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Ordinance No. 9,414ORDINANCE NO. 9414 ® AN ORDINANCE OF THE CITY COUNCIL OF THE- CITY OF BAYTOWN, TEXAS, APPROVING THE BUDGET FOR THE BAYTOWN AREA WATER AUTHORITY (BAWA) FOR THE FISCAL YEAR BEGINNING OCTOBER 1, 2002, AND ENDING SEPTEMBER 30, 2003; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. WHEREAS, the Board of Directors of the Baytown Area Water Authority (BAWA) has adopted a budget for BAWA for the fiscal year beginning October 1, 2002, and ending September 30, 2003; and WHEREAS, the General Manager of BAWA has submitted said budget to the City Council of the City of Baytown for approval; and WHEREAS, after full and final consideration, it is the opinion of the City Council of the City of Baytown that the budget should be approved; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That the City Council of the City of Baytown, Texas, hereby approves the budget of the Baytown Area Water Authority (BAWA) for the fiscal year beginning October 1, 2002, and ending September 30, 2003, in the amount of FIVE MILLION EIGHT HUNDRED NINETY - NINE THOUSAND EIGHT HUNDRED SIXTY -SIX AND N01100 DOLLARS ($5,899,866.00). A copy of the above referenced budget for BAWA is attached hereto, marked Exhibit "A," and made a part hereof for all intents and purposes. Section 2: This ordinance shall take effect immediately from and after its passage by the City Council of the City of Baytown. INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of Baytown this the 12`x' day of September, 2002. PETE C. ALFARO, Mayor ATTEST: GARY W. SMITH, City Clerk APPROVED AS TO FORM: ACIO RAMIRE , S ., City Attorney F:Ueanene \My Documents \C 61 \01 -02\ September \AdoptBAWABudgct02- 03.doc Baytown Area Water Authority � (WAWA) ANNUAL PROGRAM OF SERVICES 2002 -03 PROPOSED BUDGET Submitted To ,Baytown Area Water Gary Jackson � Fred Pack Donna Sams Authority Board July 31,2002 Interim General Manager Plant Manager Director of Finance EXHIM A • BAYTOWN AREA WATER • AUTHORITY BOARD OF DIRECTORS ROBERT L. GILLETTE, President DAN MUNDINGER, Vice President PETER R. BUENZ, Secretary KNOX BEAVERS DAN CONEJO • July 31, 2002 BAYTOWN AREA WATER AUTHORITY 7425 Thompson Road, Baytown, Texas 77521 -1056 (281) 426 -3517 FAX (281) 426 -3519 President and Members of the Baytown Area Water Authority Board Baytown Area Water Authority Baytown, Texas It is my pleasure to present the Proposed 2002 -03 Budget for the Baytown Area Water Authority Board. The Budget sets forth the revenues and appropriations for the fiscal year October 1, 2002 through September 30, 2003. The financial guidance received by the Board has resulted in Baytown Area Water Authority'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. Major improvements are currently underway at Baytown Area Water Authority that will, provide the foundation for assuming growth in sales and continued reliable service to the customers served. I look forward to reviewing this document with you in detail. Sincerely, Gary Jacksoli V Interim Ge Aral Manager 2 MAJOR BUDGET ISSUES Fiscal Year 2002 -03 BAYTOWN AREA WATER AUTHORITY is 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 2002 -03 budget projects sales of $5,631,750 for 12.21 million gallons per day (MGD) based upon average rainfall years. Fluctuations to average rainfall can significantly impact actual sales. It is anticipated. that another Municipal Utility District could become a customer of BAWA in 2002 bringing the total number of customers served to eight. 