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Home My WebLink AboutAgenda - 10/8/1997 - Finance and Personnel Committee City of McHenry �,,. �� ,, . � � 333 South Green Strec�.t , y McHenry,Illinois 60050-5495 ,�� - - �, � . -� � FINANCE COMMITTEE MEE ING ; Clerk's Office and AGENDA ' '� Administration /� �- (815)363-2100 I V � Fax(815)363-2119 1 Public Works, Wednesday, October 8, 1 97 Building and Zoning 7:00 P.M. �� / (815)363-2170 Aldermen's Conference Roc�fn Fax(815)363-2173 Pazks and Recreation (815) 363-2160 Fax(815)363-2173 Police 1 . Water and Sewer Rates (Non-Emergency) (815)363-2200 �'�x(815)363-2149 2. Water & Sewer Capital Development Fees � Mayor 3. Refunding Bond Program - Series 1990 General Obligation Bond Steven J.Cuda CityClerk 4. Any and All Business Which May Properly Come Before the PamelaJ.Althoff Committee Treasurer David M.Welter Aldermen WARD 1 William J.Bolger WARD 2 Andrew A.Glab WARD 3 Frank S.McClatchey WARD 4 Steven C.Murgatroyd Posted and Mailed: October 3, 1997 WARD 5 William V.Baird �� f1N�lNC� �QMMI7T�E AGE 'NDA � UPPLEMENT � T0: Mayor and Finance Committee FROM: John A. Lobaito, City Administrator FOR: October 8, 1997 Finance Committee Meeting RE: Water & Sewer Rates; Capital Development Fees; Refunding Bond Program WATER/SEWER RATES The Finance Committee last met on August 19, 1997 and discussed increases in the water and sewer rates. It was decided rates would have to be increased to meet present and future operation and maintenance expenditures in the Water and Sewer Department. Staff was directed to develop a rate structure that would achieve a balanced budget in both funds. The parameters that were outlined are as follows: 1 ► The rate increase should be spread over a 3-year period; 2) Anticipated expenditures attributable to the Water and Sewer Funds over the next 5 years should be included in determining the new rates. `-- 3) Present options to the Committee that would allow a comparison of rates based on different percentage increases on an annual basis. To determine a new rate schedule we first assessed the expenditures attributable to the Water and Sewer Fund over the next five years. They are detailed below: Sewer Fund • Painting secondary clarifiers both plants S 50,000 • Vehicle replacement (amortized cost annually) $ 28,235 • Pump renovations (CWWTP) S 100,000 • Two additional employees S 60,000 • Replacement of main control panel for raw sewage pump S 50,000 TOTAL S 288,235 Water Fund • Renovation of Water Plant #1 51 ,000,000 • Construction of Elevated Storage Tank S 750,000 (we anticipate building two; one will be attributable to the Water Fund users; the other will be attributable to the Capital Development Fund) • Painting and repairs of one water tower $ 125,000 � • Vehicle replacement (amortized cost annually) S 19,528 Total Water Expenditure 51 ,894,528 Total Sewer Expenditure S 288,235 COMBINED TOTAL $2,182,763 Finance Committee October 8, 1997 Page 2 `"" To accomplish these items over the next five years, approximately 5430,000 annually would need to be generated over and above existing operation and maintenance cost. It should be noted that changes in IEPA regulations for wastewater treatment over the next five years is an unknown. Recent news seems to indicate system changes will be necessary in the next three to five years. The changes will likely require land acquisition. Also, if the City acquires the McHenry Shores Water System, additional improvements to the system would be necessary. A funding mechanism has not been discussed for these improvements, but should not be attributable to the existing user fees. The following summary of the Water and Sewer Fund is drawn from the audit (year ending April 30, 1997). The revenue figures shown are exclusive of prior revenue sources of the fund which have included special assessments (this revenue [5128,000] will be lost after the current fiscal year►, capital development fees, and interest income. Revenue and Expenses (April 30, 1997) Water Sewer Debt Service