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4.b 1 Discussion on Uptown Sewer system 2018 budget Staff Report Date of Meeting: November 1, 2017 To: City Council From: Neil Soltis, Administrator Re: 2018 Uptown Sewer budget Background: The Wastewater Advisory Committee discussed amending the charge structure for the Uptown sewer system noting that the current rate structure relies primarily on a fixed charge of 12,331 per year spread equally over the 9 users. The variable portion of the charge is based on metered flow ($15.28/1,000 gallons) and generates about $5,000 per year. The current formula results in the cost per gallon of flow billed varying from around $0.035 for the large users and to around $0.35 for the smaller users. The committee recommended reducing the fixed component to $3,000 per year spread equally over the 9 users with the remaining charges based on metered ($47.00 / 1,000 gallons). This reduces the disparity to roughly $0.05 / gallon for large users and $0.11 / gallon for small users. The Committee also recommended that fees be increased by the amount of depreciation on the system to provide for a replacement reserve noting that without an increase there will not be sufficient funds available for the planned replacement of the drainfield blower in 2018 or the lift station and drainfield pumps in 2022. The Committee was in agreement that the proposed changes be included in the budget when presented to the Council and that the users be notified of the proposed changes. Issue: Should the rate structure be changed for billings beginning on January 1, 2018? Should the rate be changed to provide for an equipment replacement reserve? Proposal Details: The current ordinance provides for a quarterly charge of $342.54 with a volume charge of $15.28 / 1,000 gallons of metered flow. The recommendation would be to reduce the quarterly charge to $83.33 with a volume charge of $47.00 / 1,000 gallons of mete red flow. This change to having most of the charge be based on usage would also have the benefit of encouraging water conservation. A history of the charges and alternatives follows this report. Fiscal Impact: Below are summaries of the projected cash flow comparing the current rates and the new rates which provide for a reserve for replacement. It is important to note that based on the projected cash flow, there will not be sufficient funds to replace the drainfield blower in 2018 in accordance with the Capital Improvement committee recommendation. It should also be recognized that the CIP provides for the replacement of the lift station and drainfield pumps in 2022, which is 10 years after installation. If all of the pumps needed to be replaced by the end of 2022, there would not be sufficient funds available. 5-year projection based on the current rates 5-year projection based on the increased charge for equipment replacement. Uptown Water Meter Readings Year Café & StoreSchmitt MallEdward JonesLandmarkRepair GarageElim ChurchGammelgardenWarming HouseCommunity BuildingTotal Water Use2015 240 99 13 12 8 277 56 26 194 923 2016 188 166 12 2 18 310 44 7 470 1217 2017 180 159 11 1 20 281 42 23 210 927 average 203 141 12 5 15 289 47 19 291 1022 2015 0.031$ 0.053$ 0.305$ 0.328$ 0.484$ 0.029$ 0.082$ 0.160$ 0.035$ 0.052$ 2016 0.035$ 0.038$ 0.328$ 1.889$ 0.224$ 0.027$ 0.100$ 0.552$ 0.023$ 0.043$ 2017 0.036$ 0.039$ 0.357$ 3.781$ 0.203$ 0.029$ 0.105$ 0.179$ 0.033$ 0.052$ average 0.034$ 0.043$ 0.330$ 1.999$ 0.304$ 0.028$ 0.096$ 0.297$ 0.030$ 0.049$ 2015 2,707$ 1,920$ 1,445$ 1,436$ 1,413$ 2,913$ 1,681$ 1,515$ 2,451$ 17,481$ 2016 2,421$ 2,293$ 1,436$ 1,379$ 1,471$ 3,100$ 1,614$ 1,409$ 3,993$ 19,117$ 2017 1,779$ 1,691$ 1,072$ 1,032$ 1,110$ 2,201$ 1,204$ 1,125$ 1,902$ 13,117$ 2015 4,292$ 1,771$ 233$ 215$ 143$ 4,954$ 1,002$ 465$ 3,470$ 16,544$ 2016 3,362$ 2,969$ 215$ 36$ 322$ 5,544$ 787$ 125$ 8,406$ 21,766$ 2017 3,219$ 2,844$ 197$ 18$ 358$ 5,026$ 751$ 411$ 3,756$ 16,579$ 2015 4,818$ 1,987$ 261$ 241$ 161$ 5,561$ 1,124$ 522$ 3,895$ 18,569$ 2016 3,774$ 3,332$ 241$ 40$ 361$ 6,223$ 883$ 141$ 9,435$ 24,431$ 2017 3,614$ 3,192$ 221$ 20$ 402$ 5,641$ 843$ 462$ 4,216$ 18,610$ 333$ 333$ 333$ 333$ 333$ 333$ 333$ 333$ 333$ 3,000$ fixed 3,509$ 2,447$ 208$ 87$ 265$ 5,009$ 819$ 323$ 5,044$ 17,700$ variable 3,842$ 2,780$ 541$ 420$ 599$ 5,343$ 1,153$ 657$ 5,377$ 0.047$ variable rate 0.052$ 0.054$ 0.124$ 0.230$ 