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Ordinance No. 10,703ORDINANCE NO. 10,703
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,
2007, AND ENDING SEPTEMBER 30, 2008; 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, 2007, and ending
September 30, 2008; 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,
2007, and ending September 30, 2008, in the amount of SEVEN MILLION SEVENTY-FOUR
THOUSAND THREE HUNDRED THIRTY-SIX AND NO/100 DOLLARS ($7,074,336.00). 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 ttteVity Council of the City of Baytown this the 13lh day of September, 2007. 1/
. DONCARLOS, Mayor , May
, City Clerk
APPROVED AS TO FORM:
JACIO RAMIREZ, SR., CifftAttorney
R:\Karen\Kiles\City Council\Ordinances\2007\September 13\AdoptBAWABudgctFY07-08.doc
Water Authority
ANNUAL PROGRAM OF SERVICES
2007-08
iaytown Area Wafer
August 30, 2007
Robert D. Lei per
Fred Pack
Rhonda L. Young
Interim General Manager
Plant Manager
Director of Finance
A
BAYTOWN AREA WATER
AUTHORITY
BOARD OF DIRECTORS
ROBERT L. GILLETTE, President
DAN MUNDINGER, Vice President
PETER R. BUENZ, Secretary
KNOX BEAVERS
DAN CONEJO
BAYTOWN AREA WATER AUTHORITY
7425 Thompson Rond, Baytown, Texas 77521-1056 (281)426-3517 RAX (281) 426-3519
August 30, 2007
President and Members of the Baytown Area Water Authority Board
Baytown Area Water Authority
Baytown, Texas
It is my pleasure to present the Adopted 2007-08 Budget for the Baytown Area Water
Authority (BAWA) Board. The Budget sets forth the revenues and appropriations for the
fiscal year October 1, 2007 through September 30, 2008. The financial guidance
provided by the Board has resulted in BAWA's strong financial position exhibited by a
stable 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 construction of a second water supply
line serving the City of Baytown is funded partially from non-recurring revenues to
reduce the amount of debt that is issued. This project will provide reliability to BAWA's
largest customer, the City of Baytown, which currently constitutes approximately 86% of
BAWA's water sales.
BAWA was approved for and has closed on a loan with the Texas Water Development
Board (TWBD) for funding of the second water supply line and Phase II improvements.
The loan received from the TWDB Drinking Water State Revolving fund has interest
rates ranging from 2.25% to 3.15% as compared to a range of 4.00% to 6.00% interest
rate for insured bonds sold on the market. The City of Houston notified BAWA of a rate
increase effective April 1, 2007 for untreated water purchased from the City of Houston
The rate increased 2.8% from $0.4123 to $0.4238 per 1,000 gallons. The previous rate
increase was in 2006. Also, a 3.6% increase in the cost of raw water from the City of
Houston is anticipated effective April 1, 2008 and is included in the adopted budget.
Revenue estimates for water sales in the adopted budget are based upon sales in a
typical year. A rate increase was projected in the 2001 BAWA Rate Study for fiscal year
2005 for implementation of the capital improvement program (CIP), which anticipated
construction of the Phase II regulatory/disinfection improvements. The second water
supply line was not included in the CIP at that time. Since TWDB's loan program
reimburses BAWA as funds are expended, the full debt payments will not occur until the
project is complete. As of June 30, 2007, $6,990,000 of the total 313,290,000 has been
funded. Funding requests are submitted to TWDB as invoices are received from the
contractor.
The adopted budget includes a S0.07 per 1,000 gallon rate increase (approximately 5%)
for BAWA's customers to adjust for the two untreated water rate increases and debt
associated with the construction of the new water supply line. Rates will be adjusted in
future budgets to reflect funding needs based on actual debt issued during the previous
year. This will allow the rate increase to coincide closely with the actual construction. It
will also provide for time contingencies that may be required due to the complexity of
the project that may extend the construction time of the project. Rate increases will be
based on actual construction progress.
The City of Baytown Water and Sewer Fund pays for the cost of the City to tie-in to the
new BAWA line to pay for their portion of the project. The City's portion of the project
costs are estimated to total 51,000,000. A continuing transfer from the City's water and
sewer fund is included for that portion of the debt payment.
