City of Crescent City Water Enterprise Fund September 16, 2013

Transcription

1 City of Crescent City Water Enterprise Fund September 16, 2013

2 Provide overview of City s Water System Recap Capital Improvement Plan Provide update on System s Financial Status June 30, 2013 Update for Propose 5-Year Financial Plan Present Results of Rate Study

3 Propose 5-Year Customer Rate Structure Schedule Public Hearing to Consider Rates Direct Notice for Hearing Set Procedures for Receiving/Tabulating Protests Introduce Rate Ordinance

4 City provides service to 14,000 customers Original system tanks, pipelines, equipment in place since 1950 Current Replacement value is $60 million System requires ongoing maintenance and replacement to protect investment and prevent equipment failures

5

6 Ranney Collector Well (1958) Chlorination Building (1958) Elevated Tank (1958) Washington Storage Reservoir (2000) Amador Storage Reservoir (1982) Transmission Mains (1958 & 2000) Distribution Mains ( ) SCADA (1999)

7 Constructed 1958 Last Inspected 2008 Needs Re-Inspecting Every 7 to 10 years

8

9

10

11

12

13

14 Constructed in million Gallon Reservoir Currently only needed for Emergency Storage and Fire Flows

15 Constructed in million Gallon Reservoir Currently only needed only for Emergency Storage and Fire flows

16

17

18

19 FY 12/13 Perform Water Tank Inspections Estimated cost $10,000 Water System Security Estimated cost $25,000 (Grant $12,500) FY 13/14 Develop Water SCADA Master Plan Estimated cost $30,000 Annually Replace Valves and 600 LF of Water Mains Estimated cost $ 50,000

20 FY 14/15 Repair & Paint Amador & Washington Tanks and Facilities Estimated cost $597,287 Elevated Tank Repair, OSHA and Seismic Upgrade Estimated cost $530,450 Annually Replace Valves and 600 LF of Water Mains Estimated cost $ 51,500

21 FY 15/16 Install New SCADA System Estimated cost $ 163,909 Remote Read Metering System (Phase 1 of 3) Estimated cost $ 437,091 Install 7500 LF of 24 From Prison to Elevated Tank Estimated cost $1,016,236 Annually Replace Valves and 600 LF of Water Mains Estimated cost $ 53,045 FY 16/17 Remote Read Metering System(Phase 2 of 3) Estimated cost $ 450,204 Annually Replace Valves and 600 LF of Water Mains Estimated cost $ 54,636

22 FY 17/18 12 Transmission Main Loop (4000 LF, Railroad Ave to Northcrest Dr.) Estimated cost $579,637 Remote Read Metering System(Phase 3 of 3) Estimated cost $ 463,710 Annually Replace Valves and 600 LF of Water Mains Estimated cost $ 56,275 Total Estimated 5 Year Capital Improvement Cost $4,569,880

23 Revenue Draft Public Works Water Capital Improvement Program Financial Summary Date: 9/16/13 Updated for Rate Study Description FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Revenue Total EMPG Grant $ 12,500 $ 12,500 Total $ 12,500 Expenses Water FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Total Sub Total $ 35,000 80,900 $ 1,179,237 $ 1,670,281 $ 504,840 $ 1,099,622 $ 4,569,880 Water CIP Total Cash Flow Analysis FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Total Yearly Total $ 22,500 $ 80,900 $ 1,179,237 $ 1,670,281 $ 504,840 $ 1,099,622 $ 4,557,380

24 $4.5 million program approved July 2013 Major projects include: Annual Replacement of Valves and Water Mains Repair and painting of Washington and Amador Tanks Elevated tank repair, OSHA/Seismic upgrade Install SCADA monitoring system Expand pipe capacity from prison to elevated tank Install remote meter reading system Extend transmission loop (Railroad to Northcrest) Current cash flow does not support projects

25 Water Enterprise Fund administers system $14 million capital assets are 42% depreciated $7 million State loan at 0% interest, ½ paid System has incurred annual deficits of $300,000-$500,000/year for several years June 2013 operating reserve $295,000 Without action, reserves will be depleted in current fiscal year

