mi wea & awwa aim asset management seminar 1/25/17...mi wea & awwa aim asset management...

Wightman & Associates, Inc.

MI WEA & AWWA AIM Asset Management Seminar

1/25/17


“Ontwa Township – Planning For and Rate Adjustments

as Part of The SAW Program AMP Process”

1/25/17


Key Learning #1

“A SAW Grant Project Manager is someone who solves a problem you didn't know you had, in a way you don't understand.”


Key Learning #2

“A Waste Water System Operator is someone who tells the SAW Grant Project Manager to stop trying to fix things…

…that aren’t Broken.”

“360 Degree Perspective…”

1) 2014-2015: Assisting the New Board of Trustees in Ontwa Township:

a) Implemented the 2015 WW Rate Increase for The Township

2) 2015-2016:

a) Waste Water Administrator of Ontwa Township

b) Chairman of the Waste Water Board of Ontwa Township

c) SAW Grant Administrator for Ontwa Township

3) 2016: Infrastructure Manager; Wightman & Associates, Inc.

a) Manage 24 SAW Grants on behalf of Wightman and our clients

MI WEA AWWA Asset Management Seminar

Wightman & Associates, Inc. Stormwater, Asset Management and Wastewater Grant (“SAW”)

Planning For and Rate Adjustments as Part of the SAW Program and AMP Process 1/25/17

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SAW Program Key Elements

• Assess Inventory

• Establish Level of Service

• Evaluate Criticality

• Develop Capital Improvement Plan

• Present 20-Year Complete Revenue and Funding Forecast




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What is the Stormwater, Asset Management and Wastewater (SAW) Program?

• State Grant for Asset Management Program (AMP) of Wastewater and Stormwater

• Creation of GIS with System Conditions and Work Order System for DPW or Operating Firm

• Data Collection (Cleaning/Televising)

• Conditional Assessment by NASSCO Standards/Engineering Analysis

• Identification of Key Capital Improvement Projects from Conditional Assessment

• Development of 20 Year Capital Improvement Plan and Rate Structure Analysis

1/31/2017 MI WEA AWWA Asset Management Seminar



7

Why is the SAW Grant Program Important – Actual Photos During (and after) the Asset Assessment




1/31/2017 8

Poor Pump Condition Poor Manhole Condition Re-Conditioned Manhole

Why is the SAW Grant Program Important – Complete System Assessment / Paperless dB & W/O System / AMP




1/31/2017 9

Complete System Assessment Records and Maintenance on Handheld and Workstation

User Friendly Work Order System Asset Management Plan



Stormwater, Asset Management and Wastewater Grant (“SAW”)

Planning For and Rate Adjustments as Part of the SAW Program and AMP Process

1/25/17

SAW Program – Rules

1. The SAW Program is to be Completed Within 3 Years.

2. The Grants for Wastewater and Asset Management Plans must show significant progress toward a funding structure within

three years. Stormwater Asset Management Plan Must be Implemented.

3. At 2.5 years a “Current Year” Rate Analysis and Recommendation is Required to be Submitted to the MDEQ.

a. Current Year Financial Report and Budget:

1) If there is a “current year gap” in Rate Revenue vs Expenses, then demonstrate how 90% of the “current

year” gap will be funded over the next 5 years.

b. Current Year Rate Resolution.

c. System Description: Internal vs. External Treatment; Selling Service; System Design; Area Served; etc.

4. A Product of the Program is an Asset Management Plan that is Confirmed with the MDEQ and Required to be Made Available

to the Public for 15 Years after the Plan is Submitted.

10

A. Overview: The SAW program is approximately $450M in Grants and Loans that allows communities to locate, map, assess and document the assets and condition of the assets in their Wastewater and Stormwater systems. It also allows the recipients of the Grants and Loans to develop an Asset Management Plan, including a Geographical Information System (“GIS”), Maintenance Software and a 20 Year Financial Forecast and Rate Structure Analysis, in order to forecast, budget and plan for repair and upgrades to their systems.

