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03/24/1983 - Minutes DATE: App, c; z!? ; 1 . 3 MAYOR'S EXECUTIVE ACTION On April 26, 1983, the minutes of the meeting of March 24, 1983 were approved for the Public Utilities Advisory Committee. (82--000482) 1-/t LEROY W. HOOTON, JR. a� Pjy�2 DIRECTOR DEPARTMENT OF PUBLIC UTILITIES 6 1983 JOSEPH S. FENTON WATER SUPPLY & WATERWORKS TED L. WILSON SUPERINTENDENT, WATER RECLAMATION WATER RECLAMATION C�]'}r MAYOR WENDEL E. EVENSEN, P.E. 1530 SOUTH WEST TEMPLE • RcCOizo SUPERINTENDENT SALT LAKE CITY, UTAH 84115 WATER SUPPLY & WATERWORKS April 22, 1983 Honorable Mayor Ted L. Wilson 300 City and County Building Salt Lake City, UT 84111 Dear Mayor Wilson: RE: Salt Lake City Department of Public Utilities Advisory Committee Attached are the Public Utilities Advisory Committee minutes of the March 24, 1983, meeting which were approved at the committee meeting of April 21, 1983. I respectfully request that the minutes be approved in the Mayor' s executive meeting and filed in the City Recorder' s office. Sincerely, 66UlAjlt. . LERO OT W�i0 ON, JR. Direc to : jg Attach: cc : City Council PUBLIC UTILITIES ADVISORY COMMITTEE MINUTES ;,WU✓b� Meeting of March 24, 1983PR /983 7 a.m., 1530 South West Temple city RE,.. n� The following committee members were present: Emanuel Floor, Roger Boyer, Marvin Tuddenham, Ray Arnold, Howard Dunn and Stephen Featherstone. Also in attendance were Sheldon Barker of CH2M Hill ; Ray Montgomery of the City Attorney' s office; Cheryl Cook of the Treasurer's office;.---David Schnieder of the Deseret-News;Leigh von der Esch of the City Council office and Jim Reynolds of James M. Montgomery Engineers. Staff members present were Joseph Fenton, Wendell Evensen, E. T. Doxey, George Jorgensen, Maury Johnson, Jim Lewis, Anna Wilson, Lin Fitzgerald and Jackie Gillen. Mr. Fenton said that Mr. Hootonwas on vacation this week and that inasmuch as bath__ Chairman Ralph Steenblik and Vice-Chairman Genevieve Atwood were unable to attend the meeting, Mr. Floor was asked to conduct. Mr. Floor brought the meeting to order at 7 a.m. I. Approve minutes of February 17, 1983 meeting Mr. Arnold motioned that the minutes be approved as written and Mr. Boyer seconded the motion with all voting aye. II. Review capital improvement program Mr. Doxey referred to the capital improvements handout. He said that most of the projects are in the final stage. We will have a number of projects that will be starting soon. He asked the committee for suggestions of how to present the projects in the future. Mr. Boyer recommended that when the final costs are presented that they shouldn't be shown on future recaps except to have a summary at the end of the fiscal year. Mr. Tuddenham felt that it would also be advantageous to list completed projects as a summary on some of the future reports. Mr. Jorgensen showed on a chart the sewer and water projects that have been completed and those that are proposed in the future. The water is now flowing in the Big Cottonwood Conduit and it is in service. III. "Performance Audit of Engineering Support, Administrative and Fee Assessment Functions" This item will be covered in the April meeting. IV. Cost breakdown of fleet management Jim Lewis distributed a handout comparing costs for water and sewer fleet expenses. He explained that the first four columns were similar to the report handed out -2- during the prior board meeting, however, the department added an additional column showing the anticipated expenditure for next year. The comparison of these columns showed a small increase in costs due to inflation. He also stated that last time better control and less down-time was not included in the report. Mr. Montgomery explained that Fleet Management charges a 20 percent markup for labor and repairs. Mr. Floor recommended that the department-make an analysis by taking last year's bills and figure out what the difference in costs would be (between in-house repairs and those performed by the Fleet Management department) . This analysis should be expanded to show organizational changes, purchases of new equipment, etc. , so that it can honestly depict all costs involved. - Nr: -Featherstone-felt -that there is a-l-evel- of service that-must- be performed- at - - a higher level , but there also is a level where our department could easily handle this work. - V. 1982 -bond refunding - 1983 issue Cheryl Cook summarized the saleof the bonds. She said we sold $25,725,000 which would cover refunding the old issue and into the new one. The rate obtained for this sale was 8.9456. She handed out copies of Moody' s Investors Service' s rating write-up. She said the rate was the lowest since August, 1980, and felt pretty good about the rate that we got. We saved $920,000 over the life of the bond. $630,000 was saved in interest. We obtained $4,802,000 in new-project money which will be available in May to start new projects. The total debt service was kept within the $3.3 million level that the Council had set. The bond will close on April 13, 1983, in New York. At that time the money will be available. She said she felt good about the bond issue. Mr. Boyer said that Ms. Cook had done a very good job with the bonding issue. ******* Anna Wilson briefed the committee on what was learned on the trip she, Wayne Stanton and Jim Lewis took to Burbank, California, to observe Utility Devices, Inc.' s automated meter reading system on March 3, 1983. She said these devices have been ordered and should be in operation by July 1 , 1983. VI. Complaint