Document Ogden_doc_ddc026e85e

1 Ogden City Council Work Session: August 22, 2017 2017 UTILITY RATE STUDY – WORK SESSION BACKGROUND, EDUCATIONAL/INFORMATIONAL Receive a presentation from Lewis Young Robertson & Burningham regarding the 2017 Utility Rate Study The purpose of the Council’s work session on August 22, 2017 is to receive a presentation by and have a discussion with representatives from Lewis Young Robertson & Burningham regarding an update to the 2012 utility rate study. At the work session, it is excepted that the topics will include providing background on the policies established with the 2012 study, determining the desired level of public outreach, general capital improvement and operational needs of the utilities, and discussions regarding various policy issues. These include:  Desired fund balance (days of cash on hand)  Required debt coverage  Usage / conservation based rates  Impacts of secondary water  Fairness and equity  Potential discounts for certain users History and Overview 2007 – Water Horizons Rate Study In 2007, the City contracted with Lewis Young Robertson & Burningham (LYRB), the City’s financial consultants, to perform a comprehensive study for the setting of water, sewer, and storm water utility rates. The study was completed and new rates were adopted in December 2007 with the effective date of January 1, 2008. The rate study included rate increases set forth over the five-year period between January 2008 (FY08) and June 2012 (FY12). The rate study included a recommendation for a bond of approximately $50 million for the completion of a number of capital projects for each of the utilities included in the study. At the time of the study, it was anticipated that a new study would be completed in the spring of 2012, prior to the end of fiscal year 2012. ---PAGE BREAK--- 2 Ogden City Council Work Session: August 22, 2017 2012 Utility Rate Study Update In November 2011, the Council passed a resolution outlining the anticipated timeline and scope for an update to the 2007 utility rate study. In January 2012, the City once again contracted with LYRB to perform the rate study. While the 2007 study was a significant step forward in understanding and addressing the City’s utility needs, the 2012 update went further into the utility’s finances and future capital needs. The 2012 study relied more heavily on utility master plans and used what is called a Comprehensive Financial Sustainability Plan, or CFSP. The CFSP incorporated all of the capital needs for each of the utilities over a 20-year timeframe with particular focus on the immediate five- year period. The CFSP model included all aspects of the utilities including capital needs, the financial principles adopted by the Council for each of the utilities, personnel costs, and operating costs. The model was used to understand the anticipated expenditures of the utilities over the planning period. Once that information was ascertained, a rate structure was developed that would generate the revenue needed to cover the expenses and meet the financial principles established with the rate study. Financial Principles As part of the 2012 rate study, there were a number of financial principles that the Council and Administration agreed to in order to guide the operation of each of the utilities. These financial principles were adopted by resolution and incorporated into the CFSP. These financial principles included: Revenue Sufficiency – This principle is based on each utility being able to pay its own way in terms of revenue generation. This includes annual Consumer Price Index (CPI) adjustments, an annual review of projected revenues and expenditures, and a careful review of any proposed fee increases beyond the annual CPI to ensure the financial health of the utilities. Master Plans – This principle states that each utility should have a current master plan from which capital projects can be planned and incorporated into the utility’s budget. ---PAGE BREAK--- 3 Ogden City Council Work Session: August 22, 2017 Cash on Hand – This principle is based on the need to have adequate reserves to pay for emergency or otherwise unexpected needs. Based on industry standards, each utility should have at least 360 days, or roughly one year, of cash on hand. The rate study in 2012 showed that the sanitary sewer, storm sewer, and refuse utilities could reasonably achieve this but that the water utility could not without a substantial rate increase above what was proposed. The water utility cash on hand level was set at 150 days. Ongoing Maintenance – This principle states that utilities should have a plan to maintain and replace aging infrastructure and that the water utility should plan to replace 1.2% of the existing pipe network each year. Debt – This principle outlines some of the expectations whenever the City issues debt to pay for capital projects. Based on this principle, the City should look to pay for projects with cash first. If that cannot be done, the City should seek the lowest amount needed with the lowest borrowing costs available and should look to refinance existing debt whenever possible if terms are more favorable. Debt Service Coverage Ratio – This principle is based, in part, on maintaining as high a bond rating as possible and states that the storm sewer and sanitary sewer utilities should have at least $2 in reserve for every dollar that is required to be available for debt service. The water utility, as with the days of cash on hand, is lower and states that it should have at least $1.50 in reserve for every dollar that is pledged to debt service. Capital Reserves – This principle discusses the need for capital reserves and states that a utility’s capital reserves should not be used to pay for operating costs or to hold rates artificially low. It also allows short-term loans between utilities if excess capital is held by one utility. Water Utility Issues – This principle deals with some of the more significant issues related to water rates. It states that the water utility should be active in educating the public and encouraging ---PAGE BREAK--- 4 Ogden City Council Work Session: August 22, 2017 water conservation and reasonable use of culinary water for outside watering. The principle also states that a rate structure should be in place that is financially reasonable for residents who must water their yards with culinary water and that they should be able to maintain healthy landscaping without significant financial burden. Ongoing Management Policies and Procedures – This principle states that the goals and procedures described should be reviewed annually and that the financial condition should be reviewed by the director and with the Council during each budget review. Rate Structure Once the needs and anticipated expenditures were established with the rate study, a rate structure to provide revenue sufficiency was developed. A rate structure was developed for the water, storm sewer, sanitary sewer, and refuse utilities. The development of a fair and equitable rate structure was a significant challenge, particularly for the water utility. In the 2012 study, there were several significant policy considerations that went into the development of the rate structure. These considerations included: Size of connection Water line connections range anywhere from 5/8 of an inch to 8 inches in diameter. Generally, residential connections are either 5/8 or 3/4 of an inch with some as large as one inch with commercial connections ranging from one inch for smaller commercial users to eight inches for the largest users. Rate structures generally separate commercial usage from residential usage. In the rate structure adopted in 2012, the 5/8, 3/4, and one inch connections came under what was considered to be a residential rate structure and the larger connections came under what was considered to be the commercial rate structure. This difference is significant in how a base rate is calculated and where the tiered rate structure starts with regard to gallons used. Residential versus Commercial Rates With the rate structure that was adopted in 2012, there are three basic categories for connections: one for connections of one inch or smaller (5/8, 3/4 and 1 inch connections) with secondary water, one ---PAGE BREAK--- 5 Ogden City Council Work Session: August 22, 2017 for connections one inch and smaller without secondary water, and one for connections larger than one inch. For residential users and smaller) with secondary water, the rate tiers are broken into certain increments based on average water usage. For residential users without secondary water, the rate structure is set differently between May 1 and October 31, during the main outdoor watering season, to allow a lower rate for more gallons used to compensate for the user’s lack of available secondary water. For commercial connections, there is no tier structure; rather, there is just a base rate and one single rate that users pay per 1,000 gallons used. Base Rate versus Tiered Rates One of the more difficult considerations that went into the development of the rate structure was how to fairly charge users for the fixed costs of the system’s infrastructure versus the variable costs that come with increased water usage. During the study in 2012, it was shown that the fixed costs of the water system, meaning the physical pipes, the treatment plant, personnel costs, operations, debt service, etc…, constituted roughly 90% of the expenses of the utility. Only 10% of the expenses are directly related to increased usage; this usually comes from increased costs for a higher volume of treated water. This means that for every one dollar of expense the utility has to cover, 90 cents of that dollar covers costs regardless of how much water the users use. The issue, however, is that most users generally associate lower usage with lower water bills and higher usage with higher water bills. The policy consideration that comes from this is how to charge users for the fixed costs and how to charge for variable costs from actual water usage. This was dealt with in the rate structure by establishing a base rate for fixed costs and a tier structure for variable costs. During the course of the study, it was determined that it was unreasonable to set a base rate that covered all of the fixed expenses (90%) and a tier structure that covered the remaining costs A base rate was established in the rate structure that would be collected from a user regardless of how much water that user actually used. The base rate that was established, however, only covered around 43% of the fixed costs leaving the tiered rate structure to capture the remaining 57% of the expenses. To ensure that the tiered rates captured the remaining 47% for fixed costs and ---PAGE BREAK--- 6 Ogden City Council Work Session: August 22, 2017 the other 10% for variable costs, a very careful review of past trends was conducted and then extrapolated in the rate model. The rate structure needed to be able to reflect a user’s actual water usage with either higher or lower rates and bills while still ensuring that reductions in usage did not negatively affect the revenues needed to cover the fixed costs. Reductions in usage come from not only conservation efforts but environmental conditions. Customers typically water less when temperatures are lower or when there is more precipitation. Because the majority of the costs are fixed, this reduction in water usage reduces revenues for the utility but does not equally reduce the expenses. Availability of Secondary Water In addition to the challenges that come from establishing a base rate for all users that covers the fixed costs, an equally challenging problem exists in establishing a fair rate structure for residents with secondary water and without secondary water. In Ogden, just under 50% of the residents have access to secondary water. This means that those without secondary water must use culinary water for outdoor watering needs. Since there is no way to differentiate outdoor culinary water usage from indoor culinary water usage, the City had to try to reasonably address this issue in the rate structure itself. Residents who have access to secondary water from providers like Pineview and Weber Basin Water Conservancy District pay their secondary water bill through their property taxes assessed by the County. To make matters even more complicated, users of Weber Basin secondary water have three different rates that are charged depending on when the user was connected. Even with these varying rates for secondary water, the amount an average person pays to use secondary water is considerably less than what a person must pay to use an equal amount of culinary water for the same purpose. There is no way for the City to ensure that all residents pay the same amount for water that is used for outdoor watering purposes. The City has no control over who has access to secondary water, whether it is irrigation or ditch water or a pressurized system, and how much an individual pays for that water. Secondary water suppliers do not charge a per gallon rate for their water; it is usually a flat rate collected once a year regardless of the amount used. Some ---PAGE BREAK--- 7 Ogden City Council Work Session: August 22, 2017 providers have begun to meter the secondary water, but to date no provider has established a rate per gallon fee structure. Residents who water their lawns using the City’s culinary water are subject to the rate structure established and cannot, in the vast majority of cases, access the cheaper secondary water. To try to address this, the rate structure established first in the 2007 rate study and then again in the 2012 rate study contains a different rate structure for those with and those without access to secondary water. The first tier in the rate structure for all users with connections of one inch or smaller (residential users) contains a single rate per 1,000 gallons used through the first 6,000 gallons. This range was thought to meet the needs of an average household’s indoor water usage in one month, i.e. an average household would use 6,000 or fewer gallons per month. For residential users with secondary water, the usage rate between 6,001 and 12,000 gallons was set higher than the first tier, and the rate above 12,001 gallons per month was the highest rate. This means that the more water a household uses, the more that water will cost as usage goes up. The thought is that a user with access to secondary water should not be using a substantial amount over the average because they are presumably not watering their lawn with culinary water and therefore should be paying more for excess water usage. For residential users without secondary water, the tier structure adopted in 2012 is more complicated. As mentioned, the first tier for all residential users sets a single rate for the first 6,000 gallons used. However, for those without access to secondary water, a different rate structure takes effect between May 1st and October 31st and sets a second, higher rate for usage between 6,001 and 42,000 gallons. The dollar amount for this tier is the same as the second tier (6,001-12,000 gallons) for those with access to secondary water. The third tier for those without secondary water sets a higher rate for usage between 42,001 and 84,000 gallons, and then sets the highest rate for usage above 84,000 gallons. This rate structure only applies to users without access to secondary water between May 1st and October 31st; between November 1st and April 30th, all users fall under the three tiered rate structure described in the previous paragraph. ---PAGE BREAK--- 8 Ogden City Council Work Session: August 22, 2017 Service Charge (Base Rate) Meter Size Rate as of July 1, 2012 ¾” or Smaller (3/4 and 5/8 inch) $17.50 1” $28.96 1 ½” $40.43 2” $64.87 3” $181.08 4” $227.80 6” $506.98 8” or larger $929.11 Tiered Rate for 1” and smaller (per 1,000 gallons used) Gallons of Water Used Rate as of July 1, 2012 0 to 6,000 $1.50 6,001 to 12,000 $2.30 Above 12,000 $3.00 For users without secondary water – May 1st to October 31st 0 to 6,000 $1.50 6,001 to 42,000 $2.30 42,001 to 84,000 $2.65 Above 84,000 $3.00 Rate for larger than 1” (per 1,000 gallons used) Charge per 1,000 gallons $2.30 *This is the rate structure adopted in 2012. Scheduled rate increases including CPI increases have changes these rates since the time of adoption. Rate Increases The utility rate study was meant to be a long-term financial planning tool. As such, the CFSP looked at a specific five-year time horizon with a ---PAGE BREAK--- 9 Ogden City Council Work Session: August 22, 2017 more generalized five to 20-year time horizon. Anticipated expenses and capital projects were put into the model over that initial five-year timeframe. This allowed the City to better understand not only when these things were needed but also when they could be paid for. This modeling helped in setting the initial rates and then in understanding when and by how much those rates needed to be increased over the initial five-year period. Based on the CFSP modeling, there were no rate increases proposed for the storm sewer, sanitary sewer, or refuse utilities beyond an annual CPI adjustment. The water utility, however, did need three rate increases over the first five years to cover expenses and to meet the goals established in the financial principles. Each year, the CPI would be determined and the rates for the four utilities would be automatically increased by that percentage. The CPI increase in the water utility was applied to the base rate as well as the tiered rates. The table below shows the rate increase and the CPI increases for each of the five years included in the study. Public Involvement The 2012 utility rate study involved a significant amount of public involvement. The community outreach included organizing and consulting with a citizen advisory committee, developing and administering an online survey, holding several fact-finding work sessions, public hearings, and other opportunities for feedback including the availability of comment cards, and email and phone correspondence. Utility Fund Fiscal Year 2013 Fiscal Year 2014 Fiscal Year 2015 Fiscal Year 2016 Fiscal Year 2017 Rate Increase CPI Increase Rate Increase CPI Increase Rate Increase CPI Increase Rate Increase CPI Increase Rate Increase CPI Increase Water 5% 2.8% 5% 2.3% 3.5% 1.6% 0% 1.3% 0% 1.8% Storm Sewer 0% 2.8% 0% 2.3% 0% 1.6% 0% 1.3% 0% 1.8% Sanitary Sewer 0% 2.8% 0% 2.3% 0% 1.6% 0% 1.3% 0% 1.8% Refuse 0% 2.8% 0% 2.3% 0% 1.6% 0% 1.3% 0% 1.8% ---PAGE BREAK--- 10 Ogden City Council Work Session: August 22, 2017 Timeline July 2007 The City contracts with LYRB to begin a utility rate study that includes rates for water, sanitary sewer, and storm sewer and a process of identifying major infrastructure needs for the purposes of issuing bonds. December 2007 The City Council adopts the utility rate study and the proposed fee schedule that resulted from the Water Horizons study process. January 1, 2008 The rate schedule from the utility rate study takes effect. The rate schedule includes built-in annual increases that go through June 2012. May 2008 The City issues approximately $50 million in bonds for capital projects identified through the utility rate study. October 2008 The Council approves an amendment to the rate schedule that reduces the highest tier rate from the “punitive” rate to a rate more in line with the graduated tier structure adopted in December 2007. November 1, 2011 The last of the built-in rate increases takes effect based on the 2007 rate study. November 15, 2011 The Council introduces and adopts Resolution 2011-31 outlining the intent of the Council to complete a new utility rate study and the anticipated timeline for the new study. December 2011 A work session is held to review and educate the Council about the policy considerations established with the 2007 Water Horizons utility rate study. ---PAGE BREAK--- 11 Ogden City Council Work Session: August 22, 2017 January – March 2012 Work sessions are held to review and determine policies for the utility rate study. March 6, 2012 A fact-finding work session is held at which information is presented regarding the utility rate study and at which public comment is accepted. April 5, 2012 A Town Meeting is held at which LYRB presented scenario options for the possible rate structures and other information is presented. Public comment was also received. May 1, 2012 The Council received a presentation on the proposed utility rate study and utility rate ordinance. The Council set a public hearing for the utility rate ordinance for May 15, 2012. May 15, 2012 The Council received presentations on the Culinary Water Master Plan, Storm Water Master Plan, Capital Improvement Plan, CFSP, and the proposed utility rate ordinance and joint resolution. A public hearing was held on all of the items and each of the items was continued to the May 22, 2012 meeting. May 22, 2012 The Council adopted Ordinance 2012-23 establishing utility rates for a five-year period for the Water, Storm Sewer, Sanitary Sewer, and Refuse utilities; Joint Resolution 2012-3 establishing Financial Principles for each of the utilities; and also adopted the Culinary Water Master Plan, and the Storm Sewer Master Plan. June 5, 2012 The Council reviews information regarding changes to customer utility bills, and conservation and recycling information. ---PAGE BREAK--- 12 Ogden City Council Work Session: August 22, 2017 June 19, 2012 The Council approves a resolution for an interfund loan from the sewer utility fund to the water utility fund for planning and design work for the water treatment and filter plant. July 1, 2012 Utility rates adopted as part of the 2012 utility rate study go into effect. August 21, 2012 The Council approves minor amendments to the utility rate ordinance correcting a minor arithmetic error and language regarding severe drought conditions. July 1, 2013 Rates for the second year of the utility rate study go into effect. This includes a 5% increase to water rates and a 2.3% CPI increase to the water, storm sewer, sanitary sewer, and refuse utility funds. July 30, 2013 The Council approves a parameters resolution for the issuance of sanitary sewer and water revenue bonds ($15.5M) and storm sewer bonds ($5.5M) for Harrison Boulevard project. October 15, 2013 The Council adopts the Sanitary Sewer Master Plan. March 4, 2014 The Council adopts an update to the Culinary Water Master Plan. July 1, 2014 Rates for the third year of the utility rate study go into effect. This includes a 3.5% increase to the water rates and a 1.6% CPI increase to the water, storm sewer, sanitary sewer, and refuse utility funds. January 27, 2015 The Council adopts an update to the City’s Water Conservation Plan. June 16, 2015 The Council adopts a change to the source information for the CPI. With the 2012 study, the source used to establish the CPI was Wells Fargo ---PAGE BREAK--- 13 Ogden City Council Work Session: August 22, 2017 Bank. The amendment adopted with the FY16 budget changes the source to the Bureau of Labor Statistics – Western Region calculation. July 1, 2015 Rates for the fourth year of the utility rate study go into effect. This includes only a 1.3% CPI increase for the four utilities. May 10, 2016 The Council adopts a supplement to the Storm Drain Master Plan initially adopted in 2012. May 17, 2016 The Council adopts a parameters resolution for the issuance of approximately $17M in bonds for water utility projects. July 1, 2016 Rates for the fifth and final year of the utility rate study go into effect. This includes a 1.8% CPI increase for the four utilities. May – August 2017 Council reviews the proposed FY2018 budget which includes a proposed CPI increase of approximately 1.5% for the second half of the fiscal year. The CPI is for only half of the year in anticipation of the utility rate study update to take place in the summer and fall of 2017. It is anticipated that any new rates for the utilities would be effective January 1, 2018. The Council adopted the final fiscal year 2018 budget on August 8, 2017. 1. Report from May 22, 2012 – Utility Rate Study a. Council Staff Review b. Ordinance 2012-23 c. Comprehensive Financial Sustainability Plan for Water, Sanitary Sewer, and Storm Sewer Utilities 2. Report from May 22, 2012 – Financial Principles a. Council Staff Review b. Resolution 2012-3 3. Frequently Asked Questions document from the 2012 utility rate study Council Staff Contact: Glenn Symes, AICP (801) 629-8164 ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 1 UTILITY RATES ORDINANCE AND UTILITY RATE STUDY COUNCIL STAFF REVIEW COUNCIL OPTIONS: Adopt/not adopt the ordinance Background History and Overview In 2007, the City contracted with Lewis Young Robertson and Burningham to perform a comprehensive study for the setting of water, sewer and storm sewer utility rates. The study was completed and new rates were adopted in December 2007 with the effective date of January 1, 2008. The rate study included rate increases set forth over the five year period between January 2008 and June 2012. The rate study included a recommendation for a bond of approximately $50 million for the completion of a number of capital projects for each of the utilities included in the study. At the time of the study, it was anticipated that a new study would have to be completed prior to the end of the fiscal 2012 year. In July 2011, the City’s Administration brought forward a proposal to adjust water rates. The proposal was presented as a plan that would bring greater parity to water customers with and without secondary water. The Council staff and the Administration worked through the details of the proposal through the remainder of the summer and through the fall of 2011. In November 2011, Mayor Godfrey requested that the Council place the proposal on an agenda for consideration. The Council placed the proposal on the agenda for November 15, 2011 but did not take action on the proposed ordinance. Rather, the Council developed a plan and timeline for the completion of a new utility rate study to be completed in 2012. The statement of intent to complete the rate study and a proposed timeline were adopted with a resolution at the November 15, 2011 meeting. As a result of the intent set forth in resolution adopted in November 2011, the Council began formal communications with Lewis Young Robertson and Burningham (LYRB) for the performance of a comprehensive utility rate study. A final contract with LYRB was formalized with the City’s Administration in January 2012 and work began on a utility rate study at that time. With the 2007 utility rate study in place, the 2012 rate study began with a review of the existing rate study, a review of the financial condition of each of the utilities and with an updated list of the City’s capital needs for ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 2 each of the utilities. The Council was informed in January 2012 as work began on the study that two master plans were ready to be brought forward for the Council’s consideration. The inclusion of the culinary water master plan and the storm water master plan was crucial to the full understanding of the state of the utilities. These two plans provided guidance for the projects included not only in the study itself but in the Capital Improvement Plan (CIP). Work on the study proceeded through the winter and spring of 2012 with reviews of the CIP, the master plans, the City’s financial audit and Consolidated Annual Financial Report (CAFR) and the review of a number of policy considerations needed for establishing the financial condition of the utilities as well as policies for the development of the rate structure. The scope of the study was to review the existing (2007) rate study, review the financial condition and needs of each of the utilities, and to establish financial policies that would ensure fiscal sustainability into the future. In addition to the aforementioned elements, the scope of the study included public input and public information efforts throughout the process. These efforts included two online surveys, a fact finding work session and a town meeting dedicated to the presentation of information regarding the utility rate study and the acceptance of public input, an e- mail information distribution list, comment cards for written comments, press releases, and a citizen advisory committee. This is in addition to the ongoing comment and input opportunities such as public comment opportunities at City Council meetings, Council member and Administration e-mail and written correspondence, telephone correspondence, and personal correspondence with Council members, Council staff and Administration. Through the study process, the Council has been presented with projects and policies on which direction was sought by the internal steering committee. The steering committee, comprised of Administrative staff, Legal staff, Council staff, and the City’s consultants, was primarily responsible for completing research needed for the development of the rate study and ordinance based on Council direction and feedback. The Council reviewed policy considerations throughout the process that were essential in developing the rate study and ordinance. These policies included such things as debt coverage ratios, number of days of operating cash on hand, conservation initiatives, incorporation of usage trends, secondary water access, discounts for users, landscaping requirements, billing statement options, and others. The Council also reviewed several options for the funding and timing of capital projects identified in the master plans that were then aligned with the CIP and with the revenue sufficiency estimates for each utility. ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 3 With the direction and feedback from the Council with regard to the review of the policy considerations, the capital projects list and with the public input received, a proposal has been developed and incorporated into a utility rate ordinance and a comprehensive financial sustainability plan. Current Proposal Utility Rate Ordinance The utility rate ordinance is an update to the City’s existing code and amends sections 4-6-1.B.19, 4-6-1.B.20 and 9-1-6.A. The ordinance includes the actual rates for the water, sewer and storm sewer utilities. The numbers included in the ordinance for the rates are based on the utility rates study completed by LYRB. Section 1 of the ordinance document (amending City Code §4-6-1.B.19) addresses the sewer utility rates and establishes a base rate for customers based on water meter size. The meter size categories are listed as ¾” or smaller (this includes ¾” and 5/8” meters), 1 and 8” or larger. The base rate is calculated using the equivalent residential connection (ERC) as established with the Culinary Water Master Plan. The ordinance then addresses the usage charge based on amount per gallon usage. The ordinance sets forth a charge of $0.35 per 1,000 gallons of culinary water used for residential customers beginning after 6,000 gallons. The ordinance sets forth the same rate of $0.35 per 1,000 gallons for commercial customers (larger than 1” meter) beginning at the first gallon used. The rate a customer would pay is based on the previous winter’s culinary water usage. The winter usage number is used as this is a more accurate estimation of a customer’s indoor usage. This description is included in this section of the ordinance document. The sewer utility includes both the sanitary sewer and the storm sewer utilities. The storm sewer changes in the ordinance include only a Consumer Price Index (CPI) increase. The established CPI for FY13 is 2.8%. The rate study used for the development of this ordinance does not include any changes to the storm sewer rates beyond CPI increases which apply to all utilities. Since a CPI increase is the only proposed change to the ordinance, the ordinance document shows the rate only through June 30, 2013. The ordinance will be updated next year with the budget process to reflect the FY14 CPI increase. Section 2 of the ordinance document (amending City Code §4-6-1.B.20) amends the City’s refuse rates. The refuse rates were not a part of the utility rate study and are not affected by the changes to the rates for water and sewer. As mentioned with the storm sewer CPI increases, the ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 4 ordinance document is being updated to reflect the increase to the refuse rates based on the FY13 CPI increase of 2.8%. Section 3 of the ordinance document (amending City Code §9-1-6.A) is the section addressing the rates for the water utility. Since there are rate changes recommended from the utility rate study for a period of five years (FY13 through FY17), the rate structure for the water utility sets forth rates for the base and the price per gallon usage beginning in July for each of the five fiscal years. The base rates for the water utility are based on the ERC calculation established with the Culinary Water Master Plan and based on meter size with the 5/8” and the ¾” connections listed as “3/4” or smaller” and increasing to 8” accordingly. The increases shown in the ordinance document are shown excluding the CPI for each of the five years with the exception of the 2.8% CPI increase for FY13. Within the ordinance document regarding the water utility rates there are several important changes that should be noted. The rate structure for culinary water usage has been changed based on Council feedback throughout the study process. The ordinance adopted with the 2007 rate study established a separate rate structure for all connection sizes. This is no longer the case with this proposed ordinance. The base rates will still be based on meter size but the rates per 1,000 gallons are broken into only three user class categories. The three categories are: • 1” and smaller with secondary water service (rates apply to the full year for users with secondary service and between November 1st and April 30th for customers without secondary service) • 1” and smaller without secondary water service (these rates apply to the outdoor watering months of May through October only for customers without secondary service) • Larger than 1” (regardless of secondary service) Within each of the three user classes, there is a separate tier structure. The tier structure for the gallons of water used per month for each user class is: • 1” and smaller with secondary water service (3 tiers) - 0 to 6,000 gallons - 6,001 to 12,000 gallons - Above 12,000 gallons ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 5 • 1” and smaller without secondary water service (4 tiers) - 0 to 6,000 gallons - 6,001 to 42,000 gallons - 42,001 to 84,000 gallons - Above 84,000 gallons • Larger than 1” (1 tier) - Single rate per 1,000 gallons Section 3 of the ordinance document also includes the expanded language regarding discounts. The existing discount program offering a 50% reduction to the base rate to users meeting certain criteria for tax abatement is carried into a new section which includes military discounts. The Council indicated that a discount to military personnel currently deployed would be appropriate. Section 4 of the ordinance document establishes a Council Intent for several policy directions given by the Council. Section 4 indicates that it is the intent of the Council to continue to direct Weber Basin Water Conservancy District to levy the tax needed to collect the cost of the water purchased by Ogden City from Weber Basin. In addition, the ordinance document directs that funds generated from the rates adopted with the ordinance be used, in part, for: A. Water Rates - Funding educational or other programs designed to encourage the conservation and reasonable use of culinary water without waste; - The replacement of existing water meters with meters that are more accurate and are capable of being read year round by the end of fiscal year 2014; - The repayment of any debt which may be authorized by the Council to pay for the replacement of significant features of the water utility production and distribution system. B. Sewer Rates - Funding the completion of a sewer master plan during the fiscal year 2013. Section 5 of the ordinance document establishes an implementation date of July 1, 2012. ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 6 Utility Rate Study The utility rate study, labeled as the Comprehensive Financial Sustainability Plan (CFSP), includes the financial analysis, capital improvement analysis and the policy direction given by the Council needed for the establishment of utility funding and operations for the water, sewer and storm sewer utilities over the five to ten years. The study was completed by the City’s consulting firm, Lewis Young Robertson and Burningham. The study document, or CFSP, is not formally adopted by the Council but is used to create the utility rates ordinance which establishes annual utility rates, future rate changes, CPI changes, discounts, and other policy decisions for the City’s water, sewer and storm sewer utilities. The CFSP is broken into five major sections in addition to an executive summary and appendices which include supporting documentation, charts and graphs, and rates tables. The major sections included in the document include the following: 1. Introduction 2. Culinary Water Utility 3. Sanitary Sewer Utility 4. Storm Drain Utility 5. Recommendations for Implementation Section 1: Introduction The introduction section of the CFSP provides a project overview and describes the format of the report for each of the sections addressing a utility fund. The format used for sections 2, 3 and 4 is as follows: 1. Utility Master Planning/Capital Facilities Planning 2. Financial and Management Policies 3. Multi-year Financial Model The Recommendations for Implementation section is addressed separately as Section 5. Section 2: Culinary Water Utility The section addressing the water utility follows the format outlined in the introduction but does include several more specific elements within each of the subsections. The Master Planning and Capital Facilities Planning was based most significantly on the culinary water master plan developed by Sunrise Engineering. The Financial and Management Policies included in the CFSP are based on discussions with the Council and include: ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 7 1. Capital project funding and planning – this was largely based on the master plan and the funding and timing of capital projects discussions with the Council. 2. Financial ratios – this includes the operating reserves, or the number of days of operating cash on hand, and the debt coverage ratio. In this case, the Council gave direction that the operating reserves should be no lower than 150 days of cash on hand and that the coverage ratio be no lower than 1.50. 3. Inflationary rate increases – the Council gave direction that the rates should include an annual CPI increase. This has been included in the rate ordinance. 4. Waste mitigation – the CFSP includes two separate elements for the promotion of conservation and the mitigation of wasteful water usage. This includes an education component ($50,000 per year) as well as a tier structure that creates more expensive water for customers using above a certain level for indoor/winter usage (12,000 gallons) and outdoor/summer usage (84,000 gallons). 5. Rate consideration – the model for the study included an annual rate increase cap of 5% excluding CPI increases. The CFSP continues with the culinary water utility with the Multi-year Financial Model. This section addresses revenue sufficiency and cost recovery. The revenue sufficiency component includes steps to understand expenditure projections into the future, understand revenue projections and to “fine-tune” the model using the policy parameters established. The cost recovery component of the water utility model includes understanding the fixed costs versus variable costs and creating a base rate and tier structure that properly captures the needed revenue for the operation of the utility. This section includes several helpful charts that lay out the ERC calculations and the rate structures for customers with and without secondary water service. This section also includes several charts comparing current and future rates for the different user classes. Section 3: Sanitary Sewer Utility The section of the CFSP addressing the sanitary sewer utility follows the same format as the water utility. The Master Planning and Capital Facility Planning for the sanitary sewer utility is limited as there is no master plan in place. Rather, the majority of the capital projects included in the study are based on the CIP and other known capital projects. The model does include funding ($300,000) for the completion of a master plan for this utility. ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 8 The Financial and Management Policies included with the sewer utility includes policy direction for an increase to 365 days of operating cash on hand and a 2.0 times debt service coverage ratio. The fund balance in the sewer utility is relatively high compared to the water utility. This is the result of revenue generation over the last five years and it is expected that a significant portion of this balance will be used to pay for capital projects that will be identified in the scheduled sewer master plan. The Multi-year Financial Model for the sewer utility includes the same CPI increase as the other utilities but no other rate increases. The most significant change to the sanitary sewer utility is the proposal to tie sewer rates to the customer’s culinary water usage. The rate would be based on the customer’s previous average winter usage. The rate would be set on July 1st for the next 12 months until a new rate was set based on that year’s average usage. The rate is proposed to be $0.35 per 1,000 gallons beginning at 6,000 gallons for residential users and beginning at zero for commercial users. This rate would be in addition to a base rate set in the ordinance based on meter size. Section 4: Storm Drain Utility The storm drain or storm sewer utility section is laid out as the others. The Master Planning and Capital Facilities Planning for the storm drain utility was based on a storm sewer master plan developed by JUB Engineering. The master plan was specific to the condition of the system and not to the capacity of the system. A line item has been included in the study for the completion of an update to the master plan specifically addressing the capacity issues related to the storm sewer utility. As with the sanitary sewer utility, the storm sewer utility’s Financial and Management Policies include establishing and maintaining 365 days of cash on hand and a debt coverage ratio of 2.0. The Multi-year Financial Model for the storm sewer utility follows the same format as the other utilities and uses the same growth and CPI projections through the study period. There are no rate increases beyond the annual CPI increase proposed with the rate study for the storm sewer utility. However, with the completion of the capacity portion of the master plan, capital projects may be needed that could change the financial model for the storm sewer utility. Section 5: Recommendations for Implementation The Recommendations for Implementation discussed in the CFSP include the proposed joint resolution which outlines the policy considerations ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 9 established with this rate study. This proposed joint resolution is discussed in a separate report and will be a separate Council action item. Appendices The appendices included with the CFSP provide the detailed information for the development of the rate model and rate ordinance. This information includes tables and charts showing revenues, expenditures, debt service and capital projects for the utilities; proposed rate and tier structures for the utilities; rate comparison charts; and will include the ordinance and the joint resolution once approved. Timeline of Events July 2007 The City contracts with LYRB to begin a utility rates study that includes rates for water, sewer and storm sewer and a process of identifying major infrastructure needs for the purposes of bonding. December 2007 The City Council adopts the utility rates study and the proposed fee schedule that resulted from the Water Horizons study process. January 1, 2008 The rate schedule from the utility rates study takes effect. The rate schedule includes built-in annual increases that go through June 2012. May 2008 The City issues approximately $50 million in bonds for capital projects identified through the utility rates study. October 2008 The Council approves an amendment to the rate schedule that reduces the highest tier rates from the “punitive” rate to a rate more in line with the graduated tier rates adopted in December 2007. November 1, 2011 The last of the built-in rate increases takes effect based on the 2007 rate study. November 15, 2011 Council introduces and adopts Resolution 2011-31 outlining the intent of the Council to complete a new utility rates study and the anticipated timeline for the new study. ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 10 December 13, 2011 A work session was held to review and educate the Council about the policy considerations established with the 2007 Water Horizons utility rates study. At the meeting, representatives from Lewis Young Robertson and Burningham reviewed the policy considerations established with the 2007 study and reviewed the notes and comments received from Council members when those policies were considered. January 31, 2012 A work session was held to review policy considerations for the 2012 Utility Rates Study and to gather information from Council members regarding the policies and considerations that Council members felt were necessary for moving forward. February 21, 2012 A work session was held to review preliminary analysis of revenue sufficiency for the water utility. Several general scenarios were presented to the Council for the funding of capital projects included in the proposed capital improvements plan and the proposed culinary water master plan. March 6, 2012 A fact finding work session is held at which Council Staff and Administration presented background information on the Utility Rates Study and reviewed public comments received from an online survey. The Council accepted public input on the rate study at the meeting and reviewed revenue sufficiency data for the sewer and storm sewer utilities. March 13, 2012 The Council reviewed the proposed Culinary Water Master Plan and the proposed Storm Water Master Plan at a work session. March 21, 2012 The Council began the discussion regarding which capital projects are to be included within the rates model and which policies are to be included in the rate structure. The discussion was continued to the March 27, 2012 meeting. March 27, 2012 The Council finished the discussion regarding which policies were to be included in the creation of the rates model. The discussion was continued from March 21, 2012. ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 11 April 5, 2012 The Council held a Town Meeting at which the City’s consultants presented scenario options for the timing and funding of certain capital projects as well as options for the rate structure. At the meeting, Administrative staff reviewed a frequently asked questions document. Public comment was received at the meeting. The discussion regarding the funding and timing scenarios was continued to the April 10, 2012 work session. April 10, 2012 The Council continued the discussion from the April 5th Town Meeting regarding the timing and funding options for capital projects and the policy considerations for the rates structure. May 1, 2012 The Council received a presentation on the proposed utility rate study and utility rate ordinance. The Council set the public hearing for the utility rate ordinance for May 15, 2012. May 9, 2012 The Council held a work session to discuss the proposed ordinance. May 15, 2012 The City Council received presentations on the Culinary Water Master Plan, Storm Water Master Plan, Capital Improvement Plan, Comprehensive Financial Sustainability Plan and the proposed Utility Rate Ordinance and Joint Resolution during the regular meeting. The public hearing was held at the meeting and public input was received. The Council closed the public hearing and continued each of the items listed above to the meeting of May 22, 2012 to continue Council deliberations. Attachments 1. Ordinance for Consideration 2. Comprehensive Financial Sustainability Plan – Culinary Water, Sanitary Sewer and Storm Water Utilities Memos Prepared By-- Council Staff: Glenn Symes, 629-8164 ---PAGE BREAK--- 1 ORDINANCE NO. 2012-23 AN ORDINANCE OF OGDEN CITY, UTAH, AMENDING THE OGDEN MUNICIPAL CODE BY AMENDING SUBSECTION 4-6-1.B.19 TO ADOPT NEW FEES FOR SEWER UTILITY SERVICES; AMENDING SUBSECTION 4-6-1.B.20 TO REFLECT CONSUMER PRICE INDEX INCREASES FOR REFUSE SERVICES; AMENDING SUBSECTION 9-1-6.A TO ADOPT NEW FEES FOR WATER UTILITY SERVICES; PROVIDING DIRECTION ON THE USE OF REVENUE GENERATED FROM THE MODIFIED UTILITY FEES; AND PROVIDING THAT THIS ORDINANCE SHALL BECOME EFFECTIVE IMMEDIATELY UPON POSTING AFTER FINAL PASSAGE. WHEREAS, in 2007, the Council of Ogden City approved a multi-year plan to adjust water rates for the purpose of providing funds to pay for infrastructure improvements; and WHEREAS, the City of Ogden issued a bond in FY2008 which is being repaid from the increased revenue; and WHEREAS, the Council was aware in 2007 that, despite the rate increases adopted at that time, the water utility would still be in need of substantial additional funds to complete work on a transmission line running through Ogden Canyon and on the city’s filter plant at the base of Pineview Reservoir; and WHEREAS, the water utility has had prepared a long range master plan in which a number of capital improvement projects are proposed; and WHEREAS, the Council intends to adopt a utility rate schedule that allows for these projects to be completed, although at a slower pace than described in the master plan so that the projects proposed to be completed over ten years are instead completed over 12 years and a portion of the general water line replacements proposed in the master plan are deferred; and WHEREAS, the Council desires to set a portion of the sewage charges for each customer based on the amount of water usage during the non-irrigation season; and WHEREAS, the Council further desires to adopt a multi-year utility rate structure to more fully address the infrastructure deficiencies that were not resolved by the rates adopted in 2007; and WHEREAS, the Council has determined that the water and sanitary sewer rate structure should be built upon a base rate determined by meter size whereby each class of meters is assigned a certain number of equivalent residential units so that ¾ inch and smaller meters are assessed as a single equivalent residential unit and that the base rate collects 37.5% of the costs of the water utility and 90% of the costs of the sewer utility; and WHEREAS, the Council has further determined that a portion of the water and sanitary sewer costs should be collected based on actual use, so that 67.5% of the costs associated with water and 10% of the costs associated with sanitary sewer are collected from usage fees, as more fully described in the body of the ordinance; and ---PAGE BREAK--- 2 WHEREAS, the water rates included in this ordinance are for the foreseeable future and are designed to allow the water utility to generally follow the 2011 water master plan, but that additional increases in the future may be required to fully meet the goals described in the master plan; and WHEREAS, the Council and Mayor have, at the same time as this ordinance is adopted, adopted a joint resolution addressing their mutual goals and objectives regarding the budgeting and financial operation of the city’s utilities, which includes annual reviews of rates and financial sustainability; Now therefore, the Council of Ogden City hereby ordains: SECTION 1. Subsection amended. Subsection 4-6-1.B.19 of the Ogden Municipal Code is hereby amended to read and provide as follows: 19. [Sewer Utility:] (See section 9-5-3 of this code) a. Sanitary Sewer Service Charges: The service charge for sanitary sewer services shall be charged each customer to whom water service is available based on meter size serving the premises, regardless of whether any water is used, as follows: Meter Size Current Base Through June 30, 2011 July 1, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 July 1, 2012 8.7% CWS Increase 1.8% CPI Increase Rate Increase 9.9% CWS Increase 3/4" or smaller $ 25 .61 $ 27 .84 $ 28 .34 $ 0 .57 $ 28 .91 $ 31 .77 1" 41 .70 45 .33 46 .15 0 .92 47 .07 51 .73 11/2" 82 .95 90 .17 91 .79 1 .84 93 .63 102 .90 2" 131 .70 143 .16 145 .74 2 .92 148 .66 163 .37 3" 245 .76 267 .14 271 .95 5 .46 277 .41 304 .87 4" 408 .30 443 .82 451 .81 9 .07 460 .88 506 .51 6" 823 .88 895 .56 911 .68 18 .29 929 .97 1,022 .04 8" 1,318 .56 1,433 .27 1,459 .07 29 .26 1,488 .33 1,635 .67 Current year rate = (previous year rate* + current year rate increase) x (1 + current year ---PAGE BREAK--- 3 CPI) Water Meter Size Base Rate From July 1, 2012 Through June 30, 2013 (Including 2012 CPI increase and Central Weber Sewer Increase) 3/4" or smaller $ 27.50 1" 45.51 11/2" 63.53 2" 101.94 3" 284.56 4" 357.97 6" 796.68 8" and larger 1460.03 Current year rate = (previous year rate* + current year rate increase) x (1 + current year CPI) Sample Calculation 2013 Rate Calculation for ¾” Meter assuming 2013 CPI = $ 28.05 = ($27.50+$0.00)*(1+.02) *Previous year rate is the rate in effect on the day immediately before the current year rate is calculated. The following [rates shall] usage charges apply to water usage over the stated volumes: [Begins Nov. 1, 2010 Begins Nov. 1, 2011 Rate Increase Rate Increase Nonresidential user consumption (over 1" water meter size): Per 1,000 gallons over 25,000 gallons (includes mixed uses of residential and nonresidential) $0.01 $0.01 ] ---PAGE BREAK--- 4 Water Meter Size Allowance over which additional charge imposed Rate per 1,000 gallons over allowance (including 2012 CPI increase) 1” and smaller Average winter usage over 6,000 gallons per month* $ 0.35 Larger than 1” No minimum allowance – all usage charged 0.35 *Winter Usage is the amount of water used between the last actual meter reading of the calendar year and the first actual meter reading of the succeeding calendar year with the average use being billed beginning on July 1 of each year. In a normal year, these readings are made in November and April. For new accounts where winter usage is not known, only the base rate will be charged until the July 1 after the information is available. b. Storm Sewer Service Fees: The service charge for storm sewer services shall be based on equivalent service units ("ESUs") contained in the parcel pursuant to section 9-5-3 of this code. The amount [to be] charged for each ESU is as follows: Storm Sewer Rates Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase Residential Each unit $6 .27 $6 .38 $0 .53 $6 .91 Business Each unit 6 .27 6 .38 0 .53 6 .91 Storm Sewer Rates Base Through June 30, 2012 July 1, 2012 2.8% CPI Increase Current Base Through June 30, 2013 Residential Each unit $6 .91 $ 0.19 $7.10 Business Each unit 6.91 0.19 7.10 Current year rate = (previous year rate* + current year rate increase) x (1 + current year CPI) ---PAGE BREAK--- 5 Sample Calculation 2013 Rate Calculation assuming 2013 CPI = $ 7.24 = ($7.10+$0.00)*(1+.02) c. Sanitary Sewer Hookup Fees: For direct connection to a sewer line or manhole for which city employees perform the work (includes the approximate average cost of material, labor, equipment, administration) $334.00 per tap For direct connection to a sewer line or manhole for which the person requesting the connection performs the work (includes the approximate average cost of inspection and administration) 92.25 per tap d. Increases: In addition, the specified sanitary sewer service and usage charges and storm sewer service fees shall be increased [beginning January 1, 2008, and on November 1 annually thereafter] annually on July 1 in perpetuity[,] by the increase in the consumer price index (CPI) for the prior January as compared to the index from January of the preceding year as published by [Zions Bank] Wells Fargo Bank with January 2008 being the base month and year. e. Stormwater Pollution Prevention Permits: Sites 5 acres or larger $100.00, plus $50.00 per month of construction activity under the permit Sites over 1 acre but under 5 $100.00, plus $50.00 per month of construction activity under the permit Sites 1 acre or less $50.00, plus $50.00 per month of construction activity under the permit Permit/plan modifications (formal applications only) $50.00 SECTION 2. Subsection amended. Subsection 4-6-1.B.20 of the Ogden Municipal Code is hereby amended to read and provide as follows: 20. [Refuse Collection And Disposal Charges:] Refuse Rates* Current Base Through June July 1, 2011 ---PAGE BREAK--- 6 30, 2011 1.8% CPI Increase Rate code 01: 1st cart 90 gallon $17 .48 $17 .79 Each additional cart 90 gallon 15 .25 15 .52 Rate code 02: 1st cart 90 gallon 17 .48 17 .79 Each additional cart 60 gallon 11 .56 11 .77 Rate code 03: 1st cart 60 gallon 13 .83 14 .08 Each additional cart 90 gallon 15 .25 15 .52 Rate code 04: 1st cart 60 gallon 13 .83 14 .08 Each additional cart 60 gallon 11 .56 11 .77 Rate code 40: 1st cart 350 gallon 46 .38 47 .21 Each additional cart 350 gallon 44 .10 44 .89 Cart replacement fees: 60 gallon - 57 .11 58 .14 90 gallon - 67 .49 68 .70 ---PAGE BREAK--- 7 Pick up/delivery of carts: Each trip - 20 .47 20 .84 Refuse Rates* Base Through June 30, 2012 July 1, 2012 Current Base Through June 30, 2013 2.8% CPI Increase Rate code 01: 1st cart 90 gallon $17 .79 $0.50 $ 18.29 Each additional cart 90 gallon 15 .52 0.44 15.96 Rate code 02: 1st cart 90 gallon 17 .79 0.50 18.29 Each additional cart 60 gallon 11 .77 0.33 12.10 Rate code 03: 1st cart 60 gallon 14.08 0.39 14.47 Each additional cart 90 gallon 15 .52 0.44 15.96 Rate code 04: 1st cart 60 gallon 14.08 0.39 14.47 Each additional cart 60 gallon 11 .77 0.33 12.10 ---PAGE BREAK--- 8 Rate code 40: 1st cart 350 gallon 47.21 1.32 48.53 Each additional cart 350 gallon 44 .89 1.26 46.15 Cart replacement fees: 60 gallon - 58.14 2.89 61.03 90 gallon - 68.70 1.92 70.62 Pick up/delivery of carts: Each trip - 20 .84 2.51 23.35 *Charges are based on the number of carts provided for the collection of garbage and nonrecyclable refuse. Charges for the collection and disposal of recyclable materials, regardless of the number of carts provided for recyclable materials, are included in the costs of the first cart provided for the collection of garbage and nonrecyclable refuse. A $2.50 per month discount off of the total cost for refuse services is given to any user who, as owner of the property, is each year granted an abatement for taxes on their dwelling in Weber County under Utah Code Annotated sections 59-2-1106 through 59-2-1108, or its successor provision. In addition, the refuse collection and disposal charges shall be increased annually on July 1 in perpetuity by the increase in the consumer price index (CPI) for the prior January as compared to the index from January of the preceding year as published by Wells Fargo Bank with January 2008 being the base month and year. SECTION 3. Subsection amended. Subsection 9-1-6.A of the Ogden Municipal Code is hereby amended to read and provide as follows: A. [Designated:] 1. [Metered Water Service:] All water service except the delivery of water which does not meet the requirement for domestic and culinary use, and sales negotiated by contract shall be metered by water meters of a design and size approved by the division. service and usage charges for metered water service are as follows: a. The service charge, or base rate, shall be charged each customer to whom water service is available regardless of whether [or not] any water is used. This charge is based on the meter size. ---PAGE BREAK--- 9 b. The applicable meter size and corresponding charge is as follows: Meter Size Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 3/4" or smaller $ 14 .16 $ 14 .41 $ 0 .57 $ 14 .98 1" 22 .90 23 .31 0 .92 24 .23 11/2" 36 .28 36 .93 1 .84 38 .77 2" 58 .09 59 .14 2 .92 62 .06 3" 109 .01 110 .97 5 .46 116 .43 4" 181 .85 185 .12 9 .07 194 .19 6" 364 .38 370 .94 18 .29 389 .23 8" 580 .07 590.51 29.26 619.77 b. The applicable meter size and corresponding charge is as follows: Service Charge Begin July 1, 2012 July 1, 2013 July 1, 2014 July 1, 2015 Meter Size (Including 2012 CPI Increase) Rate Increase Rate Increase Rate Increase ¾” or smaller $ 17.50 $ 0.88 $0.64 - 1” 28.96 1.45 1.06 - 1 ½” 40.43 2.02 1.48 - 2” 64.87 3.25 2.38 - 3” 181.08 9.06 6.65 - 4” 227.80 11.39 8.37 - 6” 506.98 25.34 18.64 - 8” or larger 929.11 46.45 34.15 - Current Year Rate = (Previous Year Rate +Current Year Rate Increase)x(1+Current Year CPI) ---PAGE BREAK--- 10 Sample Calculation 2013 Rate Calculation for ¾” Meter assuming 2013 CPI = $ 18.75 = ($17.50+$0.88)*(1+.02) c. In addition to the above meter size base rate, the following rates shall be assessed per one thousand (1,000) gallons of water used, based upon the meter size, the availability of secondary water on the property and the number of gallons of water used per month: THREE-FOURTHS INCH AND SMALLER WITHOUT SECONDARY SERVICE Gallons Of Water Used Per Month Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 0 to 5,000 $1 .29 $1 .31 $0 .03 $1 .34 5,001 to 10,000 2 .07 2 .11 0 .06 2 .17 10,001 to 25,000 2 .26 2 .30 0 .07 2 .37 25,001 to 45,000 2 .33 2 .37 0 .06 2 .43 45,001 to 70,000 2 .97 3 .02 0 .09 3 .11 Above 70,000 3 .04 3 .09 0 .10 3 .19 THREE-FOURTHS INCH AND SMALLER WITH SECONDARY SERVICE Gallons Of Water Used Per Month Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 0 to 5,000 $1 .03 $1 .05 $0 .03 $1 .08 5,001 to 10,000 1 .29 1 .31 0 .03 1 .34 10,001 to 2 .58 2 .63 0 .08 2 .71 ---PAGE BREAK--- 11 20,000 Above 20,000 2 .65 2 .70 0 .09 2 .79 ONE INCH WITHOUT SECONDARY SERVICE Gallons Of Water Used Per Month Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 0 to 5,000 $1 .29 $1 .31 $0 .03 $1 .34 5,001 to 10,000 2 .07 2 .11 0 .06 2 .17 10,001 to 30,000 2 .26 2 .30 0 .07 2 .37 30,001 to 60,000 2 .33 2 .37 0 .06 2 .43 60,001 to 100,000 2 .97 3 .02 0 .09 3 .11 Above 100,000 3 .04 3 .09 0 .10 3 .19 ONE INCH WITH SECONDARY SERVICE Gallons Of Water Used Per Month Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 0 to 5,000 $1 .03 $1 .05 $0 .03 $1 .08 5,001 to 10,000 1 .29 1 .31 0 .03 1 .34 10,001 to 40,000 2 .58 2 .63 0 .08 2 .71 Above 40,000 2 .65 2 .70 0 .09 2 .79 ONE AND ONE-HALF INCHES TO TWO INCHES ---PAGE BREAK--- 12 Gallons Of Water Used Per Month Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 0 to 5,000 $1 .62 $1 .65 $0 .04 $1 .69 5,001 to 10,000 1 .75 1 .78 0 .05 1 .83 10,001 to 25,000 2 .00 2 .04 0 .05 2 .09 25,001 to 50,000 2 .13 2 .17 0 .06 2 .23 50,001 to 200,000 2 .33 2 .37 0 .06 2 .43 Above 200,000 2 .58 2 .63 0 .08 2 .71 THREE INCHES TO EIGHT INCHES Gallons Of Water Used Per Month Current Base Through June 30, 2011 July 1, 2011 Nov. 1, 2011 New Base Through June 30, 2012 1.8% CPI Increase Rate Increase 0 to 5,000 $2 .13 $2 .17 $0 .06 $2 .23 5,001 to 10,000 2 .13 2 .17 0 .06 2 .23 10,001 to 25,000 2 .13 2 .17 0 .06 2 .23 25,001 to 50,000 2 .13 2 .17 0 .06 2 .23 50,001 to 200,000 2 .13 2 .17 0 .06 2 .23 Above 200,000 2 .13 2 .17 0 .06 2 .23 ---PAGE BREAK--- 13 1” and Smaller; except that connections without secondary water service shall be billed according to the schedule in subsection A.1.c.(2) between May 1 and October 31 Gallons of Water Used Per Month Begin July 1, 2012 Begin July 1, 2013 Begin July 1, 2014 Begin July 1, 2015 2012 Rate (Including 2012 CPI Increase) Rate Increase Rate Increase Rate Increase 0 to 6,000 $ 1.50 $0.08 $0.05 - 6,001 to 12,000 2.30 0.12 0.08 - Above 12,000 3.00 0.15 0.11 - Current Year Rate = (Previous Year Rate +Current Year Rate Increase)x(1+Current Year CIP) Sample Calculation 2013 1 st Tier Rate Calculation, assuming 2013 CPI = $ 1.61 = ($1.50+$0.08)*(1+.02) 1” and Smaller Without Secondary Service between May 1 and October 31 Gallons of Water Used Per Month Begin July 1, 2012 Begin July 1, 2013 Begin July 1, 2014 Begin July 1, 2015 2012 Rate (Including 2012 CPI Increase) Rate Increase Rate Increase Rate Increase 0 to 6,000 $ 1.50 $ 0.08 $ 0.05 - 6,001 to 42,000 2.30 0.12 0.08 - 42,001 to 84,000 2.65 0.13 0.10 - Above 84,000 3.00 0.15 0.11 - Current Year Rate = (Previous Year Rate +Current Year Rate Increase)x(1+Current Year CIP) Sample Calculation 2013 1 st Tier Rate Calculation assuming 2013 CPI = $ 1.61 = ($1.50+$0.08)*(1+.02) Larger than 1” Gallons of Water Used Per Month Begin July 1, 2012 Begin July 1, 2013 Begin July 1, 2014 Begin July 1, 2015 2012 Rate (Including 2012 CPI Increase) Rate Increase Rate Increase Rate Increase Charge per 1,000 gallons $ 2.30 $ 0.12 $ 0.08 - Current Year Rate = (Previous Year Rate +Current Year Rate Increase)x(1+Current Year CIP) Sample Calculation 2013 rate assuming 2013 CPI = $ 2.47 = ($2.30+$0.12)*(1+.02) d. In addition, the specified culinary water service and usage charges [fees] shall be increased [beginning January 1, 2008, and on November 1] annually on July 1 [thereafter] in perpetuity[,] by the increase in the consumer price index (CPI) for the prior ---PAGE BREAK--- 14 January as compared to the index from January of the preceding year as published by [Zions Bank] Wells Fargo Bank with January 2008 being the base month and year. 2. Discount: A fifty percent (50%) discount of the minimum charge, or base rate, will be given to any user in a single- or two-family dwelling who as an owner of the property is, each year, granted abatement for taxes on their dwelling in Weber County under Utah Code Annotated sections 59-2-1106 through 59-2-1108, or their successors. 2. [Discount:] A fifty percent (50%) discount on the minimum service charge, or base rate, described in subsection A.1.b., will be given to the following: a. Any user in a single- or two-family dwelling who as an owner of the property is, each year, granted abatement for taxes on their dwelling in Weber County under Utah Code Annotated sections 59-2-1106 through 59-2-1108, or their successors; or b. Any residential user who is the account owner and who is currently deployed, or whose spouse is currently deployed, to a combat zone designated by the President of the United States and who provides satisfactory proof of deployment to the utility manager. The reduction shall be limited to the period of deployment and shall apply to all members of the U.S. military, including active duty, reserve and national guard troops. 3. [Increase For Severe Drought Conditions:] a. Whenever the mayor determines that severe drought conditions or other emergency conditions exist affecting the quantity of available water, the mayor, under an administrative order adopted pursuant to subsection 9-1-8A of this chapter and after seven days' advance written notice to the city council, is authorized to increase by twenty percent (20%) the water rates assessed on the basis of usage (subsection A1c of this section) for all amounts of water used over: Ten thousand (10,000) gallons per month for meters one inch and smaller in size; Fifty thousand (50,000) gallons per month for meters one and one-half (1 1/2) to two inches in size; or Two hundred thousand (200,000) gallons per month for meters over two inches in size. b. For purposes of this subsection "severe drought conditions" shall be considered to exist whenever the annual rate of precipitation affecting the Weber River watershed areas drops to a level of seventy percent (70%) or less [of] than normal. The above determination shall be based on precipitation rates existing on or after April 1 of the year in which such increase commences. Any such increase in water rates due to severe drought conditions shall terminate on November 1 of the applicable year. c. For purposes of this subsection "other emergency conditions" shall be considered to exist whenever insufficient water resources exist to meet customer demand over a foreseeable period of time exceeding thirty (30) days due to: 1) a reduction of available ---PAGE BREAK--- 15 water sources for reasons other than drought; or 2) a failure of, or damage to, the city's water storage or treatment facilities. Any such increase in water rates shall terminate at least thirty (30) days after water resources return to normal levels. d. It is not the intention of this section to restrict or limit emergency powers of the mayor under a local emergency declared pursuant to section 12-15-3 of this code that threatens or affects the water resources available to the city. SECTION 4. Council Intent. It is the City Council’s intent that the water utility continue to direct Weber Basin Water to levy a tax to collect the cost of the entire amount of water purchased by Ogden City from Weber Basin in accordance with Weber Basin’s policies and procedures and that the funds generated from the rates adopted in this ordinance be used, in part, as follows: A. [Water Rates:] Funding educational or other programs designed to encourage the conservation and reasonable use of culinary water without waste; the replacement of existing water meters with meters that are more accurate and are capable of being read year round by the end of fiscal year 2014; and the repayment of any debt which may be authorized by the council to pay for the replacement of significant features of the water utility production and distribution system. B. [Sewer Rates:] Funding the completion of a sewer master plan during fiscal year 2013. SECTION 5. Effective date. This ordinance shall be effective immediately on posting with the rates described herein being effective on July 1, 2012. PASSED, ADOPTED AND ORDERED POSTED by the Council of Ogden City, Utah this day of 2012. CHAIR ATTEST: CITY RECORDER TRANSMITTED TO THE MAYOR ON: MAYOR'S ACTION: Approved Vetoed ---PAGE BREAK--- 16 MAYOR ATTEST: CITY RECORDER PUBLICATION DATE: EFFECTIVE DATE: APPROVED AS TO FORM: MHS 4/26/12 Legal Date * The headings, catchlines or catchwords suggested for use in the Ogden Municipal Code and which are bracketed at the beginning of sections or subsections, shall not be considered to be a part of the ordinance adopted herein. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN CULINARY WATER, SANITARY SEWER, AND STORM DRAIN UTILITIES OGDEN CITY, UTAH MAY 2012 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 1 I P a g e LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. LYRB TABLE OF CONTENTS EXECUTIVE SUMMARY 2 SECTION I: INTRODUCTION 4 PROJECT OVERVIEW 4 SECTION II: CULINARY WATER UTILITY 6 MASTER PLANNING/CAPITAL FACILITY PLANNING 6 FINANCIAL AND MANAGEMENT POLICIES 8 MULTI-YEAR FINANCIAL MODEL 10 SECTION III: SANITARY SEWER UTILITY 21 MASTER PLANNING/CAPITAL FACILITY PLANNING 21 FINANCIAL AND MANAGEMENT POLICIES 21 MULTI-YEAR FINANCIAL MODEL 21 SECTION IV: STORM DRAIN UTILITY 31 MASTER PLANNING/CAPITAL FACILITY PLANNING 31 FINANCIAL AND MANAGEMENT POLICIES 32 MULTI-YEAR FINANCIAL MODEL 32 SECTION V: RECOMMENDATIONS FOR IMPLEMENTATION 36 APPENDIX A: CULINARY WATER TABLES 37 APPENDIX B: SANITARY SEWER APPENDIX C: STORM DRAIN TABLES APPENDIX D: PROPOSED JOINT POLICY RESOLUTION APPENDIX E: PROPOSED USER RATE ORDINANCE ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 2 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 EXECUTIVE SUMMARY The purpose of this Comprehensive Financial Sustainability Plan (“CFSP”) is to ensure that each utility remains functionally and fiscally viable into the future. This process began with the development of Master Plans for each utility to ensure function viability. The City then prepared 5-Year Capital Improvements Plans (“CIP”) based upon the findings of the Master Plans. The next step was to develop key financial and management policies that will ensure implementation of the CIPs, provide financial benchmarks such as cash reserves and debt service coverage ratios, and describe key management policies such as including inflationary increases each year, adopting rates for 5-year periods, and encourage waste mitigation through education and through a tiered usage structure when possible. Upon completion of the CIPs and policy objectives, a multi-year financial model was created for the Culinary Water, Sanitary Sewer, and Storm Drain Utilities. This modeling projected operational expenditures based upon 2.5% inflation and then included debt service and capital project expenditures from FY 2013 to FY 2022. Rate adjustments were then modeled to ensure the CIPs and policy objectives were obtained. These rate adjustments were depicted both in terms of rate increases year-over-year and in dollar amounts per equivalent residential connection. The method of collecting revenue between the base and tier was then analyzed after the necessary revenue estimates were calculated. This analysis began by determining the amount of fixed and variable costs in each system. This led to a discussion of trying to cover the fixed costs in the base and the variable costs in the tiers. City decision-makers in the case of culinary water determined to collect additional fixed costs in the tier system. Tier structures were set based upon actual usage patterns in the City as well as state standards. Estimated bills for various usages were then determined based upon the FY 2012 rate structures and the proposed FY 2013 rate structures. These provide a tangible comparison of the impact of rate changes on each class of users. Specific summaries of key policies and rate results for the Culinary Water, Sanitary Sewer, and the Storm Drain Utility are provided herein. Greater detail can be found in the body of the report. CULINARY WATER UTILITY Sunrise Engineering prepared a Culinary Water Master Plan in 2011 which was modified by the City to create the Water CIP. This CIP plans to fund $46.7M of improvements in the next 10 years. The City determined the culinary water utility should have 150 Days of Cash on Hand as an operating reserve and maintain a 1.50 times Debt Service Coverage Ratio. Rate increases needed to fund the CIP and meet the policy objects need to be 5% for FY 2013 and FY 2014 and 3.5% in FY 2015 in addition to annual increases that match the Wasatch Front Consumer Price Index. Adjustments were made to the base rate and the tiers. A base rate per equivalent residential connection (“ERC”) was determined and then adjusted for each meter size according to its average ERC as determined by usage. The FY 2012 base rate per ERC was $14.98 and will be $17.50 in FY 2013. The City adopted one tier structure for indoor usage, added an additional tier for users without access to secondary water, and adopted one tier for commercial usage. The estimated bill for a 5/8” or 3/4” user at the average usage for this meter size of 6,000 per month for indoor usage pays $21.72 per month in FY 2012. This will increase to $26.50 in FY 2013. The estimated bill for a 5/8” or 3/4” user at the average usage for this meter size of 20,000 per month for indoor and outdoor summer usage pays $56.23 per month in FY 2012. This will increase to $58.70 in FY 2013. SANITARY SEWER UTILITY The City has not approved a Master Plan for sanitary sewer in many years but is planning to commission a master plan in FY 2013. A CIP for sanitary sewer has been prepared with minimal projects until the master plan is completed. The CIP with additional costs to fund deprecation of assets plans to fund $4.6M of improvements in the next 10 years. The City determined the culinary water utility should have 365 Days of Cash on Hand as an ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 3 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 operating reserve and maintain a 2.0 times Debt Service Coverage Ratio. Rate increases needed to fund the CIP and meet the policy objects need to be annual increases that match the Wasatch Front Consumer Price Index. Adjustments were made to the base rate and the tiers. The City determined to move from a 100% fixed base rate for sewer and move to a structure that links a portion of the bill to indoor winter usage. The base rate per ERC will move from $28.91 in FY 2012 to $27.50 in FY 2013. Usage will be charged after 6,000 gallons per month for residential rather than after 25,000 gallons per month. The usage charge will be $0.35 per 1,000 gallons for residential after 6,000 gallons per month and the same charge for commercial for all usage. The estimated bill for a 5/8” or 3/4” user at the average usage for this meter size at 6,000 gallons per month for indoor usage pays $28.91 per month in FY 2012. This will decrease to $27.50 in FY 2013. If usage were at 12,000 gallons per month, the FY 2012 bill would be $28.91 and would move to $29.60 in FY 2013. STORM DRAIN UTILITY JUB Engineering prepared a Storm Water Master Plan in 2011 which was used closely by the City to create the Storm Water CIP. This CIP plans to fund $12.3M of improvements in the next 10 years. The City determined the storm drain utility should have 365 Days of Cash on Hand as an operating reserve and maintain a 2.00 times Debt Service Coverage Ratio. Rate increases needed to fund the CIP and meet the policy objects need to be annual increases that match the Wasatch Front Consumer Price Index. Storm drain fees are charged based upon equivalent surface units This methodology of billing was determined to be a fair means and no adjustments were made to the base rate. There is no consumption charge and thus no tier structure for storm drain. The FY 2012 charge per ESU is $6.91 and will increase with the CIP adjustment to $7.10 in FY 2013. SUMMARY Based upon the suggested changes in this report, a 5/8” or 3/4” user using 6,000 gallons per month will see a total estimated change in their bill for culinary water, sanitary sewer, and storm drain from $57.54 in FY 2012 to $61.10 in FY 2013 which is an increase of $3.56 per month. These increases will ensure that these utilities remain fiscally and functionally viable in the future. Greater detail on methodology for these conclusions can be found in the body of the report. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 4 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 The purpose of the Comprehensive Financial Sustainability Plan is to ensure that each utility remains functionally and fiscally viable into the future. SECTION I: INTRODUCTION PROJECT OVERVIEW Ogden City (the “City”) retained Lewis Young Robertson & Burningham Inc. (“LYRB”) to conduct and prepare a Comprehensive Financial Sustainability Plan (the “CFSP”) for the City’s Culinary Water, Sanitary Sewer, and Storm Drain Utilities. The purpose of the CFSP is to ensure that each utility remains functionally and fiscally viable into the future. The purpose of this report is to describe the CFSP process which is as follows: 1) Utility Master Planning/Capital Facility Planning – this section describes the capital facilities needs necessary to ensure future functional viability as outlined in the Culinary Water Master Plans prepared by Sunrise Engineering in 2011 and a Storm Water Master Plan prepared by JUB Engineers in 2011. These Master Plans are then incorporated into the City’s 5-year Capital Improvement Plans (the “CIP”) proposed for FY 2013. 2) Financial and Management Policies – with the assistance of LYRB, City elected officials and staff developed a set of financial and management policies necessary to maintain a functional and fiscally viable system into the future. 3) Multi-year Financial Model – the information gathered from items one and two above were combined into a financial model which was used to depict the revenue needs and user rate structures necessary to meet and/or implement the policies and objectives of the Utility Systems as outlined in items one and two. 4) Recommendations for Implementation – this report will conclude with a set of recommendations which LYRB believes is necessary to fully implement the CFSP. The format of the report will follow the three sections above for the Culinary Water Utility, the Sanitary Sewer Utility, and the Storm Drain Utility and will conclude with a discussion of item four which apply generally to each utility. UTILITY FUNDING INSIGHTS Prior to moving into the body of the report, LYRB feels that it is important to provide additional insight into the costs of funding infrastructure specifically with a system that is aging such as the City’s. Often municipal governments maintain rates for a long period of time without increases. This has the effect of putting the utility systems behind on recapturing the costs of inflation. Even when rates have been adjusted to account for inflationary influences, municipalities often fall behind on funding the repair and replacement of assets with long useful lives (over 20+ years). When a system reaches the stage when significant portions of its assets need to be replaced, if funding has not been set aside for such purposes, the municipality is forced to push up rates to cash fund projects, pay the debt service on projects funded through debt or a combination of both. In any case, rates can move upward more quickly than desired. Figure 1: Infrastructure Cost Recovery thru Rates is a sample of this effect. As the system ages, the amount needed to repair and replace infrastructure grows exponentially until it needs full replacement. It should be noted that the dollars used in this chart are in real terms, meaning the impacts of inflation have been removed. The red line represents an estimated amount of user rate that should be charge per month per connection to equalize the cost recovery over the life of the asset. Because it is challenging to push rates up in early years when it does not seem necessary to recapture funds for future projects, municipalities can get behind on rate adjustments. The orange line represents what often happens with rates. Once the reality of the true cost to ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 5 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 recoup the necessary revenue to fund the replacement of projects sinks in, rates must raise dramatically. LYRB wanted to color the CFSP process with this discussion as rates have climbed in the City over the past 5 years and need to push up again to replace an aging system. $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Cost of Replacement Years Figure 1: Infrastructure Cost Recovery thru Rates Cost Equalized Rate Actual Rate ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 6 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 The Capital Improvement Plan based upon the Master Plan outline $29.2M in capital projects in the next 5 years and $17.5M in years 6 thru 10 for a total of $46.7M in FY 2013 to 2022. SECTION II: CULINARY WATER UTILITY MASTER PLANNING/CAPITAL FACILITY PLANNING The first step to ensure the long-term functional and financial sustainability of the City’s Utility Systems is to understand the physical condition of the system now and into the foreseeable future by functional component. This condition assessment is usually performed in a Master Plan. A Master plan should also include recommendations related to capital improvements necessary to meet demands created by growth and ensure proper maintenance of the system. In order to effectively implement the recommendations of the Master Plan, the City should adopt a Capital Improvement Plan for the Utility which schedules the improvements needed along with the timing and expense of those improvements. The City followed the outlined process above. The following two segments will summarize the key components of the Master Plan and Capital Improvement Plan under consideration by the City. MASTER PLAN The following is an excerpt from the Culinary Water Master Plan that describes the purpose of the document. PURPOSE “Sunrise Engineering was hired by the City to prepare a Culinary Water Master Plan for the entire Ogden City water system. The purpose of the study is to provide a master plan that can be used as a valuable tool by the City for the following: 1. Provide a basic understanding of the key elements of the system including existing sources, storage facilities, pipe networks, pressure zones, and demand areas. 2. Show the water needs of Ogden City focusing on specific existing and future demand needs. 3. Provide an understanding of the existing water sources; discuss their existing capacity, their ability to meet the future demands of the water system, and their existing and long term monetary cost. 4. Provide an explanation of the City’s water rights; demonstrate existing and future water right availability and needs. 5. Provide an understanding of the existing water storage facilities, evaluate their condition and capacities, and evaluate existing and future storage needs for fire suppression. 6. Provide an understanding of the distribution system and its ability to convey water in average day, peak day, and fire flow scenarios. 7. Demonstrate the weaknesses in the Ogden water system; define current areas out of compliance with current State water system codes. Provide a prioritized list of capital improvement projects. 8. Provide overall recommendations for the water system including source and storage recommendations. Include these recommendations as part of a comprehensive prioritized capital improvement project analysis. The items discussed in master plan focus on the existing system in 2010 followed by a 20-year (2030) and 40-year (2050) planning period. The 40-year planning period is essential for water rights planning and is also an important planning period for source and storage analysis.”1 1 Ogden City Culinary Water Master Plan, Volume 1 Executive Summary & Master Plan Report, Sunrise Engineering, pg. 1. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 7 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 RECOMMENDATIONS Based upon the analysis performed, Sunrise Engineering recommended that the City would need to invest $161,164,400 over the 40-year planning horizon of the Culinary Water Master Plan. Sunrise also provided a prioritization of projects along with estimated construction windows of 0-5 years, 6-10 years, and 11-40 years according to the following criteria as found in the Culinary Water Master Plan: 1. Ogden treatment plant was listed as the number one priority. The plant is nearing the end of its useful life and needs to be upgraded. 2. The remaining required storage projects were second priority. These projects are critical to fire suppression and the overall redundancy in the system. Addressing the remaining storage issues will allow the city to determine what storage needs Weber Basin truly is capable of meeting. 3. The fire-flow and pressure distribution projects were evaluated using a scoring system. The scoring system was based primarily off of how many failing junctions the proposed project would fix. Each red junction was scored as 3 points while orange junctions were scored as 1 point. 4. The critical redundancy and operations projects have already been funded by the City. The remaining projects are lower priority and have been included in the 40 year plan. 5. Pipe replacement due to age has been prioritized and implemented into the plan on a yearly basis.2 Figure 2 summarizes the capital improvement plan proposed by Sunrise Engineering. Figure 2: Sunrise Capital Improvement Plan Recommendations – Culinary Water Project Type Timing Cost Ogden Treatment Plant Source 0-5 Years $ 9,835,000 Storage Projects Storage 0-5 Years 1,051,900 Distribution Fire Flow & Pressure Distribution Fire Flow/Pressure 0-5 Years 12,264,100 Pipe Replacement (Old Age) Distribution Age/Leaks 0-5 Years 2,500,000 Subtotal 0-5 Years 25,651,000 New Ogden City Wells Source 6-10 Years 3,675,000 Distribution Fire Flow & Pressure Distribution Fire Flow/Pressure 6-10 Years 5,489,900 Pipe Replacement (Old Age) Distribution Age/Leaks 6-10 Years 9,510,100 Subtotal 6-10 Years 18,675,000 Pipe Replacement (Old Age) Distribution Age/Leaks 11-40 Years 116,838,400 Subtotal 11-40 Years 116,838,400 Total 161,164,400 Total (0-10 Years) 44,326,000 CAPITAL IMPROVEMENT PLAN As part of the annual budget process each year, the City administration prepares a five-year capital improvement plan. This plan is presented to the City Council for adoption. The Fiscal Year 2013 Capital Improvement Plan for Water Improvements (“Water CIP”) took recommended projects indentified prior to the scope of the Culinary Water Master Plan as well as projects identified in that plan. The Water CIP adjusted the timing of several projects as recommended in the Culinary Water Master Plan. The following table summarizes the Water CIP. One notable change between the Culinary Water Master Plan and the CIP is an increase in the cost of the Ogden Treatment Plan. The cost was increased to account for an upgrade in the plant to a membrane 2 Ogden City Culinary Water Master Plan, Volume 1 Executive Summary & Master Plan Report, Sunrise Engineering, pg. 21. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 8 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 technology that is anticipated to save operation and maintenance costs over time. This Water CIP was ultimately included in the Water Financial Model as described later in this section. Figure 3: 5-Year Capital Improvement Plan – Culinary Water FINANCIAL AND MANAGEMENT POLICIES Another key element to ensuring a functional and fiscally sound utility is to establish and maintain specific policies and objectives. These formal policies provide a framework for decision-makers to monitor the functional and fiscal health of the utility. The following policies were established with City elected officials and staff. Some of these policies will be considered for formal adoption by the City. 1) Capital Project Funding & Planning 2) Financial Ratios 3) Inflation Rate Increases 4) Rate Adoption Period 5) Waste Mitigation 6) Other Rate Considerations CAPITAL PROJECT FUNDING & PLANNING As described in the previous section, the City has been thorough in ensuring a Culinary Water Master Plan has been prepared. The purpose of this master plan is to ensure the long-term functionality of the Utility. The City is ensuring that the master plan has a practical benefit to the system by linking the 5-Year Capital Improvement Plan to the recommendations of the master plan. The first key policy consideration under this section is that the City continues to update the Culinary Water Master Plan, that the Water CIP is update each year based upon the master plan, and that the Water CIP is truly funded each year. The recommended means to ensure these plans align and are funded is to update the financial model described below during the budget process each year. FINANCIAL RATIOS Professionals in the utility industry such as the American Water Works Association (“AWWA”) and bond rating agencies such as Standard and Poors provide practical financial ratios to help an entity monitor its fiscal health. The City has determined that it will meet the following ratios: Project Timing Total Costs Ogden Treatment Plant 0-5 Years $ 11,616,160 Distribution Fire Flow & Pressure 0-5 Years 7,672,000 Pipe Replacement (Old Age) 0-5 Years 1,800,000 Canyon Pipeline Rehab 0-5 Years 5,050,000 Meter Replacement 0-5 Years 3,030,150 Subtotal 0-5 Years 29,168,310 New Ogden City Wells 6-10 Years 3,675,000 Wheeler Creek Intake 6-10 Years 1,515,150 Distribution Fire Flow & Pressure 6-10 Years 7,658,000 Pipe Replacement (Old Age) 6-10 Years 4,650,000 Subtotal 6-10 Years 17,498,150 Total 0-10 Years 46,666,460 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 9 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Two key financial policies that provide a barometer for fiscal health are 150 days of operating cash on hand and 1.50 times debt service coverage for the Culinary Water Utility. OPERATING RESERVES The first key measure is the amount of operational reserves that the City has on hand. This reserve is often called a Rate Stabilization Fund because it provides a financial cushion in times of emergencies or one-time cash needs. Rather than looking to modify rates during these times, the City is able to draw upon cash reserves and thus stabilize the user rate. The measure of cash reserves is usually put in terms of Days of Cash on Hand and is obtained by dividing the unrestricted ending cash balance by the operational expenditures and then multiplying by 365. The purpose of using days of cash on hand is to have a uniform comparison of cash reserves across different sized utilities. Statistics from S&P show that entities with higher Days of Cash on Hand usually have higher bond ratings which translate into lowering borrowing costs. The goal for the City’s water utility should be to reach 365 Days of Cash on Hand. At the end of FY 2011 the City had 153 Days of Cash on Hand. The City has determined to maintain the reserves at that level moving forward or 150 Days of Cash on Hand. COVERAGE RATIO The second most common financial ratio is the Debt Service Coverage Ratio. This ratio describes the amount of cash available after operating the system (“Net Operating Revenues”) that is available to service the debt. The ratio is found by dividing the Net Operating Revenues by the total annual debt service payments. Put in another way, for every dollar of debt service, the City needs $2 of Net Operating Revenue to service the debt to obtain a 2 times coverage ratio. The City is currently obligated to have at least 1.25 times coverage as part of its obligations to owners of the City’s bonds. The goal for the City’s water utility should be to reach 2 times coverage. In 2011, the City’s water utility had a coverage ratio of 1.29x. The City has determined it will maintain a minimum coverage ratio of 1.50 times. INFLATIONARY RATE INCREASES The City’s current water rate ordinance provides for an annual rate increase that matches the rate of the consumer price index (“CPI”) for the Wasatch Front from the previous year. LYRB recommends that this policy of annual adjustments based upon CPI be continued by the City. This ensures that rates gradually climb with inflation each year. A far too frequent pattern with municipal utilities is to keep the rate constant for 5 to 10 years and then have large rate increases simply to keep up with inflation. RATE ADOPTION PERIOD When utility rates were increased in 2007, the City adopted set rate increases for a 5-year period. LYRB recommends that the City continue this practice as it aids in the revenue stability of the system and matches the planning horizon of the Capital Improvement Plan. Future councils would have the ability to adjust rates in the intervening years if needed. WASTE MITIGATION The City has determined that it desires to encourage its citizens to reduce wasteful use of water. The City is planning to provide two levels of encouragement. The first is to provide education to the public on ways to reduce waste. The operating budget now includes $50,000 per year for this purpose although a formal education program has not been finalized. The second tool will be a conservation user rate tier system whereby water usage will become more expensive per 1,000 gallons above certain determined amounts which are necessary for standard indoor or outdoor use. RATE CONSIDERATIONS As just discussed, the concept of annual inflationary rate increases is another key policy to ensure fiscal health. Rate adjustments also need to be made to pay for infrastructure expenses that are identified in the master plan and the Water CIP. LYRB recognizes the practical and political limitations of large, one-time rate increases and thus recommends that the City implement rate increase for capital projects that smooths necessary rate increases ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 10 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Revenue sufficiency determines the amount of revenue needed each year to cover operating expenditures, capital improvement plans, and debt service obligations. over a period of several years. LYRB recommends that the City limit any rate increase for capital projects to 5% a year before the adjustment for CPI. MULTI-YEAR FINANCIAL MODEL LYRB utilized the Water CIP and the policies above to prepare a multi-year financial model to ensure the fiscal viability of the water utility and to determine what rate adjustments may be necessary. This analysis included two main divisions: 1) Revenue Sufficiency – ensure that the system collects sufficient revenue to meet its financial obligations and goals 2) Cost Recovery – determine the amount of revenue to be collected in the base rate and the amount to be collected in the tier structure The final portion of this section will provide tables to compare rates under the FY 2012 structure and the proposed FY 2013 structure for each connection size and tier structure. REVENUE SUFFICIENCY The purpose of determining revenue sufficiency is to ensure that the City’s water utility collects enough revenue each year to meet its financial obligations and goals. In order to make this determination, LYRB prepared a multi-year financial model which includes both a historic and pro forma view of the water utility’s revenues and expenditures. The information used to prepare this summary was obtained from the City’s Comprehensive Annual Financial Report (“CAFR”) for Fiscal Years 2008 – 2011, the City’s 2012 budget, bond documents related to the utility’s outstanding debt, and discussions/updates from the Comptroller’s office. The general methodology used by LYRB to prepare the fiscal forecast began with step one which was to estimate operating expenditures, debt service expenditures, and capital facility expenditures into the future. Step two was to project operating and non-operating revenues moving forward. Step three was to adjust the need in revenue to meet the obligations in step one and to ensure the minimum fiscal ratios of 150 Days of Cash on Hand and 1.50 times Debt Service Coverage were met through the planning period. Step four was to fine tune the modeling to minimize the increases in revenue needs (i.e. rate increases) through the use of debt versus cash for the payment of capital projects while still maintaining the fiscal ratios and covering all costs through the 10-year planning horizon (FY 2013 – FY 2022). STEP ONE – EXPENDITURE PROJECTIONS LYRB worked with City staff to determine the most appropriate means to project future operating expenditures. It was determined that a 2.5% inflationary increase to all operating expenditures through the planning horizon was a reasonable assumption. One exception to this methodology was the Fiscal Charge under the Other Operating Expenses category. This Fiscal Charge is calculated at 17% of the Charges for Services revenue line item. Capital facilities costs were taken directly from the Water CIP. Debt Service expenditures (pro rata share) for the City’s 2008 Water & Sewer Revenue Bonds and the 2009 Water & Sewer Revenue Refunding Bonds have fixed debt service schedules which were incorporated into the modeling. The City has received authorization to issue in FY 2012 a $4m bond to be purchased by the Utah State Division of Environmental Quality for the purpose of constructing a portion of the Canyon Pipeline Rehabilitation Project. The second half of this project was assumed to be paid through a $5m bond assumed to be issued in FY 2013 at the same terms and to the same purchaser as the 2012 bond. LYRB also assumed that a bond would likely need to be issued in FY 2014 to cover the cost of the Ogden Water Treatment Facility and other outlined projects in FY 2014-2015. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 11 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 4 depicts the historic (FY2010 -2011) and pro forma (FY2012-2022) breakdown of all expenditures for the water utility. STEP TWO & STEP THREE– REVENUE PROJECTIONS Revenue increases in the water utility occur for two main reasons: 1) changes in fees or user rates and 2) changes in the number of users in the system. The primary means to increase revenue in Ogden is the latter. The Culinary Water Master Plan assumed a growth in connections at 0.8% through the planning horizon which indicates growth will have a minimal impact on revenue. In particular, the means to increase revenue will come through Metered Water Sales (i.e. user rate adjustments) as this revenue line item makes up 80-85% of total revenue. It was necessary to increase user rates by both the CPI inflation and by an additional amount in order to have sufficient revenue to meet the City’s policy goals. In order to make the increases more understandable, these increases were presented both in terms of percent increase year-over-year as well as dollar increases on a per Equivalent Residential Connections (“ERC”) basis. The following is a description of how ERCs were derived. The Culinary Water Master Plan derived the number of ERCs by equating one residential connection to one ERC. The commercial ERCs were obtained by dividing commercial usage in 2010 during the peak month of August by the state standard for outdoor and indoor usage (49,420 gallons per connection per day).3 In order to meet the City’s policy goals, rates will need to increase as depicted in Figures 5 & 6. In 2011, the City had approximately 25,998 ERCs. The charge per ERC per month based upon the Metered Water Sales in 2011 ($13.27m) was $42.20. 3 Sunrise Engineering – Cliff Linford email 3/13/2012 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 4: Expenditure Summary - Culinary Water (2010-2022) TOTAL CAPITAL PROJECTS TOTAL DEBT SERVICE Other operating expenses Charges for services Supplies Personal Services ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 12 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 5: Culinary Water Revenue Increase Need – Culinary Water 4 Actual 2011 CPI for Wasatch Front to be applied with Proposed FY 2013 rate increase 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate per ERC $42.20 $42.20 $43.35 $46.73 $50.23 $53.25 $54.58 $55.94 $57.34 $58.77 $60.24 $61.75 $63.29 Rate Increase % -6.78% 20.11% 1.70% 7.80% 7.50% 6.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% -10% 0% 5% 10% 15% 20% 25% $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Rate Per ERC Figure 6: Rate Per ERC - Culinary Water (2010-2022) Rate per ERC Rate Increase % 2013 2014 2015 2016 2017 Rate Increase for Capital/Other 5.0% 5.0% 3.5% 0.0% 0.0% Rate Increase for CPI 2.8%4 2.5% 2.5% 2.5% 2.5% Total Rate Increase 7.8% 7.5% 6.0% 2.5% 2.5% Total Rate per ERC/Month $46.73 $50.23 $53.25 $54.58 $55.94 Metered Water Sales 14,930,866 16,179,086 17,287,030 17,860,959 18,453,943 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 13 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 STEP FOUR – FINE TUNING The final step in the financial modeling was to “fine-tune” the analysis to ensure that the rate increases necessary to fund the City’s policies were as low as possible. This required the use of debt financing of the treatment facility in FY 2014. This debt was stretched to 30 years which has the effect of spreading the construction cost over a long period and pushes down the impact on user rates as opposed to building cash to construct the facility. The remaining projects are modeled to be paid with cash. Figures 8 and 9 depict the two key fiscal ratios of Days of Cash on Hand and Coverage Ratio on a graphical format. As can be seen, these fiscal measures were maintained through the planning period through the recommended rate increases. $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 7: Revenue Summary - Culinary Water (2010-2022) Gain on Sale of assets Interest income Miscellaneous Income Accounting Charges Special District Fees Charges for Services - 50 100 150 200 250 300 [PHONE REDACTED] 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Days of Cash on Hand Figure 8: Days of Cash on Hand - Culinary Water (2010 - 2022) Days of Cash on Hand Target: Days of Cash Ideal Cash on Hand ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 14 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 COST RECOVERY After revenue generation needs necessary to meet the City’s goals have been calculated, the next step is to determine how much of the revenue will be generated from the base rate and how much from the tiers. The methodology to begin this process is to break costs into fixed costs and variable costs. The most fiscally prudent means for cost recovery is to collect all fixed costs in the base rate and recoup the variable costs in the tier structure based upon usage. LYRB met with City staff and reviewed each line item in the expenditures to determine the amount of each line item that was fixed versus variable. After conducting this analysis, it was determined that 85-90% of the system costs are fixed costs and 10-15% are variable costs. This is mainly due to the large amount of infrastructure, personnel to service the infrastructure, debt service/capital costs, water contracts, etc. Table A9 in Appendix A depicts the fixed and variable analysis. BASE RATE The rate structure in 2011 with a base rate of $14.98 for 5/8” and 3/4” connections (which is the standard ERC), generates approximately 35% of the total revenue requirement for 2011. Although it is financially prudent to recover the fixed costs (90%) through the base rate, the City determined that it is not practically feasible. Thus the City has determined to recoup approximately 37-43% of the total revenue needed in the base rate and the remainder in the tiers. Since the revenue requirement per ERC per month in FY 2013 is $46.73, this equates to a base rate of $17.50 per ERC. Using the same methodology to calculate ERCs as Sunrise Engineering utilized in the Culinary Water Master Plan, LYRB found the average ERC count (based upon usage) for each connection size. For example, the usage data indicated that on average an 8” connection is equivalent in the peak month of August to 53.09 ERCs. This analysis was used for each connection size larger than 1 1/2”. The one inch residential connection was derived by splitting the difference between the 1 ERC for 5/8” & 3/4” and the 2.31 ERCs for the 1 1/2” connection. The other caveat for the 6” connection was that the City’s single largest user is in that connection size which greatly skewed the ERC calculation for that connection size. Thus the largest user was thrown out of the calculation for the 6” connection. The base rate of $17.50 per ERC was than multiplied by the ERC average per connection size to determine the base rate for each connection size. Figure 10 depicts the connection size, the average ERC count for each size, the resulting base rate for each size, the number of connections in each category, and the estimated revenue from each category. Based upon the FY 2013 need of $46.73 per connection per month and the base rates listed above, - 0.50 1.00 1.50 2.00 2.50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 9: Coverage Ratio - Culinary Water (2010-2022) Coverage Target: Coverage ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 15 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 the City can expect to collect $6.46m from the base rate. This will require that the tiers collect at least $8.47m from the usage charge. Figure 10: Base Rate Breakdown – Culinary Water Base Rate Breakdown 2013 Revenue Size ERC Base Rate 2011 Connections Base Rate Revenue 5/8 & 3/4 1.00 $ 17.50 22,352 $ 4,693,920.00 1 1.66 $ 28.96 1,574 $ 547,043.70 1 1/2 2.31 $ 40.43 293 $ 142,134.30 2 3.71 $ 64.87 518 $ 403,257.30 3 10.35 $ 181.08 111 $ 241,201.65 4 13.02 $ 227.80 73 $ 199,553.97 6 28.97 $ 506.98 25 $ 152,092.50 8 53.09 $ 929.11 7 $ 78,045.04 Base Rate Revenue $ 6,457,248.46 Tier Revenue $ 8,473,617.27 Total $ 14,930,865.73 TIER STRUCTURE As described above, the revenue not captured in the base rate must be captured in the tier structure from the usage charge. Based upon 2011 usage, the City would need to charge approximately $2 per 1,000 gallons to generate the necessary revenue not collected by the base. However, the City would like to encourage the reduction of wasteful usage, provide some relief to small water users, and provide some relief to rate payers who do not have access to a secondary water system. For these reasons, the City will charge an increasing amount in four tiers for residential users without secondary access, three tiers for users with secondary access and one tier for commercial usage. On average, residential customers use approximately 50% of water usage and commercial 50%. The revenue collection was set such that commercial and residential customers generate approximately 50% of the revenue.5 Residential With Secondary The basis for setting the residential tiers for users who have access to secondary water was to base the tiers around indoor usage patterns. The average use for the 5/8” and 3/4” connection in the City is approximately 6,000 gallons per month per connection for indoor use. The first tier was thus set at 0-6,000 gallons. The state standard for sizing water systems assumes average indoor usage of 12,000 gallons per month per connection. The second tier was thus set between 6,000 and 12,000 gallons. The top tier was then set above 12,000 to encourage the reduction of wasteful usage. 5 Within a 5% tolerance to account for changes in usage, number of connections, etc Figure 11: Structure - With Secondary Residential Tiers 2013 Tier 1 - 6,000 $ 1.50 Tier 2 6,001 12,000 $ 2.30 Tier 3 12,001 + $ 3.00 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 16 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Residential Without Secondary The same indoor usage assumptions, tier structuring, and pricing were used for users without access to secondary water. The top of the second tier was set to include the state average usage for indoor and outdoor usage which is 42,000 gallons per connection per month for a 1/3 acre lot. To account for large lot sizes, the third tier was set at 84,000 gallons or twice the state standard. The fourth tier was set for usage above 84,000 which may be considered wasteful usage. Commercial The usage patterns for commercials users do not follow closely the patterns of usage for residential usage. For this purpose, the commercial rate is set at one tier. All commercial users will pay $2.30 per 1,000 gallons which is the same charge for tier two in each residential structure. RATE COMPARISON In order to provide an understanding of how these changes to the rate structure affect a standard user, the Figures 13 – 16 depict the estimated rate per connection size at various usage amounts under the FY 2012 rate structure, the FY 2013 proposed rate structure, the percent increase per category between the FY 2012 and FY 2013 structures, and the FY 2017 proposed rate structure. The highlighted cells represent the average usage in each category. In future years as rate increases are implemented, the base rate and usage charge per tier should increase at the same rate. For example, in FY 2014 a 5% rate increase is recommended. The current base and tier system is such that to maintain equity, the City should apply the 5% increase to all charges. Figure 12: Structure - Without Secondary Residential Tiers 2013 Tier 1 - 6,000 $ 1.50 Tier 2 6,001 42,000 $ 2.30 Tier 3 42,001 84,000 $ 2.65 Tier 4 84,001 + $ 3.00 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 17 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 13: Estimated Bill – FY 2012 Rate Structure – Culinary Water With Secondary Without Secondary Commercial Meter Sizes USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" 1,000 16.06 25.31 16.32 25.57 63.75 118.66 196.42 391.46 622.00 2,000 17.14 26.39 17.66 26.91 65.44 120.89 198.65 393.69 624.23 3,000 18.22 27.47 19.00 28.25 67.13 123.12 200.88 395.92 626.46 4,000 19.30 28.55 20.34 29.59 68.82 125.35 203.11 398.15 628.69 5,000 20.38 29.63 21.68 30.93 70.51 127.58 205.34 400.38 630.92 6,000 21.72 30.97 23.85 33.10 72.34 129.81 207.57 402.61 633.15 7,000 23.06 32.31 26.02 35.27 74.17 132.04 209.80 404.84 635.38 8,000 24.40 33.65 28.19 37.44 76.00 134.27 212.03 407.07 637.61 9,000 25.74 34.99 30.36 39.61 77.83 136.50 214.26 409.30 639.84 10,000 27.08 36.33 32.53 41.78 79.66 138.73 216.49 411.53 642.07 11,000 29.79 39.04 34.90 44.15 81.75 140.96 218.72 413.76 644.30 12,000 32.50 41.75 37.27 46.52 83.84 143.19 220.95 415.99 646.53 13,000 35.21 44.46 39.64 48.89 85.93 145.42 223.18 418.22 648.76 14,000 37.92 47.17 42.01 51.26 88.02 147.65 225.41 420.45 650.99 15,000 40.63 49.88 44.38 53.63 90.11 149.88 227.64 422.68 653.22 20,000 54.18 63.43 56.23 65.48 100.56 161.03 238.79 433.83 664.37 25,000 68.13 76.98 68.08 77.33 111.01 172.18 249.94 444.98 675.52 30,000 82.08 90.53 80.23 89.18 122.16 183.33 261.09 456.13 686.67 35,000 96.03 104.08 92.38 101.33 133.31 194.48 272.24 467.28 697.82 40,000 109.98 117.63 104.53 113.48 144.46 205.63 283.39 478.43 708.97 45,000 123.93 131.58 116.68 125.63 155.61 216.78 294.54 489.58 720.12 50,000 137.88 145.53 132.23 137.78 166.76 227.93 305.69 500.73 731.27 100,000 277.38 285.03 290.13 286.48 288.26 339.43 417.19 612.23 842.77 200,000 556.38 564.03 609.13 605.48 531.26 562.43 640.19 835.23 1,065.77 35,000,000 97,648.38 97,656.03 111,621.13 111,617.48 94,839.26 78,166.43 78,244.19 78,439.23 78,669.77 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 18 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 14: Estimated Bill - Proposed FY 2013 Rate Structure – Culinary Water With Secondary Without Secondary Commercial Meter Sizes USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" 1,000 19.00 30.46 19.00 30.46 67.17 183.38 230.10 509.28 931.41 2,000 20.50 31.96 20.50 31.96 69.47 185.68 232.40 511.58 933.71 3,000 22.00 33.46 22.00 33.46 71.77 187.98 234.70 513.88 936.01 4,000 23.50 34.96 23.50 34.96 74.07 190.28 237.00 516.18 938.31 5,000 25.00 36.46 25.00 36.46 76.37 192.58 239.30 518.48 940.61 6,000 26.50 37.96 26.50 37.96 78.67 194.88 241.60 520.78 942.91 7,000 28.80 40.26 28.80 40.26 80.97 197.18 243.90 523.08 945.21 8,000 31.10 42.56 31.10 42.56 83.27 199.48 246.20 525.38 947.51 9,000 33.40 44.86 33.40 44.86 85.57 201.78 248.50 527.68 949.81 10,000 35.70 47.16 35.70 47.16 87.87 204.08 250.80 529.98 952.11 11,000 38.00 49.46 38.00 49.46 90.17 206.38 253.10 532.28 954.41 12,000 40.30 51.76 40.30 51.76 92.47 208.68 255.40 534.58 956.71 13,000 43.30 54.76 42.60 54.06 94.77 210.98 257.70 536.88 959.01 14,000 46.30 57.76 44.90 56.36 97.07 213.28 260.00 539.18 961.31 15,000 49.30 60.76 47.20 58.66 99.37 215.58 262.30 541.48 963.61 20,000 64.30 75.76 58.70 70.16 110.87 227.08 273.80 552.98 975.11 25,000 79.30 90.76 70.20 81.66 122.37 238.58 285.30 564.48 986.61 30,000 94.30 105.76 81.70 93.16 133.87 250.08 296.80 575.98 998.11 35,000 109.30 120.76 93.20 104.66 145.37 261.58 308.30 587.48 1,009.61 40,000 124.30 135.76 104.70 116.16 156.87 273.08 319.80 598.98 1,021.11 45,000 139.30 150.76 117.25 128.71 168.37 284.58 331.30 610.48 1,032.61 50,000 154.30 165.76 130.50 141.96 179.87 296.08 342.80 621.98 1,044.11 100,000 304.30 315.76 268.60 280.06 294.87 411.08 457.80 736.98 1,159.11 200,000 604.30 615.76 568.60 580.06 524.87 641.08 687.80 966.98 1,389.11 35,000,000 105,004.30 105,015.76 104,968.60 104,980.06 80,564.87 80,681.08 80,727.80 81,006.98 81,429.11 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 19 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 15: Percent Rate Increase: FY 2011 Rate Structure vs FY 2013 Proposed – Culinary Water With Secondary Without Secondary Commercial Meter Sizes USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" 1,000 18% 20% 16% 19% 5% 55% 17% 30% 50% 2,000 20% 21% 16% 19% 6% 54% 17% 30% 50% 3,000 21% 22% 16% 18% 7% 53% 17% 30% 49% 4,000 22% 22% 16% 18% 8% 52% 17% 30% 49% 5,000 23% 23% 15% 18% 8% 51% 17% 29% 49% 6,000 22% 23% 11% 15% 9% 50% 16% 29% 49% 7,000 25% 25% 11% 14% 9% 49% 16% 29% 49% 8,000 27% 26% 10% 14% 10% 49% 16% 29% 49% 9,000 30% 28% 10% 13% 10% 48% 16% 29% 48% 10,000 32% 30% 10% 13% 10% 47% 16% 29% 48% 11,000 28% 27% 9% 12% 10% 46% 16% 29% 48% 12,000 24% 24% 8% 11% 10% 46% 16% 29% 48% 13,000 23% 23% 7% 11% 10% 45% 15% 28% 48% 14,000 22% 22% 7% 10% 10% 44% 15% 28% 48% 15,000 21% 22% 6% 9% 10% 44% 15% 28% 48% 20,000 19% 19% 4% 7% 10% 41% 15% 27% 47% 25,000 16% 18% 3% 6% 10% 39% 14% 27% 46% 30,000 15% 17% 2% 4% 10% 36% 14% 26% 45% 35,000 14% 16% 1% 3% 9% 35% 13% 26% 45% 40,000 13% 15% 0% 2% 9% 33% 13% 25% 44% 45,000 12% 15% 0% 2% 8% 31% 12% 25% 43% 50,000 12% 14% 3% 8% 30% 12% 24% 43% 100,000 10% 11% 2% 21% 10% 20% 38% 200,000 9% 9% 14% 7% 16% 30% 35,000,000 8% 8% -15% 3% 3% 3% 4% ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 20 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 16: Estimated Bill - Proposed FY 2017 Rate Structure – Culinary Water With Secondary Without Secondary Commercial Meter Sizes USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" 1,000 22.75 36.47 22.75 36.47 80.42 219.54 275.47 609.70 1,115.07 2,000 24.54 38.27 24.54 38.27 83.17 222.30 278.23 612.45 1,117.82 3,000 26.34 40.06 26.34 40.06 85.93 225.05 280.98 615.20 1,120.58 4,000 28.13 41.86 28.13 41.86 88.68 227.80 283.73 617.96 1,123.33 5,000 29.93 43.65 29.93 43.65 91.43 230.56 286.49 620.71 1,126.08 6,000 31.73 45.45 31.73 45.45 94.19 233.31 289.24 623.47 1,128.84 7,000 34.48 48.20 34.48 48.20 96.94 236.06 292.00 626.22 1,131.59 8,000 37.23 50.96 37.23 50.96 99.69 238.82 294.75 628.97 1,134.34 9,000 39.99 53.71 39.99 53.71 102.45 241.57 297.50 631.73 1,137.10 10,000 42.74 56.46 42.74 56.46 105.20 244.32 300.26 634.48 1,139.85 11,000 45.49 59.22 45.49 59.22 107.96 247.08 303.01 637.23 1,142.60 12,000 48.25 61.97 48.25 61.97 110.71 249.83 305.76 639.99 1,145.36 13,000 51.84 65.56 51.00 64.72 113.46 252.59 308.52 642.74 1,148.11 14,000 55.43 69.15 53.75 67.48 116.22 255.34 311.27 645.49 1,150.87 15,000 59.02 72.74 56.51 70.23 118.97 258.09 314.02 648.25 1,153.62 20,000 76.98 90.70 70.27 84.00 132.74 271.86 327.79 662.01 1,167.39 25,000 94.94 108.66 84.04 97.77 146.50 285.63 341.56 675.78 1,181.15 30,000 112.89 126.62 97.81 111.53 160.27 299.40 355.33 689.55 1,194.92 35,000 130.85 144.58 111.58 125.30 174.04 313.16 369.09 703.32 1,208.69 40,000 148.81 162.53 125.35 139.07 187.81 326.93 382.86 717.09 1,222.46 45,000 166.77 180.49 140.37 154.09 201.58 340.70 396.63 730.85 1,236.22 50,000 184.73 198.45 156.23 169.96 215.34 354.47 410.40 744.62 1,249.99 100,000 364.30 378.03 321.56 335.29 353.02 492.14 548.07 882.30 1,387.67 200,000 723.46 737.18 680.72 694.44 628.37 767.50 823.43 1,157.65 1,663.02 35,000,000 125,709.80 125,723.53 125,667.06 125,680.79 96,451.24 96,590.36 96,646.29 96,980.51 97,485.88 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 21 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Two key financial policies that provide a barometer for fiscal health are 365 days of operating cash on hand and 2 times debt service coverage for the Sanitary Sewer Utility. SECTION III: SANITARY SEWER UTILITY MASTER PLANNING/CAPITAL FACILITY PLANNING The Sanitary Sewer Utility has not had an adopted master plan for many years. The City has programmed a new sanitary sewer master plan in FY 2013. Until that time, the City does not have any significant capital improvements scheduled that approach the magnitude of those identified in the Culinary Water Master Plan; however, due to the aging sanitary system and master plans prepared but not adopted for the sanitary sewer system in the past, it seems logical that a new master plan for the sanitary sewer may include additional capital projects. The City has adopted a 5-Year Sanitary Sewer Capital Improvement Plan (“Sanitary Sewer CIP”) that includes the items in Figure 17. LYRB recommends that the City fund at least the amount of the booked depreciation year for planning purposes until the master plan is completed. The annual depreciation is approximately $450,000. In the 0-5 Year timeframe, this will add an additional $1,194,000 in capital projects. In the 6-10 Year timeframe, this will add $2,250,000 in capital projects. FINANCIAL AND MANAGEMENT POLICIES Many of the key policies discussed in the Financial and Management Policies discussed in Section II: Culinary Water Utility apply equally to the Sanitary Sewer Utility. These include Capital Project Funding & Planning, Financial Ratios, Inflation Rate Increases and Rate Adoption Period. Please see the discussion in Section II for this information. The Financial Ratios for the sanitary sewer utility were set at 365 Days of Cash on Hand and 2 times Debt Service Coverage which is higher than these ratios set for the culinary water utility. The one key policy consideration for the Sanitary Sewer Utility is the consideration of the moving the sewer charge away from a base-rate only method to a base rate and usage charge system. This change would link winter, indoor water usage to the sanitary sewer bill. The recommendation is to average winter usage per account and then establish a bill on July 1 which will apply each month until July 1 of the next year. This bill would include a portion derived from the base rate and a portion based upon usage. The amounts of this change will be discussed in the next section. MULTI-YEAR FINANCIAL MODEL LYRB utilized the Sewer CIP including the funding of deprecation and the policies above to prepare a multi-year financial model to ensure the fiscal viability of the sanitary sewer utility and to determine what rate adjustments may be necessary. This analysis included main two divisions: 1) Revenue Sufficiency – ensure that the system collects sufficient revenue to meet its financial obligations and goals 2) Cost Recovery – determine the amount of revenue to be collected in the base rate and the amount to be collected in the tier structure The final portion of this section will provide tables to compare rates under the current structure and the proposed structure for each connection size and tier structure. Figure 17: 5 Year CIP Sanitary Sewer Project Timing Total Costs Slip Lining and Manhole Relining 0-5 Years $ 757,500 Flow Measurement Evaluation 0-5 Years 151,500 Master Plan 0-5 Years 300,000 Subtotal 0-5 Years $ 1,209,000 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 22 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 REVENUE SUFFICIENCY The purpose of determining revenue sufficiency is to ensure that the City’s sanitary sewer utility collects enough revenue each year to meet its financial obligations and goals. In order to make this determination, LYRB prepared a multi-year financial model which includes both a historic and pro forma view of the sanitary sewer utility’s revenues and expenditures. The information used to prepare this summary was obtained from the City’s Comprehensive Annual Financial Report (“CAFR”) for Fiscal Years 2008 – 2011, the City’s 2012 budget, bond documents related to the utility’s outstanding debt, and discussions/updates from the Comptroller’s office. The general methodology used by LYRB to prepare the fiscal forecast began with step one which was to estimate operating expenditures, debt service expenditures, and capital facility expenditures into the future. Step two was to project operating and non-operating revenues moving forward. Step three was to adjust the need in revenue to meet the obligations in step one and to ensure the minimum fiscal ratios of 365 Days of Cash on Hand and 2 times Debt Service Coverage were met through the planning period. Step four was fine tune the modeling to minimize the increases in revenue needs (i.e. rate increases) through the use of debt versus cash for the payment of capital projects while still maintaining the fiscal ratios and covering all costs through the 10-year planning horizon (FY 2013 – FY 2022). STEP ONE – EXPENDITURE PROJECTIONS LYRB worked with City staff to determine the most appropriate means to project future operating expenditures. It was determined that a 2.5% inflationary increase to all operating expenditures through the planning horizon was a reasonable assumption. One exception to this methodology was the Fiscal Charge under the Other Operating Expenses category. This Fiscal Charge is calculated at 17% of the Charges for Services revenue line item. Capital facilities costs were taken directly from the Sewer CIP with the inclusion of depreciation. Debt Service expenditures (pro rata share) for the City’s 2008 Water & Sewer Revenue Bonds and the 2009 Water & Sewer Revenue Refunding Bonds have fixed debt service schedules which were incorporated into the modeling. Figure 18 depicts the historic (FY 2010-2011) and pro forma (FY 2012-2022) breakdown of all expenditures for the sanitary sewer utility. $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 18: Expenditure Summary - Sanitary Sewer (2010-2022) TOTAL CAPITAL PROJECTS TOTAL DEBT SERVICE Other operating expenses Charges for services Supplies Personal Services ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 23 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 STEP TWO & STEP THREE– REVENUE PROJECTIONS Revenue increases in the sewer utility occur for two main reasons: 1) changes in fees or user rates and 2) changes in the number of users in the system. The primary means to increase revenue in Ogden is the later. The Culinary Water Master Plan assumed a growth in connections at 0.8% through the planning horizon. This same growth in connections was assumed for sanitary sewer connections. This indicates growth will have a minimal impact on revenue. In particular, the means to increase revenue will come through Charges for Services (i.e. user rate adjustments). It was necessary to increase user rates by the CPI inflation but not by any additional amount at this time. Cash balances and coverage ratios are above the standards outlined in the policy section; however, the sanitary sewer master plan will likely have a significant impact on the pro forma of the sanitary sewer utility. In order to meet the City’s policy goals, rates will need to increase as depicted in Figures 19 - 21. 