HomeMy WebLinkAbout2004 Resolution No. 093• RESO LUT ION NO . 73
SERIES OF 2004
A RESOLU TI ON E TAIJLI Sl·II NG FEE SC HED ULES FOR WATER SERV ICE FOR 111 .-
CUS TOMERS OF THE CITY OF ENGLEWOOD , COLORADO .
IVIIEREAS, lhc Englewo od Home Ruic Cha rt er, Se c11 u11 123, requ ires Cit y Cou ncil lo -.,·t
wa ter r.itc s by Rc ~o lutio n; and
WHEREAS , with the passnge of Reso lu1i nn No. 7 1, Se ries of 200 3 th e En glewoo d Ci ;
Co un ci l auth orize d a wate r rate increase; and
WH EREAS , the passage o f Resolution No . 40, Serie s of 1996 auth orized a wa ter rate in crease;
and
WHE RL ,\S, the propose d water rate in crease is dee med necessa ry to cove r the dep ictin g
Water Ut ili ties' Fund reserves; and
WH EREAS , the 2(04 au dit revealed a dec re ase in wa ter sales revenue fr om the 2002 lcvd o f
~ppro ximately I 0%; ;1 ,1d
WHEREAS , th e current bond cove nant s gove rn th e amount of reve nue required , rC\o c.:nu cs
mu st be 110% of th e de bt se rvi ce aft er pay ing ope rati on and ma int enanc e expe nses and mu st also
• maintain a debt re serve fu nd ; and
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WHEREAS , shou ld the coverage rcqui rcmenl no t be me t. an ind ependent rate ana lys t must
determine the increases in reve nu es need ed to meet th e coverage req uirement in the fo ll owing
yea r; and
WH EREAS , th e propose d in crea se was rev iewed by Bl ac k and Vea tch Co nsu ltin g Engineers
,i.•ho det erm ined that an increase was appro pria te; and
WHEREAS, the \Va ter and Sew er Bou rd recomme nd ed th e pro pose d in crease s at their
Octobe r 12, 2004 meeti ng.
NOW , TH EREFO RE, BE IT RESOLVED IJY Tl-IE CI TY COUNC IL OF TH E CITY OF
ENG LEWOOD , THAT :
Sectio n I , The curren t water rn tes and fees establi shed by Re so lut ion No. 71, Seri '!s of 2003.
whic h is an inc rea se of 6% sc hed uled fur Janu ary I , 2005 is hcrl!b y rcpea h:d.
Sc c1ion 2. Water rates fo r th e Cit y of Engle wood shr.11 be subjec t 10 cumu l;11i ve im:rcas i:s for
th e nex t fo ur-vcor-pc riod (2005 -2008), as fo ll ows:
On Janu:try I . 2005, th e cu rrent wa ter rat es and fe es sha ll be increased by 15%.
On Janu ary I , 2006 , the wate r rate s and fe es ex istin g on and after January I, 2005 shall
be increa se d by 8% .
On January I, 2007. the wmc r rates and fee s exis tin g on and aflcr January 1, 2006 shall
be in crc.iscd by 8%.
On Janua ry I, 2008, th e wa ter ra tes and fee s existing on nnd afler January I, 2007 shall
be increased by 7%.
ADOPTED AND AP PROVED thi s 18th day of October, 2004.
I, Loucri shia A. Ellis, City Clcr~l)J the City of En
above is a true copy of Re solution No.~. Series of20
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City of Englewood, Colora do
Summary of Water Rate Fin din gs Stu dy
Black & Veat ch has conducte d an independent stud y of the City's water rate findin gs. This study
has be en co nducted accordi ng to the terms of the City's loan agree ment with the Co lorado Water
Reso urce s and Power Development Auth ority. Bl ack & Veat ch stud y findings are as follows:
I. City staff developed a Wa ter Urility Reve1111 e S/wrrfa/1 Prese111a1io11 repo n . The repon
in cludes seve ral alternative s to adjustin g water rate s for 2005 throu gh 2009. Thi s report is
attached to thi s repon for reference .
