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HomeMy WebLinkAbout06/14/2011 00 Presentation Wastewater Rate and Charge Study City of Yakima, Washington . . Final Stud y Results City Council Presentation June 14, 2011 I gg * 4 __ stir t 4 _ - ✓f - .` tp. ' a + .� . ► 1 4 CITY OF ' i f A ' the heart of Centro/ Washington µ Redmond Town Center 7525 166t'' Ave NE, Suite D -215 Redmond, WA98052 • 425- 867 -1802 •%> FCS GROUP FCSGROUP.COM Presentation Outline ■ Financial Policies Review ■ Capital Program Funding Strategy ■ Revenue Requirement Forecast m Retail Rate Forecast ■ Capital Connection Charges ■ Wholesale Customer Charges ■ Miscellaneous Charges ProDosed Urnnlementation Strat.v • Period of Evaluation (2010 — 2020) • Proposed 3 -Year Adoption (2012 -2014) ✓ Retail rates ✓ Wholesale charges • Pretreatment charges v' Strong waste charges • Connection Charges — Proposed implementation of calculated charges (2012) ✓ Implement annual inflationary adjustments based on published construction cost index (ENR CCI) Financial Policies • / Objective Recommended Practice - Comments Operatin • Reserve Provide adequate working capital to Minimum target balance of 45 to 60 Current cash reserves accommodate for fluctuations in the days of operating & maintenance sufficient to meet target; no timing of revenues and expenditures (O &M) expense impact on rates Ca • ital Reserv° Provide a source of funding for Maintain a minimum balance Sustained from connection emergency repairs and unanticipated equal to a combined total of $3.0 charges and system capital expenditures million ($1.0 million for each reinvestment funding capital fund #472, 476, 478) System Reinvestment Funding —_ -- — Ensure ongoing system integrity Annually fund from rates an amount Reduces debt needs to fund through reinvestment in the system; equal to annual depreciation Capital Program; results in maintain rate stability; and promote expense, net of annual debt increment rate impacts generational customer equity principal payments (discussed herein) Debt, Service Coverag Ensure compliance with existing Maintain internal policy to set rates Achieved through identified bond covenants or higher internal to generate at least 2.0 times cash needs; no incremental policies revenue bond debt service rate impacts payments Deb na emen Prudent balance between use of debt Maintain ratio of no greater than Current ratio = 34% debt / and cash resources to finance 50% debt to 50% equity; bond 66% equity. Expected to Capital Program underwriter preference remain within guidelines Page 4 Capital Program Summary 2010 -2020 Wastewater CIP ($71.2 million) $18 $16 $14 $12 $10 $8 $6 $4 $2 - $ 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 i . , Capital Program Summary 1 2010 -20 CIP Sources of Funding ($71.2m) Cash Transfers 4.7% I System 1 1 Reinvestment Revenue Bonds Funding 47.1% - t 38.1% Capital Funding 2010 - 2020 Revenue Bond Proceeds $ 33,548,019 System Reinvestment Funding $ 27,151,091 nne n Connection Charges $ 7,150,000 har Budgeted Transfers $ 3,353,879 10. • Total $ 71,202,990 Revenue Requirement Forecast 2010 -2020 Wastewater Operating Forecast $30 $25 - $20 1111 M E WIN 1111 $15 0 O $10 $5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 wow Cash Operating Expenses City Scheduled Transfers to CIP ININI Existing Debt Service New Debt Service IMMO Rate Funded System Reinvestment a••••■Revenues Under Existing Rates Retail Rate Adjustment Strategy • Major Cost Drivers V' Proposed system reinvestment funding policy — roughly 3% impact ✓ New debt service to fund capital program — roughly 2% impact Existing Calculated Proposed Proposed Proposed Forecast Forecast Forecast Forecast Forecast Forecast Annual Rate Ad'ustments 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Annual Rate Adjustment 0.00% 5.10% 5.10% 5.10% 5.10% 5.10% 5.10% 5.10% 3.00% 0.00% Cummulative Rate Adjustment 0.00% 5.10% 10.46% 16.09% 22.01% 28.24% 34.78% 41.65% 45.90% 45.90% Average Bi- Monthly Bill [a] $71.02 $71.02 $74.64 $78.45 $82.45 $86.65 $91.07 $95.72 $100.60 $103.62 $103.62 Dollar Impact $0.00 $3.62 $3.81 $4.00 $4.20 $4.42 $4.64 $4.88 $3.02 $0.00 [a] Assumes 3/4 inch meter and 16 cubic feet of water usage per 2 -month billing period Rate Survey Comparison Monthly Sewer Rate Comparison Single Family Residential Customers (Assumes 3/4 inch meter and 8 ccf usage per month) $60.96 $61.14 $62.34 $43.70 $43.74 $35.51 $35.99 $37.32 $37.71 $31.20 $31.60 $32.30 $24.80 1 1 P $19.53 $20.36 v � u ;c to � 5 ;Li y Y m Z = E 10 } Page 9 Connection Charges Objectives • Review Existing Charge Methodology • Evaluation Alternative Methodologies ✓ Adhere to legal requirements / industry practice ✓ Simplify structure for ease of administration and understandability ✓ Promote equity between existing and future customers . . Existing Connection Charges . . . . Zone lA Zone 1B Zone 2 Zone 3 (Outside of Zones IA, 1B 2 but 4 (inside City, East of (rose City, West of Urban area per 1976 within urban growth 40th Ave) 40th Ave) agreement area) Base Treatment Element Domestic dischargers (SDUs) $ 790.230 $ 790.230 $ 790.230 $ 1,130.760 Dom Multifamily (per SDU equivalent) $ 2.982 $ 2.982 $ 2.982 $ 4.267 Nonresidential Domestic Hydraulic flow $ 0.597 $ 0.597 $ 0.597 $ 0.854 BO D $ 448.250 $ 448.250 $ 448.250 $ 670.770 TSS $ 476.110 $ 476.110 $ 476.110 $ 726.580 Plus: Base Trunk/interceptor Element Square footage of lot multiplied by: $ 0.009 $ 0.032 $ 0.093 $ 0.147 Flow (gpd) multiplied by: $ 0.448 $ 1.448 $ 5.616 $ 8.702 Plus: Base Colleetipon Pipe Element Square footage of lot multiplied by: $ 0.398 $ 0.413 $ 0.319 $ 0.376 Flow (gpd) multiplied by: $ 13.461 $ 13.684 $ 13.249 $ 12.762 1 Plus: City services Charge 6.0% of sum of first three dements Plus: Administrative Charge $50 /lot plusany costs required for inspection, permit or plan reviews Plus: Wastewater Tax 10% on vuhol esl e servi ce chages 14% on all other service chages Page 11 . . Proposed Connection Charges Meter -Based Charges Demand -Based Charges Meter Size Connection Fee Inside City Inside City Outside City Demand Component Charge per Unit 3/4" $2,377 $3,565 Flow (gpd) $4.67 1" $3,969 $5,954 BOD (lbs /day) $375.68 1 -1/2" $7,915 $11,873 TSS (lbs/day) $509.19 2" $12,669 $19,004 3" $25,362 $38,043 Outside City 4" $39,624 $59,435 Demand Component Charge per Unit 6" $79,223 $118,835 Flow (gpd) $7.01 8" $126,762 $190,143 BO D (lbs /day) $563.52 10" $182,240 $273,359 TSS (lbs/day) $763.78 Above charges exclude the City service charge of 6 %, utility tax of 14 %, and administrative charge of $50. • Charges by meter size established as standard schedule for all customers exhibiting "normal" wastewater characteristics • Charges by demand component applicable to customers with unique wastewater strength characteristics (e.g. large industrial or agricultural customers) . . Connection Charges Sample Comparisons Residential Customer 1 Customer 2 Customer 3 Customer 4 Type Single- Single- Multi- Multi - Family Family Family Family Location Zone 1A Zone 1B (N /A) (N /A) Parcel Size 12,000 sf 11,761 sf 50,000 sf 26,368 Meter Size 3/4" 3/4" 1" 1-1/2" Number of Meters 1 1 3 5 Connection Charges: Existing Structure $1,961 $2,901 $31,914 $47,537 Meter -Based Structure $2,902 $2,902 $14,338 $47,540 Difference From Existing $941 $1 ($17,575) $3 Structure Above sample charges include the City service charge of 6 %, utility tax of 14 %, and administrative charge of $50. . . Connection Charges Sample Comparisons Commercial & Industrial Customer A Customer B Customer C Customer D Meter Size 2" 3" 1" 1-1/2" Projected Demands: Flow 33,667 gpd 27,327 gpd 1,066 gpd 1,300 gpd BOD Loadings 99.7 lbs /day 93.71 lbs /day 2.87 lbs /day 3.50 lbs /day TSS Loadings 81.1 lbs /day 54.94 lbs /day 2.87 lbs /day 3.50 lbs /day Connection Charges: Existing Structure $236,016 $149,512 $10,488 $11,272 Meter -Based Structure $15,253 $30,484 $4,813 $9,548 Difference From Existing ($220, 763) ($119,028) ($5,675) ($1, 724) Structure Demand -Based Structure $283,221 $229,006 $9,071 $11,052 Difference