City of Boise FY 2010/2011 Biennial Budget Revenue Manual By: Ozzie Gripentrog, Tonya Wallace

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1 City f Bise By: Ozzie Gripentrg, Tnya Wallace Tax Funds The City tax supprted funds (General Fund and Capital Fund) prvide fr services and facilities including plice, fire, library, planning and develpment, and parks and recreatin prgrams. General Fund Amng the many surces f revenue that fund general City peratins, nine are the mst significant. The prvides analysis f the majr surces because f their imprtance in budgeting and financial planning. The City s structural balance plicy suggests that revenues be identified by categry base n-ging revenue, cyclical r prgram revenue, r ne-time revenue. Base revenues supprt n-ging cre services such as plice, fire, parks, library, and streetlights. Cyclical revenues supprt planning and develpment, recreatins prgrams, and ther services that are expected t vary based n external influences such as the ecnmy. Revenue surces are mnitred peridically and the data are used t update six-year prjectins. Fr each revenue surce, base rates, changes in law r prcedures, effect f external influences, anmalus events, trends, issues and prjectin assumptins are updated and reviewed. Prperty Tax Sales Tax Fines & Frfeitures Franchise Fees Interest Incme Liqur Tax User Fees Internal Charges Grwth/Develpment Fees Prperty tax 62% General Fund Revenue by Categry FY ($171.4 millin) Other 3% Prperty tax 62% Sales Tax 8% Fines and frfeitures 2% Franchise fees 4% Develpment fees 3% Interest incme 0% Liqur Tax Revenue 2% Internal charges 9% External User Fees 7% General Fund Revenue by Categry FY 2010 ($165.1 millin) Sales Tax 8% Fines and frfeitures 2% Franchise fees 4% Develpment fees 3% Other 3% Interest incme 0% Liqur Tax Revenue 2% Internal charges 9% External User Fees 7% The Bise ecnmy has slwed cnsistent with the natinal and glbal ecnmic trends. Significant increases in develpment revenue, recrd duble-digit increases in appreciatin f prperty values, and cntinued mnth-vermnth increases in sales tax revenue have been replaced with revenue decreases, declines in prperty values and decreases in sales tax revenue. As such, the dwnturn has had a negative impact n the City s majr revenue surces. The updated prjectins are an effrt t be fiscally respnsible withut being verly cnservative. Revenues with significant changes ver the prir base level are cnsidered t be ne-time until it can be verified that the new level is truly a change in the base. Revenue Sectin 65

2 City f Bise By: Ozzie Gripentrg, Tnya Wallace In fllwing table, FY 2007 and FY 2008 amunts are actual revenues received in each fiscal year. FY 2009 Budget represents the adpted budget. The FY 2009 Prjectin is an estimate f actual revenues anticipated t be received by the end f year based n the year t date receipts and variables that affect the particular revenue surce. FY 2010 and FY 2011 are the prpsed budget amunts fr each categry and fiscal year. FY 2012 thrugh FY 2015 prjectins are based n ecnmic cnditins and assumptins that are explained by revenue categry in the analysis that fllws. General Fund Revenues FY 2007 FY 2008 FY 2009 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 (Tax Supprted) Actual Actual Budget Prjected Prpsed Prpsed Prjected Prjected Prjected Prjected Prperty Tax 88,087 92,501 97,838 97, , , , , , ,210 Sales Tax 14,702 13,969 15,434 13,200 13,304 13,318 13,451 13,652 13,857 14,134 Fines/Frfeitures 4,018 3,717 4,291 2,791 3,934 3,943 3,982 4,034 4,074 4,114 Franchise Fees 5,671 5,871 6,057 6,057 6,147 6,284 6,440 6,599 6,763 6,931 Interest Incme 2,214 1,331 1, Liqur Tax 2,725 2,806 3,119 3,119 3,228 3,325 3,425 3,528 3,634 3,743 Internal Charges 8,934 12,481 13,664 13,949 14,539 15,103 15,820 16,572 17,359 18,183 External Fees 10,396 10,491 10,817 9,967 11,272 11,494 11,723 11,958 12,197 12,441 Develpment Fees 8,776 6,974 7,900 5,579 5,524 5,901 6,078 6,260 6,448 6,641 Other 7,184 4,176 3,920 3,270 4,324 4,656 4,679 4,726 4,773 4,868 Ttal General Fund Revenues 152, , , , , , , , , ,143 (increase ver prir year) 7.6% 1.1% 6.3% -5.0% 5.9% 3.8% 3.6% 3.7% 3.7% 3.8% Ttal General Fund Csts 152, , , , , , , , , ,143 (increase ver prir year) 17.5% 5.4% 2.1% -2.7% 3.4% 3.8% 3.6% 3.7% 3.7% 3.8% Revenues as Percent f Ttal Csts 100% 96% 100% 98% 100% 100% 100% 100% 100% 100% Prperty Tax Prperty tax revenue is the City s largest surce f general gvernment revenue. Prperty taxes are assessed t taxpayers based n taxable market value f prperties and upn a rate frmula prescribed in State cde. Since 1995, a 3 Percent cap limitatin has been a key characteristic f Idah cities prperty taxatin. The City s ttal assessed prperty value has experienced sme f the greatest percentage changes ver the past few years ranging frm a 15.3% increase in tax year 2007 t a 7.2% decrease in tax year This vlatility affects the prperty tax levy rate, which is a frmula based n a gverning bdy s budget relative t assessed prperty values. Mst taxing districts, except schl districts, are gverned by the 3% + grwth frmula fr calculating their prperty tax revenue budget. Revenue Sectin 66

