Resolution 2785-04 Superseded
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RESOLUTION NO. 2785-04
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
SOUTH TAHOE PUBLIC UTILITY DISTRICT ADOPTING
THE RESERVE POLICY
BE IT RESOLVED, by the Board of Directors of the South Tahoe Public
Utility District, County of EI Dorado, State of California, as follows:
WHEREAS, the District has historically maintained reserves for
operations, capital and self-insurance; and
WHEREAS, it is the desire of the Board of Directors to formalize its
reserve policy; and
WHEREAS, the Board of Directors would like to create a new Rate
Stabilization Fund to mitigate possible significant changes in revenue; and
WHEREAS, establishing and maintaining adequate reserves is important
to the fiscal health of the District.
NOW, THEREFORE BE IT RESOLVED, by the Board of Directors of the South
Tahoe Public Utility District that:
The attached Reserve Policy is hereby adopted and becomes part of this
Resolution by reference herein.
WE, THE UNDERSIGNED, do hereby certify that the above and foregoing
resolution was duly and regularly adopted and passed by the Board of Directors
of the South Tahoe Public Utility District at a regular meeting duly held on the
15th day of April 2004, by the following vote:
AYES: Directors Wallace, Schafer, Comte, Jones, Mosbacher
NOES: None
ABSENT: None
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South Tahoe Public Utility District
Reserve Policy
PURPOSE
The District shall maintain reserve funds in the Sewer and Water Enterprise
Funds. This policy establishes the level of reserves necessary for maintaining
the District's credit worthiness and for adequately providing for:
· Economic uncertainties and other financial hardships.
· Loss of significant revenue sources such as property tax receipts or
connection fees.
· Local disasters or catastrophic events.
· Future debt or capital obligations.
· Cash flow requirements.
· Unfunded mandates including costly regulatory requirements.
POLICY
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Operatina Reserves
The minimum amount of operating reserves will equal two months of operating
expenses.
Capital Reserves
The minimum capital reserves will equal one year's capital spending. If possible,
larger reserves will be accumulated to minimize the necessity for borrowing
funds.
Self-Insurance Reserves
The minimum self-insurance reserve will equal $300,000.
Rate Stabilization Fund
The Sewer Enterprise Fund will maintain a rate stabilization fund equal to one
year's property tax receipts net of related costs for administration and shifts to the
City redevelopment agency.
The Water Enterprise Fund will not maintain a rate stabilization fund while the
funds restricted from the MTBE settlements and judgments exceed $2 million. At
such time as the MTBE settlement funds fall below $2 million, a rate stabilization
fund will be established that equals one year's water consumption revenue.
PROCEDURE
The Chief Financial Officer shall perform a reserve analysis to be submitted to
..., the Board of Directors upon the occurrence of the following events:
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· Board of Directors' deliberation of the annual budget;
· Board of Directors' deliberation of a service charge rate increase;
· Upon renewal of the self-insurance excess insurance coverage; or,
· When a major change in conditions threatens the reserve levels
established within this policy.
If the analysis indicates projected or actual reserve levels fall 10% below the
levels outlined in this policy, at least one of the following actions shall be included
with the analysis:
· An explanation of why the reserve levels are not at the targeted level, and!
or
· An identified course of action to bring reserve levels to the minimum
prescribed.