HomeMy Public PortalAboutExhibit MSD 3G - Direct Testimony, Theresa Bellville, MSDMSD Exhibit No. MSD 3G
2015 Rate Change Proceeding
THERESA A. BELLVILLE
Direct Testimony
Metropolitan St. Louis Sewer District
February 26, 2015
Table of Contents
Page
Witness Background and Experience ........................................................................................... 1
Budget Development .................................................................................................................... 1
Wastewater Financing ................................................................................................................... 3
Performance Against 2011 Rate Report ....................................................................................... 6
Stormwater Financing ................................................................................................................... 7
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
Witness Background and Experience 1
Q1. Please state your name, business address, and telephone number. 2
A. Theresa A. Bellville, 2350 Market Street, St. Louis, Missouri 63103-2555, (314) 768-3
6229; tbellvil@stlmsd.com. 4
Q2. What is your occupation? 5
A. I am the Assistant Director of Finance for the Metropolitan St. Louis Sewer District 6
(District). 7
Q3. How long have you been associated with the District? 8
A. I have been with the District continuously since August 27, 2001. 9
Q4. What is your professional experience? 10
A. Prior to joining the District, I was the Budget Director for the St. Louis Public Schools 11
and was employed there for 10 years. Prior to that I filled a variety of financial positions 12
with Community Federal Savings and Loan Association and Carondelet Federal Savings 13
and Loan in St. Louis. 14
Q5. What is your educational background? 15
A. I hold a B.S. degree in Business Management form Maryville University-St. Louis 16
(1989). 17
18
Budget Development 19
Q6. How is the District’s budget developed? 20
A. The District’s budget is developed annually using a zero based budget approach. Each 21
District Director develops the budget for his/her area of responsibility based on most 22
current and historical expenditure trends and knowledge of upcoming needs. Each 23
2015 Rate Change Proceeding 1 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
Department prepares a base budget that covers funding for its day-to-day operations and 1
an incremental budget for strategic activities tied to the District’s Strategic Operating 2
Plan to be implemented throughout the upcoming budget year. Each Director’s 3
components are compiled into a comprehensive, balanced preliminary operating budget 4
which is presented to the District’s Board by March 15th of each year as required by 5
Charter. 6
Simultaneously, the District’s Engineering Department updates and develops the 7
District’s five year CIRP Supplemental Budget document. This document, lists the 8
various capital projects anticipated over the next 5 years, is reviewed by the District’s 9
Executive Director prior to presentation to the District’s Board and modifications are 10
made accordingly. 11
The MSD Board of Trustees (“Board”) Finance Committee meets in April to review, in 12
detail, operating expenses, the CIRP and revenues projected for the budgeted year. 13
During these meetings, District Trustees ask questions and provide direction for 14
modifications. These modifications are incorporated into the budget, which is then 15
presented at a public hearing prior to formal introduction by the Board as required by 16
Charter. This public hearing is held immediately following the May Board meeting at 17
which the budget’s formal introduction is held. Final adoption of the District budget 18
occurs at the June Board meeting. 19
Q7. What percentage of the total operating budget does the District actually spend? 20
A. A two year average (FY13 and FY14) of actual to budget expenditures for the total 21
operating budget is a favorable variance (i.e., expenditures were less than budgeted) of 22
less than 1.5% each year. 23
2015 Rate Change Proceeding 2 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
Q8. When was the current fiscal year 2015 budget approved by the District Board? 1
A. The District Board adopted the current fiscal year 2015 budget on June 12, 2014 through 2
Ordinance 13855. (Exhibit MSD19) 3
Q9. Do the budgeted costs for fiscal year 2015 match the 2015 costs shown in the rate 4
change proposal? 5
A. Yes. 6
Q10. In your opinion, are the inflation allowances used in the rate change proposal 7
reasonable? 8
A. Yes. 9
Q11. When will the fiscal year 2016 budget be approved by the Board and available for 10
distribution? 11
A. The fiscal year 2016 budget is expected to be approved by the District Board in June 12
2015 and be available for distribution shortly thereafter. 13
Q12. Is the 2016 preliminary budget available for review? 14
A. No, not at this time. The 2016 preliminary budget will be provided to the Board by 15
