Washington Township 2018-2019 Budget Proposal

March 21, 2018

Board of Trustees

Our Principles

1. Preserve the rural character of our community

2. Operate in an equitable manner

3. Manage in a fiscally responsible manner

4. Provide friendly, respectful service

5. Promote a favorable business environment

6. Demonstrate the highest ethical standards

Agenda

• Year In Review

– Financial Goals

– Emergency Services Goals

– Infrastructure Goals

– Customer Service / Other Goals

• Major Influencing Factors

• Goals for the Coming Year

• Budget Overview

Goals Pursued - Financial

Goal Outcome

Collective bargaining with 4 UAW unions Commenced and continuing including IAFF one year early

Sell non-strategic land after rezoning by the PC

Offering pending on 43 acres and 5 acres; Rezoned Jewell to R1B 60 units

Re-evaluate W/S rates after getting County/GLWA increases

Done – 0% for water and 4.9% sewer due to sinkhole costs

Evaluate the impact of the SINKHOLE

Done – incorporated in rates

Community Center Feasibility Teams formed; architect deployed

Solid audit results Another solid year and clean opinion

Goal Pursued – Financial Results

• 2016/2017financials received a clean opinion from Plante Moran:

– Continued focus on infrastructure and service over bureaucracy

– Increased net position since 2009 despite taxable value remaining below 2009 levels – AA BOND RATING!

– Washington compares favorably to neighbors in net position as a percent of expenses for governmental activities.

– Continued aggressive cost management

• Staffing levels responsive to economics

• Reasonable cost structure per employee

• 2017/2018 Not yet complete but proceeding as anticipated

Surplus Fund Balance

Governmental Funds $ 239,174 $22,138,820

Enterprise Funds $1,855,052 $58,901,716

Total $2,094,226 $81,040,536

Township Taxable Value vs Net Position

20

22

24

26

28

30

32

34

36

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Taxable Value 1,315 1,260 1,155 1,122 1,088 1,113 1,146 1,200 1,241 1,374

Net Position 25.523 26.202 29.634 30.827 31.438 32.087 32.624 34.062 34.968 35.000

Taxable value has

rebounded from

the real estate

crash with the

help of new

construction.

Despite the 10

year drought, our

net position

(health) has

improved steadily.

Net Position as a % of Most Recent Year Costs For Governmental Funds

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

2010 2011 2012 2013 2014 2015 2016 2017

Washington (3/31) 270% 305% 317% 324% 330% 336% 351% 360%

Shelby (12/31) 202% 202% 195% 193% 191% 144% 146%

Bruce (3/31) 155% 148% 106% 91% 80% 64% 59% 38%

Romeo (6/30) 89% 79% 65% 39% 16% -41% -57% -50%

Operating with a Low Millage Rate

But Keeping Property Values High

-

50,000

100,000

150,000

200,000

250,000

300,000W

ash

ingt

on

To

wn

ship

Mac

om

b T

ow

nsh

ip

Shel

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Tow

nsh

ip

Bru

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ow

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ip

Ray

To

wn

ship

Arm

ada

Tow

nsh

ip

Ric

hm

on

d T

ow

nsh

ip

New

Bal

tim

ore

Ch

este

rfie

ld T

ow

nsh

ip

Ster

ling

Hei

ghts

Mac

om

b C

ou

nty

Ave

rage

Har

riso

n T

ow

nsh

ip

Clin

ton

To

wn

ship

Ric

hm

on

d

Uti

ca

Len

ox

Tow

nsh

ip

Fras

er

St C

lair

Sh

ore

s

Mem

ph

is

War

ren

Mt.

Cle

men

s

Cen

terl

ine

Ro

sevi

lle

East

po

inte

Source: 2017 Equalization Report Excludes 40 homes in the Lake Township portion of Grosse Pointe Shores on the very south end of Macomb County at $618,375; note that villages are combined with townships in this presentation.

Washington’s

approach to

development and

building a great

lifestyle has helped

us maintain the

highest property

values in the County.

Staffing Comparison

2008 Current Proposal

General 20 FT 1 PT 16 FT 1 PT 16 FT 1 PT

Fire/Ambulance 27 FT 15 POC 27 FT 9 POC 27 FT 13 POC

Public Works 13 FT 1 PT 12 FT 1 PT 15 FT 1 PT

Building Inspection 6 FT 2 POC 6 FT 7 POC/PT 6 FT 7 PT/POC

Total 66 FT 19 PT/POC 61 FT 18 PT/POC 64 FT 22 PT/POC

We continue at lower staffing vs 2008 despite the economic recovery and

despite having 1/3 MORE residents to serve.

