Management Report and Recommendations 12/31/1988

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City of Lino Lakes, Minnesota Management Report, Page 41 2. Increased cost to process sewage. The MWCC's cost to process (per million gallons) increased to an estimated $947 in 1989 from an estimated $918 in 1988. This represents an increase of 3.2 %. The combination of the above factors has decreased the City's estimated cost in 1989 by nearly 25 %. The MWCC has approved a change in the district structure and will be converting rates and other operating procedures over the next several years. We recommend that the City monitor the effects of these changes and consider such changes on the City's sewer rates. During 1988, the City adjusted sewer and water rates. The change became effective on July 1, 1988. Part of the adjustment was to include a charge for core system improvements. The add on charge was to be calculated based on a fixed amount per quarter. This charge is collected as revenue of the Enterprise Fund along with normal user charges. Such amounts should then be transferred to an appropriate fund which fmanced (or will finance) such improvement. Resolution #31 -88 approved the above increase in sewer and water rates. The resolution states effective rates as of July 1, 1988 and then a subsequent adjustment as of January 1, 1989. The resolution has a flat fixed rate for sewer and both a variable and a fixed user fee for water. The resolution does not however specify the amount which represents the charge related to core system improvements. We recommend that the City adopt a subsequent clarifying resolution which specifies the amount of Enterprise Fund revenue which is to be collected for core system improvements and specify the timing of the transfer of such revenues to the appropriate fund which financed such improvements. AGENCY FUNDS At December 31, 1988, the City had three Agency Funds as follows: • Contractor's Deposits • Investment Fund • Deferred Compensation An Agency Fund is designed to account for transactions for other individuals, private organizations and/or other funds. The Contractor's Deposits Fund is used to account for "pass through" types of expenditures relating to prospective developers. The City pays certain legal, engineering and planning amounts