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Metropolitan Wastewater Management Commission Reserves <br />CAPITAL RESERVES <br />The MWMC Capital Budget includes four reserves: the Equipment Replacement Reserve, SDC <br />Reimbursement Reserves, SDC Improvement Reserves, and the Capital Reserve. These reserves <br />accumulate revenue to help fund capital projects including equipment replacement and major <br />rehabilitation. They are funded by annual contributions from user rates, SDCs, and loans. Each <br />reserve is explained in detail below. <br />EQUIPMENT REPLACEMENT RESERVE <br />The Equipment Replacement Reserve accumulates replacement funding for three types of <br />equipment: 1) major/stationary equipment items valued over $10,000 with life expectancy <br />greater than one year; 2) fleet vehicles maintained by the Eugene Wastewater Division; and 3) <br />computer servers that serve the Eugene Wastewater Division. Contributions to the Equipment <br />Replacement Reserve in the FY 19-20 budget total $2 million, additional budget details are <br />provided below. <br />The Equipment Replacement Reserve is intended to accumulate funds necessary to provide for <br />the timely replacement or rehabilitation of equipment, and may also be borrowed against to <br />provide short-term financing of capital improvements. An annual analysis is performed on the <br />Equipment Replacement Reserve. Estimates used in the analysis include replacement costs, <br />interest earnings, inflation rates and useful lives for the equipment. <br />PROPOSED <br />ADOPTEDAMENDED <br />BUDGETBUDGETBUDGET <br />EQUIPMENT REPLACEMENT RESERVEFY 18-19FY 18-19FY 19-20 <br /> Beginning Balance$12,007,589$12,426,367$12,799,367 <br /> Annual Equipment Contribution1,000,0001,000,0002,000,000 <br /> Interest30,00030,000250,000 <br /> Equipment Purchases(649,000)(884,000)(621,000) <br /> Equipment Replacement Reserve $12,388,589$12,572,367$14,428,367 <br />SYSTEM DEVELOPMENT CHARGE (SDC) RESERVES <br />SDCs are required as part of the MWMC IGA. They are connection fees charged to new users to <br />recover the costs related to system capacity, and are limited to funding Capital Programs. The <br />purpose of the SDC Reserves is to collect and account for SDC revenues separately from other <br />revenue sources, in accordance with Oregon statutes. The Commission’s SDC structure includes <br />a combination of “Reimbursement” and “Improvement” fee components. Estimated SDC <br />revenues for FY 19-20 are approximately $1,740,000. Budgeted expenditures include <br />$2 millionfrom Improvement Fees to fund portions of the annual debt service payments on the <br />2016 revenue bonds. The projected beginning SDC Reserve balance on July 1, 2019 is <br />$4,547,593. <br />Page 21 FY 19-20 BUDGET AND CIP <br />- ¸ ΐΒǾ ΑΏΐΘǾ 7®±ª 3¤²²¨®­ ȟ )³¤¬ Β# <br /> <br />