Mayor & Board of Trustees

AGENDA TUESDAY FEBRUARY 28, 2023 BOARD OF TRUSTEES WILLIAM J. VESCIO COMMUNITY CENTER 1 LIBRARY ROAD WORK SESSION – 6:00 PM For those members of the public interested in viewing and/or participating in the meeting remotely, visit https://www.briarcliffmanor.gov/mayor-board-trustees/events/33146 1. Tri-Village Water Consolidation Presentation 2. First Pass Budget Presentation (Operating) 1 Tonight’s Discussion Introductions Project Current Work Background Key Findings Next Steps 2 Project Need – Local Government Efficiency The Local Government Efficiency (LGE) Grant program is intended to incentivize new actions between local governments that will reduce the cost of municipal operations and modernize the delivery of local services, thereby limiting growth in property taxes. NYS Division of Local Govt’ Svcs 3 Project Need – Local Government Efficiency Current Collaboration  Existing “shared” supply assets since 1979  Overlapping IMA’s  Capital and O&M costs split for these assets Opportunities for Future Collaboration  Redundant chemical treatment and pumping infrastructure  System operations studied in 2016  Recommended consolidation of PS assets  Current work refines this recommendation 4 Water Supply – Facts and Figures Shared Assets  Connections to Shaft 10 on Catskill and Delaware Aqueduct Connection Chamber  Single metering building  Single 2.5 mi 30” transmission main (11 MGD) Separate Assets  Individual pump stations  Separate distribution and storage 5  Water System Facts and Figures Tarrytown Sleepy Hollow Briarcliff Manor Serves 12,000 Serves 10,000 Serves 9,000 • • • 1.3 MGD ADD 1.4 MGD ADD 1.1 MGD ADD • • • ca. 1962, 1996, and ca. 1979, 2006 updates 2012 construction • • some recent updates • 4 MGD firm capacity 4 MGD firm capacity • 5 MGD firm capacity • Requires upgrades in • Unmanned • Needs rehab/replace medium term • 6 • Basic Premise of Consolidation How do we realize sustained cost savings for each Village by using existing physical assets and skilled operators more efficiently? 7  Scope of Current Work Hydraulic Modeling  IMA Development  Financial Model Develop functional Develop engineering Analyze financial arrangement for solutions for system implications of transition and hydraulics consolidating assets management 8 Work Process  RFQ detailed the Scope of Work  Kickoff meeting to discuss project goals and process  Data gathering  Technical working group meetings  Village Administrators/Manager  Village Engineers  Water System Operators  Iterative analyses  Presentations to Village Boards  Final Reports 9 Hydraulic Modeling Summar y  Comprehensive computer model of 3 distribution systems  Piping  Tanks  Pumps  Control valves  Calibrated with field testing  Findings:  Tarrytown PS can be removed  Serve Tarrytown High Service zone through Briarcliff Pump Station (and PRV)  Serve Tarrytown Low Service through Sleepy Hollow Pump Station and distribution interconnections  Create space for new air break tank and future needs  Interconnection upgrades to measure and control flow  Minor upgrades to remaining Pump Stations 10 IMA Development Summar y  Consolidate “best practices” from existing IMAs  “Tri-Village Board” to continue coordinating and administering operations, maintenance, and capital improvements for shared infrastructure  Villages still responsible for executing work through Village Boards  “Tri-Village Board” is coordination only  Shared ownership of supply assets expands to include PSs  Financial Framework  Upfront capacity share payments for pump stations  Use existing capital and O&M cost structure for future expenses  Villages retain individual ownership of distribution, storage, and metering systems, and rate setting 11 Financial Modeling Summar y  Evaluated consolidation vs. “no action”  Consolidation reduced O&M costs by sharing operators between stations  Consolidation would save a total of $9.8M over 10 years  Consolidation would save a total of $17.7M over 20 years  Consolidation would reduce pressure on rates for all Villages, but at different time scales  Cost split (unchanged):  Capital: VTT 34%, VSH 25%, VBM 41%,  O&M: VTT 34.9%, VSH 36.6%, VBM 28.5% 12 Key Capital Cost Elements  Upgrades required for Consolidation  Air break tank, new manifold connections, PS upgrades at VSH and VBM  $2.4M  Avoided capital cost  Tarrytown PS replacement  $15.5M  Future capital costs  Sleepy Hollow PS replacement (year 10)  $13.8M  Does not include more minor upgrades or non- consolidated asset capital needs  Does not include any future grant funding 13 O p e r a t i ng C o s t s O p e r a t i ng C o s t s W i t h out C o n s o l i d a t i on W i t h C o n s ol i d at i o n VSH: $579,000 VSH: $457,000 VTT: $521,000 VTT: $437,000 VBM: $427,000 VBM: $356,000 Total: $1,527,000 Total: $1,251,000 (-$276k) 14 1 0 Ye a r N P V 1 0 Ye a r N P V W i t h out C o n s o l i d a t i on W i t h C o n s ol i d at i o n VSH: $6.5M VSH: $5.7M (-0.85M) VTT: $13.9M VTT: $6.1M (-7.8M) VBM: $4.2M VBM: $3.0M (-1.1M) Total: $24.6M Total: $14.8M (-9.8M) 15 2 0 Ye a r N P V 2 0 Ye a r N P V W i t h out C o n s o l i d a t i on W i t h C o n s ol i d at i o n VSH: $19.5M VSH: $12.7M (-6.9M) VTT: $25.5M VTT: $14.0M (-11.5M) VBM: $8.3M VBM: $9.0M (+0.7M)* Total: $53.4M Total: $35.7M (-17.7M) VBM Note: Includes VSH PS replacement, but not yet any benefit from shared cost of VBM replacement 16 N e a r - te r m R e v e n u e N e a r - t e rm R e v e n u e R e q u i re m e nt s Re q u i re m e n t s W i t h out C o n s o l i da t i on With Consolidation VSH: +/-0% VSH: -0.1% VTT: +37.4% VTT: +3.6% VBM: +/-0% VBM: -1.9% 17  Next Steps  Presentations to Village Boards  Tours of infrastructure  Final working group session  Final Reports  Village Actions 18  MEMORANDUM TO: Village of Briarcliff Manor, Village of Sleepy Hollow, and Village of Tarrytown FROM: Steven Robbins, P.E., LEED AP DATE: February 8, 2023 RE: Tri-Village Consolidation Analysis – Project Summary Overview and Project Objective The Villages of Briarcliff Manor, Sleepy Hollow, and Tarrytown each draw water from the New York City Catskill and Delaware Aqueducts for their water supplies. Through a combination of multiple Inter-Municipal Agreements (IMAs) between the Villages and informal mutual-benefit coordination between water departments, the three Villages share in the maintenance of the taps to each aqueduct, a common metering building, and transmission main. The shared transmission main ends at pump stations on Neperan Road in Tarrytown that are independently owned and operated by each Village. From there, each Village provides additional chemical treatment for the water and pumps finished water to its respective distribution system. This arrangement has been workable with good coordination between the Villages. However, the growing complexity of IMAs developed for each individual capital project and significant upcoming capital investment needs to address aging/failing infrastructure in both individual and shared system components has driven the need to further evaluate the feasibility of consolidation for the water supply to the three villages. This evaluation would need to examine the financial, organizational, legal, and engineering aspects to identify a preferred plan to consolidate shared assets for the benefit of each municipality. The Village of Sleepy Hollow, in conjunction with Briarcliff and Tarrytown, obtained an Inter- municipal Planning Grant to fund this study. Project Activities Woodard & Curran and its team of subconsultants was retained through a competitive RFQ process to develop the following project deliverables: • Hydraulic Model; • Financial Model; and • Draft IMA. These deliverables were developed through the review of background information from each Village, a series of collaboration meetings with staff working groups from each Village, field inspections and testing, and engineering and financial analyses. 19  Key Findings Hydraulic Model A combined distribution system hydraulic model was developed for the three Villages to analyze how flow could be distributed between the systems to reduce the need for redundant facilities for each Village. Based on these analyses, the preferred hydraulic option is to remove the Tarrytown pump station from service and upgrade the Briarcliff and Sleepy Hollow pump stations to supply Tarrytown. This eliminates the near-term need for a new pump station for Tarrytown and improves the remaining pump station infrastructure for a longer service life. Draft IMA A new IMA is proposed that would supersede the existing series of agreements and define the organizational and cost-sharing responsibilities of the Villages moving forward. The key elements of the draft