Utility Committee Agenda and Packet 2021 02 09

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saying staff continue to focus on the recommended smoothing option but will continue to include the Just -In -Time Alternative for comparison. Mr. Peterson explained the modifications in the analysis for this year. Rates are being calculated with current tap fees and the pervious method of tap fees delayed by a year. Another modification was reducing the Cash Reserves from the current 120 days to a 90 day Cash Reserve. Mr. Peterson continued to the next slide on Debt Issuance and the Modeled Tap Fees and stated there hasn't been any change to this and that staff is confident this is a conservative approach to our tap fees into the future. • Page 32-33 — Water: Cash Reserve Comparison Table, Mr. Peterson said we looked at the adjustment to the 90 day cash reserves which was based on the old model runs where we show the 4% recommended increase back in September. So when we adjust that for the 90 day Cash Reserve it drops from 4% to 3.7%. Mayor Pro Tern Councilmember Maloney asked if the 4% included the $2.5M down payment for Windy Gap. Mr. Peterson said yes it assumed the $2.5M along with the $926,000 annual payment through the model period of 2021-2030. Councilmember Fahey continued by asking why does the percentage drop in 2027 and why it is twice as much the first six years. Mr. Peterson explained the CIPs are the drivers and we know what's coming where in the later years it's not as robust. So the overall cost starts dropping. If and likely more projects are added there will be a need to increase rates to compensate. • Page 34-37 — Mr. Peterson continued the presentation with describing the Budgeted Multi Year Water CIPS and said they tried to align when the actual expenditure would occur as opposed to having it budgeted in the first year of the project. Page 35 shows how the mutli-year projects show an increase in fund balance in the first year but ultimately catches back up in a year or two depending on the project. With the water rate driver being the target cash reserve in 2027, the shifting of projects in the next few years has no change to the overall impacts to the rates. • Page 38 — Financial Planning Alternatives, Mr. Peterson explained this is the 2020 rates that were approved earlier this year. He described the percentages when frozen, COVID options, back to 4% and the WGFP smoothing percentage which is what staff is currently recommending for 2021. Councilmember Lipton asked about the down payment assumptions where he thought we were going to do a large payment from the Utility Fund to Windy Gap. Mr. Peterson explained that the 4% back in August did include the large down payment but the 2.8% we are 7