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City of Formoso
Alternatives Considered

Alternative 1: No Action. This would have the community continue to make do with the existing water system, repairing breaks as they occur and being incapable of fighting any major fires that occur.

Alternative 2: Replace the entire water distribution system at a cost of $670,380, but reduce the overall dollar cost by using local labor and equipment in lieu of matching dollars. This would constitute the creation of at least $396,380 in in-kind matching funds through the use of volunteer labor and donated machinery time. The $274,000 in potential grant funds (137 residents x $2,000/resident limit) would be used to purchase materials and professional support whenever local talent and access to materials could not meet project demand.

Alternative 3: Replace the entire water distribution system at a retail price of $670,380 using outside contract labor, equipment and materials, with matching dollars generated through issue of revenue bonds. The cost of this approach to each household would be significant, for revenue bonds in the amount of $396,380 would generate a monthly debt service requirement of $10.18 per thousand gallons to cover bonds issued at 6.00% and a 20-year term.  One month's water bill for a residence using 5,000 gallons would be $22.00 for operations plus $50.90 for debt service, or $72.90 per month.

Alternative 4: Replace the water distribution system in stages at retail price using outside contract labor, equipment and materials with matching dollars generated through issue of revenue bonds. Such staging could possibly reduce the overall cost to an affordable level, yet may cause significant delay in addressing the overall need. Debt service on $100,000 for 10 years at 6.00% would average approximately $3.98 per thousand gallons. This would limit the frequency of phase implementation, for 5,000 gallon users would pay $22.00 for operations plus $19.90 for debt service, generating a monthly bill of $35.30.

Alternative 5: Replace the water distribution system in stages, but reduce the overall dollar cost by using local volunteer labor and equipment. This method would permit the city to begin the repair of the system with scheduled delays while other grant funds were sought. While financially doable, it would not effectively address the needs of the entire system. Valves would have to be placed in strategic locations to enable the city to isolate the new from the old when and if a fire did occur to prevent line collapse. Pressure would remain low throughout the community to protect the older segments.

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This page last updated 01/16/12 01:32:34 PM
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