COMMUNITY WATER SYSTEM & WATER RATES

Transcription

1 COMMUNITY WATER SYSTEM & WATER RATES BEAR VALLEY COMMUNITY SERVICES DISTRICT January 29-30, 2019

2 WHY WE ARE HERE THE BVCSD BOARD OF DIRECTORS HAS RECEIVED A RATE STUDY FOR THE WATER SYSTEM THE BOARD HAS DIRECTED THAT WE INFORM RESIDENTS OF IDENTIFIED NEEDS STUDY RESULTS RECOMMENDATIONS SOLICIT COMMUNITY INPUT PRIOR TO SETTING A PUBLIC HEARING

3 OUTLINE PROVIDE BACKGROUND WHERE WE ARE NOW WATER BASE RATE COMPARISON THE WATER SYSTEM CURRENT ISSUES HISTORY OF THE WATER SYSTEM

4 DISCUSS SOLUTION THE RATE STUDY EFFECTS OF NEW RATES OUTLINE FINANCIAL STABILITY CAPITAL IMPROVEMENTS

5 OUTLINE NEXT STEPS SOLICIT COMMUNITY INPUT TAKE QUESTIONS

6 BASE RATE COMPARISON FY FY FY Residential Residential Residential Base Rate Base Rate Base Rate Agency Monthly Agency Monthly Agency Monthly 1 Kernville (CA Water Service Company) $ Kernville (CA Water Service Company) $ Kernville (CA Water Service Company) $ Frazier Park Public Utility District $ Frazier Park Public Utility District $ Frazier Park Public Utility District $ East Niles CSD $ East Niles CSD $ East Niles CSD $ Lake Arrowhead CSD $ Lake Arrowhead CSD $ Lake Arrowhead CSD $ California City $ California City $ California City $ City of Big Bear Lake $ City of Big Bear Lake $ City of Big Bear Lake $ Truckee Donner $ Truckee Donner $ Truckee Donner $ Ridgecrest (Indian Wells Valley WD) $ Shafter $ Bear Valley CSD $ Shafter $ Ridgecrest (Indian Wells Valley WD) $ Shafter $ Ojai (Casitas Water District) $ Rosamond $ Ridgecrest (Indian Wells Valley WD) $ Rosamond $ Ojai (Casitas Water District) $ Arvin $ Lamont Public Utility District $ Lamont Public Utility District $ Rosamond $ Bakersfield District (CA Water Service Company) $ Arvin $ Ojai (Casitas Water District) $ Big Bear City CSD $ Bear Valley CSD $ Lamont Public Utility District $ Wrightwood (Golden State Water Co.) $ Bakersfield District (CA Water Service Company) $ Big Bear City CSD $ Arvin $ Big Bear City CSD $ Bakersfield District (CA Water Service Company) $ Stallion Springs CSD $ Wrightwood (Golden State Water Co.) $ Wrightwood (Golden State Water Co.) $ Delano $ Los Osos CSD $ Stallion Springs CSD $ Los Osos CSD $ Stallion Springs CSD $ Los Osos CSD $ Tehachapi Outside Corporate Limits $ Delano $ Tehachapi Outside Corporate Limits $ Wasco $ Tehachapi Outside Corporate Limits $ Delano $ Golden Hills CSD $ Wasco $ Wasco $ Crestline $ Golden Hills CSD $ Golden Hills CSD $ Bear Valley CSD $ Crestline $ Crestline $ Tehachapi Zone B $ Tehachapi Zone B $ Tehachapi Zone B $ Tehachapi Zone A $ Tehachapi Zone A $ Tehachapi Zone A $ Mammoth Community Water District $ Mammoth Community Water District $ Mammoth Community Water District $ City of Bakersfield $ City of Bakersfield $ City of Bakersfield $ McFarland $ McFarland $ McFarland $ Maricopa (West Kern Water District) $ Maricopa (West Kern Water District) $ Maricopa (West Kern Water District) $ Taft (West Kern Water District) $ Taft (West Kern Water District) $ Taft (West Kern Water District) $8.65 *Shows BVS base rate is currently quite low. Future rates will neither be the lowest nor the highest.

