ADMINISTRATION - Joe Huss, Finance Director
Title
ADOPT THE 2020 WATER AND SEWER UTILITY ENTERPRISE FUND BUDGETS
Background
Council has reviewed the 2020 proposed budgets for the Water and Sanitary Sewer Funds at a previous Workshop and per the following summaries, has directed staff to bring forth the budgets as presented for formal adoption.
• Water Utility Fund
o Operations - The fund is expected to generate positive net operating income of roughly $90,000 for 2019. With the completion of extensive capital and infrastructure improvements over the next three years, including the construction of a water treatment plant, operating expenses are expected to increase significantly. Hence, staff is recommending to continue the implementation of water fee increases that Council first approved in 2018.
§ Revenues
• For 2020, budgeted revenue from water sales is 1.8% above budgeted 2019 revenue and aligns with what would be expected in a typical year with typical rainfall and water usage.
• Other operating revenues are expected to remain flat over the next five years.
§ Expenditures
• Operating expenditures are projected to increase 7% in 2020 and 17% in 2021 when the new water treatment plant is in full operation. Projections for 2022 through 2025 indicate expected increases in the 4% range.
o Capital Activity
§ Major capital activity includes:
• $16 million for the construction of a new water treatment plant
• $1million in well houses rehabilitation
• $300,000 for water tower improvements
• $900,000 in SCADA system updates
§ The Water Access Charge (WAC) will increase from $1,800 to $1,836 for residential property and from $4,546 per acre to $4,637 per acre for commercial property pursuant to the fund’s 20-year capital improvement plan.
o 5-year Outlook - Stable operations, with annual rate increases of 10¢ per 1,000 gallons over the next five years. Capital improvements totaling $8.6 million are anticipated for 2021-2024.
• Sewer Utility Fund
o Operations - The operation is expected to end 2019 with an operating loss of $126,000. An operating loss of $55,000 is anticipated for 2020 as MCES charges will increase 4% in 2020 and a rate increase of $1/month is implemented for 2020. The current 5-year outlook indicates an annual increase of $1/month over the next three years.
o Capital Activity
§ About $2 million is budgeted for 2020, with $1 million in lift station upgrades planned and $400,000 set aside for slip lining. Additional capital includes a $150,000 appropriation for slip-lining and $370,000 in capital equipment.
o 5-year Outlook - With the implementation of the proposed fee increase, the Sewer utility Fund’s outlook begins to stabilize in 2020 as operating losses are reduced. For capital improvements, an additional $3 million in lift station upgrades is planned over the succeeding four years and continuation of the slip-lining program in those same years totaling $2.2 million is planned.
Recommendation
By motion, adopt the following resolution approving the 2020 Water and Sanitary Sewer Utilities Funds budgets.
Body
WHEREAS, the proposed Utility Enterprise Funds Budgets for the fiscal year commencing January 1, 2020 have been prepared by the City Manager; and
WHEREAS, the City Council has examined, studied, and reviewed said proposed Utility Enterprise Funds Budgets; and
WHEREAS, the City Council has, after due consideration and deliberation, made such amendments and adjustments in the proposed Utility Enterprise Funds Budgets as they consider necessary, desirable, or expedient.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Blaine as follows:
1. That the proposed Budgets for the Water and Sewer Utility Funds attached hereto are approved.
2. That the 2020 appropriations attached hereto are approved.
3. That the 2020 funding sources and fee adjustments identified and attached hereto are approved.
4. That the City Manager is authorized and directed to implement and to administer, within the budgetary funding limits and within adopted City policy and relevant State and City laws and regulations, said approved Utility Enterprise Fund Budgets.
PASSED by the City Council of the City of Blaine this 2nd day of December, 2019.