Agenda - Parks and Recreation Commission - 04/10/2014

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C. FINANCING OF CAPITAL IMPROVEMENTS Funding of water utility projects is accomplished utilizing a combination of water utility rate revenue, trunk charge revenue and water availability charge revenue. Projects are financed from annual revenue and water utility fund cash reserves, or by bonding for project costs. In evaluating the financial impact of the proposed system improvements, the following assumptions have been utilized. 1. The surface water treatment facility will be financed through bonding. The loan terms have been assumed to be 4% interest rate over 20 years. This does not include any potential regional grant funding opportunities which might be available for construction of this facility. 2. The 1.5 MG ground storage reservoir will be financed through bonding in conjunction with the surface water treatment facility. 3. NE and NW Extension project and the Industry Avenue to TH 47 project will be financed through bonding. 4. All other capital projects will be financed through annual revenue and water utility fund cash reserves. Based on these assumptions, a 15 -year budget projection has been developed. Appendix F contains a spreadsheet with the budget projections. Key points are summarized as follows: 1. Current water use rates are set at $1.61 per 1,000 gallons used, with a quarterly minimum charge of $24.15. 2. Current Water Access Charges are $1,327/connection. 3. Water Use Rates will need to be increased by 5% annually for the next 3 years (2005-2007). Subsequent increases are projected every 4 years. 4. Water Access Charges will need to be increased to $2,325 per connection. Subsequent increases are projected every 5 years. City of Ramsey, Minnesota — M21.34343 Page 7-2 Water System Study Prepared by Bolton & Menk, Inc.