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Metropolitan Wastewater Management Commission Reserves <br />REGIONAL WASTEWATER PROGRAM <br />RESERVES <br />The RWP maintains reserve funds for dedicated purpose to sustain stable rates while fully <br />funding operating and capital needs. Commission policies and guidance, which direct the <br />amount of reserves appropriated on an annual basis, are found in the MWMC Financial Plan <br />(2005). Further details on the FY 07-08 reserves are provided below. <br />OPERATING RESERVES <br />The MWMC Operating Budget includes four separate reserves: the working capital reserve, rate <br />stability reserve, rate stabilization reserve, and the operating reserve. Revenues are appropriated <br />across the reserves in accordance with Commission policy and expenditure needs. Each reserve <br />is explained in detail below. <br />WORKING CAPITAL RESERVE <br />The Working Capital Reserve acts as a revolving account that is drawn down and replenished on <br />a monthly basis to provide funds for payment of Springfield Administration and Eugene <br />Operations costs prior to the receipt of user fees from the Springfield Utility Board and Eugene <br />Water and Electric Board. The Administration Working Capital Reserve is $200,000, and the <br />Operations Working Capital Reserve is $700,000 in FY 07-08. <br />RATE STABILITY RESERVE <br />The Rate Stability Reserve was established to implement the Commission's objective of <br />maintaining stable rates. It is intended to hold revenues in excess of the current year's operating <br />and capital requirements for use in future years, in order to avoid "rate spikes." The amount <br />budgeted on an annual basis varies in response to the variability of actual revenues net of <br />expenses, and annual budgeted amounts for the operating and capital reserves. <br />BOND RESERVE <br />The Bond Reserve was established in FY 06-07 to meet prospective revenue bond covenants. In <br />order to sell revenue bonds, sufficient reserves are created to provide assurances to bond holders <br />that adequate revenue coverage will be provided for future debt service payments. It is not <br />funded in FY 07-08 because the Commission purchased bond insurance in FY 06-07, eliminating <br />the need to fund the reserve. <br />STATE REVOLVING FUND RESERVE <br />The State Revolving Fund Reserve was established in accordance with SRF loan covenant <br />requirements. In order to secure an SRF loan, sufficient reserves are created to provide <br />assurances that adequate revenue coverage will be provided for future debt service payments. <br />Similar to the Bond Reserve, the reserve amount is defined as 10% of the loan proceeds and is <br />Page 19 FY 07-08 BUDGET AND CIP <br />