Village of AlmontVillage of Almont

WATER, SEWER, AND SSO RATES WATER, SEWER, AND SSO RATES

2012 – 2013 FISCAL YEAR2012 – 2013 FISCAL YEAR

WATER & SEWER RATESWATER & SEWER RATES There are six basic goals used when setting There are six basic goals used when setting

utility rates:utility rates: Collect the money necessary to maintain the Collect the money necessary to maintain the

water and sewer systems. water and sewer systems. Collect these funds as fairly as possible.Collect these funds as fairly as possible. Ensure each system is self-sufficient.Ensure each system is self-sufficient. Prevent a situation in which the Village incurs Prevent a situation in which the Village incurs

debt.debt. Prepare for vital infrastructure needs that extend Prepare for vital infrastructure needs that extend

the service life of the water and sewer systems.the service life of the water and sewer systems. Ensure the protection of public health, safety, and Ensure the protection of public health, safety, and

welfare and compliance with environmental welfare and compliance with environmental regulations. regulations.

What happens when rates are not What happens when rates are not sufficient to cover expenses?sufficient to cover expenses?

Proper maintenance will not be performed, reducing the Proper maintenance will not be performed, reducing the lifespan of system infrastructure and increasing long-lifespan of system infrastructure and increasing long-term operating costs.term operating costs.

Financial risk to the Village and taxpayer is increased, Financial risk to the Village and taxpayer is increased, since general fund revenues, which fund police since general fund revenues, which fund police protection services and other administrative functions, protection services and other administrative functions, must be used to compensate for any shortfall in the must be used to compensate for any shortfall in the water and sewer systems.water and sewer systems.

Service quality can be disrupted and the health, safety Service quality can be disrupted and the health, safety and, welfare of Village residents may be threatened if and, welfare of Village residents may be threatened if infrastructure needs are ignored.infrastructure needs are ignored.

RECOMMENDED FUND LEVELSRECOMMENDED FUND LEVELSCASH ON HAND 1-2 BILLING CYCLESCASH ON HAND 1-2 BILLING CYCLES

RESERVE FUNDING 1 YEARS BUDGETRESERVE FUNDING 1 YEARS BUDGET

VILLAGE OF ALMONT WATER SYSTEMVILLAGE OF ALMONT WATER SYSTEM

  CURRENT CURRENT

PROJECTIONPROJECTION RECOMMENDED RECOMMENDED

CASH ON HANDCASH ON HAND $19,200$19,200 $200,000.00$200,000.00

RESERVE FUNDINGRESERVE FUNDING $10,800$10,800 $440,000.00$440,000.00Previous cash on hand amount was Previous cash on hand amount was -$15,000.00 for the water system.-$15,000.00 for the water system.

VILLAGE OF ALMONT SEWER SYSTEMVILLAGE OF ALMONT SEWER SYSTEM

   CURRENT CURRENT RECOMMENDED RECOMMENDED

CASH ON HANDCASH ON HAND $78,000.00$78,000.00 $200,000.00$200,000.00

RESERVE FUNDINGRESERVE FUNDING $0.00$0.00 $500,000.00$500,000.00

VILLAGE OF ALMONT VILLAGE OF ALMONT WATER SYSTEMWATER SYSTEM

History of DWSD Increases The Detroit Water and Sewerage District has applied several

increases to the cost of water purchased by the Greater Lapeer County Utilities Authority. These increases include the following:

2012 – 2013 Fiscal Year - Roughly 10% Increase 2011 – 2012 Fiscal Year - Roughly 10% Increase 2010 – 2011 Fiscal Year - Roughly 15% with new fixed charge 2009 – 2010 Fiscal Year - Roughly 20% Increase

DWSD instituted their fixed charge during the 2010 – 2011 fiscal year and has increased it by over 375% since that time. DWSD’s continued practice of increasing the fixed charge means that even if the Village sells less water it is obligated to pay more to DWSD for water costs.

