Call Meeting to Invocation - cityofec.com81CF1C17-216A-4959-BE57... · April 27, 2020 Pre-Budget Presentation May 4, 2020 General Fund Discussion. Meeting Date Action May 18, 2020

•Call Meeting to

Order

• Invocation

•Pledge of Allegiance

•Agenda Approval

• Statement of

Disclosure

Meeting Date Action

February 21, 2020 City Council Retreat / Pre-Budget Work session

April 9, 2020 Budget Delivered to City Council

April 27, 2020 Pre-Budget Presentation

May 4, 2020 General Fund Discussion

Meeting Date Action

May 18, 2020 Enterprise Fund Discussion

May 26, 2020 Wrap-up Budget Discussion/Call for aPublic Hearing on Budget

June 8, 2020 Hold a Public Hearing

June 22, 2020 Adopt Final Budget

RESPONSES TO GENERAL FUND BUDGET

QUESTIONS

General Fund Expenditures by

Year

ACTUALFY 2017

ACTUALFY 2018

ACTUALFY 2019

APPROVEDFY 2020

RECOMMENDEDFY 2021

GeneralFund

19,273,783 21,014,618 20,035,987 22,640,317 22,234,697

CASH BALANCE REPORT

FUNDAs of

July 1, 2019As of

June 30, 2020Difference

General Fund $5,791,231 $4,249,560 ($1,541,671)

Electric Fund $5,404,706 $3,500,000 ($1,904,706)

Water & Sewer Fund $4,400,774 $3,200,000 ($1,200,774)

Storm Water Utility Fund

$1,183,922 $1,525,000 $341,078

Solid Waste Fund $608,279 $575,000 ($33,279)

Changes to the General Fund

Fund OriginalAmount

New Amount

Net Effecton Budget

Description

Misc. ($21,516) Previously Provided by Staff

Parks & Rec $67,826 $51,501 ($3,265) Diff. Mower (IP)

Community Dev. $100,000 -0- ($100,000) Remove Comp. Plan

Non-Departmental $123,750 -0- ($123,750) Remove Employee Clinic

Police $80,000 $190,245 (16,585) Add’l Cameras (IP)

Multiple $112,000 Debt Service

Total ($153,116)

Stormwater Utility

Overview

Storm Water Fund

• Amount of Outstanding Debt$619,664

• Debt Payment FY 2020-21 $150,642

• Total Decrease in Payment$0

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

19/20 20/21 21/22 22/23 23/24 24/25

STORMWATER FUND DEBT

PAYMENTS PRINCIPAL BALANCE

Revenue

Residential Revenue $220,000

Commercial Revenue 363,000

Interest Earned 7,000

Total Revenue $590,000

Expenses

Salaries & Wages $ 33,780

Capital 315,000

Operating Expenses 58,169

Debt Payment Roanoke Drainage Ph III 150,642

Future Projects* 32,409

Total $590,000

* To fund projects brought forward by SWAB

• Providence Road Bridge – $200,000

• Street Sweeper - $265,000

Service Level Highlights

Street Sweeper$265,000

Solid Waste

Overview

Solid Waste Fund

• Amount of Outstanding Debt$577,747

• Debt Payment FY 2020-21 $167,580

• Total Decrease in Payment ($60,536)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