by Earl Fillmore on water bill - - - --- - Inasmuch as Mr. Fillmore is out of town, this item will be covered in the April meeting. VII. Sewer Adjustments Lin Fitzgerald presented the following items to the committee: -3- 1 . TraveLodge, 652 South West Temple There was a service leak on the line since October, 1979 and it was not discovered until January, 1982. Mr. Ned Wilkinson is proposing that the final balance of $552.49 be abated. Lin felt that this was an equitable compromise inasmuch as it was less than the amount of credit that would be available if we allowed for the full period of time the break was there. Mr. Featherstone motioned that this recommendation be approved and Mr. Arnold _ seconded this motion with all voting aye. 2. Allen Hewitt, 1242 East South Temple and 36 H Street Mr. Hewitt requests that adjustments be made to these accounts during_February, _ _ . 1981 to December, 1982 because the majority of the water was being used for water blasting and masonery work to renovate the buildings. Ms. Fitzgerald recommended that he be charged_the single dwelling rate of $8.64 _for that period of time. Mr. Arnold-motioned that Ms. Fi tzgeral d's recommendation be approved and 1Mr._ Featherstone seconded this motion with all voting aye. 3. Zions Securities Corporation (formerly Hotel Utah Motor Lodge) 113 West ' North Temple Adjustment to the sewer charge is being requested as charges were based on winter usage of the hotel that has since been demolished. Ms. Fitzgerald said that an indepth study has been done and any connections being serviced by this account have been abandoned; therefore, she recommended that the total charges for this account in the amount of $10,569.24 be abated. Mr. Featherstone motioned that this recommendation be approved and Mr. Arnold seconded the motion with all voting aye. VIII. Discuss Arthur Young Privatization Study as it relates to the on-going 201 Plan implementation schedule Mr. Floor said that he had been contacted by several engineering firms concerning the 201 plan and its relationship to the study proposed by Arthur Young & Company. He said that we have now lost three months and we need to get things going or we could lose a year's time. We need to have the selection committee make their selection of the engineer to perform the work and get things started. Mr. Fenton said that we have received a copy of a letter Arthur Young sent to Mayor Wilson telling him that we should proceed with the work (a copy of the letter was distributed to the committee members) . He said we now hope to get a letter out at the first of next week to tell the engineers what we are going to do. We will make the short list within two weeks. The committee agreed with this stand on this issue. The meeting was adjourned at 7:45 a.m. A Historical Perspective of the Municipal Bond Market The Revenue Bond Index Revenue Bond Revenue Bond Date Index Date Index ' 10-15-81 13.57 09-02-82 11.97 10-22-81 13.94 09-09-82 11.64 10-29-81 13.97 09-16-82 11.47 11-05-81 13.54 09-23-82 11.10 11-12-81 12.66 09-30-82 10.98 11-19-81 13.06 10-07-82 10.31 11-26-81 , 13.26 10-14-82 9.78 12-03-81 13.49 10-21-82 10.47 12-10-81 13.89 10-28-82 10.82 12-17-81 13.95 11-04-82 10.66 12-24-81 14.12 11-11-82 10.67 12-31-81 14.23 11-18-82 10.79 01-07-82 14.29 11-29-82 10.85 01-14-82 14.32 12-02-82 10.92 01-21-82 14.12 12-09-82 10.79 01-28-82 14.09 12-16-82 10.80 02-04-82 14.03 12-23-82 10.66 02-11-82 13.89 12-30-82 10.54 02-18-82 13.75 01-06-83 10.37 02-25-82 13.52 01-13-83 10.10 03-04-82 13.35 01-20-83 10.15 03-11-82 13.59 01-27-83 10.33 03-18-82 13.73 02-03-83 10.30 03-25-82 13.79 02-10-83 10.23 04-01-82 13.70 02-17-83 10.08 04-08-82 13.60 02-24-83 9.91 04-15-82 13.22 03-03-83 *9.62 04-22-82 12.93 04-29-82 12.84 05-06-82 12.82 05-13-82 12.69 05-20-82 12.80 *08/21/80 was the last time the Revenue 05-27-82 12.90 Bond Index reached this level or lower 06-03-82 13.10 06-10-82 13.25 06-17-82 13.51 06-24-82 13.58 07-01-82 13.58 07-08-82 13.36 07-15-82 13.32 07-22-82 13.12 07-29-82 13.05 08-05-82 12.90 08-12-82 12.84 08-19-82 12.28 08-26-82 11.85 [AL: ARTHUR YOUNG e COMI'1. 50 SOUIH MAIN, SUITE 140; SALT LAKE CITY, UTAH 041:•' March 22 , 1983 Honorable Mayor Ted Wilson Salt Lake City Council Salt Lake City , Utah Dear Mayor Wilson and Members of the City Council : You may recall in our initial discussions of privatization and its applicability to financing your sewage treatment needs , that reference was made to the fact that the detailed design costs for the sewage treatment facilities could be borne by the private developer if financed through a pri- vatized approach. This is a real possibility and it is very practical to expect a private firm to bear these costs. In light of the potential savings this represented , you requested Mr . LeRoy Hooton to postpone taking any action on three outstanding projects for which bids from engineering firms had been solicited . These three projects included a permitting study for the sludge management portion of the existing facility upgrade , a wetlands and site analysis study for the new proposed treatment plant and the detailed design work for the existing plant upgrade . Since that time we have refined the scope of our privatization study and determined that the costs of proceeding in these three areas of effort would not be affected by the findings of our feasibility report . It is our conclusion that the city Honorable Mayor Ted Wilson Salt Lake City Council March 22 , 1983 Page Two will need this information regardless of the selected fi- nancing approach. Although