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Projected Revenues, Expenses, and Debt Service Coverage <br />Assumptions Related to Revenue <br />1.The City's sewer service charges are based on actual revenues received in fiscal year 2016- <br />17 and increase due to adopted and projected rate increases and growth. <br />2. Contract agencies charges are based on payments calculated for each agency according <br />to their individual contracts with the City, and assume a 6 - month lag in payments. <br />3. Interest earnings are based on the City's 2017-18 budget and are subsequently projected <br />based on the annual beginning fund balance multiplied by projected interest rate shown <br />for each year, with interest rates projected to increase from 1 % to 2% over the next three <br />years. (LAIF currently yields approximately 1.14% as of October 2017). <br />4.Revenues from the City's sewer facilities fees and connection fees are estimated at <br />$100,000 per year, although they have been substantially higher during the prior 3 years. <br />5.Other Revenues are projected at $50,000 per year based on the City's 2017-18 budget. <br />Assumptions Related to Expenses <br />1. Operating and maintenance expenses are mostly based on the City's 2017-18 budget and <br />escalate at the annual rate of 4% to account for future operating cost inflation. <br />2.SVCW wastewater treatment operations are based the City's share of allocated costs <br />according to SVCW's 2017-18 budget with future costs escalating at the annual rate of <br />3%. <br />3.The City's share of debt service for SVCW's capital program are based on updated <br />projections provided by SVCW as shown in Table A8. <br />4.City sewer system capital improvements are projected $7 million most years, with funding <br />temporarily reduced to $6 million and will be funded on a pay - as - you - go basis without <br />the need for debt financing. <br />5.SVCW pay - go capital funding is based on SVCW's 2017-18 budget and assume a <br />constant level of funding in future years, in line with SVCW projections. <br />6. SVCW SRF reserve contributions are based on SVCW projections shown on Table A8 and <br />are based on the assumption that each of the SVCW member agencies make annual <br />contributions toward their respective share of the reserve requirement for SVCW's SRF <br />loans. Actual SRF reserve requirements are required to be met approximately 90 days <br />prior to the project completion date for SRF loan. <br />A-18 <br />