HomeMy WebLinkAbout#02 - Utility Financial Mgmt Plan
STAFF REPORT
DATE: November 14, 2023
TO: Mayor and Council FROM: Clarissa Hadler, Finance Director
Kristina Handt, City Administrator
AGENDA ITEM: Utility Financial Management Plan
BACKGROUND: First in 2016, and again in 2020, the city contracted with Northland Securities Inc to complete a long range financial management plan for the water, sewer and storm water funds. In June 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? 2) Are there any assumptions to change or additional direction from council? 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 10-year CIP, 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 the update in 2020. She has also worked with the city on bonding issuances in the past. FISCAL IMPACT: A proposed rate structure is offered in the plan in order to provide for the operation and capital needs of the utility funds over the next 10 years. ATTACHMENTS:
1) Financial Management Plan for the Water, Sewer and Storm Water Funds November 2023 2) Presentation Handout
City of Lake Elmo, MN
Financial Management Plan for
Water Fund, Sanitary Sewer Fund, and Storm Sewer Fund
Draft for Presentation to City Council on November 14, 2023
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
Conclusions and Recommendations ..................................................................................1
Impact of Growth in Customer on Utilities ...................................................................1
Table A - Growth in Customer and REC Units ...............................................................2
Table A-1 - Total Projected Customers ..........................................................................2
Utility Rate Adjustments ...............................................................................................2
Table B - Residential Water Fees ...................................................................................2
Table C - Utility Fees for Residential Customers ............................................................3
Management of Cash Balances and Assets...................................................................3
Table D - Estimated Operating Expense and Unrestricted Cash ....................................4
Chart 1 - Year Ending Cash Balances .............................................................................5
Organization of the Plan .....................................................................................................6
Study Approach ..................................................................................................................6
Capital Improvement Plan 7
Capital Projects ..................................................................................................................7
Source of Funding for Capital Projects ...............................................................................7
Debt Service .......................................................................................................................7
Municipal Facilities .............................................................................................................8
Table E-1 - Capital Improvement Plan Water .....................................................................9
Table E-2 - Capital Improvement Plan Sanitary Sewer .....................................................10
Table E-3 - Capital Improvement Plan Storm Sewer .........................................................11
Chart 2 - Estimated Debt Outstanding at Year End for Existing and New .........................12
Chart 3 - Estimated Debt Outstanding by Fund................................................................12
Chart 4 - Estimated Annual Debt Service by Fund ...........................................................13
Chart 5 - Estimated Annual Debt Service - Principal and Interest ....................................13
Utility Rates 14
Key Factors .......................................................................................................................14
Annual Operating Expenditures .......................................................................................14
Metropolitan Council Environmental Services .................................................................14
Annual Capital Expenditures ............................................................................................15
Debt Service .....................................................................................................................15
Growth in Customers .......................................................................................................15
Available Other Revenues ................................................................................................15
Fees and Charges (Utility Rates) .......................................................................................16
Figure 1. Water Fees ........................................................................................................16
Estimated Volumes of Water Sold and Sanitary Sewer Billed ..........................................17
Table F - Growth Projections ............................................................................................18
Chart 6 - Sanitary Sewer REC Platted and Connected by Year ..........................................19
Chart 7 - Water REC Planned and Connected by Year ......................................................19
Contents
ii
Chart 8 - Water and Sewer Volume ..................................................................................20Table G - Water Fund - Fees and Charges and Customer Data .........................................21Table H - Sanitary Sewer Fund - Fees and Charges and Customer Data ...........................24Table I - Storm Sewer Fund - Fees and Charges and Customer Data ................................25
Financial Plans 26
Key Assumptions ..............................................................................................................26
Water Fund ......................................................................................................................27
Table J - Pro Forma ....................................................................................................29
Table K - Cash Balance ...............................................................................................30
Chart 9 - Year End Cash Balances by Purpose ...........................................................31
Chart 10 - Ending Unrestricted Net Position .............................................................31
Chart 11 - Revenue and Expense ..............................................................................32
Chart 12 - Customers and Annual Water Volume Billed ...........................................32
Sanitary Sewer Fund........................................................................................................33
Table L - Pro Forma ...................................................................................................35
Table M- Cash Balance ..............................................................................................36
Chart 13 - Year End Cash Balances by Purpose .........................................................37
Chart 14 - Ending Unrestricted Net Position .............................................................37
Chart 15 - Revenue and Expense ..............................................................................38
Chart 16 - Customers and Annual Water Volume Billed ...........................................38
Storm Sewer Fund ............................................................................................................39
Table N- Pro Forma ...................................................................................................40
Table O - Cash Balance ..............................................................................................41
Chart 17 - Year End Cash Balances by Purpose .........................................................42
Chart 18 - Ending Unrestricted Net Position .............................................................42
Chart 19 - Revenue and Expense ..............................................................................43
Chart 20 - Customers and Annual Water Volume Billed ...........................................43
Appendices to Report 44
Appendix A - Example Quarterly Utility Bills ....................................................................45
Appendix A-1 - Annual % Change in Example Quarterly Utility Bills ................................46
Appendix B - Low Volume Customer Quarterly Water Bills .............................................47
Appendix C - Medium Volume Customer Quarterly Water Bill ........................................48
Appendix D - High Volume Customer Quarterly Water Bill ..............................................49
Appendix E - Comparison to other Cities - Low Water Volume Customers ......................50
Appendix F - Comparison to other Cities - Medium Water Volume Customers ...............51
Appendix G - Comparison to other Cities - High Water Volume Customers ....................52
November 14, 2023
Kristina Handt, City Administrator
Clarissa Hadler, Finance Director
City of Lake Elmo
3880 Laverne Avenue North
Lake Elmo, MN 55042
RE: PRELIMINARY DRAFT Financial Management Plan for Water, Sanitary Sewer, and Storm Sewer Funds
Dear Kristina and Clarissa,
Northland Public Finance is pleased to present the City with this Financial Management Plan for the Water, Sanitary Sewer, and Storm Sewer Funds (the “Plan”). This Plan is an update to the Plan completed in 2020 by Northland. The current study included updating data and prior assumptions to perform a utility rate analysis for the utility systems. The analysis and study includes a review of the past and projected performance of the funds and projected growth in residential equivalent connections from new development to 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. Northland appreciates the opportunity to provide service to the City.
Sincerely,
NORTHLAND SECURITIES, INC.
Tammy OmdalManaging Director
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
1
Executive SummaryEXECUTIVE SUMMARY
This Plan is intended to serve as a guide for financial
management of the water, sanitary sewer, and storm sewer
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
forecasting 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 existing rate structure
for charging customers for service and propose
modifications to provide fair and equitable distribution
of costs that achieves revenue sufficiency, while
promoting conservation of resources.
The Plan includes projections for growth in customers of
the Utilities, projections for revenues and expenses, and
incorporation of current City plans for capital improvements,
among other items.
The growth projections prepared by the City are as of
September 20234 and limit growth to the staging plan in
the City’s 2040 Comprehensive Plan.
Conclusions and Recommendations
The following conclusions and recommendations are
offered as a result of the study:
1. Impact of Growth in Customers on Utilities
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
projects and with estimates for project costs to provide
a basis for the pro forma analysis included in the Plan.
The City reviews and revises its capital improvement
plans on a regular and on-going basis.
Timing for capital projects will be driven by development.
The planned improvements that are currently included
in the City’s capital improvement plan are anticipated to
be paid through a combination of debt issuance, special
assessments, and cash available in the Utility Funds.
In addition to the impact of future growth on capital
improvement plans, the actual timing for the build
out of already approved residential development
and commercial areas will impact future revenue
projections.
Table A provides the total estimated growth in utility
customers between 2023-2032. Table A-1 provides
the total estimated customers to be billed by service
by year 2032. The projections are based on estimated
platting of property and timing for new connections.
Table E provides details, including estimates by year, for
information summarized in Table A.
2. Utility Rate Adjustments
The Plan proposes an adjustment to the charges for
water services based on adjustments to the percentage
difference between the rates charged for different tiers
of water usage for the purpose of promoting water
conversation. The more water a customer uses, the
more they will pay for each additional gallon as their
usage moves between the five different tiers.
2
Executive SummaryThe City currently has a five tier structure for charging
water volume. The Plan proposes the City maintains its
five tiers but provides for a higher cost per 1,000 gallons
of water usage at the higher tiers (Tiers 3-5).
Table B provides a comparison of residential water fees
for current year 2023 fees compared to the proposed
2024 fees.
Charges Current Year
2023 Fee
Proposed
2024 Fees
% Increase
in Fees
Base Charge Rate $21.86 $22.52 3.0%
Tier 1: Rate for 0-
15,000 Gal $2.18 $2.20 1.0%
Tier 2: Rate for
15,001-30,000 Gal $2.63 $2.68 2.0%
Tier 3: Rate for
30,001-50,000 Gal $3.15 $3.31 5.0%
Tier 4: Rate for
50,001-80,000 Gal $3.79 $4.17 10.0%
Tier 5: Rate for
80,001 + Gal $4.52 $5.20 15.0%
Table B
Residential Water Fees
After implementation of the proposed 2024 fees for
water services, the Plan then assumes water fees
will adjust by 3.0-3.5% annually. There is no increase
proposed to fees charged for water and sanitary sewer
connection and availability charges, only to the base
and usage fees charged for services.
Fee Type REC
Platted - Sewer Access (REC)2,376
Platted - Water Access (REC)2,409
Connected - Sewer (REC)3,165
Connected - Water (REC)3,215
Table A
Total Residential Equivalent Units (REC) Projected to Pay
Access and Connection Charges Between Years 2023 and
2032
Note to Table A: 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 Village also accounts for
the differences.
Customers REC
Water 6,216
Sanitary Sewer 5,117
Storm Sewer 7,572
Table A-1
Total Utility Customers to be Billed for Service, Projected
for Year 2032
Note to Table A-1: Storm Sewer units are based on calculation of
residential equivalent units (REC). REU for commercial customers
is calculated at 3.08X. REC for residential customers is 1X.
3
Executive SummaryTable C provides information on utility fees for
residential customers, comparing current 2023 to
future years.
Maintaining a long term view for the management of the
Utility Funds will help the City avoid adjustments to utility
rates based on prior year financial performance alone
without taking into account future financial projections
and potential challenges. Future financial challenges
may come from the difference between estimated
and actual 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
estimated volumes for water and sanitary sewer, plus
revenue to be collected from development charges, will
provide cash needed to operate the utilities, maintain
capital assets, and to pay debt service.
The 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 (not less
than 50% of operating expense, not including
depreciation)
For the Plan restricted cash from availability charges
is calculated as the net cash available after accounting
for payment of debt service on bonds issued to fund
projects to support development, use of current
availability charges for planned capital projects to be
paid from cash, and unrestricted cash for operating
reserve.
Table D provides a summary of the estimated annual
operating expense (not including depreciation expense)
and unrestricted cash, and unrestricted cash as percent
of operating expense. The Plan seeks to maintain
unrestricted cash greater than 50% of operating
expense, not including depreciation or interest expense
on bonds.
Service 2023
Adopted 2024 2025 2026 2027
Residential quarterly base fee 21.86 22.52 23.19 23.89 24.60
Residential Tier 1: 0-15,000 gal 2.18 2.20 2.27 2.34 2.41
Residential Tier 2: 15,001-30,000 gal 2.63 2.68 2.76 2.85 2.93
Residential Tier 3: 30,001-50,000 gal 3.15 3.31 3.41 3.51 3.61
Residential Tier 4: 50,001-80,000 gal 3.79 4.17 4.29 4.42 4.56
Residential Tier 5: >80,001 gal 4.52 5.20 5.35 5.51 5.68
Connection charge Per REC Unit 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
Residential quarterly base fee (first
10,000 gallons)55.74 55.74 57.41 59.13 60.91
Volume charge (after 10,000 gal)4.80 4.99 5.19 5.40 5.62
Connection charge Per REC Unit 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
Storm Sewer Annual Charge 95.00 95.00 95.00 95.00 95.00
Notes:
1. This table provides a listing of some of the utility fees and is not a complete listing of all fees. The
list is for residential customers only and does not include information for other customer
classifications.
TABLE C
Utility Fees for Residential Customers
RESIDENTIAL WATER RATES (Based on Current Tier Structure)
RESIDENTIAL SANITARY SEWER RATES
STORM WATER RATES
4
Executive SummaryThe Sanitary Sewer has unrestricted cash increasing
over time. Unrestricted cash in excess of the minimum
50% is available to provide a source of funding for
capital improvement projects that the City has not yet
programmed in the CIP. As the City begins to include
future capital improvements in the CIP the ending
unrestricted cash over operating expense may decrease.
