durango - final rate study report - 11/19/14

City of

DURANGO | COLORADO

Rate Study for Water and Sewer Services

November 20, 2014

Final Report

Financial & Economic Consulting Services

T 800.755.6864 | F 888.326.6864 | 1555 South Havana St, Suite F #305, Aurora, Colorado 80012 | www.willdan.com

Table of Contents Section 1 ‐ Introduction ................................................................................................................................ 1

1.1. Introduction ....................................................................................................................................... 1

1.2. Overview of the Rate Study Process ................................................................................................. 1

1.3. Organization of this Report ............................................................................................................... 2

1.4. Reliance on Data ............................................................................................................................... 2

1.5. Acknowledgements ........................................................................................................................... 2

Section 2 ‐ Overview of Utility Rate‐Making Principles, Processes and Issues .......................................... 3

2.1. Introduction ....................................................................................................................................... 3

2.2. Discussion of General Rate‐Making Principles ................................................................................. 3

2.3. The Revenue Sufficiency Process ...................................................................................................... 4

2.4. The Cost Allocation Process .............................................................................................................. 4

2.5. The Rate Design Process ................................................................................................................... 5

2.6. Financial Management Goals of the City ......................................................................................... 7

Section 3 ‐ Rate Study Development and Initial Results ............................................................................. 8

3.1. Revenue Sufficiency Analysis ............................................................................................................ 8

3.2. Cost of Service Analysis ................................................................................................................... 18

3.3. Rate Design Analysis ....................................................................................................................... 21

3.4. Tap and Resource Fees .................................................................................................................... 34

3.5. Summary of the Rate Study ............................................................................................................ 34

Section 4 ‐ Conclusions and Recommendations ........................................................................................ 35

4.1. Conclusions ...................................................................................................................................... 35

4.2. Recommendations .......................................................................................................................... 35

Section 1 ‐ Introduction

1.1. Introduction

Willdan Financial Services (“Willdan”) was retained by the City of Durango, Colorado (“City”) to conduct

a Rate Study for Water and Sewer Services (“Rate Study”) for the City’s water and sewer utilities

(“Utilities”). This report details the results of the Rate Study analysis for the ten‐year forecast period,

2014‐2024, the results of which are presented in this Rate Study Report.

The results of the Rate Study presented herein are a financial plan, and rate structure, which were

designed to provide revenues sufficient to fund the ongoing operating and capital costs necessary to

operate the City’s water and sewer utilities, while providing incentive for customers of the system to

conserve water resources and while meeting the financial requirements and goals set forth by the City

for the water and sewer enterprise funds.

1.2. Overview of the Rate Study Process

The rate study process consists of three primary study components. First, a determination of the

adequacy of system revenues to meet system expenses during the study forecast period must be made.

The results of this analysis, known as the Revenue Sufficiency Analysis, is an assessment of the ability of

the existing revenue stream to meet the projected financial requirements of the system during the

forecast period and, to the extent required, the identification of the magnitude and timing of any

required rate adjustments.

Next, a determination of the manner in which the utility incurs costs is made. The results of this

analysis, known as the Cost of Service Analysis, are an allocation of system revenue requirements to

service (water/sewer) and further to functional cost category and finally to customer class (such as

residential or commercial).

Finally, specific rates and charges must be designed which provide sufficient revenue, as identified in the

Revenue Sufficiency Analysis, to recover costs in a manner consistent with general rate‐making practice,

as identified in the Cost of Service Analysis, while also addressing other goals of the utility, such as

conservation of resources, customer impact, ease of administration, and other relevant rate‐related

issues. This final step is known as the Rate Design Analysis.

Rate Study for Water and Sewer Services Final Report November 20, 2014

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1.3. Organization of this Report

This Rate Study presents an overview of the rate‐making concepts employed in the development of the

analysis contained herein, followed by a discussion of the data, assumptions and results associated with

each component of the analysis. Finally, appendices with detailed schedules is presented for a further

investigation into the data, assumptions and calculations which drive the results presented in this Rate

Study. The report is organized as follows:

Section 1 ‐ Introduction

Section 2 – Overview of Utility Rate‐Making Principles, Processes and Issues

Section 3 – Rate Study Development and Results

Section 4 – Conclusions and Recommendations

Appendix A – Water Financial Plan

Appendix B – Sewer Financial Plan

Appendix C – Water Cost of Service Analysis

Appendix D – Sewer Cost of Service Analysis

Appendix E – Sewer Plant Investment Fee Analysis

1.4. Reliance on Data

During the course of this project the City (and/or its representatives) provided Willdan with a variety of

technical information, including cost and revenue data. Willdan did not independently assess or test for

the accuracy of such data – historic or projected. We have relied on this data in the formulation of our

findings and subsequent recommendations, as well as in the preparation of this report. As is often the

case, there will be differences between actual and projected data, and these differences may be

significant. Therefore, we take no responsibility for the accuracy of data or projections provided by or

prepared on behalf of the City, nor do we have any responsibility for updating this report for events

occurring after the date of this report.

1.5. Acknowledgements

We wish to extend our appreciation to the City and its staff for their cooperation during the progress of

this study. In particular we would like to thank Mary Beth Miles, Assistant to the City Manager, Steve

Salka, Utility Director, Julie Brown, Finance Director and Amy Arnold, Finance Manager.


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Section 2 ‐ Overview of Utility Rate‐Making Principles, Processes and Issues

2.1. Introduction

The Rate Study utilized generally accepted rate‐making principles which resulted in the development of

rates and charges which are projected to: 1) generate sufficient revenue to meet the financial

requirements of the utilities, 2) address the need to recover costs from users in a manner which is fair

and equitable relative to service provided, and 3) meet the rate design goals of the utilities. A discussion

of some of the key principles of rate‐making, and how the processes employed herein are guided by

those principles, is presented below.

2.2. Discussion of General Rate‐Making Principles

While the individual rates for each utility vary based on a variety of factors, the development of rates

should, for the most part, be consistent with general rate‐making principles set forth in utility rate‐

making practice and literature. The principle by which rate practitioners are guided is that rates

designed for any utility should strike a reasonable balance between several key principles. In general,

rates designed should:

Generate a stable rate revenue stream which, when combined with other sources of funds, is

sufficient to meet the financial requirements and goals of the utility

Be fair and equitable – that is, they should generate revenue from customer classes which is

reasonably in proportion to the cost to provide service to that customer class

Be easy to understand by customers

Be easy to administer by the utility

Encourage conservation of resources

Designing a rate structure which completely addresses all of these principles is challenging given the

sometimes competing goals of the principles. For instance, designing a rate structure which generates a

stable revenue stream would guide the rate practitioner to the development of a rate structure with

high fixed charges which result in an assumed guaranteed revenue stream each year. However, high


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fixed charges typically do not encourage conservation (through a price signal). Striking the appropriate

balance between the principles of rate‐making is the result of a detailed process of evaluation of

revenue requirements and cost of service and how those translate into the rate design alternatives

which most closely meet the specific objectives of the individual utility under the circumstances in which

the utility operates.

2.3. The Revenue Sufficiency Process

In order to develop rates and charges which generate sufficient revenue to meet the fiscal requirements

of the utility, a determination of the annual rate revenue required must be completed. This rate

revenue, combined with other sources of funds, is evaluated to determine whether the total revenue is

sufficient to meet those fiscal requirements. This process is typically referred to as a Revenue Sufficiency

Analysis.

The process employed in the Revenue Sufficiency Analysis results in the identification of revenue

requirements of the system, such as operating expenses, capital expenses (minor and major), debt

service expense (including a provision for debt service coverage), transfers out and the maintenance of

both restricted and unrestricted reserves at appropriate levels. These revenue requirements are then

compared to the total sources of funds during each year of the forecast period to determine the

adequacy of projected revenues to meet projected revenue requirements. To the extent that the

existing revenue stream is not sufficient to meet the annual revenue requirements of the system, a

series of rate revenue increases are calculated which would be required in order to provide revenue

sufficient to meet those needs.

2.4. The Cost Allocation Process

In order to provide guidance to the utility as to how to appropriately recover the rate revenue

requirements identified in the Revenue Sufficiency Analysis, a Cost of Service Analysis is required.

The process employed in the Cost of Service Analysis results in the identification of the cost to provide

water and sewer service to customers. These water and sewer cost allocations are then used as the

basis for the assignment of revenue requirements to customer classes, upon which the development of

rates and charges is based.


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Two common approaches to the development of a cost of service analysis are based on the Base‐Extra

Capacity methodology, as detailed in the American Water Works Association (AWWA) M1 Manual –

Principles of Water Rates, Fees and Charges and the Functional Cost Allocation methodology, as detailed

in the Water Environment Federation (WEF) Manual 27 – Financing and Charges for Wastewater

Systems.

The general approach to the development of cost of service allocations under both the Base‐Extra

Capacity and Functional Cost Allocation methodologies is to: 1) identify the costs by functional cost

category, 2) allocate the functionalized costs further to cost categories and then 3) allocate rate revenue

requirements to customer classes based on the distribution of costs and customer characteristics.

The resulting allocations provide guidance to the rate practitioner which, combined with the other goals

and objectives of the utility, provides the necessary information required to proceed to the

development of utility rates and charges.

2.5. The Rate Design Process

With the rate revenue requirement determined in the Revenue Sufficiency Analysis, and the manner in

which that rate revenue should be recovered determined in the Cost of Service Analysis, the

development of specific rates and charges can commence.

Utilities consider a variety of factors in establishing rates, including cost allocation, customer impact,

conservation of resources and ease of administration. The rate design process seeks to find the balance

between the need to recover sufficient revenue in a fair and equitable manner and the need to do so

within the constraints of other objectives which are unique to each utility. By understanding the types of

customers served by the utility, and the general usage characteristics of those customers, a system of

rates and charges can be developed that balances those many objectives while also generating sufficient

revenue.

First, the rate design goals of the utility are reviewed to identify areas the utility wishes to address over

the course of the Rate Study. Next, an assessment of the existing rate design is undertaken to identify

what has worked well for the utility with regard to their specific goals and objectives, and the general

goals and objectives of utility rate‐making. This assessment typically also identifies areas for


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improvement which can provide guidance to the rate practitioner with respect to the design of future

rates and charges.

After a review of the existing rates and charges, a dialog of how to build on the positive aspects of the

existing structure and how to address deficiencies in the existing structure occurs with utility

management and staff. For instance, for a utility with a primary goal of encouraging water conservation,

the substitution of a uniform rate structure, which charges the same unit price for water regardless of

consumption level, with a conservation/inclining block rate structure, which charges a greater unit price

as usage levels increase beyond certain thresholds, would better address that primary goal.

With an evaluation of the strengths and weaknesses of the existing rate structure and the goals of the

utility going forward, the development of a new rate structure can begin. Development of a new rate

structure which recovers the costs to provide water and sewer service in a manner which achieves the

goals of the utility in a manner consistent with standard rate‐making practice requires an analysis of the

projected usage characteristics of the customer base to which the rates will apply. This analysis is

typically referred to as a billing frequency analysis.

The billing frequency analysis is provided through the billing system of the utility and then used by the

rate‐practitioner to accumulate billing statistics for each class of customer. Typical customer classes for

water and sewer utilities consist of residential, sometimes broken down into subcategories such as

single family and multi family, and non residential, sometimes broken down into subcategories such as

commercial, government, industrial and others. Billing data allows for the development of rates based

on the use of the system by each class. Alternative rate designs which account for customer usage

patterns and also address various combinations of utility rate‐making goals and rate‐making principles

can then be developed and reviewed by both the rate‐practitioner and the utility regarding the viability

of each rate structure designed.

With the identification of the rate revenue required, the manner in which those requirements should be

recovered and the billing units to be used to recover the required revenue, specific rates and charges

can then be developed. At the heart of successful rate design is the attempt to strike a proper balance

between the many, sometimes competing, objectives of rate‐making while ensuring generation of

revenue sufficient to meet system financial requirements.


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2.6. Financial Management Goals of the City

The establishment of specific financial management goals of a utility is a key step in developing financial

plans which will ensure the financial health of the utility remains strong. The financial management

goals of City are described below.

2.6.1 Minimum Unrestricted Working Capital Balance

In order to maintain a certain level of liquidity, City has developed a goal of maintaining unrestricted

working capital and repair and replacement reserves in an amount greater than or equal to

approximately 6 months of operating expenses (3 months of working capital and 3 months of repair and

replacement reserve).

2.6.2 Debt Service Coverage

The City is projected to issue revenue bonds during the study period, and the bonds are assumed to

contain covenants requiring City to maintain rates and charges such that a debt service coverage ratio,

defined as Current Year Net Revenues divided by Current Year Debt Service, be maintained at a

minimum of 1.25. The coverage requirement of 1.25x is associated with all outstanding debt for each

specific year the coverage is being calculated. The analysis presented herein meets this goal in each

year of the forecast period.


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Section 3 ‐ Rate Study Development and Initial Results

3.1. Revenue Sufficiency Analysis

3.1.1 General Methodology

In order to develop rates and charges which generate sufficient revenue to meet the fiscal requirements

of the City, a determination of the annual revenue from rates which, combined with other sources of

funds, will provide sufficient funds to meet those fiscal requirements must first be completed. This

process is typically referred to as a Revenue Sufficiency Analysis.

The process employed in the Revenue Sufficiency Analysis resulted in the identification of revenue

requirements of the system, such as operating expenses, capital expenses (minor and major), debt

service expense (including a provision for debt service coverage, as applicable), transfers out and the

maintenance of both restricted and unrestricted reserves at appropriate levels. These revenue

requirements were then compared to the total sources of funds during each year of the forecast period

to determine the adequacy of projected revenues to meet requirements. To the extent that the existing

revenue stream was not sufficient to meet the annual revenue requirements of the system, a series of

rate revenue increases were calculated to provide revenue sufficient to meet those needs.

As a note, the ten‐year Capital Improvement Plan (CIP), including the timing of projects and estimated

costs, was provided by the City. Willdan relied on this information as the CIP was fully integrated into

the Rate Study and the associated analyses.

3.1.2 Data Items

Key data items reviewed, discussed and incorporated into the Revenue Sufficiency Analysis were:

Financial management goals of the City

2013 Trial Balances related to the pending Comprehensive Annual Financial Report (CAFR)

2014 Adopted Budget

Capital Improvements Plan (CIP)

General assumptions related to:

Customer growth

Cost escalation factors


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A discussion of the use of each of the above data items is presented below.

3.1.3 Trial Balances Related to Upcoming 2013 Comprehensive Annual Financial Report (CAFR)

To better understand what funds the City will have on hand to start the forecast period, a detailed

review of trial balances associated with the upcoming 2013 CAFR was conducted and reviewed with City

staff. Assumptions were made to estimate the actual funds available at the end of 2013, and therefore

at the beginning of 2014, based on discussions with staff. A summary of the individual funds and fund

balances associated with the water and sewer utility enterprise funds for 2014, as adjusted for use in

this analysis, is presented in Table 3‐1 below.


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Table 3‐1 Beginning Fund Balances Year Ending December 31, 2013

Description Water Sewer

Operations Fund

Pooled Cash and Investments $7,930,501 $703,400

Receivables (net of allowances for uncollectables) 182,743 212,247

Unbilled Customer Receivable 100,247 136,466

Interest Receivable ‐ 1,639

Inventory ‐ 4,640

State Grant Funds ‐ 1,268,715

Due From Other Funds ‐ 63,946

Accounts and Contracts Payable (135,669) (25,273)

Compensated Absences (70,155) (35,302)

Accrued Payroll (22,832) (16,767)

Removal of Inventories (not liquid) ‐ 4,640

Total Operations Fund $7,984,836 $2,309,071

Plant Investment Fee Fund

Pooled Cash and Investments $1,491,776 $142,438

Receivables (net of allowances for uncollectables) 71,387 95,018

Accounts and Other 39,160

PIF Notes 202,199

Unbilled Customer Receivables ‐ 82,952

Interest Receivable ‐ 997

Mercy Housing PIF’s Note ‐ 9,754

Mercy Housing Goeglein PIF’s Note ‐ 13,993

Inventory ‐ 2,820

Due From Other Funds ‐ 15,122

Accounts and Contracts Payable (10,920) (13,515)

Compensated Absences (27,405) (21,459)

Accrued Payroll (8,919) (10,192)

Total Plant Investment Fee Fund $1,757,277 $317,930


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3.1.4 2014 Adopted Budget

Staff provided the 2014 Adopted Budget, and associated line‐item detail, as the basis for the projection

of financial performance for 2014. In addition, staff provided a copy of the line‐item projected expenses

for 2014 to be used as the basis for the projection of future budgetary line‐items for the remainder of

the forecast period.

Cost escalation factors were reviewed by staff and were used to project line‐item costs beyond the 2014

budget. Those factors were applied based on line‐item cost classifications.

A summary of the 2014 budget, and subsequent projected budgetary expenses, is presented below in

Table 3‐2. A more detailed presentation of the line‐item budgeted and projected revenues and

expenses is presented in Schedules A‐3, A‐4, B‐3 and B‐4 respectively, in the Appendices.

Table 3‐2 Approved Operating Budget (by category) Year Ending December 31, 2014

Description Water Sewer

Administration $387,587 $198,166

Source of Supply 13,900 ‐

Water Pumping 257,880 ‐

Transmission & Distribution / Collection 919,024 735,320

Treatment 957,769 1,361,196

Meter Reading and Repair 189,715 ‐

Non‐Departmental Miscellaneous 127,657 120,804

Existing SRF Debt Service ‐Water 246,265 ‐

Interfund Transfer 397,333 276,700

Total Expenses $3,497,130 $2,692,386

3.1.5 Capital Improvements Plan (CIP)

The City provided Willdan with a forecast of capital requirements for the ten‐year study period. This

capital forecast was escalated by Willdan for use in the analysis. The City revised the timing and

magnitude of certain projects to more accurately reflect the cash flow requirements associated with

those projects for use in the development of alternative capital project funding scenarios in the analysis.

This adjusted CIP was then used as the basis for the capital funding requirements included in the


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analysis. The CIP includes projects which are designed to provide for the repair and replacement of

existing infrastructure and to provide additional capacity for the water and sewer system.

A summary table of the CIP for the 2014 – 2024 forecast period is presented below in Table 3‐3. A more

detailed CIP, including the timing and funding source for each respective project, is presented in

Schedules A‐6 and B‐5, respectively, in the Appendices.

Table 3‐3 Capital Improvement Plan Fiscal Years Ending December 31 ($ millions)

Total 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Water $63.02 $6.27 $3.16 $5.00 $14.40 $6.49 $8.38 $4.29 $5.48 $3.44 $4.90 $1.21

Sewer 59.89 2.53 1.81 2.88 5.98 19.99 21.33 1.10 2.18 1.62 0.00 0.47

Total CIP $122.91 $8.80 $4.97 $7.88 $20.38 $26.48 $29.71 $5.39 $7.66 $5.06 $4.90 $1.68

3.1.6 Outstanding State Revolving Fund Debt

The City, like most utilities, has utilized long‐term debt to fund capital assets in the past. Specifically the

City has outstanding state revolving fund (SRF) debt and the covenants associated with this debt require

that minimum debt service coverage of 1.10 annual debt service be maintained, or exceeded, in each

year of the forecast period. This means that in each year that a debt service payment is to be made to

the debt holders, the City must generate net revenue that is at least 10% greater than the debt service

payment to be made in that year.

In addition, there also exists a debt service coverage requirement for parity debt. Parity debt is new

debt issued which is on par, or in parity, with existing revenue bond debt. The covenants of the

outstanding bonds require net revenue of at least 1.10x maximum annual debt service in years in which

bonds are projected to be issued.

The City is projected to exceed the debt service coverage requirement established in its covenants (1.10)

in each year during the forecast period.

3.1.7 General Assumptions

In order to develop the financial and rate projections, certain assumptions were made with regard to

elements of the revenue sufficiency analysis. A summary of those assumptions is presented below.


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3.1.7.1. Growth

The City anticipates growth in the water system of 124 new connections per year for the study period;

this represents an average growth rate of 1.8% per year. Since some of the new development

anticipated by the City will have sewer service provided by a neighboring entity, there is not an exact

matching of new connections between the water and sewer systems. The City anticipates that there will

be 110 new sewer connections each year during the study period which equates to an average growth

rate of 1.7% per year.

3.1.7.2. O&M Escalation Factors

Willdan worked with City staff to identify reasonable cost escalation factors to be applied to operations

and maintenance expenses in recognition of increasing costs over time. The following cost escalation

factors were used in the analysis of future water and sewer operating expenses:

Personnel: 3.0%

Operating: 2.5%

Non Operating: 2.5%

Electricity: 4.0%

Chemicals: 3.6%

Transfers: 2.5%

In addition to the general cost escalators listed above there were also one time or ongoing cost

increases projected during the study period. For example as the number of connections grows utility

staff will need to undertake additional training, which represents a onetime increase in training costs. It

is anticipated this increase will occur in 2017. Other cost increases anticipated that are over and above

annual inflationary adjustments are related to additional staff and maintenance costs when

improvements are made to the water and sewer treatment plants.

3.1.7.3. New Debt Assumptions

In order to fund the City’s CIP during the forecast period, new debt is anticipated to be required. To the

extent that new debt is issued, it is assumed it will be provided through revenue bonds. The City’s


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charter requires a majority vote of registered electors in order to issue new debt. The financial plan

assumes that the first debt issuance will occur in 2016, however, as the City evaluates its capital

program the timing of debt issuances may be shifted. It is anticipated that the debt issuance will occur

in the 2015 to 2017 timeframe. We also assumed that debt issuances (If needed) would fund capital

projects to be constructed over a 3 year period. Further, it was assumed that to the extent that new

debt is required that the requisite debt service coverage requirements would be 1.25x. Assumed debt

terms for projected revenue bond issues were deemed reasonable given the rates at the time.

The following details the assumptions related to new debt projected during the forecast period:

Revenue Bonds

Term – 30 Years

Rate – 5.5%

Issuance costs – 2.0%

Debt Service Coverage Requirement – 1.25

3.1.8 Results of the Revenue Sufficiency Analysis

After a thorough review of the above‐mentioned data elements, a draft of the Revenue Sufficiency

Analysis was developed and reviewed with City staff. This draft provided the forum in which various

alternative assumptions were discussed, tested and evaluated for both their reasonableness and their

impact upon the ultimate financial health of the utility.

The resulting financial plan presented herein is the embodiment of the data, assumptions and review

process undertaken with City staff in several meetings. Additionally, the resulting financial plan has

been reviewed with the City’s Utility Commission and the City Council.

3.1.8.1. Rate Revenue Increases Required

The revenue requirements and financial goals of the City during the forecast period necessitate the need

for additional revenue in the form of rate revenue increases.

Table 3‐4 below presents a summary of the projected rate revenue increases required during the

forecast period in order for the City to meet its financial goals.


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Table 3‐4 Projected Rate Revenue Increases

Years Ending December 31

Description

Water Rate Revenue Increases

Sewer Rate Revenue Increases

2015 55.00% 60.00%

2016 32.00% 25.00%

2017 2.00% 25.00%

2018 2.00% 2.00%

2019 2.00% 2.00%

2020 2.00% 2.00%

2021 2.00% 2.00%

2022 2.00% 2.00%

2023 2.00% 2.00%

2024 2.00% 2.00%

A more detailed presentation of the pro forma, including a fund balance reconciliation and projection of

annual debt service coverage, is presented in Schedules A‐1 and B‐1 in the Appendices.

