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Water and Sewer Water and Sewer Fund PresentationFund PresentationEvanston City CouncilEvanston City Council

July 22, 2013July 22, 2013

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AgendaAgenda

Sewer Fund Sewer Fund

Water FundWater Fund

Wholesale Water CustomersWholesale Water Customers

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Evanston Water Evanston Water ConsumptionConsumption

44

Sewer FundSewer Fund

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Sewer Rate Sewer Rate

Sewer rate has been $3.94/100 cu ft Sewer 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 Average single family residence pays

$454/year.$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 Tax-exempt customers pay $4.53/100 cu ft

for usage over 10,000 cu ft in any billing for usage over 10,000 cu ft in any billing period.period.

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Sewer Fund Expense Sewer Fund Expense ProjectionsProjections

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Large DiameterLarge DiameterSewer RehabSewer Rehab

IEPA low interest IEPA 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-$5.4M in 2014-

2017 to line 2.5 2017 to line 2.5 milesmiles

3.1 miles 3.1 miles remaining after remaining after 2017 at an 2017 at an estimated cost of estimated cost of $8.8 million$8.8 million

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Sewer Fund Cash Flow Sewer Fund Cash Flow ProjectionsProjections

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Water FundWater Fund

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Water RateWater Rate

As of July 1, 2013, the water rate is As 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 Additional bi-monthly minimum charge for first 500 cu ft (varies by meter size).first 500 cu ft (varies by meter size).

Average single family residence pays Average single family residence pays $192/year.$192/year.

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Water Fund Expense Water Fund Expense ProjectionsProjections

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Water Capital Program Water Capital Program SummarySummary Water Treatment Plant improvements:Water Treatment Plant improvements:

NWC pays ~59% of improvement costs as NWC pays ~59% of improvement costs as the assets are depreciated.the 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 Other major projects not paid for by NWC:NWC: Standpipe Painting & Repair = $2.7MStandpipe Painting & Repair = $2.7M Meter Reading System = $2.4MMeter Reading System = $2.4M

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Water Main Water Main ReplacemenReplacementt

51 miles of 51 miles of water main water main >100 years >100 years oldold

30” feeder 30” feeder main is main is almost 80 almost 80 years old.years old.

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Water Fund Five-Year CIPWater Fund Five-Year CIP

Fiscal Year

Water Plant Capital

Program

Distribution System Capital

Program

TotalCapital

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

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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

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Water Fund Cash Flow Water Fund Cash Flow ProjectionsProjections

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Water and Water and Sewer Fund Sewer Fund SummarySummary

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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%

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Regional CostRegional CostComparisonComparison

CommunityAnnual 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 Survey includes communities using Lake communities using Lake Michigan water and part of Michigan water and part of MWRD.MWRD.

Most of these Most of these communities do not have communities do not have relief sewers like Evanston relief sewers like Evanston (lower sewer rates but (lower sewer rates but also more flooding).also more flooding).

Regional average is $608 Regional average is $608 per year for single family per year for single family resident.resident.

Chicago’s water/sewer Chicago’s water/sewer rates will increase 15% in rates will increase 15% in 2014 and 2015.2014 and 2015.

2020

Regional Cost ProjectionsRegional Cost Projections

Assumptions:Assumptions: Communities buying Communities buying

water from Chicago water from Chicago pass on the 15% pass on the 15% water rate increases water rate increases in 2014 and 2015.in 2014 and 2015.

Otherwise 2% annual Otherwise 2% annual water and sewer water and sewer rates are assumed rates are assumed for all communities for all communities (CPI only).(CPI only).

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Future ChallengesFuture Challenges An average of $5M per year in water An average of $5M per year in water

bonds is needed for the next 20 years bonds is needed for the next 20 years to help pay for capital improvements, to help pay for capital improvements, while slowly increasing the water rate while slowly increasing the water rate to become self-sufficient.to become self-sufficient.

