CCR1989000aTABLE OF CONTENPS
ib Fxh ibi t
Accountants' Report
Analysis of capital paid in by municipality A
Page -
1
5
Analysis of anmal interest cost of NON-TIF contributions
under an indebtedness theory B
Analysis of annual interest cost of TLF construction projects C
Analysis of other Utility costs paid by City borrarings - NON-TIF C
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Analysis of sewer project grant funds received and
retained by City - utilized for debt payments C
Analysis of TIF costs not recorded by Sewer Utility D
Analysis of other TIF costs paid D
Summary of total potential debt owed to City from
Sewer Utility at December 31, 1987
Schedule of proposed principal and interest to maturity
on NON-TIF debt of the Sewer Utility owed to City
Schedule of principal and interest payments to maturity
on TIF Districts #2 Through #7 debt of the
Sewer Utility owed to City
E
F
G
Projected sratements of income - 1988 and 1989 H
Projected long-term debt, capital paid in by City and
unreserved retained earnings at December 31, 1988 and l9@9 I
Projected working capital at December 31, 1988 and 1989 J
Schedule of proposed principal and interest payments
projected to exist at December 31, 1989
to maturity on all debt of the Sewer Utility
CONLEY MCOONALO SPRAGUE 6 Co
K
9
10
11
12
13
14
15
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CONLEY McDONALD, SPRAGUE & CO.
Certified Public Accounranrs
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Danlcl A Schulz. C.PA.
Frcdenck L. Licau.C.PA
Nicholas D. QUPI~IO. C PA.
VIC~ N Weiler, C.PA.
William B. Volkmann. C.PA.
David L. Domhue.C.PA
Robert L Gundrum. C.PA.
Donald N. Vilme. C PA.
Paul A. Nownrkl. C PA.
RichardJ.Hammel.C.PA
RabenJ Hammel.C.PA
1homarJ.SchoPncckerC.PA.
Mayor, Common Council and
City of Muskego
W182 58200 Racine Avenue
P.O. Box 903
Muskego, WI 53150-0903
Sewer Committee
19601 W Bluemound Road
PO. Box0975
Brookbeld. Wmonsin 53008-0975
(414) 796-0701
Kenosha. Wisconsin 53140
2106 63rd Slrcer
(414)552-7909
(414)657.6156
Cudahy, Wixonrin 53110
5011 5. Paclurd Aw.
(414)481~3520
Dear Sirs:
Pursuant to your request, we have performed a study to assist you in
determining the Sewer Utility's long-term indebtedness for various projects under-
taken between 1969 and 1987.
Background:
The City of Muskego Sewer Utility was created in 1969. At that time it was
determined by management that the non-assessable portion of the cost of the Util-
ity's plant assets, financed by the City through the issuance of general obligation
bonds and notes, would be recorded as "Capital paid in by the City". This capital
paid in by the City was initially viewed as a "contribution" by the City to the
Utility, with the intent that if in the future the Utility's rate structure could
support repayments back to the City the payments would be made.
During the years 1969 through 1973 the City financed via borrowings
approximately $2.2 million of non-assessable Sewer Utility plant costs. In 1973 the
Utility issued $915,000 of mortgage revenue bonds and used these bond proceeds to
partially repay the City. In the years following, various capital additions to the
Utility were financed by City borrowings. Also, annually since 1974 the Sewer
Utility has made payments back to the City.
Since 1969, the City, including its Tax Incremental Financing Districts
(TIF), has financed approximately $5.67 million of Utility plant assets. During the
period 1969 through 1987 the Utility has repaid approximately $3.72 million.
L
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Study approach:
Our approach in performing this study was to:
1.) Review data supporting the activity in the ”Capital Paid
In by Municipality” account from 1969 through 1987. An
analysis of the account is presented on Exhibit A.
2.) Using the data established in 1.) above we computed the
annual interest cost of NON-TIF contributions by City as
if it were the Utility’s intent to pay back the City for
these funds advanced with interest. Interest was
computed using the actual interest rates on bonds issued
by the City.
Exhibit B details the annual contributions by City and
repayments from the Utility under the assumption that
the Utility would first pay the accrued interest and any
funds remaining would be applied against principal.
3.) We also calculated the imputed interest for the TIF
contributions exclusive of the TIF contributions related
to the Lake Denoon Sewer Project in TIF #I. (It is
currently projected that TIF #1 will pay 1009: of its
liability and, accordingly, amounts paid by TIF are
correctly recorded as “Capital paid in by munici-
pality”.) The imputed interest on TTF contributions is
presented on Exhibit C.
