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FY 03-04 BAWA Adopted Budget Baytown Area Water Authority (BAWA) ANNUAL PROGRAM OF SERVICES 2003-04 - ADOPTED BUDGET Submitted To Baytown Area Water Authority Board Gary Jackson General Manager Fred Pack Plant Manager Donna Sams Director of Finance i �s l OKWOD NV(l SHaAVas XOKX XJE13JOOS `ZNrAflS ')I 2Ig,L:4d luomsa.zd `:I L.L:IrIrIIo -1 .Luafto I SH013rLJaxcATIQ AO CIRVOR AIIHOHIfIV t HHIV� vauv NAI�OlAvff s p W N BAYTOWN AREA WATER AUTHORITY ...:::...............:........................................ . 7425 Thompson Road, Baytown, Texas 77521-1056 (281) 426-3517 FAX (281) 426-3519 Fip A U"T September 17, 2003 President and Members of the Baytown Area Water Authority Board Baytown Area Water Authority Baytown, Texas 79 It is my pleasure to present the Adopted 2003-04 Budget with the attached technical adjustments for the Baytown Area Water Authority (BAWA) Board. The Budget sets forth the revenues and 79 appropriations for the fiscal year October 1, 2003 through September 30, 2004. The financial guidance provided by the Board has resulted in BAWA's strong financial position exhibited by an above average working capital balance. The use of non-recurring revenues to fund a portion of the capital improvement program will reduce the amount of future debt issues. The 2004 budget includes the design of the second water supply line serving the City of Baytown. This project will provide reliability to BAWA's largest customer, the City of Baytown, which currently constitutes 88% of BAWA's water sales. _1 BAWA submitted a loan application to the Texas Water Development Board (TVVBD) for funding of the second water supply line and Phase II improvements. The BAWA projects ranked 9th out of the 49 projects submitted for funding. The TWBD will award funding in priority order until all available funding has been exhausted. The TWBD will meet in September 2003 to determine funding. In the event that the TWDB loan is not approved, we propose to issue revenue bonds as originally planned. Revenue estimates for water sales in the proposed budget are based upon sales in a typical year. However, we have experienced a trend in recent years of lower than anticipated water sales due 7 to weather conditions. Major improvements are currently underway at BAWA that will provide the foundation for assuming growth in sales and continued reliable service to the customers served. I look forward L--} to reviewing this document with you in detail. F Sincere y, t � v Gary Jac General Manager � � 2 L BAYTOWN AREA WATER AUTHORITY FUND TECHNICAL ADJUSTMENTS & AMENDMENTS 2003-04 BUDGET Attachment Proposed Adjustment Adopted Expenditures: Baytown Area Water Authority Fund 1 $ 5,774,833 $ 16,700 $ 5,791,533 $ 5,774,833 $ 163700 $ 5,791,533 Summary of Technical Adjustments —JI Proposed Adjustment Adopted i7 Expenditures: . Baytown Area Water Authority Fund 71031 Contract Personnel BAWA $ 844,714 $ 16,700 $ 8615414 $ 844,714 $ 16,700 $ 861,414 The Technical Adjustments are based on the following adjustments to the 2003-04 Baytown Area Water Authority(BAWA)Budget. ,.__i Adjustment#1: • Updates include the budgeted expenditures for the BAWA Fund to fund a 2.5% �- salary increase to employees who work at the Baytown Area Water Authority. $ 13,500 I Li Adjustment#2 • Updates include the budgeted expenditures for the BAWA Fund for health costs that were underestimated during the original budget process. 