1B - 2008 Utility Rate Study - Laserfiche WebLink

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Summary The City of Arden Hills has managed its utility funds well, and as a result has been able to pay for all improvements on a cash basis. However, doing so has caused a steady decrease in cash balances. The need to upgrade and expand the water utility system over the next several years will introduce new financial pressures along with the need to increase cash balances. The rate study indicates that water rate increases are necessary in 2009 (implemented at the end of 2008) to maintain cash balances and pay for capital improvements and debt. Steady and fairly significant rate increases will be needed for the sanitary sewer fund, beginning in 2009, to keep pace with the MCES disposal fees and to pay for City operating costs and capital improvements. While this analysis proposes the use of debt to allow for steady and predictable rate increases, it is not a debt plan. The City should review whether it has sufficient cash to pay for capital improvements prior to issuing debt. Debt options include interfimd borrowing and issue general obligation bonds. As with all other bonding decisions, the City's decision to issue debt for any given improvement will be based on many factors, including the City's cash balances, rating, and other fjnancing needs. I 14