HomeMy WebLinkAboutItem 41
City of Lakeville
Finance Department
Memorandum
To: Mayor and Council
From: Justin Miller, City Administrator
Jerilyn Erickson, Finance Director
Date: October 26, 2020
Subject: 2021 Proposed Utility Fund/Liquor Fund Budgets & Utility Rates
The purpose of this report is to provide the City Council with an overview of the
proposed 2021 Utility Fund and Liquor Fund budgets and proposed utility rates to
support the services provided.
UTILITY FEE CHANGES AND HIGHLIGHTS
The proposed rate changes for 2021 are based on the proposed 2021 budget, staff
projections for future years, the Capital improvement Plan, and with consideration of the
financial targets described below. The rate changes were developed using the Excel
model that was provided as part of the utility rate study completed in 2018. In order to
moderate the rate increases in 2021, Staff has presented a model that deviates from
some of the recommended targets in the model. This is discussed further below.
The 10-year rate projections include estimates for replacement or upgrade of aging
utilities infrastructure. The chart below includes various statistics related to the current
utilities infrastructure, and illustrates the significant cost involved in maintaining the
infrastructure.
Infrastructure item: Statistic
Water
Water mains (miles) 358
Fire hydrants 3,969
Wells 19
Water Towers 6
Water capital asset gross historical cost $143,319,000
Sanitary Sewer
Sanitary sewer mains (miles) 264
Sanitary sewer lift stations 20
Sanitary sewer capital asset gross historical
cost
$79,676,000
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Source: City of Lakeville 2019 Comprehensive Annual Financial Report
The financial planning model for the Water Operating Fund presents some challenges
for 2021-2030.
As the City continues to grow, so does the cost of capital maintenance/repairs.
The capital needed to fund replacement and repair of aging capital equipment,
infrastructure and components of the Water Treatment Facility ranges from
$1,012,000 to $4,111,539 between 2021 and 2025. Some of these amounts
include one-time costs, such as upgrading to a fixed base meter reading system
in 2023.
The annual debt service payments supported by the Water Operating Fund range
from a low in $1.6M in 2021 to a high of $2.35M in 2023. At the high point in
2023, the debt payments account for 34% of the annual revenues.
As demonstrated in the “ideal” 10-year water rate projections in the financial planning
model (attachment #3), meeting most of the financial targets would require a 16%
increase in 2021, followed by 10% in 2022, and more moderate increases thereafter. The
higher increase in 2021 was consistent with the projections presented one year ago,
however, in an effort to be mindful of the financial impact on the City’s customers in
these uncertain economic times, we’ve proposed a lower increase of 8% in 2021
(attachment #2). This will necessitate issuing additional debt in 2022 and 2023, whereas
the prior year projections planned on no additional debt after 2021. We also included a
third scenario, attachment 4, which includes the impact of a 4% increase in the water
rates in 2021. The 4% increase leaves us slightly more short of the cash targets in 2021,
but leaves us significantly short of the cash targets in 2022-2027 when compared to the
8% increase in 2021.
Staff has also contemplated proposing different rate increases for the different water
rates. Lakeville has historically used the same percentage for changes to the base rate
and all tiered rates (tier 1 rate is for usage up to 30,000 gallons; tier 2 is for usage
between 30,000-49,000 gallons, and tier 3 is for usage greater than 49,000 gallons). If it
is Council’s direction to limit increases for essential water usage, and pass a greater
share of the costs on to those using significant amounts of water (for example, for
irrigation purposes), then we can explore the impact that might serve to mitigate the
overall rate increases. As an example, an increase in the tier 2 rate by 20% and tier 3
increase by 30%, along with the same 8% increase in the base and tier 1 rates, would
result in approximately $170,000 of additional revenues each year assuming that there is
no change in usage (when compared to an increase in the base, tier 1, tier 2, and tier 3
rates all only by 8%).
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One of the financial targets is a certain level of unassigned cash by fund at the end of
each year. For Water and Sanitary Sewer, this amount is currently $500,000. For Street
Lights and Environmental Resources, the amount is currently $100,000. Our model also
includes an estimate of planned capital expenditures for the following year when
calculating the amount of cash on hand needed at the end of each period. Many of the
City’s capital improvement projects are led by the County, and although we determine
jointly what needs to be replaced, the cost is somewhat out of our control, and the level
of predictability in our costs is reduced. We have included educated estimates of the
utility costs related to these projects, however, some costs are unknown until the project
begins. At some point in the future, we may desire to increase the unassigned cash
targets beyond $500,000 and $100,000.