4.) We also determined that other transactions existed that
would affect the total indebtedness of the Utility.
These transactions are as follows:
Other NON-TIF Utility costs paid by City borrowings
(Exhibit C).
Sewer Project Grant Funds received and retained by
the City and utilized for debt payments (Exhibit
C).
., TIF costs not recorded by the Sewer Utility
(Exhibit D).
Other TIF costs paid by borrowings (Exhibit D).
5.) After completing items 1.) through 4.) above we summar-
ized our findings. Exhibit E presents a summary of the
Utility at December 31, 1987 detailed as follows:
total potential debt owed to the City from the Sewer
NON-TIF sewer debt owed to the City $ 853,868
TLF related debt of the Sewer Utility 3,195,475
Total $ 4.049.343
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8.)
Exhibits F and G present proposed repayment schedules
for the NON-TIF and TIF Sewer Utility debt.
To totally understand financial impact of recording the
Sewer Utility debt at December 31, 1987 of approximately
$4.05 million we have presented a projected statement of
income (Exhibit H), projected debt and equity accounts
(Exhibit I) and projected working capital (Exhibit J)
for 1988 and 1989.
Exhibit K presents the projected maturity schedule of
all Sewer Utility debt should this report be adopted as
establishing the Utility related debt at December 31,
1987.
Conclusion:
This report establishes the Sewer Utility debt not previously reported at
December 31, 1987 as follows:
NON-TIF Sewer Utility debt owed to the City
(as established by Exhibit F) at 8% interest $ 853,868
payable annually on November 30
TIF related debt of the Sewer Utility wed
to the City, payable annually on November 30
(as established by Exhibit G) at an average
interest rate of 8.14% 3,195,475
Total $ 4.049.343 -__
It should be noted that the establishing of the Sewer Utility's portion of
TIF related debt DOES NOT IMPLY that the respective TIF Districts enumerated in this
report are relieved of their liability; rather, it establishes the Sewer Utility's
debt responsibility should the TIF Districts not generate sufficient tax levies to
satisfy their debt responsibilities.
We recommend that both the Sewer Committee and the City Common Council
adopt this report in its entirety as establishing the Sewer Utility's unrecorded
debt at December 31, 1987.
CONLEY MCOONALO SPRAGUE S CO
We will be happy to further discuss this report with you and provide any
necessary assistance with implementation. If you have any questions or comments
concerning this report, please contact us.
We would also like to take this opportunity to adtncwledge the courtesy and I assistance extended to us by your personnel during our performance of this study.
February 2, 1989
CONLEY MCOONALO. SPRAGUE & EO
1969
1970
1971
1973
1972
1974
1975
1976
1977
1978
1979
1981
1980
1982
1983
1984
1985
1986
1987
Total
Exhibit A
5.
CITY OF MUSKEGO SEWER
SEWER INDEBTEDNESS
1969 - 1987
UTILITY
STUDY
ANALEIS OF CAPITAL PAID-IN BY MUNICIPALITY
NON TIF
Capital paid-in by City
TLF Total
$ 441,140
49,210
309,529
1,341,926
56,509
58,284
38,350
10,261
1,379
-
9,061
17,001
973
9,847
752,636
13,268
24,193
-
-
$ 3.133.567
280,743 (6) -
- -
-
-
1,165,898 (3)
1,038,107 (4)
51,821 (5)
2.536.569
441,140
309,529
49,210
1,341,926
56,509
-
58,284
38,350
10,261
1,379
280,743
17,001
9,061
973
9,847
13,268
1,918,534
1,062,300
51,821
5.670.136
Utility
to City (1)
repayments
- - -
891,988 (7)
-
72,251
58,415
125,675
137,659
161,038
161,737
167,979
205,757
40,461
132,671
165,576
520,472
386,509
485,998
3.724.246
Notes:
1. All repayments to the City represent funds used to retire City general obliga-
tion debt.
2. Net proceeds from the $915,000 Mortgage Reveme Bond.
3. Principally represents the follwing:
Woods Road Project
Northeast Pumping Station Project (27.83%)
(63.47%)
