water-sewer-financial-analysis-slides — File 202080

Water/Sewer Enterprise Funds Financial Analysis 1

A Separate Enterprise Fund Water & Sewer Services MWRA fees Ongoing maintenance Major Repairs Water & Sewer Bill Payments Water & Sewer revenues fund only water and sewer related expenses. Water & Sewer is not a part of the General City Budget. 2

MWRA Assessments Over Time $3.8M $6.0M $6.9M $7.7M $5.8M $12.8M $14.8M $15.9M 0 2 4 6 8 10 12 14 16 18 2003 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Millions Water Sewer 3

Fees charged to the City by MWRA are rising $18.4 $18.8 $19.6 $20.1 $21.0 $21.7 $22.7 $23.6 0 5 10 15 20 25 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Millions 28% increase in annual fees (+$5.2M since 2010) Combined MWRA sewer and water assessments over time 4

Historical Water & Sewer Rates $7.00 $7.56 $8.12 $8.53 $8.98 $9.35 $9.69 $9.69 $9.98 $10.11 $11.22 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 W/S Rates for Tier 1 (0-13 Units) FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 7.00 $ 7.56 $ 8.12 $ 8.53 $ 8.98 $ 9.35 $ 9.69 $ 9.69 $ 9.98 $ 10.11 $ 11.22 $ 8.0% 7.4% 5.0% 5.3% 4.1% 3.7% 0.0% 3.0% 1.3% 11.0% 5

Water & Sewer Usage FY11-FY16 This chart shows the increase or (decrease) in usage (per Hundred Cubic Feet) from one year to the next with a cumulative average. FY Year/Description Water Usage HCF Sewer Usage HCF 2011 Totals 2,467,806 2,509,785 2012 Totals 2,119,331 2,196,117 2013 Totals 2,035,953 1,969,019 2014 Totals 2,555,076 2,442,553 2015 Totals 2,257,828 2,183,762 2016 Totals 2,078,746 2,175,133 Average 2011-2016 2,252,457 2,246,062 Change 2012/2011 -14.1% -12.5% Change 2013/2012 -3.9% -10.3% Change 2014/2013 25.5% 24.0% Change 2015/2014 -11.6% -10.6% Change 2016/2015 -7.9% -0.4% Change 2016/2011 -15.8% -13.3% 6

Water Usage Trends (In millions of units billed) 2.47 2.12 2.04 2.56 2.26 2.08 2.25 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2011 Totals 2012 totals 2013 Totals 2014 Totals 2015 Totals 2016 Totals Average 2011-2016 Millions 7 *1 Unit = 100 cubic feet, or 748 gallons

Sewer Usage Trends (In millions of units billed) 8 *1 Unit = 100 cubic feet, or 748 gallons 2.51 2.20 1.97 2.44 2.18 2.18 2.25 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2011 Totals 2012 Totals 2013 Totals 2014 Totals 2015 Totals 2016 Totals Average 2011-2016 Millions

Water Enterprise Revenue & Expenses $12.1 $12.1 $12.8 $11.9 $12.4 $12.7 $10.0 $10.5 $11.0 $11.5 $12.0 $12.5 $13.0 2014 2015 2016 Millions Revenue Expenditure 9

Sewer Enterprise Revenue & Expenses $17.0 $17.9 $18.7 $17.8 $18.9 $19.6 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 $22.0 2014 2015 2016 Millions Revenue Expenditure 10

Water/Sewer FY16 Q4 Revenue Issues • Projected revenue shortfalls were apparent in April 2016 Ø Water: Approximately $600K ($900K projected operating deficit) Ø Sewer: Approximately $2.3M ($2.9M projected operating deficit) • Finance worked with Water Department to assess the revenue collection and expenditures on a weekly basis • By mid-May the situation improved slightly as a result of increased revenue and reduced spending Ø Water projected operating deficit: $400K Ø Sewer projected operating deficit: $1.6M 11

Water/Sewer FY16 Q4 Revenue Issues • The city takes immediate action to remediate the deficit, close the books with positive balance and prevent excessive Water & Sewer rate increases ØReduced OM spending and saved $140K in Water and $364K in Sewer. ØReduced Capital spending and saved $215K in Water and $363K in Sewer. ØPS savings: $237K in Water and $40K in Sewer. ØLiquidated prior year encumbrances. ØMinimized the amount of carry-forward funds from $1.1M in 2015 to $373K in 2016. 12

FY16 Water/Sewer Operating Shortfall • The table below shows the operating shortfalls which will be absorbed by and provided for from existing Retained Earnings and reversion of prior year encumbrances City of Somerville Water / Sewer Water Sewer Revenues $12,765,711.24 $18,688,473.33 Expenditures ($12,744,430.85) ($19,580,233.58) Reserve for Encumbrances ($146,317.37) ($227,432.72) Operating Shortfall ($125,036.98) ($1,119,192.97) Reverse Prior Year Encumbrances $499,687.07 $602,215.55 Add Prior Year Certified Retained Earning $309,496.50 $702,492.02 Ending Balance $684,146.59 $185,514.60 2016 13

Water Expenditure Summary FY17 Personal Services $1,321,682 Ordinary Maintenance $688,585 Capital Outlay $500,000 Debt Service $1,494,517 Special Items $1,131,696 $12.8M total MWRA Fee $7.7M 14 MWRA Assessments are 60% of the Water Enterprise budget.

Sewer Expenditure Summary FY17 Personal Services, $505,055 Ordinary Maintenance, $947,691 Capital Outlay, $500,000 Debt Service, $687,379 Special Items, $1,155,701 $19.8M MWRA Fee $16M 15 MWRA Assessments are 80% of the Sewer Enterprise budget.