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Page Two November 30, 1987 Mr. Bennett United States under Title II of the Federal Water Pollution Control Act Amendments of 1972 and from the State under applicable North Carolina law, together with any and all engineering, legal, accounting, administrative, and other incidental costs connected with such construction whether or not such costs are eligible for making grants." A copy of this contract is attached for your review. The specific amount of $91,466 which you question was comprised of three components, all of which relate to the Irish Buffalo Creek Interceptor. The first item relates to a measuring flume which was required to be installed to differentiate the flow for the City versus the flow for Cabarrus County as it entered the Brey-McNar measuring station. Elements of the project which were necessary for proper billing purposes of the different entities involved in wastewater treatment were not eligible for grant funds. The cost for this measuring flume was approximately $24,606. The second item involved payments for damages to a contractor involved in the construction of the Irish Buffalo Creek Interceptor, The contractor sustained damages on the job when he was required to hold a crew available to work on the project while waiting on the attorney for Cabarrus County to obtain the right of way for the Highway 49 tunnel relocation. The damages paid to this contractor were $39,000. The third item involved a creek bank stabilization during the construction of the Irish Buffalo Creek Interceptor. During the construction, one of the piers holding up the pipeline was damaged during a particularly heavy rain. The pier was redesigned using reinforced steel to insure that the pier would withstand extremely severe weather conditions without either the pier or the pipeline experiencing damage. The cost of this creek bank stabilization was $27,860. Question: Total interest expense of $346,452 is reflected in the financial statements. Please supply details of the loans and interest expense. Resonee: On May 5, 1977, the Board of Light & Water Commissioners authorized short term borrowings in order to meet payment schedules to contractors and to comply with the terms of the construction contracts~ As you are aware, there was always a time lag between the completion of work, the required payments to contractors, and the receipt of grant funds from EPA and the State. The Board was also at this time in the planning Stages of the issuance of grant anticipation notes and