6 Actual 2011 CPI for Wasatch Front to be applied with Proposed FY 2013 rate increase 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Charge/ERC/Month 25.97 30.05 29.69 30.52 31.29 32.07 32.87 33.69 34.53 35.40 36.28 37.19 38.12 Rate Increase % 19.9% 10.0% 23.3% 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 Rate Per ERC Figure 20: Rate Per ERC - Sanitary Sewer (2010-2022) Total Charge/ERC/Month Rate Increase % Figure 19: Rate Increases for Sanitary Sewer 2013 2014 2015 2016 2017 Rate Increase for Capital/Other 0.0% 0.0% 0.0% 0.0% 0.0% Rate Increase for CPI 2.8%6 2.5% 2.5% 2.5% 2.5% Total Rate Increase 2.8% 2.5% 2.5% 2.5% 2.5% Total Rate per ERC/Month $30.52 $31.29 $32.07 $32.87 $33.69 Charges for Services Revenue $9,752,629 $10,076,417 $10,410,954 $10,756,597 $11,113,716 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 24 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 STEP FOUR – FINE TUNING The final step in the financial modeling was to “fine-tune” the analysis to ensure that the rates increases necessary to fund the City’s policies were as low as possible. Because the sanitary sewer utility has solid Days of Cash on Hand and Debt Service Coverage ratios at present, the fine-tuning process was minimal. However, LYRB recommends that this analysis be updated after the completion and adoption of the sanitary sewer master plan in FY 2013. Figures 22 - 23 depict the two key fiscal ratios of Days of Cash on Hand and Coverage Ratio on a graphical format. As can be seen, these fiscal measures were maintained through the planning period through the recommended CPI rate increases. $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 21: Revenue Summary - Sanitary Sewer (2010-2022) Gain on Sale of assets Interest income Miscellaneous Income Accounting Charges Special District Fees Charges for Services - 100 200 300 400 [PHONE REDACTED] 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate Per ERC Figure 22: Days of Cash on Hand - Sanitary Sewer (2010 - 2022) Days of Cash on Hand Target: Days of Cash ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 25 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 COST RECOVERY After revenue generation needs necessary to meet the City’s goals have been calculated, the next step is to determine how much of the revenue will be generated from the base rate and how much from the tiers. The methodology to begin this process is to break costs into fixed costs and variable costs. The most fiscally prudent means for cost recovery is to collect all fixed costs in the base rate and recoup the variable costs in the tier structure based upon usage. The FY 2012 rate structure includes only a base rate for residential usage or 100% in the base rate. The commercial charge includes a base rate that covers the approximate fixed cost and a variable usage charge over 25,000 gallons of water usage that approximately covers the variable costs. BASE RATE In order to meet the City’s goal to link indoor usage to billing, it is the recommendation herein that the cost recovery be moved to 90-95% recovery through the base and 5-10% revenue recovery through the tier. By setting the usage tier for residential above 6,000, the charge per 1,000 gallons above 6,000 at $0.35 and charging commercial users the same $0.35 per 1,000 gallons for all usage ensures that sufficient revenue is recouped to meet the City’s policy goals.7 The base rate of $27.50 per ERC was than multiplied by the ERC average per connection size as discussed in Section II: Culinary Water Utility to determine the base rate for each connection size. Figure 24 depicts the connection size, the average ERC count for each size, the resulting base rate for each size, the number of connections in each category, and the estimated revenue from each category. Based upon the FY 2013 need of $30.52 per connection per month and the base rates listed above, the City can expect to collect $9.2m from the base rate. This will require that the tiers collect at least $546k from the usage charge. 7 Within a 2-5% tolerance to take into account usage changes, connection changes, etc which is less volatile than that used in indoor and outdoor water usage. - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 23: Coverage Ratio - Sanitary Sewer (2010-2022) Coverage with Impact Fees Target: Coverage with Impact Fees ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 26 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 24: Base Rate Breakdown – Sanitary Sewer Base Rate Breakdown 2013 Revenue Size ERC Base Rate 2011 Connections Base Rate Revenue 5/8 & 3/4 1.00 $ 27.50 20,847 $ 6,879,510.00 1 1.66 $ 45.51 1,342 $ 732,933.30 1 1/2 2.31 $ 63.53 255 $ 194,386.50 2 3.71 $ 101.94 434 $ 530,929.50 3 10.35 $ 284.56 82 $ 280,005.00 4 13.02 $ 357.97 55 $ 236,262.52 6 28.97 $ 796.68 24 $ 229,442.40 8 53.09 $ 1,460.03 7 $ 122,642.21 Base Rate Revenue $ 9,206,111.44 Tier Revenue $ 546,517.98 Total $ 9,752,629.42 RATE COMPARISON In order to provide an understanding of how these changes to the rate structure affect a standard user, the Figures 25 - 28 depict the estimates rate per connection size at various usage amounts under the FY 2012 rate structure, the FY 2013 proposed rate structure, the percent increase per category, and the FY 2017 proposed rate structure. The highlighted cells represent the average usage in each category. In future years as rate increases may be implemented, the base rate and usage charge per tier should increase at the same rate. The current base and tier system is such that to maintain equity, the City should apply any increase to all charges. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 27 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 25: Estimated Bill – FY 2012 Rate Structure – Sanitary Sewer USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 1,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 2,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 3,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 4,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 5,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 6,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 7,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 8,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 9,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 10,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 11,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 12,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 13,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 14,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 15,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 20,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 25,000 28.91 47.07 93.63 148.66 277.41 460.88 929.97 1,488.33 30,000 28.91 47.07 95.38 150.41 279.16 462.63 931.72 1,490.08 35,000 28.91 47.07 97.13 152.16 280.91 464.38 933.47 1,491.83 40,000 28.91 47.07 98.88 153.91 282.66 466.13 935.22 1,493.58 45,000 28.91 47.07 100.63 155.66 284.41 467.88 936.97 1,495.33 50,000 28.91 47.07 102.38 157.41 286.16 469.63 938.72 1,497.08 100,000 28.91 47.07 119.88 174.91 303.66 487.13 956.22 1,514.58 200,000 28.91 47.07 154.88 209.91 338.66 522.13 991.22 1,549.58 35,000,000 28.91 47.07 12,334.88 12,389.91 12,518.66 12,702.13 13,171.22 13,729.58 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 28 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 26: Estimated Bill – Proposed FY 2013 Rate Structure – Sanitary Sewer USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 1,000 27.50 45.51 63.88 102.29 284.91 358.32 797.03 1,460.38 2,000 27.50 45.51 64.23 102.64 285.26 358.67 797.38 1,460.73 3,000 27.50 45.51 64.58 102.99 285.61 359.02 797.73 1,461.08 4,000 27.50 45.51 64.93 103.34 285.96 359.37 798.08 1,461.43 5,000 27.50 45.51 65.28 103.69 286.31 359.72 798.43 1,461.78 6,000 27.50 45.51 65.63 104.04 286.66 360.07 798.78 1,462.13 7,000 27.85 45.86 65.98 104.39 287.01 360.42 799.13 1,462.48 8,000 28.20 46.21 66.33 104.74 287.36 360.77 799.48 1,462.83 9,000 28.55 46.56 66.68 105.09 287.71 361.12 799.83 1,463.18 10,000 28.90 46.91 67.03 105.44 288.06 361.47 800.18 1,463.53 11,000 29.25 47.26 67.38 105.79 288.41 361.82 800.53 1,463.88 12,000 29.60 47.61 67.73 106.14 288.76 362.17 800.88 1,464.23 13,000 29.95 47.96 68.08 106.49 289.11 362.52 801.23 1,464.58 14,000 30.30 48.31 68.43 106.84 289.46 362.87 801.58 1,464.93 15,000 30.65 48.66 68.78 107.19 289.81 363.22 801.93 1,465.28 20,000 32.40 50.41 70.53 108.94 291.56 364.97 803.68 1,467.03 25,000 34.15 52.16 72.28 110.69 293.31 366.72 805.43 1,468.78 30,000 35.90 53.91 74.03 112.44 295.06 368.47 807.18 1,470.53 35,000 37.65 55.66 75.78 114.19 296.81 370.22 808.93 1,472.28 40,000 39.40 57.41 77.53 115.94 298.56 371.97 810.68 1,474.03 45,000 41.15 59.16 79.28 117.69 300.31 373.72 812.43 1,475.78 50,000 42.90 60.91 81.03 119.44 302.06 375.47 814.18 1,477.53 100,000 60.40 78.41 98.53 136.94 319.56 392.97 831.68 1,495.03 200,000 95.40 113.41 133.53 171.94 354.56 427.97 866.68 1,530.03 35,000,000 12,275.40 12,293.41 12,313.53 12,351.94 12,534.56 12,607.97 13,046.68 13,710.03 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 29 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 27: Percent Rate Increase: FY 2012 Rate Structure vs 2013 Proposed – Sanitary Sewer USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 1,000 -32% -31% 3% -22% -14% 2,000 -31% -31% 3% -22% -14% 3,000 -31% -31% 3% -22% -14% 4,000 -31% -30% 3% -22% -14% 5,000 -30% -30% 3% -22% -14% 6,000 -30% -30% 3% -22% -14% 7,000 -30% -30% 3% -22% -14% 8,000 -29% -30% 4% -22% -14% 9,000 -29% -29% 4% -22% -14% 10,000 0% 0% -28% -29% 4% -22% -14% 11,000 1% 0% -28% -29% 4% -21% -14% 12,000 2% 1% -28% -29% 4% -21% -14% 13,000 4% 2% -27% -28% 4% -21% -14% 14,000 5% 3% -27% -28% 4% -21% -14% 15,000 6% 3% -27% -28% 4% -21% -14% 20,000 12% 7% -25% -27% 5% -21% -14% 25,000 18% 11% -23% -26% 6% -20% -13% 30,000 24% 15% -22% -25% 6% -20% -13% 35,000 30% 18% -22% -25% 6% -20% -13% 40,000 36% 22% -22% -25% 6% -20% -13% 45,000 42% 26% -21% -24% 6% -20% -13% 50,000 48% 29% -21% -24% 6% -20% -13% 100,000 109% 67% -18% -22% 5% -19% -13% 200,000 230% 141% -14% -18% 5% -18% -13% 35,000,000 42361% 26017% 0% 0% 0% 0% ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 30 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figure 28: Estimated Bill – Proposed FY 2017 Rate Structure – Sanitary Sewer USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 1,000 30.35 50.24 70.51 112.91 314.49 395.52 879.77 1,611.98 2,000 30.35 50.24 70.89 113.30 314.87 395.91 880.15 1,612.37 3,000 30.35 50.24 71.28 113.69 315.26 396.29 880.54 1,612.75 4,000 30.35 50.24 71.67 114.07 315.64 396.68 880.93 1,613.14 5,000 30.35 50.24 72.05 114.46 316.03 397.07 881.31 1,613.53 6,000 30.35 50.24 72.44 114.85 316.42 397.45 881.70 1,613.91 7,000 30.74 50.62 72.82 115.23 316.80 397.84 882.08 1,614.30 8,000 31.13 51.01 73.21 115.62 317.19 398.23 882.47 1,614.69 9,000 31.51 51.40 73.60 116.01 317.58 398.61 882.86 1,615.07 10,000 31.90 51.78 73.98 116.39 317.96 399.00 883.24 1,615.46 11,000 32.29 52.17 74.37 116.78 318.35 399.39 883.63 1,615.85 12,000 32.67 52.56 74.76 117.16 318.73 399.77 884.02 1,616.23 13,000 33.06 52.94 75.14 117.55 319.12 400.16 884.40 1,616.62 14,000 33.45 53.33 75.53 117.94 319.51 400.54 884.79 1,617.00 15,000 33.83 53.71 75.91 118.32 319.89 400.93 885.18 1,617.39 20,000 35.76 55.65 77.85 120.25 321.83 402.86 887.11 1,619.32 25,000 37.70 57.58 79.78 122.19 323.76 404.79 889.04 1,621.25 30,000 39.63 59.51 81.71 124.12 325.69 406.73 890.97 1,623.19 35,000 41.56 61.44 83.64 126.05 327.62 408.66 892.90 1,625.12 40,000 43.49 63.37 85.57 127.98 329.55 410.59 894.83 1,627.05 45,000 45.42 65.30 87.50 129.91 331.48 412.52 896.77 1,628.98 50,000 47.35 67.24 89.44 131.84 333.42 414.45 898.70 1,630.91 100,000 66.67 86.55 108.75 151.16 352.73 433.77 918.01 1,650.23 200,000 105.30 125.19 147.39 189.80 391.37 472.40 956.65 1,688.86 35,000,000 13,549.74 13,569.63 13,591.83 13,634.24 13,835.81 13,916.84 14,401.09 15,133.30 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 31 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 SECTION IV: STORM DRAIN UTILITY MASTER PLANNING/CAPITAL FACILITY PLANNING The first step to ensure the long-term functional and financial sustainability of the City’s Utility Systems is to understand the physical condition of the system now and into the foreseeable future by functional component. This condition assessment is usually performed in a Master Plan. A Master plan should also include recommendations related to capital improvements necessary to meet demands created by growth and ensure proper maintenance of the system. In order to effectively implement the recommendations of the Master Plan, the City should adopt a Capital Improvement Plan for the Utility which schedules the improvements needed along with the timing and expense of those improvements. The City followed the outlined process above. The following two segments will summarize the key components of the Master Plan and Capital Improvement Plan under consideration by the City. MASTER PLAN JUB Engineering prepared a Storm Water Master Plan for the purpose of ensuring the storm drain system had sufficient capacity to meet to run off needs of the City. This master plan did not include any analysis related to the condition of the system but only the capacity of the system. The City has programmed an update to this master plan in FY 2013 for the purpose of conducting a condition assessment. CAPITAL IMPROVEMENT PLAN The City closely followed the recommendations of the Storm Water Master Plan in preparing the 5-Year Storm Water Capital Improvement Plan (“Storm Water CIP”). Figure 29 is a summary of the CIP: Figure 29: 5 Year CIP – Storm Drain Project Timing Total Costs 33rd St & Pacific Ave Detention Pond 0-5 Years 369,038 36th Street Storm Drain 0-5 Years 697,275 17th Street Lift Station 0-5 Years 906,475 28th St. to Ogden River & Polk Ave to Jackson A 0-5 Years 2,820,000 28th St. to Ogden River & Polk Ave to Jackson B 0-5 Years 1,600,000 28th St. to Ogden River & Polk Ave to Jackson C 0-5 Years 1,450,000 9th St. from Liberty to Clover - Flooding 0-5 Years 1,252,400 Downs and West Oaks Drive 0-5 Years 260,000 Harrison to Monroe 0-5 Years 731,250 Update Master Plan 0-5 Years 150,000 Replacement of Storm Drain Inlets 0-5 Years 550,500 5 Points Water Diversion 0-5 Years 303,000 Subtotal 0-5 Years 11,089,938 33rd St & Pacific Ave Detention Pond 6-10 Years 369,038 Update Master Plan 6-10 Years 150,000 Replacement of Storm Drain Inlets 6-10 Years 550,500 Misc Projects (Funding of Depreciation) 6-10 Years 89,700 Subtotal 6-10 Years 1,159,238 Total 0-10 Years 12,249,175 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 32 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Two key financial policies that provide a barometer for fiscal health are 365 days of operating cash on hand and 2 times debt service coverage for the Storm Drain Utility. FINANCIAL AND MANAGEMENT POLICIES Many of the key policies discussed in the Financial and Management Policies discussed in Section II: Culinary Water Utility apply equally to the Storm Drain Utility. These include Capital Project Funding & Planning, Financial Ratios, Inflation Rate Increases and Rate Adoption Period. Please see the previous discussion in Section II for this information. The Financial Ratios for the storm drain utility were set at 365 Days of Cash on Hand and 2 times Debt Service Coverage which is higher than these ratios set for the culinary water utility. The storm drain charge is based upon Equivalent Surface Units (“ESU”) which is a similar measure to ERCs as discussed previously. Each residence is considered one ESU. Commercial entities are converted to ESUs by dividing the total impervious surface area by the standard for a residence (3,200 sf). This methodology is a sound methodology for charging this fee and this analysis has not assumed any change to the rate structure. Any proposed increases in rates would apply equally across user classes. MULTI-YEAR FINANCIAL MODEL LYRB utilized the Storm Water CIP and the policies above to prepare a multi-year financial model to ensure the fiscal viability of the storm drain utility and to determine what rate adjustments may be necessary. This analysis included main two divisions: 1) Revenue Sufficiency – ensure that the system collects sufficient revenue to meet its financial obligations and goals 2) Cost Recovery – determine the amount of revenue to be collected in the base rate and the amount to be collected in the tier structure REVENUE SUFFICIENCY The purpose of determining revenue sufficiency is to ensure that the City’s storm drain utility collects enough revenue each year to meet its financial obligations and goals. In order to make this determination, LYRB prepared a multi-year financial model which includes both a historic and pro forma view of the storm drain utility’s revenues and expenditures. The information used to prepare this summary was obtained from the City’s Comprehensive Annual Financial Report (“CAFR”) for Fiscal Years 2008 – 2011, the City’s 2012 budget, bond documents related to the utility’s outstanding debt, and discussions/updates from the Comptroller’s office. The general methodology used by LYRB to prepare the fiscal forecast began with step one which was to estimate operating expenditures, debt service expenditures, and capital facility expenditures into the future. Step two was to project operating and non-operating revenues moving forward. Step three was to adjust the need in revenue to meet the obligations in step one and to ensure the minimum fiscal ratios of 365 Days of Cash on Hand and 2 times Debt Service Coverage were met through the planning period. Step four was fine tune the modeling to minimize the increases in revenue needs (i.e. rate increases) through the use of debt versus cash for the payment of capital projects while still maintaining the fiscal ratios and covering all costs through the 10-year planning horizon (FY 2013 – FY 2022). STEP ONE – EXPENDITURE PROJECTIONS LYRB worked with City staff to determine the most appropriate means to project future operating expenditures. It was determined that a 2.5% inflationary increase to all operating expenditures through the planning horizon was a reasonable assumption. One exception to this methodology was the Fiscal Charge under the Other Operating Expenses category. This Fiscal Charge is calculated at 17% of the Charges for Services revenue line item. Capital facilities costs were taken directly from the Sewer CIP with the inclusion of depreciation. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 33 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Debt Service expenditures (pro rata share) for the City’s 2008 Water & Sewer Revenue Bonds, the 2009 Water & Sewer Revenue Refunding Bonds and the 2009 Storm Drain Revenue & Refunding Bonds have fixed debt service schedules which were incorporated into the modeling. Figure 30 depicts the historic (FY 2010 -2011) and pro forma (FY 2012-2022) breakdown of all expenditures for the sanitary sewer utility. STEP TWO & STEP THREE– REVENUE PROJECTIONS Revenue increases in the storm drain utility occur for two main reasons: 1) changes in fees or user rates and 2) changes in the number of users in the system. The primary means to increase revenue in Ogden is the later. The Culinary Water Master Plan assumed a growth in connections at 0.8% through the planning horizon. This same growth in connections was assumed for sanitary sewer connections. This indicates growth will have a minimal impact on revenue. In particular, the means to increase revenue will come through Charges for Services (i.e. user rate adjustments). It was necessary to increase user rates by the CPI inflation but not by any additional amount at this time. Cash balances and coverage ratios are above the standards outlined in the policy section; however, the condition update to the master plan could impact the pro forma for the storm drain utility. In order to meet the City’s policy goals, rates will need to increase as depicted in Figures 31 - 33. 8 Actual 2011 CPI for Wasatch Front to be applied with Proposed FY 2013 rate increase $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 30: Expenditure Summary - Storm Drain (2010-2022) TOTAL CAPITAL PROJECTS TOTAL DEBT SERVICE Other operating expenses Charges for services Supplies Personal Services Figure 31: Rate Increase – Storm Drain 2013 2014 2015 2016 2017 Rate Increase for Capital/Other 0.0% 0.0% 0.0% 0.0% 0.0% Rate Increase for CPI 2.8%8 2.5% 2.5% 2.5% 2.5% Total Rate Increase 2.8% 2.5% 2.5% 2.5% 2.5% Total Rate Increase per ERC/Month $7.76 $7.96 $8.16 $8.36 $8.57 Charges for Services Revenue $4,711,348 $4,867,765 $5,029,374 $5,196,350 $5,368,868 ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 34 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 STEP FOUR – FINE TUNING The final step in the financial modeling was to “fine-tune” the analysis to ensure that the rates increases necessary to fund the City’s policies were as low as possible. Because the storm drain utility has solid Days of Cash on Hand and Debt Service Coverage ratios at present, the fine-tuning process was minimal. In conjunction with the proposed bond for culinary water projects in 2014, the storm drain can combine with this bond issuance. This analysis has assumed that the 2014 proceeds from a bond issuance in 2014 for storm drain improvements would be approximately $4,522,183. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate per ERC $5.85 $5.85 $7.55 $7.76 $7.96 $8.16 $8.36 $8.57 $8.78 $9.00 $9.23 $9.46 $9.69 Rate Increase % 1.1% 2.7% 29.1% 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 Rate Per ERC Figure 32: Rate Per ERC - Storm Drain (2010-2022) $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 33: Revenue Summary - Storm Drain (2010-2022) Gain on Sale of assets Interest income Miscellaneous Income Charges for Services ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 35 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 Figures 34 - 35 depict the two key fiscal ratios of Days of Cash on Hand and Coverage Ratio on a graphical format. As can be seen, these fiscal measures were maintained through the planning period through the recommended rate increases. COST RECOVERY The storm drain utility current collects through a base rate according to ESUs. This methodology was determined to be a fair means to collect revenue and will not be adjusted. Future rate adjustments will be uniform across the base rates on a percentage basis. - 200 400 600 800 1,000 1,200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate Per ERC Figure 34: Days of Cash on Hand - Storm Drain (2010 - 2022) Days of Cash on Hand Target: Days of Cash - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Figure 35: Coverage Ratio - Storm Drain (2010-2022) Coverage Target: Coverage ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 36 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 SECTION V: RECOMMENDATIONS FOR IMPLEMENTATION The City Council and Mayor have proposed to adopt a joint resolution which outlines the policy considerations and procedures necessary to implement the recommendations outlined herein. LYRB recommends that the City approve this resolution as it will provide a solid framework in which decisions can be made for future years to ensure the functional and fiscal viability of the system for many years to come. In a sense, the adoption of these policies provides institutional memory for decision-makers in the City as circumstances, staff and elected officials change. Adoption of these policies will communicate to constituents, investors/potential investors in City bonds, and others the standards and framework that will guide the management of the system in the future. The proposed joint resolution can be found in Appendix D. ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] 37 I P a g e LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 APPENDIX A: CULINARY WATER TABLES ---PAGE BREAK--- OGDEN CITY, UTAH Rate Smoothing 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Water Utility Fund Min Cash on Hand 150 150 150 150 150 150 150 150 150 150 Comprehensive Financial Sustainability Plan Min Coverage 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Treatment Plant 2014 Rate Increase 5.0% 5.0% 3.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Pipe Replacement - Adjusted Forward CPI Rate Increase 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Table A1: Multi-Year Cash Flow Projections Total Increase 20.5% -1.2% 14.4% 2.7% 7.8% 7.5% 6.