grp division proposed fiscal year 2021 operating budget & rates · 2020-06-22 · grp division...
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GRP Division Proposed Fiscal Year 2021 Operating Budget
& Rates
GRP Review CommitteeJune 22, 2020
SJRA Board MeetingJune 25, 2020
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Budgeting during Uncertainty…
The Sequel
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Recent Eventsthat Impact the Budget
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GMA 14 Joint Planning Committee MeetingMay 29, 2020
Please go to the following link to watch the entire meeting togain the full context of the discussion and draw your ownconclusions.
https://www.youtube.com/channel/UC4qnmHSI_lmaia8qTlG9QtA
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Approved DFC Scenarios for Further Evaluation
• 70% remaining available drawdown + 1 foot additional subsidence using Run D pumpage
• 70% remaining available drawdown + 1 foot additional subsidence using 2016 pumpage
• 80% remaining available drawdown + 1 foot additional subsidence using 2016 pumpage
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Next GMA 14 Joint Planning Committee Meeting
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Wednesday, July 15, 2020, 9:00 am
HGSD Offices, Friendswood, Texas
Or
Video Conferencing
IF you have an interest in the future of groundwater supplies/use in Montgomery County, we urge you to participate in this meeting and
contribute to the discussion.
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Lone Star Groundwater Conservation DistrictBoard Meeting
June 9, 2020
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Please go to the following link to watch the entire meeting togain the full context of the discussion and draw your ownconclusions.
https://lonestargcd.new.swagit.com/videos/63099
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Lone Star Groundwater Conservation DistrictSpecial Board Meeting
June 18, 2020
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Please go to the following link to watch the entire meeting togain the full context of the discussion and draw your ownconclusions.
https://lonestargcd.new.swagit.com/videos/70770
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Source: Texas Water Development Board, Region H Planning Group
Reference Only. Not part of LSGCD Presentation
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Target Completion August 2021
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Lone Star Groundwater Conservation District Public Meeting for Phase I Subsidence Study
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Week of July 6 (Date and Time TBD)
LSGCD Offices, Conroe, Texas
IF you have an interest in the future of groundwater supplies/use in Montgomery County, we urge you to:
1. review the LSGCD presentation of Phase I Subsidence Study results,2. review the LSGCD Phase I Subsidence Study Report,3. formulate your own conclusions, and4. participate in the meeting and contribute to the discussion.
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Next Lone Star Groundwater Conservation District Board Meeting
15
Tuesday, July 14, 2020, 6:00 pm
LSGCD Offices, Conroe, Texas
IF you have an interest in the future of groundwater supplies/use in Montgomery County, we urge you to participate in this meeting and
contribute to the discussion.
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Status of Legal Issues
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FY 2021 Budget and Rates
Summary from Meeting conductedMay 29, 2020
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https://www.sjra.net/grp/participant/
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Direction Received From GRP Review Committee
• No rate increase
• Items not included in development of rates– Legal fees associated with Conroe, Magnolia and Quadvest– Uncollected Revenue (short-pays) by Conroe and Magnolia
• Shortfalls in revenue to be withdrawn from Debt Service Reserve Fund
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Final Actual to FY 2021 Budget Comparison
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The Basics – O&M Expenses, Capital Imp. and Debt Service (12 MGD SW, 51.5 MGD Total)
• O&M Expenses– Staff Payroll and Benefits $ 4,682,808– Professional Fees (Excluding Legal Fees) $ 154,000– Purchased and Contracted Services $ 1,448,540– Supplies, Materials and Utilities $10,814,271– Maintenance Repair, Parts and Rentals $ 1,431,300– General and Administrative $ 526,394Total $19,057,313
• Other Expenses (Capital Improvements) $ 236,077• Debt Service
– Principal $14,800,834– Interest $19,753,631Total $34,554,465 20
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The Intangibles
• Short-pay by City of Conroe and City of Magnolia (Uncollected Revenue)
• Legal fees and judgments associated with– EDJA and Quadvest/Conroe/Magnolia, etc. Rate Case– Quadvest Federal Antitrust Case– LSGCD DFCs/GMP/Rules– W2A & W2B Water Line Leak Case
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Key Budget Assumptions Based on Review Committee Direction
• Rate to cover only operations and maintenance costs for the surface water plant and transmission system and GRP debt service. Rate is not based on paying legal costs associated with lawsuits with Quadvest, Conroe, Magnolia, etc. nor any uncollected revenue (shortfalls from Conroe and Magnolia)
• W2A/W2B Legal Costs = $250,000• Conroe/Magnolia current arrears ($4.7MM thru August 2020)• Legal Costs included in budget but not included in rate
– Quadvest/Conroe/Magnolia rate case thru trial = $800,000– Quadvest Anti-trust case thru discovery = $700,000– LSGCD DFCs/GMA/Rules = $260,000
• Surface Water Production = 12 MGD
• Total Water Demand = 51.5 MGD 22
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Resulting Reserves
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Operating & Rate Stabilization Reserve Fund - $0 Increase
Emergency Reserve - $0 Contributions and $0 Balance
Repair & Replacement Fund - $0 Contributions and $0 Balance
Debt Service Reserve Fund - $3,032,794 Withdrawal
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Total Revenue Requirements$19,293,390
$ 340,000*
$34,554,465
$ 0
$ 0**
$54,187,855
O&M Expenses (Base)+ Other Expenses
Legal Fees
Debt Service
Contributions to Reserves
Uncollected Revenue (Conroe and Magnolia)
Total
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* $2,090,000 total legal fees included in budget BUT NOT in calculation of total revenue requirements and rates
