HomeMy WebLinkAbout#22 - 2019 Utility Budgets
STAFF REPORT
DATE: December 4, 2018
REGULAR
ITEM #: 22
MOTION
TO: Honorable Mayor and City Council
FROM: Sue Iverson – Finance Director
AGENDA ITEM: 2019 Utility Budgets
REVIEWED BY: Kristina Handt – City Administrator
INTRODUCTION:
In preparation for adoption of the utility fund budgets, this memo addresses the following information:
assumptions used to prepare the final budgets and Utility Financial Management Plan.
ISSUE BEFORE THE COUNCIL:
1) What changes, if any should be made to the final budgets?
2) What changes, if any should be made to the 2019 rates? (Note these will be adopted as part of the
2018 Fee Schedule agenda item)
DISCUSSION
The utility funds follow the Utility Rate Study projections in the Financial Management Plan with a
few updates as the City has been building out faster than anticipated. Many line items follow the
same allocation changes and additional personnel as the Street and Parks budgets in the General
Fund. Staff has worked to charge the correct costs to each fund/department. The Utility Financial
Management Plan has been updated and reviewed by the Finance Committee at its November
meeting recommending no significant changes to the projected rates from the previous plan.
Revenues:
The revenues for the funds are from the Utility Financial Management Plan prepared by Northland
Securities which is attached for your review. These assumptions are based upon the increased rates
recommended in the report as well. In summary, here are the proposed rate increases:
1) Water Fund – Proposed three percent (3%) rate increase across the base and variable rates
compared from the 2018 Adopted to 2019 Proposed. Water Availability Charge (WAC) and
the Water Connection Charge would remain the same.
2) Sewer Fund – Proposed one percent (1%) rate increase for the commercial usage, residential
usage, and residential base fee, compared from the 2018 Adopted to 2019 Proposed. Sewer
Availability Charge (SAC) and the Sewer Connection Charge would remain the same.
3) Storm Water Fund – Service fee would increase by five dollars ($5.00) from the 2018
Adopted to 2019 Proposed.
Expenses:
Water Fund:
• Personnel costs increased due to salary allocation changes and the addition of a Maintenance
Worker. Staff reevaluated the Public Works employees’ time cards and has changed the allocation
of salaries and benefits to more accurately reflect the costs in the proper departments since Public
Works is comprised of Streets (General Fund), Parks (General Fund), Water, Sewer, and Storm
Water. The additional employee is consistent with the consultant recommendation from 2016, but
has been spread across all funds.
• Other cost changes are minimal, capital outlay costs have been addressed with the Capital
Improvement Plan.
Sewer Fund:
• Personnel costs increased due to salary allocation changes and the addition of a Maintenance
Worker. Staff reevaluated the Public Works employees’ time cards and has changed the allocation
of salaries and benefits to more accurately reflect the costs in the proper departments since Public
Works is comprised of Streets (General Fund), Parks (General Fund), Water, Sewer, and Storm
Water. The additional employee is consistent with the consultant recommendation from 2016, but
has been spread across all funds.
• Metropolitan Council charges are increasing by $77,219 due to the increase in usage.
• Other cost changes are minimal, capital outlay costs have been addressed with the Capital
Improvement Plan.
Storm Water Expenses:
• Personnel costs increased due to salary allocation changes and the addition of a Maintenance
Worker. Staff reevaluated the Public Works employees’ time cards and has changed the allocation
of salaries and benefits to more accurately reflect the costs in the proper departments since Public
Works is comprised of Streets (General Fund), Parks (General Fund), Water, Sewer, and Storm
Water. The additional employee is consistent with the consultant recommendation from 2016, but
has been spread across all funds.
• Other cost changes are minimal, capital outlay costs have been addressed with the Capital
Improvement Plan.
FINANCIAL MANAGEMENT PLAN
Attached is the Updated Financial Management Plan for the Utilities completed by Northland
Securities, Inc., and reviewed by the Finance Committee at its November 20, 2018 meeting. The
Highlights of the report are as follows:
• Funds are in sound financial condition
• Future performance will be impacted by timing of future development and receipt of
revenue
• Increases in fees will be required but the rate of increase will depend on the pace of growth
o The Storm Water fund does project short term shortfall in unrestricted cash in years
2022 to 2023 which the City should be able to manage
The recommended utility rates for years through 2021 is illustrated in the following chart prepared
by Northland:
Average annual utility rate increases are:
• 3% for water between 2019-2027
• 1% between 2019-2013 and 2% between 2024-2027 for sanitary sewer
• $5 per year for storm water between 2019-2020 and $10 between 2021-2027
There was no change in conclusions and recommendations from the prior “2017 Plan”. The funds
are projected to remain in sound financial condition, however, WAC and SAC and connection
charges are needed to pay a portion of debt service expense and future operating revenue is also
needed to cover the debt service expense.
FISCAL IMPACT:
The 2019 Proposed Utility Budgets will help support necessary city services to be provided in 2019.
In addition, consideration of the impact of the decisions made today will help the City plan for the
future with the goal of sound fiscal management.
OPTIONS:
1) Approve the 2019 Water, Sewer, and Storm Water Budgets.
2) Amend and then approve the 2019 Water, Sewer, and Storm Water Budgets.
RECOMMENDATION:
1) Motion to adopt Resolution No. 2018-137 adopting the 2019 Water, Sewer, and Storm
Water Fund Budgets.
ATTACHMENTS:
1) 2019 Proposed Utility Fund Budgets
2) Financial Management Plan for Water, Sanitary Sewer, and Storm Water Funds
3) Resolution No. 2018-137 Adopting the 2019 Water, Sewer and Storm Water Fund Budgets
Service 2017 2018 2019 2020 2021
Residential Quarterly Base Fee $20.00 $20.60 $21.22 $21.85 $22.51
Residential Tier 1 $2.00 $2.06 $2.12 $2.19 $2.25
Commercial Quarterly Base Fee $25.00 $25.75 $26.52 $27.32 $28.14
Commercial Tier 1 $3.11 $3.20 $3.30 $3.40 $3.50
Water Availability Charge $3,000 $3,000 $3,000 $3,000 $3,000
Water Connection Charge $1,000 $1,000 $1,000 $1,000 $1,000
Sanitary Sewer Quarterly Base Fee $52.50 $53.03 $53.56 $54.09 $54.63
Sewer per 1,000 gallons $4.50 $4.55 $4.59 $4.64 $4.68
Sanitary Sewer Availability Charge $3,000 $3,000 $3,000 $3,000 $3,000
Sanitary Sewer Connection Charge $1,000 $1,000 $1,000 $1,000 $1,000
Annual fee $50.00 $55.00 $60.00 $65.00 $75.00
TABLE B-1
STORM WATER RATES
WATER RATES
SANITARY SEWER RATES
Utility Rates
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
SUMMARY
Utility Funds
1
Adopted 2018 to Dollar Change
2018 2019 Proposed 2019 2018 Adopt to
Account Number Description Adopted Proposed Percent Change 2019 Proposed Comments
Water Revenues
Special Assessments 111,077$ 108,550$ -2.27%(2,527)$
Interest on Investments 20,000$ 20,000$ 0.00%-$
Water Sales 597,769$ 937,421$ 56.82%339,652$ Faster build out than anticipated in Northland Study
Charges for Services 4,820$ 4,820$
Bulk Water 2,000$ -$ -100.00%(2,000)$
Water Access Revenue 960,000$ 960,000$ 0.00%-$
Investment Earnings 611,595$ 626,600$
Water Connections - Municipal 320,000$ 320,000$ 0.00%-$
Meter Sales 87,500$ 90,000$ 2.86%2,500$
Total Water Revenues:2,098,346$ 2,435,971$ 16.09%337,625$
Water fund Expenses:
9400 Water
Total Personnel 149,309$ 244,033$ 63.44%94,724$ Allocation change and 1 additional Maintenance Worker
Total Materials and Supplies 182,650$ 192,650$ 5.47%10,000$
$4,500 Fuel, Oil, and Fluids now being spread across all PW & Utility
Dept., $3,000 Water Meters, $2,500 Small Tools and Minor
Equipment
Total Charges and Services 352,333$ 368,678$ 4.64%16,345$
$45,000 Legal Services, $7,987 Audit costs not previously allocated,
$1,800 Computer replacements, ($33,859) Decr in IT support as
allocation now spreads based on users, $1,972 Credit Card fees
Total Capital Outlay 137,500$ 358,000$ 160.36%220,500$
$50,000 Service Truck, $120,000 hammes ByPass, $188,000
oversizing, Per CIP vs. 2018
Total Misc and Non-operating 1,013,631$ 1,127,041$ 11.19%113,410$ Bond Payments and Fiscal Agents Fees per Northland Schedule
9400 Total Water Fund Expenses 1,835,423$ 2,290,402$ 24.79%454,979$
Total Water Fund Revs. Over/(Under) Expenses:262,923$ 145,569$ -44.63%
Sewer Revenues
Special Assessments 77,874$ 141,799$ 82.09%63,925$ Per Northland schedule
Interest on Investments 20,000$ 20,000$ 0.00%-$
Sewer Sales 247,599$ 339,840$ 37.25%92,241$ Per Northland schedule
SAC Early Pay Discount/revenue 5,800$ -$ -100.00%(5,800)$
Sewer Lat Benefit Fee 25,500$ 31,050$ 21.76%5,550$
Sewer Connection Fee Rev (SAC)883,200$ 901,500$ 2.07%18,300$ Per Northland schedule
Sewer Connection Fees Municipal 345,500$ 339,500$ -1.74%(6,000)$ Per Northland schedule
Total Sewer Revenues:1,605,473$ 1,773,689$ 10.48%168,216$
Sewer Fund Expenses:
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
SUMMARY
Utility Funds
2
Adopted 2018 to Dollar Change
2018 2019 Proposed 2019 2018 Adopt to
Account Number Description Adopted Proposed Percent Change 2019 Proposed Comments
9450 Sewer
Total Personnel 90,298$ 119,932$ 32.82%29,634$ Allocation change and 1 additional Maintenance Worker
Total Materials and Supplies 12,100$ 15,600$ 28.93%3,500$
$4,500 Fuel, Oil, and Fluids now being spread across all PW & Utility
Dept., ($1,000) Small Tools and Minor Equipment
Total Charges and Services 185,948$ 276,178$ 48.52%90,230$
$7,987 Audit costs not previously allocated, $800 Computer
replacements, ($29,493) Decr in IT support as allocation now
spreads based on users, $1,972 Credit Card fees, $77,219 Met
Council Sewer Charges, $13,800 Lisbon Lift Station paving, $6,000
SCADA agreement, $3,500 utilities
Total Capital Outlay 85,000$ 345,000$ 305.88%260,000$ $50,000 Service Truck, $295,000 Sewer oversizing, Per CIP vs. 2018
Total Misc and Non-operating 470,624$ 714,754$ 51.87%244,130$
Bond Payments, Issuance costs, and Fiscal Agents Fees per
Northland Schedule
9450 Total Sewer Fund Expenses 843,970$ 1,471,464$ 74.35%627,494$
Total Sewer Fund Revs. Over/(Under) Expenses:761,503$ 302,225$ -60.31%
Storm Water Revenues
Interest on Investments 7,000$ 7,000$ 0.00%-$
Surface Water Utility Sales 283,587$ 337,303$ 18.94%53,716$ Per Northland schedule
SW Review Fee Revenue 29,375$ 29,051$ -1.10%(324)$ Per Northland schedule
Total Storm Water Revenues:319,962$ 373,354$ 16.69%53,392$
Storm Water Fund Expenses:
9500 Storm Water
Total Personnel 47,470$ 76,635$ 61.44%29,165$ Allocation change and 1 additional Maintenance Worker
Total Materials and Supplies 8,100$ 8,500$ 4.94%400$
$400 Fuel, Oil, and Fluids now being spread across all PW & Utility
Dept.
Total Charges and Services 88,700$ 118,360$ 33.44%29,660$
$7,987 Audit costs not previously allocated, $1,000 Computer
replacements, $360 Credit Card fees,($11,833) Decr in IT support as
allocation now spreads based on users, Allocation changes
Total Capital Outlay 40,000$ 40,000$ 0.00%-$
Total Misc and Non-operating 220,294$ 232,400$ 5.50%12,106$ Bond Payments, and Fiscal Agents Fees per Northland Schedule
9500 Total Storm Water Fund Expenses 404,564$ 475,895$ 17.63%71,331$
Total Storm Water Fund Revs. Over/(Under) Expenses:(84,602)$ (102,541)$ 21.20%
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
Master Worksheet - All Budgets - REVISED
3
Adopted 2018 to
2016 2017 2018 2018 2018 2019 Proposed 2019
Account Number Description Actual Actual Adopted YTD - Sep 2018 Projected Proposed Percent Change Comments
601 Water Fund
Water Fund Revenues:
601-000-0000-33422 PERA Pension Revenue 525 38 #DIV/0!
601-000-0000-33426 Miscellaneouse State Grants 3,433,298 67,698 #DIV/0!
601-000-0000-36100 Special Assessments 11,334 21,137 111,077 23,485 111,077 108,550 -2.27%Per Northland schedule
601-000-0000-36200 Miscellaneouse 82 #DIV/0!
601-000-0000-36205 Refunds and Reimbursements 1,902 #DIV/0!
601-000-0000-36210 Interest on Investments 13,987 18,096 20,000 20,000 20,000 0.00%
601-000-0000-37100 Water Sales 275,019 883,610 597,769 414,918 910,118 937,421 56.82%Faster build out than estimated
601-000-0000-37120 Bulk Water 5,423 3,184 2,000 1,122 2,000 -100.00%
601-000-0000-37130 Water Lat Benefit Fee 25,100 11,600 #DIV/0!
601-000-0000-39250 Contribution of Capital Assets 137 #DIV/0!
601-000-0000-37140 Water Access Revenue 979,500 1,425,000 960,000 778,000 960,000 960,000 0.00%Per Northland schedule
601-000-0000-37150 Water Connections - Municipal 244,500 172,000 320,000 431,000 320,000 320,000 0.00%Per Northland schedule
601-000-0000-37170 Meter Sales 244,260 118,052 87,500 90,897 87,500 90,000 2.86%
601-000-0000-37180 Tower Rent 52,526 - - #DIV/0!Moved to G.F for 2017
601-000-0000-39200 Transfer In (59,872) - - - - - #DIV/0!
Total Water Fund Revenues:5,200,500$ 2,735,954$ 2,098,346$ 1,751,105$ 2,410,695$ 2,435,971$ 16.09%
Water Fund Expenses:
Personnel
601-494-9400-41010 Full-time Salaries 127,902 111,772 101,194 83,283 112,194 166,020 64.06%
1 additional worker split Streets 30%, Parks 20%, Water 20%,
Sewer 20%, SW 10%
601-494-9400-41030 Part-time Salaries #DIV/0!
601-494-9400-41020 Overtime - - 4,000 6,000 50.00%On call pay should go here
601-494-9400-41040 Temporary Employees #DIV/0!
601-494-9400-41210 PERA Contributions 15,792 15,925 7,590 6,240 8,090 12,452 64.06%
601-494-9400-41220 FICA Contributions 7,346 6,854 6,497 4,941 6,997 12,701 95.49%
601-494-9400-41230 Medicare Contributions 1,718 1,603 1,525 1,155 1,525 -100.00%
601-494-9400-41300 Insurance 29,467 19,044 21,743 6,556 22,743 38,620 77.62%
601-494-9400-41325 Life Insurance 79 237 #DIV/0!
601-494-9400-41330 STD/LTD 184 685 #DIV/0!
601-494-9400-41301 Unemployment Insurance - - 683 683 -100.00%
601-494-9400-41600 Safety Clothing Allowance 193 289 49.74%Boots ($175 per person allocated by Salary Allocation)
601-494-9400-41510 Workers Compensation 1,904 3,980 5,884 7,744 7,029 7,029 19.46%
Total Personnel 184,129$ 159,177$ 149,309$ 110,181$ 159,261$ 244,033$ 63.44%
Materials and Supplies
601-494-9400-42000 Office Supplies 771 975 800 321 800 800 0.00%
601-494-9400-42120 Fuel, Oil and Fluids 4,500 #DIV/0!
$30,000 - $15K Streets, $2K Parks, $4.5K W, $4.5K S,
$0.4K SW
601-494-9400-42030 Printed Forms 499 247 750 167 750 750 0.00%
601-494-9400-42150 Operating Supplies - - 1,000 303 800 1,000 0.00%
601-494-9400-42160 Chemicals 3,157 5,992 13,000 5,461 8,000 13,000 0.00%
601-494-9400-42210 Repair/Maint. Supplies 25,014 3,614 26,000 9,098 26,000 26,000 0.00%
601-494-9400-42270 Utility System Maintenance 647 #DIV/0!
601-494-9400-42300 Water Meters & Supplies 105,477 124,127 132,000 138,582 132,000 135,000 2.27%Water meters
601-494-9400-44375 Personal Protective Equipment 262 800 411 800 800 0.00%
601-494-9400-42400 Small Tools & Minor Equipment 3,955 2,218 8,300 6,002 10,000 10,800 30.12%
Total Materials and Supplies 138,873$ 137,435$ 182,650$ 160,994$ 179,150$ 192,650$ 5.47%
Charges and Services
601-494-9400-43030 Engineering Services - 50,457 20,000 9,454 20,000 20,000 0.00%
601-494-9400-43040 Legal Services 2,323 118,260 155,000 33,260 155,000 200,000 29.03%
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
Master Worksheet - All Budgets - REVISED
4
Adopted 2018 to
2016 2017 2018 2018 2018 2019 Proposed 2019
Account Number Description Actual Actual Adopted YTD - Sep 2018 Projected Proposed Percent Change Comments
601-494-9400-43010 Audit Services 7,987 #DIV/0!5% incr. $31,946 split GF, Water, Sewer, SW
601-494-9400-43150 Contract Services 7,459 73,154 47,400 21,741 47,400 31,000 -34.60%
new SCADA agreement $6k. Mowing $6k, CLA was 2017
& 2018
Computers #DIV/0!
601-494-9400-43185 IT Support 5,556 6,289 37,133 18,781 37,133 7,297 -80.35%Roseville $7297.5
601-494-9400-42002 IT Hardware 1,800 #DIV/0!Computer Replacements
601-494-9400-43190 Software Programs 3,274 #DIV/0!Roseville $604, Banyon $363.34, Accela $2306.5
601-494-9400-43210 Telephone 793 687 800 648 700 987 23.34%Roseville $350.7, TDS $636
601-494-9400-44377 Credit Card Fees 1,972 #DIV/0!
601-494-9400-43220 Postage 1,800 2,178 2,000 9 2,000 2,000 0.00%
601-494-9400-43310 Mileage 189 119 200 #DIV/0!
601-494-9400-43610 Insurance 8,975 9,322 12,000 7,981 7,981 9,178 -23.51%corrected allocation, incr 15% over prev yr.
601-494-9400-43810 Electric Utility 34,392 54,894 45,000 52,080 43,500 45,000 0.00%
601-494-9400-43820 Water Utility 144,932 242,929 - 23,281 38,658 #DIV/0!Agreement ends w/ City of Oakdale
601-494-9400-44030 Repairs\Maint Imp Not Bldgs 8,617 17,363 20,000 34,878 20,000 20,000 0.00%Tower 2 Inspection
601-494-9400-44040 Repairs/Maint. Equip.- - 8,000 3,443 10,000 12,000 50.00%Well 2 PLC & Screen
601-494-9400-44010 Repairs\Maint Imp Bldgs - - 2,000 33,391 3,039 2,000 0.00%
601-494-9400-44150 Equipment Rental - - 1,000 1,000 1,000 0.00%
601-494-9400-44170 Uniforms 984 #DIV/0!Allocated from Streets
601-494-9400-44330 Dues & Subscriptions 196 #DIV/0!
601-494-9400-44370 Conferences & Training 103 1,880 2,000 707 2,000 2,000 0.00%
Total Charges and Services 215,139$ 577,608$ 352,333$ 239,773$ 388,411$ 368,678$ 4.64%
Capital Outlay
601-494-9400-45300 Improvments Other Than Bldgs - - 137,500 52,826 137,500 358,000 160.36%$50K Service Truck, $120K Hammes ByPass, $188K oversizing
Total Capital Outlay -$ -$ 137,500$ 52,826$ 137,500$ 358,000$ 160.36%
Miscellaneous and Non-operating
601-494-9400-43320 Depreciation Expense 612,353 808,865 #DIV/0!
601-494-9400-44300 Miscellaneous 3,178 38,696 2,000 712 1,000 2,000 0.00%
601-494-9400-46010 Bond Principal - - 710,000 710,000 810,000 14.08%
601-494-9400-46110 Bond Interest 241,142 295,328 300,775 146,193 300,775 292,041 -2.90%Per Northland schedule
601-494-9400-46200 Fiscal Agent Fees - Bond Payments 16,014 675 856 495 11,000 1185.05%
601-494-9400-46250 Fiscal Agent Fees - Bond Issuance #DIV/0!
601-494-9400-46220 Deferred Charges Amort (6,599) #DIV/0!
601-494-9400-46300 Bond Issuance Costs 11,262 12,000 #DIV/0!
601-494-9400-47200 Transfer Out 40,427 - - - - - #DIV/0!
