metropolitan council environmental services sac revenue update december 9, 2008 a clean water agency...
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Metropolitan CouncilEnvironmental Services
SAC Revenue Update
December 9, 2008
A Clean Water Agency
Jason WillettMCES Finance Director
Presented to the Environment Committee
SAC RevenueUpdate
2
Historical SAC RatesYear
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
SAC Rate Increase % Change$1,050
$1,100
$1,150
$1,200
$1,275
$1,350
$1,450
$1,550
$1,675
$1,825
$2,000
$50
$50
$50
$50
$75
$75
$100
$100
$125
$150
$175
5.0
4.8
4.5
4.3
6.2
5.9
7.4
6.9
8.1
9.0
9.6
SAC RevenueUpdate
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Service Availability Charge
SAC units in 2008 (through Sept.) are at a record low.
September year-to-date SAC units: 2008: 7,385 2007: 10,522 2006: 12,149 2005: 13,807 2004: 14,999
SAC RevenueUpdate
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Service Availability Charge
Total 2008 SAC units are projected to be 11,500.
SAC units: 2008: 11,500 (projected) 2007: 15,194 2006: 17,052 2005: 19,334 2004: 20,542
2008 will likely be the lowest since program’s inception in 1973. Previous lows: 1982: 13,400 1975: 13,300
SAC RevenueUpdate
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Service Availability Charge
History of SAC units (11,500 projected for 2008):
SAC Units Paid
10,000
15,000
20,000
25,000
30,000
73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
SAC RevenueUpdate
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SAC Units by Category
SAC units paid by category (net of credits):
Residential*
16,553
15,611
13,856
8,050
5,808
4,550
2003
2004
2005
2006
2007
2008**
Commercial
4,061
4,571
4,629
7,659
8,371
6,660
Industry
536
360
849
1,343
1,015
290
TOTAL
21,150
20,542
19,334
17,052
15,194
11,500
*Includes houses, town homes, duplexes, condos and apartments.**Estimated
SAC RevenueUpdate
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Service Availability Charge
The economic decline will likely cause the SAC reserve to drop below the established minimum balance in the next couple of years. Council Policy 3-2-5: The calculated minimum balance is 20% of
the sum of the following five years SAC transfers.
SAC RevenueUpdate
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Service Availability Charge
To keep the SAC fund above the minimum balance, the minimum SAC units needed are*: *Assuming annual $175 SAC rate increases *Based on 11,500 SAC units in 2008
– 2009: 16,000– 2010: 18,000– 2011: 19,000– 2012: 20,000 (and each following year)
SAC RevenueUpdate
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Service Availability Charge
A more realistic—albeit slightly optimistic—recovery might look like this: 2009: 13,000 2010: 16,000 2011: 18,000 2012: 20,000 (and each following year)
These numbers of SAC units will cause the reserve to drop below the minimum balance.
SAC RevenueUpdate
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Use of Reserve Fund
Council Policy 3-2-5: Use of the minimum reserve shall be allowed only in an economic downturn or natural disaster and as approved by the Council.
Reserve balance on 12/31/07 was $72.2 million
Minimum balance on 12/31/07 was $35.2 million
Projected balance for 12/31/08 was $62 million;now $54 million
SAC RevenueUpdate
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Recovery Impact on Fund
Reserve balance over or (under) the minimum in $ millions. Both cases are based on $175 annual SAC rate increase.
Quick Recovery
11,500 $12.0
16,000 $3.6
18,000 $0.7
19,000 $1.0
20,000 $3.1
2008
2009
2010
2011
2012
Realistic Recovery
11,500
13,000 ($1.0)
16,000 ($9.3)
18,000 ($12.4)
20,000 ($10.9)
SAC RevenueUpdate
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Questions, Concerns