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04-20-1960 Special Meeting 1 Q S P E C I A L M E E TIN G .. A Special meeting of the City Council of the City of Clermont was held in the administration building on Wednesday, April 20, 1960 The Meeting was called to order at 4:15 P. M. by Council Chairman G. Y. Middleton with all members of the Council present with the exception of Mr. York. Other City officials present were Mayor BonJorn and City attorney Morse. Representatives of B. J. Van Ingen Co., and Smith & Gillespie, Engineers, were also present. Mr. Hodge of B. J. Van Ingen Co. read and explained his report to the Council, dated 3/31/60. A discussion was held regarding his report and on additional information submitted by a representative of Smith & Gillespie, Engineers. A copy of the report submi.fted by B. J. Van' Ingen Co., was ordered fimed immediately following these minutes. Motion was made by Roe, seconded by Christensen and carried that the Mayor be requested to issue a pDoqlamation for a spec~~ection of Freeholders to be held on or before the Tuesday in June, 1960, for the purpose of determining if the Freeholders of the City of Clermont are in favor of a sewage sy stem for the City of Clermont. Meeting adjourned. on, Cler -e " Mil." STAin BOSTON 8. MAS., TI~, LlelATY 2.1011. B. J. VAN INGEN Be CO. INC. MUNICIPAL BONOS FIRST NATIONAL BANK BUILDING ELEVENTH FLOOR MIAMI 32. FL.ORIDA TELEPHONE FRANKLIN 3.3311 , IS So. LA SA~~a ST. CHICAGO 3, l~~, TaL. RANDOLPH 8,2717 .0 WA~~ STIlIlET NIW YO"" II. N,Y, TI~, MANOVIA a.8311S -e March 31, 1960 Honorable Mayor and City Council City Hall Clermont, Lake County, Florida Re: City of Clermont, Florida Sanitary Sewer System Dear Mayor and Councilmen: B. J. Van Ingen & Co., Inc. as your Fiscal Agent has studied the possibility of financing a sewer system at Clermont, through the medium of a revenue issue, and has analyzed the sources of revenue to use in order to bring out a marketable issue and to present same to you at this time. We do not have up-to-date figures on the earnings of your water system or your income from other sources such as the utility tax, cigarette tax anrl franchise tax, but the figures which we have are sufficient for this report and will serve as a guide to you in determining your course of action. We have been furnished by Smith and Gillespie, your consulting engineers, much detailed information which has been of great help to your Fiscal Agent in developing your financing plan and is incorporated first in this report. Attached find exhibits as follows: 1. A letter received from the engineers dated March 28, 196'0. -e 2. The consulting engineers I cost estimate for the disposal system including master lift station, various lift stations, interceptors and force mains, together with the collection system or laterals embraced in areas numbers 1, 6, 11 and 13, the first areas to be considered in the collection system; and their forecast as to the approximate time of providing the laterals for other areas. This exhibit also gives you Smith and GillespeConsulting Engineers I forecast which will convey to you their estimate as to the number of connections, the gross revenue that you can expect, the operation and maintenance expense to produce this gross revenue and the resultant net revenue from the sewer service charges. This tabulation also forecasts the estimated collection of the front foot assessments to be levied against all the property ,that will be serviced through this initial financing, and sub- sequent extensions of the collection system laterals through the usage of part of these collected assessments in the future. This compilation does not take into consideration the debt service requirements and this must be taken into consideration in con- junction with exhibit number 3, and also should be considered in conjunction with their supplemental report submitted under d~te of February, 1960 and datep January 29, 1960. This engineers' forecast for the years 1961 through 1971 did not take into consideration any interest that the City might collect on these assessment liens, or if they were collected mainly in cash as billed then these funds could be either put out at' interest in Government securities or allow th~ speeding up of the additional areas to be served at an accelerated pace. In either event, the collection returns from assessment liens 'will provide a substantial sum in the way of interest collections, or speed up the gross revenue of the system. Two things that are not taken into consideration in the engineers I report are a renewal and replacement fund, which is essential in .:any financing li:.., ... Honorable Mayor and City Council March 31, 1960 Page Two . plan for the replacement, repair or rehabilitation of the collection system at such time as it becomes necessary for such renewals or rehabilitation. This fund, together with the reserve debt service fund, has been taken into consideration in the Fiscal Agent's amortization schedule. 