District of Clearwater Utility Rate Review

Transcription

1 District of Clearwater 2018 Utility Rate Review Janice Aver May 2018

2 Table of Contents BACKGROUND... 1 FULL COST OF SERVICE... 2 OPERATIONS... 3 CAPITAL... 5 RESERVES RATES RECOMMENDATIONS APPENDICES... 19

3 Background The District of Clearwater is committed to improving their asset management practices in an ongoing manner and to further this goal, undertook this review to determine the full cost of service for both water and sewer operation and to recommend what the required rates are to fully fund these services on a sustainable basis. The objective was to review and recommend new rates for water and sewer services based on the following: Full cost recovery of system operating costs Full cost of capital infrastructure requirements Reserve contributions required for long term maintenance and replacement of all related assets To complete the analysis, a long term financial model that covers 20 years was developed based on the structure of the existing 2018 Financial Plan. The model was built based on the goal of creating rates that will accomplish full cost recovery of all operating and capital infrastructure requirements. The review looked at existing rate structures and customer types to evaluate the effect of the various rates considered. In undertaking this review consideration was also given to recent grants applications and past studies the District has completed, including studies to determine the overall financial requirements and risk assessment of the infrastructure of water and sewer assets that are critical to the provision of clean water and disposal of wastewater. The reports referenced in preparing this report are: 1. Strategic Priorities Fund Capacity Building Grant Application, District of Clearwater Infrastructure Master Plan, Urban Systems, March Risk Assessment of Buried Linear Infrastructure, True, December 2017 The major consideration that came out of these documents included: 1. Ensure Utility rates capture full costs Urban Systems 2. Continue to regularly inspect the condition of existing sewer assets True Consulting 3. Improve Water Asset inventory and assessment True Consulting and District Grant application

4 The recommendations are also influenced by the fact that the District recently acquired funding to undertake an Asset Management Investment Plan for Water and Sewer which will further inform and improve the financial management of Water and Sewer Services and ensure their long term sustainability. Full Cost of Service To completely understand and calculate the full cost of service, model the following items need to be considered and included in this model: Expenditures Current usage or consumption of services Growth in the community Administration and Operations costs Allocations from other departments New Infrastructure requirements o Planning and subdivision o Development Cost Charges o Development Connection Fees o Non-growth amounts Existing Infrastructure requirements o Replacement schedules o Replacement funding o Operation and Maintenance Non-Rate Revenues Allocations to other departments Fees and Charges Grants and Contributions Other revenue sources The total of expenditures less the total non-rate revenue will provide the amount of revenue required from user rates. See Revenue Requirement, Table 2. 2

5 Operations Expenditures The water and sewer operation and maintenance costs included in the financial model are based on the Districts 2018 budget. The following cost factors were used to create the 20-year model. Electricity expenses were increased annually by 5% All other operating expenses were increased annually by 2% Total water operating expenditures for water in 2018 is $447,000, and projected to increase to $726,000by Total sewer operating expenditures budgeted in 2018 are $182,000, and are projected increase to $207,000 by Sewer expenditures do not increase by much as the current debt will be eliminated by The model does not consider any new debt Table 1: Operating and Maintenance Costs Operating and Maintenance Costs Budget Forecast Water 447, , ,000 Sewer 182, , ,000 Revenue The water and sewer revenue amounts included in the forecast are based on the Districts 2018 budget. The revenue sources were broken into two types, other revenue and user fee revenue. The other revenue sources were used to establish the net revenue requirement funded from water and sewer user rates. Sources of other revenue includes: 3 The forecast for revenue requirements from user fee revenue is $807,000 for water and $242,000 for sewer by 2038 All other revenue was increased annually at 2% to account for inflation

6 There is no forecast for future growth in the District in this review, however future Infrastructure Investment Plans should include forecasts. Option #5 for Water considers borrowing to fund capital program. The revenue increase appears less in sewer due to debt that is retired before Table 2: Rate Revenue Requirement Rate Revenue Requirement Budget Forecast Water 303, , ,000 Sewer 127, , ,000 Table 2a: Rate Revenue Requirement with Borrowing Water only Rate Revenue Requirement - With Borrowing Budget Forecast Water 303, ,000 1,352,000 4

7 Capital Capital Infrastructure The asset information in the review came from the Infrastructure Master Plan - Urban Systems 2013, and the recent Risk Assessment of Buried Linear Infrastructure True Consulting Total length of water assets is 41.5km. The risk assessment of water assets is based on material and age as no condition information was available at time of study. Total length of sewer assets is 7.6km. The risk assessment of sewer assets is based on a combination of condition, material and age. Condition was available for only part of the system. The water assets risk for the entire system is estimated at 30% of assets are at high to very high risk, and 70% at medium to very low risk. The sewer assets risk for the entire system is estimated at 20% of assets being at high to very high risk, and 80% at medium to very low risk. The first water and sewer assets where installed in the 1970 s and have a useful life, of anywhere from 50 years to 100 years depending on material used. Replacement value of water assets is approximately $14,700,000 based on the 2013 Infrastructure Master Plan. Replacement value of sewer assets is approximately $2,300,000 based on the 2013 Infrastructure Master Plan. New or Growth Related Capital This information comes from District staff on future projects related to new capital and/or expansion of the existing systems. Addition of new assets or upgrades to existing systems have not been included in the amounts required for transfers to reserves in the 2013 Infrastructure Master Plan. These amounts will increase the overall cost of replacement of the assets and therefore the required annual contributions to the reserves. The sewer system is projected to be upgraded and expanded to include the Dutch Lake area for an estimated cost of $3,110,000. 5

8 The water system is projected to be upgraded to include a Universal Water Meter Program at an estimated cost of $2,500,000. Water Capital Projects Table 3: Water Capital Projects PROJECT NAME Location From To Year AMOUNT Russell Creek Intake - Replace Screens and Intake 2018 $100,000 Replace PRV Clearwater Station Road at Swanson Road 2019 $120,000 New 250 mm MOld Hwy 5 Camp Two Rd. Ex. 250 mm Main on Old Hwy $459,000 New PRV Clearwater Village Road at Norfolk 2021 $200,000 New 250 mm MSunshine Valley Rd $198,000 Water Main Replacement Allowance 2029 $410,560 Water Main Replacement Allowance 2030 $410,560 New ReservoirCamp Two Rd $900,000 New 300 mm WCamp Two RdHwy 5 New Reservoir 2030 $712,500 Water Main Replacement Allowance 2031 $410,560 New 300 mm MOld Hwy 5 Well No.1 Hwy $675,000 Water Main Replacement Allowance 2032 $666,267 New 250 mm MPark Dr. Hwy 5 Norfolk Rd $1,044,000 Russell Creek Booster Station - Replace Pumps 2032 $25,000 Russell Creek Intake - Replace Pumps 2032 $30,000 Water Main Replacement Allowance 2033 $666,267 Water Main Replacement Allowance 2034 $749,887 Water Main Replacement Allowance 2035 $749,887 New 300 mm MWest of ClearwEden Rd. Archibald Rd $145,000 Water Main Replacement Allowance 2036 $362,336 Water Main Replacement Allowance 2037 $362,336 Russell Creek Intake - Replace Chlorination System 2037 $25,000 Russell Creek Intake - Replace Electrical & Controls 2037 $95,000 Russell Creek Booster Station - Replace Electrical & Controls 2037 $110,000 Water Main Replacement Allowance 2038 $412,359 Water Main Replacement Allowance 2039 $164,844 Water Main Replacement Allowance 2040 $164,844 Archibald Reservoir - Replace Electrical & Controls 2040 $30,000 New PRV Lodge Dr (incl. Piping to Grizzly Heights) 2040 $300,000 Universal Water Meter Program $2,500,000 Water Main Replacement Allowance 2041 $81,224 Water Main Replacement Allowance 2042 $81,224 $13,361,656 * source: Infrastruture Master Plan, Urban Systems

9 Sewer Capital Projects Table 4: Sewer Capital Projects That policy be set to direct what a reasonable amount of total capital reserve should be based on current asset state and condition. That policy be set to direct what a reasonable amount of total capital reserve should be based on current asset state and condition. Sewer Project Description Year Amount Sewer Main Replacement Allowance 2029 $63,585 Hospital Pump Station - Replace Pumps 2030 $15,000 Sewer Main Replacement Allowance 2030 $63,585 WWTP - Upgrade Cell #2 to Complete Mix Tank + add more RI Basins 2030 $11,850 SCADA Upgrades - Eden Road Lift Station 2018 $158,620 SCADA Upgrades - Clearview Egram Homes Lift Station estimate 2019 $175,000 Upgrades - Expansion to Dutch Lake Area TBD $3,110,000 Sewer Main Replacement Allowance 2031 $63,585 Sewer Main Replacement Allowance 2032 $63,585 Sewer Main Replacement Allowance 2033 $63,585 Sewer Main Replacement Allowance 2034 $63,585 Sewer Main Replacement Allowance 2035 $82,004 Eden Road Pump Station - Replace Pumps 2035 $15,000 Sewer Main Replacement Allowance 2036 $18,418 Sewer Main Replacement Allowance 2037 $18,418 Sewer Main Replacement Allowance 2038 $18,418 Sewer Main Replacement Allowance 2039 $18,418 Sewer Main Replacement Allowance 2040 $18,418 Sewer Main Replacement Allowance 2041 $18,418 $4,059,495 * source: Infrastruture Master Plan, Urban Systems 2013 Development Cost Charges Development Cost Charges are intended to facilitate development by providing a method to finance capital projects related to roads, drainage, sewers, water and parkland. In 2015 the District adopted a Development Cost Charge Bylaw to provide funding to water and sewer projects which are specifically related to new development. Those projects related to specific area will receive a portion of funding from new homes and other development. The following table shows the calculation and total amount of revenue to be collected through DCC s. 7

10 Table 5: Water and Sewer DCC Projects Water DCC Projects Total DCC Total Estimated Design Cost per Population Benefit to New Cost Population Capita Increase Development Water supply well #1 replacement $ 2,863, $ $ 283, mm from well#1 to Hwy 5 $ 900, $ $ 89, mm from Hwy 5 to Eden Rd. $ 460, $ $ 45, mm from Eden Rd. to Archibald Rd. $ 580, $ $ 57,446 Total $ 4,803,000 $ 475,713 Municipal Assist Factor 1% $ 4,757 DCC Recoverable $ 470,956 Less CEC Reserves $ 39,222 $ 431,734 New Percent Sewer DCC Projects Development Aportioned to Total Estimated Total Capacity New Benefit to New Cost Capacity required Development Development New headworks/screening facility $ 483, % $ 45,400 Standby power $ 105, % $ 33,500 Convert cell 1 and add R1 capacity $ 1,015, % $ 206,000 Total $ 1,603,000 $ 284,900 Municipal Assist Factor 1% $ 2,849 DCC Recoverable $ 282,051 Less CEC Reserves $ 34,308 $ 247,743 * source: Development Cost Charge - Bylaw 127 Technical Appendix, True Consulting 2014 The existing DCC bylaw was completed in early 2015 and should be reviewed to determined if new projects can be partially funded through this option. Capital Maintenance This information comes from the District s current 2018 budget and makes no assumption that the amounts are sufficient to maintain assets in adequate operating condition over time. Once the Infrastructure Investment Plan is completed that information can be used to help set optimum levels of maintenance to keep assets in the best operating condition over their useful life. These amounts are currently funded through annual revenue. The risk of not providing adequate maintenance is that assets may fail or not last for their full useful life, requiring earlier than anticipated replacement or even increased costs to maintain. 8

