Ord69 1403 - Laserfiche WebLink

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It was determined therefore that revenue bonds should not be issued because (a) charges would be excessive and (b) interest rates would be higher. However, the "use of the facility" method for allocating water and sewer charges to users ,was used to determine allocation of payment. As indicated in Exhibit 1, which was prepared from the pro-forma analysis of the Feasibility Report, water and sewer revenues based on facilities cost parallel fairly closely the debt service required to retire water and sewer portions of facilities cost. Remaining portions of debt are scheduled for repayment by ad valorem tax is in recognition of benefits accruing to land and/or improve- ments not yet receiving water or discharging waste and for reasons stated below. 2. "Separable Costs/Remaining benefits" concept is used as a cost allocation device when multiple purpose facilities are constructed. "Use of facility" method of allocating repayment charges automatically assumes that water and sewer costs can, in fact, be precisely isolated. Under some conditions they can. In the Redwood Shores Project they cannot, because the cost of water and sewer facilities are an inseparable part of the total construction program for the district. It is obvious that if each type of facility was planned and constructed separately (as is typical of most separable facilities), aggregate costs of these would be greater than if they are jointly planned and constructed. There are costs savings attributable. therefore, to each type of facilities constructed because they are all constructed as one com- plex facility. Each of these facilities constructed generates benefits to users separately, relative to its separable costs. In combination because of efficiencies in design and construction, their costs are lower; therefore, surplus benefits or remaining benefits occur. These remaining benefits or the reverse, the cost savings, must be passed on to the users but they cannot be allocated exclusively to anyone or two bond issues. They must be prorated overall. Since in this Districts' total program cost savings do occur in the construction of water and sewer facilities, an equitable distribution of charges between water and sewer revenues and ad valorem tax revenues was necessary. DMJM determined that an equitable distribution of charges, based on the "separable cost/remaining benefits" principle, was as follows: