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Warsaw's mayor cautioned city council members the estimated figures before them "represented a worst-case scenario."
In any case, both city taxes and sewage rates will increase with renovations to the former NIPSCO building for the police department and construction of a second wastewater treatment plant.
Todd Samuelson, certified public accountant for H.J. Umbaugh and Associates, Plymouth, appeared before the full council Wednesday with detailed funding options for both projects.
Members were presented with a lot of numbers to crunch.
Umbaugh was provided with inflated estimates for both projects, said Mayor Ernie Wiggins.
"We do not have any bids out. Nothing has been finalized. These figures are expected to be much, much lower, but Umbaugh needed something to work with," he said.
The two proposals were submitted for the purpose of discussion and information only.
Purchasing costs of the new municipal building were given as $497,407, and $750,000 for renovation, for a total of $1,247,407.
Under one of two options presented, a general obligation bond (of $815,000) could be issued. Administrative and bond issuance fees (of $67,592) would increase costs to $1.315 million.
Payments for the project would come from the bond and cumulative capital development funds on hand in the amount of $500,000.
Taxpayers would be charged an additional $0.049 per $100 net assessed valuation because the funding is $101,327 short.
In the second option project costs remain the same at a little more than $1.2 million.
Payments for the project would come from all the 2001 Economic Development Income Tax funds ($710,000); the cumulative capital development funds of $500,000; and additional city funds of $37,408.
Although the 2001 EDIT funds would provide partial relief to pay for the new police department headquarters, the city has another multimillion dollar project it wants to begin.
And another use for all the EDIT allocations.
Samuelson explained possible revenue sources for a second municipal sewage works. The site is in the northwestern part of the city limits, south of U.S. 30, and already designated an economic development area or TIF district.
Presenting the council with an 18-page list of schedules, Samuelson first gave present sewage works balances as of September. There are two outstanding revenue bonds, one stemming from 1989 and refinanced in 1993 and one generated in 1995, for a total of $7.065 million.
Operating receipts were given as $2.3 million with about $823,173 used as revenues for debt service.
Samuelson said bondsmen want to see a minimum of 135 percent of the debt service in reserve for five years.
To show this, the city will have to increase its current residential rates from $14.50 to $15.65 per month.
Rates haven't increased since 1989.
Bonds won't be sold for more than 20 percent of revenues to any municipality.
Total project costs for a second municipal sewage works are estimated to be $14 million with an additional $3.5 million to be tacked on later for a collection system.
Estimated revenue requirements were given as:
• Operating expenses for the current wastewater treatment plant - $1.5 million.
• Additional operating expenses for the second treatment plant - $700,000.
• Annual debt service for the 1993 and 1995 bonds - $790,000.
• Annual debt service for the proposed bond issues (a 2001 bond for the plant construction, $876,100, and a 2002 bond for the collection system) - $294,500.
• Capital requirements and bond coverage - $450,000.
• Annual requirement to fund a reserve - $235,000.
• Total requirements - $4,878,051.
Annual revenue is estimated at $2,355,624; miscellaneous income of $100,000; CEDIT revenue of $710,070; and TIF revenue of $222,705; for a total of $3,388,399.
An additional $1,489,652 is needed for the proposal, which increases in customer rates will provide.
Two options were provided for the council to consider.
Option No. 1 does not use 2001 EDIT revenues as a funding source but picks up EDIT revenues thereafter.
Option No. 2 would use 2001 EDIT revenues from the start.
Two scenarios also were presented with each option assuming the proposed revenue bonds would be wrapped around sewage works bonds outstanding.
The effect on montly rate charges fluctuates from $10 more per month ($24.50) for Option No. 1 to $7.70 per month ($22.20) for Option No. 2A for residential customers.
The sewage works must have $109,891 in reserve for its debts and has $198,484 on hand.
The new bonds would require a debt reserve minimum of $235,000.
