Ordinance No. 10,961ORDINANCE NO. 10.961
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,
2008, AND ENDING SEPTEMBER 30, 2009; 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. 2008, and ending
September 30, 2009; 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,
2008, and ending September 30, 2009, in the amount of SIX MILLION NINE HUNDRED
EIGHTY-ONE THOUSAND THREE HUNDRED TWENTY-SEVEN AND NO/100 DOLLARS
($6,981,327.00). A copy of the above referenced budget for BAWA is attached hereto, marked
Exhibit "A," and made a pail 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 22nd day of September, 2008.
">
ATTEST:
, STEPHEN H. DONCARLOS. Mayor
K.AYTH1E DARNEL, City Clerk^
APPROVED AS TO FORM:
^TUNACIO RAMIREZ, SR./tyy Attorney
R:\KiLrcn\i'i[i;s\CityCoiincil\Ordinances\2008\Scptcnibur22\AdoplBAWABiidgot[7Yaд
Baytown Area Water Authority
(BAWA)
ANNUAL PROGRAM OF SERVICES
2008-09
ADOPTED BUDGET
Submitted To Baytown Area Water
Authority Board
September 17, 2008
Garry Brumback
Fred Pack
Andrea Deaton
General Manager
Plant Manager
Interim Director of Finance
BAYTOWN AREA WATER
AUTHORITY
BOARD OF DIRECTORS
PETER R. BUENZ, President
DAN M. MUNDINGER, Vice President
ROBERT L GILLETTE, Secretary
JOHN R. SANDHOP
WAYNE BALDWIN
BAYTOWN AREA WATERAUTHQjRITY
7425 Thompson Road, Baytown, Texas 77521-1056 {281)426-3517 FAX (281) 426-3519
August 20,2008
President and Members of the Baytown Area Water Authority Board
Baytown Area Water Authority
Baytown, Texas
It is my pleasure to present the 2008-09 Adopted Budget for the Baytown Area Water
Authority (BAWA) Board. The Budget sets forth the revenues and appropriations for the
fiscal year October 1, 2008 through September 30, 2009. The financial guidance
provided by the Board has resulted in BAWA's ability to maintain a stable financial
position exhibited by a healthy working capital balance.
BAWA's largest current project, 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 issued. This project, which is nearing completion, will provide reliability
to BAWA's largest customer, the City of Baytown, which currently constitutes
approximately 88% 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, 2008 for untreated water purchased from the City of Houston.
The rate increased 1.8% from $0.4238 to $0.4314 per 1,000 gallons. The previous rate
increase was in 2007. Also, a 2% increase in the cost of raw water from the City of
Houston is anticipated effective April 1, 2009 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, 2008, $8,840,000 of the total $13,290,000 has been
funded. Funding requests are submitted to TWDB as invoices are received from the
contractor.
The adopted budget includes a $0.09 per 1,000 gallon rate increase (approximately 6%)
for BAWA's customers to adjust for the untreated water rate increase 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 operational needs including
debt service requirements. This will allow the rate increase related to debt 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.
The City of Baytown Water and Sewer Fund pays for the cost of the City to tie-in to the
new BAWA supply line to pay for their portion of the project. The City's portion of the
project costs are estimated to total $1,000,000. 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 began 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 treatment
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 were 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.
Sine
Garry Brumbaj;
GeneraJJvtaiTager
MAJOR BUDGET ISSUES
Fiscal Year 2008-09
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 88% 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 2008-09 adopted budget estimates sales of $6,804,472 for 12.0 million gallons per
day (MGD) based upon an average rainfall year. Fluctuations to average rainfall can
significantly impact actual sales. A $0.09 rate increase is in the 2008-09 adopted budget.
The current rate structure of $1.46 per 1,000 gallons for the City of Baytown and 1.49 per
1,000 gallons for customers outside the city will increase to $1.55 and $1.58 respectively.
This will cover the increased cost of operations, including debt service and the purchase of
raw water. This increase in rates is expected to generate $394,200 in additional revenue.