2. The City h.i,; expe rien ced unu sually low water sales revenue durin g 2003 and 2004. The
reduced rn e.,uo in 2003 was primarily du e to vo luntary drought-related reduction in water
us.1,ge. Unu stn,ily high precipit ation during the ini gation seaso n cau sed eve n lower water
usage in 2004 res ulting in funher rev enue reduction. Treated water pumped to the
di stribution ,y,tem for the first eight months of 2004 is 2 1 % below the six -year ave rage
(1999-2004 1. Mo nthly pumpage and precipitation records for 1999 through 2004 are
show n in till' ~,,rached exhi bit.
3. The 2(l(l,I o,atei ·1sage amoun t is unu sually low and is not likely to re cur on a regu lar bc,is.
Th e 20U3 water usage amount is probably more repre se ntative of Ci ty cu stomer's usage
patt erns for cn,1se rvation -mind ed customers and is recommended to be used as a basis for
dctcm1in 1n g water sales re ve nu e projections .
4 . Bl ack & Veatch has reviewed the assumptions, procedures and calculations of eac h model
shown in the Water Utility Revenue Shortfall Presen tation repon and is recommending th at
Mode l 10 be used as a basis for adjusting water rates in 2005 through 2009. Model 10
ass ume s the usage amounts ex peri enced in 2003 wi ll co nt in ue in 2005 through 2009 .
5. Bl ack & Veatch recommer,d s a 15% water rate increase be ado pt ed in 2005. Thi s is 2%
greater than 1he 13% increase show n in Model 10 and wi ll increase the 2005 projected debt
coverage ra tio fr om I.I I to I. 18. Although the CWRPDA le U1 agreement require s a
minimum ratio of t . t 0, cov, rage ratio s of t .20 and greater arc common pract ice for fi sc all y
so und municipal water utilitie s and are re commen ded .
6. Black & Veatch recomme nd s th e additional ra te increases shown in Model JO be adopte d
for 2006 throu gh 2008 . The se includ e 8% increase s in 2006 and 2007 and a 7% increa se in
2008. TI1 ese in creases arc projected to increase debt service coverage ratios to a minir ·,m
of 1.21 begi nning in 2006. The re vised Mode l 10 is attac hed show ing th e recom men c'
in creases.
7. The City shnuld annu ally rev iew the fi sca l hea lth of the water utilit y includin g 1he abi li ty 10
comply with the CWRPDA loa n agreeme nt prior to impl ementin g eac h rate increase.
8. The Cit) should undenake a water co st of serv ice -.1e study in 2005. Thi s study will
detennine the cost of providing wa ter service to rc!.t iden ti al , commerc ial. and irrigation
cu stomer classes and provide an equitable basis for determining water rat es. Th e las t such
study was co ndu cted over 20 years ago . The study will also exa min e rate structures to
prom ote water conservation .
Black & Veatch Corporation
September 25, 2004
1999
ALLEN FIL TEA PLANT
MONTHLY TREATED WATER PUMPAGE ANO PRECIPITATION
Trea ted Water Pump ed to Ol1tribullon System
Alli/Ion Gallons
2000 2001 2002 2003 2004
q~m:@fli!.·.,, a,,.J .. •--r.2~~~?~~3s,§:i.~~!~-1!?--D'i'l/1imocs4s ~26it1~•7M'f'IIMHZIE?r
Through Augusl 2006 .642 2330.619 2103 .029 2195.762 1880.699 1589.349
Percent of 6-year average 99", 116o/. 104% 109% 93 ~• 79%
DDll!t«!Pltlllfo-
Annual
Through August
Percent of 6-year average
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1999
m Effffllk-
11.4s
147%
2000
Precipitation
lnchaa
2001 2002 2003
%If'llt~m.\l!ll5rf_;JIWllf!frVMii:~mWl'tfM1~'•.f\ltii'CFC
2004
11.43 14 .2 8 3.18 11 .77 12 .90
97'9 121 % 27 o/1 99 ~-109~-
•
Averag e
1999-2004
-2017.683
Average
1999-2004
11 .84
•
l'30'200&1 4 S2
I
I T~Rtnab•SIVOOOO
IOl1trttK1Uonllam1 1or200S: I I
THIS CASH FLOW MODEL ATTEMPTS TO REMOVE ALL CONTINGENCY MONEY .
