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Area and Unit Charge Fund On January 11, 1988, the City Council approved Resolution 1-88, which established the Area and Unit Charge Fund for the City. The purpose of this fund is to collect various area and unit charges to be used to meet debt payments. Before October 1 of each year, the City estimates the required transfer needed to meet debt payments for the subsequent year. In December, these estimated amounts are transferred to the various debt funds. We recommend that the City continue to closely monitor actual versus projected area and unit assessment collections to assure that debt payment requirements will be met. Designations of balances required for debt service is necessary to define discretionary construction balances available to the City. The financing plan for the following bond issues have pledged area and unit charges for the repayment of debt service: • Improvement Refunding Bonds of 1992A • Improvement Refunding Bonds of 1996A • Water Revenue Bonds of 1992B • Water Revenue Bonds of 1996B The Water Revenue Bonds of 1992E have future debt service requirements totaling $743,855 (principal and interest). The City annually transfers amounts from the Area and Unit Charge Fund to the Water Fund sufficient to cover the debt services of the 1992B Bonds. During 2000, a transfer of $301,709 was made to the Water Fund. It is the City's intention to repay the Water Revenue Bonds of 1992E and 1996B with revenues of the Water Fund. If revenues are not sufficient to meet the debt requirements, funds will be transferred from the Area and Unit Charge Fund. DEBT SERVICE FUNDS The combining financial statements for the debt service funds are presented in Statements 11 and 12 of the 2000 Annual Financial Report. Debt service funds are a type of governmental fund used to account for the accumulation of resources for the payment of principal and interest on general obligation debt (other than enterprise fund debt). Debt service funds may have one or a combination of revenue sources pledged to retire debt including property taxes, tax increments, special assessments and area and unit charges. The diverse nature of the type of debt included in the same fund type requires careful analysis to determine the adequacy of the fund balance and projected fund balance. The following schedule extracts information from Exhibits 1, 2 and 3 of the 2000 Annual Financial Report to assist in this analysis. The following schedule compares outstanding debt with assets pledged for debt retirement. This comparison provides a means to judge (at least on a preliminary basis) the financial position of each individual debt service fund.