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Home My WebLink AboutMinutes - March 30, 2004 SSCITY OF LODI INFORMAL INFORMATIONAL MEETING "SHIRTSLEEVE" SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, MARCH 30, 2004 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, March 30, 2004, commencing at 7:05 a.m. A. ROLL CALL Present: Council Members — Beckman, Hitchcock, Howard, and Mayor Hansen Absent: Council Members — Land Also Present: City Manager Flynn, Interim City Attorney Schwabauer, and City Clerk Blackston B. CITY COUNCIL CALENDAR UPDATE City Clerk Blackston reviewed the weekly calendar (filed). C. TOPIC(S) C-1 "Water/wastewater financing and rates" Public Works Director Prima reported that Phase 1 of the improvements to the White Slough Water Pollution Control Facility is nearing ocmpletion. Phase 2 which includes installation of the tertiary filters and UV disinfection equipment and other aeration improvements, is currently out to bid. He noted that the facility is served by Pacific Gas & Electric through contracts with Northern California Power Agency and Lodi Electric; however, major upgrading needs to be done to the lines. Staff anticipates difficulties in meeting discharge standards and are considering alternatives such as total land disposal. John Farnkopf, Senior Vice President of Hilton Farnkopf & Hobson, reviewed the wastewater rate study tables (all filed). Referencing table one, he noted that a 1 % growth in the community was projected. An adjustment for the in -lieu of tax transfer to the General Fund was made, which shows it at the 12% level and declining to 9% by the end of the period. The assumptions were built into table one, which projects the revenue requirements. It began with the City's current budget and using escalation factors, calculates the amounts through fiscal year 2011-12. It nets out non-operating revenue and arrives at the amount of revenue that is required from rates. Row 15 shows a 25% increase projected for May 2004 and 25% for July 1, 2005. Fdte increases then taper off to inflationary levels to keep up with the assumptions. The rate increases shown in table three cover the annual revenue requirements and maintain the target fund balances. There are occasions where the amount is above target; however, at the end of the projection period t is very close. The Impact Fund (00173) contemplates an increase in the impact fees in 2004-05. In answer to Council inquiries, Mr. Prima explained that in order to do the financing the City had to meet an additional bonds test tied to the current bond. When the Operations Fund (00170), Capital Outlays (00171), and White Slough Capital Fund (00172) are combined the balance is 101%. Mr. Prima assured Council that this financing is not to "fix any past issues'; it is strictly to meet the permit requirements. Addressing City Manager Flynn, Mayor Pro Tempore Beckman asked how much cash was missing from the Wastewater Fund due to transfers (such as for transit) and whether the proposed rates are factored to replenish the transfer amounts. Continued March 30, 2004 Mr. Flynn replied that on June 30 an accounting entry is made and cash is distributed. On July 1 the Finance Department reverses the entry. He explained that the deficit was due to a transit grant that was not received. He confirmed that the proposed rates are not affected by the transfers. In reference to the transfer issue, Council Member Hitchcock recalled that it amounted to $9 million and asked the City Manager to provide Council with an itemized accounting. Alex Burnett, financial advisor from the firm of Public Financial Management, explained that major financings for an enterprise require revenues to be sufficient to meet ongoing maximum annual debt service. Rates and revenues will be higher in the beginning and will over time come in line with expenses. He recalled that Phase 1 was funded through the California Statewide Communities Development Authority bond pool. The proposed Phase 2 financing is for $25 million for a term of 20 years with a fixed rate. Phase 3 financing would occur in 2006 and include the potential refunding of the 1991 Certificates of Participation (COPs). Mr. Burnett stated that George Wolfe of First Albany is the proposed underwriter who would negotiate the placement and sale. Mr. Burnett distributed a 13 -page packet of material entitled, "White Slough Water Pollution Control Facility and Related Financing" (filed). Referencing page 6, he explained that the revenue bond index is a proxy for long-term tax-exempt rates and is published weekly. As of March 12 the index was 4.75, which is the lowest it has ever been in 25 years. Page 7 shows the structure of the debt service after the proposed issuance of the 2004 financing. It does not incorporate the proposed 2006 financing. The 2003 bonds represent a small share. Page 8 includes two sets of legal covenants related to the 1991 COPs, as well as the 2003 and proposed 2004 COPs. These include: 1) the rate covenant, which is the requirement to set annual revenues to meet annual expenses, and, 2) the additional bonds test. Under the additional bonds test is a concept called "adjusted net revenues." "Net revenues" is the gross amount less operations and maintenance. The 1991 covenants do not allow connection fees to be included in the calculation. In calculating net revenues for 2003 there is some question about whether the General Fund transfer is included as part of operations and maintenance. The rate covenants listed on page 10 assume