BAYTOWN AREA WATER AUTHORITY AGENDA

Transcription

1 BAYTOWN AREA WATER AUTHORITY NOTICE OF MEETING BAYTOWN AREA WATER AUTHORITY REGULAR MEETING WEDNESDAY, AUGUST 16, :00 A.M. COUNCIL CHAMBER, CITY HALL 2401 MARKET STREET BAYTOWN, TEXAS AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM 1. PUBLIC HEARINGS a. Conduct a public hearing concerning the Baytown Area Water Authority Fiscal Year Proposed Budget. 2. PROPOSED RESOLUTIONS a. Consider a resolution adopting the Baytown Area Water Authority Fiscal Year Proposed Budget. 3. REPORTS a. Receive an update regarding the Baytown Area Water Authority (BAWA) East Plant Project. 4. MANAGER'S REPORT a. Reminder that the next Baytown Area Water Authority meeting is scheduled for Wednesday, September 20, 2017, at 9:00 a.m. in the City Council Chamber, 2401 Market Street, Baytown, Texas ADJOURN

2

3 BAYTOWN AREA WATER AUTHORITY 1. a. MEETING Meeting Date: 08/16/2017 Subject: Conduct a Public Hearing Adopting Baytown Area Water Authority FY Proposed Budget. Prepared For: Wade Nickerson, Finance Prepared By: Alisha Segovia, City Clerk's Office Information ITEM Conduct a public hearing concerning the Baytown Area Water Authority Fiscal Year Proposed Budget. PREFACE This item allows the Baytown Area Water Authority to conduct a public hearing regarding the Baytown Area Water Authority Fiscal Year Proposed Budget. Notice of this public hearing was published in The Baytown Sun and additionally posted on the City's notice boards and website on August 3, RECOMMENDATION FY18 Proposed BAWA Budget Attachments

4 BAYTOWN AREA WATER AUTHORITY (BAWA) ANNUAL PROGRAM OF SERVICES PROPOSED BUDGET

5 BAYTOWN AREA WATER AUTHORITY BOARD OF DIRECTORS BRENDA BRADLEY SMITH, President MIKE WILSON, Vice President WAYNE BALDWIN, Secretary LETICIA BRYSCH, Assistant Secretary BRANDON BENOIT, Director FRANK McKAY III, Director 2

6 BAYTOWN AREA WATER AUTHORITY (BAWA) ORGANIZATION CHART Baytown Area Water Authority Board of Directors General Manager Plant Manager/Director of Public Works & Utilities Superintendent 3

7 BAYTOWN AREA WATER AUTHORITY MAJOR BUDGET ISSUES FISCAL YEAR This fund accounts for the operations of the Baytown Area Water Authority (BAWA). BAWA is a water authority created by the Texas Legislature to supply water for the City of Baytown (City) and surrounding communities. BAWA services a total of eight customers with the City as the largest customer, generating approximately 87% of BAWA s annual sales. BAWA is a separate legal entity; however, it is considered a component unit of the City. Since it began operating, BAWA has not experienced shortages of its raw water supply to the plant or interruptions of service to its customers. REVENUES The proposed budget estimates sales of $13,285,476 for an average of 13.5 million gallons per day (MGD). Fluctuations in rainfall amounts can significantly impact actual sales. Although the Utility Rate Study calls for a 3.4% increase, the existing rate structure will provide adequate funding to exceed both working capital and bonded debt coverage. Budgeted net revenues result in a favorable 3.1 times coverage of average annual system debt service. Therefore, no rate increase is recommended for the proposed budget. The existing rate structure of $2.74 per 1,000 gallons for the City of Baytown and $2.78 per 1,000 gallons for customers outside the city will remain the same. EXPENDITURES Total operating expenditures for the proposed budget are $6,715,748 which is an increase of $578,351 from the budget. An increase of $591,573 in the untreated water supplies is included in the budget due to the City of Houston s raw water supply contract. This budget includes a transfer of $350,000 to the General Fund for an indirect cost allocation to reimburse the City for administrative services such as Human Resources, Fiscal Operations, Legal and Information Technology Services. Highlights of major operating changes are as follows: Decrease in personnel services $ (17,222) Increase in supplies 591,573 Decrease in maintenance (9,000) Increase in services 13,000 Decrease in capital outlay (90,000) Decrease in transfers out-capital improvements (2,212) Raw Water Supply Cost BAWA purchases raw water from the City of Houston. The raw water supply contract with the City of Houston is in effect through the year 2040, and sets the maximum amount of raw water to be delivered to the BAWA plant at 20 MGD without penalties. The surcharge for water purchased over the 20 MGD is nominal at this time. BAWA received notice of a rate increase (3.4%) from $ to $ effective April 1, The annual rate adjustment is intended to help cover the City of Houston s cost increases that impact the provision of safe, clean drinking water and the collection and treatment of wastewater. This includes operational costs as well as the costs involved in repairing portions of the City of Houston system s aging infrastructure. 4

