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��M�: �une 20, 1�74 T0: Ci ty ��anager FROP��: Publ ic l�arks Di rector �'�' RE: Alternative Sa7utions �o Adjust lJater Financ�ng Structure On �une 7, 1974, the Ci�Cy of 5i. Paui put into affect the recently neaotia�ed reduced water rates for Roseville. Tljese n ew rates vrauld result in a saving of $42,240.00 per year to the city. Several alternative appraaches are avail- a�le to alter the structure of the vaater -Financiai s�tua�ion to take into accaunt this lower cast of doing business. An �nvestigation,af past history of the tivater s,ystsm, p7us proj�ctions for the future, have been made. This review indicates that the systern is �roducing ap�roximate�y $150,000 per year ta�rard the establishment of an operatin� reserve fund. This fund in 1973 finally got into the black and had a baiance of approximately �88,000.00. It shouid be rememk,ered that while this reserve fund looks quite iarge havinc� aver hal f a mi 11 i on dol l ars , the depos i ts for vrater meters s��oul d not be i n-- cluded as revenues to be used to rebuiid the system. In order to depict variaus methads available for handling this reduction in cost for wate� sup�Iy, four different types of alternat�ves were developed. Alternate A tiJould be to use the $42,000 sav�ng ta reduce -�h� v�at�r billing sent to �he customers. TS�-is would result in a saving af a�proximately 3� per 1,0a0 gallons, or a reduction from 55� per 1,000 gals. to 52� per 1,000 gals. Alternate B :dould be to use the �42,000 to minir�ize the �eneral property tax contribution for bond retirement. Aiternate C Wouid be to leave the billing rates and genera7 fUnd contribution substantia7lv as is and to build the �Nater aperat�ng reserve fund to �he greatest extent possible. Alternate D tJould b� to reduce both the customer bil7ing and the general praperty tax bv a42,�00, which a�aould sti�l end up ti�ith a net cantribu- tion to the aperating reserve fur�d. I� m7gnt be nated that tFie 1974 estin�ate figures reflect the fact �t�at oniv 7 rzionths of the ,}�ear woul d foe avai 7 able for adj us�ment because tne fi rst 5 mont}�s �ae had pai� the higher amount to ��. Paul. ;�unfberaus o�i�er a�terna�ives and cambina�ions could be generated, i�ut iio�efui�v, this v�i11 provide sufficient inforriation to si�ow the si�ua�ion. ihe increase in the yearl�� al1ocati�n to tl�e operating reserve fund is primarily a factor of increased volume, which, as per the contract, resuits in lower uni� �rices. The re-negotiated lowrer rate naturally also he7ped. � pain� of infor�iiation tnat i;�ig�t ve heinful �n considering various alternatives is that a 1� �er 1,�00 �a11ot� cfzange in �he rate c{�arged the vrater users results in a�14,�00 c��an�e in rev�n�e r�er ,year. r�not�ier poi nt i s that tfte estin�a�ed fl aUrs , revenues , ex!�enses ,�tc. , far 197A- 1�75, ar� based on good �vaier sel7in� vears and incre�sed use. If �i�e Ur�t v�eateizr experienced so far this soring continues, the a�rater consum�tion wi17 b� dotan and the revenues 1 i ke4vi se.