WEDNESDAY, AUGUST 5, 2020 5:00 PM Commission/2020...communications media technology pursuant to Executive Order Number 20is -69, issued on March 20, 2020, section 120.54, Florida Statutes,

CITY OF TREASURE ISLAND NOTICE OF PUBLIC MEETING

WEDNESDAY, AUGUST 5, 2020 5:00 PM

NOTICE IS HEREBY GIVEN that the Treasure Island City Commission will hold a public meeting by means of communications media technology to which all persons are invited, at 5:00 pm on Wednesday, August 5, 2020.

NOTE: The Change of meeting location from in-person at City Hall to a meeting by means of communications media technology is pursuant to Executive Order Number 20-69, issued on March 20,2020, section 120.54, Florida Statutes, and the City’s Proclamation, as subsequently extended, andResolution 20-04 dated March 24, 2020.

A copy of the agenda and all supporting documents will be available on the City’s website on July 31, 2020, www.mytreasureisland.org, by contacting City Clerk Nickerson at [email protected], or by calling her at (727) 547-4575 x229.

Provisions have been made for any member of the public desiring to observe and/or participate to have access to the meeting. There are five ways to observe the meeting:

1. Watch the meeting on TV, but not participate. As always with the City Commission meetings,anyone can watch the broadcast from Spectrum channel 644.

2. Watch the meeting online, but not participate. As always with the City Commission meetings,anyone can watch the livestream from the City’s Website at: http://treasureislandcityfl.iqm2.com/

3. Watch the meeting and participate, using GoToWebinar. Any one may register to attend theGoToWebinar and view the meeting on their computer by visitinghttps://global.gotomeeting.com/join/824769133.

4. Listen to the meeting on the phone: Anyone may listen on the phone by 1 (872) 240-3412.When the meeting ID is requested, enter the access code of 824-769-133 and press the # key.

5. Watch at City Hall and participate. While City Hall remains closed to the public due to theCOVID-19 emergency, the City will open it briefly for the meeting to allow public comment tooccur subject to all applicable emergency measures in place to prevent the further spread ofCOVID-19. Further, City Hall will have computers set-up to allow anyone to watch and/orparticipate using GoToWebinar. City Hall is located at 120 108th Ave., Treasure Island, FL 33706.All interested parties are required to abide by all State, County, and local emergency orders and areurged to remain at home and practice social distancing.

There are additional ways to provide public comment for the meeting: 1. Calling. By call 727-547-4575 ext. 229, which includes using a TTY line, anyone may leave a

voicemail message, which will either be transcribed and read or replayed during public comment.

26407/008/01585467.DOCv1

http://treasureislandcityfl.iqm2.com/https://global.gotomeeting.com/join/824769133mailto:[email protected]:www.mytreasureisland.org

2. Email. By sending an email to the City Clerk at [email protected] which will be read during public comment

3. Mail. By mailing any written comments to the City Clerk 120 108th Ave., Treasure Island, FL 33706, which will be read during public comment

When providing public comment by any of the means described above, the person should state their name, address, and identify that they are offering general public comment or the specific agenda item they are addressing. Public comments offered using communications media technology will be afforded equal consideration as if the public comments were offered in person. The public can obtain additional information and instruction regarding participating in this meeting by calling the City Clerk at (727) 547-4575 x229 or visiting the City’s website https://www.mytreasureisland.org/residents/departments/information_technology/virtual_meetings.php

Any person with a disability requiring assistance, auxiliary aids, and services for this meeting may notify the City Clerk at (727) 547-4575 x229 or calling 711(TTY) at least 24 hours prior to the meeting.

For any person desiring to appeal any decision made by the City Commission with respect to any matter considered at such meeting or hearing, he or she will need a record of the proceedings, and that, for such purpose, he or she may need to ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based, pursuant to s. 286.0105, Fla. Stat. Any transcript shall be requested and made by the individual requesting same at his or her own expense. Therefore, a court reporter may be desired or required accordingly. A video of this meeting may be requested through the City’s record custodian, City Clerk Ruth Nickerson at [email protected] or by calling her at (727) 547-4575 x229.

26407/008/01585467.DOCv1

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NOTICE AND AGENDA CITY OF TREASURE ISLAND, FLORIDA

BOARD OF COMMISSIONERS SPECIAL BUDGET WORKSHOP

CITY HALL AUDITORIUM, 120 108TH AVE, TREASURE ISLAND, FL 33706

AUGUST 5, 2020 5:00PM Welcome to the City of Treasure Island Special Commission Workshop. If you wish to speak on a topic that is on today’s agenda, a speaker’s form [available in the rear of the room] must be completed and given to the City Clerk. Please do not address the Commission from your seat, but rather from the podium where your comments can be heard by all and recorded as required by Florida law. Unscheduled topics may be presented under the Public Comments section of the agenda.

FY2021 Proposed Budget Workshop Wed, Aug 5, 2020 5:00 PM - 8:00 PM (EDT)

Please join my meeting from your computer, tablet or smartphone.

https://global.gotomeeting.com/join/824769133

You can also dial in using your phone. (For supported devices, tap a one-touch number below to join instantly.)

United States: +1 (872) 240-3412 - One-touch: tel:+18722403412,,824769133#

Access Code: 824-769-133

New to GoToMeeting? Get the app now and be ready when your first meeting starts: https://global.gotomeeting.com/install/824769133

I. PLEDGE OF ALLEGIANCE

II. ROLL CALLLawrence Lunn Mayor Deborah Toth Commissioner, District 1/ Vice Mayor Tyler Payne Commissioner, District 2 Saleene Partridge Commissioner, District 3 Beth Wetzel Commissioner, District 4

III. OVERVIEW OF PROPOSED FY 2021 BUDGET

IV. Library Director, Vince Gadrix

V. GENERAL FUND REVIEW 1. Revenues – Millage Rate/City-Wide Fee Schedule2. Funding Causeway Projects3. Expenditures – Departments’ FY2021 Budget

City of Treasure Island, Florida Page 1 of 1 POSTED 7/12/2017

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VI. SPECIAL REVENUE FUNDS 1. Penny for Pinellas 2. County Gas Tax 3. Transportation Trust Fund 4. Police Forfeiture Fund 5. Building Fund 6. Debt Service Fund

VII. PUBLIC COMMENTS

VIII. ADJOURNMENT

For any person desiring to appeal any decision made by the board, agency, or commission with respect to any matter considered at such meeting or hearing, he or she will need a record of the proceedings, and that, for such purpose, he or she may need to ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based [F.S. 286.0105]. NOTE: Any transcript shall be requested and made by the individual requesting same at his or her own expense. Therefore, a court reporter may be desired or required accordingly.

Any person with a disability who needs any accommodation in order to participate in this proceeding is entitled to assistance at no cost. Please contact the office of the City Clerk in writing at 120 108th Avenue, Treasure Island, FL, 33706 or by phone at (727) 547-4575 at least two working days prior to the meeting to advise what assistance is needed.


CITY OF TREASURE ISLAND NOTICE OF PUBLIC MEETING

THURSDAY, AUGUST 6, 2020 5:00 PM

NOTICE IS HEREBY GIVEN that the Treasure Island City Commission will hold a public meeting by means of communications media technology to which all persons are invited, at 5:00 pm on Thursday, August 6, 2020.

NOTE: The Change of meeting location from in-person at City Hall to a meeting by means of communications media technology is pursuant to Executive Order Number 20-69, issued on March 20,2020, section 120.54, Florida Statutes, and the City’s Proclamation, as subsequently extended, andResolution 20-04 dated March 24, 2020.

A copy of the agenda and all supporting documents will be available on the City’s website on July 31, 2020, www.mytreasureisland.org, by contacting City Clerk Nickerson at [email protected], or by calling her at (727) 547-4575 x229.

Provisions have been made for any member of the public desiring to observe and/or participate to have access to the meeting. There are five ways to observe the meeting:

1. Watch the meeting on TV, but not participate. As always with the City Commission meetings,anyone can watch the broadcast from Spectrum channel 644.

2. Watch the meeting online, but not participate. As always with the City Commission meetings,anyone can watch the livestream from the City’s Website at: http://treasureislandcityfl.iqm2.com/

3. Watch the meeting and participate, using GoToWebinar. Any one may register to attend theGoToWebinar and view the meeting on their computer by visitinghttps://global.gotomeeting.com/join/410509309.

