Item 5: Metropolitan Wastewater Management Commission Budget

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conducted a public hearing on the proposed draft budget for FY10 and subsequently adopted the budget on April 10, 2009. The commission’s adopted budget is attached for council consideration (see Attachment A). The budget reflects the continuing focus on design and construction of capital improvements in the approved 2004 Facilities Plan, needed to ensure that the operation of the Regional Wastewater Facilities meets increasing environmental regulations and that collection and treatment capacity will be available to provide for growth in the service area. The adopted budget includes the financial resources necessary to support the regional program with a 1% decrease in administrative costs and a 7% increase in operations and maintenance (O & M) expenses. The decrease in administrative costs is due to staffing reductions. The increase in O & M costs are due primarily to increases in chemical costs related to changing disinfection processes, implementation of Phase III at the Biocycle Farm, and fleet operating charge adjustments. During the April 10 meeting, the commission approved an overall 18% increase in the regional wastewater user rates to generate revenue for the proposed budget and, pursuant to the recommendations of the MWMC financial advisor, to address needs for future Capital Improvement Program (CIP) financing consistent with the commission’s Financial Plan policies and net revenue objectives. The 18% user rate increase is driven mainly by the need to meet the revenue to debt service covenants related to the issuance of revenue bonds in support of the regional wastewater CIP. The revenues generated by the user rate increase are consistent with the MWMC's approved financial plan to maintain an unenhanced credit rating of A and adequately fund operations, administration, capital financing, and reserves. In a related action, the council approved a resolution on April 27, 2009, which expanded the commission's borrowing authority to allow for additional borrowing to complete the 2004 Facilities Plan. RELATED CITY POLICIES This action item is related to the City Council goals of "Sustainable Development" and "Effective, Accountable, Municipal Government." COUNCIL OPTIONS 1. Approve motion to ratify the FY10 MWMC budget. 2. Return the FY10 MWMC Regional Wastewater Program Budget and Capital Improvements Program to MWMC with specific requests for modification and reconsideration. CITY MANAGER’S RECOMMENDATION The City Manager recommends ratification of the proposed FY10 MWMC Budget and Capital Improvements Program. SUGGESTED MOTION Move to ratify the FY10 MWMC Budget. ATTACHMENTS A. Transmittal Letter and MWMC FY10 Proposed Regional Wastewater Program Budget and Capital Improvements Program Z:\CMO\2009 Council Agendas\M090511\S0905115.doc