** $1,823,177 Uncollected Revenue (short-pay) included in budget, BUT NOT in calculation of total revenue requirement and rates
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Resulting Rates (per 1000 gallons) & CashGroundwater Pumpage
Surface Water
Increase over FY 2020
Budgeted Revenue
Withdrawal from Debt Service Reserve
$2.73
$3.15
0%
$54,728,238
$3,032,794*
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* Unscheduled draws trigger public disclosure under SEC rules
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Withdrawals from Debt Service Reserve & Related Consequences
• Unscheduled draw triggers disclosure under SEC rules
• Coordinated with Texas Water Development Board
• Must be replenished in future years (60 Months)– Primarily from awards by Court required of Conroe and Magnolia– Any remaining from revenue generated from rates
• Other stipulations that may be required by TWDB and bond holders
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GRP Revenue
Groundwater Pumpage Fees
GRP General Fund
All revenue is deposited in the GRP General Fund
Surface Water Fees
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Flow of GRP FundsDefined by Bond Covenants
O&M Expenses Debt Service Fund Debt Service Reserve Fund
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Flow of GRP FundsDefined by Bond Covenants
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses29
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Flow of GRP FundsDefined by Bond Covenants
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses30
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Flow of GRP FundsDefined by Covenants
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses31
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Flow of GRP FundsDefined by Covenants
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Currently Fully Funded
Note: Legal fees are considered O&M
Expenses32
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Flow of GRP FundsDefined by Covenants
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Starting FY 2021 Fully Funded
Note: Legal fees are considered O&M
Expenses
Semi-Annual Debt Service
Payments33
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Flow of GRP FundsDefined by Policy
Operating & Rate StabilizationReserve Fund
EmergencyReserve Fund
Repair & Replacement Fund
The above reserves and funds reside within the GRP General Fund.
NO reserve funds receive contributions unless all O&M
Expenses are paid, Debt Service Fund is full and Debt Service
Reserve is full
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Flow of GRP FundsResults of FY 2021 Budget – Shortage of Available Funds
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses35
**Once adequate funds are not available to pay O&M Expenses, money will be
moved out of Debt Service Fund**
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Flow of GRP FundsResult of FY 2021 Budget
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses36
**IF funds in excess of O&M Expenses become available at a later date, Debt
Service Fund will be replenished prior to semi-annual Debt Service payment**
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Flow of GRP FundsResults of FY 2021 Budget – Shortage of Funds
O&M ExpensesDebt Service Fund
Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses
Semi-Annual Debt Service
Payments37
**IF adequate funds are not available in the Debt Service Fund, Debt Service Payment
will be supplemented with withdrawal from Debt Service Reserve Fund**
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Flow of GRP FundsDefined by Bond Covenants
O&M Expenses Debt Service FundDebt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses38
** Debt Service Reserve Fund must be replenished within 60 month period**
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Flow of GRP FundsDefined by Bond Covenants – No Shortage of Funds
O&M Expenses Debt Service Fund Debt Service Reserve Fund
Note: Legal fees are considered O&M
Expenses39
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Flow of GRP FundsDefined by Policy – No Shortage of Funds
Operating & Rate StabilizationReserve Fund
EmergencyReserve Fund
Repair & Replacement Fund
The above reserves and funds reside within the GRP General Fund.
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2014 GRP Rate Study Rate Forecasts
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2019 GRP Rate Study Groundwater Fee Forecast
$2.00$2.20$2.40$2.60$2.80$3.00$3.20$3.40$3.60$3.80$4.00
2020 2021 2022 2023 2024
Gro
undw
ater
Fee
Fiscal YearsScenario A Scenario B
Scenario A – Reserves fully funded over 5 yearsScenario B – Reserves fully funded over 10 yearsIncludes a 3% Annual Inflation Rate 42
Proposed GW Rate = $2.73
Future catch up in rates greater than previously planned!
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2019 GRP Rate Study Surface Water Fee Forecast
$2.00$2.20$2.40$2.60$2.80$3.00$3.20$3.40$3.60$3.80$4.00
2020 2021 2022 2023 2024
Surf
ace
Wat
er F
ee
Fiscal YearsScenario A Scenario B
Scenario A – Reserves fully funded over 5 yearsScenario B – Reserves fully funded over 10 yearsIncludes a 3% Annual Inflation Rate 43
Proposed SW Rate = $3.15
Future catch up in rates greater than previously planned!
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Comparison of Proposed FY 2021 Budget to 2019 Rate Study
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Keys to the FY 2021 Budget• Rates remain constant – 0% increase
– Pumpage = $2.73/1000 gallons– Surface Water = $3.15/1000 gallons
• 51.5 MGD Annual Average Total Water Demand• 12 MGD Annual Average Surface Water Production
– Limits surface water availability
• $3,032,794 budgeted withdrawals from Debt Service Reserve• No Contributions to Emergency Fund or Repair and
Replacement Fund – Both have balance of $0• Flow of funds to meet Bond covenants
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$2.73
$3.20
$3.85
$4.25$3.95
$3.15
$3.60
$4.30
$4.70
$4.30
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Current SJRA Rate Current WHCWARate
Current NHCRWARate
NHCRWA Rate(July 2020)
Current NFBWARate
Per 1
000
Gal
lons
Groundwater Surface Water
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No Amendment to Rate Order Required
• Current GRP Rate Order Adopted June 27, 2019• Section 3.01
– Pumpage Fee = $2.73/1000 gallons
• Section 3.02– Import Fee = $2.73/1000 gallons
• Section 3.03– Surface Water Fee = $3.15/1000 gallons
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Questions &Discussion
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