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TOWN OF ORO VALLEY
WATER UTILITY COMMISSION
ANNUAL REPORT
MAY 2000
ORO VALLEY TOWN COUNCIL
Paul Loomis, Mayor
Richard Johnson, Vice Mayor
Wayne Bryant, Council Member
Fran LaSala, Council Member
Paul Parisi, Council Member
ORO VALLEY WATER UTILITY COMMISSION
John Dohogne, Chair
Michael Caporaso, Vice -Chair
Jennifer Gillaspie, Member
Leo Leonhart, Member
Carle Staub, Member
Nicolas Vale, Member
LaQuita Stec, Member
TOWN STAFF
Chuck Sweet, Town Manager
Shirley Seng, Interim Utility Director
David Andrews, Finance Director
Carolyn Schneider, Customer Service Supervisor
Ron Kozoman, CPA, Consultant
John McGill, Member, Finance Subcommittee
SECTION TITLE
Executive Summary
Preferred Scenario
Alternative Water Resources
Tucson Water System Within Oro Valley
Conservation
Service Area
Debt Financing
Water Quality
Water Supply
Revenue Requirements
O & M Debt Service Requirements
5 Year Capital Improvements Plan
Recommendation on Water Rates
Financial Summary
Alternate Financial Scenarios
Conclusion
Appendices
TABLE OF CONTENTS
TOWN OF ORO VALLEY
WATER UTILITY COMMISSION
ANNUAL REPORT
MAY 2000
PAGE
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6
7
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12
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18
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INDEX OF APPENDICES
TOWN OF ORO VALLEY
WATER UTILITY COMMISSION
ANNUAL REPORT
MAY 2000
APPENDIX
A. Preferred Financial Scenario (Scenario C-4)
1) Assumptions
2) Enterprise Fund 5-Year Projected Net Income Statement
3) Enterprise Fund 5-Year Projected Debt Service Statement
4) Enterprise Fund 5-Year Projected Cash Flow Statement
B. FY 2000-01 Projected Income and Cash Flow Statements
1) Water Enterprise Fund
2) Connection Fee Fund
3) Alternative Water Resource Development Fee Fund
C. Proposed Conservation Program Expenditures
D. Water Quality
1) Water Quality Monitoring Schedule for Year 2000
2) Water Quality Testing Results
E. Water Supply
1) Static Water Level Measurements
2) Pumping Capacity Status
F. 5-Year Capital Improvements Plan
1) Existing System Improvements
2) Expansion Related Improvements
G. Proposed Rate Schedules
1) Proposed Rate Schedules
2) Tables for Monthly Charges
H. Alternate Financial Scenario (Scenario C- 5)
1) Assumptions
2) Enterprise Fund 5-Year Projected Net Income Statement
3) Enterprise Fund 5-Year Projected Debt Service Statement
4) Enterprise Fund 5-Year Projected Cash Flow Statement
5) Table for Monthly Charges
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TOWN OF ORO VALLEY
WATER UTILITY COMMISSION
ANNUAL REPORT
MAY 2000
LIST OF ACRONYMS USED IN THIS REPORT
ADWR Arizona Department of Water Resources
CAGRD Central Arizona Groundwater Replenishment District
CAP
Central Arizona Project
CDO
Canada Del Oro
CIP
Capital Improvement Plan
COLA
Cost of Living Allowance
EPA
Environmental Protection Agency
FTE
Full Time Employee
FY
Fiscal Year
GPCD
Gallons Per Capita Per Day
GPM
Gallons Per Minute
MCL
Maximum Contaminate Level
MDWID
Metropolitan Domestic Water Improvement District
O&M
Operations & Maintenance
OVWID#1
Oro Valley Water Improvement District #1
OVWU
Oro Valley Water Utility
SAWRSA
Southern Arizona Water Rights Settlement Act
T)
EXECUTIVE SUMMARY
TOWN OF ORO VALLEY
WATER UTILITY COMMISSION
ANNUAL REPORT
MAY 2000
INTRODUCTION
In October, 1996 the Oro Valley Town Council (Mayor and Council) formed the Oro Valley
Water Utility Commission (Commission) to act as the official advisory body to the Mayor
and Council regarding water related issues. The functions and duties of the seven member
commission include reviewing and developing recommendations for water revenue
requirements, water rate and fee structures, and water system capital improvement planning.
The Commission is required to prepare an annual report to the Council regarding its
recommendations. This report is the Commission's fourth Annual Report. It includes
recommendations related to establishing a conservation program, debt financing, regulatory
requirements, revenue requirements, system operations and maintenance requirements, debt
service requirements, a five-year capital improvements plan, rate adjustments and alternative
water supply strategies.
This Executive Summary contains a briefing on the implementation of the recommendations
presented in the 1999 Annual Report. It also contains a briefing on new recommendations
specific to water issues facing the Town in FY 2000/2001 and beyond. Explanations and
financial analyses that are more detailed may be found in the body of the report and the
Appendices. The main body of the report presents details related to the Commission's
preferred scenario. For comparison purposes, a section describing other alternatives is
presented at the end of the report.
IMPLEMENTATION OF THE 1999 REPORT RECOMMENDATIONS
• Water Rates: The rates recommended by the Commission were adopted in June
1999 by Mayor and Council.
j • Alternative Water Resources: The renewable water resource subcommittee has
1 worked diligently during the past year in an effort to identify alternative water resource
options and costs affiliated with each option. The subcommittee will present their final
report to the Commission before the end of this fiscal year. The Commission will then
forward their recommendation to Town Council early this summer.
• Master Planning Reports: The potable water system master plan was adopted by
J Mayor and Council in January 2000. The plan will be reviewed and/or updated every
three to five years.
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Oro Valley Water Improvement District #1: Transfer of management of the
OVWID#1 system from MDWID to the OVWU was successfully completed in July
1999. Additionally, the operational and capital objectives identified in the OVWID#1
Task Force report as "Priority A" were completed by the end of July 1999. The
objectives identified as "Priority B" and "Priority C" are included in the utility's five year
capital improvements plan and are estimated to be completed during fiscal year 2000/01.
Liens that were placed on the homes of the OVWID#1 customers in 1992 were released
when the Town paid the outstanding debt in full. Financing was accomplished by the
sale of excise tax revenue bonds in June 1999.
• Tucson Water System within Oro Valley: Mayor and Council, along with staff,
have continued discussions and analysis necessary to evaluate the feasibility of acquiring
the assets of the Tucson Water service area located within and near the Oro Valley town
limits. To assist in this evaluation, the Town employed an engineering firm to perform
an appraisal of the infrastructure. Status reports and discussion with the Commission on
possible recommendations to the Mayor and Council are expected before the end of FY
1999/00.
• Conservation: A conservation program was approved by the Commission in February
2000. This program will include, but not be limited to, public education via elementary
school programs, newsletters, and billing inserts; modification of the conservation rate
structure; and membership in conservation organizations. The program will be presented
to Mayor and Council, along with the annual report, for approval during FY 1999/00 with
implementation scheduled for FY 2000/01.
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• Service Area: As of this writing, no policy statements have been developed regarding
} the expansion or reduction of the existing service area. This item will remain on the
Commission's work plan for FY 2000/01.
• Debt Financing: Capital projects in FY 1999/00 were financed with existing revenues
with the exception of the improvements to the OVWID#1 system. Bond proceeds have
been used for improvements to the OVWID#1 system during this fiscal year and will also
be used for the remaining improvements in FY 00-01.
• CAP Water: As of this writing, no policy statements have been developed regarding
additional CAP allocations, use of incentive priced CAP water or ADWR programs
regarding the use of CAP water. This item will be addressed with alternative water
resource planning.
• Human Resource Management: The OVWU departmental structure and position
classifications were reviewed during the FY 1999/00 budget process.
• Service Fees and Charges: Changes in the service fees and charges recommended
by the Commission were adopted in September 1999 by Mayor and Council.
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• Annual Report Due Date: A change in the Annual Report due date from March
1st to April 1st was approved in November 1999 by Mayor and Council.
• Emergency Services Strategic Plan: This plan was not presented to the Commission
during FY 99-00 for their evaluation in terns of level of service, implementation and
cost impacts to the Utility.
• Water Quality: In December 1999, Mayor and Council approved the implementation
of three new initiatives that will enable the utility to fulfill its responsibility of delivering
a safe water supply to our residents and customers. The initiatives are the installation of
water quality sampling stations, a comprehensive system flushing program and a system-
wide continuous disinfection program. With the pending EPA regulation regarding radon
in drinking water, the Utility tested all of the production wells in the system. Council
1 directed staff to continue to monitor the water supply and stay abreast of all changing
regulations regarding radon and other contaminants that the EPA may regulate in the
future.
• Water Supply: The static water levels of all utility wells were first taken in February
of 1999 by utility staff. A standard operating procedure has been established that will
result in water levels being taken annually using consistent measurement techniques.
• Line Extension Agreements: In February 2000, the Town Code was amended to no
longer include refund provisions in line extension agreements with exceptions for special
circumstances where refunds for over -sizing may be required. All line extension
agreements with no financial impact to the Town may now be executed by the Water
Utility Director, while any agreement containing refunds provisions will continue to be
approved by Town Council. This change is in keeping with the Town's policy that
development pay for itself.
• Regulatory: As of this writing, no policy statements have been developed regarding
the regulatory environment in which the utility operates. This item will be removed from
the Commission's work plan with the understanding that the Utility must meet or exceed
regulatory guidelines established by governing agencies.
• Wholesale Customers: The water rate for wholesale customers was increased as part
of the rate increase approved by Mayor and Council in June 1999.
NEW RECOMMENDATIONS FOR FY 2000/2001
• Water Rates, Revenue Requirements, O&M and Debt Service Requirements and
the 5-Year CIP: Based on the analysis of 5-year projected expenses and required
revenue detailed in the body of the report and the appendices, the Commission
J recommends the following rate structure:
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48 It is recommended that all rates be equalized for the existing classifications of "Non -
city", "City" and "OV#1".
It is recommended that a three-tier rate structure be established to further promote
conservation.
The monthly base rate is recommended to increase between $0.44 and $192.55 per
month depending on the meter size. Customers with a 5/8" x 3/4" meter would
realize an increase of 44 cents per month under this proposal.
44 The Tier 1 commodity rate is recommended to increase to $1.78 per each 1000
gallons after the first 1000 gallons used. This represents an increase of 5 cents.
44- The Tier 2 commodity rate is recommended to increase to $2.08 per each 1000
gallons after the first 8000 gallons used. This represents an increase of 23 cents.
The Tier 3 commodity rate is recommended to be established at $2.31 per each 1000
gallons after the first 16,000 gallons used.
• Alternative Water Resources: Given the importance to the residents of Oro Valley in
addressing alternative water resource issues and given the progress made in the past year,
the Commission recommends that emphasis be place on public forums. This will
facilitate citizen education, information dissemination and provide a means to gather
public input to assist the Town in arriving at their decision for implementation of an
alternative water resource plan. The Commission also recommends partnering with other
jurisdictions where appropriate and investigating financial assistance from all potential
sources.
• Tucson Water System Within Oro Valley: The Commission recommends that the
Town Council continue to pursue negotiations on the acquisition of the water production
and delivery system serving residents of the Town who are currently customers of
Tucson Water.
• Conservation: The Commission recommends approval of the proposed conservation
program as developed by the conservation subcommittee and further recommends that
the program be expanded every year. The Commission recognizes the importance of
establishing a long-term conservation program for guarding the future of our groundwater
resources and will return to the Mayor and Council with specific recommendations in the
coming year.
• Service Area: The Commission recommends that policy statements regarding service
area expansion and reduction be developed as part of the FY 2000-01 Commission work
plan and forwarded to Mayor and Council for consideration.
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• Debt Financing: The Commission recommends that capital projects continue to be
financed on a pay as you go basis, except when service area acquisition requires service
level equalization and when the cost of existing system improvements to meet system
demands are such that revenues will not be adequate without excessive rate increases.
• Water Quality: Water quality issues must continue to receive high priority; therefore,
the Commission recommends that staff stay abreast of legislative changes regarding
water quality issues including, but not limited to, radon and arsenic. The Commission
also recommends that the Utility implement a public education program to address
changes in EPA regulations as they arise on different contaminants.
• Water Supply: The Utility began performing their own water level measurements in
February 1999. These measurements are the baseline data for future measurements. The
measurements taken in February 2000 indicate an average decline of 7.7 feet since
February 1999. In addition to the measurements, this decline has been substantiated by a
decline in pumping capacity of the wells. The total pumping capacity during the last year
declined by 1000 gpm. The Commission recommends that the overall decline in water
levels be established as one of the key factors driving the need to obtain and deliver an
alternative source of water for golf course irrigation and/or recharge in or near the
Utility's well fields.
The Oro Valley Water Utility Commission is proud to serve the Mayor and Council and
citizens of the Town of Oro Valley. We are pleased to present our Annual Report to the
Mayor and Council for consideration. While much has been accomplished in the past year,
the Commission looks forward to direction from Mayor and Council regarding those items
mentioned in the Executive Summary and detailed in the Report. We thank the Mayor and
Council for their consideration, direction and guidance.
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TOWN OF ORO VALLEY
WATER UTILITY COMMISSION
ANNUAL REPORT
FINANCIAL SCENARIO
The Commission has arrived at a recommendation that adheres to the sound financial criteria
developed for the 1998 Annual Report. Described below, the preferred financial scenario
(Scenario C-4) also incorporates the elements of the other recommendations detailed in this
report.
The Commission and staff performed extensive analysis of numerous scenarios prepared by a
rate consultant at their direction. To enable the Commission to more fully understand the
long term effect of identifiable future variables that impact the Utility's financial resources,
estimates for revenue, O&M, capital expenditures and debt service have been forecast for a
period of five years. Examples of major future expenses with varying long term impacts are:
costs incurred with membership in the CAGRD; lost revenue from the removal of golf
courses from groundwater; costs for necessary capital improvements to the water system;
growth factors; and debt service. Every effort has been made to employ the most accurate
available data and reasonably conservative assumptions in the analysis of future financial
requirements.
The Commission developed a set of parameters for the rate consultant to use in developing
the preferred scenario. The parameters used for Scenario C-4 are as follows:
• Revenue increases are proposed only when necessary and in an amount no more than
necessary.
• In addition to the major items identified above, projected expenditures were adjusted
for inflation, additional personnel, O&M related to the new initiatives, and existing
system improvements.
• Financial criteria established in 1998 must be met, setting the foundation for sound
fiscal operation.
• The capital improvements to the existing system will be financed by bond funds.
• Golf courses are expected to be removed from groundwater over a period of years
commencing in FY 03-04.
• Revenue projections include a residential customer growth factor of 870 in FY 00-01
and 750 connections per year thereafter. The FY 00-01 figure correlates to growth
projections utilized by other departments in the budgeting process. The figure for
subsequent years is a conservative estimate developed from historical data.
• Expansion related revenue and expenditures are not considered for purposes of
establishing rates. They are discussed separately in the report.
J Revenue increases occur in each of the 5 fiscal years in Scenario C-4 projections. These
increases allow the Utility to anticipate changes in the future revenues and expenditures as
J described at the beginning of this section, including the loss of revenue when the golf courses
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' are phased off of groundwater. In order to decrease reliance on golf course revenues for
operations, Scenario C-4 includes setting aside the additional revenues that the golf courses
will pay as a result of any rate increase. The "set aside" is recommended to be earmarked for
' special use in developing renewable water resources for use on golf courses in Oro Valley.
"! Scenario C-4 proposes generating needed revenue from an increase to the monthly base rate
'l and the creation of a 3-tiered conservation rate structure.
The input data for the 5-year projection assumes that both personnel and other costs will
") increase 5% annually. Allowances have been included for power costs and increases in
'? depreciation relating to the addition of new plant. CAP and recharge costs are scheduled to
increase; however, the costs are established by state agencies over which the Town has no
control. Interest and principal payment on existing bond sales, as well as the proposed bond
issue for this year, will also increase over the 5 year period.
The FY 2000-01 projected Income Statement, Debt Service Statement and Cash Flow
Statement for Scenario C-4 may be found in Appendix A.
Financial analysis of Scenario C-4 indicates that it meets all of the required financial criteria.
Retrained earnings maintain a positive value and the net income of the Utility do not reflect a
loss for more than two consecutive years. Additionally, the net revenues provide debt service
coverage in excess of 1.35 time the annual debt service as required by the bond covenants
and depreciation is fully recovered by the rates. The total cash reserves are maintained in
excess of 15% of the expected cash outlays.
ALTERNATIVE WATER
In 1998 the Town Council directed the OV WU staff to give preferred status to the reclaimed
water option involving Pima County. This concept was to expand treatment facilities at the
Ina Road wastewater treatment plant and extend a distribution facility up the CDO wash to
Oro Valley. This would provide a means of delivering effluent for golf course irrigation.
Ensuing litigation between the City of Tucson and Pima County regarding effluent rights at
this facility caused the Town to reevaluate other previously identified options of obtaining an
alternative water source for golf course irrigation.