3 City f Bise By: Ozzie Gripentrg, Tnya Wallace Fiscal Year 2007 a 2008 a 2009 b 2010 p 2011 p 2012 p 2013 p 2014 p 2015 p Annual 3% 2,505 2,696 3,033 2,930 3,030 3,158 3,294 3,439 3,591 Increase Grwth Frmula 2,100 2,480 2,306 1,033 1,246 1,375 1,521 1,642 1,694 Base 82,908 87,442 92,364 97, , , , , ,371 Ttal Base 87,513 92,618 97, , , , , , ,657 % Change 5.6% 5.8% 5.5% 4.1% 4.2% 4.3% 4.4% 4.4% 4.4% Adjustments (71) (255) Ttal Prceeds 87,442 92,364 97, , , , , , ,657 Prjectins/Assumptins Idah Cde changes New Cnstructin Rll Idah Cde sectin A was amended in 2007 t exclude new cnstructin in revenue allcatin areas (RAA) frm the new cnstructin rll (NCR). The new cnstructin value added during the existence f a RAA will be added t the NCR when the RAA is disslved. The impact fr the City f Bise is a delay in realizatin f the base revenue related t new cnstructin in RAA areas. In the year f disslutin, there will be a significant netime bump in the new cnstructin rll value and cnsequently a similar increase in the City s base budget. Hmewner exemptin In the 2006 Legislative sessin, the hmewner exemptin was expanded t include the hmestead, which is defined as the hme and up t ne acre f land, and the exemptin limit was increased t $75,000 indexed t the Idah husing price index. In 2009, the indexing increased the exemptin t $104,471. This change des nt affect the City s budget authrity, but changes the distributin f taxes amng prperty wners. Prperty Tax Budget The City s prperty tax budget is estimated t increase 4.1% fr FY 2010 and 4.2% fr FY This is cmpared t a 5.5% increase fr FY 2009 and is cmpsed f: 3.0% fr the cap in bth fiscal years and 1.1% in FY 2010 and 1.2% in FY 2011 fr annexatin and new cnstructin. New cnstructin taxable value is the lwest in the last ten years. Prperty Valuatin The FY 2010 ttal market value fr the City f Bise decreased apprximately 6% belw cmpared t the prir year. This is the first decline the City f Bise has experienced in ttal market value since Financial Services has tracked the data, dating back t In FY 2009 (tax year 2008), the increase in the market value f existing prperties was $443 millin. Market value is the value f the prperty befre exemptins are applied. Due t the uncertain ecnmic envirnment and what appears t be a bttming in the real estate market, the FY 2011 market value increase is assumed at 3%. A change in this assumed increase will nt affect the City s budgeting authrity, nly the levy rate. Revenue Sectin 67

