HomeMy WebLinkAbout#24 - Utilitly ProForma
STAFF REPORT
DATE: November 17, 2020
TO: Mayor and Council
FROM: Kristina Handt, City Administrator
AGENDA ITEM: Utility Financial Management Plan
BACKGROUND:
In 2016 the city contracted with Northland Securities Inc to complete a long range financial management
plan for the water, sewer and storm water funds. The plan was last updated in 2018. A couple months ago
the council approved an agreement with Northland to update the plan again. A copy of the updated plan is
included in your packet.
ISSUE BEFORE THE FINANCE COMMITTEE:
1) Does the Council have any question regarding the financial management plan for the utility funds?
DISCUSSION:
The financial management plan is an important tool used to set rates and plan for future operations
and investments in the utility funds. The plan incorporates the capital improvement projects from
the 5 year CIP as well as the following 5 years, an assumption on growth in customers and
operations, financing strategies, and fund balance policy to arrive at the rates needed to support
each utility fund.
Tammy Omdal from Northland Securities will be at the meeting to present the plan. Tammy
worked with city staff to develop the plan in 2016 and has worked on previous updates. She has
also worked with the city on bonding issuances in the past.
FISCAL IMPACT:
Proposed rate increase are offered in the plan in order to provide for the operation and capital needs
of the utility funds over the next 10 year.
RECOMMENDATION:
1. Motion to approve Financial Management Plan for the Utility Funds to the City Council
2. Identify assumptions to change or provide additional direction on the Financial Management
Plan
ATTACHMENTS:
1) Financial Management Plan for the Water, Sewer and Storm Water Funds November 2020
2) Presentation Handout
DRAFT
City of Lake Elmo, MN
Financial Management Plan
for
Water, Sanitary Sewer, and Storm Water Funds
Draft for Presentation, Dated November 4, 2020
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
i
Letter of Transmittal
Executive Summary 1
Organization of the Plan .....................................................................................................1
Study Approach ..................................................................................................................1
Conclusions and Recommendations ..................................................................................2
Table A - Growth in Customer and REC Units ...............................................................3
Table A-1 - Total Projected Customers ..........................................................................3
Table B - Projected Rate Increases ................................................................................3
Table B-1 - Utility Rates .................................................................................................4
Table C-1 - Water Fund Operating Expenses and Unrestricted Cash ............................5
Table C-2 - Sanitary Sewer Fund Operating Expenses and Unrestricted Cash ..............5
Chart 1 - Year-end Cash Balances..................................................................................6
Background 7
Water Services ...................................................................................................................7
Sanitary Sewer Services .....................................................................................................7
Storm Water Services .........................................................................................................7
Capital Improvement Plan 8
Capital Projects ..................................................................................................................8
Storm Water Projects .........................................................................................................8
Source of Funding for Capital Projects ...............................................................................8
Debt Service .......................................................................................................................8
Municipal Facilities .............................................................................................................9
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 Revenues ................................................................................................16
Historical Utility Rates ......................................................................................................16
Future Utility Rates ..........................................................................................................17
Estimated Volumes of Water Sold and Sanitary Sewer Billed ..........................................17
Table E - Growth Projections ............................................................................................18
Contents
ii
Chart 4 - Sanitary Sewer REC Platted and Connected by Year ..........................................19
Chart 5 - Water REC 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 .................................................................................................27
Table I-2 - Cash Balance ............................................................................................28
Table I-3 - Operating and Other Expenses .................................................................29
Chart 7 - Year End Cash Balances ..............................................................................30
Chart 8 - Revenue and Expense ................................................................................30
Sanitary Sewer Fund........................................................................................................31
Table J-1 - Pro Forma .................................................................................................33
Table J-2 - Cash Balance ............................................................................................34
Table J-3 - Operating and Other Expenses ................................................................35
Chart 9 - Year End Cash Balances ..............................................................................36
Chart 10 - Revenue and Expense ..............................................................................36
Storm Water Fund ............................................................................................................37
Table K-1 - Pro Forma ................................................................................................38
Table K-2 - Cash Balance ...........................................................................................39
Table K-3 - Operating and Other Expenses ................................................................40
Chart 11 - Year End Cash Balances ............................................................................41
Chart 12 - Revenue and Expense ..............................................................................41
Appendices to Report 42
Appendix A - Example Quarterly Utility Fees Payable by Property Types ........................43
Appendix B-Chart 13 - Combined Utility Funds Restricted Cash and Debt ......................44
Appendix C-Chart 14 - Total Bonds Outstanding/Bonds Subject to Call Provision ...........45
iii
150 South Fifth Street, Suite 3300, Minneapolis, MN 55402
Main: (612) 851-5900 / Direct: (612) 851-4964 / Email: tomdal@northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
November 4, 2020
Kristina Handt
City Administrator
Lake Elmo City Hall
3800 Laverne Avenue North
Lake Elmo, MN 55042
RE: Update to Financial Management Plan for City Utility Funds
Dear Kristina:
Northland Securities, Inc. is pleased to present the City of Lake Elmo with the Financial Management Plan for the City Utility Funds.
The City has requested Northland to provide service to the City to update the 2018 Financial Management Plan for the Utility Funds, dated
November 20, 2018. The service includes updating data and prior assumptions to perform a utility rate analysis for the utility systems. The
analysis and report includes a review of the past performance of the systems, projected updated growth in residential equivalent connections
from new development, determines the adequacy of current revenues, and provides recommendation on future rates, which reflect recent and
projected cost experience, in addition to anticipated capital project expenditures and estimated future debt service.
We appreciate the opportunity to provide service to the City of Lake Elmo.
Sincerely,
NORHTLAND SECURITIES, INC.
Tammy Omdal
Managing Director
1
Executive Summary
EXECUTIVE SUMMARY
This Financial Management Plan the “Plan”) is intended
to serve as a guide for financial management of the water,
sanitary sewer, and storm water systems of the City of Lake
Elmo (the “Utilities” or the “Utility Funds”). The objectives
of the study for the Plan were as follows:
• Revenue Sufficiency - update and populate a forecast-
ing model to determine the level of revenue needed to
satisfy projected operating, capital improvements, and
debt service while maintaining adequate reserves for
future capital needs of the Utility Funds.
• Rate Calculation - Review planned rates for the Utili-
ties and propose any modifications that may be needed
to ensure that rates provide fair and equitable distribu-
tion of costs.
The Plan presents an update to the Financial Plan for the
Water, Sanitary Sewer, and Storm Water Funds, dated No-
vember 20, 2018. The Plan includes updated projections for
development of land in the City and growth in customers
of the Utilities, updated projections for revenues and ex-
penses, and incorporation of current City plans for capital
improvements, among other items.
Recommendations included in the Plan are based on infor-
mation provided to Northland from City staff and other City
consultants and certain assumptions as prepared by North-
land 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 need
to continue to adjust its plans accordingly, including plans
for adjustments to rates for charging services for the Utili-
ties.
Organization of Plan
This Plan is organized into six sections:
1. Executive Summary provides information on the orga-
nization of the Plan, study approach, and conclusions
and recommendations.
2. Background discusses the historical context, 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. Information on
debt service is also included.
4. Utility Rates provides current, and future estimated
rates to maintain a positive financial condition for the
Utility Funds.
5. Financial Plans are provided for the Water Fund, Sani-
tary Sewer Fund, and Storm Water Fund. The finan-
cial plans provide both historical, current, and future
sources and uses of funds and balance sheet informa-
tion. Financial plans take into account capital improve-
ment plans, debt service, and proposed rates and cus-
tomer activity.
6. Appendices to Report provides supplemental informa-
tion.
Study Approach
The following steps were taken as part of the study:
• City provided information on the following:
- historical spending and revenues, and future capi-
tal improvement plans;
2
Executive Summary- estimated growth in customer units from residen-
tial and commercial development;
- City’s Comprehensive Annual Financial Reports as
of December 31, 2019; and
- projected 2020 financial results and preliminary
2021 budget.
• Information provided by the City was organized, ana-
lyzed, and used to support the development of finan-
cial plans. Once the preliminary financial plans were
developed then different scenarios were considered
and analyzed with City staff.
• City staff offered input and feedback on the assump-
tions and desired outcomes.
It is important to note aspects not reviewed as part of the
study, which include:
• The validity of the assumptions and figures provided by
the City on future estimated growth was not reviewed.
• The financial impact of changes to the existing tier
structure for charging for water and sanitary sewer ser-
vices was not reviewed.
• Northland did not review any City prepared pro forma
as part of the study and we are not aware of how the
Plan may compare to any City pro forma.
• The scope of the study did not include a review and
comparison of the fees and charges to other cities.
Conclusions and Recommendations
The following conclusions and recommendations are of-
fered as a result of the study:
1. Growth in Customers
To meet service demands from growth in customers
from development, the City continues to plan for capital
improvement projects. The scope, timing, and cost of
the capital improvement projects included in the Plan
are preliminary estimates that are subject to change.
The City provided a list of proposed improvement proj-
ects and with gross estimates for project costs to pro-
vide a basis for the pro forma analysis included in the
Plan. The City reviews and revises its capital improve-
ment plans on a regular and on-going basis.
Timing for capital projects will be driven by develop-
ment. The planned improvements that are currently in-
cluded in the capital improvement plan are anticipated
to be paid through a combination of debt issuance, spe-
cial assessments, and cash available in the Utility Funds.
In addition to the impact of future growth on the capi-
tal improvement plan, the actual timing for the build
out of already approved residential development and
commercial areas will impact future revenue projec-
tions.
Table A on the next page provides the total estimated
growth in utility customers between 2020-2029, based
on new connections and platting of property. The esti-
mates were prepared by City staff. Table E on page 18
provides details of the information summarized in Table
A.
The estimated growth in customers has a direct impact
on the proposed utility rates and the resulting revenue
and year-end cash projections. The City should contin-
ue to carefully monitor its estimates for future growth
in customers against actual development.
3
Executive Summary
Note to Table A: There is a difference between Sewer and Water
units shown in Table A because some customers will connect to ei-
ther municipal water or sanitary sewer, but not both. An increase
in water only customers is due to grant funding related to presence
of perfluorochemicals (PFCs) in groundwater. The sanitary sewer
improvements in the Old Village also accounts for the differences.
Note to Table A-1: Storm Water units are based on calculation of
residential equivalent units (REU). REU for commercial customers is
calculated at 3.08X. REU for residential customers is 1X.
Activity
Residential
Equivalent
Units (REC)
Platted ‐ Sewer Access (REC)3,788
Platted ‐ Water Access (REC)4,145
Connected ‐ Sewer (REC)3,631
Connected ‐ Water (REC)4,081
Table A
Total Residential Equivalent Units (REC)
Projected to be Charged Between Years
2020 and 2029
2. Establishment of Utility Rates
The Plan assumes annual increases in the fees and
charges for the Utilities based on a 1.0% average annual
increase for water and sanitary sewer service fees. The
proposed rates will help to ensure the City maintains
sufficient cash in the funds.
There is no change estimated in the fees charged for
development (connection and availably charges) only
to the base and usage fees charged for services.
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 the Plan.
Actual financial results and growth in customers from
development will impact the future annual utility rate
adjustments that may be needed.
Note to Table B: Storm Water increase is planned at a flat $10.00
increase from 2021-2025; and then 1.0% annual increase.
Year Water
Sanitary
Sewer Storm Water
2021 1.00% 1.00% $10.00
2022 1.00% 1.00% $10.00
2023 1.00% 1.00% $10.00
2024 1.00% 1.00% $10.00
2025 1.00% 1.00% $10.00
2026 1.00% 1.00% 1.00%
2027 1.00% 1.00% 1.00%
2028 1.00% 1.00% 1.00%
2029 1.00% 1.00% 1.00%
Table B
Annual Projected Rate Increases for Utility Base
Charges and Usage Charges
Customers
Projected
Based on
Current Plan
Water 5,473
Sanitary Sewer 4,082
Storm Water (Residential
Equivalent Units)9,091
Total Utility Customers to be Billed for
Service, Projected for Year 2029
Table A‐1
4
Executive SummaryThe Financial Plan Section of the Plan provides a break-
down of projected ending cash balances for each of the
Utility Funds based on the following:
• Cash for the following year planned (pay-go)
capital acquisition
• Cash for following year debt service payments
• Restricted cash from availability charges (WAC
and SAC) reserved for debt and future capital
improvements
• Unrestricted cash for operating reserve
(equivalent to 50% of operating expense, not
including depreciation)
Tables C-1 and C-2 that follow provide a summary of
the estimated annual year-end unrestricted cash bal-
ance and operating expenses (not including deprecia-
tion) and unrestricted cash as a percentage of oper-
ating expenses for the Water Fund and the Sanitary
Sewer Fund.
Maintaining a forward looking and long term view for
the ongoing management of the Utility Funds will help
the City avoid potential adjustments to utility rates
based on prior year financial performance alone with-
out taking into account future financial projections and
potential challenges. Future financial challenges may
come from the difference between estimated and ac-
tual growth in customers, unanticipated capital funding
pressures, and other unanticipated expense or revenue
shortfalls or excesses.
3. Management of Cash Balances and Assets
The rates included in the Plan, combined with the esti-
mated volumes for water and sanitary sewer plus the
estimated revenue to be collected from development
charges, will provide cash needed to operate the utili-
ties, maintain capital assets, and to pay debt service.
