To: Members of the Castle Rock Water Commission
From: Mark Marlowe, P.E., Director of Castle Rock Water
Greg Kropkowski, Business Solutions Manager
Paul Rementer, Enterprise Fund Analyst
Title
2022 Rates and Fees Study Timeline and Preliminary 2021 Year-End Financials
Town Council Agenda Date: NA
Body
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Executive Summary
The purpose of this memorandum is to provide Castle Rock Water (CRW) Commission with the updated 2022 Rates and Fee Study anticipated timeline and also to present Preliminary 2021 Year-End Financials.
2022 Rates and Fees Study Timeline (Attachment A)
The 2022 Rate and Fees study timeline will remain similar to the planned cadence over the last few years. This will include bringing the final results of the study to CRW Commission in July and to two readings for Council in September of 2022. Throughout the process again this year, CRW staff will be bringing deliverables to commission as they become available, and the major items are listed in the attached timeline.
Preliminary 2021 Year-End Financials (Attachment B)
The 2021 year-end financials along with the 2022 approved budget serves as the starting point for developing the 5 year 2023-2027 financial plan. Three years of actual data from 2019-2021 serve as a historical trend comparison. Attachment B shows the comparison in summary by enterprise fund of the preliminary 2021 year-end actuals to the 2021 adopted budget.
Excluding “Transfers In”, 2021 revenues were $15.2M higher than budget. System Development Fees came in $14.2M over budget, driven by actual growth exceeding expectations in the budget. The budget accounted for 719 new accounts in 2021 however we saw 1,239 new accounts throughout the year. These 520 additional accounts increased SDF revenues across all four funds. Water Resources saw revenues $10.0M over budget, Water exceeded budget by $2.8M and both Stormwater and Wastewater came in $0.7M over budget. Other Revenue exceeded budget by $1.7M driven primarily by increases in Reimbursements of $1.6M. Charges for Service came in flat to budget at $43.1M and up $0.2M to 2020. Transfers In came in $6.3M under budget. Two items are driving the miss to revenue, however both items have offsetting expenses that did not occur in 2021 so net impact to the overall financial picture is zero. The first is an Interfund Loan of $3.9M from Wastewater to Water for the Liberty Village Tank that was pushed out to 2021 and eventually not needed. The second item is a $2.4M transfer from Water to Water Resources that was set up to help offset the Water Resources expenses related to O&M. The journal entry was eliminated in 2021 due to CRW improving the process of breaking out O&M expenses equitably between Water and Water Resources through direct allocation rather than a journal entry.
Excluding Transfers Out, expenses were $44.4M lower than budget. The majority of this variance relates to capital projects not completed in 2021 of approximately $39.4M. CRW has evaluated our project management capacity and determined that additional temporary project management capacity is needed to complete budgeted capital projects in the next several years. The largest capital items not spent in 2021 are $6.9M in Reservoir Upgrades, $3.9M for the Liberty Village Tank, $3.1M in Well Redrills, $2.9M in Craig & Gould North Infrastructure Improvements and $2.4M in McMurdo Gulch Stream Stabilization. All of these projects are moving into construction in 2022. O&M expenses came in $4.9M under budget, driven primarily by Services and Other, which was under budget by $4.6M. Services & Other’s performance to budget was due to Other Professional Services $1.5M under budget, CIP Operations & Maintenance $0.8M under budget and Repair and Maintenance - Equipment $0.5M under budget. Electric and Natural Gas both came in flat to budget. The other two O&M components are Personnel, which came in flat to budget and Supplies which came in $0.4 under budget. Transfers Out came in $6.4M under budget, offsetting the misses to ‘Transfer In” revenue budget noted above.
Attachments
Attachment A: 2022 Rates and Fees Study Timeline
Attachment B: Preliminary 2021 Year-End Financials