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MWEA – AIM Seminar Frankenmuth, MI January 23, 2019 James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial Plan

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Page 1: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

MWEA – AIM Seminar

Frankenmuth, MI

January 23, 2019

James Bearman

Andrew Burnham

Stantec Consulting Services

Lessons Learned:

Integrating AMP

Findings Into A

Sustainable

Financial Plan

Page 2: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Hot Topic Asset Management (AM) in Michigan

The State of Michigan initiated a significant grant

and loan program to support the development of

wastewater and stormwater system and asset

management plans (AMP). Additionally, the

State mandated completion of AMPs for public

water systems without funding.

• Helped communities understand rate impacts of

alternative level of service (LOS) based AMPs and

develop sustainable funding strategies

• Collaborated with State regulators to define

appropriate financial measures and specific

documentation to submit as part of new program

• Completed over 25 studies in the past three years

Page 3: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Michigan’s AMP

Related Programs (W,WW,SW)

SAW – Stormwater, Asset Management, Wastewater

• Legislated in 2013

• 5 Rounds of grants awarded

• Currently in Round 4

Rule 1606 – Water AMP

• Organizations serving >1,000 required to have AMP by 1/1/2018

• No grant funding provided by State

•

Page 4: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

AM Components – SAW Program

• Asset Inventory & Condition Assessment

• Inventory & Condition

• Probability, Consequence, and Criticality of Failure

• Identify CIP and O&M at various levels of service

• Analysis to identify any “gap” in revenues at 2.5 year mark

• Detailed report due at end of 3-year grant period

• MDEQ certification of completion

Funding

Page 5: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

AM Components – Rule 1606

• Asset Inventory & Criticality Assessment

• Level of Service considerations

• CIP/AMP

• Identify 5 & 20 Year Needs

• Assets should be prioritized and assembled into the CIP

• Latitude for systems to tailor programs to fit their situation

• Anticipate 5 year update frequency

• Funding structure and rate methodology

More Funding

Page 6: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Financial Analysis – SAW & Rule 1606

• State requires financial “gap” analysis

• If revenue gap exists, must provide a rate plan addressing

revenue deficiency

• Bottom-line: Regardless of State driven initiatives,

communities are encouraged to evaluate financial and rate

impacts of alternative CIP, AMP, and LOS scenarios

Maybe funding is

important in AM?

Page 7: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

• AMP takes significant monetary & human resources

• State funding very helpful

• Some municipalities remain wary of State oversight

• Degrees of expertise & available data/systems (GIS)

• Many smaller communities didn’t have a CIP before

developing an AMP

• Presence of AMP provides support for future rates

• Can help communities reluctant to raise rates

• Dynamic financial analysis mitigates rate impacts

while implementing AMP on a timely basis

There’s been a

lot to take in

Observations to Date

Page 8: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Specific Examples of Lessons Learned

Page 9: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Case Study #1 Carson City, Michigan (W,WW,SW)

Lessons Learned:

• Conduct level of service sensitivities early on

• Higher fund balance targets can be a way to establish

future funding source for CIP/AMP

• Understand key customer(s) use of your services

Page 10: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Case Study #2 Imlay City, Michigan (W,WW,SW)

Lessons Learned:

• Don’t let large customers get you in a pickle

• Small yearly increases beat a large rate spike any

day of the week and 6 times on Sunday

Page 11: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Case Study #3 Livingston County, MI (Regional Sewer)

Lessons Learned:

• Don’t be afraid to call out “troubled” assets

• Clear communication is essential so everyone knows

what’s in current plans versus future reserves

• We may not be able to think of everything, but that

doesn’t mean we shouldn’t try to

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300

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Tho

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Operating Fund Current Plan Last Plan Target

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Capital Spending Current Plan Last Plan

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Revenue Vs. Expenses Cash In Cash Out

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Grinder R&R Fund Current Plan Last Plan Target

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Replacement Fund Current Plan Last Plan Target

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LT Reserve Fund Current Plan Last Plan Target

Page 12: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Case Study #4 City of Ann Arbor, MI (W,WW,SW)

Lessons Learned:

• Let stakeholders have their cake and eat it too

• We have to be realistic: How much can be

accomplished at one time and funding requirements

• College kids love to play in stormwater

Page 13: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

• Know your sensitivities

• Understand LOS options early

• Get stakeholders involved

• Be realistic about everything

• Leverage AM to create change

• Don’t let it be a one-time thing

• Doesn’t matter if you can’t pay for it– Holistic forecasting

– Dynamic modeling

– Affordability limitations

SummaryRecap of Lessons Learned & Best Practices

Page 14: Lessons Learned: Integrating AMP Findings Into A ......James Bearman Andrew Burnham Stantec Consulting Services Lessons Learned: Integrating AMP Findings Into A Sustainable Financial

Questions/Comments

James Bearman(517) 755-7502

[email protected]

Andrew Burnham(904) 631-5109

[email protected]


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