Total Revenue $657,045 $1,045,942 $ 271,332 $1,974,319 Expenditures 562,225 821,764 725,625 2,109,614 � Net Revenue $ 94,820 $ 224,178 $(454,293) $(135,295) You will note a S 135,000 deficit. This has been met by the other revenue sources mentioned above. The following tables represent projected revenues using three different scenarios for rate increases over the next three years. The projections are based on the number of users and annual usage enumerated in the April 30, 1997 audit. The number of users is 6,725 plus an additional 6 percent sewer only users and the usage is 61 1 .25 million gallons annually. Based on building permit data, these numbers were increased annually at the rate of 125 new residential connections and 1 1 .25 million gallons per year. At the end of the three-year increase (year 2000) period, the total combined revenue increase for the Water and Sewer Fund will be approximately $750,000 annually in comparison to the revenue for the year ending April 30, 1997. � �TER SEWER REVENUE PROJECTIONS COMBINED RATE INCREASES 10% /10� /10� OCTOBER 3 , 1997 ANNUAL USAGE DESCRIPTION RATE (M.GAL. ) # USERS AMOUNT ********�r****************************************************�********** 1997-98 Current Water 1.10 611.25 6,725 672,375 Sewer 1.65 1,008,563 Sewer-Flat 11.00 670 88,440 Debt Serv. 3 .00 7,395 266,220 RATE - 2.75 Total 2,035,598 ].998 - 10� INCREASE Water 1.30 622.50 6,850 $09,250 Sewer 1.70 1,058,250 Sewer-Flat 12.00 670 96,480 Debt Serv. 3 .00 7,520 270,720 RATE - 3 .00 Total 2,234,700 � 1999 - 10� INCREASE Water 1.55 633.75 6,975 982,313 Sewer 1.75 1,109,063 Sewer-Flat 13 .00 670 104,520 Debt Serv. 3.00 7,645 275,220 RATE - 3. 30 Total 2,471,115 2000 - 10� INCREASE Water 1.85 645.00 7,100 1,193 ,250 Sewer 1 .80 1,161,000 Sewer-Flat 14.00 670 112,560 Debt Serv. 3.00 7,770 279,720 RATE 3 .65 Total 2,746,530 TOTAL RATE INCREASE 30� � �PATER SEWER REVENUE PROJECTIONS COMBINED RATE INCREASES 15% / 8$/ 7$ OCTOBER 3, 1997 ANNUAL USAGE DESCRIPTION RATE (M.GAL. ) # USERS AMOUNT *******�r�r*****************************************************�r********* 1997-98 Current Water 1.10 611.25 6,725 672,375 Sewer 1.65 1,008,563 Sewer-Flat 11.00 670 88,440 Debt Serv. 3.00 7,395 266,220 RATE - 2.75 Total 2,035,598 1998 - 15� INCREASE Water 1.45 622.50 6,850 902,625 Sewer 1.70 1,058,250 Sewer-Flat 12.00 676 97,344 Debt Serv. 3.00 7,520 270,720 RATE - 3. 15 Total 2,328,939 � 1999 - 8� INCREASE Water 1.65 633.75 6,975 1,045,688 Sewer 1.75 1,109,063 Sewer-Flat 13.00 676 105,456 Debt Serv. 3 .00 7,645 275,220 RATE - 3.40 Total 2,535,426 2000 - 7� INCREASE Water 1.85 645.00 7,100 1,193,250 Sewer 1.80 1,161,000 Sewer-Flat 14.00 676 113 ,568 Debt Serv. 3.00 7,770 279,720 RATE 3.65 Total 2,747,538 TOTAL RATE INCREASE 30� � �R4TER SEWER REVENUE PROJECTIONS COMBINED RATE INCREASES 24%/ 4�/ 4� OCTOBER 3, 1997 ANNUAL USAGE DESCRIPTION RATE (M.GAL. ) # USERS AMOUNT ******************************************************�r***************** 1997-98 Current Water 1.10 611. 25 5,725 672,375 Sewer 1.65 1,008,563 Sewer-Flat 11.00 670 88,440 Debt Serv. 3 .00 7,395 266,220 RATE - 2.75 Total 2,035,598 1998 - 24� INCREASE Water 1.65 622.50 6,850 1,027,125 Sewer 1.75 1,089,375 Sewer-Flat 12.00 670 96,480 Debt Serv. 3 .00 7,520 270,720 RATE - 3.40 Total 2,483 ,700 � 1999 - 4% INCREASE Water 1.75 633.75 6,975 1,109,063 Sewer 1.80 1 ,140,750 Sewer-Flat 13 .00 670 104,520 Debt Serv. 3.00 7,645 275,220 RATE - 3 .55 Total 2,629,553 2000 - 4� INCREASE Water 1.85 645.00 7,100 1,193,250 Sewer 1.85 1,193 ,250 Sewer-Flat 14.00 670 112,560 Debt Serv. 3 .00 7,770 279,720 RATE - 3 .70 Total 2,778,780 TOTAL RATE INCREASE 32� � Finance Committee Meeting October 8, 1997 Page 3 � WATER/SEWER CAPITAL DEVELOPMENT FEES The Capital Development Fees for residential buildings is based on the cost per Population Equivalent(PE) for providing capital facilities to the Water and Sewer users. For water, these capital items would include wells, treatment plants, and water storage tanks. For sewer, the capital item would be