1. Global Service Provider Buildings Energy Environment Transportation Water Water and Wastewater Rate Study Village of Villa Park, Illinois Presented to Village Board May 23, 2016

2. Agenda Services provided Need for rate increase Rate structures Cost-of-service rate analysis & proposed Rates –Water –Wastewater (Combined sewer separation & Storm Water not currently funded) Wastewater Combined Sewer Separation Storm Water Summary of recommendations

3. Utilities Provide Services That Improve Customer’s Quality of Life Water: Provides clean water Provides adequate water supply Provides sufficient fire protection Provides high level of utility service Wastewater: Contributes to healthy neighborhoods Provides clean waterways Protects wildlife Provides high level of utility service

4. Rate Increases Required to Maintain Services Capital expenses related to proposed CIP Combined Sewer Separation Storm Water Increasing utility spending due to inflation and increased maintenance costs Declining water usage due to ongoing water conservation efforts

5. Current Rate Structures Administrative fee Water –Uniform volume rate Inside corporate limits Outside corporate limits –Customer charge –Cross connection charge Wastewater –Uniform volume rate –Customer charge

6. Proposed Rate Structures Administrative fee Water –Uniform Volume Rate Inside corporate limits Outside corporate limits –Customer Charge –Cross Connection Charge Wastewater –Uniform Volume Rate –Customer Charge –Sewer Separation Charge –Storm Water Charge

7. Proposed Rate Basis Water Audit Study What does it take to cover completed and ready to bid capital projects? Allocate debt service to fixed charge –Avoids uncertainty of revenue tied to water usage –Provides more stable source of revenue –Reduces volume charge increase

8. Cost-of-Service Rate Analysis Cost-of-service analysis for municipal utilities provides adequate revenue to cover costs Costs include O&M expenses & capital financing Goal is to charge all customers fair and equitable rates equal to cost of providing service to them In simplest form: Costs divided by billing quantity = rate For fair and equitable rates: Detailed considerations are needed

9. Global Service Provider Buildings Energy Environment Transportation Water Wastewater Rate Cost-of-Service Analysis

10. WW – Past & Programmed Loan Eligible CIP Projects Project Project Cost Debt Service Fiscal Year Wastewater South Myrtle Relief (completed)$732,157 $47,921 2008-09 North Villa Lift Station Rehab (completed)$317,786 $26,351 2008-09 Sanitary Sewer Rehab (completed)$1,558,786 $79,938 2009-10 2016 Rehabilitation Program (design phase)$1,309,610 $84,000 2016-17 Sewer Separation Park (under construction; reimbursed to Road Fund)$459,133$22,957 2016-17 Michigan (ready to bid; reimbursed to Road Fund)$632,500$31,6252016-17 Astor and Myrtle (design phase)$772,750 $50,000 2017-18 SUBTOTAL$5,782,722$374,072

11. WW – Future Programmed Loan Eligible CIP Projects (not included in Scenario 1) Project Project Cost Debt Service Fiscal Year Wastewater IEPA Wastewater$880,000 $56,000 2018-19 Sewer Separation Various Street Projects$738,000 $47,000 2017-18 Various Street Projects$3,393,000 $216,000 2018-19 Various Street Projects $1,176,000 $75,000 2019-20 Sewer Separation $2,598,000 $166,000 2018-19 Sewer Separation $3,818,000 $243,000 2019-20 SUBTOTAL$12,603,000$803,000 TOTAL $18,385,722$1,177,072

12. Itemized Future Sewer Separation Projects (not included in Scenario 1) Project FY 16-17FY 17-18FY 18-19FY 19-20Project Total Charles $96,000$1,046,000 $1,142,000 Euclid (Washington to Madison) $44,000$485,000$529,000 Holly$45,000$195,000$50,000$597,000$887,000 Maple (Illinois to Villa) $32,000$352,000 $384,000 Michigan (Kenilworth to Central)$41,500$456,500 $498,000 Myrtle (Oak to Division) $21,000$223,000 $244,000 Oak $34,000$385,000 $419,000 Pine $37,000$462,000 $499,000 Princeton (Division to Elm) $32,000$448,000 $480,000 Sewer Separation Alternate 1 $2,598,000$3,818,000$6,416,000 Summit $18,000$207,000 $225,000 Westmore (Division to St Charles) $36,000 Wisconsin (Kenilworth to Madison) $101,000 Yale (Park to Madison) $90,000 SUBTOTAL$86,500$921,500$5,815,000$5,127,000$11,950,000

13. Wastewater Expenditures Scenario 1 FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20 Operating Expenses $1,212,579$1,323,554$1,337,324$1,360,550$1,384,240 Debt Service $154,210 $292,792$342,792 Capital Outlay from Revenue $495,059$589,000$594,000 Total Expenditures $1,861,848$2,066,764$2,224,116$2,297,342$2,321,032 Scenario 2 Operating Expenses $1,212,579$1,323,554$1,337,324$1,360,550$1,384,240 Debt Service $154,210 $292,792$389,792$826,792 Capital Outlay from Revenue $495,059$589,000$594,000 Total Expenditures $1,861,848$2,066,764$2,224,116$2,344,342$2,805,032

