HomeMy Public PortalAboutFY15 Water and Sewer Rates_201406111033066285 TOWN OF
1630 WATERTOWN
• Office of the Town Manager
H :;r
Administration Building
149 Main Street
Watertown,MA 02472
Phone:617-972-6465
Michael J. Driscoll Fax:617-972-6404
www.watertown-ma.gov
Town Manager town/migr@watertown-nia.gov
To: Honorable Town Council -"
From: Michael J. Driscoll, Town Manager
Date: June 5, 2014
RE: Fiscal Year 2015 Water & Sewer Rates
As you know, the Fiscal Year 2015 Water and Sewer Enterprise Budgets were discussed at the
June 3, 2014 Committee of the Whole Meeting. Mr. Christopher P.N. Woodcock, President,
Woodcock and Associates, Inc. provided an Informational Presentation on the Proposed Water and
Sewer rates and charges for Fiscal Year 2015 (see attached Review document). Additionally, Mr.
Thomas J. Tracy, Town Auditor previously forwarded the attached June 2ad email which included a
report from Woodcock and Associates regarding the Fiscal Year 2015 Water and Sewer Rates
analysis and recommendation.
It is anticipated the Honorable Town Council will take formal action on the Fiscal Year 2015
Budget at its regular meeting on Tuesday, June 10, 2014.
Therefore, I respectfully request a First Reading on an Order establishing water and sewer rates
and charges for Fiscal Year 2015 be placed on the June 10, 2014 Town Council Agenda. The
Public Hearing and consideration of rate schedules and fees designed to raise sufficient revenues to
support the Fiscal Year 2015 operation of the services provided to customers of the Town's
Water/Sewer System would be scheduled for the June 24, 2014 Town Council Meeting.
Thank you for your consideration in this matter.
cc: Gerald S. Mee, Jr., Superintendent of Public Works
Thomas J, Tracy, Town Auditor
Karen Norton,Assistant Town Treasurer/Collector
LEGAL NOTICE
OF PUBLIC HEARING
The Town Council of the City known as the Town of Watertown hereby gives notice of a public
hearing on Tuesday, June 24, 2014, at 7:15 PM, in the Richard E. Mastrangelo Council Chamber, at
which time the Town Council will consider rate schedules and fees, designed to raise sufficient
revenues to support the Fiscal Year 2015 operation of the services provided to customers of the
Town's water/sewer system.
All rates are based on a multi-step rate structure in which the rate per 100 cubic feet of water
increases with consumption. The water rate schedule would maintain the current structure of usage
tiers for consumption.
PROPOSED WATER& SEWER RATES
(Use at 105.5 million cu ft/yr)
WATER
Current Proposed 2015 % Change
Use/auarter Rate($/100cuft) Rate($/100cuft)
0 - 3000 cu ft $4.00 $4.15 3.7%
3001 - 30,000 cu ft $6.22 $6.45 3.7%
All Over 30,000 cu ft $9.82 $10.19 3.8%
Irrigation $9.82 $10.19 3.8%
Service Charge
Meter Size / uarter / uarter
5/8 $6.14 $6.37 3.7%
3/4 $6.52 $6.77 3.8%
1 $7.70 $7.99 3.8%
1 1/4 $9.27 $9.62 3.8%
1 1/2 $9.27 $9.62 3.8%
2 $13.55 $14.06 3.7%
3 $45.13 $46.80 3.7%
4 $56.82 $58.92 3.7%
6 $84.12 $87.23 3.7%
Fire Charges $/ uarter / uarter
2 $10.00 $10.00 0.0%
3 $35.00 $35.00 0.0%
4 $70.00 $70.00 0.0%
6 $205.00 $205.00 0.0%
8 $435.00 $435.00 0.0%
10 $785.00 $785.00 0.0%
SEWER
Current Proposed % Change
Use/auarter Rate ($/100cuft) Rate ($/100cuft)
0 - 3000 cu ft $7.73 $7.95 2.8%
3001 - 30,000 cu ft $9.98 $10.27 2.9%
All Over 30,000 cu ft $13.38 $13.76 2.8%
Consumption from a second water meter for irrigation purposes would be charged at the highest tier
rate.