J During this past year, the Commission's renewable water resources subcommittee has been
reevaluating options available to the Town to provide an alternative water source for golf
course irrigation. During this past year, the subcommittee has developed a number of options
as well as costs affiliated with each option. The report is expected to be submitted to the
Commission during the month of June 2000. This progress is encouraging and essential to
the long-term operation of the Water Utility. The Commission recognizes that the effort to
accomplish providing an alternative source of water for golf course irrigation will involve a
multi -discipline team and will take several years to complete. The Commission recommends
that the Town partner with other water providers and jurisdictions where appropriate and
investigate all options for financing the infrastructure.
The Town has continued to participate with other jurisdictions in feasibility studies regarding
recharge options in the northwest region. These studies are nearing completion and thus far
have returned favorable results with regard to recharge in the Canada Del Oro Wash and Big
Wash. Contact with the Bureau of Reclamation has also been initiated regarding effluent
rights available through the SAWRSA settlement.
In order for Town residents to understand the Town's commitment to removing golf courses
from groundwater, it will be essential to provide public forums as a means of education and
information dissemination. The Commission recommends extensive public relations efforts
to assist the Council in understanding the desires of the residents as well as informing the
residents of what must be done to preserve our groundwater for future generations.
The Commission further recommends that a Renewable Water System Master Plan be
developed to look beyond the golf course issues and develop strategies and methodologies on
addressing the long range renewable water resource issues. This effort will compliment the
recently completed Potable Water System Master Plan and give the Town a comprehensive
approach to its water resource management.
The alternative water resource development impact fee fund balance is estimated to be
$1,200,000 by June 30, 2001. This revenue is to be used solely for alternative water resource
issues and/or resulting capital expenditures. A cash flow statement and income statement are
included in Appendix B.
TUCSON WATER SYSTEM WITHIN ORO VALLEY
Town staff has continued negotiations with the City of Tucson in an effort to acquire the
Tucson Water service area within the town limits. The Commission supports the objective of
the Town being the water provider to all Oro Valley residents. However, any such effort
must be made on sound financial principals. The Commission recognizes that it may be
impractical to have its water service area match exactly with its political boundaries, but has
a concern about expanding the service area to include customers in outlying areas that are not
residents of the Town. As staff moves forward in their negotiations with the City of Tucson,
the Commission looks forward to providing Mayor and Council with formal
recommendations on the issues involved.
WIXIM0461A 1111810
An ongoing conservation program can provide customers with information to assist them in
understanding the importance of conserving water, our most precious resource. An initial or
short-range conservation program was prepared by the conservation subcommittee. Key
components in the initial program focus on public education via elementary school programs,
newsletters and billing inserts; modification of the conservation rate structure and
membership in conservation organizations. This program should be reviewed annually and
expanded accordingly.
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of capital projects needed to meet existing system demands wherein the costs may be too
excessive to recover through rate increases.
The Council adopted the potable water system master plan in January of this year. The
master plan identified existing system improvements that needed to be constructed within the
next 5 years. These improvements would provide the capacity needed to meet water supply
demands, water pressure and fire flow to existing customers. The estimated costs to
construct the plant identified as essential in the coming fiscal year exceed $6,000,000.
Numerous financial scenarios were analyzed to ascertain what rate increase would provide
the required revenue. To avoid rate shock, the Commission recommended financing the
capital needs and increasing the rates to provide enough revenue to meet the debt service
requirements.
Additionally, the Town Council adopted increased development impact fees, or connection
fees, in February of this year. A large component of the new fee is financing costs. It was
determined that in order for the Utility to have the infrastructure in place prior to the demand
being placed on the system, it would need to finance the capital costs through the sale of
bonds. This debt service will be repaid through impact fees collected after building permits
have been issued and when water meters are purchased.
WATER QUALITY
During the past year, the Utility experienced a high volume of total coliform violations and
was unable to determine the cause. In December 1999, the Town Council approved a budget
modification to reallocate funds for the implementation of three new initiatives that would
enable the Utility to improve the quality and safety of the water being delivered to its
customers. The initiatives included a system -wide continuous disinfection program; the
installation of sampling stations; and the implementation of a valve exercising and main line
flushing program. These programs are in various stages of completion; however, the Utility
has not experienced a total coliform violation since the programs began.
The EPA's proposed regulation for radon in drinking water is scheduled for adoption in
August of 2000. Given the number of negative comments sent to the EPA regarding their
methodology of arriving at the MCL, it is doubtful that the proposed regulation will be
implemented as scheduled. There appears to be a general consensus that the EPA is
attempting to control an air quality problem by regulating radon in drinking water.
The Utility tested all the production wells in the system to determine if the radon levels
would meet the proposed compliance level and found that all test results exceeded the
proposed MCL. Engineering consultants were employed to perform a radon assessment
study. The report identified the worst case scenario if the MCL was adopted and the Utility
was forced to treat their water for radon. The total estimated cost to construct the required
collection and treatment facilities as in excess of $6,000,000.
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The Mayor and Council provided staff direction to continue monitoring the radon levels,
work with other jurisdictions, and develop a public education program that would provide
' accurate information to the Utility's customers.
This past year the Utility published its first Consumer Confidence Report and distributed it to
all existing customers. The Utility has also continued to distribute the report to all customers
' who have moved into the service area since the report was originally distributed. In
1 accordance with EPA regulations, a Consumer Confidence Report will be produced annually.
The report contains mandatory language on specific contaminants, bottled water, health
effects related to contaminants, and a listing of all contaminants detected in the Utility's
' water supply that exceeded the MCL during the prior year. A complete list of contaminants
that the Utility tests for may be found in Appendix D.
WATER SUPPLY
The Utility has records pertaining to static water levels taken on the wells in their production
system. Unfortunately, there is no documentation available that identifies specific measuring
points or techniques used to obtain the information, thus the accuracy of historic
measurements may be questioned. As a result, the Utility purchased "well sounding"
equipment in FY 98-99 and began performing their own measuring in February 1999. These
measurements will become the baseline data for future measurements. In addition, a
standard operating procedure was established that will result in water levels being taken
annually using consistent measurement techniques.
The measurements taken in February 2000 indicate an average decline of 7.7 feet since
February 1999. In addition to the measurements, this decline has been substantiated by a
decline in pumping capacity of the wells. The total pumping capacity during the last year
declined by 1000 gpm. Detailed information on individual wells may be found in Appendix
E.
The groundwater level declines cannot solely be attributed to growth or golf courses. The
lack of substantial natural recharge due to minimal snow and rainfall can be a major factor
for the decline in groundwater levels. The past two dry winters have contributed to the
limited amount of natural recharge.
The Commission believes that the overall decline in water levels should be one of the key
factors driving the need to obtain and deliver an alternative source of water for golf course
irrigation and/or recharge in or near the Utility's well fields.
REVENUE REQUIREMENTS
Water Utility Enterprise Fund:
The Commission and Town staff, in conjunction with a rate consultant, analyzed the revenue
1 and cash flow requirements necessary to operate and maintain the system, fund needed
" capital improvements and make debt service payments on the water system acquisition
"J bonds, OVWID bonds and the proposed bond issue in year 2000. Revenues and cash flows
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were projected for FY 2000/01 based on anticipated annual growth in customer base of 870
residential customers and water consumption patterns similar to FY 1998/99. Projected
> operating expenses were developed by the water utility staff. Capital expenditures will be
funded with depreciation and bond funds.
The following table indicates the amount of water sales revenue that would be realized by a
6.74% revenue increase (Scenario C-4), and increased service connections of 870:
FY 1999/2000
Revenue Estimate
FY 2000/2001
Revenue Projection
Dollar
Increase
$5,767,000
$6,465,800
$698,800
Increases in service fees and charges were approved by Mayor and Council in September
1999. No other adjustments to these fees are necessary at this time; however, the
Commission recommends that the services fees and charges continue to be reviewed on an
annual basis.
Connection Fee Fund:
In April 2000, Mayor and Council adopted Ordinance No. (0) 00-11 which increased the
potable water system development impact fees. The fee structure included a financing
component as well as infrastructure costs identified in the master plan. Because the impact
fees may not be collected prior to issuance of a building permit, it was deemed necessary to
finance infrastructure costs so that the plant could be constructed prior to the customer
needing the water supply. Thus capital expenditures will be funded with bond proceeds and
the debt will be repaid with the impact fees. An estimated cash flow and income statement
may be found in Appendix B.
Alternative Water Resource Development Fee Fund:
These fees have not increased since they were originally adopted by Council in 1996. To
date, there have been no capital expenditures from this fund. However, fees for professional
services and feasibility studies relating to alternative water issues are paid from this fund. An
estimated cash flow and income statement may be found in Appendix B.