3.1.8.2. Capital Project Funding

With significant capital project funding needs projected during the forecast period, it is imperative for

the City to develop a financial plan which provides for the full funding of the CIP. Willdan worked with

the City to identify the preferred funding sources for each project and, to the extent that those funding

sources were available, capital project funding followed that plan. In the event that sufficient funding

sources were not available, additional debt was identified and factored into the analysis as a source of

capital project funding.

The financial plan developed during the Rate Study is projected to provide funding for capital projects

during the 10‐Year forecast period which totals $122.91 Million. While the City is projected to utilize

significant funding sources currently available in the form of fund balances available for capital, the

remainder of capital funding requirements is projected to be met with new debt.


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3.1.8.3. New Debt

It is projected that the City will incur additional debt during the forecast period in order to fully fund the

CIP. Debt is the most common funding source for utility capital projects. Debt provides a better

matching of annual costs borne by users of the system and use of capital assets over the life of the asset

financed. This is often referred to as the concept of intergenerational equity. If capital projects were

cash funded only, rate increases could ”spike” in years that have higher capital expenditures and existing

customers would be expected to bear the full cost of infrastructure that will benefit future customers.

By issuing debt for projects that have a long useful life (for example 20 years) rate increases can be

smoothed out over time, and future customers also share in the cost of the infrastructure as their rate

revenues will be used to pay for debt service associated with infrastructure that was built to benefit

them. While this doesn’t mitigate the need for a utility to consistently fund some portion of capital with

cash, which the City is projected to do during the forecast period, it is important to recognize that debt

is an essential funding instrument for utilities.

It is assumed that when the City issues new revenue bonds that it will issue them in an amount sufficient

to fund 3 years of proposed capital projects identified to be funded with revenue bonds, plus associated

costs of issuance. Due to the City Charter requiring a majority vote of registered electors to authorize

the issuance of new debt, it was assumed in the financial plan that the first debt issuance would not take

place until 2016 for water and 2017 for sewer. The actual timing of debt issuances will be determined

by the City based on their capital needs, but it is anticipated the issuances will occur in the 2015 to 2017

timeframe. A summary of total projected debt service is presented below in Table 3‐5.

Table 3‐5 Projected Debt Service Years Ending December 31 ($ millions)

Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Water Bonds $‐ $19.10 $‐ $‐ $10.94 $‐ $‐ $4.31 $‐ $‐

Sewer Bonds ‐ ‐ 41.39 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Total $‐ $19.10 $41.39 $‐ $10.94 $‐ $‐ $4.31 $‐ $‐


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3.1.8.4. Summary of Revenue Sufficiency Analysis

The resulting financial plan presented herein includes a series of rate revenue increases, presented in

Table 3‐4, which provides for funding of projected revenue requirements during the forecast period, and

is projected to meet or exceed the financial goals of the City. The financial goals projected to be met are

as follows:

Operating fund balances greater than or equal to 6 months of operating expenses.

Net revenue greater than or equal to 1.25 the total of existing and projected debt service.

The summary of Revenue Sufficiency Analysis is presented in Table 3‐6 below. A more detailed

presentation of the financial plan, including fund balance reconciliations for each fund, is presented in

Schedules A‐1 and B‐1 in the Appendices.

Table 3‐6 Projected Net Operating Fund Results Years Ending December31 ($millions)

Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Water

Beginning Unrestricted Fund Balance $2.07 $0.96 $1.71 $3.14 $4.00 $4.75 $5.47 $5.73 $6.74 $7.45

Total Operating Revenue $5.56 $7.46 $7.74 $8.05 $8.36 $8.67 $9.00 $9.33 $9.68 $10.03

Operating Expenses $3.06 $3.35 $3.59 $3.72 $3.83 $3.94 $4.06 $4.18 $4.31 $4.44

Net Revenue $2.50 $4.11 $4.15 $4.33 $4.53 $4.73 $4.94 $5.15 $5.37 $5.59

Less:

Other Uses of Funds $3.61 $3.36 $2.72 $3.47 $3.78 $4.01 $4.68 $4.14 $4.66 $4.13

Net Cash Flow ($1.11) $0.75 $1.43 $0.86 $0.75 $0.72 $0.26 $1.01 $0.71 $1.46

Ending Unrestricted Fund Balance $0.96 $1.71 $3.14 $4.00 $4.75 $5.47 $5.73 $6.74 $7.45 $8.91

Debt Service Coverage Ratio ‐ 3.07 3.11 3.23 2.15 2.24 2.34 2.14 2.23 2.32

Target 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25

Sewer

Beginning Unrestricted Fund Balance $0.34 $1.39 $2.67 $1.44 $3.19 $4.12 $5.50 $6.38 $7.93 $11.31

Total Operating Revenue $5.22 $6.65 $8.47 $8.78 $9.13 $9.48 $9.83 $10.20 $10.58 $10.98

Operating Expenses $2.48 $2.61 $2.74 $3.63 $3.71 $3.81 $3.91 $4.01 $4.12 $4.23

Net Revenue $2.74 $4.04 $5.73 $5.15 $5.42 $5.67 $5.92 $6.19 $6.46 $6.75

Less:

Other Uses of Funds $1.69 $2.76 $6.96 $3.40 $4.49 $4.29 $5.04 $4.64 $3.08 $3.36

Net Cash Flow $1.05 $1.28 ($1.23) $1.75 $0.93 $1.38 $0.88 $1.55 $3.38 $3.39

Ending Unrestricted Fund Balance $1.39 $2.67 $1.44 $3.19 $4.12 $5.50 $6.38 $7.93 $11.31 $14.70

Debt Service Coverage Ratio ‐ ‐ 1.97 1.78 1.87 1.95 2.04 2.13 2.23 2.33

Target 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25


P a g e | 18

Cost of Service Analysis


In order to provide guidance to the City as to how to adequately recover the rate revenue requirements

identified in the Revenue Sufficiency Analysis, in a manner consistent with generally accepted rate‐

making principles, a Cost of Service Analysis was conducted.

The Cost of Service Analysis resulted in the identification of the cost to provide service to customers

based on functional cost categories. This provided the rationale for the allocation of costs to expense

categories in both water and sewer service. These water and sewer cost allocations were then used as

the basis for the assignment of revenue requirements to customer classes upon which the development

of rates and charges presented herein is based.

For the purposes of this analysis, the Cost of Service Analysis for water was based on the Base‐Extra

Capacity methodology, as detailed in the American Water Works Association (AWWA) M1 Manual –

Principles of Water Rates, Fees and Charges. The Cost of Service Analysis for sewer was based on the

Functional Cost Allocation methodology, as detailed in the Water Environment Federation (WEF)

Manual 27 – Financing and Charges for Wastewater Systems.

The general approach to the development of cost of service allocations under both the Base‐Extra

Capacity and Functional Cost Allocation methodologies was to: 1) identify the costs by functional cost

category / service, 2) allocate the functionalized costs further to cost categories and then to 3) allocate

the rate revenue requirements to customer classes based on the distribution of costs and customer

characteristics. The Cost of Service Analysis and results are presented below.

3.1.10 Allocation to Cost Categories

Functional costs were allocated to cost components for both water and sewer. The allocation of

functional costs (for example source of supply or treatment) to different cost components such as base,

volume or billing and collection is a process to identify how costs should be recovered through rate

components.

Costs allocated to customer‐related cost components were assigned to the fixed charge components,

along with a portion of other general & administrative costs. Customer related costs are costs that are

incurred by the City regardless of the amount of water used or sewer flows discharged. There is a cost


P a g e | 19

to the City to read meters and to prepare and distribute monthly bills. The costs associated with these

activities do not change based on water and sewer flows. Therefore these costs are often included and

recovered through a monthly fixed charge. A fixed charge also often includes an element of readiness to

serve, in other words there are costs that the City incurs in order to maintain and operate the system so

that when a faucet is turned on water flows. Again these costs are incurred regardless of whether or

not water is used. By allocating these costs to fixed charge components of the rate structure, the City is

better equipped to meet costs that are incurred regardless of annual water and sewer flows. A further

discussion of fixed charges can be found in Section 3.3.3.1.

Costs that are not intended to be recovered through a fixed charge are allocated to the flow charge

component. These are costs that are primarily associated with volumes of flow. As water and sewer

flows increase the City incurs increased costs in treatment. Similarly increased water demands result in

the need to increase water resources or source of supply. Since these costs are directly related to use, it

is most common to recover these costs through a flow rate. Table 3‐7 and Table 3‐8

below present the allocation of functional costs to cost categories for water and sewer, respectively.

Each Table identifies the costs or revenue requirements associated with each utility. The revenue

requirements for the water utility for 2015 are projected at $5.52 million. As discussed the functional

costs are allocated to either the fixed (customer related) or volume (base, max day, max hour)

components of the rate structure. Costs are then further subdivided or allocated within the fixed and

volume rate components. As an example source of supply costs are typically allocated to base costs in

recognition that source of supply is needed to serve all water needs. Pumping is allocated to both base

and max day in recognition that there are pumping costs to serve all water needs, but there is an

incremental pumping cost on the day when the system is being utilized at its maximum capacity.

Customer service is allocated to both meters and services and billing and collection. This recognizes that

there is a cost to the City to prepare and send out bills, but there is also customer service costs

associated with repairing or servicing a customer’s water meter. The analysis indicates that the costs

allocated to the fixed charge component of the rate were approximately 18% of total costs. Section

3.3.3.1 discusses the decision to allocate 20% of overall costs to the fixed charge.


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Table 3‐7 Water System ‐ Summary of Functional Allocations to Cost Categories Year Ending December 31, 2015

Functional Cost Total Base

Extra Capacity Customer Related

Total Max Day Max Hour Meters & Services

Billing & Collection

Source of Supply $14,249 $14,249 $‐ $‐ $‐ $‐ $14,249

Pumping 334,189 184,189 150,700 ‐ ‐ 334,889

Treatment 1,045,006 574,753 470,253 ‐ ‐ ‐ 1,045,006

Transmission and Distribution 944,338 327,146 330,518 286,674 ‐ ‐ 944,338

Customer Service 195,397 ‐ ‐ ‐ 97,698 97,698 195,397

Administration 530,220 265,110 ‐ ‐ 132,555 132,555 530,220

CIP 2,955,000 2,364,000 ‐ ‐ 591,000 ‐ 2,955,000

SRF Debt Service 246,265 184,699 ‐ ‐ 61,566 ‐ 246,265

Transfers 407,266 305,450 ‐ ‐ 101,817 ‐ 407,266

Non‐Rate Revenue and Fund Balances (1,150,346) (574,177) (294,414) (88,706) (121,803) (71,247) (1,150,346)

Total $5,522,284 $3,645,419 $657,058 $197,968 $862,833 $159,006 $5,522,284

Fixed Charge Component – for Rate Design Purposes 20%

Flow Charge Component – for Rate Design Purposes 80%

Total 100%

For sewer functional costs are typically allocated to fewer cost categories to water, as sewer costs are

generally not identified as needed to meet peak (max) day or peak hour demands. Rather sewer costs

are allocated on their need to meet volume (all sewer flows) or general capacity needs. While it is rare

that a utility installs and utilizes sewer meters for purposes of measuring sewer flows, there is a cost to

sewer customers to read the customer’s water meter and base a sewer charge on water flows. As such

administration and customer service costs are allocated to a meters and services cost category. Based

on the analysis, approximately 16% of the total costs are allocated to the fixed charge component of

rates. A further discussion of costs intended to be recovered from the fixed charge component of the

rate structure can be found in Section 3.3.3.1.


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Table 3‐8 Sewer System ‐ Summary of Functional Allocations to Cost Categories Year Ending December 31, 2015

Functional Cost Total Volume Capacity Meters & Services

Billing & Collection Total

Collection $735,520 $367,760 $367,760 $‐ $‐ $735,520

Treatment 1,361,196 680,598 680,598 ‐ ‐ 1,361,196

Administration 595,670 ‐ ‐ 297,835 297,835 596,670

CIP 1,410,000 1,410,000 ‐ ‐ ‐ 1,410,000

Transfers 276,700 221,360 ‐ 27,670 27,670 276,700

Target Reserves 838,379 326,447 326,447 92,743 92,743 838,379

Total $5,217,465 $3,006,165 $1,374,805 $418,248 $418,248 $5,217,465

Fixed Charge Component – for Rate Design Purposes 20%

Flow Charge Component – for Rate Design Purposes 80%

Total 100%

3.1.11 Summary of Cost of Service Analysis

The Cost of Service Analysis presented herein sets forth how to appropriately recover the rate revenue

requirements for 2015.

The process employed in the Cost of Service Analysis results in the identification of the cost to provide

water and sewer service to customers, and the allocation of rate revenue requirements to fixed and

flow components.

The allocations presented herein were used, along with the other goals and objectives of the utility, in

the development of the water and sewer rates and charges presented in the next section.

3.2. Rate Design Analysis


With the rate revenue requirement determined in the Revenue Sufficiency Analysis, and allocations

previously described in the Cost of Service Analysis, the development of specific rates and charges was

completed as described below.

First, the rate design goals of the City were reviewed to identify areas the City wanted to address over

the forecast period included in this Rate Study. Next, an assessment of the existing rate design was

completed to identify areas which have worked well for the City with regard to their specific goals and


P a g e | 22

objectives, and the general goals and objectives of utility rate‐making. This assessment also identified

areas for improvement, including the need to revise the existing conservation rate structure.

With an evaluation of the strengths and weaknesses of the existing rate structure, and the goals of the

City going forward, the analysis required for the development of alternative rate structures was then

completed. Review sessions were held with City staff and the City’s Utilities Commission to review each

structure and evaluate the viability of each in the context of the goals of the City. The resulting water

and sewer rate structures are presented herein. Cost of service and rate design schedules can be found

in Appendices C and D.

3.2.2 Review of Existing Rate Structure

The City’s current rates and charges are comprised of a monthly minimum charge and a flow charge per

thousand gallons for water and sewer. The volumetric rate for water is based on a seasonal, inclining

block with rates in the summer months being higher than those in the winter months (with the

exception of the college which is a non‐seasonal volumetric rate). The volumetric charge for sewer

service is based on each customer’s average billed water consumption for January through March. The

review of existing rates and charges indicates they are consistent with generally accepted rate‐making

principles and with industry standards. Table 3‐9 below presents the existing rate structure of the City.


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Table 3‐9 Existing Water and Sewer Rate Structures Year Ending December 31, 2014

Category Water System Sewer System

Monthly Charge: Winter Summer Inside City

Outside City

Single Living Unit (includes 2,000 gallons) $13.08 $13.08 $6.51 $13.02

Residential Duplex (Includes 4,000 gallons) 26.17 26.17 13.02 26.04

Commercial (includes 2,000 gallons) 26.17 $6.90 13.02 26.04

Fort Lewis College (includes 2,000 gallons) 26.17 $7.45 13.02 n/a

Single Unit Volumetric Charge ($/1,000 gal)[1]:

2,001 to 10,000 gallons $2.23 $2.23 $4.96 $9.91

Over 10,000 gallons 2.92 3.21

Duplex Volumetric Charge ($/1,000 gal)[1]:

4,001 to 12,000 gallons 2.23 2.23 4.96 9.91

Over 12,000 gallons 2.92 3.08 Commercial Volumetric Charge ($/1,000 gal)[1]:

2,001 to 100,000 gallons 2.23 2.23 4.96 9.91

Over 100,000 gallons 2.92 3.21

Fort Lewis College Volumetric Charge ($/1,000 gal)[1]: 2,001 to 2,500,000 gallons 2.23 2.23 4.96 9.91

Over 2,500,000 gallons 2.92 2.92

1. Note: Sewer volume charge based on customer’s average billed water consumption for January through March of each year.

3.2.3 Proposed Rate Structure Changes

In order to address the rate design goals of the City, a water and sewer rate structure was developed to

build on the strengths of the existing rate structure and to further strengthen the existing rate structure

where possible. A description of the proposed rate structure is presented below.

3.2.3.1. Proposed Water and Sewer Base Charge Structure

The proposed base charge structure is a change from the City’s existing structure. One of the objectives

of the City was to ensure revenue stability. This will become increasingly important for the City as

future debt is projected to be issued. Having a base fixed charge assessed to all customers each month

will help to ensure that the City will have the revenues needed in order to meet its annual debt service

obligations and will provide additional assurance to bond holders that their loans will be repaid. As

identified in Section 3.2.2, the costs allocated to the fixed charge component of the rate structure for


P a g e | 24

water and sewer were 18% and 16% respectively. Through discussions with the City it was

recommended that the City recover 20% of each utility’s costs through the fixed charge. As mentioned

previously, this will help to promote revenue stability for the City and provides additional assurance to

bond holders that annual debt service payments will be met. The City also has a number of customers

who do not reside in the City year round and under the existing structure would not pay a bill when they

do not inhabit their residence. The City still incurs costs such as meter reading, system maintenance and

debt service. There are costs that the City incurs in order to provide service to the customer when they

return to the City. A monthly fixed charge assessed to all customers acts as a “readiness to serve”

charge to ensure safe and reliable water and sewer systems when the service is needed.

The proposed fixed charges increase by meter size based on the ratio of flow capacities by meter size as

identified by AWWA. The proposed based charges for both water and sewer were designed to recover

20% of total revenue requirements for each utility.

3.2.3.2. Proposed Water Flow Charge Structure

As mentioned previously, one of the goals of this Rate Study was the refinement of the City’s current

conservation, or inclining block, rate structure. This conservation rate structure charges a higher unit

price for water beyond certain usage thresholds. During our analysis it was decided to expand the

existing 3 block structure (0‐2,000 gallons, 2,001‐10,000 gallons and all usage above 10,000 gallons) for

residential customers to a new 4 block structure (0‐4,000 gallons, 4,001 to 10,000 gallons, 10,001 to

18,000 gallons and over 18,000 gallons. Our analysis of the City’s single family residential customers’

water use revealed that a typical customer users approximately 4,000 gallons of water in the winter

months. We therefore, chose to base the first block on what can be considered “indoor” water use, the

use that is typically used for cooking, cleaning, bathing etc and does not include outdoor irrigation. An

analysis of summer water use for the residential class showed an average use of 12,000 gallons a month.

To keep in line with the City’s goal of conservation the second block was set at 10,000 gallons to

encourage a reduction in average summer water use. The two remaining blocks were intended to

provide further conservation goals by assessing a higher unit rate for every 1,000 gallons of water used.

The winter/summer rate differential under the existing rate structure was maintained for the proposed

rate structure.


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In developing the block structure for the duplex class, the goal was to achieve approximately the same

percentage of total use by block as was projected for the single family residential customer class. The

resulting block thresholds for the duplex class are: 0‐5,000 gallons, 5,001‐10,000 gallons, 10,001‐18,000

gallons and over 18,000 gallons.

We have retained the conservation oriented tiered structure in our proposed commercial rate structure,

but reduced the blocks from 3 to 2, as it could be argued that non‐residential customers typically have

less discretionary usage as compared to residential customers. The new blocks for the commercial class

are 0‐300,000 and over 300,000. The second block is intended to capture use of the larger volume

commercial customers.

While the existing Fort Lewis College structure has two blocks, our analysis indicated that the customer

class never had usage that entered the second block. As such the recommended rate structure for this

class is a uniform rate structure

3.2.3.3. Proposed Sewer Flow Charge Structure

As was the case for the proposed water rate structure, the sewer rate structure is proposed to have a

monthly based fixed charge that increases by meter size based on AWWA meter capacity flow ratios.

The base fixed charge was designed to recover 20% of total revenue requirements. The remaining 80%

of costs are proposed to be recovered through each customer’s assumed sewer flows. It is unusual in

the industry for sewer meters to be used and therefore there is not an exact measurement of sewer

flows. Instead the typical approach is to base sewer flows on water use that is assumed to enter the

sewer system. The City of Durango uses a common practice of basing sewer flows on winter water use

during the months of January through March. The January through March period is used, since it is

assumed there is little or no outdoor (irrigation) water use and that the water that is used during this

period enters the sewer system. The average water use during this period forms the basis of projected

sewer flows for each month during the year. The flow component of a customer’s bill is based on a rate

per 1,000 gallons of assumed monthly sewer flows based on the winter quarter average. The general

sewer flow charge structure (basing sewer use on average winter water use) was left unchanged,

although the actual sewer flow rates per 1,000 gallons were adjusted based on our Rate Study.


P a g e | 26

3.2.4 Data Review

In order to develop the rates and charges presented herein, a detailed review of pertinent data was

conducted. A description of the data reviewed, and the review process employed, is presented below.

3.2.4.1. Billing Data Review

In order to develop rates and charges which recover sufficient revenue to meet the financial goals of the

City in a manner consistent with the cost of service analysis and generally accepted rate‐making

practice, a detailed review of historical billing units was undertaken. The analysis resulted in the

identification of the historical bills issued at each increment of consumption for each unique customer

class in the system for the 2013 billing period. This analysis is called a billing frequency analysis and it is

used as the basis for the projection of billing units used in the development of rates and charges, and

the projection of revenue, for the City.

3.2.4.1.1. Customer Classes

The City has four general customer classes to which it provides service – single family residential, duplex,

commercial and Fort Lewis College. The City provides service to certain customers which fall outside

the City limits. These customers are referred to as outside City customers and sewer customers are

charged a 2 times multiple on their rates. We recommend that the City also apply an Outside City

differential to water customers in recognition of the risk undertaken by City residents for maintaining

the system and the retirement of outstanding debt.‐

Upon review of houses of worship it was determined that the usage patterns of this subgroup of

customers displays usage characteristics that are more like residential customers than commercial

customers which they are currently grouped with. It is our recommendation that beginning January 1,

2015, houses of worship be assessed the residential rate structure rather than the commercial rate

structure. Data Verification ‐ Revenue Test

3.2.4.1.2. Billing Data Validation

In order to validate that the data contained in the billing frequency analysis is reasonable for use in the

determination of rates and charges which recover the target revenue requirement, a billing data

validation was conducted.


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The billing data validation consisted of a revenue test in which the rates and charges in place during the

last full year, 2013, were applied to the detailed billing data compiled from the billing frequency analysis

for the same period. The resultant revenue calculated was compared to the revenue collected in 2013,

as provided by City staff.

This comparison resulted in the determination that the billing data was within accepted tolerances for

use in rate making.

3.2.5 Proposed Rates

Tables 3‐10, 3‐11 and 3‐12 present the proposed water and sewer rates, including the proposed water

and sewer fixed charges for the 10‐year forecast period.


