Our Water District has a sophisticated “big city” plant that serves a “small town” population.  The good news is the non-stop availability of high-quality water.  The bad news is that the costs of water production and distribution are spread across a relatively few number of people (305).   When the water plant is appropriately maintained and enhanced year after year, the rates can stay reasonable.   But if maintenance and enhancement are deferred year after year, the costs to catch back up to an acceptable standard of operations can be burdensome to all, which is the situation that is now being faced by the District.

A.  Expenses 

After spending time with the District Manager, the District Engineer and a number of vendors, the amount of work required to be done and the cost of that work has become clear.  On top of the $445,000 of ongoing operations costs, which includes an increase of $6,000 in personnel costs for on-call duty, the following work needs to be completed this coming year (starting July 1, the beginning of the District’s fiscal year).

Essential Plant/Business Upgrades

1. Water Plant Operations: To be made operationally sound, key elements of the water plant must be upgraded.  An outdated version of the operating system software is running on a “backup” Windows 7 computer because the main touch-screen operating control panel broke several year ago and was never fixed or replaced.   Also, key parts of the machinery that have been operating for over a decade, with almost no maintenance, are beginning to fail and need to be replaced.  Estimated costs – $50,000 – $59,000.  (Some of those costs will be paid from the capital budget – which has $50,000 allocated.)
2. District Business Operations: The District’s Administrative/Business systems must be made functional, stable and secure.  The systems are currently running, fitfully, on an antiquated computer with outdated and non-supported software and an aging residential-quality printer that can’t keep up with District demands, e.g., printing Board packets.  District contracts and essential legal, business and financial documents are buried in 5-7 years of gmail attachments. There are no security controls over District data and no backup and restore protocols.  District information cannot be accessed remotely by the District manager, the contracted administrator and/or Board members. There is no support plan or process to keep systems/software updated or to answer questions when problems arise. Maintaining/updating the District’s web site is time consuming and difficult with links frequently breaking.  Estimated costs – $20,000. (This cost will be split 50% – 50% with the Sanitary District)
3. Building Integrity: The roof on the water plant needs to be replaced.  Estimated costs – $20,000

Mandated Federal and State projects

1. The Federal Environmental Protection Agency (EPA) is requiring that all water distribution lines be inspected and inventoried to determine whether they are lead based. This project is underway now and will spill over into next year.  Estimated costs for next year:  $5,000 – $6,000
2. Oregon State is requiring the District to relocate the Asbury Creek intake to improve fish habitat.  Estimated costs:  $6,000 – $7,000

B.  Revenue – Increases in Rate & Excess Usage Fees

The Budget committee, comprised of 5 members of the community and the 5 Board members, have been deliberating over how to finance this additional work.  Recommendations for increasing rates and excess usage fees, resulting in an additional $34,000 of revenue, are likely to be finalized at the 3^rd Budget Committee meeting on May 9^th.   

1. Increasing quarterly rates by 3.75%  from $184 to $191.  Projected revenue increase: from $226,400 to $235,700.
2. Increasing excess usage rates by 125% (they haven’t been increased since initially put in place in 2011).  Projected revenue increase: from $20,000 to $45,000.

	Rate per  hookup	Excess Use Fees	Tier 1         5,001-8,000	Tier 2         8,001-12,000	Tier 3         12,001-16,000	Tier 4         16,001-25,000	Tier 5                Over 25,000
Current	$184	$20,000	$ 7.50	$30.00	$200	$810	$15/100 gal
Next Year	$191	$45,000	$16.80	$67.40	$450	$1,822.50	$33.75/100 gal

It is anticipated that the Budget Committee’s recommended FY2024-2025 budget will be presented to the Water District Board for adoption at the May 16^th Board Meeting.

The Water District Board is also assessing whether there is a local market for surplus water that could be produced and sold in non-peak usage times.   Revenue from the sale of surplus water could reduce rates and excess usage fees.

C.  The Bottom Line

Financially, next year is going to be very tight.   The District will start the year with just a little over $50,000 in the water utility’s bank account.  (Balance is typically over $100,000).  To make things work, $73,000 will be transferred from the Forest-Watershed bank account to the water utility’s bank account to repay forest expenses that were previoulsy paid out of the water utility account.  This transfer will allow the District to have a little over $80,000 of contingency for unexpected emergencies.

The long-range plan that has been developed and reviewed by the Budget Committee suggests that the next several years are not likely to be much better, as the plant will continue to age and work will continue to be needed to maintain and update it.  Financial relief is most likely to come with a larger population OR an additional revenue source, such as surplus water sales, if one can be found.