O & M AND DEBT SERVICE REQUIREMENTS
Because of the timing of the preparation of this report relative to the Town's budgeting
process, the Commission recognizes that both the projected revenues and the projected
expenses may need to be revised. The amounts shown below and used in the financial
analysis may differ from those included in the Department Budget Request and the
Manager's Budget Review because of the availability of more recent and reliable
information. The Commission understands that OVWU staff, the Town Manager and the
Council will adjust expenses to fit the final estimate of revenues based on the action of the
Town Council on the rate structure for FY 2000/2001.
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The following table is a comparative summary of expenses and debt service requirements for
the water utility enterprise fund. Budgeted amounts as amended for FY 1999/00 are
compared to the projected expenses for FY 2000/01 used in the financial analysis:
OVWU
Expenses
FY 1999/00
Amended Budget
FY 2000/01
Projected
Change
Personnel
$ 952,300
$ 1,164,900
$ 212,600
O & M
1,492,000
1,881,200
389,200
C.A.P.
310,700
315,000
4,300
C.A.W.C.D.
0
48,000
48,000
Deprec. & Amort.
1,351,000
1,377,200
26,200
Interest Payments
1,616,800
2,061,900
445,100
Principal Pmts.
385,000
636,300
251,300
Totals
$ 6,107,800
$ 7,484,500
$1,376,700
Projected FY 2000/01 personnel costs would be increased to fund a routine salary increase
(COLA & merit). The projected personnel costs also include two additional full time
employees and the reclassification of three positions. The estimated growth of 870
connections is estimated to require an additional two FTEs to provide services to these
customers.
For reference, the following table provides current employee to customer ratio comparisons
with other cities, towns and water utilities within the State of Arizona. As shown in the table,
Oro Valley Water Utility is projected to have 1 employee for every 556 customers at the end
of the current fiscal year. When fully staffed at the end of the next fiscal year, the OVWU is
projected to have available 1 employee for every 547 customers. The average ratio for those
entities surveyed is 1 employee for every 462 customers.
Municipality or
Water Utility
Number of
Employees
Number of
Customers
Employee to
Customer Ratio
Marana Water
6
1,200
1:200
Cave Creek, City of
7.5
1,700
1:227
Metro Water Dist.
50
16,000
1:320
Douglas, City of
16
5,800
1:363
Tucson, City of
558
186,085
1:316
Bella Vista Water
17
6,800
1:400
Oro Valley at
6-30-01 (projected)
28
15,320
1:547
Oro Valley at
6-30-00 (projected)
26
14,450
1:556
Avondale, City of
16
9,000
1:563
Kingman, City of
22
14,000
1:636
Lake Havasu City
31
20,000
1:645
Green Valley
5.5
3,700
1:673
Prescott, City of
23
17,000
1:739
13-
The request for increased operations and maintenance costs reflect, among other items,
" ? increased expenses for electrical power for pumping, water recharge costs, excess
groundwater withdrawal fees, capital costs for additional CAP allotment, water quality
testing, chemical for disinfection, plant and equipment repairs. Some costs are fixed by
') outside agencies with no control by the Town. Others may be subject to change as the
'1 iterative process of budget development is completed.
Principal and interest payments reflect debt service pursuant to bond repayment schedules for
the bonds related to OVWID#1, bonds related to the original acquisition of the utility, and for
the proposed bond issue to fund necessary system improvements.
5 YEAR CAPITAL IMPROVEMNTS PLAN (CIP)
The Oro Valley Water Utility Commission, in conjunction with staff and engineering
consultants, undertook extensive analysis to develop a 5-year Capital Improvements Plan for
the water enterprise fund and the connection fee fund. Needs identified in the plans include
machinery, equipment, vehicles, wells, booster stations, reservoirs, fire hydrants, mains and
structures. Funding sources for existing system improvements include water rates and bond
proceeds that will be repaid with water sales revenue. The funding source for expansion
related improvements will be bond proceeds that will be repaid with impact fees. The
following table summarizes total amounts by year for each plan:
5 Year
C.I.P.
FY 00/01
FY 01/02
FY 02/03
FY'/.
FY 04/05
Total
Existing
System
$6,366,550
$1,891,375
$1,873,750
$2,783,875
$3,016,500
$15,932,050
Expansion
Related
$1,000,000
$1,955,000
$1,567,500
$1,255,000
$1,453,750
$ 7,231,250
Total
$7,366,550
$3,846,375
$3,441,250
$4,038,875
$4,470,250
$23,163,300
The two plans identify essential system improvements and equipment purchases through FY
2004/05. Results of the potable water system master planning process were included in the
amounts above. Recommended projects to be funded will be identified in the water utility
budget and the connection fee budget.
Details of the Capital Improvement Plans may be found in Appendix F.
RECOMMENDATION ON WATER RATES
The Commission recommends adjusting the monthly base rate and replacing the existing 2-
tier commodity rate with a 3-tier design. A 6.74% revenue increase for the preferred
scenario (Scenario C-4) is proposed to be accomplished via the following changes:
-ta-
J
• Equalize all rates for all customers formerly classified as "Non -city", "City", and
"OV#1".
• The monthly base rate is recommended to increase between $0.44/month and
$192.55/month depending on the meter size. Most residential customers have a
5/8" x 3/4" meter and will realize a 44 cent per month increase in the monthly
base rate.
• The Tier 1 commodity rate is recommended to increase to $1.78 per each 1000
gallons after the first 1000 gallons used. This represents an increase of 5 cents.
• The Tier 2 commodity rate is recommended to increase to $2.08 per each 1000
gallons after the first 8000 gallons used. This represents an increase of 23 cents.
• The Tier 3 commodity rate is recommended to be established at $2.31 per each
1000 gallons after the first 16,000 gallons used. This represents an increase of 46
cents over the existing 2"a tier.
• Threshold points established for the tiers will depend on the meter size and are
detailed in Appendix G. The threshold point for golf courses is recommended to
be set equal to the volume of their annual allotment as determined by ADWR.
• The wholesale rates will be equalized with the all other rates based on meter size.
The recommended rate structure yields a 6.74% overall revenue increase for FY 00-01
operations. The amount of revenue available for operations does not include the amount that
has been `set -aside'. The source of this `set -aside' is the incremental revenue from the golf
courses generated from the rate increase applied to their consumption over and above their
ADWR allotment. The Commission recommends that this `set -aside' amount be reserved for
renewable water resource uses in an effort to reduce the dependency on golf course revenues.
The proposed revenue increase would allow the Utility enterprise fund to meet sound
financial criteria regarding the operations of a municipal utility while costs keep pace with
inflation, growth issues are not ignored, infrastructure is replaced as it is worn out and the
level of service to the customer improves.
The following table illustrates the proposed changes for a typical residential customer with
a 5/8"x 3/4" meter. Other water providers in the region are included for comparison.
OVWU
Customer
Category
Current
Monthly
Base Rate
Proposed
Monthly
Base Rate
Current
Tier I
Com.Rate
Proposed
Tier 1
Com.Rate
Current
Tier 2
Com.Rate
Proposed
Tier 2
Com.Rate
Current
Tier 3
Com.Rate
Proposed
Tier 3
Com.Rate
City
9.35
11.25
1.73
1.78
1.85
2.08
N/A
2.31
Non -City
10.81
11.25
1.73
1.78
1.85
2.08
N/A
2.31
OVWID#1
10.22
11.25
1.85
1.78
1.85
2.08
N/A
2.31
MDWID
11.06
N/A
2.00
N/A
335
N/A
N/A
NIA
Marana
14
N/A
2.55
N/A
2.55
N/A
N/A
N/A
Tucson
5.30
N/A
1.62
N(A
2.61
N/A
3.29
N/A
A table providing proposed rates for all meter sizes may be found in Appendix G.
15-
As indicated, the monthly base rate for the "City" customers (primarily the Highlands Mobile
Home Park residents) would be increased from $9.35 to $11.25 per month. The Town
Council, at the time of acquisition of the two private water utilities, agreed to equalize the
"City" customer rates over a period of four years to avoid rate shock, with this years increase
being the last year. The "OVWID#1" customers rates were unchanged when the Town
assumed management in July 1999. They were already paying a higher base rate, thus they
will experience a smaller increase.
Appendix G also contains several spreadsheets that calculate the dollar increase and the
percentage increase that a customer would experience on a monthly bill under the proposed
rate change. There is a separate table for each meter size. The tables (`non -city', `city' and
`OVWID#1' customers) are presented for the most common meter size (5/8"x 3/4").
