2020-02-26 CC Packet - Laserfiche WebLink

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Staff estimates a cost of $40 per foot as an average to remove sediment from ditches. We plan to do maintenance to each of the 14 ditches during a 10 year period. That leads us to a total of $268,500 for all ditches or an average of $26,850 per year. Staff would plan to start a regular ditch maintenance program in 2021. These assumptions are predicated on not having to completely reconstruct any storm water feature. The standard rule of thumb for a minimum cash balance in an enterprise fund is something between three to six months of operating expenses in reserve. The estimated annual operating expenditures of the fund starting in 2021 are around $90,000. Holding three months of expenses in reserves means $22,500 should be kept for cash flow purposes. The actual cash on hand at year end 2018 was $266,237. This means that there is an available balance of $240,000 available for capital projects. In 2020, the downtown storm water project associated with the street reconstruction and water main is estimated to cost $341,000. We also have to provide a 25% match of the total project amount for our $100,000 Storm Water grant from the Metropolitan Council. Total project cost is estimated to be $133,000 for the expansion of the LaMotte Park sprinkler system 25% of that equals $33,000. After 2020, there are no major projects planned in the next 10 years. In all three scenarios, pond and ditch maintenance begins in 2021. Scenario 1: With the above expenses included, we are projected to go below our target cash amount of $22,500 in 2020, and actually go negative in cash for 2026 and beyond. In Scenario 1, we never get back to our minimum cash balance amount. This indicates that some level of increase in the storm water rates is needed. Scenario 2: Staff projects a 4% increase in storm water fees on all users starting in mid-2020. With that assumption, we drop below our cash target in 2020, but get back over our 25% minimum cash balance in 2021. The cash balance keeps rising until it 2024 when we can start to address backyard ponding issues. Scenario 3: Staff projects a 5% increase in storm water fees on all users starting in mid-2020. With that assumption, we drop below our cash target in 2020, but get back over our 25% minimum cash balance in 2021. We can also start to address backyard ponding issues in 2021. Staff presents this information in anticipation of discussions for setting enterprise fund rates for future years. We will need to annually evaluate our rates based on any increases needed due to changes in MS4 requirements. We should be able to make these adjustments annually without a significant impact to residents.