Kurtz Lane Sewer Project
Bass Bay Sewer Project
Other
4. Principally represents the following:
Ladwig Drive Sewer Project
Industrial Park Sewer Project
Other
5. Represents liquidation damages on Ladwig Drive Sewer Project.
6. Represents non-assessable portion of Lake Denoon Sewer Project.
CONLEY MCOON4LO SPRAGUE & CO
$ 152,399
579,617
185.812
243;311
4,959
$ 1.165.898
$ 336,662
675,548
25,897
$ 1.038.107
1969
1971
1970
1972
1973
1974
1975
1977
1976
1979
197 a
1980
1981
1984
1985
1986
1982
1983
I 1987
Principal
beginning
Balance
of year Add1 tions Retirements
$ 441,140
490,350
2,141,805 56.509 678,145
1,520,169 - -
1,520,169 58,284
- 441.140 -
49,210
309,529
1,341,926
-
799,879
-
-
1,578,453 38,350
1,616,803
- -
1,379 43,652
1,574,530 10,261 84,569
1,500,222 - 90,272
1,409,950 9,061 101,906
1,317,105 17,001 145,335
973 -
1,134,427 13,268 114,097
65,164
1,333,172
453,062
318,121
1,039,244 - 430,391
$ 3.133.567 2.524.714
1,188,771
1,189,744 9,847
1,033,598 752,636
24,193
"
Ra la nce
of year
end
441,140
490,350
2,14l,R05
1,520,169
1,520,169
1,578,453
1,574,530
1,500,222
1,409,950
1,317,105
1,188,771
1,134,427
1,033,598
1,333,172
1,039,244
799,879
1,616,803
1,189,744
608,853
Exhibit B
I CITY OF MUSKEGO SEWER UTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
ANALYSIS OF ANNUAL IhTEREST COST OF NON-TIF
CONTRIBUPIONS UNDER AN INDEBTEDNESS THEORY
Balance
Interest
Balance
beginning
of year
$ - -
20,958
133,583
133,583
40,131
56,185
62,784
18,347 - -
13,016
-
-
Accrued
interest -
20,958
32,681
79,944
120,391
75,129
78,250
75,660
76,469
71,465
60,422
66,073
53,417
54,491
51,479
67,410
55,607
81,238
68,388
Payments - - -
213,843
58,475
72,251
125,675
76,469
94,007
71,465
66,073
60.422
40,461
67,507
51,479
67,410
55,607
-
68,388
1.189.532 ___
end
of year -
20.958
133,583
53,639
40,131
56,785
62,784
18,347 - - -
13,016
-
-
1985
1987
1986
Exhibit C
7.
CITY OF MUSKEGO SEWER UTILITY
SEWER INDEBTEDNESS STJDY
1969 - 1987
ANALYSIS OF ANNUAL INTEREST COST OF TIF CONSTRUCTION PROJECTS
Capital
paid-in
by City 1985 - 1987
Imputed
interest
$ 1,165,898 34,977
101,097
132,240
$ 2.255.826 268.314
1,038,107
51,821
""
ANALYSIS OF OTHER UTILITY COSTS PAID BY CITY BORROWING - NON-TIF
1983 MMSD capital charge
Imputed interest, 1983 - 1987
$ 635,585
177,964
$ 813.549
ANALYSIS OF SEWER PROJECT GM FUNDS RECEIVED AND RETAINED BY CITY -
UTILIZED FOR DEBT PAYMEhTS
1978
1980
1982
Imputed
interest Grants
received 1978 - 1987
$ 147,432 77,035
126,736 76,042
98,114 43,175
196.252 $ 372.282 ___ ___
CITY OF MUSKEGO SEWER UTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
ANALYSIS OF TIF COSTS NOT RECORDED BY SEWER UTILITY
1979 Town of Norway
Capital charne:
Classified-as pre-existing debt
project cost
cost
$ 349,152
460,152
111,000
1983 MNSD capital charge financed by borrowing 245,092
S 705.241.
ANALYSIS OF OTHER TIF COSTS PAID
1985 Plant abandonment costs
1982 Manhole Project
cost
$ 184,267
84,369
S 268.63fi
Exhibit D
8.
Imputed
interest
1979 - 1987
163.226
51;893
215,119
08,232
303.351
Imputed
j.nterest
1982 - 1987
32,250
37,125
69.375
CONLEY MCDONALO 5PRAGUE & EO
CITY OF MUSKEG9 SEWER UTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
SUMMARY OF TOTAL POTENl'IAL DEBT OWED TO CITY
FROM SEWER LTILITY AT DECEMBER 31, 1987
Exhibit E
9.