7 CURRENT SYSTEM ISSUES DUE TO AGE AND MULTIPLE OTHER FACTORS 109 LEAKS IN SERVICE LINE LEAKS/BREAKS * Multiple leaks are triaged for severity. Many must wait for time and staff availability. *BVS has 3,602 service connections = 148,000 lineal feet of service line. * This one line had 13 separate repairs over the years.

8 CURRENT SYSTEM ISSUES DUE TO AGE AND MULTIPLE OTHER FACTORS LOST REVENUES & WATER WASTE Total Production Total Sold % Unbilled % % % % % % % % % *Assuming $2M in annual sales, 10% loss equals $200,000 in lost revenue.

9 BEAR VALLEY SPRINGS WATER SYSTEM SYSTEM BUILT ORIGINAL BEAR VALLEY WELLS 18 ABANDONED/DESTROYED 6 LAKE FILL WELLS 4 DISCONNECTED CONTAMINANTS 3 DISCONNECTED NEED REHABILITATION 7 ACTIVE POTABLE WELLS WITHIN BEAR VALLEY

10 BEAR VALLEY SPRINGS WATER SYSTEM CUMMINGS VALLEY WELLS ADDED ORIGINAL WELLS 2 CURRENTLY BEING REFURBISHED 2 DISCONNECTED CONTAMINANTS 2 ACTIVE POTABLE WELLS * Water from CV wells is purchased from $400/acre foot.

11 BEAR VALLEY SPRINGS WATER SYSTEM COMPLEX SYSTEM WITH 110 MILES OF SERVICE MAINS 26 ACTIVE WELLS 43 STORAGE TANKS + 7 PNEUMATIC TANKS 19 PRESSURE ZONES 36 BOOSTER STATIONS 75 BOOSTER PUMPS

12 BEAR VALLEY SPRINGS WATER SYSTEM COMPLEX SYSTEM WITH 21 PRESSURE REDUCING STATIONS 171 AIR VACS 1497 VALVES 3602 SERVICE CONNECTIONS 148,000 LINEAL FEET 2962 WATER METERS 653 FIRE HYDRANTS

13 BEAR VALLEY SPRINGS WATER SYSTEM Water Agency Compairson Chart COMPLICATED SYSTEM * Efforts to find a system comparable to BVS were unsuccessful. Agency Service Connections Population (Meters) # Wells # Boosters # Tanks # PRS # Pressure Zones Miles of Main Line Annual Operating Budget Base Fees Water Rate # of Tiers (lowest Tier) Population Density Per Sq. Mile Land Area in Sq. Miles FullTime Water Supply Employees 1 West Kern Water District Multiple Multiple 300+ $ 21,000, $ 8.65 $ Unknown Unknown Unknown Notes McKittrick, Derby Acres, Fellows, Taft, Maricopa, Valley Acres, Dustin Acres, Tupman 2 McFarland Unknown Unknown Unknown $ 1,065, $ $ City Limits 3 Bakersfield City Unknown Unknown Unknown Unknown Unknown $ 22,332, $ $ City Limits 4 Tehachapi Unknown 5 Unknown 4 Unknown $ 2,189, $ $ City limits and some Unicorporated Areas of Kern 5 Mammoth Lakes CWD Unknown Unknown Unknown Unknown Unknown $ 3,233, $ $ Immediate City area 6 Bear Valley CSD $ 3,882, $ $ Within CSD Boundaries only 7 Escalon $ 927, $ $ City Limits N/O Modesto 8 Crestline $ 3,600, $ $ Town of Crestline near Big Bear and Lake Arrowhead 9 Golden Hills CSD a few 8 Unknown Unknown Unknown $ 3,678, $ $ CSD Area 10 Wasco Unknown Unknown Unknown Unknown Unknown $ 3,108, $ $ City Limits Water is also provided through facilities 11 Pismo Beach Unknown 10 Unknown $ 3,718, $ $ maintained and operated by Oceano CSD 12 Delano $ 3,200, $ $ City limits 23 Stallion Springs CSD $ 1,126, $ $ CSD Area 13 CWS Kernville Unknown Unknown Unknown Unknown Unknown Unknown $ $ Unknown Unknown Unknown Water handled through Cal Water 14 Golden State Water Co Unknown Unknown Unknown Unknown Unknown Unknown $ Unknown Unknown Unknown Wrightwood 15 Winters Unknown Unknown Unknown Unknown Unknown $ 1,503, $ $ Immediate City area 16 Lake Arrowhead CSD Unknown Unknown Unknown Unknown Unknown $ 7,458, $ $ Immediate City area (water system also recharged from lake) (base fee based on 3/4" meter) 17 Big Bear City CSD Unknown Unknown 81 $ 3,982, $ $ Immediate City area 18 Arvin CSD $ 3,000, $ $ City Limits 19 Shafter Unknown Unknown 70 $ 2,516, $ $ City limits and some Unicorporated Areas of Kern 20 Lamont Public Utility District Unknown Unknown $ 2,071, $ $ Lamont and Weedpatch 21 Frazier Park Unknown Unknown Unknown Unknown Unknown $ 1,155, $ $ Immediate City area 22 Indian Wells Valley Water Ridgecrest area. Also has zone charges $ 11,973, $ $ District starting at $ Truckee Donner $ 14,343, $ $ Truckee - Donner Pass Area. Also has zone charges starting at $ California City Unknown 5 Unknown Unknown 313 $ 5,460, $ $ City Limits 25 East Niles CSD Unknown Unknown 110 $ 1,870, $ $ Unknown Unknown Unknown Portions of Bakersfield and Unincorporated Kern *Base Fees are based on 1" meters when possible and bi-monthly charges were split in half for comparison purposes *Data is from Urban Water Management Reports, Rate Sheets, Websites, s and Telephone calls with Other Agencies. * All Water Agencies over 3000 customers must have all properties metered by 2020 * 7 of our tanks are small hydropneumatic tanks (under 5000 gallons) * 4 of our PRS's are at tank intakes on backside

