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Home My WebLink AboutCOW 2005-04-25 Item 4D - Discussion - Allentown / Foster Point Water and Sewer Improvement Funding Co UNCIL AGENDA SYNOPSIS J ��11LA, y ys 1' k :r. Initials ITEM I V O. -4 N i G Meeting Date Prepared by Mayor iew I Coup z re zv <I 4/25/05 1 3M I I I ITEM INFORMATION CAS NUMBER: 05-071 Ref 05-014 05-061 ORIGINAL AGENDA DATE: APRIL 25, 2005 AGENDA ITEM TITLE Allentown /Foster Point Water Sewer Improvement Project Funding CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other Mtg Date 4/25/05 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date SPONSOR Council Mayor Adm Svcs DCD Finance Fire Legal P&R Police PIYI SPONSOR'S Council requested additional analysis for the funding of the Allentown /Foster Point Water SUMMARY Sewer Improvement Project. A second Public Works Trust Fund Loan could be applied for an additional $2,850,000. If we obtain the second loan, both the Water Fund and the Surface Water Fund are able to absorb the added debt service. In order for the Sewer Fund to be fiscally sound, we are proposing rate increases of 15% in 2006, and 10% every year from 2007 through 2010, along with increasing the sewer connection fee from $10,000 to $15,000. REVIEWED BY COW Mt CA &P Cmte F &S Cmte Transportation Cmte Utilities Cmte Arts Comm. Parks Comm. Planning Comm. DA'Z'E: 4/19/05 RECOMMENDATIONS: SPONSOR /ADMIN. Approve proposed utility rates and connection fee increases. COMMITTEE To COW for discussion and approval. COST IMPACT FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: 403.01 Water, 403.02 Sewer 412 Surface Water Comments: MTG. DATE RECORD OF COUNCIL ACTION 4/25/05 MTG. DATE ATTACHMENTS 4/25/05 Information Memo dated April 20, 2005 (revised after UC meeting) (3) Attachment E Flyer on Sewer Fees 1 (2) Proposed Utility Rate Increases 1 Utilities Committee Minutes from April 19, 2005 INFORMATION MEMORANDUM To: From: Date: SUBJECT: Mayor Mullet Public Works Director April 20, 2005 Funding for the AIlentownlFoster Point Sewer Project ISSUE: Are the three Enterprise Funds able to support the debt service associated with an additional Public Works Trust Fund loan to construct the Allentown/F oster Point Sewer Project? BACK"GROUND: In October 2004, the City advertised for bids to construct the Allentown/Foster Point Water and Sewer Improvement project. All of the bids came in over budget. The City Council directed staff to reduce the project scope and re-advertise the project. In March 2005, the City received three bids from the second advertisement. All three bids were higher than the budget. The higher bid costs are attributed to the steep rise in construction materials. At the April 11 , 2005 Committee of the Whole Meeting, the City Council endorsed staff's recommendation to reject all of the latest bids. Numerous options were discussed to fund the project's shortfall. City Council favored the option to apply to the Public Works Trust Fund Board for a second loan, but requested Staff provide additional information at the next Utility Committee Meeting that outlines the [mancial impact of an additional loan. DISCUSSION: New Proj ect Cost Estimate Minus City Required Local Matching 5% Total Loan Amount Available PWTF Loan #1 Amount of Loan #2 $9,000,000.00 (450,000.00) $8,550,000.00 (5,700,000.00) $2.850.000.00 The second loan amount requested from the Public Works Trust Fund Board will be $2,850,000.00. Both the Water Enterprise Fund and the Surface Water Fund are able to absorb the additional debt service without risk. Since the Sewer Fund will carry the majority of the project's debt service, the enclosed attachments address the [mancial impact of the second loan. The following is being provided: 1. Enclosure 1 - Attachment E from the current 2005 crp. The 2005 budget includes the debt service associated with a $5,700,000 loan; additional revenues from assessing a $10,000 sewer.connection fee; and implementing a 15% rate increase in 2006, a 13% in 2008, and an 11 % increase in 2010. Note: The Accumulated Totals (Ending Fund Balance) decrease from year-to-year. In other words, the fund's expenditures exceed the revenues. 