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HomeMy WebLinkAboutSelectmen's Ad Hoc Water and Sewer Rate Study Committee Final Report, VOLUME TWO - 2005-07-26 H l) ) Volume II 26 July 2005 ) of the Final Report ) ) of the , Selectmen's Ad Hoc Water and Sewer Rate Study Committee ) ) Town of Lexington, MA ) 3 June 2005 ) ) ) ) ) ) ) a 9 9, Introduction ) This document is Volume II of the Final Report of the Lexington Board of Selectmen's Ad Hoc Water and Sewer Rate Study Committee (WSRSC). It contains the documents listed below, which are simply reproductions of the originals, without any modifications ) whatsoever (except for the meeting minutes, which were combined using an 8 point type font, no page breaks, and the use of"***" instead of paragraph breaks). The Committee prepared or utilized many other documents. To be included herein it was necessary, but not sufficient, that the document was published (or sent in the case of a letter) by the Committee, or was available to and of particular utility or interest to the ) Committee, or else it contained data derived and used by the Committee that might be useful to others in the future. ) The documents are in the order shown below ) Document Page 1 FY2004 Billed amounts (for accounts with greater than 0 usage) 1 2. Text of presentation of the Final Report to the Board of Selectmen on 27 June 2005 2 3. Moody's Report 5 4 Memos from Chris Woodcock, Town Consultant, on reserves and billing frequency 7 5. Rate Design Alternatives 13 ) 6. Letter of transmittal from WSRSC to BoS,regarding PILOTs in other towns, containing an email to WSRSC, and information from DPW.(See Mansfield on page 2, regarding DOR's position.) 16 ) 7 Memorandum from Palmer and Dodge to BoS on PILOTs 23 8. Interim Report of the WSRSC, 30 September 2004 42 ) 9 PILOT Information for Selectmen, 30 December 2004 68 10. Minutes of the WSRSC, Meetings #1 to#60 119 12. Summary of water and sewer usage FY2004, derived by WSRSC from MUNIS billing run 181 13. Summary of Fall 2003 usage by category(derived by WSRSC) 182 14. Summary of Spring 2004 usage by category(derived by WSRSC) 188 15. Expanded tables of Fall 2003 usage (derived by WSRSC) 194 16. Expanded tables of Spring 2004 usage (derived by WSRSC) 224 ) ) ) J J ) FY2002 Revenues (from accounts having use greater than 0 hcf) Caterory Period #users HCF used Water Rev Sewer Rev Water+Sewer FY04 Total All categories Fall 11186 593952 $2,100,195 $3,451,873 $5,552,068 All categories Spring 11186 640550 $2,153,153 $3,740,189 $5,893,342 $11,445,410 0 0 0 ) Residential Water&Sewer Fall 9068 369724 $1,076,906 $2,333,035 $3,409,942 0 Spring 9068 398404 $1,166,539 $2,526,978 $3,693,517 $7,103,459 Commer/Indu Water&Sewer Fall 259 57722 $263,442 $670,013 $933,456 0 Spring 259 64546 $293,367 $747,638 $1,041,005 $1,974,461 ) Public Water&Sewer Fall 75 35447 $168,997 $437,366 $606,363 1 0 Spring 75 32989 $156,366 $404,247 $560,613 $1,166,976 Municipal Water&Sewer Fall 13 3586 $3,945 $6,240 $10,184 1 0 Spring 13 35245 $38,770 $61,326 $100,096 $110,280 Residential Irrigation Fall 1265 93160 $464,898 $0 $464,898 1 0 Spring 1265 77826 $388,352 $0 $388,352 $853,250 Commer/Indu Irrigation Fall 10 3967 $19,795 $0 $19,795 0 Spring 10 402 $2,006 $0 $2,006 $21,801 Public Irrigation Fall 0 0 $0 $0 $0 0 Spring 0 0 $0 $0 $0 $0 Municipal Irrigation Fall 0 0 $0 $0 $0 0 Spring 0 0 $0 $0 $0 $0 Residential Water only Fall 454 19853 $63,315 $0 $63,315 0 Spring 454 23200 $79,799 $0 $79,799 $143,114 ) Commer/Indu Water only Fall 17 4490 $25,151 $0 $25,151 1 0 Spring 17 5223 $24,563 $0 $24,563 $49,714 Public Water only Fall 9 1614 $7,362 $0 $7,362 0 Spring 9 216 $642 $0 $642 $8,005 Municipal Water only Fall 15 3953 $4,348 $0 $4,348 0 Spring 15 2499 $2,749 $0 $2,749 $7,097 ` ) not seen Fall 1 436 $2,034 $5,219 $7,253 0 Spring 1 0 $0 $0 $0 $7,253 ) null Fall 0 0 $0 $0 $0 0 Spring 0 0 $0 $0 $0 $0 1 ) Pct. FY04 Total ) Residential Water&Sewer 62.1% $7,103,459 Commer/Indu Water&Sewer 17.3% $1,974,461 Public Water&Sewer 10.2% $1,166,976 1 1 Municipal Water&Sewer 1.0% $110,280 Residential Irrigation 7.5% $853,250 Commer/Indu Irrigation 0.2% $21,801 Public Irrigation 0.0% $0 Municipal Irrigation 0.0% $0 i ) Residential Water only 1.3% $143,114 Commer/Indu Water only 0.4% $49,714 Public Water only 0.1% $8,005 Municipal Water only 0.1% $7,097 not seen 0.1% $7,253 null 0.0% $0 Total 100.0% $11,445,410 1 I ) 1 I ) ) ) ) ) TEXT OF PRESENTATION ) ) 1. I am Kathryn Benjamin, from Cary Avenue, Precinct 9 a member of the Selectmen s Ad Hoc Water and Sewer Rate Study Committee. I served as secretary for the committee from September 2004 to the present. ) 2. I am here to represent our committee and submit for your approval our 47 page ) Final Report. ) 3. [May I ask members of our committee who are present in the audience to stand up ) for a moment to be recognized.] Our members brought a wealth of skills and ) experience including: economics, utility management, engineering, law, ) accounting, business management, environmental protection and citizen advocacy and represented a broad spectrum of opinions on the topic. We met 60 times and have come up with 22 recommendations which we think are fair and ) reasonable. Most were unanimous. All passed with a vote of at least 6 to 2. —' - ) 4 Our charge from the Board of Selectmen, in January 2004, was to [SLIDE]: ) "Advise the Selectmen regarding the methodology, structuring and assumptions made in determining the water and sewer rates. The Committee shall consider the feasibility of continuing to appropriate funds through the water and sewer enterprise accounts for in lieu of tax payments [PILOTs]. ) In addition, the Committee shall examine the inclining block rate ) system, its strengths and weaknesses and consider the assumptions made to determine the accountability [of in]direct charges that are ) part of the rate setting process. - The Committee should consider the impact of any changes that ) would be recommended." ) 5. This was clearly a complex issue. It is also a big issue, as the Water and Sewer Enterprise Fund manages over$14 million in revenues and expenses. a. Regarding the methodology structuring and assumptions: ) i. we found that there are no clear. consistent or established policy ) guidelines for setting water and sewer rates. Much of our report makes specific recommendations for establishing policies, with the ) intention of making the rate setting process more transparent and ) accountable. 2 ) b. Regarding indirect charges: i. Central to the policies we recommend, is the concept that the Water and Sewer operations should overate as a self-sufficient. stand-alone. transparent accounting entity that neither subsidizes. nor is subsidized by the General Fund. This means that the water and sewer rates should cover the comprehensive costs of providing the water and sewer services. ii. Indirect charges are part of the comprehensive costs of providing water and sewer services. Indirects are the transfer of costs from ) Town departments, such as Finance and MIS,to the Enterprise Fund for services provided by the Town to the Enterprise Fund. a. We have found that these indirect costs lack transparency and accountability and some may be over-estimated. We recommend establishing and using ouantifiable measures to determine these costs. c. Regarding the inclining block rates: 1 i. There are statutes regarding their use, one specifically banning declining block rates, another encouraging inclining block rates, as a means to promote water conservation. ii. Lexington's blocks are currently very steep. We recommend moving to a flatter inclining block rate structure. This means that: a. large families will not be penalized with higher rates than their neighbors and b. low volume users will not be subsidized by high volume users as much as they are now They will have to pay a ) little more,between$6 and$22 per bill, depending on their annual usage. We think reducing this subsidy is a fair thing ) to do. iii. Through intense study of collected data,it appears that the W/S Enterprise Fund subsidizes the municipal water and sewer users. .meaning that town buildings, the schools and the golf course pay a much lower rate than residential users. We ) recommendation reducing this rate-vaver subsidy by gradually increasing those charges to the average rate. ) ) 3 I ) d. Regarding PILOTs: ) ) i. We invited two lawyers to make informal presentations to our committee, representing the pro and con sides of the argument, both of which were compelling. ii. We then asked the Selectmen to have the Town's legal counsel ) make a determination on PILOTs. This was done,but they could not give a definitive defense of them. iii. A key point to the arguments in favor of continuing the PILOTs ) was to compensate the Town for indirect costs. However, since we ) believe the indirects are captured fairly thoroughly we recommend that the Town phase-out PILOTs. 6. All of this said, we believe that the Enterprise Fund requires closer financial management. One of our fundamental recommendations is that that the Town appoint a Business Manager for the EF in order to provide sound financial ) management on a day-to-day basis. and to implement the rate-setting and financial accounting policies we are recommending. ) a. This position should have no impact on the General Fund, as it would be ) funded through the Enterprise Fund. b. Further, we believe the additional cost of this position will be offset by ) improved efficiencies and reductions in indirect costs when the Business Manager performs some of the tasks previously performed by other Town ) departments. -) - c. We acknowledge that the Selectmen have already begun to act on this ) recommendation by including a slot in the FY06 budget for such a person. ) ) In conclusion, we hope that our recommendations will be implemented. It has been a privilege to serve the Town in this way and we are proud of our work. We are willing to continue to be available, to assist the Selectmen and the Business Manager in interpreting ) and implementing the findings and recommendations of our report. ) Thank you. ) ) ' ) 1 ) Moody's Investors Service has assigned a Aaa rating and negative outlook to the Town of Lexington, Massachusetts'$8.906 million General Obligation Bonds.Concurrently,Moody's has affirmed the Aaa rating and assigned a negative outlook on the town's$66.8 million of outstanding parity debt. Approximately$3.6 million of the bonds are secured by the town's General Obligation unlimited tax pledge, as debt service on this portion has been voted exempt from the limitations of Proposition 21.The remaining bonds are secured by the town's General Obligation limited tax pledge subject to the restrictions of Proposition 2 V2.Proceeds from the bonds will finance construction and renovations to schools as well as a variety of other municipal projects.The Aaa rating and outlook are based on the town's challenged financial position,affluent and substantial tax base and manageable debt position. FINANCIAL OPERATIONS SHOW EVIDENCE OF STRUCTURAL PRESSURE Moody's expects that the town's financial position will remain at its current narrow level given a tightly balanced budget in the current fiscal year and a previously reduced General Fund balance following a substantial operating draw in fiscal 2003.Following several years of very consistent and balanced ) operations in the late 90's,town revenue growth began slowing in fiscal 2002,growing just 2.7%from 2001 and 4%in 2003.By contrast,expenditures increased 5.5%and 7.1%,respectively During fiscal 2003, several factors including unforseeable events such as state aid reductions and a harsh winter exacerbated this imbalance,preventing the town from replenishing the$3.2 million in appropriated fund balance used to ) balance the budget.The resulting draw lowered the General Fund balance from$9.4 million(9.3%of operating revenues)to$6.0 million(5.7%).A similar decline occurred in the undesignated portion of fund balance,which dropped from 4.1%to 2.5%of revenues.The town does remain highly liquid with$41 million in cash and equivalents on hand at fiscal year-end and debt service remains a very manageable portion of the overall budget,comprising just 4.1%of expenditures.Other sources of flexibility are minimal as the town maintains a very limited operating stabilization fund($28,000 as of fiscal 2003)and currently levies to the maximum under Proposition 2 1/2 growth levy limits.For fiscal 2004,the town has designated a smaller amount of fund balance($600,000)for the budget.To offset this decrease,approval ) was sought for a$5 million operating override;however the vote failed.Expenditure cuts were implemented in response,resulting in very modest overall budget growth of 1.7%.In many areas,the town ` continues to demonstrate proactive management both in implementing the expenditure reductions, ) restructuring employee contracts to achieve benefit savings and adopting a number of conservative assumptions for the fiscal 2004 budget.For example,allowable new tax levy growth was budgeted at $750,000 but has historically been well in excess of$1 million.However,the town also chose to defer a i portion of its required annual pension contribution,generating$1.4 million in expenditure savings in the present year but shifting the costs of this liability into the future.Going forward,the town expects to achieve budgetary stability through a combination of methods including seeking voter approval for an operating override for fiscal 2005 and further expenditure reductions. Officials do not anticipate further appropriations of General Fund balance given the current reduced position.Moody's expects operations to ) be tight in the current year with overall fund balance levels expected to remain consistent with the prior year.Future rating evaluations will evaluate the town's ability to achieve stability and rebuild financial flexibility to a level more consistent with the Aaa rating. AFFLUENT AND GROWING TAX BASE Moody's expects Lexington's large assessed value($6.1 billion)will continue to demonstrate positive growth trends yet at a reduced level from recent years.Located in Middlesex County Lexington is a wealthy suburb of Boston(Moody's rated Aa2).In addition to an affluent,professional residential population,the town also benefits from significant commercial and manufacturing activity The town's assessed valuation has grown at an average rate of 9.9%since 1998,driven primarily by continued improvement to the town's residential properties which are valued among the highest in the state(Median ) housing value$417 400;224.8%of state levels).Lexington does benefit from its significant commercial presence;among the town's principal tax payers and major employers are several research and development facilities including Lincoln Laboratory(affiliated with MIT)and bio-medical firm Instrumental Labs.Of note,long-time tax-payer Raytheon Corp.recently moved out of town and the facility has been sold to a developer who is proposing to segment the site into smaller lots for biotech and office space.Future interest in this site could result in substantial gains to the tax base.Lexington's wealth indices greatly exceed both ) ) state and national averages and the town's assessed value per capita is high at$200,804(2.1x the state median). ) MODEST DEBT LEVELS SUPPORTED BY UTILITY SELF SUPPORT I ) Moody's expects Lexington's debt position will remain manageable given sizeable state building aid ) support(59%)and limited future borrowing plans.The town's overall debt burden is low at 1.7%and after adjusting for state aid and self-supporting water and sewer debt,the city's adjusted overall debt burden is ) modest at 1.0%. Principal is repaid at an above average rate(69.9%in ten years)and debt service payments account for a modest 4.1%of total expenditures,allowing flexibility to incorporate additional future ) borrowing needs.The town has roughly$65 million in remaining authorized unissued debt of which$38 million is already outstanding in the form of short term notes.Of the remaining$27 million,$16.1 million is authorized for further elementary school projects and the balance is for other municipal purposes.No ) decision has been made on the school project at the current time while the general purpose debt is expected ) to be issued incrementally over the next several years. KEY STATISTICS ) 2000 population: 30,355 2003 Full valuation: $6.095 billion - Full value per capita: $200,804 ) Median family income as %of state level: 181.5% Per capita income as%of state level: 177 7% ) Post-sale parity debt outstanding: $66.8 million Overall debt burden: 1.7% ) Adjusted overall debt burden: 1.0% Payout of principal(10 years): 69.9% ) FY03 General Fund balance: $5.968 million(5.7%of General Fund revenues) FY03 Undesignated General Fund balance:$2.648 million(2.5%of General Fund revenues) ) ) ) ) ) ) ) WOODCOCK&ASSOCIATES. INC. MEMORANDUM TO. Water& Sewer Rate Study Committee FROM: Chris Woodcock SUBJ: Reserves DATE. June 22, 2004 ) I have developed the following on Reserve Policies for consideration by the Committee. The values or numbers should be viewed as examples only My intent is to present the Committee with some food for thought on overall policy guidance on the setting of goals and the use of the reserves. First, I believe the Town really has two different reserves for the water and sewer funds. While they are commingled now, perhaps they should be considered separately and accounted for and administered separately 1 Capital Reserves. In effect these are the reserves that are generated from the inclusion of depreciation as an expense in the rate setting process as well as any unexpended amounts that are included as "Capital from Revenues' The intent of the Capital Reserves is to accumulate funds for the systematic replacement of assets from current rate revenues. Establishment and use of this funding source means that the Town has greater flexibility in its capital funding options. For example, with sufficient capital reserves, Lexington can choose to fund capital projects from available reserves ) rather than borrowing at times when interest rates may be high. The level of capital reserves should be established based on some quantifiable value such as a percentage of gross or net asset value. For example, if the gross value of ) water assets is $10 million and they are assumed to have an average useful life of 40 years, the annual depreciation would be $250,000. This is of course based on the original cost of the assets and would certainly not replace them at today's inflated costs. If we assume that water system assets now cost three times more than their original cost, the annual replacement cost would be ) $750,000. If the Town wants no more than three year's worth accumulation, the cap or maximum amount to be accumulated in the water system capital reserve could be set at $2.25 million. ) 2. Operating Reserve: This is a reserve that is to be used to cover unexpected expenses (such as the MWRA increase several years ago), reductions in revenues (if water sales drop below expected levels), and day to day cash flow The operating reserve could also be used to stabilize rates if there are sufficient amounts. These reserves should be considered separate from the capital reserves as they have a different purpose and use. There are a number of considerations for the operating reserves including the appropriate level and use. We have suggested to Lexington that the operating 7 -J ) ) WOODCOCK&ASSOCIATES. INC. reserve be set at 25% of the total water or sewer budget. There is no magical formula or correct amount- it is really a function of the Town's desire to protect ) itself against expense and revenue fluctuations. ) The bond market is one area that can be looked at for quantifiable amounts of reserves. Many revenue bond issues' require the establishment of a debt ) service reserve and an operation and maintenance (O&M) reserve. The debt service reserve is typically established at 100% of the annual principal and interest payments on bonds or an amount equal to the highest future annual ) principal and interest payments. The debt service reserved is only used or drawn on when revenues are insufficient to make scheduled debt payments. ) The O&M reserve is often set at a percentage of the annual operation and maintenance budget, with the percentage typically varying from 10% to 25%. Rather than break down various components, we have suggested a reserve target equal to 25% of the total water or sewer budget. —5 - We also suggest that the Town consider policies on the use of the operating ) reserve. For example, Lexington should look at the certified amounts at the end of each year and determine the percentage it represents of total expenses ) for that year If the amount is greater than the target, the overage should be used to reduce rates the next2 year Because the reserves can also be used for rate stabilization (as was done in ) FY 2004 by the Board of Selectmen), a policy should be considered for this as well. The use of reserves to reduce future rate increases must consider that ) this reduction in annual rate revenues will typically result in greater increases the following year 3 Accordingly the use to stabilize rates should be made carefully, with consideration of the longer term implications. We suggest that a ) maximum annual use be established along with conditions for the use of ) reserves. For example, Lexington could determine that: • The operating reserves will be used to reduce rate increases only if the increase is greater than a set percentage (say 12%) • The operating reserve level will not be decreased by more than a ) fixed percent per year (say 5% for a reduction from 25% to 20%) ) • The operating reserve will not be used to reduce rates in any case if ) the reserve level is below a set amount (say 15%). This will in effect ) set a floor for the reserve. ) ' Where the repayment of the borrowing is guaranteed by revenues of the enterprise, not the full faith ) and credit(taxing ability)of the town ) 2 Obviously there will be a timing issue and the comparison of the reserve amount vs. actual expense can only take place after the conclusion of the fiscal year and any overage could not be included until the following fiscal year's rates that would be two year's removed. 3 To make up for any increases in expenses from year to year plus the lack of reserve funds that were used to build up revenues plus the replacement of reserves that were used. j 8 ) ) ) WOODCOCK&ASSOCIATES. INC. 1 ) Typically additions to the operating reserve would only be equal to the set target (25%) times the annual increase in expenses. However, if the operating reserve is below4 the target level, greater allowances would be needed. In this case, the Town should set a policy as to how quickly the reserve is to be built back up again. This can be a set percentage (increase the level by 5% per ) year) or it can be over a fixed period of time (within three years). Again the intent of this memorandum is to provide "food for thought" to the Committee based on our experience elsewhere. While some utilities or communities have adopted specific policies such as these, it is rather uncommon in New England. For the most part it is the larger, more independent utilities that have taken this step. Lexington is thus somewhat unique in that it has undertaken this analysis or consideration. The establishment of reserves has allowed Lexington to moderate its rate increases last year and provided funding flexibility l ) ) ) i ) ) ) ) ) °If the reserve is above the target, it is suggested that it be reduced to the target level by using any 'excess' to reduce rate adjustments. ) H J � ) WOODCOCK&ASSOCIATES. INC. } BILLING FREQUENCY Most utilities send out monthly bills to their customers. People are used to receiving a monthly bill for electricity, natural gas, telephone service, and cable television. In New England, the exception is water and sewer bills. While it is common practice in many parts of the United States to bill for water and sewer service monthly, that is not the case in this area. The MWRA Advisory Board's Annual Water and Sewer Rate Survey ) presents the following information for those communities in the MWRA system: Semi-annual (2X) 16 i Tri-annual (3X) 1 ) Quarterly (4X) 39 Bi-Monthly (6X) 1 Monthly (12X) 3 Of the 60 communities only 3 bill for water/sewer service monthly, with nearly 2/3 billing quarterly The next most common billing frequency (about 27%) is semi-annual - billing. ) While there are certainly added costs associated with more frequent billing, there are also benefits, many of which are difficult to quantify As meter reading technology advances, the added cost of more frequent meter reading and billing will drop. It should ) be noted that billing is not always synonymous with meter reading. Quite often utilities will obtain an actual meter reading every other month and base the bill on estimates for ) the intervening months. In some cases this works well with no impact on customers bills. In cases where the rates are based on usage amounts within the billing period (block rates) or where rates may vary by season, actual meter readings each month may be preferable. ) The advantages and disadvantages of more frequent billing are presented below ADVANTAGES -9 - • Increased cash flow Moving to more frequent billing will provide an increase in cash flow The more frequent billing results in an earlier, albeit smaller increase ) in billing for most customers. The magnitude of the increase in cash flow will ) depend on the current and new frequencies of billing. For example, if bills are ) issued twice a year and the change is to quarterly billing, about 25% of the an- nual revenues would be billed some three months sooner at the first quarterly ) bill. The next quarterly bill would only reflect the balance that would otherwise ) have been billed semi-annually The third quarterly bill would result in a sooner ) collection of revenues, while the fourth bill would also just reflect the incremental amount that would normally be billed. • Smaller bills. More frequent billing result in smaller bills to customers. Doubling the billing frequency (e.g. moving from semi-annual to quarterly billing) would re- sult in customer bills that are approximately half of what they were previously �) ) /a ) ) WOODCOCK&ASSOCIATES. INC. Some customers may find payment of the smaller bills easier to pay and budget, resulting in some improvement in collections and perhaps faster payments. • Rate flexibility Adopting more frequent billing can provide greater flexibility in rate alternatives that may further other utility goals and/or policies. For example, monthly billings would allow the adoption of seasonal rates or rate block alterna- tives that would be difficult to implement with semi-annual billings. ) • Conservation/Price Signals. Sending bills more frequently provides a mecha- ) nism whereby customers are notified (through their bill) of the cost of water and sewer service and can be a reminder of the cost of excessive water use. If bills are sent at less frequent intervals, the billings are more of a penalty for past practices than a reminder to use water wisely in the future. If the utility is trying ) to send a price signal to use less water in the summer, a high bill in the fall can certainly penalize excess use. However if a bill is sent in the spring and mid- ) summer it can serve as a reminder to the customer before the summer is over ) ) • Leak detection. Customer leaks are often discovered as the result of unusually high water and sewer bills. With infrequent billing, the leak may go unnoticed for six months or more. Many communities will abate uses that are a result of un- ) known leaks, resulting in a loss of revenue. With more frequent billings, the leaks can be discovered sooner and abatements are smaller and may not be re- quested or granted if the amounts are smaller DISADVANTAGES • Cost. Certainly one of the disadvantages of more frequent billing is the added cost. Doubling the frequency from semi-annual to quarterly will double the utili- ties costs of meter reading, postage, bill forms, computer time, and handling and posting of receipts. This cost of billing and meter reading is typically about 3-5% of a utility's total operating costs. Moving to more frequent billing may add this ) much more to the rates and charges needed to recover costs. With the ad- ) vances in metering technology to more automated reading systems, the cost of more frequent readings is dropping however ) ) • Revenue Estimates. Changing to more frequent billings can make estimates of revenues more difficult, particularly with a block rate system. While the usage steps or blocks would be adjusted (e.g., cut in half if moving from semi-annual to quarterly billing), the usage at the different rates can change with different billing ) periods. Care must be taken to try and estimate this impact and allow sufficient ) allowances to assure full cost recovery ' ) • Possible Customer Confusion. Changing to more frequent bills can sometimes result in some initial confusion among customers that are not used to such fre- quent billings. Because most other utility bills are rendered monthly this confu- sion is usually minimal and certainly is short term. The posting of payments on subsequent billings can be a problem. In general, there is a need to post pay- ) ) a WOODCOCK&ASSOCIATES.INC. ) ments quickly so that arrears are not reflected incorrectly on bills. This concern ) can be a particular problem with monthly billing, but again, customers are used ) to this with other utility bills that may have been paid late and show up as arrears if the payments overlap the next bill. ) ) - ) ) - ) ) ) ) ) ) ) ) ) { Zj J Ra (y I 1 i 1 1 1 _ _ _ te Design Alterna es` L _ _ v _ _ _ _ _, i , J ,J . J Water Mg7RA,aa wr savored roe Bills at semi-annual usage of Total Revenue $ 1.52 fixed 0-20 20-40 40-50 50-60 60-80 80-90 90-100 100+ 20 40 50 60 80 90 100 120 140 Corn,Ind, ws 18136 374043 246544 64266 37822 34986 8718 5919 42601 Residential Public 814899 as 19764 387019 257487 68958 42052 42601 12248 9244 199010 1018619 1018619 Current $220 $3.06 $3.82 $3.82 $3.82 $4.99 $4.99 $4.99 $44 $105 $143 $182 $258 $308 $357.80 $458 $557 $ 3,326,451 $2,386,560 $ 939,891 Single Rate $3.27 $3.27 $327 $3.27 $3.27 $3.27 $327 $3.27 $65 $131 $163 $196 $261 $294 $326.56 $392 $457 $ 3,326,451 $2,661,173 $ 665,278 chg mm cue $1.07 $0.21 ($0.55) ($0.55) ($0.55) ($1.72) ($1.72) ($1.72) 48% 24% 14% 8% 1% -5% ($0.09) -14% -18% 12% -29% Three Blocks $2.54 $2.54 $3.82 $3.82 $3.82 $4.99 $4.99 $4.99 $51 $102 $140 $178 $255 $304 $354.34 $454 $554 $ 3,326,451 $2,387,752 $ 938,699 ChgIman $0.34 ($0.52) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 16% -3% -2% -2% -1% -1% ($0.01) -0.8% -0.6% 0.0% -0.1% Two Blocks at 60 $2.73 $2.73 $2.73 $2.73 $4.80 $4.80 $4.80 $4.80 $55 $109 $137 $164 $260 $308 $355.89 $452 $548 $ 3,326,451 $2,416,444 $ 910,007 clg em,cuts $0.53 ($0.33) ($1.09) ($1.09) $0.98 ($0.19) ($0.19) ($0.19) 24% 4% -5% -10% 0.7% 0% ($0.01) -1% -2% 1.3% -32% Two Blocks at BO $2.79 $2.79 $2.79 $2.79 $2.79 $4.99 $4.99 $4.99 $56 $112 $139 $167 $223 $273 $322.94 $423 $523 $ 3,326,451 $2,398,922 $ 927,529 cngmmwrr $0.59 ($027) ($1.03) ($1.03) ($1.03) $0.00 $0.00 $0.00 27% 6% -3% -8% -14% -11% ($0.10) -8% -6% 0.5% -1.3% Two Blocks at 100 $2.85 $2.85 $2.85 $2.85 $2.85 $2.85 $2.85 $4.99 $57 $114 $142 $171 $228 $256 $284.70 $342 $441 $ 3,326,451 $2,411,278 $ 915,173 cngmncwr $0.65 ($0.21) ($0.97) ($0.97) ($0.97) ($2.14) ($2.14) $0.00 29% 8% -1% -6% -12% -17% ($0.20) -25% -21% 1.0% -2.6%fixed charge Two Blocks at 60+fixed $5.00 $2.65 $2.65 $2.65 $2.85 $4.66 $4.66 $4.66 $4.66 $58 $111 $137 $164 $257 $304 $350.32 $443 $537 $ 3,326,451 $2,435,338 $ 891,113 $ 98,820 ORg con,cur $0.45 ($0.41) ($1.17) ($1.17) $0.84 ($0.33) ($0.33) ($0.33) 32% 6% -4% -10% 0% -1% ($0.02) -3% -4% 2.0% -5.2% 3 blocks 60&90 $2.79 $2.79 $2.79 $2.79 $327 $3.27 $4.99 $4.99 $56 $112 $140 $167 $233 $265 $298.05 $398 $498 $ 3,326,451 $2,401,345 $ 925,106 Mg Inn can $0.59 ($027) ($1.03) ($1.03) ($0.55) ($1.72) $0.00 $0.00 27% 6% -3% -8% -10% -14% ($0.17) -13% -11% 0.6% -1.6% MWRA+15I tical,ave, resld $2.39 $2.39 $2.39 $2.39 $327 $3.27 $6.43 $6.43 $48 $96 $120 $144 $209 $241 $274.15 $403 $532 $ 3,326,451 $2,183,626 $ 1,142,825 chgInn aura $0.19 ($0.67) ($1.43) ($1.43) ($0.55) ($1.72) $1.44 $1.44 9% -9% -17% -21% -19% -22% ($0.23) -12% -5% -8.5% 21.6% 3 blocks flatter $3.05 $3.05 $3.05 $3.05 $3.50 $3.50 $4.00 $4.00 $61 $122 $152 $183 $253 $288 $322.77 $403 $483 $ 3,326,451 $2,548,467 $ 777,984 cng Ina cm $0.85 ($0.01) ($0.77) ($0.77) ($0.32) ($1.49) ($0.99) ($0.99) 38% 16% 6% 1% -2% -7% ($0.10) -12% -13% 6.8% -172% 2 Blks®100, $20 fixed $5.00 $2.76 $2.76 $2.76 $2.76 $2.76 $2.76 $2.76 $4.84 $60 $115 $143 $171 $226 $254 $28124 $336 $433 $ 3,326,451 $2,430,325 $ 896,126 $ 98,820 chglmams $0.56 ($0.30) ($1.06) ($1.06) ($1.06) ($2.23) ($2.23) ($0.15) 37% 10% 0% -6% -12% -18% ($0.21) -26% -22e/ 1.8% -4.7% 2 blocks, 5%lncr 100 $323 $3.23 $3.23 $3.23 $3.23 $3.23 $323 $3.40 $65 $129 $162 $194 $259 $291 $323.41 $388 $456 $ 3,326,451 $2,642,317 $ 684,134 Mg Mown $1.03 $0.17 ($0.59) ($0.59) ($0.59) ($1.76) ($1.76) ($1.59) 47% 23% 13% 7% 0% -5% ($0.10) -15% -18% 10.7% -272% 3 blks,50, 100;20% steps $2.95 $2.95 $2.95 $3.54 $3.54 $3.54 $3.54 $4.25 $59 $118 $148 $183 $254 $289 $324.56 $395 $480 $ 3,326,451 $2,511,282 $ 815,169 wymne 20% $0.75 ($0.11) ($0.87) ($0.28) ($028) ($1.45) ($1.45) ($0.74) 34% 12% 3% 1% -2% -6% ($0.09) -14% -14% 5.2% -13.3% 3 Mks,50, 100;15% steps $3.03 $3.03 $3.03 $3.48 $3.48 $3.48 $3.48 $4.00 $61 $121 $151 $186 $256 $291 $325.46 $395 $475 $ 3,326,451 $2,548,467 $ 777,984 cnemna 15% $0.83 ($0.03) ($0.79) ($0.34) ($0.34) ($1.51) ($1.51) ($0.99) 38% 15% 6% 3% -1% -6% ($0.09) -14% -15% 6.8% -172% 3 blks,50, 100;12% steps $3.07 $3.07 $3.07 $3.44 $344 $3.44 $3.44 $3.86 $61 $123 $154 $188 $257 $291 $325.89 $395 $472 $ 3,326,451 $2,570,904 $ 755,547 cow eec 12% $0.87 $0.01 ($0.75) ($0.38) ($0.38) ($1.55) ($1.55) ($1.13) 40% 17% 7% 4% 0% 5% ($0.09) -14% -15% 7.7% -19.6% >100>vrr ent,50- 100-avers ge $2.78 $2.78 $2.78 $3.27 $3.27 $3.27 $3.27 $4.99 $56 $111 $139 $172 $237 $270 $302.52 $368 $468 $ 3,326,451 $2,405,230 $ 921,221 cm em ctsr $0.58 ($0.28) ($1.04) ($0.55) ($0.55) ($1.721 ($1.72) $0.00 27% 6% -3% 5% -8% -12% ($0.151 20% -16% 0.8% -2.0% HO=tune nt,40. 60averag e $2.68 $2.68 $327 $3.27 $3.27 $4.99 $4.99 $4.99 $54 $107 $140 $172 $238 $288 $337.45 $437 $537 $ 3,326,451 $2,393,760 $ 932,692 CPR Mem $0.48 ($0.38) ($0.55) ($0.55) ($0.55) $0.00 $0.00 $0.00 22% 2% -3% -5% -8% -7% ($0.06) -4% -4% 0.3% -0.8% WResource Insight Ire Paul GNmkk•Rale Design In Rabaeslgn Worksheet Mey$SPotty lePRINTsk•7/1ao005 a1534 PM Page I M9 Rate Design Alternatives 6.waa Wadden lea FY04 a am non-res 12241 10369 4475 4049 7279 3373 3175 146387 Sewer res 358043 236259 61334 35916 32689 8004 5392 33985 771622 total 370284 246628 65809 39965 39968 11377 8567 180372 962970 Residential Com,Intl,Publi 962970 Current $4.89 $6.05 $8.14 $8.14 $8.14 $13.13 $13.13 $13.13 $98 $219 $300 $382 $544 $676 $807.00 $1,070 $1,332 $ 7,119,277 $4,860,013 $ 2,259,264 Single Rate $7.39 $7.39 $7.39 $7.39 $7.39 $7.39 $7.39 $7.39 $148 $296 $370 $444 $591 $665 $739.30 $887 $1,035 $ 7,119,277 $5,704,633 $ 1,414,644 Ow Inflow $2.50 $1.34 ($0.75) ($0.75) ($0.75) ($5.74) ($5.74) ($5.74) 51% 35% 23% 16% 9% -2% ($0.08) -17% -22% 17% -37% Three Blocks $5.35 $5.35 $8.14 $8.14 $8.14 $13.13 $13.13 $13.13 $107 $214 $296 $377 $540 $671 $802.35 $1,065 $1,328 $ 7119277 $4,861,556 $ 2,257,721 chgInn.wr $0.46 ($0.70) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 9% -2% -2% -1% -1% -1% ($0.01) 0% 0% 0% 0% Two Bods at 60 $5.76 $5.76 $5.76 $5.76 $12.30 $12.30 $12.30 $12.30 $115 $230 $288 $346 $592 $715 $837.69 $1,084 $1,330 $ 7,119,277 $4,969,268 $ 2,150,009 cnemmwm $0.87 ($0.29) ($2.38) ($2.38) $4.16 ($0.83) ($0.83) ($0.83) 18% 5% 4% -9% 9% 6% $0.04 1% 0% 2% -5% Two Sada at BO $5.89 $5.89 $5.89 $5.89 $5.89 $13.13 $13.13 $13.13 $118 $235 $294 $353 $471 $602 $733.50 $996 $1,259 $ 7,119,277 $4,885,134 $ 2,234,143 chgmm.en $1.00 ($0.16) ($2.25) ($225) ($225) $0.00 $0.00 $0.00 20% 8% -2% -7% -14% -11% ($0.09) -7% -6% 1% -1% Two Blocks at 100 $6.07 $6.07 $6.07 $6.07 $6.07 $6.07 $6.07 $13.13 $121 $243 $304 $364 $486 $546 $607.08 $870 $1,132 $ 7,119,277 $4,924,267 $ 2,195,010 clglnncun $1.18 $0.02 ($2.07) ($2.07) ($2.07) ($7.06) ($7.06) $0.00 24% 11% 1% -5% -11% -19% ($0.25) -19% -15% 1% -3% 3 blocks 0 60&90 $5.89 $5.89 $5.89 $5.89 $7.39 $7.39 $13.13 $13.13 $118 $236 $295 $354 $501 $575 $706.68 $969 $1,232 $ 7,119,277 $4,893,299 $ 2,225,978 chg km cur $1.00 ($0.16) ($2.25) ($2.25) ($0.75) ($5.74) $0.00 $0.00 21% 8% -2% -7% 8% -15% ($0.12) -9% -8% 1% -1% MWR4+Y+1 oral,ave, mild $6.10 $6.10 $6.10 $6.10 $7.39 $7.39 $12.35 $12.35 $122 $244 $305 $366 $514 $588 $711.09 $958 $1,205 $ 7,119,277 $ 5,002,935 $ 2,116,342 Chamm con $1.21 $0.05 ($2.04) ($2.04) ($0.75) ($5.74) ($0.78) ($0.78) 25% 11% 2% 4% -6% -13% ($0.12) -10% -10% 3% -6% 3 blocks flatter $6.50 $6.50 $6.50 $6.50 $8.50 $8.50 $10.51 $10.51 $130 $260 $325 $390 $560 $645 $750.08 $960 $1,170 $ 7,119,277 $5,254,755 $ 1,864,522 chya.w,n $1.61 $0.45 ($1.64) ($1.64) $0.36 ($4.63) ($2.62) ($2.62) 33% 19% 8% 2% 3% -5% ($0.07) -10% -12% 8% -17% 2 backs, 5%Thor 100 $7.32 $7.32 $7.32 $7.32 $7.32 $7.32 $7.32 $7.69 $146 $293 $366 $439 $586 $659 $732.44 $886 $1,040 $ 7 119,277 $5,664,149 $ 1,455,128 cag m.cur $2.43 $127 ($0.82) ($0.82) ($0.82) ($5.81) ($5.81) ($5.44) 50% 34% 22% 15% 8% -2% ($0.09) -17% -22% 17% -36% 3 bike,50, 100;20% $6.70 $6.70 $6.70 $8.04 $8.04 $8.04 $8.04 $9.65 $134 $268 $335 $416 $576 $657 $737.19 $930 $1,123 $ 7119,277 $5,381,302 $ 1,737,975 chgm.. 20% $1.81 $0.65 ($1.44) ($0.10) ($0.10) ($5.09) ($5.09) ($3.48) 37% 23% 12% 9% 6% -3% ($0.09) -13% -16% 11% -23% 3 bl s,50, 100;15% $6.87 $6.87 $6.87 $7.90 $7.90 $7.90 $7.90 $9.09 $137 $275 $344 $423 $581 $660 $738.64 $920 $1,102 $ 7,119,277 $5,461,702 $ 1,657,575 Mg Inn 15% $1.98 $0.82 ($127) ($024) ($024) ($5.23) ($5.23) ($4.04) 41% 26% 14% 11% 7% -2% ($0.08) -14% -17% 12% -27% 3 blks,50, 100:12% $6.97 $6.97 $6.97 $7.81 $7.81 $7.81 $7.81 $8.75 $139 $279 $349 $427 $583 $661 $739.24 $914 $1,089 $ 7,119,277 $5,510,155 $ 1,609,122 Clog rm,c 12% $2.08 $0.92 ($1.17) ($0.33) ($0.33) ($5.32) ($5.32) ($4.38) 43% 27% 16% 12% 7% -2% ($0.08) -15% -18% 13% -29% >10o=torr ent,50- 100=avers ge $5.88 $5.88 $5.88 $7.39 $7.39 $7.39 $7.39 $13.13 $118 $235 $294 $368 $516 $590 $663.52 $926 $1,189 $ 7119277 $4,905,869 $ 2,213,408 Cho mmGun $0.99 ($0.17) ($2.26) ($0.75) ($0.75) ($5.74) ($5.74) $0.00 20% 7% -2% 4% -5% -13% ($0.181 -13% -11% 1% -2% >Bo=ane nt,40- BO=averag e $5.53 $5.53 $7.39 $7.39 $7.39 $13.13 $13.13 $13.13 $111 $221 $295 $369 $517 $648 $779.53 $1,042 $1,305 $ 7,119,277 $4,869,370 $ 2,249,907 cacrmCUM $0.64 ($0.52) ($0.75) ($0.75) ($0.751 $0.00 $0.00 $0.00 13% 1% -2% -3% -5% 4% ($0.031 -3% -2% 0% 0% cc ( , R ,,,' R- sigetc w M 16,\'b l xb ,m ,I2I .1 v v v ✓ v �..� r J. �/ -/ ,2 Rate Design Alternatives` '" -- - " - - �- - -- W -,� „� Water&Sewer 20 40 50 60 80 90 100 Residential Com,Ind,Public Current $7.09 $9.11 $11.96 $11.96 $11.96 $18.12 $18.12 $18.12 $141.80 $324 $444 $563 $802 $984 $1,164.80 $1,527 $1,890 $ 10,445,728 $7,246,573 $ 3,199,155 Single Rate $10.66 $10.66 $10.66 $10.66 $10.66 $10.66 $10.66 $10.66 $213 $426 $533 $640 $853 $959 $1,065.87 $1,279 $1,492 $ 10,445,728 $8,365,807 $ 2,079,921 Cniwncwr $3.57 $1.55 ($1.30) ($1.30) ($1.30) ($746) ($7.46) ($746) 50% 32% 20% 14% 6% -2% ($0.08) -16% -21% 15% -35% Three Blocks $7.90 $7.90 $11.96 $11.96 $11.96 $18.12 $18.12 $18.12 $158 $316 $435 $555 $794 $975 $1,156.69 $1,519 $1,881 $ 10,445,728 $7,249,308 $ 3,196,420 crywncw. $0.81 ($121) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 11% -3% -2% -1% -1% A% ($0.01) -1% 0% 0% 0% Two Blocks at 60 $8.49 $8.49 $8.49 $8.49 $1710 $1710 $17.10 $17.10 $170 $340 $425 $510 $852 $1,023 $1,193.58 $1,536 $1,878 $ 10,445,728 $7,385,712 $ 3,060,016 Ohs km curt $1.40 ($0.62) ($3.47) ($3.47) $5.14 ($1.02) ($1.02) ($1.02) 20% 5% 4% A0% 6% 4% $0.02 1% -1% 2% 4% Two Blocks at 80 $8.68 $8.68 $8.68 $8.68 $8.68 $18.12 $18.12 $18.12 $174 $347 $434 $521 $694 $875 $1,056.44 $1,419 $1,781 $ 10,445,728 $ 7,284,056 $ 3,161,672 cns am car $1.59 ($0.43) ($3.28) ($3.28) ($3.28) $0.00 $0.00 $0.00 22% 7% -2% -8% -14% -11% ($0.09) -7% -6% 1% -1% Two Blocks at 100 $8.92 $8.92 $8.92 $8.92 $8.92 $8.92 $8.92 $18.12 $178 $357 $446 $535 $713 $803 $891.78 $1,070 $1,433 $ 10,445,728 $7,335,545 $ 3,110,184 Mg/mew, $1.83 ($0.19) ($3.04) ($3.04) ($3.04) ($9.20) ($9.20) $0.00 26% 10% 1% -5% -11% -18% ($0.23) -30% -24% 1% -3% 3 blocks 60890 $8.68 $8.68 $8.68 $8.68 $10.66 $10.66 $18.12 $18.12 $174 $347 $434 $521 $734 $841 $1,021.97 $1,384 $1,747 $ 10,445,728 $7,294,645 $ 3,151,084 cls rem car $1.59 ($0.43) ($328) ($3.28) ($1.30) ($7 46) $0.00 $0.00 22% 7% -2% -7% -9% -15% ($0.12) -9% -8% 1% -2% MWRAl15l ocal,ave, rests $8.49 $8.49 $8.49 $8.49 $10.66 $10.66 $18.79 $18.79 $170 $340 $424 $509 $722 $829 $1,016.93 $1,393 $1,769 $ 10,445,728 $7,186561 $ 3,259,167 chg/cm Gun $1.40 ($0.62) ($3.47) ($3.47) ($1.30) ($746) $0.67 $0.67 20% 5% 4% -10% -10% -16% ($0.13) -9% -6% -1% 2% 3 blocks Hatter $9.55 $9.55 $9.55 $9.55 $12.00 $12.00 $14.51 $14.51 $191 $382 $477 $573 $813 $933 $1,077.85 $1,368 $1,658 $ 10,445,728 $7,803,222 $ 2,642,506 Ohg he car $2.46 $0.44 ($2.41) ($2.41) $0.04 ($6.12) ($3.61) ($3.61) 35% 18% 8% 2% 1% -5% ($0.07) -10% -12% 8% -17% 2 blocks, 5%!nor 100 $10.56 $10.56 $10.56 $10.56 $10.56 $10.56 $10.56 $11.09 $211 $422 $528 $634 $845 $950 $1,055.85 $1,267 $1,489 $ 10,445,728 $8,306,466 $ 2,139,262 Mg km tail $3.47 $1.45 ($1.40) ($1.40) ($1.40) ($7.56) ($7.56) ($7.03) 49% 30% 19% 12% 5% -3% ($0.09) -17% -21% 15% -33% 3 blks,50, 100;20% $9.65 $9.65 $9.65 $11.58 $11.58 $11.58 $11.58 $13.90 $193 $386 $483 $598 $830 $946 $1,081.74 $1,293 $1,571 $ 10,445,728 $7,892,584 $ 2,553,144 us Inn car $2.56 $0.54 ($2.31) ($0.38) ($0.38) ($6.54) ($8.54) ($4.22) 36% 19% 9% 6% 3% -4% ($0.09) -15% -17% 9% -20% 3 Wks,50, 100;15% $9.90 $9.90 $9.90 $11.38 $11.38 $11.38 $11.38 $13.09 $198 $396 $495 $609 $836 $950 $1,064.10 $1,292 $1,554 $ 10,445,728 $7,972,984 $ 2,472,744 059 smear $2.81 $0.79 ($2.06) ($0.58) ($0.58) ($6.74) ($6.74) ($5.03) 40% 22% 12% 8% 4% -3% ($0.09) -15% -18% 10% -23% 3 Mks,50, 100;12% $10.05 $10.05 $10.05 $11.25 $1125 $11.25 $1125 $12.60 $201 $402 $502 $615 $840 $953 $1,065.12 $1,290 $1,542 $ 10,445,728 $8,081.059 $ 2,364,669 >100=aln Ong mmaw, $2.96 $0.94 ($1.91) ($0.71) ($0.71) ($6.87) ($6.87) ($5.52) 42% 24% 13% 9% 5% -3% ($0.09) -16% -18% 12% -28% en6 50- 1o0 avela ge $8.66 $8.66 $8.66 $10.66 $10.66 $10.66 $10.66 $18.12 $173 $346 $433 $540 $753 $859 $966.04 $1,179 $1,542 $ 10,445,728 $7,311,100 $ 3,134,628 Chexmcuff $1.57 ($0.45) ($3.30) ($1.301 ($1.30) ($7 46) ($7 46) $0.00 22% 7% -2% -4% -6% -13% ($0.171 -23% -18% 0.9% -2.0% >11curre nt,40- 80 averag e $8.21 $8.21 $10.86 $10.66 $10.66 $18.12 $18.12 $18.12 $164 $328 $435 $541 $755 $936 $1,116.98 $1,479 $1,842 $ 10,445,728 $7274,601 $ 3,171,127 Mg em car $1.12 ($0.901 ($1.301 ($1.301 ($1.301 $0.00 $0.00 $0.00 16% 1% -2% 4% -6% -5% ($0.041 -3% -3% 0.4% -0.9% Re cm.lmlM The Pact Ctemkk•ma a Design In Rab Design Wwksl,eerMay16 hail b PRwMsla•7/192005 at 24 PM Page loll 14 Benjamin Road ) Lexington, MA 02421 4 March 2005 Board of Selectmen 1625 Massachusetts Avenue ) Lexington,MA 02420 BY HAND AND EMAIL ) Dear Dawn, Peter,Bill, Jeane, and Richard, This letter is to provide you with information that the Water and Sewer Rate Study Committee has received in the past regarding other towns and cities that have PILOTS in their water and sewer charges. The first section below is a reproduction of an email from John Bartenstein to the WSRSC, in which he describes the results of phone calls he made ) to several towns. The second section is a reproduction of a document that describes information that Bill Hadley collected for Dan Fenn, a former member of the WSRSC. ) Although the Committee has not met since the last Selectmen s meeting, I am sending you this information because the subject came up at that meeting. Perhaps you will decide that this information might be useful to Palmer and Dodge as part of their research into the PILOT Si 40 ) Loren Wood H - Chair WSRSC ) ) ) ) ) ) ) ) 1 1G ) Reproduction of Email from John Bartenstein Reproduction of Email from John Bartenstein To: Water and Sewer Rate Study Committee From: John Bartenstein ) Subject: PILOTS--Practice of Other Towns Date: 7/30/2004 2.38 PM Members of the WSRSC: At Tuesday morning's meeting, Chris Woodcock mentioned four towns whose water/sewer enterprise funds he thought might make (or may in the past have made) PILOT payments to the town's general fund: Concord, Brookline,Mansfield and ) Marblehead. I have checked with these towns and learned the following: Concord: Concord's water and sewer enterprise funds do not pay PILOTs and have not done so in the past. Concord's water and sewer funds are organized under town by-laws that were adopted in 1974 and 1976 respectively, and the town has not adopted the ) provisions of c. 44 sec 53F 1/2. Concord has a municipal lighting plant that pays a PILOT as authorized by Chapter 164 Source. Paul Cote, Assistant Water/Sewer Superintendent ) Brookline: Brookline's Water and Sewer Enterprise Fund does not pay a PILOT, and has not done so in the past. The water and sewer operations were first organized as an enterprise fund in 2001 when Brookline adopted the provisions of c. 44 sec. 53F 1/2. Previously the water and sewer operations were conducted as special revenue funds within the general fund. ) Source: Stephen Cirillo, Finance Director ) Mansfield: Mansfield's water enterprise fund does not pay PILOTS, and has not done so ) in the past. The water enterprise fund was established several years ago under c. 44 sec. 53F 1/2 (there is no sewer enterprise fund as most residents do not have public sewerage). Two years ago, facing a budget crunch, the town considered adopting a PILOT for the water fund, and even included a provision for such a payment in its ) proposed budget. However,before the budget was adopted, the Massachusetts i Department of Revenue told the town that it was not allowed to do this so the PILOT was removed from the budget. The DOR officials who gave this advice were Jim Johnson, Director of the Bureau of Accounts, and Kathleen Colleary, counsel with the Property Tax Bureau. The town has a municipal light plant that pays a PILOT, as authorized by , ) Chapter 164 J 2 1 ) l7 ) Reproduction of Email from John Bartenstein Source: Bea Kearney, Town Accountant Marblehead: The town of Marblehead has not historically made PILOT payments from its water and sewer funds but instituted such a payment for the first time this year. Facing a significant budget deficit, the town asked the Water and Sewer Board ) to make PILOT payments and, after negotiations, the Board agreed to payments of$125,000 for water and$114,000 for sewer. (The town also considered but rejected a PAYT program; and proposed a$1.4 million override which was adopted.) Marblehead's ) water and sewer funds are not organized under c. 44 sec. 53F 1/2 but under a special act of the Massachusetts legislature in 1888. I have not seen the text of that special act. ) Source. Dana Snow, Water/Sewer Superintendent I know that Bill Hadley has been collecting information for Dan Fenn on the practice ) of other towns with respect to PILOT payments from their water and sewer enterprise funds. I hope this will be helpful in that effort. John Bartenstein � - ) ) ) ) ) 3 ) /8 >> ) ) Reproduction of document: "PILOTS DANN FENN.doc" Th) Does your community allow transfers from the water and sewer enterprise account to the community general fund? If so, what specific rules govern when these transfers are permitted? For example, each fiscal year Lexington raises and allocates $750,000 from the water and sewer enterprise as a payment in lieu of tax (PILOT) to fund the community general fund. Lexington also raises within the water/sewer rates ) indirect expenses to cover costs associated with supporting the provision of water and sewer services. Northborough 1 Tn Northborough we are Enterprise funds as well. We have gone through lengthy discussions about charges to the Town for providing water for fire service and an administrative charge to the water & sewer funds (or payment in lieu of taxes). We have detennined that the two charges would offset each other, as a result we agree to eliminate any charges back and forth. That being said, the Enterprise funds do pay FICA, health insurance, liability insurance, building insurance, retirement, legal expenses, workmen's comp,audit, and all debt payments associated with water and sewer projects. Also all Town buildings are metered and pay a water bill. As I mentioned we have been wrestling with these charges for a while. If you would like to give me a call at 508-393-5030, I'd be happy to discuss it with you. ) Re: Town of Wakefield i ) We do not allow transfers of water and sewer to the community general fund. We do not pay an in-lieu of tax payment. Our system works as follows: * We do not charge Town Buildings (Police, Fire, Public Works, Town Hall, Park ) Facilities) water/sewer fees. School, Municipal Light and Library do pay water/sewer fees. * Water/Sewer pay for the following services: 4 1 ? Reproduction of document: "PILOTS DANN FENN.doc" Somerville This is my first year for closing out and preparing a budget for the water and sewer enterprise funds. Somerville includes the indirect costs of health and retirements benefits ) and fund transfers to other City entities financed by the general fund , such as Treasury TT DPW As for rules governing the transfers, in practice it has not been done until the end of the ) year This is the first year of the enterprise fund and there was concern about whether or not the general fund would have to supplement its financing. The second year might be different. ) Milton's Milton's water and sewer are fully self supporting, but do not have fully separate enterprise funds; transfers are made within the general fund to pay all the direct and indirect costs of water and of sewer service: salaries and wages, employee benefits ,general expenses for equipment and materials, maintenance of water and sewer infrastructure and all capital expenses and debt service. Also included are "rent" for space and utilities in town hall, and a portion of costs of accountant, treasurer-collector, town counsel and selectmen's office. Water, sewer, and solid waste are budgeted sub- accounts of the DPW budget. Separate tables for the water, sewer and solid waste (which is still partially subsided by taxes) enterprises are included in the town meeting warrant. There is no payment in lieu of taxes. Water and sewer are considered town services like schools, library fire, police. How is the amount of the Lexington PILOT ) determined? About ten years ago, when water and sewer rates really began to climb, there ) was a lot of controversy The town hired an outside consultant to review the rate ) structure. A few charges were revised or taken out; others were added. I can get you a copy of the report if you wish. I am interested in responses from other cities and towns. ) Canton ) Canton does not transfer between Enterprise and General Funds. The Enterprise Fund is u charged a nominal fee that's goes into the General Fund. That fee is for Town overhead 6 2. Reproduction of document: "PILOTS DANN FENN.doc" in supporting the Water/Sewer Division. The fee was developed by Town Accountant, Comptroller, and Auditor. Wilmington I was out last week and did not get your message until today We are not an enterprise account but a special revenue account. Monies are taken from that account and transferred to the general fund for water related administration. I will forward this to the Town Account to supply the details. Belmont Belmont only allocates $100,000 from the water revenue to the town's general fund for "support services" At this time, sewer does not allocate any money to the general fund. In Belmont, Water has been a Special Fund and Sanitary Sewer has only been segregated by the Accounting Department. Starting in FY 05 both Water and Sewer will be ) enterprise funds. , 1 ) ) ) ) 2 � ) MEMORANDUM To: Board of Selectmen ) FROM: William L. Lahey ) Jay Gonzalez DATE: March 25,2005 RE: PILOTs Charged to Town of Lexington's Water and Sewer Enterprise Funds ) Pursuant .o the request of the Town's Water and Sewer Rate Study Committee(the —4 _ "Committee"), you have asked us to advise the Town as to the legality of charging certain payments in lieu of taxes(PILOTs)to the Town's water and sewer Enterprise Funds and collecting such charges through water and sewer user fees. This memorandum presents our understanding of the relevant facts,our legal analysis of the issues involved and our conclusions. RELEVANT FACTS We understand the relevant facts to be as follows. The Town owns and operates its own water and sewe) systems and charges fees to the users of the systems to cover the Town's costs of providing water and sewer services. The Board of Selectmen serves as the Town's water and sewer commissioners responsible for setting rates and overseeing the operation of the systems.' In 1987,t'ne Town established Enterprise Funds for water and sewer services pursuant to the General Law now codified as G.L. c.44, §53F'/:.2 The Enterprise Funds allow the Town to account fair the revenues and expenses of its water and sewer systems,which it operates on a self-supp(using basis, separately from other revenues and expenses of the Town. _ In fiscal year 1992,the Town began charging the water Enterprise Fund a PILOT in the annual ) amount o.'$500,000 that is recovered from the fees charged to users of the water system. In fiscal yea 1998,the Town began charging the sewer Enterprise Fund a similar PILOT in the annual an tount of$250,000 that is recovered from the fees charged to users of the sewer system. The Town has continued to charge the Enterprise Funds the PILOTs in the same amounts in every year since their inception. Revenues from water and sewer user fees allocable to the ) PILOTs have been transferred from the Enterprise Funds to the Town's General Fund and have been applied to support the Town's General Fund expenditures,without allocating such amounts ) to any particular expenditure. In addition to the PILOTs,the Town has transferred amounts from 'See Code Af the Town of Lexington,Massachusetts(the"Code") §90-3. ) 2 The Town accepted G.L.c.40§39K,the predecessor statute to G.L.c.44,§53F'/2 governing Enterprise Funds,on April 6, 1917(Article 14).G.L.c.40§39K was repealed by Section 104 of Chapter 177 of the Acts of 1990.G.L. c.44,§53Fin is currently in effect and governs the Town's water and sewer Enterprise Funds. ) � 3 the Enterprise Funds to the General Fund to reimburse the General Fund for costs incurred by the Town that are related to its provision of water and sewer services. In a letter dated December 16, 1991,the Comptroller of the Town notified the Director of the Bureau o: Accounts of the Department of Revenue(DOR)of the fact that the Town intended to charge th PILOT to the water Enterprise Fund for the first time in fiscal year 1992. This written notice w submitted in connection with DOR's review of the Town's proposed tax rate for fiscal ye 1992 in order to explain why the Town had projected a$500,000 increase in general PILOT ceipts over the prior fiscal year. In a letter dated December 24, 1991,DOR notified the 1 Town that it approved the Town's fiscal year 1992 tax rate,which was calculated based in3part on the ex rected receipt of the new$500,000 PILOT charged to the water Enterprise Fund. The tax rates of the Town subsequent to fiscal year 1992 have been calculated based on the estimated receipt of the water Enterprise Fund PILOT and,since fiscal year 1998,on the estimated receipt of the sewer Enterprise Fund PILOT,and DOR has approved the tax rates in every year. LEGAL ANALYSIS Annlicab a Law The ultimate legal question at issue is whether the Town has the statutory and constitutional authority to charge users of its water and sewer systems the portion of the water and sewer user fees attributable to the PILOTs. For the reasons set forth below,it is our view that the Town only has he statutory and constitutional authority to charge the portions of the water and sewer user fees allocable to the PILOTs if the PILOTs constitute,or are related to,costs of providing the water and sewer services. Relevant Statutory Provisions Pursuant :o G.L. c.40, §22F,4 the Board of Selectmen, acting on behalf of the Town as the water and sewe•commissioners,is authorized to fix reasonable charges to be paid for water and sewer services r ndered by the Town or any department thereof. Although"reasonable charges"could ) arguably a read more broadly, a conservative reading of this statutory authorization to impose i 1 "reasons le charges"for services rendered would allow for charges sufficient to cover the costs of provid ng the service. Therefore,the statutory authority to include the amounts of the PILOTs in the was er and sewer user fees depends on whether such amounts represent costs of providing the water and sewer services. Pursuant .o G.L. c.44, §53F%,the Town's water and sewer Enterprise Funds must be maintained by the Tri asurer of the Town and accounted for inaccordance with generally accepted accounting principles(GAAP). The estimated income and proposed line-item budgets for the Enterprise-Funds are required to be submitted by the Board of Selectmen to Town Meeting,and 3 See Exhib it A for a copy of the correspondence between the Town and DOR and related materials with respect to the calculat on and approval of the Town's fiscal year 1992 tax rate. ) 'The Town accepted G.L.c.40,§22F on November 4, 1991(Article 3). 1 1 2 1 02y I 1 Town Met:ting has the authority to act upon the budget in the"same manner as all other ) budgets." The statute requires the Town to include the difference, if any,between the amount appropriated for the total expenses of the water or sewer systems and the estimated income from the related system in its tax levy If the water or sewer system produces a surplus,the surplus must either be kept in a separate reserve fund and used for capital expenditures of the system, ) subject to appropriation,or be applied by the Board of Selectmen to reduce user charges.5 Relevant Constitutional Provisions I ) Even if it s determined that the PILOTs are a permissible component of the water and sewer user fees s uthorized by statute, such statutory authorization must be permissible under the Constituti m of The Commonwealth of Massachusetts. A key factor in determining the constitutionality of the charges is whether a court would consider them to be taxes or fees. ) The Constitution grants cities and towns broad authority to govern local matters and to exercise any power or function that the legislature has the power to confer, as long as it is not inconsistent with the Constitution or state statute.6 However,the Constitution expressly reserves the power to levy, asse;.s and collect taxes to the legislature. Further,the Constitution circumscribes the legislature's(and,therefore,municipalities')taxing authority,and,with certain limited exception.,requires that the real property tax be both proportional and reasonable.8 If the water and sewer charges attributable to the PILOTs were characterized by a court as a tax,they would ) be invalid because they do not comply with the strict constitutional requirements for taxation by municipal ities.9 A governmental entity's power to impose fees is given more deference than the power to tax.to Fees impcsed by a governmental entity are described as either"user fees",which derive from the 6 G.L.c.44, §53F'/,. 6 MA Const Art.II, §§1,6. _) - r MA Const Art.II§7. ) 6 MA Const Part II,ch. 1,§1,art.IV In relevant pact:" to impose and levy proportional and reasonable assessments rates,and taxes,upon all the inhabitants of,and persons resident,and estates lying,within the said ) commonwel dth,except that,in addition to the powers conferred under Articles XLI and XCIX of the Amendments, the general i:ourt may classify real property according to its use in no more than four classes and to assess,rate and tax such prcperty differently in the classes so established,but proportionately in the same class,and except that ) reasonable exemptions may be granted. " 9 The power to tax is circumscribed and carefully scrutinized: "The bounds of legislative power as to taxation are ) marked by distinct and unmistakable words in the Constitution of this commonwealth.The history of constitutional government shows that clear definition and explicit restriction of the power of taxation was one purpose if not a ) chief motivt in adopting written constitutions."Opinion of the Justices,250 Mass.591,602(1925). 1e For exam,le,the amount of the fees in connection with motor vehicle licensing"would not be scrutinized too ) curiously evn if some incidental revenue were obtained." Opinion of the Justices,250 Mass.at 602(citing Hendrick v. Maryland,235 U.S.610). a.) ) 3 ) oZ 5^ ) � I ' I governmental entity's rights as the proprietor of the instrumentalities used, or`regulatory fees", exacted as a part of or incidental to regulations established in the exercise of the police power." 1 Both typos of fees are distinguished from taxes as payments given in return for a particular governm nit provided benefit. In analyzing whether a charge by a municipality is appropriately characterized as a valid fee or an imper nissible tax,courts weigh the following factors set forth in Emerson College v City of Boston and the related line of cases12• 1 Are the services subject to the charge sufficiently particularized to justify distribution of the costs among the users of the system,rather than the general public? 2. Are the services subject to the charge voluntarily requested,such that the party paying the fee has the option of not utilizing the service and avoiding the charge? 3. Is revenue obtained from a particular charge used exclusively to meet expenses or is it destined for a broader range of services or the general fund? Generali,,, a court will treat with deference a municipality's classification of a charge as a fee, but the ultimate decision on whether a charge is a fee or a tax will be determined by its operation rather then its description.13 In a legal challenge,the plaintiff will have the burden of proving that the assessment is not a lawful fee.14 Under the;first inquiry of the Emerson College analysis, it is clear that water and sewer services are partic ularly beneficial to the users of the water and sewer system in a way that is unique from the benefit to other members of society as a whole. This is the case even though water and sewer systems ao confer significant benefits, such as public health,sanitation,and environmental protection,to the general public. In Winthrop v. Winthrop Housing Authority,the appellate court,in upholding a charge for use of the common sewers,concluded that the benefits of the use of the sev rer system are distinct and sufficiently particularized.t5 In Morton v.Hanover, the appellate court determined that there was a particularized benefit sufficient to validate a water rate sur&arge to certain property owners whose homes abutted a new water main installation, even though the water main at issue was interconnected with the entire system to provide i ) Opinion of the Justices,250 Mass.at 602-603. 12 Emerson College v. City of Boston,391 Mass.415,424-425(1984). In Emerson College,the Supreme Judicial Court estab fished a three-part balancing test that relies on a set of criteria or factors that are weighed.Decisions invoking E person College tend to opine that the charge at issue has mixed characteristics but is either more tax-like or more-fee-like,rather than characterizing the charge as having passed or failed the Emerson College test. ) 13 Emerson College,391 Mass.at 424(citing Associated Industries of Massachusetts,Inc. v. Commissioner of Revenue, 3"8 Mass.657(1975). 14 Nuclear Metals,Inc. v.Low-Level Radioactive Waste Management Board,421 Mass. 196(1995). ) 13 Winthrop v. Winthrop Housing Authority,27 Mass.App.Ct.645,647(1989). 4 ) a 6 ' ) increased flow,pressure and fire protection and did not serve the owners' domestic water uses.16 Because general water fees benefit the users of the system in an even more direct way than the ) water surcharge fee benefited the plaintiff's in Morton,this case confirms that the general benefits ) to users o: a water system are sufficiently particularized to justify charging them users fees,even though thm charges pay costs of services with benefits to the general public. ' ) To the extent a court views the water and sewer fees in component parts,however, a question ) arises as t r whether the component relating to the PILOT payment to the Town has a benefit to users of the system different from the benefit to the general public. If the PILOT in and of itself ) constitute;a necessary and legitimate cost of operating the system,we believe a court would ) view it in the context of all services provided by user fees and,based on legal precedence, therefore i ionclude that it is more like a fee than a tax under the first prong of the Emerson College analysis. If the PILOT is justified on the basis that the revenues from the PILOT are used to pay indirect costs of the system,a court would view this portion of the fee in the same ) way as it would all other portions of the fee used to pay direct and indirect costs of the system and,like tae appellate court in Morton,conclude that it serves a particularized benefit to system users. ) Under the second inquiry of the Emerson College analysis,water and sewer services in the Town ) are likely to be considered voluntary to the extent that property owners could(and some do)use private se tic systems or wells or they could simply choose not to use the water and sewer services a atlable to them and thereby avoid the fees.'? Moreover,most courts since Emerson ) College h ve dispensed with or minimized the second inquiry as to the voluntary nature of the charge or have included it as part of the first factor.ts Because courts have upheld water and sewer use fees generally as valid fees rather than impermissible taxes,the courts have already necessarily determined either that such fees are sufficiently voluntary to be considered more like i a fee under the second prong of the Emerson College analysis or that such second prong is ) immaterial or of less weight than the other factors. Furthermore,whether or not such water or 1 16 See Mortem v.Hanover,43 Mass.App.Ct. 197,200-202(1997). 17 See Winthrop,27 Mass.App.Ct.at 647;Cf.Berry v.Danvers,34 Mass.App.Ct.507,512-513(1993)(finding a ) sewer connection fee as more tax-like under the second prong because connecting to the sewer system was ) mandated b "state law). It should be noted that the sewer connection fee in Berry,which was a special fee charged for the right to connect to the sewer system,is different from the user fee approved in Winthrop and at issue in the 1 case of the Town,which is charged for ongoing use of the system. 1 '9 In Silva v. City of Fall River,59 Mass.App.Ct.798,804(2003), the court observed that"of the three factors in ) the Emerson College test,the second factor,whether the plaintiff's use of the service is truly optional,is not necessarily determinative of whether a charge is a fee or a tax. .Rather,it is'arguably only subsidiary to,and an ) additional manifestation of,the analytically more comprehensive first factor,particularized private rather than general public benefit."(citations omitted—see fn.8). See also Morton,43 Mass.App.Ct.at 202,regarding the validity of a surcharge on municipal water,in which the appellate court stated that"the fact that the plaintiffs'use of ) the service i not truly optional is not determinative' and also that the trial court judge's opinion that the plaintiffs could avoid the charge by not using town water was more theoretical than pragmatic,but that his"legal conclusion ) that the volu ntariness factor does not preclude treating the surcharge as a fee is correct." 19 Morton,4 3 Mass.App.Ct.at 202; Winthrop,27 Mass.App.Ct.at 647 i ) J 5 ) 27 ) 1 I sewer fees are used in part to pay a PILOT has no bearing on the analysis under the second prong of the Emerson analysis; either the entire fee is voluntary or it is not. The third inquiry following the Emerson College analysis is whether revenue obtained from a particular targe is used exclusively to meet expenses or is used for a broader range of services. In Emerson College,the court noted that the third prong of the analysis is"not decisive, but is of weight in indicating a charge is a tax."20 However, assuming a court would analyze the component of the water and sewer charges attributable to the PILOTs separately from all other charges for water and sewer services,we believe the third prong would be the most significant factor in a court's analysis because,as described above,the first factor in this case leads to a similar qu;stion of whether the PILOTs are themselves or are allocable to costs of the system and the ser,ond factor is not relevant in this case. There are :ertain circumstances under which the courts will not scrutinize municipal charges under the hird prong and will defer to their characterization by the municipality as a valid fee rather that i an impermissible tax. In Commonwealth v. Caldwell,the appellate court stated that in order for a municipal charge to be a fee rather than a tax,the equivalence between the cost of providing the services and the revenue need not be exact,as long as"the revenue collected is not significantly and consistently in excess of the cost of providing the services."21 Similarly,in Silva,the appellate court stated that,in some circumstances,a rough estimate may be sufficient 22 ) Because tl a Town's water and sewer systems are self-supporting and the user fee revenues attributabl to the PILOTs have not been allocated to costs of the system,total revenues from the user fees presumably exceed the costs of the systems by at least the amount of the PILOTS 23 Based on I he case law,we believe that if a court were to review the legitimacy of the fees attributabl!to the PILOTs in the context of the total fees charged for all water or sewer services of which i constitutes only a relatively minor portion, a court might view the water and sewer user fees is generally fed to the cost of providing water and sewer services and therefore more ) like a fee order the third prong of the analysis. However,because the PILOT components of the water and sewer fees of the Town are easily identifiable and any challenge to their legitimacy would likaly focus on that component of the fees and not on the water and sewer fees generally, we believe that a court would likely analyze the PILOT component of the water and sewer fees in isolatio,d and would therefore likely scrutinize the use of the fees. i ) ) 20 Emerson College,391 Mass.at 427(quoting Opinion of the Justices,250 Mass.at 597);see also Morton,43 ) Mass.App. ;t.at 202(concluding that the water rate surcharge constituted a fee under the third prong of the Emerson Co'lege analysis because there was no evidence that any income from the surcharge or water rates was used for gen Dral revenue purpose,and noting that,"Din any event,water rates are readily distinguishable from taxes"). 21 See Comn onwealth v. Caldwell,25 Mass.App.Ct.91,97(1987). 22 See Silva, 59 Mass.App.at 806. v This facts Il conclusion assumes that the Town has identified all indirect costs of the systems payable from the ) General Fun I and charges the Enterprise Funds for all such indirect costs. If there are indirect costs of the systems that are not being charged to the Enterprise Funds,costs of the systems might exceed revenues,which would result ) in a less stringent review by a court. ) 6 ag I ) i I ) We belie e that there are two possible legal rationales that would support a conclusion that the ) PILOT p rtions of the Town's water and sewer user fees are attributable to costs of providing the ) water an sewer services and consequently are legally permissible. First,if the Town has the ) legal au ority to charge PILOTs to the Enterprise Funds for the water and sewer systems, the PILOTs ould constitute a cost of providing the water and sewer services. Second, even if no ) such leg authority to charge true PILOTs were recognized by a court,the amounts the Town ) refers to PILOTs that are charged to the Enterprise Funds would be upheld if they were ) traceable to indirect costs of the water and sewer systems paid from the Town's General Fund. Each of ese possible legal justifications is discussed in more detail below ) 7 PILOTS as Cost of Water and Sewer System 1 Governor yntal entities may charge PILOTs to tax-exempt entities either when authorized or ) required to do so by statute or when another entity agrees to pay the PILOTs as a matter of private cntract. In all cases,the policy rationale for charging the PILOTs is to compensate the governor ntal entity for all or a portion of lost property taxes it would have received if the entity charged t e PILOT were subject to property taxation. If the Town is authorized to charge its water and sewer Enterprise Funds PILOTs,then the cost ) to the users of the water and sewer systems of paying such PILOTs should be viewed as a cost of ) providing water and sewer services to such users in the same way as property taxes would be to a ) private,taxable provider of such services. Under this line of reasoning,the Town's charging of the PILOTs to the Enterprise Funds and the Enterprise Funds subsequent charging of the amounts r ceded to pay the PILOTs to the water and sewer users are separate transactions. The ) portion othe user fees charged to pay the PILOTs would be viewed as a valid fee under the ) third pro of the Emerson College analysis because the revenues from that portion of the fee would be sed to pay the PILOT,a legitimate cost of providing the water and sewer services. Accordin ly,the Town's ultimate use of the amounts it receives from PILOTs paid by the Enterprise Funds would be irrelevant to the legitimacy of the amount included in the water and 7 sewer usefees to pay the PILOTs. The following is a brief discussion of the two types of PILOTs and our analysis as to whether the ) payments from the Enterprise Funds that the Town refers to as PILOTs qualify as one of these ) types of true PILOTs. Statutory?JLOTs ) In establishing and empowering its political subdivisions, authorities, agencies and other entities to carry or 1 its public purposes,the Commonwealth may impose conditions,restrictions and ) requireme its on such entities 24 In certain circumstances where the legislature has created ) governmental entities or quasi-governmental entities that own property which might otherwise be taxable by a municipality,the legislature has required or authorized the payment of PILOTs to ) u See e.g.,Opinion of the Justices, 168 N.E.2d.858(Mass. 1960);Opinion of the Justices,22 N.E.2d.49(Mass. 1939). ) ) 7 ) ) a ? ) 3 the muni ipality 25 Such statutorily mandated or permitted PILOTs are consequently legitimate costs of a governmental or quasi-governmental entity in carrying out the public purpose for which it as established by the legislature. Althou there is no express statutory requirement or authority for the Town to charge its water and sewe Enterprise Funds PILOTs, a court could find that the Town has implicit statutory authority to charge such PILOTs pursuant to the Enterprise Fund statute as interpreted and 1 implem ted by DOR. DOR has regulatory authority over municipal assessments and taxation and certa n other matters of municipal finance.26 Consequently, a court would likely grant substantial deference to DOR's interpretation and implementation of the Enterprise Fund statute 27 Although DOR's published guidance on Enterprise Funds notes that it is uncertain whether a court wot Id ultimately conclude that PILOTS charged to an Enterprise Fund are a legitimate cost of the enterprise,it recognizes the practice of municipalities in assessing PILOTS on Enterprise Funds an'l the legal theory for doing so under the Enterprise Fund statute.28 Specifically,DOR points ou that the Enterprise Fund statute requires the accounting for an Enterprise Fund to be maintained in accordance with generally accepted accounting principles(GAAP) and that,under ss See G.L. c.164, §47C(j)(exempting municipal light plant cooperatives from taxation but requiring payment of PILOTs to municipalities);G.L.cAON, §19(authorizing municipal water and sewer commissions established under that statute :o enter into PILOT agreements with other municipalities with respect to property owned by a corrnnissior in such other municipalities that was subject to property taxation prior to the establishment of the commission);G.L.c.58,§§13-17(requiring the Commonwealth to pay PILOTS to municipalities for property owned by the Commonwealth in such municipalities that is used for certain purposes and departments of the Commonwealth);G.L.c.81A, §§8 and 14(exempting Massachusetts Turnpike Authority from taxation,but authorizing municipalities to levy property tax on businesses that lease,use or occupy property of the Authority 1 located in the municipality);Chapter 465 of the Acts of 1956(requiring Massachusetts Port Authority to enter into agreements with the City of Boston,the City of Chelsea and the Town of Winthrop for the payment of PILOTs); G.L.c.59,§'50(requiring the Massachusetts Water Resources Authority to make PILOT payments for the benefit of certain mut icipalities in which certain property held for the protection of the water supply is located);G.L.c.59, §5D(exem ting property owned by a municipality located in any other municipality for the purpose of a water supply,wa r supply protection,sewage disposal or a public airport if yielding no rent from property taxation,but requiring th payment of PILOTs);and G.L.c.121A, §§6A and 10(exempting urban redevelopment corporations established under that statute from taxation,but authorizing such corporations to enter into agreements with municipalitbs for the payment of PILOTs). w G.L.c.14 §§1 and 6;G.L.c.59,§23;G.L.c.58,§§I and 1A;G.L.c.44,§40. rr Protective Life Insurance Company v.Sullivan,425 Mass.615,618-619(199'7)(stating that the court grants "substantial deference to an interpretation of a statute by an administrative agency charged with its administration But this principal is one of deference,not abdication,and we have overruled an agency's interpretation when it is contrary to the plain language of the statute and its underlying purpose.")see also Leopoldstadt,Inc.v. Commissioner of Division of Health Care Finance and Policy,436 Mass.80,91-92(2002). a Pp.23 am l 24 of"Enterprise Funds MGL Chapter 44§53F'h"published in June 2002 by the Massachusetts Department of Revenue Division of Local Services and available at http:/lwww.dls.state.ma.us. 8 30 I 7 I � I � ) GAAP, a PILOT is a proper expense of an Enterprise Fund accounted for as a quasi-external transaction in the same manner as if it had involved a private party.29 ) In addition L to acknowledging and articulating this rationale for finding that municipalities have ) implicit st ttutory authority to charge PILOTs to their Enterprise Funds,DOR has followed this ) reading of the Enterprise Fund statute by sanctioning the practice of charging such PILOTs. In its guidance, DOR advises municipalities as to how they should calculate the amount of the PILOTS tc be charged,thereby expressly permitting municipalities to charge the PILOTs.30 Moreover, at least with respect to the Town,DOR has further sanctioned the practice by lanowingl) approving tax rates of the Town which have been calculated based on the assumption that the Gyneral Fund would receive PILOT revenues from the Enterprise Funds to offset General Find expenditures.31 } There are I:ertain factors,however,which could lead a court to conclude that such PILOTs are not author•zed by and are contrary to the Enterprise Fund statute,notwithstanding the deference it must accord to DOR's reading of the statute. s In other statutory contexts,the legislature has been clear when requiring or authorizing municipalities to charge PILOTs.33 There is no similar express authority in the Enterprise Fund statute,and a court might conclude that the statutory ) requiremei it to account for an Enterprise Fund in accordance with GAAP is not sufficient evidence cf a legislative intent to provide underlying authority for municipalities to charge PILOTS 34 In addition, in each of the situations in which the legislature has authorized ) 29 Id. ) 3o Id. ) 31 G.L.c.59, §23 provides that,in determining the amount of the annual tax levy necessary to meet appropriations for a fiscal y tar,a municipality shall deduct,among other amounts,estimated receipts of the municipality lawfully available to neet the expenditures of the municipality in the related fiscal year. A municipality may only deduct estimated receipts which exceed the aggregate amount of estimated receipts during the preceding fiscal year from ) the same sources if it obtains the written approval of the Commissioner of Revenue. No tax rate,calculated in part based on deductions of estimated,non-tax receipts,"shall be fixed by the assessors until such rate has been approved by the connrdssioner,and a rate shall not be approved until the commissioner determines that the deductions under ) this section are in full compliance of law and are reasonable in amount. G.L.c.59,§23(emphasis added). See Exhibit A attached hereto for evidence of DORS approval of the Town's tax rate in the first year that the water Enterprise Fund was charged a PILOT after being informed in writing that estimated non-tax receipts were ) increasing over the prior year receipts due in part to the PILOT. 32 See fit 27 above. 33 See fit 25 above. ) 71 Boylston Water District v. Tahanto Regional School District,353 Mass.81,83(1967)("[W]e should be unwilling to hold that[3ublicly owned]property was subject to taxation in any form,unless it were made so by express enactment or by clear implication."(quoting Worcester County v.Mayor&Aldermen of Worcester, 116 Mass. 193, 194)); Tax Collector of North Reading v.Reading,366 Mass.438,442(1974)(in finding no clear implication in governing statute that Town of North Reading could levy a tax on personal property owned by the Town of Reading, the court stat:d that where"the Legislature intended to provide for the payment of taxes or payments in lieu thereof it has clearly so provided"). ) ) 9 3 / ) J municipalities to charge PILOTs,the PILOTS are required or permitted to be charged to another 1 govemmontal or quasi-governmental entity which owns property that might otherwise be taxable by the nu nicipality(or to a private party using property owned by another governmental entity)." Although the GAAP method of accounting treats a PILOT charged to an Enterprise Fund as a quasi-external transaction in the same manner as if it involved a private party, the "Enterpri;e Fund"is not a separate entity from the municipality(see below for an explanation of this point).36 On balance,we believe a court could reasonably conclude that PILOTs charged to an Enterprise Fund are authorized by the Enterprise Fund statute and,therefore,constitute legitimate costs of providing the water and sewer services recoverable through the user fees. However, given the absence of express statutory authority and the fact that the Enterprise Funds are not legally separate entities from the Town,there is some legal risk in relying on such authority as the sole legal bash for charging the amount of such PILOTs to the users of the water and sewer systems. To the ex:ant that the Town does rely on this statutory authority based on DOR's interpretation and implementation of the statute,the Town's PILOTs would be more likely to survive a legal challenge if the PILOT amounts were calculated in the manner prescribed by DOR in its guidance 3n the subject(i.e.,based on the amount of property taxes the water and sewer systems would pay if privately owned and subject to taxation): 7PILOTs by Contract In additio 3 to PILOTs authorized by statute,municipalities may charge PILOTs when another party agrees to make such payments. Typically,these types of PILOT agreements are entered 1 into with ion-profit entities that are exempt from property taxes. These PILOT agreements are based upon the powers of the municipality and the non-profit entity to negotiate and enter into an 1 enforceab.e agreement as independent entities,38 I 33 See fn.25 above. 36 G.L.c.16 I,the statute governing municipal light plants and municipal light plant cooperatives,provides some evidence of s legislative reluctance to permit a municipality to charge a PILOT to an enterprise fund comparable to those established under G.L.c.44,§53FI4. That statute permits municipalities to establish a municipal light plant which is owned and operated by the municipality and accounted for as an independent enterprise in a manner similar to Enterprist Funds established pursuant to G.L.c.44,§53F1/4 See G.L.c.164,§§34,56 and 57 In addition,the municipal lightplant statute authorizes one or more municipal light plants established under the statute to create a municipal liht plant cooperative,which shall constitute a separate body politic and corporate and public instrumentality,for the purpose of providing energy or energy-related services. G.L.c.164,§47C. Under G.L. c.164,nnmuipal light plants,which are not separate entitles from the municipality,are not expressly required or given the au hority to pay PILOTs to the municipality,but municipal light plant cooperatives,which are established as separate entities from the municipality,are expressly required to pay PILOTs. G.L.c.I64,§47C(j). 37 Pp.23 and 24 of"Enterprise Funds MGL Chapter 44§53F%'published in June 2002 by the Massachusetts Department if Revenue Division of Local Services and available at http://www.dls.state.ma.us. 33 G.L.c.40, §4. 1 10 3a I ) The`Ent:rprise Fund"is not a separate entity from the Town,and,therefore,cannot enter into a ) negotiate I,enforceable agreement with the Town in the same manner that an independent,non- ) profit ins itution could. The Enterprise Fund statute does not establish the Fund as a separate ) entity fro:n the Town;rather,it provides the Town with an alternative means of accounting for and finan;ing its water and sewer services 39 Under law,the Town is still the owner of the ) systems and it is responsible for regulating,managing,operating and financing the systems. Consequently,the PILOTs charged by the Town to the Enterprise Fund cannot be justified solely ) on the theory that they have been agreed to by the Enterprise Fund in the same way that a non- profit cor'oration,as an independent entity,enters into an agreement with a municipality to pay ) PILOTs. ) Identifvine Indirect Costs ) To avoid he legal uncertainty associated with the Town's authority to charge true PILOTs to the ) Enterprise Funds,the Town would need to justify the amounts of any PILOTs charged to the Enterprise Funds based on actual indirect costs of the water and sewer systems. This would involve identifying the indirect costs of the water and sewer systems paid by the Town's General ) Fund. M long as such indirect costs exist(which costs would need to be in addition to any ) indirect ci tsts currently charged to the Enterprise Funds apart from the PILOTs),the fact that the Town has referred or might continue to refer to such charges as"PILOTs"should be legally ) irrelevant ) The deter flirtation as to what constitutes an indirect cost of the water and sewer system which may be used to justify the amounts the Town currently charges as PILOTs requires a fact- ) intensive alysis. Although the case law does not provide a lot of helpful guidance as to what specific c at the Town could allocate to its water and sewer enterprise funds,it is clear that there mus be some nexus between the expense and the provision of water and sewer services. As an ex ple,in Emerson College,the court concluded that the fee charged to certain property ) owners fo the provision of augmented fire services necessary as a result of their properties was more like tax under the third prong of the analysis because the proceeds of the fee were not used to pa for the additional fire companies attributed to augmented fire protection services,but rather for general police and fire services.40 ) DOR has 4:ffered guidance in identifying certain costs of water and sewer services that are properly c larged to Enterprise Funds,including salaries, expenses,capital,debt,emergency ) reserves,13gal and borrowing costs, employee benefits,pension and retirement costs.41 Based on ) the proposed fiscal year 2006 budget motion,it appears that the Town already allocates a portion ) of many o F these types of General Fund expenses to the water and sewer Enterprise Funds and provides fur a reimbursement from the Enterprise Funds(e.g.,pension,insurance,DPW salaries 39 G.L.c.44, §53F1/2 ) 40 Emerson College,391 Mass.at 427 l 41 See pp.5,6 and 9 of"Enterprise Funds MGL Chapter 44§53F1,4"published in June 2002 by the Massachusetts Department )f Revenue Division of Local Services and available at www.dls.state.ma.us. ) J ) I 11 i 33 u a f ) 7 ' and exp es,a portion of the salaries and/or expenses of the Selectmen,Town Manager, Finance a4d MIS offices). Based on DOR's guidance,there might be other expenses in the Town's G meral Fund budget which can legitimately be attributed to the provision of water and sewer services(e.g.,debt service on any bonds issued for water and saver purposes and legal expenses related to water and sewer services). We understand that the Committee is reviewing the way in which the Town allocates General Fund buduet expenses to the Enterprise Funds and will be making recommendations to the Town. lice the Committee provides these recommendations,we suggest that members of the m Comitt ,the Town administration and ourselves review the Town's General Fund budget together d work to determine whether there are additional expenses in the General Fund budget that should be allocated to the Enterprise Funds and whether the methods of allocating ) General Fund expenditures to the Enterprise Funds should be revised. To the extent that this process id ratifies additional indirect costs that may properly be allocated to the Enterprise Funds, such costs may be reimbursed with amounts currently charged to users of the water and sewer systems for the PILOTs. ) CONCLLSION There is nu case law which directly addresses the legality of the Town's charging PILOTs to the Enterprise Funds and collecting such charges through water and sewer user fees. For the reasons described ibove,we believe that a court could conclude that the Town has implicit statutory authority t)charge water and sewer PILOTs to the Enterprise Funds and,therefore,that the PILOTs constitute legitimate costs of the Town's water and sewer systems which may be recovered from the users of the systems. There are certain factors which could,however, lead a court to re soh the opposite conclusion. One way in which the Town could mitigate(but not eliminate) the risk that a court would not uphold the PILOTs would be to calculate the PILOT ) amounts u,the manner prescribed by DOR(Le.based on the amount of property taxes the water and sewer systems would pay if privately owned and subject to taxation). The only way, however,t 3 be certain that a court would uphold the amounts charged by the Town as PILOTs would be i f such amounts were tied to actual indirect costs of the water and sewer systems. ) I i ) 12 311 _) EXHIBIT A ) 1 L. TOWN OF LEXINGTON a If MASSACHUSETTS 02173 1 1 1639lakawem*sae ) JOW►J.RYANOrymman ) December 16 ,1991 ) Mariellen P Murphy, Director 1 Comma wealth of Massachusetts Department of Revenue Bureaa .of Accounts ) 200 Portland Street Boatoe, Ma. Dear dariellen; ) 1 - .. Enclo ed please find three copies of the Fiscal 1992 Pro Forma Recap• tulation sheet ) The local receipts not allocated show an increase in two main areas ) which will require some explanation ) Paymerte in Lieu of Tax show an increase due to an appropriation ) made by Town Meeting to transfer from the Water Enterprise Fund an in lieu of tax payment to the general fund in the amount of 5506,0100 This transfer for Fiscal 1992 has already been made ) The sei:ond area reflecting an increase is in the area of Investment Income The Town has accepted the legislation allowing for quarterly real and personal tax billing and this procedure was implemented with a billing on June 30, 1991 The Town has also ) adjusted its accounts payable cycle from weekly to hi-weekly and is currently in the process of insisting upon cash discounts from all ) our vendors or payments will be scheduled no sooner than 45 days from date of invoice in .an attempt to provide the Town with a —) - better cash flow ) In the area of enterprise funds please find enclosed a copy of the ) rate sirhedules prepared by the Water & Sewer Division upon which the Board of Selectmen voted the rate changes effective July 1 , ) 1991. t is anticipated that the rates currently in effect will fully fund both the water and sewer operations If you have any questions do not hesitate to call ) Sincerely, 1 `r1J.ea�-ca. ) John J Ryan, Co ptroller ) ) ) 35 U ,U ) 1 ) THE COMMONWEALTH OF HASIACHUSITTI OWAITMEMT OF REVIMIE PIICAL 1902 TAE NATI RECAPITULATION 1 I.TA% RATE SMART A.Totel MW'flt To N Raked (from It I 64,826,224.00 E.Totxl Estfllited Recelpts and Other Rran+s Source (from tilt) I 21,331,476.53 C.Tsx Levy (IA minus IN/ I 43,474,1%7.47 ) D.Olstrlhutlen of Taa Sates end Levis. Is this s reesrtlflestlon yowl M ..