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Charge/ERC/Month 31.00 $ 37.35 $ 36.89 $ 42.20 $ 43.35 $ 46.73 $ 50.23 $ 53.25 $ 54.58 $ 55.94 $ 57.34 $ 58.77 $ 60.24 $ 61.75 $ 63.29 $ Beginning ERCs 25,895 25,902 26,037 25,998 26,206 26,416 26,627 26,840 27,055 27,271 27,489 27,709 27,931 28,154 28,380 New ERCs 7 135 (39) 208 210 211 213 215 216 218 220 222 223 225 227 Ending ERCs 25,902 26,037 25,998 26,206 26,416 26,627 26,840 27,055 27,271 27,489 27,709 27,931 28,154 28,380 28,607 Connection Growth 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% O&M Inflation -6.78% 20.11% 1.70% 2.80% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Interest Earnings 75% of Fund Balance 0.75% 0.75% 0.75% 0.85% 0.95% 1.00% 1.50% 1.50% 1.50% 1.50% 1.50% - - - - - - - - BUDGETED PROJECTED FISCAL YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 REVENUES Charges for Services 10,008,575 $ 12,179,014 $ 12,056,775 $ 13,828,441 $ 14,305,150 $ 15,498,041 $ 16,748,908 $ 17,859,520 $ 18,436,138 $ 19,031,833 $ 19,647,236 $ 20,283,002 $ 20,939,806 $ 21,618,345 $ 22,319,342 $ METERED WATER SALES 9,636,915 11,669,899 11,509,700 13,271,510 13,740,600 14,930,866 16,179,086 17,287,030 17,860,959 18,453,943 19,066,614 19,699,626 20,353,653 21,029,395 21,727,570 WHOLESALE WATER CHARGE (BONA VISTA) 224,750 229,100 229,100 229,100 236,350 236,350 236,350 236,350 236,350 236,350 236,350 236,350 236,350 236,350 236,350 CUSTOMER SERVICE CHARGES 1,650 168,370 243,951 249,659 243,950 245,902 247,869 249,852 251,851 253,865 255,896 257,943 260,007 262,087 264,184 HOOK UP FEES 105,046 64,148 56,993 48,942 60,000 60,480 60,964 61,452 61,943 62,439 62,938 63,442 63,949 64,461 64,977 WATER STOCK RENTALS 185 8,649 - 13,479 1,000 1,008 1,016 1,024 1,032 1,041 1,049 1,057 1,066 1,074 1,083 WATER EXTENSION INCOME 8,040 130 1,507 - 1,500 1,512 1,524 1,536 1,549 1,561 1,573 1,586 1,599 1,612 1,624 WATER LEASE REVENUE 78 - - - - - - - - - - - - - - CUST INSTALLATION & REPAIR 20,896 16,459 9,733 6,650 9,750 9,828 9,907 9,986 10,066 10,146 10,227 10,309 10,392 10,475 10,559 FIRE HYDRANT METER RENTAL 11,014 22,260 5,790 9,101 12,000 12,096 12,193 12,290 12,389 12,488 12,588 12,688 12,790 12,892 12,995 Special District Fees 880,522 942,525 813,415 808,585 1,079,100 1,087,733 1,096,435 1,105,206 1,114,048 1,122,960 1,131,944 1,140,999 1,150,127 1,159,328 1,168,603 Accounting Charges 502,602 594,847 647,575 679,375 747,950 753,934 759,965 766,045 772,173 778,351 784,577 790,854 797,181 803,558 809,987 Miscellaneous Income 9,044 10,992 11,283 5,457 7,500 7,560 7,620 7,681 7,743 7,805 7,867 7,930 7,994 8,058 8,122 - - - - - - - - - - - TOTAL OPERATING REVENUES 11,400,743 $ 13,727,378 $ 13,529,048 $ 15,321,858 $ 16,139,700 $ 17,347,268 $ 18,612,929 $ 19,738,452 $ 20,330,102 $ 20,940,948 $ 21,571,625 $ 22,222,785 $ 22,895,108 $ 23,589,290 $ 24,306,054 $ EXPENDITURES Personal Services (2,962,472) $ (2,982,053) $ (3,001,244) $ (3,200,314) $ (3,433,200) $ (3,529,330) $ (3,628,151) $ (3,565,742) $ (3,665,583) $ (3,768,219) $ (3,873,729) $ (3,982,193) $ (4,093,695) $ (4,208,318) $ (4,326,151) $ Salaries and wages (2,111,080) (2,092,933) (2,079,606) (2,192,091) (2,291,775) (2,355,945) (2,421,911) (2,389,725) (2,456,637) (2,525,423) (2,596,135) (2,668,826) (2,743,554) (2,820,373) (2,899,343) Benefits (851,392) (889,120) (921,638) (1,008,223) (1,141,425) (1,173,385) (1,206,240) (1,176,017) (1,208,946) (1,242,796) (1,277,594) (1,313,367) (1,350,141) (1,387,945) (1,426,808) Supplies (698,177) (657,039) (636,883) (641,405) (1,179,300) (1,312,320) (1,446,265) (1,318,981) (1,355,913) (1,393,879) (1,432,907) (1,473,029) (1,514,273) (1,556,673) (1,600,260) Office supplies (189,322) (154,081) (168,872) (175,793) (196,625) (202,131) (207,790) (213,608) (219,589) (225,738) (232,058) (238,556) (245,236) (252,102) (259,161) Operating supplies (458,326) (477,868) (425,866) (418,231) (568,725) (584,649) (601,019) (655,669) (674,027) (692,900) (712,301) (732,246) (752,749) (773,826) (795,493) Repair and Maintenance supplies (50,529) (25,090) (42,145) (47,381) (163,950) (168,541) (173,260) (178,111) (183,098) (188,225) (193,495) (198,913) (204,483) (210,208) (216,094) Other Costs (GIS/Well Head Protection) - - - - - (100,000) (200,000) - - - - - - - - Meter Replacement (250,000) - - - - (250,000) (257,000) (264,196) (271,593) (279,198) (287,016) (295,052) (303,314) (311,806) (320,537) (329,512) Charges for services (1,273,601) (2,378,515) (1,583,796) (3,084,678) (1,903,700) (1,957,004) (2,011,800) (2,068,130) (2,126,038) (2,185,567) (2,246,763) (2,309,672) (2,374,343) (2,440,824) (2,509,168) Public utility services (442,221) (428,293) (459,126) (493,481) (442,850) (455,250) (467,997) (481,101) (494,572) (508,420) (522,655) (537,290) (552,334) (567,799) (583,697) Travel and education (12,745) (10,190) (7,486) (18,897) (21,000) (21,588) (22,192) (22,814) (23,453) (24,109) (24,784) (25,478) (26,192) (26,925) (27,679) Contracted agreements (818,635) (1,940,032) (1,117,184) (2,572,300) (1,439,850) (1,480,166) (1,521,610) (1,564,216) (1,608,014) (1,653,038) (1,699,323) (1,746,904) (1,795,817) (1,846,100) (1,897,791) Other operating expenses (3,670,766) (4,332,983) (4,426,485) (4,661,910) (5,269,126) (5,551,360) (5,845,669) (6,094,640) (6,278,298) (6,467,596) (6,662,709) (6,863,818) (7,071,108) (7,284,770) (7,505,003) Rental charges (113,409) (92,823) (91,304) (89,694) (121,675) (125,082) (128,584) (132,185) (135,886) (139,691) (143,602) (147,623) (151,756) (156,005) (160,373) Fiscal charges 17% (1,733,922) (2,151,144) (2,200,650) (2,584,525) (2,431,876) (2,634,667) (2,847,314) (3,036,118) (3,134,144) (3,235,412) (3,340,030) (3,448,110) (3,559,767) (3,675,119) (3,794,288) Depreciation/Amortization - - - - - - - - - - - - - - Data processing and computer equipment (417,483) (442,250) (425,563) (424,636) (422,350) (434,176) (446,333) (458,830) (471,677) (484,884) (498,461) (512,418) (526,766) (541,515) (556,677) Maintenance and repair (180,823) (174,747) (291,120) (180,792) (695,950) (715,437) (735,469) (745,881) (766,765) (788,235) (810,305) (832,994) (856,318) (880,294) (904,943) Vehicle operating expenses (408,948) (326,021) (390,660) (396,292) (397,000) (408,116) (419,543) (417,691) (429,386) (441,409) (453,769) (466,474) (479,535) (492,962) (506,765) Water purchase (810,016) (1,115,517) (987,371) (933,776) (1,148,400) (1,180,555) (1,213,611) (1,247,592) (1,282,524) (1,318,435) (1,355,351) (1,393,301) (1,432,314) (1,472,418) (1,513,646) Public Education Program (50,000) (51,400) (52,839) (54,319) (55,840) (57,403) (59,010) (60,663) (62,361) (64,107) (65,902) Miscellaneous (6,165) (30,481) (39,817) (52,195) (1,875) (1,928) (1,976) (2,025) (2,076) (2,128) (2,181) (2,235) (2,291) (2,348) (2,407) TOTAL OPERATING EXPENDITURES (8,605,016) $ (10,350,590) $ (9,648,408) $ (11,588,307) $ (11,785,326) $ (12,350,014) $ (12,931,885) $ (13,047,493) $ (13,425,831) $ (13,815,260) $ (14,216,108) $ (14,628,712) $ (15,053,419) $ (15,490,586) $ (15,940,581) $ NON-OPERATING REVENUES (EXPENSES) Interest income 122,380 $ 966,977 $ 349,426 $ 170,206 $ 50,000 $ 33,991 $ 33,586 $ 51,803 $ 53,208 $ 52,675 $ 76,807 $ 81,797 $ 77,139 $ 74,437 $ 74,601 $ Grants and donations - - - - - - - - - - - - Gain on Sale of assets 48,025 36,280 31,784 9,135 35,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Capital Contribution to general government TOTAL NON-OPERATING REVENUES (EXPENSES) 170,405 $ 1,003,257 $ 381,210 $ 179,341 $ 85,000 $ 43,991 $ 43,586 $ 61,803 $ 63,208 $ 62,675 $ 86,807 $ 91,797 $ 87,139 $ 84,437 $ 84,601 $ ---PAGE BREAK--- TOTAL NET REVENUES AVAILABLE FOR DS 2,966,132 $ 4,380,045 $ 4,261,850 $ 3,912,892 $ 4,439,375 $ 5,041,245 $ 5,724,629 $ 6,752,762 $ 6,967,479 $ 7,188,363 $ 7,442,324 $ 7,685,870 $ 7,928,828 $ 8,183,141 $ 8,450,074 $ DEBT SERVICE Series 2008 Water/Sewer Revenue 87.0% - (2,691,498) (2,690,878) (2,691,400) (2,691,957) (2,694,308) (2,692,568) (2,694,308) (2,693,917) (2,665,424) (2,692,938) (2,694,896) (2,694,243) (2,695,331) (2,693,591) Series 2009 Water/Sewer Revenue Ref 66% - - (341,341) (343,786) (337,846) (341,806) (341,649) (340,742) (341,798) (342,458) (339,422) (343,547) (340,247) (338,506) (339,290) Series 1999A Water/Sewer Revenue & Ref 67% (377,785) (146,404) Proposed Series 2012 Water Rev (DEQ) (250,808) (250,808) (250,808) (250,808) (250,808) (250,808) (250,808) (250,808) (250,808) (250,808) Proposed Series 2013 Water Rev (DEQ) (313,509) (313,509) (313,509) (313,509) (313,509) (313,509) (313,509) (313,509) (313,509) Proposed Series 2014 Water Rev Bond (809,203) (809,203) (809,203) (809,203) (809,203) (809,203) (809,203) (809,203) Proposed Series 2017 Water Rev Bond Proposed Series 2020 Water Rev Bond TOTAL DEBT SERVICE (377,785) $ (2,837,902) $ (3,032,219) $ (3,035,186) $ (3,029,803) $ (3,286,922) $ (3,598,535) $ (4,408,570) $ (4,409,235) $ (4,381,402) $ (4,405,880) $ (4,411,962) $ (4,408,010) $ (4,407,357) $ (4,406,400) $ COVERAGE RATIO 7.85 1.54 1.41 1.29 1.47 1.53 1.59 1.53 1.58 1.64 1.69 1.74 1.80 1.86 1.92 COVERAGE RATIO: Fixed Charge (includes water purchases as deb 1.79 0.51 0.76 0.24 0.67 0.75 0.82 0.87 0.89 0.92 0.94 0.96 0.99 1.01 1.04 SURPLUS REVENUES 2,588,347 $ 1,542,143 $ 1,229,630 $ 877,706 $ 1,409,571 $ 1,754,323 $ 2,126,095 $ 2,344,192 $ 2,558,245 $ 2,806,961 $ 3,036,444 $ 3,273,908 $ 3,520,818 $ 3,775,785 $ 4,043,673 $ Transfers in - 251,956 29,878 - - - - - - - - - - Transfers out - - (21,650) (10,875) (11,180) (11,459) (11,745) (12,039) (12,340) (12,649) (12,965) (13,289) (13,621) (13,962) Total Transfers In (Out) - $ - $ 251,956 $ 8,228 $ (10,875) $ (11,180) $ (11,459) $ (11,745) $ (12,039) $ (12,340) $ (12,649) $ (12,965) $ (13,289) $ (13,621) $ (13,962) $ Grant Revenue Bond Proceeds 40,736,131 - - 4,000,000 5,000,000 13,421,773 0 0.00 CULINARY WATER CAPITAL IMPROVEMENTS Ogden Treatment Plant 1-5 Years (11,616,160) - $ - $ - $ - $ - - $ (11,616,160) $ - $ - $ - $ - $ - $ - $ - $ - $ Wheeler Creek Intake 1-5 Years (1,515,150) - - - - - - - - - (1,515,150) - - - - Storage Projects 1-5 Years - - - - - - - - - - - - - - - - Distribution Fire Flow & Pressure 1-5 Years (15,814,800) - - - - (2,557,333) (2,557,333) (2,557,333) - - - - - - - - - - - - - - - - - - - - New Ogden City Wells/Pineview Well Field 6-10 Years (3,675,000) - - - - - - - - - - - (3,675,000) - - - Distribution Fire Flow & Pressure 6-10 Years (5,489,900) - - - - - - - - - - - - (2,552,667) (2,552,667) (2,552,667) - - - - - - - - - - - - - - - Pipe Replacement 1-5 Years - - (250,000) (250,000) (433,333) (433,333) (433,333) - - - - - Pipe Replacement 6-10 Years (9,510,100) - - - - - - (1,065,111) - (1,194,963) (1,194,963) (1,194,963) Pipe Replacement 11-40 Years (116,838,400) - - - - - - - - - - - Pipe Replacement Evenly - - - - - - - - - - - - - - - - - - - - - - - - - - - Canyon Pipeline Rehab Project (9,000,000) (4,000,000) (5,050,000) - - - - - - - - - Meter Replacement (3,030,000) - (1,515,150) (1,515,000) - - - - - - - - Pressure Relief Valve Replacement (222,200) - - - - - - - - - - Misc Projects (836,040) (9,713,111) (6,794,125) (11,184,634) (14,741,845) Depreciation (1,065,111) - - - - - - - - - - TOTAL CAPITAL PROJECTS (177,554,621) $ (836,040) $ (9,713,111) $ (6,794,125) $ (11,184,634) $ (18,964,045) $ (6,815,150) $ (13,381,160) $ (2,990,667) $ (2,990,667) $ (2,990,667) $ (2,580,261) $ (3,675,000) $ (3,747,630) $ (3,747,630) $ (3,747,630) $ Total Change in Cash Position 42,488,438 $ (8,170,968) $ (5,312,539) $ (10,298,700) $ (13,565,349) $ (72,007) $ 2,155,248 $ (658,220) $ (444,461) $ (196,046) $ 443,534 $ (414,057) $ (240,101) $ 14,534 $ 282,082 $ Beginning Cash Reserves 569,544 $ 43,390,329 $ 35,219,361 $ 29,906,822 $ 19,608,122 $ 6,042,774 $ 5,970,767 $ 8,126,015 $ 7,467,795 $ 7,023,334 $ 6,827,289 $ 7,270,823 $ 6,856,766 $ 6,616,665 $ 6,631,199 $ Ending Cash Reserves 43,390,329 $ 35,219,361 $ 29,906,822 $ 19,608,122 $ 6,042,774 $ 5,970,767 $ 8,126,015 $ 7,467,795 $ 7,023,334 $ 6,827,289 $ 7,270,823 $ 6,856,766 $ 6,616,665 $ 6,631,199 $ 6,913,280 $ Ending Cash Reserves (unrestricted) 956,614 $ 2,498,757 $ 3,980,343 $ 4,866,277 $ 6,042,774 $ 5,970,767 $ 8,085,403 $ 7,467,795 $ 7,023,334 $ 6,827,289 $ 7,270,823 $ 6,856,766 $ 6,616,665 $ 6,631,199 $ 6,913,280 $ Ending Bond Proceeds Balance 42,433,715 $ 32,720,604 $ 25,926,479 $ 14,741,845 $ - $ - $ 40,613 $ - $ - $ - $ - $ - $ - $ - $ - $ Days of Working Cash (unrestricted) 41 88 151 153 187 176 228 209 191 180 187 171 160 156 158 BOND ASSUMPTIONS Potential Bonds 2012&13 2014 2017 2020 2023 2026 2029 Rate 2.26% 4.1% 3.5% 3.5% 3.5% 3.5% 3.5% Years 20 30 20 20 20 20 20 PAR 0 13,824,426 0 0 0 0 0 DSRF (surety) 1% 1% 1% 1% 1% 1% 1% COI 2% 2% 2% 2% 2% 2% 2% Max 19,362,493 9,245,928 11,242,889 Notes DEQ ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A2: Graphical Representation of Multi-Year Budget - 0.50 1.00 1.50 2.00 2.50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Coverage Ratio (2010-2022) Coverage Target: Coverage - 50 100 150 200 250 300 [PHONE REDACTED] 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Days of Cash on Hand Days of Cash on Hand (2010 - 2022) Days of Cash on Hand 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate per ERC $42.20 $42.20 $43.35 $46.73 $50.23 $53.25 $54.58 $55.94 $57.34 $58.77 $60.24 $61.75 $63.29 Rate Increase % -6.78% 20.11% 1.70% 7.80% 7.50% 6.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% -10% 0% 5% 10% 15% 20% 25% $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Rate Per ERC Rate Per ERC (2010-2022) Rate per ERC Rate … - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Summary (2010-2022) Total Expenditures Total Revenue Total Cash Balance $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue Summary (2010-2022) Gain on Sale of assets Interest income Miscellaneous Income Accounting Charges Special District Fees Charges for Services $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Expenditure Summary (2010-2022) TOTAL CAPITAL PROJECTS TOTAL DEBT SERVICE Other operating expenses Charges for services Supplies Personal Services $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 202 1 202 2 Cash Balance Summary (2010-2022) Bond Proceeds Unrestricted ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A3: Revenue Recapture - Base Rate vs. Tier Structure Structure - Without Secondary Base Rate Breakdown 2011 Estimated Need per ERC 46.73 $ Size ERC Base Rate Connections Base Rate Revenue Base Rate 37.5% 5/8 & 3/4 1.00 17.50 $ 22,352 4,693,920.00 $ Tiers 62.5% 1 1.66 28.96 $ 1,574 547,043.70 $ 1 1/2 2.31 40.43 $ 293 142,134.30 $ Base Rate 17.50 $ 2 3.71 64.87 $ 518 403,257.30 $ Tiers 29.23 $ GALLONS 3 10.35 181.08 $ 111 241,201.65 $ Tier 1 1.50 $ - 6,000 4 13.02 227.80 $ 73 199,553.97 $ Tier 2 2.30 $ 6,001 42,000 6 28.97 506.98 $ 25 152,092.50 $ Tier 3 2.65 $ 42,001 84,000 8 53.09 929.11 $ 7 78,045.04 $ Tier 4 3.00 $ 84,001 + Base Rate Revenue 6,457,248.46 $ Commercial 2.30 $ Commercial All Tier Revenue 8,473,617.27 $ Total 14,930,865.73 $ Structure - With Secondary Need per ERC 46.73 $ Base Rate 37.5% Tiers 62.5% Base Rate 17.50 $ Tiers 29.23 $ GALLONS Tier 1 1.50 $ - 6,000 Tier 2 2.30 $ 6,001 12,000 Tier 3 3.00 $ 12,001 + Commercial 2.30 $ Commercial All ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A4: Base Rate & Tier - Future Base Rate Meter Size 2013 2014 2015 2016 2017 5/8 & 3/4" 17.50 $ 18.38 $ 19.02 $ 19.02 $ 19.02 $ 1" 28.96 $ 30.41 $ 31.47 $ 31.47 $ 31.47 $ 1 1/2" 40.43 $ 42.45 $ 43.93 $ 43.93 $ 43.93 $ 2" 64.87 $ 68.12 $ 70.50 $ 70.50 $ 70.50 $ 3" 181.08 $ 190.14 $ 196.79 $ 196.79 $ 196.79 $ 4" 227.80 $ 239.19 $ 247.56 $ 247.56 $ 247.56 $ 6" 506.98 $ 532.32 $ 550.96 $ 550.96 $ 550.96 $ 8" 929.11 $ 975.56 $ 1,009.71 $ 1,009.71 $ 1,009.71 $ * 2014 - 2017 this rate is before the CPI increase Structure - Without Secondary Residential Tiers 2013 2014 2015 2016 2017 Tier 1 - 6,000 1.50 $ 1.58 $ 1.63 $ 1.63 $ 1.63 $ Tier 2 6,001 42,000 2.30 $ 2.42 $ 2.50 $ 2.50 $ 2.50 $ Tier 3 42,001 84,000 2.65 $ 2.78 $ 2.88 $ 2.88 $ 2.88 $ Tier 4 84,001 + 3.00 $ 3.15 $ 3.26 $ 3.26 $ 3.26 $ Commercial Commercial All 2.30 $ 2.42 $ 2.50 $ 2.50 $ 2.50 $ * 2014 - 2017 this rate is before the CPI increase Structure - With Secondary Residential Tiers 2013 2014 2015 2016 2017 Tier 1 - 6,000 1.50 $ 1.58 $ 1.63 $ 1.63 $ 1.63 $ Tier 2 6,001 12,000 2.30 $ 2.42 $ 2.50 $ 2.50 $ 2.50 $ Tier 3 12,001 + 3.00 $ 3.15 $ 3.26 $ 3.26 $ 3.26 $ Commercial Commercial All 2.30 $ 2.42 $ 2.50 $ 2.50 $ 2.50 $ * 2014 - 2017 this rate is before the CPI increase ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A5: Rate Comparisons Estimated Bill - FY 2012 Rate Structure Estimated Bill - Proposed FY 2013 Rate Structure Estimated Bill - Proposed FY 2017 Rate Structure With Secondary Without Secondary Commercial Meter Sizes With Secondary Without Secondary Commercial Meter Size With Secondary Without Secondary Commercial Meter Size USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" USAGE 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" 6,000 21.72 $ 30.97 $ 23.85 $ 33.10 $ 72.34 $ 129.81 $ 207.57 $ 402.61 $ 633.15 $ 6,000 26.50 $ 37.96 $ 26.50 $ 37.96 $ 78.67 $ 194.88 $ 241.60 $ 520.78 $ 942.91 $ 6,000 - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,000 16.06 $ 25.31 $ 16.32 $ 25.57 $ 63.75 $ 118.66 $ 196.42 $ 391.46 $ 622.00 $ 1,000 19.00 $ 30.46 $ 19.00 $ 30.46 $ 67.17 $ 183.38 $ 230.10 $ 509.28 $ 931.41 $ 1,000 22.75 $ 36.47 $ 22.75 $ 36.47 $ 80.42 $ 219.54 $ 275.47 $ 609.70 $ 1,115.07 $ 2,000 17.14 $ 26.39 $ 17.66 $ 26.91 $ 65.44 $ 120.89 $ 198.65 $ 393.69 $ 624.23 $ 2,000 20.50 $ 31.96 $ 20.50 $ 31.96 $ 69.47 $ 185.68 $ 232.40 $ 511.58 $ 933.71 $ 2,000 24.54 $ 38.27 $ 24.54 $ 38.27 $ 83.17 $ 222.30 $ 278.23 $ 612.45 $ 1,117.82 $ 3,000 18.22 $ 27.47 $ 19.00 $ 28.25 $ 67.13 $ 123.12 $ 200.88 $ 395.92 $ 626.46 $ 3,000 22.00 $ 33.46 $ 22.00 $ 33.46 $ 71.77 $ 187.98 $ 234.70 $ 513.88 $ 936.01 $ 3,000 26.34 $ 40.06 $ 26.34 $ 40.06 $ 85.93 $ 225.05 $ 280.98 $ 615.20 $ 1,120.58 $ 4,000 19.30 $ 28.55 $ 20.34 $ 29.59 $ 68.82 $ 125.35 $ 203.11 $ 398.15 $ 628.69 $ 4,000 23.50 $ 34.96 $ 23.50 $ 34.96 $ 74.07 $ 190.28 $ 237.00 $ 516.18 $ 938.31 $ 4,000 28.13 $ 41.86 $ 28.13 $ 41.86 $ 88.68 $ 227.80 $ 283.73 $ 617.96 $ 1,123.33 $ 5,000 20.38 $ 29.63 $ 21.68 $ 30.93 $ 70.51 $ 127.58 $ 205.34 $ 400.38 $ 630.92 $ 5,000 25.00 $ 36.46 $ 25.00 $ 36.46 $ 76.37 $ 192.58 $ 239.30 $ 518.48 $ 940.61 $ 5,000 29.93 $ 43.65 $ 29.93 $ 43.65 $ 91.43 $ 230.56 $ 286.49 $ 620.71 $ 1,126.08 $ 6,000 21.72 $ 30.97 $ 23.85 $ 33.10 $ 72.34 $ 129.81 $ 207.57 $ 402.61 $ 633.15 $ 6,000 26.50 $ 37.96 $ 26.50 $ 37.96 $ 78.67 $ 194.88 $ 241.60 $ 520.78 $ 942.91 $ 6,000 31.73 $ 45.45 $ 31.73 $ 45.45 $ 94.19 $ 233.31 $ 289.24 $ 623.47 $ 1,128.84 $ 7,000 23.06 $ 32.31 $ 26.02 $ 35.27 $ 74.17 $ 132.04 $ 209.80 $ 404.84 $ 635.38 $ 7,000 28.80 $ 40.26 $ 28.80 $ 40.26 $ 80.97 $ 197.18 $ 243.90 $ 523.08 $ 945.21 $ 7,000 34.48 $ 48.20 $ 34.48 $ 48.20 $ 96.94 $ 236.06 $ 292.00 $ 626.22 $ 1,131.59 $ 8,000 24.40 $ 33.65 $ 28.19 $ 37.44 $ 76.00 $ 134.27 $ 212.03 $ 407.07 $ 637.61 $ 8,000 31.10 $ 42.56 $ 31.10 $ 42.56 $ 83.27 $ 199.48 $ 246.20 $ 525.38 $ 947.51 $ 8,000 37.23 $ 50.96 $ 37.23 $ 50.96 $ 99.69 $ 238.82 $ 294.75 $ 628.97 $ 1,134.34 $ 9,000 25.74 $ 34.99 $ 30.36 $ 39.61 $ 77.83 $ 136.50 $ 214.26 $ 409.30 $ 639.84 $ 9,000 33.40 $ 44.86 $ 33.40 $ 44.86 $ 85.57 $ 201.78 $ 248.50 $ 527.68 $ 949.81 $ 9,000 39.99 $ 53.71 $ 39.99 $ 53.71 $ 102.45 $ 241.57 $ 297.50 $ 631.73 $ 1,137.10 $ 10,000 27.08 $ 36.33 $ 32.53 $ 41.78 $ 79.66 $ 138.73 $ 216.49 $ 411.53 $ 642.07 $ 10,000 35.70 $ 47.16 $ 35.70 $ 47.16 $ 87.87 $ 204.08 $ 250.80 $ 529.98 $ 952.11 $ 10,000 42.74 $ 56.46 $ 42.74 $ 56.46 $ 105.20 $ 244.32 $ 300.26 $ 634.48 $ 1,139.85 $ 11,000 29.79 $ 39.04 $ 34.90 $ 44.15 $ 81.75 $ 140.96 $ 218.72 $ 413.76 $ 644.30 $ 11,000 38.00 $ 49.46 $ 38.00 $ 49.46 $ 90.17 $ 206.38 $ 253.10 $ 532.28 $ 954.41 $ 11,000 45.49 $ 59.22 $ 45.49 $ 59.22 $ 107.96 $ 247.08 $ 303.01 $ 637.23 $ 1,142.60 $ 12,000 32.50 $ 41.75 $ 37.27 $ 46.52 $ 83.84 $ 143.19 $ 220.95 $ 415.99 $ 646.53 $ 12,000 40.30 $ 51.76 $ 40.30 $ 51.76 $ 92.47 $ 208.68 $ 255.40 $ 534.58 $ 956.71 $ 12,000 48.25 $ 61.97 $ 48.25 $ 61.97 $ 110.71 $ 249.83 $ 305.76 $ 639.99 $ 1,145.36 $ 13,000 35.21 $ 44.46 $ 39.64 $ 48.89 $ 85.93 $ 145.42 $ 223.18 $ 418.22 $ 648.76 $ 13,000 43.30 $ 54.76 $ 42.60 $ 54.06 $ 94.77 $ 210.98 $ 257.70 $ 536.88 $ 959.01 $ 13,000 51.84 $ 65.56 $ 51.00 $ 64.72 $ 113.46 $ 252.59 $ 308.52 $ 642.74 $ 1,148.11 $ 14,000 37.92 $ 47.17 $ 42.01 $ 51.26 $ 88.02 $ 147.65 $ 225.41 $ 420.45 $ 650.99 $ 14,000 46.30 $ 57.76 $ 44.90 $ 56.36 $ 97.07 $ 213.28 $ 260.00 $ 539.18 $ 961.31 $ 14,000 55.43 $ 69.15 $ 53.75 $ 67.48 $ 116.22 $ 255.34 $ 311.27 $ 645.49 $ 1,150.87 $ 15,000 40.63 $ 49.88 $ 44.38 $ 53.63 $ 90.11 $ 149.88 $ 227.64 $ 422.68 $ 653.22 $ 15,000 49.30 $ 60.76 $ 47.20 $ 58.66 $ 99.37 $ 215.58 $ 262.30 $ 541.48 $ 963.61 $ 15,000 59.02 $ 72.74 $ 56.51 $ 70.23 $ 118.97 $ 258.09 $ 314.02 $ 648.25 $ 1,153.62 $ 20,000 54.18 $ 63.43 $ 56.23 $ 65.48 $ 100.56 $ 161.03 $ 238.79 $ 433.83 $ 664.37 $ 20,000 64.30 $ 75.76 $ 58.70 $ 70.16 $ 110.87 $ 227.08 $ 273.80 $ 552.98 $ 975.11 $ 20,000 76.98 $ 90.70 $ 70.27 $ 84.00 $ 132.74 $ 271.86 $ 327.79 $ 662.01 $ 1,167.39 $ 25,000 68.13 $ 76.98 $ 68.08 $ 77.33 $ 111.01 $ 172.18 $ 249.94 $ 444.98 $ 675.52 $ 25,000 79.30 $ 90.76 $ 70.20 $ 81.66 $ 122.37 $ 238.58 $ 285.30 $ 564.48 $ 986.61 $ 25,000 94.94 $ 108.66 $ 84.04 $ 97.77 $ 146.50 $ 285.63 $ 341.56 $ 675.78 $ 1,181.15 $ 30,000 82.08 $ 90.53 $ 80.23 $ 89.18 $ 122.16 $ 183.33 $ 261.09 $ 456.13 $ 686.67 $ 30,000 94.30 $ 105.76 $ 81.70 $ 93.16 $ 133.87 $ 250.08 $ 296.80 $ 575.98 $ 998.11 $ 30,000 112.89 $ 126.62 $ 97.81 $ 111.53 $ 160.27 $ 299.40 $ 355.33 $ 689.55 $ 1,194.92 $ 35,000 96.03 $ 104.08 $ 92.38 $ 101.33 $ 133.31 $ 194.48 $ 272.24 $ 467.28 $ 697.82 $ 35,000 109.30 $ 120.76 $ 93.20 $ 104.66 $ 145.37 $ 261.58 $ 308.30 $ 587.48 $ 1,009.61 $ 35,000 130.85 $ 144.58 $ 111.58 $ 125.30 $ 174.04 $ 313.16 $ 369.09 $ 703.32 $ 1,208.69 $ 40,000 109.98 $ 117.63 $ 104.53 $ 113.48 $ 144.46 $ 205.63 $ 283.39 $ 478.43 $ 708.97 $ 40,000 124.30 $ 135.76 $ 104.70 $ 116.16 $ 156.87 $ 273.08 $ 319.80 $ 598.98 $ 1,021.11 $ 40,000 148.81 $ 162.53 $ 125.35 $ 139.07 $ 187.81 $ 326.93 $ 382.86 $ 717.09 $ 1,222.46 $ 45,000 123.93 $ 131.58 $ 116.68 $ 125.63 $ 155.61 $ 216.78 $ 294.54 $ 489.58 $ 720.12 $ 45,000 139.30 $ 150.76 $ 117.25 $ 128.71 $ 168.37 $ 284.58 $ 331.30 $ 610.48 $ 1,032.61 $ 45,000 166.77 $ 180.49 $ 140.37 $ 154.09 $ 201.58 $ 340.70 $ 396.63 $ 730.85 $ 1,236.22 $ 50,000 137.88 $ 145.53 $ 132.23 $ 137.78 $ 166.76 $ 227.93 $ 305.69 $ 500.73 $ 731.27 $ 50,000 154.30 $ 165.76 $ 130.50 $ 141.96 $ 179.87 $ 296.08 $ 342.80 $ 621.98 $ 1,044.11 $ 50,000 184.73 $ 198.45 $ 156.23 $ 169.96 $ 215.34 $ 354.47 $ 410.40 $ 744.62 $ 1,249.99 $ 100,000 277.38 $ 285.03 $ 290.13 $ 286.48 $ 288.26 $ 339.43 $ 417.19 $ 612.23 $ 842.77 $ 100,000 304.30 $ 315.76 $ 268.60 $ 280.06 $ 294.87 $ 411.08 $ 457.80 $ 736.98 $ 1,159.11 $ 100,000 364.30 $ 378.03 $ 321.56 $ 335.29 $ 353.02 $ 492.14 $ 548.07 $ 882.30 $ 1,387.67 $ 200,000 556.38 $ 564.03 $ 609.13 $ 605.48 $ 531.26 $ 562.43 $ 640.19 $ 835.23 $ 1,065.77 $ 200,000 604.30 $ 615.76 $ 568.60 $ 580.06 $ 524.87 $ 641.08 $ 687.80 $ 966.98 $ 1,389.11 $ 200,000 723.46 $ 737.18 $ 680.72 $ 694.44 $ 628.37 $ 767.50 $ 823.43 $ 1,157.65 $ 1,663.02 $ 35,000,000 97,648.38 $ 97,656.03 $ 111,621.13 $ 111,617.48 $ 94,839.26 $ 78,166.43 $ 78,244.19 $ 78,439.23 $ 78,669.77 $ 35,000,000 105,004.30 $ 105,015.76 $ 104,968.60 $ 104,980.06 $ 80,564.87 $ 80,681.08 $ 80,727.80 $ 81,006.98 $ 81,429.11 $ 35,000,000 125,709.80 $ 125,723.53 $ 125,667.06 $ 125,680.79 $ 96,451.24 $ 96,590.36 $ 96,646.29 $ 96,980.51 $ 97,485.88 $ Estimated Rate Increase 19.7% Percent Rate Increase: Current Rate Structure vs 2013 Proposed Rate Increase With Secondary Without Secondary Commercial Meter Size Note: Highlighted cells represent the average usage for each category. 5/8" or 3/4" 1" 5/8" or 3/4" 1" 2" 3" 4" 6" 8" 1,000 18% 20% 16% 19% 5% 55% 17% 30% 50% 2,000 20% 21% 16% 19% 6% 54% 17% 30% 50% 3,000 21% 22% 16% 18% 7% 53% 17% 30% 49% 4,000 22% 22% 16% 18% 8% 52% 17% 30% 49% 5,000 23% 23% 15% 18% 8% 51% 17% 29% 49% 6,000 22% 23% 11% 15% 9% 50% 16% 29% 49% 7,000 25% 25% 11% 14% 9% 49% 16% 29% 49% 8,000 27% 26% 10% 14% 10% 49% 16% 29% 49% 9,000 30% 28% 10% 13% 10% 48% 16% 29% 48% 10,000 32% 30% 10% 13% 10% 47% 16% 29% 48% 11,000 28% 27% 9% 12% 10% 46% 16% 29% 48% 12,000 24% 24% 8% 11% 10% 46% 16% 29% 48% 13,000 23% 23% 7% 11% 10% 45% 15% 28% 48% 14,000 22% 22% 7% 10% 10% 44% 15% 28% 48% 15,000 21% 22% 6% 9% 10% 44% 15% 28% 48% 20,000 19% 19% 4% 7% 10% 41% 15% 27% 47% 25,000 16% 18% 3% 6% 10% 39% 14% 27% 46% 30,000 15% 17% 2% 4% 10% 36% 14% 26% 45% 35,000 14% 16% 1% 3% 9% 35% 13% 26% 45% 40,000 13% 15% 0% 2% 9% 33% 13% 25% 44% 45,000 12% 15% 0% 2% 8% 31% 12% 25% 43% 50,000 12% 14% 3% 8% 30% 12% 24% 43% 100,000 10% 11% 2% 21% 10% 20% 38% 200,000 9% 9% 14% 7% 16% 30% 35,000,000 8% 8% -15% 3% 3% 3% 4% $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 Gallons Used Estimated Residential Bill - 2013 Rates With Secondary 5/8" or 3/4" With Secondary 1" ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A6: Current Rate and Charge Based Upon 6,000 Gal/Month USAGE 6,000 Total 23.85 $ Total 21.72 $ 3/4 & 5/8 Without Secondary Usage Base 14.98 $ 3/4 & 5/8 With Secondary Usage Base 14.98 $ Per ERC Charges 6,000 Tier 8.87 $ Per ERC Charges 6,000 Tier 6.74 $ Base Rate 14.98 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 14.98 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 1.34 $ 0 5,000 5,000 5,000 1,000 6.70 $ Tier 1 1.08 $ 0 5,000 5,000 5,000 1,000 5.40 $ Tier 2 2.17 $ 5,001 10,000 5,000 1,000 - 2.17 $ Tier 2 1.34 $ 5,001 10,000 5,000 1,000 - 1.34 $ Tier 3 2.37 $ 10,001 25,000 15,000 - - - $ Tier 3 2.71 $ 10,001 20,000 10,000 - - - $ Tier 4 2.43 $ 25,001 45,000 20,000 - - - $ Tier 4 2.79 $ 20,001 100,000,000 99,980,000 - - - $ Tier 5 3.11 $ 45,001 70,000 25,000 - - - $ Total 6,000 Total 6.74 $ Tier 6 3.19 $ 70,001 100,000,000 99,930,000 - - - $ Total 6,000 Total 8.87 $ Total 33.10 $ Total 30.97 $ 1" Without Secondary Usage Base 24.23 $ 1" With Secondary Usage Base 24.23 $ Per ERC Charges 6,000 Tier 8.87 $ Per ERC Charges 6,000 Tier 6.74 $ Base Rate 24.23 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 24.23 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 1.34 $ 0 5,000 5,000 5,000 1,000 6.70 $ Tier 1 1.08 $ 0 5,000 5,000 5,000 1,000 5.40 $ Tier 2 2.17 $ 5,001 10,000 5,000 1,000 - 2.17 $ Tier 2 1.34 $ 5,001 10,000 5,000 1,000 - 1.34 $ Tier 3 2.37 $ 10,001 30,000 20,000 - - - $ Tier 3 2.71 $ 10,001 40,000 30,000 - - - $ Tier 4 2.43 $ 30,001 60,000 30,000 - - - $ Tier 4 2.79 $ 40,001 100,000,000 99,960,000 - - - $ Tier 5 3.11 $ 60,001 100,000 40,000 - - - $ Total 6,000 Total 6.74 $ Tier 6 3.19 $ 100,001 100,000,000 99,900,000 - - - $ Total 6,000 Total 8.87 $ Total 72.34 $ Total 129.81 $ 2" Without Secondary Usage Base 62.06 $ 3" Usage Base 116.43 $ Per ERC Charges 6,000 Tier 10.28 $ Per ERC Charges 6,000 Tier 13.38 $ Base Rate 62.06 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 116.43 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 1.69 $ 0 5,000 5,000 5,000 1,000 8.45 $ Tier 1 2.23 $ 0 100,000,000 100,000,000 6,000 - 13.38 $ Tier 2 1.83 $ 5,001 10,000 5,000 1,000 - 1.83 $ Tier 3 2.09 $ 10,001 25,000 15,000 - - - $ Total 207.57 $ Tier 4 2.23 $ 25,001 50,000 25,000 - - - $ 4" Usage Base 194.19 $ Tier 5 2.43 $ 50,001 200,000 150,000 - - - $ Per ERC Charges 6,000 Tier 13.38 $ Tier 6 2.71 $ 200,001 100,000,000 99,800,000 - - - $ Base Rate 194.19 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Total 6,000 Total 10.28 $ Tier 1 2.23 $ 0 100,000,000 100,000,000 6,000 - 13.38 $ Total 402.61 $ Total 633.15 $ 6" Usage Base 389.23 $ 8" Usage Base 619.77 $ Per ERC Charges 6,000 Tier 13.38 $ Per ERC Charges 6,000 Tier 13.38 $ Base Rate 389.23 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 619.77 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 2.23 $ 0 100,000,000 100,000,000 6,000 - 13.38 $ Tier 1 2.23 $ 0 100,000,000 100,000,000 6,000 - 13.38 $ ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A7: Proposed 2013 Rate and Charge Based Upon 6,000 Gal/Month USAGE 6,000 Total 26.50 $ Total 26.50 $ 3/4 & 5/8 Without Secondary Usage Base 17.50 $ 3/4 & 5/8 With Secondary Usage Base 17.50 $ Per ERC Charges 6,000 Tier 9.00 $ Per ERC Charges 6,000 Tier 9.00 $ Base Rate 17.50 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 17.50 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 1.50 $ - 6,000 6,000 6,000 - 9.00 $ Tier 1 1.50 $ - 6,000 6,000 6,000 - 9.00 $ Tier 2 2.30 $ 6,001 42,000 36,000 - - - $ Tier 2 2.30 $ 6,001 12,000 6,000 - - - $ Tier 3 2.65 $ 42,001 84,000 42,000 - - - $ Tier 3 3.00 $ 12,001 84,000 72,000 - - - $ Tier 4 3.00 $ 84,001 100,000,000 99,916,000 - - - $ Tier 4 3.00 $ 84,001 100,000,000 99,916,000 - - - $ Total 6,000 Total 9.00 $ Total 6,000 Total 9.00 $ Total 37.96 $ Total 37.96 $ 1" Without Secondary Usage Base 28.96 $ 1" With Secondary Usage Base 28.96 $ Per ERC Charges 6,000 Tier 9.00 $ Per ERC Charges 6,000 Tier 9.00 $ Base Rate 28.96 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 28.96 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 1.50 $ - 6,000 6,000 6,000 - 9.00 $ Tier 1 1.50 $ - 6,000 6,000 6,000 - 9.00 $ Tier 2 2.30 $ 6,001 42,000 36,000 - - - $ Tier 2 2.30 $ 6,001 12,000 6,000 - - - $ Tier 3 2.65 $ 42,001 84,000 42,000 - - - $ Tier 3 3.00 $ 12,001 84,000 72,000 - - - $ Tier 4 3.00 $ 84,001 100,000,000 99,916,000 - - - $ Tier 4 3.00 $ 84,001 100,000,000 99,916,000 - - - $ Total 6,000 Total 9.00 $ Total 6,000 Total 9.00 $ Total 54.23 $ Total 241.60 $ 1 1/2" Usage Base 40.43 $ 4" Usage Base 227.80 $ Per ERC Charges 6,000 Tier 13.80 $ Per ERC Charges 6,000 Tier 13.80 $ Base Rate 40.43 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 227.80 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 2.30 $ 0 100,000,000 100,000,000 6,000 - 13.80 $ Tier 1 2.30 $ 0 100,000,000 100,000,000 6,000 - 13.80 $ Total 6,000 Total 13.80 $ Total 6,000 Total 13.80 $ Total 78.67 $ Total 520.78 $ 2" Usage Base 64.87 $ 6" Usage Base 506.98 $ Per ERC Charges 6,000 Tier 13.80 $ Per ERC Charges 6,000 Tier 13.80 $ Base Rate 64.87 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 506.98 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 2.30 $ 0 100,000,000 100,000,000 6,000 - 13.80 $ Tier 1 2.30 $ 0 100,000,000 100,000,000 6,000 - 13.80 $ Total 6,000 Total 13.80 $ Total 6,000 Total 13.80 $ Total 194.88 $ Total 942.91 $ 3" Usage Base 181.08 $ 8" Usage Base 929.11 $ Per ERC Charges 6,000 Tier 13.80 $ Per ERC Charges 6,000 Tier 13.80 $ Base Rate 181.08 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Base Rate 929.11 $ Gallons Allowed/Tier Use in Tier Remaining Revenue Tier 1 2.30 $ 0 100,000,000 100,000,000 6,000 - 13.80 $ Tier 1 2.30 $ 0 100,000,000 100,000,000 6,000 - 13.80 $ Total 6,000 Total 13.80 $ Total 6,000 Total 13.80 $ ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A8: Usage Data and Revenue Check Residential 2011 USAGE PER TIER January February March April May June July August September October November December Total - 6,000 86,251,500 82,615,000 87,430,300 86,653,000 82,542,900 90,098,300 107,119,700 106,375,700 107,353,800 95,932,300 86,515,800 89,616,200 1,108,504,500 6,001 42,000 35,511,300 29,452,900 33,537,500 33,863,100 28,412,900 53,488,700 155,755,100 179,685,100 161,546,900 76,498,900 36,109,700 37,827,100 861,689,200 42,001 84,000 5,130,800 4,678,000 4,507,300 4,634,200 4,052,600 6,544,500 26,616,500 37,793,300 36,514,000 14,554,500 5,071,700 5,129,000 155,226,400 84,001 100,000,000 422,300 417,100 396,500 295,500 373,900 419,900 2,040,400 2,815,500 2,701,200 1,203,600 386,400 372,900 11,845,200 Total 127,315,900 117,163,000 125,871,600 125,445,800 115,382,300 150,551,400 291,531,700 326,669,600 308,115,900 188,189,300 128,083,600 132,945,200 2,137,265,300 Commercial Usage 126,812,800 108,369,400 120,371,900 127,984,500 136,871,000 145,149,000 281,154,500 301,785,100 333,510,200 222,285,200 137,813,000 132,405,000 2,174,511,600 PERCENT OF USAGE PEAK MONTH Average - 6,000 34% 37% 36% 34% 33% 30% 19% 17% 17% 23% 33% 34% 29% 6,001 42,000 14% 13% 14% 13% 11% 18% 27% 29% 25% 19% 14% 14% 18% 42,001 84,000 2% 2% 2% 2% 2% 2% 5% 6% 6% 4% 2% 2% 3% 84,001 100,000,000 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Total 50% 52% 51% 49% 46% 51% 51% 52% 48% 46% 48% 50% 50% 50% 48% 49% 51% 54% 49% 49% 48% 52% 54% 52% 50% 50% Residential SUMMER REVENUE GENERATION - 6,000 123,814 $ 135,147 $ 160,680 $ 159,564 $ 161,031 $ 143,898 $ 884,134 $ 6,001 42,000 65,350 $ 123,024 $ 358,237 $ 413,276 $ 371,558 $ 175,947 $ 1,507,391 $ 42,001 84,000 10,739 $ 17,343 $ 70,534 $ 100,152 $ 96,762 $ 38,569 $ 334,100 $ 84,001 100,000,000 1,122 $ 1,260 $ 6,121 $ 8,447 $ 8,104 $ 3,611 $ 28,664 $ Total - $ - $ - $ - $ 201,025 $ 276,774 $ 595,571 $ 681,438 $ 637,454 $ 362,026 $ - $ - $ 2,754,289 $ Residential WINTER REVENUE GENERATION - 6,000 129,377 $ 123,923 $ 131,145 $ 129,980 $ 129,774 $ 134,424 $ 778,623 $ 6,001 12,000 81,676 $ 67,742 $ 77,136 $ 77,885 $ 83,052 $ 87,002 $ 474,494 $ 12,001 + 16,659 $ 15,285 $ 14,711 $ 14,789 $ 16,374 $ 16,506 $ 94,325 $ Total 227,713 $ 206,949 $ 222,993 $ 222,654 $ - $ - $ - $ - $ - $ - $ 229,200 $ 237,932 $ 1,347,441 $ Commercial REVENUE GENERATION 291,669.44 $ 249,249.62 $ 276,855.37 $ 294,364.35 $ 314,803.30 $ 333,842.70 $ 646,655.35 $ 694,105.73 $ 767,073.46 $ 511,255.96 $ 316,969.90 $ 304,531.50 $ 5,001,376.68 $ TOTAL REVENUE GENERATION FROM USAGE CHARGES (RESIDENTIAL & COMMERCIAL) - 6,000 129,377 $ 123,923 $ 131,145 $ 129,980 $ 123,814 $ 135,147 $ 160,680 $ 159,564 $ 161,031 $ 143,898 $ 129,774 $ 134,424 $ 1,662,757 $ 6,001 42,000 81,676 $ 67,742 $ 77,136 $ 77,885 $ 65,350 $ 123,024 $ 358,237 $ 413,276 $ 371,558 $ 175,947 $ 83,052 $ 87,002 $ 1,981,885 $ 42,001 84,000 16,659 $ 15,285 $ 14,711 $ 14,789 $ 10,739 $ 17,343 $ 70,534 $ 100,152 $ 96,762 $ 38,569 $ 16,374 $ 16,506 $ 428,425 $ 84,001 100,000,000 - $ - $ - $ - $ 1,122 $ 1,260 $ 6,121 $ 8,447 $ 8,104 $ 3,611 $ - $ - $ 28,664 $ COMMERCIAL 291,669 $ 249,250 $ 276,855 $ 294,364 $ 314,803 $ 333,843 $ 646,655 $ 694,106 $ 767,073 $ 511,256 $ 316,970 $ 304,532 $ 5,001,377 $ Total 519,382 $ 456,199 $ 499,848 $ 517,018 $ 515,828 $ 610,617 $ 1,242,227 $ 1,375,544 $ 1,404,528 $ 873,282 $ 546,170 $ 542,464 $ 9,103,107 $ ---PAGE BREAK--- OGDEN CITY, UTAH Water Utility Fund Comprehensive Financial Sustainability Plan Treatment Plant 2014 Pipe Replacement - Adjusted Forward Table A9: Fixed vs. Variable Costs - BUDGETED FISCAL YEAR 2012 EXPENDITURES % Fixed % Variable Fixed Variable Personal Services (3,089,880) $ (343,320) $ (3,433,200) $ Salaries and wages 90.0% 10.0% (2,062,598) (229,178) (2,291,775) Benefits 90.0% 10.0% (1,027,283) (114,143) (1,141,425) Supplies (654,555) (524,745) (1,179,300) Office supplies 90.0% 10.0% (176,963) (19,663) (196,625) Operating supplies 30.0% 70.0% (170,618) (398,108) (568,725) Repair and Maintenance supplies 50.0% 50.0% (81,975) (81,975) (163,950) Meter Replacement 90.0% 10.0% (225,000) (25,000) (250,000) Charges for services (1,408,900) (494,800) (1,903,700) Public utility services 5.0% 95.0% (22,143) (420,708) (442,850) Travel and education 90.0% 10.0% (18,900) (2,100) (21,000) Contracted agreements 95.0% 5.0% (1,367,858) (71,993) (1,439,850) Other operating expenses (4,460,538) (758,588) (5,219,126) Rental charges 100.0% 0.0% (121,675) - (121,675) Fiscal charges 100.0% 0.0% (2,431,876) - (2,431,876) Depreciation/Amortization - - Data processing and computer equ 50.0% 50.0% (211,175) (211,175) (422,350) Maintenance and repair 50.0% 50.0% (347,975) (347,975) (695,950) Vehicle operating