CITY OF DAVIS PRELIMINARY WATER RATE STRUCTURES

BARTLE WELLS ASSOCIATESIndependent Public Finance Advisors

URAC MeetingJune 5, 2014

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Scenario 1: Market Bond Rates – Conservative Interest Rates 30 year market rate bonds for the revised CIP, but at the same

conservative interest rates we assumed one year ago. The combined total includes the CPG water purchases.

Scenario 2: Market Bond Rates – Current Market Interest Rates 30 year market rate bonds for the revised CIP, but with the first 2015

market rate bond issuance at current market rates for an A+ water revenue bond. All other series are at the same conservative interest rates we used one year ago. The combined total includes the CPG water purchases.

Scenario 3: 20 year term SRF Loan Includes accrued interest during the construction period. The combined

total includes the CPG water purchases.

Scenario 4: 30 year term SRF Loan Includes accrued interest during the construction period. The combined

total includes the CPG water purchases.

FINANCING SCENARIOS

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INTEREST RATE ASSUMPTIONS The interest rate assumptions for the 2016, 2017, 2018 and

2019 bond issues are the same in all scenarios, as shown below:

  2016: 6%2017-2019: 6.25%

  For the conservative scenarios (Scenario 1), 5.5% was used

for the 2015 bond issue.

For the current bond market rate scenarios (Scenarios 1 & 2), a scale with an average weighted coupon of 4.42% was used. The only difference between the conservative and current rate scenarios is the interest rate assumed on the 2015 issue.

  Under current market conditions, for an A-rated water credit,

the average weighted coupon would not exceed 4.25%.

SRF Loans – Interest rate equal to ½ of State’s GO Bond Rate (~ 2%)

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DEBT SERVICE ESTIMATESScenario 1 2 3 4

Fiscal YearAmount to be

Financed

Market Rate Bonds at Conservative

Interest Rate Assumptions

Market Rate Bonds with 2015 Bond Series at Current

Market Rates

SRF Funding with a 20 Year Term (CPG

at Market Rate)

SRF Funding with a 30 Year Term (CPG

at Market Rate)2015 $80,701,000 2016 $44,396,000 $4,749,774 $4,833,906 $933,600 $933,600 2017 $5,597,000 $7,669,050 $6,484,074 $2,548,363 $2,548,363 2018 $5,692,000 $8,726,636 $8,148,160 $9,781,425 $7,482,581 2019 $5,792,000 $9,833,275 $9,256,074 $9,801,519 $7,505,550 2020 $10,290,338 $9,711,857 $9,832,788 $7,530,931 2021 $10,740,100 $10,162,368 $9,855,025 $7,558,519 2022 $10,855,875 $10,279,125 $9,880,275 $7,580,356 2023 $10,883,650 $10,303,950 $9,907,725 $7,610,688 2024 $10,906,138 $10,325,647 $9,929,775 $7,631,913 2025 $10,943,063 $10,364,173 $9,956,369 $7,663,975 2026 $10,967,988 $10,389,793 $9,982,144 $7,686,569 2027 $10,995,950 $10,416,801 $10,011,988 $7,714,694 2028 $11,021,113 $10,445,355 $10,040,594 $7,747,988 2029 $11,052,925 $10,475,299 $10,067,656 $7,776,144 2030 $11,085,225 $10,506,049 $10,098,063 $7,804,163 2031 $11,112,225 $10,536,079 $10,126,506 $7,836,738 2032 $11,148,363 $10,570,529 $10,157,681 $7,868,563 2033 $11,177,238 $10,598,389 $10,186,225 $7,894,388 2034 $11,213,263 $10,633,945 $10,222,025 $7,929,156 2035 $11,240,088 $10,661,295 $10,249,525 $7,962,256 2036 $11,282,138 $10,705,031 $10,283,669 $7,998,631 2037 $11,317,450 $10,741,368 $10,318,788 $8,027,781 2038 $11,355,175 $10,772,915 $1,589,500 $8,064,650 2039 $11,388,950 $10,813,860 $1,627,500 $8,103,625 2040 $9,767,650 $9,187,651 $6,474,400 2041 $9,767,538 $9,186,375 $6,474,919 2042 $9,765,263 $9,184,175 $6,472,625 2043 $9,769,663 $9,187,438 $6,472,463 2044 $9,769,013 $9,189,788 $6,469,375 2045 $9,762,150 $9,180,138 $6,468,306 2046 $4,517,950 $4,517,950 $6,464,200 2047 $1,262,813 $1,262,813 $6,466,944 2048 $842,813 $842,813 2049 $419,688 $419,688 2050 $0 Total $142,178,000 $317,600,522 $300,294,862 $207,388,725 $226,225,050

