LRPC May/June 2020

As we approach the completion of the USDA construction project, the Long Range Planning Committee (LRPC) continues to keep a close eye on our approved funding versus total estimated costs.  Based on our latest estimates, with all potential change orders included, there is adequate funding remaining to add 3‐4 high priority new scope tasks (pending USDA approval).  MC Engineering is currently negotiating firm quotes and the additional construction schedule  required with Mozingo, as well as coordinating the new scope approvals with USDA.  If approved, since  added schedule time increases the interest we pay on our Co‐Bank interim loan, a cost‐benefit analysis  will be performed to ensure timely completion of the new scope tasks at the most advantageous  affordable price.

As mentioned in previous Bubbler articles, the BLSMWC Board made a decision at the start of the  USDA construction project in October 2018 to delay our reimbursement requests for engineering & design support and major parts purchases in order to reduce interim loan interest payments.  Over the  past 19 months, we have covered approx. $2.5M in USDA costs from our operating budget which will  be eligible for reimbursement at the end of construction.  By taking this approach, together with the  fact that our interest rate dropped from 4.49% to 2.44% over the past year, we estimate saving approximately $149K in interest payments.

The Asset Management Plan database replacement cost values and estimated end of life has been reconciled for all assets in the BLSMWC system.  The end of life for each asset varies from 18 years for meters all the way up to 90 years for mainline replacements.  Since a significant portion of our assets are  currently being replaced as part of the USDA Project, the database shows that 87% will not be due for  replacement for 50+ years.  A breakdown of replacement costs based on end‐of‐life and including soft  costs (i.e., engineering, planning & contingency) where applicable are as follows:

Asset Category	Cost to Replace	Soft Cost	Total Cost
Totals	$47,230,520	$7,596,605	$54,827,125
Water Distribution System	$36,149,888	$7,229,978	$43,379,866
Wells	$861,091	$73,702	$934,793
Water Treatment Plant	$1,387,462	$72,120	$1,459,582
Storage Tanks	$3,611,120	$44,618	$3,655,738
Booster Pumps	$504,440	$64,419	$568,859
PRVs	$2,034,369	$111,769	$2,146,138
Meters	$2,682,150	$0	$2,682,150

Over the next month, the LRPC will develop funding plan options that are both cost effective and viable, and will meet our long term strategic financial goals.  As mentioned in this article above, at the end  of USDA construction we estimate potential reimbursement of $1.5M ‐ $1.9M for project scope BLSMWC funded from our operating budget over the past 19 months.  Approximately $800K will be allocated to fund our Reserves Fund Policy as approved by the Board in January 2019.  These funds set  aside in our Reserves Fund Policy will complement the objectives to be set for the Asset Management Plan.  Consideration will be discussed to allocate a portion of the USDA reimbursements to our Asset  Management.