expenses 50.0% 50.0% (198,500) (198,500) (397,000) Water purchase 100.0% 0.0% (1,148,400) - (1,148,400) Miscellaneous 50.0% 50.0% (938) (938) (1,875) TOTAL OPERATING EXPENDITURES (9,613,873) $ (2,121,453) $ (11,735,326) $ NON-OPERATING REVENUES (EXPENSES) TOTAL NON-OPERATING REVENUES (EXPENSES) 85,000 $ TOTAL NET REVENUES AVAILABLE FOR DS 4,489,375 $ DEBT SERVICE Series 2008 Water/Sewer Revenue 100.0% 0.0% (2,691,957) - (2,691,957) Series 2009 Water/Sewer Revenue Ref 100.0% 0.0% (337,846) - (337,846) Series 1999A Water/Sewer Revenue & Re 100.0% 0.0% - - Proposed Series 2012 Water Rev (DEQ) 100.0% 0.0% - - Proposed Series 2013 Water Rev (DEQ) 100.0% 0.0% - - Proposed Series 2014 Water Rev Bond 100.0% 0.0% - - TOTAL DEBT SERVICE (3,029,803) $ - $ (3,029,803) $ Total (12,643,676) (2,121,453) (14,765,129) Percentage of Total 86% 14% 100% ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 APPENDIX B: SANITARY SEWER TABLES ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B1: Multi-Year Cash Flow Projections Rate Increase 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% CPI Rate Increase 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Total Increase 17.1% 15.7% 15.7% -1.2% 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Total Charge/ERC/Month 19.17 $ 22.45 $ 25.97 $ 30.05 $ 29.69 $ 30.52 $ 31.29 $ 32.07 $ 32.87 $ 33.69 $ 34.53 $ 35.40 $ 36.28 $ 37.19 $ 38.12 $ City Charge/ERC/Month 15.16 $ 16.24 $ 17.58 $ 19.91 $ 17.21 $ 15.05 $ 15.51 $ 15.98 $ 16.46 $ 16.95 $ 17.46 $ 17.99 $ 18.53 $ 19.08 $ 19.65 $ CWS Charge/ERC/Month 4.01 $ 6 8.40 $ 10.14 $ 12.48 $ 15.47 $ 15.78 $ 16.09 $ 16.41 $ 16.74 $ 17.07 $ 17.41 $ 17.75 $ 18.10 $ 18.46 $ Beginning ERCs 25,895 25,902 26,037 25,998 26,206 26,416 26,627 26,840 27,055 27,271 27,489 27,709 27,931 28,154 28,380 New ERCs 7 135 (39) 208 210 211 213 215 216 218 220 222 223 225 227 Ending ERCs 25,902 26,037 25,998 26,206 26,416 26,627 26,840 27,055 27,271 27,489 27,709 27,931 28,154 28,380 28,607 Connection Growth 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% O&M Inflation 19.91% 10.00% 23.27% 2.80% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Interest Earnings 75% of Fund Balance 0.75% 0.75% 0.75% 0.85% 0.95% 1.00% 1.50% 1.50% 1.50% 1.50% 1.50% - - - - - - - - BUDGETED PROJECTED FISCAL YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 REVENUES Charges for Services 5,958,518 $ 7,015,006 $ 8,103,143 $ 9,449,467 $ 9,411,700 $ 9,752,629 $ 10,076,417 $ 10,410,954 $ 10,756,597 $ 11,113,716 $ 11,482,692 $ 11,863,917 $ 12,257,799 $ 12,664,758 $ 13,085,228 $ Miscellaneous Income 4,352 78,539 7,028 2,124 18,000 18,144 18,289 18,435 18,583 18,732 18,881 19,033 19,185 19,338 19,493 - - - - - - - - - - - TOTAL OPERATING REVENUES 5,962,870 $ 7,093,545 $ 8,110,171 $ 9,451,591 $ 9,429,700 $ 9,770,773 $ 10,094,706 $ 10,429,389 $ 10,775,180 $ 11,132,448 $ 11,501,573 $ 11,882,950 $ 12,276,984 $ 12,684,096 $ 13,104,721 $ EXPENDITURES Personal Services (460,352) $ (443,426) $ (468,603) $ (430,640) $ (531,450) $ (546,331) $ (561,628) $ (577,353) $ (593,519) $ (610,138) $ (627,222) $ (644,784) $ (662,838) $ (681,397) $ (700,476) $ Salaries and wages (337,344) (318,344) (340,011) (295,816) (361,250) (371,365) (381,763) (392,453) (403,441) (414,738) (426,350) (438,288) (450,560) (463,176) (476,145) Benefits (123,009) (125,082) (128,592) (134,824) (170,200) (174,966) (179,865) (184,901) (190,078) (195,400) (200,871) (206,496) (212,278) (218,222) (224,332) Supplies (34,443) (43,475) (55,271) (44,499) (58,125) (59,753) (61,426) (63,145) (64,914) (66,731) (68,600) (70,520) (72,495) (74,525) (76,612) Office supplies (112) - (474) - (725) (745) (766) (788) (810) (832) (856) (880) (904) (930) (956) Operating supplies (33,167) (33,198) (47,485) (40,772) (47,400) (48,727) (50,092) (51,494) (52,936) (54,418) (55,942) (57,508) (59,118) (60,774) (62,475) Repair and Maintenance supplies (1,164) (10,277) (7,313) (3,726) (10,000) (10,280) (10,568) (10,864) (11,168) (11,481) (11,802) (12,133) (12,472) (12,821) (13,180) Charges for services (1,750,979) (2,562,450) (3,273,961) (3,898,464) (4,743,475) (5,754,269) (5,915,389) (6,081,019) (6,251,288) (6,426,324) (6,606,261) (6,791,236) (6,981,391) (7,176,870) (7,377,822) Sewer Dist Charges 25% (1,245,563) (1,940,117) (2,619,670) (3,189,825) (3,954,850) (4,943,563) (5,081,982) (5,224,278) (5,370,558) (5,520,933) (5,675,519) (5,834,434) (5,997,798) (6,165,736) (6,338,377) Public Utility Svc (3,303) (3,216) (3,216) (2,475) (4,550) (4,677) (4,808) (4,943) (5,081) (5,224) (5,370) (5,520) (5,675) (5,834) (5,997) Travel and Education (2,857) (924) (1,977) (2,535) (4,000) (4,112) (4,227) (4,345) (4,467) (4,592) (4,721) (4,853) (4,989) (5,129) (5,272) Contracted Agreements (499,256) (618,193) (649,098) (703,629) (780,075) (801,917) (824,371) (847,453) (871,182) (895,575) (920,651) (946,429) (972,929) (1,000,171) (1,028,176) Other operating expenses (1,683,615) (1,629,208) (1,812,444) (1,797,554) (2,274,250) (2,328,640) (2,402,463) (2,478,640) (2,557,245) (2,638,357) (2,722,055) (2,808,423) (2,897,547) (2,989,514) (3,084,416) Rental charges (62,302) (31,722) (31,614) (31,545) (46,425) (47,725) (49,061) (50,435) (51,847) (53,299) (54,791) (56,325) (57,902) (59,524) (61,190) Fiscal charges 17% (741,840) (1,195,059) (1,386,475) (1,425,850) (1,621,825) (1,657,947) (1,712,991) (1,769,862) (1,828,622) (1,889,332) (1,952,058) (2,016,866) (2,083,826) (2,153,009) (2,224,489) Depreciation/Amortization - - - - - - - - - - - - - - - Data processing and computer equipment (48,250) (50,300) (53,227) (50,300) (50,300) (51,708) (53,156) (54,645) (56,175) (57,748) (59,364) (61,027) (62,735) (64,492) (66,298) Maintenance and repair (715,480) (242,868) (228,380) (179,577) (399,700) (410,892) (422,397) (434,224) (446,382) (458,881) (471,729) (484,938) (498,516) (512,474) (526,824) Vehicle operating expenses (115,108) (108,638) (112,334) (110,168) (114,750) (117,963) (121,266) (124,661) (128,152) (131,740) (135,429) (139,221) (143,119) (147,126) (151,246) Miscellaneous (635) (621) (415) (114) (41,250) (42,405) (43,592) (44,813) (46,068) (47,358) (48,684) (50,047) (51,448) (52,889) (54,369) - - - - - - - - - - TOTAL OPERATING EXPENDITURES (3,929,389) $ (4,678,559) $ (5,610,281) $ (6,171,156) $ (7,607,300) $ (8,688,992) $ (8,940,905) $ (9,200,158) $ (9,466,966) $ (9,741,550) $ (10,024,137) $ (10,314,964) $ (10,614,271) $ (10,922,306) $ (11,239,326) $ NON-OPERATING REVENUES (EXPENSES) Interest income 28,648 $ 149,819 $ 70,463 $ 59,321 $ 6,743 $ 46,071 $ 46,874 $ 55,477 $ 65,232 $ 72,727 $ 116,226 $ 124,807 $ 134,484 $ 145,349 $ 157,457 $ Grants and donations - - - - - - - - - - Gain on Sale of assets - - - - - - - - - - Capital Contribution to general government TOTAL NON-OPERATING REVENUES (EXPENSES) 28,648 $ 149,819 $ 70,463 $ 59,321 $ 6,743 $ 46,071 $ 46,874 $ 55,477 $ 65,232 $ 72,727 $ 116,226 $ 124,807 $ 134,484 $ 145,349 $ 157,457 $ TOTAL NET REVENUES AVAILABLE FOR DS 2,062,129 $ 2,564,805 $ 2,570,353 $ 3,339,755 $ 1,829,143 $ 1,127,852 $ 1,200,675 $ 1,284,708 $ 1,373,447 $ 1,463,625 $ 1,593,662 $ 1,692,792 $ 1,797,197 $ 1,907,139 $ 2,022,852 $ DEBT SERVICE Series 2008 Water/Sewer Revenue 8.6% - (265,437) (265,376) (265,428) (265,483) (265,715) (265,543) (265,715) (265,676) (262,866) (265,579) (265,772) (265,708) (265,815) (265,644) Series 2009 Water/Sewer Revenue Ref 22% - - (116,056) (116,887) (114,868) (116,214) (116,161) (115,852) (116,211) (116,436) (115,403) (116,806) (115,684) (115,092) (115,358) Series 1999A Water/Sewer Revenue & Ref 22% (122,808) - - TOTAL DEBT SERVICE (122,808) $ (265,437) $ (381,432) $ (382,315) $ (380,350) $ (381,929) $ (381,704) $ (381,567) $ (381,887) $ (379,302) $ (380,983) $ (382,578) $ (381,392) $ (380,907) $ (381,002) $ ---PAGE BREAK--- COVERAGE RATIO 16.79 9.66 6.74 8.74 4.81 2.95 3.15 3.37 3.60 3.86 4.18 4.42 4.71 5.01 5.31 COVERAGE RATIO: Fixed Charge (includes water purchases as debt) 0.60 0.28 (0.02) 0.04 (0.49) (0.72) (0.71) (0.70) (0.69) (0.69) (0.67) (0.67) (0.66) (0.65) (0.64) SURPLUS REVENUES 1,939,321 $ 2,299,368 $ 2,188,921 $ 2,957,440 $ 1,448,793 $ 745,923 $ 818,972 $ 903,141 $ 991,559 $ 1,084,324 $ 1,212,679 $ 1,310,214 $ 1,415,805 $ 1,526,232 $ 1,641,849 $ Total Transfers In (Out) 166,504 $ - $ 371,964 $ 44,316 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Grant Revenue Bond Proceeds - - - CAPITAL IMPROVEMENTS Slip Lining and Manhole Relining (757,500) - $ - $ - $ - $ - (151,500) $ (151,500) $ (151,500) $ (151,500) $ (151,500) $ - $ - $ - $ - $ - $ Flow Measurement Evaluation (151,500) - - - - - (151,500) - - - - - - - - - Master Plan (300,000) - - - - - (300,000) - - - - - - - - - - - - - - - - - - - - - - - - Depreciation (450,000) - (298,500) (298,500) (298,500) (298,500) (450,000) (450,000) (450,000) (450,000) (450,000) TOTAL CAPITAL PROJECTS (1,659,000) $ - $ - $ - $ - $ - $ (603,000) $ (450,000) $ (450,000) $ (450,000) $ (450,000) $ (450,000) $ (450,000) $ (450,000) $ (450,000) $ (450,000) $ Total Change in Cash Position 2,105,825 $ 2,299,368 $ 2,560,885 $ 3,001,757 $ 1,448,793 $ 142,923 $ 368,972 $ 453,141 $ 541,559 $ 634,324 $ 762,679 $ 860,214 $ 965,805 $ 1,076,232 $ 1,191,849 $ Beginning Cash Reserves (3,226,313) $ (1,120,489) $ 1,178,879 $ 3,739,764 $ 6,741,521 $ 8,190,314 $ 8,333,237 $ 8,702,209 $ 9,155,350 $ 9,696,909 $ 10,331,233 $ 11,093,912 $ 11,954,126 $ 12,919,932 $ 13,996,164 $ Ending Cash Reserves (1,120,489) $ 1,178,879 $ 3,739,764 $ 6,741,521 $ 8,190,314 $ 8,333,237 $ 8,702,209 $ 9,155,350 $ 9,696,909 $ 10,331,233 $ 11,093,912 $ 11,954,126 $ 12,919,932 $ 13,996,164 $ 15,188,013 $ Ending Cash Reserves (unrestricted) (1,120,489) $ 1,178,879 $ 3,739,764 $ 6,741,521 $ 8,190,314 $ 8,333,237 $ 8,702,209 $ 9,155,350 $ 9,696,909 $ 10,331,233 $ 11,093,912 $ 11,954,126 $ 12,919,932 $ 13,996,164 $ 15,188,013 $ Days of Working Cash (unrestricted) (104) 92 243 399 393 350 355 363 374 387 404 423 444 468 493 ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B2: Graphic Depictions - 100 200 300 400 [PHONE REDACTED] 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate Per ERC Days of Cash on Hand (2010 - 2022) Days of Cash on Hand Target: Days of Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Charge/ERC/Month 25.97 30.05 29.69 30.52 31.29 32.07 32.87 33.69 34.53 35.40 36.28 37.19 38.12 City Charge/ERC/Month 17.58 19.91 17.21 15.05 15.51 15.98 16.46 16.95 17.46 17.99 18.53 19.08 19.65 CWS Charge/ERC/Month 8.40 10.14 12.48 15.47 15.78 16.09 16.41 16.74 17.07 17.41 17.75 18.10 18.46 Rate Increase % 19.9% 10.0% 23.3% 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 Rate Per ERC Rate Per ERC (2010-2022) Total Charge/ERC/Month City Charge/ERC/Month CWS Charge/ERC/Month Rate Increase % (2,000,000) 3,000,000 8,000,000 13,000,000 18,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Summary (2010-2022) Total Expenditures Total Revenue Total Cash Balance $(2,000,000) $3,000,000 $8,000,000 $13,000,000 $18,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue Summary (2010-2022) Gain on Sale of assets Interest income Miscellaneous Income Accounting Charges Special District Fees Charges for Services $(2,000,000) $3,000,000 $8,000,000 $13,000,000 $18,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Expenditure Summary (2010-2022) TOTAL CAPITAL PROJECTS TOTAL DEBT SERVICE Other operating expenses Charges for services Supplies Personal Services $(2,000,000) $3,000,000 $8,000,000 $13,000,000 $18,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cash Balance Summary (2010-2022) Bond Proceeds Unrestricted - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Coverage Ratio (2010-2022) Coverage Target: Coverage ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B3: Revenue Recapture - Base Rate vs. Tier Structure Rate Structure Base Rate Breakdown 2011 Estimated Need per ERC 30.52 $ ERC Total Base Rate Connections Base Rate Revenue Base Rate 90% 5/8 & 3/4 1.00 27.50 $ 20,847 6,879,510.00 $ Tiers 10% 1 1.66 45.51 $ 1,342 732,933.30 $ 1 1/2 2.31 63.53 $ 255 194,386.50 $ Total Base Rate 27.50 $ 2 3.71 101.94 $ 434 530,929.50 $ City Base Rate 13.56 $ 49.31% 3 10.35 284.56 $ 82 280,005.00 $ CWS Base Rate 13.94 $ 50.69% 4 13.02 357.97 $ 55 236,262.52 $ Tiers 3.02 $ GALLONS 6 28.97 796.68 $ 24 229,442.40 $ - $ - 6,000 8 53.09 1,460.03 $ 7 122,642.21 $ Residential 0.35 $ 6,001 + Base Rate Revenue 9,206,111.44 $ Commercial 0.35 $ All Tier Revenue 546,517.98 $ Total 9,752,629.42 $ ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B4: Base Rate & Tier - Future Base Rate (Includes 6,000 gallons) Meter Size 2013 2014 2015 2016 2017 5/8 & 3/4" 27.50 $ 27.50 $ 27.50 $ 27.50 $ 27.50 $ 1" 45.51 $ 45.51 $ 45.51 $ 45.51 $ 45.51 $ 1 1/2" 63.53 $ 63.53 $ 63.53 $ 63.53 $ 63.53 $ 2" 101.94 $ 101.94 $ 101.94 $ 101.94 $ 101.94 $ 3" 284.56 $ 284.56 $ 284.56 $ 284.56 $ 284.56 $ 4" 357.97 $ 357.97 $ 357.97 $ 357.97 $ 357.97 $ 6" 796.68 $ 796.68 $ 796.68 $ 796.68 $ 796.68 $ 8" 1,460.03 $ 1,460.03 $ 1,460.03 $ 1,460.03 $ 1,460.03 $ * 2014 - 2017 this rate is before the CPI increase Usage Rates (per 1,000 gallons) 2013 2014 2015 2016 2017 Residential Above 6,000 Gallons 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.35 $ Commercial All Usage 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.35 $ * 2014 - 2017 this rate is before the CPI increase ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B5: Rate Comparisons Current Rate Structure Proposed Rate Structure 2013 Proposed Rate Structure 2013 USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" USAGE 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 30,000 28.91 $ 47.07 $ 95.38 $ 150.41 $ 279.16 $ 462.63 $ 931.72 $ 1,490.08 $ 30,000 35.90 $ 53.91 $ 74.03 $ 112.44 $ 295.06 $ 368.47 $ 807.18 $ 1,470.53 $ 30,000 - $ - $ - $ - $ - $ - $ - $ - $ 1,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 1,000 27.50 $ 45.51 $ 63.88 $ 102.29 $ 284.91 $ 358.32 $ 797.03 $ 1,460.38 $ 1,000 30.35 $ 50.24 $ 70.51 $ 112.91 $ 314.49 $ 395.52 $ 879.77 $ 1,611.98 $ 2,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 2,000 27.50 $ 45.51 $ 64.23 $ 102.64 $ 285.26 $ 358.67 $ 797.38 $ 1,460.73 $ 2,000 30.35 $ 50.24 $ 70.89 $ 113.30 $ 314.87 $ 395.91 $ 880.15 $ 1,612.37 $ 3,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 3,000 27.50 $ 45.51 $ 64.58 $ 102.99 $ 285.61 $ 359.02 $ 797.73 $ 1,461.08 $ 3,000 30.35 $ 50.24 $ 71.28 $ 113.69 $ 315.26 $ 396.29 $ 880.54 $ 1,612.75 $ 4,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 4,000 27.50 $ 45.51 $ 64.93 $ 103.34 $ 285.96 $ 359.37 $ 798.08 $ 1,461.43 $ 4,000 30.35 $ 50.24 $ 71.67 $ 114.07 $ 315.64 $ 396.68 $ 880.93 $ 1,613.14 $ 5,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 5,000 27.50 $ 45.51 $ 65.28 $ 103.69 $ 286.31 $ 359.72 $ 798.43 $ 1,461.78 $ 5,000 30.35 $ 50.24 $ 72.05 $ 114.46 $ 316.03 $ 397.07 $ 881.31 $ 1,613.53 $ 6,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 6,000 27.50 $ 45.51 $ 65.63 $ 104.04 $ 286.66 $ 360.07 $ 798.78 $ 1,462.13 $ 6,000 30.35 $ 50.24 $ 72.44 $ 114.85 $ 316.42 $ 397.45 $ 881.70 $ 1,613.91 $ 7,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 7,000 27.85 $ 45.86 $ 65.98 $ 104.39 $ 287.01 $ 360.42 $ 799.13 $ 1,462.48 $ 7,000 30.74 $ 50.62 $ 72.82 $ 115.23 $ 316.80 $ 397.84 $ 882.08 $ 1,614.30 $ 8,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 8,000 28.20 $ 46.21 $ 66.33 $ 104.74 $ 287.36 $ 360.77 $ 799.48 $ 1,462.83 $ 8,000 31.13 $ 51.01 $ 73.21 $ 115.62 $ 317.19 $ 398.23 $ 882.47 $ 1,614.69 $ 9,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 9,000 28.55 $ 46.56 $ 66.68 $ 105.09 $ 287.71 $ 361.12 $ 799.83 $ 1,463.18 $ 9,000 31.51 $ 51.40 $ 73.60 $ 116.01 $ 317.58 $ 398.61 $ 882.86 $ 1,615.07 $ 10,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 10,000 28.90 $ 46.91 $ 67.03 $ 105.44 $ 288.06 $ 361.47 $ 800.18 $ 1,463.53 $ 10,000 31.90 $ 51.78 $ 73.98 $ 116.39 $ 317.96 $ 399.00 $ 883.24 $ 1,615.46 $ 11,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 11,000 29.25 $ 47.26 $ 67.38 $ 105.79 $ 288.41 $ 361.82 $ 800.53 $ 1,463.88 $ 11,000 32.29 $ 52.17 $ 74.37 $ 116.78 $ 318.35 $ 399.39 $ 883.63 $ 1,615.85 $ 12,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 12,000 29.60 $ 47.61 $ 67.73 $ 106.14 $ 288.76 $ 362.17 $ 800.88 $ 1,464.23 $ 12,000 32.67 $ 52.56 $ 74.76 $ 117.16 $ 318.73 $ 399.77 $ 884.02 $ 1,616.23 $ 13,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 13,000 29.95 $ 47.96 $ 68.08 $ 106.49 $ 289.11 $ 362.52 $ 801.23 $ 1,464.58 $ 13,000 33.06 $ 52.94 $ 75.14 $ 117.55 $ 319.12 $ 400.16 $ 884.40 $ 1,616.62 $ 14,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 14,000 30.30 $ 48.31 $ 68.43 $ 106.84 $ 289.46 $ 362.87 $ 801.58 $ 1,464.93 $ 14,000 33.45 $ 53.33 $ 75.53 $ 117.94 $ 319.51 $ 400.54 $ 884.79 $ 1,617.00 $ 15,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 15,000 30.65 $ 48.66 $ 68.78 $ 107.19 $ 289.81 $ 363.22 $ 801.93 $ 1,465.28 $ 15,000 33.83 $ 53.71 $ 75.91 $ 118.32 $ 319.89 $ 400.93 $ 885.18 $ 1,617.39 $ 20,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 20,000 32.40 $ 50.41 $ 70.53 $ 108.94 $ 291.56 $ 364.97 $ 803.68 $ 1,467.03 $ 20,000 35.76 $ 55.65 $ 77.85 $ 120.25 $ 321.83 $ 402.86 $ 887.11 $ 1,619.32 $ 25,000 28.91 $ 47.07 $ 93.63 $ 148.66 $ 277.41 $ 460.88 $ 929.97 $ 1,488.33 $ 25,000 34.15 $ 52.16 $ 72.28 $ 110.69 $ 293.31 $ 366.72 $ 805.43 $ 1,468.78 $ 25,000 37.70 $ 57.58 $ 79.78 $ 122.19 $ 323.76 $ 404.79 $ 889.04 $ 1,621.25 $ 30,000 28.91 $ 47.07 $ 95.38 $ 150.41 $ 279.16 $ 462.63 $ 931.72 $ 1,490.08 $ 30,000 35.90 $ 53.91 $ 74.03 $ 112.44 $ 295.06 $ 368.47 $ 807.18 $ 1,470.53 $ 30,000 39.63 $ 59.51 $ 81.71 $ 124.12 $ 325.69 $ 406.73 $ 890.97 $ 1,623.19 $ 35,000 28.91 $ 47.07 $ 97.13 $ 152.16 $ 280.91 $ 464.38 $ 933.47 $ 1,491.83 $ 35,000 37.65 $ 55.66 $ 75.78 $ 114.19 $ 296.81 $ 370.22 $ 808.93 $ 1,472.28 $ 35,000 41.56 $ 61.44 $ 83.64 $ 126.05 $ 327.62 $ 408.66 $ 892.90 $ 1,625.12 $ 40,000 28.91 $ 47.07 $ 98.88 $ 153.91 $ 282.66 $ 466.13 $ 935.22 $ 1,493.58 $ 40,000 39.40 $ 57.41 $ 77.53 $ 115.94 $ 298.56 $ 371.97 $ 810.68 $ 1,474.03 $ 40,000 43.49 $ 63.37 $ 85.57 $ 127.98 $ 329.55 $ 410.59 $ 894.83 $ 1,627.05 $ 45,000 28.91 $ 47.07 $ 100.63 $ 155.66 $ 284.41 $ 467.88 $ 936.97 $ 1,495.33 $ 45,000 41.15 $ 59.16 $ 79.28 $ 117.69 $ 300.31 $ 373.72 $ 812.43 $ 1,475.78 $ 45,000 45.42 $ 65.30 $ 87.50 $ 129.91 $ 331.48 $ 412.52 $ 896.77 $ 1,628.98 $ 50,000 28.91 $ 47.07 $ 102.38 $ 157.41 $ 286.16 $ 469.63 $ 938.72 $ 1,497.08 $ 50,000 42.90 $ 60.91 $ 81.03 $ 119.44 $ 302.06 $ 375.47 $ 814.18 $ 1,477.53 $ 50,000 47.35 $ 67.24 $ 89.44 $ 131.84 $ 333.42 $ 414.45 $ 898.70 $ 1,630.91 $ 100,000 28.91 $ 47.07 $ 119.88 $ 174.91 $ 303.66 $ 487.13 $ 956.22 $ 1,514.58 $ 100,000 60.40 $ 78.41 $ 98.53 $ 136.94 $ 319.56 $ 392.97 $ 831.68 $ 1,495.03 $ 100,000 66.67 $ 86.55 $ 108.75 $ 151.16 $ 352.73 $ 433.77 $ 918.01 $ 1,650.23 $ 200,000 28.91 $ 47.07 $ 154.88 $ 209.91 $ 338.66 $ 522.13 $ 991.22 $ 1,549.58 $ 200,000 95.40 $ 113.41 $ 133.53 $ 171.94 $ 354.56 $ 427.97 $ 866.68 $ 1,530.03 $ 200,000 105.30 $ 125.19 $ 147.39 $ 189.80 $ 391.37 $ 472.40 $ 956.65 $ 1,688.86 $ 35,000,000 28.91 $ 47.07 $ 12,334.88 $ 12,389.91 $ 12,518.66 $ 12,702.13 $ 13,171.22 $ 13,729.58 $ 35,000,000 12,275.40 $ 12,293.41 $ 12,313.53 $ 12,351.94 $ 12,534.56 $ 12,607.97 $ 13,046.68 $ 13,710.03 $ 35,000,000 13,549.74 $ 13,569.63 $ 13,591.83 $ 13,634.24 $ 13,835.81 $ 13,916.84 $ 14,401.09 $ 15,133.30 $ Estimated Rate Increase 10.4% Percent Rate Increase: Current Rate Structure vs 2013 Proposed Rate Increase Note: Highlighted cells represent the average usage for each category. 5/8" or 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 1,000 -32% -31% 3% -22% -14% 2,000 -31% -31% 3% -22% -14% 3,000 -31% -31% 3% -22% -14% 4,000 -31% -30% 3% -22% -14% 5,000 -30% -30% 3% -22% -14% 6,000 -30% -30% 3% -22% -14% 7,000 -30% -30% 3% -22% -14% 8,000 -29% -30% 4% -22% -14% 9,000 -29% -29% 4% -22% -14% 10,000 0% 0% -28% -29% 4% -22% -14% 11,000 1% 0% -28% -29% 4% -21% -14% 12,000 2% 1% -28% -29% 4% -21% -14% 13,000 4% 2% -27% -28% 4% -21% -14% 14,000 5% 3% -27% -28% 4% -21% -14% 15,000 6% 3% -27% -28% 4% -21% -14% 20,000 12% 7% -25% -27% 5% -21% -14% 25,000 18% 11% -23% -26% 6% -20% -13% 30,000 24% 15% -22% -25% 6% -20% -13% 35,000 30% 18% -22% -25% 6% -20% -13% 40,000 36% 22% -22% -25% 6% -20% -13% 45,000 42% 26% -21% -24% 6% -20% -13% 50,000 48% 29% -21% -24% 6% -20% -13% 100,000 109% 67% -18% -22% 5% -19% -13% 200,000 230% 141% -14% -18% 5% -18% -13% 35,000,000 42361% 26017% 0% 0% 0% 0% ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B6: Current Rate and Charge Based Upon 30,000 Gal/Month 3/4 & 5/8 1" City Base Rate 17.66 $ City Base Rate 28.84 $ USAGE 30,000 CWS Base Rate 11.25 $ CWS Base Rate 18.23 $ Total 28.91 $ Total 47.07 $ Total 95.38 $ Total 462.63 $ 1 1/2" Usage Base 93.63 $ 4" Usage Base 460.88 $ 30,000 Tier 1.75 $ 30,000 Tier 1.75 $ City Base Rate 57.36 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 282.37 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 36.27 $ CWS Base Rate 178.51 $ Tier 1 0.35 $ 25,000 1,000,000,000 999,975,000 5,000 1.75 $ Tier 1 0.35 $ 25,000 1,000,000,000 999,975,000 5,000 1.75 $ Total 5,000 Total 1.75 $ Total 5,000 Total 1.75 $ Total 150.41 $ Total 931.72 $ 2" Usage Base 148.66 $ 6" Usage Base 929.97 $ 30,000 Tier 1.75 $ 30,000 Tier 1.75 $ City Base Rate 91.08 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 569.76 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 57.58 $ CWS Base Rate 360.21 $ Tier 1 0.35 $ 25,000 1,000,000,000 999,975,000 5,000 1.75 $ Tier 1 0.35 $ 25,000 1,000,000,000 999,975,000 5,000 1.75 $ Total 5,000 Total 1.75 $ Total 5,000 Total 1.75 $ Total 279.16 $ Total 1,490.08 $ 3" Usage Base 277.41 $ 8" Usage Base 1,488.33 $ 30,000 Tier 1.75 $ 30,000 Tier 1.75 $ City Base Rate 169.96 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 911.85 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 107.45 $ CWS Base Rate 576.48 $ Tier 1 0.35 $ 25,000 1,000,000,000 999,975,000 5,000 1.75 $ Tier 1 0.35 $ 25,000 1,000,000,000 999,975,000 5,000 1.75 $ Total 5,000 Total 1.75 $ Total 5,000 Total 1.75 $ ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B7: Proposed 2013 Rate and Charge Based Upon 30,000 Gal/Month USAGE 30,000 Total 35.90 $ Total 53.91 $ 3/4 & 5/8 Usage Base 27.50 $ 1" Usage Base 45.51 $ 30,000 Tier 8.40 $ 30,000 Tier 8.40 $ City Base Rate 13.56 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 22.44 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 13.94 $ CWS Base Rate 23.07 $ Tier 1 0.35 $ 6,000 10,000,000 9,994,000 24,000 8.40 $ Tier 1 0.35 $ 6,000 10,000,000 9,994,000 24,000 8.40 $ Total 24,000 Total 8.40 $ Total 24,000 Total 8.40 $ Total 74.03 $ Total 368.47 $ 1 1/2" Usage Base 63.53 $ 4" Usage Base 357.97 $ 30,000 Tier 10.50 $ 30,000 Tier 10.50 $ City Base Rate 31.32 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 176.52 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 32.20 $ CWS Base Rate 181.46 $ Tier 1 0.35 $ - 10,000,000 10,000,000 30,000 10.50 $ Tier 1 0.35 $ - 10,000,000 10,000,000 30,000 10.50 $ Total 30,000 Total 10.50 $ Total 30,000 Total 10.50 $ Total 112.44 $ Total 807.18 $ 2" Usage Base 101.94 $ 6" Usage Base 796.68 $ 30,000 Tier 10.50 $ 30,000 Tier 10.50 $ City Base Rate 50.27 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 392.84 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 51.68 $ CWS Base Rate 403.83 $ Tier 1 0.35 $ - 10,000,000 10,000,000 30,000 10.50 $ Tier 1 0.35 $ - 10,000,000 10,000,000 30,000 10.50 $ Total 30,000 Total 10.50 $ Total 30,000 Total 10.50 $ Total 295.06 $ Total 1,470.53 $ 3" Usage Base 284.56 $ 8" Usage Base 1,460.03 $ 30,000 Tier 10.50 $ 30,000 Tier 10.50 $ City Base Rate 140.32 $ Gallons Allowed/Tier Use in Tier Remaining Revenue City Base Rate 719.95 $ Gallons Allowed/Tier Use in Tier Remaining Revenue CWS Base Rate 144.24 $ CWS Base Rate 740.08 $ Tier 1 0.35 $ - 10,000,000 10,000,000 30,000 10.50 $ Tier 1 0.35 $ - 10,000,000 10,000,000 30,000 10.50 $ Total 30,000 Total 10.50 $ Total 30,000 Total 10.50 $ ---PAGE BREAK--- OGDEN CITY, UTAH Sewer Utility Fund Comprehensive Financial Sustainability Plan Table B8: Usage Data and Revenue Check 2011 USAGE PER TIER - RESIDENTIAL January February March April May June July August September October November December Total - 6,000 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 85,946,386 1,108,504,500 6,001 10,000,000 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 38,654,671 861,689,200 Total 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 124,601,057 1,970,193,700 2011 COMMERCIAL USAGE January February March April May June July August September October November December Total 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 1,108,504,500 Total 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 127,232,514 1,108,504,500 PERCENT OF USAGE Residential over 6,000 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 127,348.43 $ Commercial 77% 77% 77% 77% 77% 77% 77% 77% 77% 77% 77% 77% 419,169.55 $ Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 546,517.98 $ RATE TOTAL REVENUE GENERATION FROM USAGE(RESIDENTIAL & COMMERCIAL) RESIDENTIAL 0.35 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 13,529 $ 162,350 $ COMMERCIAL 0.35 $ 44,531 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 43,610 $ 524,245 $ Total 58,061 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 686,595 $ TOTAL REVENUE GENERATION FROM USAGE(RESIDENTIAL & COMMERCIAL) RATE 0.35 $ 58,061 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 686,595 $ Total 58,061 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 57,140 $ 686,595 $ ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 APPENDIX C: STORM DRAIN TABLES ---PAGE BREAK--- OGDEN CITY, UTAH Storm Drain Utility Fund Comprehensive Financial Sustainability Plan Table C1: Multi-Year Cash Flow Projections Rate Increase 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% CPI Rate Increase 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Total Increase 49.1% 1.1% 2.7% 29.1% 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Charge/ERC/Month 3.78 $ 5.63 $ 5.69 $ 5.85 $ 7.55 $ 7.76 $ 7.96 $ 8.16 $ 8.36 $ 8.57 $ 8.78 $ 9.00 $ 9.23 $ 9.46 $ 9.69 $ Impact Fee - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Beginning ERCs 49,186 49,199 49,455 49,381 49,776 50,174 50,576 50,980 51,388 51,799 52,214 52,631 53,052 53,477 53,905 New ERCs 13 256 (74) 395 398 401 405 408 411 414 418 421 424 428 431 Ending ERCs 49,199 49,455 49,381 49,776 50,174 50,576 50,980 51,388 51,799 52,214 52,631 53,052 53,477 53,905 54,336 Connection Growth 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% O&M Inflation -0.32% 20.82% 7.11% 2.80% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Interest Earnings 75% of Fund Balance 0.75% 0.75% 0.75% 0.85% 0.95% 1.00% 1.50% 1.50% 1.50% 1.50% 1.50% - - - - - - - - BUDGETED PROJECTED FISCAL YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 REVENUES Charges for Services 2,229,518 $ 3,340,875 $ 3,373,464 $ 3,493,755 $ 4,546,650 $ 4,711,348 $ 4,867,765 $ 5,029,374 $ 5,196,350 $ 5,368,868 $ 5,547,115 $ 5,731,279 $ 5,921,558 $ 6,118,153 $ 6,321,276 $ Miscellaneous Income - - - - - - - - - - - - - - - - - - - - - - - - - - TOTAL OPERATING REVENUES 2,229,518 $ 3,340,875 $ 3,373,464 $ 3,493,755 $ 4,546,650 $ 4,711,348 $ 4,867,765 $ 5,029,374 $ 5,196,350 $ 5,368,868 $ 5,547,115 $ 5,731,279 $ 5,921,558 $ 6,118,153 $ 6,321,276 $ EXPENDITURES Personal Services (650,220) $ (703,420) $ (668,039) $ (689,541) $ (752,500) $ (773,570) $ (795,230) $ (817,496) $ (840,386) $ (863,917) $ (888,107) $ (912,974) $ (938,537) $ (964,816) $ (991,831) $ Salaries and wages (473,550) (517,744) (475,399) (489,425) (524,325) (539,006) (554,098) (569,613) (585,562) (601,958) (618,813) (636,140) (653,951) (672,262) (691,085) Benefits (176,669) (185,676) (192,640) (200,116) (228,175) (234,564) (241,132) (247,883) (254,824) (261,959) (269,294) (276,834) (284,586) (292,554) (300,746) Supplies (62,078) (59,522) (55,755) (74,127) (46,975) (48,290) (49,642) (51,032) (52,461) (53,930) (55,440) (56,993) (58,588) (60,229) (61,915) Office supplies (546) (400) (313) (399) (450) (463) (476) (489) (503) (517) (531) (546) (561) (577) (593) Operating supplies (60,858) (55,443) (53,475) (69,559) (41,750) (42,919) (44,121) (45,356) (46,626) (47,932) (49,274) (50,653) (52,072) (53,530) (55,028) Repair and Maintenance supplies (674) (3,678) (1,967) (4,169) (4,775) (4,909) (5,046) (5,187) (5,333) (5,482) (5,635) (5,793) (5,956) (6,122) (6,294) Charges for services (388,857) (428,465) (454,502) (513,276) (526,471) (601,212) (618,046) (635,351) (653,141) (671,429) (690,229) (709,556) (729,423) (749,847) (770,843) Sewer Dist Charges - - - - - - - - - - - - - - - Public Utility Svc (2,146) (2,144) (2,144) (1,675) (3,250) (3,341) (3,435) (3,531) (3,630) (3,731) (3,836) (3,943) (4,053) (4,167) (4,284) Travel and Education (5,145) (4,006) (650) (2,575) (4,250) (4,369) (4,491) (4,617) (4,746) (4,879) (5,016) (5,156) (5,301) (5,449) (5,602) Contracted Agreements (60,000.00) (381,567) (422,314) (451,708) (509,026) (518,971) (593,502) (610,120) (627,204) (644,765) (662,819) (681,378) (700,456) (720,069) (740,231) (760,957) Other operating expenses (733,551) (1,173,123) (1,178,582) (1,570,608) (1,724,190) (1,762,356) (1,815,867) (1,871,014) (1,927,849) (1,986,422) (2,046,788) (2,109,002) (2,173,120) (2,239,202) (2,307,308) Rental charges (32,772) (17,151) (16,598) (15,892) (16,950) (17,425) (17,912) (18,414) (18,930) (19,460) (20,005) (20,565) (21,140) (21,732) (22,341) Fiscal charges 17% (283,542) (583,949) (583,200) (698,700) (788,950) (800,929) (827,520) (854,994) (883,379) (912,708) (943,010) (974,317) (1,006,665) (1,040,086) (1,074,617) Depreciation/Amortization - - - - - - - - - - - - - - - Data processing and computer equipment (12,700) (10,650) (10,650) (10,650) (10,650) (10,948) (11,255) (11,570) (11,894) (12,227) (12,569) (12,921) (13,283) (13,655) (14,037) Maintenance and repair (163,036) (281,294) (317,764) (354,235) (390,705) (401,645) (412,891) (424,452) (436,336) (448,554) (461,113) (474,024) (487,297) (500,941) (514,968) Vehicle operating expenses (240,945) (279,553) (249,843) (490,935) (490,935) (504,681) (518,812) (533,339) (548,273) (563,624) (579,406) (595,629) (612,307) (629,451) (647,076) Miscellaneous (556) (527) (526) (196) (26,000) (26,728) (27,476) (28,246) (29,037) (29,850) (30,685) (31,545) (32,428) (33,336) (34,269) - - - - - - - - - - TOTAL OPERATING EXPENDITURES (1,834,706) $ (2,364,530) $ (2,356,877) $ (2,847,552) $ (3,050,136) $ (3,185,429) $ (3,278,785) $ (3,374,895) $ (3,473,838) $ (3,575,699) $ (3,680,564) $ (3,788,524) $ (3,899,669) $ (4,014,094) $ (4,131,897) $ NON-OPERATING REVENUES (EXPENSES) Interest income 10,720 $ 71,348 $ 29,329 $ 21,929 $ 3,257 $ 29,690 $ 23,696 $ 44,478 $ 28,713 $ 26,054 $ 45,761 $ 53,480 $ 65,954 $ 78,111 $ 92,686 $ Grants and donations - - - - - - - - - - Gain on Sale of assets - - - - - - - - - - Capital Contribution to general government TOTAL NON-OPERATING REVENUES (EXPENSES) 10,720 $ 71,348 $ 29,329 $ 21,929 $ 3,257 $ 29,690 $ 23,696 $ 44,478 $ 28,713 $ 26,054 $ 45,761 $ 53,480 $ 65,954 $ 78,111 $ 92,686 $ TOTAL NET REVENUES AVAILABLE FOR DS 405,532 $ 1,047,693 $ 1,045,915 $ 668,133 $ 1,499,771 $ 1,555,609 $ 1,612,676 $ 1,698,958 $ 1,751,225 $ 1,819,224 $ 1,912,312 $ 1,996,236 $ 2,087,842 $ 2,182,170 $ 2,282,064 $ DEBT SERVICE Series 2008 Water/Sewer Revenue 4.3% - (132,719) (132,688) (132,714) (132,741) (132,857) (132,771) (132,857) (132,838) (131,433) (132,790) (132,886) (132,854) (132,908) (132,822) Series 2008 Storm Drain Revenue & Ref Bond 100.0% (210,288) (228,313) (228,603) (228,601) (229,306) (228,669) (228,739) (228,468) (228,855) (228,852) (228,458) (228,674) (228,451) (228,789) Series 2009 Water/Sewer Revenue Ref 11% - - (58,028) (58,444) (57,434) (58,107) (58,080) (57,926) (58,106) (58,218) (57,702) (58,403) (57,842) (57,546) (57,679) Series 1999A Water/Sewer Revenue & Ref 11% (61,404) - Proposed Series 2014 (327,731) (327,731) (327,731) (327,731) (327,731) (327,731) (327,731) (327,731) TOTAL DEBT SERVICE (61,404) $ (343,007) $ (419,029) $ (419,761) $ (418,776) $ (420,270) $ (419,521) $ (747,254) $ (747,143) $ (746,237) $ (747,075) $ (747,479) $ (747,102) $ (746,636) $ (747,021) $ ---PAGE BREAK--- COVERAGE RATIO 6.60 3.05 2.50 1.59 3.58 3.70 3.84 2.27 2.34 2.44 2.56 2.67 2.79 2.92 3.05 COVERAGE RATIO: Fixed Charge (includes water purchases as debt) 6.60 3.05 2.50 1.59 3.58 3.70 3.84 2.27 2.34 2.44 2.56 2.67 2.79 2.92 3.05 SURPLUS REVENUES 344,128 $ 704,686 $ 626,886 $ 248,372 $ 1,080,995 $ 1,135,339 $ 1,193,155 $ 951,704 $ 1,004,082 $ 1,072,986 $ 1,165,238 $ 1,248,757 $ 1,340,741 $ 1,435,534 $ 1,535,043 $ Total Transfers In (Out) 13,165 $ - $ 81,492 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Grant Revenue Bond Proceeds - - - 4,522,183 - CAPITAL IMPROVEMENTS 33rd St & Pacific Ave Detention Pond (738,075) - - - - - (369,038) (369,038) - - - - 36th Street Storm Drain (697,275) - - - (697,275) - - - - - - - 17th Street Lift Station (906,475) - (906,475) - - - - - - - - - 28th St. to Ogden River & Polk Ave to Jackson (2,820,000) - - (2,820,000) - - - - - - - - 28th St. to Ogden River & Polk Ave to Jackson (1,600,000) - - - (1,600,000) - - - - - - - 28th St. to Ogden River & Polk Ave to Jackson (1,450,000) - - - - (1,450,000) - - - - - - 9th St. from Liberty to Clover - Flooding (1,252,400) - - - (1,252,400) - - - - - - - Downs and West Oaks Drive (260,000) - - (21,000) (239,000) - - - - - - - Harrison to Monroe (731,250) - (731,250) - - - - - - - - - Penn. Ave from 33rd St. to RR Tracks - - - - - - - - - - - Update Master Plan (150,000) - (150,000) - - - - - - (150,000) - - Replacement of Storm Drain Inlets (110,100) - (110,100) (110,100) (110,100) (110,100) (110,100) (110,100) (110,100) (110,100) (110,100) (110,100) 5 Points Water Diversion (303,000) - (303,000) Depreciation or Misc Projects (140,000) (1,808,264) (2,394,634) - - - - - - (29,900) - (29,900) (29,900) TOTAL CAPITAL PROJECTS (11,158,575) $ - $ - $ (1,808,264) $ (2,394,634) $ - $ (2,200,825) $ (2,951,100) $ (3,898,775) $ (1,560,100) $ (479,138) $ (479,138) $ (140,000) $ (260,100) $ (140,000) $ (140,000) $ Total Change in Cash Position 357,293 $ 704,686 $ (1,099,886) $ (2,146,262) $ 1,080,995 $ (1,065,486) $ 2,764,238 $ (2,947,071) $ (556,018) $ 593,849 $ 686,100 $ 1,108,757 $ 1,080,641 $ 1,295,534 $ 1,395,043 $ Beginning Cash Reserves 6,381,349 $ 6,738,642 $ 7,443,328 $ 6,343,442 $ 4,197,179 $ 5,278,174 $ 4,212,688 $ 6,976,927 $ 4,029,856 $ 3,473,838 $ 4,067,686 $ 4,753,786 $ 5,862,543 $ 6,943,184 $ 8,238,718 $ Ending Cash Reserves 6,738,642 $ 7,443,328 $ 6,343,442 $ 4,197,179 $ 5,278,174 $ 4,212,688 $ 6,976,927 $ 4,029,856 $ 3,473,838 $ 4,067,686 $ 4,753,786 $ 5,862,543 $ 6,943,184 $ 8,238,718 $ 9,633,761 $ Ending Cash Reserves (unrestricted) 6,738,642 $ 7,443,328 $ 6,343,442 $ 4,197,179 $ 5,278,174 $ 4,212,688 $ 5,405,843 $ 4,029,856 $ 3,473,838 $ 4,067,686 $ 4,753,786 $ 5,862,543 $ 6,943,184 $ 8,238,718 $ 9,633,761 $ Days of Working Cash (unrestricted) 1,341 1,149 982 538 632 483 602 436 365 415 471 565 650 749 851 ---PAGE BREAK--- OGDEN CITY, UTAH Storm Drain Utility Fund Comprehensive Financial Sustainability Plan Table C2: Graphical Depictions - 200 400 600 800 1,000 1,200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate Per ERC Days of Cash on Hand (2010 - 2022) Days of Cash on Hand Target: Days of Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Rate per ERC $5.85 $5.85 $7.55 $7.76 $7.96 $8.16 $8.36 $8.57 $8.78 $9.00 $9.23 $9.46 $9.69 Rate Increase % 1.1% 2.7% 29.1% 2.8% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 Rate Per ERC Rate Per ERC (2010-2022) (1,000,000) 1,000,000 3,000,000 5,000,000 7,000,000 9,000,000 11,000,000 13,000,000 15,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Summary (2010-2022) Total Expenditures Total Revenue Total Cash Balance $(1,000,000) $1,000,000 $3,000,000 $5,000,000 $7,000,000 $9,000,000 $11,000,000 $13,000,000 $15,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue Summary (2010-2022) Gain on Sale of assets Interest income Miscellaneous Income Charges for Services $(1,000,000) $1,000,000 $3,000,000 $5,000,000 $7,000,000 $9,000,000 $11,000,000 $13,000,000 $15,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Expenditure Summary (2010-2022) TOTAL CAPITAL PROJECTS TOTAL DEBT SERVICE Other operating expenses Charges for services Supplies Personal Services $(1,000,000) $1,000,000 $3,000,000 $5,000,000 $7,000,000 $9,000,000 $11,000,000 $13,000,000 $15,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cash Balance Summary (2010-2022) Bond Proceeds Unrestricted - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Coverage Ratio (2010-2022) Coverage Target: Coverage ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 APPENDIX D: PROPOSED JOINT POLICY RESOLUTION ---PAGE BREAK--- LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. SALT LAKE CITY, UTAH 84101 OFFICE [PHONE REDACTED] FAX [PHONE REDACTED] LYRB COMPREHENSIVE FINANCIAL SUSTAINABILITY PLAN OGDEN CITY, UTAH APRIL 2012 APPENDIX E: PROPOSED USER RATE ORDINANCE ---PAGE BREAK--- Ogden City Council Meeting: May 22, 2012 1 UTILITY RATES JOINT RESOLUTION COUNCIL STAFF REVIEW COUNCIL OPTIONS: Adopt/not adopt the resolution Background In an effort to clarify and summarize the policy decisions associated with the 2012 Utility Rates Study, a joint resolution has been draft for the Council’s consideration. The resolution primarily addresses financial principles; however, the resolution also addresses master plans for the utilities, management policies and procedures, and secondary water issues. The resolution addresses the following issues: - Revenue Sufficiency - Master Plan - Cash on Hand - Ongoing Maintenance - Debt - Debt Service Coverage Ratio - Capital Reserves - Water Utility Issues - Ongoing Management Policies and Procedures - Implementation The intent for the resolution is to use it alongside the utility rates ordinance and the Comprehensive Financial Sustainability Plan (Utility Rate Study) to provide additional background to and context for the rate study and the financial plan that is created from that study when dealing with bonding agencies, future Councils and Administrations, and citizens. The resolution is proposed to be adopted along with the rate ordinance, the culinary water and storm sewer master plans and the Capital Improvement Plan. Attachments 1. Joint Resolution Memos Prepared By-- Council Staff: Glenn Symes, 629-8164 ---PAGE BREAK--- 1 JOINT RESOLUTION NO. 2012-3 A JOINT RESOLUTION OF THE MAYOR OF OGDEN CITY AND THE OGDEN CITY COUNCIL APPROVING A UTILITY FUND MANAGEMENT POLICY CONSISTENT WITH CITY FINANCIAL PRINCIPLES. WHEREAS, the Council of Ogden City has, since 2007, been working toward addressing capital deficiencies in the city’s utility infrastructure, including the water utility and the sanitary and storm sewer utilities; and WHEREAS, the Council initiative known as Water Horizons provided the first step toward providing the necessary revenue for city utilities to meet future maintenance, repair and replacement needs; and WHEREAS, city utilities may require additional rate increases to pay for the replacement of essential facilities; and WHEREAS, it is the desire of the Council and Mayor of Ogden City to adopt a joint resolution regarding the establishment of certain goals and procedures for the future planning and funding of operating expenses and capital projects in order to minimize the frequency and size of rate increases; and WHEREAS, it is the intent of the Council and Mayor that such goals and procedures be utilized in setting future budgets and addressing proposed rate increases; and WHEREAS, the goals and procedures described in this joint resolution are consistent with the financial principles adopted by the Mayor and Council as part of the City’s annual budget. NOW, THEREFORE, be it resolved by the Mayor of Ogden City and the Ogden City Council that: A. Revenue Sufficiency: Each city utility is expected to pay its own way, or in other words, to prepare an annual budget ensuring that it has sufficient total revenue from existing or authorized rates to ensure proper operation and maintenance, development and perpetuation of the system and preservation of the utility’s financial integrity. 1. The need for additional revenue shall be carefully considered and justified before extraordinary rate increases are requested. Fee changes above the consumer price index are a joint effort beginning in November for the following fiscal year. ---PAGE BREAK--- 2 2. It should be the goal of each utility to create an annual projection of revenue for a period of at least five years into the future in order to determine ongoing revenue sufficiency. 3. In order to maintain revenue sufficiency, each utility is expected to adjust rates annually based on changes in the consumer price index as reflected in Wells Fargo Bank’s calculations between January of the year in which the budget is created over the index from January of the prior year. B. Master Plan: Each city utility should have a current master plan or plans, approved by the Council after they are prepared. The approval of a master plan by the Council does not necessarily mean the projects described therein will be funded or completed by a specific date. Each master plan shall, at a minimum: 1. Identify capital needs and projects designed to address those needs. 2. Be actively followed by the utility to the extent reasonably practicable. 3. Be updated on a regular basis, but no less frequently than every ten (10) years. C. Cash on Hand: City utilities should maintain adequate cash on hand to meet emergency or other unanticipated needs. 1. For the water utility, the cash on hand should not be less than 150 days at the end of each fiscal year with the goal of increasing the number of days of cash on hand to at least 180 days and, ultimately, to 360 days. 2. For other city utilities, the goal should be to have 360 days of cash on hand at the end of each fiscal year. D. Ongoing Maintenance: In conjunction with the approved master plans, all city utilities should have a plan in place to maintain and replace aging infrastructure. The water utility should have a goal of replacing aging pipes so that at least 1.2% of the pipe network is replaced each year. E. Debt: City utilities should, as a rule, pay for capital projects with cash rather than through borrowing. When debt is proposed: 1. The utility should seek the lowest amount of debt to achieve the necessary goal with the lowest borrowing cost available. 2. Where feasible, a utility should explore the option of refinancing existing debt to lower the cost of the debt or to accelerate payment on existing debt if substantial savings can be achieved. ---PAGE BREAK--- 3 F. Debt Service Coverage Ratio: City utilities should maintain a net debt service coverage ratio of at least $2.00 for every dollar that is required to be available for debt service. The water utility should seek to attain this goal over time but should maintain at least $1.50 in reserve for every dollar that is pledged to debt service. G. Capital Reserves: As cash reserves are accrued, they should be protected for use in future capital projects. 1. Cash reserves should not be used to pay for operating expenses or to hold rates artificially low. 2. Where a utility has accumulated a significant capital reserve in anticipation of future capital projects that is in addition to the desired level of cash on hand and coverage reserves, it may be appropriate to loan such reserves to other city utilities or funds, but only for a short term generally not to exceed thirty six (36) months. H. Water Utility Issues: 1. The water utility should take an active role in providing educational or other programs designed to encourage the conservation and reasonable use of culinary water without waste. An annual report should be provided to the Council as part of the budget process detailing such programs and the use of funds appropriated for this purpose. 2. Homeowners without access to non-potable sources of water for outside watering should be able to maintain healthy landscaping. The rate structure should reflect this goal by charging different rates to users with smaller meters for a reasonable amount of water needed during the outdoor watering season. I. Ongoing Management Policies and Procedures: 1. The goals and procedures described herein shall be reviewed annually by the Council and Mayor in conjunction with the overall city budget process in order to determine whether changes need to be made and whether the utilities are following them. 2. The director of the department of public services shall inspect the financial condition of each utility to determine if it is complying with the goals and procedures described herein. These inspections shall be performed prior to the submission of the annual budget to the council and mid-way through the fiscal year. 3. If the director’s inspection reveals a failure to comply with the goals and ---PAGE BREAK--- 4 procedures described, the director shall report such inconsistency to the mayor and chief administrative officer together with a recommendation of how to address the non-compliance. If addressing such non-compliance requires funding modifications, the utility shall obtain approval from the Council as may be required by the Ogden Municipal Code. J. Implementation: The Mayor is hereby authorized to adopt any administrative policies necessary to implement this joint resolution. PASSED AND ADOPTED by the Council of Ogden City, Utah, this day of 2012. CHAIR ATTEST: CITY RECORDER ADOPTED by the Mayor of Ogden City this day of 2012. MICHAEL P. CALDWELL, MAYOR ATTEST: CITY RECORDER APPROVED AS TO FORM: MHS 04-26-12 LEGAL DATE ---PAGE BREAK--- 2012 Water and Sewer Rate Study Frequently Asked Questions Question 1: I thought the 2008 bond funds were supposed to replace all of the water lines that had problems? • Ogden City’s water system has approximately 301 miles of distribution pipeline and covers an area of approximately 27 square miles. • The 2008 bond funds were used to replace 5.6% of these pipes, or about 18.5 miles of pipe. The remaining 282.5 miles of pipe were not addressed with bond funds. • Not all of the City’s water pipes need to be immediately replaced or upgraded; the average age of pipes in the system is between 40 and 50 years old. • To avoid replacing large amounts of pipe at any given time, the City is considering establishing a goal of replacing one-percent of the pipe each year. Question 2: If pipes can survive for up to 100 years, why should we start replacing them now? • Although the average pipe age is between 40 and 50 years old, over 50% of the water distribution system is more than 50 years old. • Varying conditions such as age, soil conditions, and the type of pipe that was installed, affect the life span of the pipe. Pipes need to be replaced before they rupture or fail to help minimize the cost to repair damage to public property (such as streets, curb and gutter). • Funds spent repairing emergency damage to public property from pipe failure can reduce the amount of available funds that can be spent replacing old pipes. • A substantial amount of the pipe within Ogden City’s water system does not meet modern standards for fire flow, thus limiting the effectiveness of the Fire Department. Replacing undersized pipe can improve the ability of the Fire Department to respond in an emergency situation and reduce the amount of fire damage to structures. • For each year the City waits to begin a consistent pipe replacement program the amount of pipe that will need to potentially be replaced at a single time is increased. This also means larger areas of the City will be affected at one time and there will be a greater inconvenience to residents. • Pushing replacement projects into the future may increase the cost of those projects. The cost to complete all the work needed to our system is expected to be less now than it would be in the future. ---PAGE BREAK--- Page 2 of 6 Question 3: Why is another bond being considered so soon? • The 2008 bond funded both water and sewer projects and was issued for approximately 50 million dollars. At the time the bond was issued the water utility was aware of some additional replacement projects that could not be completed with the available funds. • The largest items that could not be addressed with the 2008 bond were the City’s water filtration plant, which was built in the 1950s, and a 100- year- old 24” water line running through Ogden Canyon. Together, the cost of these projects is anticipated to exceed 20 million dollars. Both of these systems are well beyond their design life and the loss of either of them would disrupt water service to a significant portion of the City. • The official statement issued with the 2008 Sewer and Water Revenue Bonds, dated May 20, 2008, notified purchasers of the bond that “the City plans to issue an additional $30 to $50 million dollars in bonds in approximately five years in order to continue improvements to the System, including a new water filtration plant as described in the CIP [Capital Improvement Plan].” • By issuing a bond, the City would be able to pay the costs of the improvements over time with smaller rate increases. Question 4: If we received lower prices than anticipated on our construction projects, why didn’t we take care of all of the other water needs with the excess bond funds? • Ogden City found that the cost of most of the projects financed with bond proceeds came in between fifteen percent and twenty percent less than anticipated. This savings, of about 6.5 million dollars, was reallocated by the City Council to additional water projects that were identified by the City Administration. • Some of the projects funded by savings included: greatly expanding the replacement of meters in the system; replacing five additional pressure reducing valves in various areas of the City; replacing over 14,000 linear feet of additional pipe; providing for preliminary engineering and design of the 24” canyon water line replacement; and installing a new disinfection system to treat water coming from Ogden Valley. • Even with the savings from the 2008 bond, some projects were simply too large to construct with savings or could not be completed within the required timeline established in the bond parameters. Question 5: Why does the City sell water to the Bona Vista Water Improvement District? • Ogden City’s water system is designed to produce and distribute water on a year round basis. Water usage by citizens fluctuates based on such things as the time of year and temperature changes. The system has also been designed to anticipate a limited amount of growth. As a result, there are times when the system operates at less than its ideal capacity. • As per state requirements a system must be designed for “peak demand.” When there is less demand it can make the system less efficient because of certain fixed costs the City incurs to operate and maintain the water ---PAGE BREAK--- Page 3 of 6 system regardless of the amount of water that is actually being used. • If the City is able to sell water that is treated but not used by residents, this can help bring in additional revenue to allow the water system to operate at a more uniform level of production. • If the price charged for this water is more than other competing sources of water, there would be less incentive for the purchaser to enter into the transaction and the City’s water utility could lose the benefit of the additional revenue. • Ogden City ensures that during times of high demand, it has not committed an unreasonable amount of water to users outside of the City system. • The City’s agreement with Bona Vista establishes a maximum amount of water that Bona Vista is able to use, and the same price is charged regardless of whether or not this maximum amount is used. Revenue made with this agreement helps to keep our water rates as low as possible. Without this additional revenue rates may need to increase to cover the revenue losses or cuts may need to be made to the water utility. Bona Vista serves a small number of connections that are located in the City’s boundaries, but to whom the City isn’t currently able to provide service. By providing water under contract to Bona Vista, Ogden City is able to support service to those connections. Question 6: Why doesn’t the City use BDO Lease Revenue funds to pay for infrastructure improvements to the utility system? • Using BDO revenues as a funding source for water projects is a deviation from the concept of an enterprise fund, which is expected to cover its own expenses without outside City subsidies. Each area of the City that provides basic services has a similar need that could be met with BDO revenue - including the Street Department, the Fire and Police Departments and the Parks and Recreation Department. • The City Council must make a number of financial decisions about what services and programs the City will offer. In making these decisions, the Council must balance out all of the sources of income available to the City with all of the demands for service and other community investment. • Any revenue from BDO used for utility projects means that there are fewer revenue dollars available for other Capital Improvement Plan (CIP) projects. • BDO Lease Revenue Funds are appropriated according to the City’s Ordinance: a. First, the bonded debt service payment is made; b. After the debt service payment is made, fifty percent (50%) of the proceeds must be used for the funding of city-wide capital improvement projects. c. After the debt service payment and fifty percent (50%) for city-wide capital improvement projects, then up to ten percent (10%)--but not more than one hundred fifty thousand dollars ($150,000.00) — is appropriated to capital projects identified in the various community plans. d. If any funds remain, the City may use them for early retirement of city debt or other projects or programs, as deemed appropriate by the City Council. ---PAGE BREAK--- Page 4 of 6 Question 7: Why are Ogden City’s utility rates higher than other cities? • There are a number of reasons why utility rates vary from one city to another. Some cities hold utility rates down because they have relatively new infrastructure and they may not currently save enough to meet future replacement costs or they may cover more of their utility costs from the general fund. • The reality of the situation is that in the past, Ogden City deferred capital improvements to keep water rates from increasing. While this approach provided lower short term rates, it may now require higher rates as the system needs to be upgraded or replaced. • Ogden City has a large population and is fortunate to obtain high quality water primarily from its wells in Ogden Valley and water that is filtered from Pineview Reservoir. The cost of treating and transporting this water down Ogden Canyon means that the City may have higher operation and maintenance costs than other cities. Some cities, due to location or situation, have the ability to acquire water with lower capital investment. If a city receives a large portion of its water from springs that are near the city, for example, it will have lower pumping and transportation expenses to get that water into its system. Other cities may have higher residential and business densities and may be able to generate revenue with a more compact system. Ogden City does not have the density of some areas, such as Salt Lake, but as an urban center it is able to provide water at a lower rate than many smaller systems whose users are spread out over a large area. Question 8: What are the differences between the City’s sewer charges and Central Weber Sewer District’s charges? • The Ogden City sewer charge covers the sewer utility’s costs and maintenance of the City sewer infrastructure. This includes all City sewer mains and lift stations. • Maintenance of those lines includes a schedule for preventative maintenance of back up through flushing of lines and scheduled grease removals. • Ogden City sewer costs also cover a pre- treatment function within the community to assure required compliance with regard to grease and sand removal at sources. • Central Weber Sewer District owns and operates a sewer treatment plant that processes sewer from several communities, including Ogden City. A cost for this service is then billed to each City that is serviced by the plant. Those costs are broken down to sewer connections and listed as a separate line item. This helps to inform citizens of the costs charged for District treatment. ---PAGE BREAK--- Page 5 of 6 Question 9: Why don’t all of Ogden’s residents have access to secondary water? • Much of Ogden’s central downtown and east central neighborhoods were developed and settled before separate pressurized irrigation systems, or secondary water systems, were in place. • Although some of the oldest areas of the City near the Ogden River are still served by open canals and ditches, this type of secondary water could not be utilized during the initial development of residential areas. • As pressurized irrigation districts were established and expanded, newer developments on both the south and north sides of the City were included in these plans. • Ogden City does not operate a secondary irrigation system and cannot force secondary water providers to enlarge their service area within the city. The City cannot control where there is access to secondary water and what water rights are made available and issued, and in some cases the opportunity to have access to this may have already passed. • Even where a secondary system could be expanded, significant challenges remain in installing new infrastructure in parts of the City that are built out. Such systems would have to be installed in the public right of way (which would require routing around existing utilities and repairing damage to streets) or in the backyard in public utility easements (which would mean replacing landscaping and fences). • While Ogden City is interested in encouraging providers to extend secondary irrigation to additional areas of the City, participation of each property owner would likely be mandatory and the initial cost of this extension could require many years of repayment (potentially decades), before it resulted in any overall savings to the water user. Question 10: What services does storm water include and how is the billing for this calculated? • Services provided by the Storm Water Utility include maintenance to infrastructure that conveys storm water, street and gutter sweeping, cleaning of storm drain inlets and dip stones and complying with EPA and state requirements. This also includes regular inspection of storm water infrastructure, maintenance of storm sewer pipes, detention and retention ponds, and lift stations. This also addresses emergency response to flooding and hazardous spills, annual inspections of high priority facilities, dye testing for illicit discharges, public outreach and education. In addition there are specialty equipment items that assist in the cleaning, maintenance and emergency situations. • The billing is calculated based upon an evaluation that was conducted in the 2002 calendar year, and adopted on January 1, 2003 and was based upon an ESU (Equivalent Surface Unit). This ESU evaluation is based on 2,600 square ft. of impervious, or hard, surface. Residential lots are in most cases evaluated as one ESU, and commercial lots are based on actual square footage of impervious surface. The current cost per ESU is $6.91. ---PAGE BREAK--- Page 6 of 6 Question 11: Why does the water utility contribute a percentage of its revenues to the Ogden City general fund? • All utilities in Ogden City operate as “enterprise” funds. This means the water utility is expected to cover all of its operational costs using revenue it collects from users or from outside contracts, like the sale of water to Bona Vista. • In Ogden City, the various utilities receive assistance from City employees for a variety of services, such as human resources and other professional services as well as general management oversight. The City Council has determined that in order for the enterprise funds to adequately compensate the City for these services and uses, a fee of 5% of operating revenues is charged for Administration. • Other utilities operating within the City (e.g. Rocky Mountain Power or Questar Gas) are assessed Property Tax and Franchise Fees. City provided utilities do not pay either of these. The Franchise Fees charged to other utilities is so that is the percentage charged to the City Utility Funds on their operating revenue. As far as Property Tax, 6% of operating revenue is charged to the City Utility Funds. These two combined represent the Fiscal Charges. These Fiscal Charges with the addition of the 5% Administrative Charge represent the total charges to the utility funds of 17%. Question 12: What is the Weber Basin Water Conservancy District tax? • In addition to water sources owned by the City, we rely on a contract with Weber Basin to provide a portion of the City’s culinary water. An amount that totals between 20-30% of the water in our system servicing residents comes from Weber Basin. • Ogden City’s contract with Weber Basin requires the City to pay a base fee for the water provided and, in addition, to pay for the annual operation and maintenance charges associated with the water provided under the contract. • The charge on your property tax bill reflects the fee Ogden City would pay to Weber Basin for water. It does not pay for any of the water utility’s costs associated with the infrastructure needed to distribute the contracted amount to individual households from the point where the water enters Ogden City’s water system. • Once approved by the State Tax Commission, the Weber County Assessor calculates each property owner’s tax rate based on the overall Weber Basin budget and applies that rate towards that Property Tax assessment. This assessment is designed to cover Weber Basin’s actual cost to deliver the contracted amount of water to Ogden City. • If Weber Basin’s fee was not collected through the tax bill, the City would need to generate the revenue through the water bill. Contributions to the General Fund (totaling 17%) Property Tax Franchise Fees Administration Charges