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Table 3‐10 Projected Rate Schedule – Water Years Ended December 31

Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Revenue Increase 55.00% 32.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

INSIDE CITY

Fixed Charge by Meter Size

0.625 $12.46 $16.45 $16.78 $17.11 $17.45 $17.80 $18.16 $18.52 $18.89 $19.27

0.75 18.69 24.67 25.16 25.67 26.18 26.70 27.24 27.78 28.34 28.91

1.00 31.15 41.12 41.94 42.78 43.63 44.51 45.40 46.31 47.23 48.18

1.50 62.30 82.24 83.88 85.56 87.27 89.01 90.80 92.61 94.46 96.35

2.00 99.68 131.58 134.21 136.89 139.63 142.42 145.27 148.18 151.14 154.16

3.00 186.90 246.71 251.64 256.68 261.81 267.04 272.39 277.83 283.39 289.06

4.00 311.50 411.18 419.40 427.79 436.35 445.07 453.98 463.06 472.32 481.76

6.00 623.00 822.36 838.81 855.58 872.70 890.15 907.95 926.11 944.63 963.53

Flow Charge

SFR ‐ Winter 0 to 4,000 gal $2.43 $3.21 $3.27 $3.34 $3.41 $3.48 $3.54 $3.62 $3.69 $3.76

4,001 to 10,000 gal 3.65 4.82 4.91 5.01 5.11 5.21 5.32 5.42 5.53 5.64

10,001 to 18,000 gal 5.47 7.22 7.37 7.52 7.67 7.82 7.98 8.14 8.30 8.46

Over 18,000 gal 8.21 10.84 11.05 11.27 11.50 11.73 11.96 12.20 12.45 12.70

SFR ‐ Summer 0 to 4,000 gal $2.43 $3.21 $3.27 $3.34 $3.41 $3.48 $3.54 $3.62 $3.69 $3.76

4,001 to 10,000 gal 4.01 5.29 5.40 5.51 5.62 5.73 5.85 5.96 6.08 6.20

10,001 to 18,000 gal 6.02 7.94 8.10 8.26 8.43 8.60 8.77 8.94 9.12 9.30

Over 18,000 gal 9.02 11.91 12.15 12.39 12.64 12.89 13.15 13.42 13.68 13.96

Duplex ‐ Winter 0 to 4,000 gal $2.42 $3.20 $3.26 $3.33 $3.39 $3.46 $3.53 $3.60 $3.67 $3.74

4,001 to 10,000 gal 3.63 4.79 4.89 4.99 5.09 5.19 5.29 5.40 5.51 5.62

10,001 to 18,000 gal 5.45 7.19 7.33 7.48 7.63 7.78 7.94 8.10 8.26 8.43

Over 18,000 gal 8.17 10.79 11.00 11.22 11.45 11.68 11.91 12.15 12.39 12.64

Duplex ‐ Summer 0 to 4,000 gal $2.42 $3.20 $3.26 $3.33 $3.39 $3.46 $3.53 $3.60 $3.67 $3.74

4,001 to 10,000 gal 3.99 5.27 5.38 5.48 5.59 5.70 5.82 5.94 6.05 6.17

10,001 to 18,000 gal 5.99 7.91 8.06 8.22 8.39 8.56 8.73 8.90 9.08 9.26

Over 18,000 gal 8.98 11.86 12.09 12.09 12.58 12.84 13.09 13.35 13.62 13.89

Comm. – Winter

0 to 300,000 gal $3.88 $5.12 $5.22 $5.32 $5.43 $5.54 $5.65 $5.76 $5.88 $6.00

Over 300,000 gal 5.04 6.65 6.79 6.92 7.06 7.20 7.34 7.49 7.64 7.79

Comm. – Summer

0 to 300,000 gal $3.88 $5.12 $5.22 $5.32 $5.43 $5.54 $5.65 $5.76 $5.88 $6.00

Over 300,000 gal 5.54 7.31 7.46 7.61 7.76 7.92 8.07 8.24 8.40 8.57


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Table 3‐11 Projected Rate Schedule – Water Years Ended December 31

Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Outside City


0.625 $24.92 $32.90 $33.56 $34.22 $34.90 $35.60 $36.32 $37.04 $37.78 $38.54

0.75 37.38 49.34 50.32 51.34 52.36 53.40 54.48 55.56 56.68 57.82

1.00 62.30 82.24 83.88 85.56 87.26 89.02 90.80 92.62 94.46 96.36

1.50 124.60 164.48 167.76 171.12 174.54 178.02 181.60 185.22 188.92 192.70

2.00 199.36 263.16 268.42 273.78 279.26 284.84 290.54 296.36 302.28 308.32

3.00 373.80 493.42 503.28 513.36 523.62 534.08 544.78 555.66 566.78 578.12

4.00 623.00 822.36 838.80 855.58 872.70 890.14 907.96 926.12 944.64 963.52

6.00 1,246.00 1,644.72 1,677.62 1,711.16 1,745.40 1,780.30 1,815.90 1,852.22 1,889.26 1,972.06

Flow Charge

SFR ‐ Winter 0 to 4,000 gal $4.86 $6.42 $6.54 $6.68 $6.82 $6.96 $7.08 $7.24 $7.38 $7.52

4,001 to 10,000 gal 7.30 9.64 9.82 10.02 10.22 10.42 10.64 10.84 11.06 11.28

10,001 to 18,000 gal 10.94 14.44 14.74 15.04 15.34 15.64 15.96 16.28 16.60 16.92

Over 18,000 gal 16.42 21.68 22.10 22.54 23.00 23.46 23.92 24.40 24.90 25.40

SFR ‐ Summer 0 to 4,000 gal $4.86 $6.42 $6.54 $6.68 $6.82 $6.96 $7.08 $7.24 $7.38 $7.52

4,001 to 10,000 gal 8.02 10.58 10.80 11.02 11.24 11.46 11.70 11.92 12.16 12.40

10,001 to 18,000 gal 12.04 15.88 16.20 16.52 16.86 17.20 17.54 17.88 18.24 18.60

Over 18,000 gal 18.04 23.82 24.30 24.78 25.28 25.78 26.30 26.84 27.36 27.92

Duplex ‐ Winter 0 to 4,000 gal $4.84 $6.40 $6.52 $6.66 $6.78 $6.92 $7.06 $7.20 $7.34 $7.48

4,001 to 10,000 gal 7.26 9.58 9.78 9.98 10.18 10.38 10.58 10.80 11.02 11.24

10,001 to 18,000 gal 10.90 14.38 14.66 14.96 15.26 15.56 15.88 16.20 16.52 16.86

Over 18,000 gal 16.34 21.58 22.00 22.44 22.90 23.36 23.82 24.30 24.78 25.28

Duplex ‐ Summer 0 to 4,000 gal $4.84 $6.40 $6.52 $6.66 $6.78 $6.92 $7.06 $7.20 $7.34 $7.48

4,001 to 10,000 gal 7.98 10.54 10.76 10.96 11.18 11.40 11.64 11.88 12.10 12.34

10,001 to 18,000 gal 11.98 15.82 16.12 16.44 16.78 17.12 17.46 17.80 18.16 18.52

Over 18,000 gal 17.96 23.72 24.18 24.18 25.16 25.68 26.18 26.70 27.24 27.78


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Table 3‐12 Projected Rate Schedule – Sewer Years Ended December 31

Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Rate Revenue Increase 60.00% 25.00% 25.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

Inside City


0.625 $13.23 $16.45 $20.67 $21.09 $21.51 $21.94 $22.38 $22.82 $23.28 $23.75

0.75 19.85 24.81 31.02 31.64 32.27 32.91 33.57 34.24 34.93 35.63

1.00 33.08 41.35 51.69 52.72 53.78 54.85 55.95 57.07 58.21 59.37

1.50 66.15 82.69 103.36 105.43 107.54 109.69 111.88 114.12 116.40 118.73

2.00 105.84 132.30 165.38 168.68 172.06 175.50 179.01 182.59 186.24 189.96

3.00 198.45 248.06 310.08 316.28 322.61 329.06 335.64 342.59 349.20 365.18

4.00 330.75 413.44 516.80 527.13 537.68 548.43 559.40 570.59 582.00 593.64

6.00 661.50 826.88 1,033.59 1,045.27 1,075.35 1,096.86 1,118.80 1,151.17 1,163.99 1,187.27

Flow Charge

Residential All Usage $7.36 $9.20 $11.50 $11.73 $11.97 $12.21 $12.45 $12.70 $12.95 $13.21

Duplex All Usage $7.36 $9.20 $11.50 $11.73 $11.97 $12.21 $12.45 $12.70 $12.95 $13.21

Commercial

All Usage $7.36 $9.20 $11.50 $11.73 $11.97 $12.21 $12.45 $12.70 $12.95 $13.21

Inside City


0.625 $26.46 $32.90 $41.34 $42.18 $43.02 $43.88 $44.76 $45.64 $46.56 $47.50

0.75 39.70 49.62 62.04 63.28 64.54 65.82 67.14 68.48 69.86 71.26

1.00 66.16 82.70 103.38 105.44 107.56 109.70 111.90 114.14 116.42 118.74

1.50 132.30 165.38 206.72 210.86 215.08 219.38 223.76 228.24 232.80 237.46

2.00 211.68 264.60 330.76 337.36 344.12 351.00 358.02 365.18 372.48 379.92

3.00 396.90 496.12 620.16 632.56 645.22 658.12 671.28 685.18 698.40 730.36

4.00 661.50 826.88 1,033.60 1,054.26 1,075.36 1,096.86 1,118.80 1,141.18 1,164.00 1,187.28

6.00 1,323.00 1,653.76 2,067.18 2,090.54 2,150.70 2,193.72 2,237.60 2,302.34 2,327.98 2,374.54

Flow Charge

Residential All Usage $14.72 $18.40 $23.00 $23.46 $23.94 $24.42 $24.90 $25.40 $25.90 $26.42

Duplex All Usage $14.72 $18.40 $23.00 $23.46 $23.94 $24.42 $24.90 $25.40 $25.90 $26.42

Commercial

All Usage $14.72 $18.40 $23.00 $23.46 $23.94 $24.42 $24.90 $25.40 $25.90 $26.42


P a g e | 31

The City provides sewer service to some residential customers outside the City’s boundaries, who

receive water service from another service provider. The City will obtain water use data from the other

water entity and is proposed to base those customers sewer charges on winter water use for January

through March, the same approach as is used for Inside City customers. For sewer customers who are

on domestic wells we recommend the City continue with its policy of assessing a flat rate for sewer.

3.2.5.1.1. Additional Rates

In addition to the rates previously described the City provides other water services for which updates to

rates are being proposed. The first is raw water service. The City currently charges a rate of $0.94 per

1,000 gallons. Our analysis indicates that the rate for raw water should increase to $1.40 per 1,000

gallons. The City currently maintains and operates a “water dock” which provides treated water on a

per gallon basis. Our analysis of the cost per gallon to operate and maintain the water dock as well as

the unit cost per gallon of treated water is a total cost of $0.16 per gallon. As this service is typically

used by Outside City customers, we recommend the Outside City differential be applied, with a resulting

rate of $0.32 per gallon.

3.2.6 Summary of the Rate Design Analysis

The Rate Design Analysis presented herein resulted in the development of the proposed water and

sewer rates presented above in Tables 3‐10, 3‐11 and 3‐12, respectively. The rate structure was

developed in an attempt to balance the objectives of revenue sufficiency, recovery of costs in a fair and

equitable manner, conservation of resources, ease of administration and understanding, minimization of

customer impact and other goals of utility rate‐making.

The proposed rate structures and rates identified in this report are a change from the approach

currently used by the City. In order for a smoother transition for both the City and its customers, we

recommend the City provide flyers or brochures with monthly bills to educate customers on the changes

that can be expected beginning in the new year. We also recommend the City include a bill calculator

on their website or an external link from the City website so that customers can assess the impact of the

rate structure changes on their monthly bill and the impact of changes in their monthly use.

With the change in both the water rate structure and the rates themselves, an analysis of the top 25

users on the water system was undertaken. It is important to examine the top 25 users as well as the


P a g e | 32

percent of revenue they represent when changing rate structures and increasing rates significantly, in

order to assess the revenue that could potentially be placed at risk as a result of changes.


P a g e | 33

Table 3‐13 Top 25 Water Users 2013

Class Annual Use (kgals)

Annual Bill

1. Commercial 15,612 $78,747

2. Commercial 13,246 66,347

3. Commercial 13,175 66,079

4. Commercial 10,294 56,811

5. Commercial 9,480 48,772

6. Commercial 8,901 45,939

7. Commercial 8,150 41,365

8. Commercial 7,264 35,040

9. Commercial 5,308 24,468

10. Commercial 5,214 22,545

11. Commercial 5,211 25,096

12. Commercial 4,797 21,986

13. Commercial 4,518 23,787

14. Commercial 4,103 18,275

15. Commercial 4,035 18,332

16. Commercial 3,960 17,938

17. Commercial 3,858 18,467

18. Commercial 3,673 16,754

19. Commercial 3,422 14,459

20. Commercial 3,394 14,918

21. Commercial 3,389 16,848

22. Commercial 3,105 13,064

23. Commercial 3,073 16,318

24. Commercial 3,038 12,943

25. Commercial 2,940 13,892

Total Top 25 153,160 $749,459

Total System 1,053,998 5,522,284

% of Total 14.5% 13.5%


P a g e | 34

The water use of the top 25 customers based on 2013 water use represents approximately 14.5% of

total water use and assuming similar water usage patterns in 2015 would represent 13.5% of rate

revenue in 2015. While there may be some conservation as a result of the changes in the rate structure

and rates themselves, it is not anticipated that there will be a material impact on the revenue stability of

the water utility.

3.3. Tap and Resource Fees

3.3.1 Water Plant Investment Fees

The City currently assesses water plant investment fees (PIF) to new connections. The PIF is intended to

recover a new connector’s proportionate share of the City’s water infrastructure, specifically the

“backbone” system structures and water resource costs. PIFs are permitted in Colorado under Colorado

Revised Statutes §29‐20‐104.5.

We reviewed and analyzed the investments the City has made in its water system as well as future

growth related improvements that are intended to occur over the next 10 years and have determined

that the City’s current water PIF is reasonable and appropriate based on the water system value. We

do, however, recommend that the City adjust the water PIF annually based on an inflationary index in

recognition of the changes in construction costs and materials over time.

3.3.2 Sewer Plant Investment Fees

The sewer PIF was developed using the buy‐in method and considers past investments in the system

that are available to serve new development. The current wastewater tap fee is $1,520 per single family

equivalent (SFE), and is proposed to increase to $2,023, an increase of $503 or approximately 33%. We

further recommend that the sewer PIF be adjusted annually by an inflationary index in recognition of

changes in costs over time. Details of the sewer PIF analysis can be found in Appendix E.

3.4. Summary of the Rate Study

The Rate Study presented herein utilized generally accepted rate‐making principles which resulted in the

development of rates and charges which are projected to: 1) generate sufficient revenue to meet the

financial requirements of the utility, 2) address the need to recover costs from users in a manner which

is fair and equitable relative to service provided, and 3) meet the financial and rate design goals of the

City.


P a g e | 35

Section 4 ‐ Conclusions and Recommendations

4.1. Conclusions

Projected operating revenues and operating expenses for the forecast period were developed by,

and/or in consultation with, City staff and are based upon reasonable projections.

The projected capital project expenses have been developed by City staff, to address water and

sewer system renewal, replacement and capacity expansion‐related needs.

Based on Conclusions 1 and 2 above, we are of the opinion that the financial projections presented

herein demonstrate the water and sewer utility’s ability to meet its obligations with regard to:

Operating expenses,

Non‐operating expenses,

Capital project expenses, and

Key financial policies, including:

o Maintenance of at least 6 months of operating reserve balances,

o Debt service coverage of at least 1.25

The proposed rates presented herein are in conformance with industry standard rate‐making

practice and/or the City’s rate policies with respect to:

The fair and equitable recovery of costs through the water and sewer rates,

Generation of sufficient revenue to fully recover system revenue requirements and reserve

requirements,

Recovery of all customer costs and a portion of fixed costs through the water and sewer

fixed charges.

4.2. Recommendations

It is recommended that the City implement the proposed rates and charges presented in this Report

for 2015 by January 1, 2015.

It is recommended that the City update the revenue sufficiency analysis portion of this study each

year to ensure projected revenue is sufficient to fund projected expenses going forward as

assumptions made during this analysis may change and have a material impact upon the analysis.


P a g e | 36

It is recommended that the City update the cost of service analysis portion of this study every three

to five years to ensure costs are recovered consistent with cost of service principles and customer

characteristics.

We recommend the City consider the following policies to ensure the viability of the water and sewer

utilities in the future:

1) Financial Policies

Operate as an “enterprise” business model that does not generate profit but uses surplus revenues for prudent financial planning.

Generate sufficient revenues to fully recover system revenue requirements including infrastructure reinvestment, capital expenditures and targeted reserves.

Plan effectively for rate and revenue stability thereby mitigating the risk associated with local and regional economic variances.

Maintain or enhance credit rating giving the City access to low‐cost funding.

Adequately fund reinvestment in the system through a combination of unrestricted reserve funds and the prudent use of debt.

2) Rate Policies a) General

(1) System user rates will be established according to Colorado state laws and regulations and using generally accepted industry methodologies.

(2) System user rates will generate sufficient revenues to fully recover total system revenue requirements, including debt service, targeted reserve requirements and the broader objectives of the City.

b) Rate Structure

(1) System user rates will be cost‐based, equitable, and easy to administer and understand.

c) Periodic Review of Rates, Fees and Charges

(1) As part of the budgeting process, the City will periodically review its user rates and charges and system connection charges for appropriateness and effectiveness in meeting system goals and objectives. Specifically, the City will:

(a) Beginning in 2015, in odd fiscal years, conduct an “interim” review of system fees and charges to confirm they meet the system requirements in the short‐term, and

(b) In subsequent even fiscal years, retain a third‐party expert to conduct a review and evaluation of system rates and financial condition to verify and confirm system rates support established financial objectives.

(c) Additionally, the City will prepare an annual forecast of system revenues and expenses showing a projection of system operating results for a period of five (5) fiscal years. This


P a g e | 37

forecast will include the estimated operating and maintenance expenses as well as costs associated with capital improvements. The financial forecast will be presented to the City Council to facilitate budget decisions and strategic planning based on a multi‐year perspective.

(d) Water and sewer system PIFs will be reviewed annually as part of the budgeting process for purpose of confirming the rational nexus between growth related capital costs and proposed fees.

3) Financial Policies

a) Reserve Levels

(1) Working Capital Fund

(a) Purpose: Unrestricted funds that allow the City to effectively support day‐to‐day activities and mitigate the impact of fluctuations in system revenues.

(b) Description: the City will target minimum working capital equal to 6 months of annual operating expenses including general fund transfers (3 months for O&M purposes and 3 months for repair and replacement capital).

(2) Renewal & Replacement Fund

(a) Purpose: Renewal and replacement expenditures occur as existing system infrastructure is replaced or by setting aside unrestricted available funds for the purpose of paying for future capital needs. Funds deposited in this account will be used for such expenditures and will be kept separate from the Working Capital Fund.

(b) Description: For the purposes of cash funding certain capital projects, the City will target depositing into the Renewal & Replacement Fund an amount 1) equal to or greater than the System’s annual depreciation expense, or 2) determined to be appropriate by the City’s Utilities Director. No minimum fund balance is required.

(3) Plant Investment Fee Funds

(a) Purpose: PIFs are collected from new (or upsized) water and sewer customers to recover a portion of costs associated with system expansion. These funds are restricted and to be used for growth related capital projects only.

(b) Description: The City will deposit revenues collected from water and sewer PIFs into segregated and restricted funds. The proceeds from these funds, including interest earnings, will be used to pay for growth related utility system improvements. No minimum fund balance is required.

(4) Equipment Replacement Fund

(a) Purpose: For the purpose of providing financing for the periodic replacement of certain equipment critical to delivering quality water and sewer services.

(b) Description: Utility management will maintain a schedule of all equipment owned by the City and equipment replacement will be scheduled based on the estimated useful life of each respective piece of equipment on this asset listing. Funds deposited in this


P a g e | 38

account on an annual basis for such expenditures will be kept separate from the Working Capital Fund. Further, the interest earnings on all cash balances in the fund will be retained in the fund and used to finance the replacement of equipment. Likewise, proceeds from the sale of surplus equipment will be deposited in the fund. This fund is restricted in its use to the assets identified in the equipment replacement schedule.

b) Debt Management

(1) In considering whether to borrow funds for specific system needs, the City will:

(a) Identify reliable funding sources specifically earmarked for the repayment of debt.

(b) Use long‐term debt to finance capital items only and not to finance ongoing operations and maintenance.

(c) Endeavor to finance capital replacement projects from the Renewal and Replacement Fund or on a pay‐as‐you‐go basis. However, the impact to ratepayers will be taken into consideration when determining the appropriate funding strategy.

(2) Coverage Ratio: Under its existing revenue bond rate covenants, the City has a legal obligation to maintain a minimum debt service coverage level of 1.10. Pursuant to the rate covenants, the debt service coverage is calculated as Net Revenues Available for Debt Service divided by Annual Debt Service Payments. The City will target a debt service coverage level of 1.25.

4) Renewal & Replacement

a) The City will endeavor to develop a systematic management process to plan for the cyclical renewal and replacement of system components to extend the useful life of these critical assets and maintain operational integrity and high quality of service. These planned infrastructure investments will be fully integrated into the City’s rate setting and financial planning efforts.