GALLONS PURCHASED BY THE VILLAGE GALLONS PURCHASED BY THE VILLAGE FROM DWSD AND GALLONS SOLD TO FROM DWSD AND GALLONS SOLD TO

RESIDENTS FROM THE VILLAGERESIDENTS FROM THE VILLAGE

Year Year GALLONS PURCHASEDGALLONS PURCHASED GALLONS SOLDGALLONS SOLD

2012 – 20132012 – 2013 Est. 77,700,000Est. 77,700,000 Est. 58,600,000Est. 58,600,000

2011 - 20122011 - 2012 Est. 78,000,000 Est. 78,000,000

Est. 60,000,000 Est. 60,000,000

2010 - 20112010 - 2011 86,541,000 86,541,000 63,110,615 63,110,615

2009 - 20102009 - 2010 58,364,250 58,364,250 62,688,335 62,688,335

2008 - 20092008 - 2009 52,210,500 52,210,500   

•The main water meter used by the Detroit Water and Sewer District had previously miscalculated the amount of water the Village was purchasing. When the main water meter was recalibrated in early 2011, this increased the volume of water the Village must purchase, and pay for, on an annual basis [this explains the significant increase in gallons purchased between 09-10 and 10-11].

•Table below based on 905 system users. A 2.3% decrease is planned for consumption between 7/12 and 6/13.

Cost Liabilities

The following cost liabilities, in addition to general operating costs, will exist for the water enterprise system during the next fiscal year:

$30,000 in additional projected charges that the Village will be required to pay to DWSD.

$20,000 in projected additional costs that will be required for the repair and replacement of several components of the Glover Road Booster Station.

$5,000 that is being designated for implementing a more robust preventative maintenance program.

Water Rate for the 2012 – 2013 Fiscal Year

In consideration of these cost liabilities, the water rate for the 2012 – 2013 fiscal year has been adjusted so that the fixed charge will increase from $25.00 per billing quarter to $30.00 per billing quarter and the consumption charge will increase from $4.75 per 1,000 gallons to $5.25 per 1,000 gallons.

PROFIT AND LOSSPROFIT AND LOSSCASH HISTORYCASH HISTORY

Year Year REVENUEREVENUE EXPENSESEXPENSES PROFIT / LOSSPROFIT / LOSS

2012 - 20132012 - 2013 $ Est. 437,550 $ Est. 437,550

$ Est. 435,040 $ Est. 435,040 $ + 2,510 $ + 2,510

2011 – 2012 2011 – 2012 $ Est. 394,000 $ Est. 394,000 $ Est. 374,000 $ Est. 374,000 $ +20,000$ +20,000

2010 – 20112010 – 2011 $ 291,000$ 291,000 $ 370,000 $ 370,000 $ (79,000)$ (79,000)2009 – 20102009 – 2010 $ 290,885 $ 290,885 $ 349,884$ 349,884 $ (58,998)$ (58,998)2008 – 20092008 – 2009 $ 304,464$ 304,464 $ 347,794 $ 347,794 $ (43,331)$ (43,331)

2011 – 2012 figures are based on estimated figures on 6/8/2012; 2012 – 2013 figures are projections based upon the proposed operating budget.

Water Loss Control

The Almont DPW has taken aggressive steps to control water loss and it is estimated that they have successfully prevented the loss of 4,000,000 gallons over the course of the past year. This has resulted in a net savings of $8,080 to the Village and has helped to keep water rates down by approximately $0.14 per 1,000 gallons [this equates to about a 0.8% impact for the average system user]. These water loss control activities will continue in full force for the 2012 – 2013 fiscal year.

ALMONT SEWAGE SYSTEMALMONT SEWAGE SYSTEM

Sewer History

Year Year GALLONS CHARGEDGALLONS CHARGED

2012 – 20132012 – 2013 Est. 53,500,000Est. 53,500,000

2011 - 20122011 - 2012 Est. 54,570,000 Est. 54,570,000

2010 - 20112010 - 2011 56,914,000 56,914,000

2009 - 20102009 - 2010 57,508,00057,508,000

2008 - 20092008 - 2009 57,750,00057,750,000

The following table details the gallons charged for sewer use within the past four fiscal years and estimates the gallons that will be charged for the upcoming fiscal year. It is based upon 905 system users and plans for a roughly 2.0% decrease in the upcoming fiscal year.

