Lake Conroe Dock Fees Presentation

LAKE CONROE DIVISION

December 20, 2011

IntroductionAn SJRA Board of Directors approved revision to the Lake Conroe Division fee structure became effective September 1, 2010.

This presentation addresses the following: Services provided by the SJRA Lake Conroe

Division and support staff (27 slides) Chronology of Events (3 slides) Source of revenue to fund those services (4

slides) Cost of those services (13 slides) Closing (2 slides)

SJRA Lake Division Services

Operations Maintenance and Repair Water Quality Invasive Species Management Safety Regulation Enforcement Residential/Commercial Licensing

Lake Conroe

• 444 Sq Mile Watershed

• 20,985 Surface Acres Water at Full Pool

• 159 Miles of Shoreline

• 11,350 Feet Long High Hazard Dam

• 3652 Permitted Docks

• 1855+ Permitted OSSFs

• 7 Major Marinas

Service Outlet

Service Outlet Pond

GateStructure

Earthen Dam

Earthen Dam

Lake Conroe Dam

Normal DailyOperations Facility/site surveillance Lake level, evaporation and

rainfall monitoring and recording Watershed conditions monitoring Piezometer and relief well monitoring

and recording Public Awareness

Emergency Operations

Hurricane Ike

1998 Flood

Hurricane Rita

Maintenance and Repair

Water Quality Clean Rivers Program Participation Onsite Sanitary Sewage Facility (OSSF)

Program Administration Marine Sanitation Certification Program Spill Mitigation & Emergency Response Water Sampling Watershed Mapping

OSSF Program• Administer

TCEQ Regs

• 2075’ from NPWS

• 1,767 at end of 2007

• 1,855+ Currently Licensed

• 1,921 Mapped

Invasive Species Management

Aquatic Plant Management Zebra Mussel Management

Aquatic Plant Management SJRA Activities

Monitoring Selected Chemical Spraying White Amur Management Native Plant Nursery & Habitat Restoration Active Participation in Texas Aquatic Plant Management

Society (President 2011, Board of Directors) Active Participation in Texas Invasive Plant and Pest Council Public Awareness

Significant External Contributions Lake Conroe Association Montgomery County Texas Parks and Wildlife US Fish and Wildlife Sports Groups

Zebra Mussels

Residential and Commercial Licensing Residential Docks

Allows residents to construct and maintain docks on property owned/controlled by the SJRA and convert these public areas to private “restricted access” use

Commercial Marinas and Businesses Allows commercial enterprises to construct and maintain

marinas and conduct business on property owned/controlled by the SJRA and convert large areas to private “restricted access” use

Land Lease Agreements Allows citizens to use property owned by the SJRA for private

enterprises

Single Family Lawn Irrigation Allows residents to divert water from Lake Conroe for

irrigation

Commercial Irrigation Allows commercial enterprises to divert water from Lake

Conroe for irrigation

Residential Docks 3652 Dock Licenses

Single and Multi-family Docks Based on square footage of dock area and

dedicated slip area Average 824 sqft

645 new Dock Licenses Jan. 2008-Nov. 2011 Aged backlog of 57 past due accounts 2006-

2010 333 past due accounts as of Jan. 1 - Nov. 15,

2011 Reduced from backlog of 1200 past due

accounts in 2007 Aggressive 30-60-90 day enforcement plan

Residential Docks

Map Legend:

Residential Dock Permitting

Monitor access and navigational safety

Ensure docks don’t extend across property lines

Enforce lake operational regulations

Residential Dock Permitting

Commercial 71 Commercial accounts Marina Leases

Based on square footage of dock and boat slip area

7 large marinas 9 subdivision marinas

Barges and Excursion Vessels Used for commercial purposes

Rental Vessels Includes personal watercraft

Courtesy Docks

Land Use Agreement

61 Land Lease Agreements With Renewal Provisions and > 100 Perpetual Agreements Use of SJRA property located immediately

adjacent to and between private property and normal pool

Single Family Residences Renegotiated upon transfer

Commercial Property 5 year escalation

20 Year Term

Residential Lawn Irrigation 404 Permitted Single Family Lawn

Irrigation Permits as of November 2011 120 Accounts at end of 2007 Unpermitted Irrigation Setups Identified