Line No Reference 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Operations

1 Water Rate Revenue Increases 0.00% 55.00% 32.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 0.00%% of Year Rate Increase Effective 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

2 Beginning Unrestricted Fund Balance Sch A - 2, Line 26 7,984,836$ 2,067,545$ 954,034$ 1,701,834$ 3,149,209$ 4,009,074$ 4,755,851$ 5,481,516$ 5,742,322$ 6,757,731$ 7,473,202$

3 Rate Revenue 1 Sch A - 3, Line 2 3,496,500$ 5,522,284$ 7,424,991$ 7,711,779$ 8,007,068$ 8,311,084$ 8,624,058$ 8,946,226$ 9,277,831$ 9,619,122$ 9,970,354$ 4 Total Rate Revenue 3,496,500$ 5,522,284$ 7,424,991$ 7,711,779$ 8,007,068$ 8,311,084$ 8,624,058$ 8,946,226$ 9,277,831$ 9,619,122$ 9,970,354$ 5 Other Operating Revenue Sch A - 3, Line 12 19,500 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 6 Interest Income - Operating Fund Calc 40,000 10,000 5,000 9,000 16,000 20,000 24,000 27,000 29,000 34,000 37,000 7 Total Operating Revenue 3,556,000$ 5,559,119$ 7,456,826$ 7,747,614$ 8,049,903$ 8,357,919$ 8,674,893$ 9,000,061$ 9,333,666$ 9,679,957$ 10,034,189$ 8 Operating Expenses Sch A - 4, Line 2 (2,853,532) (3,064,098) (3,346,640) (3,582,927) (3,719,365) (3,830,017) (3,944,085) (4,061,682) (4,182,913) (4,307,891) (4,436,742) 9 Net Revenue 702,468$ 2,495,020$ 4,110,186$ 4,164,687$ 4,330,538$ 4,527,902$ 4,730,807$ 4,938,379$ 5,150,752$ 5,372,066$ 5,597,447$

Plus:Other Sources of Funds

10 Transfers In Sch A - 3, Line 13 - - - - - - - - - - - Less:Other Uses of Funds

11 Minor Capital Sch A - 4, Line 4 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 12 Major Capital Funded with Existing Reserves/Current Cash Sch A - 6, Line 12 (6,222,426) (2,955,000) (2,285,630) (1,630,120) (2,372,783) (2,672,271) (2,185,050) (2,345,960) (1,291,923) (2,301,070) (1,208,522) 13 Transfers Out Sch A - 4, Line 5 (397,333) (407,266) (417,448) (427,884) (438,581) (449,546) (1,160,785) (1,672,305) (2,184,113) (1,696,216) (2,258,621) 14 Non Operating Expenses Sch A - 4, Line 3 - - - - - - - - - - -

Existing SRF Debt Service Sch A - 4, Line 8 (246,265) (246,265) (246,265) (246,265) (246,265) (246,265) (246,265) (246,265) (246,265) (246,265) 15 Existing Revenue Bond Debt Service Sch A - 4, Line 6 - - - - - - - - - - - 16 New Revenue Bond Debt Service Sch A - 4, Line 7 - - (413,043) (413,043) (413,043) (413,043) (413,043) (413,043) (413,043) (413,043) (413,043)

17 Net Cash Flow (5,917,291)$ (1,113,511)$ 747,800$ 1,447,375$ 859,865$ 746,777$ 725,664$ 260,806$ 1,015,408$ 715,471$ 1,470,996$

18 Ending Unrestricted Fund Balance 2,067,545$ 954,034$ 1,701,834$ 3,149,209$ 4,009,074$ 4,755,851$ 5,481,516$ 5,742,322$ 6,757,731$ 7,473,202$ 8,944,197$ 19 Months of O&M and R&R Capital 9 4 6 11 13 15 17 17 19 21 24

20 Target Unrestricted Fund Balance Target 713,383 766,025 836,660 895,732 929,841 957,504 986,021 1,015,421 1,045,728 1,076,973 1,109,185

Debt Service Coverage Calculations:Revenue Bond Debt Service Coverage

Rate Covenant Debt Service Coverage Test:21 Net Revenue Available for Debt Service Coverage Test 702,468$ 2,495,020$ 4,110,186$ 4,164,687$ 4,330,538$ 4,527,902$ 4,730,807$ 4,938,379$ 5,150,752$ 5,372,066$ 5,597,447$

Revenue Bond Debt Service:22 Existing Revenue Bond Debt Service - - - - - - - - - - - 23 New Revenue Bond Debt Service - - 1,340,593 1,340,593 1,340,593 2,108,683 2,108,683 2,108,683 2,411,164 2,411,164 2,411,164 24 Total Revenue Bond Debt Service -$ -$ 1,340,593$ 1,340,593$ 1,340,593$ 2,108,683$ 2,108,683$ 2,108,683$ 2,411,164$ 2,411,164$ 2,411,164$ 25 Debt Service Coverage - Rate Covenant - - 3.07 3.11 3.23 2.15 2.24 2.34 2.14 2.23 2.32 26 Debt Service Coverage Requirement 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25

Parity Debt Service Coverage Test:27 Net Revenue Available for Debt Service Coverage Test 702,468$ 2,495,020$ 4,110,186$ 4,164,687$ 4,330,538$ 4,527,902$ 4,730,807$ 4,938,379$ 5,150,752$ 5,372,066$ 5,597,447$ 28 Maximum Revenue Bond Debt Service - - - - - - - - - - - 29 Debt Service Coverage - Parity Test - - - - - - - - - - - 30 Debt Service Coverage Requirement 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25

SRF Debt Service Coverage Test

SRF Test:31 Net Revenue Available for Debt Service Coverage Test 702,468$ 2,495,020$ 4,110,186$ 4,164,687$ 4,330,538$ 4,527,902$ 4,730,807$ 4,938,379$ 5,150,752$ 5,372,066$ 5,597,447$

Less:32 Existing Revenue Bond Debt Service -$ -$ (1,340,593)$ (1,340,593)$ (1,340,593)$ (2,108,683)$ (2,108,683)$ (2,108,683)$ (2,411,164)$ (2,411,164)$ (2,411,164)$ 33 Net Revenue Available for SRF Debt Service Coverage Test 702,468$ 2,495,020$ 2,769,593$ 2,824,094$ 2,989,945$ 2,419,219$ 2,622,124$ 2,829,696$ 2,739,588$ 2,960,902$ 3,186,283$ 34 Existing SRF Debt Service 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 246,265$ 35 New SRF Debt Service - - - - - - - - - - - 36 Total SRF Debt Service 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 37 Debt Service Coverage - SRF Test 2.85 10.13 11.25 11.47 12.14 9.82 10.65 11.49 11.12 12.02 12.94 38 Debt Service Coverage Requirement 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10

PIF39 Beginning Balance Sch A - 2, Line 26 1,757,277$ 1,916,277$ 2,625,367$ 2,416,897$ 1,704,437$ 1,506,159$ 545,994$ 288,104$ 535,561$ 989,957$ 520,707$ 40 Sources of Funds Sch A - 3, Line 14 200,000 699,090 706,081 713,141 720,273 727,476 1,434,750 1,942,098 2,449,519 1,957,014 2,514,584 41 Interest Earnings Calc 9,000 10,000 13,000 12,000 9,000 8,000 3,000 1,000 3,000 5,000 3,000 42 Uses of Funds other Than Major Capital Sch A - 4, Line 12 - - - - - - - - - - - 43 New Revenue Bond Debt Service - - (927,551) (927,551) (927,551) (1,695,641) (1,695,641) (1,695,641) (1,998,122) (1,998,122) (1,998,122) 44 Major Capital Funded with PIF Sch A - 6, Line 11 (50,000) - - (510,050) - - - - - (433,143) - 45 Ending Balance 1,916,277$ 2,625,367$ 2,416,897$ 1,704,437$ 1,506,159$ 545,994$ 288,104$ 535,561$ 989,957$ 520,707$ 1,040,169$

Schedule A - 1City of Durango

Pro Forma with Debt Service Coverage and Fund Balance Reconciliation

Prepared by Willdan Financial Services Water Utility A-1

BEGINNING BALANCES

Line No: Operations PIF 1 Current assets:2 Pooled cash and investments 7,930,501$ 1,491,776$ 3 Receivables (net of allowance for uncollectibles): 182,743 71,387 4 Accounts and other - 39,160 5 Unbilled accounts 100,247 6 Accrued interest - 7 PIF Notes - 202,199 8 Due from other governments - 9 Inventories -

10 Prepaid insurance - 11 Other assets - 12 Total Current Assets 8,213,491$ 1,804,522$

Current Liabilities:13 Accounts and contracts payable 135,669$ 10,920$ 14 Compensated absences 70,155 27,405 15 Accrued Payroll 22,832 8,919 16 Current portion of long-term debt: - 17 Revenue Bonds - 18 Certificates of Participation - 19 Due to other funds - 20 Deferred revenue - 21 Total Current Liabilities 228,655$ 47,245$

Adjustments by JV:22 Removal of Inventories (Not Liquid) - - 23 Other Assets (Unkown Cash) - -

24 Net Adjustments -$ -$

25 Net Beginning Balances (Curr Assets less Current Liabilities - with Adjustments) 7,984,836$ 1,757,277$

City of DurangoBeginning Fund Balance Reconciliation


Line No:1 Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242 RR1 Rate Revenue 1 3,496,500$ 5,522,284$ 7,424,991$ 7,711,779$ 8,007,068$ 8,311,084$ 8,624,058$ 8,946,226$ 9,277,831$ 9,619,122$ 9,970,354$ 3 OR Other Operating Revenue 19,500 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 4 TRIN Transfers In - - - - - - - - - - - 5 Sources - Fund 2 Sources of Funds - Fund 2 200,000 699,090 706,081 713,141 720,273 727,476 1,434,750 1,942,098 2,449,519 1,957,014 2,514,584 6 INT - Fund 1 Interest Earnings - Fund 1 49,177 10,000 9,000 16,000 24,000 29,000 34,000 37,000 42,000 47,000 55,000 7 INT - Fund 2 Interest Earnings - Fund 2 10,823 15,000 17,000 14,000 11,000 7,000 3,000 3,000 5,000 5,000 5,000

8 Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20249 Operations

10

RR1 - BEFORE GROWTH AND RATE

INCR Rate Revenue 1 3,496,500$ 3,496,500$ 5,522,284$ 7,424,991$ 7,711,779$ 8,007,068$ 8,311,084$ 8,624,058$ 8,946,226$ 9,277,831$ 9,619,122$ 11 RR1 - Growth Growth 0.00% 1.90% 1.86% 1.83% 1.79% 1.76% 1.73% 1.70% 1.67% 1.65% 1.62%12 Revenue Increase 0.00% 55.00% 32.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%13 Pct of Year Revenue Increase Effective 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%14 RR1 Total Rate Revenue 1 - After Revenue Increase 3,496,500$ 5,522,284$ 7,424,991$ 7,711,779$ 8,007,068$ 8,311,084$ 8,624,058$ 8,946,226$ 9,277,831$ 9,619,122$ 9,970,354$

15 OR Non Rate Rev 1 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 16 OR Raw Water 15,000 22,335 22,335 22,335 22,335 22,335 22,335 22,335 22,335 22,335 22,335

- - - - - - - - - 17 Interest Earning Calculation18 Average Balance 3,351,000$ 1,007,000$ 885,000$ 1,617,000$ 2,386,000$ 2,922,000$ 3,412,000$ 3,741,000$ 4,167,000$ 4,744,000$ 5,472,000$ 19 Assumed Interest Earnings Rate 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%20 INT - Fund 1 Projected Interest Earnings 49,177$ 10,000$ 9,000$ 16,000$ 24,000$ 29,000$ 34,000$ 37,000$ 42,000$ 47,000$ 55,000$

21 PIF

22 Operating Revenue 200,000 699,090 706,081 713,141 720,273 727,476 734,750 742,098 749,519 757,014 764,584 23 Non Operating Revenue - - - - - - - - - - - 24 Transfers In - - - - - - 700,000 1,200,000 1,700,000 1,200,000 1,750,000 25 Sources - Fund 2 Total Sources 200,000 699,090 706,081 713,141 720,273 727,476 1,434,750 1,942,098 2,449,519 1,957,014 2,514,584

26 Interest Earnings Calculation27 Average Balance 1,225,000$ 1,514,000$ 1,681,000$ 1,374,000$ 1,070,000$ 684,000$ 278,000$ 275,000$ 509,000$ 504,000$ 520,000$ 28 Assumed Interest Earnings Rate 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%29 INT - Fund 2 Projected Interest Earnings 10,823$ 15,000$ 17,000$ 14,000$ 11,000$ 7,000$ 3,000$ 3,000$ 5,000$ 5,000$ 5,000$


Revenue

Summary

Detail


Line No:

1FUND

# Expense Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242 1 Operating Operating 2,853,532$ 3,064,098$ 3,346,640$ 3,582,927$ 3,719,365$ 3,830,017$ 3,944,085$ 4,061,682$ 4,182,913$ 4,307,891$ 4,436,742$ 3 1 Non Operating Non Operating - - - - - - - - - - - 4 1 Minor Capital Minor Capital - - - - - - - - - - - 5 1 Transfers Transfers 397,333 407,266 417,448 427,884 438,581 449,546 1,160,785 1,672,305 2,184,113 1,696,216 2,258,621 6 1 Existing Bond Debt Service Existing Bond Debt Service - - - - - - - - - - - 7 1 New Bond Debt Service New Bond Debt Service - - 1,340,593 1,340,593 1,340,593 2,108,683 2,108,683 2,108,683 2,411,164 2,411,164 2,411,164 8 1 Existing SRF Debt Service Existing SRF Debt Service 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265

1 New SRF Debt Service New SRF Debt Service - - - - - - - - - - - 9 TOTAL 3,497,130 3,717,630 5,350,946 5,597,669 5,744,804 6,634,511 7,459,819 8,088,935 9,024,456 8,661,536 9,352,792

10 FUND # Cost Allocation Code Cost Escalation Factor Code Expense Code

Annual Expense

Escalation Factor EXPENSES 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

11 Detail

12 Water Administration13 1 Water - Admin Personnel Operating 3.0% Salaries 260,537 268,353 276,404 284,696 293,237 302,034 311,095 320,428 330,041 339,942 350,140 14 1 Water - Admin Personnel Operating 3.0% Overtime 800 824 849 874 900 927 955 984 1,013 1,044 1,075 15 1 Water - Admin Personnel Operating 3.0% Insurance 39,731 40,923 42,151 43,415 44,718 46,059 47,441 48,864 50,330 51,840 53,395 16 1 Water - Admin Personnel Operating 3.0% Retirement 29,270 30,148 31,053 31,984 32,944 33,932 34,950 35,998 37,078 38,191 39,336 17 1 Water - Admin Personnel Operating 3.0% Medicare 3,789 3,903 4,020 4,140 4,265 4,392 4,524 4,660 4,800 4,944 5,092 18 1 Water - Admin Operating Operating 2.5% Office Supplies 1,300 1,333 1,366 1,400 1,435 1,471 1,508 1,546 1,585 1,625 1,666 19 1 Water - Admin Operating Operating 2.5% Clothing and Uniforms 100 103 106 109 112 115 118 121 124 127 130 20 1 Water - Admin Operating Operating 2.5% Other Supplies 2,066 2,118 2,171 2,225 2,281 2,338 2,396 2,456 2,517 2,580 2,645 21 1 Water - Admin Operating Operating 2.5% Professional Services 6,000 6,150 6,304 6,462 6,624 6,790 6,960 7,134 7,312 7,495 7,682 22 1 Water - Admin Operating Operating 2.5% Other Contracted Services 21,713 22,256 22,812 23,382 23,967 24,566 25,180 25,810 26,455 27,116 27,794 23 1 Water - Admin Operating Operating 2.5% Software Maintenance 3,500 3,588 3,678 3,770 3,864 3,961 4,060 4,162 4,266 4,373 4,482 24 1 Water - Admin Operating Operating 2.5% Books, News & Periodicals 200 205 210 215 220 226 232 238 244 250 256 25 1 Water - Admin Operating Operating 2.5% Postage 9,400 9,635 9,876 10,123 10,376 10,635 10,901 11,174 11,453 11,739 12,032 26 1 Water - Admin Operating Operating 2.5% Publication & Legal Notices 300 308 316 324 332 340 349 358 367 376 385 27 1 Water - Admin Operating Operating 2.5% Dues and Memberships 2,075 2,127 2,180 2,235 2,291 2,348 2,407 2,467 2,529 2,592 2,657 28 1 Water - Admin Operating Operating 2.5% Auto Allowance & Mileage 1,800 1,845 1,891 1,938 1,986 2,036 2,087 2,139 2,192 2,247 2,303 29 1 Water - Admin Operating Operating 2.5% Professional Development and Travel 4,300 4,408 4,518 13,241 13,572 13,911 14,259 14,615 14,980 15,355 15,739 30 1 Water - Admin Operating Operating 2.5% Cell Phone Stipend 510 523 536 549 563 577 591 606 621 637 653 31 1 Water - Admin Operating Operating 2.5% Vehicle Rent and Maintenance 196 201 206 211 216 221 227 233 239 245 251 32 Source of Supply33 1 Water - SOS Operating Operating 2.5% Repair Parts & Materials 7,300 7,483 7,670 7,862 8,059 8,260 8,467 8,679 8,896 9,118 9,346 34 1 Water - SOS Operating Operating 2.5% Other Supplies 500 513 526 539 552 566 580 595 610 625 641 35 1 Water - SOS Operating Operating 2.5% Other Contracted Services 1,200 1,230 1,261 1,293 1,325 1,358 1,392 1,427 1,463 1,500 1,538 36 1 Water - SOS Operating Operating 2.5% Repair & Maintenance 4,900 5,023 5,149 5,278 5,410 5,545 5,684 5,826 5,972 6,121 6,274 37 Water Pumping - - - - - - - - - - 38 1 Water - Pump Operating Operating 2.5% Repair Parts & Materials 15,000 15,375 15,759 16,153 16,557 16,971 17,395 17,830 18,276 18,733 19,201 39 1 Water - Pump Operating Operating 2.5% Other Supplies 500 513 526 539 552 566 580 595 610 625 641 40 1 Water - Pump Operating Operating 2.5% Other Contracted Services 8,500 8,713 8,931 9,154 9,383 9,618 9,858 10,104 10,357 10,616 10,881 41 1 Water - Pump Operating Operating 2.5% Software Maintenance 1,640 1,681 1,723 1,766 1,810 1,855 1,901 1,949 1,998 2,048 2,099 42 1 Water - Pump Electricity Operating 4.0% Utilities - Electric 195,000 270,400 281,216 292,465 304,164 316,331 328,984 342,143 355,829 370,062 384,864 43 1 Water - Pump Operating Operating 2.5% Utilities - Telephone 7,240 7,457 7,643 7,834 8,030 8,231 8,437 8,648 8,864 9,086 9,313 44 1 Water - Pump Operating Operating 2.5% Repair & Maintenance 30,000 30,750 31,519 32,307 33,115 33,943 34,792 35,662 36,554 37,468 38,405 45 Water Transmission & Distribution46 1 Water - T&D Personnel Operating 3.0% Salaries 375,833 387,108 439,855 494,185 529,578 545,465 561,829 578,684 596,045 613,926 632,344 47 1 Water - T&D Personnel Operating 3.0% Overtime 22,950 23,639 26,859 30,177 32,338 33,308 34,308 35,337 36,397 37,489 38,614 48 1 Water - T&D Personnel Operating 3.0% Insurance 98,400 101,352 115,162 129,387 138,653 142,813 147,097 151,510 156,056 160,737 165,559 49 1 Water - T&D Personnel Operating 3.0% Retirement 44,664 46,004 52,272 58,729 62,935 64,823 66,768 68,771 70,834 72,959 75,148 50 1 Water - T&D Personnel Operating 3.0% Medicare 5,782 5,955 6,767 7,603 8,147 8,392 8,643 8,903 9,170 9,445 9,728 51 1 Water - T&D Operating Operating 2.5% Clothing and Uniforms 5,800 5,945 6,094 6,246 6,402 6,562 6,726 6,894 7,066 7,243 7,424 52 1 Water - T&D Operating Operating 2.5% Fuel 45,200 46,330 47,488 48,675 49,892 51,139 52,417 53,727 55,070 56,447 57,858 53 1 Water - T&D Operating Operating 2.5% Hand Tools 10,750 11,019 11,294 11,576 11,865 12,162 12,466 12,778 13,097 13,424 13,760 54 1 Water - T&D Operating Operating 2.5% Repair Parts & Materials 68,000 69,700 71,443 73,229 75,060 76,937 78,860 80,832 82,853 84,924 87,047 55 1 Water - T&D Operating Operating 2.5% Traffic Control Devices 2,000 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 56 1 Water - T&D Operating Operating 2.5% Other Supplies 8,000 8,200 8,405 8,615 8,830 9,051 9,277 9,509 9,747 9,991 10,241 57 1 Water - T&D Operating Operating 2.5% Service Line Repair Materials 11,500 11,788 12,083 12,385 12,695 13,012 13,337 13,670 14,012 14,362 14,721 58 1 Water - T&D Operating Operating 2.5% Other Contracted Services 5,000 5,125 5,253 5,384 5,519 5,657 5,798 5,943 6,092 6,244 6,400 59 1 Water - T&D Operating Operating 2.5% Software Maintenance 2,180 2,235 2,291 2,348 2,407 2,467 2,529 2,592 2,657 2,723 2,791 60 1 Water - T&D Operating Operating 2.5% Dues and Memberships 85 87 89 91 93 95 97 99 101 104 107 61 1 Water - T&D Operating Operating 2.5% Professional Development and Travel 5,280 5,412 5,547 5,686 5,828 5,974 6,123 6,276 6,433 6,594 6,759 62 1 Water - T&D Operating Operating 2.5% Utilities - Telephone 1,452 1,488 1,525 1,563 1,602 1,642 1,683 1,725 1,768 1,812 1,857 63 1 Water - T&D Operating Operating 2.5% Cell Phone Stipend 1,650 1,691 1,733 1,776 1,820 1,866 1,913 1,961 2,010 2,060 2,112 64 1 Water - T&D Operating Operating 2.5% Vehicle Rent and Maintenance 127,498 130,685 133,952 137,301 140,734 144,252 147,858 151,554 155,343 159,227 163,208 65 1 Water - T&D Operating Operating 2.5% Rentals 6,000 6,150 6,304 6,462 6,624 6,790 6,960 7,134 7,312 7,495 7,682 66 1 Water - T&D Operating Operating 2.5% Repair & Maintenance 55,000 56,375 57,784 59,229 60,710 62,228 63,784 65,379 67,013 68,688 70,405 67 1 Water - T&D Other Capital Operating 0.0% Other Capital 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 68 Water Treatment69 1 Water - Treat Personnel Operating 3.0% Salaries 309,886 319,183 425,766 487,043 501,654 516,704 532,205 548,171 564,616 581,554 599,001 70 1 Water - Treat Personnel Operating 3.0% Overtime 20,000 20,600 27,479 31,434 32,377 33,348 34,348 35,379 36,440 37,533 38,659 71 1 Water - Treat Personnel Operating 3.0% Insurance 67,956 69,995 93,368 106,805 110,009 113,310 116,709 120,210 123,817 127,531 131,357 72 1 Water - Treat Personnel Operating 3.0% Retirement 36,947 38,055 50,763 58,069 59,811 61,605 63,454 65,357 67,318 69,337 71,418 73 1 Water - Treat Personnel Operating 3.0% Medicare 4,783 4,926 6,572 7,517 7,743 7,975 8,214 8,461 8,715 8,976 9,245 74 1 Water - Treat Operating Operating 2.5% Office Supplies 1,350 1,384 1,419 1,454 1,490 1,527 1,565 1,604 1,644 1,685 1,727 75 1 Water - Treat Chemicals Operating 3.6% Chemicals and Supplies 143,892 149,099 154,467 160,028 165,789 171,757 177,940 184,346 190,982 197,857 204,980 76 1 Water - Treat Operating Operating 2.5% Janitorial Supplies 450 461 473 485 497 509 522 535 548 562 576 77 1 Water - Treat Operating Operating 2.5% Clothing and Uniforms 3,600 3,690 3,782 3,877 3,974 4,073 4,175 4,279 4,386 4,496 4,608 78 1 Water - Treat Operating Operating 2.5% Books and Other Materials 500 513 526 539 552 566 580 595 610 625 641 79 1 Water - Treat Operating Operating 2.5% Fuel 4,000 4,100 4,203 4,308 4,416 4,526 4,639 4,755 4,874 4,996 5,121 80 1 Water - Treat Operating Operating 2.5% Hand Tools 3,000 3,075 3,152 3,231 3,312 3,395 3,480 3,567 3,656 3,747 3,841 81 1 Water - Treat Operating Operating 2.5% Painting Supplies 1,000 1,025 1,051 1,077 1,104 1,132 1,160 1,189 1,219 1,249 1,280 82 1 Water - Treat Operating Operating 2.5% Repair Parts & Materials 58,200 59,655 61,146 62,675 64,242 65,848 67,494 69,181 70,911 72,684 74,501 83 1 Water - Treat Operating Operating 2.5% Other Supplies 6,580 6,745 6,914 7,087 7,264 7,446 7,632 7,823 8,019 8,219 8,424 84 1 Water - Treat Operating Operating 2.5% Other Contracted Services 55,830 57,226 58,657 60,123 61,626 63,167 64,746 66,365 68,024 69,725 71,468 85 1 Water - Treat Operating Operating 2.5% Software Maintenance 1,640 1,681 1,723 1,766 1,810 1,855 1,901 1,949 1,998 2,048 2,099 86 1 Water - Treat Operating Operating 2.5% Printing 2,300 2,358 2,417 2,477 2,539 2,602 2,667 2,734 2,802 2,872 2,944 87 1 Water - Treat Operating Operating 2.5% Postage 4,100 4,203 4,308 4,416 4,526 4,639 4,755 4,874 4,996 5,121 5,249 88 1 Water - Treat Operating Operating 2.5% Dues and Memberships 185 190 195 200 205 210 215 220 226 232 238 89 1 Water - Treat Operating Operating 2.5% Professional Development and Travel 9,250 9,481 9,718 9,961 10,210 10,465 10,727 10,995 11,270 11,552 11,841


Expenses Other than Major Capital Expenses

Summary - Operations

Detail

Operations


Line No:

1FUND

# Expense Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242 1 Operating Operating 2,853,532$ 3,064,098$ 3,346,640$ 3,582,927$ 3,719,365$ 3,830,017$ 3,944,085$ 4,061,682$ 4,182,913$ 4,307,891$ 4,436,742$ 3 1 Non Operating Non Operating - - - - - - - - - - - 4 1 Minor Capital Minor Capital - - - - - - - - - - - 5 1 Transfers Transfers 397,333 407,266 417,448 427,884 438,581 449,546 1,160,785 1,672,305 2,184,113 1,696,216 2,258,621 6 1 Existing Bond Debt Service Existing Bond Debt Service - - - - - - - - - - - 7 1 New Bond Debt Service New Bond Debt Service - - 1,340,593 1,340,593 1,340,593 2,108,683 2,108,683 2,108,683 2,411,164 2,411,164 2,411,164 8 1 Existing SRF Debt Service Existing SRF Debt Service 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265

1 New SRF Debt Service New SRF Debt Service - - - - - - - - - - - 9 TOTAL 3,497,130 3,717,630 5,350,946 5,597,669 5,744,804 6,634,511 7,459,819 8,088,935 9,024,456 8,661,536 9,352,792


Annual Expense


11 Detail

City of DurangoExpenses Other than Major Capital Expenses


Detail

Operations90 1 Water - Treat Electricity Operating 4.0% Utilities - Electric 110,000 114,421 118,998 123,758 128,708 133,856 139,210 144,778 150,569 156,592 162,856 91 1 Water - Treat Operating Operating 2.5% Utilities - Water, Sewer, Trash 600 615 630 646 662 679 696 713 731 749 768 92 1 Water - Treat Operating Operating 2.5% Utilities - Gas 20,000 20,504 21,017 21,542 22,081 22,633 23,199 23,779 24,373 24,982 25,607 93 1 Water - Treat Operating Operating 2.5% Utilities - Telephone 1,920 1,968 2,017 2,067 2,119 2,172 2,226 2,282 2,339 2,397 2,457 94 1 Water - Treat Operating Operating 2.5% Cell Phone Stipend 1,540 1,579 1,618 1,658 1,699 1,741 1,785 1,830 1,876 1,923 1,971 95 1 Water - Treat Operating Operating 2.5% Vehicle Rent and Maintenance 11,260 11,542 11,831 12,127 12,430 12,741 13,060 13,387 13,722 14,065 14,417 96 1 Water - Treat Operating Operating 2.5% Rentals 4,000 4,100 4,203 4,308 4,416 4,526 4,639 4,755 4,874 4,996 5,121 97 1 Water - Treat Operating Operating 2.5% Repair & Maintenance 30,000 30,750 31,519 32,307 33,115 33,943 34,792 35,662 36,554 37,468 38,405 98 1 Water - Treat Operating Operating 2.5% Animas La Plata (ALP) OM&R - 58,881 54,607 55,578 56,967 58,391 59,851 61,347 62,881 64,453 66,064 99 1 Water - Treat Other Capital Operating 0.0% Other Capital 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000

100 Water Meter Reading & Repair101 1 Water - CS Personnel Operating 3.0% Salaries 75,712 77,983 80,322 82,732 85,214 87,770 90,403 93,115 95,908 98,785 101,749 102 1 Water - CS Personnel Operating 3.0% Insurance 24,850 25,595 26,363 27,154 27,969 28,808 29,672 30,562 31,479 32,423 33,396 103 1 Water - CS Personnel Operating 3.0% Retirement 8,480 8,734 8,996 9,266 9,544 9,831 10,125 10,429 10,742 11,064 11,396 104 1 Water - CS Personnel Operating 3.0% Medicare 1,098 1,131 1,165 1,200 1,236 1,273 1,311 1,350 1,391 1,433 1,476 105 1 Water - CS Operating Operating 2.5% Fuel 2,000 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 106 1 Water - CS Personnel Operating 3.0% Hand Tools 2,400 2,472 2,546 2,622 2,701 2,782 2,865 2,951 3,040 3,131 3,225 107 1 Water - CS Personnel Operating 3.0% Repair Parts & Materials 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 108 1 Water - CS Personnel Operating 3.0% Other Supplies 45,250 46,608 48,006 49,446 50,929 52,457 54,031 55,652 57,322 59,042 60,813 109 1 Water - CS Personnel Operating 3.0% Other Contracted Services 3,465 3,569 3,676 3,786 3,900 4,017 4,138 4,262 4,390 4,522 4,658 110 1 Water - CS Personnel Operating 3.0% Software Maintenance 5,500 5,665 5,835 6,010 6,190 6,376 6,567 6,764 6,967 7,176 7,391 111 1 Water - CS Personnel Operating 3.0% Utilities - Telephone 960 989 1,019 1,050 1,082 1,114 1,147 1,181 1,216 1,252 1,290 112 1 Water - CS Personnel Operating 3.0% Repair & Maintenance 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 113 Non-Departmental Miscellaneous114 1 Water - Admin Personnel Operating 3.0% Unemployment 26,790 27,594 28,422 29,275 30,153 31,058 31,990 32,950 33,939 34,957 36,006 115 1 Water - Admin Operating Operating 2.5% Liability Insurance 43,522 44,610 45,725 46,868 48,040 49,241 50,472 51,734 53,027 54,353 55,712 116 1 Water - Admin Personnel Operating 3.0% Salary Contingency 57,345 59,065 60,837 62,662 64,542 66,478 68,472 70,526 72,642 74,821 77,066

- - - - - - - - - -

117 1 Water - Existing Bond DS Existing Bond Debt Service Existing Bond Debt Service 0.0% Existing Debt Service - Revenue Bonds - - - - - - - - - - - 118 1 Water - Existing SRF DS Existing SRF Debt Service Existing SRF Debt Service 0.0% Existing SRF Debt Service 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265 246,265

119 1 Water - Transfers Transfers Transfers 2.5% Interfund Transfer 397,333 407,266 417,448 427,884 438,581 449,546 460,785 472,305 484,113 496,216 508,621 120 1 Water- Admin Transfers Transfers 0.0% Transfer to Repair and Replacement Fund - - - - - - - - - - 121 1 Water - Transfers Transfers Transfers 0.0% Loan to PIF Fund - - - - - - 700,000 1,200,000 1,700,000 1,200,000 1,750,000


Line No: Service Function Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

1 Capital Projects2 Water Source of Supply Florida River Intake @ Rainbow Ranch $0 $150,000 $101,000 $0 $0 $0 $0 $0 $0 $0 $03 Water Source of Supply Rogers Reservoir Expansion - - 101,000 102,010 103,030 104,060 - - - - - 4 Water Source of Supply Rogers Reservoir Improvements 50,000 100,000 - - - - - - - - - 5 Water Source of Supply ALP SCADA Outfall Improvements 60,000 100,000 - - - - - 106,152 - - - 6 Water Treatment Land Acquisition WTP (Ridges Basin) 98,000 - - - - - - - - - - 7 Water Transmission Repainting 7.2 NGD Tank 100,277 - - - - - - - - - - 8 Water Transmission La Posta Road Waterline Bridge to Airpark 451,398 - - - - - - - - - - 9 Water Treatment WTP HVAC Insulation Upgrades 99,400 - - - - - - - - - - 10 Water Treatment Ridges Basin WTP Design 50,000 - - - - - - - - - - 11 Water Treatment Replace/Upgrade Polymer Blending Chemical Pump 100,000 - - - - - - - - - - 12 Water Source of Supply ALP to Santa Rita River Crossing 779,000 - - - - - - - - - - 13 Water Pumping Pumping Station - PRV's, pumps, motors, emergency spare parts - - 101,000 51,005 51,515 52,030 52,551 53,076 53,607 - - 14 Water Pumping Replace Hillcrest Booster Station - - - 102,010 360,605 - - - - - - 15 Water Pumping Santa Rita Pump Station Pump Replacement/Rehabilitation - 150,000 50,500 - - - - - - - - 16 Water Treatment PIF Lake Nighthorse to RBWTP Pipeline - - - 938,492 - - - - - - - 17 Water Treatment PIF New RBWTP 2.5 MGD Phase 1 - - 404,000 7,650,750 - - - - - - - 18 Water Treatment PIF Upgrade RBWTP Capacity to 5.0 MGD Phase II - - - - 2,060,602 2,081,208 2,102,020 - - - - 19 Water Treatment PIF Upgrade RBWTP Capacity to 10.0 MGD Phase III - - - - - - - 2,123,040 2,144,271 2,165,713 - 20 Water Treatment Ridges Basin Water Main Extension (Engineering Request) - 1,160,000 - - - - - - - - - 21 Water Treatment CMWTP Process Revisions 622,850 - - 255,025 257,575 260,151 262,753 - - - - 22 Water Treatment CMWTP Paving Roads and Parking Areas - - - 51,005 103,030 52,030 52,551 - - - - 23 Water Treatment CMWTP Replace/upgrade polymer blending chemical feed pump system 100,000 - - - - - - - - - - 24 Water Treatment CMWTP HVAC Insulation Upgrades and New Roofs - - 80,800 81,608 82,424 - - - - - - 25 Water Treatment CMWTP T1 Floculator VFD Replacement & T2 Floc Basin Baffled 99,070 50,000 101,000 - - 104,060 105,101 - - - - 26 Water Treatment CMWTP Sediment Basins Replacement - - - - - 520,302 - - - - - 27 Water Treatment CMWTP Filter Effluent to Waste System 50,000 100,000 101,000 - - - - - - - - 28 Water Treatment CMWTP UV Disinfection - - - - - - - - - 1,624,285 - 29 Water Treatment CMWTP Electrical Upgrades (includes generator) 499,805 50,000 - - - - - - - - - 30 Water Treatment CMWTP Reclaim/Sludge Management 250,000 - 202,000 - - 624,362 - - - - - 31 Water Treatment CMWTP Process Pipping Rehab - 100,000 - - - 52,030 52,551 53,076 53,607 - - 32 Water Treatment Drought Plan - - - 51,005 - - - - - - - 33 Water Treatment CMWTP Fiber Redundancy 100,000 - - 102,010 - - 105,101 106,152 - - - 34 Water Treatment CWTP Fencing - - - 51,005 51,515 - - - - 54,143 - 35 Water Treatment CMWTP 7 MG Tank Rehab - - 1,010,000 - - - - - - - - 36 Water Treatment CMWTP New 2 MG Tank & Baffeling 1,500,000 700,000 - - - - - - - - - 37 Water Treatment CMWTP Filter Media Replacement 55,000 - - - - - - 63,691 - - - 38 Water Treatment CMWTP Office Expansion 44,000 - 101,000 - - - - - - - - 39 Water Treatment CMWTP Compressed Air System Upgrades - - 60,600 - - - - - - - - 40 Water Treatment CMWTP Site Pipe / Valve Replacement - - 101,000 - 103,030 - 105,101 - - - - 41 Water Treatment PIF CMWTP 2nd Reservoir Outlet Tower - - - - - - - - - 433,143 - 42 Water Transmission Waterline Replacements 461,894 300,000 303,000 306,030 309,090 312,181 315,303 318,456 321,641 324,857 328,106 43 Water Transmission Valve Replacements 75,000 95,000 75,750 76,508 77,273 78,045 78,826 79,614 80,410 81,214 82,026 44 Water Transmission Storage Tank Cleaning/Refurbishing 100,000 200,000 - 204,020 - 208,121 - 212,304 - 216,571 - 45 Water Transmission Storage Tank Exterior Painting - - 232,300 - 236,969 - 241,732 - 246,591 - 251,548 46 Water Transmission Distribution/Collections Facility Improvements 50,000 100,000 - - - - - - - - - 47 Water Transmission PIF Highway 160 East Water South Grandview - - - - - 572,332 - - - - - 48 Water Transmission PIF Ewing Mesa to 8th Avenue Waterline - - - - - - - 1,008,444 - - - 49 Water Transmission Water Conservation Audits 126,287 75,000 - 76,508 - 78,045 - 79,614 - - - 50 Water Transmission Main Avenue Waterline Replacement Design Phase - - 353,500 - - - - - - - - 51 Water Transmission Main Avenue Waterline Replacement Construction Phase - - - 3,570,350 - - - - - - - 52 Water Transmission Riverview Waterline Replacement - - - - - - - 1,273,824 - - - 53 Water Transmission Crestview Waterline - - - - - - 182,876 - - - - 54 Water Transmission PIF College Drive Waterline Upsize - 200,000 - - - - - - - - - 55 Water Transmission PIF Grandview Large Diameter Waterlines - - - - - 976,087 - - - - - 56 Water Transmission Water System Telemetry 156,972 120,000 101,000 - - - - - - - - 57 Water Transmission Fiber Upgrade and Expansion - - - - - 104,060 105,101 - - - - 58 Water Transmission Fibert Bodo & Smelter 48,473 - - - - - - - - - - 59 Water Transmission PIF New RBWTP/Airpark Water Storage Tanks 2 @ 3MG Each - - - 102,010 2,060,602 2,081,208 - - - - - 60 Water Transmission Water Mains, river crossing replacements - - - - 515,151 - 525,505 - 536,068 - 546,843 61 Water Transmission Water Mains, river crossing replacements - - 505,000 - - - - - - - - 62 Water Transmission Fiber Expansion 29th Street Pipeline - 60,000 - - - - - - - - - 63 Water Transmission Rockridge Tank Rockwall Mitigation - 50,000 - - - - - - - - - 64 Water Transmission PIF Hwy 160 W water main capacity assurance 50,000 - - 510,050 - - - - - - - 65 Water Transmission Deferred Capital - (800,000) - - - - - - - - - 66 Water Transmission Deferred Capital - - 800,000 - - - - - - - - 67 Water Meters Meter Replacement Program 95,000 95,000 119,180 120,372 121,576 122,791 - - - - -

Total 6,272,426$ 3,155,000$ 5,004,630$ 14,401,772$ 6,493,987$ 8,383,106$ 4,287,070$ 5,477,444$ 3,436,194$ 4,899,927$ 1,208,522$


CIP (Inflated)


New Debt ServiceRevenue Bond Debt Service

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Annual New Debt Required -$ -$ 19,101,806$ -$ -$ 10,944,339$ -$ -$ 4,309,984$ -$ -$

Fiscal Year

Term (Yrs) Rate

Issuance Costs

Capital Project Proceeds Required

Issuance Costs

Total Debt Required 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

2014 30 5.5% 2.0% -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 2015 30 5.5% 2.0% - - - - - - - - - - - - - - 2016 30 5.5% 2.0% 19,101,806 382,036 19,483,842 - - 1,340,593 1,340,593 1,340,593 1,340,593 1,340,593 1,340,593 1,340,593 1,340,593 1,340,593 2017 30 5.5% 2.0% - - - - - - - - - - - - - - 2018 30 5.5% 2.0% - - - - - - - - - - - - - - 2019 30 5.5% 2.0% 10,944,339 218,887 11,163,226 - - - - - 768,090 768,090 768,090 768,090 768,090 768,090 2020 30 5.5% 2.0% - - - - - - - - - - - - - - 2021 30 5.5% 2.0% - - - - - - - - - - - - - - 2022 30 5.5% 2.0% 4,309,984 86,200 4,396,184 - - - - - - - - 302,481 302,481 302,481 2023 30 5.5% 2.0% - - - - - - - - - - - - - - 2024 30 5.5% 2.0% - - - - - - - - - - - - - -

Cumulative Annual New Bond Debt Service -$ -$ 1,340,593$ 1,340,593$ 1,340,593$ 2,108,683$ 2,108,683$ 2,108,683$ 2,411,164$ 2,411,164$ 2,411,164$

City of Durango


Line No Reference 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Operations

1 Sewer Rate Revenue Increases 0.00% 60.00% 25.00% 25.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%% of Year Rate Increase Effective 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

2 Beginning Unrestricted Fund Balance Sch A - 2, Line 26 2,309,071$ 340,817$ 1,385,607$ 2,666,188$ 1,437,473$ 3,194,002$ 4,124,232$ 5,498,968$ 6,386,641$ 7,937,525$ 11,322,337$

3 Rate Revenue 1 Sch A - 3, Line 2 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,170,035$ 10,543,812$ 10,928,472$ 4 Total Rate Revenue 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,170,035$ 10,543,812$ 10,928,472$ 5 Other Operating Revenue Sch A - 3, Line 12 41,235 125 125 125 125 125 125 125 125 125 125 6 Interest Income - Operating Fund Calc 12,000 2,000 7,000 13,000 7,000 16,000 21,000 27,000 32,000 40,000 57,000 7 Total Operating Revenue 3,253,635$ 5,219,590$ 6,649,988$ 8,467,993$ 8,785,405$ 9,127,372$ 9,475,146$ 9,833,987$ 10,202,160$ 10,583,937$ 10,985,597$ 8 Operating Expenses Sch A - 4, Line 2 (2,415,686) (2,481,182) (2,606,699) (2,735,946) (3,628,090) (3,706,176) (3,805,473) (3,908,047) (4,012,473) (4,120,324) (4,231,374) 9 Net Revenue 837,949$ 2,738,408$ 4,043,289$ 5,732,047$ 5,157,315$ 5,421,196$ 5,669,673$ 5,925,940$ 6,189,687$ 6,463,613$ 6,754,223$

Plus:Other Sources of Funds

10 Transfers In Sch A - 3, Line 13 - - - - - - - - - - - Less:Other Uses of Funds

11 Minor Capital Sch A - 4, Line 4 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 12 Major Capital Funded with Existing Reserves/Current Cash Sch A - 6, Line 12 (2,529,503) (1,410,000) (2,222,000) (3,529,546) (412,120) (1,144,664) (840,808) (2,176,116) (868,430) - (470,285) 13 Transfers Out Sch A - 4, Line 5 (276,700) (283,618) (540,708) (1,397,976) (955,425) (1,313,061) (1,420,888) (828,910) (1,737,133) (1,045,561) (854,200) 14 Non Operating Expenses Sch A - 4, Line 3 - - - - - - - - - - - 15 Existing Revenue Bond Debt Service Sch A - 4, Line 6 - - - - - - - - - - - 16 New Revenue Bond Debt Service Sch A - 4, Line 7 - - - (2,033,241) (2,033,241) (2,033,241) (2,033,241) (2,033,241) (2,033,241) (2,033,241) (2,033,241)

17 Net Cash Flow (1,968,254)$ 1,044,790$ 1,280,581$ (1,228,715)$ 1,756,529$ 930,230$ 1,374,737$ 887,673$ 1,550,884$ 3,384,812$ 3,396,497$

18 Ending Unrestricted Fund Balance 340,817$ 1,385,607$ 2,666,188$ 1,437,473$ 3,194,002$ 4,124,232$ 5,498,968$ 6,386,641$ 7,937,525$ 11,322,337$ 14,718,834$ 19 Months of O&M and R&R Capital 2 7 12 6 11 13 17 20 24 33 42

20 Target Unrestricted Fund Balance Target 1,207,843 1,240,591 1,303,349 1,367,973 1,814,045 1,853,088 1,902,736 1,954,024 2,006,236 2,060,162 2,115,687

Debt Service Coverage Calculations:Revenue Bond Debt Service Coverage

Rate Covenant Debt Service Coverage Test:21 Net Revenue Available for Debt Service Coverage Test 837,949$ 2,738,408$ 4,043,289$ 5,732,047$ 5,157,315$ 5,421,196$ 5,669,673$ 5,925,940$ 6,189,687$ 6,463,613$ 6,754,223$

Revenue Bond Debt Service:22 Existing Revenue Bond Debt Service - - - - - - - - - - - 23 New Revenue Bond Debt Service - - - 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 24 Total Revenue Bond Debt Service -$ -$ -$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 25 Debt Service Coverage - Rate Covenant - - - 1.97 1.78 1.87 1.95 2.04 2.13 2.23 2.33 26 Debt Service Coverage Requirement 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25

Parity Debt Service Coverage Test:27 Net Revenue Available for Debt Service Coverage Test 837,949$ 2,738,408$ 4,043,289$ 5,732,047$ 5,157,315$ 5,421,196$ 5,669,673$ 5,925,940$ 6,189,687$ 6,463,613$ 6,754,223$ 28 Maximum Revenue Bond Debt Service - - - - - - - - - - - 29 Debt Service Coverage - Parity Test - - - - - - - - - - - 30 Debt Service Coverage Requirement 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25

SRF Debt Service Coverage TestSRF Test:

31 Net Revenue Available for Debt Service Coverage Test 837,949$ 2,738,408$ 4,043,289$ 5,732,047$ 5,157,315$ 5,421,196$ 5,669,673$ 5,925,940$ 6,189,687$ 6,463,613$ 6,754,223$ Less:

32 Existing Revenue Bond Debt Service -$ -$ -$ (2,904,629)$ (2,904,629)$ (2,904,629)$ (2,904,629)$ (2,904,629)$ (2,904,629)$ (2,904,629)$ (2,904,629)$ 33 Net Revenue Available for SRF Debt Service Coverage Test 837,949$ 2,738,408$ 4,043,289$ 2,827,418$ 2,252,686$ 2,516,567$ 2,765,044$ 3,021,311$ 3,285,058$ 3,558,984$ 3,849,594$ 34 Existing SRF Debt Service -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 35 New SRF Debt Service - - - - - - - - - - - 36 Total SRF Debt Service - - - - - - - - - - - 37 Debt Service Coverage - SRF Test - - - - - - - - - - - 38 Debt Service Coverage Requirement 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15

PIF39 Beginning Balance Sch A - 2, Line 26 317,930$ 379,930$ 205,417$ 25,638$ 74,188$ 83,058$ 27,989$ 228,734$ 95,581$ 113,306$ 184,921$ 40 Sources of Funds Sch A - 3, Line 14 60,000 223,487 475,722 1,327,979 880,259 1,232,561 1,334,887 737,236 1,639,608 942,004 744,424 41 Interest Earnings Calc 2,000 2,000 1,000 - - - - 1,000 - 1,000 1,000 42 Uses of Funds other Than Major Capital Sch A - 4, Line 12 - - - - - - - - - - -

New Revenue Bond Debt Service - - - (871,389) (871,389) (871,389) (871,389) (871,389) (871,389) (871,389) (871,389) 43 Major Capital Funded with PIF Sch A - 6, Line 11 - (400,000) (656,500) (408,040) - (416,242) (262,753) - (750,495) - - 44 Ending Balance 379,930$ 205,417$ 25,638$ 74,188$ 83,058$ 27,989$ 228,734$ 95,581$ 113,306$ 184,921$ 58,956$

City of DurangoPro Forma with Debt Service Coverage and Fund Balance Reconciliation

Prepared by Willdan Financial Services Sewer Utility B-1

BEGINNING BALANCES

Line No: Operations PIF 1 Current assets:2 Cash and Investments 703,400$ 142,438$ 3 Customer Receivable 184,355 78,063 4 Unbilled Customer Receivable 136,466 82,952 5 Interest Receivable 1,639 997 6 Accounts Receivable 27,892 16,954 7 Mercy Housing PIF's Note 9,754 8 Mercy Housing Goeglein PIF's Note 13,993 9 Inventory 4,640 2,820

10 EIF Grant Funds 1,268,715 11 Due From Other Funds 63,946 15,122 12 Total Current Assets 2,391,052$ 363,096$

Current Liabilities:13 Accounts and contracts payable 25,273$ 13,515$ 14 Compensated absences 35,302 21,459 15 Accrued Payroll 16,767 10,192 16 Total Current Liabilities 77,342$ 45,166$