The following chart reflects the fee changes that have been incorporated into the
proposed revenues for each of the Utility Funds in the next year:
The following chart reflects the impact of the proposed rate increases on a property
using 15,000 gallons per quarter (average residential winter quarter usage):
2021 2020
Quarterly rates Basis Proposed Actual
Water base Account
9.04$ 8.37$ 0.67$ 8.0%
Water tier 1 (<30,000) Gallonage
1.80$ 1.67$ 0.13$ 7.8%
Water tier 2 (30,000 - 49,000) Gallonage
2.87$ 2.66$ 0.21$ 7.9%
RESIDENTIAL ONLY-Water tier 3 (>49,000) Gallonage
4.91$ 4.55$ 0.36$ 7.9%
Irrigation sprinkler accounts Gallonage
4.91$ 4.55$ 0.36$ 7.9%
Water testing fee*2.43$ 2.43$ -$ 0.0%
Sanitary sewer base Account
10.17$ 9.59 0.58$ 6.0%
Sanitary sewer usage Gallonage
5.04$ 4.75$ 0.29$ 6.0%
Sanitary sewer non metered accounts Account
100.89$ 95.09$ 5.80$ 6.1%
Street lights Account 10.12$ 10.12$ -$ 0.0%
f.f.0.2832$ 0.2832$ -$ 0.0%
Environmental Resources Fee Account 16.87$ 16.54$ 0.33$ 2.0%
* The Water testing fee is mandated by the state-- this is a pass-through fee for the City.
Proposed 2021 Utility Fee Structure
Increase
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This equates to about $2.61 monthly and $31.32 annual increases for City water, sewer,
street lights and environmental resource services.
The following chart reflects the impact of the proposed rate increases on a property
using 34,400 gallons per quarter (average residential summer quarter usage):
*Sewer amounts are shown capped at 15,000 gallons per quarter (based on average winter quarter usage).
The following chart reflects the impact of the proposed rate increases on a property
using 93,750 gallons per quarter (estimated summer quarter amount for a residential
property that runs sprinklers every other day during the summer, using approximately
1,750 gallons per irrigation cycle):
*Sewer amounts are shown capped at 15,000 gallons per quarter (based on average winter quarter usage).
UTILITY RATE COMMUNICATION PLAN
Staff is having ongoing discussions about the plan for communication of changes to
utility billing rates for 2021. The details of a preliminary communication strategy are
attached to this memo (attachment #5).
Impact of Utility Rate Increases
(per quarter)- Avg Winter Usage 2021 2020 Change
Water 36.04$ 33.42$ 2.62$
Sewer 85.71 80.84 4.87
Street Lights 10.12 10.12 -
Environmental Resources 16.87 16.54 0.33
State Surcharge 2.43 2.43 -
Total 151.17$ 143.35$ 7.82$
Impact of Utility Rate Increases
(per quarter)- Avg Summer Usage 2021 2020 Change
Water 76.74$ 71.16$ 5.58$
Sewer* 85.71 80.84 4.87
Street Lights 10.12 10.12 -
Environmental Resources 16.87 16.54 0.33
State Surcharge 2.43 2.43 -
Total 191.87$ 181.09$ 10.78$
Impact of Utility Rate Increases
(per quarter)- High Irrigation Usage 2021 2020 Change
Water 338.36$ 313.61$ 24.75$
Sewer* 85.71 80.84 4.87
Street Lights 10.12 10.12 -
Environmental Resources 16.87 16.54 0.33
State Surcharge 2.43 2.43 -
Total 453.49$ 423.54$ 29.95$
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PERSONNEL REQUESTS
There are no new personnel requests proposed for the Utility Funds in 2021.
UTILITY BILLING CYCLES
The City currently issues utility bills on a quarterly basis. Staff has contemplated
changing to a monthly billing cycle to provide customers better visibility to their usage
and costs. There are a few topics that need to be addressed prior to this change, the
largest of which are listed below:
1) There is a probable system change-over in the next two to three years due to
aging technology that is currently in use.
2) We are due for a staff audit of the system to ensure all city parcels are included in
the system and that any changes to the pervious surfaces have been reflected in
the composition of utility bills for those properties.
3) The City’s 2021-2025 Capital improvement Plan includes transition to a fixed
based meter system in 2023, which would result in the ability to remotely read all
meters. Currently some meters are read by consultants walking through the city,
and changing from quarterly to monthly readings would increase those meter
reading costs due to needing to read the meters eight additional times per year.
4) A change from quarterly to monthly billing means more frequent meter reads,
more payments to be processed, etc. which would add pressure to current City
Staff resources.
WATER OPERATING FUND
The proposed 2021 Water Fund budget reflects the cost of operating the City’s water
system as well as ongoing water meter replacements, well rehabilitation, and watermain
maintenance as part of the 2021 Reconstruction Project and other 2021 street projects.
