2021.11.08 WS Packet - Laserfiche WebLink

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Agenda Section: Worksession IT NEW Report Date: November 3, 2021 j 1 Council Worksession Date: November 9, 2021 111 BRIG HT4N building tomorrow today REQUEST FOR COUNCIL CONSIDERATION ITEM DESCRIPTION: REVIEW OF THE 2022-2041 UTILITY RATE ANALYSIS DEPARTMENT HEAD'S APPROVAL: Gina Foschi GtlF CITY MANAGER'S APPROVAL: Devin Massopust No comments to supplement this report V\ Comments attached Recommendation: Review the 2022-2041 Utility Rate Analysis Legislative History: An analysis of the City's water, sewer, stormwater and street light enterprise operations and their respective capital improvement plans has been completed. The focus of the analysis is to ensure the determination of revenues, expenses and net income is appropriate for operations, capital maintenance and replacement. Financial Impact: The City's water, sewer, stormwater and streetlight enterprise operations are each accounted for in their own separate and distinct fund. Each fund/operation has been established to be financially independent. The revenues of each fund are designed to cover its operating costs, capital maintenance and replacement. Rates are adjusted in accordance with costs. The rate setting process is intended to provide for gradual annual adjustments whenever possible, focusing on the long-term strategy. Each year assumptions are reviewed and adjusted, as necessary. The long-term plan then reflects the most current assumptions and financial conditions. Explanation: The financial model has been updated with the recommended 2022 budgets for the Water, Sewer, Stormwater, and Streetlight Funds, as well as the projected results for 2021. Some of the more significant assumptions include: > Attempts have been made to finance future capital improvement projects with internal loans, which help to keep utility rates low and steady. Internal loans from the Community Reinvestment Fund are needed in the following utilities: ➢ Water- $650,000 in 2024 and $750,000 in 2034 ➢ Storm - $400,000 in 2022, $500,000 in 2023, $800,000 in 2024, $400,000 in 2025, $700,000 in 2030, and $700,000 in 2033 > Streetlights- $400,000 in 2023, and $200,000 in 2025 ➢ The intent of the long-term financial plan for each utility operation is to finish each fiscal year with at least 3 months cash reserves of the current year's operating expenses but not more than 12 months cash reserves of the subsequent year's operating expenses. > Operating costs have been projected to increase by about 3% annually. ➢ The annual cash flows for Water Improvements, Sewer Improvements, Stormwater, and Street Light Improvements have been projected to determine adequate cash is available to finance each of their specific improvement projects when needed.