Wightman & Associates, Inc. MI WEA & AWWA AIM Asset Management Seminar 5/3/17

Transcription

1 MI WEA & AWWA AIM Asset Management Seminar

2 MI WEA & AWWA AIM Asset Management Seminar Ontwa Township Planning For and Rate Adjustments as Part of The SAW Program AMP Process

3 MI WEA & AWWA AIM Asset Management Seminar Key Learning #1 A SAW Grant Project Manager is someone who solves a problem you didn't know you had, in a way you don't understand.

4 MI WEA & AWWA AIM Asset Management Seminar Key Learning #2 A Waste Water System Operator is someone who tells the SAW Grant Project Manager to stop trying to fix things that aren t Broken.

5 360 Degree Perspective 1) : Assisting the New Board of Trustees in Ontwa Township: a) Implemented the 2015 WW Rate Increase for The Township 2) : a) Waste Water Administrator of Ontwa Township b) Chairman of the Waste Water Board of Ontwa Township c) SAW Grant Administrator for Ontwa Township 3) 2016: Infrastructure Manager; Wightman & Associates, Inc. a) Manage 24 SAW Grants on behalf of Wightman and our clients 5

6 SAW Program Key Elements Assess Inventory Establish Level of Service Evaluate Criticality Develop Capital Improvement Plan Present 20-Year Complete Revenue and Funding Forecast 6

7 What is the Stormwater, Asset Management and Wastewater (SAW) Program? State Grant for Asset Management Program (AMP) of Wastewater and Stormwater Creation of GIS with System Conditions and Work Order System for DPW or Operating Firm Data Collection (Cleaning/Televising) Conditional Assessment by NASSCO Standards/Engineering Analysis Identification of Key Capital Improvement Projects from Conditional Assessment Development of 20 Year Capital Improvement Plan and Rate Structure Analysis 7

8 Why is the SAW Grant Program Important Actual Photos During (and after) the Asset Assessment Poor Pump Condition Poor Manhole Condition Re-Conditioned Manhole 8

9 Why is the SAW Grant Program Important Complete System Assessment / Paperless db & W/O System / AMP Complete System Assessment Records and Maintenance on Handheld and Workstation User Friendly Work Order System Asset Management Plan 9

10 1. The SAW Program is to be Completed Within 3 Years. SAW Program Rules 2. The Grants for Wastewater and Asset Management Plans must show significant progress toward a funding structure within three years. Stormwater Asset Management Plan Must be Implemented. 3. At 2.5 years a Current Year Rate Analysis and Recommendation is Required to be Submitted to the MDEQ. a. Current Year Financial Report and Budget: 1) If there is a current year gap in Rate Revenue vs Expenses, then demonstrate how 90% of the current year gap will be funded over the next 5 years. b. Current Year Rate Resolution. c. System Description: Internal vs. External Treatment; Selling Service; System Design; Area Served; etc. 4. A Product of the Program is an Asset Management Plan that is Confirmed with the MDEQ and Required to be Made Available to the Public for 15 Years after the Plan is Submitted. 10

11 A. Overview: The SAW program is approximately $450M in Grants and Loans that allows communities to locate, map, assess and document the assets and condition of the assets in their Wastewater and Stormwater systems. It also allows the recipients of the Grants and Loans to develop an Asset Management Plan, including a Geographical Information System ( GIS ), Maintenance Software and a 20 Year Financial Forecast and Rate Structure Analysis, in order to forecast, budget and plan for repair and upgrades to their systems. B. Ontwa: 1. Total Grant Available: a. Sanitary: $678, Breakout: Sanitary a. Application $ 7,500 b. Asset Management Plan $ 355,923 c. Waste Water Design $ 214,660 d. Cleaning and Televising Sewer $ 50,000 e. Reimbursable Expense $ 6,600 f. Financial Analysis $ 17,000 g. AMP / GIS Hardware, Software & Training $ 27,000 TOTAL $ 678,683 11

12 SAW AMP Capital Improvement and Revenue Plan 4 Step Process 1) Collect 3 Years of Financial History and provide to Eng. Firm (Then to Outside Financial Specialist such as UMBAUGH) Required if Bond Financing is Anticipated. a) Income Statement Revenues, Expenses and Forecasted Budget b) Balance Sheet Asset and Liability Position 2) Establish a Test Year or a Baseline Year and a Budget. 3) Evaluate / Confirm Revenue Received Through Service Fees for the Established Year. 4) Build a 20 Year Cash Flow Forecast Based on an Annual Schedule of Maintenance Items and Special Projects from the System Assessment Capital Improvement Plan ( CIP ). 12

