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<br /> <br />City of Sample, Minnesota <br />Water Rate Study <br />Date <br /> <br />II. Assumptions <br /> <br />Water Fund <br /> <br />• All scenarios assume fees are inflated at least 3% annually. Scenarios 2 and 3 assume additional increases to the <br />inflationary increase over several years to meet the targets. <br /> <br /> • Operating expense inflation is assumed to be 3%. <br /> <br />• An increase in residential users is estimated at an average of 101 users from 2019 - 2028 based on estimated <br />development increase estimates for 2018 - 2030 provided by the City. Additional billing revenues is assumed at <br />the average consumption rate of 11,000 gallons for water quarterly. <br /> <br />• Planned acquisition of capital assets is taken from the City CIP. Major purchases are offset with bond proceeds <br />and future debt payments. <br /> <br /> <br />Meter Size Residential Commercial Tax Exempt Development Government Total <br />5/8-Inch 515 45 2 2 - 564 <br />3/4-Inch 3,157 193 42 1 - 3,393 <br />1-Inch 31 35 4 5 - 75 <br />1 1/2-Inch 8 19 1 11 1 40 <br />2-Inch 4 8 9 4 2 27 <br />3-Inch 8 2 4 - - 14 <br />4-Inch 5 3 3 - - 11 <br />6-Inch - - - - - - <br />Total 3,728 305 65 23 3 4,124 <br />Estimated Number of Meters <br /> • Target cash reserve will be set at 100% of the following year’s debt service and 50% of the following years <br />operating expenses. Based on Scenario 1, the cash balance will not be sufficient to meet the target and <br />operating cash will not generate enough surplus to cover the following year’s operating expenses. <br />Scenarios 2 and 3 create positive cash flow sufficient to hit the targeted cash balance by the end of the <br />projection. <br />Sample <br />8