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Other Capital A new well and raw water supply lines will be completed in 2007. The water <br /> Improvements tower is anticipated to be constructed in 2008. We have assumed that the City <br /> will finance all of these improvements in 2007 with a general obligation <br /> revenue bond with a term of 15 years. <br /> One additional well is planned for 2009, and will be paid for with cash out of <br /> the water connection fund. <br /> Costs are inflated 4%annually. <br /> See Attachment B: Capital Improvement Plan <br /> Allocation of The City continues to have the goal of making new and future residents pay for <br /> Capital the infrastructure the City constructs to serve them. Accordingly, the costs of <br /> Expenses major capital improvements have been allocated between connection fees,paid <br /> Between solely by future users, and user charges that are collected from both current <br /> Current and and future customers. <br /> Future Users The debt service for the 2005 treatment plant is allocated: <br /> ■ 40%connection fees <br /> ■ 60%user charges <br /> The debt service for the 2007 well and water tower is allocated: <br /> ■ 80%connection fees <br /> ■ 20%user charges <br /> The construction of future wells needed to serve new development, will be <br /> paid by connection fees. <br /> The treatment plant expansion in 2015 is allocated: <br /> ■ 65%connection fees <br /> ■ 35%user charges <br /> Maintenance and operations of the existing system is paid by current <br /> customers through user charges. <br /> Operating Operating expenses are expected to increase $125,000 in 2007 when the new <br /> Expenses treatment plant is operational. <br /> Cash Balances The water capital improvement fund should accumulate cash balances prior to <br /> 2015 to pay for the expansion of the treatment plant. <br /> The minimum recommended operating fund cash balance is $1 million, <br /> increasing to $1.5 million when the treatment plant is expanded in 2015. The <br /> City is working toward this goal and the proposed rate structure will achieve <br /> the recommended cash balance by 2012. Cash balances are available to <br /> accommodate fluctuations in revenue depending on the weather, and to fund <br /> capital improvements. <br /> See Attachments C and D for projected cash balances. <br /> 3060 Centre Pointe Drive (651)697-8546 Fax:(651)697-8555 <br /> Roseville,MN 55113-1105 jcook@ehlers-inc.com <br /> http://www.ehlers-inc.com <br /> 2 <br />