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Home My WebLink AboutWater Rates Analysis Report - 11/1/2015�0UNDED 19�� TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT NOVEMBER 2015 TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT NOVEMBER 2015 ORO VALLEY TOWN COUNCIL Satish Hiremath, Mayor Lou Waters, Vice Mayor Brendan Burns, Council Member Bill Garner, Council Member Joe Hornat, Council Member Mary Snider, Council Member Mike Zinkin, Council Member ORO VALLEY WATER UTILITY COMMISSION Richard Davis, Chair Richard Reynolds, Vice Chair Javier Arriaga, Commissioner Anne Campbell, Commissioner Winston Tustison, Commissioner Sharma Weagle, Commissioner TOWN STAFF Greg Caton, Town Manager Stacey Lemos, Finance Director Philip C. Saletta, P.E., Water Utility Director Shirley Seng, Water Utility Administrator TABLE OF CONTENTS SECTION TITLE PAGE Index of Appendices Executive Summary 1 Introduction 3 Growth Rates 4 Water Use Trends 4 Debt Service 5 Debt Service Coverage Requirements 6 Cash Reserve Policy for Operating Fund 7 Operating Fund 7 Groundwater Preservation Fee 10 Alternative Water Resources Development Impact Fee Fund 12 Potable Water System Development Impact Fee Fund 13 Preferred Financial Scenario 14 Recommendation on Water Rates, Fees & Charges 14 Service Fees & Charges 16 Conclusion 16 Appendices INDEX OF APPENDICES APPENDIX A. Preferred Financial Scenario Pro Formas A-1 Operating Fund A-2 Groundwater Preservation Fee A-3 Alternative Water Resources Development Impact Fee Fund JA-4 Potable Water System Development Impact Fee Fund A-5 Summary of all Funds B. Rate Schedules & Tables for Bill Comparisons for Preferred Financial Scenario B-1 Potable & Reclaimed Water Rates B-2 Tables for Bill Comparisons by Meter Size -Potable B-8 Tables for Bill Comparisons by Meter Size —Reclaimed C. Service Fees & Charges JC-1 Proposed Security Deposit —Construction Meter D. 5-Year Capital Improvement Schedules D-1 Operating Fund D-1 Groundwater Preservation Fee 1 D-2 Alternative Water Resources Development Impact Fee Fund I D-2 Potable Water System Development Impact Fee Fund E. Assumptions for Preferred Financial Scenario J E-1 Operating Fund E-5 Alternative Water Resources Development Impact Fee Fund 1 E-6 Potable Water System Development Impact Fee Fund J TOWN OF ORO VALLEY i� WATER UTILITY 11 WATER RATES ANALYSIS REPORT n NOVEMBER 2015 rj 1 Executive Summary The functions and duties of the Oro Valley Water Utility Commission include reviewing and n developing recommendations for water revenue requirements, water rates and fee structures. The J Commission annually evaluates staff recommendations based on a rates analysis to assure the recommendations meet Town policies and bond covenants. Water rates and charges shall be —j J reviewed annually under Mayor and Town Council Water Policies — II.A.2.b(4). The Utility has based its financial analysis on the American Water Works Association (AWWA) Cash Needs Approach. The AWWA is the largest national organization that develops water and wastewater policies, specifications and rate setting guidelines accepted by both government -owned and private water and wastewater utilities worldwide. This Water Rates Analysis Report contains detailed information on the three funds that comprise the Oro Valley Water Utility: ➢ Operating Fund ➢ Alternative Water Resources Development Impact Fee Fund (AWRDIF Fund) ➢ Potable Water System Development Impact Fee Fund (PWSDIF Fund) Each fund is individually analyzed with regard to revenue and revenue requirements. The Utility is an enterprise of the Town and generates revenue from rates, fees and charges and does not receive J revenue from taxes or other payments from the General Fund. The Water Utility Commission has made a recommendation for a Preferred Financial Scenario. 7 Under the Preferred Financial Scenario, the Operating Fund is projected to have an ending cash balance of $3,647,174 at the end of the five-year projection period which meets the cash reserve 1 requirement. To determine the cash reserve balance, the cash balance of the Operating Fund is J combined with the cash balance of the Groundwater Preservation Fees. The Preferred Financial Scenario includes cash funding and new debt to finance capital projects. l J Each year the water rates analysis is prepared based on the most up-to-date information available for a five-year projection period. Operational needs and capital improvement requirements change annually and are carefully evaluated when they are included in the analysis. The Preferred Financial Scenario results in financially sound cash balances in the AWRDIF Fund and 1 the PWSDIF Fund. These cash balances will be used to finance capital projects to meet the demands J of new growth and development. Pursuant to Arizona Revised Statute 9-463.05, revenue from the individual impact fee funds may not be consolidated nor used for any purpose other than for which they were originally established. - 1 - The Preferred Financial Scenario includes five-year projections for each fund and evaluates the impact of future costs and the revenue sources that will be required to meet those costs. Based on the data contained within the Preferred Financial Scenario, Water Utility Staff and the Water Utility Commission have made the following recommendations on water rates for FY 2015-16: ➢ Increase in the potable and reclaimed commodity rates ➢ Increase in the potable and reclaimed construction water rates ➢ Increase in construction meter deposits ➢ No increase in the monthly base rates for potable and reclaimed water ➢ No change in the potable and reclaimed Groundwater Preservation Fee (GPF) Current and proposed commodity rates and GPF are provided in the Table 1 below: Table 1 Current Proposed $ Customer Classifications Commodity Rate Commodity Rate Increase 7 Single Family Residential Tier 1 2.27 2.32 0.05 Tier2 3.10 3.19 0.09 Tier 3 4.23 4.40 0.17 7 Tier 5.76 6.05 0.29 Irrigation Tier 2.27 2.32 0.05 Tier 3.10 3.19 0.09 I Tier 4.23 4.40 0.17 J Tier 5.76 6.05 0.29 Commercial 2.27 2.32 0.05 Master Metered Multi -Family Residential 2.27 2.32 0.05 Turf 2.27 2.32 0.05 Construction 6.76 7.05 0.29 j All Reclaimed Classes 2.23 2.27 0.04 JGroundwater Preservation Fee -Potable 0.90 0.90 0.00 Groundwater Preservation Fee - Reclaimed 0.47 0.47 0.00 1 Costper 1,000 gallons J The financial impact of the proposed rates for a residential customer using 8,000 gallons of water is J an increase of $0.44 per month. The average residential customer has a 5/8 x 3/4-inch meter and averages 7,300 gallons of water per month over the course of one year. The average commercial customer with a 2-inch meter using 57,000 gallons of water will experience a $2.85 increase per month. Tables providing the financial impact to all meter sizes and customer classifications may be found in Appendix B. The Water Utility presents this Water Rates Analysis Report for the review and consideration of the Mayor and Council. The Oro Valley Water Utility Commission has reviewed the report and is recommending approval of the Preferred Financial Scenario. The Water Utility Commission and Utility Staff are dedicated to serving the Town of Oro Valley and the customers of its water utility. -2- I TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT NOVEMBER 2015 Introduction The Oro Valley Water Utility was established in 1996 as a self-supporting enterprise of the Town. The Utility is comprised of three separate funds that have been established for specific purposes. The Funds are as follows: ➢ Operating Fund ➢ Alternative Water Resources Development Impact Fee Fund ➢ Potable Water System Development Impact Fee Fund The Operating Fund is the primary fund for the Utility. Revenue for this fund includes water sales, service fees, miscellaneous charges and interest income. The Utility does not receive revenue from taxes or other payments from the Town General Fund. The expenditures managed from this fund include personnel, operations and maintenance for both potable and reclaimed water systems, capital costs for existing potable water system improvements and related debt service. The Utility pays the General Fund for services received including finance, human resources, fleet services, information technology, legal, insurance and rental of office space. Groundwater Preservation Fee (GPF) revenue is accounted for within the Operating Fund. More information on the GPF may be found on page 10 of this report. l The Alternative Water Resources Development Impact Fee Fund (AWRDIF) was established in 1996 J to manage capital expenditures related to alternative water resources including reclaimed water and Central Arizona Project (CAP) water. Revenue for this fund is received from impact fees collected at the time water meters are purchased and from interest income. Expenditures include capital repayment obligation charges for the Town's CAP allotment and infrastructure and associated debt service to deliver CAP water to the Town for future growth and development. The Potable Water System Development Impact Fee Fund (PWSDIF) was established in 1996 to manage capital expenditures related to expansion or growth -related potable water capital projects and related debt service. Revenue for this fund is received from impact fees collected at the time water meters are purchased and from interest income. Expenditures may include wells, pump stations, reservoirs and mains forthe potable water system required to meet the demands of future growth and development. The revenue and expenditures of all three funds are combined to determine if the Utility meets the 1 debt service coverage requirement established in the Mayor and Town Council Water Policies and J current bond covenants. Otherwise, each fund is independent with regard to revenue and expenses. Pursuant to Arizona Revised Statute (ARS) 9-463.05 Section 13.9., impact fees must be placed in a separate fund and accounted for separately. ARS 9-463.05 Section B.5. states that the impact fees -3- may not be used for operations and maintenance of existing facilities. Each fund is addressed in more detail on pages 12 and 13 of the report. Growth Rates The Utility's growth rates have fluctuated over the past several years. Figure 1 illustrates the Utility's growth rate of 12.8 percent or 2,178 new metered connections over the last 10 years. Figure 1 Growth Rates 600 50o 508 400 368 346 a ;5 300 a 214 z 200 196 165 155 97 100 68 61 0 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 The growth projections used for this report are consistent with the Town's financial forecasting and are shown in following table. Table 2 New Metered Connections 2015-16 2016-17 2017-18 2018-19 2019-20 Single Family Residential 200 300 300 250 200 Commercial, Multi -Family, Irrigation 15 13 10 5 5 Water Use Trends The Utility has experienced an overall reduction in water use, both potable and reclaimed, over the last 10 years. Figure 2 illustrates this reduction in total water use from FY 2005-06 through FY 2014- 15. The trend line emphasizes a continuous decline in water use even though the utility experienced growth in the number of customers in that same time frame. During FY 2014-15, the single family residential customer with a 5/8 x 3/4 inch water meter averages water use of 7,300 gallons per month. WE