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 proposed operating expenditures for the 2002 -03 budget are $3,676,673, a decrease of $45,414 from 2002. Highlights of major changes were as follows: • Annualization of compensation program for 2001 -02. $45,202 • A decrease in chemical costs due to price fluctuations. ($39,800) • An increase for untreated water for new customer. $45 800 • A decrease in maintenance expenses. • Decrease in electrical costs. • Various decreases in other supplies & services. ($59,900) ($35,235) ($1,481) 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, there will be no pass through increase in the cost of raw water for the 2003 fiscal year. The surcharge for water purchased over the 11.9 MGD is nominal at this time. Debt Service — The current debt service requirement for 2002 -03 is $1,833,193. There is a decrease of $496,065 for debt paid off in November 2001 and a lower debt service payment for bonds issued in 2002 that received a more favorable interest rate than the rate budgeted. One of the four bond issues outstanding will be paid off in fiscal year 2003. The pay off of these bonds provides debt capacity for future bond issues. CAPITAL IMPROVEMENT PROGRAM The Capital Improvement Program for BAWA includes four major projects. The projects are funded primarily from bonds. The 2003 budget includes a transfer to the BAWA Capital Improvement Program (CIP) of $320,000, which represents non - operating revenues received from a mineral royalty. Revenues received from this funding source are estimated to be $1,400,000 by the end of 2003. Utilizing non - operating funds in the CIP program will reduce the amount of debt issued in the future. The BAWA Surface Water Treatment Plant expansion project, Phase I, is complete and is undergoing equipment and SCADA system testing. The expansion has increased the treatment capacity from 13 MGD to 19.5 (MGD). The treatment facility will be able to produce approximately 26 MGD on a short-term basis, if necessary. • Phase II of BAWA's plant improvement is on hold pending the Texas Natural Resource Conservation Commission (TNRCC) study to develop new recommendations pertaining to disinfection programs MAJOR BUDGET ISSUES Fiscal Year 2002 -03 (Ozone). The study should be complete by 2004 with recommendations available in 2005. Phase II was originally estimated at $6,000,000. ® • Phase III of BAWA's plant improvement includes the replacement of equipment that has reach its useful life; pumping improvements to achieve a firm capacity of 26 MGD; and safety improvements. Phase III began in the summer of 2002 and is scheduled to be complete within 400 calendar days. The estimated cost for this project is $5,800,000 funded from the 1999 and 2002 Revenue Bonds issued. 0 • There is currently one line supplying water to BAWA's major customer, the City of Baytown. A second line is planned in 2005 at an estimated cost of $7,000,000. WORKING CAPITAL In order to maintain fiscal stability, governmental entities maintain a working capital balance to meet daily liquidity needs. Appropriate levels of working capital vary from entity to entity based on the relative impact of particular circumstances or financial conditions. The goal for working capital is 45 to 60 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 to be 89 days as of September 2003. 4 • • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY FUND 510 BUDGET SUMMARY BY FUND Actual Budget Estimated Base Proposed 2000 -01 2001 -02 2001 -02 2002 -03 2002 -03 Kevenues 765,664 787,297 810,866 810,866 2,120,345 Sale of Water - Baytown $ 4,816,877 $ 4,927,829 $ 4,675,701 $ 4,927,829 $ 4,927,829 Sale of Water - Other 590,169 652,127 598,812 703,921 703,921 Interest Revenue 132,905 40,000 89,927 87,600 87,600 Mineral Royalties 508,879 250,000 318,000 320,000 320,000 Total Revenues 6,048,830 5,869,956 5,682,440 6,039,350 6,039,350 Expenditures Personal Services Supplies Maintenance Services 667,500 765,664 787,297 810,866 810,866 2,120,345 2,258,500 2,084,185 2,258,700 2,258,700 135,805 202,200 143,250 142,300 142,300 517,880 495,723 466,873 464,807 464,807 Total Operating 3,441,530 3,722,087 3,481,605 3,676,673 3,676,673 Capital Outlay Debt Service: Principal Interest Transfers Out - Capital Improvement Contingency - 45,000 43,021 30,000 30,000 1,250,000 1,372,180 1,250,000 1,015,000 1,015,000 750,400 957,078 783,427 818,193 818,193 - 622,073 1,133,492 320,000 320,000 - 40,000 - 40,000 40,000 Total Expenditures 5,441,930 6,758,418 6,691,545 5,899,866 5,899,866 Excess (Deficit) Revenues Over Expenditures Working Capital - Beginning Working Capital - Ending No. of Working Capital Days 606,900 (888,462) (1,009,105) 139,484 139,484 1,706,374 2,313,274 2,313,274 1,304,169 1,304,169 $ 2,313,274 $ 1,424,812 $ 1,304,169 $ 1,443,653 $ 1,443,653 155 77 71 5 89 89 0 • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY FUND 510 OPERATING RESULTS Actual Budget Estimated Base Proposed 2000 -01 2001 -02 2001 -02 2002 -03 2002 -03 Operating Revenues Sale of Water - Baytown $ 4,816,877 $ 4,927,829 $ 4,675,701 $ 4,927,829 $ 4,927,829 Sale of Water - Other 590,169 652,127 598,812 703,921 703,921 Total Revenues 5,407,046 5,579,956 5,274,513 5,631,750 5,631,750 Operating Expenses Personal Services 667,500 765,664 787,297 810,866 810,866 Raw Water Purchases 1,605,882 1,679,600 1,615,435 1,725,393 1,725,393 Supplies 514,463 578,900 468,750 533,307 533,307 Maintenance 135,805 202,200 143,250 142,300 142,300 Services 517,880 535,723 466,873 504,807 504,807 Depreciation 342,268 350,000 344,400 512,000 512,000 Total Expenditures 3,783,798 4,112,087 3,826,005 4,228,673 4,228,673 Operating Income (Loss) 1,623,248 1,467,869 1,448,508 1,403,077 1,403,077 Non - operating Interest Revenue and Other 641,784 290,000 407,927 407,600 407,600 Interest Expenses and Other (750,400) (957,078) (783,427) (818,193) (818,193) Transfers out - Capital Improvement - (622,073) (1,133,492) (320,000) (320,000) Total Non - operating Expenses _ (108,616) (1,289,151) (1,508,992) (730,593) (730,593) Net Income (Loss) $ 1,514,632 $ 178,718 $ (60,484) $ 672,484 $ 672,484 Reconciliation of Net Income (Loss) to Revenues Over (Under) Expenses: Net Income (Loss) $ 1,514,632 $ 178,718 $ (60,484) $ 672,484 $ 672,484 Principal Debt Retirement (1,250,000) (1,372,180) (1,250,000) (1,015,000) (1,015,000) Capital Outlay - (45,000) (43,021) (30,000) (30,000) Depreciation 342,268 350,000 344,400 512,000 512,000 Revenues Over (Under) Expenditures $ 606,900 $ (888,462) $ (1,009,105) $ 139,484 $ 139,484 0 CITY OF BAYTOWN SERVICE LEVEL BUDGET 3070 BAYTOWN AREA WATER AUTHORITY Actual Budget Estimated Base Proposed Acct# Acct Description 2000 -01 2001 -02 2001 -02 2002 -03 2002 -03 7100 Personal Services 71031 Contract Personal Services $ 667,500 $ 765,664 $ 787,297 $ 810,866 $ 810,866 Total Personal Services 667,500 765,664 787,297 810,866 810,866 7200 Supplies 72001 Office 2,430 2,500 2,500 2,000 2,000 72002 Postage 342 500 350 400 400 72007 Wearing Apparel 4,413 6,000 4,000 4,700 4,700 72016 Motor Vehicle 3,531 4,500 4,000 4,500 4,500 72021 Minor Tools 2,745 2,800 1,500 1,800 1,800 72026 Cleaning & Janitorial 2,451 2,000 2,000 2,000 2,000 72031 Chemical 467,523 532,800 431,600 493,000 493,000 72032 Medical 525 600 600 600 600 72041 Educational 1,051 1,200 1,200 1,300 1,300 72051 Untreated Water 1,605,882 1,679,600 1,615,435 1,725,400 1,725,400 72055 Laboratory Supplies 29,452 26,000 21,000 23,000 23,000 Total Supplies 2,120,345 2,258,500 2,084,185 2,258,700 2,258,700 7300 Maintenance 73011 Buildings 2,458 3,000 3,000 3,000 3,000 73021 Filtration Plants 5,760 58,000 35,650 15,000 15,000 73022 Sanitary Sewers 485 600 500 600 600 73025 Streets Sidewalks & Curbs 280 700 500 700 700 73027 Heating & Cooling System 6,329 4,400 6,200 6,500 6,500 73028 Electrical Maintenance 38,168 50,000 32,000 50,000 50,000 73041 Furniture & Fixtures 1,038 1,000 1,200 1,000 