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HomeMy WebLinkAboutAnnual Reports - 4/1/2003TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2003 ORO VALLEY TOWN COUNCIL Paul Loomis, Mayor Richard Johnson, Council Member Bart Rochman, Council Member Werner Wolff, Council Member Paula Abbott, Council Member ORO VALLEY WATER UTILITY COMMISSION Michael Caporaso, Chair Leo Leonhart, Vice -Chair Gordon Byrnes, Member Gregg Forszt, Member Jennifer Gillaspie, Member Erin Loudermilk, Member LaQuita Stec, Member Wendell Yoder, Finance Subcommittee Ir CI II`AWf.71I-l" Chuck Sweet, Town Manager Alan Forrest, Water Utility Director Shirley Seng, Utility Administrator David Andrews, Finance Director Special recognition to OVWU staff who provided information, graphics, photos and, most of all, their time to assist in the preparation of this report: Mary C. Kobida George Kendrick Charles Soper Iris Chaparro Carolyn Schneider Robert Jacklitch Edgar Rivera Jeff Kane David Ruiz TABLE OF CONTENTS TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2003 SECTION TITLE List of Acronyms Index of Appendices Executive Summary Potable Water System Preferred Scenario Renewable Water Resources Reclaimed Water System Groundwater Preservation Fee Conservation Water Quality Water Supply Revenue Requirements O & M and Debt Service Requirements Capital Improvements Recommendation on Potable Water Rates, Fees & Charges Financial Summary Conclusion Appendices PAGE i ii 1 6 7 9 11 I1 13 15 17 18 19 21 24 25 LIST OF ACRONYMS LIST OF ACRONYMS USED IN THIS REPORT ADEQ Arizona Department of Environmental Quality ADWR Arizona Department of Water Resources AF Acre Feet CAGRD Central Arizona Groundwater Replenishment District CAP Central Arizona Project CCF One Hundred Cubic Feet (1 ccf = 748 gallons) CIP Capital Improvement Plan COLA Cost of Living Allowance CY Calendar Year EPA Environmental Protection Agency FY Fiscal Year GOVAC Greater Oro Valley Arts Council GPCD Gallons Per Capita Per Day GPM Gallons Per Minute IGA Intergovernmental Agreement IOC Inorganic Compound MCL Maximum Contaminate Level MD WID Metropolitan Domestic Water Improvement District O&M Operations & Maintenance OVWID#1 Oro Valley Water Improvement District #1 OVWU Oro Valley Water Utility POE Point Of Entry PWSMP Potable Water System Master Plan PQL Practical Quantitation Limit PVC Polyvinyl Chloride RWSMP Reclaimed Water System Master Plan SARWMS Southern Arizona Regional Water Management Study SCADA Supervised Control And Data Acquisition SOC Synthetic Organic Compound TCE Trichloreoethylene TTHM Total Trihalomethanes VOC Volatile Organic Compound pCi/L Picocuries Per Liter ppb Parts Per Billion ppm Part Per Million INDEX OF APPENDICES APPENDIX A. Potable Water Preferred Financial Scenario 1) Assumptions 2) Summary 3) Enterprise Fund 5-Year Projected Net Income Statement 4) Enterprise Fund 5-Year Projected Debt Service Statement 5) Enterprise Fund 5-Year Projected Cash Flow Statement B. Reclaimed Water System Proformas 1) Projected Income Statement 2) Projected Cash Flow Statement C. Water Quality 1) Water Quality Monitoring Schedule for Year 2002 2) Water Quality Testing Results D. Water Supply 1) Figure 1: Present & Future Water Demands 2) Figure 2: Available Renewable Water Resources 2002 3) Figure 3: Estimated Renewable Water Resources 2030 4) Static Water Level Measurements E. 5-Year Capital Improvements Plan 1) Existing System Improvements 2) Expansion Related Improvements 3) Reclaimed Water System F. Proposed Rate Schedules 1) Proposed Rate Schedule RS-1 2) Tables for Monthly Charges RS-1 G. Alternative Rate Schedules 1) Alternative Rate Schedule RS-2 -� 2) Tables for Monthly Charges RS-2 3) Alternative Rate Schedule RS-3 a 4) Tables for Monthly Charges RS-3 H. Service Fees and Charges 1) Hydrant Meter Deposit J 2) New Development Construction Inspection & Plan Review Fees J I. Utility Statistics for Calendar Year 2002 J J J EXECUTIVE SUMMARY TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2003 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 sixth Annual Report. It includes recommendations related to water conservation, revenue requirements, system operation and maintenance, debt service, a five-year capital improvements plan, rate adjustments and renewable water supplies. The Executive Summary contains a briefing on the implementation of the recommendations presented in the 2002 Annual Report as well as new recommendations specific to water issues facing the Town in FY 2003-2004 and beyond. Explanations and financial analyses that are more detailed may be found in the body of the report and the appendices. POTABLE WATER RATES The rates recommended by the Commission last year were adopted by Mayor and Council in June 2002. Implementation of those rates provided a 4.9% revenue increase. The increase was achieved by eliminating the 1,000 gallons of water that was included in the monthly base rate. There were no changes in the base rates or commodity rates. Included in the changes to the water rates was the establishment of a base rate for the 3/4" x 3/4" water meter. The Commission's preferred revenue scenario and rate design as they related to the potable water system are discussed in detail in the body of the report. Based on the analysis of five year projected expenses and required revenue, the Commission recommends the following rate structure for FY 2003-2004: ➢ The monthly base rates to increase by 2% and range from $12.25 to $1,224.00 per month depending on the meter size. ➢ The Tier 1 commodity rate to increase by 1% or 2 cents per 1,000 gallons. The rate is currently $1.90 per 1,000 gallons and will increase to $1.92 per 1,000 gallons. ➢ The Tier 2 commodity rate to increase by 8.5% or 20 cents per 1,000 gallons. The rate is currently $2.35 per 1,000 gallons and will increase to $2.55 per 1,000 gallons. ➢ The Tier 3 commodity rate to increase by 8.3% or 25 cents per 1,000 gallons. The rate is currently $3.00 per 1,000 gallons and will increase to $3.25 per 1,000 gallons. ➢ Implementation of the potable water rates to be delayed (— 3 months) until such time as the financial analysis and revenue requirements related to the reclaimed water system have been completed. ➢ Implement both potable water and reclaimed water rates simultaneously through established rate setting procedures. The proposed rate design will generate a 2% revenue increase allowing the utility to meet the revenue requirements for this coming fiscal year. Additionally, the rate is designed to move toward a "cost of service" rate and continue to promote water conservation. The body of the report contains specifics on new fees to be established for FY 2003-2004. The proposed fees for new development construction inspection and plan review are designed to recover the utility's cost for performing these services. RENEWABLE WATER RESOURCES Activities undertaken this past year represent a continuation of those planned and reported in previous years. Notably, the Town awarded a design contract for Phase I of the reclaimed water system. It is anticipated that design of the reclaimed water system will be completed by November 2003. Construction may begin as early as January 2004 and is scheduled to be completed by June of 2005. Phase I will provide reclaimed water for turf irrigation north of Tangerine Road. The reclaimed users include Stone Canyon Golf Course, Highlands at Vistoso Golf Course, Sun City Golf Course and Woodburne Elementary School. Delivery of reclaimed water to these customers will conserve potable water capacity by approximately 480,000,000 gallons per year. This is an equivalent amount of water to serve 4,000 residential customers 10,000 gallons of water per month for one year. Financing issues related to the reclaimed water system are discussed within the debt service section of the Report. An intergovernmental agreement regarding permitting and operating managed in -channel recharge of effluent in the Santa Cruz River was approved this year. A number of municipalities and other water providers joined together to maximize the ability to recharge and recover effluent water within the Santa Cruz River channel. The ultimate goal is to acquire credits that may be used to augment renewable water resources in the future. Details of the agreement may be found in the body of the Report. RENEWABLE WATER RESOURCES SURCHARGE The renewable water resources surcharge is a proposed fee for the repayment of the construction debt associated with the reclaimed water system infrastructure. The Commission has recommended that the proposed surcharge become known as the Groundwater Preservation Fee. This is an important component of the utility's supply management function because it will assist in reducing excess demand on our groundwater supply and thereby contribute to the goal of sustainable water management. Sustainable water management is a concept whereby withdrawal of groundwater is limited to quantities less than the rate of aquifer recharge or other such amounts that will not lead to groundwater ' mining or declining groundwater levels within the aquifer. Sustainable management is also a goal of the Tucson Active Management Area, of which the Town of Oro Valley is a part. Discussion on the proposed cost per customer may be found in the body of the Report entitled Groundwater Preservation Fee. CONSERVATION The water conservation newsletter, Oro Valley Water Ways, was included in water bills every other month through September 2002. Since then, the Purple Pipeline has been included in water bills to educate the public on reclaimed water issues. The utility renewed its y membership with the Water Conservation Alliance of Southern Arizona (Water CASA) which has continued to provide the utility with welcome packets and conservation retro-fit devices given to customers at no charge. Utility staff and Commission members stationed booths at the GOVAC Jazz Festival and the Arts & Crafts Fair to promote water conservation by speaking directly to residents and providing them with conservation related pamphlets directed at all ages. The utility recently filled its Water Conservation Specialist position. Addition of this position will allow the utility to focus on the possibility and/or feasibility of changing the building code with regard to hot water re -circulating pumps. It is also anticipated that the Water Conservation Specialist will become more involved with customers on an individual basis and will be able to demonstrate the effectiveness of water conservation by setting examples with proper management of water use at Town facilities. DEBT FINANCING Last year, the Commission's preferred financial scenario included the sale of bonds to finance capital improvements to the potable water system and to re -finance the debt to the ' City of Tucson for CAP water rights. During this past year, the capital improvements to the existing system were re-evaluated based on how the reclaimed water system will impact the ' potable water system. The outcome resulted in a reduction in capital improvements to the potable system As a result, the utility will be able to construct new facilities on a "pay as you go" basis and will not need to re -finance the debt to the City of Tucson. 