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Ordinance No. 10,703
ORDINANCE 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