Figure 2 Potable & Reclaimed Water Sales 3,500 3,395 3,400 3,300 0 3,191 3,200 f 3,115 3,162 3,071 3,100 3,063 0 3,026 3,100 (D 3,000 2,889 2,948 2,900 2,800 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 Debt Service Annual debt obligations are met with the revenue generated in the Operating Fund, the AWRDIF and the PWSDIF. A summary of the existing debt allocated to each of these funds and the outstanding balances at the beginning of FY 2015-16 are provided in Table 3. Table 3 Fund Year Debt Purpose Balance Operating 2005 Excise Tax Bonds Land for MOC $ 1,225,950 Operating 2007 Excise Tax Bonds - Refinance Existing Potable System $ 14,180,360 Operating-GPF 2008 WIFA Loan Reclaimed Water System $ 3,035,566 Operating 2009 WIFA Loan Existing Potable System $ 1,682,838 Operating 2012 Sr. Lien Revenue Bonds- Refinance Existing Potable System $ 3,258,808 Operating-GPF 2012 Sr. Lien Revenue Bonds- Refinance Reclaimed Water System $ 8,052,848 Operating 2013 Excise Tax -Refinance -Private Placement Existing Potable System $ 3,960,000 Operating 2014 WIFA Loan AM] Meter Replacement $ 2,873,448 PWSDIF 2012 Sr. Lien Revenue Bonds - Refinance Potable System Expansion $ 2,484,241 Total Debt $ 40,754,059 This rates analysis includes an assumption for new debt to finance existing system improvements in the amount of $4,500,000 in FY 2017-18 as shown in the appendices on page E-3. It is assumed that the Utility would obtain a loan from the Water Infrastructure Finance Authority (WIFA) with a 20- year term at a three percent interest rate. During FY 2015-16 the Town is refunding the 2005 Excise Tax Bonds of which the Utility's proportionate share is 33 percent. It is projected that the Utility's savings will be $86,000 which will be realized in FY 2016-17 and is included in this analysis. This refunding will be by way of private -5- placement with an investment institution. The next opportunity to refund older bonds is in 2017 when the 2007 bonds reach the optional early redemption date. Debt Service Coverage Requirements The method for calculating the debt service coverage ratio is pursuant to the Town Financial and Budgetary Policies adopted by the Town Council in 2008. Section C.1— Debt Capacity, Issuance & Management states the following with respect to debt service coverage ratios: "When utility revenues are pledged as debt service payments, the Town will strive to maintain a 1.3 debt service coverage ratio or the required ratio in the bond indenture (whichever is greater) to ensure debt coverage in times of revenue fluctuation." The Water Utility currently pays debt service on a number of outstanding debt issuances and loans. For the Series 2012 Senior Lien Water Revenue Bonds, the 2008, 2010 and 2014 Water Infrastructure Finance Authority (WIFA) Loans, water utility revenues are specifically pledged as the repayment source for these obligations at 1.3 times coverage per the Town's adopted financial policy. The remaining outstanding debt obligations of the Water Utility are excise tax pledged obligations meaning that the Town's unrestricted sources of sales taxes, fines, permit fees and state shared revenues are pledged as the repayment sources for these bonds in the bond indentures. Even though the bond indentures pledge these excise taxes as the repayment source, the Water Utility is and will continue to be responsible for these debt service payments. However, since excise taxes are pledged as coverage, a calculated debt service coverage ratio of 1.0 is applied to avoid double coverage when calculating the debt service coverage ratio for these excise tax -backed bonds in the water rates analysis. It is important to note that the bond indentures for the excise tax -backed bonds require that the Town's excise tax collections each fiscal year total at least 2.5 times the annual debt service 1 requirements in order to avoid having to fund a debt service reserve fund. These conditions have J been met annually in the past and are expected to continue in the future. For FY 2014-15 the debt service coverage ratio was 10.49 for the General Fund which substantially exceeds the 2.5 _j requirement. This methodology of segregating the water utility revenue -pledged debt from the excise tax -pledged 1 debt in the rates analysis process is an accepted practice in the industry and has been reviewed by J the Town's Finance Director and the Town's financial advisors with Stifel, Nicolaus & Company, Inc. The debt service coverage ratio is determined by dividing the annual net operating revenue by the annual debt service payments. Using the methodology described above is in accordance with the 2008 policy and reduces the amount of the debt service coverage requirement amount. Applying this methodology has been key in minimizing water rate increases. Debt service coverage for the Water Utility's outstanding senior lien debt issuances and loans in the Preferred Financial Scenario is shown in Table 4. M I 1 J Table 4 2015-16 2016-17 2017-18 2018-19 2019-20 Debt Service Coverage 1.79 1.81 1.88 1.80 1.54 Cash Reserve Policy for Operating Fund The Town of Oro Valley Mayor and Council Water Policies were adopted in 1996. Following the Commission recommendation, an amended policy was submitted to the Town Council and was subsequently adopted June 17, 2015. The amended policy may be found in Section II.A.1.d. and states "The Utility shall maintain a cash reserve in the Operating Fund of not less than 20%of the combined total of the annual budgeted amounts for personnel, operations and maintenance, and debt service. This cash reserve amount specifically excludes budgeted amounts for capital projects, depreciation, amortization and contingency. No cash reserve is required for the water utility impact fee funds." The cash from GPF is accounted for in the Operating Fund and is included in the total cash reserve balance. In the Preferred Financial Scenario, the projected cash reserve balance for the Operating Fund for each year in the analysis is listed in Table 5 showing compliance in all years. Table 5 Operating Fund 2015-16 2016-17 2017-18 2018-19 2019-20 Cash Reserve Requirement $ 3,019,019 $ 3,064,418 $ 3,090,779 $ 3,179,215 $ 3,632,906 Cash Reserve Balance $ 7,587,851 $ 5,519,357 $ 5,596,403 $ 5,457,949 $ 3,647,178 Cash reserve balances in the Operating Fund are the main driver for the proposed changes in water rates. The projected cash reserve balances shown in Table 5 include revenue from the proposed rate changes. Those changes include increases in the base rates and commodity rates throughout the projection period. The proposed changes allow for the cash balances to be at appropriate levels for both the Operating Fund and the GPF. The impact to the customers from the proposed changes are nominal except for single family residential and irrigation customers who are high water users. Details of the impact to all water users are in Appendix B. Cash reserves is projected to decrease $3,940,673 over the five-year projection period. Of this amount, $3,374,000 is to pay for capital projects shown on page E-3. To maintain cash reserves without large rate increases, the Preferred Financial Scenario assumes $4,500,000 in new debt to finance capital expenditures for FY 2017-18 through FY 2019-20. Operating Fund Revenue Forecast The Operating Fund (excluding the GPF cash) had a cash balance of $8,068,049 at the beginning of FY 2015-16 and is projected to have a balance of $2,855,785 at the end of FY 2019-20. These funds may be used for operating costs including personnel, operations and maintenance, capital improvements for the existing potable water system and debt service. The revenue forecast was based on analysis of the Utility's actual billing data for FY 2014-15 and projected growth in the number of new connections detailed in Table 2 on page 4. The revenue forecast includes proposed increases in the base rates shown below in Table 6. The base rates are projected to increase beginning in FY 2016-17. Table 6 Base Rates Current Proposed Proposed Proposed Proposed Proposed Potable & Reclaimed Rates Rates Rates Rates Rates Rates Meter Sizes (inches) 2015-16 2016-17 2017-18 2018-19 2019-20 5/8 x 3/4 14.19 14.19 14.47 14.76 15.06 15.36 3/4 x 3/4 21.29 21.29 21.72 22.15 22.59 23.04 1 35.48 35.48 36.19 36.91 37.65 38.40 1.5 70.95 70.95 72.37 73.82 75.29 76.80 2 113.53 113.53 115.80 118.12 120.48 122.89 3 227.05 227.05 231.59 236.22 240.95 245.77 4 354.77 354.77 361.87 369.10 376.48 384.01 6 709.54 709.54 723.73 738.21 752.97 768.03 8 1,135.26 1,135.26 1,157.97 1,181.12 1,204.75 1,228.84 The revenue forecast also includes proposed annual increases in commodity rates shown below in Table 7. The GPF revenue is also shown in Table 7 to illustrate that there are no proposed changes in this fee over the projection period. Table 7 Commodity Rates Current Proposed Proposed Proposed Proposed Proposed Rates Rates Rates Rates Rates Rates Customer Classifications 2015-16 2016-17 2017-18 2018-19 2019-20 Single Family Residential Tier 1 2.27 2.32 2.36 2.43 2.51 2.58 Tier 2 3.10 3.19 3.29 3.42 3.56 3.70 Tier 3 4.23 4.40 4,58 4.80 5.04 5.30 Tier 4 5.76 6.05 6.35 6.73 7.14 7.56 Irrigation Tier 1 2.27 2.32 2.36 2.43 2.51 2.58 Tier 2 3.10 3.19 3.29 3.42 3.56 3.70 Tier 3 4.23 4.40 4.58 4.80 5.04 5.30 Tier 4 5.76 6.05 6.35 6.73 7.14 7.56 Commercial 2.27 2.32 2.36 2.43 2.51 2.58 Master Metered Multi -Family 2.27 2.32 2.36 2.43 2.51 2.58 Turf 2.27 2.32 2.36 2.43 2.51 2.58 Construction 6.76 7.05 7.35 7.73 8.14 8.56 All Reclaimed Classes 2.23 2.27 2.32 2.39 2.46 2.54 Groundwater Preservation Fee Potable 0.90 0.90 0.90 0.90 0.90 0.90 Reclaimed 0.47 0.47 0.47 0.47 0.47 0.47 Costper 1,000 gallons I The water use included in each tier is detailed on the proposed water rates table in Appendix B. Table 8 provides the water sales revenue forecast for the five-year projection period using the proposed base rates in Table 6 and commodity rates in Table 7. The GPF and associated revenues and expenditures are detailed on pages 10 -11. Table 8 Water Sales Revenue 2015-16 2016-17 2017-18 2018-19 2019-20 Potable Water $10,177,273 $10,487,594 $10,910,286 $11,363,065 $11,602,976 Reclaimed Water 1,553,453 $ 1,584,249 1,621,069 1,669,048 1,718,454 Total Water Sales $11,730,726 $12,071,843 $12,531,355 $13,032,113 $13,321,430 Other revenue generated by the Utility consists of charges for services. Those charges for services includes and intergovernmental agreement with the Pima County Wastewater Reclamation Department to provide monthly billing services. The intergovernmental agreement will be subject to renewal in FY 2018-19. It is projected that the revenue will increase by $6,800 representing a three percent increase upon renewal. Charges for service also include, but are not limited to, new service establishment fees, late fees, reconnection fees, convenience fees, and plan review fees. Charges for services are projected to generate annual revenue ranging from $684,200 to $691,000. Projections for interest income are a cumulative total of $633,752 over the five-year period. A two percent interest rate was assumed for each year in the projection period. This interest rate is consistent with the Town's financial planning. Revenue Requirements The following table is a summary of revenue requirements for the Operating Fund that were used in the