ADMINISTRATION - Joe Huss, Finance Director
Title
ADOPT THE 2016 WATER AND SEWER UTILITY ENTERPRISE FUND BUDGETS
Background
Council has reviewed the 2016 proposed budgets for the Water and Sanitary Sewer Funds and per the following summaries, has given conceptual approval to the 2016 Budgets:
• Water Utility Fund
o Operations - The fund is expected to generate positive net operating income of roughly $450,000 for 2015. With a healthy fund reserve and positive operating results expected over the next two to three years, a recommendation for a rate adjustment is unlikely to be considered until the 2017-18 budget cycle.
§ Revenues
• Revenue from water sales is about 1% below the 2015 budget and closely aligns with 2015 actual revenues and what would be expected in a typical year with typical rainfall and water usage.
• Other operating revenues are projected to increase $78,000 and reflect a continuation of trends over the last three years.
§ Expenditures
• Operating expenditures, not including depreciation, are budgeted to increase by $44,000 (1.6%) in 2016.
o Capital Activity
§ Major capital activity includes:
• $1.8 million for the next phase of construction of four new wells (18-21).
• $550,000 for a trunk main connection to Tower #4
• $625,000 for Tower #1 rehabilitation work
• $300,000 for filter media at Treatment Plants 1 & 2
• $250,000 for AMR radio replacement program
§ The Water Access Charge (WAC) will increase from $1,663 to $1,696 for residential property and from $4,200 per acre to $4,284 per acre pursuant to the fund’s 20-year capital improvement plan.
o 5-year Outlook - Stable operations, with no immediate need for a rate increase in the near term. For capital improvements, $5 million for a new treatment plant in 2017, and $1 million for continued AMR radio upgrades.
• Sewer Utility Fund
o Operations - The operation is expected to end 2015 with an operating loss of nearly $350,000. A similar operating loss of is expected again in 2016 as MCES charges increase $263,000 (8.4%) and a rate increase of $1/month is implemented for 2016. The current 5-year outlook indicates an annual increase of $1/month over the next four years.
o Capital Activity
§ About $3.2 million is budgeted for 2016, as the fund’s slip lining project is expected to continue through 2017.
o 5-year Outlook - With the implementation of the proposed fee increase, the Sewer utility Fund’s outlook begins to stabilize in 2017 as operating losses are reduced. For capital improvements, in addition to the $2 million of slip-lining, $816,000 is projected for trunk extensions in 2017 and $400,000 for lift station improvements is projected through 2020.
Schedule of Actions
10/15/2015 - Workshop Review
11/05/2015 - Council Adoption
Recommendation
By motion, adopt the following resolution approving the 2016 Water and Sanitary Sewer Utilities Funds budgets.
Body
WHEREAS, the proposed Utility Enterprise Funds Budgets for the fiscal year commencing January 1, 2016 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 2016 appropriations attached hereto are approved.
3. That the 2016 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 5th day of November, 2015.