FY 15 Budget Review

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Proposed FY 15 Rate Model

City of Raleigh Department of Public Utilities Financial Planning Model Revenue Sufficiency & Rate Projections

FY 2013

FY 2014

FY 2015

FY 2016 Projected

FY 2017 Projected

FY 2018 Projected

Line No.

Total System Revenue

Actual

Budget

Raleigh/Garner User Charge Revenue

Water User Charges (1) Sewer User Charges (1)

66,976,257 66,712,743 133,689,000

71,115,600 77,712,227 148,827,827

75,409,474 83,408,657 158,818,131

80,214,055 88,737,001 168,951,056

85,737,268 94,865,762 180,603,030

89,012,570 98,412,991 187,425,561

1. 2. 3.

Subtotal: Raleigh/Garner User Charges

Miscellaneous Revenue

Merger Town Water User Charges Merger Town Sewer User Charges Merger Town Miscellaneous Revenue

10,128,685 11,238,448 8,211,443 23,400,957

8,934,325 10,117,520 4,022,000 19,490,316 793,440 1,631,700 44,989,301 193,817,128

9,009,724 10,185,545 3,022,000 19,524,886 823,200 1,631,700 44,197,055 203,015,186

9,086,253 10,254,591 3,022,000 19,560,666 1,030,000 1,631,700 44,585,210 213,536,266

9,163,931 10,324,672 3,022,000 19,597,698 1,110,000 1,631,700 44,850,001 225,453,031

9,242,773 10,395,805 3,022,000 19,636,026 1,110,000 1,631,700 45,038,304 232,463,865

4. 5. 6. 7. 8. 9.

Other Operating Income Acreage Fee Revenue

Interest Income Fund 315 Revenue

664,309 156,592

10.

Subtotal: Miscellaneous Revenue

$ $

53,800,433

$ $

11.

187,489,433

12. Total: System Revenue

General Water Rate Increase - Admin (2) General Water Rate Increase - Volume (2) General Sewer Rate Increase - Admin (2) General Sewer Rate Increase - Volume (2)

Approx. 10% Calculated

7.0% 7.0% 7.0% 7.0%

6.0% 6.0% 6.0% 6.0%

3.0% 3.0% 3.0% 3.0%

13. 14. 15. 16.

15% 15%

Calculated

14%

17. Total Operating Expenses

(89,197,234)

(98,198,924)

(98,665,501)

(101,790,349) $

(105,022,683) $

(108,373,897) $

18. Net: Revenue Available for Debt Service Current and Future Debt Funding Needs 19. Revenue Bonds & Parity Debt (3,4) Projected Refunding Savings (5) Subordinate Debt (SRF & GO Bonds) Other Indebtedness (Installment Fin., COPs) Transfer to General Fund for ERP Debt (6) 20. 21. 22. 23.

98,292,199

95,618,204

104,349,685

111,745,917

120,430,348

124,089,968

(37,062,626)

(42,188,681)

(46,398,778)

(51,057,095)

(45,149,175)

(50,656,098)

(2,225,650) (3,551,163) (1,776,039) (44,615,478) 53,676,721 (32,500,000) (1,416,000)

(3,537,970) (4,157,787) (1,608,684) (51,493,122) 44,125,082 (33,000,000) (1,416,000) (5,618,367)

(4,608,802) (3,052,296) (1,582,466) (55,642,342) 48,707,343 (33,000,000) (1,500,000) (7,536,766)

(7,623,841) (3,427,049) (1,637,852) (63,745,837) 48,000,080 (36,000,000) (1,500,000) (7,375,232)

(6,594,468) (2,864,767) (1,695,177) (56,303,587) 64,126,761 (38,000,000) (1,500,000) (8,693,552) 15,933,209

(6,424,959) (2,133,452) (1,754,508) (60,969,016) 63,120,952 (40,000,000) (1,500,000) (18,269,738)

24. Total: Debt All Sources

25. Annual Surplus/(Deficit)

CIP Planned PAYGO

26.

