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Home My WebLink AboutAgenda Packet 04/22/2014 City Council Workshop l grill 22, 2014 Vo '"�� J � ,. �� ,rJ✓ , � //Gl��1�1 �'��6;��r��d��f� � ,:«..�� ill �t "' � � �' Introductions Review City' s long-range financial policies � Rate study process Overview of analyses to date � Updated study results water Wastewater , Combined Sewer Transfer Station Overflow � . ..�� couocnon Electric � Next Steps _m w 10 ... uuuuull u ... uuuillluuuui Iluuuuuu�uuu uuu uuui . uuui uuu uuu uuu IIIIIIIIIIIIIII�IIIIIII uuu uuui Iluuuuuuu uuui IIIIIIIIIIIIIII�IIIIIII uuu uuui lllllluuuui uuui uuui lllllluuuuuuu uuu luuuuuo� Iluuuuu uuuuuuuu luuuuuulll uuu uui . IIII�� Ability ,to V' Council shall consider the overall impact on the community and its "ability to ay" against the need to enact any tax, utility rate, or fee/charge increase. IIII�� Utility' V' Council shall require that utility rates be designed to reflect the underlying nature of the costs for each respective utility. Council may consider establishing differential utility rates for specified utility classes to achieve specific, identifiable goals such as reduced rates to encourage recycling of used tires or construction materials. IIII�� Implementation Utility' V' Council shall give preference to more frequent but smaller, incremental increases to rates, fees, and charges rather than less frequent but larger increases. V' In all cost-of-service analysis (COSA) efforts, preference shall be given to utilizing a "phased-in" approach for all future rate increases even if it may be necessary to sllo -do n or delay planned capital project implementation as part of an overall "ability to ay" analysis Within the C OS . i s � 0 Requirement CAPITAL; . n.� r�r��r�rn��nh� ��iu�i�iiiiiiir OPERATING BUDGETS CUSTOMER STATISTICS Today's Focus TRANSFER STATION WATER WASTEWATER Step 2: Cost CSO of Service COLLECTION ELECTRIC STORMWATER iuuuuHmrmm Step a,re .•°°°.R • NB�PiPNNiNNIIIIIIIIII�iNN ��S�l�nlllll�llllllll =��-F� Design i s • - - . . . - iiii Completed rate studies in 2013 Gates proposed for 2014-2016; approved for 2014 F ocli: on overall revenue needs for �f hies � Revisit cost of service in 2014 Vali<1afc; revenue ric:e<1ti for 2015 - 2016 AD New 20I4 buclac- used as baseline AD Incorporated changes to debt assumption= AD Added ,formv:afer Cost of Service Analysis (C:(JSA) AD Discuss cost allocation to customer classes/services Jpcctccl custorncr statistics for water utility to validate Jvincncl bends I CS G RO U P IPage 6 umu umu iii 11121!d Total Existing Revenue $ 5,812,371 $ 5,764,656 $7,000,000 Expenses $6,000,000 Cash Operating Expenses $ 4,756,047 $ 4,921,829 »>MORE, New & Existing Debt Service 875,802 856,548 $5,000,000 Rate Funded System Reinvestment 450,000 500,000 $4,000,000 Total Expenses $ 6,081,849 $ 6,278,377 $3,000,000 Surplus/Deficiency $ (269,478) $ (513,721) Annual Rate Adjustment 5.25% 5.25% $2,000,000 $1,000,000 $- 2015 2016 Rate Funded System Reinvestment w a New&Existing Debt Service Cash Operating Expenses —Total Existing Revenue Total Revenue After Rate Increase 2013 rate lobn hdIds v/" Some changes in (revenue and expenses v/" Phasing in system reinvestment v/" Meeting or exceeding fund balance targets 3CI System Reinvest t Debt Service Interfund Transfers City Taxes To $551,798 $79 „x State Taxes Power Chemicals Supplies & $72,606 Equipment Operations 001 V'u um uu I Vm µ, t s Residential $ 3,435,973 $ 3,256,710 $ (179,263) -5.22% Commercial / Municipal 1 ,442,405 1 ,719,096 276,690 19.18% Irrigation 1 141 ,636 307,759 166,124 1 1 17.29% Total 1 $5,020,014 $5,283,565 $ 263,551 1 5.25% IIII�� Water r cost of service considers tot all ease, peak ease, fire requirements an customer Casts IIII�� COSA suggests shift of revenue recovery from s dent ac l to Comm rcial and Irr gat on IIII�� Sim llar to r sull�ts from 2013 study V' Residentialle -4.05% V' Commercialle 17.03% V' Irrigation: 111 .35% IIII�� Consider COSA impal mentat on al�t rnativ s VVVVVVVVVVVVV ,N m �Illllli mn mn 30 ,N Residential 5.25% -5.22% 3.44% Commercial / Municipal 5.25% 19.18% 7.94% Irrigation 5.25% 117.29% 21.80% Total 5.25% 5.25% 5.25% w, . , � muum ullil it IIII,titi4titi��1111�1�lViii ��SS55��5�� Residential (450 CF) $ 43.95 $ 46.26 $ 41.66 $ 45.46 Difference $ 2.31 $ (2.29) $ 1.51 Commercial (730 CF) $ 46.70 $ 49.15 $ 55.66 $ 50.41 Difference $ 2.45 $ 8.96 $ 3.71 Irrigation (3,000 CF) $ 41.81 $ 44.00 $ 90.84 $ 50.92 Difference $ 2. 19 $ 49.03 $ 9. 11 Phase in over 5 years Staff iraCarnmends phase in alternative II CIS GW)UP IPage 10 I CS G RO U P IPage 11 umu umu I Total Existing Revenue $ 5,410,234 $ 5,430,238 $7,000,000 Expenses $6,000,000 „„„„„„„„, Cash Operating Expenses $ 4,865,372 $ 5,023,116 New & Existing Debt Service 916,432 1,017,788 $5,000,000 Rate Funded System Reinvestment - 400,000 $4,000,000 Total Expenses $ 5,781,804 $ 6,440,904 $3,000,000 Surplus/Deficiency $ (371,569) $ (1,010,666) $2,000,000 Annual Rate Adjustment 11.00% 9.00 .... .... .... $1,000,000 $- 2015 2016 Rate Funded System Reinvestment wawNew&Existing Debt Service Cash Operating Expenses —Total Existing Revenue Total Revenue After Rate Increase 2013 rate plan holds v/” Some changes in Irevenue and expenses v/” Phasing in system reinvestment v/” Meeting or exceeding fund balance targets „°uu III Rol F V m uu da. IIIIIVO 9�' System Reinvestment Debt Service 0$- $916,432 16% Interf$199,820 sfers ..., 3% City Taxes State&Glty $724,880 $$$6 69 State Taxes $161,728 3% Power b $265,035 5% 'Nk Chemicals $41,412 Supplies & 1% Equipment Operations $196,730 $425,287 3% 7% I � IIII uia ii0 IIIIIII dp �I 'I 111111 .. ^ml alp,.m Y i I m, 07� 111111� I � �i>7 11U1 nnllll wl. iol I r � i I L' Residential $ 3,552,806 $ 3,635,400 $ 82,594 2.32' Commercial 1,281 ,963 1,731 , 193 449,230 35.04% Total $4,834,769 $5,366,593 $ 531,825 11.00% IIII�� Wastewater COSA considers tot all flow, strength an customer Casts IIII�� COSA suggests shift of revenue recovery from s dent ac l to Comm rcial IIII�� Sim llar to r sual�ts from 2013 study V' Residentialle -1 .43% V' Commercial: 52.66% IIII�� Consider COSA impal mentat on XIternatives IV CIS GRC)UP IPage 14, m till pill iulluuui uuu uuui�Illllllluuui�uuu uuu uuu II111IIIIIIIIIIIIII�111111 uuui uuui ��lllluui Ill uuu a Illluiiiii�l mN my a..., �Illllli mn mn p Residential 11.00% 2.32% 9.96% Commercial 11.00% 35.04% 13.88% Total 1 11.00% 1 11.00% 11.00% Residential < 430 CF $ 43.95 $ 48.78 $ 44.97 $ 48.33 Difference $ 4.83 $ 1.02 $ 4.38 > 430 CF $ 46.70 $ 51.84 $ 47.79 $ 51.35 Difference $ 5. 