Budget Committee Presentation_May 30, 2024 — original pdf

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Water and Wastewater Commission: Budget Committee: May 20, 2024 Agenda  Austin Water Financial Forecast Fiscal Year 2025-2029 Update  Austin Water Cost of Service Update  Austin Water Debt Management Update  Review Fiscal Year 2025 Budget Schedule Austin Water Financial Forecast Fiscal Year 2025-2029 Update Joseph Gonzales, Financial Services Assistant Director Austin Water Austin Water Financial Goals  Support operational and infrastructure resiliency  AW priority since 2019  5-Year CIP spending plan totaling $2.3B  Maintain financial strength and stability  FY23 $644.8M in total revenue  As of March 2024, revenues $5.1M above budget  Maintaining reserves and debt service coverage levels in excess of financial policies  Planned rate increases while maintaining rate affordability  Forecasted rate increase in FY25-FY29  Customer Assistance Program improvements  GoPurple Community Benefit Charge Revenue and Rates Forecasted Service Rate Increases 2025 2026 2027 2028 2029 Water: 8.6% 7.7% 2.6% 3.7% 0.0% Wastewater: 10.6% 12.2% 11.5% 7.0% 0.0% Combined:  FY 2018 rate reduction; followed by 5 years of zero rate increases 9.5% 9.8% 6.9% 5.3% 0.0%  FY 2024: 3.4% retail water and wastewater combined rate increases  6.0% average annual rate increase over the 5-year forecast period Forecast 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 *CYE=Current Year Estimate Amended 2024 CYE* 2024 2025 2026 2028 2029 Forecast 2027 267.1 640.6 58.5 699.2 338.0 186.6 240.3 764.9 -65.7 201.4 1.50 244 29.7% 295.0 640.6 58.5 699.2 338.0 153.8 240.3 732.1 -32.9 262.0 1.82 304 29.7% 262.0 705.9 55.6 761.5 352.1 181.1 228.2 761.4 0.1 262.1 1.90 302 27.8% 262.1 772.7 52.7 825.5 365.8 210.4 268.8 845.1 -19.6 242.5 1.82 284 26.8% 242.5 826.3 53.2 879.5 377.8 223.0 275.7 876.5 3.0 245.5 1.92 287 24.6% 245.5 872.0 55.0 926.9 392.4 258.4 273.7 924.6 2.4 247.8 1.78 289 26.0% 247.8 878.8 55.9 934.7 409.3 249.4 271.3 930. 4.7 252.5 1.80 293 26.3% Austin Water Financial Forecast Fiscal Year 2025-2029 Update: Operating Requirements Songli Floyd, Financial Manager III Austin Water FY2025 Forecast Program Requirements Significant Items Austin Water FY2025 Proposed New FTES EFFECTIVE UTILITY MANAGEMENT Operational Optimization Infrastructure Performance Enterprise Resiliency Customer Satisfaction Facility Improvements Affordability Total New FTES Employee Leadership & Development Note: 7 new FTEs are Temporary and Contractor conversion Total 10 5 5 3 3 2 1 29 Austin Water Financial Forecast Fiscal Year 2025-2029 Update: Key Financial Benchmarks and CIP Spending Christina Romero, Financial Manager III Austin Water Debt Service Coverage Ratio o i t a R e g a r e v o C e c i v r e S t b e D 2.2 2 1.8 1.6 1.4 1.2 1 Actual FY19 Actual FY20 Actual FY21 Actual FY22 Actual FY23 CYE FY24 Forecast FY25 Forecast FY26 Forecast FY27 Forecast FY28 Forecast FY29 Actual/Projected DSC Financial Policy AW Target AW Financial Policy and Goal  Financial Policy: 1.75x (previously was 1.5x, changed effective FY22)  AW Planning Target: 1.85x Days Cash on Hand d n a H n O h s a C s y a D 400 350 300 250 200 150 100 50 0 Actual FY19 Actual FY20 Actual FY21 Actual FY22 Actual FY23 CYE FY24 Forecast FY25 Forecast FY26 Forecast FY27 Forecast FY28 Forecast FY29 Actual/Projected DCOH Financial Policy AW Target AW Financial Policy and Goal  Financial Policy: 180 Days (previously was 60 days, changed effective FY22)  AW Planning Target: 245 Days Cash Financing of Capital Program 60.0% 40.0% 20.0% 0.0% m a r g o r P l a t i p a C i f o % g n d n u F h s a C Actual FY19 Actual FY20 Actual FY21 Actual FY22 