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Show f . I low NvouUl purchase of (ho R:K company reduce (axes? uivhase of the Cas Utility by the City of Moab is seen by , qualified observers as a once-in-a-lifetime bonanza for the City X FA HU H H U i - a p unless avenue to additional income for City operation. f I 'fft gNlf 5S ' F7T ' ' opuat on and would mean that taxpayers in Moab would have o contribute less for adequate operation of the City of Moab. , n act. m roughly 18 years after acquisition of the gas utility fF3 J YVZ v r-i UfZ ! by the aty, Moab City taxes could be entirely eliminated. ; jTR3 Ynjfl Jl M f How would we raise the money to purchase the company? ' I By issuing Revenue Bonds, the City of Moab can acquire the gas company without spending a dime. Utah Gas Service V F1 """'N Company. wnll accept revenue bonds in exchange for the com- HwHTN ft fl W7(T panv's property. No money changes hands. Revenue bonds do UWu4CllLU L2)lUi V ' not constitute a hen on any Moab property. Payoff of bonds U depends completely on revenues generated from the sale of gas. ! ; So, only gas revenues can be used to pay off the interest and CTTa H TY- roti,' th0 bomU' rDifP (lcnl v How much additional income are we talking about? Li U U VsS? ZzUkS2J A portion of the net revenues generated from the sale of f , gas will be used to pay the interest and retire the bonds. You CTN will notice in the Cash Flow Chart at the bottom of this adver- f ns CPT VxX ff J) '- tisement that this is on a sliding type of scale. As the time ILff )iM if M n(T) 10 VV " ' period increases, the interest is reduced and more is applied to zr L3 U U WWJU Li Y7 E2 - J; the principle. That means that revenues to the General Fund for f the City of Moab increase. You will also notice that after the I bonds have been retired, the net revenues can provide a windfall I . ... : .: .. .-: -- 1 of money to the General Fund. Enough money to entirely eliminate elim-inate city taxes. The proposal has been made for the City of Moab j j i i r - . . to purchase the facilities of Utah Gas Service Company i M Is this idea of a municipality owning their own utility new? and operate the company as a municipally-owned util- ; : No. Some thirty Utah cities presently own and operate ity, as permitted by Utah Code 10-8-14, page 181. This y ' h their own electric utility. The cities of Rangely, Colorado proposal will be voted upon at the election on Novem- ' -. Springs, Trinidad and Ft. Morgan, Colorado; Ellensburg, Enum- ber 2, 1971. ..; '. ; claw and Buckley, Washington and Wilcox, Arizona presently We CITIZENS FOR MUNICIPAL GAS FOR A H operate gas utilities. Mr. Ellis Foote, City Manager at Wilcox MOAB, are providing this newspaper space to point out . - says of their gas utilities: "If we didn't have it, we wouldn't be the obvious benefits of this proposal. We do this in the ,. -i j . able to manage our financial affairs. It presents no problems but interest of an informed public in Moab. , ; does a top job of producing revenues for our city." Thirty per - cent of all cities and towns connected to the entire El Paso f ""j".':"' . '"" ''7TT7" "... 17. '77777171 777777. 1 z Natural Gas Pipeline System are profitable municipal - I operations. Won't purchase of the gas company result in'ah immediate loss ' O") ? A jJP n n TNIan "" rT of tax revenue of the city - those taxes contributed by the gas JvS? (DO vLG Ua 0 (0) U U ' No. Net revenues over and above the portion that would - - - , ; be allocated to the payment of the revenue bonds would more .,,.nj n than offset any tax loss. The financial picture then gets better J a t j O'Ts (Sk fl cr" decreases and the profits 40 the (Q)li u li .; 2 : ' ; Here is a Cash Flow Chart that breaks out and projects ; i anticipated financial happenings for the Utah Gas Service Com- p . rprs rZ! n fl pany if purchased by the City of Moab. (Note that the conserva- t ja ; fii U t U fT U ' tive estimates include no provision for increase in income over jj y7 Wj j U ' J LJULI LI M i E3 ii the time period. Increased connections and additional service jJJ jJJ I will certainly increase this figure. j CASH FLOW CHART -MOAB CITY OWNERSHIP OF GAS SYSTEM BASED OIMJULY 2, 1971 UTAH GAS PROPOSAL AT PURCHASE PRICE OF $1,200,000 ! 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 H ; : H Operating revenues mmimmmmmmmmmKmimMm Residential and Commerical $225,315 $225,315 i Atlas Minerals 97-495 97'495 (1) Bonds paid off in 1989 - in 18 years I ; ' rnn.o 77 ohq (2) Extension and replacement fu nd of $ 1 1 2,500 in 1 8 years. i Texas Gulf 56,218 ,uo , Miscellaneous 2,955 2,955 (3) Moab City receives $6, Q00 payment for indirect overhead. i T . TS1 Qfl 402 973 " (4) Moab City receives 3323,471 for General Fund in 17 years com- i Total Revenues Ml,voo t", , pared to S305,1 96 for General Fund in 17 years at $1,295,000 Revenues and Cost of Gas are figured at a constant rate from 1974 on (no growth) purchase price. (5) At end of 1989, Moab City owns gas system free and clear ; producing $138,439 per year clear to Moab City, plus $6,000 ' i Cost of Gas Purchased indirect expense allowance per year. :' Residential and Commercial 105,047 105,047 (6) If Moab City desires .to make an in lieu of tax payment to its , . . ... . 63 747 63,747 School District, payments to the Extension andor General " Atlas Minerals ,n'nm r7 enn Fund will be reduced proportionately. i Texas Gulf 40-777 b'bU S. Total Cost of Gas 209,571 226,394 f ,,,,..-,,,,,.,,,, j 6 5?g $17G 57g $176,579 $176,579 $176,579 $176,579 $176,579 $176,597 $176,579 $176,579 $176,579 $176,579 $176,579 $176,579 $176,579 $176,579 $176,579 Net Revenues $172,412 $1 ( Deduct: m 32 140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 32,140 h Direct Payroll & Expense 32,140 3Z,14U , 6'QQ0 6 0QQ 0Q0 Qm em Bm Gm GQQQ eQQQ Bm . m Qm em Qm j, Moab City fees 6000 72'475 355 6635 62,985 59,605 55,835 52,065 47,905' 43,680 39,130 34,580 29,705 24,830 19.500 ' 14,040 8,255 M Interest on Bonds 78- 113'54o 110 615 107495 104375 101,125 97,745 93,975 90,205 86,045 81,820 77,270 72,720 67,845 62,970 57,640 52,180 46,395 M ' - Balance available for principal payments, 1 Si extensions & General no n R- R4 Eg 084 72,204 75,454 78,834. 82,604 86,374 90,534 94,759 99,309 103,859 108,734 113,609 118,939 124,399 130,184 ; . c j 56 272 63,uj9 DD,aot u, , Fund J'" y I Applied ,onnn 48OOO 50 000 52 000 58,000 58,000 64,000 65,000 70,000 70,000 75,000 75,000 82,000 84,000 '89,000 127,000 l) I Principal 40000 45' J innnO 7'50Q 7'500 7,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 j Extensions 10'000 1'q 7aM 13'584 14704 15,954 15,834 19,604 17,374 20,534 19,759 24,309 23,859 28,734 26,609 29,939 30,399 3,184 U General Fund 6272 8,03 ' fj l. i-atp as last two months, of 1972. . I Ba:ed on predicted consumption at the same rate as last tw . jy V CITIZENS FOR MUNICIPAL GAS FOR MOABcMr. I. D. Nightingale, Chairman Ir'' ' ' |