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Home My WebLink AboutAgenda Packet - EVWD Board of Directors - 05/17/2017SP EC IA L BO A RD MEET IN G May 17, 2017 at 3:00 PM 31111 Greenspot Road Highland, C A 92346 AG E N D A C A LL TO O RD ER P LED G E O F A LLEG IA N C E RO LL C A LL O F BO A RD MEMBERS P UBLIC C O MMEN T S Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the C hairman of the Board. Under the State of C alifornia Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. T he matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. 1.Review F Y 2017-18 Revenue Projections REPO RT S 2.General Manager/C EO 3.Legal C ounsel Report 4.Board of Directors' Comments A D J O URN P urs uant to G overnment C o d e S ec tion 54954.2(a), any reques t fo r a d is ab ility-related mo dific ation or ac commod ation, inc luding auxiliary aids or s ervic es , that is s ought in order to participate in the abo ve agendized pub lic meeting s hould be d irected to the District C lerk at (909) 885-4900. S P E C IAL B O AR D AGE N D A S TAF F RE P O RT Agenda Item #1. Meeting Date: May 17, 2017 Dis c ussion Item To: G overning Board Memb ers From: G eneral Manager/C E O S ubject: R eview F Y 2017-18 R evenue P rojec tions R E C O MM E N D AT IO N: T his item is p resented as information o nly. B AC KG R O UN D / AN ALYS IS : At a wo rks hop held on Ap ril 21 st, 2017, pro gram managers and supervis o rs pres ented to the Bo ard of Directo rs (Bo ard ) their prop o s ed program go als and o b jec tives for fisc al year (F Y) 2017-18. S taff is no w working to d etermine the funding need ed which will b e p res ented to the Board at a wo rks hop o n June 7th, 2017. Befo re c o mpleting an o p eratio nal s p end ing plan, s taff need ed to p ro jec t the amount o f revenue and o ther fund ing s ources that will b e available to meet p ro gram c o mmitments. T herefo re, the p urpo s e of this worksho p is to review revenue p ro jec tions for the upcoming F Y beginning with the rates that s up p o rt them. Water Budget Bas ed rates were adopted in Marc h 2015 with three s tated o b jec tives : 1) enc o urage c o nservatio n, 2) establish eq uitab le allo c ation o f water amo ng cus tomer c lasses , and 3) provide stab le revenues to cover the c o s t o f es s ential ratep ayer servic es . In s hort, the new rate design has been very s uc c es s ful in meeting all the s tated o bjec tives. In p articular, the Dis tric t has met o r exc eed ed emergenc y conservatio n goals estab lished by the S tate, while realizing revenue s uffic ient to s upp o rt all Dis tric t pro grams , make s c heduled debt s ervice payments, and increas e fund ing toward the Dis tric t’s C apital I mprovement P rogram to mo re than $4 million annually. G iven the succ es s of the Water Budget rates for F Ys 2015-16 and 2016-17, staff is pleas ed to prop o s e modific atio ns to the ad o p ted rates (P hase 3) that are s ched uled to take effec t fo r F Y 2017-18. T he mo d ific ations includ e: No P has e 3 inc rease to Meter C harge rates O ne-half of P has e 3 inc reas es to C o mmodity (Tier) rates P ropos ed modificatio ns to the P has e 3 commo d ity rates are p res ented b elow: Adoptio n o f the mod ifications to F Y 2017-18 rates will provid e two b enefits for cus tomers . F irs t, no inc rease to the fixed Meter C harge gives custo mers mo re c ontrol over their water bills, and s econd, Tier 1 water, whic h is intend