Transcript
Page 1: TOWN OF MOUNTAIN VILLAGE TOWN COUNCIL SPECIAL … · Jason Mumm, Executive Consultant June 12 2018 •!:> FCS GROUP Solutions-Oriented 2 Consulting . Page 2

Please note that times are approximate and subject to change. jk

06/04/18 Individuals with disabilities needing auxiliary aid(s) may request assistance by contacting Town Hall at 970-369-6429 or email:

[email protected]. A minimum advance notice of 48 hours is required so arrangements can be made to locate requested auxiliary aid(s)

TOWN OF MOUNTAIN VILLAGE TOWN COUNCIL SPECIAL MEETING

MONDAY JUNE 11, 2018, 2:00 PM 2nd FLOOR CONFERENCE ROOM, MOUNTAIN VILLAGE TOWN HALL

455 MOUNTAIN VILLAGE BLVD, MOUNTAIN VILLAGE, COLORADO AGENDA

Time Min Presenter Type

1. 2:00 Call to Order

2. 2:00 120 Work Session Telluride Regional Waste Water Treatment Plant Master Plan Implementation: Financial Analysis Presentation

3. 4:00 Adjourn

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Wastewater Rate StudyPresented by: Jason Mumm, Executive Consultant

June 12, 2018

TOWN OF TELLURIDE

Presented by: Jason Mumm, Executive Consultant

June 12 2018

•!:> FCS GROUP Solutions-Oriented Consulting 2

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Overview of Study Process

Fiscal Policies & Other Assumptions

Summary of Findings– Rate Forecast Scenarios– Comparative Survey

Questions/Discussion

Agenda

FCS GROUP Solutions-Oriented Consulting 3

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Study Schematic

Initial Project Meeting

" Initial Project ·-. Meeting !..---

Data Collection

and Review

FCS GROUP

Revenue Requirements

r----------

O&M

.----- ----, I Rnllewnue I I I I ;:::====:::: I I Other Revenue :

L----------•

Solutions-Oriented Consulting

© Cost of Service

&juity

Sensitivity Analysis

Peak / Seasonal / Off-Pe.ii! Flow

Strength

Customer Class

Rate Design

Residential

Lg Flow NonRes

SmFlowNonRes

Unmetered

Fil.ed Charges

Variable Charges

Other Service Charges

© Documentation

and Presentations

Draft1 March9

Draft2 March/April

PublicWorlc Senion March/April • •

_______ .. _ • • •

•,eview : Meeting • •

Benchmarking

Bench marking Analysis

•,Review : Meeting •

Rate Payer Education/ Communication

Recommend Utility BillFormilt

Final Report March/April

Public Worlc Senion June

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Utility Fiscal Policies

Fiscal Policy Purpose Target

Operating Reserve Liquidity cushion to accommodate fluctuations in cash flow

90 Days of O&M Expenses*(2019 Target: $376,000)

Capital Reserve To address emergency repairs and unanticipated capital repairs

1% of the cost of system assets*(2019 Target: $172,000)

System Reinvestment

Promote ongoing system integrity through reinvestment in the system

Annual Depreciation Expense: $315,0002019-23 Funding: $72,000 – $743,000/year

Debt Service Coverage

Compliance with debt covenants, preserving credit rating for future debt

issuance

(N/A – Town does not have any sewer utility debt requiring coverage)

*Combined operating/capital target balance: 150 days of O&M expenses

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Key AssumptionsAnnual Cost Inflation General: 2.5% Salaries & Benefits: 4.0% Construction: 3.5%

Annual Growth Rates 1.5% per year based on WWTP Master Plan

‒ ≈ 16 – 17 customers per year

Operating Forecast Generally based on 2018 Budget

‒ Adjusted for inflation in future years‒ Rate revenues based on projected

customer counts and usage‒ Mountain Village payments set at 35% of

treatment-related operating/capital costs

Debt Issuance Revenue Bonds

– 30-Year Term– 4.0% Interest Rate– Issuance Cost: 1.0% of Amount Issued

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Status Quo (Operating Only – No CIP)

With CIP (3 Capital Funding Scenarios):– Cash Only– Maximum Debt– Hybrid (Cash & Debt)

Summary of Scenarios Considered

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Findings: “Status Quo” Scenario

$1.3 $1.4 $1.5 $1.6 $1.7 $1.8

2018 2019 2020 2021 2022 2023

Millio

ns

O&M Expenses Revenue @ Existing Rates Revenue @ Proposed Rates

Existing Proposed Projected2018 2019 2020 2021 2022 2023

Annual Rate Adjustment 2.6% 2.5% 2.5% 2.5% 2.5%Monthly Residential Bill $30.54 $31.33 $32.11 $32.91 $33.73 $34.57Change From Prior Year +$0.79 +$0.78 +$0.80 +$0.82 +$0.84