3 Financing issues for the reclaimed water system have not yet been finalized. The Commission has recommended the sale of bonds to finance the capital costs. It was further recommended that the debt be repaid with several sources of revenue. The first source of revenue for repayment would be the Alternative Water Resources Development Fee which is already in place. The second source of revenue would be the proposed Groundwater Preservation Fee. Additionally, it has been recommended that the utility's commodity rate for reclaimed water sales be established so that it will produce enough revenue to recover all reclaimed water operating and maintenance costs. In the event there is a surplus, that surplus would also be used for debt service. WATER QUALITY The utility is proud to report that it did not experience any water quality violations in calendar year 2002 for Total Coliform bacteria. Considering the number of people involved in the process and the ease with which contamination of a sample can occur, the fact that no water quality violations occurred should be considered remarkable. Of the hundreds of other water quality samples tested annually, no contaminant was found to exceed the Maximum Contaminant Level (MCL). In a related matter, the water utility incurred a "failure to monitor" violation in November 2002 for inadvertently failing to test the water system for nitrates. Upon discovery, the utility notified the Arizona Department of Environmental Quality (ADEQ) and immediately performed the testing. The results of the tests indicated that the nitrate levels were in compliance with ADEQ regulations and at no time were the utility's customers exposed to increased health risks. WATER SUPPLY Groundwater levels continued to decline placing added emphasis on the importance of delivering renewable water supplies for both potable and non -potable uses. During calendar year 2002, the water production system frequently operated between 95% - 100% of its capacity during peak hours in the summer months. Continuation of the drought and pumping of groundwater cause groundwater levels to decline, which in turn reduces the production capability of the existing system. The completion of new and/or replacement wells and increased reservoir capacity will help the production system keep up with the demand until the reclaimed system is constructed and golf courses are delivered a renewable source of water. During a routine review of the Oro Valley Water Utility's Assured Water Supply (AWS) Designation in late 2001, the Arizona Department of Water Resources (ADWR) found that the Town's service area population had grown much faster than anticipated in 1995. Concerned that we were approaching our original 10-year population projections several years early, ADWR recommended the Utility apply for re -designation as soon as practical. 4 n n Based on this recommendation, the Town contracted with Brown and Caldwell during FY n 2001-02 to prepare a new AWS Application, including the required hydrology report, for submittal to ADWR. In June of 2002, Brown and Caldwell completed and submitted the hydrology study and AWS application to ADWR for their review. To date, we have not received a response from ADWR regarding the status of our application; however, we anticipate a favorable response in the near future. After ADWR approves the hydrology study, they will publish legal notice of their intent to issue our AWS designation and conduct the required public hearings. Once the ADWR Director is satisfied that all public comments have been adequately addressed by the Department, he will issue the Oro Valley Water Utility a new AWS designation. In the meantime, our current AWS designation remains valid. CONCLUSION 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 their consideration. While much has been accomplished in the past year, the Commission looks forward to direction regarding those items detailed in the Report. We thank the Mayor and Council for their consideration, direction and guidance. 5 TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT POTABLE WATER SYSTEM PREFERRED 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 Potable Water System Preferred Financial Scenario also incorporates the elements of the other recommendations detailed in this report. 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 use in developing the Potable Water System Preferred Financial Scenario. The parameters used are as follows: ➢ Revenue increases are proposed only when necessary and in an amount no more than necessary. ➢ Projected expenditures are adjusted for inflation, O&M expenses, debt service and existing system improvements. ➢ Financial criteria established in 1998 must be met, setting the foundation for sound fiscal operation. ➢ CAP water rights acquired from the City of Tucson will be financed by payment directly to the City of Tucson ➢ No new debt is to be incurred as it relates to the potable water system. ➢ Golf courses are expected to be removed from groundwater over a period of years commencing in FY 2005-2006. ➢ Revenue projections include a residential customer growth factor of 400 in all five years. This is a conservative estimate based on the more recent trend in growth within the Town. ➢ Expansion related revenue and expenditures are not considered for purposes of establishing potable water rates. They are discussed separately in the report. ➢ Alternative water related revenue and expenditures are not considered for purposes of establishing potable water rates. They are discussed separately in the report. Revenue increases occur in each of the five fiscal years in Potable Water System Preferred Financial Scenario. These increases allow the utility to anticipate changes in the future 6 rn r) revenues and expenditures including the loss of revenue when the golf courses are phased off groundwater. The scenario proposes generating needed revenue by modifying the monthly base rates and the commodity rates. Data for the five year projections assumes that both personnel and related costs will increase by 3% annually. The O&M costs are assumed to increase annually based on inflation factors received from the Arizona State Auditor General's office. In each year, the inflation factor is less than 3%. Allowances have been included for power costs and increases in depreciation relating to the addition of infrastructure. CAP water costs are anticipated to decrease and recharge costs are scheduled to increase; however, these costs are established by state agencies over which the Town has no control. CAGRD costs increase annually and then decrease as golf courses are removed from groundwater. Interest and principal payments on outstanding bonds gradually decrease over the five year period. Projections in years 3, 4 and 5 include decreases in revenue when three of the golf courses are no longer served groundwater. However, the utility will receive revenue from providing the golf courses a renewable source of water. It is projected that the revenue received from customers on the reclaimed system will be sufficient to recover the operations and maintenance of that system with any surplus being used to repay the associated debt. Therefore, revenue projections relating to the reclaimed water system have not been included in the Potable Water System Preferred Financial Scenario. The Commission is recommending that implementation of the proposed potable water rates be delayed until the financial analysis and revenue requirements of the reclaimed water system have been completed. It is further recommended that implementation of both the potable water and reclaimed water rates occur simultaneously through established rate setting procedures. Discussion on the preliminary reclaimed water commodity rates are contained in the Reclaimed Water System section of this Report. Additionally, financial projections for the reclaimed water system may be found in Appendix B. Analysis of the Potable Water System Preferred Financial Scenario indicates that it meets the established fmancial criteria. Retained earnings maintain a positive value and the net income ' of the utility does not reflect a loss for more than two consecutive years. Additionally, the net revenues provide debt service coverage in excess of 1.0 times 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 excluding capital ` expenditures. J The FY 2003-2004 projected Income Statement, Debt Service Statement and Cash Flow Statement for the preferred financial scenario may be found in Appendix A. J J RENEWABLE WATER RESOURCES The Town of Oro Valley is located within the Tucson Active Management Area (TAMA), one of five special water management areas within the State of Arizona. As such, the Arizona Department of Water Resources (ADWR) regulates groundwater use throughout the tl TAMA. In general, ADWR requires water providers to institute conservation programs, accurately measure and report groundwater pumpage, and within growing communities, demonstrate a 100 Year Assured Water Supply (AWS), all aimed at eliminating groundwater mining within the TAMA by the year 2025. In particular, the AWS provisions require the use of renewable water supplies — directly or indirectly — as a means for bringing (1 groundwater pumpage within the TAMA into balance. This concept is known as "safe yield". In order to meet these provisions, the Town of Oro Valley must acquire renewable water resources in quantities adequate to meet both existing and future demands. The following is a general description of the renewable water supplies available to the Town. This same information is provided graphically in Figure 1 (water demands); Figure 2 (existing resources); and Figure 3 (future resources) located in Appendix D. The Town currently has a legal allocation to CAP water in the amount of 6,748 acre feet per year. A portion of this allocation was acquired through the purchase of private water companies by the Town (2,294 acre feet per year) and the remainder through an agreement with the City of Tucson. In addition to this allocation, the Town anticipates acquiring a portion of the currently unallocated Municipal and Industrial (M&I) CAP water as part of the reallocation process conducted by the State. ADWR has recommended that the Town of Oro Valley be allocated 3,357 acre feet per year, out of the approximate 60,000 acre feet per year available through this process. The reallocation ultimately requires approval of the U.S. Congress and is anticipated to occur within the next two years. Currently, the infrastructure necessary to convey CAP water to the Town does not exist, making direct use impossible at this time. However; the Town has been cooperating with local water providers and the Bureau of Reclamation to develop a regional CAP delivery system within the northwest Tucson area. In the meantime, the Town has been recharging a portion of its CAP allocation and has accrued long-term storage credits (approximately 9,500 acre feet) that can be used to help meet its AWS requirements in the fixture. In addition to CAP water, wastewater effluent is really the only other renewable water resource available to the Town of Oro Valley. This resource is unique in the fact that it can be recycled (reclaimed) to a quality suitable for landscape irrigation water, particularly for large turf areas. Also, this is the only source of water available to the Town that actually increases in volume as population increases. Through the execution of a water settlement agreement between the Town of Oro Valley and the City of Tucson in the year 2002, the Town acquired rights to the effluent generated within its water service area. The volume of this supply, available for use by the Town, is estimated to be about 1,800 acre feet in the year 2002 and increases to approximately 4,000 acre feet by the year 2030. Currently, the Town does not have the infrastructure in place to take delivery of this water; however, plans are progressing for a transmission and distribution system for reclaimed water and a managed in -channel recharge project for effluent within the Santa Cruz River. Both of these projects are discussed in more detail later in this report. 