Good morning and welcome everybody to the Public Utility Board meeting for the
City of Dinton Monday June 28th 2021 it is 9.01 a.m. on my clock and we're going
to start by calling the meeting to order and next we're going to see if are there
any members of the public that would like to speak address the board or
anyone online. Good morning chair we have no comments this morning online or on
the phones. Where are you? Okay thank you. They said I'd see her when she came out.
Since there are no presentations from members of the public we'll move on
to items for individual consideration. First one being the approval of the June
14 2021 minutes. Would anyone like to move to approve those minutes? Move
approval. I have a motion. Do I have a second? Second. All those in favor please
say aye. Aye. Any opposed sign the same. Passes with the quorum unanimously.
Next we have item 2B which is receive nominations and elect a
secretary. Does anybody have any nominations? I mean normally I think we
should probably get someone that's not here right that didn't show today but the
other. We're not showing up. That's right absolutely but the secretary's duties
usually are just same as a second vice-chair. We really don't have any
secretary duties other than that I believe so. Any nominations?
Any thoughts? Anybody anyone want to volunteer that's here? I'm stepping down
soon so I'm out of it. I'm not caring. I think that leaves Barbara. Okay I'll do
it. Okay very good. Well you want to nominate Barbara Karen? Yes I'll nominate
formally nominate Barbara. Russell? Do I hear a second? Second. Motion and a second
all those in favor please say aye. Aye. Opposed sign the same. Passes unanimously.
We're moving on to item 2C management reports.
We have a couple of items for you. The first one is we have a report that was
done by the by the internal auditor. She provided a memo to you on the water
system rate structure. She's here and available if you have any questions on
on on that memo. Okay there appear to be comments. All right so if there's no
questions we'll move on to the future agenda items. Obviously starting today we
do have preliminary discussions with you about the utility budgets. It is it is
preliminary and Nick Vinson our director finances here and also Cassie Ogden our
director of finance. They'll try to be introducing the item kind of let you know
what the next steps are but that's really what what's on the agenda is to
come back to you on July 2nd. Chairman, Mr. Chairman if I could interject and I
apologize the memo in question you just referred to is actually quite long and I
was wondering if the department had any response to the audit. Yeah we can get
either Stephen Gay or Nick Vincent to address any any questions you may have.
So so Lee at the very end there's the responses just very in very broad terms
at the very end of the long document. Ah thank you. Yep. I did not realize that
we got about page three or four I was like I don't think I'm gonna knock this
out this morning. Yeah if you start at the back which is always a good idea.
Well that's a good tip. So there's well Nick can handle this. Mr. Ryback can you
hear me? Yes. Okay yes so we will be bringing back a conversation to the
Public Utilities Board next month based on that audit and the recommendation
to change the water rate structure. So we did receive guidance from City Council
last week to look at the water rate structure and bring that conversation
back to you mainly focused on the first tier within water which is currently 0
to 15,000 gallons. So we're gonna bring back some options for the Public
Utility Board and City Council but they will be in the next two to three weeks.
So to answer your question we will have a presentation for you on that in the
coming weeks. Is that okay with you? All righty then I'll look forward to the
presentation. I apologize for the interruption but I just had realized the
document was quite lengthy so I thought we were kind of going over it a bit too
quickly but if we're gonna have a work session on it and go over it that's fine
and I apologize for the interruption thank you. No worries thank you. Mr. Ryback
really quick too if you would want to see a presentation today and the
internal auditor Madison does have a presentation she can present to you
otherwise it'll come back to you in a couple weeks. I'd prefer to see in a
couple of weeks since we've got some pretty good budget presentations
this morning if that's okay with you member Ryback. However it works out we
can do it today fine if not the next meeting is fine as well thank you. Okay
thank you thanks Nick. Okay the last item Mr. Chair is just the new business
action item again we still have some some general items that we'll be
addressing with the board you know during the budgetary discussions and then
the final item is really the request about the legislative update you may or
may not know that the governor did recently call a special session and so
we're gonna kind of wait and see kind of what happens as we're here right now
there's not there may not be any discussions about ERCOT or the grid but
we're waiting to see what that agenda might look like and if there are going
to be items we may wait until after the special session to come back to you and
give you a legislative update so that way we can just do it all at once but
with that happy to answer any questions you may have on on any of those action
items or future agenda items. Does any member have any requests for future
agenda items new business? Mr. Chairman I have a question. Yes sir. There was some
discussion earlier by waste management about a pilot program I think for yard
waste residential yard waste composting it I was wondering if there's been any
progress on that you could give us an update. Good morning members of the
board. Brian Burner director of solid waste for the city of Denton. As you're
aware for about the last two years we have had a very successful yard waste
program implemented here in the city of Denton. This is not new we you know
you either opt in opt out we collect only paper craft bags or carts and we've
always had the opportunity for residents to put what we call pre-consumer
vegetative waste in there so the ends of your celery stalks you know apple cores
things of that nature if it's been cooked prepared has oil grease salts you
know anything of that nature that cannot go again cannot go into the cart but
anything that's vegetative that is precooked or used in the preparation can
be put in that material. A couple weeks ago I believe there was a grant proposal
that was brought before you what we're wanting to do from a proposal
standpoint is we've applied to the North Central Texas Council of Governments for
a grant to expand this and work closely with our friends over at wastewater to
collect post consumer food waste from the valet the downtown restaurant areas.
What we want to do is be able to take that in grind it up actually put it in
the wastewater digesters get methane off the top that we can purify put back in
the pipeline the the back part is digested down it goes into the biosolids
which we turn into the down order and sell so it's a wonderful closed loop
system part of this process is to see how efficient we can be. Secondarily make
sure we have capacity so that as we look to expanding this we have to we
identify when we might need to build another digester or a digester
specific to food waste management so it's a it's an opportunity that that I
think that the time has come we just got to make sure all the parts are in the
right right order. I would imagine you still and in the past I know you've had
a lot of good conversations with the downtown folks. Yes they are wonderful
partners I think if you you you compare what's happening in downtown now versus
downtown about 18 months ago you know it's cleaner it's from an aesthetic
standpoint it's much better to look at we've got about 20 25 more parking
spaces which is most important they're around the square so you know and you
know really our solid waste folks that are working that really sort of become
the ambassadors they're they're always telling people where to go and what
they're doing so you know it's it's a it's a good fit. Okay very good thank you
Brian. Thank you. To answer your question member Ryback. Yes sir thank you very
much. Thank you. Okay any other future agenda items for suggestions? There's no
new business action items either? Then I guess we'll move on to concluding items.
Is that the way you want to do this? I guess that's all that we got after that.
Okay all right I need to read this whole thing don't I? Okay under section 551.042
of the Texas Open Meetings Act respond to inquiries from the public utility
boards or the public with specific factual information or recitation of
policy or accept a proposal to place the matter on the agenda for an
upcoming meeting and under section 551.0415 of the Texas Open
Meetings Act provide reports about items of community interest regarding which
no action will be taken to include expression of thanks, congratulations or
condolence, information regarding holiday schedules, an honorary or salutary
recognition of a public official, public employee or other citizen, a reminder
about an upcoming event organized or sponsored by the governing body,
information regarding a social ceremonial or community event organized
or sponsored by an entity entity other than the governing body that was
attended or is scheduled to be attended by a member of the governing body or an
official employee or the municipality or an announcement involving an imminent
threat to the public health and safety of people in the municipality that has
arisen after the posting of the agenda. Following the completion of the regular
meeting the public utility board would convene a work session at which the
following items will be considered. This is to receive a report, this is work
session A, PUB 21-114, receive a report, hold a discussion and give
direction regarding the water, wastewater, drainage, solid waste, electric and
environmental services, FOI 2021-2022, preliminary budget capital improvement
program and five-year financial forecast. Good morning Chair, PV members, Nick
Vinson, Assistant Director of Finance. It's my pleasure to be in front of you once
again today. So I want to introduce this topic or these presentations and I'll
turn it over to Stephen Gay to present water. So there's five presentations to
be presented to you today, water, wastewater, solid waste, electric and
environmental services. Each presentation is a joint presentation meaning that the
director will present the first half of the presentation which is made up of
operational information and then I'll return to the podium to present the
financial information. Cassie Ogden will actually present the electric financial
information and then I'll present the rest of them. With that I'll turn it over
to Stephen. Please we encourage your questions, any comments that you have
regarding the preliminary budget. We'll definitely take those back and build them
into the future presentations to come back forward to you.
Thank you Nick and good morning. Let me share my screen here. Good morning
members of PUB, I'm Stephen Gay, the Director of Water Utilities. Before we
get into the actual presentation I want to take this opportunity to introduce
myself to you. I am new to the city of Denton but I'm not new to the water
utilities. I started my career in 1993 working for the city of North Las Vegas
as a water meter reader and I worked there until 2010 and when I left I was
the supervisor over water system supervisor for all of our production
storage and treatment facilities. Interesting thing about North Las Vegas
when I started there we had a population of 64,000 and when I left in 2010 we
served a population of over 360,000. From there my career took me to
Long Beach to work for the Long Beach Water Department as their manager of
security and emergency preparedness. In that role I really focused on the
strategic planning, you know continuity of operations, continuity of business
plans, emergency response recovery plans and doing risk and hazard and
vulnerability assessments. From there I had an opportunity to transition
back into a more operational centric role for the city of Westminster, Colorado
as their manager of utilities operations where I ran my team and I ran a system
very similar to the one that we have here in Denton and in 2021 I'm here now
as your new Director of Water Utilities. Leadership, I am a servant leader, I'm
very passionate about serving my community, my team and the organization. I
build collaborative partnerships through open and honest communication and hold
myself and others accountable for following up and following through and
then I challenge myself and my team to look past the status quo and embrace
emerging technologies where appropriate to better serve our community. I hold a
Master of Science, Executive Master of Science in Crisis and Emergency
Management, Bachelor of Science in Business Administration, I'm a certified
water professional in the states of both Nevada and Colorado and I hold various
certifications from the Federal Emergency Management Institute. I'm also
associated with the American Water Works Association in California, Nevada. I was
the chair of the Water Distribution Division, Rocky Mountain section in
Colorado, I was the chair of the section. I sit on the National Committee, Standard
Committee for Security and Emergency Preparedness Practices for the water
sector and I have recently been elected as appointed to the board of the National
Association for American Water Works Association. So that's a little bit about
me. We'll move into the team. We have one vacancy which is our Director, Assistant
Director of Operations, Preetem Dishmukh, I'm sure that you're familiar with him,
he's probably been in front of you a time or two before. He is our Assistant
Director of Asset Management and Infrastructure and then Kim Makin, I'm
sure that you're all familiar with, she's that she's the glue that holds us all
together. From an organizational structure that's pretty very traditional
from my experience, Director of Utilities, administrative staff supporting
the the Office of the Director and you have our Assistant Director over
Operations which contains water production and that's Hector Ortiz, our
field operations which is water field and wastewater field that's Casey Bowles
and then water reclamation is Rusty Woolard. The Preetem's team, the Asset
Management and Infrastructure is a focus on vertical assets. So vertical if you
think about our structures like our treatment plants, our pump stations, our
lift stations, so anything that exists in the vertical plane is a vertical asset.
