HomeMy WebLinkAboutResolution 2009-197 notice of intention to increase water ratesMARANA RESOLUTION N0.2009-197
RELATING TO UTILITIES; ADOPTING A NOTICE OF INTENTION TO INCREASE
WATER RATES, RATE COMPONENTS, FEES AND SERVICE CHARGES AND SETTING
A JANUARY 5, 2010 PUBLIC HEARING ON THE PROPOSED ADOPTION
WHEREAS A.R.S. § 9-511.01 requires the Town Council to adopt a notice of intention
to increase water rates, rate components, fees or service charges and to release to the public a
written report containing certain required information about the rates, rate components, fees and
service charges; and
WHEREAS the notice of intention is the first step in increasing the rates, rate
components, fees and service charges; and
WHEREAS the statutorily required report is on file in the office of the Town Clerk, the
substance of which was presented to the Town Council in a public presentation on December 1,
2009.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE
TOWN OF MARANA, ARIZONA, that notice is hereby given of the Town's intention to
increase water rates, rate components, fees and service charges, and a public hearing on the
proposed increase is hereby set for a regular Town Council meeting on Tuesday, January 5,
2010, at 7:00 P.M. in the Council chambers on the first floor of the Administration building,
Marana Municipal Complex, 11555 West Civic Center Drive, Marana, Arizona 85653.
IT IS FURTHER RESOLVED that the Town's Manager and staff are hereby directed
and authorized to undertake all other and further tasks required or beneficial to carry out the
terms and objectives of this resolution.
PASSED AND ADOPTED BY THE MAYOR AND COUNCIL OF THE TOWN OF
MARANA, ARIZONA, this 1St day of December, 2009.
®~`®~rinr`~,,~
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~~`~~''`~~~~~~~~"`""~ ~s Mayor E Honea
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ATTEST: ~'r®~ ,q~u~uw-~~``(l e~'`°°
>do elyn C. onson, Town Clerk
APPROVED AS TO FORM:
~... ~ ( 1 1
Ecorroi~ric a»cl Fi~rnncii~l Co~lsrrl~i»g
November 20 2009
Ms. Dorothy O'Brien
Utilities Director
Town of Marana
5100 W. Ina Rd.
Marana AZ 85743
Dear Ms O'Brien:
Per your request, we have completed an update to our comprehensive water rate and cost of service
model originally developed for the Town of Marana during our rate study and long-term financial plan.
The purpose of this analysis is to develop a long-term water rate plan that will enable the Town to fund its
current and forecast operating expenses while at the same time enabling it to meet debt service and
coverage requirements for its proposed WIFA-related debt. The analysis is summarized in Appendix A
which is included as an attachment to this letter.
We developed this revised rate and financial plan after a series of meetings and conference calls with
City staff and its outside advisors, including Westland Resources and Stone and Youngberg. This report
presents no assurance or guarantee that the forecast contained herein will be consistent with
actua! results or performances. These represent forecasts based on a series of assumptions about
future behavior, and are not guarantees. ANY changes in assumptions or actual events may result in
significant revisions to the forecast and its conclusions.
Further, Stone and Youngberg has provided information relative only to the financing assumptions related
to the capital improvement plan developed by Town staff and is not responsible for the assumptions and
forecast results projected in this report.
- -- _ _ _
5500 Democracy Drive Ste. 130 Plano TX 75024 (972) 378.6588 (972) 378.6988 fax ~ii~rckson~i~~conornists.c~ni
web site: www.economists.com
Forecast Assumptions
The primary assumptions we have utilized in our forecast include, but are not limited to, the following:
• New account growth is forecast to be 100 to 150 accounts per year for the next three years, but
will return to prior year levels of approximately 300 accounts annually after 2012,
• Most operating expenses are forecast to increase at an annual rate of 4.0% to 5.0%.
• Certain expenses, such as energy, chemicals and insurance, are forecast to increase at higher
annual rates.
• Capital outlays are forecast to be approximately $350,000 per year.
Most importantly, this analysis includes the assumption that the Town will issue approximately
$4,480,000 in long-term debt to fund water-related capital improvements and resource acquisition. This
debt is assumed to be 20 years at an annual interest rate of 4.0%, The proposed debt service schedule
is presented in Appendix B which is included as an attachment to this letter,
Forecast Results and Proposed Rate Plan
Table 1 on the following page presents a summary of the proposed two-year rate plan developed for the
Town. The rate plan is composed of the following elements:
• The establishment of a $0.30 per 1,000 gallon Water Resource Acquisition and Development fee
effective February 2010, increasing to $0.40 in February 2011
• No change in any other rate in 2010; volume-only rate adjustment effective February 2011
• No adjustment to minimum charges in either year; eliminate the 1,000 gallon credit in the water
minimum charge effective February 2010
Appendix A reveals that the rate plan is forecast to result in sufficient revenues each year to fund
operating expenses, debt service and coverage requirements.