Water Treatment Facility costs including dehumidifier desiccant wheels and seals, hotsy
pressure washer replacement, building security review and update, and generator
switchgear maintenance are also included in 2021. In addition, this fund has annual debt
service obligations of $1.52-$1.59 million in the next five years for $13.9 million in
remaining bond principal issued from 2014-2020. Debt is planned to be issued for
major maintenance projects in years 2021, 2022 and 2023.
The 2021 revenues for water sales reflect increases of $0.13 to $0.36 per thousand
gallons for the tiered consumption as well as an increase of $0.67 in the quarterly base
charge. Years 2021-2022 also reflect increases in the tiered consumption and the base
charge.
The underlying goals with these rate adjustments are as follows:
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Maintain a minimum cash balance to fund three months of operating expenses,
debt service payments, major maintenance expenses (net of any bond proceeds
during the period) and emergency maintenance expenses (target of $500K);
Potentially get to a point where the users of the water system are paying for
some or all of the depreciation of the system (replacement costs) and it is not
necessary to issue debt (the current rate projections assume no new debt will be
issued after 2023). The current debt outstanding is scheduled to be completely
paid off by 2036.
Maintain a debt service coverage ratio of at least 125%.
Maintain a ratio of unrestricted net assets that is at least 50% of the subsequent
year’s operating expenses.
The proposed water rate increases for 2021 (and projected increases for 2022-2026) are
projected to have the following impacts on the financial targets for the years 2020-2029:
Short on cash target in 2021-2026, but achieving the targets in years 2027 and
beyond. Staff is comfortable with the cash levels projected considering we plan
to achieve the other financial targets, and the Sanitary Sewer Fund has excess
cash levels that could be borrowed if needed for an emergency situation in those
years.
Achieve debt service coverage ratio for all years 2021-2030
Achieve unrestricted net assets percentage for all years 2021-2030
SANITARY SEWER OPERATING FUND
The proposed 2021 Sanitary Sewer Fund budget reflects the cost of operating the City’s
wastewater system as well as sewer main repair projects, other major maintenance and
debt repayment for the debt that was issued in 2016 for lift station #6 rehabilitation. It
also includes the capital replacement of a vactor truck and new equipment that uses
acoustics to review for any debris or obstructions in sewer mains. In addition, the
Metropolitan Wastewater Charge as communicated by the Met Council will have a
2.82% increase for the City of Lakeville in 2021. The wastewater charges are the most
significant component of the Sanitary Sewer Fund annual budget. The City does not
control this cost, although the cost is based on our share of the discharge into the
regional wastewater system.
The 2021 revenues for sanitary sewer sales reflect a $0.29 increase per thousand gallons
for the sewer rate as well as an increase of $0.58 in the quarterly base charge. Years
2022-2030 also reflect increases.
The underlying goals with these rate adjustments are as follows:
Maintain a minimum cash balance to fund three months of operating expenses,
debt service payments, and emergency maintenance expenses.
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Maintain a debt service coverage ratio of at least 125%. The current debt
outstanding is scheduled to be completely paid off by 2025, and no additional
debt is planned to be issued for the Sewer Fund.
Maintain a ratio of unrestricted net assets that is at least 50% of the subsequent
year’s operating expenses.
The proposed sewer rate increases for 2021 (and projected increases for 2022-2030) are
projected to have the following impacts on the financial targets:
2021 unassigned cash target is slightly below the desired $500,000, however,
staff is comfortable with not meeting the target for one year since the
projections show that all cash targets will be met 2022-2030, and the remaining
cash targets will be met in 2021 (other than the $500,000 unassigned cash).
Achieve debt service coverage ratio for all years 2021-2030
Short on unrestricted net assets percentage for 2021, however, staff is
comfortable with the 45% in 2021 given the range of 55% to 65% in the other
years presented.
STREET LIGHT OPERATING FUND
The Street Light Operating Fund reflects the cost of operating city street lights.
The 2021 revenues for the Street Light Operating Fund reflect the same quarterly
charges as 2020 (no proposed increase). Years 2022-2030 reflect minimal increases.
There are some capital projects included in the 2021 operating budget, including
impacts to Street Light costs from the County Road 70 Expansion project, and the 185th
St/Future CSAH 60 (Highview Ave- Street 7) project.
The underlying goals of street light rates are as follows:
Maintain a minimum cash balance to fund three months of operating expenses,
debt service payments, and emergency maintenance expenses ($100K).
Maintain a debt service coverage ratio of at least 125%. The current debt
outstanding is scheduled to be completely paid off by 2026.
Maintain a ratio of unrestricted net assets that is at least 50% of the subsequent
year’s operating expenses.
The current Street Light rate estimates (including the same rate for 2021 as 2020, and
slight increases in 2022-2030) are projected to have the following impacts on the
financial targets:
Achieve cash targets for all years 2021-2030.
Achieve debt service coverage ratio for all years 2021-2030, except for years
2022, 2024 and 2026. Staff is comfortable with this given the low amount of
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projected debt payments ($51K-$53K per year), and since the debt is scheduled
to be completely paid off by 2026.
Achieve unrestricted net assets percentage for all years 2021-2030
ENVIRONMENTAL RESOURCES OPERATING FUND
The Environmental Resources Fund reflects the cost of managing, promoting and
protecting the City’s natural resources including lakes, wetlands, streams, prairies and
woodlands. The 2021 budget includes annual storm water rehabilitation projects and
increases in Forestry program expenses.
The revenues for this Fund reflect an increase of $0.33 in the quarterly charge. Annual
increases of 2% to 3.5% are anticipated for 2022-2030.
The underlying goals with these rate adjustments are as follows:
Maintain a minimum cash balance to fund three months of operating expenses,
debt service payments, and emergency maintenance expenses ($100K).
Maintain a debt service coverage ratio of at least 125%.
Maintain a ratio of unrestricted net assets that is at least 50% of the subsequent
year’s operating expenses.
The proposed Environmental Resources rate increase for 2021 (and projected increases
for 2022-2030) are projected to have the following impacts on the financial targets:
Meeting all cash targets for all years 2021-2030.
The Environmental Resources Fund currently does not hold any debt, so the debt
service coverage ratio target is not applicable.
Short on unrestricted net assets percentage for all years presented. Staff would
prefer to meet this target, however, we do not desire to excessively inflate the
fund’s cash position in order to quickly meet the target.
CHARTS
The following charts reflect the expenses, revenues, and projected cash position for each
of the utility funds, including proposed rate increases. These will be referenced during
our discussion.
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Percentage of total operating fund expenses by year by type:
2021 2022 2023 2024 2025 2026
Operating expenses 43% 37% 34% 51% 52% 48%
Capital assets/major maintenance 34% 39% 42% 14% 16% 26%
Debt payments 23% 23% 24% 35% 31% 26%
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11
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Percentage of total operating fund expenses by year by type:
2021 2022 2023 2024 2025 2026
Operating expenses 20% 24% 23% 22% 21% 20%
MCES wastewater charges 59% 61% 59% 60% 60% 60%
Capital assets/major maintenance 20% 14% 17% 17% 17% 20%
Debt payments 1% 1% 1% 1% 1% 0%
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14
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The chart below shows the approximate quarterly utility billing charges for a residential
property by city, using 18,000 gallons of water. Cities have differing rates due to the age
of infrastructure, size of the community, goals, level of debt, and different programs
supported by the fund. This information is based on 2020 publicized utility billing rates
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and is included as a reference point. This chart does not include any impact from
proposed 2021 increases, nor any impact from the senior discount.
LIQUOR FUND
The proposed 2021 Liquor Fund budget reflects the costs of operating the three existing
liquor stores, as well as a fourth liquor store with an anticipated opening date in
October 2021.
The 2021 budget also includes various transfers from the Liquor Fund to support other
city endeavors including the following:
Debt Service – police station bonds - $400,000
Equipment Fund – capital equipment - $500,000
General Fund – administration, technology, etc. - $150,000
Technology Fund – technology-related equipment - $22,000
Environmental Resources – household hazardous waste drop-off day - $5,100
General Fund- fireworks - $15,000
BUDGET AND CAPITAL IMPROVEMENT PROGRAM SCHEDULE
Nov 23 Workshop – Final 2021 Budget Review; 2020 Yearend Preview
Dec 7 Meeting – Public Budget Meeting (Truth in Taxation) / Adopt 2021
Budget & 2021 Tax Levy / Adopt 2021 Fee Schedule
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COUNCIL DIRECTION
Staff is seeking direction regarding the Utility Fund and Liquor Fund budgets and utility
rate adjustments.
Attachments
1. Liquor Fund – Working Capital (2 pages)
2. Utility Financial Planning Models- Staff Proposal (2021 Water rate increase of 8%)
(4 pages)
3. Utility Financial Planning Model- Water “ideal” scenario (2021 Water rate increase
of 16%) (1 page)
4. Utility Financial Planning Model- Water alternative scenario (2021 Water rate
increase of 4%)
5. Utility Billing Rate Communication Strategy
2020 2020 2021
2018 2019 ADOPTED DEPART WORKING
ACTUAL ACTUAL BUDGET ESTIMATE BUDGET
Revenues
Liquor sales 15,276,433 16,288,986 15,898,952 17,529,589 17,431,752
Cost of goods sold (11,465,639) (12,229,562) (11,923,215) (13,112,132) (13,004,088)
Net revenues 3,810,794 4,059,424 3,975,737 4,417,457 4,427,664
Personnel services 1,576,589 1,629,879 1,757,091 1,802,160 1,972,334
Commodities 71,632 75,090 79,619 67,705 71,187
Contractual services 1,010,183 1,239,425 1,371,375 1,496,316 1,228,918
Total expenses 2,658,404 2,944,394 3,208,085 3,366,181 3,272,439
Net operating income/(loss)1,152,390 1,115,030 767,652 1,051,276 1,155,225
Other Receipts (Disbursements)
Interest income 30,878 108,600 15,000 16,250 20,000
Other income 13,421 6,453 3,762 3,250 4,000
Sale of capital assets 2,350,762 - - - -
Sale of Bonds - - - - 5,300,000
Capital outlay acquisitions - (21,638) (49,790) (49,790) (5,631,093)
Paying agent (157) - - (400) (400)
Interest expense - -- - -
Debt principal payments - -- (230,000) (240,000)
Total other 2,394,904 93,415 (31,028) (260,690) (547,493)
Net incr(decr) before transfers 3,547,294 1,208,445 736,624 790,586 607,732
Transfer to General Fund (Admin.)(141,753) (101,979) (83,786) (83,786) (86,917)
Transfer to Gen Fund (technology)(53,113) (56,594) (59,626) (59,626) (63,158)
Transfer to Gen Fund (Fireworks)- (6,302) (13,000) (13,000) (15,000)
Trasfter to Comm (Marketing Spec)(123,260) (91,267) - - -
Trasfter to Comm (Fiber)(6,789) - - - -
Transfer to Environmental Resources (2,177) (3,425) (4,356) (4,356) (5,156)
Transfer to Equip/Tech Fund (250,000) (405,495) (569,677) (569,677) (522,100)
Transfer to DSF (Galaxie Lease)(46,168) - (284,808) - -
Transfer to DSF Police Station Bonds (300,000) (400,000) (400,000) (400,000) (400,000)
Total transfers (923,260) (1,065,062) (1,415,253) (1,130,445) (1,092,331)
Net increase/(decrease)2,624,034 143,383 (678,629) (339,859) (484,599)
Working capital, January 1 851,479 3,475,513 3,007,218 3,475,513 3,135,654
Working capital, December 31 3,475,513 3,618,896 2,328,589 3,135,654 2,651,055
Total Working Capital 3,475,513 3,618,896 2,328,589 3,135,654 2,651,055
Work Cap - Reserved for future 2,238,138 2,175,546 1,991,154 1,991,154 1,807,119
Work Cap - Available for operations 1,237,375 1,443,350 337,435 1,144,500 843,936
LIQUOR FUND
PROJECTED WORKING CAPITAL
G:\Budget\2021 Budget\Budget Working\LIQUOR 2021 WORKING BUDGET : BUDGET Page 1 8/28/2020
Attachment 1
City of Lakeville Utility Financial Planning Model Water Summary Attachment 2- Staff Proposal (2021 Water rate increase of 8%)Water Fund2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Ending Cash by PurposeUnassigned211,170 (530,760) (802,701) (597,729) (481,718) 320,5661,185,429 1,793,183 2,247,615 3,809,772Unspent bond proceeds (restricted)0000000000For 3-months of operating cash 867,577 886,132 905,159 924,670 944,678 965,196 986,239 1,007,819 1,029,951 1,052,649For following year debt service 1,704,281 2,000,794 2,349,938 2,347,563 2,085,756 1,957,163 1,963,125 1,874,644 1,826,900 1,405,331For next year planned capital 970,038 1,394,039 1,012,109 1,070,732 1,903,800 1,931,141 1,845,306 2,171,319 2,350,391 1,638,200Ending Cash by Purpose 3,753,066 3,750,204 3,464,505 3,745,235 4,452,516 5,174,066 5,980,098 6,846,965 7,454,857 7,905,953Unrestricted Net AssetsUnrestricted Net Assets 5,929,989 5,976,028 5,740,022 6,071,254 6,829,864 7,603,649 8,462,651 9,383,434 10,046,143 10,552,976Subsequent Year's Operating Expense3,470,310 3,544,528 3,620,635 3,698,679 