1,000 73042 Machinery & Equipment 73,162 75,000 55,000 60,000 60,000 73043 Motor Vehicles 7,807 9,000 9,000 5,000 5,000 73045 Radio & Testing Equipment 318 500 200 500 500 Total Maintenance 135,805 202,200 143,250 142,300 142,300 7400 Services 74001 Communication 10,256 10,000 10,000 6,550 6,550 74002 Electric Service 451,879 410,235 365,000 375,000 375,000 74011 Hire Of Equipment 1,125 8,000 8,000 8,000 8,000 74021 Special Services 7,147 12,500 17,266 17,850 17,850 74022 Audits 8,010 10,800 8,060 10,800 10,800 74036 Advertising 601 800 800 500 500 74041 Travel & Reimbursables 4,014 4,000 5,800 4,000 4,000 74042 Education & Training 8,617 11,500 11,500 11,600 11,600 74051 Rents 5,416 5,400 5,500 5,640 5,640 74071 Association Dues 688 1,130 1,000 800 800 74210 General Liability Insurance 3,120 4,312 5,625 3,686 3,686 74220 Errors & Omissions 4,310 5,958 8,038 5,325 5,325 74240 Auto Liability 2,394 954 1,265 801 801 74272 Real & Personal Property 9,502 10,134 15,031 10,255 10,255 74280 Bonds 559 - 3,988 4,000 4,000 Total Services 517,638 495,723 466,873 464,807 464,807 • Total Operating 3,441,288 3,722,087 3,481,605 3,676,673 3,676,673 7 CITY OF BAYTOWN SERVICE LEVEL BUDGET 3070 BAYTOWN AREA WATER AUTHORITY Actual Budget Estimated Base Proposed Acct# Acct Descri tion 2000 -01 2001 -02 2001 -02 2002 -03 2002 -03 8000 Capital outlay 84042 Machinery & Equipment - - - 19,000 19,000 84043 Motor Vehicles - 45,000 43,021 11,000 11,000 Total Capital Outlay - 45,000 43,021 30,000 30,000 9000 Other Financing Uses 91511 To BAWA Debt Service 2,000,400 2,329,258 2,033,427 1,833,193 1,833,193 91517 To BAWA Capital lmprov - 622,073 1,133,492 320,000 320,000 Total Other Financing Uses 2,000,400 2,951,331 3,166,919 2,153,193 2,153,193 9900 Contingencies 99001 Contingencies - 40,000 - 40,000 40,000 Total Contingencies - 40,000 - 40,000 40,000 TOTAL DEPARTMENT $ 5,441,688 $ 6,758,418 $ 6,691,545 $ 5,899,866 $ 5,899,866 N. 11 • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY REVENUE BONDS LONG TERM DEBT AMORTIZATION SCHEDULES Amount Requirements Amount Revenue Amount of Outstanding Fiscal Year 2002 -03 Outstanding Bonds Issue October, 2002 Principal Interest Total Sept., 2003 Series, 1994 $ 815,000 $ 815,000 $ 815,000 $ 48,493 $ 863,493 $ - Series, 1997 1,350,000 1,350,000 200,000 67,006 267,006 1,150,000 Series, 1999 9,095,000 9,095,000 - 506,145 506,145 9,095,000 Series, 2002 3,800,000 3,800,000 - 196,549 196,549 3,800,000 689,189 $ 15,060,000 $ 1,015,000 $ 818,193 $ 1,833,193 $ 14,045,000 Combined BAWA Debt, All Series $ 15,060,000 $ 8,098,369 $ 23,158,369 Combined BAWA Debt, All Series dlattrest Debt Requirement to Maturity 2.000 ■ PRnQa� y 1.500 v 9 7 y 1.000 G O C rs 0.500 0.000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fiscal Year �t Debt Requirements to Maturity Fiscal Principal Total Total Year 5101 Interest Requirement 2003 $ 1,015,000 $ 818,193 $ 1,833,193 2004 565,000 754,950 1,319,950 2005 595,000 723,031 1,318,031 2006 630,000 689,189 1,319,189 2007 660,000 653,199 1,313,199 2008 700,000 615,429 1,315,429 2009 740,000 574,994 1,314,994 2010 780,000 533,194 1,313,194 2011 815,000 493,219 1,308,219 2012 860,000 451,141 1,311,141 2013 905,000 407,819 1,312,819 2014 950,000 361,679 1,311,679 2015 995,000 312,289 1,307,289 2016 1,050,000 259,931 1,309,931 2017 1,100,000 204,291 1,304,291 2018 1,160,000 145,991 1,305,991 2019 1,220,000 83,351 1,303,351 2020 320,000 16,480 336,480 $ 15,060,000 $ 8,098,369 $ 23,158,369 Combined BAWA Debt, All Series dlattrest Debt Requirement to Maturity 2.000 ■ PRnQa� y 1.500 v 9 7 y 1.000 G O C rs 0.500 0.000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fiscal Year �t 0 • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Fiscal Interest Principal Interest Interest Annual Principal Total Year Rate Due 5/01 Due 5 /01 