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<br />. <br /> <br />. <br /> <br />- <br /> <br />~ <br />EN HILLS <br /> <br /> <br />MEMORANDUM <br /> <br />DATE: <br /> <br />February ]6,2006 <br /> <br />AGENDA ITEM 2.D <br /> <br />TO: <br /> <br />Honorab]e Mayor and City Council <br /> <br />Kristine Giga, Civil Engineer ~ <br />Murtuza Siddiqui, Finance Director <br /> <br />FROM: <br /> <br />SUBJECT: <br /> <br />2006-20] 0 C]P Discussion <br /> <br />BACKGROUND <br /> <br />Staff has continued to review the City's Capital Improvement Plan (CIP) based upon previous <br />direction from Council and further financial analysis. Attached is the information that was <br />provided to you in August of2005 when staff first began to review the CIP, as well as a current <br />draft CIP worksheet, on which severa] changes have been made. We anticipate more revisions <br />before formally submitting the proposed CIP for approval, as staff is requesting more input and <br />guidance from Council on severa] factors. <br /> <br />In the summer of 2004, the City hired a consultant to conduct a Utility Rate Study. The primary <br />purpose was to review the existing utility rates as well as to determine if any modifications to the <br />rate structures were necessary in order to rccovcr the operating and CIP-related costs. Based on <br />thc best estimates available at that point, new rate structures were set in place. At that time, <br />Council also made an informal decision to maintain a certain fund balance in all three utility <br />funds (Water, Sanitary Sewer, and Storm Water). Fund balances determined were as follows: <br />Water - $1,000,000; Sanitary Sewer - $500,000; Storm Water - $500,000. The study was based <br />on actual 2003 numbers and the future years were projected. It should also be noted that this <br />study was prepared on a cash flow basis. <br /> <br />As part of finalizing the 2006 budgeting process, the Finance Director reviewed actual numbers <br />versus the projected numbers that were ineluded in the study. It was discovered that the actual <br />numbers for 2004 were significantly higher than the projected, both in the areas of operations <br />and CIP. In the area of operations, the charges to Met Council for sewer experienced a <br />significant increase. There was also realignment in personnel charges in all three utility funds <br />where the actual charges reflected staff that supported the function in a more realistic manner, <br /> <br />\\Metro-lnet.us\ArdcnHiIls\PR&PW\Operations & Maintcnance\Engineering\2006\2-] 6-05 Memo ClP.doc <br />