19/20 20/21 21/22 22/23 23/24 24/25

SOLID WASTE FUND DEBT


Revenue

• Estimated Revenue $1,748,610

– Solid Waste Disposal – $15,000

– Tipping Fee – $42,000

– Residential Sanitation Fee – $1,630,000

– Downtown Sanitation Fee – $35,000

– Fund Balance Appropriated - $26,610

ExpendituresFY 2020Budget

FY 2021Proposed

Personnel Services Expenditures $1,083,555 $1,094,380

Operating Expenditures $435,652 $486,650

Capital Expenditures $150,000 -0-

Debt Expenditures $197,216 $167,580

Sanitation Fund Totals $1,866,453 $1,748,610

No. of Budgeted Positions 18FT 18FT

Service Level Summary

Fund Highlights

• $14,000 budgeted for mosquito control

• Retiree Health Insurance is $86,750

• Special Purchase for resale is $25,000

• Recycling Fees $115,000

$14,000

budgeted for

mosquito

control

Retiree Group

Insurance – $86,750

Special Purchase for

Resale (Poly Carts) –

$25,000

$115,000 budgeted

for recycling fees

Fund Highlights

• $167,580 budgeted for debt service payments

Electric Fund

Overview

$23,201,744

$24,500,361 $24,415,077 $24,024,149

$18,422,714

$15,000,000

$16,000,000

$17,000,000

$18,000,000

$19,000,000

$20,000,000

$21,000,000

$22,000,000

$23,000,000

$24,000,000

$25,000,000

JULY 2015 TOJUNE 2016




JULY 2019 TODATE

FISCAL YEAR WHOLESALE COST

DOLLARS

*Includes Meter Readers

307,914,260 320,486,856

332,465,396 328,157,099

242,292,334

200,000,000

220,000,000

240,000,000

260,000,000

280,000,000

300,000,000

320,000,000

340,000,000





JULY 2019 TODATE

FISCAL YEAR WHOLESALE KWH

KWH

FR-5 Rate• Demand Charges

23.35 kW

• Energy Cost

.02319/kWh

Wholesale Power Cost

$21.00

$21.50

$22.00

$22.50

$23.00

$23.50

2018 2019 2020 2021 2022 2023

Demand Charge

$0.02100

$0.02200

$0.02300

$0.02400

$0.02500

$0.02600

$0.02700

2018 2019 2020 2021 2022 2023

KWH Charge

Electric Fund

• Amount of Outstanding Debt$2,961,361

• Debt Payment FY 2020-21 $888,490

• Total Increase in Payment$95,367

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

19/20 20/21 21/22 22/23 23/24 24/25

ELECTRIC FUND DEBT


Revenue

Category Amount

Energy Sales $32,200,000

Late Fees $450,000

Interest Earned on Investments $30,000

Retained Earnings Appropriated $192,981

Other Financing Source -0-

Payment from Water & Sewer Fund $20,000

Development Fees $100,000

Budgeted Expenses

Category Amount

Non-Departmental $27,207,845

Customer Service 479,695

Electrical Distribution 3,937,525

Load Management 1,167,270

Data Processing 131,601

Purchasing 222,795

Total Operating Costs $33,146,731

Electric Enterprise

Operation

• Purchase of Power $24,300,000

– Anticipated Sales – 319,395,685 kW

• Total Revenue $33,146,731

• Amount of money available to operate the department $8,846,731


FY 2021Proposed

Personnel Services Expenditures

$60,306 $71,302



Data Processing Fund Totals $112,934 $131,342

Number of Budgeted Positions 2FT 2 FT

Data Processing

Purchasing/Warehousing


FY 2021Proposed


$169,743 $173,820


Capital Expenditures $17,500 $1,500

Purchasing Fund Totals $233,790 $222,795

Number of Budgeted Positions

3FT 3FT

Non-Departmental


FY 2021Proposed

Personnel Services Expenditures $150,750 $133,750

Operating Expenditures $26,654,250 $27,074,095

Capital Expenditures -0- -0-

Electric Non-Departmental Fund Totals

$27,598,125 $27,207,845

Number of Budgeted Positions -0- -0-

Non-Departmental


FY 2021Proposed

Economic Development $53,000 $53,000

Payment to GF for Taxes $925,000 $925,000

Payment to GF for Services $600,000 $600,000

• Group Insurance-Retirees . . . . . . $100,000

• Purchase for Resale . . . . . . . . . . $24,300,000

• Payment to General Fund . . . . . . . $600,000

– In Lieu of Services

• Payment to General Fund . . . . . . . $925,000

– In Lieu of Taxes

Highlights Service Level


•ElectriCities – Dues . . . . . . . . . . . . $ 30,000

•Energy Fund . . . . . . . . . . . . . . . . $ 10,000


• Debt Service – 2nd Delivery Point . . $343,124

• Debt Service – Nexgrid . . . . . . . . . $554,190

Customer Service


FY 2021Proposed



Capital Expenditures -0- $5,000

Electric Customer Service Fund Totals $422,143 $479,695

Number of Budgeted Positions 5.5FT/3PT 5.5FT/3PT

ELECTRIC DISTRIBUTION SERVICE LEVEL

Electric Fund

Electric Distribution

*Includes Public Utilities Director and GIS Technician funded from General, Electric, Storm Water and Water/Sewer funds


