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HomeMy WebLinkAbout1993 09 15 - Public Briefing DocumentPUBLIC BRIEFING DOCUMENT CHAPTER 180.301 FLORIDA STATUTES © SEPTEMBER IS, 1993 ACOUISITION OF THE T GENERAL DEVELOPMENT UTILITIES, INC. SEBASTIAN HIGHLANDS DIVISION WATER AND WASTEWATER FACILITIES Prepared For THE CRY OF SEBASTIAN FLORIDA All HARTMAN & ASSOCIATES, INC. engineers, hydrogeologists, surveyors & management consultants r_, PUBLIC BRIEFING DOCUMENT "' CHAPTER 180.301 FLORIDA STATUTES TABLE OF CONTENTS an Section No. Title 1.0 Background and Chapter 180.301 Requirements 2.0 Income and Expense Statement 3.0 Balance Sheet 4.0 Statement of Existing Rate Base 5.0 Physical Condition of the Facility Utilities 6.0 Reasonableness of Sales Price and Terms 7.0 Impacts of Sale 8.0 Additional Investment Required 9.0 Alternatives to the Sale 10.0 Statement of Quality Service .. 11.0 Statement of Public Interest ON Appendix A Water Supply and Treatment Data Appendix B Wastewater Treatment Data HES/ch/dn/R7/brief. toe HAI #92-023.00 -ii- M SECTION 1 M BACKGROUND AND CHAPTER 180.301 REQUIREMENTS &&stem Background The City of Sebastian, the second largest municipality in Indian River County, Florida, is located in the northern area of the mainland, along the Indian River. The most significant land use feature of Sebastian is the large number of vacant platted residential lots. It is for this reason that Sebastian is expected to become the most populous municipality in the County during the next 15 years. This suburban land pattern dominates the southern and western limits of the City. The second most dominant land use is the municipal airport, which is located in the northwest portion of the City. The land use east of the airport consists primarily of undeveloped land that is zoned industrial. Commercial uses are concentrated along the U.S. Highway 1 corridor in the northern portion of the City. The eastern boundary of Sebastian is an irregular shape bordering the western shoreline of the Indian River. Land use consists primarily of residential uses outside the commercial uses that are present along the U.S. Highway 1 corridor or along the Indian River from the north to south City limits. Between 1986 and December 12, 1990, the City of Sebastian and Indian River County entered into a series of agreements which changed the provisions of water and wastewater service within the incorporated limits of the City. Beginning in 1986, Indian River County and the City of Sebastian held discussions and hearings regarding the County's desire to provide water _ and wastewater service within the City of Sebastian. At that time, the County was beginning the development of the north County subregional wastewater system, and it viewed the City of Sebastian as a potential source of its customers for this system. At those hearings, the City .. adopted a series of documents which have changed the nature of the provisions (and to some extent, the regulation) of water and wastewater service within the City of Sebastian. These initial documents involved Ordinance No. 0-87-01, Resolution Nos. R-87-6 and R-87-7, and an Intergovernmental Agreement between Indian River County and the City of Sebastian. Since 1987, there have been no less than five (5) City Resolutions which have further supplemented the Indian River County Agreements. These included Resolution Nos. R-87-85, _ HFS/ch/dn/R-7/Brief.Sel 1-1 HAI #92-023.00 R-89-12, R-89-60, R-90-30 and R-90-31. On December 12, 1990, the City entered into a series of agreements relating to the water and wastewater franchises granted to General Development Utilities, Inc. (GDU), in which the City agreed to transfer to the County all of the City's right, title and interest in the water and wastewater franchises granted to GDU, with the exception of the City's right t6 receive franchise revenues and to regulate rates and charges pursuant to said franchise. On March 5, 1991, the City received an offer from Indian River County to "relinquish its franchise rights within the City of Sebastian if that was what the City Council wished...". On April 5, 1991, Special Counsel for the City responded to the Board of County Commissioners �+ by accepting the County's offer subject to completion of the necessary documents containing terms and conditions applicable to the City and the County so that the agreements, ordinances, ,. and resolutions could be rescinded in such a manner as to not impact innocent third parties. Meetings have been held with various County and City officials, including a meeting on April _ 17, 1991, in which the City and the County agreed to work together in order to "unbuckle" the Indian River County agreements to the extent necessary and as ultimately determined by the Sebastian City Council and the Board of County Commissioners of Indian River County. The City and County signed an Agreement whereby the County relinquished its rights to provide retail water and wastewater service in the City and only provide wholesale wastewater service. Water System Central potable water service for the City of Sebastian is presently provided by GDU, which _ currently holds a franchise agreement for a majority of the City, with the exception of Park Place (the Villages of Lake Dolores) and Sebastian Lakes service areas. As of September 1, 1993, GDU water utility system provides potable water to 1,242 customers from a water .. treatment plant (WTP) located on Filbert Street. The location of the GDU - Sebastian Highlands WTP is illustrated in Figure 1. The existing service area for the Sebastian Highlands WTP includes Units 7, 9, 12, 14, 15 and portions of Units 8, 10, 11, 16 and 17. The existing franchise area includes all units from Unit 1 through 17, as illustrated in Figure ., 1A, which consists of more than 13,000 platted lots. .. The original WTP for this area was located on Manly Avenue and was constructed in the 1960's. This WTP consisted of 6 -inch and 8 -inch artesian wells (both abandoned in 1988), a ground storage tank and a high service pump building. In 1982, the original WTP on Manly HES/ch/dn/R-7/Brief.Sel 1-2 HAI //92-023.00 /SE S N Nit 3295 .'Ira ORT 10 7 16 20 M. F.W. RD. 30 IMMI ALE NJ HARTMAN & ASSOCIATES, INC. EXISTING GDU POTABLE WATER FIGURE wml hydrogmiogish, surveyors management emsultonts � 201 MT RNE SWU - SWX I= - Oe VNO . R 3280I SERVICE AREA HUPHORE (407) 839-3959 - FM (107) M-3790 1-3 .. . ............ ILEGEND . . E)USTING - GDu POTAB� WATER �StRYIGE AREA N /SE S N Nit 3295 .'Ira ORT 10 7 16 20 M. F.W. RD. 30 IMMI ALE NJ HARTMAN & ASSOCIATES, INC. EXISTING GDU POTABLE WATER FIGURE wml hydrogmiogish, surveyors management emsultonts � 201 MT RNE SWU - SWX I= - Oe VNO . R 3280I SERVICE AREA HUPHORE (407) 839-3959 - FM (107) M-3790 1-3 M M Avenue was abandoned and the existing facility was constructed on Filbert Street. The primary modes of water treatment include aeration, lime softening, filtration and disinfection. Raw water supply for this facility is pumped from two (2) shallow wells that are located on the Sebastian Highlands WTP site. Raw water supply well no. 1 is located near the intersection of Filbert Street and Joy Haven Drive, and well no. 2 is located near the intersection of Filbert Street and Landover Drive. Each well is 10 inches in diameter, and approximately 100 feet ., deep, and equipped with a vertical turbine pump, each with a capacity of 600 gallons per minute (gpm). Summarized in Table A-1 of Appendix A are the design parameters for each well. As the raw water enters the WTP, alum can be added prior to and/or after the natural draft tube/cascade aerator for improved water softening. The natural draft tube/cascade type aerator is utilized for hydrogen sulfide removal. The cascade type aerator consists of four (4) trays and has a maximum capacity of 1,800 gpm. From the cascade aerator, the raw water flows to the solids contact precipitator. Currently, GDU adds Moor Floc 300FL polymer and a lime ,^ slurry to influent of the precipitator to reduce the hardness in the raw water, as well as enhance the settling characteristics of the solids produced. The precipitator was manufactured by Permuttit and is 40 feet long by 12 feet wide, with a sidewater depth of approximately 9 feet. The precipitator was designed around a detention time of 70 minutes and an overflow rate of approximately 1.0 gallons per minute per square foot (gpm/sf) at average daily flow. The design capacity of the precipitator is rated at 466 gpm or approximately 671,000 gallons per day (gpd). Sludge from the precipitator is pumped to the sludge lagoon. In addition, supernatant from the sludge lagoon is pumped back to the precipitator and combined with the raw water to be treated, which then discharges into the influent to the precipitator. From the precipitator, the treated water flows by gravity to two (2) out of the three (3) gravity _ sand filters to remove the solids. One (1) filter is always used as a standby unit. Each filter is 12 feet in diameter with a media (gravel and sand) depth of 30 inches. Each filter has a capacity of 233 gpm and a hydraulic loading rate of approximately 2.06 gpm/sf. From the sand filters, the filtered water flows by gravity to a clearwell and is subsequently pumped to the 0.5 million gallon (MG) prestressed concrete ground storage tank, utilizing the transfer ., pumps located at the clearwell. Each transfer pump has a capacity of 700 gpm. Filter backwash is accomplished utilizing a 1,700 gpm centrifugal pump which obtains water for ., backwashing from the 0.5 MG ground storage tank. From the filters, the backwash water .. HES/ch/dn/R-7/Brief.Sel 1-5 HAI #92-023.00 M flows by gravity to the sludge lagoon, which is subsequently pumped back to the precipitator am for treatment. W Chlorine is added at three (3) points in the water treatment process. The three (3) chlorine addition points include: ° Gravity filter influent. ° Ground storage tank influent. Discharge to the distribution system. The treated water is then pumped from the ground storage tank to a 5,000 -gallon hydropneumatic tank and then to the distribution system utilizing the high service pumps. ,. There are three (3) high service pumps with the following capacities: 250 gpm, 400 gpm and 600 gpm. The raw water pumped to the WTP is monitored utilizing a 4 -inch turbine meter located on the influent line to the precipitator. The potable water is monitored utilizing either of the two (2) turbine meters (6 -inch and 12 -inch) that are located on the high service pumps' discharge line. Illustrated in Figure 2 is a process flow schematic of the treatment process at the Sebastian Highlands WTP. Summarized in Table A-2 of