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January 24, 2017 Mr. Ron Harring Finance Director City of Tarpon Springs 324 East Pine Street Tarpon Springs, FL 34689 Re: Draft Report Dear Mr. Harring, Burton & Associates is pleased to present this Draft Report of the Stormwater Revenue Sufficiency Analysis (Study) that we performed for the City of Tarpon Springs, Florida (City). We appreciate the fine assistance provided by you and all of the members of the City staff who participated in the Study. If you or others at the City have any questions, please do not hesitate to call me at (813) 443-5138 or email me at aburnham@burtonandassociates.com. We appreciate the opportunity to be of service to the City, and look forward to the possibility of doing so again in the near future. Sincerely, Andrew J. Burnham Director Eric Grau Managing Consultant Enclosure 777 S. Harbour Island Blvd., Suite 600 Tampa, Florida 33602 Phone (813) 443-5138 E-mail: aburnham@burtonandassociates.com
City of Tarpon Springs Draft Report Table of Contents TABLE OF CONTENTS INTRODUCTION... 2 BACKGROUND... 2 OBJECTIVES... 3 REVENUE SUFFICIENCY ANALYSIS... 4 DESCRIPTION... 4 SOURCE DATA... 5 Beginning Fund Balances... 5 Revenues... 5 Operating Expenses... 5 Debt Service... 6 Capital Improvement Program... 6 ASSUMPTIONS... 6 Cost Escalation... 6 System Growth... 6 Interest Earnings on Invested Funds... 7 Minimum Reserve Policy... 7 Future Borrowing & Capital Funding... 8 Debt Service and Coverage... 8 RESULTS... 8 STORMWATER FEE SURVEY... 9 Revenue Sufficiency Analysis... 11 1
City of Tarpon Springs Draft Report Introduction INTRODUCTION On behalf of the City of Tarpon Springs, Florida ( City ), Stantec Consulting Services, Inc. ( Stantec ) has conducted the Stormwater Revenue Sufficiency Analysis ( RSA ) for the City s Stormwater Enterprise Fund. This report describes in detail the assumptions, procedures, and results of the RSA, as well as the results of a recently completed local stormwater fee survey. BACKGROUND The City owns and operates the stormwater utility system ( System ) for the conveyance and treatment of stormwater in accordance with State and Federal regulations 1. In 2001, the City adopted Resolution 2001-74, which established its first monthly stormwater fee of $5.65 per equivalent stormwater unit ( ESU ) 2, effective January 1, 2002. This monthly fee remained unchanged until the City adopted its Stormwater Action Plan, an extensive, multi-year engineering study that identified new capital requirements. To fund these requirements, on September 15, 2015, the City s Board of Commissioners ( BOC ) adopted Resolution No. 2015-37, which repealed Resolution 2001-74 and established the annual schedule of stormwater fees per ESU presented in Figure 1-1. The BOC also approved, as part of Resolution No. 2015-37, a provision that requires the ESU rate be reviewed by the BOC for adjustments at a public meeting not less than once every three years. Resolution No. 2015-37 became effective October 1, 2015. On September 19, 2016, the City retained Stantec to evaluate the sufficiency of the revenue provided by the City s current rates and approved plan of increases 1 The Stormwater Enterprise Fund is used to account for the financing, acquisition, and operation and maintenance of the City s stormwater utility system. 2 An ESU is defined as the statistical average impervious area for residential parcels within the City, and has been determined for single-family residential parcels to be 1,945 square feet. 2
City of Tarpon Springs Draft Report Introduction to meet both the current and projected cost requirements of the utility system, the results of which are included herein. Figure 1-1 Schedule of Stormwater Fees per ESU YEAR ESU RATE, FOR MONTHLY FEE EFFECTIVE PERIOD 2016 $6.15 October 1, 2015 September 30, 2016 2017 $6.65 October 1, 2016 September 30, 2017 2018 $7.15 October 1, 2017 September 30, 2018 2019 $7.65 October 1, 2018 September 30, 2019 2020 $8.15 October 1, 2019 September 30, 2020 2021 $8.65 October 1, 2020 September 30, 2021 2022 $9.15 October 1, 2021 September 30, 2022 2023 $9.65 October 1, 2022 September 30, 2023 2024 $10.15 October 1, 2023 September 30, 2024 2025 $10.65 October 1, 2024 September 30, 2025 OBJECTIVES Perform a Revenue Sufficiency Analysis To evaluate the sufficiency of approved stormwater rate revenue adjustments to generate the level of revenues necessary to satisfy the System s projected requirements through FY 2027, including 1) operating expenses, 2) capital improvement program ( CIP ) costs, and 3) adequate operating reserves; and, if necessary, develop alternative plans of future stormwater rate revenue adjustments that will satisfy these projected requirements during each year of the forecast. Conduct a Stormwater Fee Survey That compares the City s current monthly stormwater fee per typical ESU to that of other stormwater systems in the City s surrounding geographic area. 3