8 BAYTOWN AREA WATER AUTHORITY MAJOR BUDGET ISSUES FISCAL YEAR Debt Service The transfer to cover the debt service requirement for the proposed budget is $2,421,180. Further, sufficient funds are available for first year debt service and issuance costs associated with a proposed $25 million bond issue in connection with BAWA East Water Treatment Plant, phase one construction. CAPITAL IMPROVEMENT PROGRAM The Capital Improvement Program for BAWA is funded through the issuance of revenue bonds, grants, and revenue from operations. BAWA East Water Treatment Plant $1,622,476 Development of a six (6) million gallons per day (MGD) surface water treatment plant south of Interstate Highway (IH) 10 and west of SH 99 along the Coastal Water Authority (CWA) Barbers Hill Canal. The design will provide for the ability to expand the plant based on future water demands and allow the plant to convert to salt water treatment (desalinization) ensuring long term viability. Construction is expected to begin in October Annual Operating Impact: Non-operational for FY2018. High Service Pumps $4,707,472 Replace all four high service pumps with new pumps. The new pumps will have a firm capacity of 24,000 gpm (34.5 MGD) at 175 ft TDH. Annual Operating Impact: Operating and maintenance costs are projected at $12,000. Chain and Flight Basin 4 $122,000 Replace chain and flight in basin 4, which has reached its useful life. Annual Operating Impact: Operating and maintenance costs are projected at $10,000. Sludge Room Improvements $400,000 This project replaces the sludge pumps, valves and ancillary equipment and installs electrically actuated valves on each of the hopper draw offs for the basins. Annual Operating Impact: Preventative maintenance costs are projected at $10,000. Filter Gallery Improvements $100,000 Repair to filter gallery in order to stop leaks and replace deteriorated stair case which has become a safety hazard. Annual Operating Impact: No significant operating costs are anticipated. Administrative Building Improvements $150,000 Update Administrative building to include replace flooring, paint exterior and interior as well as update restroom facilities. Annual Operating Impact: No significant operating costs are anticipated. Ground Storage Tanks Rehabilitation $1,500,000 Project would consist of recoating inside and outside of ground storage tanks at BAWA. Annual Operating Impact: Preventative maintenance costs are projected at $17,000. 5

9 BAYTOWN AREA WATER AUTHORITY MAJOR BUDGET ISSUES FISCAL YEAR WORKING CAPITAL In order to maintain fiscal stability, governmental entities maintain a working capital balance to meet daily liquidity needs. Appropriate levels of working capital vary from entity to entity based on the relative impact of particular circumstances or financial conditions. Working capital is defined as current assets (e.g., cash, investments and accounts receivable) less current liabilities (e.g., accounts payable). In the proposed budget, BAWA s working capital level at year end is projected to represent 309 days of operating expenditures; a contingency line item of $75,000 is provided; plus we are able to transfer out $2,000,000 to BAWA s Capital Improvement Project Fund (CIPF). The $2,000,000 will be available for funding future capital projects. 6

10 3070 BAYTOWN AREA WATER AUTHORITY PROGRAM SUMMARY Program Description BAWA operates and maintains a 26 Million Gallon per Day (MGD) surface water treatment facility. It has a projected raw water flow of MGD and projected finished water flow of 13.5 MGD for fiscal year BAWA currently serves 8 surrounding area customers, including the City of Baytown, which uses 87% of BAWA s production. Operations personnel ensure the facility s compliance with the Texas Commission on Environmental Quality s (TCEQ) Rules and Regulations for Public Water Supplies. BAWA provides its customers with high quality, safe drinking water and consistent water pressure for fire protection. Major Goals Maintain water quality necessary to be classified as "Meeting Optimum Corrosion Control" by TCEQ. Maintain Superior Public Water System status. Maintain standards for the Texas Optimization Program - a voluntary program through TCEQ that promotes the optimization of surface water treatment plants, by identifying and addressing the various factors that limit performance in order to lower the risk of waterborne disease. Develop and maintain a staff of highly trained water professionals through continuing education classes and hands on training. Major Objectives Produce 13.5 MGD of finished water. Maintain finished water turbidity (haze measurement) consistently < 0.1 NTU. Maintain compliance with all TCEQ and EPA regulations. 7

11 BAYTOWN AREA WATER AUTHORITY FUND 510 BUDGET SUMMARY BY FUND Actual Budget Estimated Proposed Revenues Sale of Water - Baytown $ 11,539,149 $ 11,254,823 $ 11,735,824 $ 11,735,824 Sale of Water - Other 1,522,109 1,498,575 1,549,652 1,549,652 Interest Revenue 16,647 10,724 23,321 23,321 Miscellaneous 1, Transfers In From WWIS Fund 67, , , ,618 Total Revenues 13,146,886 12,864,976 13,409,425 13,415,939 Expenditures Personnel Services 1,143,645 1,450,819 1,294,459 1,433,597 Supplies 3,837,500 3,714,063 4,136,478 4,305,636 Maintenance 273, , , ,500 Services 618, , , ,015 Total Operating 5,873,498 6,137,397 6,353,004 6,715,748 Capital Outlay 118,347 90,000 90,000 - Transfers Out - Debt Service 3,187,063 2,423,392 2,423,392 2,421,180 Transfers Out - Capital Improvement 4,680,000 4,680,000 4,680,000 2,000,000 Transfers Out - General Fund 350, , , ,000 Contingency - 75,000 75,000 75,000 Total Expenditures 14,208,908 13,755,789 13,971,396 11,561,928 Excess (Deficit) Revenues Over Expenditures (1,062,022) (890,813) (561,971) 1,854,011 GAAP to budget basis adjustment 41, Working Capital - Beginning 5,409,260 4,388,597 4,388,597 3,826,626 Working Capital - Ending $ 4,388,597 $ 3,497,784 $ 3,826,626 $ 5,680,637 Days of Operating Expenditures