it may be possible to shift a portion of the detailed design costs for the energy recovery and sludge management portions of the upgrade to the private sector , the resultant delay in the projects timetable would not be in the best interest of the city. In the case that a private financing approach is selected , it is possible that some or all of the incurred design costs could still be recouped through the private sector. We therefore recommend to you that the city not delay in proceeding with these three projects solely on the basis that the costs incurred could be borne by the private sector . At this point we feel that our study on privatization can proceed without affecting the timetable underwhich your sewage treatment developments are structured. We trust this will be received as good news with respect to any concern there may have been regarding possible delays in project timetables. Sincerely , ARTHUR YOUNG & COMPANY Marlon R. Berrett MRB: jwa cc : Al Haines LeRoy Hooton e Bond Bu 1, ..1 ,;. 4 y } .,,, . • The Authority on Municipal Bonds Since 1891 L. 263 No. 26575 New York. N.Y. - Friday. March 4. 191 • Drop • Y geld Indexes To Two-Year Lows; • 20-Bond Hits .9.04% All three of the Bond Buyer's tax- oil prices should remain stable or exempt yield indexes dropped this decline"for some time ahead." put- week to their lowest levels since the ting downward pressure on both summer and fall of 1980.amid signs inflation and interest rates. that the battle against inflation is The 20-bond index has now fallen progressing which should lead to four weeks in a row. the 11-bond lower interest rates. barometer has dropped three In the general obligation sector. straight weeks. and the revenue in- the Bond Buyer's 20-bond index dex has fallen five consecutive `dropped 30 basis points to 9.04,% weeks• Last week, the three indexes from 9.34% last week This is its declined 19.22.and 17 basis points, lowest level since it hit 8.81%on Oct. 7ely, 16. 1980. The 20-bond index is now 44 The ' higher-grade •11 basis points lower than it was at the barometer fell 26 basis poinntsts to start of 1983,when it was at 9.48%. been from Oct.8.99 23. 1980.e lowest it has Historically.it has ranged from a low been since Oct 23. when it of 1.29%on Feb. 14. 1946.to a high registered of 13.44% on Jan. 14. 1982. The 30-year ear revenue bond index slumped 29 basis points to 9.62% The 11-bond gauge is now 36 from 9.91% the previous week its basis pf points 9.0 below It has 1983's starting lowest reading since Aug. 21. 1980, point from when it also was 9.62% a low of 1.04% on Feb. 21. 119946. to This week's new tax-exempt is- a high of 13.05% on Jan. 14. 1982. sues received a good reception from - The revenue bond index now investors.and the municipal market stands 75 basis points below the remained in a comfortable technical 10.37%it posted at the beginning of position. All the available evidence this year.It made its debut on Sept. pointed to a major break in world• 19. 1979,at its historicllow4 32 of . on petroleum prices; Federal Reserve and reached its peak of Chairman Paul Volcker forecast that Jan. 14 of last year. m MOODY'S INVESTORS SERVICE/REVENUE Municipal Credit Report 9:.:' 371—w.m2. =.•-N--rc ..5;4111-- .�Gr"�`s�if"uo1Al`.�lz SALT LAKE CITY, UTAH, WATER AND SEWER SYSTEM March 4, 1983 R SALE: $26.100.000 bonds through negotiation March 10. Please sec last page for details. RATING: Water and Sewer Revenue Refunding Bonds Al Final information on this sale was received March 2. OPINION: Timely rate increases have resulted in adequate operating ratios and good coverage of outstanding and proposed debt. Future issuances may be substantial if growth in undeveloped areas materializes, and debt service requirements could strain operations, if revenue growth is not sustained. SUMMARY: The Salt Lake City Municipal Council adopted resolution No. 100 on November 3, 1981 which combined the municipal waterworks and water system and the 'sanitary sewer system and sewage treatment plants. The system is administered by the Department of Public Utilities under the direction of the city council and policy input of the nine member Public Utilities Advisory Committee. The newly combined system serves essentially all of Salt Lake City and the water system serves an expanded customer base with nearly one-third of its customers located in unincorporated county area. The majority of the system's water supply is derived from stream flow or reservoir storage at the foot of the Wasatch Mountains. The wastewater treatment plant was constructed in 1963 and provides high rate trickling filter secondary treatment; the facility treated an average of 40 MGD in 1982 and is currently meeting its National Pollutant Discharge Elimination System permit limitations. The development of the system was financed with pay-as-you-go capital contributions and general obligation bonds which have all been retired. The Series 1983 Bonds will be issued pursuant to a resolution supplemental to the Master Resolution approved November 3, 1981. Of total bond proceeds, $21.6 million will be used to purchased U.S. Government obligations that will be placed in an irrevocable escrow account held by the First Security Bank of Utah, N.A. These obligations and interest earned will be used to service the Series 1982 Bonds as they mature through May 1, 2002. Such debt service payments begin May 1, 1983. The Series 1982 Bonds will be defeased at this time. Proceeds of S2.7 million will be used to finance construction of an additional water supply line. Remaining proceeds of $1.8 million will be used to pay bond issuance costs and to increase the debt service reserve. This reserve was established with $2.4 million of Series 1982 proceeds and is to be• equal to average annual debt service. The use of proceeds from the Series 1983 Bonds will increase this reserve such that it meets the requirement, after giving consideration to this issue. r-,a•:a;-.,...