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Water Utility 17 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Water Utility Revenue Revenue requirements indicate the amount of revenue needed for the City to Requirements continue efficient operations, as well as maintain an adequate cash balance in the utility. Revenue requirements incl ude operating and maintenance expenses, debt service payments, capital outlay, and any operating or working capital reserves. The debt service payments to be made from the Water Utility are for a portion of the 2010A General Obliga tion Improvement and Utility Revenue Refunding Bonds. In 2010 and 2011, revenues from volume charges were approximately $1,055,000. In 2012, due to an extremely dry year, year-to-date figures estimate revenues to come in closer to $1,250,000. In order to not overstate revenues in 2013 and beyond, we have assumed 2011 revenues to be a more “normal” revenue base assuming average rainfall. Therefore we assume 2013 revenues would increase somewhat to account for minimal new growth in 2012 and 2013 to approximately $1,115,000. 2010 and 2011 consumption data also indicated 77% of volume-based revenues were derived from residential users, 10% from non-residential users, and 13% from non-residential irrigation accounts. We assume this pattern will continue when generating possible rate structures. The following pages show the projected operating statement and annual cash balance in the Water Utility, assuming the current rate structure and volume charges are kept in place over the planning period with increases only attributable to new customers as discussed on page 13, not from increased rates. The 2013 proposed budget was used for operating expenditures. The fund is projected to maintain positive operating income until 2015. At that time, the City will no longer be fully funding depreciation. However, projected ending cash balance is sufficient to fund the recommended reserve levels in all years of the planning period.