IM IHCJ:l
RAW WATER
OTY OITCH
OTHE R
TOTAl REVENUE
O&M NOOEPR
FRANCHISE TAX
NET OPERATlNll REVENUE
DEBT SERVICE C!Mrenl •
PRINCIPAL
INTERE ST
FIJTURE DEBT 5£RVICE
ROUTINE CAPITAL REf'V.CE
AVAJ\.ABL£ REVE NUE
< • ' l!HEREST 2.00% INTERIM FI NA NCING IN 1~7, GO 90H0 REFINANCE IN 1998
I
2002.\ctuatt 2003ACWII 200lActual1 2oot 1005 2006 2007 200I
Cnh IMl1'lod A«nMI !Mfflod I Cuh Method I E16'Ntad I P Pr Pf I
•.074 .271 3 W571 3,171.368 3.'70000
1,177,120
139,0::M
148,103
5.537,233
1,.,,11,5171
12139-4
"6.322
(6'0.623}
('87.033)
1,610.620
&<1 ,578
"""'
5.SSS.537
l ,0I U 0,3
7,568 780
(4,574,878) S,008S21 S 20111162 5,Sl.UO!i 5.859.2t l IOQ3 632
109.60'7'1 1131 7?1:'1 1'7°"3 1&1.n1 1110532 1eo.s:12
938.314 117.iS.5 1 396l'1 1 571.l71 17611.15"1 1 1 929.638 1 1595.2'61
(665,712) li6&.0!I& 15M520) 700.1111 717,~ 735,278 rn,;;152
1,n."53)~,;-~"=''·~--="='·="~-~•="=·"'~-=""="'~~='n~·•="•i
115,IDll ~,lllll 1730000
:Ml.11&3 1'15.5011 331 71D 1717,lll7 1 '"'C2 211,"lffll l 200 000
{s:M,114) 1.105.361 171.l(lg l,117n \Dll 1211 3E>J IIIII 1:J64le
• INTERE ST INCOME
IJAl..,tJCE FORWARD
(260.0111)
115,188
5.591,70! S,002.24'
82.975 ==:::~::~===~":"":~==:;:~~::t==::;~O):"":~==:;:~M~""::t==~~O)~..,~
S,002.244 l.U:2.277 I.S02.3117 l.Clel.278 1 2.552.1$8 2.528.787 1 2.752.6&1
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TRANSFER TO BONO FUNO
LOAN • GENERAL FUND
NE W DEBT PROCEEDS
AV AJLABLEFl~DS
CAPITAL PAOJECTS
DISTRI BUTION SYSTEM
CO tfflECTION FEES
DEBT SERVICE RESERVE FUND
-
-------
5,SO l,1'11l
S.OCl2.2 "' S
1.189.000l S
l.li13.2"' S
'-608.369
(1.1&3.321) (1 ,113,32 1) rnLIS2:2
100.lll
10.098 10.000
l.435,044 S
il .1890001 S
3.Jn.1110 S 1,502.)17 $
ti 250.000, S 1 250000l S
LESSOSIJ
lESSFRA,.CHISE TAX
tl ET REVE,.UE
ot eT SERVICE
4 38'278 ;1 _i.2G.sa 2718tl7 2042.IM 2049121
I
12011 000 (SIXl.000)1 (1 0.. .am 100.000 100.000
100.tuJ 100.00011 100.000I I 100.000 1100.000
10000 10000 1
I
30882tl s 2.5S2.658 I S 2.S2t.787 S
!12SO OOOl1S 1 2500001 1S 11,250,000I I S
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2752.6&1 S
f1 :?5(1 MIT $
10.000
2,759.12 1
l ,.-S0.0001
~.20II.IID.l11 S 41 7,216 I 5.633.905 S.&59.26 1 11.0Dl 632J
1U(l,IJ ! IS6223 1 IU,171 ! 1&0.532 HIO ~
1 •6&3U ! 1,64 1.370 l,8311Sl 1.m&.37 1,765.2156
I I
12"2.7SO I 1 357.911 1 l,357,S2S 1 357 5'2 1 3511,IJO
COVl:FIAOE R.Ano _________ -,,_-_-_-_-_~·:::·_·'+.,.-_-_-_-_~'_·="1,::::::::;:::~-·~"~::::::::::::~~.:;::::::::::::~··_,'°=i
,_ I . .,..,
""' ""' ""' ""'' ""' 2010 \
,.,.