Total Misc. and Non-operating 913,114$ 1,148,226$ 1,013,631$ 147,400$ 1,011,775$ 1,127,041$ 11.19%
Total Water Fund Expenses:1,451,255$ 2,022,445$ 1,835,423$ 711,173$ 1,876,097$ 2,290,402$ 24.79%
Total Water Fund Revs. Over/(Under) Expenses:3,749,245$ 713,509$ 262,923$ 1,039,932$ 534,598$ 145,569$ -44.63%
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
Master Worksheet - All Budgets - REVISED
5
Adopted 2018 to
2016 2017 2018 2018 2018 2019 Proposed 2019
Account Number Description Actual Actual Adopted YTD - Sep 2018 Projected Proposed Percent Change Comments
602 Sewer Fund
Sewer Fund Revenues:
602-000-0000-33422 PERA Pension Revenue 9 #DIV/0!
602-000-0000-36100 Special Assessments 21,073 1,229,699 77,874 209,731 77,874 141,799 82.09%Per Northland schedule
602-000-0000-36210 Interest on Investments 14,584 20,362 20,000 20,000 20,000 0.00%
602-000-0000-37200 Sewer Sales 120,974 267,130 247,599 145,094 247,599 339,840 37.25%Per Northland schedule
602-000-0000-37220 SAC Early Pay discount/revenue 8,474 8,474 5,800 5,666 5,800 -100.00%Based on averages
602-000-0000-37230 Sewer Lat Benefit Fee 11,000 25,500 25,500 31,050 21.76%
602-000-0000-39250 Contribution of Capital Assets 71,269 #DIV/0!
602-000-0000-37240 Sewer Connecton Fee Revenue (SAC)803,000 1,450,165 883,200 661,000 883,200 901,500 2.07%Per Northland schedule
602-000-0000-37250 Sewer Connection Fees Regional 21,000 - 596,294 #DIV/0!Pass-through of approx $21K
602-000-0000-37260 Sewer Connection Fees Municipa 383,500 677,980 345,500 433,500 345,500 339,500 -1.74%Per Northland schedule
Total Sewer Fund Revenues:1,351,605$ 3,757,088$ 1,605,473$ 2,051,285$ 1,605,473$ 1,773,689$ 10.48%
Sewer Fund Expenses:
Personnel
602-495-9450-41010 Full-time Salaries 39,678 23,073 62,250 23,180 69,750 79,409 27.56%
1 additional worker split Streets 30%, Parks 20%, Water 20%,
Sewer 20%, SW 10%
602-495-9450-41030 Part-time Salaries 227 #DIV/0!
602-495-9450-41020 Overtime - 4,000 123 6,000 50.00%On call pay
602-495-9450-41040 Temporary Employees #DIV/0!
602-495-9450-41210 PERA Contributions 4,270 3,807 4,669 1,748 4,919 5,956 27.56%
602-495-9450-41220 FICA Contributions 1,987 1,609 4,058 1,389 4,308 6,075 49.70%
602-495-9450-41230 Medicare Contributions 464 376 961 325 961 -100.00%
602-495-9450-41300 Insurance 8,352 8,429 10,744 1,696 11,275 17,825 65.91%
602-495-9450-41325 Life Insurance 25 125 #DIV/0!
602-495-9450-41330 STD/LTD 62 491 #DIV/0!
602-495-9450-41600 Safety Clothing Allowance 140 #DIV/0!Boots ($175 per person allocated by Salary Allocation)
602-495-9450-41301 Unemployment Insurance - - 342 342 -100.00%
602-495-9450-41510 Workers Compensation 989 2,004 3,274 4,626 3,911 3,911 19.46%
Total Personnel 55,740$ 39,300$ 90,298$ 33,277$ 95,589$ 119,932$ 32.82%
Materials and Supplies
602-495-9450-42270 Repair/Maint. Supplies 5,873 1,724 4,000 5,000 4,000 0.00%
602-495-9450-42000 Office Supplies - 73 800 1,350 1,199 800 0.00%
602-495-9450-42030 Printed Forms - 167 #DIV/0!
602-495-9450-42120 Fuel, Oil and Fluids 4,500 #DIV/0!
$30,000 - $15K Streets, $2K Parks, $4.5K W, $4.5K S,
$0.4K SW
602-495-9450-42150 Operating Suppies - - 1,000 332 1,000 1,000 0.00%
602-495-9450-42270 Repair/Maint. Supplies - (236) #DIV/0!
602-495-9450-44375 Personal Protective Equipment - 262 800 702 800 800 0.00%
602-495-9450-42400 Small Tools & Minor Equipment 2,860 2,462 5,500 2,437 4,500 4,500 -18.18%
Total Materials and Supplies 8,733$ 4,521$ 12,100$ 4,753$ 12,499$ 15,600$ 28.93%
Charges and Services
602-495-9450-43030 Engineering Services - 5,310 20,000 3,495 20,000 20,000 0.00%
602-495-9450-43010 Audit Services 7,987 #DIV/0!5% incr. $31,946 split GF, Water, Sewer, SW
602-495-9450-43150 Contract Services 8,059 291,285 21,400 19,886 40,000 30,400 42.06%
new SCADA agreement $6k/Mowing $3000, CLA was
2017 & 2018
602-495-9450-43185 IT Support 4,591 5,989 33,533 19,756 33,533 4,041 -87.95%Roseville $4257.5
602-495-9450-42002 IT Hardware 800 #DIV/0!Computer Replacements
602-495-9450-43190 Software Programs 3,010 #DIV/0!Roseville $340, Banyon $363.33, Accela $2306.5
602-495-9450-43210 Telephone 1,008 1,146 1,500 1,021 1,500 1,707 13.78%Roseville $350.7, TDS $1236, T-Mobile $120
602-495-9450-44377 Credit Card Fees 1,972 #DIV/0!
602-495-9450-43220 Postage - 2,500 1,175 1,175 1,175 0.00%
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
Master Worksheet - All Budgets - REVISED
6
Adopted 2018 to
2016 2017 2018 2018 2018 2019 Proposed 2019
Account Number Description Actual Actual Adopted YTD - Sep 2018 Projected Proposed Percent Change Comments
602-495-9450-43310 Mileage - - - #DIV/0!
602-495-9450-43610 Insurance 581 603 2,000 3,187 3,187 3,665 83.27%corrected allocation, incr 15% over prev year
602-495-9450-43810 Electric Utility 5,125 5,739 5,500 7,300 7,000 9,000 63.64%
602-495-9450-43820 Sewer Utility - Met Council 16,621 83,809 92,140 69,105 92,140 169,359 83.81%Per Met Council
602-495-9450-44040 Repairs/Maint. Equip.- 1,148 4,500 3,523 4,500 4,500 0.00%
602-495-9450-44150 Equipment Rental - - 1,000 1,000 1,000 0.00%
602-495-9450-44170 Uniforms 563 #DIV/0!Allocated from Streets
602-495-9450-44030 Repairs\Maint Imp Not Bldgs 1,391 1,200 1,200 15,000 1150.00%Pave Lisbon Lift Station
602-495-9450-44370 Conferences & Training 80 3,718 2,000 863 2,000 2,000 0.00%
Total Charges and Services 37,456$ 401,246$ 185,948$ 128,136$ 207,235$ 276,178$ 48.52%
Capital Outlay
602-495-9450-45300 Improvements Other Than Bldgs - - 85,000 81,578 - 345,000 305.88%Sewer Oversizing - $295k, Service Truck $50k
Total Capital Outlay -$ -$ 85,000$ 81,578$ -$ 345,000$ 305.88%
Miscellaneous and Non-operating
602-495-9450-43320 Depreciation Expense 132,265 350,903 - - - #DIV/0!
602-495-9450-44300 Miscellaneous Expenses 26,036 50,873 300 - 300 300 0.00%
602-495-9450-46010 Bond Principal 0 - 275,000 275,000 470,000 70.91%Per Northland schedule
602-495-9450-46110 Bond Interest 116,715 168,587 195,324 93,452 195,324 208,454 6.72%Per Northland schedule
602-495-9450-46220 Deferred Charges Amort (3,811) #DIV/0!
602-495-9450-46300 Bond Issuance Costs 18,437 20,000 #DIV/0!
602-495-9450-46250 Fiscal Agent Fees 3,707 16,000 #DIV/0!
602-495-9450-47200 Transfer Out 102,678 - - - - - #DIV/0!
Total Misc. and Non-operating 381,401$ 584,989$ 470,624$ 93,452$ 470,624$ 714,754$ 51.87%
Total Sewer Fund Expenses:483,330$ 1,030,056$ 843,970$ 341,197$ 785,947$ 1,471,464$ 74.35%
Total Sewer Fund Revs. Over/(Under) Expenses:868,275$ 2,727,033$ 761,503$ 1,710,088$ 819,526$ 302,225$ -60.31%
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
Master Worksheet - All Budgets - REVISED
7
Adopted 2018 to
2016 2017 2018 2018 2018 2019 Proposed 2019
Account Number Description Actual Actual Adopted YTD - Sep 2018 Projected Proposed Percent Change Comments
603 Storm Water Fund
Storm Water Fund Revenues:
603-000-0000-33422 PERA Pension Revenue 5 #DIV/0!
603-000-0000-36100 Special Assessments 20,674 #DIV/0!Delinquent S/A's for '17 and estimate for '18
603-000-0000-36210 Interest on Investment 15,933 8,247 7,000 7,000 7,000 0.00%
603-000-0000-39250 Contribution of Capital Assets (18) #DIV/0!
603-000-0000-36232 Developer Contributions 100,000 #DIV/0!
603-000-0000-37300 Surface Water Utility Sales 185,858 251,025 283,587 201,539 283,587 337,303 18.94%Per Northland schedule
603-000-0000-34113 SW Review Fee Revenue 27,375 38,350 29,375 29,088 29,375 29,051 -1.10%Per Northland schedule
Total Storm Water Fund Revenues:229,166$ 397,609$ 319,962$ 251,301$ 319,962$ 373,354$ 16.69%
Storm Water Fund Expenses:
Personnel
603-496-9500-41010 Full-time Salaries 20,591 12,962 34,273 13,086 34,773 54,068 57.76%
1 additional worker split Streets 30%, Parks 20%, Water 20%,
Sewer 20%, SW 10%
603-496-9500-41030 Part-time Salaries - - #DIV/0!
603-496-9500-41020 Overtime #DIV/0!
603-496-9500-41040 Temporary Employees #DIV/0!
603-496-9500-41210 PERA Contributions 2,408 1,909 2,570 982 2,820 4,055 57.78%
603-496-9500-41220 FICA Contributions 1,129 790 2,099 770 2,349 4,136 97.05%
603-496-9500-41230 Medicare Contributions 264 185 497 180 497 -100.00%
603-496-9500-41300 Insurance 5,856 5,276 6,275 1,748 6,806 12,318 96.30%
603-496-9500-41325 Life Insurance 16 81 #DIV/0!
