City of Rialto
Water and Wastewater 2023 Revenue Analysis
Prepared in Advance of Water Subcommittee Meeting,
June 2023
2 Agenda
• Review wastewater financial status, then water
• Review current utility budget and compare with revenues • Show reserves
• Show projected financial condition with no rate increases • Performance measures:
• Amount of Revenue Stabilization funds needed
• Trustee debt service coverage
• Ability to pay O&M expenses
• Ability to pay capital expenses
• Show funds available for capital projects with no rate increases • How much capital does $1/month from utility bills pay for? • Discussion
3 FY 23/24 RUA
Budget: Wastewater
FY 23/24
Budget
RWS Service Charges
Fixed and Routine R&R Component $2,956,205
Chemical Component $729,932
Labor Component $3,847,946
Other RWS Expenses
Wastewater ORR $930,000
CA: Independent Engineer $109,349
RWS Insurance $999,756
Capital Charges $12,682,000
Allowance for Maintenance < $250 $0
MIPP Services (Veolia) $111,920
Other Wastewater Expenses
Electricity $1,167,308
Gas $188,520
Biosolids $887,285
City Reimbursement (680 Admin) $1,072,830
All Other Expenses $1,037,966
Other City Expenses
City Contract (Transfer to General Fund) $685,000
RUA Lease Payment $1,600,000
Total $29,006,018
Required Deposit to RWS Reserve Fund $238,082
4 FY 23/24 RUA
Budget: Wastewater
Comparison of
Revenues and
Expenses
Expenses FY 23/24 Budget
RWS Service Charges $7,534,084
Other RWS Expenses $14,833,025
Electricity, Gas, Biosolids $2,243,113
City Reimbursement (680 Admin) $1,072,830
City Contract (Transfer to General Fund) $685,000
RUA Lease Payment $1,600,000
All Other Expenses $1,037,966
Total Expenses $29,006,018
Deposits to Trust Wastewater Reserve Fund $238,082
Revenues
Wastewater Rates $27,920,183
Development Impact Fees $350,000
Anaergia Lease $300,000
Grants $370,000
RUA Interest Income (Not in Waterfall) $3,930
All Other Revenues $302,000
Total Revenues $29,246,113
5 Wastewater reserves
• RUA cash in bank: $21.5M
• DIF funds held in trust: $7.5M
• Estimated next five years of DIF revenues: $1.75M
• Additional restricted reserves held in trust
• No formal policy exists regarding minimum RUA cash
in bank balance
6 Wastewater financial projection:
no rate increases, no capital spending
• With no capital spending, slight spenddown of RUA Fund Balance over next five years.
• Ongoing need for revenue stabilization from RUA Fund
Balance to meet coverage requirement in trust
FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28
Calculation of Free Cash Flow
All Revenues Except Development Impact Fees $28,892,183 $28,627,072 $28,732,149 $28,837,418 $28,942,885 Plus Revenue Stabilization From RUA Reserves $1,000,000 $1,000,000 $1,000,000 $1,300,000 $1,500,000 Plus New Revenue Stabilization 0 0 0 0 0
Less Expenses (Excluding RUA Lease Payment) ($27,406,018) ($27,343,618) ($27,710,159) ($28,085,863) ($28,470,959) Free Cash Flow $2,486,165 $2,283,454 $2,021,990 $2,051,556 $1,971,925 Free Cash Flow, as % of RUA Capital Charge 19.6% 18.0% 15.9% 16.2% 15.5% Projected RUA Fund Balance, $M, End of Year $21.5 $21.2 $21.3 $20.5 $19.6 7 Wastewater: $1/month from monthly bill:
how much capital does it pay for?
