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Home My WebLink About04292013 City Council Work Session Notes - Water & Wastewater Fund • 711 WORK SESSION NOTES ON LA-el - ao PurPose: t I-A-c1127 SeA.00--f-td Present: C Council Members Present: „ ,, _1, k...1 .11 j • I--A4-*--404)(••0.-% Called by:--Des , 4,...,1 • - Date 4-1 - ********************-: *********06********************** (4\r .A ()V,1” A-ba—mocta3 SJe,tne_CA,1/4)-e_, k Sa-tovJ rt-Co_P% c4-161et-r 1\-`A) Oce-- vowc-1-?D ,n-rc PVT. City of Seward Water and Wastewater Enterprise Funds Gt4:4 \ 40b1 4tats4" Water Enterprise Fund Water-related cash Water Enterprise Fund = $957,478 (12i12) versus 1 . 4M cash at c10i12>. Reduction due to payment toward Third Avenue Water Line Project versus assets of $9 . 1M HC ; $4M fully depreciated Li Cash Balance reflects 3rd Ave Water Loan $ 584K paid in 2012 u Water MRRF = $ 212 , 546 (12/12) versus $4 , 019 (10/12). Increase due to rate increase applied to capital needs . HC = historic cost • yof 4 It , 40, Water . history 3,500,000 ■MRRF n Water Fund 3,000,000 444 2,500,000 2,000,000 1,500,000 1,000,000 -- 500,000 2005 2006 2007 2008 2009 2010 2011 2012 est.2013 $1.973M cash held by Hospital Fund in bond reserve to be reimbursed to Water Fund 4lSKp Water-related debt Third Avenue Water Line loan balance as of 1/ 1/2013 $2,650,946 ; repay over 20 years at $ 155K annually; matures 4/2027 . pG 6E G CI yrs Water Projects funded with no debt aP ... ..... . . ... .. . $397K - Waterline construction GW/FA. .ARRA ( Phase 1 ) ❑ $74K - Fire hydrant upgrades/replacements ❑ $ 100K - Drinking water regulations grant ❑ $25K - Water distribution system analysis ❑ $423K - Coast Guard relocation ❑ $ 1 . 5M - ARRV dolphins @ SMC Total = $ 1 .O2M Water System plus $ 1 .5M dolphins = $2.52 million in grants managed Current Water Projects funded yoF� with no debt $4 . 5M North Seward Water Storage Tank and Pumping Facility ( Phase 2) - $ 1 . 99M designated legislative grant plus $2 . 5M ADEC grant U $575,000 Lowell Canyon Water Storage Tank Refurbishment (Currently in Governor's Budget as designated legislative grant. ) Total = $5 .O6M in Water System grants managed roc uw_ \ otesa . ® Rate increase 2013 (6% ) projected increase of new revenue = $ 59K Average bill increase $39 .89 to $42. 28 = $2. 39/ month . u If rates only rise to cover CPI : 2014 rates increase 2 . 6% ■ 2015 rates increase 2 . 6% [tit~�h s(b u�, J Notes Credit card fees added by RESO $4, 500 o Transfer funds to MRRF to begin to fund critical and high - risk infrastructure needs ( $208K in 2012 and $ 199K in 2013) Water Rate Histor3r o 2010 rate review showed need for 25 % rate increase 2010 = 4 . 8% ( 5-year avg . CPI + 2% ) 2011 = 5 . 1 % ( 5-year avg . CPI + 2% ) 2012 = 4 . 0% ( 5-year avg . CPI + 1 . 2% ) 2013 = 6 . 0% ( 5-year avg . CPI + 3 . 4%) CPI increased since then : 2010 1 . 8% ; 2011 3 . 2% ; 2012 2 . 23% ; 2013 2 . 6% est. = 9 . 83% Still behind by ( 25 % - 19 . 9% + 9 . 83% CPI) = 14 . 93% but have made up more than 1/2 of the shortfall over the past four years . 6[R v7 J �lAfKp Why the focus on capital needs and. rates? Need cash to leverage matching grants, pay for capital needs, and qualify for loans • Annual operating deficits make borrowing problematic without current cash levels and sustainable operating budget PP Major capital investments are needed to replace aging water system infrastructure c status of depreciation rreserves • Water = $ 212K in MRRF vs . assets of $9 . 