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<br />~ <br />~~HILLS <br /> <br />MEMORANDUM <br /> <br />. <br /> <br />DATE: <br /> <br />April 5, 2005 <br /> <br />Agenda Item Worksession <br /> <br />TO: Honorable Mayor and City Council <br /> <br />FROM: Murtuza Siddiqui, Finance Director/Treasurer'MS <br /> <br />SUBJECT: Replacement of Lift Stations - Sewer Fund Balance Analysis <br /> <br />BACKGROUND: <br />On November 24,2004, the Council authorized preparation of Plans and Specifications for the <br />Lift Stations #4 & #9 project. Plans and Specifications for this project were completed and nine <br />bids were received on February 15, 2005 for the proposed improvements. Based on the lowest <br />bid, the total cost of the project was estimated at $280,000, including the engineering fees, <br /> <br />. <br /> <br />The City's fivc year CIP plan, which was adopted last Fall, estimated the cost ofreplacing two <br />Lift Stations per year, over the next three years, at an estimated cost of $200,000 per set. In <br />addition to the CIP plan, the Council approved a Utility Rates Study and implemented a revised <br />rate structure to accommodate the capital improvements. As part of the adoption of the Rates <br />Study, an informal decision was made to maintain a fund balance of$500,000 over five years, as <br />a reserve for contingencies, in the Sewer Fund. <br /> <br />Due to increased construction and material costs, the cost to replace two Lift Stations is $80,000 <br />higher than the budgeted or anticipated amount. At the March's Work Session, Council <br />requested staff to prepare options and recommendation for the replacement from the funding <br />perspective, <br /> <br />DISCUSSION: <br />Based on the request from the Council, the Engineer has prepared four options and a <br />recommendation for the replacement from an engineering perspective, From a fiscal perspective, <br />I would like to provide an analysis, using three of the four Engineer's options for the timing of <br />the replacement. It should be notcd that regardless of whichever engineering option the Council <br />chooses, it will have fiscal impact on a number of areas as listed below: <br /> <br />I, If a decision is made to rcplace all Lift Stations as plmmed, leave the ratcs in-tact, and <br />undertake other projccts, the fund balance would drop below the desired level of <br />$500,000. lfwe take this route, the fund balance would drop to anywhere in the range of . <br />