4. Listen to the meeting on the phone: Anyone may listen on the phone by 1 (872) 240-3212.When the meeting ID is requested, enter the access code of 410-509-309 and press the # key.

5. Watch at City Hall and participate. While City Hall remains closed to the public due to theCOVID-19 emergency, the City will open it briefly for the meeting to allow public comment tooccur subject to all applicable emergency measures in place to prevent the further spread ofCOVID-19. Further, City Hall will have computers set-up to allow anyone to watch and/orparticipate using GoToWebinar. City Hall is located at 120 108th Ave., Treasure Island, FL 33706.All interested parties are required to abide by all State, County, and local emergency orders and areurged to remain at home and practice social distancing.

There are additional ways to provide public comment for the meeting: 1. Calling. By call 727-547-4575 ext. 229, which includes using a TTY line, anyone may leave a

voicemail message, which will either be transcribed and read or replayed during public comment.

26407/008/01585467.DOCv1

http://treasureislandcityfl.iqm2.com/https://global.gotomeeting.com/join/410509309mailto:[email protected]:www.mytreasureisland.org

2. Email. By sending an email to the City Clerk at [email protected] which will be read during public comment

3. Mail. By mailing any written comments to the City Clerk 120 108th Ave., Treasure Island, FL 33706, which will be read during public comment

When providing public comment by any of the means described above, the person should state their name, address, and identify that they are offering general public comment or the specific agenda item they are addressing. Public comments offered using communications media technology will be afforded equal consideration as if the public comments were offered in person. The public can obtain additional information and instruction regarding participating in this meeting by calling the City Clerk at (727) 547-4575 x229 or visiting the City’s website https://www.mytreasureisland.org/residents/departments/information_technology/virtual_meetings.php

Any person with a disability requiring assistance, auxiliary aids, and services for this meeting may notify the City Clerk at (727) 547-4575 x229 or calling 711(TTY) at least 24 hours prior to the meeting.

For any person desiring to appeal any decision made by the City Commission with respect to any matter considered at such meeting or hearing, he or she will need a record of the proceedings, and that, for such purpose, he or she may need to ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based, pursuant to s. 286.0105, Fla. Stat. Any transcript shall be requested and made by the individual requesting same at his or her own expense. Therefore, a court reporter may be desired or required accordingly. A video of this meeting may be requested through the City’s record custodian, City Clerk Ruth Nickerson at [email protected] or by calling her at (727) 547-4575 x229.

26407/008/01585467.DOCv1

mailto:[email protected]://www.mytreasureisland.org/residents/departments/information_technology/virtual_meetings.phpmailto:[email protected]

NOTICE AND AGENDA CITY OF TREASURE ISLAND, FLORIDA

BOARD OF COMMISSIONERS SPECIAL BUDGET WORKSHOP

CITY HALL AUDITORIUM, 120 108TH AVE, TREASURE ISLAND, FL 33706

AUGUST 6, 2020 AT 5:00PM (if needed) *Additional date scheduled is tentative in the event additional time is necessary.

Welcome to the City of Treasure Island Special Commission Workshop. If you wish to speak on a topic that is on today’s agenda, a speaker’s form [available in the rear of the room] must be completed and given to the City Clerk. Please do not address the Commission from your seat, but rather from the podium where your comments can be heard by all and recorded as required by Florida law. Unscheduled topics may be presented under the Public Comments section of the agenda.

FY2021 Proposed Budget Workshop (if needed) Thu, Aug 6, 2020 5:00 PM - 8:00 PM (EDT)

Please join my meeting from your computer, tablet or smartphone.

https://global.gotomeeting.com/join/410509309

You can also dial in using your phone. (For supported devices, tap a one-touch number below to join instantly.)

United States: +1 (872) 240-3212 - One-touch: tel:+18722403212,,410509309#

Access Code: 410-509-309

New to GoToMeeting? Get the app now and be ready when your first meeting starts: https://global.gotomeeting.com/install/410509309

***************************** AUGUST 6TH, 2020 AT 5:00 PM *******************************

I. PLEDGE OF ALLEGIANCE

II. ROLL CALLLawrence Lunn Mayor Deborah Toth Commissioner, District 1/ Vice Mayor Tyler Payne Commissioner, District 2 Saleene Partridge Commissioner, District 3 Beth Wetzel Commissioner, District 4

III. ENTERPRISE FUND REVIEW1. Wastewater Fund• Rate Study Presentation, Bryan Mantz, GovRates, Inc.2. Solid Waste Fund• Rate Study Presentation, Charles “Chas” Jordan, Kessler Consulting3. Stormwater Fund

IV. WRAP UP OF DISCUSSION NOTING ANY CHANGES TO THE PROPOSED BUDGET

V. PUBLIC COMMENTS

VI. ADJOURNMENTFor any person desiring to appeal any decision made by the board, agency, or commission with respect to any matter considered at such meeting or hearing, he or she will need a record of the proceedings, and that, for such purpose, he or she may need to ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based [F.S. 286.0105]. NOTE: Any transcript shall be requested and made by the individual requesting same at his or her own expense. Therefore, a court reporter may be desired or required accordingly.

Any person with a disability who needs any accommodation in order to participate in this proceeding is entitled to assistance at no cost. Please contact the office of the City Clerk in writing at 120 108th Avenue, Treasure Island, FL, 33706 or by phone at (727) 547-4575 at least two working days prior to the meeting to advise what assistance is needed.


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CITY OF TREASURE ISLAND, FLORIDA July 1, 2020

WASTEWATER RATE STUDY

PUBLIC WORKS AND FINANCE

GovRates, Inc. Utility, Financial, Rate, and Management

Consultants for Governments www.govrates.com

GovRates, Inc. Utility, Financial, Rate, and Management

Consultants for Governments www.govrates.com

July 1, 2020

Honorable Mayor and Members of the City Commission

City of Treasure Island 120 108th Avenue Treasure Island, Florida 33706

Subject: Wastewater Rate Study

GovRates, Inc. ("GovRates") has completed our review of the wastewater user rates for the City of Treasure Island (the "City") and has prepared this report which summarizes our analyses, findings, and recommendations. This utility rate study included preparing a financial forecast through the Fiscal Year 2030.

Developing a financial and rate plan for the City's wastewater system (the "System") involved multiple considerations:

The financial and rate plan should consider utility best management practices and shouldpromote financial sustainability and creditworthiness. The System should have adequateoperating reserves and should maintain ongoing capital reinvestment margins to balanceequity and debt financing of capital improvements.

The proposed rates should be considered equitable, affordable, and competitive.

The proposed rate plan should not cause "rate shock" to customers. From a best financial management practices standpoint, smaller incremental increases over time can help avoidfuture rate shock and large "catch up" rate increases.

The proposed rates should enable the utility to perform the necessary capital improvements and operational enhancements to remain compliant with the regulatory requirements of the Florida Department of Environment Protection, the Florida Department of Health, and theEnvironmental Protection Agency.

The proposed user rates should provide the System with an adequate level of revenue stability given the seasonality and cyclicality of water sales upon which wastewater is billed.

1 of 2

http:www.govrates.com

GovRates, Inc. 1988 Varick Way

Casselberry, FL 32707-2409 Telephone and Fax: (833) GOV-PLAN

GovRates believes that the financial and rate plan presented in this report reflects a reasonable balance of the aforementioned considerations. Following this letter is an executive summary that provides an overview of our analyses and conclusions. The other sections of the report provide additional details regarding the financial forecast and rate development.

We greatly appreciate the opportunity to be of service to the City and would like to thank the City management and staff for their tremendous assistance and cooperation during the course of the wastewater rate study.

Yours in government service, GovRates, Inc.

