Atlantic Electric Update
October 21, 2016 Meeting
The Borough met with Representatives of Atlantic City Electric on October 21, 2016 to discuss cost estimates to move Phase I Steel Poles underground and to discuss Phase II project for wooden replacement poles on 1st Avenue.
Atlantic City Electric informed the Borough that they would be delaying the Second Phase in Stone Harbor till 2018. This will give the residents on 83rd Street time to continue their pursuit of getting their lines underground. In addition it gives the Borough, residents and Atlantic Electric time to reevaluate the scope of their project and hopefully find alternative solutions.
Next Atlantic Electric presented their report analyzing options to replace existing overhead 69k V feeder with a new underground 69kV feeder within the Boroughs jurisdiction.
To view their findings please click on the link below:
Atlantic City Electric Cost Estimate for Underground Transmission
In regards to the design, the project would be broken into two components:
- Civil – Site survey and sub-surface utility investigation, design of duct bank and profiles, construction phasing and traffic control, erosion and sediment control and permitting at a cost of $350,200.
- Electrical – Cable selection, bonding schematics and cable pull layouts/installation at a cost of $115,540.
ACE has also estimated that their internal engineering cost for the project would be $400,000. This would bring the total estimate for engineering which was not included in the cost estimate to $865,740.00
The Hi-Level Cost estimate presented to us was broken down as follows:
Cost of actual construction $14,438,330
50% Contingency $ 7,219,165
3% Escalation $ 3,449,478
Total Cost $25,106,973
17.56% Mandated Tax $4,560,808*
Total Estimated Costs $ 30,533,521**
* Contribution in aid of construction is a federal tax mandated currently at 17.56%
**This figure does not include the cost to remove the existing poles, reinstall wooden poles for distribution or cost of Verizon and Comcast to move their lines to new wooden poles. ACE will be providing us an estimate to remove poles and reinstall wooden poles. We would have to get cost estimates directly from Comcast and Verizon.
Jim Craft, Borough CFO did an analysis of what the cost and effect thereof of a $30,000,000 Bond for 20 years and 30 years as well as a $40,000 bond for 20 years. According to Mr. Craft as of 12/31/15 in the General Capital Fund we have $14.1 million in Serial Bonds Issued. A $30.0 million bond would more than double the outstanding Serial Bonds, a $40.0 million bond would increase the outstanding Serial Bonds by 280%.
The Borough’s borrowing capacity is limited to 3% of the average equalized valuation by state law. Currently we are around .9%, issuing a $30.0 million bond would increase our percentage to 1.6% and our AA bond rating would drop back down to a A+ resulting in higher interest cost.
A $30.0 Million bond repaid over 20 years would increase debt service by approximately $1.9 million a year and raise the tax rate by 4.2 cents. A million dollar home would pay an additional $419.89 in additional taxes for the debt service on that bond. A $1.4 million property would pay an additional $567.85 a year for the next 20 years.
A $30.0 Million bond repaid over 30 years would increase debt service by approximately $1.4 million a year and raise the tax rate by 3.4 cents. A million dollar home would pay an additional $335.46 in additional taxes for the debt service on that bond. A $1.5 million property would pay an additional $503.19 a year for the next 30 years.
A $40.0 Million bond repaid over 20 years would increase debt service by $2.8 million a year and raise the tax rate by 6.3 cents. A million dollar home would pay an additional $633.34 in additional taxes for the debt service on that bond. A $1.4 million property would pay an additional $886.67 a year for the next 20 years.