The 2nd year of this budget will add 3 FT firemen for new station

Today assumes open accounting position (General) and engineer/inspector (PW) filled

Engineer and Insp in PW as home in proposal column as well as 2 new utility (camera/meters); Today is just Engineer/Insp

Floaters shown in their home dept. Elected shown in General

Staffing Cost Structure

2008 Now

Union CBA’s 7 6

Legacy $7mm unfunded; $1mm/yr after Permanently eliminated

Retirement Out of market Reduced by 7%-46%

Salary Some positions out of market Cut up to $10k – tier 2

Medical No responsibility; high cost Shared / mitigated cost

Time Off Out of market Reduced (tier 2)

COLA Auto Cola – no incentives Some incentivized

Clerical Probation 3 months 2 years

Flexibility to shift Limited Broad

Other New hires get same benefits Tiered

We reduced the cost per employee, not just the number of employees.

This budget assumes the same contracts plus COLA.

Goals Pursued – Emergency Services

Goals Outcome

COMTEC Conversion Done – EMD recently in; reasonable priority guidance; reporting issues

Fire station land and initial design Acquired 2 parcels; not yet designed

Install 3-5 “dry hydrants” Still working through challenges; 1 new project going in with hydrant

Re-deploy fire resources Done

CAD Units in trucks Maps, building footprints, hydrants in

Hose purchases This traunch is done

Ambulance remount Done

Goals Pursued - Infrastructure

Goals Outcome

Garland parking lot (finalize) Lot complete; ticket station outstanding

3 Miles of limestone Done – Schoennher 26 to 29 Mile

Township lot (punch list) Done

Sewer plant construction Underway – complete in < 12 months

Acquire a backhoe Postponed

Election equipment Done

Pursue strategies to generate economic activity in Van Dyke corridor (sewer)

2 SADs circulating (TWP may do one)

Goals Pursued – Infrastructure, continued

Goals Outcome

GIS – incorporate storm sewer Postponed (potentially indefinitely)

Continue sewer integrity efforts Asset mgt strategy devised - $1mm each year (Hayes Rd $1.8mm plus grouting and pipe repair) and new camera truck

Pursue replacement of older water meters

Replaced 315 meters this year

Next phase of sidewalks

Proposal before board for West; Octagon repair pending; meeting Breckinridge

North side windows, vestibule improvements, board table, LED sign, sound system, and chairs

Postponed

Potentially internal road and water lines for community center

Postponed – CC teams now meeting

Goals Pursued – Customer Service

Goals Outcome

Issue Master Plan

Hearings held, neighboring communities and agencies solicited, awaiting PC

Invasive Species Efforts

Grant assistance received and spent for Macomb Trail (4X), Campground Y, Meijer, Twp properties; AF Jonna; Willow Ridge and Trailside (they paid for cut)

Conclude on monthly vs quarterly water bills

Postponed

Improved communications bi-annually with the public

Issued 4 communications to date

Planning and Zoning software

Proposal before the board tonight

Manage development Another challenging year – see list

Development Issues Impacting Planning, Public Works and Building

Commercial/Industrial

Total Soccer Proline Asphalt Radio tower

Go Ape/Baypoint/Boat launch

TBD Industrial Bldg Romeo High

Washington Landing PUD Vanessa Center Mods Gemelli Concrete

Capital Pointe Office Trailside Ice cream Van Dyke Retail

Newberry Commercial Mines (brownfield, etc) Orchard Ridge Church

Cavataio Center Michaelangelo (Dinoto)

Development Issues Impacting Planning, Public Works & Building

New Residential

Newbury On the Green

7 Lakes Expansion (3)

Kirkway Expansion

Washington Creek PUD

Wood Duck Court

Washington Landing PUD (residential)

Township Acreage (43 acres)

Powell Ridge

Forest Brook

White Oaks

Meadowland

Veridian

Ongoing Residential

Park Avenue

Bradbury

Glacier Club

Greystone Estates

Orchard Brook

Orchards Hillcrest

Franklin Park (including drainage issues)

