1. Large User True-up Process
City of Hollywood
Large User True-up Process
Alternative Methodology Discussion
February 22, 2017
(Originally presented January 12, 2017)

2. Why an Alternative Methodology?
For many years we have discussed the desire to modify the Large User Agreement to simplify and update it.
Exhibit D is very complicated and creates a cumbersome True-up report that is difficult to create and follow.
We now have many years of True-up reports upon which to test the impact of an alternative, streamlined methodology.
In order to address some specific areas of concern to the Large Users.

3. Focus Areas
Debt Service Coverage
PILOT charges
Depreciation

4. Complexity of Annual Large User True-up Report

5. Current MethodologyAlternative Methodology
Exhibit D
Streamlined Methodology
Incorporate the best parts of the existing agreement
Easier for Large Users to review
Just as transparent as the existing method - with much fewer steps
Results similar to existing LUA with fewer steps and more concise report
Exhibit D
New Method

6. Debt Service Coverage and the Large User Agreement

7. Debt Service Coverage and the LUA
Existing LUA and Bond Ordinance requires the collection of debt service coverage from the Large Users in each year
Alternative methodology assumes collection of debt service coverage when required to meet bond covenants

8. Payment-in-Lieu-of-Taxes (PILOT) and the Large User Agreement

9. Payment-in-lieu-of-Taxes (PILOT) and the LUA
Existing LUA sets forth numerous, specific steps to distribute PILOT costs to the Large Users
A more simplified alternative to this complex process is to:
Allocate the Water/Sewer PILOT costs as follows:
Allocation of PILOT between Water and Sewer based on the average distribution of Directly Allocable Water O&M Costs versus Directly Allocable Sewer O&M Costs
Directly Allocable O&M Costs:
Water treatment, transmission, distribution O&M
Sewer collection, lift station, treatment O&M
Allocation of Sewer PILOT to the Large Users based on distribution of Flow

10. Payment-in-lieu-of-Taxes (PILOT) and the LUA

11. Depreciation and the Large User Agreement

12. Depreciation
In FY 2015 $18,310 of Depreciation was allocated to the Large Users
We will eliminate this charge to the Large Users

13. What a Simplified, Alternative Methodology Might Look Like

14. Simplified, Alternative Methodology
Allocated Sewer Costs
Total Water/Sewer Fund Costs
Allocated Water Costs
Allocated Sewer Costs
Hollywood
Large Users
Direct Water O&M
100 % Water
Direct Sewer O&M
100 % Sewer
Flow Distribution - Hollywood
Flow Distribution – Large Users
Indirect Water & Sewer O&M
General & Admin
PILOT
Engineering
Utility Admin.
Direct Water O&M
divided by
Total Direct Water & Sewer O&M
Direct Sewer O&M
divided by
Total Direct Water & Sewer O&M
Flow Distribution - Hollywood
Flow Distribution – Large Users
Debt Service
Debt-funded Water Projects divided by
Total Projects Funded with Debt Proceeds
Debt-funded Sewer Projects divided by
Total Projects Funded with Debt Proceeds
Allocated By Project Type
-Treatment = Rsvd. Capacity
-Collection = 81.5%
-Improv.& Upgrading = Flows
Allocated By Project Type
-Treatment = Rsvd. Capacity
-Collection = 18.5%
-Improv.& Upgrading = Flows
Cash-funded Sewer R,R&I Capital Costs
100 % Sewer
Allocated By Project Type
-Treatment = Rsvd. Capacity
-Collection = 81.5%
-Improv.& Upgrade = Flows
Allocated By Project Type
-Treatment = Rsvd. Capacity
-Collection = 18.5%
-Improv.& Upgrade = Flows

15. Possible Financial Impact of Alternative Methodology
Cumulative Reduction of ~$650,000 over last 5 years

16. Possible Financial Impact of Alternative Methodology
Cumulative Reduction of ~$650,000 over last 5 years

17. Possible Financial Impact of Alternative Methodology
Broward County
Cumulative Reduction of ~$270,000 over last 5 years

