Join oint me meeti ting of of th the tte e (P Engineerin ing & g & Publ blic ic Works ks C Commi mmitte (PW-14-2015 15) an and ttee (CE Corpora orate te & & Emerge rgency S Servic ices Commi mmitte (CES-13 13-2015) 2015) November 18, 2015
User Fees and Urban Service 3.3% Area Charges increase for 2016 $18 M Capital Budget for 2016 $138 M 10-Year Capital Forecast Contributions to Reserves in 2016 $6.9 M 10-Year Contribution to Reserves $75 M 10-Year Infrastructure Deficit ($43.3 M) 2
Increase in Forecast Reserves after +$37 M 10 years External Debt Repayment in 2016 $6.2 M External Debt Reduction Forecasted ($41 M) over 10 years (principal) Internal Debt Repayment in 2016 $0.6 M Internal Debt Forecasted over 10 +$28 M years (principal) 3
2016 Net Category Levy Net Levy Account Category Yr-over-Yr Increase/ Impact Change % (Decrease) Total Expenditures $637,544 2.4% 5.9% Total Revenue Sources (461,179) 3.0% (4.3%) Net Levy Impact 176,365 1.6% Assessment Growth (55,336) (0.5%) Net Levy Impact After Growth $121,029 1.1% Net Levy below guideline of 3.0% 1% levy = $108.5 k 5
Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 16 6
Allocation of Water and Wastewater Revenue for the Typical User Urban Service Fixed User Fee Area Levy (for 18.5% (2015: $200,000 15.3%) property) 30.0% (2015: 30.6%) Volumetric User Fee 51.5% (2015: 54.1%) Fixed User Fee: $ 5.90 Volumetric User Fee: (1.23) Urban Service Area Levy: 0.51 Total Monthly Increase: $ 5.18 7
Year-over-Year % User Fee Increases Historical Review 40.0% of Rates & Taxes 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Water % Increase Wastewater % Increase Total % Increase Total Water & Sewer Monthly Charges $100.00 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Water $53.18 $63.41 $64.83 $64.84 $64.37 $65.99 $66.65 $66.81 $68.36 $71.13 Wastewater $68.01 $76.71 $77.38 $83.94 $81.70 $86.15 $86.10 $87.17 $87.96 $90.37 8
2014 2014 2013 2014 2013 Residential Water/ Est. Avg. Water/ Est. Avg. Water/ Wastewater Household Wastewater Household Wastewater as a % of Income Burden Income Costs Household Ranking Ranking 200 m3 Income Gravenhurst Low $71,130 $1,110 1.6% High Huntsville Mid $85,984 $1,110 1.3% High Bracebridge Mid $85,045 $1,110 1.3% High Average $93,038 $858 1.0% Median $86,773 $821 1.0% Minimum $55,056 $354 0.3% Maximum $174,855 $1,520 1.8% BMA Municipal Study 2015, pages 369-371 9
Consumption Levels ◦ Decline in consumption levels since 2005. ◦ Conservation efforts is one factor. ◦ Weather also has an impact. ◦ 2016 consumption target is 2.665 million cubic metres (down 3.1%). ◦ Consistent with 2015 levels, but assumes additional consumption from replacement of over 1,200 aging meters. ◦ 50% of the combined rate increase due to consumption drop. Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 2 10
Operating expenses, net of support services, are 2.9% above 2015 Materials & Supplies increases = 2.8% or $116k Purchased Services increases = 13.1% or $227k Finance Charges/Reserves increases = 2% or $267k Net Support Services increases = 1.4% or $26k 11
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Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 10 13
Budget Drivers – Water Personnel increase = $22,067 ◦ Projected wage and benefits costs ◦ Shifting labour to water services from wastewater ◦ Reallocation of Engineering administration, design and facilities services = ($33k) Materials & Supplies = $68,585 ◦ Meter replacements and equipment repairs - $43k ◦ Electricity costs rising 2% = $16k ◦ Chemical costs rising = $17k Purchased Services increase = $132,890 ◦ Subcontractor costs fluctuate year to year based on preventative maintenance scheduled Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 9 14
Budget Drivers – Water Finance Charges / Reserves increase = $158,765 ◦ Debt repayments decreasing by $497k ◦ Reserve contribution increased by $646k to offset drop in debt repayments plus 5.5% increase Net Service Charges increase = $22,240 ◦ Fleet and insurance costs are main drivers Revenue increase = $319,617 ◦ User fees increasing $377k ◦ Local improvements decreasing ($59k) Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 9 15
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Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 14 17
