1985-08-28 Special Called Meeting

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• Lewis F. McLain, ,Jr. Administrative & Fiscal Consulting Services 2300 Highland Village Road, Suite 240 Lewisville, Texas 75067 August 22, 1985 (2141221-7591 Mr. Jack Owen, City Manager 604 W. Fairmont Parkway La Porte, Texas 77571 Dear Jack: Pursuant to your request, the summary schedules (pages 1, 2,&3) of my report presented April 23, 1985 have been revised and are submitted herein. The following assumptions are incorporated into the new schedules: 1) The 1985-86 revenues and expenditures are based on the proposed budget under consideration by the City Council. The projected revenue growth rates for 1986-87 and 1987-88 due to new customers have been changed from 6x to 3~. This is to reflect the slowdown in growth presently being experienced in La Porte and surrounding areas. Most of the operating costs projections are substantially the same since most of these costs are fixed or semi-fixed and do not fluctuate significantly with minor variations in growth. 2) There were three kinds of debt service in the original study: existing revenue bond debt service, existing general obligation bond debt (mostly associated with annexations) which was for utility purposes and to be supported by water and sewer rates, and the new debt service requirements which were assumed to be a combination tax and revenue bond with the intent to fund from capital recovery fees and water and sewer revenues. There have been significant changes in assumptions since the study was conducted. First, the existing revenue bonds were defeased and will no longer exist due to present funding plans which call for the new debt requirements to be in the form of revenue bonds. The revenue bonds have the utility revenue stream pledged instead of any tax base pledge. In addition, the revenue bonds require a reserve transfer which amounts to X442,500 in the current fiscal year and $221,250 next year, X303,250 the following year and X82,000 in the last year of the study period. It is planned that capital recovery fees will also be used to help retire the revenue bonds. However, the estimate has been reduced significantly due to construction slowdowns and because the per lot fees are less than originally anticipated. The original study incorporated approximately X685,000 of capital recovery fees beginning in 1985-86. Presently, there are no fees anticipated to be usable in 1985-86 and only X399,600 in 1986-87 and thereafter. This is based on 400 equivalent living units of construction which approximates the construction levels for last year and the year before.