As with the current water/sewer rate structure, sewer rates are based on water consumption.
A copy of the proposed Water/Sewer Rate and Fee Alternatives, including the proposed rate for each
tier of consumption and the percentage of increase over the current rate for each of the Alternatives
to be considered by the Town Council is available for inspection at the Administration Building, 149
Main Street, Watertown, MA 02472 in the Town Council Office, Monday through Friday, 10:00 am
to 2:00 pm, and at the Town Clerk's Office, Monday through Thursday, 8:30 am through 5:OOpm, on
Tuesday evening up to 7:00 pm, and Friday, 8:30am through 2:OOpm.
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Hand, JoAnna
From: Driscoll, Michael
Sent: Tuesday, June 03, 2014 10:15 AM
To: Hand,JoAnna
Cc: Osmond, Marsha
Subject: FW: Emailing: FY 15 Water and Sewer Rate Report from Woodcock and Assoc.pdf, FY 15
Water and Sewer Power Point Presentation.pdf
Attachments: FY 15 Water and Sewer Rate Report from Woodcock and Assoc.pdf, FY 15 Water and
Sewer Power Point Presentation.pdf
-----Original Message-----
From: Tracy,Thomas
Sent: Monday,June 02, 2014 3:49 PM
To:Town Councilors
Cc: Driscoll, Michael; Magoon,Steven; Mee, Gerald; Dpwdept; Norton, Karen; Gallagher,Sharon; Mahoney,Joseph
Subject: Emailing: FY 15 Water and Sewer Rate Report from Woodcock and Assoc.pdf, FY 15 Water and Sewer Power
Point Presentation.pdf
Councilors,
Attached please find two items from Chris Woodcock of Woodcock and Associates regarding the FY 15 Water and Sewer
Rates. The two items are Mr.Woodcock's Annual report regarding the required rates for the upcoming Fiscal Year, as
well as his power point presentation for tomorrow night's budget hearing.
Please contact me if you have any questions.
Thanks
Tom
The message is ready to be sent with the following file or link attachments:
FY 15 Water and Sewer Rate Report from Woodcock and Assoc.pdf FY 15 Water and Sewer Power Point
Presentation.pdf
Note:To protect against computer viruses, e-mail programs may prevent sending or receiving certain types of file
attachments. Check your e-mail security settings to determine how attachments are handled.
1
WOODCOCK &ASSOCIATBSy INC.
Utility Rates&Flnence
June 2, 2013
Mr. Michael J, Driscoll
Town Manager
Watertown Administration Building
149 Main Street
Watertown, MA 02472
FY 2015 Water and Sewer Rates
Dear Mr, Driscoll:
We have been working with officials from Watertown over the past few
months to review the current water and sewer rates considering the
proposed water and sewer budgets for FY 2015 and the most recent water
sales. Our findings and conclusions regarding the water and sewer rates
for next fiscal year are embodied in this report.
BACKGROUND/HISTORY
In 2002 we prepared our first rate study for the Town that addressed a
number of issues and concerns. Over the past decade we have examined
a number of matters related to the Town's water and sewer rates and billing
practices. Recognizing that various members of the Council have joined
over the past dozen years, we are providing some brief historical
background regarding the analysis of the Town's rates over this timeframe.
Among the issues we have examined were historic water use trends, the
second or deduct' meter policy, an analysis of indirect charges, fire service
charges, minimum and service charges, rate tier alternatives, a life-line
discount, miscellaneous fees and charges, quarterly billing, and per unit
r In some cases a meter Is added after the primary meter to measure water use that is not returned to the
sewers. The use on that additional meter Is deducted from the total meter use of the primary meter to
determine the sewer bill.
WOODCOCK&ASSOCIATES, INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 2
billing for owner occupied apartments and condominiums. Our
recommendations over the past few years have built on that earlier work.
In adopting new water and sewer rates, the Town Council typically makes
the rates effective on all water use after July 1. Any bills that included
meter readings with water use before the effective date of the new rates
are pro-rated to charge for earlier use at the prior rates. Customers are
only charged the new rates for usage after the effective date of the new
rates.