Adjustments by JV:17 Removal of Inventories (Not Liquid) (4,640)

Other Assets (Unkown Cash) -

18 Net Adjustments (4,640)$ -$

19 Net Beginning Balances (Curr Assets less Current Liabilities - with Adjustments) 2,309,071$ 317,930$

City of DurangoBeginning Fund Balance Reconciliation


Line No:1 Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242 RR1 Rate Revenue 1 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,170,035$ 10,543,812$ 10,928,472$ 3 RR10 Rate Revenue 10 - - - - - - - - - - - 4 OR Other Operating Revenue 41,235 125 125 125 125 125 125 125 125 125 125 5 TRIN Transfers In - - - - - - - - - - - 6 Sources - Fund 2 Sources of Funds - Fund 2 60,000 223,487 475,722 1,327,979 880,259 1,232,561 1,334,887 737,236 1,639,608 942,004 744,424 7 Sources - Fund 3 Sources of Funds - Fund 3 - - - - - - - - - - - 8 INT - Fund 1 Interest Earnings - Fund 1 15,569 2,000 1,000 - 1,000 - 1,000 1,000 1,000 1,000 1,000 9 INT - Fund 2 Interest Earnings - Fund 2 2,000 2,000 1,000 - 1,000 - 1,000 1,000 1,000 1,000 1,000 10 INT - Fund 3 Interest Earnings - Fund 3 - - - - - - - - - - -

11 Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 202412 Operations

13

RR1 - BEFORE GROWTH AND RATE

INCR Rate Revenue 1 3,200,400$ 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,170,035$ 10,543,812$ 14 RR1 - Growth Growth 0.00% 1.89% 1.86% 1.82% 1.79% 1.76% 1.73% 1.70% 1.67% 1.64% 1.62%15 Revenue Increase 0.00% 60.00% 25.00% 25.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%16 Pct of Year Revenue Increase Effective 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%17 RR1 Total Rate Revenue 1 - After Revenue Increase 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,170,035$ 10,543,812$ 10,928,472$

For Use In Rate Design Section - Do Not Alter: 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 202418 Total Rate Revenue - w/ Partial Year Rate Increase (as applicable) 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,170,035$ 10,543,812$ 10,928,472$ 19 Total Rate Revenue - w/ Full Year Rate Increase 3,200,400$ 5,217,465$ 6,642,863$ 8,454,868$ 8,778,280$ 9,111,247$ 9,454,021$ 9,806,862$ 10,543,812$ -$ -$ 20 Total Full Year Operating Revenue Requirement 3,253,635 5,219,590 6,649,988 8,467,993 8,785,405 9,127,372 9,475,146 9,833,987 10,575,937 40,125 57,125

21 OR Other Revenue 125 125 125 125 125 125 125 125 125 125 125 22 OR Loan - Principal 40,000 - - - - - - - - - - 23 OR Loan - Interest 1,110 - - - - - - - - - - 24 OR Sale of Fixed Assets - - - - - - - - - - -

25 Interest Earning Calculation26 Average Balance 233,000$ 195,000$ 77,000$ 33,000$ 52,000$ 37,000$ 86,000$ 108,000$ 70,000$ 99,000$ 81,000$ 27 Assumed Interest Earnings Rate 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%28 INT - Fund 1 Projected Interest Earnings 15,569$ 2,000$ 1,000$ -$ 1,000$ -$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$

29 PIF

30 Operating Revenue 60,000 223,487 225,722 227,979 230,259 232,561 234,887 237,236 239,608 242,004 244,424 31 Non Operating Revenue - - - - - - - - - - - 32 Transfers In - - 250,000 1,100,000 650,000 1,000,000 1,100,000 500,000 1,400,000 700,000 500,000 33 Sources - Fund 2 Total Sources 60,000 223,487 475,722 1,327,979 880,259 1,232,561 1,334,887 737,236 1,639,608 942,004 744,424

34 Interest Earnings Calculation35 Average Balance 233,000$ 195,000$ 77,000$ 33,000$ 52,000$ 37,000$ 86,000$ 108,000$ 70,000$ 99,000$ 81,000$ 36 Assumed Interest Earnings Rate 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%37 INT - Fund 2 Projected Interest Earnings 2,000$ 2,000$ 1,000$ -$ 1,000$ -$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$

City of DurangoRevenue

Summary

Detail


Line No:

1FUND

# Expense Code Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242 1 Operating Operating 2,415,686$ 2,481,182$ 2,606,699$ 2,735,946$ 3,628,090$ 3,706,176$ 3,805,473$ 3,908,047$ 4,012,473$ 4,120,324$ 4,231,374$ 3 1 Non Operating Non Operating - - - - - - - - - - - 4 1 Minor Capital Minor Capital - - - - - - - - - - - 5 1 Transfers Transfers 276,700 283,618 540,708 1,397,976 955,425 1,313,061 1,420,888 828,910 1,737,133 1,045,561 854,200 6 1 Existing Bond Debt Service Existing Bond Debt Service - - - - - - - - - - -

1 New Bond Debt Service New Bond Debt Service - - - 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 1 Existing SRF Debt Service Existing SRF Debt Service - - - - - - - - - - - 1 New SRF Debt Service New SRF Debt Service - - - - - - - - - - -

7 TOTAL 2,692,386 2,764,800 3,147,407 7,038,551 7,488,144 7,923,866 8,130,990 7,641,586 8,654,235 8,070,514 7,990,203


Annual Expense


9 Detail

10 Sewer Administration11 1 Sewer - Admin Personnel Operating 3.0% Salaries 126,830 130,635 134,554 138,591 142,749 147,031 151,442 155,985 160,665 165,485 170,450 12 1 Sewer - Admin Personnel Operating 3.0% Overtime 800 824 849 874 900 927 955 984 1,013 1,044 1,075 13 1 Sewer - Admin Personnel Operating 3.0% Insurance 18,914 19,481 20,066 20,668 21,288 21,927 22,584 23,262 23,960 24,679 25,419 14 1 Sewer - Admin Personnel Operating 3.0% Retirement 14,295 14,724 15,166 15,621 16,089 16,572 17,069 17,581 18,109 18,652 19,211 15 1 Sewer - Admin Personnel Operating 3.0% Medicare 1,851 1,907 1,964 2,023 2,083 2,146 2,210 2,276 2,345 2,415 2,488 16 1 Sewer - Admin Operating Operating 2.5% Office Supplies 1,300 1,333 1,366 1,400 1,435 1,471 1,508 1,546 1,585 1,625 1,666 17 1 Sewer - Admin Operating Operating 2.5% Other Supplies 2,066 2,118 2,171 2,225 2,281 2,338 2,396 2,456 2,517 2,580 2,645 18 1 Sewer - Admin Operating Operating 2.5% Other Contracted Services 17,000 17,425 17,861 18,308 18,766 19,235 19,716 20,209 20,714 21,232 21,763 19 1 Sewer - Admin Operating Operating 2.5% Book, News & Peridicals 200 205 210 215 220 226 232 238 244 250 256 20 1 Sewer - Admin Operating Operating 2.5% Postage 8,300 8,508 8,721 8,939 9,162 9,391 9,626 9,867 10,114 10,367 10,626 21 1 Sewer - Admin Operating Operating 2.5% Auto Allowance & Mileage 1,800 1,845 1,891 1,938 1,986 2,036 2,087 2,139 2,192 2,247 2,303 22 1 Sewer - Admin Operating Operating 2.5% Professional Development and Travel 4,300 4,408 4,518 4,631 4,747 4,866 4,988 5,113 5,241 5,372 5,506 23 1 Sewer - Admin Operating Operating 2.5% Cell Phone Stipend 510 523 536 549 563 577 591 606 621 637 653

Sewer Collections29 1 Sewer - Coll Personnel Operating 3.0% Salaries 250,555 258,072 304,057 351,422 381,087 392,519 404,295 416,424 428,917 441,785 455,039 30 1 Sewer - Coll Personnel Operating 3.0% Overtime 22,950 23,639 27,851 32,189 34,906 35,953 37,032 38,143 39,287 40,466 41,680 31 1 Sewer - Coll Personnel Operating 3.0% Insurance 72,509 74,684 87,992 101,699 110,284 113,592 117,000 120,510 124,126 127,850 131,685 32 1 Sewer - Coll Personnel Operating 3.0% Retirement 30,633 31,552 37,174 42,965 46,592 47,990 49,429 50,912 52,440 54,013 55,633 33 1 Sewer - Coll Personnel Operating 3.0% Medicare 3,966 4,085 4,813 5,563 6,032 6,213 6,400 6,592 6,789 6,993 7,203 34 1 Sewer - Coll Operating Operating 2.5% Clothing and Uniforms 4,800 4,920 5,043 5,169 5,298 5,430 5,566 5,705 5,848 5,994 6,144 35 1 Sewer - Coll Operating Operating 2.5% Fuel 13,000 13,325 13,658 13,999 14,349 14,708 15,076 15,453 15,839 16,235 16,641 36 1 Sewer - Coll Operating Operating 2.5% Hand Tools 2,000 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 37 1 Sewer - Coll Operating Operating 2.5% Repair Parts & Materials 43,500 44,588 45,703 46,846 48,017 49,217 50,447 51,708 53,001 54,326 55,684 38 1 Sewer - Coll Operating Operating 2.5% Traffic Control Devices 2,000 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 39 1 Sewer - Coll Non Operating Non Operating 2.5% Inventory Writeoff - - - - - - - - - - - 40 1 Sewer - Coll Operating Operating 2.5% Other Supplies 7,000 7,175 7,354 7,538 7,726 7,919 8,117 8,320 8,528 8,741 8,960 41 1 Sewer - Coll Operating Operating 2.5% Other Contracted Services 10,000 10,250 10,506 10,769 11,038 11,314 11,597 11,887 12,184 12,489 12,801 42 1 Sewer - Coll Operating Operating 2.5% Software Maintenance 3,340 3,424 3,510 3,598 3,688 3,780 3,875 3,972 4,071 4,173 4,277 43 1 Sewer - Coll Operating Operating 2.5% Professional Development and Travel 1,880 1,927 1,975 2,024 2,075 2,127 2,180 2,235 2,291 2,348 2,407 44 1 Sewer - Coll Electricity Operating 4.0% Utilities - Electric 23,000 23,920 24,877 25,872 26,907 27,983 29,102 30,266 31,477 32,736 34,045 45 1 Sewer - Coll Operating Operating 2.5% Utilities - Telephone 14,252 14,608 14,973 15,347 15,731 16,124 16,527 16,940 17,364 17,798 18,243 46 1 Sewer - Coll Operating Operating 2.5% Cell Phone Stipend 1,050 1,076 1,103 1,131 1,159 1,188 1,218 1,248 1,279 1,311 1,344 47 1 Sewer - Coll Operating Operating 2.5% Vehicle Rent & Maintenance 153,085 156,912 160,835 164,856 168,977 173,201 177,531 181,969 186,518 191,181 195,961 48 1 Sewer - Coll Operating Operating 2.5% Rentals 1,000 1,025 1,051 1,077 1,104 1,132 1,160 1,189 1,219 1,249 1,280 49 1 Sewer - Coll Operating Operating 2.5% Repair & Maintenance 45,000 46,125 47,278 48,460 49,672 50,914 52,187 53,492 54,829 56,200 57,605 50 1 Sewer - Coll Other Capital Operating 0.0% Other Capital 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000

Sewer Treatment51 1 Sewer - Treat Personnel Operating 3.0% Salaries 410,704 423,025 435,716 448,787 462,251 476,119 490,403 505,115 520,268 535,876 551,952 52 1 Sewer - Treat Personnel Operating 3.0% Overtime 7,500 7,725 7,957 8,195 8,441 8,695 8,955 9,224 9,501 9,786 10,079 53 1 Sewer - Treat Personnel Operating 3.0% Insurance 79,268 81,646 84,095 86,618 89,217 91,893 94,650 97,490 100,414 103,427 106,530 54 1 Sewer - Treat Personnel Operating 3.0% Retirement 46,839 48,244 49,692 51,182 52,718 54,299 55,928 57,606 59,334 61,114 62,948 55 1 Sewer - Treat Personnel Operating 3.0% Medicare 5,955 6,134 6,318 6,507 6,702 6,903 7,111 7,324 7,544 7,770 8,003 56 1 Sewer - Treat Chemicals Operating 3.6% Chemicals & Lab Supplies 41,500 42,994 44,542 46,146 47,807 49,528 51,311 53,158 55,072 57,055 59,109 57 1 Sewer - Treat Operating Operating 2.5% Janitorial Supplies 1,000 1,025 1,051 1,077 1,104 1,132 1,160 1,189 1,219 1,249 1,280 58 1 Sewer - Treat Operating Operating 2.5% Clothing and Uniforms 2,000 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 59 1 Sewer - Treat Operating Operating 2.5% Fuel 2,000 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 60 1 Sewer - Treat Operating Operating 2.5% Hand Tools 1,800 1,845 1,891 1,938 1,986 2,036 2,087 2,139 2,192 2,247 2,303 61 1 Sewer - Treat Operating Operating 2.5% Painting Supplies 650 666 683 700 718 736 754 773 792 812 832 62 1 Sewer - Treat Operating Operating 2.5% Repaiir Parts & Materials 85,000 87,125 89,303 91,536 93,824 96,170 98,574 101,038 103,564 106,153 108,807 63 1 Sewer - Treat Operating Operating 2.5% Other Supplies 8,000 8,200 8,405 8,615 8,830 9,051 9,277 9,509 9,747 9,991 10,241 64 1 Sewer - Treat Operating Operating 2.5% Other Contracted Services 293,000 300,325 307,833 315,529 323,417 331,502 339,790 348,285 356,992 365,917 375,065 65 1 Sewer - Treat Operating Operating 2.5% Software Maintenance 1,640 1,681 1,723 1,766 1,810 1,855 1,901 1,949 1,998 2,048 2,099 66 1 Sewer - Treat Operating Operating 2.5% Book, News & Peridicals 700 718 736 754 773 792 812 832 853 874 896 67 1 Sewer - Treat Operating Operating 2.5% Postage 3,500 3,588 3,678 3,770 3,864 3,961 4,060 4,162 4,266 4,373 4,482 68 1 Sewer - Treat Operating Operating 2.5% Dues and Memberships 500 513 526 539 552 566 580 595 610 625 641 69 1 Sewer - Treat Operating Operating 2.5% Professional Development and Travel 5,000 5,125 5,253 5,384 5,519 5,657 5,798 5,943 6,092 6,244 6,400 70 1 Sewer - Treat Electricity Operating 4.0% Utilities - Electric 151,500 157,560 163,862 170,416 177,233 184,322 191,695 199,363 207,338 215,632 224,257 71 1 Sewer - Treat Operating Operating 2.5% Utilities - Telephone 1,000 1,025 1,051 1,077 1,104 1,132 1,160 1,189 1,219 1,249 1,280 72 1 Sewer - Treat Operating Operating 2.5% Cell Phone Stipend 2,050 2,101 2,154 2,208 2,263 2,320 2,378 2,437 2,498 2,560 2,624 73 1 Sewer - Treat Operating Operating 2.5% Vehicle Rent & Maintenance 11,090 11,367 11,651 11,942 12,241 12,547 12,861 13,183 13,513 13,851 14,197 74 1 Sewer - Treat Operating Operating 2.5% Rentals 1,000 1,025 1,051 1,077 1,104 1,132 1,160 1,189 1,219 1,249 1,280 75 1 Sewer - Treat Operating Operating 2.5% Repair & Maintenance 80,000 82,000 84,050 86,151 88,305 90,513 92,776 95,095 97,472 99,909 102,407 76 1 Sewer - Treat Other Capital Operating 0.0% Other Capital 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 77 1 Sewer - Treat Operating Operating 0.0% Annual O&M Costs from WWTP Upgrade - - - - 788,100 788,100 807,000 826,800 846,000 866,100 886,800

Non-Departmental78 1 Sewer - Admin Personnel Operating 3.0% Unemployment 22,150 22,815 23,499 24,204 24,930 25,678 26,448 27,241 28,058 28,900 29,767 79 1 Sewer - Admin Personnel Operating 3.0% Liability Insurance 29,376 30,257 31,165 32,100 33,063 34,055 35,077 36,129 37,213 38,329 39,479 80 1 Sewer - Admin Operating Operating 2.5% Salary Contingency 69,278 71,010 72,785 74,605 76,470 78,382 80,342 82,351 84,410 86,520 88,683

81 1 Sewer - Admin Transfers Transfers 2.5% Interfund Transfer 276,700 283,618 290,708 297,976 305,425 313,061 320,888 328,910 337,133 345,561 354,200 82 1 Sewer - Admin Non Operating Non Operating 2.5% Transfer to Capital Projects Fund - - - - - - - - - - - 83 1 Sewer - Admin Non Operating Non Operating 0.0% Transfer to Repair and Replacement Fund - - - - - - - - - - - 84 1 Sewer - Admin Transfers Transfers 0.0% Loan to Plant Investment Fee Fun - - 250,000 1,100,000 650,000 1,000,000 1,100,000 500,000 1,400,000 700,000 500,000

City of DurangoExpenses Other than Major Capital Expenses


Detail

Operations


Line No: Service Function Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Capital Projects

1 Sewer Sewer Collection Lift Station Replacement $204,556 $300,000 $0 $0 $206,060 $260,151 $210,202 $0 $246,591 $0 $251,5482 Sewer Sewer Collection PIF New Lightner Creek Lift Station (To handle Twin Buttes) - - 252,500 - - - - - - - - 3 Sewer Sewer Collection LiftStation Generators 707,008 - 202,000 265,226 - - - - - - - 4 Sewer Sewer Collection In-Situ Sewer Line Replacement and MH Rehabilitation 56,284 - 202,000 204,020 206,060 - 210,202 - 214,427 - 218,737 5 Sewer Sewer Collection In-Situ Sewer Line Replacement and MH Rehabilitation - 300,000 - - - - - - - - - 6 Sewer Sewer Collection PIF 160 West Sewer Line Capacity Assurance (To handle Twin Buttes) - 400,000 404,000 408,040 - - - - - - - 7 Sewer Sewer Collection Fiber upgrade and expansion - - - - - 52,030 52,551 53,076 - - - 8 Sewer Sewer Collection Collection System Flow Monitoring and Control System (Flow Meters. I/I) - - - - - 52,030 105,101 106,152 - - - 9 Sewer Sewer Collection Limited Storage Liftstation/Emergecny Vaults - - - - - 156,091 157,652 106,152 107,214 - - 10 Sewer Sewer Collection Sewer Inflow Study - - - - - 208,121 - - - - - 11 Sewer Sewer Collection PIF Sewer Pipeline River Crossing Reliability Program & Replacements - - - - - 416,242 262,753 - 750,495 - - 12 Sewer Sewer Collection Main Avenue Sewer Main Replacment Design Phase - - 151,500 - - - - - - - - 13 Sewer Sewer Collection Main Avenue Sewer Main Rehabilitation Construction Phase - - - 2,550,250 - - - - - - - 14 Sewer Sewer Treatment SRWWTP Replace Roofs & Skylights all WWTP Buildings 187,181 - - - - - - - - - - 15 Sewer Sewer Treatment SRWWTP Instrumentation and Process Automation 14,974 - - - - - - - - - - 16 Sewer Sewer Treatment SRWWTP Primary Clarifier 1 Rehabilitation, Lining & Cover 200,000 - 151,500 - - - - - - - - 17 Sewer Sewer Treatment SRWWTP Primary Clarifier 1 Rehabilitation, Lining & Cover - 400,000 - - - - - - - - - 18 Sewer Sewer Treatment SRWWTP Process Revisions/Expansion Nutrient Regs 1,159,500 - - - - - - - - - -

19 Sewer Sewer Treatment SRWWTP Process Revisions and Expansion Design and Engineering Related toCurrent Permit Requirements - 230,000 1,515,000 510,050 - - - - - - -

20 Sewer Sewer Treatment SRWWTP Process Revisions and Expansion Design and Engineering Related toCurrent Permit Requirements - - - - - - - - - - -

21 Sewer Sewer Treatment SRWWTP Process Revisions and Expansion Construction Related to Current PermiRequirements - - - 2,040,200 19,575,719 19,771,476 - - - - -

22 Sewer Sewer Treatment SRWWTP Process Revisions and Expansion Design and Engineering Related toMeet Regulation 85 - - - - - - - - - - -

23 Sewer Sewer Treatment SRWWTP Process Revisions and Expansion Construction Related to MeeRegulation 85 - - - - - - - - - - -

24 Sewer Sewer Treatment SRWWTP Old Meter Lab Renovations and Site Improvements - - - - - 104,060 - - - - - 25 Sewer Sewer Treatment SRWTWTP Rehab/Enclose Aeration Basins and Final Treatment - - - - - 104,060 - - 107,214 - - 26 Sewer Sewer Treatment SRWWTP Inlet Sewer Pipeline Improvements - - - - - 208,121 - - - - - 27 Sewer Sewer Treatment SRWWTP Suspended Solids Removal Process (Plate Settlers) - - - - - - 105,101 106,152 - - - 28 Sewer Sewer Treatment SRWWTP Cogeneration Expansion - - - - - - - 212,304 192,984 - - 29 Sewer Sewer Treatment SRWWTP Solar Panels/Power - - - - - - - 1,592,280 - - - 30 Sewer Sewer Treatment SRWWTP Rehab Digester Outer Walls (Concrete replacement) - 180,000 - - - - - - - - -

Total 2,529,503$ 1,810,000$ 2,878,500$ 5,977,786$ 19,987,839$ 21,332,382$ 1,103,561$ 2,176,116$ 1,618,924$ -$ 470,285$

City of DurangoSchedule A - 5

CIP (Inflated)


New Debt ServiceRevenue Bond Debt Service

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Annual New Debt Required -$ -$ -$ 41,387,395$ -$ -$ -$ -$ -$ -$ -$

Fiscal Year

Term (Yrs) Rate

Issuance Costs

Capital Project Proceeds Required

Issuance Costs

Total Debt Required 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

2014 30 5.5% 2.0% -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 2015 30 5.5% 2.0% - - - - - - - - - - - - - - 2016 30 5.5% 2.0% - - - - - - - - - - - - - - 2017 30 5.5% 2.0% 41,387,395 827,748 42,215,143 - - - 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2,904,629 2018 30 5.5% 2.0% - - - - - - - - - - - - - - 2019 30 5.5% 2.0% - - - - - - - - - - - - - - 2020 30 5.5% 2.0% - - - - - - - - - - - - - - 2021 30 5.5% 2.0% - - - - - - - - - - - - - - 2022 30 5.5% 2.0% - - - - - - - - - - - - - - 2023 30 5.5% 2.0% - - - - - - - - - - - - - - 2024 30 5.5% 2.0% - - - - - - - - - - - - - -

Cumulative Annual New Bond Debt Service -$ -$ -$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$ 2,904,629$


Allocation to Base Extra Capacity - Water

Line No: Reference Water Costs Base Max Day Max HourMeters & Services Billing & Collection Total

