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Home My WebLink AboutDocumentation_Regular_Tab 1.1_05/12/2005 r � � � � � � � � � � � � � � � �� Villa e Of Te uesta g q , y � 1 � l� �.� �, �; ; �� r. �� % - Financial Forecast And Revenue Sufficienc Anal i y ys S May 12, 2005 Public Resources Management Groun, Inc. Utiliry, Rate, Financial and Managerne�t Consultants � � � � � � � � � � � � � � � � � � � _ � � �� Presentation A enda � g �� PRMG's Corporate Background �� PRMG's History with the Village �, �<�<� Purpose of Report �� Financial Forecast Overview �= Significant Events Affecting Utility System Since Last Forecast � Other Events Affecting Utility System Since Last Forecast <<�� Present Major Assumptions �a• Discuss Financial Results 2 � � � � � � � � � � � � � i � � � � � 3 -; � ■ r � � Presentat�on A enda � g �<< Present Major Assumptions -Y� Customer Statistics -- Capital Improvement Plan �, «-= Revenue and Expense Projections �<�� Comparison of Prior Vs. Current Financial Forecast ��r Observations and Conclusions �� Questions and Comments 3 � � � � � � � � � � � � � � � � � � � � 7 ��_ P RM G s Cor orate Back rou nd , p g ��< Public Resources Management Group, Inc. (PRMG) is an established financial and management consulting firm. `�� Focusing on utility rate, financial and strategic planning and management consulting services to local governmental entities. � f�� The firm has extensive expertise in the following areas: � Rate and Cost of Service Studies — Capital Facility Charges and Municipal Impact Fees � Bond Feasibility Studies — Valuation and Acquisition Studies, including transitional activities due to the utility transfer — Contract Negotiations, Developer/Effluent Extension Agreements — Capital Financing and Feasibility Studies 4 � � � r � � � w � � � �r � �■r �■�■ r � � w� .� � � r�� PRMG s Cor orate Back round Con t � ,: p g � �o o0 � 0 o� 0 o� o �o 0 0 0 �� o ��oo 0 00 0 0 0 0 0 � �� 0 0 00 0 Q Rate and Fee Evaluation 0 Financing Services ��' � �' �J i■�r � � r a� � � � � � � � � r■�r � a � � �■�e �� , . . . r�� PRMG s Histor with the V�IIa e � y g �� Work for the Village for over 6 years. Assisted the Village with the following issues: � Issuance of the Series 1998 Bonds �� 6 Development of the 2003 10-Year Financial Forecast — The Town of Jupiter Contract Negotiation and Analysis (Franchise) � Jupiter Island Customer Transition and Bulk Service Agreement � Tropic Vista Assessment Program � Other Rate Consulting Services 6 � � � � � � � � � � � � � � � � � � � "� . � � � Purpose of Anal sis � _ v e�� Identify Sufficiency of Existing Rates to Fund Expenditures @�� Identif Abilit of S stem Revenues To: �� y y y -- Meet Daily Operating Expenses ! i Finance Future Capital Improvement Plan ` Fund Debt Payments and Meet Bond Covenants � Produce Ongoing Net Revenue Margins (positive cash flow) �� Identify Potential Rate Adjustments/Trends �� Forecast Developed for Ongoing Strategic Planning Purposes 7 � �r � � �t s�t � � � � � �■�r � a� � r � � � ,� � � � r � � � F�nanc�al Forecast Overv�ew � �<� Financial Plan Covered a 5-year Period <�� Base Forecast Year = Fiscal Year 2005 ' � � Based on Fiscal Year 2005 Budget �� Recognized Existing System Conditions � Service Territory/Customer Base � Existing Rates for Service a= Continued Operations at Current Service Levels 8 r �r � r � a� t�■� � � �t � �t �r � � � � �r i - Si nificant Events Affe in ,� g ct g �.� r� �� Utilit S s�tem Since Last F r y y o e�ast �<<r Finalized Sale of Jupiter Franchise � Transaction Occurred July 17, 2003 '�, � Loss of Approx. 600 Customers �, _- Received $700,000 in S�le of Service Area ', � , <<� Successful Negotiation of the Bulk Service Agreement with Jupiter Island and Purchase of the Rolling Hills Portion of the Service Area (Approved June 10, 2004) �- Approximates Service to 100 Customers (9.5% of Sales Revenues) - 55 Accts. In Town of Jupiter Island (Bulk Agreement through December 2012) _- Purchased 45 Accts. In Martin County (Rolling Hills) -_-� Original Bulk Service Agreement would have Expired June 1, 2007 � Less Revenues 2005-2007 More Revenues 2008-2012 (NPV benefit of $350,000) 9 � r � � � � � � � � � � ' � � � � � � Si nificant Events Aff ' ,� g ect�ng r:.J r�:� Utilit S sterr� Since Last Fore ' , y y cast (Con t ) <<� Successfully Entered ir�to Interlocal Agreement with Martin County Establishing the Tropic Vista MSBU Transaction Occurred July 12, 2004 ,, Assessment to Finance cost of Distribution Improvements � - Resulting in 108 Additional Connections to the Village <<< Entered into Agreement to supply Bulk Raw Water to Jupiter Hills Country Club �� 450,000 gallons per day take-or-pay agreement ��- Generates Annual Revenues of Approximately $48,000 ��f Successfully Awarded Grants (From SFWMD) to fund a portion of the New R.O. Expansion Project ($530,000) 10 � � � � � � � � � � � � ' � � � � � � ��-� `�- O t h e r i n i' S ficant Events .� g �� . . . , r�� Affecti n Uti I it S stem Con t �.. g y y <�� Bulk Water Service �greement — Town of Jupiter �-= Agreement Expires June 15, 2007 �- Capacity Purchase of 1.350 MGD �-_= Graduated Bulk Water Rate Increase _- From $1.32 to $1.43/1,000 gallons (Currently $1.40) �<� Construction of R.O. Water Treatment Plant �= 1.20 MGD Treatment Train _-- Project Cost of ��1,900,000 c= Must Be On-Line Prior to June 15, 2007 11 � r � a� � i a■� r � s � � �w � � � � i � r : ;�. �� - Ma'or Assum tion — ' ' r.� � p s Customer Statistics � �� Utility Service Area: � Currently Serves Approximately � 4,782 customers = 7,953 ERCs �-s Approaching Built-out Condition —<1 % Growth Rate ' _= Have Ability to Serve Customers (Martin County) <<< Projected New Custor�ners As a Result of Water Line Extensions -- Tropic Vista — 108 Total Connections �-= Jupiter Heights — 15 Total Connections ---- Cover Point — 45 Connections 12 � � � � � � � � i � � � � � � � � � � r"� �� Ma�or Assu m tions — C I P , J p �� Significant Capital Improvement Program Identified � Renewals and Replacements �� Facility Expansions (RO Plant) �� :� Five-year Expenditure Requirements = $6,829,861 � Includes Annual Inflationary Allowance of 2.2% 13 � r � � � � � � � �■r � � � �r � � � �r � r;� �- Ma'or Assu m tions — C I P Con't J p ) � �;� Significant Projects Include: Amount Year ! RO Raw Water Line/Well No. 3 $1,300,000 2005 RO Water Treatment Plant $1,900,000 2006/2007 Liquid Chlorine Conversion $750,000 2007 RO Membrane Replacement $20,000/40,000 Annually Continued R&R Projects $200,000 Annually 14 � r �■ r � � � � � wi i � �w � �w � ■■� � w� �� - Ma'or Assu m tions — C I P Con't , J p ) �<� Assumed Funding Prc�gram Amount Percent Operating Reserves/Transfer $4,529,292 66.3% Capital Connection Charges 117,185 1.7 , Assessments 534,092 7.8 Grants 530,000 7.8 Renewal & Replacement Acct. 716,972 10.5 Future Bonds 402,319 5.9 Totals $6,829,861 100.0% �<� Renewal & Replacement Fund (5% Prior Year Gross Reve n u e ) �<< Future Bonds (in FY 2007 — Only if needed) 15 � � � � � � � � � � � � � � � � � � � �?' - Ma'or Assum tions — Reven ,�. � p ue/ �� r� �s � Ex �nse Pro'ection � p � s ��:� Rates Assume Annual Price Index Adjustment — Average 1.4% �� Continued Inflation on Operations/Labor ��< Recognize 3.5% Contingency Allowance ��f Maintain Working �apital at Minimum of 60 Days <<< Expiration of Jupit�r Bulk Water Purchase ��- New Water Extens�on (new customers) 16 � � � � � � � � � � � � � � � � � � � - ; r Com arison of Prior v. ,� p s r� r� �� Currenit Financial Fore cast Projected�scal Year F�►cling