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Water and Wastewater Infrastructure Funding Strategies

Water and Wastewater Infrastructure Funding Strategies. Jeff Hughes UNC School of Government Environmental Finance Center 919.843.4956 jhughes@sog.unc.edu www.efc.unc.edu. Workshop Acknowledgements. UNC School of Government

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Water and Wastewater Infrastructure Funding Strategies

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  1. Water and Wastewater Infrastructure Funding Strategies Jeff Hughes UNC School of Government Environmental Finance Center 919.843.4956 jhughes@sog.unc.edu www.efc.unc.edu

  2. Workshop Acknowledgements • UNC School of Government • Public Water Supply Section, Division of Environmental Health, NC Department of Environment and Natural Resources • US Environmental Protection Agency • Region 4 • Environmental Finance Program, Office of Chief Financial Officer

  3. Workshop Objectives • Promote proactive capital funding planning and analysis • Improve understanding of funding sources and strategies • Improve understanding of the role of rates and fees in infrastructure investment • Provide forum for sharing capital funding perspectives, ideas, and experiences

  4. Water and Wastewater Infrastructure • Serving current “unserved” residents • Serving growth • Regulatory requirements • Modernization/efficiency improvements • Protecting source water • Replacement and rehabilitation

  5. What types of projects are in your utility's current CIP? (n=172) Largest component Preliminary results

  6. Who is in the room? • Utility management • General management • Finance Office • Consultants/Community Advisors • Others

  7. Questions and… ….Burning Issues

  8. Do you have an approved set of water/wastewater finance policies? • Yes • No • Workin’ on it…

  9. Do you have an approved CIP? • Yes • No • Workin’ on it…

  10. 46) Does your utility have a Capital Improvement Plan (CIP)? n = 258 Preliminary results

  11. 53) What is included in your utility's CIP? n = 172 Preliminary results

  12. 47) Is your utility's CIP approved by your Governing Board (City Council / County Commissioners / Board of Directors)? n = 174 Preliminary results

  13. 32) Does your utility have a "finance policy" that sets financial targets and goals, such as reserve balance, debt service ratios, etc.? n = 256 Preliminary results

  14. What period does your CIP cover? • < 3 yrs • 3 - 5 yrs • 6 - 10 yrs • > 10 yrs • Don’t know

  15. 48) How many years does your utility's CIP cover? n = 164 Preliminary results

  16. How do the majority of projects make it on to your CIP? • Pass rigorous business case evaluation • Too complicated to explain • I don’t know

  17. Do you have a multi-year approved Capital Improvement Budget (CIB) • Yes • No • Workin’ on it…

  18. 51) Does your CIP include a multi-year budget (i.e. your elected officials have approved a BUDGET for MORE THAN ONE YEAR)? n = 174 Preliminary results

  19. What period does your CIB cover? • 1 yrs • 2 yrs • 3 yrs • 4 yrs • 5 years or greater • Don’t know

  20. Do you have a multi-year finance model that shows projected revenues and expenditures? • Yes • No • Workin’ on it…

  21. Is your CIP integrated with a finance plan and/or rate model? • Yes • No • Workin’ on it…

  22. 2008 2009 2010 2011 2012 Capital program Debt - CP/revenue bonds $ 147,460 $ 215,800 $ 232,900 $ 190,400 $ 188,900 Debt - equipment L/P 5,050 2,250 1,850 1,850 1,850 PAYGO 28,850 24,050 20,950 42,450 38,950 Total $ 181,360 $ 242,100 $ 255,700 $ 234,700 $ 229,700 PAYGO as % of total 16% 10% 8% 18% 17% Commercial paper balance (6/30) $ 309,440 $ 215,800 $ 448,700 $ 190,400 $ 379,300 $ 448,700 $309,440 Revenue bond issues Number of water customers 238,287 245,436 252,799 260,383 268,195 % incr. in avg. residential bill 6.25% 6.05% 6.74% 6.50% 6.50% % incr. in water sales volume 1.00% 1.00% 1.00% 1.00% 1.00% Total revenue $ 245,708 $ 260,577 $ 278,419 $ 297,401 $ 319,867 Total operating expenditures 95,858 100,091 104,516 109,141 113,976 Net income available for DS $ 149,851 $ 160,486 $ 173,903 $ 188,260 $ 205,891 Total revenue bond DS(1) $ 71,106 $ 75,235 $ 93,922 $ 98,031 $ 119,752 Total G.O. and other DS 57,941 56,325 52,186 44,544 42,457 Total DS $ 129,047 $ 131,560 $ 146,109 $ 142,575 $ 162,209 DS as % of total revenue 53% 50% 52% 48% 51% DS coverage - revenue bonds 2.11 2.13 1.85 1.92 1.72 DS coverage - total 1.16 1.22 1.19 1.32 1.27 Debt service/operating fund bal. $ 90,626 $ 95,503 $ 102,346 $ 105,581 $ 110,313 As % of op. exp. and DS 40% 41% 41% 42% 40% Total outstanding debt(2) $ 1,233,752 $ 1,483,201 $ 1,419,245 $ 1,806,785 $ 1,739,213 Water and Sewer Projection Summary 8 Year Financial Plan

  23. www.efc.unc.edu/tools

  24. How have you funded most of your W&S capital during last five years? • Grants • Debt • Pay-go (current year receipts) • Capital Reserves • We’re still looking for funds…….

  25. Percentage of capital needs in your CIP you are confident you can fund? • <10% • 10%-25% • 25%-50% • 50%-75% • >75%

  26. 44) Based on your experience, how often is your utility able to fund all of the necessary capital improvements? n = 254 Preliminary results

  27. Acquiring Funds for Capital Infrastructure (Day Covered) • Save and spend later • Spend/pay as you go Spend borrowed funds and pay later • Spend grant funds and get “someone else” to pay

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