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Home My WebLink Aboutagenda.council.worksession.20141021 CITY COUNCIL WORK SESSION October 21, 2014 4:00 PM, City Council Chambers MEETING AGENDA I. Budget Work Session - Stormwater Fund Water Utility Fund Electric Utility Fund Utility Rates, Tiers, and Development Review Fees 2015 Proposed Budget October 21, 2014 P1 I. Agenda for Oct. 21 •Stormwater Fund (160) •Water Utility Fund (421) •Electric Utility Fund (431) •Utility Rates, Tiers, and Development Review Fees 2 P2 I. Stormwater Fund •Property Tax Revenue Subject to AV Change No mill levy credit •In Lieu Of Fees Are Volatile 2014 collections more than sum of last two years 3% fee increase proposed Property Tax (0.650 Mil Levy) $808,200 Development Fees $100,000 Permits / Land Use Fees $140,050 Interest Income $12,400 Revenues = $1,060,650 3 P3 I. Stormwater Fund •Base Budget Increase: 12.6% Excluding OH and Capital Labor Shift: 3.5% •Capital Projects Aspen Mtn Drainage Basin Improvements Prockter Open Space •Supplemental Requests Maintenance Operator –Prorated for 2015 Operating Expenses $595,960 Capital Projects $675,000 Overhead, $195,400 Transfers, $163,000 Supplementals $17,180 Expenditures = $1,646,540 4 P4 I. Stormwater Fund 2015 Project Cost Aspen Mtn. Drainage Basin Improvements -Garmisch $500,000 Water Quality Improvements –Prockter Open Space $125,000 Demonstrations and Retrofits $50,000 Total Capital Projects $675,000 5 P5 I. Stormwater Fund Net Change to Fund Balance: ($585,890) $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 Stormwater Fund Long Range Plan 2011-2019 Fund Balance Revenues Expenditures Reserve (12.5% of Uses) 6 P6 I. Water Utility Fund •Variable Service Revenue Lower than budgeted for 2014 Tier adjustments (one-time) proposed for 2015 •Demand Service Revenues Rate adjustments proposed for 2015 •Development Review Fees: $325,000 Not all new moneyWater Service $5,424,000 Development Review Fees $325,000 Tap Fees $1,278,100 Transfers $368,000 Other $56,300 Revenues = $7,451,400 7 P7 I. Water Utility Fund •Base Budget Increase: 4.5% Labor Increase: 4.3% Overhead: 7.8% •With Supplementals: 10.2% Development Review Contractor: $95,000 2.0 Permanent FTE: $142,610 •With Capital Projects: 8.3% Includes Drainline / Outfall: $750,000 •Franchise Fee to General Fund •$575,000 for 2015 Operating Expenses $3,507,010 Overhead $889,200 Supplementals $237,610 Capital $2,211,300 Transfers, $880,000 Expenditures = $7,725,120 8 P8 I. Water Utility Fund 2015 Project Cost Leonard Thomas Reservoir Drainline / Outfall $750,000 Annual Ground Water Facilities $255,000 Annual Distribution Replacement $195,000 Annual Water Rights $100,000 East Treatment Plant Backwash & Surfacewash Pumps $80,000 Annual Conservation / Efficiency Efforts $75,000 Annual Treatment Plant Maintenance $75,000 Annual Storage Tank Maintenance $56,000 Electric Altitude Valve at Ridge of Red Tank $55,000 East Treatment Plant Controls Electrical Upgrade $50,000 Ground Water Model $50,000 Annual Pre-Project Engineering Services $50,000 Eighteen Additional Projects <$50,000 Each $420,300 Total Capital Projects $2,211,300 9 P9 I. Water Utility Fund Net Change to Fund Balance: ($273,720) $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 Water Utility Fund Long Range Plan 