ed for indo o r health and s afety need s, will c o ntinue to be p rovid ed at a rate lo wer than the flat rate o f $1.77 p er HC F that was in effect und er the Distric t’s p revio us rate des ign. F inally, in c o ns id ering thes e mo d ific ations to F Y 2017-18 water rates, the Distric t will maintain its fid uciary c o mmitment to ratepayers that, altho ugh water rates will no t dec rease, the District’s Bo ard and s taff will c o ntinuo us ly re-evaluate increas es to ens ure that rates are o nly raised eno ugh to s uppo rt c o s ts reasonably bo rne. S taff will as k the Board to ad o p t a R esolution offic ially ad jus ting the District’s S c hed ule of Water and Was tewater R ates and C harges at the May 24th, 2017 regular Board meeting. WAT E R F UN D RE VE NUE P R OJ E C T ION S T he Dis tric t will p ro vide water s ervic es through app ro ximately 21,187 d o mestic and irrigation connectio ns in F Y 2017-18. In ad d itio n, 243 c ommerc ial fire s ervic es are connec ted to District water mains . Anticipated cus to mer d emand is es timated at 6,665,000 hund red c ubic feet o f water (HC F = 748 gallo ns ) for F Y 2017-18, the es timate includ es cons ervation d riven b y custo mers d ue to an inc reas e in rates and Dis tric t driven c o ns ervatio n. T he estimated F Y 2017-18 cus tomer demand eq uates to a 1% reduction in c ons umption c o mpared to F Y 2016-17. O nc e thes e annual water d emand p ro jec tions for eac h c usto mer clas s and tier were es tablished, sales in do llars were calc ulated b y multip lying the vo lume by the mo d ified P has e 3 commo d ity rates , to derive total s ales o f $14,500,000 alloc ated as fo llo ws : Meter Charge revenue for F Y 2017-18 is projected to b e $8,845,000. P ro jec tions for this revenue are d etermined bas ed on the custo mer c ounts dis cus s ed ab o ve, s egregated by meter s ize, and then multip lied b y the fixed monthly rates in effec t. T he pro jection fo r meter c harge revenue includ es a d ecreas e o f $115,000 comp ared to the p rior year due to the eliminatio n of residential fire s ervice c harges in F eb ruary o f 2017. Other Charges & Other Revenue includ e fees related to the c o llec tion o f d elinq uent ac counts, inves tment revenue, reimbursements from other agenc ies, and facility rental and other mis c ellaneo us revenue. T he total revenue projected for F Y 2017-18 is $834,000: WAS T E WAT E R F UN D R E VE N UE P R O J E C T IO N S T he Dis trict pro vides was tewater c ollec tion s ervices to c usto mers through app ro ximately 19,525 connec tio ns. O f thes e connectio ns , 18,475 are s ingle family res idential units, with the remaining 1,050 c o ns is ting of various c o mmerc ial and multi-family c us tomers . T he numb er of s ewer c o nnec tions has no t inc reas ed significantly over the las t five years. Wastewater S ystem Charges are p rojec ted at $4,545,000 fo r F Y 2017-18. T hese revenues are the s o urc e o f funds us ed by the District to maintain and rep lace wastewater c o llec tion lines , pay a p ortio n of the Dis trict’s general and administrative cos ts, and p ay d ebt servic e on s ewer b ond s . P rojec ted residential revenues fo r F Y 2017-18 were c alc ulated by multip lying the s ingle family res id ential count b y the monthly flat c harge o f $15.36 fo r 12 months to d erive es timated revenue of $3,405,000. C ommercial c usto mer p ro jec ted revenues were c alculated by