0.107$ 0.051$ 0.067$ 0.096$ 0.051$ $ / gallon billed 2015 1,135$ 861$ (904)$ (1,016)$ (814)$ 2,429$ (528)$ (859)$ 2,926$ 2016 1,421$ 487$ (895)$ (959)$ (872)$ 2,243$ (461)$ (753)$ 1,384$ 2017 142$ (300)$ (801)$ (822)$ (811)$ 470$ (628)$ (797)$ 787$ average daily flow Current cost per gallon of flow billed annual charge if billed based on usage at average cost of $0.049 / gallon annual charge if billed on usage at a cost of $0.055 / gallon (includes depreciation) Charges billed (2017 3 quarters) charge if a $3,000 fixed component was used different from current \\HPSERVER17\SharedDocs\Departments\Wastewater\sewer systems\Uptown Sewer and water\Meter Readings\Uptown Water Meter Reads Consolidated.xlsx $- $0.010 $0.020 $0.030 $0.040 $0.050 $0.060 $0.070 $0.080 $0.090 $0.100 $0.110 $0.120 $0.130 $0.140 $0.150 $0.160 $0.170 $0.180 $0.190 $0.200 $0.210 $0.220 $0.230 COST PER GALLON OF BILLED FLOWFIXED COST CHARGE UPTOWN SEWER SYSTEM - FIXED CHARGE OPTIONS High Medium Low $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 ANNUAL COST TO USERFIXED COST CHARGE UPTOWN SEWER - FIXED CHARGE OPTIONS High Medium Low UPTOWN SEWER SYSTEM (FUND 612) 2016 2017 2017 2018 Actual Projected Adopted Proposed BUDGET NOTES AND HIGHLIGHTS Revenue 19,161$ 18,000$ 18,000$ 20,800$ Expenditures 21,781$ 20,500$ 20,400$ 20,800$ Net Revenues (Expenditures)(2,619)$ (2,500)$ (2,400)$ -$ Add Depreciation 4,877$ 5,000$ 5,000$ 5,000$ Less Loan repayment to Capital Imp Fund (2,639)$ (2,639)$ (2,639)$ (2,639)$ Less Capitalized expenditures -$ -$ -$ (3,000)$ Cash Flow (382)$ (139)$ (39)$ (639)$ Balance January 1 163,572$ 168,799$ 162,809$ 162,731$ Balance December 31 162,809$ 168,521$ 162,731$ 161,453$ Cash balance 2,782$ 2,643$ 2,743$ 2,004$ Intergovernmental Revenues 33422 Other State grants 39$ Total Charges for Services -$ -$ -$ -$ 36100 Special Assessments Other Income 36210 Interest Income 5$ 36250 Misc. Refunds Total Other Income 5$ -$ -$ -$ Proprietary Fund Revenues 34401 Sewer Charges & Connection Fees 19,117$ 18,000$ 18,000$ 20,800$ change in rate structure and rate increase proposed Total Proprietary Fund 19,117$ 18,000$ 18,000$ 20,800$ Total Uptown Sewer Fund 612 19,161$ 18,000$ 18,000$ 20,800$ FUND BALANCE SUMMARY REVENUES UPTOWN SEWER SYSTEM (FUND 612) 2016 2017 2017 2018 Actual Projected Adopted Proposed BUDGET NOTES AND HIGHLIGHTS FUND BALANCE SUMMARY Personnel Services 101 Regular Wages & Salaries 7,331$ 7,200$ 7,000$ 7,200$ PW director - 104 hours, PW staff - 156 hours 102 OT Reg. Wages -$ -$ -$ -$ 120 Pension expense 2,912$ -$ -$ -$ 121 PERA Coord. Employer Contribution 544$ 500$ 500$ 500$ 122 FICA Employer Contribution 436$ 400$ 500$ 400$ 126 MEDICARE Employer Contribution 101$ 100$ 100$ 100$ 131 Health Insurance Employer Contribution -$ -$ -$ -$ Paid by Public Works General Fund budget 133 Life Insurance Employer Paid -$ -$ -$ -$ Paid by Public Works General Fund budget 151 Workers Comp Insurance Premium 181$ 200$ 200$ 200$ 8% increase Total Personnel Services 11,505$ 8,400$ 8,300$ 8,400$ Materials & Supplies 200 Office Supplies 15$ 100$ 100$ 100$ 210 Operating Supplies & Equipment -$ 200$ 300$ 200$ 240 Small Tools & Minor Equipment 100$ Total Materials & Supplies 15$ 400$ 400$ 300$ Contractual Services 303 Engineering Services 204$ 300$ -$ 309 Software Support & Maintenance -$ 100$ 100$ 100$ 317 Employee Training 752$ 500$ 700$ 700$ 322 Postage 15$ 100$ 100$ 100$ 334 Licenses & Permits 200$ 200$ 200$ 200$ 361 Liability/Property Insurance 218$ 200$ 200$ 300$ 4% increase 381 Utilities 1,756$ 1,900$ 1,900$ 2,000$ 2.0% increase 385 Sewer (Pumping)486$ 1,600$ 1,000$ 1,500$ Vacuum Excavation - pumping 386 Operation & Maintenance 950$ 1,000$ 1,500$ 1,200$ Pace analytical quarterly testing 404 Machinery & Equipment Repair 803$ 500$ 500$ 500$ aeration blower motor & installation 420 Depreciation Expense 4,877$ 5,000$ 5,000$ 5,000$ 438 Misc Contractual -$ 300$ 500$ 500$ Total Contractual Services 10,260$ 11,700$ 11,700$ 12,100$ Total Uptown Sewer (612)21,781$ 20,500$ 20,400$ 20,800$ Drainfield blower 3,000$ replacement scheduled for 2017, 2020, and 2022 Replace Uptown pump 1 replacement scheduled for 2022 Replace Uptown pump 2 replacement scheduled for 2022 Replace Drainfield pump 1 replacement scheduled for 2022 Replace Drainfield pump 2 replacement scheduled for 2022 -$ -$ -$ 3,000$ EXPENDITURES CAPITAL EXPENDITURES