HomeMy WebLinkAboutMinutes - Water Finance Subcommittee - 2/7/2018 MINUTES
ORO VALLEY WATER UTILITY COMMISSION
FINANCE SUBCOMMITTEE
FEBRUARY 7,2018
WATER UTILITY CONFERENCE ROOM
11000 N.LA CANADA DRIVE
CALL TO ORDER—Member Milkey called the meeting to order at 10:01 a.m.
ROLL CALL
PRESENT: Robert Milkey,Member(Acting Chair)
Chuck Hollingsworth,Member
EXCUSED: Winston Tustison,Chair
ALSO PRESENT: Peter Abraham,P.E.,Water Utility Director
Shirley Kiel,Water Utility Administrator
Jeff Kane,Meter Operations Supervisor
CALL TO AUDIENCE—No speakers.
1. APPROVAL OCTOBER 24,2017 MINUTES
MOTION:A motion was made by Member Hollingsworth and seconded by Member Milkey to
approve the October 24,2017 minutes as written.MOTION carried,2-0.
2.DISCUSSION REGARDING THE 2018 WATER RATES ANALYSIS
Discusion regarding the water rates analysis including assumptions to be used in the
forecast period and potential financial scenarios
Mr Abraham provided an overview on the efforts made to revise the analysis and
aknowledged Ms.Kiel for her work on the project.
Ms.Kiel reviewed the major changes in capital projects for the new preffered Scenario E:
• Capital improvements were shifted into the 5-year projection period
• Amended Infrastructure Improvements Plan(IIP)to include the Northwest Recharge
and Recovery Delivery System(NWRRDS)project and remove the Tucson Water
CAP wheeling project
Ms.Kiel presented the Operating Fund assumptions:
• A restructure of capital requires borrowing$6M,$800K to be spent this fiscal year
• Revised IIP to include the Northwest Recharge and Recovery Delivery System
(NWRRDS)project.
• The cost for the NWRRDS project is a split 40%for exising customers and 60%for
growth.
• Groundwater Preservation fees will be used to pay for existing customers portion of
the projects along with the Northwest Reilability funds of$924K
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• Alternative Water Resource Development Impact Fees will be used to pay for the
growth related portion of the NWRRDS project.
• The debt service for the NWRRDS project is planned to occur in 2022;however,it
will continue to be evaluated as the project moves forward.
Ms.Kiel stated the updated Master Plan also led to capital improvement project changes in
the Potable Water System Development Impact Fee Fund(PWSDIF).All projects will be
cash funded.
Ms.Kiel reviewed Scenario E in relation to the Operating Fund:
• Revenue stays the same
• Expenses changed due to additional debt service for borrowing$6M for capital
projects in the first three years.Expenses are larger than revenues thus the need to
borrow money
• Operating Fund cash reserves stay balanced
• Cash reserve requirement is met in every year
• Debt service coverage is healthy
• Increase to average residential customer using 8K gallons is$1.83 per month
(4.4%)for the first year
• No rate shock
• New debt will change from private placement to traditional 20-year bond(5%
interest;20-year term)to lower debt service costs
Ms.Kiel discussed the Groundwater Preservation Fund:
• GPF funds will be used for existing customers portion of the NWRRDS project No
increase in the GPF rate(growth driven revenue)
• Northwest Reliability Funds will be used until depleted in 2019-20
• Majority of expenses are debt service on reclaimed and capital projects
• Cash balance stays healthy and reclaimed debt drops off four years out
• New traditional bond debt of$10M for the NWRRDS project at 6%interest over 20
years in FY 2022-23
o The bond issue will be split between the GPF and the AWRDIF
Ms.Kiel stated revenues in the Impact Fees Fund are based on growth.Expenses will
ramp up in the future in both impact fee funds as capital projects are constructed.
Discussion ensued regarding:
• Build-out projected in approximately 15 years and annexation opportunities
• Comparison of Scenario D1 and Scenario E
Ms.Kiel spoke with Chair Tustison and he conveyed full support of Scenario E.It was the
consensus of Member Milkey and Member Hollingsworth to also recommend Scenario E as
the preferred option.
FUTURE AGENDA ITEMS—Commissioner Milkey suggested a future discussion on
reclaimed rate increases for water allocations prior to this process next year.
ADJOURNMENT
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MOTION:A motion was made by Member Hollingsworth and seconded by Member Milkey to
adjourn the meeting at 11:03 a.m.MOTION carried,2-0.
Prepared by:
Danielle Tanner
Senior Office Specialist
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of
the regular session of the Water Utility Commission of Oro Valley,Arizona held on the 7th day
of February,2018.I further certify that the meeting was duly called and held and that a
quorum was present.
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