September 30, 2,005 2006 2007 2008 2009 Customers I Prior Forecast 4,680 4,719 4,740 4,742 4,781 I Current Forecast 4,782 4,934 4,939 4,945 4,950 ', Difference 102 215 199 203 169 � Sales Revenues Prior Forecast $3,282,059 $3,366,835 $3,386,273 $3,221,851 $3,313,428 Cuirent Forecast 3,548,238 3,698,056 3,758,651 3,807,976 3,870,368 Difference (1) $266,180 $331,221 $372,378 $586,125 $556,940 Operating �penses Prior Forecast �2,682,006 $2,768,410 $2,767,241 $2,532,035 $2,614,821 Current Forecast 2,787,734 2,892,281 2,888,169 2,672,079 2,757,722 Difference $105,728 $123,871 $120,928 $140,044 $142,901 Net Revenue Surplus Prior Forecast $80,204 $82,101 $72,903 $37,962 $10,257 Current Forecast 243,872 325,624 394,424 486,746 381,288 Difference $163,668 $243,522 $321,521 $448,784 $371,031 17 � � � � � � � � � � � � � � � � � � � ,� r � � � Observations and Conclusions �� ,, �� Village Financial Position Favorable — Has improved since last Financial Forecast � Result of Staff Acti�ns and Growth - No Additional Rate increases except indexing should be , needed throughout the forecast period �<� The Village should continue to stay on course and keep the system operation lean 18 � � � � � � � � � � � � � � r � � �■■i � _� � r r� �� Observations and Conclusions � �� Village Must Index F�ates Annually to Keep Up with the Cost of Inflation/Maiu�tain Revenue Margins �� Village Should Not Renew Town of Jupiter Bulk Agreement �� I ncremental Cost Of RO Expansion More Effective �� Annual Positive Operation Margins Exist �-- 5% to 10% of Rev�nues �- Maintain Minimum Working Capital Balances (60 Days) 19 � � � � � � � � � � � � � � � � � � � ,� � � ' r��_2 Observat�or�s and Conclus�ons Con t , ��<� Pursue Water Line E�:tensions in Martin County � Customer Fund Line Extensions (assessments) � Recapture Lost Customers �:� If the Village in the Future were to consider hiring a full time Utilities Director it wo�ld have an adverse affect on the utilities bottom line (Potentially a$100,000 a year or more) �� Upon Completion of RO Plant Expansion, All Impact Fees Applied to Debt Payments �� Update Financial For�cast at Least Every Two Years 20 � � � � i � � 0 � � � � � � � � � � � I _ _- --- _ --- ---- -- ---- - - - _ ___ Village of Tequesta ' Debt Service Coverage - 3.00 600, 000 - �.�,� -<� -- - 2.50 ' �, 500,000 � �► �� .� I � � 400, 000 - 2.00 � ° � � a 300, 000 1. 50 � � ♦ � � � � � � 200, 000 1. 00 0 Q U 100, 000 0. 50 - — — T — — �- — — ,— — -� — - -- 0. 00 2005 2006 2007 2008 2009 Fiscal Year — — — — — — — --- -- — — — — -- _ _ 0 Annual Debt Se�ice �Minimum Coverage ��- E st im� ted Cov erage ��;:x,u; 21 � � � i � � � � � � � � � r � � � i � r�� Observations and Conclusions Con't � �� Net Revenues (Assuming Indexing) Should Meet Bond Covenants <;<� Existing Rates for Service Competitive Monthly Bill - 10,000 qallons Village of Tequesta $28.67 Town of Jupit�r $24.14 Other Similar Utilities $30.62 22 ' ' � �I� � � �'� _ ._ - _ CV 1 ca o �� . _ � : �� a� ' � � . �/�a� � � � i , � �� saf �� lq �1 ' ��/'� J ! � 4 ■ � 4 ��P� ��a� V / ` d U � h o L lr� S /� 1 °� �' � � �� a9o� o � � Sal � !lq ��Uo� O � Sa f�� , c/J !q!1 a U! � � J/at � ` � 40 �lP�lBTQ� .d'U�,j lIJ��S U �� ' ■^ � 4 ��la�� o a ��j l � Y.L.. a a�� b �P/�� O ,s ar� tlt � ' � O : �/�pa �'�cll O aA/ a � t � O � ^ ��ls.�o Q.�o �,�J 1 Q O -�� V ♦ �� °�a ' ■ �� j� �� J ra �O° � J � . � , , 9��, � � ��ta � Q.to '�a�i ? J ' O � � 4 Mo� U � ' ��,�� a� �.�,� ' � 5 � 4 ��rY � � �� `riz,� aS' � O �/°ea �� J ' �� t4 lP � � `r T�� , � oJ C! � � a U �1�� lp � �Uo� �`To ' ° o ° o o o ° o o ° o ° o o �.�o � J " o v-, o v-, o v-, o v-, o d' M M N N � � 69 69 69 69 69 69 69 Ef3 Fi9 : � �� — L_ , w� i■r � � � ■■� � s � ■� � � w� �w � � �w �■■� � � F`:J r � I I Questions and Comments 24