Laserfiche WebLink
Page 3 of 10 <br />maintain service reliability. <br /> <br />Key inputs to the financial plan include the SSMP and the long-term sewer CIP. The long-term <br />financial plan evaluates three implementation scenarios that vary the balance between <br />investment in near-term program improvements and program risks associated with <br />improvement deferrals. The three scenarios evaluated are Scenario 1 – Maintain, Scenario 2 – <br />Prioritize, and Scenario 3 – Defer. These scenarios are further defined later in this section. In <br />addition to these scenarios, the financial plan includes a Status Quo scenario as a control. The <br />Status Quo scenario evaluates the City’s currently adopted sewer rates with no rate revenue <br />adjustments to illustrate the long-term financial impacts of maintaining rates at existing levels. <br />This scenario assesses whether current rates are sufficient to fund operating and capital <br />expenses while maintaining adequate fund balances. <br /> <br />Financial performance under each scenario is evaluated against two primary targets: fund <br />balance and reserve policy requirements, and debt coverage requirements. The City’s current <br />reserve range is 30 percent to 40 percent, with a target equal to 35 percent of annual operating <br />expenses, inclusive of DSRSD and Livermore treatment costs, but exclusive of capital <br />improvement projects. While the City’s sewer enterprise does not currently carry debt, all new <br />debt is evaluated using a minimum debt coverage requirement of 125 percent. The results of <br />the implementation scenario analysis provide the basis for assessing the financial feasibility of <br />each scenario investment level and for identifying the sewer rate adjustments necessary to <br />maintain financial stability, meet policy targets, and support long-term system reliability. The <br />results of the financial plan analysis for each scenario are summarized below. Refer to <br />Attachment 1 for a detailed summary of inputs assumed in the financial analysis. <br /> <br />Status Quo Scenario <br />The Status Quo scenario assumes that there are no adjustments to the City’s existing sewer <br />collection rates and no new debt issued to fund CIP. While the Status Quo scenario assumes <br />the same underlying O&M and CIP needs as the Maintain scenario, it assumes no rate <br />adjustments or debt financing, thereby highlighting the financial impacts of maintaining current <br />rates. <br /> <br />Table 1 shows the current sewer collection rate revenues (including no additional rate <br />revenues), projected O&M expenses, and projected CIP funding. <br /> <br />Table 1: Rate Revenues and Expenses (Status Quo) <br /> <br /> <br /> <br />Page 99 of 144