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Background 12 <br /> <br /> City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update <br />The City currently includes depreci ation in its annual budget and until <br />recently, user rates in each utility fully funded annual depreciation. However, <br />since 2011, sewer rates are not fully funding annual depreciation. Our <br />recommendations will show the necessary rate increases in order to once <br />again fully fund deprecation in the Sewer Fund. <br /> <br /> <br />Assumptions The City provided Springsted with a variety of material including: <br /> 2009-2011 Financial Reports <br /> 2012 and 2013 Operating Budgets for each Fund <br /> 2013-2025 Capital Improvement Plan – listing cost and year of <br />expenditure in 2012 dollars <br /> Capital costs were inflated to year of construction cost, using the 10- <br />year average of the Municipal Cost Index, or a 3.59% inflation factor <br /> Projected new connections to the water and sewer system over the <br />planning period <br /> Detailed number of water connections by quarter by user class for <br />2010 and 2011 <br /> Detailed water consumption data by quarter by user class for 2010 <br />and 2011 <br /> Previous utility rates <br /> <br />We have used the information provided by the City as the basis of our <br />projections, as well as discussions with City personnel. <br />