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Executive Summary 1 1. Executive Summary This report was prepared to review the financial performance of LakesÓ current Water and Sewer Funds and determine the appropriate rate structure, availability charges, and other revenue needed to adequately fund operations through 2022. The process included a historical review of the two utility funds, the evaluation of the appropriate rate structures these operations over the planning period, alternative water rate structures to encourage water demand reduction, connection fees, and a compari with other similar utilities. One major consideration in determining the water rates is compliance with Minnesota State Statutes, Section 103G.291. In the 2012 the Min Legislature redefined the water conservation requirements now calling them demand reduction measures. The law now states that Ðpublic water suppliers serving more than 1,000 people must encourage water conservation employing water use demand reduction measuresÑ as opposed to the initial law requiring Ða conservation rate structureÑ. The law goes on furt ÐDemand reduction measures must include a conservation rate structure, or a uniform rate structure with a conservation program that achieves reduction.Ñ It is important to point out that conservation themselves do not constitute an effective water conservation/demand reduction program. Rate structures work best when coupled with a comprehe program. A water demand reduction program should include, at a minimum, a public education program and public assistance program to achieve the reduction in per capita water use envisioned by the City. In determining the water rates and rate structure options, Springsted reviewed historical water consumption patterns and used this information to recommend alternative rate structures that would promote water conservatio All recommendations are based on information provided to us and on the assumptions given for the financial projections. The City will need to monitor the performance of each fund and make any necessary adjustments based upon its actual performance and on the actual construction costs of t capital improvements. The following conclusions were determined as a result of this study and the financial projections prepared: 1.The Water and Sewer FundÓs history shows revenues and expenditures, have remained fairly stable over time. Operating income in the Water Fund is projected to decrease from $324,865 in 2009 to $217,713 2012. Operating income in the Sewer Fund is projected to declin rapidly from $70,057 in 2009 to ($56,275) in 2012, thereby not f depreciation. 2.The City should maintain a minimum cash balance in each Utility fund of at least three months of anticipated operating expenses and one debt service at the end of each year. Current and projected cash levels support this recommendation. City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update