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TWSD RATE ADJUSTMENT HEARING

The Timberon Water and Sanitation District (TWSD) will hold a public hearing on December 15, 2009 at 6:00 PM to discuss proposed adjustments to water and sewer rates. The resolution includes changes to base water rates, standby charges, late fees, and the establishment of a voluntary donation program. The rate adjustments are necessary to support system upgrades and maintenance and ensure financial solvency for the district. This process follows the statutory authority and procedure outlined in New Mexico Statute 73-21-55.

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TWSD RATE ADJUSTMENT HEARING

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  1. TWSD RATE ADJUSTMENT HEARING DECEMBER 15, 2009 6:00 PM

  2. NMSA 73-21-16 GENERAL POWERS L. To fix and from time to time to increase or decrease water and sewer rates, tolls or charges for services or facilities furnished or made available by the district, including, without limiting the generality of the foregoing, standby charges for both water and sewers, and to pledge that revenue for the payment of any indebtedness of the district.

  3. STATUATORY AUTHORITY AND PROCEDURE New Mexico Statute 73-21-55 establishes a three step procedure for allowing a Water and Sanitation District that has not elected to become subject to the Public Regulation Commission to adjust its rates, tolls, fees and charges. Note: This statute was changed by House Bill 337 which became law in 2009. The TWSD board has not elected to become subject to the Public Regulation Commission.

  4. STEP 1 PUBLIC HEARING • (1) At least 30 days after publication of a notice of the board’s intention to adjust rates, tolls, fees or charges, the board shall conduct a public hearing on the proposed resolution, at which time , after hearing proponents and opponents, the board may reject, amend or adopt the resolution adjusting the rates, tolls, fees or charges;

  5. STEP 2 PUBLICATION & APPEAL • (2) within thirty days after publication of the resolution adjusting rates, tolls, fees or charges, the new rates, tolls, fees or charges may be appealed by a taxpaying elector to the district court of the county in which the district is located; and

  6. STEP 3 DISTRICT COURT • (3) the district court shall consider the petition to overturn the adjustments, based on the record of the board hearing in which the resolution was adopted, under the court’s rules governing review by a district court of administrative decisions or orders.

  7. RESOLUTION 09/10-005 On October 22, 2009 The Timberon Water and Sanitation District board of directors adopted resolution 09/10-005 adjusting water rates. The resolution lists the following changes.

  8. PROPOSED CHANGES • 1. The base water rate will be $27.40 per month, which includes the first 1000 gallons of water with a progressive rate curve for water usage after the first 1000 gallons. • 2. Rates for non-potable water, hooking up meters, extending water lines, turning meters off and on, connecting and disconnecting meters will remain unchanged. • 3. The water standby charge will be $56.70 per year, except that if an Infrastructure Maintenance Charge is adopted, the rate shall remain $36.00 per year.

  9. PROPOSED CHANGES • 4. After two (2) months, there will be a 6% interest charge on unpaid metered water and standby charges. • 5. There will be a $10.00 late fee charged on all metered water bills after a two (2) week grace period. The grace period starts the day after the due date listed on the metered water bill. • 6. To help the financially disadvantaged, there will be a voluntary donation program established. Proceeds from these donations would be distributed evenly amongst those who provide documentation that they are on the State “LiHeap” (subsidized utility bill) program.

  10. WHY DO WE NEED A RATE ADJUSTMENT? TWSD needs system wide upgrades and replacement of lines, tanks, collection systems, and treatment facilities. The district has experienced water system maintenance and repair costs, coupled with legal expenses, that exceed its revenues. The district, in the past, has used reserve funds to meet operating costs rather than raise rates making the the cost of water artificially low. There are no funds available to be set aside for water system infrastructure improvements and capital asset replacement.

  11. WHY DO WE NEED A RATE ADJUSTMENT? The district seeks to balance operation and maintenance expenses with recurring revenues, build an operational reserve to ensure financial solvency, and dedicate funds to capital improvement of the water system. Grants and other revenue sources previously available for capital improvement projects have disappeared due to the economy. The district was recently informed that funding in the amount of $1,049,000 for urgently needed repairs to tank two, our primary water reservoir, and other critical water system projects was no longer available. Timberon Water System (Asset Management)

  12. PRIMARY STORAGE TANK #2

  13. HOW MUCH DO WE NEED? In 2008-2009 the cost of operating the water enterprise was $338,490. An additional $47,600 per year for the next three years is needed to rebuild the reserve accounts as required by the DFA.

  14. DFA BUDGETING REQUIREMENTS Department of Finance and Administration calls for an additional 3 months of operations and maintenance reserves and 1 month of emergency reserves for a total of $112,830. Capital reserves add another $30,000. The whole $142,830 in reserves can be built up over a period of 3 years or about $47,600 per year. Based on the 2008-2009 actual expenditures of $338,490 and adding the reserve requirements means that the annual water enterprise budged should be approximately $386,090.

  15. 2008-2009 WATER ACCOUNTS COMBINED 2008-2009 Budget Committee Working Document

  16. WILL THE NEW RATES SOLVE THE PROBLEM? REVENUE GOAL TO BALANCE BUDGET (2008-2009 +1/3 OF RESERVE REQUIREMENTS) $386,090 FIXED INCOME FROM 620 METERS 205,900 VARIABLE INCOME WATER USAGE (EST.) 85,236 1/3 OF STANDBY CHARGES 83,160 COLLECTIONS PAST DUE STANDBY CHARGES (EST.) 20,000 TOTAL $394,296

  17. COMPARISON OF CURRENT RATES AND PROPOSED NEW RATES CURRENT RATES Base Rate 17.40 per mo. Metered Water 2.69 1st 1000 gal. 2nd 1000 gal. 2.69 per 1000 gal. Third 1000 gal. 2.69 per 1000 gal. Water use is at a Fixed Rate Standby Chg. 36.00 per year PROPOSED NEW RATES Base Rate 27.40 per mo. Metered water 0.00 1st. 1000 gal. 2nd 1000 gal. 2.00 per 1000 gal. Third 1000 gal. 4.00 per 1000 gal. Water use is a Progressive Rate Standby Chg. 56.70 per year The overall increase in the base rate and the standby charges is 57.5%. Note: A progressive water rate is now required by the NM Drinking Water Bureau

  18. WHERE DID THE 57.5% NUMBER COME FROM? All non-water revenues and expenditures were removed from the 2008-2009 budget then funds sufficient to meet DFA budgetary requirements over a period of three years were added in. The results were divided by the 2008-2009 numbers. The increase of 57.5% should balance the budget and rebuild the reserve accounts in three years.

  19. THREE PERCENT ANNUAL INCREASE Increasing the $17.40 base rate and standby charge by three percent annually since it was established would have resulted in a 2010 base rate of $28.76 per month and an annual standby charge of $59.50. The proposed rate adjustment is for a base rate of $27.40 and a standby charge of $56.70. Note: standby charges were calculated from the $36.00 annual rate not the original $42.00 rate.

  20. HOW MUCH WILL YOUR BILL GO UP ? The maximum percentage of increase in water bills for 88.5% of the water users in Timberon (those using 5,000 gallons a month or less) will be less than 44%

  21. EFFECT OF RATE ADJUSTMENT ON TYPICAL WATER CUSTOMER NEW CHARGES Base Rate 27.40 1000 Gallons 0.00 Total Bill 27.40 CURRENT CHARGES Base Rate 17.40 1000 Gallons 2.69 Total Bill 20.09 Effective rate of increase for 1000 gallon useris 36.4% Base Rate 27.40 2000 Gallons 2.00 Total Bill 29.40 Base Rate 17.40 2000 Gallons 5.38 Total Bill 22.78 Effective rate of increase for 2000 gallon user is 29.1%

  22. EFFECT OF RATE ADJUSTMENT ON TYPICAL WATER CUSTOMER CURRENT CHARGES Base Rate 17.40 3000 Gallons 8.07 Total Bill 25.47 NEW CHARGES Base Rate 27.40 3000 Gallons 6.00 Total Bill 33.40 Effective rate of increase for 3000 gallon user is 31.1% Base Rate 17.40 5,000 Gallons 13.45 Total Bill 30.85 Base Rate 27.40 5,000 Gallons 17.00 Total Bill 44.40 Effective rate of increase for 5,000 gallon user is 43.9%

  23. END OF PRESENTATION Questions for the board regarding the rate adjustments Please remember to step up to the microphone and state your name.

  24. Links to supporting documents 2008-2009 Budget Chart #6 (Current rates) Chart #6 (New rates) 4&5.xls - Sheet1!A1 (Fixed and Variable Water) Timberon Water System (Asset Management)

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