Title
Water Resources, Infrastructure, and Financial Plans
Description
This report provides the Transportation, Infrastructure and Innovation Subcommittee with an update on the Water Services Department’s financial plan for fiscal years (FY) 2021-25. Additionally, it addresses rehabilitation of aging infrastructure, as well as the impact of these costs on the community water system’s financial plan.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
Five-year financial plans for both the City's water and wastewater utilities have been prepared by the Water Services and Finance Departments which reflect both the capital infrastructure requirements and financial requirements of the water and wastewater systems.
The City Council has taken the necessary actions to meet the needs of a rapidly growing city, maintain the infrastructure for existing residents and meet federal standards for safe drinking water.
These plans:
- provide for rehabilitation, replacement, and development of infrastructure necessary to ensure deliveries of safe, clean water and safe removal and treatment of wastewater;
- provide all resources needed by water and wastewater to continue to operate efficiently and effectively;
- maintain reasonable rates for water and wastewater customers; and
- maintain high bond rating to minimize financing costs in the future.
The following sections outline the financial requirements for proposed rate adjustments.
Capital Improvement Program
The water and wastewater capital improvement programs are the largest cost components in the Water Services Department and therefore significant drivers of the rate increases periodically necessary to maintain financially viable water and wastewater utilities.
Given the impact of COVID-19, the CIP budgets were carefully developed to minimize costs in the current fiscal year while upholding the Department’s mission to provide safe and reliable water and wastewater services that meet or exceed regulatory requirements.
Water and Wastewater Financial Plans
The financial plans forecast minimal inflationary adjustments necessary to support future operational and maintenance costs and CIP costs of the system based on the following assumptions:
- normal weather conditions with impacts from wildfires on watershed;
- slowing of account growth due to COVID impacts;
- refinancing of debt to reduce current bond costs; and
- adjustment of the Capital Program to slow infrastructure investment
Concurrence/Previous Council Action
The Citizens' Water/Wastewater Rate Advisory Committee recommended:
- A zero percent water revenue increase for FY 2021, based upon the five-year financial plan that includes a 6.5 percent increase in revenue for FY 2022; and 3.5% increases in revenue for each of FYs 2023-25, on Oct. 20, 2020, by a 6-2 vote; and
- A zero percent wastewater revenue increase for FY 2021, based upon the five-year financial plan that includes zero percent wastewater revenue increases in each of FYs 2021-25, on Oct. 20, 2020, by a 6-2 vote.
Staff Recommendation
The Water Services Department requests that the Transportation, Infrastructure and Innovation Subcommittee recommend City Council approval of 0 percent water revenue and 0 percent wastewater revenue increases for FY 2021.
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services Department.