lessons learned: integrating amp findings into a ......james bearman andrew burnham stantec...
TRANSCRIPT
MWEA – AIM Seminar
Frankenmuth, MI
January 23, 2019
James Bearman
Andrew Burnham
Stantec Consulting Services
Lessons Learned:
Integrating AMP
Findings Into A
Sustainable
Financial Plan
Hot Topic Asset Management (AM) in Michigan
The State of Michigan initiated a significant grant
and loan program to support the development of
wastewater and stormwater system and asset
management plans (AMP). Additionally, the
State mandated completion of AMPs for public
water systems without funding.
• Helped communities understand rate impacts of
alternative level of service (LOS) based AMPs and
develop sustainable funding strategies
• Collaborated with State regulators to define
appropriate financial measures and specific
documentation to submit as part of new program
• Completed over 25 studies in the past three years
Michigan’s AMP
Related Programs (W,WW,SW)
SAW – Stormwater, Asset Management, Wastewater
• Legislated in 2013
• 5 Rounds of grants awarded
• Currently in Round 4
Rule 1606 – Water AMP
• Organizations serving >1,000 required to have AMP by 1/1/2018
• No grant funding provided by State
•
AM Components – SAW Program
• Asset Inventory & Condition Assessment
• Inventory & Condition
• Probability, Consequence, and Criticality of Failure
• Identify CIP and O&M at various levels of service
• Analysis to identify any “gap” in revenues at 2.5 year mark
• Detailed report due at end of 3-year grant period
• MDEQ certification of completion
Funding
AM Components – Rule 1606
• Asset Inventory & Criticality Assessment
• Level of Service considerations
• CIP/AMP
• Identify 5 & 20 Year Needs
• Assets should be prioritized and assembled into the CIP
• Latitude for systems to tailor programs to fit their situation
• Anticipate 5 year update frequency
• Funding structure and rate methodology
More Funding
Financial Analysis – SAW & Rule 1606
• State requires financial “gap” analysis
• If revenue gap exists, must provide a rate plan addressing
revenue deficiency
• Bottom-line: Regardless of State driven initiatives,
communities are encouraged to evaluate financial and rate
impacts of alternative CIP, AMP, and LOS scenarios
Maybe funding is
important in AM?
• AMP takes significant monetary & human resources
• State funding very helpful
• Some municipalities remain wary of State oversight
• Degrees of expertise & available data/systems (GIS)
• Many smaller communities didn’t have a CIP before
developing an AMP
• Presence of AMP provides support for future rates
• Can help communities reluctant to raise rates
• Dynamic financial analysis mitigates rate impacts
while implementing AMP on a timely basis
There’s been a
lot to take in
Observations to Date
Case Study #1 Carson City, Michigan (W,WW,SW)
Lessons Learned:
• Conduct level of service sensitivities early on
• Higher fund balance targets can be a way to establish
future funding source for CIP/AMP
• Understand key customer(s) use of your services
Case Study #2 Imlay City, Michigan (W,WW,SW)
Lessons Learned:
• Don’t let large customers get you in a pickle
• Small yearly increases beat a large rate spike any
day of the week and 6 times on Sunday
Case Study #3 Livingston County, MI (Regional Sewer)
Lessons Learned:
• Don’t be afraid to call out “troubled” assets
• Clear communication is essential so everyone knows
what’s in current plans versus future reserves
• We may not be able to think of everything, but that
doesn’t mean we shouldn’t try to
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Capital Spending Current Plan Last Plan
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Revenue Vs. Expenses Cash In Cash Out
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Grinder R&R Fund Current Plan Last Plan Target
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Replacement Fund Current Plan Last Plan Target
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LT Reserve Fund Current Plan Last Plan Target
Case Study #4 City of Ann Arbor, MI (W,WW,SW)
Lessons Learned:
• Let stakeholders have their cake and eat it too
• We have to be realistic: How much can be
accomplished at one time and funding requirements
• College kids love to play in stormwater
• Know your sensitivities
• Understand LOS options early
• Get stakeholders involved
• Be realistic about everything
• Leverage AM to create change
• Don’t let it be a one-time thing
• Doesn’t matter if you can’t pay for it– Holistic forecasting
– Dynamic modeling
– Affordability limitations
SummaryRecap of Lessons Learned & Best Practices
Questions/Comments
James Bearman(517) 755-7502
Andrew Burnham(904) 631-5109