B. Ontwa: 1. Total Grant Available: a. Sanitary: $678,683 2. Breakout: Sanitary a. Application $ 7,500 b. Asset Management Plan $ 355,923 c. Waste Water Design $ 214,660 d. Cleaning and Televising Sewer $ 50,000 e. Reimbursable Expense $ 6,600 f. Financial Analysis $ 17,000 g. AMP / GIS Hardware, Software & Training $ 27,000 TOTAL $ 678,683




11

SAW AMP Capital Improvement and Revenue Plan – “4 Step Process”

1) Collect 3 Years of Financial History and provide to Eng. Firm (Then to Outside Financial

Specialist such as UMBAUGH) – Required if Bond Financing is Anticipated.

a) Income Statement – Revenues, Expenses and Forecasted Budget

b) Balance Sheet – Asset and Liability Position

2) Establish a “Test Year” or a Baseline Year and a Budget.

3) Evaluate / Confirm Revenue Received Through Service Fees for the Established Year.

4) Build a 20 Year Cash Flow Forecast Based on an Annual Schedule of Maintenance Items and Special Projects from the System Assessment – “Capital Improvement Plan” (“CIP”).



Stormwater, Asset Management and Wastewater Grant (“SAW”) Planning For and Rate Adjustments as Part of the SAW Program and AMP Process

1/25/17

1/31/2017 12

SAW AMP Capital Improvement and Revenue Plan – “Now What”

1) What do we do with the Financial Information? Confirm the Following:

a) From the Income Statement: 1. Confirm Revenues: Based on REUs. 2. Confirm Expenses: Based on normalized (Normal and Usual) annual expenses to run the WW system.

b) From the Balance Sheet: 1. Confirm Assets: How much cash is in the bank accounts. 2. Confirm Liabilities/Debt: How much of the cash is used to pay down the debt (Bonds) on the balance sheet.

2) What Large Investments Need to be Made to the System: Determine Large Capital Projects Based on the

Engineering Evaluation of the Asset Inventory, the Condition of the Assets and the Criticality of the Assets.

3) Build an Annual Schedule (Cash Needed) for Maintenance and Large Capital Projects Spending:

a) Maintenance: How much cash will be needed for annual maintenance items.

b) Capital Improvement Projects: How much cash will be needed for the large projects.

4) If Cash Surplus: No Rate Increase or Additional Capital (Debt) is Needed.

5) If Cash Deficit: Additional Funding Needs to Be Provided Via:

a) Rate Increase

b) Increased Debt (Bonds, etc).



Stormwater, Asset Management and Wastewater Grant (“SAW”) Planning For and Rate Adjustments as Part of the SAW Program and AMP Process

1/25/17

1/31/2017 13




Capital Improvement Plan

1/31/2017 14

Priority Project Name Estimated

Cost

1 Manhole Rehabilitation Project $40,000

2 C-1 Lift Station Infrastructure – Building $100,000

3 H2S Analysis Project $15,000

4 Install Lighting, Fall Protection, and VFDs/PLCs at Lift

Stations and Relocate Disconnects

$92,500

5 Rehab/Replace Lift Station Equipment: 2 Stations every 3

years

$700,000

6 Manhole Rehabilitation Projects: 3-year cycle $297,600

7 Casting and Lid Repair Projects: Annual as-needed over 20

years

$371,550

SUBTOTAL $1,617,450

Engineering and Contingency (+/-20%) 323,490

Total Estimated Project Cost for Twenty Year Wastewater CIP = $1,940,940

Average Cost per Year for Twenty Year Wastewater CIP = $97,047




Revenue (“Maintenance”) Plan + Capital Improvement Plan

1/31/2017 15

Lift Station Pump

#

Make Model Discharge

Size (inch)

Horsepower M

e

a

In-Service

Date

Date of Last

Service

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Totals

B-1 1 ABS M185/4-3y.6003500164 4 24.8 Jan 22, 2014 24,800.00$ 2 ABS M185/4-3y.6003500164 4 24.8 Aug 14, 2014 25,792.00$

B-2 1 Flyght 3085.092-1764 465 3 3 Feb 17, 2014 4,290.00$ 2 Flyght 3085.092-1764.465 3 3 Feb 17, 2014 4,290.00$

B-3 1 ABS AFP1042.4M 70/4-22EX 3 9.4 10,152.00$ 2 ABS AFP1042.4M 70/4-22EX 3 9.4 9,588.00$

B-4 1 ABS AFP1032M70/4 3 5 5,400.00$ 2 ABS AFP1032M70/4 3 5 5,100.00$ .