14 BEAR VALLEY SPRINGS WATER SYSTEM COMPLICATED SYSTEM Agency Service Connections (Meters) Population # Wells # Boosters # Tanks # PRS # Pressure Zones Miles of Main Line Annual Operating Budget West Kern Water District Multiple Multiple 300+ $ 21,000, McFarland Unknown Unknown Unknown $ 1,065, Bakersfield City Unknown Unknown Unknown Unknown Unknown $ 22,332, Tehachapi Unknown 5 Unknown 4 Unknown $ 2,189, Mammoth Lakes CWD Unknown Unknown Unknown Unknown Unknown $ 3,233, Bear Valley CSD $ 3,882, Escalon $ 927, Crestline $ 3,600, Golden Hills CSD a few 8 Unknown Unknown Unknown $ 3,678, Wasco Unknown Unknown Unknown Unknown Unknown $ 3,108, Pismo Beach Unknown 10 Unknown $ 3,718, Delano $ 3,200, Stallion Springs CSD $ 1,126,155.00

15 BEAR VALLEY SPRINGS WATER SYSTEM

16 WELL PRODUCTION *Deferred maintenance on District wells leads to reduced production, requiring increased importation of Cummings Valley $400/acre foot. *1 acre foot = 325,851 gallons

17 FINANCIAL CONDITION HISTORY OF FINANCES LAST RATE INCREASE WAS IN 2008

18 FINANCIAL CONDITION HISTORY OF FINANCES REVENUES AT OR NEAR LOWEST POINT IN 10 YEARS *Even after 2008 rate increase, actual revenues do not meet the level anticipated during budget preparation.

19 FINANCIAL CONDITION HISTORY OF FINANCES TOTAL EXPENSES LESS THAN BUDGETED 10 OF 10 YEARS SINCE *Because of the revenue shortfalls, the District has kept expenses below budgeted needs.

20 FINANCIAL CONDITION HISTORY OF FINANCES REDUCED PURCHASES * Maintenance and small to midlevel projects are delayed. Inventory is not replenished.

21 FINANCIAL CONDITION HISTORY OF FINANCES VACANT POSITIONS * Staffing is below optimum level.

22 FINANCIAL CONDITION HISTORY OF FINANCES DEFERRED MAINTENANCE DEFERRING CAPITAL OUTLAY MAINTENANCE & REPAIRS ON AVERAGE OVER $600,000 PER YEAR OF DEFERRED MAINTENANCE PROJECTS * Necessary large infrastructure projects and upgrades are deferred.