So they're really going to be focusing on that moving forward. The asset
management team, Tyson Dawson is Tyler Dawson is focusing on both horizontal and
vertical assets just you know making sure that we take keep good records of
what we're repairing what we're replacing when we're doing that type of
work and the condition of those assets. And then Stephen Moore, the Senior
Engineer, is really focused on our development review. FTE summary in
2019-20 there was 110.5 FTEs and 2020 to 2021 that number was reduced to
104.5 and in 2020 moving forward in 2021-2022 that number goes up to
106.5. Now those aren't new FTEs being added to the department. We're actually
it's moving some movement around within the organization. Three positions were
moved from solid waste over to sustainability. One position was moved
from sustainability over to parks and then there was an internal move from our
distribution HBU up into the administrative HBU. What's the situation
with the utilities administration? I didn't understand that. We eliminated or at
least they're out of your excuse me out of your budget. You've got utilities
administration you had 9.5 in 19-20 and then after that you have nothing. Yeah
there I believe there was a restructure that was it was a pre-stephen gay I'll
turn that over sure sure yeah chair in fiscal year 2021 utility administration
actually combined with water administration okay that's the reason
you say going away just transfers okay member Ryback had a question I believe
yes sir mr. chairman I am wondering I understand the functions of the other
folks listed such as the administration and the meter reading what exactly do
the sustainability folks do in the water department mr. burner good morning
Brian burner director of solid waste apologize the our Katherine Barnett
white is out of the office today due to a family funeral but to answer that
question they are responsible for managing this city of didn't simply
sustainable plans so they work closely with the community and interested groups
on reducing water consumption conservation environmental protection
things of that nature so it's important from the management of the upstream the
watersheds ensuring that the right water quality and then downstream ensuring
that consumption is minimized so that we can maximize the benefit to our growing
city so may I presume that this full-time equivalents are for the
entire utility apartment and not just for the water department there are as
Stephen had pointed out city a solid waste department does have three public
education and outreach that are assigned specifically to doing the outreach for
sustained for our solid waste group but there was also within the
sustainability piece there are folks that specifically do water outreach and
water conservation type of work so even though that we each transfer funds into
it to support their efforts it's almost a dotted line relationship to the work
that they do between the departments okay so these these five point five
full-time equivalents are assigned to the water department not to the utility
department overall they're assigned to sustainability or environmental services
through the sustainability group but they work it's they're not within the
water but they help fund them okay so there's transfers that take care of the
time they spend with the different utilities correct okay correct is that
basically what you're looking for Lee I think so yeah these are not general
funded positions they are funded through the enterprises in the utilities so so
mr. chair so I guess try to answer the question here so traditionally
sustainability has been in water because they reported to the director of water
so rather than have a separate standalone internal service fund this is just
traditionally the way that it's where it's been budgeted currently this group
actually reports to Brian Borner the director of solid waste and I think we
just made the decision just to leave it where it is just because traditionally
that's where it's been but again the cost and the services they provide cut
across the various utilities and there's funding sources that come into this fund
to offset those costs so that the water fund and the rates don't necessarily
bear the full burden of that particular division okay so if I can just boil it
down for myself here in simplicity sake there are certain full-time equivalents
assigned to each department for the sustainability function is that more
or less correct more or less that is correct okay thank you that's all just
it caught my eye there thank you no worries thank you
move on mr. gay this is a lot taller than I am all right see if we can get back to
where we were
one second so moving forward talking about our areas focus areas and status
updates major maintenance the focus areas are major maintenance if the
structure improvements and new technology with regards to major
maintenance upgrades to Lake Louisville water treatment plant they'll be
completed this year and those are focused on some pump rehabilitations some yard
piping and some electrical work raw water condition assessment that's a 27
inch raw water line to Lake Louisville that's been completed and at this point
there's been no no issues of concern identified but we're still waiting for
the final report on the for the robotic inspection infrastructure
improvements the Lake Ray Roberts and a water treatment plant capacity rerate
that's to take Ray Roberts from a 20 MGD million gallons per day capacity up to
26 million gallons a day that's under design you'll hear a little hear a
little bit more about that later on in the presentation northwest booster pump
station and transmission line the design has been complete and the north west
north-south water pipeline I-35 to scripture is under construction with
regards to technology we're currently evaluating there's assessment being
conducted currently to evaluate the need to transition our metering platform from
its current platform which is an automated meter reading system to an
advanced meter reading infrastructure this man regarding the Lake Ray Roberts
water treatment plant capacity what does rewrite mean rerate is to we have to
apply to the states we make improvements at the plant that improve the capacity
our ability to treat water and so we have to apply to the state to rerate it
because it's so the state determines how much capacity the plant is allowed to
produce so that's what the rerate means okay thank you thank you
just waiting for it to advance okay so our goals for 21 22 are to complete the
Ray Roberts treatment plant project again rerating it from 28 million gallons a
day to 26 million gallons a day complete the construction of the northwest water
pipeline I-35 to scripture relocate the water lines along I-35 as part of the
tech stops project complete the construction of the northwest booster
pump station and transmission line revise our emergency response plan
response recovery plan based off of the most recent winter storm I believe house
bill 2 required us to to look more closely at backup power generation and
dual feeds to our facilities survey the distribution system to identify the lead
service lines in compliance with the lead and copper rule implement the
recommendations if any from the advanced metering infrastructure study and then
develop an asset management program for our vertical infrastructure again the
vertical infrastructure is that those plants booster pump stations lift
stations so some some operational data this is the 2020 2021 production and so
if you can see we got highlighted right there in February we had a slight uptick
in demand on the system from the tropical storm you can see that it looks
like you know demands are tapering off in May that's primarily due to wet
weather I just checked with our superintendent over water treatment this
morning and from the end of May to to current we're right about 630 million
gallons of production so we're back up in alignment with what we should be so
I'm sorry that the graph doesn't show that right now this this graph shows the
the max daily water demand in the system the light blue line represents the
demand system wide and that's based off of it's a very conservative estimate
looking at our demand plus the impacts of a drought without any conservation
measures the dark blue line represents the growth and additional capacity
needed the dashed black line shows our current capacity between both Ray
Roberts and Lake Louisville and then remember we talked earlier about that
rerate project over at Ray Roberts that one we looked at we're expecting to
complete construction in 2022 which will increase that capacity and that's what
that black line looks like so we're we're we're right on on schedule for our
expected growth so some other operation operational information regarding our
major maintenance hydrant flushing and meter replacement or two matrix that we
look at we in 2019 we flushed roughly 10,000 hydrants roughly 11,000 year to
date we're at 5,900 we'll end the year we believe at 9,000 hydrants being flushed
and that's more for water quality to remove sediments from the lines and our
goal for 2021 is 9,000 hydrants meter replacement this again this is an effort
to ensure meter accuracy to replace the ones that are failing in the system in
2018-19 we did 2,800 we're currently at 945 and we expect to end the year at
about 1,500 meters the asterisk in our projections for next year is going to
it's predicated on the results of the AMI study if whether or not there's a
recommendation to replace the platform so that will influence those numbers
another another matrix we look at is the replacement of our infrastructure so we
have in-house crews that do water line replacement and we have capital projects
that deliver projects for us for the horizontal infrastructure that sets the
water lines and the valves in 2019 the organization made a very strategic move
to align the replacement of the water infrastructure with our street
rehabilitation bond program and the capital team has been leading that
effort and if you can look at the numbers just across the bottom in 18 to
19 we only did 17,000 linear feet in 2019-2020 that number went up to 30,000
linear feet we're on track this year to hit 40,000 linear feet and our goal for
next year is 41,000 linear feet and that's primarily due to that that
realignment of efforts and I think with that piece I'm done with the operational
pieces and all but I'll still be hanging around so we have the wastewater budget
to present and I'll turn it over to Nick now thank you thank you Steven just want
to say Steven and his team's been great putting this budget together so doing a
great job there I definitely appreciate their work so the financial assumptions
really quick want to review these to everybody before we get started looking
at the pro forma and the revenue we do have a 2% growth forecasting out years
for our volume forecast that Stephen had reviewed with you shortly ago and the
hunter coal ranch rate revenue is included starting in fiscal year 2023
there's a 2% again we are continuing to utilize impact fee funding to revenue
fund eligible projects I realize a couple of the board members may not have
been here last year and we talked about this so I'll definitely review it with
you here shortly and the forecast does include the hunter coal ranch development
starting in fiscal year 2023 this is consistent across each of the utilities
but we did want to bring this to your attention and then a 3% growth and
forecasted and expenses in the out years this is the detailed revenue by
operational area so you can see residential water cells at the top line
second commercial water cells and you see water for resale and so let me walk
you through this really quick 2021 is the current fiscal year we're in this
will run through September 30th of this year and you can see we had budgeted
revenue of 49 million we are forecasting that to come in a little bit below
budget is based on some of the recent wet weather that we've had in the water
utility or you know in rainfall so the water utility is forecast a little bit
of revenue decrease so I'll show that to you in the 10-year forecast there's a
little bit more planned use of reserves that we're planning on this year than
originally budgeted for in 2022 you can see we have planned revenues of
52.2 million expenses by category so all the expenses within the utility there's
a vast number of object codes we budget for object codes could be anything from
public safety you know equipment PPE it could be office supplies we roll those
up into those these categories as to starting at the top you can see we have
personal services we go down to materials and supplies maintenance and
repair insurance and miscellaneous a little bit of return on investment and
franchise fees and then moving down the page you can see some supplemental
packages that are being requested this year so in fiscal year 2022 the
preliminary budget has 51.5 million expenses and supplemental packages are
simply those new requests those new initiatives the department's looking to
do this upcoming fiscal year we'll review those with you shortly if you've
got detailed questions Stephen can definitely address those for you this is
the expenses by operational area so you can see water administration and you
can see utility administration to mr. Rodback's question of that one going
away in fiscal year 2021 it was combined with admin and you can see
sustainability and there were a few questions on that earlier production
distribution metering lab and total expenses for the preliminary budget
which in your very far right column is 51.5 million so this is the ten year
