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WATER DEPARTMENT FY2008/09 BUDGET WORKSHOP

WATER DEPARTMENT FY2008/09 BUDGET WORKSHOP April 9, 2008 Water Department Mission Statement

EllenMixel
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WATER DEPARTMENT FY2008/09 BUDGET WORKSHOP

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  1. WATER DEPARTMENTFY2008/09BUDGET WORKSHOP • April 9, 2008

  2. Water DepartmentMission Statement The mission of the Water and Sewer Department is to provide the highest possible water quality and customer service at the lowest possible cost, while continuing our commitment to improving the infrastructure and our community’s environment.

  3. Water DepartmentFY 2008/09Budget Summary Expenditures • Total Recommended Operating Budget - $7,298,905 • Major factors influencing recommended operations costs: • The combined Personal Services and Employee Benefits objects provide a $113,891 increase (4.5%) • Electricity costs up $77K due to increased unit cost and higher consumption • Other energy costs (fuel oil & propane) up by $10K due to increased unit costs • Chemicals costs up by $7.4K due to increased unit costs • Repair pipe & fittings for field services down by $12K as we will work off of in-stock inventory • Highway supplies up by $4K due to the unit price of asphalt • Gasoline & diesel up by approximately $9K due to increased unit costs • Natural gas increased by $8.8K due to increased unit cost

  4. Water DepartmentFY 2008/09Budget Summary Expenditures(Continued) • General Plant Equipment up by $16K for critical operations & safety items • Transfer to MSIP increased by $17,795 • Total Water Fund Budget decrease of $3,081,279 • FY07/08: $3.8M of retained earnings was budgeted as a draw down from cash reserves to pay for capital projects including upgrades to the WTP. Given the shortfall in revenue, uncertainty in revenues going forward, and the policy of maintaining a working capital balance equal to 180-days of operating expenses, it is recommended that the current year Transfer to Capital Reserve be reduced by $2M, with the balance of the WTP project financed through temporary note issuance. • Interfund Transfers in FY08/09 total $1.4M which includes an increase in contributions to MSIP and a Transfer to Capital Reserve to support cash-funded capital projects

  5. Water DepartmentFY2008/09Budget SummaryRevenue • Total Recommended FY 2008/09 Revenue - $7,298,905 • Major factors influencing revenues: • Revenue from the sale of water is estimated to be $5,732,193 • This reflects a 5% rate increase and is based on a 5-year history of average consumption • Note: Economic downturn & weather-related effects have resulted in revenue shortfalls when compared to MFS Model predictions; to reduce variables associated with these factors, a 5-year average was used • Revenues of $532,969 reflect the second year of the six-year phased increase in fire service charges • Combined public & private fire charges will generate an additional $33,000 during this fiscal year • This is less than the original MFS model projected as it was decided to phase in these charges over six years instead of four years • Recommended connection fees of $100,800 reflect a decrease of approximately $226,600 in budgeted revenue from the FY2007/08 budget • MFS Cost Model anticipated 119 new connections; actual number will be about 36 • Use of Retained Earnings decreased to $493,841 • The proposed use of net assets in FY07/08 and recommended use in FY08/09 is consistent with the goal to maintain working capital at a level equal to 180 days operating expense • Remainder of revenue, $439,102 is derived from the following: • Interest & lien fees, meter installation fees, repairs, inspections, interest, rent, timber sales and miscellaneous

  6. Water DepartmentPerspective • Our current water rate is the lowest of six suppliers serving the Greater Hartford Area • A 5% rate adjustment would increase the average water bill by $2.68/quarter or $10.72/year • A typical ½ liter of bottled water costs approximately $1.39 • For that same $1.39 you could purchase 458 gallons of Manchester water and have it delivered to the tap in your house, based on our present rate of $0.003/gallon • If our rates were to increase by 5% that same $1.39 would purchase 436 gallons of water or $0.0032/gallon delivered to the tap - OR -

  7. Water DepartmentFY 2008/09Recommended Transfer to Reserve Summary Recommended Cash-Funded Capital Improvement Projects 1. Tank Painting $ 65,000 2. Public Works Projects $ 7,500 3. Source of Supply Vehicle Replacement $ 35,000 4. T&D Vehicle Replacement $ 35,000 5. Construction Vehicle Replacement $ 40,000 6. Lydall Dam Rehabilitation $ 35,700 7. Annual purchase of Water Meters $ 50,000 8. Causeway Fence Replacement $ 10,000 9. Data Concentrator Upgrade $ 56,500 10. Leak Detection Survey $ 50,000 Total $ 384,700 Note: Original FY08/09 Request totaled $898,100; reduced by >$500K based on water priority list due to FY07/08 revenue shortfalls