Bryan A. Mantz, CMC, CGFM President

2 of 2

CONTENTS Letter of Transmittal

EXECUTIVE SUMMARY AND RECOMMENDATIONS

ES‐1: General........................................................................................................................................... ES‐1 ES‐2: Summary of Recommendations ............................................................................................... ES‐1 Exhibit ES‐1: Summary of Proposed Wastewater User Rate Revenue Adjustments ..................... ES‐3

ES‐3: Financial Overview ...................................................................................................................... ES‐5 ES‐4: Requested City Commission Action......................................................................................... ES‐5

Tables: Table ES‐1: Summary of Existing and Proposed Bi‐Monthly Wastewater Rates ................................... ES‐7 Table ES‐2: Wastewater System Financial Overview .............................................................................. ES‐9 Table ES‐3: Wastewater System Multi‐Year Financial Projections ....................................................... ES‐14

SECTION 1: FINANCIAL FORECAST

1‐1: Introduction ...................................................................................................................................... 1‐1 1‐2: Existing Wastewater Bi‐Monthly Rates ...................................................................................... 1‐1 1‐3: Water System Customer Statistics............................................................................................... 1‐1 Exhibit 1‐1: Fiscal Year 2019 Wastewater Customer Statistics ......................................................1‐2

1‐4: Revenues Under Existing Bi‐Monthly Wastewater Rates ....................................................... 1‐2

1‐5: Revenue Requirements – Principal Assumptions and Considerations................................. 1‐3

Exhibit 1‐2: Projected Cost of the City's Wholesale Wastewater Service ...................................... 1‐5

Exhibit 1‐3: Wastewater System Capital Program and Funding Sources........................................ 1‐7

1‐6: Summary of Wastewater Revenue Requirements ................................................................... 1‐7

1‐7: Debt Service Coverage and Rate Covenants .............................................................................. 1‐8

Exhibit 1‐4: Projected Net Revenues Debt Service Coverage ........................................................1‐8

1‐9: Projected Sources and Uses of Funds.......................................................................................... 1‐8

Tables: Table 1‐1: Summary of Historical and Projected Wastewater System Customer Statistics................. 1‐9

Table 1‐2: Projected Wastewater Revenues Under Existing Rates.................................................. 1‐11

Table 1‐3: Development of Net Revenue Requirements from User Rates and

Projected Revenue Adjustments – Wastewater System................................................. 1‐14

Table 1‐4: Wastewater System Historical and Budgeted Expenditures ........................................... 1‐15

Table 1‐5: Projected Operating Expenses – Wastewater System.................................................... 1‐17

Table 1‐6: Escalation References .................................................................................................. 1‐19

Table 1‐7: Projected Wastewater Treatment Costs ....................................................................... 1‐20

Table 1‐8: Estimated Multi‐Year Capital Improvement Program and Funding Sources .................... 1‐21

i

CONTENTS (cont.) SECTION 1: FINANCIAL FORECAST (cont.)

Tables (cont.): Table 1‐9: Projection of Cash Balances and Interest Earnings By Fund ........................................... 1‐22

Table 1‐10: Projected Operating Results and Debt Service Coverage ............................................... 1‐23

Table 1‐11: Summary of Projected Sources and Uses of Funds ........................................................ 1‐25

SECTION 2: USER RATE DESIGN

2‐1: User Rate Design – General ........................................................................................................... 2‐1

2‐2: Proposed Wastewater Rate Design ............................................................................................. 2‐2

2‐3: Single Family Residential Bill Comparison Under Proposed Rates ....................................... 2‐2

2‐4: Bill Comparison – Neighboring Utilities ...................................................................................... 2‐2

Tables and Figures: Table 2‐1: Single Family Residential Wastewater Bill Comparison .................................................... 2‐4 Table 2‐2: Comparison of Bi‐Monthly Residential Bills for Wastewater Service ................................ 2‐5

Table 2‐3: Comparison of Bi‐Monthly Residential Bills for

Combined Water and Wastewater Service...................................................................... 2‐6

Figure 2‐1: Comparison of Bi‐Monthly Charges for Wastewater Service for

Single Family Residential Customers Using 7,000 Gallons ................................................ 2‐7

Figure 2‐2: Comparison of Bi‐Monthly Charges for Combined Water and Wastewater

Service for Single Family Residential Customers Using 7,000 Gallons ............................... 2‐8

APPENDIX: EXISTING RATE RESOLUTION

ii

EXECUTIVE SUMMARY

AND RECOMMENDATIONS

City of Treasure Island, Florida Wastewater Rate Study

EXECUTIVE SUMMARY AND RECOMMENDATIONS ES-1: General

The City of Treasure Island (the "City") owns a wastewater system (the "System" or the "Utility") that provides an essential service on a continual basis and that operates in a highly‐regulated environment. Regulatory agencies for the Utility include the Florida Department of Environmental Protection (the "FDEP"), the Florida Department of Health, and the Environmental Protection Agency. The System currently provides service to about 2,450 wastewater accounts.

The System is established as a utility enterprise fund and is essentially the City's largest "business." According to the Governmental Accounting Standards Board, "Enterprise Funds should be used to account for operations that are financed and operated in a manner similar to private business enterprises – where the intent of the governing body is that costs of providing services to the general public on a continuing basis should be financed or recovered primarily through user charges."

The installed cost of System assets under City management was about $16 million as of September 30, 2019. The System should have revenues equal to the costs of the services provided by the Utility, and the City should establish rates sufficient to cover the cost of operating, maintaining, repairing and financing the System. There are also rate covenants associated with the System's outstanding debt that require the City to establish the Utility's rates at certain levels to meet the debt obligations. To assist the City in reviewing the sufficiency of its wastewater rates, GovRates, Inc. ("GovRates") was retained to perform a wastewater rate study. The last formal review of the City's wastewater rates was completed in 2015.

ES-2: Summary of RecommendaƟons

The City’s current wastewater rates have been in effect since December 1, 2019. As part of the current wastewater rate study, financial projections were prepared for the System for the Fiscal Year 2020 through the Fiscal Year 2030 (the "Forecast Period").

Based on the assumptions relied upon in the development of the System revenue requirements, GovRates has identified the need for rate adjustments for the wastewater system. The primary reasons for the identified rate adjustments are to:

Executive Summary and Recommendations / ES-1


1. Fund the Utility’s multi-year capital improvement program (the "CIP"). The Utility has identified capital costs of approximately $27 million through the Fiscal Year 2030. Much of the existing utilityinfrastructure is over fifty (50) years old and is approaching the end of its useful service life. The majorcapital projects that must be funded by the Utility include:

a. Replacement of the force main (circa Fiscal Year 2030) that delivers the City's wastewater to the City of St. Petersburg for treatment.

b. Refurbishment of lift stations.

c. Sewer main and manhole relining to reduce inflow and infiltration.

d. Vehicles, equipment, and other departmental capital.

The CIP is assumed to about 41% funded through internal funding sources – existing cash reserves and user rate revenues – and 59% through low‐cost State Revolving Fund (SRF) loans administered through the FDEP.

2. Fund the costs of future operations. There are many factors that affect the costs of operations overwhich the Utility has limited or no control. These factors include:

a. Increases in bulk or wholesale wastewater rates from the City of St. Petersburg ("St. Petersburg").St. Petersburg treats all of the City's wastewater under a wholesale service agreement, andwholesale service costs account for about 67% of the System operating expenses. An 11.8%wholesale rate increase to the City will become effective October 1, 2020. St. Petersburg applies a 25% surcharge to customers located outside St. Petersburg.

b. Factors such as cost increases from electric power providers, changes in fuel and oil prices resultingfrom global market changes, and competition for scarce resources such as concrete and building materials often result in cost increases that are greater than the change in the consumer priceindex (general inflation). Utility costs also typically increase at a higher rate than general inflationdue to regulatory requirements.

It is important to recognize that these increased costs are usually permanent increases in the costs of operaƟons and, as such, must ulƟmately be passed through to customers through rates.

3.Maintain appropriate debt service coverage ratios and adequate operating margins and reserves tofund ongoing capital needs and maintain the financial condition of the System. The System's outstanding and anticipated debt consists of low‐cost state revolving fund ("SRF") loans securedthrough the Florida Department of Environmental Protection (the "FDEP"). The Utility's annual debtservice is anticipated to increase from about $96,700 in Fiscal Year 2020 to $870,000 in Fiscal Year2030 (when the subaqueous force main is anticipated to be replaced).



Based on discussions with the City staff, a target all‐in (senior and subordinate lien debt combined) net revenues debt service coverage ratio of 200% has been recognized, and it is proposed that the Utility target an unrestricted cash balance equal to at least 180 days of revenue.

The City’s existing user rates for wastewater service are not anticipated to fully recover the City’s projected Utility revenue requirements during the Forecast Period. If the user rates are not adjusted, possible financial risks to the System include:

Debt service coverage requirements may not be met. The current and anticipated SRF loanagreements with the FDEP contain rate covenants which are formalized agreements between the City and the FDEP.

User rates may be higher in the future. The capital needs for the System are not anticipated to go awaybut may be more expensive to address in the future. Inflation and the costs of construction continue to affect System costs.