603-496-9500-41330 STD/LTD 28 263 #DIV/0!
603-496-9500-41600 Safety Clothing Allowance 53 53 88 66.04%Boots ($175 per person allocated by Salary Allocation)
603-496-9500-41301 Unemployment Insurance - - 342 342 -100.00%
603-496-9500-41510 Workers' Compensation - 1,150 1,361 1,626 1,626 1,626 19.47%
Total Personnel 30,248$ 22,271$ 47,470$ 18,437$ 49,266$ 76,635$ 61.44%
Materials and Supplies
603-496-9500-42000 Office Supplies 499 428 800 148 800 800 0.00%
603-496-9500-42120 Fuel, Oil and Fluids 400 #DIV/0!
$30,000 - $15K Streets, $2K Parks, $4.5K W, $4.5K S,
$0.4K SW
603-496-9500-42030 Printed Forms 247 167 #DIV/0!
603-496-9500-42270 Repair/Maint. Maint Supplies 3,972 135 2,000 315 2,000 2,000 0.00%
603-496-9500-42150 Operating Supplies - - 1,000 38 1,000 1,000 0.00%
603-496-9500-44375 Personal Protective Equipment - 800 411 800 800 0.00%
603-496-9500-42400 Small Tools & Minor Equipment - 1,241 3,500 2,306 3,500 3,500 0.00%
Total Materials and Supplies 4,471$ 2,051$ 8,100$ 3,385$ 8,100$ 8,500$ 4.94%
Charges and Services
603-496-9500-43030 Engineering Services 11,827 6,311 20,000 2,170 20,000 20,000 0.00%
603-496-9500-43010 Audit Services 7,987 #DIV/0!5% incr. $31,946 split GF, Water, Sewer, SW
603-496-9500-43150 Contract Services 2,400 18,116 17,200 5,709 15,000 6,000 -65.12%$3k mowing, CLA was 2017 & 2018
603-496-9500-43185 IT Support 4,067 3,558 15,500 15,500 3,668 -76.34%Roseville $3554.5
603-496-9500-42002 IT Hardware 1,000 #DIV/0!Ipad for Pond Insp
603-496-9500-43190 Software Programs 3,010 #DIV/0!$340 Roseville, Banyon $363.33, Accela $2306.5
603-496-9500-43210 Telephone 351 #DIV/0!Roseville $350.7
603-496-9500-44377 Credit Card Fees 360 #DIV/0!
603-496-9500-43220 Postage 1,800 - 2,000 5,001 2,000 2,000 0.00%
603-496-9500-43610 Insurance - - 1,500 5,001 5,751 283.43%corrected allocation, incr 15% over prev yr.
603-496-9500-44010 Street Sweeping 10,318 20,958 25,000 13,986 25,000 30,000 20.00%more streets with development
603-496-9500-44040 Repairs/Maint Equip - - 1,000 99 750 1,000 0.00%
603-496-9500-44030 Repairs/Maint Not Bldg 1,368 3,000 33,358 33,500 1016.67%Additional maintenance costs $30,500
603-496-9500-44150 Equipment Rental - - 1,000 1,000 1,000 0.00%
CITY OF LAKE ELMO
2019 PROPOSED BUDGET
Master Worksheet - All Budgets - REVISED
8
Adopted 2018 to
2016 2017 2018 2018 2018 2019 Proposed 2019
Account Number Description Actual Actual Adopted YTD - Sep 2018 Projected Proposed Percent Change Comments
603-496-9500-44170 Uniforms 234 #DIV/0!Allocated from Streets
603-496-9500-44370 Conferences & Training 2,500 1,875 2,500 985 1,500 2,500 0.00%
Total Charges and Services 34,280$ 50,819$ 88,700$ 27,950$ 119,109$ 118,360$ 33.44%
Capital Outlay
603-496-9500-45300 Improvements Other Than Bldgs - - 40,000 - - 40,000 0.00%Storm Water Comp Plan Update
Total Capital Outlay -$ -$ 40,000$ -$ -$ 40,000$ 0.00%
Miscellaneous and Non-operating
603-496-9500-43320 Depreciation Expense 15,963 56,298 #DIV/0!
603-496-9500-44300 Miscellaneous Expenses 20,577 21,157 2,000 666 2,000 2,000 0.00%
603-496-9500-46010 Bond Principal - - 160,000 160,000 175,000 9.38%Per Northland schedule
603-496-9500-46110 Bond Interest 44,765 62,781 58,294 28,138 58,294 54,500 -6.51%Per Northland schedule
603-496-9500-46220 Deferred Charges Amort (3,193) #DIV/0!
603-496-9500-46200 Fiscal Agent Fees 900 #DIV/0!
603-496-9500-46300 Bond Issuance Costs - 1,064 - - - - #DIV/0!
Total Misc. and Non-operating 81,305$ 138,107$ 220,294$ 28,804$ 220,294$ 232,400$ 5.50%
Total Storm Water Fund Expenses:150,304$ 213,249$ 404,564$ 78,575$ 396,769$ 475,895$ 17.63%
Total Storm Water Fund Revs. Over/(Under) Expenses:78,862$ 184,360$ (84,602)$ 172,726$ (76,807)$ (102,541)$ 21.20%
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
Letter of Transmittal
Executive Summary 1
Organization of the Plan..................................................................................................................1
Study Approach...................................................................................................................................1
Conclusions and Recommendations...........................................................................................2
Table A - Growth in Residential Equivalent Units.............................................................3
Table B - Annual Estimated Rate Increases........................................................................3
Table B-1 - Utility Rates .............................................................................................................3
Table C-1 - Water Fund Operating Expenses and Unrestricted Cash......................4
Table C-2 - Sanitary Sewer Fund Operating Expenses and Unrestricted Cash ....5
Chart 1 - Year-end Cash Balances..........................................................................................6
Background 7
Water.......................................................................................................................................................7
Sanitary Sewer.....................................................................................................................................7
Storm Sewer.........................................................................................................................................7
Capital Improvement Plan 8
Capital Projects....................................................................................................................................8
Source of Funding for Capital Projects......................................................................................8
Debt Service.........................................................................................................................................8
Table D-1 - Capital Improvement Plan Water......................................................................10
Table D-2 - Capital Improvement Plan Sanitary Sewer ....................................................11
Table D-3 - Capital Improvement Plan Storm Water.........................................................12
Chart 2 - Estimated Debt Outstanding at Year End...........................................................13
Chart 3 - Estimated Annual Debt Service..............................................................................14
Utility Rates 15
Key Factors.........................................................................................................................................15
Annual Operating Expenditures ................................................................................................15
Metropolitan Council Environmental Services.....................................................................15
Annual Capital Expenditures.......................................................................................................16
Debt Service......................................................................................................................................16
Growth in Customers.....................................................................................................................16
Available Other Revenue Sources.............................................................................................16
Historical Utility Rates....................................................................................................................17
Future Utility Rates..........................................................................................................................17
Estimated Volumes of Water Sold and Sanitary Sewer Billed........................................17
Table E - Growth Projections.......................................................................................................18
Chart 4 - Sanitary Sewer REU Platted and Connected by Year......................................19
Chart 5 - Water REU Planned and Connected by Year.....................................................19
Table F - Water Fund - Fees and Charges and Customer Data .....................................20
Table G - Sanitary Sewer Fund - Fees and Charges and Customer Data...................21
Table H - Storm Water Fund - Fees and Charges and Customer Data.......................22
Chart 6 - Estimated Volumes of Water and Sanitary Sewer...........................................23
Financial Plans 24
Key Assumptions.............................................................................................................................24
Water Fund ........................................................................................................................................25
Table I-1 - Pro Forma.............................................................................................................26
Table I-2 - Cash Balance.......................................................................................................27
Table I-3 - Operating and Other Expenses....................................................................28
Chart 7 - Year End Cash Balances.....................................................................................29
Chart 8 - Source and Use of Funds..................................................................................29
Sanitary Sewer Fund.....................................................................................................................30
Table J-1 - Pro Forma.............................................................................................................31
Table J-2 - Cash Balance.......................................................................................................32
Table J-3 - Operating and Other Expenses...................................................................33
Chart 9 - Year End Cash Balances.....................................................................................34
Chart 10 - Source and Use of Funds................................................................................34
Storm Water Fund...........................................................................................................................35
Table K-1 - Pro Forma............................................................................................................36
Table K-2 - Cash Balance......................................................................................................37
Table K-3 - Operating and Other Expenses..................................................................38
Chart 11 - Year End Cash Balances...................................................................................39
Chart 12 - Source and Use of Funds................................................................................39
Appendix 40
Appendix A-Example Quarterly Utility Fees Payable by Property Types...................40
Appendix B-Chart 13-Combined Utility Funds Restricted Cash and Debt ...............41
Appendix C-Chart 14-Total Bonds Outstanding/Bonds Subject to Call Provision.42
The Plan was prepared by Northland Public Finance, a
division of Northland Securities, Inc., for the purpose of
SFWJFXJOHUIFmOBODJBMQFSGPSNBODFPGUIF$JUZPG-BLF&M
mo’s enterprise funds, including theWater Fund, the Sani-
tary Sewer Fund, and the StormWater Fund to determine
the appropriate fees and charges to fund the systems.
This Plan presents an update to the Financial Plan for the
Water, Sanitary Sewer, and StormWater Funds, Dated Oc-
tober 3, 2017.
The process for preparing the Plan involved the projec-
tion of revenues and expenditures and incorporation of
the City’s plans for capital improvements, and plans for
mOBODJOH
JOUPUIFmOBODJBMQSPKFDUJPOTBMPOHXJUIFTUJ
mated growth in customers.
Recommendations included in the Plan are based on in-
GPSNBUJPOQSPWJEFEUP/PSUIMBOEGSPN$JUZTUBõBOEPUIFS
City consultants and certain assumptions as prepared by
Northland and detailed in the Plan.
To the extent the assumptions in the Plan change in the
months and years ahead, which they will, the City will
OFFEUPDPOUJOVFUPBEKVTUJUTmOBODJBMQMBOTBDDPSEJOHMZ
#FGPSFPõFSJOHDPODMVTJPOTBOESFDPNNFOEBUJPOTGSPN
the study, an explanation of the organization of the Plan
BOEUIFTUVEZBQQSPBDIJTPõFSFE
Organization of Plan
This Plan is organized into six sections:
1. ExecutiveSummaryprovidesinformationontheorga-
nization of the Plan, study approach, and conclusions
and recommendations.
2. Backgrounddiscussesthehistoricalcontext,including
growth and development of the community, and per-
formance of the utilities.