a 20 -year level debt service, which includes the projected rate increases of 25% this year, 25% in 2005-06, and 3% thereafter. Mr. Burnett stated that the projected rate increases contemplate the 2006 financing, but not the 1991 refunding. System net revenues were calculated at $3.1 million. The 1991 COPs require an adjustment for connection fees of almost $1.4 million, which leaves only $1.7 million of revenues for purposes of meeting the additional bonds test. Roughly $1.5 million is the estimated impact from the rate increase, which is allowed to be taken into consideration for purposes of be additional bonds test. Mr. Burnett reported that the amount is $3.243 million with the rate increase, and the requirement is $3.117 million. Council Member Howard asked whether additional rate increases will be proposed at the time of the projected 2006 financing. Mr. Prima replied that it would be contingent upon: 1) the project costs coming in as estimated, 2) interest rates remaining low, and 3) impacts resulting from the next permit. Council Member Howard recalled that Council had expressed a desire to keep the in -lieu of tax transfer "revenue neutral' and asked whether this has been accounted for, to which Mr. Prima answered in the affirmative. Mr. Burnett reported that a meeting with the rating agencies has been scheduled for April 22. Final action by Council is anticipated on April 27, subsequent to which a week of pre - marketing of the bonds would occur, with the sale taking place on May 11 and the close one week later. 2 Continued March 30, 2004 Mr. Prima reiterated that the Phase 2 project is currently out to bid and staff hopes to have it awarded in early May. The current permit has a condition to have the filters on-line at the end of May. Staff has sent a letter to the Regional Board requesting an extension to January 2005 to have the new permit conditions applied to the City. Staff will return to Council to discuss the impact mitigation fees (AKA connection fees) in June or July 2004. Mr. Prima reported that the public notice of proposed increases to monthly water, sewer, and refuse rates and charges included a statement that all rates may be increased by an amount up to the percentage increase in the Consumer Price Index on July 1, 2005, and each following year as needed. This will be part of what Council will consider at the public hearing scheduled for April 27, 2004. D. COMMENTS BY THE PUBLIC ON NON -AGENDA ITEMS None. E. ADJOURNMENT No action was taken by the City Council. The meeting was adjourned at 8:25 a.m. ATTEST: Susan J. Blackston City Clerk Mayor's & Council Members' Weekly Calendar WEEK O F M ARC H 30, 2004 Tuesday, March 30, 2004 7:00 a.m. Shirtsleeve Session 1. Water/wastewater financing and rates(PW) 5:30 — 7:00 p.m. Grand Opening and Ribbon Cutting of A Piece of Heaven, 20 North School Street. Wednesday, March 31, 2004 7:30-9:00 a.m. Hansen. San Joaquin County Chapter American Red Cross Annual Heroes Breakfast, The River Mill, 1672 West Bowman Road, French Camp. 3:00 p.m. Hansen. German American Partnership Program (GAPP) to meet with the mayor in front of City Hall. 6:00 p.m. Special Joint City Council Meeting with the East Side Improvement Committee, Lodi Adopt -A -Child Office, 100 East Pine Street. Thursday, April 1, 2004 Reminder 2003 Annual Conflict of Interest Statementsare due by 5:00 p.m. Friday, April 2, 2004 Saturday, April 3, 2004 9:00 a.m. Hansen. Celebrate the Arts Festival 2004, Hutchins Street Square. 10:00 -2:00 p.m. Sp ring Fest 2004, presented by Community Development, Parks and Recreation, and Public Works Departments, Lodi Lake Park — South Lawn. Sunday, April 4, 2004 Monday, April 5, 2004 Disclaimer. This calendar contains only information that was provided to the City Clerk's Office. CADocuments and Settings\jperrin\Local Settings\Temporary Internet Files\OLKC4\Mcalndrl.doc AGENDA ITEM C go I &1Ah CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Water/Wastewater Financing and Rates MEETING DATE: March 30, 2004 (Shirtsleeve Session) PREPARED BY: Public Works Director RECOMMENDED ACTION: None BACKGROUND INFORMATION: The purpose of this presentation is to provide the City Council details of the cost factors and financing pertaining to the ongoing improvements to the White Slough Water Pollution Control Facility (the project) and to update the Council on the project. Rates & Financing Attached are the following: Wastewater Utility Revenue Program Spreadsheets -- These are the updated versions of the preliminary ones presented to the Council in October 2003. These will be presented by John Farnkopf, PE, Senior Vice President of Hilton Farnkopf & Hobson, LLC, working under subcontract to our wastewater consultants, West Yost & Associates (WYA). WYA, along with City Public Works and Finance department staff provided significant input to the model. In addition, our financial advisor, Alex Burnett and his staff from Public Financial Management also provided review and input, mainly in the financing portion. In addition, George Wolfe, of First Albany, underwriter for the financing, provided review and input. The financial model considers growth, various operating costs and improvements through fiscal year 2011112. While the model includes revenue from wastewater development fees, updating these fees will be handled as a separate action. The spreadsheets consist of: a. Assumptions — These are the factors used to adjust the figures used in the later sheets. b. Table 1 — Revenue Requirements — This table presents