Utility Committee Agenda and Packet 2021 03 09

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several CIPs because the rate model was showing the fund balance meeting targets. The delay in the CIPs caused an increase in fund balance. The finance model was already showing a higher fund balance than the rate model, so by delaying CIPs it made the balance even higher. The spend down options first considered moving these CIPs back to original dates and eliminated the delays. Spend Down Option - Mr. Peterson continued with explaining the different Options (A through D) listed in the table on page 18. Option A assumes a Driver Year or the year when the fund balance meet targets of 2027. This is shown on the graph on page 19 were the columns meet the dark orange line. Each driver year includes a corresponding colored circle for identification purposes. Option B assumes a 2025 Driver Year (2 years earlier). Option C can be described as the same as Option B but assumes a 10% O&M Turnback. Option D is the assumption of the water rights transaction we have scheduled for next City Council meeting that will bring an influx of revenue. Councilmember Lipton asked if we talked about this prior and Mr. Kowar said yes and more in depth conversation will be had at the next City Council meeting. Councilmember Lipton asked for additional clarification on the driver years. Mr. Kowar discussed the two controls in the rate model of either fund balance or debt coverage. In the water fund it has historically been fund balance that drives the rate increases. Councilmember Fahey asked for information on why the fund balance is increasing over time. Mr. Kowar explained that this a result of fewer projects the farther out in the model is calculated with more uncertainty. Mayor Pro Tern Maloney asked if we are looking for conceptual discussion and approval for direction. Mr. Kowar confirmed that the options presented address the concern over the amount of the fund balance. As a result, staff want to accelerate projects. In addition, there is potential for a new cash that adds to the spend down and staff are recommending to increasing spending on water rights and infrastructure. Councilmember Lipton sought clarification if staff were looking for approval of the concept and overall direction or if there was a desire for approval of the individual projects. Mr. Kowar responded with staff are looking for overall direction and the individual line items will be brought back for approval at the budget process or when they are needed. Mayor Pro Tern Maloney stated that he is on board with Option D because it takes everything into consideration. Mr. Peterson made the concluding point that the 2% in the recommended rate increase and is consistent across all options. Councilmember Lipton thanked staff for the explanation. • Draft - 2021 Rate Mr. Kowar started the rate discussion on page 29 and explained the various water rate versions with the last row showing the staff recommended Spend Down Option D at 2%. Councilmember Lipton said he was good with maintaining the