13 SAW AMP Capital Improvement and Revenue Plan Now What 1) What do we do with the Financial Information? Confirm the Following: a) From the Income Statement: 1. Confirm Revenues: Based on REUs. 2. Confirm Expenses: Based on normalized (Normal and Usual) annual expenses to run the WW system. b) From the Balance Sheet: 1. Confirm Assets: How much cash is in the bank accounts. 2. Confirm Liabilities/Debt: How much of the cash is used to pay down the debt (Bonds) on the balance sheet. 2) What Large Investments Need to be Made to the System: Determine Large Capital Projects Based on the Engineering Evaluation of the Asset Inventory, the Condition of the Assets and the Criticality of the Assets. 3) Build an Annual Schedule (Cash Needed) for Maintenance and Large Capital Projects Spending: a) Maintenance: How much cash will be needed for annual maintenance items. b) Capital Improvement Projects: How much cash will be needed for the large projects. 4) If Cash Surplus: No Rate Increase or Additional Capital (Debt) is Needed. 5) If Cash Deficit: Additional Funding Needs to Be Provided Via: a) Rate Increase Wightman & Associates, Inc. b) Increased Debt (Bonds, etc). 13

14 Capital Improvement Plan Priority Project Name Estimated Cost 1 Manhole Rehabilitation Project $40,000 2 C-1 Lift Station Infrastructure Building $100,000 3 H2S Analysis Project $15,000 4 Install Lighting, Fall Protection, and VFDs/PLCs at Lift $92,500 Stations and Relocate Disconnects 5 Rehab/Replace Lift Station Equipment: 2 Stations every 3 $700,000 years 6 Manhole Rehabilitation Projects: 3-year cycle $297,600 7 Casting and Lid Repair Projects: Annual as-needed over 20 years $371,550 SUBTOTAL $1,617,450 Engineering and Contingency (+/-20%) 323,490 Total Estimated Project Cost for Twenty Year Wastewater CIP = $1,940,940 Average Cost per Year for Twenty Year Wastewater CIP = $97,047 14

15 Revenue ( Maintenance ) Plan + Capital Improvement Plan Lift Station Pump # Make Model Discharge Size (inch) Horsepower In-Service Date Date of Last Service Totals B-1 1 ABS M185/4-3y Jan 22, 2014 $ 24, ABS M185/4-3y Aug 14, 2014 $ 25, B-2 1 Flyght Feb 17, 2014 $ 4, Flyght Feb 17, 2014 $ 4, B-3 1 ABS AFP1042.4M 70/4-22EX $ 10, ABS AFP1042.4M 70/4-22EX $ 9, B-4 1 ABS AFP1032M70/4 3 5 $ 5, ABS AFP1032M70/4 3 5 $ 5, C-1 1 Flygt NP Oct 15, 2015 $ 29, Flygt NP Nov 28, 2015 $ 29, C-2 1 ABS AFP0831-M35/4-12X Nov 25,2013 $ 5, ABS AFP0831-M35/4-12X $ 5, C-3 1 KJI Hydro 34KSE $ 4, C-4 2 KJI Hydro 34KSE Apr 22, 2013 $ 4, ABS AFP1046M90/4 5 $ 5, ABS AFP1046M90/4 5 $ 6, C-5 1 Flygt Mar 21, 2012 $ 5, Flygt Mar 21, 2012 Feb.17,2016 $ 5, Epw-1 1 KIJ Hydro KSE-5-4T 4 5 March 28, 2014 $ 6, KIJ Hydro KSE March 28, 2014 $ 6, Epw-2 1 KIJ Hydro 3KSE-3-4T $ 4, KIJ Hydro 3KSE-3-4T $ 4, Epw-3 1 KIJ Hydro 3KSE-3-4T $ 3, KIJ Hydro 3KSE-3-4T $ 3, Edw 1 Liberty LSG203M 2 2 Dec 1, 2014 $ 2, Liberty LSG203M 2 2 Apr 30, 2013 $ 2, JPC-1 1 ABS M75/ $ 10, ABS M75/ $ 12, JPC-2 1 ABS M75/ $ 10, ABS M75/ $ 12, JPC-3 1 BS Piranh 516/2D $ 2, BS Piranh 516/2D $ 2, MS-1 1 TBD 5 $ 5, TBD 5 $ 5, TOTAL PUMPS $ 24, $ 40, $ 25, $ - $ 25, $ - $ - $ - $ 11, $ 29, $ 12, $ - $ - $ 7, $ 6, $ 8, $ 10, $ 11, $ 11, $ 58, $ - $ 284, Assumptio 1)Pump Pump Replacement Cost: $-Hp $ 1, )Inflation Inflation Factor - Annual Ontwa Township Revenue and CIP Plan Analylsis 20 Year Projection: Replacment Timing and Cost - CIP Projects Totals Priority Qty Project Estimate Total 1 1 LS Manhole Rehabiliation Project $ 40,000 $ 40, EA C-1 Lift Station Bulding and Inf $ 100,000 $ 100,000 $ 40, $ 100, $ 40, EA H2S Analysis Project $ 15,000 $ 15,000 $ 15, $ 100, Install Lighting, Fall $ 15, $ 92, Protection, and VFDs/PLCs $ 92, LS at Lift Stations and Relocate $ 92,500 $ 92, EA Rehab/Replace Lift Station $ 80,000 $ 560,000 $ 83, $ 88, $ 93, $ 99, $ 105, $ 112, $ 119, LS Manhole Rehabilitation Projects $ 40,000 $ 240,000 $ 42, $ 45, $ 48, $ 50, $ 54, $ 57, $ 700, LS Casting and Lid Repair Project $ 15,000 $ 300,000 $ 15, $ 15, $ 15, $ 16, $ 16, $ 16, $ 17, $ 17, $ 18, $ 18, $ 18, $ 19, $ 19, $ 19, $ 20, $ 20, $ 21, $ 21, $ 21, $ 22, $ 297, $ 371, TOTAL SPECIAL PROJECTS $ 40, $ 222, $ 98, $ 58, $ 16, $ 104, $ 62, $ 17, $ 111, $ 66, $ 18, $ 117, $ 69, $ 19, $ 125, $ 74, $ 20, $ 133, $ 78, $ 21, $ 141, $ 1,617, TOTAL PUMPS AND SPECIAL PROJECTS $ 64,800 $ 262,790 $ 124,592 $ 58,300 $ 41,904 $ 104,500 $ 62,150 $ 17,250 $ 122,850 $ 95,160 $ 30,500 $ 117,800 $ 69,850 $ 27,090 $ 132,000 $ 82,350 $ 31,510 $ 144,200 $ 90,090 $ 80,300 $ 141,550 $ 1,901,536 15