IMA are summarized in the attached Terms Sheet, and include: • Continued use of a Tri-Village Board for administration and coordination; • Continued execution of operations, maintenance, and capital improvements by individual Villages; • Consolidation of aqueduct, transmission, and pump station assets into shared ownership based on capacity allocation; • Remaining un-consolidated assets (ie – distribution piping and storage tanks) will continue to be fully owned and operated by the Village that they serve; • Consolidated assets will require up front capacity share payments between the Villages to compensate for the value of the existing assets; and • Ongoing operation and maintenance costs for the consolidated assets will be shared by the Villages based on annual usage, as is currently done. Financial Model The Financial Model shows that through this consolidation, there is a total savings of almost $10M between the three Villages on a 10-year net present value (NPV) basis over estimated costs without consolidation. This is driven by the avoidance of replacement costs for the Tarrytown pump station. On a 20-year NPV basis, additional investments will be needed in the Sleepy Hollow pump station, but those would be shared among the three communities and the combined savings is still almost $18M over the costs without consolidation. The financial model does not project beyond 20 years, but future investments will be needed in the Briarcliff Manor pump station in the longer term, which would be shared among the three communities. 20  These savings contribute to less pressure on water rates by avoiding unnecessary capital expenditures and spreading the cost of future capital improvements to the supply infrastructure over a broader base. A summary of key Financial Model findings is attached. Next Steps The Woodard & Curran team is presenting the results of these studies to the three Village Boards in February, 2023. A series of site walks for Village Board members will be coordinated to allow the members to better understand the existing facilities. Input from the Village Boards is necessary to determine if there is interest in continuing to advance this consolidation planning and IMA development. 21  Draft Term Sheet Inter-Municipal Water Supply and Transmission Services Consolidation Agreement Villages of Briarcliff Manor, Tarrytown, and Sleepy Hollow Below is a draft term sheet that highlights the proposed key clauses of the Inter-Municipal Water Supply and Transmission Services Consolidation Agreement. 1. The general operating structure is such that the “Tri-Village Board” is responsible for coordinating the administration of activities for the transmission and treatment of water to the distribution systems of the three Villages. 2. The Tri-Village Board is not an Agency and does not currently have the authority to deliver water or to be a designated provider of associated physical services independently. The Tri-Village Board would serve the Villages by coordinating the administration of operations, maintenance and capital improvements, while the Villages themselves would execute the work pursuant to the terms of this IMA. 3. The Board’s designated responsibilities would include setting budgets for approval by the parties, monitoring the progress of projects, coordinating the administration of the IMA, and acting in an advisory role, but the Board would not have its own employees or the authority to manage employees of the Villages, and would not have any right to bind the parties to the IMA or enforce it. The Board would only have the authority to coordinate the administration of items and contracts approved by each Village and reviewed by Village counsel. 4. Summary of Consolidated Assets: a. The pump station assets would be designated as “Consolidated Facilities” , and the capital costs associated with the Consolidated Facilities shall be shared by each of the three villages in proportion to their overall negotiated capacity shares. The capacity shares would correspond to the amount of overall asset capacity that is reserved for each party. The agreement will specify which parties own the assets defined as “Consolidated Facilities”. the capital cost of all pump stations would be jointly shared among the three villages proportional to each village’s overall negotiated capacity share. The sharing of capital costs by each village for each pump station would occur regardless of whether a village physically uses a portion of the pumping capacity at each pump station. b. The Catskill Aqueduct Connections, and associated transmission mains, metering at Shaft 10, and chemical addition at Shaft 10 shall be considered “Consolidated Facilities”. See example for how costs would be shared at the end of this Term Sheet. 