>,�,•;:.:'.r�'d-i.�i�ftrR'.. ae,;,.... -��+11d�Sn`v�,6 '�:.a^.,;s£-.i �l ..____ ... '�f5'-�M«s-N"�S�li.,><�a+9ia�rar r...__ r-., -"> ,�.�^�^�`��,.,,m,,.,,•+.�,�n THIS REPORT MAY NOT BE REPRODUCED IN WHOLE OR IN PART IN ANY FORM OR MANNER WHATEVER. lt is furnished by Moody's Investors Service,Inc.at your request under your subscription agreement for your exclusive use.The information herein has been obtained from sources believed to he accurate and reliable,but because of the possibility of human and mechanical error its accuracy or completeness is not guaranteed. Moody's ratings are opinions,not recommendations to buy or sell,and their accuracy is not guaranteed.A rating should be weighed solely as one factor in an investment decision,and you should make your own study and evaluation of any issuer whose securities or debt obligations you consider buying or selling. Issuers of corporate hoods,municipal bonds and notes.preferred stock and rummercial paper which are rated by Moody's Investors Service,Inc.,have t iior to receiving the rating,agreed to pay a fee to Moody's for the appraisal and rating services.The fee ranges from$100 to 345,000. Yoody'.In,.,lor.S.ry s./99 Church 51,.e1,Ne.Yn,k,H.Y.1000efa.1.:(313)553 0300 2 Salt Lake City, Utah, Water and Sewer System Capital expenditures for the water system approximate $7 .0 million through 1987 , and will likely be met by available monies . A new wastewater treatment plant may be needed during this period, and cost estimates range as high as $ 100 million . This estimate is extremely rough. however , as feasibility 'eudies are underway . A decision is not expected in the immediate future. System officials estimate that $25 million in improvements to the- system will he needed over the next four years. Funding will he provided by a new sewer connection schedule , which will be phased- in over this period. This new schedule is intended to effectively place the burden of new lines and treatment upon developers , and is expected to generate an additional $7 .0 million in annual revenues . The ultimate outcome of these projects is contingent on growth in 10, 000 acres recently annexed by the city in its northwest quadrant . Financial operations are well-maintained, with healthy operating ratios. Water and sewer rate increases of 20% and 30%, respectively, became effective in October 1981 , and resulted in strong gains in operating revenues during fiscal 1982. There are no overriding consumers of either water or sewer services . The largest water consumer is an Amoco Oil refinery, which accounted for approximately 3% of revenues as of April 1982. The largest water consumer is the city; water used for parks and the golf course approximate 3% of the total revenues. Utah Power and Light is the largest industrial user, and contributes about 1% of revenues . No heavy industry is located within the service area, and much of the economy is comprised of light industry and an important service sector as well as being the cultural center for the state. Salt Lake City is the county seat and the state capital . Unemployment for the county in January was 8. 1%, compared to 8.6% state-wide. Security elements of the resolution are relatively strong, and include a coverage requirement of 1 . 25 times. The additional bonds test requires that net revenues for the most recent year cover outstanding debt service ` requirements 1 . 25 times and that the maintenance of that level must be projected for all new obligations. Type enterprise: Water and sewer system. Pledged revenues : Net system revenue. Coverage after sale: Net revenues for the fiscal year ended June 30, 1982 • cover peak annual requirements on all debt, including the new issue, by 2.04x. Historical Financial Results (to 6/30; $ in 000) : -% Change- 1980 1981 1982 1980-81 1981-82 Gross revenue S15, 905 $17 , 995 $21 , 598 12. 9 20.3 Operating expense 12 , 225 12, 970 14 , 867 5 . 8 14 .6 Net revenue 3 , 648 4 , 985 6 , 731 36. 7 35 .0 Debt service requirement -- -- 772 -- -- Net funded debt -- -- 16 . 600 -- -- Historical Key Ratios : . Water Sewer 1980 1981 1982 Median Median ()peral in!1 rnl io (%) 80.1 77 .:3 74 . :3 68 . 2 68 .3 Net take clm.•n ('(:,) 22 . 9 27 .8 :11 . 2 :38.7 :39 .4 lute est. coverage ( x ) - -- 25 . 99 4 . 27 3 . 59 Debt svc. coverage (x) -- -- 8 . 71 2 .36 2.35 Debt svc. safety margin ( %) -- -- 27 . 6 21 .7 21 . 2 Debt ratio (%) -- -- 17 . 3 27 .6 25.0 Salt Lake City. Utah , Water and Sewer System 3 Projected Financial Results ( to 6/:30; $ in 000) ' : 19831 984 1985 1986 1 987 '.. "ss revenue $24 . 172 831 . 361 $32 , 147 $32 , 8 7 9 - 7 ':1 rta t i n11 exp'•n:a' 1 8 . t40 '20, .39.; 22 .434 24 , 677 27 , 1 44 ,.• revenue 5 . 932 10 , 967 9 , 714 8,202 6,392 •t service 537 3 . 281 3 ,299 3, 288 3.295 ' ,veraye 1 1 . 05x 3 .34x 2. 94x� 24 . 9x 1 . 91x • Projection assumptions are as follows : effective January 1 , 1983: 100% sewer rate increase, 67% connection increase. January 1 . 1984 40% connection rate increase, and a 42% increase in 1985 . Operating and maintenance ',xpenses project an annual increase of 10%. BONDED DEBT : Series 1983 Bonds are payable from net water and sewer system t .'venue on a parity with $5 . 