HomeMy WebLinkAbout6.10.14 SDC Review Committee Financial Analysis
Ashland, Oregon
UPDATE:
WATER SYSTEM DEVELOPMENT CHARGE
Prepared by:
ECONOMIC & FINANCIAL ANALYSIS
1409 Franklin Street, Suite 201
Vancouver, WA98660
June 5, 2014
Update, Water System Development Charge June 5, 2014
Tables
Table 1 Summary Water SDC ...................................................................................................................... 1
Table 2 Schedule of Current and Proposed Water SDC ............................................................................... 1
Table 3 Calculation of Water Reimbursement Fee ....................................................................................... 3
Table 4 Original List of Capital Improvements & SDC Eligible, 2012 $'s .................................................. 4
Table 5 SDC Eligible Capital Improvements with Modifications, 2014 $'s ................................................. 7
Table 6 Calculation of Water Improvement Fee ........................................................................................... 8
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Update, Water System Development Charge June 5, 2014
SUMMARY
The following 5 tables show the changes to the current water system development charge (SDC) and compares the current water SDC to that proposed in the 2012 Comprehensive Water Master Plan (WMP, Final December 2012), and to this proposed SDC based on changes that have occurred since 2012.
Table 1 summarizes these three calculations of the water SDC for residential and for commercial & industrial users on a ¾-inch water meter. Compared to the current water SDC, the 2012 WMP proposed a
decrease of about 6%, and with the current changes since 2012, a 0.3% increase for the residential SDC and
a 1.3% decrease for commercial & industrial. The commercial & industrial SDC decreased due to an apparent error in the WMP calculations which is explained below in Table 5.
Table 1 Summary Water SDC
% ∆ from
Reimbursement Improvement Total SDC Reimbursement Improvement Total SDC Current
Current
$/Square Foot of Habitable Area $2.60
$/Meter Size
3/4 $4,940.40
2012 WMP
$/Square Foot of Habitable Area $0.8040 $1.6436 $2.4476 -5.9%
$/Meter Size
3/4 $1,522.18 $3,111.76 $4,633.94 -6.2%
2014 WMP Update with TAP & Crowson II
$/Square Foot of Habitable Area $0.9318 $1.6751 $2.6069 0.3%
$/Meter Size
3/4 $1,792.89 $3,084.22 $4,877.11 -1.3%
Residential Commercial & Industrial
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Update, Water System Development Charge June 5, 2014
Table 2 shows the entire schedule of changes by meter size for commercial & industrial users.
Table 2 Schedule of Current and Proposed Water SDC
Table 3 shows the changes in the cost basis of the reimbursement fee. The proposed SDC in the WMP was based on the fiscal year 2011 (July 1, 2012 through June 30, 20111) audit. The update is based on the most
recently completed audit ending June 30, 2013, and on the current cost of constructing the TAP water line
and the Medford Water Commission SDC for water in 2014 dollars. This project was deleted from the list of capital improvements that was used to calculate the improvement fee. Since this project has been
financed and is under construction, it can be counted as an existing asset with excess capacity to serve future
development. In the 2012 WMP, the project was to serve only emergency water needs and was excluded from the calculation of the improvement fee. Since then, the scope of this project has made it a source of
% ∆ from
Reimbursement Improvement Total SDC Reimbursement Improvement Total SDC Current
Current
$/Square Foot of Habitable Area $2.60
$/Meter Size
3/4 $4,940.40
1 $8,250.47
1 1/2 $16,451.53
2 $26,332.33
3 $57,654.47
4 $98,808.00
6 $205,866.47
8 $296,424.00
2012 WMP
$/Square Foot of Habitable Area $0.8040 $1.6436 $2.4476 -5.9%
$/Meter Size
3/4 $1,522.18 $3,111.76 $4,633.94 -6.2%
1 $2,537.00 $5,186.00 $7,723.00 -6.4%
1 1/2 $5,074.00 $10,373.00 $15,447.00 -6.1%
2 $8,118.00 $16,596.00 $24,714.00 -6.1%
3 $17,759.00 $36,304.00 $54,063.00 -6.2%
4 $30,444.00 $62,235.00 $92,679.00 -6.2%
6 $63,424.00 $129,657.00 $193,081.00 -6.2%
8 $91,331.00 $186,706.00 $278,037.00 -6.2%
2014 WMP Update with TAP & Crowson II
$/Square Foot of Habitable Area $0.9318 $1.6751 $2.6069 0.3%
$/Meter Size
3/4 $1,792.89 $3,084.22 $4,877.11 -1.3%
1 $2,988.75 $5,140.43 $8,129.18 -1.5%
1 1/2 $5,975.70 $10,280.87 $16,256.57 -1.2%
2 $9,561.48 $16,448.58 $26,010.06 -1.2%
3 $20,917.65 $35,983.04 $56,900.69 -1.3%
4 $35,857.80 $61,685.21 $97,543.01 -1.3%
6 $74,704.35 $128,508.83 $203,213.18 -1.3%
8 $107,573.40 $185,053.61 $292,627.01 -1.3%
Residential Commercial & Industrial
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Update, Water System Development Charge June 5, 2014
water to Ashland and it will be available to serve future development. In this analysis, 90% of the TAP line cost is included because it will primarily serve growth and 10% is assumed to be used for emergency use by existing development.
