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City of Detroit Water and Sewerage Department
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  1. City of DetroitWater and Sewerage Department SEMCOG Infrastructure Task Force January 14, 2010

  2. Presentation Qualifiers Regarding Conceptual Framework Matrix • DWSD provides both Drinking Water and Sanitary Sewer service to the region • Storm Sewer service also provided through its Combined Wastewater System for many regional communities, including Detroit • Except where noted, the quantitative information presented herein are combined water and sewer figures • Certain of the opinions expressed herein are those of THE FOSTER GROUP and/or industry perspectives and are not intended to necessarily reflect DWSD policies or philosophies Page 2 1/14/10

  3. City of DetroitWater and Sewerage Department Current Level of Investment

  4. Annual Capital Improvement Investments Combined Water & Sewer Systems – ($ millions) Page 4

  5. DWSD FY 2010-11 Combined Water / Sewer Revenue Req’t Page 5 1/14/10

  6. DWSD Combined Water / Sewer Revenue Req’t FY 2010-11 FY 2003-04 Page 6 1/14/10

  7. DWSD W&S Rev Req’t / Water Sales Comparison ($ millions / mgd) Page 7 1/14/10 Cost / MGD $1.24 $1.92

  8. City of DetroitWater and Sewerage Department Needs

  9. Annual Capital Improvement Investments Combined Water & Sewer Systems – ($ millions) Page 9

  10. DWSD CIP Comparison (Water & Sewer Combined) July 2009 vs. July 2008– ($ millions) Page 10

  11. DWSD Debt Service – Fund CIP thru 2013 (last year) Page 11

  12. DWSD Debt Service – Fund CIP thru 2014 (this year) Page 12

  13. City of DetroitWater and Sewerage Department Structure of Financing

  14. DWSD Financing Vehicles • DWSD employs a “maximum debt financing” concept when funding major infrastructure investments • Utilize revenue bond debt to greatest possible legal and practical extent • Aggressively pursue SRF and other low-cost financing terms • Attempt to augment with other vehicles to reduce local share responsibility • Aligns cost recovery and useful life of investment • Capital cost recovery for suburban customers on Utility Basis • Over useful life irrespective of financing decisions Page 14 1/14/10

  15. Sample Capital Cost Recovery for DWSD Infrastructure Investment Page 15 * Includes principal, interest, and debt service coverage ** Includes depreciation expense and return on rate base

  16. City of DetroitWater and Sewerage Department Trends

  17. Annual Water Sales – (mgd) Page 17 1/14/10

  18. Annual Billed Wastewater Volumes – (mgd) Page 18 1/14/10

  19. Potential DWSD Water Financial Plan – Mild Contraction Scenario Page 19 1/14/10

  20. City of DetroitWater and Sewerage Department Game Changers

  21. DWSD Infrastructure Financing Potentially Impacted By . . . • Affordability of Existing Level of Service • Regulatory Pressure to Enhance Existing Level of Service • Availability of Efficient Financing Vehicles Page 21 1/14/10

  22. Compliance with Wastewater Treatment Standards - A Very Possible Potential Reality Stormwater CSO Sanitary Page 22 1/14/10

  23. Federal Representative EPA Citizen Goals State Agency Utility Communities Funding WastewaterInfrastructure:A Historical Perspective Page 23 1/14/10

  24. Water Industry (AWWA) Perspective on Financing Infrastructure • Primary focus has always been local, and should remain so • Aging infrastructure is an issue in the US, but it is not at a crisis, and it is not all “crumbling” • There is a role for the federal government in lowering cost of capital and in special circumstances, but water infrastructure challenges are not primarily federal problems Page 24 1/14/10

  25. Water Industry (AWWA) Perspective on Financing Infrastructure • Water trust fund is not the most effective option • Overhead costs of sending money to Washington rather than retaining it locally • Encouragement of delay in establishing true cost rates while local officials wait for trust fund assistance • Congress’ history of not spending revenues on purpose for which they were collected Page 25 1/14/10

  26. Water Industry (AWWA) Perspective on Financing Infrastructure • More effective financing tools include: • Enhancement of existing SRF programs • Removal of annual volume caps for private activity bonds • Full cost pricing for water service • Creation of federal water infrastructure bank • AWWA opposes national water tax • Inefficient, regressive, inequitable and punishes communities that have responsibly addressed local concerns Page 26 1/14/10