Ariz. Admin. Code R18-4 app D - Water System Financial Viability Tests

Test 1: Will the proposed water system collect sufficient revenues to meet all of its projected expenses?

Measurements:

a. Total Revenues - Total Expenses = Net Income > 0

b. Total Revenues - One-Time Revenues - Interest Income - Other Income = Operating Revenues

c. Total Expenses - One-Time Expenditures - Debt Service - Capital Outlays = Operating Expenditures

d. Operating Revenues - Operating Expenses = Net Revenues > 0

e. Operating Ratio = Operating Expenses = 1 Operating Revenues

Test 2: Will the proposed water system generate reserves?

The following measurements shall be > 0 at the time submitted:

a. Operating Cash Reserve = $___________

b. Replacement Reserve = $____________

c. Working Capital = Current Assets - Current Liabilities

Test 3: Are the proposed rates reasonable compared to the median household income of the area to be served?

The following measurement shall be:

Average Annual Rates < Median Household Income* x 2.5%.

*The sources of median household income data include the most recent United States Census Bureau (USCB) data collected by the Department or generated by an impartial third party experienced in collecting income data and supplied to the Department by the applicant seeking viability determinations. Acceptable sources of income data, other than USCB data include feasibility studies, engineering reports, market studies, income surveys, or another source or collection methodology approved by the Department.

Notes

Ariz. Admin. Code R18-4 app D

Appendix D adopted by final rulemaking effective September 23, 1999; the A.A.R. citation was not available at the time of publication and will appear in Supp. 99-4 (Supp. 99-3). Amended by final rulemaking at 5 A.A.R. 4456, effective September 23, 1999; Test 1(e) amended to correct a manifest clerical error (Supp. 99-4).