Finance Committee

City of Oconomowoc Joint Finance/Utility Committee Meeting Finance: Schellpeper, Chairman / Spiegelberg, Secy / Moroni Utility: Rosek, Chairman / Ellis, Secy / Mulder Tuesday, April 02, 2024 - 7:10 PM City Hall - Conference Room 3 174 E. Wisconsin Ave. Oconomowoc, WI 53066 Notice: If a person with a disability requires that the meeting be accessible or that materials at the meeting be in an accessible format, call the City Clerk’s office at least 48 hours in advance to request adequate accommodations. Tel: (262) 569-2186 1 Call to order and confirmation of appropriate meeting notification 2 Committee Business a Consider/recommend Resolution 24-R3183 Authorizing a Budget Amendment to Increase the 2024 Water Meter Budget 3 Adjourn ________________________________ Diane Coenen, City Clerk City of Oconomowoc Notice is hereby given that a majority of the Common Council will be present at the above scheduled meeting to gather information about a subject over which they have decision-making responsibility. This constitutes a meeting of the Common Council pursuant to State ex rel. Badke v. Greendale Village Board, 173Wis. 2d 553, 494 N.W. 2d 408 (1993) and must be noticed as such, although the Common Council will not take any formal action at this meeting. 1  MEMORANDUM DEPARTMENT - WATER UTILITY Date: April 2, 2024 To: Mayor, Common Council, and Utility Committee From: Kevin Kaari, Utility Manager Laurie Sullivan-Murray, Finance Director Scott Osborn P.E., Water Superintendent Re: Consider/Act on Resolution 24-R3183 Budget Amendment for Additional Water Meters RELATES TO THE STRATEGIC PLAN Strategic Goal- II – Improve and Maintain our Infrastructure/Facilities BACKGROUND The approved 2024 water meter budget is $125,000. However, water meter needs have increased due to the number of planned developments, the backlog of meters on our meter resolution list (meters not working, leaks, complaints, and repairs), and Lead Service Line (LSL) replacements. Our revised projected 2024 capital meter estimate, for these categories, is $200,000, a $75,000 increase. See attached spreadsheet. Secondly, we have a planned mandatory mass meter replacement project starting in 2026. The last time the Water Utility did a mass meter replacement was in 2006. Chapter 185.61 (1) of the Wisconsin Public Service Commission (PSC) requires “All meters used for measuring the quantity of water delivered to a customer shall be in good working condition.” To comply with the PSC, the City of Oconomowoc Water Utility follows the Wisconsin PSC Code requirement in section 185.76(6) of replacing water meters for services 1” or smaller after 20 years of being in-service versus testing all those meters and repairing them every 10 years. As of the date of this memorandum, we have over 2500 meters to replace by 2026. We were originally planning to purchase the meters and contract all the labor and administration for the mass meter replacement project in 2026. However, to reduce the supply chain risk for procuring over 2500 meters and to level out the large expenditures associated with this program over three years, the Water Utility recommends starting to purchase the meters this year. Our plan is to purchase 800 meters per year for the next 3 years. We also recommend starting the replacement of these meters with our own crews, when available, saving the utility money associated with future contracted labor expenditures. The additional budget needed for purchasing these meters in 2024 is $285,000. The balance of meters remaining to be exchanged in 2026, will still need to be contracted out to meet the PSC requirement. We verified with our water meter vendor that the meters are available to meet our 2024 goals. ADDITIONAL ANALYSIS We contacted the Wisconsin PSC regarding the need for a Construction Authorization for the Mass Meter Replacement project. This is how they responded. 1 2 “Generally speaking, water meter replacement projects no longer require construction approval by the Public Service Commission (Commission). The Commission stopped reviewing meter projects in 2021 with the adoption of Wis. Act 86.” FINANCIAL IMPACT The proposed 2024 budget amendments to #602-573-7000 WO#224001 includes the following: 1. Add $75,000 to the current 2024 water meter budget for known projects this year. 2. Add $285,000 to allow for 800 additional water meters for the mass meter replacement project starting in 2024. This will allow Water Utility staff to begin scheduling and replacing meters this year. The total recommended budget amendment request is for an additional $360,000, with funds coming from Water Reserves, for a total amended budget amount for water meters of $485,000 in 2024. Adjustments to the 2024-2028 Long Term Financial Plan (LTFP) and future financial plans will be reflected during the LTFP Planning and the Budget Workshops