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current construction, it was discovered that certain plant components, built in 1949, are <br />no longer part of the reliable capacity. To comply with the mandates of the Cease and <br />Desist Order, additional construction is necessary. This phase would require the <br />borrowing of $4.0 million more, and an additional $2 monthly increase in residential <br />rates. Adding this to the balance of the first loan created a rate change amounting to <br />about $6.00 per month for the residential customer. <br />The funds flow language in the proposed Authority le - ase, aareement would expand the <br />financial security of the utility by establishing a minimu -in -cash working capital level, <br />providing funding of the depreciation reserve for renewals and replacements, and the <br />creation of opportunities for future ratepayer savings through economic incentives <br />derived from operating efficiencies and marketing opportunities. All of these add to the <br />ability of the JPA formation to keep rates at a lower level than previous projections. <br />Since the City of Colton provides wastewater treatment service to the City of Grand <br />Terrace, their rates would also be increased. The revenue requirement indicates that it is <br />appropriate to raise the monthly charge to the residential customer in Grand Terrace to <br />$17.07from the current rate of $14.62. <br />FINAT14CIAL IMPACT <br />There is no immediate financial impact as a result of the recommendations contained in <br />this report. The recommendations direct staff to begin taking certain steps to enable <br />future City Council action which include establishing new wastewater treatment rates and <br />forming a joint powers authority. <br />ENVIRONMENTA I - TAMPIP A P <br />None <br />RECOMMENDATIONS <br />That the City Council direct staff to: 1) prepare the resolution to adopt the wastewater <br />rates ass presented in the financial projections; 2) prepare the necessary documents to <br />proceed with the sale of Wastewater Revenue Bonds to fund the construction of treatment <br />facilities, and; 3) prepare the necessary documents for the formation of the Joint Powers <br />Authority governing the Water and Wastewater Divisions of the Utility Department <br />including the retention the appropriate consultants to perforni the required <br />valuationlappraisal of the assets. <br />Attachments: <br />Wastewater Fund 5 Year Projections <br />