Service 2020 Actual 2021
Projected
2022
Projected
2023
Projected
2024
Projected
Residential Quarterly Base Fee $21.22 $21.43 $21.65 $21.86 $22.08
Residential Tier 1 $2.12 $2.14 $2.16 $2.18 $2.21
Commercial Quarterly Base Fee $26.52 $26.79 $27.05 $27.32 $27.60
Commercial Tier 1 $3.30 $3.33 $3.37 $3.40 $3.43
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 $54.10 $54.64 $55.19 $55.74 $56.30
Sewer per 1,000 gallons $4.65 $4.70 $4.74 $4.79 $4.84
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 $65.00 $75.00 $85.00 $95.00 $105.00
TABLE B‐1
STORM WATER RATES
WATER RATES
SANITARY SEWER RATES
Utility Rates
5
Executive Summary
Year
Operating Expenses
(Not Including
Depreciation )
Unrestricted
Cash
Unrestriced
Cash as % of
Expense
2020 $477,606 $238,803 50%
2021 $517,685 $258,842 50%
2022 $502,608 $251,304 50%
2023 $564,407 $282,203 50%
2024 $625,296 $312,648 50%
2025 $748,489 $374,245 50%
2026 $857,486 $428,743 50%
2027 $1,012,230 $506,115 50%
2028 $1,197,101 $598,551 50%
2029 $1,395,271 $697,636 50%
Table C‐2
Operating Expenses and Unrestricted Cash
Sanitary Sewer Fund
Year
Operating Expenses
(Not Including
Depreciation )
Beginning of
Year
Unrestricted
Cash
Unrestriced
Cash as % of
Expense
2020 $727,689 $363,845 50%
2021 $823,679 $411,840 50%
2022 $865,473 $432,737 50%
2023 $886,980 $443,490 50%
2024 $842,235 $421,117 50%
2025 $888,355 $444,178 50%
2026 $907,255 $453,627 50%
2027 $926,577 $463,288 50%
2028 $946,334 $473,167 50%
2029 $966,534 $483,267 50%
Water Fund
Table C‐1
Operating Expenses and Unrestricted Cash
Note to Table C-1 and C-2: Amounts shown are estimates based on the assumptions and information included in the Plan. Actual amounts will vary
from these projections.
6
Executive Summary
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
20192020202120222023202420252026202720282029MillionsChart 1
Year End Cash Estimates By Fund
Sanitary Sewer
Fund
Water Fund
Storm Water Fund
Cash balance is projected to
decline between 2020-2022, as
cash is used to pay for planned
capital improvements and debt
service.
Cash is projected to incremen-
tally increase over the next
decade due to the timing of
collection of revenue from de-
velopment (connection and
availability charges) in advance
of the future anticipated use of
these funds (after year 2029) for
infrastructure.
7
Background
BACKGROUND
The City is located on the eastern edge of the Twin Cities
metropolitan area. The City reports an estimated 2020
population of 11,105 and 3,902 households. Population is
estimated to increase to 18,005 by 2030 and households
to 6,500.
The City projects that by 2030, the percent of its population
served by municipal sewer will increase from approximate-
ly 43% to 61% of the City’s population (from 4,518 residents
to 10,686 residents). (Source: Lake Elmo 2040 Comprehen-
sive Plan).
Water Utility
Lake Elmo owns, operates and maintains a municipal water
supply and distribution system. The City has a goal to serve
existing population desiring public water supply while pre-
paring the system to allow people to connect as develop-
ment occurs or existing areas request service. This policy
guides the City’s capital improvement planning and the
need to maintain a flexible and responsive water system.
Capital planning includes projects to correct existing defi-
ciencies and to expand the system.
The City uses an enterprise fund to account for its water
operations. The net position in the Water Fund totaled ap-
proximately $25.7 million and cash balance $6.6 million as
of December 31, 2019.
Sanitary Sewer Utility
Property owners in the City are served by individual sew-
er systems or in limited areas by municipal sewer. Capital
plans will provide for an increase in the number of prop-
erties to be served by municipal sewer and connection to
the Regional Sewer System. The Metropolitan Council En-
vironmental Services (MCES) has extended regional sewer
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 ap-
proximately $15.9 million and cash balance $6.8 million as
of December 31, 2019.
Storm Water Utility
The City operates a storm water utility. The system of con-
veyances is owned and operated by the City and designed
for collecting or conveying storm water. The City collects an
annual fee from property owners that is used to pay for 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 approximately $8.0 million and cash balance $1.0
million as of December 31, 2019.
8
Capital Improvement
Plan and Debt Service
CAPITAL IMPROVEMENT PLAN AND DEBT
SERVICE
The Plan incorporates portions of the City’s current Capital
Improvement Plan (the “CIP”) funded from utility revenues
and that will be accounted for the in the Utility Funds. Other
planned capital projects to be funded from sources (other
than utility revenues) are not included in the Plan.
Tables D-1 through D-3 that follow provide details on
planned capital spending for each of the utility funds.
The CIP included in the Plan is a working draft, the City is
continually reviewing and updating its plans. The specific
projects that may be authorized in the future, and the ac-
tual costs, will vary from what is included in the Plan.
Capital Projects
The CIP has historically and continues to include projects
both to expand the capacity and correct deficiencies of the
water and sanitary sewer systems. The City is a developing
community with utility expansion needs. Planned projects
include expansion of the water supply capacity and distri-
bution system. Sanitary sewer services have been expand-
ed through the construction of connections to the Regional
Sewer System.
As a developing community, the City’s CIP focus on expan-
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 main-
tenance and/or replacement that are presently not pro-
grammed in the CIP.
Storm Water Projects
For the storm water system, it should be noted that the CIP
includes projects for Phases 2 and 3 for regional drainage
improvements. The City Engineer has identified the follow-
ing issues for the storm water utility that are anticipated to
be addressed in the next five to ten years:
• Phase 2 Downtown Regional Drainage project con-
sisting of land acquisition (Shiltgen property west
of Lake Elmo Avenue and north of CSAH 14), and a
storm water pond.
• Phase 3 Downtown Regional Drainage project con-
sisting of storm sewer piping south of CSAH 14 near
Hagbergs. The ponding may be developer paid, but
for the purposes of the Plan it is assumed to be paid
from utility revenue.
• Kraemer Lake Floodplain study will be needed be-
fore development can occur in I-94 corridor, Phase
3 area (between Keats-Lake Elmo Avenue). The City
anticipates grant funds to pay for the study at an
estimated cost of $60,000.
Source of Funding for Capital Projects
The source of funding for the utility projects includes one of
the following sources or a combination thereof: fund bal-
ance (cash); bond proceeds; and/or special assessments.
The CIP, as prepared by the City, used for the study and this
Plan, does not include projects for the Utilities that are an-
ticipated to be 100% funded from grant proceeds.
Debt Service
The Plan anticipates debt service on bonds to be issued in
future years to finance capital projects.
The Plan assumes that the City will issue general obligation
bonds secured by net revenues from the utility funds. This
9
Capital Improvement
Plan and Debt Serviceapproach (issuance of general obligation revenue bonds)
provides the lowest cost of debt. These type of bonds will
not count against the City’s debt limit.
The estimates for debt service are based on bonds to be
paid over 15 years and level annual debt service. Special as-
sessments are estimated to be payable over 20 years, past
the final maturity debt of the planned bonds.
The estimated interest rates used to calculate annual debt
service is 3.0%. The actual interest rates will depend on fi-
nal structure and market conditions at time of issuance.
Charts 2 and 3 that follow provide information on the City’s
existing and estimated future debt obligations 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 an-
nual debt service (principal and interest) payments for the
combined Utility Funds.
Municipal Facilities
The City is preparing to undertake capital spending for mu-
nicipal facility, including space for city hall. The City is plan-
ning for the Water Fund and Sewer Fund to pay a portion
of the debt service on anticipated bonds to be issued to fi-
nance facility improvements. The portion of costs allocated
to the Utility Funds recognizes that the utility operations
will benefit from the municipal facilities improvements.
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 $11,505,000 (includ-
ing estimated cost of issuance) for municipal facilities im-
provements. The municipal facilities improvements will not
be recorded as an asset in the Water Fund or the Sanitary
Sewer Fund. And, the outstanding 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 a portion of the
debt service on the bonds. The annual transfers from the
Water Fund and the Sanitary Sewer Fund to a governmental
debt service fund is anticipated to be in the approximate
range of $80,000 to $85,000 per year from each fund.
10
Capital Improvement
Plan and Debt ServiceTable D-1
City of Lake Elmo, MN
Water Fund CIP
Source/Use of Funds 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Use of Funds
2
Oversizing and trunk mains
1 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Back Hoe 17,000
TH 36/Manning Interchange 100,000
Village East Trunk Watermain PRV 132,000
Well #4 Pump - Pull and Rebuild 35,000
Well #5 2,750,000
Well #6 (new)2,600,000
Watermain Oversizing 326,844 152,184
2021 Street & Utility Improvements- Water 150,000
Water Meter Change Out 50,000 50,000 50,000
Automated Radio Read System 300,000
OV sewer extension Phase 7; water component 265,650
Pressure Reduction Station- Connection to WT #3 132,000
2022 Street Projects-water component 100,000
2023 Street Projects-water component 100,000
2024 Street Projects-water component 100,000
2025 Street Projects-water component 10,000
OV Sewer Extension; Phase 5; water component 480,000
Elevated Storage Tank #3 275,000 3,200,000
Paint Water Tank at PW 800,000
OV sewer extension phase 6 & water component 800,000
Utility van 35,000
Stonegate watermain extension 2,480,000
31st Street watermain extension 470,000
Total 5,735,000 1,513,844 4,434,184 1,232,650 1,400,000 1,045,000 3,600,000 1,000,000 1,000,000 1,000,000
Source of Funds
GO Bonds - Portion Paid by Utility Revenues ---
GO Bonds - Portion Paid by Special Assessments
Grants/Donations 5,450,000
Cash from Water Fund 285,000 1,513,844 4,434,184 1,232,650 1,400,000 1,045,000 3,600,000 1,000,000 1,000,000 1,000,000
Total 5,735,000 1,513,844 4,434,184 1,232,650 1,400,000 1,045,000 3,600,000 1,000,000 1,000,000 1,000,000
Notes:
1. The $1.0 million annually between 2024-2029 is a placeholder amount for oversizing and trunk main construction but will be largely driven by development.
2. City plans to allocate a portion of the cost of constructing a new city hall and publ works facility to the enterrpise funds. This project and allocation of costs to the enterprise funds
is not shown here. The enterprise funds will annually transfer revenue to the City's debt service fund to pay a portion of the debt service on the bonds to be issued to financed the
facility improvements. The City is planning for the Water Fund and the Sanitary Sewer Fund to each pay 10% of the cost, respectively.
11
Capital Improvement
Plan and Debt ServiceTable D-2
City of Lake Elmo, MN
Sanitary Sewer CIP
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Use of Funds
2
Back Hoe 17,000
Section 36 Trunk Sewer Main Oversizing 120,760 32,922
VAC Truck 175,000
Sewer to 180 Acre Site 1,000,000 1,000,000
Sewer Oversizing 107,763
Old Village Sewer Extension Phase 5 2,298,100 1,400,400
Hamlet on Sunfish Lake Sewer Extension 489,500 855,308
Old Village Sewer Extension Phase 7 548,625
Heritage Farms Sewer Extension 1,100,000
Utility van 35,000
Future projects
1 200,000 200,000 200,000 200,000 200,000
Total 524,500 5,481,931 2,433,322 565,625 175,000 200,000 200,000 200,000 200,000 200,000
Source of Funds
GO Bonds - Portion Paid by Utility Revenues
3 1,684,167 931,833
GO Bonds - Portion Paid by Special Assessments
3 2,569,241 468,567
Developer / property owner contributions 489,500
Cash from Sewer Fund 35,000 1,228,523 1,032,922 565,625 175,000 200,000 200,000 200,000 200,000 200,000
Total 524,500 5,481,931 2,433,322 565,625 175,000 200,000 200,000 200,000 200,000 200,000
Notes:
GO Bonds -
Portion Paid by
Special
Assessments
GO Bonds - Portion
Paid by Utility
Revenues Total
Year of Bond
Issuance
Hamlet on Sunfish Lake Sewer Extension 700,308 155,000 855,308 2021
Old Village Sewer Extension Phase 5 768,933 1,529,167 2,298,100 2021
Heritage Farms Sewer Extension 1,100,000 1,100,000 2021
Total 2,569,241 1,684,167 4,253,408 2021
Old Village Sewer Extension Phase 5 468,567 931,833 1,400,400 2022
Total 468,567 931,833 1,400,400 2022
1. The plan includes a placeholder amount of $200,000 for future projects to recognize that the Sanitary Sewer system will require future capital improvements, both maintenance and build-out that have yet to be defined for
these future years.
2. City plans to allocate a portion of the cost of constructing a new city hall and publ works facility to the enterprise funds. This project and allocation of costs to the enterprise funds is not shown here. The enterprise funds will
annually transfer revenue to the City's debt service fund to pay a portion of the debt service on the bonds to be issued to financed the facility improvements. The City is planning for the Water Fund and the Sanitary Sewer Fund
to each pay 10% of the cost, respectively.
3. Projects to be financed with bonds supported by special assessments are as follows:
12
Capital Improvement
Plan and Debt ServiceTable D-3
City of Lake Elmo, MN
Storm Water CIP
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Use of Funds
Back Hoe 17,000
VAC Truck 75,000
SW-001 Phase 2 Regional Drainage Improvements: Sunfish Lake
Retention/Diversion
800,000
SW-002 Phase 3 Regional Drainage Improvements: Lions Park Drainage Retention 500,000
SW-003 Kramer Lake Floodplain Study 60,000
Future projects
1 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Total - 50,000 110,000 867,000 625,000 50,000 50,000 50,000 50,000 50,000
Source of Funds
GO Revenue Bonds 800,000 500,000
Grant funds/developer funds 60,000
Cash from Storm Water Fund - 50,000 50,000 67,000 125,000 50,000 50,000 50,000 50,000 50,000
Total - 50,000 110,000 867,000 625,000 50,000 50,000 50,000 50,000 50,000
Notes:
1. Placeholder amounts for future projects.
13
Capital Improvement
Plan and Debt Service
The estimated debt outstand-
ing at year-end shown in Chart
2 includes general obligation
revenue bonds secured by
revenues of the Utility Funds.
The chart includes both exist-
ing debt outstanding (as of
December 31, 2019) and es-
timated debt projected to be
issued (based on the Plan) in
the future and paid from the
Utility Funds.
Chart 2 includes debt support-
ed by utility revenue only and
does not include debt paid
from property tax levy.
The Note to Chart 2 provides
information on optional re-
demption of outstanding
bonds at future dates. Ap-
pendix C that follows provides
more detailed information for
optional redemption of exist-
ing bonds.
