Management Report and Recommendations 12/31/1990

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NIMMI City of Lino Lakes, Minnesota Management Report, Page 44 ENTERPRISE (UTILITY FUND' The financial statements for the Enterprise Funds are presented in Statements 14 through 16 of the 1990 Annual Financial Report. Condensed comparative statements of income and expense for the years 1990 and 1989 (excluding depreciation on contributed assets) for the water and sewer utility fund are shown in the following schedule. For The Year Ended December 31, 1990 1989 — Amount Percent Amount Percent Operating Income: Water billings $99,894 40.43% $72,238 39.78% Sewer billings 119,112 48.20% 82,408 45.38% Other 28,100 11.37% 26,942 14.84% Total operating income 247,106 100.00% 181,588 100.00% '" Operating Expenses: Personal services 61,965 25.08% 35,549 19.58% MWCC 63,655 25.76% 50,531 27.83% Repairs and maintenance 38,845 15.72% 35,798 19.71% Depreciation 820 0.33% 769 0.42% Other 43,340 17.54% 29,671 16.34% Total operating expenses 208,625 84.43% 152,318 83.88% Income from operations 38,481 15.57% 29,270 16.12% Other income: Interest on investments 256 0 MWCC maintenance agreement 7,233 10,656 Net income $45,970 $39,926 The City reviewed water and sewer rates and increased rates effective July 1, 1988 and January 1, 1989. The City engineer has updated the City's 1988 Utility Rate Study, and has issued his report dated May 20, 1991. The City Engineer has recommended that the City increase rates by 5% effective July 1, 1991 and 5% on January 1 of each following year. Also recommended is that commercial/industrial users including the Lino Lakes correctional facility pay a quarterly water user fee based upon a residential equivalent unit basis. Currently the City purchases water from the City of Circle Pines. The City of Circle Pines will discontinue the sale of water to Lino Lakes in 1992. The City is currently studying the construction of a water tower. We recommend that the City charge water rates at a level which will cover the cost of retiring debt which will be issued to construct the water tower.