March 15, 2015 as required by Charter and be available thereafter for distribution. 16
17
Wastewater Financing 18
Q13. Does the proposed Rate Change impose a fair and reasonable burden on all classes 19
of Ratepayers? 20
A. The rate increase is fair and reasonable as the wastewater charges for each class of 21
ratepayers are either based on actual water usage measured in Ccf (one Ccf is equal to 22
100 cubic feet) or for non-metered customers by the physical attributes within their 23
2015 Rate Change Proceeding 3 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
residence (i.e., number of rooms, water closets, baths and separate showers). Water usage 1
for metered customers, is based on water usage during the “Best Equated Period”, or 2
winter period, which is used to estimate billable wastewater volume, since this period is 3
typically representative of indoor water use that is ultimately discharged to the sewer 4
system. 5
Q14. Has customer impact data been factored into the Rate Proposal? 6
A. Yes. The Rate Proposal attempts to balance the use of debt financing and wastewater 7
user charge revenue to simultaneously fund a wastewater improvement and replacement 8
program needed to meet anticipated regulatory requirements and minimize the impact on 9
customer monthly bills to the extent possible. 10
B. In addition, the Rate Proposal includes a recalibration of the billable wastewater volumes 11
based on property attributes applicable to unmetered residential and multi-family 12
customers. An analysis of the relationship of water usage between metered and 13
unmetered residential customers was performed using a combination of actual District 14
data and multivariate analytics. Based on the analysis, the recalibrated unit water 15
consumption estimates of gallons per day (gpd) per attribute are as follows: rooms, 14.5 16
each; water closets, 54.2 each; baths, 45.2 each; and separate showers, 45.2 each. 17
Additional detail regarding this analysis can be found in appendix 7.1.4. 18
Q15. Will ad valorem tax revenues be used to finance any of the WW projects shown in 19
Table 4-7 of the Rate Change Proposal? 20
A. The District’s current ad valorem tax structure consists of two WW subdistricts, Lower 21
Meramec River Basin and Missouri River. The CIRP includes projects associated with 22
the Missouri River; however, this work will be funded by existing fund balances. No 23
2015 Rate Change Proceeding 4 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
WW ad valorem taxes have been levied in either subdistrict since 2008. 1
Q16. Was a customer resistance allowance factored into the Rate Proposal to compensate 2
for a potential decrease in the collection rate due to rate increases? 3
A. There is no resistance factor used in the Rate Model. A bad debt provision, of 1.5% has 4
been applied to revenue projections. 5
Q17. What Percentage of the District’s total operating budget represents the wastewater 6
operations and maintenance program? 7
A. Wastewater operating expenses for the FY17-FY20 period are projected to be $736.0 8
million, or 89% of total operating expenses of $826.7 million for the same time period. 9
Q18. How is the District wastewater O & M services funded? 10
A. Wastewater O & M expenses are primarily funded through wastewater user charges. In 11
addition to O & M expenses, these charges also fund debt service expenses and a portion 12
of the CIRP. Other sources of funding used for wastewater O & M expenses include 13
engineering fees, waste hauler permits, connection fees, interest income and other 14
miscellaneous revenues. 15
Q19. What is the impact of the proposed wastewater funding for the typical average bill 16
for the various customer types? 17
A. The average bill for a typical metered single family residential customer based on 18
monthly usage of 7 Ccf will increase by $20.14 from FY17-FY20 to $60.86 monthly. 19
The average bill for a typical metered multi-family residential customer based on 20
monthly usage of 40 Ccf will increase by $75.91 from FY17-FY20 to $222.56 monthly. 21
The average bill for a typical metered non-residential customer (normal Strength) based 22
on monthly usage of 100 Ccf will increase by $178.30 from FY17-FY20 to $519.70 23
2015 Rate Change Proceeding 5 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
monthly. 1
The average bill for a typical metered non-residential customer (excess Strength) based 2
on monthly usage of 100 Ccf and excess strength of 200 mg/l will increase by $232.53 3
from FY17-FY20 to $755.01 monthly. 4
The average bill for a un-metered residential customer based on attributes of five rooms, 5
one water closet and one bath will increase by $17.86 from FY17-FY20 to $60.92 6
monthly. 7
Additional detail on rate impacts can be found in Section 6, Customer Rate Impacts, in 8
the Rate Change Proposal. 9
10
Performance Against 2011 Rate Report 11
Q20. What is Wastewater service charge revenues forecasted to be for FY13 to FY16 12
compared to the 2011 Rate Report? 13