12 3070 BAYTOWN AREA WATER AUTHORITY- SERVICE LEVEL BUDGET Actual Budget Estimated Proposed Acct# Acct Description Personnel Services Contract Personnel BAWA $ 1,143,645 $ 1,450,819 $ 1,294,459 $ 1,433,597 Total Personnel Services 1,143,645 1,450,819 1,294,459 1,433, Supplies Office Supplies 3,057 3,100 3,100 3, Postage Supplies Wearing Apparel 5,137 6,300 6,300 6, Motor Vehicle Supplies 3,783 5,000 7,000 5, Minor Tools 2,287 2,400 2,400 2, Fuel For Generators 9,031 10,000 10,000 10, Cleaning & Janitorial Sup 2,416 2,000 2,200 2, Chemical Supplies 607, , , , Medical Supplies Educational Supplies 2,289 2,000 2,000 2, Untreated Water Supplies 3,179,559 2,979,683 3,400,000 3,550, Laboratory Supplies 21,894 22,000 22,000 22,000 Total Supplies 3,837,500 3,714,063 4,136,478 4,305, Maintenance Buildings Maintenance 6,188 17,000 17,000 7, Heat & Cool Sys Maint 5,264 5,500 6,500 5, Electrical Maintenance 33,070 40,000 40,000 40, Furniture/Fixtures Maint 1,330 3,000 2,958 1, Machinery & Equip Maint 212, , , , Motor Vehicles Maint 15,375 7,000 10,000 10,000 Total Maintenance 273, , , , Services Communication 1, Electric Service 489, , , , Equipment Rental 9,148 15,000 10,000 15, Special Services 97, , , , Audits 11,483 13,500 15,303 13, Advertising Education & Training 8,408 9,900 9,900 10,800 Total Services 618, , , ,015 Total Operating 5,873,498 6,137,397 6,353,004 6,715, Capital Outlay Machinery & Equipment 67,655 90,000 90, Motor Vehicles 50, Total Capital Outlay 118,347 90,000 90, Other Financing Uses To BAWA Debt Service 3,187,063 2,423,392 2,423,392 2,421, To BAWA CIPF Fund 4,680,000 4,680,000 4,680,000 2,000, Expense - General Fund 350, , , ,000 Total Other Financing Uses 8,217,063 7,453,392 7,453,392 4,771, Contingencies Contingencies - 75,000 75,000 75,000 Total Contingencies - 75,000 75,000 75,000 TOTAL DEPARTMENT $ 14,208,908 $ 13,755,789 $ 13,971,396 $ 11,561,928 9

13 BAWA - CAPITAL IMPROVEMENT PROGRAM FUND 518 BUDGET SUMMARY BY FUND Actual Total Allocation Estimated Total Allocation Revenues Transfer In from Operating Fund $ 4,680,000 $ 4,680,000 $ 4,680,000 $ 2,000,000 Interest Revenue 34,409 20,000 70,000 70,000 Total Revenues 4,714,409 4,700,000 4,750,000 2,070,000 Expenditures Thompson Rd Utility Relocation - 46, BAWA East Plant Engineering 455,737 1,349, ,162 1,183,586 BAWA East Plant 409, ,000 66, ,890 SCADA System 586,126 1,011,709 1,011,709 - Completed and closed projects 231, Chemical Feed System Improvements 25, , ,011 - High Service Pumps 209,711 5,338, ,817 4,707,472 Transfer Pump and Motor 146,161 39, Chain & Flight for Basin Three - 112, ,770 - Chemical Systems - Replace Bulk Tank - 1,100, , ,966 LAS System Addition - 480,000 32, ,000 Lime System Addition - 390,000 42, ,000 Site Paving - 300, , ,000 Post Filtration Chemicals - 144,000 26, ,000 Chain & Flight for Basin Four ,000 Sludge Room Improvements ,000 Filter Gallery Improvements ,000 Administration Building ,000 Ground Storage Tanks Rehabilitation ,500,000 New Capital Project Initiatives - 203, ,000 Total Expenditures 2,065,609 11,685,523 2,977,613 11,183,914 Excess (Deficit) Revenues Over Expenditures 2,648,800 (6,985,523) 1,772,387 (9,113,914) Working Capital - Beginning 7,939,505 10,588,305 10,588,305 $ 12,360,692 Working Capital - Ending $ 10,588,305 $ 3,602,782 $ 12,360,692 $ 3,246,778 10

14 Principal Principal & Interest Principal Revenue Amount of Outstanding Requirements for Outstanding Bonds Issue Oct. 1, 2017 Principal Interest Total Sept. 30, 2018 Series 2006 $ 9,975,000 $ 3,505,000 $ 675,000 $ 100,968 $ 775,968 $ 2,830,000 Series ,505,000 1,765, ,000 75, , ,000 Series ,315,000 5,725, , , ,200 5,175,000 $ 10,995,000 $ 2,090,000 $ 331,180 $ 2,421,180 $ 8,905,000 3,000,000 BAYTOWN AREA WATER AUTHORITY REVENUE BONDS LONG TERM DEBT AMORITIZATION SCHEDULES Combined BAWA Debt, All Series Debt Requirements to Maturity Fiscal Principal Total Total Year 5/01 Interest Requirement ,090, ,180 2,421, ,165, ,518 2,429, ,290, ,060 1,485, ,025, ,870 1,187, , ,756 1,120, , , , , , , ,000 92, , ,000 82, , ,000 73, , ,000 62, , ,000 51, , ,000 39, , ,000 27, , ,000 13, ,826 Total $ 10,995,000 $ 1,742,228 $ 12,737,228 Combined BAWA Debt, All Series Debt Requirements to Maturity 2,500,000 Annual Amount 2,000,000 1,500,000 1,000,000 Interest Principal 500, Fiscal Year 11