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
2019202020212022202320242025202620272028202920302031203220332034203520362037MillionsChart 2
City of Lake Elmo, MN
Estimated Debt Outstanding at Year ‐End
Includes Existing Debt and Projected Debt Issuance
Debt Supported by Utility Funds Only
Existing Debt New Debt
Note to Chart 2:
Water Fund
Sanitary
Sewer Fund
Storm
Water Fund
Total
GO 2013A Bonds 2033 7/15/2021 $595,000 $1,775,000 $2,370,000
GO Ref Bond 2012A (Refund 2005A)2030 12/1/2021 $2,810,000 $2,810,000
GO 2014A Bonds 2030 1/15/2022 $1,460,000 $480,000 $1,940,000
GO 2015A Bonds 2031 1/15/2023 $530,000 $160,000 $690,000
GO 2016A Bonds 2032 1/15/2024 $1,840,000 $490,000 $1,580,000 $3,910,000
GO 2017A Bonds 2033 1/15/2025 $950,000 $1,555,000 $85,000 $2,590,000
1. The existing bonds listed in the schedule above are subject to certain optional redemption provisions.
3. The resolution authorizing the sale of a bond series and the official statement for the bonds provides the specific language for
redemption of bonds.
Existing Bonds Outstanding by Bond Series Call Date
Par Amount Subject to Optional Redemption On Call
Date, Portion Payable from Utility Revenues
Final
Maturity
Year
2. The City may elect on the call date, and on any day thereafter, to redeem outstanding bonds in whole or in part.
14
Capital Improvement
Plan and Debt Service
The estimated annual debt
service includes general obli-
gation revenue bonds secured
by net revenues of the Utility
Funds.
The annual amounts include
both existing debt service (on
outstanding bonds) and esti-
mated debt service on bonds
anticipated to be issued in the
future and paid from utility
revenues. Future bond issu-
ance estimates are based on
the Plan (see Table D).
Chart 3 includes debt sup-
ported by utility revenue only
and does not include existing
or future estimated debt paid
from property tax levy.
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
201720182019202020212022202320242025202620272028202920302031203220332034203520362037MillionsChart 3
City of Lake Elmo, MN
Estimated Annual Debt Service
Includes Existing Debt and Projected Debt Issuance
Debt Supported by Utility Funds Only
Principal Interest
15
Utility Rates
UTILITY RATES
Key Factors
Projecting the utility rates necessary to maintain the finan-
cial stability of the utility operations requires development
and analysis of the following key factors:
• Estimates for future annual operating expenditures,
including personnel, materials and supplies, and other
operating expenses.
• Metropolitan Council Environmental Service (MCES)
sewer fee charges to the City by the Metropolitan
Council for regional collection and treatment of waste
water. This is an operating expense that the City does
not have control over.
• Annual capital expenditures to maintain and improve
the utility systems.
• Annual debt service on bonds issued to finance capital
improvements.
• Development of land and growth in customers using
and paying for the systems. Growth in customers will
provide additional revenue 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 expen-
ditures, not including the MCES charge, is estimated to in-
crease by approximately 2.0% annually, with limited excep-
tions. The limited exceptions are as follows:
• Water meters and supplies is projected at $145,000
annually between years 2020-2023, then reducing to
$90,000 in 2024 after completion of meter upgrade
project.
• New staff is anticipated to be added in 2022 and 2025.
The Plan anticipates that 50% of the cost of new posi-
tions in the Public Works Department (1.0 FTE in 2022
and 1.0 FTE in 2025) and the Finance Department (0.5
FTE in 2022 and 1.0 FTE in 2025) will be allocated to the
Utility Funds. The Water Fund and Sanitary Sewer Fund
will each pay 40% of the allocated costs and the Storm
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.
Depreciation is estimated to change with capital spend-
ing, and depreciation is included in the Plan for both
existing and future planned acquired assets.
Metropolitan Council Environmental Services
The MCES charges metropolitan cities for regional collec-
tion and treatment (disposal). For purposes of the Plan, fu-
ture charges payable to the MCES for disposal are projected
based on total projected annual sanitary sewer volume and
the MCES current wastewater service fee (for year 2020)
inflated by 5.5% annually. This is an operating expense for
the Sewer Fund.
The MCES also charges a sewer availability charge (SAC).
The City accounts for the collection and payment of the SAC
to the MCES through an accounts payable account.
16
Utility RatesAnnual Capital Expenditures
The CIP anticipates paying for future capital improvement
project costs with a combination of revenue sources. The
City anticipates future development will provide revenue to
the City for paying for utility expansion through the collec-
tion of development fees (an availability and a connection
charge).
Paying for annual planned capital improvement projects
with cash (versus debt) may be a sound strategy depend-
ing on the details of the project. Use of cash will avoid in-
curring annual interest expense. However, this strategy re-
quires advance planning and implementation of utility fees
and charges that provide adequate cash flow. Development
revenue collected from availability charges (SAC and WAC)
and connection charges provides a potential source of cash.
Debt Service
Debt service of the Utilities is paid from net revenues of the
Utility Funds. All current and future debt of the utility funds
is accounted for in the financial plans.
Development of Land and Growth in Customers
Development of land and growth in customers of the Utili-
ties is an important factor in determining future rates to be
charged for services. Build out of approved development
areas will result in an increase in revenue to the utility
funds through the collection of availability and connection
charges and fees collected for service and usage of the sys-
tems. Availability charges and connection charges are one
time charges collected at the time of development and con-
nection to the system.
Table E that follows provides information on the estimat-
ed growth in customers from development based on the
residential equivalent units (“REC”). The estimated growth
assumptions were prepared by City staff and provided to
Northland for the Plan.
The pace of growth in customers from development will di-
rectly impact the estimated revenues shown in the Plan and
the planned utility rates.
Available Other Revenues
There is limited other revenue. The majority of the cost to
operate and maintain the system is paid from charges col-
lected from those using the system. Other revenue may
include interest income, special assessments, for example.
During 2019, the City and 3M Company entered into a
settlement agreement relating to the presence of perflu-
orochemicals (PFCs) in the City’s municipal water supply.
As part of the settlement, the City received $2,700,000 of
cash and parcels of land located within the City with an es-
timated acquisition value of $3,420,000. The City incurred
$1,567,821 of professional service fees relating to the set-
tlement. The net amount of these items ($4,552,179) is re-
ported as an extraordinary item in the business-type activi-
ties (source: Comprehensive Annual Financial Report of the
City, for the year ended December 31, 2019).
Historical Utility Rates
Information on historical rates is provided in Tables F-H that
follow. Rates shown are billed quarterly, with the exception
of the storm water fee which is billed to customers receiv-
ing this charge on an annual basis.
Future Utility Rates
Information on projected utility rates for years 2021 to 2029
are included in Tables G-H for each utility fund. The future
rates reflect the rates necessary to maintain adequate cash
balances in the Utility Funds. These rates applied against
17
Utility Ratesestimated customers and usage is used to calculate the an-
nual estimated charges for services fees shown in the finan-
cial plans (pro forma) for each of the Utility Funds.
The Plan assumes a 1.0% average annual increase in water
and sanitary sewer rates beginning in 2021. The annual rate
increase are for the quarterly base fee and usage fees for
water and sanitary sewer services only. The annual fee for
storm water is assumed to increase by $10.00 per year be-
tween 2021-2025, and then 1.0% average annual increase.
Rate adjustments will ensure the City maintains sufficient
cash balances in the Utility Funds to meet City objectives.
The rates charged for connection to the water and sanitary
sewer systems and for system availably (SAC and WAC) are
assumed to remain constant at the 2020 amounts, with no
increase to these City fees.
The tier structure the City uses for charging customers for
water, based on volume of water sold, was not reviewed
as part of this study. The current adopted tier structure ap-
pears to be reasonable and meeting the City’s objectives.
Estimated Volumes of Water Sold and Sanitary Sewer Billed
Annual estimated volume of water sold by tier and estimat-
ed sanitary sewer billed by year is included in Table F and
Table G that follows. The estimated gallons of water sold
and sanitary sewer volume billed is summarized in Chart 6.
The Plan assumes average annual water volume billed of
approximately 84,000 gallons per residential customer and
approximately 180,000 gallons for commercial customers.
Average volume billed by (usage) tier for future years is cal-
culated based on historical data.
The Plan assumes average annual sewer volume billed of
approximately 40,000 gallons per residential customer and
approximately 19,000 gallons for commercial customers.
The MCES reports total sewer volume for the City of ap-
proximately 85.6 million gallons for year 2019 and 106.9
million gallons for year 2020. (Source: Reports from Metro-
politan Council for Rates and Charges by City.) This includes
total metered volume, including volume that is billed and
non-billed by the City.
18
Utility Rates
Table E
City of Lake Elmo, MN
Growth Projections
Based on Residential Equivalent Units (REC) ‐ City uses MCES SAC determination to calculate RECs for purpose of City charges
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Total
Residential 250 272 289 328 284 250 225 225 225 225 2,573
Multi‐Family 360 162 118 70 76 35 ‐ ‐ ‐ ‐ 821
Commercial 14 17 20 60 66 100 140 135 65 70 687
Total 624 451 427 458 426 385 365 360 290 295 4,081
Residential 291 200 200 200 200 200 175 175 175 175 1,991
Residential Downtown ‐ 27 29 30 23 ‐ ‐ ‐ ‐ 109
Multi‐Family 360 162 118 70 76 35 ‐ ‐ ‐ ‐ 821
Commercial 14 17 20 60 66 100 140 135 65 70 687
Commercial Downtown 10 13 ‐ ‐ ‐ ‐ 23
Total 665 389 365 359 372 371 315 310 240 245 3,631
Residential 179 360 251 439 218 421 200 350 150 69 2,637
Multi‐Family 360 162 118 70 76 35 ‐ ‐ ‐ ‐ 821
Commercial 14 17 20 60 66 100 140 135 65 70 687
Total 553 539 389 569 360 556 340 485 215 139 4,145
Residential 220 274 162 381 144 371 150 300 100 69 2,171
Residential Downtown ‐ ‐ 27 29 30 23 ‐ ‐ ‐ ‐ 109
Multi‐Family 360 162 118 70 76 35 821
Commercial 14 17 20 60 66 100 140 135 65 70 687
Commercial ‐ Downtown ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total 594 453 327 540 316 529 290 435 165 139 3,788
4. SANITARY SEWER AVAILABILITY UNITS
1. WATER CONNECTIONS UNITS
2. SANITARY SEWER CONNECTIONS UNITS
3. WATER AVAILABILITY UNITS
Projected
Customers
19
Utility Rates
‐
100
200
300
400
500
600
700
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Chart 4
City of Lake Elmo, MN
Estimated Residential Equivalent Units (REC)
Sanitary Sewer
REC from Plats REC Connections
‐
100
200
300
400
500
600
700
2020 2021 2022 2023 2024 2025 2026 2027 2028
Chart 5
City of Lake Elmo, MN
Estimated Residential Equivalent Units (REC)
Water
REC from Plats REC Connections
The estimates for future
growth from development,
shown in residential equiva-
lent units (REC) in Chart 4 and
Chart 5, was prepared by City
staff.
Revenue from increased resi-
dential equivalent units comes
from a one time payment of
the City’s availability charge
and connection charge and
then from on-going payment
for use of the systems.
The City uses the Met Council’s
SAC determination to calculate
residential equivalent units
for City availability charges
and connection charges. Avail-
ability charges for residential
property (new units platted/
developed) are paid at time of
plat. For commercial property
availability charges are paid at
time of building permit.
Connection charges for all
property types are paid at
time of building permit.
