Lunenburg Sewer Commission FY 15 Budget Presentation

to the Finance Committee

March 27, 2014

Current Sewer Support Team Business Manager: Barb Lefebvre DPW Director: Jack Rodiquenz Commissioners:

Carl Luck Chairman Jay Simeone Vice Chairman Dave MacDonald Clerk Mike Nault Member Butch Bilotta Member Small Water Systems Service: Systems operations and maintenance contractor

Weston and Sampson: Primary Engineering Consultants

Many Thanks to this Hard Working and Dedicated Team

Major Changes Planned from FY 13 to FY 14From FY 14 Fincom Presentation

Outsourcing of Sewer System Maintenance and Operation 24/7 Operation with single employee not a sustainable model Eliminates Current Town Employee (transfer to opening in DPW) Eliminates Direct Labor Overtime Costs Eliminates Stipend for On Call Eliminates Vehicle Costs Reduces fringe benefits Improved Cost Control: Fixed Price Contract Cost Including Emergency

Service New IMA with Fitchburg

Provides Additional Capacity Required for Existing Commitments and Limited Expansion Requires proportional cost share for John Fitch Hwy line upgrade

Converts from Water In to Total Flow Out Usage Cost Calculation Cost increase should be offset by reduction in “adder”

Eliminates “Double Dip” Capital Costs BALANCED BUDGET

Complete

Complete

Complete

Rate Increase FY 14From FY 14 Fincom Presentation Goals of Rate Increase

Balance the Budget Apply Single Rate to all Users

Rate Increase Methodology Increase minimum usage charge by from $81 per quarter to $97.20

At time of last rate increase the minimum charge was not changed this is consistent with prior rate increase percentage

Adjust base rate as required to balance budget From $9.72 per100 cu.ft to $11.50 per 100 cu.ft.

Adjust minimum usage to maintain consistant rate Minumum usage going from 1,000 cu.ft. to 840 cu.ft. Results in greater percentage increase to users between 840 and 1,000 cu.ft.

No Increase Require

d

To Balance FY 15 Budget

Key Points of New IMA: Operational Capacity:

Increased from 80 gpd to 161,000 gpd 10,000 gpd at Summer Street (no change) 151,000 gpd at 2A (basis of John Fitch Highway upgrade/cost)

User Fees Lunenburg pays same rate as Fitchburg residents (currently $7.30)

“Adder” of $1.65 eliminated until extraordinary cost justified (18.5% reduction)

No extra capital fees (other than John Fitch upgrade for capacity reserve)

Any Fitchburg rate increases require 90 day notification Connections fees to Fitchburg increased to $2,000 Billing based on meters at town lines (Summer St. and 2A)

10% increase expected due to I/I but more than offset by reduced “Adder” reduction

John Fitch Capacity Increase Cost Share

Total Design Cost $333,708Construction Cost $1,776,753

Total JFI Cost $2,110,461

Loan PaymentsDesign $26,241.96

Construction $112,440.69Total Loan Payment $138,682.66

Lunenburg ShareDesign flow 1,126,000 gallons / day

Lunenburg Share 151,000 gallons / day% of project 13.41%

Total JFI annual debt $138,682.66

Lunenburg Share $18,597.76

Capacity Increase Financial Issues to Address

Need to establish clear and fair policy to spread cost of securing capacity across new users Fee payment/timing should be linked to capacity allocation as required

by our Sewer By-Law

Current direction is to set up capacity “bank” to pay off JFH agreement and protect for future needs. Highfield and other new users will provide upfront payments but

payments to Fitchburg will be spread over 20 years Fee to continue beyond JFH cost to build reserve for future use

Projected “fee” for new user (not yet bettered) is $1.87 per gal. Three bedroom home - $617 Four bedroom home – $822

Effective date as soon as policy is released, target July 1st.

Additional Accomplishments in FY 14Supporting Areas of Need with Extensions of Service

Lancaster Ave Extension Complete (11 potential new users) Lakeview Ave. resident petition successful, will be moving forward with

Appropriation Request at Town Meeting Pratt St. petition successful thanks to final push/door to door by

Commissioners Mike and Dave, will also be brought to Town Meeting Achieved sufficient score to qualify Lakeview and Pratt for SRF loan. Working with Highland St. resident on extension Private extension policy and covenants established

Educational outreach on “Flushables” and Grease ongoing Videos secured and aired, Public Access telecast being prepared

Grease Trap Education/Policy Enforcement Brought from 0% to 100 % compliance with Annual Permitting Cleaning reports still lacking, but next focus

