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<br />The financing plan recommends a minimum fund reserve target comprised of two <br />components: <br />a. emergency operating reserves ($2 million per existing Council policy), and <br />b. drought contingency reserves based on the estimated financial impact of a <br />moderate drought assuming a 20% SFPUC system-wide drought and 10% <br />reduction in demand due to local drought conservation efforts. <br /> <br />The fund reserve target would change each year based on water demand and wholesale <br />water rates. According to the financial proj ections, the total recommended target ranges <br />from about $7 to $8 million over the next 10 years. These recommendations should be <br />treated as financial targets; the City may not meet the targets every year, but should <br />always aim to meet the targets over the long-run. <br /> <br />Policy Issues <br /> <br />This financing plan provides a long-term roadmap for funding of the City's water <br />operating and capital programs including the recycled water project. However, a number <br />of outstanding policy issues remain unresolved including: <br /> <br />. Water rate structure adjustments <br /> <br />. Recycled water pricing <br /> <br />. <br /> <br />Future rate increases and timing <br />Minimum fund reserve targets <br />Facilities Fees update <br /> <br />. <br /> <br />. <br /> <br />These outstanding policy issues are discussed in more detail on Table A-5 and should be <br />resolved during implementation of the financing plan. <br /> <br />Additional information about the recycled water project and the Water Financing Plan <br />is available upon requestfrom the Redwood City Public Works Services Department <br />at (650) 780-7464 or online at www.redwoodcity.org/water. <br /> <br />Water Financing Plan <br /> <br />6 <br /> <br />December 2004 <br />