forecast I'm gonna spend a little bit of time on this slide just really walk
through it and give you as much detail as possible and answer any questions that
you may have once we get through the presentation if I need to pull this back
up and be happy to do so so fiscal year 2021 is the current budget that we're in
here in this column and you can see that 49 million in revenues that I reviewed
reviewed with you on the previous slide and expenses of 52.9 million so the
adopted budget did have 3.9 million in reserve usage adopted by both the PDB and
City Council this year we are forecasting about 48.7 million in
revenues this coming year so a little bit less in revenue due to some of this
recent wet weather that we're experiencing and you can see end of your
expenses about 51.5 so still planning to use some reserves 2.8 million that we do
fully intend to monitor this as we progress through the summer we
definitely are bringing an update this fall or next spring for this utility so
the preliminary fiscal year 2022 budget is in this column right here that I'm
pointing to we have 52.2 million in revenue and 51.5 million in expenses and
you can see five hundred thirty one thousand in supplemental packages that
are included on this line for total expenses of 51.5 that I mentioned so we
do have a surplus or a positive revenue of six hundred eighty six thousand this
coming fiscal year in the preliminary budget moving down the page we talked
about this in April a little bit but you can see the reserve requirement the
current reserve both in this utility so in the blue is the current reserve that
we have from an operating standpoint so you can see in the preliminary budget we
have 20.2 million in reserves with that target that we're not recommended to
change to be 16.5 to 24.7 so you can see we're well within that
reserve target in the current year I do want to point out that we stay above it
each year we slightly dip a bullet below in 2031 and there are a few years that we
do show some net income out here starting in fiscal year 24 through 2027
5.4 million in 2025 with the goal being is to build up a capital reserve to help
us fund that debt service that new plan expansion coming on so many PB members
know we do have a large capital expense about 90 million plugged into the
pro forma starting in fiscal year 2026 that debt service will actually start
hitting us excuse me it's in the pro forma in 2027 that debt service will hit
us in 2028 so when you see this number jump from 16.5 to 21.3 that is that debt
and our full intention is to build that fund balance up to help offset that debt
moving down the page a little bit more we do have an impact fee capital reserve
you can see it does have 9 million in it that money does go away in fiscal year
2024 our intention is to take 9 million out of the impact fee reserve and cash
fund the design of that lake facility so really trying to minimize that debt
issuance for that plan expansion the plan development lines and the impact
fee reserve those are just result revolving lines that we carry forward for
different developments and may come in the community let me see if there's
anything else in here I want to point out we can come back to this of course
first questions would be happy to answer them in a little bit this is the
preliminary five-year capital plan for the water utility so what we've done is
we've summarized it by different debt issuance or revenue funding for this
utility so in fiscal year 2022 we have 41 million planned in debt issuance you
can see that number right here in this column revenue funding so this is funded
by that rate revenue that we charge our customers for operating 9.9 million of
revenue funding we had some aid in construction impact fee funding so at
3.5 million that you see there that is revenue funding eligible projects and
those projects were called out in a study that we completed in 2019 and
their growth related and what that does is that allows us to minimize the amount
of debt we're issuing for those projects we're really trying to focus on cash
funding any projects that we possibly can and you've seen some vehicle
replacement of 309,000 for a total capital plan of 55 million one thing I
will say this year we are doing the capital plan a little bit differently to
make sure that we are cohesive across the city that we are communicating we
actually have an internal department meetings with engineering water
wastewater electric to make sure for budgeting for a field service
replacement job in the water utility the streets department knows about it just
to make sure it's consistent across the city so those conversations are ongoing
this budget could change slightly based on those conversations but I just want
to bring that up to the public utility board makes you aware of it so what is
aid in construction it seems like it's a grant sort of aid in construction is
simply contributions we get so from developments that come into the
community that may install waterline we get that revenue this is gives us the
mechanism to expense that so it's separate from the impact fees that is
correct it is separate from the impact fees it's actually revenue funding
revenue received from developments yeah what we want to do this is not an
extensive list of all the projects that the public utility board like to see it
will be happy to provide it this is the major projects these make up thirty eight
point five million of the capital plan this coming fiscal year and you can see
the Northwest transmission lines which is fourteen point nine million the
Ray Roberts capacity rerate and performance upgrades at Stephen
emission earlier of 11 million we have Elman Locust of four million and then
the annual field service replacements of two point eight million these are the
ones I mentioned earlier really important we do those cross-departmental
meetings to make sure that we have a consistent capital plan across the city
and we can touch on this if you want this is an example of how we manage
those cash flows one one other thing we did in the capital plan this year is
really we met with Stevens group and we had them take a look at the cash flows
of different projects the main reason for this exercise is to make sure we're
not issuing debt early or earlier than it's needed so this is really a good
exercise we did this year with the apartment so you can see for example you
know fiscal year 2021 for the booster pump station they only needed a million
dollars we could delay issuing that additional nine point four or five
million till 2022 so really looking at those projects in time and amount from a
cash flow perspective this gets into the budget request these are supplemental
packages that I mentioned earlier serves four hundred thirteen thousand five
hundred dollars worth of supplemental packages you can see anything from system
repair materials of twenty five thousand the major ones being those line location
for a hundred and fifty thousand and then the street rehab for two hundred
thousand and when it says streets workload what that is that's to hire a
contractor to come out and help us and do the street cuts repair the the street
where we fix those water lines and the street department is extremely busy on
their end too so we like to get some help in for the water utility so just
clarify on that amount all you really have to pay for is that four foot on the
top the pavement portion of the two to four foot of whatever your cut is right
that's that's correct yeah yeah yeah it's almost like if you think about it
the field service replacements or the water line itself or budgeted for in the
annual filter replacement this would go to our contract we help us repair those
patches actually sure I think I got through here let me scroll the bottom of
it
the calendar so this is in each presentation we do not have to review
the calendar in detail in each of them we definitely want to give you a glimpse
of what's to come in the coming weeks as we continue our talks of the preliminary
budget so June 28th of course today we're doing the presentation July 12th we have
a conversation coming up with a PB will also include a rate discussion so to
mr. Rob backs question earlier regarding the rate structure that presentation
will include some considerations for the PB to consider in this upcoming fiscal
year on July 20th we have the DME City Council presentation July 27th water
wastewater is always will go forward to City Council but then July 26 at the PB
and rate approval and then we get into that proposed budget being presented
it's actually August the 2nd not August the 3rd apologize that that error but
it's actually August the 2nd is the City Council budget work session so budgeted
option will be September 21st and then I'll take it down for questions for
Stephen or myself Mr. Chairman I have a quick question or is a pub board part of
that City Council workshop you mentioned on the schedule mr. Robert currently
and this the PB historically has not participated in the budget workshop
annually you know if you'd like to have a joint meeting with City Council we
could talk about that but the budget workshop itself at the beginning of
August the Public Utility Board is historically not been included oh my
question is purely informational since I'm one of the newer members of the
board thank you I just had a quick question about the the bond debt can you
remind me how far we have bonds approved how far in the future so the the PB and
City Council only adopts the first year of the budget so this year you'll adopt
the fiscal year 2022 budget you'll give us authority for the operating budget
the capital plan for this year okay not adopt future bond issuances those are
just potential that's planned that's our planning purposes right to the plan we
what we're looking to do is plan future rate increases if we need them looking
at the holistic picture of ten years and looking at that capital plan it helps us
feed that ten-year picture but you only adopt one year in the utilities so it's
really a ten-year I think I was surprised that in a lot of these
presentations the bond debt was equal to the production expenses worse or so and
so I think we all sort of want to reduce the bond debt or see if you know a
future in which we're not depending so much on debt so absolutely yeah
absolutely and we look at that every year and yeah and you bring up a great
point that that is the focus of the utilities is to try to maximize the
revenue funding as much as possible without putting an undue burden on the
ratepayers and minimize that debt issuance and it helps us you know
minimize that debt payment over a ten-year period in doing that and I
think that was one of the main reasons for starting to use impact fees to
revenue from projects was to delay that bond issue and so absolutely okay thank
you any other questions for Nick this item then chair if I may if we could
move environmental services up David Gaines the assistant city managers here
to give that presentation and then maybe we'll flip to wastewater after that if
that's okay with everybody okay any problem with that at all
good morning David Gaines assistant city manager I know there was some
discussion on environmental services as we went through the water presentation
understandably so wanted to just pull this a brief presentation that we have
regarding environmental services up and really from my perspective just talk a
little bit about what the changes were making with environmental services so I'm
going to talk about that at a high level I'll go to the presentation very quickly
and we obviously have staff here to answer any specific questions that you
have so what what what we're doing with environmental services is fairly
straightforward we are taking all the positions and the divisions that
currently exist
so we're taking all the oppositions in a vision that currently exists both in
solid waste and water water houses our environmental services team right now and
solid waste houses our sustainability team and combining those into one group
and then we're going to hire a an environmental services director so
that's not a position that's it that's existed thus far we have an environmental
services assistant director and obviously our sustainability group
really the purpose of doing this of combining the groups first those
divisions have a lot of synergies they all work they work together very well
but also having a position coming at the director level to to head our
environmental services team is important for the city right now given where we
are given the focus on environmental issues as we move forward so this has
been something we talked about at a high level with the city for the past year or
two to get to this point so we'll feel really good about the path that we're
taking and placing that emphasis by getting a director level position I
think as you know we had Dr. Banks here he was he had such a history with
environmental services but also with water wastewater that he wore a lot of
different hats this makes a lot of sense to create a separate division and it
also gives some of that accountability to the water group I think it's worth
great having environmental services in water from the pretreatment the
laboratory and down to the the watershed as well but having that as a separate
division does add something because a lot of what they're doing right is
checking what water and wastewater do so that that works out very well but
obviously there's going to be one of the priorities as we go forward and hiring
that position is that they can work across the organization with all of our
utilities and throughout the city so that's the purpose of making that change
as far as from a fund perspective these will be housed in the water fund similar