8 During the past 18 months, Town staff has been working with other water providers and governmental agencies within the region to develop a managed recharge facility within the Santa Cruz River channel to begin receiving recharge credits for effluent discharged into the river. According to State law, those who have ownership of the effluent being discharged into the river may apply to receive long-term recharge credits for the water actually recharged. These credits are limited to 50% of the water recharged within the boundaries of the managed recharge facility. The proposed Lower Santa Cruz River Managed Recharge Project is located within Pima County, along a 16 mile stretch of the Santa Cruz River. Secondary effluent is discharged to the river from the Roger Road Wastewater Treatment Plant and the Ina Road Wastewater Treatment Plant, where a significant amount of it recharges within the proposed project area. Along with others, Oro Valley has legal ownership to a portion of the effluent discharged into the Santa Cruz River and is interested in accruing long-term recharge credits associated with its infiltration. To this end, a regional approach to permitting and operating the recharge facility has been undertaken and a facility permit application was filed with the Arizona Department of Water Resources in May of 2002. Early in the process, the Marana area expressed concerns regarding the potential recovery of these credits within their boundaries. In order to avoid litigation related to these issues, the involved parties consented to develop an agreement aimed at resolving these issues. To this end, the parties have successfully negotiated an Intergovernmental Agreement (IGA) to settle the issue. A final permit for the facility is expected to be issued in April of 2003, with accrual of recharge credits beginning shortly thereafter. RECLAIMED WATER SYSTEM The approval of Intergovernmental Agreements (IGA) with the City of Tucson (Tucson) expedited the feasibility of implementing a reclaimed water delivery system to provide a renewable source of water for turf irrigation. In September 2002, the Mayor and Council approved the Reclaimed Water System Master Plan (RWSMP). The RWSMP identifies specific supply and connection options; potential utility and right-of-way conflicts along alignments; conversion issues of reclaimed users; infrastructure and its location; permitting and regulatory concerns; capital cost estimates; and an economic analysis. The reclaimed water system will be constructed in two phases. Phase 1 will supply reclaimed water to turf areas north of Tangerine Road. The infrastructure required for Phase 1 includes two pump stations, a one million gallon reservoir, and approximately eleven miles of transmission and distribution mains in varying sizes. The estimated cost to construct Phase I is $13 million. Design engineering is underway and is expected to be completed by November 2003 with construction expected to be completed by July 2005. Phase 2 will supply reclaimed water to turf areas south of Tangerine Road. Potential customers of Phase 2 include golf courses, schools and parks. The planned infrastructure includes a two million gallon reservoir; a pump station; and approximately twelve miles of 9 transmission and distribution mains and is estimated to cost $10 million. Delivery to Phase 2 customers is anticipated sometime in 2008. Proposed financing for the project is expected to be obtained through the sale of Municipal Property Corporation (MPC) bonds. Repayment of the debt is proposed to be accomplished through a combination of reclaimed water user fees, alternative water resource impact fees and revenue collected through the Groundwater Preservation Fee (GPF). The GPF is discussed in detail below. In order to sell bonds, the utility will need to have an executed ' IGA with Tucson that identifies the conditions and costs associated with "wheeling" Oro Valley's effluent through the City of Tucson's reclaimed water system. The Town will also need to adopt an ordinance mandating the use of reclaimed water for turf irrigation when it becomes available. Additionally, all fees intended to be a source of revenue to repay debt 'l must be in place prior to the sale of bonds. The utility is recommending that the reclaimed source be purchased on an "interruptible" basis for several years. The cost for Tucson to deliver Oro Valley's reclaimed water on an interruptible basis is approximately 40% less than the cost to deliver it on a "non - interruptible" basis. The utility is confident that with the available supply of reclaimed water; extensive capital improvements the Town is making to the delivery system; and the fact that Tucson has other customers receiving non -interruptible supplies through the same infrastructure, it is unlikely the supply of reclaimed water to the Town would be interrupted with the exception of Tucson plant failures. However, any temporary interruptions or reductions in reclaimed water deliveries could be mitigated through use of the potable water system As Tucson's demand for reclaimed water in the northwest area grows, the utility may choose to re-evaluate its infrastructure needs or prepare itself to pay a higher rate for a non -interruptible supply. Discussions with Tucson have resulted in an estimated cost for reclaimed water of $331.86 per acre foot on an interruptible basis in FY 2005-2006. The cost is based on Tucson's operating and maintenance costs for their reclaimed system and will be adjusted every year for the prior year's costs. The interruptible rate has no component for capital costs which saves the utility approximately $231 per acre foot. Preliminary projections on the reclaimed water system's revenue and expenses may be found in Appendix B. Assumptions used in these projections include capital costs for both phases of the reclaimed system using a 5.5% interest rate, estimated operating and maintenance costs; and standard depreciation rates. It is also assumed that the OVWU commodity rate for reclaimed water will be equal to that of the potable water rate and that there is no increase in the alternative water impact fees except for new turf facilities. The projections demonstrate that the proposed rates will meet all operating costs with a surplus being used to repay debt. The entire debt service is projected to be met using this surplus, impact fees collected and revenue collected from the GPF. The projected cost to the typical residential customer is approximately $2.50 per month and will increase over a period of time to $4.00 per month. 10 l GROUNDWATER PRESERVATION FEE The Commission's 2002 Annual Report recommended the establishment of a "renewable water resources surcharge" to help finance the delivery system that will provide a renewable water supply for turf irrigation. The Commission is recommending that the surcharge be titled the Groundwater Preservation Fee (GPF) to more accurately identify why the fee will be assessed. As discussed in last year's report, it is proposed that the fee be assessed to everyone who benefits from the use of renewable water supplies. The use of renewable water supplies, such as reclaimed water, allows the utility to mine less groundwater, thus preserving groundwater supplies for domestic uses. All consumers will benefit from the preservation of groundwater; therefore, it is recommended that all consumers pay their fair share of the cost to deliver a renewable supply to the Town. It is further recommended that the GPF be established on a volumetric basis. In other words, the cost to each consumer will be based on the volume of water used. The less water that consumers use, the less they will pay. Preliminary financial projections for the reclaimed water system are contained in Appendix B. The projections will continue to be refined as actual costs become available. After design of the Phase 1 Reclaimed Water System is completed, the project is publicly bid and the bonds are sold, the utility will be able to finalize the costs and adjust the amount to be assessed. With the information available at the time of this writing, it is projected that initially the GPF will be billed at 25 cents for each 1,000 gallons of water used. The average residential customer uses 10,000 gallons of water per month, thus the cost for these customers would be $2.50 per month. Projections indicate that it will be necessary to increase the fee up to $4.00 per month over the course of time. Again, the less water a customer uses, the less they will pay. Implementation of the GPF is needed as soon as possible to help build reserves to repay debt incurred to construct the reclaimed water system infrastructure. The Commission will forward its recommendation on the GPF later this fiscal year. As stated previously, the Commission recommends that both the potable water and reclaimed water rates be implemented simultaneously. As with all rates, fees and charges, the GPF will be reviewed annually and adjusted as necessary. CONSERVATION In recognition of the current drought Arizona is experiencing and the impact such drought can have on the operations of a public water system, the Mayor and Council instructed staff -' to develop a policy to address such situations. Staff researched and evaluated drought and water shortage policies adopted by other communities in Arizona. With this information and 11 a input from the Commission, staff developed a new water conservation and use reduction policy to replace what existed in the Town Code. In general, the new policy directs the utility to implement specific rules, regulations, penalties and plans for water conservation during times of drought and water shortages. The Mayor and Council adopted the code change in March 2003. An ongoing conservation program can provide customers with information to assist them in understanding the importance of conserving water. During FY 2002-2003 the conservation program made significant progress toward its short-term goals. The Commission recommends that the utility continue to improve and expand these conservation efforts. The O&M expenditures for conservation are proposed to increase by $15,000 for a total of $50,000 in FY 2003-2004. This will allow the utility to maintain an on -going conservation program which includes the following: ➢ Membership in Water CASA ➢ Water Conservation Specialist to follow-up and maintain the conservation program by targeting commercial and public facilities and to assist with customer education, information and onsite visits or audits ➢ Bi-monthly publication of the Oro Valley Water Ways conservation newsletter and the Purple Pipeline reclaimed water newsletter. ➢ Purchase educational materials such as workbooks, activity books and crayons for students. ➢ Provide a conservation booth at GOVAC events such as the Arts & Crafts Fair and Jazz Festival to distribute conservation information, educational materials, retrofits, etc. ➢ Partner with other Town departments to decrease the use of irrigation water in and around Town facilities. ➢ Participate in discussions and provide input as it relates to conservation issues with existing and planned park facilities. ➢ Continued modification of the water rate structure to promote conservation. ➢ Participate with the Town library to provide conservation and educational materials to Town residents. ➢ Miscellaneous/Other (workshops, training, other Town events that may arise) The Commission reiterates its recommendation that a long-term conservation program be established to provide objectives and guidelines to minimize the decline of groundwater levels and to ensure that the Town has established codes where necessary for the protection of our water resources and the enforcement of regulations. The following are proposed long- term goals to be reviewed by the Commission in future years: ➢ Evaluate alternative funding sources such as grants. ➢ Promote and help facilitate the use of CAP and/or reclaimed water. ➢ Evaluate the cost of establishing rebate programs for low flow toilets, front loading washing machines and hot water re -circulating pumps. ➢ Monitor and maintain Town owned irrigation systems in a manner that will set an example of conservation for the customers. 