3. The Fiscal Agent's suggested amortization schedule on the proposed $650,000 issue using an assumed interest rate of 5%. This amortization schedule shows - (a) Serial maturities July 1, 1963 through July 1, 1992; it shows interest payments from July 1, 1960 through July 1, 1992; and the tota~ debt service requirements during that period of time. It also shows a reserve which is to be created equal in amount to the highest debt service that will occur in anyone year during the life of these bonds. It also shows a renewal and replacement fund and how it is to be created; and you will note from this amortization schedule that the interest has been capitalized for the construction period estimated at 18 months and 6 months thereafter. (b) That there is latitude allowed in the creation of the reserve even though you and the engineers might want to create it sooner through the special assessment collections. (c) You w:tll also note that the highest debt service on this amortization schedule would occur in 1978 and the chances are that at the public sale, regardless of the interest coupons contained in the highest bid, will still show that the highest debt service will probably occur in that year. (d) You will note that latitude will be allowed in the creation of the renewal and replacement fund in the sum of $20,000, but of course it cml be cre~ted at any time if you have the funds available, and good financial management of the City would facilitate the establishment of the reserve fund and the renewal and replacement fund at the earliest possible date; and in the authorizing ordinance provision will be made for the investment of the reserve in dire~t U. S. obligations and also investment in short term Goveri~ent securities of the renewal and replacement fund so that both of these filllds will not be idle, but w1ll be earning interest. No account of such interest has been taken into consideration in any of the compilations submitted herewith. '. From the exhibits referred to above you can see where the e~gineers have told you that you can reasonably expect to get the m;)71ey ':;0 build the disposal plant and extend the collection .rr3tern for a fairly comprehensive sanitary sewer system in Clermont. Such a forecast to guide the City is whdt the City needs to have, but the engineers' forecast where no sewer system exists with a record of historioal earnings, is not sufficient to make a marketable issue of sewer revenue certificRtes. In other words, there must be sbme historical record of income that c&n be used to supplement and augment the engineers' forecast in order for 'the revenue certificates to be accepted by the buying public. Fortunately, at Clermont you do not have any revenue certificates outstanding against your water system and you do not have any L . . Honorable Mayor and City Council March 31, 1960 Page Three revenue certificates that are payable from the proceeds of either your cigarette taxes or utility taxes or Florida Power Franchise tax so that they are available for pledging to this sanitary sewer system financing. While the engineers' forecast would mean that you would have to use either part of the special assessment collections or part of your Water Department earnings, it would mean that in arriving at your budgets starting for the year 1963 some consideration should be given as to the possibility of perhaps using some part of these pledged sources of income. No attention need be given to these additiunally pledged sources of lncome at tne present time because the interest on the $650,000 Sewer Revenue Certificates will be capitalized for a two-year period, that is, the 18-month engineers' estimated construction period and 6 months thereafter; and by the time the budget is to be arranged for the calendar year 1963 cr. your fiscal year ending October 30, 1963, according to the engineerst estimate, your disposal plant will be completed and your laterals for areas 1, 6, 11 and 13 will be completed and in operation since an approximate date of January 1, 1962; so that it will be an actual guide for the City Council, the Mayor and the City Clerk in formulating the budget for the fiscal year ending October 31, 1963. Additional pledges are needed which will make this issue a good marketable issue, that will enable these securities to be marketed at public sale possibly at a lesser rate of interest than has been assumed in the fiscal agentts amortization schedule, and which would create widespread interest in the issue by institutional buyers, insurance companies and individuals. Your audits for the last couple of years reveal that the net revenue