FY 2021Proposed

Personnel Services Expenditures $1,551,828 $1,608,025

Operating Expenditures $1,283,575 $1,219,500

Capital Expenditures $3,625,000 $1,110,000

Electric Distribution Fund Totals $6,460,403 $3,937,525

Number of Budgeted Positions 19.25FT* 19.25FT*

• Maintenance & Repair-Lines $325,000– Pole replacement, switches, transformer services,

primary and related distribution expenses

• Line Improvements $235,000– New construction, commercial parks, substation

work, line extensions


• Tanglewood Pavilion Street Lights - Phase I $ 375,000Hughes Blvd to Thunder Road

• Mariner’s Landing $ 100,000

• Stockbridge 2A $ 250,000

• Switch Replacement $ 150,000


LOAD MANAGEMENT DIVISIONElectric Fund

Last Year This Year

$4,032,041 $3,232,079**

** Year-to-date

Net Savings

Load Management


FY 2021Proposed




Electric Distribution Fund Totals $984,903 $1,167,270

Number of Budgeted Positions 10FT 10FT*

• Maintenance & Repair-Generators - $181,000

– Testing, oil changes, filters, repairs, rebuilding

generator #2, 26 Generators


• Heat Pump Rebate $1,600

• Attic Insulation Rebate $1,000

• Peak Generator Fuel $80,000

• Load Management Fuel $50,000

• Weatherization Program -0-


Water and Sewer

Fund

City of Elizabeth City

2020 Water and Wastewater Rate Study Analysis

May 18, 202058

59

Raftelis is a Registered Municipal Advisor within the meaning as defined in Section 15B (e) of the Securities Exchange Act of 1934

and the rules and regulations promulgated thereunder (Municipal Advisor Rule).

However, except in circumstances where Raftelis expressly agrees otherwise in writing, Raftelis is not acting as a Municipal Advisor, and the opinions or views contained herein are not intended

to be, and do not constitute “advice” within the meaning of the Municipal Advisor Rule.

60

61

Keith Readling, PE– Executive Vice

President at Raftelis

– 35 years of experience

– Co-Author of Water and Wastewater Finance and Pricing: The Changing Landscape

62

Agenda• Study purpose and background• Major issues facing the utility• Future debt assumptions• Revenue sufficiency under current rates• Project annual rate adjustments• Revenue sufficiency under proposed rates• Customer impacts and peer community comparison• Conclusions• Questions

63

Study Purpose● Primary Objective – Develop Sustainable Rate and Financial Plan

● Evaluate the Sufficiency of Revenues – Ten Year Financial Forecast

– Based On FY 2019/2020 Budget and Actual Operating Results

– Reflects Current Proposed Capital Improvement Plan

● Develop Capital Funding Plan

● Identify Available Cash / Funding Resources

● Recommended Adjustments to Monthly User Rates to:

– Fund Cost of Operations and Capital Funding Requirements

– Support the Issuance of Future Additional Debt

– Maintain Adequate Working Capital Requirements – Limit Financial Risks

– Ensure the System Complies with all Rate Covenant Requirements

64

Revenue RequirementsEvaluated Revenue Requirements – Based on Following Formula:

+ Operating Expenses

+ Debt Service Payments

+ Capital Funded from Operations

+ Deposits to Working Capital / Debt Compliance *

– Other Operating Revenues and Income

– Use of Working Capital (Fund Balance)

= Net Revenue Requirements Funded From Rates

* Includes:

Maintain Operating Fund Balances

Maintain Rate Covenant Compliance

65

Major Issues Facing Utility● Continued Inflation on Cost of Operations

– Ongoing Inflation – Over 2.5% per Year

– Increasing Demand for Goods and Services – Higher Construction / Contract Service and Maintenance Costs