NON-TIF DEBT
Capital paid-in by City (Exhibit 8)
1983 MMSD charge (Exhibit C)
Less:
Payments (Exhibit B)
Grants (Exhibit C)
Adjustment
Total NON-TLF sewer debt
owed to City
TIF DEBT
Capital paid-in by City (Exhibit C)
Town of Norway (Exhibit D)
1983 MMSD capital (Exhibit D)
1985 plant abandonment (Exhibit D)
1982 manhole rehabilitation (Exhibit D)
Less:
Town of Norway charges which
will be paid by TIF F1
Total TIF related debt
of swer utility
Principal Interest Total
$ 3,133,567 1,189,532 4,323.099
635,585 177,964
3,769,152 1,367,496 5,136,648
-813;549
(2,524,714) (1,189,532) (3,714.246)
(372,282) (196,252) (568;534j
(18,288)
853,868
18,288 - 872,156 (18,288)
$ 853.868
""
- 853.868 -
$ 2,255,826 268,314 2,524,140
460,152
245,092
215,119
88,232
675,271
184,267 32.250
333,324
216,517
84,369
3,229,706
37,125
641,040 3,870,746
1213494
(460,152) (215,119) (675,271)
$ 2.769.554 425.921 3.195.475 -
ALLOCATION OF TIF DEBT
Balance
District
2
3
4
5
7
6
December 31,
1987
S 419,595
70,163
1,769,691
139,663
335,892
460,471
Total $ 3.195.475
CONLEY MCOONALO PRAGUE & Co
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I1 1987
1988 1- 1989
II 1990
1991
1992 I
1
1993
1994
1995
1996
1997 -
1998
b 1999
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Exhibit F
10.
CITY OF MUSKEG0 SEWER UTILITY
SEWER INDEBTEDNESS SllJDIDY
1969 - 1987
SCHEDULE OF PROPOSED PRINCIPAL AND INTEREST PAYMENTS
TO MATURITY ON NON-TIF DEBT OF THE SEWER UTILITY OWED TO CITY
Principal
$ 103,868 - -
100,000
100,000
100,000
-
-
300,000
150,000 - -
Interest
68,309
60,000
60,000
60,000
52,000
52,000
44,000
44,000
36,000
12,000 -
488.309
(1)
Tot a1
172,177
60,000
60,ono
160,000
152,000
52,000
144,000
44,000
336,000
162,000 - -
1.342.177
Balance
outstanding
Decenber 31,
$ 853,868
750,000
750,000
750,000
650,000
650,000
550,000
550,000
450,000
150,000 - - -
(1) Interest computed at 8%. Principal and interest due November 30.
(2) Principal debt payments based on City's debt maturity schedule considering
TIF debt schedule.
CONLEY MCOONALO SPRAGUE Co
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I 1987
1988
1989
19 91 1 1993
1992
1995
1994
1 1996
1997
1999
1998
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Exhibit G
11.
CITY OF MUSKEGO SEWER UTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
SCHEDULE OF PRINCIPAL AND INTEREST PAYMEhTS
To MATURITY ON TIF DISTRICTS 82 THROUGH #7 DEBT OF THE
SEMER UTILITY OWED TO CITY
Principal
$ 166,853
284,182
296,533
290,525
485,504
507,123
508,716
323,249
28,943
101,302
57,887
144,658
$ 3.195.475 -__
Interest
271,047
231,472
254,807
202,982
167,283
123,762
91,925
42,699
28,169
25,811
21,006
12,446
1.473.409
Total
437,900
528,005
538,989
652,787
493,507
630,885
600,641
365,948
57,112
122,308
83,698
157,104
4.668.884
Balance
outstanding
December 31,
$ 3,195,475
3,028,662
2,744,440
2,447,907
2,157,382
1,671,878
1,164,755
656,039
332,790
303,847
245,960
144,658 -
Project ed ne !t inc :ome per
CITY OF MUSKEGO SEWER UTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
PROJECTED STATEMEmS OF INCOME
1989 budget document
Additional interest expense:
NON-TIF debt
TIF debt
Estimated operating transfer from TIF
to finance interest expense
Exhibit R
12.