"'"' '""' ,,.,.
c-.
'" -
j
,:,i
~ATER ENTERPRISE~ ?004:
.,_ Tn~•S\11O000
THIS c:~~~=-~L~ ATTEMPTS ro REMOVE ALL coN=T:"'~00
°'G'=e""Nc~v~MO=N-=evc,._---'---~---'-
. . . -~
IOI MtNCA INl FRESl :tun. !NTERU.1 FINANCING IN 1097, GO 80f.lO REFINANCE IN I091
REVENUE:
WATER SALES
RATE INCREASE
RA N WATER
OTYDITCH
01>£R
TOTAI..REVU.vE
--· ...,.,.,., --............
I ,.01•.ve S l,65,3,571
•.0U.271 365.3,571
1.1 n ,S20 1.610.820
139,034 .. ,,.
Ul.103 ,..,,.
'-"'.233 U55.S37
I s :J.671,368 II •=ooa s
3811368
-•
4,2$7CDI I I. ......
'907,(60
-p .
0070150 S -... ,
.., .. --
1,&A0.290 11110620 1 110.820 1,610.620 lllG.620 1110.&20 1 1510 620
2::~ ----,,::~:;,,;;-• 1--.1:.~·""c,--,"'::"':.,."".._--,s,:;ss:.,.ss"e-,--,-"::"'.:"""-~,::=::X,"-''
(4 ,4l.517l (4,42t.Q27)
/UI JIM\ 1101UIO71
"""' 1,01lil,903
5.622.5117 ~-,,.,..._~•~"'-'="-~'~'"=·'="+-~'-..... -"°'+-~'="'=·"='+-~"="·"=i'
(4,57'.ffl)C SOC8 S21 520&1&2 1~417,211 5.13311051 1!1.11159.281 l ,IU.l.&32
;:;;;;;:;;;:;;;::::_--~ ;j!!i_ _ ___::~~--J'!!!"ii"!ioni'.:·_:_::'._'.f~•lJ!"E"'?!~;?•?"?-"'!.f~~?• .. "!!'..~
7
\~-=-:::'..,.~.•'l!"~·"~'f~~!'aa"'!!'.",..·E~_\=_=...,5.,,l!,.,E_..,~a-l
NET OPfRA TINO REVENUE
931.314 :::::::"::::'·"':::'.:1::::::':"':":::':+==::::'·':::"::::·'::::":;::::':::"::::''::::":+==::::":::''::::·"'::::;:::':::"':::·:"'~
DEBT SERVICE fa.rrMt
PfUNCIPAL
IHTEREST
I
FUTUAED:::STSERVICE
16'0,623) (655,712)
('87,0lJI (03.,53)
(6.SS,712'1
(473.45,3}
...
