Agenda - Council - 06/23/1981 - Laserfiche WebLink

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analysis measuring the effect of various operating, maintenance and. replacement costs, projected revenues and financial assumptions. The sensitivity analysis should provide the investor with coverage ratios (a measure of the availability of ~unds to r~pay principal and inter- est) expected under variOus operating conditions. The coverage ratios should be sufficient to satisfy the investor that he or she will be properly compensated. Security features can be built into the financing of waste facilities. These include: o A reasonable (one year) reserve fund to pay principal and interest on the debt; o A reasonable reserve fund for maintenance of the facility, as well as planned replacement of certain key facility componentS; and o An equity contribution to the project by the private sector that assures the investor of the level of commitment by the operator and reduces the level of annual debt service. Resource recovery projects require a series of contractual arrange- ments between the parties involved in the planning, development and operation of the facility. Along with contracts for design and construction, contracts are needed to secure the solid waste supply, operate and maintain the facility, and to purchase energy productS. Contracts for waste supply and energy products are particularly important, since they provide the revenues for the project and are scrutinized during the project financial analysis by investors, bonding agencies and public sector representatives. These contracts, for most part, will be long term and involve both private and public commitments for periods up to 20 yearS. Consequently, it is impor- tant to consider the many contractual options available and select agreements that contain appropriate performance guarantees, equitable compensation formulas, specific contract issues (e.g., tonnage guarantee provisions, source separation clauses) and risk-sharing provisions. Certain conditions will require formal advertising, competitive negotiation or single source negotiation for contrac- ting. Contracts may involve a single local governmental unit or a number of communities. Planning for the variation will help achieve efficiences and minimize delays. Communities may wish to seek con- sulting assistance from either independent financial and procurement consultants or from governmental planning and regulatory agencies. Objectives Ensure that ublicl¥ supported or ~ Waste facilities do 7a. D-~-~i~e the continued op~at~on of comparable private not ]eop Waste facilities. 7b. Ensure that a publicly owned, operated or funded waste facility, or a waste facility having contract obligations with governmental units, will (BE FINANCIALLY SELF-SUFFICIENT) minimize the public economic risk.