4 City f Bise By: Ozzie Gripentrg, Tnya Wallace Net Change in Market Value fr Existing Prperties in Bise City 4,000 3,000 millins $ 2,000 1,000 - (1,000) (2,000) FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Levy rate The City s levy is estimated t increase by 12.1% fr FY This will affect tax bills in December 2009 and June Fr every $100,000 f taxable value, this equates t an increase in taxes f apprximately $62 ver the prir year. A decline in taxable value will ffset the mill levy increase in prperty taxes. The estimated decline in prperty taxes n an average residential taxable value f $250,000 is abut $48. It is nt anticipated that the State will lwer the maximum hmewners exemptin. By maintaining the maximum hmewners exemptin at the 2008 level, the result is a minr shift in the verall tax burden frm hmewners t businesses. If mdel assumptins hld thrugh FY 2011, the City s levy is estimated t increase by 0.2% fr FY Bise City Prperty Tax Rate FY 2009 Prjectin FY 2010 Prjectin FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Revenue Sectin 68

5 City f Bise By: Ozzie Gripentrg, Tnya Wallace Sales Tax The State f Idah shares sales tax revenues with certain lcal gvernments based upn a frmula established in State Cde. Sales tax is characterized in the Structural Balance plicy as base (fr such sales as fd) and cyclical (fr sensitive discretinary purchases). Sales tax has histrically been the City s secnd largest General Fund revenue surce. Due t the decreased sales tax revenue estimated fr FY 2010, this revenue categry is the third largest surce fr the General Fund. Revenue $ 14,702 13,969 15,434 13,200 13,304 13,318 13,451 13,652 13,857 14,134 % Change 3.3% -5.0% 10.5% -14.5% 0.8% 0.1% 1.0% 1.5% 1.5% 2.0% Sales tax is shared revenue and all statewide prceeds are pled. Therefre, statewide sales prjectins, based n the ecnmic cnditin f the state, are a key variable. Distributin t cities is based upn ppulatin and assessed market value. Prjectins/Assumptins As f April 2009, the State prjects Idah grss dmestic prduct t increase by 0.9% in 2009, and abut 0.8% in 2010 increasing t 1.3% in Persnal incme is prjected t decline by 0.2% in 2009 and increase t 1.8% and 4.4% fr 2010 and 2011, respectively. These tw key prjectins result in the City s assumed 0.8% increase in FY 2010 cmpared t the dwnward prjected amunt fr FY 2009, and 0.1% increase in FY The City s prprtinate assessed market value is 27.05%, a decrease frm the 28.15%, which was used fr FY Prprtinate ppulatin als decreased frm 20.87% in FY 2007 t 20.07% fr FY The sales tax prjectin fr the fur year prjectin windw is indexed by the expected GDP, which shws mderate grwth thrugh the prjectin windw. The City s prprtinate assessed market value and prprtinate ppulatin are assumed t remain unchanged. Threats/Opprtunities Further deteriratin in the labr markets wuld have an adverse effect n sales. Strnger ecnmic grwth than prjected culd enhance revenue. Pssible legislative changes t the distributin frmula and allwable exemptins cntinue t be watchful items. Fines and Frfeitures Fines and frfeiture revenue include traffic fines, false alarm fines, parking fines, verdue library fines, and animal cntrl fines. Revenue $ 4,018 3,717 4,291 2,791 3,934 3,943 3,982 4,034 4,074 4,114 % Change 14.8% -7.5% 15.4% -35.0% 40.9% 0.2% 1.0% 1.3% 1.0% 1.0% Prjectins/Assumptins Ttal fines and frfeitures fr FY 2010 are nearly 41% mre than the prjected amunt fr FY 2009 due t prpsed rate increases, system cding crrectins, and increased usage and delinquency f library materials. The prjectin windw includes an average annual increase f apprximately 1.0%. Revenue Sectin 69