0 million Water and Sewer Revenue bonds, Series 1981 purchased on January 19, 1982 by the State of Utah Department of Natural Resources and Energy, Division of Water Resources. Currently, $4.0 million of the $5.0 million authorization has been delivered; the balance will be delivered to the Division of Water Resources , as needed. Proceeds totalling S21 .6 million will be used to establish an irrevocable escrow account with First Security Bank of Utah. Such funds will be used to retire $17 .0 million Series 1982 Bonds as they mature through 1997 . Proceeds of S2 .7 million will finance improvements and $1 .8 million will establish reserves and pay issuance expenses . -- DEBT-- - Debt Statement ($ in 000) : Amounts Interest Amounts Outstanding Series Dated Rate Rating Issued (as of 3/10/83) Maturities r 1981 12/1/81 6 .625% N. R. S 1 ,000 $ 4 ,000 3/1/83-97 1982 5/1/82 10. 50-12. 50 Al 17 ,000 17,000 5/1/83-02 1983 4/1/83 To be det. Al 26, 100 26, 100 4/1/84-03 Total $44 , 100 $47, 100 Less : Bonds being refunded 17 ,000 17,000 Total $27 , 100 $30, 100 Structure: Outstanding bonds , when the full $5,000,000 principal is delivered, will he retired through 2003 , the coupon on Series 1981 Bonds is fixed at 6 5/8 and although the schedule for delivery of the full sale is not set , financial consultants have assumed an early delivery and provided a maximum debt service requirement of $536 , 724 which has been used throughout the table below. Utilizing a consultant assumed 9 . 0% interest rate on Series 1983 Bonds , annual debt service requirements approximate $2 .7 million through 2003 . Fiscal Year Principal Interest* Total " Year Principal Interest` Total" 1983 $ 205 $ ,332 $ 537 1995 $1 , 741 $1 , 556 $3 , 297 1984 844 2 ,437 3 , 281 1998 1 , 650 1 , 109 2, 759 1985 908 2 ,391 3 . 299 ' 2002 2 , 300 439 2, 739 1990 1 . 221 2 . 068 3 , 289 2003 2. 525 230 2 , 755 1 `19 1 1 . 292 1 . 983 3, 275 • 9 . 00 interest assumed by financial advisors on Series 1983 . includes annual requirements of $5:37 . 000 to meet the Series 1981 at $5 .0 int 11 ion out tit and img . • Series 1983 only • Rate of Retirement ($ in 000) : Total debt Line. new issue) Principal amount, due In 5 years: $3,550 13 . 6% In 10 years : $8,375 32 . 1 Debt Service Coverage ($ in 000) : Last 3 Yr . Fiscal Yr . ended Average 6/30/81 Pledged revenues $5, 121 $6 , 731 Es t . peak requirements Interest : ($2 ,437 in 198.1 ) 2. 10x 2. 76x Prin. !4 int.. : ($:3 , 299 in 1985) 1 . 55x 2 .04x BOND SECURITY PROVISIONS: The bonds will be issued pursuant to a master Resolution No. 100 adopted by the Municipal County of Salt Lake City on November 3, 1981 and a Supplemental and Amendatory Resolution to be adopted. Flow of funds: All revenues derived from the operation of the system are to be deposited into the Revenue Fund and after the periodic payment of operating and maintenance expenses revenues are to be allocated monthly as follows: ( 1 ) to the Principal and Interest Fund sufficient amounts to meet all debt service costs ; (2) to the debt service reserve account which began with the Series 1982 issue; is to be maintained at the amount of average annual debt service; (3) to the Renewal and Replacement Fund to be accumulated to an amount equal to $300,000 over a 120 month period; (4) remaining funds may be used for a variety of system purposes as well as any lawful purpose of the city. Rate covenant: Rates and charges are to be established and maintained sufficient to yield net revenues equal to at least 1 . 25 times the aggregate debt service requirements during the forthcoming fiscal year. Additional bonds: Parity bonds may be issued provided that among other conditions , as evidenced by an accountant' s certificate, net revenues for any period of twelve consecutive months during the preceding 24 months were at least equal to 1 .25 times the aggregate debt service for that period and an engineer 's certificate must indicate not less than 1 . 25 time aggregate debt service coverage in future years. • Authorized investments : ( 1 ) Direct obligations of or obligations guaranteed by the United States of America; (2) Bonds, debentures or notes or other evidence of indebtedness issued by any of the following agencies: Bank for Cooperatives; Federal Intermediate Credit Bank; Federal Home Loan Bank System; the Export-Import Bank of the United States ; Federal Land Banks ; the Federal National Mortgage Association: the United States Postal Service; the Tennessee Valley Authority; the Government National Mortgage Association; the Federal Financing Bank; or any agency or instrumentality of the United States of America which shall be established for the purposes of acquiring the obligations of any of the foregoing or otherwise providing financing therefore; (3) Repurchase Agreements , to the extent permitted by law, with any bank or trust company , selected by the city and satisfactory to the trusee, (4 ) New [lousing Authority Bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an Annual Contributions Contract or contracts with the United States America ; and (5) Direct and general obligations of any state within the territorial United States of America, to the payment of the principal of and interest on which the full faith and credit of such state is pledged, provided that at the time of their purchase under the resolution, such obligations are rated in either of the two highest rating categories by a nationally recognized bond rating agency. Salt Lake City, Utah , Water and Sewer System 5 - -- -SYSTEM DESCRIPTION -- - --- --- - --- se,,t ,•n> Theo Cit , c••nter ,,nci set,(2;- Stem serves an area primarily I t . he ., , t t t niSe cif ), houn,lar :es • but laps serve some territory outside of the city ' s eater .apply comes from stream flow or : voi , sl .