1 Water - SOS Sch B-2, Col. B, Line 1 14,249$ 14,249$ -$ -$ -$ -$ 14,249$ - 2 Water - Pump Sch B-2, Col. B, Line 2 334,889 184,189 150,700 - - - 334,889 - 3 Water - Treat Sch B-2, Col. B, Line 3 1,045,006 574,753 470,253 - - - 1,045,006 - 4 Water - T&D Sch B-2, Col. B, Line 4 944,338 327,146 330,518 286,674 - - 944,338 - 5 Water - CS Sch B-2, Col. B, Line 5 195,397 - - - 97,698 97,698 195,397 - 6 Water - Admin Sch B-2, Col. B, Line 6 530,220 265,110 - - 132,555 132,555 530,220 - 7 Water - CIP 2,955,000 2,364,000 - - 591,000 - 2,955,000 - 8 Water - Existing SRF DS Sch B-2, Col. B, Line 7 246,265 184,699 - - 61,566 - 246,265 - 9 New Bond DS - General Sch B-2, Col. B, Line 8 - - - - - - - -

10 Water - Transfers Sch B-2, Col. B, Line 8 407,266 305,450 - - 101,817 - 407,266 - 11 Non-Rate Revenue & Fund Balance (1,150,346) (574,177) (294,414) (88,706) (121,803) (71,247) (1,150,346) - 12 Total Sch B-2, Col. B, Line 15 5,522,284$ 3,645,419$ 657,058$ 197,968$ 862,833$ 159,006$ 5,522,284$ -$

13 Fixed Charge Component 862,833$ 159,006$ 1,021,839$ 18.50%14 Flow Charge Component 3,645,419$ 657,058$ 197,968$ 4,500,445$ 81.50%15 Total 3,645,419$ 657,058$ 197,968$ 862,833$ 159,006$ 5,522,284$ 100.00%

Unit Cost 9.73$ 1.79$

Allocation to Customer Class - Water - Annual Basis

16 Customer Class Total Annual FlowAverage Daily

Flow Base Capacity Factor Total Capacity Extra Capacity Capacity Factor Total Capacity Extra Capacity Total Costs17 SFR 432,591 1,185 311% 3,685 2,500 446% 5,291 4,106 18 Duplex 25,371 70 259% 180 111 372% 259 189 19 COM 594,073 1,628 244% 3,975 2,348 351% 5,708 4,081 20 Fort Lewis 21,938 60 179% 108 47 257% 154 94 21 Total 1,073,973 2,942 7,948 5,005 11,412 8,470

22 Allocated Costs 3,645,419$ 657,058$ 197,968$ 4,500,445$ 23 Billing Units 1,073,973 5,005 8,470 24 Rate 3.39$ 131.27$ 23.37$

25 Customer Class Total Annual FlowBase Costs Allocated to

Customer Class Extra Capacity

Max Day Costs Allocated to

Customer Class Extra Capacity

Max Hour Costs Allocated to Customer

Class Meters & ServicesBilling &

Collection

Total Base Extra Capacity Costs Allocated

to Customer Class

26 SFR 432,591 1,468,356$ 2,500 328,130$ 4,106 95,968$ 644,239$ 118,723$ 2,655,416$

27 Duplex 25,371 86,117 111 14,521$ 189 4,421$ 28,440$ 5,241$ 138,739$

28 COM 594,073 2,016,481 2,348 308,178$ 4,081 95,375$ 189,619$ 34,944$ 2,644,596$

29 Fort Lewis 21,938 74,465 47 6,229 94 2,205 535 99 83,533$

30 Total 1,073,973 3,645,419$ 5,005 657,058$ 8,470 197,968$ 862,833$ 159,006$ 5,522,284$

Maximum Day Maximum Hour

Schedule B - 3City of Durango

Allocation of Water Costs

Extra Capacity

Prepared by Willdan Financial Services Water Utility C-1

Line No: Reference / Notes:

1 Total Water Revenue Target Sch B-1, Col. B, Line 5,522,284$ 2 Percent from Fixed Charge 20% 19% From COS

3 Total Fixed Charge Revenue Requirement - Water 1,104,457$ 4 Total Equivalent Meters 88,661 5 Monthly Water Fixed Charge per Equivalent Meter 12.46$

Water Fixed Charge - By Meter Size

6 Meter SizeMeter

EquivalencyMonthly Water Fixed Charge

Multi Family Equiv. Factor

Outside Factor

7 0.625 1.00 12.46$ 0.75 1.25 8 0.75 1.50 18.69$ 9 1 2.50 31.15$ 10 1.5 5.00 62.30$ 11 2 8.00 99.68$ 12 3 15.00 186.90$ 13 4 25.00 311.50$ 14 6 50.00 623.00$ 15 8 80.00 996.80$ 16 10 120.00 1,495.20$

WaterI

Class --> SFR Duplex COM Fort Lewis Total Calculation of Equivalent Meters / Units - Inside

Meter Size Billing Basis--> Bills Bills Bills Bills Total Bills Equiv. Factor

Inside / Outside Factor

Equivalent Meters Units Equiv. Factor

Inside / Outside Factor Equivalent Units

0.625 55,916 2,849 15,260 24 74,049 74,049 1.00 1.00 74,049 - 0.75 1.00 - 0.75 3,411 49 86 - 3,546 3,546 1.50 1.00 5,319 - 0.75 1.00 -

1 1,602 - 269 12 1,883 1,883 2.50 1.00 4,708 - 0.75 1.00 - 1.5 37 - 73 - 110 110 5.00 1.00 550 - 0.75 1.00 - 2 61 - 122 - 183 183 8.00 1.00 1,467 - 0.75 1.00 - 3 12 - 98 - 110 110 15.00 1.00 1,651 - 0.75 1.00 - 4 12 - 24 - 37 37 25.00 1.00 917 - 0.75 1.00 - 6 - - - - - - 50.00 1.00 - - 0.75 1.00 - 8 - - - - - - 80.00 1.00 - - 0.75 1.00 -

10 - - - - - - 120.00 1.00 - - 0.75 1.00 - Total 5,088 241 1,328 3 79,918 79,918 88,661 - -

REVENUE TESTWater

I Calculation of Fixed Charge Revenue - InsideClass --> SFR Duplex COM Fort Lewis SFR Duplex COM Fort Lewis Total

Meter Size Billing Basis--> Bills Bills Bills Bills Bills Bills Bills Bills Total0.625 12.46$ 12.46$ 12.46$ 12.46$ 696,713$ 35,498$ 190,137$ 305$ 922,654$ 0.75 18.69$ 18.69$ 18.69$ 18.69$ 63,760 914 1,600 - 66,274

1 31.15$ 31.15$ 31.15$ 31.15$ 49,896 - 8,379 381 58,656 1.5 62.30$ 62.30$ 62.30$ 62.30$ 2,285 - 4,571 - 6,856 2 99.68$ 99.68$ 99.68$ 99.68$ 6,094 - 12,188 - 18,282 3 186.90$ 186.90$ 186.90$ 186.90$ 2,285 - 18,282 - 20,568 4 311.50$ 311.50$ 311.50$ 311.50$ 3,809 - 7,618 - 11,427 6 623.00$ 623.00$ 623.00$ 623.00$ - - - - - 8 996.80$ 996.80$ 996.80$ 996.80$ - - - - -

10 1,495.20$ 1,495.20$ 1,495.20$ 1,495.20$ - - - - - Total 824,843$ 36,413$ 242,776$ 686$ 1,104,716$

Total Fixed Charge Revenue - Calc'd 1,104,716$ Total Fixed Charge Revenue - Target 1,104,457$

Variance - $ 259$ Variance - % 0.02%

City of DurangoCalculation of Fixed Charge Rates/ Revenue - Water


Service Charge, $ per Bill Rate5/8" $12.463/4" 18.691" 31.151-1/2" 62.302" 99.683" 186.904" 311.506" 623.00

Single Family Residential

Block Winter Summer0 - 4,000 gallons $2.43 $2.434,001 - 10,000 gallons 3.65 4.0110,001 - 18,000 gallons 5.47 6.02Over 18,000 gallons 8.21 9.02

Duplex

Block Winter Summer0 - 5,000 gallons $2.42 $2.425,001 - 10,000 gallons 3.63 3.9910,001 - 18,000 gallons 5.45 5.99Over 18,000 gallons 8.17 8.98

Commercial

Block Winter Summer0 - 300,000 gallons $3.88 $3.88> 300,000 gallons 5.04 5.54

College

Block All Year> 0 gallons $3.85

Projected 2015 Water Rates


Allocation to Volume and Customer Service - Sewer

Sewer Costs Volume Capacity Strength - SS Strength -

BOD Strength - TKN Billing & Collection Customer Total Sewer - Coll Sch B-2, Col. C, Line 1 735,520$ 367,760$ 367,760$ -$ -$ -$ -$ -$ 735,520$

Sewer - Pump Sch B-2, Col. C, Line 2 - - - - - - - - - Sewer - Treat Sch B-2, Col. C, Line 3 1,361,196 680,598 680,598 - - - - - 1,361,196

Sewer - CS Sch B-2, Col. C, Line 4 - - - - - - - - - Sewer - Admin Sch B-2, Col. C, Line 5 595,670 - - - - - 297,835 297,835 595,670

Sewer - CIP Sch B-2, Col. C, Line 5 1,410,000 1,410,000 - - - - - - 1,410,000 Sewer - Existing SRF DS Sch B-2, Col. C, Line 5 - - - - - - - - -

Sewer - Transfers 276,700 221,360 - - - - 27,670 27,670 276,700 New Bond DS - General Sch B-2, Col. C, Line 7 - - - - - - - - -

Target Reserves 838,379 326,447 326,447 - - - 92,743 92,743 838,379 Total Sch B-2, Col. C, Line 15 5,217,465$ 3,006,165$ 1,374,805$ -$ -$ -$ 418,248$ 418,248$ 5,217,465$

Fixed Charge Component 300,616$ 137,480$ 418,248$ 418,248$ 1,274,592$ 24%Flow Charge Component 2,705,548$ 1,237,324$ -$ -$ -$ 3,942,873$ 76%

Total 3,006,165$ 1,374,805$ -$ -$ -$ 418,248$ 418,248$ 5,217,465$ 100%


Allocation of Sewer Costs

Prepared by Willdan Financial Services Sewer Utility D-1

SFR Duplex COM Fort Lewis Total SFR Duplex COM Fort Lewis Total SFR Duplex COM Fort Lewis Total

Meter Size Accounts Accounts Accounts Accounts Total Meter Size Accounts Accounts Accounts Accounts Total Meter Size Accounts Accounts Accounts Accounts Total

0.625 4,573 233 1,248 2 6,056 0.625 4,179 212 997 - 5,388 0.625 3,898 197 930 - 5,025

0.75 279 4 7 - 290 0.75 254 3 5 - 262 0.75 236 2 4 - 242

1 131 - 22 1 154 1 119 - 17 1 137 1 111 - 15 1 127

1.5 3 - 6 - 9 1.5 2 - 4 - 6 1.5 1 - 3 - 4

2 5 - 10 - 15 2 4 - 7 - 11 2 3 - 6 - 9

3 1 - 8 - 9 3 - - 6 - 6 3 - - 5 - 5

4 1 - 2 - 3 4 - - 1 - 1 4 - - - - -

6 - - - - - 6 - - - - - 6 - - - - -

8 - - - - - 8 - - - - - 8 - - - - -

10 - - - - - 10 - - - - - 10 - - - - -

Total 4,993 237 1,303 3 6,536 Total 4,558 215 1,037 1 5,811 Total 4,249 199 963 1 5,412

SFR Duplex COM Fort Lewis Total

Meter Size Accounts Accounts Accounts Accounts TotalInside City Outside City Total % outside 0.625 280 4 42 - 326

Water Res Customers 4,856 374 5,230 0.75 17 - - - 17

Water Comm Customers 1,225 81 1,306 1 7 - - - 7

Sewer Res Customers 4,459 321 4,780 6.7% 1.5 - - - - -

Sewer Comm Customers 999 45 1,044 4.3% 2 - - - - -

Sewer Res % of total 91.4% Total 6.3% 3 - - - - -

Sewer Com % of total 79.9% Duplex 2.4% Pulled from Consumption Data 4 - - - - -

Sewer % of Grand Total 89.1% 6 - - - - -

8 - - - - -

10 - - - - -

Total 304 4 42 - 350

Water Meter Accounts Sewer Meter Accounts Sewer Meter Accounts ‐ Inside

Sewer Meter Accounts ‐ Outside


Line No: Reference / Notes:

1 Total Sewer Revenue Target Sch B-1, Col. B, Line 15 5,217,465$ 2 Percent from Fixed Charge 20% 24% From COS3 Total Fixed Charge Revenue Requirement - Sewer 1,043,493$ 4 Total Equivalent Meters 78,873 5 Monthly Sewer Fixed Charge per Equivalent Meter 13.23$

Sewer Fixed Charge - By Meter Size

6 Meter SizeMeter

EquivalencyMonthly Sewer Fixed Charge Duplex Factor

Outside Factor

7 0.625 1.00 13.23$ 1.00 2.00 8 0.75 1.50 19.85$ 9 1 2.50 33.08$

10 1.5 5.00 66.15$ 11 2 8.00 105.84$ 12 3 15.00 198.45$ 13 4 25.00 330.75$ 14 6 50.00 661.50$ 15 8 80.00 1,058.40$ 16 10 120.00 1,587.60$

SewerI

Class --> SFR DUP COM Total Calculation of Equivalent Meters / Units - Inside

Meter Size Billing Basis--> Bills Units Bills Total BillsEquiv. Factor




Equivalent Units

0.625 46,399 2,364 11,160 59,923 57,559 1.00 1.00 57,559 2,364 1.00 1.00 2,364 0.75 2,809 24 48 2,881 2,857 1.50 1.00 4,286 24 1.00 1.00 24

1 1,321 - 192 1,513 1,513 2.50 1.00 3,783 - 1.00 1.00 - 1.5 12 - 36 48 48 5.00 1.00 240 - 1.00 1.00 - 2 36 - 72 108 108 8.00 1.00 862 - 1.00 1.00 - 3 - - 60 60 60 15.00 1.00 900 - 1.00 1.00 - 4 - - - - - 25.00 1.00 - - 1.00 1.00 - 6 - - - - - 50.00 1.00 - - 1.00 1.00 - 8 - - - - - 80.00 1.00 - - 1.00 1.00 - 10 - - - - - 120.00 1.00 - - 1.00 1.00 -

Total 50,577 2,388 11,568 64,533 62,145 67,629 2,388 2,388

SewerO

Class --> SFR DUP COM Total Calculation of Equivalent Meters / Units - Outside

Meter Size Billing Basis--> Bills Units Bills Total BillsEquiv. Factor




Equivalent Units

0.625 3,360 48 504 3,912 3,864 1.00 2.00 7,728 48 1.00 2.00 96 0.75 204 - - 204 204 1.50 2.00 612 - 1.00 2.00 -

1 84 - - 84 84 2.50 2.00 420 - 1.00 2.00 - 1.5 - - - - - 5.00 2.00 - - 1.00 2.00 - 2 - - - - - 8.00 2.00 - - 1.00 2.00 - 3 - - - - - 15.00 2.00 - - 1.00 2.00 - 4 - - - - - 25.00 2.00 - - 1.00 2.00 - 6 - - - - - 50.00 2.00 - - 1.00 2.00 - 8 - - - - - 80.00 2.00 - - 1.00 2.00 - 10 - - - - - 120.00 2.00 - - 1.00 2.00 -

Total 3,648 48 504 4,200 4,152 8,760 48 96

REVENUE TESTSewer

I Calculation of Fixed Charge Revenue - InsideClass --> SFR DUP COM SFR DUP COM Total

Meter Size Billing Basis--> Bills Units Bills Bills Units Bills Total0.625 13.23$ 13.23$ 13.23$ 613,858$ 31,276$ 147,647$ 792,780$ 0.75 19.85$ 13.23$ 19.85$ 55,762 318 953 57,032

1 33.08$ 13.23$ 33.08$ 43,707 - 6,351 50,059 1.5 66.15$ 13.23$ 66.15$ 787 - 2,381 3,169 2 105.84$ 13.23$ 105.84$ 3,780 - 7,620 11,400 3 198.45$ 13.23$ 198.45$ - - 11,907 11,907 4 330.75$ 13.23$ 330.75$ - - - - 6 661.50$ 13.23$ 661.50$ - - - - 8 1,058.40$ 13.23$ 1,058.40$ - - - - 10 1,587.60$ 13.23$ 1,587.60$ - - - -

Total 717,894$ 31,593$ 176,860$ 926,347$

SewerO Calculation of Fixed Charge Revenue - Outside

Class --> SFR DUP COM SFR DUP COM TotalMeter Size Billing Basis--> Bills Units Bills Bills Units Bills Total

0.625 26.46$ 26.46$ 26.46$ 88,906$ 1,270$ 13,336$ 103,512$ 0.75 39.70$ 26.46$ 39.70$ 8,099 - - 8,099

1 66.16$ 26.46$ 66.16$ 5,557 - - 5,557 1.5 132.30$ 26.46$ 132.30$ - - - - 2 211.68$ 26.46$ 211.68$ - - - - 3 396.90$ 26.46$ 396.90$ - - - - 4 661.50$ 26.46$ 661.50$ - - - - 6 1,323.00$ 26.46$ 1,323.00$ - - - - 8 2,116.80$ 26.46$ 2,116.80$ - - - - 10 3,175.20$ 26.46$ 3,175.20$ - - - -

Total 102,562$ 1,270$ 13,336$ 117,168$

Total Fixed Charge Revenue - Calc'd 1,043,515$ Total Fixed Charge Revenue - Target 1,043,493$

Variance - $ 22$ Variance - % 0.00%


Calculation of Fixed Charge Rates/ Revenue - Sewer


Calculation of Sewer Flow Charge RevenueLine No:

1 5,217,465$

2 (1,043,493)

3 4,173,972$ Outside City Multiplier 2.00

Development of Sewer Flow Rates

4Customer

Class ServiceInside

/Outside City Season

General Customer

Type Equivalent FlowDistribution

of FlowInside/Outside

Multiplier

Equivalent Distribution of

FlowRate Revenue

AllocationEquivalent Base Rate

5 SFR Sewer I All Res 140,650 26% 1.00 25% 1,035,410$ 7.36$ 6 SFR Sewer O All Res 10,331 2% 2.00 4% 152,106$ 14.72$ 7 DUP Sewer I All Dup 16,150 3% 1.00 3% 118,890$ 7.36$ 8 DUP Sewer O All Dup 580 0% 2.00 0% 8,539$ 14.72$ 8 COM Sewer I All Com 351,560 65% 1.00 62% 2,588,046$ 7.36$ 9 COM Sewer O All Com 18,405 3% 2.00 6% 270,981$ 14.72$

10 537,676 100% 4,173,972$ 7.76$

Development of Sewer Equivalent Flows

11Customer

Class ServiceInside


General Customer

Type Equivalent FlowElasticity Factor

Inside / Outside Factor Equivalent Flow

12 SFR Sewer I All Res 140,650 100% 1.00 140,650 13 SFR Sewer O All Res 10,331 100% 2.00 20,662 14 DUP Sewer I All Dup 16,150 100% 1.00 16,150 15 DUP Sewer I All Dup 580 100% 1.00 580 15 COM Sewer I All Com 351,560 100% 1.00 351,560 16 COM Sewer O All Com 18,405 100% 2.00 36,810

17 566,412 18 Total Flow Charge Revenue Target 4,173,972$ 19 Equivalent Flow Rate 7.37$

Rate Revenue Test

20Customer

Class ServiceInside


General Customer

Type Billable FlowElasticity Factor Billable Flow Flow Rate Revenue

21 SFR Sewer I All Res 140,650 100% 140,650 7.36$ 1,035,410$ 22 SFR Sewer O All Res 10,331 100% 10,331 14.72$ 152,106$ 23 DUP Sewer I All Dup 16,150 100% 16,150 7.36$ 118,890$ 24 DUP Sewer O All Dup 580 100% 580 14.72$ 8,539$ 25 COM Sewer I All Com 351,560 100% 351,560 7.36$ 2,588,046$ 26 COM Sewer O All Com 18,405 100% 18,405 14.72$ 270,981$

4,173,972$ 27 Target Sewer Flow Revenue 4,173,972$ 28 Variance (Due to Rounding) -$

Net to be Recovered with Flow Charges

Schedule B - 8

Total Sewer Rate Revenue Requirement

Less: Fixed Charge Requirement

City of DurangoCalculation of Flow Charge Rates / Revenue - Sewer


Inside OutsideService Charge, $ per Bill Rate Rate5/8" $13.23 $26.463/4" 19.85 39.701" 33.08 66.161-1/2" 66.15 132.302" 105.84 211.683" 198.45 396.904" 330.75 661.506" 661.50 1,323.00

Single Family Residential Inside Outside

Flows Rate Rate> 0 gallons $7.36 $14.72

DuplexInside Outside


CommercialInside Outside


Projected 2015 Sewer Rates


Table 2City of DurangoWastewater Plant Investment Fee ModelFixed Assets by Valuation Method

Asset No. Fixed Asset How AcquiredValuation

Date Original CostAccumulated Depreciation

Original Cost Less

DepreciationCCI Inflation

FactorReplacement

Cost New (RCN)

Equipment10484 AURORA PUMP -ISLAND COVE 1 2012 $9,260 $1,852 $7,408 1.01 $9,26010496 SEWER LIFT STN CONTROL UPGRADE 1 2012 63,065 25,226 37,839 1.01 63,06510497 BODO 1 LIFT STATION 1 2012 151,992 30,398 121,593 1.01 151,99210498 FISH HATCHERY LIFT STATION 1 2012 91,811 18,362 73,449 1.01 91,81110499 MCC REPLACEMENT 1 2012 195,188 30,007 165,181 1.01 195,1882738 WET WELL SEWAGE PUMPING STATN 1 1983 13,762 13,762 0 1.91 13,7624158 POWER FACTOR CORRECTION EQUIP 1 1991 11,894 11,894 0 1.90 11,8945261 SEWER TV INSPECTION SYSTEM 1 1999 58,000 58,000 0 1.57 58,0005344 AUTO DIALER ALARMS 1 1999 8,268 8,268 0 1.57 8,2685948 MINI MAINLINE CAMERA 1 2002 9,270 9,270 0 1.48 9,2706415 ROTATING ASSEMBLY 1 2007 7,463 7,463 0 1.23 7,4636442 PUMP 1 2009 6,933 6,933 0 1.11 6,9336443 PUMP 1 2009 6,933 6,933 0 1.11 6,933804 AIR COOLED DEUTZ DIESAL ENGINE 1 1988 13,117 13,117 0 1.99 13,117

9235 LAB EQUIPMENT 8 1979 7,573 7,573 0 2.57 7,5735412 2 - 5HP VARIABLE SPD DRIV CTLR 1 1994 10,106 10,106 0 1.76 10,1065414 7.5 HP VARIABLE SPD DRIVE CONT 1 1994 5,334 5,334 0 1.76 5,3344935 MICROSCOPE 1 1996 6,000 6,000 0 1.62 9,748

Land and Buildings9698 TONIOLLI RIGHT OF WAY-UTE PASS 1 2001 9,500 0 9,500 1.51 9,500

10558 WWTP DIGESTER ROOF REPAIRS 1 2013 31,560 1,578 29,982 1.00 31,56010560 WWTP ROOF IMPROVEMENTS 1 2013 60,026 3,001 57,024 1.00 60,0269448 REROOF WASTEWATER PLANT 1 1992 16,200 16,200 0 1.84 16,2009356 86 ADDS-INC STEPS, HVAC SYS,ET 3 1986 28,508 19,599 8,909 2.01 28,508