Based on the financial forecast, the funding plan for the System, and discussions with City staff, the following Exhibit ES‐1 shows the proposed user rate revenue adjustments:

Fiscal Year Effective Date

Wastewater System Adjustment

Total Single-Family Residential Bill at Bi-Monthly Usage of 7,000 Gallons Under Rate Design

Total Cost Per Gallon at Bi-Monthly Usage of 7,000 Gallons

Exhibit ES-1: Summary of Proposed Wastewater User Rate Revenue Adjustments

2021 October 1, 2020 6.0% $113.99 1.6¢ 2022 October 1, 2021 6.0% + PSA $121.01 1.7¢ 2023 October 1, 2022 6.0% + PSA $128.41 1.8¢ 2024 October 1, 2023 4.0% + PSA $133.72 1.9¢ 2025 October 1, 2024 4.0% + PSA $139.31 2.0¢

PSA = Purchased Sewer Adjustment; pass‐through of future wholesale wastewater rate increases from St. Petersburg.

Single‐family residential customers comprise about 73% of wastewater customer base.

These adjustments are considered by the City staff to be representative of the increases in costs to effectively operate and maintain the System given the specific requirements of the System service area. As shown in the preceding table, the first adjustment is recommended to become effective on October 1, 2020.

As further discussed in SecƟon 2 of this report, it is recommended that the City gradually increase the base / fixed charge recovery of the System (i.e., percentage of revenue recovered through fixed charges). Current base charge recovery is about 26.5%, while the uƟlity industry recommended level is at least 30%. Most of the UƟlity's operaƟng expenses are fixed (e.g. labor) and the proposed financial plan involves uƟlizing debt – another fixed cost – to finance a porƟon of the mulƟ‐year capital program. The recent



COVID-19 pandemic – which affects volumetric revenue – also stresses the need for base charge recovery consistent with recommended levels.

The exisƟng bi-monthly base charge for the System is $28.70 while the average base charges paid over a two-month period by 23 surveyed nearby communiƟes is $49.51. A summary of the exisƟng and proposed bi-monthly wastewater rates is shown in Table ES-1 at the end of this ExecuƟve Summary. The rate plan involves gradually increasing the base charge recovery to 30% by Fiscal Year 2025. The proposed rates produce bills that are compeƟƟve with those of other "neighboring" uƟliƟes.

The proposed rates assume recalibration of the PSA (based on assumptions in the current study for Fiscal Year 2021; the PSA is currently based on Fiscal Year 2017 assumptions) and its continued implementation after the Fiscal Year 2021. Since the St. Petersburg is anticipated to continue increasing the cost of wastewater treatment, the PSA is a method to directly recover the increased expense. GovRates recommends that the PSA be applied automatically – without a public hearing – whenever St. Petersburg increases its wholesale rates to the City. The PSA should be calculated utilizing the following formula:

Purchased Sewer Adjustment (PSA) Methodology (also shown in Table ES-1)

The Volumetric Charge shall be automatically adjusted - without a public hearing - within one (1) month after the City's wholesale sewer provider adopts an adjustment to the City's wholesale sewer rates. The Purchased Sewer Adjustment (PSA) shall be determined as follows:

Purchased Sewer Adjustment (PSA) = [Annual Purchased Sewer Costs Under the Adjusted Wholesale Sewer Rates / Annual Revenue Gallons] - Base Year Cost

Annual Revenue Gallons are in thousands of gallons Base Year Cost = $8.92 per thousand gallons as derived from the projected cost for the Fiscal Year 2021

Annual Purchased Sewer Costs in PSA Formula 1. The Annual Purchased Sewer Costs include the total costs of wholesale sewer service including strong waste charges and outside-city surcharges. 2. The Annual Purchased Sewer Costs shall be calculated using the most recently available historical 12 months of actual sewer flow billed by the City's wholesale sewer provider -

for which the City also has revenue gallons billed to the City's sewer customers - on the date that the adjusted sewer rates are adopted. 3. The historical time period for the sewer flow billed by the City's wholesale sewer provider and the revenue gallons billed to the City's sewer customers must be the same for

purposes of the PSA calculations.

Annual Revenue Gallons in PSA Formula The Annual Revenue Gallons shall be the most recently available historical 12 months of sewer flow billed to the City's sewer customers based on metered water sales in thousands of gallons for which the City also has actual sewer flow billed by the City's wholesale sewer provider.

The Base Year Cost of $8.92 per thousand gallons is derived as follows:

Exhibit ES‐2: Derivation of Base Year Cost of Wastewater Treatment

Description Fiscal Year 2021

Projected Annual Purchased Wastewater Cost Under Fiscal Year 2021 St. Petersburg Rates [1] $2,739,936 Projected Wastewater Annual Revenue-Gallons (000's) [2] 307,214 Base Year Cost per 1,000 Gallons $8.92 [1] Amount derived from Table 1-7. [2] Amount derived from Table 1-1.



ES-3: Financial Overview

Tables ES‐2 and ES‐3 of this Executive Summary provides a financial overview of forecasted System operations. These tables indicate the following for all projected fiscal years, assuming that the projected user rate adjustments and any PSA adjustments for all fiscal years are implemented:

1. Overall or all‐in net revenues debt service coverage – net revenues divided by the annual debt servicerequirement (senior lien plus subordinate lien) – of at least 200% during the Forecast Period. TheUtility's rate covenants associated with the System's outstanding and anticipated SRF loan obligationsinclude a 115% net revenues coverage requirement. Utility best management practices recognize theneed to target coverage ratios greater than the minimum required so that the Utility has sufficientoperating margins to fund annual or recurring renewal and replacement capital needs. Revenuesremaining after the payment of operating expenses and debt service should be used for these "pay‐as‐you‐go" reinvestments in the System to help ensure that the System remains operationally sustainable and that service interruptions to customers are avoided.

2. Maintenance of adequate operating reserves.

3. Maintenance of affordable rates. Bills for the average residential customer with bi‐monthly usage of7,000 gallons per month are projected to remain below 2% of the City's median household income throughout the Forecast Period. According to the Environmental Protection Agency, wastewater bills less than 2.0% of median household income are considered affordable.

Based on the financial forecast and assuming the implementation of the proposed rate adjustments, the Utility is projected to remain in a good financial position through the Fiscal Year 2025.

ES-4: Requested City Commission AcƟon

The recommendations of this wastewater rate study are to:

Adopt the proposed wastewater rates for the Fiscal Years 2021 to 2025. Smaller, incremental rate increases over time help to avoid future "rate shock" and "catch up" increases. As previously discussed, the proposed rates are considered affordable by utility industry standards. The proposed wastewaterrates reflect gradual increase of the base charge recovery percentage to the 30% recommended level.

Adopt the PSA formula modifications, which include making the PSA automatic whenever St. Petersburg increases its wholesale wastewater rates to the City.

Monitor the actual vs. projected financial results, and update the financial and rate plan as needed. Itis important to review the effects of COVID‐19 as well as changes in economic conditions, customer usage trends, the regulatory environment, capital needs, etc.



The remainder of the report provides additional details regarding the utility financial and rate analysis conducted on behalf of the City, including how the proposed rate adjustments and recommendations were derived.


Table ES-1

City of Treasure Island, FloridaWastewater Rate Study

Summary of Existing and Proposed Bi-Monthly Wastewater Rates

Line No. Description

Existing 2020

Proposed 2021

Proposed Proposed 2022 2023

Fiscal Year Ending September 30, Proposed 2024

Proposed 2025

WASTEWATER SERVICE

1 2 3 4

5 6

Base Facility Charge - Bi-Monthly Single Family Duplex (per account) Multifamily (per unit) Hotel (per unit) Commercial (by meter size)

3/4" or 1" 1.5"

$ 28.70 50.12 26.90 20.42

28.70 70.55

$ 31.57 55.13 29.59 22.46

31.57 77.61

34.73$ 38.20$ 60.65 66.71 32.55 35.80 24.71 27.18

34.73 38.20 85.37 93.90

$ 42.02 73.38 39.38 29.90

42.02 103.29

$ 46.23 80.73 43.33 32.89

46.23 113.64

7 2" 107.55 118.31 130.15 143.15 157.47 173.24 8 Greater than 2" 168.41 185.25 203.79 224.16 246.57 271.28 9 Non-Metered 28.70 31.57 34.73 38.20 42.02 46.23

10 11 12

Volumetric Charge [*] Block 1 (0-3,000)

Rate per Thousand Gallons Purchased Sewer Adjustment (PSA) Total Block 1 Rate per Thousand Gallons

$

$

10.22 NA

10.22

$

$

10.70 NA

10.70

11.20$ 11.71$ + PSA [*] + PSA [*]

11.20$ 11.71$

$

$

11.90 + PSA [*]

11.90

$

$

12.08 + PSA [*]

12.08

13 14 15

Block 2 (Above 3,000) Rate per Thousand Gallons Purchased Sewer Adjustment (PSA) Total Block 2 Rate per Thousand Gallons

$

$

12.02 NA

12.02

$

$

12.58 NA

12.58

13.17$ 13.77$ + PSA [*] + PSA [*]

13.17$ 13.77$

$

$

14.00 + PSA [*]

14.00

$

$

14.21 + PSA [*]

14.21

Footnotes on following page.