City of Tarpon Springs Draft Report Revenue Sufficiency Analysis REVENUE SUFFICIENCY ANALYSIS This section of the report presents a description of the source data, assumptions, and results of the RSA, while includes detailed supporting schedules for the stormwater financial management plan identified herein. DESCRIPTION The RSA was performed using both historical and projected information. City staff provided the historical financial information that was used to establish the beginning FY 2017 fund balance of the System. It is important to note that funds reserved or encumbered for specific capital projects not reflected as requirements of the CIP budget were removed from beginning fund balances. Revenue sources utilized in the RSA consist of stormwater fee revenue and interest earnings. Stormwater fee revenues reflect the FY 2017 Projection provided by City staff, calculated each year thereafter based upon prior year revenue adjusted for projected growth and applicable stormwater fee adjustments. Likewise, interest earnings reflect the FY 2017 Projection provided by City staff, calculated each year thereafter based upon projected average fund balances and assumed annual interest earnings rates. Grant proceeds available for capital were also recognized in the RSA, but were based upon the identified requirements of the CIP budget. Revenue requirements consist of operating expenses, minor capital outlays, debt service, and inter-fund transfers. Operating expenses include personal services costs and operating and maintenance costs. All revenue requirements in FY 2017 reflect the FY 2017 Budget, and, with respect to all operating expenses and interfund transfers, projected each year thereafter based upon assumed future cost escalation factors. Minor capital outlays were provided by City staff for every year of the forecast, and the System held no outstanding debt as of the time of this RSA. It is important to note that in each year of the forecast, a 98% spending execution rate was assumed for all budgeted/projected operating expenses; whereas, spending execution rates of 100% were assumed for all 4
City of Tarpon Springs Draft Report Revenue Sufficiency Analysis budgeted/projected minor capital outlays, inter-fund transfers, and, to the extent necessary, debt service requirements. Annual capital requirements were provided by City staff and adjusted to account for future cost escalation. It is important to note that in each year of the forecast, a 100% spending execution rate was assumed for all budgeted/projected CIP requirements. SOURCE DATA The following presents the key source data relied upon in conducting the RSA: Beginning Fund Balances The System s beginning FY 2017 fund balances were derived from the unaudited year-end FY 2016 Trial Balance 3. Revenues The System s FY 2017 revenues were derived from the Fiscal Year 2017 Statement of Projected Revenues as reflected in the City s adopted FY 2017 Budget 4. Operating Expenses The System s FY 2017 operating expenses, as well as inter-fund transfer, were derived from the Fiscal Year 2017 Budget Request as reflected in the City s adopted FY 2017 Budget 5. It is important to note that future incremental operating expense associated with the addition of one new GIS Data Collector/Inspector in FY 2018 was provided by City staff 6, and projected each year thereafter based upon assumed future cost escalation factors. 3 As prepared by City staff on October 25, 2016. 4 As prepared by City staff on August 26, 2016. 5 As prepared by City staff on August 26, 2016. 6 As provided by City staff during the November 29, 2016 interactive work session. 5