– Increased Labor, Purchased Power, Chemical and Other Cost Increases

– Average Annual Operating Expense Increase = 2.7%

● System Growth

– New Customer Growth Not anticipated to Increase Enough to Offset Inflation Cost Increases On Operations and Maintenance Expenses

66

Major Issues Facing Utility● Increasing Need for Replacement of Aging Assets

– Significant Capital Investment in water and sewer infrastructure required to provide reliable utility service

– Levelized Capital investment plan

• Limits Future Debt for Capital Financing

• Promotes Flexibility in Funding and Long-Term Rate Sustainability

● Forecast Recognizes Recommended Increases to Pay-As-You-Go Capital Funding (Capital Funding From Rate Revenues)

– Annual Water and Sewer Aging Line Replacement Costs

67

Major Issues Facing Utility● Significant Capital Infrastructure Needs – Primary Rate Driver

– FY 2020-2029 Capital Improvement Needs = $36.9 Million

Projected CIP Funding Sources

Description 10-Year

Total

Rate Revenue $16,467,865 Operating Reserves 2,594,987 Renewal & Replacement Fund 2,996,500 Additional Debt (Currently Planned) 5,800,000 New Additional Debt 6,518,326

Grants 2,525,414

Total $36,903,092

68

Additional Future Debt● The Following is the Assumed Future Borrowing For Water and Sewer Projects

● For the Purpose of the Analysis the New Loan Associated with the Smart Meter Project would not have an impact on the Rate Adjustments Identified in this Analysis

● The New Loan for the Public Utilities Multiplex has been assumed occur in Fiscal Year 2028/2029, therefore, the corresponding rate adjustment associated with the new facility would not occur until Fiscal Year 2029.

Proposed New Loan Assumptions

Description

New Loan Raw Water

Project

New Loan Smart Meter

Project

New Loan Public Utilities

Multiplex

Total Loan Principal $276,400 $5,000,000 $6,437,500 Term of Issue (Years) 5 10 10 Interest Rate 0.00% 2.15% 3.00% Assumed Issue Date July 1, 2020 July 1, 2020 July 1, 2028 Annual Debt Service Payment $55,300 $561,010 $754,700

69

Projected Water and Wastewater Revenue Sufficiency Under Existing Rates

● Existing Rates Not Considered Sufficient to Fund the Revenue Requirements of the System

Water Revenue Sufficiency Forecast at Existing Rates

Description FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24

Net Revenue Requirements $4,087,272 $5,083,829 $5,314,864 $5,209,582 $5,410,462

Rate Revenue from Existing Rates 4,950,900 5,077,450 5,205,900 5,210,400 5,215,000

Surplus/(Deficiency) $863,628 ($6,379) ($108,964) $818 ($195,462)

Sewer Revenue Sufficiency Forecast at Existing Rates



Rate Revenue from Existing Rates [1] 2,806,800 2,879,750 2,952,700 2,955,500 2,958,300

Surplus/(Deficiency) ($41,658) ($1,364,697) ($1,353,190) ($1,653,602) ($1,756,687)

70

Projected Annual Required Rate Adjustments

Projected Annual Rate Adjustments

Fiscal Year Water Sewer

2019/20 0.0% 0.0% 2020/21 2.0% 50.0% 2021/22 2.0% 3.0% 2022/23 2.0% 3.0% 2023/24 2.0% 3.0% 2024/25 2.0% 3.0% 2025/26 2.0% 3.0% 2026/27 2.0% 3.0% 2027/28 2.0% 3.0% 2028/29 9.0% 9.0%

71

Projected Water and Wastewater Revenue Sufficiency Under Proposed Rates

● Projected Revenues Under the Proposed Rates are Projected to be Sufficient to Meet the Operating and Capital Funding Requirements of the Water and Wastewater System

Water Revenue Sufficiency Forecast under Projected Rate Adjustments



Rate Revenue from Projected Rates 4,950,900 5,178,950 5,416,200 5,529,300 5,644,900