18. Possible Financial Impact of Alternative Methodology
Dania Beach
Cumulative Reduction of ~$93,000 over last 5 years

19. Possible Financial Impact of Alternative Methodology
Hallandale Beach
Cumulative Increase of ~$70,000 over last 5 years

20. Possible Financial Impact of Alternative Methodology
Miramar
Cumulative Reduction of ~$95,000 over last 5 years

21. Possible Financial Impact of Alternative Methodology
Pembroke Park
Cumulative Reduction of ~$13,000 over last 5 years

22. Possible Financial Impact of Alternative Methodology
Pembroke Pines
Cumulative Reduction of ~$250,000 over last 5 years

23. Takeaway Thoughts Related to an Alternative Methodology

24. Two Primary Takeaway Thoughts
Exhibit D
New Method
Streamlined Methodology
Simplified Methodology is easier for all Large Users to understand, interpret and explain to their stakeholders
Simplified Methodology likely to result in not much difference in cost sharing relationship between Large User group / Hollywood
In fact, based on recent 5 years of True-up Reports, there appears to be a cumulative benefit to the Large User group of ~$650,000 +

25. Next Steps

26. Next Steps
Large User Group to determine if Alternative Methodology is to be implemented
Requires unanimous approval to:
Replace Exhibit D with New Methodology
Adjust Large User Agreement, as applicable, based on New Methodology
Large User Group determines to retain Exhibit D methodology
If unanimous approval of New Methodology not secured

27. Questions

29. Existing Large User True-up Methodology

30. Large User True-up Process
Expense Category
Expenses
Operations & Maintenance
Treasury - Utility Billing & Collections
Utility Administration
Engineering Support
Water Treatment Plant
Water Distribution
Sewer Treatment
Sewer Collection
Pmt-in-Lieu-of-Taxes
Gen. & Admin. Charges
Debt Service
Depreciation
Total
Water
Sewer
Not allocated to Large Users
Utility Administration Staff Time
Spent on Water/Sewer
Engineering Staff Time
Spent on Water/Sewer
100% Water
100% Water
100% Sewer
100% Sewer
Per LUA / Ex. D - Multi-step, including Sewer Coll / Treatment Assets Value
Weighted Allocation of Personnel, O&M, Minor Capital Costs per LUA /
Ex. D Methodology
Each Issue Allocated By Service Type (Water / Sewer)
100% to Sewer (Large Users) – Calc developed for LUTU Only

31. Large User True-up Process
Expense Category
Sewer
Operations & Maintenance
Treasury - Utility Billing & Collections
Utility Administration
Engineering Support
Water Treatment Plant
Water Distribution
Sewer Treatment
Sewer Collection
Pmt-in-Lieu-of-Taxes
Gen. & Admin. Charges
Debt Service
Depreciation
Total
Hollywood
Large Users
Not allocated to Large Users
Utility Administration Staff Time
Spent on Water/Sewer
Engineering Staff Time
Spent on Water/Sewer
NA - 100% Water
NA - 100% Water
Flows
18.5% to Large Users –
Per Ex. D this is LU Share of Collection
Per LUA / Ex. D - Multi-step, including Sewer Coll / Treatment Assets Value
Flows
Each Issue Allocated By Project Type
Treatment = Reserve Capacity
Collection = 18.5%
Improv.& Upgrading = Flows
Flows

32. Large User True-up Process
Expense Category
Large Users
Operations & Maintenance
Treasury - Utility Billing & Collections
Utility Administration
Engineering Support
Water Treatment Plant
Water Distribution
Sewer Treatment
Sewer Collection
Pmt-in-Lieu-of-Taxes
Gen. & Admin. Charges
Debt Service
Depreciation
Total
Broward
Dania Beach
Hallandale Beach
Miramar
Pembroke Park
Pembroke Pines
Not allocated to Large Users
LU Flows
LU Flows
NA - 100% Water
NA - 100% Water
LU Flows
LU Flows
LU Flows
LU Flows
Each Issue Allocated By Project Type
Treatment = LU Reserve Capacity
Collection = LU Flows
Improv.& Upgrade = LU Flows
LU Flows