Even with no CIP, rate increases are needed to keep up with rising operating costs and maintain prudent reserve levels

Status Quo is not really an option here – its shown for perspective on increases that would be required regardless of the capital projects

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Capital Needs Forecast

$- $2.0 $4.0 $6.0 $8.0

$10.0 $12.0 $14.0 $16.0

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

Millio

ns

Capital Costs by Year

$- $10 $20 $30 $40 $50 $60 $70 $80

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

Millio

ns

Cumulative Capital Spending

Summary of Projected Capital Costs 2018 – 2023 2024 – 2029 TotalBiosolids (WWTP) $18,486,000 $ - $18,486,000Liquid Stream (WWTP) 2,337,000 54,151,000 56,488,000Admin/Other 591,000 468,000 1,059,000Total $21,414,000 $54,619,000 $76,033,000

Focus for this study Future projects required

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Capital Funding Philosophy

Pros Cons

Cash Funding Lower overall cost May improve financial flexibility

Higher near-term rates Existing customers pay for

disproportionate share of costs May need to maintain higher cash

balances (unless debt can be issued)

Debt Funding

Mitigates immediate rate impacts of capital investment

Enhances “generational equity” by spreading cost to future customers

Higher overall cost (interest) May reduce financial flexibility (e.g.

coverage requirements)

FCS GROUP Solutions-Oriented Consulting 10

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$- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0

2018 2019 2020 2021 2022 2023

Millio

ns

Revenue Requirement Forecast

Rate-Funded Capital Operating ExpensesRevenues @ Existing Rates Revenues @ Projected Rates

MV Payments$7,288,000

34%Telluride Cash

$14,126,000 66%

2018 – 2023 Capital Funding Strategy

Findings: “Cash Only” Scenario

Rate increases needed to cover O&M and generate cash for capital projects 6% annual increases required in 2024 for the future CIP projects

Existing Proposed Projected2018 2019 2020 2021 2022 2023

Annual Rate Adjustment 225.0% 10.0% 10.0% 9.0% 7.0%Monthly Residential Bill $30.54 $99.26 $109.19 $120.11 $130.92 $140.08Change From Prior Year +$68.72 +$9.93 +$10.92 +$10.81 +$9.16

Telluride Cash 14,126,000

66%

FCS GROUP Solutions-Oriented Consulting

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$-

$1.0

$2.0

$3.0

$4.0

2018 2019 2020 2021 2022 2023

Millio

ns

Revenue Requirement Forecast

Rate-Funded Capital Debt ServiceOperating Expenses Revenues @ Existing RatesRevenues @ Projected Rates

MV Payments$7,288,000

34%

Telluride Cash$3,826,000

18%

Debt$10,300,000

48%

2018 – 2023 Capital Funding Strategy

Findings: “Maximum Debt” Scenario

$10.3 million in net debt proceeds → debt service of $639,000/year Rate increases are needed to cover O&M and debt service

– 130% rate increase needed in 2024 to cover second debt issue ($26.5 million of net proceeds)

Existing Proposed Projected2018 2019 2020 2021 2022 2023

Annual Rate Adjustment 89.0% 0.0% 0.0% 0.0% 0.0%Monthly Residential Bill $30.54 $57.72 $57.72 $57.72 $57.72 $57.72Change From Prior Year +$27.18 $0.00 $0.00 $0.00 $0.00

FCS GROUP Solutions-Oriented Consulting

Telluride Cash 3,826,000

18% ---

~ ,_, .__,

~ . - - ---r- • - • - • - • ~ • -I I I I I I

-

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$-

$1.0

$2.0

$3.0

$4.0

2018 2019 2020 2021 2022 2023

Millio

ns

Revenue Requirement Forecast

Rate-Funded Capital Debt ServiceOperating Expenses Revenues @ Existing RatesRevenues @ Projected Rates

MV Payments$7,288,000

34%

Telluride Cash$6,026,000

28%

Debt$8,100,000

38%

2018 – 2023 Capital Funding Strategy

Findings: “Hybrid” Scenario

$8.1 million in net debt proceeds → debt service of $503,000/year Rate increases are needed to cover O&M/debt service and generate funding for capital

– Increase of 9% per year needed from 2024-28 to cover second debt issue ($19.3 m of net proceeds)

Existing Proposed Projected2018 2019 2020 2021 2022 2023

Annual Rate Adjustment 89.0% 13.0% 13.0% 13.0% 10.0%Monthly Residential Bill $30.54 $57.72 $65.22 $73.70 $83.28 $91.61Change From Prior Year +$27.18 +$7.50 +$8.48 +$9.58 +$8.33

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FCS GROUP Solutions-Oriented Consulting 13

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Comparing Funding Alternatives“Status Quo” Scenario (No CIP) Existing Proposed Projected Cumulative