operating costs, including increases due to the additional processes and equipment included in the project. The general fund in -lieu transfer is also included and has been adjusted as previously directed by the Council to reduce the proposed rate increase. c. Table 2 — Projected Revenue Increases — This table presents the proposed total revenue adjustments, one to go into effect in May 2004 and a second one in July 2005. In subsequent years, we have indicated a nominal annual increase to keep pace with increased costs and avoid larger, less frequent increases. In the recent property owner mailing on the proposed rated increases, staff included the possibility of such adjustments. Discussion on including a formal update mechanism (CPI or other factor) would be appropriate at this meeting. APPROVED: Dixon Flynn, City MAnager W WWRates Shirtsleeve.doc 312412004 Water/Wastewater Financing and Rates March 30, 2004 (Shirtsleeve Session) Page 2 d. Table 3 — Reserve Funds — This is the heart of the model and shows our four wastewater sub -funds: Operations, Capital Outlay (our main infrastructure replacement fund), White Slough Capital and Impact (development). This sheet summarizes the revenue and cost information from the other sheets and shows fund balance both with and without the rate increases. The rate increases are set to provide fund balances meeting the recommended reserve levels in each sub -fund. e. Table 5 — Capital Improvement Program — This table presents the capital projects being funded by the wastewater utility, including the infrastructure replacement program. (Note Table 4, which deals with bond coverage requirements discussed in the next item, is not included.) 2. PFM Presentation — Alex Burnett of PFM will present an overview of the proposed 2004 Wastewater COP. Staff wishes to emphasize that rates are at all-time lows right now and recognizing that we still have "Phase 3" of the White Slough project ahead of us, we are proposing to finance some of the Phase 3 expenses at this time. Project Update The Phase 1 project is nearing completion. The earthwork is completed and the first of four aeration blowers is installed and being tested. Electrical work is underway. The Phase 2 project — installation of the tertiary filters and UV disinfection equipment and other aeration improvements — is out to bid. According to our permit, this work was to be completed in May 2004. Since we do not discharge during the summer, we were targeting completion by September when we begin discharge to Dredger Cut. Staff and our consultants have sent a request to the Regional Board for a time extension to January 2005, as it now appears that meeting the September date will be extremely difficult (hence, very expensive), if not impossible. We believe Regional Board staff is supportive of our request, but Board action will be required. _ Richard C. Prima, Jr. Q Public Works Director RCP/pmf Attachments cc: Steve Schwabauer, Interim City Attomey Vicky McAthie, Finance Director Wally Sandelin, City Engineer Frank Beeler, Assistant Water/Wastewater Superintendent Del Kerlin, Assistant Wastewater Treatment Superintendent Bruce West, West Yost Associates John Farnkopf, HF&H Alex Burnett, PFM George Wolfe, First Albany W WWRates Shirtsleeve.doc 812412004 City of Lodi Wastewater Rate Study Assumptions used for projections Lodi WW model 3-5-04-jf.xls 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Basis/Comments General growth Per Budget Per Budget 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% General increase with City growth; w/o rate adjustments SSUs added per year 322 326 329 332 336 339 342 346 General growth times current SSUs Interest on Fund Balance 2.0% 2.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Current LAIF rate with slight increase in future General inflation Per Budget Per Budget 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% General inflation factor used unless noted otherwise Construction cost inflation 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Based on recent increases in ENR -CCI SF index Labor Per Budget Per Budget 3.0% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% Maint. & Op. MOU thru 6/03, estimate beyond Power Per Budget Per Budget 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% GF contribution (In -Lieu) 12.0% 12.0% 12.0% 11.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% Insurance, Misc. Per Budget Per Budget 5.0% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% Septage Hauler Revenues Per Budget Per Budget 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Lodi WW model 3-5-04-jf.xls Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 1 1. Rev Rqmt A I B H I J K L M N O P 1 City of Lodi Wastewater Rate Study 3 Table 1. Revenue Requirements 4 5 Budgeted Budgeted Projected 6 FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09 FY 09.10 FY 10.11 FY 11.12 7 Operations and Maintenance 8 Damage to City Property 170152 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 9 Administration 170401 10 Personnel Services $ 246,995 $ 267,610 $ 276,307 $ 285,287 $ 294,559 $ 304,132 $ 314,017 $ 324,222 $ 334,759 11 Increased Administrative Expenses - - 106,090 109,538 113,098 116,774 120,569 124,487 128,533 12 Utility Comm. & Transportation 3,000 3,100 3,255 3,418 3,589 3,768 3,956 4,154 4,362 13 Supplies 82,125 106,640 109,839 113,134 116,528 120,024 123,625 127,334 131,154 14 Other 10,550 7,000 7,210 7,426 7,649 7,879 8,115 8,358 8,609 15 Subtotal , Administration $ 342,670 $ 384,350 $ 502,702 $ 518,804 $ 535,423 $ 552,577 $ 570,282 $ 588,556 $ 607,417 16 Plant Maintenance 170403 17 Personnel Services $ 849,500 $ 901,065 930,350 960,586 991,805 1,024,039 1,057,320 1,091,683 1,127,163 18 Utility Comm. & Transportation 428,675 428,675 450,109 472,614 496,245 521,057 547,110 574,465 603,189 19 Supplies 491,265 483,970 498,489 513,444 528,847 544,712 561,054 577,885 595,222 20 Other 138,680 132,680 136,660 140,760 144,983 149,333 153,812 158,427 163,180 21 Subtotal, Plant Maintenance $ 1,908,120 $ 1,946,390 $ 2,015,608 $ 2,087,404 $ 2,161,880 $ 2,239,141 $ 2,319,296 $ 2,402,461 $ 2,488,753 22 Sanitary Sewer Maintenance 170404 23 Personnel Services $ 340,790 $ 359,590 371,277 383,343 395,802 408,665 421,947 435,660 449,819 24 Utility Comm. & Transportation 16,400 16,400 17,220 18,081 18,985 19,934 20,931 21,978 23,076 25 Supplies 31,880 33,000 33,990 35,010 36,060 37,142 38,256 39,404 40,586 26 Other 3,700 4,000 4,120 4,244 4,371 4,502 4,637 4,776 4,919 27 Subtotal , Sanitary Sewer Maintenance $ 392,770 $ 412,990 $ 426,607 $ 440,677 $ 455,218 $ 470,244 $ 485,771 $ 501,818 $ 518,401 28 Storm Drain Maintenance 170405 29 Personnel Services $ 137,245 $ 144,840 149,547 154,408 159,426 164,607 169,957 175,481 181,184 30 Utility Comm. & Transportation 26,600 26,600 27,930 29,327 30,793 32,332 33,949 35,647 37,429 31 Supplies 152,500 86,500 89,095 91,768 94,521 97,357 100,277 103,286 106,384 32 Other 105,000 107,135 110,349 113,660 117,069 120,581 124,199 127,925 131,763 33 Subtotal , Storm Drain Maintenance $ 421,345 $ 365,075 $ 376,921 $ 389,161 $ 401,809 $ 414,878 $ 428,382 $ 442,337 $ 456,759 34 Other Expenses 35 Increased Annual O&M - White Slough WWTP $ - $ 145,000 $ 300,000 315,000 330,800 347,300 364,700 382,900 402,000 36 Additional Increases for Land/Other Expenses - - - - - - - - 37 Supplement Envir. Program 170413 8,945 14,445 30,300 31,200 32,100 33,100 34,100 35,100 36,200 38 Watershed Education Grant 170414 7,200 - - - - - - - - 39 Industrial System Maintenance 170442 11,255 11,505 11,850 12,206 12,572 12,949 13,337 13,738 14,150 40 Subtotal - OtherO&M Expenses $ 27,400 $ 170,950 $ 342,150 $ 358,406 $ 375,472 $ 393,349 $ 412,137 $ 431,738 $ 452,350 41 Total, Operating O&M Expenses $ 3,100,305 $ 3,287,755 $ 3,671,988 $ 3,802,452 $ 3,937,802 $ 4,078,188 $ 4,223,869 $ 4,374,909 $ 4,531,680 42 Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 1 1. Rev Rqmt Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 2 1. Rev Rqmt A I B H I J K L M N O P 1 City of Lodi Wastewater Rate Study 3 Table 1. Revenue Requirements 4 5 Budgeted Budgeted Projected 6 FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09 FY 09.10 FY 10.11 FY 11.12 43 Non -Operating Expenses 44 Contributions to GF (in -lieu) 170472 $ 755,040 $ 759,885 $ 839,367 $ 869,058 $ 904,656 $ 941,441 $ 987,318 $ 1,027,546 $ 1,069,418 45 Cost of Services (to GF) 665,859 665,859 687,499 709,843 732,913 756,733 781,327 806,720 832,938 46 Insurance, Misc. 433,857 433,857 447,957 462,516 477,548 493,068 509,093 525,638 542,722 47 Total Non -Operating O&M Expenses $ 1,854,756 $ 1,859,601 $ 1,974,823 $ 2,041,417 $ 2,115,117 $ 2,191,242 $ 2,277,737 $ 2,359,904 $ 2,445,078 48 Total O&M Expenses $ 4,955,061 $ 5,147,356 $ 5,646,811 $ 5,843,870 $ 6,052,919 $ 6,269,429 $ 6,501,606 $ 6,734,813 $ 6,976,758 49 50 Debt Service (Existing users' share only) 51 1991 COPS $ 210,207 $ 209,834 $ 209,247 $ 209,698 $ 209,836 $ 208,430 $ 209,362 $ 208,689 $ 209,011 52 Phase 1- 2003 bond 73,777 318,012 314,941 315,979 316,933 317,597 317,668 316,556 314,711 53 Phase II -2004 bond 806,231 1,601,860 1,601,611 1,601,030 1,599,785 1,597,668 1,598,892 1,594,674 54 Phase III - 2006 bond 909,100 1,105,548 1,107,000 1,108,245 1,108,546 1,107,882 55 Subtotal, Debt Service $ 283,984 $ 1,334,078 $ 2,126,048 $ 3,036,388 $ 3,233,347 $ 3,232,812 $ 3,232,943 $ 3,232,683 $ 3,226,278 56 Total Operation and Maintenance Expenses $ 5,239,045 $ 6,481,434 $ 7,772,859 $ 8,880,257 $ 9,286,266 $ 9,502,241 $ 9,734,549 $ 9,967,497 $ 10,203,036 57 58 Non -Operating Revenue 59 Sewer Reimbursements 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 60 Rent-WSWPCF 205,645 205,645 207,701 209,778 211,876 213,995 216,135 218,296 220,479 61 Sale of City Property - - - - - - - - - 62 Miscellaneous revenues: 63 Other 64 State special grants 7,200 65 Sewer tap fees - 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 66 Subtotal Non -Operating Revenues $ 405,645 $ 405,645 $ 407,701 $ 409,778 $ 411,876 $ 413,995 $ 416,135 $ 418,296 $ 420,479 67 68 Transfers To/(From) Reserves 69 Capital Outlays (00171) (Tbl 3) $ 1,700,000 $ 1,100,000 $ 2,200,000 $ 1,200,000 $ 1,900,000 $ 2,000,000 $ 2,200,000 $ 2,100,000 $ 2,200,000 70 WSWPCF Capital (00172) (Tbl 3) - - - - - - - - - 71 Impact Fund (00173) (Tbl 3) - - - - - - - - - 72 Subtotal Transfer To/(From) $ 1,700,000 $ 1,100,000 $ 2,200,000 $ 1,200,000 $ 1,900,000 $ 2,000,000 $ 2,200,000 $ 2,100,000 $ 2,200,000 73 Revenue Requirements (To Tb1 2) $ 6,533,400 $ 7,175,789 $ 9,565,158 $ 9,670,479 $ 10,774,389 $ 11,088,246 $ 11,518,414 $ 11,649,200 $ 11,982,557 74 75 76 77 78 79 80 81 Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 2 1. Rev Rqmt Hilton Farnkopf Hobson, , LLC Lodi WW model 3-5-04-jf.xls 1 2. Rev Inc A I B G H I J K L M N O 1 City of Lodi Wastewater Rate Study Table 2. Projected Revenue Increases Budgeted FY 03-04 Budgeted FY 04-05 FY 05-06 FY 06-07 FY 07-08 Projected FY 08-09 FY 09-10 FY 10-11 FY 11-12 2 3 4 5 6 7 Revenue Requirements (From Tbl1) Revenue from Rates Revenue from Current