Laserfiche WebLink
<br />~ <br />.rA.~HILLS <br /> <br />MEMORANDUM <br /> <br />e <br /> <br />DATE: <br /> <br />July 21, 2004 <br /> <br />Agenda Item 6.A <br /> <br />TO: Honorable Mayor and City Council <br /> <br />:FROM: Murtuza Siddiqui, Finance Director/Treasurer 'M~ <br /> <br />SUBJECT: Utility Rate Study <br /> <br />BACKGROUND: <br />The City has not reviewed or adjusted its water, sewer, and storm water rates since 200 I. <br />Currently. the enterprise funds are breaking even from a routine operational perspective. This <br />does not take into account major maintenance projects. The existing rate structure does not <br />appear to be adequate and is not able to accommodate maintenance of the sewer, storm water, <br />and water infrastructure in the long-term. <br /> <br />. <br /> <br />DISCUSSION: <br />Over the past four years, income from operations in the enterprise funds is on a decline. As we <br />look into the future, there are a number of major projects that need to be undertaken. The <br />underground infrastructure is aging and is in need of major repair and replacement. In order to <br />address our current and future needs, it is important that we conduct a Utility Rate Study. The <br />study is expected to analyze our current and projected revenues and expenditures, a rate <br />comparison with other cities, and the impact of projected costs of capital improvements on cash <br />flows. The study will also analyze the impact on rates if debt is issued to finance the projects. <br />The study will conclude with a recol11l11endation to establish future rates into 2011. <br /> <br />The City has a long-term relationship with both Ehlers & Associates and Abdo, Eick & Meyers, <br />CPA. Both firms are very familiar with the City's financial history and had provided excellent <br />service over the past years. Staff is of the opinion that Abdo, Eick & Meyer will be a better fit <br />for this project as they have in-depth knowledge of the City's finances since they have been our <br />auditors for the past decade. There is a significant difference in service fees between the two <br />firms. The City has the option to hire Ehlers & Associates to review thc CPA's work and seek <br />their input, particularly, if the City would consider financing options and further in-depth <br />analysis if necessary. <br /> <br />RECOMMENDED ACTION: <br />Staff recommends that the Council engage in a relationship with Abdo, Eick & Meyers to _ <br />conduct the Utility Rate Study at an estimated cost of $7,500. .. <br />