22  5. Other assets that do not provide water supply to more than one party (e.g. distribution systems, storage tanks, booster stations, pressure release valves, and other assets serving only one party) shall be solely owned and operated by the Village that they serve. Owners of these individually-utilized assets shall be responsible for addressing any capital, operations and maintenance (O&M), or regulatory actions needed for those assets, unless another agreement assigns that responsibility. 6. Parties that desire to reserve a portion of the capacity of assets owned by other parties will pay an upfront capacity payment. Such capacity payment will be based on a proportionate share of the depreciated value of the asset. Asset valuations shall be determined based on the asset's original cost, less accumulated depreciation that considers the age and anticipated useful life of the asset. For example, a 20 year old asset with an original cost of $1 million and an estimated 30-year useful life, would be valued at the original cost ($1 million) less 20 years of accumulated depreciation ($1 million x 20/30 = $0.8 million), or $200,000. 7. The agreement will specify which parties are initially responsible for operating the assets defined as “Consolidated Facilities” for the purposes of regulatory compliance and O&M. The owner and designated operator of any asset may be different. Any changes in operational responsibility, or O&M or capital interventions for these jointly owned assets may also be recommended by the Tri-Village Board. O&M costs for these assets would be charged by the responsible party to the other parties in proportion to the overall average day water demand in each of the Villages during the latest twelve-month period. 23 Illustration of How the Cost Sharing in the Proposed Consolidation would work: The following example has been prepared to illustrate how cost sharing would work. For the purposes of this example, we have assumed that the future engineering design is such that Tarrytown’s pumping capacity is provided by an upgraded Briarcliff Manor pump station. Under this scenario, it is assumed that Sleepy Hollow and Briarcliff Manor are served entirely by what are currently their own pump stations. Up Front Capacity Share Payments Each of the Villages’ pump station facilities would become “Consolidated Facilities.” Up-front payments would be made by each of the Villages to one or more of the other Village(s) to compensate for previous investments made in the assets, based on capacity shares and considering the value of the pump stations. Tarrytown would make upfront payments to Briarcliff Manor and Sleepy Hollow to compensate them for dedicating their pump stations as Consolidated Facilities. Beyond these initial payments all three communities would contribute to pump station capital work based on negotiated capacity shares. Briarcliff Manor and Sleepy Hollow would permit Tarrytown to finance internal up-front capacity payments to reduce rate impacts. The recent Delaware Tap Project would be rebalanced, if necessary, to distribute those costs on a capacity basis as well. The figure below shows the amount of the near-term up-front payments required to rebalance the Delaware Tap Project costs, and for Tarrytown reserving capacity in the Briarcliff Manor and Sleepy Hollow existing pump station assets. In the financial model developed by Raftelis all of these costs were assumed to be debt financed. Primary Option Up-Front Capacity Payments Receives Payment Briarcliff Manor Sleepy Hollow Tarrytown Makes Payment Briarcliff Manor $0 $0 $0 Sleepy Hollow $1,862,792 $0 $0 Tarrytown $3,081,835 $0 $0 Pump Station Capital Reinvestment Payments Each Village would contribute to the cost of future pump station capital reinvestments at all of the Consolidated Facility pump stations, regardless of whether a Village physically utilizes the pump station needing the capital reinvestment. Further, the initial costs for connecting Tarrytown would be shared by all three communities and the Briarcliff Manor pump station would not require a capacity expansion. The figure below shows the total new project costs for connecting Tarrytown to the Briarcliff Manor and Sleepy Hollow pump stations, replacing the Briarcliff Manor and Sleepy Hollow pump stations in today’s dollars. In the financial model developed by Raftelis all of these costs were assumed to be debt financed. 