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Summary of 2000 Budget Work Sessions <br />Page 3 <br />Enterprise Fund Budgets <br />1. Rate increases. The 2000 water and sewer fund budgets reflect rate increases of 2.7% and <br />3.2%, respectively. This provides sufficient revenue to fund operating expenses and <br />depreciation. <br />2. Enterprise fund questions. The Council had a number of questions regarding the Enterprise <br />funds. The questions, and staffs answers, are as follows: <br />A. What caused the sewer fund operating expenditures to be reduced substantially from <br />1996 to 1998? <br />Three factors caused the expenditure reduction. The first was a reduction in MWCC <br />sewer treatment charges due to lower flows related to reduced infiltration and inflow <br />of surface water into the system. The second related factor was that the lower sewer <br />flows resulted in a credit from the MWCC due to the MWCC's over estimate of the <br />City's sewer flows. The third factor was a reduction in depreciation expense based on <br />increasing the expected life of the City's sewer lines from 50 years to 75 years. The <br />magnitude of each of these factors is as follows: <br />1) Reduced NIWCC charges 34,938 <br />2) MWCC credit for prior year 52,283 <br />final cost allocation <br />3) Reduced depreciation expense 51,348 <br />B. What is the total loan amount to the tivater fund to fund the irpgrade of the Navarre <br />water treatment plant, and what is the term of the loan? <br />The total loan amount is $475,000. The term of the loan is 15 years at an interest rate <br />of 5.5%. The annual debt service amount on the water plant loan is $51,650. <br />C. What is the outstanding special crssessment amount related to the water plant project? <br />The outstanding special assessment amount is $215,600. The special assessments will <br />be paid over a 5-year period at an interest rate of 6.5%. <br />The City received prepayments of$73,150 during 1998. <br />The Council indicated the City should be showing liabilities in the water and sewer funds to reflect <br />the tax levy being used to fund the debt service on the 1989 sewer and water bond.