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AC–2015ATM
<br />PPROPRIATIONOMMITTEE
<br />FundsFundingCommittee
<br />Article 15: Appropriate for
<br />RequestedSourceRecommendation
<br />Wastewater System Improvements
<br />$1,200,000
<br />Wastewater EF (Debt)
<br />Wastewater RE
<br />Approve (8-0)
<br />$600,000
<br />$1,800,000
<br />This Article addresses proposed capital expenditures to be made during FY2016 as part of a continuing
<br />program to upgrade and keep current the assets of the Wastewater Enterprise Fund. For general back-
<br />ground on the enterprise funds, and the relationship between the budget process and the water rate-setting
<br />process, please see Appendix B and the discussion under Article 5.
<br />A total of $1,800,000 is requested this year: $1,200,000 as part of a multi-year plan to rehabilitate sanitary
<br />sewer infrastructure, particularly in remote areas, including brook channels, where poor soil conditions
<br />lead to storm water infiltration; and $600,000 as part of an ongoing program to upgrade Lexington’s ten
<br />sewer pumping stations. (An additional $750,000 is requested under Article 2 of STM #2 for extraordi-
<br />nary repairs to the pumping station on Bedford Street, bringing this year’s total requested appropriation
<br />for pumping station upgrades to $1,350,000.) The details of the projects, including the locations where
<br />work is expected to be done, can be found in the Brown Book (p. XI-23). Capital appropriations for simi-
<br />lar purposes have been made in most years (except for FY2006, when engineering studies were not ready,
<br />and FY2011, when only pump station upgrades were performed).
<br />The costs of this year’s wastewater system improvements will be funded by a combination of borrowing
<br />($1,200,000) and retained earnings of the Water Enterprise Fund ($600,000). The resulting debt service
<br />costs for the portion borrowed will be borne by the operating budget for the Water Enterprise Fund in
<br />FY2014 and in future years until the debt is retired (see Brown Book, p. XI-14, Table III), and will be
<br />included each year as a component of the wastewater rates. Part of the funding may come from MWRA
<br />grants or loans.
<br />Prior to FY2006, capital expenditures for sewer distribution improvements were funded primarily by en-
<br />terprise-fund cash capital, which was raised in the rates. Subsequently, there was a transition to funding
<br />these ongoing improvements primarily with debt. While the transition to debt financing mitigated the
<br />need for rate increases early on, that change, together with the fund’s allocated contribution to the debt
<br />service for the new DPW facility, has steadily increased the annual debt-service costs of the sewer enter-
<br />prise fund, both in dollar and percentage terms, as illustrated below.
<br />Growth in Wastewater Fund Debt Service
<br />Fiscal WastewaterTotal BudgetDebt Service
<br />YearDebt ServiceRatio
<br />2006
<br />$275,950$7,084,8023.9%
<br />2007
<br />$333,899$7,440,9204.5%
<br />2008
<br />$439,792$7,355,4796.0%
<br />2009
<br />$488,135$7,643,6496.4%
<br />2010
<br />$575,357$8,083,4787.1%
<br />2011
<br />$791,777$8,315,5569.5%
<br />2012
<br />$879,713$8,934,6249.8%
<br />2013
<br />$956,855$9,282,07710.3%
<br />2014
<br />$1,131,673$9,257,35412.2%
<br />2015
<br />$1,220,843$9,517,61812.8%
<br />2016
<br />$940,679$9,103,31610.3%
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