HomeMy WebLinkAboutVII(F) Water/Wastewater Fund Analysis Agenda 06-15-2004
Item VII F
Mayor , center of Good Li Commissioners
S. Scott Vandergrift AP-1— - -w.f.,. Danny Howell, District 1
Scott Anderson, District 2
Acting City Manager — Rusty Johnson, District 3
V. Gene Williford — - Nancy J. Parker, District 4
STAFF REPORT
TO: The Honorable Mayor and City Commissioners
FROM: Wanda Horton, Finance Director
DATE: June 7, 2004
RE: Water/Wastewater Fund Analysis
The rate study and"Financial Feasibility Report"conducted and prepared by Burton and
Associates summarizes the assumptions and projections of operations over a five-year period
(2004-2008)for the City of Ocoee Water and Wastewater Utility System.
Assumptions:
• The City will continue to provide services to its current service area and no material
changes will occur to reduce significantly the number of customers served or their
demand.
• Management has considered current and anticipated Federal and State government
regulations concerning environmental and other matters affecting operations of the
System.
• Increases in rate revenue due to growth are expected to average about 2.85%per year for
water and 4.35%for sewer based upon a projection of an additional 300 equivalent
residential units connecting annually.
• Water and Sewer Impact fee revenue is projected to average $498,000 annually based
upon 130 connections in addition to the pre-purchased capacity and/or impact fee credits.
• Cost of Operations and Maintenance are projected to increase 3%annually during this
period.
• A working capital reserve equal to three months of Operation and Maintenance costs will
be maintained.
• Annual debt service payments of $1,471,000will be paid from impact and user fees
• An annual interest rate of 1.5%will be earned on the funds.
• Capital expenditures in addition to the projects identified in the 2003 bond issue will not
exceed a designated amount each year.
• No additional bonds/borrowings would be required during the five-year period.
• Net Revenues will be sufficient to meet the debt service coverage as required by the rate
covenant. (110%of annual debt service payment).
The rate structure presented to the Commission and subsequently adopted by them is
projected to:
• Provide revenues to fund the operations and maintenance required on the system for the
period 2004-2008
• Provide funds for designated capital projects not included in the bond projects through
2008
• Generate funds to pay the annual debt service payments on the bond issues
• Generate revenues sufficient to meet the rate covenant coverage on the bond
• Maintain a three-month working capital reserve (fund balance) in the operating fund.
• Generate an additional$1,500,000 in revenue the first year(2005)over the estimated
annual increase of$158,000 due to growth
Summary:
The$1,500,000 to be generated the first year would equal $125,000/month.
The projected additional revenue to be generated the next four years (as a result of the rate
increase)would average $198,500 a year.
The $158,000 annual increase (due to normal growth)is approximately$13,167/month.
Based upon the assumptions and projections in the pro-forma,this fiscal year,the City should
realize $138,167 more monthly in revenue than it did last year.
• The increase in revenue received for the first seven months of FY2004 for commercial
and residential utility service is $1,060,471.
• This averages to$151,496 per month compared to the projected$138,167 per month.
• This difference of$13,329 per month would result in an annual increase of$159,948
more than projected if the current usage pattern continues.
• This amount will increase or decrease based upon usage.