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City of Lino Lakes, Minnesota <br />Water and Wastewater Fee Study <br />May 2007 <br />Page 2 <br />- Develop projected customer growth and future service demands based <br />upon the existing systems and anticipated growth <br />- Project the cost of providing services for each Utility <br />Task 11 - Conduct Study <br />D Develop a financial projection of each Utility that integrates all anticipated <br />revenue sources, including interest on the cash balance, anticipated operating <br />expenditures including existing and projected new depreciation, anticipated <br />capital expenditures, existing debt service, projected debt service for identified <br />projects and changes in the customer base over the planning period: <br />- Develop a ten -year forecast of revenues and expenditures for each Utility <br />to determine the adequacy of revenues provided by existing rates <br />- Evaluate the impact of anticipated capital improvement financing options <br />on rates, fees and charges <br />- Develop recommendations for the financing of the anticipated capital <br />improvements based on the above impact analysis <br />- Identify the overall change in revenue required to provide for adequate <br />funding for major capital improvement programs, to meet all recurring <br />annual operating and capital expenditures, to cover all debt service <br />requirements, to comply with any existing revenue bond covenants, and to <br />maintain sufficient cash balances and capital reserves (as defined by the <br />City) for each Utility The projections will be made using an income <br />statement approach and will include a yearly cash flow analysis <br />- Develop preliminary rate schedules for each Utility that provides revenue <br />recovery at levels necessary to support the Utility's operation as defined <br />above. Rates developed will include user fees, capacity fees, connection <br />charges and other fees and charges that provide sources of revenue to the <br />Utility <br />- Perform a sensitivity analysis to illustrate the impacts of adverse <br />assumption changes (e.g. future growth, operating costs) <br />D Evaluate each Utility's current service fees and charges to determine whether <br />there are additional service fees and charges that are currently not assessed <br />and that may be applicable to the Utility's provision of services and, <br />conversely, whether there are fees and charges that can be reduced or <br />eliminated <br />D Project the fiscal impact of proposed changes to fees and charges on each <br />Utility's current rates, fees and charges <br />- Develop recommendations for any changes to fees and charges, together <br />with the impact on current rates and charges <br />- Make recommendations for changes in existing ordinances, resolutions <br />and policies necessary to implement any new fees and charges <br />recommended <br />D. If we make a recommendation to increase rates or charges, Springsted will: <br />• <br />