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Establishing user rates with an anticipated contribution to the Rate Stability Reserve <br />smoothes out the financial impact of required rate increases on customers over time, and <br />hedges against potential rate spikes when assumptions about the future prove to be <br />incorrect. Revenue is allocated to the Rate Stability Reserve only after budgeted <br />Operating Reserve and Capital Reserve transfer targets are met. <br />FSf) The Reimbursement SDC Reserve accumulates revenues derived from the <br />"reimbursement fee" component of SDCs charged to new development along with <br />accrued interest. Expenditures of these funds are limited to support capital projects and <br />debt service payments in accordance with ORS 223.311. <br />FSg) Improvement SDC Reserve accumulates revenues derived from the <br />"improvement fee" component of SDCs charged to new development along with accrued <br />interest. Expenditures of these funds are limited to support capacity enhancement capital <br />projects and debt service payments in accordance with ORS 223.311. <br />FSh) A Bond Reserve shall be sufficient to provide assurances to bond holders that <br />adequate revenue coverage will be provided for future debt service payments. <br />FSi) The Rate Stabilization Reserve contains funds to be used at any point in the future <br />when the net revenues are insufficient to meet the bond covenant coverage requirement. <br />The Commission shall maintain the Rate Stabilization account as long as bonds are <br />outstanding. Money in the Rate Stabilization account may be withdrawn at any time and <br />used for any purpose for which gross revenues may be used. Earnings on the Rate <br />Stabilization Account shall be credited to the sewer fund. <br />Discussion -Each reserve has specific sources and uses, and the order in which the reserves are <br />accessed to meet operating and capital needs follows: <br />In the operating budget, in the event of a revenue shortfall, funds will first be transferred from <br />the Rate Stability Reserve. If additional funds are necessary, the Operating Reserve will then be <br />used. If additional funds are still needed, the budgeted transfer from the Operating Fund to the <br />Capital Reserve will be reduced. <br />Funding for capital projects will come from a combination of SDC reserves, Capital reserves, <br />and debt financing. During each year's budget process, staff will consider reserve levels, <br />reporting requirements, arbitrage considerations and debt issuance costs associated with <br />borrowed funds and cash flow needs and determine the specific funding source for each project <br />in the budget. <br />Policy F6 MWMC funds are dedicated for the exclusive benefit of the RWP including <br />operating expenses, debt service payments, and the associated capital program. <br />Investment of Liquid Assets <br />The liquid assets of the Metropolitan Wastewater Management Commission (MWMC) are <br />managed by the City of Springfield, in the City's capacity as the MWMC's administrative <br />agency. <br />2005 MWMC Financial Plan Page 13 <br />