to how drainage is housed in the wastewater fund it'll just be a section
of the water fund from a funding perspective but be a separate HBU but it
does mean those positions are moving from solid waste over to those in the
solid waste fund over to the water fund and there'll be appropriate transfers to
to to go with that so that's again at a very high level what the change is as we
go into the fiscal year I'll run through these other the rest of these slides at
a high level as well and as I mentioned we have staff if there's any specific
questions on the detail so here you can see all those positions that I mentioned
grouped together it's total of 33 positions we are moving and you kind of
see the asterisk there in sustainability there's one position that works with
parks that's been in the sustainability group or we're just simply moving that
FTE out of parks as that's the appropriate placement of the FTE and I
high level some of those accomplishments from each of those groups sustainability
some very significant accomplishments a lot of work over the past year and
adopting the simply sustainability framework and then establishing that new
committee for implementation and then you see the last bullet point there just
want to again focus on that as we're all aware as we continue to make progress on
the comprehensive solid waste management plan environmental services again some
big ticket items over the past year with the TCEQ industrial pretreatment
streamlining and then obviously we've had a number of conversations on the
mosquito surveillance response plan as well so a lot that's been done over the
past year some of the goals for the groups heading into the next year
implementation of that frame of the sustainability framework for sure will
be a priority and then you can see each of those as we move down the list from
reduce recycling contamination to the community assessing the community
hazards and vulnerabilities on environmental services we're continuing
to expand those programs and cross-chain training with our watershed
protection gas well inspection staff and pretreatment obviously as we look to
bring in a director over all these groups these will be priorities as we
move into the next fiscal year budget highlights fairly straightforward here
you can really the only change you see as we look into preliminary budget just
from a financial standpoint is the sustainability group as we've lost that
position though that positions moved over to parts I will also point out that
the director position was able we were able to move positions around and use
vacancy to create the director level position and that is reflected in those
preliminary numbers
budget requests there's only one budget request and that's for an additional FTE
with our watershed group the stormwater inspector and this is really to meet our
goal of the three-week inspections right now our time frame is more in the five
week range of when those inspections get done so adding this FTE is with a pure
intention of meeting the goal of three weeks that we have set out for stormwater
inspections and that's it for the presentation I'll take the screen down
and happy to answer any questions about the the change that we've made from a
organizational structure and obviously we have staff available to answer any
detailed questions on those goals or moving forward any questions no thank
you all right thank you
[Applause]
it just proves you can be taught so for the wastewater business unit of water
utilities department the budget overview this is the organizational chart we went
through earlier with regards to the FTE summary David mentioned that new
stormwater FTE for the inspections looking back at 2019 and 20 we had 21.5
positions in 2020 to 2021 that was reduced to 107.5 and then the 109.5 in
21 22 represents the two new positions moved in from from from solid waste major
maintenance or our focus areas and status updates again major maintenance
infrastructure improvements and improvements to planning with regards to
major maintenance Hickory Creek old Alton lift station replacement is to be
completed in 2021 Lakeview interceptor project is currently under design with
regards to infrastructure improvements to the concrete water reclamation
facility solids handling project phase one is under design Hickory Creek
detention facility is under construction the Hickory Creek interceptor sewer phase
one and phase two are currently under construction and with regards to
improvements to planning I believe last week or the week before you approved the
us moving forward with the wastewater master plan and that is in in progress
for our goals for 21 22 we want to bid and mobilize the construction of the
concrete plan expansion phase one complete construction of the Hickory
Creek detention facility complete construction of the Hickory Creek
interceptor sewer pipe phase one to bid and mobilize on the construction of
Hickory Creek interceptor phase three and the dry fork interceptor project
complete construction of ropes and ranch water main connection projects
initiate the decommissioning of the ropes and ranch water treatment
wastewater treatment facility and complete an update to the impact fee
study like the this is very similar to that demand chart that I showed you on
the water side but this is really driven by TCEQ so that's the Texas Commission
on environmental quality the regulations clearly state that when a facility
reaches 75% of its design capacity so the capacity that that facility was
designed to treat we have to be we have to start designing a new our expansion
the regulations also state that when we hit that 90% of design capacity the
utility must be under construction of that expansion and so if you look in at
this chart in 2021 we get that 75% capacity mark we're currently under
design of the concrete improvements and we should we are on track to have will
be under construction next year on those improvements so we're well ahead of
schedule wastewater operational data major maintenance and linear feet so
with the collection system we clean and inspect the system annually and quite an
aggressive amount of linear footage 19 and 20 we got over a five hundred and
almost six hundred thousand linear feet of collection system cleaned 131,000
linear feet inspected we're on track for 2020 21 to complete the year with 120
linear feet 120,000 linear feet of inspection and 675,000 linear feet of
cleaning the goal for 21 22 is 120,000 linear feet of inspections and 675 linear
feet of cleaning like on the water side that alignment with the capital team and
the street rehabilitation program you can see the value in that that
adjustment in these figures right here 19 we were only able to install roughly
15,000 linear feet of pipe after that shift was made we did 21,000 this year
we're on track to do 31,000 and our goal for 21 22 is 31,000 and I believe that
was really quickly and I'll turn it over to Nick thank you
thank you Steve all right I'll walk us through the financials for wastewater so
the financial assumptions I want to review each one of these with you but
this is consistent between the water and wastewater utilities we do the two
percent growth forecast in the out years for the volume forecast and that 100
coal ranch development being included in fiscal year 2023 or starting in fiscal
year 2023 and these are revenues by different operational areas so you can
see very similar to water you have wastewater residential wastewater
commercial wastewater wholesale and we have other wastewater revenue and then
you have your cost of service transfers into this fund to recoup any charges or
a cost associated with doing activities for other operational areas around the
city we do have an impact fee transfer in a 4.2 million this upcoming fiscal
year and very similar to water we are using a portion of that to revenue fund
eligible projects these are expenses by categories and so as explained in water
these are grouped based on the type of purchases they may be so you can see
personnel expenses materials and supplies maintenance and repairs
insurance miscellaneous and skipping out to the bottom you can see that some cost
allocation transfers I'm going to the general fund other departments about the
city and then the capital outlays that revenue funding of projects and this
utility does have seven hundred eighty six thousand in supplemental packages or
review those with you here shortly and then expenses by operational area so you
can't see administration is going to zero it is important to note that this
group was combined with water administration that we visited about
earlier we have water reclamation horse collections filled services the drainage
utility is included down here so for several public utility boards it may be
new we do show drainage separately but ultimately it does roll up into the
wastewater fund so we'll show you perform on drainage here shortly okay
then total expenses of thirty seven point nine million in the wastewater
utility you can see that number right down here so very similar to water this
is a ten-year forecast I'll do my best to walk you through it as detailed as
possible as slowly then we can take any questions that you have so fiscal year
twenty twenty one you can see here we had thirty seven point two million or
thirty seven point one in revenue we had thirty six point nine million in
expenses so we didn't have a budget basically a balanced budget in fiscal
year twenty twenty one finished near about two hundred ninety two thousand
dollars positive we are forecasting to come in a little bit better this fiscal
year based on our volume forecast our flows within the wastewater fund
revenues about thirty seven point one million but those expenses coming in at
thirty six point four so total revenue about seven hundred thousand with an
ending fund balance you can see right in here fifteen point oh six the targets
that we discussed in April the minimum being nine point nine and the maximum
being thirteen point nine so actually above the higher end target for this
upcoming or ending this fiscal year so great news for the wastewater department
the preliminary twenty twenty two budget and you can see here in this column we
have thirty eight point six million in revenues moving down to the expenses you
saw on the previous slide the thirty seven point nine million finish in the
year about six hundred fifty thousand dollars positive so about fifteen point seven million ending
fund balance which is well within that reserve target that you see down here no
forecasted rate increases very similar to water we're not forecasting rate
increases this upcoming fiscal year I do want to point out in the future years you
can see we do have some one percent rate increases plugged in starting in fiscal
year twenty twenty nine in twenty thirty and the reason for that is to keep that
reserve target above that minimum that minimum target in the future years as
some of those planned expansion projects come on board that Stephen was talking
about moving down the page a little bit more you can see we do have an
impact fee reserve about nine point five million currently in that reserve for the
wastewater utility and then we have a drainage reserve we do dedicate one
million dollars to the drainage reserve you'll see that on the next pro forma
so this is drainage broken out of the pro forma that you just saw so in
fiscal year twenty twenty one the adopted budget that we're currently in
total revenues of five point nine million with total expenses of five point
nine the biggest majority of their budget has been on what we call channel
rehab so maintaining those drainage ways around the city makes up the biggest
portion of this budget so you can see they do plan their expenses to come in
about five point three but the revenues being equal to the expenses of five point
three what are you moving into the polymer do you think that number right
there went down what what is it the inability to get construction projects
going you think or yeah housing I don't think Daniel's here today or Danny
Kramer but the majority of it is I think what with covid with some of the
weather we've been having and getting some of those projects executed the
numbers is coming in below budget it's trending below budget so you know there
are future conversations to come with drainage in the capital plan when we do
the citywide budget discussion for the the capital initiative I was talking
about earlier part of that will be some drainage projects included and we can
talk more in detail about that if you'd like to chair but I do believe in the
brief conversations I have with Danny that is the majority it's not a huge
difference it just raise an eyebrow almost ten percent so yeah so if I can
get this my presentation here okay so preliminary but we do have budgeted
revenues of 5.6 million and then budgeted expenses of 5.6 for any PB
members that may not know these drainage revenues are part of the
wastewater fee schedule they're charged for impervious surfaces of different
businesses in different properties around the city so just want to point
that out that's how the drainage fund or the drainage department gets their
revenues so the five-year capital plan very similar to water we do summarize
it by different debt issuance or revenue funding so this upcoming fiscal year we
got forty point one million in debt funded capital revenue funded projects
about five million 80 construction 82,000 an impact fee funding of 250,000
we don't have quite a few eligible projects is coming fiscal year in the
wastewater utility as water is the reason that number is 250,000 instead of
more so wanted to point that out for the public utility board and we did some