3,200 TOTAL $ 16,700 7 7 1 3 MAJOR BUDGET ISSUES Fiscal Year 2003-04 BAYTOWN AREA WATER AUTHORITY This fund accounts for the activities of the Baytown Area Water Authority(BAWA). BAWA is a water authority created by the Texas Legislature to supply water for the City of Baytown (City) —' and surrounding communities. The City comprises approximately 88% of BAWA's annual sales. BAWA is a separate legal entity; however, it is considered a component unit of the City. BAWA has experienced no shortages of raw water supply to the plant or interruptions to service -�` to its customers. REVENUES The 2003-04 budget projects sales of$5,647,178 for 12.21 million gallons per day(MGD) based upon average rainfall years. Fluctuations to average rainfall can significantly impact actual sales. BAWA services a total of eight customers. No increases are projected to BAWA's current rate structure of $1.26 per 1,000 gallons for the City of Baytown and $1.29 per 1,000 gallons for customers outside the city. Since the inception of the BAWA plant in April 1981, there have been three rate increases in 1988, 1993 and 1999. The 1999 increase provided funding for the issuance of debt for plant expansion. EXPENDITURES Total adopted operating expenditures for the 2003-04 budget are $3,722,583, an increase of $45,910 from 2003. The depreciation expense increased to recognize one full year of depreciation on the Phase I improvement project. Highlights of major operating changes were as follows: • Annualization of prior year compensation program and 2004 increases for 2002-03. $3%029 Li • A decrease in maintenance expenses. ($2,300) 7 • Various increases in other supplies & services. $9,181 Raw Water Supply Cost — BAWA purchases raw water from the City of Houston. The raw water supply contract with the City of Houston is in effect through the year 2020 and sets the maximum amount of raw water to be delivered to the BAWA plant at 11.9 MGD without penalties. BAWA anticipates no rate increase from the City of Houston for next year; therefore, i 71. there will be no pass through increase in the cost of raw water for the 2004 fiscal year. The L surcharge for water purchased over the 11.9 MGD is nominal at this time. 7 Debt Service — The current debt service requirement for 2003-04 is $1,319,950. There is a decrease of$513,243 from the 2003 fiscal year. The final payment on the 1994 Revenue bonds was made in 2003. l 7 4 7 MAJOR BUDGET ISSUES Fiscal Year 2003-04 La 7 CAPITAL IMPROVEMENT PROGRAM The Capital Improvement Program for BAWA includes four major projects. The projects are funded primarily from bonds. The 2004 budget includes funding from retained earnings -�� designated for capital improvements for the second water supply line project design cost. The pp y P J � 2004 budget includes a transfer to the BAWA Capital Improvement Program (CIP) of$475,000, which represents non-operating revenues received from a mineral royalty. The retained earnings g of the BAWA CIP Fund is estimated to be $1,379,117 by the end of 2004. Utilizing non- operating funds in the CIP program will reduce the amount of debt issued in the future. • Phase II of BAWA's plant improvement is on hold pending the Texas Commission on Environmental Quality (TCEQ) study to develop new recommendations pertaining to disinfection programs (Ozone). The stud show ' p g�' y should be complete by 2003 with recommendations available in 2004. Phase II was originally estimated at$6,000,000. • Phase III of BAWA's plant improvement is currently underway. This included the p Y Y replacement of equipment that has reached its useful life; pumping improvements to achieve a firm capacity