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1. Why has maintenance costs increased?

Numerous unfunded mandates have occurred over the last 10 years:
• Backflow program
• Valve maintenance program
• Sanitary sewer overflow (SSOI) program or I&I programs.
• No lead mandate – This increased the cost of repairs significantly (cost of fittings).
• Chemical analysis mandates – UCMR2, UCMR3, UCMR4
• Creation of the NTGCD (North Texas groundwater Conservation District)
• Nitrification Action plan – additional sampling.
Other factors:
• Inflow and Infiltration (I&I) Flooding in City last few years resulted in significantly increased sewage treatment cost from the UTRWD, due to storm-water entering the sewer system. (The sewer system is a closed system, but infiltration via manhole covers, uncovered sewer clean-outs, etc. allows storm-water to penetrate, especially with flooding). Associated capital project to locate and correct inflows into system added to this cost.
• Automated Meter Read program (AMR) projects in 2012 and 2014.
• Water meter cost increases from approx. $50/each to approx. $200/each for a ¾” water meter
• Operators license fee increases

2. Have maintenance costs increased only in the past year, or over the past ten years when rates were unchanged?

Cost increases identified above were incurred over the past ten years. There have been on-going efforts to absorb costs as long as possible with existing rate structure and reserve capability.

3. What conditions existed that made it possible to keep rates unchanged for ten years?

Primary factors:
- Change of rate structure in 2007 to provide for a Wholesale Pass-Through charge provided an avenue for sufficient ongoing revenues to match related expenditures for roughly ½ of the operational costs.
- Rates for the City portion were determined with intent to provide sufficient revenues for a four to five year window. Previous rate structure, with a graduated rate schedule for higher usage, provided a substantial portion of revenue in summer months. In dry years, increased revenues increased reserves – these used to sustain City during years with increased rainfall and corresponding lower revenues. Reserves were increased in dry years of 2011 and 2012, however it is now apparent there is a sustained change of ongoing reduced usage patterns.

4. Are financial records available for public review showing projected maintenance costs, loss of revenue from decreased demand, and projected increase in revenue to be used to offset maintenance costs?

Yes, financial reports as well as budgets are all available on the City website. Detailed information specific to rate change considerations are also available on the website. Finance page-with budget & financial report links

5. Citizens and leaders generally try to avoid large increases in taxes, costs and fees. What changes did the City not anticipate in order to avoid this large and unexpected increase?

The previous rate structure, with larger emphasis on higher levels of usage for revenues, provided for a higher degree of volatility. Over a period of time, the higher revenue years generally provided sufficient reserves to offset lower revenue years. Following years of increased sales in 2011 and 2012, a lower-sales year was reasonably expected. However, as this trend continued, there was a reluctance to increase rates, with previous history providing expectation that the next year would surely revert back to previous usage patterns. There is now a realization that usage patterns have indeed changed, thus prompting the need to adjust accordingly.

6. What corrections will the City Council implement to ensure that future unexpected and large increases will not occur?

Budgets each year are constructed in context of a five-year outlook. Debt issues – with related debt service, equipment replacement, various projects are scheduled to not have an outsize effect on a particular year – with intent to maintain rates for as long as possible. This rate adjustment includes a change in the rate structure to redirect more cost to lower usage – to accomplish dual objectives of increased fairness and less reliance on higher usage and its associated revenue volatility.

7. Has any long term planning been done on projected water costs and usage for the next five years?

Each year the budget is constructed in context of a five-year financial plan. The City also takes part in the long range planning strategies of the UTRWD (Upper Trinity Regional Water District), the Region C Planning Group and the NTGCD (North Texas Groundwater Conservation District). All have, or are developing 50+ year outlook plans for water usage in the North Texas area.

8. What has the City done to be more efficient? Could cost savings come from reducing staff and expenses?

Efficiencies are pursued on a continuing basis. Staffing has not increased in ten years despite increased workload and numerous state mandates. In fact, the City has maintained staffing levels at just 85% of levels suggested for utilities our size by the leading water association (AWWA). A work-order system is utilized to coordinate workload and provide accountability. The bulk of expense with a utility distribution system is infrastructure – water / sewer lines, lift stations, water wells, pumps, equipment. Equipment is maintained rigorously and utilized as long as possible. Water and sewer lines are replaced on an ongoing basis as needed.