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64 <br /> <br /> Ms. Mohr asked about the life expectancy of a sewer line. <br /> <br /> Mr. Cusenza indicated about 40-50 years. <br /> <br /> Ms. Mohr then said it will take as long to accrue the fund as <br /> the life expectancy of the lines being installed today. <br /> <br /> Mr. Cusenza responded yes, in theory, but there are lines in <br /> the ground today that are 40-50 years old. They will have to be <br /> replaced in the next few years. <br /> <br /> Mr. Tarver asked how the LAVWMA replacement amount is <br /> determined. <br /> <br /> Ms. Rossi indicated that is part of the rate studies. <br /> <br /> Mr. Lawson said the studies are done by the LAVWMA Board and <br /> the Board adopts the study as the guideline for future replacement. <br /> That is not necessarily the budget, but influences the budget <br /> process each year. <br /> <br /> Mr. Tarver indicated the recommendation is the transfer of <br /> $1.1 million from the Operations Account to the Replacement Fund <br /> and 2.2% increase in operation costs. Is it likely that there will <br /> be a surplus that could come into the Replacement Fund out of <br /> Operations if we achieve a savings now and we are increasing rates <br /> by 2.2%. <br /> <br /> Ms. Rossi indicated that would be monitored year to year. The <br /> ideal is to have 30% in a reserve fund. Much of the balance in the <br /> reserve fund accumulated due to growth in the 1980's, and revenue <br /> has outpaced expenses. What is happening now is trying to have a <br /> goal of what reserves should be and with each rate study we look at <br /> the reserves and whether it should be rolled back. <br /> <br /> There was discussion regarding the billing procedure and its <br /> impact on this reserve program. <br /> <br /> Mr. Leon Bridgers, 2357 Woodthrush, questioned if the reserves <br /> were for capital improvement fifty years from now. He also <br /> expressed concern about accumulating a massive fund and how the <br /> fund would be managed. Mr. Bridgers asked if some of the <br /> improvements could be constructed by using bonds. <br /> <br /> Mr. Cusenza indicated improvements were for the benefit of <br /> existing customers. The sewer rates are funding replacement and <br /> improvements. The fifty year project is looking at how those costs <br /> come up on a year by year basis and making sure that the City has <br /> money to make the improvements. He indicated the reserve fund does <br /> not get that large due to the significant expenditures required. <br /> <br /> 01/19/93 14 <br /> <br /> <br />