vehicle replacements about 1.4 million so preliminary capital plan for fiscal
year 2022 is 46.9 million major problem I have a quick question before you move on
yes sir what is the term aid in construction what that is that is
contributions from different developments in the community to fund
their part of a development or an infrastructure within wastewater what
that mechanism does in the capital budget that gives us the tool from a
budgeting standpoint to expense those funds for us to perform that work on
their behalf that's that's what that represents understood thank you very
much so that's like a developer saying I'll give you the money instead of me
doing the work and you may upsize that's correct okay and we have some those come
in usually each fiscal year some fiscal year is not as much as others but
typically it's pretty consistent major wastewater projects so these are
included and in the pro forma and Stephen had mentioned several of these earlier
the solids the solids handling project of 14 million the Hickory Creek wastewater
treatment plant land acquisition of 5.8 million to name a few other large ones
here we have the Hickory Creek interceptor 3 or phase 3 project of 4
million and then we have the 2019 bond election to support those projects are
identified in that bond election we had here a few years ago of 2.9 million so
total on this page is 33.9 million this is not an exhaustive list if you'd like
that list we'd be happy to provide it but we wanted to give you at least a
glimpse of the major ones
same thing here this table is just simply to mint the tele staff took an
extra step this year in the last couple years for that matter from looking at a
cash flow perspective of how much money we need and really not issuing that debt
before it is needed so really lessening that burden to the ratepayers this is
the supplemental package summary so in total that I mentioned earlier 701,000
and the first one being the system repair materials for 250,000 is just
simply material costs have gone up of last several months I'm sure people on
this board are familiar with that the streets cut of 215,000 very similar to
water this is the wastewater component of that and then we have the other line
the other big one being here the line location just reallocating resources of
150,000 if detailed questions on these Stevens here to address them but that's
the summary of the supplemental package is being requested and all these are
included in the pro forma with no no proposed rate increases this fiscal year
the calendar again next conversation will come back forward to the public
utility board the 1st of July or July the 12th which will include that rate
discussion in response to that memo that you saw earlier from internal audit and
I'll pull the presentation down for questions questions doesn't appear to
be for this one thank you okay thank you and then next we have solid waste if you
if you would buy I'd like to take a quick break come back you can just five
minutes okay with everybody okay we're gonna reconvene it's 1016 I believe
Brian you're up with solid waste city of Denton and this could be one of the most
exciting budget budget presentations you will see all day so we'll go ahead and
get started here
let's start off by sharing a little bit about the department this is our
leadership team I've got Eugene McKinney who is my deputy director Tammy
Klausing who's with me today she is our business services manager James tip
that's our administration manager I put Katherine Barnett on this she is not
technically a member of our salt of the solid waste group she is in the
environmental services team but she is really our right arm being outreach
sustainability we support each other so closely from a functional standpoint
it's important that we represent them in their contributions to the city and to
the organization from a functional standpoint we we rely on each other
organizationally administration site operations it supports collections
business services we're all working together to ensure that we have the
highest quality of service to the city of Denton's residents and business
community from a personnel standpoint we started in 1920 with 123 folks mid-year
this last year we actually added three positions a wellfield technicians to
help us manage our landfill gas systems one that were in the process of
converting from our DTE program into our high BTU landfill gas energy system in
what you see in the in the 2021 is actually the loss of the three public
service or public outreach folks in sustainability actually going to the
sustainability department excuse me the environmental services department so
again it's really a net zero across the board from a a carry forward
standpoint as proposed from an operational standpoint want to share a
few metrics about things that are happening within the department first and
foremost any time I get up here and I talk about what we do you'll hear me
talking about safety safety is key in the solid waste industry we are the
fifth most dangerous service sector to either work in or be related to I mean
you're more likely to be in an accident or to be injured than you are to be a
police and firefighter across America to be a solid waste worker so again it's
important for us to put in programs and policies that help reduce our incidents
of accidents and injuries and you'll see that in this year the first six months
of this year we've had a 35% reduction in at fault accidents as well as 60 60
percent reduction in injuries what's interesting is that that reduction in
industry in injuries is directly tied to are changing from the plastic bags that
we were collecting yard waste into and having to tear open to a going to the
cart and the and the paper bag service we had a 0% worker comp claim and lost
time as a result of making that change so again we're it's a program success
that we look forward to expanding and carrying forward in the future when we
look at growth growth is a four-letter word right now City of Denton sitting on
top the the Metroplex right now growth is coming we've got to get ahead of it
and right now in this past six months we've seen a 1% growth and that's with
COVID and that's with the shutdowns and everything else we're anticipating
really about a two-and-a-half in reality anywhere between of about three and five
percent home count growth in this year alone just people moving in and that's
not counting the commercial sector that comes into support of these folks too so
again growth is coming and we've got to get ready for it
temporary students exactly you know this this doesn't really take into account
all the renters moving in and out also because those are really net-zero because
those homes turn but again all the new apartments that we have coming in that
that is an impact from that we have to have to prepare for we talked about
commercial service that's not only the business the multifamily sector is in
that commercial service opportunity we started this graph actually with the
start of COVID because as businesses were closing they were reducing the
amount of service they had we and we we kept this chart going to really show
what of our increases are and since the beginning of this year we've had 419
yards per week added to our system now what does that mean basically that's
418 yards of garbage that we have to collect in a can somewhere that is a
route that is a person in a new piece of equipment so out there servicing so
again it is again is that is that four-letter word of growth that we have
to keep looking for but we also have to prepare for too Denton is alive it is
vibrant it is growing another sector that we look at is roll-off this is
directly related to the construction industry you'll notice back in October
and again these percentages are year over year so it's last year presented to
what we're seeing in this year and again in October November December cooler
months but again we saw a significant some significant increases even though
we were still in COVID still we saw you know 5 10 15 percent growth and once the
the city opened up in February March and April you'll see a 40 percent jump a 30
percent jump year over year right now we're trending at about 16
percent growth in our roll-off business we actually excuse me we're realizing a
16 percent growth but we're trending at about 35 percent again it is a tremendous
growth sector that we're constantly having to chase and as the business as
the building boom keeps keeps ramping up construction keeps going on this service
sector will only increase over the next few years one of our things that we like
to talk about is waste diversion a lot of people caught talk about recycling
rate but we want to talk about it in a much bigger sense when we talk about
diversion it's everything that we collect that we don't send to a landfill
so everything that's you know whether it's our yard waste whether it's our
recycling whether it's appliances that are brought to the landfill that we end
up sending out to metal recyclers 18 percent of everything that's brought to
us either from residential commercial we collect at the HCC we actually turn
around and beneficially reuse it in some way shape or form so whether it's in the
dyno dirt whether it's y'all sending it off to our third-party processors again
sending it for metal recycling a tremendous amount and this is consistent
with what we're seeing in the North Texas area so again and we're looking to
really improve that over the next years the next few years this next slide is a
point and I apologize for it I'm sad about it but again one of the issues
that that we see right now is in our residential and commercial recycling we
have a 64 percent contamination rate it is a point a lot of that has to do with
COVID and people being home a lot of that has to do with the change in
recycling market three years ago Asian countries basically said no more so
the amount of material that we're able to recycle just actually get into the
market and have processed has dropped the quality requirements of these
third-party processors has gone through the roof city of Denton has aspirational
recyclers we want to recycle as much stuff as we can but unfortunately it's
not in our program so again that is considered contamination one of the
biggest things right now with the very very poor resale prices that we have is
wet material either wet material wet stuff is put into the cans itself or you
know the last eight months have been extremely wet here in the city of Denton
it get rain it gets rained on water is very very heavy eight pounds to the
gallon so you know when you're trying to rate separate what is water what is
actually recycled material you know discretion be to be in the better part
of valor you put that you throw that wet material away so again it
significantly compresses the ability that we have to get high quality material
back up to the third-party processors the shining star in this though is back
in November we actually implemented what we call the Rubicon system it's our
smart routing system what that's been allowed us to do is not only you know
right size our routes but it also gives the driver the ability to help us
identify where this contamination is occurring they see a contaminated card
at a residential they punch a button we capture that address specifically we
know from our routes you know commercial routes if they see something
heavily contaminated they can push a button because a lot of times when you
dump those cans until it's in the hopper you don't see what's down in the bottom
so they can tap it there and that gives us sustainability our account
coordinators the opportunity to go out and one-on-one and individually make a
difference in reducing this if I was giving this presentation back in October
of last year that number would have been in the low 70s so in six months we've
made a significant contribution and ability to drive that number down and we
hope that by the end of this year this number will be significantly lower yes
ma'am I was going to say one of the things that I think you've done very
successful in educating people is putting what you can put in the bins on
top of the bins yes but you probably cannot advertise or communicate enough
about what you can recycle I I think people are getting it more than they used
to but it's just something you have to be quite persistent with it is and you
know with the high number of rental units so we have single-family rent
rental use that we have here students moving in students students moving out
we're constantly chasing our tail having to educate and re-educate and re-educate
and you know we're currently toying with sort of a welcome wagon program for lack
of a better term somebody goes in that to turn on a utility they get so much
information from the city of Denton and solid waste that really what it does it
opens up the opportunity to say okay you know this is what the program is not
just there's recycling program or worse yet this is how we did it back where I
used to live because we you know we've got a significant different set of
things that we can take and that other cities don't have so you know it's it's
it's okay it's not only education but it's also re-education well one of the
things that most common that we see is you can put the pizza box in there but
you can't put the piece that the pizzas on in there because it has food on it
well and again if there's if that piece that that that pizza box is stained with
grease in any way that can't go in there you can possibly tear off the top and
put it in there but that grease is contamination it has to go away yes ma'am
oh I just wanted to say you need to advertise the waste wizard yes I mean