20
Utility Rates
TABLE F
City of Lake Elmo, MN
Water Fund
Fees and Charges and Customer Data
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Customer Units Billed (Quarterly Average)
Residential customer units 1,829 2,091 2,353 2,603 2,875 3,164 3,492 3,776 4,026 4,251 4,476 4,701
Commercial customer units 123 179 155 169 186 206 266 332 432 572 707 772
Total customer units 1,952 2,270 2,508 2,772 3,061 3,370 3,758 4,108 4,458 4,823 5,183 5,473
Total Volume Sold Per 1,000 Gallons
Residential:
Subtotal 165,993 176,899 199,064 220,214 243,225 267,674 295,423 319,450 340,600 359,635 378,670 397,705
Commercial and Irrigation:
Subtotal 11,499 40,968 27,900 30,420 33,480 37,080 47,880 59,760 77,760 102,960 127,260 138,960
Total Volume Billed 177,492 217,867 226,964 250,634 276,705 304,754 343,303 379,210 418,360 462,595 505,930 536,665
Connections (Number of REC)489 331 624 451 427 458 426 385 365 360 290 295
Availability Charge (Number of REC)281 211 553 539 389 569 360 556 340 485 215 139
Charges for Service Fees (per 1,000 gallons)
Residential quarterly base fee $20.60 $21.22 $21.22 $21.43 $21.65 $21.86 $22.08 $22.30 $22.53 $22.75 $22.98 $23.21
Residential Tier 1: 0‐15,000 gallons $2.06 $2.12 $2.12 $2.14 $2.16 $2.18 $2.21 $2.23 $2.25 $2.27 $2.30 $2.32
Residential Tier 2: 15,001‐30,000 gallons $2.47 $2.54 $2.54 $2.57 $2.59 $2.62 $2.64 $2.67 $2.70 $2.72 $2.75 $2.78
Residential Tier 3: 30,001‐50,000 gallons $2.97 $3.06 $3.06 $3.09 $3.12 $3.15 $3.18 $3.22 $3.25 $3.28 $3.31 $3.35
Residential Tier 4: 50,001‐80,000 gallons $3.56 $3.67 $3.67 $3.71 $3.74 $3.78 $3.82 $3.86 $3.90 $3.93 $3.97 $4.01
Residential Tier 5: >80,001 gallons $4.27 $4.40 $4.40 $4.44 $4.49 $4.53 $4.58 $4.62 $4.67 $4.72 $4.76 $4.81
Commercial quarterly base fee $25.75 $26.52 $26.52 $26.79 $27.05 $27.32 $27.60 $27.87 $28.15 $28.43 $28.72 $29.00
Commercial Tier 1: 0‐15,000 gallons $3.20 $3.30 $3.30 $3.33 $3.37 $3.40 $3.43 $3.47 $3.50 $3.54 $3.57 $3.61
Commercial Tier 2: 15,001‐30,000 gallons $3.36 $3.46 $3.46 $3.49 $3.53 $3.56 $3.60 $3.64 $3.67 $3.71 $3.75 $3.78
Commercial Tier 3: 30,001‐50,000 gallons $3.88 $4.00 $4.00 $4.04 $4.08 $4.12 $4.16 $4.20 $4.25 $4.29 $4.33 $4.37
Commercial Tier 4: 50,001‐80,000 gallons $5.15 $5.31 $5.31 $5.36 $5.42 $5.47 $5.53 $5.58 $5.64 $5.69 $5.75 $5.81
Commercial Tier 5: >80,001 gallons $6.83 $7.04 $7.04 $7.11 $7.18 $7.25 $7.33 $7.40 $7.47 $7.55 $7.62 $7.70
Development Fees
Connection charge Per REC Unit $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Availability charge Per REC Unit $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sewer lateral benefit charge $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800
Annual Revenue
Base charges $163,379 $196,472 $216,165 $241,259 $269,062 $299,213 $337,799 $373,871 $411,396 $451,908 $492,615 $525,969
Usage charges $518,199 $705,241 $707,101 $787,919 $878,379 $977,490 $1,124,014 $1,267,474 $1,435,754 $1,637,418 $1,838,339 $1,977,621
Adjustments to reconcile with audited statements $63,194 ‐$50,599
Total Charges for Service Fees $744,772 $851,114 $923,266 $1,029,177 $1,147,441 $1,276,703 $1,461,813 $1,641,345 $1,847,150 $2,089,326 $2,330,954 $2,503,590
Connection charges $489,000 $331,000 $624,000 $451,000 $427,000 $458,000 $426,000 $385,000 $365,000 $360,000 $290,000 $295,000
Availability charges $844,100 $633,000 $1,659,000 $1,617,000 $1,167,000 $1,707,000 $1,080,000 $1,668,000 $1,020,000 $1,455,000 $645,000 $417,000
Adjustments to reconcile with audited statements $17,700
Total Development Fees $1,333,100 $981,700 $2,283,000 $2,068,000 $1,594,000 $2,165,000 $1,506,000 $2,053,000 $1,385,000 $1,815,000 $935,000 $712,000
Total Revenue $2,077,872 $1,832,814 $3,206,266 $3,097,177 $2,741,441 $3,441,703 $2,967,813 $3,694,345 $3,232,150 $3,904,326 $3,265,954 $3,215,590
Actual Projected
Note: Adjusting entries reflect classification changes, recording of receivables, and/or other audit entry adjustments as reported in the City's financial statements.
21
Utility Rates
TABLE G
City of Lake Elmo, MN
Sanitary Sewer Fund
Fees and Charges and Customer Data
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Customer Units Billed (Quarterly Average)
Residential customer units 921 1,169 1,417 1,708 1,908 2,135 2,364 2,594 2,817 2,992 3,167 3,342
Commercial customer units 62 64 66 80 107 127 187 253 366 506 641 706
Commercial customer units (flat rate for off‐site maint)34 34 34 34 34 34 34 34 34 34 34 34
Total customer units 1,017 1,267 1,517 1,822 2,049 2,296 2,585 2,881 3,217 3,532 3,842 4,082
Total Volume Sold Per 1,000 Gallons
Residential Volume 44,208 46,773 56,113 67,637 75,557 84,546 93,614 102,722 111,553 118,483 125,413 132,343
Commercial Volume 2,976 14,646 15,048 18,240 24,396 28,956 42,636 57,684 83,448 115,368 146,148 160,968
Total Volume Metered 47,184 61,419 71,161 85,877 99,953 113,502 136,250 160,406 195,001 233,851 271,561 293,311
Connections (Number of REC)565 331 665 389 365 359 372 371 315 310 240 245
Availability Charge (Number of REC)256 211 594 453 300 511 286 506 290 435 165 139
Availability Charge (Number of REC) ‐ Downtown 0 20 ‐ ‐ 27 29 30 23 ‐ ‐ ‐ ‐
Charges for Service Fees
Residential quarterly base fee (first 10 gallons)$53.03 $53.56 $54.10 $54.64 $55.19 $55.74 $56.30 $56.86 $57.43 $58.00 $58.58 $59.17
Residential usage per 1,000 gallons:$4.55 $4.60 $4.65 $4.70 $4.74 $4.79 $4.84 $4.89 $4.94 $4.99 $5.04 $5.09
Commercial quarterly base fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Commercial usage per 1,000 gallons:$4.55 $4.60 $4.65 $4.70 $4.74 $4.79 $4.84 $4.89 $4.94 $4.99 $5.04 $5.09
Commercial off‐site customer (per quarter)$75.75 $76.51 $77.28 $78.05 $78.83 $79.62 $80.42 $81.22 $82.03 $82.85 $83.68 $84.52
Development Fees
Connection charge Per REC Unit $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Availability charge Per REC Unit $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sewer lateral benefit charge $11,300 $11,600 $12,200 $12,500 $12,800 $13,100 $13,400 $13,700 $14,000 $14,300 $14,600 $14,900
SAC Charge (pass‐thru payable to Met Council)$2,485 $2,485 $2,485 $2,485 $2,485 $2,485 $2,485 $2,485 $2,485 $2,485 $2,485 $2,485
Annual Revenue
Base charges $205,665 $260,852 $317,149 $383,922 $431,912 $486,842 $543,278 $601,022 $658,258 $705,442 $753,505 $802,458
Usage charges $47,065 $67,430 $67,338 $82,456 $112,101 $134,634 $201,732 $276,842 $406,343 $569,192 $729,518 $811,826
Adjustments to reconcile with audited statements ‐$8,347 ‐$28,503
Total Charges for Service Fees $244,383 $299,779 $384,486 $466,378 $544,013 $621,476 $745,010 $877,864 $1,064,601 $1,274,635 $1,483,023 $1,614,284
Connection charges $565,044 $321,000 $665,000 $389,000 $351,500 $344,500 $357,000 $359,500 $315,000 $310,000 $240,000 $245,000
Availability charge Per REC Unit $766,723 $633,000 $1,782,000 $1,359,000 $823,050 $1,450,350 $772,500 $1,452,450 $870,000 $1,305,000 $495,000 $417,000
Adjustments to reconcile with audited statements $913 $61,733
Total Development Fees $1,332,680 $1,015,733 $2,447,000 $1,748,000 $1,174,550 $1,794,850 $1,129,500 $1,811,950 $1,185,000 $1,615,000 $735,000 $662,000
Total Revenue $1,577,063 $1,315,512 $2,831,486 $2,214,378 $1,718,563 $2,416,326 $1,874,510 $2,689,814 $2,249,601 $2,889,635 $2,218,023 $2,276,284
Notes:
1. The Availability charger per REC Unit is broken‐out separately for the "Downtown" because the charge to the Downtown units is spread over 20 years. Beginning in 2017, the base charge includes 10 units.
2. Adjusting entries reflect classification changes, recording of receivables, and/or other audit entry adjustments as reported in the City's financial statements.
Actual Projected
22
Utility Rates
Table H
City of Lake Elmo, MN
Storm Water Fund
Fees and Charges and Customer Data
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Customer Units Billed (Quarterly Average)
Residential units billed 3,656 3,887 4,149 4,399 4,671 4,960 5,288 5,572 5,822 6,047 6,272 6,497
Commercial residential equivalent units billed
1 641 644 693 736 789 850 1,035 1,238 1,546 1,978 2,393 2,594
Total residential equivalent units billed 4,297 4,531 4,842 5,135 5,460 5,810 6,323 6,810 7,368 8,025 8,665 9,091
Charges for Service Fees
Residential fee $55.00 $60.00 $65.00 $75.00 $85.00 $95.00 $105.00 $115.00 $116.15 $117.31 $118.48 $119.67
Commercial fee $55.00 $60.00 $65.00 $75.00 $85.00 $95.00 $105.00 $115.00 $125.00 $135.00 $145.00 $155.00
Annual Revenue
Base charges $236,335 $271,860 $314,748 $385,155 $464,080 $551,984 $663,932 $783,201 $869,530 $976,364 $1,090,184 $1,179,507
Adjustments to reconcile with audited statements $49,440 $0
Total Revenue $285,775 $271,860 $314,748 $385,155 $464,080 $551,984 $663,932 $783,201 $869,530 $976,364 $1,090,184 $1,179,507
Notes:
Note: Adjusting entries reflect classification changes, recording of receivables, and/or other audit entry adjustments as reported in the City's financial statements.
Actual Projected
23
Utility Rates
0
100
200
300
400
500
600
20192020202120222023202420252026202720282029Thousands of GallonsChart 6
City of Lake Elmo, MN
Projected Volume of Water and Sanitary Sewer Subject to Billing
Water volume Sewer volume
Note: Future volume billed is calculated based on 7,050 gallons per month of water usage for residential customers and 15,000 gallons per month for commercial customers.
The estimated annual gallons
of volume increases as more
customers connect to the
water and sanitary sewer sys-
tems.
The Plan assumes that the av-
erage annual usage per cus-
tomer for residential and com-
mercial remains fairly constant
at historical levels.
24
Financial Plans
FINANCIAL PLANS
Based on historical financial performance, estimated utility
rates, and future capital projects, financial plans (proforma)
have been prepared for each the utility funds.
Key Assumptions
The financial plans for each utility funds was developed
based on key assumptions, which are summarized as fol-
lows:
• Operating expenditures, including personnel costs and
materials supplies and all other operating expense will
increase by approximately 2.0% annually, based on the
preliminary 2021 budget, with an exception for meter
and supplies, and MCES payments.
• No change in existing tier structure for fees and charges.
• Depreciation is estimated based on current deprecia-
tion of existing assets and planned acquisition of capital
assets with new assets depreciated over 40 year term.
• Capital improvement plans will be implemented based
on current estimated project costs and sources of fund-
ing, as included in the Plan. Estimated debt service on
bonds to be issued is included in the Plan.
• Utility fees for use of the system are assumed to in-
crease annually for water and sanitary sewer services,
see Table B on page 3 for annual percentage increases
for water and sewer fees and the fee adjustment for
storm water.
• Connection and availability charges are assumed to
remain at current levels, with no planned increases in
current rates.
• Fees and charges for the Utility Funds are planned to
be at levels adequate to maintain cash balances in the
funds sufficient to meet targets for ending cash. This
includes ending cash available for the following year
pay-go capital expenditures, debt service, and for oper-
ating reserves, and restricted cash collected from avail-
ability charges for infrastructure and related debt.
25
Financial Plans
WATER FUND
Fund Description
The Water Fund is used to account for the operating and
capital improvement costs of the water utility system.
Background
The Water Fund is in sound financial condition. Future fi-
nancial performance will continue to be impacted by the
timing of development of land in the City and the timing of
receipt of development fees to cover debt service on the
infrastructure and receipt of charges for service for usage
of the system.
As note earlier in the Plan, during 2019, the City and 3M
Company entered into a settlement agreement relating to
the presence of perfluorochemicals (PFCs) in the City’s mu-
nicipal water supply. As part of the settlement, the City re-
ceived $2,700,000 of cash and parcels of land located within
the City with an estimated acquisition value of $3,420,000.
The City incurred $1,567,821 of professional service fees
relating to the settlement. The net amount of these items
($4,552,179) is reported as an extraordinary item in the
business-type activities (source: Comprehensive Annual Fi-
nancial Report of the City, for the year ended December 31,
2019).
Revenues
There are two major sources of revenues: 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 is projected to in-
crease as the number of customers increases and the vol-
ume of water sold increases.
The financial plan assumes no change to the rate structure
with annual rate increases of 1.0% average annual between
2021-2029.
Interest income earned on cash balance is recorded as rev-
enue. The investment earnings rate is estimated to be 0.5%
for future years.
Special assessments levied for water infrastructure im-
provements are recorded as revenue when certified. Certi-
fied special assessments collected over a certified number
of years, which are not prepaid, are recorded as an ac-
counts receivable. When special assessment payments are
collected by the City, the receivable is reduced.
Other revenue from grant proceeds is anticipated to pay
for certain capital project. The City plans to record $5.45
million in year 2020 for the following projects funded from
grant proceeds:
• $2.50 million for Well No. 5
• $2.48 million for Stonegate watermain extension
• $0.47 million for 31st Street watermain extension
Expenses
Expenses are to pay for the operation of the water system,
interest and fiscal expense on debt, depreciation, and au-
thorized transfers to other funds that may occur from time
to time.
Principal payments on bonds supported by the Water Fund
result in a reduction of liability for the Fund. Operating ex-
pense line item details can be found in Table I-3 that fol-
lows.
Transfers
Beginning in year 2021, a transfer of cash from the Water
Fund to a governmental debt service fund is planned to pay
a portion of debt service on bonds to be issued to finance
WATER FUND
26
Financial Plansmunicipal facilities improvements. The exact timing of the
bond issuance and terms is not certain at this time, but for
purpose of planning a bond issuance year of 2021 is as-
sumed. The Plan anticipates the Water Fund will pay 10%
of the annual debt service on an estimated total bond is-
suance of $11,505,000 for the municipal facilities improve-
ments. The municipal facilities improvements will not be re-
corded as an asset in the Water Fund. The outstanding debt
obligation for the municipal facilities improvements will not
be a liability of the Water Fund.
The City does not charge the utility funds for General Fund
overhead but does directly charge the fund for administra-
tive staff time.
Balance Sheet Items
The financial plan includes estimated assets and liabilities,
this includes estimated annual year-end cash balance. Ta-
ble I-2 that follows provides details on estimated annual
change in reported ending cash.