C-1 1 Flygt NP 3153.095-462 4 20 Oct 15, 2015 29,200.00$ 2 Flygt NP 3153.095-462 4 20 Nov 28, 2015 29,200.00$

C-2 1 ABS AFP0831-M35/4-12X 3 4.7 Nov 25,2013 5,076.00$ 2 ABS AFP0831-M35/4-12X 3 4.7 5,076.00$

C-3 1 KJI Hydro 34KSE-3-4-001 3 3 4,200.00$ 2 KJI Hydro 34KSE-3-4-001 3 3 Apr 22, 2013 4,200.00$

C-4 1 ABS AFP1046M90/4 5 5,100.00$ 2 ABS AFP1046M90/4 5 6,600.00$

C-5 1 Flygt 3085.092-1448 255 4 4 Mar 21, 2012 5,480.00$ 2 Flygt 3085.092-1448 255 4 4 Mar 21, 2012 Feb.17,2016 5,480.00$

Epw-1 1 KIJ Hydro KSE-5-4T 4 5 March 28, 2014 6,100.00$ 2 KIJ Hydro KSE-5-4001 4 5 March 28, 2014 6,100.00$

Epw-2 1 KIJ Hydro 3KSE-3-4T-001 3 3 4,050.00$ 2 KIJ Hydro 3KSE-3-4T-001 3 3 4,050.00$

Epw-3 1 KIJ Hydro 3KSE-3-4T-001 3 3 3,870.00$ 2 KIJ Hydro 3KSE-3-4T-001 3 3 3,870.00$

Edw 1 Liberty LSG203M 2 2 Dec 1, 2014 2,860.00$ 2 Liberty LSG203M 2 2 Apr 30, 2013 2,800.00$

JPC-1 1 ABS M75/4-22.6003358640 4 10 10,200.00$ 2 ABS M75/4-22.6003358640 4 10 12,000.00$

JPC-2 1 ABS M75/4-22.60 03308635 4 10.1 10,302.00$ 2 ABS M75/4-22.60 03308635 4 10.1 12,120.00$

JPC-3 1 ABS Piranha 516/2D.02 2 2.1 2,520.00$ 2 ABS Piranha 516/2D.02 2 2.1 2,520.00$

MS-1 1 TBD 5 5,850.00$ 2 TBD 5 5,850.00$

TOTAL PUMPS 24,800.00$ 40,290.00$ 25,792.00$ -$ 25,704.00$ -$ -$ -$ 11,700.00$ 29,160.00$ 12,200.00$ -$ -$ 7,740.00$ 6,600.00$ 8,100.00$ 10,960.00$ 11,200.00$ 11,440.00$ 58,400.00$ -$ 284,086.00$ Assumptio

1)Pump Pump Replacement Cost: $-Hp 1,000.00$ 2)Inflation Inflation Factor - Annual 1.02 1.02 1.04 1.06 1.08 1.10 1.13 1.15 1.17 1.20 1.22 1.24 1.27 1.29 1.32 1.35 1.37 1.40 1.43 1.46 1.49

Ontwa Township Revenue and CIP Plan Analylsis20 Year Projection: Replacment Timing and Cost - CIP Projects

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Totals

Priority Qty Project Estimate Total1 1 LS Manhole Rehabiliation Project 40,000$ 40,000$ 40,000.00$ 40,000.00$ 2 1 EA C-1 Lift Station Bulding and Infrastructure100,000$ 100,000$ 100,000.00$ 100,000.00$ 3 1 EA H2S Analysis Project 15,000$ 15,000$ 15,000.00$ 15,000.00$