24  Primary Option Pump Station Capital Reinvestment Payments Pump Station Investment Briarcliff Manor Sleepy Hollow Briarcliff Manor $6,196,719 $6,793,339 Shares in Cost Sleepy Hollow $3,718,032 $4,076,003 Tarrytown $5,060,654 $5,547,894 1 25  Tri-Village Water Supply Consolidation Study Proposed Consolidation Results Summary Tables Table 10: 2023 O&M Costs Under Proposed Consolidation Asset O&M Briarcliff Manor Sleepy Hollow Tarrytown Total Manpower (2 Operators per Main Pump Station $151,665 $194,755 $186,088 $532,508 = 4 Employees Total) Maintenance and 13,477 17,306 16,536 47,318 Repair Transmission Main 1,162 1,492 1,426 4,079 Leak Detection Contractual and Other 142,119 182,497 174,375 498,991 Additional Electricity 24,396 31,327 29,933 85,656 Due to Tarrytown Additional Chemicals 16,270 20,892 19,963 57,125 Due to Tarrytown PRV to Supply Tarrytown High 7,120 9,143 8,736 25,000 Gradient Tank Total $356,208 $457,413 $437,056 $1,250,677 Table 11: Capital Receipts (Payments) Under Proposed Consolidation (2023 Dollars) Capital Item* Briarcliff Manor Sleepy Hollow Tarrytown Note Assumes initial cost was Up-Front Payments for fully by owner and Pump Station $4,944,627 ($1,862,792) ($3,081,835) rebalances to agreed Remaining Useful Life capacity Tarrytown Connection Based on agreed (858,791) (515,275) (701,346) Costs capacity Future Replacement Payment for Sleepy Based on agreed (6,363,943) (3,818,366) (5,197,220) Hollow Pump Station capacity in Current Dollars Total (2,278,108) (6,196,433) (8,980,401) Sum above *Note that Briarcliff Manor Pump Station Replacement is not expected during the forecast period and therefore not shown, but when needed would proceed using the same current agreement basis allocations under Proposed Consolidation. Table 12: 10 and 20 Year NPV Analysis of Proposed Consolidation vs No Further Consolidation Description Briarcliff Manor Sleepy Hollow Tarrytown Total Consolidation – 10 ($3,037,213) ($5,655,699) ($6,112,727) ($14,805,640) Year NPV Cost Consolidation – 20 (8,976,845) (12,677,317) (14,029,345) (35,683,507) Year NPV Cost No Further Consolidation – 10 Year (4,159,095) (6,500,902) (13,903,512) ($24,563,508) NPV Cost No Further Consolidation – 20 Year (8,318,189) (19,533,571) (25,547,114) (53,398,874) NPV Cost Consolidation – 10 1,121,881 845,202 7,790,784 9,757,868 Year NPV Cost Savings 26 Consolidation – 20 Year NPV Cost (658,655) 6,856,254 11,517,769 17,715,367 Savings* *Note the reason over 20 years BM goes net negative is because they begin paying for new SH PS in middle of that period and are not yet benefitting from shared costs for replacement of their own station. Further under the No Further Consolidation scenario they do not have to share in SH PS costs. Modeling would need to extend out nearly 50 years to realize the significant saving BM will achieve when they receive cost sharing for replacement of their own PS. Table 13: Fiscal Analysis of Relative Ratepayer Impacts of Proposed Consolidation vs No Further Consolidation Description Briarcliff Manor Sleepy Hollow Tarrytown 2019 Actual Revenue $7,567,117 $4,068,001 $2,463,695 2021 Forecast Revenue 8,516,857 4,578,571 2,772,910 Estimated O&M Costs (427,027) (578,890) (521,108) Replaced Consolidation – (264,763) (574,578) (621,851) Annual Cost (2023) No Further Consolidation – Annual (428,387) (580,250) (1,557,731) Cost (2023)* Consolidation – Estimated Rate Impact -1.9% -0.1% 3.6% (2023) No Further Consolidation – 0.0% 0.0% 37.4% Estimated Rate Impact (2023)** *Under Proposed Consolidation Future Capacity Allocations were based on Average Day Demand Shares. **Under the No Further Consolidation scenario, Briarcliff Manor and Sleepy Hollow costs are slightly higher than estimated O&M costs replaced due to equally shared main leak detection (from PS to storage tank) costs that did not appear in identified baseline O&M costs captured from the DR report. 27