HomeMy WebLinkAboutX-E-01 Utility Rate StudyOverview of Utility Rate Study
City Council Meeting
September 18, 2023
X-E-01
Items to Cover
Review study objectives
Conclusions and recommendations
Key financial information
Utility rates and customer impacts
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Study Objectives
Provide City with information to evaluate
updated proposed rates for charging for
service
Review existing plans and projections
Collect and analyze customer data
Provide recommendation on planning for
major capital improvements and financing
3
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Conclusions and Recommendations
Utility Rates
Rates set at level to fund operations, meet debt
service, and to provide for annual capital
improvements
Plan anticipates the following future level of
rate increases will be needed over the planning
period (2024-2032):
3.5% increase for Water rates
4.5% increase for Sanitary Sewer rates
4.0% increase for Storm Water rate
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Impact on Example Customer
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Impact on Development Fees
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Financial Management of Utility Funds
Activities of the utility enterprise funds should be
recovered with the fees and charges of the individual
utility
Objectives for year-end cash balances:
Cash sufficient to cover 3-months of operations
Cash sufficient to cover following year debt service
Cash sufficient to cover planned (pay-go) capital
outlay
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Water Fund
Sound financial condition – revenues sufficient
to cover expenses
Plan assumes an average annual rate increase
to customers of 3.5%
Plan includes 1/3 FTE increase in 2025
Capital improvements to be funded with a
combination of cash (pay-go) and bonding:
Debt issuance anticipated in 2025, 2028, and 2029 to
finance an estimated $7.905 million of $14.69 million
of project costs
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Water Fund Cash Balance
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Water Fund Customers and Usage
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Impact on Example Water Customer
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Sanitary Sewer Fund
Sound financial condition – revenues sufficient
to cover expenses
Plan includes 1/3 FTE increase in 2025
Plan assumes an annual average rate increase
to customers of 4.5%
Bonding is anticipated for capital
improvements in all years, with the exception
of 2030.
Total debt issuance of $9.1 million anticipated to
finance total project costs of approximately $10.425
million
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Sanitary Sewer Fund Cash Balance
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Sanitary Sewer Fund Customers and Usage
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Impact on Example Sanitary Sewer Customer
15
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Storm Water Fund
Sound financial condition – revenues sufficient
to cover expenses
Plan includes 1/3 FTE increase in 2025
Plan assumes average annual increase of 4.0%
annually
Capital improvements to be funded with a
combination of cash and bonding
Debt issuance anticipated in 2024, 2027, 2030 and
2032 to finance the estimated $2.65 million of the
$4.9 million of total storm utility projects
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Storm Water Fund Cash Balance
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Storm Water Fund Customers and Usage
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Impact on Example Storm Water Customer
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Bonds Outstanding Paid from Utility Revenue
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Annual Debt Service Paid from Utility Revenue
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Comparison to Other Cities
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Summary
City should annually review and adopt rate
increases, paying particular attention to
anticipated changes to MCES charges and
impact on Sewer expenses
City should adopt rates that achieve revenues
to meet both cash objectives and net position
targets
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Northland Public Finance
Northland Securities, Inc.
150 South 5th Street, Suite 3300
Minneapolis, Minnesota 55402
800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC
Registered with SEC and MSRB
Thank You
24
Tammy Omdal
612-851-4964
tomdal@northlandsecurities.com
Jessica Green
612-851-5930
jgreen@northlandsecurities.com
X-E-01
City of Hastings, MN
Financial Management Plan For
Water Fund, Sewer Fund, and Storm Fund (Utility Study)
September 18, 2023
Northland Securities, Inc.150 South Fifth Street , Suite 3300Minneapolis, MN 55402 Toll Free 1-800-851-2920 Main 612-851-5900www.northlandsecurities.comMember FINRA and SIPCRegistered with SEC and MSRB
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i
CONTENTS
Letter of Transmittal
1. Introduction and Summary 1Overview ............................................................................................................................1Study Approach ..................................................................................................................1Revenue Sufficiency ...........................................................................................................1Rate Calculation .................................................................................................................2Organization of the Plan .....................................................................................................3
Table 1 - Water Fund Key Financial Summary Data ............................................................4Chart 1 - Water Fund Projected Ending Cash Position .......................................................5Charts 2, 3, 4, 5 - Water Fund - Key Financial Summary Data ............................................6
Table 2 - Sewer Fund Key Financial Summary Data ............................................................7Chart 6- Sewer Fund Projected Ending Cash Position ........................................................8Charts 7, 8, 9, 10- Sewer Fund - Key Financial Summary Data ...........................................9
Table 3 - Storm Fund Key Financial Summary Data ..........................................................10Chart 11- Storm Fund Projected Ending Cash Position ....................................................11Charts 12, 13, 14, 15- Storm Fund - Key Financial Summary Data ...................................12
Charts 16, 17 - Low Volume Customer Water and Sewer Bill...........................................13Charts 18, 19 - Medium Volume Customer Water and Sewer Bill....................................14Charts 20, 21 - High Volume Customer Water and Sewer Bill ..........................................15
2. Best Practices Evaluation 16
Overview ..........................................................................................................................16
Irrigation / Rate Structures ......................................................................................16
Water Conservation Elements and Rate Structures ................................................16
Billing Cycles ............................................................................................................17
Comparison to Other Minnesota Cities ............................................................................18
Chart 22 - Low Volume Customer Comparison to Other Cities ........................................19
Chart 23 - Medium Volume Customer Comparison to Other Cities .................................20
Chart 24 - High Volume Customer Comparison to Other Cities .......................................21
4. Rate Structure 22
Equity of Current Rate Structure for Water and Sewer ....................................................22
Revenue from Fixed Rate Versus Volume Basis ................................................................22
Figure 1 - Charges for Services Revenue ..........................................................................23
Evaluation of Funding Approach for Infrastructure ..........................................................23
Contents
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ii
Funding Depreciation .......................................................................................................23
Cash Balance Targets ........................................................................................................24
Unrestricted Net Position Target ......................................................................................24
Price Elasticity of Demand for Water ...............................................................................24
Chart 25 - Water Revenue - Volume Basis Versus Non-Volume Basis ..............................25
Chart 24 - Sewer Revenue - Volume Basis Versus Non-Volume Basis ..............................25
5. Capital Improvement Plan 26
Overview ..........................................................................................................................26
Capital Projects ................................................................................................................26
Source of Funding for Capital Projects .............................................................................26
Chart 27 - Water Fund - Annual Capital Project Costs ......................................................27
Chart 28 - Sewer Fund - Annual Capital Project Costs ......................................................27
Chart 29 - Storm Fund - Annual Capital Project Costs ......................................................28
Table 4 - Water Fund - Capital Improvement Plan ...........................................................29
Table 5 - Sewer Fund - Capital Improvement Plan ...........................................................30
Table 6 - Storm Fund - Capital Improvement Plan............................................................31
Table 7 - Bonds Outstanding - Existing and Future Bonds ................................................32
Chart 30 - Bonds Outstanding Payable from Utility Funds ...............................................33
Chart 31 - Annual Debt Service Payable from Utility Funds .............................................33
6. Financial Plans 34Revenue Sufficiency .........................................................................................................34Key Assumptions ..............................................................................................................34
Water Fund ......................................................................................................................36Table 8 - Pro Forma .................................................................................................37Table 9 - Year End Cash Balances.............................................................................39Table 10 - Customers/Usage and Rates and Charges for Services Revenue ............40
Sewer Fund ......................................................................................................................43Table 11 - Pro Forma ...............................................................................................45Table 12 - Projected Year End Cash Balances ..........................................................47Table 13 - Customers/Usage and Rates and Charges for Services Revenue ............48
Storm Fund ......................................................................................................................50Table 14 - Pro Forma ...............................................................................................51Table 15 - Projected Year End Cash Balances ..........................................................53Table 14 - Customers/Usage and Rates and Charges for Services Revenue ............54
7. Appendix 55
Comparison to Other Cities ..............................................................................................56
Contents
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iii
September 18, 2023
Chris Eitemiller
Finance Manager
City of Hastings
101 4th Street East
Hastings, MN 55033
RE: Financial Management Plan for Water, Sewer, and Storm Funds
Dear Chris,
Northland is pleased to present the City of Hastings with a Financial Management Plan for Water, Sewer, and Storm Funds (the “Plan”). The Plan provides the results of our analytical work and facilitation of the process to guide the city towards arriving at a conclusion on utility rate fee schedule for the next decade. The Plan provides options for revenue generation structure that is projected to be financially solvent, fair to end-users, economically competitive, and in proposed alignment with what we understand to be the city’s overall philosophy on utility fees.
Sincerely,
NORTHLAND SECURITIES, INC.
Tammy Omdal Jessica Green
Managing Director Managing Director
150 South Fifth Street, Suite 3300, Minneapolis, MN 55402
Main: (612) 851-5900 / Direct: (612) 851-4964 / Email: tomdal@northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
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1
Introduction and
SummaryINTRODUCTION AND SUMMARY
ing reports on customer billings for years 2020 and
2021, with volumes billed by billing period and cus-
tomer classifications. Northland relied on the data as
presented by the city for projection of water use and
volumes by tier and average number of billing units per
year.
• City provided historical financial data along with cur-
rent budget plans and CIP.
• Information provided by the city was organized, ana-
lyzed, and used to support the development of the
Plan. Prior year data included in the Plan is reconciled
with the city’s audited financial statements.
• City staff offered input and feedback on assumptions
for the study.
Revenue Sufficiency
The study evaluated the sufficiency of revenues to meet
current and projected financial requirements for the Util-
ity Funds over the next decade, and determined the rates
necessary in each year of the projection period to provide
sufficient revenues to meet objectives. For purposes of the
Plan, the objectives included providing revenue sufficient
to achieve year-end cash balances to cover the following
purposes:
• Three-months of operating expense
• Following year debt service payments
• Following year capital acquisition (planned to be paid
from cash)
• Reserves for future capital improvements
Reserves for future capital improvements includes cash
available from connection and access charges collected at
time of development reserved for future improvements.
Overview
The Financial Management Plan for Water, Sewer, and
Storm Funds (the “Plan”) is intended to serve as a guide
for financial management of the water, sewer, and storm
systems of the city (the “Utility Funds”).
The objectives of the study for the Plan were as follows:
• Revenue Sufficiency - develop and populate a fore-
casting model to determine the revenue needed to
satisfy projected operating, capital improvements, and
debt service while maintaining adequate reserves for
future capital needs. The city desires to minimize debt
issuance for capital improvements when possible.
• Rate Calculation - Review existing rate structures for
the Utility Funds and develop and propose modifica-
tions to ensure that rates reflect accepted practices,
fair and equitable distribution of costs.
The Plan includes anticipated future capital improvements
for the Utility Funds for years 2023-2032 (the “CIP”). Esti-
mates include future costs and timing of projects. The ac-
tual timing for future system improvements will depend in
part on the growth rate of the city. While the specific timing
is uncertain, awareness of the necessity of these future im-
provements is important when considering rates and level
of reserves as presented in the Plan.
Study Approach
The following steps were taken as part of the study:
• City provided information on customer activity, includ-
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2
Introduction and
SummaryThe city accounts for water, sewer, and storm services in
the Water Fund, Sewer Fund, and the Storm Fund, reported
as Enterprise Funds of the city. Enterprise Funds are used to
account for ongoing activities that are similar to businesses
found in the private sector.
The Enterprise Funds are considered self-supporting in
that the services rendered by them are financed primarily
through user charges. The costs of providing services, such
as capital costs, depreciation, and debt service, are recov-
ered with fees and charges, rather than with taxes or similar
revenues.
The graphics and tables that follow provide a summary of
key financial information for the Utility Funds, including the
revenue sufficiency of the proposed rates to meet ending
cash objectives.
Rate Calculation
The city has a practice of annually adjusting utility rates to
ensure revenue is sufficient. The city has a two-part rate
structure for the water and sewer services, comprised of
both fixed and variable charges based on volume. A tier
structure is recommended by generally accepted practices
and is a practice followed by most cities within the Twin
Cities metropolitan area. A two-part rate structure recovers
a portion of system costs in a fixed charge, recognizing that
the water and sewer services have certain fixed costs that
are incurred year-round regardless of the level of water us-
age by customers. Storm services are billed based on a per
customer basis.
It is estimated that approximately 70%-85% of the Water
Fund and Storm Fund expenses, including depreciation, are
fixed, and for the Sewer Fund it is approximately 30%. The
fixed expenses for the Sewer Fund are lower because of the
collection and treatment system operated by Metropolitan
Council Environmental Services (MCES).
Based on the results of the study, for usage or metered vol-
ume-based rates the following is recommended:
• Maintain the city’s structure for base rate charges with
annual inflationary adjustments to cover the projected
annual increases in fixed costs for services.
• Consider the cost/benefit of converting from a quar-
terly to monthly billing cycle. The benefits of a monthly
billing cycle are covered later.
• Establish rates at a level that provides an appropriate
level of cash reserves for future capital improvements
that are not yet programmed in the CIP. The reserves
should be maintained at a level that is consistent with
the city’s past experience for contingency and at a level
that reflects uncertainty about cost and timing of fu-
ture infrastructure needs, and the city’s desire to limit
the issuance of debt financing when feasible.
The Plan anticipates approximately 3.5% average annual
rate increase for water services, 4.5% for sewer services,
and 4% for storm services beginning in 2024. The annual
rate increases are approximate average annual increases,
and reflect the anticipated net cost increases and revenue
sufficiency objectives in the Plan.
The graphics and tables that follow present the impact to an
average residential customer at various levels of water use
resulting from the proposed rates. Customer bill amounts
are shown on a quarterly basis consistent with the city’s
current billing cycle.
Utility rates and tier structures should be reviewed annually
to ensure that rates and structure provide adequate rev-
enues based on actual experience. Future rates should be
set based on actual data and performance, which will be
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3
Introduction and
Summaryimpacted by timing of future development, among other
factors.
Organization of Plan
The Plan is organized into seven sections:
1. Introduction and Summary provides information on the
study approach, revenue sufficiency, and rate calcula-
tions.
2. Best Practices Evaluation provides information on lit-
erature search for best practices, and comparison to
other cities.
3. Rate Structure provides information on equity of the
current rate structure, evaluation of funding approach
for infrastructure, and approach for funding deprecia-
tion.
4. Capital Improvement Plan provides information on the
city’s plans for maintaining and improving the water
and sanitary sewer systems. This includes estimates on
project costs, timing, and sources of funds. The time
horizon for the CIP is 2023-2032. Information on out-
standing debt obligation and debt service of the Utility
Funds is included in this section.
5. Financial Plans provides the financial plans for the Util-
ity Funds. The financial plans include historical, current,
and projected sources and uses of funds and estimated
ending cash balances. Financial plans take into account
capital improvement plans and proposed rates.