15 BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Revenue Bonds Funding: BAWA-WWIS $ 9,975,000 Series 2006 Date of Issue - June 14, 2006 Term - 16 Years Fiscal Interest Principal Interest Interest Total Annual Principal Year Rate Due 5/01 Due11/01 Due 5/01 Interest Requirement Outstanding % $ 595,000 $ 2,115 $ 51,400 $ 53,515 $ 648,515 $ 9,380, % 530,000 77, , , ,152 8,850, % 540, , , , ,587 8,310, % 550, , , , ,159 7,760, % 565, , , , ,368 7,195, % 580,000 98,545 98, , ,090 6,615, % 590,000 91,585 91, , ,170 6,025, % 605,000 84,210 84, , ,420 5,420, % 620,000 76,345 76, , ,690 4,800, % 640,000 68,130 68, , ,260 4,160, % 655,000 59,490 59, , ,980 3,505, % 675,000 50,484 50, , ,968 2,830, % 695,000 41,034 41,034 82, ,068 2,135, % 710,000 31,130 31,130 62, ,260 1,425, % 735,000 20,835 20,835 41, , , % 690,000 10,178 10,178 20, ,356 - $ 9,975,000 $ 1,024,000 $ 1,114,713 $ 2,138,713 $ 12,113,713 Call Option: Bonds maturing on 05/01/2017 to 05/01/2022 callable in whole or in part inversely on any date beginning par. Revenue Bonds Funding: BAWA $ 6,505,000 Series 2007 Date of Issue - February 1, 2007 Term - 13 Years Fiscal Interest Principal Interest Interest Total Annual Principal Year Rate Due 5/01 Due11/01 Due 5/01 Interest Requirement Outstanding 2007 $ - $ - $ 66,153 $ 66,153 $ 66,153 $ 6,505, % 40, , , , ,612 6,465, % 40, , , , ,012 6,425, % 45, , , , ,412 6,380, % 45, , , , ,612 6,335, % 695, , , , ,812 5,640, % 715, , , , ,012 4,925, % 745, , , , ,412 4,180, % 775,000 85,806 85, , ,612 3,405, % 805,000 70,306 70, , ,612 2,600, % 835,000 54,206 54, , ,412 1,765, % 865,000 37,506 37,506 75, , , % 900,000 19,125 19,125 38, ,250 - $ 6,505,000 $ 1,135,891 $ 1,202,044 $ 2,337,935 $ 8,842,935 Call Option: Bonds maturing on 05/01/2016 to 05/01/2019 callable in whole or in part on any date beginning par. 12

16 BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Revenue Bonds Funding: BAWA $ 8,315,000 Series 2012 Issue Date - March 29, 2012 Term-20 Yrs Fiscal Interest Principal Interest Interest Total Annual Principal Year Rate Due 5/01 Due11/01 Due 5/01 Interest Requirement Outstanding % $ 485,000 $ 123,050 $ 103,500 $ 226,550 $ 711,550 $ 7,830, % 510,000 98,650 98, , ,300 7,320, % 520,000 93,550 93, , ,100 6,800, % 535,000 88,350 88, , ,700 6,265, % 540,000 83,000 83, , ,000 5,725, % 550,000 77,600 77, , ,200 5,175, % 570,000 72,100 72, , ,200 4,605, % 580,000 66,400 66, , ,800 4,025, % 290,000 60,600 60, , ,200 3,735, % 295,000 57,700 57, , ,400 3,440, % 300,000 54,197 54, , ,394 3,140, % 310,000 50,447 50, , ,894 2,830, % 315,000 46,184 46,184 92, ,368 2,515, % 325,000 41,459 41,459 82, ,918 2,190, % 335,000 36,584 36,584 73, ,168 1,855, % 345,000 31,350 31,350 62, ,700 1,510, % 360,000 25,744 25,744 51, ,488 1,150, % 370,000 19,894 19,894 39, , , % 385,000 13,650 13,650 27, , , % 395,000 6,913 6,913 13, ,826 - $ 8,315,000 $ 1,147,422 $ 1,127,872 $ 2,275,294 $ 10,590,294 Call Option: Bonds maturing on 05/01/2023 to 05/01/2032 callable in whole or in part on any date beginning par. 13

17 CITY OF HOUSTON UNTREATED WATER RATES Effective Month/Year 04/ / / / Rate 01/ FIRST 150 MGD/PER 1,000, NEXT 150 MGD 08/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 07/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 08/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 02/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 10/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 10/ UP TO 13.1 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO 13.1 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 06/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 14

18 City Rate/1,000 gallons Other Rate/1,000 Gallons TREATED WATER RATES Increase- City Increase- Other Year 1981 $0.97 $ $0.97 $1.00 $0.00 $0.03 Comments $1.07 $1.10 $0.10 $0.10 Result of rising operating cost. (Raw water rates up 25%) $1.18 $1.21 $0.11 $0.11 Result of increase in raw water rates $1.26 $1.29 $0.08 $0.08 Funding for plant expansion debt $1.39 $1.42 $0.13 $0.13 Funding for new water line debt and City of Houston rate increase $1.46 $1.49 $0.07 $0.07 Funding for new water line debt and City of Houston rate increase $1.55 $1.58 $0.09 $ $1.71 $1.74 $0.16 $ $1.96 $1.99 $0.25 $ $2.15 $2.18 $0.19 $ $2.35 $2.39 $0.20 $ $2.53 $2.57 $0.18 $ $2.61 $2.65 $0.08 $ $2.74 $2.78 $0.13 $ $2.74 $2.78 $0.00 $ $2.74 $2.78 $0.00 $0.00 Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Excess revenues are sufficient to cover incremental operating cost. Excess revenues are sufficient to cover incremental operating cost. 15

19 16

20 BAYTOWN AREA WATER AUTHORITY 2. a. MEETING Meeting Date: 08/16/2017 Subject: Consider Adopting the Baytown Area Water Authority FY Proposed Budget. Prepared For: Wade Nickerson, Finance Prepared By: Leticia Brysch, City Clerk's Office Information ITEM Consider a resolution adopting the Baytown Area Water Authority Fiscal Year Proposed Budget. PREFACE This proposed resolution adopts the Baytown Area Water Authority Fiscal Year Proposed Budget. RECOMMENDATION Staff recommends approval. Resolution - Adopt Budget Exhibit A - Budget Attachments

21 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY ADOPTING A BUDGET FOR THE ENSUING FISCAL YEAR, BEGINNING OCTOBER 1, 2017, AND ENDING SEPTEMBER 30, 2018; MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ****************************************************************************** WHEREAS, the General Manager of the Baytown Area Water Authority ( BAWA ) has submitted to BAWA s Board of Directors a budget estimate of the revenues of BAWA and the expense of conducting the affairs thereof for the ensuing fiscal year, beginning October 1, 2017, and ending September 30, 2018; and WHEREAS, the Board of Directors of BAWA (the Board ) received the General Manager's estimate and held a public hearing thereon; and WHEREAS, after full and final consideration of the information contained in the proposed budget and the input received at the public hearing, it is the opinion of the Board that the budget attached hereto should be approved and adopted; NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY: Section 1: That the Board of Directors of the Baytown Area Water Authority hereby adopts the budget, which is attached hereto as Exhibit A and incorporated herein for all intents and purposes for BAWA s fiscal year. Section 2: This resolution shall take effect immediately from and after its passage by the Board of Directors of the Baytown Area Water Authority. INTRODUCED, READ and PASSED, by the affirmative vote of the Board of Directors of the Baytown Area Water Authority this the 16 th day of August, ATTEST: BRENDA BRADLEY SMITH, President LETICIA BRYSCH, Assistant Secretary APPROVED AS TO FORM: IGNACIO RAMIREZ, SR., General Counsel R:\Karen\Files\BAWA\Resolution\2017\August 16\Adopt Budget.doc

22 Exhibit "A" BAYTOWN AREA WATER AUTHORITY (BAWA) ANNUAL PROGRAM OF SERVICES PROPOSED BUDGET

23 BAYTOWN AREA WATER AUTHORITY BOARD OF DIRECTORS BRENDA BRADLEY SMITH, President MIKE WILSON, Vice President WAYNE BALDWIN, Secretary LETICIA BRYSCH, Assistant Secretary BRANDON BENOIT, Director FRANK McKAY III, Director 2

24 BAYTOWN AREA WATER AUTHORITY (BAWA) ORGANIZATION CHART Baytown Area Water Authority Board of Directors General Manager Plant Manager/Director of Public Works & Utilities Superintendent 3

25 BAYTOWN AREA WATER AUTHORITY MAJOR BUDGET ISSUES FISCAL YEAR This fund accounts for the operations of the Baytown Area Water Authority (BAWA). BAWA is a water authority created by the Texas Legislature to supply water for the City of Baytown (City) and surrounding communities. BAWA services a total of eight customers with the City as the largest customer, generating approximately 87% of BAWA s annual sales. BAWA is a separate legal entity; however, it is considered a component unit of the City. Since it began operating, BAWA has not experienced shortages of its raw water supply to the plant or interruptions of service to its customers. REVENUES The proposed budget estimates sales of $13,285,476 for an average of 13.5 million gallons per day (MGD). Fluctuations in rainfall amounts can significantly impact actual sales. Although the Utility Rate Study calls for a 3.4% increase, the existing rate structure will provide adequate funding to exceed both working capital and bonded debt coverage. Budgeted net revenues result in a favorable 3.1 times coverage of average annual system debt service. Therefore, no rate increase is recommended for the proposed budget. The existing rate structure of $2.74 per 1,000 gallons for the City of Baytown and $2.78 per 1,000 gallons for customers outside the city will remain the same. EXPENDITURES Total operating expenditures for the proposed budget are $6,715,748 which is an increase of $578,351 from the budget. An increase of $591,573 in the untreated water supplies is included in the budget due to the City of Houston s raw water supply contract. This budget includes a transfer of $350,000 to the General Fund for an indirect cost allocation to reimburse the City for administrative services such as Human Resources, Fiscal Operations, Legal and Information Technology Services. Highlights of major operating changes are as follows: Decrease in personnel services $ (17,222) Increase in supplies 591,573 Decrease in maintenance (9,000) Increase in services 13,000 Decrease in capital outlay (90,000) Decrease in transfers out-capital improvements (2,212) Raw Water Supply Cost BAWA purchases raw water from the City of Houston. The raw water supply contract with the City of Houston is in effect through the year 2040, and sets the maximum amount of raw water to be delivered to the BAWA plant at 20 MGD without penalties. The surcharge for water purchased over the 20 MGD is nominal at this time. BAWA received notice of a rate increase (3.4%) from $ to $ effective April 1, The annual rate adjustment is intended to help cover the City of Houston s cost increases that impact the provision of safe, clean drinking water and the collection and treatment of wastewater. This includes operational costs as well as the costs involved in repairing portions of the City of Houston system s aging infrastructure. 4