5500 Democracy Drive Ste. 130 Plano TX 75024 (972) 378.6588 (972) 378.6988 fax cli~~cksrmia~~conc~niists.cgrn
web site: www.economists.com
Table 1
(TOWN OF MARANA
Effective
Current Feb-10
w8ter Gates
Groundwater Acq. Fee $ - $ 0.30 $
Residential Base Charge
3/4" $ 15.12 $ 15.12 $
1" 36.72 36.72
1112" 39.96 39.96
2" 46.44 46.44
3" 46.44 46.44
4" 110,16 110.16
Residential Volume Charge (per 1,000 gal)
- 10,000 $ 2.32 $ 2,32 $
10,001 20,000 3.24 3.24
20,001 30,000 4.21 4.21
30,001 40,000 5,18 5.18
40,001 Above 7.45 7,45
Non•Residential Volume Charge (per 1,000 gal):
Multi Family $ 2.86 $ 2.86 $
Commercial 2.86 2.86
Government 2.86 2.86
Standpipe 3.24 3.24
Type 2 3.24 3.24
Restdentlat Monthly Water Charges
Gallons
7,500 $ 30.21 $ 34.79 $
{Residential Avg) 4.57
10.000 36.02 41.34
5.32
30, 000 110.54 121.86
11.32
Effective
Feb-11
0.40
15.12
36.72
39.96
46.44
46.44
110.16
2.46
3.43
4.46
5.50
7.90
3.03
3.03
3.03
3.43
3.43
36.56
1.79
43.73
2.39
130.72
8.86
Conttnerctaf Monthty Water Charges -- 2"
50,000 189.54 204.54
15,00
218.13
13.59
5500 Democracy Drive Ste. 130 Plano TX 75024 (972) 378.6588 (972) 378.6988 fax crack:,cx1{a?e,~~,4xtoinist.,.;;tun
web site: www.economists.corn
Appendix C to this letter is a copy of our December 1 presentation to the Town Council,
It should be noted that this plan will be presented to the Town Council in December 2009. The Council
will make the ultimate decision with regards to the Town's rate policy.
Please feel free to call me if you have any questions.
Very Truly Yours,
-~
~a~i'v.,~- V '.~ ,w'-..
Dan V, Jackson
Managing Director
_ ___ _
5500 Democracy Drive Ste. 130 Plano TX 75024 (972) 378.6588 (972) 378.6988 fax <ll~ick~on~i~~e~conomists ciom
web site; www.economists.com
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APPENDIX 13
f_?ct Z0, 2009 11:22 am Prepared by DBC Finance t:Finanee S.QI 1 \larana \VIFA-1.010_2) Page 1
SOURCES ADD USES OF FUNDS
Town of i\larana
\Vater Revenue Obligations, Series 2010 (Partial)
(\V1FA Revenue Loan Obligation, Partial Proj., Srs. 2010, ,4ssumes
1/1/2010 Closing -Subject to Change, 4n'o Estimated Interest Rate,
20-fear Level Debt Service Amortization, Assumes Reserve Fund
Requirement Funded Equally Over ~-Years Out of S}stem
Cash Flows (or held local!}' -lets discuss), Capitalized Interest
for 12 months Resulting in First Principal and [merest Payment
en July 1,2011]
Dated Date 01!01/2010
Delis°ery Date O1+OU2010
Sources:
Bond Proceeds:
Par Amouui 4,480,000.00
4 x;30,000.00
O."~e5:
Project Fund Deyosits:
Camino De Alenana Water Line Project 1,000,000.00
Twink Pzaks_Blue Bonnet Water Line Project 1,710,000.00
CAlID 14'ell Acquisition 1,500,000.00
-_
4 X10,000.00
Other Fw;d De~pasits:
Capitalized ]merest Fund 17g,20p.00
Delivery Date Expenszs:
Cost of issuance 10,000.00
Oti~er Uses of Funds:
Additional Proceeds SG0,00
4,480,000.00
pct 20, 24119 1 1:22 ant Prepared by DSC Finance (Finance 6.01 l klarana \VU~A 20(0_2) Page
BOND DE6T SERVICE
Period
Ending
1-o~,vn of \9ai~na
1Vater Revenue Obligations, aeries 2010 (Partial)
[l1'1FA Revenge t_oan Obligation, Partial Proj., Sr. 2010, Assumes
l/12014 Closins -Subject to Chanee,4S"o Estimated Interest Rate,
20-Year Level Debt Service Arnortization, Assuntes Reserve Fund
Requirement Funded Equally Over ~-Year Out of System
Cash Flows (ar held locally -lets discuss), Capitalized Intzrzst
for l2 months Resultin; in First Principal and Interest Payment
