Town of Eagle Public Hearing Variable Surcharge & Water Rate - - PowerPoint PPT Presentation

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

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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

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Water Conservation Planning Scenario Approximate Resulting Average Surcharge under several options With 9 months of O&M With 3 months of O&M Option 1 Option 2 Option 1 Option 2 Long term annual rate increase: 3.0% 2020 and on 3.5% 2021 and on 3.0% 2020 and on 2.5% 2020 and on 3.5% 2021 and on 3.0% 2021 and on No water conservation. No reduction in rate revenue due to conservation. $ 10.00 $ 18.00 $ 8.00 $ 13.50 $ 15.50 $ 20.50 Half of Water Efficiency Plan Goal - 5% conservation from 2017 to 2023. 1% conservation per year over 5 years. $ 14.00 $ 23.00 $ 12.50 (chosen

• ption)

$ 18.00 $ 21.00 $ 25.50 Water Efficiency Plan Goal - 10% conservation from 2017 to 2023. 2% conservation per year over 5 years. $ 18.00 $ 28.00 $ 16.25 $ 22.00 $ 26.00 $ 30.00 * 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

Current Assumptions

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Proposed Variable Surcharge

Surcharge Category Usage Percentile Range Average Monthly Usage (gal) Monthly Plant Surcharge

• Avg. Residential

Monthly Bill 2018 Residential Non-Residential (Commercial, etc.) 1: Low Usage 0 - 20% Lowest 20th percentile 0 – 4,100 gallons 0 – 1,600 gallons $ 8.15 $49 (based on 4,000 gal) 2: Average Usage 20 - 80% 4,100 - 13,800 gallons 1,600 – 46,200 gallons $ 12.50 $76 (based on 8,900 gal) 3: High Usage 80 - 100% Highest 20th percentile > 13,800 gallons > 46,200 gallons $ 17.00 $176 (based on 21,200 gal)

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Proposed In-Town Water Rates

Rate Class Monthly Base Fee Tier Usage Block (gal) Charge per 1,000 gal Residential In Town without accessory dwelling unit $35.29 Tier 1 0-6,000 $ 1.50 Tier 2 6,001-17,000 $ 6.62 Tier 3 17,001-28,000 $ 9.92 Tier 4 28,000 + $ 14.88 Residential In Town with accessory dwelling unit $44.27 Tier 1 0-8,000 $ 1.50 Tier 2 8,001-17,000 $ 6.62 Tier 3 17,001-28,000 $ 9.92 Tier 4 28,000 + $ 14.88 Commercial In Town $35.29 Tier 1 0-6,000 $ 1.50 Tier 2 6,000 + $ 6.62 Government, Schools, & Churches In Town $35.29 Tier 1 0-6,000 $ 1.50 Tier 2 6,000 + $ 6.62

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Proposed Out-of-Town Water Rates

Rate Class Monthly Base Fee Tier Usage Block (gal) Charge per 1,000 gal Residential Out of Town without accessory dwelling unit $52.94 Tier 1 0-6,000 $ 2.25 Tier 2 6,001-17,000 $ 9.89 Tier 3 17,001-28,000 $ 14.84 Tier 4 28,000 + $ 22.25 Residential Out of Town with accessory dwelling unit $66.45 Tier 1 0-8,000 $ 2.25 Tier 2 8,001-17,000 $ 9.89 Tier 3 17,001-28,000 $ 14.84 Tier 4 28,000 + $ 22.25 Commercial Out of Town $52.94 Tier 1 0-6,000 $ 2.25 Tier 2 6,000 + $ 9.89 Government, Schools, & Churches Out of Town $52.94 Tier 1 0-6,000 $ 2.25 Tier 2 6,000 + $ 9.89

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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

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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.

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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%

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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%,

• r
• Increase the surcharge to

$14.50, water rates to 7%

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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

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Next Steps

Adopt ordinance 11-2018 Approve Guaranteed Maximum Price Finish securing financing through SRF and sell bonds May 24, 2018 Award construction contract early May Implement rate increase July 1, 2018 Construction begins June/July

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Questions?