City of Tarpon Springs Draft Report Revenue Sufficiency Analysis Debt Service The System held no outstanding debt as of the time of this RSA. Capital Improvement Program The System s annual CIP requirements were provided by City staff 7. System capital requirements (including inflation) for FY 2017 FY 2027 totaled approximately $6.9 million, of which approximately $1.4 million was identified as eligible for future grant funding. ASSUMPTIONS The following presents the key assumptions utilized in conducting the RSA: Cost Escalation Annual cost escalation factors for the various types of operating expense, including inter-fund transfers, were developed in consultation with City staff after review of historical trends, City staff s future expectations, and our industry experience. The specific escalation factors assumed for the various categories of expense are presented on Schedule 1 of. To account for inflation in the future cost of construction, an annually compounding cost escalation factor of 3.0% (based upon recent increases observed in the Engineering News Record Construction Cost Index) was applied to budgeted capital requirements beginning in FY 2018. System Growth New growth projections were based upon a review of historical data as well as input from City staff with regards to future expectations of growth. The RSA reflects projected annual growth in new equivalent stormwater units (ESUs) that ranges from 0.15% to 1.53% per year, assuming 455 new ESUs through FY 2020 and 15 ESUs 7 As provided by City staff during the November 29, 2016 interactive work session. 6
City of Tarpon Springs Draft Report Revenue Sufficiency Analysis per year thereafter 8. Projected annual growth rates, as well as total new ESU counts, are presented on Schedule 1 of of this report. Interest Earnings on Invested Funds The RSA reflects an interest-earning rate of 0.50% in FY 2018, followed by 0.75% in FY 2019, 1.00% in FY 2020, 1.50% in FY 2021, and 2.00% in FY 2022 and each year thereafter. Minimum Reserve Policy Reserve balances for utility systems are funds set aside for a specific cash flow requirement, financial need, project, task, or legal covenant. These balances are maintained in order to meet short-term cash flow requirements, and at the same time, minimize the risk associated with meeting the financial obligations and continued operational and capital needs under adverse conditions. The level of reserves maintained by a utility is an important component and consideration of developing a utility system multi-year financial management plan. Many utilities, rating agencies, and the investment community as a whole place a significant emphasis on having sufficient reserves available for potentially adverse conditions. The rationale related to the maintenance of adequate reserves is twofold. First, it helps to assure a utility that it will have adequate funds available to meet its financial obligations during unusual periods (i.e. when revenues are unusually low and/or expenditures are unusually high). Second, it provides funds that can be used for emergency repairs or replacements to the system that can occur because of natural disasters or unanticipated system failures. The financial management plan presented in this report assumes the City will maintain a minimum Operating Fund balance or reserve equal to 3 months of annual operating expenses, including personal services costs and operating and maintenance costs. This level of reserves are consistent with our experience with other financial healthy utility systems. 8 Through FY 2020, the schedule of annual new ESUs was provided by City staff. 7
City of Tarpon Springs Draft Report Revenue Sufficiency Analysis Future Borrowing & Capital Funding To the extent new debt is projected during the forecast period, the RSA assumes a 9-year borrowing term, 1.60% cost of issuance, and annual cost of borrowing equal to 2.40% in FY 2017, 2.50% in FY 2018, 2.75% in FY 2019, and 3.00% in FY 2020 and each year thereafter. The financial management plan presented herein does not reflect the issuance of debt in any year of the forecast period. Debt Service and Coverage To the extent new debt is projected during the forecast period, it is assumed annual net revenue (gross revenue minus operating expenses) will be no less than 1.15 times greater than the annual debt service requirement (annual principal and interest payments). Again, it is important to note the financial management plan presented herein does not reflect the issuance of debt in any year of the forecast period. RESULTS Based upon the data, assumptions, and policies presented herein, the City s current schedule of adopted stormwater fees should generate levels of revenue sufficient to satisfy the projected financial requirements of the System through FY 2027 without the need to issue debt, including 1) operating expenses, 2) CIP costs, and 3) adequate operating reserves. The financial management plan presented herein does not reflect the need for additional stormwater fee adjustments beyond that which have already been approved through FY 2025. It is important to note that to the extent future operating requirements are greater than projected or future grant proceeds are less than projected, the financial management plan presented herein would likely need adjustment. 8
