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• TO: Mayor & Council <br /> 0 FROM: Don Brager, Finance Director-Treasurer <br /> DATE: April 10, 1990 <br /> SUBJECT: DESIGNATIONS OF RETAINED EARNINGS OF THE WATER AND <br /> SEWER FUND <br /> The Water and Sewer Systems Maintenance and Capital Improvements <br /> Program provides a multi-year program of maintenance activities <br /> and capital improvements. Costs of each year's projects vary <br /> greatly. To minimize the impact on annual budgets, the Program <br /> provides for the following approach to finance these projects: <br /> 1) An annual maintenance allowance is budgeted in the Water <br /> and Sewer Funds <br /> 2) Any unused portion of the budgeted maintenance allowance <br /> is designated as a Reserve for Future Maintenance and <br /> Capital Improvement Projects <br /> 3) When projects exceed the annual maintenance allowance, <br /> money from the reserve is used to finance the project <br /> • During 1988 and 1989, Water Fund maintenance activities used only <br /> $11,697 of the maintenance allowance of $89,416 budgeted leaving <br /> an unexpended balance of $77,719 . Resolution No. 3027 designates <br /> Water Fund retained earnings of $77,719 as a Reserve For Future <br /> Maintenance and Capital Improvement Projects. The total amount <br /> in the Reserve after this designation will be $135,559. <br /> During 1988 and 1989 none of the Sewer Fund budgeted maintenance <br /> allowance of $66,374 was used for projects . Resolution No. 3026 <br /> designates Sewer Fund retained earnings of $66,374 as a Reserve <br /> For Future Maintenance and Capital Improvement Projects. The <br /> total amount in the Reserve after this designation will be <br /> $193,523. <br /> Water and sewer main breaks can be very costly depending upon the <br /> nature of the break and the depth and location of the main. To <br /> minimize the impact of a break upon the annual budget a Reserve <br /> For Water Main Breaks was established in the Water Fund and a <br /> Reserve For Sewer Main Breaks was established in the Sewer Fund. <br /> These Reserves are funded by designating the unused portion of <br /> each year's budgeted Contingency. <br /> Unused Contingency for 1988 and 1989 total $24,823 for the Water <br /> Fund and $27,408 for the Sewer Fund. Resolution No. 3025 <br /> designates these amounts as a Reserve For Main Breaks. After <br /> these designations the Water Fund's Reserve For Main Breaks will <br /> • <br /> total $97,261 and the Sewer Fund's Reserve will total $74,851. <br />