12 r 1 ➢ Review existing plumbing codes to identify which conservation oriented modifications are in need of change. ➢ Evaluate the options to establish a mobile landscape/irrigation unit to audit irrigation systems for residents via obtaining sponsorship for the unit. ➢ Assist the water utility to achieve regulatory compliance with the Arizona Department of Water Resources (ADWR) regulations and enforcement as it relates to the Town's GPCD, assured water supply designations and replenishment requirements through the CAGRD and groundwater decline. It is the intent of the Commission to include these issues in the work plan for FY 2003-2004 as well as future years. The Commission looks forward to returning to Mayor and Council with specific recommendations regarding proposed programs. WATER QUALITY The mission of Oro Valley Water Utility is to provide assurance that drinking water is safe, clean, and meets all local, state, and federal drinking water health standards. In order to protect public health, the United States Environmental Protection Agency (USEPA) sets drinking water standards which all public water providers must meet. Regular monitoring and testing of the water supply is required to assure customers are provided with safe water in their homes and businesses. The USEPA regulations require water providers to regularly test public drinking water supplies for bacteria and other microorganisms, and numerous other natural -occurring or man-made organic and inorganic constituents. Over the course of a year, the utility collects hundreds of water samples from numerous sites including groundwater wells, reservoirs and pumping stations, and from locations throughout the water distribution system specially selected to represent the entire water delivery system. Each sample is tested for numerous constituents, which may include bacteria, minerals, metals, or man-made chemicals. The USEPA sets national drinking water standards, which are administered in Arizona by the Arizona Department of Environmental Quality (ADEQ). The utility provides all water quality testing results to ADEQ and works closely with that agency to ensure all federal and state standards are maintained. It is important to remember that the detection of a contaminant in drinking water does not necessarily represent a threat to public health. Current technology allows water utilities to detect extremely low levels of contaminants in drinking water. Groundwater is the source of all of the drinking water delivered by Oro Valley Water Utility. All drinking water, including bottled water, may reasonably be expected to contain at least small amounts of some contaminants. Oro Valley's groundwater contains dissolved minerals and organic compounds, which have been leached from the rock, sediments, and plant materials through which the water traveled. One would expect to find minerals such as calcium and magnesium, chloride, bicarbonate, and sulfate, and metals such as iron, copper, arsenic, and lead, which may be either beneficial or harmless at low concentrations, but harmful at high concentrations. In addition to these naturally occurring contaminants, our groundwater may contain contaminants resulting from human, industrial or domestic activities. For this reason, 13 water utilities must currently monitor for approximately 90 regulated and 48 unregulated contaminants. Three inorganic contaminants of special interest are arsenic, fluoride, and nitrate. Fluoride and arsenic are naturally occurring and tend to increase as water is drawn from greater depths. Arsenic is a naturally occurring mineral known to cause cancer in humans at high levels. Oro Valley Water Utility conducted compliance tests for arsenic in its wells in Calendar Year (CY) 2001. The water systems arsenic levels ranged from "no detect" to 1.3 parts per billion (ppb). The EPA standard for arsenic is now 10 ppb. Fluoride is found naturally in our drinking water. Oro Valley's groundwater has fluoride at low concentrations ranging from 0.15 to 0.58 ppm, well below the EPA limit of 4.0 ppm. Fluoride at a level of 1.0 ppm has been shown to help prevent tooth decay. In concentrations substantially greater than that, fluoride may be harmful. Nitrate is typically found in higher concentrations near the surface of the groundwater table because it is frequently associated with fertilizer use, septic tanks and other human activities. Nitrates in drinking water at levels above 10 parts per million (ppm) could pose a health risk for infants and the elderly. High nitrate levels in drinking water can cause blue baby syndrome. The concentrations for nitrates in Oro Valley's water ranges from "no -detect" to 3.8 ppm. The level of water hardness varies from one well to another. Hardness is a measurement of the concentration of calcium and magnesium in the water. If the hardness of water is more than 120 milligrams per liter (mg/1), then a water softener would probably reduce the formation of scale within a household and make soap lathering easier. The hardness levels in Oro Valley's water ranges from 32 mg/1 to 230 mg/1. Other contaminants that may be present in source water are microbial contaminants, such as viruses and bacteria, which may come from sewage, agricultural livestock, and wildlife. Total Coliform is an indicator to more closely monitor the distribution system for possible unwanted bacteria. During CY 2002, the utility performed 456 routine samples for Total Coliform bacteria and had no positive samples. The utility adds chlorine as a precaution against bacterial growth in its distribution system. Inorganic Compounds (IOC), such as salts and metals, can be natural occurring or result from urban stormwater runoff, industrial or domestic wastewater discharges, oil and gas production, mining, or farming. Testing for contaminants in this group resulted in "no detect" with the exception of fluoride and nitrate. Fluoride and nitrate levels were within the limits set by USEPA as discussed above. Synthetic Organic Compounds (SOC) include pesticides and herbicides, which may come from a variety of sources such as agriculture, urban stormwater runoff, and residential uses. None of these contaminants have been found in Oro Valley's water supply. Volatile Organic Compounds (VOC) include such compounds as trichloroethylene (TCE) and tetrachloroethylene (PCE). These compounds are volatile like alcohol or gasoline and are made up of relatively small molecules, that allow them to migrate readily through soils. Solvents such as TCE and PCE have been commonly used for cleaning machine parts and for 14 dry cleaning. Despite the vulnerability of groundwater to such contamination, Oro Valley's potable supplies are free of such contamination. Total Trihalomethanes (TTHMs) are formed when chlorine combines with naturally occurring organic material in water. Since the level of organic matter in our groundwater is extremely low, these compounds are found at very low concentrations. The highest TTHM result in any system sample was 0.0062 ppm. The standard is 0.8 ppm. Adjusted Gross Alpha is a measure of radioactivity due to naturally occurring minerals in groundwater. The standard for gross alpha radioactivity is set at 15 picocuries per liter (pCi/1). The range for Oro Valley's water supply is "no detect" to 4.3 pCi/l. Most lead and copper contamination occurs within the water distribution system and is caused by corrosive water coming into contact with plumbing materials that contain lead. Lead and copper are regulated by a Treatment Technique that requires systems to control the corrosiveness of their water. If more than 10% of tap water samples exceed the action level, water systems must take additional steps. For copper, the action level is 1.3 mg/L and lead is 0.015 mg/L. Water samples are taken within the customer's residence. As a result of meeting compliance regulations over several years, the utility is only required to sample every three years instead of annually. The Lead and Copper Rule established action levels for lead (0.015 mg/1) and copper (1.3 mg/1). Sampling in 2001 had results for lead as "no detect" and the highest copper level was 0.33 mg/1. The groundwater delivered by Oro Valley Water Utility meets all drinking water standards without treatment. However, approximately 0.5 ppm of chlorine is added to the drinking water supply at well sites, reservoirs and other facilities to provide assurance that water delivered to customers will remain free of microbiological contamination. Because of chlorine's effectiveness in killing germs, disinfection with chlorine provides critical protection for drinking water consumers. Around the world, millions of people suffer from waterborne diseases due to microorganisms in their drinking water. In the United States, we have few waterborne disease outbreaks because the water is very carefully monitored for disease -causing organisms. Most water providers add a chlorine -based disinfectant to the drinking water supply to kill existing microorganisms. A complete listing of all contaminants that the utility tests for and the most recent test results may be found in Appendix C. WATER SUPPLY The aquifer beneath the Town of Oro Valley is currently the sole source of water resources for potable and non -potable uses. Non -potable uses include turf irrigation of golf courses and parks. The current state of the aquifer is affected by long-term and short-term rates and distribution of groundwater withdrawals and recharge. Groundwater withdrawals occur at the active water supply wells owned and operated by the Town and some privately owned wells. Natural recharge occurs from the infiltration of surface runoff near the mountain W fronts of the Santa Catalina and Tortolita Mountains and the stream beds of the Big Wash, Canada Del Oro Wash and small washes in the area. Current water demands supplied by withdrawals of local groundwater resources have outpaced groundwater recharge, resulting in a local water deficit. It is estimated that the average annual recharge from the local mountain fronts and stream channels total about 6,000 to 7,000 acre feet less than the amount withdrawn in 2002. Over the past several years, dry conditions (drought) have persisted with less than normal precipitation and runoff. Not only has the drought resulted in less recharge, it has caused a greater demand for water, which further exacerbates the current deficit. As a result, marked water level declines at wells have been experienced. Rates of decline over various time periods are provided in Appendix D. The largest rates of decline have occurred in the central east portions of Oro Valley's water service area, which has the largest concentration of high capacity wells. Demand for water in Oro Valley has increased significantly since its incorporation and have more than doubled within the last ten years. Continued growth is expected for Oro Valley; however, at a slower rate than we experienced from 1990 to 2000. Current demand projections for the 2030 — anticipated build -out date of the service area — approach 17,000 acre feet per year. Over this period, alternative water resources including effluent and CAP water will supplement groundwater resources to meet demands. Appendix D includes figures that illustrate Oro Valley's current (2002) and future (2030) water demands, along with the available renewable water resources corresponding to these time frames. Static groundwater level measurements taken in January and February of this year indicate an average decline of 6.3 feet. Current system demand coupled with less than average rainfall over the past three years is a large contributor to the falling levels. Detailed information on the individual wells may be found in Appendix D. During a routine review of the Oro Valley Water Utility's Assured Water Supply (AWS) Designation in late 2001, the Arizona Department of Water Resources (ADWR) found that the Town's service area population had grown much faster than anticipated in 1995. Concerned that we were approaching our original 10-year population projections several years early, ADWR recommended the Utility apply for re -designation as soon as practical. Based on this recommendation, the Town contracted with Brown and Caldwell during FY 2001-02 to prepare a new AWS Application, including the required hydrology report, for submittal to ADWR. As part of their review, the State looks to see that the water provider can meet three basic criteria prior to issuing an AWS designation: 1.) physical availability of water supplies; 2.) acceptable (potable) water quality; and 3.) financial capability. In order for the Town to ' prove the physical availability of water, we must demonstrate that sufficient local groundwater resources are physically available for the proposed water uses for the next 100 years. To this end, Brown and Caldwell has produced a hydrology report (Assured Water Supply Hydrology Report for the Oro Valley Water Utility) that describes Oro Valley's water demand, supply, and adequacy. J J 16 The scope of work for the hydrology study included demand, supply, and calculated physical availability of groundwater resources for 100 years. Elements of demand include the compilation of past, current, committed, and projected water demands for the Oro Valley Water Utility, other major water providers, and other water users within the study area. Elements of supply include an evaluation of the current hydrogeologic conditions to assess local groundwater resource availability. Elements of adequacy include analyses to quantify water level impacts in 100 years. In June of 2002, Brown and Caldwell completed and submitted the hydrology study and AWS application to ADWR for