6 City f Bise By: Ozzie Gripentrg, Tnya Wallace All parking fine rates are prpsed t increase $3.00 and late payment penalties by $5.00 effective Octber 1, 2009, resulting in cmparable parking fine and penalty rates with peer cities. The estimated impact is a $328,000 increase in parking fine revenue. Traffic fine revenue is prjected t decrease during FY 2009 largely due t the implementatin f a new curt management infrmatin system and the crrectin f cding errrs in the ld system. Upn implementatin f the new system in April 2008, the City traffic fine revenue decreased apprximately 34%. Issues related t the implementatin were identified in the later half f FY 2009 and are assumed t result in increased traffic fine revenue, althugh nt t the levels experienced prir t the new system. Overdue bk fines are budgeted at 23.5% increase fr FY 2010 and 11.2% increase fr FY 2011 due t the additin f tw strefrnt libraries and ne branch library. Threats/Opprtunities Legislative actin culd increase traffic fine revenue, althugh nne is freseen. Curt practices in assessing and administering traffic fines culd perhaps lead t enhanced traffic fine revenue. Traffic fine revenue has prven t be unpredictable cmpared t the number f tickets issued. Franchise Fees Franchise fees are cllected frm businesses having an agreement allwing the peratin f their business within the City. The City charges a franchise fee fr water, slid waste, cable, natural gas and electricity. Electric franchise revenue is discussed under capital revenues. Revenue $ 5,671 5,871 6,057 6,057 6,147 6,284 6,440 6,599 6,763 6,931 % Change 2.1% 3.5% 3.2% 0.0% 1.5% 2.2% 2.5% 2.5% 2.5% 2.5% Prjectins/Assumptins There are n assumed rate increases fr the. Althugh rate increases are likely, nne were annunced at the time the budget amunts were determined. Natural gas franchise revenue is estimated t increase abut $114,000, r 4.6%, in FY 2010 cmpared t the FY 2009 Adpted Budget based n actual revenue received during the first half f FY 2009 indicating increased sales and/r custmer grwth. The Energy Infrmatin Administratin prjects a 6.0% increase in cnsumptin fr the Muntain regin fr calendar year Cable franchise revenue is less in FY 2010 cmpared t the FY 2009 Adpted Budget based n the assumptin f declining discretinary incme. Actual revenue received during FY 2009 supprts this assumptin. FY 2011 revenue grwth is assumed t be flat. Water franchise revenue grwth is assumed t remain nearly unchanged. Public Wrks is nt recmmending increases in slid waste rates fr FY 2010 r FY Prjectins assume a 2.5% increase in revenue due t grwth in ppulatin and usage. Revenue Sectin 70

7 City f Bise By: Ozzie Gripentrg, Tnya Wallace Threats/Opprtunities Inclement weather culd have significant impacts n franchise revenue. Future adptin f trash rate increases that will require City Cuncil actin. Digital televisin cnversin set t ccur n June 12, The impact n cable franchise fee revenue is difficult t prject. Franchise Fee Cmpnents $ Thusands $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Natural Gas Garbage Cable TV Water Other Interest Incme The City earns interest revenue n available cash balances thrugh varius investment vehicles in accrdance with Idah State Cde. Additinally, the City earns interest fr penalties n varius fees such as prperty taxes that is included in the revenue ttals. The City s investment prtfli is mnitred daily and cnstantly reviewed as t security type, maturity, duratin, and surce t maintain a balanced prtfli. Revenue $ 2,214 1,331 1, % Change 43.0% -39.9% -24.9% -72.1% 116.7% 38.8% 0.5% 1.0% 1.0% 2.0% The prjectins are estimated based n average cash balances in each fund and shrt-term interest rates. Fr FY 2010/2011, prjected shrt-term interest rates are estimated t increase slightly frm 1.0% in 2009 t 2.0% in FY 2010 and 3%-4.5% in FY 2011 thrugh FY Prjectins/Assumptins Increased fund balance due t increase in the cash flw reserve and ther cash balances and an expected dubling f interest rates frm 1.0% t 2.0% fr tax and shrt-term funds cntribute t the prjected 116.7% increase in interest incme fr FY 2010 ver the prjected amunt fr FY The FY 2009 prjected amunt reflects the sudden and significant shift in the financial markets during the first quarter f the fiscal year and explains the decrease frm the adpted budgeted amunt. The increase in interest incme f 38.8% frm FY 2010 t FY 2011 is attributed the expectatin that interest rates will grw frm 2.0% t 3.0% fr FY Revenue Sectin 71