26 BAYTOWN AREA WATER AUTHORITY MAJOR BUDGET ISSUES FISCAL YEAR Debt Service The transfer to cover the debt service requirement for the proposed budget is $2,421,180. Further, sufficient funds are available for first year debt service and issuance costs associated with a proposed $25 million bond issue in connection with BAWA East Water Treatment Plant, phase one construction. CAPITAL IMPROVEMENT PROGRAM The Capital Improvement Program for BAWA is funded through the issuance of revenue bonds, grants, and revenue from operations. BAWA East Water Treatment Plant $1,622,476 Development of a six (6) million gallons per day (MGD) surface water treatment plant south of Interstate Highway (IH) 10 and west of SH 99 along the Coastal Water Authority (CWA) Barbers Hill Canal. The design will provide for the ability to expand the plant based on future water demands and allow the plant to convert to salt water treatment (desalinization) ensuring long term viability. Construction is expected to begin in October Annual Operating Impact: Non-operational for FY2018. High Service Pumps $4,707,472 Replace all four high service pumps with new pumps. The new pumps will have a firm capacity of 24,000 gpm (34.5 MGD) at 175 ft TDH. Annual Operating Impact: Operating and maintenance costs are projected at $12,000. Chain and Flight Basin 4 $122,000 Replace chain and flight in basin 4, which has reached its useful life. Annual Operating Impact: Operating and maintenance costs are projected at $10,000. Sludge Room Improvements $400,000 This project replaces the sludge pumps, valves and ancillary equipment and installs electrically actuated valves on each of the hopper draw offs for the basins. Annual Operating Impact: Preventative maintenance costs are projected at $10,000. Filter Gallery Improvements $100,000 Repair to filter gallery in order to stop leaks and replace deteriorated stair case which has become a safety hazard. Annual Operating Impact: No significant operating costs are anticipated. Administrative Building Improvements $150,000 Update Administrative building to include replace flooring, paint exterior and interior as well as update restroom facilities. Annual Operating Impact: No significant operating costs are anticipated. Ground Storage Tanks Rehabilitation $1,500,000 Project would consist of recoating inside and outside of ground storage tanks at BAWA. Annual Operating Impact: Preventative maintenance costs are projected at $17,000. 5

27 BAYTOWN AREA WATER AUTHORITY MAJOR BUDGET ISSUES FISCAL YEAR WORKING CAPITAL In order to maintain fiscal stability, governmental entities maintain a working capital balance to meet daily liquidity needs. Appropriate levels of working capital vary from entity to entity based on the relative impact of particular circumstances or financial conditions. Working capital is defined as current assets (e.g., cash, investments and accounts receivable) less current liabilities (e.g., accounts payable). In the proposed budget, BAWA s working capital level at year end is projected to represent 309 days of operating expenditures; a contingency line item of $75,000 is provided; plus we are able to transfer out $2,000,000 to BAWA s Capital Improvement Project Fund (CIPF). The $2,000,000 will be available for funding future capital projects. 6

28 3070 BAYTOWN AREA WATER AUTHORITY PROGRAM SUMMARY Program Description BAWA operates and maintains a 26 Million Gallon per Day (MGD) surface water treatment facility. It has a projected raw water flow of MGD and projected finished water flow of 13.5 MGD for fiscal year BAWA currently serves 8 surrounding area customers, including the City of Baytown, which uses 87% of BAWA s production. Operations personnel ensure the facility s compliance with the Texas Commission on Environmental Quality s (TCEQ) Rules and Regulations for Public Water Supplies. BAWA provides its customers with high quality, safe drinking water and consistent water pressure for fire protection. Major Goals Maintain water quality necessary to be classified as "Meeting Optimum Corrosion Control" by TCEQ. Maintain Superior Public Water System status. Maintain standards for the Texas Optimization Program - a voluntary program through TCEQ that promotes the optimization of surface water treatment plants, by identifying and addressing the various factors that limit performance in order to lower the risk of waterborne disease. Develop and maintain a staff of highly trained water professionals through continuing education classes and hands on training. Major Objectives Produce 13.5 MGD of finished water. Maintain finished water turbidity (haze measurement) consistently < 0.1 NTU. Maintain compliance with all TCEQ and EPA regulations. 7

29 BAYTOWN AREA WATER AUTHORITY FUND 510 BUDGET SUMMARY BY FUND Actual Budget Estimated Proposed Revenues Sale of Water - Baytown $ 11,539,149 $ 11,254,823 $ 11,735,824 $ 11,735,824 Sale of Water - Other 1,522,109 1,498,575 1,549,652 1,549,652 Interest Revenue 16,647 10,724 23,321 23,321 Miscellaneous 1, Transfers In From WWIS Fund 67, , , ,618 Total Revenues 13,146,886 12,864,976 13,409,425 13,415,939 Expenditures Personnel Services 1,143,645 1,450,819 1,294,459 1,433,597 Supplies 3,837,500 3,714,063 4,136,478 4,305,636 Maintenance 273, , , ,500 Services 618, , , ,015 Total Operating 5,873,498 6,137,397 6,353,004 6,715,748 Capital Outlay 118,347 90,000 90,000 - Transfers Out - Debt Service 3,187,063 2,423,392 2,423,392 2,421,180 Transfers Out - Capital Improvement 4,680,000 4,680,000 4,680,000 2,000,000 Transfers Out - General Fund 350, , , ,000 Contingency - 75,000 75,000 75,000 Total Expenditures 14,208,908 13,755,789 13,971,396 11,561,928 Excess (Deficit) Revenues Over Expenditures (1,062,022) (890,813) (561,971) 1,854,011 GAAP to budget basis adjustment 41, Working Capital - Beginning 5,409,260 4,388,597 4,388,597 3,826,626 Working Capital - Ending $ 4,388,597 $ 3,497,784 $ 3,826,626 $ 5,680,637 Days of Operating Expenditures

