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Memo to Mayor, City Council&Utilities Commission Page 3 <br /> November 4, 1994 <br /> • know their ordinances, the gross revenues of the electric utilities , or any <br /> other facts of this type. <br /> According to the Municipal Utilities proposed budget, gross revenues will <br /> approach $6 million in 1995 and the net income of the electric utility, before <br /> depreciation and the contribution to the City, will be in excess of$1 million. <br /> In reviewing the $72,000 annual cash contribution to the City, there seems to <br /> be two different options to look at if a change is to take place. One option, the <br /> one preferred by staff, is to increase this amount to about $108,000 and <br /> equate this to a percentage of gross revenues, and then use this formula for a <br /> contribution level for future years. If it is true that the Utilities does not <br /> desire this formula approach and that the Utilities would prefer to review <br /> specific requests on an annual or as-needed basis, then this, as the second <br /> option, is an approach that the City can live with. The City definitely has <br /> II capital <br /> large capital outlay items that are needed in the future. These large <br /> capital outlay items include the $300,000 pumper desired by the Fire <br /> Department; the goal of the Park and Rec Commission to purchase 80 acres <br /> of open land and to develop this area into recreation fields; and projects such <br /> as a youth or community center. The list of needed special projects is long in <br /> a growing city like Elk River. <br /> The current issue before the City Council and the Utilities Commission is the <br /> fact that the Council has balanced the 1995 budget with an additional <br /> $55,000 contribution from the Utilities for the purchase of the Street <br /> Department front-end loader. The ongoing issue is the City/Utilities overall <br /> financial relationship. <br /> With all that is said in this memo, I want to once again make it clear that the <br /> City is very appreciative of all of the contributions it has received from the <br /> Utilities. The City and the Utilities have a very special relationship and we <br /> are partners in the growth and development of the community. The City <br /> would like to be able to share some of the future profits of this growth and <br /> not just have the expense of providing services to accommodate this growth. <br /> Staff sees a contribution level established by a formula based on gross <br /> revenues as a mechanism for us to share in the benefits of this growth. <br /> • <br /> s:council:utilcomm <br />