Post on 26-Mar-2015
MunicipalFinancialServices
Water Rates Update
December 18, 2008
MunicipalFinancialServices
Water Rate Setting Objectives
Pay operations and maintenance expenditures
Pay capital expenditures Pay debt principal and interest Meet debt coverage requirements Maintain prudent level of reserves Keep rates competitive
MunicipalFinancialServices
Water Rate Study Updates
Review revenue requirements – updated in this study
Allocate costs proportionally among customers – no change; used same allocation basis as for current rates (43% from Basic charges and 57% from Usage charges)
Develop rate structure – no change; used the current rate structure (meter sizes and tiers)
Customer Characteristics – added customers in Felton service area; steady decline in system-wide average water use
MunicipalFinancialServices
Water System Meters
Residential (6,492)90%
Other2%
Institutional (52)0.7%
Fire Service (29)0.4%
Landscape (11)0.2%
Private Mutual (5)0.1%
Vacant/Other (69)1%
Commercial (249)3%
Multi-Family (396)5%
Total Meters, October 2008 (7,303)
MunicipalFinancialServices
Water System Sales, Ccf
Tier 1: First 10 units (349,406)
38%
Tier 5: Over 200 units (97,074)
11%
Tier 4: 101 - 200 units (40,468)
4%
Tier 3: 41 - 100 units (108,019)
12%
Tier 2: 11 - 40 units (326,693)
35%
Total Water Use, 2009 (921,660 Ccf)
MunicipalFinancialServices
Long Term Water Use and Average Water Use
1819
2021
2223
22 2223 22 23 23
24
2221 22 21
21.2 21.2 21.1 21.1 21.0 21.0 20.9 20.9 20.8 20.7
500,000
550,000
600,000
650,000
700,000
750,000
800,000
850,000
900,000
950,000
1,000,000
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
To
tal
Wat
er
Use
, C
cf
Total Water Use (Ccf), Actual All Customers (l. scale) Total Water Use (Ccf), Projected All Customers (l. scale)
Avg. Mo. Use, Actual All Customers (r. scale) Avg. Mo. Use, Projected All Customers (r. scale)
Water use in 2009 includes customers in the Felton area
MunicipalFinancialServices
Water System 2008 Replacement Value
Wells$2,350,000
2%
Tanks$5,827,500
6%
Water Pipeline$64,667,875
67%
Meters$10,950,000
11%
Hydrants$2,250,000
2%
Buildings$488,930
0.5%
Water Treatment$7,000,000
7%
Booster Stations$4,450,000
5%
2008 Water System Replacement Cost = $97,984,305
MunicipalFinancialServices
Rate Increase Alternatives Over 10 Years (2009-2018)
New Debt Status > No New Debt $6 Million New DebtAnnual Rate Increases, 2009-2011 > 15% / 10% / 5% 10% / 10% / 5%
Balance July 1, 2009 $13,525,000 $13,525,000
Expenditures
O&M $41,727,490 55% $41,727,490 53%Debt Service $10,833,741 14% $13,653,122 17%Capital Replacement $23,712,167 31% $23,712,167 30%Total Expenditures $76,273,397 100% $79,092,779 100%
Revenues
Water Rates $60,934,053 84% $57,479,762 75%Bond Disbursement $0 0% $6,000,000 8%Other Revenue $7,880,000 11% $7,880,000 10%Loan Repay from Wastewater $240,000 0.3% $240,000 0.3%Interest $3,581,581 5% $4,769,077 6%Total Revenue $72,635,634 100% $76,368,839 100%
Revenues - Expenditures -$3,637,763 -$2,723,940
Balance June 30, 2018 $9,887,237 $10,801,060
MunicipalFinancialServices
No New Debt, $24M Capital, Rates Increases of 15%/10%/5%
1.39% 1.85% 2.00% 2.14% 2.30% 2.51% 2.69% 2.89%3.71% 3.96%