In January of 2006, the EPA approved the Long Term 2 Enhanced Surface Water
Treatment (LT2) Rule and the Stage 2 Disinfection Byproducts (DBP) Rules. With
respect to the LT2 rule, systems that serve a population of less than 100,000 must
begin the monitoring schedule in January 2007. The schedule is as follows:
Submit Sampling Plan January 1, 2007
Begin source water monitoring April 1, 2007
Report bin classification October 1, 2009 Comply with additional treatment requirements (Ozone) October 1! 2012
The data collected during the 2 year monitoring period will determine if Ozone should be
implemented at the BAWA surface water treatment plant. The Stage 2 DBP rule
pertains to the City of Baytown distribution system only. BAWA has received the Small
System waiver and does not have to monitor the by-products listed in the rule. We have
completed the first two steps in this process.
The current and planned major improvements at BAWA we're designed to provide the
foundation for growth in sales and continued reliable service of the highest quality water
for our customers. I look forward to reviewing this document with you.
Sincerely,
Robert D. Leiper
Interim General Manager
MAJOR BUDGET ISSUES
Fiscal Year 2007-08
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. BAWA services a total of eight customers
with the City as the largest customer, generating approximately 89% of BAWA's annual
sales. BAWA is a separate legal entity; however, it is considered a component unit of the
City. Since it began operating, BAWA has not experienced shortages of raw water supply
to the plant nor interruptions to service to Its customers.
REVENUES
The 2007-08 adopted budget estimates sales of $6,697,893 for 12.5 million gallons per
day (MGD) based upon an average rainfall year. Fluctuations to average rainfall can
significantly impact actual sales. A $0.07 rate increase is in the adopted 2007-08 budget.
The current rate structure of $1.39 per 1,000 gallons for the City of Baytown and $1.42 per
1,000 gallons for customers outside the city are to increase to $1.46 and $1.49;
respectively, to cover the increased cost of operations, including the purchase of raw
water. This increase in rates is expected to generate additional revenue in the amount of
$320,251. Since the inception of the BAWA plant in April 1981, there have been rate
increases in 1988,1993,1999 and 2007.
EXPENDITURES
Total operating expenditures for the adopted 2007-08 budget are $4,798,850, an increase
of $226,301 from the 2006-07 budget. The depreciation expense increased to recognize
one full year of depreciation on new improvements. The adopted 2007-08 budget
includes a transfer to General Fund for an indirect cost allocation, which is to reimburse
the City for administrative services such as Human Resources, Fiscal Operations, Legal
and Information Technology Services. Highlights of major operating changes were as
follows:
• Increase in personnel services $ 55,525 • Increase in supplies (Primarily raw water rate increase) 52^099
• Increase in maintenance 80,200 • Increase in services 38^477
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 2040 and
sets the maximum amount of raw water to be delivered to the BAWA plant at 15.8 MGD
without penalties. BAWA received notice of a 2.8% rate increase from $0.4123 to $0.4238
effective April 1, 2007. An additional increase of 3.6% is anticipated in April 2008 The
surcharge for water purchased over the 15.8 MGD is nominal at this time.
Debt Service -The debt service requirement for existing debt for the adopted 2007-08
budget is $2,167,486.
MAJOR BUDGET ISSUES
Fiscal Year 2007-08
CAPITAL IMPROVEMENT PROGRAM
The Capital Improvement Program for BAWA is funded primarily from bonds. The
adopted 2007-08 budget includes funding from retained earnings designated for capital
improvements for the second water supply line project. 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). Phase II was originally estimated at
$6,000,000. Final costs will be developed after TCEQ issues final regulations.
Implementation will be planned in the fiscal year following the issuance of final
regulations that will enable the BAWA Board to review implementation plans during
the annual budget process.
