09-28-2015 Council Work Session Packet

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Sewer Fund In recent years the sewer fund has mostly operated at a loss. Non-operating revenues however, have consistently offset the operating losses. This has resulted in a positive operating cash flow for the fund. In 2014, the fund covered operating expenses, including depreciation, for the first time since 2009. In 2015 the fund will operate at a loss. However, this includes depreciation of $275,000 which is a non- cash expenditure, so the fund will still experience a positive cash flow for the year. The loss is the direct result of a 22% increase in wastewater disposal charge to the Metropolitan Council. In 2016, the dipsal charges are decreasing by 19% (92,780). The variability in this budget line is due to the heavy rains and flooding that occurred in 2014. As has been discussed with the Council during previous budget processes, our system continues to have a high level of inflow and infiltration (I&I). As a result heavy rains and high water tables increase the flow through the MCES lift stations and increase our disposal charges. The total operating expenditure budget is decreasing by $77,265 (5.79%) The revenues are calculated with a 4% increase in the sewer rates as called for in the 2014 rate study. The operating transfer is to cover the sewer improvement that were part of the Casco Point project and will continue for another seven years. Upcoming capital expenditures can be covered by the fund’s current cash balances. Projects identified in the CIP for 2016 include: lift station updates; a generators for lift station #5; rehabilitation of the vactor truck; expansion of the northern collection system; increased lift station monitoring; and maintenance to the Navarre garage. Total anticipated capital expenditures are $1,300,648. The costs associated with the northern expansion ($710,000) will eventually be recovered as the properties being served are developed. The current cash balance for the fund is $2,900,000. Storm Water The Stormwater Fund is for the most part project based. Operating expenditures are mainly limited to engineering associated with NPDES, SWPPP and other state and federal requirements. Public Works time and materials spent on culvert cleaning/replacement are also charged to this fund. The purpose of this fund is to collect money for the larger Stormwater projects that will be required in the future. The revenue in the attached budget is calculated with a 10% increase in the rates. This is the annual increase required to avoid future special assessments for stormwater projects. Potential CIP projects in 2016 include: Replacing the Truck Mounted Sweeper, Shoreline Stabilization (SWMP 13); System improvements performed with road projects; and Kelley Avenue drainage improvements. The capital expenditures total $503,700. The funds current cash balance is $1,100,000. Recycling The recycling fund was newly created in 2013. Its major expenditure line is for contracted recycling charges. The current contract with Waste Management is capped at a 2.8% increase. However, as the result of low prices for recycling materials, the Recycled Material Offset (RMO) credit that we receive has been reduced to $0, this has resulted in the fund underperforming compared to the forecasts made when the fund was established. The full time wages that are charged to the fund represent 10% of the City Clerks wages. An additional fall cleanup is included in this budget. The budget is being presented with a 10% increase in rates. The current cash balance is $0.