Surplus/(Deficiency) $863,628 $95,121 $101,336 $319,718 $234,438

Sewer Revenue Sufficiency Forecast under Projected Rate Adjustments

Description [1] FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24


Rate Revenue from Projected Rates 2,806,800 4,319,650 4,562,000 4,703,200 4,848,900

Surplus/(Deficiency) ($41,658) $75,203 $256,110 $94,098 $133,913

72

Typical Monthly Bill ImpactResidential Water Bill Impacts @ 5,000 Gallons Per Month

Fiscal Year

Monthly Water Bill

$ Increase % Increase

2019/20 $48.96 2020/21 $49.93 $0.97 2.0% 2021/22 $50.95 $1.02 2.0% 2022/23 $51.98 $1.03 2.0% 2023/24 $53.02 $1.04 2.0%

Residential Sewer Bill Impacts @ 5,000 Gallons Per Month

Fiscal Year

Monthly Sewer Bill


2019/20 $28.84 2020/21 $43.26 $14.42 50.0% 2021/22 $44.56 $1.30 3.0% 2022/23 $45.88 $1.32 3.0% 2023/24 $47.26 $1.38 3.0%

Residential Combined Water and Sewer Bill Impacts @ 5,000 Gallons Per Month

Fiscal Year

Monthly Combined Bill


2019/20 $77.80 2020/21 $93.19 $15.39 19.8% 2021/22 $95.51 $2.32 2.5% 2022/23 $97.86 $2.35 2.5% 2023/24 $100.28 $2.42 2.5%

73

Single Family Water and Sewer Bill ComparisonSingle Family Water and Sewer Bill Comparison (5,000 Gallons)

74

Primary Reasons for Recommended Rate Adjustments

● Increased Cost of Operations

– Additional Revenue Generated from Customer Growth Not Anticipated to Cover

the Increased Costs of Operations

● Increasing Need for Replacement of Aging Assets

– The City has a Significant Capital Investment In Water and Sewer Assets that Needs

to be Maintained to Provide Reliable Service

– Requires a Levelized Capital Re-investment Plan

• Limits Future Debt for Capital Financing

• Promotes Flexibility in Funding and Long-Term Rate Stability

● Maintain Adequate Operating Reserves To Ensure Sustainable Reliable Utility Service

75

Conclusions and Recommendations

● Existing Utility Rates are not Projected to meet the Funding Requirements of the System over the Forecast Period.

● Council Should Adopt the Proposed Rate Adjustments Recommended for Fiscal Year 20/21.

● Council Should Annually Adopt the Future Identified Additional Rate Adjustments for Fiscal Years 2022 through 2029 in order to meet the Future Funding Requirements of the Water and Sewer System Over the Forecast Period.

76

Projected Annual Required Rate Adjustments

Projected Annual Rate Adjustments

Fiscal Year Water Sewer

2019/20 0.0% 0.0% 2020/21 2.0% 50.0% 2021/22 2.0% 3.0% 2022/23 2.0% 3.0% 2023/24 2.0% 3.0% 2024/25 2.0% 3.0% 2025/26 2.0% 3.0% 2026/27 2.0% 3.0% 2027/28 2.0% 3.0% 2028/29 9.0% 9.0%

77

Questions?

78

Water & Sewer Fund

• Amount of Outstanding Debt$2,873,678

• Debt Payment FY 2020-21 $709,375

• Total Increase in Payment

$147,946

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

19/20 20/21 21/22 22/23 23/24 24/25 25/26

WATER & SEWER FUND DEBT

Payments Principal Balance

Water & Sewer Projects FY

2020-2021

Raw Water Transmission Line (Grant Funded)

$1,077,281

Raw Water Reservoir $1,533,290

Water & Sewer Line Replacement $800,000

Total $3,410,571

Projected Revenue

CATEGORY AMOUNT

Antenna Rental $ 211,000

Water Revenues 5,180,000

Sewer Revenues 4,320,000

System Development Fees 375,000

Other Financing Source -0-


Payment to General Fund $80,000

Payment to Electric Fund 20,000

Debt Service WWTP Improvements 148,370

Debt Service Well Improvements 59,160

SCADA Equipment 82,337

Vactor Truck 79,175

MACS-Payment for Services 250,000


Debt Service – Vehicles 13,725

Debt Service – 2020 Line Improvements

168,900

Retiree Health Insurance 95,000

Bad Debt Expense 65,000

Data Processing

*Two full-time positions funded by Electric and Water/Sewer Funds.