financial analysis. These revenue requirements do not include expenditures to be paid with GPF WIT141101-741 Table 9 Utility Expenditures 2015-16 2016-17 2017-18 2018-19 2019-20 Personnel $ 3,173,022 $ 3,347,538 $ 3,531,653 $ 3,725,894 $ 3,930,818 Operations/Maintenance 1,890,212 1,909,114 1,928,205 1,947,487 1,966,962 PowerforPumping 800,000 800,000 920,000 920,000 920,000 Water Resource Mgmt. 450,000 450,000 0 0 0 CAP Wheeling Costs 262,442 271,302 291,048 281,048 347,965 CAP Recharge Costs 1,719,930 1,770,705 1,822,230 1,853,145 2,072,355 Reclaimed Maintenance 903,028 944,258 996,801 1,040,969 1,086,179 Subtotal Expenditures $ 9,198,634 $ 9,492,917 $ 9,479,937 $ 9,768,543 $ 10,324,279 Debt Service 3,568,166 3,472,734 3,576,117 3,730,791 5,245,145 Capital Outlay 1 1,485,800 1,780,000 170,000 475,000 170,000 Total Expenditures $14,252,600 $ 14,745,651 $ 13,226,054 $ 13,974,334 $15,739,424 Projected personnel costs include the addition of one new employee in FY 2015-16, three and one half percent annual merit increases and two percent annual increases in health care costs. These projected increases are consistent with the General Fund's financial planning. M I The projected operations and maintenance (0&M) costs for both the potable and reclaimed water r systems include inflationary increases of one percent annually. The inflation factors are consistent J with the General Fund's financial planning. n Power for pumping costs were segregated from the traditional O&M costs because they are not J subject to annual inflationary increases. A 15 percent rate increase by Tucson Electric Power was projected in FY 2017-18. The Utility received authorization from the Town Council to pursue the acquisition of excess electric power from the Arizona Power Authority. This power will be wheeled through Tucson Electric Power or the Utility will receive credits on the monthly bills. The Utility is still in the early stages of negotiation; therefore, the amount of power savings the Utility will realize has not yet been determined and therefore not included in this analysis. The Utility plans to purchase groundwater extinguishment credits in FY 2015-16 and FY 2016-17. The analysis included $450,000 to purchase these credits in each of these two fiscal year. These credits will be pledged to the Groundwater Allowance Account (GWA) to help maintain a balance in the GWA that will facilitate growth in the water service area. CAP wheeling costs are the fees charged by Tucson Water to wheel our CAP water through their recharge and recovery system. These fees are fixed pursuant to an IGA and are subject to renegotiation in FY 2016-17. Based on the renegotiated IGA, costs increase in FY 2017-18 due to projected rate increase by Tucson Water. The costs increase again in FY 2019-20 due to an additional delivery of 500 acre feet of CAP water as allowed in the IGA. CAP water recharge costs represent costs to take delivery of the Utility's entire CAP water allotment of 10,305 acre feet annually. This water will be recharged in various recharge facilities including the Tucson Water's facilities. Costs are based on the rate schedule adopted by the CAP. Projected capital outlay for existing system improvements in this analysis includes the replacement of approximately 5,000 water meters and installation of AMI equipment in the Oro Valley water service area in FY 2015-16. Capital outlay also includes water main replacements, pumping station replacements. well replacements, vehicles, computer and security equipment. The schedule for five- year capital improvements may be found in Appendix D. The meter replacement project is being financed with a loan from the Water Infrastructure Finance Authority of Arizona (WIFA) and will be completed in FY 2015-16. This loan was approved by the Town Council in January 2014. Debt service costs increase in FY 2019-20 because of a large principal payment due on the 2007 bonds. A small portion of the increase is due to the new debt projected to occur in FY 2017-18 as described on page 5. The complete five-year projection pro formas for the Preferred Financial Scenario may be found in Appendix A. Groundwater Preservation Fee The Groundwater Preservation Fee (GPF) was established in 2003 to generate revenue to finance alternative water resources, capital expenditures for infrastructure needed to deliver alternative water to the Town and related debt service. Following the Commission recommendation, an amended policy was submitted to the Town Council and was subsequently adopted June 17, 2015. -10- The amended policy may be found in Section II.A.1.g. of the Mayor and Council Water Policies and states "Revenue from the Groundwater Preservation Fees shall be used for renewable water capital costs and associated debt; renewable water supplies and related debt; and for costs to wheel Central Arizona Project water to the Town." This analysis includes 75 percent of the total wheeling n costs charged by Tucson Water being paid with GPF revenue. The remaining 25 percent will Jcontinue to be paid with water sales revenue. There is no proposed increase in the GPF. Table 10 shows the GPF rates used in this analysis. 1 Table 10 Current 2015-16 2016-17 2017-18 2018-19 2019-20 Rate Proposed Proposed Proposed Proposed Proposed GPF—Potable Rate $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 GPF—Reclaimed Rate $0.47 $0.47 $0.47 $0.47 $0.47 $0.47 Costper 1,000 gallons The table below provides the revenue forecast for the five-year projection period using the GPF rates in Table 10. A Table 11 GPF Revenue 2015-16 2016-17 2017-18 2018-19 2019-20 Potable Water Reclaimed Water $ 2,009,078 309,596 $ 2,036,366 309,596 $ 2,065,706 309,596 $ 2,090,256 309,596 $ 2,110,013 309,596 Total GPF Revenue $ 2,318,674 $ 2,345,962 $ 2,375,302 $ 2,399,852 $ 2,419,609 Table 12 provides the proposed expenditures that will be funded with GPF revenue in accordance with the new GPF policy. Table 12 Expenditures 2015-16 2016-17 2017-18 2018-19 2019-20 Debt Service- Reclaimed System $1,385,767 $1,380,579 $1,385,996 $1,384,894 $1,382,492 J CAP Wheeling Costs 787,327 813,907 843,145 843,145 1,043,894 Capital Cost for CAP Allotment 155,204 161,952 168,700 168,700 168,700 Reclaimed System Capital Projects 2,100,000 200,000 J Total Expenditures $4,428,298 $2,556,438 $2,397,841 $2,396,739 $2,595,086 The GPF has a beginning cash balance of $3,306,394 in FY 2015-16 and is projected to have an ending cash balance of $791,389 in FY 2019-20. Although the GPF cash reserve is decreasing, this is an appropriate cash reserve amount for the GPF because there are no significant increases in 1 expenditures. This is due to consistent debt service payments and limited capital expenditures J during the projection period. The GPF cash is combined with Operating Fund to determine the l overall cash reserve balance of the Operating Fund. J -11- Development Impact Fee Funds Alternative Water Resources Development Impact Fee Fund The Alternative Water Resources Development Impact Fee Fund (AWRDIF) had a cash balance of $4,021,793 at the beginning of FY 2015-16 and is projected to have $2,825,377 at the end of FY 2019-20. The revenue sources for the AWRDIF Fund are from impact fees collected when a water meter is purchased and from interest earned on cash balances. Interest income is projected to be a total of $559,965 for this analysis. A two percent interest rate was assumed for each year in the projection period and is consistent with the Town's financial planning. The revenue forecast was based on new service units related to the number of new connections. A service unit is the equivalent of one single family residential (SFR) 5/8 x 3/4-inch water meter. The SFR service units are equal to the number of new connections. The other service units are forecast based on historic trends and pending development projects within the Town. Other service units ' include commercial, multi -family and irrigation uses with the number of service units depending on the meter sizes for each project. The Town Council adopted new impact fees that became effective July 1, 2014. The new impact fee for a SFR 5/8 x 3/4-inch water meter or one service unit is $4,045. Table 13 provides the projected growth in service units and the revenue associated with that growth. Growth / Revenue 2015-16 Table 13 2016-17 2017-18 2018-19 2019-20 SFR Service Units 200 300 300 250 200 JOther Service Units 50 50 50 50 50 1 Projected Revenue J $1,331,323 $1,415,750 $1,415,750 $1,213,500 $1,011,250 AWRDIF funds may be used for capital expenditures related to CAP water. The capital expenditures J during this projection period total $8,143,954 and include the capital costs assessed by CAP for 3,557 acre feet of our CAP water allotment and design and construction of facilities that will deliver an additional 1,000 acre feet of CAP water to the Town. The capital expenditures for the AWRDIF Fund are listed in the table below. Table 14 Capital Expenditures 2015-16 2016-17 2017-18 2018-19 2019-20 J CAP Capital Charges $ 81,811 $ 85,368 $ 88,925 $ 88,925 $ 88,925 CAP Facilities $ 100,000 $ 400,000 $ 4,110,000 $ 3,100,000 Total Capital Expenditures $ 81,811 $ 185,368 $ 488,925 $ 4,198,925 $ 3,188,925 There is no outstanding debt in the AWRDIF Fund and no future debt is projected for this analysis. All capital projects shown above will be financed with impact fees contained within this fund. -12- Potable Water System Development Impact Fee Fund The Potable Water System Development Impact Fee Fund (PWSDIF) had a cash balance of $4,800,153 at the beginning of FY 2015-16 and is projected to have $6,407,674 at the end of FY 2019-20. The revenue sources for the PWSDIF Fund are from impact fees collected when a water meter is purchased and from interest earned on cash balances. Interest income is projected to be a total of $580,543 for this analysis. A two percent interest rate was assumed for each year in the projection period and is consistent with the Town's financial planning. The revenue forecast was based on new service units related to the number of new connections. A service unit is the equivalent of one single family residential (SFR) 5/8 x 3/4-inch water meter. The SFR service units are equal to the number of new connections. The other service units are forecast based on historic trends and pending development projects within the Town. Other service units include commercial, multi -family and irrigation uses with the number of service units depending on the meter sizes for each project. The Town Council adopted new impact fees that became effective July 1, 2014. The new impact fee for a SFR 5/8 x 3/4-inch water meter or one service unit is $2,015. Table 15 provides the projected growth in service units and the revenue associated with that growth. Table 15 Growth / Revenue 2015-16 2016-17 2017-18 2018-19 2019-20 SFR Service Units 200 300 300 250 200 Other Service Units 50 50 50 50 50 l Projected Revenue $663,207 $705,250 $705,250 $604,500 $503,750 PWSDIF funds may be used for capital expenditures related to potable water system improvements including wells, booster stations, reservoirs and water mains that are required to meet the demands of new growth. There are no O&M expenditures in this fund. The projections detailed in the 1 Preferred Financial Scenario for the PWSDIF Fund assume