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The following is a summary of the funding strategy staff is recommending. <br /> 1. Minimize the use of debt to fund improvements. <br /> 2. Seek state SRF loan to help fund project— if it looks like the state is unable to <br /> meet project timeline for loan funds by May 2022, begin process to issue revenue <br /> bonds. <br /> 3. Assume four percent interest rate in water rate model. If the actual interest rate is <br /> lower, adjust actual water rates charged accordingly. <br /> 4. If we receive the grant and/or settlement proceeds before issuing debt, reduce <br /> principal. If we receive the grant and/or settlement proceeds after issuing debt <br /> use bond proceeds and/or settlement proceeds to make debt service payment <br /> and adjust actual water rates charged accordingly. <br /> Submitted by: Approved ..y: <br /> \L‘A.—L\L <br /> Tina Olson Kathleen Yurchak Nelson Fialho <br /> Director of Finance Director of Operations and City Manager <br /> Water Utilities <br /> Page 7 of 7 <br />