Year
Operating Expense (not
including depreciation,
interest expense, or
transfers)
Unrestricted Cash
Unrestricted Cash as
% of Operating
Expense
2023 1,155,418 600,056 52%
2024 1,200,113 613,422 51%
2025 1,226,844 631,824 52%
2026 1,263,649 650,779 52%
2027 1,301,558 670,303 52%
Year
Operating Expense (not
including depreciation,
interest expense, or
transfers)
Unrestricted Cash as
of Prior Year End
Unrestricted Cash as
% of Operating
Expense
2023 982,621 560,235 57%
2024 1,120,469 608,357 54%
2025 1,216,715 1,480,316 122%
2026 1,300,032 1,261,154 97%
2027 1,384,796 1,849,703 134%
Year
Operating Expense (not
including depreciation,
interest expense, or
transfers)
Unrestricted Cash as
of Prior Year End
Unrestricted Cash as
% of Operating
Expense
2023 244,442 128,138 52%
2024 256,276 131,886 51%
2025 263,772 135,842 52%
2026 271,685 139,918 52%
2027 279,835 144,115 52%
Note: For purpose of this table, operating expense does not include
depreciation expense or interest expense. Unrestricted cash as % of
operating expense fluctuates as outstanding debt is amortized and with
reduction in new debt issuance, among other factors. The Plan seeks to
provide unrestricted cash that is greater than 50% of operating expense.
Water Fund
Sanitary Sewer Fund
Storm Sewer Fund
Table D
Estimated Operating Expense and Unrestricted Cash
5
Executive Summary
$0
$5
$10
$15
$20
$25
$30
20232024202520262027202820292030203120322033MillionsChart 1
Year Ending Cash is projected to be sufficient to meet cash objectives, including cash available for debt service payments, pay-go capital, and reserves
Storm Sewer Fund Sanitary Sewer Fund Water Fund
Ending cash balances are
projected to change from year
to year due largely to the timing
of collection of connection
and access charges and use of
these funds to pay debt service
on bonds issued to finance
improvements and use of these
funds for pay-go capital in future
years.
6
Executive SummaryOrganization of Plan
This Plan is organized into six sections:
1. Executive Summary provides information on the
organization of the Plan, study approach, and
conclusions and recommendations.
2. 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 included.
3. Utility Rates provides current, and future estimated
rates to maintain a positive financial condition for the
Utility Funds.
4. Financial Plans are provided for the Water Fund,
Sanitary Sewer Fund, and Storm Sewer Fund. The
financial plans provide both historical, current, and
future sources and uses of funds and balance sheet
information. Financial plans take into account capital
improvement plans, debt service, and proposed rates
and customer activity.
5. Appendices to Report provides supplemental
information.
Study Approach
Northland worked closely with city staff in the preparation
of the Plan.
• The City provided information on the following:
- Historical spending and revenues, and future
capital improvement plans;
- Estimated growth in customer units from residential
and commercial development;
- 2021 and 2022 audited financial results and 2023
budget.
• Information provided by the City was organized,
analyzed, and used to support the development of
financial plans for the Utility Funds. Once the preliminary
financial plans were developed then different scenarios
were developed by Northland and considered by City
staff.
• City staff offered input and feedback on the assumptions
and desired outcomes.
7
Capital Improvement
Plan and Debt ServiceCAPITAL IMPROVEMENT PLAN AND DEBT
SERVICE
The Plan incorporates portions of the City’s current Capital
Improvement Plan (the “CIP”) funded from utility revenues.
Other planned capital projects to be funded from sources
other than utility revenues are not included in the Plan.
Tables E-1, E-2, and E-3 that follow provide details on
planned capital spending for each of the utility funds. The
City is continually reviewing and updating its plans. The
specific projects that may be authorized in the future, and
the actual 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
distribution system. Sanitary sewer services have been
expanded through the construction of connections to the
Regional Sewer System.
As a developing community, the City’s CIP focus is on
expansion and does not presently include any material
capital spending for maintenance of existing systems. This
will need future consideration by the City as the community
develops and infrastructure ages and requires major
maintenance and/or replacement that are presently not
programmed in the CIP.
For the storm sewer 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 following issues for the storm sewer utility that are
anticipated to be addressed in the next five to ten years:
• Phase 2 Downtown Regional Drainage project
consisting of over sizing costs paid to the developer
for the construction of the regional storm sewer
pond in Phase 2 (Shiltgen property west of Lake
Elmo Avenue and north of CSAH 14), and a storm
sewer pond.
• Phase 3 Downtown Regional Drainage project
consisting 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.
Source of Funding for Capital Projects
The source of funding for projects includes one of the
following sources or a combination thereof: fund balance
(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
anticipated 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.
When issuing bonds to finance utility improvements, the
Plan assumes that the City will issue general obligation
bonds secured by net revenues from the utility funds. This
approach (issuance of general obligation revenue bonds)
provides the lowest cost of debt. These type of bonds do
not count against the City’s debt limit.
The estimates for debt service are based on bonds to be
paid over 15-20 years and level annual debt service. The
estimated interest rates used to calculate annual debt
service is 4.0%. The actual interest rates will vary and will
depend on final structure and market conditions at time of
issuance.
8
Capital Improvement
Plan and Debt ServiceCharts 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
bonds outstanding as of year-end for the combined Utility
Funds. Chart 3 includes information on estimated annual
debt service (principal and interest) payments for the
combined Utility Funds.
Municipal Facilities
The City is completing capital spending for new municipal
facility, including space for city hall. In 2021, the City
transferred cash from the Water Fund and the Sanitary
Sewer Fund in the amounts of $3,750,000 and $1,500,000,
respectively to pay a portion of the total cost of the project.
The balance of the project cost for the new municipal
facility was financed through issuance of $10,295,000 of
general obligation capital improvement bonds (issued as a
portion of the Series 2021A Bonds).
9
Capital Improvement
Plan and Debt ServiceTable E-1
Water Fund
Capital Improvement Plan
Project Description 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Use of Funds
W-008 - Village East Trunk Watermain & PRV 210,000 -210,000 -------W-010 - Paint Water Tank at PW -800,000 --------
W-011 - Well #2 Pump - Maintenance -50,000 --------W-012 - Well #4 Pump - Maintenance -------50,000 --W-013 - Watermain Oversizing 100,000 75,000 --------
W-023 - Water Meter Change Out 75,000 25,000 --------W-024 - Automated Radio Read System --325,000 -------
W-033 - 2024 Street Projects-water component 1,425,000 ---------W-034 - 2025 Street Projects-water component -2,826,000 --------W-035 - 2026 Street Projects-water component --2,118,000 -------
W-036 - 45th Street Watermain Extension ---400,000 ------W-037 - Well #6 & Treatment Plant 880,000 3,400,000 3,400,000 -------
W-038 - Trunk Watermain Extensions --1,740,000 1,500,000 -1,500,000 -1,500,000 --W-039 - Decommission Water Tower 1 --50,000 -------W-040 - 2027 Street & Utility Improvements - Water Portion ---2,088,900 ------
W-041 - CSAH-14 Trunk Watermain Ext-Jamaca Ct to Klondike 2,800,875 ---------W-042 - Well #5 Pump - Maintenance ------50,000 ---
W-043 - Paint/Rehab Water Tower 2 (Ideal Ave)----------W-044 - Paint/Rehab Water Tower 4 (Inwood Ave)---------800,000W-046 - 2028 Street & Utility Improvements - Water ----150,000 -----
W-047 - Temporary PFAS Treatment Plant for Well #2 1,500,000 ---------W-048 - Well #7 (or Well #3)----240,000 640,000 ----
W-049 - 2030 Street & Utility Improvements - Water portion ------100,000 ---W-050 - 2031 Street & Utility Improvements - Water portion -------130,000 --W-051 - 2032 Street & Utility Improvements - Water portion --------210,000 -
W-052 - 2033 Street & Utility Improvements - Water portion ---------525,000Cost of Issuance 94,125 85,000 121,000 30,000 -30,000 -30,000 --
Total Use of Funds 7,085,000 7,261,000 7,964,000 4,018,900 390,000 2,170,000 150,000 1,710,000 210,000 1,325,000
Source of Funds
Par Amount of Bonds 4,775,000 4,435,000 6,160,000 1,530,000 -1,530,000 -1,530,000 --
Special assessments -318,000 --------Other revenues 2,310,000 2,508,000 1,804,000 2,488,900 ------Use of cash from fund ----390,000 640,000 150,000 180,000 210,000 1,325,000
Total Source of Funds 7,085,000 7,261,000 7,964,000 4,018,900 390,000 2,170,000 150,000 1,710,000 210,000 1,325,000
Projected
10
Capital Improvement
Plan and Debt ServiceTable E-2
Sanitary Sewer Fund
Capital Improvement Plan
Project Description 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Use of Funds
S-013 - Sewer Oversizing 89,102 200,000 --------
S-019 - VAC Truck 300,000 ---------S-021 - Low Pressure Sewer to Klondike ----------
S-022 - Sewer to Sunfish Ponds ----380,000 -----S-024 - I-94 Lift Station and Forcemain Upgrade ---900,000 ------
S-025 - Lake Jane Trail/Jane Road Sanitary Sewer Extension ----------S-026 - 50th Street & Hill Trail Low Pressure Sewer System -----1,636,000 ----S-027 - Tapestry Sanitary Sewer Collection System Upgrades --------1,000,000 -Cost of Issuance ----------Total Use of Funds 389,102 200,000 -900,000 380,000 1,636,000 --1,000,000 -
Source of Funds
Par Amount of Bonds ----------
Special assessments ----380,000 1,636,000 --1,000,000 -Use of cash from fund 389,102 200,000 -900,000 ------
Total Source of Funds 389,102 200,000 -900,000 380,000 1,636,000 --1,000,000 -
Projected
11
Capital Improvement
Plan and Debt ServiceTable E-3
Storm Water Fund
Capital Improvement Plan
Project Description 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Use of Funds
SW-001 - Phase 2 Regional Drainage Improvements 800,000 ---------SW-002 - Phase 3 Regional Drainage Improvements -575,000 --------SW-005 - Storm Sewer Reuse-Irrigation Systems -40,000 40,000 -------SW-006 - Lions and VFW park irrigation Storm Sewer reuse -76,000 --------SW-TBD - Future Unidentified Storm Sewer Projects ---50,000 50,000 50,000 50,000 50,000 50,000 50,000Cost of Issuance 15,000 10,000 --------Total Use of Funds 815,000 701,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Source of Funds
Par Amount of Bonds 815,000 585,000 --------Special assessments ----------Use of cash from fund -116,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000Total Source of Funds 815,000 701,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Projected
12
Capital Improvement
Plan and Debt Service
The chart includes both
existing debt outstanding
(as of December 31) and
estimated new debt to be
issued in the future and paid
from the Utility Funds.
Other outstanding debt of the
City supported by tax levy an
other revenue is not included
here.
$0
$5
$10
$15
$20
$25
$30
$35
$40
20232024202520262027202820292030203120322033MillionsChart 2Estimated Debt Outstanding for Existing and Planned New Debt Supported by Utility Revenues
New debt issuance planned for Water and Storm Sewer projects only, no
debt issuance planned for Sanitary Sewer projects
Existing Debt New Debt
$0
$5
$10
$15
$20
$25
$30
$35
$40
20232024202520262027202820292030203120322033MillionsChart 3
Estimated Debt Outstanding by Fund Including Existing and Planned New Debt Supported by Utility Revenues
New debt issuance planned for Water and Storm Sewer projects only, no
debt issuance planned for Sanitary Sewer projects
Water Fund Sanitary Sewer Fund Storm Sewer Fund
13
Capital Improvement
Plan and Debt Service
The estimated annual debt
service includes general
obligation revenue bonds
secured by net revenues of
the Utility Funds.
The annual amounts include
both existing debt service
(on outstanding bonds) and
estimated debt service on
bonds anticipated to be issued
in the future and paid from
utility revenues. Future bond
issuance estimates are based
on the Plan (see Table D).
Chart 3 includes debt
supported 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
$3.5
$4.0
$4.5
$5.0
20232024202520262027202820292030203120322033MillionsChart 4
Estimated Annual Debt Service by FundIncludes Existing and Planned New Debt
Water Fund debt service is planned to increase with issuance of new debt
Storm Sewer Fund Sanitary Sewer Fund Water Fund
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
20232024202520262027202820292030203120322033MillionsChart 5Estimated Annual Debt Service for Utility Funds
Includes Existing and Planned New Debt
Debt service is estimated to increase with planned new debt issuance
Interest Principal
14
Utility RatesUTILITY RATES
Key Factors
Projecting the utility rates necessary to maintain financial
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. MCES has increased the fee charged
based on metered volume by approximately 13-14% in
recent years. The Plan assumes 7.0% annual increase in
the MCES fee. The amount the City will pay to MCES will
increase due the increase in MCES fee and increase in
metered volume for the City from development.
• Annual capital expenditures are planned to maintain
and improve the utility systems.
• Annual debt service is planned for 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
expenditures, not including the MCES sanitary sewer
disposal charge, is estimated to increase by approximately
3.0% annually, with limited exceptions. The limited
exceptions are as follows:
• New staff (personnel costs) are anticipated for the
Utility Funds. Year 2024 includes funding for the new
Finance Coordinator position added as part of the 2023
budget (with half of the cost budgeted in 2023 and
remaining half in 2024). Starting in 2025, a new Public
Works position is included with 50% of the cost funded
from the Utility Funds.
• 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
spending, 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 collection
and treatment (disposal). For purposes of the Plan, future
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 2023)
inflated by 7.0% 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.
15
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
collection of development fees (availability and a connection
charges).
