CCP 10-18-2004 - Laserfiche WebLink

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. II. . . CITY OF ARDEN HILLS, MINNESOTA RATE STUDY SEPTEMBER 9, 2004 ASSUMPTIONS - CONTINUED Debt assumptions - The City did not intend to issue debt during the projection period. If debt were issued it would have an impact on what rate increases would be necessary to cover costs within the projection period. III. WATER RATE STUDY Currently the City's water rate stroWlre is as follows: Category Type Amount Senior Winter usage Summer usage Base Winter usage Summer usage Winter usage Sununer usage Standby average per acct $ 2,15 2.20 21.95 2,15 2.20 2.15 2.20 45,00 Non- Senior Commercial Most categories are consistent with what other cities have except for the senior category. The senior category represents 17 percent of the total residential accounts and they only pay for usage. There is no base fee. For the last 4 billing periods the seniors that have been under the base have averaged 166 accounts and these accounts have used approximately 7,000 gallons per quarter. This translates to an annual discount of approximately $4,500 to the senior accounts which is relatively insignificant to the total. We have presented projections of cash flow under three different scenarios: 1. Rates stay the same for all categories 2. Rates increase 3 percent per year for all categories starting in 2005 3. Rate are increased to cover the increased costs and maintain a cash reserve at approximately $1.2 million The following graph highlights the ending cash balances under the rate scenarios described above: PROJECTED WATER FUND CASH BALANCES $2,000,000 $1,500,000 $1,000,000 $500,000 $. $(500.000) 2004 2005 2006 2007 ~Rates Slay same 51,490.362 $1,136,838 5962,430 $308,203 Rates increase 3 percent per year 51,490,361 $1,169,069 $J,061 ,057 $509,41 I ......Rate increase to cover costs $1,490,361 $1,296.210 $1,347,046 $988.968 2008 2009 $(86,275) $255,808 $966.879 $(351,692) $169,183 $1,124.866 -4-