that would be something to really push because I found that very useful and for
those who may be watching on TV the waste wizard basically it's a it's an
it's a it's a database so if you are if you have a question about whether it can
or can't be recycled go into city of Denton recycling page type in what you
have and if we'll take it it says yeah managing it this way if we can't take it
it says we'll try this opportunity or this opportunity so again it gives you
it just doesn't say yes or no but it does give you significant direction on
how to divert that material places to donate or ways to reuse it correct okay
all right so we will continue here so again moving into the budget
you know last year even with kovat I'm gonna have to brag on it's probably some
of the hardest-working people here at the city of Denton you know there are
certain folks who did a yeoman's work from their house you know they moved
basically their office to their their living room their kitchen to the home
office and and kept this city running but city of Denton solid waste folks day
in day out day after day they were showing up for work they were picking up
garbage at the curb they were picking up recycling at the curb they were picking
up and they did it and not only that the people but when we had folks get sick we
had crew leaders and supervisors and managers jumping into trucks making sure
that that garbage was collected and we had a safe and clean and sustainable
city so again just a huge shout out to these folks they they they don't get
enough credit you know we do 350,000 service stops a month for our
residential standpoint and again they do it and we appreciate the fact that that
they're out there doing it so again we continued with this with the slowdown
and then the shutdown I talked a little bit about a Rubicon smart routing system
we're six months in and every day is a new day just exciting about what it can
do for us what it what we wanted to do for us so we continue making those those
improvements as we're going along we've talked a lot about our scale house
system it's at the end of life so we finalized the acquisition of what we
call what's called the strong data scale house software system so within this
next year the implementation of that will occur and we continue working on
the landfill expansion through our permit 1590 B at the state we're getting
very close to having that awarded as we look forward to 21 22 again landfill
expansions first and foremost we want to tie that up make sure that that we've
got the capacity that you know looking forward secondly David brought this up
but again our comprehensive solid waste management strategy we're looking
forward to that completion so we can plan in the implementation of what we're
looking at you know Mark I don't know if it was Mark Twain but said you know if
you always do what you always done you always get what you always got well you
know even if you're trying to do it better you're always going to get what
you always got and I think what this opportunity is going to allow us to do
is look at it differently so we can affect it differently so we can make the
changes that need to be made to ensure not only that we're fiscally responsible
but protecting diverting being as safe as we possibly can again reducing
contamination fleet performance uptime and downtime we talk about our drivers
our fleet is really the key to making sure that we can deliver those services
so you know working with our fleet services so we can keep the trucks on
the road you know and not having them sitting in shops that's probably the
one thing that really hurts us and is downtime and with the chip shortage that
everybody's talking about you know new vehicles really are not not available so
we've got to maximize use of our existing fleet one of our old landfills
out on Mosley Road there's some long-term maintenance issues that we're
going to have to work with so well we'll be impacting those in 2122 and again
continuous improvements to cost safety and service delivery turn it over here
to Nick to talk about our budget itself thank you Brian so I'll say the same
thing Brian and Tammy and all the staff has always been great putting this
budget together so just want to give them definitely credit so really quick
revenue projections that we do have the 2% forecasting out years so very
consistent across the utilities we are forecasting the hunter coal ranch
development in 2023 and then the cell construction actually took place this
fiscal year but we wanted to put it on here just to reiterate with the the PV
members that were continuing to focus on revenue funding as many projects as
possible so definitely wanted to point that out to you these are the revenues
by different operational areas so you can see the adopted 2021 budget which
we're currently in right here you can see residential revenue residential
recycling front load side low which is typically commercial could also be a
little bit residential mixed in there we have some roll-off open top revenue and
then moving down the page another big category is a landfill gate revenue so
total revenues for the adopted budget is a 39.8 million you see here we are
forecasting to come in a little bit below that I'm at 38.5 million and then
the preliminary budget for fiscal year 2022 is 39.8 so really getting us back to
where we were in 2021 solid waste expense by category so these are those
different expense items within the operating budget grouped into different
categories so you can see materials and supplies maintenance and repair
operations transfer franchise fee administrative cost revenue funded
capital and vehicle replacement so in 2021 you can see adopted expenses of the
44.1 estimated a 43.4 so a little bit below budget and then the
preliminary budget of 37 million and I will point out that the majority of this
decrease is for the cell development cost so on that first bullet point or
that first slide that we had we had the revenue funding capital you can see here
was 6.4 million we have expense that money from the operating budget this
fiscal year to revenue fund that cell development so it will go away next year
so the majority that decrease is associated with that this is the expenses
by operational area or division so the solid waste administration division
residential commercial solid waste disposal which is also the landfill your
home chemical collection division side operations miscellaneous and any
supplemental request so in 2021 the adopted budget had a 44.1 million in
expenses and the 43.4 we talked about and 37 million we do have 282,000
supplemental packages for this utility and we'll talk about those shortly and
Brian can talk to them in greater detail so for solid waste we show a five-year
outlook I'm going to walk you through this very similar to water and waste
water and give you as much detail as possible so in 2021 we had adopted
revenues of 39.8 million we had the adopted expenses we discussed 44.1 so
the adopted budget had 4.3 million in reserve usage we are forecasting and in
this fiscal year ending September 30th to use a little bit more in reserves
about 4.8 million you can see that number right here with the expenses of
43.4 that we talked about on the previous slide one thing I did want to
point out is it's fiscal year 2021 budget did include a five percent rate
decrease for residential customers that equated to about a dollar and eight
cents a month for the average residential customer with a standard
card so I just want to make sure I point that out the preliminary 2022 budget is
here in this dotted line you can see we had preliminary revenues of 39.8 with
expenses of 37 so we're actually forecasting the finish the year 2.8
million moving down the page what I wanted to point out is the ending fund
balance is 9 million with the reserve targets down here in this pink color of
5.2 to 6.7 so definitely well above the top end of that reserve and then going
out in the future years we do come down a little bit in 2024 to about 6.7
million so I wanted to point that out for everybody we're not forecasting rate
changes in this pro forma and the reserve requirement is above that
reserve minimum in each of the years so good news one thing I definitely need to
bring to your attention that we separated out this year so up in your
revenues we have our wholesale waste agreements those will be in place through
fiscal year 2022 but starting in fiscal year 2023 they're currently forecasted
they're not included in the pro forma so based on direction we get from PB city
council if you make the decision to renew those contracts we would build them
into this pro forma but this pro forma currently does not include those going
forward past fiscal year 2022 so that's we want to bring that to your your
attention today that no decision has been made on that but we definitely want
to bring it to your attention this is the five-year capital plan so this is
the preliminary capital budget is upcoming fiscal year a couple different
tables on the solid waste fund we wanted to break it out by different funding
year in different types so up here in the top table which you can see is we
have 6.7 million in capital funded projects is coming fiscal year that does
include vehicle replacements we do sell different types of bonds for those
capital projects 20-year bonds of two millions five-year bonds of 480,000 a
little bit of revenue funding and you can see here for 40,000 coming from the
operating fund and then those vehicle replacements of 4.2 and down here at the
bottom we just grouped them into different categories you can see street
structural vehicles and building construction for that total of 6.7
million also so just giving you a couple different looks at it and how it groups
together and how we're paying for it for this coming fiscal year so
everybody's touched on it but just the vehicle replacement fund you buy off the
buy board right yeah let me pull this down really good yeah Brian probably
talked to that better about the buy board and your truck purchases out do
you buy them off the buy board or it depends on what type of vehicle that
we're looking for where we can take the opportunities to to purchase off some
sort of cooperative we do because we get exceptionally good prices and it speeds
up the price but there are other trucks that marrying the chassis with the body
those are special fleet orders that are specific to the city of Denton so we have
to get into a build cycle so it's a it's a it's a homogenation of the two
so I guess my real question is how's that gonna go well it's hard to get them
nowadays it is hard to get them so you know part of it is you know we have to
look at our fleet try to keep it up we can you know secondly we try to look at
what's on the ground you know because there are some people who due to COVID
they can't afford some of the trucks that may have been in a build cycle so
sitting on the ground if it if it's close then you know we might be able to
purchase that others were being extremely aggressive and trying to get
letters of intent out there saying that you know go ahead get us in your build
cycle you know October 1 comes we have the funding but you know don't because
if we wait till October 1 it's gonna be 18 months built cycle now we might be
able to get into six to eight months yes in this case since you're getting that
budget ahead so far ahead of time you ought to be in pretty good shape we
should be in decent shape and fortunately also this past year from a
landfill standpoint we've been able to get all of our you know big equipment
yellow iron that we've needed and delivered so we're not having we're not
as subject to that the speculation in that market as we are to the the front
line fleet thank you
Mr. Ryback may be talking I think he's on sorry go ahead we can hear you
previous slides on the budget there was franchise fees and administrative and
I'm curious what the franchise fees refers to so mr. Ryback that's a great
question those are fees paid to the general fund that ultimately get
transferred over to the street fund for street improvements that was guidance we
received from City Council several years ago so those are five percent five
percent of revenues they go to the general fund all right so that's
something that's being set aside per council mandate is that correct that's
correct yeah several years ago the council gave staff direction to
establish a franchise fee the franchise fees would ultimately make their way to
the street fund to do street improvements in the city so each utility
pays in a franchise fee of five percent so okay thank you their taxes yeah well
and you know in cities that that have you know private third-party companies
that are out perching doing it it's basically it would be a fee that they
would pay also for the use of the city infrastructure to perform their
business so basically what it does is it puts us on the same level from a from a
value standpoint of determining you know and appraising how well we're doing with
the private sector so again it's a it's a it's a fee that that needs to be paid
should be paid by or by the department into the street fund for the use of that
infrastructure thank you all right I think I only got a couple more slides to
go through here let me pull it up really quick we'll take any other questions that
you may have okay so supplemental packages for full-time positions so you
can see here a field service worker to is being requested HEO to a heavy
equipment operator to a roll-off truck driver of one and then a field service
supervisor of one we do have a part-time intern there at the bottom so total
supplemental requests are 282,000 you want to point out all these are
