FY 18 Annual Report

Sewer

2018

CITY OF SPENCER, IOWA

Departmental Highlights

Budget Review The sewer utility operates the city's wastewater treatment plant, the sanitary sewer collection system, the sanitary sewer lift stations and the wastewater monitoring operations. The Sewer department is primarily supported through user fees. Employees of the Street Division are responsible for maintaining the city's 81.8 miles of the collection system , which includes cleaning sewer lines routinely and checking catch basins and intakes. The City contracts with Veolia Water for the operations and maintenance of the wastewater treatment plant. Veolia's crews also maintain the city's XX lift stations around the community. The department has two capital reserve accounts. One for the wastewater treatment plant and the other for the collection system and general sewer related equipment. City financial policy requires the city to carry a positive cash balance in each of the enterprise funds at the end of the fiscal year. At a minimum, the balance should be 25% of the department appropriations for the succeeding fiscal year to provide adequate cash flow and emergency cash funding. Any operational revenues above the minimum balance may be transferred to the capital reserve accounts. Capital projects that were completed in FY 18 include maintenance on several of the city's lift stations, completion of the 2016 wastewater treatment plant upgrades and the purchase of a new sewer jet, which is used for maintaining the seer lines. The City also collects a monthly CSI charge. This fee is utilized by the city to pay principal and interest on sewer related debt. As of June 30, 2018, the monthly fee was $15.00 per month on each sewer account. All sewer related debt is paid out of the Sewer Revenue Bond Sinking Fund. This fund accounts for all principal and interest payments related to sewer revenue bonds. As part of the 2010 CSO project eh city was granted Build America Bonds, in which the city received an interest subsidy form the federal government. This revenue is receipted into the fund to offset the cost of interest. The city has issued two sewer related General Obligation bonds and those related payment are expended within the Debt Service fund. Total expenditures for the sewer department totaled $4,740,140.33 for FY 18, an increase of $853,182.73 (+21.95%) compared to FY 17. The operations of the sewer department actually decreased in FY 18 compared to FY 17. The primary cause of the decrease were lower transfers out of the sewer fund into subsidiary funds, such as sewer reserves, WTP reserves, etc. The overall increases to the department came form the capital reserve accounts. The Wastewater Treatment Plat (WTP) reserve saw an increase of $304,845.46 compared to FY 17. The primary cause was a transfer of funds to the enterprise capital project fund in relation to the 2016 WTP improvement project. Other expenditures out of this funds include an update to the city's Long Term Control Plan, parking lot repairs, and an overhead door replacement on one of the out buildings at the plant. The Sanitary Sewer Reserve account is the main capital account for improvements to the system and equipment purchases. The fund saw an increase of $557,082.93 compared to FY 17. The department purchased a new sewer vac truck in FY 18 and the remaining amount of expenses are attributable to various capital infrastructure projects. Debt payments on outstanding sewer debt increased in FY 18 due to increased sewer debt payments in accordance with the individual bond amortization schedules. Overall the department expended 125.57% of the budget for FY 18. Operational revenue for the department decreased by $240,070.16 compared to fee 17. Primary cause of the decrease was waste from commercial users, such as Eaton's or the Dickinson County Landfill. Outside of the commercial treatment agreements, the revenue held steady and increased slightly year over year. The change in commercial treatment agreements has been monitored closely and reflect in the FY 19 budget.

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