|
REGULAR MEETING NOVEMBER 11, 2013
<br /> increases and last time it was over a four(4) year period of time, a 9% increase each year. We
<br /> are trying to do the same thing at this point in time, 9% increases over the next four(4) years,
<br /> that allows us to actually go out into the public and explain to your customers what they can
<br /> expect to happen with this bill. Especially, if you are looking at not-for-profits, schools,
<br /> hospitals, those other entities that have to put together budgets. They would like to know over a
<br /> period of time what's going to happen with the rates, especially when they do know that they are
<br /> putting enormous pressure on the utility and cause increases. For them not to see an increase for
<br /> a couple years and then all of a sudden be shocked with a 30, 40, 50 percent increase the next
<br /> year, it makes them hard to budget and plan on their end. So we try to put together planned
<br /> increases over a period of time so that they can be put in, in a reasonable manner. I will talk to
<br /> you about the pressure at this point in time, as Eric mentioned just a little bit earlier, these rate
<br /> increases are driven by capital improvements. What we are trying to accomplish over the next
<br /> four(4) years is about $91 million dollars' worth of projects and trying to mix the funding of
<br /> those projects through bonds, and debt financing and also paying for some out of our revenue
<br /> stream. As was mentioned earlier about the sewage works fund, it is an Enterprise Fund, the cash
<br /> comes into that fund, and the revenues coming in are for the financial responsibilities of that
<br /> fund. We've got debt services, we have operation and maintenance expenses, salaries, wages,
<br /> benefits, insurances,power, chemicals all of those needed expenses, we have all those, taxes, and
<br /> we have capital improvement budget. So the money coming in, the revenues come in and pay
<br /> for the projects. We are currently bringing in $32 million dollars a year in revenue, and as you
<br /> look at it about$9.5 million dollars of that $32 million go to annual debt service. What we are
<br /> looking to do is to increase that$32 million by 2017 we would like to have that increased to $40
<br /> million dollars. About half of that increase a little over$4 million would go to funding
<br /> additional debt service for completing that $91 million dollars of projects. The other$4 to $6
<br /> million a year would go to funding some improvements with cash. Yes, we had built in some
<br /> inflationary pressure with the operation and maintenance expenses and those types of things,
<br /> those are minor really though in comparison to what we are really trying to do as far as bond
<br /> fund some of the $91 million dollars in projects over the next three years and pay for some of
<br /> those with capital improvements. Again, if you look at the sewage works, enterprise fund, its
<br /> cash in, cash out. When we need to fund this level of projects, I guess fortunately or
<br /> unfortunately the source of revenue generally comes from the customers and as you look at it
<br /> what we have planned for is on the residential bill an increase each year in that bill so that we
<br /> can fund the projects over that period of time. As I said before the average is $3.44 for the
<br /> remainder of the life of the plan. We have put that together and shown you in this detail here,
<br /> (referring to power point) when you go out to 2029, when we came here four years ago we
<br /> showed you an additional four years on this plan, showing comparisons of where we are at. If
<br /> you were to go back and compare what we gave you four years ago compared to what we have
<br /> now we are pretty much staying on target with where we are at as far as the final rate. Yes, the
<br /> final rate is a big number but all we can do is stay on target with that and move forward and try
<br /> to lessen the impact as much as possible. If you look at it as Eric mentioned before, we are
<br /> competitive now. A lot of other cities many,many cities are out there dealing with these same
<br /> things. As Eric showed you our 2017 rate already compares on the high side,but competitive
<br /> with the other communities and we know that they are going to be going up either currently or
<br /> within the next few years as they are dealing with these things. So, as far as the financial side
<br /> goes, I think we have a plan that is very feasible, we think that it is put together in such a way
<br /> that we can give the public some reasonable increases that they can anticipate and plan for and
<br /> move forward. We really need to move this project, and one thing that was asked,how about
<br /> just doing a 5%increase instead of a 9% increase over the next few years. If you knock down to
<br /> a 5%basically, you are going to put twenty some million dollars of project over to 2017/2018,
<br /> double digit rate increases needed at that point in time, with projects being delayed. I think one
<br /> of the things that was mentioned earlier that Becky mentioned was the re-opener clause is if we
<br /> spend $100 million dollars when we get to that $100 million dollar number, one of the those re-
<br /> opener clauses could be activated if we start not funding the projects then we are not going to get
<br /> to that one part of re-opener clause. Part of the financial part of it goes; you can see the increase
<br /> in residential monthly rates which are very feasible at this point in time. I would like to open it
<br /> up to any questions that you may have.
<br /> Councilmember Oliver Davis: Yes, thank you, I think that there needs to be a clear
<br /> understanding of what we have done in past capital projects since the inception of this whole
<br /> project that the public needs to know. That since we have spent the first dollar, what kind of
<br />
|