EXPENDITURES
Total operating expenditures for the adopted 2008-09 budget are $4,722,800, a decrease
of $76,050 from the 2007-08 budget. The depreciation expense increased to recognize
one full year of depreciation on new improvements. The adopted 2008-09 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 $ 4,154
• Decrease in supplies (Primarily raw water rate increase) (108,326)
• Decrease in maintenance (12,200)
• Increase in services 40*322
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 1.8% rate increase from $0.4238 to $0.4314
effective April 1, 2008. An additional increase of 2% 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 2008-09
budget is $2,163,526.
MAJOR BUDGET ISSUES
Fiscal Year 2008-09 __
CAPITAL IMPROVEMENT PROGRAM
The Capital Improvement Program for BAWA Is funded primarily from bonds. The
adopted 2008-09 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. This
project is nearing completion.
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 64 days as of
September 2009. 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
No. of Working Capital Days 86 68 73 64
BAWA -CAPITAL IMPROVEMENT PROGRAM FUND 518
BUDGET SUMMARY BY FUND
Revenues
Transfer From BAWA
Interest Revenue
Actual Carried-forv/ard Adopted Adjustments
2006-07 2006-07 2007-08 2007-08
Adj Budget Estimated Canied-foiward Adopted
2007-08 2007-08 2007-08 2008-09
$ -$
100,647
-$
Total Revenues 100.647
Expenditures
BAWA Admin Bldg -A/C Repairs
BAWA Second Supply Line
Highlands Tie-In Meter
BAWA Raw Waterfine
Pump Replacement
Thompson Rd Utility Relocation
Capita] Assets
New Capital Project Initiatives
Total Expenditures
Exjgsss (Deficit) Revenues
Over Expenditures
Retained Earnings -Beginning
Retained Earnings -Ending
25,305
279,229
12.738
-$
75.000
-$ -$
75.000 25100
75.000 75.000 25.000
134,695
252.009
76,500
5,700
22.000
134.695
257,709
76.500
22,000
134,695
257,709
76,500
22,000
-$
25,000
25,000
CITY OF BAYTOWN
PROGRAM SUMMARY
13070 BAYTOWN AREA WATER AUTHORITY fBAWA) I
Program Description
Operate and maintain a 28 MGD design capacity
surface water treatment facility with a projected flow
of 12.0 MGD in fiscal year 2008-2009 and a certified
bacteriological laboratory, which currently serves 8
customers with the City of Baytown using 88% of
production. Follow and comply 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. Provide 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.
• Maintain "Superior Public Water System" status.
• Maintain Optimization Standards as classified by
TCEQ'8 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 12.0 MQD of water. ~
• Maintain finished water turbidity consistently less
than 0.1 NTU.
• Provide QA/QC and mathematical training for
personnel.
Workload Measures
T^ Customer Connections
Actual
2006-07
Budget
2007-08
Estimated
2007-08
Projected
2008-09
2. Average MGD of water produced
3. Customer Service calls
8
10.35
3
8
12.5
10
8
11.5
15
8
12.0
12
Performance Measures
1. Days without interruption of service
2. Days finished water <0.1 NTU
3. Customer Service Calls Investigated
4. Maintain Distribution Cl2 Residual <4.0
mgl
365
365
3
365
366
366
10
366
366
366
15
366
365
365
12
365
CITY OF BAYTOWN
SERVICE LEVEL BUDGET
10
CITY OF BAYTOWN
SERVICE LEVEL BUDGET
13070 BAYTOWN AREA WATER AUTHORITY
Acct# Acct Description
Actual Budget Estimated Adopted
2006-07 2007-08 2007-08 2008-09
Total Services
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
687.183 847,704 844,699 8881261
4,061,840 4,798,850 4,339,672 4,722,800
13,000 13,078
13,000 13,078
50,000 50,000
1,950,060 2,172,486
50,000 50,000
2,005,000 2,168,527
11
BAYTOWN AREA WATER AUTHORITY REVENUE BONDS
LONG TERM DEBT AMORTIZATION SCHEDULES
Revenue
Bonds
Amount of
Issue
Principal
Outstanding
Oct 1,2008
Requirements
Fiscal Year 2007-08
Principal Interest Total
Principal
Outstanding
Sept. 30,2008
Series, 1999
Series, 2002
Series, 2006
Series, 2007
$ 9,095,000
3,800,000
13,290,000
6,505,000
Total
$ 1,745,000
2,980,000
12,165,000
6.465,000
$ 550,000
190,000
540,000
40,000
91,710
151,449
337,355
263,013
$ 641,710
341,449
877,355
303,013
$ 1,195,000
2,790,000
11,625,000
6.465.000
$ 23,355,000 $ 1,320,000 $ 843.526 $ 2,163,526 $ 22.075.000
Combined BAWA Debt, All Series
Debt Requirements to Maturity
12
BAYTOWN AREA WATER AUTHORITY REVENUE BONDS
DETAIL DEBT AMORTIZATION SCHEDULES
610,000 641,110
IRevenue Bond. Series 2002 Date of Issue -January 10.2002 Term »19 Years!