16 Comparative Detail of Operating Expenses - Normalized TOWNSHIP OF ONTWA (MICHIGAN) SEWER FUND COMPARATIVE DETAIL OF OPERATING EXPENSES Fiscal Year Ended 3/31/2015 3/31/2016 3/31/2017 Test Year Multiplier 2018/ / / / /23 ( Per Client ) Operating Expenses Plant Operating Expenses Telephone $2,269 $2,012 $2,900 $3, % $3,182 $3,213 $3,245 $3,278 $3, Electric 25,853 22,161 23,500 19, % 19,392 19,586 19,782 19,980 20, Gas 4,623 3,035 1, % Water % System 1.0% Management (IAI) 125, , ,000 91,327 92,240 93,163 94,094 95,035 95, Lab/Testing Fees 22,331 21,400 12,000 16, % 16,453 16,617 16,784 16,951 17, Chemical Treatments 180, ,071 50,000 44, % 45,337 45,790 46,248 46,711 47, WW Treatment - Elkhart 400, , % 380, , , , , a WW Treatment Plant - Sewage 0.0% Processing Costs 314, , b WW Treatment Plant - Surcharges 26,427 26, % c WW Treatment Plant - Admin/Labor Charges 8,592 8, % d WW Treatment Plant - Penalties Paid 35,000 35, % WW Treatment Plant - Other 111, , % Repair/System Maintenance 0.0% ,000 70,870 70,870 70,870 70,870 70,870 70, Repair - Building Maintenance % Repair - Emergency Repairs % ,257 4, Repair - Normal Repairs 53,851 53, % Repair - Other 96,609 96, % Total Plant Operating Expenses 1,013, , , , , , , , ,780 Administrative and Other Expenses Office/Other ,000 36, % 36,638 37,004 37,374 37,748 38, Secretary Salary 0.0% 9,480 8, Treasurer Salary 7,800 6, % WW Admin. 4,986 4, % Clerk Salary 7,200 6, % Plumbing Inspections % WW Comp % ,060 3, Employer's S.S. 2,061 1, % Office Supplies 1,837 1, % Postage 6,535 5, % 8,000 6,061 6,122 6,183 6,245 6,307 6, Audit 2,500 2, % 2,391 2,415 2,439 2,463 2, Legal Fees 2,500 2, % 2,020 2,040 2,061 2,081 2,102 2,522 2, Insurance 6, % WW Miscellaneous - 0.0% ,702 1, Miss Dig % WW Computer 1.0% 1,909 1,534 3,000 1,300 1,313 1,326 1,339 1,353 1, Bad Checks % Total Administrative and Other Expenses 63,441 44,256 69,000 48,003 48,483 48,968 49,458 49,952 50,452 Total Operating Expenses $1,076,474 $940,917 $714,400 $671,589 $677,596 $683,663 $689,791 $695,981 $702,

