WATER, WASTEWATER' AND IRRIGATIOI{ SYSTEM REVENUE SUFFICIENCY ANALYSIS

Transcription

1 St. Lucie \Mest Services Disict WATER, WASTEWATER' AND IRRIGATIOI{ SYSTEM REVENUE SUFFICIENCY ANALYSIS Presentation to the Board of Supervisors September 23r 2008 Presented by Public Resources Management Group, Inc.

2 Agend a - Purpose of Presentation Determine Rate Adequacy and Financial Compliance I Identify System Trends I Promote Full Cost Recovery r Rate Covenant Compliance r Financial Position Consideration Identified Rate Adjustments r Customer Impact Analysis Other Issues for Board Discussion

3 Significant Changes - Revenue Trends Occurring r Reduction in Water Use per Customer SFWMD - General \ilater Use Resictions Declining Average Water Use per Customer Residential Average Water Use per Month ' Historical - System Trends - Revenues Gallons. Fiscal Year Gallons Current Economic Conditions Declining Account Growth for Forecast Period r Historically Averaged over 500 Residential Accounts I Now Averaging 20 per Year r Approaching Mature Utitity Position t

4 System Trends - Revenues (cont'd.) Provide Bulk Service to Reserve CDI) r Pursuant to Amended and Restated Interconnect Agreement (1 ll ) I Primary Assumptions for Reserve CDD Limited Growth Projected Take/Pay Obligation (Limited to Phase L Service Area) User Rates are 80o/o of Disict Retail Rates Revenue is Approximately 5.0o/o of Total Sales Revenue Limited Capacity Growth/Average 50 ERCs/Year

5 System Trends - Operating Expenses Operating Bxpenses Increasing at Rate Higher than Revenue Growth r 30o/o FP&L Increas e (Actual) I 25o/o FP&L Increas e llll09 (Anticipated) r Cost of OiUGas - In Sz.z4lcallon - Today - $3.69/Gallon r Average O&M Costs per Account - $ in Fiscal Year $ in Fiscal Year o/o Compound r Results in Declining Revenue Margins - Expect Trend to Continue 5 Growth

6 Rate Adequacy - General E Five-Year Financial Forecast - Fiscal Years Key Assumptions: r Limited Disict Customer Growth to 0.3o per Year I RecognizedContinued Commercial Development r Fiscal Year 2009 Budget - Basis for Expenditure Projections r Operating Bxpense Projections - Average Annual Increases Fuel Costs Increase d, 16.10/0 Elecicity Costs Increase d 12.4o/o Personnel Costs Increased 5.0o No Additional Personnel above Fiscal Year 2009 Levels 6

7 Rate Adequacy - General (cont'd.) Key Assumptions (cont'd.): r Consider Financial Targets as Part of Rate Adequacy Review r Promotes Financial Creditworthiness of System r Financial Targets Considered \ilorking Capital - 90 Days of O&M All-In Debt Service Coverage - l35o/o Minimum R&R Reserve at I Year's R&R Expenditure Minimum Net Revenue Margin/Target zt 38o/o

8 Capital Improvement Program Based on Disict's CIP Program Primary Driver in Rate Adequ ùcy l)etermination Primary Capital Expenditures r Significant R&R Projects Lift Station Renewal and Replacement Surge Tank Rehabilitation Pump Rebuilds Membrane Replacement t Expansion and Upgrade of the Irrigation System r Expansion and Upgrade of the Wastewater System

9 Capital Improvement Program Fiscal Years 2008 through 2013 Six-Year Totat [11 Total System Capital Expenditures $ 20,125 CAPITAL FT]NDING SOURCES: Renewal and Replacement Fund $ Rate Revenue 659 \ilater Connection Fees Fund Ir42I Wastewater Connection Fees Fund Series 2013 Bonds [2] 8,189 Total Sources S Percentage 100.0Y" 24.5o/o 3.30Á 7.lo/o 24.5o/o 40.60/ % [] 000's ofdollars. [2]Total Bond Issue estimated at $9.3 million to f.nd the wastewater teatnent plant eryansion

