Establishing and Funding a Capital Improvement

ProgramWAMCAT

September 9th, 2014Kathy Weinsaft

Wyoming Rural Water

This is your road map ◦ It tells you where you want to go◦ How you are going to get there◦ What resources are needed◦ Where the resources will come from◦ It should cover a minimum of five years

Capital Improvement Plans (CIP)

Decision Makers should review and add to the plan every year

Input should be garnered from:◦ Clerk/Treasurers◦ Accountant◦ Operators◦ Administrative staff◦ Consulting Engineer

Board and Council members

Not A Shelf Document

Each expansion, upgrade and or replacement should include the rational for why it is in the plan.

This is really important so if there is a change of leadership there is continuity and projects are not caught up in an election cycle

Expansion

Requirements for other methods of financing

Regulatory requirements and changes Potential growth or decline Use actual numbers for revenues and

expenses from the previous three to five years to obtain an average increase or decrease per year

Avoid magical thinking

Things to Consider

Notice that is plural!◦ O & M Reserves◦ Capital Improvement/Asset Depreciation◦ Emergency Reserve◦ Debt Service Reserve

You Need Reserves

O & M Reserve◦ Target 1/8 of annual O & M expenses◦ Accumulate over 5 years = budget 1/5 of target

each year

Minimum Utility Reserves

Emergency Reserve◦ Target enough in reserve to pay for the

replacement of the most critical piece of equipment

◦ Accumulate over 5 years = budget 1/5 of target each year

Minimum Utility REserves

Capital Improvement/Asset Depreciation Reserve◦ At the very least 1 % of replacement value per

year

Minimum Utility Reserves

Debt Service Reserve◦ Target 1 year of payment in reserve◦ Accumulate over 10 years = budget for 10% of

the annual loan payment per year

Minimum Utility Reserves

You can get a copy of this at www.warws.com under downloads

What A CPI Budget Might Look Like

You have to have an operating surplus to be able to fund reserves

Set your rates so that can happen Operating something until the wheels come

off and than yelling “emergency” is no longer SOP

In Reality

Improvements that have a direct impact on customer health

Things needed for regulatory compliance Testing results can be a guide Severity of potential consequences both

acute and chronic

Prioritize projects - Critical

Projects that must meet a given deadline Those that have been delayed for a long

time Potential costs that may rise dramatically in

the future

Other projects - Urgent

There are resources available Step One is get on the Intended Use Plan

◦ Kevin Frank (DEQ) is the keeper of the list (307) 473-3471

It takes a package

There are 269 Million Dollars in projects on the list for drinking water

There are 214 Million Dollars of requests on the Clean Water side

Approximately 50 million dollars are available each year

6 million in the Governor’s Emergency Fund

Currently

They do have money available You may be eligible for a grant/loan combo Don’t let the paperwork scare you Engineering oversight can be worth its

weight in gold Alana Cannon (307) 233-6709

Don’t Forget USDA RD Funding

A good CIP can help your system develop capacity and work towards sustainability

Sustainability Workshop◦ September 24th ◦ 8:00 – 5:00◦ Holiday Inn, Cody Wyoming◦ Pre-Conference is free of charge but please

register◦ Full conference agenda on line and registration

Sustainability

Give me a call anytime Email works too! Kathy Weinsaft (307) 262-3943 kweinsaft@wyoming.com

Want to talk?