Rate Projections & Budgetary Forecast

The District is required by its Bond Order to set rates at such a level that the excess of revenues over current expendituresequalsatleast120%ofdebtservice.TheBoardestablishedarevenuepolicythatthegoalfordebt coverage ratio be 150% or 1.5, and sufficient to meet all operating and capital needs with modest level increases.

TheBoardhas also established a budget policy that calls for a ten-year projectedoperatingbudgetand capital improvement program for long-term planning purposes. Revenue and expenditure projections are integrated with anticipated capital expenditures to anticipate rate increases and timing of debt issuance based on cash flowlevels and debtcoverageratios.

Consumer revenue projections are based on consumption rates, growth in numberof taps during the previous year, and projected rate increase. Industrial revenue is developed from anticipated fees of actual individual companies, since there are relatively few industrial customers and the charges are determined by effluent strength, as well as volume, which may vary greatly depending on the particular entity. As there are a limited number of large customers, any major change to a particular facility such as announced layoffs or closings, may beimmediately factoredinto theindustrial revenuecomputation.

Operating expenditures are anticipated to increase at the regional cost of living rate, and capital expenditures at the general inflation rate. Future debt service is projected to be issued at slightly above prevailing rates. As this forecast is updated at least semiannually, management is able to adjust timing of capital projects and discussin advancewith Board members proposedtiming and levels ofrate increases.

Using consumption data projected from the recent historical population growth statistics within the AshevilleBuncombe County area, the District anticipates annual rate increases of approximately 5% for the next nine years.

ConstructioncostsarefairlylevelreflectingtheDistrict’sMasterPlantoconsistentlyrehabilitateapproximately 40,000 linear feet of pipe per year. The CIP expenditure forecast for FY2024 reflects a continuation of a major rehabilitation project at theWastewaterTreatmentPlant.