10.02 2017 Capital Improvements/Utility Rate Analysis Report

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 Over the long term, the tax rate will slightly DECREASE: In 2018, the City will see a slight increase in the tax rate due to the 2017 GO Equipment Certificate. Otherwise the rate slightly decreases in future years as debt is paid off. We anticipate no significant increase LGA.  Current Water and Sewer Rates are adequate: Without the addition of new projects and purchases the model is projecting that Water and Sewer Fund reserves will begin to grow without any adjustment. However, future projects and State mandated conservation rates will require changes which we will discuss later in this report.  Long term impact on residents expected to remain stable: Due to the projected lower tax rate and adequate structure of current water and sewer rates, the long-term increases on residents (assuming no new projects or purchases are added) would be expected to remain stable if no new projects or large purchases are added. Again, the City intends to contemplate a variety of new projects and purchases which we’ll address later in the report, but this part of the analysis is designed to see where the City is headed without those items. SCENARIO TWO: Future Condition – Add New Projects and Purchases (See tab 3 for associated exhibits) This plan includes nearly $10 million (present value) in new spending over the next fifteen years. Please refer to the “Projects, Debt & Revenue Allocation Worksheet” under Tab 3 “New Projects Added” for details on upcoming projects. The worksheet is summarized as follows: 2017 In 2017, the City plans to fund the purchase of a plow truck from cash reserves. 2018 The plan calls for several projects to be funded: 1. A new maintenance facility and a Street Quadrant/County Road 112 project funded fully with an interfund loan from Fund 402 (original funding coming from the County payment to the City for road turn-backs). However, the City plans to repay the upfront contribution to these projects (via an annual levy) to rebuild the funds prior to the 2032 Patriot Avenue project. 2. Trailside Park – Phase 1. The City anticipates general obligation debt for the project, with tax levies identified as the primary source of repayment on the debt obligation. The project is offset by park donations of $265,000. 3. East Sibley Street near Trailside Park - The City anticipates bonding for street and utility work adjacent to the Trailside park project. Water, sewer, and tax levies are pledged to the repayment on the debt. 2019 The City has identified the purchase of equipment, along with a street and utility project. Specifically: 1. The plan identifies the purchase of a front-end loader and a fire truck. Both issued using general obligation debt. The equipment is estimated at $225,000 and $230,000, respectively. Tax levies are the primary source of repayment for the equipment debt. 2. Myers Road and Sluetter Road will be improved in 2019. The $500,000 estimated project will be financed through general obligation debt. Currently, we dedicate water, sewer, and tax levies to the repayment of the debt.