Title
Storm and Surface Water Financial Analysis and Rate Structure
Recommended Action
Receive information on the financial status of the Storm and Surface Water Utility. Move to direct staff to proceed with the concepts presented and further develop an operating budget and a revised storm and surface water rate structure for implementation in 2019.
Report
Issue:
Whether to authorize staff to proceed with finalization of a revised storm and surface water rate structure for implementation in 2019.
Staff Contact:
Andy Haub, Water Resources Director, 360.570.3795
Presenter(s):
Andy Haub
Background and Analysis:
As part of the financial analysis for the Storm and Surface Water Plan (Plan), the Utility hired a consultant, FCS Group (FCS), to help develop a rate strategy that provides stable revenue to meet the Utility's operating and capital costs. FCS determined that the Utility was in solid financial condition.
Full implementation of the Storm and Surface Water Plan strategies
FCS's analysis assumed full implementation of all of the Plan's strategies and capital projects. If that were to happen, the resulting rate increase would be 54% through 2022. The biggest driver in FCS's recommendations was increasing depreciation funding to equitably charge current customers for the wear and tear and future replacement of the infrastructure. Depreciation funding alone accounted for a 20% rate increase. Keeping up with inflation, salaries and construction costs was anticipated to raise rates an additional 14% through 2022. Hiring additional employees, if justified, for inspection and maintenance, street sweeping and pipe televising, accounted for an additional 8% rate increase.
More likely implementation scenario
Staff will discuss the Utility's strategy for a modified implementation strategy that would raise rates by approximately 27% by 2022. The strategy will involve:
* A slower increase in depreciation funding,
* Fully accounting for inflation and construction ...
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