Have you evaluated your capital reserve funds only to realize you don’t have a sufficient amount to address the backlog of capital improvement repairs and projects? If you don’t have the funds to cover the current needs, how will you address improvements in the future?
A capital reserve fund is an essential part of the budget process, and there are several steps that can be taken to ensure an adequate supply of funds for system improvements in the future. We’ve outlined a few key tasks for initiating this process below. This process is best completed with close coordination between the engineering consultant and the municipality/authority.
The Sanitary Sewer Rate Study evaluates and recommends rate structure modifications and/or alternatives. The objective is to ensure that the rate structure is fair and equitable to the customers, but also provide an annual stream of revenue to maintain and operate the sewer system. Our approach to the study is outlined here.
Review prior four years of revenues and expenses (including current budget) and project five years of revenue and expenses without rate adjustments
Prepare several scenarios and rate adjustment recommendations for increase in sewer rates to cover projected expenses
Increase in user revenues to be based on growth projections contained in current Annual Municipal Wasteload Management (Chapter 94) Report, or using an agreed upon percentage for growth
Interview Municipal Officials to determine administrative needs of staff and projected healthcare/retirement benefits
Interview Municipal Public Works Personnel to review maintenance schedules, equipment replacements, and new facilities related to sanitary sewer system extensions
Attend work sessions with Municipal Staff to review recommendations and make presentation to Elected Officials
The Capital Improvement Charges are designed to recover the capital costs associated with providing water and wastewater capacity to new development. Often we discover that current charges do not adequately recover the costs associated with plant, transmission, or collection capacity. These charges should be reviewed at least every three to five years, and especially when a new census is available. Since the 2010 US Census data is available, now is a good time to evaluate where you stand.
Again, we’ve outlined a few key tasks that should be incorporated into the review process.
Review existing Inter-Municipal Agreements
Update current Capital Charges Study to reflect higher trending factors for replacement costs using Engineering News Record (ENR) 20 Cities Construction Cost Index (CCI)
Update connection fees for laterals installed by Authority or Municipality using ENR CCI
Review and add any new construction/associated project costs since the last amendment(s)
Recompute the amount of outstanding indebtedness
Update the basis for EDU design calculations using 2010 US Census persons per household data
If you would like additional information on either of these processes, please contact Richard G. Resh, Senior Project Manager, at (717) 846-4805 or firstname.lastname@example.org.