that will take place during the normal budgeting process. Staff recommends the budget amendment to increase the 2024 water meter budget to include $75,000 for additional meters due to planned growth and replacement of meters on the meter resolution list and an additional $285,000 to start procuring and installing replacement meters associated with the PSC required 20- year mass meter replacement project. SUGGESTED COMMITTEE RECOMMENDATION Motion to recommend to the Common Council approval of the proposed budget amendments for additional water meters of $360,000, with funds coming from Water Reserves, for a total amended budget amount for water meters of $485,000 in 2024. SUGGESTED COUNCIL MOTION Motion to adopt Resolution 24-R3183. Z:\Interim Utility Manager\2024 Watermeters\Background Memo for 2024 Water Meter Budget Amendment Final.docx 2 3  RESOLUTION NO. 24-R3183 RESOLUTION AUTHORIZING A BUDGET AMENDMENT TO INCREASE THE 2024 WATER METER BUDGET WHEREAS, water meter needs for 2024 have increased due to the number of planned developments, LSL replacements and the backlog on the meter resolution list; and WHEREAS, the Water Utility proposes to phase in the water meter purchases for the 2026 mandatory mass meter replacement project requiring the replacement of approximately 2500 meters; and WHEREAS, to accomplish the proposed plan the Water Utility will need a budget amendment to purchase the additional meters as follows: 1. Add $75,000 to the current 2024 water meter budget for known projects this year. 2. Add $285,000 to allow for 800 additional water meters for the mass meter replacement project starting 2024. This will allow the Water Utility staff to begin scheduling and replacing meters this year. NOW THEREFORE, BE IT HEREBY RESOLVED that the Common Council authorizes the budget adjustment of $360,000 for additional meter purchases in 2024 with the funds coming from Water Reserves. Note: A budget amendment requires a super majority vote to be approved. DATED: CITY OF OCONOMOWOC By: _____________________________ Robert P. Magnus, Mayor ATTEST: Diane Coenen, Clerk 4  ESTIMATED WATER METER ALLOCATIONS - 2024 Revised 3/18/24 2024 Water Meter Total # Water Meters Estimated # of Units for Estimated Water New Development or Project Name Quantity Needed for Project Development Project Meter Size UW Credit Union 1 1 1 1.5" Arrowood Phase 2 & 3 (2024) 25 32 32 3/4" Arrowood Phase 4 (2025) 0 75 35 3/4" Norden Range - 1" 7 7 1" 270 Apts Norden Range - 2" 8 12 2" Olde Highlander - 3/4" for SF homes (2024) 41 164 164 3/4" Olde Highlander - 1" (quarter in 2024) 2 7 260 1" Locklyn Apartments 2 2 46 2" NE Area Apartments Ph 1 (start in 2024) 1 12 200 2" Prairie Creek Ridge #8 (half in 2024) 20 52 52 3/4" Oympia Fields proposed build out - 3/4" 0 4 3/4" 116 Apts / 8 Retail Oympia Fields proposed build out - 1.5" (start in 2024) 1 10 1.5" Panera Bread 0 1 1 1.5" Performance Coatings 1 1 1 2" Winnesota 1 1 1 1.5" Pabst Retail (2024) 4 16 16 3/4" Pabst Retail (2025 start) 0 6 6 1.5" Pabst 59 - Apartments (start late 2024) 4 4 162 3" Pabst 59 - Apartments (start in 2025) 0 7 see above 3/4" Pabst 59 - Innvoation buildings (Wingspan Bldg in 2024) 1 4 4 1.5" Other Developments/Phases of Past Projects Continued... 25 25 3/4" Sub-Total (Meters) 144 443 METER RESOLUTION LIST (includes all water meter exchanges due to leaks, complaints, repairs, and stop reading notices. Includes meters changed during LSL replacements) 190 3/4" Total Number of Water Meters 334 WATER METER PRICING SUMMARY -2024 New Developments Size Cost/Meter Meter Quantity Estimated Cost New water meters for service territory growth 3/4" $ 355 115 $ 40,825 New water meters for service territory growth 1" $ 575 9 $ 5,175 New water meters for service territory growth 1.5" $ 1,660 4 $ 6,640 New water meters for service territory growth 2" $ 1,870 12 $ 22,440 New water meters for service territory growth 3" $ 2,345 4 $ 9,380 New Meter Sub-Total 144 $ 84,460 METER RESOLUTION LIST (includes all water meter exchanges due to leaks, complaints, repairs, and stop reading notices. Includes meters 5/8", 3/4", 1", 1.5", 2", 3" $ 595 190 $ 113,050 changed during LSL replacements) Sub-Total 334 $ 197,510 Mass Meter Replacement Project (2550 meters exchanged by 2026) 5/8", 3/4", 1" $ 355 800 $ 284,000 TOTALS 1,134 $ 481,510 Notes: 1. New water meter installs as of 3/18/24 = 32 2. Water meter exchanges as of 3/18/24 = 65 3. NE Area Apartment project not initially approved for 2024 construction with 220 units but revised plans expected with 1 building started 4. Arrowood Phase 2&3 - assumed half developed 5. Olde Highlander - assumed quarter developed 6. Pabst Retail - assumed starting in 2024 7. Pabst 59- Wingspan Blgd in 2024, remaining in 2025 8. Norden Range (assume 75% complete) 9. The meter resolution list cost per meter above includes all meter sizes (cost is estimated) 5