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<br />'. <br /> <br />. IV. <br /> <br />. <br /> <br />. <br /> <br />CITY OF ARDEN HILLS, MINNESOTA <br />RATE STUDY <br />SEPTEMBER 9, 2004 <br /> <br />SANITARY SEWER RATE STUDY - CONTINUED <br /> <br />We have presented projections of cash flow under four different scenarios. <br /> <br />]. Rates stay the same for all categories <br />2. Rates increase 3 percent per year for all categories starting in 2005 <br />3. Rates are increased to cover the increased costs but limited to 15%. <br />4. The rate strucUlre for non-senior residential changes to include a usage component based on winter usage. <br /> <br />lbc following graph higWights the ending cash balances under the rates described above: <br /> <br />PROJECTED SANITARY SEWER FUND CASH BALANCES <br /> <br />11,000,000 <br />$800,000 <br /> <br />$600,000 <br />$400,000 <br />1200,000 <br />$. <br />$(200,000) <br />$(400,000) <br />$(600,000) <br />$(800,000) <br />$(1,000,000) <br />$(1,200,000) <br /> <br />Rates. stay same <br />~Rates increase 3% per year <br />~Rate increase to cover costs <br />......Rates have a usage component <br /> <br /> <br />1004 <br /> <br />$756,669 <br />$756,769 <br />$756,769 <br />$756,769 <br /> <br />2005 2006 2007 2008 2009 <br />$424,142 $98,325 $(247,970) 5(623,840) $(1,017,283) <br />$452,618 $185,024 $(71,983) 5(329,584) $(572,711) <br />$565,880 $431,306 $329,220 $246,741 $181,368 <br />$636,856 $583,920 $575,028 $598,254 $644,707 <br /> <br />Rate scenario 1 is not an option without issuing debt to finance a large portion of the planned capital projects. <br /> <br />Rate scenario 2 projects results based on a 3 percent inflationary increase per year starting in 2005. The cash balance is <br />not adequate for working capital starting in 2006 and ends at negative starting in 2007 and continuing until 2009. TIus <br />option would only work with a debt issuance. <br /> <br />-6- <br />