Cost LiabilitiesCost Liabilities The proposed 2012 – 2013 annual operating budget includes a The proposed 2012 – 2013 annual operating budget includes a

sewer rate increase from $25.00 fixed and $7.23 per 1,000 gallons sewer rate increase from $25.00 fixed and $7.23 per 1,000 gallons to $27.00 fixed and $7.95 per 1,000 gallons in order to pay for three to $27.00 fixed and $7.95 per 1,000 gallons in order to pay for three major capital improvement projects:major capital improvement projects:

The upgrade of the East St. Clair lift station [which will help to The upgrade of the East St. Clair lift station [which will help to prevent sewer back-ups in the eastern portion of the Village].prevent sewer back-ups in the eastern portion of the Village].

The maintenance/replacement of the tertiary treatment system at The maintenance/replacement of the tertiary treatment system at the treatment plant [which will allow the plant to meet its DEQ the treatment plant [which will allow the plant to meet its DEQ permit requirements and avoid environmental violations and permit requirements and avoid environmental violations and fines.fines.

The repair of the treatment plant roof [which is needed to protect The repair of the treatment plant roof [which is needed to protect the sensitive equipment inside of the treatment plant].the sensitive equipment inside of the treatment plant].

Sewer Rate for the 2012 – 2013 Fiscal Year

In consideration of these cost liabilities, the sewer rate for the 2012 – 2013 fiscal year has been adjusted so that the fixed charge will increase from $25.00 per billing quarter to $27.00 per billing quarter and the consumption charge will increase from $7.23 per 1,000 gallons to $7.95 per 1,000 gallons.

PROFIT AND LOSSPROFIT AND LOSSCASH HISTORYCASH HISTORY

Year Year REVENUEREVENUE EXPENSESEXPENSES PROFIT / LOSSPROFIT / LOSS

2012 – 20132012 – 2013 Est. $524,700Est. $524,700 Est. $524,100Est. $524,100 Est. $600Est. $600

2011 - 20122011 - 2012 Est. $475,000 Est. $475,000 Est. $455,000Est. $455,000 Est. $20,000Est. $20,000

2010 - 20112010 - 2011 $445,938$445,938 $394,700$394,700 $51,238$51,238

2009 - 20102009 - 2010 $437,171 $437,171 $404,000 $404,000 $33,171 $33,171

2008 - 20092008 - 2009 $430,752 $430,752 $426,949 $426,949 $3,803 $3,803

SSO ChargeSSO Charge In late 2011 the Village refunded the bonds it issued for In late 2011 the Village refunded the bonds it issued for

the completion of the equalization tanks at the treatment the completion of the equalization tanks at the treatment facility in 2002. This allowed the Village to decrease the facility in 2002. This allowed the Village to decrease the SSO rate from $2.52 per 1,000 gallons to $1.75 per SSO rate from $2.52 per 1,000 gallons to $1.75 per 1,000 gallons for the 2012 – 2013 fiscal year. 1,000 gallons for the 2012 – 2013 fiscal year.

The refunding of these bonds by the Village Council and The refunding of these bonds by the Village Council and staff prevented all of the utility rates for the 2012 – 2013 staff prevented all of the utility rates for the 2012 – 2013 fiscal year for the average system user from being raised fiscal year for the average system user from being raised by an additional 4.4% and saved the average system by an additional 4.4% and saved the average system user $53.90 a year in additional costs.user $53.90 a year in additional costs.

SSO revenues are calculated by multiplying the SSO SSO revenues are calculated by multiplying the SSO charge by the number of sewer gallons charged.charge by the number of sewer gallons charged.

Percentage Impact for System Users Based on Consumption

This table illustrates the impact of the rate adjustments on system users, based on quarterly consumption:

Consumption Old Bill New Bill Change % Change

5,000 gallons $122.50 $131.75 $9.25 7.55%

10,000 gallons $195.00 $206.50 $11.50 5.90%

15,000 gallons $267.50 $281.25 $13.75 5.14%

17,500 gallons

[Average User]

$303.75 $318.63 $14.88 4.90%

20,000 gallons $340.00 $356.00 $16.00 4.71%

Community CollaborationCommunity Collaboration

The Village wants to hear ideas as to how The Village wants to hear ideas as to how rates can be decreased or how bills could rates can be decreased or how bills could be lowered in a fair manner.be lowered in a fair manner. At any time feel free to contact Village At any time feel free to contact Village

Manager Oliver Turner at (810) 798-8528 and Manager Oliver Turner at (810) 798-8528 and he will investigate each idea and follow-up he will investigate each idea and follow-up with the individual who suggested it.with the individual who suggested it.