14. Projections with Present WW Rates – Scenario 1 Wastewater Rate Analysis

15. Projections with Present WW Rates – Scenario 2 Wastewater Rate Analysis

16. Storm Water – 5 Year Programmed CIP Projects Project Project Cost Debt Service Fiscal Year Astor and Myrtle $400,000$30,000 2017-18 High Ridge $100,000$8,000 2017-18 Lions Park Drainage $214,800$16,000 2017-18 Jackson Area Storm Water Improvements $6,390,200$465,000 2017-19 Monterey Storm Water Quality $106,000$8,000 2016-17 Sewer Separation Alternate 2 (design) $93,750$7,000 2017-18 Wisconsin – Kenilworth to Madison (design) $111,000$9,000 2019-20 Yale – Park to Madison (design) $34,935$3,000 2019-20 TOTAL $7,450,685$546,000

17. Proposed Wastewater Rates & Typical Bill Unit Rates Present Rates (Jan 1, 2016) Rates (Jan 1, 2017) Volume Charge (per 1,000 gallons)Programmed $3.46$3.57 Proposed Customer Charge (per account per month) $1.62$3.00 Sewer Separation Charge (per account per month) $3.00 Storm Water Charge (per account per month) $6.00 Typical Monthly Customer Bill Wastewater Volume Charge (7,500 gallons per month) $25.95$26.78 Wastewater Customer Charge$1.62 $3.00 Sewer Separation Charge$0.00 $3.00 Storm Water Charge$0.00 $6.00 Total$27.57 $38.78

18. 2016-17 Result with Proposed Wastewater Rates Wastewater Fund (includes Sewer Separation) Annual Net Revenue $1,873 Account Balance $919,216 90 Days Operating Expenses$992,666

19. Global Service Provider Buildings Energy Environment Transportation Water Water Rate Cost-of-Service Analysis

20. Water – Past & Programmed Loan Eligible CIP Projects Project Project Cost Debt Service Fiscal Year Completed, Ready to Bid, or Design Phase North Side Water Main/South Villa Water Main (completed) $1,279,964 $65,639 2010-11 College Street (ready to bid)$2,664,350$169,0002016-17 Michigan (Park to Madison) (design phase)$1,400,000$89,0002016-17 SUBTOTAL$5,344,314$323,639 Future (not included in Scenario 1) Michigan (Kenilworth to Central)$1,158,000 $74,000 2017-18 IEPA Water Loan Projects$2,687,000$171,0002017-18 Water Meter System Upgrades$1,420,000 $78,000 2017-19 Various Street Projects$698,000 $44,000 2018-19 Various Street Projects$1,254,000 $80,000 2019-20 SUBTOTAL$7,217,000$447,000 TOTAL$12,561,314$770,639

21. Water Expenditures Scenario 1 FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20 Operating Expenses $4,663,944$4,658,133$4,683,313$4,708,997$4,735,194 Debt Service $65,639 $323,639 Capital Outlay from Revenue $796,903$455,000$415,000 Total Expenditures $5,526,486 $5,178,772$5,421,952$5,447,636$5,473,833 Scenario 2 Operating Expenses $4,663,944$4,658,133$4,683,313$4,708,997$4,735,194 Debt Service $65,639 $194,639$607,639$690,639 Capital Outlay from Revenue $796,903$455,000$415,000 Total Expenditures $5,526,486$5,178,772$5,292,952$5,731,636$5,840,833

22. Projections with Present Water Rates – Scenario 1 Water Rate Analysis

23. Projections with Present Water Rates – Scenario 2

24. Proposed Water Rates & Typical Bill Unit Rates Present Rates (Jan 1, 2016) Rates (Jan 1, 2017) Volume Charge (per 1,000 gallons)Programmed Within Corporate Limits$8.53$8.85 Outside Corporate Limits$17.06$17.70 Customer Charge (per account per month) Proposed ¾” meter $4.66$5.13 1” meter $8.37$9.21 1 1/4” meter $13.02$14.33 1 1/2” meter $18.60$20.46 2” meter $33.02$36.33 3” meter $74.40$81.84 4” meter $132.06$145.27 Cross Connection Charge (per non-residential account per month) $1.20 Typical Monthly Customer Bill Wastewater Volume Charge (7,500 gallons per month) $63.98$66.38 Wastewater Customer Charge $4.66$5.13 Total $68.64$71.51

25. 2016-17 Result with Proposed Water Rates Water Fund Annual Net Revenue($189,420) Account Balance $910,739 90 Days Operating Expenses $603,000

26. Combined Typical Monthly Customer Bill with Proposed January 1, 2017 Rates Present Proposed (Jan 1, 2017) Water Volume Charge (7,500 gallons per month) $63.98 $66.38 Water Customer Charge$4.66$5.13 Wastewater Volume Charge (7,500 gallons per month) $25.95$26.78 Wastewater Customer Charge $1.62$3.00 Sewer Separation Charge $0.00$3.00 Storm Water Charge $0.00$6.00 Total $96.21$110.29

27. Additional Charge for each $100,000 Debt Service Fixed ChargeLoan Interest & Term Annual P&I Payment Additional Monthly Charge Wastewater Customer Charge 2.5%, 20 years$6,400$0.08 Sewer Separation Charge 2.5%, 20 years$6,400$0.08 Storm Water Charge 4.0%, 20 years$7,300$0.09 Water Customer Charge (3/4” meter) 2.5%, 20 years$6,400$0.07

28. Summary of Rate Analysis January 1, 2017 Recommendations Implement programmed volume charges for water and wastewater Implement proposed water and wastewater customer charges to cover debt service for completed, ready to bid, design or construction phase CIP projects Implement proposed sewer separation charge to cover debt service for completed, ready to bid, design or construction phase CIP projects Implement proposed storm water charge to cover all programmed CIP projects

29. Comments / Questions?