•ttt at the foot o[ the Wasatch Mountains The city has 124 i•,t. „. Il, t: : oi irc:tted water s,toragt• and 60 million gallons e!' .untre•atcd ,•r• t „t age• 11,pt t,x gnat c• I y I :,'.+ of the c i ty ' s water Supply comes from ! Is . c i t y ,,; I i e l a l s have indicated that they have acquired the majority of • : fen right :, to the following streams along the east bench through direct .u.r,ropriation water right purchase or exchange: Big Cottonwood Creek, Little '•,it „nw-od creek . NiIi Creek . City Creek and Parley ' s Creek. 1'11•• sewage t•ol lect i„tt System has been expanded to serve most of the 72 square ▪ t :tr,•;; t,t Sn l t Lake City or an equivalent population of 295.000. The • ' ; !ee•t ion syst e'm contains over eight hundred miles of sanitary sewer pipe. various sewerage l i ft stations and a pre-treatment and biological treatment plant The plant was constructed in 1963 and provides high rate trickling r' il ' en sr-'naaiary treatment at a rated capacity. The treatment facility in 1". 1 treated an average of 50 MOD and is currently meeting its NPDES t'i-,•harge a Permit Limitations ; the improvement programs financed by the 1982 Series will increase capacity to 60 MGD and future growth projections indicate the need for additional treatment facilties by the year 1986. System Usage (to 6/30) : 1978 1979 1980 1981 1982 Water meter connections City 48,873 49,020 49, 164 49. 558 49,920 County 27 ,353 27 ,801 28, 116 28,401 28,686 Water consumption (MG) 23, 514 29 .756 30,046 28, 274 30,294 \verage daily water consumption (MOD) 64 .4 81 .5 82.3 77. 5 81 .8 Sewer connections 43 , 153 44. 103 46, 165 45.840 45,804 Average daily sewage flow (MOD) 39.7 41 .2 46.4 50.0 40.0 Current and future improvement program: Proceeds of the Series 1983 Bonds will he applied as follows : $21 . 6 million will be used to establish an irrevocable escrow account to service the Series 1982 Bonds as they mature; $2 . 7 million will finance construction of water supply line expansions that will improve transmission between the city and storage reservoirs, and $1 .8 million will finance reserves and bond issuance costs. Further borrowing plans for the water system are minor, and primarily involve line improvements . Expansion of the sewer plant will be necessitated by continued population growth . Most of this growth is expected to occur in a 10.000 acre tract recently annexed by the city. The plant is being increased to a design capacity of 60 mgd. City officials anticipate that $25 million in capital improvements will be needed over the next four years . Funds will be provided by substantially increased sewer connection fees , which will be implemented „.•,_ r the next fc,ur ::tars . • ---FINANCIAL SUMMARY Fiscal Year Results ( to 6/:30; $ in 000) . Percent Change- 1980 1981 1982 1980 81 1981 -82 operating revenue . Water services $ 10,338 $ 10 ,441 $ 12 , 801 1 . 0 22 . 6 Sewer services •1 , 759 6 , 135 6 , 979 28 .9 13 . 8 Other 155 209 212 34 .8 1 .4 Total operating revenue 15 , 253 16 , 785 19 , 992 1 0 . 0 19 . 1 Gross revenue 15 ,905 17 , 955 21 , 598 12 . 9 20 .3 Operating expense Water service 7 , 368 7 . 568 8 ,020 3 . 0 5 .7 Sewer service 2 .69'l 2 , 975 3 .945 10.4 32 .6 Administration 2 , 193 2 ,409 2 , 902 9 . 8 20. 5 Total operating expense 12 , 255 12 .970 14 , 867 5 .8 14 .6 Net revenue 3. 648 4 , 985 6.731 36 . 7 35 .0 Interest -- -- 259 -- -- Principal and interest --- -- 772 -- -- Balance Sheet data (at 6/30; $ in 000) Gross plant 82 , 957 87 , 850 96, 528 5 .9 9.9 Net plant 58, 889 63 , 279 70,354 7 .4 11 .2 Net working capital 8, 771 9 , 717 25, 676 41 .3 137 . 8 Long-term debt 1 , 108 1 , 007 19 ,000 -9 . 1 -- Bond reserves -- -- 2,400 -- -- Net debt -- -- 16 , 600 -- -- FINANCIAL FACTORS: System financial operations are soundly maintained, with operating ratios well above medians . Water and sewer revenues increased substantially during fiscal year 1982 , reflecting rate increases that took effect in October 1981 . 'These increases were approximately 20% for water and 30% for sewer . Operating expenses increased by over one-third during this period, directly reflecting unexpected sewer maintenance costs stemming from line failures . The 1982-83 budget anticipates and increase of approximately 22% in operating revenues for the system. This increase is due to the fact that a full year of operations under the new rate schedule will be completed, as well as partial effects of the new sewer rates imposed in January 1983. The proposed 1983-84 budget projects a 30% increase in overall revenues , again reflecting the new rate structure . Expenses are expected to increase by approximately 10%. This relatively low rate of growth is due to computerization of billings , and purchase of water from less expensive sources . ADMINISTRATION: The Salt Lake City Municipal City Council adopted Resolution No. 100 on November 3 . 1981 which combined the municipal waterworks and water system and the sanitary sewer system and sewerage treatment plants . The system is administered by the Department of Public Utilities under the guidance of the city council and policy input provided by nine member Public Utilities Advisory Committee . Rates : The city raised water and sewer rates and connection fees effective October• 18 , 1981 The average increase in rates was approximately 20% for water and 30% for •,ewer . The water rate within Salt. Lake City per residential usage is based on a minimum of $1 . 