3,778,711 3,860,785 3,944,955 4,031,275 4,119,803 4,210,598Unrestricted Net Assets as % of Expense171% 169% 159% 164% 181% 197% 215% 233% 244% 251%Revenues 5,953,980 6,431,128 6,947,771 7,509,528 8,120,330 8,784,448 8,848,919 8,913,435 8,977,997 9,042,605 Expenditures 6,530,353 6,687,302 6,864,309 6,965,718 7,070,530 7,198,158 7,328,510 7,458,812 7,599,416 7,746,703 Net Revenue for Debt Coverage 2,576,914 2,979,584 3,421,994 3,906,216 4,440,378 5,027,999 5,014,004 4,998,381 4,980,957 4,960,076 Total Water Fund Debt Service 11,598,356 1,704,281 2,000,794 2,349,938 2,347,563 2,085,756 1,957,163 1,963,125 1,874,644 1,826,900 Debt Service Coverage Ratio 161% 175% 171% 166% 189% 241% 256% 255% 266% 272%Rate increase 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 0.0% 0.0% 0.0% 0.0%Change in Net Position - - - - - - - - - - New Debt1,420,000 2,470,000 2,785,000 - - - - - - - TargetsMinimum Unassigned Cash Balance500,000 Unrestricted Net Assets as % of Expense50%Debt Service Coverage125%No New Debt After202310/21/2020Page 1 of 2
City of Lakeville Utility Financial Planning Model Sewer SummarySewer SummarySewer Fund2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Ending Cash by PurposeUnassigned296,237833,610 1,131,301 1,324,427 1,247,702 1,682,999 1,933,424 2,088,234 2,333,801 1,747,183For 3-months of operating cash 1,437,146 1,342,575 1,411,952 1,485,378 1,562,533 1,643,907 1,730,002 1,820,502 1,915,919 2,016,782For following year debt service 75,650 73,375 70,125 71,750000000For next year planned capital 937,500 1,209,285 1,285,581 1,375,904 1,700,971 1,166,141 1,320,306 1,379,823 1,155,391 1,838,274Ending Cash by Purpose 2,746,533 3,458,845 3,898,960 4,257,459 4,511,207 4,493,047 4,983,731 5,288,559 5,405,112 5,602,238Unrestricted Net PositionUnrestricted Net Assets 2,420,216 3,132,528 3,572,643 3,931,142 4,184,890 4,166,730 4,657,414 4,962,242 5,078,795 5,275,921Subsequent Year's Operating Expense5,370,299 5,647,810 5,941,510 6,250,133 6,575,627 6,920,007 7,282,008 7,663,678 8,067,127 8,492,812Unrestricted Net Assets as % of Expense45%55% 60% 63% 64% 60% 64% 65% 63% 62%Revenues 6,869,371 7,141,659 7,421,498 7,711,865 8,013,144 8,325,730 8,650,035 8,986,484 9,245,767 9,511,965 Expenditures 7,589,303 7,234,456 7,542,198 7,868,039 8,211,058 8,579,077 8,952,611 9,347,619 9,763,785 10,196,118 Net Revenue for Debt Coverage 7,743,303 7,234,456 7,542,198 7,868,039 8,211,058 8,579,077 8,952,611 9,347,619 9,763,785 10,196,118 Total Sewer Fund Debt Service 71,750 75,650 73,375 70,125 71,750 - - - - - Debt Service Coverage Ratio 10792% 9563% 10279% 11220% 11444%Rate increase 6.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 2.0% 2.0%Change in Net Position (613,969) (145,010) (176,087) (213,937) (258,113) (317,795) (373,218) (438,173) (601,657) (774,608) New Debt - - - - - - - - - - TargetsMinimum Unassigned Cash Balance500,000 Unrestricted Net Assets as % of Expense50%Debt Service Coverage125%No New Debt After202010/21/2020Page 2 of 2
Street Light Summary Street Light FundRevised 10.13.20202021 2022 2023 2024 2025 2026 2027 2028 2029Ending Cash by PurposeUnassigned (target $100,000) 190,292 224,287 207,894 246,848 214,805 305,996 253,608 294,580 422,392 For 3‐months of operating cash 220,680 227,300 234,119 241,143 248,377 255,828 263,503 271,408 279,551 For following year debt service 50,500 53,375 51,125 53,750 51,250 ‐ ‐ ‐ ‐ For next year planned capital 363,100 113,980 175,780 129,220 214,270 142,670 285,870 192,790 99,710 Ending Cash by Purpose 824,571 618,942 668,919 670,961 728,702 704,494 802,982 758,779 801,653 Unrestricted Net AssetsUnrestricted Net Assets 681,092 515,463 610,440 657,482 765,223 791,015 889,503 845,300 888,176 Subsequent Year's Operating Expense* 882,719 909,201 936,477 964,571 993,508 1,023,314 1,054,013 1,085,633 1,118,202 Unrestricted Net Assets as % of Expense 77% 57% 65% 68% 77% 77% 84% 78% 79%Revenues 1,054,306 