• $1/month from each EDU:
• $450,000 per year cash
• Annual cash spending of $450,000, or
• Debt service on $6.4M SRF loan (20 years, 2%, also considers trust coverage requirement), or
• Debt service on $7.1M WIFIA loan (30 years, 3.61%, also considers trust coverage requirement)
8 FY 23/24 RUA
Budget: Water
FY 23/24
Budget
RWS Service Charges
Fixed and Routine R&R Component $3,057,485
Chemical Component $63,096
Labor Component $3,533,470
Other RWS Expenses
Water ORR (1) $680,000
CA: Independent Engineer $109,296
RWS Insurance $869,512
Capital Charges $2,900,000
Allowance for Maintenance < $250 $221,300
Other Water Production and Purchase
Electricity (2) $1,540,932
Water Purchase, Baseline Feeder $500,749
Water Purchases, Other $671,129
Perchlorate, Not Reimbursed $87,300
Other Utility Operating Costs
City Reimbursement (680 Admin) $799,560
All Other Expenses $974,172
Other City Expenses
City Contract (Transfer to General Fund) $479,023
RUA Lease Payment $400,000
Total $16,887,024
Required Deposit to RWS Reserve Fund $272,119
9 FY 23/24 RUA
Budget: Water
Comparison of
Revenues and
Expenses
Expenses FY23/24 Budget
RWS Service Charges $6,654,051
Other RWS Expenses $4,780,108
Other Water Production and Purchase $2,800,110
City Reimbursement (680 Admin) $799,560
City Contract (Transfer to General Fund) $479,023
RUA Lease Payment $400,000
All Other Expenses $974,172
Total Expenses $16,887,024
Deposits to Trust Water Reserve Fund $272,119
Revenues
Water Rates $13,053,423
Perchlorate Revenues $0
Development Impact Fees $200,000
Water Rights Lease to SB County $332,264
Grants $165,025
RUA Interest Income (Not in Waterfall) $110,640
All Other Revenues $243,050
Total Revenues $14,104,402
10 Water reserves
• RUA cash in bank: $1.6M
• DIF funds held in trust: $2.6M
• Estimated next five years of DIF revenues: $1.0M
• Rate stabilization reserves held in trust: $2.785M
• These funds will be used in FY 23/24
• Additional restricted reserves held in trust
• No formal policy exists regarding minimum RUA cash in bank balance
11 Water financial projection:
no rate increases, no capital spending
• Estimated $21M revenue stabilization needed over next five years. • FY 23/24 Revenue Stabilization reserves held in trust and spend down of RUA Fund Balance. • At least $13.2M revenue stabilization required but no funding source identified. • Capital spending, if any, limited to use of DIF reserves FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28
Calculation of Free Cash Flow
All Revenues Except Development Impact Fees $13,941,354 $13,837,058 $13,898,394 $13,960,751 $14,024,177 Plus Revenue Stabilization From RUA Reserves 300,000 1,400,000 0 0 0 Plus Revenue Stabilization Currently in Trust 2,785,000 Plus New Revenue Stabilization 0 1,800,000 3,500,000 3,800,000 4,100,000 Less Expenses (Excluding RUA Lease Payment) ($16,487,024) ($16,487,148) ($16,825,577) ($17,172,466) ($17,528,028) Free Cash Flow $539,330 $549,910 $572,818 $588,285 $596,149 Free Cash Flow, as % of RUA Capital Charge 18.6% 19.0% 19.8% 20.3% 20.6% Projected RUA Fund Balance, $M, End of Year $1.9 $0.1 $0.3 $0.3 $0.3 12 Water: $1/month from monthly bill:
how much capital does it pay for?
• $1/month from each EDU:
• $226,000 per year cash
• Annual cash spending of $226,000, or
• Debt service on $3.14M SRF loan (20 years, 2%, also considers trust coverage requirement), or
• Debt service on $3.5M WIFIA loan (30 years, 3.61%, also considers trust coverage requirement)
• Ability to issue debt without revenue
stabilization/sufficient rates is in question.
13 Capital Improvements:
Priority Infrastructure Upgrades
Wastewater:
• Sycamore Sewer Upsize: $3M
• Acacia Sewer Upsize: $2M
• Digester 1 Activation & Digester 2 Rehab: $1.8M
• Rialto Biosolids: $21.9M Remaining
• Agua Mansa Lift Station Upgrades: $2M
• Secondary Clarifier 1 and 2 Upgrades: $0.5M
• Ayala Lift Station Upgrade and Repair: $2M
Water:
• $6.7M Etiwanda Avenue Water Main Replacement.
14 Capital Improvements:
projects with outside funding
Wastewater:
• Microgrid: $20M project cost. Estimated 30% project funding through ITC Tax credit. Triggers ITC Tax Credit on other projects:
• WWTP P1 and P2 Demo. $2.3M project cost
• WWTP Electrical Upgrade for Microgrid: $8.8M project cost • Lake Rialto: $5.25M grant funding; $2.95M remaining unfunded.
Water:
• Priority infrastructure upgrades:
• AMI: $8M project. $8M grant received, fully funded.
• Well 3A Groundwater Treatment: $4.2M project. $2M grant received Security Upgrades, water and wastewater: $4M, fully ARPA funded 15 Feedback, Questions, Comments?
Thank you for your time.