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2011 WATER CONSUMPTION

Customer Class Jan/Feb Mar/Apr May/Jun Jul/Aug Sept/Oct Nov/Dec Total Peak Average Peak Ratio

Single Family Residential 211,655 319,455 541,267 682,622 501,043 278,118 2,534,160 682,622 422,360 1.62Multi-Family Residential 137,573 155,415 188,376 198,744 174,755 127,190 982,053 198,744 163,676 1.21Commercial 48,339 59,123 86,082 100,993 84,548 61,365 440,450 100,993 73,408 1.38Irrigation 9,398 40,158 145,113 205,218 146,349 47,039 593,275 205,218 98,879 2.08Total 406,965 574,151 960,838 1,187,577 906,695 513,712 4,549,938 1,187,577 758,323 1.57

Percent of Total 8.9% 12.6% 21.1% 26.1% 19.9% 11.3% 100.0%

2011 Water Consumption and Peaking Ratios by Customer Class (ccf)

Summer Winter Summer WinterCustomer Class May - Oct Nov - Apr Total May - Oct Nov - Apr Total

Single Family Residential 1,724,932 809,228 2,534,160 68% 32% 100%Multi-Family Residential 561,875 420,178 982,053 57% 43% 100%Commercial 271,623 168,827 440,450 62% 38% 100%Irrigation 496,680 96,595 593,275 84% 16% 100%Total 3,055,110 1,494,828 4,549,938 67% 33% 100%

Usage (hcf) % of Total

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SINGLE FAMILY RESIDENTIAL – USE IN EACH TIERBills Ending Water Use* Bills Ending Water Use*

in Tier % in Tier in Tier % in Tier

Tier 1 0 - 18 ccf 73.9% 76.0% Tier 1 0 - 10 ccf 47.2% 55.0%Tier 2 19 - 29 ccf 15.9% 12.8% Tier 2 11 - 29 ccf 42.7% 33.8%Tier 3 Over 29 ccf 10.1% 11.2% Tier 3 Over 29 ccf 10.1% 11.2%

100.0% 100.0% 100.0% 100.0%

* Includes water use for La Buena Vida

CURRENT MONTHLY TIERS PROPOSED MONTHLY TIERS

Tier 176.0%

Tier 212.8%

Tier 3, 11.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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% of Single Family Water Sales per Tier

Tier 155.0%

Tier 233.8%

Tier 311.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

% of Single Family Water Sales per Tier

CURRENT PROPOSED

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RATE STRUCTURE OPTIONSRATE STRUCTURES1. Conventional – SFR 3 Tiers with Tier 1: 0-10 ccf/month2. Conventional – SFR 3 Tiers with Tier 1: 0-18 ccf/month3. Conventional - Different Uniform Tiers by Customer Class

(Alternative: Single Uniform Tier for All Customers)4. Conventional - Seasonal Tiers (Same for All Classes)

ASSUMPTIONS All structures assume 40% fixed / 60% variable revenue

recovery All structures assume debt service for Scenario 2 (Market Rate

Bonds at Current Market Rates)  Rates are preliminary for discussion purposes only. BWA will

update revenue and expense projections, consumption data, and customer information.

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DRAFT RATES – CONVENTIONAL SFR 3 TIERS (TIER 1: 0-10 CCF)

1-Jan-14 1-Jan-15 1-Jan-16 1-Jan-17 1-Jan-18Meter Replacement3/4" $1.75 $1.80 $1.85 $1.91 $1.971" $2.58 $2.66 $2.74 $2.82 $2.901-1/2" $3.68 $3.79 $3.90 $4.02 $4.142" $6.35 $6.54 $6.74 $6.94 $7.153" $7.18 $7.40 $7.62 $7.85 $8.094" $9.75 $10.04 $10.34 $10.65 $10.976" $13.80 $14.21 $14.64 $15.08 $15.538" $17.39 $17.91 $18.45 $19.00 $19.57

Admin/Billing ChargeAll $2.12 $2.18 $2.24 $1.74 $1.80

Readiness to Serve3/4" $15.82 $18.16 $20.84 $22.24 $23.581" $26.37 $30.27 $34.74 $37.07 $39.291-1/2" $52.71 $60.54 $69.48 $74.14 $78.592" $84.33 $96.87 $111.17 $118.63 $125.743" $168.67 $193.74 $222.34 $237.26 $251.474" $263.55 $302.72 $347.41 $370.72 $392.936" $527.10 $605.44 $694.82 $741.45 $785.868" $843.37 $968.70 $1,111.71 $1,186.31 $1,257.37