1,090,690 1,126,532 1,165,424 1,205,283 1,234,821 1,264,471 1,295,681 1,321,297 Expenditures 956,541 1,245,819 1,023,181 1,112,257 1,093,791 1,207,779 1,165,984 1,339,883 1,278,424 Cash 824,571 618,942 668,919 670,961 728,702 704,494 802,982 758,779 801,653 Net Revenue for Debt Coverage 97,765 (155,129) 103,351 53,167 111,491 27,042 98,487 (44,202) 42,874 Total Street Light Fund Debt Service 51,721 50,500 53,375 51,125 53,750 51,250 ‐ ‐ ‐ Debt Service Coverage Ratio 1.89 (3.07) 1.94 1.04 2.07 0.53 N/A N/A N/ARate increase 0% 3% 3% 3% 3% 2% 2% 2% 2%Change in Net Position (165,629) 94,976 47,042 107,741 25,792 98,487 (44,202) 42,876 140,969 TargetsMinimum Unassigned Cash Balance 100,000 Unrestricted Net Assets as % of Expense 50%Debt Service Coverage 1.25No New Debt Aftern/a*Excludes major maintenance estimates
Environmental Resources Summary Environmental Resources FundRevised 10.13.20202021 2022 2023 2024 2025 2026 2027 2028 2029Ending Cash by PurposeUnassigned (target $100,000) 478,209 240,351 193,282 135,756 116,943 136,748 174,963 230,851 305,090 For 3‐months of operating cash 565,635 578,983 592,655 606,660 621,006 636,477 651,533 666,956 682,758 For following year debt service‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ For next year planned capital ‐ 54,060 ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ending Cash by Purpose 1,043,844 873,394 785,937 742,416 737,949 773,225 826,495 897,807 987,848 Unrestricted Net AssetsUnrestricted Net Assets 955,907 791,375 713,403 681,550 687,497 733,645 794,267 873,145 970,971 Subsequent Year's Operating Expense* 2,262,541 2,315,932 2,370,621 2,426,640 2,484,024 2,545,909 2,606,130 2,667,825 2,731,032 Unrestricted Net Assets as % of Expense42% 34% 30% 28% 28% 29% 30% 33% 36%Revenues 2,230,750 2,123,136 2,208,154 2,308,092 2,401,045 2,497,769 2,573,271 2,650,894 2,730,689 Expenditures 2,453,096 2,262,541 2,315,932 2,370,621 2,426,640 2,484,024 2,545,909 2,606,130 2,667,825 Cash 1,043,844 873,394 785,937 742,416 737,949 773,225 826,495 897,807 987,848 Net Revenue for Debt Coverage (222,346) (139,405) (107,778) (62,528) (25,595) 13,745 27,362 44,764 62,864 Total Env Resources Fund Debt Service‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Debt Service Coverage Ratio N/A N/A N/A N/A N/A N/A N/A N/A N/ARate increase 2.0% 2.0% 3.0% 3.5% 3.0% 3.0% 2.0% 2.0% 2.0%Change in Net Position (218,290) (138,472) (106,972) (61,853) (25,053) 14,148 27,623 44,878 62,826 TargetsMinimum Unassigned Cash Balance 100,000 Unrestricted Net Assets as % of Expense 50%Debt Service Coverage 1.25No New Debt After 20XXn/a
City of Lakeville Utility Financial Planning Model Water Summary Attachment 3- Water alternative scenario (2021 Water rate increase of 16%)Water Fund2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Ending Cash by PurposeUnassigned 606,675413,031516,089 793,133 637,018 632,111 753,568 683,882 529,054 1,552,386Unspent bond proceeds (restricted)0000000000For 3-months of operating cash 867,577 886,132 905,159 924,670 944,678 965,196 986,239 1,007,819 1,029,951 1,052,649For following year debt service 1,704,281 2,000,794 2,349,938 2,347,563 2,085,756 1,957,163 1,963,125 1,874,644 1,826,900 1,405,331For next year planned capital 970,038 1,394,039 1,012,109 1,070,732 1,903,800 1,931,141 1,845,306 2,171,319 2,350,391 1,638,200Ending Cash by Purpose 4,148,572 4,693,995 4,783,294 5,136,097 5,571,253 5,485,611 5,548,237 5,737,664 5,736,296 5,648,567Unrestricted Net AssetsUnrestricted Net Assets 6,325,495 6,919,819 7,058,811 7,462,116 7,948,600 7,915,194 8,030,791 8,274,133 8,327,582 8,295,589Subsequent Year's Operating Expense3,470,310 3,544,528 3,620,635 3,698,679 3,778,711 3,860,785 3,944,955 4,031,275 4,119,803 4,210,598Unrestricted Net Assets as % of Expense182% 195% 195% 202% 210% 205% 204% 205% 202% 197%Revenues 6,349,486 6,977,437 7,318,050 7,575,007 7,841,250 7,971,663 8,103,955 8,238,154 8,374,284 