Rates $ Revenue from prior year's rate increases Total Rate Revenues Including Rate Increases Surplus/(Deficit) before rate increase Rate Increase Indicated (From Tbl 3) Revenue from rate increases FY 03-04 (effective 5/1/04 - 2 months) $ FY 04-05 (effective 7/1/04) FY 05-06 FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12 Subtotal - Revenue from Rate Increases $ Total Rate Revenue $ Surplus/(Deficit) after Rate Increase (To Tbl 3, Fund 171 $ $6,533,400 6,079,083 - $6,079,083 (454, 316) 25.0% 253,295 253,295 6,332,378 201,021 $7,175,789 $ 6,092,300 1,538,306 $7,630,606 454,817 0.0% $ 1,538,306 - $ 1,538,306 $ 7,630,606 $ 454,817 $9,565,158 $ 6,155,323 1,554,219 $7,709,542 (1,855,616) 25.0% $ 1,554,219 - 1,946,659 $ 3,500,878 $ 9,656,201 $ 91,044 $9,670,479 $ 6,219,018 3,537,105 $9,756,124 85,645 3.0% $ 1,570,302 - 1,966,803 295,611 $ 3,832,716 $ 10,051,734 $ 381,255 $10,774,389 $ 6,283,393 3,872,390 $10,155,783 (618, 606) 3.0% $ 1,586,557 - 1,987,162 298,671 304,673 $ 4,177,063 $ 10,460,456 $ 313,933 $11,088,246 $ 6,397,656 4,253,022 $10,650,678 (437, 568) 3.0% $ 1,615,408 - 2,023,299 304,102 310,214 319,520 $ 4,572,543 $ 10,970,198 $ 118,048 $11,518,414 $ 6,464,397 4,620,244 $11,084,642 (433, 772) 3.0% $ 1,632,260 - 2,044,406 307,274 313,450 322,854 332,539 $ 4,952,784 $ 11,417,181 $ 101,233 $11,649,200 $ 6,531,862 5,004,472 $11,536,334 (112, 866) 3.0% $ 1,649,295 - 2,065,742 310,481 316,721 326,223 336,010 346,090 $ 5,350,562 $ 11,882,424 $ 233,224 $11,982,557 $ 6,600,057 5,406,425 $12,006,482 23,925 3.0% $ 1,666,514 - 2,087,309 313,723 320,028 329,629 339,518 349,703 360,194 $ 5,766,619 $ 12,366,676 $ 384,119 8 9 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 26 27 28 29 Operating Revenue Wastewater Sales - Public Wastewater Sales - City Septage Charges (actual to increase per gen incr.) Revenue "loss" Low-income programs Other Operating Income Rate increase (as a full year's revenue for FY 03-04) Total for coverage tests (Tbl 4A) $ 5,845,710 29,540 210,000 (6,167) $ 6,079,083 $ 1,519,771 $ 7,598,854 $ 5,904,170 30,130 210,000 (52,000) - $ 6,092,300 $ 1,538,306 $ 7,630,606 $ 5,963,212 30,431 214,200 (52,520) - $ 6,155,323 $ 3,500,878 $ 9,656,201 $ 6,022,844 30,736 218,484 (53,045) - $ 6,219,018 $ 3,832,716 $ 10,051,734 $ 6,083,072 31,043 222,854 (53,576) - $ 6,283,393 $ 4,177,063 $ 10,460,456 $ 6,143,903 31,353 276,511 (54,111) - $ 6,397,656 $ 4,572,543 $ 10,970,198 $ 6,205,342 31,667 282,041 (54,653) - $ 6,464,397 $ 4,952,784 $ 11,417,181 $ 6,267,395 31,984 287,682 (55,199) - $ 6,531,862 $ 5,350,562 $ 11,882,424 $ 6,330,069 32,303 293,435 (55,751) - $ 6,600,057 $ 5,766,619 $ 12,366,676 33 34 35 36 37 38 39 40 41 42 43 Hilton Farnkopf Hobson, , LLC Lodi WW model 3-5-04-jf.xls 1 2. Rev Inc Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 1 3. Reserves A D E F G H I J K L 1 City of Lodi Wastewater Rate Study Table 3. Reserve Funds Budgeted FY 03-04 Budgeted FY 04-05 FY 05-06 FY 06-07 FY 07-08 Projected FY 08-09 FY 09-10 FY 10-11 FY 11-12 2 4 5 6 Operations Fund (00170) Fund Balance Without Rate Increases Beginning Fund Balance Annual Surplus/(Deficit) (From Tbl 2) Subtotal Estimated interest earnings Ending Balance (Without Rate Incr.) Rate Increases: Fund Balance With Rate Increases (To Tbl 2) Beginning Fund Balance Transfers (To)/From Fund 00172 (To Tbl 3 below) Annual Surplus/(Deficit) (From Tbl 2) Subtotal Estimated interest earnings Ending Balance (With Rate Increase) Minimum Balance (15% of Operations) Fund Balance Compared to Target $ 1,533,330 (454,316) $ 1,079,014 26,123 $ 1,105,137 25% $ 1,533,330 - (201,021) $ 1,332,309 28,656 $ 1,360,965 $ 743,000 183% $ 1,105,137 454,817 $ 1,559,954 33,314 $ 1,593,268 0% $ 1,360,965 - 454,817 $ 1,815,782 39,709 $ 1,855,491 $ 772,000 240% $ 1,593,268 (1,855,616) $ (262,348) 16,636 $ (245,712) 25% $ 1,855,491 - 91,044 $ 1,946,535 47,525 $ 199949060 $ 847,000 235% $ $ $ $ $ $ $ (245,712) 85,645 (160,067) (160,067) 3% 1,994,060 - 381,255 2,375,316 54,617 2,429,933 877,000 277% $ (160,067) (618,606) $ (778,673) - $ (778,673) 3% $ 2,429,933 (300,000) (313,933) $ 1,816,000 53,074 $ 198699074 $ 908,000 206% $ (778,673) (437,568) $ (1,216,242) $ (1,216,242) 3% $ 1,869,074 (400,000) (118,048) $ 1,351,026 40,251 $ 1,391,277 $ 940,000 148% $ (1,216,242) (433,772) $ (1,650,014) - $ (1,650,014) 3% $ 1,391,277 (400,000) (101,233) $ 890,044 28,517 $ 918,561 $ 975,000 94% $ (1,650,014) (112,866) $ (1,762,880) $ (1,762,880) 3% $ 918,561 (300,000) 233,224 $ 851,785 22,129 $ 873,914 $ 1,010,000 87% $ $ $ $ $ $ $ (1,762,880) 23,925 (1,738,955) - (1,738,955) 3% 873,914 (300,000) 384,119 958,033 22,899 980,932 1,047,000 94% 7 8 9 10 11 12 14 15 16 17 18 19 20 -2 -1 22 23 24 Capital Outlays (00171) Beginning Balance Transfers (To)/From Rev Reqmts (Tbl 1) Transfers (To)/From Fund 172 (Tbl 3 below) Cash funded projects (From Tbl 5) Subtotal Estimated interest earnings Ending Balance Target Balance (50%of10-yrannual average cash costs) Fund Balance Compared to Target $ (111,277) $ 56,768 1,700,000 1,100,000 100,000 1,600,000 (1,631,955) (1,849,500) $ 56,768 $ 907,268 12,050 $ 56,768 $ 919,318 $ 957,000 $ 986,000 6% 93% $ 919,318 2,200,000 100,000 (2,231,000) $ 988,318 23,845 $ 1,012,163 $ 1,016,000 100% $ 1,012,163 1,200,000 700,000 (1,881,000) $ 1,031,163 25,542 $ 1,056,705 $ 1,046,000 101% $ 1,056,705 1,900,000 - (1,931,000) $ 1,025,705 26,030 $ 1,051,735 $ 1,077,000 98% $ 1,051,735 2,000,000 - (1,985,000) $ 1,066,735 26,481 $ 1,093,216 $ 1,109,000 99% $ 1,093,216 2,200,000 - (2,135,000) $ 1,158,216 28,143 $ 1,186,359 $ 1,142,000 104% $ 1,186,359 2,100,000 - (2,135,000) $ 1,151,359 29,221 $ 1,180,580 $ 1,176,000 100% $ 1,180,580 2,200,000 - (2,185,000) $ 1,195,580 29,702 $ 1,225,282 $ 1,211,000 101 25 26 27 28 29 30 31 32 33 34 WSWPCF Capital (00172) Beginning Balance Transfers (To)/From Rev Reqmts (Tbl 1) Transfers From Fund 170 (Tbl 3 above) Transfers (To)/From Fund 171 (Tbl 3 above) Capital Projects (from Tbl 5) Bond proceeds Subtotal Estimated interest earnings Ending Balance Min. Recommended Balance $500,000 current year, inflate in future Fund Balance Compared to Target $ $ $ $ 84,701 - - (100,000) (3,581,000) 4,096,050 499,751 5,845 505,596 500,000 101% $ 505,596 - (1,600,000) (15,831,650) 21,387,890 $ 4,461,836 62,093 $ 4,523,929 $ 515,000 878% $ $ $ $ 4,523,929 - - (100,000) (3,965,000) - 458,929 62,286 521,215 530,000 98% $ $ $ $ 521,215 - (700,000) (8,955,160) 9,680,160 546,215 13,343 5599557 546,000 102% $ $ $ $ 559,557 - 300,000 - (350,000) - 509,557 13,364 522,921 562,000 93% $ $ $ $ 522,921 - 400,000 - (350,000) 572,921 13,698 5869619 579,000 101% $ $ $ $ 586,619 - 400,000 - (350,000) - 636,619 15,290 651,910 596,000 109% $ 651,910 - 300,000 - (350,000) $ 601,910 15,673 $ 6179583 $ 614,000 101% $ $ $ $ 617,583 - 300,000 - (350,000) - 567,583 14,815 582,397 632,000 92% 35 36 37 38 39 40 41 42 43 44 45 46 Total Reserves (00170, 00171, 00172) Total Reserves (With Rate Increases) Total Target Reserves Fund Balance Compared to Target $ $ 1,923,329 2,2009000 87% $ 7,298,738 $ 2,273,000 321% $ $ 3,527,438 2,3939000 147% $ $ 4,046,195 2,469,000 164% $ $ 3,443,731 2,5479000 135% $ $ 3,071,113 2,628,000 117% $ $ 2,756,830 2,7139000 102% $ 2,672,077 $ 2,800,000 95% $ $ 2,788,612 2,8909000 96% 47 48 49 Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 1 3. Reserves Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 2 3. Reserves A D E F G H I J K L 1 City of Lodi Wastewater Rate Study Table 3. Reserve Funds Budgeted FY 03-04 Budgeted FY 04-05 FY 05-06 FY 06-07 FY 07-08 Projected FY 08-09 FY 09-10 FY 10-11 FY 11-12 2 4 5 50 Impact Fund (00173) Beginning Balance $ Transfers (To)/From Rev Reqmts (To Tbl 1) Debt Service 1991 COPS Phase 1- 2003 bond Phase II -2004 bond Phase III - 2006 bond Impact Fee Revenue -Existing Impact Fee Revenue -Increase In Fees Capital Projects Bond proceeds Subtotal $ Estimated interest earnings Ending Balance $ 1,011,924 - (598,281) (15,111) - 777,000 (580,821) 838,950 1,433,661 24,456 1,458,117 $ 1,458,117 - (597,221) (65,135) (165,132) 924,000 215,403 (3,323,017) 3,613,350 $ 2,060,366 43,981 $ 2,104,347 $ 2,104,347 - (595,550) (64,506) (328,092) - 933,240 217,557 (1,935,000) - $ 331,996 30,454 $ 362,451 $ 362,451 - (596,832) (64,719) (328,041) (186,201) 942,572 219,733 (11,406,840) 12,831,840 $ 1,773,963 26,705 $ 1,800,668 $ 1,800,668 $ - (597,226) (64,914) (327,922) (226,437) 951,998 221,930 (677,260) - $ 1,080,837 $ 36,019 $ 1,116,856 $ 1,116,856 - (593,223) (65,050) (327,667) (226,735) 961,518 224,149 - 1,089,849 27,584 1,117,433 $ 1,117,433 - (595,876) (65,065) (327,233) (226,990) 971,133 226,391 - - $ 1,099,794 27,715 $ 1,127,509 $ 1,127,509 - (593,961) (64,837) (327,484) (227,052) 980,845 228,655 - $ 1,123,675 28,140 $ 1,151,815 $ 1,151,815 - (594,879) (64,459) (326,620) (226,916) 990,653 230,941 - - $ 1,160,536 28,904 $ 1,189,441 51 52 53 54 55 56 57 58 59 60 63 64 65 66 Hilton Farnkopf Hobson, LLC Lodi WW model 3-5-04-jf.xls 2 3. Reserves City of Lodi Wastewater Rate Study Table 5. Capital Improvement Program Wastewater Capital Outlay Fund (00171) Elm Street (Hutchins > Lee) Lockeford St. SD E/Mills Glaves Park Inlet Structure Future, Unspecified Storm Drain Upgrades Lodi Lake Pump Station Modifications Remote Actuated Slide Gate Installation (2) Billing Software Upgrades Air Compressor (Unit No. 04-094) White Slough Primary Sedimentation Tank Repairs White Slough Laboratory Ceiling Tile and Light Fixture Replacem White Slough Telephone Systems Upgrade White Slough WPCF-Professional Services White Slough Headwork Sluice Gate Storm water Management Program Organization Evaluation and Restructure 171008 Century Meadows Three 171021 Wastewater Main replacement 171053 MSC Modular Bldgs/Rehabilitation/Expansion 171405 Miscellaneous System Relocations 171471 Wastewater Taps - PW/CM 171473 Mainline Trunk CC Study 171474 Lift Station -Generator Replacements 171475 Main Street Storm Drain Mitigation 171476 Outfall Diversion Structure 171477 Remote Terminal Unit Replacement 171201 Vehicles and Other Equipment Future Vehicles Future projects Total (00171) (To Tbl 3) - cash funded WSWPCF Capital (00172) 172002 WS/WPCF Phase 1 Pre -Design 172405 Aeration Basin 172406 Chlorine Residual Monitor 172461 WW Treatment Master Plan 172463 Groundwater Monitoring 172500 Roof Replacement -White Slough/Boiler WSWPCF - Phase 1, 2003 Improvements WSWPCF - Phase 2, 2003 Improvements WSWPCF - Phase 2, Land Acquisition WSWPCF - Phase 3, Environmental & Design WSWPCF - Phase 3, Construction Future projects Total (00172) (To Tbl 3) Budgeted FY 03-04 Budgeted FY 04-05 FY 05-06 FY 06-07 FY 07-08 Projected FY 08-09 FY 09-10 FY 10-11 FY 11-12 $ 44,000 $ - $ - $ - $ - $ - $ - $ - $ - 106,500 - - 20,000 - - - - - - - - 200,000 200,000 200,000 200,000 200,000 200,000 200,000 - - to be determined - - - - 30,000 - - - - 50,000 6,455 - - 15,000 15,000 - 16,000 - 45,000 40,000 - 15,000 - - - - - - - - - 52,500 50,000 50,000 50,000 50,000 50,000 50,000 50,000 25,000 - - - - - - - 1,035,000 1,200,000 1,250,000 1,250,000 1,300,000 1,300,000 1,350,000 1,350,000 1,400,000 