The proposed SDC uses the same criteria as the 2012 WMP and the current methodology. The current and WMP methodology divides the cost between single-family residences and commercial & industrial based
on the equivalent numbers of ¾-inch water meters in service currently. A ¾-inch equivalency is based on
the amount of water that a certain size meter (e.g., 2-inch meter) can pass instantaneously relative to the amount a ¾-inch meter can pass (e.g., a 2-inch meter can pass 5.33 times more water than a ¾-inch meter).
Single-family residences’ SDCs are based on square footage of habitable (heated) floor area; and, the
commercial & industrial is based on meter size which varies by the meters’ abilities to provide water instantaneously—gallons per minute. Seventy-seven percent of the 3/4-inch meters are in single-family
residences; therefore, 77% of the eligible reimbursement fee costs are allocated to residences and 23% to commercial & industrial users.
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Update, Water System Development Charge June 5, 2014
Table 3 Calculation of Water Reimbursement Fee
2011 2013 Allocation % ∆
Original Cost $36,180,656 $36,435,280 0.7%
Accumulated Depreciation ($15,228,374)($17,254,657)13.3%
Book Value of Hosler Dam ($55,741)-100.0%
Book Value $20,896,541 $19,180,623 -8.2%
Series 1997 Flood & Refunding Bonds ($175,000)-100.0%
Series 2003 Water Revenue Bonds ($2,940,000)($4,695,862)59.7%
Series 2009 Water & WW Bonds (FF&C)($633,551)-100.0%
Principal Outstanding ($3,748,551)($4,695,862)25.3%
Investment in Capacity $17,147,990 $14,484,761 -15.5%
Emergency TAP Pipeline & Pump
MWC's SDC $2,620,084
Construction $4,400,000
Less: IFA Forgivable Loan ($950,000)
Net cost of TAP $6,070,084
% Allocation to future development 90.00%
Allocation to future development $5,463,076
Cost Basis for Reimbursement Fee $19,947,837
Current 3/4" Equivalents Meters (EM)Number %
Residential 7,575 77%$15,359,834
Commercial & Industrial 2,227 23%$4,588,002
Total 9,802 100%$19,947,836
Square Feet (SF) of Residential Habitable Area, 2032 16,483,431 $/SF $0.9318
3/4" Commercial & Industrial Equivalents Meters (EM), 2032 2,559 $/EM $1,792.89
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Update, Water System Development Charge June 5, 2014
Table 4 is from the WMP (Table 9-16) and shows that the Emergency TAP line project is deleted. This project is under construction and qualifies as a reimbursement fee. Only 9 projects qualify to be
improvement fee projects; of the $44 million of capital improvements only $4.3 million is included in the SDC improvement fee. The Emergency TAP Pipeline & Pump project has been deleted from the list of
capital improvements and added to the list of existing capital improvements. Because of this change in
scope the City was able to reduce the amount of storage needed at the Crowson II reservoir which reduced the cost by $1.3 million (in 2012 $’s). Table 5 shows these calculations.
