communicating finance and rate information to your board · communicating finance and rate...
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Communicating Finance and Rate Information To Your Board
Annual Water and Wastewater Finance Workshop
UNC School of Government March 11, 2014
Orange Water and Sewer Authority A public, non-profit agency providing water, sewer and reclaimed water services to the Carrboro-Chapel Hill community in North Carolina.
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Raleigh
Charlotte
Greensboro
Fayetteville
Wilmington
OWASA
Chapel Hill/Carrboro/UNC
Durham
A public, non-profit agency providing water, sewer and reclaimed water services to the Carrboro-Chapel Hill community in North Carolina.
![Page 3: Communicating Finance and Rate Information To Your Board · Communicating Finance and Rate Information To Your Board Annual Water and Wastewater Finance Workshop UNC School of Government](https://reader034.vdocuments.us/reader034/viewer/2022042406/5f2004be0bea092eee4aa1a3/html5/thumbnails/3.jpg)
Orange Water and Sewer Authority
80,000 people
21,000 accounts
UNC 22% of sales
20 MGD Water Treatment Plant
14.5 MGD Wastewater Treatment Plant
3 MGD Reclaimed Water System
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Customers
Board of Directors ● 9 Board Members (appointed) ● Approves budgets & rates ● Issues revenue bonds ● Sets policy
Auditor Executive Director
General Counsel
OWASA Governance
Chapel Hill Town Council
(appoints 5)
Carrboro Board of Aldermen
(appoints 2)
Orange County Board of
Commissioners (appoints 2)
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Work together with your Board to set financial goals
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OWASA’s Financial Management Policy
“…a comprehensive and systematic approach to strategic financial
planning, related policy decisions, and measurements of financial
performance that collectively guide OWASA…”
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OWASA FINANCIAL PERFORMANCE OBJECTIVES
Measurement Objective
Working Capital Reserves The greater of 4 months of O&M budget or 20% of the succeeding 3 years of CIP budget
Capital Improvements Reserve Fund
Minimum fund balance target of 2% of annual depreciated capital costs
Debt Service Coverage Ratio ≥ 2.0
Debt Burden to Asset Value ≤ 50%
Sufficiency of Revenues Above Debt Requirements
Annual Debt service shall not exceed 35% of annual gross revenues
Credit Ratings Aa2 – Moody’s; AA+ – Standard & Poor’s; AA+ – Fitch
Cash Financing of Capital Annual revenues and cash reserves shall provide not less than 30% of CIP funding
Rate/Revenue Stabilization Fund Minimum fund balance target of 5% of projected water and sewer revenue
Service Affordability Average annual residential bill divided by real median household income shall be ≤ 1.5%.
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Board Communication Tips
• Regular review of financial performance objectives and information
• Educate, inform and involve
• Open, honest and transparent
• Simple graphs, charts and dashboards
• Numbers tell a story
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OWASA’s KPI Dashboard
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10,000
12,000
14,000
16,000
18,000
20,000
22,000
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
Cu
stom
er A
ccou
nts
Wat
er
Sale
s (m
illio
n g
allo
ns
pe
r d
ay a
vera
ge)
Actual Water Sales Accounts
Water Sales and Accounts Growth In Water Sales Decline In Water Sales
UNC Reclaimed
Water Use
Begins
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Approved Rate Increases
2007 10%
2008 17%
2009 10%
2010 9%
How did we do it?
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OWASA’s Board Understood,
• what needed to be done to sustain utility (short- and long-term),
• the consequences of their actions (or inactions), and
• what proactive cost reduction and efficiency measures were necessary.
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15 Year Financial Model – “Must have” tool!
• Helps Board make informed decisions (with aid of a dashboard)
• Provides answers to “what-if” scenarios
• Compares projected financial performance to stated policy objectives
• Use sound and conservative projections of expenses (O&M and CIP) and sales
• Long-term view essential
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Informed and Involved Customers
• Story of a positive future…
• Opportunities to receive and respond to feedback
• Report results
• Keep them informed about the value of water
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High Value – Story of a Positive Future
• National leader in drinking water quality & wastewater management
• Conservation & use of reclaimed water = supply for next 50 years (with contingency plans)
• Extending adequacy of existing facility capacity
• Infrastructure in good shape, plan to sustain
• Working smart
• Future rate increases expected to follow inflation
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2012 Customer Satisfaction Survey
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Key Take-Aways
Work together and set financial goals
Regular review of financial performance objectives
Open, honest and transparent
Simple graphs, charts and dashboards
Tell your story of a positive future
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Orange Water and Sewer Authority 400 Jones Ferry Road
Carrboro, NC 27510
919-968-4421
www.owasa.org
A public, non-profit agency providing water, sewer and reclaimed water services to the Carrboro-Chapel Hill community in North Carolina.
Ed Kerwin Executive Director [email protected] 919-537-4211
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0.00
0.50
1.00
1.50
2.00
2.50
3.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Years
Bond Order minimum
OWASA's Financial Management Policy target
Debt Service Coverage Ratio
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Drought Surcharges
Residential Customers Non-Residential
Customers
Increasing Blocks
1 2 3 4 5 Seasonal
Rates
Stage 1 Shortage
0 0 1.25 1.5 2.0 1.15
Stage 2 Shortage
0 1.25 1.5 2.0 3.0 1.25
Stage 3 Shortage
0 1.5 2.0 3.0 4.0 1.50
(surcharge multipliers applied to water volume charge)