Paying for annual planned capital improvement projects
with cash (versus debt) may be a sound strategy depending
on the details of the project. Use of cash will avoid incurring
annual interest expense. However, this strategy requires
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 planned debt
obligations of the utility funds are accounted for in the
financial plans and the projected revenues that will be
needed for debt service. Debt service principal payments
reduce the bonds payable liability (on the balance sheet)
and are not recorded as an expense. Interest payments are
reporting as an expense.
Development of Land and Growth in Customers
Development of land and growth in customers of the
Utilities 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 systems. Availability charges and connection charges
are one time charges collected at the time of development
and connection to the system.
Table F provides information on the estimated 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
directly impact the estimated revenues shown in the Plan
and the planned utility rates.
Available Other Revenues
There is limited other revenue for the utility funds, meaning
revenue that does not come from charges for services. The
majority of the cost to operate and maintain the system is
paid from charges collected from those using the system.
Other on-going sources of revenue for the utility funds
include interest income and other miscellaneous revenue
collected.
During 2019, the City and 3M Company entered into
a settlement agreement relating to the presence of
perfluorochemicals 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 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 Financial Report
of the City, for the year ended December 31, 2019).
Municipal sewer lines were extended along the city’s
western border in order to serve new development on
the 180 acres the city received in a settlement with 3M in
2019. The new area will provide for business/industrial,
16
Utility Ratescommercial and low-density housing options (source:
Comprehensive Annual Financial Report of the City, for the
year ended December 31, 2022).
Fees and Charges (Utility Rates)
The City bills utility customers quarterly. Information on
prior years and projected utility fees for years 2024 to
2032 are included in Tables G, H, and I for each respective
utility fund. The future rates reflect the rates necessary to
maintain adequate cash balances and ending unrestricted
net position in the Utility Funds. The rates applied against
estimated customers and usage (volume) is used to
calculate the annual estimated charges for services fees
revenue shown in the Plan for each of the Utility Funds.
Water Fees
Figure 1 includes the proposed 2024 fees in the Plan for
water fees. The Plan assumes the 2024 fee amounts for
water will increase by 3.0% annually, beginning in year
2025. The Plan assumes fees for availability and connection
charges will remain constant at 2023 amounts over the
planning period.
Sanitary Sewer Fees
The Plan assumes sanitary sewer fees will increase annually
by 3.0-4.0%, beginning in 2025, except for availability and
connection fees which are assumed to remain constant at
current amounts over the planning period (2024-2032). The
Plan does not include any increase to the quarterly base
fee for sanitary sewer in 2024. After 2024, the base charge
increases by 3.0% annually. The volume charge is assumed
to increase by 4.0% annually between 2024-2032.
Storm Sewer Fees
Storm Sewer fees are assumed to remain constant at
current 2023 adopted amounts.
Figure 1.
Water Fees
2023
Adopted
2024
Proposed
%
Increase
Residential quarterly base fee $21.86 $22.52 3.0%
Residential Tier 1: 0-15,000 gal $2.18 $2.20 1.0%
Residential Tier 2: 15,001-30,000 gal $2.63 $2.68 2.0%
Residential Tier 3: 30,001-50,000 gal $3.15 $3.31 5.0%
Residential Tier 4: 50,001-80,000 gal $3.79 $4.17 10.0%
Residential Tier 5: >80,001 gal $4.52 $5.20 15.0%
Commercial quarterly base fee $27.33 $28.15 3.0%
Commercial Tier 1: 0-15,000 gallons $3.39 $3.42 1.0%
Commercial Tier 2: 15,001-30,000 gal $3.56 $3.63 2.0%
Commercial Tier 3: 30,001-50,000 gal $4.12 $4.33 5.0%
Commercial Tier 4: 50,001-80,000 gal $5.46 $6.01 10.0%
Commercial Tier 5: >80,001 gal $7.25 $8.34 15.0%
Irrigation quarterly base fee $27.33 $28.15 3.0%
Irrigation Tier 1: 0-30,000 gallons $2.63 $2.68 2.0%
Irrigation Tier 2: 30,001-50,000 gal $3.15 $3.31 5.0%
Irrigation Tier 3: 50,001-80,000 gal $3.79 $4.17 10.0%
Irrigation Tier 4: >80,001 gal $4.52 $5.20 15.0%
Hotel/Motel quarterly base fee $27.33 $28.15 3.0%
Hotel/Motel Tier 1: 0-30,000 gal $3.39 $3.42 1.0%
Hotel/Motel Tier 2: 30,001-50,000 gal $3.56 $3.63 2.0%
Hotel/Motel Tier 3: >50,001 gal $4.36 $4.80 10.0%
Multi-Family Residential quarterly base fee $21.86 $22.52 3.0%
Multi-Family Residential Tier 1: 0-15,000 gal $2.18 $2.20 1.0%
Multi-Family Residential Tier 2: 15,001-30,000 gal $2.63 $2.68 2.0%
Multi-Family Residential Tier 3: 30,001-50,000 gal $3.15 $3.31 5.0%
Multi-Family Residential Tier 4: 50,001-80,000 gal $3.79 $4.17 10.0%
Multi-Family Residential Tier 5: >80,001 gal $4.52 $5.20 15.0%
17
Utility RatesEstimated Volumes of Water Sold and Sanitary Sewer Billed
Annual estimated volume of water sold by tier and
estimated sanitary sewer billed by year are included in
Table G and Table H.
The estimated gallons of water sold and sanitary sewer
volume billed by year is shown in Chart 6. The Plan assumes
average annual water volume billed of approximately 80,000
gallons per residential customer. Average volume billed by
(usage) tier for future years is calculated based on historical
data. The Plan assumes average annual sewer volume billed
of approximately 60,000 gallons per residential customer.
The MCES reports total sewer volume for the City of
approximately 150.37 million gallons for year 2021 and
163.89 million gallons for 2022. The MCES charges the City
pays in the current year are based on flow from the prior
year. For example, the 2023 total MCES disposal charge to
the City is $526,216, calculated based on 163,890 million
gallons. (Source: Reports from Metropolitan Council for
Rates and Charges by City.) This includes total metered
volume, including volume that is billed and non-billed by
the City. The volume the City bills to customers of the Sewer
utility is less than the flow metered by MCES.
18
Utility Rates
Table F
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
TOTAL 2023-
2032
Residential 328 217 200 150 150 150 150 150 150 150 1,795
Commercial 39 52 85 78 60 65 --25 40 444Multi Family -336 100 70 170 100 100 100 976Total3676053852983803152501501752903,215
Residential 200 200 200 150 150 150 150 150 150 150 1,650
OV Residential 72 23 95Commercial395285786065--25 40 444OV Commercial -Multi Family -336 100 70 170 100 100 100 976
Total 311 611 385 298 380 315 250 150 175 290 3,165
Residential 180 177 176 90 62 62 62 -90 90 989Commercial395285786065--25 40 444Multi Family -336 100 70 170 100 100 100 976Total219565361238292227162-115 230 2,409
Residential 69 160 176 90 62 62 62 -90 90 861
OV Residential 72 23 95Commercial395285786065--25 40 444OV Commercial -Multi Family -336 100 70 170 100 100 100 976
Total 180 571 361 238 292 227 162 -115 230 2,376
Source: Data provided by City.
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
TOTAL 2023-
2032
New Commercial accounts
estimated by year:
4 4 3 3 3 3 2 1 1 2 26
Note: For commercial customers the city uses MCES SAC determination to calculate RECs for purpose of city charges. The number of new commercial utility customers (accounts) is as
estimated as follows by year:
Residential Equivalent Customers (REC)
SANITARY SEWER CONNECTIONS-PAID AT TIME OF PERMIT
WATER CONNECTIONS-PAID AT TIME OF PERMIT
WATER AVAILABLITY CHARGE-PAID AT TIME OF PLATTING
SANITARY SEWER AVAILABILITY CHARGE-PAID AT TIME OF PLATTING
19
Utility Rates
-
100
200
300
400
500
600
700
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Chart 6
Sanitary Sewer FundEstimated Residential Equivalent Units (REC)
REC from Plats REC from Connections
-
100
200
300
400
500
600
700
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Chart 7
Water FundEstimated Residential Equivalent Units (REC)
REC from Plats REC Connections
The estimates for future
growth from development,
shown in residential equivalent
units (REC), was prepared by
the City. The estimates are as
of September 2023.
Revenue from increased
residential equivalent
units comes from a one
time payment of the City’s
availability charge and
connection charge and then
from on-going payments 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.
Availability 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
0
100
200
300
400
500
600
700
20232024202520262027202820292030203120322033Thousands of GallonsChart 8
Projected Volume of Water and Sanitary Sewer Subject to Billing
Volume billed is projected to increase with addition of new customers
Water Volume Sewer Volume
The estimated annual gallons
of volume increases as more
customers connect to the
water and sanitary sewer
systems.
The Plan assumes that the
average annual usage per
customer for residential and
commercial remains fairly
constant at historical levels.
21
Utility Rates
Table G
Water Fund
Customers/Usage and Rates
Current Year
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Customers, Volume Billed (in 1,000 of gallons), and RECResidential customers 3,181 3,398 3,598 3,748 3,898 4,048 4,198 4,348 4,498 4,648 4,658Residential Tier 1: 0-15,000 gal 143,329 156,349 168,349 177,349 186,349 195,349 204,349 213,349 222,349 231,349 231,949
Residential Tier 2: 15,001-30,000 gal 69,823 74,163 78,163 81,163 84,163 87,163 90,163 93,163 96,163 99,163 99,363Residential Tier 3: 30,001-50,000 gal 44,146 44,146 44,146 44,146 44,146 44,146 44,146 44,146 44,146 44,146 44,146Residential Tier 4: 50,001-80,000 gal 35,099 35,099 35,099 35,099 35,099 35,099 35,099 35,099 35,099 35,099 35,099Residential Tier 5: >80,001 gal 37,524 37,524 37,524 37,524 37,524 37,524 37,524 37,524 37,524 37,524 37,524Residential Volume Billed Total 329,921 347,281 363,281 375,281 387,281 399,281 411,281 423,281 435,281 447,281 448,081
Multi-Family Residential customers 118 454 554 624 794 894 994 994 994 1,094 1,094
Multi-Family Residential Tier 1: 0-15,000 gal -13,490 17,505 20,316 27,141 31,156 35,171 35,171 35,171 39,186 39,186Multi-Family Residential Tier 2: 15,001-30,000 gal -----------Multi-Family Residential Tier 3: 30,001-50,000 gal -----------Multi-Family Residential Tier 4: 50,001-80,000 gal -----------Multi-Family Residential Tier 5: >80,001 gal -----------
Multi-Family Residential Volume Billed Total -13,490 17,505 20,316 27,141 31,156 35,171 35,171 35,171 39,186 39,186
Commercial customers 192 196 199 202 205 208 210 211 212 214 215Commercial Tier 1: 0-15,000 gallons 5,267 5,507 5,687 5,867 6,047 6,227 6,347 6,407 6,467 6,587 6,647Commercial Tier 2: 15,001-30,000 gal 2,727 2,807 2,867 2,927 2,987 3,047 3,087 3,107 3,127 3,167 3,187Commercial Tier 3: 30,001-50,000 gal 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634Commercial Tier 4: 50,001-80,000 gal 2,913 2,913 2,913 2,913 2,913 2,913 2,913 2,913 2,913 2,913 2,913
Commercial Tier 5: >80,001 gal 11,527 11,527 11,527 11,527 11,527 11,527 11,527 11,527 11,527 11,527 11,527Commercial Volume Billed Total 25,068 25,388 25,628 25,868 26,108 26,348 26,508 26,588 26,668 26,828 26,908
Irrigation customers 230 234 237 240 243 246 248 249 250 252 253Irrigation Tier 1: 0-30,000 gallons 4,007 10,007 16,007 22,007 28,007 34,007 40,007 46,007 52,007 58,007 64,007Irrigation Tier 2: 30,001-50,000 gal 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327Irrigation Tier 3: 50,001-80,000 gal 3,188 7,188 11,188 15,188 19,188 23,188 27,188 31,188 35,188 39,188 43,188
Irrigation Tier 4: >80,001 gal 38,341 38,341 38,341 38,341 38,341 38,341 38,341 38,341 38,341 38,341 38,341Irrigation Volume Billed Total 47,863 57,863 67,863 77,863 87,863 97,863 107,863 117,863 127,863 137,863 147,863
Hotel/Motel customers -----------Hotel/Motel Tier 1: 0-30,000 gal -----------Hotel/Motel Tier 2: 30,001-50,000 gal -----------Hotel/Motel Tier 3: >50,001 gal -----------
Hotel/Motel Volume Billed Total -----------
Total Customers Billed 3,721 4,282 4,588 4,814 5,140 5,396 5,650 5,802 5,954 6,208 6,220Total Volume Billed 402,852 444,022 474,277 499,328 528,393 554,648 580,823 602,903 624,983 651,158 662,038
Total Connection REC 458 605 385 298 380 315 250 150 175 290 10Total Water Availability REC 569 565 361 238 292 227 162 -115 230 10
Projected
22
Utility Rates
Table G
Water Fund
Customers/Usage and Rates