multiplying the numb er of c o mmerc ial acc o unts by the Dis tric t’s mo nthly flat c harge of $3.90 fo r twelve months, and then es timating total water usage by c o mmerc ial c usto mers, in HC F, and multiplying the to tal usage by the volumetric rate o f $0.55. C o mmerc ial b illings make up $1,140,000 o f p ro jec ted revenues . Wastewater Treatment Charges are as s es s ed in acc o rdance with rates s et b y the C ity o f S an Bernardino (C ity) whic h treats all wastewater generated b y Dis tric t c us to mers . All Treatment C harges c ollec ted are remitted to the C ity and therefore have no effect on Distric t operations. Treatment C harges , and o ffsetting p ayments to the C ity, are es timated at $7,900,000 for F Y 2017-18. Total Financial Resources available for F Y 2017-18 inc lude the operating revenues outlined ab ove, plus d evelo p er fees of $250,000. I n additio n, $500,000 in O perating R es erves has been earmarked for S terling Natural R esourc es C enter (S NR C ) cos ts to fund the p ro jec t through p ermitting and legal is s ues until the pro ject c an b e financed through the S tate R evolving F und (S R F ) fund ing. S taff has taken a c o nservative app ro ac h to estimating F Y 2017-18 revenues , antic ip ating that o ngoing analys is and mo nito ring will ad d the organizational flexib ility to allow adjus tments to operational efforts in ac cordanc e with the ac tual level o f revenues realized . At the next b udget works ho p on June 7th, 2017, s taff will p res ent a s p end ing plan to utilize thes e financ ial resourc es , entrus ted to the District by o ur s takeho lders, in an effec tive and fis c ally res pons ib le manner. AGE N C Y ID E ALS AN D E N DE AVO R S: Id eals and Endeavor I I - Maintain An Enviro nment C ommitted To Elevated P ub lic S ervice (E) - P ractice transparent & acc o untab le fis cal management R ec o mmend ed b y: John Mura G eneral Manager/C EO R espec tfully s ubmitted: Brian Tomp kins C hief F inancial O fficer R E VIE W B Y O T HE R S : T his agenda item has been reviewed by the Ad minis tratio n and P ublic Affairs Departments. F IS C AL IMPAC T : T here is no fis c al impact ass ociated with this agenda item. ATTAC H M E NTS: Description Type P resentation P resentation REVENUE PROJECTIONS MAY 17, 2017 BUDGET BASED RATES Primary Goal –Promote Conservation While Providing Reliable Services Equitable Stable Revenues Affordable Essential Use Promote Water Efficiency Implemented 2015 Board Authorized Three-Phase Increase 2015, 2016, 2017 2 EVALUATING RESULTS $0 $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 $21,000,000 $24,000,000 $27,000,000 $30,000,000 $33,000,000 $36,000,000 FY 2015 -16 FY 2016 -17 $8,063,077 $8,887,245 $2,172,907 $2,805,950 $4,577,815 $5,216,217 $5,176,803 $5,784,199 Meter Charges Tier 3 Tier 2 Tier 1 $19.9 Million $22.7 Million 3 ASSESSING EFFECTIVENESS •July 1 Rate Increase for Meter Charge and Commodity Rates •Consider Permanent Conservation Changes −Communities Active Response to Drought •Prepare for Unpredictable Weather Patterns •Implement Capital Improvement Projects •Minimize Rate Spikes Collect Revenues that will Allow Us to Continue Operating in a Responsible Way 4 LOOKING AHEAD •Staff is Proposing to Implement ½ of Authorized Commodity Rate Increase •No Increase to Meter Charges RATE TYPE CURRENT RATES FY 2017-18 AUTHORIZED PHASE THREE FY 2017-18 PROPOSED RATES Tier 1 $ 1.63 $ 1.83 $ 1.73 Tier 2 