parker-stonegate regionalization compark business metro district, e-470 potomac metro district,...
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Parker-Stonegate RegionalizationCompark Business Metro District, E-470 Potomac Metro District, Lincoln Park Metro District, Parker Water and Sanitation Sanitation District, Stonegate Village Metro District
“financial solutions that make a difference”StepWise Utility Advisors, LLC. | 58 Inverness Drive East, Suite 260Englewood, CO 80112 | (866) 935-3101www.StepWiseAdvisors.com
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How Did This Process Begin?• Inclusion (or regionalization) has been discussed
a few times before– Each discussion ended for various reasons before a
recommendation could be presented at Board levels
– The last discussion (around 2006-07) ended when the issue was tabled by the Stonegate Board of Directors
• Stonegate renewed its interest in 2009– Signed MOU with PWSD in Feb. 2009
• Stonegate Engaged StepWise to conduct a 1st phase analysis of the cost/benefit of an inclusion (regionalization)
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Review the Timeline to Now
Feb-2010Stonegate retained
StepWise
Mar-2010Phase 1 Prelim.
Findings presented to
Stonegate Board
Feb-2011Stonegate task force receives
preliminary results
May-2010Phase 2 Findings
presented to Stonegate
Board
Jul 10 – Feb 11
PWSD and Stonegate
analysis
Mar-11Feb-11 May-11 Jun-11Mar-10Feb-10 May-10 Jun-10 Jul-11 Nov-11
Jun-2010Stonegate & PWSD begin discussions
for a regional utility
Mar-2011Joint Task Force &
Parker Board receives findings
May-2011PWSD Board
Workshop
Nov-11Stonegate Inclusion
Issue on Nov. Ballot
Jul-11PWSD
considers Resolution for
Inclusion
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Overall Approach – Find Scale
TOTAL GALLONS PRODUCED
AVER
AGE
COST
/ G
ALLO
N
Economies of Scale.The cost per unit
decreases with more units produced
How it Works
Total Fixed Cost= $1,000Variable Costs = $2.00 / gallon
If we produce 20 gallons:Total Cost = $1,040
Avg. Fixed Cost = $50 / gallon ($1,000/20)Variable Cost = $2.00 / gallon ($40/20)
Avg. Total Cost = $52 / gallon
If we produce 100 gallons:Total Cost = $1,200
Avg. Fixed Cost = $10 / gallon ($1,000/100)Variable Cost = $2.00 / gallon ($200/100)
Avg. Total Cost = $12 / gallon
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22
3344
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Regionalization Changes Cost Structure
TOTAL GALLONS PRODUCED
AVER
AGE
COST
/ G
ALLO
N
All Else Being Equal.Increased total costs
mean increased avg. cost for the SAME amount of
water produced
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3
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New Economies.Benefits occur when we can
increase units of usage without undue increase to costs
22
3
= Fail
= Win
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Basic Regionalization Model
Stonegate Assessed
Value
The new district has a new balance sheet with increased assets and no increase in
debt. It can now operate at lower cost per unit than either of the 2 separate districts
Stonegate is transferring 100% of its assets, including 3,300 accounts generating instant cash
flow for the regionalized district.
PWSD AssetsPWSD
Debt
StonegateCASH FLOW
Stonegate ASSETS
Regionalized Utility
District
Stonegate Debt
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Searching for Economies of Scale
PWSDBaseline Projection
PWSDBaseline Projection
StonegateBaseline Projection
StonegateBaseline Projection
1 2
Regional ModelCombined Operations
Regional ModelCombined Operations
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Compare to BaselinesCompare to Baselines
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During this process we identify:
•Changes in cost structure•Increases in units produced•Change in avg. cost per unit•Whether economies of scale exist or not
During this process we identify:
•Changes in cost structure•Increases in units produced•Change in avg. cost per unit•Whether economies of scale exist or not
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Other Issues: Rueter-Hess
Stonegate Stonegate Mill LevyMill Levy
Parker Parker
Water Water
Mill LevyMill Levy
Credit is necessary to avoid double charging Stonegate residents for
Rueter-Hess
They will be paying 2 taxes for Rueter-Hess while everyone else pays just one
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