Board of Public Works

EASTHAMPTON INTEGRATED PLAN USER RATE AND COST IMPACT FACT SHEET CURRENT ENTERPRISE STRUCTURE (WATER/SEWER) WATER 5 Year Capital Needs Water $2.3M Stormwater $1.1M Wastewater $4.7M Total $8.2M The figure above shows the cost breakdown of the proposed five- year repair and rehabilitation SEWER (INCLUDES STORMWATER) program. Stormwater costs are partly increasing due to new regulations; however, the remainder of costs are required to replace or rehabilitate infrastructure that is beyond its useful life to maintain the existing level of service. Stormwater is currently funded out of the sewer budget. Operating and Debt Capital Base Fee is a flat rate, usage is the Service Costs Improvements cost per 100 cubic feet of water used ESTIMATED CUSTOMER COST IMPACTS Two Person (Typical Usage) Two Person (Heavy Usage) (1,500 Cubic Feet Quarterly Usage) (1,800 Cubic Feet Quarterly Usage) Three Person (Typical) Six Person (Typical) (2,200 Cubic Feet Quarterly Usage) (4,400 Cubic Feet Quarterly Usage) 1/16/2023 WATER & SEWER RATE EVALUATION City of Easthampton, Massachusetts 1/18/2023 RATE EVALUATION OVERVIEW 1. Project expenses 2. Project revenues Operating Existing CIP Usage Rates Expenses Debt Expenses Revenues Revenue Dashboard Capital expenses are generally biggest driver of rate increases 3. Calculate net revenue 4. Adjust rates to maintain fund balance Stability 5. Calculate user costs 6. Evaluate equity 7. Evaluate affordability 3 SEWER 3 SEWER – PROJECTED OPERATING COSTS 1 Notes & Key Points 1. Assumed and added 4 SEWER – PROJECTED CAPITAL COSTS 1 2 3 Notes & Key Points 1. Assume that Ballard St., Lownds Ave, Pomeroy, and East St. pump stations are all included in project 2. Previous project (based upon IWRMP elements) replaced with cost from 2023 Intended Use Plan note: ALL Clean Water SRF project costs are reduced by 6.6% to reflect principal forgiveness for a Tier 2 community. 3. Project was approved under 2022 Intended Use Plan which requires Funding Authorization by 6/30/2022 and Contract Award by 6/30/22. Assume project is resubmitted for 2024 IUP 5  SEWER – PROJECTED CAPITAL COSTS 1 2 Notes & Key Points 1. Assumed SRF funding 2. Contains IWRMP elements associated with WWTP other than those associated with Aeration System, Headworks and Primary outfall 6 PROJECTING REVENUES Review Calculate last Calibrate Rate Project Water Revenue two years of Adjust Rates Model Usage Sources revenue 1 Notes & Key Points 1. FY22 usage was previously estimated to be 0.5% less than FY21 based upon overall trend of metered use. The projected usage did not agree with the total amount billed (assumed = to committed value) for FY22 so the usage was adjusted accordingly. This value should be confirmed with the actual FY22 metered usage and projected usage for FY23 on adjusted as necessary. 7 ADJUSTING RATES 1 Notes & Key Points 1. Water and Sewer are operated as a combined enterprise fund. The Fund Balance is split 70% sewer/ 30% water 8 WATER Note: Easthampton manages water, sewer and stormwater under one Enterprise Fund, for the purposes of this evaluation we have analyzed water and sewer (including stormwater) separately. 9 WATER PROJECTED OPERATING EXPENSES 1 Notes & Key Points 1. Assumed and added. For FY25 on the Budget capital values are taken from the rate funded projects on the CIP Source Data YTD Budget Reports 10 PROJECTING EXPENSES – CAPITAL 1 2 Notes & Key Points 1. Changed to Debt to ease rate impact 2. Moved back one additional year 11 WATER PROFORMA 1 Notes & Key Points 1. Rates set manually in conjunction with the City to maintain fund balance of 50% - 60% of Opex, note that rate increases are only contemplated for FY24 - FY26 at this time. Effective increases based upon revenue are 12%, 13% and 9% for FY24, FY25 and FY26 respectively. 12 PROPOSED RATES AND RESIDENTIAL COST IMPACTS Sewer Water Easthampton’s projected residential water costs are below the average residential cost in Tighe & Bond’s 2017 water and sewer rate survey, similarly, sewer costs do not exceed the 2017 value until FY27 13 AFFORDABILITY Measuring Affordability. Affordability, like temperature, is highly subjective. To determine whether water and sewer costs represents a financial burden we use the Household Burden Indicator (HBI). Introduced in 2019, this indicator is based the Lowest Quintile Income (the lowest 20%), which is more representative of household financial status. The second component, the Poverty Prevalence Indicator is the percentage of the community below 200% of the Federal Poverty Level. The burden is determined by using the chart below. Poverty Prevalence Indicator Easthampton Income Data (US Census) Household Burden Median Household Income: $63,657 Indicator >= 35% 20% to 35% <20% Lowest Quintile Income: $31,110 Very High Moderate – High Poverty Prevalence Indicator: 19.9% > = 10% High Burden Burden Burden Moderate – High Moderate - Low 7% to 10% High Burden Burden Burden Moderate - High Moderate - Low <7% Low Burden Burden Burden Results Based upon the data shown herein and using a constant LQI (no increase in income), the projected rates are considered to be a low burden. 14 PROJECTED RATES Projected Sewer rates Projected Water rates Northampton Rates for Comparison 15