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CITY COUNCIL AGENDA ITEM BRIEFING SHEET <br />Submittal Date: <br />Originating Depattrnent: <br />Presented By: <br />Agenda Item No.: <br />O1/19/10 <br />Council Date: <br />Finance <br />Gene Anderson <br />11. <br />O1/25/10 <br />RECOMMENDED MOTION: <br />Move to approve a resolution establishing and approving a Water and Sewer Rate Maintenance Policy. <br />POLICY ISSUE(S): <br />Fiscal Management <br />The refunding of all City of Paris water and sewer revenue debt obligations into a general obligation <br />refunding bond effectively eliminates the rate covenants included in all ordinances dealing with water <br />and sewer system debt issues. It was recommended by the City's financial advisor, Dan Almon of <br />Southwest Securities, Inc., that the City adopt a water and sewer rate and reserve policy that requires an <br />identical maintenance of water and sewer rates and associated reserves. Such a policy is good business <br />practice and is an attractive feature to point to the rating agencies when the City is preparing to issue <br />debt. The policy states that the City agrees to set rates and other charges at a level that will produce <br />gross revenues sufficient to pay all expenses of operation and maintenance of the System and to provide <br />net revenues equal to 1.1 times the principal and interest requirements of all outstanding bonds or <br />certificates of obligation. In addition, rates should generate a reserve equal to the average annual <br />principal and interest payments of all outstanding bonds or certificates. Plus, rates should generate <br />sufficient revenue to create a contingency fund of $500,000. The policy as proposed meets the <br />requirements of existing bond covenants. <br />BOARD/COMMISSION RECOMMENDATION: <br />EXHIBITS: <br />Resolution and Water & Sewer Rate Maintenance Policy <br />ACTION: <br />BUDGET INFO: <br />Z Financial Report ❑ Minute Order <br />Expense <br />$N/A <br />❑ Department Report Z Resolution <br />Budgeted Amt. <br />$N/A <br />❑ Presentation ❑ Ordinance <br />y'I'D Actual <br />$N/A <br />❑ Public Hearing ❑ Other <br />Acct. Name <br />N/A <br />Acct. Number <br />N/A <br />FISCAL NOTES: <br />REVIEWED AND APPROVED BY: <br />Z Administration Z City Clerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire <br />❑ Municipal Court E Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities <br />City of Paris n , Revised 2/04/08 <br />000t,7.S~ <br />