Stonecrest

Accessory Structure Amendment

CCN and Hidden Pond drainage issues

Goals Pursued - Talent

Goals Outcome

Continue to recruit POC/PT Ongoing battle

Hire engineer/inspector Postponed to this next budget

WS Field Hires Done

Other Accomplishments

Authorized new pumper GLWA amendment Drone

DPW/Fire trailers Policy to finance utility expansions

Comment policy

Stretchers Water asset mgt plan authorized

Managed dewatering issues and added 26 customers at Powell

AT&T settlement Managed sinkhole comms and legal decisions

Upgraded fire code

Fire Chief contract WBRW anniversary and continued improvement

Held emergency drill

Waste events Fire grants (Gloves/Foam) Metropark relationship

Parking lot light repair and sealcoating

PC, ZBA, Library/BOR appts Updated Engineering Ordinance

Other Accomplishments, continued

Began sign ordinance review

Commenced Community Center teams

Partnered with Octagon on silo drill

Federal Investigation

Federal Investigation

• The Federal investigation was known to limited persons in Washington Township offices who had initiated some of the probe.

• It has been a substantial drain on intellectual capital and operations for years.

• The ongoing Federal Investigation has so far netted 19 persons.

• It is far from over as is the backlash against those who helped.

• Clinton Trustee Dean Reynolds

• Chesterfield Supervisor Mike Lovelock

• Macomb Trustee Clifford Freitas

• Macomb Trustee Dino Bucci

• New Haven Trustee Chris Craigmiles

• New Haven Trustee Brett Harris

• Detroit Deputy Poice Chief Ceila Washington

• GWE Engineer Paul Modi

• GWE Engineer Jim Pistilli

• Washington PWD Steve Hohensee

• Shelby Engineer Fazal Khan

• Motor City Rep Robert Maechtle

• Chuck Rizzo (trash)

• Charles Rizzo (trash)

• Chris Sorrentino (Macomb contractor)

• Angelo Selva (attorney)

• Quinton Ramanauskas (Rizzo)

• Derrick Hicks (trash)

• Gasper Fiore (towing)

Background Factors Impacting 2018/2019

• Property Values

• Federal initiatives on tax reform and infrastructure

• State budget impact on revenue sharing (assumed 2% increase) or cost pushdowns

• CBA impacts (none assumed other than inflation)

• Sewer system expansion

• Fire expansion

• Commercial market uncertainty

• Priority balancing given financial and intellectual resource limitations

• Significant infrastructure spend

• Interest rate changes

• Continued population migration

• The Federal investigation

General Fund Profit (Excluding Transfers)

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,0002

00

8

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

P

20

19

B

20

20

B

03/2017 is the last “actual” year available. 03/2018 is conservatively projected. It is lower than budget due to the lack of a land sale but that is offset by less sidewalk and other capital spending than anticipated. 03/2019B assumes the 43 and 5 acre land sales. Without the land sales, the 03/2019 would be $102k loss due to significant capital investments (West Road sidewalk alone is $200k). 03/2020 is positive but bears a $300k investment in sidewalk near Hevel.

General Fund Revenue Trends We’re Finally Recovering BUT with MORE People to Serve

791

817

783

708 697

675 690

714

763 773

800

845 858

550

600

650

700

750

800

850

900

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18P

20

19B

20

20B

Property Tax Revenues Due to State law, the dramatic

decline in property values is not

reversed by subsequent dramatic

increases for existing, unsold

properties. Taxable value increases

are capped at inflation plus

additions.

We are finally drifting back to 2009

tax revenue levels due to market

recovery PLUS significant

development.

During the downfall, we avoided tax

increases through cost controls

despite inflationary cost increases

and additional clients to serve.

General Fund Revenues Other Trends

0

200

400

600

800

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

P

20

19

B

20

20

B

Interest Revenues

0

200

400

600

800

1000

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

B

20

19

B

20

20

B

Other Revenues

0

500

1000

1500

2000

2500

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

B

20

19

B

20

20

B

Revenue Sharing

Lower interest

absorbed thru cost

control measures.

Interest rates,

improved savings,

and change in

approach is

improving interest.

The census will help

SRS which helped

mitigate some

revenue losses since

‘08. However, we

have more people to

serve. Estimates are

conservative.

Other revenues

exclude the land

sale and cable fees.

They are lower due

to lack of

Romeo/Bruce fees,

lower SADs, and

grants.

