06/02/1987 Meeting - Laserfiche WebLink

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e e e II. SEWER USER RATE PROPOSAL Ci ty Manager Mi chea 1 Gl eason introduced Fi nance Di rector Warren Wong who distributed a packet titled "Local Sewer Rate." Mr. Wong reviewed the data in the packet. He said the Ci ty has several types of funds. The 1 oca 1 sewer operations and capital projects funds are enterprise funds. Enterprise funds are rate-based funds and users pay for the service provided. Enterprise funds do not receive support from the General Fund. Mr. Wong said the council's financial management policies that affect the enterprise funds are maintenance of an adequate service system, compliance with established service standards, fund independence, rate-based support, no property tax support, maintenance of adequate working capital, and sufficient contingency and reserve funds. Answering questions from Mr. Rutan, Mr. Wong said the decision to fund a service with an enterprise fund is usually made during the budget process before a service is initiated. Mr. Gleason said the decision to fund the Metropolitan Wastewater Management Commission (MWMC) was made in 1976 or 1977 when the service district was formed. Replying to a question from Ms. Bascom, Mr. Wong said the City would like the sewer fund to be financially stable and to break even. Mr. Wong said the cash flow, capital requirements, and contingency and reserve provisions for the sewer fund are important because of its present fiscal ~ondition and because of future infrastructure requirements. He said the sewer operations fund totals about $3.6 million annually. He discussed expenses and revenue and said working capital in an enterprise fund should equal two months. cash flow. For the sewer fund, the working capital should be $600,000 to $800,000. Working capital also needs to be accumulated to pay for capital projects. He said the working capital in the sewer fund in the early 1980's was $7 million. Because of capital projects, the working capital is now down to about $3.4 million and will be down to about $102,000 in 1988. Mr. Gleason said much of the $7 million was spent providing services to the River Road and Willow Creek areas. Mr. Wong reviewed the sewer capital projects that have been funded since 1981. Answering questions from Ms. Ehrman, Mr. Wong said the sewer fund under discussion is for the City of Eugene only. Mr. Wong said the contingency part of a fund should be about 5 percent. For the sewer fund, it should be about $200,000. He discussed several recent sewer emergencies. Mr. Holmer pointed out that the General Fund includes contingency funds for both operations and capital projects. Mr. Wong responded that the General Fund contingency funds are for projects paid for from the General Fund. He said the contingency for sewer operations is in the sewer fund and there is another $100,000 in the budget for a reserve for sewer capital. Mr. Gleason added that funds from the General Fund must be used if there is not enough in the contingency for sewer emergencies. MINUTES--Eugene City Council Dinner/Work Session June 2, 1987 Page 2