land acquisition costs for a future J reservoir site and pumping station. Debt service for previously constructed growth -related facilities is paid from revenues collected from impact fees and use of cash reserves. No new debt is projected l in this analysis. Future capital projects will be financed with impact fees contained within this fund. J The Potable Water System Development Impact Fees are not projected to increase or decrease during the five year period. The table below lists all expenditures forecast for the PWSDIF. l I Table 16 JJJ Expenditures 2015-16 2016-17 2017-18 2018-19 2019-20 Debt Service $ 331,478 $ 329,916 $ 331,627 $ 331,328 $ 330,630 Capital Projects 500,000 Total Expenditures $ 331,478 $ 329,916 $ 331,627 $ 331,328 $ 830,630 I -13- Preferred Financial Scenario i Prior to developing financial forecasts, financial considerations were evaluated relating to proposed future operating costs, significant short and long term capital expenditures, the Utility's existing cash reserves, existing outstanding debt and the related debt service payments. To develop a Preferred Financial Scenario, the goals of the Utility were to ensure that all existing rate setting policies were met, cash reserves were utilized to minimize future debt and proposed rate increases would not result in rate shock. l The Water Utility has prepared a Preferred Financial Scenario. The Scenario generates the revenue needed to maintain an adequate cash balance in all funds over the projected five-year period. Additionally, the Scenario uses both available cash and proposed new debt to finance capital projects. The Scenario meets the debt service coverage requirements in each year of the projection j period. The Preferred Financial Scenario includes projections for five years; however, water rates are J approved annually for the first year in the projection period. The Water Utility Commission and Utility staff recommend approval of this Preferred Financial Scenario. J The cash balance in the PWSDIF fund increases over the five year period while the cash balance in the AWRDIF fund decreases as cash is used for capital projects. The cash balance will be important in the future as the Town moves forward with increased deliveries of CAP water and constructing potable water system infrastructure to meet the demands of new growth. The financial projections for the Operating Fund, AWRDIF Fund and the PWSDIF Fund were combined to evaluate the overall debt service coverage at the end of each fiscal year. Analysis indicates that, under the Preferred Financial Scenario, the Utility will meet the debt service coverage l requirement established by the Mayor and Council Water Polices and bond covenants for all five J years. Pro formas for the Preferred Financial Scenario may be found in Appendix A. The assumptions used to develop the financial projections contained in the Preferred Financial Scenario 1 may be found in Appendix E. 1 Recommendation on Rates, Fees & Charges J After reviewing the analysis of the three funds and their respective revenue requirements contained in the Preferred Financial Scenario for FY 2015-16, the Water Utility Commission and Utility staff recommend the following: ➢ Increase in the potable and reclaimed commodity rates ➢ Increase in the potable and reclaimed construction water rates ➢ Increase in construction meter deposits ➢ No increase in the monthly base rates for potable and reclaimed water No change in the potable and reclaimed Groundwater Preservation Fee (GPF) Table 17 illustrates the proposed water rates for a single family residential customer with a 5/8 x 3/4 inch water meter. Approximately 87 percent of the utility's customers fall into this category. Water rates of other water providers in the region are included for comparison of the cost per 1,000 gallons. EM I� Water Provider Monthly Tier 1 Base Rate Table 17 Tier 2 Tier 3 Tier 4 Tier 5 GPF or Water Resource Fee Oro Valley Current 14.19 2.27 3.10 4.23 5.76 0.90 Oro Valley Proposed 14.19 2.32 =- 3.19 4.40 6.06 0.90 Metro Water 27.00 .99 2.66 4.30 5.70 7.02 0.40 Marana Water 17.31 2.82 3.93 5.11 6.30 9.04 0.46 Tucson Water 11.90 1.87 3.61 9.67 15.37 -- 0.60 Cmt per 1,000 gallons. Table 18 provides a calculation of a monthly bill amount for a single family residential customer with a 5/8 x 3/4 inch meter for the water utilities surrounding the Oro Valley Water Utility service area. Direct comparison of specific base rates and commodity rates is less effective because of the varying rate structures of each utility. A more effective comparison is to calculate the cost for specific consumption levels for one month. The following bill comparisons include water rates and water resource fees similar to the Utility's GPF. Table 18 Cost for Cost for Cost for Costfor Water Provider 8,000 Gallons 15,000 Gallons 25,000 Gallons 40,000 Gallons Oro Valley Current 40.38 68.38 118.55 207.74 Oro Valley Proposed 40.82 69.45 121.24 213.94 Metro Water 44.80 72.78 129.58 240.88 Marana Water 43.55 72.06 121.86 217.31 JTucson Water 38.11 91.84 206.08 448.81 The following table illustrates the financial impact to customers with varying meter sizes based on the average monthly water use for specific customer classifications. These charges are for Oro Valley Water Utility customers and include the base rates, commodity rates and groundwater preservation fees. Table 19 Classification Meter Size Water Use Current Bill Proposed Bill Change l J SF Residential 5/8 8,000 $ 40.38 $ 40.82 - $ 0.44 SF Residential 5/8 15,000 $ 68.38 $ 69.45 $ 1.07 SF Residential 5/8 25,000 $118.55 $121.24 $ 2.69 SF Residential 5/8 40,000 $207.74 $213.94 $ 6.20 Irrigation 1 27,000 $129.37 $131.12 $ 1.75 Commercial 2 57,000 $294.22 $297.07 $ 2.85 MF Residential 4 550,000 $ 2,098.27 $ 2,125.77 $ 27.50 Turf -Potable 4 4,000,000 $13,034.77 $13,234.77 $200.00 Reclaimed - Turf 6 15,000,000 $41,209.54 $41,809.54 $600.00 -15- Proposed rates for all Oro Valley Water Utility meter sizes may be found in Appendix B. Tables that rl calculate monthly bills under the proposed rates may also be found in Appendix B. Monthly bill amounts are calculated in 1,000 gallon increments for the 5/8 x 3/4 inch meters and a variety of increments for larger meter sizes. Table 20 contains the proposed reclaimed rates. Tucson Water's rates have been included for comparison. Table 20 Water Provider Commodity Rate GPF Oro Valley Water —Current $2.23 $0.47 Oro Valley Water —Proposed $2.27 $0.47 Tucson Water $2.50 N/A Costper 1,000 gallons. Service Fees & Charges The Utility charges fees for services rendered in an amount designed to recover the cost to provide that service. These fees and charges are evaluated annually to determine if any adjustments are needed. it is recommended that the security deposit for a construction meter be increased to recover material costs associated with replacing the meter and backflow device. These meters are used by contractors to obtain construction water. When the meter is returned, the security deposit is refunded in its entirety. Occasionally the meter is returned damaged. If there is damage, the security deposit is then used to repair or replace the meter. Detailed cost information may be found in Appendix C. Conclusion Each year the water rates analysis is prepared based on the most up-to-date information available. Operational needs and capital improvement requirements change annually and are carefully l evaluated when they are included in the analysis. It is important that the Utility perform a water J rates analysis every year to plan for changes in debt service, operating or capital costs. 1 The Water Utility presents this Water Rates Analysis Report for the review and consideration of the JMayor and Council. The Commission and Water Utility Staff are available to discuss this report in greater detail at Council's request. Utility Staff will be requesting Council's approval of the Notice of Intent to increase water rates on December 2, 2015. The Oro Valley Water Utility Staff and Commission are dedicated to serving the Town of Oro Valley J and the customers of its water utility. Water Utility Staff and the Commission extend their appreciation to the Mayor and Council for their consideration and guidance and looks forward to l their continued direction. J ZM APPENDIX A Preferred Financial Scenario Pro Formas A-1 Operating Fund A-2 Groundwater Preservation Fee A-3 Alternative Water Resources Development Impact Fee Fund A-4 Potable Water System Development Impact Fee Fund A-5 Summary of All Funds IJ Oro Valley Water Utility Prepared: October 20, 2015 REVENUES Water Sales Potable Water Sales (excluding golf courses) Potable Water Sales from Growth - Res. & Com. Potable Water Sales - Golf Courses Total Potable Water Sales Reclaimed Water Sales Total Water Sales Other Operating Revenue Service Fees & Charges Interest Income Total Other Operating Revenue Total Operating Revenue OPERATING EXPENSES Potable Operating Expenses Personnel Operations & Maintenance Power for Pumping Water Resource Management Costs CAP Wheeling Costs - 25% CAP Water Recharge Costs Total Potable Operating Expenses Reclaimed Operating Expenses Operating & Maintenance Total Reclaimed Operating Expenses Total Operating Expenses PREFERRED FINANCIAL SCENARIO Operating Fund FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 $ 9,988,128 $ 10,162,264 $ 10,433,763 $ 10,751,103 $ 10,873,154 61,726 195,363 343,704 475,025 588,823 127,419 129,967 132,819 136,937 140,999 10,177,273 10,487,594 10,910,286 11,363,065 11,602,976 1,553,453 1,584,249 1,621,069 1,669,048 1,718,454 11,730,726 12,071,843 12,531,355 13,032,113 13,321,430 684,200 684,200 684,200 691,000 691,000 190,705 131,590 110,084 109,654 91,719 874,905 815,790 794,284 800,654 782,719 $ 12,605,631 $ 12,887,633 $ 13,325,639 $ 13,832,767 $ 14,104,149 3,173,022 3,347,538 3,531,653 3,725,894 3,930,818 1,890,212 1,909,114 1,928,205 1,947,487 1,966,962 800,000 800,000 920,000 920,000 920,000 450,000 450,000 - - - 262,442 271,302 281,048 281,048 347,965 1,719,930 1,770,705 1,822,230 1,853,145 2,072,355 $ 8,295,606 $ 8,548,659 $ 8,483,136 $ 8,727,574 $ 9,238,100 903,028 944,258 996,801 1,040,969 1,086,179 $ 903,028 $ 944,258 $ 996,801 $ 1,040,969 $ 1,086,179 $ 9,198,634 $ 9,492,917 $ 9,479,937 $ 9,768,543 $ 10,324,279 Net Operating Revenue $ 3,406,997 $ 3,394,716 $ 3,845,702 $ 4,064,224 $ 3,779,870 DEBT SERVICE - POTABLE P&I - Excise Tax Bonds - Land for MOC (2005) P&I - Excise Tax Bonds - Refinance 1996 (2007) P&I - WIFA Loan - Exist. System CIP (2009) P&I - Sr. Lien Bonds - Existing System (2012) P&I - Refunding - Excise - Private Placement (2013) P&I - WIFA Loan - Sr. Lien - AM I (2014) P&I - Excise Tax Bonds - Refinance 2005 (2015) P&I - WIFA Loan - Sr. Lien - Existing System (2017) Total Potable System Debt Service Other Obligations Machinery & Equipment & Vehicle Reserve J Capital Improvements: Existing System Total Other Obligations Net Balance From Operations Beginning Cash Balance Net Balance From Operations Ending Cash Balance 125,758 - - - - 1,258,430 1,259,936 1,255,326 1,258,553 2,615,276 149,322 149,275 149,226 149,175 149,123 582,285 589,491 586,716 589,759 589,227 1,039,489 1,015, 424 1,026,250 1,016,859 1,017,323 408,361 408,361 408,361 408,362 408,361 4,521 50,247 150,238 150,709 151,106 - - - 157.375 '414.749 $ 3,568,166 $ 3,472,734 $ 3,576,117 $ 3,730,791 $ 5,245,165 $ 206,800 $ 1,279,000 100,000 $ 1,680,000 100,000 $ 70,000 200,000 $ 275,000 100,000 70,000 $ 1,485,800 $ 1,780,000 $ 170,000 $ 475,000 $ 170,000 $ (1,646,969) $ (1,858,017) $ 99,584 $ (141,567) $ (1,635,295) $ 8,038,049 $ 6,391,080 $ 4,533,063 $ 4,632,647 $ 4,491,080 (1,646,969) (1,858,017) 99,584 (142,567) (1,635,295) $ 6,391,080 $ 4,533,063 $ 4,632,647 $ 4,491,080 $ 2,855,785 A-1 Oro Valley Water Utility PREFERRED FINANCIAL SCENARIO Prepared: October 20, 2015 Operating Fund Groundwater Preservation. Fees FY 2015.16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 GPF Beginning Balance $ 3,306,394 $ 1,196,770 $ 986,293 $ 963,754 $ 966,867 Revenue GPF Revenue- Potable 1,998,071 1,998,071 1,998,071 1,998,071 1,998,071 GPF Revenue - Reclaimed 309,596 309,596 309,596 309,596 309,596 GPFRevenue- Growth 11,007 38,295 67,635 92,185 111,942 Total Revenue 2,318,674 2,345,962 2,375,302 2,399,852 2,419,609 Expenses CAP Wheeling Costs - 75% 787,327 813,907 843,145 843,145 1,043,894 Capital Cost for CAP Allotment 6,748 AF 155,204 161,952 168,700 168,700 168,700 Reclaimed Capital Projects - Main Relocate & Extend 2,100,000 200,000 - - - P&I - Sr. Lien - WIFA -Reclaimed Ph.2 (2007) 311,256 311,130 311,001 310,867 310,727 P&I -Sr. Lien Bonds - Reclaimed Ph.1 (2012) 1,074,511 1,069,449 1,074,995 1,074,027 1,071,765 Total Expenses 4,428,298 2,556,438 2,397,841 2,396,739 2,595,086 GPF Ending Balance $ 1,196,770 $ 986,293 $ 963,754 $ 966,867 $ 791,389 A-2 Oro Valley Water Utility Prepared: October 20, 2015 REVENUES AWRD Impact Fee Revenue Subtotal Revenue Other Operating Revenue Interest Income Subtotal Other Operating Revenue Total Operating Revenue PREFERRED FINANCIAL SCENARIO Alternative Water Resources Development Impact Fee Fund FY 2015-16 FY 2016.17 FY 2017-18 FY 2018-19 FY 2019-20 $ 1,331,323 $ 1,415,750 $ 1,415,750 $ 1,213,500 $ 1,011,250 1,331, 323 1,415, 750 1,415,750 1,213,500 1,011, 250 91,890 118,542 142,738 128,267 78,528 91,890 118,542 142,738 128,267 78,528 $ 1,423,213 $ 1,534,292 $ 1,558,488 $ 1,341,767 $ 1,089,778 OPERATING EXPENSES N/A - - - - - Total Operating Expenses $ - $ - $ - $ - $ - Net Operating Revenue $ 1,423,213 $ 1,534,292 $ 1,558,488 $ 1,341,767 $ 1,089,778 DEBT SERVICE N/A Total Debt Service OTHER OBLIGATIONS Capital Improvements: CAP Capital Charges 3557 acre feet $ 81,811 $ 85,368 $ 88,925 $ 88,925 $ 88,925 CAP Facilities Engineering & Construction - 100,000 400,000 4,110,000 3,100,000 Total Other Obligations $ 81,811 $ 185,368 $ 488,925 $ 4,198,925 $ 3,188,925 Net Balance From Operations $ 1,341,402 $ 1,348,924 $ 1,069,563 $ (2,857,158) $ (2,099,147) Beginning Cash Balance $ 4,021,793 $ 5,363,195 $ 6,712,119 $ 7,781,682 $ 4,924,524 Net Balance From Operations $ 1,341,402 $ 1,348,924 $ 1,069,563 $ (2,857,158) $ (2,099,147) Ending Cash Balance $ 5,363,195 $ 6,712,119 $ 7,781,682 $ 4,924,524 $ 2,825,377 A-3 Oro Valley Water Utility PREFERRED FINANCIAL SCENARIO Prepared: October 20, 2015 Potable Water System Development Impact Fee Fund FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 REVENUES Development impact Fees $ 663,207 $ 705,250 $ 705,250 $ 604,500 $ 503,750 Subtotal Revenue $ 663,207 $ 705,250 $ 705,750 $ 604,500 $ 503,750 Other Operating Revenue Interest Income 99,044 108,059 117,711 126,617 129,112 Subtotal Other Operating Revenue 99,044 108,059 117,712 126,617 129,112 Total Operating Revenue $ 762,251 $ 813,309 $ 822,961 $ 731,117 $ 632,862 OPERATING EXPENSES N/A - - - - Total Operating Expenses $ - $ - $ - $ - $ - Net Operating Revenue $ 762,251 $ 813,309 $ 822,961 $ 731,117 $ 632,862 DEBTSERVICE P&I - Sr. Lien Bonds - Expansion Related (2012) $ 331,478 $ 329,916 $ 331,627 $ 331,328 $ 330,630 Total Water System Debt Service $ 331,478 $ 329,916 $ 331,627 $ 331,328 $ 330,630 OTHER OBLIGATIONS Growth Related Capital Projects - - - - 500,000 Total Other Obligations $ - $ - $ - $ - $ 500,000 Net Balance From Operations $ 430,773 $ 483,393 $ 491,334 $ 399,789 $ (197,768) Beginning Cash Balance $ 4,800,153 $ 5,230,926 $ 5,714,319 $ 6,205,653 $ 6,605,442 Net Balance From Operations $ 430,773 $ 483,393 $ 491,334 $ 399,789 $ (197,768) Ending Cash Balance $ 5,230,926 $ 5,714,319 $ 6,205,653 $ 6,605,442 $ 6,407,674 A-4 Oro Valley Water Utility Prepared: October 20, 2015 PREFERRED FINANCIAL SCENARIO Summary of all Funds ' FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019.20 REVENUES Water Sales Potable Water Sales (exclude golf courses) $ 9,988,128 $ 10,162,264 $ 10,433,763 $ 10,751,103 $ 10,873,154 Potable Water Sales from Growth 61,726 195,363 343,704 475,025 588,823 - Potable Water Sales - Golf Courses 127,419 129,967 132,819 136,937 140,999 Total Potable Water Sales 10,177,273 10,487,594 10,910,286 11,363,065 11,602,976 Reclaimed Water Sales 1,553,453 1,584,249 1,621,069 1,669,048 1,718,454 Total Water Sales 11,730,726 12,071,843 12,531,355 13,032,113 13,321,430 Other Operating Revenue -1 Groundwater Preservation Fees Groundwater Preservation Fee - Potable 1,998,071 1,998,071 1,998,071 1,998,071 1,998,071 ' Groundwater Preservation Fee - Reclaimed 309,596 309,596 309,596 309,596 309,596 Groundwater Preservation Fee - Growth 11,007 38,295 67,635 92,195 111,942 1 Total Groundwater Preservation Fees 2,318,674 2,345,962 2,375,302 2,399,852 2,419,609 Potable Water Impact Fees 663,207 705,250 705,250 604,500 503,750 Alternative Water Impact Fees 1,331,323 1,415,750 1,415,750 1,213,500 1,011,250 l Service Fees & Charges J Interest Income 684,200 381,639 684,200 358,191 684,200 370,533 691,000 364,538 691,000 299,359 Total Other Operating Revenue 5,379,043 5,509,353 5,551,035 5,273,390 4,924,968 Total Operating Revenue $ 17,109,769 $ 17,581,196 $ 18,082,390 $ 18,305,503 $ 18,246,398 OPERATING EXPENSES Potable Operating Expenses Personnel 3,173,022 3,347,538 3,531,653 3,725,894 3,930,819 Operations & Maintenance 1,890,212 1,909,114 1,928,205 1,947,487 1,966,962 Power for Pumping 800,000 800,000 920,000 920,000 920,000 Water Resource Management Costs 450,000 450,000 CAP Wheeling Costs 262,442 271,302 281,048 281,048 347,965 CAP Recharge Costs 1,719,930 1,770,705 1,822,230 1,853,145 2,072,355 Costs paid by GPF Revenue (excluding debt service) 942,531 975,859 1,011,845 1,011,845 1,212,594 Total Potable Operating Expenses $ 9,238,137 $ 9,524,518 $ 9,494,981 $ 9,739,419 $ 10,450,693 -, Reclaimed Operating Expenses JOperating & Maintenance 903,028 944,258 996,801 1,040,969 1,086,179 Total Reclaimed Operating Expenses $ 903,028 $ 944,258 $ 996,801 $ 1,040,969 $ 1,096,179 Total Operating Expenses $ 10,141,165 $ 10,468,777 $ 10,491,782 $ 10,780,389 $ 11,536,872 Net Operating Revenue $ 6,968,604 $ 7,112,419 $ 7,590,608 $ 7,525,115 $ 6,709,526 Debt Service Debt Service - Potable- Existing System P&I - Excise Tax Bonds - Land for MOC (2005) 125,758 P&I - Excise Tax Bonds - Refinance 1996 (2007) 1,258,430 1,259,936 1,255,326 1,258,553 2,615,276 7 P&I - WIFA Loan - Exist. System CIP (2009) 149,322 149,275 149,226 149,175 149,123 J P&I - Sr. Lien Bonds - Existing System (2012) 582,285 589,491 586,716 589,759 589,227 P&I - Refunding - Excise - Private Placement (2013) 1,039,489 1,015,424 1,026,250 1,016,859 1,017,323 P&I -WIFA Loan - Sr. Lien - AMI (2014) 408,361 408,361 408,361 408,361 408,361 P&I- Excise Tax Bonds - Refinance 2005 (2015) 4,521 50,247 150,238 150,709 151,106 P&I - WIFA Loan - Sr. Lien - Existing System (2017) 157,375 314,749 Total Potable Existing System Debt Service $ 3,568,166 $ 3,472,734 $ 3,576,117 $ 3,730,791 $ 5,245,165 Debt Service - Potable - Expansion Related P&I - Sr. Lien Bonds - Expansion Related (2012) 331,478 329,916 331,627 331,328 330,630 Total Potable Expansion Related Debt Service $ 331,478 $ 329,916 $ 331,627 $ 331,328 $ 330,630 Debt Service - Non -Potable P&I - Sr. Lien - WIFA -Reclaimed Ph.2(2007) $ 311,256 $ 311,130 $ 311,001 $ 310,867 $ 310,727 P&I - Sr. Lien Bonds - Reclaimed Ph.1 (2012) 1,074,511 1,069,449 1,074,995 1,074,027 1,071,765 Total Non -Potable System Debt Service $ 1,385,767 $ 1,380,579 $ 11385,996 $ 1,384,894 $ 1,382,492 Total Water System Debt Service $ 5,285,410 $ 5,183,229 $ 5,293,740 $ 5,447,013 $ 6,958,287 A-5 Oro Valley Water Utility Prepared: October 20, 2015 Other Obligations Machinery & Equipment & Vehicle Reserve Capital Improvements: Existing System GPF Projects Alternative Water Resources Potable Water System Expansion Total Other Obligations Net Balance From Operations Growth - New Metered Connections Monthly increase to residential customer using 8K gals. Monthly increase to residential customer using 8K gals. Debt Service Coverage Requirement Amount OS Coverage Ratio: Sr. Lien Bonds & WIFA Debt Service Coverage Requirement = 1.30 Required Cash Reserves (20°% of personnel, O&M, debt) (does not Include depreciation/amortization) Beginning Cash Balance - Ali Funds Net Balance From Operations -AII Funds Ending Cash Balance -AII Funds Operating Fund Groundwater Preservation Fees Subtotal Operating Fund AW RD Impact Fee Fund PWSD Impact Fee Fund Total Ending Cash Balance Contingent Reserve Fund: Contingent Reserve Requirement =130% PREFERRED FINANCIAL SCENARIO Summary of all Funds FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 $ 206,800 $ 100,000 $ 100,000 $ 200,000 $ 100,000 1,279,000 1,680,000 70,000 275,000 70,000 2,100,000 200,000 - - - 81,811 185,368 488,925 4,198,925 3,188,925 - - - - 500,000 $ 3,667,611 $ 2,165,368 $ 658,925 $ 4,673,925 $ 3,858,925 $ (1,984,417) $ (236,178) $ 2,637,943 $ (2,595,823) $ (4,107,685) 215 313 310 255 205 1.1% 1.6% 2.2% 2.4% 2.1% $0.44 $0.66 $0.91 $1.00 $0.93 $ 6,455,777 $ 6,360,217 $ 6,505,264 $ 6,703,551 $ 8,261,190 1.79 1.81 1.88 1.80 1.54 $ 3,019,019 $ 3,064,418 $ 3,090,779 $ 3,179,215 $ 3,632,906 $ 20,166,389 $ 18,181,972 $ 17,945,794 $ 19,583,737 $ 16,987,914 (1,984,417) (236,178) 1,637,943 (2,595,823) (4,107,685) $ 18,181,972 $ 17,945,794 $ 19,583,737 $ 16,987,914 $ 12,880,229 $ 6,391,080 $ 4,533,063 $ 4,632,647 $ 4,491,080 $ 2,855,785 1,196,770 986,293 963,754 966,867 791,389 7,587,850 5,519,356 5,596,401 5,457,946 3,647,174 5,363,195 6,712,119 7,781,682 4,924,524 2,825,377 5,230,926 5,714,319 6,205,653 6,605,442 6,407,674 $ 18,181,971 $ 17,945,794 $ 19,583,736 $ 16,987,912 $ 12,880,225 344% 346% 370% 312% 185% A-6 APPENDIX B Preferred Financial Scenario Rate Schedules & Tables for Bill Comparisons B-1 Potable & Reclaimed Water Rates B-2 Tables for Bill Comparisons by Meter Size - Potable B-8 Tables for Bill Comparisons by Meter Size -Reclaimed , I _3 i J ORO VALLEY WATER UTILITY PREFERRED FINANCIAL SCENARIO PROPOSED WATER RATES BASE RATES POTABLE & RECLAIMED METER SIZE BASE RATE (in inches) 5/8 x 3/4 $14.19 3/4 x 3/4 $21.29 1 $35.48 1.5 $70.95 2 $113.53 3 $227.05 4 $354.77 6 $709.54 8 $1,135.26 COMMODITY RATES - POTABLE WATER RESIDENTIAL & IRRIGATION CLASSIFICATIONS METER COMMODITY COMMODITY COMMODITY COMMODITY SIZE TIER 1 TIER 2 TIER 3 TIER 4 $2.32 $3.19 $4.40 $6.05 COST PER 1000 GALS. COST PER 1000 GALS. COST PER 1000 GALS. COST PER 1000 GALS. 5/8 x 3/4 0 - 7,000 7,001-16,000 16,001- 32,000 OVER 32,000 3/4 x 3/4 0-10,000 10,001- 24,000 24,001- 48,000 OVER 48,000 1 0-17,000 17,001-40,000 40,001- 80,000 OVER 80,000 1.5 0 - 35,000 35,001- 80,000 80,001 - 160,000 OVER 160,000 2 0-56,000 56,001 - 128,000 128,001 - 256,000 OVER 256,000 3 0-112,000 112,001- 256,000 256,001- 512,000 OVER 512,000 