City of Crescent City Water Enterprise Fund September 16, 2013
Provide overview of City’s Water System Recap Capital Improvement Plan Provide update on System’s Financial Status ◦ June 30, 2013 ◦ Update for 2013-14 Propose 5-Year Financial Plan Present Results of Rate Study
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
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
Ranney Collector Well (1958) Chlorination Building (1958) Elevated Tank (1958) Washington Storage Reservoir (2000) Amador Storage Reservoir (1982) Transmission Mains (1958 & 2000) Distribution Mains (1958 – 2013) SCADA (1999)
Constructed 1958 Last Inspected 2008 Needs Re-Inspecting Every 7 to 10 years
Constructed in 2000 4 million Gallon Reservoir Currently only needed for Emergency Storage and Fire Flows
Constructed in 1982 1.5 million Gallon Reservoir Currently only needed only for Emergency Storage and Fire flows
FY 12/13 Perform orm Water ter Tank ank Inspec pectio ions Estimated cost $10,000 Water er System em Securit ecurity y Estimated cost $25,000 (Grant $12,500) FY 13/14 Develop velop Water er SCADA CADA Master ter Plan Estimated cost $30,000 Ann nnuall ally Replac place e Valves es and d 600 00 LF of Water ter Main ins Estimated cost $ 50,000
FY 14/15 Repair pair & Paint nt Amado ador & W Washin shingt gton on Tank anks s and d Facilit acilities ies Estimated cost $597,287 Elev evated ated Tank ank Repair pair, OSHA SHA and d Seismi ismic Upgrade ade Estimated cost $530,450 Ann nnuall ally Replac place e Valves es and d 600 00 LF of Water ter Main ins Estimated cost $ 51,500
FY 15/16 Install stall New New SCAD ADA A System tem Estimated cost $ 163,909 Remo emote te Read ead Meter erin ing g System em (Phase 1 o of 3) Estimated cost $ 437,091 Install 7500 LF of 24” From Prison to Elevated Tank Estimated cost $1,016,236 Ann nnuall ally Replac place e Valves es and d 600 00 LF of Water ter Main ins Estimated cost $ 53,045 FY 16/17 Remo emote te Read ead Meter erin ing g System em (Phase (Phase 2 of 3 3) Estimated cost $ 450,204 Ann nnuall ally Replac place e Valves es and d 600 00 LF of Water ter Main ins Estimated cost $ 54,636
FY 17/18 12” Transmission Main Loop (4000 LF, Railroad d Ave e to Northcre rest Dr.) Estimated cost $579,637 Remo emote e Read ead Meter terin ing g System tem (Phas (Phase e 3 of 3) Estimated cost $ 463,710 Ann nnuall ally Replac place e Valves es and d 600 00 LF of Water ter Main ins Estimated cost $ 56,275 Total Estimated 5 Year Capital Improvement Cost $4,569,880
Draft Public Works Water Capital Improvement Program Financial Summary Date: 9/16/13 Updated for Rate Study Revenue 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
$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
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 2013-14 fiscal year
Water Fund Reve venue/ nue/Exp Expens nse History ry 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 Projected Revenue Actual Expense Actual
2013-14 adopted budget deficit $(417,000) 2013-14 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
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)
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
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
Willdan Financial Services
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
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
Purpose of the Rate Study
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
Rate Study Approach
Rate Study Approach Planning Analysis Communication Project Initiation & Rate Setting & Summary Management Financial Plan Report • • • Data Collection & Customer Statistics Written Assessment • • System Revenue Public Presentations • Confirmation of Requirements Goals and • Integration of Objectives Capital • Frequent Improvement Plan Communication • Multi-year Financing Analysis Adopted Rates & • Alternatives Financial Plan Analyses Presentation to the City of Crescent City | Water Rate Study | 6
Data Reviewed
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
Key Assumptions
Key Assumptions • No Growth in customer base • Fund Balance Reserves – Build a 90-day Operating Reserve – Maintain Debt Service Reserve @ $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
Results
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
Results Existing Rates
Recommend
More recommend