Excutive Summary and Recommendations / ES-7

Table ES-1

City of Treasure Island, FloridaWastewater Rate Study

Summary of Existing and Proposed Bi-Monthly Wastewater Rates

Footnotes:

[*] The Volumetric Charge shall be automatically adjusted - without a public hearing - within one (1) month after the City's wholesale sewer provider adopts an adjustment to the City's wholesale sewer rates. The Purchased Sewer Adjustment (PSA) shall be determined as follows:

Purchased Sewer Adjustment (PSA) = [Annual Purchased Sewer Costs Under the Adjusted Wholesale Sewer Rates / Annual Revenue Gallons] - Base Year Cost

Annual Revenue Gallons are in thousands of gallons Base Year Cost = $8.92 per thousand gallons as derived from the projected cost for the Fiscal Year 2021

Annual Purchased Sewer Costs in PSA Formula 1. The Annual Purchased Sewer Costs include the total costs of wholesale sewer service including strong waste charges and outside-city surcharges. 2. The Annual Purchased Sewer Costs shall be calculated using the most recently available historical 12 months of actual sewer flow billed by the City's wholesale sewer provider for which the City also has revenue gallons billed to the City's sewer customers - on the date that the adjusted sewer rates are adopted. 3. The historical time period for the sewer flow billed by the City's wholesale sewer provider and the revenue gallons billed to the City's sewer customers must be the same for

purposes of the PSA calculations. Annual Revenue Gallons in PSA Formula The Annual Revenue Gallons shall be the most recently available historical 12 months of sewer flow billed to the City's sewer customers based on metered water sales in thousands of gallons for which the City also has actual sewer flow billed by the City's wholesale sewer provider.

Excutive Summary and Recommendations / ES-8

-

Table ES-2

City of Treasure Island, Florida

Wastewater Rate Study

Wastewater System Financial Overview

High Level Summary 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Fiscal Year Ending September 30,

Identified Revenue Adjustments Wastewater System w/o PSA 0.00% 6.00% 6.00% 6.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

+ PSA + PSA + PSA + PSA + PSA + PSA + PSA + PSA + PSA Effective Months 10 10 10 10 10 10 10 10 10 10 10

Unrestricted Cash Balance ($ 000's) $ 1,929 $ 1,193 $ 1,240 $ 1,068 $ 1,584 $ 2,412 $ 2,272 $ 2,125 $ 3,367 $ 4,629 $ 4,067 One Year Days Cash on Hand 3,818 4,115 4,156 4,199 4,244 4,290 4,337 4,386 4,436 4,488 4,542

All-In Net Revenues Debt Coverage 815% 760% 1044% 1320% 1516% 954% 1068% 1181% 1299% 1430% 312% Revenue Surplus / (Deficiency) ($ 000's) $ (1,881) $ (735) $ 47 $ (172) $ 516 $ 828 $ (140) $ (146) $ 1,241 $ 1,262 $ (562) Bi-Monthly Sewer Bill @ 7,000 Gallons $ 107.44 $ 113.99 $ 121.01 $ 128.41 $ 133.72 $ 139.31 $ 144.88 $ 150.66 $ 156.66 $ 162.92 $ 169.40 Increase 6.55 7.02 7.40 5.31 5.59 5.57 5.78 6.00 6.26 6.48 Cost Per Gallon of Total Bill $ 0.015 $ 0.016 $ 0.017 $ 0.018 $ 0.019 $ 0.020 $ 0.021 $ 0.022 $ 0.022 $ 0.023 $ 0.024 Percent of MHI (Target < 2%) 0.86% 0.90% 0.95% 1.00% 1.03% 1.06% 1.09% 1.13% 1.16% 1.19% 1.23%

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Am

ount

($ th

ousa

nds)

1) Summarized Revenue Requirements Analysis - Wastewater System

Deposits to Working Capital-Additional Capital Funding Other Transfers

Capital Funded from Rates Net Debt Service

Operating Expenses Projected Revenues Under Proposed Rates

Projected Revenues Under Existing Rates

$0 $500

$1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Am

ount

($ th

ousa

nds)

2) Unrestricted Ending Cash Balances

Operating Funds One Year Days Cash on Hand 180 Days of Operating Revenues


Table ES-2




0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

3) All-In Debt Service Coverage - Net Revenues Only

Calculated Debt Service Coverage Target Debt Service Coverage (200%) Minimum Debt Service Coverage (150%)

41.4%

58.6%

6) Capital Improvement Program Funding ($26.9 M)

State Revolving Fund Loans ($11.2 M)

Rate Revenues and Operating Reserves ($15.8 M)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2020 2025 2030 2035 2040 2045

Am

ount

($ th

ousa

nds)

5) Existing and Anticipated Debt Outstanding - BeginningPrincipal Balance

Proposed Debt Existing Debt Total Debt Service Payments

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

4) Outstanding Debt Principal to Net Capital Assets

Outstanding Debt to Net Utility Fixed Assets

Not-to-Exceed Percentage (50%); Fitch Medians by Rating: AAA = 24%, AA = 46%, A = 55%


Table ES-2




$0 $500

$1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Am

ount

($ th

ousa

nds)

8) Available Year-End Working Capital Cash Balance

Ending Cash Balance - Operating and Maintenance Fund; Rate Stabilization Fund (Working Capital)Target Balance - 90 Days of Operating Revenues

$0 $50

$100 $150 $200 $250 $300 $350 $400 $450

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Am

ount

($ th

ousa

nds)

9) Available Year-End Capital Replacement Fund Cash Balances

Ending Cash Balance - Renewal and Replacement Fund

One Year of Depreciation Expense ($415,605)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Am

ount

($ th

ousa

nds)

7) Funding of Capital Improvement Program by Fiscal Year ($26.9 M)

State Revolving Fund Loans ($11.2 M) Rate Revenues and Operating Reserves ($15.8 M)

0%

100%

200%

300%

400%

500%

600%

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

10) Free Cash as a % of Depreciation

Free Cash as a % of Depreciation Target Minimum (100%)


Table ES-2




0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%

100.00%

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

11) Calculated Operating Ratio

Calculated Operating Ratio Moody's Median (65.5%)

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Am

ount

($ T

hous

ands

)

12) Ending Cash Balance - System Development Charge andConstruction Funds

Sanitary Sewer System Development Charge Fund Construction Fund

2,448 2,448 2,448 2,448 2,448 2,448 2,448 2,448 2,448 2,448 2,448 2,448

0 500 1,000 1,500 2,000 2,500 3,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Fisc

al

Yea

r

13) Projected Wastewater System Customers

Wastewater Customers

$169.40

Mon

thly

Bill

($)

Gallons 14) Single Family Residential Bill @ Bi-Monthly Usage of 7,000

$180.00

$160.00

$140.00

$120.00

$100.00

$80.00

$60.00

$40.00

$20.00

$-

$107.44 $113.99 $121.01

$128.41 $133.72 $139.31 $144.88

$150.66 $156.66 $162.92

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Wastewater Bill


Table ES-2




15) Affordability of SFR Bill @ Bi-Monthly Usage of 7,000 Gallons2.50%

2.00%

1.50%

1.00%

0.50%

0.00% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0.86% 0.90% 0.95% 1.00% 1.03% 1.06% 1.09%

1.13% 1.16% 1.19% 1.23%

Single Family Residential Sanitary Sewer Bill as % of Median Household Income

Environmental Protection Agency Affordability Threshold (2% of Median Household Income)

63.6%

16.2%

9.7% 2.6%

1.7% 1.6%

1.0% 1.9% 16) Wastewater System: 11-Year Summary of Projected Operating Expenses

Wastewater Treatment Charges ($29.9 M) Administrative Charge ($7.4 M)