4 0-175,000 175,001- 400,000 400,001- 800,000 OVER 800,000 6 0 - 860,000 860,001- 2,000,000 2,000,001- 3,500,000 OVER 3,500,000 8 0 - 860,000 860,001- 2,000,000 2,000,001- 3,500,000 OVER 3,500,000 COMMERCIAL CLASSIFICATION $2.32 per 1000 gallons for all water use MASTER -METERED MULTIFAMILY CLASSIFICATION $2.32 per 1000 gallons for all water use CONSTRUCTION WATER $7.05 per 1000 gallons for all water use COMMODITY RATES - RECLAIMED WATER ALL RECLAIMED WATER USES & CLASSIFICATIONS $ 2.27 per 1000 gallons for all water use GROUNDWATER PRESERVATION FEES POTABLE WATER $ 0.90 per 1000 gallons for all water use RECLAIMED WATER $ 0.47 per 1000 gallons for all water use B-1 ,II I TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 5/8 X 3/4" METER PREFERRED FINANCIALSCENARIO = Tiers = Average Water Use GALLONS USED CURRENT WATER RATE PROPOSED WATER RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 14.19 14.19 0.00 0.0% 0.00 0.00 0.00 0.00 14.19 0.0% 1,000 16.46 16.51 0.05 0.3% 0.90 0.90 0.00 0.05 17.41 0.3% 2,000 18.73 18.83 0,10 0.5% 1.80 1.80 0.00 0.10 20.63 0.5% 3,000 21.00 21.15 0.15 0.7% 2.70 2.70 0.00 0.15 23.85 0.6% 4,000 23.27 23.47 0.20 0.9% 3.60 3.60 0.001 0.20 27.07 0.7% 5,000 25.54 25.79 0.25 1.0% 4.50 4.50 0.00 0.25 30,291 0.8% 6,000 27.81 28.11 0.30 1.1% 5.40 5.40 0.00 0.30 33.51 0.9% 7,000 30.08 30.43 0.35 1.2% 6.30 6.30 0.00 0.35 36.73 1.0% 8,000 33.18 33.62 0.44 1.3% 7.20 7.20 0.00 0.44 40.82 1.1% 9,000 36.28 36.81 0.53 1.5% 8.10 8.10 0.00 0.53 44.91 1.2% 10,000 39.38 40,00 0.62 1.6% 9.00 9.00 0.00 0.62 49.00 1.3% 11,000 42.48 43.19 0.711 1.7% 9.901 9,90 0.00 0.71 53.09 1.4% 12,000 45.58 46.38 0.80 1.8% 10.80 10.80 0.001 0.80 57.18 1.4% 13,000 48.68 49.57 0.89 1.8% 11.70 11.70 0.00 0.89 61.271 1.5% 14,000 51.78 52.76 0.98 1.9% 12.60 12.60 0.00 0.98 65.36 1.5% 15,000 54.88 55.95 1.07 1.9% 13.50 13.50 0.00 1.07 69.45 1.6% 16,000 57.98 59.14 1.16 2.0% 14.40 14.40 0.00 1.16 73.54 1.6% 17,000 62.21 63.54 1.33 2.1% 15.30 15.30 0.00 1.33 78.84 1.7% 18,000 66.44 67.94 1.50 2.3% 16.20 16.20 0.00 1.50 84.14 1.8% 19,000 70.67 72.34 1.67 2.4% 17.101 17.10 0.00 1.67 89.44 1.9% 20,000 74.90 76.74 1.84 2.5% 18.00 18.00 O.Ool 1.84 94.74 2.0% 21,000 79.13 81.14 2.01 2.5% 18.90 18.90 0.00 2.01 100.04 2.1% 22,000 83.36 95.54 2.18 2.6% 19.80 19.80 0.00 2.18 105.34 2.1% 23,000 87.59 89.94 2.35 2.7% 20.70 20.70 0.00 2.35 110.64 2.2% 24,000 91.82 94.34 2.52 2.7% 21.60 21.60 0.00 2.52 115.94 2.2% 25,000 96.05 98.74 2.69 2.8% 22.50 22.50 0.00 2.69 121.24 2.3% 26,000 100.28 103.14 2.861 2.9% 23.40 23.40 0.00 2.86 126.54 2.3% 27,000 104.51 107.54 3.03 2.9% 24.301 24.30 0.00 3.03 131.84 2.4% 28,000 108.74 111.94 3.20 2.9% 25.20 25.20 0.001 3.20 137.14 2.4% 29,000 112.97 116.34 3.37 3.0% 26.10 26.10 0.00 3.37 142.44 2.4% 30,000 117.20 120.74 3.54 3.0% 27.00 27.00 0.00 3.54 147.74 2.5% 31,000 121.43 125.14 3.71 3.1% 27.90 27.90 0.00 3.71 153.041 2.5% 32,0001 125.66 129.54 3.88 3.1% 28.80 28.80 0.00 3.88 158.34 2.5% 33,0001 131.42 135.59 4.17 3.2% 29.70 29.70 0.00 4.17 165.29 2.6% 34,000 1 137.18 141.641 4.46 3.3% 30.60 30.60 0.00 4.46 172.24 2.7% 35,0001 142.94 147.69 4.75 3.3% 31.501 31.50 0.00 4.75 179.19 2.7% 36,000 148.70 153.74 5.04 3.4% 32.40 32.40 0.00 5.04 186.14 2.8% 37,000 154.46 159.79 5.33 3.5% 33.30 33.30 0.00 5.33 193.09 2.8% 38,000 160.22 165.84 5.62 3.5% 34.20 34.20 0.00 5.62 200.04 2.9% 39,000 165.98 171.89 5.91 3.6% 35.10 35.10 0.00 5.91 206.991 2.9% 40,000 171.74 177.94 6.20 3.6% 36.00 36.00 0.00 6.20 213.94 3.0% 41,000 177.50 183.99 6.491 3.7% 36.90 36.90 0.00 6.49 220.89 3.0% 42,000 183.26 190.04 6.78 3.7% 37.80 37.80 0.00 6.78 227.84 3.1% 43,0001 189.02 196.09 7.07 3.7% 38.70 38.701 0.00 7.07 234.79 3.1% 44,000 194.78 202.14 7.36 3.8% 39.60 39.60 0.00 7.36 241.74 3.1% 45,000 200.54 208.19 7.65 3.8% 40.50 40.50 0.00 7.65 248.69 3.2% 46,000 206.30 214.24 7.94 3.8% 41.40 41.40 0.00 7.94 255.64 3.2% 47,000 212.06 220.29 8.23 3.9% 42.30 42.30 0.00 8.23 262.591 3.2% 48,000 217.82 226.34 8.52 3.9% 43.20 43.20 0.00 8.52 269.54 3.3% 49,000 223.581 232.391 8.811 3.9%1 44.10 44.10 0.00 8.81 276.491 3.3% 50,000 229.341 238.441 9.101 4.0% 45.00 45.00 0.001 9.10 283.441 3.3% B-2 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 3/4" x 3/4" METER BASE RATE $ 21.29 r COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 10,000 GALLONS TIER 2= $ 3.19 FOR 10,001 - 24,000 GALLONS TIER 3 = $ 4.40 FOR 24,001- 48,000 GALLONS r - TIER 4 = $ 6.05 FOR ALL USAGE OVER 48,000 GALLONS = Average Water Use GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNT OF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 21.29 21.29 - 0.0% 0.00 0.00 0.00 0.00 21.29 0.0% 7,000 37.18 37.53 0.35 0.9% 6.30 6.30 0.00 0.35 43.83 0.8% 11,000 47.09 47.68 0.59 1.3% 9.90 9.90 0.00 0.59 57.58 1.0% 28,000 104.31 106.75 2.44 2.3% 25.20 25.20 0.00 2.44 131.95 1.9% 50,000 200.43 206.85 6.42 3.2% 45.00 45.00 0.00 6.42 251.85 2.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 3/4" x 3/4" METER BASE RATE $ 21.29 COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE TIER 2= N/A TIER 3= N/A TIER 4= N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 21.29 21.29 - 0.0% 0.00 0.00 0.00 0.00 21.29 0.0% 7,000 37.18 37.53 0.35 0.9% 6.30 6.30 0.00 0.35 43.83 0.8% 11,000 46.26 46.81 0.55 1.2% 9.90 9.90 0.00 0.55 56.71 1.0% 28,000 84.85 86.25 1.40 1.6% 25.20 25.20 0.00 1.40 111,45 1.3% 50,000 134.79 137.29 2.50 1.9% 45.00 45.00 0.00 2.10 182.29 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 1" METER BASE RATE $ 35.48 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 17,000 GALLONS TIER 2 = $ 3.19 FOR 17,001-40,000 GALLONS TIER 3 = ' $ 4.40 FOR 40,001- 80,000 GALLONS TIER 4 = $ 6.05 FOR ALL USAGE OVER 80,000 GALLONS GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 35.48 35.48 - 0.0% 0.00 0.00 0.00 0.00 35.48 0.0% 17,000 74.07 74.92 0.85 1.1% 15.30 15.30 0.00 0.85 90.22 1.0% 27,000 105.07 106.82 1.75 1.7% 24.30 24.30 0.00 1.75 131.12 1.4% 38,000 139.17 141.91 2.74 2.0% 34.20 1. 0.00 2.74 176.11 1.6% 50,000 187.67 1S, 4.62 2.5% 45.00 45.00 0.00 4.62 237.29 2.0% B-3 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 1" METER BASE RATE $ 35.48 r COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A n TIER 4= N/A I1 = Average Water Use GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASE IN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 35.48 35.48 - 0.0% 0.00 0.00 0.00 0.00 35.48 0.0% 15,000 69.53 70.28 0.75 1.1% 13.50 13.50 0.00 0.75 83.78 0.9% 27,000 96.77 98.12 1.35 1.4% 24.30 24.30 0.00 1.35 122.42 1.1% 38,000 121.74 123.64 1.90 1.6% 34.20 34.20 0.00 1.90 157.84 1.2% 50,000 148.98 151.48 2.50 1.7% 45.00 45.00 0.00 2.50 196.48 1.3% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 1.5" METER BASE RATE $ 70.95 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 35,000GALL0NS TIER 2= $ 3.19 FOR 35,001-80,OOOGALLONS -} TIER 3 = $ 4.40 FOR 80,001-160,000 GALLONS TIER 4 = $ 6.05 FOR ALL USAGE OVER 160,000 GALLONS GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASE IN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 70.95 70.95 - 0.0% 0.00 0.00 0.00 0.00 70.95 0.0% 38,000 159.70 161.72 2.02 1.3% 34.20 34.20 0.00 2.02 195.92 1.0% 64,000 240.30 244.66 4.36 1.8% 57.60 57.60 0.00 4.36 302.26 1.5% 90,000 332.20 339.70 7.50 2.3% 81.00 81.00 0.00 7.50 420.70 1.8% 125'000 480.25 493.70 13.45 2.8% 112.50 112.50 0.00 13.45 606.20 2.3% I _J TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 1.5" METER J BASE RATE $ 70.95 COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE j TIER 2 = N/A J TIER 3 = N/A TIER 4 = N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNT OF MONTHLY BILL TOTAL PERCENT INCREASED 0 70.95 70.95 - 0.0% 0.00 0.00 0.00 0.00 70.95 0.0% 30,000 139.05 140.55 1.50 1.1% 27.00 27.00 0.00 1.50 167.55 0.9% 64,000 216.23 219.43 3.20 1.5% 57.60 57.60 0.00 3.20 277.03 1.2% 90,000 275.25 279.75 4.10 1.6% 81.00 81.00 0.00 4.50 360.75 1.3°% 125,000 354.70 360.95 6.25 1.8% 112.50 112.50 0.00 6.25 473.45 1.3% B-4 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON = Average Water Use FOR IRRIGATION CUSTOMERS WITH A 2" METER BASE RATE $ 113.53 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 56,000 GALLONS TIER 2 = $ 3.19 FOR 56,001- 128,000 GALLONS TIER 3 = $ 4.40 FOR 128,001- 256,000 GALLONS 11 TIER 4 = $ 6.05 FOR ALL USAGE OVER 256,000 GALLONS �I F, GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASE IN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 113.53 113.53 - 0.0% 0.00 0.00 0.00 0.00 113.53 0.0% 57,000 243.75 246.64 2.89 1.2% 51.30 51.30 0.00 2.89 297.94 1.0% 130,000 472.31 481.93 9.62 2.0% 117.00 117.00 0.00 9.62 598.93 1.6% 250,000 979.91 1,009.93 3202. 3.1% 225.D0 225.00 0.00 30.02 1,234.93 2.5% 325,000 1,402.73 1,453.78 51.05 3.6% 292.50 292.50 0.00 51.05 1,746.28 3.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 2" METER BASE RATE $ 113.53 COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE TIER 2= N/A TIER 3= N/A TIER 4= N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 113.53 113.53 - 0.0% 0.00 0.00 0.00 0.00 113.53 0.0% 57,000 242.92 245.77 2.85 1.2% 51.30 51.30 0.00 2.85 297.07 1.0% 128,000 404.09 410.49 6.40 1.6% 115.20 115.20 0.00 6.40 525.69 1.2% 250,000 681.03 693.53 12.50 1.S% 225.00 225.00 0.00 12.50 918.53 1.4% 325,000 851.28 867.53 16.25 1.9% 292.50 292.50 0.00 16.25 1,160.03 1.4% 1 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 3" METER BASE RATE $ 227.05 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 112,000 GALLONS 1 TIER 2= $ 3.19 FOR 112,001-256,000 GALLONS TIER 3= $ 4.40 FOR 256,001-512,000 GALLONS TIER 4 = $ 6.05 FOR ALL USAGE OVER 512,000 GALLONS GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 227.05 227.05 - 0.0% 0.00 0.00 0.00 0.00 227.05 0.0% 50,000 340.55 343.05 2.50 0.7% 45.00 45.00 0.00 2.50 388.05 0.6% 150,000 599.09 608.11 9.02 1.5% 135.00 135.00 0.00 9.02 743.11 1.2% 300,000 1,113.81 1,139.55 26.04 2.3% 270.00 270.00 0.00 26.04 1,409.85 1.9% 500,000 1,959.81 2,019.85 60.04 3.1% 450.00 450.00 0.00 60.04 2,46US 2.5% B-5 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 3" METER BASE RATE $ 227.05 COMMODITY RATE: TIER 1 = $ 2.32 FOR ALL WATER USAGE TIER 2= N/A TIER 3 = N/A TIER4= N/A = Average Water Use GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 227.05 227.05 - 0.0% 0.00 0.00 0.00 0.00 227.05 0.0% 50,000 340.55 343.05 2.50 0.7% 45.00 45.00 0.00 2.50 388.05 0.6% 150,000 567.55 575.05 7.50 1.3% 135.00 135.00 0.00 7.50 710.05 1.1% 300,000 908.051 923.05 11.00 1.7% 270.00 270.00 0.00 15.00 1,193.05 1.3% 500,000 1,362.05 1,387.05 25.00 1.8% 450.00 450.06 0.00 25.OD 1,537.05 1.4% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 4" METER BASE RATE $ 354.77 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 175,000 GALLONS TIER 2= $ 3.19 FOR 175,001-400,000 GALLONS 1 TIER 3 = $ 4.40 FOR 400,001- 800,000 GALLONS TIER 4 = $ 6.05 FOR ALL USAGE OVER 800,000 GALLONS GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 354.77 354.77 - 0.0% 0.00 0.00 0.00 0.00 354.77 0.0% 300,000 1,139.52 1,159.52 20.00 1.8% 270.00 270.00 0.00 20.00 1,429.52 1.4% 550,000 2,084.02 2,138.52 54.50 2.6% 495.00 495.00 0.00 54.50 2,633.52 2.1% 700,000 2,718.52 2,798.52 80.00 2.9% 630.00 630.00 0.00 80.00 3,425.52 2.4% 850,000 3,429.52 3,541.02 111.50 3.3% 765.00 765.00 0.00 111.50 4,306.02 2.7% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 4" METER BASE RATE $ 354.77 COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE 1 TIER2= N/A TIER3= N/A TIER4= N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 354.77 354.77 - 0.0% 0.00 0.00 0.00 0.00 354.77 0.0% 300,000 1,035.77 1,050.77 15.00 1.4% 270.00 270.00 0.00 15.00 1,320.77 1.1% 550,000 1,603.27 1,630.77 27.50 1.7% 495.00 495.00 0.00 27.50 2,125.77 1.3% 700,000 1,943.77 1,978.77 35.00 1.8% 630.00 fi30:00 0.00 35.00 2,608.77 1.4% 850,000 2,284.27 2,326.77 42.50 1.9% 765.00 765.00 0.00 42.50 3,091.77 CSC TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 6" METER BASE RATE $ 709.54 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 860,000 GALLONS TIER 2 = $ 3.19 FOR 860,001- 2,000,000 GALLONS TIER 3 = $ 4.40 FOR 2,000,001- 3,500,000 GALLONS TIER 4 = $ 6.05 FOR ALL USAGE OVER 3,500,000 GALLONS =Average Water Use GALLONS USEDIN I MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 709.54 709.54 - 0.0% 0.00 0.00 0.00 0.00 709.54 0.0% 425,000 1,674.29 1,695.54 21.25 1.3% 382.50 382.50 0.00 21.25 2,078.04 1.0% 1,000,000 3,095.74 3,151.34 55.60 1.8% 900.00 900.00 0.00 55.60 4,051.34 1.4% 1,500,000 4,645.74 4,746.34 100.60 2.2°/a 1,350.00 1,350.00 0.00 100.60 6,096.34 1.7% 2,000,000 6,195,74 6,341.34 145.60 2.4% 1,800.00 1,800.00 0.00 145.60 8,141.34 1.8% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 6" METER BASE RATE $ 709.54 COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4= N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 709.54 709.54 - 0.0% 0.00 0.00 0.00 0.00 709.54 0.0% 425,000 1,674.29 1,695.54 21.25 1.3% 382.50 382.50 0.00 21.25 2,078.04 1.0% 1,000,000 2,979.54 3,029.54 50.00 1.7% 900.00 900.00 0.00 50,00 3,929.54 1.3% 1,500,000 4,114.54 4,189.54 75.00 1.8% 1,350.00 1,350.00 0.00 75.00 5,539.54 1.4% 2,000,000 5,249.54 5,349.54 100.00 1.9% 1,800.00 1,800.00 0.00 100.00 7,149.54 1.4% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8" METER BASE RATE $ 1,135.26 COMMODITY RATE: TIER 1= $ 2.32 FOR 0 - 860,000 GALLONS TIER 2 = $ 3.19 FOR 860,001- 2,000,000 GALLONS TIER 3= $ 4.40 FOR 2,000,001- 3,500,000 GALLONS TIER 4 = $ 6.05 FOR ALL USAGE OVER 3,500,000 GALLONS GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 1,135.26 1,135.26 - 0.0% 0.00 0.00 0.00 0.00 1,135.26 0.0% 425,000 2,100.01 2,121.26 21.25 1.0% 382.50 382.50 0.00 21.25 2,503.76 0.9% 1,000,000 3,521.46 3,577.06 55.60 1.6% 90D.00 900.00 0.00 55.60 4,477.06 1.3% 1,500,002 5,071.46 5,172.01 100.60 2.0% 1,350.00 11350.00 0.00 100.60 6,522.06 1.6% 2,000,000 6,621.46 6,767.06 145.60 2.2% 1,800.00 1,800.00 0.00 145.60 8,567.06 1.7% B-7 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL AND MULTIFAMILY CUSTOMERS WITH AS" METER BASE RATE $ 1,135.26 COMMODITY RATE: TIER 1= $ 2.32 FOR ALL WATER USAGE TIER 2 = N/A TIER 3= N/A TIER 4= N/A = Average Water Use GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNT OF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASE IN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 1,135.26 1,135.26 - 0.0% 0.00 0.00 0.00 0.00 1,135.26 0.0% 425,000 2,100.01 2,121.26 21.25 1.0% 382.50 382.50 0.00 21.25 2,503.76 0.9% 1,000,000 3,405.26 3,455.26 50.00 1.5% 900.00 900.00 0.00 50.00 4,355.26 1.2% 1,500,000 4,540.26 4,615.26 75.00 1.7% 1,350.00 1,310.11 0,00 75.00 5,965.26 1.3% 2,000,000 5,675.26 5,775,26 100.00 1.8% 1,800.00 1,800.00 0.00 100.00 7,575.26 1.3% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1.5" METER - RECLAIMED WATER USE BASE RATE $ 70.95 COMMODITY RATE: TIER 1= $ 2.27 FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4= N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASE IN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 70.95 70.95 - 0.0% 0.00 0.00 - - 70.95 0.0% 50,000 182.45 184.45 2.00 1.1% 23.50 23.50 - 2.00 207.95 1.0% 135,000 372.00 377.40 5.40 1.5% 63.45 63.45 - 5.40 440.85 1.2% 200,000 516.95 524.95 8.00 1.5% 94.00 94.00 - 8.00 618.95 1.3% 250,000 628.45 638,45 10.00 1.6% 117.50 117.50 - 10.00 755.95 1.3% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 2" METER - RECLAIMED WATER USE BASE RATE $ 113.53 COMMODITY RATE: TIER 1= $ 2.27 FOR ALL WATER USAGE TIER 2= N/A TIER 3= N/A TIER 4 = N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 113.53 113.53 - 0.0% 0.00 0.00 0.00 - 113.53 0.0% 150,000 405.45 411.45 6.00 1.5% 70.50 70.50 - 6.00 481.95 1.3% 265,000 661.90 672.50 10.60 1.6% 124.55 124.55 - 10.60 79,7.05 1.3% 450,000 1,074.45 1,092.45 18.00 1.7% 211.50 211.50 - 18.00 1,303.95 1.4% 600'000 1,408.95 1,432.95 24.00 1.7% 282.00 282.00 - 24.00 1,714.95 1.4% LII3 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON =Average Water Use FOR CUSTOMERS WITH A 3" METER - RECLAIMED WATER USE BASE RATE $ 227.05 COMMODITY RATE: TIER 1= $ 2.27 FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4= N/A i 1 -1 GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 227.05 227.05 - 0.0% 0.00 0.00 0.00 - 227.05 0.0% 20,000 271.65 272.45 0.80 0.3% 9.40 9.40 - 0.80 281.85 0.3% 50,000 338.55 340.55 2.00 0.6% 23.50 23.50 - 2.00 364.05 0.6% 100,000 450.05 454.05 4.00. 0.9% 47.00 47.00 - 4.00 501.05 0." 150,000 561.55 567.55 6.00 1.1% 70.50 70.50 - 6.00 638.05 0.9% ' TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON _ FOR CUSTOMERS WITH A 4" METER- RECLAIMED WATER USE BASE RATE $ 354.77 COMMODITY RATE: TIER 1= $ 2.27 FOR ALL WATER USAGE TIER 2 = N/A -' TIER 3= N/A TIER 4= N/A J GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASEi TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 354.77 354.77 - 0.0% 0.00 0.00 0.00 - 354.77 0.0% 209,000 820.84 829.20 8.36 1.0% 98.23 98.23 - 8.36 927.43 0.9% 300,000 1,023.77 1,035.77 12.00 1.2% 141.00 141.00 - 12.00 1,176.77 1.0% 450,000 1,358.27 1,376.27 18.00 1.3% 211.50 211.50 - 18.00 1,587.77 1.1% 600,000 1,692.77 1,716.75 24.00 1.4% 282.00 282,00 - 24.00 1,998.77 1.2% J TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON 1 FOR CUSTOMERS WITH A 6" METER -RECLAIMED WATER USE J BASE RATE $ 709.54 COMMODITY RATE: TIER 1= $ 2.27 FOR ALL WATER USAGE 1, TIER 2= N/A JI TIER 3= N/A TIER 4= N/A GALLONS USEDIN 1 MONTH BILLATTHE CURRENT RATE BILLATTHE PROPOSED RATE AMOUNTOF INCREASE Water Rate PERCENT INCREASED Water Rate CURRENT GPF PROPOSED GPF INCREASEIN GPF TOTAL MONTHLY INCREASE TOTAL AMOUNTOF MONTHLY BILL TOTAL PERCENT INCREASED 0 709.54 709.54 - 0.0% 0.00 0.00 0.00 - 709.54 0.0% 470,000 1,757.64 1,776.44 18.80 1.1% 220.90 220.90 - 18.80 1,997.34 1.0% 5,000,000 11,859.54 12,059.54 200.00 1.7% 2,350.00 2,350.00 - 200.00 14,409.54 1.4°% 10,000,000 23,009.54 23,409.54 400.00 1.7% 4,700.00 4,700.00 - 400.00 28,109.54 1.4% 15,000,000 34,159.54 34,759.54 600.00 1.8% 7,050.00 7,050.00 - 600.00 41,809.54 1.5% 20,000,000 1 45,309.541 46,109.54 1 800.00 1 1.8%1 9,400.00 1 9,400.00 11 800.00 1 5% APPENDIX C Service Fees & Charges C-1 Security Deposits—ConstructionMeters SERVICE FEES AND CHARGES Proposed Security Deposits - Construction Meters Purpose: To reduce the Utility's financial loss when a contractor does not pay the balance on their account after the meter has been returned. In addition, the security deposit allows the utility to recover losses associated with lost or damaged equipment. The security desposit is refunded in full when the meter is returned in good condition and the final bill has been paid. Current Proposed Construction Meter Deposits $1,200.00 $2,300.00 Supporting Documentation 3-inch Omni meter FEBCO backflow assembly Adapter Total costs: $1,405.30 805.07 90.29 $2,300.66 C-1 APPENDIX D 5-Year Capital Improvement Schedules D-1 Operating Fund D-1 Groundwater Preservation Fee D-2 Alternative Water Resource Development Impact Fee Fund D-2 Potable Water System Development Impact Fee Fund ORO VALLEY WATER UTILITY I 7 1 1 OPERATING FUND CAPITAL IMPROVEMENTS PROJECTS EXISTING POTABLE SYSTEM IMPROVEMENTS PROJECTS 2016-16 1 2016.17 1 2017-18 1 2018-19 2019-20 5 YearTotal ADMINISTRATION AMI Meter Replacement -Oro Valley $ 1,800,000 $ 1,800,000 SUBTOTAL Hydropneumalic Tank Replacement $ $ 1,800,000 50,000 $ $ 50,000 $ - $ - $ - $ 1,800,000 $ 50,000 $ 50,000 $ 200,000 Replace Well Pumps $ 75,000 $ 75,000 $ 150,000 Well E2 Upgrade $ 100,000 $ 100.000 D 8 Well Replacement $ 700,000 $ 900,000 $ 1.600,000 Water Quality Control Program $ 60,000 $ 60,000 $ 70,000 $ 190,000 Steel Tank Safety Railings $ 80,000 $ 80,000 Big Wash Reservoir Coating $ 100,000 $ 100,000 El Con Storage - Operational Improvements $ 50,000 $ 50,000 Energy Efficiency Booster Upgrades $ 100,000 $ 100,000 Deer Run Booster PRV Installation $ 40,000 $ 40,000 Hydropneumatic (HP) Tank Replacement $ 60.000 $ 60,000 $ 60,000 $ 180,000 High Mesa E and F Zone Bair. Enhancements $ 50,000 $ 50,000 Big Wash Wall Improvement $ 30,000 $ 30,000 Chlorine Bldg Expansion - Control Room $ 80,000 $ 200,000 $ 280.000 Wall Upgrades and Improvements $ 75,000 1 $ 75.000 SCADA server and monitors $ 50,000 $ 50,000 SCADA Legacy Replacement $ 100,000 $ 100.000 Golf Course Metering Stations Modifications $ 50.000 $ 50,000 SUBTOTAL $ 320,000 $ 666,000 $ 1,130,000 --_,.,.I-. $ ..,, 1,360,000 $ 50,000 $ 3,426,000 o -TION Main Valve Replacements $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 250,000 W. Lambert Ln. 12" Main Relocation (DIS) $ 450,000 $ 450,000 Tangerine Potable Main Extension (DIS) RTA $ 80,000 $ 80.000 System Connection Upgrades $ 100,000 $ 100,000 La Cholla -Lambert to Tangerine (RTA) $ 10%000 $ 500,000 $ 600,000 Relocate 3 PRV'S OV Area $ 100,000 $ 100,000 Rancho Verde Hydrants $ 200,000 $ 200,000 El Con. Patio Homes & Castles Main Rapt. $ 10000 $ 1,300,000 $ 1,400,000 El Con Tennis Club - La Canada Main Repl. $ 600,000 $ 600,000 SUBTOTAL $ 780,000 $ 860,000 $ 50,000 $ 160,000 $ 1,960,000 $ 3,780,000 - $ 265,000 $ 70,000 $ 75,000 $ 70,000 $ 659,000 All Divsions $ 179,000 TOTAL ALL PROJECTS $ 3,079,000 $ 1,680,01 $ 1,250,000 $ 1,586,000 $ 2,070,000 1 $ 9,664,000 GROUNDWATER PRESERVATION FEE CAPITAL IMPROVEMENTS PROJECTS RECLAIMED SYSTEM IMPROVEMENTS Project Name 2015-16 2016-17 2017-18 2018-19 2019-20 5 Year Total 24 Inch Reclaimed Main Tangerine (DIS) RTA A. $ 2,100,000 1 $ 2,100,000 Reclaimed Bstr. & Pump Replacements 1 $ 200,0001 $ 200,000 TOTAL c$ 2,100,000 1 $ 200,000 1 $ $ - $ - $ 2,300,000 D-1 ORO VALLEY WATER UTILITY ALTERNATIVE WATER RESOURCES DEVELOPMENT IMPACT FEE FUND CAPITAL IMPROVEMENTS PROJECTS CAP WATER DELIVERY PROJECTS Project Name 2015-16 2016.17 2017-18 2018-19 2019-20 5 Year Total E-C PRV Naranja Reservoir $ 100,000 $ 100,000 CAP Wheeling TW Naranja 1000 AF/Yr $ 400,000 $ 400,000 $ 800,000 CAP La Cholla D-E Blending Booster Station $ 700,000 $ 700,000 TW Naranja Booster Station Upgrade $ 1,200,000 $ 1,200,000 24" pipe Naranja/ La Cholla/Tangerine $ 1,600,000 $ 1,200,000 $ 2,800,000 TW Oasis Booster Station Upgrades $ 30,000 $ 100,000 $ 130,000 TW 12" Pipe $ 80,000 $ 800,000 $ 880,000 TW 16" Pipe Oasis Rd. $ 100,000 $ 1,000,000 $ 1,100,000 TOTAL $ - $ 100,000 $ 400,000 $ 4,110,000 $ 3,100,000 $ 7,710,000 ORO VALLEY WATER UTILITY POTABLE WATER SYSTEM DEVELOPMENT IMPACT FEE FUND CAPITAL IMPROVEMENTS PROJECTS GROWTH RELATED POTABLE WATER PROJECTS Project Name 2015-16 2016-17 1 2017-18 2018-19 2019-20 5 Year Total Property Acquisition -Reservoir Site $ 500,000 $ 500,000 TOTAL $ - $ - $ - $ - $ 500,000 $ 500,000 D-2 APPENDIX E Assumptions for Preferred Financial Scenario E-1 Operating Fund E-5 Alternative Water Resources Development Impact Fee Fund E-6 Potable Water System Development