Water and sewer fund presentation

1. 11
Water and Sewer FundWater and Sewer Fund
PresentationPresentation
Evanston City CouncilEvanston City Council
July 22, 2013July 22, 2013

2. 22
AgendaAgenda
 Sewer FundSewer Fund
 Water FundWater Fund
 Wholesale Water CustomersWholesale Water Customers

3. 33
Evanston Water ConsumptionEvanston Water Consumption

4. 44
Sewer FundSewer Fund

5. 55
Sewer RateSewer Rate
 Sewer rate has been $3.94/100 cu ftSewer rate has been $3.94/100 cu ft
($5.27/1,000 gal) since 2004.($5.27/1,000 gal) since 2004.
 Average single family residence pays $454/year.Average single family residence pays $454/year.
 $17M in GO Bonds approved for 2010-2013.$17M in GO Bonds approved for 2010-2013.
 Tax-exempt customers pay $4.53/100 cu ft forTax-exempt customers pay $4.53/100 cu ft for
usage over 10,000 cu ft in any billing period.usage over 10,000 cu ft in any billing period.

6. 66
Sewer Fund Expense ProjectionsSewer Fund Expense Projections

7. 77
Large DiameterLarge Diameter
Sewer RehabSewer Rehab
 IEPA low interestIEPA low interest
loan funding:loan funding:
 $3.6M in 2013 to$3.6M in 2013 to
line 1.6 milesline 1.6 miles
 $5.4M in 2014-2017$5.4M in 2014-2017
to line 2.5 milesto line 2.5 miles
 3.1 miles remaining3.1 miles remaining
after 2017 at anafter 2017 at an
estimated cost ofestimated cost of
$8.8 million$8.8 million

8. 88
Sewer Fund Cash Flow ProjectionsSewer Fund Cash Flow Projections

9. 99
Water FundWater Fund

10. 1010
Water RateWater Rate
 As of July 1, 2013, the water rate isAs of July 1, 2013, the water rate is
$1.80/100 cu ft ($2.41/1,000 gal).$1.80/100 cu ft ($2.41/1,000 gal).
 Additional bi-monthly minimum charge for firstAdditional bi-monthly minimum charge for first
500 cu ft (varies by meter size).500 cu ft (varies by meter size).
 Average single family residence pays $192/year.Average single family residence pays $192/year.

11. 1111
Water Fund Expense ProjectionsWater Fund Expense Projections

12. 1212
Water Capital Program SummaryWater Capital Program Summary
 Water Treatment Plant improvements:Water Treatment Plant improvements:
 NWC pays ~59% of improvement costs as theNWC pays ~59% of improvement costs as the
assets are depreciated.assets are depreciated.
 14 MG Reservoir = $26.1M14 MG Reservoir = $26.1M
 Plant Reliability Improvements = $3.0MPlant Reliability Improvements = $3.0M
 Intake Improvements = $2.0MIntake Improvements = $2.0M
 Other major projects not paid for by NWC:Other major projects not paid for by NWC:
 Standpipe Painting & Repair = $2.7MStandpipe Painting & Repair = $2.7M
 Meter Reading System = $2.4MMeter Reading System = $2.4M

13. 1313
Water MainWater Main
ReplacementReplacement
 51 miles of51 miles of
water mainwater main
>100 years old>100 years old
 30” feeder30” feeder
main is almostmain is almost
80 years old.80 years old.

14. 1414
Water Fund Five-Year CIPWater Fund Five-Year CIP
Fiscal
Year
Water Plant
Capital
Program
Distribution
System Capital
Program
Total
Capital
Spending
2013 $3,305,000 $3,100,000 $6,405,000
2014 $4,050,000 $3,190,000 $7,240,000
2015 $6,250,000 $7,090,000 $13,340,000
2016 $21,440,000 $6,800,000 $28,240,000
2017 $7,725,000 $3,490,000 $11,215,000
2018 $3,000,000 $3,590,000 $6,590,000
5-Yr Total $42,465,000 $24,160,000 $66,625,000