30 3070 BAYTOWN AREA WATER AUTHORITY- SERVICE LEVEL BUDGET Actual Budget Estimated Proposed Acct# Acct Description Personnel Services Contract Personnel BAWA $ 1,143,645 $ 1,450,819 $ 1,294,459 $ 1,433,597 Total Personnel Services 1,143,645 1,450,819 1,294,459 1,433, Supplies Office Supplies 3,057 3,100 3,100 3, Postage Supplies Wearing Apparel 5,137 6,300 6,300 6, Motor Vehicle Supplies 3,783 5,000 7,000 5, Minor Tools 2,287 2,400 2,400 2, Fuel For Generators 9,031 10,000 10,000 10, Cleaning & Janitorial Sup 2,416 2,000 2,200 2, Chemical Supplies 607, , , , Medical Supplies Educational Supplies 2,289 2,000 2,000 2, Untreated Water Supplies 3,179,559 2,979,683 3,400,000 3,550, Laboratory Supplies 21,894 22,000 22,000 22,000 Total Supplies 3,837,500 3,714,063 4,136,478 4,305, Maintenance Buildings Maintenance 6,188 17,000 17,000 7, Heat & Cool Sys Maint 5,264 5,500 6,500 5, Electrical Maintenance 33,070 40,000 40,000 40, Furniture/Fixtures Maint 1,330 3,000 2,958 1, Machinery & Equip Maint 212, , , , Motor Vehicles Maint 15,375 7,000 10,000 10,000 Total Maintenance 273, , , , Services Communication 1, Electric Service 489, , , , Equipment Rental 9,148 15,000 10,000 15, Special Services 97, , , , Audits 11,483 13,500 15,303 13, Advertising Education & Training 8,408 9,900 9,900 10,800 Total Services 618, , , ,015 Total Operating 5,873,498 6,137,397 6,353,004 6,715, Capital Outlay Machinery & Equipment 67,655 90,000 90, Motor Vehicles 50, Total Capital Outlay 118,347 90,000 90, Other Financing Uses To BAWA Debt Service 3,187,063 2,423,392 2,423,392 2,421, To BAWA CIPF Fund 4,680,000 4,680,000 4,680,000 2,000, Expense - General Fund 350, , , ,000 Total Other Financing Uses 8,217,063 7,453,392 7,453,392 4,771, Contingencies Contingencies - 75,000 75,000 75,000 Total Contingencies - 75,000 75,000 75,000 TOTAL DEPARTMENT $ 14,208,908 $ 13,755,789 $ 13,971,396 $ 11,561,928 9

31 BAWA - CAPITAL IMPROVEMENT PROGRAM FUND 518 BUDGET SUMMARY BY FUND Actual Total Allocation Estimated Total Allocation Revenues Transfer In from Operating Fund $ 4,680,000 $ 4,680,000 $ 4,680,000 $ 2,000,000 Interest Revenue 34,409 20,000 70,000 70,000 Total Revenues 4,714,409 4,700,000 4,750,000 2,070,000 Expenditures Thompson Rd Utility Relocation - 46, BAWA East Plant Engineering 455,737 1,349, ,162 1,183,586 BAWA East Plant 409, ,000 66, ,890 SCADA System 586,126 1,011,709 1,011,709 - Completed and closed projects 231, Chemical Feed System Improvements 25, , ,011 - High Service Pumps 209,711 5,338, ,817 4,707,472 Transfer Pump and Motor 146,161 39, Chain & Flight for Basin Three - 112, ,770 - Chemical Systems - Replace Bulk Tank - 1,100, , ,966 LAS System Addition - 480,000 32, ,000 Lime System Addition - 390,000 42, ,000 Site Paving - 300, , ,000 Post Filtration Chemicals - 144,000 26, ,000 Chain & Flight for Basin Four ,000 Sludge Room Improvements ,000 Filter Gallery Improvements ,000 Administration Building ,000 Ground Storage Tanks Rehabilitation ,500,000 New Capital Project Initiatives - 203, ,000 Total Expenditures 2,065,609 11,685,523 2,977,613 11,183,914 Excess (Deficit) Revenues Over Expenditures 2,648,800 (6,985,523) 1,772,387 (9,113,914) Working Capital - Beginning 7,939,505 10,588,305 10,588,305 $ 12,360,692 Working Capital - Ending $ 10,588,305 $ 3,602,782 $ 12,360,692 $ 3,246,778 10

32 Principal Principal & Interest Principal Revenue Amount of Outstanding Requirements for Outstanding Bonds Issue Oct. 1, 2017 Principal Interest Total Sept. 30, 2018 Series 2006 $ 9,975,000 $ 3,505,000 $ 675,000 $ 100,968 $ 775,968 $ 2,830,000 Series ,505,000 1,765, ,000 75, , ,000 Series ,315,000 5,725, , , ,200 5,175,000 $ 10,995,000 $ 2,090,000 $ 331,180 $ 2,421,180 $ 8,905,000 3,000,000 BAYTOWN AREA WATER AUTHORITY REVENUE BONDS LONG TERM DEBT AMORITIZATION SCHEDULES Combined BAWA Debt, All Series Debt Requirements to Maturity Fiscal Principal Total Total Year 5/01 Interest Requirement ,090, ,180 2,421, ,165, ,518 2,429, ,290, ,060 1,485, ,025, ,870 1,187, , ,756 1,120, , , , , , , ,000 92, , ,000 82, , ,000 73, , ,000 62, , ,000 51, , ,000 39, , ,000 27, , ,000 13, ,826 Total $ 10,995,000 $ 1,742,228 $ 12,737,228 Combined BAWA Debt, All Series Debt Requirements to Maturity 2,500,000 Annual Amount 2,000,000 1,500,000 1,000,000 Interest Principal 500, Fiscal Year 11