4 1 LS

Install Lighting, Fall

Protection, and VFDs/PLCs

at Lift Stations and Relocate 92,500$ 92,500$ $ 92,500.00

92,500.00$

5 7 EA Rehab/Replace Lift Station 80,000$ 560,000$ 83,200.00$ 88,000.00$ 93,600.00$ 99,200.00$ 105,600.00$ 112,000.00$ 119,200.00$ 700,800.00$ 6 6 LS Manhole Rehabilitation Projects: 3-year cycle40,000$ 240,000$ 42,400.00$ 45,200.00$ 48,000.00$ 50,800.00$ 54,000.00$ 57,200.00$ 297,600.00$ 7 20 LS Casting and Lid Repair Projects: Annual as-needed15,000$ 300,000$ 15,000.00$ 15,600.00$ 15,900.00$ 16,200.00$ 16,500.00$ 16,950.00$ 17,250.00$ 17,550.00$ 18,000.00$ 18,300.00$ 18,600.00$ 19,050.00$ 19,350.00$ 19,800.00$ 20,250.00$ 20,550.00$ 21,000.00$ 21,450.00$ 21,900.00$ 22,350.00$ 371,550.00$

TOTAL SPECIAL PROJECTS 40,000.00$ 222,500.00$ 98,800.00$ 58,300.00$ 16,200.00$ 104,500.00$ 62,150.00$ 17,250.00$ 111,150.00$ 66,000.00$ 18,300.00$ 117,800.00$ 69,850.00$ 19,350.00$ 125,400.00$ 74,250.00$ 20,550.00$ 133,000.00$ 78,650.00$ 21,900.00$ 141,550.00$ 1,617,450.00$

64,800$ 262,790$ 124,592$ 58,300$ 41,904$ 104,500$ 62,150$ 17,250$ 122,850$ 95,160$ 30,500$ 117,800$ 69,850$ 27,090$ 132,000$ 82,350$ 31,510$ 144,200$ 90,090$ 80,300$ 141,550$ 1,901,536$ TOTAL PUMPS AND SPECIAL PROJECTS




Comparative Detail of Operating Expenses - Normalized

1/31/2017 16

TOWNSHIP OF ONTWA (MICHIGAN) SEWER FUND

COMPARATIVE DETAIL OF OPERATING EXPENSES

Fiscal Year Ended

3/31/2015 3/31/2016 3/31/2017 Test Year Multiplier 2018/19 2019/20 2020/21 2021/22 2022/23

(---------------Per Client---------------)

Operating Expenses

Plant Operating Expenses

610-850 Telephone $2,269 $2,012 $2,900 $3,150 1.0% $3,182 $3,213 $3,245 $3,278 $3,311

610-921 Electric 25,853 22,161 23,500 19,200 1.0% 19,392 19,586 19,782 19,980 20,179

610-922 Gas 4,623 3,035 1,500 570 1.0% 576 581 587 593 599

610-924 Water 393 366 500 516 1.0% 521 526 532 537 542

610-932 System Management (IAI) 125,061 105,495 105,000 91,327 1.0% 92,240 93,163 94,094 95,035 95,986

610-940 Lab/Testing Fees 22,331 21,400 12,000 16,290 1.0% 16,453 16,617 16,784 16,951 17,121

610-950 Chemical Treatments 180,109 154,071 50,000 44,888 1.0% 45,337 45,790 46,248 46,711 47,178

610-956 WW Treatment - Elkhart - - 400,000 376,775 1.0% 380,543 384,348 388,192 392,074 395,994

610-956a WW Treatment Plant - Sewage Processing Costs 314,653 251,919 - - 0.0% - - - - -

610-956b WW Treatment Plant - Surcharges 26,427 26,427 - - 0.0% - - - - -

610-956c WW Treatment Plant - Admin/Labor Charges 8,592 8,592 - - 0.0% - - - - -

610-956d WW Treatment Plant - Penalties Paid 35,000 35,000 - - 0.0% - - - - -

610-956 WW Treatment Plant - Other 111,720 111,720 - - 0.0% - - - - -

610-958 Repair/System Maintenance - - 50,000 70,870 0.0% 70,870 70,870 70,870 70,870 70,870

