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Rates - 1988City of armel Dorothy J. Hancock MAYOR February 23, 1988 Mr. Beau Wilfong Hamilton Western Utilities 1350 Greyhound Court Carmel, Indiana 46032 Dear Beau: Thank you for getting back to us so quickly on the sewage treatment plant capacity. Regarding your first question, at this point I would state I am willing to work with you on setting a schedule of payments as progress is being made. However, that may mean we would ask for a letter of credit from your bank to protect the City. I am willing to discuss this point further with you at a later date. Your rate for treatment cost is based upon the method of calculation set up in our contract with you. Your current rate of $0.64807 per 1000 gallons was revised downward five percent two years ago, and as we grow, we expect it to continue down as costs are shared over more customers. At this point we would expect the actual expansion project costs to be divided by our increased capacity to establish the final cost per gallon of additional treatment capacity. There may need to be some minor adjustments to this but not of major significance. As Don said he pointed out to you, there would also be some capital cost for the use of the North-South Inter- ceptor. I hope this is of help to you in setting how much capacity you will want and look forward to hearing from you on working out the details. Sincerely, Dorothy J. Hancock, Mayor DJH/bjc cc: Donald R. Silvey, P.E., Commonwealth Engineers, Inc. 40 EAST MAIN STREET CARMEL; INDIANA 46032 317/844-6433 February 19, 1988 Mr. Beau Wilfong Hamilton Western Utilities, Inc. 1350 Greyhound Court Carmel, Indiana 46032 Dear Beau: Thank you for getting back to us so quickly on the sewage treatment plant capacity. Regarding your first question, at this point I would (haveito ask that the moneys be paid_ when we start construction)"(be willing to work with you on setting a schedule of payments as progress is being made). Your rate for treatment costs is based upon the method of calculation setup in our contract with you. Your current rate of $0.64807 per 1000 gallons was revised downward five percent two years ago, and as we grow, we expect it to continue down as costs are shared over more customers. At this point we would expect the actual expansion project costs to be divided by our increased capacity to establish the final cost per gallon of additional treatment capacity. There may need to be some minor adjustments to this but not of major significance. As Don said he pointed out to you, there would also be some capital cost for the use of the North-South Interceptor. I hope that this is of help to you in setting how much capacity you will want and look forward to hearing from you on working out the details. Sincerely, Dorothy J. Hancock, Mayor DJH/bc CC: Donald R. Silvey, P.E., Commonwealth Engineers, Inc. Line Item Number CARMEL - HAMILTON -WESTERN UTILITIES TREATMENT AGREEMENT` DATE RECEIVED JOB NO..�_ FILE CALCULATION OF WHOLESALE RATE FOR OPERATION AND ROUTE TO: FEB 5 1986 MAINTENANCE COSTS AND FOR REPLACEMENT COST ON EQUIPMENT Annual operation & maintenance (0 & M) expense: Allocation Total Costs Percentage Shared Costs 1 Treatment plant expense $ 525,890 100% $585,890 2 Sludge handling disposal expense -0- 100% -0- Collection system expense 3 - interceptor sewers _ 23,721 100%* 23,721 4 - collection sewers 66,894 0% -0- 5 - lift stations 27,992 0% -0- 6 Billing and collection expense 75,162 0% -0- 7 Industrial monitoring expense 0% 6 Subtotal 779,679 609,611 9 General and administrative expense 134,076 78.2%** 104,847 10 Taxes 40,175 Total 0 & M expense - 953,930 714,458 11 Plus: Annual replacement costs on equipment for items of plant benefiting wholesale customers 150,000*** 150,000 12 Total annual 0 & M expense and replacement cost on equipment $1,103,930 864,458 13 Less: Carmel surcharge revenue for excess BOD and SS -0- 14 Net of surcharge revenue -0- 15 Divided by total annual flow received at Carmel treatment plants - :1,333.9**** 16 Rate per million gallons of flow to wholesale customers (including domestic loading) $648.07 Allocation for interceptor based on 20% of collection costs. Allocation percent = line item *8, shared cost : line item $8, total cost. Amount estimated by the consulting engineer. Plant flow 1,314.4 mg (August 1984 -July 1985) plus estimated Hamilton -Western increase of 1.625 mg