3. Capital Improvement Plan provides information on
the plans for infrastructure improvements for the
utilities. This includes estimates on project costs and
sources of funds to pay for the improvements. Infor-
mation on debt service is also included.
4. Utility Rates provides current, and future estimated
utility rates that will be necessary to maintain a posi-
UJWFmOBODJBMDPOEJUJPOGPSUIFVUJMJUZGVOET*OGPSNB
tion is provided in the Appendix for impact of rates
changes on customers.
5. Financial Plans are provided for the Water Fund, Sani-
UBSZ4FXFS'VOE
BOE4UPSN8BUFS'VOE5IFmOBO
cial plans provide both historical, current, and future
sources and uses of funds and balance sheet infor-
mation. Financial plans take into account capital im-
provement plans, debt service, and proposed rates.
6. Appendix provides supplemental information.
Study Approach
The following steps were taken as part of the study:
• City provided information on the following:
-historicalspendingandrevenues,andfuturecapi-
tal improvement plans;
-estimatedgrowthincustomerunitsfromresiden-
tial and commercial development;
- City’sComprehensiveAnnualFinancialReports as
of December 31, 2017; and
QSPKFDUFEmOBODJBMSFTVMUTBOEQSFMJNJOBSZ
2019 budget.
• Information provided by the City was organized, ana-
MZ[FE
BOEVTFEUPTVQQPSUUIFEFWFMPQNFOUPGmOBO
DJBMQMBOT0ODFUIFQSFMJNJOBSZmOBODJBMQMBOTXFSF
EFWFMPQFEUIFOEJõFSFOUTDFOBSJPTXFSFDPOTJEFSFE
BOEBOBMZ[FEXJUI$JUZTUBõ
•$JUZTUBõPõFSFEJOQVUBOEGFFECBDLPOUIFBTTVNQ
tions and desired outcomes, along with explanation
ofadjustingentriestheCitymadetoitsgeneralledger
GPSmTDBMZFBS
• A draft of the Plan was prepared.
It is important to note aspects not reviewed as part of the
study, which include:
•5IFWBMJEJUZPGUIFBTTVNQUJPOTBOEmHVSFTQSPWJEFE
by the City on future estimated growth was not re-
viewed.
•5IFmOBODJBMJNQBDUPGDIBOHFTUPUIFFYJTUJOHUJFS
structure for charging for water and sanitary sewer
services was not reviewed.
• Northland did not review any City prepared pro for-
ma as part of the study and we are not aware of how
the Plan may compare to any prior or current City pro
forma.
• The scope of the study did not include a review and
comparison of the City’s utility fees and charges to
other cities.
• The City is not able to provide historical/current vol-
ume data by tier or otherwise. The Plan includes cer-
tain assumptions for future volume of water and sani-
tary sewer volume billed by tier and in total. Changes
to the assumption for average volume per customer
XJMMJNQBDUUIFmOBODJBMSFTVMUTJODMVEFEJOUIF1MBO
Conclusions and Recommendations
The following conclusions and recommendations are of-
fered as a result of the study:
To meet service demands from growth in customers,
the City is planning for capital improvement projects.
It needs to be emphasized that the scope, timing, and
cost of the capital improvement projects included in
thePlanarepreliminaryestimates.TheCityprovideda
list of proposed improvement projects and with gross
estimates for project costs to provide a basis for the
pro forma analysis included in the Plan. The City re-
views and revises its capital improvement plans on a
regular basis.
Timing for capital projects will be driven by develop-
ment. The planned improvements that are currently
included in the capital improvement plan are antici-
pated to be paid through a combination of debt issu-
ance, special assessments, grants, and cash.
Inadditiontotheimpactoffuturegrowthonthecapi-
tal improvement plan, the actual timing for the build
out of already approved housing development and
DPNNFSDJBMBSFBTXJMMTJHOJmDBOUMZJNQBDUGVUVSFSFW
enues.
TableAonpage3providesasummaryofthetotalesti-
mated growth for residential equivalent units (platted
and connected).The growth estimates were prepared
CZ$JUZTUBõ5BCMF&POQBHFQSPWJEFTEFUBJMFEJO
formation on the total estimated growth summarized
in Table A for the 2018 Plan.The estimates for growth
in customers has an impact on the establishment of
futureutilityratesandtheresultingrevenueandyear-
end cash projections for the utility funds. The City
should continue to carefully monitor its estimates for
future growth in customers against actual develop-
ment.
/PUFUP5BCMF"5IFSFJTBEJõFSFODFCFUXFFO4FXFSBOE8BUFSVOJUT
showninTableAbecausesomecustomerswillconnecttoeithermunicipal
waterorsanitary sewer, but notboth.The sanitary sewer improvementsin
UIF0ME7JMMBHFBMTPBDDPVOUTGPSUIFEJõFSFODFT
The Plan assumes annual increases in the fees and
charges for utility services. The increases will ensure
UIF$JUZJTBCMFUPNBJOUBJOTVöDJFOUDBTIJOUIFGVOET
over the long-term. There is no change estimated in
the fees charged for development (connection and
availably charges) only to the base and usage fees for
service.Table B provides information on the annual
estimated rate increases.Table B-1 on the next page
provides a summary of the utility rates as included in
UIF1MBO"DUVBMmOBODJBMSFTVMUTBOEHSPXUIJODVT
tomerswillimpacttheactualutilityrateincreasesthat
may be needed.
TheCityshouldestablishannualuserratesconcurrent
with the development of the following year’s budget.
It is important to maintain a long term, forward look-
ing view for the ongoing management of the utility
funds to avoid potential adjustments to utility rates
CBTFEPOQSJPSZFBSmOBODJBMQFSGPSNBODFBMPOFXJUI
PVUUBLJOHJOUPBDDPVOUGVUVSFmOBODJBMQSPKFDUJPOT
BOEQPUFOUJBMDIBMMFOHFT'VUVSFmOBODJBMDIBMMFOHFT
NBZDPNFGSPNUIFEJõFSFODFCFUXFFOFTUJNBUFE
andactualgrowthincustomers,unanticipatedcapital
funding pressures, and other unanticipated expense
or revenue shortfalls.
calling of bonds; and 3) unrestricted cash available
equivalent to 50% of operating expense.
TableC-1 onthenextpageprovidesasummaryofthe
estimated annual year-end unrestricted cash balance
and operating expenses (not including depreciation)
and unrestricted cash as a percentage of operating
expenses for the Water Fund.Table C-2 on the next
page provides the same information for the Sanitary
Sewer Fund.Chart 1 on page 6, provides a summary
of thetotalestimatedyear endcash balances by fund.
It is estimated that the funds will begin to draw on
cash balances to cover capital and debt service. The
$JUZNBZOFFEUPDPOTJEFSNPEJmFESBUFBEKVTUNFOUT
GSPNXIBUBSFJODMVEFEJOUIF1MBO"DUVBMmOBODJBM
results will need to be monitored to determine what
may be necessary in the future years.
There are no changes recommended at this time to
theCity’sratestructure.As theCitygainsmoreexperi-
FODFPQFSBUJOHUIFFYQBOEFEVUJMJUJFTBOENPSFmOBO
cial history becomes available, the City should evalu-
atewhetherthecurrent ratestructureiscontinuingto
meet the City’s objectives.
The utility rates included in the Plan, combined with
the estimated volumes for water and sanitary sewer
plustheestimatedrevenuetobecollectedfromdevel-
opment charges, will provide cash needed to operate
the utilities, maintain capital assets, and to pay debt
service.TheFinancialPlanSectionofthePlanprovides
a break-down of cash balances for each of the utility
funds based on the following: 1) restricted cash for
planned capital; 2) restricted cash for debt service/
Note toTable B-1: Table B-1 does not include allof the tier rates. SeeTables F-H
for more information.
Note to Table C-2: Amounts shown are estimates based on the assumptions
and information includedin the Plan.
Note to Table C-1: Amounts shown are estimates based on the assumptions
and information includedin the Plan.
Chart 1 shows that cash
balances in the utility funds
will remain stable, with some
growth, over the long term as
customers and volumes billed
increase.
Cash balance will decline be-
tween years 2020 and 2023 as
revenue collected from devel-
opment is used to pay down
debt outstanding as scheduled.
The Plan does not presently
include the use of cash to call
bonds at optional redemption
dates. Optional redemption
of outstanding bonds should
monitored.
The increase in cash from 2016
actual to 2017 is due to the col-
lection of the approximate $3.4
million receivable from other
governments (state funding) in
2017 for capital improvements
made in 2016.
The City of Lake Elmo is located on the eastern edge of
the Twin Cities metropolitan area. The City’s 2030 Com-
prehensive Plan forecasts and provides for approximately
eighttimesthegrowthinhouseholdsandpopulationdur-
ing the 2000-2030 planning period than was experienced
during the 1980-2000 period.
The City reports an estimated 2010 population of 8,069
and 2,774 households (2010 Census). Population is esti-
mated to increase to 10,500 by 2020 and households to
3,800 (
). The land area for the City en-
compasses approximately 15,250 acres.
The City’s 2030 Comprehensive Plan provides guidance
on the City’s plans for managing future demand for util-
ity infrastructure.The City is in the process of updating its
ComprehensivePlan, the updatedPlan willlikely have im-
plications for the assumptions included in the Plan.
Water Utility
Lake Elmo owns, operates and maintains a municipal wa-
ter supply and distribution system. The City has a goal to
serve existing population desiring public water supply
while preparing the system to allow people to connect
as development occurs or existing areas request service.
This policy guides the City’s capital improvement plan-
OJOHBOEUIFOFFEUPNBJOUBJOBnFYJCMFBOESFTQPOTJWF
water system. Capital planning includes projects to cor-
SFDUFYJTUJOHEFmDJFODJFTBOEUPFYQBOEUIFTZTUFN
The City uses an enterprise fund to account for its water
operations. The net position in the Water Fund totaled
$14.11 million and cash balance $3.45 million as of De-
cember 31, 2017.
Sanitary Sewer Utility
PropertyownersintheCityareservedbyindividualsewer
systems or in limited areas by municipal sewer. Capital
planswillprovideforanincreaseinthenumberofproper-
ties to be served by municipal sewer and connection to
the RegionalSewerSystem. The Metropolitan Council En-
vironmentalServices (MCES)has extendedregionalsewer
service to serve a greater area of the City.
The City uses an enterprise fund to account for its sewer
operations. The net position in the Sewer Fund totaled
$8.30 million and cash balance $4.85 million as of Decem-
ber 31, 2017.
Storm Water Utility
TheCityoperatesastormwaterutility. Thesystemofcon-
veyancesisownedandoperatedbytheCityanddesigned
for collecting or conveying storm water.The City collects
anannualfeefrompropertyownersthat isusedtopayfor
the cost of constructing and maintaining the system.