2.32 2.61 2.46 Tier 3 3.24 3.64 3.44 METER SIZE CURRENT RATES 5/8”$ 23.06 3/4”29.27 1”41.71 1 1/2”72.81 2”110.13 3”228.30 4”402.44 6”819.44 8”1,503.28 Commercial Fire Service 8.78 to 87.84Proposition 218 Allows Governing Board to Implement Rates Up to Authorized Amount in the Public Hearing 5 PROPOSED GOALS & OBJECTIVES FISCAL YEAR 2017 -18 FINANCIAL OVERVIEW PHASE THREE WATER RATE REVENUES Saved Ratepayers $1.36 Million Annually CURRENT PROPOSED Water Sales $ 13,800,000 $ 14,500,000 Meter Charge 8,845,000 8,845,000 Total 22,645,000 23,345,000 Difference N/A 700,000 7 FY 2017-18 TOTAL PROJECTED WATER REVENUE $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 FY 2016-17 Budget FY 2016-17 Projected FY 2017-18 $8,845,000 $9,465,000 $8,845,000 $13,500,000 $15,240,000 $14,500,000 Water Sales Meter Charges $22.3 Million $24.7 Million $23.3 Million 8 FY 2017-18 WATER SALES $8,215,000 $3,104,000 $1,126,000 $2,055,000 Total Sales -$14,500,000 Residential Multi-Family Commercial Irrigation RATE TYPE TIER 1 TIER 2 TIER 3 Residential $ 3,680,000 $ 3,315,000 $ 1,220,000 Multi-Family 1,614,000 850,000 640,000 Commercial 850,000 96,000 180,000 Irrigation 0 1,220,000 835,000 9 FY 2017-18 WASTEWATER SYSTEM CHARGES CUSTOMER TYPE SERVICE CONNECTIONS ESTIMATED USAGE MONTHLY FIXED OR UNIT CHARGE TOTAL REVENUE Residential 18,475 N/A $ 15.36 $ 3,405,000 Commercial / Multi-Family Fixed 1,050 3.90 49,000 Volumetric 1,983,600 0.55 1,091,000 Commercial Total $ 1,140,000 Wastewater System Charges Total $4,545,000 10 FY 2017-18 WASTEWATER TREATMENT CHARGES •City of San Bernardino Rates Effective 7/1/2017 −Residential: $21.55 Monthly −Multi-Family: $1.97, plus $1.62 per HCF −Non-Residential: $3.42, plus $1.29 to $3.18 per HCF FY 2016-17 FY 2017-18 Wastewater Treatment Charges $ 7,610,000 $ 7,900,000 Contract Services -Wastewater Treatment (7,610,000)(7,900,000) Net Effect on District Operations $ 0 $ 0 11 FY 2017-18 OTHER CHARGES & REVENUE CHARGE / REVENUE PROJECTED REVENUE Initiation of Service Fee $ 61,500 Delinquent Fees 115,000 Disconnect Notice Charge 300,500 Disconnect / Reconnect Fee 140,000 Returned Payment Fee 5,000 Facility Rental Fee 15,000 Reimbursements 50,000 Miscellaneous Revenue 50,000 Interest Revenue 97,000 Total Other Charges / Revenue $ 834,000 12 FY 2017-18 PROJECTED RATE REVENUE $- $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 $21,000,000 $24,000,000 $27,000,000 $30,000,000 $33,000,000 $36,000,000 FY 2013 -14 FY 2014 -15 FY 2015 -16 FY 2016 -17 FY 2017 -18 $20,055,645 $18,379,740 $19,990,600 $22,710,000 $23,345,000 $4,649,212 $4,531,355 $4,286,594 $4,460,000 $4,545,000 $7,197,418 $4,907,828 $7,165,655 $7,610,000 $7,900,000$718,302 $924,522 $1,581,233 $1,367,000 $834,000 Water Revenue Wastewater System Charges Wastewater Treatment Charges Other $32.6 Million $29 Million $33 Million $36 Million $36.6 Million 13 DISCUSSION REVENUE PROJECTIONS MAY 17, 2017 BUDGET BASED RATES Primary Goal –Promote Conservation While Providing Reliable Services Equitable Stable Revenues Affordable Essential Use Promote Water Efficiency Implemented 2015 Board Authorized Three-Phase Increase 2015, 2016, 2017 2 EVALUATING RESULTS $0 $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 $21,000,000 $24,000,000 $27,000,000 $30,000,000 $33,000,000 $36,000,000 FY 2015-16 FY 2016-17 $8,063,077 $8,887,245 $2,172,907 $2,805,950 $4,577,815 $5,216,217 $5,176,803 $5,784,199 Meter Charges Tier 3 Tier 2 Tier 1 $19.9 Million $22.7 