From Existing $47,205 $79,494 ($1,417) ($221) Structure Above sample charges include the City service charge of 6 %, utility tax of 14 %, and administrative charge of $50. Page 14 . . W holesale Service Charges Terrace H eights & U nion G ap • Treatment plant O &M and new debt service based on pro -rata share of flow, BOD and TSS • Terrace Heights composite share = 4.23% • Union Gap composite share = 3.67% • Treatment plant existing debt service & coverage • Terrace Heights = 4.0% • Union Gap= 8.1% • Rudkin Road pump station O &M costs — Union Gap only — based on pro- rate share of contributed flow (Yakima and Union Gap) = 27.3% • Unmetered flow O &M costs — Union Gap only • 50% of unit cost of treatment plant O &M 1 • 50% of unit cost of Rudkin Road um station O &M costs P p . . Wholesale Charges Terrace Heights 600,000 500,000 400,000 NM 300,000 200,000 100,000 B6 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 TH - Treatment Plant O &M TH - Existing Debt Service & Coverage • TH -New debt service Vi n ,, . . . Wholesale Charges Union Gap ... 600,000: — 500,000 . ■ 400,000 — 300,000 — 200,000 100,000 : .LF 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 UG - Treatment Plant O &M UG -Existing Debt Service & Coverage • UG - New debt service UG - Rudkin Road Pump Station O &M • UG - Unmetered Flow O &M ,r Pretreatment Program Charge • Outside city customers currently pay full cost charge • Inside city customers currently pay discounted charge (about 61 of full cost charge) ✓ 25% subsidy from retail user rates ✓ Remaining subsidy from cost share with strong waste charges • All subsidies eliminated for current study Base Fee for MIUs Calculated Proposed Proposed Proposed Forecast Forecast Forecast Forecast Forecast Forecast Existing Char. es 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Outside City Users $ 102.32 $ 111.46 $ 115.25 $ 119.15 $ 123.15 $ 128.35 $ 133.72 $ 139.28 ; $ 145.02 $ 150.95 i $ 157.09 Inside City Users $ 62.45 $ 111.46 $ 115.25 $ 119.15 $ 123.15 $ 128.35 $ 133.72 $ 139.28 $ 145.02 $ 150.95 > $ 157.09 Page 18 OP% w t rya ■ Surcharge applied to customers that discharge wastewater greater than domestic strength (> 300 ppm for BOD,TSS; > 100 FOG) • Current practice is to establish separate charges for inside and outside city customers (currently no FOG charge applied to outside city) ■ Current study proposes implementation of an outside city multiplier of 1.5 times inside city charges (consistent with user rates) Calculated Proposed Proposed Proposed Forecast Forecast Forecast Forecast Forecast Forecast Existing 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Inside City BOD - $/ ppm $ 0.407 $ 0.422 $ 0.464 $ 0.489 $ 0.495 $ 0.499 $ 0.508 $ 0.516 $ 0.523 $ 0.529 $ 0.536 TSS - $/ ppm $ 0.415 $ 0.424 $ 0.466 $ 0.491 $ 0.496 $ 0.501 $ 0.508 $ 0.517 $ 0.523 $ 0.529 $ 0.536 FOG - $/ ppm $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 $ 0.276 Outside City [a] BOD - $/ ppm $ 0.470 $ 0.633 $ 0.696 $ 0.734 $ 0.742 $ 0.749 $ 0.761 $ 0.775 $ 0.784 $ 0.794 $ 0.804 TSS - $/ ppm $ 0.467 $ 0.636 $ 0.699 $ 0.736 $ 0.744 $ 0.751 $ 0.763 $ 0.776 $ 0.785 $ 0.794 $ 0.803 FOG - $/ ppm n/a $ 0.414 $ 0.414 $ 0.414 $ 0.414 $ 0.414 $ 0.414 $ 0.414 $ 0.414 $ 0.414 $ 0.414 [a] 1.5 times inside city charges Page 19 rte, sr It ,. _. r a ` J 'M q b & 4. d6■• f # p *ft V • .. ,. 4 '* S „ 7 '/ 'r r. t Oa; an 4 • ,r P W • .qr imp � I ... M 4 , . _ ,.. .:A 1 1 _ n . ,.......,.. , .. ,. . Mw K , y i � MT 4 . l 1111P1 4 !iiiiirlill • . Ft. II,, ,4•• d • 4 , • +I A is ' 41_, ,, ( 11 1 .. 040 0p ok%, 01 1 111k.. y 1 ©. s .i 0 liar M•ti i - .. .. - • 1 I - . Ijill ! 0E1 sKat O0 , 1 yy �y Imo F r ♦ s WWTPProjects e t Name IW - Industrial Waste Anaereblc Process = $6,000,000 DRYER - Biosolids Class A Dryer = $2,300,000 STRUVITE - Struvite Reactor = $700,000 r GRS - Grease Receiving Station = $400,000 Q BOILERS - 2 New Boilers = $2,000,000 ~"'"° •• ` PWR DIST - Up Date Electrical Power Distribution = $1,700,000 i Nt, , L . - ,P•-•:; �� , *:, C ' w " `' x i . - yr°