08-05/08-24-1999 Council Work Session Minutes

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