ESTIMATED EXPENSES AND REVENUES
Proposed budgets for the water and sewer enterprise funds have been
developed by the Town for FY 2015 and provided to us to use for our
study. The budgets reflect the latest estimated assessments from the
MWRA for water and sewer. The FY 2015 water budget is $6,465,839'. In
addition to the water rates and charges, the Town receives some revenues
from interest earnings, liens, interest and penalty charges, municipal
charges, and other miscellaneous water fees. After deducting the
estimated revenues from these miscellaneous charges and accounting for
1% of all billings being uncollectible, some $5.93 million must be derived
from the water rates, meter service charges, and private fire protection
charges. We estimate the current water rates, meter service charges, and
fire protection charges will produce annual revenues of about $5.72 million,
leaving a deficit of approximately $215,000.
The proposed sewer budget for FY 2014 is $9,048,617 2. After deducting
the estimated revenues from miscellaneous charges and accounting for 1%
of all billings being uncollectible, some $8,57 million must be derived from
the Town's sewer rates. The current sewer rates are estimated to produce
annual revenues of$8,34 million, leaving an estimated sewer deficit in FY
2015 of some $236,000.
The MWRA assessments comprise the largest single expense for both the
water and sewer enterprise funds. In the case of the water enterprise, the
2,Note that the water and sewer budget numbers presented herein do not Include proposed transfers of
$500,000 from reserves for water and sewer capital projects. The impact of this Is discussed later In the
report.
WOODCOCK&ASSOCIATES. INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 3
MWRA assessment is 48% of the total cost, While the projected overall
increases in water assessments for all MWRA communities is about 3,9%
for 2015, the MWRA water assessment for Watertown is projected to
increase by 5.2% over the final 2014 water assessment. Last year,
Watertown's water assessment was well below the average increase.
The MWRA's water assessments are generally based on each
community's relative share of total MWRA water purchases from the prior
year. Over the past few years, Watertown's shares of the MWRA water
assessments have been:
• FY 2011: 1.49%
• FY 2012: 1.45%
• FY 2013: 1.49%
• FY 2014: 1.46%
• FY 2015: 1 .47% (preliminary)
As this historic comparison shows, the Town's share of the MWRA water
assessments generally ranges between 1.45 and 1.49%. The year to year
changes do not necessarily reflect changes in the Town's overall water
purchases, but the share compared to all other communities.
The Town's MWRA sewer assessment for 2015 is projected to increase by
2.2% in comparison to an overall increase in the MWRA sewer
assessments of 3.3%. Unlike the water assessment, the sewer
assessment is not based strictly on volume. The sewer assessment is
based on three historic years of wastewater discharge, peak flows, septage
discharge, the relative strength of the sewage pollutants, and population
served. The MWRA sewer assessment represents some 64% of the
overall sewer enterprise budget. The Town's recent share of the total
MWRA sewer assessments are as follows:
WOODCOCK&ASSOCIATES, INC,
Mr. Michael J. Driscoll
Town of Watertown
Page 4
• FY 2011: 1.35%
• FY 2012: 1.37%
• FY 2013: 1.33%
• FY 2014: 1,33%
• FY 2015: 1.31% (preliminary)
As this shows, Watertown's share of the MWRA sewer assessments has
been slowing dropping.
USAGE ESTIMATES
At the turn of this century, the Town experienced revenue shortfalls due to
unattained usage estimates. The Town Council had to adopt increases to
make up these revenue shortfalls plus pay for the annual increases in
MWRA assessments and local operational and debt costs. As a result, the
estimates of usage have been closely watched to try and avoid deficits and
large rate increases the following years.
For more than a decade now, Watertown has generally been able to cover
its water and sewer expenses with rate increases and has rebuilt the
retained earnings in the two enterprise funds. This has provided the Town
with the flexibility to use reserves to minimize the impact of large rate
increases and fund capital projects; but more importantly, it has allowed
estimates of water sales to be made with less concern of incurring a
shortfall, The Department of Revenue has issued guidance that allows
communities to use their retained earnings to make up any revenue deficits
in that year. Because the Town Council has adopted water and sewer
rates that were sufficient to rebuild the reserves, Watertown is now in a
position to take advantage of this ruling, if needed.
