KLWTD 2017-2018 Budget

Fiscal Year 2018 budget approved by board on September 26, 2017.

Sewer Utility Fund

The Key Largo Wastewater Treatment District (“District”) was formed as an autonomous independent Special District and political body formed In 2002 by the Legislature of the State of Florida by House Bill 471, enacted as Chapter 2002-37, Laws of Florida, for the purpose of carrying out the planning, acquisition, development, operation, and management of a wastewater management system within the District’s boundaries in Key Largo, Monroe County, Florida.

The District operates and maintains a sewer utility from mile marker 91 to 106 and on the southern portions of C-905 In North Key Largo and provides services to approximately 9,494 sewer accounts, representing 14,253 EDUs for billing purposes and 16,689.8 for assessment purposes. Operating as an enterprise fund, customer charges and assessments pay for the cost of operations and maintenance, debt service, and administrative costs.

Fund Overview

The District is structured on the basis of one individual enterprise fund. An enterprise fund is established by a government to account for activities similar to private business operations. The Intent is that user charges make up for the costs of providing goods or services to the public. Enterprise funds use the accrual basis of accounting. Under this method of accounting revenues are recorded when earned and expenses are recorded when the liability Is Incurred, regardless of when the cash is received or paid. Also, all assets and liabilities associated with the entity are included on the balance sheet. Generally, accepted accounting principles applicable to enterprise funds are similar to those applicable in the private sector.

Budget Development

The annual budget is considered one of the most important documents adopted by the District’s Board of Commissioners each year. The budget reflects the District’s financial policies for the upcoming year by allocating the sources of funds for District services, and projecting expenditures for those services.

The District is focused on improvements that will continue to supply high quality service to our customers. Staff will continue to focus on the collection and disposal of wastewater in the most effective and efficient methods available. External funding sources, including grants, will continue to be aggressively sought.

Revenue Overview

The FY17-18 projected revenues and other sources of the District are as follows:

FY 2017-18 Budget % of Total FY 2016-17 Budget % of Total
Wastewater Service Revenue 8,750,800 59.22% 8,550,000 53.45%
Non Ad Valorem Assessments 3,895,181 26.36% 4,010,190 25.07%
Use of/(Addition to) Reserves (108,919) -0.74% 1,574,288 9.84%
Monroe County ILA 1,000,000 6.77% 1,000,000 6.25%
Islamorada ILA Revenue 1,025,000 6.94% 642,207 4.01%
SDC Prepayments 170,00 1.15% 168,000 1.05%
Interest Income 40,000 0.27% 30,000 0.19%
Islamorada ILA – Allocation of Capital Projects 4.753 0.03% 21,146 0.13%
$14,776,814 100% $15,995,831 100%
Where the Money Came From

Wastewater Service Revenue ($8,750,800)

Consisting of 59.22% of the District’s revenues, charges for wastewater services represent the largest source of budgeted revenues for the District. This revenue is derived by providing sewer collection and treatment services to the public. Users are charged for this service on their monthly water bill from the Florida Keys Aqueduct Authority (“FKAA”). Customers are charged a base service charge and a usage charge, which is based on their monthly water consumption.

Non Ad valorem Assessments ($3,895,181)

Non ad valorem assessments revenue is the annual assessments of system development charges to customers for providing the sewer infrastructure. Initially, assessments were levied In phases and customers were given the option to prepay the assessment in full, or to have the assessment spread over 20 years as a non ad valorem assessment on their tax bill from Monroe County. The assessment charge is calculated on the number of equivalent dwelling units (“EDU”) for the serviced parcel. An EDU represents the equivalent to a single family unit and is based on 167 gallons per day of potable water usage.

Monroe County ILA ($1,000,000)

The District successfully negotiated an Interlocal agreement with Monroe County to exchange the $17,000,000 of Stan Mayfield funding that the State allocated to the District in FY13/14. In FY15/16 the District exchanged $1,250,000 of Stewardship funding in return for annual payments from the County of funds that have an unrestricted use.