City of Tarpon Springs Draft Report Stormwater Fee Survey STORMWATER FEE SURVEY We also performed a comparative stormwater fee survey of the City s surrounding geographic area. The survey presents the typical monthly stormwater fee in effect for each community as of October 1, 2016 (FY 2017) 9. Figure 3-1 FY 2017 Monthly Stormwater Fee Survey Clearwater St. Pete Beach Tampa Dunedin Pinellas County St. Petersburg Safety Harbor Tarpon Springs New Port Richey Pasco County Oldsmar Gulfport $14.51 $11.34 $11.20 $10.62 $9.81 $9.00 $8.50 $6.65 $6.45 $4.75 $4.50 $3.60 Port Richey $3.00 New Port Tarpon Safety St. Pinellas St. Pete Port Richey Gulfport Oldsmar Pasco County Dunedin Tampa Clearwater Richey Springs Harbor Petersburg County Beach Stormwater Fee $3.00 $3.60 $4.50 $4.75 $6.45 $6.65 $8.50 $9.00 $9.81 $10.62 $11.20 $11.34 $14.51 As identified in Figure 3-1, the survey results indicate the City charges a monthly stormwater fee per ESU that is currently within the market range for the City s surrounding geographic area. Furthermore, it is likely many of the stormwater systems surveyed will implement stormwater fee adjustments in the near future. Therefore, as the City continues implementing its approved stormwater fee adjustments, it is reasonable to expect the City s fees to remain within the market range. 9 With respect to the City, the typical monthly stormwater fee is that which is charged to one ESU, or the statistical average impervious area for residential parcels within the City of 1,945 square feet. 9
DISCLAIMER This document was produced by Stantec Consulting Services, Inc. ( Stantec ) for the City of Tarpon Springs and is based on a specific scope agreed upon by both parties. In preparing this report, Stantec utilized information and data obtained from the City of Tarpon Springs or public and/or industry sources. Stantec has relied on the information and data without independent verification, except only to the extent such verification is expressly described in this document. Any projections of future conditions presented in the document are not intended as predictions, as there may be differences between forecasted and actual results, and those differences may be material. Additionally, the purpose of this document is to summarize Stantec s analysis and findings related to this project, and it is not intended to address all aspects that may surround the subject area. Therefore, this document may have limitations, assumptions, or reliances on data that are not readily apparent on the face of it. Moreover, the reader should understand that Stantec was called on to provide judgments on a variety of critical factors which are incapable of precise measurement. As such, the use of this document and its findings by the City of Tarpon Springs should only occur after consultation with Stantec, and any use of this document and findings by any other person is done so entirely at their own risk. 10
City of Tarpon Springs Draft Report REVENUE SUFFICIENCY ANALYSIS Supporting Schedules for the RSA Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5 Schedule 6 Schedule 7 Schedule 8 Schedule 9 Assumptions Beginning Balances Capital Improvement Program Projection of Cash Outflows Projection of Cash Inflows FAMS-XL Control Panel Pro Forma Capital Projects Funding Summary Funding Summary by Fund 11
Schedule 1 Assumptions Annual System Growth: FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Equivalent Stormwater Units (ESUs) 16,650 16,710 16,965 17,005 17,030 17,055 17,080 17,105 17,130 17,155 17,180 Growth in ESUs (1) 100 60 255 40 25 25 25 25 25 25 25 % Increase in ESUs 0.60% 0.36% 1.53% 0.24% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% Rate Increase Adoption Date N/A 10/1/2017 10/1/2018 10/1/2019 10/1/2020 10/1/2021 10/1/2022 10/1/2023 10/1/2024 10/1/2025 10/1/2026 Average Annual Interest Earnings Rate: (2) Stormwater Fund 0.51% 0.50% 0.75% 1.00% 1.50% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Working Capital Reserve: Target (Number of Months of Operating Expenses) 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Annual Cost Escalation - Personal Services: 23 Life & Health Insurance N/A 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% All Other Personal Services N/A 2.00% 3.