2002
2003
2004
2005
2006
2007
2008
-$
5.500%
5.500%
5.500%
5.500%
5.500%
150,000
155,000
165,000
170.000
180.000
81,895
98,274
98,274
94,149
89,887
85,349
80,674
98,274
98,274
94,149
89,887
85,349
80,674
81,895
196,549
346.549
343,299
344,774
340,699
341,349
3,800,000
3.800.000
3.650,000
3,495.000
3,330,000
3,160,000
2,980,000
$ 6,040,949
5,959,054
5.762,506
5.415,956
5,072,658
4,727,884
4,387.185
4.045,836
2009 5.500% 190.000 75,724 75,724 341,449 2.790.000 3,704.388
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
5.500%
5.350%
4.700%
4.800%
4.900%
5.000%
5.000%
5.000%
5.100%
5.125%
5.150%
195.000
205,000
215,000
230,000
240,000
250.000
265.000
275.000
290.000
305,000
320,000
70,499
65,137
59,653
54,601
49,081
43,201
36,951
30,326
23,451
16,056
8.240
70,499
65,137
59,653
54,601
49,081
43,201
36.951
30,326
23,451
16,056
8,240
335,999
335,274
334,306
339,201
338.161
336,401
338,901
335,651
336,901
337,111
336.480
2.595,000
2,390,000
2,175,000
1,945.000
1,705,000
1,455,000
1,190,000
915,000
625,000
320,000
3,368,389
3,033,115
2,698,809
2,359,608
2,021,446
1,685,045
1,346,144
1,010,493
673,591
336,480
$ 3,800.000 $ 1.161.422 $ 1.079.527 $ 6,040,949
13
BAYTOWN AREA WATER AUTHORITY REVENUE BONDS
DETAIL DEBT AMORTIZATION SCHEDULES
14
City of Houston
Untreated Water Rates
Year
1981
1985-1987
1988-1992
1993-1998
1999-2006
2007
2008
2009
Baytown Area Water Authority
Treated Water Rates
Rate
$0.97 COB
$0.97 COB. $1.00 Other
$1.07 COB. $1.10 Other
$1.26 COB. $1.29 Other
$1.39 COB. $1.42 Other
$1.46 COB. $1.49 Other
$1.55 COB. $1.58 Other
Increase
Amount
$0.11
$0.08
$0.07
Result of rising operating cost
(Raw water rates up 25%) .
Result of increase in raw water
rates.
Funding for plant expansion debt
Funding for new water line debt
and City of Houston rate
Increase.
Funding for new water line debt
and City of Houston rate
increase.
Funding for new water line debt,
other operating increases and
City of Houston rate increase.
City of Houston.
Public Works and Engineering
Department
Bill White
Mayor
Michael S. Marcotte. P.E.. DEE
Director
P.O. Box 4883
Houston. Texas 77210-4863
www.houslonlx.gov
IMPORTANT NOTICE
NOTIFICATION OF WATER RATE ADJUSTMENT
On April 1. 2008 water and sewer rates will be adjusted upward by 1 8% Each
NEW RATES AND CHARGES
Contract Treated Water
Untreated Water Rates where there is no
First 10.000.000 cmllnna
Next 10.000.000 gallons
Next 30.000.000 nations
Next 100.000.000 gallons
Excess of 150.000.00Q gallons
Untreated water Rates undar written contract $0.4314 per 1.000. m»)innC
Rate
Px $1793 plus (P-M)x $.582 *
• P =
M = 'Xr" "~"' L ^ &S in
For further information, please:
the Bflea and Pflqa? or the Billing and P« , 8ectton of your
WsiL' b«P://WVyw,hou3tonfa(.OBWr?rt^/ (Sections 47-61 and 47-84 et seq)
16