The City uses an enterprise fund to account for its storm
water operations. The net position in the Storm Water
Fund totaled $1.60 million and cash balance $1.96 million
as of December 31, 2017.
The Plan includes a capital improvement plan (the“CIP”),
as prepared by the City, that includes capital projects
funded from utility revenues and accounted for the in the
utilityfunds.Tables D-1 through D-3 beginningonpage
10, provide details on planned capital spending for each
of the utility funds.
It is important to emphasize that the CIP included in the
Plan is a working draft.The cost estimates for the projects
providesaninputtotheproformaanalysisincludedinthe
1MBO*UJTJNQPSUBOUUPSFDPHOJ[FUIBUUIFTQFDJmDQSPKFDUT
that may actually be authorized in the future, and the ac-
tual costs, may vary greatly from what is included in the
Plan.
Capital Projects
The projects included in the CIP include projects to ex-
QBOEUIFDBQBDJUZBOEDPSSFDUEFmDJFODJFTPGUIFXBUFS
and sanitary sewer systems.The City is a developing com-
munity with utility expansion needs. Planned projects in-
clude expansion of the City’s water supply capacity and
distribution system. Sanitary sewer services have been
expandedthroughtheconstructionofconnections tothe
Regional Sewer System.
Asadevelopingcommunity,theCity’sCIPfocusonexpan-
sion and does not presently include any material capital
spending for maintenance of existing systems. This will
need future consideration by the City as the community
develops and infrastructure ages and requires major
maintenance and/or replacement.
Storm Water Projects
For the storm water system, it should be noted that the
CIPincludesprojects for Phases2 and3 forregionaldrain-
BHFJNQSPWFNFOUT5IF$JUZ&OHJOFFSIBTJEFOUJmFEUIF
following issues for the storm water utility that are antici-
QBUFEUPCFBEESFTTFEJOUIFOFYUmWFUPUFOZFBST
• Phase 2 Downtown Regional Drainage project
consisting of land acquisition (Shiltgen property
west of Lake Elmo Avenue and north of CSAH 14),
and a stormwater pond.
• Phase 3 Downtown Regional Drainage project
consisting of storm sewer piping south of CSAH
14nearHagbergs.Thepondingmaybedeveloper
paid,butforthepurposesofthePlanitisassumed
to be paid from utility revenue.
• KraemerLakeFloodplainstudywillbeneededbe-
foredevelopmentcanoccurinI-94corridor,Phase
3 area (between Keats-Lake Elmo Avenue). The
City anticipates grant funds to pay for the study.
Source of Funding for Capital Projects
The source of funding for the utility projects in the CIP
includes one of the following sources or a combination
thereof: fund balance (cash); bond proceeds; special as-
sessments; and/or grants.
Debt Service
Planned funding for utility infrastructure projects antici-
pates the issuance of debt to undertake certain planned
improvementsandtomanageannualutilityfeeincreases.
TheprojectionsassumethattheCitywillissuegeneralob-
ligation bonds secured by revenues from the utility funds
to pay principal and interest. This approach provides the
lowest cost of debt. These bonds will not count against
the City’s debt limit. Debt management is an important
factor in ongoing capital improvements planning.
The estimates for debt service are based on bonds to
be paid over 15 years and level annual debt service. For
bonds supported by special assessments, the special as-
sessments are estimated to be payable over 20 years, past
the term of the bonds.
Theestimatedinterestrates usedto calculateannualdebt
service are generally based on today’s current rate envi-
SPONFOU5IFBDUVBMJOUFSFTUSBUFTXJMMEFQFOEPOmOBM
structure and market conditions at time of issuance.
Charts 2 and 3 on pages 13 and 14, provide informa-
tion on the City’s existing and estimated future debt ob-
ligations supported by the utility funds.Chart 2 includes
information on estimated debt (bonds) outstanding as of
year-end for the combined utility funds.Chart 3 includes
information on estimated annual debt service (principal
and interest) payments for the combined utility funds.
Municipal Facilities
The City is preparing to undertake capital spending for
municipal facility, including space for city hall. The City is
planningfortheWaterFundandSewer Fundto pay apor-
tion of the debt service on anticipated bonds to be issued
UPmOBODFGBDJMJUZJNQSPWFNFOUT5IFQPSUJPOPGDPTUTBM
located to the utility funds recognizes that the utility op-
FSBUJPOTXJMMCFOFmUGSPNUIFNVOJDJQBMGBDJMJUJFTJNQSPWF
ments.
The Plan anticipates the Water Fund and Sewer Fund will
each pay 10% of the annual debt service, respectively,
on an estimated total bond issuance of $11,100,000
($10,950,000 for construction plus cost of issuance) for
municipal facilities improvements.The municipalfacilities
improvements will not be recorded as an asset in theWa-
terFundortheSanitarySewerFund.And,theoutstanding
debt obligation for the municipal facilities improvements
will not be a liability of the Water Fund or the Sanitary
Sewer Fund.
It is anticipated in the Plan that the Water Fund and the
Sanitary Sewer Fund will transfer cash annually to a City
governmental debt service fund to pay an allocated por-
UJPOPGUIFEFCUTFSWJDFPOUIFCPOETJTTVFEUPmOBODFUIF
municipal facilities improvements. The annual transfers
from the Water Fund and the Sanitary Sewer Fund to a
governmentaldebtservicefundisanticipatedtobeinthe
approximate range of $85,000 per year ($170,000 in total
from both funds).
The estimated debt out-
standing at year-end shown
in Chart 2 includes general
obligation revenue bonds se-
cured by water, sanitary sew-
er, and storm water revenues.
The chart includes both exist-
ing debt outstanding (as of
November 2, 2018) and esti-
mated debt anticipated to be
issued in the future and paid
from utility revenues. Future
bond issuance estimates are
based on the Plan.
Chart 2 includes debt sup-
portedbyutilityrevenueonly
and does not include existing
or future estimated debt that
is paidfromproperty tax levy.
The Note to Chart 2 provide
information on optional re-
demption of outstanding
bonds at future dates.Ap-
pendix C on page 42 pro-
vides additional information
for optional redemption of
existing bonds.
The estimated annual debt
service shown in Chart 3 in-
cludesgeneralobligationrev-
enuebondssecuredbywater,
sanitarysewer, andstormwa-
ter revenues.
The annual amounts include
bothexistingdebtservice(on
outstanding bonds) and esti-
mated debt service on bonds
anticipated to be issued in
the future and paid from util-
ity revenues. Future bond is-
suance estimates are based
on the Plan (see Table D).
Chart 3 includes debt sup-
portedbyutilityrevenueonly
and does not include existing
or future estimated debt that
is paidfromproperty tax levy.
Key Factors
1SPKFDUJOHUIFVUJMJUZSBUFTOFDFTTBSZUPNBJOUBJOUIFm
nancialstability oftheutility operationsrequires develop-
ment and analysis of the following key factors:
• Estimates for future annual operating expenditures,
including personnel, materials and supplies, cost of
electricity, and other operating expenses.
• Metropolitan Council Environmental Service (MCES)
sewer fee charges to the City by the Metropolitan
Councilforregionalcollectionandtreatmentofwaste
water.This is an operating expense that the City does
not have control over.
• Annual capital expenditure to maintain and improve
the utility systems.
• Annual debt servicePOCPOETJTTVFEUPmOBODFDBQJ
tal improvements.
• Growth in customers using and paying for the sys-
tems.Growthincustomerswillprovideadditionalrev-
enue to the systems at time of platting, connection,
and on-going usage, but will also create additional
demand for services.
• Available other revenue sources other than fees and
charges paid by customers of the utility systems.
Annual Operating Expenditures
Costs incurred in operating the utility systems, which are
used up in the period in which acquired, are recorded
as operating expenditures. Annual growth in operating
expenditures, not including the MCES charge, has been
modest. It is estimated that annual increase in expenses
will be approximately 2.0% annually, above 2019 budget,
with some limited exceptions. The limited exceptions are
for the following line items:
• Legal services payable from the Water Fund is pro-
jected at approximately $200,000 annually between
years 2019 and 2021, then reducing to approximately
$10,000 annually.
• Water meters and supplies is projected at approxi-
mately $132,000 to $143,000 annually between years
2018 and 2022, then reducing to $90,000 annually.
•/FXTUBõJTBOUJDJQBUFEUPCFBEEFEJOBOE
The Plan anticipates that 50% of the cost of new posi-
tions in the PublicWorks Department (1.0 FTE in 2021
and 1.0 FTE in 2025) and the Finance Department (1.0
FTE in 2021 and 1.0 FTE in 2025) will be allocated to
the utility funds. The Water Fund and Sanitary Sewer
Fundwillpay40%oftheallocatedcostsandtheStorm
Water Fund will pay 20%.
Depreciation is reported as an operating expenditures
and is the process of allocating the costs of an asset over
its useful life in a systematic and rational manner. Depre-
ciation is estimated to change with capital spending and
depreciation of both existing and future acquired assets.
Metropolitan Council Environmental
Services
TheMCESchargetocitiesforregionalcollectionandtreat-
ment has been volatile in recent years. MCES experienced
SFWFOVFMPTTFTGSPNUIFTJHOJmDBOUESPQJOSFHJPOBMEFWFM
opment during the recession which has caused a corre-
sponding decline in revenue collected by the Council for
SewerAvailabilityCharges(aonetimefeefornewconnec-
tions). Future charges payable to the MCES are calculated
based on total projected annual sanitary sewer volume
BOEUIF.$&4DVSSFOUSBUF GPSZFBS
JOnBUFECZ
annually.This is an operating expense fortheSewerFund.
The City accounts for the collection and payment of the
MCES “Sewer Availability Charge” (SAC) through an ac-
countspayableaccount.Theoperatingexpensereportfor
theSanitarySewerFund(see Tables J-1 and J-3 onpages
31 and 33 do not include a separate revenue andexpense
line item for the MCES SAC.
Annual Capital Expenditures
TheCIP anticipates paying for futurecapitalimprovement
project costs with a combination of revenue sources. The
City anticipates future development will provide revenue
totheCityforpayingforutilityexpansionthroughthecol-
lection of development fees (an availability and a connec-
tion charge).
Paying for annual planned capital improvement projects
with cash may be a sound strategy depending on the de-
tails of the project. It avoids incurring annual interest ex-
pense. However, this strategy requires advance planning
and implementation of utility fees and charges that pro-
WJEFBEFRVBUFDBTInPX
For large (non-routine) capital expenditures or unantici-
pated capital expenditures, the use of bonding to fund
capital minimizes annual rate increases that otherwise
would be necessary. It also allows the City to charge fu-
ture customers the cost of infrastructure with a longer
useful life, versus putting the entire burden on today’s
customers.The CIP anticipates bonding.The resulting an-
OVBMEFCUTFSWJDFPOUIFCPOETJTJODMVEFEJOUIFmOBODJBM
plans for the funds.