Monthly bill amounts are calculated in 1000 gallons and other various increments.
The above scenario recommendations combine to result in changes to monthly base rates
between $0.44 and $192.55 (between 4.1% and 20.6% respectively), depending on meter
size. The average consumption for customers with a 5/8"x 3/4" meter is approximately 8,000
gallons per month. For the `non -city' customer, the proposed rate structure would increase
their monthly bill by 79 cents (3.4%).
A cost of service study ascertained that the residential class of customers is currently not
paying rates that would provide revenues sufficient to recover all costs incurred to serve
them. Analysis showed that, utilizing a `demand concept', that the currently monthly base
rate is extremely understated ($11.25 vs. $28.74). Analysis also showed the rate of return for
each customer class was not equal. Rate of return values ranged from —3.06% for the 5/8"x
3/4" meter customer class to +40.63% for the 6" meter customer class. Overall, the rate of
return was calculated at-0.695%. This implies that the OVWU is over -reliant on commodity
sales for revenue to operate. The demand concept allocates expenses to the various meter
customer classes on the basis of the service level demand they place on the system that is
unrelated to the amount of water consumed. Some expenses such as billing, meter reading,
repairs & maintenance, insurance, testing, vehicles, regulatory compliance and interest can
be at least partially attributable to service level demand. The proposed increase to the
monthly base rate is a continuing step to phase in use of the demand concept. This will
continue the process of gradually allocating costs accurately, insulating the Utility operations
from the impact of fluctuating water sales influenced by climate and other factors as well as
preparing the Utility for the loss of golf course revenue when the golf courses are removed
from groundwater.
The establishment of a 3-tiered rate structure will further encourage water conservation of the
Utility's customers whereby usage in excess of the annual average usage for each customer
class is penalized with higher rates. The Commission's recommended rate design is intended
to encourage voluntary conservation practices.
In order to avoid increasing reliance on golf course revenues for operations, Scenario C-4
includes setting aside the additional revenues that the golf courses will pay as a result of any
rate increase (monthly base rate or conservation). The `set aside' is recommended to be
16-
l
earmarked for special use in developing renewable water resources for use on golf courses in
Oro Valley. For FY 2000-01, the `set aside' amount is project to be $17,444.
For comparison purposes, the following table provides a calculation of a monthly bill amount
for a 5/8"x 3/4" meter for several of the other water utilities surrounding the Oro Valley
Water Utility service area. Direct comparison of raw base rates and raw commodity rates is
not effective because of the varying rate structures of each utility. The best way to compare
is to calculate the cost for certain consumption levels.
Water
Utility
Cost for
8,000 Gallons
Cost for
16,000 Gallons
Cost for
26,000 Gallons
Cost for
40,000 Gallons
Marana
29.30
49.70
75.20
110.90
Metro Water
23.06
39.06
42.41
89.31
Tucson Water
15.02
32.93
61.75
107.81
Oro Valley
Current
22.92
37.48
55.98
81.88
Oro Valley
Proposed
23.71
40.35
63.45
95.79
As previously described, the proposed revenue increase for Scenario C-4 would allow the
utility enterprise fund to meet sound financial criteria regarding the operations of a municipal
utility while costs keep pace with inflation, growth issues are not ignored, infrastructure is
replaced as it is worn out and the level of service to the customer improves.
These recommendations were developed with the assistance of a Cost of Service Study and
Rate Analysis performed by Mr. Ron Kozoman, CPA.
-17-
FINANCIAL SUMMARY
Retained earnings is the cumulative measure used by enterprise funds to determine the
amount of earnings remaining after expenses are deducted from revenues since the inception
of operations. For Scenario C-4, the following table represent the estimate retained earnings
at June 30, 2001:
7/l/2000
6/30/2001
Estimated
Net Income (Loss)
Projected
Retained Earnings
Retained Earnings
$1,003,714
$145,989
$1,505,253
The Utility is projected to have positive retained earnings of $1,505,253 at the end of FY
2000-01 under the preferred scenario. Maintaining positive retained earnings is an important
element of the financial criteria used to guide staff in arriving at proposed revenue increases.
Cash flow is an analysis of all changes that effect the cash account. The following table
reflects the estimated cash balances at June 30, 2001:
7/1/2000
6/30/2001
Estimated
Change in Cash Balance
Projected
Cash Balance
Cash Balance
$4,905,533
($626,220)
$4,279,313
The cash balance is estimated to decrease to $626,220 at the end of FY 2000-01. The
projected cash decrease is largely attributable to cash payments for additional debt service.
Appendix B contains estimated income and cash flow statements and a comparison of
funding requirements with projected revenues for the utility enterprise fund for FY 00-01.
Estimated income and cash flow statements for the connection fee fund and the alternative
water resources development fee fund are also included in Appendix B.
ALTERNATE FINANCIAL SCENARIOS
Appendix H presents an alternate financial projection to allow for a comparison with the
preferred scenario (Scenario C-4). The financial criteria used to evaluate the financial
soundness of a proposed revenue and expense scenario was applied to this alternate scenario.
The conclusion of that analysis was that it did comply with the guidelines of the financial
criteria and could be considered a valid option. However, the impact of the rate increase to
the low end user was far greater than the preferred scenario.
Scenario C-5 (Appendix H) used identical assumptions for growth, operating costs and
revenue increases. The difference between the preferred scenario (Scenario C-4) and this
scenario is the rate design. In Scenario C-5 the rates were designed to eliminate the "free"
1000 gallons included in the base rate, equalize all base rates to the existing Non -city rate of
$10.81 and implement a three tiered commodity structure. The first tier would remain
') unchanged at $1.73 per 1000 gallons up to 8,000 gallons. The second tier would be
increased by 3% above the existing rate for a cost of $1.90 per 1000 gallons for usage
between 8,001 and 16,000 gallons. The third tier would be established at 10% above tier 2
for a cost of $2.10 per 1000 gallons for all usage over 16,000 gallons.
CONCLUSION
The Commission presents this annual report for the review and consideration of Mayor and
Council. The Commission would be glad to discuss this report in greater detail at a joint
study session or other appropriate forum. Please advise if such a discussion is desired.
The Oro Valley Water Utility Commission is proud to serve the Town of Oro Valley and the
customers of its water utility. Much has been accomplished in the fourth full year of the
Utility's operation. The commission looks forward to continued direction from Mayor and
Council, especially on those issued discussed in this report.
The Commission extends their appreciation to the Mayor and Council for its consideration,
direction and guidance.
50
APPENDIX A
Preferred Financial Scenario
Scenario C-4
The following are the assumptions used in preparing these projections:
• Growth is based on 870 new residential customers in FY 2000-01 and 750 new
residential customers per year thereafter.
• All rates have been equalized for the former Non -city, City, OVWID#1 and
Wholesale customers.
• Golf courses will be removed from groundwater over two years beginning in
FY 2003-04.
• Rate increases are effective at the beginning of each fiscal year with the exception of
FY 2000-01 in which the rates are projected to be effective by October 1, 2000.
• Financing will be achieved through the sale of bonds for capital improvements and
the purchase of rights to alternative water resources.
• Assumed a 6.25% interest rate on the proposed bond issue.
> • Personnel costs increase 5% annually for COLA and merit.
• Operations and maintenance costs increase 5% annually.
• Debt service does not fall below the required 1.25:1 ratio.
• The Utility does not run at a loss for more than two consecutive years.
• The minimum cash balances meet or exceed 15% of cash outlays excluding capital.
• Retained earnings maintain a positive balance.