During Dock Monitoring

Resources – Tools - Process

GIS Database Title Company Searches MCAD Data Research Communication with POAs, ACCs Field Verification Resources

Manager Administrative Staff Field Staff

Field Verification

Challenges To Implementing Licensing Program

Property (associated with a dock) is sold without notification to SJRA Renewal is sent to previous owner Previous owners often discard renewal notices SJRA staff forced to search MCAD database and/or

conduct title search for new owner Renewal sent to new owner

Property owner retains property but relocates from primary residence (billing address) without notification to SJRA Renewal is sent to previous billing address If no forwarding address, SJRA staff forced to search for

new primary residence of property owner


New property owners construct dock or existing property owners modify (expand) dock without prior notification of SJRA Requires SJRA staff to conduct periodic surveillance of

entire shoreline to identify compliance violations.

Current marina owners modify (expand) facilities or change use of facilities without prior notification of SJRA Requires SJRA staff to conduct periodic surveillance to

identify compliance violations.


Residential/Commercial Enterprises do not respond to initial Renewal Notice Requires SJRA Lake Division Operations Manager to

send second notice 30 days after initial notice. If no response, requires SJRA Lake Division Manager to

send third notice 60 days after initial notice. If no response, requires SJRA to contract with third party

attorney to send final notice 90 days after initial notice. If no response, requires SJRA to take legal action.

Current Effort

Updating residential files to capture current conditions

Continue unbilled or overdue dock license backlog reduction

Continue to identify, research and bill for unlicensed docks

Install tags on all docks Public Awareness Campaign Concerned customer calls due to current

drought conditions

Chronology of Events

1973

2008

Sep

t 20

10

City of Houston Water Customers Subsidize Lake Conroe Services to Local Residential & Commercial Owners

COH Requests Subsidies Cease

Rate Increase Effective

Backlog of Accounts in Arrears Peaks

The Perfect Storm in 2008

COH Financial Crisis

Licensing System Non-compliance Peaks

Chronology of Events20

08

Aug

. 20

11

COH Requests Subsidies Cease

Dec

. 20

08

Aug

. 20

09

Aug

. 2

010

Lake Conroe Division costs manually separated into four work areas based on assumed allocation of resources

Firm request from COH to cease further subsidizing of certain Lake Conroe activities (Feb 9)

Update of Lake Division Rate Structure to SJRA Board (Feb 19)

SJRA Board deferred action on rate structure increase for FY 2010 (July)

Lake Division FY 2010 budget includes four separate areas

SJRA Board approved Lake Division Rate Structure revisions (June)

SJRA Board approved Lake Division FY 2011 budget with rate revisions effective Sept. 1, 2010

SJRA Board approved Lake Division FY 2012 budget

Budget

The SJRA maintains detailed financial records down to the individual transaction as required by GAAP, GASB and TCEQ accounting requirements and formats. These detailed records have always existed and are always available for staff to use in budgeting and auditing. However, governmental accounting standards do not prescribe that audits and annual financial statements be prepared in additional levels of detail due to the cost. Instead they prescribe reasonable, standard reports and formats to be used for financial reporting.

Sources of Revenue Fees

Contributions by local associations and individuals

Contributions by other governmental entities

City of Houston*

* City of Houston contributes to two-thirds of acceptable costs associated only with the operations and maintenance of Lake Conroe Dam. City of Houston strictly prohibits use of funds from City of Houston water customers to subsidize activities in and around Lake Conroe that are perceived to only benefit the residents and recreational users of Lake Conroe.

Lake Conroe Fee Structure

SJRA Board approved fee increase Approved June 2010 Approved Budget August 2010 Effective September 1, 2010 Approximately 50% increase Residential dock licenses implemented as

current licenses expire throughout the year Commercial leases implemented as current

contracts (5 year) expire Goal : Projected Revenue = Projected Expenses

Item Current Rate Per Unit

Proposed Term Approved Rate in FY 2011

Single Family Residential Use

Agreement

$500 20 year agreement with annual escalation

option and renegotiated upon

transfer, annual fee

$500

Commercial Use Agreement

$0.25 20 year agreement with annual escalation

option, annual fee

$0.375

Residential Dock License Fee

$0.125 Annual $0.188

$40 Min. $60 Min.Commercial License

Fee$250 Annual $375

Commercial Lease Fee $0.25/sf Annual $0.375/sf

Excursion Vessel and Commercial Barge

License Fee

$125 Annual $250

Rental Vessel License Fee

$50 Annual $100

On-Site Sewage Facility (OSSF) Permit

$200 One Time $300

OSSF Reinspection Fee

$50 Each Time $260

OSSF Transfer Fee $50 Each Time $100

Marine Sanitation Certification Fee

$30 Bi-annually $50

Single Family Residential Lawn

Irrigation Fee

$120 Annual 6 month $150

(April-September)

Cost of Services Wages and Benefits Professional Fees Purchased and Contracted Services Supplies, Materials & Utilities Rentals Maintenance, Repairs & Parts General & Administrative Capital Improvements

December 2008 Labor Analysis

Total

Residential/Commercial Boatslips

Including Backlog

OSSF License & Permitting & Water Quality

Aquatic Plant Management

Operation & Maintenance

(includes Admin)Division Manager 20% 10% 20% 50%Deputy Division Manager 20% 50% 10% 20%Ops/Maintenance Manager 10% 20% 20% 50%Aquatic Plant Mngnt Tech 30% 20% 30% 20%Admin Assistant I 50% 15% 0% 35%Admin Assistant II 60% 0% 0% 40%Senior Maintenance Tech 0% 0% 20% 80%Maintenance Tech I 0% 0% 10% 90%Maintenance Tech I 0% 0% 50% 50%Intern 25% 25% 25% 25%General Manager 5% 5% 5% 10%Deputy General Mgr – Ops 1% 3% 1% 5%Deputy General Mgr - Admin 10% 5% 5% 10%Controller 3% 2% 2% 2%Accountant 12% 6% 6% 10%Accountant Assistant I 15% 10% 5% 10%Accountant Assistant II 12% 6% 6% 10%Accountant Assistant III 20% 20% 20% 10%Accounting Admin Assistant 20% 10% 10% 10%Office Manager 3% 3% 3% 3%Benefits Coordinator 3% 3% 3% 3%HR/Admin Support Admin 5% 5% 4% 5%IT Manager 5% 5% 5% 5%IT Tech 5% 5% 5% 5%IT System Admin 5% 5% 5% 5%IT/Communication 5% 5% 5% 5%IT L1 3% 2% 2% 3%Receptionist 10% 5% 10% 5%Safety Specialist 3% 2% 2% 8%Wages $176,358 $140,853 $144,989 $291,018

Wages W/Benefits$1,144,5

00 $268,064 $214,097 $220,383 $442,347

December 2008 Expense Analysis

Total

Residential/Commercial

Boatslips Including Backlog




(includes Admin)

OUTSIDE SERVICES EMPLOYED

LEGAL SERVICES $24,000 $16,000 $2,000 $2,000 $4,000

AUDITING $7,600 $2,400 $1,400 $1,400 $2,400

MANAGEMENT AUDIT $0

ENGINEERING $297,500 $297,500

CRANE INSPECTIONS $7,500 $7,500

CONFINED SPACE INSPECTIONS $7,000 $7,000

WASTE DISPOSAL SERVICES $4,000 $4,000

STATE FEES $2,500 $500 $1,000 $1,000

PATROLLING SERVICES $150,000 $150,000

EMPLOYEE TESTING- NEW $300 $100 $50 $50 $100

RECRUITING EXPENSES $1,000 $300 $200 $200 $300

JANITORIAL SERVICES $4,000 $4,000

RAIN GAUGING FEES $1,200 $1,200

STREAM GAUGING & WATER QUALITY - USGS CO-OP $58,000 $20,000 $38,000

WATER QUALITY TESTING $20,000 $20,000

TOTAL OUTSIDE SERVICES EMPLOYED $584,600 $19,300 $24,650 $4,650 $536,000


Total



OSSF License & Permitting

& Water Quality



(includes Admin)

