1/18/1984 - Laserfiche WebLink

Home Browse Search

• BOOS n^,m Hutchinson Utilities is operating the utility in a fine operational manner and as far as the way it functions, re equipment, etc., they comply with Section 7 of the franchise agreement. Section 17 of the franchise has a paragraph which requires the utility to put 100 of gross sales into a reserve fund until they reach $20,000 for renewal and replacement, and they did not comply with that requirement in 1981 or 1982. Re Section 18, Mr. Duynslager stated that while the provision for a connection charge is appropriate, its purpose is not defined nor is the amount justified. He submitted that a connection fee was not even justified at that point in time or with the existing rate structure since the plant was donated to them, and therefore, collecting connection fees in advance for a facility in which they had no investment was inappropriate. Mr. Duynslager discussed Section 19, noting that while the provision for monthly utility rates is necessary, there is a lack of verification of customer equity. He suggested when rates are allowed that some clearer definition be included so that those following can better evaluate whether they are charging equitable rates. Mr. Duynslager noted that the connection fees collected have not been accounted for separately. While he believed they have followed proper accounting procedures based on the business accounting principles used for tax purposes, he noted that within the normal process of accounting for revenue collected by a water/sewer utility, the collection fees would be set aside in a separate reserve fund to be devoted to capital improvements or pay off debt service. Since this was not required in the franchise, they did not do this, but co -mingled those funds with the normal bills and that accountability is lost as far as being attributed to the plant. He believed current operating costs exceeded those appropriate for a utility of this size as did quite a few of the items listed under general and 25