23 FINANCIAL CONDITION HISTORY OF FINANCES CASH BALANCES DECLINING *Even with keeping expenses as low as possible, we are dipping into the reserve fund to finance daily operations. * Items included in the budget are essential to the operation of the system. *Completing all budgeted items, would exhaust the reserve fund. * Once the reserve is exhausted, the water system will not be able to sustain operations, with needed repairs still incomplete.

24 FINANCIAL CONDITION HISTORY OF FINANCES * Since last rate increase, Revenues decrease, expenses increase, reserve balance falls.

25 FINANCIAL CONDITION HISTORY OF FINANCES DEFERRED MAINTENANCE 2017/18 BUDGET 62 NEEDS IDENTIFIED 28 BUDGETED 34 UNBUDGETED 4 FULLY OR PARTIALLY COMPLETED 5 UNPLANNED REPAIRS

26 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 BUDGETED

27 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 BUDGETED

28 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED *$9,000,000 in Unfunded, but Critical Projects.

29 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED *$9,000,000 in Unfunded, but Critical Projects.

30 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED OAKFLAT BOOSTER * Unbudgeted emergency repair.

31 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED PARAMOUNT MAINLINES *Unbudgeted emergency repair.

32 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED FOXRIDGE MAINLINE * Unbudgeted emergency repair..

33 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED PORT ROYAL MAINLINE *Unbudgeted emergency repair. *389,118 gallons of precious water lost.

34 FINANCIAL CONDITION DEFERRED MAINTENANCE 2017/18 UNBUDGETED DEERTRAIL PRESSURE REDUCING STATION * Unbudgeted emergency repair.

35 THE RATE STUDY RECOGNIZING THE NEED TO FULLY UNDERSTAND THE REQUIREMENTS OF THE SYSTEMS, THE BOARD OF DIRECTORS ORDERED A 3-PHASE STUDY FOR ALL THREE UTILITIES DATA COLLECTION & REVIEW CONDITION ASSESSMENTS CAPITAL IMPROVEMENT PLANS RATE STUDIES * Including Water, Wastewater and Solid Waste.

36 THE RATE STUDY BALANCING THE COMPLEXITY OF THE REQUIRED ANALYSIS AGAINST THE IMMEDIATE FINANCIAL CONCERNS OF THE WATER UTILITY, THE BOARD ORDERED A WATER RATE STUDY TO BE COMPLETED IN THE INTERIM DRAFT REPORT WAS REVIEWED ON JANUARY 10, 2019

37 THE RATE STUDY CONDUCTED BY WILLDAN FINANCIAL SERVICES DEVELOPED METHODOLOGIES FOR AMERICAN WATER WORKS ASSOCIATION (AWWA)

38 THE RATE STUDY CONDUCTED BY WILLDAN FINANCIAL SERVICES COMPLETED STUDIES FOR 30 MAJOR CLIENTS IN LAST 5 YEARS AVENAL, CA FILLMORE, CA ELK GROVE WATER DISTRICT, CA BANNING, CA FLAGSTAFF, AZ MCKINLEYVILLE CSD, CA BLYTHE, CA KINGMAN, AZ MISSION SPRINGS WATER DISTRICT, CA CALEXICO, CA LOMPOC, CA MONTE VISTA WATER DISTRICT, CA COACHELLA, CA NORWALK, CA NEVADA IRRIGATION DISTRICT, CA COVINA, CA PINOLE, CA PHELAN PINION HILLS CSD, CA CRESCENT CITY, CA SOLEDAD, CA RAINBOW MUNI WATER DISTRICT, CA DELANO, CA TULARE, CA APPLE VALLEY, CA DINUBA, CA TWENTYNINE PALMS, CA GILBERT, AZ DURANGO, CO SAN DIEGO COUNTY, CA QUEEN CREEK, AZ

39 THE RATE STUDY GOALS OF RATE STUDY ACHIEVE REQUIRED DEBT SERVICE COVERAGE RATIO BUILD OPERATING RESERVES 120 DAYS ADDRESS DEFERRED CAPITAL NEEDS * The District agreed to maintain a 1.1 fund balance to debt payment ratio, but has not been in compliance with this loan covenant. *Healthy operating reserves are necessary for emergency situations and to maintain our credit worthiness. *Infrastructure needs are reaching a critical level.

