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Auditors urge rate monitoring as Montrose’s water, sewer and wastewater funds show mixed coverage
Summary
Auditors advised the city to monitor water and sewer rates and cash balances; they noted the water fund covers operating costs and debt while the sewer fund shows a tighter margin after bond spend-down and the wastewater treatment fund currently has no debt.
Michelle, the audit-in-charge from Abdo, reviewed the city's enterprise funds and told the council the water fund's operating receipts generally cover debt and costs, but the sewer fund shows a larger gap between receipts and obligations after the spend-down of bond proceeds. "We would ideally like [the operating receipts] to be greater than the yellow and black bar," Michelle said, explaining why monitoring rates and reserves matters.
Michelle also said the wastewater treatment fund currently carries no debt and has a modest cushion. She cautioned that planned infrastructure projects will require the city to evaluate whether to spend reserves or bond for projects and how that would affect rates and the tax levy. The auditors recommended periodically reviewing commercial and residential water rates to ensure enterprise funds cover operations and debt service, and to factor planned capital needs into long-term financial planning.
