10-11-2023 Workshop Packet - Laserfiche WebLink

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VII. Water/Sewer Replacement Fund (604) Background: This fund is used to account for funds set aside from the City’s water and sewer operating utilities to be used for future equipment replacement and capital costs for the City’s utilities. Source of Funds: The Fund receives an annual operating transfer from the Water Enterprise Fund & Sewer Enterprise Fund. Significant Highlights in Future Years: Large meter replacements are included ranging $30,900 to $40,317 per year starting in 2024. A sewer slip-lining project is in included in 2024 at $250,000. A Met Council I/I grant has been included for this project at $50,000. Fund Outlook: The fund includes the debt service payment for the public works facility. Initially the debt service payment was structured to be financed through a tax levy. Since the tax levy has been eliminated there has been a major shift in the financial burden to the Water (Fund 601) and Sewer fund (Fund 602), since transfers from these funds are the main source of revenues for the Water/Sewer replacement fund (Fund 604). It is essential that the City will closely monitor the Water and Sewer fund to ensure that it can continue to finance the Water/Sewer replacement fund to meet its capital infrastructure needs and the future debt service payments. The debt will not be retired until 2034. It is currently projected that an increase of 6.5% in utility rates in 2024 would be needed in the water and sewer funds in order to fund the operations, debt service, and capital outlay. The water tower is scheduled to be painted in 2034 which is the large expenditure. Staff will provide a detailed PowerPoint presentation on each of these funds at the City Council workshop. Additional information on each of the primary expenditures and possible funding sources will be discussed during the workshop, as well as examples of how each funding source will impact the City’s long-term fund balance.