E2. Briefing Presentation — original pdf

Backup

Water and Wastewater Commission Austin Water Proposed FY2021 Budget July 15, 2020 Presentation Outline • Proposed Budget Overview • Sources - Revenue • Uses - Expenses • Significant Budget Changes • Debt Management Strategies • Average Residential Bills / CAP Customer Bills • Capital Improvement Budget • Affordability Metrics • Fund Summary 2 Proposed Budget Overview • 0% Rate Revenue Increase for 2021 – Continued improvements to affordability – CAP customer rate reduction for COVID-19 extended for all of 2021 • $4.38 average bill reduction • Continued debt management strategies – Debt defeasances and refinancing – $40 million debt defeasance in FY 2020 resulting in $40.2 million in debt savings – $46.5 million decrease in FY 2021 debt service requirements due to all previous defeasances and refundings since 2016 • 18 new full-time positions – 4 operations positions, 1 engineering program position, 3 environmental planning & development program positions, 5 support services positions, 3 positions supporting AMI and 2 positions supporting Water Forward 3 Sources of Funds Austin Water Revenue and Transfers In: FY 20 Amended: $ 630.0 million FY 21 Proposed: $ 614.2 million $290.5 $296.8 $269.9 $256.7 $350 $300 $250 $200 $150 $100 $50 $0 $2.3 $2.3 $14.5 $12.2 Water Services Wastewater Services Reclaimed Water Other Revenue Transfers In Services FY 20 Amended FY 21 Proposed 52.8 46.2 4 $300 $250 $200 $150 $100 $50 $0 Uses of Funds Austin Water Expenses and Transfers Out: FY 2021 Positions: 1,236 FY 20 Amended: $620.8 million FY 21 Proposed: $616.3 million 18.0 $236.7 $221.9 $186.5 $173.7 $190.0 $184.7 $22.4 $21.2 Operations Other Programs and Requirements Debt Service Transfers FY 20 Amended FY 21 Proposed 5 Significant Budget Changes Description Increase in cash transfers for pay-as-you-go CIP financing Increase in Balcones Canyon Preserve and Longhorn Dam operating costs by decreasing in Expense Refunds from the General Fund 18 new full-time positions Increase in employee wages enhancement (2%) Increase in AMI metering contract warranty and annual maintenance costs New On-site Reuse Incentive Grant Increase in building inspections, maintenance and repairs Increase in City Administrative Support Costs Decrease in General Fund Transfer Decrease in debt service requirements Decrease in transfers for debt defeasance Amount $10.0 million $2.1 million $2.0 million $1.9 million $1.2 million $1.0 million $0.9 million $0.9 million ($0.9 million) ($12.8 million) ($15.0 million) 6 Debt Management Strategies • Capital Recovery Fees (“CRF”) – Projected CRF net revenues of $32 million for FY20 – Proposed use of CRF revenues of $35M to be used for FY21 debt defeasance – $40.0 million of debt defeased in FY20 used to reduce future debt service requirements by – $189.4 million in total debt defeasances since 2016 with $199.5 million in debt service • Debt Defeasance $40.2 million through 2023 savings • TWDB Loans – Continued use of TWDB low-interest loans for major CIP projects 7 $250 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 ) s n o i l l i m n i ( e c i v r e S t b e D Debt Management Impact Total Debt Service Requirements Comparison FY 2016 to Current - Budget Basis $45.9M $48.7M $40.1M $46.5M $60.8M $65.4M $68.6M $63.9M $16.7M $19.M Total Debt Service Savings From Defeasances $199.5 Million Since 2016 2015-16 Actual 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Estimate 2020-21 Forecast 2021-22 Forecast 2022-23 Forecast 2023-24 Forecast 2024-25 Forecast Current Debt Service Requirements Debt Svc Reduction 2016 Debt Service Requirements 8 Average Residential Customer Proposed Bill Impacts Non-CAP Customers Water Service2 Wastewater Service Total Revenue CAP Customers Water Service2 Wastewater Service Total Revenue Current 2020 Rates1 $ 40.31 40.48 80.79 $ Current 2020 Rates1 $ 19.49 24.48 $ 43.97 Proposed 2021 Rates1 $ 40.31 40.48 80.79 $ Proposed 2021 Rates1 $ 17.57 22.02 $ 39.59 $ Variance $ - - - $ % Variance 0.0% 0.0% 0.0% $ Variance $ $ (1.92) (2.46) (4.38) % Variance -9.9% -10.0% -10.0% Notes: 1. Bills based on 5,800 gallons of water and 4,000 gallons of wastewater discharge 2. Water bills include the Reserve Fund Surcharge 9 Customer Assistance Program Customer Assistance Program Overview • $0.15 per thousand gallon charge to all retail customers • Approximately 13,180 CAP participants • Waived fixed fees and discounted volume rates • Proposed $4.38 reduction in CAP average monthly bill • Increase CAP discount from 45.6% to 51.0% of Non-CAP bill 2021 Average Monthly Bill Comparison: Non-CAP vs. CAP Non-CAP CAP $ Discount % Discount Water $ 40.31 $ 17.57 $ 22.74 Wastewater 40.48 22.02 18.46 Combined $ 80.79 $ 39.59 $ 41.20 56.4% 45.6% 51.0% Note: Bills based on 5,800 Gals water and 4,000 Gals. wastewater 10 Capital Improvement Spending Plan $971.0 Million 5-year Capital Spending Plan 5-Year CIP Plan FY 2021-2025 $ in millions 2021 2022 2023 2024 2025 Total Water Wastewater Reclaimed $ 87.3 83.6 5.3 $ 88.1 123.6 6.7 $ 60.6 123.0 8.7 $ 69.6 103.4 7.7 $ 71.9 128.4 3.1 $ 377.5 562.0 31.5 Combined $ 176.2 $ 218.4 $ 192.3 $ 180.7 $ 203.4 $ 971.0 11 Proposed 5-Year CIP Spending Plan Capital Spending Category 5-Year CIP Spending Plan Wastewater Treatment Plants Water Pipe Network Wastewater Pipe Network Water Treatment Plants Reservoirs Reclaimed Water Network Pump Stations Buildings and Improvements Lift Stations Information Technology Vehicles and Equipment Other Projects Proposed 5-Year CIP Spending Plan Total $343.8M $181.5M $169.5M $75.0M $57.8M $31.6M $28.6M $28.1M $18.3M $17.7M $16.5M $2.6M $971.0M 12 Affordability Metrics 13 Affordability Overview • Rate Changes – FY18 – 4.8% rate reduction – FY19 – 0% rate increase – FY20 – 0% rate increase – FY21 – 0% rate increase – Projected FY22 – 0% rate increase • Continued focus on CAP Customer Affordability – FY18 – 11.4% rate reduction – FY19 – 0% rate increase – FY20 – 8.3 % rate reduction – FY21 – 10% rate reduction for maintaining COVID discounts • COVID Bill Relief – 10% rate reduction for CAP and Non-CAP on Water blocks 1, 2, & 3 and Wastewater blocks 1 & 2 – CAP Customer 10% rate reduction extension for FY21 – $5 million in additional funds to Plus 1 Assistance Program rom both AW and AE 14 Affordability Metrics Affordability Metrics 15 Affordability Metrics CAP Customers lowest of all cities Average Monthly Bill Comparison Combined Bill Residential Low Volume Existing Rates 3,000 gallons water and 2,000 gallons wastewater 16 Affordability Metrics FY21 CAP Increased Ranking 6th 4th. Average Monthly Bill Comparison Combined Bill Residential Average Volume Existing Rates 5,800 gallons water and 4,000 gallons wastewater 17 Affordability Metrics FY21 CAP is 2nd Lowest in Ranking Affordability Ratio (AR20) Preliminary Numbers Combined Bill Residential 20th Percentile Household Income % Income after paying for essential needs Existing Rates 4,000 gallons water and 4,000 gallons wastewater 18 Affordability Metrics FY21 CAP is 2nd Lowest in Ranking Hours Minimum Wage Preliminary Numbers Combined Bill Residential Number of Hours at Minimum Wage to Pay for Basic Services Existing Rates 4,000 gallons water and 4,000 gallons wastewater 19 Affordability Metrics FY21 CAP Increased Ranking 14th 9th. AVERAGE MONTHLY BILL COMPARISON Combined Bill Residential Existing Rates 10,000 gallons water and 5,000 gallons wastewater 20 Affordability Metrics AW Goal: 1.5% or less 21 Historical CAP Customer Water and Wastewater Bills CAP Customer Historical Water and Wastewater Bills (5,800 Gals. Water and 4,000 Gals. Wastewater) $54.16 $50.97 $46.29 $47.97 $47.97 $43.97 $40.36 $38.38 $38.38 $36.20 $34.19 2018 AW rate decrease and initiated additional wastewater volume discounts $39.59 $39.59 $39.59 $39.59 $39.59 2021 Continuation of COVID-19 Rate Reduction 2013 AW initiated additional water volume discounts 2009 AW initiated fixed fee discounts 2020 AW $4 volumetric rate decrease for combined average monthly CAP bill $49.29 $50.00 $30.00 $33.26 $60.00 $40.00 $20.00 $10.00 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 22 Fund Summary (In Millions) Beginning Balance Revenue Transfers In Available Funds* Operating Requirements Debt Service Transfers Out Total Requirements* Excess (Deficiency) Ending Balance Debt Coverage Days Cash on Hand % Cash for CIP Spending Amended 2020 Estimated 2020 Proposed 2021 $ $ $ $ 197.9 577.2 52.8 630.0 244.3 186.5 190.0 620.8 9.2 207.1 $ $ $ $ 201.8 557.0 50.8 607.8 246.9 176.3 180.0 603.2 4.6 206.4 $ $ $ $ 206.4 568.0 46.2 614.2 257.9 173.7 184.7 616.3 (2.1) 204.3 1.75 244 44.0% 1.71 258 39.8% 1.74 246 47.2% FY2021 Proposed Budget complies with all Council approved financial policies. 23 24