Appendix A is the equipment, to the best of our knowledge, which is installed at the WTP. The water distribution and transmission system consists of approximately 165,403 feet of pipeline ranging in size from 2 to 16 inches in diameter and is constructed of either ductile iron (DI), polyvinyl chloride (PVC) or asbestos cement (AC) that was installed up to 13 years ago coincident with the growth and development of the utility system. Summarized below is a breakdown of the water distribution and transmission system by pipeline sizes: ., M M HES/ch/dn/R-7/Brief. Sel 1-6 '" HAI #92-023.00 I 1 1 I I I 1 I I 90-021.00 3 &i 6 Ro �a I 'o ALUM ALUM C' a n m m LIME LIME SILO a " cn RAW WATER FROM WELLS -gin AERATOR M vm �Fll o n CONTROL & HIGH SERVICE n > PUMP BUILDING m i �a �z T 2 r_ o ci r oD nZ v� HYDR0PNELUMAT11C v TANKL-F CI 2 TO DISTRIBUTIONM SYSTEM FLOWMETER N C m m I I I SOLIDS CONTACT GROUND STORAGE TANK SUPERNATANT SLUDGE LAGOON SUPERNATANT RETURN PUMP STATION - CLEARWELL AND TRANSFER PUMPS TO SLUDGE LAGOONS BACKWASH PUMP C12 Size/je Total Footage (Feet) 2" Distribution Main 600 3" Distribution Main 840 4" Distribution Main 10,500 6" Distribution Main 101,537 6" Transmission Main 2,220 _ 8" Transmission Main 7,780 10" Transmission Main 1,700 12" Transmission Main 25,826 16" Transmission Main 141400 The pressure in the water distribution system is generally maintaihed between 53 and 63 pounds per square inch (psi). In addition, the water distribution system consists of 133 fire �+ hydrants for fire protection within the City and isolation valves to shut down portions of the system during times of maintenance. The raw water quality that is pumped to the Sebastian Highlands WTP is considered good, based on data obtained from the Florida Department of Environmental Regulation (FDER) and the Indian River County Health Department (IRCHD). Of the data analyzed, the two (2) raw water supply wells did not violate any of the water quality standards that were in effect at the time of sampling. The FDER MOR data indicates that the raw water that is treated at the Sebastian Highlands WTP is defined as hard in nature, averaging 251 milligrams per liter (mg/1) as CaCO3 since September, 1988, and has ranged from 160 to 296 mg/l as CaCO3. Since September, 1988, the raw water pumped to the Sebastian Highlands WTP ranged from 162,000 gpd (March, 1989) to 575,000 gpd (June, 1989), and averaged 297,300 gpd. The maximum day to average day ratio since September, 1988, has ranged from 1.14 to 1.71, and averaged 1.28. The finished water provided to the customers by the Sebastian Highlands WTP considered good quality product with the exception of total trihalomethanes (TTHM's), copper and bacteria. Moreover, there have been some complaints from customers regarding the finished water quality that have been primarily investigated by IRCHD. These problems are not alarming, since GDU does not practice TTHM control (ammoniation), the copper problems could be a result of improper operation of the WTP (i.e., pH low). Also, the bacteria concentrations appear to be a problem resulting from within a residential water system that was .. sampled by the Indian River County Health Department, rather than from the system. HES/ch/dn/R-7/Brief.Sel 1-8 HAI #92-023.00 L1 However, all three (3) problems can be eliminated fairly simply at a low cost by instituting a TTHM control program and operation modifications at the WTP, and increased flushing of problem areas with a high chlorine solution. Between January, 1990 and December, 1991, the Sebastian Highlands WTP pumped approximately 291,200 gpd on an average basis, and ranged from 268,000 gpd to 466,000 gpd. The maximum day to average day ratio ranged from 1.10 to 1.46 and averaged 1.22 _ over the period investigated. Summarized in Table 1 are the maximum day and average day finished water demands for the Sebastian Highlands WTP. The average finished water hardness averaged 185 mg/1 as CaCO3 and ranged from 178 to 209 mg/l as CaCO3. Therefore, the treatment process removes approximately only 26.3' percent of the hardness from the raw water. However, it should be noted that this type of water treatment process •• should be capable of reducing the raw water hardness to a concentration of less than 100 mg/l as CaCO3. M Wastewater System ., The Sebastian Highlands wastewater treatment plant (WWTP) is located at the west end of the Bailey Drive extension in Unit 9. The City of Sebastian is presently served by GDU under an exclusive franchise agreement. As of September 1, 1993, wastewater service was provided to 569 customers, which comprises the population in Units 9, 16 and 17 of the development. Illustrated in Figure 3 is the current wastewater service area of the Sebastian Highlands WWTP. The existing franchise area consists of Units 7, 9, 14, 15, 16 and 17. The WWTP is permitted as an extended aeration, activated sludge process. Illustrated in Figure 4 is the hydraulic profile and process flow schematic of the WWTP. The wastewater is ., pumped to the WWTP and discharged into the two (2) aeration basins. The primary aeration basin has an effective treatment volume (ETV) of approximately 204,000 gallons. The secondary aeration basin has an ETV of approximately 99,000 gallons. Based on a review of the available data regarding the WWTP, the aeration basins appear to be designed around a solids retention time (SRT) of 14 days and an oxygen requirement of 1.15 pounds of oxygen (02) per pound of biochemical oxygen demand (BOD) removed, and 4.6 lbs. OZ/lbs. nitrogen removed. M HES/ch/dn/R-7/Brief.Set 1-9 HAI #92-023.00 M M w M TABLE 1 SEBASTIAN HIGHLANDS WATER TREATMENT PLANT MAXIMUM DAY AND AVERAGE DAY FINISHED WATER DEMANDS Year Month Plant Flow (gpd) Maximum Average 1990 January 303,000 270 000 February 354,000 288,000 March 388,000 309 000 April 466,000 341,000 May 461,000 362,000 June 337,000 280,000 July 360,000 273,000 August 331,000 270,000 September 322,000 282,000 October 311,000 268,000 November 335,000 292,000 December 348,000 310,000 1991 January 355,000 308,000 February 407,000 305,000 March 364,000 291,000 April 364,000 290,000 May 449,000 308,000 June 332,000 286,000 July 296,000 268,000 August 326,000 275,000 September 316,000 273,000 October 340,000 267,000 November 325,000 278,000 December 333,000 275,000 _ Notes: (1) From Plan Operation Reports to FDEP. HES/ch/R7/Brief.Tbl 1-10 HAI #92-023.00 LEGEND EXISTING 9DU WAST ilpffl SERVICE AREA J . aza . [ s [ •r��{ b I2 J SES ST o ��•F` _e a/ t` '32958/ . Mu wF•M1' `.f . : F.Ya11e.Y 19• � {I � /�......_ [ R..4 - M :n: 's N. ec n tom+'•, °,'raun cw.\ _ .\,— _ y rt �_ P+ C� t ".a16i1 .otlulf �. I _.. h.•k. 8STIA , •/!:i .•y' � UHI IPAL .v�� o.-_�"^, .. .� .. a �� r k 4�[ E n i s 1.512 t•\ \ll � \ '•`I • ; , • �� � 9 10 is �, n .ev:a _ IXt YEVIWuI T `\ \09 • •• mM1+l •. .:_•: 1, .�4 ° y. ' - p t T ° . K la � •.., I lunlr4xul i Y py _ i • r � ;'.. / ...,... ''-�%'.: e'.• - .h4 Ci ii [+t :^'1 N n.�n'.�« nl:cw nun° - - /�. / t1 `s'�$" ° ;Ei* < � :I� v •.�.� rL,-;`• ""6 U � -rs:'�.7...=...� � uE�reu'ua[urxw vEunwo�� �.� �:. . Vii., 1.-.a t s 1iC q u,x EQp � ' {. •• ••-• ... 4.4.•+t I IN•O x.513 Fj (• tl rr,Urlan IAYLf Y 16 ! s t '[ • t[ x'11 N!'Ut'131' ..n a `�17.. 3 ,-y_"•_ c.cf' ipu:ec �.�_ '\\.F t i� 1 ' l s?4 1 • s `•4l nwY... y[S •1� 18 { •t.l �"i„ s. [ .w[c •� y, 11G:.• / .�. ' ..„a' 3 �.,[ • t }1Mr ( _ sa � s] , Oi� .fro\. � `4 �i � ~ :5 !I c:1 •:. n.4 1Yi1 .NI[• "r; 2 Gr .\:o l I __-. Y- CL+t_'•.i- 1Sdd f f e f - 1, i• _ �/� IIYG doh_a. ��� P yea N Y ytlN ' Vn I •\\ Yn : ll it x 2F. 275:: ..<y - `' 4 FI _. %' _. .x i ZY r u rwtr 21 1 30':- °R�s-1' :IT 19 25 8 ._j7x^sT. I cl =1..1 *R.15<' 0 IMIM 0 ®® HARTMAN & ASSOCIATES, INC. ®® engineers, hyErogeologists, swveyms k monogement cons llcnts EXISTING GDU WASTEWATER FIGURE 201E TR9ESTREET-sm[I=-ae M.n 32NI SERVICE AREA 3 TE!FP E (407) Ba9-3955 - FA (407) 939-3790 1-11 1 1 I I 1 ! 1 1 1 1 1 1 I 1 1 ! ! ! W -023M ® ® 40.0 N=a 37.5 8a 35.0 Y 35.0 r e7 G Z L a 30.0 x ry c�im z 28.5 28.5 (cis 28.5 0 0 r ` 26.5 26.5 '— ^S $ n y 25.0 26.5 `� "� z x -- -I 23.5 23.5 98 N 23.5 PERCOLATION POND PERCOLATION POND PERCOLATION POND NO 1 NO. 2 'g - = ; Z n 20.0 NO. 3 f D V(n �m =Om oma x0-1 > M CN E: O=m :0mm UK> MD { p —I 3 -n F) Z F Zr a z -i' m L7 AC m m 30.0 U W m K 25.0 20.0 1 40.0 35.0 SLUDGE DISPOSAL 22.5 c — — SLUDGE DRYING BEDS 28.5 TO SLUDGE FILTRATE RETURN .. From the aeration basins, the mixed liquor suspended solids (MLSS) flows by gravity to a secondary clarifier that has a surface area of approximately 586.5 square feet (sf). The average surface loading rate for the clarifier is approximately 512 gpd/sf, which is considered excessive for an extended aeration process. Typically, the surface loading rates for extended aeration processes are generally In the range of 300 to 400 gpd/sf. Although the surface loading rate is considered high, from November, 1990 to December, 1991, the influent averaged approximately 110,000 gpd and the peak day flow averaged approximately 136,000 gpd. Therefore, on an average daily basis during the past 14 months, the surface loading rate averaged approximately 190 gpd/sf, which is considered on the low side. The solids loading rate for the clarifier is designed around 15 lbs./sf/day, which is considered adequate. From the clarifier, the effluent flows by gravity to the chlorine contact basin where chlorine is ,., added for disinfection. The chlorine contact basin has an effective volume of 12,070 gallons which equates to a detention time of approximately 58 minutes at average daily flow and approximately 23 minutes at peak flow. From the chlorine contact basin, the chlorinated ., effluent flows to one (1) of three (3) percolation ponds. The permitted capacity of the percolation ponds is summarized below: ° Percolation ponds no. 1 and no. 2: 112,900 gpd. Percolation pond no. 3: 29,100 gpd. ., Based on the permitted capacity of the percolation ponds, the influent flow is limited to 142,000 gpd until sufficient effluent disposal sites are located. The sludge is wasted directly from the clarifier to the aerobic digester for sludge stabilization. The aerobic digester has an effective treatment volume of approximately 25,000 gallons. This volume will result in a solids retention time (SRT) ranging from 9 to 14 days, depending on the quantity of sludge wasted. The oxygen supplied to the aerobic digester for sludge stabilization was reported to be 2 lbs. O2/lb. volatile solids (VS) destroyed. The aerobically stabilized sludge is then pumped to the sludge sand drying beds for dewatering. Sludge ., removed from the sand drying beds and hauled off-site by a licensed independent sludge hauler. Based on