for the construction of a wastewater treatment plant and associated costs such as engineering services. The PE for dwelling units can be obtained from the Illinois School Consulting Services. These figures were just updated in 1997. They are as follows: Detached Single Familv PE 2 bedroom or less 2.017 3 bedroom 2.899 4 bedroom 3.764 5 bedroom or more 3.770 Attached Single Familv 1 bedroom 1 .193 2 bedroom 1 .990 3 bedroom 2.3g2 4 bedroom or more 3.145 � Apartments Efficiency 1 .294 1 bedroom 1 .758 2 bedroom 1 .914 3 bedroom 3.053 The cost per PE for providing wastewater treatment can be easily figured because of the present expansion to the SWWTP. This project cost, including engineering services, is approximately 53.6 million. The cost per PE can be calculated as follows: Construction cost: 53.6 million Expansion of Plant Capacity: 5,000 PE (53.6 million) = 5,000 PE = 5720 per PE The cost per PE (5720) can be applied to the PE established for the different dwelling units. This represents the actual cost of adding a dwelling unit to the sewer system. The table below reflects the current fees compared to the proposed increase. SEWER CAPITAL DEVELOPMENT FEES Current Proposed Detached Single Family: � 2 bedroom or less $ 980.00 $ 1 ,452.00 3 bedroom 1 ,418.00 2,087.00 4 bedroom 1 ,818.00 2,710.00 5 bedroom or more 1 ,781 .00 2,714.00 Finance Comm�ttee Meeting October 8, 1997 Page 4 Current Proposed � Attached Single Family: 1 bedroom S 1 ,027.00 S 858.00 2 bedroom 1,027.00 1 ,432.00 3 bedroom 1 ,178.00 1 ,722.00 4 bedroom 1,651 .00 2,264.00 Apartments: Efficiency 867.00 931 .00 1 bedroom 867.00 1 ,265.00 2 bedroom 1,379.00 2,198.00 The Water Capital Development Fees are calculated on a similar basis. The cost of constructing water plants and water storage facilities can be converted to a cost per PE. This was done by Baxter and Woodman in 1994. The cost at that time for providing water supply and water storage was S 181 per PE. The City has not undertaken any projects of this type since then to establish a more updated figure. We can inflate the number to reflect more accurately the cost of developing these facilities. However, upon review of the current rates and factoring inflation in over the past three years, it appears the current schedule provides sufficient monies to cover the cost of developing new facilities. The Finance Committee might still consider an adjustment based on the inflation rate over the three-year period. I have provided the �.,. current fee schedule below: Water Capital Development Fee Detached Single Family: Current 2 bedroom or less S 615.00 3 bedroom 891 .00 4 bedroom 1 ,142.00 5 bedroom or more 1 ,1 19.00 Attached Single Family: 1 bedroom 5 645.00 2 bedroom 645.00 3 bedroom 740.00 4 bedroom or more 1,037.00 Apartments: Efficiency 545.00 1 bedroom 545.00 2 bedroom 545.00 3 bedroom or more 866.00 `.. Finance Committee Meeting October 8, 1997 Page 5 For your review, I have provided a chart below that compares the water and sewer �-' capital development fees with the surrounding communities. The McHenry figure reflects the proposed sewer rate. For simplicity, the comparison was made of three bedroom homes. Water Capital Sewer Capital Development Fee Development Fee ItII�cHenry �891.00 ' I $�,�87.U� < _. Crystal Lake $1,150.00 S 1,890.00 Woodstock $630.00 5970.00 Algonquin $3,200.00 $3,200.00 Cary $3,220.00 53,880.00 Harvard 5447.00 52,567.00 � REFUNDING BOND PROGRAM - SERIES 1990 GENERAL OBLIGATION BOND Attached is information provided to us by Eric Anderson of Harris Trust and Savings Bank. The information details the program for refunding the 1990 Bond Issue. The net savings to the City over the life of the bond will be approximately 556,000 should the City decided to enter into an agreement with Harris Bank. City Attorney David McArdle is presently reviewing the information provided. As of the time of this writing, his comments have not been received. Additional information will be provided at the Finance Committee Meeting. JAL:Ijm Attachments L