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Annual Cost Escalation - Operating & Maintenance: 43 Utility Services N/A 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 45 Insurance N/A 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 52 Operating Supplies N/A 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 53 Road Materials & Supplies N/A 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% All Other Operating & Maintenance N/A 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Weighted Average Cost Escalation - All Operating (3) N/A 9.96% 3.50% 3.96% 3.98% 4.00% 4.03% 4.05% 4.07% 4.09% 4.12% Annual Cost Escalation - Minor Capital Outlays (4) 64 Machinery & Equipment N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Annual Cost Escalation - Interfund Transfers 91 Transfers N/A 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Operating Expenses Execution Rates: Personal Services 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% Operating & Maintenance 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% Minor Capital Outlays Execution Rate: 64 Machinery & Equipment 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Capital Spending Execution Rate: % of Capital Budget 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% (1) Growth in ESUs, through FY 2020, are based upon known new residential and commercial developments. (2) The interest earnings rate in FY 2017 is based upon annual interest earnings revenue reflected in the FY 2017 Estimate. (3) FY 2018 weighted average cost escalation reflects the incremental personnel services associated with a new GIS Data Collector / Inspector. See Schedule 4 for detail. (4) Future minor capital outlays are as confirmed by City staff on Nov 29, 2016, assuming street sweeper purchases to be funded from Sanitation Fund. 12
Schedule 2 Beginning Balances FUND BALANCES (1) 30-Sep-2016 Revenue Fund $ 1,512,151 Restricted Reserves - TOTAL CONSOLIDATED FUND BALANCE $ 1,512,151 Revenue Fund CURRENT ASSETS Cash And Cash Equivalents $ 533,235 Investments 1,080,315 Receivables: Interest 2,631 Receivables: Accounts - Billed (Net) 92,402 Prepaid Items 4,045 TOTAL CURRENT ASSETS $ 1,712,628 Less: Accounts Payable (6,804) Less: Accrued Liabilities (2,554) Less: Compensated Absences (9,854) CALCULATED FUND BALANCE $ 1,693,416 Plus/(Less): Restricted: Prepaid Items (2,791) Plus/(Less): Unrestricted: Encumbrances (176,102) Plus/(Less): Unrestricted: Insurance (2,372) NET UNRESTRICTED FUND BALANCE $ 1,512,151 (1) Beginning fund balance is based upon the unaudited year-end FY 2016 trial balance. 13
Schedule 3 Capital Improvement Program PROJECT DESCRIPTION: FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 1 Riverside Dr. & Hillside Dr. $ 58,083 - - - - - - - - - - 2 Athens St. & Dodecanese Blvd. 75,000 - - - - - - - - - - 3 Highland Ave. & Vista Pl.& Jasmine Ave. & Lime St. 171,740 109,600 - - - - - - - - - 4 Pent St. 200' east of Grosse Ave. 128,177 776,821 - - - - - - - - - 5 Disston Ave. & Center St. - - 150,267 344,565 174,910 148,374 - - - - - 6 Coburn Dr. 100' west of Florida Ave. - - 39,240 180,800 - - - - - - - 7 Levis Ave. Alleyway/Levis Ave. between Lime St. & Oakwood St. - - - 48,125 200,513 - - - - - - 8 Spruce St. between Levis Ave. & Grosse Ave. - - - 151,230 - - - - - - - 9 Kenneth Way at Seaside Dr. - - - - 116,382 332,260 - - - - - 10 Disston Ave. between Spruce St. & Live Oak St. - - - - - 87,064-285,812 294,608 - - 11 Palm Ave. between Tarpon Dr. & Gulf Rd. - 59,770-440,188 - - - - - - - 12 Palm Ave. between Tarpon Dr. & Gulf Rd. - ROW - - 350,000 - - - - - - - - 13 Stormwater GIS for NPDES - 200,000 - - - - - - - - - 14 Unspecified Future Capital Spending - - - - - - 400,000 - - 400,000 400,000 15 Total CIP Budget (Current $) $ 433,000 1,146,191 539,507 1,164,908 491,805 567,698 400,000 285,812 294,608 400,000 400,000 16 Compounded Annual Cost Escalation (1) 0.0% 3.0% 6.1% 9.3% 12.6% 15.9% 19.4% 23.0% 26.7% 30.5% 34.4% 17 Annual Capital Spending Execution Rate 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 18 Final CIP Funding Level (Future $) $ 433,000 1,180,577 572,417 1,273,244 553,772 657,962 477,600 351,549 373,268 522,000 537,600 Note: All project costs in blue highlighting are assumed elegible for 50% funding from SAP Grant Proceeds. (1) Annual cost escalation factor of 3.00% is based upon the 5-year average increase in utility construction costs, per the Engineering News Record Construction Cost Index (ENR-CCI). 14