15. 1515
Water Rate ProjectionsWater Rate Projections
FY
2013
FY
2014
FY
2015
FY
2016
Annual Water Rate
Increase
3% 10% 10% 10%
Water Rate
per 100 cu ft
$1.80 $1.98 $2.18 $2.40
Water Rate
per 1,000 gallons
$2.41 $2.65 $2.91 $3.21
Average Resident
Annual Water Cost
$192 $211 $232 $255
Annual Cost Increase $6 $19 $21 $23

16. 1616
Water Fund Cash Flow ProjectionsWater Fund Cash Flow Projections

17. 1717
Water and SewerWater and Sewer
Fund SummaryFund Summary

18. 1818
Rate ProjectionsRate Projections
FY
2013
FY
2014
FY
2015
FY
2016
Annual Water Bill for
Avg. Residential Use
$192 $211 $232 $255
Annual Sewer Bill for
Avg. Residential Use
$454 $454 $454 $454
Combined Annual
Water & Sewer Bill
$645 $665 $686 $709
Increase in Annual
Water & Sewer Bill
$6 $20 $21 $23
% Increase in Annual
Water & Sewer Bill
1% 3% 3% 3%

19. 1919
Regional CostRegional Cost
ComparisonComparison
Community
Annual Water &
Sewer Cost
Buffalo Grove $371
Skokie $374
Palatine $399
Northbrook $420
Chicago $477
Arlington Heights $487
Wheeling $567
Niles $574
Glenview $624
Lincolnwood $643
Evanston $645
Des Plaines $677
Wilmette $682
Park Ridge $710
Oak Park $750
Morton Grove $758
Schaumburg $774
Deerfield $791
Lincolnshire $826
 Survey includes communitiesSurvey includes communities
using Lake Michigan waterusing Lake Michigan water
and part of MWRD.and part of MWRD.
 Most of these communities doMost of these communities do
not have relief sewers likenot have relief sewers like
Evanston (lower sewer ratesEvanston (lower sewer rates
but also more flooding).but also more flooding).
 Regional average is $608 perRegional average is $608 per
year for single family resident.year for single family resident.
 Chicago’s water/sewer ratesChicago’s water/sewer rates
will increase 15% in 2014 andwill increase 15% in 2014 and
2015.2015.

20. 2020
Regional Cost ProjectionsRegional Cost Projections
 Assumptions:Assumptions:
 Communities buyingCommunities buying
water from Chicagowater from Chicago
pass on the 15% waterpass on the 15% water
rate increases in 2014rate increases in 2014
and 2015.and 2015.
 Otherwise 2% annualOtherwise 2% annual
water and sewer rateswater and sewer rates
are assumed for allare assumed for all
communities (CPI only).communities (CPI only).

21. 2121
Future ChallengesFuture Challenges
 An average of $5M per year in water bonds isAn average of $5M per year in water bonds is
needed for the next 20 years to help pay forneeded for the next 20 years to help pay for
capital improvements, while slowly increasingcapital improvements, while slowly increasing
the water rate to become self-sufficient.the water rate to become self-sufficient.
 Perform a capital funding study in 2014 toPerform a capital funding study in 2014 to
evaluate long-term funding options for waterevaluate long-term funding options for water
improvements.improvements.
 Aging of Water Plant infrastructure andAging of Water Plant infrastructure and
equipment.equipment.

22. Future UncertaintiesFuture Uncertainties
 Additional revenue from new wholesaleAdditional revenue from new wholesale
customers could significantly reducecustomers could significantly reduce
borrowing needs for future CIP.borrowing needs for future CIP.
 Future water consumption trends.Future water consumption trends.
 Negotiation of a new Water SupplyNegotiation of a new Water Supply
Agreement with Skokie.Agreement with Skokie.
 Re-Open WaterRe-Open Water Supply Agreement with theSupply Agreement with the
Northwest Water Commission.Northwest Water Commission.
2222

23. 2323
WholesaleWholesale
Water CustomersWater Customers

24. 2424
Existing Wholesale WaterExisting Wholesale Water
CustomersCustomers
 Village of SkokieVillage of Skokie
 Became a wholesale customer in 1944Became a wholesale customer in 1944
 Latest agreement signed in 1997Latest agreement signed in 1997
 20-yr term (expires in 2017)20-yr term (expires in 2017)
 Currently paying $0.98/1,000 galCurrently paying $0.98/1,000 gal
 Northwest Water CommissionNorthwest Water Commission
 Became a wholesale customer in 1985Became a wholesale customer in 1985
 Latest agreement expires in 2030 +/- 5 yearsLatest agreement expires in 2030 +/- 5 years
 Currently paying on average $0.60/1,000 galCurrently paying on average $0.60/1,000 gal