included in the pro forma so no rate increases being proposed this future
year and they are funded to get questions regarding the positions of
course Brian could speak to them but then that future calendar so we will
talk to you again of course on July the 12th with a budget and rate discussion
then I will pull this down for questions any questions I just wanted to
compliment you on the number of times I get to hear no rate increases yeah
congratulations very good point that's all thank you then chair we have electric
so Tony point they will come up and present the operational information for
electric thank you
so mr. chair members of the board Tony point the DMV general manager thank you
for the opportunity to come and present this budget to you first of all before I
began I wanted to first of all again acknowledge our customers and the
difficult time and the challenges that they experienced during winter storm
yuri that certainly was not something that that we wanted and certainly we did
our best to try to provide the best service that we could and the power that
we could when when we had it also want to acknowledge our staff or the kind of
yeoman work that they did fantastic work many cases left their own families to
come and serve our customers I proud to serve with them I tell people all the
time that I haven't been around folks like that since I was 18 years old in
Marine Corps they're just fantastic people they continue to amaze me and
surprise me every single day including this weekend you know we had a couple
folks really do some fantastic work this weekend protecting our assets and that's
just something that that they do just because they love what they do and they
love our customers I will tell you that since winter storm yuri we fielded a
number of phone calls from folks wanting to switch to DMV you know for for all the
the hoopla that we've had in past years about you know why can't I choose my
own provider it's amazing how many people are thankful that during winter
storm yuri they were they actually had DME because they could see friends and
family members across the state of Texas and they were without power for for days
in some cases and so we're certainly thankful for our customers and certainly
we'll work with them on that I have not filled in a single phone call since then
telling me that they want to switch away from DME so again really just credit our
staff and really this community for for what we do in a single every single day
so again I'll be presenting the piece of this presentation at Chris Lutrick our
executive manager of operations and I know you guys would prefer to listen to
Chris than to me he'll be coming up here as well and covering the majority of our
operating presentation and of course our director of finance Cassie Ogden will be
here to present the financial pieces this is just a brief organizational chart of
what we look like you know certainly Terry Nolte our assistant general
manager who's actually on should be on the phone case there are some questions
that that he may need to come in and answer Bill Shepard's our executive
manager of business services Bill started with us the week of a winter
storm yuri and got to experience that along with his family in an RV park you
know because he was just temporarily housing and so we're fortunate to have
Bill with this and he's been a great asset in addition to to our team Smith
day is our executive manager of risk and compliance and you know he really keeps
us in a straight and narrow when it comes to regulatory issues and and risk
and compliance issues in their utility of course Chris Lutrick who's been you
know he's done a great job for us running our operations and our field
services folks you know he's not new to DME but he's certainly new to to this
role so we're thankful for him and in here today we also have Jerry Fildler
who's our division manager for for engineering and you know I tell Jerry
that that groups really the brains of DME and certainly does a great job him
and his team and so he's here to answer any questions specifically on the on the
capital projects as well which his team really kind of is at the forefront of
leading so just a little bit about DME obviously the those are you that been on
the board for one this can be for a while now that he's been in existence for
quite some time about a hundred and sixteen years 1905 I was doing a little
bit of research over the weekend and so 39 years after the city of Denton was
incorporated DME was formed and so we we certainly share a long history with with
the city and certainly our own and a part of the city as well we are the six
largest municipality I'm usually only to electric utility in the state of Texas
there's 72 of those we're proud to be members of TPPA which is our kind of
state organization of all these utilities obviously the council is the
governing body and adopts the budget and rates but certainly the public utility
board serves a very important role in advising not just the utilities but
certainly the City Council and making recommendations which this is part of
the process is going through the budget and making recommendations to the
council as they deliberate you know going forward after after August 1st one
of the things that we've been trying to preach and talk to our staff about is
just you know we are part of the city so we are one city of one organization DME
is not a separate organization we are a department of the city and it's
something that we try to preach to our to our to our employees on a daily basis
and then the last thing that I'll share with you again is we do have somewhat of
a defined service territory we certainly serve the majority of the core of the
city but there are dually and triply certified areas in which we do compete
primarily on the initial stages of development and and I'll tell you I'm
proud that the majority of developments choose to have DME serve those areas and
so I think a lot of it has to do with our reliability and and the service that
we provide and Chris will be talking a little bit about those metrics I just
wanted to show you just a high-level map obviously the green area is kind of our
core and what we are singly certified for we are the sole provider of
electricity in in that area but out in the fringes you can see where we are
singly and dually certified just an example we'll talk a little bit about
Hunter and coal ranch was an area that was dually and triply certified in some
areas and we are going to be serving the majority of that development so a couple
of goals over the last two years a couple accomplishments over the last two
years went to kind of give a recap to you on on really kind of where we've been
and and and I think as Cassie comes up and talks about the budget you kind of
see why we're making the recommendations that we're making but one of the first
ones that I'll touch base is two years ago we did do an FTE or organizational
analysis and certainly in conjunction with the voluntary separation program we
were able to eliminate 20 FTEs that's about two million dollars an annual
basis that came out of our operating budget ten million dollars over a five
year period so substantial amount of savings that really has has helped us
not only organizationally to work more efficiently but also I think from a
financial standpoint has put us in the position that we're in today and the
recommendation that that you'll see coming forward I already mentioned
hunter coal ranch those are pretty large developments we'll we're gonna serve
about 10,000 single-family homes at about 18,000 the other there's a core of a
hunter coal ranch that will be served by coaster of electric and they are only
certified for coaster of electric so that was the only piece that we could
not get about 18,000 homes total over 30 years but you know like I said 10,000
those will be served by by DME about 3,000 multifamily unions are projected
and 350 commercial industrial properties that will develop throughout that entire
development this is a net positive cash flow for for DME over that 30 year
period about 183 million dollars worth of positive income that will that will
come to the benefit of DME and certainly as we spread and grow that base will
certainly be able to spread those costs and and and this will certainly help us
keep our rates stable going forward into the future the next item we had about
18 and a half million dollars worth of savings by basically postponing the Eagle
Drive substation we as you may recall we are making some improvements about the
local substation and then the new Hickory GIS substation to serve DME that
property that is there on Eagle Drive we will retain ownership for that property
we're gonna land bank it because eventually we will need a substation and
I think that area would be a perfect spot for it but again it's eighteen and a
half million dollars of savings to our ratepayers and then finally the last
item that I'll just kind of just talk about certainly if you have any
questions about the other items I'm happy to respond to those but we did
reduce our bond sale for the current year by 20 million dollars that's
something that you know even though you approve a CIP budget this year for for
the next five years and certainly for fiscal year 21-22 before we go to issue
those bonds we will go back and we'll reevaluate those projects see where they
are if we can slide them if they're no longer needed if we can better match our
cash flows with some other financing opportunities we'll certainly be
looking at that just like we did this year and certainly what that translates
to is a reduced projected annual debt service going forward that again helps
us to kind of stabilize those rates and with that I'll go ahead and turn it over
to mr. Lutrik and he'll take the rest of the presentation good morning board
good morning are you budgeted out yet so I'll go through mine pretty quick and if
you have any questions on any of the information that I don't directly speak
to just let me know one thing we'd like to highlight is our accomplishments last
year or the current fiscal year was again our reliability so other than
winter storm URI those were controlled outages so that those do not count in
our metrics but again we were we were awarded an APPA certification for our
reliability so that's the American Public Power Association is kind of our the
national trade organization for municipalities so again that's our third
year in a row and new this year is our reliable public power provider so that's
a program it's a pretty elite company that we're in so we submitted about a
month-long application how we operate our business our reliability metrics our
staffing our staff training and just it's just honor for us to get that to
get that award and finally on here we energized Brinker substation so that
that's a substation that's located over by the DME campus a pretty large project
to it for us we got that energized this summer and then got it into our rate
base for our t-cost looking forward to the upcoming year the one at the top
here is probably the most the most relevant to the utility that is our our
full rate case that we have to submit to the Public Utility Commission of Texas
so as you might probably don't know the the last time the DME submitted a rate
case a full rate case was in the early 2000s that's right after deregulation so
that's something that that Cassie will speak to that they could have some
serious consequences to our finances some other stuff on here that we have
planned a complete a cost of service study as you know you'll be looking at
the rates going forward our current cost of service study is outdated so when it
was done in 2017 we still had Givens Creek online so we're actually buying
that power our portion of the power that and our t-cost revenue have gone up
substantially so the new cost of service will take those into account and a new
thing we're excited about this year is as a tree line USA utility designation so
as you may know the city of Denton is a tree city USA so this is another Arbor
Day a program that acknowledges that our tree trimming program meets all that
that meets all of their guidelines for responsible vegetation management and
finally I know we've been in front of you a lot the last couple years our last
major construction project is getting ready to kick off and that's the Hickory
GIS substation and the associated transmission line that will connect
locus to Hickory through the UNT campus when we complete this project we'll have
our inner loop a ring back up and projects going forward should be for
expansion which would be the underwood substation for the Hunter coal ranch and
again and another hot topic item is our LED retrofit program we're continuing on
with that and we did have a delay of about three months but we still look to
wrap that up not this fiscal year but the following fiscal year here's a graph
that we bring every year during the budget and it's a rate comparison so the
the graph on the left is how our rates compare to comparably sized I mean other
meanies in the state of Texas so as you can see we're a couple dollars below the
average right at $124.80 kind of a middle of the pack and new this year is now
that we are 100% renewable we added a graph where we compare our rates which
we only have one rates it's 100% renewable with some competitive packages
out there that are a 12-month term they're also 100% renewable so these are
the power to choose if you live in an encore or any part of Texas you would
have access to these to these programs so as you can see our hundred twenty four
eighty is just a dollar or two more than the average for those plans so any
