The Burton community hopes to create another, non-profit water utility.

The Burton Water Company, now privately owned by Evan Simmons and Jim Garrison, has agreed to sell its system of 412 connections for $1.2 million, slightly less than $3,000 per connection.

During the past year, some of their customers have formed committees and a board structured to purchase that water system and operate it as a cooperative. Their hopes, efforts, and progress are recorded on the website, burtonwater.org.

There, you’ll also find a fiscal philosophy that differs somewhat from the share price dependence that is utilized by other water utilities on Vashon.

The issue revolves around what many call an “initial member equity” (IME) contribution, or simply the initial price one must pay to guarantee their water service from a utility.

The price for most connections is proportional to its value — for example, District 19’s IME is $11,900; Westside Water’s is $10,000; Heights Water is $10,000; and Dockton Water’s is $10,000.

Water District 19 will soon offer 28 new shares at $11,900 each; the price a utility customer expects to pay for a hookup on Vashon. But the soon-to-be-formed Burton Water Co-op proposes to ask for a much smaller IME and to borrow a large loan amount instead.

This brings up the issue of how the Burton Water Co-op should be funded — two, distinctively different options exist.

The board has extensively explored one — I’ll call it an “A-type” plan — that asks for a small IME and depends upon a large, 40-year loan offered by the US Department of Agriculture (the USDA). Several examples were outlined earlier on the co-op’s website — all displayed under its “Resources: Capital Scenarios Summary” section and each depended upon the small IME of $1,500.

The alternative funding option — I call it a “B-type” plan — is more aligned with the other Vashon water utilities, asking for a larger IME and avoiding a large loan completely.

I have explored the significant advantages of the B-type funding and suggested — to the board, other committee members, and as comments in community meetings — that both types of plans be explored and compared.

The whole point of the B-type, over the A-type funding, is to avoid large debts — a burden for any small business in uncertain, inflationary times, ones that often threaten bankruptcy or foreclosures.

Unfortunately, the advantages of the B-type funding are not available on the co-op’s website, nor have comparisons been published elsewhere. I’d like to correct that situation here.

I want to compare some of the negative features of A-type funding with the positive qualities of the B-type approach, which is followed by the other utilities.

Recently, the co-op’s finance committee circulated another A-type funding plan.

In an Excel spreadsheet analysis, under an assumed set of annual revenues and expenses, the $1.2 million purchase price, and a $2.4 million capital improvements list, the finances were evaluated for a 20-year period.

The committee asked for an IME of $2,000 and proposed to borrow a 40-year, UDSA loan of $3,305,955. The repayment schedule for the loan required payments of $159,688 per year, creating over $6.2 million in initial debt for the 40-year loan period, and over $3.1 million in debt still owed in 2043.

Contrast that with the no-loan, B-type funding — the same annual revenues, expenses, purchase price, and capital improvements list, but an IME of $4,000. This approach eliminates the need to borrow, and my analysis shows all the same costs covered in 20 years, leaving no debt in 2023, in any year in between then and 2043, or beyond.

The contrast is simple: The USDA loan involved in A-type funding provides an initial fiscal boost forward, but onerous principal and interest repayments over a 40-year period. Whereas, if the coop doubles its IME, there is no need to borrow, and no loan-related debts to be paid in its future.

And of course, each dollar saved by the co-op is one saved by its 400-plus members.

Ward Carson is a Burton resident. He holds a Ph.D. in Mechanical Engineering from the University of Washington. Reach him at wardcarson@comcast.net.