8,512,372 Expenditures 6,530,353 6,687,302 6,864,309 6,965,718 7,070,530 7,198,158 7,328,510 7,458,812 7,599,416 7,746,703 Net Revenue for Debt Coverage 2,972,420 3,527,870 3,796,992 3,978,288 4,168,252 4,220,807 4,270,598 4,320,940 4,371,697 4,421,250 Total Water Fund Debt Service 11,598,356 1,704,281 2,000,794 2,349,938 2,347,563 2,085,756 1,957,163 1,963,125 1,874,644 1,826,900 Debt Service Coverage Ratio 186% 207% 190% 169% 178% 202% 218% 220% 233% 242%Rate increase 16.0% 10.0% 4.5% 3.0% 3.0% 1.0% 1.0% 1.0% 1.0% 1.0%Change in Net Position - - - - - - - - - - New Debt1,420,000 2,470,000 2,785,000 - - - - - - - TargetsMinimum Unassigned Cash Balance500,000 Unrestricted Net Assets as % of Expense50%Debt Service Coverage125%No New Debt After202310/21/2020Page 1 of 1
City of Lakeville Utility Financial Planning Model Water Summary Attachment 4- Water alternative scenario (2021 Water rate increase of 4%)Water Fund2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Ending Cash by PurposeUnassigned13,417 (944,835) (1,453,227) (1,506,607) (1,672,775) (1,178,591) 7,577940,729 1,724,675 3,620,484Unspent bond proceeds (restricted)0000000000For 3-months of operating cash 867,577 886,132 905,159 924,670 944,678 965,196 986,239 1,007,819 1,029,951 1,052,649For following year debt service 1,704,281 2,000,794 2,349,938 2,347,563 2,085,756 1,957,163 1,963,125 1,874,644 1,826,900 1,405,331For next year planned capital 970,038 1,394,039 1,012,109 1,070,732 1,903,800 1,931,141 1,845,306 2,171,319 2,350,391 1,638,200Ending Cash by Purpose 3,555,314 3,336,130 2,813,979 2,836,357 3,261,459 3,674,909 4,802,246 5,994,511 6,931,916 7,716,665Unrestricted Net AssetsUnrestricted Net Assets 5,732,237 5,561,954 5,089,496 5,162,376 5,638,806 6,104,492 7,284,799 8,530,980 9,523,203 10,363,687Subsequent Year's Operating Expense3,470,310 3,544,528 3,620,635 3,698,679 3,778,711 3,860,785 3,944,955 4,031,275 4,119,803 4,210,598Unrestricted Net Assets as % of Expense165% 157% 141% 140% 149% 158% 185% 212% 231% 246%Revenues 5,756,228 6,215,795 6,713,390 7,254,429 7,842,695 8,482,303 9,177,720 9,244,723 9,311,773 9,378,871 Expenditures 6,530,353 6,687,302 6,864,309 6,965,718 7,070,530 7,198,158 7,328,510 7,458,812 7,599,416 7,746,703 Net Revenue for Debt Coverage 2,379,161 2,763,262 3,185,542 3,647,864 4,158,198 4,719,899 5,335,309 5,323,779 5,310,471 5,293,727 Total Water Fund Debt Service 11,598,356 1,704,281 2,000,794 2,349,938 2,347,563 2,085,756 1,957,163 1,963,125 1,874,644 1,826,900 Debt Service Coverage Ratio 149% 162% 159% 155% 177% 226% 273% 271% 283% 290%Rate increase 4.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 0.0% 0.0% 0.0%Change in Net Position - - - - - - - - - - New Debt1,420,000 2,470,000 2,785,000 - - - - - - - TargetsMinimum Unassigned Cash Balance500,000 Unrestricted Net Assets as % of Expense50%Debt Service Coverage125%No New Debt After202310/21/2020Page 1 of 1
Utility Billing Rate Communication Strategy regarding 2021 rate changes
Date Method of Communication Publication due date Intent
10/21/2020 Website N/A Inform customers of upcoming meetings with Council
to discuss fees ‐ in particular UB rates
12/7/2020 Newspaper:
Legal Notices
10 or 14 days before meeting Required communications to inform residents about
upcoming Public Hearing regarding all fees ‐ in
particular UB rates
Newspaper:
Focus on Lakeville Ad
options: Nov. 13, Nov. 27 Advertise upcoming public meeting, in addition to legal
posting
12/7/2020 Website publication notice Communicate upcoming Public Hearing and proposed
rate changes
12/7/2020 Social media publication notice Communicate upcoming Public Hearing and proposed
rate changes
Week of Nov. 30 Nextdoor.com
Week of Nov. 30 Twitter
Week of Nov. 30 Instagram
Week of Nov. 30 Facebook
1/4/2021 Mailed letter to all UB residents Need to work with Impact on timing Communication regarding adopted rates go into effect
2/1/21
Attachment 5