11 9 Annual maintenance and small equipment for water assets in 2018 budget is $122,000, this has been forecast at 2% increase annually to account for inflation. Annual maintenance and small equipment for sewer assets in 2018 budget is $30,000, this has been forecast to increase at 2% per year to account for inflation

12 Reserves The forecast for reserves requirements is taken from information contained in the 2013 Infrastructure Master Plan. The twenty year (20) forecast will reduce the annual effect of rate increases. 10 The requirement for water asset capital reserve contribution was calculated at $260,000 annually (as identified in the Infrastructure Master Plan, Urban System 2013) The requirement for sewer asset capital reserve was calculated at $50,000 annually (as identified in the Infrastructure Master Plan, Urban System 2013) As the state and condition of assets change over time, and as new assets are added or the expansion of systems occur, the amounts required to fund a long term financial model will have to be modified accordingly. Even though the current risk assessment shows that annual requirements may be less than originally calculated, no change was made based on this information. Further information is required before a reasonable calculation could be made. Some of the information that is needed to update required reserve contributions will include: Current state and conditional of all water and sewer assets. Growth estimates which will inform required system upgrades and additions to existing assets. Confirmation of all existing asset inventory. Based on the current twenty (20) year forecast the reserve funds for both water and sewer will not receive sufficient transfer to keep pace with the projects planned. The options are to borrow, apply for grants and/or increase transfers to reserves. Table 6: Projected Reserve Balances Projected Capital Reserve Balances Budget Forecast Water 590, ,000 (8,522,000) Sewer 163, ,000 1,387,000 The alternate scenario would be to borrow the funds to complete the capital projects:

13 Table 7: Projected Reserve Fund Balance with Borrowing Projected Capital Reserve Balances - with Borrowing Budget Forecast Water 590, ,000 1,634,000 While this option will fund capital projects it does add additional cost for debt payment: Table 8: Projected Borrowing Projected Total Borrowing Total Debt Incurred Annual 2019 to 2038 Water 426,000 8,520,000 The annual costs of repaying this debt would need to be recovered through user fee revenue which would further increase the revenue requirement: Table 9: Rate Revenue requirement with Borrowing Rate Revenue Requirement - With Borrowing Budget Forecast Water 303, ,000 1,352,000 These debt costs would substantially increase the rate for water user rates, while sewer user rates are not affected as there is no requirement to borrow long term funds. This is due to the size of the sewer capital program compared to water capital program which is far more substantial. 11

14 Rates The existing rate structure for the District takes two forms 1) a flat rate parcel tax that was implemented to help cover costs of Capital reinvestment and 2) a user rate fee intended to cover costs of operations, maintenance and repair of capital infrastructure. These fees and charges are set by bylaw and must be set in relation to the cost of providing the services. The current rates do not fully fund the long term financial requirements of the water and sewer utilities. This means that Property taxes and other revenue sources could in fact be subsidizing the water and sewer services. To be more transparent and ensure the long tern financial sustainability of these services rates must be set to cover 100% of the cost of managing these utilities. It is easier to justify increases in user fees which are set to recover costs than it is to justify why property taxes may increase. The proposed rate structure ensures the District will over time begin to recover all costs related to water and sewer utilities on an annual basis, including a provision to set aside reserves for asset repair and replacement. Recommended Rate Increase That the first step in moving toward a full cost recovery rate structure is to begin increasing rates on an incremental basis. The recommended model considers an initial rate increase of 5% per year for Water and 10% for Sewer until further information is available. To help keep rate increases more stable in the years going forward it is recommended that a Rate Stabilization Reserve be created. Any surplus or short fall created in any year would go to a new rate stabilization reserve. Other Rates Options Considered Other Options included as follows: Option 1: (recommended) Increase rates for water by 5% per year and for sewer by 10% per year, and increase contributions to reserve to optimal levels over twenty (20) years. Pro s 12

15 13 Con s Moves to full cost of operating costs gradually over a twenty-year period. Rate increase is less of an impact in first year than other options and the increase remains constant over the twenty years. Does not address funding for Capital Program for Water and minimal amounts for Sewer. Only able to slowly increase contributions to reserves which brings more risks as funds may not be available when assets need repair or assets fail as they are not repaired. Option 2: Increase rates for water by 8% per year and for sewer by 5% per year. Increase annual contributions to reserve to optimal levels over ten (10) years, $260,000 for water and $50,000 for sewer. Pro s Con s Moves to full cost of operating costs gradually over a ten-year period. Rate increase is lower than other options in years 11 through 20. Provides capital funding sooner than other options. Rate increase is more of an impact than option #1 in first ten years Option 3: Increase 2019 rates for water by 75%, then 2% annually and for 2019 sewer rates by 50% and then 1% per year. Increase annual contributions to reserve to optimal levels over twenty (20) years, $260,000 for water and $50,000 for sewer. Pro s Con s Option 4: Status Quo, no increase to rates or to reserve contributions. Pro s There is no increase in current rates.