per month. Revised February 3, 1986 August 26, 1985 mo above unaudited and limited financial information is presented for the purpose of dlscu✓sion and consideration of appropriate officers aid officials and in oub;cct to future revision and anal report. HAMILTON WESTERN UTILITIES, INC. 1350 GREYHOUND COURT CARMEL, INDIANA 46032 Telephone: (317) 846-6561 February 17, 1988 The Honorable Dorothy Hancock Mayor of the City of Carmel 40 E. Main Street Carmel, Indiana 46032 Dear Dottie: I want to thank you for taking time out the other day to meet and discuss with me the possibility of our participating with Carmel in the sewer expansion. I met with Don Silvey the next week and we discussed the matter in further detail. We would like to obtain between 300,000 to 500,000 gallons per day capacity in this expansion. There were a couple of items that were still up in the air and if I knew the answer to these then I could give you a more definitive answer today. Specifically I would like to know when the money would be required to be paid for the expansion. I would hope it would be as progress was being made on the expansion, but Don seemed to indicate that this might not be the case. Also I would need to know what the cost would be to treat the sewage per 1000 gallons. Finally I would like to know how the final cost per gallon will be determined. As soon as you can, please get back with me so that we can work out the details and proceed with the project. Sincerely, / u)(1 -7 - Beau Wilfong BW/pc cc Don Silvey IOMMONWEALTH ENGINEERS, INC. ENVIRONMENTAL ENGINEERS & CONSULTANTS February 18, 1988 Honorable Dorothy J. Hancock, Mayor City Hall 40 East Main Street Carmel, Indiana 46032 RE: Hamilton -Western Utilities Dear Dottie: I received a carbon copy of Beau Wilfong's February 17th letter today. In it he raised three (3) questions which I wanted to comment upon. First, he wanted to know when the money would need to be paid: When he and I discussed this, I pointed out that in the current project Jane asked that the money be paid by Clay and Westfield up front, before construction began. He indicated that he had hoped there would be a bond issue and that he could pay the cost over a period of time. I told him that there probably would be no bond and that the schedule for payment would be up to you as a policy decision. He appears to be receptive to paying but wants to spread payments over the construction period. The major risk with this would be a default during construction with the City left responsible. The risk could be limited by requiring a letter of credit from his bank, if you wanted to go along with him. Second, he wanted to know what the cost would be for treatment per 1000 gallons: This per his contract would be calculated essentially the same as he is paying now, $0.64807 per 1000 gallons. It is based upon actual costs for treatment with a schedule detailing the calculation attached to their contract. The latest calculation sheet is attached. Last, he wanted to know how cost per gallon of capacity would be determined: The simple answer is total project cost divided by the increased gallon per day capacity. This ignores that there will be some costs for nitrification and dechlorination which should be shared on the total capacity used rather than the incremental increase, but these costs will not be a major item. So it may be premature to get into that with him. When he and I met, I pointed out 710 Executive Park Drive P.O. Box 406 Greenwood, Indiana 46142 (317) 888-1177 8770 Guion Road Suite P Indianapolis, Indiana 46268 (317) 872-1177 Honorable Dorothy J Hancock, Mayor February 18, 1988 Page -2- that he would also have cost associated with use of the North-South Interceptor. The method of assigning cost for that was established in the Westfield agreement. That was established at $103,360 per million gallons ($0.10336/gallon in his terms). Since that was bonded, with interest cost incurred by the City, it would be up to you if you wanted to adjust the 1984 price. In our meeting I told him $0.10 to $0.15/gallon. Sorry to be so long winded, but wanted to get you some facts to work with. I have tried to draft a quick response for your consideration to send back, but it will have to be retyped since 1 did not know if you would want them to pay up front or offer any alternatives. Very truly yours, COMMO ALTH ENGINEERS, INC. Donald R. Silvey, P.E. DRS/djw attachment