Stan Mayfield funding exchange 17,000,000
Payments received from Monroe County (2,000,000)
Stewardship Bill funding exchange 1,250,000
Balance due from Monroe County $16,250,000

Expected Mayfield $17M & Stewardship Expected Mayfield $17M
2018 1,000,000 1,000,000
2019 2,125,000 2,000,000
2020 2,125,000 2,000,000
2021 2,125,000 2,000,000
2022 2,125,000 2,000,000
2023 2,125,000 2,000,000
2024 2,125,000 2,000,000
2025 2,125,000 2,000,000
2026 125,000
2027 125,000
2028 125,000
$16,250,000 $15,000,000

System Development Charge Advance Payoff Revenue ($170,000)

Customers have the option to pay off their system development charge at any time. Although substantially all of the serviced parcels have been assessed, customers may choose to either pay down or pay off their assessment in advance.

Interest Income ($40,000)

The District is projected to earn $40,000 in interest earnings in FY17/18 from its interest bearing accounts.

Use of/(Addition to) Operating Reserves (-$108,919)

The District’s FY17/18 budget projects that the revenues will exceed expenditures in the amount of $108,919. This surplus will increase the District operating reserves.

Islamorada Revenues

Islamorada Wastewater Service Revenue ($960,000)

The District and Islamorada, Village of Islands (“Village”) have an Interlocal agreement for the use of 32% of the District’s plant capacity. The Village is charged a base rate of $4.65 per 1,000 gallon of influent, not including any rate surcharges, at the District’s advanced wastewater treatment plant. That rate is calculated at $4.30 for treatment cost and $0.35 for repair and replacement funding. The District began receiving flows from the Village on June 16, 2014.

Islamorada Insurance Surcharge Revenue ($65,000)

The Interlocal agreement with the Village requires them to pay 32% of the Insurance expense for the advanced treatment plant. The District invoices the Village annually for this surcharge.

Islamorada Portion of Capital Projects ($4,753)

As District continues to make required changes to the plant to accommodate for the increased flows from the Village, a portion of the capital cost associated with these changes are paid by the Village according to the Interlocal agreement.

Expenditure Overview

The total projected appropriations of this budget are $14,776,814. The following chart shows a summary of the budgeted appropriations by category:

FY 2017-18 Budget % of Total FY 2016-17 Budget % of Total
Personnel Services 2,689,420 18.20% 2,900,887 17.81%
Operating Expenses 4,055,849 27.45% 3,898,685 23.94%
Capital Outlay 2,111,977 14.29% 1,187,089 7.29%
Transfers 529,798 3.59% 490,513 3.01%
Debt Service 5,389,770 36.47% 7,806,657 47.94%
$14,776,814 100% $16,283,831 100%
Where the Money Goes

Personnel Services ($2,689,420)

Personnel Services includes all salaries and benefits for District employees. This represents a $211,467 decrease from the FY6/17 budgeted amount.

Department FY17-18 FY17-18 FY16-17 FY16-17
Commissioners NA $72,950 NA $83,055
Administrative 11 825,448 15 1,178,727
Plant 6 443,300 7 377,015
Field 14 982,389 14 928,351
Maintenance 5 365,333 5 333,739
Total 41 $2,689,420 41 $2,900,887

Operating Expenses ($4,055,849)

Operating expenditures increased by $157,164 or 3.51%. Plant operating expenses Increased based on the costs to treat Increased flows from the Villages of Islamorada. FY17/18 will be the eighth year of full operations.

Capital Outlay ($2,111,977)

The FY17/18 budget includes appropriations of $2,111,977 for capital outlay. The following chart provides the details on the specific capital outlay items requested.