FY 2021Proposed




Data Processing Fund Totals $112,774 $131,342

Number of Budgeted Positions 1FT* 1FT*

Non-Departmental


FY 2021Proposed


$103,000 $128,750


Other Expenditures $763,595 $978,047

Non-Departmental Fund Totals $1,318,845 $1,110,297

Number of Budgeted Positions -0- -0-

Customer Service

*Three part-time positions funded from Electric and Water/Sewer Funds.


FY 2021Proposed



Capital Expenditures -0- $5,000

Customer Service Fund Totals $420,293 $476,466

Number of Budgeted Positions 5.5FT/3PT* 5.5FT/3PT*

Water Treatment

*Includes Public Works Director funded from General, Electric, Water/Sewer

and Storm Water funds.


FY 2021Proposed


Operating & Professional Services

Expenditures$1,301,417 $1,230,700

Capital Expenditures $3,262,600 $1,887,790

Other Expenditures -0- $132,390

Water Treatment Fund Totals $5,095,591 $3,765,955

Number of Budgeted Positions 8.25 FT* 8.25FT*

• Utilities . . . . . . . . . . .. . . . . . . . . . $200,000

• Chemicals & Lab Supplies . . . .. . $355,000– Major Items: Lime - $150,000

Chlorine - $30,000 Alum Diox - $80,000

• Contracted Services . . . . . . . . . $150,000– Major Item: Sludge removal - $99,000

• Purchased Water (RO) . . . . . . . . $230,000


• Instrumentation and Controls . . . $ 45,000

• Pumps and controls . . . . . . . . . $ 45,000


Wastewater Treatment


FY 2021Proposed



Expenditures$1,090,950 $1,064,300

Capital Expenditures $319,000 $600,000

Wastewater Treatment Fund Totals Expenditures

$1,860,468 $2,127,493

Number of Budgeted Positions 8 FT 8FT

• Utilities . . . . . . . . . . . . . . . . . . $200,000

• Contracted Services . . . . . . . . $350,000– Sludge removal for land application

8 times per year - $225,000

– Dumpster Service - $28,000


• Capital Outlay (Equipment). . . . .$600,000– Disinfection Conversion -- $250,000

– SCADA Upgrades -- $350,000


Water & Sewer

MaintenanceExpenditures

FY 2020Budget

FY 2021Proposed

Personnel Services Expenditures $1,282,564 1,243,435


Expenditures$1,525,291 $1,166,800

Capital Expenditures $1,605,920 $955,000

W&S Maintenance Fund Totals Expenditures

$4,413,775 $3,365,235

Number of Budgeted Positions 20 FT 20FT

• Contracted Services . . . . . . . . . . $325,000

– Infrastructure Repair/Replacement – $100,000

–Clean & Inspect Sewer Mains – $100,000

– Sewer Main Grouting Point Repairs – $125,000


• Pump Station Improvements . . . $100,000

–Pump and Equipment Rehab -- $70,000

–Maintenance of Water Tower -- $78,000

–Water Line Repair -- $90,000


• Capital Improvements

− Water Main Improvements . . . . . . . . . . . $ 300,000

– Sewer Line Improvements . . . .. . . . . . . . $ 585,000

• Capital Outlay Equipment . . . . . . . . . . . . . . . $ 55,000


ENTERPRISE

FUND

DISCUSSION &

QUESTIONS

END OF BUDGET

WORK SESSION

ENTERPRISE

FUNDS

•Adjournment

END OF

PRESENTATION

FINAL SLIDE

Documents

Call Meeting to Invocation - cityofec.com81CF1C17-216A-4959-BE57... · April 27, 2020 Pre-Budget Presentation May 4, 2020 General Fund Discussion. Meeting Date Action May 18, 2020