General Fund Expenses

2018B had a number of budget items that increased costs. We postponed the costs for another year, driving up 2019B costs. Key items included in 2019:

• Board room

• Vestibule

• Paint

• Sign

• Windows

• Planning software

• Legal for CBAs, etc.

• Sidewalks (see left)

0500

1000150020002500300035004000

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

P

20

19

B

20

20

B

Red line is

2008 inflation

adjusted by

1.5% per year.

All other than

‘09 expense

would be

>$300k more if

OPEB not cut

West Road sidewalk ($200k) in

2019 and Hevel ($300k) in 2020 vs

generic $100k (not spent ) in 2018.

Improvement Revolving

2019 2020

Powell area road 2,750,000 1,650,000

3 miles of limestone 30,000 30,000

Planner & Architect 100,000

TIP or microsurfacing 50,000 200,000

Watershed Training 600 600

Engineer 5,000 5,000

NPDES permit 500 500

PEP assistance CRWC 1,800 1,800

Workshop 500 500

Mac Orch Trail 5,000 5,000

Dry Hydrants 28,000 28,000

Siren Main 4,500 4,500

Total Estimate 2,975,900 1,925,900

Figures assume no SAD for the road project and also do

not consider our share of a sewer line SAD.

Police Trends Revenue and Expense In Sync

0

500

1000

1500

2000

2500

Rev

Exp

Rev 1237 1259 1176 1177 1111 1081 1081 1133 2341 2084 2189 2183 2226

Exp 834 863 868 869 851 981 1005 1200 2017 2052 2094 2129 2213

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018B 2019B 2020B

New Deputy added Nov 2011

Doubled to 14 Jan 2015 following millage increase

Fire and Ambulance Income / Loss History

(2,000,000)

(1,500,000)

(1,000,000)

(500,000)

-

500,000

1,000,0002

00

9

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

B

20

19

B

20

20

B

Income Income history is driven by major capital expenditures

- Fire station (3/11) - Tanker (3/17) - Dispatch/CAD (3/18) - New Station land (3/18) - Ambulance remount and

hose (3/18) - Engine (3/19) - Tanker (3/20) - New Station (3/19 and

3/20) - 3 New FT – (3/20)

Fire / Ambulance Revenues

2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018

B2019

B2020

B

Tax 4244 4297 4060 3650 3590 3490 3575 3696 3913 4273 4422 4888 4986

Amb Fee 315 388 452 498 445 529 589 521 538 538 520 500 500

Grants 13 44 0 1436 180 34 43 16 148 2 0 0 0

Int/Other 324 442 54 67 43 58 101 4 58 104 49 94 94

0

1000

2000

3000

4000

5000

6000 Taxes hurt by the market decline

finally rebounding due to new

construction. But now we serve

more people.

Amb. fees are uncertain. Interest

also is insignificant. Both were

estimated conservatively.

To maximize value to customers, we

rebalance emergency millages each

year based on where the capital

spend needs are without increasing

taxes.

Fire and Ambulance Expenditures

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018B 2019B 2020B

Exp 3574 4430 4273 6726 4443 3613 4009 4230 4159 4816 5162 7113 6579

0

1000

2000

3000

4000

5000

6000

7000

8000- Fire station (3/11)

- Ambulance

10/12/14/15/16/17/18/19

- Tanks (Grant) bought in 2015.

- 3 new paramedics in 2016

- Tanker (3/17)

- Dispatch/CAD (3/18)

- New Station land (3/18)

- Ambulance remount and hose

(3/18)

- Engine (3/19)

- Tanker (3/20)

- New Station (3/19 and 3/20)

- Additional staffing in 3/20

OPEB was only in 2009; would be

> $350k/yr if not cut)

Why Invest in Personnel and Stations

• Run Count is up 29% since 2009.

• Influx of development and senior living creates a need.

• We were DOWN staff prior to last hires since ‘08.

• Counting brass, we have 1 FF per thousand residents. Bruce/Romeo were at 1.8 per 1,000.

• Every 3 hirings raise costs $200-400k over time.

0

1000

2000

3000

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Runs

Runs

Manpower Factors:

Only 28% hydranted

Metropark (2mm visitors/yr)

We transport

36 square miles

M53 split

Home compostion –petrochem

Age and existence of assisted living

Fire Department Cost Mitigation Efforts

• Split various Coordinator positions between shifts

• Created a shifted part-time role with cooperation from unions.