55,000 315,000 - - - - - - - 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 - 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 60,000 - - - - - - - - - 46,000 46,000 46,000 46,000 240,000 - - - 50,000 400,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 200,000 300,000 400,000 400,000 400,000 1,631,955 1,849,500 2,231,000 1,881,000 1,931,000 1,985,000 2,135,000 2,135,000 2,185,000 50,000 50,000 50,000 15,000 - - - - - - - - 2,739,000 15,151,650 2,490,000 1,075,000 8,605,160 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 $ 3,581,000 $ 15,831,650 $ 3,965,000 $ 8,955,160 $ 350,000 $ 350,000 $ 350,000 $ 350,000 $ 350,000 Lodi WW model 3-5-04-jf.xls City of Lodi Wastewater Rate Study Table 5. Capital Improvement Program ortion Allocable to WSWPCF Capital (00172) Budgeted Budgeted Assumptions: Projected FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12 Impact Fund (00173) - $300,000 blower cost funded from cash WSWPCF Phase II Improvements - 173002 MSS1002 Flow Monitoring $ - $ - $ - $ - $ - $ - $ - $ - $ - 173040 Municipal Service Center (MSC) Expansion 18,333 219,667 - MSSO 001 Sanitary Sewer Master Plan ortion Allocable to Impact Fund (00173) - - 115,970 MSSO 002 PW Admin Bldg Exp $ 561,000 $ - $ - WSWPCF Phase III Improvements 373,420 MSSO 003 PW Storage Facilities - - - - WSWPCF Phase III Improvements 187,870 WSWPCF - Phase 1, 2003 Improvements - 561,000 $ WSWPCF - Phase 2, 2003 Improvements $ 21,255,000 $ 22,512,000 3,103,350 roject Totals (check total per Phase) WSWPCF WSWPCF - Phase 2, Land Acquisition 510,000 $ 3,300,000 WSWPCF - Phase 3, Environmental & Design $ - WSWPCF Phase II Improvements 1,425,000 - 21,255,000 WSWPCF - Phase 3, Construction WSWPCF Phase III Improvements 11,406,840 22,512,000 Future projects 1,488 - - - - Total (00173) (To Tbl 3) $ 580,821 $ 3,323,017 $ 1,935,000 $ 11,406,840 $ 677,260 $ $ $ $ WSWPCF Total Project Costs WSWPCF Phase I Improvements $ 3,300,000 100.00% Existing use 2,739,000 83.00% Future user 561,000 17.00% WSWPCF Phase 11 Improvements 21,255,000 100.00% Existing users 17,641,650 83.00% Future users 3,613,350"12,8301,840 17.00% WSWPCF Phase III Improvements 100.00% Existing users 43.00% Future users 57.00% ortion Allocable to WSWPCF Capital (00172) Assumptions: WSWPCF Phase I Improvements WSWPCF Phase I Improvements $ 2,739,000 - $300,000 blower cost funded from cash WSWPCF Phase II Improvements - 17,641,650 - Benefit to existing users 83.0% WSWPCF Phase III Improvements - - 9,680,160 WSWPCF Phase II Improvements ortion Allocable to Impact Fund (00173) Benefit to existing users 83.0% WSWPCF Phase I Improvements $ 561,000 $ - $ - WSWPCF Phase III Improvements WSWPCF Phase II Improvements - 3,613,350 - Benefit to existing users 43.0% WSWPCF Phase III Improvements - - 12,831,840 $ 3,300,000 $ 21,255,000 $ 22,512,000 roject Totals (check total per Phase) WSWPCF WSWPCF Phase I Improvements $ 3,300,000 $ - $ - WSWPCF Phase II Improvements - 21,255,000 - WSWPCF Phase III Improvements - 22,512,000 Lodi WW model 3-5-04-jf.xls Presen to tion to: Lodi City Council on White Slough Water Pollution Control Facility and Related Financing March 30, 2004 Contents ➢ Project Description - Summary of Funding OF 41FO ➢ Wastewater System Revenue Certificates of Participation, 2004 Series A - Market Update - Projected Debt Service Requirements - Summary of Rate Covenants - Summary of 1991 COPs - Summary of Coverage Requirements - Projected Fund Balances ➢ Next Steps Project Description ➢ The Project consists of the following additions, betterments, extensions, replacements and improvements to the System: - Equipment for Phase 2 of the upgrade of the White Slough Water Pollution Control Facility, including Tertiary filters, UV disinfection equipment and aeration panels. - Installation of the above equipment along with associated equipment, structures and appurtenances. - Land to be acquired in connection with improvements and buffer zones for the White Slough Water Pollution Control Facility. - Equipment and other improvements associated with Phase 3 of the White Slough Water Pollution Control Facility Improvement Project. - Improvements to the wastewater collection system and support facilities. - Engineering, environmental, legal and other expenses associated with the above improvements. Summary of Funding ➢ Purpose of Bonds — Finance Phase II of State -mandated improvements at White Slough Water Pollution Control Facility. — Phase I financed in 2003 through the California Statewide Communities Development Authority bond pool. — Phase II financed through proposed 2004 Wastewater Revenue Certificates of Participation. — Phase III Financing likely in 2006. Wastewater System Revenue Certificates of Participation, 2004 Series A Par Amount $25 million Purpose Phase II of White Slough Security System Net Revenues of Wastewater Enterprise • 20 -year fixed rate COP financing with level debt Structure(l) service • Lessee = City of Lodi • Lessor = Lodi Public Improvements Corporation Call Provision Optional redemption beginning 10/1/14 @ 100% Reserve Fund Surety policy Assumed Rate 4.10% Underwriter First Albany Capital Bond Counsel Orrick, Herrington & Sutcliffe (1) COP Structure = An arrangement in which investors buy certificates that entitle them to receive a participation, or share, in the lease payments from a particular project or enterprise. Market Update �IFC7R ➢ Long term tax-exempt rates are at historical lows. The Bond Buyer Revenue Bond Index has only been this low 0.08% of the time since 1980. Percentage of