The estimate of water consumption is critical to the estimation of future
revenues. If consumption exceeds projections, the Town generates
surpluses that are held as retained earnings; funds that can be used to
offset future rates and/or be applied to future capital needs. if consumption
falls short of estimates then expenses must be cut, programs put off, and
any existing retained earnings can be applied to the deficit.
WOODCOCK&ASSOCIATES. INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 5
The following graph presents total calendar sales by the MWRA since
2003. While there has been a slight increase in sales over the past year or
two3, over the past decade, there has been an overall trend of reduced
water sales in New England.
MWRA Sales (MGD)
270.00
260.00
250.00 /
240.00 /
23000
220.00
2000 --�
200.00
190.00 I `�--�
180.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
The next chart shows water consumption in Watertown since FY 1994.
145,000,000
140,000,000
13 ,000,000
130,000,000
125,000,000
1 ,000,000
11515,000,000
110,000,000 II
105,000,000 i
100,000,000
Q
a Several communities have been added to the MWRA system in recent years accounting for some of this
increase.
WOODCOCK&ASSOCIATES, INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 6
The Town converted to quarterly billing in FY 2008, resulting in an increase
in billed revenues as water use was billed earlier. As a result, the actual
water sales in FY 2008 are not representative of annual sales. We have
included an estimate of"annualized" use for FY 2008 on the graph above.
For the FY 2015 rates, we have looked at the sales through the last full
fiscal year (FY 2013), where annual sales fell to just below 106.5 million
cubic feet. Based on data for FY 2014 through May, we are projecting that
consumption will be 105.E million cubic. In the coming year we are
forecasting a leveling off of sales at 105.5 million cubic feet.
PROPOSED RATES AND CHARGES
To fully recover the budgeted costs for FY 2015, Watertown will need to
increase the water rates and charges to the typical resident4 by $3.98 per
quarter. The quarterly water bill for a typical resident will increase from
$106.14 to $110.12. The quarterly sewer bill for a typical resident will need
to increase about $5.50 per quarter, from $193.25 to $198.75.
The overall or combined water and sewer bill for a typical resident would
increase from $299.39 per quarter to $308.87 per quarter; for an overall
increase of $9.48 per quarter, or about 3.2%. This is just slightly less than
last year's proposed increases. The daily cost of both water and sewer
service in Watertown would Increase from $3.29 per day to $3.39 per day,
or approximately $0.10 per day. If a household can reduce its daily water
use by about 6.5 gallons per day, it would offset the cost of this increase.
The following tables present the current and proposed water and sewer
rates. On the next following page is a table that presents the impact on
bills for some typical customers.
4 Typical resident assumed to use about 200 gallons/day or 2,500 cubic feet per quarter
WOODCOCK&ASSOCIATES. INC.
Mr. Michael J, Driscoll
Town of Watertown
Page 7
PROPOSED WATER & SEWER RATES
(Use at 105.5 million cu ft/yr)
WATER
Current Proposed 2015
Use/quarter Rate ($/100cuft) Rate ($/100cuft) % Change
0 - 3000 cu ft $4.00 $4.15 3.7%
3001 -30,000 cu ft $6.22 $6.45 3.7%
All Over 30,000 cu ft $9.82 $10.19 3.8%
Irrigation $9.82 $10.19 3.8%
Service Charge
Meter Size /Quarte /Quarto
5/8 $6,14 $6.37 3.7%
3/4 $6.52 $6.77 3.8%
1 $7,70 $7.99 3.8%
1114 $9.27 $9.62 3.8%
1112 $9.27 $9.62 3.8%
2 $13.55 $14.06 3.8%
3 $45.13 $46.80 3.7%
4 $56.82 $58.92 3.7%
6 $84.12 $87.23 3.7%
Fire Charges / uarter / uarter
2 $10.00 $10.00 0.0%
3 $35.00 $35.00 0.0%