• Expanded mutual aid to automatic mutual aid for fires to increase resources.

• Improved tech for report processing to reduce man hours.

• Eliminated Clerical Position

• CBA Concessions:

– OPEB eliminated

– Some COLA shifted to bonus

– Reduced retirement

– Increased staff medical cost

– Restructured new hire pay

• Shifted to ambulance remounting

• Merged Fire Marshall and Assistant Fire Chief (till 2019)

• Now using COMTEC to free staff

Health Governmental Fund Balances

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008200920102011201220132014201520162017201820192020

Police

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2008200920102011201220132014201520162017201820192020

General and Other

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fire/Amb

Health is strong. Aggressive spend

(for parking lots, roads, tanker,

ambulances, station, etc) will reduce

fund balances somewhat. We still

have > 1 year in reserve for General

1.5 for Fire/Amb and 2 for Police.

Note that you need 70% of budget

to cover timing.

Enterprise Funds

Enterprise funds are government run businesses:

– deliver services not done best by private enterprise

– no taxing authority or use of taxes

– generate revenues from fees for the services

– recover their cost of capital expenditures over time

– Cannot be supported by tax $.

Building Fund Fees

• Charges fees for reviewing building plans and inspecting construction.

• Revenues from:

– Plan review fees

– Bldg. inspection fees

– Electric inspection fees

– Plumbing inspection fees

– Mechanical inspection fees

• Expenditures are primarily for personnel

• We turned this fund around by:

– Use of paid on call

– Pay freezes

– Staff reductions at key times

– Elimination of Opeb ($1mm liability and $114k per year)

– Absorbing other activities

– Significant CBA concessions.

Building Fund Major Assumptions of Budget

• 175 Residential new home permits

• $70k of Commercial permits

• 425 Misc Building permits

• Building Official has help of Facility Mgr and OE officer and Engineer

• Continued POC model for Plumbing, Mechanical, Electrical

• 3 Clerical plus a part timer

• Many cost risks are revenue dependent

• Capital for field PCs

Building Fund Revenue/Expense Trend

-75-249 -295

-75

72187 160 237 293

425 385270 254 247

-500

0

500

1000

15002

00

7

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

P

20

19

B

20

20

B

Revenue

Expense

Net Income

Had OPEB not been cut out, profits would be reduced by $100k/yr or more.

Note that, due to market uncertainty, we typical budget this fund

conservatively. Revenues for the current year are projected to be

almost $200k higher than plan as is net income. The next two years

are planned based on 175 housing units.

Building Fund Permit Trend

0

100

200

300

400

500

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

P

2019

B

2020

B

Com

Res

Peak residential building was 422 in 2000. Low since was YE 3/31/2010. 2018P was budgeted at 175 homes and we have 167 with 2 weeks left. 2019B and 2020B assumes 175 residential each.

Profitability is largely maintained by cost

flexibiilty down to 100 residential permits.

Building Fund Fund Balance

-1000

0

1000

2000

3000

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

P

20

19

B

20

20

B

Fund BalanceFund Balance was $1mm worse than shown here prior to eliminating unfunded OPEB. Note that in addition to having negative equity AND a $1mm unfunded liability, this fund owed several hundred thousand to the General Fund. It now has no legacy, debt or negative equity – a > $3mm swing!

Low point was $100k negative equity plus $1mm

OPEB liability plus several hundred thousand of

debt to the General Fund in 2010

Water and Sewer Fund

• Delivers water and transports sewerage for 6,045 “accounts” or approximately 20,000 “People” by DEQ standards.

• Revenues from:

– per unit charges

– fixed meter charges

– contributed pipe

– tap and capacity fees

– interest

– Permits/Inspection fees

– Grants

• Expenditures for: – Pass-through cost of GLWA

for water (fixed and variable)

– Pass-through cost of GLWA, Macomb County, and Macomb Township for downstream sewer transport

– Infrastructure, mostly within the township (lines, pump stations, meters, trucks, remote readers, etc.)

– Field personnel

– Administration

Water and Sewer Key Infrastructure

Sewer System • 390,842 feet of sanitary sewer

main (74 Miles)

• 5 pump stations

• One meter pit

• Sewer plant (pending)

• 3% “ownership” of 11 member district assets

Water System • 515,338 feet of water main

(97.6 Miles)

• Water storage facility (1.5mm g)

• 2 booster stations

• 2 GLWA meter pits

• 7 pressure reducing valves (PRVs)

• Meters / remote reading devices

Water and Sewer Active Accounts Trend

0

2000

4000

6000

8000

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Accounts

Customers

Water Only 588

Water & Sewer 5,237

Sewer Only 220

Total Accounts 6,045

RN

*excludes all Sprinkler accounts

96%

4%

Residential

Non Residential

Accounts

DPW Specific Key Drivers

• Economic development of north end through sewer project

• New rates from GLWA/County for water and sewer (estimated to be 3.1% and 7.5%).

• Development projects underway and in infancy

• System maintenance / System Integrity

• Aging meters

• Lead and copper rules

PW Budget Assumptions Water

Water Purchases – Assumes we buy 73,800 MCF

based on GLWA projections for Yr 1. The 5 year average is 72,200.

– The purchase commodity and fixed rates for Yr 1 are based on the weighted average published rates for the year from GLWA

– The purchase commodity and fixed expense for Yr 2 are inflated at 3%

Water Sales – Assumes we sell 73,800 MCF

based on GLWA projections for Yr 1. The 5 year average is 72,200.

– The sales rate assumes no change in volumetric rate for either year.

– We assume a 3% growth on fixed charges due to new customers each year.

PW Budget Assumptions Sewer

Sewer Purchases

• Based on 5 year average of our flows vs total, we pay 2.807% of the County costs

• We use their projection of a 7.5% increase for the last 9 months of Yr 1 over current charges.

• Year 2 includes a 5% expense increase.

Sewer Sales

• Both fixed and variable revenues are assumed to be increased in Yr 1 by 8% over the projected year end 3/31/18.

• This % is due to growth assumption of 3% and rate increase of 5%.

• Year 2 we increased both fixed and variable by 5% (higher than water because we assume water RATE increases are frozen and they only experience growth).

Other Key Assumptions

• Staff - 1 PW Director, 8.5 Field, 4 clerical, and ½ Engineer ¾ inspector

• Maintain focus on significant maintenance and capital

• Plant - built by year end. Operator hired in August. Hauling starts Jan 2019 through end of year 2.

Why Are Water Rates Higher Here?

GLWA sets rates based on 3 factors –

• distance from plant (we are far)

• Elevation (we are high)

• usage during peak times (we are a bedroom community).

Washington prefers lower density development so has a higher infrastructure cost PER CUSTOMER because a mile of water main in another community might be borne by many more homes than it is in our town. That is a cost we bear for our lifestyle choice.

0

2

4

6

8

10

5 Year AverageIncrease Pre-

Storage

2016 2017

% Increases Passed to Customers Before Vs After Building a Water Storage Facility

Zero

The Water Storage

Facility Is Benefiting

Customers

Investments Paying Off for Residents

Water and Sewer Income

Overall income of $3mm for YE 2019 and $2.3mm for 2020. The net income includes contributed pipe (not cash) which, for each of the two years, is less than the total income. We need to cover bond principal of $811k per year over 20 years. Note that Opeb would have hurt by $200k per year if not cut. -1000

-500

0

500

1000

1500

2000

2500

3000

3500

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

B

20

19

B

Income

Pipe

TRUE

Major Capital Initiatives 2019 2020

Waste Water Treatment Plant 11,163,565

Water Main Extension on West Side 1,000,000 1,000,000

Hayes Road Pump Station Rehab (1976) 900,000 900,000

Sewer Line to 31 Mile 875,100

30.5 Booster Station Rehab (1995) 300,000

Transit Truck for Sewer Televising 250,000

Contracted Sewer and Manhole Replacement 100,000

Meter Change Out Program 86,000 90,000

Worksite Pro 45 Incompact Track Loader (Skid Steer) + Trailer79,000

Scada System Upgrade (60/40 W/S) 50,000

Upgrade to Mega Net Collection System (MTU Tower) 49,850

F150 4x4 with Plow/wo Plow 34,252 22,000

Temporary Pressure Monitoring Stations 12,240

Rain Guage 10,000

Tapping Machine 8,500

Backhoe and Dump Truck 235,000

PRV Pits/Booster Station VD/26 and Jewell/27 100,000

Vactor Truck Replacement (1994) 300,000

29 / VD Booster / Meter Pit (another water access point) 400,000

14,918,507 3,047,000

Funded from Bond 7,525,722 -

New Cash Outlay 7,392,785 3,047,000

Sewer plant

Cash Needs

2019 2020

Net Income 2,979,000 2,347,000

Subtract Contributed Capital (2,162,000) (2,084,000)

Add Back Depreciation 1,680,000 1,976,000

Net Available for Capital and Debt 2,497,000 2,239,000

Capital Not From Bond (7,393,000) (3,047,000)

Principal on Bond (811,000) (811,000)

Cash from Reserves (5,707,000) (1,619,000)

The capital investment program results in a decrease in

cash in the short term in return for future cash flows

going forward. These cash needs are funded from

earmarked cash of $10mm of our $20mm of working

capital that was set aside for exactly these purposes

years ago.

Risks and Opportunities

Risks

• Revenue Sharing • Ambulance fees • Property Tax Values – long term • Infrastructure deterioration • Facility needs • Push down from State/County • Service level requirements • Building trends • New regulations for Flint driving

costs for local governments • CBA negotiations • Land price risk

Opportunities

• Attrition causing more 2nd tier • Markets – interest • Building trends • Grants • Revenue Sharing • Ambulance fees

Resident Benefits Over Bureaucracy

2008 YE 2019

Full time staff 66 FT 64 FT at a lower cost per person

Unfunded Legacy $7mm Eliminated

Police 6 14

ISO ratings 5 and 9/10 3 and 4/10

Infrastructure dilapidated Lined and repaired sewers Added water main Built a water storage facility Built a new fire HQ New sewer plant 5 miles paved road 24 miles limestone New water tanker New ambulance fleet Public parking 180 acres added land

Fund bal. (net of $7mm legacy) Governmental (5 legacy) Enterprise (2 legacy)

$14.4mm $46.9mm

$18.6mm $64.5mm

Operating with a Low Millage Rate

But Keeping Property Values High

-

50,000

100,000

150,000

200,000

250,000

300,000W

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ip

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Ch

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Har

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ow

nsh

ip

Clin

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To

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Ric

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Uti

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Len

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Fras

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Source: 2017 Equalization Report Excludes 40 homes in the Lake Township portion of Grosse Pointe Shores on the very south end of Macomb County at $618,375; note that villages are combined with townships in this presentation.

Washington’s

approach to

development and

building a great

lifestyle has helped

us maintain the

highest property

values in the County.

Health Governmental Fund Balances

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008200920102011201220132014201520162017201820192020

Police

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2008200920102011201220132014201520162017201820192020

General and Other

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fire/Amb

Health is strong. Aggressive spend

(for parking lots, roads, tanker,

ambulances, station, etc) will reduce

fund balances somewhat. We still

have > 1 year in reserve for General

1.5 for Fire/Amb and 2 for Police.

Note that you need 70% of budget

to cover timing.

Sampling of Businesses Choosing Washington - 2009 to Present

Jake O’Malley’s

Brown Iron Brewery

Art and Jakes

Pizza Nostalgia

Bangkok Cuisine

Sapori’s

Taco Bell

Pamela’s Catering

Jimmy Johns

Michigan Planners

Angelica’s Place

Pure Sleep

Powerhouse Gym

Salon V

Total Health Systems

Miracle Ear

AAA

Anytime Fitness

Sylvan Learning

Movement Project

Yoga

Salvation Army

Advanced Auto

Rite Aid

Brush Salon

Momentum Church

All State

Crittendon Medical

Katy’s Corner

Autozone

Serra Kia

ReCycle Fitness

Verizon

Total Soccer

Sally’s Beauty

Orielly’s Auto Parts

Basement Salon

Diversified Financial

Escape Room

Randazzo Call Center

United Framing

Gemelli Concrete

A Great Place to Live…

3 local orchards

20 dine-in 12 fast-food restaurants

Several golf courses

Sports facilities

Amazing emergency services

Clean water and waste services

Park’s and Recreation activities

AA bond rating

Washington Historical Society Museum

Octagon House

Art Guild

Macomb Orchard Trail.

Washington Lions

Sportsman’s Club,

Boys and Girls Club

Library and Schools

WBRW TV

16 religious congregations.

Stony Creek Metropark

• swim,

• fish,

• bike,

• nature center,

• disc golf,

• boat,

• sled,

• cross country ski,

• music in the park,

• camp,

• zip-line aerial course.

More to come…

What is Next?

• Must adopt budgets by 3/31.