Capital Outlay Items
Computer Equipment 8,000
Equipment (telehandler) 90,000
Vehicle(1 gator) 10,000
Security Equipment 5,000
Equipment (vac pump rebuilds & spares) 188,500
Equipment (sewage pump spares(2)) 32,950
Vehicle(2) 46,000
Software: CMMS 20,000
Vehicle(1) 25,000
Service Connection Construction Revisions 100,000
Unique Properties 75,000
Solar 115,000
Chemical Feed Systems 51,872
Chlorine Contact Basin Covers 67,280
Process Water System Project 157,598
Headworks Bypass Piping System 395,255
Bridge from Ops Bldg 3rd floor to SBR#3 44,245
Emergency Generator – Admin Office Project 112,648
Hydro Sulfide Testing Project 222,078
Vac Station Fire Detection Project 79,700
Booster Pump Modification Project 109,258
Vac Trailer/VPS Piping Mods Project 156,523
Total Capital Outlay $2,111,977

Note: These projects, while budgeted, are still subject to board approval.

Debt Service ($5,389,770)

The FY17/18 budget includes $5,389,770 for debt service on the District’s two State Revolving Fund (SRF) loans, and the two BB&T Revenue Bonds. The SRF loans are paid semi-annually and the BB&T bonds repayments are made quarterly.

Debt Obligation Loan Balance @ 9/30/17 Required Annual Debt Service Loan Balance @ 9/30/18
SRF Loan 46401P 15,991,517 1,558,961 14,839,282
SRF Loan 464010 9,300,497 2,118,581 7,409,093
BB&T 2013 7,642,635 856,049 6,986,329
BB&T 2014 7,643,794 856,179 6,987,389
Total 40,578,443 5,389,770 36,222,092

Transfers ($529,798)

The FY17/18 budget Includes transfers to the District’s following reserve accounts: repair and replacement and insurance deductible. $509,798 is projected to be transferred to the reserve for future repairs and replacements. The District BB&T bonds require the District set aside 5% of the gross operating revenues from the system for repairs and replacements. The ILA with the Village also requires that $0.35 of the $4.65 flow charge be set aside for future repairs and replacements. At the end of FY17/18, the District expects to have$3,786,834in funding designated for repairs and replacement.

Budgeted Transfer to R&R fund 509,798
5% of Gross Operating Revenues (437,540)
$0.35 of Islamorada Flow Charge (72,253)
Total Required Transfer to R&R fund (509,798)
Amount in EXCESS of minimum requirement $-

The District is projecting to reserve $20,000 for insurance deductibles. This reserve category is important due to the District’s unique Island location. The District’s goal is to maintain twelve months of operating expenses in undesignated cash as a reserve balance.

Unassigned Fund Balance as of Sept. 30, 2016 9,663,255
Budgeted Revenues FY16-17 14,421,543
Budgeted Expenditures & Reserve Transfers FY16-17 (15,995,831)
Budgeted Expenditures in excess of Revenues & Reserve Transfers FY16-17 (1,574,288)
Expected Unassigned Fund Balance as of Sept 30, 2017 8,088,967
Budgeted Revenues FY17-18 14,776,814
Budgeted Expenditures & Reserve Transfers FY17-18 (14,776,814)
Budgeted Revenues in excess of Expenditures & Reserve Transfers FY17-18 (108,919)
Expected Unassigned Fund Balance as of Sept 30, 2018 8,197,886
12 month operating reserve balance would be 6,771,313
Amount in EXCESS of operating reserve 1,426,573

Debt Reduction & Wastewater Revenue Sufficiency

Below are two graphs that depict the current debt service versus assessment and County ILA Income vs. future debt service versus assessment and County ILA with additional debt reduction payments. Included FY17/18 budget Is funding for a wastewater revenue sufficiency analysis, otherwise known as a rate study. The last rate study was completed during 2012, and since that time, the District successfully negotiated Interlocal agreements with Islamorada and with Monroe County.

Current Required Debt Service vs Assessment Revenue

Current Required Debt Service vs. Assessment Revenue Chart Current Required Debt Service vs. Assessment Revenue Table

Future Required Debt Service vs Assessment Revenue – with additional advanced debt reduction payments
(includes future excess revenues applied to debt)

Future Required Debt Service vs. Assessment Revenue Chart Future Required Debt Service vs. Assessment Revenue Table

FY17-18 Organizational Chart

KLWTD FY18 Organizational Chart