their review. To date, we have not received a response from ADWR regarding the status of our application; however, we anticipate a favorable response in the near future. Once ADWR approves the hydrology study, they will publish legal notice of their intent to issue our AWS designation and conduct the required public hearings. Once the ADWR Director is satisfied that all public comments have been adequately addressed by the Department, he will issue the Oro Valley Water Utility a new AWS designation. In the meantime, our current AWS designation remains valid. REVENUE REQUIREMENTS Water Utility Enterprise Fund: The Commission and Town staff analyzed the revenue and cash flow requirements necessary to operate and maintain the system, funds needed for capital improvements and debt service payments on outstanding bonds. Revenues and cash flows were projected for FY 2003-2004 based on anticipated annual growth in the customer base of 400 residential customers and water consumption patterns similar to CY 2002. Projected operating expenses were developed by the water utility staff. Capital expenditures will be funded with water rates and depreciation. The following table indicates the amount of water sales revenue that would be realized by a 2% revenue increase and increased service connections of 400: FY 2002-2003 Revenue Estimate FY 2003-2004 Revenue Projection Dollar Increase $8,238,000 $8,381,000 $143,000 Connection Fee Fund: In October of 2000, Mayor and Council approved the sale of $6,770,000 in bonds to finance three years of growth -related infrastructure. During FY 2003-2004 the last of the scheduled projects will be completed. All impact fees collected are pledged to repay the debt. To continue to have growth -related infrastructure in place prior to the demand, it will be necessary to continue to finance the costs. It may be prudent to re -finance the existing debt and increase the amount of the debt to finance future infrastructure. 17 (1 The utility is in the process of updating the Potable Water System Master Plan (PWSMP) as a result of the slow down in residential and commercial growth, where the growth is actually taking place, and the resulting changes in infrastructure requirements. Thus, the CIP as shown is subject to change. Upon completion of the PWSMP update, the existing impact fees will be evaluated to determine if the fees are still adequate for projected debt service. The Commission will forward a recommendation on impact fees to Mayor and Council at that time. The five year CIP may be found in Appendix E. Alternative Water Resource Development Fee Fund: Alternative water resource development fees are collected for each new connection to the potable water system. These fees have not increased since they were originally adopted by Mayor and Council in 1996. Completion of the Reclaimed Water System Master Plan (RWSMP) will help the utility evaluate infrastructure needs and related costs and substantiate the existing fee or justify increasing the fees. To date, there have been no capital expenditures from this fund but during FY 2002-2003 design engineering costs for the Phase I Reclaimed Water System were paid from the fund. The timing and estimated costs to construct the Reclaimed Water System are detailed in the five year CIP which may be found in Appendix E. 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 Mayor and Council will adjust expenses to fit the final estimate of revenues based on the action of the Council on the rate structure for FY 2003-2004. The following table is a comparative summary of expenses and debt service requirements for the water utility enterprise fund. Budgeted amounts for FY 2002-2003 are compared to the projected expenses for FY 2003-2004 used in the financial analysis: OVWU Expenses FY 2002-2003 Budget FY 2003-2004 Projected Change Increase Decrease Personnel $1,583,942 $1,631,461 $ 47,519 O & M $2,115,301 $2,186,680 $ 71,379 C.A.P. $ 634,987 $ 343,700 $291,287 C.A.G.R.D. $ 160,100 $ 258,746 $ 98,646 De rec. & Amort. $1,601,600 $1 850,031 $248,431 Interest Payments 1 $29088,687 $2,044,309 $ 44,378 Principal Payments $1 94,940 $1,350,610 $ 55,670 Totals $9,479,557 $9,665,537 $185,980 18 n Personnel costs include no new employees but are projected to increase by 3% to fund projected annual COLA/Merit increases. The request for operations and maintenance costs reflect, among other items, increased expenses for electrical power for pumping, water recharge costs, excess groundwater withdrawal fees, chemicals for disinfection, plant and equipment repairs. Some costs are fixed by outside agencies and others may be subject to change as the iterative process of budget development is completed. Principal and interest payments reflect debt service pursuant to bond repayment schedules for the bonds related to acquisition of the utility; assuming management of the OVWID#1; the bond issue in FY 2000-2001 for existing system improvements; and the acquisition of CAP water rights. The substantial increase in depreciation is due to the completion of approximately $6,000,000 in infrastructure during the past year. Since this new infrastructure has been put into service, it must now be depreciated over the expected life of each facility. CAPITAL IMPROVEMENTS Potable Water System: This past year, the OVWU was active in constructing new water system capital improvements for both the existing system and expansion related projects. By June 2003 it is anticipated newly completed projects totaling more than $6 million will be on line providing service to our customers. Capital improvement projects include one new well; two new reservoirs with a total capacity of 1.4 million gallons; four new single and dual zone booster stations; and 21,000 feet of new water mains in varying sizes. WP94 Weil Under Construction 19 The new well was drilled to a depth of 800 feet and will be equipped to provide a capacity of 400 gallons per minute. This additional groundwater supply will help the utility meet peak day demands. J J J The two new reservoirs are above ground steel tanks. The reservoirs will provide operations stability and enhance the utility's ability to provide reliable supply for fire flow and peak demands in the "D" and "G" zone water service areas. Resen-oir at WP#14 Booster Station at WP#14 The four new booster stations will enhance the utility's ability to move water throughout the distribution system from the lower elevations to the higher elevations delivering the required water volume and pressure. Design of the booster stations includes a feature which allows for maintenance of the pumping units without any downtime of the station. The new water mains are ductile iron and are the arteries of the water system. Water mains move water from the supply source through the booster station and into the water service areas. The mains vary in size and range from 8" to 16". All of the new plant facilities have been designed and constructed with SCADA (Supervisory Control And Data Acquisition) equipment. SCADA equipment has become the standard for water utilities and allows utility staff to control and monitor the facility from a remote FM location. SCADA equipment has dramatically increased the utility's ability to identify, respond and correct a problem in a timely fashion significantly reducing the number and duration of water interruptions to its customers. As discussed previously in this report, the Potable Water System Master Plan (PWSMP) is in the process of being updated. It is anticipated that the five year CIP as detailed in Appendix E will change upon completion of the PWSMP. Reclaimed Water System: The Reclaimed Water System Master Plan (RWSMP) was approved by Mayor and Council in September 2002. The RWSMP identified the capital improvements required to receive reclaimed water at Tangerine Road and Thornydale Road and deliver it to the golf courses and schools within the Town of Oro Valley that are located north of Tangerine Road. The capital costs slated for FY 2003-2004 include completion of the design engineering for Phase 1 of the reclaimed system; construction of a 1 million gallon reservoir, two pump stations and transmission and distribution mains. Details of the capital improvement plans may be found in Appendix E. Funding sources for all capital projects include water rates, depreciation, bond proceeds, impact fees and the proposed Groundwater Preservation Fund. The following table summarizes the utility's five } year CIP: Oro Vallev Water Utilitv Five Year Canital Imnrovement Prnornm 5 Year C.I.P. FY 03/04 FY 04/05 FY 05/06 FY 06/07 FY 07/08 Total Existing System $ 2,377,000 $ 1,390,000 $3,027,000 $1,361,000 $1,091,000 S 9,246,000 Expansion Related $ 420,000 $ 1,000,000 $ 900,000 $ 0 $ 0 $ 2,320,000 Reclaimed System $ 3,935,000 $ 9,420,000 $1,007,000 $2,360,250 $7,065,750 $23,798,000 Total $ 6,732,000 $11,810,000 $4,934,000 $3,721,250 $8,156,750 $35,354,000 RECOMMENDATION ON POTABLE WATER RATES, FEES & CHARGES The Commission recommends modification of the monthly base rates and the commodity rates to further encourage water conservation and to provide the revenue necessary to meet projected expenditures. The usage thresholds in the commodity rates will remain the same. A 2% revenue increase for the Potable Water System Preferred Financial Scenario is proposed to be accomplished via the following changes: ➢ The monthly base rates to increase by 2% and range from $12.25 to $1,224.00 per month depending on the meter size. 21 ➢ The Tier 1 commodity rate to increase by 1% or 2 cents per 1,000 gallons. The rate is currently $1.90 per 1,000 gallons and will increase to $1.92 per 1,000 gallons. ➢ The Tier 2 commodity rate to increase by 8.5% or 20 cents per 1,000 gallons. The rate is currently $2.35 per 1,000 gallons and will increase to $2.55 per 1,000 gallons. ➢ The Tier 3 commodity rate to increase by 8.3% or 25 cents per 1,000 gallons. The rate is currently $3.00 per 1,000 gallons and will increase to $3.25 per 1,000 gallons. ➢ Implementation of the potable water rates to be delayed (— 3 months) until such time as the financial analysis and revenue requirements related to the reclaimed water system have been completed. ➢ Implement both potable water and reclaimed water rates simultaneously through established rate setting procedures. 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 customer service improves. The following table illustrates the proposed changes for a typical residential customer with a 5/8% 3/4" meter. Other water providers in the region are included for comparison. Water Provider Monthly Base Rate Tier 1 Commodity Rate Tier 2 Commodity Rate Tier 3 Commodity Rate OroValley Current 12.00 1.90 2.35 3.00 OroValley Proposed 12.25 1.92 2.55 3.25 MDWID 11.96 2.16 3.62 3.62 Marana 14.00 2.55 2.55 2.55 Tucson 5.35 1.03 3.50 4.92 Oro Valley Water and Tucson Water no longer include water usage in their base rates; however, Marana includes 1,000 gallons and MDWID includes 2,000 gallons. A table providing proposed rates for all OV WU meter sizes may be found in Appendix F. Appendix F also contains tables that calculate the dollar increase and the percentage increase that a customer would experience on a monthly bill under the proposed rate change. Monthly bill amounts are calculated in 1,000 gallon increments for the 5/8" x 3/4" meters and a variety of increments for larger meter sizes. The Commission has provided the Mayor and Council with two alternative rate designs for comparison purposes. These alternative rate designs may be found in Appendix G. Rate Design RS-2 will produce more revenue than is required and will result in all customers experiencing a 2.1 % rate increase. This design does not "appear" to reward the low end user. `A Rate Design RS-3 will not produce sufficient revenue, but the utility would be able to meet its revenue requirements by reducing its costs proportionately. Under this design, customers would experience varying rate increases depending on the volume of water used. However, rate design RS-3 does not promote a "cost of service" rate design which is the utility's ultimate goal. The Potable Water System Preferred Financial Scenario recommendations result in modification of both the base rates and the commodity rates. The average consumption for customers with a 5/8"x 3/4" meter is approximately 10,000 gallons per month. The proposed modification of the 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. 