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Home My WebLink AboutDocumentation_Workshop_Tab 02_8/1/2022Agenda Item #2. Workshop STAFF Meeting: Staff Contact �� MEMO Workshop - Aug 01 2022 Jeremy Allen, Village Manager Department: Manager Discussion on Water Pipe Replacement and Funding Sources The Village Council has shown interest in expediting the A/C Pipe replacement throughout the Village. Council has asked staff to prepare scenarios including financing that will get the Village to 100% replacement of A/C Pipe. Staff has asked Raftelis to prepare scenarios along with potential funding sources. This document and any attachments may be reproduced upon request in an alternative format by completing our Accessibility Feedback Form, sending an e-mail to the Village Clerk or calling 561-768-0443. PROJECT NAME: NA BUDGET: NA ENCUMBERED: NA Proposed: Projected Remaining: NA NA PROJECTED TOTAL: NA Water Main Repl Progrm (Draft 3) (002) Page 8 of 30 Water Enterprise Fund —Water Main Replacement Program Presentation Budget Workshop Meeting V o6 or rap�a August 1 2o22 °h+ coin Agenda • Background • Recap of Prior Rate Study • Updated Financial Forecast • Accelerate Water Main Replacement Program • Development of Funding Plan • Next Steps 21 k11 E, Background • Enterprise Fund • Cost of Service funded from Rates • Full Faith and Credit of Village not Pledged • Serves Village of Tequesta, Jupiter Inlet Colony, and portions of unincorporated Palm Beach and Martin Counties 75 miles of Water Distribution Pipe • Both AC and Non -AC Pipe • Interconnects with Town of .r Jupiter and South Martin Regional Utilities 3 • zozi Rate Plan ZoYear Financial Forecast of Operating and Capital Expenditure Needs of the System Council Adopted a 5-Year Rate Phasing Plan • Includes Inflationary Price Indexing (based on inflation rates at that time — average of 2.0%) • Additional Fixed Rate Increase of 1.5% per year Gross Revenu and In. zozi Rate Study- Capital Plan • Total so -year capital improvement program (CIP) during zozi financial update was approximately $27.6 million 10-Year Capital Improvement Program 10-Year Capital Improvement Program ( Fiscal Funding ( Fiscal Years 2021- 2030) Years 2021- 2030) $1,169,615 Operating Reserves Water Production Well Improvements $5,849,064 Water Treatment Plant r$6,,871,412 Renewal and $12,786,108 Improvements Replacement Fund $8,963,4Water Main �17 $16,511,168 $ ,04G,383 Replacement Program Additional Debt ■ Other Capital Projects and General Plant 2021 Rate Study - WM Replacement Program Water Main Replacement Program Funding Plan 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Operating Reserves $243,000 $284,820 $76,508 $ - $301,567 $583,311 $199,035 $ - $ - $ - $1,688,240 R&R _ - - _ - - - 231,903 2,189,969 974,145 3,396,018 SRF Loan 1 - 3,152,210 1,786,195 - - - - - - - 4,938,405 SRF Loan 2 _ - - _ - 2,604,403 3,884,102 - - - 6,488,505 Total $243,000 $3,437,030 $1,862,703 $ - $301,567 $3,187,713 $4,083,137 $231,903 $2,189,969 $974,145 $16,511,168 A/C Water Main Replacement Program - Background • Advance Asbestos Cement Pipe Replacement Program • Represents Approximately 40% of Total Water Distribution System (29 miles of pipe) • Pipe Is Approaching Useful Life • Some Areas Over 70Years Old • Ten-YearA/C Pipe Replacement Plan = $39,979,249 • Includes Inflation on Project costs of 3.00% PerYear • Includes Projects Currently Underway ark X 5 IL 0 45 { aevt LEY 's LE--Er4D VALVE & BOX FIRE HYDRANT WELL SITE ( SURFICIAL WELLS SAMPLE STATIONS 'HELL SITE ( FLORIDIAN WELLS } PROPOSED WELL SITE GR04JND STORAGE TANK VOT SERVICE AREA BOUNDARY wm-1 WM-2 Wm-3 WM-4 WM-5 WM-6 AW-7 wM-8 WM—s WM-14 ww —11 WM-1 2 VOA-1 7, WM — 1 4 wIVI-1 s Changes Since Last Study • 2021. Rate Study CIP was $27.6M • 2022 Forecast Update CIP is $54.9M — Includes Acceleration of AC Pipe Replacement Program 10-Year Capital Improvement Program (Fiscal Years 2021- 2030) Water Production well rnprovernents Water Treatment Plant Improvements AC water Mahn Replacement Program Other Capital Projects and General Plant 10-Year Capital Improvement Program (Fiscal Years 202 - 