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Home My WebLink About2023 08 28 Awards/Presentation 100 - Water and Waste Water Rate StudyAWARDS AND PRESENTATIONS ITEM 100 CITY COMMISSION AGENDA | AUGUST 28, 2023 REGULAR MEETING TITLE Water and Waste Water Rate Study SUMMARY The City requested a comprehensive review of the sufficiency of water, sewer, and reclaimed water user rates to provide revenue for operations and capital improvements. As the City is engaging in a significant sewer capital upgrade and reinvestment program over the next few years which will require a focus on obtaining funding for the projects and setting the rates to support the capital program and potential new debt service payments. Raftelis Financial Consultants conducted the study with close support and cooperation by the City’s staff and engineering consultants. This presentation will discuss the development of the study, results and recommendations to the City and Commission. FUNDING SOURCE RECOMMENDATION Staff is requesting the Commission review the presentation and discuss. No action is required at this time. 5 1 2023 Water and Wastewater Rate Study Water: 3 water treatment plants 153 miles of water main pipe from 6-16 inch Wastewater: 2 wastewater plants 52 lift stations 26 miles of force mains pipe from 4-24 inch 68 miles of gravity sanitary sewer Reclaimed Water: 6 Disposal sites 3 storage tanks 1 booster pump station 2200 connections 3 major users (Tuscawilla Golf Course, Trotwood Park, Central Winds Park) 45 miles of reclaimed water main pipe from 4-18 inch 6 Projects 7 Historical Trends for Winter Springs •Rates would increase by 2-4% due to the Consumer Price Index (CPI), Average change over time of prices paid for consumer goods and services. •Operational Expenses have increased at a greater rate •Old debt services were only being maintained •Repair and Maintenance of existing infrastructure expenses are increasing 8 Comparison with Surrounding Municipalities •2021 CPI 4.7%, 2022 CPI 8.0%, 2023 CPI 4.9 % (to date) •Other City increases ›Vero Beach adopted a series of three consecutive 15% first year with 18% for next two years for a waste water plant and other improvements. ›Hallandale Beach adopted a 40% water increase for FY 2023 followed by 17% in FY 24, 10% in FY25, and between 3.75-7% over FYs 26-28. ›Melbourne adopted 14% water and wastewater increase effective June 1, 2023; and an additional rate adjustment of 8% in October 2024 *Capital Improvement Plan project list varies per City 9 Leveraging additional Funding Sources •St. John River Water Management District Cost Share •FEMA/ Hazard Mitigation Grant Project •FDEP ›Water Quality Improvement Grant Program ›Alternative Water Supply Grant ›Resilient Florida Grants 10 City of Winter Springs 2023 Water and Wastewater Rate Study August 28, 2023 11 7 Project Scope Key Forecast Assumptions CIP Funding Plan Revenue Sufficiency Forecast Findings and Recommendations 12 Key Forecast Assumptions and Notes 8 - 2024 Preliminary Budget - Forecast remaining 5 years Escalation Factors for: -Labor -Health Insurance -General Inflation -Electricity -Chemicals -Fuel Fully Funded CIP - $166.4 million from FY 2023 – FY 2029 Issuance of new debt to fund Water Reclamation Facilities (WRFs) and Reclaimed Water Flow Upgrades Rate adjustments identified to meet loan covenants, O&M expenses, CIP needs, and maintain utility reserves 13 9 CIP Funding Plan 14 CIP Summary Project Cost Notes Water Supply and Treatment $11,951,300 Drinking water improvements Water Transmission 15,362,600 Water meter and line upgrades Sewer Treatment and Disposal 115,880,500 Wastewater improvements/ WWTPs design and construction Sewer Collection/Lift Stations 10,448,200 Sanitary sewer and lift station improvements Reuse Pumping and Storage 5,315,000 Reclaimed water improvements Reuse Transmission 4,136,100 Reclaimed water expansion General 3,299,000 Equipment and other Total $166,392,700 10 15 New Loans for Large Projects Description 2023/24 WRF Design SRF Loan 2025 WRF Construction SRF Loan 2025 Reclaimed Water SRF Loan 2029 WTP SRF Loan Estimated Project Cost $12,000,000 $82,000,000 $3,445,400 $3,289,800 Loan Principal $12,292,100 $86,126,300 $3,532,700 $3,355,600 Loan Term (Years)10 20 20 20 Interest Rate 2.04%2.00%2.50%3.50% Annual Debt Pmt $1,371,300 $5,267,200 $226,600 $236,100 First Year of Debt Pmt 2024 2029 2025 2029 11 Notes: -SRF Design loan has been submitted to FDEP -SRF Construction loan interest rate and amounts are estimated. Assumes plant cost of $100,000,000 less $18,000,000 of ARPA funds 16 12 Water and Wastewater Revenue Sufficiency Forecast 17 Existing Water Rates (October 1, 2022) Monthly Base Charges Rates 5/8 x ¾ -inch Meter $6.85 1-inch Meter $17.13 1.5-inch Meter $34.25 2-inch Meter $54.80 3-inch Meter $109.60 4-inch Meter $171.25 6-inch Meter $342.50 8-inch Meter $548.00 13 Residential Usage Charges Rates Block 1 (0 – 10,000 gallons)$1.59 Block 2 (10,001 – 15,000 gallons)$2.31 Block 3 (15,001 – 20,000 gallons)$3.06 Block 4 (20,001 – 25,000 gallons)$3.72 Block 5 (25,001 – 30,000 gallons)$4.96 Block 6 (Above 30,000 gallons)$6.86 Usage rates are charged per 1,000 gallons of consumption. 