• There is currently one line supplying water to BAWA's major customer, the City of
Baytown. The BAWA board approved a contract for the design for the second line
in 2004. The design is complete and has been approved by TWDB and the BAWA
Board and the City Council awarded the contract in the Spring of 2006. The project
is partially funded from non-recurring revenues and CIP funds to reduce the amount
of debt that Is issued. TWDB debt has been issued for construction. The total
estimated cost is $10.5 million for the BAWA line with $1,000,000 funded by the
City of Baytown for extending their lines to connect with the new supply line.
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 60 to 90 days. Working capital is defined as current assets
(e.g., cash, investments and accounts receivable) less current liabilities (e.g., accounts
payable). The working capital in the adopted budget is estimated to be 65 days as of
September 2008. Working capital in excess of the targeted goal provides contingency
funding for current projects and unforeseen expenses.
BAYTOWN AREA WATER AUTHORITY FUND 510
BUDGET SUMMARY BY FUND
Excess (Deficit) Revenues
Over Expenditures
Working Capital • Beginning
Working Capital • Ending
No. of Working Capital Days
(141.761) (415.430) (578,277) (223,043)
2,204.019 1,550.008 2,062.258 1,483.981
$2.062.258 $1.134.578 $1.483,981 $1,260.938
128 60 90 65
BAYTOWN AREA WATER AUTHORITY FUND 510
OPERATING RESULTS
Actual
2005-06
Budget
2006-07
Estimated
2006*07
Adopted
2007-08
Operating Income 682.490 944,851 641.438 1.304,443
Non-Operating
Interest Revenue and Other
interest Expenses and Other
Transfers Out • Capital Improvement m
Total Non-Operating Expenses'
237,002
(675,956)
(316.201)
216.000
(936.281)
82,825
(608.770)
83,000
(897,486)
(755.155) (720,281) (525.945) (814186T
Net Income $ (72.665) $ 224,570 $ 115.493 S 489.357
Reconciliation of Net Income (Loss) to Revenues Over (Under) Expenses:
Net Income $ (72.665) $ 224.570 $ 115,493 $ 489 957
Principal Debt Retirement (632,835) (1.275,000) (1.264,950) (1,275,000)
Capital Outlay (14,642) -. (13Ooo
Depreciation 578.381 635.000 571.180 575.'o00
Revenues Over (Under) Expenditures $ (141.761) $ (415.430) $ (578.277) $ (223 043V
BAWA -CAPITAL IMPROVEMENT PROGRAM FUND 518
BUDGET SUMMARY BY FUND
CITY OF BAYTOWN
PROGRAM SUMMARY
13070 BAYTOWN AREA WATER AUTHORITY (BAWA) I
Program Description
Operate and maintain a 26 MGD design capacity
surface water treatment facility with a projected flow
of 12.50 MGD in fiscal year 2007-2008 and a
certified bacteriological laboratory, which currently
serves 8 customers with the City of Baytown using
88% of production. Following and complying with the
Texas Commission on Environmental Quality
(TCEQ) Rules and Regulations for Public Water
Supplies adopted 1992, National Primary Drinking
Water Regulations, Safe Drinking Water Act,
Surface Water Treatment Rule, and the Criteria for
Certified Bacteriological Laboratories. Providing
BAWA's customers with high quality, safe drinking
water and consistent water pressure for fire
protection.
Major Goals
• Maintain water quality necessary to be classified
as "Meeting Optimum Corrosion Control" by
TCEQ.
t Maintain "Superior Public Water System" status.
• Maintain Optimization Standards as classified by
TCEQ's Texas Optimization Program.
• Operate the bacteriological laboratory in a
manner that exceeds the requirements as set
fourth by Texas Department of Health.
• Develop and maintain a staff of highly trained
water professionals to better serve customers.
Major Objectives
• Produce 12.50 MGD of water.
• Maintain finished water turbidity consistently less
than 0.1 NTU.
• Provide QA/QC and mathematical training for
personnel.