Current Year
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Projected
Customer Rates for Fees and Charges (Dollars)Residential quarterly base fee 21.86 22.52 23.19 23.89 24.60 25.34 26.10 27.02 27.96 28.94 29.95Residential Tier 1: 0-15,000 gal 2.18 2.20 2.27 2.34 2.41 2.48 2.55 2.64 2.73 2.83 2.93
Residential Tier 2: 15,001-30,000 gal 2.63 2.68 2.76 2.85 2.93 3.02 3.11 3.22 3.33 3.45 3.57Residential Tier 3: 30,001-50,000 gal 3.15 3.31 3.41 3.51 3.61 3.72 3.83 3.97 4.11 4.25 4.40Residential Tier 4: 50,001-80,000 gal 3.79 4.17 4.29 4.42 4.56 4.69 4.83 5.00 5.18 5.36 5.55
Residential Tier 5: >80,001 gal 4.52 5.20 5.35 5.51 5.68 5.85 6.03 6.24 6.46 6.68 6.91
Multi-Family Residential quarterly base fee 21.86 22.52 23.19 23.89 24.60 25.34 26.10 27.02 27.96 28.94 29.95
Multi-Family Residential Tier 1: 0-15,000 gal 2.18 2.20 2.27 2.34 2.41 2.48 2.55 2.64 2.73 2.83 2.93Multi-Family Residential Tier 2: 15,001-30,000 gal 2.63 2.68 2.76 2.85 2.93 3.02 3.11 3.22 3.33 3.45 3.57Multi-Family Residential Tier 3: 30,001-50,000 gal 3.15 3.31 3.41 3.51 3.61 3.72 3.83 3.97 4.11 4.25 4.40Multi-Family Residential Tier 4: 50,001-80,000 gal 3.79 4.17 4.29 4.42 4.56 4.69 4.83 5.00 5.18 5.36 5.55Multi-Family Residential Tier 5: >80,001 gal 4.52 5.20 5.35 5.51 5.68 5.85 6.03 6.24 6.46 6.68 6.91
Commercial quarterly base fee 27.33 28.15 28.99 29.86 30.76 31.68 32.63 33.78 34.96 36.18 37.45Commercial Tier 1: 0-15,000 gallons 3.39 3.42 3.53 3.63 3.74 3.85 3.97 4.11 4.25 4.40 4.55
Commercial Tier 2: 15,001-30,000 gal 3.56 3.63 3.74 3.85 3.97 4.09 4.21 4.36 4.51 4.67 4.83Commercial Tier 3: 30,001-50,000 gal 4.12 4.33 4.46 4.59 4.73 4.87 5.02 5.19 5.37 5.56 5.75Commercial Tier 4: 50,001-80,000 gal 5.46 6.01 6.19 6.37 6.56 6.76 6.96 7.21 7.46 7.72 7.99
Commercial Tier 5: >80,001 gal 7.25 8.34 8.59 8.85 9.11 9.38 9.67 10.00 10.35 10.72 11.09
Irrigation quarterly base fee 27.33 28.15 28.99 29.86 30.76 31.68 32.63 33.78 34.96 36.18 37.45
Irrigation Tier 1: 0-30,000 gallons 2.63 2.68 2.76 2.85 2.93 3.02 3.11 3.22 3.33 3.45 3.57Irrigation Tier 2: 30,001-50,000 gal 3.15 3.31 3.41 3.51 3.61 3.72 3.83 3.97 4.11 4.25 4.40Irrigation Tier 3: 50,001-80,000 gal 3.79 4.17 4.29 4.42 4.56 4.69 4.83 5.00 5.18 5.36 5.55
Irrigation Tier 4: >80,001 gal 4.52 5.20 5.35 5.51 5.68 5.85 6.03 6.24 6.46 6.68 6.91
Hotel/Motel quarterly base fee 27.33 28.15 28.99 29.86 30.76 31.68 32.63 33.78 34.96 36.18 37.45
Hotel/Motel Tier 1: 0-30,000 gal 3.39 3.42 3.53 3.63 3.74 3.85 3.97 4.11 4.25 4.40 4.55Hotel/Motel Tier 2: 30,001-50,000 gal 3.56 3.63 3.74 3.85 3.97 4.09 4.21 4.36 4.51 4.67 4.83Hotel/Motel Tier 3: >50,001 gal 4.36 4.80 4.94 5.09 5.24 5.40 5.56 5.75 5.96 6.16 6.38
Connection charge Per REC Unit 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00Availability charge Per REC Unit 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
23
Utility Rates
Table G
Water Fund
Customers/Usage and Rates
Current Year
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Projected
Revenue by Fee Type (Dollars)Residential quarterly base fee 278,147 306,035 333,769 358,114 383,620 410,333 438,305 469,854 503,076 538,048 558,077Residential Tier 1: 0-15,000 gal 312,457 344,249 381,791 414,268 448,349 484,103 521,599 563,631 607,967 654,716 679,388
Residential Tier 2: 15,001-30,000 gal 183,634 198,950 215,970 230,987 246,711 263,170 280,395 299,865 320,354 341,911 354,591Residential Tier 3: 30,001-50,000 gal 139,060 146,013 150,393 154,905 159,552 164,339 169,269 175,193 181,325 187,672 194,240Residential Tier 4: 50,001-80,000 gal 133,025 146,328 150,718 155,239 159,896 164,693 169,634 175,571 181,716 188,076 194,659Residential Tier 5: >80,001 gal 169,608 195,050 200,901 206,928 213,136 219,530 226,116 234,030 242,221 250,699 259,473Total Residential 1,215,932 1,336,624 1,433,542 1,520,442 1,611,265 1,706,169 1,805,317 1,918,145 2,036,660 2,161,121 2,240,429
Multi-Family Residential quarterly base fee 10,318 40,889 51,392 59,622 78,141 90,622 103,781 107,414 111,173 126,640 131,073Multi-Family Residential Tier 1: 0-15,000 gal -118,813 158,799 189,823 261,205 308,840 359,099 371,667 384,675 443,589 459,114Multi-Family Residential Tier 2: 15,001-30,000 gal -----------Multi-Family Residential Tier 3: 30,001-50,000 gal -----------
Multi-Family Residential Tier 4: 50,001-80,000 gal -----------Multi-Family Residential Tier 5: >80,001 gal -----------Total Multi-Family 10,318 159,701 210,191 249,445 339,346 399,462 462,880 479,081 495,849 570,229 590,187
Commercial quarterly base fee 20,962 22,041 23,051 24,100 25,193 26,329 27,379 28,473 29,609 30,935 32,168
Commercial Tier 1: 0-15,000 gallons 17,855 18,855 20,056 21,311 22,624 23,997 25,193 26,321 27,497 28,988 30,276Commercial Tier 2: 15,001-30,000 gal 9,708 10,193 10,723 11,276 11,852 12,453 12,995 13,537 14,101 14,781 15,395Commercial Tier 3: 30,001-50,000 gal 10,852 11,395 11,737 12,089 12,451 12,825 13,210 13,672 14,150 14,646 15,158Commercial Tier 4: 50,001-80,000 gal 15,905 17,495 18,020 18,561 19,118 19,691 20,282 20,992 21,727 22,487 23,274Commercial Tier 5: >80,001 gal 83,571 96,106 98,990 101,959 105,018 108,169 111,414 115,313 119,349 123,526 127,850Total Commercial 158,853 176,086 182,576 189,296 196,256 203,463 210,472 218,308 226,434 235,363 244,120
Irrigation quarterly base fee 25,144 26,348 27,487 28,670 29,899 31,176 32,372 33,641 34,958 36,471 37,897Irrigation Tier 1: 0-30,000 gallons 10,538 26,845 44,229 62,631 82,098 102,677 124,417 148,083 173,255 200,006 228,418Irrigation Tier 2: 30,001-50,000 gal 7,330 7,697 7,927 8,165 8,410 8,663 8,922 9,235 9,558 9,892 10,239
Irrigation Tier 3: 50,001-80,000 gal 12,083 29,967 48,042 67,175 87,412 108,804 131,400 156,008 182,177 209,987 239,520Irrigation Tier 4: >80,001 gal 173,301 199,297 205,275 211,434 217,777 224,310 231,039 239,126 247,495 256,157 265,123Total Irrigation 228,396 290,153 332,960 378,075 425,597 475,629 528,151 586,092 647,442 712,514 781,197
Hotel/Motel quarterly base fee -----------Hotel/Motel Tier 1: 0-30,000 gal -----------Hotel/Motel Tier 2: 30,001-50,000 gal -----------Hotel/Motel Tier 3: >50,001 gal -----------Total Hotel/Motel -----------
Connection charges 458,000 605,000 385,000 298,000 380,000 315,000 250,000 150,000 175,000 290,000 10,000Availability charges 1,707,000 1,695,000 1,083,000 714,000 876,000 681,000 486,000 -345,000 690,000 30,000
Total Revenue by Fee Type 3,778,499 4,262,564 3,627,269 3,349,258 3,828,464 3,780,723 3,742,820 3,351,626 3,926,384 4,659,226 3,895,934
Total Charges for Services, Capital Contribution, and Connection Charges (Dollars)Charges for services 1,613,499 1,962,564 2,159,269 2,337,258 2,572,464 2,784,723 3,006,820 3,201,626 3,406,384 3,679,226 3,855,934Connection charges 458,000 605,000 385,000 298,000 380,000 315,000 250,000 150,000 175,000 290,000 10,000Availability charges 1,707,000 1,695,000 1,083,000 714,000 876,000 681,000 486,000 -345,000 690,000 30,000Total3,778,499 4,262,564 3,627,269 3,349,258 3,828,464 3,780,723 3,742,820 3,351,626 3,926,384 4,659,226 3,895,934
24
Utility Rates
Table H
Sanitary Sewer Fund
Customers/Usage and Rates
Current Year
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Customers and Usage
Residential quarterly base fee Customer Count 2,476 2,748 3,307 3,607 3,827 4,147 4,397 4,647 4,797 4,947 4,957Residential Sanitary Sewer Tier 1 (first 10,000 gallons included in base fee) Volume Billed 85,151 87,871 93,461 96,461 98,661 101,861 104,361 106,861 108,361 109,861 109,961Residential Sanitary Sewer Tier 2 usage per 1,000 gallons (after first 10,000 gal) Volume Billed 25,772 27,132 29,927 31,427 32,527 34,127 35,377 36,627 37,377 38,127 38,177
Commercial quarterly Customer Count 88 92 95 98 101 104 106 107 108 110 111
Commercial Sanitary Sewer Tier 1 Volume Billed -40 70 100 130 160 180 190 200 220 230
Commercial Sanitary Sewer Tier 2 usage per 1,000 gallons Volume Billed 19,088 19,148 19,193 19,238 19,283 19,328 19,358 19,373 19,388 19,418 19,433
Total Customers Billed 2,564 2,840 3,402 3,705 3,928 4,251 4,503 4,754 4,905 5,057 5,068
Total Volume Billed (includes first tier billed)130,011 134,191 142,651 147,226 150,601 155,476 159,276 163,051 165,326 167,626 167,801
Total Connection REC 365 611 385 298 380 315 250 150 175 290 10Total Sewer Availability REC 278 548 361 238 292 227 162 -115 230 10Total Sewer Availability REC - Early Incentive Program 72 23 ---------
Total Sewer lateral benefit units -----------
Customer Rates for Fees and Charges (Dollars)Residential quarterly base fee 55.74 55.74 57.41 59.13 60.91 62.74 64.62 66.56 68.55 70.61 72.73Residential Sanitary Sewer Tier 1 (first 10,000 gallons included in base fee)-----------Residential Sanitary Sewer Tier 2 usage per 1,000 gallons (after first 10,000 gal)4.80 4.99 5.19 5.40 5.62 5.84 6.07 6.32 6.57 6.83 7.11
Commercial quarterly -----------
Commercial Sanitary Sewer Tier 1 -----------
Commercial Sanitary Sewer Tier 2 usage per 1,000 gallons 4.80 4.99 5.19 5.40 5.62 5.84 6.07 6.32 6.57 6.83 7.11
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 1,000Availability charge Per REC Unit 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000Availability charge Per REC Unit - Early Incentive Prg (50% of rate)1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Revenue by Fee Type (Dolllars)
Residential quarterly base fee 552,049 612,694 759,449 853,194 932,389 1,040,662 1,136,500 1,237,152 1,315,398 1,397,226 1,442,052Residential Sanitary Sewer Tier 1 (first 10,000 gallons included in base fee)-----------Residential Sanitary Sewer Tier 2 usage per 1,000 gallons (after first 10,000 gal)123,706 135,443 155,371 169,685 182,650 199,299 214,863 231,353 245,534 260,480 271,254Total Residential 675,755 748,137 914,820 1,022,879 1,115,038 1,239,962 1,351,364 1,468,505 1,560,933 1,657,706 1,713,306
Commercial quarterly -----------
Commercial Sanitary Sewer Tier 1 -----------Commercial Sanitary Sewer Tier 2 usage per 1,000 gallons 91,620 95,584 99,641 103,870 108,277 112,871 117,568 122,366 127,359 132,658 138,071Total Commercial 91,620 95,584 99,641 103,870 108,277 112,871 117,568 122,366 127,359 132,658 138,071
Connection charges 365,000 611,000 385,000 298,000 380,000 315,000 250,000 150,000 175,000 290,000 10,000Availability charges 832,500 1,644,000 1,083,000 714,000 876,000 681,000 486,000 -345,000 690,000 30,000
Availability charges - early incentive program 108,000 34,500 ---------
Total Revenue by Fee Type 2,072,875 3,133,221 2,482,461 2,138,749 2,479,316 2,348,833 2,204,932 1,740,871 2,208,292 2,770,364 1,891,377
Total Charges for Services, Capital Contribution, and Connection Charges (Dollars)Charges for services 767,375 843,721 1,014,461 1,126,749 1,223,316 1,352,833 1,468,932 1,590,871 1,688,292 1,790,364 1,851,377Connection charges 365,000 611,000 385,000 298,000 380,000 315,000 250,000 150,000 175,000 290,000 10,000
Availability charges 940,500 1,678,500 1,083,000 714,000 876,000 681,000 486,000 -345,000 690,000 30,000
Total 2,072,875 3,133,221 2,482,461 2,138,749 2,479,316 2,348,833 2,204,932 1,740,871 2,208,292 2,770,364 1,891,377
Projected
25
Utility Rates
Table I
Storm Water Fund
Customer/Usage and Rates
Current Year2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Customers (Residential Equivalent)Residential REC 5,012 5,565 5,865 6,085 6,405 6,655 6,905 7,055 7,205 7,455 7,465Commercial REC 331 335 338 341 344 347 349 350 351 353 354Vacant property (acres)490 490 490 490 490 490 490 490 490 490 490
Customer Rates for Fees and Charges (Dollars)Storm Sewer Annual Basic Charge - Residential 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00
Storm Sewer Annual Equivalent Basic Charge Commercial Billed at 3.08X Residiental 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00Storm Sewer Annual Charge - Vacant Land - Per Acre Charge 14.25 14.25 14.25 14.25 14.25 14.25 14.25 14.25 14.25 14.25 14.25
Revenue by Fee Type (Dolllars)Storm Sewer Annual Basic Charge - Residential 476,140 528,675 557,175 578,075 608,475 632,225 655,975 670,225 684,475 708,225 709,175
Storm Sewer Annual Equivalent Basic Charge Commercial Billed at 3.08X Residiental 96,851 98,021 98,899 99,777 100,654 101,532 102,117 102,410 102,703 103,288 103,580Storm Sewer Annual Charge - Vacant Land - Per Acre Charge 6,976 6,976 6,976 6,976 6,976 6,976 6,976 6,976 6,976 6,976 6,976Total Revenue by Fee Type 579,966 633,672 663,050 684,827 716,105 740,733 765,068 779,611 794,153 818,489 819,731
Projected
26
Financial PlansFINANCIAL PLANS
Based on historical financial performance, estimated utility
rates, and future capital projects, financial plans (proforma)
have been prepared for each of the utility funds.
