PowerPoint Presentation (added 2/7/2025)**
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Water Services Financial Forecast
and Rate Study Results
City Council Workshop February 11, 2025
Overview
2
• Water and Wastewater Funds 5-year Forecast
• Rate Study Results and Options
• Consensus and Next Steps
Water and Wastewater Funds 5-year Forecast
3
• O&M Expense Increase 34%
– Chemical Costs Increase 85%
– Raw Water Costs Increase 32%
• Construction Costs Increase 38%
• Actual Revenue Increase 8.5%
4
O&M and Capital Improvements Costs
Over Past 36 Months
• 6” Water Main
Break
• Clarifier
Rehabilitation
5
Capital Improvements
6
2026 5-Year Capital Improvement Plan
FY25-26
FY26-27
FY27-28
FY28-29
FY29-30
Water &
Wastewater
69,102,510
70,424,850
65,642,640
64,435,000
57,244,775
Water
Resources
3,874,048
552,064
6,736,940
17,963,240
12,271,160
Advanced
Metering
4,000,000
10,000,000
10,000,000
6,000,000
0
Total Capital
76,976,558
80,976,914
82,379,580
88,398,240
69,515,935
• Revenue (Account Growth and Demand)
– Accounts: increase 1% to 0.5%
– Demand: declining slightly
• Expenses
– Increases 10% to 5%
7
Forecast Assumptions – Operating
• Significant Capital Investments
– 10-year Capital Improvement Plan
– First Five Years $398 million
• Assumed Debt Issuance
– $273 Million in Bond Sales Over First Five Years
8
Forecast Assumptions – Capital Outlay
9
Five-Year Forecast Without Rate Adjustments
FY24-25
Revised Budget
FY25-26
Budget
FY26-27
Budget
FY27-28
Budget
FY28-29
Budget
FY29-30
Budget
Beginning Fund Balance 53,897,040 40,739,680 37,906,376 19,745,762 (1,687,041) (30,468,636)
Operating Revenue
114,330,519 119,483,003 122,538,830 123,151,809 123,767,568 124,386,406
Other Revenue
17,825,284 14,375,776 13,968,010 13,902,292 14,116,818 14,364,241
Bond Proceeds
36,000,000 63,500,000 55,000,000 60,000,000 59,000,000 35,000,000
Operating Expenditures (84,677,127) (92,263,025) (99,019,291) (104,925,628) (110,547,936) (116,087,188)
Debt Service
(27,709,806) (28,952,500) (29,671,249) (31,181,696) (26,719,805) (30,886,720)
Capital Outlay
(66,926,230) (76,976,558) (80,976,914) (82,379,580) (88,398,240) (69,515,935)
Contingency
(2,000,000) (2,000,000)
- - - -
Total Surplus/(Deficit)
(13,157,360) (2,833,304) (18,160,614) (21,432,803) (28,781,595) (42,739,196)
Ending Fund Balance
40,739,680 37,906,376 19,745,762 (1,687,041) (30,468,636) (73,207,833)
Fund Balance Policy
50% Operating
42,338,563 46,131,513
52,462,814 55,273,968 58,043,594
49,509,646
Rate Study Results and Options
10
• Be Just and Reasonable
• Provide Revenue Stability
• Maintain Financial Targets
• Encourage Conservation
11
Rate Objectives
• Fund Balance (Per Council Policy)
– 50% of O&M Expense
• Days Cash on Hand
– 250 Days, Minimum 180
• Debt Service Coverage
– 1.85x Senior, 1.2x All Debt
• Maintain "AA" Credit Rating
12
Financial Targets
Proposed Rate Options
13
Effective
Option 1A
SF Bill*
Option 2A
SF Bill*
Date
Water
Sewer
Combined
Impact
Water
Sewer
Combined
Impact
10/2025
11.8%
7.4%
7.9%
$6.75
13.3%
8.5%
8.8%
$7.55
1/2026
4.3%
3.0%
3.5%
$2.80
0.0%
0.0%
0.0%
$0.00
1/2027
11.8%
7.4%
8.5%
$7.61
13.3%
8.5%
9.5%
$8.37
1/2028
11.8%
7.4%
8.5%
$8.42
13.3%
8.5%
9.5%
$9.25
1/2029
11.8%
7.4%
8.5%
$9.23
13.3%
8.5%
9.5%
$10.55
1/2030
11.8%
7.4%
8.5%
$10.23
13.3%
8.5%
9.5%
$11.56
*Based on single-family (SF) bill using 9,000 gallons per month
14
How Does Glendale Compare to Other Cities?
