KLWTD 2018-2019 Budget

Fiscal Year 2019 budget approved by board on September 18, 2018.

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 wastewater utility from mile marker 91 to 106 and southern portions of C-905 in North Key Largo. It provides service to approximately 10,404 improved parcels and 9,737 accounts are billed monthly, representing 15,096.3 EDUs assessed and 14,410.9 EDUs billed. 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 FY18-19 projected revenues and other sources of the District are as follows:

FY 2018-19 Budget % of Total FY 2017-18 Budget % of Total
Wastewater Service Revenue $8,750,800 46.47% $8,750,800 59.22%
Non Ad Valorem Assessments 3,546,694 18.83% 3,895,181 26.36%
Grant Revenue – Stewardship 3,333,333 17.70% 0.00%
Monroe County ILA 2,125,000 11.28% 1,000,000 6.77%
Islamorada ILA Revenue 1,140,000 6.05% 1,025,000 6.94%
SDC Prepayments 170,000 .090% 170,000 1.15%
Interest Income 42,000 0.22% 40,000 0.27%
Islamorada ILA – Allocation of Capital Projects 0.00% 4,753 0.03%
Use of/(Addition to) Reserves (275,000) -1.46% (108,919) -0.74%
$18,832,827 100% $14,776,814 100%
Where the Money Came From

Wastewater Service Revenue ($8,750,800)

Consisting of 46.47% 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 ($3,546,694)

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 ($2,125,000)

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 (3,000,000)
Stewardship Bill funding exchange 1,250,000
Balance due from Monroe County $15,250,000

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

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 ($42,000)

The District is projected to earn $42,000 in interest earnings in FY18/19 from its interest bearing accounts.

Use of/(Addition to) Operating Reserves (275,000)

The District’s FY18/19 budget projects that the revenues will exceed expenditures in the amount of $275,000. This surplus will increase the District operating reserves.

Islamorada Revenues

Islamorada Wastewater Service Revenue ($1,140,000)

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.

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.

Expenditure Overview

The total projected appropriations of this budget are $18,832,827. The following chart shows a summary of the budgeted appropriations by category:

FY 2018-19 Budget % of Total FY 2017-18 Budget % of Total
Personnel Services $2,559,868 13.59% $2,689,420 18.20%
Operating Expenses 3,882,376 20.61% 4,055,849 27.45%
Capital Outlay 3,621,917 19.23% 2,111,977 14.29%
Transfers 643,346 3.42% 529,798 3.59%
Debt Service 8,125,320 43.14% 5,389,770 36.47%
$18,832,827 100% $14,776,814 100%
Where the Money Goes

Personnel Services ($2,559,868)

Personnel Services includes all salaries and benefits for District employees. This represents a $129,552 decrease from the FY17/18 budgeted amount.

Department FY18-19 FTE FY18-19 Budget FY17-18 FTE FY17-18 Budget
Commissioners NA $52,188 NA $72,950
Administrative 7 619,122 11 825,448
Plant 6 483,925 6 443,300
Field 14 1,031,713 14 982,389
Maintenance 5 372,944 5 365,333
Total 32 $2,559,892 36 $2,689,420

Operating Expenses ($3,882,376)

Operating expenditures decreased by $173,473 or 6.83%. Plant operating expenses increased based on the mechanical integrity testing that is required every five years. FY18/19 will be the ninth year of full operations.

Capital Outlay ($3,621,917)

The FY18/19 budget includes appropriations of $3,621,917 for capital outlay. The following chart provides the details on the specific capital outlay items requested.

Capital Outlay Items
Vehicles (1) 30,000
Equipment (vac pump rebuilds & spares) 25,000
Equipment (sewage pump spares(2)) 30,000
Trailer Mounted Sewer Jetter System 45,400
Capital Improvements (includes CEI)
Capital Upgrades Project (Bridge to SBR#3, Booster Pump Modification,
Headworks Bypass Piping, Process Water System) 1,253,654
Engineering for Solar Demonstration Project for FDEP Loan Program 30,000
Solar for CCC and Ops Building 338,700
Service Connection Construction Revisions 50,000
Unique Properties 30,000
Vac Station Fire Suppression 348,700
Vac Trailer/VPS piping modifications 155.863
CCC Concrete Repair, Coatings & Emergency Effluent Disposal 402,450
Fire Suppression at WWTP 183,400
Steel Storage Building at Vac E 193,750
Vacuum Pit Monitoring Phase 1 267,500
Access Ports on Force Main (Gap project) 46,000
Data Base and Billing Module 191,500
Total Capital Outlay $3,621,917

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

Debt Service ($8,125,320)

The FY18/19 budget includes $8,125,320 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 service includes $2,687,935 for early debt retirement.

Debt Obligation Loan Balance @ 9/30/18 Required Annual Debt Service Loan Balance @ 9/30/19
SRF Loan 46401P $14,839,282 $1,558,961 $13,657,021
SRF Loan 464010 7,409,093 2,118,581 5,468,712
BB&T 2013 6,495,444 879,855 5,836,996
BB&T 2014 6,496,505 879,988 5,837,957
Total 32,240,354 5,437,385 30,800,686

Transfers ($643,346)

The FY18/19 budget includes transfers to the District’s following reserve accounts: repair and replacement and insurance deductible. $523,346 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 FY18/19, the District expects to have $4,378,348 in funding designated for repairs and replacement & insurance deductibles, and $100,000 for self insurance.

Budgeted Transfer to R&R fund $523,346
5% of Gross Operating Revenues $(437,540)
$0.35 of Islamorada Flow Charge (85,806)
Total Required Transfer to R&R fund (523,346)
Amount in EXCESS of minimum requirement $-

The District is also going to reserve $20,000 for insurance deductibles, and $100,000 for self insurance. FY18/19 is the first year a contribution will be made to the self insurance fund. These reserve categories are 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, 2017 $10,367,802
Budgeted Revenues FY17-18 $14,885,733
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 10,476,721
Budgeted Revenues FY18-19 $19,107,827
Budgeted Expenditures & Reserve Transfers FY18-19 (18,832,827)
Budgeted Revenues in excess of Expenditures & Reserve Transfers FY18-19 275,000
Expected Unassigned Fund Balance as of Sept 30, 2019 $10,751,721
12 month operating reserve balance would be $6,771,313
Amount in EXCESS of operating reserve $3,980,408

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.

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 early debt retirement of $2,687,935 in FY2019)

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

FY18-19 Organizational Chart

KLWTD FY19 Organizational Chart