2. Enclosure 2 - A revised Attachment E that shows the additional debt service associated with an $8,550,000 loan in lieu of the current $5,700,000 loan; increasing the sewer connection fee to $15,000; and implementing the same 15% rate increase in 2006, 13% in 2008, and 11 % increase in 2010. The increase in the connection fee from $;10,000 to $15,000 is to accommodate the increase in the project's cost. Note: The' Ending Fund Balance is slightly better - expenditures start to exceed revenues in 2007. 3, Enclosure 3 - As stated above, the budget anticipates revenues from assessing a connection fee of$15,000, but this is only a portion of the costs that a homeowner will pay. The total cost to connect to the sewer is estimated to be approximately $25,000. This is a significant cost to a homeowner and it is felt that the anticipated revenues from assessing these charges may not be realized, especially if the City continues with its current policy of not requiring homeowners to connect immediately. The estimate for a $15,000 sewer connection fee on a 15-year payment plan at 2.5% interest would be approximately $100.00 each month. 4. Enclosure 4 - To counter the risk associated with the increased cost of the connection fee and the potential that the Sewer Fund may not receive revenues as anticipated, an option is a 15% rate increase in 2006 and a 10% rate increase every year from 2007 through 2010. These proposed rate increases reduce the financial risk and place the Sewer Fund in a better fiscal position. 5. Enclosure 5 - Shows the monthly fmancial impact to a Residential Customer for the current proposed rate increases of 15% in 2006, 13% in 2008, and 11 % in 2010. 6. Enclosure 6 - Shows the monthly fmancial impact to a Residential Customer for the proposed rate increase of 15% in 2006 and 10% increases in 2007 through 2010. RECOMMENDATION Forward to the Committee of the Whole for discussion of the proposed actions required to fund the Allentown/Foster Point project - Apply for a second Public Works Trust Fund loan in the amount of $2,850,000; increase the connection fee from $10,000 to $15,000; and add 10% rate increases for 2007 through 2010. p:\project\SW\Ol-SW02\Cost Savings cow 042505 Enclosure 1 ATTACHMENT E City of Tukwila 2005 CIP SEWER ENTERPRISE FUND 2005-2010 Analysis in OOO's REVENUES 2005 2006 2007 2008 2009 2010 Totals - Monthly Sewer Charges (1) 15% 13% 11% King County Metro Sewer 2,640 2,640 2,680 2,750 2,750 2,775 16,235 Regular City Sewer 1,000 1,165 1,195 1,363 1,383 1,546 7,652 Other Misc. Revenue (2) 125 130 130 135 140 145 805 Public Works Trust Fund (3) 2,508 0 0 0 0 0 2,508 Bond Proceeds (4) 0 0 0 0 0 3,500 3,500 Sewer Connection Fees (5) 50 70 100 150 150 150 670 Beginning Working Capital 2,000 0 0 0 0 0 2,000 Total Revenues 8,323 4,005 4,105 4,398 4,423 8,116 33,370 EXPENDITURES I Sewer Operations & Maintenance King County Metro Sewer (6) 2,648 2,648 2,688 2,775 2,775 2,785 16,319 Regular City Sewer (7) 881 921 962 1,005 1,050 1,097 5,916 Debt Service (8) 36 150 250 250 250 250 1,186 Subtotal 3,565 3,719 3,900 4,030 4,075 4,132 23,421 Sewer Capital - CI P Program(9) 3,575 670 270 555 355 3,650 9,075 Total Expenditures 7,140 4,389 4,170 4,585 4,430 7,782 32,496 Cash Flow