Council workshop on water - higher costs on horizon

During its Jan. 09, 2018 workshop meeting, the Forney City Council met and in summary:

• Held a 36-minute executive session
  
• Ms. Woodham said the city has exceeded their minimum water use 4 times in last 10 years. 26% of water goes to residential customers, 48% go to wholesale customers: Talty is 19%, Windmill Farms is 12%, High Point is 11%, Markout is 6%. Industrial uses 17%, commercial uses 8%.
  In budget year 2017 the city increased rates 5%, and 2018 is 10%. Their costs from NTMWD have increased 52% since 2014.
  For industrial users, Smurfit Kappa uses almost all of the water; Luminant Energy is able to use reclaimed water that they buy from Forney at a 10% markup of what the city pays Garland. Windmill Farms pays 61 cent (not percent) markup, the other Wholesale customers pay 63% increase.
  The city started meter replacement program in 2014, so far 2600 meters have been upgraded. About 144 commercial meters have not been replaced.
  Sewer usage: 40% residential, industrial is 30%, commercial is 21% and wholesale is 9%. Rates have only been increased once in 10 years, 10% in the current budget. The cost from NTMWD have increased 70% since 2014. There only 2 wholesale sewer contracts: Devonshire and Vintage Meadows. Total income is $14.6 million, expenses $13.4 million.
  Mr Sullivan gave an overview of public works: starting with waste-water, currently responsible for 80 miles of sewer line, 1,038 manholes, 3,609 sewer cleanouts and 3 sewer lift stations. One goal for maintenance is to avoid treating rainwater; another is not having citizens pour fat/oil/grease down the drain. New personnel needed would add $375k / year. He showed equipment that needs replacement of $970k, none of which is in the current budget.
  For Water dept, he listed the many reports (some weekly) they must file to various state & federal agencies. Desired extra personnel would cost $354k. The 5 year plan is to add $400k of equipment. They need a 10-20 acre service center to store and maintain equipment and parts.
  Total for water and waste-water 5yr plans: $2.2million
  Ms. McCuiston spoke about utility capital improvements, then Mr. Dormier spoke about needs for projected growth. If growth continues, may need another storage tank in 10 years. Antique row area needs to be upgraded for fire flow. Pump station 2 will add 5 million gallons. He reviewed the sewer projects.
  Chris Ekrut with NewGen Strategies discussed future needs for water and waste-water. He said these funds are not like normal government financing, it is a business and revenue must match or exceed expenses. Like death and taxes, you can count on NTMWD water rates going up every year. He said the contracts with wholesale and commercial customers are good. The fund balance has been shrinking, which can't continue. Bond rating grades will be lowered and loan costs will go up.
  For just water finances, it looks OK based on certain assumptions. For waste-water, it is not in good shape. Due to regulation, impact fees will not cover all costs, rates must fund waste-water. Combining the two, rates are still insufficient. He recommends adjusting rates in Oct.
  He showed two scenarios, stressing they are not recommendations, of 5,000 gallons per month. Scenario 1 increase water & waste 10% per year; scenario 2 only increases waste rates enough to cover expenses.
  Under scenario 1 the rate would increase from $31 to $50 by 2023. Waste-water would go from $33 to $54, but expenses would be $57. Combined (water + sewer) bill at $65 now would go to $104 in 1, or $88 in 2. He showed a chart (stressing that comparisons are difficult) where Forney is mid-range in costs, but stressed must charge enough to cover costs.
  
• Adjourned at