18 Existing Wastewater Rates (October 1, 2022) Rate Component Inside Base Charge 5/8 x ¾ -inch Meter $13.44 1-inch Meter $33.60 1.5-inch Meter $67.20 2-inch Meter $107.52 3-inch Meter $215.04 4-inch Meter $336.00 6-inch Meter $672.00 8-inch Meter $1,075.20 Usage Charges All Consumption [1]$5.25 14 [1] Residential wastewater consumption billed is capped at 10,000 gallons per month.19 Capital Improvement Program Funding 15 Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total Rate Revenues $8,400 $339,400 $383,400 $398,900 $417,400 $436,800 $417,200 $2,401,500 410 Operating Fund 5,394,400 5,452,700 5,930,800 4,703,000 5,961,100 3,170,600 1,824,100 32,436,700 412 Service Avail. Fees 0 3,654,900 0 1,357,000 0 3,859,200 0 8,871,100 ARPA Funds 0 0 16,000,000 2,000,000 0 0 0 18,000,000 SRF Loans 0 2,551,300 6,894,100 22,000,000 26,000,000 20,000,000 23,289,800 100,735,200 FEMA Funds 0 3,560,400 387,800 0 0 0 0 3,948,200 Total Funding Sources $5,402,800 $15,558,700 $29,596,100 $30,458,900 $32,378,500 $27,466,600 $25,531,100 $166,392,700 Note: most projects include annual inflation of approximately 4.0% to account for future price increases. 20 Revenue Sufficiency at Existing Rates •Revenues not projected to be sufficient through the forecast period •Significant increase in O&M expenses from FY 23 to FY 24 •Additional debt is necessary to fund the wastewater treatment plant replacements, reclaimed water upgrades, and water plant improvements •Rate adjustments necessary to fund O&M, debt, debt covenants, capital, and maintain reserves 16 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Debt ServiceOther Expense/Transfers 21 Fiscal Year % Change Typical 5,000 Gal Residential Bill Proposed Rate Adjustments 17 22 Monthly Utility Bill by Year – 5,000 gallons Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Water $14.80 $17.01 $18.29 $19.67 $21.15 $22.73 $24.41 Wastewater 39.69 47.63 57.16 68.58 77.13 82.94 89.15 Combined $54.49 $64.64 $75.45 $88.25 $98.28 $105.67 $113.56 $ Change $10.15 $10.81 $12.80 $10.03 $7.39 $7.89 % Change 18.6%16.7%17.0%11.4%7.5%7.5% 18 23 Revenue Sufficiency at Proposed Rates •Revenues increased to cover all revenue requirements and meet debt covenants •Increased revenues provide funding for CIP and maintaining minimum reserve levels 19 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Debt Service Other Expense/Transfers Revenues w/ Existing Rates Revenue from Proposed Rates 24 20 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 410 Operating Fund 412 Service Avail. Fee Fund Target (25% of Annual Revenue) Fund Balance Forecast •The Operating fund should be maintained to manage cash flows and to address emergency repairs •Service Availability Fees are being used for upgrade and expansion projects 25 Local Comparison at 5,000 gallons consumption (existing FY 2023 rates) $41.88 $41.95 $51.85 $54.48 $60.92 $63.46 $64.64 $67.00 $70.11 $72.08 $72.40 $77.37 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 Altamonte Springs Lake Mary Winter Park Winter Springs - Existing 2023 Orlando Sanford Winter Springs - Proposed 2024 Longwood Casselberry Seminole County Maitland Oviedo Water Sewer 21 26 2024 Local Comparison at 5,000 gallons consumption (with known rate increases) $41.88 $41.95 $51.85 $54.48 $60.92 $64.64 $66.63 $70.11 $72.08 $77.37 $77.77 $78.92 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 Altamonte Springs - 2023 Lake Mary - 2023 Winter Park - Adopted 2023 Winter Springs - Existing 2023 Orlando - Adopted 2023 Winter Springs - Proposed 2024 Sanford - Adopted 2024 [1] Casselberry - Adopted 2024 [3] Seminole County - 2023 Oviedo - 2023 Longwood - Adopted 2024 [2] Maitland - Adopted 2024 [4] Water Sewer 22 27 Findings and Recommendations •Adopt water, wastewater, and reclaimed water rate increases for the next five (5) fiscal years – FY 2024 through FY 2028 •Due to the magnitude of the rate adjustments, CIP, and inflationary impacts on operations the City should consider updating the revenue sufficiency plan each year for the next three to four years 23 28 Contact: Joe Williams 407 960 1806 / jwilliams@raftelis.com 24 Thank you! 29