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APPENDIX B
ORO VALLEY WATER ENTERPRISE FUND
ESTIMATED INCOME STATEMENT
Budget
FY 1999/00
Estimated
Actuals
FY 1999/00
Projected
FY 2000/01
OPERATING REVENUES:
Water Sales:
Unmetered/Wholesale
$
32,000
$
33,100
$
45,300
Residential
3,556,000
3,777,300
4,475,000
Commercial
274,000
344,300
334,400
Irrigation
318,000
475,500
418,700
Turf Related
926,000
902,900
923,800
Construction
122,000
233,900
268,600
Subtotal Water Sales
$
5,228,000
$
5,767,000
$
6,465,800
Other Revenue:
Miscellaneous Service
$
56,000
$
30,400
$
60,000
Meter Income
100,000
146,900
150,000
New Service Establishment Fees
44,000
58,600
55,000
Reconnect Fees
9,000
8,700
8,000
Miscellaneous
11,000
-
Subtotal Other Revenue
$
209,000
$
255,600
$
273,000
Total Operating Revenues
$
5,437,000
$
6,022,600
$
6,738,800
OPERATING EXPENSES:
Personnel
$
952,339
$
953,053
$
1,164,900
Operations & Maintenance
1,802,691
2,135,295
2,244,200
Depreciation
1,306,000
1,225,000
1,369,600
Amortization
45,000
52,200
52,200
Total Operating Expenses
$
4,106,030
$
4,365,548
$
4,830,900
Operating Income
$
1,330,970
$
1,657,052
$
1,907,900
NON -OPERATING REVENUES (EXPENSES):
Interest Revenue
$
190,000
$
325,000
$
300,000
Interest Expense
1,616,833
1,626,502
2,061,911
Total Non -Operating Revenues (Expenses)
$
(1,426,833)
$
(1,301,502)
$
(1,761,911)
Net Income (Loss)
$
(95,863)
$
355,550
$
145,989
Retained Earnings, beginning of year
$
1,003,714
$
1,359,264
Retained Earnings, end of year
$
1,359,264
$
1,505,253
ORO VALLEY WATER ENTERPRISE FUND
ESTIMATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH:
Estimated
Actuals
FY 1999/00
Projected
FY 2000/01
Cash flows from operating activities:
Cash received from water revenues
$
5,767,000
$
6,465,000
Cash received from other revenues
255,600
273,000
Cash payments for operating expenses
(3,088,348)
(4,830,900)
Net cash provided(used) by operating activity
$
2,934,252
$
1,907,100
Cash flows from capital & financing activities:
Improvements
$
(1,099,400)
$
(6,748,550)
Machinery & Equipment
(64,740)
(58,600)
Vehicles
(170,000)
(28,000)
Interest expense
(1,626,502)
(2,061,911)
Principal payments
(395,000)
(636,259)
Net cash provided(used) from capital &
financing activities
$
(3,355,642)
$
(9,533,320)
Cash flows from investing activities:
Interest
$
325,000
$
300,000
FY 2000101 Bond Proceeds
-
6,700,000
Net cash provided by investing activities
$
325,000
$
7,000,000
Net increase (decrease) in cash
$
(96,390)
$
(626,220)
Cash at beginning of year
$
5,001,923
$
4,905,533
CASH A T END OF YEAR
$
4,905,533
$
4,279,313
ORO VALLEY WATER CONNECTION FEE FUND
ESTIMATED INCOME STATEMENT
Budget
FY 1999/00
Estimated
Actuals
FY 1999/00
Projected
FY 2000/01
REVENUES:
Connection Fees
$
775,000
$
645,000
$
1,717,800
Total Revenues
$
775,000
$
645,000
$
1,717,800
EXPENSES:
Capital Improvements
$
(1,324,000)
$
(52,426)
$
(1,050,000)
Total Expenses
$
(1,324,000)
$
(52,426)
$
(1,050,000)
Surplus (Deficit)
$
(549,000)
$
592,574
$
667,800
NON -OPERATING REVENUES (EXPENSES):
Interest Revenue
$
-
$
45,000
$
44,125
Interest Expense
27,696
27,696
671,050
Total Non -operating Revenues (expenses)
$
27,696
$
72,696
$
715,175
Water System Revenue Bond Proceeds
$
-
$
-
$
8,075,000
General Fund Loan -Series B Revenue Bonds
-
747,500
General Fund Loan-Fireflow Revenue Bonds
-
575,000
Net Income (Loss)
$
(521,304)
$
665,270
$
10,780,475
Fund Balance, beginning of year
$
429,433
$
11094,703
Fund Balance, end of year
$
1,094,703
$
11,875,178
ORO VALLEY WATER CONNECTION FEE FUND
ESTIMATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH:
Estimated
Actuals
FY 1999/00
Request
FY 2000/01
Cash flows from operating activities:
Cash received from connection fees
$
645,000
$
1,717,800
Cash payments for operating expenses
-
-
Net cash provided(used) by operating activity
$
645,000
$
1,717,800
Cash Flows from capital & financing activities:
Improvements
$
(52,426)
$
(1,050,000)
Interest expense
(27,696)
(671,050)
Principal payments
(514,815)
(534,500)
Water System Revenue Bond Proceeds
8,075,000
General Fund Loan -Series B Rev. Bonds
747,500
General Fund Loan-Fireflow Rev. Bonds
575,000
Net cash provided (used) from capital and
financing activities
$
(594,937)
$
7,141,950
Cash flows from investing activities:
Interest Revenue
$
45,000
$
44,125
Net cash provided by investing activities
$
45,000
$
44,125
Net increase in cash
$
95,063
$
8,903,875
Cash at beginning of year
$
940,909
$
1,035,972
CASH AT END OF YEAR
$
1,035,972
$
9,939,847
ORO VALLEY WATER ALTERNATIVE WATE RESOURCE FEE FUND
ESTIMATED INCOME STATEMENT
Budget
FY 1999/00
Estimated
Actuals
FY 1999/00
Projected
FY 2000/01
REVENUES:
Alternative Water Resource Fees
$
240,000
$
385,000
$
261,000
Total Revenues
$
240,000
$
385,000
$
261,000
EXPENSES:
Operation & Maintenance
$
(140,000)
$
(140,000)
$
(150,000)
Total Expenses
$
(140,000)
$
(140,000)
$
(150,000)
Surplus (Deficit)
$
100,000
$
245,000
$
111,000
NON -OPERATING REVENUES (EXPENSES):
Interest Revenue
$
40,000
$
40,800
$
50,000
Interest Expense
-
-
_
Total Non -operating Revenues (expenses)
$
40,000
$
40,800
$
50,000
Net Income (Loss)
$
140,000
$
285,800
$
161,000
Fund Balance, beginning of year
$
807,339
$
1,093,139
Fund Balance, end of year
$
1.093.139
$
1,254,139
ORO VALLEY WATER ALTERNATIVE WATER RESOURCE DEV. FEE FUND
ESTIMATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH:
Estimated
Actuals
FY 1999/00
Request
FY 2000/01
Cash flows from operating activities:
Cash received from connection fees
$
385,000
$
261,000
Cash payments for operating expenses
(140,000)
(150,000)
Net cash provided(used) by operating activity
$
245,000
$
111,000
Cash Flows from capital & financing activities:
Improvements
$
-
$
-
Interest expense
-
-
Principal payments
-
-
Net cash provided (used) from capital and
financing activities
$
-
$
-
Cash flows from investing activities:
Interest Revenue
$
40,800
$
50,000
Net cash provided by investing activities
$
40,800
$
50,000
Net increase in cash
$
285,800
$
161,000
Cash at beginning of year
$
829,132
$
1,114,932
CASH A T END OF YEAR
$
1,114,932
$
1,275,932
APPENDIX C
PROPOSED CONSERVATION PROGRAM
1) Annual funding for a conservation program is to be provided from the conservation
rate structure
2) An ongoing conservation program is proposed to be established and expanded, as
additional funds become available.