1 million ; $4 . 0 million end of useful life MRRF increased $ 208, 527 in 2012 and will increase by additional $ 198, 883 in 2013 ; from $4, 019 to $411 ,429 in two years Estimated cost to replace 114, 701 linear feet of pipe is approximately $ 34 . 5M ; 1/3 of system is near end of useful life 12 Water Capital Needs p ") 4 c Water HnterpriseFund Capital Needs 2013 - - - - 2014 4,330,000 - - 4,330,000 2015 875,000 1 , 185,000 - 2,060,000 2016 - - - - 2017 - - 3,085,000 3,085,000 Total : 5,205,000 1 , 185,000 3,085,000 9,475,000 13 Critical Capital Needs 2013-2017 ' J Likely to Fail in the Next 5 years, must be accomplished • New North Water Storage Tank- $4,330,000 $2, 508,000 from ADEC MMG Program $ 1 ,992,000 from Dept. of Commerce, Community and Economic Development Division of Community Advocacy. Grant # 12-RR-030 o Refurbish Lowell Canyon 400,000 gallon tank- $575,000 Currently in Governor's FY2014 budget ® Gateway Tank Roof- $300,000 Funding being sought Total = $5, 205,000 14 0F tty, 4 a Water Storage Tanks , _ _. ._........,.....______ 400K Gallon Tank 200K Gallon Tank ,� t T L •'9p -.s _ fir ... ,� . , 1' _ '''t, ,) `1y t it. ' - ..: .,./ , )'va,sir. •.••••-,-Ti'---'-',-. • 1. N ,, I M .KC ,I.V. 1 - Received offer from ADEC for low interest loan in the amount Scheduled to be taken out of service of $575K to refurbish [Z V7 4 K � 4,4.0 JCanyon � Tank Corrosion p 4 4- 1041' r e. „a. Gateway water Tank �4 r e '4., ti` 4 ) \ k .� 4y 1 4 UPI a Needs roof replaced 40$st p 4t4r.: High Risk Ca ital Needs 2013 -2022 Likely to fail within 5-10 years Mobile Generation for Water Wells : $ 285 , 000 u New Production Well : $650 , 000 ❑ Abandoning Wells at Fort Raymond : $250 , 000 Total = $ 1 , 185 , 000 18 417: Moderate Risk Ca . ital Needs 2013-2022 • Continuous Increasing Cost to Maintain & Operate a Facility Control Upgrades : $80 , 000 o GIS : $ 30 , 000 a Formal rate study of Water utility : $ 30 , 000 o Replace 5 % of water lines per depreciation plan : $ 1 , 000, 000/yr. a Refurbish #4 Production Well : $85 , 000 a Replace 10 " and 14" AC water line between Phoenix and Sea Lion : $ 1 , 860, 000 Total = $ 3 , 085 , 000 19 414. Well houses Well House 2 Well House 4 w p xY r �- ... Iiiik ' t. iii. •a .eta' 4.' #064111P11111111k Sit 'r's : y it? U. V ., � .' ,� ava w � 4 set. 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J`S Annual Replacement of Critical Infrastru : t Planning for Depreciation and Replacement 2013-2032 Replacing 5 % of water lines annually IP A total of 73, 119 linear ft of A. C. , Cast Iron and Wood Stave pipe needs to be replaced Replacement cost is approximately $300 per linear foot This would require approximately $ 1M in additional funding annually ® Continued funding of the depreciation plan is 22 critical to the success of the water system yos k� Annual Replacement of Critical Infrastrucre Continued Ductile Iron Pipe ( DIP) • DIP systems could have a life expectancy of over 100 years, but the harsh climate of Seward could reduce that considerably After all of the A. C. , Cast Iron and Wood Stave pipe is replaced with DIP, the replacement schedule for pipe should be on at least a 50 year cycle or 1 . 