Schedule 4 Projection of Cash Outflows FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 1 Personal Services 2 11 Executive Salaries $ 20,738 21,153 21,787 22,659 23,565 24,508 25,488 26,508 27,568 28,671 29,817 3 12 Regular Salaries & Wages 262,443 267,692 275,723 286,752 298,222 310,150 322,556 335,459 348,877 362,832 377,345 4 13 Other Salaries & Wages 1,257 1,282 1,321 1,373 1,428 1,486 1,545 1,607 1,671 1,738 1,807 5 14 Overtime 9,000 9,180 9,455 9,834 10,227 10,636 11,061 11,504 11,964 12,443 12,940 6 15 Special Pay 7,168 7,311 7,531 7,832 8,145 8,471 8,810 9,162 9,529 9,910 10,306 7 21 Fica Taxes 22,576 23,028 23,718 24,667 25,654 26,680 27,747 28,857 30,011 31,212 32,460 8 22 Retirement Contribution 26,043 26,564 27,361 28,455 29,593 30,777 32,008 33,289 34,620 36,005 37,445 9 23 Life & Health Insurance 69,257 74,798 80,781 87,244 94,223 101,761 109,902 118,694 128,190 138,445 149,521 10 24 Worker'S Compensation 10,834 11,051 11,382 11,837 12,311 12,803 13,316 13,848 14,402 14,978 15,577 11 29 Salary/Benefit Increase 519 529 545 567 590 613 638 663 690 718 746 12 GIS Data Collector / Inspector - 60,000 61,800 64,272 66,843 69,517 72,297 75,189 78,197 81,325 84,578 13 Sub-Total: Personal Services $ 429,835 502,587 521,405 545,492 570,801 597,402 625,369 654,780 685,719 718,275 752,544 14 Operating & Maintenance 15 31 Professional Services $ 52,531 53,844 55,190 56,570 57,984 59,434 60,920 62,443 64,004 65,604 67,244 16 32 Accounting & Auditing 1,625 1,666 1,707 1,750 1,794 1,839 1,885 1,932 1,980 2,029 2,080 17 34 Other Contract Services 133,096 136,423 139,834 143,330 146,913 150,586 154,351 158,209 162,165 166,219 170,374 18 40 Travel Per Diem 674 691 708 726 744 763 782 801 821 842 863 19 41 Communication Services 756 775 794 814 834 855 877 899 921 944 968 20 43 Utility Services 3,403 3,573 3,752 3,939 4,136 4,343 4,560 4,788 5,028 5,279 5,543 21 44 Rents & Leases 5,253 5,384 5,519 5,657 5,798 5,943 6,092 6,244 6,400 6,560 6,724 22 45 Insurance 6,315 6,631 6,962 7,310 7,676 8,060 8,463 8,886 9,330 9,797 10,286 23 46 Repairs & Maintenance 77,422 79,358 81,341 83,375 85,459 87,596 89,786 92,030 94,331 96,689 99,107 24 47 Printing & Binding 315 323 331 339 348 356 365 374 384 393 403 25 48 Promotional Activities 1,576 1,615 1,656 1,697 1,740 1,783 1,828 1,873 1,920 1,968 2,017 26 49 Other Current Charges 39,095 40,072 41,074 42,101 43,154 44,232 45,338 46,472 47,633 48,824 50,045 27 51 Office Supplies 210 215 221 226 232 238 244 250 256 262 269 28 52 Operating Supplies 116,401 122,221 128,332 134,749 141,486 148,560 155,988 163,788 171,977 180,576 189,605 29 54 Books-Publ-Subscriptions 735 753 772 792 811 832 852 874 896 918 941 30 55 Training 3,979 4,078 4,180 4,285 4,392 4,502 4,614 4,730 4,848 4,969 5,093 31 Sub-Total: Operating & Maintenance $ 443,386 457,624 472,375 487,660 503,502 519,922 536,944 554,593 572,894 591,875 611,563 32 Total Operating Expense (@ 100% Execution) (1) $ 873,221 960,211 993,779 1,033,152 1,074,303 1,117,324 1,162,313 1,209,373 1,258,613 1,310,150 1,364,107 33 Personal Services Execution Rate 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 34 Operating & Maintenance Execution Rate 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% 35 Total Operating Expense Funding Requirement $ 855,757 941,007 973,904 1,012,489 1,052,817 1,094,978 1,139,067 1,185,185 1,233,441 1,283,947 1,336,825 36 Senior-Lien Debt Service Expense 37 Existing Senior-Lien Debt Service $ - - - - - - - - - - - 38 Cumulative Debt Service for Future Borrowings - - - - - - - - - - - 39 Total Senior-Lien Debt Service Expense $ - - - - - - - - - - - 15
Schedule 4 Projection of Cash Outflows FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 40 Minor Capital Outlay (2) 41 64 Machinery & Equipment $ 35,000 100,000 200,000 100,000 200,000 100,000 200,000 100,000 200,000 100,000 200,000 42 Minor Capital Outlays Execution Rate 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 43 Total Minor Capital Outlays Funding Requirement $ 35,000 100,000 200,000 100,000 200,000 100,000 200,000 100,000 200,000 100,000 200,000 44 Interfund Transfers (3) 45 91 Transfers $ 108,664 111,381 114,165 117,019 119,945 122,943 126,017 129,167 132,397 135,706 139,099 46 TOTAL CASH OUTFLOWS $ 999,421 1,152,387 1,288,069 1,229,509 1,372,762 1,317,921 1,465,084 1,414,353 1,565,837 1,519,654 1,675,924 (1) Operating expenses are based upon the FY 2017 Budget, adjusted for assumed cost escalation factors as identified on Schedule 1. (2) Future minor capital outlays are as confirmed by City staff on Nov 29, 2016, assuming street sweeper purchases to be funded from Sanitation Fund. (3) Interfund transfers are based upon the FY 2017 Budget, adjusted for assumed cost escalation factors as identified on Schedule 1. 16