6. Appendixes provides additional data and graphics.
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4
Introduction and
SummaryTable 1
Water Fund
Summary
Water Fund
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Revenues 2,668,223 2,966,836 2,896,394 2,890,923 5,099,397 3,108,955 3,229,588 3,348,716 3,479,382 3,608,946
Expenses 2,466,901 2,528,002 2,675,770 2,768,771 2,835,231 2,949,089 3,126,681 3,196,458 3,208,998 3,228,181
Revenue Over (Under) Expense 201,322 438,834 220,624 122,152 2,264,166 159,866 102,907 152,258 270,384 380,765
Projected Ending Cash by Purpose
For future capital and unassigned 3,674,334 4,164,382 3,014,665 345,656 2,906,639 2,961,850 2,682,702 2,655,622 2,699,475 2,979,426
For planned capital 1,035,000 214,000 1,390,100 2,863,500 78,200 239,000 400,300 314,000 405,400 314,000
For 3-months of operating cash 334,054 351,659 362,209 373,075 384,267 395,796 407,669 419,899 432,496 445,471
For following year debt service 883,057 856,125 1,164,125 1,164,850 887,375 1,199,075 1,448,350 1,355,690 1,276,378 1,211,950
Total Projected Ending Cash 5,926,446 5,586,167 5,931,099 4,747,082 4,256,482 4,795,721 4,939,022 4,745,211 4,813,749 4,950,847
Net Position
Ending unrestricted net position 5,669,155 5,308,976 5,659,059 4,480,244 3,994,899 4,539,445 4,688,106 4,499,709 4,573,714 4,716,335
As % of expense 230%210%211%162%141%154%150%141%143%146%
Net Revenues as % of Debt Service 200% 185% 168% 124% 310% 172% 133% 119% 133% 147%
Customers
Average # of Customer Accounts Billed Per
Quarter
7,653 7,785 7,858 7,894 7,930 7,965 8,001 8,036 8,072 8,107
Annual Volume Billed (1,000 of gallons) 717,493 726,073 730,818 733,158 735,498 737,773 740,113 742,388 744,728 747,003
Example Customer
Residential Bill for Water Service (36,000
gallons per quarter)
45 47 48 50 52 54 56 58 61 63
$ Change in Total Annual Billed 2 2 2 2 2 2 2 2 2
% Change in Total Annual Billed 3.7%3.7%3.8%3.8%3.8%3.8%3.8%3.8%3.9%
Notes:
1. Expenses includes depreciation expense.
X-E-01
5
Introduction and
Summary
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Chart 1.
Water Fund
Projected Ending Cash Position is projected to be sufficient to meet policy
objectives and to position City to accumulate cash for infrastructure improvements
Ending Cash Position with Rate Increases
Desired Minimum Ending Cash Position
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Introduction and
SummaryWater Fund
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Chart 2
Water FundProjected Ending Cash (Investments) by Designation
For future capital
improvements
For following year
pay-go capital
For 3-months of
operating cash
For following year
debt service
Cash is projected to be sufficient to meet minimum annual cash needs and to
provide reserve for future capital improvements
0%
50%
100%
150%
200%
250%
$0.0
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Chart 3
Water Fund
Ending Unrestricted Net Position
Ending
unrestricted
net position
As % of
expense
Ending unrestricted net position as % of expense is projected to be at or above a
minimum target of 50%
$0.0
$1.0
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Chart 4Water FundRevenue and Expense
Revenues
Expenses
Revenues are projected to cover expenses, revenues in excess of annual expenses
comes from development fees collected to pay for future improvements
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
-
100,000
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Chart 5
Water Fund
Customers and Annual Water Volume Billed
Annual
Volume
Billed (1,000of gallons)
Average # of
Customer
AccountsBilled PerQuarter
Plan anticipates about 50 new customers added annually with average water volume of 65,000 gallons/year per customer
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7
Introduction and
SummaryTable 2
Sewer Fund
Summary
Sewer Fund
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Revenues 2,981,209 3,120,164 3,196,015 3,296,463 5,407,373 3,624,323 3,802,874 3,986,785 4,183,169 4,385,738
Expenses 2,886,951 3,096,743 3,306,366 3,469,696 3,673,517 3,864,458 4,099,039 4,283,115 4,462,320 4,647,975
Revenue Over (Under) Expense 94,258 23,422 (110,351) (173,234) 1,733,856 (240,135) (296,165) (296,330) (279,151) (262,237)
Projected Ending Cash by Purpose
For future capital and unassigned 2,912,371 3,155,626 3,219,397 1,234,401 3,113,222 2,951,114 2,399,841 2,177,257 1,966,827 1,773,378
For planned capital - - - 1,950,000 - - 300,000 - - -
For 3-months of operating cash 614,857 654,192 685,600 718,585 753,158 789,538 827,675 867,809 909,887 954,173
For following year debt service 255,837 314,713 419,463 490,263 552,588 669,088 808,213 807,535 827,891 841,525
Total Projected Ending Cash 3,783,065 4,124,530 4,324,460 4,393,248 4,418,967 4,409,740 4,335,729 3,852,602 3,704,605 3,569,077
Net Position
Ending unrestricted net position 4,158,065 4,502,630 4,705,622 4,777,432 4,806,131 4,799,839 4,728,716 4,248,429 4,103,221 3,970,427
As % of expense 144%145%142%138%131%124%115%99%92%85%
Net Revenues as % of Debt Service 219% 154% 114% 98% 376% 73% 75% 82% 82% 88%
Customers
Total Average Annual # of Customer
Accounts Billed Per Quarter
7,432 7,564 7,637 7,673 7,709 7,744 7,780 7,815 7,851 7,886
Total Annual Volume Billed (1,000 of gallons)485,489 494,069 498,814 501,154 503,494 505,769 508,109 510,384 512,724 514,999
Example Customer
Residential Bill for Water Service (36,000
gallons per quarter)
178 186 194 203 212 222 232 242 253 264
$ Change in Total Annual Billed 8 8 9 9 10 10 10 11 11
% Change in Total Annual Billed 4.5%4.5%4.5%4.5%4.5%4.5%4.5%4.5%4.5%
Notes:
1. Expenses includes depreciation expense.
X-E-01
8
Introduction and
Summary
$0.0
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Chart 6.
Sewer Fund
Projected Ending Cash Position is projected to be sufficient to meet policy
objectives over the planning period
Ending Cash Position with Rate Increases
Desired Minimum Ending Cash Position
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9
Introduction and
SummarySewer Fund
$0.0
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Chart 7Sewer FundProjected Ending Cash (Investments) by Designation
For future capital
improvements
For following year
pay-go capital
For 3-months ofoperating cash
For following yeardebt service
Cash is projected to be sufficient to meet minimum annual cash needs and to provide
reserve for future capital improvements
0%
20%
40%
60%
80%
100%
120%
140%
160%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2
0
2
3
2
0
2
4
2
0
2
5
2
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2
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9
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1
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As
%
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f
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Mil
l
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Chart 8Sewer Fund
Ending Unrestricted Net Position
Endingunrestrictednet position
As % of
expense
Ending unrestricted net position as % of expense is projected to be at or above a minimum target of 50%, but at a decline rate
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2
0
2
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Mil
l
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Chart 9Sewer Fund
Revenue and Expense
Revenues
Expenses
Expenses, including deprecation, are anticipated to outpace revenues over the
planning period
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
-
100,000
200,000
300,000
400,000
500,000
600,000
2
0
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)
Chart 10Sewer Fund
Customers and Annual Water Volume Billed
Total AnnualVolumeBilled (1,000
of gallons)
TotalAverageAnnual # of
Customer
AccountsBilled PerQuarter
Plan anticipates about 50 new customers added annually with average volume of 65,000 gallons/year per customer
X-E-01
10
Introduction and
SummaryTable 3
Storm Fund
Summary
Storm Fund
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Revenues 836,262 820,338 859,890 897,708 937,558 978,658 1,022,070 1,066,845 1,114,134 1,162,911
Expenses 559,947 603,889 675,627 696,920 741,231 779,777 800,172 852,935 892,282 916,630
Revenue Over (Under) Expense 276,315 216,449 184,263 200,788 196,327 198,882 221,897 213,910 221,852 246,281
Projected Ending Cash by Purpose
For future capital and unassigned 1,266,564 753,435 633,634 861,914 497,693 361,391 569,974 268,245 342,738 183,045
For planned capital - 775,000 325,000 - 525,000 325,000 - 425,000 75,000 300,000
For 3-months of operating cash 130,204 141,694 145,944 150,323 154,832 159,477 164,262 169,190 174,265 179,493
For following year debt service - 26,300 83,800 81,400 171,100 166,100 170,900 281,700 282,900 320,400
Total Projected Ending Cash 1,396,768 1,696,429 1,188,379 1,093,637 1,348,625 1,011,968 905,136 1,144,135 874,903 982,938
Net Position
Ending unrestricted net position 1,161,768 1,451,929 934,104 829,303 1,073,942 726,635 608,844 836,565 555,729 651,821
As % of expense 207%240%138%119%145%93%76%98%62%71%
Net Revenues as % of Debt Service 105% 68% 60% 57% 48% 44% 48% 47% 52% 55%
Customers
Total Average # of Residential Equivalent Units
Billed Per Quarter
7,680 7,812 7,885 7,921 7,957 7,992 8,028 8,063 8,099 8,134
Residential Customer
Average Residential Bill for Service 22 22 23 24 25 26 27 28 29 31
$ Change in Total Annual Billed 1 1 1 1 1 1 1 1 1
% Change in Total Annual Billed 4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%
Notes:
1. Expenses includes depreciation expense.
X-E-01
11
Introduction and
Summary
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
2
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M
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s
Chart 11.
Storm Fund
Projected Ending Cash Position is projected to be sufficient to meet policy
objectives over the planning period
Ending Cash Position with Rate Increases
Desired Minimum Ending Cash Position
X-E-01
12
Introduction and
SummaryStorm Fund
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
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Mil
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Chart 12Storm Fund
Projected Ending Cash (Investments) by Designation
For future capital
improvements
For following year
pay-go capital
For 3-months of
operating cash
For following year
debt service
Cash is projected to be sufficient to meet minimum annual cash needs and to provide reserve for future capital improvements
0%
50%
100%
150%
200%
250%
300%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
2
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As
%
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(
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5
0
%
)
Mil
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Chart 13Storm Fund
Ending Unrestricted Net Position
Endingunrestrictednet position
As % of
expense
Ending unrestricted net position as % of expense is projected to be at or above a minimum target of 50%, but at a decline rate
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
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Mil
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Chart 14Storm Fund
Revenue and Expense
Revenues
Expenses
Revenues are projected to cover expenses within the Storm Fund
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2
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RE
U
Chart 15
Storm Fund
Residential Equivalent Units (REU) Billed
Plan anticipates about 50 new REU added per year
X-E-01
13
Introduction and
SummaryLow Volume Residential Customer Water and Sewer Bill
$0
$10
$20
$30
$40
$50
$60
2
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% C
h
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Uti
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Chart 16Water ServicesLow Volume Customer (12,000 gallons/qtr)
Water Utility
Bill
Annual &Change
$0
$20
$40
$60
$80
$100
$120
2
0
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1.0%
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7.0%
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9.0%
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% C
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Chart 17
Sewer Services
Low Volume Customer (12,000 gallons/qtr)
Sewer Utility
Bill
Annual &Change
X-E-01
14
Introduction and
SummaryMedium Volume Residential Customer Utility Bill Examples
$0
$10
$20
$30
$40
$50
$60
$70
2
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1.0%
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7.0%
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9.0%
10.0%
% C
h
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Uti
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Chart 18Water ServicesMedium Volume Customer (18,000 gallons/qtr)
Water Utility
Bill
Annual &Change
$0
$20
$40
$60
$80
$100
$120
$140
$160
2
0
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0.0%
1.0%
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7.0%
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9.0%
10.0%
% C
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Chart 19
Sewer Services
Medium Volume Customer (18,000 gallons/qtr)
Sewer Utility
Bill
Annual &Change
X-E-01
15
Introduction and
SummaryHigh Volume Residential Customer Utility Bill Examples
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2
0
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% C
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Chart 20Water ServicesHigh Volume Customer (60,000 gallons/qtr)
Water Utility
Bill
Annual &Change
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2
0
2
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0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
% C
h
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Chart 21
Sewer Services
High Volume Customer (60,000 gallons/qtr)
Sewer Utility
Bill
Annual &Change
X-E-01
16
Best Practices and
ComparisonsBest Practices and Comparisons
ing rainy or wet weather.
WSICS have proven to be valuable tools for residential cus-
tomers with automated irrigation systems, particularly in
suburban areas. Studies have shown that suburban prop-
erties are more likely to have in-ground irrigation systems.
This, coupled with the fact that suburban lot sizes are gener-
ally larger than those in more denser urban environments,
often leads to a greater demand for outdoor watering, par-
ticularly in areas with higher property values. Additionally,
research indicates that property owners in these areas are
more likely to be concerned with the condition and appear-
ance of landscaping and maintaining lawn health.
High-demand residential water users are particularly sensi-
tive to increasing rate structures. Their outdoor water us-
age can be discretionary and may be scaled back should the
cost of water become less palatable.
Specific example of Midwestern cities with experience in
modifying water rate structures in a way that results in a
reduction in irrigation demand, includes cities of all sizes,
located within large metropolitan areas and suburban ar-
eas. Most of the examples of cities implementing programs
for water conservation tend to be focused on providing
financial assistance (grants or otherwise) to assist private
property owners with acquisition of new plumbing fixtures
(sinks, toilets, sprinkler systems) to improve water conser-
vation.
Water Conservation Elements and Rate Structures
National studies support the finding that the utility rate lev-
el itself matters more than the rate structure. Rates that are
kept too low do not adequately cover the cost of operation,
future replacement, and infrastructure expansion. Rates
kept too low in the short term provide inaccurate informa-
tion to customers on the long term cost of service.
Overview
This section provides information on best practices and
comparisons to other cities to help inform city decisions for
utility rates and billing cycles, among other purposes.
Irrigation / Rate Structures
Research regarding the relationship between inclining rate
structures and demand for water is readily available. Re-
search specific to rates versus irrigation demand is less
prevalent, particularly for residential customers as these
customers often lack separate irrigation meters.
Research has shown that inclining rate structures are often
successful in reducing overall water demand, which would
suggest that demand for water used for irrigation purposes
would also decline.
Most studies specific to irrigation focus on the use of me-
tering, consumption control devices, and the use of other
measures specific to landscaping (soil additives, drought
tolerant turf, etc.). Separate irrigation metering has proven
to be a successful tool in reducing demand for water as it
identifies the specific use of outdoor watering and is sepa-
rate from normal residential use. Hastings promotes sepa-
rate irrigation meters when appropriate and beneficial to
the customer.
Consumption control devices, such as weather sensitive
irrigation control switches (WSICS), are powerful tools in
reducing irrigation demand, particularly for high volume
users. WSICS are designed to override automated or timer-
controlled irrigation systems to prevent over watering dur-
X-E-01
17
Best Practices and
ComparisonsThe setting of rates and rate structure needs to take into ac-
count both current and future needs for revenue. The rates
and structure need to balance what are sometimes com-
peting objectives. Those objectives may include:
• Providing a stable source of revenue, recognizing water
usage can vary from year to year due to weather condi-
tions and other factors, to cover both variable and fixed
costs, both in the short term and long term.
• Promoting water conservation.
• Providing for affordable and fair structure for charging
for services.
• Balancing the decision to pay for capital infrastructure
with cash versus debt recognizing that future custom-
ers will benefit from the improvements funded today.
Conservation measures include placing the lowest 10-20%
of users in the first tier, the more average users of 20-30%
in the second tier, and the highest 20-30% and 10-20% of
users in the third and fourth tiers, respectively.
Tiered rates should increase respective to the desire for
water conservation. Some studies suggest that each tier
should be increased by 10, 20, and 30%, while more ag-
gressive rate structures may have each tier increasing by
20 to 50%.
In Minnesota, public water suppliers serving more than
1,000 people, large private water suppliers in designated
Groundwater Management Areas, and all water suppliers
in the Twin Cities metropolitan area are required to prepare
and submit a water supply plan (WSP). For water suppliers
in the metropolitan area, the WSP helps local governmental
units to fulfill their statutory requirements to complete a
local comprehensive plan.
