Agenda Packets - 1996/12/02 - Laserfiche WebLink

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L. CITY OF MOUNDS VIEW UTILITY RATE STUDY Page 1 of 2 • Summary of Significant Projection Assumptions Ask Note 1-REPORT FORMATS AND SOURCE OF PROJECTION DATA • The following is a list of significant projection assumptions provided by the staff of the City of Mounds View which were used to assemble the projected balance sheets,statements of revenue,expenses and changes in retained earnings and statements of cash flow for the periods of 1996 through 2000. The projected financial statements are listed in the table of contents beginning with Schedule 7. The financial projections were assembled to assist the City in determining current and future water and sewer utility rates. Historical balance sheets,statements of revenue expenses and changes in retained earnings and statements of cash flow are presented in Schedules 1 through 6. These historical statements were extracted from the comprehensive annual financial reports of the City of Mounds View for the years 1991 through 1994. The 1995 presentation is based on annualized November 30, 1995 information obtained by City staff The historical financial statements are presented in formats consistent with the comprehensive annual financial reports of the City of Mounds View. These reports were prepared in conformance with generally accepted governmental accounting standards. As more fully described in the notes to the comprehensive annual financial report of the City of Mounds View. The projected statements were prepared on a basis consistent with the published comprehensive annual financial report of the City of Mounds View. Note 2-OPERATING REVENUE Projected financial statements included projections of operating revenue based on an increase in the rates for water of 6% for 1996 through 2000 and for sewer 4%,5%,5.5%,6%and 6.5%for 1996 through 2000,respectively. In .addition,water revenue is expected to increase by$31,500 from the installation of an automatic phone reading system. Note 3-DEPRECIATION EXPENSE Depreciation on assets which have been funded by enterprise revenues(Le. "purchased assets")have been projected based on existing depreciation schedules plus assumed increases as provided by City staff. Depreciation on contributed assets have been projected based on existing depreciation schedules. These amounts represent depreciation on assets which were not purchased by the enterprise fund revenues but rather were contributed to the enterprise fund primarily through the special assessment process. Depreciation on contributed assets does not affect operations of the City but rather reduces the net contributions to the water and sewer enterprise funds. A summary of the various useful lives as established by the City of Mounds View are as follows: Depreciable Lives Purchased Assets: Water 3-20 years Sewer 3-15 years Contributed Assets: Water 30-50 years Sewer 30-50 years Note 4-OPERATING EXPENSES • •Operating expenses have been projected to increase at a rate of 3%per year for personnel services,contractual services and other routine expenses. The Metropolitan Council Wastewater Services(MCWS)contractual expenses were projected to increase at an annual rate of 7%per year based on the average percent increases from 1991 through 1995. Administrative charges paid to the City's general fund were projected to increase at a rate of 5%per year.