Schedule 5 Projection of Cash Inflows FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 1 Growth in Stormwater ESUs N/A 0.36% 1.53% 0.24% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 2 Stormwater Fee Revenue Adjustments: N/A 7.52% 6.99% 6.54% 6.13% 5.78% 5.46% 5.18% 4.93% 0.00% 0.00% 3 Stormwater Fee Revenue (1) $ 1,340,092 1,446,043 1,570,775 1,677,386 1,782,911 1,888,738 1,994,867 2,101,299 2,208,034 2,211,257 2,214,479 4 Non-Operating Revenue / Other Sources of Funds 5 SAP Grant Proceeds (2) $ 149,959 590,288-240,563-50,454-175,774 186,634 - - 6 Interest Earnings (3) 7,895 7,165 8,607 7,183 5,406 5,514 5,781 11,589 21,588 28,339 30,634 7 Total Non-Operating Revenue / Other Sources of Funds $ 157,854 597,453 8,607 247,746 5,406 55,967 5,781 187,363 208,222 28,339 30,634 8 TOTAL CASH INFLOWS $ 1,497,946 2,043,496 1,579,383 1,925,132 1,788,316 1,944,705 2,000,649 2,288,663 2,416,256 2,239,595 2,245,113 (1) Stormwater fees revenues are based upon the FY 2017 Estimate, adjusted by the schedule of approved annual fee increases and the assumed annual growth in stormwater ESUs. (2) SAP grant proceeds are based upon the FY 2017 Estimate in FY 2017, whereas each year thereafter are based upon an assumed 50% funding of eligible projects as identified on Schedule 3. (3) Interest earnings are based upon the FY 2017 Estimate in FY 2017, whereas each year thereafter are calculated based upon projected fund balances and assumed annual interest earnings rates as identified on Schedule 1. 17
Millions ($) Millions ($) Millions ($) Millions ($) Millions ($) Schedule 6 FAMS-XL Control Panel SAVE CALC Override Stormwater Rate Increases FINANCIAL ANALYSIS AND MANAGEMENT SYSTEM (FAMS) SUMMARY FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Cumulative Change 0.00% 7.52% 6.99% 6.54% 6.13% 5.78% 5.46% 5.18% 4.93% FY 2022 FY 2027 0.00% 7.52% 6.99% 6.54% 6.13% 5.78% 5.46% 5.18% 4.93% 0.00% 0.00% 37.59% 60.15% Rate Covenant CIP Execution % Operating Reserve % 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 SAP GRANTS YES 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% PS FY18 98% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% OM FY18 98% MONTHLY FEE PER ESU $6.65 7.15 7.65 8.15 8.65 9.15 9.65 10.15 10.65 10.65 10.65 Operating Fund Current Plan Target 4.0 Rev Vs. Exp Cash In Cash Out Cash Out Excl. CIP 4.0 3.0 3.0 2.0 2.0 1.0 1.0 0.0 16 17 18 19 20 21 22 23 24 25 26 27 0.0 17 18 19 20 21 22 23 24 25 26 27 CIP Spending 4.0 Current Plan CIP Funding Debt Operating 4.0 Long-Term Borrowing 4.0 Current Plan 3.0 3.0 3.0 2.0 2.0 2.0 1.0 1.0 1.0 0.0 17 18 19 20 21 22 23 24 25 26 27 0.0 17 18 19 20 21 22 23 24 25 26 27 0.0 17 18 19 20 21 22 23 24 25 26 27 18
Schedule 7 Pro Forma FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 1 Rate Revenue Subject to Growth & Rate Adjustments 2 Stormwater Rate Revenue $ 1,340,092 1,340,092 1,446,043 1,570,775 1,677,386 1,782,911 1,888,738 1,994,867 2,101,299 2,208,034 2,211,257 3 Additional Rate Revenue From Growth - 4,829 22,067 3,704 2,466 2,617 2,769 2,920 3,071 3,222 3,222 4 Subtotal: Base Rate Revenue With Growth $ 1,340,092 1,344,921 1,468,110 1,574,479 1,679,852 1,785,528 1,891,506 1,997,787 2,104,371 2,211,257 2,214,479 5 Proposed Stormwater Rate Increase N/A 7.52% 6.99% 6.54% 6.13% 5.78% 5.46% 5.18% 4.93% 0.00% 0.00% 6 Additional Rate Revenue From Rate Increase - 101,122 102,665 102,907 103,058 103,210 103,361 103,512 103,664 - - 7 Total Rate Revenue $ 1,340,092 1,446,043 1,570,775 1,677,386 1,782,911 1,888,738 1,994,867 2,101,299 2,208,034 2,211,257 2,214,479 8 Less: Operating Expenses 9 Personal Services $ (421,238) (492,535) (510,977) (534,582) (559,385) (585,454) (612,862) (641,684) (672,004) (703,910) (737,493) 10 Operating & Maintenance (434,518) (448,471) (462,927) (477,907) (493,432) (509,523) (526,205) (543,501) (561,436) (580,037) (599,332) 11 Equals: Net Operating Income $ 484,335 505,037 596,872 664,897 730,093 793,760 855,801 916,114 974,593 927,310 877,654 12 Plus: Non-Operating Income/(Expense) 13 Interest Earned On Fund Balances $ 7,895 7,165 8,607 7,183 5,406 5,514 5,781 11,589 21,588 28,339 30,634 14 Equals: Net Income Available for Debt Service $ 492,230 512,201 605,479 672,080 735,499 799,273 861,582 927,703 996,181 955,648 908,288 15 Senior-Lien Debt Service Coverage Test 16 Existing