City of Snoqualmie. Water, Sewer and Storm Utilities Rate Study Update. Council Meeting. January 23, Sergey Tarasov, Project Manager

Transcription

1 City of Snoqualmie Water, Sewer and Storm Utilities Rate Study Update Council Meeting January 23, 2017 Sergey Tarasov, Project Manager

2 Discussion Outline Revenue requirement Rate design New customer charges Connection charges General facilities charges (GFCs) Questions Page 2

3 Revenue Requirement

4 Key Assumptions - Operating Study period Focus on the next 6-years Projected rate revenue based on historical data Customer growth 0.50% per year 2017/2018 budget used as baseline O&M Additions: Water: 1 additional FTE starting in 2017 Sewer: decrease in O&M budget from adopted budget 2017: $261, : $162,000 Storm: $162,500 increase in O&M outlays in 2017 and 2018 only Page 4

5 Key Assumptions - Capital New Debt Revenue Bonds: Year Water Sewer Storm 2017 $ 7,145,432 $ 11,082,927 $ 1,351, ,897,983 5,160,008 31, ,039 1,663, , ,194,388 4,880,686 2,658, ,654 2,055,010 1,834, ,883,084 3,319,230 1,758,295 Total $ 18,566,578 $ 28,161,336 $ 8,132,389 Note: CIP inflated to the year of construction Issue: 30 year term, 4.5% interest, 1.0% issuance Future Issues: 20 year term, 5.0% interest, 1.0% issuance Page 5

6 Water Revenue Requirement $6,000,000 $5,000, % 5.00% 5.00% 5.00% 5.00% 3.00% $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ Cash Operating Expenses Existing Debt Service New Debt Service Additional Capital Funding Total Existing Revenues Total Revenues after Rate Increase Water Sample Bill Existing Sample Residential Monthly Bill $ $ $ $ $ $ $ $ Difference $ 2.32 $ 2.43 $ 2.56 $ 2.68 $ 2.82 $ 1.78 Proposed Increases 5.00% 5.00% 5.00% 5.00% 5.00% 3.00% Note: Sample bill for residential customer w ith 3/4 inch meter and av erage monthly usage of 7 ccf Page 6

7 Water Rate Comparison Water Utility - Avg. Residential Monthly Bill North Bend (2017) Snoqualmie (2020) Snoqualmie (2019) Snoqualmie (2018) Duvall (2017) Carnation Snoqualmie (2017) Snohomish Bellevue (2017) Snoqualmie (Existing) Issaquah Monroe (2017) Redmond Enumclaw (2017) $28.94 $31.75 $37.67 $37.09 $61.41 $56.36 $53.68 $51.12 $50.14 $49.35 $48.69 $47.74 $47.27 $46.37 $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 Notes: 1. Assumes residential meter under 1 inch and 7 ccf monthly usage. 2. Some 2017 rates were based on pre approved plans provided by those entities. 3. Rates for comparable agencies are 2016 or current year (2017) only. Page 7

8 Sewer Revenue Requirement $7,000,000 $6,000, % 5.50% 5.50% 3.00% $5,000, % 17.00% $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ Cash Operating Expenses Existing Debt Service New Debt Service Additional Capital Funding Total Existing Revenues Total Revenues After Rate Increase Sewer Sample Bill Existing Sample Residential Monthly Bill $ $ $ $ $ $ $ $ Difference $ 8.25 $ 9.65 $ $ 4.27 $ 4.51 $ 2.59 Proposed Increases 17.00% 17.00% 17.00% 5.50% 5.50% 3.00% Note: Sample bill for residential customer inside the City limits. Page 8

9 Sewer Rate Comparison Sewer Utility - Avg. Residential Monthly Bill North Bend (2017) Snohomish Carnation Monroe (2017) Enumclaw (2017) Snoqualmie (2020) Snoqualmie (2019) Bellevue (2017) Duvall (2017) Snoqualmie (2018) Issaquah Snoqualmie (2017) Redmond Snoqualmie (Existing) $99.49 $98.10 $94.51 $91.04 $81.97 $77.69 $72.53 $72.24 $66.41 $60.25 $56.76 $56.18 $48.51 $ $- $20.00 $40.00 $60.00 $80.00 $ $ $ Note: 1. Some 2017 rates were based on pre approved plans provided by those entities. 2. Rates for comparable agencies are 2016 or current year (2017) only. Page 9

