Minutes 12/23/1980 - Laserfiche WebLink

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r I: TUESDAY DECEMBER 23, 1980 The estimated cost of the interim improvements is $1,133,000 and of the long-term expansion, another $3,676,000. Neither of these estimates is factored for inflation. If we share the costs of the interim improvements with PSA on a 2/3-1/3 basis, we are looking at $754,578 short-range. If the costs of long-term expansion are shared on 50-50 basis, we will be facing $1,838,000 long-range, not considering inflation. BACKGROUND OF SEWER BOND FUND In March, 1960, Martinsville citizens authorized the issuance of $2,500,000 in sewer revenue bonds, with which to undertake a major expansion of the sewage collection system and construction of the City's first wastewater treatment plant. Three bond sales followed: $1,300,000 in March, 1962; $550,000 in March, 1967; and a final $650,000 in September, 1967. Coincidental with the first sale, a construction account, called the Sewer Bond Fund, was established into which flowed proceeds from the bond sales and from which project costs were expended. During the ensuing 20 years, the Sewer Bond Fund has been in deficit most of the time; and as of June 30, 1980, this deficit was $1,OsO,461. The reasons for this, in general, follow: Delay of Bond Sales The original construction project was designed to stretch over a seven-year period, during which there occurred only three bond sales, as shown above. Bond sales were dictated somewhat by market conditions, and the Fund would go into deficit while awaiting the proceeds of the next sale. Federal Funding Since inception of the Sewer Bond Fund, several federal grants have been secured, totaling $3,070,693. The regulations required that these funds come to us only on a reimbursement basis--there were no advance payments. So, the expenditures were made from the Sewer Bond Fund which were then reimbursed from federal funds (sometimes slowed by various red tape situations) and the Fund would fall into deficit. PSA Financing When the State Water Quality Board and EPA forced a sewer system marriage between the City and PSA in the early 1970's, our current contract was the result. Basically, this contract provided that the City would finance the joint facilities and that PSA would "buy-in" as time progressed and as they utilized their allocated capacity. This arrangement drove the Sewer Bond Fund into perpetual deficit.