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transfers or budgeted expenditures may need to be reduced. However, should additional growth <br /> occur, or costs escalations decrease over the next several years, the proposed adjustments may <br /> provide adequate operating and capital funding. It should also be noted that the revenue <br /> requirement plan as developed, may not include sufficient capital funded through rates when the <br /> City has completed its asset management study. <br /> 1.9 Consultant's Conclusions and Recommendations <br /> Based upon the revenue requirement analysis developed herein, it is projected that the City will <br /> operate at a deficit for the projected planning period. These deficiencies are primarily a result of <br /> the need to begin funding a replacement reserve, while at the same time, increasing the capital <br /> improvements funded from rates. <br /> The size and timing of the adjustments to the City's local sewer rates are a policy decision of the <br /> Pleasanton City Council. HDR would recommend a larger rate increase than the consumer price <br /> index in order to cover the deficit the City will have over the planning horizon. <br /> 1.10 Summary <br /> This section of the report has provided a discussion of the City's revenue requirement analysis. <br /> The revenue requirement developed a financial plan to support Pleasanton's local sewer <br /> operating and capital infrastructure requirements. A rate transition plan was developed to <br /> implement the needed rate adjustments, while attempting to minimize the impacts to customers. <br /> The next section of the report will discuss the proposed rates developed for the City's local sewer <br /> utility. <br /> 1 ED D evelopment of the Revenue Requirement 1.8 <br /> City of Pleasanton Local Sewer Rate Study <br />