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Bargersville Water Utility

Bargersville Water Utility. Treatment Plant. $12.5M Debt. Wells. Smith Valley Road. White River. SR 37. SR 135. North Hydraulic System. Smokey Row Road. New Treatment Plant. New Wells. $16M ($29M). South Hydraulic System. New 24 Inch Water Main. $4M ($7M). SR 144. Kinder.

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Bargersville Water Utility

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  1. Bargersville WaterUtility Treatment Plant $12.5M Debt Wells Smith Valley Road White River SR 37 SR 135 North Hydraulic System Smokey Row Road New Treatment Plant New Wells $16M ($29M) South Hydraulic System New 24 Inch Water Main $4M ($7M) SR 144 Kinder The Abbey 2000 Homes Bargersville Water Tank

  2. August 2010 ProposedBargersville Water Rate Increase • Everyone will see a 77% increase in • Meter Rate • Water Usage Rate • Non Bargersville residents pay a Fire Protection Fee • It goes from $10.53 per month to $20.00 • Their total bills will rise by more than 77%

  3. Problem in need of a Solution • What is the Problem? • Today: • Problem is centered in North Hydraulic system • System peak demand is approaching peak capacity • 80% of existing customers are in this area • Tomorrow: • Bargersville has large growth plans • Conclusion: • Capacity is marginal for existing customers • Capacity is totally insufficient for growth as planned

  4. Problem in need of a Solution • What is the Solution? • No question; More Capacity is Needed! • The 2002 Master Planning report is very comprehensive • The engineering work has defined a solution • WHAT’S A FAIR WAY TO PAY FOR IT?

  5. Marginal Capacity Solution • Existing customers are responsible to pay the bill for their part of the solution • Issue the bonds and start construction • Adjust rates so existing customers pay their fair share

  6. Growth Capacity Solution • Future customers will enjoy the benefits • Issue the bonds and start construction • Delay payment of the principal (10 years) until future customers are there • Establish an upfront “System Development Charge” (SDC) for each new customer • Adjust rates so future customers pay their fair share

  7. Does This Sound Fair? • Rates for sprinklers is based on a 1995 study • “Peak demand” was compared to average consumption • Leaves out non sprinkler users who also have high peak demands • Has not been re-evaluated since 1995 • Does not contain an increasing rate based on consumption • Recommendation of 2002 Master Plan have not been followed • Estimate the future development units • Apply 50% of the expansion cost as a “System Development Cost” to those units

  8. Does This Sound Fair? • Recommendation of a 2004 financial expert testimony has not been followed • Delay payment of bond principle for 10 years • “New customers are the major beneficiaries of these improvements” • “This allows them to pay a larger portion of the debt” • Project has been delayed to study cost reduction • 2004: Estimated cost $14.4M • Today: Cost is $20M • In today’s economy, bids for State and County projects are coming in at 25% below engineering estimates • Why can’t we get a $15M price tag?

  9. Does This Sound Fair? • Proposed bond rates are as high as 5.8% • Lower rates are available thru • State Revolving Fund (SRF) • State Indiana Utility Regulatory Commission (IURC) • They could be as much as 1% lower!

  10. Are We Biting Off More Than We Can Chew? • Water Utility Asset Value $ 32.5M • Current Debt $ 12.5M • Additional Debt for this project $ 36M • Debt includes principle and interest • Total Debt $ 48.5M • Final Asset Value $ 52.5M • Ratio of Debt to Asset Value 92% • Total Revenue (2009) $ 4.2M • Required Future Revenue / Year $ 7.8M • Projected for $20M from $16M debt

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