3) The proposed program will include the following:
a) Annual membership in Water CASA to assist in providing information and
lowering of costs with group purchases
b) The enclosure of conservation information flyers with the water utility bills on a
regular basis
c) Involvement of students in local schools in a conservation program with puppet
shows and educational materials
d) Providing Home Audit Kits to customers at no charge on an available upon
request basis
PROPOSED PROGRAM EXPENDITURES
PROGRAM
JUL-SEPT
2000
OCT-DEC
2000
JAN-MAR
2001
APR-JUN
2001
TOTALS
Water CASA
$12,500
$12,500
Bill Inserts*
$985
$985
$985
$985
$3,940
Schools
$2,140
$2,140
Home Audit 1
$313
$313
$313
$3131
1,252
Totals
$13,798
$3,438
$1,298
$1,298
$19,832
Quarterly cost — conservation inserts provided bi-monthly — quarterly here for sake of space
APPENDIX D
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MICROBIOLOGICAL CONTAMINANTS
(POSITIVES)
ORO VALLEY WATER UTILITY
SYSTEM 10-164
SYSTEM 10-175
DATE
ADDRESS
DATE
ADDRESS
Aug-92
1360 Rams Hill
Jun-92
9000 Camino De Oeste
Aug-92
1360 Rams Hill
Jun-92
Degrazia - bid A
Aug-94
10702 Glen Abbey
Jun-92
9251 Sea Otter
Aug-94
10575 Stargazer
Jun-92
9241 Sea Otter
Aug-94
11092 Eagle Crest
Aug-98
8972 Eagleston Lp
Aug-94
11092 Eagle Crest
Jul-99
4949 Manatee
Aug-94
11052 Eagle Crest
Jul-99
4837 Daphne
Jun-97
02C
Dec-99
4837 Daphne
Aug-97
03C
9501 Albatross
Aug-97
11C
4949 Manatee
Nov-97
09C
Nov-97
10C
Nov-97
11C
Dec-98
10531 Buck Ridge
Dec-98
2411 Stone Stable
Apr-99
1783 Wimbledon Way
1
Jul-99
10154 Calls De Carnero
")
Jul-99
10531 Buck Ridge
Aug-99
11140 N. Divot Dr
Aug-99
1779 Wimbledon Way
Aug-99
1311 Sandtrap Way
Sep-99
11140 N. Divot Dr
Sep-99
11262 Twin Spur Ct
Sep-99
10341 Hacinda Hermosa
Oct-99
11262 Twin Spur Ct
Nov-99
11518 Ironwood Canyon
2411 Stone Stable Dr
Dec-99
1060 Canada Vista
10145 Calls De Carnero
10531 Buck Ridge Dr
Jan-00
systems 10-212 merged with
10-164
13025 Meadview Way
14657 Lost Arrow
2199 Bedrock
215 Horizon Circle
1060 Canada Vista
10145 Calls De Carnero
1
1477 Ganymede Dr
11445 Mandarin Ln
11518 Ironwood Canyon
J
9631 Calle Buena Vista
1000 Calls Concordia
261 Highcourte Ln
J
1133 Saddlehorn Dr
'
9856 Linda Golf View
J
J
SYSTEM 10-212
DATE
ADDRESS
Jul-90
none listed
Aug-93
booster 11
Aug-94
booster 11
May-95
booster 11
Jan-96
booster 11
Jun-96
booster 11
Jun-96
booster12
Jun-96
booster 10
Jun-97
booster 1
Mar-98
booster 1
Mar-98
booster 21
Oct-98
13956 Honey Bee Tr
Oct-98
13956 Honey Bee Tr
Oct-98
13956 Honey Bee Tr
Oct-98
13956 Honey Bee Tr
Oct-98
X1
Jul-99
13025 Meadview
Dec-99
12289 Red Mountain
12898 Whitlock
APPENDIX E
Information from American Water Works Association manual of water supply practices:
Lowered water table. The water table in the vicinity of a well may recede
seasonally or during long dry periods when recharge to the aquifer is at its minimum. An
aquifer may be reduced if the stored groundwater is being gradually depleted by pumping.
Finally, the successive installation of additional wells in an area with overlapping cones of
depression can also cause the water table to recede. A receding water table will cause
significant mutual interference, in which the overlapping cones of depression cause reduction
in the water levels of the wells. Consequently, pumping levels will be lowered to a point that
is lower than that found in a single operating well.
Figure 7-1 illustrates the operating problem that results from a drop in the water table
caused by any of these occurrences. Curve 1 represents the relationship between well yield
and pumping level. Curves 2 and 3 represent lower pumping levels caused by recessions of
the water table. The drawdown in each case is the difference between the depth to water at
zero discharge and any other point on one of these curves. The limiting yield is indicated as
the condition where increase in yield ceases to be approximately proportional to increase in
drawdown.
Assume that the pump was originally designed to operate at point A on curve 1. If a
drop in water level changes the well performance to curve 2, the same pump may operate at
about point C, which is undesirable. The situation can be improved only by cutting back the
pumping rate to less than 800 gpm.
Pumping Rate 9p,
Figure 7-1 Operating problems resulting from a drop in the water table.
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ORO VALLEY WATER UTILITY
PUMPING CAPACITY
CHANGE
INCREASE
WELL #
1999 GPM
2000 GPM
(DECREASE)
CH 1
452
421
-31
CH 2
307
355
48
CH 3
1279
1250
-29
CH 4
270
263
-7
CH 5
200
193
-7
CH 6
306
287
-19
CH 7
324
320
-4
CH 8
200
187
-13
CH 9
141
not in service
N/A
CH 10
733
732
-1
CH 11
695
559
-136
CH 12
662
526
-136
CH 13
not in service
not in service
N/A
CH 14
294
299
5
CH 15
653
633
-20
CH 17
480
416
-64
CH 18
1431
1312
-119
CH 23
not in service
1531
N/A
RV 1
449
300
-149
RV 2
533
350
-183
RV 3
475
289
-186
RV 9
162
160
-2
RV 19
356
351
-5
RV 20
649
568
-81
RV 22
330
293
-37
APPENDIX F
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APPENDIX G
TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON
CITY CUSTOMERS WITH A 5/8 X 3/4" METER
PROPOSED BASE RATE 20.3 % INCREASE FROM 9.35 TO 11.25 (INC. 1000 GALLONS)
PROPOSED COMMODITY 3 % INCREASE IN TIER 1 FROM 1.73 TO 1.78
12% INCREASE IN TIER 2 FROM 1.85 TO 2.08
TS-14 ESTABLISH TIER 3 AT 2.31 (25% OVER TIER 2)
GALLONS
USED
CURRENT
RATE
PROPOSED
RATE
AMOUNT
INCREASED
PERCENT
INCREASED
0
9.35
11.25
1.90
20.3
1,000
9.35
11.25
1.90
20.3
2,000
11.08
13.03
1.95
17.6
3,000
12.81
14.81
2.00
15.6
4,000
14.54
16.59
2.05
14.1
5,000
16.27
18.37
2.10
12.9
6,000
18.00
20.15
2.15
11.9
7,000
19.73
21.93
2.20
11.2
8,000
21.46
23.71
2.25
10.5
9,000
23.19
25.79
2.60
11.2
10,000
24.92
27.87
2.95
11.8
11,000
26.77
29.95
3.18
11.9
12,000
28.62
32.03
3.41
11.9
13,000
30.47
34.11
3.64
11.9
14,000
32.32
36.19
3.87
12.0
15,000
34.17
38.27
4.10
12.0
16,000
36.02
40.35
4.33
12.0
17,000
37.87
42.66
4.79
12.6
18,000
39.72
44.97
5.25
13.2
19,000
41.57
47.28
5.71
13.7
20,000
43.42
49.59
6.17
14.2
21,000
45.27
51.90
6.63
14.6
22,000
47.12
54.21
7.09
15.0
23,000
48.97
56.52
7.55
15.4
24,000
50.82
58.83
8.01
15.8
25,000
52.67
61.14
8.47
16.1
26,000
54.52
63.45
8.93
16.4
27,000
56.37
65.76
9.39
16.7
28,000
58.22
68.07
9.85
16.9
29,000
60.07
70.38
10.31
17.2
30,000
61.92
72.69
10.77
17.4
31,000
63.77
75.00
11.23
17.6
32,000
65.62
77.31
11.69
17.8
33,000
67.47
79.62
12.15
18.0
34,000
69.32
81.93
12.61
18.2
35,000
71.17
84.24
13.07
18.4
36,000
73.02
86.55
13.53
18.5
000
74.87
88.86
13.99
18.7
000
[N4
76.72
91.17
14.45
18.8
000
78.57
93.48
14.91
19.0
000
80.421
95.791
15.371
19.1
TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON
OV#1 CUSTOMERS WITH A 518 X 3/4" METER
PROPOSED BASE RATE 10% INCREASE FROM 10.22 TO 11.25 (INC. 1000 GALLONS)
PROPOSED COMMODITY 4 % DECREASE IN TIER 1 FROM 1.85 TO 1.78
ESTABLISH TIER 2 AT 2.08 (17% OVER TIER 1)
TS-14 ESTABLISH TIER 3 AT 2.31 (25% OVER TIER 1)
GALLONS
USED
CURRENT
RATE
PROPOSED
RATE
AMOUNT
INCREASED
PERCENT
INCREASED
0
10.22
11.25
1.03
10.1
1,000
10.22
11.25
1.03
10.1
2,000
10.22
13.03
2.81
27.5
3,000
12.07
14.81
2.74
22.7
4,000
13.92
16.59
2.67
19.2
5,000
15.77
18.37
2.60
16.5
6,000
17.62
20.15
2.53
14.4
7,000
19.47
21.93
2.46
12.6
8,000
21.32
23.71
2.39
11.2
9,000
23.17
25.79
2.62
11.3
10,000
25.02
27.87
2.85
11.4
11,000
26.87
29.95