Year by Year 1,183 (384 ) (65) (187) (7) 334 874 Accumulated Totals 1 ,183 799 734 547 540 874 XIV 4/1412005 Enclosure 2 ,..11110" 111:.9,,6 ...D-" ;;,.rr' ATTACHMENT E City of Tukwila 000 $16f fee Gtio'" Go......e SEWER ENTERPRISE FUND 2005-2010 Analysis in ODD's REVENUES 2005 2006 2007 2008 2009 2010 Totals - Monthly Sewer Charges (1) 15% 13% 11% King County Metro Sewer 2,640 2,640 2,680 2,750 2,750 2,775 16,235 Regular City Sewer 1,000 1\,165 1,195 1,363 1,383 1,546 7,652 Other Misc. Revenue (2) 125 130 130 135 140 145 805 Public Works Trust Fund (3) 2,508 1,567 0 0 0 0 4,075 Bond Proceeds (4) 0 0 0 0 0 3,500 3,500 Sewer Connection Fees (5) 50 105 150 225 225 225 980 Beginning Working Capital 2,000 0 0 0 0 0 2,000 Total Revenues 8,323 5,607 4,155 4,473 4,498 8,191 35,247 EXPENDITURES I outside CE Sewer Operations & Maintenance King County Metro Sewer (6) 2,648 2,648 2,688 2,775 2,775 2,785 16,319 Regular City Sewer (7) 881 921 962 1,005 1,050 1,097 5,916 Debt Service (8) 36 150 340 340 340 340 1,546 Subtotal 3,565 3,719 3,990 4,120 4,165 4,222 23,781 Sewer Capital - CIP Program(9) 3,575 1,985 270 555 355 3,650 10,390 Total Expenditures 7,140 5,704 4,260 4,675 4,520 7,872 34,171 Cash Flow Year by Year 1,183 (97) (105) (202) (22) 319 1,076 Accumulated Totals 1,183 1,086 981 779 757 1,076 XIV 4/20/2005 Enclosure 4 ........D" ..:8,,6 ....D"" ;;,.rr' ATTACHMENT E City of Tukwila 000 $16f fse Gtioll c;ollIlS SEWER ENTERPRISE FUND 2005-2010 Analysis in ODD's REVENUES 2005 2006 2007 2008 2009 2010 Totals - Monthly Sewer Charges (1) 15% +10% +10% +10% +10% King County Metro Sewer 2,640 2,640 2,680 2,750 2,750 2,775 16,235 _ Regular City Sewer 1,000 1;, 165 1,300 1 ,460 1,630 1,815 8,370 Other Misc. Revenue (2) 125 130 130 135 140 145 805 Public Works Trust Fund (3) 2,508 1,567 0 0 0 0 4,075 Hond Proceeds (4) 0 0 0 0 0 3,500 3,500 Sewer Connection Fees (5) 50 105 150 225 225 225 980 Beginning Working Capital 2,000 0 0 0 0 0 2,000 Total Revenues 8,323 5,607 4,260 4,570 4,745 8,460 35,965 EXPENDITURES 1 outside CE Sewer Operations & Maintenance King County Metro Sewer (6) 2,648 2,648 2,688 2,775 2,775 2,785 16,319 Regular City Sewer (7) 881 921 962 1,005 1,050 1,097 5,916 Debt Service (8) 36 150 340 340 340 340 1,546 Subtotal 3,565 3,719 3,990 4,120 4,165 4,222 23,781 Sewer Capital - CIP Program(9) 3,575 1,985 270 555 355 3,650 10,390 Total Expenditures 7,140 5,704 4,260 4,675 4,520 7,872 34,171 Cash Flow Year by Year 1,183 (97) 0 (105) 225 588 1,794 Accumulated Totals 1 ,183 1,086 1,086 981 1,206 1 ,794 XIV 4/20/2005 Enclosure 3 Update on Sewer Fees - April 21, 2005 Open House Allentown Phase II and Foster Point Neighborhoods Hookup to the new sewer system is only required if: )- Your septic system fails, or )- Remodel, adding a bedroom or bathroom, or )- Horne ownership changes )- New construction Estimate of charges for sewer connection include: 1. Connection Charge 2. Side Sewer Connection (the line from your house to the street) 3. City of Tukwila Permit Fee 4. King County's Sewer Capacity Charge Approximate Total Estimate $ 15,000.00 Estimate $4,500,00 Estimate $500,00 $ 4~136.93 $ 24..137.00 Again, you will not have to pay any of these charges until you connect to the sewer system, .We know the new sewer system will bring benefits to the area - improved sanitation, cleaner, safer ground water, and increased property values, We also recognize that connecting to the sewer system involves a substantial sum of money. We are committed to doing as much as possible to ease the financial burden and keep you informed. Payment plans of 5, 10 or 15 years will be available to all households for the Connection Charge. We estimate that a I5-year payment plan on the $15,000 connection fee at 2.5% interest would be $100.00 a month. King County also offers a IS-year payment plan on the Sewer Capacity Charge. Assistance will also be available for low-income households. F or information on the proj ect and financial assistance, please call the City of Tukwila's Public Works department at (206) 433-0179, Open House 4/21/05 Proposed Utility Rate Increases Residential Customers -- , 1 D (1) \.