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In the first Fiscal Year and Fiscal Year n +1 of production of Allowable Yield, <br />each amortization for the calculation of ACCost shall be prorated by the <br />number of days needed to achieve exactly n years of amortization following <br />the first day of production of Allowable Yield, <br />C. For variable-interest rate financing, annual payments shall be computed based on <br />the actual payments made in the applicable Fiscal Year according to OCWD's <br />financing documents. Any principal payments toward the Project capital cost <br />before the Project operation will be treated as cash. OCWD shall provide <br />Metropolitan with the accumulated paid principal pursuant to Section 5.1. <br />d. For fixed-interest rate financing with a non-uniform annual payment schedule, an <br />econon-tically-equivalent uniform annual payment schedule shall be calculated <br />based on an "Internal Rate of Return" analysis to establish the annualized capital <br />cost. <br />e. Project capital costs not covered by a financing arrangement described above and <br />all grants and contributions as defined in Section 5.3 shall be amortized over <br />25 years at an interest rate equal to the lesser of: <br />Metropolitan's most recent weighted cost of long-term debt on June 30 in <br />the year the capital expenditure occurred; or <br />the Fiscal Year average of the 25-bond Revenue Bond Index (RBI) as <br />published in the Bond Buyer, or such other index that may replace the <br />R131, over the most recent Fiscal Year prior to the date the replacement <br />cost was incurred. <br />All grants or contributions shall be amortized as negative capital cost values <br />beginning in the year that money was received. <br />f. After the first Fiscal Year of operation, only refinancing changes which lower the <br />Annualized Capital Component shall be included in the Annualized Capital <br />Component calculation of each subsequent Fiscal Year. <br />9. If the Project capital cost is part of a broad financing arrangement, annual <br />payments shall be calculated by prorating the annual payments of the broad <br />financing using the ratio of the Project capital cost to the initial principal of the <br />broad financing arrangement. <br />4. The Annualized Capital Component (ACCom) in dollars per acre-foot for purposes of <br />determining the Project Unit Cost each Fiscal Year shall be calculated using the following <br />formula: <br />ACCorn = ACCost / Allowable Yield <br />5, When Recycled Water is delivered to OCSD plants, the Annualized Capital Component <br />shall be adjusted as follows: <br />Agreement 221,56 -17- <br />