Budget Drivers – Wastewater Personnel decrease = $20,715 ◦ Projected wage and benefits costs ◦ Shifting labour from wastewater services to water services ◦ Reallocation of Engineering administration, design and facilities services = ($24k) Materials & Supplies increase = $47,567 ◦ Electricity costs rising 2% = $37k Purchased Services increase = $94,150 ◦ Subcontractor costs fluctuate year to year based on preventative maintenance scheduled = $95k Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 13 18
Budget Drivers – Wastewater Finance Charges / Reserves increase = $108,205 ◦ Debt repayments decreasing by $1M ◦ A/R write-offs decreasing to reflect actuals $20k ◦ Reserve contribution increased by $1.155M to offset drop in debt repayments plus 5.5% Net Service Charges increase = $3,790 ◦ Fleet reduction (offset in water) = ($9k) ◦ Insurance increase = $27.5k ◦ Other allocations = ($30k) Revenue increase = $141,562 ◦ User fees increasing $257k ◦ Local improvements decreasing ($116k) Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, pages 13 19
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2016 Capital Financing - Water • Total 10-year Draft Capital Budget & Forecast is projecting $30.7 million in gross expenditures (2015 - $31.1) • The largest source of funding continues to be from the internal reserve funds at $17.6 million (2015 - $17.3) • Sustainable Infrastructure at $8.4 million Reference: CES-13-2015-1 - Water & Wastewater • Development Charges Revenue: Treasurer’s Report, page 17 • $2.2 million in 2016 (2015 - $2.1) • There are no shortfalls in development charges revenue assumed in the 10- year forecast that require financing through internal debt over the next 10 years. 21
Water: 2014 TCA Historical Costs Land & Site Improvements $5.9 Distribution $112.9 Treatment $63.9 Machinery & Equipment $32.2 Total Cost $214.9 22
Major Water Projects 2016 – 2025 Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 20 23
2016 Capital Financing - Wastewater • Total 10-year Draft Capital Budget & Forecast is projecting $106.9 million in gross expenditures (2015 - $ 105.7 ) • The projects for the Mountview and Golden Pheasant plants in Huntsville represent $65 million of total • Infrastructure Funding Deficit is $43 million. This represents the grant funding necessary to proceed with Huntsville project • Internal reserve funds are financing $29.2 million (2015 - $26.3) from Wastewater capital Reference: CES-13-2015-1 - Water & Wastewater and Environmental reserves Treasurer’s Report, page 21 • Borrowing from Debt Reduction is $19.3 million to finance Huntsville project • Sustainable infrastructure is $7.6 million • Development Charges Revenue reduced to $5.3 million ($5.6 million in 2015) 24
Wastewater: 2014 TCA Historical Costs Land & Site Improvements $8.9 Collection $125.5 Treatment $81.7 Machinery & Equipment $53.2 Total Cost $269.2 25
Major Wastewater Projects 2016 - 2025 Reference: CES-13-2015-1 – Water & Wastewater Treasurer’s Report, page 24 26
Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 27 27
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Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 29 29
Reference: CES-13-2015-1 - Water & Wastewater Treasurer’s Report, page 30 Wastewater - Forecasted Payments $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Existing Debt - External Existing Loans - Internal Forecasted Loans - Internal Reference: CES-13-2015-1 - Water & Wastewater 30 Treasurer’s Report, page 31
Review of condition and estimated remaining life of assets Review levels of service Review replacement cost valuations Integrate with capital forecast in the budget cycle AMP indicates revenue sources need to increase: Water: 2.10% - 8.78% per year Wastewater: 2.47% - 9.85% per year 31
The 2016 Draft Water and Wastewater Budget has been prepared excluding: ◦ Amortization: Estimated at $5.6 million and $8.2 million for Water and Wastewater, respectively; and ◦ Post-employment benefits: nominal Net deficit with Full Accrual Budgeting: ◦ Water is $1.1 million; and ◦ Wastewater is $0.6 million Conclusion: contributions to reserves are not sufficient to replace assets at historical values 32
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