§ 31-7. Reserve accounts.

(a)

Existing reserves created by bond ordinance.

(1)

Contingency and retirement reserve ("CRR"). The city's existing combined waterworks and sewer system (the "system") revenue bond ordinances require the maintenance of a CRR in an amount equal to not less than five (5) percent nor more than ten (10) percent, as determined by the city, of the gross revenues of the system for each year. These funds may be utilized for system extensions, improvements, additions, and any other capital expenditures related to the system, or to make necessary repairs or replacements to the system, or, at the option of the city, to pay any principal or interest on any prior lien revenue bonds.

(2)

Debt service reserve ("DSR"). The city's existing system revenue bond ordinances require the maintenance of a DSR equal to the average annual debt service for all outstanding prior lien revenue bonds. Funds in this account are used to pay principal and interest payments on prior lien revenue bonds when there are insufficient funds available.

(b)

Administrative reserves.

(1)

Operation and maintenance reserve ("OMR"). The OMR may be utilized for all expenses related to the operation, maintenance, and routine repair of the water and wastewater systems, including wages, salaries, cost of materials/supplies, power, fuel, insurance, contract services, unplanned minor repairs and other non-capital cash requirements.

The OMR should be created on or before October 1, 2010, with a total initial deposit of five million, three hundred ninety-eight thousand, two hundred twenty-two dollars ($5,398,222.00), of which three million, two hundred thirty-two thousand, eight hundred ten dollars ($3,232,810.00) shall be allocated to the water system, and two million, one hundred sixty-five thousand, four hundred eleven dollars ($2,165,411.00) shall be allocated to the sewer system. Beginning on or before October 1, 2011, and continuing prior to the inception of each successive fiscal year thereafter, the city shall make annual contributions to the OMR in amounts sufficient to fully replenish and maintain an OMR balance equal to sixty (60) days of the coming fiscal year's budgeted operations and maintenance costs.

(2)

Emergency reserve ("ER"). The city shall designate seven million three hundred twenty-three thousand, four hundred fourteen dollars ($7,323,414.00) of undesignated fund balances of the system to create an ER, to be used for any lawful purpose, including the payment of debt service for revenue bonds or other obligations of the system.

The ER should be created on or before October 1, 2010, with a total initial deposit of four million, six hundred sixty-one thousand, four hundred one dollars ($4,661,401.00) allocated to the water system and two million, six hundred sixty-two thousand, thirteen dollars ($2,662,013.00) allocated to the sewer system. Beginning on or before October 1, 2011, and continuing prior to the inception of each successive fiscal year thereafter, the city shall make annual contributions to the ER in amounts sufficient to fully replenish and maintain an ER balance equal to the average annual debt service of all outstanding tax supported debt which is supported by the revenues 006Flf the System, and subordinate lien system revenue debt.

(3)

Repair and replacement reserve ("RRR"). The sum of RRR and CRR deposits shall be equal to two and one-half (2.5) percent of the net assets of the system, as reported in the previous fiscal year's audited statement of revenues, expenses, and changes in net assets. The RRR shall used for the payment of extraordinary repairs, replacements, or contingencies, in order to ensure that the city's system may at all times be able to render effective and efficient service.

The RRR should be created on or before October 1, 2010, with initial deposits of one million, five hundred fifty-eight thousand, one hundred ninety-seven dollars ($1,558,197.00) allocated to the water system and one million, two hundred seventy-seven, seven hundred twenty-four dollars ($1,277,724.00) allocated to the sewer system. Beginning on or before October 1, 2011, and continuing prior to the inception of each successive fiscal year thereafter, the city shall make annual contributions to the RRR in amounts sufficient over a maximum thirty-six-month period to fully replenish and maintain a combined RRR and CRR balance equal to two and one-half (2.5) percent of the system's net assets, based on the previous fiscal year's audited statement of revenues, expenses, and changes in net assets.

(Ord. No. 2010-O-082, 6-21-10)