Debt Service $ - - - - - - - - - - - 17 Cumulative Debt Service for Future Borrowings - - - - - - - - - - - 18 Total Senior-Lien Debt Service $ - - - - - - - - - - - 19 Debt Service Coverage: Test I 1.15 Req. N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 20 Cash Flow Test 21 Net Income Available for Debt Service $ 492,230 512,201 605,479 672,080 735,499 799,273 861,582 927,703 996,181 955,648 908,288 22 Total Senior-Lien Debt Service - - - - - - - - - - - 23 Minor Capital Outlay (35,000) (100,000) (200,000) (100,000) (200,000) (100,000) (200,000) (100,000) (200,000) (100,000) (200,000) 24 Interfund Transfers Out (108,664) (111,381) (114,165) (117,019) (119,945) (122,943) (126,017) (129,167) (132,397) (135,706) (139,099) 25 SAP Grant Proceeds (1) 149,959 590,288-240,563-50,454-175,774 186,634 - - 26 Net Cash Flow $ 498,525 891,109 291,314 695,623 415,554 626,784 535,565 874,310 850,419 719,942 569,189 27 Unrestricted Working Capital Reserve Fund 28 Balance At Beginning Of Fiscal Year $ 1,512,151 1,577,676 1,288,208 1,007,105 429,484 291,266 260,087 318,052 840,813 1,317,964 1,515,906 29 Cash Flow Surplus/(Deficit) 498,525 891,109 291,314 695,623 415,554 626,784 535,565 874,310 850,419 719,942 569,189 30 Capital Projects Paid With Unrestricted Reserve Funds (433,000) (1,180,577) (572,417) (1,273,244) (553,772) (657,962) (477,600) (351,549) (373,268) (522,000) (537,600) 31 Balance At End Of Fiscal Year $ 1,577,676 1,288,208 1,007,105 429,484 291,266 260,087 318,052 840,813 1,317,964 1,515,906 1,547,495 32 Minimum Working Capital Reserve Target (2) 241,105 263,097 272,017 282,377 293,190 304,480 316,271 328,588 341,459 354,913 368,981 33 Excess Working Capital Above Target $ 1,336,571 1,025,111 735,088 147,107 (1,925) (44,393) 1,781 512,225 976,505 1,160,992 1,178,514 (1) SAP grant proceeds are based upon the FY 2017 Estimate in FY 2017, whereas each year thereafter are based upon an assumed 50% funding of eligible projects as identified on Schedule 3. (2) Equal to 25% of annual Operating Expenses (Personal Services and Operating & Maintenance), plus annual transfer-out requirements (91 Transfers ). 19
Schedule 8 Capital Projects Funding Summary CAPITAL PROJECT FUNDING SOURCES: FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Revenue Fund (1) $ 433,000 1,180,577 572,417 1,273,244 553,772 657,962 477,600 351,549 373,268 522,000 537,600 Future Long-Term Borrowing Proceeds - - - - - - - - - - - Total Capital Project Funding $ 433,000 1,180,577 572,417 1,273,244 553,772 657,962 477,600 351,549 373,268 522,000 537,600 (1) Includes SAP Grant Proceeds applicable to eligible projects as identified on Schedule 3. 20
Schedule 9 Funding Summary by Fund FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 REVENUE FUND Balance at Beginning of the Fiscal Year $ 1,512,151 1,577,676 1,288,208 1,007,105 429,484 291,266 260,087 318,052 840,813 1,317,964 1,515,906 Additional Annual Revenues (1) 498,525 891,109 291,314 695,623 415,554 626,784 535,565 874,310 850,419 719,942 569,189 Less: Cash-Funded Capital Projects (433,000) (1,180,577) (572,417) (1,273,244) (553,772) (657,962) (477,600) (351,549) (373,268) (522,000) (537,600) Less: Payment Of Debt Service - - - - - - - - - - - Subtotal $ 1,577,676 1,288,208 1,007,105 429,484 291,266 260,087 318,052 840,813 1,317,964 1,515,906 1,547,495 Less: Restricted Funds (241,105) (263,097) (272,017) (282,377) (291,266) (260,087) (316,271) (328,588) (341,459) (354,913) (368,981) Total Amount Available For Projects $ 1,336,571 1,025,111 735,088 147,107 - - 1,781 512,225 976,505 1,160,992 1,178,514 Add Back: Restricted Funds 241,105 263,097 272,017 282,377 291,266 260,087 316,271 328,588 341,459 354,913 368,981 Plus: Interest Earnings 7,895 7,165 8,607 7,183 5,406 5,514 5,781 11,589 21,588 28,339 30,634 Less: Interest Allocated To Cash Flow (7,895) (7,165) (8,607) (7,183) (5,406) (5,514) (5,781) (11,589) (21,588) (28,339) (30,634) Balance At End Of Fiscal Year $ 1,577,676 1,288,208 1,007,105 429,484 291,266 260,087 318,052 840,813 1,317,964 1,515,906 1,547,495 RESTRICTED RESERVES Balance at Beginning of the Fiscal Year $ - - - - - - - - - - - Additional Funds: Debt Service Reserve on New Debt - - - - - - - - - - - Other Additional Funds - - - - - - - - - - - Subtotal $ - - - - - - - - - - - Plus: Interest Earnings - - - - - - - - - - - Less: Interest Allocated to Cash Flow - - - - - - - - - - - Balance at End of Fiscal Year $ - - - - - - - - - - - (1) Includes SAP Grant Proceeds applicable to eligible projects as identified on Schedule 3. 21