the above information, it appears that the sludge would be designated as a .. Class C sludge and would require upgrades to meet the new Sludge Rule Title 40, Code of Federal Regulations (CFR) Part 503. HES/ch/dn/R-7/Brief. Sel 1-13 HAI #92-023.00 0" Summarized in Table B-1 of Appendix B is the design criteria for the GDU wastewater treatment plant. _ Presently, the Sebastian Highlands WWTP operates under FDER Permit DO31-15332, which expired in August, 1993. Between January, 1990 and December, 1991, the influent wastewater flow averaged approximately 107,200 gpd and ranged from 77,000 gpd (January, 1990) to 186,000 gpd (April, 1990). The average and maximum daily wastewater flows for this area have increased gradually, approximately 10 percent annually, since January, 1988. Based on the information reviewed, the maximum day to average day flow ratios were determined and averaged 1.27 over the 24 -month period, and ranged from 1.12 (November, 1990) to 1.66 (January, 1990). Summarized in Table 2 are the average day and maximum day influent wastewater flows to the Sebastian Highlands WWTP. The effluent from the Sebastian Highlands WWTP must meet the requirements set forth in Chapter 17-610, Reuse of Reclaimed Water and Land Application, of the FAC. The effluent from the WWTP must meet secondary treatment levels (BOD: 20 mg/1 and TSS: 20 mg/1), or 90 percent removal, whichever is more stringent, with basic disinfection and a nitrate - nitrogen concentration of 12 mg/l as nitrogen. The Sebastian Highlands WWTP generally meets these standards on a continual basis. However, at times, the TSS standard of 20 mg/1 is exceeded during a sampling event. The effluent TSS has equaled and/or exceeded a concentration of 20 mg/1 on four (4) occasions since January, 1988. The possible reasons for exceeding the effluent standard for TSS is the low surface loading rate in the clarifier and/or not wasting sludge properly. Both are possible reasons for sludge bulking, solids carry-over and pin floc. The WWTP has had no problem meeting the basic disinfection requirements. No data was provided in the FDER MOR's which indicated the effluent nitrate -nitrogen concentration in the WWTP effluent. The wastewater collection system consists of six (6) wastewater lift stations which pump the wastewater to the Sebastian Highlands WWTP. In addition, there is approximately 48,800 feet of 8 -inch gravity sewer and 20,300 feet of force main ranging in diameter from 4 to 6 inches. HES/ch/d n/R-7/Brief. Se 1 1-14 HAI #92-023.00 n W M om TABLE 2 SEBASTIAN HIGHLANDS WASTEWATER TREATMENT PLANT MAXIMUM DAY AND AVERAGE DAY FLOW Year Month Flow (gPd) Maximum Average 1990 January 128 000 77,000 February 98,000 80,000 March 130,000 105,000 April 186,000 115,000 May 127,000 106,000 June 121,000 103,000 July 119,000 97 000 August 119,000 101,000 September 142,000 104,000 October 134,000 111,000 November 120,000 107,000 December 121,000 107,000 1991 January 131,000 113,000 February 154,000 119,000 March 146,000 119,000 April 134,000 118,000 May 146,000 108,000 June 124,000 103,000 July 172,000 129,000 August 142,000 109,000 September 126,000 103,000 October 174,000 127,000 November 132 000 105,000 December 141,000 106,000 HES/ch/R7/Brief.Tb2 1-15 HAI #92-023.00 M Florida Statues Chapter 180 Municipal Public Works ., Section 180.301 Requirements Any potential public acquisition of a private utility is governed by Section 180.301 of the Florida Statutes which state: ' 180.301 Purchase or sale of water or sewer utility by municipality. No municipality may purchase or sell a water or sewer utility that provides service to the public for compensation, until the governing body of the municipality has held a public hearing on the purchase or sale and made a determination that the purchase or sale is in the public interest, ., the municipality shall consider, at a minimum the following: M Om 1) The most recent available income and expense statement for the utility; 2) The most recent available balance sheet for the utility, listing assets and liabilities and clearly showing the amount of contributions -in -aid -of -construction and the accumulated depreciation thereon; 3) A statement of the existing rate base of the utility for regulatory purposes; 4) The physical condition of the utility facilities being purchased or sold; 5) The reasonableness of the purchase or sales price and terms; 6) The impacts of the purchase or sale on utility customers, both positive and negative; 7) Any additional investment required and the ability and willingness of the purchaser to make that investment, whether the purchaser is the municipality or the entity purchasing the utility from the municipality. 8) The alternatives to the purchase or sale and the potential impact on utility customers if the purchase or sale is not made; and HES/ch/dn/R-7/Brief. Sel 1-16 HAI #92-023.00 9) The ability of the purchaser to provide and maintain high-quality and cost- effective utility service, whether the purchaser is the municipality or the entity purchasing the utility from the municipality. The municipality shall prepare a statement showing that the purchase or sale is in the public interest, including a summary of the purchaser's experience in water and sewer utility .. operation and a showing of financial ability to provide the service, whether the purchaser is the municipality or the entity purchasing the utility from the municipality." The remainder of this document provides a summary of the above considerations. M ., M HES/ch/dn/R-7/Brief.Sel 1-17 "' HAI #92-023.00 SECTION 2 INCOME AND EXPENSE STATEMENT 180.301 (B The most recent available income and expense statement for the Utility. The most recent Income and Expense Statement for the utility that is available to the City was based on information provided by the Utility for the year ended December 31, 1991. Those revenue and costs for the water and wastewater systems are summarized and delineated on Table 2-1. 9� ., M .. M ., M M ., M WN HES/ch/dn/R-7/Brief.Se2 HAI #92-023.00 2-1 Table 2-1 GDU - Sebastian Highlands Division Income and Expense Statement For The Year Ended December 31, 1991 (1) Taxes Other Than Income Taxes Property Taxes Payroll Taxes Total Taxes Other Than Income Taxes Total Expenses and Taxes Total Available for Income Taxes and Other Purposes Footnotes on Page 2-3. 55,084 45,527 100,611 4,438 2,312 6,750 59,522 362,902 47,839 219,448 107,361 582,350 ($16,041) ($67,007) ($83,048) 2-2 Water Wastewater Combined Revenues System System System User Fees $312,328 $151,741 $464,069 Other Revenues (2) 34,533 700 35,233 - Total Revenues 346,861 152,441 499,302 Operating Expenses Salaries and Wages 63,269 32,216 95,485 Employee Pensions and Benefits 21,092 10,809 31,901 - Fuel or Power Purchased 15,374 25,050 40,424 Treatment - Chemicals 7,120 2,812 9,932 Treatment - Expenses 10,122 8,322 18,444 Plant Maintenance (Non -labor) 20,900 8,290 29,190 Contractual Services -Legal 111 0 111 Management Fees 10,340 5,144 15,484 Transportation Expenses 1,404 687 2,091 Public Relations 72 0 72 Insurance -Property 14,536 7,061 21,597 Regulatory Commission Expense 417 0 417 - Uncollectible Accounts 2,692 2,465 5,357 Customer Acctg. Expense 4,006 1,962 5,968 A & G - Expenses 5,339 4,073 9,412 Miscellaneous Expense 375 54 429 Total Operating Expenses 177,369 108,945 286,314 Depreciation Expense 126,011 62,664 188,675 Taxes Other Than Income Taxes Property Taxes Payroll Taxes Total Taxes Other Than Income Taxes Total Expenses and Taxes Total Available for Income Taxes and Other Purposes Footnotes on Page 2-3. 55,084 45,527 100,611 4,438 2,312 6,750 59,522 362,902 47,839 219,448 107,361 582,350 ($16,041) ($67,007) ($83,048) 2-2 Table 2-1 GDU — Sebastian Highlands Division Income and Expense Statement For The Year Ended December 31, 1991 (1) (1) Amounts shown derived from the balance per books listed in the Minimum Filing Requirements for Interim and Permanent Rate Increases submitted to the City of Sebastian on the behalf of General Development Utilities — Sebastian Highlands Division. (2) Amounts shown do not include income derived from interest earnings. 2-3 M SECTION 3 BALANCE SHEET ., 180.301(2) The most recent available balance sheet for the utility, listing assets and liabilities and clearly showing the amount of contributions -in -aid -of -construction and accumulated depreciation thereon. Presented in Table 3-1 is a balance sheet of General Development Utilities, Inc. (GDU) of which the Sebastian Highlands Division's assets and liabilities are incorporated. Table 3-2 summarizes the Utility Plant in Service and Contributions -in -aid -of - Construction (CIAC) specifically associated with the GDU-Sebastian Highlands Division. M M HES/ch/dn/R-7/Brief. Se3 HAI 1192-023.00 3-1 Table 3-1 GDU — Sebastian Highlands Division Water and Wastewater Systems Comparative Balance Sheet — Assets Assets — Utility Plant in Service Less: Accumulated Depreciation and Amortization Aquisition Adjustments Net Utility Plant Non—Utility Property Other Investments Current and Accrued Assets: Cash Accounts and Notes Receivable, Less Accumulated Provision for Uncollectibles Materials and Supplies Accrued Utility Revenues Miscellaneous Current and Accrued Assets Total Current Assets Unamortized Debt Discount and Expense Accumulated Deferred Income Taxes—CIAC Miscellaneous Deferred Debits Accumulated Deferred Income Taxes—Other Total Deferred Debits TOTAL ASSETS otes on Page 3-3. 3-2 1991 Consolidated N $129,025,871 (27,231,818) (27,170) 101,766,883 552,710 153,000 3,105,634 1,360,997 71,945 1,054,668 139,361 5,732,605 272,430 3,934,406 7,297,353 2,797,828 4,302,017 $122,507,215 Table 3-1 GDU - Sebastian Highlands Division Water and Wastewater Systems Comparative Balance Sheet - Equity Capital and Liabilities 1991 Equity Capital and Liabilities Consolidated Common Stock Issued $1,000 Additional Paid In Capital 75,300,000 Retained Earnings (15,956,209) -' Total Equity Capital 59,344,791 Long -Term Debt 1,365,139 Accounts Payable 887,746 Notes Payable 0 - Current Income Taxes Payable 120,000 Accrued Interest 56,239 Customer Deposits 544,794 - Accrued Taxes 3,158,471 Miscellaneous Current and Accrued Liabilities 421,372 - Total Current and Accrued Liabilities 5,188,622 - Accumulated Deferred Income Tax Credits 3,475,364 Advances for Construction 614,873 Other Deferred Credits 13,542,559 - Total Deferred Credits 17,632,796 Miscellaneous Operating Reserves 4,785,808 CIAC Net of Accumulated Amortization 23,691,610 CIAC Advances from Escrow Net of Accumulated Amortization 3,505,040 Accumulated Deferred Income Taxes 6,993,409 TOTAL EQUITY CAPITALAND LIABILITIES $122,507,215 (1) Amounts shown derived from the balance sheet included in General - Development Utilities 1991 Consolidated Annual Report which summarizes the assets and liabilities associated with several GDU owned utilities in which the Highlands Division is included. 3-3 Table 3-2 GDU — Sebastian Highlands Division Water and Wastewater Systems Utility Plant In Service and CIAC Summary Description Water System: Utility Plant in Service Utility Land & Land Rights Less Accumulated Depreciation Net Water System Utility Plant in Service CIAC Less Accumulated Amortization Net CIAC Net CIAC as Percentage of Net Utility Plant In Service Wastewater System: Utility Plant in Service Utility Land & Land Rights Less Accumulated Depreciation Net Wastewater System Utility Plant in Service CIAC Less Accumulated Amortization Net CIAC 1991 Balance (1 $5,316,563 4,993 (1,396,279) 3,925,277 1,416,967 (203,683) 1,213,284 30.91% $2,613,383 0 (782,152) 1,831,231 705,417 (152,141) 553,276 Net CIAC as Percentage of Net Utility Plant In Service 30.21% (1) Amounts shown derived from the value per books of the Minimum Filing Requirements for Interim and Permanent Rate Increases submitted to City of Sebastian on the behalf of General Development Utilities — Sebastian Highlands Division. IOZE ., SECTION 4 M STATEMENT OF THE EXISTING RATE BASE 180.30](3) A statement of the existing rate base of the Utility for re¢ulatory purposes. Generally speaking, the rate base of a utility company represents the depreciated cost to the utility company of the plant and facilities financed by the owners of the utility which is used to provide service to the public. Specifically, rate base of a utility includes gross plant in service, less depreciation and net contibuted capital and/or plant, an allowance for working capital, materials, supplies and inventory, and certain other financial considerations. In determining the existing rate base, net plant which is .., in service, but not used or useful, or plant which is held for future use is generally subtracted from the total plant in order to arrive at the level of rate base required to provide service to the existing customer base. The level of rate base as proposed by GDU for the Sebastian Highlands as of December 31, 1991, is shown on Tables 4-1 and 4-2 for the water and wastewater system, respectively. F, M OR M M .. HES/ch/dn/R-7/Brief. Se4 .. HAI #92-023.00 4-1 _ Table 4-1 — GDU — Sebastian Highlands Division Schedule of Year End Rate Base — Water System as of December 31, 1991 Average 1991 _ Description Rate Base (1) Utility Plant In Service $5,316,563 Utility Land and Land Rights 4,993 Less: Non—Used and Useful 0 Construction Work in Progress 0 — Less: Accumulated Depreciation (1,396,279) Less: CIAC (1,416,967) Accumulated Amortization of CIAC 203,683 — Aquisition Adjustments 0 Accumulated Amortization of — Acquisition Adjustments 0 Advances for Construction (39,528) _ Working Capital Allowance 22,171 _ TOTAL WATER RATE BASE WITHOUT DEFERRED TAX (2) $2,694,636 _ Deferred Tax 314,575 TOTAL WATER RATE BASE $3,009,211 (1) Amounts shown derived from the value per books stated in the Minimum Filing Requirements for Interim and Permanent Rate Increased submitted to the City of Sebastian on the behalf of General Development Utilities—Sebastian Highlands Division. (2) Represents amount of utility investment for which the utility can earn a rate of return for rate making purposes. 4-2 Table 4-2 GDU — Sebastian Highlands Division Schedule of Year End Rate Base — Wastewater System as of December 31, 1991 Average 1991 Description Rate Base (1) Utility Plant In Service $2,613,383 Utility Land and Land Rights 0 Less: Non—Used and Useful 0 Construction Work in Progress 0 Less: Accumulated Depreciation (782,152) Less: CIAC (705,417) Accumulated Amortization of CIAC 152,141 Aquisition Adjustments 0 Accumulated Amortization of Acquisition Adjustments 0 Advances for Construction 0 Working Capital Allowance 13,618 TOTAL WASTEWATER RATE BASE WITHOUT DEFERRED TAX (2) $1,291,573 Deferred Tax 176,756 TOTAL WASTEWATER RATE BASE (2) $12468,329 (1) Amounts shown derived from the value per books stated in the Minimum Filing Requirements for Interim and Permanent Rate Increased submitted to the City of Sebastian on the behalf of General Development Utilities—Sebastian Highlands Division. — (2) Represents amount of utility investment for which the utility can earn a rate of return for rate making purposes. MW M SECTION 5 PHYSICAL CONDITION OF THE FACILITIES 180-30](4) YhePhvsical condition of the utility facilities being purchased or sold As indicated in Section 1 of this Briefing Document, the water and wastewater facilities consist of the following: 1) The water system consists of a 0.671 MGD groundwater treatment facility for sulfide removal and softening. The source of raw water supply is the aquifer and consists of two (2) raw water supply wells, each 100 feet deep. The primary modes of water treatment include aeration, lime softening, filtration and disinfection. The finished water is then stored in a 0.5 million gallon ground storage tank and then pumped to the distribution system. The water distribution system consists of approximately 165,403 feet of pipeline ranging in size from 2 to 16 inches in diameter and are constructed of either polyvinyl chloride (PVC), asbestos cement (AC) or ductile iron (DI). The water transmission and distribution system treatment facilities and the storage facilities are considered to be in average to good condition. In addition, the water treatment facilities meet all current state and federal regulations regarding water • treatment and supply. Although the facilities meet the applicable regulations, the City is committed to institute total trihalomethane (TTHM) control facilities immediately following the acquisition of the GDU-Sebastian Highlands water system. 2) The wastewater system consists of a 0.3 MGD extended aeration activated sludge wastewater facility provided with screening, aeration, secondary ., clarification, filtration and chlorine disinfection. The WWTP is limited to a permitted capacity of 0.142 MGD on an annual average basis due to the effluent disposal limitations. The sludge generated at this facility is treated utilizing an aerobic digestion process. Liquid sludge is then hauled from the site by a private sludge hauling contractor and disposed of on permitted agricultural sites. The effluent disposal facilities consist of three (3) percolation ponds with a disposal capacity of 0.142 MGD. The wastewater collection and transmission .. HES/ch/R-7/Brief.Se5 5-1 HAI #92-023.00 ^ system consists of approximately 69,100 linear feet of gravity sewer and force ^ mains ranging in size from 3 to 12 inches in diameter and six (6) wastewater lift stations. The wastewater collection and transmission system, the treatment plant ^ and effluent disposal facilities are in average (WWTP) to above-average (collection transmission) condition. The primary risks associated with this ^ facility are limited capacity of the effluent disposal facilities and the sludge treatment facilities. The wastewater collection, transmission, treatment and disposal facilities currently meet all applicable state and federal regulations. However, a recently promulgated rule Title 40, Code of Federal Regulations (CFR) Part 503 regarding the treatment and disposal of wastewater sludges became effective on March 21, 1993. This rule requires all facilities in the State of Florida and throughout the United States to be in compliance within 2 - years, if construction is required, or within 1 year through documented operational procedures. The City is committed to be in compliance with this ^ rule by March 1995, either through operational or construction methods. ^ ^ ^ ^ ^ ^ ^ HES/ch/R-7/Brief.Se5 5-2 ^ HAI #92-023.00 .. 00 SECTION 6 REASONABLENESS OF SALES PRICE AND TERMS 180,30](5) The reasonableness ofthe purchase or sales price and terms. The City of Sebastian Task Force negotiated with General Development Utilities, Inc. (GDU) for the Sebastian Highlands system in an effort to avoid potentially costly litigation, an excessive GDU rate increase on the systems' customers, the potential sale of the system to another investor-owned utility, and to correct the total trihalomethane and sludge treatment �* problems of this system. The City of Sebastian Task Force was comprised of Mayor Lonnie Powell; Acting City Manager/City Clerk, Kay O'Halloran; Finance Director, Marilyn Swichkow, CPA; Utilities Director, Richard B. Votapka, P.E.; and Charles I. Nash, Esquire, City Attorney. The attached September 3, 1993 letter from Ms. Marilyn Swichkow, CPA, to Mr. Gerald C. Hartman, P.E., provides the basis for the reasonableness of the purchase price and terms. Moreover, included is a letter from Ms. Marilyn Swichkow, CPA, to Mr. Charles E. Fancher, Jr., dated September 2, 1993, and a September 7, 1993 letter from Mr. Charles E. Fancher, �• Jr., to Ms. Kathryn M. O'Halloran, Acting City Manager, accepting the purchase price of the Sebastian Highlands water and wastewater system. Based on the documentation prepared by the City and their rate consultants, Rachlin and Cohen, as attached hereto, the purchase price appears reasonable. so r� M HES/ch/dn/R-7/Brief.Se6 6-1 HAI /192-023.00 - r_� — — M - City of Sebastian POST OFFICE BOX 780127 ❑ SEBASTIAN, FLORIDA 32978 TELEPHONE (407) 589-5330 ❑ FAX (407) 589-5570 C O N F I D E N T I A L September 3, 1993 �* VIA FACSIMILE (407) 839-3790 AND VIA FEDERAL EXPRESS I, II1 U L1LfT LJL U, L `=' Gerald C. Hartman, P.E. Hartman & Associates, Inc. 201 East Pine Street, Suite 1000 _ Orlando, FL 32801 Dear Mr. Hartman: .. The City of Sebastian GDU acquisition task force met on Wednesday, September 1, 1993 and determined to recommend the purchase of the Sebastian Highlands GDU utility system at $3,650,000 cash, at — closing to City Council at a public hearing on September 15, 1993. The acquisition task force reached their decision after a thorough review of the following: • Determination of debt capacity from two independent sources. — • Determination of reasonable annual operating expenses of $300,000 based upon City staff calculations, GDU operating expenses and comparison to the operating expenses of the nearby Barefoot Bay system. • Determination that City funds, time and effort would be — in the best interest of its residents and could be capitalized as acquisition costs if spent on acquisition. • Determined that additional funds, time and effort spent on a rate case and/or resulting litigation would not be recoverable to the City's General Fund, and — - would not be eligible for capitalization — Page Two C O N F I D E N T I A L would not provide the level of rate relief GDU customers wanted would not provide for the City's entry into a viable operating utility system and - would not solve the GDU customers complaints about the THM issue. • Determination that an average rate increase of 35% would generate sufficient revenues to operate the system and meet the debt service requirements. • Determination that $3,650,000 as a purchase price was reasonable based on $4.3 Indian River County Property Appraisal $3.9 net original cost figures as utilized by ---- Rachlin & Cohen, City consultants on rate case 8.2 divided by 2 = 4.1 average appraisal or valuation •. As you are aware, the City had previously selected your firm as engineering consultants on the GDU acquisition project and has paid substantial amounts on this project for work your firm has already performed. At this point, the GDU acquisition project is specifically limited .. to meeting the requirements of Section 180.301, Florida Statutes. If any item of this statutory requirement is available from, or has been prepared by, any other City consultant, then such other .. consultant's work product will be utilized. Although you may agree or disagree with same, you may not re -work that item without explicit written authorization from, and justification to, the City. • In order to accomplish the requirements of the Chapter 180 public hearing, I expect to see the public hearing document organized and .. tabbed in the following manner: Section 180.301, Florida Statutes (1) The most recent available income and expense statement for the utility; etc. Further, I expect a City agenda request form to be utilized for �* each action item required of the City Council at the conclusion of the September 15, 1993 public hearing in order to ensure legal compliance and to minimize public confusion over actions taken. ., I also expect to have a resolution on the agenda that will authorize the GDU acquisition task force to select all consultants needed to arrive at a successful closing, expected to be mid- November, 1993. This will include bond counsel, underwriters, rate consultants, etc., and be subject to City Council approval or ratification. Page Three C O N F I D E N T I A L .. As Finance Director, I believe it is my duty to monitor cost estimates of consultants and ensure that the City engages consultants on an "as -needed" basis to accomplish specific tasks when authorized and not,before. I have already estimated certain costs and obtained other cost estimates from underwriters that I believe are valid. I request that you provide me with a detail project task list and costs, for same to complete but not duplicate the requirements of the Chapter 180 public hearing. Additionally, please submit cost estimates for acquisition related tasks, but do not incur such costs until authorized by City Council subsequent to the said public hearing. For example, any requirements of bond underwriters will be scope -defined after City Council action on September 15, 1993. At this time, I do not see a need for special counsel services, but the City Attorney is authorized to call on Tom Cloud as needed. If you believe you must also confer with special counsel, please first discuss this with the City task force. Richard Votapka inspected the GDU facility on August 31, 1993, but as of this letter, City staff have been unable to locate your "due diligence inspection" report. I hope this letter accurately reflects the City's GDU task force position and our requirements over the next two weeks. .. I look forward to working with you and your firm to successfully accomplish the objectives of the task force which we believe are in _ the best interests of the public. Sincere , C 0y7 Att ' M ilyn Swichkow, C.P.A. Finance Director Attachments: (1) Revenues and rate schedules prepared by City staff (2) Raymond James financial analysis (3) Barnett Securities financial analysis (4) City letter to GDU dated 9-02-93 (5) GDU offer to City dated 8-25-93 m m r1 r� No GDU 1991 OPERATING REVENUES r. A B Water $ 346,861.00 $ 346,861.00 Sewer 152,441.00 152,441.00 Total $ 499,302.00 $ 499,302.00 .r Proposed Increase Increase @ 31.4% _ $ 156,780.00 @ 35% _ $ 174,756.00 Required = $ 656,082.00 Required - 656,000.00 Surplus/ Contingency $ 18,058.00 m m r1 r� No RUG -31-1993 16:45 FROM RJR PF BOCK 407-998-0198 TO 14075895570 P.01 LIM RAYMOND JAMES & ASSOCIATES, INC. •PUBLIC FINANCE DEPARTMENT• FAX#: 407/998-0198 TOTAL NUMBER OF PAGES INCLUDING COVER PAGE; 6 COMMENTS : Here is a revised letter based on the higher net operating revenue level of $400,000. 2255 GLADES ROAD, SUITE 120A • BOCA RATON, FLORIDA 33431 4071997-9100 •8001327-1055 FAX COVER LETTER DATE : August 31, 1993 TO : Marilyn Swichkow - FIRM : City of Sebastian FAX # : 407/589-5570 FROM : Arthur Ziev TOTAL NUMBER OF PAGES INCLUDING COVER PAGE; 6 COMMENTS : Here is a revised letter based on the higher net operating revenue level of $400,000. 2255 GLADES ROAD, SUITE 120A • BOCA RATON, FLORIDA 33431 4071997-9100 •8001327-1055 AUG -31-1993 16:45 FROM RJR PF HOCA 407-998-0198 TO 14075895570 P.02 August 31, 1993 Ms. Marilyn Snrichkow Director of Finance City of Sebastian 1225 Main Street Sebastian, Florida 32978-0127 Dear Ms. Swichkow: Raymond James & Associates, Inc, appreciates the opportunity to provide the City of Sebastian with a preliminary financial analysis of the purchase of the GDU utility system in Sebastian under different scenarios. Raymond James has conducted two analyses based on the information provided by the City_ The first analysis determines the annual debt service and required net operating revenues based on a purchase price of $4.2 million. The second analysis identifies the level of debt service and purchase price that could be supported under the net operating revenue levels provided by the City. The results of our preliminary analysis, based on certain assumptions provided by the City, are as follows. ® Analysis I: The purchase of the GDU system at a price of $4.2 million would result in annual debt service of approximately $340,000 and require net operating revenues of $356,000. Analysis II: Net operating revenues of $400,000 (as provided by the City) can support a bond issue with annual debt service of $381,750 and a purchase price of $4,750,000. Exhibit I presents supporting documentation for Analysis I. It includes a sources and _ uses of funds and the calculation of required net operating revenues to support debt service on the bond issue. Supporting documentation for Analysis II is presented in Exhibit II. It includes a sources and uses of funds and the calculation of annual debt service based on the net operating revenues as provided by the City. Please call me if you desire any additional information or analysis. Raymond James is prepared to meet with you and other representatives of the City to discuss financing the acquisition of a utility system. Sincerely, RAYMOND JAMES & ASSOCIATES, INC. Arthur H_ Ziev Vice President Public Finance RA17M4ND JAMES .a E- 2265 2255 Glades Road, Suite 120A Boca Raton, Florida 33431 (407) 997-9100 • Fax (407) 998-0198 RUG -31-1993 16:46 FROM RJR PF BOCA 407-998-0198 TO 14075895570 P.03 Exhibit I CITY OF SEBASTIAN, FLORIDA _ WATER AND SEWER REVENUE BONDS SERIES 1993 ANALYSIS I: PURCHASE PRICE OF $4.2 MILLION Sources and Uses of Funds Sources of Funds Bond Proceeds $5.065.000 Total Sources of Funds $5,065,000 Uses of Funds Acquisition of GDU $4,200,000 Debt Service Reserve 341.788 — Operating & Maintenance Reserve 50,000 Renewal & Replacement Reserve 100,000 Issuance Costs — Underwriter 63,312 Bond Counsel 30,000 Local Attorney 20,000 Consultants 30,000 Ratings 10,000 Printing, Misc. 13.981 — Total Issuance Costs 167,293 Bond Insurance 55,919 New Construction 150.000 Total Uses of Funds $5,055,000 NOTES — (1) Uses of Funds are preliminary and based on information provided by the City and estimates of Raymond James & Associates, Inc. (2) Assumes that the bonds will be bank -qualified because the City will not issue more than $10 million in bonds during the calendar year in which the utility is purchased. RAYMOND JAMES 6 ASS�GATES. INC. AUG -31-1993 16:46 FROM RJR PF BOCK 407-998-0198 TO 14075895570 P.04 Exhibit I CITY OF SEBASTIAN, FLORIDA WATER AND SEWER REVENUE BONDS SERIES 1993 ANALYSIS I: PURCHASE PRICE OF $4.2 MILLION Calculation of Required Operating Revenues Bond insurers will require at a minimum that net operating revenues, plus interest earnings on the reserve fund, equal 110% of annual debt service. This relationship between revenues and debt service is known as "1.10 debt service coverage". Annual Debt Service $340,000 1.10 Coverage Level 374,000 Less: Reserve Fund Earnings 18,000 Required Net Operating Revenues 356,000 Operating Expenses 300,000 Required Gross Operating Expenses 656,000 NOTE: Bond insurers usually have a two-tiered rate covenant test, which requires the issuer to meet one of the tests at all times. The first test requires that net operating revenues and interest earnings equal 110% of annual debt service. The second test requires that (1) net revenues, investment earnings and connection fees equal 125% of annual debt service, and (2) net revenues and investment earnings equal 100% of annual debt service. In addition, bond insurers may require that the annual payment into the Renewal & Replacement Fund be counted as an operating expense. This will increase the required amount of operating revenues. RAYMOND JAMES 6 G-SEHOCIATES, INC AUG -31-1993 16:47 FROM RSR PF BOCK 407-998-0198 TO 14075895570 P.05 Exhibit II CITY OF SEBASTIAN, FLORIDA WATER AND SEWER REVENUE BONDS SERIES 1993 ANALYSIS II: PURCHASE PRICE BASED ON NET REVENUES OF $400,000 Sources and Uses of Funds Sources of Funds Bond Proceeds Total Sources of Funds Uses of Funds Acquisition of GDU Debt Service Reserve Operating & Maintenance Reserve Renewal & Replacement Reserve Issuance Costs Underwriter Bond Counsel Local Attorney Consultants Ratings Printing, Misc. Total Issuance Costs Bond Insurance New Construction 70,812 30,000 20,000 30,000 10,000 10.048 Total Uses of Funds $5,665,000 $5,665,000 $4,750,000 381,612 50,000 100,000 170,860 62,528 150.000 $5,665,000 NOTES (1) Uses of Funds are preliminary and based on information provided by the City and estimates of Raymond James & Associates, Inc. (2) Assumes that the bonds will be bank -qualified because the City will not issue more than $10 million in bonds during the calendar year in which the utility is purchased. RAYMOND TAMES S. AS80CIATES. INC. RUG -31-1993 16:47 FROM RJA PF BOCK 407-998-0198 TO 14075895570 P.06 Exhibit II CITY OF SEBASTIAN, FLORIDA _ WATER AND SEWER REVENUE BONDS SERIES 1993 ANALYSIS II' PURCHASE PRICE BASED ON NET REVENUES OF $400.000 Calculation of Maximum Annual Debt Service Bond insurers will require at a minimum that net operating revenues, plus interest earnings on the reserve fund, equal 110% of annual debt service. This relationship between revenues and debt service is known as 1.10 debt service' coverage". Net Operating Revenues $400,000 Plus: Reserve Fund Earnings 20,000 Total Net Revenues Available for Debt Service 420,000 Debt Service at 1.10 Coverage Level 361,750 T NOTE: Bond insurers usually have a two-tiered rate covenant test, which requires the issuer to meet one of the tests at all times. The first test requires that net operating revenues and interest earnings equal 110% of annual debt service. The second test requires that (1) net revenues, investment earnings and connection fees equal 125% of annual debt service, and (2) net revenues and investment earnings equal 100% of annual debt service. In addition, bond insurers may require that the annual payment into the Renewal & Replacement Fund be counted as an operating expense. This will increase the required amount of operating revenues. 9o� Jas 6 GS�:OGwTES, ING TnTni P LIF, 09-01-1993 13:28 4072365228 BSI - ORLANDO P.001 Barnett Securities, Inc_ Capital MnrkotS Group 390 North Orange Suite 700 Post Offi •.r. Hex 3200 Orlando, I lorida 32802-3200 FACSIMILE TRANSMITTAL TO: 4.:-�1.,-I(41C_-ot-O FAX: Ll II DATE/TIME: FROM: () k': I k; (:7(. t l u' I v I COMMENTS: We are transmitting �2) pages including this cover page. If all pages are not received, please call it ic. at 1 1 . .. t.. `_ `J The information contained in this transmittal may be confidential and is intended only for the individual(s) to whom it is addressed or the authorized agent responsible to deliver it to the intended recipient(s). If you have received this transmittal in error, please immediately notify us by telephone and return the transmittal to us via overnight mail. You will be reimbursed for any delivery costs incurred. Thank you. — Barnna Secunlics. Inc.. a subsidiary of Barnett banks. Inc., is not a bank and is separate front Barnett Bank. Member N/tE'0A3IPC 09-01-1993 13:28 4072365228 BSI - ORLANDO City of Sebastian, Florida Water and Sewer Acquisition Revenue Bonds, Series 1993 Bond Assumptions Dated Date 10/01/93 Delivery Date 10/01193 I First Maturity Date 10/01/94 Net Revenues $400,000 I Debt Service Coverage Factor 1.20x Reserve Account Equal To Maximum Annual Debt Service Interest Rate 20 Year Issue 5.70% 25 Year Issue 5.80% 30 Year Issue 6.00% Acquisition Purchase Price $4,200,000 New Construction Funds $195,000 R&Rand O & M Reserve $180,000 Cost of Issuance and Underwriter's Discount $160,000 I Insurance Premium .50% P. 002 09-01-1993 13:28 4072365228 BSI - ORLANDO City of Sebastian, Florida Acquisition of Sebastian Highlands Utility Summary of Bonding Capacity. P. 003 20 Year 25 Year 30 Year Issue Issue Issue Net Revs. Avail. for Debt Service $400,000 $400,000 $400,000 Net Revs adjusted for 120% coverage factor $333,333 $333,333 $333,333 Bond Issue Size $3,880,000 $4,310,000 $4,555,000 Acquisition Funds $2,977,045 $3,400,355 $4,005,000 Construction Funds & R& R $375,000 $375,000 $375,000 and O&M Reserves Proceeds Shortfall $1,222,955 $799,645 $562,932 Add. Revenues Required $137,276 $81,248 $52,400 0 �1 City of Sebastian POST OFFICE BQX 780127 o SEBASTIAN, FLORIDA 32978 TELEPHONE (407) 589-5330 o FAX (407) 589-5570 September 2, 1993 VIA FEDERAL EXPRESS Mr. Charles E. Fancher, Jr. General Development Utilities, Inc. 2601 South Bayshore Drive Miami, FL 33133-5461 M Dear Mr. Fancher: The City of Sebastian GDU acquisition task force met on Wednesday, September 1, 1993 and agreed to recommend the purchase of the GDU utility system to the City Council at the scheduled public hearing on September 15, 1993 for $3,650,000.00 cash at closing. A formal purchase and sale agreement will be executed upon acceptance by the City Council and subsequent to the public hearing pursuant to Chapter 180 of Florida Statutes. The purchase and sale agreement, as well as separate transitional agreements, will be formalized over the next few days. It is our understanding that GDU will be entitled to collection of outstanding accounts receivable and unbilled revenues up to closing date. Deposits on hand at closing will be transferred to the City. If this understanding is acceptable to you and your Board of Directors, please sign this letter below on the line provided and return to me in a fax or envelope clearly marked confidential. Sincerely, Azul ktl�4 Marilyn Swichkow, C.P.A. Finance Director ACCEPTED BY GDU THIS DAY OF , 1993. M As: AUG 25 '93 14:07 GENERAL DEVELOPEMENT UTILITIES P.1/3 GDU GENERAL DEVELOPMENT UTHM ES, mTC. ...b".,KATLANTIC GULP COMMUNITIR6 CORPORATION FA IMT - MNSNIISSION TO: FROM: DATE: TOTAL PAGES TRANSNIITI'W INCLUDING COVER SHEET: FAX NUMBER: NP-) 57 %fS 76 CONDIENTS: AUG 25 '93 14:07 GENERAL DEVELOPEMENT UTILITIES I P.2i3 Geneial Development Utilities, Inc. AN ATU TIC GULF COMMUNITY CORPORATION S IOIARY 2601 SOUTH BAYSHORE DRIVE MIAMI. FL 33133-5461 (306)1359-4331 Ms. Kathryn M. O'Halloran Acting City Manager City of Sebastian 1225 Main Street Sebastian, Florida 32958 Re: GDU's Sebastian Water and Wastewater Utility System Dear Ms. O'Halloran: AMU Charles E. Fancher, Jr. PRESIDENT : 25, 1993 It is my understanding that the City Council of the City of Sebastian (the "City") has appointed a committee to investigate the acquisition of General Development Utilities, Inc.'s ("GDU's") Sebastian water and wastewater utility system (the "Sebastian System"). Although GDU and the City had similar discussions earlier this yeear, prior to GDU's utility rate increase request to the City, those prior discussions were unsuccessful and all offers made by both parties were rejected. Since that time, other buyers l ave expressed an interest in purchasing the Sebastian System. Also in the interim, GDU fi l d its utility rate increase request with the City and the City's consultant, Rachlin 4 Cohen, has made its recommendation to the City. The City's decision on final ra is due no later than September 17, 1993. In an effort to avoid requiring the City Ito set final rates and to address the City's interest in acquiring the Sebastian System, I GDU offers to sell the Sebastian System to the City for $4.2 million. We offer the foll�wing analysis in support of this matter. i First, under the 1981 water and sewer franchise agreements between GDU and the City, the City has the right to acquire the Sebastian System at the end of the franchise period for a purchase price based upon the average of the net original cost anj a price as computed and agreed upon by three independent appraisers. The Rachlin & Cohen report indicates that the net original cost of the Sebastian System is approximately $3.9 million. In the absence of the agreement of three independent appraisers, GDU suggestA that the parties take the average of (i) Hartman & Associates estimation of value, (ii) GDU's estimation of reproduction cost new less depreciation, and (iii) Indian River �ounty's appraisal for ad valorem assessment purposes. AUG 25 '93 14:08 GENERAL DEVELOPEMENT UTILITIES P.3i3 Ms. Kathryn M. O'Halloran August 25, 1993 Page 2 Thus: Net Original Cost Hartman & Associates $2.0 million Reproduction Cost New Less Depreciation $7.4 million Indian River County Tax Appraisal $4.3 million Appraisal Average Franchise Purchase Price Second, in public acquisitions of private utility systems, the public focuses on debt capacity. At the appropriate revenue levels idem) the debt rapacity analysis would yield a purchase price of apt Therefore, the City can afford to pay GDU the suggested $4.2 in utility customers substantially lower rates than those suggested h million million nance analysis generally W by Rachlin & Cohen, )ximately $5.5 million. lion and still charge the Rachlin & Cohen. For these reasons, GDU believes that its offer to sell the Sebas System to the City for $4.2 million is not only fair, based upon the original inter t of the franchise, but demonstrably in the best interest of the Sebastian utility custome�S. Unless earlier accepted, rejected or extended, this offer will expe at SPM on September 10th. We look forward to your earliest response. Sincerely n � I Charles E. Fancher, 4r. I cc: J. L. Rutherford SEP 09 '93 03:59PM City of Sebastian P.15 POST OFFICE -BOX 780127 o SEBASTIAN, FLORIDA 32978 TELEPHONE (407) 589.5330 o FAX (407) 589.5570 September 21 1993 G. D. U. MIAMI - IA F ID E ESS Mr. Charles E. Fancher, Jr - General Development Utilities, Inc. 2601 South Bayshore Drive Miami, FL 33133-5461 - Dear Mr. Fancher= The City of Sebastian GDU acquisition task force met on Wednesday, September 1, 1993 and agreed to recommend the purchase of the GDU Council at the utilit for schedule the $3 650 000.00 cashatclosing. hearing - A formal purchase and sale agreement will be executed upon acceptance by the City Council and subsequent to the public hearing pursuant to Chapter 180 of Florida Statutes. The purchase and sale agreement, as well as separate transitional agreements, will be formalized over the next few days. It is our understanding that GDU will be entitled to collection of outstanding accounts receivable and unbilled revenues up to closing date. Deposits on hand at closing will be transferred to the City. If this understanding is acceptable to you and your Board of Directors, please sign this letter below on the line provided and return to me in a fax or envelope clearly marked confidential. Sincerely, Marilyn Swichkow, C.P.A. Finance Director ACC By: - As: BY GDU THIS DAY OF /_. . 1993. SEP 09 '93 03:59PM Geneial Development Utdities.lnc. AN ATLANTIC GULF COMMUNITY CORPORATION SUBSIDIARY 26DI SOUTH ' YSSORE DRIVE MIAMI 1305)59-4331 Billions • uy-nR"— Ms. Marilyn Swichkow, C.P.A. Finance Director City of Sebastian 1225 Main Street Sebastian, Florida 32958 Re: Sebastian Water and Wastewater Systems P.17 SM/ charies E. Rancher. Jr. PRESIDENT September 7, 1993 Dear Ms, Swichkow: This memorandum will confirm that General Development Utilities, Inc. agrees to sell our Sebastian Highlands utility systems for $3,650,000 cash at closing, subject to the execution of an acceptable purchase and sale agreement. It is my understanding that the City Council would decide on whether or not to proceed with this purchase after a public hearing scheduled for September 15, 1993. I have attached a draft form of purchase and sale agreement which addresses how certain items might be handled, including several identified in your letter of September 2, 1993. please call me if you wish to discuss any of these topics. Sincerely, Charles E. Fancher, Jr. CEF: gi Attachments cc: J. L. Rutherford M SECTION 7 DAPACTS OF SALE i8a 301 /61 The impacts pf the purchase on utility customers, both positive and negative. There are numerous positive impacts on the utility customers resulting from the purchase by the City of the GDU-Sebastian Highlands Division water and wastewater system assets and are summarized as follows: 1) The purchase will be the fust step in creating a unified water and wastewater ., system throughout the City of Sebastian. In accordance, growth management and master planning efforts can address and correct system deficiencies in an effective and economical manner. As a result, the water and wastewater services provided to the customers can significantly improve. 2) Regulatory decisions concerning the water and wastewater facilities will be made by local representatives of the customers, who will be more aware of local .. requirements and will be sensitive to the needs of the customers. 3) Public sewer system ownership most likely would ensure better system management. GDU is a business operating for profit. Because they are _ operating for profit some maintenance and facilities could suffer. This "bottom- line" management policy has resulted in a poor maintenance program. As a result, facilities are typically not fixed until they are broken. When repairs are .. made they are in the least expensive manner and at minimum standards. Under City ownership, such maintenance and management policies will not be continued. The City is limited in how far it can govern how a private utility is operated and maintained. If acquired, however, all standards can be upheld by the City, ensuring better service to the community. 4) Management policies would be more beneficial to the community under City ownership. If the City acquires the water and wastewater system, improvements can be made tax free and the need for profit in rate collection HES /ch/dn/R-7/Brief. Se7 "' HAI #92-023.00 7-1 M eliminated. It is proposed that the City operates the utility as a "user pays" enterprise fund, so that no general tax monies are used for its purchase or operation. Existing users will be required to share the financial burden of existing needed improvements, and future users will pay for needed system expansion through connection fees. 5) The operation of the Sebastian water and wastewater system and the subsequent expansion of operations will be under the control of the City, and not subject to conflicting land development interests. 6) Substantial financial advantages will be available because of City -owned utility system is not subject to federal and state income taxes, or gross receipt taxes as privately owned utility systems. 7) Future capital improvements required for the continued efficient operation of the Sebastian water and wastewater system can be more economically financed by the City than by a private company through the use of municipal tax-free financing. 8) The City will be able to better control and correct negative environmental ^ impacts and provide surface, groundwater and other environmental protection which will promote the public health, safety, and welfare of the citizens of the City of Sebastian. 9) Under the City ownership, the customers' water and wastewater monthly bills will be lower than the proposed GDU rates for this system. The negative impacts associated with the proposed utility acquisition are the following: 1) As owners of the system, the City would also assume a responsibility foi operations and maintenance, which typically involves problems and complaints. ^ The City would also assume the liabilities involved in ownership and responsibility for rates and charges. ^ HES/ch/dn/R-7/Brief. SO HAI #92-023.00 7-2 .. 2) Future regulatory requirements and more stringent changes can ultimately result in unforeseen costly future capital investments. 3) Lack of expertise in utility management, which can be remedied in large part by the hiring of the present operational staff. The impact on the existing GDU customers were calculated by both Rachlin & Cohen and by .. Marilyn Swichkow, City of Sebastian Finance Director. These calculations are attached hereto. M HES/ch/dn/R-7/Brief.Se7 ., HAI #92-023.00 7-3 A 1 1 1 I 1 1 ! 1 1 1 I I 1 I 1 1 1 I TABLE 7-1 REASONS FOR AND AGAINST ACQUISITION OF THE GDU - SEBASTIAN HIGHLANDS WATER AND WASTEWATER HES/ch/dn/R-7/Brief.7-1 HAI 1/92-023.00 REASONS FOR ACQUISITION REASONS AGAINST ACQUISITION 1. Assurance of environmentalprotection.— Capital costs. 2. Provides a tool for growth management. Responsibility of ownership and operation. 3. Level of wastewater services improved. Lack of expertise in utility management and contract operations. 4. Public health protection through improved management. Regulatory requirements. 5. Groundwater protection. Regulatory enforcement liability. 6. Lower cost of capital due to tax exempt status of municipal securities. Operations liability. 7. Elimination of state federal and other taxes in rates. Customer complaints. 8. Elimination of regulation by Indian River County, and associated costs therewith. New customer service accommodation. 9. Reduction in administrative costs through consolidation of supervisory and administrative staff. Rate and charge malting. 10. Generation of revenues for further improvements and/or expansion of the system and other City of Sebastian needs. Billing and accounting. 11. Elimination of profit or rate -of -return. 12. Equity in service. HES/ch/dn/R-7/Brief.7-1 HAI 1/92-023.00 1993 GDU RATE INCREASE - SEBASTIAN HIGHLANDS WATER AND SEWER BILL COMPARISON 3000 GALLONS WATER SEWER TOTAL BFC USAGE BFC USAGE PRE -TAR F.P.U.A. _ inside city 9.20 +included + 5.60 + 6.93 = 21.73 limits ouside city 11.50 +included + 7.00 + 8.67 = 27.17 limits Indian River County 11.20 + 5.25 + 15.50 + 10.05 = 42.00 Martin County No. System 11.00 + 6.06 + 15.00 + 9.45 = 41.51 Martin Downs 15.89 + 7.32 + 16.77 + 10.32 = 50.30 Port Salerno 11.00 + 2.76 + 8.80 + 7.35 = 29.91 Vero Beach Inside City 9.30 + ---- + 15.80 + ----- = 25.10 Outside City 10.23 + ---- + 17.40 + ----- = 27.63 St. Lucie County 4.67 + 7.11 + 10.26 + 14.97 = 37.01 GDU Rachlin & 16.52 + 9.60 + 22.00 + 13.11 = 61.23 .. Cohen Now 13.05 + 3.72 + 15.12 + 3.21 = 35.10 .. IRC 42.00 * R & C 61.23 M.S. * 47.39 GDU (Now) 35.10 GDU (Now) 35.10 GDU(Now) 35.10 Diff. $ 6.90 Diff. $26.13 Diff. $12.29 % Increase 19.70 o Increase 74.4% % Increase 35%* 1993 GDU RATE INCREASE SEBASTIAN HIGHLANDS WATER AND SEWER BILL COMPARISON 5000 GALLONS ^ WATER SEWER TOTAL BFC USAGE BFC USAGE PRE-TAX F.P.U.A. ^ inside city 9.20 + 2.92 + 5.60 + 11.55 = 29.27 limits ouside city 11.50 + 3.66 + 7.00 + 14.45 = 36.61 limits Indian River County 11.20 + 9.55 + 15.50 + 16.75 = 53.00 Martin County ^ North System 11.00 + 10.10 + 15.00 + 15.75 = 51.85 Martin Downs 15.89 + 12.20 + 16.77 + 17.20 = 62.06 ^ Port Salerno 11.00 + 4.60 + 8.80 + 12.25 = 36.65 Vero Beach Inside City 9.30 + 3.20 + 15.80 + 5.10 = 33.40 Outside City 10.23 + 3.52 + 17.40 + 5.60 = 36.75 St. Lucie County 4.67 + 11.85 + 10.26 + 24.95 = 51.73 GDU Rachlin & 16.52 + 16.00 + 22.00 + 21.85 = 76.37 Cohen Now 13.05 + 6.20 + 15.12 + 5.35 = 39.72 ^ IRC 53.00* R & C 76.37 M.S.* 53.62 GDU (Now) 39.72 GDU (Now) 39.72 GDU (Now) 39.72 Diff. $13.28 Diff. $36.65 Diff. $13.90 °%Increase 33.43% % Increase 92.27% % Increase 35%* -- 1993 GDU RATE INCREASE SEBASTIAN HIGHLANDS WATER AND SEWER BILL COMPARISON 7000 GALLONS WATER SEWER TOTAL BFC USAGE BFC USAGE PRE-TAX F.P.U.A. inside city 9.20 + 5.84 + 5.60 + 1'6.17 = 36.81 limits ouside city 11.50 + 7.32 + 7.00 + 20.23 = 46.05 limits Indian River County 11.20 + 13.85 + 15.50 + 23.45 = 64.00 Martin County - North System 11.00 + 14.14 + 15.00 + 22.05 = 62.19 Martin Downs 15.89 + 17.08 + 16.77 + 24.08 = 73.82 Part Salerno 11.00 + 6.44 + 8.80 + 17.15 = 43.39 Vero Beach Inside City 9.30 + 6.40 + 15.80 + 10.20 41.70 Outside City 10.23 + 7.04 + 17.40 + 11.20 = 45.87 St. Lucie County 4.67 + 16.59 + 10.26 + 34.93 = 66.45 GDU Rachlin & 16.52 + 22.40 + 22.00 + 30.59 = 91.51 Cohen Now 13.05 + 8.68 + 15.12 + 7.49 = 44.34 IRC 64.00 R & C 91.51 M.S.* 59.86 GDU (Now) 44.34 GDU (Now) 44.34 GDU (Now) 44.34 Diff. $19.66 Diff. $47.17 Diff. $15.52 ^ % Increase 44.340 % Increase 106.4% % Increase 35%* UTILITY BILL FOR 12,000 GALLONS USAGE (WATER-& SEWER) GDU R E C PRESENT PROPOSED Water Base Facility Charge........ $13.05 $16.52 Water Usage First 10,000 gal $1.24 per gal ... $12.40 $25.60 First 8,000 gal $3.20 over 10,000 gal $1.55 per gal .... $ 3.10 $14.92 over 8,000 $3.73/gal Sewer Base Facility Charge ....... $15.12 $22.00 Sewer Usage " maximum 12,000 gallons maximum 8,000 gals $1.07 per 1,000 gallons .......... $12.84 $34.96 $4.37 per 1,000 gal s 10% Utility Tax (water only) ..... $ 2.86 $ 5.70 6% Franchise Tax on total .... 3.39 6.84 Diff. % Increase TOTAL $62.76 $126.54 $63.78 101.60 GDU M.S. Diff. % Increase Now $62.76 $ 84.73 $21.97 350 F, SECTION 8 ADDITIONAL INVESTMENT REQUIRED 180.301(7) Any additional inveitment required and the ability and willingness of the Cia? to make that investment. It is currently anticipated that in order for the water and wastewater treatment facilities and their related distribution, collection, transmission and disposal facilities and regulatory requirements, additional investments will be required during the next two (2) years following acquisition. This investment will include: 1) Expenditures to the existing system in order for the assets to reach the useful or expectant service life. 2) Expenditures for capital expansion in order to meet system growth and satisfy the goals of the City. 3) Expenditures for regulatory requirements, environmental concerns, and good operating and management practices. Those identified capital investments regarding the GDU Sebastian Highlands water and wastewater system that should be completed during the fust two (2) years include the following: 1) Total trihalomethane control system at the GDU water treatment plant - estimated total project cost is $22,000. Although this project is not required by state or federal regulations, the City is committed to install total trihalomethane (TTHM) control at the WTP due to public concerns. �* 2) Sludge stabilization facilities at the GDU wastewater treatment plant to meet Title 40 Code of Federal Regulations Part 503 - estimated total project cost is $220,000. This project is required due to the recently promulgated rule which became effective on March 21, 1993. The City has 2 years to comply with this rule. GCH/ch/dn/R-7/Brief.Se8 8-1 HAI #92-023.00 .. 