16 Con s This option is unsustainable as it does not cover costs of operating or funds for capital requirements. Option 5: (Water Only) Increase rates for water by 9% per year to cover full cost of operating and the cost to borrow for capital program. Pro s Con s Moves to full cost of operating costs gradually over a twenty-year period. Includes borrowing which provides Funds for capital program. Only able to slowly increase contributions to reserves which brings more risk as funds may not be available when assets need repair or assets fail as they are not repaired. Rate increase is more per year than other options. Table 9: Water Rate Option Summary Water Rate Options Option #1 Option #2 Option #3 Option #4 Option #5 Increase reserve Increase reserve Increase reserve Status Quo Increase reserve contribution over contribution over Contribution Now contribution 20 years 10 years over 20 years Increase rates gradually till full cost achieved Increase rates gradually till full cost achieved Increase rates in first year to cover full cost No Increases Increase rates gradually till full cost achieved and borrow for capital program First year rate increase 5% 8% 75% 0% 9% Year 2 to 10 increase 5% 8% 2% 0% 9% Year 11 to 20 increase 5% 2% 2% 0% 9% Operating reserve balance $ 745,000 $ 679,000 $ 640,000 $ (2,180,000) $ 431,000 (unfunded operating) Capital reserve balance $ (8,522,000) $ (7,222,000) $ (6,052,000) $ (11,251,893) $ 1,634,000 (unfunded capital) 14

17 Table 10: Sewer Rate Option Summary Sewer Forecast Options Option #1 Option #2 Option #3 Option #4 Increase reserve Increase reserve Increase reserve Status Quo contribution over contribution over contribution Now 20 years 10 years Increase rates gradually till full cost achieved Increase rates gradually till full cost achieved Increase rates in first year to cover full cost No Increases First year rate increase 10% 5% 50% 0% Annaul Rate Increase 10% 5% 1% 0% Year 11 to 20 Annual Increase 5% 2% 1% 0% Operating reserve balance $ 301,000 $ 244,000 $ 426,000 $ (544,000) (unfunded operating) Capital reserve balance $ 1,387,000 $ 348,000 $ 450,000 $ (549,000) (unfunded capital) New Rate Structure A further option to consider is whereby the District could consider revamping its existing rate structure and consider other models. These other models could include a combination of the following: Metered system Combination flat rate and metered rate Flat rate for capital maintenance and replacement and separate flat rate for usage These are valid and operational models which exist in other communities, however this decision should be delayed until further information is made available through the Asset Management Infrastructure Investment plan. 15

18 Recommended Water Rates Table 11: Option #1 The recommended user rates are forecast to increase by 5% as noted in the table below: Rate Schedule RESIDENTIAL Existing Rates New Rates Rate Increase Impact Monthly Quarterly Monthly Quarterly Annual Monthly Quarterly Annual A Single Family Dwelling Additional self contained dwelling sharing one connection B Duplex, apartment, mobile home or other multiple dwelling per unit C Senior citizen home - per unit INSTITUTIONAL A Place of Worship B School, per Classroom C Public Hall D Hospital, per bed COMMERCIAL A Restaurant B Coffee Shop or drive In C Beauty Parlour D Super market, meat market or bakery E Medical, dental or veterinary Offices F Beer parlour, neighbourhood pub G Liquor lounge H Medical, hotel living quarters Motel, hotel per unit I Laundromat, per washer J Car wash per bay K Pet grooming facility L Garage, service station up to two bays additional bay per bay O Commercial enterprise not otherwise sepecified M Commercial enterprise attached to a residential connected dwelling N Commercial enterprise, sharing with another commercial enterprise P CNR Station SEASONAL Campground with site tap facilities A per site B Sports field, or school grounds per acre

19 Recommended Sewer Rates Table 12: Option #1 - The proposed user rates is to increase by 10% as noted in the table below: RESIDENTIAL Existing Rates New Rates Rate Increase Impact Monthly Quarterly Monthly Quarterly Annual Monthly Quarterly Annual A Single Family Dwelling Additional self contained dwelling sharing one connection B Duplex, apartment, mobile home or other multiple dwelling per unit C Senior citizen home - per unit INSTITUTIONAL A Place of Worship B School, per Classroom C Public Hall D Hospital, per bed COMMERCIAL A Restaurant B Coffee Shop or drive In C Beauty Parlour D Super market, meat market or bakery E Medical, dental or veterinary Offices F Beer parlour, neighbourhood pub G Liquor lounge H Medical, hotel living quarters Motel, hotel per unit I Laundromat, per washer J Car wash per bay K Pet grooming facility L Garage, service station up to two bays additional bay per bay O Commercial enterprise not otherwise sepecified M Commercial enterprise attached to a residential connected dwelling N Commercial enterprise, sharing with another commercial enterprise P CNR Station SEASONAL Campground with site tap facilities A per site B Sports field, or school grounds per acre

20 Recommendations That Council adopt a policy that outlines an incremental basis of moving to a full cost recovery model for setting rates for water and sewer. That the District budget be reviewed to ensure that 100% of costs related to water and sewer services are included in costs. That policy be set to direct what a reasonable amount of total operating reserve should be based on budgeted annual operating expenses. That policy be set to direct what a reasonable amount of total capital reserve should be based on current asset state and condition, and That annual transfers to reserves be set to fully fund future requirements for asset replacement and asset additions. That the District develop a Rate Stabilization Fund by policy or bylaw to assist in providing funding through incremental rate increases required in future years. That a further review of rates be done after the completion of the Asset Management Infrastructure Investment Plan. 18

