20071126 Municipal and Financial Services Group Westminster Water and Wastewater Rate and Fee Study presentation

Municipal and Financial Services Group Westminster Water and Wastewater Rate and Fee Study presentation

November 26, 2007 - Municipal and Financial Services Group Westminster Water and Wastewater Rate and Fee Study presentation

Presentation to the Westminster mayor and common council on November 26, 2007 by Edward J. Donahue III, CMC

http://www.youtube.com/watch?v=y2pX2lmraZI

City of Westminster

Water and Wastewater Rate and Fee Study

Agenda

Project Team

Project Understanding and Approach

Policy Issues

Firm Profile

Specialized Financial and Management Consulting Practice
Focus on Municipal and Environmental Infrastructure
Efficient Delivery of Public Sector Services
National Practice Since 1976
Part of National CPA/Engineering Firms for 25 Years
Maryland-Based
Established as an Independent, Women-Owned Firm in 2002
Previous Clients Range from Very Large (Boston, New York, Washington, DC, Chicago, San Francisco) to Very Small (Marydel, Queen Anne’s County, Bramble Hills, North Slope Borough)
Clients Serve 45% of Nation’s Population

Project Team Synergy
Complementary Blend of Functional Skills
Broad Industry Experience
Seamless Service Delivery for Clients

Project Organization
Project Team Skills
Agenda

Project Team

Project Understanding and Approach

Policy Issues

Project Fundamentals

OBJECTIVES
Long-Term Financial Security and Stability
Lowest Rates Over Time (Optimal Management of Assets)
Equitable Rate Design
Rational and Defensible Basis for all Rates and Fees

Custom Tailored Financial Model
Model tied to official documents
Operating Budgets
Capital Improvement Plan

Can produce cost of service on multiple bases
Cash
Utility
Hybrid(s)

Easy/quick updates and iterations

Inexpensive feasibility studies for revenue bond issues

Project Work Plan/Schedule/Deliverables
Agenda
Preliminary Policy Issues

Lowest Lifecycle Cost

Paying for Growth

Existence / Adequacy of Reserves

Rate Design

Policy Issue: Lifecycle Cost

Assumption – City wants lowest total capital and operating costs for its utilities over their useful lives

Requirement: Adequate funding of maintenance to make facilities last as long as practicable – use of Asset Management approach to maintenance

Impact: Possibility of slightly higher rates now to assure lower rates in the long run

Policy Issue: Paying for Growth

Assumption - City does not want rates for existing customers to be impacted by growth

Requirement - Segregation of capital costs into growth / non-growth categories, then determination of capital cost recovery fees based on growth-related capital costs

Impact - Possible adjustment of capacity fees / connection fees; increase in user fees if growth does not occur as planned

Policy Issue: Financial Reserves
Purposes for Reserves
Insurance against unexpected events
Reduce borrowings
Smooth out rate increases
Designation of formal restriction on fund balance

Operating Reserve
Typically 90 days of operating cash (PSC provision for investor-owned utilities)

Repair / Renewal / Rehabilitation Reserve
Regular contribution towards cost of renewing long-lived assets
Annual contribution on formulaic basis

Policies on spending approvals

Policy Issue: Rate Design
Rate Structure
Fixed vs. Variable
Discounts for selected customer classes

Drought Rates

Inside-City / Outside-City Differential

Fund Balance

Transfers to / from General Fund
Reimbursement for services provided
Payment in Lieu of Taxes

Frequency of Rate Adjustments

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Water and Sewer Westminster, Westminster Council Meeting Agenda, Westminster Dept Public Works, Westminster Dept Public Works Water and Sewer, Water and Sewer Westminster Rates and Fees

20071126 Municipal and Financial Services Group Westminster Water and Wastewater Rate and Fee Study presentation