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 as effective because of the varying rate structures of each utility. A better comparison is to calculate the cost for specific consumption levels during a summer month. Water Utility Cost for 10,000 Gallons Cost for 18,000 Gallons Cost for 27,000 Gallons Cost for 40,000 Gallons Oro Valley Current 31.00 49.80 72.25 111.25 Oro Valley Proposed 31.45 51.85 76.20 118.45 MDWID 29.24 46.52 68.88 115.94 Marana 34.40 57.35 80.30 113.45 Tucson 19.12 52.51 103.52 206.42 As previously described, 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. Review of the utility's service fees and charges revealed the existing hydrant meter deposit is not sufficient to recover the utility's cost to replace a lost or broken meter. The Commission is recommending that the hydrant meter deposit be increased from $750.00 to $1,200.00. Hydrant meters are used to measure water taken from fire hydrants for construction purposes. Refund of the hydrant meter deposit is predicated upon return of the meter in satisfactory condition and payment of the contractor/developer's final bill. Details of the proposed fee are located in Appendix H. Additionally, the Commission is recommending that the utility implement service fees for new development plan review and construction inspection. Other municipalities assess these fees from developers to recover their labor costs for this work. These fees would be new to the OVWU; however, establishing the fees is in keeping with the policy that "growth pays for itself'. Implementation of the fees will provide a revenue source that will offset J 23 i personnel costs and help minimize future rate increases. It is recommended that fees for construction inspection be based on the linear feet of main that is inspected. Proposed fees for construction inspection increase in 500 feet increments with 500 feet being the minimum. The fees range from $365.00 to $2,345.00. The fees for hydraulic plan review and design/construction plan review will vary depending on the number of pages in the plan set. Hydraulic review fees will range from $155.00 to $230.00. Design/construction review fees will range from $200.00 to $235.00. Both fee schedules include two reviews. Additional reviews will be charged at $85.00 per review. Details of the proposed fees are located in Appendix H. No other adjustments to service fees and charges are necessary at this time; however, the Commission recommends that the service fees and charges continue to be reviewed on an annual basis. FINANCIAL SUMMARY Retained earnings are 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. Using assumptions in the Potable Water System Preferred Financial Scenario, the following table represents the projected retained earnings at June 30, 2004: 6/30/2003 Estimated Retained Earnings Net Income (Loss) 6/30/2004 Projected Retained Earnings $2,433,929 $479,239 $2,913,168 The utility is projected to have positive retained earnings of $2,913,168 at the end of FY 2003-2004 under the Potable Water System Preferred Financial Scenario. Maintaining positive retained earnings is an important element of the financial criteria used to guide staff in arriving at proposed revenue increases. The retained earnings accumulated since 1996 has reached a significant balance given the utility's goal of matching revenue and expenses to operate at a "break even" point. Depreciation funds are used to meet debt service requirements on bond financed capital projects. Rates have been increased to allow the utility to maintain a positive cash flow when golf courses are removed from groundwater and to provide contingency funds for emergency repairs. These have contributed to the retained earnings balance. Another contributing factor is approximately $432,000 in equity obtained from the dissolution of the IGA between Oro Valley and MDWID in FY 1998-1999. Also, in past years actual growth exceeded the projections which were accompanied by a drier climate that produced more revenue than anticipated. As this cash is used to finance capital improvements, the retained earnings balance will decrease. Cash flow is an analysis of all changes that affect the cash account. The following table reflects the estimated cash balances at June 30, 2004: J J 24 J 6/30/2003 Estimated Cash Balance Change in Cash Balance 6/30/2004 Projected Cash Balance $5,788,360 ($1,398,340) $4,390,020 The cash balance is estimated to decrease by $1,398,340 at the end of FY 2003-2004. The projected cash decrease is largely attributable to the use of cash on hand to finance capital improvements and debt service. CONCLUSION The Commission presents this annual report for the review and consideration of the Mayor and Council. The Commission is available to discuss this report in greater detail at a joint study session or other appropriate forum 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 sixth year of the utility's operation. The Commission extends their appreciation to the Mayor and Council for their consideration and guidance and looks forward to their continued direction on issues discussed in this report. 25 APPENDIX A POTABLE WATER PREFERRED FINANCIAL SCENARIO co o O IT N O 00 00 N O N (d V m h to V N O M OD r 0 N fA fA fR O O V ( CO r N LOV 0 o 0 N O N 00 N co 0 N h O N 1 H! fA EH O O N o O O N c0 ~ O O 00 (D QN) N U o o N (O (D O 0 N VT 64 EA U W O O N N N N o O Q OODD (C ILN V O 00 N oo m Q O WZ N V3 6Fi 6fi rZ O a a z O ITN m 0) O O 00 O o O } W O N W W O N J y 0 J M O a 0 W r N OM I� V m m ((D (O F- a r N w . p V ZZN 64 fR fA a-07i e W NW 3LLa ' LU o c Q WO ti Q a0W U d Z�i o � o a)ai a W E o N O > wZ U o (aw m d'Qm W UOO ma d m 0 (naa Mh2 UQ Z 0 0 I C M M O O I N O O N N 0 0 0 O M O O (O M m O 10_ O r T N N W 0 0 0 0 16 o 0 C (O t o N_ M W 0 } 6 O I� NNO N C C CMO 0 htOO O (00 co to W W NOMOO W W W O M(OM^O COO (O W 01 O t0' C V U.r 0 M (O M 0, C(, co r W C CO CO M (O O O CO r M 1� N r W O r N 1l: N 0 H V p N N I�Mr(p W COO C NOOOONOOC 0 O 00� uJ ' O W OOCCONO W w 0LOv co WnCOOL _ _ Mm } O NNON O C N W O RN co- C� C O NON W M W W NO a0 Nth V W W M M O v r C O i� C W N � LL 0--V" W C v tO M O I� M r W N N M C W W r N �'-� N N (V (O C% r a 4 Z t 0 O N O W M 0 0 0 0 0 C W O O C W O C W C N m d 1} U O O W W O O C f� O C W O O W W C i� O O W C I- N N M O (O OI Z } ON N9r O C W O V IT tV Mfg N 1 M O NON M N t n C Mr MOON V NV' O N M O O to Cl) r O mM W— M O = C M M I� r r r M r W N M M co CO N N LL f� r ll� v N N �r N N (V 1 W W Q O O N N (O N M r W N O O N to Cl) O O M W O O O M (O (0 N 0 O W OMON�M OO OL co M N W O N O N O C C T NON O O J toY N Z W LL N O r r r I� N V r O M M (O M O W C r Om N M" W— M t h (n O W MC N ( 0 a n N 01 r N N N � N W W F a0: C NN N CO rM W a 0(O 00 O W MO W W W C(O 01 O O<G n O O O NM I (O t` r COM W OO r 0 0 W (O(ON 0m00 C C 1- 0 O W(� h W C (O W N M O N z }O M R co O � O0) �LO (O a t` ML M� O V IO Nr (01 a 0 W LL O r N r M M � C (O r W M" N (O n N C w U Z f � r Co N r N r (O N r U70 U) H Z U Z O 75 � H ClO w (� H co F- m O a OO r0 U Ix c0iv CD o �F-(D K <0 (Oi _Z V w6EOO zO WO 0 aON ow N O X 0 W c r 2 Z M O Z 0L 2' J W N W Z F O��(:JLL UW w�JOoH >Z aiW O U Z c U U cr co w> N ww W U y w O W ZDOr�. zm W N 2 r w ww lw N U M W W mLL Z U LL H LL W X ic(7 > a w �w Oau9Ow >>w Z wd X~O xw OZ > O z f.F Dd1 �UU jU7)»>7 w UZzozz OZ W x W>� W W �Z U) ¢OaaKx U( co (7 lY W W w -- w W MOW< ¢9 07 ar W z w coOaa w �F-poa Z O 1'ON aUo w����w(nu�- Ww�t' >IiwLLw���O�>ZO ( �Za awz0O�aa� 0 mm Z M p J» C7 J w F, X w0 X z O a H O J Z00 ww W W W W 0 0 O o D U z Z U 0 0 0 w" o y w w w w 0 W Z w w� w Z zz W J w 0 O O a w w w w m 0 0 j H w a O O w O O¢¢ w~ ¢ j W y Op Z W www(n(7o7 Z a 9MOaaoaaUUo a Z Z Z n m m W>: wo_ a' O O a> > w (u F i= (L LU IL IL LLJ 0 IL M Ix 0 0 z w 0 O N 0 O N 0 O O N U) w a w L) U Z W D z w w tY r O U 0 W C W M l n W O 0000 b W G O O o 0 I W M N �M - - M 00 I n I n CO M N O O a. 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O O O O o O O O O O O O o O O O O O O O o OO OO C O O O G O C O V e e Q e Q Q Q O O OO O O O C O O 0 0 0 0 0 0 0 0 0 0 0 o O N N N N N N m m m m N N N N m m m m m m m N N N N N N N N N N N N N N N N N N N lV N N N N N N N N W w W W W W W W W W W W J IJ J J J 7 J J J J J J J J J 0 0 0 0 0 J J J> 3>>> J J>>>>> o 0 0 0 o w w w o 0 0 0 o w w o 0 0 0 0 3 3 3 3 3 3 3 3 3 3 3 3 3 � Q N N W m w > w > > a r � N U a U a W � Z N m 0 0 j 1Ni W m m Q W w �w mw > Q �N O w ewe �wp mz s N N E N n N M W W W o o r r m N Z W W O Z < b F > r Z m N � p' O ff• O O' O' m 4� m W W O C1 • i • N N W (=j • Q � � 3 z U•' W Z O Z Z Z Z p ql m< O O` O • m N O O W O U Q ] m WK r z z x O O W O w 0 O U N f U F Z O J Z N N n N O m m O m O Y< O P O m E E N O O C] m W N m K O Q J Q N N •(ml 0 wW D W LL 4 U Z W U. O> f Q J LL' W m 0 Oms a`•] f' N T m 0 16 W m O f N Q 2 LL J M N m 499 Nm m b m m m m O m �' �'Oi m P g O O O O u c nAa u coc4 ri 6 c N J b N N N O O O O O O O O O O O O O O O O O O O O O O 2 Q (O m m O Q P O O P Y C P P C< m O O m m Q O j J W O O r r n N b m N N m m m b m m b r m r b m N N N N N N N N N N N N N N N N N m F LL N N J J w J J J J ZZ Z2 zS 3 3 ZS ZS 25 0 0m 0 0 O O O w O o o O O S$ wZ2So o' V O O0 x w LL n o m r w 3 0 m N m Z m m Q N - U V% w J N Obi J J J > > > r w N O Z r F W F H U H U V Q j OU N m w ; p N O m w m W LL N 0 2� z e w^ z m > e 6 6 vmi F n H vmi F umi N r O O VJ W N f0 1� 6f � 0 2 3 w w w w >m a m o � n z U O Z r < m > W Z J ¢ w J o P P Oy N N N W � U F K 6 O 0 3 Z O W ? O � p Z Z Z Z O m c O Q O W p z J m c r z z m 2 00 w 0 U m r 4' N U z Z J J z 0 W m J F W Q ? p 9 n N 9 O m p Q a rc x m 3 W� N N w o w w w LL K U Z W O p> a> C C C 0 W 0 0 O LL y m Ih INS] M M O Q< Q W m p 2 LL J w Ei No mo S No c m_ m_ m_ m_ _ m_ a0 O Z ry o- O O O T ¢ o o m Z Z z T O -Oi m a a a-Oi f m o O O O O O o o Z K W a m m m m m m m a J J m W F N N N N N N N N LL W a 'O 0 >o 0 o o o o o m J x J 3 p U 6 m U p J ¢ w J m 'm W p 3 Z O Z o > p p a r f- J a a m p m > a Y x o J U U 1 U m U m OF 1 F Q U Qm U z p i 0 m m W Q > a � Y ~ m m f Z N d m = m m p p m w W m U U LL, UJ m W P R m U m U UO U J rc m o z N n z N a J U p m m U' E O m • N N a s O O F- x 3 w cr 2 w > x > > > > > U O 0 K K K 0 O Z APPENDIX D WATER SUPPLY CO �/$ E 4 #Coc @ ^ z0/ ) / ƒ C,4 LU \ 0 2 � } § \ \ƒ C �� � _/ y LU w w « a LLI @ � k k k 2 \ LL f § $ R \ § k E 0 2 f m § ) § $ j G k / ® CM 8 04 / a k[\ S 22§ °°® e $ )�® w C) a �§ o \2 $ k LLI - \ n §UJ CLL !% \ E \%/ o_ �-1 $ )2� ~ \ƒ ak !f > 0w w - 0 LL w \3/ o o R k Q LLI 0 CD °� a. k )LL � Cl) /§ w� R R APPENDIX E 5-YEAR CAPITAL IMPROVEMENT PLAN o p o 0 0 0 0 o O o 0 0 0 0 0 0 0 0 0 0 0 O 0 o 0 0 0 0 0 0 0 0 0 0 0 p O ID o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N O O N N O O N N O O O O m O W N N O In N r � M N E9 fA N (9 w 69 w fH f9 f9 f9 w w N N N fA (A w O O W O O O O O O � O O O O r p 0 o 0 _ N w w w w w N w 0 0 0 0 0 0 0 N 0 0 0 N tp m � Yl O N w M N f9 N w N w U 0 0 0 0 0 0 0 o O p b O O O O p O O O O O O O O O O O O O O O O O N O O O O O O O O O O O O N N O N O N C1 Cl O N N w M E9 w w w (9 N w N N U U � 0 0 0 o p o O O O N p p O O o O O G o 0 0 co O O O O O O O N O O O W W N N Q N b N N r 00 N N N w N f9 w w w M H 0 0 0o p 0 0 o O p o 0 Q o 0 0 0 0 0 0 o 0 p 0 o 0 O 0 o 0 0 0 0 0 N O O N N O O O W W N N 0 N w N N f9 w f9 fA N w N w U � 5 �6 o 'do a G Z Z w w U w U w U LL O O Q Q N o a Z � w iJ ` 2 i 03 y C o Q@ g a J R E d Q -j� o O N @ d 0 o a d r d E K > O d y N@ y m V N O h N m L>>@ l0 L O o m v y u U 6 Z N A N N O., N O (7 Q - r w0 O r Q r r r O r c a a a n a 1 n N N M 7 N J J J 141 0 0 o p o 0 0 0 0 0 0 0 0 o e 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 0 p 0 o o c o 0 of o o vi vi vi ici o 0 0 of �o r a+ w w w w w e» w w w w w w w w w w 0 0 0 0 m 0 o 0 0 0 0 0 0 0 o � - - 1� O O N w w w f9 f9 f9 w w O O O O O p O O O O O O N O N N w f9 di fA w w N O O O O O O O O O O N N M N h N h N 10 O O N N w M IA w w w 0 0 0 o p o n p o o 0 0 0 0 0 0 o 0 p 0 O N S O M O M N N O N O T b 2 0 N w M f9 FA f9 W w N 0 0 0 0 0 o r M O N N w w w w w w N t/ O V ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ Z Z Z Z Z Z Z Z Z Z m m m n n U 7 � c Z Z Z Z Z Z Z Z Z Z N 0 N N O O � N A U a r r r r r r r r r- z d N 3 3 3 3 3 3 3 3 3 H a` m m in in > :� ¢ o - - Z O O O Y r r r v 0 0 0 0 000 o a o 0 0 0 0 O O O O O O O q I- N f9 M fA f9 q M F9 N f9 19 f9 (A N N O N O N H q H N N O O N O O N N w w N 0 0 0 0 0 0 0 N 0 0 0 0 0 O O O O O O N M E9 q q f9 N N 0 0 0 0 0 'o 'o 0 N 0 O 0 O 0 O Y O O O O N N N q f9 N M o O o y o O o 0 0 0 0 o N a N o N 0 N pj V O C O N N q N f9 N N O N VI N N d d A d d o n n a U W W W W d 2 U LL S 0 N d 0 0 o 0 0 0 Z d d mp �.