8 City f Bise By: Ozzie Gripentrg, Tnya Wallace As the City prgresses tward the cash flw reserve gal f 8%, and if interest rates return t a mre nrmal range, interest incme is expected remain at a level between $800 and $900 thusand. The fur years f the prjectin windw reflect a mdest annual 1% t 2% increase ver the preceding year. Prjected rates f return are based n the prjected shrt-term yield curve and prjected average cash balances. Threats/Opprtunities It is unlikely that interest rates will further decrease; thus, increasing interest rates are prbable ver the next tw years. The impact f internatinal ecnmic events and unprecedented Federal spending prgrams may prvide brader investment pprtunities. Liqur Tax The City receives frm the State a prtin f the surcharge n all liqur sales. The past several years there has seen significant grwth in liqur sales and prfits. Increased liqur tax revenue is attributed t increased liqur sales, a shift in preference frm tp shelf premium liqur t higher vlumes f secnd tier premium liqur, and additinal distributin lcatins. Revenue $ 2,725 2,806 3,119 3,119 3,228 3,325 3,425 3,528 3,634 3,743 % Change 12.8% 3.0% 11.1% 0.0% 3.5% 3.0% 3.0% 3.0% 3.0% 3.0% The State Liqur Dispensary distributes funds quarterly in level installments, subject t adjustments. Additinal installments may be made as the state reviews actual and anticipated liqur sales, usually at the end f its fiscal year. Prjectins/Assumptins The frmula fr distributin f mneys in the Liqur Accunt was changed by S1388, which was signed int law n March 31, It returns t the cities and cunties the $7.2 millin used t fund the Water Resurce Bard Revlving Develpment Fund in 2005 thrugh netime payments in 2006 thrugh The City s annual share was $210,000, which is dedicated t start up csts relating t the Detxificatin Center. FY 2009 will be the last year f the water fund repayment. The frmula change als reduces the share allcated t cities and cunties frm 60% in 2009 t 50% by The revenue decrease due t the lwer percentage f allcated mnies under the frmula is ffset by the prjected higher sales grwth. The State Liqur Dispensary prjects sales grwth f apprximately 7% t 8% thrugh The State plans t integrate sftware systems during FY 2009 as part f the remdeling f the distributin warehuse, which lessens the amunt t be distributed t cities and cunties. In additin, the distributin mdel calculates revenue share based n pint f sale. Grwth in neighbring cities and additinal stres being added acrss the state impacts the share that the City f Bise receives thus accunting fr the lwer grwth prjectin f 6.5% t 7.0% in the ut years. Internal Charges Internal charges are derived frm services that departments prvide t each ther. Fr example, ther departments reimburse Human Resurces fr recruitment services and Legal fr litigatin services. Revenue Sectin 72

9 City f Bise By: Ozzie Gripentrg, Tnya Wallace Revenue $ 8,934 12,481 13,664 13,949 14,539 15,103 15,820 16,572 17,359 18,183 % Change 16.6% 39.7% 9.5% 2.1% 4.2% 3.9% 4.8% 4.8% 4.8% 4.8% Prjectins/Assumptins The City will transitin t full cst accunting beginning in FY The first phase f the transitin is t match the timing f reimbursement and expenditures fr services rendered. Previusly, reimbursement lagged tw years frm the time the service was prvided. Phase tw will cmmence in FY 2012, which will result in the budgeting and tracking f reimbursement and expenditures fr all departments. Primarily enterprise funded departments budget and track these reimbursements. The largest single cst cmpnent fr internal services is persnnel expenditures. Only health care cst increases are assumed in FY 2010 accrding t the prpsed strategy. The increase in FY 2011 is based n the recmmended wage and benefit increases. Internal charges are based n an annual 4.75% cst f service increase fr the prjectins f FY 2012 thrugh FY 2015 and little r n change in the level f service prvided. The grwth rate is based n assumed persnnel cst increases and peratinal cst increases. Threats/Opprtunities Significant changes in the cst f service. Department restructuring. Allcatin changes between direct and indirect internal charges. User Fees User fees are charges fr specific services. The City charges external user fees t cnsumers fr services fr which a direct benefit can be easily identified and billed. Revenue $ 10,396 10,491 10,817 9,967 11,272 11,494 11,723 11,958 12,197 12,441 % Change -0.5% 0.9% 3.1% -7.9% 13.1% 2.0% 2.0% 2.0% 2.0% 2.0% Prjectins/Assumptins Based n increasing unemplyment and presumed decrease f discretinary incme, user fees are prjected t decrease by 5.0% in FY Prpsed park and recreatin fee increases are included in FY 2010, prjected t increase revenue by apprximately $20,000. The mst significant change in FY 2010 cmpared t the FY 2009 Adpted Budget is an increase f $676,000 (39.5%) fr reimbursement frm Whitney Fire District fr cntracted fire services. Fr the prjectin windw, a mderate annual rate increase f apprximately 2.0% is assumed. Revenue Sectin 73