25. 2525
Engineering and FinancialEngineering and Financial
AnalysisAnalysis
 Transmission main feasibility study conducted inTransmission main feasibility study conducted in
coordination with 5 potential wholesale customerscoordination with 5 potential wholesale customers
and the Northwest Water Commission:and the Northwest Water Commission:
 LincolnwoodLincolnwood
 NilesNiles
 Park RidgePark Ridge
 Des PlainesDes Plaines
 Regional transmission main is technically andRegional transmission main is technically and
financially feasible for all but Lincolnwood.financially feasible for all but Lincolnwood.
North Suburban MunicipalNorth Suburban Municipal
Joint Action Water AgencyJoint Action Water Agency

26. 2626
Potential New Wholesale CustomersPotential New Wholesale Customers

27. 2727
OutlookOutlook
 Lincolnwood:Lincolnwood:
 No modifications needed at the Water Plant or inNo modifications needed at the Water Plant or in
the distribution system.the distribution system.
 A dedicated transmission main would beA dedicated transmission main would be
constructed from Evanston’s South Standpipe.constructed from Evanston’s South Standpipe.
 City has submitted a proposal to LincolnwoodCity has submitted a proposal to Lincolnwood
and has begun contract negotiations.and has begun contract negotiations.
 Would take about one year to design, permit, andWould take about one year to design, permit, and
construct the transmission main.construct the transmission main.

28. 2828
OutlookOutlook
 Niles, Park Ridge, and Des Plaines:Niles, Park Ridge, and Des Plaines:
 Possible additions to the Northwest WaterPossible additions to the Northwest Water
Commission or could construct their own main.Commission or could construct their own main.
 Morton Grove could also potentially be served by aMorton Grove could also potentially be served by a
new pipeline to these communities.new pipeline to these communities.
 Would have to increase water treatment capacityWould have to increase water treatment capacity
from 108 mgd to 132 mgd to serve all of thesefrom 108 mgd to 132 mgd to serve all of these
communities.communities.
 City has submitted a proposal to these communitiesCity has submitted a proposal to these communities
and offered to begin contract negotiations.and offered to begin contract negotiations.

29. 2929
OutlookOutlook
 NWC and NSMJAWA:NWC and NSMJAWA:
 Addition of NSMJAWA would likely mean the additionAddition of NSMJAWA would likely mean the addition
of the other communities as well, since it wouldof the other communities as well, since it would
decrease their cost for a new transmission main.decrease their cost for a new transmission main.
 NWC would also benefit from a lower cost toNWC would also benefit from a lower cost to
construct a redundant transmission main.construct a redundant transmission main.
 Would require a major water plant expansion fromWould require a major water plant expansion from
108 mgd to 214 mgd.108 mgd to 214 mgd.
 City has submitted a proposal to NSMJAWA andCity has submitted a proposal to NSMJAWA and
offered to begin contract negotiations, though theiroffered to begin contract negotiations, though their
contract with Chicago extends 10 more years.contract with Chicago extends 10 more years.

30. 3030
SummarySummary
 Current Operations:Current Operations:
 Substantial Capital needed that is not supportedSubstantial Capital needed that is not supported
without debt issuance and debt issuance has interestwithout debt issuance and debt issuance has interest
costs on top of capital costs.costs on top of capital costs.
 Separation of Water Operating and Water CapitalSeparation of Water Operating and Water Capital
revenues could create a flow of funds without interestrevenues could create a flow of funds without interest
 Expanded Operations:Expanded Operations:
 Substantial Capital needed depending on the option.Substantial Capital needed depending on the option.
 Capital and Operating costs completely covered byCapital and Operating costs completely covered by
new revenues.new revenues.

31. 3131
Utilities Department UpdateUtilities Department Update
QUESTIONSQUESTIONS