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Financial Plan Scenarios <br />•How do we “solve” the financial plan for each WSMP alternative? <br />•Revenue adjustments – increase total water/recycled water rate revenues <br />each year <br />•Issue new debt – issue debt to fund CIP, reduces amount of CIP funded by <br />cash/rates <br />•Goal is to stabilize water and recycled water utility and enterprise fund by the end <br />of study period (FY 2029) <br />15 <br />Debt Financing <br />•What are the benefits of issuing new debt to fund CIP? <br />•Reduces need for larger revenue adjustments <br />•Smooths out rates and customer impacts over a longer horizon <br />•Addresses generational equity concerns <br />•What are the disadvantages of issuing debt to fund CIP? <br />•Increases overall project costs (paying interest) <br />•Requires additional financial management policies (debt coverage, future debt capacity) <br />•Most utility agencies issue debt to fund CIP; to minimize revenue adjustments, debt <br />should be issued for each WSMP alternative <br />16 <br />Page 24 of 27