2018 2019 2020 2021 2022 2023 2019 – 2023Annual Rate Adjustment 2.6% 2.5% 2.5% 2.5% 2.5% 13.3%Monthly Residential Bill $30.54 $31.33 $32.11 $32.91 $33.73 $34.57Change From Prior Year +$0.79 +$0.78 +$0.80 +$0.82 +$0.84 +$4.03

“Cash Only” Scenario Existing Proposed Projected Cumulative2018 2019 2020 2021 2022 2023 2019 – 2023

Annual Rate Adjustment 225.0% 10.0% 10.0% 9.0% 7.0% 358.7%Monthly Residential Bill $30.54 $99.26 $109.19 $120.11 $130.92 $140.08Change From Prior Year +$68.72 +$9.93 +$10.92 +$10.81 +$9.16 +$109.54

“Maximum Debt” Scenario Existing Proposed Projected Cumulative2018 2019 2020 2021 2022 2023 2019 – 2023

Annual Rate Adjustment 89.0% 0.0% 0.0% 0.0% 0.0% 89.0%Monthly Residential Bill $30.54 $57.72 $57.72 $57.72 $57.72 $57.72Change From Prior Year +$27.18 $0.00 $0.00 $0.00 $0.00 +$27.18

“Hybrid” Scenario Existing Proposed Projected Cumulative2018 2019 2020 2021 2022 2023 2019 – 2023

Annual Rate Adjustment 89.0% 13.0% 13.0% 13.0% 10.0% 200.0%Monthly Residential Bill $30.54 $57.72 $65.22 $73.70 $83.28 $91.61Change From Prior Year +$27.18 +$7.50 +$8.48 +$9.58 +$8.33 +$61.07

FCS GROUP Solutions-Oriented Consulting 14

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Sample Monthly Bill Comparison

$29.89 $29.63 $30.22 $31.79

$28.00 $38.06

$30.22 $28.04

$49.21 $30.22

$22.34 $30.54 $31.33 $32.85 $37.50

$34.41 $57.72 $60.37

$49.21 $99.26

$52.23 $60.17 $61.55 $64.64 $65.50

$72.47 $87.94 $88.41

$98.42 $129.48

MontroseTelluride (2018)

Telluride (2019, Status Quo)Ouray

Crested ButteEagle River WSD

Telluride (2019, Max. Debt/Hybrid)Durango

Mountain VillageTelluride (2019, Cash Only)

Water Wastewater

Each utility’s rates reflect its unique demographics and operating/capital needs Rates for other jurisdictions are for 2018; may increase in subsequent years

________ ____...__.

$129.48

.,__. ..... ....___._....,.....,._..... $98.42

J.....lll,IIIIM,i,li&; ...... _---,1ILIILIILlillL&.,..-....I $88.41

FCS GROUP Solutions-Oriented Consulting 15

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Questions / Discussion• •:: > ___,;Q=a..=.;~~~=----:....--=--,;~~=-=---....=........."--------------

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Jason MummExecutive Consultant

[email protected](719) 284-9168

Contact FCS GROUP:(425) 867-1802

www.fcsgroup.com

•!:> FCS GROUP Solutions-Oriented Consulting 17

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TOVSN OE' MOT'NTATN VILT,AGETown CounciJ. Special. Meeting

ilune LL, 20182:00 p.m.

During Mountain Village government meetìngs and forums, there will be an opportunity for the public to speak. Ifyou would like to address the board(s), we ask that you approach the podium, state yorü name and affiJtatton, andspeak into the microphone. Meetings ate fi.lmed and archived and the audio is recorded, so it is necessâry to speakloud ¿nd clear for the listening audience. If you provide your email address below, we will add you to ourdistribution list ensuring you will receive timely and important news and information about the Town of MountainVillage. Thank you for yorü cooperation.

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Page 19: TOWN OF MOUNTAIN VILLAGE TOWN COUNCIL SPECIAL … · Jason Mumm, Executive Consultant June 12 2018 •!:> FCS GROUP Solutions-Oriented 2 Consulting . Page 2

TOWN OF MOT'NTATN VILI,AGETown Counci1 Special- Meeting

ilune LL, 2OLg2:00 p.m.

During Mountain Village government meetings and forums, there will be ân opportunity for the public to speak. Ifyou would like to addtess the board(s), we ask that you approach the podium, state your nâme and affútaaon, andspeak into the microphone. Meetings are filmed and archived and the audio is tecotded, so it is necessary to speak

loud and cleat for the listening audience. If you provide your email addtess below, we will add you to ourdistdbution list ensuring you will receive timely and impotant news and information about the Town of MountainVillage. Thank you for your cooperation.

NAME: (PLEASE PRINT!!)Ø EMA]L:

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