15%
10%
5% 5% 5% 5% 5% 5% 5% 5%
-$20,000
-$15,000
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
x$0
00Interest
Other OperatingRevenue
Water Fees
BondDisbursement
Debt Service
CapitalReplacement
Other OperatingCosts
Salaries andLabor Costs
Coverage
Ending Balance
Annual Increasein Rates
MunicipalFinancialServices
No New Debt, $24M Capital, Rates Increases of 15%/10%/5%
1%
11%
0%
15%
10%
5% 5% 5% 5% 5% 5% 5% 5%
$68 $68
$76
$87
$96
$100
$105
$111
$116
$122
$128
$135
$141
$76
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Annual Increase in Rates
Avg Single Family 2-Mo Bill
Note: The 2006 rate increase applied only to the Basic Charge
MunicipalFinancialServices
$6M New Debt, $24M Capital, Rates Increases of 10%/10%/5%
1.32% 1.31% 1.42% 1.52% 1.63% 1.73% 1.82% 1.91% 2.31% 2.42%
10% 10%
5% 5% 5%4% 4% 4% 4% 4%
-$20,000
-$15,000
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
x$0
00Interest
Other OperatingRevenue
Water Fees
BondDisbursement
Debt Service
CapitalReplacement
Other OperatingCosts
Salaries andLabor Costs
Coverage
Ending Balance
Annual Increasein Rates
MunicipalFinancialServices
$6M New Debt, $24M Capital, Rates Increases of 10%/10%/5%
1%
11%
0%
10% 10%
5% 5% 5%4% 4% 4% 4% 4%
$68 $68
$76
$83
$92$96
$101
$106$110
$115$119
$124
$129
$76
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Annual Increase in Rates
Avg Single Family 2-Mo Bill
Note: The 2006 rate increase applied only to the Basic Charge
MunicipalFinancialServices
Comparison of Alternatives
New Debt Status > No New Debt $6 Million New Debt 2009-2018Rate Increases 2009-2011 > 15% / 10% / 5% 10% / 10% / 5% Difference
Debt Capacity > able to issue new date at later date temporary limit to debt issuanceNew Debt Payments > none 15 years at $313,000 per year
Debt Payments 2009-2018 > $10,833,741 $13,653,122 $2,819,382
Rates 2012-2018 > increase at 5% per year increase at about 4% per yearRevenue from Rates > $60,934,053 $57,479,762 -$3,454,291Revenue from Bonds > $0 $6,000,000 $6,000,000
Revenue from Interest > $3,581,581 $4,769,077 $1,187,496Revenue, Rates/Bonds/Int > $64,515,634 $68,248,839 $3,733,205
Change in Fund Balance > -$3,637,763 -$2,723,940 $913,823
MunicipalFinancialServices
Survey of Four Other Agencies
$35.75$41.10 $45.20 $47.45
$33.16 $31.00
$47.42
$31.00$42.28
$59.54
$39.90
$45.84
$50.36$52.84
$58.34$73.38
$59.07
$76.86
$74.50
$90.33
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
SLVWD,Current
SLVWD,Proposed
2009
SLVWD,Proposed
2010
SLVWD,Proposed
2011
City ofSanta Cruz
(InsideLimits)
SoquelCreek Water
District -SFH
ScottsValley Water
District
SoquelCreek Water
District -Other
City ofSanta Cruz
(OutsideLimits)
Lompico
Quantity
Basic
MunicipalFinancialServices
END OFPRESENTATION
MunicipalFinancialServices
District Customers and Operations Customers
– 7,300 water meter connections as of October 2008– 55 sewer connections
Operations– Water
• Wells, Treatment, Storage, Distribution, Meter Reading, Fire Hydrants
– Sewer• Collection, Treatment, Effluent Disposal, Solids Disposal
– Administration• Billing, Financial Reporting, Operations Compliance
Reporting, Management