Table 4 Original List of Capital Improvements & SDC Eligible, 2012 $'s
SDC Eligible
Capital Project Total Cost % $
Supply
FERC Dam Security & Telemetry Impr. - 25.00% -
FERC Dam Spillgate Upgrades(50% Electric, 50% Water) - 25.00% -
FERC Structural Stability Analysis(50% Electric, 50% Water) - 25.00% -
FERC Part 12 Dam Safety Inspection(50% Electric, 50% Water) 160,000 25.00% 40,000
Ashland Creek West Fork Bridge Construction 120,000 75.00% 90,000
Sediment TMDLin Reeder Resv. 600,000 75.00% 450,000
Reeder Resv Study Implementation 30,000 75.00% 22,500
Reeder Resv Access Road TMDL Compliance 100,000 75.00% 75,000
Reeder Resv Variable Depth Intake 100,000 0.00% -
TID Terrace St Pump Station Improvements 220,000 0.00% -
TID Canal Piping: Starlite to Terrace Street 1,100,000 100.00% 1,100,000
Test existing high capacity wells 50,000 0.00% -
Water Conservation Smart Controller Pilot Project 50,000 0.00% -
Water Conservation Management Plan (due April 2012) 0 100.00% -
Emergency TAP Pipeline & Pump 2,000,000 0.00% -
Treatment & Storage -
Raw Water Bypass Measurement 25,000 0.00% -
SCADA Radio Frequency FCC Compliance 45,000 0.00% -
Final CT Disinfection Improvements 85,000 0.00% -
Permanganate Feed Facility Study & Implementation 265,000 0.00% -
WTP Security Upgrades 50,000 0.00% -
Existing Plant Mech. Elec. & Scada Upgrades 1,500,000 0.00% -
Ozone /UV Analysis & Disinfection 1,750,000 0.00% -
Bear Creek Cu WLA Source Control Study & Implementation 50,000 0.00% -
2.6-MG Reservoir & Clearwell (“Crowson II”) 6,746,000 10.00% 674,600
2.5 MGD Water Treatment Plant 12,000,000 10.00% 1,200,000
Distribution
Telemetry Station at Water Warehouse 50,000 0.00% -
Water Master Plan Updates 700,000 100.00% 700,000
Park Estates Pump Station/Loop Road Reservoir Alternatives 2,000,000 0.00% -
Lit Way New PRV 341,000 0.00% -
Tolman Creek Road New PRV 341,000 0.00% -
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Update, Water System Development Charge June 5, 2014
SDC Eligible
Capital Project Total Cost % $
Pipe Replacement Program 3,700,000 0.00% -
Radio Read Meter Program 1,351,000 0.00% -
Hydrant Replacement 616,000 0.00% -
Emergency Response Plan Update 20,000 0.00% -
Cross Connection Control Plan Update 15,000 0.00% -
Safety Plan Update 20,000 0.00% -
Granite Reservoir Valving 100,000 0.00% -
Piping
Ivy Lane 346,000 0.00% -
Ivy Lane 94,000 0.00% -
Normal Ave 517,000 0.00% -
Walker Ave 784,000 0.00% -
Parker Street 162,000 0.00% -
Harmony Lane 65,000 0.00% -
Lit Way 35,000 0.00% -
Ray Lane 54,000 0.00% -
Beach Street 91,000 0.00% -
AHS Property 90,000 0.00% -
Vista Street 149,000 0.00% -
Vista Street 5,000 0.00% -
Meade Street 235,000 0.00% -
Elkader Street 72,000 0.00% -
Ivy Lane 64,000 0.00% -
South Mountain Ave 6,000 0.00% -
South Mountain Ave 17,000 0.00% -
Pinecrest Trail 178,000 0.00% -
Pinecrest Trail 396,000 0.00% -
Penny Drive 83,000 0.00% -
Woodland Drive 52,000 0.00% -
Hiawatha Place 58,000 0.00% -
Morton Street 130,000 0.00% -
Ashland Mine Road 115,000 0.00% -
Fox Street 54,000 0.00% -
Almeda Drive 35,000 0.00% -
Skycrest Drive 162,000 0.00% -
Crispin Street 131,000 0.00% -
Oak Lawn Ave 29,000 0.00% -
Sylvia Street 64,000 0.00% -
Black Oak Way 85,000 0.00% -
Oak Knoll Dr 287,000 0.00% -
Ashland Street 432,000 0.00% -
I-5 Crossing 794,000 0.00% -
Ditch Road 225,000 0.00% -
Lithia 70,000 0.00% -
Iowa Street 640,000 0.00% -
Granite Street 300,000 0.00% -
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Update, Water System Development Charge June 5, 2014
SDC Eligible
Capital Project Total Cost % $
B Street 250,000 0.00% -
Terrace Street 350,000 0.00% -
Totals $44,006,000 $4,352,100
Table5 shows the list of qualified improvement fee projects and the adjustments made to the original WMP projects as of this year. The Crowson II reservoir can be reduced in size at a cost savings of $1.3 million.