The water industry recognizes that there are many ways to
design rates. Research and studies suggest that utilizing a
three-or-four tiered approach, such as Hastings has adopt-
ed, can demonstrate success in reducing water usage and
encouraging conservation.
Somes cities tend to recover significant amounts of fixed
costs through volumetric rates, primarily for the purpose of
promoting conservation. However, when drought-related
water shortages over the past five years resulted in declin-
ing water sales, those cities may find themselves at greater
risk of not recovering their fixed costs. To promote revenue
stability its important to not shift fixed costs into volumetric
rates.
The proposed rate structure for Hastings does not propose
changes to shift any fixed costs of the systems into fixed
charges versus volumetric rates.
Billing Cycles
Research has shown that monthly billing cycles can be help-
ful in promoting water conservation as less frequent billing
tends to disconnect users from monitoring usage. Hastings
has a quarterly billing cycle.
Billing on a monthly basis can more easily help to identify is-
sues with water supply (plumbing that may be leaking) and
allow customers to easily see the impacts of increasing or
decreasing usage which can lead to behavior modification.
Monthly billing can sometimes be more budget friendly for
the rate payer and can be beneficial in reducing late pay-
ments.
Monthly billing will likely have a direct impact on costs as-
sociated with utility billing due to the need for increased
administrative support and distribution expense. Providers
that utilize and promote online billing benefit from reduced
costs associated with printing and mailing physical bills.
X-E-01
18
Best Practices and
ComparisonsTo analyze the cost of monthly versus the city’s current
quarterly billing cycle, more information would be need-
ed regarding the city’s data collection (meter readings)
and other information gathered by the city. The cost of a
monthly versus quarterly billing cycle was not analyzed as
part of the study.
Comparison to Other Cities
As part of the study, water and sewer rate information for
other cities was compiled and compared to Hastings.
As shown in the charts that follow, water and sewer bills for
utility customers in Hastings tend to fall in the lower range
compared to the other cities included in the study. For
equivalent comparison purposes, the bill comparisons are
based on monthly equivalent bills. The actual billing cycles
vary across cities.
The rates used to calculate the monthly bills for the com-
parative cities comes from the published fees schedule for
each of the cities available on respective city websites.
X-E-01
19
Best Practices and
ComparisonsLOW VOLUME CUSTOMER COMPARISON
Chart 22
$0
$1 0
$2 0
$3 0
$4 0
$5 0
$6 0
$7 0
$8 0
$9 0
Cottage
Grove
Farmington
Lakeville
Rosemount
Hastings
Apple Valley
Lake Elmo
3,000 Gallons Monthly Volume - Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles for comparison billing is shown as monthly equivalent bills
Water Sewer Stormwater
X-E-01
20
Best Practices and
ComparisonsMEDIUM VOLUME CUSTOMER COMPARISON
Chart 23
$0
$1 0
$2 0
$3 0
$4 0
$5 0
$6 0
$7 0
$8 0
$9 0
Farmington
Cottage Grove
Lakeville
Hastings
Rosemount
Apple Valley
Lake Elmo
6,000 Gallons Monthly Volume - Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles for comparison billing is shown as monthly equivalent bills
Water Sewer Stormwater
X-E-01
21
Best Practices and
ComparisonsHIGH VOLUME CUSTOMER COMPARISON
Chart 24
$0
$2 0
$4 0
$6 0
$8 0
$1 0 0
$1 2 0
$1 4 0
$1 6 0
$1 8 0
Farmington
Apple Valley
Hastings
Cottage Grove
Lakeville
Rosemount
Lake Elmo
20,000 Gallons Monthly Volume - Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles for comparison billing is shown as monthly equivalent bills
Water Sewer Stormwater
X-E-01
22
Rate Structure
Rate Structure
Sewer Rate Structure
Sewer volume is currently billed at a fixed rate per 1,000
gallons. Sewer services are billed based on actual consump-
tion during the first quarter of the year, or actual water con-
sumption during the billing period, whichever is less. The
city does not bill sanitary sewer volume based on a tiered
block rate structure. And the city does not vary sanitary
sewer rates charged based on customer classifications - all
customers are charged based on the same rate structure for
sewer services.
Revenue from Fixed Rate Versus Volume
Basis
A comparison of volume basis revenue versus non-volume
basis revenue is provided in the charts that follow. The pro-
jected revenues from the fixed rate charges (non-volume
basis revenue) compared to total fixed expenses and total
revenues is projected to remain fairly constant.
Base Rates
The proposed base rates for water and sanitary sewer ser-
vices were determined based on the following targets:
• Non-volume basis revenues from base charge equal to
not less than 50% of total fixed expenses.
• Non-volume basis revenues from base charge equal to
not less than 30% of total revenues (total revenues in-
cludes both base charges and volumetric-charges).
The base rate for water services is projected to meet the
above targets by year 2027 based on the proposed increas-
es assumed within the Plan. The base rate for sewer is pro-
jected to meet the minimum percentage of not less than
50% of total fixed expenses, but not less than 30% of total
revenues. Significantly higher adjustments than proposed
would be necessary to meet this target.
Equity of Current Rate Structure
The study included review and analysis of the city’s current
utility rates. The proposed rates are based on meeting the
following objectives:
• Provide a clear understanding of the costs of water and
sewer operations; and
• Provide revenue generation structures that are finan-
cially solvent, fair to end-users, economically competi-
tive, and in alignment with the city’s overall philosophy
on user fees.
The existing rate structure is comprised of quarterly fixed
charges per customer for water, sewer, and storm services.
Water Rate Structure
The quarterly charges include base charges for water ser-
vices and for sewer services. The city varies the base charge
based on customer meter size. The base charge for irriga-
tion meters is twice the charge for non-irrigation meters.
The city’s existing volumetric rates for water customers is a
four-tier block rate structure, with volumes capped by tier
and different rates charged per 1,000 gallon by tier.
Residential customers are charged based on different maxi-
mum volumes per tier compared to other customers, for
example for commercial and industrial customers, but the
rate charged per tier, for the four tiers, is the same for all
customers.
X-E-01
23
Rate StructureFigure 1 below provides information on revenue from fixed
rates charges for both water and sewer.
Evaluation of Funding Approach for
Infrastructure
The CIP provides that the city will strive to fund infrastruc-
ture for water, sewer, and storm systems with cash versus
debt when doing so does not put undue pressure on utility
rates.
The Plan includes bond issuance for the following:
• $1.535 million in 2024 to finance $845,000 in Sewer
Improvements and $690,000 in Storm Improvements.
• $3.680 million in 2025 to finance $2,550,000 in Water
Improvements and $1,130,000 in Sewer Improvements.
• $595,000 in 2026 to finance Sewer Improvements.
• $1.515 million in 2027 to finance $$805,000 in Sewer
improvements, and $710,000 in Storm improvements.
• $3.775 million in 2028 to finance $2,550,000 in Water
improvements and $1,225,000 in Sewer improvements.
• $4.905 million in 2029 to finance $2,805,000 in Water
improvements and $2,100,000 in Sewer improvements.
• $945,000 in 2030 to finance Storm improvements.
• $915,000 in 2031 to finance Sewer improvements.
• $840,000 in 2032 to finance $535,000 in Sewer im-
provements and $305,000 in Storm improvements.
The city plans to adopt annual rate increases to ensure suf-
ficient cash is available to pay for planned capital improve-
ments, operations and debt service.
Recognizing that future customers will benefit from the im-
provements funded with today’s dollars, it is always a bal-
ancing decision to decide whether to pay for capital infra-
structure with cash versus debt. There are many factors to
consider, including balancing other city demands for debt
financing of projects and the impact on the city’s overall
outstanding debt obligations, among other factors. The city
should continue to consider which projects make financial
sense to fund from cash versus the issuance of debt.
Figure 1.
Revenue from Fixed Rate Charges
(Non-Volume Basis Revenue)
Year 2023
Projected
Year 2027
Projected
Non-Volume Basis Revenue (NVR) $807,756 $995,710
Total Fixed Expense $1,808,026 $2,093,661
Total Revenue $2,668,223 $2,999,397
NVR as % of Total Fixed Expense 45% 48%
NVR as % of Total Revenue 30% 33%
Non-Volume Basis Revenue (NVR) $577,318 $714,122
Total Fixed Expense $1,031,956 $1,309,192
Total Revenue $2,981,209 $3,457,373
NVR as % of Total Fixed Expense 56% 55%
NVR as % of Total Revenue 19% 21%
Water Fund
Sanitary Sewer Fund
X-E-01
24
Rate StructureFunding Depreciation
The funding of depreciation, or setting aside of funds to re-
place depreciated infrastructure, is an important element
for establishment of sufficient rates.
The study focused on the city’s asset management practices
to maintain and replace aging infrastructure, including the
city’s adoption of a long-range capital improvements plan.
Rather than focus on “funding depreciation” we find it is
better to gain a strong understanding of the expected fu-
ture costs and, maybe more importantly, their timing, and
plan for replacement of infrastructure and facilities. Using
a planned schedule for capital improvements and the in-
corporation of those plans into the study does that. Capital
improvement plans combined with financial management
targets are an important element that allows for the setting
of rates that meet city goals.
Financial management targets begin with criteria for eval-
uating overall financial condition. For instance, do projec-
tions show sufficient revenues to cover planned operating
and capital improvement expenses? The Utility Funds must
do better than break even, but by how much?
Cash Balance Targets
The Plan helps to answer these question by allocating pro-
jected year-end cash balance to defined purposes. One of
the purposes is for planned capital acquisition and reserves
for future capital. The year end cash balances are targeted
to meet the following purposes:
• Three-months of operating expense
• Following year debt service payments
• Following year capital acquisition (planned to be paid
from cash)
• Reserves for future capital
Taken together these targets for ending cash help determine
if future financial scenarios provide adequate amounts of
available financial resources.
Unrestricted Net Position Target
The Plan provides a second criteria to evaluate revenue suf-
ficiency. The second criteria is ending unrestricted net posi-
tion as percent of expense. The unrestricted net assets of
the Water Fund and the Sewer Fund can be considered a
measure of available financial resources.
The Plan sets a target (a floor) to strive to maintain an unre-
stricted net position in the Utility Funds in the range of 50%
of the subsequent year’s estimated expenditures.
The majority of revenues in the Water Fund and the Sewer
Fund come from user charges. Maintaining an unrestricted
net position that is equal to at least 50% of the subsequent
year’s expenditures will help to ensure that sufficient re-
sources are available to fund services between receipts of
user charges.
The target (or floor) for unrestricted net position of 50% is
meant to be an equivalent of the target for an unrestricted
fund balance for the General Fund. Hastings has a stated
policy to strive to maintain a year-end unassigned fund bal-
ance in the Governmental Funds in the range of 35%–45%
of the subsequent year’s budgeted expenditures.
Equity is reported as “fund balance” in the General Fund
and as “net position” within the Utility Funds. Net position
and fund balance are the difference between fund assets
and liabilities reflected on the statement of net position or
balance sheet.
.
X-E-01
25
Rate StructurePrice Elasticity of Demand for Water
The model developed for the study provides the ability to
test different assumptions for how water usage may re-
spond to price changes. The model allows for an input of
estimated price elasticity of demand for water to adjust wa-
ter usage for each one-percent increase in rate.
While the model provides the ability to input different as-
sumptions for price elasticity of demand, the Plan does not
include a factor for reduction in demand based on proposed
pricing changes in the Plan. General demand for municipal
water is assumed to remain constant, with the exception of
growth from new development.
While not proposed in the Plan, a more aggressive rate
structure may result in a stronger economic relationship
between water use and price, with water use responding
to price.
X-E-01
26
Rate Structure
0%
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Chart 25
Water Revenue
Volume BasisRevenue
Non-Volume BasisRevenue
Non-Volume BasisRevenue as % ofTotal Revenue
Non-volume basis revenue as % of total revenue is projected to increase slightly over
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Chart 26
Sewer Revenue
Volume BasisRevenue
Non-Volume BasisRevenue
Non-Volume Basis
Revenue as % ofTotal Revenue
Non-volume basis revenue as % of total revenue is projected to increase over the
planning period but below 30% target
X-E-01
27
Capital
Improvement PlanCAPITAL IMPROVEMENT PLAN
ments and to minimize the issuance of debt, with some
limited exceptions in years where cash is not projected to
be sufficient and bonding is anticipated for major improve-
ment projects.
Capital projects and source of funding are evaluated on an
on-going basis by the city, including for timing and estimat-
ed costs.
Overview
For purposes of the Plan, the city provided a Capital Im-
provement Plan (the “CIP”) that included planned water,
sewer, and storm capital improvement projects.
A purpose of the Plan is to provide the city with options and
recommendation for financing future capital improvement
projects for water and sanitary sewer services.
The tables that follow in this section provide information on
planned capital improvement projects.
Capital Projects
The projects in the CIP include projects to manage both ex-
isting and expanding service demands and to reconstruct or
replace existing infrastructure.
Future updates to the CIP may include service expansion to
support development. The city collects development fees
at time of development of property.
Development fees collected are deposited into the Water
Fund and the Sewer Fund and available to pay for future
improvements needed as a result of development.
Source of Funding for Capital Projects
The source of funding for the planned capital projects is an-
ticipated to come from the use of estimated available cash
within the Utility Funds and the issuance of debt on a lim-
ited basis.
