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Future Use of Water and Sewer Fund Balance

Future Use of Water and Sewer Fund Balance. Mayor Pro Tem Tuggle Councilman Carter Councilman Burnette October 19,2010. What? The Recommendation.

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Future Use of Water and Sewer Fund Balance

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  1. Future Use of Water and Sewer Fund Balance Mayor Pro Tem Tuggle Councilman Carter Councilman Burnette October 19,2010

  2. What? The Recommendation • It is our recommendation that the water and sewer service rate increases previously approved and scheduled for implementation on January 1, 2011, January 1, 2012 and July 1, 2012 be delayed for two years.

  3. Background Information • August 2009 Council adopted a series of Water and Sewer rate increases due to a $3.2 Million loss of revenue from the closing of Hanes Brand. • The increases were factored into the operating costs and continued improvements in infrastructure. • Special Order by Consent from NCDENR

  4. Why? • Recession • High unemployment rate • Effects on individuals, businesses and industries • Larger than expected Water and Sewer Fund Balance • Recent acquisition of $1 million grant for sewer projects

  5. How? The Financials • W/S Fund Balance June 2009………………$9.2 Million • June 2010-Expected • Revenues ……………………………………………$9.8 Million • Expenditures…………………………………………$8.0 Million • Revenues greater than expenses by ……………..$1.8 Million • Expected W/S Fund Balance June 2010…..$11.0 Million

  6. Who Will This Delay Affect? Everyone • City of Eden------lost revenue $339,000/yr • Residential Customer using-5000 gal/month saves $88/yr • Industry Example-Karastan saves $72,000/yr

  7. W/S Fund Balance Will Have to be Utilized Without Rate Increase • $10,041,500 Projected Revenue Total • -$2,500,000 Take-or-Pay HBI FY 2010-11 • $7,541,500 Total Revenue Figure • -$339,429 Lost Revenue • $7,202,251 New Revenue Total • $7,224,000 Proj. Expenses with NO Capital Initiatives • $21,749 Deficit -with NO improvements or projects • Therefore Fund Balance will have to be used for projects and improvements

  8. Short & Long Term Cost Considerations • Continue to investigate Automated Water Meter Reading • Maintain focus on high priority W/S capital projects • Utilize appropriate amount of W/S Fund Balance • Review W/S rates as changes occur

  9. Final Recommendation and Motion • Delay water and sewer rates scheduled for implementation January 1, 2011, January 1, 2012 and July 1, 2012 for two years by utilizing Water and Sewer Fund Balance but try NOT go below June 30 2008 Fund Balance total of $7,659,335.

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