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Summary Memorandum <br />Re: Sewer Revenue Adequacy <br />October 21, 2021 <br />gallon or $13.40 per thousand gallons of leachate discharged to the sewer system. At the <br />current rates, revenue from the Domestic users is approximately $195,000 per month, and <br />revenue from the landfill is approximately $13,000 per month. Table 1 summarizes the total <br />revenues projected for the utility in 2021 and 2022, based on an assumed domestic user account <br />growth rate of 1.3 percent. <br />Table 1: Projected Sewer Utility Rate Revenues <br />Projected 2022 <br />City of Elk River Sewer Revenues Projected 2021 <br />Domestic User Fees $2,343,684 $2,374,102 <br />Leachate Discharge Fees $160,800 $160,800 <br />Miscellaneous Revenues $50,500 $100,500 <br />Sewer Access Charges (SAC) $100,000 $500,000 <br />Total Projected Revenues $2,654,934 $3,135,402 <br />ASSUMPTIONS <br />The first step in evaluating revenue adequacy is to develop total revenue requirement <br />projections. Assumptions upon which the revenue adequacy analysis is based are listed below. <br /> Elk River Rate (2021): $5.07 volumetric fee per thousand gallons; minimum monthly <br />charge per account of $11.75 <br /> Domestic (City) user accounts: 5,379 <br /> Leachate user accounts: 1 <br /> Leachate rate (2021): $13.40 per thousand gallons <br /> Wastewater flow: 1.33 million gallons per day (MGD) in 2020, and 1.32 MGD in 2021 <br /> Annual capital outlay is paid for through rate revenues <br /> 2020C debt is retiring 2014B Debt <br /> Year-end 2020 Sewer Cash Balance= $6,344,631 <br /> Operating Reserve Target: 180 days <br /> Contribution to capital reserves based on estimated net system value of $30.7 million (M) <br /> Annual inflation: 5% in 2022, 4% in 2023, and 3% from 2024 and thereafter <br /> Annual domestic account and flow growth rate: 1.3% <br /> Debt service reserve fund: Target based on annual debt payment <br /> Required Debt Service Coverage = 105% <br /> Capital reserve fund based on funding depreciation <br /> Placeholder value for Capital Improvement Plan (CIP) projects: Average of 2022 projects <br /> CIP placeholder values are inflated annually <br />Project Number Page 2 of 20 <br />Think Big. Go Beyond. www.ae2s.com <br /> <br />