Barksdale Alternative Water Supply Project Proposal

Transcription

1 Barksdale Alternative Water Supply Project Proposal Washburn Common Council Approves Water Supply Agreement At their January 26, 2004 meeting, the Washburn Common Council approved a 30-plus year agreement with DuPont to provide water to eligible property and homeowners in the town of Barksdale. This is the presentation given by DuPont to the Washburn Common Council.

2 Barksdale Alternative Water Supply Project Proposal Presented to: Washburn Common Council January 26, 2004 Washburn, WI

3 Purpose of Presentation Briefly review the project background. Review Common Council comments received to date. Discuss details of the Secured Collateral Account structure. Review project benefits to Washburn. Request a vote on the proposed water agreement and supporting documents. January 26,

4 Presenters Brad Nave Former Barksdale Works Project Director, DuPont Corporate Remediation Group (CRG). Introduction, Purpose, Background, Review of City Council Comments, and Benefits of the Proposed Agreement. Tom Halloran Attorney, The Schroeder Group. Details of proposed agreement and Secured Collateral Account structure. January 26,

5 Background of Proposed Project Groundwater near the former Barksdale Works is contaminated with compounds associated with DuPont s former explosives manufacturing activities. DuPont has made a commitment to make an alternative water supply available to eligible home and property owners. While DuPont continues to evaluate other options, a water line from Washburn to Barksdale is the leading option. January 26,

6 Washburn City Council Comments There would be competition between DuPont and Washburn for pipeline construction contractors. Washburn has a lot going-on right now and already has a manpower shortage. Will you provide a water hookup at the Boy Scout camp? DuPont may not be in business in the future. What kind of security can DuPont provide to guarantee that it will fulfill the obligations of the contract? The revenue generated by DuPont sponsorship won t be very much. What is in the agreement for Washburn? January 26,

7 Secured Collateral Account (SCA)

8 Secured Collateral Account Creation of Secured Collateral Account (SCA) to guarantee DuPont s O&M obligations under the water agreement. Security interest gives Washburn priority with respect to this collateral. DuPont will maintain account and provide an annual report to Washburn. Concurrent with Washburn s obligation to provide water to Barksdale. SCA provision has been added to the water agreement. January 26,

9 Secured Collateral Account (continued) Incorporated into water agreement (Paragraph II, F): DuPont s obligation for the O&M payment shall be secured by a Secured Collateral Account. A description of that Account and DuPont s attendant obligations is set forth in Secured Collateral Account Addendum to the Water Supply Agreement which is attached and hereby incorporated into this Agreement. SCA Collateral Account Addendum Security Agreement Control Agreement UCC Financing Statement January 26,

10 Secured Collateral Account Growth $1,200, $1,000, $800, Estimated Annual O&M Cost $600, Collateral Balance (assuming default at 10 yrs.) Collateral Growth (5% growth, no default) Collateral Balance (assuming default at 5 yrs.) $400, $200, $ Years January 26,

11 What s in it for Washburn?

12 What is in it for Washburn? Free infrastructure: 4,400 feet of 12-inch diameter water main installed within city limits at DuPont s expense. Increasing the line from 4-inches to 12-inches in diameter within the Washburn city limits (per Washburn s request) will cost DuPont an extra $206,000. The total cost of the 12-inch section of pipeline in Washburn will cost DuPont an estimated $421,000. This section of pipeline also provides Washburn a potential for growth in this area of town (more customers = lower future rates for all). January 26,

13 What is in it for Washburn? (continued) A significant source of no risk revenue: DuPont will initially pay all Barksdale water bills within the specified usage limits. DuPont will pay operation and maintenance costs associated with the Barksdale extension for as long as Washburn provides water to eligible properties (30+ years). Washburn is protected by a Secured Collateral Account that the city can rely on to cover O&M costs should DuPont default. Up to $876,000 in gross revenue to Washburn over the initial 30 years of the contract. January 26,

14 Projected Revenue for Washburn Up to $876,000 in revenue over 30 years $1,000,000 $900,000 $876,396 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 Total Revenue O&M Revenue 8% Profit $438,198 $100,000 $0 $0 Estimated Revenue without Barksdale Customers $35,056 Estimated Total Revenue Structure with Barksdale Customers (55 customers in 30 years) January 26,

15 What is in it for Washburn? (continued) An opportunity to reduce future rates for Washburn residents: Economies of scale (sell more water). Washburn will be paid twice for the same water for a 30+ year period. DuPont will pay for the actual water sold AND pay for O&M (O&M is normally part of the charge for actual water sold). DuPont s overpayment will be reflected in next PSC filing by Washburn. Washburn residents benefit from this overpayment. January 26,

16 DuPont s Historical Community Support

17 DuPont s Historical Community Support DuPont has been committed to people of Washburn and surrounding communities: Constructed YMCA/DuPont Club (Club) in 1918 for use by DuPont employees and the public. DuPont offered and paid a double assessment on its residential properties and the YMCA/Club for several years in the 1920s to help Washburn through difficult financial times. DuPont donated funds for construction of a middle school in 1942 and a high school (to replace the one that burned in 1947) around DuPont leased the YMCA/Club for $1.00/year for use as a high school until the replacement was built. January 26,

18 DuPont s Historical Community Support (continued) DuPont has been committed to people of Washburn and surrounding communities: Following World War II, DuPont donated land, labor, and materials towards construction of a memorial park along Chequamegon Bay to honor those who had fallen in the war and the returning soldiers. After plant closure in 1971 and sale of the plant property in1986, DuPont proactively returned to address environmental issues. In 2003, DuPont made a donation to the Washburn Community Center. January 26,

19 DuPont s Historical Community Support (continued) DuPont has been committed to people of Washburn and surrounding communities: DuPont continues to provide retirement benefits to former Barksdale Works employees or their spouses. Many still reside in Washburn or the surrounding area. January 26,

20 Next Step Vote on the proposed water agreement and supporting documents. January 26,

21 Questions or comments? January 26,