21 Appendices Appendix A Water Forecasts for Rate Options Water Forecast Option # FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST Operating Expenditure Administrative Salaries and Wages 184, , , , , , , , , , ,318 General Expenses 22,646 23,099 23,561 24,032 24,513 25,003 25,503 26,013 26,533 27,064 32,991 Contracted Services 37,485 38,235 38,999 39,779 40,575 41,386 42,214 43,058 43,920 44,798 54,609 Materials 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485 6,687 Vehicle Overhead 61,692 62,925 64,184 65,468 66,777 68,113 69,475 70,864 72,282 73,727 89,873 Operations Sample Testing 13,770 14,045 14,326 14,613 14,905 15,203 15,507 15,817 16,134 16,456 20,060 Works Equipment 3,743 3,818 3,895 3,973 4,052 4,133 4,216 4,300 4,386 4,474 5,453 Reservoir 1,847 1,909 1,973 2,040 2,109 2,181 2,257 2,335 2,417 2,502 3,575 Treatment 21,888 22,432 22,991 23,568 24,162 24,774 25,404 26,054 26,724 27,415 35,662 Pump House Booster Station 73,388 76,674 80,118 83,726 87,506 91,468 95,619 99, , , ,802 Distribution and Connections 19,890 20,288 20,694 21,107 21,530 21,960 22,399 22,847 23,304 23,770 28,976 Hydrants 5,610 5,722 5,837 5,953 6,072 6,194 6,318 6,444 6,573 6,704 8,173 Other and Debt 6, Total Operating Expenses 457, , , , , , , , , , ,179 Capital Expenditures Infrastruture Reinvestment 120, , , , ,359 Capital Program 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 Infrastruture replacement reserves Current Additional 13,000 26,000 39,000 52,000 65,000 78,000 91, , , , ,000 Transfer from reserve (for capital) (215,120) (554,120) (295,120) (95,120) (95,120) (95,120) (95,120) (293,120) (95,120) (95,120) (507,479) Borrowing Grants/Contributions Net Capital Expenses 13,000 26,000 39,000 52,000 65,000 78,000 91, , , , ,000 Total Annual Expenditures 470, , , , , , , , , , ,179 Non Rate Revenues Parcel Taxes 101, , , , , , , , , , ,555 Connections 1,000 1,050 1,103 1,158 1,216 1,276 1,340 1,407 1,477 1,551 2,527 Penalties 4,725 4,961 5,209 5,470 5,743 6,030 6,332 6,649 6,981 7,330 11,940 Return on Investment 1,050 1,103 1,158 1,216 1,276 1,340 1,407 1,477 1,551 1,629 2,653 Grants and Miscellaneous 5,775 6,064 6,367 6,685 7,020 7,371 7,739 8,126 8,532 8,959 14,593 Reserves and Surplus Total Non Rate revenue 113, , , , , , , , , , ,268 RATE REVENUE REQUIREMENT 356, , , , , , , , , , ,911 Rate Increase 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% Revenue from User fees 357, , , , , , , , , , ,121 Short Fall/(Excess) (144) (3,645) (831) 1,299 2,708 3,356 3,202 2, (2,523) (95,210) Transfer (to)fr operating reserve (144) (3,645) (831) 1,299 2,708 3,356 3,202 2, (2,523) (95,210) Water Operating Reserve Opening Balance 322, , , , , , , , , , ,848 Transfer In (Out) 144 3, (1,299) (2,708) (3,356) (3,202) (2,202) (310) 2,523 95,210 Closing Balance 323, , , , , , , , , , ,058 Water Capital Reserve Opening Balance 590, ,880 (140,240) (396,359) (439,479) (469,599) (486,719) (490,838) (679,958) (658,078) (8,274,414) Transfers In/(Out) (202,120) (528,120) (256,120) (43,120) (30,120) (17,120) (4,120) (189,120) 21,880 34,880 (247,479) Closing Balance 387,880 (140,240) (396,359) (439,479) (469,599) (486,719) (490,838) (679,958) (658,078) (623,198) (8,521,893) 19

22 Water Forecast Option # FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST Operating Expenditure Administrative Salaries and Wages 184, , , , , , , , , , ,318 General Expenses 22,646 23,099 23,561 24,032 24,513 25,003 25,503 26,013 26,533 27,064 32,991 Contracted Services 37,485 38,235 38,999 39,779 40,575 41,386 42,214 43,058 43,920 44,798 54,609 Materials 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485 6,687 Vehicle Overhead 61,692 62,925 64,184 65,468 66,777 68,113 69,475 70,864 72,282 73,727 89,873 Operations Sample Testing 13,770 14,045 14,326 14,613 14,905 15,203 15,507 15,817 16,134 16,456 20,060 Works Equipment 3,743 3,818 3,895 3,973 4,052 4,133 4,216 4,300 4,386 4,474 5,453 Reservoir 1,847 1,909 1,973 2,040 2,109 2,181 2,257 2,335 2,417 2,502 3,575 Treatment 21,888 22,432 22,991 23,568 24,162 24,774 25,404 26,054 26,724 27,415 35,662 Pump House Booster Station 73,388 76,674 80,118 83,726 87,506 91,468 95,619 99, , , ,802 Distribution and Connections 19,890 20,288 20,694 21,107 21,530 21,960 22,399 22,847 23,304 23,770 28,976 Hydrants 5,610 5,722 5,837 5,953 6,072 6,194 6,318 6,444 6,573 6,704 8,173 Other and Debt 6, Total Operating Expenses 457, , , , , , , , , , ,179 Capital Expenditures Infrastruture Reinvestment 120, , , , ,359 Capital Program 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 Infrastruture replacement reserves Current Additional 26,000 52,000 78, , , , , , , , ,000 Transfer from reserve (for capital) (215,120) (554,120) (295,120) (95,120) (95,120) (95,120) (95,120) (293,120) (95,120) (95,120) (507,479) Borrowing Grants/Contributions Net Capital Expenses 26,000 52,000 78, , , , , , , , ,000 Total Annual Expenditures 483, , , , , , , , , , ,179 Non Rate Revenues Parcel Taxes 101, , , , , , , , , , ,555 Connections 1,000 1,075 1,156 1,242 1,335 1,436 1,543 1,659 1,783 1,917 2,337 Penalties 4,838 5,200 5,590 6,010 6,460 6,945 7,466 8,026 8,628 9,275 11,306 Return on Investment 1,075 1,156 1,242 1,335 1,436 1,543 1,659 1,783 1,917 2,061 2,512 Grants and Miscellaneous 5,913 6,356 6,833 7,345 7,896 8,488 9,125 9,809 10,545 11,336 13,818 Reserves and Surplus Total Non Rate revenue 114, , , , , , , , , , ,528 RATE REVENUE REQUIREMENT 369, , , , , , , , , , ,651 Rate Increase 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 2% Revenue from User fees 365, , , , , , , , , , ,211 Short Fall/(Excess) 4,081 3,683 8,396 11,107 11,657 9,872 5,565 (1,464) (11,431) (24,569) (45,560) Transfer (to)fr operating reserve 4,081 3,683 8,396 11,107 11,657 9,872 5,565 (1,464) (11,431) (24,569) (45,560) Water Operating Reserve Opening Balance 322, , , , , , , , , , ,280 Transfer In (Out) (4,081) (3,683) (8,396) (11,107) (11,657) (9,872) (5,565) 1,464 11,431 24,569 45,560 Closing Balance 318, , , , , , , , , , ,840 Water Capital Reserve Opening Balance 590, ,880 (101,240) (318,359) (309,479) (274,599) (213,719) (126,838) (211,958) (73,078) (6,974,414) Transfers In/Out (189,120) (502,120) (217,120) 8,880 34,880 60,880 86,880 (85,120) 138, ,880 (247,479) Closing Balance 400,880 (101,240) (318,359) (309,479) (274,599) (213,719) (126,838) (211,958) (73,078) 91,803 (7,221,893) 20

