Town of Eagle Public Hearing Variable Surcharge & Water Rate Increases BRANDY REITTER, TOWN MANAGER JILL KANE, FINANCE DIRECTOR/TREASURER BRYON MCGINNIS, PUBLIC WORKS DIRECTOR
Process July 7, 2017 - Water Rate and Tap Fee Study Completed January 9, 2018 - Water Rate and Tap Fee Study Presentation by SGM January 18, 2018 - Open House on LBWTP January 23, 2018 - Revised Variable Surcharge and Rate Proposal February 13, 2018 - Third party review of Variable Surcharge and Water Rate proposal March 13, 2018 – Raftelis and SGM rerun rate model to include updated assumptions March 27, 2018 – Board approves new proposed Variable Surcharge and Water Rates April 10, 2018 – Public Hearing on Ordinance adopting new surcharge and water rates 2 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Current Assumptions • Surcharge assigned to 3,100 units instead of number of accounts at 2,500 • Average Surcharge is $12.50 (surcharge is in addition to the base fee and usage charge) • Option 1 (implement the conservation oriented rate structure change over 2018 and 2019 and start charging for water in Tier 1) • Plan for 5% conservation from 2017 to 2023 (half of the 5-Year Water Efficiency Planning Strategy goal) • Plan for 90 days of O&M expenses as the minimum O&M reserve balance • Plan for 3% rate increases in 2020 and on 3 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Current Assumptions Approximate Resulting Average Surcharge under several options With 9 months of O&M With 3 months of O&M Water Conservation Planning Scenario Option 1 Option 2 Option 1 Option 2 3.0% 3.5% 3.0% 2.5% 3.5% 3.0% Long term annual rate increase: 2020 and on 2021 and on 2020 and on 2020 and on 2021 and on 2021 and on No water conservation. No reduction in rate $ 10.00 $ 18.00 $ 8.00 $ 13.50 $ 15.50 $ 20.50 revenue due to conservation. Half of Water Efficiency Plan Goal - $ 12.50 5% conservation from 2017 to 2023. $ 14.00 $ 23.00 (chosen $ 18.00 $ 21.00 $ 25.50 1% conservation per year over 5 years. option) Water Efficiency Plan Goal - 10% conservation from 2017 to 2023. $ 18.00 $ 28.00 $ 16.25 $ 22.00 $ 26.00 $ 30.00 2% conservation per year over 5 years. * 3.0% and 3.5% annual rate increases are what was in the March 22, 2018 Variable Surcharge Update Memo * 2.5% and 3.0% annual rate increases are what was in the January 4, 2018 Variable Surcharge Study 4 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Proposed Variable Surcharge Average Monthly Usage (gal) Avg. Residential Monthly Monthly Bill 2018 Surcharge Usage Percentile Non-Residential Plant Category Range Residential (Commercial, etc.) Surcharge 0 - 20% $49 1: Low Usage Lowest 20 th 0 – 4,100 gallons 0 – 1,600 gallons $ 8.15 (based on 4,000 percentile gal) $76 2: Average 4,100 - 13,800 1,600 – 46,200 20 - 80% $ 12.50 (based on 8,900 Usage gallons gallons gal) 80 - 100% $176 > 13,800 > 46,200 Highest 20 th 3: High Usage $ 17.00 (based on 21,200 gallons gallons percentile gal) 5 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Proposed In-Town Water Rates Monthly Base Charge per Rate Class Fee Tier Usage Block (gal) 1,000 gal Tier 1 0-6,000 $ 1.50 Residential In Town without Tier 2 6,001-17,000 $ 6.62 $35.29 accessory dwelling unit Tier 3 17,001-28,000 $ 9.92 Tier 4 28,000 + $ 14.88 Tier 1 0-8,000 $ 1.50 Residential In Town with Tier 2 8,001-17,000 $ 6.62 $44.27 accessory dwelling unit Tier 3 17,001-28,000 $ 9.92 Tier 4 28,000 + $ 14.88 Tier 1 0-6,000 $ 1.50 Commercial In Town $35.29 Tier 2 6,000 + $ 6.62 Tier 1 0-6,000 $ 1.50 Government, Schools, & $35.29 Churches In Town Tier 2 6,000 + $ 6.62 6 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Proposed Out-of-Town Water Rates Monthly Base Charge per Rate Class Fee Tier Usage Block (gal) 1,000 gal Tier 1 0-6,000 $ 2.25 Residential Out of Town Tier 2 6,001-17,000 $ 9.89 without accessory dwelling $52.94 Tier 3 17,001-28,000 $ 14.84 unit Tier 4 28,000 + $ 22.25 Tier 1 0-8,000 $ 2.25 Residential Out of Town with Tier 2 8,001-17,000 $ 9.89 $66.45 accessory dwelling unit Tier 3 17,001-28,000 $ 14.84 Tier 4 28,000 + $ 22.25 Tier 1 0-6,000 $ 2.25 Commercial Out of Town $52.94 Tier 2 6,000 + $ 9.89 Government, Schools, & Tier 1 0-6,000 $ 2.25 $52.94 Churches Out of Town Tier 2 6,000 + $ 9.89 7 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Cash Flow Management Scenario proposed on March 27 did not include a 22-year term – only original 20-year assumption If not corrected, the following will occur: ◦ We will meet 66% of our reserve requirement or $2.66M in 2022 ◦ Recommended reserve requirement is $3.99M ◦ Critical year balance is in 2035 ◦ Account balance comes closest to minimum recommended reserve balance ◦ 2022 – 2028 and 2035 - 2036 8 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
9 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Cash Flow Scenarios Option One Delay all capital improvement projects (except for the LBWTP plant construction and the Violet Lane Loop waterline project) by 2 years. Keep the average surcharge at $12.50, and same rate increases as described above. 10 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Cash Flow Scenarios Option Two Delaying certain capital improvement projects by 1 year and adjust the planned rate increases for 2020, 2021, and 2022. Keep the average surcharge at $12.50. Proposed rates in 2020 could be 3% - $4.5% 11 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Cash Flow Scenarios Option Three No delay in capital improvement plan. Adjust the planned rate increases for 2020, 2021, and 2022. ◦ Increase the surcharge to $17.50, water rates to 5%, or ◦ Increase the surcharge to $14.50, water rates to 7% 12 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Recommendations Option Two - Delay certain capital improvement projects by 1 year and adjust the planned rate increases for 2020, 2021, and 2022. Keep the average surcharge at $12.50 and increase rates to 3% - 4.5%. ◦ Keeps proposed ordinance the same ◦ Look at rates in 2019 ◦ Delay aligns with staffing capacity ◦ Save tap fees to offset capital reducing the pressure on rate increase 13 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Adopt ordinance 11-2018 Approve Guaranteed Maximum Price Finish securing financing through SRF and sell bonds May 24, 2018 Next Steps Award construction contract early May Implement rate increase July 1, 2018 Construction begins June/July 14 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
Questions? 15 4/10/2018 TOWN OF EAGLE PUBLIC HEARING - VARIABLE SURCHARGE AND WATER RATE INCREASES
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