26 Water Fund Revenue/Expense History 2,500,000 2,000,000 1,500,000 1,000, ,000 - FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 Projected Revenue Actual Expense Actual

27 adopted budget deficit $(417,000) current projection $(649,000) Critical Capital Projects deferred until cash flow is restored Without action, unrestricted cash expected to be depleted in January Without action, state loan will likely default in January Any delays will require a larger rate increase

28 Financial Plan Objectives: Stabilize cash flow Build 90-day operating reserve (future years) Restore coverage for existing debt Set stage for new debt financing Provide cash flow for CIP program Begin contributing to a CIP replacement reserve (future years)

29 City engaged consultant to develop 5-Year Plan A Rate Study is used to break down Financial Plan revenue requirements into customer rates Five-year rates have been proposed to build long-term financial stability into system Five-year rates best position system as a good credit risk to qualify for new debt financing Long-term capital financing smoothes customer rate impact 5-Year Plan has been completed and is ready for City Council consideration

30 City contracted with Willdan Financial Services Consultant is a recognized expert in field City staff teamed closely with consultant in preparing and reviewing data, estimates, and projections Company representatives are here to present their report and proposed rate structure

31 Willdan Financial Services

32 City Council Presentation Water Rate Study Results C R E S C E N T C I T Y C A L I F O R N I A September 16, 2013

33 Agenda Purpose of the Rate Study Rate Study Approach Data Reviewed Key Assumptions Results Questions Presentation to the City of Crescent City Water Rate Study 2

34 Purpose of the Rate Study

35 Purpose of the Rate Study Evaluate sufficiency of the existing water revenue stream to: Provide funding for future operating / capital expenses Maintain / build minimum reserve levels Meet legal obligations associated with outstanding debt Develop rates and charges which will generate sufficient revenue / meet cost of service standards (Prop 218) Presentation to the City of Crescent City Water Rate Study 4

36 Rate Study Approach

37 Rate Study Approach Planning Project Initiation & Management Data Collection & Assessment Confirmation of Goals and Objectives Frequent Communication Analysis Rate Setting & Financial Plan Customer Statistics System Revenue Requirements Integration of Capital Improvement Plan Multi-year Financing Analysis Alternatives Analyses Communication Written Summary Report Public Presentations Adopted Rates & Financial Plan Presentation to the City of Crescent City Water Rate Study 6

38 Data Reviewed

39 Data Reviewed Audited FY 12 Financial Report Historical revenues / expenses FY 13 actual and FY 14 budgeted revenues / expenses Capital Improvement Plan Outstanding loan agreements Customer billing data Presentation to the City of Crescent City Water Rate Study 8

40 Key Assumptions

41 No Growth in customer base Fund Balance Reserves Key Assumptions Build a 90-day Operating Reserve Maintain Debt Service $350,000 Build a Capital Reserve of $450,000 (~10% of CIP) New debt to fund portion of CIP Inflationary (3%) cost escalation factor Pelican Bay Prison water rate updated per terms of contract Increased from $0.758 per CCF to $2.07 per CCF Debt service coverage: Build to at least 1.00x for existing water loan Maintain 1.25x for new debt Presentation to the City of Crescent City Water Rate Study 10

42 Results

43 Estimated Beginning Fund Balances Estimated FY 14 Beginning Fund Balances Operating Reserves $295,000 Debt Service Reserve $350,000 Capital Reserve $0 Presentation to the City of Crescent City Water Rate Study 12

44 Results Existing Rates

45 Projected Cash Flow Performance Existing Rates $3,500,000 $3,000,000 $2,500,000 $2,000,000 Total Sources Total Uses $1,500,000 $1,000,000 $500,000 $- FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Presentation to the City of Crescent City Water Rate Study 14

46 Projected Operating Reserves Existing Rates Projected Year End Operating Reserves $1,000,000 $- $(1,000,000) $295k Fund Balance $(2,000,000) $(3,000,000) $(4,000,000) $(5,000,000) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Projected Year End Operating Reserves $295,333 $(317,270) $(1,061,775) $(2,223,571) $(3,450,757) $(4,788,943) Presentation to the City of Crescent City Water Rate Study 15