23 Water Forecast Option # FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST Operating Expenditure Administrative Salaries and Wages 184, , , , , , , , , , ,318 General Expenses 22,646 23,099 23,561 24,032 24,513 25,003 25,503 26,013 26,533 27,064 32,991 Contracted Services 37,485 38,235 38,999 39,779 40,575 41,386 42,214 43,058 43,920 44,798 54,609 Materials 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485 6,687 Vehicle Overhead 61,692 62,925 64,184 65,468 66,777 68,113 69,475 70,864 72,282 73,727 89,873 Operations Sample Testing 13,770 14,045 14,326 14,613 14,905 15,203 15,507 15,817 16,134 16,456 20,060 Works Equipment 3,743 3,818 3,895 3,973 4,052 4,133 4,216 4,300 4,386 4,474 5,453 Reservoir 1,847 1,909 1,973 2,040 2,109 2,181 2,257 2,335 2,417 2,502 3,575 Treatment 21,888 22,432 22,991 23,568 24,162 24,774 25,404 26,054 26,724 27,415 35,662 Pump House Booster Station 73,388 76,674 80,118 83,726 87,506 91,468 95,619 99, , , ,802 Distribution and Connections 19,890 20,288 20,694 21,107 21,530 21,960 22,399 22,847 23,304 23,770 28,976 Hydrants 5,610 5,722 5,837 5,953 6,072 6,194 6,318 6,444 6,573 6,704 8,173 Other and Debt 6, Total Operating Expenses 457, , , , , , , , , , ,179 Capital Expenditures Infrastruture Reinvestment 120, , , , ,359 Capital Program 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 Infrastruture replacement reserves Current Additional 260, , , , , , , , , , ,000 Transfer from reserve (for capital) (215,120) (554,120) (295,120) (95,120) (95,120) (95,120) (95,120) (293,120) (95,120) (95,120) (507,479) Borrowing Grants/Contributions Net Capital Expenses 260, , , , , , , , , , ,000 Total Annual Expenditures 717, , , , , , , , , , ,179 Non Rate Revenues Parcel Taxes 101, , , , , , , , , , ,555 Connections 1,000 1,020 1,035 1,053 1,072 1,091 1,110 1,129 1,149 1,169 1,390 Penalties 7,875 8,033 8,153 8,296 8,441 8,589 8,739 8,892 9,047 9,206 10,950 Return on Investment 1,750 1,785 1,812 1,843 1,876 1,909 1,942 1,976 2,011 2,046 2,433 Grants and Miscellaneous 9,625 9,818 9,965 10,139 10,317 10,497 10,681 10,868 11,058 11,251 13,383 Reserves and Surplus Total Non Rate revenue 121, , , , , , , , , , ,711 RATE REVENUE REQUIREMENT 596, , , , , , , , , , ,468 Rate Increase 75% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% Revenue from User fees 595, , , , , , , , , , ,310 Short Fall/(Excess) 1,156 (9,172) (9,371) (11,016) (12,559) (13,992) (15,306) (16,492) (17,542) (18,445) (16,842) Transfer (to)fr operating reserve 1,156 (9,172) (9,371) (11,016) (12,559) (13,992) (15,306) (16,492) (17,542) (18,445) (16,842) Water Operating Reserve Opening Balance 322, , , , , , , , , , ,566 Transfer In (Out) (1,156) 9,172 9,371 11,016 12,559 13,992 15,306 16,492 17,542 18,445 16,842 Closing Balance 321, , , , , , , , , , ,408 Water Capital Reserve Opening Balance 590, , , , , , , , ,042 1,096,922 (5,804,414) Transfers In/Out 44,880 (294,120) (35,120) 164, , , ,880 (33,120) 164, ,880 (247,479) Closing Balance 634, , , , , , , ,042 1,096,922 1,261,803 (6,051,893) 21

