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1 RiversideCA.gov
1 RiversideCA.gov
WASTEWATER FINANCIAL MODEL UPDATE
Mobility & Infrastructure Committee
August 11, 2022
Public Works Department
RiversideCA.gov
2 Treatment Plant
Collections System
BACKGROUND
WQCP services 93,000 customers
within the City of Riverside
27 Million gallons
per day average
16,000 sewer manholes
800 miles of gravity sewers
20 wastewater lift stations
BACKGROUND
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3 City Council has taken numerous actions regarding the Water Quality Control Plant over last 8 years
– 2014 adopted annual rate increases of 8.5% for FY 2014/15 through FY 2018/19 – 2015 approved agreement and settlement with Jurupa Community Services District in the amount of $15,000,000
– 2016 adopted Sewer Enterprise Reserve Fund Policy. Approved agreement with Carollo Engineers for Wastewater Master Plan Update
– 2017 rescinded 8.5% rate increase for FY 2018/19. Recommend reserves be held closer to Reserve Policy minimum
– 2020 approved 2019 Integrated Wastewat er Master Plan except for Volume 8, Financial Plan and User rates and Fees. Approved public Works Renewable Resources Master Plan
– 2022 extended contract with Carollo Engineers for Financial Model Update
BACKGROUND
RiversideCA.gov
4 Digester 5 Rehabilitation
for Food Waste
Budget = $ 2.75 M
Magnolia Sewer Force
Main Rehabilitation
Budget = $ 8.50 M
Priority Pipeline
Replacements
Budget = $2.60 M
ONGOING CIP
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5 Headworks & Primary
Odor Control Meters
Funded = $ 0.00 M
Needed = $0.75 M
Digester Gas System
Rehabilitation
Funded = $ 0.00 M
Needed = $2.00 M
Dissolved Air Flotation
Rehabilitation
Funded = $ 0.55 M
Needed = $8.08 M
Upgrade Flow Meters
to Electromagnetic
Funded = $ 0.00 M
Needed = $6.32 M
CRITICAL WASTEWATER TREATMENT PROJECTS
RiversideCA.gov
6 Pierce St. Pump Station
Funded = $0.20 M
Needed = $8.83 M
Wood Rd. Pump Station
Funded = $0.20 M
Needed = $8.00 M
Pipeline Replacements
Funded = $4.12 M
Needed = $4.27 M
CRITICAL COLLECTION SYSTEM PROJECTS
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7 • Present need to advance critical Master Plan and Renewable Resource Projects
• Division requested update of existing financial model • Consultant directed to ensure update:
– Reflected current economic conditions
– Focused foremost on options which reduce pressure on rates and reserves – Forestalled any potential rate increases
– Maintained reserves at or above a reserve goal equal to the minimum Sewer Enterprise Fund Reserve Policy (Reserve Policy) amount plus 10-percent; and – Provided sufficient funding for the CIP
WASTEWATER FINANCIAL MODEL UPDATE
RiversideCA.gov
8 • Adopted November 2016
• Ensure fiscal stability by establishing target and minimum • Provide guidance to staff in the financial management of Sewer Division operations
• 2017 - Council directed staff to hold reserves closer minimum rather than targets; no set level was established
• Technical consultant defined a “Reserve Goal” as an amount equal to the Reserve Policy minimum plus 10-percent as part of Financial Model Update
• “Reserve Goal” used to evaluate scenarios to fund Capital Improvement Program through FY 2026/27
SEWER ENTERPRISE FUND RESERVE POLICY
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9 ASSUMPTIONS
• No future rate increases
• No new bonds issued
• Jurupa Settlement refunded
PROJECTIONS
• Not considered viable
• Significant cuts to capital
• Reserves below goal in FY 2024/25
and near depleted FY 2026/27
BASE CASE SCENARIO
RiversideCA.gov
10 ASSUMPTIONS
• Utilize Jurupa Settlement for
capital
• Resume 4% rate increases FY
2024/25
PROJECTIONS
• Decreased pressure on rates & reserves
• Maintains reserves at or above goal
• Bonds issued in FY 2026/27 to provide
funding for FY 2026/27 & FY 2027/28
• Debt coverage sufficient
OPTION 1 - RECOMMENDED
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11 ASSUMPTIONS
• Jurupa Settlement refunded
• 4% rate increases starting FY
2024/25
PROJECTIONS
• Reserves below goal (~$8.3M) FY 2025/26
and through at least FY 2026/27
• Rates would not make up reserve deficit
• Additional bond funds required
• Debt coverage sufficient
OPTION 2A
RiversideCA.gov
12 ASSUMPTIONS
• Jurupa Settlement refunded
• 5% rate increases starting FY
2024/25
PROJECTIONS
• Reserves below goal in FY 2025/26
• Higher rates would allow reserves to
rebound in FY 2026/27
• Additional bond funds required
• Debt coverage sufficient
OPTION 2B
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13 Strategic Priority 4 – Environmental Stewardship
Goal 4.1 - Rapidly decrease Riverside’s carbon footprint by acting urgently to reach a zero-carbon electric grid with the goal of reaching 100% renewable energy production by 2040 while continuing to ensure safe, reliable and affordable energy for all residents.
Goal 4.2 - Sustainably manage local water resources to maximize reliability and advance water reuse to ensure safe, reliable and affordable water to our community.
Goal 4.4 - Implement measures and educate the community to responsibly manage goods, products and services throughout their lifecycle to achieve waste reduction outcomes.
Goal 4.6 - Implement the requisite measures to achieve citywide carbon neutrality no later than 2040.
STRATEGIC PLAN ALIGNMENT STRATEGIC PLAN ALIGNMENT
RiversideCA.gov
14 Strategic Priority 6 – Infrastructure, Mobility & Connectivity Goal 6.2 - Maintain, protect and improve assets and infrastructure within the City’s built environment to ensure and enhance reliability , resiliency, sustainability, and facilitate connectivity.
Cross-Cutting Threads
STRATEGIC PLAN ALIGNMENT
STRATEGIC PLAN ALIGNMENT (CONT.)
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15 That the Mobility & Infrastructure Committee recommend that the City Council:
1. Receive an update on the Wastewater Financial Model;
2. Conceptually approve the City of Riverside Wastewater Master Plan Technical Memorandum – Summary of Financial Model Update dated July 2022;
3. Conceptually approve Option 1 within the City of Riverside Wastewater Master Plan Technical Memorandum – Summary of Financial Model Update dated July 2022;
4. Define as a Sewer Enterprise Fund Reserve Policy “Reserve Goal” an annual Reserve Ending Balance of at least the Policy Minimum Reserve Target plus
10.0-percent;
RECOMMENDATIONS
RiversideCA.gov
16 5. Authorize the use of Sewer Enterprise Fund Reserves above the “Reserve Goal” to fund Capital Improvement Projects through FY 2026/27;
6. Authorize the use of $15,000,000 in Jurupa CSD Settlement funds for capital projects outlined in this report; and
7. Direct staff to finalize the 2019 Wastewater Master Plan Volume 8 – Financial Plan and User Rates and Fees based on the Wastewater Financial Model Update and return to the City Council for consideration.
RECOMMENDATIONS (CONT.)
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