- ~ (f) o u &1 o ~ ~ en o ~ c::i N c0 $0 ~.s~ ..;;r 0 ~ ,<"",4th c0 ~ co o ~ 'Q ~ (/) (1) ~ (1) """" tJ c: -- ~ ~ ~ .-- --- ~ ~'ti) -0'- ~% 09 0-(1) o ~ """"0 0--- .!.~ .-- c: ~~ ~.~ r-~ '0;"'; ~ .-- o \ \ \ \ \ \ 6' '<"'" c0 $0 ~.s~ ..;;r cJJ ~ Q')4th c--i ~ tD o ~ .... It) o ~ u -----rs \ cJJ. \ '<"'" \ '<"'" \~fPO \0 .s~' \ '<"'" ~ \+04th \ ~ \ o ~ ~ ~ .f:/t - , \.D o o N (3 N ~ -- \.D co o fP 0 Cf-O~ o.,.:..o-ct N'<""'~ t-.f:/t ~ 6' t-. o ~~o o V' 0 ~.s~ + o 4th - t- o) ~ ~ ~ 4th -- o~o Cf-OO t-.i? . '<"'" <.D <' tft4th ;;;..../ 6' 6' -- 0 t- '<"'" 0 0) t- o c0 ~$O ~tFrO ~ ~$O o.s~ ~.s~ <' o.s~ '<"'" 0 '<"'" N Q') ~ r---:oC"l +~4th to 4th 4th o 4th ~ cO cO N ~ ~ 6' 0 6' ~ co 0 ~$O ..g,cOO -ct oo-ct ofP~ ~ ..;;r.,.:..o . ,<"",00 .f:/t . o~ +.i?4th \.Dt04th co ~ ~ ~ 6' -;i to ~ $ tOo 0 0$0 ~fPo 0 ..g,$0 ~.s~ 090 ~ 'b9~ NN~ ~ -<to<' '<""'t-~ \.D4th 4th to 4th ~ ~ u> N ~ 6' to u> 0 N ..g,fPO C"l 09~ ~ o)oC"l 4th ..;;r4th ~ ~ \.- ~ "'C ~ (1) ro ~ S '$ o~ 'Q) ~u ro (1) ~ <.) 0) (1) \.- <.) \0- \.- ro (f)O \-2- \- Q) 't: ~'<"'" .2?o \- ~ ~ o.-.s Q) (f) ro \- ~ (f) (0'3 $~ ~ ... ~ ~Q) ro (1) (f) (!) .~ $~ ~~ ~ ~ ~ ~E ~ ~ c: ~ \- -OQ) ~ ~ ~ \- ~ (1)0) 0 (!) *'"" (f) ro \-E 0 a CJ 0 ro \0- ~ .- ... cG ~ 0 .~ .r::,.(1) o .~ (!) 0) ~ "C \- ~ ... 8~ ~~ t c: ,\ ~ 0 - ~ '0 ;..../ ~ 0 ,\ ~ ......-' \ \ ...;:; CG 0.- f/) -;)\ ~ ~ -- Utilities Committee April 19, 2005 Present: Dave Fenton, Chair; Joan Hernandez, Jim Haggerton Jim Morrow, Frank marte, Gail Labanara, Lucy Lauterbach; Todd Heistuman "" Allentown/Foster Point Proiect Financial Impacts Even ~ith plarmed 15%,13% and II % rate 1" increases in five years in the sewer fund, with the current $5.7 m Public Works Trust Fund (PWTF) loan the enterprise would lose money from 2006 until 2010 when the new 11 % increase took effect. Because we need to borrow $2.8 million additional PWTF loans for the AllentownIFoster sewer, with identic'al rate increases (150/0, 13% and 110/0), with connection fee repayments and with the $2.8 m. loan, deficits are decreased until 2007. Jim said the additional loan will pay increased costs due to oil prices, anticipated future cost increases, and for a construction management consultant to manage the project. With the $8.5 million loan, connection fees will be $15,000. With a side sewer permit and construction work costing about $5,000 and King County's Sewer Capacity charge of$4,100, connections will cost about $25,000. Monthly payments on al5-year loan of that size would be $ laO/month. Again, no one would be required to hook up unless their sewer was failing, they added a 'bedroom or bathroom, sold their home or built a new home. Committee members talked about how difficult it could be for citizens to afford the new prices, but they could not think of an alternative. Joan suggested sewer rates be raised 100/0 every year for five years to make planning ahead easier. Staffwill run those figures to see if they generate as much funding as the three planned increases. Gail had calculated increases to generate an even dollar increase in residential rates, Three Council members will be at the Du\vamish Community Club meeting Thursday. Jim and Gail will also attend. Recommend {undin!! and proposed sewer rates to COW. ~/ ~ y//' . ~ Committee chair approval Minutes by L. Lauterbach