47 Results Proposed Rates

48 Projected Cash Flow Performance Proposed Rates $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 Total Sources Total Uses $500,000 $- FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Presentation to the City of Crescent City Water Rate Study 17

49 Projected Operating Reserves Proposed Rates Projected Year End Operating Reserves $500, Days of O&M 94 Days of O&M 94 Days of O&M $400,000 $300,000 $200, Days of O&M 61 Days of O&M $100,000 $- Projected Year End Operating Reserves 10 Days of O&M FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 $295,333 $44,730 $279,225 $423,429 $459,243 $475,057 Presentation to the City of Crescent City Water Rate Study 18

50 Proposed Rates Monthly Fixed Charges Proposed Rates - Monthly Fixed Charges (Includes 500 Cubic Feet of Monthly Usage) Service Type FY 2014 FY 2015 FY 2016 FY 2017 FY /4" Meter $ $ $ $ $ " Meter $ $ $ $ $ /2" Meter $ $ $ $ $ " Meter $ $ $ $ $ " Meter $ $ $ $ $ " Meter $ $ $ $ $ " Meter $ $ $ $ $ Fire Service 4" Meter $ 8.72 $ $ $ $ Fire Service 6" Meter $ $ $ $ $ Fire Service 8" Meter $ $ $ $ $ Fire Service 10" Meter $ $ $ $ $ Bertsch, Churchtree, Meadowbrook $ $ $ $ $ Presentation to the City of Crescent City Water Rate Study 19

51 Proposed Rates Monthly Flow Charges per CCF Proposed Rates Flow Charge per CCF Service Type FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 All Water Flow Above 500 Cubic Feet (Excluding Fire Service) $ 1.70 $ 2.10 $ 2.46 $ 2.54 $ 2.62 Fire Service $ - $ - $ - $ - $ - Presentation to the City of Crescent City Water Rate Study 20

52 Customer Impact of Proposed Rates ¾ City 600 Cubic Ft per Month $30.00 Monthly Water Bill $25.00 $20.00 $15.00 $10.00 $5.00 $- Current Proposed Proposed Proposed Proposed Proposed Bill FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Monthly Water Bill $10.26 $16.42 $20.21 $23.65 $24.37 $25.11 $ Change $6.16 $3.79 $3.44 $0.72 $0.74 % Change 60% 23% 17% 3% 3% Presentation to the City of Crescent City Water Rate Study 21

53 Customer Impact of Proposed Rates ¾ City 700 Cubic Ft per Month $30.00 Monthly Water Bill $25.00 $20.00 $15.00 $10.00 $5.00 $- Current Proposed Proposed Proposed Proposed Proposed Bill FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Monthly Water Bill $11.32 $18.12 $22.31 $26.11 $26.91 $27.73 $ Change $6.80 $4.19 $3.80 $0.80 $0.82 % Change 60% 23% 17% 3% 3% Presentation to the City of Crescent City Water Rate Study 22

54 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- Crescent City - Current Regional Water Bill Comparison ¾ Meter with 1,000 Cubic Feet of Monthly Flow Crescent City - Proposed Dec. 5, 2013 City of Gold Beach, OR City of Brookings, OR Monthly Water Bill City of Fortuna City of Florence, OR City of Arcata Humboldt CSD City of Yreka City of Rio Dell City of Eureka City of Fort Bragg Monthly Water Bill $14.50 $23.22 $24.76 $34.05 $34.44 $34.99 $36.76 $39.10 $45.33 $46.18 $49.95 $69.29 $72.10 City of Willits Presentation to the City of Crescent City Water Rate Study 23

55 CITY COUNCIL QUESTIONS Presentation to the City of Crescent City Water Rate Study 24

56 Receive Public Comment Approve Resolution : Schedule Public Hearing Direct Notice of the Hearing Approve Resolution : Procedures for Receiving/Tabulating Protests Waive full reading, introduce rate ordinance Ordinance No. 777

57

58 Approve Resolution : Schedule Public Hearing Direct Notice of the Hearing Approve Resolution : Procedures for Receiving/Tabulating Protests Waive full reading, introduce rate ordinance Ordinance No. 777