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over the next several years. Vohune increases will be generated through future annexations and overall growth within the City which caimot be accurately projected at this time. Future revenue can also be impacted by any rate change that may be enacted beyond 2006. Rate increases or decreases are determined on a case by case basis and can be impacted by either capital needs or funding of onga~g operational expenses. The South Bend Water Works received approval from the Indiana Utility Regulatory Comnvssian to increase its water utility rates and charges effective 2006. The average water rate increase was approximately 21.77% over the prior rate. Although this sounds significant, the City of South Bend remained in the lower percentile in regards to water rates charged by other municipalities throughout Indiana. After the rate increase, South Bend's water rates ranked sixth lowest out of the twenty largest cities in Indiana.. It had previously ranked fourth lowest prior to this 21.77% increase. This increase will be rased to fund new debt of $4,710,000 to be issued far additions, extensions and improvement for the City's Waterworks. The City is in the very early stages of determining if a future rate increase will be needed to cover the growing operations and maintenance costs anticipated in the years 2007 and beyond. In November 2005, a Sewer rate increase was enacted for 2006, 2007, 2008 and 2009. The overall revenue enhancement with the rate ranges from. 29% in 2006 to 9% m 2009. The City engaged independent consultants in 2002 to perform a Cost of Service Study which adjusted fixed vs variable costs and other allocations. The rates were adjusted in 2004 by 24% and m 2005 by 5%. This was the first increase in 15 years. The financial analysis was updated during 2005 and the phase in of rates over the next four years was recommended to fund new debt service. The City's new sewer rates are projected to rank number four out of the five largest cities in Indiana as of August 2005. Over the next four years a series of sewer bonds will be issued totaling $56,380,000. Proceeds of the bonds will be used to address the city's Combined Sewer Overflow {CSO) issues. The initial series will be issued m June 2006 in the amount of $7,630,000. These capital expenditures are necessary to enhance present and future needs and to maintain the highest level of quality and quantity acceptable for the community. The bond will be issued for capital needs only -not for operations or maintenance. In late 199$, the County's Solid Waste Management District enacted a mandatary recycling program for all county residents. This program is expected to have a significantly positive impact on the City's future landfill costs. As a result of the anticipated cost savings resulting from City residerns' participation in this countywide recycling program, a rate increase may now be delayed for an undetermined amount of time. Results of the recycl~g program will be reviewed prior to any final determination of future solid waste pick up Bees. As mentioned earlier, the City is always looking for other sources ofrevernxe that would reduce its reliance on property taxes. A viable source of revenue is from user fees and/or charges for services currently being performed. The City has included in its 2006 budget $12.4 million of revenue from user fees that are currently m place. It is the City's desire to establish all user charges and fees at a level closely related to the full cost of providing the services while taking into consideration similar charges/fees being levied by other public and private providers. The City recalculates, on an annual basis, the full costs of activities supported by user fees (including the Parks Department, EMS ambulance services, Building Department and the Century Center among others) to identify the impact of inflation and other cast increases. It then revises user fees accordingly. As a result, overall charges far services and user fee revenues are anticipated to B-~7