Salaries and Benefits ($4.6 M)

Repairs and Maintenance - O&M ($1.2 M) Insurance ($0.8 M)

Utilities and Fuel ($0.7 M)

Professional and Contractual Services ($0.5 M) Other Operating Expenses ($0.9 M)


Table ES-3City of Treasure Island, Florida

Wastewater System

Wastewater System Multi-Year Financial Projections

Actual FY High-Level Summary 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Operating Revenue

Fiscal Year Ending September 30,

User Rate Revenue - Retail Wastewater User Rate Revenue Before Current Year Adjustment Additional User Rate Increase - Wastewater

Total User Rate Revenue - Retail $ 4,384,406 $ 4,567,560

$

$

4,600,000 6.0%

4,830,000

$

$

4,908,240 6.0%

5,153,640

$

$

5,202,740 6.0%

5,462,840

$

$

5,514,940 4.0%

5,698,740

$

$

5,735,540 4.0%

5,926,740

$

$

5,964,940 4.0%

6,163,740

$

$

6,203,540 4.0%

6,410,340

$

$

6,451,640 4.0%

6,666,740

$

$

6,709,740 4.0%

6,933,440

6,978,140$ 4.0%

7,210,740$

Other Operating Revenue $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

TOTAL OPERATING REVENUE $ 4,384,406 $ 4,567,560 $ 4,830,000 $ 5,153,640 $ 5,462,840 $ 5,698,740 $ 5,926,740 $ 6,163,740 $ 6,410,340 $ 6,666,740 $ 6,933,440 7,210,740$

Operating Expenses [1] Wastewater System Operating Expenses Percent Change

$ 3,406,378 $ 3,817,562 12.1%

$ 4,114,807 7.8%

$ 4,156,463 1.0%

$ 4,199,436 1.0%

$ 4,243,769 1.1%

$ 4,289,505 1.1%

$ 4,336,772 1.1%

$ 4,385,621 1.1%

$ 4,436,025 1.1%

$ 4,488,121 1.2%

4,541,968$ 1.2%

Operating Revenues Less Operating Expenses $ 978,028 $ 749,998 $ 715,193 $ 997,177 $ 1,263,404 $ 1,454,971 $ 1,637,235 $ 1,826,968 $ 2,024,719 $ 2,230,715 $ 2,445,319 2,668,772$

Non-Operating Revenue Unrestricted Interest Income $ 65,904 $ 38,343 $ 19,529 $ 12,175 $ 12,643 $ 10,923 $ 16,271 $ 24,549 $ 23,151 $ 21,688 $ 34,101 48,465$

Net Revenue Available for Debt Service $ 1,043,932 $ 788,341 $ 734,722 $ 1,009,351 $ 1,276,046 $ 1,465,894 $ 1,653,506 $ 1,851,518 $ 2,047,870 $ 2,252,403 $ 2,479,420 2,717,237$

City Debt Service Existing Debt Service - Principal and Interest New Debt Service - Principal and Interest Less Wastewater Impact Fees Used for City Growth-Related Debt Service NET DEBT SERVICE

$

$

96,687 --

96,687

$

$

96,687 --

96,687

$

$

96,687 --

96,687

$

$

96,687 --

96,687

$

$

96,687 --

96,687

$

$

96,687 76,656

-173,343

$

$

96,687 76,656

-173,343

$

$

96,687 76,656

-173,343

$

$

96,687 76,656

-173,343

$

$

96,687 76,656

-173,343

96,687$ 773,011

-869,697$

Allocations and Other Transfers $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Inter-Utility Loan Activity $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Total Revenue Available for Capital Rehabilitations / Improvements $ 691,654 $ 638,035 $ 912,665 $ 1,179,360 $ 1,369,208 $ 1,480,163 $ 1,678,175 $ 1,874,528 $ 2,079,060 $ 2,306,077 1,847,539$

Capital Expenditures Capital Program as Scheduled Capital Projects - Wastewater Departmental Capital - Wastewater

Total Capital Program as Scheduled

$

$

2,573,041 -

2,573,041

$

$

1,373,450 -

1,373,450

$

$

865,850 -

865,850

$

$

1,501,300 -

1,501,300

$

$

1,853,600 -

1,853,600

$

$

652,370 -

652,370

$

$

1,817,939 -

1,817,939

$

$

2,020,854 -

2,020,854

$

$

837,770 -

837,770

$

$

1,043,770 -

1,043,770

12,409,207$ -

12,409,207$

Adjustments Capital Projects - Wastewater Departmental Capital - Wastewater

Total Adjustments

$

$

--

-

$

$

---

$

$

---

$

$

---

$

$

---

$

$

---

$

$

---

$

$

---

$

$

---

$

$

---

$

$

---

Capital Projects as Adjusted Capital Projects - Wastewater Departmental Capital - Wastewater

ADJUSTED CAPITAL EXPENDITURES

$

$

2,573,041

-

2,573,041

$

$

1,373,450 -

1,373,450

$

$

865,850 -

865,850

$

$

1,501,300 -

1,501,300

$

$

1,853,600 -

1,853,600

$

$

652,370 -

652,370

$

$

1,817,939 -

1,817,939

$

$

2,020,854 -

2,020,854

$

$

837,770 -

837,770

$

$

1,043,770 -

1,043,770

12,409,207$ -

12,409,207$

Cash Surplus / (Deficiency) Base Surplus / (Deficiency) Less Projects to Be Funded by Developers Less Projects to Be Funded Through Wastewater Impact FeesLess Projects to Be Funded Through Proceeds from Existing and Proposed DebtINCREASE / DECREASE IN UNRESTRICTED FUND BALANCES

$

$

(1,881,387) -

--

(1,881,387)

$

$

(735,415) ---

(735,415)

$

$

46,815 ---

46,815

$

$

(321,940) --

150,000 (171,940)

$

$

(484,392) --

1,000,000 515,608

$

$

827,793 ---

827,793

$

$

(139,764) ---

(139,764)

$

$

(146,326) ---

(146,326)

$

$

1,241,290 ---

1,241,290

$

$

1,262,307 ---

1,262,307

$ (10,561,667) --

10,000,000 (561,667) $


Table ES-3City of Treasure Island, Florida

Wastewater System

Wastewater System Multi-Year Financial Projections

Actual FY High-Level Summary 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Fiscal Year Ending September 30,

Debt Service Coverage Net Revenue Available for Debt Service $ 788,341 $ 734,722 $ 1,009,351 $ 1,276,046 $ 1,465,894 $ 1,653,506 $ 1,851,518 $ 2,047,870 $ 2,252,403 $ 2,479,420 $ 2,717,237Total Debt Service 96,687 96,687 96,687 96,687 96,687 173,343 173,343 173,343 173,343 173,343 869,697

ALL-IN DEBT SERVICE COVERAGE - 2.00x MIN TARGET 8.15 7.60 10.44 13.20 15.16 9.54 10.68 11.81 12.99 14.30 3.12

Cash Balances Beginning of Year Cash Balances $ 3,810,100 Less Construction / Loan Fund Balance - Less Customer Deposits - Less Debt Service Reserve Account - Less System Development Charges -Less Carryforward Projects -

Beginning of Year Fund Balance - Net Cash Operating/Capital Reserve (Increase/Decrease)

ENDING CASH RESERVES - $

$

$

3,810,100 (1,881,387) 1,928,713

$

$

1,928,713 (735,415) 1,193,298

$

$

1,193,298 46,815

1,240,113

$

$

1,240,113 (171,940) 1,068,173

$

$

1,068,173 515,608

1,583,781

$

$

1,583,781 827,793

2,411,574

$

$

2,411,574 (139,764) 2,271,810

$

$

2,271,810 (146,326) 2,125,484

$

$

2,125,484 1,241,290 3,366,774

$

$

3,366,774 1,262,307 4,629,081

$

$

4,629,081 (561,667) 4,067,414

Target Minimum Cash Reserves - One Year of Operating Expenses - $ [2] $ 3,817,562 $ 4,114,807 $ 4,156,463 $ 4,199,436 $ 4,243,769 $ 4,289,505 $ 4,336,772 $ 4,385,621 $ 4,436,025 $ 4,488,121 $ 4,541,968 Cash Reserves Balance - % of Operating Expenses [2] Cash Reserves Balance - Days Cash on Hand [2]

Bi-Monthly Bill and Rate Affordability Average Bi-Monthly Residential Wastewater Bill (7,000 Gallons) $ 107.44 $ 113.99 $ 121.01 $ 128.41 $ 133.72 $ 139.31 $ 144.88 $ 150.66 $ 156.66 $ 162.92 $ 169.40 Amount Increase $ 6.55 $ 7.02 $ 7.40 $ 5.31 $ 5.59 $ 5.57 $ 5.78 $ 6.00 $ 6.26 $ 6.48 Percent Increase 6.1% 6.2% 6.1% 4.1% 4.2% 4.0% 4.0% 4.0% 4.0% 4.0% Cumulative Increase - % 6.1% 12.6% 19.5% 24.5% 29.7% 34.8% 40.2% 45.8% 51.6% 57.7%

Median Household Income in City of Treasure Island (Bi-Monthly) [3] Percent of Median Household Income (Target < 2.0%)

$ 12,472 $ 12,596 $ 12,722 $ 12,850 $ 12,978 $ 13,108 $ 13,239 $ 13,371 $ 13,505 $ 13,640 $ 13,776

51% 29% 30% 25% 37% 56% 52% 49% 76% 103% 90% 184 106 109 93 136 205 191 177 277 376 327

0.86% 0.90% 0.95% 1.00% 1.03% 1.06% 1.09% 1.13% 1.16% 1.19% 1.23%

Footnotes: [1] Historical Operating Expenses excluding depreciation are shown as follows:

Total Operating Expenses $ 3,013,774 $ 3,115,100 $ 2,973,237 $ 2,903,685 $ 3,406,378 Growth Rate

Compound Expenses Summary 2015 2016 2017 2018 2019 Annual

Fiscal Year Ended June 30,

Percent Change 3.4% -4.6% -2.3% 17.3% 3.1%

[2] Fitch Ratings considers that utilities with the strongest financial profiles would have cash reserve balances equal to at least 100% of annual Operating Expenses.

[3] $74,830 median household income per United States Census Bureau (www.census.gov) divided by 6 months. Assumed to increase by 1.0% per year after Fiscal Year 2020.

Additional Personnel 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Fiscal Year Ending June 30,

Additional Full Time Employees (FTE) per Year 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Cumulative Additional FTE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


http:www.census.gov

SECTION 1:

FINANCIAL FORECAST


SECTION 1:

FINANCIAL FORECAST1-1: IntroducƟon

The recommendations of this study are based on a financial forecast developed for the wastewater system. The financial forecast starts with the identification of the accounts and System demands, next considers the determination of funding of capital needs, and finally establishes the timing of rate adjustments. The basis for the rate study’s recommendations is a financial plan developed for Fiscal Years 2020 through 2030.

1-2: ExisƟng Wastewater Bi-Monthly Rates

The City’s current bi‐monthly wastewater rates have been in effect since December 1, 2019 pursuant to Resolution No. 19‐07 (the "Rate Resolution"), which was adopted by the City Commission (the "Commission") on September 17, 2019 and reflect historical PSA adjustments since the last formal wastewater rate study completed in 2015. A copy of the Rate Resolution is contained in the Appendix of this report.

Table ES‐1 in the executive summary of this report shows the existing bi‐monthly wastewater rates.

1-3: Wastewater System Customer StaƟsƟcs

During the Fiscal Year 2019, it is esƟmated that the City provided wastewater service to an average of 2,448 accounts. Based on customer billing data provided by the City, the average number of customers served by class during Fiscal Year 2019 for the wastewater system is shown in Table 1‐1 at the end of this secƟon and summarized as follows:

Section 1: Financial Forecast / 1-1


Exhibit 1-1: Fiscal Year 2019 Wastewater Customer Statistics [*]

Customer Class Accounts Percent Units Percent Revenue-Gallons Percent

Single Family 1,783 72.85% 1,794 23.00% 75,897 24.70% Duplex 165 6.74% 297 3.81% 7,343 2.39% Multifamily 278 11.36% 3,353 43.00% 100,127 32.59% Hotel/Motel 120 4.90% 2,230 28.60% 100,786 32.81% Commercial 3/4‐inch or 1‐inch 87 3.53% 110 1.40% 13,240 4.31% 1‐1/2‐inch 10 0.41% 10 0.13% 3,670 1.19% 2‐inch 5 0.20% 5 0.06% 6,151 2.00%

Total 2,448 100.00% 7,799 100.00% 307,214 100.00%

[*] Amounts shown derived from Table 1‐1.

As can be seen in the preceding table, approximately 73% of the wastewater customer accounts are classified as single‐family residenƟal. However, the City’s single‐family customer class only comprises 23% of the total units served. The two customer classes that account for the largest percentage of units are mulƟfamily residenƟal with about 43% of the total units and hotel/motels which comprise an addiƟonal 29%. The single‐family residenƟal, mulƟ‐family residenƟal, and hotel/motel classes account for about 90% of billed wastewater gallons (i.e., revenue‐gallons).

Based on discussions with the City staff, the City has approached a built‐out condiƟon. As such, it has been assumed that the City's wastewater customer base and billed flow would remain constant during the Forecast Period.

1-4: Revenues Under ExisƟng Bi-Monthly Wastewater Rates

The forecast of revenues from exisƟng bi‐monthly wastewater rates was based on: i) the projecƟon of System accounts and corresponding wastewater revenue‐gallons as shown in Table 1‐1; ii) the exisƟng bi‐monthly rates for wastewater service as currently adopted by the City; iii) adjustments to reflect the esƟmated effects of COVID‐19; and iv) discussions with the City staff. Total wastewater revenue under exisƟng bi‐monthly rates was esƟmated at $4,567,560 for Fiscal Year 2020; $4,600,000 for Fiscal Year 2021; and $4,630,440 for Fiscal Year 2022 and beyond. In the absence of rate adjustments, these revenue totals would be collected. Table 1‐2 at the end of this secƟon shows the revenue projecƟons under exisƟng wastewater rates.



1-5: Revenue Requirements – Principal AssumpƟons and ConsideraƟons

The costs associated with operaƟng and maintaining a uƟlity system, as well as the costs of financing the renewals and replacements of exisƟng faciliƟes and the capital improvements for upgrades and expansions, are generally considered as the revenue requirements of a public uƟlity such as the City’s System. The sum of these costs, aŌer adjusƟng for other operaƟng and non‐operaƟng (e.g., interest income, capacity fees available to pay expansion‐related debt service if applicable) revenues available to the uƟlity, represents the net revenue requirements of a uƟlity system that must be funded from the user charges or rates. The following is a summary of the net revenue requirement derivaƟon:

+ Cost of OperaƟon and Maintenance + Debt Service Payments (Senior and Subordinate) + Transfers and AdministraƟon Payments + Capital Project Financing + Working Capital Reserves / Financial Compliance ‐ Other OperaƟng Revenue and Other Funding Sources ‐ Interest Income = Net Revenue Requirements (Funded from User Rates)

Net revenue requirements signify the expenditure levels required to be recovered from user fees or rates. The development of the net revenue requirements of the System is a criƟcal component of the analysis since uƟlity rates should be designed to fully recover the cost of providing service.

The financial evaluaƟon contained in this uƟlity rate analysis covered projecƟons for the 11 fiscal year period of October 1, 2019 through September 30, 2030 (previously defined as the "Forecast Period"). A forecast of System operaƟons was prepared in order to: i) assess the adequacy of uƟlity rates in the near future; ii) recognize potenƟal cost recovery strategies based on the phase‐in of any required rate adjustments to meet the projected revenue requirements and finance idenƟfied capital expenditure requirements; and iii) examine the financial implicaƟons of alternaƟves to funding the System’s mulƟ‐year capital improvement program.

The projected revenue requirements are shown in Table 1‐3 at the end of this secƟon for the wastewater system. In the preparaƟon of the financial projecƟons contained in this report and the conclusions that



follow, GovRates has made certain assumpƟons with respect to condiƟons that may occur in the future. While we believe the assumpƟons are reasonable and based on the best available informaƟon for the purpose of this report, they are dependent upon future events. Actual condiƟons may differ from those assumed. We recommend that the City conƟnue to compare actual results with the projecƟons contained in this report to ensure that the UƟlity's rates conƟnue to be sufficient.

