Mark Burroughs, a former member of the Denton City Council and current partner with Swako and Burroughs, P.C. law firm in Denton was elected Vice Chairman.

Dottie Polumbo, City Attorney for Highland Village, was elected Secretary.

Jeff Snowden, a representative of the City of Frisco and principal consultant with Capex Consulting Group now serves as chairman of the Finance Committee and Treasurer of the DCTA Board of Directors.

Formed in 2002 as the state's only county-wide transportation authority, the DCTA is governed by a 14-member board appointed by respective entities to oversee the implementation of DCTA's Service Plan and the development of a regional rail system.

Charles Correll of Copper Canyon, formerly chairman of the Finance Committee, is now serving as chairman to the Program Development Committee. Jeff Snowden, a representative of the City of Frisco and principal consultant with Capex Consulting Group now serves as chairman of the Finance Committee.

Thomas Smith, Vice President of Engineering with Paradigm Engineering, Ltd, was appointed by the Denton County Commissioners as an at large representative to replace Jason Pierce who resigned in August.

Formed in 2002 as the state's only county-wide transportation authority, the DCTA is governed by a 14-member board appointed by respective entities to oversee the implementation of DCTA's Service Plan and the development of a regional rail system.

In addition, there is tremendous value in developing expertise in project finance from a career development standpoint. The EPA estimates a 20-year funding shortfall of $277 billion and $181 billion for water and wastewater, respectively. The current and future demand for City staff who can execute large-scale projects while providing oversight and guidance to the various stakeholders should be significant.

While every project is unique, a large number of items that can be challenging tend to appear consistently from one project to the next. The following paragraphs are designed to provide an overview of the key elements of project finance. Potential problem areas are identified and discussed in order to enable staff to identify and mitigate these items as early in the project development process as possible.

Understanding the Project
Clearly the best way to develop a big-picture understanding of the project is by asking questions early and often. What is the driving need for this project and how will it benefit the utility? Is the service area in a high-growth situation where continued economic expansion can only take place with additional infrastructure? If so, you may choose to direct members of your project team to begin exploring methods to allocate a portion of the project's cost directly to new development via impact fees. Or, you might want to evaluate the degree to which rate increases may curtail consumption and thus reduce long-term capacity requirements. Alternatively, a slow-to-no growth situation may warrant the evaluation of discounted rate structures offered to certain customer classes.

Managing the Critical Documents
A record-keeping system that provides quick access to important project documents is invaluable. The objective is to have the important documents at your fingertips when you need them. Example documents include loan agreement/official statements, rate studies and financial plans, disbursement schedules, bid evaluation reports, professional service contracts for project team members, construction contracts, and sources and uses tables. Given the level of coordination required in a typical project, the individual who can consistently access the required items quickly becomes a key member of the project team.

As new documents are formulated, it becomes increasingly important to have a role in the review and comment process. If the rate study, for example, assumed an interest-only grace period throughout the construction phase, but the amortization schedule did not, you have a problem that could have been avoided during the review and comment period of the loan agreement. Similarly, a project team's assumption that a rate stabilization fund can be used to cover revenue shortfalls is of little value if the bond ordinance does not include this fund type in the definition of pledged revenues. Again, a long-term, big picture view of the project becomes critical in identifying disconnects and moving forward.

Sources and Uses of Funding
The one document that provides the best picture of an infrastructure project is the sources and uses table. When properly constructed and summarized, it serves as a one-page reference that identifies the amount and type of each funding source and a high-level breakdown of what it is that you are building. The interesting thing about this document is that it will go through a number of changes during the project cycle as your project is developed. Initial project cost estimates based on conceptual designs will be replaced by the "Opinion of Probable Cost" associated with the final design, which will ultimately be replaced by the schedule of values submitted by the winning bidder. Of course the sources component will fluctuate as well.

