1. RATE ANALYSIS FY 2015 - FY 2019 March 6, 2014 CARSON VALLEY WATER UTILITY FUND 326 – DEPARTMENT 864

2. OUTLINE Background 2012 Rate Study Projections Projected Rate Adjustments Capital Improvement Plan 2014 Rate Analysis Goals Assumptions Model Scenarios Implementation Schedule Board Direction 2

3. Background Monthly water rates, private fire service and connection charges were last reviewed in 2012 On June 27, 2012, the Board of County Commissioners adopted Resolution 2012R-029 establishing a 2-year rate schedule for the Carson Valley Water Utility The existing monthly existing water rate for a typical residential customer with a ¾” service using 16,000 gallons monthly is $63.25 (East valley, West Valley and Sheridan Acres) The existing monthly existing water rate for a typical residential customer with a 1” service using 16,000 gallons monthly is $87.30 (Jobs Peak) The existing monthly water rates expires on June 30, 2014 3

4. 2012 Rate Study Projections 4 The 2012 Water Rate Study included projected increases for FY 2015, FY 2016 and FY 2017. Projected Rate Adjustments FISCAL YEARRATE ADJUSTMENT FY 201514.15 % FY 20168.17% FY 20176.15% The projected rate adjustments represent an average increase of approximately 9.5% annually

5. Capital Improvement Plan Proposed FY 2015 through FY 2019 CIP Project FY 2015FY 2016FY 2017FY 2018FY 2019 Distribution Improvements $130,000$6,000$294,000 SCADA$150,000 Clear Creek 1 $7,200,000 Clear Creek 2 $1,100,000 2 County Investment in off-site water improvements with a $1.1M payment back to the County (Developer Contributed Capital) 5 1 Developer cost for off-site water system improvements (Developer Contributed Capital)

6. 2014 Rate Analysis Goals Fiscal Responsibility Enterprise Fund (no external or internal subsidies) Build Reserves Rate Stability Uniform Annual Rate Adjustment Prevent Rate Spikes Long-term Predictability 6

7. 2014 Rate Analysis Assumptions and Changes since the 2012 Rate Analysis Water consumption has increased approximately 13% ($375,000) over the last rate study’s base year forecast Purchased water costs from the Town of Minden increased approximately 24% ($54,000) over the 2014 projection with future increases Adjusted the base model to include the private fire service charges ($51,000 annually) Annual debt service decreases approximately $240,000 in FY 2018 Revised the 5 – Year CIP Removed South County Water Line Included Clear Creek Off-site Improvements (Contributed Capital) Shifted approximately $3.2 M in assets from Fund 326 to the Fund 324 (Regional Water) 7

8. 2014 Rate Analysis Scenario 1 System Reinvestment 2014 = 40% (current), 2015 = 60%, 2016 = 70%, 2017 = 80%, 2018 = 90%, 2019 = 100% FY 2015FY 2016FY 2017FY 2018FY 2019 Rate Adjustment3.75% Monthly Bill$65.62$68.08$70.64$73.28$76.03 Combined Ending Fund Balance $2,601,083$3,100,456$3,797,014$4,484,661$6,638,741 Minimum Target$1,227,809$1,478,087$1,513,178$1,541,580$1,584,433 Debt Coverage1.561.611.652.212.26 8

9. 2014 Rate Analysis Scenario 2 System Reinvestment 2014 = 40% (current), 2015 = 50%, 2016 = 60%, 2017 = 70%, 2018 = 80%, 2019 = 90% FY 2015FY 2016FY 2017FY 2018FY 2019 Rate Adjustment3.25% Monthly Bill$65.31$67.43$69.62$71.88$74.22 Combined Ending Fund Balance $2,587,157$3,057,565$3,708,940$4,333,947$6,406,619 Minimum Target$1,277,809$1,478,087$1,513,178$1,541,580$1,584,433 Debt Coverage1.551.591.612.142.16 9

10. 2014 Rate Analysis Scenario 3 System Reinvestment 2014 = 40% (current), 2015 = 50%, 2016 = 50%, 2017 = 50%, 2018 = 60%, 2019 = 60% FY 2015FY 2016FY 2017FY 2018FY 2019 Rate Adjustment2.0% Monthly Bill$64.52$65.81$67.12$68.46$69.83 Combined Ending Fund Balance $2,552,343$2,950,946$3,491,255$3,963,565$5,839,437 Minimum Target$1,277,809$1,478,087$1,513,178$1,541,580$1,584,433 Debt Coverage1.52 1.511.961.93 10

11. 2014 Rate Analysis Scenario 4 System Reinvestment 2014 = 40% (current), 2015 = 40%, 2016 = 40%, 2017 = 40%, 2018 = 40%, 2019 = 40% FY 2015FY 2016FY 2017FY 2018FY 2019 Rate Adjustment0.75% Monthly Bill$63.72$64.20$64.68$65.17$65.66 Combined Ending Fund Balance $2,517,528$2,845,197$3,277,113$3,602,194$5,290,593 Minimum Target$1,277,809$1,478,087$1,513,178$1,541,580$1,584,433 Debt Coverage1.481.451.411.781.70 11

12. Implementation Schedule Actions March 6, 2014:Board Presentation March 16, 2014:Advertise in Newspaper April 15, 2014:End 30 Day Noticing Period May 1, 2014:Board Adopt Rate Resolution July 1, 2014:Implement Rate Schedule 12

13. Board Direction Direction to staff on bringing back a resolution to the May 1, 2014 Board meeting establishing a five (5) year monthly water rate schedule based on the scenario selected by the Board. 13