on July i , 201 l
Dated Date O IJO120 ( 0
Delivery Date 4]10112010
;Mutual
Debt Debt
Principal Coupon Interest Service Sc-rvicz
07~012U14 39,600 59,600 39;600
001)12011 39,600 59,600
07/011201 i 59,600 59,600 179?QO
01/012012 59,600 59,604
07/01/2012 175,400 4.000`5 39,b00 26=1,600 354 200
01!012013 36,IOQ 36,100
07/01/2013 152,040 4.000`,=o S6,100 265,100 354;200
01/012014 52,464 32,460
07/01/2014 IS9 x]00 4.OOOS~ 52;160 271 ¢.60 353,920
Ol;Oli20li 75,630 i8,6S0
07/01/2413 195,400 4.0004~~ 73,630 274,650 363;360
01/01/2016 7-1,760 74,160
07/0112016 20=1,000 4.400;0 74,760 273,760 353520
01101/2017 70,680 70,650
07/01/2017 212,400 4.OOOr;S 7Q,6S0 232,630 353,360
01/01/2018 66;]110 65,=140
071G1I201S 221,000 4.OOO:~b 66,~h'0 237,=1-10 353,350
01!01!2014 62,020 62,020
07/OIZOf9 230,004 =3.0OO~-o 62,020 292,024 334,040
01/012020 57,420 57,=720
07/41/2020 239,000 '.0005'a 57,420 296,=120 353,340
01/01/2021 52,640 52,640
07/012021 249,000 4.40050 X2,6=70 301,640 354,250
01/0112022 47,660 47,660
0710112022 239,000 4.OOOSh 47,660 306 X60 35-1.320
0110112023 42,4S0 42,0
07/01/2023 269,000 4.OOU~'o =72,'180 311,484 353,960
41/01/2024 37,100 37,100
07/01/2024 280,000 4.OOO~b 37,100 317,100 354,200
01/01/2025 31500 31,500
07101?2025 291,000 4.OOOb 31500 322 X00 35=1,000
01/0112026 25,650 25,530
47/01/2026 302,000 4.(100-:0 25,630 327,680 353,360
O 1/012027 19,640 19,540
07/01/2027 3L5,000 4.000"u 19,640 334,640 354,?54
01/01/2028 1:3,340 ]3,340
07!01/2428 327.000 4.000`"0 13;340 340,340 353,680
01/01/2029 6,300 6,500
07/O1r2029 340,000 4.000~~ 6,500 346.800 3.53,600
4,450,000 2,155,300 6.633,500 6,638,800
(?rt 20, 2009 I l~?.2 am Prepared by DBC Finance (Finance 6.01 I \Iarana:A5'IFA-2010_2) Pave .3
NET DL•BT SERVICE
[own of \~larana
\Vater Revenue Obligations, Series 2010 (Partial)
[\\rIFA Revenue Loan ObligaROn, Partial Proj., Srs. 2010, Assumes
1/1/2010 Closing ~ Subject to Change, 44"o Estimated Interest Rate,
20-Year Level Debt Son ice Amortization, Assumes Reserve Fund
Requirement Funded Equally Over ~-Years Out of Sp~tam
Cash Flows {or held locally -lets discuss},Capitalized interest
for 12 months Resulting in First Principal and lnterest Payment
on July 1, 201 1 J
Total
Date Debt Service
07101; 2010 59,600
01 /01 !2011 59,600
071011'2011 59,600
01/0112012 59,600
07/011201 a 264,600
O1r01/2013 86,100
07101/2013 265,100
OllOli201-{ 52,460
07/0112014 271,160
01101%2015 78,650
07101 /2015 274,6S0
OIi01Y2016 74,760
07J01/2016 278,760
01;01!2017 70,650
07;0112017 2S2,6S0
01/0112015 66,~t-'.p
G7rO1i201S 257,1-}0
01/01/2019 62,020
07/0112019 292,020
01/0112020 S7;<120
07JOII2020 296,20
O1r011202] 52,6-#0
07101 !2021 301,640
01/01/2022 47,660
07/01/2022 305,660
01;0112023 42,4S0
07/002023 311,480
01101!2024 37,100
07101 x2024 317,1 ~}0
Olr01J2025 31,500
07101!2025 323,500
01/0112026 25,bS0
07/01/2026 327.650
O1 r01 /2027 19,6x-0
07/01/2021 334,<40
0001/2025 13,340
07/0112025 340,340
01 /01 /2029 6,500
07/01!2029 316.500
Capitalized
bue, est
Fund
59,b00
S9,600
Net
Debt Service
S9 ,600
89,600
26-1,600
56,100
265,100
52,460
271,460
75,650
27=1,650
74,760
278,760
70,650
2S2;650
65,;-10
257,-140
62 ,020
292,020
57,=120
296,420
52,640
30 L640
47,b60
306,660
=12,=1so
3I1,4S0
37,100
317,100
31,500
322,500
5 ,650
327,680
19,6:0
334,610
13,340
340,340
6,500
346,500
6,638;500 179,200 6,-159,600
~~~
MARANA
Recommended Long-Term
Water Rate Plan
Council Briefing
' w t I ~
N.