17 Annual Debt Payments Analysis TOWNSHIP SEWER FUND SCHEDULE OF AMORTIZATION OF $2,430,000 PRINCIPAL AMOUNT OUTSTANDING OF CASS COUNTY SEWAGE DISPOSAL BONDS, SERIES 2005 Payment Principal Interest Debt Service Fiscal Year Date Balance Rate Principal Interest Total Total (In Dollars) (%) 5/1/2016 $2,430, $565,000 $56, $621, /1/2016 1,865,000 43, , , /1/2017 1,865, ,000 43, , /1/2017 1,260,000 29, , , /1/2018 1,260, ,000 29, , /1/ ,000 14, , , /1/ , ,000 14, , , Totals $2,430,000 $233, $2,663, $2,663,

18 Assumptions Wightman & Associates, Inc. Annual Cash Flow Analysis: Revenues Operating Expenses Debt Payments Increase TOWNSHIP OF ONTWA (MICHIGAN) SEWER FUND SEWER CASH FLOW ANALYSIS 2016/ / / / / / / /24 Ontwa Township residential equivalent units billed 1, , , , , , , , Ontwa Township residential equivalent unit charge - month 0.00% $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 Ontwa Township residential equivalent unit debt charge - month 0.00% $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 Edwardsburg Village residential equivalent units billed Edwardsburg Village residential equivalent unit charge - month 0.00% $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 Mason Township residential equivalent units billed Mason Township residential equivalent unit charge - month 0.00% $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 Revenues Rates & charges Ontwa Township residential equivalent unit charge $556,946 $556,946 $556,946 $556,946 $556,946 $556,946 $556,946 $556,946 Edwardsburg Village residential equivalent unit charge 87,023 87,023 87,023 87,023 87,023 87,023 87,023 87,023 Mason Township residential equivalent unit charge 234, , , , , , , ,816 Commodity charge 63,744 63,744 63,744 63,744 63,744 63,744 63,744 63,744 Total rates & charges revenue 942, , , , , , , ,529 Other 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Total revenues 952, , , , , , , ,529 Total operating expenditures 714, , , , , , , ,545 Net operating revenue 238, , , , , , , ,983 Less: Current debt service payment 729, , , ,295 52,172 48,688 45,267 43,996 Estimated cash-funded capital improvements 233,800 91,290 25,802 52,823 44,163 Estimated debt-funded capital improvements Net cash flow ($725,353) ($549,919) ($492,637) ($419,429) $157,743 $163,697 $205,030 $199,987 Cash & investments $2,687,550 $1,962,197 $1,412,277 $919,641 $500,211 $657,954 $821,652 $1,026,682 $1,226,669 18

19 Cash and Asset Balance After Coverage of Revenue and CIP Forecast $2,500,000 Cash and Investment Balance $2,309,277 $2,000,000 $2,131,197 $1,946,157 $1,500,000 $1,409,778 $1,000,000 $500,000 $0 $818,351 $755,524 $612,644 $509,284 $340,622 $1,020,747 Cash and Investment Balance 19

20 Ontwa Township Key Understandings 1) Newer System: 16 Years Old 2) Good Consistent, Residential Flows 3) Collection System: Do not Own a WW Plant 4) Solid Financial Position: Strong Asset Positions 20

21 Many Systems Key Assumptions 1) Older Systems: > 20 Years Old. 2) Inconsistent, seasonal flows, marginal condition, high H2S issues. 3) Collection System and WW Plant: Own and operate the complete system. 4) Marginal Financial Position: Many systems will need rate increases. 21

22 Recommendations 1) Don t panic / Ask for Help: Leverage the experience of your Engineers, Engineering Firms and Professional, Experienced Financial Firms such as UMBAUGH. a. Many SAW AMP and Financial Programs are being successfully implemented. 2) Pre-Plan and Provide Adequate Time: Try to have your system assets fully assessed, with your Revenue and CIP plans, at least in development, by Q3 or Q4 of Year 2 at the latest. 3) Leverage the Opportunity of the SAW Program/Funding: Be moderate in your projections for funding requirements for Maintenance and Capital Improvement Plans for your Systems. a. If a Rate Increase is needed, the SAW Program provides a good fact based program to facilitate acceptance by your communities. 22

23 MI WEA and AWWA If you don t know where you are going you might wind up someplace else. Yogi Berra

24 MI WEA and AWWA Thank You Frank LaPierre Infrastructure Manager Wightman & Associates, Inc. Wightman & Associates, Inc. Wightman & Associates, Inc. 264 Western Ave Pipestone Road 9635 Portage Road Allegan, MI Benton Harbor, MI Portage, MI O: C: