This document analyzes water rate options for the City of The Dalles. It finds that previous revenue predictions were not met due to lower water usage. Several capital projects are needed to meet regulations and infrastructure needs, requiring significant rate increases or delays to projects. Four options are presented: completing projects on schedule (Option 1), delaying projects by several years (Option 2), delaying the largest projects to the extent possible (Option 3), or spreading rate increases more evenly. Completing projects on time requires the highest initial costs while delays increase risks but allow rates to increase more gradually.

1. Water Rate Analysis Will Norris Administrative Intern City of The Dalles Note to reader: Extra text has been added to the following slides that didn’t exist in the original PowerPoint, as it had a verbal presentation. For further information please refer to the 7/25/11 Council Agenda Packet at: http://www/newsite/sites/default/files/imported/agendas/city_council/PDFs/Agenda072511.pdf

3. Previous Forecasts and Actuals

5. Capital ImprovementsRevenue Predictions Future Options City of the Dalles - Water Rate Analysis

6. Background Capital Requirements Revenue Predictions Options Consumption History Metered water data from Utility Billing shows that system-wide water use has changed little in the past ten years Possible reasons could include conservation, reaction to higher water prices and more water efficient appliances City of the Dalles - Water Rate Analysis

7. Background Capital Requirements Revenue Predictions Options Previous Revenue Predictions Previous revenue predictions assumed increasing water use and more development. Lower than expected water sales has meant that revenue expectations have not been met Difference $1.3 Million City of the Dalles - Water Rate Analysis

8. Background Capital Requirements Revenue Predictions Options Water Utility History Flat Rates/Lowered Reserves Rate Increases/Capital Investments City of the Dalles - Water Rate Analysis

9. Background Capital Requirements Revenue Predictions Water Utility Personnel and Materials(2011 Dollars) City of the Dalles - Water Rate Analysis Options Adjusting for inflation, the operating costs within the Water Utility have ,on average, increased 1.6% per year. This is as healthcare, energy and metals prices have experienced large increases.

10. Revenue Predictions FY 2011/12 Debt Service City of the Dalles - Water Rate Analysis 2007 Water Revenue Bond $561,405 (Wicks Clear Well, Dam permitting, Lone Pine well) FFC 2008 $59,971 (Public Works Shop Relocation) FFC 2009 $32,421 (West 1st Local Improvement District) ARRA Loan $200,892 (Vista Reservoir) Total $854,689 Options Background Capital Requirements While operating costs have remained stable, implementing the Water Master Plan as well as meeting unexpected regulatory costs has substantially increased the debt of the utility.

11. Required Revenue to meet Expenses Background Capital Requirements Revenue Predictions Options Meeting current debt service and continuing forward historic price trends will require significant increases in Revenue in order to maintain fund balances. City of the Dalles - Water Rate Analysis

12. Capital Projects City of the Dalles - Water Rate Analysis Background Capital Requirements Revenue Predictions Options There are still many projects that need to be completed in the next decade. Only one of which is primarily capacity enhancement. The rest are meeting federal regulations or securing the quality and quantity of water the city already uses

13. Background Capital Requirements Revenue Predictions Options Revenue Predictions Previous revenue predictions created hypothetical scenarios and then calculated what billing would result. This analysis instead used a regression equation to model the relationship between rate increases and additional revenue. Note: Background graph is not necessarily actual model statistics City of the Dalles - Water Rate Analysis

14. Background Capital Requirements Revenue Predictions Options Years with flat rate increases saw flat revenue growth. After instituting successive 10% rate increases, each year saw about a $311,000 increase in revenue. + 10% rate + $311k + 0% rate + $3k revenue City of the Dalles - Water Rate Analysis

15. Background Capital Requirements Revenue Predictions Options Using this relationship to model a regression equation, any increment of rate increases can be used to estimate revenue growth. City of the Dalles - Water Rate Analysis

16. Background Capital Requirements Revenue Predictions Options City of the Dalles - Water Rate Analysis

19. Background Capital Requirements Revenue Predictions Options Option #1 On Time Least risk and highest upfront cost option Eight of the ten projects are bonded in FY 11/12. The last two projects, port pipeline extension and replacing the finished water pipeline are bonded in FY 16/17 City of the Dalles - Water Rate Analysis

20. Background Capital Requirements Revenue Predictions Options Option #2 A Delayed Each project delayed several years Three bond issues required Thompson/19th street project is paid with cash in FY 11/12. The first bonding begins in FY 14/15. This plan requires three rounds of bonding. City of the Dalles - Water Rate Analysis

21. Background Capital Requirements Revenue Predictions Options Option #2 B Delayed Rates are spread more evenly Fund Balances grow before projects Exact same Capital Project timeline at Option #2 A. Version B prioritizes stable rate increases, rather than just-in-time rate increases. City of the Dalles - Water Rate Analysis

22. Background Capital Requirements Revenue Predictions Options Option #3 A Critically Delayed Projects pushed to their furthest extreme Dog River Permitting will require renewal Thompson/19th st. is still paid cash this year. The largest project, Dog River Pipeline and the Finished Water Pipeline are delayed until FY 19/20. City of the Dalles - Water Rate Analysis

23. Background Capital Requirements Revenue Predictions Options Option #3 B Critically Delayed More evenly spacing rate increases leads to a large growth in fund balances Version B prioritizes more stable rates. However, with the two larges projects, Dog River pipeline and Finished water pipeline replacements both delayed, major rate increases at the end of the decade are unavoidable. City of the Dalles - Water Rate Analysis

24. Discussion City of the Dalles - Water Rate Analysis