FY 2425 2526 Recommended Operating Budget

Major Revenue Assumptions (continued)

face difficulty finding lenders to finance their projects. This is more pronounced in the commercial real estate sectors. The City has seen several projects either delayed or cancelled altogether, and the projects that are moving forward, typically housing, are not generating the same fees as in the past. The fund is budgeted with revenue of $5.9 million and $5.8 million for FY 24 - 25 and FY 25 - 26, respectively. The fund is still anticipated to have an on - going annual deficit mainly because of certain activities that are not meant to be full cost recovery such as public counter/general information services, strategic initiatives, and special projects, as well as other subsidized services. These activities need to be supplemented by other funding sources, mainly the General Fund. The Recommended Budget reflects the support provided by the General Fund to the Development Services Fund by the elimination of the General Administrative charges that the fund would otherwise require to be paid to the General Fund for the internal services cost such as Finance, Human Resources, etc. of approximately $0.6 million annually. This is in addition to an interfund loan of approximately $1.0 million in FY 23 - 24. It is worth noting that an interfund loan of approximately $2.9 million was envisioned in the FY 20 - 21 and FY 21 - 22 budget. However, with higher revenue collection coupled with conservative spending, this fund did not need an interfund loan from the General Fund until now. 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 24 25 and 25 - 26 are budgeted at $16.6 million and $18.4 million, respectively. The City is currently going through the rate study process to adjust the wastewater rates for the next five years. The projected revenues for the Recommended Biennial Budget reflect the increase in wastewater rates to meet the minimum reserve levels set by the Council, ensure sufficient funds are available for the much - needed capital projects, keep pace with expenditures, and to ensure the City ’ s wastewater system integrity and reliability. 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. The City ’ s Water revenue is projected to be $21.5 million for FY 24 - 25 and $23.5 million for FY 25 - 26. With the approved rates plan, the water fund operationally is forecasted to be able to maintain appropriate reserve levels, including rate stabilization and system replacement fund reserves, and fund much - needed capital projects associated with the repair and improvement of the aging system.

92 BUDGET SUMMARY