•••(Enter T or MI 1 I Ctuslflsc^•s Unclassified-se C e-••-(biter M) Cs) I Cb) (t) TO (s) I (f) Lary IC shove demon VALUATION LINT by ) PEIGEIITAII Inch portent by CLASS TAX RATES CLANS CLASS (from LA-3) In oaluml (b) (free LA-2) (0)/(d)x1000 (d)1(Cs)/1000 Rutdannclal 70.8620% 30,107,073.9 2,519,321,000.00 12.23 1 30,811,293.83 1 cuss Splice 1 0.00002 0.00 0.00 0.00 0.00 I Cano.rclel 1 20,75202 9.021,879.59 379.124,000.00 23.80 9,023.19840 Industrial 1 3.47342 2,333,441.911 96,899.000.00 23.80 2,333,796.20 1 -.1 I Iama ---I 97.3274% n ._ ..---- 2,997.346,000.00 42.10,290.83 .__ ) 1 Personal 1 2.9726% 1,292,330.34 1 54,052.800.00 23.80 I 1,286,456.64 1 •I .---1 .. . _. NOTAL 1 10P10000%, 5,051,798,800.00 43,474,747.47 I 1 I ... I 1 .we�vvoe�vQ... Yaaoo�eoee. . I Gourd of Assesses of I City or Town Date Tel No. 1 I 2 1 Co Not Write Below This Lino • For Dspertnent of Revenue Use only Reviewed by FY92 Growth S Data F798 Levy Limit S Tex Rates(s) I FT93 list S II. FY92 Estlstsd I I Ill.- %. Receipts $ F792 Ovaria S Director of Accounts Dies 1 1 ) ) I ) 36 ) f. I ) I II. AMOURTO BS RAISED > A. AMOR TION8 (from Sohedulu B) 5 62,622,761.00 ) 1. Amounts for tea title 5 0.00 title purposes ) 2 Debt and interest charges $ 0.00 not included in schedule a 1 3 Final court judgments $ 0.00 1 4. Total overlay deficits of 5 0.00 prior yearn 6 Total cherry sheet offsets $ 1,031,057 00 6. Revenue definite 5 0.00 ) 7 °feint receipts deficits $ 0.00 deficits Ch. 44,Seo. 531 8. $ 1 9.. $ 1 10, 5 0.00 ) 11. 5 0.00 ) TOTAL I (Total linea 1 through 11) $ 1,031,057.00 ) C. STATS ANO COUNTY CHERRY MIT CflSAEB 1 922.406.00 ) (C.S. i-SC cols. 1 and 2) D. ALLOWAN FOR ABATEMENTS AND EXEMPTIONS 5 350,000.00 } ( Y) NOTE- Is OL-1 Fora Campletud7 ) E. TOTAL ell TO BE RAISED (Total IIA through $ 64,826,224.00 I IID) ) III. E5TIMA ED RECEIPTS AND OTHER MANOR SOURCES ) A. ESTIMAT RECEIPTS - STATE 1. Che r Sheat EstimatedJ Y $ 4,106,052.00 Rao pt. (C.S. I-ER Totayl Dart D.) 2. Chitty sheet Overestimates $ 1,328.00 ) (C.8. I-E0 Part E col. 3) TOTAL. A (Total linea 1 and 2) $ 4,107,380.00 ) B ESTIMATE? MUSTS - LOCAL 1 LocaL Receipts Not 5 5,448,610.53 ) Allocated (Page 3, col. (b), ) Line 25) 2 Otfait Receipts 5 0.00 ) (See Schedule A-1) 3. Enta:rprin Funds 5 8,348,486.00 (See Schedule A-2) TOTAL B (Total lima. 1 and 3) $ 13,797,096.53 J ) 3 7 u J C. REVANDE SOURCES APPROPRIATED POR PARTICULAR PURPOSES 1. Free Oath (Page 4, Cci. (C)) S 31,000.00 2. Other Available !undo (Page f 916,000.00 4, col. (d)) 6 947,000.00 TOTAL C (Total linea 1 and 2) D. OTHER REVEROE SOURCES APPROPRIATED SPECIFICALLY TO REDUCE TAE RATE 1. Pres Cash 6 2,600,000.00 a.) Appropriated prior to 7/1/91 6 0.00 b.) Appropriated after 7/1/91 $ 2,500,000.00 TOTAL C (Total lines a and b) 2. lunicipal Light Source 5 0.00 3. 7ther source f 0.00 tOTAL D (Total lines 1 5 2,500,000.00 through 3) E. TOTS, ESTIMATED RECEIPTS AND OTHER REVENUE SoaRCES (Tat,! IIIA through IIID) f 21,351,476.53 I I SUMMARY US TOTAL AIk7UNT TO BE RAISED AND TOTAL RECEIPTS FROM ALL SOURCES A. TOTAL AMOUNT TO ES RAISED (from IIS) S 64,526,224.00 E. TOTAL, ESTIMATED RECEIPTS AND OTHER f 21,351,476.53 REVENUE SOURCES (from IIIS) C. TOTAL REAL AND PERSONAL PROPERTY f 43,474,747.47 TAX LEVI (from IC) D TOTAL RECEIPTS FROM ALL SOURCES 6 64,826,224.00 (TOTAL IVa plus IVO) 1 (IVA MUST EQUAL IVU) 1 ) 1 3g _ i ) SCHEDOLd A. LOCH. RECEIPTS ROT ALLOCATED (a) (b) Actual Estimated ) Receipts Rsoeipt■ Fiscal 1991 Fiscal 1992 ) ) 1. Motor Vehicle Stoics $ 1,950,455.00 i 2,000,000.00 2 Other Excise 137,345.00 150.000.00 3. Penalties and Interest on Taxes 109,331.00 115,000.00 ) NUL Excises 4. Pa}ments in Lieu of Taxes 341,002.00 841,002.00 li 5 Ch•.rges for Services - Water 0.00 0.00 1 '6. Chixges for Services - Sewer 0.00 0.00 1 7 Ch►.rges for Services - Hospital 0.00 0.00 1 B Chirpse for aervicem - Trash Disposal 0.00 0.00 9 Other Charges for Services 0.00 0.00 ) 10. Poem 142,206.00 150,000.00 ) 11. Rentals 51,880 00 85,000.00 ) 12 Departmental Revenue - Schools 157,901.00 175,000.00 23 Departmental Revenue - Libraries 0.00 0.00 14. Departmental Revenue - Cemeteries 117,280.00 125,000.00 ) 15. Departmental Revenue - Recreation 0.00 0.00 16. Oth+,s Departmental Revenue 229,004.00 240,000.00 1 17. Lioiineea and Permits 217,341.00 240,000.00 1e. Special *amusements 81,043.00 80,000.00 1 19. Pine and Forfeits 297,569.00 320,000.00 ) 1 20. Investment Income 451,945.00 957,608.53 ) 21. I 0.00 0.00 1 22 i 0.00 0.00 1 23. I 0.00 0.00 ) 24 '` 0.00 0.00 25. 0.00 0.00 ) 26. TOTMAS 4,294,304.00 3,446,610.53 N ..__-N -- MIMS. ) ) ) 37 ) J ) ( ) sc9EDDL A (oo21TIN93D) I harsh' certify that the actual receipts from the preceding fiscal year am shown in column (a) are, to the beat of my knowledge and belie!, true, correct and complete, and I further certify that I have examined the entries matte on page 4 of the fiscal 1992 tax rate recapitulation form by the City or Town Clerk and hereby acknowledge that such entries correctly reflect the eppropriatone made and sources from wh:.ch such appropriations are to met. t}�lw14 , } ( 11 K(-272-0 Date Acccuntent/A4litor Telephone No. • Rellipte voted by the city/Town Council or Town Meeting as ofleeets to the appropriation of a specific department listed on chedule A-1 or fund on Schedule A-2 filed with and approved by he Director of Accounts must not be included in columns (a) or ) �• If y estimate in column (b) is greater than the actual line item in column (a), factual support for the increase should be bubo' ted in writing for approval of the Co mi.sioner of Revenue. 1 DO NOT WRIT1 =Low THIS LINE - FOR DtfAATNZNT OF summum ass ONLY ) ) ) ) O ) I ) ) ) I ) ) ) .) 116 � I i ) I I ,. , MASSACHUSETTS DEPARTMENT OF REVENUE ) 7 C 111:7 i DIVISION OF LOCAL SERVICES y 200 Portland Street ) Boston 02114-1715 ) MITCHELL ADAMS (517) 727-2300 i ) Commleelonar LESLIE A. KIRWAN Deputy Commissioner ) December 24, 1991 ) TOWN OF LEXINGTON ) I ) Board o Assessors of Lexington DEC E x 1991 ) ) BOAIif, ce:Alit t.itta5 ) Deer Bourd Members Thr fiscal year 1992 Tax Rate has been reviewed and has been approver by the Bureau of Accounts. ) vs vish to take this opportunity to thank you as vell as the Accountant, Clerk and Collector for all your cooperation and assistance r in the process of setting the tax rata. tly, © ' ) - en P. Murpn' ) Director of Ascom•► ) i ) i ?Wf:ccg cc: Actent ) Clerk Coll, tar ) Selee►:nen ) ) ) ) U_) i Lt ' ) ) ) Interim Report ) of the ) Selectmen's Ad Hoc ) Water and Sewer Rate Study Committee Town of Lexington, MA ) 30 September 2004 ) ) ) ) I ) ) ) ) Liz ) ) ) ) Table of Contents ) Participants. .3 I ) 1 Executive Summary 4 2. Issue summaries .5 2.1 Overview of Rate Setting Process .5 ' ) 2.2. Capital, Depreciation and Debt .8 ) 2.3. Reserves 11 ) 2.4. Indirects 13 2.5 Rates 16 2.6. PILOTs .21 ) 2.7 Billing, Collection and Administration .24 2.8. Enterprise Funds. .25 ) - ) ) ) ) 2 � ) 2 V, ) J I ) Particinants The participants in the study so far, which is ongoing,include Appointed Members (with voting powers) of the Selectmen's Ad Hoc Water and Sewer Rate Study Committee, Liaisons to the Committee, Lexington Town Staff, and Citizens. The Committee invited a number of guest presenters on various topics. Water and Sewer Rate Study Committee. Annointed Members 1. John Bartenstein (resigned 30 June 2004, appointed to Appropriation) 2. Larry Belvin (resigned 30 August 2004) 3. Kathryn Benjamin 4 Paul Chernick 5. Dan Fenn (resigned 2004, appointed to Interim Town Manager Search Committee) 6. Lorraine Fournier ) 7 David Laredo 8. Jim Osten 9 Wade Tambor (appointed 13 September 2004) 10. Bruce Williams (appointed 13 September 2004) 11 Loren Wood (Chairman) ) Liaisons Selectmen Jeanne Krieger-until Spring 2004 Selectmen Richard Pagett:- after Spring 2004 ) Appropriation Rick Eurich Appropriation John Bartenstein (following appointment to Appropriation) Lexington Staff DPW, Director William Hadley DPW Water/Sewer Supt. Dennis Meehan Finance Office Michael DiPietro Finance Office Michael Young Consultant to Town Chris Woodcock ) Citizens Robert Earsy Ann Gilbert (prospective Committee member) Guest Presenters Norman Cohen former Town Counsel, on enterprise fund legal issues Jay Gonzales Palmer and Dodge, Town's law firm, on enterprise legal issues Alan Levine Appropriation Committee, on financial issues ) Tom Lindberg MWRA, on MWRA issues Leo Norton MWRA, on MWRA issues David Sheehan formerly of Mass. Dept. of Revenue, on debt issues D 3 11 ) ) ) 1. Executive Summary ) A committee of nine citizens, informed by a number of other town committee liaisons and staff members for the Town of Lexington and the MWRA, has met 20 times since January 2004, to learn about how the water and sewer rates are established and to make recommendations. We are ) specifically charged by the Board of Selectmen with: Advising the Selectmen regarding the methodology structuring and assumptions made in determining the water and sewer rates. The Committee shall consider the feasibility of continuing to appropriate funds through the water and sewer enterprise ) accounts for in lieu of tax payments. In addition, the Committee shall examine the inclining block rate system, its strengths and weaknesses and consider the assumptions made to determine the accountability in direct charges that are part of ) the rate setting process. The Committee should consider the impact of any changes —) that would be recommended. The issue is complex, and we have come to appreciate that there is no one correct answer. Further, ) the opinions and perspectives of the members on the Committee represent a range of those present in Lexington. Finding a satisfactory middle ground of specific,quantitative recommendations will ) take more time. At this point we are prepared to make a number of qualitative observations and recommendations. With the approval and further direction of the Board of Selectmen, we will ) continue our investigation and prepare specific recommendations, hopefully before the end of this ) calendar year. We believe Lexington provides quality service, both in maintenance and delivery of water and sewer services, and we clearly benefit from our membership with the Massachusetts Water ) Resources Authority(MWRA). The rates for water and sewer service are a composite of many costs, including the basic cost of product and service delivered by the MWRA and the additional costs of service delivery and maintenance and improvement of the infrastructure provided by `, - Lexington. These costs include direct and indirect expenses. The Committee believes that certain ) charges that are part of the rate setting process. such as the indirect services provided by non-DPW ) town offices and employees, and charges for depreciation and reserve funds, are ones requiring ) careful scrutiny While the direct costs charged to the water and sewer program are straightforward, the other cost components lack specific policy statements and/or guidelines for their calculation. We believe ) establishing clearly stated policies and guidelines will help to make the rate setting process more transparent and accountable. and provide greater consistency in future rates. ) While the Committee has not come to a unanimous decision about PILOTs, we are beginning to ) question the appropriateness and wisdom of levying these payments in light of the comprehensive ) collection of indirect expenses. Lexington's rates are higher than the average for the MWRA cities and towns. This may be due in part to our more thorough capturing of direct and indirect expenses. Although issues of fairness and 1 equity in rates can be defined in many ways, it is the sense of the Committee that the current 4 ) L/ ) J structure could be made more fair and equitable. We recommend establishing specific policies and guidelines for setting rates among all users in Lexington. Additionally the continued significant increases in cost merit consideration of some rate modification. perhaps in making the rate blocks less steep, changing the number of blocks, adding a flat service charge, or billing more frequently We intend to generate models of different rate structures and their impact on different levels of users and revenue generation. 2. Issue summaries This Section summarizes the Committee's status on the issues of: Capital, Debt and Depreciation; Reserves; Indirects; Rates; Billing, Collection and Administration. The Section begins with a brief overview of the rate setting process. 2.1. Overview of Rate Setting Process ) Background. The Selectmen set rates based on a budget projected by DPW The budget includes expenses and non-rate revenues. The difference between the expenses and non-rate revenues must ) be raised through customer charges. The DPW also projects the amount of water and sewer usage ) by the customers. The rates are then set so that the projected usage will generate the required rate revenue. There are several questions concerning the rate setting process. • What expenses are included in the budget? • How is the MWRA assessment determined? • What are non-rate revenues? • How do the Reserves affect the rates? • How are the rates set? ' ) • Is the budget presented to Town Meeting? • How is customer usage projected? 1 What expenses are included in the budget? The FY04 projected budgets are in Table 2.1-1. Items marked (D) are direct operating expenses of the water and sewer departments, that is, expenses within the water and sewer departments. Items (C), although indicated as separate expenses, are all budgeted for upgrade and acquisition of capital assets. (Reserves and depreciation ) may also be applied to capital items.) Table 2.1-1 FY04 Water and Sewer Projected Budgets ) EXPENSES WATER SEWER TOTAL Wages, as [10.5 Water,4.5 Sewer] (D) 432,001 211,172 643,173 ) Other compensation(D) 7 400 3,500 10,900 Overtime(D) 111,724 39,327 151,051 Utilities(D) 3,244 90,750 93,994 Supplies&Materials(D) 94,793 53,528 148,321 ) Contractual Services(D) 85,021 j 40,038 125,059 Equipment(D) 91,341 I 5,000 I 96,341 MWRA—Assessment Estimate 3,205,374 4,900,000 8,105,374 Capital from Revenues(C) 435,000 225,000 I 660,000 Existing Debt—P&I(C) 241,421 I 1,237,517 I 1,478,938 ) 5 qd ) ) New Debt(C) 0 0 0 Depreciation 450,000 510,000 960,000 Reserve Deposits 0 0 0 Indirect Costs 837,128 749,069 1,586,197 PILOT 500,000 250,000 750,000 ) Total Water Expenses 6,494,447 8,314,901 14,809,348 ) NON-RATE REVENUES Penalties&Interest 14,755 29,273 44,028 ) Misc.Department Revenue 11,100 9,827 20,927 ) New Meter Charge 27,000 0 27,000 Bedford Fixed 42,632 0 42,632 ) Sewer Rate Relief(state-funded) 0 49,000 49,000 Reserve Withdrawal 0 475,000 475,000 ) Total Revenues(not including from rates) 95,487 563,100 658,587 REVENUE REQUIRED FROM RATES 6,398,960 7 751,801 14,150,761 2. How is the MWRA assessment determined? The final fiscal year 2004 MWRA water ) assessment was $3,205,374 based on the MWRA's rate of$1,638.22 per million gallons (mg) and ) actual usage of 1,956.621 mg in the calendar year 2002, equivalent to 2,615,803 hundred cubic feet (hcf) at$1.22 per hcf. The assessments are not based on current usage. The actual usage in CY04 will be accounted for in the assessment for FY06. The Committee believes that the FY05 MWRA ) water assessment will be$3,303,339 (The MWRA rate increase is about a factor of 1.0964, but Lexington's CY03 usage was 0.940 of CY02, thus the net water assessment increase is about 3 1%.) The forecast for the FY05 sewer is $5,062,751 (a 4.2% increase). The sewer assessment is described in Section 2.5.3 ) 3. What are non-rate revenues? As the name suggests, non-rate revenues are revenues that do not _ depend on customer usage as measured by meter readings. Penalties are assessed on late remittances from customers. Interest is earned on cash balances. Lexington supplies MWRA water ) to Bedford through Lexington pipes. The Bedford Fixed revenues are a fixed charge that Bedford ) has agreed to pay to cover the expenses of these pipes. ) 4 How do the Reserves affect the rates? The effect of Reserves on the rates is discussed in Section 2.3, Reserves. ) ) 5. How are the rates set? In order to balance the budget in FY04 the bottom line in Table 2.1-1 ) shows that revenues of$14,150,761 were required to be generated from the rates, that is from customer charges based on projected customer use. This resulted in the rates shown in Table 2.1-2, ) which are about 5% over the FY03 rates. In other words, projected expenses,reserve withdrawals ) (if any), and projected usage are the main determinants of the rates. ) ) ) 6 7 ) ) Table 2.1-2 FY04 Water and Sewer Rates Block From(hcf) To(hcf) Water Water Sewer Sewer FY03 FY04 FY03 FY04 1 0 20 $2.10 $2.20 $4.66 $4.89 I 2 21 40 $2.92 $3.06 $5.76 $6.05 I 3 41 80 $3.64 $3.82 $7 75 $8.14 4 81 up I $4.75 $4.99 $12.50 $13.13 I When the above rates are combined with the projected water and sewer usages shown in Table 2.1- 3, the projected revenue is seen to be about what was projected to be required for FY04. Table 2.1-3 FY04 Projected Revenue (Based on Projected Usage) Category Water Water Water Sewer Sewer Sewer Total Total of Use (hcf) $/hcf Revenues (hcf) $/hcf Revenues Revenues as% ' Residential 760,974 (block) $2,414,388 788,795 (block) $5,223,518 $7,637,906 54.0% Irrigation 190,790 $4.99 $952,042 0 $0.00 $0 $952,042 6.7% Indus/Comm 152,834 (block) $701,298 130,465 (block) $1,503,131 $2,204,429 15.6% Public* 85,701 (block) $402,871 81,240 (block) $977,922 $1,380,793 9.8% ) Municipal** 20,619 $1.10 $22,681 20,619 I $1.74 $35,877 $58,558 0.4% ) Hanscom*** 273,037 $3.63 $991,124 I 0 I $0.00 I $0 $991,124 7.0% VA Hosp*** 46,342 $4.33 I $200,661 I 0 I $0.00 I $0 $200,661 1.4% Bedford**** 580,620 $1.23 I $714,163 I 0 I $0.00 I $0 $714,163 5.1% Total 2,110,917 I $6,399,228 I 1,021,119 I I $7 740,448 $14,139,676 100.0% *Public includes churches,nursing homes,Hayden rink,private schools,etc. **Municipal includes public schools and municipal buildings. ***Hanscom and the VA Hospital rates are determined by contractual provisions. **** Bedford is charged 1%above MWRA rates. ) 6. Is the budget presented to Town Meeting? The water and sewer budgets are not presented to Town Meeting in the level of detail shown in Table 2.1-1 The Budget Book, in lines 3700 and ) 3800, does show the MWRA assessments, the total budget, and the percentages devoted to each category In addition, the Indirect charges by department can be ascertained by looking at the "Town Funded Expenses" for each department. But this is a cumbersome process, and the ) Committee feels that the budgets should be presented to Town Meeting explicitly in a form similar ) to that shown herein. In addition, Town Meeting should be shown the previous year's actual amounts that were raised and expended. It would be useful at the rate setting for FY05 if the DPW would provide the Selectmen with actual expenses and revenues experienced in FY04, together with ) explanations of any significant differences from the budgeted amounts. 7 How is customer usage proiected? Projections of"billable" water use (i.e., metered, as opposed to water lost through leaks and hydrant flushing) are based on a three year moving average. Last year they were also adjusted for errors in data. The Chart 2.1-1 below shows that the trend in water delivered to Lexington by the MWRA in recent years has been downward, but with variations about the trend. ) J a 7 Chart 2.1-1 Actual Water Delivered to Lexington by MWRA ) 2,900,000 , , , , 1 , , , 1 , , , , , , , , 1 , , , , 1 , , _ ) 2,800,000 - .j. . . + 4 4 - ) W2,700,000 - • .j. . • •j. . . .i. + + •e. •_ ) U ) X 2,600,000 = ..t. + .¢.. • q. ._ 2,500,000 - - - - •_ ) 2,400,000 ) 1997 1998 1999 2000 2001 2002 2003 ) Calender Year ) ) 2.2. Capital, Depreciation and Debt ) Background. When the enterprise funds were established in 1987 the Town's existing water and ) sewer capital assets were contributed (in a bookkeeping sense)to the funds. Since that time capital ) improvements and replacements have been made. All assets are depreciated as a bookkeeping matter. In addition, the water and sewer budgets include a rate setting depreciation expense. The ) Committee has studied the following questions: ) • What are capital and depreciation? ) • How are they determined? ) • What happens to the funds collected for depreciation? • How are capital assets paid for? - • How much debt is there? ) • Should the debt be transferred to the tax levy? ) 1 What are capital and depreciation? Capital means `capital assets" or"tangible long term assets" ) or"fixed assets and infrastructure" Examples include the water mains and equipment used ) exclusively (with some exceptions) by the department. Bookkeeping "Depreciation' means the ) decline in value of all the capital assets. Bookkeeping depreciation reduces the Net Book Value. The Committee is investigating the proper accounting for principal, capital contributions, and depreciation. _,) ) 2. How are they determined? Table 2.2-1 shows that$51,012,000 in Contributed Capital (i.e., the ) then existing assets and infrastructure as determined by Deloitte and Touche LLP) was initially ) contributed to the funds, and has been depreciated so far (on a straight line basis over an assumed life of 75 years) to $27,206,400. Table 2.2-2 shows that assets of$21,309,447 in "Basis Added' ) have been acquired since the funds began. These assets are depreciated over their individually ) estimated useful lives. The totals of Contributed Capital and Basis Added are shown in Table 2.2-3, ) along with the Accumulated Depreciation and resulting Net Book Value, which is $44,870,252. 8 9 ) Table 2.2-1 Initial Contributed Capital Contributed Useful Deprec per Accum Deprec Net Book Capital (Initial Life Year Thru 6/30/03 Value 6/30/03 Basis) I Sewer $30,165,000 175 $402,200 $14,077,000 I $16,088,000 I I Water I $20,847,000 175 $277,960 I $9,728,600 I $11,118,400 I I Total I $51,012,000 175 $680,160 I $23,805,600 I $27,206,400 I ) Table 2.2-2 Capital (Basis) Added Basis Added I ) (to 6/30/03) I Sewer $10,012,811 I I Water I $11,296,636 I Total I $21,309,447 I Table 2.2-3 Basis, Depreciation and Net Book Value Basis I Useful Deprec FY03 Accum Deprec I Net Book Life (6/30/03) Thru 6/30/03 I Value 6/30/03 I Sewer I $40,177,811 I various $514,805 $15,131,612 I $25,046,198 I Water I $32,143,636 I various $486,915 $12,319,582 I $19,824,054 I Total I $72,321,446 I various I $1,001,720 $27,451,194 I $44,870,252 I Table 2.2-4 shows that the total water and sewer capital Warrant Articles, and funding sources, adopted by Town Meeting in the years 1988 (for FY89) to 2004 (for FY05) is $23,106,218. There is a close relationship between these Warrant Article appropriations and the $21,309,447 in "Basis added to 6/30/03" in Table 2.2-2 because capital expenditures must be appropriated by Town Meeting. Table 2.2-4 Capital Warrant Articles 1988 to 2004 I Combined WSEF WEF SEF Tax levy Borrowed Total I $186,000 $5,986,500 $3,451,500 $468,218 $13,014,000 $23,106,218 I 3. What happens to the funds collected for depreciation? The water and sewer budgets for FY04 (Table 2.1-1) show rate setting depreciation expenses of$510,000 for sewer and$450,000 for ) water, values that are similar to the bookkeeping depreciation shown in Table 2.2-3. The rate ) setting depreciation expenses are raised through the rates during the fiscal year but are not budgeted to be spent. If at the end of the fiscal year the actual revenues and actual expenses match the budgeted amounts, then the depreciation amount (along with the reserve deposit amount if any was budgeted) will be deposited into the Reserve Fund. In the event of a surplus or deficit the deposit into the Reserve Fund will be correspondingly greater or smaller. The depreciation amounts are J 9 > sa ) ) ) ) not segregated or even kept track of separately The Committee is looking into the issue of rate setting depreciation and what that term is intended to, and actually does, encompass. ) 4. How are capital assets paid for? Capital related expenses (excluding depreciation) totaling -� $2,138,938 extracted from the FY04 budgets are shown in Table 2.2-5. All capital expenses are recovered in the rates, by the two methods indicated in the Table. Capital from Revenues means ) that current rate revenue will be used to purchase assets in cash. Debt means that current rate revenue will be used to pay off previously issued debt and newly incurred debt (if any). Table 2.2-5 Water and Sewer Capital Related Expenses in FY04 Budget I FY04 Capital related expenses WATER SEWER Both I ) 1. Capital from Revenues 435,000 225,000 660,0001 ) I 2a. Existing Debt-P&I 241,421 1,237,517 1 ) 2b. New Debt 0 0 1 Total 676,421 1462,517 2,138,9381 - ) 5. How much debt is there? Debt means the current amount owed to holders of notes issued by the ) Town for the purchase of capital assets. Table 2.2-6 shows that the outstanding debt is $2,852,770, with interest due of$399,079 The last payment will be due in FY13. According to the Town Finance Department, on 9 July 2004 there were no outstanding Bond Anticipation Notes (BANs). ) Table 2.2-6 Water and Sewer Outstanding Debt Issued Original Date Issued Amt Purpose ) ) May-01 153,957 Water thru MWRA-8G/00&10/00 Feb-03 1,680,000 Water 8f/00,8f/01,11/01,9/02 1,833,957 Subtotal Water -) - ) 300,000 Sewer 10/97 ) Feb-00 1,095,000 Sewer 10/98 &9/97 ) Feb-03 830,000 Sewer 10/98,9/97,9/98 Feb-04 300,000 Sewer 99 ) 2,525,000 Subtotal Sewer ) ) 4,358,957 Total Water and Sewer ) (1,506,187) Principal Paid Off ) 2,852,770 Remaining Principal Due 399,079 Remaining Interest Due 6. Should the debt be transferred to the tax levy? The Committee has been advised that state law ) permits the Selectmen to transfer some or all of the water and sewer debt from the rates to the tax levy (and to reduce the rates accordingly) as a debt exclusion under M. G. L. Ch. 59, s. 21C(n), 10 , ) which does not require voter approval. Factors to consider include, among others: 1) the appropriateness of funding capital according to usage or according to house value; and 2) the financial effects on households with varying usage and valuation, including a) whether they itemize on their federal taxes,b) whether they can take advantage of the "Circuit Breaker' provision of the Massachusetts income tax, and c) the Town's policy of partial abatement of water and sewer bills for qualified households. ) 2.3. Reserves Background. The reserve balances in the water and sewer funds, once minimal,have been growing steadily for the past three or four years and have now reached fairly sizeable proportions. As of the end of FY03 (6/30/03), the certified reserve in the water enterprise fund was $1,878,977 and in the sewer enterprise fund was $2,191,348. This is 29% and 26% of the respective budgets. ) At the last rate hearing, in September 2003, the Board of Selectmen opted not to add to the water fund reserves, and to draw on a portion of the sewer fund reserves, to ameliorate a proposed combined water/sewer rate increase of 14%. This action raised a number of questions that are now before the Committee: • What exactly are reserves? • What reserves has Lexington maintained historically? • What has caused the reserve balances to grow? • What is the purpose of reserves? • What level of reserves is adequate and appropriate? • When, if ever, is it appropriate to draw on the reserves for rate relief? • How should the Selectmen manage reserves? • Should there be a written policy on reserves? ) 1. Definition of Reserves. The DOR has adopted a precise definition of reserves in a water or sewer enterprise fund that it"certifies"each year. Essentially, the DOR definition takes the cash balance that has been accumulated in each fund, deducts accounts payable, and disregards accounts receivable. The certified reserve balance in each enterprise fund is analogous to the certified "free cash"balance in the general fund and reflects unencumbered cash that is available for spending. 2. History of Reserves. The history of certified reserves since FY00 (in millions) is set forth ) below (earlier data is unavailable): Table 2.3-1 History of reserves ) Fiscal Year Water Sewer Total I 00 0.2 1.5 1 7 ) I 01 1.0 2.4 3.4 I 02 I 0.9 1 2.6 I 3.5 I 031 1.91 2.21 41I ) 11 S . Anecdotally, the finance department advises that during the earliest years of the enterprise ) funds, a reasonable level of reserves was maintained, at least in the water fund. During the late ) 1990's, the reserve levels dwindled to practically nothing, and in some cases the water and sewer -) funds actually ran slight deficits. In 1999, Chris Woodcock was hired as a consultant and made a ) report to the Board of Selectmen that recommended, among other things, the strengthening of cash reserves. The recent growth in reserves has resulted from the implementation of his ) recommendations. The fund reserve balances as of the end of FY04 are not yet known. ) 3 Growth in the Reserve Balances. There appear to be three factors that account for the recent ) growth of the reserves: (a) the deliberate inclusion of"reserve deposits"in the rates; (b) the inclusion of a depreciation charge in the rates for which there is no identified offsetting cash outlay; ) and (c) surplus revenue generated by higher than projected water consumption. How much each of ) these factors has contributed requires further analysis. ) 4 Purpose of Reserves. Several possible reasons have been identified for accumulating and H - maintaining reserves in the water and sewer enterprise funds: (a) management of cash flow where expenses are incurred continuously but bills are rendered and collected only semiannually (sometimes referred to as "operating capital"); (b) funding of disaster recovery or emergency repairs; and (c) stabilization of rates against fluctuations in demand, MWRA cost increases or political developments such as the recent cut in state-funded sewer rate relief. It has also been ) suggested that the maintenance of separately identified "capital"reserves may be appropriate to ) "prefund" future capital investments and thereby eliminate or reduce the need for future borrowing. Finally, it has been suggested that significant reserves in the enterprise funds may be a `selling point' to help maintain a favorable municipal bond rating. ) Note that under the enterprise fund statute, G.L. c. 44, § 53F1/2, reserve funds may be used only "for capital expenditures of the enterprise, subject to appropriation, or to reduce user charges if authorized by the appropriate entity responsible for the operations of the enterprise." ) —' - 5. Reserve Levels. The appropriate level of reserves that should be maintained is an issue that requires further examination. Chris Woodcock advised in 1999 the creation and maintenance of operating reserves equal to 25% of the enterprise fund's operating costs. He has since provided the ) Committee with a memo recommending an operating reserve of 25% of the total water/sewer ) budget and the creation of a separately identified capital reserve. We are attempting to gather ) information on the reserve policies or practices of other MWRA communities, and to determine other sources that might provide guidance on this issue. We are also attempting to evaluate the potential downsides of maintaining excessive reserves. The Department of Revenue(DOR) has no ) written policy, but a DOR staff person has suggested to a Committee member that a level of 5% of the budget is adequate. ) 6. Drawing on Reserves. If it is accepted that one of the purposes of maintaining reserves in the ) water and sewer enterprise funds is rate stabilization–that is, smoothing out unusually large ) fluctuations in the rates that might result from major changes in anticipated consumption or expenses–then it stands to reason that it is appropriate, in setting rates, to draw on the reserves from time to time when the need arises. It might also be appropriate to draw on the reserves during a rate year to meet operating needs that arise if revenues and expenses fall short of or exceed J 12 S3 ) projections, or to fund capital projects (subject to appropriation). Under what circumstances, and in what amounts, the reserves might be used requires further examination. 7 Managing Reserves. If the Selectmen are to ensure going forward that reserves in the water and sewer enterprise funds are maintained at adequate and appropriate,but not excessive, levels they will need to consider the issue of reserves during the rate setting process. (The issue of ) reserves may also be a proper topic for consideration by Town Meeting during the appropriation process.) Actively managing the reserves may require developing better procedures for tracking the performance of the enterprise funds over the course of the rate year than are currently in place, so that meaningful information on current reserves is available to the Selectmen at the time of rate setting. 8. Reserve Policy To provide guidance and continuity as the composition of the Board of Selectmen changes, and to avoid ad hoc decision-making or politicization of the rate setting process, the Committee believes that the Board of Selectmen should adopt a written policy on water and sewer enterprise fund reserves. Such a policy might address: the appropriate size of the reserves; steps that can be taken to manage the reserves; and the circumstances under which it is appropriate to draw on the reserves. The Committee expects to recommend such a policy as part of its final report. 2.4. Indirects Background. Direct expenses are those incurred within the water and sewer department, such as payroll for department employees and supplies. Indirect expenses are amounts that other town ) departments charge the water and sewer departments. The Committee notes that the indirects have been steadily growing, which has raised a number of questions that are now before the Committee: ) • What are indirect charges? • How are indirect charges determined? • What is the history of indirect charges? • What if there is a disagreement about the indirect charges? • Should there be offsets to the indirect charges? 1. What are indirect charges? Various Town departments provide services to water and sewer. Examples include when Highway repairs street openings and Revenue prepares water and sewer bills. Water and sewer pays for these services (in the form of"indirect" charges) out of the rate revenues. The combined water and sewer indirect charges for FY04 are$1,586,199 as shown in Table 2.4-3a at the end of this Section. 2. How are indirect charges determined? The rationales and justifications for the allocations are not transparent to the Committee. We have been told that they are based on estimated effort. However, we haven't seen any supporting documents and rationales for the level of the charges. The Committee feels that there should be clear policies or methodologies for determining the ) indirects. Perhaps there are metrics that the town staff could use to determine the percentage of a ) department's budget that is on behalf of the water and sewer. For example, what is the time spent on water and sewer by each department? 13 � S ) ) ) ) 3. What is the history of indirect chanes? A six year history of the percent of each department's ) total budget that water and sewer pays in the form of indirect charges is given in Table 2.4-1 below ) Table 2.4-1 FY 00 to FY 05 Indirect Expenses ) FY00 FY01 FY02 FY03 FY04 FY05 ) Approp Approp Approp Approp Approp Recom ) Engineering 63.0% 63.0% 88.7% 75.0% 81.2% 76.3% Revenue 46.9% 46.7% 37.9% 40.0% 55.9% 77 7% ) DPW Admin. 34.9% 35.0% 48.3% 45.0% 54.9% 68.9% ) Road Machinery 32.3% 30.0% 38.2% 40.0% 47 7% 46.8% Comptroller 30.0% 29.0% 34.7% 35.0% 39.8% 38.4% ) Highway 11.3% 10.0% 16.4% 16.0% 24.6% 20.9% ) Town Manager 21.1% 15.0% 16.1% 20.0% 23.2% 23.0% MIS 13.0% 13.0% 13.4% 16.0% 20.0% 15.7% `,/ - Building Maint. 5.5% 5.0% 6.6% 10.0% 10.0% 8.9% ) Assessor 2.0% 2.0% 2.1% 5.0% 7.8% 9.5% ) Contrib.Retire. 2.5% 2.4% 3.1% 3.0% 5.2% 2.7% Selectmen 2.5% 2.5% 2.5% 3.0% 3.6% 3.6% ) Municipal Sal. 0.0% 1.1% 4.2% 1.1% 2.1% 7.6% ) Insurance* 17.5% 13.4% 2.8% 2.7% 3.0% 3.0% Water Total 856,597 872,680 901,526 987,641 837,129 837,129 ) Sewer Total 277,318 287,379 456,400 473,676 749,070 749,070 Water/Sewer Total 1,133,915 1,160,059 1,357,926 1,461,317 1,586,199 1,586,199 ) Department Total 8,361,903 9,092,002 11,386,050 12,465,538 10,660,374 12,095,786 ) *Insurance accounting methods changed in FY04. The Table shows the combined Benefits and Expenses portions of Insurance. 1 The reasons for upward trends are not clear. For example, from FY00 to FY05, Highway has doubled from 11% to 21%; Building Maintenance has doubled from 5% to 9%; DPW } Administration has doubled from 35%to 69%; and the Assessor has quadrupled from 2%to 9%. A ) few examples of the Committee's concerns about indirect charges follow The Superintendent of Water and Sewer presumably manages the department and is paid directly by the water and sewer funds, so the Committee wonders how 68.9% of the DPW Administration's time could be spent on water and sewer, considering all the other tasks it must manage (plowing, street repair, refuse and ) recycling collections,building maintenance, etc.) The Revenue department, in addition to semi- ) annual water and sewer bills, also prepares quarterly tax bills, yearly excise bills, and performs many other functions, yet charges 77 7% of its budget to water and sewer. Contributed Retirement's total budget dipped in FY04, presumably because of the pension holiday", and it would seem that ) the water and sewer charge should have decreased proportionately,but in fact the charge stayed the ) same (see Table 2.4-3b). The role of the Assessor is not obvious. ) On the other side of the coin, perhaps the indirect charges of a department should include not only i wages or salaries (which are included in the amounts in Table 2.4-3a), but also a share of the costs I ) of supporting the department's employees, such as benefits,building space, heat,phone, utilities, ) 14 %C.>, , ' ) ) etc. There may be other ways in which the indirect charges do not capture all the costs incurred by the Town in servicing water and sewer. 1 1 4 What if there is a disagreement about the indirect charges? The Massachusetts Department of Revenue (DOR) Manual on Enterprise Funds says 'If, however, the enterprise still cannot agree ) with the community's financial officials what figure should be used for indirect and allocated costs, 1 the appropriate body to resolve the matter is the city council or Town Meeting." The Committee ) knows of no instance where this ever occurred, and is not sure who would represent the enterprise in any such appeal to Town Meeting. 1 5, Should there be offsets to the indirect charges? The Committee has been told that water and 1 sewer employees whose direct costs are paid in full by the water and sewer enterprise funds may, from time to time, perform services that are not water and sewer-related but of general benefit to the town, such as snowplowing in the winter(Ref. The 2003 Annual Town Report at page 37 1 "[Water/sewer] employees are cross-trained to perform all divisional functions and participate in ) snow removal operations."). In addition, the Committee wonders if vehicles and equipment ) purchased with water/sewer enterprise funds might be used to support general town operations. In such cases, it might be appropriate to estimate the value of such activities and cross-allocate them back to the general fund, either as a charge to the general fund or as a credit against the indirect ) allocation of expenses to the water/sewer funds. 1 Details. The combined water and sewer indirect charges of$1,586,199 for FY04, along with the percentages of the individual department budgets, appear in Table 2.4-3a below' , ) ) Table 2,4-3a FY04 Indirect Charles Item Total Budget I Water % I Sewer % I Total WS I % Engineering $327,935 f $133,174 40.6 $133,174 40.6 $266,348 81.2 Revenue $207,009 $57,855 27.9 $57,855 27.9 $115,710 I 55.91 ) DPW Admin. $357,508 $98,190 27.5 $98,190 27.5 $196,38054.9 I Road Mach. $413,264 $98,533 23.8 $98,533 23.8 $197,066 I 47 7 I 1 Comptroller $473,598 $94,255 19.9 $94,255 19.9 $188,510 I 39.81 Highway $752,675 $92,468 12.3 $92,468 12.3 $184,936 24.61 Town Manager $297,656 $34,559 11.6 $34,559 11.6 $69,118 23.2 1 I MIS $280,480 $28,064 I 10.0 $28,064 I 10.0 $56,128 20.0 Building Maint. $628,021 $31,249 5.0 $31,249 5.0 $62,498 10.0 i ) I Assessor $184,721 I $7,246 3.9 $7,246 I 3.9 $14,492 7.8 I Contrib.Retire. * $1,584,000 $65,762 4.2 $16,441 1.0 $82,203 5.2 I ) I Selectmen $129,963 $2,357 1.8 $2,357 1.8 $4,714 3.6 1 i 1 1 Municipal Sal. $185,810 $2,029 1.1 $1,791 1.0 $3,820 2.1 I I Insurance(Bene.) $4,837,734 $60,500 1.3 I $22,000 0.5 $82,500 1.7 I I Insurance(Expen) I $30,888 0.6 I $30,888 0.6 $61,776 1.3 1 I Totals I $837,129 I $749,070 1 $1,586,199 I 1 As shown in Table 2.4-3b below, Contributed Retirement's total budget dipped in FY04, presumably because of the "pension holiday" It would seem that the water and sewer share should have dccreased proportionately, but in fact the charges stayed the same. ) , ) 15 „S4, ) Table 2.4-3b Contributed Retirement FY00 FY01 FY02 FY03 FY04 FY05 1 ) Approp Approp Approp Approp Approp Recom 1 ) Contrib.Retire. 3,281,872 3,398,681 2,635,674 2,721,766 1,584,000 3,015,532 1 Water 65,762 65,762 65,762 65,762 65,762 65,7621 Sewer 16,441 16,441 16,441 16,441 16,441 16,4411 ) Total 82,203 82,203 82,203 82,203 82,203 82,2031 ) 2.5 Rates ) Background. With the exception of a few large customers (Municipal,Bedford, the Veteran's ) Administration Hospital, Hanscom, and a car wash referred to as Bubbles), Lexington has a single ) rate structure for all customers. The rate increases as usage rises. Customers who choose to install a second meter for irrigation are charged at the highest block rate for water($4.99/hcf),but not for ) sewer. The Committee has addressed the following questions: - - ) • What is the history of rates? • What are the purposes of rate design? • What are the drivers of water and sewer costs? • What are the effects of increasing-block rates? ) • How are Municipal users charged for water and sewer? ) • What factors influence residential water use? ) • What principles should be used in setting the initial block, and the size and price of additional blocks (if any)? • What are some other rate-design issues? • What do other towns charge? 1. What is the history of rates? At one time Lexington had about 8 or 9 blocks. The number of blocks was reduced to the current four around 1999 when Woodcock Associates recommended a -) - structure based on a household size of four people, such that if this household used water at the rate ) of 40 gallons per person per day (which is sufficient for normal sanitary uses, and is equivalent to ) 80 hcf per year for the household), the household's water usage would fall entirely within the lowest rate block of 0 to 20 hcf, on a auarterlv billing basis. However, Lexington implemented the j recommended block hcf values but applied them to semi-annual billing. This is one reason why ) Lexington's block rate is very steep. Households with many persons may be escalated into the third ) or fourth block. ) 2. What are the mu-noses of rate design? Rates are set to recover the costs of the enterprise funds, ) although actual revenues will not necessarily equal those projected from the rate design, due to ' ) variation in usage. Within the constraints imposed by attempting to collect the costs of the water ) and sewer arrangements, the structure of the rates can be used to pursue a number of other objectives, including: a) encouraging efficiency in water use; b) recovering costs from the customers responsible for those costs; c) collecting revenues from those best able to pay those revenues; d) avoiding undue discrimination in rates; e) charging similar rates to similarly-situated ) customers; and f) charging variable costs to those customers most likely to be able to vary their usage. All but the first of these objectives could be considered an aspect of equity, as could many 16 � _) other criteria. These objectives may not be mutually consistent; designing rates requires tradeoffs between objectives. 3. What are the drivers of water and sewer costs? The MWRA's charges to Lexington for water are entirely based on usage, while the MWRA's sewer charges are approximately 60% based on annual and peak-monthly usage, and 40% on population. The replacement of existing mains and the sizing of some replacement and supplementary lines are generally determined by the peak daily load on the particular lines,plus an allowance for fire service. Environmental effects of water and sewer usage (energy use, waste generation) primarily vary with total usage. (The MWRA reports ) that usage of the Quabbin reservoir is comfortably below the "safe yield", and can withstand short and medium length droughts and dry periods without a significant impact on its operating levels.) For most domestic water uses, usage will be fairly constant from day to day Every dollar of investment to serve those uses will be used most days of every month, so the cost per hcf delivered will be relatively low But irrigation water is used in just a few months, and only on some days in those months (when it is not rainy), and very little in summers that are cool and wet, so the cost per L ) hcf delivered will be relatively high. 4. What are the effects of increasing-block rates? Increasing-block rates raise the rate paid for the customer's last hcf of water, increasing conservation incentives. Studies of consumer behavior indicate that increasing average water prices by 10% would reduce usage by about 1 4% to 5.5%. Increases in marginal water rates appear to have similar effects. Table 2.5-1 below shows revenues and average prices by user categories that pay block rates. (Abatements are not accounted for in the Table. Municipal is not included because it pays a flat rate.) Table 2.5 -1. Usage and Revenues by User Category FY04 (Preliminary) Block Rate Residential Comm Industrial Public Total(excluding Municipal) Water 1-201 $2.20 372,868 7,127 3.086 4,024 21-40 $3.061 245,043 5,7401 2,870 3,473 41-80 $3.82 170,777 8,4311 5,123 5,740 81+ $4.99 154,054 61,5081 57464 71,637 Total 942,742 82,806 68,543 84,874 1,178,965 1 Revenues $2,991,239 $372,375 $321,887 $398,876 $4,084,376 Average Rate $3.461 $3.17 $4.50 $4.70 $4.70 $3.46 Sewer 120 $4.89 317,255 6,486 2,737 3,822 21-401 $6.05 206,6461 5,1851 2,571 3,295 41-80 $8.14 125,7921 7,589 4,613 5,399 1 81+ $13.13 73,337 42,641 47,725 62,051 Total 723,030 61,901 57,646 74,567 917,144 Revenues $4,788,447 $684,732 $693,118 $897,3021 $7,063,598 ) Average Rate $7 70 $6.62 $11.06 $12.02 $12.031 $7 70 ) 17 Sri ) ) Increasing-block rates can also distribute a much higher percentage of the revenue requirements to ) non-residential customers than to residential customers, as shown in the following Table 2.5 -2, ) which is derived from Table 2.5-1 ) Table 2.5 -2. Average All user, Residential and Non-residential Rates IAll users Residential Non-Residential I ) I Water($/hcf) $3.46 $3.17 $4.63 I ) I Sewer($/hcf) $7 70 $6.62 $11.55 I ) Residential water rates would be 9% higher [$3.46/$3.17] and residential sewer rates would be 16% ) higher [$7 70/$6.62], without the increasing-block rates, i.e., with flat rates. ) Because an inclining rate block design captures a relatively high percentage of revenue on the - margin, it tends to increase the volatility of revenue as the demand fluctuates. ) 5. How are Municipal users charged for water and sewer? The Committee will also consider ) whether water and sewer services used by the town, schools,recreation department, and other ) municipal users should be charged at their full cost(including town direct and indirect expenses, ) capital costs, debt costs, etc.), instead of at a steeply discounted rate pegged to the MWRA wholesale cost (actually below, in the case of water). The Committee has developed the capability ) to analyze the actual FY04 usages,billings, and abatements. In FY04 the Municipal, including ) schools, usage was 44,323 hcf(a preliminary figure, and considerably more than the projection ) shown in Table 2.1-3). The revenues that would result from that amount have been computed two ways as shown in Table 2.5-3• a) at the current flat discounted rates for water and sewer and b) at ) the same block rates that are charged to residential and commercial customers. There is a ) substantial difference between the two methods. ) Table 2.5-3 Municipal water and sewer charg:s - Flat and Block Rates Category Water Water Water Sewer Sewer Sewer Total 1 ) (hcf) $/hcf Rev (hcf) $/hcf Rev ) I Municipal/school 44,323 $1.10 $48,755 44,323 $1.74 $77,122 $125,877 I I Municipal/school 44,323 block $215,785 44,323 block $562,837 $778,622 1 ) I Difference $167,030 $485,715 $652,7451 ) 6. What factors influence residential water use? There are a number of potential drivers of water ) use per household, including: a) number of persons; b) the use of yard irrigation and of swimming ) pools; c) equipment efficiency (low-flow, high-pressure showerheads; low-flow toilets which are ) the only new toilets available in Massachusetts; horizontal-axis washing machines; more-efficient ) dishwashers; and drip irrigation); d) care of water use (size of loads run in the clothes washer and dishwasher, the length of showers taken); and e) income. The Committee continues to explore the ) extent to which each of these factors affects usage, and the implications for rate design. j 7 What principals should be used in setting the initial block, and the size and price of additional ) blocks (if any)? The initial block currently covers little more than the MWRA charges. Some rules ) , ) 18 si ) 'J } should be established for guiding the design of the rates, such as the percentage of each cost category to be recovered from each block. 8. What are some other rate-design issues? Some other rate-design issues are: Separate residential and non-residential rates: This approach would require determining the classification of each meter, which is possible,but somewhat more complex to administer than the current approach. It might also be difficult to explain why a small commercial customer, such as a store with a restroom and no other water use, would pay a higher rate than a similar or large residential customer. Meter capacity Instead of end-use categories,the rate system could be based on the capacity of the ) meter, which is uniform for most residential customers, and larger for most customers in other classes. Seasonal rates: Implementing seasonal rates would more accurately capture the costs of irrigation load. Seasonal rates would make the choice of meter-reading date more important and contentious, and make metering reconciliations more speculative. Rate for irrigation: The rate for irrigation could be higher than for other uses. Fixed charge, independent of usage: Some costs (meters and service lines) are largely fixed once a customer is connected, and might be collected through a fixed charge. All else being equal, adding a fixed charge would shift revenues onto residential customers,especially small residential ) customers, and away from large users and non-commercial customers. The reduction in variable charges would reduce conservation incentives. 9 What do other towns charge? The Committee has surveyed the water and sewer rates of a ) number of Massachusetts towns, and a partial listing of the results is shown in Table 2.5-4 (on the next page). ) ) ) 19 9D ) 1 ) Table 2.5-4. Water Rates in Selected Towns ) Towns with Multiple Water Rate Tiers ) Fund Bill Town Tier 1 Ratel Tier 2 Rate2 Tier 3 Rate3 Tier 4 Rate4 Commercial Cycle ) hcf $ hcf $ hcf $ hcf $ Ent. S Arlington 0-200 1.90 201+ 2.80 same Gen. S Bedford 0-20 1.67 21+ 3.30 3.30+base/mon. ) Ent Q Cambridge 0-80 2.66 81-800 2.87 801-4000 3.03 4001-20K 3.23 same Ent Q Canton 0-40 1.79 41-80 3.30 81-120 4.96 121+ 5.76 0-400==54.07 401+=$6.06 ) Ent M Chelsea 0-60 2.30 61-300 2.55 301+ 2,81 same ) Ent S Clinton 0-30 1.70 31-50 1.85 51-200 2.00 201+ 115 same Gen Q Everett 0-60 1.51 61-120 1.81 121-2000 2.15 2001+ 2.43 same ) Ent Q Framingham 1-312 2.31 313-6000 3.05 6001+ 3.56 same ) Ent S Lexington 0-20 2.20 21-40 3.06 41-80 3.82 81+ 4.99 same Ent Q Malden 0-50 1.75 51-75 3.14 76+ 3.97 n/a ) Ent Q Marblehead 0-60 2.75 61+ 2.80 same "H - Ent Q Newton 0-40 2.58 41-140 3.10 141+ 3.72 same Gen B Norwood 0-30 1.81 31+ 2.66 double resid. ) Ent S Saugus 0-30 1.80 31-100 2.65 101-200 2.75 201-500 3.53 same ) Gen Q Somerville 0-100 2.23 100-200 2.34 201+ 2.43 same,bill bi- mon. ) Ent Q Waltham 0-42 1.96 43-90 2.41 91-240 3.33 241+ 4.33 same,bill mon. ) Ent S Watertown 0-75 2.45 75-1000 3.47 1001+ 4.91 same Ent S Weston 0-50 1.08 51+ 2.37 same ) Ent 5 Wilbraham 0-100 1.90 101-200 2.10 201+ 2.30 1.90 flat rate ) M=Monthly Low 0-20 1.08 21 1.81 76.00 2.00 81.00 2.15 ) B=Bi-Mon. High 0-312 2.75 6000 3.47 6001.00 4.96 20K 5.76 ) Q=Quarterly Average 0-73 2.02 500 2.72 1054.00 3.27 3306.00 3.77 ) S=Semi-Ann. Median 0-50 1.90 100 2.80 201.00 3.03 241.00 3.53 Lexington 0-20 2.20 21-40 3.06 41-80 3.82 81+ 4,99 - Notes: 1. All rates compared as semi-annual rate(for quarterly bills,the tier ranges were doubled) ) 2. Rates taken only from towns that get their water from MWRA ) Ent. M Wellesley charges flat rate Nov-Apr of$2.02/hcf+base charge equivalent to$10.38/6 mos,and in summer a 3-tier 'seasonal' ) block rate equivalent to: 72-144 3.39 145-216 4.24 217+ 5.30 ) hcf/ hcf/ hcf/ ) 6 mo 6mo 6mo ) The total annual residential water plus sewer cost for 120 hcf(the average annual residential usage ) used by the MWRA) per year has also been computed, as well as ratios that indicate the steepness of the block rates, for towns that receive both water and sewer service from MWRA. The ratios are: ) a) a household's total bill if it used 80 hcf per year divided by the total bill if it used 40 hcf per year; ) and b) the bill if 160 hcf were used divided by the bill if 80 hcf were used. If a ratio is 2.00, the ) customer pays exactly twice as much for twice the usage; this would represent a flat rate structure. If the ratio is greater than 2.00, the rate is an inclining block structure. (Ratios less than 2.00 reflect the effect of a fixed, or base, charge.) The higher the ratio the steeper the rates. Lexington is the ) i ) 206 ` ) ,_) second steepest in both ratios. The data are given in Table 2.5-4, where rankings within a column ) are shown in parentheses. Table 2.5-4 Bills for 120 hcf, and Steepness Ratios Town Fund Type Total bill for 120 hcf Ratio of bills Ratio of bills (descending order) 80 hcf/40 hcf 160 hcf/80 hcf ) Nahant General (1) $1,441.20 2.00 2.00 1 Belmont Spec._Rev,_Gen (2) $1,403.28 1.86 1.92 Milton Special_Revenue (3) $1,185.12 (1) 2.43 2.18 ) Lexington Enterprise (4) $1,126.40 (2) 2.28 (2) 2.48 Medford Enterprise $1,082.40 2.00 2.00 Stoneham Enterprise $1,080.00 2.00 2.00 Brookline Enterprise $1,032.00 2.00 2.00 / Melrose Enterprise $941.88 2.00 2.00 Swampscott Enterprise $938.40 2.00 2.00 ` 1 Winthrop Enterprise $922.80 2.00 2.00 > Marblehead Enterprise $888.00 1.85 1.92 Watertown Enterprise $887.56 1.96 2.01 Chelsea Enterprise $885.60 2.00 2.05 Newton Enterprise $875.60 2.00 2.20 Quincy General $848.88 2.00 2.00 Revere Enterprise $842.40 2.00 2.00 Somerville General $811.20 2.00 2.00 ) Norwood General $795.84 2.17 2.37 3 Malden Enterprise $684.20 2.14 (1) 2.64 ) Waltham Enterprise $681.24 2.00 2.19 I ) Everett General $674.40 2.00 2.11 1 Framingham Enterprise $639.60 2.00 2.00 1 Arlington Enterprise $501.80 1.82 1.90 ) Saugus Enterprise $482.56 1.43 2.21 ) ) ) 2.6. PILOTs 1 Background. Since the 1990's, Lexington's water and sewer enterprise funds have made payments in lieu of taxes (PILOTS) to the town s general fund. A PILOT charge of$500,000 was added to the water rates beginning in 1992, and a PILOT charge of$250,000 was added to the sewer rates ) beginning in 1997 The immediate event that triggered the decision to add a PILOT in 1992 apparently was the need to replace approximately $500,000 in annual revenue that Lexington lost when the Town of Bedford, which had previously purchased water from the Town of Lexington at a price higher than cost,joined the MWRA and became entitled to purchase water from Lexington essentially at cost. The Board of Selectmen decided to raise an additional $250,000 PILOT from ) 21 6 2T J J ) ) the sewer fund in 1997 in order to close a budget gap of that amount in the general fund that year. ) When the issue was raised at the 1999 Town Meeting, an amendment reviewing PILOTs was ) defeated. ' ) The Committee has examined issues of legality, equity, and rate setting. At this point, possible recommendations include: 1)keeping PILOTs as is; 2) establishing a more systematic method of establishing the rates; 3) eliminating PILOTs; or 4)phasing them out over a set period of years. ) ) In carrying out the Board's charge to "consider the feasibility of continuing to appropriate funds through the water and sewer enterprise accounts for in lieu of tax payment," this Committee has ) examined the following issues: ) • What are PILOTS? ) • Why are PILOTs controversial in Lexington? • What is the legal justification for PILOTs? • How could the amount of the PILOTs be set? ) • What would be the consequences of making changes to PILOTS? 1. What are PILOTs? It is not uncommon for non-profits, or other entities that are exempt from ) municipal taxation,to make voluntary, negotiated payments in lieu of taxes to their host communities. These payments can be viewed as compensation to the community for services that the community provides to the tax-exempt entity In some cases, for example in the case of ) municipal lighting plant cooperatives, state law mandates that a tax-exempt utility agree to make payments in lieu of taxes as a condition of doing business. The Committee does not know how many communities have water and sewer P1LOTs,but only one besides Lexington has been ) identified so far ) ) 2. Whv are PILOTS controversial in Lexington? The pros and cons of the PILOTs reveal why they are controversial. On the pro side, they are seen as an available source of revenue for meeting Lexington's community needs. On the con side, PILOTs are often perceived to be inappropriate in that they are taxes for general purposes rather than payments for water and sewer services despite being included in the water and sewer bills. Although conceivably water and sewer could negotiate the payment with the Town, the fact is that they do not. The PILOT is placed in the Town Manager's budget, then in the Selectmen's budget and then established by the Town Meeting. They ) are seen by some as devices for getting around Proposition 2 1/2, with the added disadvantage that they deprive some taxpayers of federal income tax deductions, since water and sewer bills are non- deductible. 3. What is the legal justification for PILOTs? The legal justification for PILOTS is murky The ) Department of Revenue Manual on Enterprise Funds says: "All enterprise revenues may only be ) used to support the expenditures (see below) of the enterprise fund. At no time may these funds be used to support ongoing municipal operations or subsidize the general fund." (page 5) At the same time,the DOR Manual also says (page 23 and 24): j [Question] 15. Can a community charge an enterprise fund a payment in lieu of taxes for ) property used to provide the service? 22 ) 63 ) J [Answer] Chapter 44 s.53F 1/2 states that the books and records of the enterprise fund shall be maintained in accordance with generally accepted accounting principals (GAAP). From a purely accounting perspective, a payment in lieu of taxes is a proper expense of the enterprise fund. It is a quasi-external transaction, that is, an interfund exchange that would have resulted in recognition of an expense or revenue if it had involved a private party The validity of such a charge does not depend on the type of enterprise,but depends on the type and amount of property used by the enterprise. If the decision is made to proceed with ! -) such a payment,the amount would be the community's commercial tax rate multiplied by the assessed value of the enterprise's land, buildings and personal property ) Notwithstanding the foregoing,it must be noted that from a legal point of view, it is not at all clear to what extent a court would consider such a payment to be part of the actual cost of providing the service, and therefore an appropriate component of the enterprise's fee structure. ) ) PILOTs were discussed with Jay Gonzales (Palmer and Dodge) at meeting#7 The minutes indicate that Jay told the Committee that a possible legal justification would be if the Town treated ) the enterprise as if it were a separate and private entity then it could possibly be taxed as such. (Some Committee members have suggested that water and sewer are not really managed and ) operated as a private business.) However, Jay also indicated that there is no legal precedent either way on PILOTs, and that their use is a risk based on the odds of winning a lawsuit challenging their use. The Committee has engaged in discussions of another legal issue, the validity of PILOTs ) under the Massachusetts Supreme Judicial Court's Emerson College decision, but has not yet ( ) completed its review of that issue. 4. How could the amount of the PILOTs be set? If water and sewer were private businesses they would pay property taxes computed as the depreciated (i.e. book) value of assets times the commercial tax rate. The 30 June 2003 book value was $44,870,252, and the FY04 commercial tax ) rate was $21.39, which would compute to $959 775 5. What would be the consequences of making changes to PILOTs? If PILOTs were reduced, i phased out or eliminated the lost revenue to the general fund would have to be made up by property taxes or cuts in services. Of course, each household would be affected differently The water and sewer rates would decline by about 6% ($750,000 divided by about$12,175,000 in revenues arising from block rate payers) and the tax rate would increase by about 1% ($750,000 divided by the $80,651,114 levy limit). Households in highly assessed houses that use little water would see an increase in net payments. Households with low assessments and high usage would see a decrease in ) net payments. Those homeowners who itemize deductions would be able to use the additional deductions resulting from higher property taxes, although residents subject to the alternative minimum tax may not be able to take such deductions. Although the tax effect per household is small, the aggregate savings to the residential taxpayers could be substantial. There might be a shift in the rate-plus-tax amounts obtained from households compared to businesses, although this could be adjusted for in the water and sewer block rates. ) 23 ) ) 2.7 Billing, Collection and Administration Background. The Town reads water meters twice yearly for all accounts. Readings are done by DPW personnel and the information is processed by the Town's MUNIS accounting system. The Town is in the process of installing new meters which can be read electronically through a contact ) mounted on the outside of domiciles and buildings. These meters should be extremely accurate ) (they are new) and offer the advantage of being able to be read without direct access to the meter. The Committee is addressing the following questions: • Can the existing system be improved to make it more efficient? ) • Should billing be more frequent? ) • What are abatements, and what is the amount? ) • Should there be a written policy on abatements? • Are there any billing practices of interest? ) 1. Can the existing system be improved to make it more efficient? The billing system seems to be } working well shown by the substantial decrease over the past three years in the computer generated billing errors. The improvements can be attributed to solving many problems with the operation of the town's MUNIS accounting system, and the procedures developed to provide detail checking of the bills prior to mailing. ) According to the DPW billing errors range from one to two percent of the total bills. However, the Department is continuing its program to mitigate and eliminate errors in billing with the objective being to decrease the billing errors to as low a level as feasible. ) 2. Should billing be more frequent? Utilities often use shorter billing cycles (monthly bi-monthly or quarterly) to improve cash flow Shorter billing periods also provide additional consumption ) data. Such data enables a utility to continuously size up its situation as the year progresses. Consumers also receive added information, giving them a chance to make decisions regarding their overall usage, and to make lower cash payouts (but more times per year). The DPW has no cash flow problems regarding the collection of water and sewer bills thus the major benefit of shorter billing cycles would be the greater level of information and data that would ) accrue to the utility and the consumers. ) The DPW indicates that it could accommodate a quarterly billing cycle within their operating ) framework. However,bills for the bad weather quarter(January through March) might have to be ) estimated or read by contracted personnel. The drawbacks to instituting multi-billing cycles are added meter reading costs, and added costs to ) prepare and send out added bills, and to collect the proceeds. Systems to store and utilize the extra ) data may also be required. ) Quarterly billing is something for Lexington's water department to consider, within the context of the advantages and disadvantages discussed above. The Committee's discussion consensus favored ) 24 G 2i.-) J the examination of 4 bills per year. However, a decision on shorter billing cycles is probably a "backburner"issue. 3 What are abatements, and what is the amount? The major issues regarding abatements include: a) the policy used by the DPW to grant billing adjustments and abatements; b) the need for the Department to review the existing policy; and c) communicating the policy to the system users. The Committee has received information on the FY04 abatements,but has not analyzed it yet. The DPW grants adjustments to bills for several reasons including: a) meter reading errors; b) computer errors causing mistakes in billing; c) overuse caused by faulty plumbing fixtures (the adjustment is usually close to the repair cost,based upon the presentation of a receipt); d) increased ) water use caused by running water to prevent freezing of a shallow underground supply pipe into the residence; and e) assistance provision to needy households based upon proof that they are receiving a discount from another major utility such as NStar) Except for the last three cases cited above, abatements are billing adjustments rather than discounts ) to bills. Thus, abatements should not be understood as lost revenue, as the abated amounts are, for the most part, charges that were billed in error. Except for the case of assistance, abatements are ordinarily considered when customers request a review of their bill. Each request is handled on an individual basis, and action is taken if investigation by the water department indicates the complaint or request is valid. ` ' From discussion with DPW personnel, indications are that any abatements granted are based upon ) logical methods they have developed in-house. However, the DPW management agrees that there is some confusion as to the policy and how and when it is applied. ) 4 Should there be a written nolicv on abatements? The Committee is considering a recommendation that the DPW and water department prepare a policy document indicating the reasons and bases upon which abatements will be granted and the methods to be used to compute their value. The final report of this Committee will present further recommendations in this regard. 5. Are there any billing practices of interest? The Committee has learned of a practice in which it appears that some multi-unit residential facilities (with say,N units)that are served by a single meter have their single bill computed as N times what the average unit would pay if each unit had a separate meter. The details of this practice, and its applicability, are under study In addition, some customers are covered by special agreements and the Committee will probably recommend that ) these agreements be reviewed. 2.8. Enterprise Funds _> Background. The water and sewer enterprise funds were adopted by Article 14 of the 1987 Town ) Meeting. The Committee has considered the following question: • What is the purpose of having an enterprise fund? J 25 66 ) 1. What is the purpose of having an enterprise fund ? MGL Ch. 44, s. 53F1/2,Enterprise Funds authorizes towns to " establish a separate account. and that " .the books and records shall be ) maintained in accordance with generally accepted accounting principles " This gives towns a method for segregating water and sewer funds from the general fund. Thus, for example, excess revenues will stay within the water and sewer fund, and do not become part of the general fund. ' Enterprise funds are also seen as a method to identify the true cost of providing water and sewer services. Jay Gonzales, of Palmer and Dodge, stated that there are certain advantages and ) preferences in state assistance for water and sewer capital projects (including, but perhaps not ) limited to, the State Revolving Fund) given to towns that have enterprise funds. But he also said that an enterprise fund is simply an accounting mechanism. Mike DiPietro (former Assistant ) Finance Director) has stated that the accounting methods that the town uses do not require that the ) town have adopted an enterprise fund. Conversely the statute does not require the town to manage ) the water and sewer accounts as it does. The statute does not confer upon the water and sewer departments the status of a privately owned and operated business. The minutes of meeting#9, 25 ) May 2004 show that one member asked if the Committee should consider whether to keep the H - enterprise fund structure. In a note to the minutes, the secretary noted that this question is not listed in the Selectmen's Charge to the Committee. A third member requested that the pros and cons of the enterprise fund structure be put on the outline of Committee discussions. However, no sub- group was assigned this question, and the Committee has no interim report to make. ) � - ) ) ) ) ) ) ) 26 ) C7 ) ) 14 Benjamin Road ) Lexington, MA 02421 30 December 2004 Board of Selectmen 1625 Massachusetts Avenue ) Lexington, MA 02420 BY HAND 1 Dear Selectmen McKenna, Kelley, Kennedy Krieger, and Pagett, ' ) The Water and Sewer Rate Study Committee (WSRSC) has voted unanimously to ask you to i consider obtaining a legal opinion from outside counsel regarding the PILOTs. We have received memos that discuss some legal aspects of PILOTs from John Bartenstein and Peter Enrich (both are lawyers). Each of them met with us in separate meetings to discuss their memos. John's memos expressed a concern that these PILOTs would not survive a court challenge; Peter's presented the view that they would survive. Dan Fenn also submitted a memo that provides some historical background. For your convenience these memos (which include several relevant statutes) and excerpts from the Massachusetts Department of Revenue's Manual on Enterprise Funds are attached hereto in a single combined hardcopy document. This document is also being emailed to you so that you will have electronic copies. Some questions that might be posed include: 1 Does the Emerson College decision apply to fees charged by an enterprise fund established under G.L. c. 44 sec. 53F 1/2? 2. If so, does Emerson College permit Lexington's Water and Sewer Enterprise Funds to make payments in lieu of taxes (PILOTs) to the General Fund that are funded by water and sewer fees, under the facts and circumstances outlined in Dan Fenn's 6/22/04 draft memorandum to the WSRSC? Your charge to us requests our recommendation(s) on PILOTS. They will reflect our views ) regarding policy considerations and perhaps on the legal issues if the legal opinion we are requesting becomes available in a timely manner. Naturally, we have formed individual opinions on the legal issues based on the memos and discussions with John and Peter, and review of various materials. ) ) Sincerely Loren Wood, Chairman, WSRSC ) 1 6g PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee ) Table of Contents ) L 'PILOTs DRAFT DAN FENN" Mr. Dan Fenn (22 June 2004) 4 ) 11 HISTORY 4 1.2. CALCULATION 4 1.3 IMPACT OF PILOTs ON LEXINGTON HOMEOWNERS 4 1 4 LEGAL JUSTIFICATION .5 1.5. PROS AND CONS. 6 1.5 1 PRO. 6 1.5.2. CON 6 1.6. Attachments. 6 1.6.1 Message from John J Ryan, Finance Director/Comptroller to the Town Meeting, ) March 26, 1997 explaining enterprise funds. 6 1.6.2. Excerpt from a Manual on Enterprise Funds, Governmental Accounting, Auditing and Financial Reporting, page 129-130. 7 ) 1.6.3. PILOT Committee Report, Presented to the Board of Selectmen, February 2, 1998 7 2. Memo on Emerson case by Mr. John Bartenstein (22 July 2004) 10 ) 2.1 Cover email 10 2.2. Attachment 1•"Emerson Case and PILOTs", J Bartenstein 10 2.3. Attachment 2: 'Emerson College v City of Boston 14 3. Memo on Emerson case by Mr. Peter Enrich (12 December 20041 25 ) 3.1 Cover email .25 3.2. Attachment: 'Emerson Case and PILOTs', P Enrich .25 3.2.1. MEMO .25 3.2.2. 1 The Conflation Problem: .26 ) 3.2.3. 2. PILOTs and Incidental Costs: .27 4. Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) 29 4 1 Cover email .29 —) - 4.2. Attachment: "Response on [P Enrich's] Emerson case and PILOTS" J Bartenstein. .29 ) 4.2.1 Memo .29 ) 4.2.2. 1 The Conflation Issue. .29 4.2.3. 2. Even Independent Governmental Entities Are Not Subject to Local Taxes or ) PILOTs Absent a Clear Legislative Mandate. 31 4.2.4 3. The Costs of Generalized Municipal Services Described in Part 2 of Peter's ) Memo are Exactly the Type of Costs That Emerson Does Not Permit a Municipality to Recover Through a Fee. 33 4.3 Summary of Response to Mr. Enrich's memo by Mr. Bartenstein (14 December 2004). 41 ) 5. Email 'Postscript on PILOTs" by Mr Bartenstein (15 December 2004) 42 6. Reply to Mr. Bartenstein's Postscript on PILOTs by Mr. Peter Enrich (16 December 2004) 44 ) 7. Mass. Department of Revenue's Manual on Enterprise Funds [Excerntsi_ 45 71. Introduction 45 ) 7 1 1 History 45 7 1.2. What is an Enterprise Fund? 45 7 1.3 What are the Advantages of Enterprise Fund Accounting? 46 7 1 4 Impact of GASB Statement [omitted] 47 ) 2 G1 ) , ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 7.2. Adopting an Enterprise Fund [omitted] 47 7.3. The Enterprise Budget [omitted] 47 7.3.1. Revenues [omitted] 47 , ) 7.3.2. Costs [omitted] 47 7 4 Balancing an Enterprise Budget [omitted] 47 7.5. Adopting an Enterprise Budget [omitted] 47 7.6. Reporting on the Tax Rate Recapitulation Sheet [omitted] 47 7 7 UMAS Budgetary Entries [omitted] 47 7.8. UMAS Actual Entries [omitted] 47 7.9 Frequently Asked Questions [omitted: 1,2,3,4,6,7,8,24,25] 47 7.9.1 5. Does an enterprise fund have to fully recover its costs through user fees or be self- ) sufficient? 47 7.9.2. 9 Who determines user fees? 47 7.9.3. 10. Does the amount of a Proposition 21/2 debt exclusion for an enterprise fund have to be reduced by the amount of any user fees and/or special assessments imposed for the same project? 48 7.9 4 11 When a community adopts an enterprise fund is it subject to the appropriation process? 48 7.9.5 12. Can an enterprise fund use its retained earnings/surplus to pay for the expenditures that the city council/town meeting voted to fund by borrowing? 48 J 7.9.6. 13. For what purposes can the community use the budgeted surplus and/or retained earnings? 48 7.9 7 14 Can an enterprise fund operate independently or under its own procedures? 48 7.9.8. 15. Can a community charge an enterprise fund a payment in lieu of taxes for property used to provide the service? 49 1 7.9.9 16. Should services provided by other departments be billed directly to the enterprise fund?Are other indirect costs like health insurance charged directly to the enterprise fund? 49 7.9.10. 17 What happens if there is a disagreement on the indirect costs (e.g. which expenses and how much) of an enterprise fund? 49 7.9.11 18. How does the community provide for an enterprise operating loss? 49 7.9.12. 19 How is enterprise fund accounting different from other governmental accounting? 49 7.9.13. 20. How can an enterprise provide for extraordinary or unforeseen expenditures?.50 7.9.14 21 Can a community establish a stabilization fund in an enterprise fund? .50 7.9.15. 23. Can city council or town meeting vote to use enterprise funds for purposes not related to the enterprise? .50 7 10. APPENDIX A. ENTERPRISE FUND LEGISLATION CHAPTER 44 §53F1/2. .50 7 11 APPENDICES B,C,D,E,F [omitted] 51 ) 3 70 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: PILOTs DRAFT DAN FENN", Mr. Dan Fenn (22 June 2004) ) ) 1. 'PILOTS DRAFT DAN FENN" Mr. Dan Fenn (22 June 2004) ) 11. HISTORY The first imposition of PILOTS (payments in lieu of taxes) on this type of public services in ) Lexington came in 1992. For many years, Bedford had been paying us $500,000 for water; when ) they became part of the MWRA system, those payments ceased, leaving Lexington with a significant budget shortfall. To fill that gap, a PILOT was added to the water bills. The issue arose once more in 1998 in the face of yet another budget shortfall. The ) suggestion was made to establish a companion PILOT on sewer bills of$250,000. After extended public debate, the Board of SELECTMEN voted 3 to 2 to assess this charge for one year because some kind of short term solution was needed. At the same time the decision was made to establish ) an ad hoc committee to review the practice and make recommendations to the Selectmen. -) - That Committee reported to the Board a year or so later; they were split three to three. One ) group felt the PILOTs on both water and sewer should be phased out over time; the other three thought PILOTs should be retained, but not increased over the $500,000 -- $250,000 level. By this time, the Board had changed. In the late winter of 1999, the Board voted 3-2 to retain PILOTs on water and sewer despite vigorous opposition from the two dissenting members. Some citizens, including especially Peter Kelley strongly disagreed. In order to open up the issue, Mr. Kelley proposed an amendment to Article 22 (the budget article), line item 3800. After about fifteen minutes of discussion, the Town Meeting defeated the amendment, and the$750,000 has been assessed ever since. 1.2. CALCULATION Conceptually, since the PILOT is designed to charge the Water and Sewer Enterprise Fund ) the dollar figure it would have paid to the Town had it been a private, free-standing entity the ) PILOT would be the commercial tax rate applied to the assessed valuation of the water and sewer infrastructure. However, that does not appear to be the case in Lexington s situation. Bill Hadley ) estimates the value at$ and the current commercial tax rate is $ per thousand, so if the formula was being applied, the water and sewer PILOT would be considerably higher than ) it is. 1.3 IMPACT OF PILOTs ON LEXINGTON HOMEOWNERS ) The exact figure, of course, depends on a particular household's water and sewer usage,but the homeowner is paying 7% on the water bill, 3% on the sewer bill, and 5% on the combination. ) 4 7 ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: PILOTs DRAFT DAN FENN", Mr. Dan Fenn (22 June 2004) 1.4 LEGAL JUSTIFICATION As a 1980 Suffolk University study of PILOTs paid by non-profit institutions to their host communities (schools, colleges, churches, etc.) notes, there are no Massachusetts statutes specifically authorizing PILOTs. They are essentially voluntary contributions; the precise numbers are worked out in negotiations between the parties. (In Emerson v City of Boston, the Supreme ) Judicial Court clarified the distinction between fees and [taxes], a distinction which need not concern us here.) The important fact is that PILOTs generally(and Emerson stresses this point) are paid by choice as a result of two-party negotiations. That condition clearly does not apply to PILOTs on Enterprise Funds, although conceivably it could (Water and Sewer or Recreation could negotiate the level of payment with the Town). But the fact is they do not. The PILOT is placed in the Town Manager's budget,then in the Selectmen's budget and then established by the Town Meeting. The legal justification for PILOTs from Enterprise Funds is murky The Manual issued by the Department of Revenue says: 1 "All enterprise revenues may only be used to support the expenditures (see below) of the enterprise fund. At no time may these funds be used to support ongoing municipal operations or subsidize the general fund." (page 5) At the same time, it also says (page 23 and 24): 1 15. Can a community charge an enterprise fund a payment in lieu of taxes for property used to provide the service? Chapter 44 § 53F 1/2 states that the books and records of the enterprise shall be maintained in accordance with generally accepted accounting principles (GAAP). From a purely accounting perspective, a payment in lieu of taxes is a proper expense of the enterprise fund. It is a quasi-external transaction, that is, an interfund exchange that would have resulted in recognition of an expense or revenue if it had involved a private party The validity of such a charge does not depend on the type of enterprise, but depends on the type and amount of property used by the enterprise. If the decision is made to proceed with such a payment, the amount would be the community's commercial tax rate multiplied by the assessed value of the enterprise's land, buildings and personal property Notwithstanding the foregoing,it must be noted that from a legal point of view, it is not at all clear to what extent a court would consider such a payment to be part of the actual cost of providing the service, and therefore an appropriate component of the enterprise's fee structure. Communities using PILOTs rely on the above statements as to how PILOTs are to be handled in financial statements coupled with the fact that auditors of the Town's books have never called them illegal as sufficient legal justification. But as the DOR indicates and as Lexington Town Counsel (Palmer & Dodge) has indicated, there is a risk here. 5 72 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: PILOTs DRAFT DAN FENN", Mr. Dan Fenn (22 June 2004) In short, unsatisfying as this conclusion may be, while PILOTs on Enterprise Funds are clearly not "illegal, they are not clearly "legal" either 1.5 PROS AND CONS The arguments are pretty straightforward: ) 1.5.1 PRO: ) PILOTs on Enterprise Funds are an available source of revenue for meeting Lexington s community needs. If they were to be eliminated, these monies would have to be made up somehow, perhaps ) either by cuts in services or added taxes. ) 1.5.2. CON. PILOTs are often perceived to be deceptive in that they are taxes rather than payments for water and sewer services though they are included in water and sewer bills; PILOTs are seen by some as devices for getting around Proposition 2 'h since they are taxes and not, strictly speaking, fees; PILOTs deprive the taxpayer of federal income tax deductions since water and sewer bills are non- ) deductible. 1.6. Attachments 1.6.1. Message from John J Ryan, Finance Director/Comptroller to the Town Meeting, - March 26, 1997 explaining enterprise funds. ) Message from J Ryan to Town Meeting 26 March 1997 Payments in lieu of taxes: Enterprise funds,because of their governmental nature, most often are not subject to taxation. ) Therefore, some types of enterprise funds make 'payments in lieu of taxes" to compensate the general government for the services they receive. The GASB's codification uses payments in lieu of taxes as an example of a quasi-external transaction (i.e. a transaction treated as an expenditure/expense of the paying fund and as a revenue of the receiving fund). A true payment in lieu of taxes is not an arbitrary contribution. Rather, it is calculated on some objective basis ) comparable to the taxation that would be imposed on similar businesses operating within the jurisdiction. 673. ) ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: PILOTs DRAFT DAN FENN", Mr Dan Fenn (22 June 2004) 1.6.2. Excerpt from a Manual on Enterprise Funds, Governmental Accounting, Auditing and Financial Reporting, page 129-130. Enterprise funds,because of their governmental nature, most often are not subject to taxation. Therefore, some types of enterprise funds make "payments in lieu of taxes" to compensate the general government for the services they receive. The GASB's Codification, Section 1800.103, uses payments in lieu of taxes as an example of a quasi-external transaction (i.e. a transaction treated as an expenditure/expense of the paying fund and as a revenue of the receiving fund). A true payment in lieu of taxes is not an arbitrary contribution. Rather, it is calculated on some objective basis comparable to the taxation that would be imposed on similar businesses operating within the jurisdiction. Therefore, it is recommended that arbitrary payments from an enterprise fund to the general government be reported as "operating transfers' rather that as quasi-external transactions, even if they are called "payments in lieu of taxes" 1.6.3. PILOT Committee Report, Presented to the Board of Selectmen, February 2, 1998 Enterprise Fund Background The Town of Lexington created enterprise funds for water and sewer operations in 1987 Later in 1988 a similar fund was established for Recreation services when the Town purchased the Pine Meadows Golf Course. In practice, enterprise funds are used for activities that are fully financed through user charges. Specifically, all direct and indirect costs of the operation for the water and sewer functions have been built into the fees/rates charges and the tax levy does not support the costs of providing these services. ) However, unlike the Water and Sewer Enterprise, the Recreation Enterprise Fund has not generated enough revenue to fund all the indirect costs incurred to support this recreation operation. The tax levy supports all financial costs and administrative oversight connected with the Recreation function while some capital investment and Public Works Division support is funded through Recreation program fees. The Town of Lexington and Bedford water purchase agreement, and subsequent revenue generated as a result of the agreement, made it feasible and appropriate to transfer$500,000 per year from the Enterprise Fund to the General Fund in the form of an in lieu of tax payment. This practice has been in place for approximately six years. The 1998 Annual Town Meeting approved an expansion of the in lieu of tax transfer to the Sewer Funds with the explicit understanding that the Board of Selectmen would create a citizen's committee with a charge to examine the feasibility of continuing and/or expanding this practice. The Ad Hoc Committee on PILOTs consisted of six citizens appointed by the Board of Selectmen. Active members included: Ed Grant Setha Olsen Cathy Abbott I 7 7Lie PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: PILOTs DRAFT DAN FENN", Mr Dan Fenn (22 June 2004) Chuck Benson Diana Garcia Steve Hastings The Charge The Ad Hoc Committee on PILOTs was given the following charge: ) • Examine the practice of transferring the funds from the Water, Sewer, and Recreation Enterprise Funds to the General Fund in the form of in lieu of tax payments. • Consider the feasibility, practicality, and advisability of continuing this practice and the effects of this practice on the rates charged for water, sewer, and recreation services. ) • Examine whether this practice resulted in water and sewer rate/fees that are incompatible ) with the rates charged by other MWRA communities. • Determine whether implementing a Recreation Fund in lieu of tax payment would result in Recreation program fees that are incompatible with fees charged by other organizations and companies serving citizens of Lexington. Committee Process The Committee met over a 60 day period to examine the following information: 'PILOT Committee Rate Information' memorandum- presented by Bill Hadley, 'Recreation Enterprise Fund Five-Year ) History and Projections' - presented by Karen Simmons, '1997 Annual Town Meeting Report on Enterprise Funds' - presented by John Ryan, 'A Handbook on Implementing an Enterprise Fund Established under Chapter 44 Section 53F1/2' written by the Division of Local Services - ) Department of Revenue for the Commonwealth of Massachusetts, 'Enterprise Funds'(Chapter 10) - ) Governmental Accounting, Auditing, and Financial Reporting(see Appendix). In addition, the ) Committee interviewed the following people: Richard J White, Town Manager; George Woodbury Director of Public Works; Karen Simmons, Recreation Director; John Ryan, Finance - Director; and Bill Hadley Superintendent of Water/Sewer Enterprises; for background. ) Conclusions Recreation Enterprise ) The Committee reached a clear consensus regarding the inability of the Recreation Enterprise to make in lieu of tax payments as the fund is not completely secure at this time. The Committee recommends that the Recreation Enterprise revenue and expenditure policies presented to the Board ) of Selectmen on March 13, 1997 and reviewed again on November 21, 1997 be continued in the ) interest of maintaining and improving upon the financial stability of the fund. Additionally the Committee determined that in lieu of tax payment would result in Recreation program fees that are incompatible with fees charged by other organizations serving the community of Lexington. ) J ) 8 75 � PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: PILOTs DRAFT DAN FENN", Mr. Dan Fenn (22 June 2004) Water and Sewer Enterprises 1 There is no consensus among the group regarding the continuation of the Water and Sewer Enterprise in lieu of tax payments. It is clear from the group's discussions that everyone regardless of their feelings about in lieu of tax payments, understands the difficulty in removing this alternative funding source either immediately or in the short term. The group is unable to make a ) specific policy recommendation to the Board as opinions varied. The following is a compilation on the group's feedback regarding these issues: • Some members of the group felt that the in lieu of tax payment should be phased out over time. Most of the concern centered around the 'hidden cost' to the taxpayer in the water and sewer bills. • Other members felt that the in lieu of tax payment should be continued at some level. However, they felt that restrictions should be placed on the amount of the in lieu of tax payment to be collected. • All members agreed that the public should be made aware of the collection process for in lieu of tax payments. The Committee recommends a full accounting be presented annually and printed in the water/sewer bill prior to rate setting in the spring of 1998 billing cycle and annually thereafter. In summary half the Committee (Setha Olsen, Chuck Benson, Steve Hastings) thought the payment in lieu of tax should be phased out over time. The other half(Ed Grant, Diana Garcia, and Cathy Abbott) felt the payment in lieu of tax should not be increased above current levels ($500,000 for water; and $250,000 for sewer). ) ) I ) I _I ) 9 74 I ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: Memo on Emerson case by Mr. John Bartenstein (22 July 2004) ) ) 2. Memo on Emerson case by Mr. John Bartenstein (22 July 2004) 2.1 Cover email From:John Bartenstein ) Date:Thursday July 22,2004 12:50 PM To: [WSRSC email list] Subject:Emerson Case and PILOTS ) Members of the WSRSC. As promised at Tuesday morning's WSRSC meeting,I have prepared a short memo setting forth my concerns about the legal validity of the PILOTs charged in Lexington's water and sewer rates. The memo,as well as a copy of the Emerson ) case to which it refers,are attached. —1 - I understand that there are other points of view on this important legal issue. In particular,Dan Fenn has advised me that Peter Enrich,a professor of municipal law at Northeastern University Law School and former Lexington selectman, has expressed a different opinion. Because I think it is important for the Committee to consider all perspectives, and ) there might be a legal justification for the PILOTs that I have not thought of,I called Peter Enrich this morning,asked him to look over my analysis,and invited him to provide the committee with his comments. Peter said that he would like to do so;however,because of work requirements and upcoming vacation plans he does not think ) he could get to it before Labor Day I know that the committee is anxious to come to a decision about the PILOTs, and that the topic has been slated for a possible vote next week. I think,however,that this is an important and difficult issue that has been controversial for some time,and that it would behoove the committee to hear all sides on the legal issues before making its final decision. Accordingly I would urge the committee not to act until Peter has had a chance to respond and the legal ) issues have been fully aired. John Bartenstein ) 2.2. Attachment 1 'Emerson Case and PILOTs", J Bartenstein ) To: Water/Sewer Rate Study Committee July 22, 2004 ) From: John Bartenstein ) ) Subject: Emerson Case and PILOTs 1 Having looked over Dan Fenn's preliminary draft on PILOTs, I think there is one issue that bears further exploration. Dan notes in his memo that "in [Emerson College v City of Boston, 391 Mass. 415 (1984)], the Supreme Judicial Court clarified the distinction between fees and [taxes]," ) but then states that the "distinction need not concern us here." For the reasons set forth below ) I do not believe that the issue can be so lightly dismissed. The Emerson case (copy attached) is the leading case on the validity of municipal fees in ) Massachusetts, and its principles have been applied in numerous subsequent cases, including cases ) involving water and sewer fees. Emerson recognizes that a municipality is authorized to charge ) 10 ) 77h r i PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: Memo on Emerson case by Mr. John Bartenstein (22 July 2004) fees, separate and apart from the collection of municipal taxes, in two circumstances: (1) for the delivery of particularized services (such as water and sewer services); and (2) for regulatory purposes (such as licensing and inspection fees). Emerson then identifies the salient characteristics that distinguish both types of fees from taxes, setting out a three-part test.' For our purposes, the key requirement is the last one: Emerson squarely holds that fees may not be used to raise revenue for general municipal purposes, but only 'to compensate the governmental entity for its expenses" in providing the particular service at issue. 391 Mass, at 425; see also DOR Manual at 22. Where "revenue obtained from a particular charge is not used exclusively to meet expenses incurred in providing the service but is destined instead for a broader range of services or for the general fund, the charge (or at least that portion of the charge that exceeds the cost of providing the service and is intended for general revenue purposes) does not qualify as a legitimate fee but instead must be considered a tax. 391 Mass. at 427; see also Silva v. City of Fall River 59 Mass. App. Ct. 798 (2003) (burial permit fee an invalid tax in absence of evidence 'that the money collected is not used to subsidize general government operations");Berry v Town of Danvers, 34 Mass. App. Ct. 507, 513 (1993) (sewer connection charges deemed an invalid tax where "they are deposited into the general fund and are available to be used for many other sewer projects"); cf Morton v. Town of Hanover 43 Mass. App. Ct. 197 (1997) (surcharges imposed on abutters for installation of new water main a valid fee where 'the benefits of increased water flow were sufficiently particularized to the surcharged users" and there was "no record evidence that the income from the surcharge or water rates has been, or is, used for general revenue purposes"). The Emerson analysis does not end, however, with merely drawing the distinction between a fee and a tax. Emerson further held that if the municipal charge in question (or a portion of it) must be deemed a tax instead of a fee, then it may validly be imposed only if it falls within the scope of the municipality's legal authority to tax. And there lies the rub. After determining that an augmented fire services charge imposed on Emerson College was effectively a tax, not a fee, the SJC concluded in Emerson that it could not validly be imposed at all. "[I]f classified as a real property tax rather than as a fee or excise," the Court held, not only would Emerson College be exempt as a non-profit institution,but also the charge would be invalid altogether because it "violates the requirements for real estate taxation set forth in Part II, c. 1, sec. 1 of the Massachusetts constitution, which requires that real estate taxes be levied on an ad valorem basis and that they be proportional. The Appeals Court has subsequently noted that under the Home Rule Amendment to the Massachusetts Constitution, municipalities lack the power to tax generally, and may tax only where authority is "granted by the general court in conformity with the constitution and with the powers reserved to the general court' by that amendment. See Greater i Franklin Developers Ass'n v Town of Franklin, 1997 WL 573211 (Mass. Super. 1997), affd 49 Mass. App. Ct. 500 (2000) (striking down school impact charge as an invalid tax); see also Silva, 59 The SJC held in Emerson that both user fees and regulatory fees 'share common traits that distinguish them from taxes:they are charged in exchange for a particular governmental service which benefits the party paying the fee in a manner'not shared by other members of society' they are paid by choice,in that the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge and the charges are collected not to raise revenues but to compensate the governmental entity providing the services for its expenses. 391 Mass. at 424- 25;see also DOR Manual on Enterprise Funds at 22(summarizing Emerson's three-part test). 11 7 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: Memo on Emerson case by Mr. John Bartenstein (22 July 2004) ) 1 Mass. App. Ct. at 799 ("[u]nder the Massachusetts Constitution, municipalities do not have an ) independent power of taxation"). ) As a general rule, municipalities are authorized by the legislature and by the Massachusetts constitution to tax only real and personal property, not services; there is no legislative authorization for a town to tax its own property; and the power to levy taxes on personalty and realty is further ) constrained by the limits of Proposition 2 1/2, i.e. the tax levy may be increased only by 2 1/2 % ) per year unless town residents vote to exceed that limit in an override referendum. So if the , ) amounts charged in the water and sewer rates to pay the PILOTs were deemed to be a tax, where would one find legislative authorization for the town to impose such a tax above and beyond ) the Proposition 2 1/2% levy limit? ) The only argument I have heard so far is that such authority can be found in the provision of the enterprise fund statute, G.L. c. 44, § 53 1/2,requiring that "the books and records of the enterprise shall be maintained in accordance with generally accepted accounting principles." I can —) - certainly understand why the legislature would have wanted enterprise fund accounting to be kept in ) accordance with GAAP This seems like a prudent and responsible thing to do if the purpose of the ) enterprise is to permit a town and its residents to have a clear, accurate and complete picture of the financial status of the enterprise fund, including both its operating revenues and its capital assets, at any given time. And I would also agree that in those jurisdictions and circumstances where PILOTS ) are expressly authorized by law accounting for them as expenses of a fund is the proper treatment ) under GAAP I have a much harder time concluding, however, that the legislature intended, by this procedural requirement for keeping books and records in accordance with GAAP to grant a municipality substantive authorization to impose an additional tax that it is not,by some other more express grant, authorized to charge.2 - 2 Consider,by way of contrast,the following provision contained in Chapter 164 of the General Laws,the statute authorizing the establishment of a municipal lighting plant cooperative: 'j)Except as provided for herein,a municipal lighting plant cooperative shall be exempt from paying taxes,including, ) but not limited to taxes on its income and real and personal property situated within the commonwealth and owned by the municipal light plant cooperative;provided,however,that the cooperative shall agree,in lieu of property taxes,to ) pay to any governmental body authorized to levy local property taxes the amount which would be assessable as local property taxes on the real and tangible personal property if such property were the property of a domestic corporation; ) provided,further,that no such municipal lighting plant cooperative shall be allowed to commence any such operations ) allowed pursuant to this section or exercise any such powers pursuant to subsection(d)until such payment in lieu of taxes is executed. The cooperative shall pay all sales or excise taxes which are properly assessed on its business ) activities under this section to the extent such taxes are assessed against domestic corporations. It may well be that the legislature included this provision for a PILOT because chapter 164 expressly contemplates ) transferring a hitherto privately owned enterprise to a municipal cooperative,and the legislature recognized the hardship that might ensue to a town from the consequent loss of preexisting tax revenue. However,the enterprise fund statute, unlike the municipal lighting plant cooperative statute,does not provide for the municipalization of a private company 3 It only provides that a municipality that already owns its water and sewer distribution systems may separately account ) for those assets. So there would not, in the ordinary course,be the same political or practical need to protect a town's existing revenue stream through a PILOT when it adopts an enterprise fund. ) ) 12 p 7 ° ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee: ) Memo on Emerson case by Mr. John Bartenstein (22 July 2004) The DOR's Enterprise Fund Manual makes reference to the GAAP rationale for charging a PILOT as an accounting matter, but it is careful not to offer any assurance that it would carry the day legally under the Emerson analysis. "Notwithstanding the foregoing," it states, "it must be noted that from a legal point of view it is not at all clear to what extent a court would consider such a payment to be part of the actual cost of providing the service, and therefore an appropriate component of the enterprise's fee structure." DOR Manual at 24 But, of course, if the test is whether the PILOT payment is needed to defray 'the actual cost of providing the service," then Lexington's PILOT fails by definition because it is explicitly targeted not to cover any costs of providing water and sewer services or operating the enterprise fund itself—which are theoretically completely captured by the direct and indirect expenses included in the rates—but to supplement the revenue available in the general fund for generalized municipal spending.3 And that is exactly ) the kind of charge that Emerson characterizes as a tax and forbids unless legislatively authorized. As difficult as this may be, given that the town has become dependent on the water/sewer PILOTs as an integral component of the town budget, I can only conclude that there are serious concerns about whether the PILOTs that are included in Lexington s water and sewer rates can 1 survive scrutiny under the third test set forth in Emerson. The amounts that are charged have never been related to any identifiable cost of providing water/sewer services; to the contrary, they have at I all times been included in the rates as a supplemental charge that has indisputably been earmarked for direct transfer to the general fund to meet general municipal needs. Indeed, the suggested method for computing the PILOT—multiplying the value of the enterprise's assets by the property tax rate—has nothing to do with the costs of operating the enterprise. As such,it is hard to see how a court could consider the PILOT charges to be anything other than a tax. And if the PILOTS are properly characterized as a tax, I am not aware of any sound legal authority for the town to impose ) such a tax. I ) I ) I ) ) ) 3 If the direct and indirect costs that are currently included in the rates do not represent the complete operating costs of } the enterprise fund,and the PILOTs are intended somehow to make up the shortfall,then there would be no need for PILOTs at all. Rather,the town could simply identify the additional indirect costs and make the appropriate transfers. _) 13 bid ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *; 462 N.E.2d 1098, **• ) 1984 Mass. LEXIS 1432, *** 1 1 DISPOSITION: 1 2.3. Attachment 2: "Emerson College v So ordered. ) City of Boston CORE TERMS: ordinance, fire protection, ) Emerson College v fire commissioner, gallon, minute, personnel, 1 City of Boston & fire fighting, excise, computation, one-half, ) others n1 formula, suppression, excise tax, taxation, 1 n1 The fire general public, augmented, collected, invalid, 3 commissioner paying, fire department, extinguish, exaction, of the city of exempt, expenditures, sprinkler, conferred, ) Boston and the occupants, smoke, taxing power, property tax ) collector of taxes of the city of Boston. COUNSEL. - Howard P Speicher, Assistant Corporation ) [NO NUMBER IN Counsel, for the defendants. ) ORIGINAL] Stuart DeBard for the plaintiff. ) Supreme Judicial Lane McGovern & David J Kerman, for ) Court of Association of Independent Colleges and Massachusetts Universities in Massachusetts, amicus curiae, submitted a brief. ) 391 Mass. 415; Wayne S. Henderson & Jean M. DeLuca, ) 462 N.E.2d 1098, for New England Legal Foundation, amicus ) 1984 Mass. LEXIS curiae, submitted a brief. ) 1432 November 8, 1983, JUDGES: _ Argued Hennessey, C.J Abrams, Lynch, & 3 O'Connor, JJ March 14, 1984, Decided OPINIONBY ) ABRAMS PRIOR HISTORY OPINION. ) [***1] ) [*416] [**1100] In 1982, the Legislature ) Suffolk. conferred authority on the city of Boston to impose a charge for fire protection against the ) Civil action commenced in the Superior owners of certain buildings that "by reason of ) Court Department on January 27 1983. their size, type of construction, use and other ) The case was heard by Nixon, J and was relevant factors require[ ] the city to employ reported by him to the Appeals Court. The additional firefighters, deploy additional Supreme Judicial Court granted a request for equipment and purchase equipment different in -) direct review kind from that required to provide fire ) ) 14 ) S'i ) ) } PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *;462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** protection for the majority of structures." St. On February 16, 1983, after the plaintiffs 1982, c. 190, § 30. n2 Under the statute, the suit was initiated, the Boston city council, city "is authorized to impose a fee for acting pursuant to the statute, promulgated an augmented fire services availability pursuant to ordinance establishing augmented fire services [St. 1982, c. 190, § 30] or pursuant to an availability (AFSA). The plaintiffs motion for ordinance enacted by the city of Boston not a preliminary injunction against imposition of inconsistent [***3] with [St. 1982, c. 190, § the AFSA charge was denied on February 24, 30]. 1983. On the same date, the mayor of Boston approved the AFSA ordinance. City of Boston n2 Statute 1982, c. 190, § 30, reads Code, Ordinances, Tide 14, § 459 as amended in part as follows: "The cost of providing February 24, 1983 n3 the availability of fire protection to certain structures in the city of Boston is n3 The ordinance that became greater than the cost of providing the effective on February 24 1983, was the availability of fire protection to the third version of the AFSA charge majority of structures, by reason of their promulgated by the city The first size, type of construction, use and other ordinance was approved by the mayor on relevant factors. The provision of fire February 25, 1982. City of Boston Code, protection to such structures requires the Ordinances, Title 14, § 459 inserted by city to employ additional firefighters, City of Boston Ordinances of 1982, c. 7 deploy additional equipment and purchase equipment different in kind The validity of that ordinance was challenged by the Greater Boston Real from that required to provide fire protection for the majority of structures. Estate Board. On April 12, 1982, a judge in the Superior Court, citing a section of The availability of such additional fire the ordinance stating that revenues from services is being provided to a small the AFSA charge "shall be used to proportion of the buildings in the city restore and maintain adequate public Therefore, the city of Boston is safety forces in the City of Boston which authorized to impose a fee for augmented shall be defined as Police and Fire fire services availability pursuant to the Services, held that the charge was a tax, following or pursuant to an ordinance rather than a fee, and was invalid because enacted by the city of Boston not the power to impose such a tax had not inconsistent with the following. been delegated to the city See art. 89, § "(2) The purpose of this act is to 7, of the Amendments of the assure the city's continued ability to Massachusetts Constitution. provide the availability of fire fighting On April 14, 1982, the Boston city services in excess of the degree of such council passed an ordinance amending services provided to the general public the AFSA ordinance by striking the by imposing the cost of making available section pertaining to use of AFSA charge such extra services on those to whom revenues. On May 24 1982, the such extra services are made available." amended ordinance was declared invalid ) by the same judge. The judge reiterated ) [***4] his conclusion that the AFSA charge was an unauthorized tax, this time basing his determination on the observation that a 15 ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415 *; 462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** charge is not a fee if it is assessed for the After the denial of a second motion for a availability of services rather than for preliminary injunction, the case was heard on 1 services rendered. The case was reported March 28 and 29, 1983. On April 1, 1983, the to the Appeals Court but was mooted by judge issued a memorandum and order the enactment of St. 1982, c. 190 § 30, declaring the statute and the ordinance invalid which provided statutory authority for as applied to the plaintiff and facially the imposition of the charge, and by the unconstitutional, and enjoined their subsequent striking of the invalidated enforcement. The judge found that the statute amended ordinance and its replacement permits the city to exact a charge [*418] by the February 24 1983, ordinance that "based on a complex, sophisticated but not ) is the subject of the current litigation. scientifically proven or generally accepted formula, which attempts to assess costs of [***5] providing life safety services in terms of gallons per minute." The judge found that 1 [*417] The plaintiff, a tax exempt '[t]he buildings against which the charge (tax) —4 - educational institution, owns fourteen buildings [was] levied [were] not uniformly selected nor in the city, containing classrooms, assessed. He determined that the AFSA charge ) administrative offices and dormitories. These was not a fee because "[a] fee is based on buildings were inspected by the fire department services performed or delivered and not on in [**1101] December, 1982, to determine anticipatory expenses for services which may whether they were subject to the charge. On never be needed " Quoting Williams College January 27 1983, the plaintiff brought an v. Williamstown, 219 Mass. 46, 48 (1914), he action pursuant to G. L. c. 231A, § 1 concluded, "Protection from fires always has requesting a declaratory judgment and been treated as a general function of injunctive relief. The plaintiffs complaint government. ) alleged that the AFSA charge is in effect a tax The judge declared 'that the money sought ) on real property from which Emerson is exempt to be collected by the city under sec. 30 of under G. L. c. 59 § 5 The plaintiff also Chapter 190 of the Acts of [***7] 1982 and/or alleged that the AFSA charge violates the p - constitutional requirement that property taxes Title 14, sec. 459 of the Ordinances of the City be 'proportional and reasonable," Part II, c. 1, § of Boston, approved by the Mayor on February ) 1, art. 4, of the Massachusetts Constitution, and 24, 1983 is a tax and not a fee." He noted that ) that computation of the charge by the fire the plaintiff is a tax exempt institution. He then ) commissioner constitutes an unconstitutional declared that the money "sought to be raised delegation of taxing authority to an [was] a real estate tax and not an excise tax," ) administrative official. On March 1, 1983, the and, further, that the tax was not proportional ) and reasonable. See Part II, c. 1, § 1, art. 4, of city mailed bills totaling $ 12,029 for AFSA ) charges assessed against three of the plaintiffs the Massachusetts Constitution. n5 The judge g g p reported his [*419] decision to the Appeals ) buildings. n4 Court. We granted the parties'joint application for direct appellate review n6 We conclude ) n4 The bills remain unpaid pending that the AFSA [**1102] charge is a chimera, ) bearing features of both a fee and a tax, but not resolution of this case. valid in either form. Therefore, we affirm the judgment invalidating the statute and the ) [***6] ordinance. 16 L ) 53. ) 1 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee ) 391 Mass. 415, *. 462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** Williamstown, 219 Mass. 46, 47 (1914). n5 The city does not challenge the [***g] judge's determination that the AFSA n6 Helpful amicus curiae briefs have charge, if classified as a real property tax been filed by the Association of rather than as a fee or excise, violates the Independent Colleges and Universities in requirements for real estate taxation set Massachusetts and by the New England forth in Part II, c. 1, § 1, art. 4, of the Legal Foundation. Massachusetts Constitution. Because it is imposed on a minority of property owners, the charge fails to comport with We summarize the relevant provisions of ) the requirement that real estate taxation the AFSA statute and ordinance, as well as be proportional. See Opinion of the pertinent testimony presented at the Superior Justices, 378 Mass. 802, 803 & n.1 Court hearing. The proclaimed purpose of the (1979). Additionally, the charge is not statute "is to assure the city's continued ability imposed on an ad valorem basis. Cf. to provide the availability of fire fighting Fairmont v Pitrolo Pontiac-Cadillac services in excess of the degree of such Co. W Va. (1983) (308 S.E.2d 527 services provided to the general public by [W Va. 1983]) (fire protection "fee" imposing the cost of making available such imposed on all buildings within city at extra services on those to whom such extra rate of fifty-five cents per $ 100 of services are made available." St. 1982, c. 190, § building's value constitutes ad valorem 30(2). The statute thus distinguishes two i ) property tax, but invalid because in classes of building owners. In one class are excess of constitutional limitations). owners of buildings who are deemed members The city correctly refrains from of the general public, to whom fire protection arguing that the AFSA charge is a special services are made available without any charge assessment or amount due for a beyond the annual property tax. In a distinct class are buildingowners who, byimplication, betterment. Cf. G. L. c. 80, § 1 Special are not considered members of the "general" assessments may be imposed for local public, and who, in addition to the property tax, improvements which enhance the value if any, assessed against them, n7 must [***9] of real property provided the pay an AFSA charge for the availability of fire assessments are not in substantial excess protection. A building-owner is subject to the of the benefits received. See Illinois AFSA charge if the "total fire fighting capacity Cent. R.R. v Decatur 147 U.S. 190, 199 necessary to extinguish a fully involved fire" (1893), White v. Gove, 183 Mass. 333, in the building exceeds 3,500 "gallons per 335 (1903). The maintenance of eight and one-half fire companies necessary to minute." St. 1982, c. 190, § 30 (3) (i), (ii). extinguish fires at various buildings distributed throughout Boston is not a n7 Some buildings against which the local improvement. Nor is any increase AFSA charge is assessed, including the in the value of property containing AFSA three buildings owned by the plaintiff, structures apparent -- instead, fire are exempt from ad valorem property protection once included within the taxes. See G. L. c. 59, § 5 However, general property tax has been reclassified although the fire department investigates as a special service and an incremental all tax exempt buildings to determine cost imposed. Cf. Williams College v whether they are subject to the AFSA 17 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *; 462 N.E.2d 1098, **• 1984 Mass. LEXIS 1432, *** 1 charge, there is no statutory correlation minute fire, while maintaining four companies ) between tax-exempt status and payment available for discretionary use as well as one of the AFSA charge. Imposition of the fire engine and one truck on standby in each of charge is contingent on factors relating to the city's eleven fire districts. The remaining the physical characteristics of a given eight and one-half companies are maintained to building, rather than on tax status. Thus, guard against the potential occurrence of a fire ) some nonexempt buildings may be exceeding the 3,500 gallon per minute required to pay an AFSA charge, category The parties stipulated that the Boston whereas some exempt buildings would fire department's costs for fiscal year 1983 obtain fire protection without payment. would be $ 76,877,152. According to the ) director of the city's office of fiscal affairs (OFA), $ 10,114,502 of that sum is allocable to ) The statutory scheme is based on [***10] a the personnel, equipment, and overhead costs legislative determination that a disproportionate of providing AFSA. n10 Over 13% of the percentage of the city of Boston's firefighting [**1103] Boston fire department's costs for -3 - budget is consumed by expenses related to the fiscal year 1983 can thus be traced to AFSA. ) maintenance of equipment and personnel n11 After applying a statutory formula, which capable of protecting buildings with [*420] we discuss [*421] infra, to data collected physical characteristics requiring, in the event through inspections of approximately 5,000 of a fire, the presence of more than fourteen buildings, n12 the fire commissioner ) fire companies. The fire commissioner said determined that, in 1983, some 2,000 buildings, that 3,500 gallons per minute is the functional or 2% of the buildings in Boston, necessitate equivalent of fourteen fire companies, n8 the AFSA. ) personnel and equipment necessary to combat a three-alarm fire. n9 The fire commissioner counted as one-half company the personnel ) n8 The management and systems necessary to operate an aerial tower. consultant hired by the city to assist in [***12] - the implementation of the AFSA charge testified that, historically, one fire n10 The $ 76,877,152 figure for total � company was capable of delivering 250 fire department costs includes: fire ) gallons of water per minute. In current fighters' salaries ($ 39 783,777), ) usage, 250 gallons per minute is administrative backup ($ 7,430,815), considered the equivalent of one fire pensions ($ 19,867,800), health insurance ) company irrespective whether the ($ 1,024 400), overtime ($ 1,602,720), company delivers water, ladders, or other workmen's compensation ($ 200,000) equipment and personnel necessary to and indemnification ($ 500,000); $ 1, fire fighting. 185,836 in maintenance and capital costs for fire fighting equipment; and $ ) 5,281,804 in overhead costs for fire There are currently fifty-six and one-half stations. On the basis of these figures, fire companies n9 in Boston. [***11] Of that average yearly costs to the city for each ) number, forty-eight companies would suffice to fire fighter, each piece of equipment, and combat simultaneously one 3,500 gallon per each fire station were computed. A ) minute fire and one smaller, 2,000 gallon per multiplication of the average cost figures by the number of fire fighters, pieces of 18 s5. ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *• 462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** equipment, and fire stations absorbed by square footage; the use of the building, the eight and one-half fire companies including the combustibility [***14] of its necessary to provide AFSA yields the $ contents; and exposure" and "connecting 10,114,502 figure for total AFSA passageways' subfactors, which measure the expenditures. risk that a fire would spread to adjacent n11 The evidence suggests that the buildings. St. 1982, c. 190, § 30 (3) (iii). cost of AFSA is attributable principally The second factor, the "life risk factor' to quantitative rather than qualitative (LRF), measures the personnel and equipment differences between the city's current fire necessary to ensure the safety of the occupants fighting personnel and equipment needs of the burning building. The LRF takes into and the corresponding needs, were there account the building's density of occupancy, no buildings requiring more than hours of occupancy, number of stories, and fourteen fire companies in the event of whether the building contains smoke removal fire. At the hearing, the only pieces of equipment. St. 1982, c. 190, § 30 (3) (v). equipment referred to as being The third factor is a "suppression credit' specifically targeted for fires in AFSA (S), which operates to reduce the gallons per structures were two aerial towers costing minute computation by an amount that reflects a total of$ 34,676 per year. [***13] a building's existing fire suppression and n12 On the basis of data previously detection equipment. [*422] St. 1982, c. 190, collected by the city's office of property § 30(3) (iv). The department's consultant equalization (OPE), the fire indicated that a suppression credit is granted for commissioner determined which smoke and heat detectors connected to an alarm buildings in the city possessed at the fire department. A larger suppression characteristics warranting an inspection credit may be obtained if a building has for AFSA charge assessment purposes. standpipes with outlets to which fire hoses can be connected. A building's sprinkler systems also reduce the total gallons per minute i ) The statute requires that, prior to March 1 computation. n13 of each year, the fire commissioner determine not only which buildings in Boston are subject to the AFSA charge, but also the amount of the n13 The existence of sprinkler charge to be assessed each such building. A systems reduces the NFF factor rather formula set forth in the statute establishes three than increasing the S factor. A decrease principal factors to be considered by the fire in the NFF factor, like an increase in the commissioner in establishing whether, in the S factor, lowers the 1141- computation on event of fire, a building would require more which assessment of the charge, as well than 3,500 gallons per minute of fire fighting as the amount of the charge, is capacity contingent. One factor, the 'needed fire flow' (NFF), measures the personnel and equipment [***15] necessary to extinguish a fire in the building. The NFF is determined by reference to various The three factors, as incorporated in the statutory formula, yield a "total fire flow' 1 subfactors: the building's construction type, (11-t) computation expressed in gallons per including the fire resistance of its constituent minute. St. 1982, c. 190, § 30 (3) (ii). If a materials; the effective area of the building in 19 ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee ) 391 Mass. 415, *; 462 N.E.2d 1098, **; ) 1984 Mass. LEXIS 1432, *** building's fit exceeds 3,500, it is subject to uphold the judge's decision on other ) the AFSA charge. Every gallon per minute in grounds. We believe, however, that the ) excess of 3,500 is considered an AFSA "unit." judge was correct in concluding that the ) The OFA director testified that the total number unreviewable discretion conferred on the of AFSA units for fiscal year 1983, as fire commissioner by the statute is ) determined by the fire commissioner's constitutionally impermissible. ) application of the formula to data collected Although the statutory formula ) through building inspections, is 4,624,828. The establishes several factors to be ) $ 10,114,502 in costs attributable to AFSA considered by the commissioner in protection was [**1104] divided by 4,624,828 ) determining the number of AFSA units to yield a cost per AFSA unit of$ 2.187 attributable to a given building, see supra ) After inspecting the plaintiffs buildings, the at 421, these factors are determined not ) fire commissioner determined that three of the only by means of objective computations ) buildings had AFSA requirements measured, but through subjective, qualitative respectively at 1,250, 2,500, and 1,750 AFSA evaluations by the fire commissioner. We units. Accordingly, the plaintiff received bills have noted that a delegation of the taxing ) of $ 2,734 $ 5 468, and $ 3,827 for the three power to an administrative official may ) buildings. be allowed if "the [tax] rate is ) Because the AFSA charges are based on the mathematically deduced [by the official] ) availability of fire protection, the plaintiff, and from facts and events occurring within other owners of AFSA structures, must pay the the year and created without reference to charges irrespective whether the fire the matter of that rate." Commissioner of ) department's services are actually utilized to Revenue v Massachusetts Mut. Life Ins. ) battle [***16] fires in the specific buildings for Co. 384 Mass. 607 610 (1981), quoting which the charges are imposed. Charges are Michigan Cent. R.R. v Powers, 201 U.S. ) payable in two instalments. On payment of the 245, 297 (1906). The statute we review, first instalment, the owner paying an AFSA by contrast, confers on the fire ) charge may appeal the correctness of the commissioner the "power to affect the assessment to the commissioner No further amount of tax payable." Commissioner of review either administrative or judicial, is Revenue, supra at 610. authorized by the statute. n14 The statute We need not decide whether such a ) directs that "[r]evenues received [*423] [from delegation of the taxing power would be ) AFSA charges] shall be used to restore and permissible given adequate ) maintain adequate public safety forces in the administrative or judicial review of the city of Boston which shall be defined as police actions taken by the fire commissioner, ) and fire services. St. 1982, c. 190, § 30 (4). see Opinion of the Justices, 341 Mass. n15 738, 759 (1960); 1 K.C. Davis, ) Administrative Law § 3 15, at 208, 210 ) (2d ed. 1978), for the statute establishes n14 The judge found that St. 1982, c. no such appellate procedure. The only , ) 190, § 30, impermissibly delegated the appeal available to owners assessed an ) taxing authority to an administrative AFSA charge is to the fire commissioner. officer. He further concluded that the Although under G. L. c. 249 § 4, as failure to provide for judicial review is appearing in St. 1973, c. 1114, § 289, an ) fatal to the validity of the statute. We action in the nature of certiorari may be ‘ ) 20 ) 2 7 ) ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *; 462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** brought "to correct errors in proceedings In reviewing the statute, we are bound, as not otherwise reviewable by motion or was the judge, to treat with deference the by appeal, that review offers no classification of the charge [**1105] as a fee. protection against discretionary "In any doubtful case, the intention of the administrative actions. See, e.g., School Legislature, as it may be expressed in part Comm. ofHatfeldv Board of Educ. 372 through its characterization [of the charge] Mass. 513, 517(1977). [***17] deserves judicial respect, and especially so n15 The provisions of the ordinance where the constitutionality of the exaction ) promulgated under the statute are in most depends on its proper characterization respects similar to the statutory (footnote omitted). Associated Indus. of Mass. ) Inc. v Commissioner of Revenue, 378 Mass. provisions. There are, however, material variations. Unlike the statute, the 657, 667-668 (1979). See Opinion of the ordinance provides that a building owner Justices, 250 Mass. 591 597 (1924). is exempt from paying for AFSA units Ultimately however, the nature of a monetary attributable to portions of the building exaction 'must be determined by its operation rented as residential units. City of rather than its specially descriptive phrase." Boston Code, Ordinances, Title 14, § Thomson Elec. Welding Co. v. Commonwealth, 1 459 as amended February 24, 1983. The 275 Mass. 426, 429 (1931). Accord Eaton, ordinance also differs from the statute in Crane [***19] & Pike Co. v Commonwealth, that it is silent as to the application of 237 Mass. 523, 528 (1921). See Dawson v. revenues from AFSA charges. Further, Kentucky Distilleries & Warehouse Co. 255 there are discrepancies between the U.S. 288, 292 (1921), Gunby v Yates, 214 Ga. assessment, payment, and appeal dates 17 19(1958). established by the ordinance and those With these considerations in mind, we turn set forth in the statute. On the view we to the question whether the AFSA charge is a take of the case, we need not address the fee. Fees imposed by a governmental entity plaintiffs argument that the ordinance is tend to fall into one of two principal categories: invalid because it is inconsistent with the user fees, based on the rights of the entity as enabling statute or because it violates proprietor of the instrumentalities used, constitutional equal protection standards. Opinion of the Justices, 250 Mass. 591, 597 (1924), or regulatory fees (including licensing and inspection fees), founded on the police 1. Our initial inquiry pertains to the nature power to regulate particular businesses or ' ) of the monetary exaction imposed by the AFSA activities, id. at 602. See Boston v Schaffer 9 statute. The city argues that the judge erred in Pick. 415, 419 (1830); P Nichols, Taxation in rejecting the statutory characterization of the Massachusetts 6-9 (3d ed. 1938). Such fees charge [***18] [*424] as a fee, and in share common traits that distinguish them from holding that the charge is a property tax. taxes: they are charged in exchange for a Consequently the city alleges, the judge's particular governmental service which benefits conclusion that the plaintiff is insulated from the party paying the fee in a manner "not paying the charge by the G. L. c. 59 § 5 shared by other members of society," National property tax exemption was erroneous, as was Cable Television Ass'n v. United States, 415 the judge's determination that the statute is U.S. 336, 341 (1974); they are paid by choice, facially inconsistent with constitutional in that the party paying the fee has the option of limitations on the taxing power. not utilizing the governmental [***20] service J and [*425] thereby avoiding the charge, 21 � 8g PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *; 462 N.E.2d 1098, **• 1984 Mass. LEXIS 1432, *** Vanceburg v. FERC, 571 F.2d at 630, 644 n.48 (1969). See generally 3 C.J Antreau, (D C. Cir 1977), cert. denied, 439 U.S. 818 Municipal Corporations Law § 24 14, at (1978), and the charges are collected not to 24-551 (1981). raise revenues but to compensate the governmental entity providing the services for [***21] its expenses. n16 The city emphasizes that the factors used to determine the amount of each AFSA n16 Proprietary fees do not implicate assessment are related to the city's costs in the taxation power if "based on fair providing AFSA protection and urges that, on recompense for the public moneys this basis alone, the charge be characterized a ) expended for initial construction and for fee. We agree that, in its correlation to the adequate maintenance" of the facilities costs of funding the personnel and equipment ) used. Opinion of the Justices, 250 Mass. constituting eight and one-half of Boston's fire 591 597 (1924). Similarly, regulatory companies, the AFSA charges bears some - fees are not taxes if commensurate with similarity to a user fee. ) governmental expenditures occasioned The AFSA charge fails, however, to by the regulated party The general rule comply with another essential characteristic of as to regulatory fees is "that the costs to a fee. Fees are legitimate to the [**1106] the municipality which may be extent that the services for which they are ) considered are [not] simply those which imposed are sufficiently particularized as to arise directly in the enforcement of the justify distribution of the costs among a limited regulatory provisions themselves. The group (the 'users," or beneficiaries, of the license fee may properly be fixed with a services), rather than the general public. The view to reimbursing the city town, or benefits of augmented" fire protection are not county for all expenses imposed upon it limited to the owners of AFSA buildings. The ) by the business sought to be regulated. capacity to extinguish a fire in any particular 'In fixing upon the fee, it is proper and ) reasonable to take into account not the building safeguards not only the private property interests of the owner, but also the expense merely of direct regulation, but safety of the building's occupants [*426] as ) all the incidental consequences that may well as that of surrounding buildings and their be likely to subject the public to cost in occupants. In more sparsely populated areas, it ) consequence of the business licensed."' may be possible to isolate private [***22] ) United Business Comm'n v San Diego, property interests in fire suppression from the ) 91 Cal. App. 3d 156, 166(1979), quoting property and safety interests of the public at County of Plumas v Wheeler 149 Cal. large. In a large, densely populated city like 758, 764 (1906). See Boston v Schaffer 9 Pick. 415, 419 (1830). See also Boston, the prevention of damage to buildings Fletcher Oil Co. v Bay City, 247 Mich. by fire is an object which affects the interest of 572, 577 (1929), Opinion of the Justices, all the inhabitants and relieves them from a 112 N.H. 166, 170 (1972), Phillips v common burden and danger. Fisher v. Boston, ) Folcroft, 44 Pa. Commw. 83, 86 (1979), 104 Mass. 87 93 (1870). See Williams College Fort Worth Gulf Ref Co. 125 Tex. 512, v Williamstown, 219 Mass. 46, 48(1914). That aparticular buildingrequires 529 (1935), State v Jackman, 60 Wis.2d q 700, 707 (1973). Cf. Richmond Heights "augmented" rather than regular fire protection v LoConti, 19 Ohio App. 2d 100, 110 does not change the nature of the benefit ) 22 L ) SRS ) _ PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *; 462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** conferred by the suppression of a fire in that requirements could be achieved through building from one that is public to one that is the installation of sprinkler systems in limited to the owner of the building. The buildings lacking such systems. We note statutory formula controlling the assessment that there is no claim the buildings do not and computation of AFSA charges illustrates meet applicable State building code this by factoring in not only the fire fighting standards. capacity necessary to preserve a particular structure in the event of fire, but also the [***24] personnel and equipment necessary to safeguard the building's occupants and to [*427] Although we need go no further to 1 prevent the spread of fire to adjacent buildings. sustain the judge's conclusion that the AFSA Further confirmation of the public nature of charge is not a fee, we note additionally that, by the benefit conferred by AFSA services may be statutory command, the amounts collected derived from the fact that "use" of AFSA through AFSA assessments are targeted not for the maintenance of the eight and one-half fire protection is [***23] compelled. Fees companies attributed to AFSA protection but to generally are charged for services voluntarily general "police and fire services." St. 1982, c. requested. See National Cable Television Ass'n 190, § 30 (4). That revenue obtained from a v United States, 415 U.S. 336, 340 (1974). If particular charge is not used exclusively to the benefits for which AFSA charges are imposed were limited to the owners of AFSA meet expenses incurred in providing the service structures, rather than being essential to the but is destined instead for a broader range of ) public welfare, there would be no reason to services or for the general fund, 'while not decisive, is of weight in indicating that the depart from the optional character of a charge is a tax." P Nichols, supra at 7 traditional fee. n17 Opinion of the Justices, 250 Mass. at 597 The statutory earmarking of proceeds for non- n17 The city suggests that payment AFSA services is more consistent with a of AFSA charges has the voluntary revenue raising purpose than with an intent to aspect of a fee, see Vanceburg v FERC, recover AFSA-related expenditures. The AFSA 571 F.2d 630, 644 (D.C. Cir 1977), P charge thus resembles not a fee, but a tax, Nichols, supra at 6, rather than the which has been defined as an enforced coerced aspect of a tax, because the contribution to provide for the support of owner of an AFSA building may opt to government. United States v Tax Comm'n, reduce, and in some cases eliminate, 421 U.S. 599 606 (1975), quoting United aF ) future AFSA charges by installing fire States v L31). [*a, 282 U.S. 568, 572 suppression equipment such as [**1107] (1931).r (***25] n18 sprinklers, smoke detectors, and smoke removal systems. The imposition of an n18 The city argues that fire AFSA charge is also contingent, protection differs from other services in however, on factors (such as building that mere availability constitutes a size, materials, and exposure) that are benefit to the owners of buildings which beyond the owner's control. might otherwise be unprotected if struck According to the fire commissioner, a by fire. Accepting, for purposes of ) substantial reduction in the city's discussion, the proposition that owners of ' [ ) firefighting equipment and personnel AFSA structures derive some pecuniary J 23 50 J 1 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee 391 Mass. 415, *;462 N.E.2d 1098, **; 1984 Mass. LEXIS 1432, *** benefit from the availability of fire relinquishing ownership of buildings subject to protection, see Fairmont v. Pitrolo AFSA assessments, the charges tax the Pontiac-Cadillac Co. W Va. , privilege of owning certain improved property (1983) (308 S.E.2d 527 535 [W Va. "The mere right to hold and own property 1983]) (Neely, J., dissenting), but see cannot be made the subject of an excise." State Univ v Patterson, 42 A.D.2d 328, Opinion of the [***27] Justices, 220 Mass. 329 (N Y 1973), we note that the statute 613, 626(1915). The judge correctly concluded makes no attempt to distinguish that that the statute does not impose a valid excise particularized benefit from the benefit tax. n19 provided to the general public. In any ) event, other aspects of the AFSA statute, discussed in the text, preclude n19 The amici argue that, even if the classification of the AFSA charge as a AFSA charge is appropriately fee. denominated a fee or excise tax, it is unconstitutional under Part II, c. 1, § 1, —) - art. 4, of the Massachusetts Constitution, 2. The city contends that even if St. 1982, c. which requires that expenditures for the 190, § 30, imposes a tax rather than a fee, the "public charges of government, or any ) judge erred in holding that the charge is a part thereof" be defrayed through ) disproportionate real property tax instead property taxes. See Dorgan v Boston, [***26] of a valid excise tax. The Legislature 12 Allen 223, 235 (1866), Oliver v. is constitutionally authorized to levy excises Washington Mills, 11 Allen 268, 275 "upon any produce, goods, wares, merchandise (1865). Neither the plaintiff nor the ) and commodities. Part II, c. 1, § 1, art. 4, of defendants have briefed this issue. the Massachusetts Constitution. The term Because we conclude that the AFSA "commodities' encompasses "convenience, charge constitutes neither a fee nor an privilege, profit, and gains." Minot v. Winthrop, excise tax, we need not decide whether ) 162 Mass. 113, 120 (1894). The city suggests the Commonwealth or the city is ) that the AFSA charge qualifies as an excise on constitutionally precluded from using _ the 'privilege" of receiving an extra [*428] fees or excises to pay for fire protection. level of fire protection. It is well-established, however, that the obligation to pay an excise ) tax "is based upon the voluntary act of the The AFSA charge does not conform to any person taxed in enjoying the privilege constitutionally permissible form of monetary which is the subject of the excise and that an exaction. The judgment of the Superior Court, excise may be imposed only where "the declaring St. 1982, c. 190, § [***28] 30, and element of absolute and unavoidable demand is City of Boston Code, Ordinances, Title 14, § ) lacking." P Nichols, supra at 16. Owners of 459, as amended February 24, 1983 invalid, is AFSA structures are not at liberty to reject affirmed. AFSA services. To the extent that payment of )So ordered. AFSA charges may be avoided by ) . l 24 9! ) ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Memo on Emerson case by Mr Peter Enrich (12 December 2004) 3. Memo on Emerson case by Mr Peter Enrich (12 December 2004) 3 1 Cover email ) From:P Enrich Date: Sunday,December 12,2004 4:08 PM To:John Bartenstein;Paul Chernick;Loren Wood Subject: PILOT memo ) Loren,et al. I'm attaching the memo that I've long been promising you in response to John's. I apologize not only for how long it's taken me to get it to you,but also for the somewhat compressed and perhaps ' cryptic articulation of some of the issues. I'm afraid it's the best I could do under the pressures of multiple competing obligations. I look forward to meeting with the committee on Tuesday morning, and hopefully the discussion then will render the issues here a bit more transparent. Many thanks for your immense patience on this. Peter 3.2. Attachment: "Emerson Case and PILOTs' P Enrich 3.2.1 MEMO ) TO• Water/Sewer Rate Study Committee FROM. Peter Enrich RE. Emerson Case and PILOTs DATE. Dec. 12, 2004 In July John Bartenstein wrote a memo to the Committee in which he argued that the ) Payments in Lieu of Taxes (PILOTS) paid to the town by Lexington's water and sewer enterprise funds ran afoul of the restrictions on municipal fees identified in the case of Emerson College v City of Boston, 391 Mass. 415 (1984). At that time, John shared his memo with me, in light of my professional experience applying and interpreting the Emerson case and related issues, and presumably in light of my history as a supporter of Lexington's use of water and sewer PILOTs, and he invited me to respond to the concerns that he raised. I apologize to the committee that other professional and volunteer obligations have prevented me from responding until now Also, let me note at the outset that I have neither the time nor the inclination to provide the committee with a fully researched and comprehensive legal memorandum in support of the town s existing practices. Instead, I will confine myself to some general responses to the primary concern raised in John's ) thoughtful memo. ) 7/1/2005 4 49 PM 25 12, PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Memo on Emerson case by Mr. Peter Enrich (12 December 2004) 1 In essence, John s argument is that the PILOTs constitute charges imposed by the town on users of water and sewer services which do not qualify as lawful fees pursuant to the standards articulated in the Emerson case and its progeny As I see it, there are two fatal flaws in this ) argument. First, John's analysis conflates two separate events --payment of the PILOTs by the enterprise funds to the town and payment of water and sewer fees by users to the enterprise funds — in a manner that confuses the Emerson analysis. And second, even if the PILOTs are analyzed as if they were charges against the users, those charges could satisfy the Emerson standards. ) 3.2.2. 1 The Conflation Problem: The PILOTS in question here are transactions between the water and sewer enterprise funds and the ) town of Lexington. These payments are among the many and diverse expenses incurred by the ) enterprise funds which are ultimately recouped by the enterprise funds through the fees charged by the enterprise funds against water and sewer users. It is the fees charged to the users by the enterprise funds that must satisfy the Emerson analysis,4 and the key question, as John s memo recognizes, is whether those fees satisfy the third prong of the Emerson standard,5 i.e. that"the charges are collected not to raise revenues but to compensate the governmental entity providing the services for its expenses." 391 Mass. at 425. ) Here the relevant governmental entities are the respective enterprise funds, and the fees that they charge to the users are calculated to cover, as required by enterprise accounting principles, the full costs incurred by the funds in providing water and sewer services. In the present case, those costs include the PILOTs paid by the enterprise funds to the town,just as they include any other taxes, license fees or other charges that the enterprise funds pay to the town or to any other governmental entity How those funds may be used by the entities to which the enterprise funds pay them is not relevant to the Emerson analysis. The Emerson question is whether the amount charged to the fee payers is a reflection of the costs actually incurred by the charging entity and there is no question ) here that the PILOTS are expenses actually incurred by the enterprise funds. ) To suggest otherwise, and to contend that the fees charged to users cannot cover the costs of ) taxes or PILOTs paid by the charging entity, is not only without any foundation in the Emerson case and its progeny but would also invalidate a wide range of charges paid in a wide variety of ) contexts. For instance, it would disallow the fees charged by MassPort and by the Turnpike ) Authority to its tenants and other users, since those fees cover, among other costs of the charging ) entities, the PILOTs that they pay under voluntary agreements to the municipalities in which they 4 The transactions between the enterprise funds and the town,like most PILOTs,are voluntary negotiated payments made in accordance with generally accepted accounting principles,and hence are not fees subject to the Emerson ) analysis. This is not to suggest that the Selectmen and ultimately Town Meeting,in their roles as authorizers of the expenditures of the enterprise funds,could not,as a policy decision,decide not to continue to pay PILOTs. But, so long ) as the PILOTs are voluntarily appropriated and paid by the enterprise funds,their legitimacy rests on the fact that they ) are legitimate expenses of an enterprise fund,not on the question of whether they fit Emerson s definition of a `fee. 5 It should be noted that the courts have not insisted that every valid fee must satisfy all three of the Emerson factors. Rather,the three factors are to be weighed and balanced in combination to determine whether a particular charge constitutes a fee rather than a tax. ) 7/1/2005 4.49 PM 26 ) G �L ) J PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Memo on Emerson case by Mr. Peter Enrich (12 December 2004) own land. Likewise,it would invalidate the charges imposed by municipal utilities for gas and electric service, since those charges recoup, inter alia, the costs of PILOTs paid by the utilities to the municipalities which operate them.6 l 3.2.3. 2. PILOTs and Incidental Costs: The water and sewer enterprises, like any business activity conducted in town, derive substantial benefits from the general services provided by the town, such as fire protection for their facilities, police protection of their property, and the availability of roads and street lighting that allows them to carry on their operations. Ordinary businesses pay for these benefits through their property taxes. Likewise, the water and sewer enterprises compensate the town for such services through the PILOTS 7 Thus, these are valid expenditures of the enterprise funds for real services received and utilized by the enterprises. Thus, even if the PILOTs, contrary to fact, are conceived of as billed to the users, the user charges would still satisfy Emerson's standards as valid user fees. Under Emerson, the costs that can legitimately be reflected in a valid fee include not only the direct costs of providing the applicable service,but also the full range of indirect costs incurred c ) by the governmental entity in connection with the service for which the charge is levied. See Emerson, 391 Mass. at 425 n. 16 (` In fixing upon the fee, it is proper and reasonable to take into account not the expense merely of direct regulation,but all the incidental consequences that may be likely to subject the public to cost in consequence of the business licensed.") (citations omitted). Moreover, in assessing whether a fee is appropriately limited to the recovery of associated costs incurred in connection with the service, the courts have generally been quite deferential to the municipality's determinations, see, e.g. Silva v. City of Fall River, 59 Mass. App. 798, 806 (2003) (citing cases for conclusion that 'a rough estimate may be sufficient' and that the precise amount of a fee wouldn't necessarily 'be scrutinized too curiously even if some incidental revenue were obtained") and the burden of establishing that the charge is not a valid fee rests upon the challenger, not the municipality, see, e.g. Nuclear Metals, Inc. v Low-Level Radioactive Waste Mgmt. Bd.,421 Mass. 196, 201 (1995). These relatively relaxed standards are particularly applicable in the case of water and sewer fees, which are quintessential examples of fees, as distinguished from taxes. See, e.g. Morton v Town of Hanover 43 Mass. App. 197 202 (1997) (citing McQuillin, Municipal Corporations, sect. 44.02). ) 6 John's memo references the provisions of Mass.Gen.Laws c. 164 which expressly address the payment of PILOTS by municipal utilities. The function of those provisions,however,is to require that the utilities make such payments, not to authorize them to do so. In any case,those provisions govern the relationship between the utilities and the municipalities,not the relationships between the utilities and their ratepayers. Moreover,the statute couldn't serve as the authority for recoupment of utility PILOTs through utility fees,because,as the Emerson case itself exemplifies,the legislature cannot authorize a fee that does not satisfy the Emerson standards. So,the only way to rescue utility charges that cover PILOTs would be to argue that c. 164 somehow empowers municipal utilities to levy excise taxes on their customers in the amount of the associated PILOTs,a suggestion that flies in the face of both the statute s actual language and the conventional understanding of municipal utility charges as archetypal fees. 7 These benefits that the water and sewer enterprises receive from generally available town services are quite distinct from those particularized services that they receive by virtue of their operation as part of town government,such as ) billing and accounting services. It is these latter types of services,but not the former, which are covered by the indirect cost components of the enterprise funds' expenditures. 7/1/2005 4.49 PM 27 cic7c PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Memo on Emerson case by Mr Peter Enrich (12 December 2004) Thus, in light of the deference that is accorded to reasonable municipal determinations of the costs associated with the delivery of municipal services, and in light of the unquestioned benefits that the water and sewer enterprises derive from a range of tax-supported municipal services, it is unlikely that a court would find that the inclusion of a reasonable component recovering for general municipal services would convert an otherwise legitimate water or sewer fee into a forbidden tax. ) ) 1 ) 7/1/2005 4.49 PM 28 G)r { , ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr. Enrich's memo by Mr Bartenstein (14 December 2004) 4 Response to Mr. Enrich's memo by Mr. Bartenstein (14 December 2004) ) 4 1 Cover email From:John Bartenstein Date: Tuesday,December 14,2004 12:29 PM To: [WSRSC email list] Subject: PILOT Response WSRSC Members: For those who were not present this morning or prefer electronic copies, I am forwarding the summary and memo I provided this morning responding to Peter Enrich's memo on PILOTs. I realize that this is stiff reading, but feedback is welcome. John 4.2. Attachment: 'Response on [P Enrich's] Emerson case and PILOTS" J Bartenstein it 4.2.1 Memo To: Water/Sewer Rate Study Committee December 14, 2004 From: John Bartenstein Subject: Response on Emerson Case and PILOTs I very much appreciate Peter Enrich providing his analysis of the legal issues presented by water and sewer PILOTs. As I said in my July 22 memo, I asked Peter to comment on my discussion of the Emerson case `[b]ecause I think it is important for the Committee to consider all perspectives, and there might be a legal justification for the PILOTs that I have not thought of. Through this kind of dialog, I think we can reach a far better understanding of the issues and sharpen and refine the questions to be resolved; and I can think of no better or more qualified ) spokesman to present the case for PILOTs than Peter. Peter has certainly brought some new and interesting perspectives to the problem. However, after working my way carefully through the arguments contained in his memo and conducting additional legal research on the points he has raised, I do not believe they establish a viable legal underpinning for the payment of PILOTs by the water and sewer funds. My reasoning is summarized briefly below 4.2.2. 1. The Conflation Issue. Peter's first argument rests on the premise that the Town and the enterprise funds are separate ) "governmental entities." He acknowledges that to satisfy the third prong of the Emerson standard 7/18/2005 1:50 PM 29 C/6 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) for a valid fee, the charges in question must be"collected not to raise revenues but to compensate the governmental entity providing the services for its expenses." 391 Mass. at 425. He then contends that the "relevant governmental entities" for purposes of the Emerson analysis "are the respective enterprise funds' and not the Town itself. On this basis, he concludes that as long as "the PILOTs are expenses actually incurred by the enterprise funds,"then `[h]ow those funds may be used by the [separate governmental] entities to which the enterprise funds pay them"—in this case, ) the Town— 'is not relevant to the Emerson analysis." The proposition that the Town and the enterprise funds are separate governmental entities, however, is simply not true. The Enterprise Fund statute, G.L. c. 44, § 53F'/2, which is reproduced ) in Appendix A, does not create a separate governmental entity It merely permits the Town to establish a separate account for segregating and tracking the expenses and revenues of water and sewer facilities that at all times are owned, operated and controlled by the Town. See par. 1 ("a town may establish a separate account for a utility and its operation, as the town may designate") (emphasis added). - If the Town and the enterprise funds are not separate governmental entities, then the observations that Peter makes about PILOTs, and the conclusions he draws about the application of Emerson to the PILOTs, do not follow. ) • The PILOTs in question here are transactions between the water and sewer enterprise funds and the Town of Lexington that, 'like most PILOTs, are voluntary negotiated payments." Memo, p. 1 and n. 1 The PILOTS are not, in fact, transactions between two separate governmental entities, nor are they voluntary negotiated payments. They are set unilaterally by the Board of Selectmen and Town Meeting for the benefit of the Town, and there is no separate representation of the water and sewer enterprise funds ) because they are not separate and independent entities. • "[S]o long as the PILOTs are voluntarily appropriated and paid by the enterprise funds, -) - their legitimacy rests on the fact that they are legitimate expenses of an enterprise fund. Memo, p. 1 n. 1 The PILOTs are not in fact "voluntarily appropriated and paid by the enterprise funds." Town Meeting appropriates funds to be raised from water and sewer fees for the benefit of the town, and the enterprise funds themselves do not appropriate ) anything. • "How [the PILOTs] may be used by the entities to which the enterprise funds pay them ) is not relevant to the Emerson analysis. Memo, p. 2. If the PILOTs are not in fact arms-length negotiated payments voluntarily made by separate governmental entities to ) the Town of Lexington, but rather charges imposed by the Town of Lexington on its residents through the enterprise funds, which at all times are owned and controlled by ) the Town, then the `relevant government entity' for purposes of the Emerson analysis is the Town itself. Consequently, how the Town uses the PILOT funds raised through the ) water and sewer rates is completely relevant to the Emerson analysis. ) • 'To suggest that the fees charged to users[of the water and sewer enterprise funds cannot cover the costs of PILOTs would invalidate a wide range of charges 7/18/2005 P40 PM 30 ) g 7 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) paid in a wide variety of contexts. For instance, it would disallow the fees charged by MassPort and by the Turnpike Authority since those fees cover the PILOTs that they pay under voluntary agreements to the municipalities in which they own land." Memo,p. 2. Unlike Lexington's water and sewer enterprise funds, MassPort and the Turnpike Authority were expressly created by the state legislature as "independent bodies politic and corporate." See, e.g., G.L. c. 81A, § 1, which is reproduced in Appendix B. They provide services to, and collect fees from, not just residents of the municipalities in which they operate but persons who range from across the nation and around the world • Likewise, it would invalidate the charges imposed by municipal utilities for gas and electric service," including in particular the municipal lighting plant cooperatives I mentioned in my earlier memo, since those charges recoup, inter alia, the costs of PILOTs paid by the utilities to the municipalities which operate them. Memo, p. 2 n. 2. Municipal lighting plant cooperatives, unlike enterprise funds, are also established by a state law expressly providing that such a cooperative"shall constitute a body politic and corporate" and `public instrumentality"that is managed independently by directors elected by and from its members, and can sue and be sued, acquire and hold title to its own assets, and incur its own liabilities. See G.L. c. 164, § 47C,portions of which are reproduced in Appendix C. 4.2.3. 2. Even Independent Governmental Entities Are Not Subject to Local Taxes or PILOTs Absent a Clear Legislative Mandate. Even if the enterprise funds were viewed as independent"governmental entities"that had the power to conduct their own affairs and voluntarily negotiate PILOT payments at arms' length with the Town of Lexington—and not merely as an accounting mechanism for assets and operations owned, controlled, maintained and operated by the Town itself—the argument Peter makes in Part I of his memo still would not be viable. The law is well-established that independent governmental entities that own land within a municipality that is used for a `public purpose" (including towns that own land within other towns) are exempt from local taxation, or from any obligation to make a "payment in lieu of tax," unless the state legislature has explicitly provided otherwise. ) In the case of Collector of Taxes of Milton v City of Boston, 278 Mass. 274 (1932), the collector of taxes of the Town of Milton sought to recover taxes on property located within the Town of Milton,but owned by the City of Boston and used for the operation of a rapid transit railroad line. The Supreme Judicial Court held that the portion of the property that was devoted to a public use was exempt from taxation under the following principle: ) `Property taken or held for a public use by one municipality within the territorial limits of another, or within its own boundaries, is not subject to taxation so long as it is actually devoted to a public use. The reason is that property held and used for the benefit of the public ought not to be made to share the burden of paying the public expenses. That ) exemption does not rest on any provision of statute, but is founded on general principles of expediency and justice. This rule of law plainly applies to the land and structures connected with the one and one quarter miles of track. That land is clearly devoted to the 7/18/2005 1 45 PM 31 V PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) public use of rapid transit. In this respect the property in question stands on no different footing from property held for a water supply or other use from which some revenue may be derived. The defendant owns the land in fee and it is devoted exclusively to the public use." ) 278 Mass. at 277 ) The same principle was applied in an earlier case to a public water company that owned land within a municipality for the purpose of furnishing the residents of another municipality with water. Milford Water Co. v. Hopkinton, 192 Mass. 491 (1906). In that case, the Court held that the land in question was exempt from local taxation based on the principle that "where land is taken (or ) purchased where it could have been taken) and held for a public purpose,it shall be exempt from ) taxation in the absence of any express statutory provision to the contrary " 192 Mass at 495. The ) Court did take note of the existence of a state statute (to which a modem analog can still be found in ) G.L. c. 59 § 5D-G) providing "in substance that although property held by a city or town in another city or town for the purpose of a water supply if yielding no rent, should be exempt from taxation, —) - yet that the city or town so holding should pay to the city or town in which the land was situated a certain sum dependent upon the value of the land exclusive of buildings or other structures" which was 'not technically a tax,but simply a substitute for a tax." 192 Mass. at 496. However, it concluded that if the public interest called for the extension of such a PILOT provision to public ) corporations such as the plaintiff, as well as to towns, it was up the state legislature to provide a remedy 192 Mass. at 497 The principles established by the Milton and Milford Water Company cases are not merely ancient relics but viable legal doctrines continue to be followed in modem cases. Thus, in Boylston Water District v Tahanto Regional School District, 353 Mass. 81 (1967), the Supreme Judicial ) Court held that, in the absence of an express mandate in its enabling legislation, a water district ) could not charge a regional school district for real estate taxes, betterment assessments or payments in lieu of taxes. "Because the school district's `property constitutes one of the instrumentalities by ) which [the Commonwealth] performs its functions," the Court held, 'we should be unwilling –4 - to hold that such property was subject to taxation in any form,unless it were made so by express enactment or by clear implication. 353 Mass. at 83. See also Town of Avon v City of Brockton, ) 355 Mass. 401 (1969) (where the Town of Avon failed to comply with statutory requirements for charging a payment in lieu of taxes to the City of Brockton, which owned land within the Town of ) Avon used for a public water supply, it could not recover such PILOTs ); Tax Collector of North Reading v Town of Reading, 366 Mass. 438,443 (1974) (personal property of the Town of Reading, consisting of poles, wires, transformers, etc. located in the Town of North Reading and used to supply electricity were not subject to taxation by the Town of North Reading; `[w]here the Legislature intended to provide for the payment of taxes or payments in lieu thereof it has clearly so ) provided); Town of Boylston v Commissioner of Revenue,434 Mass. 398, 406 (2001) (Appellate ) Tax Board"correctly decided that land under the waters of the Wachusett reservoir should not be ) valued for purposes of PILOT' statutorily authorized by G.L. c. 59 § 5G. 'This conclusion comports as well with the established principle that the exemption from local taxation for state ) 7/18/2005 1 45 PM 32 ) 99 ) ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr. Enrich's memo by Mr. Bartenstein (14 December 2004) owned property granted under G.L. c. 59 § 5, Second, can be overridden only by express enactment or by clear implication a situation that clearly does not exist here.")8 In sum, even if one were to accept Peter's argument that Lexington's water and sewer enterprise funds must be treated as independent "governmental entities" for purposes of the ) Emerson analysis (which they clearly are not), they still would be exempt under well established law, from any obligation to pay local taxes or PILOTs as public entities carrying out the "public purpose' of supplying water and sewer services to town residents. As the SJC said in the Milton case, '[t]he reason is that property held and used for the benefit of the public ought not to be made to share the burden of paying the public expenses. 278 Mass. at 277 If Lexington's water and ) sewer enterprises owned water supplies in an adjoining town, say the Town of Bedford, the cases summarized clearly establish that the Town of Bedford could not require the enterprises to pay either real or personal property taxes or PILOTs on that property except to the limited extent the state legislature has authorized in G.L. c. 59 §§ 5D-F It follows, a fortiori,that the Town of Lexington could not exact such payments.9 1 4.2.4 3 The Costs of Generalized Municipal Services Described in Part 2 of Peter's Memo are Exactly the Type of Costs That Emerson Does Not Permit a Municipality to Recover Through a Fee. In Part 2 of his Memo, Peter argues that the PILOTs paid to the Town of Lexington by the ) water and sewer enterprise funds should be considered legitimate components of a fee under the Emerson analysis because they represent an acceptably "rough estimate" of the cost of"general ) services provided by the town, such as fire protection, police protection, and the availability of roads and street lighting." `These benefits that the water and sewer enterprises receive from ) generally available town services,"he states, "are quite distinct from those particularized services that they receive by virtue of their operation as part of town government, such as billing and accounting services." As I pointed out in my original memo, however, this is `exactly the kind of charge that Emerson characterizes as a tax and forbids unless legislatively [and constitutionally] authorized." Indeed, the first prong of Emerson s standard for a valid fee is that it is charged 'in exchange for a particular government service which benefits the party paying the fee in a manner 'not shared by other members of society "' 391 Mass. at 424 There is no dispute that the direct and specifically identifiable indirect costs that are involved in delivering particularized water and sewer services to individual residents are legitimate components of a fee under Emerson. One way of looking at this is that Emerson permits the Town to recoup the costs of those services which, but for the necessity of delivering water and sewer service, the Town would not have to incur. This would certainly 1 1 8 Peter argues in footnote 3 of his memo that G.L.c. 164 `couldn't serve as the authority for recoupment of utility PILOTs through utility fees because,as the Emerson case itself exemplifies,the legislature cannot authorize a fee that does not satisfy the Emerson standards. As the foregoing cases demonstrate,however,the legislature clearly does have the power to authorize or require an independent body politic and corporate that it creates,such as a municipal lighting plant cooperative,to make a PILOT payment to a local government,as a condition of its statutory existence. 9 Indeed,the SJC expressly noted as part of its rationale in the Town of Reading case that 'a municipality would obviously not tax property owned by it and held within its territorial limits. 