Key Assumptions
The financial plans for each utility fund was developed based
on key assumptions, which are summarized as follows:
• Operating expenditures, including personnel costs and
materials supplies and all other operating expense will
increase by approximately 3.0% annually, based on the
2023 budget, with an exception for MCES payments.
The MCES fee charged on metered sewer volume is
projected to increase by 7.0% annually.
• New staff (personnel costs) are anticipated for the
Utility Funds. Year 2024 includes funding for the new
Finance Coordinator position added as part of the 2023
budget (with half of the cost budgeted in 2023 and
remaining half in 2024). Starting in 2025, a new Public
Works position is included with 50% of the cost funded
from the Utility Funds
• Implementation of proposed changes to the existing
fees and tier structure for charging water fees is
reflected in the finance plans. The maximum volume
per tier is not proposed to change but the difference
in rates between the tiers is proposed to widen. The
rates for the higher tiers, Tier 3, 4, and 5 are proposed
to increase at a greater percentage, from 2023 to
2024, compared to the rate for Tiers 1 and 2, which are
proposed to decrease. See Figure 1 on page 16 for a
comparison of rate changes from 2023 to 2024 by tier.
• 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
operating reserves, and restricted cash collected from
availability charges for infrastructure and related debt.
• Depreciation is estimated based on current depreciation
of existing assets and planned acquisition of capital
assets with new assets depreciated over a 40 year term.
• Capital improvement plans will be implemented based
on current estimated project costs and sources of
funding, as included in the Plan. Estimated debt service
on bonds to be issued is included in the Plan.
27
Financial PlansWATER 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. The City
reports in its financial statements for years 2021 and
2022 net operating losses before other financing sources,
including contributions and transfers, among other financing
sources. Operating revenue, which includes revenue from
customers but does not include revenue from availability
charges, connection charges, and special assessments, has
not been sufficient to cover depreciation expense. The
City acquired depreciable assets, in part, from issuance of
bonds supported, in part, by projected future availability
and connection charges (other financing sources). The Plan
projects that over time, as the City continues to increase
customers, and outstanding debt is amortized, that the City
will begin to report net operating income.
The cash available within the fund is projected to be
sufficient to cover debt service payments, pay-go capital
plans, and to provide reserves for future improvements,
while also providing unrestricted cash (equal to a minimum
of 50% of operating expense not including depreciation or
interest expense).
Future 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.
As noted earlier in the Plan, during 2019, the City and 3M
Company entered into a settlement agreement relating to
the presence of perfluorochemicals 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 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) was reported as an extraordinary item in the
business-type activities (source: Comprehensive Annual
Financial 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
increase as the number of customers increases and the
volume of water sold increases. Annual adjustments to the
service fees is planned to account for inflationary increases.
The financial plan assumes adjustments to fees from
2023 to 2024 to further promote water conservation. Fee
increases in future years projected to average 3.0%-3.5%.
Investment income earned on cash balance is recorded as
revenue. The plan conservatively assumes future revenue
from interest income earned at the amount budgeted for
year 2023.
Special assessments levied for infrastructure improvements
are recorded as revenue when certified. Certified special
assessments collected over a certified number of years,
which are not prepaid, are recorded as an accounts
receivable. When special assessment payments are
collected by the City, the receivable is reduced.
The Plan includes anticipated donation/grant revenue for
capital improvements. This is included as “other revenues”.
WATER FUND
28
Financial PlansExpenses
Expenses are to pay for the operation of the system, interest
on debt, depreciation, and authorized transfers to other
funds that may occur from time to time.
Principal payments on bonds supported by the fund are
reported as a reduction of liability for the fund.
The financial plan for the Water Fund shows an increase
in accumulated depreciation over time. The actual
accumulated depreciation amount will vary depending
on the City’s accounting for capital assets and future
depreciation.
Transfers
In 2021, the City transferred cash from the Water Fund in
the amount of $3,750,000 to pay a portion of the cost of
the new municipal facility project.
The City does not transfer cash from the fund to the General
Fund for overhead. Instead the City directly charges the
fund for administrative staff time.
Balance Sheet Items
The financial plan includes estimated assets and liabilities,
this includes estimated annual year-end cash balance.
WATER FUND
29
Financial Plans
Table J
Water Fund
Pro Forma
Prior Year
Actual
Prior Year
Actual20212022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
RevenuesCharges for services 1,538,316 1,647,656 1,613,499 1,962,564 2,159,269 2,337,258 2,572,464 2,784,723 3,006,820 3,201,626 3,406,384 3,679,226
Investment income (11,572)(66,764)32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000Other operating revenue 23,336 400,075 2,000 33,455 33,455 33,455 33,455 33,455 33,455 33,455 33,455 33,455
Water meter sales 149,944 113,708 100,000 155,675 155,675 155,675 155,675 155,675 155,675 155,675 155,675 155,675
Other revenues 35,635 --2,310,000 2,508,000 1,804,000 2,488,900 -----Availability charges 1,566,000 685,000 1,707,000 1,695,000 1,083,000 714,000 876,000 681,000 486,000 -345,000 690,000
Capital assets contributions non-cash 1,837,010 1,503,597 243,638 ---------Intergovernmental revenue 7,006,533 8,164,179 ----------
Special assessments 154,678 73,461 --318,000 -------Lateral Benefit Fee 23,200 12,400 ----------Connection charges 515,000 383,000 458,000 605,000 385,000 298,000 380,000 315,000 250,000 150,000 175,000 290,000
Total Revenues 12,838,080 12,916,312 4,156,136 6,793,694 6,674,399 5,374,388 6,538,494 4,001,853 3,963,950 3,572,756 4,147,514 4,880,356
ExpensesPersonal services 411,561 453,262 511,897 539,346 546,254 562,642 579,521 596,906 614,814 633,258 652,256 671,823Materials and supplies 212,515 204,340 247,522 254,948 262,596 270,474 278,588 286,946 295,554 304,421 313,553 322,960
Professional services 131,108 109,490 192,999 198,789 204,753 210,895 217,222 223,739 230,451 237,364 244,485 251,820Repairs and maintenance 19,628 84,958 71,000 73,130 75,324 77,584 79,911 82,308 84,778 87,321 89,941 92,639
Utilities 138,466 176,806 130,000 133,900 137,917 142,055 146,316 150,706 155,227 159,884 164,680 169,621Depreciation expense 1,467,694 1,868,224 1,894,893 2,069,665 2,249,065 2,445,140 2,544,863 2,554,613 2,608,113 2,611,863 2,653,863 2,659,113Interest and fees on long-term debt 223,270 346,637 376,941 374,262 557,590 685,215 886,946 853,113 773,666 766,531 682,488 687,025
Transfer out to Capital Fund 3,750,000 3,261,225 ----------Other expenses 61,466 37,158 2,000 ---------
Cost of bond issuance ---94,125 85,000 121,000 30,000 -30,000 -30,000 -Total Expenses 6,415,708 6,542,100 3,427,253 3,738,165 4,118,498 4,515,004 4,763,367 4,748,330 4,792,602 4,800,642 4,831,266 4,855,001
Change in Net Position 6,422,372 6,374,212 728,884 3,055,530 2,555,901 859,384 1,775,127 (746,477)(828,651)(1,227,886)(683,752)25,355Ending net position 40,073,644 46,447,856 47,176,740 50,232,269 52,788,170 53,647,554 55,422,681 54,676,204 53,847,552 52,619,666 51,935,914 51,961,270
AssetsCash and investments 4,820,465 5,738,584 6,564,185 8,316,029 8,954,330 8,963,468 8,977,172 8,367,923 7,454,994 6,489,165 6,573,766 7,253,073
Special assessments receivable 316,158 533,521 503,423 473,325 446,417 421,229 396,041 370,853 345,665 320,871 296,077 271,283Other current assets / receivables 222,271 243,557 209,105 209,105 209,105 209,105 209,105 209,105 209,105 209,105 209,105 209,105
Due from other governmental units 665,541 1,429,117 ----------Capital assets 55,401,846 65,601,629 66,668,407 73,659,282 80,835,282 88,678,282 92,667,182 93,057,182 95,197,182 95,347,182 97,027,182 97,237,182Less Accumulated depreciation (9,796,976)(11,665,199)(13,560,092)(15,629,758)(17,878,823)(20,323,963)(22,868,826)(25,423,439)(28,031,552)(30,643,415)(33,297,278)(35,956,390)
Deferred outflows 94,261 109,550 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000Total Assets and Deferred Outflows 51,723,566 61,990,759 60,400,027 67,042,984 72,581,311 77,963,121 79,395,674 76,596,623 75,190,394 71,737,909 70,823,852 69,029,252
LiabilitiesOther current liabilities / payables 528,920 835,631 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Bonds payable 9,830,000 13,375,000 12,670,000 16,295,000 19,315,000 23,875,000 23,570,000 21,555,000 21,015,000 18,825,000 18,625,000 16,830,000Unamortized bond premium 199,743 432,861 395,288 357,714 320,141 282,567 244,993 207,420 169,842 135,243 104,938 79,982
Other non-current liabilities 142,709 318,367 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000Unearned revenues 829,000 575,000 ----------Deferred inflows 119,550 6,044 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000
Total Liabilities and Deferred Inflows 11,649,922 15,542,903 13,223,288 16,810,714 19,793,141 24,315,567 23,972,993 21,920,420 21,342,842 19,118,243 18,887,938 17,067,982
Total Liabilities, Deferred Inflows, and Net
Position
51,723,566 61,990,759 60,400,027 67,042,984 72,581,311 77,963,121 79,395,674 76,596,623 75,190,394 71,737,909 70,823,852 69,029,252
Projected
WATER FUND
30
Financial Plans
Table K
Water Fund
Projected Year End Cash Balance
Current Year2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Use of Cash
Operations & Maintenance 1,155,418 1,200,113 1,226,844 1,263,649 1,301,558 1,340,605 1,380,823 1,422,248 1,464,915 1,508,863
Capital Acquisition 1,066,778 7,085,000 7,261,000 7,964,000 4,018,900 390,000 2,170,000 150,000 1,710,000 210,000Interfund Transfers Out ----------Debt Service (includes transfers for debt)1,576,941 1,524,262 1,952,590 2,265,215 2,721,946 2,868,113 2,843,666 2,956,531 2,412,488 2,482,025
Total Use of Cash 3,799,137 9,809,374 10,440,433 11,492,863 8,042,404 4,598,718 6,394,489 4,528,779 5,587,403 4,200,888
Source of Cash
Revenues 4,156,136 6,793,694 6,674,399 5,374,388 6,538,494 4,001,853 3,963,950 3,572,756 4,147,514 4,880,356
Bond Proceeds 495,000 4,775,000 4,435,000 6,160,000 1,530,000 -1,530,000 -1,530,000 -
Interfund Transfers In ----------Total Source of Cash 4,651,136 11,568,694 11,109,399 11,534,388 8,068,494 4,001,853 5,493,950 3,572,756 5,677,514 4,880,356
Net Change in Other Assets and Liabilities (26,398)(7,476)(10,666)(12,386)(12,386)(12,386)(12,390)(9,806)(5,511)(162)
Change in Cash Balance 825,601 1,751,844 658,300 29,139 13,704 (609,250)(912,928)(965,829)84,601 679,307
Beginning Cash Balance 5,738,584 6,564,185 8,316,029 8,974,330 9,003,468 9,017,172 8,407,923 7,494,994 6,529,165 6,613,766
Ending Cash 6,564,185 8,316,029 8,974,330 9,003,468 9,017,172 8,407,923 7,494,994 6,529,165 6,613,766 7,293,073
Ending Cash by Purpose
Cash for next year planned capital 2,310,000 2,826,000 1,804,000 2,488,900 390,000 640,000 150,000 180,000 210,000 500,000
Cash for next year debt service 1,524,262 1,952,590 2,265,215 2,721,946 2,868,113 2,843,666 2,956,531 2,412,488 2,482,025 2,228,088Restricted availability charges 2,129,867 2,924,018 4,273,291 3,141,843 5,088,757 4,233,845 3,677,339 3,204,220 3,167,310 3,787,921Unrestricted cash 600,056 613,422 631,824 650,779 670,303 690,412 711,124 732,458 754,431 777,064
Ending Cash 6,564,185 8,316,029 8,974,330 9,003,468 9,017,172 8,407,923 7,494,994 6,529,165 6,613,766 7,293,073
Net Position
Ending Unrestricted Net Position 6,738,425 8,497,745 9,146,711 9,168,235 9,194,325 8,597,461 7,696,922 6,740,899 6,831,010 7,510,478Ending Unrestricted Net Position as % of Expenses 180.3%206.3%202.6%192.5%193.6%179.4%160.3%139.5%140.7%154.4%
Projected
WATER FUND
31
Financial Plans
Changes in year end cash
balances are projected to
increase, in large part, due
to timing of collection of
revenue from development
charges. Revenue from
development charges
provides a source of cash to
service debt on bonds issued
to finance projects and to
pay for future development
projects.
