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<br />Table A-4 <br />Redwood City Water Financing Plan <br />Cash Flow Assumptions <br /> <br />Cash Flow Assumptions <br /> <br />1 Based on Adopted Budgets for 2004/05 and 2005/06, modified to include no SFPUC rate <br />increase in 2005. <br /> <br />2 Growth in customer base estimated at 0.25% per year; annual change in volume of water <br />sales based on water demand projections which include impacts of growth and <br />conservation initiatives. <br /> <br />3 Facilities Fee revenues held constant at $250,000 per year; future revenues may increase <br />based on a fee adjustment. Facilities Fees have not been adjusted since 1994. <br /> <br />4 Annual % change in water sales based on Redwood City Urban Water Management Plan <br />demand projections with passive and active conservation. <br /> <br />5 Water sales reven ue red uction due to recycled water d iscou nt assu me recycled rates are <br />set at 75% of potable water rates. <br /> <br />6 Future interest income projected at 1.5% of beginning fund balance in 2005/06, 2.0% in <br />2006/07, 2.5% in 2007/08, and 3.0% thereafter. <br /> <br />7 Projections include estimated interest earnings on debt service reserve funds, but do not <br />include potential interest earnings on unspent bond proceeds as projects are funded. <br /> <br />8 Operating costs escalate at the annual rate of 3.5% to account for cost inflation. <br /> <br />9 On-going costs for newly-established Water Resources Management Program <br />(approximately $785,000 annually) are built into the budget and are not listed as a <br />separate line item. <br /> <br />10 Recycled water project operating costs projected to phase in from $50,000 in 2005/06 to <br />$200,000 in 2006/07 to $300,000 in 2007/08 and escalate at the annual rate of 3.5% <br />thereafter. <br /> <br />11 Debt service includes gross debt service on the bond issues; interest earnings on debt <br />service reserve funds are included with annual revenues. <br /> <br />12 Conservation program capital expenditures estimated at $1.5 million in 2004/05 plus <br />$900,000 in 2005/06. <br /> <br />13 Transfers to capital fund for potable water system replacements are projected to continue <br />at $2.0 million annually. <br /> <br />14 The Water Fund will be reimbursed for $8.3 million of prior transfers to the Water CIP <br />Fund when the first series of bonds is issued for the recycled water project in 2005. <br /> <br />15 Debt service coverage calculated at total revenues less operating costs, divided by gross <br />debt service. <br /> <br />BARTLE WELLS ASSOCIA TES <br />F:\Jobs\Redwood City\1921\ \Redwood City Tables 12-20-04\Assumptions 4,12/21/2004,5:51 PM <br />