For the purposes of the financial projecƟons, the principal consideraƟons and assumpƟons were either made by us or provided to us by others. These primary consideraƟons and assumpƟons include the following:

1. Projected revenues from current rates and charges for the City’s wastewater system have been basedon the schedule of rates and charges currently in effect and as set forth in the Rate ResoluƟon. Suchrates were applied to the customer and sales usage forecast discussed previously.

2. The adopted Fiscal Years 2020 and proposed 2021 OperaƟng and Capital Budgets as provided by theCity served as the baseline for the expenditure projecƟons for the remainder of the Forecast Periodand the underlying assumpƟons contained in these budgets were considered reasonable and toreflect anƟcipated operaƟons. The budgeted operaƟng expenses were compared with actualhistorical results and trends in operaƟng expenses.

3. Table 1‐4 at the end of this secƟon summarizes: i) the budgeted Fiscal Year 2020 and Fiscal Year 2021operaƟons and maintenance expenses for the System; and ii) the adjustments made to the forecast for known operaƟonal and ratemaking consideraƟons. The operaƟon and maintenance expenses forthe wastewater system idenƟfied for the Fiscal Year 2021 were projected for the remaining nine (9) years of the Forecast Period (through Fiscal Year 2030). These projecƟons are displayed on Table 1‐5at the end of this secƟon. Table 1‐6 indicates the escalaƟon factors uƟlized in the analysis that werebased on the nature of the expense and informaƟon provided by the City staff. The forecast of inflaƟon was based upon the consumer price index (CPI) forecast prepared by the CongressionalBudget Office as contained in "The Budget and Economic Outlook: 2020 to 2030" published in January2020. This inflaƟon forecast was compared to other pricing indices used by many uƟliƟes for financial forecasƟng and rate review purposes. Major cost escalaƟon factors assumed were based on discussions with City staff and include:

Salaries and Wages: 3.0% per year Health Insurance: 5.0% per year Repair and Maintenance Expenses: 4.0% per year Property / General Insurance: 5.0% per year Utilities: 4.0% per year Administrative Charge to General Fund: 3.0% per year

4. The City currently purchases wholesale wastewater treatment and disposal services from the St.Petersburg for the City’s enƟre wastewater service area. Based on St. Petersburg’s recently adopted



rate adjustments, St. Petersburg’s wholesale wastewater rate to the City increased to $4,196 per million‐gallons effecƟve October 1, 2019 (Fiscal Year 2020), which was a 10.39% increase over the $3,801 per million‐gallons rate that was effecƟve during the Fiscal Year 2019. EffecƟve October 1, 2020 (Fiscal Year 2021), St. Petersburg's wholesale wastewater rate to the City is anƟcipated to increase to $4,693 per million‐gallons, an increase of 11.84% over the $4,196 per million‐gallons rate effecƟve in Fiscal Year 2020. AddiƟonally, the City is currently charged a 25% outside‐municipality surcharge by St. Petersburg. The outside‐municipality surcharge is applied to the monthly metered flow cost. The projected cost of purchased wholesale wastewater services was calculated under exisƟng and anƟcipated rates and reflects the customer growth assumpƟons previously discussed. No assumed rate increases from St. Petersburg were reflected for the Fiscal Years 2022 through 2030 since it was assumed that any such adjustments would be passed‐through to the City’s customers via the PSA formula. The historical and projected costs are summarized on Table 1‐7 at the end of this secƟon and as follows:

Exhibit 1-2: Projected Cost of the City's Wholesale Wastewater Service [1]

Fiscal Year

Sewer Flow Billed By St. Petersburg (000's gallons)

Rate Per 1,000 Gallons

Purchased Sewer Cost

Outside Municipality Surcharge

Purchased Sewer Cost with Outside-Municipality Surcharge

2019 (actual) 461,177 $3.801 $1,752,935 $438,234 $2,191,169 2020 478,862 4.196 2,009,303 502,326 2,511,629 2021 467,068 4.693 2,191,949 547,987 2,739,936 2022 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2023 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2024 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2025 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2026 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2027 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2028 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2029 [2] 467,068 4.693 2,191,949 547,987 2,739,936 2030 [2] 467,068 4.693 2,191,949 547,987 2,739,936

[1] Amounts shown derived from Table 1‐7. [2] It was assumed that future increases from St. Petersburg would be passed‐through to City customers via the PSA formula.

5. Based on discussions with City staff, no addiƟonal personnel above Fiscal Year 2021 budgeted levelshave been recognized for purposes of developing the financial forecast.

6. The projecƟon of variable costs for wastewater systems operaƟons, which would include suchexpenses as chemicals and electricity, was based on the projected growth wastewater flow,respecƟvely, plus an allowance for commodity cost increases.

7. In the projecƟon of the esƟmated expenditure requirements, a conƟngency allowance has been included for Fiscal Years 2020 through 2030. The conƟngency allowance assumed for thedevelopment of the projected revenue requirements is $90,000 per year. This annual allowance has



been included as an operaƟng expense in order to have addiƟonal funds to meet unknown or unplanned expenses throughout the fiscal year and to recognize potenƟal changes in revenues that may result due to weather, conservaƟon, and other factors. To the extent the conƟngency allowance is not required to meet annual operaƟng expenses or provide funds for ongoing System operaƟons, such monies would accrue to the benefit of the System and could be used for other purposes such as funding renewals, replacements, and upgrades to the System over Ɵme.

8. For the purposes of this analysis, amounts associated with depreciaƟon and amorƟzaƟon expenseshave not been recognized in this analysis. These expenditures are non‐cash in nature and are also notconsidered as operaƟng expenses for ratemaking purposes under the City's exisƟng and anƟcipatedloan agreements. Therefore, such amounts have not been recognized as a revenue requirement to be recovered from rates for the Forecast Period. It should be noted that an allowance for the fundingof capital projects, renewals and replacements, and/or reserves has been recognized which essenƟally provides for the cash funding of these expenses.

9. The System's outstanding debt consists of two (2) low‐cost SRF loans secured through the FDEP – SRF Loans 53601P and 520810 with combined payments of about $97,000 per year. It is assumed that the City will secure addiƟonal SRF loans during the Forecast Period to finance the Master Pump StaƟon refurbishment ($1,150,000 borrowed; 20‐year term; 2.5% interest rate; $76,656 annual payment)and the subaqueous force main ($10,000,000 borrowed, 20‐year term, 3.0% interest rate; $696,355annual payment). Given uncertainƟes on future interest rates, GovRates has been conservaƟve in the interest rate assumpƟons.

10. The projected eleven (11) year capital expenditures (i.e., through the Fiscal Year ending September30, 2030) for the wastewater system were based on discussions with the City staff. Table 1‐8 at theend of this secƟon provides a detailed lisƟng of the capital projects for the wastewater system as well as projected funding sources for such projects within the analysis period. The capital improvementprogram (CIP) is summarized in the following Exhibit 1‐3:



Exhibit 1-3: Wastewater System Capital Program and Funding Sources

Description

Estimated Cost Through

Fiscal Year 2030 Percent of Total

Capital Needs: Replacement of Force Main to St. Petersburg $10,550,000 39.1% Lift Station Refurbishments 7,591,661 28.2% Sewer Main Relining / Laterals 4,450,603 16.5% Manhole Relining 2,908,470 10.8% Other Projects and Departmental Capital 1,448,416 5.4% Total Capital Needs $26,949,151 100.0%

Funding Sources: Additional SRF Loans $11,150,000 41.4% Internal Funding Sources 15,799,151 58.6% Total Funding Sources $26,949,151 100.0%

[1] Amounts shown derived from Table 1‐8.

As the preceding table indicates, the mulƟ‐year capital improvement program is projected to be funded from a mix of addiƟonal SRF loans and internal funding sources.

11. Interest income has been recognized as an available revenue source to fund the expenditure needsof the System. For the Forecast Period, interest income was based on esƟmated balances inunrestricted funds. In the development of the esƟmated interest earnings, an average interest rate of 1.00% was assumed to be earned on the esƟmated average fund balances during the Forecast Period. This interest rate is based on recent earning performance results of the UƟlity, discussionswith the City staff, and a review of earnings performance of available investment vehicles to the City(e.g., State Board of AdministraƟon).

Table 1‐9 at the end of this section contains the projection of cash balances and interest income by fund.

1-6: Summary of Wastewater Revenue Requirements

As shown on Table 1‐3 and as presented in the ExecuƟve Summary secƟon of this report, the need for 6.00% annual revenue increases has been recognized for the Fiscal Years 2021 through 2023, followed by

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