2021 Capital Improvements Plan Topics 1. Annual expenditures for - - PowerPoint PPT Presentation

2021 Capital Improvements Plan

Topics

• 1. Annual expenditures for planning period
• 2. Cash reserves projections
• 3. Connection charge projections
• 4. Financing alternatives

Annual Expenditures

$36 $20 $15 $9 $8 $23 $25 $41 $19 $29 $30 $19 $27 $0 $10 $20 $30 $40 $50 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Millions

Actual Expenditures Budgeted or Proposed Expenditures

$44

District Funds

Connection charges (7%) Direct transfer (2%) Clean Water Fund loan (91%) Operating Fund Capital Fund Interest (<1%) Debt Service Fund Service charges

Transfer from Operating Fund to Capital Fund

Ye Year 2020 Capital B Budget (Actuals t throug ugh h 2019 2019) Pr Prop

• pos
• sed 2

2021 Capi pital Impr provem emen ents P s Plan n Differ eren ence e

2016 $0 2017 172,000 2018 2019 1,200,000 2020 915,000 2021 961,000 $1,486,000 $525,000 2022 1,009,000 2,001,000 992,000 2023 1,059,000 2,506,000 1,447,000 2024 1,112,000 3,021,000 1,909,000 2025 1,168,000 3,542,000 2,374,000 2026 1,226,000 4,040,000 2,814,000 2021 2021-2026 T 2026 Total $6, $6,535, 535,00 000 $16, $16,596, 596,000 00 $10, $10,061, 061,000 00

Cash Reserve Projections

$0 $2 $4 $6 $8 $10 $12 $14 $16 2020 2021 2022 2023 2024 2025 2026

End of Year Cash Balance

Millions Increased Cash Transfers No Increase in Cash Transfers Minimum Balance

Connection Charge Projection

$0 $1 $2 $3 $4 $5 $6 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Millions Historical Connection Charges 2020 Budget Projection 2021 CIP Projection

Connection Charges – 2020

$2.8 $1.7 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Millions 2020 2019 5-Year Average 2020 Budget Target 2020 Revised Budget Target

Outstanding Connection Charges

SewerPlanNum DateApproved DateExpired CalcBalanceDue DeedRestriction Project/Comments 2020-007 1/30/2020 7/30/2020 Yes 2020-008 1/30/2020 7/30/2020 Yes 2020-021 3/12/2020 9/12/2020 148,730.19 Covered Bridge Resdences of Bear Tree Farms 2020-027 3/26/2020 9/26/2020 26,194.06 Village at Autumn Lake Phase 10 2020-034 4/16/2020 10/16/2020 58,853.31 Rockstream Drive Assessment District - 2020 2020-035 4/16/2020 10/16/2020 49,851.41 Stoner Prairie Phase 3 2020-042 4/30/2020 10/30/2020 Yes 2020-045 4/30/2020 10/30/2020 14,561.01 Vang Homesites 2020-055 5/28/2020 11/28/2020 52,424.81 The Meadowlands Phase 11 2020-063 6/11/2020 12/11/2020 78,007.20 Yes The Woods at Cathedral Point Phase 1 2020-064 6/11/2020 12/11/2020 274,206.48 Yes Whispering Coves Phase 1 2020-071 6/25/2020 12/25/2020 644,386.17 Yes Fox Hill Estates Phase 3 TOTAL 1,347,214.64

Financing Alternatives

Transfer from Operating Fund to Capital Fund Transfer from Operating Fund to Debt Service Fund Projected increase in annual service charges Scenario Description

• Alt. No.

2021 2021-2026 2021 2021-2026 2021 2021-2026 Six Year Debt Incurred Capital Reserve Minimum Met? CIP (base) $1.486 M $16.596 M $16.552 M $111.2 M 3.1% 3.0% $126.5 M Yes Reduce transfer to Debt Service Fund 1 $1.486 M $16.596 M $16.027 M $107.7 M 1.8% 2.8% $126.5 M Yes No Increases in transfer to Capital Fund 2 $0.961 M $6.535 M $16.552 M $111.2 M 1.8% 2.0% $136.5 M No

Interest Rates for Clean Water Fund loans

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

1993 1995 1997 1998 2000 1999 2002 2002 2006 2006 2009 2007 2010 2011 2011 2013 2015 2014 2016 2015 2015 2018 2017 2018 2018 2019

Debt Financing

Advantages Disadvantages

• Large capital costs can be

spread out over time

• Interest payments, even at

subsidized rates.

• Future users participate in

cost of improvements

• Debt burden on future

users, limits flexibility

• Subsidized interest rates

through Clean Water Fund

• Future of Clean Water Fund

is not guaranteed

• Steady revenue source for

repayment of loans via service charges

• High debt to expense ratio

hurts bond rating

Next Steps

• Accept draft 2021 CIP for planning purposes
• Formal approval of Capital Budget in October
• Project details available on District website

http://www.madsewer.org/Planning/Budget- Finance

Questions?

Thank you!

Cash spending in 2021

Project 2021 Spending Metrogro Applicators & Equipment $0.9 M CMMS Replacement $1.3 M Pump Station 17 Relief Force Main – Phase 1 $2.8 M Total $5.0 M

Service Charge Impacts

Ye Year Operating ng F Fund nd Support f for the Capital P Pro rogram m (Fro rom S m Service Charges) es) Increa ease O se Over er P Prior Ye Year Impl plied ed P Percentage e Increa ease i se in n Servi vice e Charge Reve venue nue O Ove ver Pr Prior

• r Y

Year 2016 $12,909,000 $1,066,000 4% 2017 13,856,000 947,000 3% 2018 14,505,000 649,000 2% 2019 16,358,000 1,853,000 5% 2020 16,755,000 397,000 1% 2021 18,038,000 1,283,000 3% 2022 19,298,000 1,260,000 3% 2023 20,582,000 1,283,000 3% 2024 21,910,000 1,328,000 3% 2025 24,667,000 1,371,000 3% 2026 $24,667,371 $1,386,000 3%