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I <br /> City of Mounds View <br /> Utility Rate Study <br /> Page 10 <br /> Reserves and Capital Replacement Policies(continued) • <br /> The following schedule has been prepared to illustrate the composition of the total retained <br /> earning of the City's water and sewer funds as of December 31, 1994: <br /> IWater Sewer <br /> Cash and investments S 1,485,075 $817,550 <br /> Cash with escrow agent 2,113,034 - <br /> Receivables and prepaids 145,822 321,431 <br /> Property and equipment-net 4,200,131 1,038,484 <br /> Accumulated depreciation (285,200) (190,895) <br /> Liabilities <br /> (200,880) (81,732) <br /> Bonds payable (5,105,000) <br /> Total retained earnings $2,352,982 51,904,838 <br /> f <br /> In summary, user rates must be sufficient to cover operating expenses plus meet the additional <br /> financial commitments of the City's water and sewer enterprise funds. These additional financial <br /> commitments are as follows: <br /> 1. Capital outlay and/or depreciation for the no�ystem fixed assets(i.e., machineryand • <br /> equipment). <br /> 2. Futurestem improvements <br /> sy to be financed directly from user rates(if any). <br /> 3. Debt payments(principal and interest)for a portion of the City's revenue bond issues <br /> which are used to finance portions of the City's water and sanitary sewer systems (i.e., <br /> water towers, wells, pumphouses, sanitary sewer interceptors and lift stations, and water <br /> and sewer overpass). <br /> 4. Reserve balances for the water and sewer enterprise funds at sufficient levels to meet <br /> current and future City policy. <br /> Definition of an"adequate"balance can only be determined through a more thorough study and <br /> by an understanding of the City Council's preference in dealing with the various areas discussed <br /> above. <br />