09.02 - Utility Rate Study Proposals

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Springsted MEMORANDUM TO: Mr. Larry Burks, City Administrator FROM: Patty Kettles, Vice President DATE: November 23, 2010 SUBJECT: Water Utility Rate Study Springsted Incorporated 300 Walnut Street, Suite 215 Des Moines, IA 50309 -2258 Tel: 319 -752 -7755 Fax: 319 - 752 -7805 www.springsted.com The purpose of this memorandum is to provide you with the outcome of our review and analysis of the City's Water Utility Fund to determine the appropriate rate structure and other revenue sources needed for its operation. The rate structure and other revenue sources must provide sufficient revenue to cover anticipated operating and maintenance expenses, debt service including principal and interest, utility extensions and improvements, plant replacement, and to provide adequate cash reserves. The total revenue collected should reflect not only recent cost experience, but should recognize anticipated future costs during the period for which rates are being established. Our analysis is based on information provided by the City including the following: ➢ Historical revenues, expenditures and cash position of the fund ➢ Anticipated capital expenditures for the fund and anticipated financing sources ➢ Current rates and charges for water services ➢ Input received from City representatives during three different WebEx meetings Proiected Water Capital Expenditures, The Water Utility projections incorporate $3,099,453 of anticipated capital expenditures through 2021, with a significant water treatment plant improvement in 2011. The annual capital expenditures include: 2011 2011 -2015 2016 -2021 Total P ent Water treatment plant upgrades Miscellaneous water improvements Miscellaneous water improvements .;Ambu ce. - $2,100,000 State Loan /Grant $497,800 Rates $501,653 Rates $3,099,453 Public Sector Advisors V OK