HomeMy WebLinkAboutMinutes - Water Finance Subcommittee - 12/17/2019 (2) MINUTES
ORO VALLEY WATER UTILITY COMMISSION
FINANCE SUBCOMMITTEE
REGULAR SESSION
DECEMBER 17,2019
WATER UTILITY CONFERENCE ROOM
11000 N.LA CANADA DRIVE
REGULAR SESSION AT OR AFTER 10:00 AM
CALL TO ORDER
Chair Tustison called the meeting to order at 10:05 a.m.
ROLL CALL
Present: Winston Tustison,Chair
Chuck Holligsworth,Member
Robert Milkey,Member
Staff Present: Peter A.Abraham,P.E.,Water Utility Director
Kevin Artz,Interim Finance Director
Shirley Kiel,Utility Administrator
Mary Rallis,CPA,Utility Administrator
CALL TO AUDIENCE-No speakers.
REGULAR SESSION AGENDA
1. REVIEW AND APPROVAL OF THE DECEMBER 3,2019 REGULAR SESSION MEETING MINUTES
Motion by Member Robert Milkey,seconded by Member Chuck Holligsworth to approve the December 3,
2019 minutes as written.
Vote:3-0 Carried
2. DISCUSSION REGARDING THE 2020 WATER RATES ANALYSIS
Ms.Kiel explained the reduction in operating costs due to the new reclaimed cost allocation results in the
need for the reclaimed commodity rate to be reduced in order to lessen the subsidy of the potable
customers by the reclaimed customers.Ms.Kiel reviewed the reclaimed commodity rate reductions in each
scenario.
Ms.Kiel discussed allocating a portion of the debt service for the Northwest Recharge,Recovery and
Delivery System(NWRRDS)project since this will be the reclaimed customers'reliability source in the
event of a reclaimed outage.
Ms.Kiel presented the assumptions in new Scenario W,including:
-Revised timing and amount of debt financed to include only projects that benefit both reclaimed and
potable customers.Other projects are to be cash funded.
-Debt to be repaid by both potable and reclaimed water sales
-NWRRDS and reclaimed debt will continue to be repaid with GPF funds
-Reduction in GPF rate in Years 1,2 and 4
-Reclaimed subsidy is a cumulative$16K by the end of the 5-year period
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12/17/19 Minutes,Water Utility Commission Finance Subcommittee
Ms.Kiel reviewed the reclaimed subsidy details:
-Operations with revenue and expenses at a reduced commodity rate
-Debt service on potable projects benefit reclaimed customers to ensure system reliability
-Projected surplus in Year 1 drops to reclaimed operating costs being subsidized by the potable customers
in Year 4
-Two proposed commodity rate reductions that can be adjusted as needed
-GPF Debt Service includes reclaimed GPF at a reduced rate,debt service on NWRRDS and reclaimed
debt service being subsidized by potable customers
-Need to balance the subsidy between operations and GPF
-Results in a reclaimed subsidy to potable customers with a cumulative$16K over the 5-year period
-This scenario meets the cash reserve requirement
Discussion ensued amongst staff and the Subcommittee members regarding:
-Financial impact to golf course customers
-Upcoming Cost of Service Study later this year
-Purchase of Groundwater Extinguishment Credits were eliminated from the financial scenario due to
volatility in the market
Ms.Kiel discussed the Financial pro forma:
-The cash balance is strong
-The GPF cash is solid
-Combining impact fee funds into one fund and no borrowing for growth related projects
-We combine the Operating Fund,the GPF and the impact fee fund to illustrate we meet the debt service
coverage requirements.
The Subcommittee members reached concensus that Scenario W should be recommended as the
preferred scenario.
Ms.Kiel will provide an update to the Water Utility Commission at the January meeting.A recommendation
on water rates will be requested in February.
FUTURE AGENDA ITEMS-No items discussed.
ADJOURNMENT
Motion by Member Robert Milkey,seconded by Member Chuck Holligsworth to adjourn the meeting at
10:57 p.m.
Vote:3-0 Carried
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the
Town of Oro Valley Water Finance Subcommittee of Oro Valley,Arizona held on the 17th day of December,2019.I
further certify that the meeting was duly called and held and that a quorum was present.
Dated this 17th day of December,2019.
—tj-ILY'‘J,' -3-kiL. --(ClAilU.
Danielle Tanner A/
Senior Office Specialist
12/17/19 Minutes,Water Utility Commission Finance Subcommittee 2