33 BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Revenue Bonds Funding: BAWA-WWIS $ 9,975,000 Series 2006 Date of Issue - June 14, 2006 Term - 16 Years Fiscal Interest Principal Interest Interest Total Annual Principal Year Rate Due 5/01 Due11/01 Due 5/01 Interest Requirement Outstanding % $ 595,000 $ 2,115 $ 51,400 $ 53,515 $ 648,515 $ 9,380, % 530,000 77, , , ,152 8,850, % 540, , , , ,587 8,310, % 550, , , , ,159 7,760, % 565, , , , ,368 7,195, % 580,000 98,545 98, , ,090 6,615, % 590,000 91,585 91, , ,170 6,025, % 605,000 84,210 84, , ,420 5,420, % 620,000 76,345 76, , ,690 4,800, % 640,000 68,130 68, , ,260 4,160, % 655,000 59,490 59, , ,980 3,505, % 675,000 50,484 50, , ,968 2,830, % 695,000 41,034 41,034 82, ,068 2,135, % 710,000 31,130 31,130 62, ,260 1,425, % 735,000 20,835 20,835 41, , , % 690,000 10,178 10,178 20, ,356 - $ 9,975,000 $ 1,024,000 $ 1,114,713 $ 2,138,713 $ 12,113,713 Call Option: Bonds maturing on 05/01/2017 to 05/01/2022 callable in whole or in part inversely on any date beginning par. Revenue Bonds Funding: BAWA $ 6,505,000 Series 2007 Date of Issue - February 1, 2007 Term - 13 Years Fiscal Interest Principal Interest Interest Total Annual Principal Year Rate Due 5/01 Due11/01 Due 5/01 Interest Requirement Outstanding 2007 $ - $ - $ 66,153 $ 66,153 $ 66,153 $ 6,505, % 40, , , , ,612 6,465, % 40, , , , ,012 6,425, % 45, , , , ,412 6,380, % 45, , , , ,612 6,335, % 695, , , , ,812 5,640, % 715, , , , ,012 4,925, % 745, , , , ,412 4,180, % 775,000 85,806 85, , ,612 3,405, % 805,000 70,306 70, , ,612 2,600, % 835,000 54,206 54, , ,412 1,765, % 865,000 37,506 37,506 75, , , % 900,000 19,125 19,125 38, ,250 - $ 6,505,000 $ 1,135,891 $ 1,202,044 $ 2,337,935 $ 8,842,935 Call Option: Bonds maturing on 05/01/2016 to 05/01/2019 callable in whole or in part on any date beginning par. 12

34 BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Revenue Bonds Funding: BAWA $ 8,315,000 Series 2012 Issue Date - March 29, 2012 Term-20 Yrs Fiscal Interest Principal Interest Interest Total Annual Principal Year Rate Due 5/01 Due11/01 Due 5/01 Interest Requirement Outstanding % $ 485,000 $ 123,050 $ 103,500 $ 226,550 $ 711,550 $ 7,830, % 510,000 98,650 98, , ,300 7,320, % 520,000 93,550 93, , ,100 6,800, % 535,000 88,350 88, , ,700 6,265, % 540,000 83,000 83, , ,000 5,725, % 550,000 77,600 77, , ,200 5,175, % 570,000 72,100 72, , ,200 4,605, % 580,000 66,400 66, , ,800 4,025, % 290,000 60,600 60, , ,200 3,735, % 295,000 57,700 57, , ,400 3,440, % 300,000 54,197 54, , ,394 3,140, % 310,000 50,447 50, , ,894 2,830, % 315,000 46,184 46,184 92, ,368 2,515, % 325,000 41,459 41,459 82, ,918 2,190, % 335,000 36,584 36,584 73, ,168 1,855, % 345,000 31,350 31,350 62, ,700 1,510, % 360,000 25,744 25,744 51, ,488 1,150, % 370,000 19,894 19,894 39, , , % 385,000 13,650 13,650 27, , , % 395,000 6,913 6,913 13, ,826 - $ 8,315,000 $ 1,147,422 $ 1,127,872 $ 2,275,294 $ 10,590,294 Call Option: Bonds maturing on 05/01/2023 to 05/01/2032 callable in whole or in part on any date beginning par. 13

35 CITY OF HOUSTON UNTREATED WATER RATES Effective Month/Year 04/ / / / Rate 01/ FIRST 150 MGD/PER 1,000, NEXT 150 MGD 08/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 07/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 08/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 02/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 10/ FIRST 300 MGD/PER 1,000, NEXT 300 MGD 10/ UP TO 13.1 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO 13.1 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER / UP TO MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 06/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 04/ UP TO 20.0 MGD. IF WE GO OVER, THEN 5% ADDED TO ANYTHING OVER. BAWA EAST (2nd TAKE POINT) 6 MGD MINIMUM. 14

36 City Rate/1,000 gallons Other Rate/1,000 Gallons TREATED WATER RATES Increase- City Increase- Other Year 1981 $0.97 $ $0.97 $1.00 $0.00 $0.03 Comments $1.07 $1.10 $0.10 $0.10 Result of rising operating cost. (Raw water rates up 25%) $1.18 $1.21 $0.11 $0.11 Result of increase in raw water rates $1.26 $1.29 $0.08 $0.08 Funding for plant expansion debt $1.39 $1.42 $0.13 $0.13 Funding for new water line debt and City of Houston rate increase $1.46 $1.49 $0.07 $0.07 Funding for new water line debt and City of Houston rate increase $1.55 $1.58 $0.09 $ $1.71 $1.74 $0.16 $ $1.96 $1.99 $0.25 $ $2.15 $2.18 $0.19 $ $2.35 $2.39 $0.20 $ $2.53 $2.57 $0.18 $ $2.61 $2.65 $0.08 $ $2.74 $2.78 $0.13 $ $2.74 $2.78 $0.00 $ $2.74 $2.78 $0.00 $0.00 Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Funding for new water line debt, other operating increases and City of Houston rate increase. Excess revenues are sufficient to cover incremental operating cost. Excess revenues are sufficient to cover incremental operating cost. 15