14 $ 1.09 $ 4.65 Commercial (730 CF) $ 41.81 $ 46.40 $ 56.45 $ 47.61 Difference $ 4.60 $ 14.65 $ 5.80 Phase in over 5 years Staff IraCarnmends phase in alternative Ili GS GW)UP IPage 15 wµ , $2,500,000 Total Existing Revenue $ 1,998,856 $ 2,007,925 Expenses $2,000,000 Existing Debt Service $ 1,434,310 $ 1,430,717 New Debt Service 218,333 508,026 $1,500,000 Rate Funded System Reinvestment - - Total Expenses $ 1,652,643 $ 1,938,744 $1,000,000 Surplus/Deficiency $ 346,213 $ 69,181 Annual Rate Adjustment 0.00% 0.00 $500,000 $_ 2015 2016 Existing Debt Service wom New Debt Service —Total Existing Revenue 2013 rate plan holds v" No Irate change through 2016 v" 2017 may have a 14% increase for new debt service associated with Phase 2 CSO improvements g IV CS GROUP F:Iaege 16 Yi I m, J1 Residential 11U1 �IIII w.. ion � r � i I W Residential $ 1,494,505 $ 1,340,582 $ 153,923 -10.30% Commercial 484,468 638,391 (153,923) 31 .77% Tota 1 $ 1,978,973 $ 1,978,973 $ - 0.00% Shift of cost recovery from si n�tial to C o rcial ................................................................................................................................................................................................................................................................................................................................................................................. I asis Residential Commercial Wastewater COSA -10.30% 31 .77% < IRecoirnirneinded Flow -16,51% 50.93% Assets -17.16% 52.93% C S rate increase not necessary untill 2017 os�t of service adjustments cou�ld be phased in sooner IV GS G 0 U P IPage 17 I ,N m �Illllli mn mn ,N Residential 0.00% -10.30% 0.00% Commercial 0.00% 31.77% 1 8.26% Total 1 0.00% 1 0.00% 1 4.47% IEM �mn mn mw a., a�lllllll��` �Ni Qp Residential < 430 CF $ 18.00 $ 18.00 $ 16.15 $ 18.00 Difference $ - $ (1.85) $ - > 430 CF $ 20.10 $ 20.10 $ 18.03 $ 20.10 Difference $ - $ (2.07) $ - Commercial (730 CF) $ 16.45 $ 16.45 $ 21.68 $ 19.46 Difference $ - $ 5.23 $ 3.00 IIII�� Staff recommends has -ire to begin adjusting Comm rcial rates over three years V' Adjusting cc)rr merciall rate earlier results in r dditionall revenue V' Lowers over allll rate increases needed in the future lu Total Existing Revenue $ 6,038,326 $ 5,982,462 $8,000,000 Expenses $7,000,000 , � Cash Operating Expenses $ 4,732,119 $ 4,886,559 $6,000,000 Existing Debt Service 817,752 817,752 wwwwwwwww°°°°°°°wwwwwwwwwwwww"�' New Debt Service - 933,925 $5,000,000 Post Closure Reserve Transfers 136,402 164,540 $4,000,000 Total Expenses $ 5,686,273 $ 6,802,775 $3,000,000 Surplus (Deficiency) $ 352,054 $ (820,314) $2,000,000 Additions to Meet Coverage - (410,224) $1,000,000 Surplus (Deficiency) $ 352,054 $ (1,230,538) Annual Rate Adjustment 10.20% 10.20% 2015 2016 2013 Rate Strategy 14.65% 6.10% Cash Operating Expenses Kim Existing Debt Service mom New Debt Service ��A Post Closure Reserve Transfers m=dAdditions to Meet Coverage -Total Existing Revenue Total Revenue After Increase IIII�� 2013 rate pIlan can be adjusted V' Interest capitalized in 2015 V' Revenue bond coverage target of 1 .75 V' Past closure fund transfers required V' Meeting or exceeding fund balance targets General&m Salaries&Benefits Administrative $297,014 Debt Service 5% $423,480 $817,752 Operations Supplies&Equipment 15% $92,649 $11,639 0% ......... ... ...... Interfund Transfer $145,981 3% / /jj Dui a�Iln rr' !%i:j ��1`/ � ail City Taxes f ! j%/j $468,944 ,/ /j 8% State Taxes $267,439 5% Contractual $3,092,598 55% I GS G RQ U P F:Iage 21 iiiiiiiuuuuu I VIII mid $/Ton Ilia N mu m4 Tax Exempt Transfer Station: MS W $ 139.13 $ 131.49 $ 139.13 $ 15.71 154.84 YW 29.09 71.05 29.09 29.09 Biosolids 74.06 70.73 74.06 74.06' Self Haul MS W 170.11 235.62 170.11 19.11 189.22 Tires 170.11 334.62 170.11 19.11 189.22 Asbestos 447.24 483.30 447.24 447.24 Contaminated Soils 237.76 244.18 237.76 237.76 Yard Waste 47.20 169.60 47.20 47.20 Metals and White Goods 72.29 216.96 72.29 72.29 Blue Mountain 1 237.40 247.21 1 237.40 26.48 263.88 N otes: Self Haul includes a minimum fee charge based on type of service. IIII�� Transfer station COSA considers fac llity operations, contract casts - isposal and transport COSA update consistent with 2013 findings V' Continues to promote yard waste, ratans and white goods recycling IIncorporated IL and uff surcharcg. II CS GR0UP I a e 22 I CS G RO U P IPage 23 µ uu MI' m $4,500,000 .... .... .... .... .... .... .... Total Existing Revenue $ 3,536,261 $ 3,533,858 $4,000,000 ..�� . I �p Expenses �; Cash Operating Expenses $ 1,848,498 $ 1,839,788 $3,500,000 Administrative 171,795 176,949 $3,000,000 Contractual 629,628 642,982 $2,500,000 Transfer Station 1,395,424 1,529,712 $2,000,000 Total Expenses $ 4,045,345 $ 4,189,431 $1,500,000 Surplus (Deficiency) $ (509,084) $ (655,573) $1,000,000 Annual Rate Adjustment 6.50% 6.50% $500,000 2013 Rate Strategy 5.60% 5.60% 2015 2016 Transfer Station MONContractual mom Administrative M=Cash Operating Expenses -Total Existing Revenue Total Revenue After Increase IIII�� llic ht increase to 2013 rate study V' Increase in operati ng Costs (equipment replacement/trucks) V' Reduction Of 2014 beginning balances compared t0 forecast V' Continue t0 use fund balances t0 moderate rate impacts g FIGS GROUP F:Iage 24 i s - - iiii Interfund Transfers City Taxes 478,029 $217,141 12% State Taxes 5% General& Administrative State/C71 $442,689 Operations Contractual I I I I I I I film= 0 1 Residential - Weekly $ 32.17 $ 32.48 $ 33.27 $ 1.37 34.64 ' Residential - EOW 20.35 23.16 20.74 0.89 21.63 Residential - Yard Waste 8.40 8.39 8.41 8.41 Commercial - 90g 26.89 36.41 29.01 1.21 30.21 Commercial - 300g 81.51 81.69 82.93 3.27 86.20 Schools - Recycling 13.80 4.71 13.80 13.80 COSA update consistent with l 3 findin v" Promotes every Other Week it sidential pick-up based On previous Council direction v/` Commercial costs are being has d in tO full COSA by 201 Incorporated Land III ff surcharge II CIS G 0 U P IPage 26 I CS G RO U P IPage 27 umu umu Total Existing Revenue $ 20,317,288 $ 20,374,054 $25,000,000 - Expenses $20,000,000 � Cash Operating Expenses $ 9,522,585 $ 9,882,573 Power 10,970,874 11,635,379 $15,000,000 Existing Debt Service 772,493 766,780 $10,000,000 System Reinvestment 1,036,634 1,049,051 Total Expenses $ 22,302,586 $ 23,333,783 $5,000,000 .... .... ........ .... Surplus (Deficiency) $ (1,985,298) $ (2,959,729) 2015 2016 Annual Rate Adjustment 6.50% 6.50% 2013 Rate Strategy 6.50% 5.75% Cash Operating Expenses Power um Existing Debt Service System Reinvestment —Total Existing Revenue Total Revenue After Increase IIII�� IIicght adjustment to 2013 rate pbn in 2016 V' Reduction in hood forecast based on updated trends V' Using fund balances to moderate rate increases V' Operating reserves drop below target Revell - rebuilding to target by 2019 g Ii GS GR0UP F:1aege 28 ww uuuuuu �� uu� System Reinvestment Debt Service $1,036,634 5% $772,493 Salaries&Benefits Interfund Transfers 3% m°�'Y� ° $2,794,298 $610,326 12% 3% % City Taxes ,�� $1,296,322 p ' P, b% Tray/i /r General& State Taxes Administrative $834,574 / ta Ci t Y Tax // ail udy i � $2,8940 4% 3% te 1 $2 134 696 s 14% nr,�,,� m Il llllllllllilllllllllllllllllll in oe�n Operations $528,802 2% Supplies&Equipment 1 J $591,323 3% Contractual $10,970,874 49% ww ,,,. uuuuuu o Residential $ 10,587,520 $ 11,553,750 $ 966,230 9.13% General Service 2,709,853 2,773,974 64,120 2,37% G.S. - Demand 3,976,948 4,239,344 262,396 6.60% G.S. - Demand Primary 590,744 542,109 (48,635) -8.23% Primary 1,492,145 1,384,688 (107,457) -7,207o Municipal Water Pumping 182,799 206,794 23,995 13.13% Nonprofit 263,927 253,239 (10,689) -4.05% Total $ 19,964,197 $ 21,261,870 $ 1,297,673 6.50% N otes: Additional discount and lighting classes available. IIII�� COSA considers tot all ease, peak ease, fac llity requirements an customer casts COSA update consistent with 2013 findings V' Casts shift from Generall Service Primary, Primary and Non-Profit classes IIII�� Consider impal mentat on alt rnativ s Ii CS G 0 U P Page 30 m I IIIIIIIIIIII I �i IIII � olio � u � m IIIIIIIIIIII III Residential 6.50% 9.13% 8.71% General Service 6.50% 2.37% 2.37% G.S. -Demand 6.50% 6.60% 6.60% G.S. -Demand Primary 6.50% -8.23% 0.61% Primary 6.50% -7.20% 0.61% Municipal Water Pumping 6.50% 13.13% 10.00% Nonprofit 6.50% -4.05% 0.61% Total 6.50% 6.50% 6.50% Residential $ 104.39 $ 111.18 $ 113.92 $ 113.49 Difference 6.79 9.53 9.10 General Service $ 178.61 $ 190.22 $ 182.84 $ 182.84 Difference_ 11.61 4.23 _4.23 G.S. -Demand $ 1,633.10 $ 1,739.25 $ 1,740.85 $ 1,740.85 Difference 106.15 107.75 107.75 G.S. -Demand Primary $ 8,756.82 $ 9,326.01 $ 8,035.89 $ 8,810.12 Difference 569.19 (720.93) 53.30 Primary $ 34,881.22 $ 37,148.50 $ 32,369.24 $ 35,093.53 Difference 2,267.28 (2,511.98) 212.31 Municipal Water Pumping $ 8,176.32 $ 8,707.78 $ 9,249.59 $ 8,993.96 Difference 531.46 1,073.26 817.63 Nonprofit $ 389.90 $ 415.24 $ 374.11 $ 392.27 Difference 25.34 (15.79) 2.37 Notes. Additional discount residential rates and lighting classes available. Staff iraaarnmends phase in alternative iI , ��ROU IPage 31 Council direction Water Wastewater CSO Electric � Other? I CS G RO U P IPage 33