of 26 MGD; and safety improvements. Phase III began in the -w' summer of 2002 and is scheduled to be complete September 2003. The estimated cost for this project is $5,800,000 :ftmded from the 1999 and 2002 Revenue Bonds issued. '-- • The master meters for BAWA's seven outside customers are being replaced. The meters p for the City of Baytown are not being replaced due to the volume of meters. The purpose of this program is to, change the master meters from a turbine meter to a fire-service compound meter. This will bring BAWA into compliance with the UL-FM Code for Fire Protection as well as measure water usage at lower flows more accurately. The 2004 budget includes $210,000 for this project. tJ._ •7 There is currently one line supplying water to BAWA's major customer, the City of �t Baytown. The design for a second line is planned in 2004 at an estimated cost of $700,000 for design. The total estimated cost will be $7,000,000. Debt will be issued for construction. WORKING CAPITAL In order to maintain fiscal stability, governmental entities maintain a ' g working capital balance to meet daily liquidity needs. Appropriate levels of working capital vary from entity to entity based 7 on the relative impact of particular circumstances or financial conditions. The goal for working L capital is 90 days. Working capital is defined as current assets (e.g. cash, investments, accounts receivable) less current liabilities (e.g. accounts payable). Projected working capital is estimated 7 to be 103 days as of September 2004. Li i 5 BAYTOWN AREA WATER AUTHORITY FUND 510 BUDGET SUMMARY BY FUND Actual Budget Estimated Adopted 2001-02 2002-03 2002-03 2003-04 Revenues Sale of Water-Baytown $ 4,641,698 $ 4,927,829 $ 4,6422691 $ 4,9412329 Sale of Water-Other 5862889 703,921 6303197 7052849 Interest Revenue 382764 872600 182350 122000 Mineral Royalties 313,625 3203000 475,000 475,000 Total Revenues 52580,976 620392350 5,7661238 621342178 f� Expenditures Personnel Services 7812202 8221385 81%521 8615414 Supplies 1,9982998 2,258,700 221292900 2,2582200 Maintenance 1872189 1422300 1332200 1402000 Services 4399887 453,288 4445553 462,969 (� Total Operating 354072276 326762673 3,527,174 32722,583 Capital Outlay 431021 302000 292269 234)000 Debt Service: Principal 15250,000 1,0155000 1,015,000 5652000 Interest 813,938 8182193 8182193 7542950 Transfers Out-Capital Improvement 313,625 3202000 4755000 4753000 __. Contingency - 402000 - 4000 Total Expenditures 598275860 5289%866 55864,636 5,7912533 Excess(Deficit)Revenues s. Over Expenditures (2462884) 139,484 (98,398) 3422645 Working Capital-Beginning 1,643,064 1,396,180 1,396 180 1 297 782 WorkingCapital Ending p - g $ 113962180 $ 1,535,664 $ 1,2972782 $ 1,6402427 f i No.of Working Capital Days 87 95 81 103 �a 1 j U i_J 6 I BAYTOWN AREA WATER AUTHORITY FUND 510 L_J; OPERATING RESULTS Actual Budget Estimated Adopted 2001-02 2002-03 2002-03 2003-04 Operating Revenues Sale of Water-Baytown $ 41641,698 $ 4,9279829 $ 4,6427691 $ 4,9412329 Sale of Water-Other 5863889 7032921 6305197 705,849 Total Revenues 5,228,587 5,6315750 59272,888 526479178 - Operating Expenses Personnel Services 781,202 822,385 8195521 8615414 I Raw Water Purchases 155855340 19679,600 13615,435 127252393 Supplies 413,658 5795100 5145465 5325807 Maintenance 1873189 142,300 133,200 1402000 Services 43%887 4935288 444,553 5025969 Depreciation 351 650 350 000 344 400 512 000 j > Total Expenditures 3,7585926 4,066,673 358712574 4,2742583 Operating Income 1,46%661 1,565,077 1Al0 314 1,372,595 i Non-Operating Interest Revenue