AgdaPkt 2019-06-24 Joint SA PFA - Laserfiche WebLink

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6.11.11. - Page 28 of 47 ■ The City's share of debt service for SVCW's capital improvement program is based on recently -updated debt projections developed March 2019 along with BWA estimates for WIFIA debt repayment assuming a 3 -year deferral of WIFIA debt repayment after project completion. ■ Capital expenditures for the City's collection system are projected at $7.5 million per year for the next 3 fiscal years escalating to $8.5 million annually most years thereafter. As noted, the projections also include some temporary supplemental funding generated in years leading up to stepped up increases in debt service. The City anticipates using this additional funding to help pay for additional capital improvements and the sewer utility's share of costs for a new utility billing system, and to fund additional contributions towards the sewer utility's long-term pension liabilities. The projections assume the City's capital program will be funded on a pay-as-you-go basis without the need for debt financing. ■ For financial planning purposes, the projections assume the City achieves roughly balanced budgets each year and roughly maintains its current level of fund reserves. Maintaining a prudent minimal level of fund reserves provides a financial cushion for dealing with unanticipated expenses, revenue shortfalls, and non -catastrophic emergency capital repairs. ■ Debt service coverage is calculated for a) the City's debt service obligations for SVCW bonds, which are directly secured by the net revenues of the City's sewer utility, and b) the City's share of total debt service for SVCW's capital program, which also includes SRF and WIFIA financing, which are legally secured by SVCW (not the member agencies) but are allocated to each member agency based on their share of participation in each financing. Debt service coverage is calculated based on net revenues remaining each year after payment of operating and maintenance expenses, divided by annual debt service. The table also shows debt service coverage with the inclusion of unencumbered fund reserves as net revenues available for paying debt service, consistent with the legal definitions in the Finance Agreements securing repayment for SVCW bonds. A table showing 10 -year sewer utility cash flow projections is shown on the following page. The rate projections shown on the table are designed to keep revenues aligned with the City's future cost of providing service, provide adequate funding for the City's capital needs and the financing needs of SVCW's capital improvement program, and maintain roughly balanced budgets. ®BARTLE WELLS ASSOCIATES 11 Sewer Financial Plan & Rate Update 707