27. PAYGO For Nutrient Reduction/Watershed Protection

PAYGO for Infrastructure Renewal (7)

28.

29. Total Surplus/(Deficit) w/ PAYGO

19,760,721

4,090,715

6,670,577

3,124,848

3,351,214

Debt Service Coverage Parity Indebtedness (8)

2.65

2.27

2.25

2.19

2.67

2.45

30. 31. 32. 33. 34. 35. 36. 37. 38. 39.

Legal Covenant: 1.20

City Policy:

2.00

2.50

2.09

2.05

1.90

2.33

2.17

Parity, Subordinated, & G.O. Indebtedness

Legal Covenant: 1.00

City Policy:

1.25

2.20

1.86

1.88

1.75

2.14

2.04

All Sources

Legal Covenant: 1.00

City Policy:

1.00

Unrestricted Fund Balances

Beginning Balance (9)

79,738,433 19,760,721 (5,390,946) 94,108,209

94,108,209 4,090,715

98,198,924 6,670,577 (6,204,000) 98,665,501

98,665,501 3,124,848

101,790,349 15,933,209 (12,700,875) 105,022,683

105,022,683

Total Surplus/(Deficit) (Line 29) Transfers to CAPI Funds (10)

3,351,214

Ending Balance (9)

98,198,924

101,790,349

108,373,897

Ratio of Ending Balance to O&M (11)

105.5%

100.0%

40.

Minimum Target Balance (11)

44,598,617 49,509,592

49,099,462 49,099,462 3,128,672

49,332,751 49,332,751 3,128,671

50,895,174 50,895,174 3,238,174

52,511,341 52,511,341 3,351,511

54,186,948 54,186,948 3,468,813

41.

Ending Over/(Under) Target Balance

42.

Budgeted Non-Cash Reserve

43.

Typical Residential Customer Bill (12)

$ 48.89

$ 52.63

$ 56.31

$ 59.71

$ 63.35

$ 65.28

44. 45.

% Change

8.8%

7.6%

7.0%

6.0%

6.1%

3.1%

(1) Projected water and sewer user charge revenue is based on actual FY 2013 customer demand and assumes 1.5% annual growth in accounts beginning in FY 15. Consumption is projected to remain constant through FY 2016 and 0.50% annual growth is included beginning in FY 2017. (2) Water and Sewer Admin charges are calculated to recover costs related to billing, meter reading, utility administration, and a percentage of annual debt service requirements. Water and Sewer Volumetric rates increase based on percentages shown. Projected water and sewer rates are shown on the following page. (3) Increases in revenue bond debt are based on future debt issues in the amounts of $75, $77, $158, and $163 million for Series 2013, 2015, 2017 and 2019, respectively.

(4) Excludes liquidity/remarketing costs from 2008 A&B debt, which are included in operating expenses (line 17). (5) Used to present potential savings when considering refunding scenarios. No refunding is currently under consideration. (6) Represents a transfer to the General Fund that is used for payment of Utilities' portion of debt service relating to the City's ERP system.

(7) Ending fund balance above 100% of annual O&M is available for infrastructure renewal. (8) City Policy includes a Council endorsed 2.00x Parity Coverage beginning in FY 2012. (9) The balance shown in "Unrestricted Fund Balance" is for Operating and Debt Service Funds Only. See Appendix A for FY 13 reconciliation to financial statements. (10) In lieu of using bond proceeds, the City has elected to cash-finance the Capitalized Interest Funds. (11) City Policy includes a minimum target balance of 50% of annual O&M costs. (12) Monthly bill assuming a residential customer with a 5/8" meter and 6 ccf monthly usage and includes $0.45 per bill for Watershed Protection.

Raleigh Financial Planning Model FY15 Update v3

Draft

12/3/2013

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