Depending on the scope of the project, the uses of funds (also known as the schedule of values) can run into the thousands of line-items. Initially, the project team should seek a clear separation of hard and soft costs. All of the Utility's sunk/planning costs should be fully reflected in the soft cost breakdown, especially when matching funds are available or when grant and/or low interest loans are sought. On the hard cost side, Utility staff should develop an understanding as to how the contractor plans to handle inflationary forces, especially when dealing with multi-year projects. Will unit cost increases be absorbed by the contractor's profit? By the contingency allocation? Does the contractor's balance sheet indicate that severe cost increases can be absorbed without interrupting your project? In light of the recent double digit price spikes in key construction materials such as diesel, rubber, and cement, addressing cost overrun issues early is both prudent and necessary from a finance perspective.

Another key question to ask is who will be responsible for tracking the project using this schedule. It is not uncommon for this work to be duplicated by the contractor, the lender, and the project manager. Given the level of effort involved, establishing a system with the project manager and/or lender wherein the Utility is notified of any significant deviations from the original schedule is one option. A Utility requirement that change order requests be accompanied by a report that illustrates changes to the contractor's original schedule of values is yet another option. If the Utility elects to track all line-items individually, the purchase of the software application used by the contractor [typically Microsoft Project, Primavera, or Excel] may be warranted. The main idea is that someone is watching the progress so that there is no duplicate billing.

Grant Funding
While grants are important funding mechanisms that provide the necessary amount of capital to bridge the gap between utility funding capacity and the project's cost, it is important to note that there can be numerous strings attached to the funds. Examples include additional procurement procedures and reporting requirements. From the outset it is important to define all items that may affect the grant amount or timing of disbursements. Will the amount of the grant be lowered proportionately if bids come in under budget? Does the Utility stand to loose a portion of the committed grant if it is successful in accessing additional grant funds, or if debt is issued at more favorable terms than originally anticipated? What is the impact on the grant calculation if actual connection growth, and thus revenues, are above or below forecasts?

Debt Financing
Debt obligations, in the form of municipal bonds secured either partially or completely by system revenues, typically provide the largest source of project funding. The Utility's financial advisor is the architect of this funding mechanism, and the ultimate resource for questions related to debt service coverage ratios, additional bonds tests, reserve funding, and reporting requirements. In the event that the project will provide additional capacity sufficient to serve new areas, the revenue from these new connections may play a vital role in meeting the bond's various covenants. Correspondingly, a thorough understanding of the timing of these new connections and the rate structure to be applied to them is critical.

Summary
Participating in a project that will benefit your community for several generations can be both rewarding and challenging. Developing a broad-based understanding of the project and its benefits will position Utility staff to play an effective role throughout the process. Leveraging the expertise of internal and external project team members provides an additional tool that will enable the Utility's staff to implement the project effectively. The skill-set that is developed along the way becomes an important asset to both the Utility and the individual staff member.

The Boiler Expansion and Renewable Energy Project will allow for improvements to the mill to convert sugarcane stalk biomass waste from milling operations (bagasse) to a value-added energy source for increased steam production and on-site renewable energy power production for plant operations and resale, Bearden said.

Specifically, the waste product that results from the milling process will be fed into a series of boilers, the steam from which will power turbo-generators that produce electricity. As such, the value-added product to be produced by RGVSG will be kilowatt hours of electricity.

The federal grant is provided by the Value-Added Producer Grant program, which was established by the Agriculture Risk Protection Act of 2000 and is administered by the USDA Rural Business Cooperative Service. The initial grant of $100,000, which must be matched or exceeded by RGVSG, will be used to develop a detailed financial feasibility study, marketing plan, and legal documentation and related expenses.

Jeff Snowden of Capex Consulting Group, who prepared the grant application and is providing project management services to RGVSG, added that the improvements to the mill will significantly reduce the emission of air pollutants, promote renewable energy sources, and improve the overall efficiency of the plant. The project also will add a new source of revenue to ongoing operations by providing access to the emerging market of renewable electricity.