WATER FUND
27
Financial Plans
Table I‐1
City of Lake Elmo, MN
Water Fund
Pro Forma
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Revenues
Charges for service fees 835,164 851,114 923,266 1,029,177 1,147,441 1,276,703 1,461,813 1,641,345 1,847,150 2,089,326 2,330,954 2,503,590
Charges for service fees ‐ meters 115,036 97,342 95,000 95,000 97,900 100,000 40,000 41,800 43,636 45,509 47,419 49,367
Special assessments 48,742 11,968 10,740 10,740 10,740 10,591 9,860 9,860 9,860 9,860 9,860 3,742
Intergovernmental 704 261,244
Investment income 31,305 183,386 33,040 39,928 39,841 22,096 23,698 22,073 25,570 13,929 18,474 19,738
Contributions and donations 4,698,595
Water availability charge 844,100 480,800 1,659,000 1,617,000 1,167,000 1,707,000 1,080,000 1,668,000 1,020,000 1,455,000 645,000 417,000
Water connection fee 489,000 500,900 624,000 451,000 427,000 458,000 426,000 385,000 365,000 360,000 290,000 295,000
Extraordinary item 4,552,179
Rents/leases ‐ ‐ 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000
Miscellaneous 1,785 13,547 13,818 14,094 14,376 14,664 14,957 15,256 15,561 15,872 16,190 16,514
Grants for capital 5,450,000
Capital contributions ‐
Total Source of Funds 2,365,836 11,651,075 8,834,864 3,282,940 2,930,298 3,615,053 3,082,328 3,809,334 3,352,778 4,015,496 3,383,897 3,330,951
Expenses
Operating and other expense 898,600 666,463 727,689 823,679 865,473 886,980 842,235 888,355 907,255 926,577 946,334 966,534
Interest and fiscal expense 267,529 257,766 270,238 254,326 235,571 216,583 196,006 174,631 152,406 129,188 104,438 78,891
Depreciation 902,049 1,015,919 1,159,294 1,197,140 1,307,995 1,338,811 1,373,811 1,399,936 1,489,936 1,514,936 1,539,936 1,564,936
Transfer out to other funds 840 ‐ ‐ 36,241 80,196 80,409 80,574 80,175 80,262 80,301 80,294 80,238
Total Use of Funds 2,069,018 1,940,148 2,157,221 2,311,386 2,489,236 2,522,782 2,492,626 2,543,098 2,629,859 2,651,002 2,671,001 2,690,599
Change in Net Position 296,818 9,710,927 6,677,643 971,554 441,063 1,092,271 589,701 1,266,237 722,919 1,364,494 712,896 640,352
Prior period adjustment (271,735) 1,855,369
Net Position, End of Year 14,133,240 25,699,536 32,377,179 33,348,733 33,789,795 34,882,067 35,471,768 36,738,005 37,460,924 38,825,418 39,538,314 40,178,666
Assets
Cash and investments 4,970,049 6,608,007 7,985,666 7,968,162 4,419,162 4,739,531 4,414,631 5,114,035 2,785,780 3,694,714 3,947,622 4,148,520
Due from other governments 58,372
Special assessments receivable 304,332 299,549 313,594 232,958 204,706 176,453 149,303 126,213 103,123 80,033 56,943 33,853
Other assets 146,829 199,934 199,934 199,934 199,934 199,934 199,934 199,934 199,934 199,934 199,934 199,934
Capital assets 27,744,662 38,140,439 43,875,439 45,389,283 49,823,467 51,056,117 52,456,117 53,501,117 57,101,117 58,101,117 59,101,117 60,101,117
Less accumulated depreciation (5,953,481) (6,989,032) (8,148,326) (9,345,466) (10,653,461) (11,992,272) (13,366,083) (14,766,019) (16,255,955) (17,770,891) (19,310,827) (20,875,762)
Deferred outflows of resources 26,991 14,122 14,122 14,122 14,122 14,122 14,122 14,122 14,122 14,122 14,122 14,122
Total Assets and Deferred Outflows 27,239,382 38,331,391 44,240,430 44,458,993 44,007,930 44,193,885 43,868,024 44,189,403 43,948,122 44,319,030 44,008,912 43,621,784
Liabilities
Due to other funds and government 8,786 8,733
Unearned revenue 654,000 729,000 757,000 807,000 807,000 807,000 807,000 807,000 807,000 807,000 807,000 807,000
Contracts and retainage payable 118,977 7,273
Net Unamortized Prem/Discount 215,755 208,785 194,866 181,875 169,750 158,433 147,871 138,013 128,812 120,225 112,210 104,729
Bonds payable 11,795,000 11,415,000 10,645,000 9,855,000 8,975,000 8,080,000 7,175,000 6,240,000 5,285,000 4,300,000 3,285,000 2,265,000
Accounts payable / Other 289,998 246,385 246,385 246,385 246,385 246,385 246,385 246,385 246,385 246,385 246,385 246,385
Deferred inflows of resources 23,626 16,679 20,000 20,000 20,000 20,000 20,000 20,000 20,001 20,002 20,003 20,004
Total Liabilities and Deferred Inflows 13,106,142 12,631,855 11,863,251 11,110,260 10,218,135 9,311,818 8,396,256 7,451,398 6,487,198 5,493,612 4,470,598 3,443,118
Total Liabilities and Net Assets 27,239,382 38,331,391 44,240,430 44,458,993 44,007,930 44,193,885 43,868,024 44,189,403 43,948,122 44,319,030 44,008,912 43,621,784
Actual Projected
WATER FUND
28
Financial Plans
Table I‐2
City of Lake Elmo, MN
Water Fund
Year‐End Cash Balance
Actual
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Source of Cash:
Operating and other non‐operating revenues 2,400,301 1,101,864 1,214,940 1,336,298 1,450,053 1,576,328 1,756,334 1,967,778 2,200,496 2,448,897 2,618,951
Development revenues 981,700 2,283,000 2,068,000 1,594,000 2,165,000 1,506,000 2,053,000 1,385,000 1,815,000 935,000 712,000
Extraordinary revenue (settlement) 4,552,179 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Grant proceeds for capital ‐ 5,450,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Bond proceeds 393,683 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total Source of Cash 8,327,863 8,834,864 3,282,940 2,930,298 3,615,053 3,082,328 3,809,334 3,352,778 4,015,496 3,383,897 3,330,951
Use of Cash:
Operations and maintenance 643,971 727,689 823,679 865,473 886,980 842,235 888,355 907,255 926,577 946,334 966,534
Capital improvement / acquisitions 4,817,564 5,735,000 1,513,844 4,434,184 1,232,650 1,400,000 1,045,000 3,600,000 1,000,000 1,000,000 1,000,000
Interfund transfers ‐ ‐ 36,241 80,196 80,409 80,574 80,175 80,262 80,301 80,294 80,238
Debt service 1,040,258 1,040,238 1,044,326 1,115,571 1,111,583 1,101,006 1,109,631 1,107,406 1,114,188 1,119,438 1,098,891
Total Use of Cash 6,501,793 7,502,927 3,418,090 6,495,425 3,311,621 3,423,815 3,123,162 5,694,923 3,121,066 3,146,065 3,145,663
Net Change in Other Assets and Liabilities (188,112) 45,723 117,645 16,128 16,936 16,588 13,232 13,890 14,503 15,076 15,610
Net Change in Ending Cash Balance 1,637,958 1,377,659 (17,505) (3,548,999) 320,368 (324,900) 699,404 (2,328,255) 908,934 252,908 200,898
Ending Cash Balance 6,608,007 7,985,666 7,968,162 4,419,162 4,739,531 4,414,631 5,114,035 2,785,780 3,694,714 3,947,622 4,148,520
Ending Cash Balance by Purpose:
Cash for next year planned capital 285,000 1,513,844 4,434,184 1,232,650 1,400,000 1,045,000 3,600,000 1,000,000 1,000,000 1,000,000 1,000,000
Cash for next year debt service 1,040,238 1,044,326 1,115,571 1,111,583 1,101,006 1,109,631 1,107,406 1,114,188 1,119,438 1,098,891 1,076,631
Restricted WAC (Water Availability Charges)4,918,924 5,015,657 1,985,670 1,631,440 1,817,407 1,815,822 (46,998) 208,305 1,102,110 1,365,465 1,578,294
Unrestricted cash 363,845 411,840 432,737 443,490 421,117 444,178 453,627 463,288 473,167 483,267 493,595
Total Ending Cash 6,608,007 7,985,666 7,968,162 4,419,162 4,739,531 4,414,631 5,114,035 2,785,780 3,694,714 3,947,622 4,148,520
Notes:
Projected
1. City policy guidelines provide that the City maintain unrestricted cash equal to 50% of operating expenditures (not including depreciation). The pro forma meets this objective.
WATER FUND
29
Financial Plans
Table I‐3
City of Lake Elmo, MN
Water Fund
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Personnel Services
Salaries 179,910 231,699 236,333 241,060 245,881 250,798 255,814 260,931 266,149 271,472
Allocation of New FTEs ‐ ‐ 20,321 25,782 26,813 56,625 58,890 61,245 63,695 66,243
Overtime 6,000 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030
PERA Contributions 13,924 18,288 18,654 19,027 19,407 19,796 20,191 20,595 21,007 21,427
FICA Contributions 10,728 14,737 15,032 15,332 15,639 15,952 16,271 16,596 16,928 17,267
Medicare Contributions 2,516 3,447 3,516 3,586 3,658 3,731 3,806 3,882 3,960 4,039
Health\Dental Insurance 38,822 46,276 47,202 48,146 49,108 50,091 51,092 52,114 53,157 54,220
Other 400 400 408 416 424 433 442 450 459 469
Workers Compensation 6,984 7,682 7,836 7,992 8,152 8,315 8,482 8,651 8,824 9,001
Total Personnel Services 259,284 328,529 355,420 367,584 375,451 412,235 421,613 431,222 441,072 451,167
Supplies
Office Supplies 750 800 816 832 849 866 883 901 919 937
Printed Forms 700 750 765 780 796 812 828 845 862 879
Operating Supplies 3,350 3,500 3,570 3,641 3,714 3,789 3,864 3,942 4,020 4,101
Fuel, Oil, and Fluids 8,600 9,000 9,180 9,364 9,551 9,742 9,937 10,135 10,338 10,545
Chemicals 11,000 11,000 11,220 11,444 11,673 11,907 12,145 12,388 12,636 12,888
Utility System Maintenance 14,500 16,000 16,320 16,646 16,979 17,319 17,665 18,019 18,379 18,747
Water Meters & Supplies 145,000 145,000 147,900 150,000 90,000 91,800 93,636 95,509 97,419 99,367
Personal Protective Equipment 800 800 816 832 849 866 883 901 919 937
Small Tools & Minor Equipment 9,000 9,800 9,996 10,196 10,400 10,608 10,820 11,036 11,257 11,482
Total Supplies 193,700 196,650 200,583 203,737 144,811 147,708 150,662 153,675 156,749 159,883
Other Services and Charges
Engineering Services 25,000 25,000 25,500 26,010 26,530 27,061 27,602 28,154 28,717 29,291
Legal Services ‐ ‐ 5,000 5,100 5,202 5,306 5,412 5,520 5,631 5,743
Newsletter 1,100 1,100 1,122 1,144 1,167 1,191 1,214 1,239 1,264 1,289
Audit Services 8,812 8,227 8,392 8,559 8,731 8,905 9,083 9,265 9,450 9,639
Contract Services 30,000 30,000 30,600 31,212 31,836 32,473 33,122 33,785 34,461 35,150
Telephone 2,000 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343
IT Hardware and Software Programs 17,097 18,927 19,306 19,692 20,085 20,487 20,897 21,315 21,741 22,176
Credit Card Fees 7,050 7,262 7,407 7,555 7,706 7,861 8,018 8,178 8,342 8,509
Postage 3,500 4,000 4,080 4,162 4,245 4,330 4,416 4,505 4,595 4,687
Mileage 200 200 204 208 212 216 221 225 230 234
Insurance 10,552 11,607 11,839 12,076 12,317 12,564 12,815 13,071 13,333 13,599
Electric Utility 75,000 80,000 81,600 83,232 84,897 86,595 88,326 90,093 91,895 93,733
Water Utility 21,810 23,000 23,460 23,929 24,408 24,896 25,394 25,902 26,420 26,948
Repairs\Maint Imp Bldgs 33,000 45,000 45,900 46,818 47,754 48,709 49,684 50,677 51,691 52,725
Repairs\Maint Imp Equipment 7,500 7,500 7,650 7,803 7,959 8,118 8,281 8,446 8,615 8,787
Repairs\Maint Imp Not Bldgs 4,000 4,000 4,080 4,162 4,245 4,330 4,416 4,505 4,595 4,687
Miscellaneous and Other 2,000 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343
Equipment Rental 1,000 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172
Uniforms 1,000 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172
Conferences & Training 600 2,500 2,550 2,601 2,653 2,706 2,760 2,815 2,872 2,929
Real estate taxes 23,084 23,777 24,253 24,738 25,232 25,737 26,252 26,777 27,312 27,859
Dues & Subscriptions 400 400 408 416 424 433 442 450 459 469
Total Other Services and Charges 274,705 298,500 309,470 315,659 321,973 328,412 334,980 341,680 348,513 355,484
Total Operating and Other Expenses 727,689 823,679 865,473 886,980 842,235 888,355 907,255 926,577 946,334 966,534
Notes:‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Operating and Other Expenses (Not Including Depreciation)
Projected
1. Future year amounts are projected based on the 2019 budget plus 2.0% annual increase per year, with a few exceptions. Water Meter & Supplies is projected to be
reduced after meter change‐out project is completed in year 2022.
WATER FUND
30
Financial Plans
Year end cash balances are
projected, as shown in Chart
7, to increase with collection
of future development charg-
es to pay for future infrastruc-
ture projects.
The revenues and expenses
in Chart 8 includes depre-
ciation expense, and other
contributions, transfers, and
extraordinary items. The dif-
ference between annual reve-
nues and expenses equals the
change in net position of the
fund. Sources of revenue are
projected to exceed uses (ex-
penses) as planned to provide
(source of funds) for payment
of debt on outstanding bonds
(liabilities) and revenue for
future build-out of the system.
