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Th~ projected annual operating expenses of the water system including retiring, the $5,574,000 FmHA loan are $790,147 (see attached expense summary). £t should be noted that an additional $170,000 will be required annually to retire the proposed $1,697,000 General Obligation Bond. This $170,000 is not reflected in the FmHA budget. Local funds will have to be generated to cover this operating expense deficit, A number of options are available: l) The BmHA water user charges as proposed will completely cover all operating expenses and retirement of the $5,574,000 FmHA loan. The proposed minimum water bill is $10.10 with the average bill being approximately $17.50 per month. An additional $3.50 per month would have to be added to the average water bill to fully recover the $170,000 through user fees. 2) The tax base of the planned water and sewer district is approximately $660,000,000. A special tax levy of $0.025 per $100 valuation within the water and sewer district could raise the required funds. 3) The county has opted to participate in the ½ cent sales tax levy. This tax is expected to generate over $900,000 annually for the ~- county in undesignated funds. The county could designate a portion of this tax levy to cover the $1.694 million GOB debt retirement. 4) Another option would.be to retire the $1.69~ million GOB with general fund revenues. A combination of any or all of these methods may be desirable. It should be mentioned at this point that the county water system will generate over $400,000 in tap fees from the initial customer sign ups. The expense of these tap-ons is figured in the $1],060,000 project. However, the revenues from the 3700 customer tap fees is not. The adopted county water policies call for a special sign up tap fee of $75 plus a $25 deposit and $10 cut on fee. Conservatively 3700 customers will therefore generate 3700 x milO/customer or $407,000. This revenue will be available as a contingency for the operation of the water system.