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Preliminary Financial Analysis

Preliminary Financial Analysis. Chehalis River Basin Flood District Formation February 17, 2010. Purpose of Financial Analysis. Compile known costs for flood district Identify unknown costs for flood district Propose methodology for allocating costs Among participating jurisdictions

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Preliminary Financial Analysis

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  1. Preliminary Financial Analysis Chehalis River Basin Flood District Formation February 17, 2010

  2. Purpose of Financial Analysis • Compile known costs for flood district • Identify unknown costs for flood district • Propose methodology for allocating costs • Among participating jurisdictions • Between the floodplain and the remaining basin • Calculate planning level rates / taxes for consideration Chehalis River Basin Flood District Formation

  3. Known Costs / Projects 1 Request for State funds pending. 2 Re-appropriation of existing State funds. 3 Assumes $1 million already funded; remainder 50/50 split. 4 No available cost estimates. Chehalis River Basin Flood District Formation

  4. List: Non-Structural Mitigation Measures • Public Information: Education materials – flood proofing guidance • Regulation: Improve floodplain regulations, develop conservation easement programs • Planning and data collection: Improve hydraulic modeling, study woody debris and stream gravels • Reduce damage to existing structures: Develop home elevation and buyout programs • Emergency response and preparedness: Develop early warning systems • Natural resources protection projects: Protect and restore riparian areas

  5. List: Structural Measures • Floodplain protection • Culvert improvements, tributary drainage improvements • Bank protection • Bank stabilization and protection • Conveyance capacity • Open channel migration zone

  6. Cost Allocation Question #1 • What is the best basis for allocating costs between the floodplain and the remaining basin? Recommendation: Allocate costs to floodplain by direct economic value added in floodplain / total economic benefit of floodplain improvements in the basin 6

  7. Cost Allocation Question #2 • What is the best basis for allocating costs among participating jurisdictions? Recommendation: Allocate floodplain costs from previous slide to each jurisdiction 50/50 by floodplain economic value added / floodplain assessed valuation Allocate remaining basin costs by total economic benefit / value of floodplain to basin 7

  8. Potential Allocation Bases

  9. Proposed Approach Negotiate cost sharing Yes Floodplain costs Does activity provide unique benefit to specific geographic location(s)? Allocate among participants 50/50 by floodplain AV & floodplain direct economic value Allocate cost between floodplain & remaining basin by economic value added in floodplain Lewis County Grays Harbor County Thurston County Chehalis Tribe No Remaining basin Allocate among participants by total floodplain economic benefit (direct & indirect) Allocate individual costs shares back to floodplain and remaining basin by economic value added in floodplain Lewis County floodplain Grays Harbor County floodplain Thurston County floodplain Chehalis Tribe floodplain Basis of rate tobe applied infloodplain only Basis of tax orrate to be appliedthroughout basin Remain-ing basin Remain-ing basin Remain-ing basin Remain-ing area

  10. Rate Authorization RCW 86.15.160 Excess levies, assessments, regular levies, and charges — Local improvement districts. For the purposes of this chapter the supervisors may authorize: …(4) A charge, under RCW 36.89.080, for the furnishing of service to those who are receiving or will receive benefits from storm water control facilities and who are contributing to an increase in surface water runoff…

  11. Revenue Requirement Scenarios • State Assistance – funds all • revenue requirement (to District): $0 • No State Assistance, District funds nothing • revenue requirement (to District): $0 • No State Assistance, District funds only District staff / management; awaits State funding for major capital projects • first year revenue requirement: $645,000 • 7/1-12/31/2011 District staff through member contributions • No State Assistance, District funds staff / management & hydraulic analysis; awaits State funding for major capital projects • first year revenue requirement $1,045,000 • 7/1-12/31/2011 District staff through member contributions

  12. Summary of Cost Allocations Scenario 3: District funds only District staff / management; awaits State funding for other needs • 1st year revenue requirement: $645,000

  13. Summary of Cost Allocations Scenario 4: District funds staff / management & hydraulic analysis; awaits State funding for other needs • 1st year revenue requirement: $1,045,000

  14. Summary of Rates / Taxes

  15. Characteristics of Options

  16. Cost Recovery Evaluation 16

  17. Future Fiscal Policies • Maintain an appropriate working capital balance as a cushion against fluctuating expenditures, taking into account the size of the program and other factors • Fund capital repair and replacement over time • Maintain an appropriate level of capital contingency funding for emergency needs • Develop a capital funding strategy once a project list and associated costs are developed 17

  18. Summary of Financial Analysis • Revenue Requirement: Scenario 3 - fund only District staff / management ($645,000) • Cost Allocation: • Between floodplain and remaining basin – allocate costs to floodplain by direct economic value added in floodplain / total economic benefit of floodplain improvements in the basin • Among jurisdictions – allocate remaining basin costs by total economic benefit / value of floodplain to basin Chehalis River Basin Flood District Formation

  19. Summary of Financial Analysis • Cost Recovery • Recover floodplain costs in a rate to developed property • Recover remaining basin costs in a property tax • Rate Credits • Provide credits against floodplain rate for properties that develop to recommended standards Chehalis River Basin Flood District Formation

  20. Next Steps • Results of direction today will be incorporated into the DRAFT ILA • DRAFT ILA will be the subject of the March Flood Authority meeting • We anticipate continued review in April • We suggest the ILA be calendared now for necessary public process and action in May/June by each signator to the Agreement • Presumes that the FCZDs of each jurisdiction will be formed by May/June action on the ILA Chehalis River Basin Flood District Formation

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