2011-2019 Fund Balance Revenues Expenditures Reserve (12.5% of Uses) 10 P1 0 I. Electric Utility Fund •Proposed Tier Shift for 2015 Adopted rate increases reduced or eliminated •Demand and Availability Rate Increases 5.0% for 2015 Commercial Service $4,399,000 Availability Charges / Other $560,100 Residential Service $2,601,000 City Facility Service $514,000 Revenues = $8,074,100 Adopted Rate Increase Proposed Rate Increase Residential 2.5%0.0% Sm. Commercial 0.0%0.5% Lg.Commerical 0.5%0.5% Sm. City Facility 1.5%0.5% Lg. City Facility 2.0%0.5% 11 P1 1 I. Electric Utility Fund •Base Budget Increase: 3.7% Administrative Increase: 7.5% Purchased Power Increase: 2.0% •With Supplementals: 17.5% Purchased Power: $749,000 Utilities Efficiency Specialist: $24,960 •With Capital: 12.6% $1,350,000 removed from 5 year plan Operating Expenses $1,520,990 Overhead $363,800 Purchased Power $3,957,000 Capital Expenses $869,500 Supplementals, $773,960 Transfers & Debt Service $1,095,600 Expenditures = $8,580,850 12 P1 2 I. Electric Utility Fund $3,177,167 $3,844,173 $4,456,885 $4,369,000 $4,706,000 $4,708,000 $4,798,000 $4,893,000 $4,964,000 21% 18% 11%10% 8%7%6%6% 0% 5% 10% 15% 20% 25% $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Purchased Power Compound Avg Annual Change since 2011 13 P1 3 I. Electric Utility Fund 2015 Project Cost Annual Electric System Replacement $300,000 Annual Other Renewable Opportunities $150,000 Electric Cable Study $85,000 Annual Energy Conservation Efforts $75,000 Micro Hydro $50,000 Annual Street Light Replacement and Repair $45,000 Community Greenhouse Gas Inventory $30,000 Annual Electric Building Maintenance $30,000 Annual Electric Meter Replacement $22,000 Annual Ruedi Facility Improvements $20,000 Annual Maroon Creek Hydro Facility $18,000 Annual Electric System Telemetry $16,000 Annual Hydroelectric Telemetry $15,000 Work Equipment Replacement –Locating Devices $10,000 Total Capital Projects $869,500 14 P1 4 I. Electric Utility Fund Net Change to Fund Balance: ($506,750) $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 Electric Utility Fund Long Range Plan 2011-2019 Unrestriced Fund Balance Revenues Expenditures Reserve (12.5% of Uses) 15 P1 5 I. Utility Rates, Tiers and Fees 16 P1 6 I. Water Utility Development Review Fee •Large Project Reviews Are Outsourced Challenges with reviews being consistent with regulations Revenues and expenditures not showning up in budget Process is too lengthy to achieve new timeframes •General Customer Base is Subsidizing Reviews Smaller projects are done with existing staff and not charged out Subsidy rising as construction activity increases 17 P1 7 I. Water Utility Development Review Fee 790 427 691 0 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Permits Requiring Utilities Review 18 P1 8 I. Water Utility Development Review Fee •Proposed Changes Continue to do smaller reviews with existing staff New Civil Engineer position to take on majority of larger reviews Retain contactor support for only handful of large projects •Adopt New Development Review Fees Smaller remodel will have flat rate; Larger remodels to have rate per ECU added Minor review for new construction (up to 10,000 sqft) Major review for new construction (greater than 10,000 sqft) 19 P1 9 I. Water Utility Rates •Last