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Page 3 <br />Water Rate Increase <br />Utilities Commission Meeting of April 27, 1998 <br />The adoption of any type of capital improvement program in the Water Utility will necessitate a rate <br />increase of some kind. It is the opinion of the utility Staff that a 20% increase is the minimum level that will <br />sustain the debt service for a $10 million financing. At this level, sufficient coverage of the debt will be <br />attained. However, any cash reserves will be used over the ensuing four years, and an additional <br />increase is projected in FY 2001-02. A higher increase at this time will protect the cash reserves and <br />afford the utility some protection from unforeseen disasters, changes in service requirements, and <br />uncertainties. The revenue requirements of the Water Utility will increase essentially due to the debt <br />service. This is currently estimated to be $731,400, annually, for the next 25 years. <br />That the Colton City Council set a public hearing and proceed with the first reading of the rate ordinance <br />during the July 21,1998, council meeting adoption of a 20.0% general water rate increase to become <br />effective September 1, 1998. In addition, Staff is requesting that the Utilities Commission proceed with a <br />debt financing in the amount approximating $10,000,000. <br />attachments <br />Item No. <br />