50 per month plus an additional $0 . 31 per 100 cu . C t . usage over the initial I .000 cu . f t . A capital improvements fee is charged col all nei. development >, in the city• : thce lee is $ 1 , 500 per acre of land he I uw the e I e\•:t t ion e,l I . (;5(1 feet and S3 , 000 per acre above that elevation . Rates for uut ', ide e• ity users are 1 50% higher . The municipal council has implemented a new sewer rate structure, becoming effective on .January I , 1983 . Sewer rates were tncteased 100%. raising the minimum charge to $4 .00. An increase of (;7`, in connection fees also took effect . Further connect ion fees increases wi I l be 10% in 1981 , and '12% in 1985 . Another sewer rate increase is :tntiripated for 1987 or 1988 . Salt Lake City. Utah, 'Water and Sewer System 7 Pensions: Utah State Retirement System. Litigation: It is reported that at present theme is no pending or threatened litigation against the city which would in any way materially affect the issuance or ability to pay principal and interest on the Series 1983 Bonds. sources of information: Official statement dated February 25, 1983: financial statements through June 30. 1982. "taster Resolution dated November 3. 1982, supplemental resolutions and a draft escrow agreement. Service area: The newly combined water and sewer system serves essentially all the residents of Salt Lake City. The city has a 1980 population of 163.033, a decrease of 7.3% from the 1970 level. In .addition, as many as one-third of the sewer customers are located in unincorporated county area. Salt Lake City, the capital of Utah. is a commercial and financial center for the intermountain west, as well as being a regional trade and service center. Traditionally. unemployment is lower than the national average due to the stability of the area's major employers, the University of Utah. Chevron Oil Refinery, Hill Air Force Base and other educational institutions and manufacturers. Kennecott Corporation operates the largest open pit mine in the world. Decreased demand has resulted in a decrease in employment from 7.000 to 4,800 recently. D. Fucio 095387BO.UT SALT LAKE CITY, UTAH, WATER AND SEWER SYSTEM March 4 , 1983 • R Details of Bond Sale Legal name of issuer: Salt Lake City Amount: $26, 100,000 Water and Sewer Purpose: System improvements Improvement and Refunding Revenue Bonds, Series 1983. RATING: Water and Sewer Revenue Refunding Al Sealed bids until : Through negotiation MARCH 10, 1983 Date of bonds: April I . 1983 Maturity: April 1 , 1984-2003 Annual Maturities (000) Denomination: $5,000 1984 $ 625 1994 $1 ,200 1985 675 1995 1 ,300 Interest payable: Semiannually beginning 1986 700 1996 1 ,400 April 1 . 1984. 1987 750 1997 1 ,500 1988 800 1998 1,650 Paying agent: First Security Bank of Utah, 1989 850 1999 1,775 Salt Lake City. 1990 900 2000 1,950 1991 950 2001 2, 125 Registration: Principal only 1992 1 ,025 2002 2,300 1993 1 , 100 2003 2,525 Interest rate: To he expressed in Delivery: On or about April 20, 1983 multiples of 1/8 of 1/20 of 1%. Up to five different rates, one rate per maturity. Basis for award: Lowest net interest cost. Maximum spread of 2%. Consultants: Burrows, Smith and Company. Call features: Callable beginning April 1 , Salt Lake City. 1993 at 103; decreasing by 1/2% annually to par. Plus accrued interest. Security: Net water ai„i sewer system revenue. Legal opinion: Chapman and Cutler, Chicago. Litigation: No-litigation certificate to be provided at closing. Historical Date of bond sale: April 13, 1982 Net interest cost: 11 .6836% Amount : $17 , 000 ,000 Average life: 14 . 18 years Moody' s index: 12.7% (A, 4/16/82) Purchaser: Syndicate headed by Salomon Brothers . Inc. Ratings since 1970 : Al ( 1982) ( this issuer , this Security) JL 03/21/83 PUBLIC UTILITIES BUDGET COMPARISON OF FLEET COSTS FOR FISCAL YEAR ENDING JUNE 30, 1984 EXPENDED BUDGET ESTIMATED BUDGET ESTIMATED 1980-1981 1981-1982 1982 1982-1983 1982-1983 Water Water Inhouse $163,820.00 $154,158.00 $169,751.00 $268,821 .00 $268,821 .00 Fleet Management 367,663.00 546,693.00 375,734.00 402,106.00 300,000.00 Total Water $531 ,483.00 $700,851 .00 $545,485,00 $670,927.00 $568,821 .00 Sewer Sewer Inhouse $ 91 ,443.00 $ 20,000.00 $ 48,822.00 $ 69,000.00 $ 69,000.00 Fleet Management 137,511 .00 150,459.00 121 ,886.00 125,000.00 120,000.00 Total Sewer $228,954.00 $170,459.00 $170,708.00 $194,000.00 $189,000.00 Total Fleet Maintenance $760,437.00 $871 ,310.00 $716,193.00 $864,927.00 $757,821 .00 ruDLjs. U11L111Gb CAPITAL IMPROVEMENTS 1982-83 Total % of F Engineer's Bid Mods. Payments Construction Project & Location Funding Estimate Price to Date to Date Completed Near-Term Improvements Bond 1982 $ 3,759,000.00(C) $ 2,770,943.00(C) $ 19,985.00 $ 814,096.17(C) 20% at Wastewater Plant 287,000.00(E) 88,834.51(E) 49-Q-5-24 Redwood Road Sewer Pipe Current 629,075.60(C) 918,712.50(C) $111,963.53(C) 724,207.43(C) 80% Line Replacement Earnings 167,000.00(M) 166,367.98(M) 32,636.00(M) 50-1208 62,500.00(E) 23,842.50(E) 84,488.55(E) Big Cottonwood Conduit Bond 1982 3,411,000.00(C) 2,351,480.30(C) 100,000.00(C) 1,990,190.40(C) 95% Replacement (3,800,000.00(M) ) 3,647,097.17(M) 2,745,623.91(M) 33C-1253 165,000.00(E) 116,550.00(E) Big Cottonwood Exten- Bond 1982 730,950.00(C) 584,130.00(C) 5,348.25(C) 542,177.01(C) 100% sion Terminal Res. (Reserves to 15th East - Phase I until bond 35-4184 money trans- ferred) Victory Road Bond 1981 