03-25-13 Regular Meeting of La Porte City Council

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Item Balance of Funds FY 12_13 Non-CIP Utility Expenses: Cost Remaining (FY 12_13 Projected Utility Revenue) $8,060,000 Personnel $2,535,000 $5,525,000 Purchase Water $1,740,000 $3,785,000 Bond Debt $862,000 $2,923,000 Utility BillingDivision$758,000 $2,165,000 Electric$615,000 $1,550,000 Services & Charges (Motor Pool, Machinery, etc.)$490,000 $1,060,000 Non-Dept $270,000 $790,000 Supplies (Chemicals, Gas/Oil, etc.) $200,000 $590,000 TCEQ $115,000 $475,000 Meter Supplies/Water Tap Material $45,000 **$430,000 Utility Expenses Prior to CIP Projects: $7,630,000 **Balance Available For CIP Projects The estimated $430,000 funds projected to be available for CIP projects in FY 12_13 may end up being $0 to $1-million with a few percent increase or decrease in water consumption this fiscal year. Staff’s recommended Utility Capital Improvement Project (CIP) budget is $2-millionper year. The estimated $430,000 projected to be available for CIP projects will likely be absorbed by inflation costs over the next two years. One option for funding an annual $2-millionCIP program is to consider a $1.50 per 1000 gallon “Capital Improvement ReserveFee” added to the rate structure. The city bills an average of 1.3-billion gallons/year x $1.50/1000 gallons = $1,950,000. Benefits of a Capital Improvement Reserve Fee: Fairly consistent revenue from year to year gives staff the ability to better plan o longer term (5-year) CIP program. More uniform project work load from year to year. The current cycle for CIP o funding is: 1) period of declining funds available for CIP projects each year, 2) a significant increase in utility rates (40% total rate increases over 2005 –2007), 3) another period of declining CIP funding. The impact of a $1.50/1000 gallon Capital Improvement Reserve Fee on residential customers is approximately $4.00/month added to the bill of a single person; $9.00 - $10.00/month of the average residential customer. Still the La Porte residential rates would still be 7% (10,000 gallons/month) –21% (5,000 gallons/month) below the