40 THE RATE STUDY METHODOLOGY REVIEWED PAST 5 YEARS REVENUES & EXPENSES * Based on actual expenditures; what we are spending, but which is not reflective of the true needs of the water system.

41 METHODOLOGY PROJECTED FUTURE REVENUES THE RATE STUDY *Based on budgeted expenditures; what we should be spending on the water system.

42 METHODOLOGY THE RATE STUDY PROJECTED FUTURE OPERATING EXPENSES DEVELOPED RATES TO ACHIEVE GOALS *Based on budgeted expenditures; what we should be spending on the water system. *To cover $450,000 in capital outlay from previous budgets, plus an additional $300,000 to address additional critical deferred infrastructure needs.

43 RATE STUDY RECOMMENDATIONS RATE STRUCTURE CHANGE CURRENTLY 40% - 60% BASE RATE TO WATER USAGE 7 VOLUMETRIC TIERS LEADS TO SHORTFALLS WHEN CONSUMPTION FALLS DOES NOT COVER BASE OPERATIONAL COSTS RECOMMENDED 60% - 40% BASE RATE TO WATER USAGE 2 VOLUMETRIC TIERS ESTABLISH ADEQUATE RESERVES STABILIZE OPERATIONS ADDRESS DEFERRED MAINTENANCE

44 FINANCIAL STABILITY EFFECTS OF NEW RATES COMPLIANT WITH DEBT SERVICE COVERAGE RATIO REQUIREMENTS ACHIEVED IN YEAR 2

45 FINANCIAL STABILITY EFFECTS OF NEW RATES OPERATIONAL RESERVES 120 DAY GOAL ACHIEVED IN YEAR 5 * Improved ability to respond to emergencies.

46 CAPITAL IMPROVEMENTS EFFECTS OF NEW RATES ADDITIONAL FUNDS FOR DEFERRED CAPITAL IMPROVEMENTS ~$450,000 CURRENT $300,000 ADDITIONAL PROJECTS WILL BE UNDERTAKEN & COMPLETED DECREASED IMPORTED WATER COSTS INCREASED AVAILABLE FUNDS POSSIBLY AN ADDITIONAL $150,000 *Planned repairs and replacements are more cost effective than emergency call-outs. * Currently operational District wells can be rehabilitated as well as those which have been take out of service. Rehabilitation has the potential to greatly improve production.

47 BULLET POINTS CSD HAS BEEN RUNNING DEFICITS IN THE WATER FUND FOR SEVERAL YEARS BECAUSE OF RISING COSTS & LOWER REVENUES BVS HAS A COMPLEX & COSTLY WATER SYSTEM BECAUSE OF THE INCREASED NUMBER OF TANKS, WELLS, BOOSTER STATIONS, PRESSURE REDUCTION STATIONS AND PRESSURE ZONES. BVS HAS A VERY SMALL NUMBER OF SYSTEM USERS PER MILE OF PIPE TO SHARE THE COSTS OF THE SYSTEM

48 NEXT STEPS HERE TO ANSWER QUESTIONS & SOLICIT PUBLIC INPUT COLLECT & TABULATE COMMENTS BY FEBRUARY 5, S. LOWER VALLEY ROAD WILL BE GIVEN TO THE BOARD OF DIRECTORS FEBRUARY 14, 2019 BOARD OF DIRECTORS WILL: CONSIDER FEEDBACK FINALIZE PROPOSED RATES SET PUBLIC HEARING

49 NOTICE OF PUBLIC HEARING MAILED TO ALL PROPERTY OWNERS 45 DAYS PRIOR TO PUBLIC HEARING PROPOSED RATES PROTEST PROCEDURE APRIL 11, 2019 (ANTICIPATED) BOARD OF DIRECTORS WILL: NEXT STEPS CONDUCT PUBLIC HEARING HEAR AND CONSIDER OBJECTIONS ADOPT RESOLUTION SETTING NEW WATER RATES IF ABSENCE OF MAJORITY PROTEST

50 MAY 2019 NEXT STEPS IF APPROVED, NEW RATES BECOME EFFECTIVE REFLECTED IN JUNE BILLS

51 QUESTIONS & PUBLIC INPUT FOR MORE INFORMATION VISIT: SEND QUESTIONS OR COMMENTS TO: S. LOWER VALLEY ROAD