10 Debt Service Outstanding Debt Service Issue Utilities System Revenue Bonds, Series 2000 Utilities System Revenue Bonds, Series 2004 Principal Average Annual Outstanding [1ì Debt Sewice [21 s26,225,000 $ ,445, ,850 Maturity Date Fiscal Year2032 Fiscal Year2038 Total Annual Ave rage Payment $2,686,806 [1] Amount anticipated being outstanding at October 1, 2008 (affer payment of the October maturity). [2] Average debt sewice during the Forecast Period. Proposed Debt Service - Series 2013 Bonds r Funding Source of 'Wastewater Treatment Plant Expansion r Total Principal Amount Estimated at S9.3 Million Average Annual Coupon Rate of 6.00Á Over a 30-Year Term Estimated Debt Service $557,700 (Interest Only) Begins Fiscal Year 2013 Ultimate Funding Dependant on Timing/Cash Availabitity 10

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12 Deposits to R&R Fund Pay/Go Capital - Funded Annually from Operations Purpose - To Fund Renewalo Bettermento and Upgrade Projects of the System on Ongoing Basis Gross Plant-in-Service r Total (Without Land) : $40.6 Million (Original Cost - Not Replacement Cost) r Assuming a D-Year Remaining Service Life of Assets : $1.01 MillionNear l1

13 Deposits to R&R Fund (cont'd.) Annual R&R Deposit During Forecast Period Averages $922,000 r Required Deposit per Bond Indenture - 5.0o/o of Previous Yearts Revenues - Average : $ During Forecast Period r Average Additional Annual Deposit Amount of $ During Forecast Period r Support S-Year Capital Program T I T Build Reserve for Unexpected/Future Capital Needs Promotes System Equityllimits Future Debt Financing Long-Term Rate Stabilify and Ftexibility

14 Observations & Recommendations Pro ected ratin Results Actual FY 2007 Estimated FY 2009 Estimated Without Rate With Râte FY 2008 Increase Increase (10.07o) Total Sales Revenue Income & Funds From Other Sources $6,937, ,573 $7,264, ,389 $7,2s9,s38 s7,98s, , ,891 Total Revenues s7,414,611 $7,6s6,01 I $7,7ss,428 $8,481,382 Total Operating Expenses $4,451,440 $4,299,01s $s,008,23s $5,008,23s Net Revenues Net Revenue Margin $2,963, % $3,3s6, % $2,747,t93 s3,473,147 3s.42% 40.95% Debt Service Required R&R Fund Deposit Additional Recognized Requirements Water Connection Fees For Debt Service 2,661, ,733 3,698 2,687,4r3 381, ,6s4 0 2,686,673 2,686, , , , ,750 (400,000) (400,000) Net Revenue Surplus/(Deficit) G!6gZÐ Debt Service Coverage Net Revenues Less: AFPI Adjusted Net Revenues For Debt Service s2,963,r71 153,486 $2,809,68s $3,3s6,996 85,456 $3,271,541 s2,747,r93 248,975 s2,498,2r9 $3,473,r47 248,97s $3,224,173 Debt Senice Debt Service Coverage Calculation Calculated Minimum Required 2,661,618 2,687, % % % % 2,686, % % 2,686,673 l3

15 Observations & Recommendations Identified Future Rate Adjustments r Fiscal Year I Fiscal Year o/o Annually l0o/o l)ue to Anticipated Debt Service r Amounts Include Annual Index Allowance t4

16 Observations & Recommendations conttd. Financial Performance - Net Revenue Maryin Net Revenue Margin 50.ÙYo 45.0Yo 40.0% 35.0% 30.0o/o 25.0o/o 20.0o/o 15.ÙYo I0.0Yo s.0% 0.0% ll 2012 Reflects o/o of Revenuesrto Fund Debt and Capital

17 Observations & Recommendations conttd. Financial Performance - All-In Debt Service Coverage All-in Debt Coverage/1.{et Revenues/l'{o Connection Fees or AFPI l600/o l40yo 120% 100% 80% 60% 4ÙYo 20% 0% Reflects Ability of Net Rate Revenue to Cover Debt Service Payment rc

18 Observations & Recommendations conttd. Financial Performance - Operating Reserves $2,000,000 $ 1,800,000 $ r,600,000 $ l,400,000 $ r,200,000 $ l,000,000 $800,000 $600,000 $400,000 $200,000 $- Delineates Liquidity of System - Ability to Atact Capital and Meet Unknorvn Expenditures

19 Observations & Recommendations conttd. Financial Performance - R&R Fund Balance $1,600,000 Renewal and Replacement Fund Balance $1,400,000 $1,200,000 s1,000,000 s800,000 s600,000 s400,000 $200,000 s0 lllusates Ability to Continuously Fund Capital Needs - Promotes Going Concern of System

20 Proposed User Rates Single-Family Residential Customer \Mith 5/8" x 314" Meter WaterRates Monthly B ase Facility Charge FY 2009 Existing Prcposed [1] $13.48 $14.83 Usage Charge Per 1,000 Gallons WastewaterRates Monthly Base Facility Charge Usage Charye Per 1,000 Gallons brisation Rates P er Single-F amily Residence $3.04 $3.s4 $16.86 $18.55 $3.37 $3.71 $ [] Proposed rates effective October 1,2008. t9

21 FY 2009 Customer Impact Analysis Average Single-Family Residential Customer with 518" x 314" Meter Uses Approximately Gallons per Month Monthly Bill For Single Family Residential Customer With 5/8" x 3/4" Meter Using 3,000 Gallons Water Wastewater Irrigation Difference From Previous Year Combined Amount Percent Existing Rates FY 2009 Proposed Rates s $16.L $6s $6.s % Proposed Rate Adjustments Assume October Lst Effective l)ate 20

22 Reasons for Proposed Revenue Adjustments Inflationary Pressures on Operating Expenses During Forecast Period r Significant Anticipated Increases in Purchased Power Costs r Effects of FueUOil on Overall Costs r Continued Inflationary Increases Lower Customer Growth and Revenue Projections Funding Requirements Associated with Capital Improvement Program - Pay-As-You-Go Capital Must Maintain Bond Coverage Promote Financial Creditworthiness of System 2l

23 Rate Comparison St. Lucie West Sewices Disict Combined Water and WastewaterBill Comparison Assuming Gallons Potable WaterUsage and Gallons Irrigation Sewice $ $ $ s80.00 s60.00 $ s40.00 $20.00 $0.00 t da *s.,""" cuc" tþ cu,rf.d,*t.*- i *t'd.*-" ^--irt _** "s"riut -/" ^" d- a.-" s " ":-n ".tf' a' c' 22 N N f'cost$jj "d "$su C f f^s"if.ôdoô"i*df ó$ "-ss s' c* $ +s FJ".Á/ v ^$' i+' o*'sp8 cty a q.óooô'è"4 - _a $É" oj- ô v õi" 2 *S'.Fu*u o'u d d" su sd f" *s* o ^d i d ô{'- ^s' *d os *'d â.áod ø \ì- 9'â (& ðs flt

24 Other Observations Disict Should Bvaluate Financial Position Annually r Consideration of Future Debt Refunding r Assumed Use of Connection Fees to Pay Debt Service r Changes in System Growth/Services Needs r Changes in Operations/Cost of Service n Consideration of Other Revenues r Private Fire Line Rates r Review Miscellaneous Service Charges/Deposits Improve Customer Statistical Database 23

25 Discussion Questions and Answers 24

26 @otl* lo "util t "E,qu*g" l St. Lucie West Services Disict Comparison of \üater Bills at 3,000 Gallons Potable Water Usage and 5,000 Gallons Irrigation Service with Neighboring Utilities $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 I TTTITI -rril $ '"r-t l I $0.00,""" *""n rs."".d ri*8"-d"s1si;"" rtis--"0".""=...,* "J",t"-.u,f ii i ^"* "r.*ry *ff "."un.r,f._., "u""."5.-c "C "-' i ous ^--*-u"t' d -... Ò9 "-- -S

27 St. Lucie West Services Disict Comparison of Wastewater Bills at 3,000 Gallons Usage and 5,000 Gallons Irrigation Service with Neighboring Utilities $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 IT "*'-' " ^u_."t^s"""rs "-t_"t-n":.-"jr*ju"t*r*uou"- "f"^e""ui.u" " "y "ns ".t{-d "_"tt"*."."o ""^s " t E "tl-*i."i-",s-nt-i,""1-.-"-"'r-""'",.a.f &s c,tò IIIN e,',íô?$2e.6s I I I, rrlii IT "rcst.é'- *"t.',"" d"sû J *uo ø-' I ""0'-" f T T