3.08
11.5
12,000
28.72
32.03
3.31
11.5
13,000
30.57
34.11
3.54
11.6
14,000
32.42
36.19
3.77
11.6
15,000
34.27
38.27
4.00
11.7
16,000
36.12
40.35
4.23
11.7
17,000
37.97
42.66
4.69
12.4
18,000
39.82
44.97
5.15
12.9
19,000
41.67
47.28
5.61
13.5
20,000
43.52
49.59
6.07
13.9
21,000
45.37
51.90
6.53
14.4
22,000
47.22
54.21
6.99
14.8
23,000
49.07
56.52
7.45
15.2
24,000
50.92
58.83
7.91
15.5
25,000
52.77
61.14
8.37
15.9
26,000
54.62
63.45
8.83
16.2
27,000
56.47
65.76
9.29
16.5
28,000
58.32
68.07
9.75
16.7
29,000
60.17
70.38
10.21
17.0
30,000
62.02
72.69
10.67
17.2
31,000
63.87
75.00
11.13
17.4
32,000
65.72
77.31
11.59
17.6
33,000
67.57
79.62
12.05
17.8
34,000
69.42
81.93
12.51
18.0
35,000
71.27
84.24
12.97
18.2
36,000
73.12
86.55
13.43
18.4
37,000
74.97
88.86
13.89
18.5
38,000
76.82
91.17
14.35
18.7
39,000
78.67
93.48
14.81
18.8
40,000
80.521
95.791
15.27
19.0
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 1" METER
BASE RATE _ $28.13
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 16,000 GALLONS
TIER 2 = $2.08 FOR 16,001 - 27,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 27,000 GALLONS
GALLONS
USED IN
1 MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
27.10
28.13
1.03
3.8%
10,000
42.67
44.15
1.48
3.5%
20,000
60.45
63.15
2.70
4.5%
30,000
78.95
84.64
5.69
7.2%
40,000
97.45
107.741
10.29
10.6%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 1 1/2" METER
BASE RATE _ $56.25
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 38,000 GALLONS
TIER 2 = $2.08 FOR 38,001 - 64,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 64,000 GALLONS
GALLONS
USEDIN
1 MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
54.19
56.25
2.06
3.8%
10,000
69.76
72.27
2.51
3.6%
20,000
87.06
90.07
3.01
3.5%
40,000
121.66
12%
4.61
3.8%
50,000
140.40
147.07
6.671
4.8%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 2" METER
BASE RATE _ $90.00
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 80,000 GALLONS
TIER 2 = $2.08 FOR 80,001 - 134,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 134,000 GALLONS
GALLONS
USEDIN
1 MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
86.66
90.00
3.34
3.9%
25,000
128.18
132.72
4.54
3.5%
50,000
171.43
177.22
5.79
3.4%
75,000
214.68
221.72
7.04
3.3%
100,000
260.33
272.22
11.89
4.6%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 3" METER
BASE RATE _ $180.00
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 186,000 GALLONS
TIER 2 = $2.08 FOR 186,001 - 311,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 311,000 GALLONS
GALLONS
USEDIN
1 MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
173.33
180.00
6.67
3.8%
50,000
258.10
267.2
9.10
3.5%
100,000
344.60
356.22
11.62
3.4%
200,
519.28
538.42
19.14
3.7%
300,000000
704.28
746.42
42.14
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 4" METER
BASE RATE _ $281.25
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 169,000 GALLONS
TIER 2 = $2.08 FOR 169,001 - 283,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 283,000 GALLONS
GALLONS
USEDIN
1 MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
274.25
281.25
7.00
2.6%
50,000
359.02
368.47
9.45
2.6%
75,000
402.27
412.97
10.70
2.7%
100,000
445.52
457.47
11.95
2.7%
200,000
622.24
646.77
24.53
3.9%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 6" METER
BASE RATE _ $562.50
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 1,800,000 GALLONS
TIER 2 = $2.08 FOR 1,800,001 - 3,006,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 3,006,000 GALLONS
GALLONS
USEDIN
1MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
548.50
562.50
14.00
2.6%
500,000
1411.77
1450.72
38.95
2.8%
1,000,000
2276.77
2340.72
63.95
2.80/.
1,500,000
3141.77
3230.72
88.95
2.8%
2,000,000
4030.77
4180.72
149.951
3.7%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR NON -CITY CUSTOMERS WITH A 8" METER
BASE RATE _ $1,125.00
COMMODITY RATE: TIER 1 = $1.78 FOR 0 - 1,800,000 GALLONS
TIER 2 = $2.08 FOR 1,800,001 - 3,006,000 GALLONS
TIER 3 = $2.31 FOR USAGE OVER 3,006,000 GALLONS
GALLONS
USEDIN
1MONTH
BILL AT THE
CURRENT
RATE
BILL AT THE
PROPOSED
RATE
AMOUNT OF
INCREASE
PER MONTH
PERCENT OF
INCREASE
0
932.45
1125.00
192.55
20.6%
500,000
1975.72
2013.22
37.50
1.9%
1,000,000
2660.72
2903.22
242.50
9.1%
1,500,000
3525.72
3793.22
267.50
7.6%
2,000,000
4414.72
4743.22
328.501
7.4%
GOLF COURSE CONSERVATION RATES TO BECOME EFFECTIVE WHEN USAGE
EXCEEDS THE ARIZONA DEPT. OF WATER RESOURCES ANNUAL ALLOTMENT.
APPENDIX H
Alternate Financial Scenario
Scenario C-5
The following are the assumptions used in preparing these projections:
• Growth is based on 870 new residential customers in FY 2000-01 and 750 new
residential customers per year thereafter.
• All rates have been equalized for the former Non -city, City, OVWID#1 and
Wholesale customers.
• The base rate will no longer include 1,000 gallons of "free" water.
• Golf courses will be removed from groundwater over two years beginning in
FY 2003-04.
• Rate increases are effective at the beginning of each fiscal year with the exception of
FY 2000-01 in which the rates are projected to be effective by October 1, 2000.
• Financing will be achieved through the sale of bonds for capital improvements and
the purchase of rights to alternative water resources.
• Assumed a 6.25% interest rate on the proposed bond issue.
• Personnel costs increase 5% annually for COLA and merit.
• Operations and maintenance costs increase 5% annually.
• Debt service does not fall below the required 1.25:1 ratio.
• The Utility does not run at a loss for more than two consecutive years.
• The minimum cash balances meet or exceed 15% of cash outlays excluding capital.
• Retained earnings maintain a positive balance.
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TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON
NON -CITY CUSTOMERS WITH A 5/8 X 3/4" METER
PROPOSED BASE RATE 0% INCREASE - RATE REMAINS AT 10.81 (INC. NO FREE WATER)
PROPOSED COMMODITY 0% INCREASE - TIER 1 REMAINS AT 1.73
3% INCREASE IN TIER 2 FROM 1.85 TO 1.90
TS-17 ESTABLISH TIER 3 AT 2.10 (10% OVER TIER 2)
GALLONS
USED
CURRENT
RATE
PROPOSED
RATE
AMOUNT
INCREASED
PERCENT
INCREASED
0
10.81
10.81
0.00
0.0
1,000
10.81
12.54
1.73
16.0
2,000
12.54
14.27
1.73
13.8
3,000
14.27
16.00
1.73
12.1
4,000
16.00
17.73
1.73
10.8
5,000
17.73
19.46
1.73
9.8
6,000
19.46
21.19
1.73
8.9
7,000
21.19
22.92
1.73
8.2
8,000
22.92
24.65
1.73
7.5
9,000
24.65
26.55
1.90
7.7
10,000
26.38
28.45
2.07
7.8
11,000
28.23
30.35
2.12
7.5
12,000
30.08
32.25
2.17
7.2
13,000
31.93
34.15
2.22
7.0
14,000
33.78
36.05
2.27
6.7
15,000
35.63
37.95
2.32
6.5
16,000
37.48
39.85
2.37
6.3
17,000
39.33
41.95
2.62
6.7
18,000
41.18
44.05
2.87
7.0
19,000
43.03
46.15
3.12
7.3
20,000
44.88
48.25
3.37
7.5
21,000
46.73
50.35
3.62
7.7
22,000
48.58
52.45
3.87
8.0
23,000
50.43
54.55
4.12
8.2
24,000
52.28
56.65
4.37
8.4
25,000
54.13
58.75
4.62
8.5
26,000
55.98
60.85
4.87
8.7
27,000
57.83
62.95
5.12
8.9
28,000
59.68
65.05
5.37
9.0
29,000
61.53
67.15
5.62
9.1
30,000
63.38
69.25
5.87
9.3
31,000
65.23
71.35
6.12
9.4
32,000
67.08
73.45
6.37
9.5
33,000
68.93
75.55
6.62
9.6
34,000
70.78
77.65
6.87
9.7
35,000
72.63
79.75
7.12
9.8
36,000
74.48
81.85
7.37
9.9
37,000
76.33
83.95
7.62
10.0
38,000
78.18
86.05
7.87
10.1
39,000
80.03
88.15
8.12
10.1
40,000
81.881
90.251
8.371
10.2
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