610-958 Repair - Building Maintenance 285 285 - - 0.0% - - - - -

610-958 Repair - Emergency Repairs 5,257 4,309 - - 0.0% - - - - -

610-958 Repair - Normal Repairs 53,851 53,261 - - 0.0% - - - - -

610-958 Repair - Other 96,609 96,609 - - 0.0% - - - - -

Total Plant Operating Expenses 1,013,033 896,661 645,400 623,586 629,113 634,696 640,334 646,028 651,780

Administrative and Other Expenses

610-700 Office/Other - - 47,000 36,275 1.0% 36,638 37,004 37,374 37,748 38,125

610-702 Secretary Salary 9,480 8,009 - - 0.0% - - - - -

610-703 Treasurer Salary 7,800 6,590 - - 0.0% - - - - -

610-704 WW Admin. 4,986 4,148 - - 0.0% - - - - -

610-705 Clerk Salary 7,200 6,083 - - 0.0% - - - - -

610-706 Plumbing Inspections 224 224 - - 0.0% - - - - -

610-707 WW Comp. 4,060 3,780 - - 0.0% - - - - -

610-715 Employer's S.S. 2,061 1,788 - - 0.0% - - - - -

610-728 Office Supplies 1,837 1,818 - - 0.0% - - - - -

610-729 Postage 6,535 5,497 8,000 6,061 1.0% 6,122 6,183 6,245 6,307 6,370

610-804 Audit - - 2,500 2,367 1.0% 2,391 2,415 2,439 2,463 2,488

610-810 Legal Fees 2,522 2,522 2,500 2,000 1.0% 2,020 2,040 2,061 2,081 2,102

610-912 Insurance - - 6,000 - 0.0% - - - - -

610-957 WW Miscellaneous 13,702 1,188 - - 0.0% - - - - -

610-960 Miss Dig 541 541 - - 0.0% - - - - -

610-970 WW Computer 1,909 1,534 3,000 1,300 1.0% 1,313 1,326 1,339 1,353 1,366

610-971 Bad Checks 584 534 - - 0.0% - - - - -

Total Administrative and Other Expenses 63,441 44,256 69,000 48,003 48,483 48,968 49,458 49,952 50,452

Total Operating Expenses

$1,076,474

$940,917

$714,400

$671,589

$677,596

$683,663

$689,791

$695,981

$702,232

3




Annual Debt Payments Analysis

1/31/2017 17

TOWNSHIP SEWER FUND

SCHEDULE OF AMORTIZATION OF $2,430,000 PRINCIPAL AMOUNT OUTSTANDING

OF CASS COUNTY SEWAGE DISPOSAL BONDS, SERIES 2005

Payment Principal Interest Debt Service Fiscal Year

Date Balance Rate Principal Interest Total Total

(In Dollars) (%)

5/1/2016 $2,430,000 4.500 $565,000 $56,628.13 $621,628.13

11/1/2016 1,865,000 43,915.63 43,915.63 665,543.76

5/1/2017 1,865,000 4.625 605,000 43,915.63 648,915.63

11/1/2017 1,260,000 29,925.00 29,925.00 678,840.63

5/1/2018 1,260,000 4.750 640,000 29,925.00 669,925.00

11/1/2018 620,000 14,725.00 14,725.00 684,650.00

5/1/2019 620,000 4.750 620,000 14,725.00 634,725.00 634,725.00

Totals $2,430,000 $233,759.39 $2,663,759.39 $2,663,759.39




Annual Cash Flow Analysis: Revenues – Operating Expenses – Debt Payments

1/31/2017 18

TOWNSHIP OF ONTWA (MICHIGAN) SEWER FUND

SEWER CASH FLOW ANALYSIS

2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

Assumptions Increase Ontwa Township residential equivalent units billed 1,450.38 1,450.38 1,450.38 1,450.38 1,450.38 1,450.38 1,450.38 1,450.38

Ontwa Township residential equivalent unit charge - month 0.00% $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00

Ontwa Township residential equivalent unit debt charge - month 0.00% $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00

