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Additional Debt and Funding New Projects

Reference Number: MTAS-799
Reviewed Date: 03/28/2023

“How do we handle the additional debt requirements that are necessary to complete all the projects?”
The City’s engineer worked with city staff to develop a schedule of planned capital improvements and their estimated costs. These are shown in Table 4. Some of the new projects would require new debt.


Table 4: Any City Capital Projects
Water Line Replacement $ 1,500,000 F/Y 2013
Sewer Line Rehab $ 3,000,000 F/Y 2014
Water Line Extension $ 2,500,000 F/Y 2015
Sewer Line Extension $ 3,500,000 F/Y 2015
Total $10,500,000  

“Do we have enough money to pay debt service and fund new projects?”
The staff was ready to calculate the rate changes the city needed in order to fund operations. But an important question had to be answered first: Would the income translate into enough cash flow to meet the principal payments on debt and pay for new projects? To answer that question, staff decided to use a simplified cash flow statement, projecting the future cash needs of the water and sewer system. Table 5 shows current and projected cash flow.