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2020202120222023202420252026202720282029MillionsChart 7
City of Lake Elmo, MN
Water Fund
Year End Cash Balance Projections
From 2018 Plan 2020 Plan
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2020202120222023202420252026202720282029MillionsChart 8
City of Lake Elmo, MN
Water Fund
Projected Source and Use of Funds
Revenues Expenses
Note: Year 2019 revenues included extraordinary revenues from legal settlement, among other sources.
WATER FUND
31
Financial Plans
SANITARY SEWER FUND
Fund Description
The Sanitary Sewer Fund is used to account for the oper-
ating and capital improvement costs of the sanitary sewer
utility system.
Background
The Sanitary Sewer Fund is in sound financial condition. Fu-
ture financial performance will continue to be impacted by
the timing of development of land in the City and the timing
of receipt of development fees to cover debt service on the
infrastructure and receipt of charges for service for usage
of the system.
Revenues
There are two major sources of revenues: 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 plat-
ting will result in increased revenue from water availability
and connection charges.
The financial plan assumes no change to the rate structure
with annual rate increases of 1.0% average annual between
2021-2029.
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 sanitary sewer infrastructure
improvements are recorded as revenue when certified. Cer-
SANITARY SEWER FUNDtified special assessments collected over a certified num-
ber of years, which are not prepaid, are recorded as an ac-
counts receivable. When special assessment payments are
collected by the City, the receivable is reduced.
Expenses
Expenses are to pay for the operation of the sanitary sewer
system, interest and fiscal expense on debt, depreciation
expense, 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 reduction of liability for the Fund.
Operating expense line item details can be found in Table
J-3 that follows.
Transfers
Beginning in year 2021, a transfer of cash from the Sanitary
Sewer Fund to a governmental debt service fund is planned
to pay a portion of debt service on bonds to be issued to
finance municipal facilities improvements. The exact timing
of the bond issuance and terms is not certain at this time,
but for purpose of planning a bond issuance year of 2021
is assumed. The Plan anticipates the Sanitary Sewer Fund
will pay 10% of the annual debt service on an estimated
total bond issuance of $11,505,000 for the municipal facili-
ties improvements. The municipal facilities improvements
will not be recorded as an asset in the Sanitary Sewer Fund.
The outstanding debt obligation for the municipal facilities
improvements will not be a liability of the Sanitary Sewer
Fund.
The City does not charge the utility funds for General Fund
overhead but does directly charge the fund for administra-
tive staff time.
32
Financial PlansBalance Sheet Items
The financial plan includes estimated assets and liabilities
for, this includes estimated annual year-end cash balance.
Table J-2 that follows provides details on estimated annual
change in reported ending cash.
SANITARY SEWER FUND
33
Financial Plans
Table J‐1
City of Lake Elmo, MN
Sanitary Sewer Fund
Pro Forma
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Revenues
Charges for service fees 244,383 299,779 384,486 466,378 544,013 621,476 745,010 877,864 1,064,601 1,274,635 1,483,023 1,614,284
Special assessments 1,427,565 109,944 83,686 2,652,927 629,954 175,087 174,939 174,783 174,783 174,783 174,783 163,609
Intergovernmental 168
Investment income 48,218 190,342 34,025 39,812 40,941 40,192 43,755 45,919 51,436 54,240 59,479 60,538
Contributions and donations 3,358,478
Sewer availability charge 767,500 505,732 1,782,000 1,359,000 823,050 1,450,350 772,500 1,452,450 870,000 1,305,000 495,000 417,000
Sewer connection fee 565,180 510,001 665,000 389,000 351,500 344,500 357,000 359,500 315,000 310,000 240,000 245,000
Sewer lateral benefit 11,000
Miscellaneous 8,231 6,262 6,387 6,515 6,645 6,778 6,914 7,052 7,193 7,337 7,484 7,633
Total Source of Funds 3,061,245 4,991,538 2,955,585 4,913,632 2,396,103 2,638,383 2,100,118 2,917,568 2,483,014 3,125,995 2,459,768 2,508,064
Expenses
Operating and other expense 264,218 383,079 477,606 517,685 502,608 564,407 625,296 748,489 857,486 1,012,230 1,197,101 1,395,271
Interest and fiscal expense 167,079 172,929 179,655 172,279 292,019 320,073 299,664 277,501 254,764 231,344 206,631 181,166
Depreciation 414,735 526,989 580,636 717,684 778,517 792,658 797,033 802,033 807,033 812,033 817,033 822,033
Transfer out to other funds ‐ ‐ 36,241 80,196 80,409 80,574 80,175 80,262 80,301 80,294 80,238
Total Use of Funds 846,032 1,082,997 1,237,897 1,443,888 1,653,341 1,757,546 1,802,567 1,908,199 1,999,544 2,135,908 2,301,059 2,478,708
Change in Net Position 2,215,213 3,908,541 1,717,688 3,469,744 742,762 880,837 297,551 1,009,369 483,469 990,087 158,710 29,356
Prior period adjustment (136,324) 1,606,660
Net Position, End of Year 10,376,847 15,892,048 17,609,736 21,079,480 21,822,243 22,703,080 23,000,631 24,010,000 24,493,470 25,483,557 25,642,266 25,671,622
Assets
Cash and investments 5,548,853 6,805,012 7,962,368 8,188,169 8,038,334 8,750,984 9,183,728 10,287,203 10,847,950 11,895,752 12,107,586 12,170,446
Special assessments receivable 2,791,034 2,485,002 2,302,462 4,647,893 4,832,037 4,524,187 4,223,493 3,924,390 3,627,582 3,330,775 3,033,967 2,737,160
Other assets 108,898 137,185 137,185 137,185 137,185 137,185 137,185 137,185 137,185 137,185 137,185 137,185
Capital assets 10,376,146 15,479,534 16,004,034 21,485,965 23,919,287 24,484,912 24,659,912 24,859,912 25,059,912 25,259,912 25,459,912 25,659,912
Less accumulated depreciation (1,110,369) (1,679,575) (2,260,210) (2,977,894) (3,756,412) (4,549,069) (5,346,102) (6,148,135) (6,955,168) (7,767,200) (8,584,233) (9,406,266)
Deferred outflows of resources 6,454 3,377 3,377 3,377 3,377 3,377 3,377 3,377 3,377 3,377 3,377 3,377
Total Assets and Deferred Outflows 17,721,016 23,230,535 24,149,216 31,484,695 33,173,809 33,351,575 32,861,593 33,063,931 32,720,838 32,859,800 32,157,794 31,301,814
Liabilities
Due to other governments 257,285 295,909
Unearned revenue 50,000 50,000
Contracts and retainage payable 70,888 8,171
Net Unamortized Prem/Discount 145,117 148,910 138,983 129,717 121,069 112,998 105,465 98,434 91,872 85,747 80,030 74,695
Bonds payable 6,695,000 6,695,000 6,260,000 10,135,000 11,090,000 10,395,000 9,615,000 8,815,000 7,995,000 7,150,000 6,295,000 5,415,000
Accounts payable / Other 120,230 136,509 136,509 136,509 136,509 136,509 136,509 136,509 136,509 136,509 136,509 136,509
Deferred inflows of resources 5,649 3,988 3,988 3,988 3,988 3,988 3,988 3,988 3,988 3,988 3,988 3,988
Total Liabilities and Deferred Inflows 7,344,169 7,338,487 6,539,480 10,405,214 11,351,566 10,648,495 9,860,962 9,053,931 8,227,369 7,376,244 6,515,527 5,630,192
Total Liabilities and Net Assets 17,721,016 23,230,535 24,149,216 31,484,695 33,173,809 33,351,575 32,861,593 33,063,931 32,720,838 32,859,800 32,157,794 31,301,814
Actual Projected
SANITARY SEWER FUND
34
Financial Plans
Table J‐2
City of Lake Elmo, MN
Sanitary Sewer Fund
Year‐End Cash Balance
Actual
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Source of Cash:
Operating and other non‐operating revenues 606,327 508,585 3,165,632 1,221,553 843,533 970,618 1,105,618 1,298,014 1,510,995 1,724,768 1,846,064
Development revenues 1,026,733 2,447,000 1,748,000 1,174,550 1,794,850 1,129,500 1,811,950 1,185,000 1,615,000 735,000 662,000
Bond proceeds 440,262 ‐ 4,340,000 1,430,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total Source of Cash 2,073,322 2,955,585 9,253,632 3,826,103 2,638,383 2,100,118 2,917,568 2,483,014 3,125,995 2,459,768 2,508,064
Use of Cash:
Operations and maintenance 383,079 477,606 517,685 502,608 564,407 625,296 748,489 857,486 1,012,230 1,197,101 1,395,271
Capital improvement / acquisitions 103,545 524,500 5,481,931 2,433,322 565,625 175,000 200,000 200,000 200,000 200,000 200,000
Interfund transfers ‐ ‐ 36,241 80,196 80,409 80,574 80,175 80,262 80,301 80,294 80,238
Debt service 605,679 614,655 637,279 767,019 1,015,073 1,079,664 1,077,501 1,074,764 1,076,344 1,061,631 1,061,166
Total Use of Cash 1,092,303 1,616,761 6,673,135 3,783,145 2,225,513 1,960,534 2,106,166 2,212,512 2,368,875 2,539,026 2,736,675
Net Change in Other Assets and Liabilities 275,140 (181,468) (2,354,696) (192,793) 299,779 293,161 292,072 290,245 290,683 291,091 291,472
Net Change in Ending Cash Balance 1,256,159 1,157,356 225,801 (149,835) 712,649 432,745 1,103,474 560,747 1,047,802 211,834 62,861
Ending Cash Balance 6,805,012 7,962,368 8,188,170 8,038,335 8,750,984 9,183,729 10,287,203 10,847,950 11,895,752 12,107,586 12,170,446
Ending Cash Balance by Purpose:
Cash for next year planned capital 35,000 1,228,523 1,032,922 565,625 175,000 200,000 200,000 200,000 200,000 200,000 200,000
Cash for next year debt service 614,655 637,279 767,019 1,015,073 1,079,664 1,077,501 1,074,764 1,076,344 1,061,631 1,061,166 1,059,456
Restricted WAC 5,916,554 5,837,724 6,136,925 6,175,434 7,183,672 7,531,983 8,583,696 9,065,491 10,035,571 10,148,784 10,137,020
Unrestricted cash 238,803 258,842 251,304 282,203 312,648 374,245 428,743 506,115 598,551 697,636 773,970
Total Ending Cash 6,805,012 7,962,368 8,188,170 8,038,335 8,750,984 9,183,729 10,287,203 10,847,950 11,895,752 12,107,586 12,170,446
Notes:
Projected
2. The Plan includes future bond issuance to fund project costs to be special assessed to benefiting property. All other capital improvement costs to be paid from cash estimated to be available in the Sanitary Sewer
Fund.
1. City policy guidelines provide that the City maintain unrestricted cash equal to 50% of operating expenditures (not including depreciation). The pro forma meets this objective.
SANITARY SEWER FUND
35
Financial Plans
Table J-3
City of Lake Elmo, MN
Sanitary Sewer Fund
Operating and Other Expenses (Not Including Depreciation)
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Personnel Services
Full-time Salaries 69,750 79,409 80,997 82,617 84,269 85,955 87,674 89,427 91,216 93,040 94,901 96,799
Allocation of New FTEs - - - - 20,321 25,782 26,813 56,625 58,890 61,245 63,695 66,243
Overtime 123 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030 7,171 7,314
PERA Contributions 4,919 5,956 6,075 6,197 6,321 6,447 6,576 6,707 6,842 6,978 7,118 7,260
FICA Contributions 4,308 6,075 6,197 6,320 6,447 6,576 6,707 6,841 6,978 7,118 7,260 7,405
Medicare Contributions 961 - - - - - - - - - - -
Health\Dental Insurance 11,275 18,335 18,702 19,076 19,457 19,846 20,243 20,648 21,061 21,482 21,912 22,350
Other Benefits (Life, Disab, Clothes)756 771 787 802 818 835 851 868 886 903 922
Unemployment Benefits 342 - - - - - - - - - - -
Workers Compensation 3,911 3,911 3,989 4,069 4,150 4,233 4,318 4,404 4,493 4,582 4,674 4,767
Total Personnel Services 95,589 120,442 122,851 125,308 148,135 156,152 159,791 192,262 197,240 202,362 207,634 213,061
Supplies
Repair/Maint/Supplies 5,000 4,000 4,080 4,162 4,245 4,330 4,416 4,505 4,595 4,687 4,780 4,876
Office Supplies 1,199 800 816 832 849 866 883 901 919 937 956 975
Fuel, Oil, and Fluids 4,500 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485
Operating Supplies 1,000 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172 1,195 1,219
Personal Protective Equipment 800 800 816 832 849 866 883 901 919 937 956 975
Small Tools & Minor Equipment 4,500 4,500 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485
Total Supplies 12,499 15,600 15,912 16,230 16,555 16,886 17,224 17,568 17,919 18,278 18,643 19,016
Other Services and Charges
Engineering Services 20,000 20,000 20,400 20,808 21,224 21,649 22,082 22,523 22,974 23,433 23,902 24,380
Audit Services 7,987 8,147 8,310 8,476 8,645 8,818 8,995 9,175 9,358 9,545 9,736
Contract Services 40,000 30,400 31,008 31,628 32,261 32,906 33,564 34,235 34,920 35,618 36,331 37,057
IT Support 33,533 4,041 4,122 4,204 4,288 4,374 4,462 4,551 4,642 4,735 4,829 4,926
IT Hardware 800 816 832 849 866 883 901 919 937 956 975
Software Prorams 3,010 3,070 3,132 3,194 3,258 3,323 3,390 3,458 3,527 3,597 3,669
Telephone 1,500 1,707 1,741 1,776 1,811 1,848 1,885 1,922 1,961 2,000 2,040 2,081
Credit Card Fees 1,972 2,011 2,052 2,093 2,135 2,177 2,221 2,265 2,311 2,357 2,404
Postage 1,175 1,175 1,199 1,222 1,247 1,272 1,297 1,323 1,350 1,377 1,404 1,432
Insurance 3,187 3,665 3,738 3,813 3,889 3,967 4,046 4,127 4,210 4,294 4,380 4,468
Electric Utility 7,000 9,000 9,180 9,364 9,551 9,742 9,937 10,135 10,338 10,545 10,756 10,971
Sewer Utility - Met Council 92,140 169,359 229,887 265,011 224,560 275,743 330,344 418,362 519,624 666,434 843,163 1,032,981
Repairs\Maint Imp Equipment 4,500 4,500 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485
Repairs\Maint Imp Not Bldgs 1,200 15,000 15,300 15,606 15,918 16,236 16,561 16,892 17,230 17,575 17,926 18,285
Equipment Rental 1,000 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172 1,195 1,219
Uniforms 563 574 586 597 609 622 634 647 660 673 686
Conferences & Training 2,000 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343 2,390 2,438
Miscellaneous - - - - - - - - - -
Other Costs Related to Financing - - - - - - - - - -
Total Other Services and Charges 207,235 276,179 338,843 376,147 337,919 391,369 448,281 538,659 642,326 791,590 970,823 1,163,194
Total Operating and Other Expenses 315,323 412,221 477,606 517,685 502,608 564,407 625,296 748,489 857,486 1,012,230 1,197,101 1,395,271
Actual Projected
SANITARY SEWER FUND
36
Financial Plans
Year end cash balances are
projected, as shown in Chart
9, to increase with collection
of future development charg-
es to pay for future infrastruc-
ture projects.