WATER FUND
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
2023202420252026202720282029203020312032MillionsChart 9
Water FundEnding Cash by Purpose
Unrestricted cash
Cash for next year
planned capital
Restricted
availability charges
Cash for next year
debt service
0%
50%
100%
150%
200%
250%
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
2023202420252026202720282029203020312032Ending Unrestricted Net Position as % of ExpensesEnding Unrestricted Net PositionMillionsChart 10Water FundEnding Unrestricted Net Position as % of Expenses is projected to be well above the minimum
50% target for the Plan
Ending Unrestricted Net Position
Ending Unrestricted Net Position as % of Expenses
32
Financial Plans
Revenues and expenses
include depreciation expense,
and other contributions,
transfers, and extraordinary
items. The difference between
annual revenues and expenses
equals the change in net
position of the fund. Sources
of revenue are projected to
exceed uses (expenses) 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
$1
$2
$3
$4
$5
$6
$7
$8
2023202420252026202720282029203020312032MillionsChart 11Water FundRevenues and Expenses
Revenues fluctuate with timing of private development and collection of development related revenues including connection and availability charges and special assessments
Revenues Expenses
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2023202420252026202720282029203020312032Total Customer Units (ERU)Volume Billed (1,000 Gal)Chart 12
Water FundCustomers and Annual Water Volume Billed is projected to continue to increase
Water Volume Billed Total Customer Units
33
Financial PlansSANITARY SEWER FUND
Fund Description
The Sanitary Sewer Fund is used to account for the operating
and capital improvement costs of the sanitary sewer utility
system.
Background
The Sanitary Sewer Fund is in sound financial condition. The
City reports in its financial statements for years 2021 and
2022 net operating losses before other financing sources,
including contributions and transfers, among other financing
sources. Operating revenue, which includes revenue from
customers but does not include revenue from availability
charges, connection charges, and special assessments, has
not been sufficient to cover depreciation expense. The
City acquired depreciable assets, in part, from issuance of
bonds supported, in part, by projected future availability
and connection charges (other financing sources). The Plan
projects that over time, as the City continues to increase
customers, and outstanding debt is amortized, that the City
will begin to report net operating income.
The cash available within the fund is projected to be
sufficient to cover debt service payments, pay-go capital
plans, and to provide reserves for future improvements,
while also providing unrestricted cash (equal to a minimum
of 50% of operating expense not including depreciation or
interest expense).
Future 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.
SANITARY SEWER FUNDThe financial plan for the Sanitary Sewer Fund shows an
increase in accumulated depreciation over time. The actual
accumulated depreciation amount will vary depending
on the City’s accounting for capital assets and future
depreciation.
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 platting
will result in increased revenue from water availability and
connection charges.
The Plan assumes sanitary sewer fees will increase annually
by 3.0-4.0%, beginning in 2025, except for availability and
connection fees which are assumed to remain constant at
current amounts over the planning period (2024-2032). The
Plan does not include any increase to the quarterly base
fee for sanitary sewer in 2024. After 2024, the base charge
increases by 3.0% annually. The volume charge is assumed
to increase by 4.0% annually between 2024-2032.
Investment income earned on cash balance is recorded as
revenue. The plan conservatively assumes future revenue
from interest income earned at the amount budgeted for
year 2023.
Special assessments levied for infrastructure improvements
are recorded as revenue when certified. Certified special
assessments collected over a certified number of years,
which are not prepaid, are recorded as an accounts
receivable. When special assessment payments are
collected by the City, the receivable is reduced.
34
Financial PlansExpenses
Expenses are to pay for the operation of the system, interest
on debt, depreciation, and authorized transfers to other
funds that may occur from time to time.
Principal payments on bonds supported by the fund are
reported as a reduction of liability for the Fund.
Transfers
In 2021, the City transferred cash from the Sewer Fund in
the amount of $1,500,000 to pay a portion of the cost of
the new municipal facility project.
The City does not transfer cash from the fund to the General
Fund for overhead. Instead the City directly charges the
fund for administrative staff time.
Balance Sheet Items
The financial plan includes estimated assets and liabilities,
this includes estimated annual year-end cash balance.
SANITARY SEWER FUND
35
Financial Plans
Table L
Sanitary Sewer Fund
Pro FormaPrior Year
Actual
Prior Year
Actual20212022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
RevenuesCharges for services 539,130 671,474 767,375 843,721 1,014,461 1,126,749 1,223,316 1,352,833 1,468,932 1,590,871 1,688,292 1,790,364Investment income (7,335)(138,866)2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500Other revenues 10,437 26,819 ----------Availability charges 1,491,000 477,500 940,500 1,678,500 1,083,000 714,000 876,000 681,000 486,000 -345,000 690,000Capital assets contributions non-cash 1,476,603 1,272,767 ----------Intergovernmental revenue -544 ----------Special assessments 2,143,642 2,250,585 -----380,000 1,636,000 --1,000,000Connection charges 482,000 310,500 365,000 611,000 385,000 298,000 380,000 315,000 250,000 150,000 175,000 290,000Transfer in ---100,000 --------Total Revenues 6,135,477 4,871,323 2,075,375 3,235,721 2,484,961 2,141,249 2,481,816 2,731,333 3,843,432 1,743,371 2,210,792 3,772,864
Expenses
Personal services 135,765 211,488 226,973 239,828 252,782 260,366 268,177 276,222 284,509 293,044 301,835 310,890
Materials and supplies 16,062 26,354 30,621 31,540 32,486 33,460 34,464 35,498 36,563 37,660 38,790 39,953
Professional services 63,876 61,544 170,061 175,163 180,418 185,830 191,405 197,147 203,062 209,154 215,428 221,891
Repairs and maintenance 9,850 25,283 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
Utilities 19,630 26,466 18,750 19,313 19,892 20,489 21,103 21,736 22,388 23,060 23,752 24,464
Depreciation expense 880,861 960,729 968,457 978,184 983,184 983,184 1,005,684 1,015,184 1,056,084 1,056,084 1,056,084 1,081,084
Interest and fees on long-term debt 145,484 306,946 350,455 397,870 361,225 329,013 295,913 261,625 226,122 189,363 154,550 124,775
Transfer out to Capital Fund 1,500,000 -----------
Intergovernmental payments (MCES)265,011 421,859 526,216 644,326 720,528 788,960 858,392 940,433 1,024,573 1,115,757 1,206,410 1,304,436
Other expenses 26,469 31,189 ----------Cost of bond issuance ------------Total Expenses 3,063,008 2,071,858 2,301,533 2,496,523 2,561,124 2,612,229 2,686,393 2,759,438 2,865,242 2,936,420 3,009,517 3,120,542
Change in Net Position 3,072,469 2,799,465 (226,158)739,198 (76,162)(470,980)(204,577)(28,105)978,190 (1,193,049)(798,725)652,322Ending net position 22,460,630 25,260,095 25,033,937 25,773,135 25,696,973 25,225,992 25,021,416 24,993,311 25,971,501 24,778,452 23,979,727 24,632,049
AssetsCash and investments 10,067,392 11,464,351 11,747,655 12,867,506 12,835,316 12,541,154 11,609,703 11,354,223 10,859,936 9,800,162 9,151,110 8,979,538Special assessments receivable 3,672,068 5,054,729 4,785,342 4,529,505 4,276,005 4,064,659 3,854,506 3,644,353 3,434,200 3,225,280 3,030,324 2,835,368Other current assets / receivables 149,372 174,669 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000Due from other governmental units --457,199 ---------Capital assets 22,345,695 26,714,376 27,023,478 27,412,580 27,612,580 27,612,580 28,512,580 28,892,580 30,528,580 30,528,580 30,528,580 31,528,580Less Accumulated depreciation (3,322,887)(4,283,616)(5,252,073)(6,230,257)(7,213,441)(8,196,625)(9,202,309)(10,217,493)(11,273,577)(12,329,661)(13,385,745)(14,466,829)Deferred outflows 38,175 45,920 86,247 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Total Assets and Deferred Outflows 32,949,815 39,170,429 38,937,848 38,684,334 37,615,460 36,126,768 34,879,480 33,778,663 33,654,139 31,329,360 29,429,269 28,981,657
Liabilities
Other current liabilities / payables 236,780 566,880 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Bonds payable 9,760,000 12,665,000 13,255,000 12,305,000 11,355,000 10,380,000 9,380,000 8,350,000 7,290,000 6,200,000 5,140,000 4,080,000
Unamortized bond premium 385,942 542,623 499,911 457,199 414,488 371,776 329,064 286,352 243,638 201,908 160,542 120,607
Other non-current liabilities 58,046 133,291 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000
Deferred inflows 48,417 2,540 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000
Total Liabilities and Deferred Inflows 10,489,185 13,910,334 13,903,911 12,911,199 11,918,488 10,900,776 9,858,064 8,785,352 7,682,638 6,550,908 5,449,542 4,349,607
Total Liabilities, Deferred Inflows, and Net
Position
32,949,815 39,170,429 38,937,848 38,684,334 37,615,460 36,126,768 34,879,480 33,778,663 33,654,139 31,329,360 29,429,269 28,981,657
Projected
SANITARY SEWER FUND
36
Financial Plans
Table M
Sanitary Sewer Fund
Projected Year End Cash Balance
Current Year
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Use of Cash
Operations & Maintenance 982,621 1,120,469 1,216,715 1,300,032 1,384,796 1,482,629 1,583,036 1,690,973 1,798,883 1,914,683
Capital Acquisition 309,102 389,102 200,000 -900,000 380,000 1,636,000 --1,000,000
Interfund Transfers Out ----------
Debt Service (includes transfers for debt)1,265,455 1,347,870 1,311,225 1,304,013 1,295,913 1,291,625 1,286,122 1,279,363 1,214,550 1,184,775
Total Use of Cash 2,557,178 2,857,441 2,727,940 2,604,045 3,580,709 3,154,254 4,505,158 2,970,335 3,013,433 4,099,458
Source of Cash
Revenues 2,075,375 3,135,721 2,484,961 2,141,249 2,481,816 2,731,333 3,843,432 1,743,371 2,210,792 3,772,864Bond Proceeds 1,505,000 ---------Interfund Transfers In -100,000 --------Total Source of Cash 3,580,375 3,235,721 2,484,961 2,141,249 2,481,816 2,731,333 3,843,432 1,743,371 2,210,792 3,772,864
Net Change in Other Assets and Liabilities (739,893)741,571 210,788 168,634 167,441 167,441 167,438 167,190 153,590 155,021
Change in Cash Balance 283,304 1,119,851 (32,190)(294,162)(931,451)(255,480)(494,287)(1,059,774)(649,051)(171,572)
Beginning Cash Balance 11,464,351 11,747,655 12,867,506 12,835,316 12,541,154 11,609,703 11,354,223 10,859,936 9,800,162 9,151,110
Ending Cash 11,747,655 12,867,506 12,835,316 12,541,154 11,609,703 11,354,223 10,859,936 9,800,162 9,151,110 8,979,538
Ending Cash by Purpose
Cash for next year planned capital 389,102 200,000 -900,000 380,000 1,636,000 --1,000,000 -
Cash for next year debt service 1,347,870 1,311,225 1,304,013 1,295,913 1,291,625 1,286,122 1,279,363 1,214,550 1,184,775 1,127,838
Restricted availability charges 9,450,448 10,747,924 10,050,988 9,084,088 8,088,375 7,063,878 6,010,638 4,985,450 3,955,225 2,952,163
Unrestricted cash 560,235 608,357 1,480,316 1,261,154 1,849,703 1,368,223 3,569,936 3,600,162 3,011,110 4,899,538Ending Cash 11,747,655 12,867,506 12,835,316 12,541,154 11,609,703 11,354,223 10,859,936 9,800,162 9,151,110 8,979,538
Net Position
Ending Unrestricted Net Position 17,017,443 17,353,011 17,067,321 16,561,813 15,420,209 14,954,576 14,250,136 12,981,442 12,137,434 11,770,906
Projected
SANITARY SEWER FUND
37
Financial Plans
Changes in year end cash
balances are projected to
increase with collection and
use of future development
charges for infrastructure
projects. For purpose of the
Plan, availability charges are
shown as “restricted” for
purpose of payment of debt
service on bonds issued to
finance certain infrastructure
improvements to support
development. The plan
anticipates use of available
funds to pay for future capital
improvement projects with
cash on hand versus debt
issuance.