_: ,R::~:~:~:
December 1 2009
Page: 1
`'°W,
MARANA
., 4 4 .~
~...
The geographic challenges of
integrating several systems that
have been thrust together over
a large area (being addressed
through Master Plan)
Water resource acquisition -
the cost of acquiring water for
replenishment
.~ ~~,
~,~;,
a,~ ~`
4 ~ ,~~~;:
I'' V
_ M
~~ ~~~.
~¢ } , ..
~ ~,~~
~ ~y:,.
~ '~~ Page: 2
a
MARANA
Current
Minimum Charge
3/4" $15.12
Volume Charge: Per 1,000 Gallons
Residential
1,001 10,000 2.32
10,001 20,000 3.24
20,001 30,000 4.21
30,001 40,000 5.18
40,001 Above 7.45
Multi Family 2.86
Commercial 2.86
Government 2.86
Standpipe 3.24
F Page: 3
R
MARANA
$50.00
$45.00
$40.00
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$-
$29.82
$39.02
Town of Avg. -- Avg. -- $1-$5 Avg. -- 5,000
Marana Municipal Million Rev Accts
Page: 4
Avg. --
Statewide
Avg. -- Oro
Valley
$42.52
$46.06
$38.37
$36.02
MARANA
Forecast takes into consideration continued economic downturn;
fewer new accounts in future years than in 2005-2009 timeframe
Plan assumes for purposes of this analysis only that there is no
immediate acquisition of Tucson Water accounts
Most operating expenses continue to be assumed to increase
3.0% -- 5.0% per year
Town proposes to issue $4,480,000 in water related debt to fund
CMID acquisition and Twin Peaks/Camino De Manana
Page: 5
MARANA
1,200
1,000
Total 2009 = 5,186
800 Total 2019 = 7,637
600 -1
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Page: 6
MARANA
~.
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
2010 2011 2012 2013
r Operating
2014 2015 2016 2017 2018 2019
^ Debt Service
Page: 7
MARANA
Establish Groundwater Resource
Acquisition and Development Fee in
2010 for all usage to finance acquisition-
related costs
Do not change other water rates in
2010; implement rate adjustment in
2011
Do not change minimum charge in either
year; however, eliminate 1,000 gallon
credit in 2010
.+.W.~,
Page: 8
~~:~ ..
MARANA
~~
,Effective Effective
Current Feb-10 Feb-11
Groundwater Resou rce/Acq. Fee
Per 1,000 Gal - 0.30 0.40
Minimum Charge
3/4" 15.12 15.12 15.12
Vol Chg
Residential Per 1,000 Gal
- 10,000 2.32 2.32 2.46
10,001 20,000 3.24 3.24 3.43
20,001 30,000 4.21 4.21 4.46
30,001 40,000 5.18 5.18 5.50
40,001 Above 7.45 7.45 7.90
Multi Family 2.86 2.86 3.03
Commercial 2.86 2.86 3.03
Government 2.86 2.86 3.03
Standpipe 3.24 3.24 3.43
i ; '; Page: 9
MARANA
Effective
Current Feb-10
Effective
Feb-11
Residential Monthly Charges -- 3/4"
Gallons
5,000 $24.41
Increase
$28.23 $29.43
3.82 1.20
7,500 $30.21 $34.79 $36.58
Increase 4.57 1.79
10,000 36.02 41.34 43.73
Increase 5.32 2.39
`~
Commercial Monthly Charges -- 2"
50,000 186.68
Increase
Page: 10
204.54 218.13
17.86 13.59
Water resource acquisition and
development costs are primary
reasons for rate adjustments
. Rate plan establishes a separate fee
to capture groundwater resource
acquisition costs
Most residential ratepayers will
experience a $3-5 increase in monthly
bills in 2010
MARANA
_.:.
~;~ , °_~ Page: 11
,~