Debt Service
Debt service in the funds is paid from revenue collected
from utility fees and charges, availability and connection
charges, and special assessments. The CIP anticipates
debt issuance to be supported by revenue within the util-
ity funds. All current and future debt is accounted for in
UIFmOBODJBMQMBOTUIBUBSFJODMVEFEJOUIF1MBO5IFFTUJ
mated debt service on future bonds is based on 15 years
andbondspayableatcurrentmarketinterestrates.Future
FTUJNBUFEVUJMJUZGFFTBOEDIBSHFTSFnFDUUIFDPTUPGUIF
estimated increase for debt service.
Growth in Customers
Growth in customers from development is the most im-
portant factor in determining the projections for future
utilityrates.Buildoutofapproveddevelopmentswillbring
anincreaseinrevenuetotheutilityfundsthroughthecol-
lection of availability and connection charges and fees
collectedforserviceandusage ofthe systems. Availability
chargesandconnectionchargesareonetimechargescol-
lected at the time of development and connection to the
system. Estimating the increase in future customers is the
NPTUWPMBUJMFGBDUPSJOEFWFMPQJOHmOBODJBMQSPKFDUJPOTGPS
the utility funds.Table E on page 18 and Charts 4 and 5
on page 19 include information on the estimated growth
in customers or residential equivalent units (“REU”) from
development. The estimated growth in REU’s was pre-
QBSFECZ$JUZTUBõBOEQSPWJEFEUP/PSUIMBOEGPSUIF1MBO
The pace of growth in customers from development will
directly impact the estimated revenues shown in the Plan
and the planned utility rates. The City must continue to
VQEBUFJUTmOBODJBMQMBOTCBTFEPOBDUVBMHSPXUI
Available Other Revenues
There is limited other revenue. The majority of the cost
to operate and maintain the system is paid from charges
collected from those using the system. Other revenue in-
cludes interest income, special assessments, and grants.
Historical Utility Rates
Information on historical rates is provided in Tables F-H
beginning on page 20 for each of the utility funds. Rates
shown are billed quarterly, with the exception of the
stormwaterfeewhichisbilledto customersreceivingthis
charge on an annual basis. Prior to 2017, the City charged
a basic service fee for water only.
Future Utility Rates
Information on utility rates for years 2019 to 2026 is in-
cludedin Tables G-H foreachutilityfund.Thefuturerates
SFnFDUUIFSBUFTOFDFTTBSZUPNBJOUBJOBEFRVBUFDBTI
balance in the utility funds. These rates applied against
estimated customers and usage is used to calculate the
annual estimated charges for services fees shown in the
mOBODJBMQMBOT QSPGPSNB
GPSFBDIVUJMJUZGVOE5IFSBUFT
inthePlanarethesameratesasincludedinthe2017Plan.
The Plan assumes a 3.0% annual increase in water rates
and a 1.0% annual increase in and sewer rates beginning
in 2019.The annual rate increase is assumed on the quar-
terlybasefeeandusagefeesonly.Theannualfeeforstorm
water is assumed to increase by $5.00 per year beginning
in 2019 and then by $10.00 per year beginning in 2021.
The increases are needed to ensure the City is able to
NBJOUBJOTVöDJFOUDBTIJOUIFVUJMJUZGVOETPWFSUIFMPOH
term. There is no estimated change to the rates charged
for development, the connection and availably charges.
The tier structure the City uses for charging customers for
water, based on volume of water sold, was not reviewed
aspartofthisstudy.Thecurrentadoptedtierstructureap-
pears to be reasonable.
The City changed the basis for charging sanitary sewer
customers in 2017. Residential customers are charged a
CBTFGFFGPSUIFmSTU
HBMMPOTPGTFXFSWPMVNFCJMMFE
per quarter andthen charged on a per 1,000 gallons basis
for volume billed above this usage.
Estimated Volumes of Water Sold and
Sanitary Sewer Billed
Annual estimated volume of water sold by tier and esti-
mated sanitary sewer billed by year is included in Table
F and Table G beginning on page 20.The estimated gal-
lonsofwatersoldandsanitarysewerbilledissummarized
in Chart 6 on page 23.
The City is not able to provide information on histori-
cal volume sold per tier, or in total, so assumptions were
made on the volumes sold in order to prepare the Plan
andtoprojectfuturerevenuesfrombillingofwaterusage.
The Plan assumes average annual volume of just under
97,925 gallons per residential customer (or approximately
8,160 gallons per month).This volume is pro-rated across
theCity’stierstructureusingestimatedhistoricaldata(ac-
tual volume data is not available from the City). For com-
mercial customers, annual volume is calculated based on
prior year estimated volumes adjusted by the percentage
increaseincommercialandschoolcustomers.ThePlanas-
sumes annual sewer volume biller per customer for both
residentialandcommercialof48,000gallons(or4,000gal-
lons per month).The MCES reports total sewer volume for
the City of approximately 38 million gallons for year 2017
and estimated 67 million gallons for year 2018.
The estimates for residential and commercial customers
volume usage for both water and sanitary sewer needs
to be revisited and reviewed when better information is
available from the City’s utility billing system.
The estimates for future
growth from development,
shown in residential equiva-
lent units in Chart 4 and
Chart 5,waspreparedbyCity
TUBõ
The data was provided to
Northland as an input for the
Plan.
Theestimatesforgrowth,and
annual units platted and con-
nected, is an important input
forestimatingfuturerevenue.
Revenue from increased
residential equivalent units
comes from a one time pay-
ment of the City’s availabil-
ity charge and connection
charge and then from on-
going payment for use of
the systems. The availabil-
ity charge is paid at time of
platting and the connection
charge at time of connection.
The estimated annual gallons
of volume will increase as
more customers connect to
the water and sanitary sewer
systems.
The Plan assumes that the
average annual usage per
customer for residential and
commercial remains fairly
constant.
#BTFEPOIJTUPSJDBMmOBODJBMQFSGPSNBODF
FTUJNBUFEVUJM
JUZSBUFT
BOEGVUVSFDBQJUBMQSPKFDUT
mOBODJBMQMBOT QSP
forma) have been prepared for each the utility funds.
Key Assumptions
5IFmOBODJBMQMBOTGPSFBDIVUJMJUZGVOETXBTEFWFMPQFE
based on key assumptions, which are summarized as fol-
lows:
• Operating expenditures, including personnel costs
and materials supplies and all other operating ex-
pense will increase by approximately 2.0% annually,
basedonthe2019budget,withanexceptionforlegal
fees, meter and supplies, and MCES payments.
• Nochangeinexistingtierstructureforfeesandcharg-
es.
• Depreciation is estimated based on estimated capital
improvements with new assets assumed to be depre-
ciated over a 40 year term.
• Current capital improvement plan will be implement-
ed at estimated project costs and estimated sources
of funding as included in the Plan.This includes an in-
crease in future debt service for payment on bonds to
be issued.
• Utility fees for use of the system are assumed to in-
crease for water and sanitary sewer services, begin-
ning in year 2019, see Table B on page 3 for annual
percentage increases for water and sewer fees and
thefeeadjustmentforstormwater.Theannualratein-
creaseisassumedonthequarterlybasefeeandusage
fees only. The annual fee for storm water is assumed
to increase by $5.00 per year, beginning in year 2019.
• Connection and availability charges are assumed to
remain constant for years 2019-2026. Revenue from
these charges is used to pay for the system, including
the planned capital projects and related debt service.
• Theestimatedutilityfeesandchargesareshowntobe
at a level that is adequate to maintain cash balances
JOUIFGVOETTVöDJFOUUPDPWFSUIFGPMMPXJOHPWFSUIF
OFYUmWFZFBST
SFTUSJDUFEDBTIGPSQMBOOFEDBQJUBM
2) restricted cash for debt service/calling of bonds;
and 3) unrestricted cash available equivalent to 50%
of anticipated operating expenses.
Fund Description
The Water Fund is used to account for the operating and
capital improvement costs of the water utility system.
Background
5IF8BUFS'VOEJTJOTPVOEmOBODJBMDPOEJUJPO'VUVSF
mOBODJBMQFSGPSNBODFXJMMCFJNQBDUFECZUIFUJNJOHPG
development of land in the City and the timing of receipt
of development fees that will support debt service on the
infrastructure and receipt of charges for service for usage
of the system.
Source of Funds
There are two major source of funds: 1) collection of
charges for service fees (base fee and volume usage fees)
and 2) development fees collected at time of platting and
time of connection to the system. Revenue from charges
for service fees will increase as the number of customers
increases and the volume of water sold increases.
5IFmOBODJBMQMBOBTTVNFTOPDIBOHFUPUIFSBUFTUSVDUVSF
with annual rate increases of 3.0% beginning in 2019.
As of year 2017, the City no longer deposits receipt of rev-
enue from a rental fee for private commercial access to
water towers to the Water Fund, this represented about
a $50,000 reduction in annual revenue to theWater Fund.
Interest income earned on cash balance is recorded as
revenue. The investment earnings rate is estimated to be
0.5%for future years. Specialassessments leviedforwater
infrastructureimprovementsisrecordedasrevenueinthe
WaterFund.Grantfundsintheamountof$975,000inyear
2020 is for capital projects.
Use of Funds
The use of funds is to pay for the operation of the water
TZTUFN
JOUFSFTUBOEmTDBMFYQFOTFPOEFCU
EFQSFDJBUJPO
and authorized transfers to other funds that may occur
from time to time. Principal payments on bonds sup-
ported by the Water Fund result in a reduction of liability
for the Fund. Operating expense line item details can be
found in Table I-3 on page 28.
Transfers
Beginning in year 2021, a transfer of cash from the Water
Fund to a governmental debt service fund is planned to
QBZBQPSUJPOPGEFCUTFSWJDFPOCPOETUPCFJTTVFEUPm
nancemunicipalfacilitiesimprovements.Theexacttiming
of the bond issuance and terms is not certain at this time,
but for purpose of planning a bond issuance year of 2020
is assumed for the Plan. The Plan anticipates the Water
Fund will pay 10% of the annual debt service on an es-
timated total bond issuance of $11,100,000 ($10,950,000
for construction plus cost of issuance) for municipal facili-
ties improvements.The municipal facilities improvements
will not be recorded as an asset in the Water Fund. The
outstanding debt obligation for the municipal facilities
improvements will not be a liability of theWater Fund.
Presently the City does not charge the utility funds for
General Fund overhead but does directly charge the fund
GPSBENJOJTUSBUJWFTUBõUJNF
Balance Sheet Items
5IFmOBODJBMQMBOJODMVEFTFTUJNBUFEBTTFUTBOEMJBCJMJUJFT
this includes estimatedannualyear-endcashbalance.Ta-
ble I-2 on page 27 provides details on estimated change
in cash. The City reported $3.4 million as receivable from
other governments (State of Minnesota) in 2016; the re-
ceivable was collected in 2017.