OPERATING SUPPLIES & EXPENSEOFFICE SUPPLIES & PRINT $12,000 $4,000 $2,000 $2,000 $4,000OTHER OFFICE EXPENSE $2,000 $600 $400 $400 $600TRAVEL $4,000 $1,400 $600 $600 $1,400AUTOE & TRUCK EXPENSE $15,000 $4,000 $2,000 $2,000 $7,000POSTAGE $4,000 $2,000 $1,000 $500 $500SMALL TOOLS PURCH $2,000 $2,000TRAINING-EXTERNAL $5,000 $1,000 $2,000 $2,000TRAINING - EXTERNAL-IT $5,000 $1,000 $2,000 $2,000TRAINING-INTERNAL $1,200 $400 $200 $200 $400MANAGERS EXPENSE $1,200 $400 $200 $200 $400FUEL $43,000 $10,000 $6,000 $7,000 $20,000MEMBERSHIPS & SUBS $2,400 $800 $400 $400 $800SUPPLIES $20,000 $6,000 $2,000 $2,000 $10,000UTILITIES $50,000 $10,000 $10,000 $10,000 $20,000UTILITIES-LP GAS $1,500 $500 $200 $300 $500LABORATORY EXPENSES $1,500 $1,500SAFETY $18,100 $5,000 $2,000 $2,000 $9,100HEALTH PROGRAM EXP $600 $200 $100 $100 $200COMPUTER HARDWARE $20,000 $8,000 $2,000 $2,000 $8,000SOFTWARE & SUPPORT $12,000 $4,500 $1,500 $1,500 $4,500NETWORK COMM $9,000 $3,000 $1,000 $1,000 $4,000LOCAL PHONE SERVICE $3,600 $2,000 $600 $1,000LONG DISTANCE PHONE $600 $200 $100 $100 $200WIRELESS SERVICES $6,000 $2,000 $1,000 $1,000 $2,000INSURANCE PREMIUMS $14,600 $14,600AUTO INSURANCE EXP $7,700 $2,000 $1,000 $1,000 $3,700TOTAL OPERATING SUPPLIES AND EXPENSE $262,000 $67,000 $37,800 $38,300 $118,900


Total






(includes Admin)

RENTALSEQUIPMENT RENTALS $10,000 $10,000OFFICE RENT $7,200 $3,000 $1,200 $1,000 $2,000

RENT-U.S. FOREST LANDS- $18,000 $18,000TOTAL RENTALS $35,200 $3,000 $1,200 $1,000 $30,000

MAINTENANCE, REPAIRS & PARTS EXPENSE

OFFICE FURN & EQUIP $6,000 $3,000 $1,000 $1,000 $1,000INSTRUMENTATION $12,000 $12,000

OFFICE FURNITURE, FIXTURES $2,000 $1,000 $300 $200 $500BUILDINGS & GROUNDS $30,000 $10,000 $2,000 $3,000 $15,000

MACHINERY,TOOLS & EQUIP $10,000 $10,000DAM MAINTENANCE $700,000 $700,000

CHEMICALS / AQUATIC PLANT MANAGEMENT $250,000 $250,000

AQUATIC WEED CONT $0STREETS & ROADS $5,000 $5,000

AYER ISLAND MAINT $15,000 $15,000SECURITY REPAIRS $15,000 $15,000

TOTAL MAINT. REPAIRS & PARTS EXPENSE

$1,045,000 $14,000 $3,300 $254,200 $773,500

G & A EXPENSE ALLOCATED $460,695


Total



OSSF License & Permitting

& Water Quality



(includes Admin)

