Administration - Alison Bong, Deputy Finance Director; Nick Fleischhacker, Deputy Public Works Director
Title
Title
Adopt 2023 Water Fund Budget and 2023-2027 Capital Improvement Program (CIP)
end
Executive Summary
Staff recommends that council adopt the proposed Water Fund 2023 Capital Budget and 2023-2027 Capital Improvement Program (CIP). Finance and Public Works presented the 2023-2027 Water CIP and the 2023 Water Budget at a workshop on November 14. The council had an opportunity to ask questions and discuss different projects within the budget.
Background
Council reviewed the proposed 2023 Water Budget and 2023-2027 CIP at the November 14, 2022, workshop. Council gave guidance to proceed with the staff proposed rightsized water rates for 2023.
Rates
Water rates presented are quarterly residential; commercial rates are the same as the residential rates.
|
Quarterly Residential |
2022 |
2023 Rightsized |
|
Flat Fee |
5.50 |
7.70 |
|
0-24,000 |
1.61 |
2.25 |
|
24,001-75-000 |
2.03 |
2.84 |
|
75,001-150,000 |
2.08 |
2.91 |
|
150,000+ |
2.80 |
3.92 |
|
State Test Fee |
2.43 |
2.43 |
Fund Background
Blaine’s municipal water system provides users with clean, treated, potable water. The system serves nearly 21,000 accounts, 95% of which are residential. Overall, Blaine provides water to more than 96% of city residents. The system has a daily pumping capacity of 18.5 million gallons, with average daily usage of 6.4 million gallons.
The city’s water operation functions as a division of the city’s Public Works Department, with 10 full-time equivalents (FTE) staff budgeted in the division. An additional FTE position, a Water Treatment Plant Foreman, is proposed to be added in 2023.
Revenues
Water service fees generate 92-95 percent of total operating revenue. Other revenue sources include penalties, permits, meter sales, and interest; water access charges (WAC) provide a revenue source for capital projects and improvements.
Water rates were adjusted in 2022 by splitting the third consumption tier, creating four tiers. Gradual increases were applied at each tier: 15 cents per thousand gallons on the first tier, 20 cents on the second, 25 cents on the third, and 30 cents on the fourth.
Total revenues budgeted for 2023 using the staff proposed rightsized rates are $9 million, plus a debt issuance to fund capital expenses of $4.6 million. If council decides to allocate ARP funding towards water capital projects, the debt issuance will be reduced.
Expenses
Budgeted operating expenses (not including depreciation) are proposed to increase by $1,105,742 (20.3%) from the 2022 budget.
• Personal services - increasing $204,292 (17.8%)
o Addition of a Water Treatment Plant Foreman
o 3% general wage increase and contractual increases
• Supplies - increasing $527,500 (122.2%)
o Treatment chemicals - inventory rightsizing, significant inflationary cost (30% current spot pricing), vendor desires monthly or quarterly contracts rather than annual
o Small tools - high inflationary cost (15-40% depending on the tool)
• Contractual services - increasing $321,200 (27.8%)
o Electric costs - Water Treatment Plant 4 is fully operational
o Maintenance agreements - Treatment plants and hydrants
• Other category - increasing $52,750 (5.4%)
o Administrative chargebacks
o Building Maintenance internal service fund
Capital Improvement Plan
The 2023-2027 five-year plan includes $21.5 million in capital improvements, with an additional $31.7 million beyond 2027, which is attached in detail. The 2023 proposed capital budget includes $4.6 million in improvements. A summary of the plan by category can be found below.
|
Project Category |
2023 Budget |
2024-27 |
Beyond 2027 |
Total |
|
Capital Equipment* |
$476,500 |
$147,000 |
$30,000 |
$653,500 |
|
Treatment Plant Reconstruction |
$0 |
$1,400,000 |
$30,000,000 |
$31,400,000 |
|
Water Main Construction |
$1,000,000 |
$5,400,000 |
$1,200,000 |
$7,600,000 |
|
Water Tower Maint/Replacements |
$0 |
$3,985,000 |
$0 |
$3,985,000 |
|
Water Trmt Plant Maint/Replacements |
$2,995,000 |
$1,180,000 |
$0 |
$4,175,000 |
|
Well Construction |
$0 |
$0 |
$400,000 |
$400,000 |
|
Well Maintenance/Replacements |
$30,000 |
$350,000 |
$100,000 |
$480,000 |
|
Well Upgrades |
$55,000 |
$660,000 |
$0 |
$715,000 |
|
Wellhouse Construction |
$0 |
$3,785,000 |
$0 |
$3,785,000 |
|
Grand Total |
$4,556,500 |
$16,907,000 |
$31,730,000 |
$53,193,500 |
* Capital equipment from 2024 and on has not been fully accounted for in this plan; a long-range capital equipment plan will be created during the 2024 budget cycle
5-Year Projections
Staff continues to work with Baker Tilly, and a finalized rate model with 5-year projections will be presented to the council at a workshop in the second quarter of 2023. Significant progress has been made to date that has greatly improved the city’s current rate model. Finance, Public Works, and Engineering staff have collaborated in-depth to produce a preliminary long-range capital plan.
Strategic Plan Relationship
Adoption of annual budgets contributes to the overall financial stability of the City.
Board/Commission Review
N/A
Financial Impact
The proposed budget, if adopted, would fully fund water operations and capital needs for 2023 as well as help to stabilize the fund’s reserves.
Public Outreach/Input
N/A
Staff Recommendation
Approve the 2023 Water Utility Fund Budget and 2023-2027 Capital Improvement Plan through the adoption of the following resolution.
Attachment List
Water Utility Fund Budget Summary
Water Utility Fund CIP
Body
WHEREAS, the proposed Water Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan for the fiscal year commencing January 1, 2023 has been prepared by the City Manager; and
WHEREAS, the City Council has examined, studied, and reviewed said proposed Water Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan; and
WHEREAS, the City Council has, after due consideration and deliberation, made such amendments and adjustments in the proposed Water Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan 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 Water Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan attached hereto are approved; and
2. That the 2023 appropriations attached hereto are approved; and
3. That the 2023 funding sources and fee adjustments identified and attached hereto and reflected in the City’s fee schedule are approved.
4. That the City’s 5-Year Capital Improvement Plan be updated to reflect the approval of projects included in the proposed 2023-2027 Capital Improvement Plan; and
5. 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 Water Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan.
PASSED by the City Council of the City of Blaine this 5th day of December 2022.