Time RBI has been lower than Current Levels less 25 by less 20 by less 15 by less 10 by less 5 by Current Rate plus 5 by plus 10 by plus 15 by plus 20 by plus 25 by 0.00% 0.00% 0.00% 0.00% 0.00% 0.08% 0.16% Current RBI = 4.75% 0.71% Historic RBI Maximum 14.32 Minimum 4.75 Average 7.48 Current (3/12/2004) 4.75 0.87% 1.03% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.34% 1.40% 1.60% -PF 6 Projected Debt Service Requirements ➢ Projected debt service requirements are approximately $3.1 million through FY 2024 with the 2004 COPs. 3,500,000 3,000,000 2,500,000 v U 2,000,000 v v 1,500,000 Q 1,000,000 500,000 Summary of Projected Debt Service Requirements 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 ■ 1991 COPs Period Ending June 30 ■ 2003 Bonds ■ 2004 COPs 7 Summary Rate Covenants �IFC7R ➢ The proposed financing is designed to update Lodi's rate covenants over time to the 2003 covenants. The final change will require the refunding of the 1991 COPs when economic. ➢ Rate Covenant: 1. Net revenues coverage = 1.1Ox debt service and; 2. Adjusted net revenues coverage = 1.00x debt service. ➢ Additional Bonds Test: 1. Net revenues coverage = 1.1 Ox Max Annual Debt Service (MADS) and; 2. Adjusted net revenues coverage = 1.00x MADS. ➢ Adjusted Net Revenues = Net revenues less fees charged to customers for initial connection to the sewer system. ➢ Rate Covenant: 1. System revenues coverage = 1.00x O&M and debt service and; 2. Net revenues coverage = 1.1 Ox debt service. ➢ Additional Bonds Test: 1. Net revenues coverage = 1.1Ox Max Annual Debt Service (MADS). ➢ Net Revenues = System revenues less Operations and Maintenance Costs and less General Fund transfer(O. ect to GAAP. g Summary of 7991 COPS ➢ The 1991 COPs are not callable until August 1, 2006. ➢ Based on current rates which will be reevaluated in 2006, a fixed rate refunding is estimated to generate present value savings of over $2.0 million (22.9%). 8.0% 7.0% 6.0% 5.0% v c� 4.0% v v 3.0% 2.0% 1.0% 0.0% 1991 CON versus Current Interest Rates Delivery Date 8/l/06 Par Amount of Refunded Bonds 8,800,000 TIC 3.905% Average Annual Savings 144,796 Gross Savings 2,897,694 Present Value Savings 2,021,567 Present Value Savings % 22.972% M M 10 r- 00 C, O N M t Ln V r- o0 G, O — N M 7 u' V O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N Period Ending Series 1991 Coupons Current Interest Rates Current market rates as of Mardi 10, 2004. PF 9 Summary of Rate Covenant Requirements Gross Revenues (a) 7,074,885 8,518,672 9,776,194 10,735,595 11,734,944 12,908,951 Operating Expenses (b) (3,941,714) (4,200,021) (4,387,471) (4,807,444) (4,974,812) (5,148,262) System Net Revenues (c) 3,133,171 4,318,651 5,388,723 5,928,150 6,760,133 7,760,689 Less: Connection Fees (d) (1,394,287) (777,000) (1,139,403) (1,150,797) (1,162,305) (1,173,928) Adjusted System Net Revenues (e) 1,738,884 3,541,651 4,249,319 4,777,353 5,597,827 6,586,761 Parity Debt Obligations 1991 COPS 808,488 807,055 804,798 806,530 807,063 801,653 2003 Bonds - 88,888 383,148 379,448 380,698 381,848 2004 COPS - - 971,362 1,929,951 1,929,651 1,928,951 Total Parity Debt (0 808,488 895,943 2,159,307 3,115,929 3,117,411 3,112,451 1991 COPs Coverage/Rate Covenant 3.26x 3.98x 2.14x 1.63x 1.89x 2.20x Net Revenues (c/f) (1.10x) 3.88x 4.82x 2.50x 1.90x 2.17x 2.49x Adjusted Net Revenues (e/ f) (1.00x) 2.15x 3.95x 1.97x 1.53x 1.80x 2.12x 2003 Bonds, 2004 COPS Coverage/Rate Covenant System Net Revenues (c) 3,133,171 4,318,651 5,388,723 5,928,150 6,760,133 7,760,689 Less: General Fund Transfer (g) (496,647) (755,040) (759,885) (839,367) (869,058) (904,656) System Net Revenues less GF Transfer (h) 2,636,524 3,563,611 4,628,837 5,088,784 5,891,075 6,856,033 Gross Revenues (a/b+f) (1.00x) 1.49x 1.67x 1.49x 1.35x 1.45x 1.56x Net Revenues (h/f) (1.10x) 3.26x 3.98x 2.14x 1.63x 1.89x 2.20x �rr�� 10 Summary of Additional Bonds Test Gross Revenues (a) 7,074,885 Operating Expenses (b) (3,941,714) System Net Revenues (c) 3,133,171 Less: Connection Fees (d) (1,394,287) Adjusted System Net Revenues (e) 1,738,884 Parity Debt Obligations 1991 COPS 808,488 2003 Bonds - 2004 COPS - Total Parity Debt ( 808,488 1991 ABT for 2004 COPs System Net Revenues (c) 3,133,171 Plus: Proposed Rate Increases (i) 1,384,346 Total Net Revenues for ABT (j) 4,517,517 Less: Connection Fees (d) (1,394,287) Total Adjusted Net Revenues for ABT (k) 3,123,230 Total Max Annual Parity Debt (1) 3,121,586 Net Revenues (j /1) (1.10x) 1.45x Adjusted Net Revenues (k/1) (1.00x) 1.00x 2003 ABT for 2004 COPs System Net Revenues less GF Transfer (h) 2,636,524 Plus: Proposed Rate Increases (i) 1,384,346 Total Net Revenues for ABT (m) 4,020,870 Net Revenues (m/1) (1.10x) 1.29x Projected Fund Balances ➢ Assuming 25% rate increases in FY 03-4 and in FY 05-06 and 3% rate increases thereafter, projected fund balances are $980,932 or 16.6% of estimated annual expenses in FY 11-12. Projected Wastewater System Fund Balances(1) 3,000,000 60.0% Fund Balance f Fund Balance as % of O&M 2,500,000 2,000,000 v U cC 1,500,000 bA W 1,000,000 500,000 0 FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 (1) Projected ending fund balances with projected rate increases before capital outlays. 50.0% 20.0% 0 10.0% 0.0% FY 08-09 FY 09-10 FY 10-11 FY 11-12 Next Steps 0 Council Shirt -sleeve Meeting: ➢ Rating Agency Meetings: ➢ Final Council Action on Bond Financing: ➢ Receipt of Rating Indications: ➢ Pre -Marketing Period: ➢ Pricing of 2004 COPs: ➢ Closing of 2004 COPs: March 30 April 20 - 22 April 27 May 3 May 5-10 May 11 -12 May 19 -20