2,200,000.00(C) 2,148,880.00(C) 1,955,481.00(C) 85% Reservoir 43,000.00(E) 33,611.09(E) 34-D-19 Victory Road Reservoir Bond 1981 538,000.00(C) 543,553.97(C) 55,706.06(C) 592,260.03(C) 100% Pipeline - 5th North 675,000.00(M) 674,367.30(M) 674,367.30(M) to 10th W. to Victory Road 35-4153 Perry's Hollow Res. Current 328,425.00(C) 307,632.00(C) 188,293.21(C) 75% 34-D-27 Earnings 9,997.00(E) 6,095.68(E) Neff's Canyon Current 143,750.00(C) 147,350.00(C) 100,055.41(C) 900 Reservoir Earnings 9,797.00(E) 6,579.98(E) 34-D-33 Lagoon Beds Current 300,000.00(C) 236,773.35(C) 55,296.68(C) 129,346.09(C) 100% 49-A-5-22 Earnings 162,723.94(M) Page 1 Subtotals: $16,682,200.60 $11,427,404.40 $ 372,142.02 $10,987,617.71 (C) Construction (E) Engineering (M) Material iuyc PUBLIC UTILITIES CAPITAL IMPROVEMENTS 1982-83 ' i Total o of Engineer's Bid Mods. Payments Construction ,, Project & Location Funding Estimate Price to Date to Date Completed Completed Metal Storage Building $ 135,000.00(C) $ 135,680.00(C) 70% 49-Q-5-18 Laird Avenue; 50-539-1 19,773.50(C) 8,931.00(C) 500 South, west of Emery 21,500.00(C) 17,867.80(C) $ 2,585.00(C) 18,407.52(C) 98% Street; 50-1248 500 East between 2549 17,392.50(C) 16,669.50(C) 13,695.30(C) 85% & 2579 South; 50-1258 2100 So. , 3650 West to 159,978.10(C) 158,029.80(C) 136,074.01(C) 98% 4250 West; 35-4114 Taffeta Street 35-4181 120,134.00(C) 144,034.00(C) 142,239.00(C) 100% Oakley & Sonata 35-4182 Buccaneer Street 35-4183 1500 West; 35-4186 First South & 1300 East 60,000.00(E) $ 51,300.00(E) 75% Pipeline; 35-4205 Terminal/Park Reservoir 200,000.00(E) 8,800.00(E) 178,430.00(E) 85% 35-4184 Post Street - 7th to 13,600.00(C) 21,631.50(C) 0% 8th South; 35-4113 Jeremy Street; 35-4115 9,860.00(C) 17,627.22(C) 10,917.40(C) 75% Genesee Avenue; 35-4116 23,000.00(C) 21,940.00(C) 14,240.88(C) 95% Gale Street; 35-4117 18,500.00(C) 15,649.00(C) 0% 1200 West; 35-4119 6,120.00(C) 11,589.70(C) 8,231.78(C) 80% Page 2 Subtotals: $ 525,084.60 $ 840,492.02 $ 11,385.00 $ 582,466.89 GRAND TOTALS: $ 17,207,285.20 $ 12,267,976.42 $383,527.02 $11,570,084.60 (C) Construction (E) Engineering (C) Material ETD:jg Rev. 3/22/83 ITEMS TO PRESENT TO BOARD 1 . Travel Lodge 2. Allen Hewitt (2) 3. Zions Securities Corporation TO: LeRoy W. Hooton, Jr. & Advisory Board FROM: Madolin A. Fitzgerald, Sewer Service Charge Administrator Date: March 24, 1983 Subject: Travel Lodge 652 S. West Temple Account #025-008360 Mr. Ned E. Wilkinson, Controller for the Tri Arc Travel Lodge, owners of the property serviced on the subject account has written requesting a sewer adjustment as there has been a leak on the service line since October 1979, the first year we used to establish winter averages. The repair was not made until January 1982, when the leak was brought to their attention. We have history prior to the break and using a two year average their usage would be 900 cubic per month resulting in a bimonthly sewer charge of $9.72 over the last three years. The usage since the repairs have been made has decreased to an average of 700 cubic feet per month. Mr. Wilkinson is only asking that we abate the balance outstanding after the final reading was taken of $552.49. This amount is less than the amount of credit that would be available if we allowed for the full period of time the break was there. Therefore it is my recommendation that we accept his pro- posal as it will be an equitable compromise between the two solutions. Thank you for your consideration in this matter. TO: LeRoy W. Hooton , Jr. , & Advisory Board FROM : Madolin A. Fitzgerald - Sewer Service Charge Administrator DATE: March 24, 1983 SUBJECT: Allen Hewitt 1242 E. South Temple Account #481-009680 36 H Street Account #811 0010-9-0 Mr. Hewitt is requesting adjustments to the two subject accounts due to the • building being restored through the redevelopment agency and were under rennovation from February 1981 through December 1982. During that time the majority of the water was being used for water blasting and masonery work to the outside of the buildings. Account #481-009680, had one tennant throughout the entire period of restor- ation. I recommend that we charge the single dwelling rate of $8.64 for that period of time. Account #811-0010-9-0, had a tennant from February 1981 through June 1981. At that time, the inside of the building was completely redone to convert the single dwelling into a duplex. Occupancy began in September 1982. I recommend we remove all sewer charges from June 1981 through September 1982, and from that time, charge the duplex rate as though it were a new unit as prior history was for a single dwelling. Thank you. TO: LeRoy W. Hooton, Jr. , & Advisory Board FROM: Madolin A. Fitzgerald - Sewer Service Charge Administrator DATE: March 24, 1983 SUBJECT: Zions Securities Corporation - Formerly Hotel Utah Motor Lodge 113 W. North Temple Account #979-0086-9-9 Mr. Ramon B. Morgan, Secretary-Treasurer of Zions Securities has written, requesting adjustment to the sewer charges. The charges were based on the winter usage of the Hotel Utah Motor Lodge that has since been demolished and the water usage has been for irrigation and construction. In doing an in depth study of the site, all sewer connections this account would have serviced have been abandoned and a new line for water and sewer installed having a new account number for the Relief Society Building that occupies a portion of the area. The total charges from July 1 , 1982, to the present for sewer are $10,569.24. and I recommend that these total charges be abated as erroneous. Thank you.