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City of Falcon Heights Budget Workshop 31 August 1994 ENTERPRISE FUNDS The purpose of an enterprise fund is to be self- sustaining by charging fees for service that cover the cost of providing the service. Staff reviews the fees for the service on an annual basis and recommends adjustments to these fees as necessary. A. Sanitary Sewer Fund The sanitary sewer fund obtains its revenue from a quarterly fee for service. The fee is designed to cover the MWCC charge to the city for treating the sanitary sewer waste from the city and to set aside funds for replacing the aging sewer system as replacement becomes necessary. The extensiveness and age of the system require that the city carry a fund balance that can financially manage to replace deteriorated sewer throughout the city. ($63,539 of the sanitary sewer fund was used to replace deteriorating sewer in the 1993 street improvement project./ The MWCC fees increased substantially in 1990, which drew down the sanitary sewer fund balance. Increased city fees in 1991 and 1993 combined with reduced MWCC charges in 1994 have stabilized the fund balance. Given the estimated 1995 charges by the MWCC, staff anticipates the sanitary sewer fund balance will modestly increase without increasing the city's charge to users. In 1994 the city approved a $250,000 five -year loan to the school district for parking lot improvements to the Falcon Heights Elementary School. This loan will be charged to the city's sanitary sewer fund because it has the largest financial set aside of any capital or enterprise fund in the city. The school loan will not negatively impact the long -term fund balance of this enterprise fund.