1988 19 89
$ 407,542 214,085
(271,047) (254,807)
(68,309) (60,000)
(1) 22,500 40,600
Projected net income $ 90.686 160.122) -__
(1) If it is assumed that the TIF tax levy is used first to finance the MMSD annual
capital charge then the following Districts would be able to finance a portion
of the annual interest expense:
2 3 4 5 6 7 Tot a1
Districts
1988 tax levy $ 98,999 164,993 23,553 13,010 21,063 159,277 480,895
1988 MMSD requirement 71,904 12,015 81,479 23,937 57,542 14,362 261,239
Available for
debt service $ 27.095 152.978
"
- - - 173,639
Above divided by 1988
total debt service
requirements 14.5x ~ 98.4% N/A N/A N/A = 29.6% -
1988 Sewer interest
coverage $ 5.500 5.700 N/A N/A N/A 11.300 22.500 ~-
1989 Debt service % 17.8% - - 100% 8.2% N/A 20.32 35%
1989 Sewer interest
- = - =
coverage $ 6.100. 4.900 11,600 N/A 5.400 12.600 40.600
CITY OF MUSKEGO SEWER LTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
PROJECTED LONG-TERM DEBT, CAPITAL PAID IN BY CIn
AND UNRESERVED RETAINED EARNINGS
Bala
(as previously reported)
mces, December 31, 1987
Restatement for:
NON-TIF Sewer debt
TIF debt
Balances (deficit), December 31, 1987
(restated)
1988 activity:
Projected borrowing for Hillandale
Principal payments on debt
Transfer from TIF for principal debt
Appropriation for equipment replacement
Net income
and Bellvim/Bay Lane Sewer projects
Projected balances (deficit),
December 31, 1988
1989 activity:
Principal payments on debt
Projected borrowing for Sewer project
Transfer from TIF for principal debt
Net income (loss)
Appropriation for equipment replacement
to Waste Management
Projected balances (deficit),
December 31, 1989
Long-Term
Debt
853,868
3,195,475
5,456,378
5,510,252
(423,507)
816,000 - -
-
$ 5.902.745
Capital
paid in
by City
1,955,890
(853,868)
(821,279)
280,743
-
-
24,200 - -
304,943
-
46,800
-
- -
- 351.743
Exhibit I
13.
Unreserved
Retained
Earnings
1,246,438
(2,374,196)
-
(1,127,758)
-
- -
90,686
(26,350)
(1,063,422)
-
- -
(60,122)
(26,350)
(1.149.894)
CITY OF MUSKEGO SEWER liTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
PROJECTED WORKING CAPITAL
Balances, December 31, 1987
Contributed capital - TIF
1988 City Special Revenue Fund activity
1988 net income
Depreciation
Amortization
Replacement Fund payments
Principal payments:
Collectionof special assessments
1988 budget
TIF debt
NON-TIF debt (1988 and 1989)
(1988 and 1989)
Fixed assets purchased - financed
with working capital
Projected balances, December 31, 1988
1989 City Special Revenue Fund
Contributed capital - TIF
1989 net loss
Depreciation
Amortization
Replacement Fund payments
Collect ion of special assessments
Principal payuents:
activity
NON-TIF debt (1990)
1989 budget
TIF debt (1990)
Fixed assets purchased - financed
with working capital
Projected balances, December 31, 1989
Note:
Utility
$ 313,281
24,200
90,686
250,000
78,400
(26,350)
33,600
-
$ 85,405
103,868
451,035 (640,308)
(20,000)
103,509
46,800
(60,122)
250,000
78,400
(26,350)
55,600
-
$ 139,325
296,533 (435,858)
-
(11,408)
$ 571
city
Special
Rev e nue
605,164
(92.000) - - - -
-
-
-
-
513,164
(140,000) - - - - - -
-
-
373.164
The above working capital projection provides for the financing of the
subsequent year's interest debt service requirements to be financed by
subsequent year's principal debt service requirements and assumes the
that year's operations; however, the City Special Revenue Fund would
be sufficient to also finance the subsequent year's interest require-
ments on non-mortgage revenue debt if operations were not sufficient
to do so.
Exhibit J
14.
Tot a1
918,445
(92,000)
24,200
90,686
250,000
78,400
(26,350)
33,600
(640,308)
(20,000)
616,673
(140,000)
46,800
(60,122)
250,000
78,400
(26,350)
55,600
(435,858)
(11,408)
373,735
CONLEY MCOONALO. SPRAGUE 6 Co
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1988
1990
1989
1991
1992
1994
1993
1995
1996
1997
1998
1999
Exhibit K
15.
CITY OF MUSKEGO SEWER UTILITY
SEWER INDEBTEDNESS STUDY
1969 - 1987
SCHEDULE OF PROPOSED PRINCIPAL AND INTEREST PAYMENTS
TO MATURITY ON ALL DEBT OF THE SEWER UTILITY
PROJECTED TU EXIST AT DECEMBER 31, 1989
Principal
$ 356,126
423,507
475,008
583,725
660,688
822,948
771,071
688,229
714,929
814,378
196,707
175,062
6.682.318
Interest
505,288
434,692
449,392
409,660
353,101
245,739
298,440
176,111
130,800
72,720
30,010
15,030
3.120.983
Tat a1
790,81R
928,795
924,400
993,385
1,013,789
1,016,810
1,121,3@8
864,340
887,098
845,729
226,717
190,092
9.803.361