- N [O N C - - Z w r r m m L C _ d d w w N N H E 0 o a o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 0 p 0 p 0 o 0 0 o 0 O 0 O Q A A r n N M c0 N A N fA w N w f9 f9 w E9 IH fA w !9 w N O O O O O O O O O N O N O N m O O O N N N N n N N N r A M Cl N r o A m n m W Q W Q o r o A m o N f9 M t9 w Yi N w w U U U 0 0 0 0 0 0 0 0 0 n 0 o 0 0 0 0 Ln o N N n N n o o o o N ry N N N N N r n N h O m O O N m N m (O m f0 N_ N N m �•! N N f9 N f9 w (A f9 N w U U U o m 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o r n n N N N <O m O O N ea w w w w w w ❑ ❑ ❑ 0 0 0 0 0 0 0 0 0 0 0 N 0 O 0 O 0 O 0 p 0 O 0 O 0 O 0 O 0 O 0 O 0 O 0 0 o a o0 0 oa o 0 0 0 O N N A W N e» w w w w en » w m w w U U U U U p o 0 0 0 o p o 0 Q o 0 0 0 0 0 0 0 0 O p O p O C p p O O o � i as o ao o N M t+l N N O O O O Ol N E9 w w w w M f9 w w w U U U U U �8 �3 Fi E c m aai a"i 9 a N t a Q. N (p _ a O Z = - N - N N a N C OC S1 ❑ J H 2 U i v E Z 2 O O O N N N Z H Vp tVp 1Yp O O COW D- m m` U U m0 H a a i i m m _ N a r t P o m o a 3 a > a > a > O d N N N N H APPENDIX F PROPOSED RATE SCHEDULES I Z.*31 W 2 W ZLLI J J O 0 d LLI U W W y Juj Q W j w 0 �a O ODa N 0 0 E E O U G fA w Q U 0 0 U 06 CO) aW LU Q 00 J 2 H Z 0 2 Q J LU U) Q M Q 0 0 2 N N W) W) N b N N 1O o a. N N N N N N N N N H M M M M M M M M M O d U a M W❑ d' 0 d'O 0 0 0 0 0 0 O 0 O 0 O 0 O 0 O 0 O 0 O 00 a Q Y v N ❑ N o WU N N N N Lq N q N 1 Lr W o F N N N N N N N N N a U a Z Cl N 8D LL, O W pp M M M M M M M M M .- N N N N N N N N N ❑�� U OU a J W F_ O Q C7 O O N N N N N N N N N o aw � w o m m m m rn m m m m 0 F d U a Z H a Z o W O o �� rn m rn rn rn rn m rn rn W o L)0 of U OU a w inW i O N N 0 iO W) I, W) N 0 O 0. 0 O 0 O 0 O 0 O W oD O iG fC N� m o M t0 O/ T O(D Cl) 10 N N O o a w 0 a am 00 W c o o O O O o O O O w� o,��Mc�mrnM�o 0 cr W y � U U mc � ev W W F- N M x M x N Cl)IT CO 00 w m v 08 Ix W F Z W 7 J U Z W Q N W O O N Q W a N N A O V (7 {p (p N N ❑ O O d Z M o 0 0 0 0 0 0 0 0 M W 0 0 0 0 o 0 0 0 0 0 0 0 0 0 O~ Z 0 0 0 0 W J N `w U o 0 0 0 d 0 0 0 0 0 0 e 0 e 0 o 0 0 0 0 0 0 0 0 0 0 0 0 ❑ o 0 0 0 0 0 0 W vi ui r a v ri y N N N t0 N N O N e e 0IL M M ❑ 0 C 0 C 0 0 'o C C C W Q. o 0 0 0 0 0 0 0 0 Q CL c •- J N Z 0 0 0 0 0 0 0 0 0 O O O O O O o O O Z N N N fop M N W m m K J Q D o 0 o 0 6 C 0 0 0 O U o o m of o 6 of o 0 M OJ co m m W e 0 e o 0 0 0 0 0 Q Q o o fe M m m m m m Z � U% _W Z o 0 00 0 0 0 0 0 0 0~ J W o o �c m m m o 0 omi O U o 0 0 0 0 0 0 0 0 v a W W M M H N x x N M w W w fq ao 7 TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON CUSTOMERS WITH A 518 X 3/4" METER 'l PROPOSED BASE RATE 2.1% INCREASE IN BASE RATE FROM $12.00 TO $12.25 (INCLUDES 0 GALS) PROPOSED COMMODITY 1.0% INCREASE IN TIER 1 FROM $1.90 TO $1.92 (0 - 10,000 GALS) 8.5% INCREASE IN TIER 2 FROM $2.35 TO $2.55 (10,001 - 25,000 GALS) RS-1 8.3% INCREASE IN TIER 3 FROM $3.00 TO $3.25 (OVER 25,000 GALS) GALLONS USED CURRENT RATE PROPOSED RATE AMOUNT INCREASED PERCENT INCREASED CUSTOMERS IN USAGE CATEGORY PERCENT OF CUSTOMER BASE 0 12.00 12.25 0.25 2.1 Average Residentlal Usage As of 12/31/02 there were 14,646 residential customers whose water use averaged 10,000 gallons of water per month. These customers represent 93.6 % of the total customer base. 1,000 13.90 14.17 0.27 1.9 2,000 15.80 16.09 0.29 1.8 3,000 17.70 18.01 0.311 1.8 4,000 19.60 19.93 0.33 1.7 5,000 21.50 21.85 0.35 1.6 6,000 23.40 23.77 0.37 1.6 7,000 25.30 25.69 0.39 1.5 8,000 27.20 27.61 0.41 1.5 9,000 29.10 29.53 0.43 1.5 10,000 31.00 31.45 0.45 1.5 11,000 1 33.35 34.00 0.651 1.9 12,000 35.70 36.55 0.85 2.4 13,000 38.05 39.10 1.05 2.8 14,000 40.40 41.65 1.25 3.1 15,000 42.75 44.20 1.45 3.4 16,000 45.10 46.75 1.65 3.7 17,000 47.45 49.30 1.85 3.9 18,000 49.80 51.85 2.05 4.1 19,000 52.15 54.40 2.25 4.3 20,000 54.50 56.95 2.45 4.5 21,000 56.85 59.50 2.65 4.7 22,000 59.20 62.05 2.85 4.8 23,000 61.55 64.60 3.05 5.0 24,000 63.90 67.15 3.25 5.1 25,000 66.25 69.70 3.45 5.2 26,000 69.25 72.95 3.70 5.3 27,000 72.25 76.20 3.95 5.5 28,000 75.25 79.45 4.20 5.6 29,000 78.25 82.70 4.45 5.7 30,000 81.25 85.95 4.70 5.8 31,000 84.25 89.20 4.95 5.9 32,000 87.25 92.45 5.20 6.0 33,000 90.25 95.70 5.45 6.0 34,000 93.25 98.95 5.70 6.1 35,000 96.25 102.20 5.95 6.2 36,000 99.25 105.45 6.20 6.2 37,000 102.25 108.70 6.45 6.3 38,000 105.25 111.95 6.70 6.4 39,000 108.25 115.20 6.95 6.4 40,000 111.25 118.45 7,2016.5 RS-1 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3/4" x 3/4" METER BASE RATE _ $18.50 COMMODITY RATE: TIER 1 = $1.92 TIER 2 = $2.55 TIER 3 = $3.25 FOR 0 - 10,000 GALLONS FOR 10,001 - 25,000 GALLONS FOR USAGE OVER 25,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 18.00 18.50 0.50 2.87% 10,000 37.00 37.70 0.70 1.9% 25,000 72.25 75.95 3.70 5.1% 40,000 117.25 124.70 7.45 6.4% 50,000 147.25 1 157.20 9.951 6.8% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1" METER BASE RATE _ $30.75 COMMODITY RATE: TIER 1 = $1.92 TIER 2 = $2.55 TIER 3 = $3.25 FOR 0 - 16,000 GALLONS FOR 16,001 - 27,000 GALLONS FOR USAGE OVER 27,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 30.01 30.75 0.74 2.5% 16,000 60.41 61.47 1.06 1.8% 27,000 86.26 89.52 3.26 3.8% 38,000 119.26 125.27 6.01 5.0% 50,000 1 153.361 164.27 1 10.911 7.1 % TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1 1/2" METER BASE RATE _ $61.25 COMMODITY RATE: TIER 1 = $1.92 TIER 2 = $2.55 TIER 3 = $3.25 FOR 0 - 38,000 GALLONS FOR 38,001-64,000 GALLONS FOR USAGE OVER 64,000 GALLONS GALLONS USEDIN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 60.00 61.25 1.25 2.1 38,000 132.20 134.21 2.01 1.5% 64,000 193.30 200.51 7.21 3.7% 90,000 271.30 285.01 13.71 5.1% 125,000 376.30 398.76 1 22.461 6.0% n n C� n n RS-1 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON C) FOR CUSTOMERS WITH A 2" METER (') BASE RATE = $98.00 O COMMODITY RATE: TIER 1 = $1.92 FOR 0 - 80,000 GALLONS TIER 2 = $2.55 FOR 80,001 - 134,000 GALLONS _ TIER 3 = $3.25 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 96.00 98.00 2.00 2 1 %% 80,000 248.00 251.60 3.60 1.5% 134,000 374.90 389.30 14.40 3.8% 275,000 797.90 847.55 49.65 6.2% 325,000 947.90 1 1,010.051 62.151 6.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3" METER BASE RATE = $196.00 COMMODITY RATE: TIER 1 = $1.92 FOR 0 - 186,000 GALLONS TIER 2 = $2.55 FOR 186,001 - 311,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 311,000 GALLONS GALLONS USED IN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 192.00 196.00 4.00 2.1 100,000 382.00 388.00 6.00 1.6%i 186,000 545.40 553.12 7.72 1.4%'.. 311,000 839.15 871.87 32.72 3.9%' 450,000 1,256.15 1 1,323.62 67.471 5.4%1 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON .e FOR CUSTOMERS WITH A 4" METER a BASE RATE = $306.00 COMMODITY RATE: TIER 1 = $1.92 FOR 0 - 169,000 GALLONS TIER 2 = $2.55 FOR 169,001 - 283,000 GALLONS 3 TIER 3 = $3.25 FOR USAGE OVER 283,000 GALLONS GALLONS USEDIN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 300.00 306.00 6.00 2.05/. 100,000 490.00 498.00 8.00 1.6%'. 169,000 621.10 630.48 9.38 1.5%', 283,000 889.00 921.18 32.18 3.6% 350,000 1,090.00 1 1,138.93 1 48.93 4.5%' RS-1 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 6" METER BASE RATE = $612.00 COMMODITY RATE: TIER 1 = $1.92 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.55 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.25 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 0 600.00 612.00 12.00 2.07% 1,000,000 2,500.00 2,532.00 32.00 1.3% 1,800,000 4,020.00 4,068.00 48.00 1.2% 3,000,000 6,840.00 7,128.00 288.00 4.2% 5,000,000 12,836.10 13,623.80 1 787.701 6.1% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8" METER BASE RATE = $1,224.00 COMMODITY RATE: TIER 1 = $1.92 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.55 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 3,006,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 1,200.00 1,224.00 24.00 2.0°/a 1,000,000 3,100.00 3,144.00 44.00 1.4% 1,800,000 4,620.00 4,680.00 60.00 1.3% 3,000,000 7,440.00 7,740.00 300.00 4.0% 5,000,000 1 13,436.10 14,235.80 799.701 6.0% GOLF COURSE CONSERVATION RATES TO BECOME EFFECTIVE WHEN USAGE EXCEEDS THE ARIZONA DEPT. OF WATER RESOURCES ANNUAL ALLOTMENT. APPENDIX G ALTERNATIVE RATE SCHEDULES N H � J J 13 ~ Z W �yU W W (n Q ❑ W 3 W W W p J J W O00. d ~ Opera h W r � a 0 y O F E E O U w� U N � A 0 W W U) H 0 m c� W N Q u J C S e Z N O 2 Q �: v; LU M Q OOd'om�emmmm�o�om O O O O O O O O O O 0 2 f M M M M M M M M M O C U a J z Q W O w 0 x O 0 O 0 O 0 O 0 O 0 O 0 O 0 O 0 O 0 O � M M M M M M M M M 0 00 a p J La_ y ❑ N � 0 0 w O 0 a 0 a 0 a 0 a 0 v 0 a 0 a 0 a 0 a a n w= 0 2 F NC-4 N N N N N N N O d U a Z N W 2 W 00 M M M M M M M M M F K N N N N N N N N N U UO a Q h LU a U) ❑ r 0O O w v a v v anwo' o 0~'r-v -v -v - -v -e - M O K d U a F a Z E W O- p O O O O O O O O O �� W oo rn rn rn rn m rn m rn rn DmF- U O w U a p W C N N O h VA N O 0 O 0 O 0 O O O O W N W 0 0 O OD fO N V y9 m M W <O 0/ m Oa O M (0 f0 N N O o Q. W m `= �a9 am W c 0 0 0 0 0 0 0 0 0 Z N O M m 0 0 0 W Q (OO W w �U U mu c � a a W W �-N co x Cl) x LO N M-1W OD LU N co a i0 M LU W F Z W ❑ J U Z W Q N W0 0 0 0 0 0 0 0 0 US o 0 0 0 0 0 0 e 0 p pW a O p v M d Z M O O O O G G O 0 0 N W_ O~ Z O O C O O O O O O W 6 N N N N M ro 0 Q in,01010 C N O O th M U N o d> 0 N N 0 N N N N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 O ❑ O o O 0 O 0" O 0 O 0 O 0 O 0 0 0 of e � N N N f0 M � M m N O O M 0? a Q O O O O O O O O O O W o 0 0 0 0 0 0 0 0 p CL o o `6 n C m 0 o 0 Jo m U o 0 0 0 0 0 0 0 a 0 o N Z R o 0 0 0 0 0 o !/J W ~ 'i 6 0 0 O W N N N p'J C? M a o 0 0 0 0 0 0 o a M w m m D m Wo 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N o 0 0 0 0 0 0 0 0 O O O �6 M O O 93 a00 aOD tOD w a�� Ja o 0 0 0 0 0 0 0 0 U Z � W _W H o 0 0 0 0 0 0 0 0 f- Z o 0 0 0 0 0 0 0 0 OZ J W O U o 0 0 0 0 0 0 0 0 W W M M HN x x�`nNMv�oo W(q m v � M TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON CUSTOMERS WITH A 5/8 X 3/4" METER PROPOSED BASE RATE 2.1% INCREASE IN BASE RATE FROM $12.00 TO $12.25 (INCLUDES 0 GALS) PROPOSED COMMODITY 2.0% INCREASE IN TIER 1 FROM $1.90 TO $1.94 (0 - 10,000 GALS) 2.0% INCREASE IN TIER 2 FROM $2.35 TO $2.40 (10,001 - 25,000 GALS) RS-2 2.0% INCREASE IN TIER 3 FROM $3.00 TO $3.06 (OVER 25,000 GALS) GALLONS USED CURRENT RATE PROPOSED RATE AMOUNT INCREASED PERCENT INCREASED CUSTOMERS IN USAGE CATEGORY PERCENT OF CUSTOMER BASE 0 12.00 12.25 0.25 2.1 Average Residential Usage As of 12/31/02 there were 14,646 residential customers whose water use averaged 10,000 gallons of water per month. These customers represent 93.6 % of the total customer base. 1,000 13.90 14.19 0.29 2.1 2,000 15.80 16.13 0.33 2.1 3,000 1 17.70 18.07 0.371 2.1 4,000 19.60 20.01 0.41 2.1 5,000 21.50 21.95 0.45 2.1 6,000 23.40 23.89 0.49 2.1 7,000 25.30 25.83 0.53 2.1 8,000 27.20 27.77 0.57 2.1 9,000 29.10 29.71 0.61 2.1 10,000 31.00 31.65 0.65 2.1 11,000 33.35 34.05 0.70 2.1 12,000 35.70 36.45 0.75 2.1 13,000 38.05 38.85 0.80 2.1 14,000 40.40 41.25 0.85 2.1 15,000 42.75 43.65 0.90 2.1 16,000 45.10 46.05 0.95 2.1 17,000 47.45 48.45 1.00 2.1 18,000 49.80 50.85 1.05 2.1 19,000 52.15 53.25 1.10 2.1 20,000 54.50 55.65 1.16 2.1 21,000 56.85 58.05 1.20 2.1 22,000 59.20 60.45 1.25 2.1 23,000 61.55 62.85 1.30 2.1 24,000 63.90 65.25 1.35 2.1 25,000 66.25 67.65 1.40 2.1 26,000 69.25 70.71 1.46 2.1 27,000 72.25 73.77 1.52 2.1 28,000 75.25 76.83 1.58 2.1 29,000 78.25 79.89 1.64 2.1 30,000 81.25 82.95 1.70 2.1 31,000 84.25 86.01 1.76 2.1 32,000 87.25 89.07 1.82 2.1 33,000 90.25 92.13 1.881 2.1 34,000 93.25 95.19 1.94 2.1 35,000 96.25 98.25 2.00 2.1 36,000 99.25 101.31 2.06 2.1 37,000 102.25 104.37 2.12 2.1 38,000 105.25 107.43 2.18 2.1 39,000 108.25 110.49 2.24 2.1 40,000 111.251 113.55 2.30 2.1 RS-2 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3/4" x 3/4" METER BASE RATE = $18.50 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 10,000 GALLONS TIER 2 = $2.40 FOR 10,001 - 25,000 GALLONS TIER 3 = $3.06 FOR USAGE OVER 25,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 18.00 18.50 0.50 2.8% 10,000 37.00 37.90 0.90 2.4% 25,000 72.25 73.90 1.65 2.3% 40,000 117.25 119.80 2.55 2.2% 50,000 1 147.25 150.40 1 3.151 2.1% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1" METER BASE RATE = $30.75 COMMODITY RATE: TIER 1 = $1.94 TIER 2 = $2.40 TIER 3 = $3.06 FOR 0 - 16,000 GALLONS FOR 16,001 - 27,000 GALLONS FOR USAGE OVER 27,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 30.01 30.75 0.74 2.5% 16,000 60.41 61.79 1.38 2.3% 27,000 86.26 88.19 1.93 2.2% 38,000 119.26 121.85 2.59 2.2% 50,000 1 155.26 1 158.571 3.311 2.1% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1 1/2" METER BASE RATE = $61.25 COMMODITY RATE: TIER 1 = $1.94 TIER 2 = $2.40 TIER 3 = $3.06 FOR 0 - 38,000 GALLONS FOR 38,001 - 64,000 GALLONS FOR USAGE OVER 64,000 GALLONS GALLONS USEDIN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 60.00 61.25 1.25 2.1 38,000 132.20 134.97 2.77 2.1% 64,000 193.30 197.37 4.07 2.1% 90,000 271.30 276.93 5.63 2.1% 125,000 1 376.30 1 384.03 1 7.731 2.1% RS-2 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 2" METER BASE RATE = $98.