10 Stormwater Revenue Requirement $3,000,000 $2,500, % 5.65% 5.65% 5.65% 5.65% 3.00% $2,000,000 $1,500,000 $1,000,000 $500,000 $ Cash Operating Expenses Existing Debt Service New Debt Service Additional Capital Funding Total Existing Revenue Total Revenues After Rate Increase Stormwater Sample Bill Existing Sample Residential Monthly Bill $ $ $ $ $ $ $ $ Difference $ 1.09 $ 1.16 $ 1.22 $ 1.29 $ 1.36 $ 0.76 Proposed Increases 5.65% 5.65% 5.65% 5.65% 5.65% 3.00% Note: Sample monthly bill for residential customer w ith 1 ESU Page 10

11 Stormwater Rate Comparison Storm Utility - Avg. Residential Monthly Bill Bellevue (2017) $28.36 Snoqualmie (2020) Snoqualmie (2019) Snoqualmie (2018) Snoqualmie (2017) Duvall (2017) Snoqualmie (Existing) $24.12 $22.83 $21.61 $20.45 $19.59 $19.36 Redmond Issaquah Snohomish $14.78 $14.39 $16.56 North Bend (2017) Monroe (2017) $11.36 $12.36 $- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 Note: 1. Assumes one ERU 2. Some 2017 rates were based on pre approved plans provided by those entities. 3. Rates for comparable agencies are 2016 or current year (2017) only. Page 11

12 Combined Rate Comparison Average Residential Monthly Bills North Bend (2017) Snoqualmie (2020) Snohomish Snoqualmie (2019) Bellevue (2017) Carnation Monroe (2017) Duvall (2017) Snoqualmie (2018) Snoqualmie (2017) Enumclaw (2017) Snoqualmie (Existing) Issaquah Redmond $ $ $ $ $ $ $ $ $ $ $ $ $ Water Sewer Storm $ Note: rates for comparable agencies are 2016 or current year (2017) only. Page 12

13 Rate Design

14 Rate Design Produce sufficient revenue to meet utility financial requirements Collect the target revenue level for each class of service Meet the goals and objectives of the utility Rate design consideration: Water, Stormwater & Irrigation: no structure changes Increases applied equally to fixed and variable charges Sewer: Residential: no structure changes Increases applied to fixed charges Commercial: strength based rates Page 14

15 Rates Water Meter Existing (2016) 2017 Proposed 2018 Proposed 2019 Proposed 2020 Proposed Res./MF. Comm/Irr. Res./MF. Comm/Irr. Res./MF. Comm/Irr. Res./MF. Comm/Irr. Res./MF. Comm/Irr. Monthly Fixed 3/4" $ $ $ $ $ $ $ $ $ $ " " " " " " " MF per Unit Volume (per 100 cf) Residential Block 1 (0-300cf) Block 2 ( cf) Block 3 (801+cf) Multifamily Commercial/Irrigation Notes: Outside City rates are 1.5 times the inside City rates. Low income senior/disable rate av ailable. $1.86 $1.95 $ $ $ Page 15

16 Rates Reclaimed Irrigation Customer Zones Existing Proposed (2016) Monthly Fixed Per Zone Cost $ 6.59 $ 6.92 $ 7.27 $ 7.63 $ 8.01 City of Snoqualmie 358 $ 2,356 $ 2,474 $ 2,597 $ 2,727 $ 2,864 Residential Owners Association 239 1,573 1,652 1,734 1,821 1,912 Business Park Owners Association Snoqualmie Ridge Joint Committee Venture Corporation Bandera Murray/Franklin Total 755 4,968 5,216 5,477 5,751 6,039 Volume (per 100 cf) Volume rate $ 2.49 $ 2.61 $ 2.75 $ 2.88 $ 3.03 Bult volume rate Page 16

17 Rates Stormwater Existing Proposed Description (2016) Monthly Charge (per ESU) $ $ $ $ $ Notes: Low income senior/disable rate av ailable. Page 17

18 Rates Sewer Existing Class Existing (2016) Residential (per unit) $ Multifamily (per unit) Commercial (per unit) Volume - per 100cf (601+ cf) 4.33 Notes: Low income senior/disable rate av ailable. Outside City rates are 1.5 times the inside City rates. Page 18

19 Why Sewer Strength Rates? Not all sewer flow is equal Higher concentrated sewer flows are more expensive to treat Increased capital requirements and ongoing O&M expenses Sewer strength charges allow for fair cost distribution between customers Customers with higher concentration will pay more Page 19

20 Customer Categories Residential E.g. single family homes, duplex, triplex, multifamily units Low Commercial (0-250 mg/l BOD and/or TSS) E.g., schools professional offices, specialty stores. Equal to domestic level concentration High Commercial (251+ mg/l BOD and/or TSS) E.g., repair shops, service stations, hospitals (with dining facilities), laundry, restaurants, hotels and dining facilities, breweries Note: the provided example businesses by strength class are a sample of the different types of businesses and do not represent the entire list. Page 20