$97.55
$105.49
$106.30
$107.80
$112.98
$113.79
$128.60
$136.35
$137.70
$149.35
$170.92
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
Phoenix
Avondale
Tempe
Peoria
Surprise
Scottsdale
Glendale
Mesa
Gilbert
Buckeye
Goodyear
Water
Wastewater
Trash
Tax & Fees
15
Five-Year Forecast – Proposed Rate Adjustments
FY24-25
Revised Budget
FY25-26
Budget
FY26-27
Budget
FY27-28
Budget
FY28-29
Budget
FY29-30
Budget
Beginning Fund Balance 53,897,040 40,739,680 43,192,342 38,522,802 41,965,599 50,564,246
Operating Revenue
114,330,519 124,768,969 136,029,905 148,027,409 161,147,810 175,501,134
Other Revenue
17,825,284 14,375,776 13,968,010 13,902,292 14,116,818 14,364,241
Bond Proceeds
36,000,000 63,500,000 55,000,000 60,000,000 59,000,000 35,000,000
Operating Expenditures (84,677,127) (92,263,025) (99,019,291) (104,925,628) (110,547,936) (116,087,188)
Debt Service
(27,709,806) (28,952,500) (29,671,249) (31,181,696) (26,719,805) (30,886,720)
Capital Outlay
(66,926,230) (76,976,558) (80,976,914) (82,379,580) (88,398,240) (69,515,935)
Contingency
(2,000,000) (2,000,000)
- - - -
Total Surplus/(Deficit)
(13,157,360)
2,452,662 (4,669,539)
3,442,797 8,598,647 8,375,532
Ending Fund Balance
40,739,680 43,192,342 38,522,802 41,965,599 50,564,246 58,939,778
Fund Balance Policy
50% Operating
42,338,563 46,131,513
52,462,814 55,273,968 58,043,594
49,509,646
Stormwater Management Program
16
General Fund
Maintain retention basins,
channels, washes
Capital improvements
Enterprise Funds
Inspect and clean stormwater
pipes, outfalls, drywells,
street sweeping
• Safely manage the quantity
and quality of stormwater
• Continued compliance with
state regulations
• Maintain existing system
—Engineering
—Parks, Transportation
—Solid Waste
—Water Services
• Many Valley cities have a stormwater or environmental fee*
– Peoria – $1.50 per month
– Tempe – $3.00 per month
– Scottsdale – $8.10 per month
– Phoenix – from $0.95 to $40.88 per month, depending on
water meter size
*Each city’s fee covers a different combination of activities: street sweeping,
household hazardous waste collection, capital projects
17
Stormwater Fees
• 2024 National Community Survey
– How important it is for the city to invest in the following INFASTRUCTURE IMPROVEMENT
activities:
—Storm sewer system improvements 87%
—Flood drainage improvements 82%
• One dedicated stormwater fund
• Provide funds dedicated to a regulatory program
• Reallocation of General Fund dollars
• Preliminary Stormwater Performance Audit findings
– Draft Recommendation - Evaluate option for implementing a stormwater fee
18
Benefits of Stormwater Management Fee
• Initial fee: $3.00 per account per month
– Beginning in October 2025
– 5% increase per year for 2027 through 2030
• To maintain city's stormwater infrastructure
19
Proposed Stormwater Fee
Stormwater
Revenue:
$2.3M/year
General Fund
Reallocation of
$400K/year
Sewer Fund
Reallocation
of $1.9M/year
Proposed Rate – Option 1
20
Effective Option A (no Stormwater Fee) SF Bill*
Option B (Stormwater Fee)
SF Bill*
Date
Water
Sewer
Combined
Impact
Water
Sewer
Stormwtr Combined
Impact
10/2025
11.8%
7.4%
7.9%
$6.75
11.8%
2.7%
$3.00
9.7%
$8.43
1/2026
4.3%
3.0%
3.5%
$2.80
4.3%
3.0%
0.0%
2.9%
$2.65
1/2027
11.8%
7.4%
8.5%
$7.61
11.8%
6.9%
5.0%
8.0%
$7.40
1/2028
11.8%
7.4%
8.5%
$8.42
11.8%
6.9%
5.0%
8.0%
$8.20
1/2029
11.8%
7.4%
8.5%
$9.23
11.8%
6.9%
5.0%
8.0%
$8.89
1/2030
11.8%
7.4%
8.5%
$10.23
11.8%
6.9%
5.0%
8.0%
$9.84
* Based on single-family bill using 9,000 gallons per month
Proposed Rate – Option 2
21
Effective Option A (no Stormwater Fee) SF Bill*
Option B (Stormwater Fee)
SF Bill*
Date
Water
Sewer
Combined
Impact
Water
Sewer
Stormwtr Combined
Impact
10/2025
13.3%
8.5%
8.8%
$7.55
13.3%
4.5%
$3.00
11.0%
$9.44
1/2026
0.0%
0.0%
0.0%
$0.00
0.0%
0.0%
0.0%
0.0%
$0.00
1/2027
13.3%
8.5%
9.5%
$8.37
13.3%
7.5%
5.0%
8.9%
$7.94
1/2028
13.3%
8.5%
9.5%
$9.25
13.3%
7.5%
5.0%
8.9%
$8.81
1/2029
13.3%
8.5%
9.5%
$10.55
13.3%
7.5%
5.0%
8.9%
$9.89
1/2030
13.3%
8.5%
9.5%
$11.56
13.3%
7.5%
5.0%
8.9%
$10.94
*Based on single-family bill using 9,000 gallons per month
• Rate Options for Public Outreach
22
Consensus
23
Urban Irrigation
• Council Policy
– Resolution 5123
adopted 6/14/2016
– Irrigation Service Rates
to recover 50% of average
costs incurred by the City
• Rate Schedule
– Last rate change was in 2019
and included 2020 and 2021
24
Urban Irrigation Rate Update
FY2022
Actual
FY2023
Actual
FY2024
Actual
FY2025
Forecast
April 2026
Proposed
April 2027
Proposed
Annual Rate
for 1.0 Lot
$328.34
$328.34
$328.34
$328.34
$399.27
$485.11
Revenue
$90,773
88,131
88,039
94,140
112,426
134,153
Expenses
284,482
194,526
213,278
230,235
248,541
268,306
(Under) / Over
(193,709)
(106,395) (125,239)
(136,095)
(136,116)
(134,153)
Recovery %
32%
45%
41%
40%
48%
50%
# of Customers
278
278
280
276
271
266
• February-April 2025
– Public Outreach Efforts
– Citizen Utility Advisory Commission
• April 2025
– Adopt Notice of Intent and Set Public Hearing Date
• June 2025
– Conduct Public Hearing on Proposed Rate Adjustments
– Formal Vote on Proposed Rate Adjustments
• October 2025
– Effective Billing Cycle
25
Next Steps
26
Questions?