City of Buffalo Water and Sewer Rate Study. Nick Anhut Jessica Cook

Transcription

1 City of Buffalo Water and Sewer Rate Study Nick Anhut Jessica Cook 09/05/2017 1

2 Topics Tonight Review Financial Snapshot of Water and Wastewater Utilities Key Assumptions Future Capital Needs Review Proposed New Rate Structures Impacts on Ratepayers Impact on Utility Fund Conclusions 2

3 Utility Revenues 2016 Revenues Water Wastewater Property Taxes 3

4 Utility Expenditures 2016 Expenditures Operations Capital and Debt Service 4

5 Key Assumptions 3% inflation on operating expenses Water consumption declines 5% in 2018, steady thereafter Sewer consumption declines 2% in 2018, steady thereafter No new users assumed for operating revenues. Approximately 40 new units per year for connection fees Assumes future levy support of $500,000 per year thru 2022 Step down to $300,000 per year levy Target year-end cash = 3 months operating expenses plus next year s debt service 5

6 Key Assumptions Capital Projects Description Capital Costs (inflated 3%/yr) Water CIP $410,000 $503,000 $220,000 $175,000 $175,000 $175,000 $175,000 Biosolids Improvements Wastewater CIP Lift Station Improvements Description Capital Costs (inflated 3%/yr) $2,398,000 $759,000 $100,000 $100,000 $2,304,000 $1,877,000 $761,000 Bonds used to finance major improvements in 2017 and All other projects funded with cash 6

7 Proposed Rates Confirmed need for revenue increases in 2018 Meet existing debt/capital obligations Self-supporting enterprise Recommending new rate structure to achieve policy and financial goals: Stability in revenues from year to year Lower increases for essential indoor water use Moderate rate increases after

8 Proposed Water Residential Rates 2018 Monthly Water Rates Existing Proposed Fixed Rates Minimum Charge 9.15 Base Fee 7.50 Usage Rates Residential , ,001-25, >25, Residential , ,000-8, >8,

9 Proposed Water Rates Other User Classes Monthly Water Rates Existing Proposed Commercial , , , >300, Commercial 2018 Base Fee , ,001-75, >75, Mobile Homes Multifamily , ,001-25, >25, Multifamily Irrigation

10 Proposed Sewer Rates Monthly Sewer Rates Existing Proposed Fixed Rates Minimum Charge Minimum Charge (2 Units) Usage Rates All Users per 1,000 gallons

11 Utility Bill Comparison with other Communities $80 Comparison of Buffalo Proposed 2018 Rates to 2017 Water and Sewer Charges per Month for Sample Residential User (6,000 gallons water/3,500 gallons sewer) $70 $60 $50 $40 $30 Sewer Water $20 $10 $0 Buffalo (Proposed 2018) Buffalo (Current 2017) St. Michael Monticello Big Lake Albertville Maple Lake Hanover 11

12 12 National Trends

13 Impact on Residential Customers Sample Summer Bill Impact Analysis on Residential Monthly Existing Proposed Dollar Increase Low User - Residential Water (2,000 gallons/month) $ 9.15 $ $ 5.49 Sewer (2,000 gallons/month) $ 7.68 Total Monthly Utility Bill $ $ $ Moderate User - Residential Water (6,000 gallons/month) $ $ $ Sewer (3,500 gallons/month) $ Total Monthly Utility Bill $ $ $ High User - Residential Water (30,000 gallons/month) $ $ $ Sewer (4,000 gallons/month) $ Total Monthly Utility Bill $ $ $

14 Impact on Sample Commercial Customers Sample Summer Bill Impact Analysis on Commercial Monthly Existing Proposed Dollar Increase Low User - Commercial Water (3,000 gallons/month) $ 9.15 $ $ 9.06 Sewer (3,000 gallons/month) $ Total Monthly Utility Bill $ $ $ Moderate User - Commercial Water (33,000 gallons/month) $ $ $ Sewer (25,000 gallons/month) $ Total Monthly Utility Bill $ $ $ High User - Commercial Water (175,000 gallons/month) $ $ 1, $ Sewer (182,000 gallons/month) 1, , $ Total Monthly Utility Bill $ 1, $ 3, $ 1,

15 Future Projected Rate Increases Moderate Rate Increases projected after 2018 Meet existing debt and future capital needs Cover inflationary pressures Year Water Sewer % 4% 2020 thru % 4% % 2% Goal is self-sustaining enterprise 15

16 Restores Health of Utility Fund Combined Water and Sewer Fund Projected vs. Target Cash Balances 10,250,000 8,250,000 Financial capacity for capital repairs and replacement 6,250,000 4,250,000 2,250, ,000 (1,750,000) Target Cash Balance Ending Cash 16

17 Conclusions Utilities are currently operating at a loss Self-supporting utilities will require revenue increases Restructuring utility rates will stabilize revenue with higher base charges Proposed 2018 rates will be comparable to peer communities Revisit rates annually 17