The Plan includes proposed utility fees and charges at a lev-
el to provide for pay-go funding of annual capital improve-
X-E-01
28
Capital
Improvement Plan
-$0.5
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Chart 27Water Fund
Capital Improvement PlanAnnual Project Costs
Capital Funded
from Bond
Proceeds
Capital Funded
from Cash/Non-
Bond Sources
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Chart 28Sewer FundCapital Improvement PlanAnnual Project Costs
Capital Funded
from Bond
Proceeds
Capital Funded
from Cash/Non-Bond Sources
X-E-01
29
Capital
Improvement Plan
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Chart 29Storm Fund
Capital Improvement Plan
Annual Project Costs
Capital Funded
from Bond
Proceeds
Capital Funded
from Cash/Non-
Bond Sources
X-E-01
30
Capital
Improvement Plan
Table 4
Water Fund
City of Hastings
Capital Improvement Plan (CIP)
Water Fund
Budget
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Capital Outlay
Acquisition of capital assets 431,500 1,035,000 2,714,000 1,390,100 2,863,500 2,578,200 2,989,000 400,300 314,000 405,400
Bond issuance cost - - 50,000 - - 50,000 55,000 - - -
Total Capital Outlay 431,500 1,035,000 2,764,000 1,390,100 2,863,500 2,628,200 3,044,000 400,300 314,000 405,400
Source of Funds
Bond proceeds 610,000 - 2,550,000 - - 2,550,000 2,805,000 - - -
Transfers in - - - - - - - - - -
Current revenue / use of cash in fund (178,500) 1,035,000 214,000 1,390,100 2,863,500 78,200 239,000 400,300 314,000 405,400
Total Source of Funds 431,500 1,035,000 2,764,000 1,390,100 2,863,500 2,628,200 3,044,000 400,300 314,000 405,400
X-E-01
31
Capital
Improvement Plan
Table 5
Sewer Fund
City of Hastings
Capital Improvement Plan (CIP)
Sewer Fund
Budget
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Capital Outlay
Acquisition of capital assets 537,500 830,000 1,110,000 585,000 2,740,000 1,200,000 2,060,000 300,000 895,000 525,000
Bond issuance cost - 15,000 20,000 10,000 15,000 25,000 40,000 - 20,000 10,000
Total Capital Outlay 537,500 845,000 1,130,000 595,000 2,755,000 1,225,000 2,100,000 300,000 915,000 535,000
Source of Funds
Bond proceeds 360,000 845,000 1,130,000 595,000 805,000 1,225,000 2,100,000 - 915,000 535,000
Transfers in 18,333 18,883 19,449 20,033 20,634 21,253 21,891 22,547 23,224 23,920
Current revenue / use of cash in fund 159,167 (18,883) (19,449) (20,033) 1,929,366 (21,253) (21,891) 277,453 (23,224) (23,920)
Total Source of Funds 537,500 845,000 1,130,000 595,000 2,755,000 1,225,000 2,100,000 300,000 915,000 535,000
X-E-01
32
Capital
Improvement Plan
Table 6
Storm Fund
City of Hastings
Capital Improvement Plan (CIP)
Storm Fund
Budget
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Capital Outlay
Acquisition of capital assets 117,000 675,000 710,000 325,000 695,000 525,000 325,000 925,000 425,000 375,000
Bond issuance cost - 15,000 - - 15,000 - - 20,000 - 5,000
Total Capital Outlay 117,000 690,000 710,000 325,000 710,000 525,000 325,000 945,000 425,000 380,000
Source of Funds
Bond proceeds - 690,000 - - 710,000 - - 945,000 - 305,000
Transfers in - - - - - - - - - -
Current revenue / use of cash in fund 117,000 - 710,000 325,000 - 525,000 325,000 - 425,000 75,000 Total Source of Funds 117,000 690,000 710,000 325,000 710,000 525,000 325,000 945,000 425,000 380,000
X-E-01
33
Capital
Improvement Plan
Table 7
Debt Payable from Utility Funds, Includes Existing and Planned New Debt
Summary of Debt (Existing and New)
Fiscal
Year Principal Interest Total P&I Outstanding Principal Interest Total P&I Outstanding Principal Interest Total P&I Outstanding Principal Interest Total P&I Outstanding
2021 360,000 111,642 471,642 4,210,000 40,000 27,558 67,558 1,340,000 - - - - 400,000 139,200 539,200 5,550,000 2022 440,000 118,262 558,262 5,190,000 75,000 38,965 113,965 1,550,000 - - - - 515,000 157,227 672,227 6,740,000
2023 510,000 176,575 686,575 5,290,000 120,000 50,379 170,379 1,790,000 - - - - 630,000 226,954 856,954 7,080,000
2024 705,000 178,057 883,057 4,585,000 195,000 60,837 255,837 2,440,000 - - - 690,000 900,000 238,894 1,138,894 7,715,000
2025 705,000 151,125 856,125 6,430,000 230,000 84,713 314,713 3,340,000 65,000 26,300 91,300 625,000 1,000,000 262,138 1,262,138 10,395,000
2026 940,000 224,125 1,164,125 5,490,000 300,000 119,463 419,463 3,635,000 60,000 23,800 83,800 565,000 1,300,000 367,388 1,667,388 9,690,000 2027 975,000 189,850 1,164,850 4,515,000 360,000 130,263 490,263 4,080,000 60,000 21,400 81,400 1,215,000 1,395,000 341,513 1,736,513 9,810,000
2028 730,000 157,375 887,375 6,335,000 405,000 147,588 552,588 4,900,000 125,000 46,100 171,100 1,090,000 1,260,000 351,063 1,611,063 12,325,000
2029 975,000 224,075 1,199,075 8,165,000 490,000 179,088 669,088 6,510,000 125,000 41,100 166,100 965,000 1,590,000 444,263 2,034,263 15,640,000
2030 1,155,000 293,350 1,448,350 7,010,000 565,000 243,213 808,213 5,945,000 135,000 35,900 170,900 1,775,000 1,855,000 572,463 2,427,463 14,730,000
2031 1,105,000 250,690 1,355,690 5,905,000 585,000 222,535 807,535 6,275,000 215,000 66,700 281,700 1,560,000 1,905,000 539,925 2,444,925 13,740,000 2032 1,065,000 211,378 1,276,378 4,840,000 590,000 237,891 827,891 6,220,000 225,000 57,900 282,900 1,640,000 1,880,000 507,169 2,387,169 12,700,000
2033 1,040,000 171,950 1,211,950 3,800,000 605,000 236,525 841,525 6,565,000 260,000 60,400 320,400 1,380,000 1,905,000 468,875 2,373,875 11,745,000
2034 825,000 135,500 960,500 2,975,000 590,000 250,800 840,800 5,975,000 270,000 49,800 319,800 1,110,000 1,685,000 436,100 2,121,100 10,060,000
2035 855,000 101,900 956,900 2,120,000 620,000 226,600 846,600 5,355,000 200,000 40,400 240,400 910,000 1,675,000 368,900 2,043,900 8,385,000
2036 575,000 73,300 648,300 1,545,000 640,000 201,400 841,400 4,715,000 205,000 32,300 237,300 705,000 1,420,000 307,000 1,727,000 6,965,000 2037 600,000 49,800 649,800 945,000 600,000 176,600 776,600 4,115,000 215,000 23,900 238,900 490,000 1,415,000 250,300 1,665,300 5,550,000
2038 620,000 25,400 645,400 325,000 620,000 152,200 772,200 3,495,000 135,000 16,900 151,900 355,000 1,375,000 194,500 1,569,500 4,175,000
2039 325,000 6,500 331,500 - 640,000 127,000 767,000 2,855,000 140,000 11,400 151,400 215,000 1,105,000 144,900 1,249,900 3,070,000
2040 - - - - 590,000 102,400 692,400 2,265,000 145,000 5,700 150,700 70,000 735,000 108,100 843,100 2,335,000
2041 - - - - 510,000 80,400 590,400 1,755,000 35,000 2,100 37,100 35,000 545,000 82,500 627,500 1,790,000
2042 - - - - 545,000 59,300 604,300 1,210,000 35,000 700 35,700 - 580,000 60,000 640,000 1,210,000
2043 - - - - 420,000 40,000 460,000 790,000 - - - - 420,000 40,000 460,000 790,000
2044 - - - - 325,000 25,100 350,100 465,000 - - - - 325,000 25,100 350,100 465,000
2045 - - - - 150,000 15,600 165,600 315,000 - - - - 150,000 15,600 165,600 315,000
2046 - - - - 155,000 9,500 164,500 160,000 - - - - 155,000 9,500 164,500 160,000
2047 - - - - 80,000 4,800 84,800 80,000 - - - - 80,000 4,800 84,800 80,000
2048 - - - - 80,000 1,600 81,600 - - - - - 80,000 1,600 81,600 -
2049 - - - - - - - - - - - - - - - -
Total 14,505,000 2,850,853 17,355,853 11,125,000 3,252,316 14,377,316 2,650,000 562,800 3,212,800 28,280,000 6,665,969 34,945,969
Total Enterprise FundsWater Fund Sewer Fund Storm Fund
X-E-01
34
Capital
Improvement Plan
The bonds outstanding and
annual debt service amounts
shown in the charts here are
for the combined total esti-
mated debt payable from rev-
enues from the Water Fund,
Sewer Fund and Storm Fund.
The charts include combined
existing debt and future esti-
mated debt based on antici-
pated bond issuance as shown
in the Plan.
The charts include debt sup-
ported by utility revenue only
and does not include debt
payable from property tax levy
or other sources of revenue.
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Chart 30
Outstanding Bonds Payable
Includes Existing and Planned Debt Issuance
Storm Fund
Sewer Fund
Water Fund
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Chart 31
Debt Service PayableIncludes Existing and Planned Debt Issuance
Storm Fund
Sewer Fund
Water Fund
X-E-01
35
Financial Plans
FINANCIAL PLANS
crease by 6.80% in 2024 and 5% annually throughout
the planning period; the City should closely monitor
annual increases to MCES charges and adjust rates as
necessary. The Plan includes an increases of one new
position (FTE), split equally between the utility funds.
• Depreciation is adjusted for anticipated annual depre-
ciable capital acquisitions. New capital is depreciated
over a 50 year term in the Plan.
• Capital improvement plan will be implemented at esti-
mated project costs and sources of funding as included
in the Plan.
• Water customers and volume billed is based on his-
torical customer volumes plus estimates for future
development. The Plan anticipates an average annual
increase of approximately 50 new residential customer
units between 2023-2032. The average annual con-
sumption per unit is assumed to remain constant over
the planning period at 65,000 gallons for water and for
sewer.
• Rate increases to provide revenue sufficiency. The Plan
anticipates fees and charges will increase by an average
annual amount of 3.5% for water, 4.5% for sewer, and
4.0% for storm services between 2024-2032. There are
no proposed changes to the tier structure for charging
water and sewer volume.
• Base rate and volume based tiered rate structure in-
cludes charging a fixed quarterly fee for water and sani-
tary sewer services, consistent with the past structure
for billing. Volume based tiered rate structure, includ-
ing maximum volumes per tier, are not proposed to be
modified.
• Development related charges for access (city WAC
and SAC) are accounted for in the Water Fund and the
Revenue Sufficiency
Based on historical financial performance, current utility
rates and structure, and anticipated future capital projects,
financial plans have been prepared for the Utility Funds.
The reports demonstrate revenue sufficiency, which is the
level of revenue needed to satisfy each system’s projected
operating, capital costs, and debt service while maintaining
adequate reserves for future capital needs of the systems.
The following reports are provided for the Water Fund,
Sewer Fund, and Storm Fund:
• Pro Forma - Includes information on annual revenues
and expenses and balance sheet items.
• Year End Cash Balance - Includes explanation of the
projected changes in year end cash balances.
• Customers/Usage and Rates - Includes the number of
customers, usage (volume billed) for prior years and
projections for future years. Revenues by non-volume
basis and volume basis are shown by customer type.
Key Assumptions
The financial plans are based on certain key assumptions,
which are as follows:
• Operating expenditures, including personnel costs,
materials supplies, utilities and all other operating ex-
pense will increase by approximately 3.0% per year,
with exception for sanitary sewer disposal charges
payable to the Met Council, which are estimated to in-
X-E-01
36
Financial PlansSewer Fund. There are no access charges for the Storm
Fund. The City also charges a “Interceptor Sewer Fee”
on a per unit basis. The timing of collection of develop-
ment related charges does not directly correlate to the
use of funds for capital improvements. Development
related charges that have been collected but not spent
are reflected in the cash reserve balances of the funds.
The Plan assumes the following for WAC, SAC, and Sew-
er Interceptor fee:
- Increase WAC fee from $2,306.25 to $2,957 per unit
- Increase SAC fee from $708.75 to $945 per unit
- Maintain Sewer Interceptor Fee at $485 per unit
The proposed WAC and SAC fees are based on an analy-
sis of the City’s estimated water and sewer improve-
ment project costs in future years that are planned to
support new development. Improvement projects in-
clude a new water well and pump house and elevated
storage tank, and sanitary sewer pipe over-sizing and
new lift station. The estimated costs for these future
projects were spread over the City’s estimated growth
in units (from development) out to year 2030.
X-E-01
37
Financial Plans
WATER FUND
The Plan anticipates a 3.0% annual inflationary increase in
operating expenses with .33 personnel (FTE) additions.
Debt service expense includes interest expense on both ex-
isting outstanding bonds and for anticipated new issuance.
The Plan models annual depreciation expense on both ex-
isting capital assets and anticipated new assets to be ac-
quired.
The Water Fund includes annual transfers to other funds
based on historical levels.
Cash Balance
The financial plan includes projected assets and liabilities
for the Fund. This includes projected annual year-end cash
balance. A table that follows provides a detailed summary
on projected change in cash year by year.
Based on assumptions in the Plan, including collection of
development fees related to growth (that will be used to
pay for future capital improvements), it is projected that
the cash balance position of the Fund will decrease over the
planning period. The Fund is projected to have future cash
sufficient to meet the objectives for cash balance, including
cash sufficient to cover:
• Three-months of operating expense
• Following year debt service payments
• Following year capital acquisition (planned to be paid
from cash)
• Reserves for future capital improvements
The sufficiency of the estimated reserves for capital im-
provements will depend on future capital improvement
projects that may not yet be programmed in the CIP.
WATER FUND
Background
The Water Fund is used to account for the operating and
capital improvement costs related to maintenance of the
water utility system. The Fund is in sound financial condi-
tion. Future financial performance will be impacted by fu-
ture capital improvement needs and the timing of future
development in the city.
Future development will increase the demands on the wa-
ter utility infrastructure but will also provide increased rev-
enue to support the maintenance and operation of the sys-
tem. Expansion of infrastructure, including treatment may
be needed in the future. The city anticipates collection of
future development related revenue, which is reported as
revenue in the Water Fund.
Revenues
The major source of revenue comes from the collection of
quarterly charges, including a fixed based charge to each
customer, along with volume-based charges for water use.
The financial plan for the Water Fund reflects the adopted
rates for 2023 and proposed future year increases averag-
ing 3.5% annually.
Interest income is earned on the cash balance in the Fund
that is recorded as revenue. The investment earnings rate is
projected to be 2.0% for future years.
Expenses
The expenses are for payment of operating expenses, debt
service expense, and depreciation expense.
X-E-01
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Financial Plans
WATER FUNDTable 8
Water Fund
Page 1 of 2City of Hastings
Finance Plan
Water Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Estimated Proj Proj Proj Proj Proj Proj Proj Proj Proj
Revenues
Charges for services 2,563,573 2,326,389 2,347,973 2,409,023 2,511,592 2,610,992 2,714,795 2,822,501 2,935,226 3,052,215 3,174,677 3,301,798
Availability charges 113,006 724,163 160,000 393,281 215,861 106,452 106,452 103,495 106,452 103,495 106,452 103,495 Service charges - state testing fee - - - - - - - - - - - -
Service charges - unbilled revenues - - - - - - - - - - - -
Service charges - cancels/manual bill adjusts - - - - - - - - - - - -
Property taxes - - - - - - - - - - - -
Capital contributions - non-cash 328,395 402,154 - - - - - - - - - -
Distillery waste disposal - - - - - - - - - - - -
Connection permits - - - - - - - - - - - -
Sales of meters 11,448 26,106 35,000 36,050 37,132 38,245 39,393 40,575 41,792 43,046 44,337 45,667
Penalties and other revenues 43,200 53,547 104,250 107,378 110,599 113,917 117,334 120,854 124,480 128,214 132,061 136,023
Investment income and other earnings (4,055) (70,710) 21,000 21,105 21,211 21,317 21,423 21,530 21,638 21,746 21,855 21,964
Connection charges - - - - - - - - - - - -
Intergovernmental revenues - - - - - - 2,100,000 - - - - -
Other revenues and special items 1,345 3,862 - - - - - - - - - -
Special assessments 114,436 59,148 - - - - - - - - - -
Special item (3,762) 9,082 - - - - - - - - - -
Transfers in - - - - - - - - - - - -
Capital contributions - - - - - - - - - - - -
Total Revenues 3,167,586 3,533,741 2,668,223 2,966,836 2,896,394 2,890,923 5,099,397 3,108,955 3,229,588 3,348,716 3,479,382 3,608,946
Expenses
Fixed Expenses
Personnel services 465,560 633,889 638,423 657,576 677,303 697,622 718,551 740,107 762,310 785,180 808,735 832,997
Personnel services / FTE changes - - - - 30,333 31,243 32,181 33,146 34,140 35,165 36,220 37,306
Transfers out General Fund - - - - - - - - - - - -
Transfer out Debt Service Fund - - - - - - - - - - - -
Transfer out Other Funds 33,806 38,877 40,822 40,822 40,822 40,822 40,822 40,822 40,822 40,822 40,822 40,822 Interest and fiscal expense 102,647 159,845 176,575 178,057 151,125 224,125 189,850 157,375 224,075 293,350 250,690 211,378
Depreciation 897,045 943,576 952,206 972,906 1,027,186 1,054,988 1,112,258 1,163,822 1,223,602 1,231,608 1,237,888 1,245,996
Subtotal Fixed Expenses 1,499,058 1,776,187 1,808,026 1,849,361 1,926,769 2,048,800 2,093,661 2,135,272 2,284,950 2,386,124 2,374,355 2,368,499
Variable Expenses
Supplies 392,349 107,713 159,100 163,873 168,789 173,853 179,068 184,441 189,974 195,673 201,543 207,589 Meters - - - - - - - - - - - -
Placeholder - - - - - - - - - - - -
Repairs and maintenance - - 135,144 139,198 143,374 147,675 152,106 156,669 161,369 166,210 171,196 176,332
Professional services and other expense 554,608 516,488 364,631 375,570 386,837 398,442 410,395 422,707 435,388 448,450 461,904 475,761
Bond issuance cost - - - - 50,000 - - 50,000 55,000 - - -
Subtotal Variable Expenses 946,957 624,201 658,875 678,641 749,000 719,971 741,570 813,817 841,731 810,333 834,643 859,682
Total Expenses 2,446,015 2,400,388 2,466,901 2,528,002 2,675,770 2,768,771 2,835,231 2,949,089 3,126,681 3,196,458 3,208,998 3,228,181
Change in Net Position 721,571 1,133,353 201,322 438,834 220,624 122,152 2,264,166 159,866 102,907 152,258 270,384 380,765
Ending net position 17,283,965 18,417,318 18,618,640 19,057,474 19,278,098 19,400,250 21,664,416 21,824,282 21,927,189 22,079,447 22,349,832 22,730,597
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Financial Plans
WATER FUNDTable 8
Water Fund
Page 2 of 2City of Hastings
Finance Plan
Water Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Estimated Proj Proj Proj Proj Proj Proj Proj Proj Proj
Assets and Deferred Outflow of Resources
Cash and cash equivalents 3,721,657 5,061,827 5,926,446 5,586,167 5,931,099 4,747,082 4,256,482 4,795,721 4,939,022 4,745,211 4,813,748 4,950,847
Due from other governments - - - - - - - - - - - -
Due from other funds / advances - - - - - - - - - - - -
Special assessments receivable 146,838 149,166 125,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Other assets / receivables 554,787 507,713 510,000 515,100 520,251 525,454 530,708 536,015 541,375 546,789 552,257 557,779
Capital assets 38,040,940 39,962,106 40,393,606 41,428,606 44,142,606 45,532,706 48,396,206 50,974,406 53,963,406 54,363,706 54,677,706 55,083,106
Less Accumulated depreciation (20,022,912) (20,882,724) (21,834,930) (22,807,836) (23,835,022) (24,890,010) (26,002,268) (27,166,090) (28,389,692) (29,621,300) (30,859,188) (32,105,184)
Deferred outflows of resources 196,001 184,372 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Total Assets and Deferred Outflows 22,637,311 24,982,460 25,320,122 25,022,037 27,058,934 26,215,231 27,481,128 29,440,052 31,354,111 30,334,406 29,484,524 28,786,549
Liabilities and Deferred Inflow of Resources
Other current liabilities / payables 595,562 783,987 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000
Contracts payable - - - - - - - - - - - -
Due to other governments - - - - - - - - - - - -
Bonds payable 4,210,000 5,190,000 5,290,000 4,585,000 6,430,000 5,490,000 4,515,000 6,335,000 8,165,000 7,010,000 5,905,000 4,840,000
Unamortized bond premium 290,577 354,656 319,190 287,271 258,544 232,690 209,421 188,479 169,631 152,668 137,401 123,661
Net pension liability (non-current)209,916 443,614 445,000 445,000 445,000 445,000 445,000 445,000 445,000 445,000 445,000 445,000
Other non-current liabilities (152,401) (218,247) (152,401) (152,401) (152,401) (152,401) (152,401) (152,401) (152,401) (152,401) (152,401) (152,401)
Deferred inflows of resources 199,692 11,132 199,692 199,692 199,692 199,692 199,692 199,692 199,692 199,692 199,692 199,692
Total Liabilities and Deferred Inflows 5,353,346 6,565,142 6,701,481 5,964,562 7,780,835 6,814,981 5,816,712 7,615,770 9,426,922 8,254,959 7,134,692 6,055,952
Total Liabilities, Deferred Inflows, and Net Position 22,637,311 24,982,460 25,320,122 25,022,037 27,058,934 26,215,231 27,481,128 29,440,052 31,354,111 30,334,406 29,484,524 28,786,549
Net investments in capital assets 13,517,451 13,534,726 12,949,486 13,748,499 13,619,040 14,920,006 17,669,517 17,284,837 17,239,083 17,579,738 17,776,117 18,014,261
Unrestricted net position 3,766,514 4,882,592 5,669,155 5,308,976 5,659,059 4,480,244 3,994,899 4,539,445 4,688,106 4,499,709 4,573,714 4,716,335
Total net position 17,283,965 18,417,318 18,618,640 19,057,474 19,278,098 19,400,250 21,664,416 21,824,282 21,927,189 22,079,447 22,349,832 22,730,597
X-E-01
40
Financial Plans
Table 9
Water Fund
City of HastingsEnding Cash Balance
Water Fund
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
Use of Cash
Operations & Maintenance 1,297,298 1,336,217 1,406,637 1,448,836 1,492,301 1,537,070 1,583,182 1,630,678 1,679,598 1,729,986
Capital Acquisition and Cost of Issuance of Bonds 431,500 1,035,000 2,764,000 1,390,100 2,863,500 2,628,200 3,044,000 400,300 314,000 405,400
Other Interfund Transfers 40,822 40,822 40,822 40,822 40,822 40,822 40,822 40,822 40,822 40,822
Debt Service (includes transfers for debt)686,575 883,057 856,125 1,164,125 1,164,850 887,375 1,199,075 1,448,350 1,355,690 1,276,378
Total Use of Cash 2,456,195 3,295,096 5,067,584 4,043,883 5,561,473 5,093,467 5,867,079 3,520,150 3,390,110 3,452,585
Source of Cash
Revenue from Service Charges 2,508,223 2,573,555 2,680,533 2,784,471 4,992,945 3,005,460 3,123,136 3,245,221 3,372,930 3,505,451
Revenue from Connection and Availability Charges 160,000 393,281 215,861 106,452 106,452 103,495 106,452 103,495 106,452 103,495
Bond Proceeds 610,000 - 2,550,000 - - 2,550,000 2,805,000 - - -
Interfund Transfers - - - - - - - - - -
Total Source of Cash 3,278,223 2,966,836 5,446,394 2,890,923 5,099,397 5,658,955 6,034,588 3,348,716 3,479,382 3,608,946
Net Change in Other Assets and Liabilities 42,590 (12,019) (33,878) (31,057) (28,524) (26,249) (24,208) (22,377) (20,735) (19,263)
Change in Cash Balance 864,618 (340,279) 344,932 (1,184,017) (490,600) 539,239 143,301 (193,811) 68,538 137,098
Beginning Cash Balance 5,061,827 5,926,446 5,586,167 5,931,099 4,747,082 4,256,482 4,795,721 4,939,022 4,745,211 4,813,749
Total Projected Ending Cash 5,926,446 5,586,167 5,931,099 4,747,082 4,256,482 4,795,721 4,939,022 4,745,211 4,813,749 4,950,847
Ending Cash by Purpose
For future capital improvements 3,674,334 4,164,382 3,014,665 345,656 2,906,639 2,961,850 2,682,702 2,655,622 2,699,475 2,979,426
For following year pay-go capital 1,035,000 214,000 1,390,100 2,863,500 78,200 239,000 400,300 314,000 405,400 314,000
For 3-months of operating cash 334,054 351,659 362,209 373,075 384,267 395,796 407,669 419,899 432,496 445,471
For following year debt service 883,057 856,125 1,164,125 1,164,850 887,375 1,199,075 1,448,350 1,355,690 1,276,378 1,211,950
Total Projected Ending Cash 5,926,446 5,586,167 5,931,099 4,747,082 4,256,482 4,795,721 4,939,022 4,745,211 4,813,749 4,950,847
Note: Cash balances include cash and investments.
WATER FUNDX-E-01
41
Financial Plans
WATER FUNDTable 10
Water Fund
Page 1 of 3City of Hastings
Customers and Charges for Sales and Development Revenue
Water Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
CUSTOMER DATA
Average Annual Billing Units (Customers)
Residential 6,919 6,942 7,010 7,142 7,215 7,251 7,286 7,321 7,356 7,391 7,426 7,461
Commercial 388 391 392 392 392 392 393 393 394 394 395 395
Governmental 50 53 53 53 53 53 53 53 53 53 53 53
Other 3 3 3 3 3 3 3 3 3 3 3 3
Irrigation 198 195 195 195 195 195 195 195 195 195 195 195
Total Customers 7,558 7,584 7,653 7,785 7,858 7,894 7,930 7,965 8,001 8,036 8,072 8,107
Volume (in thousands of gallons)
Residential 572,631 531,081 505,501 514,081 518,826 521,166 523,441 525,716 527,991 530,266 532,541 534,816
Commercial 80,372 79,104 79,169 79,169 79,169 79,169 79,234 79,234 79,299 79,299 79,364 79,364
Governmental 35,968 41,191 41,191 41,191 41,191 41,191 41,191 41,191 41,191 41,191 41,191 41,191
Other 15,561 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322
Irrigation 91,872 76,310 76,310 76,310 76,310 76,310 76,310 76,310 76,310 76,310 76,310 76,310
Total Volume 796,404 743,008 717,493 726,073 730,818 733,158 735,498 737,773 740,113 742,388 744,728 747,003
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42
Financial Plans
Table 10
Water Fund
Page 2 of 3City of Hastings
Customers and Charges for Sales and Development Revenue
Water Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
REVENUE
Revenue - Base Charge
Residential $519,202 $539,255 $563,604 $602,928 $639,545 $674,873 $712,037 $751,230 $792,563 $836,150 $882,115 $930,587
Commercial $72,804 $75,932 $78,792 $82,732 $86,868 $91,212 $96,016 $100,817 $106,128 $111,434 $117,303 $123,168
Governmental $9,382 $10,293 $10,653 $11,186 $11,745 $12,332 $12,949 $13,596 $14,276 $14,990 $15,739 $16,526
Other $1,801 $1,864 $1,929 $2,026 $2,127 $2,234 $2,345 $2,463 $2,586 $2,715 $2,851 $2,993
Irrigation $74,305 $75,730 $78,390 $82,310 $86,425 $90,746 $95,284 $100,048 $105,050 $110,303 $115,818 $121,609
Total Revenue $677,495 $703,074 $733,368 $781,180 $826,710 $871,396 $918,631 $968,154 $1,020,602 $1,075,592 $1,133,826 $1,194,882
Revenue - State Testing Charge
Residential $67,253 $67,476 $68,137 $69,420 $70,130 $70,480 $70,820 $71,160 $71,500 $71,841 $72,181 $72,521
Commercial $3,771 $3,801 $3,810 $3,810 $3,810 $3,810 $3,820 $3,820 $3,830 $3,830 $3,839 $3,839
Governmental $486 $515 $515 $515 $515 $515 $515 $515 $515 $515 $515 $515
Other $29 $29 $29 $29 $29 $29 $29 $29 $29 $29 $29 $29
Irrigation $1,925 $1,895 $1,895 $1,895 $1,895 $1,895 $1,895 $1,895 $1,895 $1,895 $1,895 $1,895
Total Revenue $73,464 $73,716 $74,387 $75,670 $76,380 $76,730 $77,080 $77,420 $77,770 $78,110 $78,460 $78,800
Revenue - Volume Charge
Residential $1,012,412 $836,559 $823,866 $862,985 $897,079 $928,158 $960,176 $993,280 $1,027,506 $1,062,891 $1,099,474 $1,137,297
Commercial $222,389 $216,310 $224,009 $230,729 $237,651 $244,780 $252,331 $259,901 $267,917 $275,955 $284,466 $293,000
Governmental $141,031 $167,792 $173,620 $178,829 $184,194 $189,719 $195,411 $201,273 $207,311 $213,531 $219,937 $226,535
Other $21,941 $22,539 $23,305 $24,004 $24,724 $25,466 $26,230 $27,017 $27,827 $28,662 $29,522 $30,407
Irrigation $370,474 $310,849 $321,647 $331,296 $341,235 $351,472 $362,016 $372,877 $384,063 $395,585 $407,452 $419,676
Total Revenue $1,768,246 $1,554,048 $1,566,446 $1,627,842 $1,684,882 $1,739,596 $1,796,164 $1,854,347 $1,914,624 $1,976,623 $2,040,852 $2,106,915
WATER FUNDX-E-01
43
Financial Plans
Table 10
Water Fund
Page 3 of 3City of Hastings
Customers and Charges for Sales and Development Revenue
Water Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
Availability Charge (WAC)
Residential $113,006 $724,163 $157,694 $393,281 $215,861 $106,452 $103,495 $103,495 $103,495 $103,495 $103,495 $103,495
Commercial $0 $0 $2,306 $0 $0 $0 $2,957 $0 $2,957 $0 $2,957 $0
Governmental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Irrigation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue $113,006 $724,163 $160,000 $393,281 $215,861 $106,452 $106,452 $103,495 $106,452 $103,495 $106,452 $103,495
Total Unadjusted Revenue $2,632,211 $3,055,001 $2,534,201 $2,877,974 $2,803,833 $2,794,174 $2,898,326 $3,003,416 $3,119,448 $3,233,820 $3,359,589 $3,484,093
Adjustments / other changes 1 $44,368 -$4,449 -$26,228
Total Revenue Calculated $2,676,579 $3,050,552 $2,507,973 $2,877,974 $2,803,833 $2,794,174 $2,898,326 $3,003,416 $3,119,448 $3,233,820 $3,359,589 $3,484,093
Total Revenue from Service Charges $2,519,205 $2,330,838 $2,374,201 $2,484,693 $2,587,972 $2,687,722 $2,791,874 $2,899,921 $3,012,996 $3,130,325 $3,253,137 $3,380,598
Total Revenue Other / Adjustments $44,368 -$4,449 -$26,228 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue from Connection Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue from Availability Charges $113,006 $724,163 $160,000 $393,281 $215,861 $106,452 $106,452 $103,495 $106,452 $103,495 $106,452 $103,495
Total $2,676,579 $3,050,552 $2,507,973 $2,877,974 $2,803,833 $2,794,174 $2,898,326 $3,003,416 $3,119,448 $3,233,820 $3,359,589 $3,484,093
Note:
1. The Adjustments/other changes is the difference between how the Study calculated revenue compared to revenue reported in the city's financial statements or budget document. The difference are subject to further review.
WATER FUNDX-E-01
44
Financial Plans
SEWER FUND
The financial plan for the Sewer Fund reflects the adopted
rates for 2024 and proposed future year increases averaging
4.5% annually.
Interest income is earned on the cash balance in the Fund
that is recorded as revenue. The investment earnings rate is
projected to be 2.0% for future years.
Expenses
The expenses are for payment of operating expenses, debt
service expense, and depreciation expense.
The Plan anticipates a 3.0% annual inflationary increase in
operating expenses and .33 personnel (FTE) additions.
Debt service expense includes interest expense on both ex-
isting outstanding bonds and for anticipated new issuance.
The Plan models annual depreciation expense on both exist-
ing capital assets and anticipated new assets to be acquired.
With the inclusion of depreciation expense, annual operat-
ing losses are shown within the Sewer Fund, on a declin-
ing basis beginning in 2030, due to the retirement of debt
service.
The Sewer Fund includes annual transfers to other funds
based on historical levels.
MCES charges the city a fee for the regional collection and
treatment of wastewater (disposal charges). The city does
not have control over this operating expense. Future charges
payable to the MCES are projected based on total estimated
sanitary sewer volume reported to the MCES with an esti-
mated 6.8% increase in 2024 and 5.0% annual increase in
years 2025-2032 per unit of volume. The City should closely
monitor changes to MCES charges and adjust rates as neces-
sary.
MCES uses an allocation method based on previous flow
to calculate each municipality’s charges. For example, the
SEWER FUND
Background
The Sewer Fund is used to account for the operating and
capital improvement costs related to maintenance of the
sanitary sewer system. The sanitary sewer utility system
provides for the collection and treatment of wastewater.
The treatment of wastewater is provided by Metropolitan
Council Environmental Services (MCES). The city builds and
maintains the collection system that transports wastewater
to the MCES treatment facilities.
The Sewer Fund is in sound financial condition, but nota-
bly the level of reserves and net assets as percentage of
expense is comparatively less than compared to the Water
Fund. The Plan proposes higher rate increases for sewer
services compared to water.
Future development will increase the demands on the
sanitary sewer utility infrastructure but will also provide
increased revenue to support the maintenance and opera-
tion of the system.
The city anticipates collection of future development fees
to support expansion of the system as the community con-
tinues to grow. Development fees are accounted for in the
Sewer Fund.
Revenues
The major source of revenue comes from the collection of
quarterly charges, including a fixed based charge to each
customer, along with volume-based charges for sanitary
sewer volume billed.
X-E-01
45
Financial Plansmethod uses 2022 calendar year flow to allocate 2023 fees.
The city pays the Metropolitan Council a disposal charge
based on volume. Disposal charges payable to the MCES
represent approximately 48% of the estimated 2023 ex-
penses in the Sewer Fund, increasing to an average of 58%
in years 2024-2032.
Cash Balance
The financial plan includes projected assets and liabilities
for the Fund. This includes projected annual year-end cash
balance. A table that follows provides a detailed summary
on projected change in cash year by year.
Based on assumptions in the Plan, including collection of
development fees related to growth (that will be used to
pay for future capital improvements), it is projected that
the cash balance position of the Fund will decrease over the
planning period. The Fund is projected to have future cash
sufficient to meet the objectives for cash balance, including
cash sufficient to cover:
• Three-months of operating expense
• Following year debt service payments
• Following year capital acquisition (planned to be paid from cash)
• Reserves for future capital improvements
The sufficiency of the estimated reserves for capital im-
provements will depend on future capital improvement
projects that may not yet be programmed in the CIP.
SEWER FUNDX-E-01
46
Financial Plans
Table 11
Sewer FundCity of Hastings
Finance Plan
Sewer Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Estimated Proj Proj Proj Proj Proj Proj Proj Proj Proj
Revenues
Charges for services 2,608,421 2,627,715 2,876,876 2,885,742 3,044,592 3,196,539 3,355,996 3,522,878 3,698,458 3,882,211 4,075,529 4,277,844
Availability charges 108,984 222,548 60,000 188,760 104,390 51,480 51,480 50,050 51,480 50,050 51,480 50,050
Penalties and other revenues - - 12,000 12,360 12,731 13,113 13,506 13,911 14,329 14,758 15,201 15,657
Investment income and other earnings (2,774) (44,484) 14,000 14,420 14,853 15,298 15,757 16,230 16,717 17,218 17,735 18,267
Connection charges - - - - - - - - - - - -
Intergovernmental revenues - - - - - - 1,950,000 - - - - -
Other revenues and special items 37,299 169,082 - - - - - - - - - -
Special assessments (233) - - - - - - - - - - -
Transfers in 18,333 18,333 18,333 18,883 19,449 20,033 20,634 21,253 21,891 22,547 23,224 23,920
Capital contributions 223,782 339,292 - - - - - - - - - -
Total Revenues 2,993,812 3,332,486 2,981,209 3,120,164 3,196,015 3,296,463 5,407,373 3,624,323 3,802,874 3,986,785 4,183,169 4,385,738
Expenses
Fixed Expenses
Personnel services 321,850 383,932 437,876 451,012 464,543 478,479 492,833 507,618 522,847 538,532 554,688 571,329
Personnel services / FTE changes - - - - 30,333 31,243 32,181 33,146 34,140 35,165 36,220 37,306
Transfers out General Fund - - - - - - - - - - - -
Transfer out Debt Service Fund - - - - - - - - - - - -
Transfer out Other Funds 387,429 37,293 39,158 40,333 41,543 42,789 44,073 45,395 46,757 48,159 49,604 51,092
Interest and fiscal expense 32,068 58,955 50,379 60,837 84,713 119,463 130,263 147,588 179,088 243,213 222,535 237,891
Depreciation 476,605 493,793 504,543 521,143 543,343 555,043 609,843 633,843 675,043 681,043 698,943 709,443
Subtotal Fixed Expenses 1,217,952 973,973 1,031,956 1,073,325 1,164,474 1,227,017 1,309,192 1,367,590 1,457,874 1,546,112 1,561,990 1,607,062
Variable Expenses
Supplies 5,358 6,201 6,400 6,592 6,790 6,993 7,203 7,419 7,642 7,871 8,107 8,351
Repairs and maintenance 102,471 1,600 65,000 66,950 68,959 71,027 73,158 75,353 77,613 79,942 82,340 84,810
MCES Disposal Charges 1,412,707 1,595,532 1,659,271 1,806,822 1,914,248 2,018,807 2,129,036 2,244,970 2,367,460 2,496,287 2,632,392 2,775,538
Professional services and other expense 219,428 182,409 124,324 128,054 131,895 135,852 139,928 144,126 148,449 152,903 157,490 162,215
Bond issuance cost - - - 15,000 20,000 10,000 15,000 25,000 40,000 - 20,000 10,000
Subtotal Variable Expenses 1,739,964 1,785,742 1,854,995 2,023,418 2,141,891 2,242,680 2,364,325 2,496,868 2,641,165 2,737,003 2,900,330 3,040,913
Total Expenses 2,957,916 2,759,715 2,886,951 3,096,743 3,306,366 3,469,696 3,673,517 3,864,458 4,099,039 4,283,115 4,462,320 4,647,975
Beginning net position 11,153,684 11,189,580 11,762,351 11,856,608 11,880,030 11,769,679 11,596,446 13,330,302 13,090,167 12,794,002 12,497,671 12,218,520
Change in Net Position 35,896 572,771 94,258 23,422 (110,351) (173,234) 1,733,856 (240,135) (296,165) (296,330) (279,151) (262,237)
Ending net position 11,189,580 11,762,351 11,856,608 11,880,030 11,769,679 11,596,446 13,330,302 13,090,167 12,794,002 12,497,671 12,218,520 11,956,283
SEWER FUNDX-E-01
47
Financial Plans
SEWER FUNDTable 11
Sewer FundCity of Hastings
Finance Plan
Sewer Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Estimated Proj Proj Proj Proj Proj Proj Proj Proj Proj
Assets and Deferred Outflow of Resources
Cash and cash equivalents 3,285,758 3,457,029 3,783,065 4,124,530 4,324,460 4,393,248 4,418,967 4,409,740 4,335,729 3,852,601 3,704,605 3,569,076
Due from other governments - - - - - - - - - - - -
Due from other funds / advances - - - - - - - - - - - -
Special assessments receivable 15,358 13,527 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Other assets / receivables 841,186 848,936 850,000 858,500 867,085 875,756 884,513 893,359 902,292 911,315 920,428 929,632
Capital assets 20,438,295 21,482,497 22,019,997 22,849,997 23,959,997 24,544,997 27,284,997 28,484,997 30,544,997 30,844,997 31,739,997 32,264,997
Less Accumulated depreciation (11,453,653) (11,926,911) (12,431,454) (12,952,597) (13,495,940) (14,050,983) (14,660,826) (15,294,669) (15,969,712) (16,650,755) (17,349,698) (18,059,141)
Deferred outflows of resources 148,311 117,240 125,000 128,750 132,613 136,591 140,689 144,909 149,257 153,734 158,346 163,097
Total Assets and Deferred Outflows 13,275,255 13,992,318 14,361,608 15,024,180 15,803,215 15,914,609 18,083,340 18,653,336 19,977,562 19,126,893 19,188,678 18,882,662
Liabilities and Deferred Inflow of Resources
Other current liabilities / payables 194,282 195,498 195,000 198,900 202,878 206,936 211,074 215,296 219,602 223,994 228,474 233,043
Contracts payable - - - - - - - - - - - -
Due to other governments - - - - - - - - - - - -
Bonds payable 1,340,000 1,550,000 1,790,000 2,440,000 3,340,000 3,635,000 4,080,000 4,900,000 6,510,000 5,945,000 6,275,000 6,220,000
Unamortized bond premium 111,704 119,010 100,000 80,000 60,000 40,000 20,000 - - - - -
Net pension liability (non-current)163,873 125,802 175,000 180,250 185,658 191,227 196,964 202,873 208,959 215,228 221,685 228,335
Other non-current liabilities 120,127 232,722 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000
Deferred inflows of resources 155,689 6,936 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Total Liabilities and Deferred Inflows 2,085,675 2,229,968 2,505,000 3,144,150 4,033,536 4,318,163 4,753,038 5,563,169 7,183,561 6,629,222 6,970,158 6,926,378
Total Liabilities, Deferred Inflows, and Net Position 13,275,255 13,992,318 14,361,608 15,024,180 15,803,215 15,914,609 18,083,340 18,653,336 19,977,562 19,126,893 19,188,678 18,882,662
Net investments in capital assets 7,532,938 7,886,576 7,698,543 7,377,400 7,064,057 6,819,014 8,524,171 8,290,328 8,065,285 8,249,242 8,115,299 7,985,856
Unrestricted net position 3,656,642 3,875,775 4,158,065 4,502,630 4,705,622 4,777,432 4,806,131 4,799,839 4,728,716 4,248,429 4,103,221 3,970,427
Total net position 11,189,580 11,762,351 11,856,608 11,880,030 11,769,679 11,596,446 13,330,302 13,090,167 12,794,002 12,497,671 12,218,520 11,956,283
X-E-01
48
Financial Plans
Table 12
Sewer Fund
City of Hastings
Ending Cash Balance
Sewer Fund
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
Use of Cash
Operations & Maintenance 2,292,871 2,459,430 2,616,767 2,742,402 2,874,339 3,012,632 3,158,152 3,310,700 3,471,238 3,639,549
Capital Acquisition and Cost of Issuance of Bonds 537,500 845,000 1,130,000 595,000 2,755,000 1,225,000 2,100,000 300,000 915,000 535,000
Other Interfund Transfers 39,158 40,333 41,543 42,789 44,073 45,395 46,757 48,159 49,604 51,092
Debt Service (includes transfers for debt)170,379 255,837 314,713 419,463 490,263 552,588 669,088 808,213 807,535 827,891
Total Use of Cash 3,039,908 3,600,600 4,103,023 3,799,653 6,163,674 4,835,615 5,973,996 4,467,072 5,243,377 5,053,532
Source of Cash
Revenue from Service Charges 2,902,876 2,912,522 3,072,175 3,224,950 5,335,259 3,553,020 3,729,503 3,914,187 4,108,465 4,311,768
Revenue from Connection and Availability Charges 60,000 188,760 104,390 51,480 51,480 50,050 51,480 50,050 51,480 50,050
Bond Proceeds 360,000 845,000 1,130,000 595,000 805,000 1,225,000 2,100,000 - 915,000 535,000
Interfund Transfers 18,333 18,883 19,449 20,033 20,634 21,253 21,891 22,547 23,224 23,920
Total Source of Cash 3,341,209 3,965,164 4,326,015 3,891,463 6,212,373 4,849,323 5,902,874 3,986,785 5,098,169 4,920,738
Net Change in Other Assets and Liabilities 24,735 (23,100) (23,062) (23,022) (22,980) (22,935) (2,889) (2,840) (2,788) (2,735)
Change in Cash Balance 326,036 341,465 199,930 68,788 25,719 (9,228) (74,011) (483,127) (147,997) (135,528)
Beginning Cash Balance 3,457,029 3,783,065 4,124,530 4,324,460 4,393,248 4,418,967 4,409,740 4,335,729 3,852,602 3,704,605
Total Projected Ending Cash 3,783,065 4,124,530 4,324,460 4,393,248 4,418,967 4,409,740 4,335,729 3,852,602 3,704,605 3,569,077
Ending Cash by Purpose
For future capital improvements 2,912,371 3,155,626 3,219,397 1,234,401 3,113,222 2,951,114 2,399,841 2,177,257 1,966,827 1,773,378
For following year pay-go capital - - - 1,950,000 - - 300,000 - - -
For 3-months of operating cash 614,857 654,192 685,600 718,585 753,158 789,538 827,675 867,809 909,887 954,173
For following year debt service 255,837 314,713 419,463 490,263 552,588 669,088 808,213 807,535 827,891 841,525
Total Projected Ending Cash 3,783,065 4,124,530 4,324,460 4,393,248 4,418,967 4,409,740 4,335,729 3,852,602 3,704,605 3,569,077
Note: Cash balances include cash and investments.
