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As requested, our office has prepared an analysis of the rate structure for
the central water system for the Town of Wappinger for the 2006
Calendar Year based on the budget adopted by the Town Board.
Please note for the record that the districts included in analysis are the
districts that are hydraulically connected and served by the Atlas and
Hilltop Well Fields. They are the:
. Central Wappinger Water Improvement.
. North Wappinger Water Improvement.
. Myers Comers II Water District.
. Cranberry Hills Water Improvement.
. Oakwood Water District.
. Wappinger Park Water District & Extension.
. Ardmore Hills Water District.
The Town Board has adopted a budget for the above districts for
Calendar Year of2006 of $775,000.00. This budget has increased over
the Calendar Year of 2005 primarily because of three (3) specific
reasons. They are:
1. The amount of water pumped.
2. The sharp increase in the electric costs to run the water districts.
3. The decrease in the available surplus revenue funds to offset
budget increases.
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Our analysis started with the total budget necessary to raise. From that
number we subtracted out projected revenues that will be realized from
the commercial establishments within the districts. An analysis was
done of the seven (7) largest commercial entities. These included:
. 165 Myers Comers Road.
. Hark 3 Building.
. Roy C. Ketchum High School.
. Myers Comers Elementary School.
. Mycor
. Greenbaum & Guilhooleys.
. Dutchess Medical Arts.
In our analysis of these commercial properties, we looked at the actual
flows over the last four quarters and took what we considered to be an
average quarterly flow which would be representative of the second and
fourth quarter. The commercial rates, as they exist today, have not been
changed for a number of years, and appear not to be consistent with the
actual cost of producing water. We have proposed a commercial base
rate of$90.00/quarter for the first 18,700 gallons. Overage cost would
be $2.40 per 1,000 gallons for water consumed between 18,700 and
250,000 gallons, and $3.20 per 1,000 gallons over 250,000 gallons.
An analysis of the seven (7) commercial entities previously mentioned
shows that the yearly revenue realized at the proposed rates would be
approximately $52,000.00.
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The next number that we subtracted from the total budget is the available
surplus revenue that we have to apply to this total. We were advised by
the Comptroller's Office for Calendar Year 2006, this number is
$79,000.00. Therefore the following amounts of monies will need to be
raised by residential properties.
. Total Budget
. Commercial Revenue
. Surplus Revenue Funds
$ 775,000.00
- $ 52,000.00
- $ 79,000.00
Total to be raised by residential properties $ 644,000.00
In the current and proposed residential billing structure, a certain amount
of water is purchased for a minimum rate. For initial calculations, we set
the minimum rate @ $39.00 for 18,700 gallons. Ifwe set the minimum
rate @ $39.00, this would generate approximately $619,000.00. To
meet the total revenues necessary to be raised by residential properties,
$25,000.00 would then need to be raised from overage charges.
We then did an analysis of 836 houses in the central part of the water
district to determine how many of these houses use over the minimum
amount.
From this analysis, we saw that of the 836 houses, approximately 200
houses, or 24%, used over the minimum.
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We initially set the rate for overages @ $1.60 per 1,000 gallons of water
consumed over 18,700 gallons. At this rate, overage usage would need
to be approximately 4 million gallons per quarter to generate the
$25,000.00 necessary to balance the budget. The 836 houses that we had
sampled utilized 1.65 millions gallons of water over the minimum per
quarter. Extrapolating this number of houses sampled over the total
number of houses in the district equals approximately 6.6 million gallons
of water over the minimum. This is in excess of the 4 million gallons
required to generate the necessary revenue.
We therefore feel confident in setting the base rate for residential houses
in the district mentioned @ $39.00 for 18,700 gallons with an overage
rate of$1.60 per 1,000 gallons.
It is further recommended that the revenues be analyzed at the end of the
second quarter or June 30th. At that time, we will be able to determine if
we are inline with the amount of revenues needed to be raised. If, at that
point in time, there is a deficit, then a mid-year rate adjustment will be
necessary.
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