07-18-1994 Review of New Regional Authority Concept D C Ctuiciat., tJ
ECONOMIC, MARKETING AND MANAGEMENT CONSULTANTS
M ORANDUK
TO: Mayor Kirk
FROM: Phil Gonot
DATE: July 14, 1994
SUBJECT: Review of New Regional Authority Concept
We reviewed the conceptual proposal submitted to the City Council
at the workshop meeting of June 28, 1994. We were not able to meet
directly with Hartman and Associates regarding this matter as they
were unable to travel to Okeechobee and we were not able to travel
to Orlando as they requested. Our cursory analysis was then based
on our own calculations.
In direct terms, we have found that the concept could work for the
benefit of the citizens of the City of Okeechobee. The tentative
rate figures do derive sufficient funds for the system, however, it
is important to note that the tentative rates did not include the
debt service for the 1992A bond issue, which is about to commence.
One other point of extreme significance is that the suggested
annuity amount in the tentative proposal is not sufficient to
equate to the true value of the utility system. The formula
generates a current figure of approximately $435,000 annually.
Based on current information, the amount necessary to return the
equity to the City of Okeechobee is approximately $755,000. This
figure must be recalculated to determine the true equity at the
time of negotiation settlement.
The issue of the true value and how the City will be compensated
is, of course, an item for negotiation. We do not suggest that we
have started this process because it is inappropriate at this time.
This figure is merely offered as a frame of reference for the City
Council when, and if, negotiations do begin.
While discussing this matter with Mr. Reese to attempt to ascertain
the true value of the system, we thought that a workshop or agenda
item with the Council may be appropriate. We could discuss the
valuation issues and provide some of the background necessary for
the Council to wrestle with this issue. If you feel that such a
presentation is productive, we would be pleased to comply.
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