366 Mass.at 440 n.2. J 7/18/2005 1.45 PM 33 �66 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr Bartenstein (14 December 2004) ) include the costs of plumbers, meter readers, accountants performing the billing, pipes, or even the ) costs of a town police officer who is specifically detailed to direct traffic around an open manhole. ) What Emerson expressly forbids, however, is the use of a fee as a vehicle for capturing the ) costs of generalized municipal services that are available to the public at large, are usually funded by the town's general fund, and which the Town would have to maintain whether or not it maintains ) a water and sewer facility Thus, Emerson states: ) "That revenue obtained from a particular charge is not used exclusively to meet expenses incurred in providing the service but is destined instead for a broader range of services or for ) the general fund, while not decisive, is of weight in indicating that the charge is a tax. The statutory earmarking of proceeds for non-AFSA [augmented fire services availability] services is more consistent with a revenue-raising purpose than with an intent to recover AFSA-related expenditures. The AFSA charge thus resembles not a fee,but a tax, which has been defined as an enforced contribution to provide for the support of the -9 - government." ) 391 Mass. at 427 ) The funds that the water and sewer funds pay to the Town as a PILOT are not earmarked for ) any particular service provided by the Town to the water and sewer enterprises. Rather they are simply transferred into the general fund as additional, general revenues which the Town is then free ) to appropriate and spend however it sees fit. To characterize such revenue enhancements as legitimate components of a valid fee would render Emerson meaningless. ) ) , ) 7/18/2005 1 45 PM 34 ) !Dl PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) APPENDIX A Chapter 44: Section 53F 1/2 Enterprise funds Section 53F1/2. Notwithstanding the provisions of section fifty-three or any other provision of law ) to the contrary, a city or town which accepts the provisions of this section may establish a separate account classified as an "Enterprise Fund' for a utility, health care, recreational or transportation facility and its operation, as the city or town may designate, hereinafter referred to as the enterprise. Such account shall be maintained by the treasurer, and all receipts,revenues and funds from any source derived from all activities of the enterprise shall be deposited in such separate account. The treasurer may invest the funds in such separate account in the manner authorized by sections fifty- five and fifty-five A of chapter forty-four. Any interest earned thereon shall be credited to and become part of such separate account. The books and records of the enterprise shall be maintained in accordance with generally accepted accounting principles and in accordance with the ) requirements of section thirty-eight. ) No later than one hundred and twenty days prior to the beginning of each fiscal year, an estimate of the income for the ensuing fiscal year and a proposed line item budget of the enterprise shall be submitted to the mayor, board of selectmen or other executive authority of the city or town by the appropriate local entity responsible for operations of the enterprise. Said board, mayor or other executive authority shall submit its recommendation to the town meeting, town council or city ) council, as the case may be, which shall act upon the budget in the same manner as all other ) budgets. ) The city or town shall include in its tax levy for the fiscal year the amount appropriated for the total expenses of the enterprise and an estimate of the income to be derived by the operations of the enterprise. If the estimated income is less than the total appropriation, the difference shall be added ) to the tax levy and raised by taxation. If the estimated income is more than the total appropriation, the excess shall be appropriated to a separate reserve fund and used for capital expenditures of the enterprise, subject to appropriation, or to reduce user charges if authorized by the appropriate entity ) responsible for operations of the enterprise. If during a fiscal year the enterprise incurs a loss, such loss shall be included in the succeeding fiscal year's budget. ) If during a fiscal year the enterprise produces a surplus, such surplus shall be kept in such separate reserve fund and used for the purposes provided therefor in this section. ) For the purposes of this section, acceptance in a city shall be by vote of the city council and approval of the mayor, in a town,by vote of a special or annual town meeting and in any other municipality by vote of the legislative body ) A city or town which has accepted the provisions of this section with respect to a designated enterprise may, in like manner, revoke its acceptance. ) 7/18/2005 1 45 PM 35 /0 a. PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr. Enrich's memo by Mr Bartenstein (14 December 2004) APPENDIX B ) Chapter 81A. Section 1 Massachusetts Turnpike Authority; construction as public instrumentality Section 1 There is hereby created a body politic and corporate to be known as the Massachusetts Turnpike Authority which, while within the executive office of transportation and construction, ' ) shall not be subject to the supervision and regulation of said executive office or any other ) department, commission, board,bureau or agency except as specifically provided in any general or special law to the contrary The authority is hereby authorized and empowered, subject to the provisions of this chapter,to own, construct, maintain, repair, reconstruct, improve, rehabilitate, - finance, refinance, use,police, administer, control and operate (a) the turnpike as defined herein; ) and (b) the metropolitan highway system as defined herein. The authority is hereby constituted a public instrumentality The exercise by the authority of the powers conferred by this chapter shall be deemed and held to be the performance of an essential ) governmental function. ) ) ) � - ) ) ) ) ) ) ) ) ) 7/18/2005 1.45 PM 36 ) /b3, ) J PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) APPENDIX C MUNICIPAL LIGHTING PLANTS ) Chapter 164. Section 47C Municipal lighting plant cooperatives [Paragraph (a)as amended by 2004, 269 Sec. 1 effective November 7, 2004 For text effective until November 7 2004, see above.] (a) Any municipal lighting plant created in a manner provided for in this chapter shall be allowed to form cooperative public corporations for the purpose of furnishing efficient,low cost, and reliable electric power and energy-related services and cable television services as provided in this ) section. (b) A municipal lighting plant cooperative established pursuant to the provisions of this section shall constitute a body politic and corporate and is constituted a public instrumentality and the exercise of the powers conferred by this section shall be deemed and held to be the performance of an essential public function. (d) A municipal lighting plant cooperative may be formed for any purpose stated in subsection (c) which may lawfully be carried out by any other corporation; provided, that a municipal lighting plant cooperative shall be organized and shall conduct its business primarily for the mutual benefit of its members as patrons of the cooperative. A municipal lighting plant cooperative shall have all ) of the powers of a natural person, including the power to participate with others in any partnership, joint venture or other association, transaction, or arrangement of any kind. In addition, each municipal lighting plant cooperative shall have the following powers: (i) To have perpetual succession by its corporate name unless a limited period of duration is stated in the articles of incorporation; (ii) To sue and be sued, complain, and defend its corporate name; ) (iii) To have and use a corporate seal; (iv) To purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, and deal in -) and with real or personal property or any interest therein, wherever situated; ) (v) To sell, convey mortgage, pledge, lease, exchange, transfer, or otherwise dispose of all or any part of its property and assets; ) ' ) (vi) To purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,pledge, or otherwise dispose of,use, and deal in and with shares or other interest in, or obligations of, other domestic or foreign corporations, associations,partnerships, or 9 7/18/2005 1.45 PM 37 ) 10&7 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Conunittee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) ) individuals, or direct or indirect obligations of the United States or any other government, state, ) territory, governmental district, or municipality or any instrumentality thereof; (vii) To make contracts and incur liabilities,borrow money at rates of interest the cooperative may determine, issue notes, bonds, certificates of indebtedness, and other obligations, receive funds from members and pay interest thereon, issue capital stock and certificates representing equity interests in assets, allocate earnings and losses at the times and in the manner the articles of incorporation or ) bylaws or other contract specify create book credits, capital funds, and reserves, and secure obligations by mortgage or pledge of any of its property, franchises, and income; ) (viii) To lend money for corporate purposes, invest and reinvest funds, and take and hold real and personal property as security for the payment of funds loaned or invested; (ix) To conduct business, carry on operations, have offices, and exercise the powers granted by this subsection, within or without this commonwealth; (x) To elect or appoint officers and agents of the corporation, define their duties, and fix their compensation; (xi) To make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this commonwealth, for the administration and regulation of the affairs of the cooperative; (xii) To make donations for the public welfare or for charitable, scientific, or educational purposes; (xiii) To pay pensions and establish pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans, and other incentive plans for any or all of its directors, officers, and ) employees; (xiv) To be a partner, member, associate, or manager of any partnership,joint venture, trust, or -4 - other enterprise; ) (xv) To cease corporate activities and surrender its corporate franchise; ) (xvi) To purchase, acquire, distribute, sell, resell, supply, and dispose of energy in any form or ) other services; ) (xvii) To purchase, acquire, distribute, sell, resell, supply, and provide any energy or energy- ) related services to wholesale or retail customers within or without the commonwealth; ' ) (xviii) To have access on comparable terms to energy transportation systems for delivery of energy ) to its members and other customers; (xix) To sell electricity to any consumer, including, but not limited to, a consumer that receives 3 electric distribution, transmission, or other services from an entity other than the municipal light ) plant cooperative organized under subsection (a), other than consumers served by municipal light ) plants which are not members of a municipal light plant cooperative, that is selling such electricity 7/18/2005 1 45 PM 38 b5 ') ,J PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr Enrich's memo by Mr. Bartenstein (14 December 2004) to such consumer; provided, that an entity providing such distribution, transmission, or other 1 -) services shall provide non-discriminatory access and pricing for the use of its property and services and shall otherwise facilitate such transactions; (xx) To contract with natural persons, firms, corporations,business trusts, partnerships,public and ) private agencies, non-profit organizations and corporations, other cooperatives, and local municipalities to accomplish any purposes of the cooperative; (xxi) To have and exercise all powers necessary or convenient to effect its purposes; ) (xxii) To exercise and perform all or part of its power and functions through one or more wholly- / owned or partly-owned corporations or other business entities; and (xxiii) To exercise all other powers not inconsistent with the state constitution or the United States Constitution, which may be reasonably necessary or appropriate for or incidental to the effectuation of its authorized purposes or to the exercise of any of the foregoing powers, and generally to exercise in connection with its property and affairs, and in connection with property within its control, any and all powers which might be exercised by a natural person or a private corporation in connection with similar property and affairs. (e) A municipal lighting plant cooperative organized pursuant to this section shall be managed by a board of not less than three directors. The directors shall be elected by and from the members of the cooperative at such time, in such manner, and for such term of office as the bylaws may prescribe and shall hold office during the term for which they were elected and until their successors are elected and qualified. Any vacancy occurring in the board of directors, and any directorship to be 1 filled by reason of an increase in the number of directors, may be filled by the board of directors unless the articles of incorporation or the bylaws provide that a vacancy or directorship so created shall be filled in some other manner. A director elected or appointed to fill a vacancy shall be elected or appointed for the unexpired term of the predecessor in office. (f) Any municipal lighting plant cooperative organized pursuant to the provisions of this section may enact bylaws to govern itself in the implementation of the provisions of this section which are not inconsistent with the provisions of this section. I (g) The provisions of chapter 258 shall apply to the municipal lighting plant cooperatives established under the provisions of this section as if said municipal lighting plant cooperatives were municipal lighting plants. J (h) The right of a member of a cooperative to vote may be limited, enlarged, or denied to the extent specified in the articles of incorporation or bylaws. Unless so limited, enlarged, or denied, each member shall be entitled to one vote on each matter submitted to a vote of members. ) (i) A member of the board of directors or an officer of any cooperative subject to the provisions of this section shall have immunity from liability equivalent to that granted to directors and officers of for-profit corporations in the commonwealth. Except for debts lawfully contracted between a member and the cooperative, no member shall be liable for the debts of the cooperative to an 9 7/18/2005 1 45 PM 39 /06 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Response to Mr. Enrich's memo by Mr. Bartenstein (14 December 2004) amount exceeding the sum remaining unpaid on his or her membership fee or subscription to capital ) stock. ) (j) Except as provided for herein, a municipal lighting plant cooperative shall be exempt from paying taxes, including, but not limited to taxes on its income and real and personal property situated within the commonwealth and owned by the municipal light plant cooperative; provided, ) however, that the cooperative shall agree, in lieu of property taxes, to pay to any governmental body ) authorized to levy local property taxes the amount which would be assessable as local property taxes on the real and tangible personal property if such property were the property of a domestic ) corporation; provided, further, that no such municipal lighting plant cooperative shall be allowed to commence any such operations allowed pursuant to this section or exercise any such powers ) pursuant to subsection (d) until such payment in lieu of taxes is executed. The cooperative shall pay ) all sales or excise taxes which are properly assessed on its business activities under this section to ) the extent such taxes are assessed against domestic corporations. (k) A municipal lighting plant cooperative created pursuant to the provisions of this section shall be exempt from the public records requirement of section 10 of chapter 66 and the open meeting requirements of section 23B of chapter 39 only in those instances when necessary for protecting trade secrets, confidential, competitively sensitive or other proprietary information provided in the ) course of proceedings conducted pursuant to this chapter. ) ) ) ) ) ) ) ) ) 7/18/2005 1 45 PM 40 ) /07 ) J PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Summary of Response to Mr Enrich's memo by Mr Bartenstein (14 December 2004) ( ) 4.3. Summary of Response to Mr. Enrich's memo by Mr. Bartenstein (14 December 2004) [SUMMARY OF] RESPONSE TO PETER ENRICH MEMO ON PILOTS • First argument (the"conflation argument") rests on the premise that the Town and the enterprise funds are separate `governmental entities' o The Enterprise Fund statute does not create a separate governmental entity; it merely permits the Town to establish a separate account for segregating and tracking the ) expenses and revenues of facilities that are at all times owned, operated and controlled by the Town ) o PILOTs are not "voluntary negotiated payments' between two independent entities, but are set unilaterally by the Board of Selectmen and Town Meeting ) o Because PILOTS are, in effect, charges imposed by the Town on residents through the Enterprise Funds, how the Town uses the funds is entirely relevant to the Emerson analysis o MassPort,Massachusetts Turnpike Authority and municipal lighting plant cooperatives, unlike enterprise funds, are independent"bodies politic and corporate"that are capable of negotiating voluntary payments and may be statutorily authorized to do so ) • Under well-established Massachusetts law, even independent governmental entities are not subject to local taxes or PILOTS absent a clear legislative mandate ) o Governmental entities holding property in a municipality for a `public purpose' are exempt from local taxation; "the reason is that property held and used for the benefit of the public ought not to be made to share the burden of paying the public expenses" ) o Nevertheless, the legislature may, and in some cases has, imposed an obligation on a public purpose entity to make payments in lieu of taxes o Legislature must do so by a clear mandate o Muncipalities may not tax their own property ) • The costs of generalized municipal services described in Part 2 are exactly the type of costs that Emerson does not permit a municipality to recover through a fee o Emerson permits recoupment of costs which,but for the necessity of delivering water and sewer service, the Town would not have to incur o The generalized services identified (police, fire, etc.) do not meet this test J J 7/18/2005 1.45 PM 41 /0 SI ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Postscript on PILOTs by Mr. Bartenstein (15 December 2004) 1 5 Email 'Postscript on PILOTS' by Mr Bartenstein (15 December 2004) From: John Bartenstein Date:Wednesday,December 15,2004 7:09 PM Date: To: [WSRSC email list],cc:P Enrich,D.Brown Subject:Postscript on PILOTs WSRSC Members: ) There is a postscript I should add to the response I provided yesterday to Peter Enrich's memo on PILOTs. ) I forgot to mention that the state Department of Revenue does not share Peter's view that Emerson is ) inapplicable to water and sewer fees if they are charged through the "intermediary" of an enterprise fund. Consider the following excerpt from the DOR's Enterprise Fund Manual (June 2002): 9. Who determines user fees? The board or officer designated under the general enabling legislation or local charter determines the user fees. If it is not designated, then the chief executive officer(board of selectmen or mayor) ) usually sets the user fee amounts. The fees imposed for any municipal service must comply with the specific requisites set forth by the Supreme Judicial Court in Emerson College v. Boston, 391 Mass. 415 (1984). • The fee must be charged for a particular service that benefits the party paying the fee in a manner not shared by other members of society • The fee must be paid by choice (i.e., the person paying the fee must have the option of not ) using the service, thereby avoiding the charge). • The charges may not be collected to raise additional revenues, as such,but to compensate --) - the governmental entity for its expenses in providing the services. ) Enterprise Fund Manual at 22. ) Undoubtedly it is the DOR's recognition of the applicability of Emerson to an enterprise fund that ) accounts for its statement, in response to FAQ 9 (whether a community may charge an enterprise ) fund a PILOT), that "from a legal point of view, it is not at all clear to what extent a court would ) consider [a PILOT] payment to be part of the actual cost of providing the service, and therefore an appropriate component of the enterprise's fee structure." Enterprise Fund Manual at 24 ) ) The fact of the matter is that just about every town facility benefits, in the generalized sense that Peter describes, from the existence of every other town facility The police department benefits from the existence of the fire department (in case the police station catches on fire), and the fire department benefits from the existence of the police department(in case the fire station is vandalized). The schools benefit from the existence of roads (over which school buses must be ) driven), the town library benefits from the sidewalks (which enable people to walk to the library) etc. etc. This does not mean, however, that every town department can be made to pay a PILOT to 7/18/2005 1:51 PM 42 ) ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Postscript on PILOTs by Mr. Bartenstein (15 December 2004) the town (based on the value of the portion of the town property it uses), and then recapture that cost from residents through library fees, fire inspection fees, school bus fees, and the like. No more can the water/sewer department, notwithstanding that it is accounted for as an enterprise fund, raise additional revenues to pay for the police department, fire department, schools, etc. in this manner. John Bartenstein ) 1 i ) ) ) ) I I ) 7/18/2005 1:51 PM 43 //o 1 PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Reply to Mr Bartenstein's Postscript on PILOTs by Mr Peter Enrich (16 December 2004) ) ) 1 6. Reply to Mr. Bartenstein's Postscript on PILOTs by Mr. Peter Enrich (16 December 2004) From: P.Enrich Date Thursday,December 16,2004 9:27 AM ) To:John Bartenstein cc: [WSRSC email list] Subject:Re:Postscript on PILOTs ) ) Just a very brief response: John is doing an excellent job of writing the legal briefs in opposition to the PILOT I am not in a position to commit the time and energy to act as the attorney in support of the PILOT Let me merely note that John's views,both here and in his lengthy memo distributed on Tuesday all deserve a careful and thorough response. They are only one side of a debate and in my view the distinctly weaker side.If the Committee intends to further explore the legal aspects of this issue,I'd strongly advise you to ensure that you are receiving a balanced presentation of the legal arguments. I apologize that I can't volunteer for a continuing role in that task. - Peter ) Good luck in your continuing work. ) } ) ) ) J 7/18/2005 1:54 PM 44 ) !/ / ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] 7 Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] 7 1 Introduction 7 1.1. History ) The enterprise fund statute, MGL Chapter 44 §53F1 (formerly Chapter 41 §39K),was enacted in 1986 (see Appendix A). Before that time, communities used special revenue funds authorized under various general laws or special acts in order to separately account for their business type services. These special revenue funds were limited, however, with regard to the services and costs covered. The funds were most commonly authorized for water, gas and electric utility departments and used L ) primarily to account for annual operating costs, not the indirect costs, capital expenditures or fixed ) assets of the service. The purpose of the enterprise fund statute was to give communities the flexibility to account separately for all financial activities associated with a broader range of municipal services. 7 1.2. What is an Enterprise Fund? An enterprise fund establishes a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. Under enterprise accounting, the revenues and expenditures of the service are segregated into a separate fund with its own financial statements, rather than commingled with the revenues and expenses of all other governmental activities. Financial transactions are reported using standards similar to private sector ( ) accounting. Revenues are recognized when earned and expenses are recognized when incurred, under a full accrual basis of accounting. An enterprise fund provides management and taxpayers with information to: ) • Measure performance ) • Analyze the impact of financial decisions } • Determine the cost of providing a service • Identify any subsidy from the general fund in providing a service Enterprise accounting allows a community to demonstrate to the public the portion of total costs of a service that is recovered through user charges and the portion that is subsidized by the tax levy or other available funds, if any A community may choose to recover total service costs through user charges, but it is not required. Enterprise funds frequently are used to account for services whose costs are only partially funded by fees and charges. For example, a community with a sewer enterprise votes a Proposition 21 debt exclusion to pay for a$10 million sewer line expansion and replacement project. Because the community will be raising the debt service costs of this project from the tax levy, user charges and fees will not fund the total cost of the sewer service. At year-end, the performance of an enterprise fund is measured in terms of positive and negative operations. An operating surplus is the result of revenue collected in excess of estimates and appropriation turn backs, and translates into retained earnings that are maintained in the fund rather than closing to the general fund. Retained earnings of an enterprise fund are certified as an available _) 7/18/2005 1:59 PM 45 /1a ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] Division of Local Services Introduction lEnterprise Funds MGL Chapter 44 §53F1/2 ) fund after the submission of a June 30th balance sheet to DLS. Once certified, retained earnings may be appropriated only for expenditures relating to the fund. Conversely, if during the year, the enterprise fund incurs an operating loss,the loss must be raised in the subsequent year's budget. Enterprise funds may be established, 'for a utility health care, recreational or transportation ) facility "Examples of which include the following. • Public utilities—water, sewer, trash disposal ) • Health care—ambulance service, nursing homes ) ) • Recreation—skating rinks, pools, golf courses • Transportation—airports, dock and wharf facilities A community may not establish enterprise funds for normal government operations or services such as building rentals, inspectional services or cemeteries. ) Establishing an enterprise does not create a separate or autonomous entity from the municipal government operation. The municipal department operating the enterprise service continues to ) fulfill financial and managerial reporting requirements like every other department. ) 7 1.3. What are the Advantages of Enterprise Fund Accounting? A community may account for a certain service in the general fund, special revenue fund or an enterprise fund. The advantages of using the enterprise fund rather than the other two methods are as follows. ) • Demonstrate total cost of service—With all the direct, indirect (e.g., interdepartmental support, health and insurance costs) and capital costs of providing the service in a - consolidated fund, the community will be able to readily identify the true cost of providing a service. • Provide useful management information—With the consolidation of revenues and costs of ) the service and information on the operating performance (positive or negative) of the fund, ) the community will have useful information to make decisions on user charges and other ) budgetary items. The community will be able to analyze how much the user fees and charges support the service and to what extent if any the tax levy or other available revenues ) are needed to subsidize the enterprise fund. The community will also be able to include the ) fixed assets and infrastructure of the enterprise as assets in the financial statements and recognize the annual depreciation of these assets. • Retain investment income and surplus—Unlike services operating in the general fund or a ) special revenue fund, all investment earnings and any operating surplus are retained in the enterprise fund rather than closed to the general fund at year-end. Once a surplus is certified as available (similar to free cash), it may be used to fund operating, capital or debt service costs associated with the enterprise. j 7/18/2005 1:59 PM 46 ) //3 ) J PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] l 7 1.4 Impact of GASB Statement [omitted] 7.2. Adopting an Enterprise Fund [omitted] 7.3. The Enterprise Budget [omitted] 7.3.1. Revenues [omitted] 7.3.2. Costs [omitted] 7 4 Balancing an Enterprise Budget [omitted] 7.5 Adopting an Enterprise Budget [omitted] 7.6. Reporting on the Tax Rate Recapitulation Sheet [omitted] 7 7 UMAS Budgetary Entries [omitted] 7.8. UMAS Actual Entries [omitted] 7.9 Frequently Asked Questions [omitted: 1,2,3,4,6,7,8,24,25] 7.9.1 5. Does an enterprise fund have to fully recover its costs through user fees or be self-sufficient? No. An enterprise fund may be self-supporting or it may be subsidized (e.g., debt and capital exclusions)by the general fund. The extent to which it is subsidized is a policy decision that should be clearly presented when the city council or town meeting adopts the enterprise budget. 7.9.2. 9 Who determines user fees? The board or officer designated under the general enabling legislation or local charter determines the user fees. If it is not designated, then the chief executive officer(board of selectmen or mayor) usually sets the user fee amounts. The fees imposed for any municipal service must comply with specific requisites set forth by the Supreme Judicial Court in Emerson College v Boston, 391 Mass. 415 (1984). J • The fee must be charged for a particular service that benefits the party paying the fee in a manner not shared by other members of society • The fee must be paid by choice (i.e. the person paying the fee must have the option of not using the service, thereby avoiding the charge). • The charges may not be collected to raise additional revenues, as such, but to compensate the governmental entity for its expenses in providing the services. 7/18/2005 1:59 PM 47 ) 0 if PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] 7.9.3. 10. Does the amount of a Proposition 2' debt exclusion for an enterprise fund have to be reduced by the amount of any user fees and/or special assessments imposed for the same project? No. If the debt service for an enterprise project is funded through user fees, betterments or other local revenues, a community has the option of excluding a lesser amount by reporting the principal and interest net of the local revenue. However, if the community chooses to exclude the gross debt service amount instead, it must budget that property tax subsidy to the enterprise fund. The increase in allowable levy attributable to the exclusion cannot be spent for any other purpose. Division of Local Services Frequently Asked Questions 22 Enterprise Funds MGL Chapter 44 §53F' 7.9 4 11 When a community adopts an enterprise fund is it subject to the appropriation process? ) Yes. The community is responsible for appropriating all enterprise fund costs and identifying the - revenue sources from which these will be funded. This information is recorded on the tax rate recapitulation sheet. ) 7.9.5. 12. Can an enterprise fund use its retained earnings/surplus to pay for the expenditures that the city council/town meeting voted to fund by borrowing? ) No. The enterprise s retained earnings (or surplus) cannot be spent without appropriation, nor can the city council s or town meeting's decision about the funding source for expenditures be reversed by the enterprise fund. It would require a city council or town meeting vote to change the funding source. ) 7.9.6. 13. For what purposes can the community use the budgeted surplus and/or ) retained earnings? The community can appropriate the budgeted surplus and retained earnings for ) • Operating costs to offset the need to increase user charges ) • Capital improvements ) • Reimbursement to the general fund to the extent the general fund has funded the particular service in prior years (which requires detailed documentation) ) • Enterprise revenue deficits (operating loss) 7.9 7 14 Can an enterprise fund operate independently or under its own procedures? ) An enterprise fund is just an accounting/budgeting tool. It does not grant additional powers to the department providing the service. An enterprise is still a municipal department that is subject to ordinary municipal finance procedures. The rate setting process is established by statute or local charter. Any enterprise fund property/asset is owned by the municipality and may only be acquired, ) leased or disposed of by vote of the legislative body (council or town meeting). At no time can these j conditions be altered through the adoption of an enterprise fund. ) ) 7/18/2005 1:59 PM 48 ) J PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] 1 _ 7.9.8. 15. Can a community charge an enterprise fund a payment in lieu of taxes for d property used to provide the service? Chapter 44 §53F1/2 states that the books and records of the enterprise shall be maintained in 1 accordance with generally accepted accounting principals (GAAP). From a purely accounting perspective, a payment in lieu of taxes is a proper expense of the enterprise fund. It is a quasi- external transaction, that is, an interfund exchange that would have resulted in recognition of an expense or revenue if it had involved a private party The validity of such a charge does not depend on the type of enterprise,but depends on the type and amount of property used by the enterprise. If the decision is made to proceed with such a payment, Division of Local Services Frequently Asked Questions 23 Enterprise Funds MGL Chapter 44 §53F1 the amount would be the community's commercial tax rate multiplied by the assessed value of the enterprise s land,buildings and personal property Notwithstanding the foregoing, it must be noted that from a legal point of view, it is not at all clear to what extent a court would consider such a payment to be part of the actual cost of providing the d service, and therefore an appropriate component of the enterprise s fee structure. 7.9.9 16. Should services provided by other departments be billed directly to the A enterprise fund?Are other indirect costs like health insurance charged directly to the ) enterprise fund? No. Any services provided by other departments and indirect expenses/charges should be reimbursed to the general fund through inter-fund transfers from the enterprise fund. Ideally these transfers should be done monthly so the enterprise fund expenses are tracked and its financial position is accurately reflected. 7.9.10. 17 What happens if there is a disagreement on the indirect costs(e.g., which expenses and how much) of an enterprise fund? ) Indirect and allocated costs should be clearly set forth (e.g. what costs will be shared and how much) when the budget is adopted to avoid disputes later in the fiscal year. If, however, the enterprise still cannot agree with the community's financial officials what figure should be used for indirect and allocated costs, the appropriate body to resolve the matter is the city council or town meeting. 7.9.11 18. How does the community provide for an enterprise operating loss? Any operating loss will be provided for in the subsequent year's enterprise fund budget. This may be funded by enterprise revenues or available funds, or possibly a general fund subsidy The deficit may be provided for by appropriation or raised on the tax recapitulation sheet, page 2 part II B, other amounts to be raised. 7.9.12. 19 How is enterprise fund accounting different from other governmental accounting? Accounting for enterprise funds is similar to accounting in the private sector. Revenues are ) recognized when earned and expenses are recognized when incurred under the full accrual basis of 7/18/2005 1:59 PM 49 /�G ) ) PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] ) accounting. In addition, enterprise fund accounting requires the establishment of fixed asset reporting and recognizing depreciation within the fund. 7.9.13. 20. How can an enterprise provide for extraordinary or unforeseen expenditures? • The community may establish an emergency reserve for extraordinary or unforeseen expenditures similar to the general fund reserve fund (Chapter 40 §5A or §6). • The community may establish an enterprise budgeted surplus which is subject to the appropriation process by city council with the approval of the mayor or town meeting. ) • City council/town meeting may appropriate from the emergency reserve fund and/or retained earnings. • The department may request a transfer from the general fund reserve fund. The enterprise fund may later appropriate to reimburse the general fund for such transfer. _ • The community may request authorization from the Director of Accounts to spend in excess of authorization (Chapter 44 §31) under an emergency that poses an immediate threat to the health or public safety of persons or property ) 7.9.14 21 Can a community establish a stabilization fund in an enterprise fund? No. There is no provision in the statute to allow for a stabilization fund. 7.9.15. 23. Can city council or town meeting vote to use enterprise funds for purposes not related to the enterprise? ) No. The enterprise enabling statute provides that the enterprise revenues may only be used for enterprise-related expenses. Even if there is an understanding the funds will be reimbursed to the enterprise, a community cannot use the enterprise fund as a funding source for appropriations to pay for unrelated municipal expenses or for interfund borrowing for cash flow purposes. ) 7 10. APPENDIX A. ENTERPRISE FUND LEGISLATION CHAPTER 44 §53F'h ) Notwithstanding the provisions of section fifty-three or any other provision of law to the contrary, a city or town which accepts the provisions of this section may establish a separate account classified as an 'Enterprise Fund' for a utility health care, recreational or transportation facility and its ) operation, as the city or town may designate, hereinafter referred to as the enterprise. Such account shall be maintained by the treasurer, and all receipts, revenues and funds from any source derived from all activities of the enterprise shall be deposited in such separate account. The treasurer may invest the funds in such separate account in the manner authorized by sections fifty-five and fifty- five A of chapter forty-four. Any interest earned thereon shall be credited to and become part of ) such separate account. The books and records of the enterprise shall be maintained in accordance with generally accepted accounting principles and in accordance with the requirements of section thirty-eight. ) ) No later than one hundred and twenty days prior to the beginning of each fiscal year, an estimate of the income for the ensuing fiscal year and a proposed line item budget of the enterprise shall be submitted to the mayor, board of selectmen or other executive authority of the city or town by the appropriate local entity responsible for operations of the enterprise. Said board, mayor or other , ) ) 7/18/2005 2:05 PM 50 117 ) a PILOT Information for Selectmen, compiled by Water Sewer Rate Study Committee Mass. Department of Revenue's Manual on Enterprise Funds [Excerpts] executive authority shall submit its recommendation to the town meeting, town council or city council, as the case may be, which shall act upon the budget in the same manner as all other budgets. The city or town shall include in its tax levy for the fiscal year the amount appropriated for the total expenses of the enterprise and an estimate of the income to be derived by the operations of the enterprise. If the estimated income is less than the total appropriation, the difference shall be added to the tax levy and raised by taxation. If the estimated income is more than the total appropriation, the excess shall be appropriated to a separate reserve fund and used for capital expenditures of the enterprise, subject to appropriation, or to reduce user charges if authorized by the appropriate entity responsible for operations of the enterprise. If during a fiscal year the enterprise incurs a loss, such loss shall be included in the succeeding fiscal year's budget. If during a fiscal year the enterprise produces a surplus, such surplus shall be kept in such separate reserve fund and used for the purposes provided therefor in this section. For the purposes of this section, acceptance in a city shall be by vote of the city council and approval of the mayor, in a town, by vote of a special or annual town meeting and in any other municipality by vote of the legislative body ) ) A city or town which has accepted the provisions of this section with respect to a designated enterprise may, in like manner, revoke its acceptance. 11 i ) 7 11. APPENDICES B,C,D,E,F [omitted] i 1 ) ) I ) ) I ) i ) 7/18/2005 2:05 PM 51 (I X ) Ad Hoc Water and Sewer Rate Study Committee(WSRSC)Meeting#1 Tuesday January 27 2004 Summary 1. Elected a chair Loren Wood 2. Agreed on frequency and time of future meetings every 2 weeks on Tuesday mornings at 8:00am 3. Introductions reasons for joining the Committee 4. Discussed the key points for meetings#2 and#3 a)How big is the pie?.b)How to split up the pie? 5. Agreed on agendas for some of the future meetings Details Members/liaisons present:Jeanne Krieger liaison to the BoS,John Bartenstein,Larry Belvin,Kathryn Benjamin,Paul Chernick, ) Lorraine Foumier,Loren Wood,Staff/consultant present: Bill Hadley DPW Director,Dennis Meehan Water and Sewer Superintendent,Chris Woodcock Water and Sewer rate consultant*** Loren Wood volunteered to be chair and was unanimously elected. We agreed that the role of the chair is to set the agenda for each meeting,keep the group focused on the agenda(i.e. keep the group from spending the entire hour on the first agenda item),and make sure that the group produces the final report/recommendations in a timely manner.*** We agreed that meetings should last no longer than one hour,and that we will plan to meet every two weeks on Tuesday mornings at ) 8:00am.At some point the group may split up into sub-committees to look at narrow issues,but the consensus was that it is too early to do so now.*** John Bartenstein described the two key issues surrounding water and sewer rates and costs.The first is how big is the pie? That is, what are the cost components that Lexington uses to determine what makes up the town's total water and sewer costs? These ) components can be split into two broad categories. The first is direct costs what the Massachusetts Water Resources Authority ) (MWRA)charges Lexington for water and sewer services. Lexington has no control over this MWRA direct cost. The other category is indirect costs the employees,trucks,equipment,pipes,interest,etc.necessary to provide water and sewer services to residents.*** The second key issue surrounding water and sewer rates and costs is how to split the pre up?That is,how are the rates determined? There are several components and issues related to rates.For one,the current incrementing block structure raises questions of equity. Another aspect of rate setting is to achieve policy objectives,such as conservation. John noted that water and sewer rates are set differently in many other communities.Another question is whether it is legal to charge different rates for commercial and industrial customers compared with residential customers,and if so,is it desirable to do so? Still another aspect of rate setting is whether and how to provide subsidies to seniors and other low income/fixed income customers.*** We then went around the room and briefly mentioned why we applied to join the committee.*** Chris Woodcock is the town's water and sewer rate consultant and has been working with Lexington for the past 5-6 years. He works ) with approximately 300 communities in various states and around the world,although most of his work is in the Northeast,and most of that work is in Massachusetts.He works with several MWRA communities.*** ) We discussed how best to make use of Chris,as his time is not inexpensive. There was some agreement that Chns would best serve the committee at first by providing background and historical information.*** ) Kathryn Benjamin was intrigued by an article in the Minuteman about the Water and Sewer Enterprise Funds'cash reserve. She also worked with a group that pushed to clean up Boston Harbor and noted that she is now on the other side of the table as a ratepayer.*** John Bartenstein explained that he became interested in the way our water and sewer rates are set when questions were raised on the TMMA email list a year ago. John attended the water and sewer rate hearings in the summer and fall of 2003,had extensive discussions with the DPW and Chris Woodcock about rate-making issues,and made a presentation to the Board of Selectmen about some of these issues. John noted that there is no written policy on how to manage the reserve funds in the Water and Sewer Enterprise ) Funds.****** Loren Wood is interested in town finances in general and was intrigued to find out more about the Water and Sewer Funds.*** ) Lorraine Fournier's interest was sparked by an error in one of her recent water bills and by how high some of those bills were. She investigated water and sewer rate structures in several nearby towns and has questions about the fairness of Lexington's rate structure. Lorraine requested that the Committee study the history of the Water and Sewer Enterprise funds. Jeanne Krieger noted that the Committee should be able to do this during meeting#4(that meeting's goal is to review the legal construction of the enterprise statutes with Palmer and Dodge).*** Larry Belvin wants to answer a question his neighbor asked about water and sewer bills. This neighbor has 2 adults and 6 children[8 ) people]in her house,while Larry has 2 adults and 2 children[4 people]in his house. The neighbor uses twice as much water as Larry ) does,which is the same usage on a per-person basis.However,instead of paying twice as much as Larry does,this neighbor pays 2.5 times as much. She doesn't think this is fair,and neither does Larry.*** Paul Chernick has been working on rate base and depreciation for other types of utilities,such as gas,and he 'reluctantly"volunteered to join the committee.*** � ) Dennis Meehan is in his fourth week in Lexington as the new Water and Sewer Superintendent. He said that his department has already dealt with 24 freeze-ups in the past two weeks. Dennis previously worked in Lowell,where they get their water from the Merrimack River and treat it. Lowell does not use Water and Sewer Enterpnse Funds.*** Bill Hadley was the Water and Sewer Superintendent for Lexington for several years and noted that Lexington once had twelve blocks ) in its block structure(that number is now four). Bill noted that there is a discount available on water and sewer bills for those in need. Bill can provide historical information based on his years in the Water and Sewer Department. Bill is a member of the MWRA ' Advisory Board and MWRA Advisory Board's Executive Committee.*** Jeanne Krieger feels that the current incrementing block structure makes sense and that the town needs a reserve fund for water and sewer.Jeanne loves standard costing something she does for a living. Standard costing is a method for determining a unit cost for a product or service when there is a fixed component to that cost as well as a variable component. Ms.Krieger mentioned that the Town ) had recently received a warning from Moody's about its Aaa bond rating,and that she understood from the Town Manager that one of the reasons for the warning was concern about the Town's drawing on its water and sewer reserves to subsidize the water and sewer j rates,*** Bill Hadley noted that the Water and Sewer Enterprise Funds were created in 1988(Rick White's second year as Town Manager).*** ) J 1*** ) Our goal as a committee is to complete our report and recommendations in time for the June rate-setting meeting of the Board of l Selectmen. A few people noted that if we propose radical changes,such as scrapping the Enterprise Fund structure,those changes would not be able to be fully implemented until the fiscal 2006 budget.*** 1 Chris will think about the resources that are available on-line for those of us who want to learn more about water and sewer rates and will e-mail us links to these resources. He noted that the MWRA publishes an annual survey of water and sewer rates. Either Chris or Bill will bring this survey to the next meeting.*** We agreed that meeting#2 will cover the question:how big is the pie? That is,what are the various cost components for providing ) water and sewer services to the town residents and businesses. Chris will give us a presentation with background information, including some of the highlights of the most recent rate-setting meeting last June/July.*** 1 We also agreed that meeting#3 will cover the question:bow to divide the pie? Again,Chris will give us a presentation with background information.*** ) Someone noted that there are lots of costs related to providing water and sewer services. For example,the town's MIS department sends out the water and sewer bills,so the Enterprise Funds have to pay for part of the MIS budget. The Town Manager's office also I does some water and sewer related work and gets some money from the Enterprise Funds.*** Note that we do not yet have a guest speaker from the MWRA scheduled to talk to us at our fifth meeting.It is not clear whose responsibility it is to arrange for an MWRA representative to come talk to us.*** Someone asked whether there was an income statement(or equivalent)and a balance sheet available for the Water and Sewer Enterprise Funds. The expense side of such an income statement could be created using the pie charts that Bill Hadley distributed,but there does not appear to be any information readily available about the income side of such an income statement.*** Bill Hadley will bring a copy of the big(250-page)water and sewer manual that he and Chris mentioned to the next meeting.*** 1 Respectfully submitted,Larry Belvin*** WSRSC Meeting#2 Thursday February 12,2004 1 Summary 1. Welcomed new member Rick Eurich,liaison to the Appropriation Committee. ) 2. Chris Woodcock led the Committee through the various components that make up the water service expenses and noted that the types of sewer service expenses are similar. ) 3. Bill Hadley distributed the MWRA Water&Sewer rate survey,and Chris and David Laredo cautioned us about comparing rates in other communities to our rates because of the vastly different ways that communities allocate water and sewer costs. l ) 4. Next meeting is Tuesday,February 24,at 8:00am in Town Hall room 0-15. Details : ) Members/liaisons present: Rick Eurich—liaison to the Appropriation Committee,John Bartenstein,Larry Belvin,Kathryn Benjamin,Paul Chemick,Lorraine Fournier,David Laredo,Jim Osten,Loren Wood,Staff/consultant present: Bill Hadley DPW 1 Director,Dennis Meehan Water and Sewer Superintendent,Chris Woodcock Water and Sewer rate consultant*** Before the meeting got started,Dennis Meehan gave some details about our water service. He said that 13%of the water that we get from the MWRA is"unaccounted for' That is,it leaks out of the system and no one is charged directly for this water. He said that the normal leakage percentage is around 15%. Additionally,it is normal to have about one leak for every mile of pipe,while I Lexington has one leak for every seven miles of pipe.*** John Bartenstein and Lorraine Fournier offered corrections to the minutes from the previous meeting.*** ) The people who were not at the first meeting introduced themselves, Rick Eurich is the liaison to the Appropriation Committee. Jim Osten is a professional economist. And David Laredo is a retired civil engineer who worked on water and sewer rates for several years. David knows Chris from previous professional experience.*** Chris then began the discussion of"how big is the pie"? That is,how much money is required to meet the expenses of running the town's water service? Or put another way,what are the expenses and other charges that should be included to determine the cost of the town's water service?*** ) Chris distributed a 4-page handout that showed the projected water and sewer expenses for fiscal years 2003 and 2004. The tables are reproduced below:*** Water Expenses I item Fiscal 2003 Fiscal 2004 %change l ) Wages 419,180 432,001 3,1% Other compensation 7,600 7400 -2.6% ) Overtime 108,470 111,724 3.0% Subtotal Labor 535,250 551,125 I 3.0% Utilities 3,200 3,244 1.4% ) Supplies&Materials 94,743 94,793 0.1% Contractual Services 85,021 85,021 0.0% Equipment 94,341 91,341 3.2% Depreciation 463,500 450,000 -2.9% Indirect Costs 987,641 837,128 -15.2% PILOT 500,000 500,000 0.0% Subtotal Operating 2,228,446 2,061,527 -7.5% MWRA—Water Assessment I 2,870,102 3,205,374 11.7% Capital from Revenues I 393,000 435,000 10.7% I Existing Debt—P&I I 97,532 241,421 148% New Debt 0 0 0.0% 9 I Reserve Deposits I 314,216 0 -100% ) ) 2*** ) /ao Subtotal Capital 804,748 676,421 -15.9% I ) Grand Total Water 6,438,546 6,494,447 0.9% _ I Other Revenues Penalties&Interest 14,755 14,755 0.0% New Meter Charge 27,000 27,000 0.0% Misc.Department Revenue 11,100 11,100 0.0% Bedford Fixed 42,632 42,632 0.0% Subtotal Other 95.487 95,487 0.0% -) Revenue Required from Rates 6,343,059 6,398,960 0.9% ) Chris noted that in general,there are not any big changes in these various line-item expenses,with the notable exception of the town's ) MWRA assessment. The non-MWRA charges are what the town pays to operate the water service-these costs are somewhat under the town's control. But the MWRA assessment is completely out of the town's control-it is a number that is dictated to the town by ) the MWRA.*** Question-What were the numbers that were used to develop the fiscal year 2003 rates? Answer-Chris will get us that information by the next meeting.*** Supplies&Materials such things as pipes,meters,valves,gravel,fittings,etc.*** Contract Services-money that the town pays to independent contractors for such things as cross-connects and to engineers who assist on a water main break(for example).*** ) Equipment-vehicles,hydrants,meters,etc.*** Depreciation a non-cash expense or bookkeeping number that attempts to represent the reduction in value of the town's water system -H - during the past year, Note that depreciation is based on historical cost,not replacement cost,of the town's water service assets(pipes, valves,pumping stations,etc.)*** ) Question-What is the estimated value of the town's water assets? How is this estimated value determined?*** Answer-This value is determined by the Town Manager's financial people and is given to Bill Hadley. Bill will get this value for us.*** The depreciation item is determined by devaluing all of the water service assets according to their expected lives. For example,water ) pipes have a life of 75-100 years,while pumps have an expected life of 20-25 years. Water service vehicles have a life expectancy of ) about ten years. Storage tanks last 35-50 years. Therefore the water pipes are depreciated at 1.0-1.3%per year,while pumps are depreciated at 4-5%per year,and vehicles are depreciated at 10%per year.*** Depreciation is money that is reserved for replacing any system components that have failed or are near failure. This number is used ) as a surrogate for how much investment is put back into the water service system.*** Question-Are we appropriating money from a separate depreciation 'fund"? What if in a particular year we do not use all of the money set aside for depreciation?*** Answer-Depreciation is not carried in a separate fund-it is part of the general Water Enterprise account. Any money not expended in one year is carried over to the next year.*** Canital from Revenues-another line item that is used to upgrade the water system.*** Question-How are 'depreciation' and 'capital from revenues' different? They both seem to be used to upgrade the water system infrastructure.*** Answer-In a rough sense, 'depreciation' money is used for unplanned events such as unexpected repairs to the system-such as when a water main breaks. 'Capital from Revenues' money is used for planned upgrades such as relining water pipes. It is important to note that depreciation is based on oripinal costs,not replacement costs. For long-lived assets such as water pipes(75-100 years), - the depreciation taken is not even close to the replacement cost(because of inflation).*** Indirect Costs-this large item(second only in size to the MWRA assessment)represents charges from the general town government for services performed on behalf of the water system. Some examples are engineering services,DPW services[e.g. the cost of repairing a road after it has been ripped up to fix a water main break],billing/MIS,Town Manager services,purchasing,human ) resources/personnel,etc. The cost for providing these services comes out of the town's general fund-this line item is the method for the Water Enterprise fund to repay the costs of these services to the general fund.*** Bill Hadley has a list of all of the components of this indirect costs item. He will get this list for the next meeting.*** Note that there was some reallocation of indirect costs from Water to Sewer for 2004, To get a better picture of the change in indirect costs,the sum of Water and Sewer indirect costs in 2003 was projected to be$1,461,317 while the sum for 2004 is projected to be $1,586,197-an increase of 8.5%.*** Note that the various town departments do not keep track of the time they spend on water system services on an hour-by-hour basis. Instead,the town has a method or formula for computing these indirect costs based on an estimate of the percentage of time spent by ) the various town departments on water system services.*** Question-How are wages and benefits accounted for?*** ) Answer-For employees who work 100%of the time for the Water and/or Sewer Enterprise funds,the 'wages' line item in the table above represents both wages and benefits. There are 15 water and sewer employees-10 for water,4 for sewer,and the Water and ) Sewer Superintendent's[Dennis Meehan]salary is split evenly between Water and Sewer. Bill noted that there is no cross-charging between the Water and Sewer Enterprise funds-if a water employee works on a sewer issue,or vice versa,his or her time is still ) charged to the Enterprise fund for which he or she works.*** ) Open question-it was not clear to me whether the indirect costs item includes benefits for the other town employees who work on water issues,or whether this item accounts only for wages. I think Bill said that this item accounts only for wages. We need clarification on this question.*** J Payments In Lieu Of Taxes(PILOTI-this potentially controversial item is supposed to represent what a privately-owned water utility ) would pay to the town in property taxes. As Chris noted,the number($500,000)used here is pulled out of thin air. Some might claim that using a PILOT is a way to circumvent Proposition 2'h. As Chris noted,this is a philosophical question that we may discuss at a 3*** ) tatU later meeting. The PILOT is an amount that the Water Enterprise fund pays to the town's general fund. The town started using a ) PILOT for the Water Enterprise fund around 1993;the Sewer Enterprise fund PILOT($250,000)is newer—perhaps 1998 or 1999.*** Question—How common is the use of enterprise funds?*** ) Answer—Of the 351 municipalities in Massachusetts,approximately 200 have some sort of water and/or sewer enterprise fund. Most of these funds were set up after 1980-81—that is,post Proposition 2 IA*** The purpose of using Enterprise funds is that their use is thought to make it clearer to the Town Meeting what the true cost is to run a water or sewer system.*** MWRA Assessment—this large item(just over 50%of the total revenue required for water expenses for 2004)is a cost that is dictated to us and that we have no control over. Note that there is a Community Advisory Board to the MWRA that is allowed to comment on the MWRA's proposed assessments. Bill Hadley is a member of the Executive Committee of this advisory board. This charge generally increases from year to year.*** ) Side note—the MWRA is constructing a cover for the Norumbega Reservoir to protect that reservoir's water from bird droppings and other pollutants.*** Existine Debt—P&I—[P&I stands for principal and interest]—this item fluctuates as the town issues bonds to cover water and sewer enterprise debt. There was a new bond issue recently,so this number is rising significantly for 2004 compared with 2003.*** Chris then gave us a brief summary of the various ways in which a town can fund capital improvements to its water and/or sewer system. There are three primary sources for new capital: 1) rates 2) reserves 3) bonds*** ) Lexington has a lot of flexibility for paying for capital improvements because of the reserve funds in the Water and Sewer Enterprise funds. What is good about having reserve funds is that a town can choose when it wants to enter the bond market. Currently,interest rates are low,so issuing bonds to pay for capital improvements is a good idea. But in the early 1980s,when interest rates were above 10%,issuing bonds would have been a very poor choice. If a town does not have reserves(Lexington's reserves were very low in the mid-1990s),and the town has to fund some capital improvements,then them are only two choices—rates or bonds. If a town without reserves has to fund capital improvements in a year that the MWRA assessment rises significantly,there would probably be extreme reluctance to raise rates by 20%or more,so a bond would be the only option. Reserves allow a town to stay out of the bond market when interest rates are high—the town can instead draw down on its reserves in order to fund capital projects.*** Chris pointed out that 4-5 years ago,he had a long discussion with the current Board of Selectmen(Jeanne Krieger is the only holdover from that time)about the importance of maintaining reserves in the Water and Sewer Enterprise funds. Chris's opinion is - ) that it is a good idea to maintain 25%of the operating budget in reserves for unforeseen costs,such as a large water main break,a large increase in our MWRA assessment,etc.—in an effort to prevent large rate increases and/or unfavorable debt issuances. He noted that halfway through the year two years ago,the MWRA sprang an unexpected assessment hike on its member communities. Other towns may have struggled to deal with this hike,while Lexington was able to handle it by drawing on our reserves.*** Water and Sewer reserve funds are certified this year. John Bartenstein reported that the latest certified figures for 2003 were$2.2 million for Sewer and$1.9 million for Water. Note that$2.2 million is 28%of the projected 2004 Sewer expenditures of$7.75 t I million,and$1.9 million is 30%of the projected 2004 Water expenditures. Thus Lexington's Water and Sewer reserves are both currently above Chris's 25%recommendation.*** ) In an effort to build up the town's water and sewer reserves,water and sewer rates for the past 4 years have been higher than they would have been if we had sufficient reserves 4 years ago.*** Note that there were no reserve deposits projected for 2004 for either Water or Sewer since the Board of Selectmen judged that our current reserves are sufficient. The Board is also waiting to hear the recommendation of this Committee about our reserves before ) they vote to add to those reserves.*** We then had a brief discussion about municipal finance. John Bartenstein noted that the town periodically collects its short-term interest-only bond offerings,called Bond Anticipation Notes(BANs),into multi-purpose bonds,and then offers those bonds to investors. If a bond issue is$20 million,and water borrowing is$2 million of the$20 million,then 10%of the principal and interest for the$20 million bonds would be attributed to the Water Enterprise fund("Existing Debt—P&p').*** Question—Do the Enterprise funds earn interest on unexpended money in the Enterprise fund accounts?*** Answer—Yes—see the"Penalties and Interest' line item under 'Other Revenues' in the table above.*** Bedford Fixed—Lexington supplies water to Hanscom Air Force Base and to the Veterans'Administration hospital in Bedford. In addition to paying 1.01%of our MWRA assessment water rates for metered usage,Bedford also pays us a fixed charge of$42,632 in order to cover our costs of transporting this water to them.*** That ended our discussion of Water expenses. Chris noted that the same line items apply to Sewer.*** Rick Enrich asked a question that I did not understand the answer to. There appears to be double-counting of the$475,000 'Other' entry on the Sewer expenses table(see below)that is attributable to rate relief voted for by the Board of Selectmen. As Chris noted, there is no reserve deposit for 2004 for Sewer(or Water)and thus a reduction of$462,348 from 2003(see below). I am confused about whether there was a further reduction of$475,000 as noted below,which implies that the reserves were drawn down by that amount. We need clarification on this issue.*** John Bartenstein noted that all of the line items we have been looking at are prospective,rather than actual numbers.*** ) Question—How often and when is the effort made to reconcile these prospective estimates with some actual numbers?*** Answer—We need an answer to this question.*** Chris noted that the MWRA assessment is an estimate of 2004 usage,and it is based on actual calendar year 2002 usage. It's also based on peak flows and population equivalents,whatever those are—we did not have time to discuss the details of the components of the MWRA assessments. Bill Hadley noted that the Sewer charge has several components and is based on a 3-year running average of usage. The Water charge is based on the prior year's consumption.*** Bill noted that he is a member of the MWRA advisory board,and that the final MWRA assessment is not what the MWRA originally requests. But the advisory board vote comes after Town Meeting is over,*** ) Next meeting is Tuesday,February 24" in Town Hall room G-15. Sewer Expenses I item I Fiscal 2003 I Fiscal 2004 I %change 4*** Baa ) ) Wages 205,648 211,172 2.7% ) Other compensation 3,750 3,500 -6.7% Overtime 38,182 39,327 3.0% Subtotal Labor 247,580 253,999 2.6% ) Utilities 90,750 90,750 0.0% " ) Supplies&Materials 53,528 53,528 0.0% \ Contractual Services 40,000 40,038 0.1% i Equipment 5,000 5,000 0,0% 1 Depreciation 500,000 510,000 2.0% Indirect Costs 473,676 749,069 58.1% ) PILOT 250,000 250,000 0.0% Subtotal Operating I 1,412,954 1,698,385 20.2% MWRA-Water Assessment 4,828,736 4,900,000 1.5% ) Capital from Revenues 160,000 225,000 40.6% ) Existing Debt-P&I 1,164,035 1,237,517 6.3% New Debt 0 0 0.0% ) Reserve Deposits 462,348 0 -100% Subtotal Capital 1,786,383 1.462.517 -18.1% Grand Total Sewer 8.275.653 8,314,901 0.5% - Other Revenues ) Penalties&Interest 29,273 29,273 0.0% Misc.Department Revenue 9,827 9,827 0.0% ) Sewer Rate Relief 49,000 49,000 0.0% Other(more rate relief) 0 475,000 n/a ) Subtotal Other 88,100 563,100 539% ) Revenue Required from Rates 8,187,553 7.751.801 5.3% ) Respectfully submitted,Larry Belvin*** WSRSC Meeting#3 Thursday February 24,2004*** ) Summary I. OLD ACTION ITEMS a. Chris Woodcock said he felt the materials(blue book,etc)he handed out were the most useful resources available. ) b. Balance sheets have been provided(see details below) c. Assets are included in Balance Sheet handouts(see details below) ) d. Indirect costs are included in handouts(see details below) e. Do indirect costs include benefits? [I'm not sure this was answered-Loren] ) f. The 'double counting' of$475K question was explained satisfactorily g. Moody's letter[I think it was handed out,although I can't find a copy-Loren) - 2. This meeting focused on rate setting issues,billing issues,and the bond rating. 3. NEW ACTION ITEMS. Paul Chemick requested information on depreciation. ) 4. Next meeting is Wednesday,March 10,at 8:00 a.m.in Town Hall room G-15. 5. The topic for next meeting is the recent rate setting by the Selectmen. Bill Hadley will present a review of that process.*** ) Present were: Members: John Bartenstein member,Kathryn Benjamin member,Paul Chemick member,Lorraine Foamier member,David Laredo member,Loren Wood-chairman,Liaisons: Rick Enrich-liaison to the Appropriation Committee,Deborah ) Brown Appropriation Committee,Staff/consultants: Dennis Meehan Water and Sewer Superintendent,Chris Woodcock Water and Sewer rate consultant,Mike DiPietro-Assistant Finance Director,Citizens: Bob Earsy*** ) Details The Minutes of the February 12,2004 meeting were approved [There may have been an correction/clarification to be provided].*** ) Mike DiPietro handed out a FY03 Balance Sheet.*** John Bartenstein handed out FY02 balance Sheet and FY03 Indirect Costs.*** ) John Bartenstein handed out a Combining Balance Sheet for the Water and Sewer Enterprise Funds dated June 30,2002,which he received by email from Mike DiPietro. The accompanying email text was:*** ` ) In order to come up with the available reserve#the DOR goes through a calculation starting with the Retained Earnings#. \ Then subtracts the receivable amounts,due from other(MWPAT),construction in process and property equip. Then adds back contributed capital and bonds payable. The net result is 2.6 sewer,900,000 water.*** ) Paul Chemick requested that Depreciation be made available.*** John Bartenstein handed out a newspaper article about Arlington: 'Water/sewer skyrockets' *** ) MWRA Assessments were handed out.*** Chris Woodcock then led a discussion. Six or 7 years ago Lexington had about 8 to 10 steps in the WS rates. There was no real basis or policy behind them. At some point in time,he recommended a reduction in the number,and to reflect different user classes. Such as Residential(small medium large)Commercial,Industrial,etc. *** j The current steps are progressive to encourage conservation. MWRA encouraged this. Such blocks could result in more State Grants. The MWRA started in the mid 80's. MWRA was using more than the 'safe yield' from Quabbin. 315 million gal per day is a safe ) Ui 5*** ) fa3 i yield. MWRA had ideas of tapping Merrimack,but locals objected. There exists legislation requiring leak detection,metering,etc. MWRA now uses less than the safe yield. They encourage increasing block rates. But not all towns use them. Declining block rates are illegal. MGL Ch.40 s.39L and CH.165,s.2B. John B.will provide these by email.[And has done so.] Dave Laredo is not impressed with increasing blocks. Paul Chemick asked how the steepness in Lexington rates was decided. Chris answered that increasing blocks have low leverage on usage because water is fairly cheap. Lorraine Fournier replied that her water bill has risen from very low amounts to$750 twice a year. Paul C.noted that some residents get a second meter for irrigation,and do not have to pay the sewer charge for that water. Chris explained that there are 4 blocks. Lowest is 'lifeline' Highest is quite high to 'get people's attention' Irrigation water is most expensive. This is because the size of pipes required is based on max load. And irrigation increment determines the max load. Second meter(irrigation)is charged at highest block. John B.noted that the low rate is subsidized usage,and the high rate is penalized usage. The town has decided against a 'base' charge. Chris noted that ideally the fee would be a base charge plus a rate that is a function of the people in the household. Los Angeles has very complex rates that take into account zip code,month,persons in household,etc,but not time of day. But,this is because water is precious there. Our region has better water supplies. Lexington bills twice a year. Data is collected twice a year. This limits fine tuning. Chris recommends monthly billing with rates designed to accomplish goals like conservation,equity,catching irrigation usage. Dave Laredo noted that the benefits of monthly must be balanced against the administrative costs; suggested possible quarterly billing. Chris noted metering systems are improving. Radio reading is available. Arlington does this,but paid one million for the system. Lorraine F commented about leakage,and Chris said our pipes are(some)100 years old. Dennis Meehan said leak detection must be done every 2 years. Lexington brings in experts for 6 to 7 weeks,using special technology. It costs$30,000 plus the costs for our staff to support the effort. Dave Laredo noted that the 13% 'non-revenue' water has many masons,including leaks,water supplied that is not metered (example is hydrants),etc.****** 1 "There was a brief discussion about Moody's recent bond rating and the water and sewer reserves. The Moody's letter that Bill Hadley distributed earlier does not address water and sewer enterprise fund reserves;Michael DiPietro agreed that Moody's principal concerns related to developments in the general fund. Chris Woodcock said that he has recommended operating reserves of approximately 20-25%of the budget. He has recommended no specific number for capital reserves but believes that at our asset levels there should be$500,000 to$1,000,000.'****** It was agreed that the agenda for the next meeting would be for Bill Hadley to lead the committee through the process by which the Selectmen set the FY04 water and sewer rates in September 2003. *** ) Next meeting is Wednesday,March 10. in Town Hall room G-15.*** Respectfully submitted,Loren Wood for Larry Belvin*** WSRSC Meeting 04,Wednesday March 10,2004 1 ) Summary 1. Bill Hadley was unavailable to attend because of a family matter,so he asked Michael Young,the town's budget officer,to stand in for him. 2. As this meeting was scheduled to be a review/summary of Bill Hadley's presentation to the Board of Selectmen at the water [ and sewer rate setting hearings last summer/fall,we instead shifted gears and reviewed some of the larger indirect costs for the water and sewer enterprise funds. 3. Next meeting is Tuesday March 23 at 8:00am.*** Details Members/liaisons present: Jeanne Krieger—(liaison to the BoS),John Bartenstein,Larry Belvin,Kathryn Benjamin,Paul Chemick, Lorraine Fournier,Jim Osten,Loren Wood,Citizens present: Bob Earsy,Staff/consultant present: Dennis Meehan Water and Sewer Superintendent,Michael Young—Budget Officer*** Because Bill Hadley was not available to attend this meeting,John suggested that we postpone our review and discussion of Bill's presentation to the Board of Selectmen at last year's water and sewer rate setting hearings until our next meeting on March 23itl In the absence of a contingency plan for this meeting,we 'winged' it.*** Lorraine asked how many blue books[American Water Works Association Principles of Water Rates—provided by Bill Hadley/ Chris Woodcock]them were. Larry said he thought there were about three of them,and he gave the one he had to Lorraine.*** ) We decided to review some of the specifics of the indirect costs listed on a spreadsheet that was handed out at the meeting. Loren asked whether the indirect costs listed on the water and sewer enterprise fund operating budget summaries included benefits. John said that the direct costs certainly include benefits,and that it was his understanding that the indirect costs also included benefits. ) Michael Young said that benefits are in budget line item 2130 and are a 'shared' fund. Thus the indirects include salary only,while the directs include approximately$5,500 per employee of benefits. Them are 11 full-time equivalent(I.1 h)employees in the water ) division,4 FTEs in sewer,and 4 FTEs in recreation. Those three enterprise funds pay money in to line item 2130—an indirect transfer to account for those employees'benefits. Them was a total of$104,500 in health and dental benefits for water and sewer and recreation employees in fiscal year 2003.*** Workers'compensation and Medicare are not viewed as benefits because they are not earmarked specifically for an employee.*** [Fiscal year 2005—about$494,000 in general insurance costs.]*** Line item 2130—10%of that item is allocated for water and sewer general insurance.*** j Q $472,000—is that for all town employees—including school employees? A—DON'T HAVE THE ANSWER IN MY NOTES*** ) There is an allocation for'h the time of a human resources specialist,because the HR specialist spends half of her time working on insurance and liability issues.*** Q—Why does the Recreation enterprise fund not pay in to line item 2130 expenses? A—This decision was made about 5 years ago when the Recreation enterprise fund was not stable. The Recreation contribution would be only a small part of line item 2130 anyway. The Recreation enterprise fund is still not healthy enough to be able to pay its fair share of 2130 expenses.*** Q—Can we get an electronic copy of the spreadsheet that everyone is looking at in this meeting? [A—CAN'T REMEMBER WHO ANSWERED—I THINK WE WERE SENT THIS SHORTLY AFTER THE MEETING.]*** Lorraine noted that Paul has requested the depreciation schedules for the water and sewer enterprise funds'assets.*** 6*** lay The depreciation and capital expenditure items on the operating budgets are required to be compliant with the Government Accounting Standards Board(GASB)regulations. GASB says that them must be a depreciation expense in all general funds and all enterprise funds. The purpose is to increase transparency in accounting.*** We had a brief discussion about the minutes from meeting#3. We agreed that these minutes will be changed to indicate that someone said that the MWRA encouraged a progressive rate structure—rather than the minutes stating this as a fact. [We won't know until we meet with an MWRA representative,and maybe not even then,whether the above opinion about progressive rates is true.]*** ) John Bartenstein and Loren Wood agreed to compare notes regarding their recollections of what took place during meeting#3,and we _ will discuss these revised minutes at a subsequent meeting.*** ) John said that he has the balance sheet numbers that are required to derive the reserve fund numbers. John asked whether the water and sewer enterprise funds pay for the benefits of other town employees(such as MIS)who do work on behalf of the enterprise funds. Michael Young said that that is correct. John's follow-up question was whether the MIS estimate for indirect costs can be construed to include benefits. Michael said that yes,perhaps that is true. He noted that indirect percentages are rather imprecise,so no one ) really knows how accurately they reflect reality. Michael noted that percentages are also used to allocate benefits throughout the town's various departments.*** ) Q—What should the committee do over the next several meetings? John suggested that we meet with the MWRA representative before we meet with the Palmer&Dodge representative because most of ) our questions can best be addressed by someone from the MWRA. Someone asked whether Palmer&Dodge is the best candidate to ) give us a history of the enterprise funds. The very next meeting will be to discuss Bill Hadley's presentation as noted earlier. Loren volunteered to try to find someone from the MWRA who would be willing to meet with us.*** ) [Side note—Michael Young said that the town is very close to being able to put the entire blue budget book online,and that there will be a budget section on the town's web site relatively soon.]*** Jim Osten asked—when were the indirect percentages determined? And how were they determined? Currently they are 35%of the ) comptroller,20%of the town manager,and 3%of the Board of Selectmen. Michael said that these percentages have been arrived at over a number of years. But are the percentages fair and reasonable? Loren pointed out that although only 15 of the employees in DPW are water and sewer employees(I1 water and 4 sewer),and there are 88 total employees in DPW fully 50%of the DPW ) administrative costs are paid by the water and sewer enterprise funds.*** Q—On what basis was it determined that 50%of Bill Hadley's salary should be paid by the water and sewer enterprise funds?*** ) Loren asked what items in budget line item 3110 we want explanations for,regarding the indirect percentages. Some examples—80% of the town engineer's cost is paid by the water and sewer enterprise funds,along with 40%of road machinery.*** Michael had a few comments in response to these questions. For one,50%represents the approximate amount of time spent by the DPW office manager on water and sewer issues. Loren pointed out that this percentage was 45%in 2003 and is now 50%in 2004. Is there an explanation for the increase? Michael said that as pressure has increased on the general fund,there is and will continue to be increased pressure to get more funding from the enterprise funds—the 'path of least resistance' Larry pointed out that a cynic may ) view this as an end-around the limits of Proposition 2 IA.*** John asked for the indirect costs for the past 5 budget years. How far back do the budget books go? Michael thought that the Town ) Manager's office had these books back to around 1996 or 1997 Cary Library may be an option. The town reports go back to 1980 or so,but the town reports do not have the details on the indirect costs that the big budget books have.*** Budget line item 3110—50%of wages and expenses—but not benefits,not Town Hall charges,etc. The percentage minors the number of service inquiries and responses for water and sewer issues as a percentage of all DPW inquiries and responses.*** Jim asked whether there was some quantitative basis for these indirect percentages,such as a ratio of the number of employees,the size of the budget,the number of inquiries,etc. Loren pointed out that these indirect percentages do not meet the goal of transparency ) in accounting that the town strives for. Jeanne Krieger added that it is sometimes not worth expending the effort it takes to gather all of this data.*** ) Jim asked whether the MWRA pays a PILOT to towns where the MWRA has operations(such as Weston,site of the Nommbega Reservoir). We agreed that that was a question that we should add to our list of questions to ask the MWRA when an MWRA - representative comes to visit our committee.*** The next meeting is Tuesday March 23 at 8:00am. Other future meetings are tentatively planned for:*** ) Respectfully submitted,Larry Belvin*** WSRSC Meeting#5 Tuesday March 23,2004*** ) Summary 1. Bill Hadley provided a summary of the presentation that he made to the Board of Selectmen during the water rate hearings last ) year. 2. John Bartenstein provided a summary of the presentation that he made to the Board of Selectmen during the second water rate hearing last year. ) 3. Next meeting is Tuesday April 6 at 8:OOam.*** Details Members/liaisons present: Jeanne Krieger—(liaison to the BoS),John Bartenstein,Larry Belvin,Kathryn Benjamin,Paul Chemick, Rick Eurich—liaison to the Appropriation Committee,Lorraine Foumier,David Laredo,Jim Osten,Loren Wood,Citizens present: Bob Earsy,Staff/consultant present: Bill Hadley DPW Director,Dennis Meehan Water and Sewer Superintendent,Chris Woodcock Water and Sewer rate consultant*** One of the purposes of this committee meeting was to look at the details of last year's water and sewer rate hearings. At the first rate hearing in July(2003),the recommended water and sewer rate increase was 14%. John Bartenstein asked several questions about how the rate increase was determined. The Selectmen opted to continue the rate hearing until September. John later met with Bill Hadley and Chris Woodcock to get answers to his questions. At the second rate hearing in September(September 8,2003),the recommended ) water and sewer rate increase was lowered to 9%. The Selectmen inquired about drawing on the Sewer Enterprise Fund reserves in order to further lower the increase to 5%. Rick White requested a third rate hearing in order to evaluate different options for how to draw on the reserves. At that third meeting(late September,2003),the Board of Selectmen voted 3-2 to approve a 5%water and sewer rate increase.*** ) 7*** ) a On a separate note,there are approximately 1,600 irrigation(i.e. water-only)meters in Lexington. Irrigation usage last year was approximately 190,000 hcf,or 10%of the town's total water usage. Commercial and industrial usage was approximately 152,000 hcf —somewhat smaller than the inigation usage.*** And on a different separate note,them was a brief discussion about the various ways to fund water and sewer capital projects. Someone noted that it is legal to move water and sewer Enterprise Fund debt from the Enterprise Funds onto a debt exclusion (property taxes). The benefit of such a move is that the debt service from the Enterprise Funds is federally tax-deductible. An analysis of this strategy show that the benefits to the taxpayers accrue disproportionably to larger water and sewer users compared with smaller users. Only Winchester and Arlington,among our nearby MWRA neighbors,have funded their water and sewer capital projects via debt exclusions.*** Bill noted that the MWRA Advisory Board,of which he is a member,recently recommended a 5%increase in the(average) assessments to the member communities. Bill also noted that the governor's budget proposal for FY2005(as of 03/23/04)eliminated sewer rate relief.*** 1 We revisited the question about the$475,000 sewer reserve draw-down number and noted that this sum does not include the$260,000 mid-year rate increase assessed last year by the MWRA. *** A side note about municipal debt—unlike your mortgage,where,at least with a fixed-rate mortgage,your monthly payment remains the same from month to month(because as your interest payment drops,your principal payment rises),municipal debt is different. For a particular bond issue,the payment goes down each year,because the principal payment stays the same,while the interest payment decreases.*** Someone asked about how storm drain capital expenses are paid. Bill said that these expenses are paid out of the Water and Sewer I Enterprise Funds. Storm drains empty into existing brooks and streams,but if the storm sewers overflow,the overflow can run into the sanitary sewer system. That's part of the rationale for paying for storm drain capital expenditures from the enterprise funds.*** After Bill finished talking about last year's rate hearings,John Bartenstein reviewed his presentation at last year s second water and sewer rate hearing(when the proposal was for a 9%rate increase). John noted that the components that make up a rate setting are projected costs and projected consumption. He noted that the 9%rate increase proposal was premised on a projected decrease in consumption of 10% a very conservative projection.*** John commented about the reserves in the water and sewer enterprise funds. Reserves can build in four ways: I) direct deposits to the reserve funds 2) depreciation—if such depreciation is not fully offset by related expenditures I ) 3) if water usage is greater than projected 4) if expenses are less than projected*** I ) John noted that the reserves had been buildingiup over the oast few years as seen in the table below: Year Sewer Reserves Water Reserves 1 2000 $1.5M $0.2M 12001 $2.4M $0.9M 12002 $2.6M $0.8M There are at least two questions about reserves: ) 1) How large should they be? 2) When is it acceptable to draw down on the reserves?*** ) John suggested that the town should have a policy for its water and sewer reserves,and that is one of the reasons that the Board of Selectmen created our committee.*** ) Water and sewer debt service was approximately$1.SM in 2004 and$1.3M in 2003.*** John noted that there is a significant discrepancy between the projected water and sewer cost increases and the suggested rate increase. For a cost increase of 4-5%,the rate increase was suggested to be 14%. For a cost increase of 1%,the rate increase was suggested to be 9%, Why the discrepancy? The explanation is because of the projected decrease in consumption. For example,with a 10% decrease in consumption,the rates have to rise by 11%. So the major driver in the 14%rate increase recommendation was the projected decrease in consumption.*** There were also issues related to the change-over in the billing system. The 10%projected decrease included abatements(presumably for billing errors).*** Has the town been tracking consumption? John and/or Bill noted that the MWRA charges less if a community uses less water,but ) there is a 6-12 month time lag—a community's water assessment for FY2004 is based on its consumption in FY2003/CY2003(not sure which is correct—perhaps Bill or someone else can clarify this).*** ) John reviewed a few examples in his presentation that illuminate the effect of the inclining block rate structure. John's assumption is that water usage is roughly proportional to the number of people in a household. The average household's annual water&sewer usage is 100 hcf at an average cost of$9.24/hcf or$924 per year,and we'll assume that the average household has 4 people in it. For a small family(2 people),the usage is likely to be around 50 hcf at an average cost of$7.80/hcf or$390 per year. For a large family (8 people),the usage is likely to be around 200 hcf at an average cost of about$12/hcf,or$2400 per year.*** The lowest block rate recoups the MWRA assessment costs but not the town's water and sewer operating costs. These questions are the reason that our committee exists.*** Someone asked when the committee will get a chance to make recommendations. Someone else noted that if the committee ) recommends reorganization of the water and sewer service structure,and the recommendations were adopted,they would not take effect until FY2006.*** After John s presentation,Jim Osten had a question about MWRA PILOTs and wondered who might be able to address this question.*** Jim asked Bill whether there were any water and sewer 'surprises' (i.e. large capital projects)looming. Bill said one big issue is ozonation vs.filtration. Currently the MWRA uses ozonation to purify the system's water. There is a possibility that the MWRA may have to change to filtration instead. If so,the MWRA would have to build at least one filtration plant and the construction of that plant would have a significant effect on rate payers.*** Someone asked Bill or Chris about the capacity of the MWRA system. The answer is that the current capacity is approximately 350 million gallons of water per day. The usage is approximately 250 million gallons per day. Back in the 1980s,during a drought,there ) 8*** 1)G ) 1 was concern that the system was running at close to capacity. But because of leak detection and repair and water conservation ) programs in the member communities,the usage dropped significantly.*** Someone else wondered when the committee would have an opportunity to discuss the various policy questions that John raised during his presentation. It is not clear when we will do that.*** The next meeting is Tuesday April 6 at 8:00am. Other future meetings are tentatively planned for:*** Respectfully submitted,Larry Belvin*** WSRSC Meeting 416 Tuesday April 6,2004*** Summary 1. Agreed that the next two meetings would be with Palmer&Dodge and with someone from the MWRA. Because Bill Hadley will not be able to attend the April 27 meeting,the conunittee opted to meet with Palmer&Dodge on April 27 and then with the ) MWRA on May 11. 2. Jeanne Krieger volunteered to try to get someone from Palmer&Dodge to meet with the committee on April 27 3. Bill Hadley volunteered to try to get someone from the MWRA to meet with the committee on May 11. 4. Welcomed Dan Fenn—he has been having computer problems and was not aware of our meeting schedule. ) 5. Developed two sets of questions—one set for Palmer&Dodge,and the other set for the MWRA. 6. Agreed that the agenda for the next meeting is to meet with Palmer&Dodge and then to discuss what should be in the ) committee's report to the Selectmen.*** Details ) Members/liaisons present: Jeanne Krieger—(no longer liaison to the BoS),John Bartenstein,Larry Belvin,Kathryn Benjamin,Paul Chemick,Rick Enrich—liaison to the Appropriation Committee,Dan Fenn,Lorraine Fournier,Loren Wood,Citizens present: Bob Earsy,Staff/consultant present: Bill Hadley DPW Director,Dennis Meehan Water and Sewer Supenntendent,Chris Woodcock Water and Sewer rate consultant*** We started by developing questions to ask a representative of the MWRA(see separate document that lists the questions). During this process,Bill Hadley was able to answer some of the questions that were raised. One such question was whether the MWRA has a — separate budget for capital projects,or whether all of its expenses are reflected in its rates(assessments). Bill Hadley said that the MWRA's whole budget is reflected in its water and sewer rates. Capital projects,such as the recent repairs to a sewer pipe near the bike path,benefit all of the MWRA member communities and are paid for by all of the member communities. Chris Woodcock called ) this 'postage stamp' rates—the rates are the same for every community,regardless of what MWRA capital projects are occurring in one particular community.*** One question that came up that is not specific to either Palmer&Dodge or to the MWRA is how various items were added to the Water and Sewer Enterprise Fund budgets over time.*** Another question is about the Water and Sewer Enterprise debt in Lexington. Bill said that this debt is for a new pumping station that was constructed during the 1990s and for renovation of the town's water towers.*** Bill also provided a handout of MWRA costs and usage from now until 2014.*** Another question was about MWRA monthly reports—can Lexington track its usage from month to month to see how our usage compares with the projections that were used to determine the water and sewer rates. Bill said that our monthly report includes not only Lexington but also Bedford,the Bedford V.A.Hospital,and Hanscom.*** ) Someone noted that before the Enterprise Funds existed,the costs of running the water and sewer services were in the town s operating budget.*** ) In the 1970s,federal regulations required communities to have separate sewer rates—outside of the community's general funds. Later,the regulations included water rates.*** ) After determining that we had enough questions for the MWRA(and that it would probably take 90 minutes,rather than 60,for an MWRA representative to address all of them),we moved on to develop questions for Palmer&Dodge(see separate document that ) lists the questions).*** When the subject of the role of the Enterprise Fund came up,Chris Woodcock mentioned that the Department of Revenue(Division of - Local Services)has a 35-page handbook on Enterprise Funds that addresses such questions as:what to do if there is insufficient money in an Enterprise Fund;what is the impact on the tax rate;does a municipality have to recover all enterprise costs through the ) rates[the answer is no]. Chris noted that this handbook has nothing about reserves policy for an Enterprise Fund. The handbook is accessible via the following link:*** htto://www.dls state.ma.us/PURLMISC/EnterpriseFundManual.ndf*** The handbook does discuss PILOTs and says that the answer to whether PILOTS are allowed in an Enterprise Fund is a definite maybe ) —there is a legal question about the legality of a PILOT in an Enterprise Fund.*** ) After we developed our list of questions for Palmer&Dodge,we had a bit of a philosophical discussion. Rick Eurich wondered what the charge of this committee was. He thought that we were overstepping our bounds by looking at minute details such as what percentage was charged against the Enterprise Funds for a particular town department. His views were not shared by all of the committee members. Paul Chemick wondered whether the process of assigning indirect expense percentages needed to be improved. Should the Board of Selectmen improve this process? How can the budget writers make this process more transparent and plausible? ) Loren noted that the committee's charge is rather broad and that he thought the committee could and should look at issues such as indirect expense charge percentages.*** John Bartenstein wondered whether it was now time for the committee to split up into subgroups to address specific issues*** ) The next meeting is Tuesday April 27 at 8:00am. Other future meetings are tentatively planned for:*** Respectfully submitted,Larry Belvin*** ) WSRSC Meeting#7 Tuesday April 27,2004*** Summary 1. Jay Gonzalez from Palmer&Dodge provided thorough answers to most of our legal-oriented questions.Jay recommended that we talk to David Eisenthal and/or Chris Woodcock for answers to the questions that Jay was not able to provide. 2. Next meeting on May 11°i will be with a representative from the MWRA.*** Details Members/liaisons present: Richard Pagett liaison to the Board of Selectmen,John Bartenstein,Larry Belvin,Kathryn Benjamin, Paul Chemick,Rick Eurich—liaison to the Appropriation Committee,Lorraine Fournier,David Laredo,Loren Wood,Citizens ) 9*** 1a7 , _) present: Jeanne Krieger,Staff/consultant present: Dennis Meehan Water and Sewer Superintendent,Chris Woodcock Water and Sewer rate consultant,Special guests present: Jay Gonzalez—Palmer&Dodge,Norm Cohen*** John Bartenstein began by asking Jay Gonzalez to define the term 'just and equitable standard' as it applies to setting water and sewer rates. Jay asked for the broader context of why this committee was created and what its purpose is and why he was invited to speak with us. Lorraine Foumier and John briefly described how we got here—Lorraine received an incorrect water and sewer bill 18 ) months ago,which led to her asking questions about the water and sewer rates. John attended the water and sewer rate-setting hearings in June and September of 2003 and had questions about the rates themselves and about the policy of setting reserves in the ) Water and Sewer Enterprise funds. The Board of Selectmen then recommended a committee to study the water and sewer rates.*** Jay noted that his specialty is municipal finance and that he also works as bond counsel. For some of the questions that we submitted ) to him,he is the right person to answer them. For others,such as the policy on reserves,he is not the right person. He recommended that we consult David Eisenthal and/or Chris Woodcock for the questions that Jay is not able to answer.*** ) We agreed to proceed through the written questions in order,including John's changes and additions. [Note that these minutes contain the full text of the original questions provided to Jay Gonzalez,as well as John's changes and additions,so that the minutes are a self- contained document.] [Note also that many of the questions and answers are preceded by the questioner's or answerer's initials. Here is the translation table for those initials: JO=Jay Gonzalez;JB=John Bartenstein;LW=Loren Wood;RE=Rick Eurich;CW= Chris Woodcock;RP=Richard Pagett;JK=Jeanne Krieger;DL=David Laredo;LF=Lorraine Fournier;NC=Norm Cohen;PC= Paul Chemick;KB=Kathryn Benjamin;LB=Larry Kelvin.]*** / I. Question#1—Reserves: a) How does the level of reserves in Lexington's Water and Sewer Enterprise Funds affect the town's bond rating? b) Is there a standard for setting and maintaining reserves in municipal Water and Sewer Enterprise Funds? If so, what is the standard? John's comments about this question— 'It strikes me that the two questions that have been posed about reserves are not so much legal questions as financial and accounting questions. Although town counsel may be able to provide some useful background information,I think it would be unrealistic to expect them to provide definitive answers to ) these questions. The first question how the level of reserves in the water and sewer enterprise funds affects the town's bond rating would seem better addressed to the town's bond consultant(David Eisenthal of Unibank?). The second question,relating to standards for setting and maintaining reserves in the water and sewer enterprise funds, might more appropriately be addressed to a municipal finance expert and/or utility ratemaking expert(Chris ) Woodcock?). It might also benefit from some empirical research into the standards and practices of other communities.'*** Jay reiterated John's suggestions by referring us to David Eisenthal and Chris Woodcock for these answers.