Rate Study -October 2012 Water use had declined since 2008 Needed to evaluate how recovering costs •Transitioned to Cost of Service Model New Component Charges Created •Variable Component –Unchanged since 2006 Four Tier Inverted Blocks (gallons per ECU) Tier 1: 0-5,000 Tier 2: 5,000-15,000 Tier 3: 15,001-20,000 Tier 4: 20,001+ 20 P2 0 I. Water Utility Rates •Proposing Tier Adjustments 20% reduction to upper bounds Impact to Avg. Residential: 3.5% Impact to Avg. Commercial: 0.2% •In Addition to Proposed Tier Changes 4.5% rate increase for Consumption 3.0% rate increase for Demand (escalating in out years) 5.0% rate increase for Fire (excludes new fire mitigation charge) 5.0% rate increase for Pumping •Changes are Needed Income Swings Too Extreme 10-Year Capital Plan Currently Not Achievable In That Time 21 P2 1 I. 2014 2015 Proposed 2015 2016 Proposed 2016 2017 Proposed 2017 Avg. Bill Rate Changes Tier Shift Impact Avg. Bill Rate Changes Tier Shift Impact Avg. Bill Rate Changes Tier Shift Impact Avg. Bill Water Variable $19 4.5%3.5%$20 4.5%0.0%$21 4.5%0.0%$22 Water Demand $12 3.0%0.0%$13 4.0%0.0%$13 6.5%0.0%$14 Fire Charge $4 5.0%0.0%$4 5.0%0.0%$5 5.0%0.0%$5 Pump Charge $0 5.0%0.0%$0 5.0%0.0%$0 5.0%0.0%$0 Avg. Residential 2.67 ECUs & 0 Pumps $35 $37 $38 $40 4.2%4.4%5.2% Water Variable $38 4.5%0.2%$40 4.5%0.0%$42 4.5%0.0%$43 Water Demand $69 3.0%0.0%$71 4.0%0.0%$73 6.5%0.0%$78 Fire Charge $23 5.0%0.0%$24 5.0%0.0%$25 5.0%0.0%$27 Pump Charge $0 5.0%0.0%$0 5.0%0.0%$0 5.0%0.0%$0 Avg. Commercial 9.14 ECUs -No Pump $130 $135 $140 $148 3.9%4.3%5.6% Water Utility Rates * Increases exclude any impact from new fire mitigation charges 22 P2 2 I. Electric Utility Rates •Last Rate Study –September 2011 Assumption was for 1% conservation decrease and 1% growth in number of accounts •Transitioned to Cost of Service Model Goals for Cost Recovery Residential customers to 92% by 2015 Commercial customers to 100% by 2015 Availability charges to 100% by 2022 23 P2 3 I. Electric Utility Rates •Average Annual Increase to Purchased Power Cost 10% from 2011 to projected 2015 Large impact initially due to drought on local hydro Includes shift to higher mix of renewables •Consumption Based Rates Not Keeping Pace with Cost 4% average increase for residential 1% average increase for small commercial 2% average increase for large commercial •Need To Restructure Revenue Model •20% Tier Shift Proposed Similar to Water •Greater Shift to Demand and Availability Charges •3% -4% Increases to Consumption Charges (<= 0.5% in 2015) 24 P2 4 I. 2014 2015 Proposed 2015 2016 Proposed 2016 Avg. Bill Rate Changes Tier Shift Impact Avg. Bill Rate Changes Tier Shift Impact Avg. Bill kWh Charges $43 0.0%6.7%$46 4.0%0.0%$47 kW Charges $0 0.0%0.0%$0 7.0%0.0%$0 Availability Charges $13 0.0%0.0%$13 10.0%0.0%$14 Average Residential -200 AMP service $56 $59 $62 5.1%5.3% kWh Charges $178 0.5%3.8%$185 3.0%0.0%$191 kW Charges $0 0.0%0.0%$0 7.0%0.0%$0 Availability Charges $13 5.0%0.0%$14 10.0%0.0%$15 Average Small Commercial -200 AMP service $191 $199 $206 4.4%3.5% kWh Charges $3,406 0.5%3.0%$3,524 3.0%0.0%$3,630 kW Charges $1,170 5.0%0.0%$1,229 7.0%0.0%$1,315 Availability Charges $32 5.0%0.0%$34 10.0%0.0%$37 Average Large Commercial -400 AMP service $4,608 $4,787 $4,982 3.9%4.1% Electric Utility Rates 25 P2 5 I.