Estimated year end cash bal-
ances are estimated to in-
crease and then be spent
downto paydebt serviceand
capital spending over the
coming years.
The source and use of funds
in Chart 8 includes depre-
ciation and capital contribu-
UJPOT5IFEJõFSFODFCFUXFFO
the annual source and use
of funds is the change in net
assets of the fund. The dif-
ference comes from the col-
lection of development fees
(source of funds) for payment
of debt service on outstand-
ing bonds (liability of the
fund) and collection of rev-
enue for build-out of the sys-
tem.
Fund Description
TheSanitarySewerFundisusedtoaccountfortheoperat-
ing and capital improvement costs of the sanitary sewer
utility system.
Background
5IF4BOJUBSZ4FXFS'VOEJTJOTPVOEmOBODJBMDPOEJUJPO
'VUVSFmOBODJBMQFSGPSNBODFXJMMCFJNQBDUFECZUIFUJN
ing of future development of land and the timing of re-
ceipt of development fees (trunk line availability charges
and connection charges) that will support infrastructure
costs and receipt of charges for service for usage of the
system.
Source of Funds
There are two major source of funds: 1) collection of
charges for service fees (base fee and volume usage fees)
and 2) development fees collected at time of platting and
time of connection to the system. Revenue from charges
for service fees will increase as the number of customers
increases and the volume of water sold increases. Future
development of land through platting will result in in-
creased revenue from water availability and connection
charges.
5IFmOBODJBMQMBOBTTVNFTOPDIBOHFJOUIFSBUFTUSVDUVSF
and annual rate increases of 1.0% beginning in 2019 and
then 2.0% annually beginning in 2024.
Interest income is earned on cash balance is recorded as
revenue. The investment earnings rate is estimated to be
0.5% for future years. Special assessments levied for sani-
tarysewerinfrastructureimprovementsisrecordedasrev-
enue in the Sanitary Sewer Fund.
Use of Funds
The use of funds is to pay for the operation of the sanitary
TFXFSTZTUFN
JOUFSFTUBOEmTDBMFYQFOTFPOEFCU
EFQSF
ciation, and authorized transfers to other funds that may
occur from time to time. Principal payments on bonds
supported by the Sanitary Sewer Fund result in a reduc-
tion of liability for the Fund. Operating expense line item
details can be found in Table J-3 on page 33.
Transfers
Beginning in year 2021, a transfer of cash from the Sani-
tary Sewer Fund to a governmental debt service fund is
planned to pay a portion of debt service on bonds to be
JTTVFEUPmOBODFNVOJDJQBMGBDJMJUJFTJNQSPWFNFOUT5IF
exacttimingofthebondissuanceandtermsisnot certain
at this time, but for purpose of planning a bond issuance
year of 2020 is assumed for the Plan. The Plan anticipates
the Water Fund will pay 10% of the annual debt service
on an estimated total bond issuance of $11,100,000
($10,950,000 for construction plus cost of issuance) for
municipal facilities improvements. The municipal facili-
ties improvements will not be recorded as an asset in the
Water Fund. The outstanding debt obligation for the mu-
nicipal facilities improvements will not be a liability of the
Sanitary Sewer Fund.
Presently the City does not charge the utility funds for
General Fund overhead but does directly charge the fund
GPSBENJOJTUSBUJWFTUBõUJNF
Balance Sheet Items
5IFmOBODJBMQMBOJODMVEFTFTUJNBUFEBTTFUTBOEMJBCJMJUJFT
for, this includes estimated annual year-end cash balance.
Table J-2 on page 32 provides a detailedsummary on es-
timated change in cash year by year.The City recorded an
a receivable for special assessments in 2017 that is inclu-
sive of future development fee revenue.
Estimated year end cash bal-
ance is estimated to increase
betweenyears2018and2020
duetodevelopmentandcon-
nections.
The actual year-end cash
balance will be impacted by
changes in planned capital
spending. As projects are im-
plemented, beyond what is
included in the CIP, cash bal-
ance may be lower than what
is estimated in the Plan.
The source and use of funds
shown in Chart 10 includes
depreciation and capital con-
USJCVUJPOT5IFEJõFSFODFCF
tween the annual source and
use of funds is the change
JOOFUBTTFUT5IFEJõFSFODF
comes from the collection of
development fees (source of
funds) for payment of debt
serviceonoutstandingbonds
(liability of the fund) and col-
lection of revenue for build-
out of the system.
Fund Description
TheStormWaterFundisusedtoaccountfortheoperating
and capital improvement costs of the storm water utility
system.
Background
5IF4UPSN8BUFS'VOEJTJOTPVOEmOBODJBMDPOEJUJPO'V
UVSFmOBODJBMQFSGPSNBODFXJMMCFJNQBDUFECZUIFUJNJOH
of future development oflandinthe City. Future develop-
ment will increasethe demands onthestormwaterutility
infrastructure and provide opportunity for increased rev-
enue to support the infrastructure and operation of the
system.
Source of Funds
5IFSFJTPOFNBKPSTPVSDFPGGVOE
UIFDPMMFDUJPOPGBmYFE
annual charge for service fee. The City does not charge
an availability fee for the storm water utility system. Build
out ofthe systemhas been paid as part of the developer’s
project costs.
Theannualfee,presentlyat$55.00,isassumedtoincrease
annually by $5.00 per year until 2021, and then by $10.00
QFSZFBS5IFJODSFBTFTXJMMNBJOUBJODBTICBMBODFTVö
cient to meet operating and capital needs and to cover
debt service. In 2017, the City began paying debt service
on bonds issued in 2016.
The City received a developer contribution of $100,000
(relatedtotheNorthportDevelopment)asanescrowcon-
tribution,includedinthecashbalancefortheStormWater
Fund as of year-end 2017. The funds are available in the
event the storm water pipe installed for the project needs
to be moved in a few years when Manning Avenue is ex-
panded. The City anticipates $60,000 in grants/contribu-
tions in 2022 related to a capital project.
Some cities choose to manage storm water utility fees
UISPVHImOBODJOHDFSUBJODBQJUBMJNQSPWFNFOUTXJUIUBY
levy, the City will have the ability in the future to consid-
er what costs, if any, of the storm water utility should be
spread over the cities entire tax base.
Interest incomeis earnedonthecashbalanceandrecord-
ed as revenue. The investment earnings rate is estimated
tobe0.5%forfutureyears.Anyspecialassessmentslevied
and recorded as revenue to the Storm Water Fund relates
to unpaid utility bills and are not related to project costs.
Use of Funds
The use of funds is to pay for the operation of the storm
XBUFSTZTUFN
JOUFSFTUBOEmTDBMFYQFOTFPOEFCU
EFQSF
ciation, and authorized transfers to other funds that may
occur from time to time. Principal payments on bonds
supported by the Storm Water Fund result in a reduction
of liability for the Fund. Operating expense line item de-
tails can be found in Table K-3 on page 38.
Transfers
5IFmOBODJBMQMBOEPFTOPUBOUJDJQBUFBOZGVUVSFUSBOTGFST
in or out of funds fromthe StormWater Fund to other city
funds. Presently the City does not charge the utility funds
for General Fund overhead but does directly charge the
GVOEGPSBENJOJTUSBUJWFTUBõUJNF
Balance Sheet Items
5IFmOBODJBMQMBOJODMVEFTFTUJNBUFEBTTFUTBOEMJBCJMJUJFT
for, this includes estimated annual year-end cash balance.
Table K-2 on page 37 provides a detailed summary on
estimated change in cash year by year.
Estimated year end cash bal-
ance is improved over the
prior 2017 Plan. The reason
for this comes from a reduc-
tion in the planned use of
cash for capital projects. Cash
balances are expected to be
maintained due to a planned
annual increase in the storm
water fee.
The actual year-end cash
balance will be impacted by
changes in planned capital
spending. As projects are
implemented, beyond what
is included in the CIP, cash
balances may be lower than
what is estimated in the Plan.
The source and use of funds
shown in Chart 12 includes
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between the annual source
anduseoffundsisthechange
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comes from the collection of
charges and payment of debt
serviceonoutstandingbonds
(liability of the fund).
The CIP anticipates the issu-
ance of additional debt in
the future to pay for capital
improvements.Chart 13
includes both existing and
anticipated issuance of new
debt.
The estimated future re-
stricted cash balance for debt
service as a percent of year-
end debt outstanding will in-
crease as cash increases from
the collection of develop-
ment fees. The cash collected
will be used to pay future
debt service.
The City may determine in
future years to use cash to
call bonds outstanding that
are subject to an optional re-
demption provision.
A decision to call bonds with
cash will depend on several
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nancial performance of the
utility funds and the “actual”
cash that may available in the
future to call bonds.
5IF$JUZTPOHPJOHmOBODJBM
management planning will
help to inform any future de-
cision to call bonds. See page
13 for more detailed informa-
tionbybondseriesonthepar
amount of bonds subject to a
future call date.
Note: For purpose of illustration Chart 14 combines all bonds outstanding payable by net revenues (with general obliga-
tion pledge) of theWater Fund, Sanitary Sewer Fund, and StormWater Fund. Restricted cash available for calling bonds is
also a combination of cash from these three funds. Before considering the calling of bonds, the City will need to review
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Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
CITY OF LAKE ELMO
WASHINGTON COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 2018-137
RESOLUTION ADOPTING 2019 WATER, SEWER AND STORM WATER FUND
BUDGETS
WHEREAS, The City of Lake Elmo is to approve a resolution setting forth an annual
budget for the Water, Sewer and Storm Water Funds; and
WHEREAS, the City Council has received the budget document;
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Lake Elmo,
that the 2019 Water, Sewer and Storm Water Fund Budgets shall be as follows:
2019
Water
2019
Sewer
2019
Storm
Adopted Adopted Adopted
Fund Revenues:
Charges for Services $ 937,421 $ 339,840 $366,354
Connections 1,280,000 1,272,050 -
Special Assessments 108,550 141,799 -
Miscellaneous 90,000 - -
Interest on Investments 20,000 20,000 7,000
Total Fund Revenues $2,435,971 $1,773,689 $373,354
Fund Expenses:
Personnel $ 244,033 $ 119,932 $ 76.635
Materials and Supplies 192,650 15,600 8,500
Charges and Services 368,678 276,178 118,360
Capital Outlay 358,000 345,000 40,000
Miscellaneous 1,127,041 714,754 232,400
Total Fund Expenses $2,290,402 $1,471,464 $475,895
ADOPTED, by the Lake Elmo City Council on the 4th day of December, 2018.
______________________________
Mike Pearson
Mayor
ATTEST:
__________________________________
Julie Johnson
City Clerk