Perform a capital funding study in 2014 Perform a capital funding study in 2014 to evaluate long-term funding options to evaluate long-term funding options for water improvements.for water improvements.

Aging of Water Plant infrastructure and Aging of Water Plant infrastructure and equipment.equipment.

Future UncertaintiesFuture Uncertainties

Additional revenue from new wholesale Additional revenue from new wholesale customers could significantly reduce customers 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 Supply Negotiation of a new Water Supply

Agreement with Skokie.Agreement with Skokie. Re-Open Water Re-Open Water Supply Agreement with Supply Agreement with

the Northwest Water Commission.the Northwest Water Commission.

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WholesaleWholesaleWater CustomersWater Customers

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Existing Wholesale Water Existing 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

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Engineering and Financial Engineering and Financial AnalysisAnalysis

Transmission main feasibility study Transmission main feasibility study conducted in coordination with 5 potential conducted in coordination with 5 potential wholesale customers and the Northwest wholesale customers and the Northwest Water Commission:Water Commission: LincolnwoodLincolnwood NilesNiles Park RidgePark Ridge Des PlainesDes Plaines

Regional transmission main is technically and Regional transmission main is technically and financially feasible for all but Lincolnwood.financially feasible for all but Lincolnwood.

North Suburban North Suburban Municipal Joint Action Municipal Joint Action Water AgencyWater Agency

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Potential New Wholesale Potential New Wholesale CustomersCustomers

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OutlookOutlook

Lincolnwood:Lincolnwood: No modifications needed at the Water Plant or No modifications needed at the Water Plant or

in the distribution system.in the distribution system. A dedicated transmission main would be A dedicated transmission main would be

constructed from Evanston’s South Standpipe.constructed from Evanston’s South Standpipe. City has submitted a proposal to Lincolnwood City has submitted a proposal to Lincolnwood

and has begun contract negotiations.and has begun contract negotiations. Would take about one year to design, permit, Would take about one year to design, permit,

and construct the transmission main.and construct the transmission main.

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OutlookOutlook

Niles, Park Ridge, and Des Plaines:Niles, Park Ridge, and Des Plaines: Possible additions to the Northwest Water Possible 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 Morton Grove could also potentially be served by

a new pipeline to these communities.a new pipeline to these communities. Would have to increase water treatment capacity Would have to increase water treatment capacity

from 108 mgd to 132 mgd to serve all of these from 108 mgd to 132 mgd to serve all of these communities.communities.

City has submitted a proposal to these City has submitted a proposal to these communities and offered to begin contract communities and offered to begin contract negotiations.negotiations.

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OutlookOutlook

NWC and NSMJAWA:NWC and NSMJAWA: Addition of NSMJAWA would likely mean the Addition of NSMJAWA would likely mean the

addition of the other communities as well, since it addition of the other communities as well, since it would decrease their cost for a new transmission would decrease their cost for a new transmission main.main.

NWC would also benefit from a lower cost to NWC 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 from Would require a major water plant expansion from 108 mgd to 214 mgd.108 mgd to 214 mgd.

City has submitted a proposal to NSMJAWA and City has submitted a proposal to NSMJAWA and offered to begin contract negotiations, though their offered to begin contract negotiations, though their contract with Chicago extends 10 more years.contract with Chicago extends 10 more years.

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SummarySummary

Current Operations:Current Operations: Substantial Capital needed that is not supported Substantial Capital needed that is not supported

without debt issuance and debt issuance has interest without 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 Capital Separation of Water Operating and Water Capital revenues could create a flow of funds without revenues could create a flow of funds without interestinterest

Expanded Operations:Expanded Operations: Substantial Capital needed depending on the option.Substantial Capital needed depending on the option. Capital and Operating costs completely covered by Capital and Operating costs completely covered by

new revenues.new revenues.

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Utilities Department UpdateUtilities Department Update

QUESTIONSQUESTIONS