RES 2024025 - Laserfiche WebLink

36 outstanding balance on June 30, 2023, was $1,900,000. The outstanding bonds were paid off in April 2024 with funds borrowed from the City’s Equipment Replacement Fund. The interfund loan amount is $965,160 with a five-year repayment term. The loan bears variable annual interest that is based on the investment return generated by the City’s investment pool. The current interest rate is about 1.5%. Principal and interest are due annually in June. The loan can be paid off anytime within the five-year period without penalty. The repayment is not secured by a pledge of the Net Revenues and, accordingly, is a subordinate debt obligation of the Water System. Funds and Reserves The City currently maintains separate funds for the Water System. Each of these funds is treated as a separate accounting entity, but are consolidated for rate setting. The Water Operating Fund is the main operating fund of the Water System. The fund is used to pay for all operating and maintenance costs for water system. The fund is also used for ongoing capital and replacement projects as budgeted each year. The Water CIP Fund is used for specific capital improvement projects that were budgeted in past years. Each year, the City sets aside the full cost of capital improvements approved that year by transferring money from the Water Operating Fund to the Water CIP Fund. The Water CIP Fund typically carries a significant balance that is reserved for the remaining costs of projects approved in prior years but still under construction. The Water Connection Fees Fund was established to record connection fees that are paid by developers to connect new services to the water system, and are used to fund improvements and expansion of the water system to accommodate new development. The fees also cover the incremental cost of future expansion and improvements necessary to accommodate new developments. The City’s fiscal policies and fiscal practices provide as follows, among other things: (1) The City will maintain working capital in the Water System funds to provide for future capital projects and unanticipated emergencies, such as pump station repairs. The City will attempt to maintain a working capital reserve of at least 30% of the annual operating and maintenance expenses for the Water Fund. As of June 30, 2023, the amount in this reserve was $8.0 million (unaudited). (2) A plan will be developed to provide a roadmap to replenish the reserve through a rate study when the reserve level is below 30%. (3) Unspent funds in the Water CIP Fund will be used for future capital projects and is served as a rate stabilization fund in which funds can be transferred back to the Water Operating Fund to cover operating expenses if needed.