25% of the total 122,232 linear feet of pipe This would require approximately $500K in additional funding annually 23 Vastewater tFund Wastewater-related cash ❑ Wastewater Enterprise Fund = $606K ( 12/ 12) versus assets of $ 12M HC; $7M fully depreciated ❑ Projected ending cash in 2013 is $724K with no contributions to MRRF LI Wastewater MRRF = $ 112K ❑ Rate increases still needed to cover cost of operations HC = historic cost • r. fl J Y lt£ 11 Wastewater Cash history ,,,c., „,„,,,,, ,„,,,,, �M e 900,000 DC7 ittA ill MRRF A'e r 800,000 Wastewater 700,000 Fu nd i w 600,000 434.14 500,000 400,000 0 ''1'4:'''''_ ;. till ''' ,„ v 300,000 200,000 --._ 100,000 2005 2006 2007 2008 2009 2010 2011 Oct-12 est. 2013 u �R 448'FP Wastewaterre1ated de 1995 Dairy Hill Sewer loan = $2,665 ( matures 7/2014) u1994 Lowell Point loan = $ 59,689 ( matures 11/2013) u*GF loan to repay 1990 debt = $ 1 , 219, 150 • Total : $ 1 , 281 , 504 * Wastewater Fund has not been making $76,840 annual payments to GF due to cash shortfalls pf LfW Gray► 4[ASKp Wastewater Projects funded without debt • ® $ 57K - Backup Generator - Grant ❑ $278K - Lift Station # 3 - ARRA Grant Total : $335,000 in Wastewater grants being managed 6‘447) Notes Rate increase 2013 (6% ) expected to generate $ 59K/year Avg . bill increased $ 50 . 33 to $ 53 . 35 = $ 3 . 02/mo . o Annual debt payments $84K ($60K matures in 11/2013 ) ; assumes no new debt a Maple Street Sewer ACWF 400K loan offer from ADEC in hand , MMG pending o No current funding for MRRF pc.eK Wastewater Rate History o 2010 rate review showed need for 30 % rate increase ■ 2010 = 4 . 8% 11 2011 = 5 . 1 % • 2012 = 6 . 0 % ■ 2013 = 6 . 0% CPI increased since then : 2010 1 . 8% ; 2011 3 . 2% ; 2012 2 . 23% ; 2013 2 . 6% est. = 9 . 83% ■ We are still behind by ( 30% - 21 . 9 % + 9 . 83 % CPI ) = 17 . 93 % but have made up 60 % of the shortfall over the past four years Status of depreciation reserves AS1F le Wastewater = $ 112K in MRRF vs . assets of $ 12 million ; $ 7 . 1 million fully depreciated Estimated cost to replace 21 miles of underground sewer lines is $44M 31 ,4,::_ ..4..) a ital Infrastructure 4,..,0%.S4,..,0%. Water knterprise Fund — Capital Needs ri Ica �,;.ig. , - oderate- Risk Risk 2013 162,000 - - 162,000 2014 640,000 50,000 - 690,000 2015 92,000 270,000 250,000 612,000 2016 - 120,000 85,000 205,000 2017 - - - - Total 894,000 440,000 335,000 1 ,669,000 32 Critical Capital Needs 2013-2017 t Likely to Fail in the Next 5 years, must be accomplished ❑ Forest Acres Lift Station : $92K (engineering) O # 1 Stand - by generator : $ 150K ✓ SMIC bypass valve : $ 72K o Secure Spruce Creek sewer : $90K o Sewer sludge removal : $490K :• TOTAL = $894,000 33 NeedsOi SfHi h Risk Ca ital 2013-2022 J 9/.ASwP Likely to fail within 5-10 years D Replace blowers at Lowell Point wastewater treatment plant : $ 120K • SMIC piping for bypass (engineering and design ) : $ 50K ✓ Double wall fuel tanks : $ 150K (funding initially approved by AES but approval later rescinded ) LJ Manhole refurbishment : $ 120K Total = $440 , 000 34 0,„ Moderate Risk Capital Needs 2013-2016 .gip Moderate Risk- Continuous Increasing Cost to Maintain & Operate o GIS : $ 30K o Rate study : $ 30K ri Sludge pile disposal : $25K o SMIC Lower Lift Station (engineering only) : $250K ❖ Total = $ 335 , 000 Still leaves $600K/yr. over 10 years needed to replace infrastructure past useful life Depreciation plan for infrastructure past useful life 35 ,....4 4,4 Wastewater facilities • ____ _ ..___ ____............_.........._....._......._ Lowell Point Aerated Lowell Point Lagoon Lagoon Lab/ Blower Bldg . ...., ..•.- . - , . ., :,.. ..., :. „ . . . ,.. , ',--• ''0 . ai': , • .:, , ,- ... - ........ 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