10 City f Bise By: Ozzie Gripentrg, Tnya Wallace Threats/Opprtunities Ecnmic changes such as further layffs r wage increases culd result discretinary incme changes f certain user grups. Weather cnditins have a significant impact n parks and utdr recreatin activities. Private cmpetitin, such as Raring Springs Water Park cmpeting with City swimming pls, redirects ptential revenue. Mre aggressive recvery f csts culd enhance revenues. Hwever, fee increases culd reduce user levels. Develpment Fees Develpment fees fund planning and grwth management, including lng- and shrt-term planning and zning, review f develpment plans and subdivisins and building inspectin. Develpment fees als pay fr a prtin f develpment related impacts n service prvided by ther City departments. Revenue $ 8,776 6,974 7,900 5,579 5,524 5,901 6,078 6,260 6,448 6,641 % Change 1.1% -20.5% 13.3% -29.4% -1.0% 6.8% 3.0% 3.0% 3.0% 3.0% The number f building permits thrugh May 2009 (eight mnths f FY 2009) was 30% lwer than the same time last year. The market value f the permitted prjects, hwever, was 23% lwer fr the same time perid. Single- family and multi-family husing were 29% and 100% lwer, respectively, while cmmercial cnstructin was 9% ver this time last year due t a few large-scale prjects. Prjectins/Assumptins Develpment fees are intended t cver the cst f prviding planning and building services, with the exceptin f cde enfrcement and cmprehensive planning. The basis fr develpment revenue fr the next tw years is a base level range f permits and general mix f permit types based n the ecnmic mdel frm ECONrthwest. Prject valuatin is assumed t be less than previus years fr similar prject due t the lwer market values. N fee increases are assumed. Threats/Opprtunities Dwntwn develpment activity spurred by the Simplt prject culd prvide cyclical revenues. Federal stimulus funding culd bst develpment activity by directly funding prjects r indirectly funding prjects thrugh revlving lans and ther lcal credit incentives. Annexatin f vacant land prvides pprtunity fr develpment within the City limits. The prjected develpment revenue is based n less building activity than in prir years. Increased develpment activity culd prvide additinal cyclical revenue. Revenue Sectin 74

11 City f Bise By: Ozzie Gripentrg, Tnya Wallace Capital Revenues Capital revenues in the Capital Fund include electric franchise fees revenue, interest incme, grants, dnatins, impact fees, and General Fund transfer in. Electric FF 1,269 1,472 1,625 1,625 1,730 1,782 1,836 1,891 1,947 2,006 Interest Impact Fees 1,631 1,175 1,738 1,805 1,050 1,206 1,211 1,247 1,284 1,323 Grants/Dnatins/Other 782 1,433 6,335 12,604 4,560 3,123 2,954 1,645 2,375 2,375 GF Trans In 15,894 11,851 3,567 3,523 5,574 4,858 3,851 3,951 4,070 4,192 Ttal 20,546 16,516 13,714 20,007 13,349 11,618 10,520 9,422 10,386 10,626 % Change 60.4% -19.6% -17.0% 45.9% -33.3% -13.0% -9.5% -10.4% 10.2% 2.3% Prjectins/Assumptins On April 15, 2009, Idah Pwer filed a new rate case with the Idah Public Utilities Cmmissin (IPUC) requesting a general rate increase f 11.4%. At the time f this publicatin, the IPUC had nt made a decisin. The budgeted revenue fr FY 2010 and FY 2011 includes the revenue impact f the prpsed rate increase. Hwever, because f the pending status f the applicatin, a cntingent pwer utility cntingency has been established fr $165,000, t either cver the City s increased pwer csts resulting frm the apprved rate increase r a cst reductin t ffset the decrease in revenue if a rate increase is nt apprved. Interest incme in the Capital Fund has benefited frm high fund balances related t reserves fr prpsed capital facilities. Fund balance is assumed t be relatively unchanged. Impact fee prjectins decline dramatically in FY 2010 because f decreased develpment activity, but are prjected t increase slightly in FY 2011 and flatten thereafter. The Parks & Recreatin Department will cntinue t develp partnerships fr the cnstructin f majr prjects such as the Marianne Williams Park, Esther Simplt/River Recreatin Facility and Julia Davis Park. N ther fee increases are assumed. Threats/Opprtunities A rebund in develpment activity will psitively affect impact fee revenue. A drught culd impact pwer rates, thus impacting electric franchise fee revenue. Ecnmic cnditins causing interest rates t fluctuate. An increase in the electric franchise fee rate, as prvided by Idah State Cde up t 3% thrugh apprval f the utility bard f directrs r the electrate, culd prvide additinal revenue t fund the several ther prpsed capital prjects. Revenue Sectin 75