  8. WATER DEPARTMENTFY 2008/09 Transfer to Reserve Request SummaryMoved, Deleted, Reduced or Deferred Items Project NameAmountStatus Oversized Pipe $15,000 Deleted Water Meters $29,500 Reduced Vehicle Replacement - Meters $30,000 Deferred Dump Truck – T&D $150,000 Deferred Abandoned Building Demos $170,000 Deleted Heavy Equipment Replacement $100,000 Deferred Vehicle Replacement – Engineering $25,000 Deleted Total request reduction $519,500

  9. Water DepartmentFY 2008/09Recommended Transfer to Reserve Justification Details Tank Painting - $65,000 • The provides for an annual contribution to the 15-year cycle of tank painting and 5-year inspection cycle; a DPH requirement Public Works Projects - $7,500 • This is the Water Department’s share of the costs of projects that originate from the Public Works Department and/or the State of Connecticut Vehicle Replacement Source of Supply - $35,000 • In-kind replacement of Vehicle #314; 1997 4X4 Pickup Truck with plow Vehicle Replacement T&D - $35,000 • In-kind replacement of Vehicle #367; 1997 4X4 Utility Truck with plow Vehicle Replacement Construction - $40,000 • In-kind replacement of Vehicle #370; 1997 Utility Van

  10. Water DepartmentFY 2008/09 Recommended Transfer to Reserve Justification Details(Continued) Lydall #1 Dam Tree Removal - $35,700 • Work necessary to maintain the integrity of the earthen dam embankment Water Meters Annual Purchase - $50,000 • This is for replenishing the stock of water meters needed for replacement and new customers Causeway Fencing - $10,000 • Replacement of the fence on the East Side of South Main Street as it crosses the Globe Hollow Reservoir as it is in poor condition Data Concentrator Upgrade - $56,500 • This project supplies a new Central Processing Unit for monitoring and control of the Water Treatment Plant & Distribution System Leak Detection Survey - $50,000 • Perform a comprehensive leak detection program of the entire distribution system; reduce the amount of unaccounted for water and preserve supply

  11. WATER DEPARTMENTFY2008/09 BUDGET NOTE-FUNDED PROJECTS

  12. Water DepartmentFY 2008/09Note-Funded Capital Projects SummaryRecommendations Water Quality Improvement ProgramTotal Cost • Infrastructure Improvements $1,500,000 • This is the annual recommended allocation of funds to implement distribution pipe replacement and rehabilitation (R/R) based on the results of the Water Distribution System Evaluation • The study identified areas of undersized or deteriorated water mains and developed a prioritized list of R/R projects • In general, it targets mains that are unlined, 4 inches or smaller, older than 60 years and that require upgrading for hydraulic purposes • These mains can cause water quality problems, increase pumping and maintenance costs, restrict flow rates and limit fire protection capabilities • Long-term finance plan is to authorize $5M on a three year cycle (1.5M/1.5M/2.0M) through the sale of notes

  13. Water DepartmentFY 2008/09Note-Funded Capital Projects SummaryStatus of GHWTP Upgrade Globe Hollow Water Treatment Plant Upgrade • Currently in the 90% design phase • Groundbreaking expected late-summer or early fall 2008 • Project cost estimate is $12,483,000; includes the following: • Installation of an ozonation system for taste and odor control; also provides a barrier against viruses and other pathogens • Will also help reduce & eliminate Pharmaceuticals & Personal Care Products (PPCP’s) • Eliminates gaseous chlorine and replaces it with safer liquid form • Provides renovations to the existing processes and equipment • Reconditions the existing filters and changes media to GAC • Structural repairs and HVAC upgrade • Replaces equipment and the type of lime used for handling safety • Replaces emergency generator • Rehabilitates the flocculation process equipment and chemical tanks • Security upgrades based on EPA Vulnerability Assessment • Improvements and rearrangement of Administrative offices recommended by town-wide efficiency study by Management Partners • Also includes energy efficiency measures, structural deficiencies and brings the facility into compliance with ADA and Building codes • Miscellaneous site work to parking area, driveways & grounds

  14. Water DepartmentFY 2008/09Working Capital Projections • By using $1.8M in cash reserves in FY07/08 instead of $3.8M; and, • By adopting rate adjustments of 5% per year for FY08/09 and FY09/10, • The Water Fund will be positioned to meet the 180-day working capital target for another two years

  15. Water DepartmentRate Comparison Chart

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