A. Wastewater service charge revenue is forecasted to be lower than the 2011 rate report by 14
$5.8 million or 0.5%. Additional detail can be found in appendix 7.7.1 of the Rate 15
Change Proposal. 16
Q21. What is other revenue forecasted to be for FY13 to FY16 compared to the 2011 Rate 17
Report? 18
A. Other revenue is forecasted to be higher than the 2011 rate report by $15.9 million or 19
81%. Additional detail can be found in appendix 7.7.1 of the Rate Change Proposal. 20
Q22. What are total operating expenses forecasted to be for FY13 to FY16 compared to 21
the 2011 Rate Report? 22
A. Total operating expenses are forecasted to be lower than the 2011 Rate Report by $16.2 23
2015 Rate Change Proceeding 6 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
million or 2.3%. Additional detail can be found in appendix 7.7.1 of the Rate Change 1
Proposal. 2
Q23. What is Total Debt Service Expenses forecasted to be for FY13 to FY16 compared 3
to the 2011 Rate Report? 4
A. Total debt service is forecasted to be lower than the 2011 Rate Report by $77.4 million or 5
24.8%. Additional detail can be found in appendix 7.7.1 of the Rate Change Proposal. 6
7
Stormwater Financing 8
Q24. How does the District intend to change the stormwater revenue structure? 9
A. Stormwater services are currently funded through a combination of a flat rate monthly 10
charge per bill and various ad valorem taxes according to the District and subdistrict 11
boundaries. The proposed structure would eliminate the current flat rate monthly charge; 12
the $0.0682 ad valorem tax for O & M; and all OMCI specific subdistrict ad valorem 13
taxes. These would be replaced by a voter approved, District-wide stormwater tax of 14
$0.10/$100 of assessed property value. However, the current $0.0197 ad valorem tax that 15
is assessed to all properties within the District’s boundaries for regulatory purposes will 16
remain in place. 17
Q25. How was the taxable base for the District’s stormwater revenue calculated and 18
projected? 19
A. The taxable based was determined using the assessed valuation (as supplied by the City 20
and County Assessor’s Offices) for property within the District’s boundaries. The annual 21
assessed property valuation was then slightly increased each year within the study period 22
by .5% each year. 23
2015 Rate Change Proceeding 7 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
Q26. Is this proposed stormwater funding contingent upon voter approval? 1
A. Yes 2
Q27. When will the voters have an opportunity to consider the stormwater funding? 3
A. In an election proposed to be in calendar year 2016. 4
Q28. When will the proposed change in stormwater fees and tax levies take place? 5
A. If the voters’ approve the new tax structure in the first half of calendar year 2016, the new 6
ad valorem taxes would be filed with the City and County by September 30, 2016 and 7
would be included as a component of property tax bills issued for calendar year 2016. 8
The majority of that tax revenue would be received by the District in the beginning of 9
calendar year 2017. 10
Q29. Has the District obtained voter approval for previous stormwater funding? 11
A. On March 8, 1988 a majority of the voters approved stormwater service charges “To be 12
collected only in those areas within the boundaries of The Metropolitan St. Louis Sewer 13
District where the District has assumed or may in the future assume responsibility for 14
operation and maintenance of stormwater and drainage facilities,” which election was 15
called pursuant to Ordinance No. 7358, adopted December 23, 1987. A flat rate charge 16
of .24 cents per month for residential and non-residential properties and .18 cents per unit 17
for multi-residential properties were approved. 18
Q30. What is the impact of the proposed stormwater funding structure on the various 19
customer types compared to the current fees and taxes? 20
A. Customers currently in the District’s original boundaries for single/multi-family and non-21
residential customers, on average, may anticipate an annual increase of $3.60 and $31.11, 22
respectively. 23
2015 Rate Change Proceeding 8 MSD Exhibit No. MSD 3G
Direct Testimony of Theresa A. Bellville, MSD February 26, 2015
Customers located in the District’s original boundaries and currently in a taxing sub-1
district(s) for single/multi-family and non-residential customers, on average, may 2
anticipate an annual decrease of $19.75 and $117.75, respectively. 3
Customers located in the extension (largely outside the 270 loop) who currently only pay 4
the $0.0197 ad valorem regulatory tax for single/multi-family and non-residential 5
customers, on average, may anticipate an annual increase of $50.08 and $224.18, 6
respectively. 7
Additional detail on the impact of the proposed stormwater funding structure can be 8
found in the Rate Change Proposal on table ES-6 and in Section six (6). 9
Q31. Does this conclude your prepared direct testimony in this matter? 10
A. Yes, it does. 11
12
2015 Rate Change Proceeding 9 MSD Exhibit No. MSD 3G