TOTAL MONTHLY FIXED/READINESS TO SERVE CHARGE3/4" $19.69 $22.14 $24.93 $25.89 $27.351" $31.07 $35.11 $39.72 $41.63 $43.991-1/2" $58.51 $66.51 $75.62 $79.90 $84.532" $92.80 $105.59 $120.15 $127.31 $134.693" $177.97 $203.32 $232.20 $246.85 $261.364" $275.42 $314.94 $359.99 $383.11 $405.706" $543.02 $621.83 $711.70 $758.27 $803.198" $862.88 $988.79 $1,132.40 $1,207.05 $1,278.74

CONSUMPTION CHARGES FOR INCLINING TIERSSFR Tiered Rates ($/ccf)Tier 1: 0 - 10 $1.53 $1.65 $1.94 $2.08 $2.23Tier 2: 11 - 29 $1.69 $1.94 $2.28 $2.45 $2.62Tier 3: 30 + $2.97 $3.41 $4.01 $4.31 $4.61

MFR Rate ($/ccf) $2.24 $2.57 $3.02 $3.24 $3.46Comm Rate ($/ccf) $1.87 $2.15 $2.52 $2.71 $2.89Irrig Rate ($/ccf) $2.95 $3.38 $3.97 $4.27 $4.56

PROPOSEDADOPTED

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DRAFT RATES – CONVENTIONAL SFR 3 TIERS (TIER 1: 0-18 CCF) 1-Jan-14 1-Jan-15 1-Jan-16 1-Jan-17 1-Jan-18

Meter Replacement3/4" $1.75 $1.80 $1.85 $1.91 $1.971" $2.58 $2.66 $2.74 $2.82 $2.901-1/2" $3.68 $3.79 $3.90 $4.02 $4.142" $6.35 $6.54 $6.74 $6.94 $7.153" $7.18 $7.40 $7.62 $7.85 $8.094" $9.75 $10.04 $10.34 $10.65 $10.976" $13.80 $14.21 $14.64 $15.08 $15.538" $17.39 $17.91 $18.45 $19.00 $19.57

Admin/Billing ChargeAll $2.12 $2.18 $2.24 $1.74 $1.80

Readiness to Serve3/4" $15.82 $18.16 $20.84 $22.24 $23.581" $26.37 $30.27 $34.74 $37.07 $39.291-1/2" $52.71 $60.54 $69.48 $74.14 $78.592" $84.33 $96.87 $111.17 $118.63 $125.743" $168.67 $193.74 $222.34 $237.26 $251.474" $263.55 $302.72 $347.41 $370.72 $392.936" $527.10 $605.44 $694.82 $741.45 $785.868" $843.37 $968.70 $1,111.71 $1,186.31 $1,257.37

TOTAL MONTHLY FIXED/READINESS TO SERVE CHARGE3/4" $19.69 $22.14 $24.93 $25.89 $27.351" $31.07 $35.11 $39.72 $41.63 $43.991-1/2" $58.51 $66.51 $75.62 $79.90 $84.532" $92.80 $105.59 $120.15 $127.31 $134.693" $177.97 $203.32 $232.20 $246.85 $261.364" $275.42 $314.94 $359.99 $383.11 $405.706" $543.02 $621.83 $711.70 $758.27 $803.198" $862.88 $988.79 $1,132.40 $1,207.05 $1,278.74

CONSUMPTION CHARGES FOR INCLINING TIERSSFR Tiered Rates ($/ccf)Tier 1: 0 - 18 $1.53 $1.75 $2.05 $2.21 $2.36Tier 2: 19 - 29 $1.69 $1.94 $2.28 $2.45 $2.62Tier 3: 30 + $2.87 $3.30 $3.88 $4.17 $4.46

MFR Rate ($/ccf) $2.24 $2.57 $3.02 $3.24 $3.46Comm Rate ($/ccf) $1.87 $2.15 $2.52 $2.71 $2.89Irrig Rate ($/ccf) $2.95 $3.38 $3.97 $4.27 $4.56

PROPOSEDADOPTED

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DRAFT RATES – CONVENTIONAL UNIFORM TIER1-Jan-14 1-Jan-15 1-Jan-16 1-Jan-17 1-Jan-18