1\$.IDJ'
7352 n«a&2
m.2M 72.171
1n.un
(2e0,081) (-'$3.225)
EROUTI::':::"""JCAPOT=:::;:"'~"'~"""'::=:::::_--..!!.!!!.!!!lL......._..-"'""'!L.----"'~!>!,'',o;n=~n~!l:-••~.,.!i)::==iJE'•.=~=Jnff"Lli!!i¢::=~1!!~~~n~,•Y•==!¥J5+-, ~~!!;!l""=~""
AYAILA8t.£REVEMJE (!t31.114) I 1~J611 111.1ni:w 108129 3538!11 136.438
• IHfEFW;ST INCOME
8AlAHCE FORWAAO
165,168
,.,,._,.. "·""
5,002,244
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TRANSFER TO BOHO FUNO ---'-
L0AH • GE NERAL FUND
~NE~W'.::OE~B'.i;T:;:""0C'.".~E:'.'.EO'.".S:::::_-------~----'----"--,l--"'-J,OOO.OOO l
AV,.ILA~ Fl.#«>S 5.SOl .793 4,608,369 •.S50.405 :_:_°::',2=,,.,,=,.,.,.~ .. ,,,~~---~-",=.,e>M';,>'i,11'2,:.:.-:;.-;, .. ~,_s,658;,t,:.:.-::;,~1'~1.=71£--t'+----=~2.~..,,d°'s, ... ';;_t:.-:,';;, .. ';o'I,'2'IJ•
CAPIT,.L PROJECTS !S ll,374) (1 ,183,32 1) (1,18.1,321) •~!22 1,209000 t IVWl,000 101,000 100,000 100,tn'
'"' 01STRl8UTIOH SYST EM • ~ 100,IIIE 100,IDII : 100,000 100,(D]
;CO;-;~CTI;ON;,~FE~E~S~~~~:= ___ ,,,,.,,,.,.,_ __ -",o~"'""----'"''"'896'------~ -=':::'"'°:::j::;::::;:~'::'"":'.t::;::::;:~"~°"'==t ;:::::;~':::'·"":'.t:;::::;:~'°~-CXXl==t ;:::::;;:;~'°::""~
t ,l"",lOI IIIA
OEST SERVICE RESERVE FUNO
5,002,::44 S
11119.n:n S
3,435.044 S
1.111900CI S
TO TAl CASHIJl'Vfllnct~ l.813.244 S 2.2411.044 S 2.127,980 S 252.lll7 I S l ,136271 1S I.J02.6SI I S 1.2711.717 S 1,$02.&M S 15011 12 1
WATER SALES REVE t«JE
.J',•'N WATER 1 610,&20
M.5711
150 000 1
""" 10000 1
11.122.2.a
sm.,u
111 10&20
M..576
150.000
I
"""' 10.000
721U10 1
5.723.SIJ
1.610,620
M..5 76 1
,so,CXX>
10.CXXI
10.000 1
711311.779
I
Ul0,620
'"" 150,000
""" """ ,.cm •JO
1 124 .ZI.I
1,110.&20
M576
'50CXXI
"""
LESSO&M 5.20U1&211 5 4 17.2 16 5631.to!ln 5.859.211 1 1 083.ID.!
~•,o.r="="~"--+-~'~'='~'~"';,-1''<-'_::_::.;'7.'=";m;:c+',-_-_-:_,~-:•="-;,.,"~',-._~-.,.";'="',,,'·".'"'.,,rl-""-~"".__,='"''°=-:·"'~
tOREVCNUE t .&6el'1 11141.310 1,&38 153 1.9008.17 1 765,261
I
DEBT SERVICE 1.242.750 1,357.991 1,357,525 1,357.512 1.3SU30
COVERAOE RATIO :_:_:_:_:_:_4l:_:_:_:_:,,'},,.i14---_ -_ -_:,_,_,Il,2't:_:_:_:_-:,,;;l,.ll14:_:_:_:_].,.,,,,,.,t:_:_:_:_.c,,.,.,oiqj -
~=t:======::t====l=====+====:::t:====t===:t===~==l ::::'.".'.'.eum.,~•-.. ==:::::l
,_
. .... .,. ...
2007
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20101
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COUNCI L COMMUNICATI ON
Date:
O ctober 18, 2004 I
Agenda Item: I Subject:
11 c iii Reso lut ion for Wa ter Rate Increase
Initiated By:
Utilit ies Depa rtm ent I
Staff Source:
Stewa rt H . Fo nda, Director or U tilit ies
COUNCI L GOAL AND PREV IOUS COUNCI L ACTION
In Jul y of 2003, Ci ty Co un cil adopted Res oluti o n No. 7 1, w hi ch approve d a 16 perce nt wa ter rate
increase that beca me effecti ve O ctober 1, 2003, and an addi ti o nal in crease of six percen t to
become effec ti ve Janua ry 1, 2005 .