questions on that it's it's a little it's it's kind of new we picked the zip
code in Denton that has encore and that's how we were able to to get these
rates
doesn't appear to be our key metric that we have that probably most people came
to understand during winter storm URI is what we call system average interruption
duration index or Sadie so what this is is basically when that when the lights
go out how quickly do we get them back on on an average basis so as you can see
the the 2020 national average was about 139 minutes our average came in at a
little over 34 minutes so this is from we get the call we get our guys out
there it's the time it takes us to to restore the average I will note 2017 as
you remember was a bad storm year we had those straight-line winds and the small
tornadoes and so that year is a little above our average FTE's so we have as
Tony mentioned and in his part of the presentation we were down 20 FTE's
through the VSP program so that dropped us from 189 to 169 and that was probably
very very lean for our organization as the other utilities I think Brian had a
very good graph the growth we realized that in the last 10 years we've added
about 65 miles of distribution lines so we have more system to maintain yet we
were doing it with significantly less people so I think what you will see we
did add two positions mid-year one of those was in operations and one of them
was in engineering but as you'll see we're really evaluating how do we
right-size our organization so with that we're proposing two additional FTE's for
the upcoming budget the first I'll start with is the line designer for engineering
so again the common thing is growth so this is our it's an engineering staff
member that does our review our plan reviews so we right now we have one
individual that does that and it's just starting to to be more than he can then
he can manage so that this is another position that will work in the
engineering department and support that plan review the second is our senior
business intelligence analyst I can't apply for it because I can't even say it
what this is in our EMO our EMO handles massive amounts of data so they have
data coming from ERCOT from weather forecasts from all their sources of
information that they use so it's overwhelming so this person's duties is
managing that data flow and getting it into a form that these guys can use
every day to make to make smart business decisions where's your
meteorologist he's coming okay and Terry is listening right now and he's
cringing so we do have three supplemental they all have to do with
either a service or an FTE so as I mentioned the the senior business
intelligence analyst and the line designer those will be two new FTEs and
much to Mr. Naltjes Chagrin he's not getting a full-time meteorologist
meteorologist on his staff so what we have elected instead is to put forth
that money into a service so the basis of this service is as you know everybody
knew the winter storm URI was coming but what happened was the models kept
sliding so if you remember they had a hitting earlier in the week and it ended
up sliding into a holiday Monday which you know if we would have known
the severity of it which they didn't have right in the timing of it it would
have been they could have taken some more steps to mitigate that so with that
would be instead of Terry getting his wish is is what we will procure those
services on just on contract basis so here's our capital improvement plan so
as you know URI is a common theme here it was a financial hit for us so we
looked at everything we could do to to offset or help mitigate those those
effects to our to our performer so as you will see here is our capital
improvement plan and I know mr. Cheeks been here for a while you do notice the
numbers are getting smaller so we're about to get all of our expensive stuff
completed it's still heavily loaded in 22 and 23 that is the hickory GIS
substation and the associated transmission line and the other cost you
see on here just our average annual CIP expenses so and as you will see as we
wrap up these projects that that number is falling off significant significantly
in the out years and it also as Tony noted we we reduced our CIP request this
year by about 20 million dollars our major projects that we have going on is
a couple I'd like to hit on here the first is a our pole replacement so as
you imagine you drive around we have a lot of wooden poles in the city of
various ages right at about 10,000 of them so we kicked off an inspection just
to start with scratch we're inspecting inspecting every pole on our system and
what we're finding out is our failure rate or out of spec rate right now we're
through about half the poles so about five thousand fifty five hundred we have
a thousand that we need to replace so this is a preventative maintenance for
us they are identifying some critical poles we try to get those switched out
in a week but generally what they're finding that our poles are out of spec
so meaning that at some point in the near future they need to be replaced so
that's a reliability project for us secondly is the streetlight program the
three million dollars so as you know our new subdivisions their design lighting
they have lighting plans they're properly lit so but our older
neighborhoods was kind of put one every 300 feet and and see what happens so we
actually have a study going on to determine what is the an adequate light
level in neighborhoods so with that the results of that study and this money we
will then go into these to these darker neighborhoods and get them properly
illuminated and finally the last one on here is our big ticket item that's the
hickory GIS substation so as Tony noted in the past well we had the option so
the deck was was very expensive we had to issue all the bonds up front even
though it took us three years to build it so with this commercial paper program
we can more match those the bonds to the our cash flow needs saving us some money
I should note that if you add all that up is about 58 million about 24 and a
half million of that is transmission related so it will be put into our rate
base it will be able to recover those costs through our transmission cost to
service and finally just another note that that bottom note is about the
commercial paper so we'll better match our debt issuance with our with our cash
flow needs so with that I'll answer any questions on the operations and before I
turn it over to Cassie any questions not at this point thank you all right thank
you good morning board Cassie Ogden director of finance so I wanted to go
back through I know you've heard a lot about winter storm Uri today when when
it hit in February we did expect a large financial impact you saw that we we've
made several presentations regarding that impact and what we expected it to do
to our budget next year so as you may recall our net expenses of the storm
originally we expected it to be about 140 million due to that outstanding
uplift charge of 9 million it's it's come to approximately 150 million we did
receive direction to issue commercial paper notes to pay for that with the
idea that we would refund those short-term commercial paper notes to
long-term bonds to mitigate the the impact to the fund instead of all of
that hundred and forty or hundred and fifty million hitting the electric fund
in one year we're we're selling bonds to over 30 years so you'll see that in the
pro forma in just a couple of slides and then previously we discussed with you
and counsel the possibility of how do we pay make that that debt payment so we
were discussing possibly five percent increase to electric rates for for this
upcoming fiscal year however due to some uncertainties in the budget and just
some outlying things that we we don't have great forecasts for yet we'd like
to reevaluate the need for a rate increase mid-year so coming back
possibly in December next year because Tony and Chris already talked about
that that full rate filing that we were under that transmission cost of service
revenue we're forecasting to decrease substantially but we we don't have the
final rate filing yet so we don't know this is our best guess based on you know
current factors that are known but there's still a lot of outstanding
factors and then we do have a couple other items that could that will impact
our financial situation so the TMPA mine sale the some potential data center
projects and then also our cost of service study we are in the middle of
that cost of service study we didn't want to make any rate changes without
having that cost of service to justify the rate structure changes or impact or
changes to the overall rate increase so some financial assumptions that are built
into the performer that you're about to see our average load growth is one and a
half percent over the next five years I talked about that t-cost revenue so we
had previously expected it to it's it's about 28% we've decreased that to 13 and
a half percent which is substantial on our revenues and I'll show you that in
the performer again that ROI because of COVID we did increase the ROI transfer
to the general fund to six percent that will change in 2023 back to three and a
half percent so that's tentatively scheduled right now in the performer and
then again some uncertainties obviously we're right now in the middle of summer
but we don't know how the deck will perform the rest of the year so we're
expecting the deck revenue to come in higher than we forecasted which will
change our financial picture by the end of the fiscal year we've already talked
about the transmission cost of service revenue and that rate filing impact as
well as the cost of service study you may recall the reserve levels some of
those changes so we did bring reserve targets to you to discuss kind of
changing that reserve levels for electric we're keeping them the same for
water wastewater but we did propose increasing those based on the winter
storm impact for electric we discussed that with council and did get direction
but they have not approved a formal policy of that change so I have the
performer built up to where it shows you the current reserve level and then that
proposed reserve level so we are not proposing at this time a rate increase
for electric based on all of those uncertainties that I mentioned just a
moment ago we felt like it would be premature to increase the electric rates
also you can see we're still we're projecting to be next year at a hundred
and nineteen million dollars for our fund balance which would be right in the
middle of that proposed reserve target range which is good news but 2023 is
really where you start seeing that impact to the t-cost revenue that non
rate revenue line you can see it going from 60 million to 45 million that's
that thirteen and a half percent reduction or thirteen and a half percent rate of the
t-cost revenue so it was previously 28 percent dipping down to thirteen and a
half percent and that's still just a projection so a couple other things to
point out obviously the estimate 2021 deck revenue a lot higher as well as the
purchase power but we have shown the debt service starting for winter storm
you're restarting in 2022 you can see that six point two million dollars as
well as your supplemental packages that Chris just reviewed and because a couple
of those are positions they're reoccurring in the future years I'm just
wanted to point out again the reserve targets are not have not been formally
adopted by council but we are we are tentatively showing them and we don't
dip below those reserve targets until 2024 but again with so many
uncertainties don't want to don't want to plan for rate increases yet based on
just those outstanding items that will have a have a financial impact but we
just don't know what that will look like yet and so Nick has already mentioned
the next steps we will be bringing more budget and rate discussion back to you
in July and then City Council will have their budget workshop in August with
formal adoption in September and I'm happy to answer any questions you have
on the financial piece so yes it's not an exact science that is right I'm sorry
mr. right back did you have a question yes sir ma'am I was wondering the six
point two million roughly you show starting next year on those payments for
the debt how long is the term of that bond that is 30-year bond so it's it's
the same as what our other bonds are electric sells 30-year bond the other
utilities usually sell 20-year 20-year bond thank you very much questions on
the budget doesn't look like it thank you thank you that's the last of our
presentations okay well you got anything else Tony no sir I'll just I'll just say
that if many of the board members have any questions after today please feel
feel feel free to direct them to Cassie and and Nick and they can certainly work
with the department so we'll be back to you again here and you know through the
month of June and ultimately before the end of July we'll be asking you to
recommend to give us a recommendation on on these budgets and turning the rates
as well that will be then discussing with the City Council during their their
budget workshop and again that's just part of the role of the process that we
follow through you know with with the PUB and and the council will know that
you've made a recommendation either for or against against that budget so if
there's any changes we'll be happy to work with you guys on that so again and
as usual thank you staff for making this so we can understand it and I really
appreciate you bringing it to us like in that form and having the detail there so
that we can go into that as well so thank you again and with that I think we
We stand adjourned.