Edwardsburg Village residential equivalent units billed 611.50 611.50 611.50 611.50 611.50 611.50 611.50 611.50

Edwardsburg Village residential equivalent unit charge - month 0.00% $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00

Mason Township residential equivalent units billed 166.00 166.00 166.00 166.00 166.00 166.00 166.00 166.00

Mason Township residential equivalent unit charge - month 0.00% $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00 $32.00

Revenues

Rates & charges Ontwa Township residential equivalent unit charge $556,946 $556,946 $556,946 $556,946 $556,946 $556,946 $556,946 $556,946

Edwardsburg Village residential equivalent unit charge 87,023 87,023 87,023 87,023 87,023 87,023 87,023 87,023

Mason Township residential equivalent unit charge 234,816 234,816 234,816 234,816 234,816 234,816 234,816 234,816

Commodity charge 63,744 63,744 63,744 63,744 63,744 63,744 63,744 63,744

Total rates & charges revenue 942,529 942,529 942,529 942,529 942,529 942,529 942,529 942,529

Other 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

Total revenues 952,529 952,529 952,529 952,529 952,529 952,529 952,529 952,529

Total operating expenditures 714,400 671,589 677,596 683,663 689,791 695,981 702,232 708,545

Net operating revenue 238,129 280,940 274,933 268,865 262,737 256,548 250,297 243,983

Less: Current debt service payment 729,682 739,569 741,767 688,295 52,172 48,688 45,267 43,996

Estimated cash-funded capital improvements 233,800 91,290 25,802 52,823 44,163 Estimated debt-funded capital improvements

Net cash flow

($725,353)

($549,919)

($492,637)

($419,429)

$157,743

$163,697

$205,030

$199,987

Cash & investments

$2,687,550

$1,962,197

$1,412,277

$919,641

$500,211

$657,954

$821,652

$1,026,682

$1,226,669




Cash and Asset Balance After Coverage of Revenue and CIP Forecast

1/31/2017 19

$2,131,197

$1,409,778

$818,351

$340,622

$509,284 $612,644

$755,524

$1,020,747

$1,946,157

$2,309,277

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Cash and Investment Balance

Cash and Investment Balance

Ontwa Township – Key Understandings

1) Newer System: 16 Years Old

2) Good Consistent, Residential Flows

3) Collection System: Do not Own a WW Plant

4) Solid Financial Position: Strong Asset Positions




1/31/2017 20

Many Systems – Key Assumptions

1) Older Systems: > 20 Years Old.

2) Inconsistent, seasonal flows, marginal condition, high H2S issues.

3) Collection System and WW Plant: Own and operate the complete system.

4) Marginal Financial Position: Many systems will need rate increases.




1/31/2017 21

Recommendations

1) Don’t panic / Ask for Help: Leverage the experience of your Engineers, Engineering Firms and

Professional, Experienced Financial Firms such as UMBAUGH.

a. Many SAW AMP and Financial Programs are being successfully implemented.

2) Pre-Plan and Provide Adequate Time: Try to have your system assets fully assessed, with your

Revenue and CIP plans, at least in development, by Q3 or Q4 of Year 2 at the latest.

3) Leverage the Opportunity of the SAW Program/Funding: Be “moderate” in your projections

for funding requirements for Maintenance and Capital Improvement Plans for your Systems.

a. If a Rate Increase is needed, the SAW Program provides a good fact based program

to facilitate acceptance by your communities.




1/31/2017 22



“If you don’t know where you are going… you might wind up someplace else.”

…Yogi Berra

MI WEA and AWWA

MI WEA and AWWA

Thank You

Frank LaPierre Infrastructure Manager [email protected]

Wightman & Associates, Inc. Wightman & Associates, Inc. Wightman & Associates, Inc. 264 Western Ave. 2303 Pipestone Road 9635 Portage Road Allegan, MI 49010 Benton Harbor, MI 49022 Portage, MI 49002 O: 269-487-9696 C: 574-339-9398

mailto:[email protected]



mi wea & awwa aim asset management seminar 1/25/17...mi wea & awwa aim asset management...

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