10/01/2007 Council Packet - Laserfiche WebLink

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• • • • • • • • • • • • • • • • • • • 1 • • • • • • • • 1 • Executive Summary 2 Springsted The following conclusions were determined as a result of this study and the financial projections prepared: 1. The Water and Sewer Fund's history shows revenues and expenditures, have remained fairly stable over time. Operating income in the Water Fund is projected to increase from $213,265 in 2004 to $340,813 in 2007. Operating income in the Sewer Fund is projected to decline slightly from $149,658 in 2004 to $131,964 in 2007. 2. The City should maintain a minimum cash balance in each Utility fund of at least three months of anticipated operating expenses and one year's debt service at the end of each year. 3. The Water Availability Charge should be increased from $3,415 to $3,530 for a customer with a 5/8 inch meter to more accurately reflect current capital cost estimates to provide service to new users. Fees for customers with larger sized meters should be proportionately higher based on estimated water consumption. The method currently used by the City is efficient in determining Availability Charges for larger users. 4. Water user rates should be set to promote conservation. After analyzing current and historical consumption patterns, our recommended block rate structure is as follows: Proposed Blocks (Thousands of gallons) Charge/Unit 0 - 15,000 1.70 15,001 - 30,000 2.05 30,001 - 79,000 2.30 79,001 - 499,000 2.55 > 499,000 2.90 1 The City's current water rate structure is as follows: Current Blocks (Thousands of gallons) Charge /Unit 0 - 30,000 1.77 30,000 or > 2.07 It is recommended that the proposed block rate structure be implemented in 2008. Future projections indicate rates may need to be increased by 3.00% in 2013, 2015 and 2017. These increases are needed to pay for anticipated operating and maintenance expenses, debt service including principal and interest, capital improvements, to provide sufficient cash flow for operations, and to maintain adequate cash reserves for future capital improvements. 5. The current Sewer Availability Charge of $2,585 is adequate to fund projected capital costs. 6. Sewer user rates should be increased annually by 2.75% 2013 through 2017. These increases are also needed to pay for anticipated operating and maintenance expenses, debt service including principal and interest, City of Lino Lakes, Minnesota. Water and Sewer Study