I/I Reduction Kicked off house to house inspection contract to find sources in Whalom area

I/I Fee Policy/Fee implementedRegs and Policy reviewed, updated and released

Ongoing Sewer Commission Project Management Goal: Assign Member of Sewer Commission as Champion for Major Projects

Responsible for maintaining project overview and regular reporting to SC. Works with appropriate operations, business management, suppliers and or

other Town governing groups to achieve goals set by Sewer Commission Investigate and propose new activities and/or policies within assigned areas

Grease Trap Policy/Compliance: Dave MacDonald/Mike Nault Outflow Rate Metering and Tracking: Mike Nault Lakeview/Pratt Betterment: Dave MacDonald Capacity Fee Policy: Carl Luck Inflow and Infiltration Reduction: TBD Privately Funded Extension Policy: TBD Remote Monitoring/Control of Pump Stations: Jay Simeone Improved Business Practices: Carl Luck

Overview of Usage and Rates FY14 vs FY15

Usage Rates Paid by LunenburgFY 14 FY 15

Leominster (per 100 cu. ft.) $4.57 4.80 Fitchburg $8.95 $7.30

Rate to Lunenburg Users (per 100 cu. ft.) $11.50

Total Number of Users/Connections 708 730 To Leominster 575 593 To Fitchburg 133 137

Units with access not Connected 355 333

Total Units with Access 1,063 1,063

Pratt and Lakeview Potential Users 81

SEWER ENTERPRISE ADJUSTED FY14 BUDGET PROPOSED FY15

BUDGET INCR/DECR OVER FY14

FINAL BUDGET

REVENUES      

User Charges (YTD is actual 50% based on Commitmts) $ 683,263.00 $ 709,753.00 $ 26,490.00

Connection Fees $ 22,500.00 $ 27,000.00 $ 4,500.00

Sewer Bank Fees   $ 7,440.00 $ 7,440.00

Penalties & Interest (incl. prior year pmts) $ 6,300.00 $ 8,000.00 $ 1,700.00

Drain Layer Fees $ 1,000.00 $ 1,000.00 $ -

Grease Trap Annual permit fees   $ 1,000.00 $ 1,000.00

Investment Income $ 1,550.00 $ 2,333.00 $ 783.00

Sewer Use Regs $0.00 $ - $ -

Highfield Capacity -Reserve Fund - one time pmt   $ 57,716.00  

Adjusted Total Revenues $ 714,613.00 $ 814,242.00 $ 99,629.00

FY 14 and FY 15 Budgeted Revenues Detail

FY 15 Cost Element as Percent of Total Costs

User Fees = 95% of Operating Revenues

FY 15 Key Budget Assumptions

Addition of 22 new connections/users No rate increase to Lunenburg customers Outsource contract increase of 2.5% No new rate increases from Fitchburg Leominster rate increase assumption of 5% included in

Budget No extraordinary legal fees Continuation of I/I reduction at roughly $35,000 in FY 15 Addition of generator maintenance outsourcing/contract with

current operations company No impact to Enterprise Fund with proposed extensions at

Lakeview and Pratt

FY 15 Budget Items to Note

No transfers from Retained Earnings for Operating Budget

BALANCED BUDGET AGAIN!! Retained earnings as of 7/1/13 were $471,785 John Fitch Highway Upgrade Treatment

Expected upfront income of $57,716 from Highfield capacity charge shown in FY 15 Revenue $54,830 of this amount shown as cost, to be moved to separate account to be

drawn on annually (working with Town and Fitchburg to simplify process) $2,886 included in projected annual payment of $18,598 to Fitchburg

This income is not reflected in “Operating Income” on prior slide Inflow and Infiltration Fee

As this $7,440 is an I/I “Bank” that is restricted for use on I/I reduction, it is not considered part of the “Operations Income” in analysis

For the FY 15 budget we have reduced the planned costs of $35,000 for I/I reduction by this amount

Last Words

Thank you to all the Commissioners for volunteering their precious time and energy to this very important effort that is a significant contributor to the future of Lunenburg

Thanks to Barb Lefebvre for her many hours of dedicated effort to keep all of the balls in the air, well done!

Thanks to Jack Rodriquenz for his efforts, guidance and knowhow that helps keep us moving in the right direction

Thanks to those that have helped find ways to help get services to those in need on Lancaster, Lakeview and Pratt

Thanks to Jay Simeone for all his work and sharing of knowledge, you will be missed

HELP: we have one opening on the Commission and would love to hear from any interested candidates who would like to roll up their sleeves to help the Town and continue this good work

Questions?