SANITARY SEWER FUND
$0
$2
$4
$6
$8
$10
$12
$14
2023202420252026202720282029203020312032MillionsChart 13
Sanitary Sewer Fund
Ending Cash by Purpose
Unrestricted cash
Cash for next year
planned capital
Restricted
availability charges
Cash for next year
debt service
0%
100%
200%
300%
400%
500%
600%
700%
800%
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2023202420252026202720282029203020312032Ending Unrestricted Net Position as % of ExpensesEnding Unrestricted Net PositionMillionsChart 14Sanitary Sewer FundEnding Unrestricted Net Position as % of Expense is projected to be above the minimum 50%
for the Plan
Ending Unrestricted Net Position
Ending Unrestricted Net Position as % of Expenses
38
Financial Plans
$0
$1
$1
$2
$2
$3
$3
$4
$4
$5
2023202420252026202720282029203020312032MillionsChart 15Sanitary Sewer FundRevenues and Expenses
Revenues fluctuate with timing of private development and collection of development related revenues including connection and availability charges and special assessments
Revenues Expenses
0
1,000
2,000
3,000
4,000
5,000
6,000
-
20,000
40,000
60,000
80,000
100,000
120,000
2023202420252026202720282029203020312032Total Customer Units (ERU)Volume Billed (1,000 Gal)Chart 16
Sanitary Sewer FundCustomers and Annual Volume Billed
Volume Billed Total Customer Units
39
Financial PlansSTORM SEWER FUND
Fund Description
The Storm Sewer Fund is used to account for the operating
and capital improvement costs of the storm sewer utility
system.
Background
The Storm Sewer Fund is in sound financial condition. The
City reports in its financial statements for years 2021 and
2022 net operating losses before other financing sources,
including contributions and transfers, among other
financing sources. The Plan projects that over the long-term
a new customers are added and outstanding debt is repaid,
that the City will begin to report net operating income.
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 sewer utility system. Build
out of the system has been paid as part of the developer’s
project costs.
The annual fee is currently $95.00 per utility rate factor
as determined by city code. This Plan assumes this rate
remains constant for the planning period (2024-2032).
Investment income earned on cash balance is recorded as
revenue. The plan conservatively assumes future revenue
from interest income earned at the amount budgeted for
year 2023.
Expenses
Expenses are to pay for the operation of the system, interest
and fiscal expense on debt, depreciation, and authorized
transfers to other funds that may occur from time to time.
STORM SEWER FUNDPrincipal payments on bonds supported by the Storm Sewer
Fund result in a reduction of liability for the Fund.
The financial plan for the Storm Sewer Fund shows an
increase in accumulated depreciation over time. The actual
accumulated depreciation amount will vary depending
on the City’s accounting for capital assets and future
depreciation.
Transfers
The financial plan does not anticipate any recurring transfers
in or out of funds from the Storm Sewer 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.
The finance plan includes a $100,000 transfer in year 2024
for the Storm Sewer Fund to pay a portion of a new Vac
Truck purchase.
Balance Sheet Items
The financial plan includes estimated assets and liabilities,
this includes estimated annual year-end cash balance.
40
Financial Plans
Table N
Storm Sewer Fund
Pro FormaPrior Year
Actual
Prior Year
Actual20212022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
RevenuesCharges for services 457,517 510,061 579,966 633,672 663,050 684,827 716,105 740,733 765,068 779,611 794,153 818,489Investment income (2,038)(15,423)4,400 4,400 4,400 4,400 4,400 4,400 4,400 4,400 4,400 4,400Other revenues 55,107 33,835 35,000 ---------Availability charge ------------Capital assets contributions non-cash 1,605,495 1,994,356 ----------Intergovernmental revenue ------------Special assessments 202 253 ----------Total Revenues 2,116,283 2,523,082 619,366 638,072 667,450 689,227 720,505 745,133 769,468 784,011 798,553 822,889
ExpensesPersonal services 67,497 118,674 112,148 121,558 125,012 128,763 132,626 136,604 140,703 144,924 149,271 153,750Materials and supplies 5,935 10,885 9,700 9,991 10,291 10,599 10,917 11,245 11,582 11,930 12,288 12,656Professional services 46,269 37,021 93,594 96,402 99,294 102,273 105,341 108,501 111,756 115,109 118,562 122,119Repairs and maintenance 42,031 35,370 27,500 28,325 29,175 30,050 30,951 31,880 32,836 33,822 34,836 35,881Utilities-572 ----------Depreciation expense 611,565 691,840 691,840 711,840 729,115 730,115 731,365 732,615 733,865 735,115 736,365 737,615Interest and fees on long-term debt 49,359 45,005 48,663 44,113 76,796 91,913 80,413 72,563 64,413 56,200 47,913 39,325Transfer out to Capital Fund ---100,000 --------Other expenses 7,388 13,432 1,500 ---------Cost of bond issuance ---15,000 10,000 -------Total Expenses 830,044 952,799 984,945 1,127,229 1,079,683 1,093,712 1,091,613 1,093,408 1,095,155 1,097,099 1,099,235 1,101,346
Change in Net Position 1,286,239 1,570,283 (365,578)(489,157)(412,233)(404,485)(371,108)(348,275)(325,687)(313,088)(300,682)(278,458)Ending net position 11,196,988 12,767,271 12,401,693 11,912,536 11,500,303 11,095,817 10,724,710 10,376,434 10,050,748 9,737,659 9,436,978 9,158,520
AssetsCash and investments 1,061,782 1,256,301 1,401,064 1,418,009 1,368,153 1,358,044 1,362,564 1,386,165 1,418,606 1,459,894 1,509,837 1,577,857Cash and investments held in escrow ------------Special assessments receivable 41,374 33,460 ----------Other current assets / receivables 420,563 307,271 310,000 310,000 310,000 310,000 310,000 310,000 310,000 310,000 310,000 310,000Due from other governmental units ------------Capital assets 14,128,874 16,123,229 16,123,229 16,923,229 17,614,229 17,654,229 17,704,229 17,754,229 17,804,229 17,854,229 17,904,229 17,954,229Less Accumulated depreciation (1,722,423)(2,414,262)(3,106,102)(3,817,942)(4,547,057)(5,277,172)(6,008,537)(6,741,152)(7,475,017)(8,210,132)(8,946,497)(9,684,112)Deferred outflows 21,187 26,010 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000Total Assets and Deferred Outflows 13,951,357 15,332,009 14,753,191 14,858,296 14,770,325 14,070,101 13,393,256 12,734,242 12,082,818 11,438,991 10,802,569 10,182,974
LiabilitiesOther current liabilities / payables 29,523 32,999 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000Bonds payable 2,605,000 2,400,000 2,190,000 2,790,000 3,120,000 2,830,000 2,530,000 2,225,000 1,905,000 1,580,000 1,250,000 910,000Unamortized bond premium 60,974 55,236 49,498 43,760 38,022 32,284 26,546 20,808 15,070 9,332 3,591 2,454Other non-current liabilities 32,001 75,071 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000Unearned revenues ------------Deferred inflows 26,871 1,432 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000Total Liabilities and Deferred Inflows 2,754,369 2,564,738 2,351,498 2,945,760 3,270,022 2,974,284 2,668,546 2,357,808 2,032,070 1,701,332 1,365,591 1,024,454Total Liabilities, Deferred Inflows, and Net Position 13,951,357 15,332,009 14,753,191 14,858,296 14,770,325 14,070,101 13,393,256 12,734,242 12,082,818 11,438,991 10,802,569 10,182,974
Projected
STORM SEWER FUND
41
Financial Plans
Table O
Storm Sewer Fund
Projected Year End Cash Balance
Current Year
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Use of Cash
Operations & Maintenance 244,442 256,276 263,772 271,685 279,835 288,231 296,877 305,784 314,957 324,406Capital Acquisition -815,000 701,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000Interfund Transfers Out -100,000 --------
Debt Service (includes transfers for debt)258,663 259,113 331,796 381,913 380,413 377,563 384,413 381,200 377,913 379,325
Total Use of Cash 503,105 1,430,389 1,296,568 693,597 710,248 715,793 731,290 736,984 742,870 753,731
Source of Cash
Revenues 619,366 638,072 667,450 689,227 720,505 745,133 769,468 784,011 798,553 822,889
Bond Proceeds -815,000 585,000 -------
Interfund Transfers In ----------Total Source of Cash 619,366 1,453,072 1,252,450 689,227 720,505 745,133 769,468 784,011 798,553 822,889
Net Change in Other Assets and Liabilities 28,501 (5,738)(5,738)(5,738)(5,738)(5,738)(5,738)(5,738)(5,741)(1,137)
Change in Cash Balance 144,763 16,945 (49,856)(10,108)4,519 23,602 32,440 41,289 49,942 68,020
Beginning Cash Balance 1,256,301 1,401,064 1,418,009 1,368,153 1,358,044 1,362,564 1,386,165 1,418,606 1,459,894 1,509,837
Ending Cash 1,401,064 1,418,009 1,368,153 1,358,044 1,362,564 1,386,165 1,418,606 1,459,894 1,509,837 1,577,857
Ending Cash by Purpose
Cash for next year planned capital -116,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000Cash for next year debt service 259,113 331,796 381,913 380,413 377,563 384,413 381,200 377,913 379,325 172,513Restricted availability charges 1,013,813 838,327 810,398 787,714 790,886 803,314 834,514 874,503 870,675 737,488Unrestricted cash 128,138 131,886 135,842 139,918 144,115 148,439 152,892 157,479 209,837 617,857
Ending Cash 1,401,064 1,418,009 1,368,153 1,358,044 1,362,564 1,386,165 1,418,606 1,459,894 1,509,837 1,577,857
Net Position
Ending Unrestricted Net Position 1,574,566 1,597,249 1,553,131 1,548,760 1,559,018 1,588,357 1,626,536 1,673,562 1,729,246 1,798,403
Projected
STORM SEWER FUND
42
Financial Plans
Year end cash balances are
projected to increase with
collection of charges for
connection and availability
(City SAC) to pay for future
infrastructure projects.
