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

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

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

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

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

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

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

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

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

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

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, Sewer Separation Various Street Projects$738,000 $47, Various Street Projects$3,393,000 $216, Various Street Projects $1,176,000 $75, Sewer Separation $2,598,000 $166, Sewer Separation $3,818,000 $243, SUBTOTAL$12,603,000$803,000 TOTAL $18,385,722$1,177,072

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

Wastewater Expenditures Scenario 1 FY FY FY FY FY 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

Projections with Present WW Rates – Scenario 1 Wastewater Rate Analysis

Projections with Present WW Rates – Scenario 2 Wastewater Rate Analysis

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

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

Result with Proposed Wastewater Rates Wastewater Fund (includes Sewer Separation) Annual Net Revenue $1,873 Account Balance $919, Days Operating Expenses$992,666

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

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, College Street (ready to bid)$2,664,350$169, Michigan (Park to Madison) (design phase)$1,400,000$89, SUBTOTAL$5,344,314$323,639 Future (not included in Scenario 1) Michigan (Kenilworth to Central)$1,158,000 $74, IEPA Water Loan Projects$2,687,000$171, Water Meter System Upgrades$1,420,000 $78, Various Street Projects$698,000 $44, Various Street Projects$1,254,000 $80, SUBTOTAL$7,217,000$447,000 TOTAL$12,561,314$770,639

Water Expenditures Scenario 1 FY FY FY FY FY 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

Projections with Present Water Rates – Scenario 1 Water Rate Analysis

Projections with Present Water Rates – Scenario 2

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 $8.37$ /4” meter $13.02$ /2” meter $18.60$ ” meter $33.02$ ” meter $74.40$ ” meter $132.06$ 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

Result with Proposed Water Rates Water Fund Annual Net Revenue($189,420) Account Balance $910, Days Operating Expenses $603,000

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

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

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

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