CAPITAL OUTLAY

MOWING EQUIPMENT $13,000 $13,000

ALERT SYSTEM HARDWARE UPGRADE $50,000 $50,000

FUEL SHED $30,000 $30,000

SECURITY IMPROVE $25,000 $25,000

PICKUP $25,000 $25,000

DOCUMENT MANAGEMENT SYSTEM INFRASTRUCTURE $12,000 $4,000 $2,000 $2,000 $4,000

ACCOUNTING SOFT W $10,000 $4,000 $1,500 $1,500 $3,000

TOTAL CAPITAL OUTLAY $165,000 $8,000 $3,500 $3,500 $150,000

TOTAL EXPENSES $379,364 $284,547 $522,033 $2,050,747

December 2008 Analysis (FY 2009 Budget)

Expenses Wages/Benefits = $

702,544 Outside Services = $

48,600 Operating Supplies and Expenses = $

143,100 Rentals = $ 5,200 Maintenance, Repairs & Parts = $

271,500 Capital Outlay= $ 15,000 Total =

$1,185,944 Revenue

Residential = $ 340,851

Commercial = $ 200,352 Total = $

541,103 Deficit = $

644,841

FY 2008 Actual + Changes vs FY 2012 Budget

Starting revenue (FY 2008 Residential) = $340,851 Rate increase = $170,425 695 docks x 824 sf x $ 0.188/sf = $107,664 Subtotal $ 618,940 Starting revenue (FY 2008 Commercial) = $200,352 Rate increase = $100,176 Additions of licensed dock area (Approx.) $125,000 Subtotal $ 425,528 Starting revenue (FY 2008 Irrigation) = $10,826 Rate Increase = $ 5,413 276 x $150 = $41,400 Subtotal $ 57,639 TOTAL $ 1,102,107 Allowance for bad debt (assumed collection rate less than 90%

and limited lawn irrigation) $ 152,407

Total FY 2012 (assumed 90% collection rate and limited lawn irrigation)$ 949,700

2004 thru 2011Consumer Price Index

18.9% Increase 2004 thru Oct. 2011

• Previous Rate Structure Increase – June 24, 2004

FY 2008 thru FY 2011 Revenue Actuals

FY 2008 FY 2009 FY 2010 FY 2011$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

Permits, Licenses & Fees - ResidentialPermits, Licenses & Fees - CommercialMarine Sanitation InspectionsOSSF LicensesInvasive Species ManagementLawn Irrigation Fees Total

Aggressive Collection of Accounts in Arrears, ID of non-li-censed docks and new docks

Cost of Services (FY 2012)Non-Operations/Maintenance

Labor $ 424,153 Professional Fees $ 68,600 Purchased and Contracted Services $

34,096 Supplies, Materials & Utilities $ 180,493 Rentals $

40,800 Maintenance, Repairs & Parts $

113,650 Employee Benefits $

202,864 General & Admin. Expenses $

159,698 Total Expenses

$1,224,354 Capital Improvements $

8,333 Total $1,232,687

Revenue (FY 2012)Non-Operations/Maintenance

Permits, Licenses & Fees - Residential $ 518,700

Permits, Licenses & Fees – Commercial $ 426,000

Invasive Species Management $ 5,000

City of Houston Share of Lake Conroe * $ 183,103

Total $1,132,093

* COH share of Non-Operations and Maintenance costs proposed by SJRA

Rate Components

Basic Core Sources

Resolving Accounts in Arrears

Resolving Non-compliance Issues

Cost Control

Continued management of and limits on non-operations/maintenance costs FY 2008 (budgeted) Expenses = $1,185,944 FY 2012 (budgeted) Expenses = $1,232,687

Summary SJRA has consistently & reliably operated & maintained

Lake Conroe Dam in a safe, appropriate, and professional manner .

From 1973 thru 2010 COH water customers (residents) subsidized services provided to Lake Conroe residents.

The dock licensing program has transformed from an initial “honor system” to a more resource intensive program, including enforcement, due to lack of compliance.

The cost of the program has increased due to these resource requirements.

SJRA effort to bring non-compliant residential and commercial enterprises into compliance generated non-reoccuring revenue in FY 2008 thru FY 2011.

Without this non-reoccuring revenue, SJRA would have realized net losses.

SJRA Board delayed Rate Structure increase from 2008 until 2010.

Questions ?

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