Meter Replacement3/4" $1.75 $1.80 $1.85 $1.91 $1.971" $2.58 $2.66 $2.74 $2.82 $2.901-1/2" $3.68 $3.79 $3.90 $4.02 $4.142" $6.35 $6.54 $6.74 $6.94 $7.153" $7.18 $7.40 $7.62 $7.85 $8.094" $9.75 $10.04 $10.34 $10.65 $10.976" $13.80 $14.21 $14.64 $15.08 $15.538" $17.39 $17.91 $18.45 $19.00 $19.57

Admin/Billing ChargeAll $2.12 $2.18 $2.24 $1.74 $1.80

Readiness to Serve3/4" $15.82 $18.16 $20.84 $22.24 $23.581" $26.37 $30.27 $34.74 $37.07 $39.291-1/2" $52.71 $60.54 $69.48 $74.14 $78.592" $84.33 $96.87 $111.17 $118.63 $125.743" $168.67 $193.74 $222.34 $237.26 $251.474" $263.55 $302.72 $347.41 $370.72 $392.936" $527.10 $605.44 $694.82 $741.45 $785.868" $843.37 $968.70 $1,111.71 $1,186.31 $1,257.37

TOTAL MONTHLY FIXED/READINESS TO SERVE CHARGE3/4" $19.69 $22.14 $24.93 $25.89 $27.351" $31.07 $35.11 $39.72 $41.63 $43.991-1/2" $58.51 $66.51 $75.62 $79.90 $84.532" $92.80 $105.59 $120.15 $127.31 $134.693" $177.97 $203.32 $232.20 $246.85 $261.364" $275.42 $314.94 $359.99 $383.11 $405.706" $543.02 $621.83 $711.70 $758.27 $803.198" $862.88 $988.79 $1,132.40 $1,207.05 $1,278.74

CONSUMPTION CHARGES FOR INCLINING TIERSUniform Tier for All Classes $2.00 $2.29 $2.68 $2.88 $3.08

SFR Rate ($/ccf) $1.69 $1.94 $2.28 $2.45 $2.62MFR Rate ($/ccf) $2.24 $2.57 $3.02 $3.24 $3.46Comm Rate ($/ccf) $1.87 $2.15 $2.52 $2.71 $2.89Irrig Rate ($/ccf) $2.95 $3.38 $3.97 $4.27 $4.56

ADOPTED PROPOSED

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DRAFT RATES – SEASONAL RATES1-Jan-14 1-Jan-15 1-Jan-16 1-Jan-17 1-Jan-18

Meter Replacement3/4" $1.75 $1.80 $1.85 $1.91 $1.971" $2.58 $2.66 $2.74 $2.82 $2.901-1/2" $3.68 $3.79 $3.90 $4.02 $4.142" $6.35 $6.54 $6.74 $6.94 $7.153" $7.18 $7.40 $7.62 $7.85 $8.094" $9.75 $10.04 $10.34 $10.65 $10.976" $13.80 $14.21 $14.64 $15.08 $15.538" $17.39 $17.91 $18.45 $19.00 $19.57

Admin/Billing ChargeAll $2.12 $2.18 $2.24 $1.74 $1.80

Readiness to Serve3/4" $15.82 $18.16 $20.84 $22.24 $23.581" $26.37 $30.27 $34.74 $37.07 $39.291-1/2" $52.71 $60.54 $69.48 $74.14 $78.592" $84.33 $96.87 $111.17 $118.63 $125.743" $168.67 $193.74 $222.34 $237.26 $251.474" $263.55 $302.72 $347.41 $370.72 $392.936" $527.10 $605.44 $694.82 $741.45 $785.868" $843.37 $968.70 $1,111.71 $1,186.31 $1,257.37

TOTAL MONTHLY FIXED/READINESS TO SERVE CHARGE3/4" $19.69 $22.14 $24.93 $25.89 $27.351" $31.07 $35.11 $39.72 $41.63 $43.991-1/2" $58.51 $66.51 $75.62 $79.90 $84.532" $92.80 $105.59 $120.15 $127.31 $134.693" $177.97 $203.32 $232.20 $246.85 $261.364" $275.42 $314.94 $359.99 $383.11 $405.706" $543.02 $621.83 $711.70 $758.27 $803.198" $862.88 $988.79 $1,132.40 $1,207.05 $1,278.74

SEASONAL UNIFORM TIERSummer (May - Oct) $2.23 $2.54 $2.99 $3.22 $3.43Winter (Nov -Apr) $1.52 $1.74 $2.05 $2.20 $2.35

ADOPTED PROPOSED