Fairbury City Proprietary Funds “Solid and Healthy”

The City of Fairbury's 2024-2025 proprietary budget was presented at a meeting of the city council Tuesday evening, May 21, 2024. A municipality's proprietary funds are those funds used to account for a government's ongoing activities that are similar to businesses found in the private sector. These funds are considered self-supporting in that the services rendered by them are generally financed through user charges. The City's Proprietary Budget includes three separate utility operations: electric, water, and wastewater. The revenues received through these utilities can also be transferred to the General Fund if excess funds exist. According to a memorandum prepared by City Clerk Erin Reimer, “This is standard practice and can help fund governmental activities like parks, museums, and streets.” RevenuesRevenues from the Electric, Sewer, and Water Departments are forecasted to remain flat compared to the 2023-2024 budget. Reimer wrote, “With cost control measures in place, the utilities have been able to significantly increase the cash position across all three entities. The cash position continues to increase and is currently approximately 13 million.” ExpendituresAccording to Reimer, “the City of Fairbury utility funds currently have a healthy cash balance and these reserves have steadily grown over the last few years. With such a healthy cash position, the budget allows for reinvestment into the utilities without major reductions in the reserves.”This cash position will also allow the city to complete major upgrades to include the Wastewater Treatment Plant Upgrade and the Water Sourcing Project. These projects will also utilize state and federal funding/loan options. Electric DepartmentRVW Inc. completed an Electrical Planning Study in early 2022 that outlined a model of proposed projects in order to maintain safe and adequate electricity to the City of Fairbury's customers. These projects were broken down into three transitional periods: 1-3 years, 3-7 years, and 10+ years.Reimer noted, “The actual cost to the city has potential to be significantly less depending on how active of a role the Line Department has in these projects. Likewise, there are several major projects that will not be able to be completed in a single year. The cost for these services will be able to be spread across multiple years.” Water DepartmentThe Water Department had several items budgeted in the 2023-2024 budget that did not occur for various reasons. These funds are being proposed to carry over to the 2024-2025 budget year. These items include:Replacement of 2 blocks of 6 foot water main $90,000Replacement of 10 fire hydrants $25,000Generator for East Wells $70,000Although the generator for the East Wells was a carryover item from last year, consideration for generators at all three wells was presented with a total cost of $210,000. There is a lead time for the generators of 14 weeks.Based on the last proposed cost estimate presented to Council, the Water Sourcing Project, intended to locate a lower-nitrate source of water, was estimated to be between $6.7 and $7.4 million for the City's portion, according to Reimer. Funding for this project is currently through the USDA.This project and related expenditures are still dependent upon the approval of the City Council. Sewer DepartmentThe Waste Water Treatment Plant upgrade project is nearly completed. The current estimate for this project is approximately $5 million. Reimer said this expense is anticipated to be offset via the increase in sewer rate and the Clean Water State Revolving Fund. The sludge load-out building was piggy backed off of the same loan for a cost of $400,000. Capital/Equipment Reserve FundThere are several large expenses such as vehicles and other capital items that will need to be replaced in the coming years:A new sludge truck for the Waste Water Treatment Plant. Estimated cost is $400,000.A new hydraulic valve wrench and water pump machine for the Water Department on Truck #9: Estimated cost is $30,000.With a small business incubator grant the city received, a new building or renovation to a current structure will be occurring. A total of $600,000 of the grant will go towards the structure, leaving a potential shortfall of $800,000. It is proposed that with the sharing of the building that the sewer, water, and electric all contribute $200,000 towards the build. The city will also contribute.The staff is seeking $60,000 for a potential new building or renovations to existing structures.Two bucket trucks for the Line Department- Approval was given to the electric department to place on order a 2026 small bucket truck and a 2028 big bucket truck. With this, an increase in the equipment reserves monthly transfer from $5000 to $10,000 for the 2024-2025 and 2025-2026 budgets with another increase to $15,000 for the 2026-2027 and 2027-2028 budget years is being sought to be able to pay for the 2026 and 2028 trucks in full upon delivery.A new jet/vac truck that would be split 50/50 by the water and sewer departments. The current jet/vac truck is a 2003 model and is aging out. A new truck would likely have a one-year lead time and estimated cost of $500,000, with an anticipated 10 percent price increase each year. new.City staff are proposing that each utility continue to contribute $5,000/month to an equipment reserve fund, outside of the electric department. This would earmark a total of $180,000/year to meet the needs of the aging fleet and ensure funds are available. Reimer indicated each fund; electric, water, and sewer, currently have $60,000 in their respective equipment reserve accounts.City staff is currently seeking grant and loan opportunities for a potential Steele City transmission line project of $3 million.The city anticipates that proprietary funds will see a decline in total, cash reserves due to major projects as well as reinvestment of revenues into the city's infrastructure. Nevertheless, Reimer concluded, “Overall, the proprietary funds are in a solid and healthy state.”

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