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<br />~ <br /> <br /> <br />~ ORIGINAL <br />EN HILLS <br /> <br />. <br /> <br />MEMORANDUM <br /> <br />DATE: <br /> <br />February 16, 2006 <br /> <br />AGENDA ITEM 2.D <br /> <br />TO: <br /> <br />Honorable Mayor and City Council <br /> <br />Kristine Giga, Civil Engineer ~ <br />Murluza Siddiqui, Finance Director <br /> <br />FROM: <br /> <br />SUBJECT: <br /> <br />2006-2010 CIP Discussion <br /> <br />BACKGROUND <br /> <br />. <br /> <br />Staff has continued to review the City's Capital Improvement Plan (C1P) based upon previous <br />direction from Council and further financial analysis. Attached is the infonnation that was <br />provided to you in August of 2005 when staff first began to review the CIP, as well as a currcnt <br />draft CIP worksheet, on which several changcs have been made. We anticipate more revisions <br />before fonnally submitting thc proposed C1P for approval, as staff is requesting more input and <br />guidance from Council on scvcral 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 structurcs were necessary in order to recover the operating and C1P-related costs. Based on <br />the best cstimates available at that point, new rate structures were sct in place. At that time, <br />Council also madc an inftlrmal dccision to maintain a ccrtain 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 Scwcr - $500,000; Stonn Watcr - $500,000. The study was bascd <br />on actual 2003 numbers and the future years wcrc projected. It should also be noted that this <br />study was preparcd on a cash flow basis. <br /> <br />As part of finalizing the 2006 budgeting process, thc Finance Director reviewed actual numbcrs <br />versus the projected numbers that were included in the study. It was discovered that the actual <br />numbers for 2004 were significantly higher than the projected, both in the areas of opcrations <br />and CIP. In the area of operations, the charges to Met Council for sewcr cxperienced a <br />significant increase. There was also realignment in personnel charges in all thrce utility funds . <br />where the actual charges rcflccted staff that supported the function in a more rcalistic manner, <br /> <br />\\Metro-ineLLL<;;\ArdenHills\PR&PW\Opcmtions & Maintenam:::e\Engineering\2006'2-16-05 Memo CIP.doc <br />