CYE FY24 Forecast FY25 Forecast FY26 Forecast FY27 Forecast FY28 Forecast FY29 Actual/Projected % AW Target (Max) AW Target (Min) Actual FY23 Financial Policy AW Financial Policy and Goal  Financial Policy: 35% (previously was 20%, changed effective FY22)  Current Financial Policy & AW Planning Target: 35% min – 50% max Average Non-CAP Residential Customer Estimated 5-Year Bill Impact Average Residential Customer Water Wastewater Total Current 2024 $ $ 42.26 42.65 84.91 Forecast 2025 $ $ 45.83 47.11 92.94 Forecast 2026 Forecast 2027 Forecast 2028 Forecast 2029 $ $ 49.28 52.79 102.07 $ 50.55 $ 52.38 $ 52.38 $ 58.81 109.36 $ 62.88 115.26 $ 62.88 115.26 $ Variance % Variance $ 1.47 1.8% $ 8.03 9.5% $ 9.13 9.8% $ 7.29 7.1% $ 5.90 5.4% - $ 0.0%  Bills based on 5,800 gallons water usage and 4,000 gallons wastewater discharge.  Water bills include the Reserve Fund Surcharge.  Water and Wastewater bills include Community Benefit Charge and GoPurple Community Benefit Charge Average Non-CAP Residential Bill Average Combined Water and Wastewater Residential Bill Impacts 5,800 Gallons of Consumption and 4,000 Flows $80.24 $83.19 $80.79 $80.79 $80.79 $80.79 $80.79 $75.16 $75.30 Zero Rate Increase $64.25 $68.18 $59.13 3 Years of Zero Rate Increase 4 Years of Forecasted Rate Increases $115.26 $115.26 $109.36 $102.07 $92.94 $84.91 2 Years of Zero Rate Increase Covid Reduction 8010 7010 6010 5010 4010 3010 2010 1010 10 FY12 Actual FY13 Actual FY14 Actual FY15 Actual FY16 Actual FY17 Actual FY18 Actual FY19 Actual FY20 Actual FY21 Actual FY22 Actual FY23 Actual FY24 Actual FY25 Forecast FY26 Forecast FY27 Forecast FY28 Forecast FY29 Forecast Average Combined Residential Bill Average Residential Consumption $130.00 $120.00 $110.00 $100.00 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 15 Customer Assistance Program (CAP) Customer Assistance Program Overview • Over 20,000 Residential CAP participants • Over 38,000 Multifamily CAP participants • Waived residential monthly water and wastewater fixed fees • Discounted residential volumetric water and wastewater rates • Multifamily CAP monthly credit $17 ($11 Water & $6 Wastewater) 2024 Average Monthly Residential Bill Comparison: Non-CAP vs. CAP Non-CAP CAP $ Discount % Discount Water $ 42.26 $ 17.58 $ 24.68 Wastewater 42.65 22.02 20.63 Combined $ 84.91 $ 39.60 $ 45.31 58.4% 48.4% 53.4% Note: Bills based on 5,800 Gals water and 4,000 Gals. wastewater 16 Affordability Benchmark Austin Water Average Annual Bill % of Median Household Income Actual FY 2022: 1.08% Projected FY 2023: 1.05% AW Goal: 1.5% or less 1.25% 1.22% 1.75% 1.50% 1.00% 17 1.45% 1.44% 1.47% 1.35% 1.37% 1.40% 1.36% 1.29% 1.28% 1.22% 1.08% 1.05% 1.06% Actual 2011 Actual 2012 Actual 2013 Actual 2014 Actual 2015 Actual FY16 Actual FY17 Actual FY18 Actual FY19 Actual FY20 Actual FY21 Actual FY22 Forecast FY23 Forecast FY24 Baseline % of MHI 5-Year Approved Capital Spending Plans Comparison $2,293.0 $1,869.1 $1,367.5 $1,018.2 $986.2 $840.0 $863.0 $884.4 $890.4 $912.6 $975.2 $971.8 $1,087.8 $2,400 $2,100 $1,800 $1,500 $1,200 s n o i l l i M n i $ $900 $600 $300 Capital Improvement Spending Plan $2.29 Billion 5-year Capital Spending Plan 5-Year Plan FY 2025-2029 $ in millions 2025 2026 2027 2028 2029 Total Water $120.7 $133.3 $135.2 $117.4 $113.3 $ 619.9 Wastewater 213.1 364.1 416.8 345.3 277.0 1,616.3 Reclaimed 16.9 19.4 14.7 3.9 1.9 56.8 Combined $350.7 $516.8 $566.7 $466.6 $392.2 $2,293.0 19 Strategic Projects Project Name Walnut Creek WWTP 100 MGD Exp Aquifer Storage and Recovery Aquifer Storage and Recovery Pilot Austin Water Control Center Advanced Metering Infrastructure Oltorf Street Reclaimed Water Main Phase 2 Travis Heights Reclaimed Water Main 9 