of your water system, eliminating the depreciation item and also eliminating the capital outlay itenls, has been in excess of $30,000 annually; the net water revenue for the year 1958 being $33,472.35 and for the fiscal year ending October 31, 1959 the net revenue is shown as $31,609.01. The audits reveal that the cigarette tax for the year ending October 31, 1958 amounted to $211734.54 and that your utility taxes for the same period amounted to ~13,052.70. The audit for the year ending October 31, 1959 reveals that the cigarette tax revenue collection amounted to $24,445.91 and the utility tax revenue amounted to $20,027.77. The Florida Power franchise tax is too small to be given much consideration in your decisions. A pledge of the water and sewer earnings and the cigarette and utility taxes should make the . marketing of this $650,000 Revenue Certificate issue possible. On the basis of the engineers' forecast none of the cigarette tax or utility tax would be needed and in a few years only part of the Water Departrnent earnings, and this, of course, could be decreased by whatever amount of the special .assessment collection that was made and put in the sinking fund to pay the debt service. How- ever, the revolving fund for the further expansion of the laterals should be maintained as nearly as possible in accordance with the engineers' recommendations. In order to have a marketable issue we should have one and one- half times the debt service, after, of course, expenses of operation and maintenance have been paid. In the case of this issue with an approximate annual debt service of $43,000, one and one-half times would amount to $64,500 annually, which is just about the total net earnings of your Water Department plus the cigarette tax and a ,small portion of the utility tax. The extent to which you would have to use part of the water system earnings and/or the cigarette tax would be determined by how much of the special assessment money you wanted to apply on debt service, and how much of it you wanted to keep in the revolving fund for further extension of the system. While the taxing power of the City of Clermont is not involved in this financing, your attention is called to the excellent position of the City in regard to its general obligation debt. Before too long the City will be entirely free from such debt. , -~ ~ Honorable Mayor and City Council March 31, 1960 Page Four . In view of the above information, we recommend that the City Council take the following action: 1. Authorize the City's Fiscal Agent to prepare and market a revenue certificate issue in the amount of $650,000 to finance the proposed sanitary sewer system for the City of Clermont. 2. Authorize the preparation of plans and specifications for the proposed new sanitary sewer treatment plant and collection system in areas 1, 6, 11 and 13 as submitted by your consulting engineers, Smith and Gillespie. This action should be taken immediately as the preparation of plans and specifications, the taking of bids, and the construction time of a project of this size will require about a year and one-half. 3. Authorize the Mayor or some other designated official of the City to schedule and initiate the planning and construction of the proposed sanitary sewer system, as to the disposal plant ~nd first phase embracing areas 1, 6, 11 and 13, as submitted by Jour consulting engineers. The designated official should be 8.11owed to make changes and revisions in the priority list as conditions dictate. 4. Authorize the City Attorney to draw up a rate schedule ordinance and proceed with the legal phases necessary to adopt and enforce the rate schedule. The rate schedule should be the rate schedule as recommended by your engineers, Smith and Gillespie. 5. Decide in conjunction with the consulting engineers the front foot assessment basis and at the proper time hold the meetings in the legal manner prescribed for placing assessment liens for the improvements against the benefited property at the p1:'o~er time. Yo~r fiscal Agent trusts that this report has been comprehensive enough to acquaint you with the various factors involved in formulating a plan for the financing of an issue in the amount recommended by your consulting engineers that will 'provide a sanitary sewer system for the City of Clermont; which undoubtedly will aid in the progress of the City through better sanitary conditions, improved financing possibilities for construction, and providing a facility tlmt is needed by the City of Clermont. Respectfully submitted, FISCAL AGENT B. J. VAN INGEN & CO., INC. . By (I" ,.. -- 1- /- ' ,", /' ./ ) I ~. .. / _:.~ ., /, '/ --'::' . C' -' /' " I - ..-- ,/ .' .