Infrastructure9174 LIFT STATION WEST SIDE 8 1968 6,906 6,906 0 6.10 42,1059179 COLLECTION SYSTEM 8 1963 26,424 26,424 0 7.82 206,5209182 60-2 8 1960 41,366 41,366 0 8.55 353,5089189 EASTER 2 ADDITION 8 1971 24,008 20,486 3,521 5.21 125,0879190 COLLECTION SYSTEM 8 1972 9,665 8,083 1,582 4.77 46,1459191 COLLECTION SYSTEM 8 1973 51,454 41,992 9,462 4.53 232,8709192 COLLECTION SYSTEM 8 1974 82,542 65,679 16,863 4.22 348,0309193 32ND STREET RIVER CROSS 8 1975 10,280 7,973 2,307 3.73 38,3789195 TALBERT NYE ADD/. 8 1975 17,655 13,694 3,961 3.73 65,9129196 3 LIFT STATION BODO RD. 8 1975 26,358 26,358 0 3.73 98,4049198 LITTLE RICHARDS 8 1976 14,700 11,104 3,596 3.32 48,7469200 TIMBERLINE ESTATES 8 1976 41,375 31,254 10,121 3.32 137,2019202 J C CAMPGROUND 8 1976 6,489 4,902 1,587 3.32 21,5189203 COLLECTION SYSTEM 8 1977 117,320 86,251 31,069 2.99 351,1019204 COLLECTION SYSTEM 8 1978 101,099 72,331 28,768 2.75 277,5789205 COLLECTION SYSTEM 8 1979 21,600 15,008 6,592 2.57 55,5339206 CITY ADDITIONS 8 1981 6,972 4,563 2,409 2.20 15,3419207 SUBDIVISION ADDITIONS 6 1981 89,635 58,668 30,967 2.20 197,2149248 GOEGLIN GULCH-8TH TO HILLCREST 6 1983 108,255 66,496 41,759 1.91 206,5789267 LA POSTA RD SLUDGE SITE 6 1983 47,929 47,929 0 1.91 91,4609298 SEWAGE LIFT STATION HILLCREST 6 1984 22,170 13,172 8,998 2.27 50,2569333 RAMADA LIFT STATION-CR203 1 1985 16,288 9,350 6,938 2.12 34,5879334 VFW LIFT STATION 1 1985 16,288 9,350 6,938 2.12 34,5879335 WESTSIDE LIFT STATION 1 1985 16,888 9,694 7,194 2.12 35,8619336 BODO LIFT STATION #1 1 1985 25,188 14,458 10,730 2.12 53,4859337 BODO LIFT STATION #2 1 1985 28,688 16,467 12,221 2.12 60,9179338 BODO LIFT STATION #3 1 1985 19,220 11,032 8,188 2.12 40,8129345 BODO LIFT STATION #4 1 1986 26,847 14,766 12,081 2.01 53,9639346 RED LION LIFT STATION 6 1986 25,000 13,750 11,250 2.01 50,2519589 RIO VISTA CIRCLE SEWER REALIGN 1 1996 49,983 17,646 32,337 1.62 81,2089601 PRESERVE APTS 6 1996 20,783 7,337 13,446 1.62 33,7669602 RECODO DEL RIO TWNHMS 6 1996 29,793 10,518 19,275 1.62 48,4059603 SONGBIRD III SUB 6 1996 35,475 12,524 22,951 1.62 57,6369604 SUNDANCER TOWNHOMES 6 1996 9,380 3,311 6,069 1.62 15,2409605 HENRY MOBILE PARK 6 1996 14,633 5,166 9,467 1.62 23,7749609 MERCY HOUSING PROJECT 6 1997 34,000 11,220 22,780 1.63 55,3049611 SUNSHINE GARDENS PROJECT 6 1997 32,886 10,852 22,034 1.63 53,4929613 SONGBIRD PHASE III 6 1997 35,880 11,840 24,040 1.63 58,3629616 FOREST AVE TOWNHOMES 6 1997 11,960 3,947 8,013 1.63 19,4549618 SHEPARD SUBDIVISION 6 1997 16,920 5,584 11,336 1.63 27,5229621 WILLIAMS ADDITION SEWER 6 1997 6,960 2,297 4,663 1.63 11,3219623 PTARMIGAN RIDGE 6 1997 35,360 11,669 23,691 1.63 57,5169625 HENRY MOBILE HOME PARK 6 1997 14,800 4,884 9,916 1.63 24,0739635 FLORID RD SEWER MAIN-OVERLAY 1 1997 35,499 11,821 23,679 1.63 57,7429640 4TH AVE MAIN REPLACEMENT 450FT 1 1998 41,500 12,986 28,514 1.58 65,3729642 HWY 160 RELOCATE-LIGHNTER CRK 1 1998 35,270 11,037 24,234 1.58 55,5599644 DGO TECH CENTER PHASE II 6 1998 17,835 5,581 12,254 1.58 28,0949658 CLUB DURANGO PHASE I 6 1999 42,882 12,436 30,446 1.57 67,1279661 FOREST TOWNHOME PROJECT 6 1999 12,915 3,745 9,170 1.57 20,2179664 ORCHARD TOWNHOMES 6 1999 22,092 6,407 15,685 1.57 34,5839667 SKYRIDGE PHASE I 6 1999 171,024 49,597 121,427 1.57 267,7209669 BUSSARD PROJECT-SEWER ADDS 6 2000 7,600 2,052 5,548 1.48 11,2279670 SONGBIRD SUB-SEWER ADDS 6 2000 34,250 9,248 25,003 1.48 50,597

Prepared by Willdan Financial Services Sewer Utility E-1




Original Cost Less


FactorReplacement

Cost New (RCN)9680 8TH AVE SEWER REPLACEMENT 1 2000 19,000 5,130 13,870 1.48 28,0699699 UTE PASS SEWER LINE EXTENSION 6 2001 271,642 67,911 203,732 1.51 410,2159700 STATE HWY 3 SEWER LINE-PHASE I 1 2001 238,201 59,550 178,651 1.51 359,7149701 2001 IN SITU SEWER PROJECT 1 2001 113,715 28,429 85,286 1.51 171,7249707 BROOKSTONE CONDOS 6 2001 10,000 2,500 7,500 1.51 15,1019783 AVENIDA DEL SOL SEWER REPLACE 1 2004 97,106 30,750 66,356 1.29 125,461

Transmission10135 SANITARY SEWER PIPE LINING 1 2006 88,951 16,678 72,273 1.23 109,61610136 SEWER MAIN THE VILLA'S DEVELOP 1 2006 327,525 65,505 262,020 1.23 403,61610139 SEWER MAIN LA CAMANELLA 700 LF 6 2006 34,500 6,469 28,031 1.23 42,51510141 SEWERMAINVILLASHILLCREST1204LF 6 2006 26,375 4,945 21,430 1.23 32,50310144 SEWER MAIN CRIMSONCLIFFS 704LF 6 2006 96,000 19,200 76,800 1.23 118,30310146 SEWER MAIN CLOVISJUNCTION385LF 6 2006 34,000 6,375 27,625 1.23 41,89910174 SEWER LINES LIGHTNER CREEK I 6 2007 83,398 14,595 68,803 1.23 102,18910175 SEWER LINES VILLA AT HILLCREST 6 2007 26,375 4,616 21,759 1.23 32,31810176 SEWER LINES CLOVIS JUNCTION 6 2007 34,500 6,038 28,463 1.23 42,27410200 SEWER LINES ELLA VITA CT 955LF 6 2007 66,000 10,725 55,275 1.23 80,87110229 VILLAS@HILLCREST 1160LF SEWER 6 2008 110,200 20,203 89,997 1.19 130,73610238 LIGHTNER CREEK SEWERMAIN1255LF 6 2008 119,225 21,858 97,367 1.19 141,44210257 LACAMPANELLA SEWER MAIN 960 LF 6 2008 45,425 8,328 37,097 1.19 53,89010260 CRIMSON CLIFF SEWERMAIN 1200LF 6 2008 106,042 19,441 86,601 1.19 125,80310262 CANYON TERRACE SEWERMAIN 700LF 6 2008 56,218 10,307 45,911 1.19 66,69410290 SEWER LINE 28TH/30TH 978 LF 1 2009 124,402 12,440 111,962 1.11 138,10510291 SEWER LINE NATURES OASIS1270LF 6 2009 283,080 28,308 254,772 1.11 314,26010292 SEWER LINE TIERRA VISTA 1042LF 6 2009 218,820 21,882 196,938 1.11 242,92210293 SEWER LINE CLOVIS JCT 386 LF 6 2009 81,060 8,106 72,954 1.11 89,98810294 SEWER LINE TANQUEVERDE 320 LF 6 2009 67,200 6,720 60,480 1.11 74,60210299 SEWER LINE TELLURIDEIRON 420LF 6 2009 38,786 3,879 34,907 1.11 43,05810302 SEWER LINE LA QUESTADR 1360 LF 6 2009 108,800 10,880 97,920 1.11 120,78410307 SEWER LINE JENKINSRESERVE1645F 6 2009 100,352 10,035 90,317 1.11 111,40510316 SEWER LINE MTN TRACE 3016 LF 6 2009 242,755 24,276 218,480 1.11 269,49310350 SEWER LINE DAKOTA WEST 6 2009 130,620 7,837 122,783 1.11 145,00710351 SEWER LINE MOUNTAIN TRACE 6 2009 592,200 35,532 556,668 1.11 657,42810352 SEWER LINE TIERRA VISTA VILLAG 6 2009 218,820 13,129 205,691 1.11 242,92210353 SEWER OUTFALL LINE REPLACEMENT 3 2009 798,854 71,897 726,957 1.11 886,84410354 SEWER LINE REPLACEMENT INSITU 1 2009 151,436 9,086 142,350 1.11 168,11610443 SEWER LINES BRAE SUBDIVISION 6 2010 37,200 4,340 32,860 1.10 40,9499173 TRUNK LINE 8 1960 227,449 227,449 0 8.55 1,943,7649186 MAINS 8 1970 24,104 21,139 2,965 5.10 122,9089197 SEWER LINE BODO RD. 8 1975 203,898 158,130 45,768 3.73 761,2249213 FLORIDA HEIGHTS 1035 FT OF 10 6 1982 18,630 11,818 6,812 2.04 38,0739214 FLORIDA HEIGHTS-4 MANHOLES 6 1982 6,000 3,806 2,194 2.04 12,2629246 BUTTERFIELD I - 762' OF 8 6 1983 13,716 8,425 5,291 1.91 26,1749247 BUTTERFIELD I - 4 MANHOLES 6 1983 6,000 3,654 2,346 1.91 11,4499249 TIMBERLINE REPLACEMENT-270' 6 1983 7,560 4,644 2,916 1.91 14,4269252 S CAMINO RELOCATN-958' OF 12 6 1983 18,289 11,234 7,055 1.91 34,9009253 S CAMINO RELOCATN-59' OF 8 6 1983 9,711 5,965 3,746 1.91 18,5319269 500' 8 SEWER BODO HEIGHTS OFF 6 1984 6,000 3,565 2,435 2.27 13,6019285 717' 8 SEWER-HERITAGE HILLS 6 1984 8,600 5,109 3,491 2.27 19,4959286 6 MANHOLES-HERITAGE HILLS 6 1984 7,200 4,278 2,922 2.27 16,3219293 2080' 10 SEWER-HILLCREST EST 6 1984 18,850 11,199 7,651 2.27 42,7309294 7503' 8 SEWER HILLCREST EST 6 1984 57,040 33,889 23,151 2.27 129,3019296 42 MANHOLES-HILLCREST ESTATES 6 1984 31,630 18,792 12,838 2.27 71,7019305 405' 8 SANITARY SEWER-12TH ST 1 1984 13,896 8,256 5,640 2.27 31,5009339 1437' 12 & 5 MANHOLES 1 1985 31,621 18,150 13,471 2.12 67,1459340 365' 8 AND 2 MANHOLES 1 1985 8,196 4,704 3,492 2.12 17,4049343 490' 8 AND 3 MANHOLES-DUKE 6 1985 12,313 7,067 5,246 2.12 26,1469344 412' 21 SEWER AND 2 MANHOLES 1 1985 24,320 13,959 10,361 2.12 51,6429347 363' 8 SEWER MAIN W/2 MANHOLE 6 1986 8,000 4,400 3,600 2.01 16,0809348 2851' 8 SEWER LINE W/12 MANHO 3 1986 62,063 34,135 27,928 2.01 124,7489359 420' 8 SEWER MAIN W/4 MANHOLE 6 1987 8,690 4,605 4,085 2.01 17,4499383 225' OF 8 SEWER MAIN 1 1988 5,700 2,907 2,793 1.99 11,3449395 200' OF 8 SEWER MAIN 1 1989 5,000 2,450 2,550 1.93 9,6689396 270' OF 8 SEWER MAIN 1 1989 6,500 3,185 3,315 1.93 12,5699397 650' 8 SEWER MAIN W/2 MANHOLE 1 1989 8,500 4,165 4,335 1.93 16,4369398 335' 8 SEWER MAIN W/3 MANHOLE 6 1989 8,600 4,214 4,386 1.93 16,6299415 1396' 10 SEWER MAIN 5 MANHOLE 1 1990 93,713 44,373 49,340 1.92 179,9019416 622' 8 SEWER MAIN 6 MANHOLES 6 1990 20,202 9,566 10,636 1.92 38,7829418 500' 8 SEWER MAIN 4 MANHOLES 6 1990 12,000 5,682 6,318 1.92 23,0369419 180' 8 SEWER MAIN 2 MANHOLES 6 1990 6,540 3,097 3,443 1.92 12,5559420 297' 8 SEWER MAIN 2 MANHOLES 6 1990 9,940 4,707 5,233 1.92 19,0829439 ASSORTED MAINS & 7 MANHOLES 1 1991 117,723 53,378 64,346 1.90 223,1269440 10680' 8 MAIN 38 MANHOLES 6 1991 154,739 70,161 84,578 1.90 293,2849441 FOLSOM SEWER MAIN 1 1991 36,287 16,453 19,834 1.90 68,7779457 1798' 12 MAIN, 7 MANHOLES 1 1992 155,542 67,402 88,140 1.84 285,7099459 1480' 8 MAIN, 8 MANHOLES 6 1992 20,453 8,863 11,590 1.84 37,5699514 488' 8 MAIN, 3 MANHOLES 6 1993 11,000 4,546 6,454 1.76 19,3079515 2533' 8 MAIN, 13 MANHOLES 6 1993 52,500 21,696 30,804 1.76 92,1489516 1520' 8 MAIN, 8 MANHOLES 6 1993 32,259 13,332 18,927 1.76 56,6219517 655' 10 MAIN, 4 MANHOLES 6 1993 22,000 9,092 12,908 1.76 38,6149518 910' 8 MAIN, 4 MANHOLES 6 1993 17,050 7,046 10,004 1.76 29,9269519 140' 8 MAIN, 1 MANHOLE 6 1993 5,115 2,114 3,001 1.76 8,978





Original Cost Less


FactorReplacement

Cost New (RCN)9520 765' 8 MAIN, 4 MANHOLES 6 1993 27,140 11,216 15,924 1.76 47,6369521 1115' 8 MAIN, 7 MANHOLES 6 1993 25,382 10,489 14,893 1.76 44,5509541 3180' 27 ,4180' 24 ,6889'21 1 1994 2,896,292 1,138,727 1,757,565 1.76 5,087,7039542 1050' 8 , 4 MANHOLES 1 1994 35,850 14,096 21,755 1.76 62,9759543 4300' 8 MAIN, 14 MANHOLES 6 1994 76,500 30,078 46,422 1.76 134,3829544 LIFT STAT. 2275'8 ,2264'8 MANH 1 1994 646,128 205,586 440,542 1.76 1,135,0059545 256' 8 MAIN, 3 MANHOLES 6 1994 11,668 4,588 7,080 1.76 20,4969546 590' 12 MAIN, 2 MANHOLES 1 1994 18,000 7,077 10,923 1.76 31,6199548 570' 8 MAIN, 3 MANHOLES 1 1994 18,000 7,077 10,923 1.76 31,6199573 281' 8 MAIN/2 MANHOLES 6 1995 8,182 3,053 5,129 1.72 14,0959574 1000' 8 MAIN/ 9 MANHOLES 6 1995 30,500 11,380 19,120 1.72 52,5419575 2916'-8 MAIN/13 MANHOLES 6 1995 75,694 28,242 47,452 1.72 130,3949576 795' 8 MAIN/ 5 MANHOLES 6 1995 22,092 8,243 13,849 1.72 38,0579578 220' 8 MAIN/ 2 MANHOLES 1 1995 6,730 2,511 4,219 1.72 11,5939580 1087'-8 MAIN/7 MANHOLES 6 1995 31,457 11,737 19,720 1.72 54,1899590 FLORIDA RD SEWER MAIN 1 1996 69,870 24,667 45,203 1.62 113,5189641 FOREST AVENUE MAIN 1 1998 55,035 17,061 37,974 1.58 86,6939650 ARROYO/W 2ND AVE MAIN 1 1999 464,122 134,595 329,526 1.57 726,5349697 SAN JUAN/ARROYO RELIEF MAIN 1 2001 83,500 20,875 62,625 1.51 126,0969705 O'BRIEN DR EXTENSION 300' 6 2001 8,000 2,000 6,000 1.51 12,0819709 SPRINGHILL SUBDIVISION-2025' 6 2001 71,000 17,750 53,250 1.51 107,2199711 SKYRIDGE PHASE II 7390' 6 2001 259,000 64,750 194,250 1.51 391,1249713 SKYRIDGE PHASE III 6195' 6 2001 217,000 54,250 162,750 1.51 327,6989724 ISLAND COVE SEWER MAIN 10 1 2002 151,589 34,865 116,724 1.48 225,0009725 STATE HWY 3 PHASE II 3369' 1 2002 198,108 45,565 152,544 1.48 294,0489726 SEWER SLIP LINING 2002 3264' 1 2002 103,169 23,729 79,440 1.48 153,1329731 HAWKS NEST 429 MAIN/MANHOLES 6 2002 18,500 4,255 14,245 1.48 27,4599760 PARKSIDE TERRACE SEWER LINES 6 2003 55,000 11,550 43,450 1.40 77,2229761 EAST ANIMAS VILLAGE SEWER LINE 6 2003 29,750 6,248 23,503 1.40 41,7709777 RIVERGATE SEWER LINES 6 2004 87,426 29,142 58,284 1.29 112,9559778 SANTA RITA TOWNHOMES SEWER LIN 6 2004 27,000 9,000 18,000 1.29 34,8849779 CASA DEL CORAZON SEWER LINES 6 2004 26,000 8,233 17,767 1.29 33,5929780 DAKOTA RIDGE SEWER LINES 6 2004 34,740 11,580 23,160 1.29 44,8849781 VALLE DE MERCED SEWER LINES 6 2004 40,050 13,350 26,700 1.29 51,7459782 HILLCREST GOLF SEWER LINES 6 2004 58,075 18,390 39,685 1.29 75,0339784 METZ LANE SEWER EXTENSION 1 2004 62,346 20,782 41,564 1.29 80,551

Treatment Plant2003 GENERATOR 1 2007 21,450 21,450 0 1.23 26,2832004 GENERATOR 1 2007 21,450 21,450 0 1.23 26,2832007 GENERATOR W/ TRANSFER SWITCH 1 2013 116,750 5,838 110,913 1.00 117,2362010 GENERATOR W/ TRANSFER SWITCH 3 2013 24,688 1,234 23,454 1.00 24,7912013 GENERATOR W/ TRANSFER SWITCH 1 2013 24,268 1,213 23,055 1.00 24,3692014 GENERATOR W/ TRANSFER SWITCH 1 2013 24,268 1,213 23,055 1.00 24,3692017 GENERATOR W/ TRANSFER SWITCH 1 2013 27,363 1,368 25,995 1.00 27,4772018 GENERATOR W/ TRANSFER SWITCH 3 2013 24,688 1,234 23,454 1.00 24,7912019 GENERATOR W/ TRANSFER SWITCH 3 2013 27,363 1,368 25,995 1.00 27,4779404 WASD PLANT 6 1989 444,300 321,358 122,942 1.93 859,1122717 WASTEWATER TREATMENT PLANT 3 1985 9,278,420 6,675,823 2,602,597 2.12 19,702,2335168 DATA LOGGER UPGRADE 12K MEM 1 1999 14,850 14,850 0 1.57 23,2465595 AUTO MECHANICAL BARSCREEN REPL 1 2001 80,633 80,633 0 1.51 121,7665609 3 AMER SIGMA REFRIG COMPOSITE 1 2000 14,410 14,410 0 1.48 21,2885877 MONITORING SYSTEM 1 2002 11,310 11,310 0 1.48 16,7876113 BOILER 1 2004 13,340 8,893 4,447 1.29 17,2356356 THERMAL IMAGING CAMERA 1 2006 6,500 6,500 0 1.23 8,0106407 VIDEX ELECTRONIC KEY SYSTEM 1 2007 25,000 8,125 16,875 1.23 30,6336414 SUPPORT SYSTEM FOR TANK 1 2007 8,900 5,785 3,115 1.23 10,9056461 MOYNO 2000 PUMP 1 2011 7,663 2,299 5,364 1.02 7,8356462 MOYNO 2000 PUMP 1 2011 7,663 2,299 5,364 1.02 7,8359683 UV DISINFECTION SYSTEM EQUIP 1 2001 504,414 504,414 0 1.51 761,731

10559 LIFTSTATION FENCE-LIGHTNERCREK 1 2013 5,897 295 5,602 1.00 5,92210561 LIFTSTAION FENCE-BODO 2 1 2013 6,885 344 6,541 1.00 6,91410138 SEWER ROTARY DRUM WWTP 1 2006 143,746 53,905 89,841 1.23 177,14110159 SEWER WWTP CONTROLS 1 2006 118,467 88,850 29,617 1.23 145,98910289 COGENERATION PROJECT 1 2009 568,293 142,073 426,220 1.11 630,88810562 LIFTSTATION FENCE-DOUBLE TREE 1 2013 6,215 311 5,904 1.00 6,2416382 FULL SPAN COVER WWTP CLARIFIER 1 2007 174,838 40,796 134,042 1.23 214,2329216 LAND AT TREATMENT SITE 1 1982 297,868 0 297,868 2.04 608,743

$27,574,766 $13,115,164 $14,459,601 $50,476,500


City of DurangoWastewater Plant Investment Fee ModelSummary of System Assets by Valuation Method(Asset Values as of December 31, 2013)

Buy-In

Item

Replacement Cost New

(RCN)ASSETS

Current AssetsCash and Cash Equivalents $518,389

--------------Total Current Assets $518,389

Fixed Assets $50,476,500--------------

TOTAL ASSETS 50,994,889

Add: Borrowing Costs (Growth) 0Less: Principle (Non-Growth) 0

--------------Net System Value $50,994,889


City of DurangoWastewater Plant Investment Fee ModelPIF Calculation - Buy-In

Description

Replacement Cost New

(RCN)Buy-In - Assets

Cash and Cash Equivalents $518,389

Fixed AssetsEquipment $679,717Land and Buildings 145,794Infrastructure 5,709,545Transmission 20,233,683Treatment Plant 23,707,761

--------------Total Fixed Assets 50,476,500

Less: Principal (Non-Growth) 0--------------

Total Assets 50,994,889

Current Plant Capacity (gpd) 3,000,000Use per SFRE (gpd) 119

--------------25,210

--------------Proposed Plant Investment Fee per SFRE $2,023Current Plant Investment Fee per SFRE $1,520

--------------Change $503

Number of SFRE's


durango - final rate study report - 11/19/14

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