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Executive Summary <br /> The goal of a rate study is to ensure long-term financial health of the utility enterprise funds. <br /> � As part of this analysis, the rate study takes into account historic trends, assumptions and <br /> state mandates, as applicable. <br /> • The water system has had relatively stable cash balances over the past several years, <br /> however new legislation requires cities within the seven county Twin Cities Metropolitan <br /> Area to implement conservation rates by January 1, 2010. The fund currently uses <br /> combination of pay-as-you-go and internal financing for its capital needs. <br /> • The sanitary sewer system has had stable cash balances over the past several years. <br /> However the need for capital improvement projects may bring financial pressures to the <br /> fund in future years. The fund currently uses a combination of pay-as-you-go and bond <br /> financing for its capital needs. <br /> • The storm sewer system has stable, but lower, cash balances. This is not unusual for <br /> storm sewer utilities. Ongoing capital improvement projects may require the use of debt. <br /> Recommendations <br /> • Recommendation One: Adopt the tier structure as proposed. <br /> • Recommendation Two: Adopt the rate changes as proposed <br /> � Recommendation Three: Adopt target cash balance goals as recommended. <br /> • Recommendation Four: Update the utility study periodically to determine progress <br /> with cash balance goals and an updated capital improvement plan. <br /> Utilrt} Rate Studp Page 1 <br /> Cin�n(Oraro..blinnesau Deremher,ZOU9 <br />