SEWER FUNDX-E-01
49
Financial Plans
Table 13
Sewer FundCity of Hastings
Customers and Charges for Sales and Development Revenue
Sewer Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
CUSTOMER DATA
Average Annual Billing Units (Customers)
Residential 6,917 6,947 7,015 7,147 7,220 7,256 7,291 7,326 7,361 7,396 7,431 7,466
Commercial 372 371 372 372 372 372 373 373 374 374 375 375
Non-Profit - - - - - - - - - - - -
Governmental 45 45 45 45 45 45 45 45 45 45 45 45
Other 1 1 1 1 1 1 1 1 1 1 1 1
Total Customers 7,335 7,363 7,432 7,564 7,637 7,673 7,709 7,744 7,780 7,815 7,851 7,886
Volume (in thousands of gallons)
Residential 351,801 348,823 353,243 361,823 366,568 368,908 371,183 373,458 375,733 378,008 380,283 382,558
Commercial 69,341 69,042 69,107 69,107 69,107 69,107 69,172 69,172 69,237 69,237 69,302 69,302
Non-Profit - - - - - - - - - - - -
Governmental 45,822 47,817 47,817 47,817 47,817 47,817 47,817 47,817 47,817 47,817 47,817 47,817
Other 15,561 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322 15,322
Total Volume 482,525 481,004 485,489 494,069 498,814 501,154 503,494 505,769 508,109 510,384 512,724 514,999
REVENUE
Revenue - Base Charge
Residential $521,561 $529,045 $544,886 $580,121 $612,419 $643,169 $675,354 $709,133 $744,585 $781,791 $820,838 $861,816
Commercial $28,011 $28,217 $28,858 $30,157 $31,514 $32,932 $34,506 $36,059 $37,783 $39,483 $41,371 $43,232
Non-Profit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Governmental $3,393 $3,427 $3,496 $3,653 $3,817 $3,989 $4,169 $4,356 $4,552 $4,757 $4,971 $5,195
Other $75 $76 $78 $81 $85 $89 $93 $97 $101 $106 $110 $115
Total Revenue $553,040 $560,766 $577,318 $614,012 $647,835 $680,179 $714,122 $749,646 $787,021 $826,137 $867,290 $910,359
Revenue - Volume Charge
Residential $1,502,190 $1,503,427 $1,554,269 $1,663,662 $1,761,326 $1,852,335 $1,947,628 $2,047,745 $2,152,929 $2,263,433 $2,379,523 $2,501,477
Commercial $296,086 $297,571 $304,071 $317,754 $332,053 $346,995 $362,951 $379,284 $396,724 $414,577 $433,639 $453,153
Non-Profit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Governmental $195,660 $206,091 $210,395 $219,863 $229,756 $240,095 $250,900 $262,190 $273,989 $286,318 $299,203 $312,667
Other $66,445 $66,038 $67,417 $70,451 $73,621 $76,934 $80,396 $84,014 $87,794 $91,745 $95,873 $100,188
Total Revenue $2,060,382 $2,073,127 $2,136,152 $2,271,729 $2,396,756 $2,516,360 $2,641,874 $2,773,233 $2,911,436 $3,056,073 $3,208,239 $3,367,485
SEWER FUNDX-E-01
50
Financial Plans
Table 13
Sewer FundCity of Hastings
Customers and Charges for Sales and Development Revenue
Sewer Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
Availability Charge (SAC) and Interceptor Sewer Fee
Residential $183,411 $374,838 $116,988 $188,760 $104,390 $51,480 $50,050 $50,050 $50,050 $50,050 $50,050 $50,050
Commercial $0 $0 $1,194 $0 $0 $0 $1,430 $0 $1,430 $0 $1,430 $0
Non-Profit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Governmental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue $183,411 $374,838 $118,181 $188,760 $104,390 $51,480 $51,480 $50,050 $51,480 $50,050 $51,480 $50,050
Total Unadjusted Revenue $2,796,832 $3,008,732 $2,831,651 $3,074,502 $3,148,982 $3,248,019 $3,407,476 $3,572,928 $3,749,938 $3,932,261 $4,127,009 $4,327,894
Adjustments / other changes 1 -$79,427 -$158,469 $105,225
Total Revenue Calculated $2,717,405 $2,850,263 $2,936,876 $3,074,502 $3,148,982 $3,248,019 $3,407,476 $3,572,928 $3,749,938 $3,932,261 $4,127,009 $4,327,894
Total Revenue from Service Charges $2,613,422 $2,633,893 $2,713,469 $2,885,742 $3,044,592 $3,196,539 $3,355,996 $3,522,878 $3,698,458 $3,882,211 $4,075,529 $4,277,844
Total Revenue Other / Adjustments -$79,427 -$158,469 $105,225 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue from Connection Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue from Availability Charges $183,411 $374,838 $118,181 $188,760 $104,390 $51,480 $51,480 $50,050 $51,480 $50,050 $51,480 $50,050
Total $2,717,405 $2,850,263 $2,936,876 $3,074,502 $3,148,982 $3,248,019 $3,407,476 $3,572,928 $3,749,938 $3,932,261 $4,127,009 $4,327,894
Note:
1. The Adjustments/other changes is the difference between how the Study calculated revenue compared to revenue reported in the city's financial statements or budget document. The difference are subject to further review.
SEWER FUNDX-E-01
51
Financial Plans
STORM FUNDSTORM FUND
Debt service expense includes interest expense on antici-
pated new bond issuance.
The Storm Fund includes annual transfers to other funds
based on historical levels.
Cash Balance
The financial plan includes projected assets and liabilities
for the Fund. This includes projected annual year-end cash
balance. A table that follows provides a detailed summary
on projected change in cash year by year.
Based on assumptions in the Plan, which does not include
any collection of development fees related to growth, it is
projected that the cash balance position of the Fund will
decrease over the planning period. The Fund is projected to
have future cash sufficient to meet the objectives for cash
balance, including cash sufficient to cover:
• Three-months of operating expense
• Following year debt service payments
• Following year capital acquisition (planned to be paid from cash)
• Reserves for future capital improvements
The sufficiency of the estimated reserves for capital im-
provements will depend on future capital improvement
projects that may not yet be programmed in the CIP.
Background
The Storm Fund is used to account for the operating and
capital improvement costs related to maintenance of the
stormwater system. The city builds and maintains the col-
lection system that transports and manages stormwater.
The Storm Fund is in sound financial condition. Future de-
velopment will increase the demands on the sanitary sewer
utility infrastructure but will also provide increased revenue
to support the maintenance and operation of the system.
The Plan does not include collection of future development
fees to support the stormwater system.
Revenues
The major source of revenue comes from the collection of
quarterly charges from a fixed charge that is based on cus-
tomer classification.
The financial plan for the Storm Fund reflects the adopted
rates for 2023 and proposed future year increases averag-
ing 4.0% annually.
Interest income is earned on the cash balance in the Fund
that is recorded as revenue. The investment earnings rate is
projected to be 2.0% for future years.
Expenses
The expenses are for payment of operating expenses, in-
cluding depreciation expense.
The Plan anticipates a 3.0% annual inflationary increase in
operating expenses and .33 personnel (FTE) additions.
X-E-01
52
Financial Plans
Table 14
Storm Fund
City of Hastings
Finance Plan
Storm Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Estimated Proj Proj Proj Proj Proj Proj Proj Proj Proj
Revenues
Charges for services 761,135 802,509 829,762 813,643 852,995 890,605 930,242 971,123 1,014,308 1,058,851 1,105,900 1,154,430
Availability charges - - - - - - - - - - - -
Penalties and other revenues - (49,568) 3,500 3,605 3,713 3,825 3,939 4,057 4,179 4,305 4,434 4,567
Investment income and other earnings (1,270) (31,805) 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914
Connection charges - - - - - - - - - - - -
Intergovernmental revenues 119,525 - - - - - - - - - - -
Other revenues and special items - - - - - - - - - - - -
Special assessments - - - - - - - - - - - -
Special item - - - - - - - - - - - -
Transfers in - - - - - - - - - - - -
Capital contributions 260,554 - - - - - - - - - - -
Total Revenues 1,139,944 721,136 836,262 820,338 859,890 897,708 937,558 978,658 1,022,070 1,066,845 1,114,134 1,162,911
Expenses
Fixed Expenses
Personnel services 308,885 362,258 401,250 413,288 425,686 438,457 451,610 465,159 479,113 493,487 508,291 523,540
Personnel services / FTE changes - - - - 30,333 31,243 32,181 33,146 34,140 35,165 36,220 37,306
Transfer out Other Funds 7,526 8,655 9,088 9,361 9,641 9,931 10,229 10,535 10,852 11,177 11,512 11,858
Interest and fiscal expense - - - - 26,300 23,800 21,400 46,100 41,100 35,900 66,700 57,900
Depreciation 32,093 42,872 45,212 58,712 72,912 79,412 93,312 103,812 110,312 128,812 137,312 144,812
Subtotal Fixed Expenses 348,504 413,785 455,550 481,360 564,872 582,842 608,731 658,752 675,517 704,540 760,035 775,416
Variable Expenses
Supplies 3,856 5,132 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914
Meters - - - - - - - - - - - -
Repairs and maintenance - - - - - - - - - - - -
Professional services and other expense 58,653 84,596 101,397 104,439 107,572 110,799 114,123 117,547 121,073 124,706 128,447 132,300
Bond issuance cost - - - 15,000 - - 15,000 - - 20,000 - 5,000
Subtotal Variable Expenses 62,509 89,728 104,397 122,529 110,755 114,077 132,500 121,025 124,655 148,395 132,247 141,214
Total Expenses 411,013 503,513 559,947 603,889 675,627 696,920 741,231 779,777 800,172 852,935 892,282 916,630
Change in Net Position 728,931 217,623 276,315 216,449 184,263 200,788 196,327 198,882 221,897 213,910 221,852 246,281
Ending net position 1,640,105 1,857,728 2,134,044 2,350,493 2,534,756 2,735,544 2,931,872 3,130,753 3,352,651 3,566,560 3,788,412 4,034,693
X-E-01
53
Financial Plans
Table 14
Storm Fund
City of Hastings
Finance Plan
Storm Fund
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Estimated Proj Proj Proj Proj Proj Proj Proj Proj Proj
Revenues
Charges for services 761,135 802,509 829,762 813,643 852,995 890,605 930,242 971,123 1,014,308 1,058,851 1,105,900 1,154,430
Availability charges - - - - - - - - - - - -
Penalties and other revenues - (49,568) 3,500 3,605 3,713 3,825 3,939 4,057 4,179 4,305 4,434 4,567
Investment income and other earnings (1,270) (31,805) 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914
Connection charges - - - - - - - - - - - -
Intergovernmental revenues 119,525 - - - - - - - - - - -
Other revenues and special items - - - - - - - - - - - -
Special assessments - - - - - - - - - - - -
Special item - - - - - - - - - - - -
Transfers in - - - - - - - - - - - -
Capital contributions 260,554 - - - - - - - - - - -
Total Revenues 1,139,944 721,136 836,262 820,338 859,890 897,708 937,558 978,658 1,022,070 1,066,845 1,114,134 1,162,911
Expenses
Fixed Expenses
Personnel services 308,885 362,258 401,250 413,288 425,686 438,457 451,610 465,159 479,113 493,487 508,291 523,540
Personnel services / FTE changes - - - - 30,333 31,243 32,181 33,146 34,140 35,165 36,220 37,306
Transfer out Other Funds 7,526 8,655 9,088 9,361 9,641 9,931 10,229 10,535 10,852 11,177 11,512 11,858
Interest and fiscal expense - - - - 26,300 23,800 21,400 46,100 41,100 35,900 66,700 57,900
Depreciation 32,093 42,872 45,212 58,712 72,912 79,412 93,312 103,812 110,312 128,812 137,312 144,812
Subtotal Fixed Expenses 348,504 413,785 455,550 481,360 564,872 582,842 608,731 658,752 675,517 704,540 760,035 775,416
Variable Expenses
Supplies 3,856 5,132 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914
Meters - - - - - - - - - - - -
Repairs and maintenance - - - - - - - - - - - -
Professional services and other expense 58,653 84,596 101,397 104,439 107,572 110,799 114,123 117,547 121,073 124,706 128,447 132,300
Bond issuance cost - - - 15,000 - - 15,000 - - 20,000 - 5,000
Subtotal Variable Expenses 62,509 89,728 104,397 122,529 110,755 114,077 132,500 121,025 124,655 148,395 132,247 141,214
Total Expenses 411,013 503,513 559,947 603,889 675,627 696,920 741,231 779,777 800,172 852,935 892,282 916,630
Change in Net Position 728,931 217,623 276,315 216,449 184,263 200,788 196,327 198,882 221,897 213,910 221,852 246,281
Ending net position 1,640,105 1,857,728 2,134,044 2,350,493 2,534,756 2,735,544 2,931,872 3,130,753 3,352,651 3,566,560 3,788,412 4,034,693
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Financial Plans
Table 15
Storm Fund
City of HastingsEnding Cash Balance
Storm Fund
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
Use of Cash
Operations & Maintenance 505,647 520,816 566,774 583,777 601,291 619,330 637,909 657,047 676,758 697,061
Capital Acquisition and Cost of Issuance of Bonds 117,000 690,000 710,000 325,000 710,000 525,000 325,000 945,000 425,000 380,000
Other Interfund Transfers 9,088 9,361 9,641 9,931 10,229 10,535 10,852 11,177 11,512 11,858
Debt Service (includes transfers for debt)- - 91,300 83,800 81,400 171,100 166,100 170,900 281,700 282,900
Total Use of Cash 631,735 1,220,177 1,377,716 1,002,508 1,402,919 1,325,965 1,139,861 1,784,124 1,394,970 1,371,819
Source of Cash
Revenue from Service Charges 836,262 820,338 859,890 897,708 937,558 978,658 1,022,070 1,066,845 1,114,134 1,162,911
Revenue from Connection and Availability Charges - - - - - - - - - -
Bond Proceeds - 690,000 - - 710,000 - - 945,000 - 305,000
Interfund Transfers - - - - - - - - - -
Total Source of Cash 836,262 1,510,338 859,890 897,708 1,647,558 978,658 1,022,070 2,011,845 1,114,134 1,467,911
Net Change in Other Assets and Liabilities 95,972 9,500 9,775 10,058 10,350 10,650 10,959 11,277 11,605 11,942
Change in Cash Balance 300,499 299,661 (508,050) (94,742) 254,989 (336,657) (106,832) 238,999 (269,232) 108,035
Beginning Cash Balance 1,096,269 1,396,768 1,696,429 1,188,379 1,093,637 1,348,625 1,011,968 905,136 1,144,135 874,903
Total Projected Ending Cash 1,396,768 1,696,429 1,188,379 1,093,637 1,348,625 1,011,968 905,136 1,144,135 874,903 982,938
Ending Cash by Purpose
For future capital improvements 1,266,564 753,435 633,634 861,914 497,693 361,391 569,974 268,245 342,738 183,045
For following year pay-go capital - 775,000 325,000 - 525,000 325,000 - 425,000 75,000 300,000
For 3-months of operating cash 130,204 141,694 145,944 150,323 154,832 159,477 164,262 169,190 174,265 179,493
For following year debt service - 26,300 83,800 81,400 171,100 166,100 170,900 281,700 282,900 320,400
Total Projected Ending Cash 1,396,768 1,696,429 1,188,379 1,093,637 1,348,625 1,011,968 905,136 1,144,135 874,903 982,938
Note: Cash balances include cash and investments.