*** Q How do the enterprise fund reserve levels affect the town's bond rating? JG—We should talk to David Eisenthal and/or directly to Moody's. Water and sewer debts are treated as general obligation(GO) debts rather than as specific obligation or revenue bonds. Moody's presumably looks at the town's entire GO credit when assessing ) the town's financial condition,so the health of the enterprise funds is taken into account in that manner. Jay's guess is that a$500,000 or$1,000,000 change in an enterprise fund's reserve level most likely does not have any impact on the town's bond rating. ) LW—Are the water and sewer bonds more secure[than other town bonds]? JG—He's not sure,but the water and sewer bonds are rolled up into other town obligations and issued as a single entity—that is,an ) investor cannot specifically buy water and sewer bonds issued by the Town of Lexington.*** RE—Does Moody's look at water and sewer reserves when it is evaluating non-water/sewer town bonds? JO—Only if the water and sewer rates were not self-supporting would Moody's look at the water and sewer enterprise operations.*** JB—Are enterprise funds protected from GO foreclosure? JG—[I DIDN'T WRITE FAST ENOUGH TO NOTE JAY'S RESPONSE.]*** CW—Could the town eliminate the enterprise funds completely? 1 JG—MWRA cannot require a town to have water and sewer enterprise funds. [At this point NC noted that he thinks there is relevant federal law regarding this question,but I don't have any more notes about Norm's comment.]*** JG—Noted that communities that have adopted the section of the MGL that provides for the establishment of an enterprise fund shall be given priority for state assistance for certain water and sewer capital projects. It's called State Revolving Fund or SRF financing. [JO also mentioned something here about a Massachusetts Abatement Trust,but!don't have any more notes than that.] There is no statutory requirement for a municipality to establish an enterprise fund. CW noted that some MWRA towns do not have enterprise funds.*** DL—What is the difference between interest rates on AAA vs.AA or A municipal bonds? JO—It depends on the general interest rate environment. Currently,there is very little difference.*** On to question#1 b)—are there standards for setting reserve fund levels?*** JG—We should ask CW about this. There is no legal standard for maintaining reserves. A municipality can intentionally underfund its enterprise funds and then subsidize them from the municipality's general fund. This is a fiscal policy matter that perhaps has an impact on a municipality's credit rating—we should talk to David Eisenthal. JO said that he spoke with a consulting engineer who works at CDM[I assume he means Camp,Dresser,and McKee]who said that communities are all over the board regarding their enterprise fund reserves policies.*** RP—Has the town always budgeted for reserves—why? Answer—as discussed at previous meetings,the town had negligible reserves in both enterprise funds about 6-7 years ago and a conscious effort was begun then to build up these reserves.*** JO—He works for the City of Lynn water and sewer service. Lynn budgets a reserve because there is a political problem with raising water and sewer rates. Lynn tries to implement water and sewer rate increases only every 3-5 years and tries to put money into reserves during the first year or two after an increase in order to lengthen the time before a subsequent rate increase is required.*** RP—Is credit-worthiness affected by drawing on one's reserves? ) JG—The enterprise reserve funds are only one of a number of issues that determine a municipality's creditworthiness.*** 2. Question#2—Legal Basis and Requirements of Enterprise Funds:*** ) 10*** lois ) a) What is the role of a municipal enterprise fund? That is,what are the requirements for how a town operates its enterprise fund(s)? What flexibility does a town have in how it operates its enterprise fund(s)? ) b) Is there a legal requirement for a town(Board of Selectmen)to present the operating budget(s)for its enterprise fund(s)to the Town Meeting separately from the town's operating budget? Note that Lexington does not currently do so-the components of the Water and Sewer Enterprise funds are sprinkled throughout several line items in the town's operating budget.The reason for this question is because of the following passage from ) Chapter 44:Section 53F 1: No later than one hundred and twenty days prior to the ) beginning of each fiscal year,an estimate of the income for the ensuing fiscal year and a proposed line item budget of the enterprise shall be submitted to the mayor,board of selectmen ) c) The answers to a)and b)may be based,at least in part,on chapter 44:section 53F 1/2"Enterprise Funds' in the Massachusetts General Laws cited below:*** ) htto://www.state.ma us/Ieeis/laws/mel/44-53F.5 htm*** MISCELLANEOUS PROVISIONS ) Chapter 44:Section 53F 1/2 Enterprise funds Section 53F1/2.Notwithstanding the provisions of section fifty-three or any other provision of law to the contrary,a city or town ) which accepts the provisions of this section may establish a separate account classified as an "Enterprise Fund' for a utility,health care,recreational or transportation facility,and its operation,as the city or town may designate,hereinafter referred to as the enterprise.Such account shall be maintained by the treasurer,and all receipts,revenues and funds from any source derived from all ) activities of the enterprise shall be deposited in such separate account.The treasurer may invest the funds in such separate account in the manner authorized by sections fifty-five and fifty-five A of chapter forty-four.Any interest earned thereon shall be credited to and become part of such separate account.The books and records of the enterprise shall be maintained in accordance with generally —) - accepted accounting principles and in accordance with the requirements of section thirty-eight ) No later than one hundred and twenty days prior to the beginning of each fiscal year,an estimate of the income for the ensuing fiscal year and a proposed line item budget of the enterprise shall be submitted to the mayor,board of selectmen or other executive authority ) of the city or town by the appropriate local entity responsible for operations of the enterprise.Said board,mayor or other executive authority shall submit its recommendation to the town meeting,town council or city council,as the case may be,which shall act upon the budget in the same manner as all other budgets. The city or town shall include in its tax levy for the fiscal year the amount appropriated for the total expenses of the enterprise and an ) estimate of the income to be derived by the operations of the enterprise.If the estimated income is less than the total appropriation,the difference shall be added to the tax levy and raised by taxation.If the estimated income is more than the total appropriation,the excess shall be appropriated to a separate reserve fund and used for capital expenditures of the enterprise,subject to appropriation,or to reduce user charges if authorized by the appropriate entity responsible for operations of the enterprise.If during a fiscal year the enterprise incurs a loss,such loss shall be included in the succeeding fiscal years budget. If during a fiscal year the enterprise produces a surplus,such surplus shall be kept in such separate reserve fund and used for the purposes provided therefor[sic]in this section. For the purposes of this section,acceptance in a city shall be by vote of the city council and approval of the mayor,in a town,by vote of a special or annual town meeting and in any other municipality by vote of the legislative body. A city or town which has accepted the provisions of this section with respect to a designated enterprise may,in like manner,revoke its ) acceptance. [end of MGL chapter 44,section 53 1 F]*** ) John's comments about these questions: 'The portion of the enterprise fund statute that Larry quoted provides that 'a proposed line item budget of the enterpnse shall be submitted to the board of selectmen. It should be noted that the statute additionally - provides that '[s]aid board shall submit its recommendation to the town meeting which shall act upon the budget in the same manner as all other budgets.*** ) The Massachusetts Department of Revenue[DOR]has addressed the budgeting requirements of G.L.c.44,sec.53F1/2 in its manual on"Enterprise Funds' (June 2002)(the"DOR Manual") ) [See httn://www.dls.state.ma us/PUBL/MISC/EntemriseFundManual.odfl*** The DOR manual notes at p. 10 that a recommendation should he made 'to town meeting for the approval of the enterprise budget. It ) further states that: '[w]hen preparing the budget recommendation,DOR recommends that a community use the wording found in Table 3. The wording is designed to ensure the revenue sources and appropriations are clearly stated in detail.'*** ) It appears that a planned surplus must specifically be appropriated to a separate reserve fund,and that a withdrawal from the reserve fund(at least for capital expenditures)is also subject to appropnahon.*** To flesh out the original question a bit,should Town Meeting should be presented with separate,complete budgets for the water and ) sewer enterprise funds? If so,what level of detail is required? Are approximate percentage allocations among various general categories of expenditures for a prior fiscal year,as are currently contained in the Annual Budget Book[see pp.V11I-41-48] ) sufficient? (The FYO5 Budget Book contains a list of percentage allocations in FY03). To the extent that the rates include a budgeted surplus for the purpose of building reserves,must that surplus be specifically appropriated by Town Meeting? See DOR Manual,pp. ) 8-9. [end of John's comments/additions]*** ) Q-What is the role of the enterprise fund? Should it[they]be presented as[a]completely separate budget[s]? Currently,the water and sewer enterprise fund expenditures are shown in the budget motion at Town Meeting as transfers,per budget line item,for indirect 1 ) costs incurred by the water and sewer enterprise funds.*** JO-He looked at the DOR handbook. The operative legal statute is that the municipality must 'approve[the water and sewer enterprise]budget as the town approves other budgets' And that is indeed how the Town Meeting approves town expenditures. There is no legal requirement for TM to approve specific revenue sources. The method used currently for appropriating water and ) sewer enterprise expenditures is fine-because all of the costs are clearly and specifically identified. The current method is obviously ) ) 11*** ) /a9 ) a Th not the only way to present the enterprise budgets[and is not the method recommended in the DOR handbook],but itis legal to present them in this way.*** LF-The water and sewer enterprise funds are hard to follow[because one has to search through the blue budget book to find all of the expenses] RP-Everything you need is in the blue budget book. LF-It's still hard to follow.*** JO-This committee could make recommendations about how to present the budgets for the water and sewer enterprise funds. NC-Some towns have a single line item in their budgets for their water and sewer enterprise funds. PC-He moves to take up this issue of how to present the water and sewer enterprise budgets[to the Board of Selectmen/Town Meeting]at a future meeting of the committee[so as to make the best use of JO's time with us].*** JB-The direct expenses listed in line items 3700 and 3800 of the budget book are the core of the expenditures of the enterprise funds. What is the legal requirement for breaking down these line items? There is no guidance in the enterprise funds statute-just recommendations from the DOR. Does the water and sewer surplus have to be appropriated as a separate line item? John referred Jay (and the committee)specifically to pages 8 and 9 of the DOR handbook. JO-His first answer is that the surplus can be included in one aggregate line item. His second answer is that the appropriation should include what is being spent,and that allocating money to the enterprise fund reserves should be a separate appropriation. Then he -) scanned through the book of municipal taxation that he brought with him and said that the total expenditure should include the reserve amount. However,to spend the reserve amount in that fiscal year would require a separate appropriation.*** PC-Should the enterprise fund reserve deposit be treated as an expense? LW-Like Free Cash? JG-No-you don't appropriate to Free Cash. This is more akin to appropriating to a Stabilization Fund.*** JO-Q-Do you need to specifically identify the reserve deposit? JO-A-He doesn't think so. But the reserve deposit should be broken out,at least in the enterprise fund budget that is presented to the Board of Selectmen.*** RE-Are we within the law? Doesn't chapter 44,section 53 Yx F hinge on the tax levy? JG-The prior year reserve is treated as income for the enterprise fund even if rate revenue is not sufficient to cover expenses. The ( ) DOR handbook spells this out,and JO recommends that we read the handbook carefully. [Note-Rick Eurich and Jay Gonzalez actually had a rather esoteric discussion regarding whether we are within the law. I didn't ) follow most of the discussion. Perhaps Rick Eurich could write up a paragraph or two of his recollection of this discussion so that the committee has an accurate record of it.]*** KB-Did JG answer all of question 2 a)? What is the advantage of an enterprise fund? JG-One advantage is the S.R.F benefit[priority for state aid]that JG described earlier(see the middle of page 3 of these minutes). ) An enterprise fund also allows for better management because there is better understanding of all of the costs. But an enterprise fund is simply an accounting mechanism.*** KB-Does an enterprise fund allow help on Proposition 2 1? JO-A municipality does not have to set up an enterprise fund in order to charge user fees. An enterprise fund does not allow help for Proposition 2 Yz.*** LW-Could the town still set rates the same way it does now,even without the enterprise fund structure? JG-Yes.*** JO-There is a lot of flexibility with how a town sets up and runs its enterprise funds.*** 3. Question#3-Payments In Lieu Of Taxes[PILOTs]: a) Is a town allowed to pay a PILOT from its enterprise fund(s)into the town's general fund? ) b) If not,then why does Lexington currently do so in its Water and Sewer Enterprise funds? c) If so,what are the legal restrictions and/or guidelines for establishing the amount of a particular enterprise fund's PILOT? John's comments: At least two legal issues are presented hem:(a)whether a PILOT is consistent with the provisions of the enterprise fund statute itself,and(b)whether a PILOT is consistent with the principles of Emerson College v. City of Boston,391 Mass.415(1984)[distinguishing a permissible user fee from an impermissible tax]. (For a more complete discussion of Emerson College,see the DOR Manual at p.22.) The DOR Manual states,at p.5,that: "All enterprise fund revenues may only be used to support the expenditures of the enterprise fund. At no time may these funds be used to support ongoing municipal operations or subsidize the general fund. On the specific issue of PILOTS,the Manual states,at p.24,that"from a legal point of view,it is not at all clear to what extent a court would consider such a payment to be part of the actual cost of providing the service, and therefore an appropriate component of the enterprise's fee structure.'*** JG-Questions about PILOTS are hard to answer. Jay recommends that the committee pay attention to John's comments above,as John made a good argument about the ambiguities surrounding PILOTS. The town does a good job of identifying many indirect costs (MIS,finance,etc.). But are there other indirect costs that are currently not being covered? That's one of the theories behind PILOTS -to cover costs that are difficult to identify/quantify. The legal justification for PILOTS is that the enterprise fund statute says that the enterprise fund should be treated in accordance with Generally Accepted Accounting Principles[GAAP]. If the town treats the water and sewer enterprise funds as if water and sewer service were a separate and pnvate entity,then PILOTs would be appropriate. From a purely accounting point of view,a PILOT is okay.*** The DOR handbook has guidance on page 23 says the following about PILOTs: If the decision is made to proceed with such a payment,the amount would be the community's commercial tax rate multiplied by the assessed value of the enterprise's land, buildings and personal property.'*** LB-The town is not following that guidance. As CW noted at an earlier committee meeting[see the minutes for the committee's second meeting on February 12,2004-near the top of page 5],the water and sewer PILOT amounts were pulled out of a hat. These numbers have not changed since they were added to the enterprise funds. However,the commercial tax rate has changed since then (every year),and it's very likely that the assessed value of the enterprise's land,buildings and personal property has also changed each year.*** S S 12*** / 30 S The argument against a PILOT is that it violates the provision spelled out in the Emerson College case-that the fees for a service cannot exceed an expense,or else that fee is no longer a fee but is instead an impermissible tax.*** ' ) JG There are very good arguments on both sides of the PILOT issue-that's why these questions are so hard.*** RP-Is there a basis for the PILOT? LW-If all costs are identified,then the PILOT is not justified. 7K-How about intangible/hard to identify costs? Such as the road usage by the enterprise fund vehicles,to name one example? ) PC-What about Keyspan? Does it pay a PILOT to the town?*** JB-If there is no enterprise fund,can there still be a PILOT? JO-The statute for the enterprise fund is what provides for the possibility of a PILOT. If there is no enterprise fund,such a charge might still be permissible,but it would not be called a PILOT.*** ) JB-Why is the Emerson College case different,as CW claims? [CW did make such a claim but I did not wnte fast enough to note his comments.] JB-Quoted from the Emerson College decision. Is Emerson different or is it the same? JO-Hasn't read the Emerson College case recently. Does not want to comment. ) JB-It is not clear to him that generalized expenses are recoverable via a PILOT*** LW-Is the enterprise really a separate entity? Since the PILOT is used for general purposes,is it really okay? ) JO-Them is lots of legal ambiguity surrounding this type of PILOT There is no legal precedent for this issue. So in some sense the usage of a PILOT is a calculated gamble based on the town's odds of winning a lawsuit if one were to be filed over the enterprise ) funds'PILOTS.*** RE-What is the voluntary agreement between the enterprise and the taxing entity?*** RP-The Board welcomes the committee's input on the water and sewer PILOTS.*** ) PC-The water PILOT is okay,since it represents approximately 2%of assets(the commercial property tax rate is around 2%). The sewer PILOT is too low,since it represents only 1%of assets. LW-It's the other way around-the sewer PILOT is okay,while the water PILOT is too high-because one should use the —)- residential tax rate instead of the commercial tax rate.*** ) JO-The DOR approves a tax rate based on all of the town's input to them. Since the DOR has been sanctioning our tax rate,they are at least implicitly approving of our use of PILOTs for the water and sewer enterprises. But as you can see from the DOR handbook, ) the DOR is wishy-washy about PILOTs. He recommends that the committee look at the PILOT as a policy matter.*** 4. Question#4-Legal and Practical Effect of MGL Chapter 165:Section 2B: a) Chapter 165:Section 2B of the MGL appears to mandate that MWRA municipalities,such as Lexington impose an increasing block rate structure on water users(although nothing is said about sewer users). Yet 26 of the 60 ) MWRA municipalities(as of December 2003)do not impose an increasing block rate structure on their water users. That is,it would appear that this particular statute is ignored or unenforced,for whatever reason. Does town counsel recommend that Lexington continue to impose an increasing block rate structure on water charges in order to maintain our compliance with this statute?*** ) httn://www.state ma usllerrs/laws/m¢1/165-2B.htm*** WATER COMPANIES Chapter 165:Section 2B Base rate for water charges and fees;increases for high volume users Section 2B.All municipalities or water districts within the jurisdiction of the Massachusetts Water Resources Authority,but not including communities serviced by the Connecticut Valley Aqueduct shall institute water charges and fees that incorporate a base rate for all users;provided,that said base rate shall be increased at an increasing block rate to fairly reflect the resource demand and ) consumption of high volume users of water. [end of chapter 165,section 2B]*** ) John's comments on this question:Increasing Block Rate Structure Assuming that c.165,sec.2B does apply to Lexington,how much flexibility does the statute permit in determining(a)the number of rate blocks and the amount J_ by which they increase,and(b)the definition of 'high volume users of water. See Merrimac Paper Co.v City of Lawrence, 1995 WL 1286562(Mass Super.1995)(upholding two-tier sewer block rate under which '[n]o residential ) customer is included in the second tier").*** JO-Chapter 165,section 2B does apply to Lexington. The policy behind this statute is conservation. That's why it applies only to ) water users and not sewer users. One point of view is that some large commercial customers are actually more efficient users of water than others-it is the residential lawn-waterers who are inefficient users of water. This statute does not define high volume users nor ) the number of rate blocks required. There is lots of room for flexible interpretation.*** JO-Does the town have more costs to provide high volume users with water? One could make the case that the costs are less-there is only one meter to check,etc. This is a policy question-we should keep in mind the principles behind this statute.*** ) 5. Question#5-Commercial Rates: Is it lawful for a community to set different water and sewer rates for residential and commercial customers? Note ) that,according to the MWRA Advisory Board's Annual Water&Sewer Retail Rate Survey[December 2003],the following member towns appear to have different residential and commercial rates:Bedford,Burlington,Canton, ) Dedham,Hingham,Holbrook,Lynnfield,Melrose,Norwood,Peabody,Revere,Wellesley,Weston,Wilbraham, Winchester,and Wobum.*** JO-He's not aware of a statutory basis for separate rates. "Equitable rates' is the only provision. Sometimes the commercial rate is lower,and sometimes it's higher. The rates should be based on costs if possible. There should be a reasonable rationale for different commercial and residential rates. Otherwise,it's safest to have only one rate. This is unlike the situation for the split in commercial and residential property tax rates,where there is specific statutory support.*** ) Q-If an enterprise fund were not self-sufficient,could it have different residential and commercial rates?*** - LW-What about splitting the PILOT between commercial and residential users?The next meeting is Tuesday May 11 at 8:00am. Other future meetings are tentatively planned for:*** Respectfully submitted,Larry Belvin*** ) WSRSC Meeting 48 Tuesday May 11,2004*** Summary ) ) 13*** / 3f U This meeting was devoted to the MWRA. They handed out a detailed set of answers to our written questions which had been submitted. We have requested an electronic copy,if one is available. The questions are appended hereto.*** Present: Members:John Bartenstein,Kathryn Benjamin,Paul Chemick,Dan Fenn,Lorraine Foumier,Loren Wood,Chair,liaisons:. Richard Pagett,BOS,Jeanne Krieger,(previous BOS Liaison),Richard Enrich,Appropriations Committee,Citizens:,Bob Earsey, Staff/Consultant,Bill Hadley,DPW Dennis Meehan,W&S Supt. Chris Woodcock,Consultant,Special Guests:MWRA representatives,Torn Lindberg,Leo Norton(617 788-1184)*** Details This meeting was devoted to the MWRA,which handed out a detailed set of answers to the questions that the committee had formulated and submitted. The following points were made during the discussion. The MWRA peak year of water usage was 1988, The decreases since then are attributed to an unknown combination of increasing rates,changes in the state plumbing code(low flow toilets,etc.),and leak detection and prevention on the part of the member towns. The inner cities have seen larger decreases,but may be due to less lawn watering,older infrastructure which was more benefited by the leak detection and prevention efforts,and a decrease in water-intensive manufacturing. The MWRA Advisory Board has the final say on MWRA rates. The MWRA pays PILOTS to certain towns for the water assets,but none are paid for the distribution assets. Leak detection(loss of water)is an important task for towns,and they should also try to minimize Infiltration and Inflow(VI),which means Infiltration of ground water into the sewer system and Inflow which includes illegal connections such as residential downspouts and sump pumps feeding into the sewer.This I/I costs the town money,and also unnecessarily burdens the Deer Island treatment facility. Half of what goes to Deer Island is I/I. In Lexington,we use TV monitoring(sliding a TV camera into the lines)to detect infiltration. 'Slip lining' is used to ) reduce infiltration. In the past,but not in recent years, 'smoke detection' has been used to locate illegal connections. It is now harder to notice illegal connections in houses since the advent of outside meter reading limits the occasions of entry. The storm drains in the streets are supposed to collect the surface water from rain,and these drains empty into local brooks. In a drought emergency,the MWRA could impose water restrictions. Several towns are trying to get into the MWRA,but the policy is that such entry has to be the town's last resort for acquisition of water. An entrance fee($5.5M per Mgal)is required.*** It was agreed that the next meeting would be devoted to setting up the final report process and identifying issues to make recommendations on. It was agreed to set a schedule for at least 4 more meetings beyond the May 25 meeting.*** The next meeting is Tuesday May 25 at 8:00am. *** r ) Respectfully submitted,Loren Wood*** Water&Sewer Rate Study Committee April 25,2004*** Questions for the representative from the Massachusetts Water Resources Authority(MWRA)for his or her visit to our committee on ( ) or about May 11.2004.*** DRAFT#1*** 1. Conservation How do the various rate structures(Ascending Block with Base Charge,Ascending Block only,Flat Rate with Base Charge,Flat Rate only,Fixed Fee,etc.)of the MWRA member communities affect conservation? That is,how do {{ the various rate structures compare against one another in terms of promoting water conservation in a community? ) 2. Usaee Outlook/Forecast Looking out over the next 1-3-5-10 years,what is the best guess as to how water and sewer usage will change during ( ) that time? There are three components(at least)that affect usage—the first is how the water and sewer usage habits of residents of existing residential structures in the existing MWRA communities change,the second is how much r ) growth(of residential structures)there is in the existing MWRA communities,and the third is how many,if any,new communities are added to the MWRA system. The number and rate of additions of new communities to the MWRA system should depend on several factors,two of which are I)the rate at which wells in Eastern Massachusetts are becoming polluted,and 2)the capacity of the MWRA system. 3. Rate Outlook/Forecast Looking out over the next 1-3-5-10 years,what is the best guess as to how much the MWRA assessments will change during that time? No doubt this forecast will depend to some degree on the usage forecast(see question#2). In addition to usage changes,are there any large capital projects on the horizon or any other significant changes that will necessitate large assessment increases? 4. Payments In Lieu Of Taxes(PILOTS) How does the MWRA determine the amount of the PILOTS(or whatever term is used)that the MWRA pays to ( ) communities where MWRA facilities/resources are located(such as the Norumbega Reservoir in Weston)? 5. Regulatory/Contractual Relationshin between MWRA and Lexington What is the regulatory/contractual relationship between MWRA and Lexington(for that matter,the MWRA and a member community)? That is,what control does the MWRA have over how Lexington administers its water and sewer service? 6. Does the MWRA Recommend Snecific Canital Projects to its Member Communities? 7 How is Lexington's MWRA Water Assessment Calculated(each year)? 8. How is Lexington's MWRA Sewer Assessment Calculated(each year)? 9. How do the MWRA Usage Restrictions(Water)Comnare with River Towns? We are all familiar with various water restrictions(no watering of lawns,no washing of cars,etc.)during dry/ drought summers. How do the MWRA water usage restrictions compare(in number,severity,and duration)with restrictions imposed by communities that draw water from one or more of the various rivers in Eastern Massachusetts? 10. What factors determine whether new communities can ioin the MWR A9 What are the factors that the MWRA evaluates to determine whether to allow a new community(such as Reading)to join the MWRA system? What is the recent(past 3-5 years)history of new additions? + ) 11. How have MWRA Assessments and Municipal Water and Sewer Rates changed over the past 30 Years? The reason for this question is that one member of the committee claims that her water and sewer bill was about$9 per year 30 years ago,whereas her bill is currently about$1400 per year. 14*** 3 j � 1 12. Boston Harbor Cleanup Capital Project-Projected and Actual Costs How did the cost projections for the recent Boston Harbor Cleanup project compare with the actual costs incurred? ) 13, What about MGL Chanter 165:Section 2B Inclinine Block Law? MOL Chapter 165:Section 2B,cited below,appears to require most,if not all,MWRA member communities to impose an inclining block structure for water service. However,according to page 4 of the December 2003 MWRA Annual Water&Sewer Retail Rate Survey,only 34 of the 60 MWRA member communities have such a water rate ) structure. Thus,this statute seems to be widely ignored. Why is that so? Is the law enforceable?*** Here is the inclining block structure statute: ) htto•//www.state mn.us/leeis/laws/mel/165-213 htm*** WATER COMPANIES ) Chapter 165:Section 2B Base rate for water charges and fees;increases for high volume users Section 2B.All municipalities or water districts within the jurisdiction of the Massachusetts Water Resources Authority,but not ) including communities serviced by the Connecticut Valley Aqueduct shall institute water charges and fees that incorporate a base rate for all users;provided,that said base rate shall be increased at an increasing block rate to fairly reflect the resource demand and consumption of high volume users of water.*** WSRSC Meeting#9 Tuesday May 25,2004 ) Summary 1. Discussed components of the Committee's report ) 2. Assigned people to research and write a first cut at the key issues that will likely be featured in the Committee's report. l Details Members/liaisons present: Richard Pagett liaison to the Board of Selectmen,John Bartenstein,Larry Belvin,Kathryn Benjamin, ) Paul Chemick,Rick Eurich-liaison to the Appropriation Committee,Dan Fenn,Lorraine Fournier,Jim Osten,Loren Wood,Citizens present: Jeanne Krieger,Staff/consultant present: Bill Hadley-DPW Director,Dennis Meehan Water and Sewer Superintendent, Chris Woodcock Water and Sewer rate consultant*** ` )- [Translation table for initials used in these minutes:RP=Richard Pagett;JB=John Bartenstein;LB=Larry Belvin;KB=Kathryn ) Benjamin;PC=Paul Chemick;RE=Rick Eurich;DF=Dan Fenn;LF=Lorraine Fournier;JO=Jim Osten;LW=Loren Wood;JK =Jeanne Krieger;BH=Bill Hadley;DM=Dennis Meehan;CW=Chris Woodcock.]*** ) LW passed out an outline for the Committee's report and said that we are ready to begin writing the report. LB disagreed and said that we are nowhere close to being ready.*** ) KB-What is our charge? What are we trying to accomplish? Fairness on rates? Lowering rates? Conservation? Shifting debt service to the tax levy via a debt exclusion? Is the Committee supposed to be an educational forum for the rest of the community?*** ) DF-We should explore the key questions that are scattered throughout Loren's table of contents. We need an executive summary (PC agrees). Some of the key questions are:PILOTs,billing,indirects.*** ) Q-How to get to the point of being able to write the report?*** JK-Go through the JB outline. Have balanced subcommittees to bring out both sides of contentious issues.*** LW-Let's identify the key issues. 1) Components of rates ) a) indirect expenses b) PILOTS c) Transfer of water and sewer debt service to the tax levy*** RP-There is not a clear understanding on the Board of Selectmen of the purpose of depreciation,capital expenditures,and reserves. ) Some of the Selectmen may be suspicious that these three items am all different ways of funding the same thing. These concepts must be clarified for the Board.*** ) JB-While some of these concepts are interrelated accounting questions,they could rise to be policy issues as well. That is,whether to fund capital expenditures from the rates or from the reserves,etc.*** - RP-PILOTs and indirects are also hot buttons for the BoS.*** JB-Debt service and depreciation for the same item-could be construed as double-counting(according to the DOR)-does } Lexington do this?*** JO-Recommends that there be factual background about what all of these water and sewer service issues are. Perhaps the ) Committee could compose a condensed version of the background material for use by the Lexington Minuteman and/or interested citizens. The material should answer the question-where does your water and sewer dollar go?*** RP-Recalls the following issues from last year's rate-setting hearings-the level of abatements seems high-this level needs to be ) compared to other towns to find out whether it is indeed higher(than average). Is this level of abatements the norm for Lexington over the past several years? Abatements have a direct impact on the rates,so they are important to RP*** ) DF-Should the Committee discuss whether to keep the Enterprise Fund structure? [Editor's note-this issue was not listed in the Committee's charge from the BoS.]*** ) PC-Add this discussion under section 6 of Loren's outline-what are the pros and cons of the enterprise fund structure.*** JB-All of the items in#1[JB's#11 are key issues,except perhaps for the issue of accounting for municipal use of water.*** ) Assignments-first cuts at write-ups on the key issues. 1. PILOTS-Dan Fenn. 2. Reserves-John Bartenstein and Larry Belvin ) 3. Rate Structures-Paul Chemick and Kathryn Benjamin. ) 4. Indirects and Presentation-Jeanne Krieger 5. Capital,Depreciation,Debt Service-Loren Wood and Lorraine Fournier j 6. Transfer of water and sewer debt service to the tax levy-Jeanne Krieger and David Sheehan with assistance from Rick Eurich. J 7 Background-Jim Osten and Loren Wood. 8. Billing,Collection,and Abatements-David Laredo. I ) 9. Possible additional topic-Bob Earsy. Fire hydrants-the water used to clean them and maintain them is not being paid for.*** r ) 15*** J /33 Town buildings are charged at a rate below the lowest block rate. CW thinks that municipal use accounts for about 5%of Lexington's water consumption.*** Item#3—rate structure—JB thinks that subgroups for this topic are better than individuals.*** DF—Our writing must be both crisp and brief.*** JB—It would be good to find someone with an accounting background(preferably municipal)to help us out—no one currently on the Committee has such a background.*** 3K David Sheehan,who wrote the DOR Enterprise Fund handbook,is no longer at the DOR and is a Lexington resident. Perhaps he can help us out.*** Transfer of water and sewer debt to the tax levy(chapter 59,section 21C): a) deductible(from federal income tax) b) proportional to property value c) water and sewer rates go down d) property tax bills go up e) can be put in place by vote of the BoS*** Next meeting—groups should provide what they can via e-mail by June 81b Respectfully submitted,Larry Belvin*** WSRSC Meeting#10 Thursday June 10,2004*** Summary 1. Various discussions about abatements,reserves,indirects,and how the Committee should proceed from here.*** Details,Members/liaisons present: Richard Pagett liaison to the Board of Selectmen,John Bartenstein,Larry Belvin,Kathryn Benjamin,Paul Chernick,Lorraine Foumier,David Laredo,Loren Wood,Citizens present: Bob Earsy,Jeanne Krieger,Staff/ consultant present: Bill Hadley—DPW Director,Dennis Meehan Water and Sewer Superintendent*** DL—Not sure about the committee's charge. He likes the format of JB's draft.*** JK—Anything related to the water and sewer service is up for consideration. The Committee should make recommendations for the Board of Selectmen to consider. The Board will not spend a lot of time on water and sewer issues—the Board is relying on the Committee to study these issues.*** LW—The Committee should make questions,edit drafts,and bestow final approval on the Committee's decisions. The Committee needs a process to express our opinions.*** JB—The Committee needs to scope the problem. How to move forward? Address one topic per meeting?*** KB—Is our charge to develop recommendations that will minimize water and sewer rates? Or is it to make suggestions that will make the water and sewer rates more equitable? Or are we supposed to make recommendations that would move revenues and expenses from the enterprise funds to the general fund? How do the topics that we have agreed to research and discuss fit into these ) questions?*** JB—One more question for the Committee to ponder—is there a downside to maintaining excessive levels of reserves?*** 1 I RP—The Selectmen would like a recommendation on what the level of reserves should be. That is,what a prudent level of reserves should be. He is not concerned about excessive levels of reserves, Part of answering this question is answering the following question ! —when can the town stop adding to the reserves? What would a prudent Board do? He remembers this discussion from last year (before he was a member of the BoS). Is there a more transparent way to account for water and sewer revenues and spending? What specifically are the reserves for?*** RP—The abatements question is key. During the rate-setting hearings last year(2003),the rates were increased to account for a 10% drop in consumption. RP asked Chris Woodcock about this 10%drop,and Chris said that 'there are problems' in billing—that is,the 10%drop is not really a drop in consumption but is instead a reflection of the fact that billings were 10%below what they should have been. RP is intrigued by the results of DL's upcoming investigation of abatements.*** JK—she gets a lot of information from Michael Young[Budget Officer]—Michael likes to snoop around and dig up information.*** RP—There is a discrepancy between billings and finance(accounting). There was not agreement on what was billed or on what was abated. RP would like to know why there was this discrepancy.*** LF—Is there a time limit on abatements?*** I JB—The town switched to a new software accounting application recently[MUNIS]. MUNIS is recognized by many as being poor in the area of utility billing. DM confirms that there have been lots of problems with MUNIS. DM—MUNIS 'adds zeroes' on occasion for no apparent reason[i.e. a bill that should have been$120,000 is instead sent out as$1,200,000].*** JK—There has been a recommendation to do some customization of MUNIS to address these billing issues.*** JK—What is the policy on abatements? If someone has a leak in their plumbing and doesn't notice it for a while(until his or her next water bill),does the town allow an abatement for this? Is there a written policy on abatements? Should there be? Should the Committee make such a recommendation?*** JK—members should bring information(back)to the Committee,along with a recommendation,and the Committee can either agree or disagree with the recommendation.*** JK—Everyone should send his or her comments about recommendations to the author of the recommendations,and then we can schedule a meeting to discuss the recommendations.*** JB—Please use 'reply all' / 'send all' on all Committee e-mail correspondence,so that everyone is in the loop.*** PC—We should have an outline of all of the topics that we plan to discuss,along with the current status of these topics.*** LW—Volunteers could aggregate comments and print them out and bring them to the meetings.*** Note— 'CIF in the context of water and sewer operations does not mean 'Commercial/Industrial/Personal' [as in property—when one is discussing taxes]. Instead,CIP stands for"Construction In Progress' *** The numbers for miles of water and sewer pipes and other statistics about the town's water and sewer infrastructure were assembled by Dennis and can be found in the blue budget book.*** How can we best use the rest of our meetings? Should we cover topics based on who is prepared?*** David Sheehan will ask Michael Young for data about debt exemption(chapter 59,section 21).*** RP—We need justifications for the levels of indirect charges. What is the methodology for assigning percentages to the various departments for calculating the indirects?*** JB—Indirects for FY04 and FY05 were identical.*** J 16*** /3If ) JB-What is the relationship between the appropriation process and the rate-setting process?*** JB-Question-Is it legal for the BoS to draw on the reserves in the water and sewer enterprise funds without Town Meeting ) approval?*** JK-Someone should put together a time-line on how current the information is that is used in the rate-setting process. This ties in to how this information should be presented to the Board of Selectmen and to Town Meeting.*** JK-She is willing to take a stab at this time-line and will work with Bill and the finance office to get specifics. Respectfully submitted,Larry Belvin*** WSRSC Meeting#11 Tuesday June 22,2004 Summary Present: Members: John Bartenstein,Kathryn Benjamin,Dan Fenn,Lorraine Fournier,Dave Laredo,Loren Wood,Chair,Liaisons: ) Richard Bunch,Appropriations Committee,Jeanne Krieger,(previous BOS Liaison),Richard Pagett,BOS,Citizens:,none, Staff/Consultant.Bill Hadley,DPW Dennis Meehan,W&S Supt. Michael Young,Town Administration,Special Guests:,David ) Sheehan,formerly on the DOR staff*** Summary ) This meeting covered Indirect costs and transfer of debt to a debt exclusion. *** Details The minutes for meeting#1 were approved.*** Jeanne Krieger(JK)reviewed the BOS's rate setting timeline provided by Michael Young. The MWRA rate charged to the town is for a Fiscal Year,say FY05. The rate is based on the usage by the Town in the previous Calendar Year,which would be CY03. Chris Woodcock,the Town's WS consultant computes how much revenue the Town will need,and how much would be generated by various rates,and the BOS then decides what the rates will be.*** Bedford gets MWRA water through Lexington pipes,and it is separately metered by Lexington. Bedford pays Lexington the MWRA ) rate times 1.01,plus$40,000 fixed cost. Hanscom gets its water the same way,and is charged somewhere between blocks 3 and 4 rates. Lexington Public(including schools)accounts and Municipal accounts pay approximately the MWRA rate. No revenue is collected from hydrants(they are not separately metered). They are flushed once a year. The watering of the athletic fields is divided ) between recreation and schools.*** Jeanne Krieger(JK) described her inputs on indirect costs. She said that when she has looked at specific cost drivers(trips made, invoices billed,etc)they usually confirm intuitive estimates.*** Richard Pagett(RP)said that the concept is ok,but the basis should be easy to explain. He thought 70%for the DPW sounded ) high.*** JK said the argument for increasing the DPW amount is that although the DPW budget has been cut,the Water and Sewer work stayed ) the same.*** RP asked if there should be any indirects at all. He said some citizens think its a backdoor approach to get around Prop 2 and 1/2.*** Richard Eurich said the DPW amount is$198K,and is too small to argue about.*** Lorraine Fournier(LF)questioned why insurance in line item 2130 went up so much from 2001 to 2002. *** John Bartenstein(JB)said that some earlier numbers are not correct.*** Mike Young(MY)said there were some factors that led to increases in line item 2130.*** Then David Sheehan gave a presentation on the issue of transferring water and sewer debt(which is presently paid from rates)to a debt exclusion. (First he mentioned the 'circuit breaker"provision of Mass income taxes.) He distributed a handout. The benefit of ) such transfer would go to those who itemize on their income taxes. There is debt that Lexington incurred,and that the MWRA incurred and Lexington must pay the service on. Them are 700 households in Lexington that don't use town sewers,and 10 that don't ) use town water; they will pay more if debt is put on debt exclusion than they pay now. Those using the circuit breaker will be affected depending on the specifics of their situation. The State makes up what Lexington loses on account of what Lexington forgoes ) via the circuit breaker. This is in MGL Chapter 41C. *** JB asks if the fixed infrastructure costs should be paid by fees or property taxes. Water Sewer capital is presently paid 50%by rates - and 50%n by bonds. *** Richard Burich(RE)noted that even those that itemize may not get the full benefit of putting WS debt on a debt exclusion because of ) the Alternative Minimum Tax. He noted the BOS can put the debt on an exclusion. *** Richard Pagett(RP)noted that identifying which households net out ahead or behind would be difficult to assess,and hard to explain ) to the citizens.*** LF said that the citizens would not understand a transfer from rates to property taxes.*** Dan Fenn thought the politics were unclear.*** John Bartenstein suggested a sub-group to look at this issue and other towns. Dave Laredo and David Sheehan and Loren Wood will ) look into it further.*** The next meeting subject will be Indirects(Jeanne Krieger),PILOTs(Dan Fenn) and Billing and Collection(Dave Laredo). ) The next meeting is Tuesday July 6,2004 at 8:00am. ) Respectfully submitted,Loren Wood*** - WSRSC Meeting#12 Tuesday July 6,2004 Summary 1. John Bartenstein is no longer a member of the committee because he is now a member of the Appropriation Committee. ) He will continue his involvement with the committee as a second liaison to the Appropriation Committee. 2. Loren asked for suggestions for a ninth member to replace John. 3. We briefly discussed indirect charges. 4. We discussed David Laredo's billing/abatements report somewhat and then asked Bill some general questions about ) billing and meter reading and related issues.*** Details J Members/liaisons present: Richard Pagett liaison to the Board of Selectmen,John Bartenstein liaison to the Appropriation Committee,Larry Belvin,Paul Chernick,Lorraine Fournier,Loren Wood,Citizens present: Bob Earsy,Jeanne Kneger,Staff/ consultant present: Bill Hadley-DPW Director,Dennis Meehan Water and Sewer Superintendent*** 17*** 13� ) ) J 1 JB—Now that he is officially a member of the Appropriation Committee,he is not allowed to be a member of any other town committee. Thus,he is now the second liaison to the Appropriation Committee[Rick Enrich is the first and will continue in that role]. Thus the number of members of the WSRSC is now down to eight.*** LW—At the next meeting,or before then,we are encouraged to offer ideas about who might be suitable to join the WSRSC.*** LW—will contact Jim Osten to make sure that Jim is still interested in being a part of the WSRSC[Jim has missed six of the previous seven meetings].*** RP—The Board can replace committee members who don't appear to be actively involved in the workings of a committee.*** LW—Distributed guidelines for future committee work/discussions(these guidelines were distributed electronically by Loren Wood on July 19,2004).*** JK—She asked the Town Manager's office to provide more information on indirects but hasn't yet received a response,so she recommends deferring this discussion. She requested detailed justifications for more of the indirect allocations than the WSRSC has currently received.*** PC—What kind of recommendation on indirects are the Selectmen looking for? Should there be subjective rationales for each of the ) indirects? If so,the BoS could accept or reject each individual rationale. Does the WSRSC want to recommend a process going forward for addressing the indirects? Is an indirect expense a fixed cost rather than a percentage of a department's budget?*** 1 JB—Note question#17 of the frequently asked questions from the DOR's June 2002 Enterprise Fund Manual:*** ) What happens if there is a disagreement on the indirect costs(e.g. which expenses and how much)of an enterprise fund? Indirect and allocated costs should be clearly set forth(e.g. what costs will be shared and how much)when the budget is adopted to avoid disputes later in the fiscal year.If,however,the enterprise still cannot agree with the community's financial officials what figure should be used for indirect and allocated costs,the appropriate body to resolve the matter is the city council or town meeting. JB—Should there be a threshold(permitted increase)for each individual indirect cost above which the cost would be carefully studied?*** RP—The committee should make a recommendation to the BoS about this.*** 1K—There is an effort underway to get answers to our questions about indirects.*** RP—Is there a metric for indirect costs that the staff can use going forward?*** RP—The indirect for the assessor's office for FY2005 is 9%of the assessor's office budget—what is it that the assessor's office does on behalf of the water and sewer enterprise funds?*** JB—If he were writing the report on indirects,he would interview each town department head to try to get a sense of the fair level of indirect charges for each department.*** PC—If an indirect charge is large enough to be assessed to the water and/or sewer funds,then such a charge is important enough that the appropriate department head should write a paragraph of justification(to be reviewed by someone as yet undetermined).*** I ) LB—volunteered to join the indirects subcommittee[because there was no member of the WSRSC working on this topic].*** We then abruptly shifted gears to talk about David Laredo's report on billings and abatements[even though David was not able to I 1 attend the meeting]. LW distributed David's report on July 2,2004.*** LB—There is no data to justify David's assertion that 'the system seems to be working well' [middle of page one of David's report]. ) How can we claim that the system is working well if we don't know any of the data about the current level of abatements compared with the levels in recent years?*** BH—[side note to a question raised about billings]—about 60%of the residences in town now have the new water meters that can be read from outside of the dwelling unit.*** BH—[another side note]—the MWRA uses a 9-payment billing cycle. Lexington pays one-ninth of its annual WRA bill each one- ninth of a year[one-ninth of a year is just under six weeks].*** ) Q—What is Lexington's final MWRA assessment for this year? A—[BH]—He doesn't have that number right now.*** BH—He receives a monthly update from the MWRA regarding Lexington's water usage,while he receives a quarterly update from the MWRA regarding Lexington's sewer usage.*** JB—Q—What is the billing recovery rate compared with the gross usage as measured by the MWRA? BH—A—We[the water and sewer division]can't measure this because billings are done on a semi-annual basis while usage numbers are provided by the MWRA on a monthly basis[editor's note—why can't the six MWRA monthly usage numbers for a six-month billing period be added together and compared with the billings for that six-month period?].*** JB—Q—Are the MWRA gross usage numbers and the billing numbers available? BH—A—Yes.*** Q—When is this year's water and sewer rate-setting hearing? A—Probably August 23,2004[editor's note—the hearing did not occur on August 23 and is now estimated to occur in mid- September].*** Chris Woodcock is working on rates and projections right now—note that he had to project a 10%decline in usage last year to compensate for the numerous billing problems.*** Q—What is Chris likely to project for usage this year?*** A—not sure,but the water billings were$100,000 higher than expected this past year,while the sewer billings were$180,000 lower than expected.*** RP—Is the billing system in better shape now,one year later?*** BH—Yes it is—this is the second full year of experience with MUNIS. BH,Mike DiPietr0,and Chris Woodcock are meeting next week[2""week of July]to review this past year's water and sewer billings and revenues and expenses.*** BH—[side note]—Water readings are now all electronic. Even for those residences without the new meters,the meter reader inputs the reading into a touch pad electronic device,and this reading goes straight into the town's electronic billing system. The only part of the meter reading system that is manual now is the postcard(if the resident has an old meter and is not home when the meter-reader arrives).*** ) BH—Before MUNIS,there was approximately a 1%error rate.*** ) 18*** I36 ) BH-Some of the MUNIS problems were-when irrigation meters went under MUNIS,the irrigation users were also erroneously assessed a sewer charge;some septic system owners were erroneously assessed a sewer charge.*** ) BH-If the town went to quarterly billing,there would probably be only 2-3 actual readings per year-either read twice and estimate twice,or read three times and estimate once-as it is difficult for the meter readers to take readings during the winter.*** ) LF-Why not use quarterly billings? She would find it easier to pay a$350 bill four times a year than a$700 bill twice a year.*** JB-Q What about billing errors that work in favor of the homeowner? ) BH-A-They don't look at low bills,just high bills.*** Electronic meters are supposedly fraud-proof. Someone has to manually examine the billing printout to look for potentially erroneous high bills-this is not done electronically.*** Someone noted that,according to the yellow MWRA Rate Survey book(December 2003),only five of the 30 towns that obtain both water and sewer service from the MWRA bill twice a year-the other 25 towns bill quarterly or more often(bi-monthly/ monthly).*** ) Q-Why do most towns bill quarterly? [And Lexington does not?]*** JB-had some suggestions for the minutes that LW incorporated into his versions of the minutes.*** ) Next meeting-July 20-PILOTs and indirects*** Someone noted that Al Levine of the Appropriation Committee wrote a report on PILOTs as an appendix to the Appropriation ) Committee report to Town Meeting 3-4 years ago. LB agreed to contact Al about that report.*** Respectfully submitted,Larry Belvin*** WSRSC Meeting#13 Tuesday July 20,2004*** Summary ) 1. Approved the minutes for meetings#2-8 excluding#7. ) 2. Special guest Alan Levine from the Appropriation Committee amplified on his AC appendix report from 3-4 years ago about PILOTs. 3. We voted to hold the next three meetings on 7/27 8/10,and 8/24.*** Details ) Members/liaisons present: Richard Pagett liaison to the Board of Selectmen,John Bartenstein liaison to the Appropriation Committee,Larry Belvin,Kathryn Benjamin,Paul Chemick,Rick Eurich-liaison to the Appropriation Committee,Dan Fenn, Lorraine Foumier,David Laredo,Jim Osten,Loren Wood,Citizens present: Bob Earsy,Jeanne Kreger,Staff/consultant present: Dennis Meehan Water and Sewer Superintendent,Chris Woodcock Water and Sewer rate consultant,Special guest: Alan Levine-Appropriation Committee*** LW asked whether anyone had any suggestions for candidates to fill the vacant ninth spot on the committee-no one had any ideas.*** We reviewed the minutes for meetings 2-8 excluding meeting#7 [Meeting#7 was the Palmer&Dodge meeting-we need ) clarification from Jay Gonzalez regarding the need for a separate appropriation for water and sewer fund surpluses-I think that's the issue that requires clarification-JB knows for sure.]*** JK-suggests that the following sentence from the minutes for meeting#2: Instead,the town has a method or formula for computing these indirect costs based on an estimate of the percentage of time spent by the various town departments on water system services. be changed to remove the words 'percentage of'*** ) The vote was 8-0 to approve the minutes for meetings#2-8 excluding#7 with JK's change.*** The main topic of this meeting was Alan Levine's PILOTs report. Alan recalled that his first meeting about PILOTs took place in ) 1999 because of issues that were raised in 1999. He thought about the issue of tax deduction versus redistribution and said that given the information that he has seen since he wrote his report,he is on the fence about whether it is better for the water and sewer ) enterprise funds to pay PILOTs as opposed to funding the$750,000 PILOTs amount via the tax levy.*** Before 1999,the lowest rate block did not even recover the full MWRA assessment costs. AL left this block alone. So that means - that the PILOT is paid by the water and sewer users whose usage falls into the second,third,and fourth rate blocks. Thus the cost of the PILOT is loaded onto high volume water and sewer users.*** ) Seniors who use low amounts of water are not better off with the PILOT amount in the tax levy. The affect on the most needy ) residents of moving the PILOT to the tax levy is not clear.*** DF-For the average homeowner,the PILOT is about 5%of the total water and sewer charge.*** ) LF-A big family in a small house/low-valued house benefits from moving the PILOT amount to the tax levy.*** DL-Don't forget the 10%tax break for seniors on their water and sewer bills.*** DL-What is a good basis for the PILOTS?*** JB-Clarification of DL's point-the senior circuit breaker takes effect if one's property tax and half of one's water and sewer bill is ) greater than 10%of one's income.*** JK-Seniors get a 20%discount off their water and sewer bill if they meet certain eligibility standards.*** JB-Are the water and sewer rates supposed to be an income redistribution vehicle?*** Someone commented that there are two ways to look at tax benefits-one is the benefit to an individual,and the other is the benefit,in aggregate,to all of the taxpayers in the town. Looked at this issue in the aggregate,the shift of the PILOT amount of$750,000 from the water and sewer rates to the tax levy results in a$150,000 federal subsidy,assuming that the average marginal tax rate is 20%.*** DF-Bill Hadley has been inquiring about the use of PILOTs by other communities,and thus far he[Bill]has not identified any other communities.*** DF volunteered to make a new draft of his PILOTs report that incorporates some of the material in AL's report.*** RE-Al's numbers are out of date.*** ) DF-The general concept is what is important,not the specific figures. For most households,this is small money.*** LF-Q to DF-Why did the 1999 PILOTs Committee have an even number of members? Why weren't there more members?*** DF-A-There were more members,but those members 'goofed off'and were removed from duty. [Editor's note-the committee members who did not participate in that committee's final vote were Peter Kelley,Wade Tambor,and Frank Smith.]*** ) RE-Q to AL-How accurate were the estimates?*** AL-He can't remember the assumptions that he used for his blocks.*** ) 19*** ) I 3 7 ) 1 ) CW—The assumption that the first block covers the MWRA assessment is no longer valid. The first block does not cover the entire MWRA assessment.*** CW—30%of the town's water usage is commercial/industrial,so the$150,000 subsidy that JB mentioned is probably more ) accurately estimated to be about$100,000.*** CW—One needs to look at PILOTS in conjunction with other expenses. How to redistribute the costs to all customers. How should the committee decide how to redistribute the costs?*** DP—Perhaps a staged elimination of the PILOT,instead of cutting the whole PILOT in one budget year,is the way to go.*** ) PC—The PILOT reduction would go mostly to higher rate block users,which are predominately commercial and industrial users.*** PC—Think about the principal of real estate taxation. That is,compare the water and sewer operations to KeySpan,NStar,etc. Will the town tax AvalonBay for their water equipment(at the Met State property)? Is the town favoring the water and sewer operations over other entities?*** JO—Reserves are being collected mostly on the highest rate block. Is this a risk? The variation in billings is the most pronounced for the highest rate block. He agrees with DF that using the 1999 numbers is fine and he doesn't see the need to update the numbers to ) FY2005 numbers.*** l AL—The rates with and without PILOTs may have come from BH(from CW). AL did not find any of his calculations. The 28% figure cited in his report for water and sewer revenue from non-residential customers may have been volume,or it may have been cost —he's not sure.*** Affordability—it does matter who gets the tax-deductibility benefits.*** Have water and sewer costs been fully investigated? Note that the water and sewer operations pay no rent to the town.*** The PILOT legality question is an issue—if the town doesn't have a back-up plan,in the event that the PILOT was found to be illegal, there would be a hardship.*** LF—the$500,000 PILOT started after Bedford joined the MWRA.*** Q—How do the 2005 MWRA rates compare with the appropriated and actual expenditures in the budget?*** CW—the MWRA rates for 2005 are not final—they depend on whether Romney's veto is sustained or overridden.*** JK—There is no difference between appropriated and actual indirect expenditures.*** CW—Example of a mid-year retirement[of a town employee]—that is money that is appropriated at the beginning of the year [because the retirement is not known about]but is not spent.*** KB—This is too much information—is it possible for someone[JB]to describe the circuit breaker in writing?*** I ) JB&LW—It is too time-consuming to write this up.*** LW—Are there any volunteers to write up the state circuit breaker and town low-income discount?*** ) JK—There is a tax-exemption committee that probably has this kind of information—Vicki Blier is the chair.*** JK—The assessor's office can tell you how many houses are below the assessment threshold.*** ) Someone noted that Keyspan,NStar,and Verizon combined pay about$1,500,000 per year in taxes to Lexington—an average of $500,000 each.*** I ) Rate costs—small users pay only 50%of the cost of water. Are the low volume users the neediest residents in town? Redistribution troubles him[editor's note—can't recall who"him' is—think it is JB but am not sure]—is it fair?*** I ) JB—the PILOT does not appear to him to be legal,based on the Emerson College precedent.*** DF—Asked Jay Gonzalez about this,and Jay said 'who really knows?"*** LW—We have reached the end of our scheduled slate of meetings. How and when to continue?*** We voted to hold meetings on 7/27(6 yes votes),8/10(6 yes votes),and 8/24(5 yes votes). We will cover PILOTs and indirects on I ) 7/27*** DF—Is there light at the end of the tunnel? [That is,is this committee ever going to finish its work?]*** LW—The committee will decide this.*** LF—Moved to close discussion on PILOTS.*** JO—Suggested that we poll the members on the various issues to establish the majority and minority[in case the minority wants to write a minority report on an issue].*** ) KB—How are we making decisions? On what basis?*** LW—He will accommodate her[KB's]question in the format of the committee's discussions. The first issue to be discussed will be messy.*** LW—no substantive input[such as Peter Enrich's take on the legality of PILOTs]is precluded by LF's motion.*** ) The vote on LF's motion to close the discussion on PILOTs is 5 in favor and zero opposed.*** Respectfully submitted,Larry Belvin*** WSRSC Meeting#14 Tuesday July 27,2004*** Summary This meeting concentrated on PILOTS. The committee is presently discussing what the possible PILOT recommendation it makes might be. The committee identified several issues that would affect its recommendation: PILOT legality,PILOT perception by public, justifications for PILOTS as to theory and dollar amount,net affect on families if PILOT shifted to property tax, possible elimination methods(including phase out over several years),using additionally identified indirects to compensate for PILOT loss. Present:,Members:,Kathryn Benjamin,Paul Chemick,Dan Fenn,Lorraine Fournier,Dave Laredo,Jim Osten,Loren Wood,Chair, Liaisons:,John Bartenstein,Appropriations Committee,Richard Eurich,Appropriations Committee,Jeanne Krieger,(previous BOS Liaison),Richard Pagett,BOS,Citizens:,Bob Earsey,Staff/Consultant.Bill Hadley,DPW Dennis Meehan,W&S Supt. Chris Woodcock,Consultant,Michael Young,Town Administration*** Details Dan Fenn(DF)noted that the effects on a particular family of PILOTS versus raising the same amount via property taxes depends on family income and whether they itemize. Regardless,the amount of the difference is 'nickels and dimes' *** John Bartenstein(JB)noted that 'nickels and dimes' is not an appropriate characterization,and that many taxpayers are meticulous to find every possible Schedule A deduction.*** Chris Woodcock(CW)said that the lowest tier water users would not see much savings if PILOT amount were shifted to tax levy.*** Richard Eurich (RE)noted that the biggest savings would be to highest block users,which are mostly businesses.*** Lorraine Foumier(LF)noted PILOT could be discontinued,halted immediately,or continued.*** 20*** 131 Jeanne Krieger(JK)noted that the basis for the PILOT amount could be the commercial(rather than residential)tax rate times the ) assessment of the DPW water and sewer property. A sheet with the relevant numbers was passed out.*** DF said the other PILOT issue is whether its legal.*** Kathryn Benjamin(KB)stated that the problem with PILOTS is the public's perception. The issue must be handled carefully. The legal question is important. PILOT's may erode public confidence in Town govemment.*** JK stated that lawyers can be found who will state both sides of the legal issue.*** JB noted that the case law raises serious questions as to whether PILOTs are legal. He referred the committee to some of the points in his email describing some of the reasons why PILOTs may not be legally upheld by the courts. He said that Peter Enrich will write a ) summary of the reasons why PILOTs may be legal.*** LF reminded the committee of Jay Gonzales'(Town Counsel representative)comments in re PILOTS at#7 meeting. *** ) DF said the Town is vulnerable on the PILOT legality point.*** Richard Pagett(PR)Agreed with DF that legality is open question. Its a risk management problem for the Town. He likes the PILOT ) concept,but doesn't like the arbitrariness of the dollar amount at which its assessed.*** Paul Chemick(PC)thinks the appropriate amount should be one million instead of 750K. He suggested putting enough in the WS reserves to cover the loss of the PILOT if its eliminated. *** JB said that the WS reserves cannot be used to compensate the Town for the loss of the PILOT because WS reserves cannot be used ) for Town general expenses. The compensating amount must come from Town free cash.*** Jim Osten(JO)would like to hear from PC and CW on WS rates. He noted that the WS gets preferred Town interest rates,which a private operation would not get. The WS also gets other Town subsidy/benefits. These would be a basis for justifications of PILOTS.*** DF would like input about a method for PILOT phase-out. He asked if the committee wants to tilt one way or the other regarding a PILOT recommendation.*** 1B thinks its too early,since the committee has only heard one side of the legality issue(JB's)and the other side(Peter Enrich's)is not due until after Labor Day.*** KB asked if NStar and KeySpan are 'for profit' operations,and it was answered that they are. She also reminded that JB's PILOT ) memo noted that additional indirect costs(which are charges to the WS)could be found to compensate the Town for loss of PILOT revenue.*** JB noted that Harvard and MIT pay PILOTs voluntarily. He also noted that its a 'sales tax' on water,and sales taxes are generally considered to be regressive taxes.*** Dave Laredo(DL)asked what other Towns have PILOTs. It was answered that possibly they would include Brookline,Concord, Marblehead,Mansfield.*** ) CW noted that PILOTs have been legally tested in other states. They were found valid in a Detroit case in federal court. He said that how the PILOTS are collected in the rates is up to the BOS,who set the rates. He noted that NStar pays property taxes but can't demand the Town do NStar's billing. His opinion is that the legislative intent was to make the EFs be a business entity,accounting- wise and service-wise.*** JO noted that the broadness of the EF definition has not been tested legally.*** LF referred the committee to the Mass Dept.of Revenue manual regarding PILOTS,and also minutes from meeting#7*** The next meeting subject will be Capital,Debt,and Depreciation,with inputs from Loren Wood and Lorraine Fournier. The next meeting is Tuesday August 10,2004 at 8:00am. *** Loren Wood*** WSRSC Meeting#15 Tuesday August 10,2004*** ) Summary 1. Discussion of Loren s report on Capital,Debt,and Depreciation.*** ) Details Members/liaisons present: Larry Belvin,Paul Chemick,Rick Eurich-liaison to the Appropriation Committee,Dan Fenn,Lorraine -4 - Fournier,David Laredo,Jim Osten,Loren Wood,Citizens present: Bob Earsy,Jeanne Krieger,Staff/consultant present: Michael DiPietro-Assistant Finance Director,Bill Hadley-DPW Director,Dennis Meehan Water and Sewer Superintendent*** ) LF-Moved that we postpone the discussion of the minutes for meetings#11 and#14. No one disagreed.*** ) The main topic was Capital,Debt,and Depreciation-written by Loren with assistance from Lorraine. Loren distributed copies of the report and we went through the report page by page.*** MD-Water and sewer system assets needed to be placed on the books in order to use enterpnse fund accounting. Deloitte&Touche ) did a study of all of these assets and determined both a value and a useful life. The average life(dollar weighted)of all of the assets in the water and sewer systems when the study was done(1992)was about 23 years. Hence Loren's detennination that the depreciation appears to 'start' in 1969*** ) DF-Note that these are historical(cost)numbers,and not replacement cost numbers.*** LB-Does depreciation go past 100%? [i.e. if a pipe has a 75 year life but is still viable at the end of 75 years].*** MD-No-depreciation goes to 100%and then stops.*** There was some agreement that the year 1969 should be left in the report,as long as it is clear that this reflects the average life of all , of the water and sewer assets.*** Note-the vote for water and sewer enterprise fund accounting was in 1987,but the Deloitte and Touche study was done in 1992 and was used for the FY1993 budget.*** LW-Question on handout from PC from last meeting(#14)-does 'net assets' include CIP[Construction In Progress]? ) MD-answer-yes. But note that there is no depreciation taken on CE'assets. Depreciation is taken on the net plant in service(stuff that is already fully built).*** Q-[bottom of page 2 of the report]-Why is the depreciation listed not equal to the depreciation numbers in the appendix?*** -) PC-Depreciation is always a guess,because it depends on what is retired and what is added to service. That is,there is no way to predict at the beginning of a year which assets will be retired during that year[although it may be easier to predict what assets will be added to net plant in service during the year].*** ' LW-page 3(existing debt)is the least controversial of all of the issues facing the Committee-these are just facts.*** 21*** c ) 13 7 _, LF—Q—Why pay for depreciation and also for capital? Isn't that like taking a loan out for a car,and also setting aside savings each year for that same car? Isn't this a form of double-counting?*** _ MD—Depreciation is for the replacement of existing capital assets;capital reserves are for future capital needs.*** LF—Q—Why pay for something before you need it?*** MD—If the water and sewer funds had more money,we could spend more on upgrading the system to a better level of service.*** DF—An example—He was an officer in his condominium association[Potter Pond]. Potter Pond kept a capital reserve for replacing roofs,roads,etc.—so that when it came time to do the work,the cost to the residents was not prohibitively high in a single year. Towns and businesses run the same way.*** PC—Before enterprise funds,there was an ad hoc way of funding capital improvements for water and sewer—a combination of tax levy money,raising capital from the rates,etc.*** LW—Q—Why on an item that we pay for by borrowing do we also put money away for depreciation?*** One answer—depreciation covers only part of the cost of replacing an asset,since depreciation is taken on the cost of the asset. For an asset with a long life(such as pipes—75 years),the cost to replace the asset will be far higher than the depreciation taken on the historical cost of the asset. Borrowing and depreciation have to occur at the same time.*** DL—Should there be a policy on how enterprise funds pay for new assets?*** I 1 JO—Do we carry depreciation on town buildings? He doesn't think so. Towns don't adequately care for their existing plant and equipment because they don't take depreciation on things such as town buildings(i.e. Town Hall). In the 1970s,Jim had a neighbor who introduced an article at Town Meeting to replace water and sewer assets that needed replacing(because of asbestos,iron pipes, etc.). Depreciation is a reminder that assets need to be replaced eventually. Side note—there is no depreciation taken in the general fund.*** LF—Q Why do we have debt in the water and sewer enterprise funds if we have depreciation and capital reserves?*** MD—Sewer debt is dropping(FY04 >FY05). Water debt is rising because of some new projects. Capital from revenue is increasing while debt is about the same. Sewer reserves are higher than water reserves,so those reserves can be tapped more easily.*** MD—We haven't raised enough revenue from the rates because the rates were too low.*** LF—If consumption is too low,the rates have to go up to make up for the shortfall. This doesn't make sense—it's a negative incentive for conserving water.*** DF—Footnote to JO's comment—it hasn't been a high enough priority to rebuild capital assets compared to funding the operating budget.*** DL—MWRA rates will not go down—they may just go up less(because of the MWRA's extensive debt service. Reserves can be used for rate relief. Conservation should cut your costs—eventually.*** DL—Some communities set up a replacement fund,not just a depreciation fund.*** [Note—I had to leave the meeting at 9:05am—if anyone has any comments or notes about what happened afterwards,please append them to these minutes and distribute them to the Committee.]*** Respectfully submitted,Larry Belvin*** WSRSC Meeting#16 Tuesday August 31,2004*** Summary 1. Received and briefly reviewed a draft compilation of materials by Loren Wood 1 2. Discussion of Rate Report prepared by Paul Chemick 3. Scheduled the next three meetings for 9/7 9/14 and 9/21.*** Members/liaisons oresent:Initials used in minutes Richard Pagett—liaison to the Board of Selectmen RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF David Laredo DL,Jim Osten JO,Loren Wood LW,Citizens present: Larry Belvin LB,Bob Earsy BE, Staff/consultant oresent: Chris Woodcock CW*** ) Business/Discussion*** The meeting opened with an acknowledgment that Larry Belvin has resigned from the committee due to personal circumstances and ) appreciation for his role as secretary. *** LB suggested that we establish a rotation for covering the secretarial duty for the committee. Kathryn Benjamin volunteered to serve as secretary today.*** LW distnbuted 5 copies of an unedited comnilation of materials presented to date. This material has also been emailed to the committee. After a brief review of the table of contents,it was generally agreed that a final report would include a summary of about 1 10 pages,perhaps prefaced by a very brief executive summary,and then the complete documentation would be provided as back-up material.*** Discussion of Draft Rate Report by Paul Chemick:*** LB and others request that the report use current rate structure in the examples in the report*** KB asked for clarification in first sentence: 'single rate for all customers' means single rate schedule used by all customers: residential,commercial,and municipal*** I 1 LW has decoded a text delimited file of all 11,000+water/sewer bills and is analyzing it with Chris Woodcock*** PC has set up a Yahoo Group to make it easier to share data in the group—all committee members should have received an invitation ) to participate in this group via email*** JB asked if there is ambiguity of who is what kind of customer*** CW replied yes,but it doesn't affect what residents are charged*** KB asked if there is any ambiguity of who is categorized as a municipal user,which is charged the lowest rate*** i I CW replied maybe. Chris recommends that we recommend to the Board of Selectmen that we not classify users by category but by meter size*** I ) JB referenced a law proposed in Boston to separate the meters of tenants in apartment buildings*** BE explained that Lexington has a mathematical formula for working around this issue(the total water/sewer bill for a building is ) divided by the number of units and billed individually)*** DL explained that the town's accounting system,MUNIS,is not designed to generate water/sewer bills,we've been struggling with it*** ) 22*** > /90 ) CW stated that MUMS is great for generating tax bills,it was not designed to generate water/ sewer bills,we asked them for an add-on to the system to do this,which was done 2 years ago.*** ) JB asked is it within the scope of the committee to make recommended changes on billing,since it's not specifically part of our charge?*** ) RP replied,Yes. He encouraged the committee to have a Summary of the report and to have the report delivered to the Board members at least a week before the Selectmen's meeting on rates so they would have time to read and ask questions about the report. The date for this meeting is expected in September but has not yet been set.*** PC pointed out that while the water rates are based on flow,the MWRA rate for sewer is based on a formula which included flow and ) population.*** CW explained that there is some rationale for this system: the old system for rates was based on population and if a town was piped ) for larger capacity than currently using,it was charged fro that investment. This led to a change in the percentages in the formula, over which there is controversy and compromise.*** PC asked what is the implication of this formula for rate design? Paul recommends treating the sewer rate as flow related only,or perhaps include a base charge for all users and a flow charge.*** ) CW allowed as how a fixed charge based on meter size was considered in 1999.*** LB offered to get a copy of that report to the committee and for it to be included in the compilation*** PC asked how the DPW determines the capacity for the system*** CW explained that maximum capacity is considered to be maximum day plus fire*** ) PC/CW summarized that rates are based on annual usage,while capacity is designed for potential maximum usage*** KB asked for clarification on comments in report on environmental impact*** JB made a distinction between short-term and long-term environmental impacts and expressed the opinion that the MWRA should be ) devising a solution for regional water resource problems,and that these problems should not be addressed locally with the inherent variations from one locale to another*** PC started discussion on the HCF topic in the report*** JB asked for confirmation/clarification: the MWRA said that consumption went down when the rates went up. Is our system ) designed for larger capacity than we're using now—either in the past did we use more water and/or is our system planning on more growth for increased usage?*** CW explained that when water was cheap,people used more as there was no incentive to conserve or fix leaks,until the cost increased.*** DL explained that we have a minimum pipe size we use is 8' for maximum day+fire flow. This gives a large amount of extra capacity for future development. The system can accommodate even more growth by increasing water pressure. Old pipes are 2-4' and are replaced with current standard 8' *** CW added that fire protection drives a lot of this capacity*** ) JB/CW asked/confirmed that peak demand capacity equals fire protection plus the maximum day use(which is equal to about 2.5 x average day use)*** The group further discussed the causal effect of usage on the system design and investment that requires higher rates. We are committed to build an over-sized system as it is a long-lived asset that needs to be useful 50-100 years from now.*** PC believes the individual usage causal effect on the system is minimal.*** KB asked if in Paul's report is he making the case,and answering one of his questions raised at the beginning of the report,that irrigation should be charged the higher rate because irrigation usage requires that the system be able to handle a larger capacity— irrigation is one of the causative factors in the system design and higher costs.*** ) PC replied,Yes. (some explanation about how the higher usage only happens for a small amount of the time and the effect of higher or lower hcf being spread out among more users more of the time affects the overall cost)*** LB repeated a point made in his report circulated by email the day before,which is that the current rate structure used by the town is not what Chris Woodcock recommended originally,and this seems important to consider now*** -4 - LF recommends that we have only two blocks,one from 1-100 hcf and a second fro 100+ to be more fair among families of different sizes.*** ) PC explained that the higher tail rate gives a stronger signal for users to change their water consumption behavior*** LF doesn't think it's right to tell people how much water to use by penalizing them with higher rates*** More discussion followed on understanding the chart on page 4 of the report.*** Began a discussion on equity issues. There are many definitions as spelled out in the draft rate report and different opinions in the committee.*** ) Discussed the chart on page 5 about elasticity of rates. It was recommended that the columns titled 'low' and 'high' be changed to 'less' and 'more' *** ) KB asked how to interpret the elasticity number and how does this information impact rate setting and consumption.*** PC began an explanation and offered to re-write this section of the report to be clearer.*** ) JB asked if there are comparisons of flat rates vs.inclining rates.*** PC believes there are,although definitions cause some confusion and added complexity. He will look into it.*** ) CW pointed out that elasticity is only one factor that affects people's water usage. Rainfall,the state of the economy,income levels and perception all affect people's water usage in addition to elasticity.*** ) More discussion followed about household size and equity.*** JB asked how many households have second(irrigation)meters and wondered how this affects how we compare water bills. Common sense seems to contradict some of the claims being made about elasticity.*** JO asked if commercial users have the same rates as residential.*** ) Yes.*** Discussed chart on page 6. It is believed that the usage shown in the highest residential block includes some irrigation. Comparing ) that figure with the sewage figure,which is about half the water usage,can help clarify how much is irrigation,but not all.*** JB asked if our(unstated?)policy goal of charging commercial users higher rates could be achieved by changing the rates to reflect ) that goal-so that large families don't get swept into the higher commercial rate?*** ) ) 23*** ) PC/CW replied that Chris recommended quarterly billing;since the town is billing semi-annually the blocks should have been doubled*** Next meeting topic:continue Rates*** Loren will see if Peter Enrich can attend on 9/14 to present his understanding of the legality of PILOTS.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#17 Tuesday September 7,2004*** Summary 1. Introduced new prospective members of the committee 2. Distributed minutes of last meeting ) 3. Distributed revised rate design report and new water and sewer analysis tables and graph 4. Discussed how we account for and compare rates within Lexington and among other towns 5. Discussed format of interim report*** Members/liaisons nresent'Initials used in minutes,Richard Pagett–liaison to the Board of Selectmen RP John Bartenstein–liaison to the Appropriations Committee JB,Richard Enrich–liaison to the Appropriations Committee RE,Kathryn Benjamin KB,Paul l Chemick PC,Lorraine Foumier LF David Laredo DL,Loren Wood LW Citizens present: Bob Earsy BE,Bruce Williams BW Wade Tambor WT,Staff/consultant present: Chris Woodcock CW Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Loren introduced two new citizen visitors who are considering serving on the committee,Bruce Williams and Wade Tambor.*** Minutes were distributed and KB offered to take them for this meeting.*** KB asked Lorraine about her comment last week to make 2 rate blocks—did she mean quarterly or semi-annually? LF replied, Quarterly. *** J8 pointed out that we currently bill semi-annually and that LF's proposed rate blocks would have to be adjusted for quarterly billing I (e.g.0-100/half year or 0-50/quarter year).*** LW added that such a recommendation requires analysis,especially regarding the proportion commercial properties pay so it doesn't ) skew the proportions terribly.*** Al Levine's report says: About 72%of the water and sewer revenue for FY 1999 was raised through residential accounts. The balance is raised through public,industrial,and commercial accounts. In comparison,about 78%of the real estate tax revenue collected in recent years comes from residential properties,with the balance being raised largely from commercial and industrial ) properties. However,Loren's 'big spread sheet' shows that in FY04 the residential water/sewer divided by the residential plus commercial plus industrial is about 77% which is higher that Al's(older)figures. Loren has a 'big spread sheet' of all the billing data for Spring 2004. There is some data for Fall 2003,but Chris and Loren are not completely confident that it is accurate. He has shared it with 3 others,and cautions that the data should be used with discretion.*** PC distributed his revised rate report,incorporating changes from last week's meeting.*** KB distributed water and sewer rate analysis tables. These reports will also be distributed electronically.*** ) JB commented that the water analysis table shows that our HCF ranges are narrower than other towns,as had been pointed out in Larry Belvin's report a week ago.*** ) PC commented that we need to appreciate what's happening inside those rates.*** LW pointed out that the yellow MWRA rate survey book compare towns at a uniform usage of 120 hcf/year. Lexington's average use 1 is closer to 100 hcf/year. In reviewing this data he chose towns that get both water and sewer services from MWRA,with Enterprise funds. The highest annual bill was$1,400,with a low of$500. Lexington's is$1,100.*** PC/KB asked CW.do Enterprise Funds have to be self supporting? CW replied,no,but typically they are.*** LW. different towns could use different percentages and ways of funding and accounting for indirect expenses,debt and financing capital improvements,which makes them hard to compare.*** DL. need more data to make our own recommendations for how many blocks and ranges we want to have, Our system for billing makes it hard to get this data.*** LW in his big spread sheet he has identified the following categories: Residential,Irrigation,Industrial/Commercial,Public, Municipal,Hanscom,VA,Bedford and Bubbles(a car wash that is billed monthly).*** CW pointed out that there are 'apples and oranges' problems with all these comparisons. Some towns have base charges,some base charges include an initial number of HCF some towns charge for fire protection.*** LW.JB has commented that high users subsidize low end users. Loren hopes to get from his data a trial rate structure that generates ) how much each category pays and what the total revenue is for each configuration.*** JB:be sure to separate irrigation*** LW.can do that and can set it separate from the rest of the block rate*** RP'if we have one rate structure,why do we discuss residential and commercial?*** LW' because the data is available. Commercial tax rate is higher than residential rate.*** CW/PC: we can have separate commercial and residential rates,but we don't now,most towns don't.*** J8: highest users require bigger equipment and drive higher capacity than average users,so there is some justification of their bearing higher rates.*** CS. actually,a large business using 10,000 gallons is less expensive to serve than 10 homes using 1,000 gallons each. The one large ) user doesn't have as great variance of demand which makes them less expensive to service. Also,there's usually one big pipe to serve the big user rather than a number of pipes to serve the many individual users. The other side is fire protection,which is 25-30%of the total cost. Lexington doesn't charge separately. The large user has a higher impact on fire protection capacity.*** RE: business use is easier to anticipate than household use*** JB: the risk is higher,therefore we need to spend more*** RP' where I'm going with this questions is,our lowest tier doesn't even capture the cost of MWRA water charges*** LW'our lowest rate is$2.20. MWRA is$1.22.*** CW'some of our MWRA water isn't metered,so it's actually a higher cost than$1.22.*** RP'if we tinker with the rate structure,we need to preserve revenue neutrality. Do we maintain the practice that commercial users pay more and residential users pay less? It is not clear.*** ) ) 24*** 11/41 ) ) ) CW MWRA cost has increased more than the town's rates. To keep the 1"tier up to the MWRA rate,the percentage increase would ) be greater than the percentage of the total revenue increase. The percentage change for the low-end user may look extreme.*** KB: although the real dollars would not be an extreme increase*** LF.I don't like us to use the term 'subsidizing, prefer we use 'equalizing"*** DL.referring to Paul's report,the I"tier is about 80 gal/day,which seems low. It would be useful to know how many households fall into this block.*** ) KB/CW Out of a total of 11,184 total accounts: 1840 households are in the lowest tier, ) 785 are in the top tier(separate from 2nd meters for irrigation) 1,270 are irrigation rate users. ) These numbers are from the fall readings,which include summer use.