Workload Measures
1. Customer Connections
2. Average MGD of water produced
3. Customer Service calls
Performance Measures
1. Days without interruption of service
2. Days finished water <O.1 NTU
3. Customer Service Calls Investigated
4. Days above 12.50 MGD
CITYOFBAYTOWN
SERVICE LEVEL BUDGET
13070 BAYTOWN AREA WATER AUTHORITY
Acct# Acct Description
Actual Budget Estimated Adopted
2005-06 2006-07 2006-07 2007-08
7100 Personnel Services
71031 Contract Personnel Services
Total Personnel Services
7200 Supplies
72001 Office
72002 Postage
72007 Wearing Apparel
72016 Motor Vehicle
72021 Minor Tools
72026 Cleaning & Janitorial
72031 Chemical
72032 Medical
72041 Educational
72051 Untreated Water
72055 Laboratory Supplies
Total Supplies
7300 Maintenance
73011 Buildings
73021 Filtration Plants
73025 Streets Sidewalks & Curbs
73027 Heating & Cooling System
73028 Electrical Maintenance
73041 Furniture & Fixtures
73042 Machinery & Equipment
73043 Motor Vehicles
73045 Radio & Testing Equipment
Total Maintenance
7400 Services
74001 Communication
74002 Electric Service
74011 Equipment Rental
74021 Special Services
74022 Audits
74036 Advertising
74041 Travel & Reimbursables
74042 Education & Training
74051 Rents
74071 Association Dues
74210 General Liability Insurance
74220 Errors & Omissions
74240 Auto Liability
74242 Auto Catastrophic
74271 Mobile Equipment
74272 Real & Personal Property
74280 Bonds
Total Services
$ 917.842 $ 924,960 $ 924,960 $ 980.485
10
CITY OF BAYTOWN
SERVICE LEVEL BUDGET
13070 BAYTOWNAREA WATER AUTHORITY
Acct# Acct Description
Actual Budget Estimated Adopted
2005-06 2006-07 2006-07 2007-08
Total Operating
8000 Capital Outlay
84042 Machinery & Equipment
84043 Motor Vehicles
Total Capital Outlay
9000 Other Financing Uses
92101 To General Fund
91511 To BAWA Debt Service
91518 To BAWA Capital Improv
Total Other Financing Uses
9900 Contingencies
99001 Contingencies
Total Contingencies
TOTAL DEPARTMENT
4,256,681 4,572,549 4,083.628
14.642
4,798,850
13,000
11
BAYTOWN AREA WATER AUTHORITY REVENUE BONDS
LONG TERM DEBT AMORTIZATION SCHEDULES
Combined BAWA Debt, All Series
Debt Requirements to Maturity
Combined BAWA Debt, All Series
Debt Requirement to Maturity
2.500
2.000
1.500
1.000
0.500
0.000
Q Interest
I Principal
Uuuxi
^vvvvvvvvv
Fiscal Yoar
12
BAYTOWN AREA WATER AUTHORITY REVENUE BONDS
DETAIL DEBT AMORTIZATION SCHEDULES
13
BAYTOWN AREA WATER AUTHORITY REVENUE BONDS
DETAIL DEBT AMORTIZATION SCHEDULES
14
City of Houston
Untreated Water Rates
Baytown Area Water Authority
Treated Water Rates
IS
City of Houston-
Public Works and Engineering
Department
BUI Whit©
Mayor
MchMi S. Marectte. P.E., OEE
Dimeter
P.O. Box 4*83
Houston. Tuu 7721IMB83
www.houstontx.gov
IMPORTANT NOTICE
NOTIFICATION OF WATER RATE ADJUSTMENT
On April 1,2007, rates will be adjusted upward by 2.8%. By law, water rates are now
adjusted each year based upon the actual increase in costs In the region. These new
rates will be reflected on your April 2007 billing which you will receive In May.
NEW RATES AND CHARGES
•p
M
Total water delivery during the month in thousand gallons, except If the minimum
monthly specified in the customer's contract Is greater than P, P shall equal M.
Minimum monthly amount of water specified in the customer's contract expressed In
units of one thousand gallons.
For further information, please:
• Refer to the Rates and Prices or the BllUno and Payment section of your contract
• Visit: http://www.houstontx.Qov/codaB/ (Sections 47*61 and 47-84 et seq.)
Please contact Maria Carrillo at Utility Customer Service at (713) 371-1072 with spedflc
questions about your bill
I6