Water & Sewer System

Transcription

1 Water & Sewer System FY 2017 Revenue Sufficiency Analysis City Council Workshop: August 9, 2016 Presentation By: Vita Paltridge, Consultant

2 Background & Scope 2015 Financial Condition Assessment No rate increase required in FY 2016 Utility established Master Plan project New rate structure as of April 2015 Revenue projection based on new rate structure and 2 months of billing data Scope Populate a multi-year financial forecasting model to project the expenditure requirements and revenues of the system Evaluate alternative scenarios & sensitivities using current data Provide national trends and local cost comparisons Identify observations and key issues/future considerations 2

3 Summary of Process/Approach Populated financial planning models: 4+ years of detailed volume and customer data (FY 12 through FY 16) Historical & current operating costs (FY 13 FY 16 & Prelim. FY 17 Budget) Current multi-year capital improvement program Existing debt service & key policies (operating reserves, debt coverage, etc.) Billing analysis with 12 months under new rates Reviewed multiple scenarios interactively with staff Performed sensitivity analyses with instant feedback Identified key issues and observations Compared alternative scenarios side-by-side No rate adjustments required for FY % rate increases in FY 2018 and FY 2019 sufficient to fund all previously identified requirements through FY

4 Source Data & Assumptions Fund balances as of Sept. 30, 2015 Estimated FY 16 revenues, plus growth & assumed rate increases 225 new accounts per year; equates to about a 0.80% growth rate Operating expenses per FY 17 Preliminary Budget, plus inflation Weighted average annual cost inflation of approximately 1.7% per year Assumed spending consistent with recent historical trends Capital per multi-year CIP provided by staff, plus cost inflation Annual cost inflation of 3.0% applied to each project beginning in FY 18 Minimum operating reserve = 3 mos. of O&M expenses ($3.4M) May be adjusted in update to reflect changes in financial management policies Annual R&R Transfer for capital funding of 10% of revenue 4 Remaining CIP funded with development fees or additional debt

5 Updated Financial Forecast 2% Rate increases in FY 2018 and FY 2019 Reduced capital spending Maintain 3 months of reserves Financially sustainable plan Borrowing only in FY

6 Comparison to National Industry Trends 6 Measures the national average change in the cost of water and sewer service to households Much more specific and relevant to utilities than overall CPI Average annual increase = 5.3%; Nearly double the rate of increase by City over the same period Note: City increases based upon residential user at 4,000 gallons; 2015 reflects new rate structure

7 Water & Sewer Monthly Bill Survey (Based upon current FY 2016 rates per publicly available data) Combined Water & Sewer Bill Survey at 4,000 Gallons per Month Bunnell $ Flagler County $88.34 Orange City $73.79 Flagler Beach $71.92 South Daytona $66.66 Daytona Beach $66.30 DeLand $66.14 Volusia County East $66.08 Palm Coast $64.11 Titusville $63.72 Holly Hill $62.82 Edgewater $62.78 Volusia County West $59.00 Oviedo $56.98 Seminole County $56.38 New Smyrna Beach $50.57 Port Orange $49.72 Sanford $47.10 Ormond Beach $

8 Future Considerations Integration of capital requirements per master plans On hold pending new director Impacts to amount and timing of multi-year CIP requirements Impacts of any changes in financial policies & budgets Reserve levels, cost allocations, new programs, regulatory changes, etc. Level of future development and trends in demand Continue to monitor & update analysis per most current data 8

9 Discussion PROVIDING SOLUTIONS THROUGH CLEAR VISION Presentation Contact Information: Vita Paltridge, Consultant Office: Mobile: