Water and Sewer Increase Presentation

8/14/2019 Water and Sewer Increase Presentation

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Water and Sewer System FundFinancial Needs

City Council MeetingJanuary 14, 2010

Goal 8: Sound Governance

Goal 9: Infrastructure


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Purpose Statement

Provide revenue stream sufficient tosupport operations and debt service

requirements Maintain service levels and support

infrastructure renewal


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Definition of Roles

Public Works Committee Define operating and capital needs

Audit and Finance Committee Review options to achieve necessary

revenue levels

Recommend rates

City Council Adopt budget, capital plan and rates


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Recommendation

INCREASE FINANCIAL INVESTMENT TOPROTECT $1.2B SYSTEM Expand Infrastructure Replacements

50 yr average life cycle for pipes 28 miles/yr of 1400 total miles Current program is 14 miles/yr for 100 year replacement

cycle

Implement conservation projects Implement master plan projects Increase water supply capacity Implement water reuse projects Sustain operations and maintenance

ANNUAL CIP INVESTMENT REQUIRED

$24M to $40M


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Scale of the System

700 Miles of Water Pipe

700 Miles of Sewer Pipe

75 Miles of Raw Water Pipe 6 Pump Stations

11 Sewer Lift Stations

20 Tanks and Reservoirs

43,000 Customer Meters

6,000 Fire Hydrants

16,000 Valves


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BenchmarkingInfrastructure Condition

Source: American Water Works Assoc. (AWWA)

Water Distribution System Integrity Irving: 136 failures/100 miles pipe

Benchmark: Bottom Quartile >101.2

Wastewater Collection System Integrity Irving: 52 failures/100 miles of pipe

Benchmark: Bottom Quartile > 30.2

Pipe condition ranks in bottom quartile

1,200 breaks per year, 98 percent inolder pipes


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System Needs

Water and Sewer replacement is wellbelow needed levels

Line breaks continue to increase

Average CIP funding is only $15 millionper year

Average should be over $30 million


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Water Pipe Issues

Unlined Cast Iron

35 to 60 yrs old

140 of 700 miles

Breaks easily Water quality issues

Fiber Cement Pipe

28 to 40 yrs old

130 of 700 miles Breaks easily

Total Replacement 1,200 breaks per year

11 mi/yr, 25 yrs, 98 percent of breaks

from older pipes


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Quality WaterRequires Pipe Replacements


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10-Yr Average Pipe ReplacementInvestment

Pipe Replacement Spending Levels

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

Water Wastewater

AnnualSpending

10 Yr Average Spending Level

Spending Level for 50 Yr Avg Li fe

* Current expectation of > 100 yr life


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Pipe Replacement Criteria

Water Mains

Customer complaints

Water qualityreadings Break history Age

Sewer Mains Customer complaints

TV inspection results Ongoing

maintenanceproblems

Infiltration/Inflow Break history

Age


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JamisonSupply Line

PipeReplacement

Focus Areas

Cast Iron Pipe

Cement Pipe

12


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Water Pipe Age and Type

13


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Capital Budget FY 2010

Jamison Line (TxDOT) $11.00M

Tank Rehabilitation $ 1.00M

Water Replacements (Iron Pipes) $ 3.55M Sewer Replacements (EPA) $ 3.30M

Vault Rehabilitation $ 2.50M

Participation Projects (TxDOT) $ 0.90MSub total $11.25M

Total: $22.25M


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5 Year Total Capital Needs

Sewer Collection System $ 47.78M

Water Transmission Lines $ 26.63M

Water Distribution Lines $ 34.42M General Plant $ 39.07M

Meters/Vaults $ 12.25M

Pump Stations $ 2.35M Storage Tanks $ 5.00M

$ 167.5MAverage of $33.5M per year


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Key Projects 2010-2014

Jamison water supply line $11 million

SH 183 utility relocations $11.3 million

Other TxDOT relocations $20 million

Texas Stadium redevelopment $4.7 million

Water main replacements $21.4 million

Sewer main replacements $10 million

Delaware Creek interceptor $9.5 million Grauwyler to Rochelle interceptor $2.9 million

Total $90.8 million

Total system needs $154 million


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Capital Funding Strategies

35 percent of projects will be fundedby cash

$7-$11 million per year projected forpay-as-you-go projects

Drier years will generate additional

revenues that can be used for CIP Maximizing cash funded projects

reduces future debt requirements


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Additional Debt ServiceRequired

FY 2010 $ 1.06 million

FY 2011 $ 2.93 million

FY 2012 $ 5.79 million FY 2013 $ 7.68 million

FY 2014 $10.47 million

$27.93 million

Use of pay-as-you-go funding reduces additional

debt costs by $4.5 million per year for 10 years


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Water & Sewer Debt Service

Revenue Bonded Indebtedness to Maturity by Year

$-$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

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

2027

-28

2028

-29

Principal Interest

Principal

Interest


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Impact of Additional Debt

Average of $30 million in capital projects per year for 10 years

Pay-as-you-go funding reduces average total debt by $4.5 million per year

Revenue Bonded Indebtedness to Maturity by Year

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

2026

-28

2026

-29

Principal Interest New Debt

Interest

Principal

New Debt


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Development of Future WaterResources

FY 2009 $ 410,000

FY 2010 $ 500,000

Next 40 Years $ 400,000,000 Average of $10 million per year + interest

Water rights acquisition

Pipeline construction

Water storage and treatment

Options range from $150 to $600 million


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Current Revenue Stream

Water Sales $45.58M

Sewer Sales $25.13M

Interest on Investments $ 0.88M

Transportation Fees $ 3.40M

Other $ 3.27M$78.26M


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Source and Uses

Source of Funds $78.26M

O&M ($51.65M)

Net Available $26.61M

Financial policies target $29.8M

Used to fund:

Debt Service $19.85M Capital Needs $9.76M

Increase Fund Balance $0

Unfunded Capital Needs ($3.2M)


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Other Cities Rate Shock

Mesquite +13% water +11% sewer

Frisco +27% water +27% sewer

Plano +16% water +20% sewer Grand Prairie +14% water +11% sewer

University Park +15% water +20% sewer

Crandall +45% water +80% sewer


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Major Infrastructure Failures

Irving

Riverside Drive sewer line $5 million

Park Springs apartments (private line)

Fort Worth

54 water main break 12 cities without service

Dallas

84 water main break near White Rock station

Los Angeles: over 10 major breaks in last five years

Van Nuys 54 water main break

Century City 64 major break caused flooding


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Seasonal Factors

Coldest weather in more than a decade Extreme weather changes causes soils to

expand and contract Cast iron pipes are the most likely to break

Dallas had 105 water main breaks over thelast cold weather period, compared to a

typical 4-5 per weekend Dry summer months also see increased

breaks


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City of Dallas Line Breaks


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Moodys: Financial Best

Practices for Utilities

Well Managed Financial Operations

Committed to periodic rate increases

Maintain coverage ratios higher thanlegal requirements

Maintain strong working capital

Maintain competitive rates


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Moodys: Financial Best

Practices for Utilities

Desirable Service Area Attributes

Benefit from a steadily growing customer

base and strategic economic development Home to some of the largest employers in

the area

Capacity to Meet Future Needs?


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Benchmark Debt Ratio

Debt Ratio (%): Net funded debt, divided by the sum of net fixed

assets, plus net working capital

46%

42%

39% 39%

33%30%

27%

24%

15% 14%

10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

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Carro

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Resident Feedback

smart to plan to replace pipes before they cause anemergency. It is better to be proactive than reactive Doug Harper

I believe that increasing the water/sewer rates by 5%make perfect sense given the fact that the older pipes arebreaking down, the PVC piping will continue to cost Irvingmore in the future, and the disruption to Irving citizens willdecrease with new pipes installed Ronda V. Lane

I do see by the video that it is truly needed and with thecold weather here we really need to make sure we are allprotected in the end. You got our votes Nasario and

Anna Ramos


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Conclusion

Increasing costs, infrastructure needs,and debt service drive the need to

increase revenues this year Bond rating considerations are

important, but are overshadowed by

aging infrastructure needs/concerns


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Recommendation

Evaluate financial condition at year-end Know results of FY 2008-09 operations

Know increases in benchmark cities Increase rates by 5 percent

Avoid rate shock

Meet financial policy requirements

Insure ability to issue additional debt

Budget at least $7 million in cashfunded CIP projects annually


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Questions

Documents

Water and Sewer Increase Presentation