The revenues and expenses
in Chart 10 includes depre-
ciation expense, and other
contributions, transfers, and
extraordinary items. The dif-
ference between annual reve-
nues and expenses equals the
change in net position of the
fund. Sources of revenue are
projected to exceed uses (ex-
penses) as planned to provide
(source of funds) for payment
of debt on outstanding bonds
(liabilities) and revenue for
future build-out of the system.
Year 2021 revenues is pro-
jected to be larger than other
years due to the anticipated
certification of special assess-
ments (accounts receivable)
for several larger capital proj-
ects in this year, with assess-
ments (cash) to be collected
over multiple years.
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
2020202120222023202420252026202720282029MillionsChart 9
City of Lake Elmo, MN
Sanitary Sewer Fund
Year End Cash Balance Projections
From 2018 Plan 2020 Plan
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2020202120222023202420252026202720282029MillionsChart 10
City of Lake Elmo, MN
Sanitary Sewer Fund
Projected Source and Use of Funds
Revenues Expenses
SANITARY SEWER FUND
37
Financial Plans
STORM WATER FUND
Fund Description
The Storm Water Fund is used to account for the operating
and capital improvement costs of the storm water utility
system.
Background
The Storm Water Fund is in sound financial condition. Fu-
ture financial performance will be impacted by the timing
of future development of land in the City. Future develop-
ment will increase the demands on the storm water util-
ity infrastructure and provide opportunity for increased
revenue to support the infrastructure and operation of the
system.
Revenues
There is one major source of revenue, the collection of a
fixed annual charge for service fee. The City does not charge
an availability fee for the storm water utility system. Build
out of the system has been paid as part of the developer’s
project costs.
The annual fee, presently at $65.00, is assumed to increase
annually by $10.00 per year between 2021-2025, and then
1.0% average annual increases. The increases will help to
maintain cash balance sufficient to meet operating and fu-
ture capital needs, and to cover debt service.
The City received a developer contribution of $100,000 (re-
lated to the Northport Development) as an escrow contri-
bution, included in the cash balance for the Storm Water
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 grant funds in 2022
STORM WATER FUNDfor the Kraemer Lake Floodplain Study.
Some cities choose to manage storm water utility fees
through financing certain capital improvements with tax
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 income is earned on the cash balance and recorded
as revenue. The investment earnings rate is estimated to be
0.5% for future years. Any special assessments levied and
recorded as revenue to the Storm Water Fund relates to
unpaid utility bills and are not related to project costs.
Expenses
Expenses are to pay for the operation of the storm water
system, interest and fiscal expense on debt, depreciation,
and authorized transfers to other funds that may occur
from time to time.
Principal payments on bonds supported by the Storm Wa-
ter Fund result in a reduction of liability for the Fund. Op-
erating expense line item details can be found in Table K-3
that follows.
Transfers
The financial plan does not anticipate any future transfers
in or out of funds from the Storm Water Fund to other city
funds. Presently the City does not charge the utility funds
for General Fund overhead but does directly charge the
fund for administrative staff time.
Balance Sheet Items
The financial plan includes estimated assets and liabilities
for, this includes estimated annual year-end cash balance.
Table K-2 that follows provides details on estimated annual
change in reported ending cash.
38
Financial Plans
Table K-1
City of Lake Elmo, MN
Storm Water Fund
Pro Forma
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Revenues
Charges for service fees 285,775 344,211 314,748 385,155 464,080 551,984 663,932 783,201 869,530 976,364 1,090,184 1,179,507
Special assessments 361 ----------
Intergovernmental 84
Investment income 16,902 37,478 5,040 4,574 4,072 3,586 3,801 4,175 4,988 6,068 7,536 9,726
Contributions and donations 4,183,075 -
Miscellaneous 980 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,148 1,171 1,195
Storm water plan review charges 36,925 35,454 35,000 35,000 35,000 35,000 35,000 35,000 30,000 30,000 30,000 30,000
Total Source of Funds 340,047 4,601,198 355,788 425,749 504,191 591,630 703,815 823,480 905,644 1,013,581 1,128,891 1,220,428
Expenses
Operating and other expense 116,529 132,018 210,052 214,253 228,698 233,272 237,938 257,066 262,207 267,451 272,800 278,256
Interest and fiscal expense 49,537 57,606 58,616 57,013 52,713 48,288 55,963 83,938 77,338 70,188 62,988 55,563
Depreciation 149,901 280,141 328,695 329,945 332,695 354,370 369,995 371,245 372,495 373,745 374,995 376,245
Transfer out to other funds 394,600
Total Use of Funds 315,967 864,365 597,362 601,210 614,106 635,930 663,895 712,248 712,040 711,384 710,783 710,064
Change in Net Position 24,080 3,736,833 (241,574)(175,461)(109,914)(44,299)39,920 111,231 193,604 302,197 418,108 510,364
Prior period adjustment 74,348 2,556,241
Net Position, End of Year 1,696,959 7,990,033 7,748,459 7,572,997 7,463,083 7,418,784 7,458,703 7,569,935 7,763,539 8,065,735 8,483,844 8,994,207
Assets
Cash and investments 1,029,457 1,008,024 914,838 814,321 717,102 760,173 835,087 997,564 1,213,663 1,507,154 1,945,258 2,466,866
Special assessments receivable 44,503 69,802 69,802 69,802 69,802 69,802 69,802 69,802 69,802 69,802 69,802 69,802
Other assets 318,980 372,922 372,922 372,922 372,922 372,922 372,922 372,922 372,922 372,922 372,922 372,922
Capital assets 3,461,973 10,249,843 10,249,843 10,299,843 10,409,843 11,276,843 11,901,843 11,951,843 12,001,843 12,051,843 12,101,843 12,151,843
Less accumulated depreciation (284,276)(612,971)(941,666)(1,271,611)(1,604,306)(1,958,676)(2,328,671)(2,699,916)(3,072,411)(3,446,156)(3,821,151)(4,197,396)
Deferred outflows of resources 3,235 1,692
Total Assets and Deferred Outflows 4,573,872 11,089,312 10,665,739 10,285,277 9,965,363 10,521,064 10,850,983 10,692,215 10,585,819 10,555,565 10,668,674 10,864,037
Liabilities
Due to other funds
Contracts and retainage payable
Net Unamortized Prem/Discount 64,254 72,450 67,450 62,450 57,450 52,450 47,450 42,450 37,450
Bonds payable 2,765,000 2,980,000 2,805,000 2,605,000 2,400,000 3,005,000 3,300,000 3,035,000 2,740,000 2,445,000 2,140,000 1,825,000
Accounts payable / Other 44,828 44,830 44,830 44,830 44,830 44,830 44,830 44,830 44,830 44,830 44,830 44,830
Deferred inflows of resources 2,831 1,999
Total Liabilities and Deferred Inflows 2,876,913 3,099,279 2,917,280 2,712,280 2,502,280 3,102,280 3,392,280 3,122,280 2,822,280 2,489,830 2,184,830 1,869,830
Total Liabilities and Net Assets 4,573,872 11,089,312 10,665,739 10,285,277 9,965,363 10,521,064 10,850,983 10,692,215 10,585,819 10,555,565 10,668,674 10,864,037
ProjectedActual
STORM WATER FUND
39
Financial Plans
Table K-2
City of Lake Elmo, MN
Storm Water Fund
Year-End Cash Balance
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Source of Cash:
Revenues 418,123 355,788 425,749 504,191 591,630 703,815 823,480 905,644 1,013,581 1,128,891 1,220,428
Bond proceeds 390,000 ---815,000 510,000 -----
Total Source of Cash 808,123 355,788 425,749 504,191 1,406,630 1,213,815 823,480 905,644 1,013,581 1,128,891 1,220,428
Use of Cash:
Operations and maintenance 132,018 210,052 214,253 228,698 233,272 237,938 257,066 262,207 267,451 272,800 278,256
Capital improvement / acquisitions --50,000 110,000 867,000 625,000 50,000 50,000 50,000 50,000 50,000
Interfund transfers 394,600 ----------
Debt service 229,500 233,616 257,013 257,713 258,288 270,963 348,938 372,338 365,188 367,988 370,563
Total Use of Cash 756,118 443,667 521,265 596,411 1,358,560 1,133,900 656,003 684,545 682,639 690,788 698,819
Net Change in Other Assets and Liabilities (73,438)(5,307)(5,000)(5,000)(5,000)(5,000)(5,000)(5,000)(37,450)--
Net Change in Ending Cash Balance (21,433)(93,186)(100,516)(97,219)43,071 74,915 162,476 216,099 293,492 438,103 521,609
Ending Cash Balance 1,008,024 914,838 814,321 717,102 760,173 835,087 997,564 1,213,663 1,507,154 1,945,258 2,466,866
Ending Cash Balance by Purpose
Cash for next year planned capital --50,000 50,000 67,000 125,000 50,000 50,000 50,000 50,000 50,000
Cash for next year debt service 233,616 257,013 257,713 258,288 270,963 348,938 372,338 365,188 367,988 370,563 368,050
Unrestricted cash 774,408 657,825 506,609 408,814 422,210 361,150 575,226 798,475 1,089,167 1,524,695 2,048,816
Total Ending Cash 1,008,024 914,838 814,321 717,102 760,173 835,087 997,564 1,213,663 1,507,154 1,945,258 2,466,866
Notes:
Actual Projected
1. City policy guidelines provide that the City maintain unrestricted cash equal to 50% of operating expenditures (not including depreciation). The pro forma meets this objective.
STORM WATER FUND
40
Financial Plans
Table K-3
City of Lake Elmo, MN
Storm Water Fund
Operating and Other Expenses (Not Including Depreciation)
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Personnel Services
Full-time Salaries 34,773 54,068 55,149 56,252 57,377 58,525 59,695 60,889 62,107 63,349 64,616 65,909
Allocation of New FTEs ----10,160 10,364 10,571 25,152 25,655 26,168 26,691 27,225
PERA Contributions 2,820 4,055 4,136 4,219 4,303 4,389 4,477 4,567 4,658 4,751 4,846 4,943
FICA Contributions 2,349 4,136 4,219 4,303 4,389 4,477 4,566 4,658 4,751 4,846 4,943 5,042
Medicare Contributions 497 -----------
Health\Dental Insurance 6,806 12,755 13,010 13,270 13,536 13,806 14,083 14,364 14,651 14,945 15,243 15,548
Other Benefits (Life, Disab, Clothes)53 432 441 449 458 468 477 487 496 506 516 527
Unemployment Benefits 342 ----------
Workers Compensation 1,626 1,626 1,659 1,692 1,726 1,760 1,795 1,831 1,868 1,905 1,943 1,982
Total Personnel Services 49,266 77,072 78,613 80,186 91,950 93,789 95,665 111,947 114,186 116,470 118,800 121,176
Supplies
Office Supplies 800 800 816 832 849 866 883 901 919 937 956 975
Fuel, Oil, and Fluids 400 408 416 424 433 442 450 459 469 478 488
Repair/Maint/Maint Supplies 2,000 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343 2,390 2,438
Operating Supplies 1,000 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172 1,195 1,219
Printed Forms ----------
Other Equipment 4,300 4,300 4,386 4,474 4,563 4,654 4,748 4,842 4,939 5,038 5,139 5,242
Total Supplies 8,100 8,500 8,670 8,843 9,020 9,201 9,385 9,572 9,764 9,959 10,158 10,361
Other Services and Charges
Engineering Services 20,000 20,000 20,400 20,808 21,224 21,649 22,082 22,523 22,974 23,433 23,902 24,380
Audit Services 7,987 8,147 8,310 8,476 8,645 8,818 8,995 9,175 9,358 9,545 9,736
Contract Services 15,000 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030 7,171 7,314
IT Support 15,500 3,668 3,741 3,816 3,893 3,970 4,050 4,131 4,213 4,298 4,384 4,471
IT Hardware 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172 1,195 1,219
Software Programs 3,010 3,070 3,132 3,194 3,258 3,323 3,390 3,458 3,527 3,597 3,669
Telephone 351 358 365 372 380 388 395 403 411 419 428
Credit Card Fees 360 367 375 382 390 397 405 414 422 430 439
Postage 2,000 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343 2,390 2,438
Insurance 5,001 5,751 5,866 5,983 6,103 6,225 6,350 6,477 6,606 6,738 6,873 7,010
Street Sweeping 25,000 30,000 30,600 31,212 31,836 32,473 33,122 33,785 34,461 35,150 35,853 36,570
Repairs/Maint Equip 750 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172 1,195 1,219
Repairs/Maint Not Bldg 33,358 33,500 34,170 34,853 35,550 36,261 36,987 37,726 38,481 39,251 40,036 40,836
Equipment Rental 1,000 1,000 1,020 1,040 1,061 1,082 1,104 1,126 1,149 1,172 1,195 1,219
Uniforms 234 239 243 248 253 258 264 269 274 280 285
Miscellaneous Expenses 2,000 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343 2,390 2,438
Conferences & Training 1,500 2,500 2,550 2,601 2,653 2,706 2,760 2,815 2,872 2,929 2,988 3,047
Other Costs Related to Financing ------------
Other/adjustments ----------
Total Other Services and Charges 121,109 120,361 122,768 125,224 127,728 130,283 132,888 135,546 138,257 141,022 143,843 146,719
Total Operating and Other Expenses 178,475 205,933 210,052 214,253 228,698 233,272 237,938 257,066 262,207 267,451 272,800 278,256
Actual Projected
STORM WATER FUND
41
Financial Plans
Year end cash balances are
projected, as shown in Chart
11, to increase with collection
of charges to pay for future in-
frastructure projects.