Impact Fee Fund PREFERRED FINANCIAL SCENARIO ASSUMPTIONS FOR OPERATING FUND I Growth n SFR growth rates were provided by the Finance Department on 9/28/15 and are consistent with Town financial forecasting. Other growth rates include commercial, irrigation and multi -family connections. I 1 Connections FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 SFR 200 300 300 250 200 Other 15 13 10 5 5 Current Water Rate Structure 1 The following commodity rates are the cost per 1,000 gallons: I Classifications Tier Tier2 Tier3 Single Family Residential $2.27 $3.10 $4.23 Irrigation $2.27 $3.10 $4.23 Multi -family Residential $2.27 --- --- M Commercial $2.27 --- --- Construction Water $6.76 ---Reclaimed Water $2.23 ---GPF-Potable $0.90 --- --- GPF-Reclaimed $0.47 --- --- --- J Proposed Water Rate Structure for FY 2015-16 The following proposed commodity rates are the cost per 1,000 gallons: Classifications Tier 1 Tier 2 Tier 3 Tier 4 Single Family Residential $2.32 $3.19 $4.40 $6.05 Irrigation $2.32 $3.19 $4.40 $6.05 Multi -family Residential $2.32 --- --- --- Commercial $2.32 -- --- --- Construction Water $7.05 --- --- Reclaimed Water $2.27 --- -- --- GPF-Potable $0.90 --- -- -- GPF-Reclaimed $0.47 --- -- -- There are no proposed changes to the usage allowed in each tier of the SF Residential and Irrigation classifications. There are no changes to any of the base rates for FY 2015-16. Proposed Potable Water Rate Increases The "overall increase" and "monthly impact" are representative of a residential customer with a 5/8 x 3/4 inch water meter using 8,000 gallons of water per month. Base Rate Tier Tier Tier Tier GPF Overall Increase Monthly Impact FY 15-16 N/A 2.0% 3.0% 4.0% 5.0% 0.0% 1.1% $0.44 FY 16-17 2.0% 2.0% 3.0% 4.0% 5.0% 0.0% 1.6% $0.66 FY 17-18 2.0% 3.0% 4.0% 5.0% 6.0% 0.0% 2.2% $0.91 FY 18-19 2.0% 3.0% 4.0% 5.0% 6.0% 0.0% 2.4% $1.00 FY 19-20 2.0% 3.0% 4.0% 5.0% 6.0% 0.0% 2.1% $0.93 E-1 PREFERRED FINANCIAL SCENARIO ASSUMPTIONS FOR OPERATING FUND (continued) I� Proposed Reclaimed Water Rate Increases The proposed reclaimed rate increases are shown below: FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 Base Rate N/A N/A N/A N/A N/A 1 Commodity Rate $2.27 $2.32 $2.39 $2.46 $2.54 Percent Increase 2.0% 2.0% 3.0% 3.0% 3.0% Groundwater Preservation Fee Rates (cost per 1,000 gallons) There are no proposed changes in the GPF throughout the 5-year projection period. jWater Use Trends Projections include similar water use trends as those in FY 14-15. The average monthly water use for a residential customer with a 5/8 x 3/4 inch water meter decreased to 7,300 gallons per month In FY 14-15 from 7,900 gallons in FY 13-14. Other Revenue 7 Other revenue is based on FY 15-16 proposed budget. With the exception of revenue from sewer billing, other revenue is not projected to increase because misc. charges fluctuate annually. Other revenue includes late fees, reconnect fees, new service establishment fees, sewer billing, stormwater billing and meter income. Sewer billing is projected to increase by 3% in FY 2018-19. Beginning Cash Balance Taken from 6/30/15 Balance Sheet of respective funds (MUNIS reports dated 9/14/15) J Interest Income The Interest rate for all 5 years in the analysis period is projected to be 2.0%. Interest rate provided by the 1 Finance Department on 9/28/15. J Personnel Costs One new employee was added in FY 15-16. No other new employees were added during the projection period. The following Increases were provided by the Finance Department on 9/28/15 and are consistent with Town financial forecasting: the annual merit increase is projected to be 3.5% annually and health care costs are 1 projected to increase by 2%annually. It is projected that the state pension will remain constant over the 5-year projection period. O&M Costs Potable J Based on Utility's proposed budget for FY 15-16 and updated with the most recent information. Projected 15% Increase In power costs for a potential Tucson Electric rate increase in FY 17-18. O&M Costs - Reclaimed Based on Utility's proposed budget for FY 15-16 and updated with the most recent information. Projected 15% increase in power costs for a potential Tucson Electric rate increase in FY 17-18. J E-2 I I PREFERRED FINANCIAL SCENARIO ASSUMPTIONS FOR OPERATING FUND (continued) Inflation Rates The following inflation rates were provided by the Town's Finance Department on 9/28/15: FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 1.0% 1.0% Water Resource Management Costs Costs are for the purchase of groundwater extinguishment credits. These credits will be pledged to the Groundwater Allowance Account to help maintain a balance that will facilitate growth in the water service area. Annual costs for FY 15-16 and FY 16-17 have been estimated. The actual volume purchased will depend on the negotiated cost per acre foot. Reclaimed Water Wheeling Costs Pursuant to the existing IGA, the reclaimed water is delivered on a non -interruptible basis at an interruptible rate. The IGA is currently being renegotiated with the same terms; therefore, only inflationary increases are included annually. The rate for FY 15-16 is $274.45/AF plus a monthly base rate. Included in the FY 15-16 costs are funds paid to Tucson Water for the purchase of their effluent when Oro Valley didn't produce enough effluent during the past 4 years. In the future, Oro Valley will have the choice to use long-term storage credits to offset any Town effluent shortages or to repay with cash; an average of $33,600 per year has been included in the reclaimed operating costs for FY 2016-17 through FY 2019-20. CAP Wheeling Costs Costs include the fees charged by Tucson Water to wheel the CAP water through their recharge and recovery system. Tucson Water fees are fixed pursuant to an IGA and are subject to re -negotiation in FY 2016-17. It is assumed that there were be a 15% increase in the power component and a 5% increase In the 0&M component of the wheeling rate. It is also assumed that the Utility will wheel 2,100 AF per year for FY 2015-16 through FY 2018-19. The amount wheeled is projected to increase to 2,600 AF in FY 2019-20. CAP Recharge Costs j Costs are based on the rate schedule adopted by CAP 6/04/15. The figures represent the cost to deliver the Utility's entire allotment of CAP water (10,305 AF) for recharge annually. Capital Improvements —Operating Fund 1 The following table identifies the amount of the capital projects for the existing potable water system for J each fiscal year and the related financing as identified in the revised 5-Year CIP dated 10/07/15: Fiscal Total Prolect Financing Year Capital Costs Cash Existing New Debt Reserves WIFA Loan 2015-16 $ 3,079,000 $1,279,000 $1,800,000 ------ 2016-17 $ 1,680,000 $1,680,000 ----- J 2017-18 $ 1,250,000 $ 70,000 $ 1,180,000 2018-19 $ 1,585,000 $ 275,000 $ 1,310,000 I 2019-20 S 2,070,000 70,000 $ 2,000,000 $ 9,664,000 $3,374,000 $1,800,000 $ 4,490,000 Assumed additional debt incurred in FY 17-18 for existing system improvements. E-3 -1 J I PREFERRED FINANCIAL SCENARIO ASSUMPTIONS FOR OPERATING FUND (continued) Capital Improvements —Groundwater Preservation Fee The following table identifies the amount of the capital projects for the reclaimed water system for each fiscal year and the related financing as identified in the revised 15-Year CIP dated 10/07/15: Fiscal Year Total Capital Costs Prolect Financing Cash New Debt Reserves 2015-16 $2,100,000 $2,100,000 ------ 2016-17 200,000 200,000 ------ 2017-18 ------ --- ----- 2018-19 -- ----- ------ 2019-20 ----- $2,300,000 $2,300,000 Debt Service The following table identifies the debt service included in this proforma: Bonds Type Description Amortization Schedule By 2005 Excise Tax Land—MOC Stone&Youngberg 2007 Excise Tax Refunding (1996 & 1999) Stone & Youngberg 2008 Sr. Lien Reclaimed Ph.2 WIFA 2009 Sr. Lien Existing System CIP WIFA 2012 Sr. Lien Refunding (Reclaim Ph. 1) Stone & Youngberg 2012 Sr. Lien Refunding (2003) Stone &Youngberg 2013 Sr. Lien Refunding (2003) Stifel & Nicolaus & Co. 2014 Sr. Lien AM[ Project WIFA 2015 Excise Tax Refunding (2005) Stifel & Nicolaus & Co. 2017 Sr. Lien Existing System CIP WIFA Minimum Debt Service Coverage Requirement 1.30 debt service coverage ratio for 2012 & 2013 Sr. Lien Bonds & WIFA Loans 1.00 debt service coverage ratio for all Excise Tax Pledged Bonds E-4 i i Growth ll 1 J J PREFERRED FINANCIAL SCENARIO ASSUMPTIONS FOR AWRDIF FUND SFR growth rates were provided by the Finance Department on 9/28/15 and are consistent with Town financial forecasting. Other Service Units (SU's) include commercial, irrigation and multi -family connections. FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 SFR SU's Ji 200 300 1300 250 200 Other SU's 1 50 50 1 50 50 50 AWRD Impact Fees Decreased to $4,045 per EDU, Ordinance No. (0) 14-05, effective 7/01/14 Not projected to change in the 5 year projection period. Beginning Cash Balance Taken from 6/30/15 Balance Sheet of respective funds (MUNIS reports dated 9/14/15). Interest Income The interest rate for all 5 years In the analysis period is projected to be 2.0%. Interest rate was provided by the Finance Department on 9/28/15. CAP Capital Costs Based on 3,557 AF at rate schedule adopted by CAP 6/04/15. Debt Service There is no debt service in this fund during the 5-year projection period. Capital Improvements The following table identifies the amount of the CAP water capital projects for each fiscal year and the related financing as identified in the revised 5-Year CIP dated 10/07/15: Fiscal Total Year Capital Costs 2015-16 2016-17 $ 100,000 2017-18 $ 400,000 2018-19 $4,110,000 2019-20 $3,100,000 $7,710,000 Prolect Financing Cash Reserves New Debt $ 100,000 ----- $ 400,000 ------ $4,110,000 ------ 3 100 000 ----- $7,710,000 E-5 r—• I I �j J J J J i J PREFERRED FINANCIAL SCENARIO ASSUMPTIONS FOR PWSDIF FUND Growth SFR growth rates were provided by the Finance Department on 9/28/15 and are consistent with Town financial forecasting. Other Service Units (SU's) include commercial, irrigation and multi -family connections. FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 SIR SU's 200 300 300 250 200 Other SU's 50 50 50 50 50 PWSD Impact Fees Decreased impact fees to $2,015 per EDU, Ordinance No. (0) 14-05, effective 7/O1/14. Not projected to change in the five year projection period. Beginning Cash Balance Taken from 6/30/15 Balance Sheet of respective funds. (MUNIS reports dated 9/14/15). Interest Income The interest rate for all 5 years in the analysis period is projected to be 2.0%. Interest rate was provided by the Finance Department on 9/28/15. Debt Service The following table identifies the debt service included in this proforma: Bonds Type Description Amortization Schedule By 2012 Sr. Lien Refunding (2003) Stone & Youngberg Debt Service Coverage 1.30 debt service coverage ratio for 2012 Sr. Lien Bonds Capital Improvements The following table identifies the amount of the growth related capital projects for the potable water system for each fiscal year and the related financing as identified in the revised 5-Year CIP dated 10/07/15: Fiscal Total Project Financing Year Capital Costs Cash Reserves New Debt 2015-16 ----- ---- ------ 2016-17 -- ------ ---- 2017-18 ---- ----- ----- 2018-19 ---- ------ ----- 2019-20 500,000 $500.000 ----- $ 500,000 $ 500,000 E-6