others Total 20 *Project outside 5-year spending plan and included on chart for informational purposes only Spending Plan (in Millions) $794 $66 $21 $16 $13 $10 $8 $13 $941 Growth, Enhancement & Priority Improvements Project Name SAR WWTP Trains A&B Improvement Williamson Creek Wastewater Interceptor Center Street Pump Station Replacement and Electrical Improvements Walnut Creek Primary Clarifier and Flow Equalization Basin Rehab Wild Horse Ranch Wastewater Treatment Plant Expansion McNeil Drive Water Transmission Main Ullrich WTP Inherently Safer Disinfection Conversion Handcox Water Treatment Plant Resiliency Improvements Project Upper Harris Branch Wastewater Interceptor - Phase 1 Fallwell Lane Capital Renewal Project 110 Others Total 21 Spending Plan (in Millions) $115 $105 $58 $58 $57 $39 $36 $34 $33 $30 $417 $982 Austin Water Austin Water Cost of Service Update Joseph Gonzales, Financial Services Assistant Director Austin Water Cost of Service Update  Cost of Service Public Involvement Committee  Nine meetings scheduled from February 5th through June 10th  NEWGEN serving as Cost-of-Service Rate Consultants  Raftelis Consultants serving as Residential Rate Advocate  PIC Members: Residential, Multifamily, Commercial, and Large Volume  Examine methodology  Discuss various factors that impact costs  Provide input to AW Project Team  Phases: Process Overview, Review Data, Provide Feedback, Evaluate Decision Points Cost of Service Update  PIC Feedback Methods  Meeting Discussions  Speakup Austin (Received 105 questions)  Public Input Sessions: May 23rd through June 22nd  Open Houses in each council district plus 1 Virtual  2 Focus Groups Austin Water Debt Management Christina Romero, Financial Manager III Austin Water Debt Management Strategies  Capital Recovery Fees (“CRF”)  Net revenues of $30.7 million for FY23  Net revenues of $15.8 million as of March 2024  Average $30 million of CRF revenue for debt defeasance throughout the forecast period.  Debt  $60 million debt defeasance in FY 2024  Funding Opportunities  Continued use of TWDB low-interest loans for major CIP projects  All TWDB loan closings are done for a total of $267 million  $25 million SWIFT AMI application submitted May 2024  EPA WIFIA loan letter of Interest for Walnut Creek WWTP Expansion submitted May 2024 Debt Management Efforts Total Debt Service Requirements Comparison FY2018 through FY2029 35.3% $49.3 $60.8 29.8% $47.4 29.4% $20.9 28.7% 31.3% $46.1 $36.6 $88.3 $72.5 31.6% 28.4% $8.3 27.3% 23.3% 24.9% Total Debt Service Savings $556M 22.7% 22.8% $25.0 $13.9 $27.2 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Estimate 2024-25 Forecast 2025-26 Forecast 2026-27 Forecast 2027-28 Forecast 2028-29 Forecast Current Debt Service Requirements Debt Svc Savings Fiscal Year Debt Svc % of Total Requirements (*) Graph illustrates 5 years of actual, current year estimate, and 5 years of forecasted debt requirements. (**) Total savings are actual Net Present Value savings as of November 30, 2023 and includes several outward years of actual saving amounts not shown on graph. $320 $280 $240 $200 $160 $120 $80 $40 $0 ) s n o i l l i m n i ( e c i v r e S t b e D 27 Review Fiscal Year 2025 Budget Schedule Christina Romero, Financial Manager III Austin Water Review Fiscal Year 2025 Budget Schedule  July 12th - Proposed Budget Presentation to Council  July 17th – Water and Wastewater Commission Review  July 24th – Council Budget Work Session & Input Meeting  July 30th – Council Budget Work Session  August 1st – Council Budget Work Session & Public Hearings  August 6th – Council Budget Work Session  August 8th – Council Budget Work Session  August 14th thru 16th – Budget Adoption Questions?