The revenues and expenses
in Chart 12 includes depre-
ciation expense, and other
contributions, transfers, and
extraordinary items. The dif-
ference between annual reve-
nues and expenses equals the
change in net position of the
fund. Sources of revenue are
projected to exceed uses (ex-
penses) as planned to provide
(source of funds) for payment
of debt on outstanding bonds
(liabilities) and revenue for
future build-out of the system.
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
2020202120222023202420252026202720282029MillionsChart 11
City of Lake Elmo, MN
Storm Water Fund
Year End Cash Balance Projections
From 2018 Plan 2020 Plan
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
2020202120222023202420252026202720282029MillionsChart 12
City of Lake Elmo, MN
Storm Water Fund
Projected Source and Use of Funds
Revenues Expenses
STORM WATER FUND
42
Appendices
APPENDICES TO THE REPORT
43
Appendices
APPENDIX A
City of Lake Elmo, MN
Example Quarterly Utility Fees Payable by Property Types
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Residential Customer
Gallons of water per month 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000
Water Bill $38.18 $38.18 $38.56 $38.95 $39.34 $39.73 $40.13 $40.53 $40.93 $41.34 $41.76
Sanitary Sewer Bill $117.96 $119.20 $120.39 $121.60 $122.81 $124.04 $125.28 $126.53 $127.80 $129.08 $130.37
Storm Sewer Bill
1 $15.00 $16.25 $18.75 $21.25 $23.75 $26.25 $28.75 $29.04 $29.33 $29.62 $29.92
Total $171.14 $173.63 $177.70 $181.79 $185.90 $190.02 $194.16 $196.10 $198.06 $200.04 $202.04
Commercial Customer
Gallons of water per quarter 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Water Bill $207.92 $207.92 $210.00 $212.10 $214.22 $216.36 $218.53 $220.71 $222.92 $225.15 $227.40
Sanitary Sewer Bill $230.00 $232.50 $234.83 $237.17 $239.54 $241.94 $244.36 $246.80 $249.27 $251.76 $254.28
Storm Sewer Bill
1, 2 $46.20 $50.05 $57.75 $65.45 $73.15 $80.85 $88.55 $96.25 $103.95 $111.65 $119.35
Total $484.12 $490.47 $502.57 $514.72 $526.92 $539.15 $551.44 $563.76 $576.14 $588.56 $601.03
Note:
1. City bills the storm water charge on an annual basis. For the purpose of this report it is shown on a quarterly basis.
2. Commercial property, for storm water services, is billed at the equivalent of 3.08X of one residential equivalent unit (REU).
ProjectedBased on Actual Rates
44
Appendices
0%
20%
40%
60%
80%
100%
120%
140%
$0
$5
$10
$15
$20
$25
20192020202120222023202420252026202720282029MillionsAppendixB
Combined Utility Funds
Annual Restricted Cash (from Availability Charges for Developed Property) Compared to Projected
Debt Outstanding
Restricted cash balance from availabiltiy charges collected at time of development
Debt Outstanding
Restricted cash as % of Debt Outstanding
The estimated future restrict-
ed cash as % of debt outstand-
ing will increase as cash in-
creases from the collection of
development fees. The cash is
available to pay debt service
on bonds issued to finance in-
frastructure improvements to
support development and to
pay for other future infrastruc-
ture improvements.
45
Appendices
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
factors, including future fi-
nancial performance of the
utility funds and the “actual”
cash that may available in the
future to call bonds, among
other factors.
See page 13 for information
by bond series on the par
amount of bonds subject to a
future call date.$0
$5
$10
$15
$20
$25
$30
2019 Proj 2020 Proj 2021 Proj 2022 Proj 2023 Proj 2024 Proj 2025 Proj 2026 ProjMillionsAppendix C
Total Bonds Outstanding and Bonds Subject to Call Provision
Total Bonds Outstanding (Existing and New)
Total Existing Bonds Subject to Call
Restricted cash balance from availabiltiy charges collected at time of development
Note: For purpose of illustration this chart combines all bonds outstanding payable by net revenues of the Water Fund, San-
itary Sewer Fund, and Storm Water Fund. Restricted cash balance is a combination of cash from these three funds. Before
considering the calling of bonds, the City will need to review options and available cash on a specific fund basis.
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
NorthlandSecurities, Inc. 1
Overview of
Draft Financial Management Plan
for Utility Funds
City of Lake Elmo, MN
November 17, 2020
Items to Cover
Study approach
Conclusions and recommendations
CIP and debt service
Utility rates
Financial plans
2
1
2
NorthlandSecurities, Inc. 2
Study Approach
City provided information on key inputs
Historical spending and revenue trends
Projected growth in customers
Audited financial statements, preliminary estimates
for 2020 and 2021 budget, capital improvement plans
Meetings with city staff to review
assumptions and plans
Certain aspects not reviewed as part of
the study
Comparison of rates to other communities
3
Conclusions and Recommendations
4
Growth in customer units
Staff estimated the customer growth based upon the 2040Comp Plan
Impact CIP and future revenue estimates
No change to planned average annualutility rate increases
1% average annual increases between 2021-2029 for waterand sanitary sewer
$10 per year for storm water between 2021-2025, and then1.0% average annual increase between 2026-2029
Management of cash balances and Assets
Cash for operations, CIP, and debt service, andundesignated cash equal to 50% of operatingexpenditures
3
4
NorthlandSecurities, Inc. 3
Future customers
5
Note: There is a difference between Sewer and Water units shown in Table A because some
customers will connect to either municipal water or sanitary sewer, but not both. An
increase in water only customers is due to grant funding related to presence of
perfluorochemicals(PFCs) in groundwater. The sanitary sewer improvements in the Old
Villagealso accounts for the differences.
Activity
Residential
Equivalent
Units (REC)
Platted - Sewer Access (REC)3,788
Platted - Water Access (REC)4,145
Connected - Sewer (REC)3,631
Connected - Water (REC)4,081
Table A
Total Residential EquivalentUnits (REC)
Projectedtobe ChargedBetweenYears
2020and2029
Utility rates
6
Average annual utility rate increases
1.0% for waterand sanitary sewer
$10 per year for storm water between2021-2025,and then 1.0% between2026-
2029
Service 2020
Actual
2021
Projected
2022
Projected
2023
Projected
2024
Projected
Residential Quarterly BaseFee $21.22 $21.43 $21.65 $21.86 $22.08
Residential Tier 1 $2.12 $2.14 $2.16 $2.18 $2.21
Commercial Quarterly Base Fee $26.52 $26.79 $27.05 $27.32 $27.60
Commercial Tier 1 $3.30 $3.33 $3.37 $3.40 $3.43
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 $54.10 $54.64 $55.19 $55.74 $56.30
Sewer per 1,000 gallons $4.65 $4.70 $4.74 $4.79 $4.84
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 $65.00 $75.00 $85.00 $95.00 $105.00
TABLEB-1
STORMWATERRATES
WATERRATES
SANITARY SEWERRATES
Utility Rates
5
6
NorthlandSecurities, Inc. 4
Management of cash balances
7
Year
Operating
Expenses (Not
Including
Depreciation )
Unrestricted
Cash
Unrestriced
Cash as %of
Expense
2020 $1,205,295 $602,648 50%
2021 $1,341,364 $670,682 50%
2022 $1,368,082 $684,041 50%
2023 $1,451,386 $725,693 50%
2024 $1,467,530 $733,765 50%
2025 $1,636,844 $818,422 50%
2026 $1,764,740 $882,370 50%
2027 $1,938,807 $969,404 50%
2028 $2,143,435 $1,071,717 50%
2029 $2,361,806 $1,180,903 50%
Table C
Operating Expenses and Unrestricted Cash
Water and Sanitary Sewer Funds
Cash balances
8
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
20192020202120222023202420252026202720282029MillionsChart 1
Year End Cash Estimates By Fund
Sanitary Sewer
Fund
Water Fund
StormWater
Fund
7
8
NorthlandSecurities, Inc. 5
Capital Improvement Plan
9
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
2020202120222023202420252026202720282029MillionsPlannedCapitalImprovementProjectSpendingbySourceofFunds
Cash fromWater Fund
Grants/Donations
GOBonds- Portion Paid
bySpecial Assessments
GOBonds- Portion Paid
byUtilityRevenues
Projected bonds outstanding
10
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
2019202020212022202320242025202620272028202920302031203220332034203520362037MillionsChart 2
CityofLakeElmo,MN
Estimated DebtOutstandingat Year-End
IncludesExisting Debtand ProjectedDebt Issuance
Debt SupportedbyUtility FundsOnly
Existing Debt New Debt
9
10
NorthlandSecurities, Inc. 6
Projected debt service
11
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
201720182019202020212022202320242025202620272028202920302031203220332034203520362037MillionsChart 3
City ofLakeElmo,MN
Estimated AnnualDebt Service
IncludesExisting Debt and ProjectedDebt Issuance
Debt Supportedby Utility FundsOnly
Principal Interest
Increase in Utility Customers
12
-
100
200
300
400
500
600
700
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Chart4
CityofLake Elmo,MN
EstimatedResidentialEquivalentUnits(REC)
SanitarySewer
REC from Plats REC Connections
11
12
NorthlandSecurities, Inc. 7
Increase in Utility Customers
13
-
100
200
300
400
500
600
700
2020 2021 2022 2023 2024 2025 2026 2027 2028
Chart5
Cityof Lake Elmo, MN
EstimatedResidentialEquivalentUnits(REC)
Water
REC from Plats REC Connections
Increase in Utility Customers
14
0
100
200
300
400
500
600
20192020202120222023202420252026202720282029ThousandsofGallonsChart6
Cityof Lake Elmo, MN
ProjectedVolumeofWaterandSanitarySewerSubjecttoBilling
Watervolume Sewervolume
Note: Future volume billed is calculatedbasedon 7,050 gallons per month of water usagefor residential customers and 15,000 gallons per month for commercial
customers.
13
14
NorthlandSecurities, Inc. 8
Water Fund
Water Fund is in sound financial condition
Future performance will be impacted by
timing of future development and receipt of
revenue
Minimal adjustment to fees are anticipated
(inflationary) but actual increases will depend
on pace of development
Annual debt service is projected to remain at
about $1.0 million annually 2021-2029, with no
planned new debt issuance
15
Water Fund
16
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2020202120222023202420252026202720282029MillionsChart 7
City ofLakeElmo,MN
WaterFund
Year End Cash BalanceProjections
From 2018 Plan 2020 Plan
15
16
NorthlandSecurities, Inc. 9
Water Fund
17
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2020202120222023202420252026202720282029MillionsChart 8
City ofLakeElmo,MN
Water Fund
Projected Sourceand UseofFunds
Revenues Expenses
Note: Year 2019revenuesincludedextraordinaryrevenuesfromlegal settlement, among other sources.
Sanitary Sewer Fund
Sanitary Sewer Fund is in sound financial
condition
Future performance will be impacted by
timing of future development and receipt of
revenue
Minimal adjustment to fees are anticipated
(inflationary) but actual increases will depend
on pace of development
Annual debt service is projected to increase
from about $0.6 million in 2020 to $1.06 million
by 2029, new debt issuance is planned
18
17
18
NorthlandSecurities, Inc. 10
Sanitary Sewer Fund
19
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
2020202120222023202420252026202720282029MillionsChart 9
City ofLakeElmo,MN
Sanitary Sewer Fund
Year EndCash BalanceProjections
From 2018 Plan 2020 Plan
Sanitary Sewer Fund
20
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2020202120222023202420252026202720282029MillionsChart 10
City ofLakeElmo,MN
Sanitary Sewer Fund
Projected Sourceand UseofFunds
Revenues Expenses
19
20
NorthlandSecurities, Inc. 11
Storm Water Fund
Storm Water Fund is in sound financial
condition
Future performance will be impacted by
timing of future development and receipt of
revenue
Rate increase of $10.00 between 2021-2025, and
then minimal adjustment to fee is anticipated
(inflationary) but rate increases will depend on
the pace of development
No outstanding debt
21
Storm Water Fund
22
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
2020202120222023202420252026202720282029MillionsChart 11
City ofLakeElmo,MN
StormWaterFund
Year End Cash BalanceProjections
From 2018 Plan 2020 Plan
21
22
NorthlandSecurities, Inc. 12
Storm Water Fund
23
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
2020202120222023202420252026202720282029MillionsChart 12
City ofLakeElmo,MN
StormWater Fund
Projected Sourceand UseofFunds
Revenues Expenses
Closing Comments
Utility funds are projected to remain in sound
financial condition
WAC and SAC and connection charges (both current
balances and future collection) are needed to pay a
portion of debt service expense; and
Future operating revenues are needed to cover debt
service expense
Minimal rate increases will be needed
Level of increase and timing will depend on actual
pace of development and actual year to year
financial performance
24
23
24
NorthlandSecurities, Inc. 13
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, Minnesota 55402
800-851-2920
www.northlandsecurities.com/public_finance
Member NASD and SIPC
Registered with SEC and MSRB
Questions
25
Tammy Omdal
612-851-4964
tomdal@northlandsecurities.com
25