and Other 352,389 407,600 4939350 487,000 Interest Expenses and Other (813,938) (818,193) (8182193) (754,950) Transfers Out-Capital Improvement (313,625) (320,000) (475,000) (475,000) Total Non-Operating Expenses (775)174) (730,593) (79%843) (742,950) I Net Income $ 6942487 $ 834,484 $ 601,471 $ 6293,645 Reconciliation of Net Income(Loss)to Revenues Over(Under)Expenses: Net Income $ 694,487 $ 834,484 $ 6019471 $ 6292645 Principal Debt Retirement (1,250,000) (1,015,000) (150152000) (5655000) - Capital Outlay 43 021 30 000 29 269 4 p Y ( � ) ( � ) ( � ) 2( 3 ,000) Depreciation 3515650 3505000 344,400 512,000 Revenues Over(Under)Expenditures $ (2465884) $ 13%484 $ (98,398) $ 3422645 f L 7 i BAWA- CAPITAL IMPROVEMENT PROGRAM FUND BUDGET SUMMARY BY FUND __j Actual Budget Estimated Adopted 2001-02 2002-03 2002-03 2003-04 Revenues Transfer Royalties From BAWA $ 3133625 $ 320,1000 $ 475,000 $ 4753000 Total Revenues 313,625 32000 4753000 47500 Expenditures Design Water Supply Line-City of Baytown - - - 700,000 Total Operating - - - 7002000 Total Expenditures - - - 7002000 Excess(Deficit)Revenues Over Expenditures 3133625 3203000 475,000 (2252000) Retained Earnings-Beginning 8152492 1112%117 1512%117 116041117 Retained Earnings-Ending $ 1,1292117 $ 1244%117 $ 126042117 $ 123792117 77 Li 7 7 i 8 7 CITY OF BAYTOWN SERVICE LEVEL BUDGET 3070 BAYTOWN AREA WATER AUTHORITY Actual Budget 'g Estimated Adopted 1Acct# Acct Description 2001-02 2002-03 2002-03 2003-04 7100 Personnel Services L-J, 71031 Contract Personnel Services $ 781,202 $ 822,385 $ 81%521 $ 861 AN Total Personnel Services 781,202 822,385 819,521 861,414 7200 Supplies _J 72001 Office 22242 2,000 2 000 2 000 72002 Postage 322 400 400 400 72007 Wearing Apparel 3,293 41700 4,700 4,700 J 72016 Motor Vehicle 2,475 41500 4,000 4,000 72021 Minor Tools 1,496 1,800 1,800 1,800 72026 Cleaning&Janitorial 23007 2,000 22000 2,000 72031 Chemical 377,516 4932000 465,000 493,000 72032 Medical 274 600 600 600 72041 Educational 503 1,300 1,300 13300 72051 Untreated Water 1,585,340 15725,400 1,625,100 1,725,400 Li 72055 Laboratory Supplies 23,530 23,000 23,000 23,000 Total Supplies 11998,998 21258,700 2,129,900 2,2585200 7300 Maintenance - 73011 Buildings 2,413 3 000 3 000 3 000 73021 Filtration Plants 43,333 15,000 35000 152000 73022 Sanitary Sewers 12717 600 1,600 - 73025 Streets Sidewalks&Curbs 376 700 100 500 73027 Heating&Cooling System 6,432 6,500 12,000 6,000 73028 Electrical Maintenance 27,717 503000 503000 50,000 L) 73 041 Furniture&Fixtures 1.7035 1,000 1,000 1,000 73042 Machinery&Equipment 932117 60,000 602000 605000 17 73043 Motor Vehicles 10,869 5,000 2,500 45000 73045 Radio&Testing Equipment 180 500 - 500 Total Maintenance 187,189 142,300 1331200 140,000 7400 Services 74001 Communication 72661 6,550 6,550 6,550 Lj 74002 Electric Service 358,602 363,481 363 481 363 481 74011 Hire Of Equipment 6,479 8,000 4,000 5,000 7 74021 Special Services 12,709 17,850 12,850 28,850 74022 Audits 8,060 10,800 102800 10 800 74036 Advertising 373 500 500 500 74041 Travel&Reimbursables 3,624 4,000 4,000 4,000 f 74042 Education&Training�--' g 8961 1160 0 115600 113600 74051 Rents 51555 5,640 6,000 6,000 74071 Association Dues 832 800 800 800 L-J 74210 General Liability Insurance 4,188 306 3,686 4,242 74220 Errors&Omissions 6,052 52325 5,325 65300 74240 Auto Liability 615 801 825 696 ' 74271 Mobile Equipment 285 - 284 298 9 1 CITY OF BAYTOWN SERVICE LEVEL BUDGET 13070 BAYTOWN AREA WATER AUTHORITY w' Actual Budget Estimated Adopted Acct# Acct Description 2001-02 2002-03 2002-03 2003-04 