City of Woodbury Water & Sanitary Municipal Utility Facilities April 2016
Background • Remington & Vernick was authorized to study the utility system in 2015. • Objectives of Study: – Evaluate Existing Water & Sanitary Infrastructure – Develop a 20 Year Capital Improvement Plan (CIP) including costs – Establish impact of CIP on Utility Fund & Utility Rates – Develop a value of the Utility System – Establish if an Emergent Condition exists as defined by the law • Approach: – Inspected all utility facilities – mechanical, electrical & structural – Reviewed historic operations and maintenance records – Interviewed long time utility personnel – Reviewed utility financial records including historic investment in system
Objective #1 - Utility System Evaluation • Existing Water Utility Infrastructure: – Approximately 46 miles of water main, ranging in size from 4” to 16” diameter. – Most of the water main is original in nature dating back to pre-1926; over 60% of the water main is small diameter and does not meet today’s size requirements. – Five (5) potable wells to supply water. Only four (4) of the existing wells are active; one (1) well voluntarily shutdown due to PFNA contamination. – Two (2) of the wells are located 4.5 miles from Woodbury in Sewell. – All wells are located in Critical Area II as defined by the NJDEP. This area has pumping limitations imposed by the NJDEP due to over usage of the aquifer. – Due to pumping limitations, the City entered into an agreement with NJAW to buy water to fulfill peak demand requirements.
Utility System Evaluation • Existing Water Utility Infrastructure (continued) : – Two (2) water treatment plants. Both water treatment plants were constructed in 1997. Limited improvements have been made since the original construction. – One (1) 1 million gallon aboveground water storage tank located in Woodbury Heights, recently re-constructed in 2009. – Approximately 4000 water accounts. Water meters were replaced in 2008. Since installation, failures have developed with metering system. As a result, approximately 40% of accounts are estimated on a quarterly basis. – Meter failures result in a loss of revenue and additional manpower spent to read and replace failing meters.
Utility System Evaluation • Existing Sanitary Utility Infrastructure: – The Utility collects and conveys sewage to the Gloucester County Utility Authority (GCUA) for treatment. – Seven (7) sanitary lift stations; as old as 31 years. Maintenance and repair completed on an as needed basis. – Approximately 46 miles of terracotta sanitary main; most original dating pre-1926. – Terracotta pipe is prone to cracking and joint separation due to tree infiltration. This allows for infiltration of groundwater and additional fees paid to GCUA due to additional flow.
Utility System Evaluation • Overall Observations – Water & Sanitary: – Most of the above grade and below grade infrastructure is original in nature; currently over 90 years old. – Utility personnel have done a good job at maintaining clean and orderly facilities. However, sufficient funds are not allocated for the routine maintenance and necessary upgrades of the infrastructure. Work is typically completed as infrastructure fails or on an emergency basis. – Due to insufficient availability of funds and personnel, there is a lack of routine maintenance programs. – Lack of significant water main, hydrant and water service replacements relative to the age of the system. – Lack of significant sanitary main and sanitary lateral replacements or rehabilitation relative to the age of the system.
Objective #2 – 20 Year Capital Improvement Plan • Developed as a planning tool to begin the necessary improvements to the system for sustainable operation. • To be utilized to establish annual budgetary requirements for the City Utility. • Incorporates improvements to address deficiencies in the system. • Develops routine inspection and maintenance improvements of critical infrastructure elements (i.e. well pumps, sanitary lift station pumps, well inspection/redevelopment). • Begins conservative approach to the systematic and prioritized water main replacements. • Begins conservative approach to the systematic and prioritized sanitary main replacements / rehabilitation .
20 Year Capital Improvement Plan • Recommended review on annual basis and incorporation of additional water and sanitary piping, as feasible due to budgetary considerations. • Capital Improvements Plan does not incorporate Operations Budget or Debt Service. • Capital Improvements Plan results in: – Annual average Capital Improvement Costs = $440,000 – Annual average Water Distribution Improvement Costs = $933,000 – Annual average Sanitary Conveyance Improvement Costs= $879,000 – Total Average Annual Budgetary Considerations = $2,252,000
Objective #3 - Rate Study • A rate study was completed to establish the rates necessary to fund the capital improvements over the 20 year period. • The rate study considered and incorporated the following: – Current Debt Service – Utility Salary & Wages – Payments to GCUA – Statutory Expenditures – Maintenance & Repairs – Outlined Capital Improvements Plan – Establishment of a positive, but not excessive, fund balance for emergencies and a self liquidation utility
Rate Study • The rates were examined annually; over the 20 year analysis period. The objective is to fund the utility and maintain a fund balance for emergencies. • To fund the utility operations and capital improvement projects to sustain the utility, the following rate structure is suggested: – Years 2016 thru 2023 – Annual rate increase of 8.0% – Years 2024 thru 2035 – Annual rate increase of 3.0%
Rate Study • Noteworthy points : – The utility system improvements do not terminate in 2035; this is merely the end of the 20 year analysis period. – Routine life cycle improvements (i.e. pump replacements, well redevelopment) and maintenance improvements continue for the life of the utility. – The schedule for the water main and sanitary main replacement / rehabilitation was conservative. In fact, at the end of the 20 year analysis period, over 50% of the infrastructure in the ground will be over 120 years old. The theoretical life expectancy of pipe, in general, is 100 years.
Rate Study • Noteworthy points (continued) : – The study was completed assuming set revenue collected from the utility. However, the money collected is unpredictable and can vary greatly based upon weather. As an example, a wet summer produce less revenue for the utility due to less lawn watering, etc. – The continued maintenance, operation, replacements and upgrades to the utility will require re-examination at the end of the 20 years. – Rates will need to be re-examined to fund the continued improvements for the utility system.
Objective #4 - System Valuation • As part of this project, RVE was requested to complete a valuation of the system. This analysis puts a current worth on the system. • Each element of the infrastructure was incorporated into the valuation. • The system was analyzed utilizing original costs less depreciation methods. • Accordingly, each element of the infrastructure provides a value to the system. Since depreciation is considered, newer infrastructure provides a greater value in the system. • The valuation resulted in a current worth of $ 15,543,000.
Objective #5 - Emergent Condition Review • In 2015, P.L. 2015, Chapter 18, cited as the Water Infrastructure Protection Act (WIPA) was enacted. The WIPA established legislature which declared that the maintenance and operation of water and wastewater treatment and conveyance systems is vital to ensure the protection of water quality and clean drinking water in the State of New Jersey. • The law identified and defined conditions in a public utility system which may be classified as an “emergent condition”. An emergent condition for a utility system shall exists if the system meets one (1) of the following conditions:
Emergent Condition Review As defined by law: – The system is located in Critical Supply Area I or II; – The owner is a significant non-complier and has been the subject of enforcement; – There is a present deficiency or violation of maximum contaminant levels concerning the availability of potable water or concerning the provisions of water at adequate volumes or pressure or distribution or treatment of wastewater; – There is a demonstrated lack of historical investment, repair or sustainable maintenance; – The owner lacks the financial, technical or managerial capacity to adequately address any of the foregoing on a sustainable basis or operate the system in a way that supports economic activity on a sustainable basis.
Emergent Condition Review During the review, it was established that the City of Woodbury meets several of the Emergent Conditions as defined by the Water Infrastructure Protection Act (WIPA) as follows:
Emergent Condition #1 – Critical Supply Area II • All of the five (5) wells permitted by the City are in Critical Supply Area II as defined by the NJDEP & USGS. • Due to the reduction in allocation, the City entered into a contract with NJAW to purchase water to meet peak demands.
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