< --- ,> '/ ECH:ab Enclosures E. C. Hod ge . e c o p y SMITH AND GILLESPIE ENGINRERS P.O. Box 1048 Jacksonville 1, Florida March 28, 1960 Exhibit 1 Mr. E. C. Hodge B. J. Van Ingen & Company First National Bank Building Miami 32, Florida Subject: Sanitary Sewerage Improvements - Clermont, Florida File No. 390-1 Dear Mr. Hodge: The attached tabulation has been prepared in accordance with the request contained in your letter of March 22, 1960. No attempt has been made to include debt service require- ments as it is assumed this will all be covered by pledge of other funds. I have extended the study period through 1971. It must be kept in mind that the order of construction used is only one of many possible combinations. The in- crease shown in anticipated customers each year over that shown in my March 21 letter results from expected growth in the sewered areas. It is reasonable to assume that the areas with sewer service will account for a major part of the city's growth until saturated. I trust this is the information you require. Please advise us as to further information you may desire in this matter. Assuring you of our continued oooperation. Yours very truly, SMITH AND GILLESPIE, ENGINEERS /s/ A. J. Birchall AJB:mcr -encl- A. J. Birchall cc: City of Clermont, Florida ,.. . Revolving Fund 'f(~l1' Lateral Construction - March 26, 1960 .. CJermont, Florida Grpvity LS & PL Serve Chg. Opere & (4-5) Assmt. Year Areas Served Cust. CanstI'. CanstI'. Revenue Maint. Net Rev. Call. 1961 1, 6, 11, 13 172,600 1962 314 13,200 14,000 ( 800) 86,300 1963 2 339 58,900 26,600 14.,200 14,000 200 60,400 1964 7 f LS & PL 14 484 15,900 34,400 20,300 14,200 6,100 55,300 1965 All 14 - LS & PL 8 I- 540 5~., 700 18,000 22,100 14,400 6,300 39,800 1/2 Lat 1966 1/2 L2t 8 LS & PL 9 645 26'~500 17.,800 27,100 16,800 10,300 58,900 1967 LClt 9 & Area 16 705 33,,300 17,800 29,600 17,000 12,600 48,200 1968 Are a 17 757 5,1',800 28,100 31,800 17,500 14,300 35,900 1969 820 34,400 18,000 16,400 38,400 1970 Area 19 850 52,400 19-,000_ 35,700 18,000 11,100 31,300 1911 910 ~3' 0'<) - -q-;o 38,200 18,500 19,700 37,600 If Beyond this point dependent upon too many unpredictable factors for reasonable projection. NOTE: Col. 1 - Anticipated Customer connections. Col. 2 - Expended on grAvity sewers. Col. 3 - Expended on pumping st~tions and pressure lines. Col. 4 - Customers multiplied by assumed $42.00/yeAr annual bill. Col. 5 - Oper~ting and MaintenAnce cost from report. Col. 6 - Column 4 - Column 5 net revenue from service charge. Col. 1 - Assessment collections pssumed to equal 50% the first year and balance over five years. Col. 8 - Net funds Column 5 plus Column 8 plus previous years net funds less current years construction cost. Assessments taken ~s equal to cost of grpvity system. Gravity system construction through 1~ is estimated at t;465,000. Ba_sed on 100,000 assessable would be $4.65 per front foot. This ca~ot be made firm until det~iled roll prepared. \ ' Sewer service charge is taken as that necessary to equal $42/year/customer. )&f,// Exhibit 2 Net Funds 85,500 60,600 71,700 46,100 71 ,000 80,100 50,000 104,800 82,400 139,700 . . r front feet, the assessment rate Prepared by SMITH l-\ND GILLESPIE, ENGINEERS . .. . - .... . , . Exhibit 3 $650,000 City of Clermont, Florida Water and Sewer Revenue Certificates Dated July 1, 1960 Due July 1, as below Year 1961 1962 196,3 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Assumed Interest Principal @ 5% -0- (a)$ 32,500.00 $ -0- (a) 32,500.00 $ 9,000.00 32,500.00 10,000.00 32,050.00 11,000.00 31,550.00 11,000.00 31,000.00 12,000.00 30,450.00 13,000.00 29,850.00 13,000.00 29,200.00 14,000.00 28,550.00 15,000.00 27,850.00 15,000.00 27,100.00 16,000.00 26,350.00 17,000.00 25,550.00 17,000.00 24,700.00 19,000.00 23,850.00 19,000.00 22,900.00 21,000.00 21,950.00 21,000.00 20,900.00 22,000.00 19,850.00 24,000.00 18,750.00 25,000.00 17,550.00 26,000.00 16,300.00 27,000.00 15,000.00 28,000.00 13,650.00 30,000.00 12,250.00 32,000.00 10,750.00 33,000.00 9,150.00 35,000.00 7,500.00 37,000.00 5,750.00 38,000.00 3,900.00 . 40,000.00 2,000.00 $650,000.00 $683,7QO.00 (a) Total Debt Service Renewal & Replace- ment Reserve Fund 32,500.00 32,500.00 41,500.00 $ 42,050.00 42,550.00 42,000.00 42,450.00 42,850.00 42,200.00 42,550.00 42,850.00 42,100.00 42,350.00 42,550.00 41,700.00 42,850.00 41,900.00 42,950.00 41,900.00 41,850.00 42,750.00 42,550.00 42,300.00 42,000.00 41,650.00 42,250.00 42,750.00 42,150.00 42,500.00 42,750.00 41,900.00 42,000.00 $1,333,700.00 8,590.00 8,590.00 8,590.00 8,590.00 8,590.00 $ 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00 $42,950.00 $20,000.00 Capitalize interest for 2 years, construction period (18 months) and 6 months thereafter. Certificates maturing 7-1-71 thru 1992 callable 7-1-70 to 1-1-77 inclusive @ 103 7-1-77 to 1-1-84 inclusive @ 102 7-1-84 and before maturity @ 101 Callable in inverse order on any interest date as above.