Ten percent of the cost and of the cost reduction are incorporated into the revisions along with an adjustment for inflation. According the ENR Construction Cost Index, construction costs increased 5.45% between June 2012 and June 2014.
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Update, Water System Development Charge June 5, 2014
Table 5 SDC Eligible Capital Improvements with Modifications, 2014 $'s
^ENR Construction Cost Index shows a 5.45% increase in construction costs between 2012 and 2014.
Capital Project Total Cost %$% eligible Cost 2014$'s 2012 $'s 2014 $'s
105.45%
Supply
FERC Part 12 Dam Safety Inspection (50% Electric, 50% Water)160,000 25.00%40,000 40,000 $42,000
Ashland Creek West Fork Bridge Construction 120,000 75.00%90,000 90,000 $95,000
Sediment TMDL in Reeder Resv.600,000 75.00%450,000 450,000 $475,000
Reeder Resv Study Implementation 30,000 75.00%22,500 22,500 $24,000
Reeder Resv Access Road TMDL Compliance 100,000 75.00%75,000 75,000 $79,000
TID Canal Piping: Starlite to Terrace Street 1,100,000 100.00%1,100,000 1,100,000 $1,160,000
Treatment & Storage - -
2.6-MG Reservoir & Clearwell (“Crowson II”)6,746,000 10.00%674,600 10%-$1,300,000 674,600 $574,000
2.5 MGD Water Treatment Plant 12,000,000 10.00%1,200,000 1,200,000 $1,265,000
Distribution -
Telemetry Station at Water Warehouse 50,000 0.00%- - -
Water Master Plan Updates 700,000 100.00%700,000 700,000 $738,000
Piping - -
Totals 44,006,000 4,352,100 4,352,100 4,452,000
SDC Eligible Adjustments
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Update, Water System Development Charge June 5, 2014
Table 6 shows the allocation of the eligible improvement fee projects to residential and commercial & industrial users based on the expected number of ¾-inch equivalent meters each customer class is expected to use. The improvement fee is the allocated cost divided by the forecast square footage of habitable space
residences are expected to develop; and, the allocated cost divided by the forecast number of ¾-inch equivalent meters commercial & industrial customers are expected to develop.
Table 6 Calculation of Water Improvement Fee
Compared to the current SDC, the proposed residential SDC (reimbursement plus improvement fees) will
increase 0.3%, and the proposed commercial & industrial SDC will decrease about 1.3%. The decrease in
the commercial & industrial SDC is due to an apparent error in the calculations of the WMP. The WMP forecast the number of ¾-inch equivalent meters will increases by 332 (from 2229 in 2012 to 2559 in 2032);
however, the 2012 calculation of the SDC was based on only 318 new ¾-inch equivalent meters.1 Table 6
above is based on 332 new ¾-inch equivalent meters.
1 Comprehensive Water Master Plan, page 9-29 Table 9.15 shows the current and forecast numbers of ¾-inch EM for commercial & industrial at 332; page 9-32 shows only 318 EM were included in the calculation of the improvement
fee. The reimbursement fee is based on the correct number of ¾-inch EM, 2559 (page 9-29).
Total Cost Allocation to Improvement Fee, 2014 $'s $4,452,000
3/4" Meter Equivalents
Residential 7,575 77%$3,428,040
Commercial & Industrial 2,227 23%$1,023,960
Total 9,802 100%$4,452,000
Forecast Growth Square Feet of Residential Habitable Area 2,046,408 $/SF $1.6751
Forecast Growth 3/4" equivalent meters 332 $/EM $3,084.22
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