The reason for higher costs in 1992 and 1993 is that two to three pumps stations are being
upgraded each year in order to overcome the substantial deficiencies in the City’s sewer pump
stations. As the City only has sixteen pump stations, the need for pump station reconstruction is
expected to diminish after 1993 and consequently the Capitai Costs are expected to be reduced.

SUMMARY

I expect that both the Sewer Capital and the Water Capital costs are somewhat high due to a
catch up situation. However, the annual replacement value for sewer and water of $171,600 and |
$221,840 respectfully may be somewhat low due to two reasons:

1) Developers may not provide the estimated contribution of 50% of the costs for
capital replacement.

2) The actual replacement cost for watermains and sewer mains are higher than the
cost for installing brand new water and sewer mains due to road rehabilitation and

service connections.

| would recommend that the City precede with establishing the water main and sewer line
replacement reserve funds and re-evaluate the water and sewer system evaluation estimates in
1992 to determine the required rates and the sewer and water utilities. oo

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CityEngineer :

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