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<br /> <br /> <br />40 <br />Additional Information Regarding Projections. The table above reflects a number of <br />assumptions regarding projected debt service coverage for Fiscal Years 2025-26 through 2029- <br />30, including the following: <br /> <br />• Growth in customers during the projection period is expected to remain flat. <br /> <br />• Rate increases during the projection period are consistent with the previously <br />adopted rate study, which provides for annual revenue increases of <br />approximately 15% in each of Calendar Year 2026 and 2027, and 8% increases <br />in each of Calendar Year 2028 and 2029. <br /> <br />• Purchased Water expenses are projected by the City to increase by up to 5% per <br />year; actual costs charged by Zone 7 may vary significantly from this estimate. <br /> <br />• Other expenses, consisting of personnel services and services & supplies, are <br />projected to increase at between 3% to 5% per year. <br /> <br />• A borrowing of $20 million was estimated for infrastructure improvements during <br />the projection period. <br /> <br />With respect to capital costs associated with the Water System, the City’s current CIP <br />identifies a number of projects for planning purposes. All future years’ projects and their related <br />funding require annual review and approval by the City Council and are therefore subject to <br />change. The City records its infrastructure capital costs, including Water System capital costs <br />as capital assets. Because capital costs are not included in the definition of Operations and <br />Maintenance Costs, they will not affect the availability of Net Revenues to make the Installments <br />Payments. Should the City decide to finance any of these capital costs through the issuance of <br />Parity Debt within the projection period, projected debt service coverage could decrease without <br />a corresponding increase in either rates or customers. <br /> <br /> <br /> <br />Page 168 of 205