*** JB:do we have 3`d tier numbers? CW'we can get them. JB continued:given that some households don't have 2nd meters,does rainfall impact the variability of the P°tier? CW.yes*** LW.other rate of interest: ) Municipal: $1.10/hcf(water) $1.74/hcf(sewer) Hanscom: $3.63/hcf no sewer VA. $4.33/hcf no sewer Bedford: $1.23+flat base rate of$46,000 no sewer*** LW is it possible to change these rates,are they negotiable?*** CW' Hanscom and Bedford rates are established in a contract for about 20 years.*** ) LW they represent significant use. We need to know the terms of the contracts with VA,Hanscom and Bedford*** CW they were renewed in the last 10 years,probably not negotiable until the end of the contracts*** ) DM: believes the MWRA set the rate for Bedford*** LW Bedford pays 1%more than the MWRA rate*** - RP. where is this water measured? Who absorbs leakage?*** ) DM: there are 4 locations,we absorb leakage. *** JB: had asked Bill Hadley about this months ago. He said since this water travels through one big pipe it is less likely to be losing ) much water.*** RP' asked Loren if his big spread sheet shows the difference between municipal and public?*** LW I made some calculations and assumptions to condense 20 columns to 5. Public pays the block rates,municipal pays a flat rate.*** ) RP. and Bubbles pays. ?*** JB: in reviewing old selectman minutes he read 'an attorney for the owner of Bubbles complained about high water bills. The solution proposed by the DPW was to bill monthly. Approved. The effect was to push Bubbles'rates into the lower tier(s). Apparently the 'squeaky wheel' gets attention.*** LW. Brookhaven has their total meter reading divided by the number of units to establish bills for the households in the complex. Who can qualify for this treatment?*** ) DM: Avalon pays for one meter. Not aware of a policy in place.*** BE: aware of condominium associations or multi-family units that have asked and gotten this treatment It's the 'squeaky wheel.'*** LW- I think there should be a policy*** CW. Regarding Bubbles,while trying to help a large user by billing monthly to ease payments,there was no consideration for impact on block rates.*** LW is there anything legally challengeable in our rates?*** CW. anyone would have a difficult time,not because there isn't anything wrong,but courts tend to side with the towns,only asking if the rates are reasonable.*** ,, - LW. any successful suit in MA? *** CW' No. An example is the Flatley Company in Malden,which lost its challenge. Maybe our PILOTs are challengeable,but in my ) opinion,the town would win.*** PC. Loren,does your chart note those units that have one meter divided by number of units?*** LW' No,I intend to*** CW. Hanscom and VA,back in history,the rate increase was tied to the Lexington rate increase.*** ) LW. It would be good to know the terms of those contracts,and meter readings on cycle 9s(special billing category). *** DM: I can get that information.*** ) LW How is Bedford base rate established? *** CW' Fixed.*** ) RP' Chris,how do you come up with rate recommendations?*** CW' start with total revenue needed,it's a zero-sum calculation. Initially there was a formula,the I"tier was the MWRA rate. Used ) to have 8-10 blocks,to shift the burden to higher users. Since 1999 the percent increase has been flat across the board.*** ) RP. was there a rationale?*** CW' more of a policy. In the 1998 rates,the I3'block was too low and should at least equal the MWRA. To change the 1° tier affected others. All the other towns were going to quarterly billing. Lots of options were discussed in 1999. *** KB:shared Jim Osten's comment via email that our intermediate report should make qualitative rather than quantitative ) recommendations.*** LW good idea,but for rates it isn't helpful until they are quantified to understand the real impact.*** ) CW Board of Selectmen has a difficult task of setting rates and redistributing costs. Small users will have a greater percentage increase and will result in angry voters. Making a qualitative recommendation now may make their decision easier than going against a quantitative recommendation from this committee.*** RP. is there a date for rate setting meeting?*** , CW we're waiting for some final data and hope to be ready by the end of the month. Recommend an across the board rate increase, because the committee isn't ready.*** I ) 25*** /Li3 ) ) l RP' there's no possibility that this committee can affect the December 2004 rates? Not sure this committee is ready to make a quantitative report. Useful to make interim report with qualitative issues,so BoS isn't sand bagged. Hopefully in 2-3 months a quantitative report can be made so the BoS has time to react,vote and implement.*** RE: don't see how we can do a practical implementation. A qualitative recommendation is possible. The value of this to the BoS is that they can ask for quantitative data from DPW We don't want to get a yes/no decision now.*** LF' What impact can we have on rates for this year?*** CW/RP. None.*** LF. what percent increase over MWRA increase will Lexington increase?*** RP' that's what the DPW will recommend this month. It would be useful to have this committee's report to guide the decision- / making,moving to a more rational way to make political decisions.*** LW. regarding Larry Belvin's report,was it in the style of what we want/need for our interim report?*** Next meeting PILOTs,9/21 finish interim report,a 10 page report with a one-page executive summary?*** WT. Having read Larry Belvin's report,what stuck out were: 1) PILOTS,there seems to be an inequity in relation to the tax rate and 2)issue of steps/blocks seemed steep. The style of the report was helpful for those dealing with policy and follow with details. How do indirect costs get allocated? What is that total and how is it managed?*** LW send me any paragraph or sentences for use in the report*** RP• our job won't be over when the final report is submitted, We will need citizen review.*** BW. Having read LB's report,the#1 issue seems to be to set the rates that most accurately reflect cost,all costs.*** LW One consequence of rates reflecting costs,for example: capital: infrastructure is paid fee proportionate to usage rather than per assessed property value.*** JB: Dave Sheehan was addressing this? It's premature for us to address it.*** LW The interim report will include a reference about it.*** RP• we need a draft report days in advance to review and prepare.*** LW not sure if Peter Enrich will have PILOTs information for next week.*** ) RE: The timeline seems a bit too fast.*** RP' the rate meeting is Sept.28.n* CW one consideration is should reserves be used to keep increases down?*** JB: it's too soon to make quantitative recommendations. It's like treating a patient before the whole diagnosis is done.*** KB: it is appropriate to do triage,to stop the extreme bleeding and then complete the diagnosis*** PC: moved to adjourn. Second by many.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#18 Tuesday September 14,2004*** Summary*** I. Welcomed two new committee members 2. Reviewed a draft interim report and an alternative draft executive summary for an interim report. Discussed the focus of the report,whether to be more qualitative or quantitative. Discussed topics to be covered and how to finish writing the report;made assignments. Members/liaisons nresenr Initials used in minutes,Richard Pagett—liaison to the Board of Selectmen RP John Bartenstein—liaison to the Appropriations Committee IB,Richard Lunch—liaison to the Appropriations Committee RE,Kathryn Benjamin KB,Paul Chernick PC,Lorraine Fournier LF David Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff/consultants present: Chris Woodcock,Consultant CW Dennis Meehan,Water/Sewer Superintendent DM*** ) Business/Discussion Loren Wood announced that the Board of Selectmen has appointed two new members to our committee,Wade Tambor and Bruce Williams,who attended last week's meetings. At John Bartenstein's request,brief introductions were made.*** Wade Tambor is a retired entrepreneur with a Masters degree in business. He has an understanding of profit&loss(P&L)statements I ) and balance sheets.*** Bruce Williams also started his own company and is familiar with P&L matters.*** JB expressed appreciation for people with these skills to be added to the committee.*** LW. distributed a revised copy of his Draft Interim Report and KB distributed her alternative draft of an Executive Summary for an interim report.*** LW his goal for the committee is for a final draft of the interim report to be reviewed at next week's meeting,9/21,with final revisions made by 9/24 so the report can be given to the Selectmen by 9/24 in advance of their rate setting meeting(9/28).*** The topics that seem to need to be covered in the report include: • Reserves&Depreciation • Indirects • PILOTs • Rate design*** LW pointed out that while the reserves are kept in the separate water and sewer accounts,they are equivalent to free cash as the ) monies are not designated for capital or rate stabilization uses.*** PC wondered if capital contributions should be included with reserves and depreciation. LW thought that capital's already committed in the budget. RP said,yes,it makes sense to include capital as they're all going to the same purpose.*** DF' suggested we not get too concrete in making qualitative recommendations.*** JB:agreed*** PC:agreed. Regarding indirects,describe what they are,perhaps we'll provide criteria for DPW Regarding PILOTS and rate design Regarding reserves,depreciation and capital,explain. *** LF. agreed*** ) LW do you want me to rename to section on Qualitative Recommendations?*** IB: after executive summary,cover each category*** DL. report should consist of summary and issues under consideration,write the executive summary after the report.*** 9171 ) LF after our 17 meetings we know enough to make statements about what to do*** ) KB: that sounds more quantitative. For me,a qualitative recommendation is that policy guidelines are needed for many of these topics*** DF for example: ) • we recommend we phase out PILOTs over 5 years; • tiered rates encourage conservation so we recommend continuing them; ) • given the fact that for indirect costs it's not clear what criteria are used to establish them,Board of Selectmen should establish policy ) I don't think we're ready to make these recommendations yet.*** PC: sounds more like a status report. On indirects,we don't have details,it's a valid category of expenses,we need more information ) on how to calculate them*** LW anyone have any sentences for the Executive Summary?*** ) LF let's go around the table for each person to offer their thoughts*** JB: recommend we ask subgroups to offer summaries on their topics,as neutral and unbiased as possible*** ) LW. billing is another subgroup. Would leaders agree to provide summaries?*** KB: LW's Executive Summary sounded like we should go back to using the tax base to fund the water and sewer programs rather than have them be a fee-based service.*** ) LW' My belief is that PILOTS should be eliminated and indirects should be eliminated from the fee structure. It would simplify a lot of our questions about how to figure the indirects,and what should and should not be included.*** ) RP' You're challenging the basic concept of the Enterprise Fund?*** LW I am only noting that the stature says one can set up an account and use GAAP'we could do that anyway without an Enterprise Fund. Some towns have enterprise funds and don't recoup all their costs.*** DL. the only definition for municipal accounting is that there be a beginning and an ending balance. We have used the enterprise - fund to define costs we want to recapture,and it gives a wide latitude. Doesn't mean the enterprise fund will be used as a business. Enterprise fund accounting is a proven municipal accounting tool. We should treat the enterprise fund as a stand-alone entity with two keys: cost and revenue.*** DF the nature of the enterprise fund is our own history in terms of definition and why it was established. Have we drifted off the topic of the executive summary?*** LW Dan,do you expect that voting will be a process for the interim report?*** DF No. I am intrigued about making some recommendations. There is some cleanliness about saying we'll get back to you on these 5 topics. This is where we are,what we've done and the issues requiring decisions.*** ) LW. I expected we'd end this meeting with some language rather than disband until next week and reconvene with similar dissent on next text.*** DF' What is the function of the interim report? Is it to be a mixed bag or is it to say here is factual data and five issues identified, we'll proceed with due speed to making a firm recommendation?*** ) LW RP can you share with us what the Board of Selectmen wants?*** RP We each have different voices. In my mind,an interim report will force this group to look at issues and where are we going with them? Discussions have been fascinating but they circle around. You need to move toward a decision,but you're not ready yet. The Board of Selectmen would find it helpful for a report to state 'here are the big issues,and as you set rates this year,be aware we may have some recommendations that will have big impacts in the future. Make statements as factual as possible and attach appendices for background. You may feel you're leaning one way now,but may find you re leaning in another direction later.*** ) LF RE:keeping Enterprise Fund separate: I spoke with Mike DiPietro some time ago and asked if we need the enterprise fund to keep the water and sewer accounting of revenues and expenses separate. He said the accounting could be kept separate even in the ) absence of the enterprise fund.*** RE: I think what should be given to the selectmen:KB's executive summary has outlined concerns and direction,combine that with - RP's and IB's ideas for an interim report. Include one or two paragraphs on each issue and discuss some pros and cons. Ask the ) selectmen for guidance. It makes a shorter report. Maybe some will feel it is too short. We have uncovered many questions.*** PC: 1) Recommend the committee not do wordsmithing until the very end ) 2) decide who's writing which sections 3) think LF's point should be added to the list of issues*** ) LW. would the committee like to address Paul's questions? Paul,would you please restate them:*** PC: Do we want to put the enterprise fund as issue#6 or not discuss it further as all these issues are independent of whether or not we ) have an enterprise fund?*** JB: RE:process,yes. RE:Enterprise Fund question,we would be grappling with too much for too long. Agree with RE's scenario, except not sure we should be asking the selectmen for direction.*** DF I like figuring out what will be in the summary and who will do what. If we're going back to the establishment of the enterprise ) fund,I recall lots of good reasons for establishing the enterprise fund,such as appropriations and more. If we add this to the agenda,it will add a lot more discussion. Don't think it's likely we'd discontinue enterprise fund. For practicality I recommend we don't ) address this.*** LW. It was not my idea that we abandon the enterprise fund. The point was to give consideration to the components of the costs ) recovered through rates vs.property taxes. This question has already been raised in this committee about PILOTs. I've only added indirects to the consideration of whether they should be recovered by fees or taxes.*** PC: Capital has also been addressed as a possible transfer to the tax levy.*** LF I would like to keep it open.*** PC. I would like to add a paragraph on this. A brief description of what the enterprise fund does and that it does not require or prohibit a lot of accounting,and that the committee has not reached consensus whether to continue the practice of an enterprise fund.*** -' RP I think raising the question of the enterprise fund moves the committee far away from the original charge of the Board of ) Selectmen. I don't mind if there's some reference to the bigger issue.*** LW the chair rules that the enterprise fund is outside the scope of the charge,if there is no objection.*** ) 27*** /145� ) ) LF. It should be brought up in the future.*** DF. anyone could write a minority report.*** _ LF. I didn't say it should be in the report,I think it should be discussed.*** PC: I suggest we have a section that clarifies the point that the enterprise fund doesn't impose constraints and evaluation of the enterprise fund was beyond the scope of this committee.*** DP What is the burden of those sentences?*** LW' I'll write about the enterprise fund,innocuous and factual and not controversial. Dan has indicated he will write about the PILOTS.*** RP' what should be written is a statement of the issues with a level of substance.*** ) PC: point out the questions raised,legality,equity,tax efficiency.*** KB: I think the purpose of the interim report is to keep the Board of Selectmen up to speed with all we have been learning,so they're not overwhelmed when we finally make reconunendations.*** JB: I think it's important that we have voting members take point on writing the report,with 'alumni' from the committee available for support.*** LW' Committee members write the report. Some non-members may provide text for the committee to approve.*** LF. can each of us write a small paragraph about the categories and perhaps reach a consensus?*** ) LW I'd like to see each issue to have one assigned person. Them is no prohibition to anyone submitting his or her own piece.*** DL. it's appropriate for committee members to send their comments*** The issue of Open Meeting practices and the use of email was discussed. Does all the communication have to be copied 'to all"? LW believes we've used email responsibly,and he's kept hard copies of all correspondence he's received.*** JB: Let's not open this Pandora's box. IB&RE are looking into this for the appropnations committee and advise us on their findings.*** LW' I need Wade's and Bruce's email address and to get all the minutes to them.*** KB: I will work to get today's minutes done in 24 hours.*** I KB: Is there a budget for this committee? How do we cover the cost of producing copies of the interim report(let alone all the drafts Loren has printed for the committee)?*** ) RP. bring the final Interim Report to the Selectmen's office and they'll make copies*** JB: another topic we've discussed,but don't need for the intenm report,is how is the water/sewer information presented.*** LF. who's doing directs?*** LW don't think they're an issue*** PC: they are one of the cost drivers. They could just be mentioned in an introduction,directs and MWRA costs.*** JB: we don't need to educate the Selectmen,but the final report may need some background information for the general public I ) audience.*** LW KB can capture the 'non-issues' in the introduction/executive summary*** I 1 LW the interim report will have a paragraph or two on each topic and appendices as a separate document*** KB: recommend we circulate the paragraphs before the weekend so we have enough time to review and reflect on them before the ) next meeting*** WT at some point the broader citizenry will have access to this information,we should be sensitive to what it's like to read this cold. ) We want the general population to be able to say its reasonable and transparent—we should keep it simple. For example,explain possible phase out of PILOTs,that amount will be transferred to the tax base over time. It's important to reinforce trust,not obscure it.*** LF• LW did a great job on the interim draft and JB contributions were great,too. The group agreed unanimously.*** PC: Motion to adjourn. LF' Second.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#19 Tuesday September 21,2004 Summary*** 1. Welcomed one prospective new committee member 2. Began reviewing and editing the revised interim report,including submissions from sub-committees. 3. Set a meeting for Thursday September 23 at 8:30 a.m.to finish the review and edits. NOTE: Meeting location is in the ) Board of Selectmen room upstairs. 4. Action item: John Bartenstein to contact Christ Woodcock and Lorraine Fournier to contact DOR to get clarification and definition of their use of the term 'budget' as relates to reserve fund levels. 5. Approved a motion to give proxy authority to Loren Wood and Kathryn Benjamin to finish whatever isn't finished of the report by 10:00 a m.Thursday 9/23. 6. Set another meeting for Tuesday September 28 at 8:00 a.m. Members and liaisons present:Initials used in minutes.Richard Pagett—liaison to the Board of Selectmen RP John Bartenstein— I ) liaison to the Appropriations Committee JB,Richard Enrich—liaison to the Appropriations Committee RE,Kathryn Benjamin KB, Paul Chemick PC,Lorraine Fournier LF David Laredo DL,Jim Osten JO,Wade Tambor WT,Bruce Williams BW Loren Wood ) LW Staff and consultants oresenC Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM, Citizens/Guests precept: Dan Fenn,former committee member DF Ann Gilbert,prospective new member AG*** Business/Discussing LW' Introduced Ann Gilbert as a new prospective member for the committee. Ann's background is in accounting.*** No motion to review minutes,so moved on to reviewing the revised draft interim report.*** LW: Hope to finish final revisions today so that we can have a vote to authorize submitting the report to the Board of Selectmen. For today's discussion the chair will give preference to committee members'comments,while still allowing comments from guests.*** LF' recommend we start by reviewing each section*** Executive Summary ) 28*** /L/6 KB: had emailed to the committee last night that while she had mad Loren's masterful compilation and enhancement of the combined sub-committee reports,she did not have time to revise the executive summary,and actually preferred to wait until after the meeting today to incorporate final comments. This would require one more meeting to review that version.*** Discussion followed about how best to proceed in a timely manner. RP explained that this Friday the Board of Selectmen's office will put together materials for next Monday's meeting. Those materials are usually available for pick up late Friday afternoon,and over the weekend from the police department. *** BH explained that the DPW will make their rate-setting presentation to the Selectmen on Monday September 27 There will be a follow-up meeting,to be scheduled,which will be the public hearing.*** JB: should we establish a second meeting now to finish revisions to this report?*** ) Some discussion followed. *** Next meetine scheduled for Thursday September 23 at 8:30 a.m.(BH immediately went to the town clerk's office to schedule this ) meeting per the Open Meeting laws. The meeting will be held in the Selectmen's offices.)*** PC: thinks the current report is too long and detailed.*** ) LF liked the amount of detail. The Selectmen haven't attended our meetings and need to be brought up to speed.*** LW Let's go through each section*** Discussion followed resulting in the following changes to the Executive Summary: • Paragraph 4,underlined section,will now read: 'The committee believes that certain charges that are part of the rate setting process,such as the indirect services provided by non-DPW town offices and employees,and charges for depreciation and reserve funds,are the ones requiring careful scrutiny. ) Paragraph 6 will read: 'While the committee has not come to a unanimous decision about PILOTS,we are beginning to question the appropriateness and wisdom of levying these payments in light of the comprehensive collection of indirect expenses. _ • Paragraph 7 the second-to-last sentence will include 'changing the number of blocks' as one of the considerations for rate modification. • Paragraph 7 the last sentence will now read: 'We intend to generate models of different rate structures and their impact on different levels of users and revenue generation.'*** 2.1 Overview of Rate-Setting Process*** LW' Let's discuss the level of detail in Table 2.1-1,FY04 Water and Sewer Projected Budgets*** KB: As one less familiar with reading town budget reports,I appreciated the amount of information. How did the newest members of the committee experience it?*** WT. Is this information similar to other charts of accounts? (Yes.) Then keep it as is.*** BW; Keep the detail*** DL. the Selectmen can read this level of detail,keep it*** LW agreed,we'll keep the chart as is*** General formatting continents:*** watch page breaks,to keep pertinent information together put titles for tables on the top rather than the bottom of the table*** Discussion followed resulting in the following changes to this section:*** Paragraph 2:Move the sentence 'The sewer assessment is described later. to the end of the paragraph and site exactly ) where it is later in the report(e.g.section 2.5.3) • Paragraph 2:Change the next two sentences to read: 'The assessments are not based on current usage. The actual usage in ) CY 2004 will be accounted for in the assessment for FY 2006. Paragraph 2: Change the last sentence to: "The Committee does not have a forecast for the FY05 sewer. - • Paragraph 4: strike the text and refer to the section in Reserves • Paragraph 5:change the first sentence to open 'In order to balance the budget in FY04' (underlined text added,not to be ) underlined in the report) Table 2.1-2:add columns and headings for FY03 and FY04 in the water and sewer rate comparisons ) • Paragraph 5: change the end of the last sentence to read: .the projected revenue is seen to be about what was projected for FY04. ) • Table 2.1-3:use asterisks to define what `public' and `municipal' include • Paragraph 6: Add a final sentence: 'It would be useful at the rate setting for FY05 if the DPW would provide the ) Selectmen with actual expenses and revenues experienced in FY04. ) • Paragraph 7• change the first sentence to read: "Projections of water use are based on a three-year moving average. Last year they were also adjusted for errors in data. ) Paragraph 7'change the second sentence to read:"The chart below shows that the trend in water delivered to Lexington by the MWRA to Lexington in recent years is downward,but with variations about the trend. ' • Chart:make it a bar chart and change title to `Actual Water Delivered to Lexington by MWRA'*** 2.2 Capital.Depreciation and Debt*** ) LW'the last sentence in paragraph 1,is this double counting?*** AG:Yes. Depreciation: it's important to spread the actual cost over the life of the item. It's wrong to have the principal expense in there too.*** JO: discussed the rate model for Investor Owned Utilities or public utilities. Public utility rates include depreciation,return on equity ) and interest payments,but not principal. The utility uses the depreciation and retum on equity to pay for the investments it makes. *** DL. In rate setting them are two models,commercial and cash;depreciation is handled differently for each model.*** PC: whether or not this is double counting or inflating the rates in this area,we still need to generate a certain amount of revenue.*** ) DF' could we invite John Ryan,Finance Director,to speak with us about this?*** RP the proper protocol would be to talk with Sheila English first.*** 'i ) ) 29*** ) (LIT ) ) ) _ Following more conversation about depreciation the following change was approved:*** Paragraph 1: change last sentence to read: 'The Committee is investigating the proper accounting for principal,capital contributions and depreciation.'*** Other changes approved for section 2.2 include:*** } • Table 2.2-3: the notation in the column for 'useful life' will change from NA to"Various' • Paragraph 3: after more discussion about depreciation and acknowledging that it's a confusing concept and needs more work in committee to be able to explain it in lay terms,changed the third-to-last sentence: 'The money goes into the water and sewer Reserve fund accounts where it is combined with other monies that were collected by not budgeted to be spent. ) • Paragraph 3:replace last sentence with: "The Committee is looking into the issue of depreciation and what that term is intended to,and actually does,encompass. Paragraph 4: delete the last sentence • Table 2.2-5:delete line 3,Reserves(and change reference in 2"d sentence about to reference 'two' instead of"three' methods indicated in the Table. • Table 2.2-6:check typo?In purpose column for entry Feb-04,$300,000;Sewer 27/99. [LW has confirmed this should be 'Sewer 99'.] • Paragraph 6: change the first sentence to read: The Committee has been advised that state law permits the Selectmen to transfer some or all of the water and sewer debt from the rates to the tax levy(and reduce the rates accordingly)as a debt exclusion under M.G.L.Ch.59,s.2IC(n),which does not require voter approval. • Paragraph 6: Add to the beginning of the second sentence 'among others' 'Factors to consider include,among others: *** ) There was some discussion of how long today's meeting would run,as it was already after 9:00. Before Dan Fenn needed to leave,he said he approves of the additions made to his submission for the section on PILOTS.*** Motion made by Jim Osten,seconded by Lorraine Fournier: if we're not done with our edits by Thursday September 23 at 10:00 a.m. give proxy to Loren Wood and Kathryn Benjamin to finish the report. John Bartenstein added a request that the final report be circulated to Committee members via email by 5 p.m.Thursday,before being delivered to the Selectmen. Wade Tambor added a request for a deadline for responses from Committee members on the final draft be made by 9:00 p.m.Thursday. Motion approved without objection.*** DL. offered to assist LW and KB*** At 9:45 Bill Hadley,Dan Fenn,Dave Laredo and Bruce Williams needed to leave the meeting. A quorum still being present,the meeting continued.*** 2.3 Reserves*** • Paragraph 1. delete reference to Table 2.3-2*** Paragraph 3 generated a lot of technical accounting discussion about depreciation. One observation made was that there is a difference between bookkeeping and rate setting practices,which may be making the understanding of depreciation more confusing. In our working toward better transparency in the rate-setting process it is important to eliminate backdoors,or perceived back doors, of possible double accounting.*** The point was made that capital is collected in the rates. Additional needed capital is raised through debt exclusions. Therefore monies collected for depreciation go to the reserves.*** • Paragraph 3: change 'expense' in section(b)to 'cash outlays' and delete the following parenthetical phrase;keep section (c).*** RP. Chris Woodcock was recommending making a distinction between capital reserve and operating reserve funds.*** PC: that would help with transparency*** At about 10:00,Paul Chemick needed to leave. He asked that we postpone the discussion on rates until Thursday,and that he will revise that section,incorporating some comments made,and email to the committee before Thursday. *** A quorum still being present,the meeting continued.*** RE: DL had asked us to consider in paragraph 4,the reference to the use of reserve funds under the enterprise fund statute. It seems that we are OK and use it appropriately,in fact we don't use it much which leads one to ask if we need to fund the reserve fund at such a high percentage?*** JB: observed that in paragraph 5 we seem to have migrated from an operating expense test to a total expense test for maintaining reserve fund levels. Chris Woodcock made a recommendation in his 1999 report to have a reserve fund equal to 25%of the enterprise fund's operating costs. In his June 22,2004 memo to the committee he recommended significantly higher amounts,including the ) creation of a separately identified capital reserve. John also observed that Loren had added the last sentence about the DOR recommendation of a reserve level of 5%,of the budget.*** Discussion followed about reserve fund usage,projections,and the use of the word"budget' by Chris Woodcock and the DOR—are they referring to the same base?*** ACTION ITEM: Lorraine Fournier will contact the DOR and John Bartenstein will contact Chris Woodcock for clarification of the definition of their use of"budget.'*** Comment: it's hard to work without the FY04 actuals.*** KB asked if any of us should attend the Selectmen's meeting Monday night when the DPW will make their rate-setting presentation.*** RP. Selectmen's meetings are open to all, At the 9/27 meeting they won't discuss our report,but hopefully will use it for guidance in dealing with the information from DPW*** Scheduled another meeting of this Committee for Tuesday,September 28 at 8:00 a.m.to debrief from the Selectmen's meeting the night before.*** After some discussion about Table 2.3-2,it was agreed to remove it from the report.*** No other changes were made to section 2.3.*** The Appendix for the report will be discussed on Thursday. Jim Osten suggested a one-page index of all titles received for such an appendix.*** ,) 30*** ) JE: for our consideration,he distributed his own re-write of the section on PILOTs,done at the same time as LW and not necessarily as a suggested replacement to LW's. In fact,Loren's has the virtue of being more brief.*** ) Motion to adjourn Meeting#19. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#20 Thursday September 23,2004*** Summary*** Members and liaisons oresent:Initials used in minutes,Richard Pagett–liaison to the Board of Selectmen(present briefly)RP John Bartenstein–liaison to the Appropriations CommitteeJB,Kathryn BenjaminKB,Paul ChemickPC,Lorraine FoumierLF Jim OstenJO,Wade TamborWT,Bruce WilliamsBW Loren WoodLW Staff and consultants present: Bill Hadley,Director DPW (presently briefly at 8:30 a.m.)BH,Dennis Meehan,Water/Sewer SuperintendentDM,Chris Woodcock,Consultant(arrived 10:30 ) a.mJCW Business/Discussion LW presented a list of participants in this committee's work,to be included in the report. One change was made,to add Ann Gilbert's ) name as a prospective new member. Inclusion of document approved.*** Section 2.3–Reserves*** ) LF reported that she had called the DOR for clarification of their use of the 'budget' in reference to the percentage to maintain in a reserve. The staff person was not the same as the first one LF had spoken with months ago,and their answer was to ask what was the difference between our operating budget and total budget. *** Paragraph 5: Add to the beginning of the last sentence: 'The Dept.of Revenue has no written policy,but a DOR staff person told a committee member that they suggest. '*** Paragraph 5: (when CW arrived later,we returned to this section for further clarification). Change the 3'"sentence,replacing text ) from 'significantly higher. with 'an operating reserve of 25%of the total water/sewer budget and the creation of a separately identified capital reserve.'*** Discussion about this sentence change included CW explaining that when he had made this recommendation in 1999,it was for the total W/S budget,including MWRA costs and debt,as debt was low then. Also,Lexington was so far from having a reserve at 25%of any levels,it didn't matter what was included at that time. JB and CW had a technical conversation about Operating&Maintenance ) (O&M)costs,which includes everything including PILOTs,except debt.*** Conversation continued about the role of a capital reserve. CW explained that in 1999 the expense of depreciation was offset and did ) not impact the rates in 1999. Afterwards,depreciation was included in the rates. The idea was to accumulate money for capital improvements. That got murky when we also appropriated funds for capital through the rates. The idea had been to use the money ) identified for depreciation as a capital reserve. JB&CW continued the conversation about calculating the depreciation not on book value but on replacement cost,so that when we need to replace items we would have enough money and not need to raise more through rates or debt. RP commented that$4 million seems like a large reserve for a$16 million budget.*** 2.4–indirects*** Background: add 'department' at the end of 2"sentence.*** Discussed the tendency of indirects to show the financial need of town(i.e.restrictions of Prop.2-1/2). It is not GAAP to recover some of the town's short-fall or 'crunch' by diverting more costs to W/S indirects. It is not an official policy. We need to justify the amounts of the indirects.*** ) Paragraph 2: 2"sentence,delete 'an' before 'estimated effort' and delete 'basis' at the end of that sentence. Add a sentence between the 2nd and 3rd: 'However,we haven't seen any supporting documentation or rationale for the level of the charges.'*** ) The committee commended Loren on his work creating Table 2.4-I.*** Paragraph 5: Move the second paragraph in this section,with Table 2.4-2,to the Rate section,just before the current Paragraph 5 in ) section 2.5.*** JO: it is useful to have bullet point(s)of finding(s)from all this data. He raised some concern about the amount of increase in the indirects vs.the amount of discount given the municipal water users. It was agreed that the Committee would come back to this point after the Interim report is submitted.*** ) 2.5 Rates*** Paul Chemick distributed his revision to this section. Changes noted are based on this revised text:*** ) Background: 2"to last sentence,change 'tail block' to 'highest block rate for water'*** Bullet#6,add 'if any' at the end*** ) Delete bullet#7*** Paragraph 1. 2"to last sentence,add 'or fourth' before the last word 'block. Delete the last sentence.*** ) Paragraph 2: 1"sentence: add 'those' before 'expected"*** Paragraph 3: 3"sentence(beginning Environmental. .),end the sentence at 'total usage, deleting the remainder of the sentence(but ) withdrawals. .). *** 411i sentence,add to the beginning: 'The MWRA reports that usage of the Quabbin reservoir is comfortably below the 'safe yield, ) and continue with the remainder of the sentence.*** ) Last sentence: change to make structure parallel with 2 sentences earlier: 'Hence,the cost of equipment for distributing irrigation water is spread over relatively few hcf,so the cost per hcf delivered will be relatively high. *** Paragraph 4: 1"paragraph: add parenthetical sentence after 2"a to last sentence: (Municipal is not included because it pays a flat rate.) Strike the last parenthetical sentence.*** Last paragraph: Just keep the first sentence. Delete the rest of the paragraph.*** (Note: add new one-sentence paragraph here,described in discussion of paragraph 2)*** Table 2.5-1. discussion generated a point for future investigation into the high public usage of water—is that the schools,or the town pool or a neighborhood pool or what? *** At 10:00 Jim Osten had to leave. There still being a quorum,the meeting continued.*** Add new paragraph 5 here,moved from page 15,section 2.4.5,second paragraph and Table 2.4-2. Create a heading about Municipal ) rate considerations(none provided in meeting). Add this heading to the bullets at the beginning of this section.*** ) 1 ) 31*** ) Old paragraph 5(renumber 6):accepted changes in PC's revision.*** Old Paragraph 6(renumber 7):this is actually a new paragraph in PC's revision. Correct the formatting/underlining.*** Old Paragraph 7 should be moved to an italicized section in paragraph 8,which number 8. Change for formatting/underlining. Add 'All else being equal' to the beginning of the sentence which currently starts 'Adding a fixed charge. Delete from the last sentence the end phrase 'and tend to result in increased usage.'*** Paragraph 8: Accept PC's revisions. In the section on rate for irrigation,change 'should' to 'could.'*** 1 At 10:15 Paul Chemick had to leave, There still being a quorum,the meeting continued.*** Table 2.5-3:semi-annualize Wellesley's data:*** 72-144 hcf/6 mo $3.39 145-216 hcf/6 mo. $4.24 217+hcf $5.30*** (Loren,perhaps change the first line about Wellesley to read: 'Wellesley charges a flat rate Nov-Apr of$2.02/hcf+base charge equivalent to$10.38/6 months&a 3-tier rate in summer.')*** Table 2.54: add 'hcf'to the ratio heading columns (Loren,what is the first column?)*** 10:20 Christ Woodcock arrived.*** 10:30 Richard Pagett arrived and informed the committee of a change in the Selectmen's meetings. September 27• the DPW will not present rate setting information until October • October 4: they would like our committee to present our interim report. • October 18: DPW present rates(begin public hearing?) • October 25: Vote on rates*** LW. proposed that we maintain our timeline of finishing the interim report this week and use our meeting scheduled for September 28 to prepare for making our presentation on October 4. We are encouraged to attend the October Selectmen's meetings.*** 2.6 PtLOTs*** Cutting and pasting between the interim draft and JB's proposed text for this section,the background now reads: *** Background: Since the 1990s,Lexington's water and sewer enterprise funds have made payments in lieu of taxes(PILOTs)to the town's general fund. A PILOT charge of$500,000 was added to the water rates beginning in 1992,and a PILOT charge of$250,000 was added to the sewer rates beginning in 1997 The immediate event that triggered the decision to add a PILOT in 1992 apparently was the need to replace approximately$500,000 in annual revenue that Lexington lost when the Town of Bedford,which had previously purchased water from the Town of Lexington at a price higher than cost,joined the MWRA and became entitled to purchase water from Lexington essentially at cost. The Board of Selectmen decided to raise an additional$250,000 PILOT from the sewer fund in 1997 in order to close a budget gap of that amount in the general fund that year. When the issue was raised at the 1999 Town Meeting,an amendment reviewing PILOTs was defeated. *** The Committee has examined issues of legality,equity and rate setting. At this point,possible recommendations include: 1)Keeping PILOTs as is;2)Establishing a more systematic method of establishing the rates;3)Eliminating PILOTs;or,4)Phasing them out over a set period of years. *** In carrying out the Board's charge to 'consider the feasibility of continuing to appropriate funds through the water and sewer enterprise accounts for in lieu of tax payment, this committee has examined the following issues:*** Continue with the bullets in the interim draft and the text following.*** Paragraph 1. Delete the first 2 sentences.*** Motion to adjourn made by seconded by Respectfully Submitted,Kathryn Benjamin*** WSRSC Meeting#21 Tuesday September 28,2004 Members and liaisons nresent:Initials used in minutes.John Bartenstein—liaison to the Appropriations Committee JB,Kathryn Benjamin KB,Lorraine Foumier LF Bruce Williams BW Loren Wood LW Staff and consultants nresent: Bill Hadley,Director DPW(had to leave at 8:30)BH,Dennis Meehan,Water/Sewer Superintendent(had to leave at 8:30)DM,Guests/Citizens present: Ann Gilbert AG*** Business/Discussion A quorum was not present for this meeting. This is an open meeting,properly scheduled and publicized. Those gathered agreed to discuss the Interim Report,the drafted Bibliography,and the presentation to the Selectmen,scheduled for next Monday,October 4 at 7:30 p.m. *** It was not known if the Selectmen at last night's meeting had appointed Ann Gilbert to serve on this committee.*** BW' an organizational chart would be helpful*** LW distributed a drafted bibliography to be submitted in addition to the report. The interim report needs to be spell checked,a final copy printed,and then it will be delivered to the Board of Selectmen's office. Loren welcomes feedback and recommendations on the bibliography through Thursday night of this week.*** Some discussion followed about how extensive the bibliography should be. JB has maintained a set of binders of almost all the materials distributed at meetings. Ultimately,such a set of materials should be delivered to the Library.*** KB suggested that the bibliography for the interim report be a selected bibliography of the most pertinent references.She suggested adding the 1999 Appropriation Committee report on PILOTs that Al Levine shared with us,and perhaps the follow-up email Al Levine wrote after his presentation to us;Jeanne Krieger's timeline;and the MWRA Water and Rate Survey for 2003.*** JB suggested a grouping of the pertinent laws,including the one that prohibits declining rates,the one requiring an inclining or higher rate for high volume users,one about transferring debt,and one or two others*** Discussion followed about making the presentation.*** Based on a best guess from Bill Hadley,Loren will plan for a 30-minute spot on the agenda,and prepare a 15 minute presentation, allowing 15 minutes at least for Q&A.*** Discussed the list of participants. Recommended that instead of naming everyone,give the Selectmen a sense of the different perspectives and specialties represented on the committee.*** The protocol for such presentations is that the chair of the committee makes the presentation. The meeting is open for anyone to make comments. If committee members have a particular issue they want to be sure Loren presents,please contact him. After reviewing further the draft presentation materials,the group advised Loren to condense the education about rate setting and to focus on policy issues. Loren will be careful not to imply any recommendations at this time.*** J 32*** /5_6 1 1B asked if the FY04/05 numbers that Chris Woodcock emailed recently the final numbers?*** BH: Yes.*** Discussion clarified that Lexington received some rate relief from the state last year,which may account for the difference between the FY04 numbers Loren had and those provided by Chris.*** ) Discussed the rate setting schedule,FY vs.CY,and tinting of Town Meeting and Selectmen's rate hearings. BH explained that the rates determined by the Selectmen this October will be applied to usage from March-September 2004. *** ) AG asked if there is a committee like this that meets annually,and if not,why now?*** Discussion followed about the recent history of rate setting and the formation of this committee.*** ) BW observed that there appear to be no basic policies that deal with what things are and what they're for,how they're determined.*** AG pointed out that it is absolutely clear in the DOR manual that an Enterprise Fund is not to pay for anything not clearly related to ) the enterprise fund. That's some guidance,at least for use in determining indirects.*** JB replied that that is a DOR guideline,but the Town has no policy.*** KB suggested making a final recommendation to have a standing rate setting committee.*** JB added that it is common,or required,to have a consumer advocate present for utility rate setting meetings. This is an issue of deep ) concern to the Appropriation Committee.*** 13W.if there are substantive changes to be made that will impact the town budget,can we recommend that they be implemented gradually?*** JE: Regarding depreciation and what happens to money raised for depreciation,LW wrote in the report that the money goes to the reserve fund. JB tweaked that section to indicate that if there is a surplus that year,money raised for depreciation increases the surplus,otherwise it reduces the deficit,*** Reviewed last year's practice and impact of drawing on reserves.*** ) Discussed billing and abatements,revenues and projections. These issues were recently flagged by the Appropriation Committee to the Acting Town Manager,who replied that the town does not have adequate staff to manage these issues.*** - Discussed rate relief and its impact on revenue projections(those who qualify for utility relief can get a 20%abatement of their w/s bills).*** ) BW described the business model of standard reports for financial management.*** AG shared that audit practices have not kept up with complexity of accounting systems.*** ) The Chair called for another meeting of the committee for next Tuesday,October 5 at 8:00 a.m. He will make proper announcements about this meeting.*** ) Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#22 Tuesday October 5,2004*** Summary 1. ACTION:be prepared to approve minutes for meetings#8-11 at next meeting ) 2. Reviewed presentation of Interim Report to the Board of Selectmen on October 4 3. ACTION:prepare a list by next meeting of outstanding issues to resolve and recommendations to make for the final report 4. Scheduled meetings for every Tuesday from 8-9 a.m.through the end of the year Members and liaisons nresent:lnitials used in minutes,John Bartenstein-liaison to the Appropriation Committee 18,Rick Eurich- liaison to Appropriation Committee RE,Richard Pagett,Selectman RP Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Jim Osten JO,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Dennis Meehan,Water/Sewer Supenntendent DM*** Business/Discussion Minutes: The meeting opened with a discussion about approving the minutes. It was agreed that the minutes will be approved in groups of four over the next few meetings. Everyone is encouraged to review and have prepared any changes for minutes for ) meetings#8-11 for the next meeting.*** Review Presentation to Board of Selectmen at their Meeting October 4: *** - There was a general consensus from those who attended that meeting,that Loren did a good job presenting the report. Loren thanked John Bartenstein for assistance in answering some questions. *** RP concurred that the report and the presentation were great. One area not addressed in the report pertains to billing and abatements: they need to be reconciled. Currently we have a problem with the estimates,*** A discussion followed about auditing,accounting,abatements,billing and meter readings.*** ) Loren Wood has 12 spreadsheets from the Finance Department,one for each month for abatements. They require some work to make sense of them,but it appears that there may be about$1 million in abatements for the past calendar year. *** These abatements are due to many issues,not just that we let people not pay for$1 million worth of water: • meter reading problems(especially when meters roll over or are replaced) ) MUNIS error,adding zeroes to bills(e.g.a$1,000 bill becomes a$10,000 bill,resulting in a$9,000 abatement) • Freeze-up prevention(the DPW sends letters to 400-500 users advising them to keep a steady stream of water running ) during the cold months to prevent freeze-ups,since their water lines have not or cannot be put below the frost line in the ground. This extra usage is abated.) ) • Leak detection(the process to detect leaks uses water. We have a minimal level of leaks,about 10-15%.) • System flushing*** 3 WT asked if the Enterprise Fund is audited separately or as part of the Town audit. RP replied that it is part of the Town audit. WT asked to see a copy of the management letter from the audit. Copies were supplied to the committee. AG described the scope of an ) audit and how sparse the final report is.*** PC asked if there were any direction given from the Selectmen.*** ) JB replied that Dawn McKenna noted that at the end of our report we raise the enterprise fund as an issue,but we hadn't done the same pro and con analysis that we had with the other sections. She'd appreciate it if we would.*** LF- agrees we should review further the enterprise fund. In her meeting with Mike DiPietro,he said we don't need an enterprise fund,the monies can be managed by bookkeeping,but there is a benefit from keeping the money totally separate from the town ) monies. It was her impression that the Selectmen wanted more information,for us to go into more detail of PILOTs and Reserves,for example.*** ) 33*** 157 Th) PC: regarding indirects,are we thinking we'll come up with recommendations on percentages or a process for calculating them?*** LP I think there should be a study to come up with accurate percentages.*** RP• repeated a comment he made at the Selectmen's meeting: if 80%of the Engineering Department's work is for the water and sewer,then perhaps they should become part of the DPW and pay back 20%to the general fund. While this is not a serious suggestion,it describes clearly the problem we have with indirects.*** PC: we need to get clear on what we want to do—make a recommendation about process or percentage. We should at least flag percentages that seem out of line or suspect.*** WT. that would lead to an in-depth study of each department*** PC: it would be helpful to have a paragraph from each department head describing what they do comprehensively,and then what portion they believe goes to water and sewer.*** RP' I think that would be very useful. I don't think this group has the time to do that kind of in-depth research.*** AG: the enterprise fund cannot subsidize the town,it is supposed to have very hard boundaries. If a department's indirects to water —) and sewer started at 10%and have grown to 80%,that warrants a look.*** JB: When Al Levine met with us,he commented that some areas of indirects we may not have captured and money may need to go the other way,too,from the water and sewer department to the town. We could use an ombudsman for water and sewer,so department heads have someone to go to.*** WT is there someone responsible for looking over the water-sewer budget? It seems to be that it is the Selectmen,and that is a flaw in the system.*** BW something about findings(Loren,you said good point' to what Bruce said here,and I think you jotted something down. .1 missed it,can you fill this in? Or,I could email Bruce)*** LW. Last night we promised to make a number of recommendations by year-end,on indirects,depreciation,reserves,rate structure, PILOTs,among others. How shall we go about this?*** 1 LF. take one item a week and just work through it.*** KB: offered to review the minutes she's taken in the recent meetings leading up to the interim report,for items raised up as needing ) more consideration,and prepare a list of them for consideration by the committee at the next meeting.*** LF• everyone should prepare their own list*** ) LW everyone bring their own or email to Kathryn for inclusion in her prepared list*** KB: ideally,I'll get this emailed to everyone by next Monday*** WT I'll take a stab at findings and recommendations.*** JB: Raised the issue that we need someone on the committee to take point on reserves,now that he and Larry Belvin are not members.He'd be willing to assist. Ann Gilbert is willing to do this.*** JB: We still haven't heard from Peter Enrich on PILOTs. The Selectmen were very interested in that topic.*** PC: I'll follow up with him.*** LW how often shall we meet to get this work done?*** KB: recommend that we meet weekly,to keep the momentum going,and end closer to 9:00 a.m.*** LW' noting general support for meeting weekly,will schedule the meetings with the town through the end of the year.*** ) PC and WT motion to adjourn.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#23 Tuesday October 12,2004*** Summary ) 1. Discussed the audit report and abatement practices 2. Approved minutes for meetings#7-11 3. Scheduled approval of minutes for meetings#12-16 for the next meeting 4. Reviewed the compilation of preliminary recommendations and issues requiring more work,and made assignments for follow-up ) Members and liaisons oresent:Initials used in minutes,John Bartenstein—liaison to the Appropriation Committee JB,Rick Eurich— liaison to Appropriation Committee RE,Richard Pagett,Selectman RP Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Ann Gilbert AG,Jim Osten JO,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants oresent: Bill Hadley,DPW Director BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Discussion about audit report and abatements *** LW distributed copies of a report from Chris Woodcock:a comparison of water and sewer commitments and abatements for FY03 vs. FY04. *** Q:What does the word 'commitment' mean? Is it the amount billed or paid? DM: 'Commitment' means the billed amount based on the metered reading.*** JB:Dennis,is there a monthly[abatement]report? DM: No,twice a year. Abatements of less than$1,000 go to Norm Broulee,greater than$1,000 I get and forward to Bill Hadley. MONIS flags bills that are too high or too low. Abatements are initiated by the rate payer in response to bills. Meters are read by an ) electronic touch pad and the data is transferred directly to MUNIS, Some problems could be with old meters that need a visual read.*** LW How shall we procede? LF Investigate abatements. LW. We need a recommendation on abatement policy. RE: I recall we didn't want to get into micromanaging. It seems that the water-sewer department has regulations to manage this. It would be of interest to us to look at the gross commitment vs.the gross abatement,not the individual abatements. The water-sewer department has policies,are they written down? DM: Yes,we're getting them written. LW' Can we see them when they're done? JB: We should ask Chris Woodcock what he thinks the issues are,since he's worked with this closely for about five years. a 34*** Th AG:Over time,can the abatements be quantified? They seem variable,which affects the reserves. Is there any predictive ability? RP. That seems to be where work of this committee intersects with investigation into abatements. i DM: We always recover the cost of the water. If the leak has bumped the bill into a higher block,we will abate to the lowest block, to at least recover the cost of water. For outdoor leaks,we abate the sewer charge.*** Review Minutes for meetings#7-11*** BW' Loren,I believe that those of us who were not present at these earlier meetings shouldn't vote? LW Agreed.Thank you.*** JB:explained his handout of suggested corrections to the minutes. Regarding meeting#7,he suggests adding his note as an addition i ) rather than a change. LW. is everyone agreeable? ) Motion by PC,second by LF approved.*** LW. For meeting#8,do we accept JB's changes? ) Motion by PC,second by LF approved.*** LW For meeting#9,do we accept JB's changes? Someone suggested that we strike the phrase starting 'i.e. Motion by PC,second by LF approved.*** LW' For meeting#10,any changes? No. ) Motion by PC,second by LF approved.*** LW' For meeting#11,any changes? LF Yes,on p.3,change my comment from 'could understand' to 'would not understand. ) Motion by LF second by PC,approved.*** LW. Next meeting,we will review minutes for meetings#12-16.*** ) Review Compilation of Preliminary Recommendations and Issues Requiring More Work*** BW. What is a 'circuit breaker?' - JB: It is a provision in the state tax law that allows low income residents to get a credit of up to$800 off of their state income tax. It looks at their property tax plus'h of their water-sewer bill,compares it to their total income and then determines if they qualify. It's a state subsidy at no cost to the town. LW John,can you elaborate on why we're looking at this? JE: David Sheehan said at his meeting with us that in Provision 21 c(n)if we move principal and interest charges from the water- sewer bills to the tax base,it might have a differential affect on those who benefit from the circuit breaker. This is a detail or nuance ) for our consideration.*** KB: In preparing this compilation,I did not review Larry Belvin's final report or Paul Chemick's most recent commentaries on Rates and PILOTs,which we had said had too much nuance for us to include in the interim report. We might want to look at these as well. PC:I recommend that we make assignments to individuals to review these sections more closely and determine what needs more ) information and which items need more discussion before we can come up with a policy statement. What are the questions or tasks, vs.the decisions for us to make? Perhaps we could come up with a straw man or `dueling straw people' for our policy ) discussions.*** BW' Volunteered to work on Reserves with AG,assisted by JB,*** ) Assignments:*** Capital/Depreciation/Debt: LW LF BW ) LF' one issue that comes up is,what does it cost to carry the debt vs.interest earned on reserves.*** Reserves: AG,BW assisted by JB*** i ) Indirects: JO&WT PC: this seems like a largely clerical task*** ) Rates: PC&KB*** PILOTS: PC,assisted by JB - JB: LW did you receive reply from Peter Enrich. No,*** Billing,Collection,Administration: DL,LW ) LF' If we go to quarterly billing,we could allow abatements once or twice a year,for example,every other billing cycle,because of using estimated billing alternating with actual reads.*** Enterprise Fund: LW LF assisted by JB*** JB: I think there's one more topic:presentation of the budget. Should this be a separate topic? KB: I included this in the administration section. ) PC: Suggest including it in the Enterprise Fund section. General agreement to include presentation of the budget in the Enterprise Fund section.*** ) Motion to adjourn by PC,second by WT*** Respectfully submitted,Kathryn Benjamin*** ) WSRSC Meeting#24 Tuesday October 19,2004 Summary 1. Approved minutes for meetings#12-16 2. Scheduled approval of minutes for meetings#17-21 for the next meeting ) 3. Reviewed the reports from sub-committees on outstanding questions,tasks,decisions and draft recommendations. Members and liaisons nresent:lnitials used in minutes,John Bartenstein-liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO,Wade Tambor WT,Loren Wood LW Staff and consultants present: Bill Hadley,DPW Director BH,Chris Woodcock,Consultant CW*** Business/Discussion Approve Minutes#12-16*** LW. For meeting#12,are there any changes to the minutes?No. Motion by LF second by PC,approved*** ) LW For meeting#13,are there any changes to the minutes? No. Motion by PC,second by LF approved.*** 35*** /53 I 7 I 1 LW'For meeting#14,are there any changes to the minutes? Yes. LF' On page 2,change her comment to: "LF noted PILOTs could be phased over to tax levy,discontinued,or continued. Motion by PC,second by LF approved.*** LW For meeting#15,are there any changes to the minutes? No _ Motion by PC,second by LF approved.*** LW' For meeting#16,are there any changes to the minutes? No Motion by KB,second by PC,approved.*** For the next meeting we will review minutes for meetings#17-21.*** Reports*** JB:Report on Reserves: We have three people to talk with: 1)Bill Hadley regarding capital needs of system;2)someone from Finance about finance aspects of setting aside reserves,calculating them,managing the cash flow;3)Chris Woodcock for his perspective. JB has also been collecting data from other communities. Intend to have a written policy for our consideration in a few weeks.*** AG:added that Reserves are set up properly for accounting for the in and out of funds. Do we have a sense of the historic trends in abatements? That would help us forecast the likely abatements in the future and allow us to do a better job of reserving the right amount for working capital. We need to be clear about what we're saving for. How much is needed for operating reserves? She 1 proposed that major capital projects be financed out of debt.*** PC: What about volatility of sales or expenses? We should do a 20 year analysis.*** LF' How can we write a report with so many unanswered questions? I'm still waiting for information on depreciation,capital, reserves.*** JB: They've been handed out at prior meetings.*** LW' Everyone should bring their outstanding questions for discussion and approval next week. Then I'll send a letter on behalf of the ) committee to the appropriate town person for each question,requesting an answer.*** PC: make sure appropriation committee contacts are included in the letters*** JB: invited LF to his office to share prior meeting materials with her*** LF' I want to understand all these things. What do municipal and the schools pay for water and sewer?*** ) LW' I have that data and will get it to you.*** BH: Norman Bmle,from my department,met with you at your house a while ago.*** ) LF He did. The information he provided was incomplete.*** LW' We've received lots of information and had good cooperation from the town. Next week we'll compile our outstanding questions,identify the point persons to receive them,and send a letter from the committee to collect the final data within a specific time frame.*** PC: asking JB:Do you have specific questions you want to ask,rather than a general conversation?*** JB: Yes. We're not experts. For example,we want to ask Bill Hadley if he has reserve funds for capital needs,what is planned for that expenditure?*** AG: We may not know by next week all the questions we want to ask.*** JO&WT Indirects,distributed a hand-out,noted some typographical corrections.*** We believe there are about$2 million of questionable indirects. If we change rates to redistribute$2 million,it will affect water usage and further impact revenues.*** JB: Al Levine asked about categories for rent for buildings that may not be captured. Ask if the net is cast appropriately to capture everything.*** PC:Rates,distributed a hand-out*** ) There is one factual thing to learn,then get on to policy questions.*** PC:PILOTs,distributed a hand-out(Rates and PILOTS hand-out combined)*** Early November seems to be the soonest that Peter Enrich can meet with us to discuss his perspective on the legality of PILOTS.*** WT change in one area affects other areas. These issues are not isolated from the others.*** LW' Capital.Denreciation and Debt,distributed hand-outs*** Discussion followed. The question raised in#3 was discussed in other contexts. Need to create models to demonstrate the effect that ) changes have on other aspects of the rates.*** In the straw man candidate recommendations,LW suggested that capital assets for water/sewer be treated just like any other town assets.*** 1 Billing considerations were included in LW's report. Straw man#7 is intended to get at the 'out-of-phaseness' of our billing and rate- setting cycle.*** LW Enterprise Funds,distributed a hand-out.*** Loren encouraged the subgroups to be bold,and when ready draft candidate recommendations for discussion purposes in the group.*** JO: setting indirect percentages,seems to be informal and variable. One of our recommendations is to add more formality. Article 4, scattered presentation on water-sewer enterprise fund. The information is kind of hidden,not compiled or presented together.*** Discussion followed about budget presentations.*** ) Next Meeting: *** • Bring in factual questions to send out for answers • Make straw man candidate recommendations • Review minutes from meetings#17-21*** BH: the DPW presentation on rates for 2005 has been rescheduled for October 25,due to the Selectmen's meeting being cancelled October 18. Motion to adjourn.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#25 Tuesday October 26,2004*** Summary J I. Deferred review of minutes from meetings#17-21 until next meeting J 36*** ) 2. Debriefed from Board of Selectmen's meeting of October 25 3. Reviewed sub-committee reports and compiled questions and requests for data*** Members and liaisons nresenttnitials used in minutes,Richard Pagett,Selectman liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Richard Bunch—liaison to the Appropriation Committee RE,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** ) Business/Discussion Deferred review of minutes for meetings#17-21 until next meeting.*** Debriefed from the Board of Selectmen's meeting last night,Monday October 25.*** Shocking news reported at last night's meeting: $4.6 million is outstanding for water-sewer bills. This is a cumulative amount since ) at least FY2000. *** JB provided the numbers over the past five years: FY00=$1.2 million FY0I=$1.7 ) FY02=$1.3 FY03=$2.2 FY04=$4,6*** (Note:The significant spike for FY04 may be due to the spring bills going out late in the fiscal year(ending June 30,2004)and not being payable until,or at least not being significantly late if paid in the next fiscal year(starting July 2004).)*** ) Discussion followed about courses of action for recovering these receivables. The town has exercised attaching liens to delinquent payer's property taxes in the past,and is intending to do this more aggressively with the third quarter tax bills this year. It was ) acknowledged that these delinquent rates are driving up all of our rates. It was agreed that there is no action for this committee to take,while we acknowledge that this is shocking information.*** — KB asked BH if the term 'personal' on the proposed budget pie charts refers to `personnel' costs or something else. BH replied that 'personal' is an old term used to represent total compensation for employees.*** KB asked BH is the MWRA rate for water not increasing,as the DPW is not recommending an increase in our water rates?*** BH replied that the FY05 MWRA rate increase for water is 3%,and our current rate structure is sufficient to cover this increase(there was a surplus in FY04). The municipal rate is increasing,as it is intended to equal the MWRA rate. The FY05 MWRA rate increase for sewer is 4.2%. Also,the MWRA is projecting an increase in FY06 of 17.6%. This is due to a lot of debt coming due,for treatment plants,covered storage,etc.*** KB asked why not raise rates more this year to buffer the very large projected increase for FY067*** JB explained that the MWRA rates am only 50%of our water rates,so their rate of increase translates into half that amount of impact on our rates.*** ) BH added that it is a decision for the Selectmen.*** KB asked if the debt for the MWRA can be collected through our property taxes rather than our water and sewer rates,or if we can only recover debt for the town's capital expenditures and related debt.*** BH replied that that is an option,which this committee has begun to consider.*** ) KB asked if it is useful to get a list of the existing debts for the town's water and sewer funds and the aging of those debts.*** BH will provide that data*** JB added that it can be misleading to look at the aging of debts,as it looks like our debt burden will decrease,while there will be new debts incurred in the future,most likely keeping the debt level about the same. He and Ann,in their research on reserves,will be ) asking for the projected capital budget for the next 5-10 years,which may be more useful in determining the projected debt load and impacts on reserves and other matters.*** KB pointed out that at the Selectmen's meeting last night,there seems to be real confusion around depreciation and reserves. While depreciation is shown on the fund budgets,the reserves are referred to as a separate entity,while also acknowledging that accumulated - depreciation monies roll into the reserves at the end of the fiscal year,which doesn't seem right.*** JB:agreed that this is a major issue,and hopefully we will make recommendations on reporting that will greatly improve the ease and ) transparency of this accounting.*** Review sub-committee reports,for compiling questions and requests for data from the town*** During the course of the meeting questions were raised and a list was generated. This list is attached at the end of these minutes.*** ) DL asked about the results from the town wide leakage study.*** DM replied that they are about 10-11%,and 15%is the norm,so we are doing well.*** Discussion followed about flushing the system,both for public health safety to remove bio-film accumulations and to restore proper levels of protective agents in the water,and flushing for fire protection,which is a separate activity. A copy of the DEP report on ) flushing was requested.*** WT.Indirects: Reviewed hand-out. Emphasized the point that any changes to indirects will affect the overall town budget.We want ) to understand that before making any recommendations.*** JB: we need to make sure that the current categories of indirects are complete. For example,the indirects are not capturing the health ) benefits of indirect personnel;also,there is some question about collecting rent for the buildings.*** WT we also need a negotiator between water/sewer and the town*** WT by what criteria do the mdirects grow?*** AG: who has authority to make changes and decide whether or not to phase changes. If we determine that something is wrong,does it need to be changed immediately and totally?*** JB: Theoretically,it is an 'Emerson College' scenario(like PILOTs). Another example would be if you are driving above the speed limit,realize it and begin to slow down in such a way as not to cause injury to the passengers,and get caught in a radar trap at a reduced speed that is still above the limit,you're still breaking the law. A 'radar trap' does not exist at the DOR. There would need J to be a plaintiff.*** BW' These are called 'allocated costs, a very grey area,allowing for lots of interpretation.*** i ) AG: We have an obligation to understand. And,we live in a town where people have sued over trash collection. Will they sue over this?*** 37*** ) BW The question is,how far away are we from reasonable allocations?*** JB: This is a problem to the Selectmen to decide on. We can examine it and describe it to them.*** LW Next meeting: • Review minutes for meetings#17-21(meeting#21 did not have a quorum) • Discuss 'straw man' recommendations presented by LW at last meeting,in the areas of Capital,Depreciation and Debt; Billing,Collection and Administration;and Enterprise Funds. WT may bring some recommendations about Indirects for our consideration. PC: Motion to adjourn.*** Kathryn Benjamin*** Questions*** I. Request copies of the contracts with Hanscom,VA and Bedford for water supplied*** 2. Need information to resolve discrepancy in sewer billing(Loren's spread sheet shows$8.1 million and the Town's records indicate about$7.6 million)*** 3. Open Money question about capital cash appropriated but not spent,which goes into the Reserves at the end of a fiscal year. How much is really available for Reserve use,and how much is designated or committed as appropriated capital for projects yet to be done?*** 4. Need complete 365 days of billing for Cycle 9 accounts*** 5. What is Bubbles'/Scmbbie's(car wash)water usage?*** 6. Request the DEP report for flushing usage. (DM reported that we have or are getting technology to flush at the rate of 6 cubic feeUsecond,which they do for 5 minutes on all 1500 hydrants. PC calculated that that is 21,600 cubic feet of water, which is 1.8%of water sales.)*** 7 DL requested a list of town accounts and billing information. LW will get that data to him.*** ( I 8. What portion of the MWRA charges is for debt that can be transterred to the tax levy by the Selectmen under section 21C(n).*** WSRSC Meeting#26 Tuesday November 2,2004*** Summary 1. Approved minutes from meetings#17-21 2. Began discussion of sub-committee questions and candidate recommendations L 3. Approved a motion about the Enterprise Funds*** Members and liaisons present:Initials used in minutes,Richard Pagett,Selectman liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Richard Enrich—liaison to the Appropriation Committee RE,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Bruce Williams BW,Loren Wood LW Staff and ) consultants present: Dennis Meehan,Water/Sewer Superintendent DM,Citizens/Guests present: Denise Dube,resident and Boston Globe report *** ) Business/Discussion Review Minutes: LW any changes to minutes for meeting#17? No. Motion to accept by LF second by PC. Approved.*** LW. any changes to minutes for meeting#18? No. Motion to accept by LF second by PC. Approved.*** ) LW' any changes to minutes for meeting#19? No. Motion to accept by LF second by DL. Approved.*** LW. any changes to minutes for meeting#20? I LF' Yes. On page 1,delete the last sentence in the first paragraph about reserves. We were talking about the enterprise fund budget with the DOR. Motion to accept as amended by PC,second by DL. Approved.*** LW. meeting#21 did not have a quorum,so the notes stand as is.*** Review Caoital/Deoreciation/Debt:*** KB:question 2,do we know the rates of interest earned on bonds and on cash in the reserve account? LF believes the bonds earn about 5%. JB believes cash balances earn about 1%.*** Discussion followed about the impact of these rates.*** JB: for purposes of setting the reserve policy,recommend setting a minimum level to maintain as well as a maximum,so that we have enough cash on hand while minimizing the negative interest rate.*** KB: question 3,what does 'progressive' property tax mean? A:it means people with more money pay more taxes. It is one way of defining what is equitable.*** PC: don't know how progressive this tax is. Studies show that high income users use more water.*** BW. regarding the Enterprise Fund(EF),everything should be self-supporting. Is the EF totally self-supporting? As we move expenses to the general fund,the W/S EF becomes less self-supporting. Recommend we establish a policy for expectation of self- sufficiency of the EF*** LW Moving the discussion from Cnoital/Denreciation/Debt to Enterprise Find:what is it for,do we like it,how do we manage it? If indirects are in the tax base,they aren't disputable the way they are as indirects in the W/S funds.*** DL. we don't have to treat the EF as a business,we can say the EF should be self-sustaining.*** LW. what about PILOTs and transfer of debt?*** ) DL. they can be accommodated either way.*** KB: believes one of the key values of the EF is that it gets around the limitations of Proposition 2-1/2,not as a back-door for funding the town,but as a way not to get the town bogged down in over-rides for providing an essential service whose costs increase by more that 2.5%each year.*** BW don't want the town to get into disputes about providing an essential service*** LW. do citizens consider W/S more like roads or schools(believing that we raise funds for roads with less complaint than we do for schools)*** .) 38*** 51 J ) RE: roads were in disrepair because we didn't have enough money,so I don't think that question pertains*** BW water and sewer services need to be maintained at a very high level,as an essential service with serious health consequences.*** AG: the Enterprise Funds help with transparency.*** PC: If debt service is transferred from EF to tax levy,it can be separate from the Prop.2-1/2 limits. If expenses of w/s increase more than 2.5%,it could be a problem. EF makes sense for transparency.*** LW' Could the EF have bonds issued? It's not a Prop 2-1/2 issue,it is a property tax issue,in terms of how much our property taxes ) go up.*** AG: Can EF incur debt and then transfer debt to the tax base?*** ) RP' Yes.*** JB: Them is a 1993 amendment allowing debt exclusions by order of the selectmen,not limited by Prop.2-1/2,and doesn't require taxpayer vote. (Tax payers don't vote on W/S rates,either.)*** LW' Let's focus on the Pros and Cons of the Enterprise Funds.*** BW I favor a clean EF no funding to or from the General Fund,including no transfer of debt. The EF is immune from property tax issues and w/s is a most essential service.*** JB: let's clarify our terminology: EF is shorthand for 1)segregating costs. Jay Gonzales said we can do that without an EF There are many legal advantages to and EF and 2)W/S needs to be fully funded,including capital costs. I recommend that we use the EF showing all the costs,and then transfer the capital debt to the tax base in a clear way,so that we can benefit from their tax deductibility.*** DL. the best run waste water systems were those that could most clearly and completely account for their costs.*** ) Discussed making a motion for a recommendation about the EF and how much detail to include. Opted for a simple statement and then work on additional statements about the EF JB listed some of the legal distinctions and benefits of an EF' 1)all receipts of EF are placed in the EF 2)all interest gets credited to the EF and 3)an EF must be maintained using GAAP An EF is a useful tool.*** Motion made by PC,second by DI,recommending to the town to retain the water and sewer enterprise funds. Approved — unanimously.*** WT distributed a hand-out in response to LW's questions and straw man recommendations on Capital/Depreciation/Debt. He ) recommends the format he(WT)presented for our use and is open to changes in the content of his comments. Motion to adjourn by PC,second by AG.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#27 Tuesday November 9,2004*** Summary 1. Approved minutes from meetings#22-26 2. The Moody's bond rating of the Town of Lexington is probably not significantly affected by the water and sewer reserves as follows: In Moody's determination of the probability that Lexington's bonds will be repaid it is likely that as long as the water and sewer reserves are large enough to essentially eliminate any need for general funds to be transferred to the water and sewer funds then the actual amount of the fund reserves has no bearing on the bond rating. In addition,since water and sewer reserves cannot,by law,be used for general purposes any amount of reserves in excess of the above amount will not serve to increase the bond rating above that which is based on the status of the general fund.*** 3. It was indicated to the Committee that there is no contract between Lexington and Hanscom beyond a yearly letter of agreement at a mutually agreed upon rate for water,and that there is no contract between Lexington and the VA Hospital beyond the yearly issuance of a Purchase Order by the hospital at a mutually agreed upon rate for water. It was also indicated that the rate charged to Bedford for water is fixed in perpetuity at 1%above the MWRA's rate to Lexington,plus a yearly payment which is currently about$46,000 and which is increased yearly in a reasonable amount. None of the above customers use any sewer services from Lexington.*** ) Members and liaisons oresent'nitials used in minutes,Richard Pagett,Selectman liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Dave Laredo DL,Jim Osten JO,Loren Wood LW Staff and consultants oresent: Bill Hadley,Director,DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion The Chair thanked Dennis Meehan and Bill Hadley for providing the answers to the storm drain cleaning and MWRA debt that is eligible for transfer to the tax rate. He also extended a general expression of appreciation for all the efforts the DPW has put into providing the Committee with information.*** ) Review Minutes: Minutes from meetings#22-26 were approved with no changes.*** ) Continue review of Capital/Denreciation/Debt Issues: KB:question 3e: which large volume users do not pay property taxes?*** A. Bedford,the VA Hospital and Hanscom.*** DM: We have a contract with Bedford to provide water at the MWRA+1%. They also pay a$45,000 carrying charge.*** ) RP' is there an escalation clause?*** BH: Yes. It's in the contract.*** DM: VA and Hanscom do not pay a carrying charge. Their water rate is affected by changes in the Lexington water rate. We have not found a contract between Lexington and the VA Hospital,we have found a purchase order from them for water we provide.*** ) Discussion followed about hypothetical scenarios.*** LP Cycle 9 usage,is it calculated in Lexington sewerage charges?*** ) BH:No. Their water is metered separately and deducted from Lexington's total water usage.*** JB: the government is very meticulous about contracts. What I'm hearing is an archaic system for charging rates.*** ) LW' we are the sole source for their acquisition.*** DM: Regarding Hanscom,we've looked through our files,called,can't go on the base. We've asked if we have a contract or a letter of agreement with them. They've said there's a letter of agreement,which covers one year(renewed in September 2004?). JB: so,we're working with a clear slate*** DL. no mason for us not to negotiate a contract. It would make sense for both parties.*** DL. the pipe lines connecting to these users,who paid for them?*** ) 39*** ) 9 BH: no other service is provided off the line to Bedford. They paid for it. Hanscom has a dedicated line. The VA water comes off one of our lines.*** JO: we did a big expenditure about 10 years ago,updating and connecting on Rts.4&225. We did a deal on sewer with Hanscom, installing a high pressure line through Lexington and they paid for mad repaving.*** LW' We all thank Dennis Meehan for a great amount of work gathering data for this committee.*** PC: how do our rates with Cycle 9 accounts compare with our tail block rates? Tail block is$4.99. Hanscom pays$3.63,VA pays $4.33 and Bedford went from$1.23 to$1.35.*** JB: there is no legal prohibition to making a profit on charging for water to VA and Hanscom. But as a sole provider,there is a negative repercussion or at least perspective to price gouging.*** 1 LF. regarding QI,Moody's AAA rate,we had a discussion a while ago about the impact of enterprise fund reserves on the town's rating.*** JB: at an appropriation meeting about a month ago,John Eisenthal,our consultant who advises us on dealing with Moody's,attended. He said their primary review does not look at enterprise fund balances. If there was a significant deficit in W/S enterprise fund,that had to be made up from the general fund tax levy,that would put our bond rating in jeopardy. I would venture that this concern is very small.*** PC: so Moody's would like to see a sufficient reserve level in the W/S enterprise fund to protect the General Fund?*** JB: there's a wrinkle under the Enterprise Fund statute: if we run a deficit in one year,we can make that up in rates in the following year. This provides an extra layer of protection for the General Fund. I don't think Moody's gives much concern to W/S enterprise fund reserve level. We've had lower reserves years ago and still had a AAA rating. (After continued discussion on this topic,JB also stated that 'if we're very tight in general fund free cash,Moody's would care about w/s enterprise fund reserve levels.')*** RP' If W/S enterprise fund reserves were zero,that's a red flag. Having reserves of 20-30-40%doesn't get us brownie points.*** PC: Adequate reserves is important. Extra reserves isn't a benefit in regards to the Moody's rating.*** JB: funds can only flow from the general fund to the W/S fund,can't have W/S fund money going into the general fund,so the enterprise fund level doesn't matter. We've never drawn on the general fund for the W/S enterprise fund.*** LW' Let's continue this conversation off-line and revisit it next week if necessary.*** JO: Where are we in terms of finishing our work?*** LW' Last week we passed a motion to maintain the Enterprise Fund. The way to complete our report is to offer motions. Any motion that is passed can be rescinded by a later motion.*** Next Week's agenda: Continue with capital/depreciation/debt issues.*** Handouts from LW * Draft final report * Letter to Sheila English,Bill Hadley and Dennis Meehan Motion to adjourn by LF second by KB.*** ) Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#28 Tuesday November 16,2004*** I ) Summary 1, Approved minutes from meeting#27 I 2. Update from Board of Selectmen,that an audit has been requested of the water-sewer enterprise fund,including a meeting with the auditors and this committee. ) 3. Continued to work with the Working Copy of the Final Report,specifically on issues related to capital,depreciation and debt. 4. One motion made and tabled,(Loren,does this need to be mentioned here?) 5. Motion made and carried:that the committee recommend that the Town revise the ratemaking process so that each dollar of capital investment is recovered either through depreciation OR a charge for bond principal,but not both.*** Members and liaisons nresent•Initials used in minutes,Richard Pagett,Selectman liaison RP John Bartenstein—liaison to the ) Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Dave Laredo DL,Jim Osten JO,Wade Tambor WT,Loren Wood LW Staff and consultants nresent: Bill Hadley,Director,DPW BH,Dennis Meehan,Water/Sewer Superintendent DM,Chris Woodcock,Consultant CW*** Business/Discussion Update from Board of Selectmen: ) RP'reported from the prior evening's Board of Selectmen's meeting that Linda had informed the Board that she has asked the auditors to do an audit of the water-sewer enterprise fund. She would like part of that audit to include the auditors meeting with the Appropriation Committee and with the Water-Sewer Rate Setting Committee. Depending on the results of the audit,she may also recommend that a peer panel be set up to look at the process for how we handle the accounting of the water-sewer enterprise fund.*** Minutes: LF recommended a change to the minutes of November 9: in the Summary section,the first sentence for item#2 to read: "The ) Moody's bond rating of the Town of Lexington is probably not significantly affected by the water and sewer reserves as follows: Motion made by LF second by DL,approved. Minutes approved as amended.*** Discussion: PC distributed a chart showing the impacts of various changes to the water and sewer rates. One correction was noted,that the ) amount attributed to PILOTs is$750,000 and not$1,000,000. The committee expressed its appreciation for this work.*** LW referred us to the working copy of the final report,item 2.1 FY04 Financial Report. The Interim Report has the projections for revenues and expenses,the Final Report will have the actuals.*** BH: Regarding Table 2.1-2,the amount for `PILOT(included in contract services)' needs to be corrected. (Loren,what was the ) correction?)*** PC: Recommend that the motion at the beginning of section 2.2 be made into two separate motions. The bond principal repayment issue overlaps with the depreciation issue.*** 1. transfer to tax levy 2. overlap bond principal overlap with depreciation 3. capital funded through cash capital OR capital funded through debt and depreciation. Normally a business would fund capital through equity and debt. That's clearer and my preference.*** 40*** In ) WT. this is the double counting issue.*** PC: The Town needs to determine a way of counting for capital funding once and choose which method to use.*** ) JB: Neither Ann nor Bruce are here. In their discussions,they also talked about this overlap. They considered proposing an annual maintenance charge. We appear to spend between$500,000 and$1,000,000 on maintenance each year,and that should be counted as an annual maintenance expense and not as capital,then there is no need for depreciation and no need to borrow and pay interest on debt. They want to talk with BH and others to develop this idea further.*** DL. this is a simple matter of accounting. We need to resolve the double counting issue.*** CW Be careful distinguishing between maintenance and capital. The Federal regulations say that sewer rates need to recover operation,maintenance and replacement costs.*** PC: Eliminate the cash capital line from the budget and treat it as maintenance and hence as expense,OR as capital recovered from depreciation. The decision on cost would be made by town management.*** DL. I second that motion.*** Discussion followed.*** LF' I propose and amendment to the motion: discontinue depreciation. If need be,increase capital expense.*** ) LW' This would be better handled as a separate motion. If we handle this as an amendment,we vote on the amendment,then on the motion.*** ) JO: We will always have depreciation. Capital and maintenance are shown separately in the budget AND not use depreciation as a source of rate setting.*** DL. Do LF and PC accept this re-wording?*** PC: What does it mean to have capital in the budget without depreciation to recover the cost?