21 Cost of Service by Category $2,500,000 Cost of Service Summary (Average Increase of 17.00%) (1.43)% $2,000,000 $1,500,000 $1,000, % $500,000 (25.96)% 2.51% $- Residential Multi Family Low Commercial High Commercial 2017 Existing $2,266, , , , COSA $2,233, , , ,427 Page 21

22 Recommended Rates Phase-in strength rates over time: 25% of Cost of Service by year 5 (2021) Recommended Rates Class Residential 15.9% 15.9% 15.9% 4.6% 4.6% Multi Family 15.9% 15.9% 15.9% 4.6% 4.6% Commercial Low Commercial 15.9% 15.9% 15.9% 5.2% 5.2% High Commercial 26.6% 25.7% 25.0% 11.2% 10.9% Total 17.0% 17.0% 17.0% 5.5% 5.5% Class Existing Monthly fixed Residential $ $ $ $ $ $ Multi Family Commercial Low Commercial High Commercial Volume per ccf > 6ccf per month (Commercial only) Commercial Low Commercial $ 4.33 $ 5.02 $ 5.82 $ 6.74 $ 7.09 $ 7.46 High Commercial Page 22

23 Impacts Brewery (High Commercial) Sewer Utility - Brewery Mo. Bill North Bend (2017) Carnation Snoqualmie (2020) Bellevue (2017) Snoqualmie (2019) Enumclaw (2017) Monroe (2017) Issaquah Snoqualmie (2018) Redmond Snohomish Snoqualmie (2017) Snoqualmie (Existing) Duvall (2017) $ $ $ $ $ $ $ $ $ $ $ $ $1, $1, $- $ $ $ $ $1, $1, $1, Page 23

24 Impacts Small Restaurant (High Commercial) Sewer Utility - Small Restaurant Mo. Bill Snoqualmie (2020) Carnation North Bend (2017) Snoqualmie (2019) Snohomish Snoqualmie (2018) Monroe (2017) Duvall (2017) Issaquah Bellevue (2017) Snoqualmie (2017) Enumclaw (2017) Redmond Snoqualmie (Existing) $ $ $ $95.92 $93.05 $86.16 $85.98 $79.07 $73.88 $72.78 $ $ $ $ $- $20.00 $40.00 $60.00 $80.00 $ $ $ $ Page 24

25 Impacts Glass Fabricator (Low Commercial) Sewer Utility - Glass Fabricator Mo. Bill North Bend (2017) Carnation Bellevue (2017) Enumclaw (2017) Monroe (2017) Issaquah Snoqualmie (2020) Redmond Snoqualmie (2019) Snohomish Snoqualmie (2018) Snoqualmie (2017) Snoqualmie (Existing) Duvall (2017) $ $ $ $ $ $ $ $ $ $ $ $ $1, $1, $- $ $ $ $ $1, $1, $1, $1, Page 25

26 New Customer Charges

27 New Customer Charges Connection Charges (physical connection) existing charge The cost to connect to the water, sewer or stormwater system No current connection charges for the storm water or irrigation utilities General Facilities Charge GFC- (buy-in fee) new charge One time charge imposed on new development or expanded connection to system as a condition of service Represents a prorated share of the cost of providing system capacity Charge calculated based on intent and structure of Revised Code of Washington (RCW ) Page 27

28 Connection Charges Water utility (last updated in 2002) Meter Existing Proposed (plus tax) Inside City Outside City Inside City Outside City 3/4" $ 2,150 $ 2,800 $ 5,233 $ 5,883 1" 2,300 3,000 5,240 5, " 3,300 4,300 6,764 7,764 2" 3,700 4,800 6,915 8,015 Sewer utility (last updated in 2001) Existing: $2,500 per single residential unit Proposed: actual cost to install the connection (due to depth of sewer) Stormwater (no current charges) Existing: no fee assessed Proposed: actual cost to install the connection Connection charges waived for the Snoqualmie Ridge Planning Area Page 28

29 General Facility Charges WATER GENERAL FACILITY CHARGE 2016 TOTAL GENERAL FACILITY CHARGE $ 7,421 Meter MCE Factor /4" 1.00 $ 7,421 1" , " ,735 2" ,576 3" ,206 4" ,677 6" ,353 SEWER GENERAL FACILITY CHARGE 2016 TOTAL GFC (PER ERU) $ 12,168 STORM GENERAL FACILITY CHARGE 2016 TOTAL GFC (PER ESU) $ 328 Notes: - GFCs will be escalated annually with an accredited escalation index such as the Engineering News Record (ENR) - Water GFC is on a per Meter Capacity Equivalent (MCE) basis - Sewer GFC is on a per Equivalent Residential Unit (ERU) basis 138 gpd - Storm GFC is on a per Equivalent Service Unit (ESU) basis 2,600 square feet of impervious area - Flow factors based on American Water Works Association (AWWA) Principles of Water Rates, Fees and Charges M1 Manual - Does not apply to Snoqualmie Ridge connections Page 29