RECOMME N DED ACTION
The Engle wood Water and Se we r Board re co mmended, at th eir October 1 2, 2004 meeting,
Council approva l of th e proposed reso lutio n. Th e propos ed ame nded increase would amend th e
six p ercen t in crea se and repla ce it w ith a 1 5 percent increase effective Janu ary 1, 200 5, an eight
pe rcen t increase effec ti ve Janu ary 1, 20 06, and eigh t perce nt in crease effecti ve Janua ry 1, 2007,
and a seve n pe rce nt in creas e effecti ve January 1, 2008.
BACKGR O UND, ANALYS IS, AND ALTERNATIVES IDENTIFIED
In 2004 the cons tant rainfall during t' 11m er month s produc ed ve ry little nee d fo r law n wa tering
and less wa ter was, th erefore, purchase a . This resu lted in a de pl etion of th e W ater Utilities' fund
reserves.
In 2004 th e audit revea led a dec rease in wa ter sa les reven ue 1. J'n th e 2002 leve l of appro ximately
ten percent. Reven ue fo r 2003 w as $3 ,6 78,368 compared wi th reve nue fo r 200 2 of $4 ,074,276.
Thi s dec rease in reve nu e was cause d by a simil ar de crease in th e amount of tr ea ted wa ter pum ped
to th e sys tem, whic h was in tum du e to bo th in creased wa ter co nserva ti on awa reness and an
increase in rai nfa ll during th e 2003 irr iga ti on seaso n. In :!004 th e timin g and th e amo unt of
prec ip itati on, as we ll as co nt in ued co nse rva ti on awa renes s, has res ult ed in an additi onal 20 perce nt
drop in tr eated water pumped to th e sys tem fr o m 2003 leve ls. It is th erefor e anticipa ted th at 2004
reve nu es w ill be subst antiall y les s th an th ose produced in 2003.
The curr ent bond cove nants govern the amoun t of reven ue requ ir ed. Reven ues must be 11 0
perce nt more than deb t service aft er payi ng ope rati on and mai nt enance exp ens es and mus t also
mai ntain a debt rese rve fund. Sho uld th e cove rag e requirement not be met, an inde pendent rate
ana lys t must determin e th e inc reases in reve nu es nee ded to mee t th e coverage requi rement in th e
fo ll owing yea r .
Th e prop ose d in crease \Vas rev iew ed by Black and Vea tch Consu ltin g En gin ee rs and \Vas
determ in ed l o be ap p ropriate.
FINANCIAL IMPACT
Bla ck & Veatch was retain ed to analyze va ri ous rate in crease alt r.rn ati ves. It was de termin ed th at
$3 ,000,000 in addi ti ona l b onding is required in lh e Wal er Fund l o compl etr, needed ca pital
projects an d maintain an adequate fund ba lan c e. Th e rat e increases are n ecess ary to me et b ond
coverage requirements for th e c urrent and proposed bond issues. It is proposed that lh e in c rease
o f six p erce nt passed by Reso lu tion No. 71, Se ri es 2003 b e amended and b e rep laced by an
increase of 15 p ercen t effecti ve January 1, 2005, an in crease of eighl perce nt effecti ve January I,
2006, an in c rease or eight perce nt effective January 1, 2007. an d an increase of seven percent
effective Jan uary 1, 2008.
Bo nd covena nts req uire that the City of Eng lewood m aintain a certain m inimum debt ra ti o. In 2002
Eng lewood fe ll below the minimum req uirem ent. Th e rat e increases prese nt ed are proj ec t, d to
insure bond covenants are met until 2008 unl ess th ere are un expected revenue sho rt fa ll s or
unanticipa ted expe nses.
LIST OF ATTACHMENTS
Reso lu ti on.
Summary of W ater Rate Find ings Stud y.
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