FY 2021 2122 ADOPTED OPERATING AND FY 2021 2526 CIP BUDGETS

Major Revenue Assumptions (continued)

of Planning, Building, and Land Development Engineering fees. The expenditures of these funds are restricted to the costs associated with processing Planning, Building, and Land Development Engineering applications. FY 20-21 and FY 21-22 revenues are projected to be $4.7 million and $5.3 million, respectively. Revenues collected are completely dependent on the level of development activity and a transfer from the General Fund to offset any structural deficits realized in each year. In November 2017 Council adopted an updated user fee study to be phased-in over two years, beginning in January 2018. Even with the updated user fees, the fund is projected to continue to have an annual structural deficit of approximately 2.9 million. This is primarily due to activity in the Department that generates little or no revenue.

On May 1, 2019, the Council approved the wastewater rate update, which includes a five- year annual rates adjustment plan to address a significant shortage in funding for the legally required repairs and improvements to the existing wastewater system. With the approved rates plan, the wastewater fund is projected to allow for funding of much needed capital projects associated with the repair of the aging system. Operationally, the fund will be able to maintain appropriate reserve levels, including rate stabilization and system replacement fund reserves. Other capital projects, such as a second Relief Trunk Line to the Treatment Plant and Treatment Plant expansion, which are included in the six-year CIP, are expected to be funded by impact fees and/or financed through bonding against future impact fees. Water Operations Fund (650) The Water Operations Fund receives revenues from user charges based on water usage. All expenditures for the operation of the water system, including maintenance and debt service, are charged to the Water Operations Fund. Actual water revenue is dependent on customer usage. Due to the recent drought years, the City has adopted conservation measures which have reduced the amount of revenue from water sales. The City’s Water revenue is forecasted to steadily increase from $15.6 million in FY 20- 21 to $16.3 million in FY 21-22. Operationally, the fund is forecasted to maintain appropriate reserve levels, including rate stabilization and system replacement fund reserves.

The fund is projected to be depleted by the end of FY 19-20 and will have to rely on support

from the General Fund, assuming all assumptions related to revenues and expenditures hold true.

Wastewater Operations Fund (640) The Wastewater Operations Fund receives revenues from user charges based on water usage. Rates are set from a three month average of water consumption during the winter months, which is typically the lowest period of water consumption. All expenditures for the operation of the wastewater (sewer) system, including maintenance and debt service, are charged to the Wastewater Operations Fund. Total revenue for FY 20-21 and 21-22 are budgeted at $13.3 million and $14.1 million, respectively.

82 BUDGET SUMMARY

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