74272 Real&Personal Property $ 112653 $ 10,255 $ 132852 $ 132852 74280 Bonds 42238 4,000 - - Total Services 43%887 4532288 444,553 462,969 ---_� Total Operating 324072276 326762673 35527,174 3,722,583 8000 Capital Outlay 84042 Machinery&Equipment - 1%000 182478 234 000 84043 Motor Vehicles 435021 11,000 1%791 - Total Capital Outlay 432021 302000 299269 2342000 i 9000 Other Financing Uses 91511 To BAWA Debt Service 2,0632938 1,833,193 12833,193 1231%950 91518 To BAWA Capital Improv 3132625 3209000 4752000 4752000 Total Other Financing Uses 2,3772563 2,153 193 2 308 193 1 794 950 9900 Contingencies 4' 99001 Contingencies - 4000 - 4%000 Total Contingencies - 4%000 - 4%000 TOTAL DEPARTMENT $ 5,8271860 $ 5289%866 $ 59864,636 $ 5,7912533 7 i� L i _ 10 I CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY REVENUE BONDS LONG TERM DEBT AMORTIZATION SCHEDULES Amount Requirements Amount Revenue Amount of Outstanding Fiscal Year 2003-04 Outstanding Bonds Issue October,2003 Principal Interest Total Sept.,2004 Series, 1997 $ 1,350,000 $ 1,150,000 $ 2059000 $ 52,256 $ 257,256 $ 9459000 L-' Series, 1999 9,095,000 9,0959000 2109000 5067145 7169145 8,8859000 Series,2002 3,800,000 39800,000 150,000 1969549 3461,549 39650,000 7 $ 1490459000 $ 565,000 $ 754,950 $ 193199950 $ 13,480,000 L-j Combined BAWA Debt All Series_.�, S ryes Debt Requirements to Maturity Fiscal Principal Total Total G Year 5101 Interest Requirement 2004 $ 565,000 $ 7547950 $ 19319,950 2005 595,000 723,031 1,3189031 2006 630,000 689,189 19319,189 7 2007 660,000 653,199 1,313,199 2008 7009000 615,429 19315,429 2009 7409000 574,994 19314,994 --' 2010 780,000 5339194 19313,194 2011 815,000 493,219 19308,219 {{ 2012 8609000 451,141 19311,141 2013 905 000 407,819 1 312 819 2014 9509000 3619679 19311,679 2015 9959000 312,289 1,3071289 j 2016 1,0509000 259,931 11,309,931 2017 191009000 2049291 19304,291 2018 11160,000 1459991 19305 9991 i 2019 1,220,000 83,351 1,3031351 2020 320,000 16,480 336,480 $ 14,045,000 $ 792801176 $ 219325,1176 Combined BAWA�. Debt,All Series Debt Requirement to Maturity C]Interest 1.400 ■Principal 1.200 y 1.000 0.800 c 0.600 0.400 0.200 0.000 17 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fiscal Year J 11 7 CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Fiscal Interest Principal Interest Interest Annual Principal Total Year Rate Due 5101 Due 5101 Due 11/01 Requirement Outstanding Outstandin Revenue Bond,Series 1997 Date of Issue-December 4,1997 Term-10 Years 2000 $ - $ 33,503 $ 33,503 $ 67,006 $ 173507000 $ 117157523 2001 - 33,503 337503 671,006 193509000 1,648,516 2002 - 331,503 333,503 679006 1.13509000 175813,510 2003 7.375% 2009000 337503 337503 2677006 19150,000 123149504 Lj F�2(004 4.375% 2057000 26,128 26,128 257,256 9457000 170577248 2005 4.450% 215,000 217644 21,644 258,288 7307000 798,960 7 2006 4.550% 230,000 161,860 16,860 2637720 500,000 535,240 i 2007 4.600% 2457000 11,628 11,628 268,255 2559000 266,985 2008 4.700% 2559000 59993 57993 266,985 - - $ 173509000 $ 216,264 $ 2162264 $ 1,7827529 [Revenue Bond,Series 1999 Date of Issue-November 1,1999 Term-20 Years $ 1670197675 2000 5.565% $ - $ 253,073 $ - $ 2539073 $ 91095,000 1577667603 L 2001 5.565% - 253,073 2532073 506,145 92095,000 1592607458 2002 5.565% - 253,073 253,073 506,145 97095,000 1477541,313 2003 5.565% - 2539073 253,073 5067145 920959000 14,248,168 r�2004 7.000% 210,000 2537073 2537073 7162145 87885,000 1325322023 2005 7.000% 2259000 245,723 2457723 7167445 87660,000 12,815,578 2006 7.000% 235,000 2377848 2377848 7107695 874257000 12,104,883 ! 