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Plant the assumptions for the Sanitary Sewer operation. Other Capital Averages$66,800 per year in 2007 Averages almost$129,400 per year Improvements dollars, for water system in today's dollars. Includes trunk improvements,and capital lines,the waste water treatment plant purchases. and capital equipment. Costs are inflated 3%annually. Costs are inflated 3%annually. The The total in today's dollars for 2008 total in 2007 dollars from 2008 through 2023 is$1,068,500 through 2023 is$2,069,500 Allocation of Capital improvements needed to Capital improvements needed to Capital finance water system improvements expand the waste water treatment Expenses are paid by a combination of hook- plant are paid by a combination of Between up fees and user fees. Capital hook-up fees and user fees. equipment and maintenance of the Current and Capital equipment and maintenance Future Users existing system is paid by user of the existing system is paid by user charges. charges. After deducting the credit for the After deducting the credit for the developer,as described in#2 of the developer, as described in#2 of the Findings section below, Findings section below, approximately$88,000 in hook up approximately$523,000 in hook up fees are available to pay for fees are available to pay for $860,000 of costs of improvements $1,865,000 of costs of improvements to the water distribution system, to the sanitary sewer system,which which includes the improvements to includes the improvements to the the Industrial Park. Industrial Park and the waste water The study includes a special treatment facility. assessment component for the The study includes a special Industrial Park,which is consistent assessment component for the with the financing for phase I of the Industrial Park,which is consistent Park. with the financing for phase I of the Park. See Exhibit C for the proposed See Exhibit C for the proposed schedule of capital projects schedule of capital projects Operating Expenses increase 5%annually. Expenses increase 5%annually. Expenses Depreciation was revised to reflect Depreciation was revised to reflect a a longer life than is currently being longer life than is currently being used to calculate the expense based used to calculate the expense based on recommendations the City has on recommendations the City has received from its auditors. received from its auditors.. Water Utility and Sanitary Sewer Utility Funding Ideally,a City would fully fund depreciation.in its utility.funds._However, 3060 Centre Pointe Drive (651)697-8500 Fax:(651)697-8555 Roseville,MN 55113-1105 http://www.ehlers-inc.com 2