STORM SEWER FUND
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
2023202420252026202720282029203020312032MillionsChart 17
Storm Sewer FundEnding Cash by Purpose
Unrestricted cash
Cash for next year
planned capital
Restrictedavailability charges
Cash for next year
debt service
125%
130%
135%
140%
145%
150%
155%
160%
165%
$1.4
$1.5
$1.5
$1.6
$1.6
$1.7
$1.7
$1.8
$1.8
$1.9
2023202420252026202720282029203020312032Ending Unrestricted Net Position as % of ExpensesEnding Unrestricted Net PositionMillionsChart 18Storm Sewer FundEnding Unrestricted Net Position as % of Expense is projected to be above the minimum 50%
for the Plan
Ending Unrestricted Net Position
Ending Unrestricted Net Position as % of Expenses
43
Financial Plans
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
2023202420252026202720282029203020312032MillionsChart 19Storm Sewer FundRevenues and Expenses
Expense, inclusive of depreciation, is planned to exceed revenues as the City draws on available cash to pay interest expense on bonds outstanding and relies on private development
to finance future improvements
Revenues Expenses
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2023202420252026202720282029203020312032Equivalent Residential UnitsChart 20Storm Sewer FundTotal Customer (Equivalent Residential Unit) Billed Annually
44
Appendices
APPENDICES TO THE REPORT
45
Appendices
APPENDIX A
Example Quarterly Utility Fees Payable by Property Types TOTAL DOLLAR AMOUNT
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Low Volume Example, 6,000 gallons billed
Residential Customer
Water Bill 34.27 34.60 34.94 35.73 36.80 37.90 39.04 40.21 41.42 42.87 44.37 45.92
Sanitary Sewer Bill 54.64 55.19 55.74 55.74 57.41 59.13 60.91 62.74 64.62 66.56 68.55 70.61Storm Sewer Bill 18.75 21.25 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75
Total 107.66 111.04 114.43 115.22 117.96 120.79 123.70 126.70 129.78 133.17 136.67 140.28
% Change 3.1%3.1%0.7%2.4%2.4%2.4%2.4%2.4%2.6%2.6%2.6%
Commercial Customer
Water Bill 3.49 3.52 3.56 3.63 3.74 3.85 3.97 4.09 4.21 4.36 4.51 4.67
Sanitary Sewer Bill 4.70 4.75 4.80 4.99 5.19 5.40 5.62 5.84 6.07 6.32 6.57 6.83
Storm Sewer Bill 57.75 65.45 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15Total65.94 73.72 81.51 81.77 82.08 82.40 82.73 83.08 83.43 83.82 84.23 84.65
% Change 11.8%10.6%0.3%0.4%0.4%0.4%0.4%0.4%0.5%0.5%0.5%
Medium Volume Example, 20,000 gallons billed
Residential CustomerWater Bill 66.38 67.04 67.71 68.96 71.02 73.16 75.35 77.61 79.94 82.74 85.63 88.63
Sanitary Sewer Bill 101.64 102.69 103.74 105.66 109.33 113.13 117.06 121.14 125.35 129.72 134.24 138.93
Storm Sewer Bill 18.75 21.25 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75
Total 186.77 190.98 195.20 198.37 204.10 210.03 216.16 222.50 229.04 236.21 243.63 251.31
% Change 2.3%2.2%1.6%2.9%2.9%2.9%2.9%2.9%3.1%3.1%3.2%
Commercial Customer
Water Bill 94.19 95.06 95.98 97.66 100.59 103.61 106.72 109.92 113.22 117.18 121.28 125.53Sanitary Sewer Bill 47.00 47.50 48.00 49.92 51.92 53.99 56.15 58.40 60.74 63.16 65.69 68.32
Storm Sewer Bill 57.75 65.45 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15
Total 198.94 208.01 217.13 220.73 225.66 230.76 236.02 241.47 247.11 253.50 260.13 267.00% Change 4.6%4.4%1.7%2.2%2.3%2.3%2.3%2.3%2.6%2.6%2.6%
High Volume Example, 107,000 gallons billed
Residential Customer
Water Bill 365.35 369.19 373.04 399.56 411.55 423.90 436.62 449.71 463.21 479.42 496.20 513.56
Sanitary Sewer Bill 510.54 515.94 521.34 539.96 561.01 582.87 605.59 629.21 653.75 679.25 705.76 733.30
Storm Sewer Bill 18.75 21.25 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75 23.75Total894.64 906.38 918.13 963.28 996.31 1,030.52 1,065.96 1,102.67 1,140.71 1,182.42 1,225.71 1,270.62
% Change 1.3%1.3%4.9%3.4%3.4%3.4%3.4%3.4%3.7%3.7%3.7%
Commercial Customer
Water Bill 515.41 520.23 525.20 562.84 579.72 597.12 615.03 633.48 652.48 675.32 698.96 723.42
Sanitary Sewer Bill 455.90 460.75 465.60 484.22 503.59 523.74 544.69 566.47 589.13 612.70 637.21 662.69
Storm Sewer Bill 57.75 65.45 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15 73.15
Total 1,029.06 1,046.43 1,063.95 1,120.21 1,156.47 1,194.00 1,232.86 1,273.10 1,314.77 1,361.17 1,409.31 1,459.26% Change 1.7%1.7%5.3%3.2%3.2%3.3%3.3%3.3%3.5%3.5%3.5%
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).
46
Appendices
APPENDIX A-1
Example Quarterly Utility Fees Payable by Property Types ANNUAL PERCENT CHANGE
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Low Volume Example, 6,000 gallons billed
Residential Customer
Water Bill 1.0%1.0%2.3%3.0%3.0%3.0%3.0%3.0%3.5%3.5%3.5%
Sanitary Sewer Bill 1.0%1.0%0.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%Storm Sewer Bill 13.3%11.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Total 3.1%3.1%0.7%2.4%2.4%2.4%2.4%2.4%2.6%2.6%2.6%
% Change
Commercial Customer
Water Bill 0.9%1.1%2.0%3.0%3.0%3.0%3.0%3.0%3.5%3.5%3.5%
Sanitary Sewer Bill 1.1%1.1%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%
Storm Sewer Bill 13.3%11.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Total 11.8%10.6%0.3%0.4%0.4%0.4%0.4%0.4%0.5%0.5%0.5%
% Change
Medium Volume Example, 20,000 gallons billed
Residential CustomerWater Bill 1.0%1.0%1.8%3.0%3.0%3.0%3.0%3.0%3.5%3.5%3.5%
Sanitary Sewer Bill 1.0%1.0%1.9%3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%
Storm Sewer Bill 13.3%11.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Total 2.3%2.2%1.6%2.9%2.9%2.9%2.9%2.9%3.1%3.1%3.2%
% Change
Commercial Customer
Water Bill 0.9%1.0%1.8%3.0%3.0%3.0%3.0%3.0%3.5%3.5%3.5%Sanitary Sewer Bill 1.1%1.1%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%
Storm Sewer Bill 13.3%11.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Total 4.6%4.4%1.7%2.2%2.3%2.3%2.3%2.3%2.6%2.6%2.6%% Change
High Volume Example, 107,000 gallons billed
Residential Customer
Water Bill 1.1%1.0%7.1%3.0%3.0%3.0%3.0%3.0%3.5%3.5%3.5%
Sanitary Sewer Bill 1.1%1.0%3.6%3.9%3.9%3.9%3.9%3.9%3.9%3.9%3.9%
Storm Sewer Bill 13.3%11.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Total 1.3%1.3%4.9%3.4%3.4%3.4%3.4%3.4%3.7%3.7%3.7%
% Change
Commercial Customer
Water Bill 0.9%1.0%7.2%3.0%3.0%3.0%3.0%3.0%3.5%3.5%3.5%
Sanitary Sewer Bill 1.1%1.1%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%
Storm Sewer Bill 13.3%11.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Total 1.7%1.7%5.3%3.2%3.2%3.3%3.3%3.3%3.5%3.5%3.5%% Change
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).
47
Appendices
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Qtr 1 - 2023Qtr 2 - 2023Qtr 3 - 2023Qtr 4 - 2023Qtr 1 - 2024Qtr 2 - 2024Qtr 3 - 2024Qtr 4 - 2024Qtr 1 - 2025Qtr 2 - 2025Qtr 3 - 2025Qtr 4 - 2025Qtr 1 - 2026Qtr 2 - 2026Qtr 3 - 2026Qtr 4 - 2026Qtr 1 - 2027Qtr 2 - 2027Qtr 3 - 2027Qtr 4 - 2027Appendix B
Low Volume Residential Customer Quarterly Water Bill
Volume by Quarter: Qtr 1 Vol = 4,000 gallons; Qtr 2 = 5,000 gallons; Qtr 3 = 9,000 gallons; Qtr
4 = 6,000 gallons
Low Volume Customer - Scenario A Low Volume Customer - Scenario B
Scenario A = Current year 2023 adopted fee schedule adjusted by 3.0% annually between years 2024-2032.
Scenario B = Year 2024 proposed fee schedule to provide 1-2% increase for Tier 1 and Tier 2, and then higher (5-15%) adjustments for Tier 3
through Tier 5. After year 2024, then 3.0% annually.
Customers with lower volume of
water usage are estimated to pay
slightly less in 2024 for quarterly water
bills under the proposed changes to
the fees by tier rate for water usage
compared to if the City were to
increase all water fees by 3.0% from
2023 to 2024.
48
Appendices
$0
$20
$40
$60
$80
$100
$120
$140
Qtr 1 - 2023Qtr 2 - 2023Qtr 3 - 2023Qtr 4 - 2023Qtr 1 - 2024Qtr 2 - 2024Qtr 3 - 2024Qtr 4 - 2024Qtr 1 - 2025Qtr 2 - 2025Qtr 3 - 2025Qtr 4 - 2025Qtr 1 - 2026Qtr 2 - 2026Qtr 3 - 2026Qtr 4 - 2026Qtr 1 - 2027Qtr 2 - 2027Qtr 3 - 2027Qtr 4 - 2027Appendix C
Medium Volume Residential Customer Quarterly Water Bill
Volume by Quarter: Qtr 1 Vol = 13,000 gallons; Qtr 2 = 18,000 gallons; Qtr 3 = 37,000 gallons;
Qtr 4 = 12,000 gallons
Med Volume Customer - Scenario A Med Volume Customer - Scenario B
Scenario A = Current year 2023 adopted fee schedule adjusted by 3.0% annually between years 2024-2032.
Scenario B = Year 2024 proposed fee schedule to provide 1-2% increase for Tier 1 and Tier 2, and then higher (5-15%) adjustments for Tier 3
through Tier 5. After year 2024, then 3.0% annually.
Customers with medium volume of
water usage are estimated to pay
nearly the same amount in 2024
for quarterly water bills under the
proposed changes to the fees by tier
rate for water usage compared to if
the City were to increase all water fees
by 3.0% from 2023 to 2024.
49
Appendices
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Qtr 1 - 2023Qtr 2 - 2023Qtr 3 - 2023Qtr 4 - 2023Qtr 1 - 2024Qtr 2 - 2024Qtr 3 - 2024Qtr 4 - 2024Qtr 1 - 2025Qtr 2 - 2025Qtr 3 - 2025Qtr 4 - 2025Qtr 1 - 2026Qtr 2 - 2026Qtr 3 - 2026Qtr 4 - 2026Qtr 1 - 2027Qtr 2 - 2027Qtr 3 - 2027Qtr 4 - 2027Appendix D
High Volume Residential Customer Quarterly Water Bill
Volume by Quarter: Qtr 1 24,000; Qtr 2 = 117,000 gallons; Qtr 3 = 248,000 gallons; Qtr 4 =
40,000 gallons
High Volume Customer - Scenario A High Volume Customer - Scenario B
Scenario A = Current year 2023 adopted fee schedule adjusted by 3.0% annually between years 2024-2032.
Scenario B = Year 2024 proposed fee schedule to provide 1-2% increase for Tier 1 and Tier 2, and then higher (5-15%) adjustments for Tier 3 through Tier 5. After year 2024, then 3.0% annually.
Customers with high volume of water
usage are estimated to pay more in
2024 for quarterly water bills, in the
quarters with higher water volume,
under the proposed changes to
the fees by tier rate for water usage
compared to if the City were to
increase all water fees by 3.0% from
2023 to 2024.
50
Appendices
Appendix E
$0$10$20$30$40$50$60$70Woodbury
Rosemount
Farmington
Hugo
Oakdale
Lake Elmo
Lake Elmo Year 2024
Stillwater
Chaska
Prior Lake
Victoria
Ramsey
Minnetonka
Carver
Corcoran
2,000 Gallons Monthly Volume - Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles. For comparison billing is shown as monthly equivalent bills.
Water Sewer Stormwater
“Lake Elmo Year 2024” includes the
proposed changes to the fees by tier
for billing water volume, among other
proposed fee changes included in the
Plan.
The amounts shown for the other
cities is an estimated amount based
on interpretation of a city’s current
published fee schedule. While it is
believed the interpretation of the
various cities fees is correct, it is
possible that the calculated amounts
are not correct.
51
Appendices
Appendix F
$0$20$40$60$80$100$120$140Woodbury
Farmington
Hugo
Stillwater
Oakdale
Lake Elmo
Lake Elmo Year 2024
Ramsey
Rosemount
Victoria
Prior Lake
Minnetonka
Chaska
Corcoran
Carver
7,000 Gallons Monthly Volume - Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles. For comparison billing is shown as monthly equivalent bills.
Water Sewer Stormwater
“Lake Elmo Year 2024” includes the
proposed changes to the fees by tier
for billing water volume, among other
proposed fee changes included in the
Plan.
The amounts shown for the other
cities is an estimated amount based
on interpretation of a city’s current
published fee schedule. While it is
believed the interpretation of the
various cities fees is correct, it is
possible that the calculated amounts
are not correct.
52
Appendices
Appendix G
$0$100$200$300$400$500$600$700Stillwater
Ramsey
Oakdale
Hugo
Woodbury
Lake Elmo
Farmington
Corcoran
Lake Elmo Year 2024
Victoria
Rosemount
Minnetonka
Chaska
Prior Lake
Carver
35,000 Gallons Monthly Volume - Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles. For comparison billing is shown as monthly equivalent bills.
Water Sewer Stormwater
“Lake Elmo Year 2024” includes the
proposed changes to the fees by tier
for billing water volume, among other
proposed fee changes included in the
Plan.
The amounts shown for the other
cities is an estimated amount based
on interpretation of a city’s current
published fee schedule. While it is
believed the interpretation of the
various cities fees is correct, it is
possible that the calculated amounts
are not correct.
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