FINANCIAL PLANNING AND RISK ASSESSMENT. October 27, 2015

Transcription

1 FINANCIAL PLANNING AND RISK ASSESSMENT October 27, 2015

2 Goals of Today s Meeting 1. Financial Challenges facing the Agency 2. Global Assumptions 3. Risk Assessments Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 2

3 Financial Challenges Anticipated Reduction in Water Sales 55% less in FY 2016, slow rebound to current sales levels by FY 2030 Rising DWR Costs Delta Fix Potential for opting out of Delta Fix Maintaining Desired Reserve Levels Maintaining Adequate Water Storage Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 3

4 Global Assumptions Maintain current tax rates Maintain current groundwater storage balance Delta Fix Cost Scenarios Low: $15B, as budgeted Medium: 25% over budget High: 50% over budget Extended Drought 3 more years of drought conditions Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 4

5 Global Assumptions (Cont.) DWR Cost Scenarios Scenario FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Low Increase 5% 5% 5% 5% 3% 3% 3% 3% 3% Average Increase 7% 7% 7% 7% 7% 7% 7% 7% 4% High Increase 20% 10% 10% 10% 10% 10% 10% 10% 5% Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 5

6 Reserve Policy Summary Operating Bond Reserve DHCCP Contingency Reserve Targets 50% of O&M Expenses % of annual debt payments 50% of Delta Fix Debt Service Rate Stabilization Capital Contingency (Rainy Day Fund) 15% of Taxes 4% of MWA Capital Assets 10% Operating Expenses Total Target in FY 2015 $42M Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 6

7 Scenarios Examined 1. Baseline Scenario 2. Blue Sky Scenario - Ideal 3. Blue Sky with high DWR costs 4. Blue Sky with high DWR and No Delta Fix Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 7

8 Baseline Scenario Beacon Forecast No reliability charge increase Low Delta Fix Cost Delta Fix starts in FY 2019 SWP Cost Scenario is Average Increase 0% Multi-Year Pool sales Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 8

9 Baseline Scenario Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 9

10 Blue Sky Scenario Beacon High Forecast No reliability charge increase Low Delta Fix Cost Delta Fix starts in FY 2019 SWP Cost-Scenario is Low increase 75% Unused Table A sales with no carry over Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 10

11 Blue Sky Scenario Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 11

12 Blue Sky Risk Sensitivity Scenario Beacon High Forecast No reliability charge increase Low Delta Fix Cost Delta Fix starts in FY 2019 SWP Cost-Scenario is HIGH increase 75% Unused Table A sales with no carry over Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 12

13 Blue Sky Risk Sensitivity Scenario Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 13

14 Blue Sky Risk Sensitivity Scenario 2 Beacon High Forecast No reliability charge increase No Delta Fix SWP Cost-Scenario is HIGH increase 75% Unused Table A sales with no carry over Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 14

15 Blue Sky Risk Sensitivity Scenario 2 Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 15

16 Take Away Points 3 Key Financial Risk Factors SWP costs potentially huge and highly variable Beacon Forecasts and Assessed Value Unused Table A sales Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 16

17 Possible Financial Solutions Existing Revenue Stream Water Sales Reliability Charge Source Charge assessed on sold water Charge assessed on sold water How is it increased? Majority Board approval Majority Board approval MWA 1 Tax on land value 2/3 popular vote MWA 2(a) Tax on assessed value Majority Board approval MWA 2(b) Tax on assessed value 2/3 popular vote Water Supply Connection Fees Water Exchange Program Fee paid by new users connecting to service area Sell unused Table A water for revenue stream Majority Board approval Agency has chosen to pursue this Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 17

18 Possible Financial Solutions (Cont.) Potential Revenue Stream Pump Tax Standby Charge Fixed Retail Meter Charge Tax on Undeveloped Parcels Other/Non-Operating Revenue Streams Source Tax assessed on pumped water in service area Charge assessed on all parcels. Assess a charge on purveyors based on number and size of meters in service area. Tax on assessed value of undeveloped land Various sources. How is it enacted? Can be increased as necessary by MWA per section of MWA Act Enacted by majority protest process. Majority Board approval 2/3 popular vote Depends Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 18

19 DISCUSSION Additional options to be considered Other risks to be considered/evaluated Examine other financial solutions? Oct 27, 2015 Mojave Water Agency - Financial Planning and Risk Assessment 19