Million 3 ASSESSING EFFECTIVENESS •July 1 Rate Increase for Meter Charge and Commodity Rates •Consider Permanent Conservation Changes −Communities Active Response to Drought •Prepare for Unpredictable Weather Patterns •Implement Capital Improvement Projects •Minimize Rate Spikes Collect Revenues that will Allow Us to Continue Operating in a Responsible Way 4 LOOKING AHEAD •Staff is Proposing to Implement ½ of Authorized Commodity Rate Increase •No Increase to Meter Charges RATE TYPE CURRENT RATES FY 2017-18 AUTHORIZED PHASE THREE FY 2017-18 PROPOSED RATES Tier 1 $ 1.63 $ 1.83 $ 1.73 Tier 2 2.32 2.61 2.46 Tier 3 3.24 3.64 3.44 METER SIZE CURRENT RATES 5/8”$ 23.06 3/4”29.27 1”41.71 1 1/2”72.81 2”110.13 3”228.30 4”402.44 6”819.44 8”1,503.28 Commercial Fire Service 8.78 to 87.84Proposition 218 Allows Governing Board to Implement Rates Up to Authorized Amount in the Public Hearing 5 PROPOSED GOALS & OBJECTIVES FISCAL YEAR 2017-18 FINANCIAL OVERVIEW PHASE THREE WATER RATE REVENUES Saved Ratepayers $1.36 Million Annually CURRENT PROPOSED Water Sales $ 13,800,000 $ 14,500,000 Meter Charge 8,845,000 8,845,000 Total 22,645,000 23,345,000 Difference N/A 700,000 7 FY 2017-18 TOTAL PROJECTED WATER REVENUE $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 FY 2016-17 Budget FY 2016-17 Projected FY 2017-18 $8,960,000 $8,887,245 $8,845,000 $13,500,000 $13,800,000 $14,500,000 Water Sales Meter Charges $22.5 Million $22.7 Million $23.3 Million 8 FY 2017-18 WATER SALES $8,215,000 $3,104,000 $1,126,000 $2,055,000 Total Sales -$14,500,000 Residential Multi-Family Commercial Irrigation RATE TYPE TIER 1 TIER 2 TIER 3 Residential $ 3,680,000 $ 3,315,000 $ 1,220,000 Multi-Family 1,614,000 850,000 640,000 Commercial 850,000 96,000 180,000 Irrigation 0 1,220,000 835,000 9 FY 2017-18 WASTEWATER SYSTEM CHARGES CUSTOMER TYPE SERVICE CONNECTIONS ESTIMATED USAGE MONTHLY FIXED OR UNIT CHARGE TOTAL REVENUE Residential 18,475 N/A $ 15.36 $ 3,405,000 Commercial / Multi-Family Fixed 1,050 3.90 49,000 Volumetric 1,983,600 0.55 1,091,000 Commercial Total $ 1,140,000 Wastewater System Charges Total $4,545,000 10 FY 2017-18 WASTEWATER TREATMENT CHARGES •City of San Bernardino Rates Effective 7/1/2017 −Residential: $21.55 Monthly −Multi-Family: $1.97, plus $1.62 per HCF −Non-Residential: $3.42, plus $1.29 to $3.18 per HCF FY 2016-17 FY 2017-18 Wastewater Treatment Charges $ 7,610,000 $ 7,900,000 Contract Services -Wastewater Treatment (7,610,000)(7,900,000) Net Effect on District Operations $ 0 $ 0 11 FY 2017-18 OTHER CHARGES & REVENUE CHARGE / REVENUE PROJECTED REVENUE Initiation of Service Fee $ 61,500 Delinquent Fees 115,000 Disconnect Notice Charge 300,500 Disconnect / Reconnect Fee 140,000 Returned Payment Fee 5,000 Facility Rental Fee 15,000 Reimbursements 50,000 Miscellaneous Revenue 50,000 Interest Revenue 97,000 Total Other Charges / Revenue $ 834,000 12 FY 2017-18 PROJECTED RATE REVENUE $- $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 $21,000,000 $24,000,000 $27,000,000 $30,000,000 $33,000,000 $36,000,000 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 $20,055,645 $18,379,740 $19,990,600 $22,687,245 $23,345,000 $4,649,212 $4,531,355 $4,286,594 $4,543,978 $4,545,000 $7,197,418 $6,907,828 $7,165,655 $7,610,000 $7,900,000$718,302 $924,522 $1,581,233 $1,367,000 $834,000 Water Revenue Wastewater System Charges Wastewater Treatment Charges Other $32.6 Million $31 Million $33 Million $36.2 Million $36.6 Million 13 DISCUSSION