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 80,000 GALLONS TIER 2 = $2.40 FOR 80,001 - 134,000 GALLONS TIER 3 = $3.06 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 96.00 98.00 2.00 2.1 7/6 80,000 248.00 253.20 5.20 2A% 134,000 374.90 382.80 7.90 2.1% 275,000 797.90 814.26 16.36 2.1% 325,000 947.90 1 967.26 19.361 2.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3" METER BASE RATE = $196.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 186,000 GALLONS TIER 2 = $2.40 FOR 186,001 - 311,000 GALLONS TIER 3 = $3.06 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 0 192.00 196.00 4.00 2.1 100,000 382.00 390.00 8.00 2.1% 186,000 545.40 556.84 11.44 2.1% 311,000 839.15 856.84 17.69 2.1% 450,000 1,256.15 1,282.18 1 26.031 2.1% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 4" METER BASE RATE = $306.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 169,000 GALLONS TIER 2 = $2.40 FOR 169,001 - 283,000 GALLONS TIER 3 = $3.06 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 0 300.00 306.00 6.00 2.07/. 100,000 490.00 500.00 10.00 2.0% 169,000 621.10 633.86 12.76 2.1% 283,000 889.00 907.46 18.46 2.1% 350,000 1,090.00 1 1,112.48 22.481 2.1% 1 RS-2 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 6" METER BASE RATE = $612.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.40 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.06 FOR USAGE OVER 3,006,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 600.00 612.00 12.00 2.0% 1,000,000 2,500.00 2,552.00 52.00 2.1% 1,800,000 4,020.00 4,104.00 84.00 2.1% 3,000,000 6,840.00 6,984.00 144.00 2.1% 5,000,000 1 12,836.10 1 13,100.04 1 263.941 2.1% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8" METER BASE RATE = $1,224.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.40 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.06 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 1,200.00 1,224.00 24.00 2.0% 1,000,000 3,100.00 3,164.00 64.00 2.1% 1,800,000 4,620.00 4,716.00 96.00 2.1% 3,000,000 7,440.00 7,596.00 156.00 2.1% 5,000,000 1 13,436.10 1 13,721.041 284.941 2.1% GOLF COURSE CONSERVATION RATES TO BECOME EFFECTIVE WHEN USAGE EXCEEDS THE ARIZONA DEPT. OF WATER RESOURCES ANNUAL ALLOTMENT. RS-3 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 6" METER BASE RATE _ $600.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 1.800,000 GALLONS TIER 2 = $2.40 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.06 FOR USAGE OVER 3,006,000 GALLONS GALLONS BILL AT THE BILL AT THE AMOUNT OF PERCENT OF USEDIN CURRENT PROPOSED INCREASE INCREASE 1 MONTH RATE RATE PER MONTH p 600.00 600.00 0.00 0.0% 1,000,000 2,500.00 2,540.00 40.00 1.6% 1,800,000 4,020.00 4,092.00 72.00 1.8% 3,000,000 6,840.00 6,972.00 132.00 19% 5,0001000 12,836.10 13,088.04 251.94 2.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8" METER BASE RATE _ $1,200.00 COMMODITY RATE: TIER 1 = $1.94 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.40 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.06 FOR USAGE OVER 3,006,000 GALLONS GALLONS BILL AT THE BILL AT THE AMOUNT OF PERCENT OF USED IN CURRENT PROPOSED INCREASE INCREASE 1 MONTH RATE RATE PER MONTH 0 1,200.00 1,200.00 0.00 0.0% 1,000,000 3,100.00 3,140.00 40.00 1.3% 1,800,000 4,620.00 4,692.00 72.00 1.6% 3,000,000 7,440.00 7,572.00 132.00 1.8% 5,000,000 13,436.101 13,697.041 260.94 1.9% GOLF COURSE CONSERVATION RATES TO BECOME EFFECTIVE WHEN USAGE EXCEEDS THE ARIZONA DEPT. OF WATER RESOURCES ANNUAL ALLOTMENT. J APPENDIX H SERVICE FEES & CHARGES ORO VALLEY WATER UTILITY SERVICE FEES AND CHARGES HYDRANT METER DEPOSIT The Oro Valley Water Utility recommends increasing the amount of the Hydrant Meter Deposit. The existing deposit is not sufficient to recover the utility's cost to replace a lost or broken hydrant meter. The Hydrant Meter Deposit is paid by the contractor/developer upon application for a hydrant meter. The deposit accrues interest at a rate of 5% per year. Refund of the deposit is predicated on the return of the hydrant meter in satisfactory condition and payment of the final water bill. The utility's cost to purchase a hydrant meter: $1,184.68 Existing Hydrant Meter Deposit: $ 750.00 Proposed Hydrant Meter Deposit: $1,200.00 r'• ' ORO VALLEY WATER UTILITY SERVICE FEES AND CHARGES �7 NEW DEVELOPMENT CONSTRUCTION INSPECTION FEES The Oro Valley Water Utility recommends establishing a fee to recover the personnel costs to provide new development construction inspection. The utility employs two full - time construction inspectors to monitor the installation of water lines installed by and for developers to provide water service throughout their development projects. Other costs i are incurred for assistance from a Utility Service Operator III and administrative support from the Senior Civil Engineering Technician and the Water Utility Director. The utility would also include the pressure testing costs and the laboratory cost to perform bacteria testing on the water lines prior to connecting the new facilities to the existing water distribution system. Establishment of the new development construction inspection fee is in keeping with the Town's policy that "new development pays for itself'. The proposed fees were derived by using current wages plus a 3% allowance for COLA and merit increases in FY 2003-2004 and a benefit factor of 30%. The construction inspectors average 8.25 hours inspecting a 500 foot section of water main. The Utility Service Operator III averages 4.50 hours per project assisting with the connection of the new mains to the existing system. The Senior Civil Engineering Technician provides operational support of approximately .75 hours per project and the Utility Director provides administrative support of approximately .50 hours per project. The laboratory costs are actual costs incurred for testing. The following table itemizes the costs to be recovered: PROPOSED NEW DEVELOPMENT CONSTRUCTION INSPECTION FEES Length Of Water Main in feet) Constr. Inspector $24.46/Hr Sr. Civil Eng. Tech. $24.46/Hr. Util. Svc. Op.I1I $21.87/Hr. Utility Director $61.02/1-Ir. Lab Cost $18.00/Test Total Cost Proposed Fee 0-500 $201.80 $18.35 $98.42 $30.51 $18.00 $367.08 $365.00 501-1000 $403.59 $18.35 $98.42 $30.51 $36.00 $586.87 $585.00 1001-1500 $605.39 $18.35 $98.42 $30.51 $54.00 $806.67 $805.00 1501-2000 $807.18 $18.35 $98.42 $30.51 $72.00 $1026.46 $1025.00 2001-2500 $1008. 88 $18.35 $98.42 $30.51 $90.00 $1246.26 $1245.00 2501-3000 $1210.77 $18.35 $98.42 $30.51 $108.00 $1466.05 $1465.00 3001-3500 $1412.17 $18.35 $98.42 $30.51 $126.00 $1685.85 $1685.00 3501-4000 $1614.36 $18.35 $98.42 $30.51 $144.00 $1905.64 $1905.00 4001-4500 $1816.16 $18.35 $98.42 $30.51 $162.00 $2125.44 $2125.00 4501-5000 $2017.95 $18.35 $98.42 $30.51 $180.00 $2345.23 $2345.00 Proposed fee for repeat pressure tests: $60.00 per test (Const. Insp. 2.50 hrs. @ $24.46/hr. = $61.15) Proposed fee for repeat bacteria tests: $75.00 per test (Const. Insp. 2.25 hrs. @ $24.46/hr. + $18.00 lab = $73.04) All proposed fees to be collected prior to project acceptance. ORO VALLEY WATER UTILITY SERVICE FEES AND CHARGES NEW DEVELOPMENT PLAN REVIEW FEES The Oro Valley Water Utility recommends establishing a fee to recover the personnel costs to provide new development plan review. The utility reviews new development plans prior to a developer constructing water lines for their project. There are two components to new development plan review. The utility performs a hydraulic review, which includes computer modeling, to determine if the proposed project can be adequately served by the utility. After the construction plans are completed, they are presented to the utility for design review to insure that the proposed project will be constructed pursuant to the utility's specifications. Establishment of the new development plan review fees is in keeping with the Town's policy that "new development pays for itself'. The hydraulic review and the design review are proposed to have two separate fee schedules since the two reviews can be performed at different times. The proposed fees were derived by using current wages plus a 3% allowance for COLA and merit increases in FY 2003-2004 and a benefit factor of 30%. The hydraulic review is performed by the Engineering Division Administrator who averages .50 hours per project and the Senior Civil Engineering Technician whose time varies depending on the number of sheets contained in the set of plans. The proposed fees for hydraulic plans include two reviews. The following table itemizes the costs to be recovered: PROPOSED NEW DEVELOPMENT HYDRAULIC REVIEW FEES Sr. Civil Eng. Tech. $24.46/Hr. Eng. Div. Admin. $41.16/1-1r. Total Cost Proposed Fee 1 Sheet $134.53 $20.58 $155.11 $155.00 2 Sheets $158.99 $20.58 $179.57 $180.00 3 Sheets $183.45 $20.58 $204.03 S205.00 4 Sheets $207.91 $20.58 $228.49 $230.00 Proposed fee for more than 2 reviews: $85.00 per additional review Proposed fees to be collected prior to receipt of approved plans. Page 1 of 2 NEW DEVELOPMENT PLAN REVIEW FEES continued The design or construction review is performed by the Engineering Division Administrator who averages 1.0 hour per project and the Senior Civil Engineering Technician whose time varies depending on the number of sheets contained in the set of plans. Additionally the Water Operations Superintendent averages approximately 1.0 hour to review the plans and the Utility Director averages .50 hours to perform the final review and approval. The Engineering Aide spends 2.0 hours preparing the Line Extension Agreement for each project. The proposed fees for design plans include two reviews. The following table itemizes the costs to be recovered: PROPOSED NEW DEVELOPMENT DESIGN REVIEW FEES Sr. Civil Eng. Tech. $24.46/Hr Eng. Div. Admin. $41.16/Hr Engineer. Aide $20.90/Hr Water Ops Supt. $37.90/Hr. Utility Director $61.02/11r. Total Cost Proposed Fee 1 Sheet $110.07 $41.16 $41.80 $37.90 $30.51 $261.44 $260.00 2 Sheets $122.30 $41.16 $41.80 $37.90 $30.51 $273.67 $275.00 3 Sheets $134.53 $41.16 $41.80 $37.90 $30.51 $285.90 $285.00 4 Sheets $146.76 $41.16 $41.80 $37.90 $30.51 $298.13 $300.00 Proposed fee for more than 2 reviews: $85.00 per additional review Proposed fees to be collected prior to receipt of approved plans. Page 2 of APPENDIX I UTILITY STATISTICS FOR 2002 Utility Statistics for Calendar Year 2002 New Meters Installed 445 Services Established 2,532 Services Terminated 2,584 Service Orders Processed: Meter re -reads 215 Water quality 57 Water pressure 108 Meter replacements 42 Service repairs 26 Leaks 181 Other 112 Total service orders: 741 741 Total Water Pumped 3,299,433,627 gallons 10,125.59 acre feet Total Water Delivered 3,196,819,889 gallons 9,810.68 acre feet Lost & Unaccounted For Water ` 84,206,415 gallons 258.42 acre feet 2.63 % ADWR allows a maximum of up to 10%to maintain compliance status. Accounts By User Type As of December 31, 2002 15,093 ■ Construction - 1 % ❑ Commercial - 1 % ■ Residential - 96% ■ Irrigation - 2% ®Turf - 0% Gallons Sold By User Type January - December 2002 223,757,000 1,850,119,000 911,590,000 48,911,000 159,249,000 Revenue By User Type January - December 2002 $7iiai $21213 18,387 $5,869,994 ■ Construction - 2% ❑ Commercial - 5% ■ Residential - 58% ■ Irrigation - 7% ■ Turf - 28% ■ Construction - 3% ❑ Commercial - 6% ■ Residential - 69% ■ Irrigation - 8% ® Turf - 14% Customers by Meter Size & User Type As of December 31, 2002 Totals 14,992 131 346 108 193 28 7 9