3) Hydraulic improvements to the water distribution system to interconnect and loop existing watermains which will improve the distribution and quality of the potable water to the customers of the system - estimated project cost is $300,000. This project should be initiated in Year 2 00 M 4) Miscellaneous water main and wastewater system improvements in Year 1: (a) Barber Street water main interconnection - estimated total project cost is $54,000, to be financed from impact fees from the Park Place/Palm Lake Club connections. (b) Park Place force main interconnection - estimated total project cost is $108,000, to be financed from impact fees from the Park Place/Palm Lake Club impact fees. 5) Renewal and replacement revenue for the system is identified under Exhibit 1 of the August 31, 1993, Raymond James Analysis I. It is assumed that capital facility expansions, line extensions for the water and/or wastewater system will be funded by potential customers impact fees, line extension fees or contributions in -aid of construction. The total additional investment during the next two (2) years required is approximately $542,000, excluding the miscellaneous water main and wastewater system improvements in the Park Place/Palm Lake renewal and replacement revenue. The City has both the ability and willingness to make the necessary investments. Summarized below is a distribution of funds and projects for the first two (2) years. GCH/ch/dn/R-7/Brief.Se8 8-2 HAI /192-023.00 SECTION 9 ALTERNATIVES TO THE SALE 180.301(8) The alternatives to the urchase or sale and the potential impact on utility customers if the purchase or sale is not made There are several alternatives to the sale of the GDU-Sebastian Highlands Division water and wastewater facilities to the City of Sebastian. These include: 1) No sale. 2) Sale to an investor. 3) Sale to a non-profit entity. If the City does not acquire the GDU-Sebastian Highlands water and wastewater system, GDU can either continue to operate the facilities, or sell to another party. Based on the financial position of GDU's parent company, Atlantic Gulf Communities Corporation, it is highly unlikely that GDU will continue to operate the system. GDU filed for a rate increase on May 1, 1993. GDU believes that the Sebastian City Council will approve a rate increase as recommended by the August 9, 1993 Rachlin and Cohen Report, based upon the conclusion of the August 18, 1993 public hearing, during which the report was publicly discussed. The "no sale" option results in the following: 1) Higher monthly bills to the average GDU-Sebastian customer. 2) Limited services. 3) Continuation of existing management and operations practices. 4) Limited control over proper growth management and system development. 5) Limited control over environmental concerns and issues. Many of the same items listed in the "no sale" option would be considerations for this alternative. The City would function in a land use/regulatory manner. To the best of our HES /ch/dn/R-7/Brief. S e9 RAI #92-023.00 9-1 .. knowledge, no outside investor has offered to buy the GDU-Sebastian Highlands water and wastewater system in a fashion that would elicit a sale from GDU. Moreover, the City of Sebastian was given the opportunity to investigate the acquisition of the GDU-Sebastian Highlands Division water and wastewater system through the May 11, 1981 Franchise Agreement. If the GDU-Sebastian Highlands Division water and wastewater facilities were sold to a non - for -profit entity, many of the disadvantages associated with the above two (2) options would accrue. To the best of our knowledge, GDU was in the process of actively marketing the system to privately owned utility companies throughout the United, States as recently as the August 19, 1993 meeting that the City Task Force had with GDU to re -open negotiations for purchase of the Sebastian Highlands water and wastewater system. M ., M HES/ch/dn/R-7/Brief. Se9 .+ HAI #92-023.00 9-2 M M M M SECTION 10 STATEMENT OF QUALITY SERVICE 180 30101 The ability_of the purchaser to Ovide and maintain high quality and cost a ective utility service whether the purchaser is the municipality or the entity purchasing the utility from the municipality. In order to provide and maintain high quality and cost effective utility services, the City will institute several utility management objectives. The City, throughout the evaluation and acquisition process, has engaged the professional services of a well recognized consulting engineering firm and special legal counsel to assist competent City staff in technical areas. The City intends to offer employment to the current remaining GDU operational and customer service staff that is currently operating, maintaining, and performing repairs to the GDU- Sebastian Highlands Division water and wastewater facilities, as well as providing customer service functions, in order to have a smooth transition at the time of acquisition. Moreover, the City has recognized the need to perform capital improvements to the system in order to maintain service levels and has recognized the need to fund such improvements from the issuance of utility revenue bonds and rates. The capital improvements will be performed as soon as it is feasible after the acquisition. HFS/ch/dn/R-7/Brief. S 10 HAI #92-023.00 10-1 SECTION 11 STATEMENT OF PUBLIC INTEREST Statement of Public Interest. Based upon the foregoing, the purchase of GDU-Sebastian Highlands Division water and .. wastewater facilities is in the public interest and the City has the experience and the financial ability to provide service to the customers. m ., m m HES/ch/R7/Brief. S 11 .. HAI #92-023.00 11-1 M TABLE A-1 SEBASTION HIGHLANDS WATER TREATMENT PLANT RAW WATER SUPPLY WELLS Raw Water Supply Raw Water Supply Parameter Well No. 1 Well No. 2 Depth drilled, feet 100 101 Outside casing length, feet 65 65 Outside casing diameter, 10 10 inches Outside casing material Black steel Black steel Normal suction lift, feet 23.7 18.0 Normal yield, gpm 580 550 Test yield, gpm 665 605 Pump type Vertical turbine Vertical turbine Motor size, hp 25 15 Pump capacity, gpm 600 600 Protection from surface water Yes Yes Inundation of well possible No No Year drilled 1981 1981 HES/ch/R7/Brief.A1 HAI #92-023.00 -1- I TABLE A-2 SEBASTIAN HIGHLANDS WATER TREATMENT PLANT EXISTING EQUIPMENT HES/ch/R7/Brief.A2 ' HAI #92-023.00 -1- I. Raw water supply wells A. Number: Two (2) B. Depth 1. Well no. 1: 100 feet 2. Well no. 2: 101 feet C. Casing depth 1. Well no. 1: 65 feet 2. Well no. 2: 65 feet D. Casing diameter 1. Well no. 1: 10 inches 2. Well no. 2: 10 inches E. Test yield 1. Well no. 1: 665 gpm ' 2. Well no. 2: 605 gpm _. F. Normal yield 1. Well no. 1: 580 gpm 2. Well no. 2: 550 gpm G. Well pumps 1. Type: Vertical turbine 2. Motor size a. Well no. 1: 25 hp b. Well no. 2: 15 hp HES/ch/R7/Brief.A2 ' HAI #92-023.00 -1- TABLE A-2 (Continued) SEBASTIAN HIGHLANDS WATER TREATMENT PLANT EXISTING EQUIPMENT 3. Capacity a. Well no. 1: 600 gpm b. Well no. 2: 600 gpm HES/ch/R7/Brief.A2 ^ HAI #92-023.00 -2- II. Aerator ^ A. Type: Cascade B. Number of units: One (1) C. Number of trays: Four (4) D. Maximum design capacity: 1,800 gpm E. Head loss through unit: 5 feet - 4 inches ^ III. Lime softening unit ^ A. Type: Permutit Precipitator Hull No. 11 B. Number of units: One (1) C. Dimensions ^ 1. Length: 40 feet 2. Width: 12 feet ^ 3. Sidewater depth: 9 feet D. Capacity: 32,500 gallons E. Detention time: 70 minutes F. Overflow rate: 1.0 gpm/sf . G. Mechanical agitator 1. Blade size: 3 feet - 3 inches ^ 2. Motor size and type: 1 hp/variable H. Inlet size: 12 inches I. Discharge size: 12 inches IV. Filtration A. Type: Permutit gravity filter ^ B. Number: Three (3) HES/ch/R7/Brief.A2 ^ HAI #92-023.00 -2- TABLE A-2 (Continued) SEBASTIAN HIGHLANDS WATER TREATMENT PLANT EXISTING EQUIPMENT C. Capacity: 233 gpm (each) D. Length of filter runs: 40 hours C. Backwash rate: 20 gpm D. Hydraulic loading rate: 2.06 gpm/sf E. Depth of media 1. Gravel: 6 inches Capacity: 700 gpm (each) 2. Sand: 24 inches F. Clearwell volume: 4,460 gallons G. Backwash pump service pumps 1. Number: One (1) A. 2. Type: Centrifugal 3. Capacity: 2,200 gpm .. 4. Motor size: 50 hp V. Transfer pumps A. Number: Two (2) B. Type: Centrifugal C. Capacity: 700 gpm (each) D. Motor size: 10 hp VI. High service pumps A. Number: Three (3) B. Type: Centrifugal C. Capacities 1. High service pump no. 1: 250 gpm 2. High service pump no. 2: 400 gpm ., 3. High service pump no. 3: 600 gpm D. Motor sizes 1. High service pump no. 1: 10 hp 2. High service pump no. 2: 30 hp HES/ch/R7/Brief.A2 HAI #92-023.00 -3- WN _ TABLE A-2 (Continued) SEBASTIAN HIGHLANDS WATER TREATMENT PLANT .. EXISTING EQUIPMENT .. 3. High service pump no. 3: 40 hp VII. Ground storage tank A. Number: One (1) B. Type: Prestressed concrete C. Volume: 500,000 gallons VIII. Hydropneumatic tank A. Number: One (1) B. Type: Steel .. C. Volume: 6,000 gallons D. Operating pressures 1. On: 42 psi 2. Off. 62 psi IX. Chemical feed systems A. Chlorine 1. Number: Three (3) 2. Type: Gas chlorinators 3. Capacity: 100/50 (each) 4. Feed locations a. Filter influent b. Ground storage tank influent C. High service pump discharge B. Lime (system specifics unknown) C. Alum (system specifics unknown) D. Sodium aluminunate (system specifics unknown) HES/ch/R7/Brief.A2 HAI #92-023.00 -4- TABLE B-1 SEBASTIAN HIGHLANDS WASTEWATER TREATMENT PLANT DESIGN CRITERIA I. Wastewater characteristics A. Influent flow 1. Average: 300,000 gpd 2. Peak: 900,000 gpd B. Biochemical oxygen demand: 200 mg/1 C. Total suspended solids: 200 mg/1 II. Aeration basins ,., A. Number: Two (2) B. Volume: 302,400 gallons (total) C. Hydraulic retention time: 24.2 hours ., D. Solids retention time: 14 days E. Oxygen required: 1. BOD: 1.15 lbs. 02/lb. BOD removed 2. Nitrogen: 4.6 lbs. 02/1b. N removed III. Secondary clarifier A. Number: One (1) B. Volume: 50,900 gallons C. Surface area: 586.5 sf D. Sidewater depth: 11 feet - 6 inches E. Surface overflow rate: 512 gpd/sf F. Solids loading rate: 15 lbs./sf/day G. Detention time at adf: 4.1 hours IV. Chlorine contact chamber A. Number: One (1) B. Volume: 12,070 gallons C. Detention time: 1. At adf: 58 minutes 2. At peak: 23 minutes HES/ch/R7/Brief.Bl HAI //92-023.00 -1- TABLE B-1 (Continued) SEBASTIAN HIGHLANDS WASTEWATER TREATMENT PLANT DESIGN CRITERIA D. Chlorine residual after 15 minutes: 1.0 mg/1(minimum) V. Effluent disposal A. Type: Percolation ponds B. Number: Three (3) C. Capacities 1. Ponds no. 1 and no. 2: 112,900 gpd (total) 2. Pond no. 3: 29,100 gpd VI. Sludge stabilization A. Type: Aerobic digestion B. Number: One (1) .. C. Volume: 25,000 gallons D. Solids retention time: 9 to 14 days F. Oxygen required: 2.0 lbs. 02/lb. VSS destroyed M M M HES/ch/R7/Brief.B 1 �- HAI #92-023.00 -2-