4 $70.00 $70.00 0.0%
6 $205.00 $205.00 0.0%
8 $435.00 $435,00 0.0%
10 $785.00 $785.00 0.0%
SEWER
Current Proposed 2015
Use/quarter Rate ($/100cuft) Rate ($/1 Mot ift). % Change
0 -3000 ou It $7.73 $7.95 2.8%
3001 -30,000 cu It $9.98 $10.27 2.9%
All Over 30,000 cu It $13.38 $13.76 2.8%
WOODCOCK&ASSOCIATES, INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 8
Customer Impacts - Quarterly Bills
Proposed
Customer with 5/8 inch meter Current New Change % Change
using 2,500 cuft/grt (200 gal/day)
Water $106.14 $110.12 $3.98 3.7%
Sewer $193.25 $198.75 $5.50 2.8%
Total $299.39 $308.87 $9.48 3.2%
$3.29 per day $3.39 per day
using 4,000 cuft/grt (325 gal/day)
Water $188.34 $195.37 $7.03 3.7%
Sewer $331.70 $341.20 $9.50 M
Total $520.04 $536.57 $16.53 3.2%
using 5,000 cuft/grt (410 gal/day)
Water $250.54 $259.87 $9.33 3.7°%
Sewer $431.50 $443.90 liLLO M
Total $682.04 $703.77 $21.73 3.2%
Customer with 1 inch meter
using 25,000 cuft/grt(2300 gal/day)
Water $1,496.10 $1,651.49 $55.39 3.7%
Sewer $2,427.60 $2,497,90 $70.40 2.9%
Total $3,923.60 $4,049.39 $126.79 3.2%
Customer with 4 inch meter
using 75,000 cuft/grt (6900 gal/day)
Water $6,275.22 $6,610.42 $235.20 3.7%
Sewer $8,947.50 $9,203.40 $255.90 2.9%
Total $16,222.72 $16,713.82 $491.10 3.2%
WOODCOCK&ASSOCIATES. INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 9
SENSITIVITY TO WATER SALES
As we indicated earlier, the rates we have proposed are based on sales of
105.5 million cubic feet year. Different assumptions regarding future water
sales will impact the resulting rates and charges. The following table shows
the impact on the rate increase of various assumptions for water sales.
Impact on Rate Increase of Alternative Sales
Water Sewer Overall
Volume (mill cu ft/vr) Increase Increase Increase
105,000,000 4.2% 3A% 3.7%
106,600,000 3.7% 2.8% 3.2%
106,000,000 3.5% 2.5% 2.8%
107,000,000 2.5% 1.4% 1.8%
Note: For customer using 2,500 cu ft/quarter(200 gal/day)
SENSITIVITY TO USE OF RESERVES
Earlier it was noted that $500,000 of reserves are proposed to be used to
help fund both water and sewer capital improvements. As part of our study
we looked at the impact of using these reserves to fund capital projects. If
the Town does NOT use the $500,000 of water and sewer reserves, and
instead pays for the budgeted capital projects through rates, the water
rates would need to be increased by 12.6% and the sewer rates by 8.9%.
The overall increase would be 10.2% instead of the 3.2% we recommend.
Once again it has been a pleasure to work with the Town of Watertown.
We are pleased to see the progress in multiple areas since we began
working with the Town.
e The Town restored and is maintaining its retained earnings in the
enterprise funds providing flexibility to the Council in future rate
deliberations and for funding capital projects.
WOODCOCK&ASSOCIATES, INC.
Mr. Michael J. Driscoll
Town of Watertown
Page 10 _
• Condominium owners with master meters are now charged the same
as single family homes.
• New rate blocks were adopted that better reflect Watertown's water
use patterns by different customer classes.
• New rates for irrigation meters were adopted to reflect the higher cost
of providing irrigation water.
• Quarterly water billing has been successfully implemented.
• The annual increases in water and sewer rates have leveled off over
the past seven years, averaging about 3.4%/year, with a maximum
increase of 6% in FY 2010.
Please feel free to call us if you have any questions on this report.
Very truly yours;
Woodcock & Associates, Inc.
'',+ Digitally stoned byChrlstopherWoodcock
Christopher WOOdCOC[ DN:cn=Chrlstopher Woodcock,o=Woodcock&Associates,
Inc.,on,email=woodcock@w•a.com,c=US
Date:2014.06.0210:54:07.04'00'
Christopher P.N. Woodcock
President