04-20-1960 Special Meeting
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S P E C I A L M E E TIN G
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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.
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" 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
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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.
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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
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Honorable Mayor and City Council
March 31, 1960
Page Two
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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
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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.
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Honorable Mayor and City Council
March 31, 1960
Page Four
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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.
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Enclosures
E. C. Hod ge
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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
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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
.
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front feet, the assessment rate
Prepared by SMITH l-\ND GILLESPIE, ENGINEERS
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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.