*** LF' There isn't any other town that charges depreciation?*** CW Water-Sewer is an Enterprise Fund,the schools aren't,which is why depreciation doesn't show up for them.*** ) PC: Where do we recover the cost of the project?*** - WT. In reviewing accounting fundamentals,a balance sheet pays off capital as bond principal or depreciation.*** LF' Depreciation should not be combined with reserves.*** JB: Recommend a sub-committee investigate this further and come back with a proposal.*** PC: I support segregating depreciation. I support amending my motion with WT's language.*** ) LW' Motion to table this motion by WT,PC approved. (Loren,I seem to have missed some of the flow of conversation here,did Wade propose tabling this motion? Can you reconstruct this part of the minutes better than I have?)*** Discussion followed about open meeting laws and our conduct of business. *** LW' The Chair encourages the working group of LW WT,AG and PC to work on this issue further.*** Comment: It's an artificial framework to separate depreciation and reserves.*** PC: The other overlap is charging for capital AND collecting for depreciation. I move that the committee recommend that the Town revise the ratemaking process so that each dollar of capital investment is recovered either through depreciation OR a charge for bond principal,but not both.*** Clarification: the overlap issue is that we charge for depreciation on the capital investment AND recover the principal payments on the debt used to finance the investment.*** WT. Second the motion.*** LW' How does this affect the transfer of debt to the tax levy?*** ) WT. This does not prohibit that transfer.*** LF' I propose an amendment for this motion: so long as revenues collected for depreciation are kept separately.*** ) LW Is there a second? No,therefore the amendment is not carried.*** JO: Where will we make motions for funding capital?*** ) DL. This motion doesn't prohibit us from making other motions.*** Motion voted on and carried.*** -� Recommendation that motions be submitted in writing.*** JB: Has anyone heard from Peter Enrich?*** PC: I'll nudge him again.*** LW' Possibly we should establish a time certain for making a decision on PILOTS.*** ) DL. Suggest we rethink our work schedule and our deadline to complete our final report by the end of this year,as it's hard to get a ) lot of work done between December 15 and January 5,due to the holidays. Motion to adjourn by PC,second by WT.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#29 Tuesday November 23,2004*** Summary 1. Approved minutes from meeting#28. ) 2. Received notice that Peter Enrich would make a presentation on PILOTs on Dec. 14. 3. Discussed Bruce Williams'proposal for funding the water and sewer services,which led to a motion to accept his first alternative: 'Fund the total costs of W&S services by charging users based on the amount of the service consumed. With this approach,no costs being transferred from or to the Town's General Funds(cost allocations from and to the Town is acceptable). This motion was carried,with a note that the issue of how PILOTs,subsidies and indirects will be handled is still to be determined. 4. Began to discuss how to handle depreciation. 5. Members are encouraged to prepare and circulate written motions before meetings.*** ) Members and liaisons oresent:Initials used in minutes.John Bartenstein-liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chernick PC,Lorraine Fournier LF Dave Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants oresent Dennis Meehan,Water/Sewer Supenntendent DM,*** ) ) 41*** IS7 'I Business/Discussion. BW. presented his draft proposal for how to fund the water and sewer services. He emphasized that the selectmen need to make a fundamental policy decision:either to make the W/S enterprise funds totally self-sufficient or to move some of the costs of the W/S service to the general fund,to be collected from the tax levy so as to afford some residents the opportunity to take a tax deduction.*** JB: regarding tax law,once extreme is W/S paid 100%by tax levy. The law states that rates can't be descending,so the MWRA charge for water would be a separate fee.*** _ Discussion about BW's proposal followed.*** DL. thought the last$3 million borrowed for water/sewer capital was shared with the town.*** JB:we used the town's bonding capacity to get out loan.*** In considering Alternate#2(to 'charge users for only MWRA costs,paid for by user rates. MI other costs would be paid from the General Funds and paid(collected)from real estate taxes.'),we drew up a list of Pro's and Con's:*** PRO CON * increased tax deductibility *need massive override(note: debt transfer doesn't require override) • increase property taxes • lose track of accounting for W/S expenses,less transparent and less accountable(how important is this?) • increased competition for general funds • tax advantage is variable and not available to all*** LW. there doesn't appear to be a lot of advantage to move to Alternate#2. Can we vote?*** LF how much would someone save from a tax deduction?*** LW. for example,if you have a$1,000 W/S bill,about half,or$500 would be deductible. At the 25%tax bracket,you would save about$125.*** PC: property tax would increase more,because some big users don't pay property taxes.*** LW. KB presented a proposal that might address that issue*** LW There is a savings,but perhaps not enough to make a change worth it?*** KB: make a motion to give the Board of Selectmen three scenarios: 1. Bruce's model(Tub On Own Bottom)—different from what we're doing now,in that there would be no PILOTs(maybe),no municipal subsidy(maybe),the town would pay the W/S fund for snow plowing service,and indirects are called 'allocated costs' (maybe). i 2. Maximize tax deductibility 3. A hybrid*** i ) BW. the Enterprise Fund guidelines already offer these three scenarios*** JB: I recommend that we avoid piecemeal appeals. It would be hard to make a decision in a vacuum. I recommend completing out I ) work without an intermediate decision.*** PC: a final report could describe two scenarios.*** DL. discuss capital costs and capital funding*** LF concerned that if we make too drastic changes,the Selectmen will be overwhelmed. If we take it in stages,it will be better than plunging ahead with lots of mistakes*** PC. recommend that the decision on PILOTs is to be determined,as are the municipal subsidy and handling of the indirects.*** Motion made by BW second by LF accept motion of Alternate#1 as written("Fund the total costs of W&S services by charging users based on the amount of the service consumed. With this approach,no costs being transferred from or to the Town's General ) Funds(cost allocations from and to the Town is acceptable.').*** PC: have the minutes show the interpretation on PILOTS,subsidies and indirects.*** WT in essence,we're continuing what we're doing,while cleaning up costs and transfers. There's a lot of"housekeeping' to be done.*** PC: move to call the question*** The motion was voted on and carried.*** LW. would like to see bonds moved to the tax levy.*** DL. when we make our recommendations,put it all on the table so BoS can make an informed decision.*** ) PC: could be done two ways: dissenting report or include multiple scenarios in the report.*** LW. expressed appreciation to those who prepared materials for this meeting. Encourage others to do the same.*** Discussion about working group on Reserves and Depreciation and BW's proposal not to include depreciation.*** DL. it's just semantics*** BW. so many assets are appreciating faster than they depreciate,so the costs are meaningless.*** LF when will auditors meet with us?*** JB: it may have been a mis-statement that they will meet with the whole committee. They will start their work in beginning of December.*** DL. do they have a mission statement or scope of work? JB: that's not clear.*** DL, it would be helpful to provide them with our outstanding questions*** KB: who will represent us and select our questions? A. LW 7B,maybe BW*** PC: on BW's proposal about depreciation,how do you recover principal cost for a project?*** BW. if it's a$1 million project(and I'm not clear what the projects are),example,to replace mains,will take 2-3 years,if you have a project,it will be forecast,therefore build reserves in advance and increase rates during project to cover all costs. Go to debt when you have a big project in a short tens.*** ( PC: we clearly have work to do in deciding if we I)charge in advance or 2)borrow and recover. Do we want to have capital from revenues or treat it more like a business?*** BW. What does the W/S maintenance and repair budgets look like over time? It looks like we have on-going substantial sums.*** Announcement: Peter Enrich will make a presentation to the committee on Dec.14. He will circulate something in advance.*** ) Motion to adjourn. ) 42*** /6G ) Respectfully submitted,Kathryn Benjamin*** ) WSRSC Meeting#30 Tuesday November 30,2004*** ( ) Summary 1. Discussed and tabled a motion about the number of rate blocks to set and the range for the blocks. Part of the discussion ) included whether bills should be issued quarterly or semi-annually. This motion will be revisited at the next meeting,for which scenarios and projections will be prepared;a member of the Finance department will be invited to come to answer questions and present their side of the billing process.*** Members and liaisons present:Initials used in minutes,Richard Pagett—Selectman liaison RP John Bartenstein—liaison to the ) Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Ann Gilbert AG,Wade Tambor WT, Bruce Williams BW Loren Wood LW Staff and consultants present: Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion The issue of Reserves was discussed.*** LF' Motion:to set rates at two blocks,the first from 0-100 hcf,the second is anything above 100 hcf. Second by LW*** Discussion followed,including whether this would be billed semi-annually of quarterly. If quarterly,the hcf would need to be ) adjusted.*** R: Is this a thinly veiled way of creating commercial rates?*** LW- need to be careful about this*** JE: reminder of Jay Gonzalez'discussion many meetings ago,that a commercial rate would need to be justified. It could be justified since we have a separate commercial tax rate.*** BW what's the effect on overall revenue?*** DM: described possibilities and impacts for billing quarterly*** LF' the benefit of quarterly billing is it's a convenience for rate payers*** LW two blocks is a faimess issue to better equalize rates among families of different sizes*** JB: low end users would experience a bump*** LW- because low end users are subsidized by high end users*** JB: not sure if we should recommend a phase-in to smooth the bump*** LW' would PC please make a proposal for hcf break points?*** ) PC: if we're not going to do more readings and just add estimates for the additional quarterly bills,instead offer an option for people to pay quarterly on the semi-annual meter reading: half how and half in three months. Having an extra bill is a nuisance for some people.*** LW DM,would this be hard to do? DM: it depends on the finance department. Don't know.*** LF• we should have someone from Finance here to answer questions.*** KB: another example is the budget payment plan for heating bills,equal payments made over a 10-month period,with the balance made up in the last bill*** RP• we need to be careful not to create more work for a finance department that isn't staffed for more work.*** PC: what are the costs for reading/bi0ing,are they worth the advantage? The advantages being easing cash flow for rate payers and giving better information on water usage.*** LW' the Town doesn't need quarterly billing for cash flow.*** PC: Motion to table this motion until next week when we have different scenarios and projections for two blocks billed quarterly and semi-annually. Second: WT. Carried.*** JB: I think we should invite Chris Woodcock to our rate discussion meeting.*** ) LF: and invite someone from Finance.*** LW DM would you be able to answer these questions or prefer to have someone from Finance?*** DM: I know I'd be creating a nightmare for Finance. I'd like to have Rose come and present her side.*** LW I will ask Linda if Rose may attend our meeting next week*** -4 - LW&PC will create scenarios.*** LW' Reserves and Indirects: think that 5%of the revenue for the W/S budget is enough for a Reserve Fund to provide rate protection ) or relief.*** JB: uncomfortable making a decision until we learn what the audit show*** LF' a ceiling should be set. 25%seems very high*** ) JB: as a matter of process,I'd prefer to have the subgroup make a proposal.*** Motion to adjourn by PC,second by AG. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#31 Tuesday December 7,2004*** Summary 1. Heard from members of the Finance Department on W/S billing process and possible impact of moving to quarterly billing 2. Heard report on sub-group meeting with members of the finance team on December 3,2004 3. Established meeting schedule for 2005;acknowledged that our final report will not be done by 12/31/04.*** Members and liaisons nresent'lnitials used in minutes.Richard Pagett,Selectman liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL, Jim Osten JO,Wade Tambor WT,Loren Wood LW Staff and consultants present: Rose Ducharme,Finance Department,W/S Revenue Officer RD,Sheila English,Director,Finance SE*** ) Business/Discussion LW Reported that he and JB met on Friday, 12/3,with Sheila English,Deb Brown(Appropriation Committee vice chair)and Eric ) Demose,the auditor from Melanson Heath. He introduced Rose Ducharme,from the Finance Department,who is attending today's meeting to discuss the Finance Department's perspective on the impact of going to quarterly billing. As Rose's time is very limited this morning,we will have a report on the Dec.3 meeting later in the meeting.*** RD: The additional work of billing quarterly rather than semi-annually would overwhelm the staff. After the failed over-ride last ' year,the finance staff was reduced from 6 to 4.5. The W/S clerk was laid off and Paul,a revenue clerk,was moved to the W/S clerk's position. *** 'L 4 0 43*** } /6 / The process for generating the W/S bills starts with the W/S readers getting the meter information to Dennis Meehan,who gets it into the computer/MUNIS system. A high-low usage report is generated. The data file is sent to an outside vendor,Document Technology of RI,who prints the bills. The Finance Department does the collection process,including 'reminder' letters.*** Liens are supposed to go on the 3ra quarter property tax bill,which has to be an actual bill,not an estimated bill. We had problems doing this last year,the state gave the BoS an option to make 3rd quarter bills estimated.*** RP. Last night the BoS gave the assessor's office permission to estimate the 3r°quarter bills. Please lien the 4"quarter.*** Liens are supposed to be resolved by close of sale. If closing isn't done properly,it isn't the Town's responsibility. The Register of Deeds doesn't change the name of an owner of a property for 1 to 1-1/2 years.*** RD: The prior revenue officer didn't attach liens for 2-3 years,before I came on Nov. 1,2003. When people pay their tax bill,the lien is paid first out of the proceeds.*** AG: theoretically we'd only be 3 quarters behind in W/S bills.*** RP' not everyone pays their tax bills,either.*** DL. how is reading data entered into MUNIS? A: direct download from meter reading 'guns. 1,200-1,500 blue data cards are manually entered.*** JB: accounts receivable,is it base line or whole cumulative? A. whole AG: what percentage bills are not paid? RD:don't know*** LW' propose that he,PC,DL and perhaps JB meet with Finance/MIS staff to answer the questions raised at the 12/3 meeting. Meet in January,date to be determined.*** BW' what is the structure of the Finance Department?*** SE: Comptroller,Assessing,Revenue(includes W/S billing,which is really a DPW function),Purchasing.*** LF is MUNIS system adequate to handle W/S billing or should we use another system?*** SE: need to evaluate how the system is or is not performing and what are the options.*** KB: it makes no sense that the W/S clerk was eliminated due to the override if W/S Enterprise Fund is separate from the General Fund.*** SE: I have requested a 'process analysis' —flow charts of time and effort to do the job. It is used to identify critical points of failure: software,internal controls or transactional issues.*** LW' FY03&FY04 summary of commitments and abatements: has there been any change to them recently?*** SE: that's what we'll address in the audit*** j ) LW JB pointed out on 12/3 that some accounts have very high usage.*** LF why are some accounts not charged for sewage? Seems to be random.*** A. Hanscom and VA Hospital are only water customers;they take care of their own sewage.*** Renort on Dec.3 meeting with Finance nersonnel*** j j JB: the stated reserves for FY03 are$3 million. Reserves are at$2.3 million now. These figures are certified. Expected reserves to have increased based on billing and revenue numbers. Could be missing up to$2.7 million.*** Accounts receivable report doesn't make sense. For example,6 month bills at$30,000,a couple at$500,000. Clearly,these are errors. If we remove these errors,we can account for the difference in the Reserve levels.*** There may be errors the other way,people who were inadequately,or under billed. Auditors will devise a time table to do this work, will take about 1 month.*** To the extent that some of our work depends on this information,how much work can we do until we have this correct data?*** AG: it makes no sense that the exception report has not generated more action;seems to be a major lapse of internal controls. Who was allowed to make the decision not to issue liens?*** SE: We have an entirely new finance department. MUNIS conversion delayed liening process. Management made a decision last ) year to make the 3r°quarter tax bill an estimated bill,so we were not allowed to have liens on that bill.*** LW. Final Report target date,it is premature to set a new date. It won't be done by 12/31/04.*** ) Set meeting schedule for 2005: Tuesday mornings from 8 a.m.to 9 a.m.weekly.*** Vacation: Dec.28,2004*** Meet again:Jan.4,2005.*** The committee expressed its appreciation to Sheila and Rose for attending today's meeting.*** ) Motion by PC to adjourn,second by DL.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#32 Tuesday December 14,2004*** Summary I. Presentation by Peter Enrich,former Selectman and current law professor,and discussion on the PILOTs issue. Resolved to recommend to the BoS that they request a determination on the legality of PILOTS from Town Counsel.*** Members and liaisons oresent:Initials used in minutes,John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present. Deb Brown,Appropriation Vice Chair DB,Dennis Meehan, Water/Sewer Superintendent DM,Chris Woodcock,Consultant CW Guest: Peter Enrich,former Selectman and law professor PE, *** Business/Discussion Peter Enrich,at the request of the Committee,had prepared a written response to John Bartenstein's July memo about the legality of PILOTS. Today he attended the meeting to elaborate on his report and to answer questions from the committee.*** Peter opened by acknowledging that his memo was not as thoroughly researched or written as if for a formal legal hearing. At the end of our meeting,we agreed that if the Selectmen want a complete and formal legal analysis on this issue,that Town Counsel should be consulted.*** Peter described a syllogism that he believes we are using for understanding PILOTs: • Fees(direct and indirect costs)are cost of operations,not cost of government • PILOTS are a cost of government 44*** > /‘a 1 • Therefore,under Emerson,PILOTS are not legal*** Peter believes that PILOTS are not government costs. The Enterprise Fund,which does not pay taxes,benefits from services provided by the town(e.g.police,fire,streets),which are supported by taxes. PILOTs are an appropriate way of contributing to these services. Further,the Enterprise Fund is authorized to make PILOTs,which are voluntary and negotiated payments. Peter does not believe Emerson applies here.*** A subsidiary point: even if a court were to conflate fees and PILOTs(which he doubts),given the approach courts have demonstrated ) historically,there is a high degree of deference in favor of municipalities as long as costs are reasonable. There is a wide range of incidental costs,and the Enterprise Fund benefits from the general services of the Town.*** ) PILOTS are paid by many entities which recover their costs from user fees(e.g.Massport). He doesn't think the court would rule against PILOTs because of the impact such a ruling would have on other entities.*** The three prongs of the Emerson case distinguish a fee from a tax: ) 1) the charge must be for a particular service,not enjoyed by the Town at large 2) the service must be voluntary,the user must not be obliged to take the service ) 3) the fee can recoup expenses incurred by Enterprise Fund for delivering services,cannot be applied for General Revenues for the Town.*** LF how are PILOTs different from direct and indirect expenses?*** PE: Direct expenses are costs related to staff and other expenses related directly to providing water and sewer services;indirect ) expenses are costs related to other Town services which help provide for the water and sewer services and enterprise fund administration,such as the finance office and Town Manager;PILOTs are voluntary and negotiated payments to cover incidental services such as police and fire protection,road maintenance,etc.*** LF• the history of the PILOTs is that they were instated because of shortfalls in the General Fund.*** ) PE: The first event was a PILOT of$500,000 which replaced the revenue stream originally from the sale of water to Bedford before it became an MWRA town.The second event was an additional$250,000 PILOT which was a voluntary,negotiated amount.*** -H — SW. All the other costs(direct and indirect)can be objectively established. Can't be objective for the amount of PILOTs;they seem more arbitrary.*** PE: Them are some constraints on PILOTs,they needs to be comparable to taxes paid by a private business;the current amount could be more closely calibrated.*** AG: What property does the Enterprise Fund own? And,if the Enterprise Fund went away,who would own the assets and pay for them? *** PE: There are the physical assets of all the pipes and buildings. In many other states(for example,CT),private water companies pay taxes, (CW. there are a few private water companies in MA.) That's why Enterprise Funds are useful to a town.*** DL. Getting to the discussion on whether PILOTs are legal,we have legal staff,we should recommend that the Selectmen/Town Manager instruct the lawyers to make a determination.*** LW On the voluntary and negotiated aspect of the PILOTs,who would be the parties for negotiation in this case?*** PE: Town Meeting and Town Management.*** PC: NSTar pays property taxes. Regarding who negotiates with whom,remove the subsidy,run EF more like a business,suggest to committee: recommend a mlu so that PILOT is set so it acts more like a tax.*** WT. look at this through the eyes of a citizen,I have some problems with the combination of indirects and PILOTs that make it look like it's a dodge around Proposition 2-1/2. Citizens care more about policy question than legal question.*** PE: Nothing in my report that says we have to have PILOTS*** JB: Before we had an EF but provided W/S services,could we have charged a PILOT?*** PE: We couldn't require one,the Town could ask for a payment of"incidental' costs as opposed to 'indirects. *** JB: Would Emerson have applied before the EF?*** ) PE: Yes.*** JB: So,adoption of EF changed the applicability of Emerson.*** JB: When we stopped selling water to Bedford at a profit,was the profit earned by EF from this sale,was the money paid to the Town? All revenues must be deposited in the EF*** JO: We bought water from MWRA and sold to Bedford.*** ) JB: Town Meeting negotiates for both sides. Can the Town engage in a negotiation with itself: Were there any real negotiations?*** PE: There was a committee formed(1999?)that came up with the policy to charge PILOT rates for seven years. It's a common practice to negotiate both sides,it can be done badly or well.*** JB: Do you know of any other MA towns that pay PILOTS?*** PE: in 1997 no others. DOR might know.*** JB: Marblehead just did recently;Mansfield tried,but the DOR wouldn't approve,so they didn't.*** PE: DOR hasn't raised any objections to the Lexington practice.*** JB: Do you think they know?*** PE: Yes. Almost$1 million would be noticed. Vague language in their guidelines indicates that they're aware and not paying close - attention.*** LF PAYT was found to be illegal,due to a by-law. Question if the money collected through PILOTs is double collected through other indirects? How do we calculate how much time the incidentals really benefit the EF?*** ) PE: The Town isn't running a surplus. Either the Town reduces$750,000 of services,or raises taxes. That's a legitimate question. Doesn't amount to paying twice for the services.*** LF If the Town collects money for PILOTS,do they keep track of how the money is allocated?*** - PE: That's not how it's done. A business pays a tax based on value of its property. They receive a wide,miscellaneous array of ) services from the Town.*** LF We need to know how much is going to the Town,Reserves,etc. Bookkeeping is not a good enough excuse to collect money for PILOTS.*** PE: The Water/Sewer Enterprise Fund can reasonably be expected to pay to the Town for incidental services provided. We're doing this approximately;we could do it better.*** AG: We're not a for-profit entity,so need to compare us with other nonprofits. Lots of nonprofits don't pay PILOTS.*** ) l ) 45*** ) /63 ) PE; It's OK for the Town to ask large nonprofits to contribute,unless the Town benefits substantially from the nonprofit.*** BW' Proposition 2-1/2 and deductibility make PILOTS an issue.*** PE: Another issue is the value of internalizing the services which citizens can choose to use.*** PC: In addition to BW's factors,also what kind of signals are we giving to consumers through pricing increases and decreases? Putting as many costs on water/sewer rates as possible would encourage conservation.*** DL. Don't think we should look at this as PILOT or override. Town has other ways of absorbing costs. They're difficult mechanisms. It's not an either-or question.*** BW' How we forecast inflation is one mechanism.*** JO: If someone were to take a law suit against Lexington,what would their argument be? Prima facie it would be costs.Lexington has some of the highest rates,looks like we're doing more than conning an Enterprise Fund.*** PE: Not aware of case law. Question is: is the fee too high?*** JB: If the fee is too high and goes to the general fund,it is a tax.*** JB: Legal and policy question: Most of the committee seems more interested in policy. I'm really coming at this from a legal perspective. We should follow the law as a matter of policy.*** JB: handed out a written reply to PE's written report.*** LF' The problem with PILOTS is accountability.*** PC: Move we accept DL's proposal to ask BoS to ask Town Counsel for an opinion. Second by BW*** JB: Recommend they ask for a cost estimate first.*** Motion passed,unanimously.*** LW' PC,please draft a letter to the Selectmen for us to approve and/or revise next week.*** Motion to adjourn by PC,second by WT.*** The Committee expressed its appreciation to Peter Enrich for his presentation today.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#33 Tuesday December 21,2004*** Summary 1. Approved minutes from meetings#28,29,30. 2. Discussed letter requesting BoS for Town Counsel opinion on PILOTs 3. Reviewed work to date on the final report.*** Members and liaisons present.,Initials used in minutes,John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Jim Osten JO,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director,DPW BH,Dennis Meehan,Water/Sewer Superintendent DM, Chris Woodcock,Consultant CW*** Business/Discussion Minutes were approved for meetings#28,29,and 30.*** 1 Discussion about PC's draft reouest to the BoS for Town Counsel opinion on legality of PILOTS. JB: will prepare a package of memos from Dan Fenn,JB,Peter Enrich,JB reply to Peter Enrich. AG: can we provide an executive summary? The key question is 'Does Emerson apply?' LW' In the letter to the BoS,we will reference the attachments,ask if they want legal counsel for opinion,and let them know that if there is a response soon,it will be included in our final report.*** WT We can focus on policy questions*** LF' Concerned our final report will have too many open ended issues.*** JB: I need to report from the Appropriation Committee that my presence on the Water/Sewer Rate Study Committee is not a l statement of Appropriation Committee policy or recommendations. The Appropriation Committee has not addressed this out yet.*** Review current working cony of the final report LW' Rates: LF's motion,waiting for PC&LW to do analysis,which is waiting for the finance dept./audit committee to get definitive usage figures for FY04. ) LE' a new rate survey book from the MWRA came out recently with useful information.*** LW' Reserves: hung up on status of Reserve Fund until the large accounts receivable are determined. We have a low recommendation of 5%of budget or revenues for W/S reserves,and a high of 25%for operations and 25%for capital. Sub-group of BW&AG are not ready to comment.*** BW. We can get to a conclusion soon. Our objective is to keep reserves as low as possible. AG: We need information. Michael Young,a budget officer,is very busy now. He is a good source of information for us when he has time. PC: Reserve formula: biggest revenue shortfall plus biggest expense,gives target for reserve level. BW. Reserves are for fluctuations and unplanned expenses. Be conservative when forecasting usage,to help manage reserve level. Implicit cap. AG; Another issue is how important is it to smooth rate level. I'm for zero reserves and deal with real spikes.*** LW' Capital.Debt&Depreciation: we adopted BW's proposasl.*** BW We will be coming back with some more information*** LW Indirects: Review section 3.4,WT&JO comments*** JO: Allocating someone's time is usually an estimate,not documented. Rather than putting a burden on town staff,establish a policy for a cap on allocating expense and if cap is exceeded,then work on getting documentation or investigate.*** LW 3.7 Administration: WTs comments on allocated costs refer to an additional position for a general manager.*** BW. I think we need a CFO for these issues. DM: I'm very comfortable with this idea. I ) BH: Haven't finalized our budget. We've been talking about creating a full-time business manager. A$17 million operation deserves a manager. JB: BH,if you think this committee can be helpful in getting support for a manager,let us know. The W/S EF has the ability to add the expense of a staff person. Don't stint on the amount. This doesn't negatively impact Town Budget and Selectmen.*** J 46*** 1 (4 S ) JB: State law allows for a W/S commission. There is an option for BoS to serve as those commissioners,which we have done by default.*** KB: Regarding the change in the W/S clerk in finance,(BH: Paul from finance was moved to that position),it was represented by someone from finance a couple of weeks ago that because of the failed over-ride,that position was eliminated. But the W/S staff position should not have been affected by the override. Was the W/S clerk formerly an indirect charge and is now a direct charge?*** BH: Actually,the W/S clerk at that time retired,and a position from finance was eliminated. The staff person from the eliminated finance position was moved to W/S clerk.*** LW' Reported on actual numbers for the Enterprise Funds from the DOR:*** ) DOR: FY04: $1,478,379 Water EF as of June 30,2004 _ $993,500 Sewer EF DOR: FY03: $1,878,977-Water EF as of June 30,2003 $2,191,348-Sewer EF*** LP I heard the auditors are giving an interim report to BOS. Suggest we ask the BoS to advise us. LW- I will check on that.*** ) Motion to adjourn by PC,second by LF Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#34 Tuesday January 4,2005*** Summary ) 1. Amended and approved minutes from meetings#31,32,33. 2. Reviewed work to date on the final report. 3. Passed motion recommending that the Water/Sewer Enterprise Funds prepare a yearly operating statement,cash-flow ) statement and balance sheet,as well as the usual rate-setting budget. And the prior year results. All in accordance with GAAP*** Members and liaisons nresent:Initials used in minutes,John Bartenstein-liaison to the Appropriation Committee JB,Kathryn —) Benjamin KB,Paul Chernick PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO,Brace Williams BW Loren Wood LW Staff and consultants nresent: Bill Hadley,Director,DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Changes to minutes#31. bottom of page 2,change the first sentence by JB:"The stated reserves as of the end of FY03 were$4 million. Reserves as ) of the end of FY04 were at$2.3 million. Changes to minutes#32: ) • bottom of page 2: LW 'negotiation' instead of"negation' bottom of page 2: PC change 'rule of law to 'rule so. top of page 3: I"PE comment: delete 'don't' so sentence reads: 'Nothing in my report that says we have to have PILOTs.' middle of page 3: JL comment change to: 'Perhaps the Town bought water from MWRA and sold it to both the Enterprise Fund and Bedford. ) • middle of page 3: JB comment,beginning 'Marblehead. change 'do' to 'so' bottom of page 3,last comment by LF• delete 'sloppy' top of page 4,first PE comment,change 'pay toe Town' to read 'pay the Town' • middle of page 4,PC: change second sentence by deleting 'I recommend, and change 'to encourage' to 'would encourage' so the sentence reads: 'Putting as many costs on water/sewer rates as possible would encourage conservation. ) Middle of page 4:JO:correct spelling of"prima facie' Middle of page 4: JB:delete complete line that begins 'If the fee is too high. - • Bottom of page 4:note that the motion passed unanimously.*** Changes to minutes#33: ) • page 1,LF'change 1' comment: change 'opinion' to 'open ended opinions' • page 1,JB comment about Appropriation Committee,change 'has not hashed this out yet' to 'has not addressed this ) yet"*** Minutes were amended and approved for meetings#31,32,33.*** ) LW reported that he had delivered the PILOT information packets to the BOS.*** DL. commended LW for his comprehensive compilation*** ) JB: was a courtesy copy sent to Peter Enrich?*** LW no. I will do that.*** ) Review Working cony of Final Renort: LW • We'll wait on PILOTs until we hear back from the BoS ) • Regarding rates,need to figure out on our own why more hcf of sewage than water. There is only a meter for water flowing in each residence/establishment. See Table 2.1-3,first row,residential water and sewer quantities should be the same. Need to ask CW*** DM: I have a report on in-flow from MWRA,during wet months there is more sewerage metered due to in-flow.*** ) LF' there are some buildings that aren't charged for sewer,so sewer hcf should be lower than water hcf.*** LW' regarding indirects,which Wade suggests we call allocations,see his proposal on page 7*** ) BW' I'd like to make the case that so many of the issues relate to the financial reports of the enterprise fund,and those reports are impossible to get the information from them that's needed to run an enterprise fund. We need an operating/profit&loss(P&L) ) statement,cash flow statement,and a balance sheet. Our work is made more difficult because the terminology keeps changing.*** LW see p.3. CW provided column 1,BH provided column 2. What BW is saying is this report isn't standard. BW provided a ) report on 11/29 that gives examples of standard reports.*** BW' It would be very helpful to have standard reports:budget,compared to actual,and variance.*** ) I 47*** /6 ) ) i l 1 PC: the chart on page 3 is a fourth report that needs to be generated for rate setting, Can't generate rates from a P&L statement. We need a trail for generating revenue.*** BW' if you need a price increase,need to do a forecast of revenue,volumes,cash flow,to see if you're running slow on receivables. The driver of increases is reduction in number of customers or increased costs. How do you measure the need for an increase? Using these financial reports is a cleaner,more understandable way from a business perspective,more transparent,forces discipline.*** JO: Comments have come up repeatedly about the use of different accounting systems in the town.*** AG:There's been some talk about getting a CFO for the W/S EF We're already required to use GAAP*** PC: The report on page 3 is a very economic way of reporting.*** AG: As long as we understand where the numbers come from.*** JO: The Selectmen set the rates,which are implicit in the Town Meeting Warrant Budget Article. Town Meeting can amend the rates. But TM never votes on them as one coherent collection of reports or financial data.*** JB: It's a 'chicken and egg' question. The process is that the budget goes to TM,then rates are set,based on the appropriations made at Town Meeting.This coming TM will be addressing FY06 starting July 1,2005. FY06 W/S rates will be set in September 2005 to the July I budget,retroactive to the spring meter readings.*** JB: That is an issue. At what level of detail is the budget presented to TM? The budget book presents the direct costs of W/S,which includes PILOTS,and indirect costs divided up among departments;we've never had a unified EF budget presented to TM.*** DL. The problem may be in part how this is perceived by financial and non-financial people. For lay people,it may not make sense to provide the amount of detail a financial person would like. If we produce the three additional reports,we still need to produce the fourth report. We're not really disagreeing.*** Motion made by BW,second by LF' The committee recommends to the Selectmen that the water sewer enterprise funds prepare a yearly operating statement,cash-flow statement and balance sheet and the usual rate-setting budget showing the previous year's projected and actuals for expenses and revenues. And the prior year results.*** 1 AG: This motion just reinforces GAAP We still don't have good information.*** Discussion followed about the quality of the data.*** JB: Motion to amend motion by adding sentence: 'All in accordance with generally accepted accounting procedures. Motion passed.*** PC: Next week I'll put together a table to attach to the motion to illustrate what we're looking for.*** Amended motion passed unanimously.*** Issue for future meeting: quality of data,accounts receivable,indirects,reserves.*** LF Regarding billing frequency,you(LW)said you were going to work on it. *** LW I haven't gotten what DL says I need for the data. I'm still working on it.*** Motion to adjourn by LF second by DL. i Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#35 Tuesday January 11,2005*** Summary 1. Discussed proposal for a CFO for the W/S EF 1 2. Reviewed,amended and approved minutes for meeting#34.*** Members and liaisons oresent:Initials used in minutes,Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to Appropriation Committee JB Kathryn Benjamin KB,Paul Chernick PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL, Jim Osten JO,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants oresent: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Discussed proposal for a CFO for the W/S Enterprise Fund. (The Town web site has an organization chart that we can consult to see where this position might fit,)*** The job description for a CFO would include: • prepares operating statement,cash flow report,balance sheet and rate setting budget/recommendation,and previous year's 1 ) results • prepares/supervises internal billing and collection(WSRSC recommends xyz company's product A,used on PC with printer,backup hard drive,scanner,fax,address labels) o eliminates most of the indirects to revenue department,comptroller,MIS department • off loads some functions of DPW Administrator and consultant,reducing those two direct charges • represents EF in direct negotiations • reports to whom? o needs not to duplicate and conflict with others o policy role,manage or project future capital needs*** LP asked RP how will the[W/S EP]budget be presented to Town Meeting?*** RP I don't know if they will be presented as their own budgets,but there will be an overall presentation of those and one or two others,for informational purposes. The actual appropriation will be done the way we usually do it.*** JO: I need clarification,is there a check book from which W/S payments are made and another for Town payments? A. there is one checkbook for all payments.*** JO: I have two questions/concems about that: 1),how that gets set up and who handles the money and 2)we budget on a fiscal year ) but W/S is on a different calendar?*** A. Billing late fall for usage May-Oct,and bill in spring for usage Nov-April. Rates are in the fall and applied retroactively.*** JB: we use a modified accrual basis for accounting*** JO: In each fiscal year,the rate is the same,for example,Fall 04 and Spring 05 are billed at FY05 rate.*** 1 DM: The MWRA charges based on the previous year's water consumption.*** LF' Why haven't bills gone out yet?*** BH:Cycle 1 bills have gone out.We're trying to get all the adjustments in the system before they go out.*** LW I'm getting close to completing a usages report. Then we can do some rate work. Then we can decide on the policy for PILOTs, J then the legal aspect,if we have an outside counsel opinion.*** J ) 48*** 1640 ) RP. BoS will discuss that recommendation tomorrow night.*** LW Anything on the audit?*** ) RP• No. They won't want to say anything until they're close to the end. I have suggested that the TM invite a couple of members of this committee and the appropriation committee to their meeting.*** ) LW. I hope we'll have a prepared motion for the CFO position for our next meeting.*** Reviewed and approved minutes for meeting#34,with the following amendments: ) • page 1,comments on changes to minutes#31,correct typo 'ate' to 'at" • Page 2,BW comment,delete 'asset statement' from list ) Page 3,top of the page,change JB comment to read: 'It's a 'chicken and egg' question. The process is that the budget ) goes to TM,then rotes are set,based on the appropriation made at town meeting. This coming TM will be addressing FY06 starting July 1,2005. FY06 W/S rates will be set in September 2005 and applied retroactively to the last previous meter reading. • Delete next line from LW Change next JB comment,third sentence to read: 'The budget book presents the direct costs of W/S,which include PILOTS and direct costs divided up among department. We've never had a unified EF budget presented to TM. ) • Change motion made by BW adding text in bold,to read: 'The committee recommends to the Selectmen that the water/sewer enterprise funds prepare a yearly operating statement,cash-flow statement and balance sheet and the usual rate-setting budget,showing both the projected expenses and revenue,and the prior year results.'*** PC: BW is making the table to illustrate the motion that I said I'd make last week.*** Motion to adjourn by PC,second by DL. Respectfully submitted,Kathryn Benjamin*** ) WSRSC Meeting#36 Tuesday January 18,2005*** Summary — 1. Discussed possible CFO position for W/S Enterprise Funds. 2. Received update on BoS meeting and action on our request for getting a legal opinion on PILOTs. 3. Discussed considerations for establishing the level of the Reserve Fund. 4. Described the existing Town organizational chart and where a CFO or other title would fit. ) 5. Motion to resume the topic of a new staff person as first item of business at the next meeting,with the expectation of receiving in advance of the meeting a drafted motion statement.*** Members and liaisons oresent•Initials used in minutes,Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO,Wade ) Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants oresent Bill Hadley,Director,DPW BH,Dennis Meehan, Water/Sewer Superintendent DM*** Business/Discussion ) There were no minutes to review at this meeting. Returning to the conversation begun at our last meeting about a CFO for the W/S Enterprise Funds:*** RP• Regarding our idea about a CFO for the W/S Enterprise Funds,what needs to be in the budget and by when? There are lots of related practical questions: job description,justification,salary range. We have a small window to get this in for the FY06 ) budget.*** Discussion followed about the budget process and timing. The FY06 budget will be presented to Town Meeting in March. The information about this new position needs to be included in the materials for review and approval or we will have to wait almost two years to get this position in place.*** LP requested an update on the recent BoS meeting,where BH had addressed the BoS on W/S increases.*** BH: The MWRA is projecting a 15-18%increase. Usually we appropriate funds using the higher number,but by the time the budget is set,it is usually lower and we adjust the budget.*** LF' requested the monthly updates from the MWRA that BH receives to be shared with this committee. BH thought that would be possible to do.*** LW BoS update on PILOTS. The BoS had received and reviewed the packet of materials pertaining to what we've learned about PILOTs and our request that the BoS get a legal opinion from Town Counsel. All were very complimentary of John Bartenstein s and Peter Enrich s work. Three voted in favor(RP BK,DM),two voted against the request(JK,PK). One of the dissenters felt that since ) PILOTS had never been raised as an issue by Palmer and Dodge,or our auditors,that that provided sufficient evidence that they were OK.*** RP. doesn't expect Palmer and Dodge to give a clear cut opinion. Hopes that the report will say there's enough ambiguity to warrant discontinuing PILOTs. Advises we don't move too aggressively. Right now the Town is in conversation with Moody's,finishing up ) this week,then there will be time to pursue P&D.*** LF' BH also reported to the BoS that the contract with NESWC ends in September 2005,and we anticipate saving about$600,000. Discussion followed about how that money could be used. There are major policy decisions that need to be made,and many constituencies that will probably request access to additional funds. Putting any savings in the stabilization fund is also an option.*** DL. The audit that's going on now,if it gives us more information on accounts receivable that can be collected,where will that money go?*** ) BH: To the W/S EF The money would first be used to pay outstanding bills,with the remainder going to Reserves.*** Presentation by AG&BW*** ) Reserves need to be dealt with at the level of CFO. Such a position will highlight the separateness and independence of the W/S EFs from the Town's operating fund. Recommend putting in place a CFO whose primary responsibility is the preparation of ) complete financial statement for the W/S EFs: P&L statement,balance sheet/asset statement,cash flow. Regarding the Reserve Fund,cash flow is the most important factor for determining the level for the Reserve Fund.*** Policy issues:*** j 1. The purpose for Reserves is to cover general operations when receipts are low(if we go to quarterly billing,reserve level would need to be adjusted). Recommend keeping reserves to a minimum,5%of revenues. Don't believe there is a need ) for excess reserves. ) 49*** !� ) 7 J ) 2. In the past,Reserves were used to smooth rates. AG&BW believe it makes for better transparency of the EFs to have users know the real costs of W/S,so recommend we don't use Reserves to smooth rate spikes. a. RP. there was a situation a couple of years ago when the MWRA made a mid-year increase and we used the reserve to cover that. b. AG:a different example is heating fuel:users pay the going rate,which varies c. RP' heating fuel also offers the option for a fixed rate plan 3. Don't believe Reserves should be maintained against large,unforeseen capital expenses. It is in the best interest of the ratepayers to go into debt for those situations. It requires better,closer financial reporting,management and forecasting. a. WT.would we get rid of depreciation by design? b. AG:no,but depreciation won't be part of rate setting.*** DL. I agree with the main objective,to keep Reserves as part of the EF The best operated public works agencies have always had reserves. The question is how high should they be? 5%would be$750,000,which seems like a lot,but I recommend a slightly higher percentage. Perhaps set a minimum and maximum range for the Reserve Fund.*** AG: The CFO needs to know what they're doing. Need to be able to report to Selectmen without having to go through a chain of command.*** DL. If we separate EF structure from the regular Town operating budget,may want to set up a water review board.*** BW. Regarding the percentage,our wording may allow for flexibility.*** JO: A number of years ago the Town was paying$50,000 for earthquake insurance. Town management finally realized that the ) damage from an earthquake would be so great,the federal government would help out,so we discontinued the earthquake insurance. *** When considering the variance in revenues due to rainfall and outdoor water usage,might recommend setting the reserve fund at 10%. (LW' the Interim Report suggests a Reserve Fund of 7%.)*** JO: Quarterly billing,irrigation rate and factor for drought should all be considered for setting Reserve level.*** AG: EFs are allowed to run a deficit because they can catch up in the next year with rate changes.*** I JO: EF has no impact on Moody's rating.*** RP. Forecasting consumption may be the most difficult factor. Believe we should have adequate Reserves for large variability.*** LW. Remember that MWRA rate is only half of our total EF budget.*** BIN. If we are conservative forecasting usage,that will help prevent negative impact of low usage. So,we balance a low Reserve level with conservative forecasting for usage.*** LF' Spoke with DOR about their recommendation for Reserve levels.Their representative said 3-5%. Think 5%is more than generous. If we don't have great changes in other expenses,and with good projections of capital expenses,we shouldn't have to go much higher.*** Organization Chart*** BH: Agree we need to have a person overseeing meter reading and water billing and preparing financial statements;could be a Business Manager instead of CFO. Thinks person should be below Finance Director and perhaps Revenue Officer.*** AG: It's important that the EF is independent from the Town's Operating Funds.*** JB: Linda Vine and John Ryan seemed interested in discussing this further. Recommend AG&BW meeting with LV&JR.*** RP. I agree. Not sure where to place the position in the organizational chart,but don't think it should report directly to BoS. Needs i I to be able to bring issues forward and negotiate on behalf of EF and ratepayers.*** BH: The position should report to the Finance Director rather than the Revenue Director.*** 1 WT This is like a matrix organization where EF Director will need to have access to many people and departments.*** The diagram below represents the discussion,with two options,A&B,for the new position:*** Board of Selectmen Town Attorney--- -I- --- --(W/S EF CFO)(A) Town Manager Town Comptroller I / I I Finance Director DPW Director (B)W/S EF Dir- I I Revenue Offieer(Rose Ducharme) Operations Billine(Paul) W/S Superintendent (move W/S billing to BF) (Dennis Meehan) *** JO: What about other EFs? (Answer: Initially there's just the W/S EF There is a Recreation EF but much smaller than W/S.)*** AG: Do we need more information before making the motion?*** RP- Talk to Linda Vine,she has a lot of experience about chains of reporting and appropriate titles.*** BW' We're not attached to the CFO title,what's important are the job duties,which could be done by a Financial Director of the Water/Sewer Enterprise Funds.*** Agreed to hold the making of the final motion until the next meeting. Text will be emailed to all in advance of the meeting. AG& BW will work to meet with Linda Vine before next week's meeting.*** Motion made by AG,second by WT. That this item of business be the first item on next week's meeting agenda. Motion carried.*** BW We'll make a separate motion about Reserves,ultimately move billing to report to EF Dir.*** RE' Need to keep checks and balances in place so the same person isn't reading meters,billing and reporting.*** Motion to adjourn by KB,second by BW I - Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#37 Tuesday January 25,2005*** Summary 1. Reviewed,amended and approved minutes from meeting#36. 50*** /64 ) I 2. Report on meeting with Acting Town Manager 3. Discussion and motion on submitting BW's description for a W/S CFO or Business Manager in the final report and submit ) it to the BoS now as an Interim report. 4. Directed the Chairman to send a cover memo and the description to the BoS immediately.*** Members and liaisons present.Initials used in minutes.Richard Pagett-Selectmen liaison RP Kathryn Benjamin KB,Paul Chemick _ PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO,Wade Tambor WT,Bmce Williams BW Loren Wood LW Staff and consultants present. Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Reviewed minutes for meeting#36 on Jan.18. Approved as amended. • At top of page 2,in first paragraph of comments from LW changed last sentence that begins: 'Among the dissenters. to read: 'One of the dissenters felt that. 1 • At bottom of page 3,comment by BH,change 'Reserve' officer to 'Revenue' officer.*** Ann Gilbert report that she,Bruce Williams and John Bartenstein met with Acting Town Manager,Linda Vine,to discuss the proposal for a CFO for the Water/Sewer Enterprise funds. They briefed her on our work and assessments. She reported that they had thought everything was fine and just needed a billing clerk. LV didn't like having W/S EF Dir.Reporting directly to BoS without going through the Town Manager.*** WT How does this impact making our motion? AG: Ask RP if we should make an Interim Report to BoS recommending a budget placeholder for the position.*** BW In the final report,we should recommend filling the position.*** WT Need to be explicit about the skills required in the candidate.*** RP' I don't think there's a fundamental difference in our perception and that of the Town Manager. There is a real political problem ) in that there is a budget gap of$1.5-2 million,that needs to be divided between the schools and the Town. The issue of the size of the gap and how it's resolved will be a very emotional experience. While the W/S EF Director won't be funded by the Town's taxes,it's - still hard to explain why we're hiring a new person in that department and making cuts everywhere else. There is a bad situation in the finance office in that one person handles billing,revenue and collections. The auditors are aware of this staff problem and will probably recommend adding another clerk. There will be a placeholder in the W/S Department's budget for one or more positions.*** DL. This is a familiar argument. We're trying to make a more functional w/s enterprise fund. While it makes very good business ) sense,it is constrained by a political atmosphere,which doesn't make our recommendation wrong. I think we should make the recommendation and if it's not funded,get some of it done somehow. This is not a real business enterprise,it is a monopoly.*** RP' I've been in these meetings long enough to understand how this position can reduce costs elsewhere. It will take time to educate others.*** ) LF' The Enterprise Fund is a$17 million enterprise,with no one accountable. If the public is properly educated about what the EF is, how budgets are kept separate and how it's a$17 million enterprise,I believe the public would support this new position. This has nothing to do with the tax levy. It is separate.*** Committee summary on this discussion:*** ) • CFO/Business Manager position is a good idea • 4 Selectmen need a good rationale • want to get it in the FY06 budget • we need to get consensus on the organizational chart(1/2 done) • need to describe the direct/indirect trade-offs*** ) Motion by AG,second by PC:to include BW's description(changing Rev Dir.to Rev.Officer)in the final report and submit it to the BoS as an Interim report. Discussion followed.*** ) WT. The W/S EF has become a financial 'release valve' to the Town. There will be a certain amount of push-back.*** JO: Do we consider the Town government to be more of a matrix organization or 'command and control"? 'Matrix organization' meaning a person reports to more than one boss, 'command and control' means a person reports to only one boss.*** AG: 'Matrix' means that you want the person to move in all directions.*** ) JO: My point is that Town government is usually 'command and control. The Comptroller's position is a quasi-matrix position. We're really putting this person out on a limb.I have some concern about recommending a matrix position to our Town ) government.*** PC: My impression is that the Town Manager is responsible to many different boards,the Board of Assessors,Board of Selectmen, etc. The Town Manager position is more matrix styled.*** RP' It is somewhat analogous to the Planning Director who is appointed by the BoS and answerable to the Planning Board. The ) difference here is we don't have a W/S Board.*** WT. Defacto,the BoS is the W/S Board/policy maker.*** ) RP' The BoS doesn't understand this function,*** AG: Part of our argument is that the EF is different from the rest of Town government and this begins to make that difference ) clearer.*** LF' It is important that the public gets educated.*** ) LW. There's no mention in the description about who appoints or hires this position. Should we add this?*** AG: Let's leave it as is now,we can add that later. Right now we just need a placeholder.*** ) JO: Thought there'd be some dotted line relation between the Finance Director and the W/S Bus.Mgr.*** More discussion followed. It was agreed to defer changes to a later date,and some changes will be made by and with the Town ) govemment.*** RPf a senior financial position is necessary.*** ) Motion,that this recommendation will go into the final report,passed unanimously.*** LW. How shall we deal with the placeholder for the FY06 budget?*** PC: Send this description with a cover memo to the BoS.*** ) RP' at 11:00 a.m.today,there is a committee meeting to prepare for the Budget setting meeting on Wednesday night(tomorrow). We can't move fast enough,but there already are one or two placeholders in the W/S budget*** ) LW. Is it agreed that I should write a cover memo and deliver it and the description to the BoS? The points in the memo will be: 51*** ) I' ? u ) ) ) this position is key to solving problems of transparency,billing,reserves,etc. this is a timely issue,need a placeholder in the FY06 W/S budget • this is a draft*** Yes,the committee agrees.*** DL. Any report from the auditors?*** RP No.*** Motion to adjourn by PC,second by BW Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#38 Tuesday February 1,2005*** Summary I. Set an target end date of May 15,2005 for our final report. 2. Motion passed to continue as a committee beyond the end date,to be available to a newly hired financial officer for the water/sewer enterprise funds,for one year. 3. Discussed abatements and liening practices. 4. Discussed Reserves. Motion made and tabled about recommended reserve levels and usage.*** Members and liaisons present:Initials used in minutes,Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Lorraine Fournier LF Ann Gilbert AG,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director,DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion I 1 There were no minutes to review at this meeting.*** RP reported on BoS budget meeting: there is a `placeholder' in the budget,per our request for a CFO for the Water/Sewer Enterprise Funds,although the exact title and amount were not finalized.*** Regarding the Audit,Deb Brown met with John Bartenstein and a representative from the audit firm,and will meet again on Feb.2. They're not finished with their report.*** LW. Regarding the upcoming election,we're not done with our work and the committee has no position on the candidates.*** WT Proposed an end date for the committee work to be completed. Discussion followed,including determining what from our agenda/task list could be handed off to the prospective new CFO(or other title).*** 1 Motion by KB,second by BW that May 15 be our target date for completing our report. Approved unanimously.*** KB raised the possibility of an Advisory W/S committee continuing after our report is submitted and the new financial person hired.*** Motion by WT,second by LF for a continuation of this committee for one year to support the new hire,to meet as that person calls upon us. Approved unanimously.*** LW presented complied data on recorded abatements. The committee praised him for his diligent work. Discussed terminology of ) abatement vs.credit and if there are any uncollectible bills. Technically there should be no uncollectible bills. Discussed liening practices. BH reported that everything pre-FY05 will be liened in the upcoming bills,to catch up on the past 2-3 years that weren't I I liened. FY05 liens will be issued in Nov/Dec.*** BW/AG:Led a discussion on Reserves;their report is on page 7 of the draft final report. Motion approved to delete the parenthetical ) sentence from item#1 '(at present bill. .be reduced.)' *** JB:raised the issue of examples of unexpected events:not included was the instance of a mid-year rate increase by the MWRA. Suggested adding 'unexpected assessments from MWRA.'*** Discussion followed about Reserves lagging or preceding an event. *** Motion by AG,second by BW to maintain a 5%reserve level and set a policy not to use reserves to smooth rate spikes.*** ( I Motion by KB,second by AG,to table this discussion until Paul Chemick is present to discuss his alternative opinion. Motion passed.*** ) RP stated that historically there are no spikes. *** JB:reported that his research showed a number of years with rate increases of only 0-3#and then a 14%increase recently.*** JB: question for AG/BW do you have a separate proposal for what to do with excess reserves currently held?*** I ) RP: we can't decide what to do with excess reserves until the audit is finished and we know why we have,or don't have,the reserves that we have.*** ) Motion to adjoum by KB,second by AG. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#39 Tuesday February 8,2005*** Summary 1. Discussion of the reserves motion.Motion made to include text from Feb 1 meeting in final report. 2. Clarification of the 5%reserve target as a guideline for the recommended business manager. ) 3. Discussed the ongoing audit of the water billing. 4. Delegated BW and WT to itemize issues to be resolved prior to the May 15,2005 deadline for our final report. Memhers and liaisons present•Initials used in minutes John Bartenstein—liaison to the Appropriation Committee JB,Jim Osten JO, ) Lorraine Fournier LF Ann Gilbert AG,Wade Tambor WT,Bruce Williams BW Staff and consultants present. Dennis Meehan, Water/Sewer Superintendent DM*** ) Business/Discussion Them were no minutes reviewed at this meeting.*** ) AG:Discussion of the reserves policy. A distinction should be made between the transition period policy and the recommendations for the long term. *** LF: The reserves target should be achieved by using excess reserves to reduce rates or outstanding debt.*** WT.The reserves should be minimal,therefore the 5%target.*** 52*** 170 ) BW.The policy implementation should follow the hiring of a business manager.*** JO:Raised the question of what estimate of revenues would be used to establish the reserves?*** AG:The adjusted commitments are used for revenue recognition but abatements do not necessarily match in the same cycle.Forecasts depend upon weather. The revenue forecast used for reserves should include an adjustment for abatements. Revenues equal ) commitments less abatements so they should be matched within the same cycle.Conservative estimates on revenues will build up reserves and thus a position on forecasts must be established and be consistent. *** DM:The water department is set up for billing with 3 data collectors and one person,Paul Douglas,in the W/S department at 85%. DM oks abatements but wants a second person on Finance to check so that there is a check.My abatement over$1000 goes to the Finance Director.There were past practices in place on abatements.A department goal is to obtain accreditation form the American Public Works association which has recommendations for policies.*** ) A software exclusively for W/S could be obtained for as little as$50,000 for water related software and 4 people could run the data collection and billing.DM reviews the bills from Munis and looks for exceptions,high and low.Someone is sent to investigate.For ) example,a broken hose left on over winter.DM has written a memo with recommendations for the billing.*** Before the electronic meters,15 people read meters for the entire month. Now 3 meter readers suffice. New hires must be computer ) literate.*** The abatement policy should be if it is a hose left on,a broken sink or a running toilet it is the homeowner's responsibility. Multiple billing at 4 times per year would help reduce abatements.Abatements should have 2 signatures,DM and Rose in Finance. On Commercial bills,Munis can add zeros. There is a$1 million dollar bill outstanding that has a$750,000 abatement. The policy is to ) recover the MWRA cost of the water*** AG:Matching billing and abatement in the same cycle is important.*** JB:Asked DM if the committee could provide any support for him.*** DM:The fact that the committee is formed is doing some good and will help on indirects and finance. Perhaps someone to hear appeals on abatements is needed.*** - BW The question on abatements is to come up with a policy. *** Meeting turned to discussion of the Reserves policy approved at the Feb.1 meeting.*** WT made motion, 'Reserves Policy approved at the Feb. 1"meeting is hereby adopted for the interim report. Seconded by AG. Passed unanimously.*** JB:Noted that a discussion of the disposition of current reserves versus the 5%target is necessary.*** AUDIT REPORT.*** ) JB:JB and Loren Wood met with Scott Macintyre(Auditor),Eric Demis(Auditor)and Candy McLaughlin(Lex Finance). Scott's report recommended writing off$0.5 million from FY2003 and$2.5 million from FY2004.There was a drop off in revenue so there may also have been overbillings.Macro analysis by the Auditor shows unexplained drop-offs that need to be examined.The sewer revenue drop offs are three times those of the water drop offs which is a plausible ratio since the sewer rates are three times those of the water rates. The appropriations committee asked for a timetable for the audit report. Also,Loren Wood has identified items for review in Munis.*** DM:Lexhealth,formerly Sunbridge,had a$1 million bill which was listed three times,twice for Sunbridge the prior owner of the property.It was paid at about$268,000 after adjustments to reflect multiple units.*** JB:Lexus of Cambridge had a$500,000 rollover mistake from Munis.When the meters roll over back to zero,Munis does not recognize the change and adds zeros to the bill.*** WT.We need to highlight systematic problems to clean up and avoid in future.*** JB:The Town manager asked for an audit to get to the bottom.The auditors have verified the problems.The Appropriations committee wants specifics,a workplan and a timetable.*** DM:I was interviewed for 33 accounts by the auditors but otherwise have not been asked for information.*** ) Steps to take include a slot for a water person who is a replacement, the business manager and then the subsidization of the general fund.*** - JB:We need to identify problems and someone for this position.*** WT.Without a business manager the recommendations lose their value. WT and BW volunteered to itemize issues remaining to get to the May 1511Ideadline and to provide a timetable to meet this deadline.*** LF Requested a copy of the interim audit report.*** Obtaining a copy of the interim audit report deferred to Loren Wood.*** ) Motion to adjourn by WT,second by AG. James Osten*** WSRSC Meeting#40 Tuesday February 15,2005*** ) Summary 1. Set meeting schedule for March and April. 2. Discussed rates.*** Members and liaisons oresent-Initials used in minutes, Richard Pagett-Selectmen liaison RP John Bartenstein-liaison to the ) Appropriation Committee 1B,Kathryn Benjamin KB,Ann Gilbert AG,Jim Osten JO Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Set meeting schedule for March and April. It was agreed to continue meeting every Tuesday morning at 8:00 a.m. Due to vacation and other scheduling conflicts,it was further agreed that a poll will be taken at the end of each meeting to confirm attendance for the next week's meeting,to guarantee a majority will be present for conducting business.*** ) LW&RP. Responded to LF's request of the Board of Selecmen for a decision by Palmer and Dodge on the PILOTs. The target due date is today.*** ) JB: Reported that there is no report from the auditors yet.*** RP Linda Vine does a weekly update for the BoS,reported that the auditors are working on a work plan.*** ) LW Deborah,the vice chair of the appropriation committee,asked for his data base on the history(fall 1998-Spring 2004)of usage for all of the W/S accounts. Also,the auditors handed out a list of recent abatements which he has now.*** ) 53*** ) 17/ , ) Rates:*** BW billing frequency affects the rate structure IB: we need a rate buffer for a rate transition AG: recommends that the broad policy be that everyone should be paying the full cost. RP• Are you proposing a flat rate? AG: I'm figuring that there are economies of scale to capture and pass on to the rate payers. BW' Increased usage leads to decreased cost,theoretically. (Can't have a declining block rate.) AG: Ijust don't want to have the low volume users subsidized. BW How many blocks and how steep? JB: many high volume users are commercial. We don't currently have separate commercial and residential rates.*** LW The Laredo Matrix Tables,as I'm calling my spread sheet,will show each category's usage.*** AG: Utilities distinguish between commercial and residential users. Does the BoS want us to make policy or just recommendations?*** ) Reviewed the charge to the committee. *** LW the BoS's first concern is if they change the rates,will we get enough revenue;and second concern is about political consequences of any rate changes. It is the same thinking as around the OP(commercial/industrial/personal)factor. There are some laws that govern the differential.*** JO: The relationship between the Reserve and how we structure the rates: if we get most revenue from the high block,then we need high reserves to smooth variance. If we bill quarterly,that will help smooth revenue and require lower Reserves. The prior recommendation was for quarterly billing. The rates for quarterly billing were adopted,but applied semi-annually. How do we prevent that from happening again? Discussion followed.*** RP. Wouldn't want us to make a recommendation without supporting data and at least a broad strokes view of the consequences.*** JB: It is unlikely that the BoS would adopt something radically different from the status quo without a committee like this.*** KB: raised LF's point in favor of quarterly billing which helps consumers budget their payments;and PC's point that quarterly billing provides information to consumers to change their water usage behavior.This second point makes it important for there to be an actual read for summer irrigation usage.*** Discussed the irrigation rate. Lesson for us to look at the recommendation through the consumers'eyes so it's as clear as possible.*** JO/BH:observed that when you conserve water,the wholesale water rater increases. Conservation allows more people to use water.*** JO: If we increase the schools'water rate(which is currently subsidized),eliminate PILOTs,perhaps transfer debt to the tax levy,that will lead to an increase in the tax rate of about$3 million. It's hard to imagine that going over well. Observation: it is all the more important to describe clearly and educate the consumer to recognize that the increased taxes will be offset by a decrease in water rates.*** JB: Does Bedford resell their water at a higher rate than we charge?*** Discussion followed about the rates we charge. For Bedford we charge the MWRA plus 1%. DM observed that we have no contracts, and he's looking into this.*** Motion to adjourn by KB,second by AG.#40 Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#41 Tuesday February 22,2005*** Summary 1 I. .Motion passed to include Section D of Bruce Williams Handout of 2/20/05(Rev la)in the Final Report. 2. Motion passed to recommend 2(semi-annual)blocks,0 to 99 hcf,and 100 up.*** Members and liaisons nresent:Initials used in minutes-John Bartenstein—liaison to the Appropriation CommitteeJB,Lorraine FoumierLF Ann GilbertAG,Wade TamborWT,Bruce WilliamsBW Loren WoodLW Staff and consultants present Dennis Meehan,Water/Sewer SuperintendentDM*** Business/Discussion*** BW suggested that the Final Report be a summary of the recommendations we are making.*** Motion by WT,seconded by AG,to include Section D of Bruce Williams Handout of 2/20/05(Rev la)in the Final Report passed 5- 0.*** WT and BW then passed out document representing their suggested draft of the Final Report.*** There was a discussion of the block structures,and a motion by LF seconded by AG,to recommend 2 semi-annual blocks of 0 to 99 hcf,and 100 and up hcf,passed by 5 0.*** A motion to adjourn passed. Respectfully submitted,Loren Wood*** WSRSC Meeting#42 Tuesday March 1,2005*** Meeting 42 was cancelled due to a snow storm. The meeting number sequence will include Mar 1 as#42 even though no meeting was held.*** j Loren Wood*** WSRSC Meeting#43 Tuesday March 8,2005*** Summary 1. Update on Palmer and Dodger letter about PILOTS 2. Discussion about rates*** Members and liaisons nresent Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the I ) Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Jim Osten JO Bruce Williams BW Loren Wood LW Staff and consultants nresent Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion RP• Reported on the preliminary letter from Palmer and Dodge on PILOTS.*** LW. Discussed integrating BW&WT's report into the draft of the final report. The last piece of work for the committee is to come up with recommendation on rates.*** BW' in favor of a flat rate,plus an irrigation rate,because there is no need to justify costs other than the costs of the system.*** 54*** 3 ) ) JB: Reminded us of the earlier committee vote for a two-tiered rate structure,0-99 hcf and 100+hcf. Also,Chris Woodcock had emailed him about a legal issue about having at least two blocks to capture high users.*** LW. Going to a flat rate will result in a big increase(about 40%)for current first-block-only users*** RP. This will be a difficult political decision to make*** ) JO: At one time the low end rate was set to recover MWRA rate;it used to be below MWRA rate,now the low end is more than MWRA rate. Recommend a life-line rate equal to the MWRA rate.*** JB: Chris Woodcock explained the MWRA rate in two ways: 1. 100%of MWRA charges 2. about 85%of MRWA charges,due to deducting leakage and hydrant flushing*** BW Agrees that current block rate structure is indefensible*** PC: Discussed the feasibility of an irrigation rate,pointing out that they don't pay for sewerage on irrigation use water*** JB: If we have two blocks,the second block could be the irrigation or seasonal rate.*** ) Them is a provision in the tax law that citizens 65 years and older with low income and low assets can defer paying their taxes until they sell their property or die. We could do the same thing for water/sewer rates. Tied to two-year constant maturity rate.*** ) KB: What information do we need to finish this discussion on rate? Do we need Loren's spread sheet?*** LW. Agreed to make the next meeting focus on rates and to email his spread sheet for people to use.*** Motion to adjourn by LF second by PC. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#44 Tuesday March 15,2005*** Summary ) 1. Motion passed to make a presentation to Town Meeting on our work to date. l 2. Loren Wood presented the rates database he's been working on. 3. Focus for next meeting will be everyone's top three priorities in rate setting.*** — Members and liaisons present Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee 1B,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL, ) Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Motion made to make a presentation to Town Meeting and form a committee to prepare the presentation. Discussion followed about coordinating our presentation with Bill Hadley's DPW presentation. It was noted that if our recommendations are made and accepted after Town Meeting has approved the FY06 budget,our recommendations would impact FY07 budget. BH said that our recommendations could impact the FY06 rates. Agreed that the presentation should focus on work to date,not any recommendations yet. Dave Laredo and Bnice Williams volunteered to work with Loren Wood on preparing the presentation. Motion aooroved.*** Rates: Loren Wood presented his database on rates and demonstrated some examples of different rate structures. He explained that there are different classes of users:residential,commercial,public,municipal,irrigation and water only. This spread sheet is a tool for making recommendations.*** DL.observed that 40%of revenue from only several hundred accounts(out of over 10,000)and 60%of revenue from moderate to lower level users. DL recommends we keep the four-block rate structure.*** AG: It seems wrong to be driven by the bottom line in structuring the rates. We can also change what the bottom line is,if we move ) PILOTS,indirects,capital and depreciation,etc.out of the rates.*** BW. We should work on what's wrong with the current system and then focus on solution for those problems.*** DL.One problem is that we are skewed to a few users who pay a disproportionate amount of the rates. *** LW We could add a base rate into the spreadsheet.*** BW: The problem is that the rates seem upside-down.*** JB: The rates used to be declining blocks to encourage use,so fixed rates could be spread out more. It's a given that we have to have - flat rates at least. There is a statute that prohibits declining block rates. Another statute directs members of MWRA to have an inclining block rate to capture high-end users.*** ) LW. Focus for next meeting: everyone bring in top three priorities for rate setting and use the spread sheet to ran the numbers to ) illustrate the impacts. BH will arrange for a screen projector.*** WT. If we're going to reduce revenue requirements,it would help to know that sooner rather than later. Discussion of mathematics ) followed,determining that whatever factor the revenue was reduced could be used to adjust the rate side. AG and LW pointed out that if we change the break point in blocks,the multiplicative rule doesn't apply.*** ) Motion to adjourn by PC,second by AG. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#45 Tuesday March 22,2005 *** Summary 1. Reviewed Loren Wood's presentation to the Board of Selectmen and Town Meeting. 2. Advised that the Palmer and Dodge report on PILOTs will be presented to the Selectmen on Monday,March 28.*** ) Members and liaisons present.Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Dave Laredo DL,Lorraine Fournier LF Ann Gilbert AG, Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** ) Business/Discussion Reviewed slides for Loren Wood's presentation to the Board of Selectmen(4/6)and Town Meeting(4/13). Made recommendations ) for revisions. To be reviewed again at the next meeting.*** Thanks for Dennis Meehan for AV set-up.*** J It was announced that the Palmer and Dodge report on PILOTs would be presented to the Selectmen on Monday,March 28. Loren will post a meeting of our committee just before the BoS meeting to allow a group of five or more of us to gather together under open ) meeting laws.*** Motion to adjourn by PC,second by AG. 55*** / 7 3 ) _ Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#46 Tuesday March 29,2005*** Summary 1. Discussed Loren Wood's presentation to the Board of Selectmen and Town Meeting about our committee's work to _ date.*** Members and liaisons nresent Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL, Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants nresent: Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Discussed how to organize the topics, Proposed organizing them by Policy and Financial Management,recognizing that all the policy topics were also financial:*** Policy Rates • PILOTs • Indirects • Reserves • Capital&Debt*** Financial Management • Billing Accounts receivable • Reports • Abatements • Liens Business manager LW for the April 5 meeting next week,I will bring my talking text and current revision of the slides. There will also be extra handouts about the pie chart depiction of the budgets and rate setting or rate structure,including municipal and wholesale rates,which will not have slides.*** Question: How much did the PILOT legal work cost?*** Point of information: 100 hcf=approximately 750 gallons.*** Motion to adjourn by WT,second by AG. Respectfully submitted,Kathryn Benjamin*** ( WSRSC Meeting#47 Tuesday April 5,2005*** Summary ) I. Discussed considerations to take into account when setting rates. 2. Made several Final Report subject assignments.*** Members and liaisons nresent Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—Appropriation Committee Liaison JB,Kathryn Benjamin KB,Paul Chemick PC,Ann Gilbert AG,Wade Tambor WT,Bruce Williams BW Loren ( Wood LW Staff and consultants nresent: Dennis Meehan,Water/Sewer Superintendent DM,Bill Hadley,DPW Director BH*** Business/Discussion The members described the considerations they think the rates should be based on: BW' Reduce the spread in dollars between the blocks,i.e. flatten the rates. The rates should be based on usage,not status(category) of user. WT. Same as BW's,plus adding a base charge. DL. There should be 4 blocks. As indicated by his email which contained the following: Regarding the rate design:*** I think we should keep the 4 block billing basis we now employ,BUT WE SHOULD CHANGE THE RANGES. I think this will be the best way to allow smoothing out the steepness in the rates. 1 recommend that the rates per block be set so that each of the 4 sets of users pay a total amount approximately equal to the percentage of water they use.(ie;If the users in the second block are billed for,in total,a volume of ) water equal to 24%of the total usage,these users should pay about 24%of the total cost.)The block rates would be computed after subtracting the expected payments from customers billed on special agreements,the irrigation users,etc. The rates per block should be set so that each block pays at least what the MWRA charge is plus a fair share of the fixed cost. [NOTE:I think the above considerations could lead to a system of charges in which the very low and very high ( users will pay a higher BUT FAIRER share of the costs.]*** AG:Agrees with DL,and the municipal users should not be subsidized. But,the low income subsidies should continue.*** It was agreed that PC should make several sample rate structures that respond to the various considerations listed above.*** Some Final Report topics were assigned as follows:*** Policy • Rates--PC • PILOTs--John Bartenstein • Indirects • Reserves--John Bartenstein 1 • Capital&Debt--LW and Lorraine Founder*** Financial Management • Billing--DL ) 56*** ' ) 175' 1 • Accounts receivable • Reports Abatements Liens • Business management Motion to adjourn passed. Loren Wood*** WSRSC Meeting#48 Tuesday April 12,2005*** l Summary*** 1. Discussed PILOTS. > 2. Motion approved: In an effort to increase transparency and independence of the W/S Enterprise Fund,recommend phasing out PILOTs over three years. 3. Confirmed sufficient attendance to hold next week's scheduled meeting.*** ) Members and liaisons present.Initials used in minutes John Bartenstein—liaison to the Appropriation Committee JB,Kathryn ) Benjamin KB,Paul Chemick PC,Lorraine Foamier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Minutes were not available for review.*** KB:asked how many would be in attendance next week,as it is April school vacation week. By a show of hands,everyone else but KB will be present next week,so the meeting will be held as scheduled.*** PILOTS*** — LW. Reviewed the work and data gathered and presented on PILOTs to date.*** KB: Do I understand correctly that if municipal water usage is no longer subsidized,and the increased rate is paid by the town,that payment will come from the tax revenues,effectively moving a small portion of the water/sewer charges to the property tax base? Answer: Yes.*** Discussion followed about impact of other changes,such as • a decrease in PILOTs paid by W/S Enterprise Fund to the Town could result in an increase in the property tax rate; • a decrease in indirects paid by W/S EF to the Town could result in an increase in the property tax rate; • hiring a W/S Business Manager could lead to an increase in direct charges and perhaps an equivalent decrease in indirect charges,*** PC: suggest we add a section to the Final Report on"Fiscal Impact' of recommendations.*** Motion made by AG,seconded by BW.in an effort to increase transparency and independence of the W/S Enterprise Fund, recommend phasing out PILOTs over three years.*** Discussion on the motion:*** PC: how will this motion increase transparency?*** AG: from its origin,the PILOT was never identified as a cost to W/S,it was to replace lost revenue for the Town. It should represent a real cost.*** LF agrees with AG*** ) KB: understood the legal determination letter to recommend making PILOTS OR collecting all indirects,not both.*** WT. PILOTs are not properly accounted for,tends toward double counting.*** PC: doesn't think it does anything for transparency and independence. If running W/S EF like a business,we would charge them as we charge all other utilities. This is a bias in favor of government and against free enterpnse. There is no equity in retum,no federal - tax,their interest income is tax exempt,indirects don't cover a whole lot of town services provided: roads,lights,police,fire,etc. Therefore,we're running the W/S EF less like a business and we're increasing the subsidy. We can use an established formula to ) determine rate for PILOT.*** AG: 'they' is 'us' —we don't charge the schools full price for water and some don't pay for sewer*** LF disagrees with PC. Tax payers already cover those very indirect costs,why attribute them to W/S?*** PC: W/S won't be double paying;there's no good way to assess how much police,fire,etc.to attribute to W/S,so we just charge based on personal and real property*** DL. if we really treat W/S as a business,shouldn't we charge a heftier rate?*** ) BW' do away with PILOTs;based on p.12 of legal letter,it never states a definitive solution*** KB: eliminating PILOTs increases the property tax deduction for those who itemize*** WT calls the question,second by AG.*** Vote: six in favor: KB,AG,LF WT,BW LW two opposed: PC,DL*** AG: we've seen BoS and Town Meeting decisions run more by numbers than by good policy,will we be prejudicing them to do this ) again? (discussion followed on this point)*** LW Began review of Draft Final Report Format. Discussion about including minority reports.*** Motion by PC,second by DL. to the extent that there are PILOT payments by W/S,that they be calculated as though they are commercial property.*** LF' If we are taxed,would we also be charged directs and indirects? Would PILOTS be in addition to complete capture of all indirects?*** i ) PC: My motion makes no assumption about that. BoS could decide to calculate indirects more conservatively.*** JB: Paul,were you saying it should be taxed at commercial rate?*** LF' What is the assessed value? Would it be a higher cost than the PILOTS now?*** PC: close to the same.*** LW Information can be found on p.8 of the Interim Report: net book value for WS is$44 million x$22/$1000=approximately$800,000.*** ) 57*** I75� AG&PC discuss which value should be used for taxing.*** BW thinks using net book value is so undervalued,that it isn't a useful number;if the actual value is used it would be enormous.*** _ LF' people get charged according to their water consumption. Don't want this to become a tax.*** PC: I think there's a misunderstanding;the charge for PILOTS has a real basis for calculation and becomes a cost of the W/S EF*** AG: calls the question,second by WT*** Vote: three in favor,KB,PC,DL,five opposed:LF AG,WT,BW LW*** KB: liked the format of the final report*** DL. long term financial planning for water supply and water treatment should be looked at. what will be the impact of Hanscom closing?*** PC: motion to adjourn,second by WT. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#49 Tuesday April 19,2005*** Summary [Loren Wood kept notes,but lost them.]*** Memhers and liaisons nresent'Initials used in minutes.Staff and consultants present: Loren Wood and at least four other members were present. *** Business/Discussion [In lieu of minutes,the agenda is reproduced below.]*** Ad Hoc Water and Sewer Rate Study Committee Agenda,Meeting#49 19 April 2005,8:00 am,Town Hall*** I. Call to Order 2. Minutes 3. Long Term Financial Planning Recommendation 4. Proposal for contents of Financial Impact Section of Final Report I 5. Final Report. Comments on and edits to the Draft of the Final Report,attached hereto. 6. Adjournment(9:00)*** Loren Wood*** WSRSC Meeting#50 Tuesday April 26,2005*** Summary 1. Discussed PC's rate design alternatives chart and took a straw poll about members'preferences for rate structure.*** Members and liaisons present:Initials used in minutes John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion After discussion of Paul Chemick's Rate Design Alternatives charts,took a straw poll about members'preferences for rate structure:*** KB:3 blocks—JO's model,likes that it has a rationale for the break ranges:(1"=MWRA rate for water,2"d=MWRA+some town services,3`d block=MWRA+more town services) PC:3 blocks AG:base charge,and 2 blocks,breaking at 100 hcf DL.3 blocks with breaks at 60 hcf and 90 hcf(actually prefers 4 blocks) LF 2 blocks,breaking at 100 hcf JO:3 blocks,3`d block over 100 hcf WT. 2 blocks,with a break at 80 hcf BW 1 block LW.2 blocks,breaking at 100 hcf JB:a flat base charge not tied to any hcf with 3 block rates that are flatter than they are currently*** Comment: the commercial/residential split is a big issue politically. AG: remember our principles for setting rates and work with the numbers. KB: can the base charge be calculated based on the administrative costs of the system,meter reading and billing? LW. reminder: Marathon meeting Saturday May 7 from 8 a.m. Noon. Motion to adjourn by LF second by AG. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#51 Tuesday May 3,2005*** Summary 1. Discussed rates. 1 2. Passed a motion about rates: Recommend a base charge,which includes 0(zero)hcf;a first block up to 100 hcf per six- month billing period;a second rate for 101 hcf and up;and an irrigation rate at a premium. I ) 3. Reminder that we re meeting on Saturday,May 7 from 8 a.m.to Noon.*** Members and liaisons present'Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan, ) Water/Sewer Superintendent DM*** Business/Discussion ) LW distributed current draft of final report.*** Discussed rates.*** AG: if a large commercial user needs to be added to the system,is there a fixed cost related to them to warrant a higher rate for their water and sewer service? Do they burden the system more?*** DL. Yes.*** ) J 58*** / 7'/ J ) ) BW' Strongly supports a single rate plus and irrigation rate. Believes this is most transparent,conservation is everyone's ) responsibility,recommends that the town establish a conservation program to educate the public and promote conservation;setting ) rates so high to promote conservation seems arbitrary and unfair in this monopoly;businesses won't waste water because it's a cost they manage just like every other cost.*** DL.what is the statute requirement for conservation?*** BH: at least two blocks are required to have an inclining block rate. An irrigation rate is a different use and doesn't qualify as a second block.(When JB arrived later,he agreed with this interpretation.)*** LF to label people as water wasters because they have a larger family and require more water to cover everyone's basic needs isn't right. (Question to BH/DM: why is the Town wasting water at our expense,to water the Battle Green right after it's rained? DM provided an answer at the end of the meeting,they have emailed the appropriate department and can look into devises that measure how wet the soil is for triggering the watering system.)*** DL. Rates to monopolies are based on cost of service principle. I've seen many companies waste water because it was so inexpensive.*** WT Are we still in support of maintaining the Enterprise Fund as a desirable way to charge for water? We also discussed a ) connection or base rate charge. Could that count as one block if it includes some HCF with that rate? Then we can narrow or put boundaries around the conversation of other variable blocks.And continue with the irrigation rate.*** JO: There is a relation between rates and conservation. High rates do affect people's usage and bring about technological improvements. (Later,DM reported that the over-usage of the Quabbin reservoir by the MWRA ceased after leak detection programs were required and rates were increased to encourage conservation. Someone else pointed out that low-flow toilets,whose use ) increased after the building code required them,have also had a big impact on reduced water usage.)*** LW water rate elasticity is so low as to not be elastic?*** DL. water is inelastic because in relation to our incomes,the cost of water is not significant enough.*** Some personal stories of self-imposed water conservation at our current rate level challenge the statement that water rates are inelastic, — or that usage is not responsive to rate increases.*** JB: the statute doesn't define what constitutes a high volume user or why to encourage conservation(or recover costs?)only from ) high volume users.*** LF' if we have two blocks for domestic use,plus a separate irrigation rate,will we meet the requirements of the statute?*** LW' if we had a fixed base rate,or charge,which includes some HCF e.g.$60/semi-annual billing period,which includes 20HCF then pay a higher rate for usage over 20HCF *** JB: reminded us a problem we identified in the fall,about the compressed blocks*** AG: want to make a motion,representing our desire to charge people the full cost of their water and sewer service and that we don't ) want to charge a separate commercial rate,and that we want to comply with the statute: Motion,seconded by KB: establish a base charge which includes 20 hcf,the second block to be from 20-100 hcf and a third block for usage over 100 hcf,as well as an irrigation rate at a premium. Discussion of motion ) JB: concerned that people who use less than 20 hcf would complain about paying for something they're not using. DL. about 17%of users fall into this category. 5%of users use less than 10 hcf per billing period. WT Motion,seconded by BW' to amend the motion by removing the 100 hcf cap. Discussion on the motion to amend: JB: the statute focuses on high volume users,so having the break at 20 hcf doesn't seem to qualify. Described the Town of Wellesley's water rates as an example. -4 - BH: is this within the purview of the committee? ) LW our report will make policy recommendations;we will also make rate recommendations to support our policy recommendations, which the BoS can accept or reject.*** DL. if the second block breaks at 100hcf,it impacts very few users,won't discriminate against large families. WT withdraws amendment. BW'agrees. AG's rate motion was discussed further and revised: Recommend a base charge,which includes 0(zero)hcf;a first block up to 100 hcf per six-month billing period;a second rate for 101 hcf and up;and an irrigation rate at a premium. Vote: 6 in favor,2 opposed. ) JO: concerned that this structure won't capture enough for reserve needs. 5%reserve is not enough. Discussion followed. AG ) pointed out that until 1999 the Enterprise Fund could run at a deficit,borrow from the General Fund and pay back the General Fund from future rates collected. KB: can JO's concern be address by changing the recommended reserve level from 5%-10%?*** ) DL and BW. 5%should be adequate,but it is not a fixed level. The earlier statement was that a 5%reserve level is a goal. ) Motion to adjourn by BW second by WT.*** Respectfully submitted,Kathryn Benjamin*** <� WSRSC Meeting#52 Saturday May 7,2005*** Summary****** ) Members and liaisons present.Initials used in minutes ) 59*** J 177 John Bartenstein—liaison to the Appropriation Committee IS,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW*** Business/Discussion Reviewed DL's document,Prioritization of WSSC Report Recommendations,for inclusion into the final report. Approved including an implementation plan in the report,making it section 1.3.*** KB appointed editor of final report,working with LW*** It was agreed that after today,no more information will be added to the report.*** Agreed to divide section 1.2 into Management and Policy sub-sections,1.2.1 and 1.2.2, *** Move italicized comments in recommendation summary to discussion section or introduction.*** Discussed additional revisions of text in recommendation summary section,to be incorporated into next version for further review and approval.*** Discussed base charges and two block rates. Motion by PC,second by BW to drop the connection charge. Approved unanimously. *** Discussed statute for inclining blocks and high volume users. PC ran some numerical illustrations. Vote deferred until Tuesday.*** Motion to adjourn by PC,second by AG. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#53 Tuesday May 10,2005*** Summary*** 1. Unanimously passed a motion 'to make some members of this committee available to the W/S EF Business Manager,to assist him/her in interpreting and implementing the findings of this committee. 2. Unanimously passed a motion 'to extend our committee meetings for two more weeks,to finish the final report and submit it to the BoS no later than Friday May 27 3. Tabled a motion,in order to gather more information,recommending that 'all municipal buildings pay water and sewer at a flat rate,equal to the average cost;and to strongly encourage the development of a policy to encourage water conservation in municipal buildings. 4. Unanimously passed a motion that 'the irrigation rate be a flat rate at its present value and be increased by the same percentage that water costs increase. 5. Reviewed documents,charts and tables prepared by Loren Wood and Kathryn Benjamin. 6. Next week's meeting will begin at 8:00 a.m.and continue until them is not a quorum or there is a vote to adjourn.*** Members and liaisons present.Initials used in minutes John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Jim Osten JO Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Motion:made by LF second by WT. to make some members of this committee available to the W/S EF Business Manager,to assist him/her in interpreting and implementing the findings of this committee,passed unanimously.*** Motion:made by KB,second by LF' to extend meetings for two more weeks to finish the final report and submit it by Friday May 27 passed unanimously.*** I I Motion:made by LW second by KB:to move indirects and Lexington debt from the water/sewer rates to the tax levy. Discussion followed. LW two reasons for this motion: 1)this would put an end to the endless contention about indirects,and 2)debt pays for infrastructure proportionate to property value.*** LF concerned about losing accountability for indirect services and charges and doesn't think increasing property taxes is favorable AG: we've been concerned about transparency and this doesn't make things clearer*** Vote failed: 7 opposed,1 in favor*** Discussion about municipal rates. Municipal users in FY04 paid a flat rate of$1.10 for water and$1.74 for sewer,resulting in about $140,000 in total charges. If they had been charged at the average price paid by the ensemble of block rate payers,then the charges would have been about$540,000.*** KB: this is a lesser priority;recommend the business manager look into this in the future WT. should we prioritize all recommendations? AG: transparency is served by consistency,meaning no subsidy. At least everyone pays water AND sewer. LF everyone should pay at least the MWRA charge and some of the Town costs LW. asked DM to research any buildings not paying sewer DM: at least 2 building don't pay sewer since the change from the Alpha to the MUNIS systems. BW recommend all pay at least the cost—PC's 'average' JB: supports the principle:stand alone,no subsidies in either direction. Has wondered if municipal buildings should be on block rate j structure to encourage conservation. Don't agree we should charge tax-supported usage at premium rate,just charge average rate. DL. a plan should be developed to raise mumcipal rates over time,and a Town water-use policy.*** I ) Motion:made by AG,second by KB: recommend all Town buildings pay water and sewer at flat rate set at the average cost,and strongly encourage establishing a policy to encourage conservation in municipal buildings. Discussion followed. *** ) JO: what disturbed him at Town Meeting recently was about rebuilding the white house. The BoS dismissed the recommendation of a citizen's committee and just did what they wanted. Regarding the municipal rate,have a motion that focuses on the intent rather than on specific numbers. Ask the business manager to report on specific subsidies and report on municipal usage and conservation steps.*** Motion by KB second by LF to table this motion in order to gather more data. Motion passed unanimously.*** JB: The current motion for indirects doesn't capture the point the Al Levine made that not all indirect charges are identified. The business manager ought to make sure to capture all indirects.*** Motion: made by BW second by LF'that the irrigation rate will be a flat rate and at its present value and be increase by the percentage that costs increase. Passed unanimously.*** a 60*** 1 7 5' 1 ) LW suggest we offer the Selectmen three rates,two extremes and one intermediate.*** Reviewed handouts on rates from LW and KB. It was recommended that future data models show semi-annual billing and combine ) the water and sewer charges.*** WT. The principles for setting the blocks seem to be 1)have fewer blocks,2)make the increases between blocks less steep,and 3) the lowest block should capture at least the MWRA costs and some Town costs.*** LW Next Tuesday's meeting will be a 'marathon' meeting,to review and edit the current draft of the final report,until we no longer have a quorum or a motion to adjourn passes. Those submitting individual reports are encouraged to have them in by next week.*** Motion to adjourn by KB,second by DL,passed. Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#54 Tuesday May 17,2005*** Summary 1. Discussed possible impact of the delayed audit report. 2. Presented and discussed a log graph of various proposed rates. 3. Motion passed,recommending three(3)rate blocks,where the top block remains at the current level of$4.99 for water and $13.13 for sewer,the middle block is the average cost and the bottom rate is what's left. 4. Motion passed,that the new blocks be set at 0-40 hcf,41-80 hcf and 81+hcf. 5. Motion passed,recommending that a long-term policy objective of rate setting be that the middle block is always the average of the cost and the highest block is not more than 20%over the average. 6. After discussion about municipal rates was opened again,motion passed,recommending that municipal rates reach the average cost within four years,with suggested increases of approximately 25%each year. 7 Meetings to edit the final report will continue on Thursday May 19 and Friday May 20.*** Members and liaisons nresent.Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the Appropriation Committee]B,Kathryn Benjamin KB,Paul Chemick PC,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL, - Wade Tambor WT,Bruce Williams BW Loren Wood LW Staff and consultants present: Bill Hadley,Director DPW BH,Dennis Meehan,Water/Sewer Superintendent DM*** Business/Discussion Discussed audit report and possible impact of its being delayed. It was agreed to finish our report as planned,without waiting for the audit report.*** LW introduced a log graph of the various rate proposals and how they compare with the current rates. Discussion followed. Comment: the problem with block rates is that low volume users are subsidized by large volume users. Subsidize means any user pays less or more than the average cost. In discussing how many options of rates to present in the report,RP advised that it is useful to give some numerical examples to show the impact of different changes. Recommended we include our best recommendation plus a high and low example.*** BW. believes our objective is to move to as flat a rate as the law allows. IB:the purpose of the statute is to promote conservation. Two blocks essentially creates a residential vs.commercial rate structure. Three blocks allows for a conservation rate for citizens as well as a business rate.*** DL. It's the waste water costs that are really driving costs.*** Motion by AG,second by BW' To move to as flat a rate as the law allows. Discussion followed. Vote was split evenly: 4 in favor (LF WT,BW LW)and 4 opposed(KB,PC,AG,DL). Motion failed.*** ) Discussion continued about how to balance two competing goals: promoting conservation and creating a rate structure that is fair to all users.*** ) Motion by WT,second by AG: recommend three(3)rate blocks,where the top block remains at the current level of$4.99 for water and$13.13 for sewer,the middle block is the average cost and the bottom rate is what's left. Discussion about this motion ) acknowledged that the top rate may go up or down as costs increase or decrease. Motion passed unanimously.*** Motion by LF second by WT that the new blocks be set at 0-40 hcf,41-80 hcf and 81+hcf. Motion passed unanimously.*** Motion by WT,second by AG: recommend that a long-term policy objective of rate setting be that the middle block is always the ) average of the cost and the highest block is not more than 20%over the average.*** Motion by WT,second by KB,to 'untable' the discussion about municipal rates,passed unanimously. One observation is that getting the municipal rates up to the average cost immediately would be a hardship for the Town.*** Motion by AG,second by WT recommending that municipal rates reach the average cost within four years,with suggested increases ) of approximately 25%each year. Motion carred 6:1. Those in favor: KB,AG,DL,WT,BW LW Opposed:LF*** Meetings to edit the final report will be Thursday May 19 at 11:00 a.m.(LW and KB will start at 9:00 a.m.)and Friday May 20 at 9:00 a.m. Loren Wood will email the committee with room locations*** Motion to adjourn by WT,second by BW , Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#55&56 Thursday May 19,2005 and Friday May 20,2005*** ) Summary 1. Continued to review and edit draft of final report.*** Members and liaisons nresent'Initials used in minutes Richard Pagett—Selectmen liaison RP Kathryn Benjamin KB,Lorraine Fournier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Loren Wood LW*** ) Business/Discussion Those present arrived and left at different times,discussing and editing the draft of the final report. Changes would be incorporated ) into an updated draft,to be distributed to all members,for continued discussion and editing at the next meeting,Tuesday,May 24.*** Respectfully submitted,Kathryn Benjamin*** ) WSRSC Meeting#57&58 Tuesday,May 24,2005 and Thursday May 26,2005*** Summary j 1. Continued to review and edit draft of final report.*** Members and liaisons nresent:Initials used in minutes Richard Pagett—Selectmen liaison RP John Bartenstein—liaison to the ) Appropriation Committee JB,Kathryn Benjamin KB,Paul Chemick(5/24 only)PC,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW*** l ) ) 61*** ) � 7f Business/Discussion Continued discussing and editing the draft of the final report. Changes would be incorporated into an updated draft,to be distributed to all members,for continued discussion and editing at the next meeting,Thursday,June 2.*** Respectfully submitted,Kathryn Benjamin*** WSRSC Meeting#59 Thursday June 2,2005*** Summary 1 1. Finished editing the draft of the final report.*** Members and liaisons nresent Initials used in minutes John Bartenstein—liaison to the Appropriation Committee JB,Kathryn Benjamin KB,Lorraine Foumier LF Ann Gilbert AG,Dave Laredo DL,Wade Tambor WT,Bruce Williams BW Loren Wood LW*** Business/Discussion Continued discussing and editing the draft of the final report. *** Motion:made by LF/second by WT,to adopt a two-block rate structure to recommend in the report. Discussion followed. Motion failed,I in favor,6 opposed.*** Discussed the possibility of our committee preparing a press release on the report for use in the Minuteman. Suggested that we talk to Richard Pagett about this.*** Motion:made by WT,second by AG,to accept the report as revised. Motion passed unanimously.*** As Loren will be away tomorrow,Kathryn was authorized to deliver the final revised copy of the report to the Selectmen as soon as the final edits were incorporated,either tomorrow,Friday or Monday,June 6.*** A final meeting will be scheduled to review the outstanding minutes to be approved.*** Motion to adjourn by WT and DL passed.*** Respectfully submitted,Kathryn Benjamin*** ) WSRSC Meeting#60 Thursday June 21,2005 Summary I. Reviewed and approved minutes for meetings#44-60. 2. Appointed Kathryn Benjamin to present the Final Report to the Board of Selectmen at their meeting Monday June 27 1 ) Members and liaisons nresent Initials used in minutesJohn Bartenstein—liaison to the Appropriation Committee,JB Kathryn Benjamin,KB,Lorraine Fournier,LF,Ann Gilbert,AG,Jim Osten,JO,Wade Tambor,WT,Loren Wood,LW,Staff and consultants present:,Bill Hadley,Director DPW,BH,Dennis Meehan,Water/Sewer Superintendent,DM, Business/Discussion LW reported that he has requested a slot on the Selectmen's June 27 agenda for our committee. Motion by LW second by WT that Kathryn Benjamin present the Final Report,including 5 minutes of comments,to the Board of Selectmen on June 27 Passed unanimously. Motions were made and passed unanimously to approve minutes for meetings#44-59. Regarding meeting#46,a comment was made that we don't know how much the PILOT legal work cost. Regarding meeting#52,agreed to delete the summary section. Dennis Meehan and Bill Hadley made final remarks,commending the committee for its good work and tireless effort. A wealth of information has been gathered which will be very useful. l 1 JB reported that the audit of the Enterprise Fund is still not done. KB asked how to approve minutes of this final meeting. After she read her notes aloud,motion made by JO,second by AG,to approve the minutes for meeting#60 as read,to be written up. Motion passed unanimously. The meeting adjoumed. Respectfully submitted, Kathryn Benjamin ) ) I ) ) ) ) a -) 62*** g0 J a Fall 2003 Use(hcf) Spring 2004 Use(hcf) FY2004 Water(W) Water(W) Sewer(S) Residential Water&Sewer 372,427 Residential Water&Sewer 399,195 771,622 CommerMdu Water&Sewer 58,271 Commer/Indu Water&Sewer 64,546 122,817 Public Water&Sewer 35,542 Public Water&Sewer 32,989 68,531 962,970 <Res,CI,Pub-W&S I 962,970 Municipal Water&Sewer 3,586 Municipal Water&Sewer 35,245 38,831 38,831 <Muni W&S 38,831 Residential Irrigation 93,166 Residential Irrigation 77,826 170,992 Commer/Indu Irrigation 3,967 Commer/Indu Irrigation 402 4,369 Public Irrigation 0 Public Irrigation 0 0 Municipal Irrigation 0 Municipal Irrigation 0 0 175,361 <Irrigation I 175,361 <Irrigation Residential Water only 20,077 Residential Water only 23,200 43,277 Commer/Indu Water only 5,319 Commer/Indu Water only 5,223 10,542 Public Water only 1,614 Public Water only 216 1,830 55,649 <Res,CI,Pub-W only1,018,619 <Res,CI,Pub Municipal Water only 3,953 Municipal Water only 2,499 6,452 6,452 <Muni-W only I 45,283 <Municipal 7i Total 597,922 Total 641,341 1,239,263 1,239,263 1,239,263 1,001,801 Iv - v -. _ v Fall 2003 Residential Water&Sewer Commer/Indu Water&Sewer From To #users Pct.users HCF Pct.HCF Revenue Pct.Rev. #users Pct.users HCF use Pct.HCF Revenue Pct.Rev 1 5 130 z 321 0.09% $2,277.67 0.07% 6 2.32% 14 0.02% $99.26 0.01% 6 10 341 3.76% 2526 0.68% $17,912.82 0.53% 5 1.93% 35 0.06% $248.15 0.03% 11 20 1233 13.60% 19406 5.25% $137,585.58 4.03% 18 6.95% 279 0.48% $1,978.12 0.21% 21 30 1855 20.46% 50610 13.69% $378,723.99 11.11% 16 6.18% 401 0.69% $3,006.72 0.32% 31 40 1840 20.29% 66872 18.09% $530,749.61 15.56% 22 8.49% 763 1.32% $6,062.15 0.65% 41 50 1375 15.16% 62566 16.92% $529,663.36 15.53% 19 7.34% 836 1.45% $7,064.98 0.76% 51 60 872 9.62% 58179 15.74% $529,221.84 15.52% 14 5.41% 748 1.30% $6,784.50 0.73% 61 70 504 5.56% 32928 8.91% $314,145.49 9.21% 11 4.25% 709 1.23% $6,781.25 0.73% 71 80 256 2.82% 19073 5.16% $188,273.38 5.52% 6 2.32% 444 0.77% $4,383.85 0.47% 81 90 156 1.72% 13115 3.55% $136,680.62 4.01% 11 4.25% 919 1.59% $9,533.10 1.02% 91 100 110 1.21% 11088 3.00% $125,192.55 3.67% 5 1.93% 473 0.82% $5,334.77 0.57% 101 110 49 0.54% 5083 1.37% $60,393.30 1.77% 7 2.70% 724 1.25% $8,588.49 0.92% 111 120 33 0.36% 3747 1.01% $46,544.01 1.36% 5 1.93% 567 0.98% $7,038.05 0.75% 121 130 21 0.23% 2602 0.70% $33,557.35 0.98% 2 0.77% 255 0.44% $3,326.20 0.36% 131 140 15 0.17% 1996 0.54% $26,459.55 0.78% 7 2.70% 945 1.64% $12,593.01 1.35% 141 150 11 0.12% 1580 0.43% $21,510.42 0.63% 2 0.77% 289 0.50% $3,942.28 0.42% 151 160 13 0.14% 2017 0.55% $28,139.85 0.83% 9 3.47% 1378 2.39% $19,144.58 2.05% 161 170 8 0.09% 1298 0.35% $18,342.17 0.54% 4 1.54% 659 1.14% $9,352.29 1.00% 171 180 7 0.08% 1213 0.33% $17 455.30 0.51% 4 1.54% 705 1.22% $10,192.00 1.09% 181 190 6 0.07% 1107 0.30% $16,175.65 0.47% 1 0.39% 188 0.33% $2,759.36 0.30% 191 200 2 0.02% 387 0.10% $5,724.11 0.17% 3 1.16% 588 1.02% $8,712.97 0.93% 200 inf 33 0.36% 14713 3.98% $245,239 76 7.19% 67 25.87% 46352 80.30% $796,534.56 85.33% -inf -1 73 0.81% -2705 -0.73% $0.00 0.00% 7 2.70% 549 -0.95% $0.00 0.00% zero zero 125 1.38% 0 0.00% $0.00 0.00% 8 3.09% 0 0.00% $0.00 0.00% Totals 9068 100.00% 369724 100.00% $3,409,968.39 100.00% 259 100.00% 57722 100.00% $933,460.66 100.00% CO Fall 2003 Public Water&Sewer Municipal Water&Sewer From To #users Pct.users HCF used Pct.HCF Revenue Pct.Rev. #users Pct.users HCF used Pct.HCF Revenue Pct.Rev 1 5 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 6 10 2 2.67% 11 0.03% $77.99 0.01% 0 0.00% 0 0.00% $0.00 0.00% 11 20 6 8.00% 100 0.28% $709.00 0.12% 0 0.00% 0 0.00% $0.00 0.00% 21 30 7 9.33% 177 0.50% $1,329.68 0.22% 0 0.00% 0 0.00% $0.00 0.00% 31 40 1 1.33% 36 0.10% $287.56 0.05% 0 0.00% 0 0.00% $0.00 0.00% 41 50 4 5.33% 172 0.49% $1,439.52 0.24% 0 0.00% 0 0.00% $0.00 0.00% 51 60 1 1.33% 57 0.16% $527.32 0.09% 0 0.00% 0 0.00% $0.00 0.00% 61 70 3 4.00% 197 0.56% $1,892.92 0.31% 1 7.69% 65 1.81% $184.60 1.81% 71 80 2 2.67% 146 0.41% $1,437.36 0.24% 1 7.69% 75 2.09% $213.00 2.09% 81 90 2 2.67% 166 0.47% $1,713.52 0.28% 1 7.69% 88 2.45% $249.92 2.45% 91 100 2 2.67% 187 0.53% $2,094.04 0.35% 0 0.00% 0 0.00% $0.00 0.00% 101 110 3 4.00% 315 0.89% $3,766.21 0.62% 1 7.69% 100 2.79% $284.00 2.79% 111 120 2 2.67% 222 0.63% $2,728.24 0.45% 2 15.38% 232 6.47% $658.88 6.47% 121 130 3 4.00% 369 1.04% $4,744.69 0.78% 0 0.00% 0 0.00% $0.00 0.00% 131 140 3 4.00% 410 1.16% $5,487.61 0.91% 0 0.00% 0 0.00% $0.00 0.00% 141 150 3 4.00% 428 1.21% $5,813.77 0.96% 0 0.00% 0 0.00% $0.00 0.00% 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 161 170 1 1.33% 160 0.45% $2,252.00 0.37% 1 7.69% 164 4.57% $465.76 4.57% 171 180 1 1.33% 177 0.50% $2,560.04 0.42% 0 0.00% 0 0.00% $0.00 0.00% 181 190 2 2.67% 367 1.04% $5,355.64 0.88% 0 0.00% 0 0.00% $0.00 0.00% 191 200 1 1.33% 194 0.55% $2,868.08 0.47% 0 0.00% 0 0.00% $0.00 0.00% 200 inf 22 29.33% 31651 89.29% $559,277 76 92.23% 5 38.46% 2862 79.81% $8,128.08 79.81% -inf 1 2 2.67% -95 -0.27% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 2 2.67% 0 0.00% $0.00 0.00% 1 7.69% 0 0.00% $0.00 0.00% Totals 75 100.00% 35447 100.00% $606,362.97 100.00% 13 100.00% 3586 100.00% $10,184.24 100.00% L 00 W C ._ I C v J Fall 2003 Residential Irrigation Commer/Indu Irrigation From To #users Pct.users HCF used Pct.HCF Revenue Pct.Rev. #users Pct.users HCF use(Pct.HCF Revenue Pet.Rev 1 5 49 3.87% 108 0.12% $538.92 0.12% 0 0.00% 0 0.00% $0.00 0.00% 6 10 77 6.09% 541 0.58% $2,699.59 0.58% 0 0.00% 0 0.00% $0.00 0.00% 11 20 124 9.80% 1782 1.91% $8,892.18 1.91% 0 0.00% 0 0.00% $0.00 0.00% 21 30 106 8.38% 2604 2.80% $12,993.96 2.79% 1 10.00% 20 0.50% $99.80 0.50% 31 40 143 11.30% 4951 5.31% $24,705.49 5.31% 0 0.00% 0 0.00% $0.00 0.00% 41 50 112 8.85% 4961 5.33% $24,755.78 5.32% 0 0.00% 0 0.00% $0.00 0.00% 51 60 96 7.59% 5235 5.62% $26,122.65 5.62% 0 0.00% 0 0.00% $0.00 0.00% 61 70 88 6.96% 5646 6.06% $28,173.54 6.06% 0 0.00% 0 0.00% $0.00 0.00% 71 80 54 4.27% 4014 4.31% $20,029.86 4.31% 1 10.00% 77 1.94% $384.23 1.94% 81 90 59 4.66% 4970 5.33% $24,800.16 5.33% 0 0.00% 0 0.00% $0.00 0.00% 91 100 52 4.11% 4915 5.28% $24,525.85 5.28% 1 10.00% 93 2.34% $464.07 2.34% 101 110 33 2.61% 3441 3.69% $17,170.59 3.69% 1 10.00% 102 2.57% $508.98 2.57% 111 120 30 2.37% 3418 3.67% $17,055.82 3.67% 0 0.00% 0 0.00% $0.00 0.00% 121 130 22 1.74% 2750 2.95% $13,722.99 2.95% 0 0.00% 0 0.00% $0.00 0.00% 131 140 24 1.90% 3236 3.47% $16,148.90 3.47% I 10.00% 132 3.33% $658.68 3.33% 141 150 19 1.50% 2755 2.96% $13,747 45 2.96% 0 0.00% 0 0.00% $0.00 0.00% 151 160 12 0.95% 1861 2.00% $9,286.39 2.00% 0 0.00% 0 0.00% $0.00 0.00% 161 170 9 0.71% 1491 1.60% $7440.09 1.60% 0 0.00% 0 0.00% $0.00 0.00% 171 180 11 0.87% 1922 2.06% $9,590.78 2.06% 0 0.00% 0 0.00% $0.00 0.00% 181 190 7 0.55% 1280 1.37% $6,387.20 1.37% 0 0.00% 0 0.00% $0.00 0.00% 191 200 9 0.71% 1755 1.88% $8,757 45 1.88% 0 0.00% 0 0.00% $0.00 0.00% 200 inf 61 4.82% 29530 31.70% $147,354.70 31.70% 5 50.00% 3543 89.31% $17,681.88 89.31% -inf 1 1 0.08% 7 -0.01% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 67 5.30% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% Totals 1265 100.00% 93160 100.00% $464,900.34 100.00% 10 100.00% 3967 100.00% $19,797.64 100.00% Fall 2003 Public Irrigation Municipal Irrigation From To #users Pct.users HCF used Pct.HCF Revenue Pct.Rev. #users Pct.users HCF used Pct.HCF Revenue Pct.Rev 1 5 0 0 $0.00 0 0 $0.00 6 10 0 0 $0.00 0 0 $0.00 11 20 0 0 $0.00 0 0 $0.00 21 30 0 0 $0.00 0 0 $0.00 31 40 0 0 $0.00 0 0 $0.00 41 50 0 0 $0.00 0 0 $0.00 51 60 0 0 $0.00 0 0 $0.00 61 70 0 0 $0.00 0 0 $0.00 71 80 0 0 $0.00 0 0 $0.00 81 90 0 0 $0.00 0 0 $0.00 91 100 0 0 $0.00 0 0 $0.00 101 110 0 0 $0.00 0 0 $0.00 111 120 0 0 $0.00 0 0 $0.00 121 130 0 0 $0.00 0 0 $0.00 131 140 0 0 $0.00 0 0 $0.00 141 150 0 0 $0.00 0 0 $0.00 151 160 0 0 $0.00 0 0 $0.00 161 170 0 0 $0.00 0 0 $0.00 171 180 0 0 $0.00 0 0 $0.00 181 190 0 0 $0.00 0 0 $0.00 191 200 0 0 $0.00 0 0 $0.00 200 inf 0 0 $0.00 0 0 $0.00 -inf 1 0 0 $0.00 0 0 $0.00 zero zero 0 0 $0.00 0 0 $0.00 Totals 0 0 $0.00 0 0 $0.00 Fall 2003 Residential Water only Commer/Indu Water only From To #users Pct.users HCF used Pct.HCF Revenue Pct.Rev. #users Pct.users HCF uses Pct.HCF Revenue Pct.Rev 1 5 10 2.20% 16 0.08% $35.20 0.06% 1 5.88% 4 0.09% $8.80 0.03% 6 10 33 7.27% 230 1.16% $506.01 0.80% 0 0.00% 0 0.00% $0.00 0.00% 11 20 56 12.33% 832 4.19% $1,830.41 2.89% 2 11.76% 26 0.58% $57.20 0.23% 21 30 75 16.52% 1822 9.18% $4,285.34 6.77% 1 5.88% 27 0.60% $65.42 0.26% 31 40 76 16.74% 2592 13.06% $6,624.34 10.46% 0 0.00% 0 0.00% $0.00 0.00% 41 50 63 13.88% 2816 14.18% $7,757.17 12.25% 3 17.65% 126 2.81% $338.52 1.35% 51 60 39 8.59% 2092 10.54% $6,135.05 9.69% 1 5.88% 51 1.14% $147.22 0.59% 61 70 23 5.07% 1480 745% $4,558.81 7.20% 0 0.00% 0 0.00% $0.00 0.00% 71 80 19 4.19% 1401 7.06% $4,447 43 7.02% 1 5.88% 74 1.65% $235.08 0.93% 81 90 10 2.20% 850 4.28% $2,829.50 4.47% 0 0.00% 0 0.00% $0.00 0.00% 91 100 9 1.98% 853 4.30% $2,987.33 4.72% 0 0.00% 0 0.00% $0.00 0.00% 101 110 5 1.10% 515 2.59% $1,863.85 2.94% 0 0.00% 0 0.00% $0.00 0.00% 111 120 3 0.66% 336 1.69% $1,253.04 1.98% 0 0.00% 0 0.00% $0.00 0.00% 121 130 5 1.10% 632 3.18% $2,447.68 3.87% 0 0.00% 0 0.00% $0.00 0.00% 131 140 3 0.66% 396 1.99% $1,552.06 2.45% 0 0.00% 0 0.00% $0.00 0.00% 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 151 160 3 0.66% 462 2.33% $1,881.78 2.97% 0 0.00% 0 0.00% $0.00 0.00% 161 170 2 0.44% 326 1.64% $1,344.34 2.12% 0 0.00% 0 0.00% $0.00 0.00% 171 180 1 0.22% 171 0.86% $712.09 1.12% 0 0.00% 0 0.00% $0.00 0.00% 181 190 1 0.22% 189 0.95% $801.91 1.27% 0 0.00% 0 0.00% $0.00 0.00% 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 200 inf 6 1.32% 2066 10.41% $9,463.82 14.95% 5 29.41% 5011 111.60% $24,298.64 96.61% -inf -1 5 1.10% -224 1.13% $0.00 0.00% 1 5.88% -829 -18.46% $0.00 0.00% zero zero 7 1.54% 0 0.00% $0.00 0.00% 2 11.76% 0 0.00% $0.00 0.00% Totals 454 100.00% 19853 100.00% $63,317.20 100.00% 17 100.00% 4490 100.00% $25,150.89 100.00% 0i VN Fall 2003 Public Water only Municipal Water only From To #users Pct.users HCF used Pct.HCF Revenue Pct.Rev #users Pct.users HCF used Pet.HCF Revenue Pct.Rev 1 5 1 11.11% 1 0.06% $2.20 0.03% 0 0.00% 0 0.00% $0.00 0.00% 6 10 0 0.00% 0 0.00% $0.00 0.00% 1 6.67% 9 0.23% $9.90 0.23% 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 21 30 2 22.22% 48 2.97% $112.48 1.53% 0 0.00% 0 0.00% $0.00 0.00% 31 40 2 22.22% 72 4.46% $185.92 2.53% 1 6.67% 36 0.91% $39.60 0.91% 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 51 60 1 11.11% 50 3.10% $143.40 1.95% 0 0.00% 0 0.00% $0.00 0.00% 61 70 0 0.00% 0 0.00% $0.00 0.00% 1 6.67% 66 1.67% $72.60 1.67% 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 121 130 0 0.00% 0 0.00% $0.00 0.00% 1 6.67% 123 3.11% $135.30 3.11% 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 181 190 0 0.00% 0 0.00% $0.00 0.00% 1 6.67% 185 4.68% $203.50 4.68% 191 200 0 0.00% 0 0.00% $0.00 0.00% 1 6.67% 191 4.83% $210.10 4.83% 200 inf 2 22.22% 1443 89.41% $6,918.04 93.97% 6 40.00% 3343 84.57% $3,677.30 84.57% -inf 1 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 1 11.11% 0 0.00% $0.00 0.00% 3 20.00% 0 0.00% $0.00 0.00% Totals 9 100.00% 1614 100.00% $7,362.04 100.00% 15 100.00% 3953 100.00% $4,348.30 100.00% CP J i- r I - Spring 2004 Residential Water&Sewer Commer/Indu Water&Sewer From To #users %.users HCF used Pct.HCF Revenue Pct.Rev. #users %.users HCF used Pet.HCF Revenue Pct.Rev. 1 5 123 1.36% 297 0.07% $2,105.82 0.06% 5 1.93% 12 0.02% $85.08 0.01% 6 10 298 3.29% 2189 0.55% $15,520.22 0.42% 5 1.93% 35 0.05% $248.15 0.02% 11 20 1048 11.56% 16624 4.17% $117,864.94 3.19% 16 6.18% 237 0.37% $1,680.34 0.16% 21 30 1603 17.68% 43818 11.00% $327 435.24 8.87% 20 7.72% 473 0.73% $3,501.05 0.34% 31 40 1905 21.01% 68639 17.23% $544,381.91 14.74% 22 8.49% 738 1.14% $5,834.40 036% 41 50 1528 16.85% 77768 19.52% $655,429.81 17.75% 18 6.95% 792 1.23% $6,693.14 0.64% 51 60 1050 11.58% 56977 14.30% $518,554.18 14.04% 22 8.49% 1190 1.84% $10,835.63 1.04% 61 70 623 6.87% 41090 10.31% $392,003.57 10.61% 11 4.25% 693 1.07% $6,589.89 0.63% 71 80 299 3.30% 22758 5.71% $224,630.85 6.08% 5 1.93% 369 0.57% $3,641.25 0.35% 81 90 205 2.26% 17179 4.31% $178,607.85 4.84% 8 3.09% 683 1.06% $7,198.37 0.69% 91 100 107 1.18% 10114 2.54% $114,015.47 3.09% 9 3.47% 857 1.33% $9,704.06 0.93% 101 110 70 0.77% 7264 1.82% $86,319.81 2.34% 6 2.32% 634 0.98% $7,604.89 0.73% 111 120 33 0.36% 3784 0.95% $47,208.54 1.28% 3 1.16% 341 0.53% $4,237.33 0.41% 121 130 19 0.21% 2363 0.59% $30,520.79 0.83% 3 1.16% 370 0.57% $4,762.81 0.46% 131 140 16 0.18% 2152 0.54% $28,639.07 0.78% 3 1.16% 407 0.63% $5,433.25 0.52% 141 150 10 0.11% 1437 0.36% $19,566.46 0.53% 5 1.93% 732 1.13% $10,027.85 0.96% 151 160 8 0.09% 2349 0.59% $32,855.91 0.89% 7 2.70% 1081 1.67% $15,057.33 1.45% 161 170 9 0.10% 1486 0.37% $21,101.54 037% 4 1.54% 655 1.01% $9,279.81 0.89% 171 180 7 0.08% 1217 0.31% $17,521.65 0.47% 4 1.54% 694 1.08% $9,986.49 0.96% 181 190 9 0.10% 1647 0.41% $24,018.86 0.65% 4 1.54% 721 1.12% $10,475.73 1.01% 191 200 3 0.03% 585 0.15% $8,658.61 0.23% 1 0.39% 195 0.30% $2,886.20 0.28% 200 inf 46 0.51% 17458 4.38% $286,568.68 7.76% 75 28.96% 52637 81.55% $905,242.58 86.96% -inf -1 8 0.09% -792 -0.20% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 41 0.45% 0 0.00% $0.00 0.00% 3 1.16% 0 0.00% $0.00 0.00% Totals 9068 100.00% 398404 100.00% $3,693,529.77 100.00% 259 100.00% 64546 100.00% $1,041,005.61 100.00% Spring 2004 Public Water&Sewer Municipal Water&Sewer From To Misers %.users HCF used Pct.HCF Revenue Pet.Rev #users %.users HCF used Pct.HCF Revenue Pct.Rev. 1 5 2 2.67% 5 0.02% $35.45 0.01% 1 7.69% 1 0.00% $2.84 0.00% 6 10 2 2.67% 12 0.04% $85.08 0.02% 0 0.00% 0 0.00% $0.00 0.00% 11 20 5 6.67% 81 0.25% $574.29 0.10% 0 0.00% 0 0.00% $0.00 0.00% 21 30 7 9.33% 174 0.53% $1,302.35 0.23% 0 0.00% 0 0.00% $0.00 0.00% 31 40 3 4.00% 107 0.32% $853.57 0.15% 1 7.69% 32 0.09% $90.88 0.09% 41 50 3 4.00% 145 0.44% $1,271.00 0.23% 0 0.00% 0 0.00% $0.00 0.00% 51 60 3 4.00% 164 0.50% $1,498.24 0.27% 0 0.00% 0 0.00% $0.00 0.00% 61 70 1 1.33% 61 0.18% $575.16 0.10% 0 0.00% 0 0.00% $0.00 0.00% 71 80 0 0.00% 0 000% $0.00 0.00% 1 7.69% 75 0.21% $213.00 0.21% 81 90 2 2.67% 175 0.53% $1,876.60 0.33% 2 15.38% 171 0.49% $485.64 0.49% 91 100 3 4.00% 288 0.87% $3,276.97 0.58% 0 0.00% 0 0.00% $0.00 0.00% 101 110 5 6.67% 528 1.60% $6,331.37 1.13% 0 0.00% 0 0.00% $0.00 0.00% 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 121 130 2 2.67% 246 0.75% $3,163.12 0.56% 0 0.00% 0 0.00% $0.00 0.00% 131 140 2 2.67% 267 0.81% $3,543.64 0.63% 1 7.69% 137 0.39% $389.08 0.39% 141 150 2 2.67% 286 0.87% $3,887.92 0.69% 0 0.00% 0 0.00% $0.00 0.00% 151 160 1 1.33% 150 0.45% $2,070.80 0.37% 1 7.69% 150 0.43% $426.00 0.43% 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 171 180 1 1.33% 172 052% $2,469 44 0.44% 0 0.00% 0 0.00% $0.00 0.00% 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 200 inf 28 37.33% 30128 91.33% $527,797.81 94.15% 5 38 46% 34679 98.39% $98,488.36 98.39% -inf -1 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 3 4.00% 0 0.00% $0.00 0.00% 1 7.69% 0 0.00% $0.00 0.00% Totals 75 100.00% 32989 100.00% $560,612.84 100.00% 13 100.00% 35245 100.00% $100,095.80 100.00% to Spring 2004 Residential Irrigation Commer/lndu Irrigation From To #users %.users HCF used Pet.HCF Revenue Pct.Rev. #users %.users HCF used Pet.HCF Revenue Pct.Rev. 1 5 494 39.05% 984 1.26% $4,910.16 1.26% 2 20.00% 5 1.24% $24.95 1.24% 6 IO 209 1632% 1409 1.81% $7,030.91 1.81% 1 10.00% 9 2.24% $44.91 2.24% 11 20 175 13.83% 2402 3.09% $11,985.98 3.09% 2 20.00% 30 7 46% $149.70 7 46% 21 30 71 5.61% 1663 2.14% $8,298.37 2.14% 0 0.00% 0 0.00% $0.00 0.00% 31 40 36 2.85% 1201 1.54% $5,992.99 1.54% 0 0.00% 0 0.00% $0.00 0.00% 41 50 27 2.13% 1194 1.53% $5,958.06 1.53% 1 10.00% 40 9.95% $199.60 9.95% 51 60 12 0.95% 652 0.84% $3,253.48 0.84% 0 0.00% 0 0.00% $0.00 0.00% 61 70 11 0.87% 694 0.89% $3,463.06 0.89% 2 20.00% 127 31.59% $633.73 31.59% 71 80 8 0.63% 594 0.76% $2,964.06 0.76% 0 0.00% 0 0.00% $0.00 0.00% 81 90 4 0.32% 330 0.42% $1,646.70 0.42% 0 0.00% 0 0.00% $0.00 0.00% 91 100 7 0.55% 678 0.87% $3,383.22 0.87% 0 0.00% 0 0.00% $0.00 0.00% 101 110 5 0.40% 516 0.66% $2,574.84 0.66% 0 0.00% 0 0.00% $0.00 0.00% 111 120 3 0.24% 340 0.44% $1,696.60 0.44% 0 0.00% 0 0.00% $0.00 0.00% 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 131 140 2 0,16% 270 0.35% $1,347.30 0.35% 0 0.00% 0 0.00% $0.00 0.00% 141 150 1 0.08% 149 0.19% $743.51 0.19% 0 0.00% 0 0.00% $0.00 0.00% 151 160 1 0.08% 153 0.20% $763.47 0.20% 0 0.00% 0 0.00% $0.00 0.00% 161 170 1 0.08% 169 0.22% $843.31 0.22% 0 0.00% 0 0.00% $0.00 0.00% 171 180 1 0.08% 173 0.22% $863.27 0.22% 0 0.00% 0 0.00% $0.00 0.00% 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 191 200 2 0.16% 396 0.51% $1,976.04 0.51% 1 10.00% 191 47.51% $953.09 47.51% 200 int' 34 2.69% 63859 82.05% $318,656.41 82.05% 0 0.00% 0 0.00% $0.00 0.00% -inf -1 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 161 12.73% 0 0.00% $0.00 0.00% 1 10.00% 0 0.00% $0.00 0.00% Totals 1265 100.00% 77826 100.00% $388,351.74 100.00% 10 100.00% 402 100.00% $2,005.98 100.00% O Spring 2004 Residential Water only Commer/Indu Water only From To #users %.users HCF used Pct.HCF Revenue Pct.Rev. #users %.users HCF used Pet.HCF Revenue Pct.Rev 1 5 11 2.42% 29 0.00% $63.80 0.08% 1 5.88% 3 0.00% $6.60 0.03% 6 10 26 5.73% 194 0.00% $426.81 0.53% 2 11.76% 13 0.00% $28.60 0.12% 11 20 70 15.42% 999 0.00% $2,197.82 2.75% 1 5.88% 16 0.00% $35.20 0.14% 21 30 87 19.16% 2168 0.00% $5,137.71 6.44% 0 0.00% 0 0.00% $0.00 0.00% 31 40 80 17.62% 2723 0.00% $6,956.40 8.72% 1 5.88% 32 0.00% $80.72 0.33% 41 50 70 15.42% 3096 0.00% $8,494.75 10.65% 2 11.76% 91 0.00% $252.42 1.03% 51 60 35 7.71% 1914 0.00% $5,645.49 7.07% 0 0.00% 0 0.00% $0.00 0.00% 61 70 23 5.07% 1482 0.00% $4,566.45 5.72% 0 0.00% 0 0.00% $0.00 0.00% 71 80 10 2.20% 734 0.00% $2,327.88 2.92% 0 0.00% 0 0.00% $0.00 0.00% 81 90 13 2.86% 1084 0.00% $3,573.57 4.48% 0 0.00% 0 0.00% $0.00 0.00% 91 100 9 1.98% 854 0.00% $2,990.66 3.75% 0 0.00% 0 0.00% $0.00 0.00% 101 110 5 1.10% 513 0.00% $1,853.87 2.32% I 5.88% 106 0.00% $387.74 1.58% 111 120 1 0.22% 113 0.00% $422.67 0.53% 0 0.00% 0 0.00% $0.00 0.00% 121 130 1 0.22% 123 0.00% $472.57 0.59% 0 0.00% 0 0.00% $0.00 0.00% 131 140 2 0.44% 277 0.00% $1,099.83 1.38% 0 0.00% 0 0.00% $0.00 0.00% 141 150 0 0.00% 0 0.00% $0.00 0.00% 1 5.88% 147 0.00% $592.33 2.41% 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 161 170 1 0.22% 160 0.00% $657.20 0.82% 0 0.00% 0 0.00% $0.00 0.00% 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 200 inf 5 1.10% 6737 0.00% $32,911.63 41.24% 6 35.29% 4815 0.00% $23,179.65 94.37% -inf -1 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 5 1.10% 0 0.00% $0.00 0.00% 2 11.76% 0 0.00% $0.00 0.00% Totals 454 100.00% 23200 0.00% $79,799.12 100.00% 17 100.00% 5223 0.00% $24,563.27 100.00% Spring 2004 Public Water only Municipal Water only From To #users %.users HCF used Pct.HCF Revenue Pct.Rev. #users %.users HCF used Pct.HCF Revenue Pct.Rev. 1 5 1 11.11% 1 0.00% $2.20 0.34% 0 0.00% 0 0.00% $0.00 0.00% 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 11 20 1 11.11% 11 0.00% $24.20 3.77% 0 0.00% 0 0.00% $0.00 0.00% 21 30 2 22.22% 55 0.00% $133.90 20.84% 0 0.00% 0 0.00% $0.00 0.00% 31 40 0 0.00% 0 0.00% $0.00 0.00% 2 13.33% 63 2.52% $69.30 2.52% 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 61 70 1 11.11% 62 0.00% $189.24 29.46% 0 0.00% 0 0.00% $0.00 0.00% 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 81 90 1 11.11% 87 0.00% $292.93 45.59% 0 0.00% 0 0.00% $0.00 0.00% 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% 200 inf 0 0.00% 0 0.00% $0.00 0.00% 5 33.33% 2436 9748% $2,679.60 9748% -inf -1 0 0.00% 0 0.00% $0.00 0.00% 0 0.00% 0 0.00% $0.00 0.00% zero zero 3 33.33% 0 0.00% $0.00 0.00% 8 53.33% 0 0.00% $0.00 0.00% Totals 9 100.00% 216 0.00% $642.47 100.00% 15 100.00% 2499 100.00% $2,748.90 100.00% J3 FY04 Fall(of 2003) Usage by caterogies All categories From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 197 1 76% 464 0.08% $2,962.06 0.05% 464 0 0 0 0 0 6 10 459 4.10% 3353 0.56% $21 454.46 0.39% 2330 1023 0 0 0 0 11 20 1439 12.86% 22425 3.78% $151,052.50 2.72% 7435 7435 7555 0 0 0 21 30 2063 18.44% 55709 9.38% $400,617.39 7.22% 11230 11230 22460 10789 0 0 31 40 2085 18.64% 75322 12.68% $568,654.67 10.24% 10935 10935 21870 21870 9712 0 41 50 1576 14.09% 71477 12.03% $571,019.35 10.28% 8085 8085 16170 16170 16170 6797 51 60 1024 9.15% 66412 11 18% $569,081.98 10.25% 6155 6155 12310 12310 12310 12310 61 70 631 5.64% 41091 6.92% $355,809.21 6.41% 3215 3215 6430 6430 6430 6430 71 80 340 3.04% 25304 4.26% $219,404.19 3.95% 1710 1710 3420 3420 3420 3420 81 90 239 2.14% 20108 3.39% $175,806.83 3.17% 1195 1195 2390 2390 2390 2390 91 100 179 1.60% 17609 2.96% $160,598.62 2.89% 930 930 1860 1860 1860 1860 101 110 99 0.89% 10280 1.73% $92,575.42 1.67% 495 495 990 990 990 990 111 120 75 0.67% 8522 1 43% $75,278.04 1.36% 375 375 750 750 750 750 121 130 54 0.48% 6731 113% $57,934.21 1.04% 270 270 540 540 540 540 131 140 53 0.47% 7115 1.20% $62,899.81 113% 265 265 530 530 530 530 141 150 35 0.31% 5052 0.85% $45,013.92 0.81% 175 175 350 350 350 350 151 160 37 0.33% 5718 0.96% $58,452.60 1.05% 185 185 370 370 370 370 161 170 25 0.22% 4098 0.69% $39,196.65 0.71% 125 125 250 250 250 250 171 180 24 0.21% 4189 0.71% $40,510.21 0.73% 120 120 240 240 240 240 181 190 18 0.16% 3316 0.56% $31,683.27 0.57% 90 90 180 180 180 180 191 200 16 0.14% 3115 0.52% $26,272.71 0.47% 80 80 160 160 160 160 200 1E+05 213 1.90% 140951 23.73% $1,825,835.36 32.89% 1065 1065 2130 2130 2130 2130 1 E+06 1 89 0.80% -4409 -0.74% $0.00 0.00% -402 -324 -492 -408 -328 -269 0 0 216 1.93% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 11186 100% 593952 100% $5,552,113.46 100% 56929 55158 100955 81729 58782 39697 FY04 Fall(of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 All categories 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4862 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6430 2511 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3420 3420 1364 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2390 2390 2390 988 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1860 1860 1860 1860 869 0 0 0 0 0 0 0 0 0 0 0 0 0 990 990 990 990 990 380 0 0 0 0 0 0 0 0 0 0 0 0 750 750 750 750 750 750 272 0 0 0 0 0 0 0 0 0 0 0 540 540 540 540 540 540 540 251 0 0 0 0 0 0 0 0 0 0 530 530 530 530 530 530 530 530 225 0 0 0 0 0 0 0 0 0 350 350 350 350 350 350 350 350 350 152 0 0 0 0 0 0 0 0 370 370 370 370 370 370 370 370 370 370 168 0 0 0 0 0 0 0 250 250 250 250 250 250 250 250 250 250 250 98 0 0 0 0 0 0 240 240 240 240 240 240 240 240 240 240 240 240 109 0 0 0 0 0 180 180 180 180 180 180 180 180 180 180 180 180 180 76 0 0 0 0 160 160 160 160 160 160 160 160 160 160 160 160 160 160 75 0 0 0 2130 2130 2130 2130 2130 2130 2130 2130 2130 2130 2130 2130 2130 2130 2130 98351 0 0 -237 -218 -201 184 160 -60 -44 -37 -30 30 -30 -30 -30 -30 -30 -835 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25452 16671 12104 9338 7359 5880 5022 4461 3905 3482 3128 2808 2579 2366 2205 98351 0 0 sum (including negatives) 593952 sum (ignoring negatives) 598361 negatives -4409 U FY04 Fall (of 2003) Usage by caterogies Residential Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 130 143% 321 0.09% $2,277.67 0.07% 321 0 0 0 0 0 5.2% 6 10 341 3.76% 2526 0.68% $17,912.82 0.53% 1740 786 0 0 0 0 18.8% 11 20 1233 13.60% 19406 5.25% $137,585.58 4.03% 6405 6405 6596 0 0 0 39.2% 21 30 1855 20.46% 50610 13.69% $378,723.99 11 11% 10190 10190 20380 9850 0 0 59.5% 31 40 1840 20.29% 66872 18.09% $530,749.61 15.56% 9710 9710 19420 19420 8612 0 74.7% 41 50 1375 15.16% 62566 16.92% $529,663.36 15.53% 7080 7080 14160 14160 14160 5926 84.3% 51 60 872 9.62% 58179 15.74% $529,221.84 15.52% 5395 5395 10790 10790 10790 10790 89.9% 61 70 504 5.56% 32928 8.91% $314,145.49 9.21% 2580 2580 5160 5160 5160 5160 92.7% 71 80 256 2.82% 19073 5.16% $188,273.38 5.52% 1290 1290 2580 2580 2580 2580 94.4% 81 90 156 1 72% 13115 3.55% $136,680.62 4.01% 780 780 1560 1560 1560 1560 95.6% 91 100 110 121% 11088 3.00% $125,192.55 3.67% 585 585 1170 1170 1170 1170 96.2% 101 110 49 0.54% 5083 1.37% $60,393.30 1 77% 245 245 490 490 490 490 96.5% 111 120 33 0.36% 3747 1.01% $46,544.01 1.36% 165 165 330 330 330 330 96.8% 121 130 21 0.23% 2602 0.70% $33,557.35 0.98% 105 105 210 210 210 210 96.9% 131 140 15 0.17% 1996 0.54% $26,459.55 0.78% 75 75 150 150 150 150 971% 141 150 11 0.12% 1580 0.43% $21,510.42 0.63% 55 55 110 110 110 110 97.2% 151 160 13 0.14% 2017 0.55% $28,139.85 0.83% 65 65 130 130 130 130 97.3% 161 170 8 0.09% 1298 0.35% $18,342.17 0.54% 40 40 80 80 80 80 97 4% 171 180 7 0.08% 1213 0.33% $17 455.30 0.51% 35 35 70 70 70 70 974% 181 190 6 0.07% 1107 0.30% $16,175.65 0.47% 30 30 60 60 60 60 97.5% 191 200 2 0.02% 387 0.10% $5,724.11 0.17% 10 10 20 20 20 20 97.8% 200 1 E+05 33 0.36% 14713 3.98% $245,239.76 7 19% 165 165 330 330 330 330 98.6% 1E+06 1 73 0.81% -2705 -0.73% $0.00 0.00% -328 -264 -391 -308 -236 180 100.0% 0 0 125 1.38% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 9068 100% 369724 100% $3,409,968.39 100% 47066 45791 83796 66670 46012 29166 FY04 Fall(of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Residential Water&Sewer 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4229 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5160 1968 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2580 2580 1013 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1560 1560 1560 635 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1170 1170 1170 1170 558 0 0 0 0 0 0 0 0 0 0 0 0 0 490 490 490 490 490 183 0 0 0 0 0 0 0 0 0 0 0 0 330 330 330 330 330 330 117 0 0 0 0 0 0 0 0 0 0 0 210 210 210 210 210 210 210 82 0 0 0 0 0 0 0 0 0 0 150 150 150 150 150 150 150 150 46 0 0 0 0 0 0 0 0 0 110 110 110 110 110 110 110 110 110 40 0 0 0 0 0 0 0 0 130 130 130 130 130 130 130 130 130 130 67 0 0 0 0 0 0 0 80 80 80 80 80 80 80 80 80 80 80 18 0 0 0 0 0 0 70 70 70 70 70 70 70 70 70 70 70 70 23 0 0 0 0 0 60 60 60 60 60 60 60 60 60 60 60 60 60 27 0 0 0 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 7 0 0 0 330 330 330 330 330 330 330 330 330 330 330 330 330 330 330 8113 0 0 157 138 128 120 111 -30 -22 17 10 10 10 10 10 10 10 -205 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16679 9258 5723 3785 2538 1673 1277 1032 846 730 627 498 433 377 337 8113 0 0 sum (including negatives) 369724 sum (ignoring negatives) 372427 negatives -2703 v FY04 Fall(of 2003) Usage by caterogies Commer/Indu Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 6 2.32% 14 0.02% $99.26 0.01% 14 0 0 0 0 0 6 10 5 1.93% 35 0.06% $248.15 0.03% 25 10 0 0 0 0 11 20 18 6.95% 279 0A8% $1,978.12 0.21% 90 90 99 0 0 0 21 30 16 6.18% 401 0.69% $3,006.72 0.32% 80 80 160 81 0 0 31 40 22 8.49% 763 1.32% $6,062.15 0.65% 110 110 220 220 103 0 41 50 19 7.34% 836 1 45% $7,064.98 0.76% 95 95 190 190 190 76 51 60 14 5.41% 748 1.30% $6,784.50 0.73% 70 70 140 140 140 140 61 70 11 4.25% 709 1.23% $6,781.25 0.73% 55 55 110 110 110 110 71 80 6 2.32% 444 0.77% $4,383.85 0.47% 30 30 60 60 60 60 81 90 11 425% 919 1.59% $9,533.10 1.02% 55 55 110 110 110 110 91 100 5 1.93% 473 0.82% $5,334.77 0.57% 25 25 50 50 50 50 101 110 7 2.70% 724 1.25% $8,588.49 0.92% 35 35 70 70 70 70 111 120 5 1.93% 567 0.98% $7,038.05 0.75% 25 25 50 50 50 50 121 130 2 0.77% 255 0.44% $3,326.20 0.36% 10 10 20 20 20 20 131 140 7 2.70% 945 1.64% $12,593.01 1.35% 35 35 70 70 70 70 141 150 2 0.77% 289 0.50% $3,942.28 0.42% 10 10 20 20 20 20 151 160 9 3.47% 1378 2.39% $19,144.58 2.05% 45 45 90 90 90 90 161 170 4 1.54% 659 114% $9,352.29 1.00% 20 20 40 40 40 40 171 180 4 1.54% 705 1.22% $10,192.00 1.09% 20 20 40 40 40 40 181 190 1 039% 188 0.33% $2,759.36 0.30% 5 5 10 10 10 10 191 200 3 116% 588 1.02% $8,712.97 0.93% 15 15 30 30 30 30 200 1E+05 67 25.87% 46352 80.30% $796,534.56 85.33% 335 335 670 670 670 670 1E+06 1 7 2.70% -549 -0.95% $0.00 0.00% -35 -35 -61 -60 -52 -49 0 0 8 3.09% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 259 100% 57722 100% $933,460.66 100% 1204 1175 2249 2071 1873 1656 t FY04 Fall(of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Commer/Indu Water&Sew 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 48 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 110 49 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 60 60 24 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 110 110 110 390 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 23 0 0 0 0 0 0 0 0 0 0 0 0 0 70 70 70 70 70 24 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 17 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 15 0 0 0 0 0 0 0 0 0 0 70 70 70 70 70 70 70 70 35 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 20 9 0 0 0 0 0 0 0 0 90 90 90 90 90 90 90 90 90 90 28 0 0 0 0 0 0 0 40 40 40 40 40 40 40 40 40 40 40 19 0 0 0 0 0 0 40 40 40 40 40 40 40 40 40 40 40 40 25 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 10 10 8 0 0 0 0 30 30 30 30 30 30 30 30 30 30 30 30 30 30 18 0 0 0 670 670 670 670 670 670 670 670 670 670 670 670 670 670 670 32952 0 0 -40 -40 -33 -24 19 10 10 10 10 10 10 10 10 10 10 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1488 1379 1294 1199 1133 1064 1007 985 935 889 818 769 735 708 688 32952 0 0 sum(including negatives) 57722 sum(ignoring negatives) 58271 negatives -549 .-4) FY04 Fall(of 2003) Usage by caterogies Public Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 6 10 2 2.67% 11 0.03% $77.99 0.01% 10 1 0 0 0 0 11 20 6 8.00% 100 0.28% $709.00 0.12% 30 30 40 0 0 0 21 30 7 9.33% 177 0.50% $1,329.68 0.22% 35 35 70 37 0 0 31 40 1 1.33% 36 0.10% $287.56 0.05% 5 5 10 10 6 0 41 50 4 5.33% 172 0.49% $1 439.52 0.24% 20 20 40 40 40 12 51 60 1 1.33% 57 0.16% $527.32 0.09% 5 5 10 10 10 10 61 70 3 4.00% 197 0.56% $1,892.92 0.31% 15 15 30 30 30 30 71 80 2 2.67% 146 0.41% $1 437.36 0.24% 10 10 20 20 20 20 81 90 2 2.67% 166 0.47% $1,713.52 0.28% 10 10 20 20 20 20 91 100 2 2.67% 187 0.53% $2,094.04 0.35% 10 10 20 20 20 20 101 110 3 4.00% 315 0.89% $3,766.21 0.62% 15 15 30 30 30 30 111 120 2 2.67% 222 0.63% $2,728.24 0.45% 10 10 20 20 20 20 121 130 3 4.00% 369 1.04% $4,744.69 0.78% 15 15 30 30 30 30 131 140 3 4.00% 410 116% $5,487.61 0.91% 15 15 30 30 30 30 141 150 3 4.00% 428 1.21% $5,813.77 0.96% 15 15 30 30 30 30 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 1 1.33% 160 0.45% $2,252.00 0.37% 5 5 10 10 10 10 171 180 1 1.33% 177 0.50% $2,560.04 0.42% 5 5 10 10 10 10 181 190 2 2.67% 367 1.04% $5,355.64 0.88% 10 10 20 20 20 20 191 200 1 133% 194 0.55% $2,868.08 0.47% 5 5 10 10 10 10 200 1 E+05 22 29.33% 31651 89.29% $559,277.76 92.23% 110 110 220 220 220 220 1E+06 1 2 2.67% -95 -0.27% $0.00 0.00% -9 -5 10 10 10 10 0 0 2 2.67% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 75 100% 35447 100% $606,362.97 100% 355 346 670 597 556 522 N a 0 v ..i _ J J _ ✓ J J _, J _ FY04 Fall (of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Public Water&Sewer 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 30 17 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 7 0 0 0 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 15 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 2 0 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 30 9 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 30 30 20 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 30 30 30 8 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 10 7 0 0 0 0 0 20 20 20 20 20 20 20 20 20 20 20 20 20 7 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 10 10 10 4 0 0 0 220 220 220 220 220 220 220 220 220 220 220 220 220 220 220 27251 0 0 10 10 10 10 1 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 507 487 456 436 417 395 362 339 320 278 270 260 257 237 224 27251 0 0 sum (including negatives) 35447 sum (ignoring negatives) 35542 negatives -95 0 FY04 Fall(of 2003) Usage by caterogies Municipal Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 21 30 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 31 40 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 1 7.69% 65 1.81% $184.60 1.81% 5 5 10 10 10 10 71 80 1 7.69% 75 2.09% $213.00 2.09% 5 5 10 10 10 10 81 90 1 7.69% 88 2.45% $249.92 2.45% 5 5 10 10 10 10 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 1 7.69% 100 2.79% $284.00 2.79% 5 5 10 10 10 10 111 120 2 15.38% 232 6.47% $658.88 6.47% 10 10 20 20 20 20 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 1 7.69% 164 4.57% $465.76 4.57% 5 5 10 10 10 10 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 5 38.46% 2862 79.81% $8,128.08 79.81% 25 25 50 50 50 50 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1 7.69% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 13 100% 3586 100% $10,184.24 100% 60 60 120 120 120 120 kJ r I F LL L L 1,___ '_ J 'J ._ '`. �. - - - - - - - - - - - -' _ _ .J J _-' —1 _ ' J `/ J ../ _/ FY04 Fall(of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Municipal Water&Sewer 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 5 00 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 80 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 1862 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 120 115 105 98 90 80 72 60 60 60 60 54 50 50 50 1862 0 0 sum(including negatives) 3586 sum (ignoring negatives) 3586 negatives 0 0 L FY04 Fall(of 2003) Usage by caterogies Residential Irrigation From To #users Pct.users HCE used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 49 3.87% 108 0.12% $538.92 0.12% 108 0 0 0 0 0 6 10 77 6.09% 541 0.58% $2,699.59 0.58% 385 156 0 0 0 I 0 11 20 124 9.80% 1782 1.91% $8,892.18 1.91% 620 620 542 0 0 0 21 30 106 8.38% 2604 2.80% $12,993.96 2.79% 530 530 1060 484 I 0 0 31 40 143 11.30% 4951 5.31% $24,705.49 5.31% 715 715 1430 1430 661 0 41 50 112 8.85% 4961 5.33% $24,755.78 5.32% 560 560 1120 1120 1120 481 51 60 96 7.59% 5235 5.62% $26,122.65 5.62% 480 480 960 960 960 960 61 70 88 6.96% 5646 6.06% $28,173.54 6.06% 440 440 880 880 880 880 71 80 54 4.27% 4014 4.31% $20,029.86 4.31% 270 270 540 540 540 540 81 90 59 4.66% 4970 5.33% $24,800.16 5.33% 295 295 590 590 590 590 91 100 52 4.11% 4915 5.28% $24,525.85 5.28% 260 260 520 520 520 520 101 110 33 2.61% 3441 3.69% $17 170.59 3.69% 165 165 330 330 330 330 111 120 30 2.37% 3418 3.67% $17,055.82 3.67% 150 150 300 300 300 300 121 130 22 1 74% 2750 2.95% $13,722.99 2.95% 110 110 220 220 220 220 131 140 24 1.90% 3236 3.47% $16,148.90 3.47% 120 120 240 240 240 240 141 150 19 1.50% 2755 2.96% $13,747 45 2.96% 95 95 190 190 190 190 151 160 12 0.95% 1861 2.00% $9,286.39 2.00% 60 60 120 120 120 120 161 170 9 0.71% 1491 1.60% $7 440.09 1.60% 45 45 90 90 90 90 171 180 11 0.87% 1922 2.06% $9,590.78 2.06% 55 55 110 110 110 110 181 190 7 0.55% 1280 1.37% $6,387.20 1.37% 35 35 70 70 70 70 191 200 9 0.71% 1755 1.88% $8,757 45 1.88% 45 45 90 90 90 90 200 1E+05 61 4.82% 29530 31.70% $147,354.70 31.70% 305 305 610 610 610 610 1E+06 1 1 0.08% -7 -0.01% $0.00 0.00% -5 -2 0 0 0 0 0 0 67 5.30% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1265 100% 93160 100% $464,900.34 100% 5848 5511 10012 8894 7641 6341 0 (_ r FY04 Fall (of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Residential Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 435 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 880 366 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 540 540 234 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 590 590 590 250 0 0 0 0 0 0 0 0 0 0 0 0 0 0 520 520 520 520 235 0 0 0 0 0 0 0 0 0 0 0 0 0 330 330 330 330 330 141 0 0 0 0 0 0 0 0 0 0 0 0 300 300 300 300 300 300 118 0 0 0 0 0 0 0 0 0 0 0 220 220 220 220 220 220 220 110 0 0 0 0 0 0 0 0 0 0 240 240 240 240 240 240 240 240 116 0 0 0 0 0 0 0 0 0 190 190 190 190 190 190 190 190 190 95 0 0 0 0 0 0 0 0 120 120 120 120 120 120 120 120 120 120 61 0 0 0 0 0 0 0 90 90 90 90 90 90 90 90 90 90 90 51 0 0 0 0 0 0 110 110 110 110 110 110 110 110 110 110 110 110 52 0 0 0 0 0 70 70 70 70 70 70 70 70 70 70 70 70 70 20 0 0 0 0 90 90 90 90 90 90 90 90 90 90 90 90 90 90 45 0 0 0 610 610 610 610 610 610 610 610 610 610 610 610 610 610 610 17330 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5335 4386 3714 3140 2605 2181 1858 1630 1396 1185 1031 931 822 720 655 17330 0 0 sum (including negatives) 93160 sum (ignoring negatives) 93166 negatives -6 O C' FY04 Fall(of 2003) Usage by caterogies Commer/Indu Irrigation From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 21 30 1 10.00% 20 0.50% $99.80 0.50% 5 5 10 0 0 0 31 40 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 71 80 1 10.00% 77 1.94% $384.23 1.94% 5 5 10 10 10 10 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 1 10.00% 93 2.34% $464.07 2.34% 5 5 10 10 10 10 101 110 1 10.00% 102 2.57% $508.98 2.57% 5 5 10 10 10 10 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 1 10.00% 132 3.33% $658.68 3.33% 5 5 10 10 10 10 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 5 50.00% 3543 89.31% $17,681.88 89.31% 25 25 50 50 50 50 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 10 100% 3967 100% $19,797.64 100% 50 50 100 90 90 90 Ri a 6-' V FY04 Fall(of 2003)Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130.140140-150 150-160 160-170 170-180180.190 190-200 200-up 1Mto-1 0-0 O 0 0 0 Commer/indu Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 7 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 103 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 2543 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 90 90 87 80 73 62 60 60 52 50 50 50 50 50 50 2543 0 0 sum(including negatives) 3967 sum(ignoring negatives) 3967 negatives 0 Sb 0 FY04 Fall (of 2003) Usage by caterogies Public Irrigation From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fa112003 1 5 0 0 0 0 $0.00 0 0 0 0 0 0 0 6 10 0 0 0 0 $0.00 0 0 0 0 0 0 0 11 20 0 0 0 0 $0.00 0 0 0 0 0 0 0 21 30 0 0 0 0 $0.00 0 0 0 0 0 0 0 31 40 0 0 0 0 $0.00 0 0 0 0 0 0 0 41 50 0 0 0 0 $0.00 0 0 0 0 0 0 0 51 60 0 0 0 0 $0.00 0 0 0 0 0 0 0 61 70 0 0 0 0 $0.00 0 0 0 0 0 0 0 71 80 0 0 0 0 $0.00 0 0 0 0 0 0 0 81 90 0 0 0 0 $0.00 0 0 0 0 0 0 0 91 100 0 0 0 0 $0.00 0 0 0 0 0 0 0 101 110 0 0 0 0 $0.00 0 0 0 0 0 0 0 111 120 0 0 0 0 $0.00 0 0 0 0 0 0 0 121 130 0 0 0 0 $0.00 0 0 0 0 0 0 0 131 140 0 0 0 0 $0.00 0 0 0 0 0 0 0 141 150 0 0 0 0 $0.00 0 0 0 0 0 0 0 151 160 0 0 0 0 $0.00 0 0 0 0 0 0 0 161 170 0 0 0 0 $0.00 0 0 0 0 0 0 0 171 180 0 0 0 0 $0.00 0 0 0 0 0 0 0 181 190 0 0 0 0 $0.00 0 0 0 0 0 0 0 191 200 0 0 0 0 $0.00 0 0 0 0 0 0 0 200 1E+05 0 0 0 0 $0.00 0 0 0 0 0 0 0 1E+06 1 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 3 C. L � _ � L � _ J J \ `- `� �/ J J J J J _- - _ _ _. _ _ _ _ _ .- J .J e� FY04 Fall (of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mt0-1 0-0 0 0 0 0 Public Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 sum(including negatives) 0 sum (ignoring negatives) 0 negatives 0 R) 0 FY04 Fall(of 2003) Usage by caterogies Municipal Irrigation From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fa112003 1 5 0 0 0 0 $0.00 0 0 0 0 0 0 0 6 10 0 0 0 0 $0.00 0 0 0 0 0 0 0 11 20 0 0 0 0 $0.00 0 0 0 0 0 0 0 21 30 0 0 0 0 $0.00 0 0 0 0 0 0 0 31 40 0 0 0 0 $0.00 0 0 0 0 0 0 0 41 50 0 0 0 0 $0.00 0 0 0 0 0 0 0 51 60 0 0 0 0 $0.00 0 0 0 0 0 0 0 61 70 0 0 0 0 $0.00 0 0 0 0 0 0 0 71 80 0 0 0 0 $0.00 0 0 0 0 0 0 0 81 90 0 0 0 0 $0.00 0 0 0 0 0 0 0 91 100 0 0 0 0 $0.00 0 0 0 0 0 0 0 101 110 0 0 0 0 $0.00 0 0 0 0 0 0 0 111 120 0 0 0 0 $0.00 0 0 0 0 0 0 0 121 130 0 0 0 0 $0.00 0 0 0 0 0 0 0 131 140 0 0 0 0 $0.00 0 0 0 0 0 0 0 141 150 0 0 0 0 $0.00 0 0 0 0 0 0 0 151 160 0 0 0 0 $0.00 0 0 0 0 0 0 0 161 170 0 0 0 0 $0.00 0 0 0 0 0 0 0 171 180 0 0 0 0 $0.00 0 0 0 0 0 0 0 181 190 0 0 0 0 $0.00 0 0 0 0 0 0 0 191 200 0 0 0 0 $0.00 0 0 0 0 0 0 0 200 1E+05 0 0 0 0 $0.00 0 0 0 0 0 0 0 1E+06 1 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 Aa 0 L LLL - J _, JJ JS FY04 Fall (of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Municipal Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 sum (including negatives) 0 sum(ignoring negatives) 0 negatives 0 FY04 Fall(of 2003)Usage by caterogies Residential Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall2003 1 5 10 2.20% 16 0.08% $35.20 0.06% 16 0 0 0 0 0 6 10 33 7.27% 230 116% $506.01 0.80% 165 65 0 0 0 0 11 20 56 12.33% 832 4.19% $1,830.41 2.89% 280 280 272 0 0 0 21 30 75 16.52% 1822 9.18% $4,285.34 6.77% 375 375 750 322 0 0 31 40 76 16.74% 2592 13.06% $6,624.34 10.46% 380 380 760 760 312 0 41 50 63 13.88% 2816 14.18% $7,757 17 12.25% 315 315 630 630 630 296 51 60 39 8.59% 2092 10.54% $6,135.05 9.69% 195 195 390 390 390 390 61 70 23 5.07% 1480 7 45% $4,558.81 7.20% 115 115 230 230 230 230 71 80 19 4.19% 1401 7.06% $4,447 43 7.02% 95 95 190 190 190 190 81 90 10 2.20% 850 4.28% $2,629.50 4.47% 50 50 100 100 100 100 91 100 9 1.98% 853 4.30% $2,987.33 4.72% 45 45 90 90 90 90 101 110 5 1 10% 515 2.59% $1,863.85 2.94% 25 25 50 50 50 50 111 120 3 0.66% 336 1.69% $1,253.04 1.98% 15 15 30 30 30 30 121 130 5 110% 632 3.18% $2,447.68 3.87% 25 25 50 50 50 50 131 140 3 0.66% 396 1.99% $1,552.06 2.45% 15 15 30 30 30 30 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 3 0.66% 462 2.33% $1,881.78 2.97% 15 15 30 30 30 30 161 170 2 0.44% 326 1.64% $1,344.34 2.12% 10 10 20 20 20 20 171 180 1 0.22% 171 0.86% $712.09 112% 5 5 10 10 10 10 181 190 1 0.22% 189 0.95% $801.91 1.27% 5 5 10 10 10 10 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 6 1.32% 2066 10.41% $9,463.82 14.95% 30 30 60 60 60 60 1E+06 1 5 1 10% -224 1 13% $0.00 0.00% -20 13 -20 -20 -20 -20 0 0 7 1.54% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 454 100% 19853 100% $63,317.20 100% 2176 2060 3702 3002 2232 1586 p I I FY04 Fall (of 2003) Usage by caterogies Commer/Indu Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 1 5.88% 4 0.02% $8.80 0.01% 4 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 2 11.76% 26 0.13% $5720 0.09% 10 10 6 0 0 0 21 30 1 5.88% 27 0.14% $65.42 0.10% 5 5 10 7 0 0 31 40 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 41 50 3 17.65% 126 0.63% $338.52 0.53% 15 15 30 30 30 6 51 60 1 5.88% 51 0.26% $147.22 023% 5 5 10 10 10 10 61 70 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 71 80 1 5.88% 74 0.37% $235.08 0.37% 5 5 10 10 10 10 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1 E+05 5 29.41% 5011 25.24% $24,298.64 38.38% 25 25 50 50 50 50 1E+06 1 1 5.88% -829 -4.18% $0.00 0.00% -5 -5 10 10 10 10 0 0 2 11.76% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 17 100% 4490 23% $25,150.89 40% 69 65 116 107 100 76 N FY04 Fall (of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 O 0 0 0 Commer/Indu Water only 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 4 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 4011 0 0 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 -629 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 61 60 54 50 50 50 50 50 50 50 50 50 50 50 50 4011 0 0 sum (including negatives) 4490 sum (ignoring negatives) 5319 negatives -829 t.\ I FY04 Fall(of 2003)Usage by caterogies Public Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fal12003 1 5 1 1111% 1 0.06% $220 0.03% 1 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 21 30 2 22.22% 48 2.97% $112.48 1.53% 10 10 20 8 0 0 31 40 2 22.22% 72 4.46% $185.92 2.53% 10 10 20 20 12 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 1 1111% 50 3.10% $143.40 1.95% 5 5 10 10 10 10 61 70 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 2 22.22% 1443 89.41% $6,918.04 93.97% 10 10 20 20 20 20 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1 1111% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 9 100% 1614 100% $7,362.04 100% 36 35 70 58 42 30 k) FY04 Fall(of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Public Water only 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 Fall2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 1043 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 1043 0 0 sum (including negatives) 1614 sum (ignoring negatives) 1614 negatives 0 3 I I\-- l._ L _ FY04 Fall(of 2003) Usage by caterogies Municipal Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 6 10 1 6.67% 9 0.23% $9.90 023% 5 4 0 0 0 0 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 21 30 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 31 40 1 6.67% 36 0.91% $39.60 0.91% 5 5 10 10 6 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 1 6.67% 66 1.67% $72.60 1.67% 5 5 10 10 10 10 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 1 6.67% 123 3.11% $135.30 3.11% 5 5 10 10 10 10 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 1 6.67% 185 4.68% $203.50 4.68% 5 5 10 10 10 10 191 200 1 6.67% 191 4.83% $210.10 4.83% 5 5 10 10 10 10 200 1 E+05 6 40.00% 3343 84.57% $3,677.30 84.57% 30 30 60 60 60 60 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 3 20.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 15 100% 3953 100% $4,348.30 100% 60 59 110 110 106 100 to FY04 Fall(of 2003) Usage by caterogies not seen From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall 2003 1 5 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 21 30 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 31 40 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 1 100.00% 436 100.00% $7,260.81 100.00% 5 5 10 10 10 10 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1 100% 436 100% $7,260.81 100% 5 5 10 10 10 10 q) b C _ _ ` .L _ _ _ _ _ _ _ _ _ L _ _ _ - .� -, - J 1 _ _ _ _ _ _ _ _ __ _ - _ _ _ - ` I` _ FY04 Fall (of 2003) Usage by caterogies null From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Fall2003 1 5 0 0 0 0 $0.00 0 0 0 0 0 0 0 6 10 0 0 0 0 $0.00 0 0 0 0 0 0 0 11 20 0 0 0 0 $0.00 0 0 0 0 0 0 0 21 30 0 0 0 0 $0.00 0 0 0 0 0 0 0 31 40 0 0 0 0 $0.00 0 0 0 0 0 0 0 41 50 0 0 0 0 $0.00 0 0 0 0 0 0 0 51 60 0 0 0 0 $0.00 0 0 0 0 0 0 0 61 70 0 0 0 0 $0.00 0 0 0 0 0 0 0 71 80 0 0 0 0 $0.00 0 0 0 0 0 0 0 81 90 0 0 0 0 $0.00 0 0 0 0 0 0 0 91 100 0 0 0 0 $0.00 0 0 0 0 0 0 0 101 110 0 0 0 0 $0.00 0 0 0 0 0 0 0 111 120 0 0 0 0 $0.00 0 0 0 0 0 0 0 121 130 0 0 0 0 $0.00 0 0 0 0 0 0 0 131 140 0 0 0 0 $0.00 0 0 0 0 0 0 0 141 150 0 0 0 0 $0.00 0 0 0 0 0 0 0 151 160 0 0 0 0 $0.00 0 0 0 0 0 0 0 161 170 0 0 0 0 $0.00 0 0 0 0 0 0 0 171 180 0 0 0 0 $0.00 0 0 0 0 0 0 0 181 190 0 0 0 0 $0.00 0 0 0 0 0 0 0 191 200 0 0 0 0 $0.00 0 0 0 0 0 0 0 200 1E+05 0 0 0 0 $0.00 0 0 0 0 0 0 0 1E+06 1 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 30 CP FY04 Fall(of 2003) Usage by caterogies 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 O 0 0 O null 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fall 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 sum (including negatives) 0 sum (ignoring negatives) 0 negatives 0 p w J J J J C J J _ _ - _ __ _ _ _ _ _ _ _ - - - - 1 - - - - -- - - - 2 - _. _ _) J J J J All categories From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 640 5.72% 1337 0.21% $7,236.91 0.12% 1337 0 0 0 0 0 6 10 543 4.85% 3861 0.60% $23,384.68 0.40% 2715 1146 0 0 0 0 11 20 1318 11.78% 20400 3.18% $134,512.47 2.28% 6825 6825 6750 0 0 0 21 30 1790 16.00% 48351 7.55% $345,808.61 5.87% 9815 9815 19630 9091 0 0 31 40 2050 18.33% 73535 11 48% $564,260.18 9.57% 10740 10740 21480 21480 9095 0 41 50 1649 14.74% 83126 12.98% $678,298.78 11.51% 9500 9500 19000 19000 19000 7126 51 60 1122 10.03% 60897 9.51% $539,787.03 9.16% 5635 5635 11270 11270 11270 11270 61 70 672 6.01% 44209 6.90% $408,021 10 6.92% 3465 3465 6930 6930 6930 6930 71 80 323 2.89% 24530 3.83% $233,777.04 3.97% 1660 1660 3320 3320 3320 3320 81 90 235 2.10% 19709 3.08% $193,681.67 3.29% 1175 1175 2350 2350 2350 2350 91 100 135 1.21% 12791 2.00% $133,370.38 2.26% 675 675 1350 1350 1350 1350 101 110 92 0.82% 9561 1 49% $105,072.52 1 78% 460 460 920 920 920 920 111 120 40 0.36% 4578 0.71% $53,565.14 0.91% 200 200 400 400 400 400 121 130 25 0.22% 3102 0.48% $38,919.29 0.66% 125 125 250 250 250 250 131 140 26 0.23% 3510 0.55% $40,452.17 0.69% 130 130 260 260 260 260 141 150 19 0.17% 2751 0.43% $34,818.07 0.59% 95 95 190 190 190 190 151 160 18 0.16% 3883 0.61% $51 173.51 0.87% 125 125 250 250 250 250 161 170 15 0.13% 2470 0.39% $31,881.85 0.54% 75 75 150 150 150 150 171 180 13 0.12% 2256 0.35% $30,840.85 0.52% 65 65 130 130 130 130 181 190 13 0.12% 2368 0.37% $34,494.58 0.59% 65 65 130 130 130 130 191 200 7 0.06% 1367 0.21% $14,473.94 0.25% 35 35 70 70 70 70 200 1E+05 204 1.82% 212749 33.21% $2,195,524.73 37.25% 1020 1020 2040 2040 2040 2040 1E+06 1 8 0.07% 792 -0.12% $0.00 0.00% -40 -40 -80 -80 -80 -80 0 0 229 2.05% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 11186 100% 640550 100% $5,893,355.49 100% 55937 53031 96870 79581 58105 37136 N V 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 All categories 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4547 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6930 2629 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3320 3320 1290 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2350 2350 2350 909 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1350 1350 1350 1350 641 0 0 0 0 0 0 0 0 0 0 0 0 0 920 920 920 920 920 361 0 0 0 0 0 0 0 0 0 0 0 0 400 400 400 400 400 400 178 0 0 0 0 0 0 0 0 0 0 0 250 250 250 250 250 250 250 102 0 0 0 0 0 0 0 0 0 0 260 260 260 260 260 260 260 260 130 0 0 0 0 0 0 0 0 0 190 190 190 190 190 190 190 190 190 91 0 0 0 0 0 0 0 0 250 250 250 250 250 250 250 250 250 250 133 0 0 0 0 0 0 0 150 150 150 150 150 150 150 150 150 150 150 70 0 0 0 0 0 0 130 130 130 130 130 130 130 130 130 130 130 130 46 0 0 0 0 0 130 130 130 130 130 130 130 130 130 130 130 130 130 28 0 0 0 0 70 70 70 70 70 70 70 70 70 70 70 70 70 70 37 0 0 0 2040 2040 2040 2040 2040 2040 2040 2040 2040 2040 2040 2040 2040 2040 2040 171949 0 0 -80 -80 -80 -80 72 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 23287 14439 9780 7049 5431 4231 3648 3322 3090 2861 2653 2440 2286 2138 2077 171949 0 0 sum(including negatives) 640550 sum(ignoring negatives) 641341 negatives -791 1.) Residential Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 123 1.36% 297 0.07% $2,105.82 0.06% 297 0 0 0 0 0 4.6% 6 10 298 3.29% 2189 0.55% $15,520.22 0.42% 1490 699 0 0 0 0 16.2% 11 20 1048 11.56% 16624 4.17% $117,864.94 3.19% 5475 5475 5674 0 0 0 33.9% 21 30 1603 17.68% 43818 11.00% $327 435.24 8.87% 8880 8880 17760 8298 0 0 54.9% 31 40 1905 21.01% 68639 17.23% $544,381.91 14.74% 10015 10015 20030 20030 8549 0 71.7% 41 50 1528 16.85% 77768 19.52% $655,429.81 17.75% 8895 8895 17790 17790 17790 6608 83.3% 51 60 1050 11.58% 56977 14.30% $518,554.18 14.04% 5275 5275 10550 10550 10550 10550 90.2% 61 70 623 6.87% 41090 10.31% $392,003.57 10.61% 3220 3220 6440 6440 6440 6440 93.5% 71 80 299 3.30% 22758 5.71% $224,630.85 6.08% 1540 1540 3080 3080 3080 3080 95.7% 81 90 205 2.26% 17179 4.31% $178,607.85 4.84% 1025 1025 2050 2050 2050 2050 96.9% 91 100 107 118% 10114 2.54% $114,015.47 3.09% 535 535 1070 1070 1070 1070 97.7% 101 110 70 0.77% 7264 1.82% $86,319.81 2.34% 350 350 700 700 700 700 98.1% 111 120 33 0.36% 3784 0.95% $47,208.54 1.28% 165 165 330 330 330 330 98.3% 121 130 19 0.21% 2363 0.59% $30,520.79 0.83% 95 95 190 190 190 190 98.4% 131 140 16 0.18% 2152 0.54% $28,639.07 0.78% 80 80 160 160 160 160 98.6% 141 150 10 0.11% 1437 0.36% $19,566.46 0.53% 50 50 100 100 100 100 98.6% 151 160 8 0.09% 2349 0.59% $32,855.91 0.89% 75 75 150 150 150 150 98.7% 161 170 9 0.10% 1486 0.37% $21 101.54 0.57% 45 45 90 90 90 90 98.8% 171 180 7 0.08% 1217 0.31% $17,521.65 0.47% 35 35 70 70 70 70 98.9% 181 190 9 0.10% 1647 0.41% $24,018.86 0.65% 45 45 90 90 90 90 99.0% 191 200 3 0.03% 585 0.15% $8,658.61 0.23% 15 15 30 30 30 30 99.5% 200 1E+05 46 0.51% 17458 4.38% $286,568.68 7.76% 230 230 460 460 460 460 99.5% 1E+06 1 8 0.09% 792 -0.20% $0.00 0.00% -40 -40 -80 -80 -80 -80 100.0% 0 0 41 0.45% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 9068 100% 398404 100% $3,693,529.77 100% 47832 46744 86814 71678 51899 32168 70 V 6` 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Residential Water&Sewer 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4227 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6440 2450 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3080 3080 1198 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2050 2050 2050 779 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1070 1070 1070 1070 484 0 0 0 0 0 0 0 0 0 0 0 0 0 700 700 700 700 700 264 0 0 0 0 0 0 0 0 0 0 0 0 330 330 330 330 330 330 154 0 0 0 0 0 0 0 0 0 0 0 190 190 190 190 190 190 190 83 0 0 0 0 0 0 0 0 0 0 160 160 160 160 160 160 160 160 72 0 0 0 0 0 0 0 0 0 100 100 100 100 100 100 100 100 100 37 0 0 0 0 0 0 0 0 150 150 150 150 150 150 150 150 150 150 99 0 0 0 0 0 0 0 90 90 90 90 90 90 90 90 90 90 90 46 0 0 0 0 0 0 70 70 70 70 70 70 70 70 70 70 70 70 27 0 0 0 0 0 90 90 90 90 90 90 90 90 90 90 90 90 90 27 0 0 0 0 30 30 30 30 30 30 30 30 30 30 30 30 30 30 15 0 0 0 460 460 460 460 460 460 460 460 460 460 460 460 460 460 460 8258 0 0 -80 -80 -80 -80 -72 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19237 11020 6688 4219 2854 1934 1494 1233 1062 927 839 696 607 517 475 8258 0 0 sum (including negatives) 398404 sum (ignoring negatives) 399195 negatives -791 93 3, L I I Commer/Indu Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 5 1.93% 12 0.02% $85.08 0.01% 12 0 0 0 0 0 6 10 5 1.93% 35 0.05% $248.15 0.02% 25 10 0 0 0 0 11 20 16 6.18% 237 0.37% $1,680.34 0.16% 80 80 77 0 0 0 21 30 20 7.72% 473 0.73% $3,501.05 0.34% 100 100 200 73 0 0 31 40 22 8.49% 738 114% $5,834.40 0.56% 110 110 220 220 78 0 41 50 18 6.95% 792 1.23% $6,693.14 0.64% 90 90 180 180 180 72 51 60 22 8.49% 1190 1.84% $10,835.63 1.04% 110 110 220 220 220 220 61 70 11 4.25% 693 1.07% $6,589.89 0.63% 55 55 110 110 110 110 71 80 5 1.93% 369 0.57% $3,641.25 0.35% 25 25 50 50 50 50 81 90 8 3.09% 683 1.06% $7 198.37 0.69% 40 40 80 80 80 80 91 100 9 3.47% 857 1.33% $9704.06 0.93% 45 45 90 90 90 90 101 110 6 2.32% 634 0.98% $7,604.89 0.73% 30 30 60 60 60 60 111 120 3 116% 341 0.53% $4,237.33 0.41% 15 15 30 30 30 30 121 130 3 116% 370 0.57% $4,762.81 0.46% 15 15 30 30 30 30 131 140 3 116% 407 0.63% $5,433.25 0.52% 15 15 30 30 30 30 141 150 5 1.93% 732 113% $10,027.85 0.96% 25 25 50 50 50 50 151 160 7 2.70% 1081 1.67% $15,057.33 1 45% 35 35 70 70 70 70 161 170 4 1.54% 655 1.01% $9,279.81 0.89% 20 20 40 40 40 40 171 180 4 1.54% 694 1.08% $9,986.49 0.96% 20 20 40 40 40 40 181 190 4 1.54% 721 112% $10,475.73 1.01% 20 20 40 40 40 40 191 200 1 0.39% 195 0.30% $2,886.20 0.28% 5 5 10 10 10 10 200 1E+05 75 28.96% 52637 81.55% $905,242.58 86.96% 375 375 750 750 750 750 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 3 116% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 259 100% 64546 100% $1,041,005.61 100% 1267 1240 2377 2173 1958 1772 3.3 9-1 50-60 60-70 70-80 80-90 90-100 100-110 110-120120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Commer/Indu Water&Sew 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 90 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 110 33 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 80 80 80 43 0 0 0 0 0 0 0 0 0 0 0 0 0 0 90 90 90 90 47 0 0 0 0 0 0 0 0 0 0 0 0 0 60 60 60 60 60 34 0 0 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 11 0 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 30 10 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 30 30 17 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 50 50 50 32 0 0 0 0 0 0 0 0 70 70 70 70 70 70 70 70 70 70 31 0 0 0 0 0 0 0 40 40 40 40 40 40 40 40 40 40 40 15 0 0 0 0 0 0 40 40 40 40 40 40 40 40 40 40 40 40 14 0 0 0 0 0 40 40 40 40 40 40 40 40 40 40 40 40 40 1 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 10 10 10 5 0 0 0 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 37637 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1570 1403 1339 1283 1197 1124 1071 1040 1017 982 911 855 814 761 755 37637 0 0 sum(including negatives) 64546 sum (ignoring negatives) 64546 negatives 0 C , - rC _ L _ Public Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 2 2.67% 5 0.02% $35.45 0.01% 5 0 0 0 0 0 6 10 2 2.67% 12 0.04% $85.08 0.02% 10 2 0 0 0 0 11 20 5 6.67% 81 0.25% $574.29 0.10% 25 25 31 0 0 0 21 30 7 9.33% 174 0.53% $1,302.35 0.23% 35 35 70 34 0 0 31 40 3 4.00% 107 0.32% $853.57 0.15% 15 15 30 30 17 0 41 50 3 4.00% 145 0.44% $1,271.00 0.23% 15 15 30 30 30 25 51 60 3 4.00% 164 0.50% $1 498.24 0.27% 15 15 30 30 30 30 61 70 1 1.33% 61 0.18% $575.16 0.10% 5 5 10 10 10 10 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 81 90 2 2.67% 175 0.53% $1,876.60 0.33% 10 10 20 20 20 20 91 100 3 4.00% 288 0.87% $3,276.97 0.58% 15 15 30 30 30 30 101 110 5 6.67% 528 1.60% $6,331.37 113% 25 25 50 50 50 50 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 2 2.67% 246 0.75% $3,163.12 0.56% 10 10 20 20 20 20 131 140 2 2.67% 267 0.81% $3,543.64 0.63% 10 10 20 20 20 20 141 150 2 2.67% 286 0.87% $3,887.92 0.69% 10 10 20 20 20 20 151 160 1 1.33% 150 0.45% $2,070.80 0.37% 5 5 10 10 10 10 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 1 1.33% 172 0.52% $2,469.44 0.44% 5 5 10 10 10 10 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 28 37.33% 30128 91.33% $527,797.81 94.15% 140 140 280 280 280 280 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 3 4.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 75 100% 32989 100% $560,612.84 100% 355 342 661 594 547 525 p W C 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140140-150 150-160 160-170170-180180-190190-200 200-up 1Mto-1 0-0 0 0 0 0 Public Water&Sewer 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 14 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 30 30 30 3018 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 28 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 6 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 7 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 20 6 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 10 2 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 280 280 280 280 280 280 280 280 280 280 280 280 280 280 280 24528 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 484 461 460 455 428 388 360 346 327 306 290 290 282 280 280 24528 0 0 sum (including negatives) 32989 sum(ignoring negatives) 32989 negatives 0 p W v L L L L '`. _ - Municipal Water&Sewer From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 1 7.69% 1 0.00% $2.84 0.00% 1 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 21 30 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 31 40 1 7.69% 32 0.09% $90.88 0.09% 5 5 10 10 2 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 71 80 1 7.69% 75 021% $213.00 0.21% 5 5 10 10 10 10 81 90 2 15.38% 171 0.49% $485.64 0.49% 10 10 20 20 20 20 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 1 7.69% 137 0.39% $389.08 0.39% 5 5 10 10 10 10 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 1 7.69% 150 0.43% $426.00 0.43% 5 5 10 10 10 10 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1 E+05 5 38.46% 34679 98.39% $98,488.36 98.39% 25 25 50 50 50 50 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1 7.69% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 13 100% 35245 100% $100,095.80 100% 56 55 110 110 102 100 P W P 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 O 0 0 0 Municipal Water&Sewer 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 5 00 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 110 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 33679 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 100 95 81 70 70 70 70 67 60 50 50 50 50 50 33679 0 0 sum(including negatives) 35245 sum (ignoring negatives) 35245 negatives 0 3) W ON I I Residential Irrigation From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 494 39.05% 984 1.26% $4,910.16 1.26% 984 0 0 0 0 0 6 10 209 16.52% 1409 1.81% $7,030.91 1.81% 1045 364 0 0 0 0 11 20 175 13.83% 2402 3.09% $11,985.98 3.09% 875 875 652 0 0 0 21 30 71 5.61% 1663 2.14% $8,298.37 2.14% 355 355 710 243 0 0 31 40 36 2.85% 1201 1.54% $5,992.99 1.54% 180 180 360 360 121 0 41 50 27 2.13% 1194 1.53% $5,958.06 1.53% 135 135 270 270 270 114 51 60 12 0.95% 652 0.84% $3,253.48 0.84% 60 60 120 120 120 120 61 70 11 0.87% 694 0.89% $3,463.06 0.89% 55 55 110 110 110 110 71 80 8 0.63% 594 0.76% $2,964.06 0.76% 40 40 80 80 80 80 81 90 4 0.32% 330 0.42% $1,646.70 0.42% 20 20 40 40 40 40 91 100 7 0.55% 678 0.87% $3,383.22 0.87% 35 35 70 70 70 70 101 110 5 0.40% 516 0.66% $2,574.84 0.66% 25 25 50 50 50 50 111 120 3 024% 340 0.44% $1,696.60 0.44% 15 15 30 30 30 30 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 2 0.16% 270 0.35% $1,347.30 0.35% 10 10 20 20 20 20 141 150 1 0.08% 149 0.19% $743.51 0.19% 5 5 10 10 10 10 151 160 1 0.08% 153 0.20% $763.47 0.20% 5 5 10 10 10 10 161 170 1 0.08% 169 0.22% $843.31 0.22% 5 5 10 10 10 10 171 180 1 0.08% 173 0.22% $863.27 0.22% 5 5 10 10 10 10 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 2 0.16% 396 0.51% $1,976.04 0.51% 10 10 20 20 20 20 200 1E+05 34 2.69% 63859 82.05% $318,656.41 82.05% 170 170 340 340 340 340 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 161 12.73% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1265 100% 77826 100% $388,351.74 100% 4034 2369 2912 1793 1311 1034 W 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 O 0 0 0 Residential Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 52 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 110 34 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 80 80 34 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 40 40 40 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 70 70 70 70 48 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 16 0 0 0 0 0 0 0 0 0 0 0 0 30 30 30 30 30 30 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 10 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 9 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 3 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 9 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 10 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 16 0 0 0 340 340 340 340 340 340 340 340 340 340 340 340 340 340 340 57059 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 852 724 644 580 548 466 430 420 410 399 383 379 363 360 356 57059 0 0 sum (including negatives) 77826 sum (ignoring negatives) 77826 negatives 0 W v\ C_ J. 1 iJ _. i L Commer/Indu Irrigation From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 2 20.00% 5 1.24% $24.95 1.24% 5 0 0 0 0 0 6 10 1 10.00% 9 2.24% $44.91 2.24% 5 4 0 0 0 0 11 20 2 20.00% 30 746% $149.70 7 46% 10 10 10 0 0 0 21 30 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 31 40 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 41 50 1 10.00% 40 9.95% $199.60 9.95% 5 5 10 10 10 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 2 20.00% 127 31.59% $633.73 31.59% 10 10 20 20 20 20 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 81 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 1 10.00% 191 47.51% $953.09 47.51% 5 5 10 10 10 10 200 1E+05 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 1 10.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 10 100% 402 100% $2,005.98 100% 40 34 50 40 40 30 W T Public Irrigation From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 0 0 $0.00 0 0 0 0 0 0 6 10 0 0 0 0 $0.00 0 0 0 0 0 0 0 11 20 0 0 0 0 $0.00 0 0 0 0 0 0 0 21 30 0 0 0 0 $0.00 0 0 0 0 0 0 0 31 40 0 0 0 0 $0.00 0 0 0 0 0 0 0 41 50 0 0 0 0 $0.00 0 0 0 0 0 0 0 51 60 0 0 0 0 $0.00 0 0 0 0 0 0 0 61 70 0 0 0 0 $0.00 0 0 0 0 0 0 0 71 80 0 0 0 0 $0.00 0 0 0 0 0 0 0 81 90 0 0 0 0 $0.00 0 0 0 0 0 0 0 91 100 0 0 0 0 $0.00 0 0 0 0 0 0 0 101 110 0 0 0 0 $0.00 0 0 0 0 0 0 0 111 120 0 0 0 0 $0.00 0 0 0 0 0 0 0 121 130 0 0 0 0 $0.00 0 0 0 0 0 0 0 131 140 0 0 0 0 $0.00 0 0 0 0 0 0 0 141 150 0 0 0 0 $0.00 0 0 0 0 0 0 0 151 160 0 0 0 0 $0.00 0 0 0 0 0 0 0 161 170 0 0 0 0 $0.00 0 0 0 0 0 0 0 171 180 0 0 0 0 $0.00 0 0 0 0 0 0 0 181 190 0 0 0 0 $0.00 0 0 0 0 0 0 0 191 200 0 0 0 0 $0.00 0 0 0 0 0 0 0 200 1E+05 0 0 0 0 $0.00 0 0 0 0 0 0 0 1E+06 1 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 13 W l - - - - - - - - - - - - 50.60 60-70 70-80 80-90 90-100 100-110110-120120-130130-140140-150150.160160-170170-180180.190190-200 200-up 1Mto-1 0-0 O 0 0 0 Public Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 sum(including negatives) 0 sum(ignoring negatives) 0 negatives 0 30 w Municipal Irrigation From To #users Pct.users HCF used Pct.HCF Revenue Pct. Rev 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 0 0 0 0 $0.00 0 0 0 0 0 0 0 6 10 0 0 0 0 $0.00 0 0 0 0 0 0 0 11 20 0 0 0 0 $0.00 0 0 0 0 0 0 0 21 30 0 0 0 0 $0.00 0 0 0 0 0 0 0 31 40 0 0 0 0 $0.00 0 0 0 0 0 0 0 41 50 0 0 0 0 $0.00 0 0 0 0 0 0 0 51 60 0 0 0 0 $0.00 0 0 0 0 0 0 0 61 70 0 0 0 0 $0.00 0 0 0 0 0 0 0 71 80 0 0 0 0 $0.00 0 0 0 0 0 0 0 81 90 0 0 0 0 $0.00 0 0 0 0 0 0 0 91 100 0 0 0 0 $0.00 0 0 0 0 0 0 0 101 110 0 0 0 0 $0.00 0 0 0 0 0 0 0 111 120 0 0 0 0 $0.00 0 0 0 0 0 0 0 121 130 0 0 0 0 $0.00 0 0 0 0 0 0 0 131 140 0 0 0 0 $0.00 0 0 0 0 0 0 0 141 150 0 0 0 0 $0.00 0 0 0 0 0 0 0 151 160 0 0 0 0 $0.00 0 0 0 0 0 0 0 161 170 0 0 0 0 $0.00 0 0 0 0 0 0 0 171 180 0 0 0 0 $0.00 0 0 0 0 0 0 0 181 190 0 0 0 0 $0.00 0 0 0 0 0 0 0 191 200 0 0 0 0 $0.00 0 0 0 0 0 0 0 200 1E+05 0 0 0 0 $0.00 0 0 0 0 0 0 0 1E+06 1 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 $0.00 0 0 0 0 0 0 0 0 1 J 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Municipal Irrigation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 sum(including negatives) 0 sum(ignoring negatives) 0 negatives 0 3 -z Residential Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 11 2.42% 29 0.13% $63.80 0.08% 29 0 0 0 0 0 6 10 26 5.73% 194 0.84% $426.81 0.53% 130 64 0 0 0 0 11 20 70 15.42% 999 4.31% $2,197.82 2.75% 350 350 299 0 0 0 21 30 87 19.16% 2168 9.34% $5,137.71 6.44% 435 435 870 428 0 0 31 40 80 17.62% 2723 11.74% $6,956.40 8.72% 400 400 800 800 323 0 41 50 70 15.42% 3096 13.34% $8,494.75 10.65% 350 350 700 700 700 296 51 60 35 7.71% 1914 8.25% $5,645.49 7.07% 175 175 350 350 350 350 61 70 23 5.07% 1482 6.39% $4,566.45 5.72% 115 115 230 230 230 230 71 80 10 2.20% 734 3.16% $2,327.88 2.92% 50 50 100 100 100 100 81 90 13 2.86% 1084 4.67% $3,573.57 4.48% 65 65 130 130 130 130 91 100 9 1.98% 854 3.68% $2,990.66 3.75% 45 45 90 90 90 90 101 110 5 110% 513 2.21% $1,853.87 2.32% 25 25 50 50 50 50 111 120 1 0.22% 113 0.49% $422.67 0.53% 5 5 10 10 10 10 121 130 1 0.22% 123 0.53% $472.57 0.59% 5 5 10 10 10 10 131 140 2 0.44% 277 119% $1,099.83 1.38% 10 10 20 20 20 20 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 1 0.22% 160 0.69% $657.20 0.82% 5 5 10 10 10 10 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 5 110% 6737 29.04% $32,911.63 41.24% 25 25 50 50 50 50 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 5 110% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 454 100% 23200 100% $79,799.12 100% 2219 2124 3719 2978 2073 1346 1 50-60 60-70 70-80 80-90 90-100 100-110110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 O 0 0 0 Residential Water only 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 164 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 230 102 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 100 34 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 130 130 130 44 0 0 0 0 0 0 0 0 0 0 0 0 0 0 90 90 90 90 44 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 13 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 3 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 3 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 20 17 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 10 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 5737 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 864 572 404 284 194 113 93 83 77 60 60 50 50 50 50 5737 0 0 sum(including negatives) 23200 sum(ignoring negatives) 23200 negatives 0 W Comme r/lndu Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 1 5.88% 3 0.06% $6.60 0.03% 3 0 0 0 0 0 6 10 2 11.76% 13 0.25% $28.60 0.12% 10 3 0 0 0 0 11 20 1 5.88% 16 0.31% $35.20 0.14% 5 5 6 0 0 0 21 30 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 31 40 1 5.88% 32 0.61% $80.72 0.33% 5 5 10 10 2 0 41 50 2 11.76% 91 1.74% $252.42 1.03% 10 10 20 20 20 11 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 90 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 1 5.88% 106 2.03% $387.74 1.58% 5 5 10 10 10 10 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 1 5.88% 147 2.81% $592.33 2.41% 5 5 10 10 10 10 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 6 35.29% 4815 92.19% $23,179.65 94.37% 30 30 60 60 60 60 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 O 0 0 0 0 2 11.76% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 17 100% 5223 100% $24,563.27 100% 73 63 116 110 102 91 so c_ - _/ J .iI 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1Mto-1 0-0 0 0 0 0 Commer/Indu Water only 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 10 10 10 10 10 10 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 3615 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 80 80 80 80 80 76 70 70 70 67 60 60 60 60 60 3615 0 0 sum(including negatives) 5223 sum(ignoring negatives) 5223 negatives 0 93 kr Public Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. Rev. 0-5 5-10 10-20 20-30 30-40 40-50 Spring 2004 1 5 1 11 11% 1 0A6% $2.20 034% 1 0 0 0 0 0 6 10 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 11 20 1 11 11% 11 5.09% $24.20 3.77% 5 5 1 0 0 0 21 30 2 22.22% 55 25.46% $133.90 20.84% 10 10 20 15 0 0 31 40 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 41 50 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 51 60 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 61 70 1 11 11% 62 28.70% $189.24 29.46% 5 5 10 10 10 10 71 80 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 81 90 1 11 11% 87 40.28% $292.93 45.59% 5 5 10 10 10 10 91 100 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 101 110 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 111 120 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 121 130 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 131 140 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 141 150 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 151 160 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 161 170 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 171 180 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 181 190 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 191 200 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 200 1E+05 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 1E+06 1 0 0.00% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 3 33.33% 0 0.00% $0.00 0.00% 0 0 0 0 0 0 0 0 9 100% 216 100% $642.47 100% 26 25 41 35 20 20 U -t 6"-• 1 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130 130-140 140-150 150-160 160-170 170-180 180-190 190-200 200-up 1 Mto-1 0-0 0 0 0 0 Public Water only 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Spring 2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 10 70 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 12 10 70 0 0 0 0 0 0 0 0 0 0 0 0 0 sum(including negatives) 216 sum(ignoring negatives) 216 negatives 0 513 -4 Municipal Water only From To #users Pct.users HCF used Pct. HCF Revenue Pct. 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HCF Revenue Pct. 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