031) -a::p,:7,:?,�:49' Water Production Well Improvements Water Treatment Plant Improvements AC water Main Replacement Program Other capital Projects and General Plant zozz Forecast Update -Capital Plan Breakdown • Continuation of 3.5o%Total Rate Adjustment Through 2031 • Includes 2.o%Average Indexing • Continues 1.5%Additional Fixed Rate Adjustment • May Need Adjustment if Inflation Higher (O&M and Capital) • Funds $23.9M of Water Main Program • Approximately 6o% of Program • s16.1M of Program Unfunded • Needs Additional Funding Sources Fiscal bears 2022 - 2031 Capital Improvement Plan $2,017,622 $5,479,103 Water Production Well Improvements Water Treatment Plant Improvements w Unfunded A/C WM Program A/C Water Blain Replacement Program (3,50% Indexing Only) Other Capital Projects and Genera, P!Pant Water Main Replacement Program Funding Need • Unfunded Water Main Replacement Program = s16.ZM • Council Directive to Replace A/C Pipe Throughout Village • Replacement Program Assumed to be Constructed Over alo-Year Period • Will Require Additional Rate Revenue to Accelerate Program • For Presentation of Estimated Rate Impact to Fund Program - Capital Recovery Charge or it's Equivalent • A Monthly Fixed Rate Adjustment Dedicated to Financing Program • Will Require Debt to Fund Program - Plan Assumes Use of Low -Interest State Revolving Fund Loans • Fixed Charge Process Used by Other Utilities to Recover Specific Capital Costs • Sarasota County • Martin County • Marco Island Capital Recovery Charge - • Establishment of the Capital Funding Level from Rates is a Policy Decision • Three Fixed Capital Recovery Charge Scenarios Presented to Illustrate Magnitude of Program — Eventually a Policy Decision of the Council*: • Base Case (Prior Forecast) —Continue Rate Implementation at 3.5% perYear Identified in 2023.Study • NOTE: High Inflation may affect Base Case Cost Recovery and May Need Further Adjustment • Scenario 1- Base Case + Capital Recovery Charge set at $6.0o a Month ($72 perYear) • Scenario z - Base Case + Capital Recovery Charge set at $Zo.00 a Month ($120 perYear) • Scenario 3 — Base Case + Capital Recovery Charge set at $16.5o a Month ($198 perYear) • Capital Recovery Charge Applied to All Customers Capital Recovery Charge Capital Recovery Charge Cost Recovery Comparison Baseline Scenario 1 Scenario 2 Scenario 3 Assumed Capital Recovery Charge N/A $6.00/Mo $10.00/Mo $16.5o/Mo Total Funded WM Capital Cost $23,85o,853 $29,153,019 $34,548,125 $39,979,249 Percentage of WM Projects Funded 6o% 73% 86% Z00% Annual Estimated Revenue From Recovery Charge N/A $585,000 $975,000 $1,56o,000 Customer Impact Analysis 2023* 2024* Typical 2025* Monthly 2026* Bill @ :... 2027 Gal 2028 2029 2030 2031 Rate Ad j 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Bill $48.15 $49.83 s51.56 $53-39 $55.26 $57.19 $59.19 s61.26 s63.40 Typical Bill Under Capital Recovery Charge Options s6CRC 54-15 s55.83 $57-56 $59-39 s61.26 s63.19 s65.19 s67.26 s69.40 s10 CRC 58.15 s59.83 s61.56 s63.39 s65.26 s67.19 s69.19 $71.26 $73.40 s16.5o CRC s64.65 s66.33 s68.06 s69.89 $71.76 $73.69 $75.69 $77.76 $79.90 * Rates in Fiscal Years 2023 through 2026 have been adopted byVillage Council. Current bill at 8,000 (FY2022) is $46.50 Fiscal Year 2022 Rate Comparison (without CRC) Single Family Residential Service at 8,000 Gallons 9 0. 00 80.0c 70.00 60.00 Average: $49.67 50.00 40. OC $46.50 30.00 20.00 10.00 0.00 NA <.P xz" 10 dx" Water Bills -Other Uti I ity Average Additional Considerations and Observations - • Costs and Projections may need Additional Update due to Current Economic Conditions (Expenses and Capital) • Water Main Distribution Replacement Program Presented Does not Include Non -A/C Pipe Replacement • This Will Need to be Addressed At Some Point in Future • Capital Recovery Charge Can be Structured as • A Separate Fixed Fee shown on the Utility Bill • An Incremental Rate Adjustment (above the 3.5% Base Case Adjustments) • Billing as a Non -Ad valorem Assessment per F.S., Chapter 3.93 • May need to Expand Program and Cost Recovery since A/C Pipe represents only Portion of the Total Cost Questions. 17