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Financial Plans
Table 16
Storm FundCity of Hastings
Customers and Charges for Sales and Development Revenue
Storm Fund
2 3 4 5 6 7 8 9 10 11 12 13
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Actual Budget Proj Proj Proj Proj Proj Proj Proj Proj Proj
CUSTOMER DATA
Average Annual REU Units (Customers)
Residential 7,056 7,164 7,232 7,364 7,437 7,473 7,508 7,543 7,578 7,613 7,648 7,683
Commercial 334 332 333 333 333 333 334 334 335 335 336 336
Non-Profit - - - - - - - - - - - -
Governmental - - - - - - - - - - - -
Other 108 115 115 115 115 115 115 115 115 115 115 115
Total Customers 7,498 7,611 7,680 7,812 7,885 7,921 7,957 7,992 8,028 8,063 8,099 8,134
REVENUE
Revenue - REU ChargeResidential $562,202 $593,732 $623,377 $660,145 $693,357 $724,582 $757,095 $791,050 $826,509 $863,540 $902,210 $942,593
Commercial $127,599 $132,003 $137,702 $143,210 $148,939 $154,896 $161,576 $168,039 $175,284 $182,295 $190,153 $197,759
Non-Profit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Governmental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $8,605 $9,510 $9,891 $10,287 $10,699 $11,127 $11,572 $12,034 $12,516 $13,016 $13,537 $14,079Irrigation
Total Revenue $698,407 $735,245 $770,970 $813,643 $852,995 $890,605 $930,242 $971,123 $1,014,308 $1,058,851 $1,105,900 $1,154,430
Access Charge
Residential $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Commercial $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Non-Profit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Governmental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other
Total Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Unadjusted Revenue $698,407 $735,245 $770,970 $813,643 $852,995 $890,605 $930,242 $971,123 $1,014,308 $1,058,851 $1,105,900 $1,154,430
Adjustments / other changes 1 $62,728 $67,264 $58,792
Total Revenue Calculated $761,135 $802,509 $829,762 $813,643 $852,995 $890,605 $930,242 $971,123 $1,014,308 $1,058,851 $1,105,900 $1,154,430
Total Revenue from Service Charges $698,407 $735,245 $770,970 $813,643 $852,995 $890,605 $930,242 $971,123 $1,014,308 $1,058,851 $1,105,900 $1,154,430
Total Revenue Other / Adjustments $62,728 $67,264 $58,792 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue from Connection Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue from Availability Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total $761,135 $802,509 $829,762 $813,643 $852,995 $890,605 $930,242 $971,123 $1,014,308 $1,058,851 $1,105,900 $1,154,430
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Appendixes
APPENDIXES
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AppendixesAppendix A
PFAS Scenario Comparison Memo
Hastings Water Fund Scenarios Page 0
City of Hastings, MN
Utility Study
Finance Plan Development for Water Fund
Presentation of Potential Scenarios to City Staff
As of August 4, 2023
Prepared by Northland Public Finance
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Appendixes
Hastings Water Fund Scenarios Page 1
TABLE OF CONTENTS
INTRODUCTION 1
SCENARIOS 1
Scenario A 3
Scenario B 2
Scenario C 4
PRESENTATION AND COMPARISON OF SCENARIOS 3
COMPARISON OF WATER UTILITY BILLS TO OTHER CITEIS 4
COMPARISON OF SCENARIOS 4
SCENARIO REPORTS 4
EXHIBITS
Exhibit A: Charts 5
Exhibit B: Comparison of Water Utility Bills to Other Cities 8
Exhibit C: Comparison of Scenarios 11
Exhibit D: Scenario A Report 12
Exhibit E: Scenario B Report 13
Exhibit F: Scenario C Report 14
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Hastings Water Fund Scenarios Page 1
INTRODUCTION
The City of Hastings engaged Northland to aid the city with a study of the municipal utility funds for development of the scenarios for funding future planned capital improvements, including related debt service on planned bond issuance to support the planned capital improvements. The aims of the study, which in process, are as follows:
• Revenue Sufficiency – For the Enterprise Funds, develop and populate a forecasting model to
decide the level of revenue needed to fund planned operations, capital improvements, and debt service while maintaining adequate reserves for future services and capital needs.
• Rate Calculations - Model projected future utility fees and charges for revenue sufficiency.
The study includes planned future capital improvements for years 2023-2033. Estimates were made by the city for capital improvement project costs and the timing of projects. While the specific timing and costs of future improvements is uncertain, awareness of the projects and the funding needed for each project are important when considering utility fees and charges and level of reserves.
Future development of property within the city will supply increased utility revenue from charges for services. The rate of future development and addition of new utility customers is a significant variable for the study. Future development will affect the projected service demands and revenues included in the study.
The purpose of this document is to supply preliminary information to the city on three different scenarios specific to the Water Fund. Northland will update the study and final report based on the city’s direction to Northland on which of the three scenarios should be incorporated into the final “Financial Management Plan For Water Fund, Sewer Fund, and Storm Water Fund (Utility Study)”.
SCENARIOS
There are three scenarios presented for review and discussion with city staff, as outlined below.
Scenario A
Scenario A is presented as the “base” scenario. The results and key assumptions and parameters for this scenario are as follows:
RESULTS
1. Total average annual change in utility bills for water services for all users, including high
volume, medium volume, and low volume, over the planning period (10 years) does not exceed 3.5%.
2. Annual ending cash balances for the Water Fund between 2023-2033 are projected to be sufficient to cover at a minimum the following: three months of operating expense;
following year planned pay-go capital improvements; and following year debt service. Cash balance is projected above minimum amounts for future capital improvements.
ASSUMPTIONS
1. City will issue debt as needed to spread the financial impact of capital improvements over multiple years to achieve the parameters for average annual change in water utility bills,
as listed in item 1 above. Total bonds issued between years 2024 and 2028 is $9.945 million; and no bonds issued between 2029-2033. Debt issuance is assumed as follows:
- $2.55 million in 2025
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Appendixes
Hastings Water Fund Scenarios Page 2
- $3.825 million in 2027
- $3.57 million in 2028
2. City will structure amortization of debt to achieve the parameters for average annual change in water utility bills as listed in items 1 above.
3. City will implement its plans for personnel increases, including positions and wage adjustments as planned and salary and wages, personnel costs are assumed to increase
by approximately 3.0% annually.
4. Non-personnel operating expenses are assumed to increase by an average of approximately 3.0% annually.
5. City will annually adjust fees for water services at amounts needed to achieve revenue sufficiency for the Water Fund. This includes annual increases for fees for meters, usage, and water availability charge (WAC).
Scenario B
Scenario B is based on the same assumptions as Scenario A, except Scenario B includes future
capital improvements for water treatment facility improvements and issuance of bonds to finance the improvements.
RESULTS
Because Scenario B includes spending for water treatment facility improvements and issuance of bonds to finance these improvements, Scenario B does not achieve the same results as Scenario A. The results for Scenario B are as follows:
1. Total average annual change in utility bills for water services, for all users including high
volume, medium volume, and low volume, over the planning period (10 years) will average 14.5%. This scenario includes larger increases between years 2024-2028, with a five-year average annual increase of 26.4%.
2. Total average annual change for City Water Availability Charge (WAC) will average 4.0%.
3. Ending cash balances for the Water Fund is projected to be sufficient to cover at a minimum the following: three months of operating expense; following year planned pay-
go capital improvements; and following year debt service. Cash balance is projected above minimum amounts for future capital improvements.
ASSUMPTIONS
Same assumptions as Scenario A, except Scenario B includes project costs and bonding for
water treatment facilities, as noted above.
1. No external funding is assumed to be available for the water treatment facility improvements. Scenario B assumes the project costs are funded entirely from customers of the water utility, and from fees and charges collected and deposited by the city into the Water Fund.
2. Water revenue bonds are structured with relatively level annual debt service over terms ranging from 10-25 years. The treatment facility improvements are structured over the longer 25-year term, bonds for other projects are structured over a 10 year terms. Total bonds issued between years 2024 and 2028 is $80.23 million; and no issuance between 2029-2033. Debt issuance is assumed as follows:
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Hastings Water Fund Scenarios Page 3
a. $21.05 million in 2024
b. $29.775 million in 2025
c. $22.01 million in 2027
d. $3.57 million in 2028
Scenario C
Scenario C is based on the same assumptions as Scenario A, except Scenario C includes $850,000
for costs related to planning for construction of future water treatment facilities. Only the planning dollars are included in Scenario C and not the construction costs.
Results
The results for Scenario C are as follows:
1. Total average annual change in utility bills for water services, for all users including high
volume, medium volume, and low volume, over the planning period (10 years) will average 3.8%. This scenario includes slightly larger increases than Scenario A to supply
funds related to planning for future treatment facility improvements.
2. Ending cash balances for the Water Fund is projected to be sufficient to cover at a
minimum the following: three months of operating expense; following year planned pay-go capital improvements; and following year debt service. Cash balance is projected
above minimum amounts for future capital improvements.
ASSUMPTIONS
Same assumptions as Scenario A, except Scenario C includes spending for capital improvement planning, as noted above.
1. Water revenue bonds are structured with relatively level annual debt service over term of 25 years. Total bonds issued between years 2024 and 2028 is $80.23 million; and no
issuance between 2029-2033. Debt issuance is assumed as follows:
a. $2.55 million in 2025
b. $1.42 million in 2026
c. $3.825 million in 2027
d. $3.57 million in 2028
e. $415,000 in 2032
PRESENTATION AND COMPARISON OF SCENARIOS
Exhibit A includes charts to graphically present the results for the three scenarios based on the assumptions outlined above. The charts include the following information that is intended to summarize the data in the more detailed information included in the other exhibits that follow:
Chart 1: City Quarterly Utility Bill for Water Services
Chart 2: Five Year Average Annual % Increase in Quarterly Water Utility Bill
Chart 3: Bonds Issued to Finance Improvements Supported by Water Revenues
Chart 4: Total Principal Amount of Bonds Outstanding Supported by Water Revenues
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Hastings Water Fund Scenarios Page 4
Chart 5: Total Debt Service Paid from Water Revenues
Chart 6: Amortization of Bonds Supported by Water Revenues
COMPARISON OF WATER UTILTY BILLS TO OTHER CITIES
Exhibit B includes a comparison of water utility bills to other cities. A comparison to the City of Hastings’ water bills is provided for current year bills (year 2023) and future estimated Hastings’ water bills under Scenarios A, B, and C, for year 2028. Year 2028 is used for comparison purposes to account for the phasing of fee increases between years 2024-2028 under Scenario B and Scenario C.
COMPARISON OF SCENARIOS
Exhibit C includes a summary report with key financial data for each of the three scenarios.
SCENARIO FINANCIAL RESULTS
Exhibit D, Exhibit E, and Exhibit F includes reports for Scenario A, Scenario B, and Scenario C, respectively.
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Exhibit A
Hastings Water Fund Scenarios Page 5
Ch
a
r
t
1
Ch
a
r
t
2
$78 $78 $78$92
$238
$94$109
$272
$112
$0
$50
$100
$150
$200
$250
$300
Scenario A Scenario B Scenario C
City Quarterly Utility Bill for Water ServicesWater bill for example residential customer with 36,000 gallons of water billed
Year 2023 Year 2028 Year 2033
3.2%3.4%3.5%
23.1%
26.4%
28.6%
3.7%3.8%3.9%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
High User Medium User Low User
Five Year Average Annual % Increase in Quarterly Water Utility Bill
Scenario A Scenario B Scenario C
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Appendixes
Exhibit A
Hastings Water Fund Scenarios Page 6
C ha
r
t
3
Ch
a
r
t
4
$9.945
$0.000
$80.230
$0.000
$11.365
$0.415$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Between years 2024 to 2028 Between years 2029 to 2033
Mill
i
o
n
s
Bonds Issued to Finance Improvements Supported by Water Revenues
Principal Amount of Bonds Issued
Scenario A Scenario B Scenario C
*The Plandoes not anticipate any bonding for Water Improvements under Scenario A and Scenario B, between years 2029-2033.
$0
$10
$20
$30
$40
$50
$60
$70
$80
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Mill
i
o
n
s
Total Principal Amount of Bonds OutstandingSupported by Water Revenue
Scenario A Scenario B Scenario C
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Appendixes
Exhibit A
Hastings Water Fund Scenarios Page 7
Ch
a
r
t
5
Ch
a
r
t
6
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Mill
i
o
n
s
Total Debt Serivce (Principal and Interest) Paid from Water RevenuesEstimated Based on Planned Capital Improvements and Bonding
New Debt for Treatment / Extraordinary Improvements
New Debt After 12/31/2023
Existing Debt as of 12/31/2023
56.9%
78.6%
68.1%
93.9%
0.0%20.0%40.0%60.0%80.0%100.0%
Percent of debtamortized within fiveyears
Percent of debtamortized within tenyears
Amortization of Bonds
Supported by Water RevenuePercent of Principal Repaid Over a Period of Time
Scenario A Scenario B
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EXHIBIT B
Comparison of Water Utility Bills to Other Cities
Includes City of Hastings Current Rates for Year 2023 and Estimated Future Rates for Scenarios A, B, and C for Year 2028
Hastings Water Fund Scenarios Page 8
$0
$1
0
$2
0
$3
0
$4
0
$5
0
$6
0
Cottage Grove
Lakeville
White Bear Lake
Inver Grove Heights
Rosemount
Woodbury
Plymouth
Hastings
Blaine
Brooklyn Park
Farmington
Lino Lakes
Spring Lake Park
Eagan
Oakdale
Chaska
Stillwater
Minnetonka
Hastings Scen A Yr 2028
Champlin
Hastings Scen C Yr 2028
Apple Valley
Lake Elmo
South St. Paul
Eden Prairie
Bloomington
Burnsville
Long Lake
Victoria
Savage
Prior Lake
Maplewood
Mendota Heights
West St. Paul
Carver
St Francis
St Bonifacius
Loretto
Hastings Scen B Yr 2028
Water Bill for 3,000 Gallons Monthly Volume -Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles for comparison billing is shown as monthly equivalent bills
Note: Hastings Scenarios are based on
estimated rates for year 2028. The
comparison to the other cities does not account for any adjustments these other
cities may make to water rates between
year 2023 and 2028.
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Appendixes
EXHIBIT B
Comparison of Water Utility Bills to Other Cities
Includes City of Hastings Current Rates for Year 2023 and Estimated Future Rates for Scenarios A, B, and C for Year 2028
Hastings Water Fund Scenarios Page 9
$0
$1
0
$2
0
$3
0
$4
0
$5
0
$6
0
$7
0
Cottage Grove
White Bear Lake
Lakeville
Inver Grove Heights
Rosemount
Hastings
Woodbury
Plymouth
Farmington
Stillwater
Blaine
Spring Lake Park
Lino Lakes
Brooklyn Park
Hastings Scen A Yr 2028
Oakdale
Hastings Scen C Yr 2028
Champlin
Apple Valley
Eagan
Chaska
Lake Elmo
Minnetonka
South St. Paul
Eden Prairie
Burnsville
Victoria
Long Lake
Bloomington
Savage
Prior Lake
Maplewood
Mendota Heights
West St. Paul
St Francis
Carver
St Bonifacius
Hastings Scen B Yr 2028
Loretto
Water Bill for 6,000 Gallons Monthly Volume -Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles for comparison billing is shown as monthly equivalent bills
Note: Hastings Scenarios are based on
estimated rates for year 2028. The comparison to the other cities does not
account for any adjustments these other
cities may make to water rates between
year 2023 and 2028.
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Appendixes
EXHIBIT B
Comparison of Water Utility Bills to Other Cities
Includes City of Hastings Current Rates for Year 2023 and Estimated Future Rates for Scenarios A, B, and C for Year 2028
Hastings Water Fund Scenarios Page 10
$0
$5
0
$1
0
0
$1
5
0
$2
0
0
$2
5
0
Hastings
Hastings Scen A Yr 2028
Lakeville
Hastings Scen C Yr 2028
Woodbury
Farmington
Rosemount
Apple Valley
Plymouth
Lino Lakes
Stillwater
Spring Lake Park
Blaine
Oakdale
Cottage Grove
White Bear Lake
Champlin
Brooklyn Park
Lake Elmo
Inver Grove Heights
Eden Prairie
Eagan
Burnsville
Minnetonka
Chaska
South St. Paul
Victoria
Maplewood
Savage
Prior Lake
Long Lake
Hastings Scen B Yr 2028
St Francis
Mendota Heights
West St. Paul
Bloomington
St Bonifacius
Carver
Loretto
Water Bill for 20,000 Gallons Monthly Volume -Residential
Estimated Based on Published Rate Data and Interpretation of Fee Schedules
Cities have different billing cycles for comparison billing is shown as monthly equivalent bills
Note: Hastings Scenarios are based on
estimated rates for year 2028. The
comparison to the other cities does not
account for any adjustments these other
cities may make to water rates between year 2023 and 2028.
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Northland Securities, Inc.150 South Fifth Street , Suite 3300Minneapolis, MN 55402 Toll Free 1-800-851-2920 Main 612-851-5900www.northlandsecurities.comMember FINRA and SIPCRegistered with SEC and MSRB
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