24 Water Forecast Option # FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST Operating Expenditure Administrative Salaries and Wages 184, , , , , , , , , , ,318 General Expenses 22,646 23,099 23,561 24,032 24,513 25,003 25,503 26,013 26,533 27,064 32,991 Contracted Services 37,485 38,235 38,999 39,779 40,575 41,386 42,214 43,058 43,920 44,798 54,609 Materials 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485 6,687 Vehicle Overhead 61,692 62,925 64,184 65,468 66,777 68,113 69,475 70,864 72,282 73,727 89,873 Operations Sample Testing 13,770 14,045 14,326 14,613 14,905 15,203 15,507 15,817 16,134 16,456 20,060 Works Equipment 3,743 3,818 3,895 3,973 4,052 4,133 4,216 4,300 4,386 4,474 5,453 Reservoir 1,847 1,909 1,973 2,040 2,109 2,181 2,257 2,335 2,417 2,502 3,575 Treatment 21,888 22,432 22,991 23,568 24,162 24,774 25,404 26,054 26,724 27,415 35,662 Pump House Booster Station 73,388 76,674 80,118 83,726 87,506 91,468 95,619 99, , , ,802 Distribution and Connections 19,890 20,288 20,694 21,107 21,530 21,960 22,399 22,847 23,304 23,770 28,976 Hydrants 5,610 5,722 5,837 5,953 6,072 6,194 6,318 6,444 6,573 6,704 8,173 Other and Debt 6, Total Operating Expenses 457, , , , , , , , , , ,179 Capital Expenditures Infrastruture Reinvestment 120, , , , ,359 Capital Program 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 Infrastruture replacement reserves Current Additional Transfer from reserve (for capital) (215,120) (554,120) (295,120) (95,120) (95,120) (95,120) (95,120) (293,120) (95,120) (95,120) (507,479) Borrowing Grants/Contributions Net Capital Expenses Total Annual Expenditures 457, , , , , , , , , , ,179 Non Rate Revenues Parcel Taxes 99,300 99,300 99,300 99,300 99,300 99,300 99,300 99,300 99,300 99,300 99,300 Connections 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Penalties 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 Return on Investment 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Grants and Miscellaneous 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 Reserves and Surplus Total Non Rate revenue 111, , , , , , , , , , ,300 RATE REVENUE REQUIREMENT 346, , , , , , , , , , ,879 Rate Increase 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Revenue from User fees 340, , , , , , , , , , ,000 Short Fall/(Excess) 6,392 10,394 21,675 33,284 45,233 57,534 70,199 83,242 96, , ,879 Transfer (to)fr operating reserve 6,392 10,394 21,675 33,284 45,233 57,534 70,199 83,242 96, , , Water Operating Reserve Opening Balance 322, , , , , , ,441 78,242 (5,000) (101,676) (1,904,570) Transfer In (Out) (6,392) (10,394) (21,675) (33,284) (45,233) (57,534) (70,199) (83,242) (96,676) (110,517) (274,879) Closing Balance 316, , , , , ,441 78,242 (5,000) (101,676) (212,193) (2,179,449) Water Capital Reserve Opening Balance 590, ,880 (179,240) (474,359) (569,479) (664,599) (759,719) (854,838) (1,147,958) (1,243,078) (10,744,414) Transfers In/Out (215,120) (554,120) (295,120) (95,120) (95,120) (95,120) (95,120) (293,120) (95,120) (95,120) (507,479) Closing Balance 374,880 (179,240) (474,359) (569,479) (664,599) (759,719) (854,838) (1,147,958) (1,243,078) (1,338,198) (11,251,893) 22

25 Water Forecast Option # FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST Operating Expenditure Administrative Salaries and Wages 184, , , , , , , , , , ,318 General Expenses 22,646 23,099 23,561 24,032 24,513 25,003 25,503 26,013 26,533 27,064 32,991 Contracted Services 37,485 38,235 38,999 39,779 40,575 41,386 42,214 43,058 43,920 44,798 54,609 Materials 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378 5,485 6,687 Vehicle Overhead 61,692 62,925 64,184 65,468 66,777 68,113 69,475 70,864 72,282 73,727 89,873 Operations Sample Testing 13,770 14,045 14,326 14,613 14,905 15,203 15,507 15,817 16,134 16,456 20,060 Works Equipment 3,743 3,818 3,895 3,973 4,052 4,133 4,216 4,300 4,386 4,474 5,453 Reservoir 1,847 1,909 1,973 2,040 2,109 2,181 2,257 2,335 2,417 2,502 3,575 Treatment 21,888 22,432 22,991 23,568 24,162 24,774 25,404 26,054 26,724 27,415 35,662 Pump House Booster Station 73,388 76,674 80,118 83,726 87,506 91,468 95,619 99, , , ,802 Distribution and Connections 19,890 20,288 20,694 21,107 21,530 21,960 22,399 22,847 23,304 23,770 28,976 Hydrants 5,610 5,722 5,837 5,953 6,072 6,194 6,318 6,444 6,573 6,704 8,173 Other and Debt 29,000 58,000 87, , , , , , , , ,000 Total Operating Expenses 479, , , , , , , , , ,817 1,306,179 Capital Expenditures Infrastruture Reinvestment 120, , , , ,359 Capital Program 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 95,120 Infrastruture replacement reserves Current Additional 13,000 26,000 39,000 52,000 65,000 78,000 91, , , , ,000 Transfer from reserve (for capital) (215,120) (554,120) (295,120) (95,120) (95,120) (95,120) (95,120) (293,120) (95,120) (95,120) (507,479) Borrowing (426,000) (426,000) (426,000) (426,000) (426,000) (426,000) (426,000) (426,000) (426,000) (426,000) (426,000) Grants/Contributions Transfer to reserve for Capital 426, , , , , , , , , , ,000 Net Capital Expenses 13,000 26,000 39,000 52,000 65,000 78,000 91, , , , ,000 Total Annual Expenditures 492, , , , , , , , , ,817 1,566,179 Non Rate Revenues Parcel Taxes 101, , , , , , , , , , ,555 Connections 1,000 1,090 1,188 1,295 1,412 1,539 1,677 1,828 1,993 2,172 5,142 Penalties 4,905 5,346 5,828 6,352 6,924 7,547 8,226 8,967 9,774 10,653 25,220 Return on Investment 1,090 1,188 1,295 1,412 1,539 1,677 1,828 1,993 2,172 2,367 5,604 Grants and Miscellaneous 5,995 6,535 7,123 7,764 8,462 9,224 10,054 10,959 11,945 13,021 30,824 Reserves and Surplus Total Non Rate revenue 114, , , , , , , , , , ,345 RATE REVENUE REQUIREMENT 378, , , , , , , , , ,557 1,351,834 Rate Increase 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% Revenue from User fees 370, , , , , , , , , ,904 1,905,500 Short Fall/(Excess) 7,854 24,269 37,854 48,339 55,429 58,805 58,116 52,979 42,976 27,654 (553,665) Transfer (to)fr operating reserve 7,854 24,269 37,854 48,339 55,429 58,805 58,116 52,979 42,976 27,654 (553,665) Water Operating Reserve Opening Balance 322, , , , , ,208 90,403 32,287 (20,692) (63,668) 431,199 Transfer In (Out) (7,854) (24,269) (37,854) (48,339) (55,429) (58,805) (58,116) (52,979) (42,976) (27,654) 553,665 Transfer to Capital (553,665) Closing Balance 315, , , , ,208 90,403 32,287 (20,692) (63,668) (91,322) 431,199 Water Capital Reserve Opening Balance 590, , , ,641 1,264,521 1,660,401 2,069,282 2,491,162 2,728,042 3,175, ,728 Transfer from operating reserve 553,665 Transfers In/(Out) (202,120) (528,120) (256,120) (43,120) (30,120) (17,120) (4,120) (189,120) 21,880 34,880 (247,479) Borrowing 426, , , , , , , , , , ,000 Closing Balance 813, , ,641 1,264,521 1,660,401 2,069,282 2,491,162 2,728,042 3,175,922 3,636,803 1,633,915 23