30 GFC Survey: Combined Issaquah Redmond Snoqualmie (Current Study) Duvall Carnation North Bend Bellevue Snohomish Monroe Enumclaw General Facilities Charges $8,826 $14,148 $13,697 $11,567 $20,249 $19,917 $19,065 $18,107 $17,892 $23,690-5,000 10,000 15,000 20,000 25,000 Water Sewer Storm Water Notes:-Assume ¾ meters if available -City of Redmond assumes a medium size home charge. -City of Issaquah, Duvall and Redmond include a Regional Capital Facilities Charges Storm Notes: -City of Duvall GFC is per gross acre foot assumed 6 lots per gross acre foot Notes: -Municipalities with a King County Treatment charge assume a one time payment instead of the monthly installments for 15 years -Assumes ¾ meter if applicable Page 30

31 Proposed Cost of a New Residential Connection Water 2017 Connection Charge $5,233 General Facilities Charge $7,421 Sewer 2017 Connection Charge own crew General Facilities Charge $12,168 Stormwater 2017 Connection Charge own crew General Facilities Charge $328 Total Cost $25,150 Note: if latecomer fees are applicable, they would be added to these costs. Page 31

32 Recent S&P Global Ratings for Utilities Recent S&P Global Ratings raised the City s ratings to AA- from A Outlook is stable Financial risk All in coverage has been consistently strong over the past 3 fiscal years Large anticipated debt funded capital improvement plan is considered to be manageable given historical rate increases and strong all-in coverage metrics City s practices and policies are good and mostly comprehensive in nature Outlook Stable outlook reflects the expectation that the system s strong financial metrics will continue Page 32

33 Next Steps Incorporate feedback Ordinance to Parks and Public Works Committee on February 6 Public Hearing on the Ordinance on February 13 Public meetings Adopt Ordinance on February 27 Page 33

34 Questions/Discussion

35 Appendix

36 Background Last comprehensive rate study for Water, Sewer & Storm Utilities completed in Resulted in a six-year rate plan for each utility Utility Water 6.75% 6.75% 6.75% 6.00% 5.00% 4.00% Sewer 7.50% 7.50% 7.50% 7.50% 5.00% 3.00% Storm 17.75% 17.75% 17.75% 9.50% 5.00% 3.00% Equity adjustments were identified in the sewer utility and phased-in over the six year period Chose to revisit rates every 3 years to evaluate progress Page 36

37 GFC Survey Water General Facilities Charges Sewer General Facilities Charges Issaquah Redmond Duvall Snoqualmie (Current Study) North Bend Snohomish $4,382 $8,415 $8,285 $7,421 $6,880 $12,034 Carnation Snoqualmie (Current Study) Redmond Duvall Issaquah North Bend $12,168 $10,876 $10,461 $10,400 $10,222 $14,807 Monroe $4,111 Bellevue $9,995 Bellevue $3,487 Snohomish $9,315 Carnation $3,300 Monroe $7,456 Enumclaw $3,110 Enumclaw $5,716 $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 Notes: -Assume ¾ meters if available -City of Redmond assumes a medium size home charge. -City of Issaquah, Duvall and Redmond include a Regional Capital Facilities Charges Notes: Stormwater General Facilities Charges -Municipalities with a King County Treatment charge assume a one time payment instead of the monthly installments for 15 years -Assumes ¾ meter if applicable Issaquah $1,256 Redmond $958 North Bend $790 Bellevue $666 Snoqualmie (Current Study) Duvall $328 $319 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 Notes: -City of Duvall GFC is per gross acre foot assumed 6 lots per gross acre foot Page 37

38 Impacts Casino (High Commercial) Sewer Utility - Casino Mo. Bill North Bend (2017) Carnation Snoqualmie (Existing) Snoqualmie (2020) Bellevue (2017) Enumclaw (2017) Snoqualmie (2019) Monroe (2017) Issaquah Redmond Snoqualmie (2018) Snohomish Snoqualmie (2017) Duvall (2017) $8,349 $30,387 $30,109 $27,630 $27,326 $25,630 $24,491 $22,979 $21,867 $18,614 $17,396 $36,383 $49,337 $47,277 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Page 38