Due 11101 Requirement Outstanding Outstandin Revenue Bond, Series 1994 Date of Issue - November 1 1994 Term - 9 Years 2000 5.95% $ - $ 24,246 $ 24,246 $ 48,493 $ 815,000 $ 960,478 2001 5.95% - 24,246 24,246 48,493 815,000 911,985 2002 5.95% - 24,246 24,246 48,493 815,000 863,493 2003 5.95% 815,000 24,246 24,246 863,493 - - Revenue Bond, Series 1997 Date of Issue - December 4 1997 Term -10 Years 2000 $ - $ 33,503 $ 33,503 $ 67,006 $ 1,350,000 $ 1,715,523 2001 5.565% - 33,503 33,503 67,006 1,350,000 1,648,516 2002 5.565% - 33,503 33,503 67,006 1,350,000 1,581,510 2003 7.375% 200,000 33,503 33,503 267,006 1,150,0001 1,314,504 2004 4.375% 205,000 26,128 26,128 257,256 945,000 1,057,248 2005 4.450% 215,000 21,644 21,644 258,288 730,000 798,960 2006 4.550% 230,000 16,860 16,860 263,720 500,000 535,240 2007 4.600% 245,000 11,628 11,628 268,255 255,000 266,985 2008 4.700% 255,000 5,993 5,993 266,985 - - 2008 7.000% $ 1,350,000 $ 216,264 $ 216,264 $ 1,782,529 7,915,000 10,693,543 Revenue Bond, Series 1999 Date of Issue - November 1 1999 Term - 20 Years $ 16,019,675 2000 5.565% $ - $ 253,073 $ - $ 253,073 $ 9,095,000 15,766,603 2001 5.565% - 253,073 253,073 506,145 9,095,000 15,260,458 2002 5.565% - 253,073 253,073 506,145 9,095,000 14,754,313 2003 5.565% - 253,073 253,073 506,145 9 095,009_1 14,248,168 2004 7.000% 210,000 253,073 253,073 716,145 8,885,000 13,532,023 2005 7.000% 225,000 245,723 245,723 716,445 8,660,000 12,815,578 2006 7.000% 235,000 237,848 237,848 710,695 8,425,000 12,104,883 2007 7.000% 245,000 229,623 229,623 704,245 8,180,000 11,400,638 2008 7.000% 265,000 221,048 221,048 707,095 7,915,000 10,693,543 2009 5.700% 550,000 211,773 211,773 973,545 7,365,000 9,719,998 2010 5.000% 585,000 196,098 196,098 977,195 6,780,000 8,742,803 2011 5.100% 610,000 181,473 181,473 972,945 6,170,000 7,769,858 2012 5.150% 645,000 165,918 165,918 976,835 5,525,000 6,793,023 2013 5.200% 675,000 149,309 149,309 973,618 4,850,000 5,819,405 2014 5.300% 710,000 131,759 131,759 973,518 4,140,000 4,845,888 2015 5.350% 745,000 112,944 112,944 970,888 3,395,000 3,875,000 2016 5.400% 785,000 93,015 93,015 971,030 2,610,000 2,903,970 2017 5.400% 825,000 71,820 71,820 968,640 1,785,000 1,935,330 2018 5.500% 870,000 49,545 49,545 969,090 915,000 966,240 2019 5.600% 915,000 25,620 25,620 966,240 - - $ 9,095,000 $ 3,588,874 $ 3,335,801 $ 16,019,675 10 • • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Fiscal Interest Principal Interest Interest Annual Principal Total Year Rate Due 5/01 Due 5101 Due 11/b1 Requirement Outstanding Outstanding Revenue Bond, Series 2002 Date of Issue - January 10 2002 Term - 19 Years $ 6,040,949 2002 $ - $ 81,895 $ - $ 81,895 $ 3,800,000 5,959,054 2003 - 98,274 98,274 196,549 3,800,0001 5,762,505 2004 5.500% 150,000 98,274 98,274 346,549 3,650,000 5,415,956 2005 5.500% 155,000 94,149 94,149 343,299 3,495,000 5,072,658 2006 5.500% 165,000 89,887 89,887 344,774 3,330,000 4,727,884 2007 5.500% 170,000 85,349 85,349 340,699 3,160,000 4,387,185 2008 5.500% 180,000 80,674 80,674 341,349 2,980,000 4,045,836 2009 5.500% 190,000 75,724 75,724 341,449 2,790,000 3,704,388 2010 5.500% 195,000 70,499 70,499 335,999 2,595,000 3,368,389 2011 5.350% 205,000 65,137 65,137 335,274 2,390,000 3,033,115 2012 4.700% 215,000 59,653 59,653 334,306 2,175,000 2,698,809 2013 4.800% 230,000 54,601 54,601 339,201 1,945,000 2,359,608 2014 4.900% 240,000 49,081 49,081 338,161 1,705,000 2,021,446 2015 5.000% 250,000 43,201 43,201 336,401 1,455,000 1,685,045 2016 5.000% 265,000 36,951 36,951 338,901 1,190,000 1,346,144 2017 5.000% 275,000 30,326 30,326 335,651 915,000 1,010,493 2018 5.100% 290,000 23,451 23,451 336,901 625,000 673,591 2019 5.125% 305,000 16,056 16,056 337,111 320,000 336,480 2020 5.150% 320,000 8,240 8,240 336,480 - - $ 3,800,000 $ 1,161,422 $ 1,079,527 $ 6,040,949 11