2007 7.000% 2452000 229,623 229,623 7047245 81180,000 1174009638 2008 7.000% 2659000 221,048 2219048 7072095 77915,000 1076937543 2009 5.700% 5509000 211,773 2117773 973,545 79365,000 %7199998 2010 5.000% 5857000 1967098 1963,098 9777195 677807000 877427803 2011 5.100% 6107000 1817473 1817473 9727945 6 170 000 7 769 858 2012 5.150% 6457000 165,918 1657918 9761,835 515252000 6,7937023 2013 5.200% 6759000 1497309 149,309 9739618 418509000 578192405 2014 5.300% 710,000 1312759 1312759 973,518 421402000 4,8457888 2015 5.350% 7457000 112,944 112,944 9707888 37395,000 318757000 2016 5.400% 7852000 93,015 937015 9712030 276107000 23,903,970 2017 5.400% 8257000 713,820 71,820 9687640 19785,000 119359330 Lj 2018 5.500% 8707000 497545 499545 9697090 9152000 9669240 2019 5.600% 9159000 25,620 25,620 966,240 - - $ 92095,000 $ 31588,874 $ 31335,801 $ 16,0197675 7 7 -.1 1 12 ; i CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Fiscal Interest Principal Interest Interest Annual Principal Total Year Rate Due 5101 Due 5101 Due 11/01 Requirement Outstanding Outstanding Revenue Bond,Series 2002 Date of Issue-January 10,2002 Term-19 Years $ 61040,949 2002 $ - $ 81,895 $ - $ 81,895 $ 318007000 5,9599054 2003 - 989274 98,274 1969549 318009000 57762,505 r'2004 5.500% 1509000 989274 98,274 3469549 32650,000 574157956 2005 5.500% 1559000 94,149 949149 343,299 3,14959000 3',072,658 r 2006 5.500% 1659000 899887 89,887 3449774 31330,000 417277884 2007 5.500% 170,000 859349 857349 340,699 371607000 41387,185 2008 5.500% 1809000 809674 809674 3417349 22980,000 490457836 2009 5.500% 1902000 75,724 75,724 341,449 2,7909000 3,7049388 2010 5.500% 195,000 709499 709499 3359999 2,5959000 393689389 2011 5.350% 2059000 65,137 65,137 335,274 2,3901000 310332115 2012 4.700% 215,000 59,653 592653 334,306 21175,000 29698,809 2013 4.800% 2301,000 54,601 549601 3392201 119459000 2,359,608 2014 4.900% 240,000 49,081 49,081 338,161 127057000 220219446 2015 5.000% 250,000 439201 439201 336,401 11455,000 11685,045 2016 5.000% 2652000 36,951 369951 338,901 121909000 19346,144 2017 5.000% 2759000 307326 30,326 3357651 915,000 19010,493 ' 2018 5.100% 2907000 239451 232451 3369901 6257000 673 591 2019 5.125% 305,000 16,056 16,056 3377111 320,000 336,480 2020 5.150% 320,000 8,240 8,240 336,480 - $ 318009000 $ 19161,422 $ 12079,527 $ 610409949 ,1 7 I 7 L 7 Li 13 CITY OF BAYTOWN BAWO MEMORANDUM TO: Gary Jackson, City Manager FROM: Donna Sams, Director of Finance DATE: August 12, 2003 SUBJECT: Technical Adjustment for 2003-04 Baytown Area Water Authority Budget A technical adjustment is attached based on the following adjustments to the 2003-04 Baytown Area Water Authority. Adjustment number 1: • Updates budgeted expenditures for the Baytown Area Water Authority (BAWA) Fund to fund a 2.5% salary increase to employees who work for the Baytown Area Water Authority. $13,500 Adjustment number 2: • Updates budgeted expenditures for the Baytown Area Water Authority (BAWA) Fund for health costs that were underestimated during the original budget process. $3,200 Finance Department Attachment BAYTOWN AREA WATER AUTHORITY TECHNICAL ADJUSTMENTS & AMENDMENTS 2003-04 BUDGET Proposed Adjustment Adopted Expenditures: Baytown Area Water Authority $ 399795883 $ 16,700 $ 35996,583 $ 3597%883 $ 16,700 $ 35996,583 Summary of Technical Adjustments Proposed Adjustment Adopted Expenditures: Baytown Area Water Authority * 71031 Contract Personnel BAWA $ 8445714 $ 16,700 $ 861,414 $ 844,714 $ 163700 $ 861,414 *Technical adjustment for 2.5%Across-the-Board Salary and Health increase.