26 Appendix B Sewer Forecasts for Rate Options Sewer Forecast Option # BUDGET FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST Operating Expenditure Administrative Salaries and Wages 59,825 61,022 62,242 63,487 64,757 66,052 67,373 68,721 70,095 71,497 72,927 88,897 General Expenses 10,785 11,001 11,221 11,445 11,674 11,908 12,146 12,389 12,636 12,889 13,147 16,026 Contracted Services 11,400 11,628 11,861 12,098 12,340 12,587 12,838 13,095 13,357 13,624 13,897 16,940 Materials 3,250 3,315 3,381 3,449 3,518 3,588 3,660 3,733 3,808 3,884 3,962 4,829 Vehicle Overhead 15,573 15,884 16,202 16,526 16,857 17,194 17,538 17,888 18,246 18,611 18,983 23,141 Operations Sewer Sampling 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343 2,390 2,438 2,972 External Equipment Rental 1,670 1,703 1,737 1,772 1,808 1,844 1,881 1,918 1,957 1,996 2,036 2,482 Treatment 10,600 11,064 11,550 12,059 12,592 13,150 13,734 14,347 14,988 15,660 16,365 25,557 Lift Stations 8,700 8,925 9,157 9,396 9,643 9,898 10,161 10,433 10,713 11,003 11,302 14,912 Distribution and Connection 9,000 9,180 9,364 9,551 9,742 9,937 10,135 10,338 10,545 10,756 10,971 13,374 Debt Servicing 48,750 68,093 68,093 19,343 19, Total Expenses 181, , , , , , , , , , , ,129 Capital Expenditures Infrastruture Reinvestment 107,570 18,418 Capital Program 7,570 7,570 7,570 7,570 7,570 7,570 7,570 7,570 7,570 7,570 7,570 Infrastruture replacement reserves - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 50,000 Transfer from reserve (for capital) - (7,570) (7,570) (7,570) (7,570) (7,570) (7,570) (7,570) (7,570) (7,570) (7,570) (25,988) Grants 100,000 Net Capital Expenses 7,570 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 50,000 Total Annual Expenditures 189, , , , , , , , , , , ,129 Non Rate Revenues Parcel Taxes 9,920 10,118 10,321 10,527 10,738 10,952 11,172 11,395 11,623 11,855 12,092 14,741 Connections Penalties 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Transfer from reserve 50,203 Return on Investment 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Total Non Rate revenue 62,123 12,118 12,321 12,527 12,738 12,952 13,172 13,395 13,623 13,855 14,092 16,741 RATE REVENUE REQUIREMENT 127, , , , , , , , , , , ,389 Rate Increase 10% 10% 10% 10% 10% 5% 5% 5% 5% 5% 5% Revenue from User fees 127, , , , , , , , , , , ,213 Short Fall/(Excess) 54,537 45,898 (12,815) (24,241) (56,622) (61,214) (66,235) (71,708) (77,658) (84,110) (182,824) (Borrow)/Repay (54,537) (45,898) 12,815 24,241 56,622 61,214 66,235 71,708 77,658 84,110 Transfer to operating reserve 182, Sewer Operating Reserve Opening Balance 81,391 31,188 (23,349) (69,247) (56,432) (32,191) 24,431 85, , , , ,247 Transfer In (54,537) (45,898) 12,815 24,241 56,622 61,214 66,235 71,708 77,658 84, ,824 Transfer to Capital 50,203 (84,110) (182,824) Closing Balance 31,188 (23,349) (69,247) (56,432) (32,191) 24,431 85, , , , , ,247 Sewer capital reserve Opening Balance 163, , , , , , , , , ,385 1,180,544 Transfers In/(Out) (5,070) (2,570) (70) 2,430 4,930 7,430 9,930 12,430 14,930 17,430 24,012 Transfer from Operating reserve , ,824 Closing Balance 157, , , , , , , , , ,925 1,387,381 24