KLWTD 2019-2020 Budget


Fiscal Year 2020 budget approved by board on August 20, 2019.

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 10,496 improved parcels and 9,779 accounts are billed monthly, representing 15,321 EDUs assessed and 14,771 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 FY19-20 projected revenues and other sources of the District are as follows:

FY 2019-20 Budget % of Total FY 2018-19 Budget % of Total
Wastewater Service Revenue $9,071,622 47.35% $8,750,800 46.47%
Non Ad Valorem Assessments 3,908,637 20.40% 3,546,694 18.83%
Grant Revenue – Stewardship 3,098,414 16.17% 3,333,333 17.70%
Monroe County ILA 2,125,000 11.09% 2,125,000 11.28%
Islamorada ILA Revenue 1,230,000 6.42% 1,140,000 6.05%
SDC Prepayments 150,000 .78% 170,000 .90%
Interest Income 45,000 0.23% 42,000 0.22%
Islamorada ILA – Allocation of Capital Projects 0.00% 0.00%
Use of/(Addition to) Reserves (470,444) -2.46% (275,000) -1.46%
$19,158,229 100% $18,832,827 100%
Where the Money Came From

Wastewater Service Revenue ($9,071,622)

Consisting of 47.35% 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 ($3,908,637)

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 (5,125,000)
Stewardship Bill funding exchange 1,250,000
Balance due from Monroe County $13,125,000

Expected Mayfield $17M & Stewardship
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
$13,125,000

System Development Charge Advance Payoff Revenue ($150,000)

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 ($45,000)

The District is projected to earn $45,000 in interest earnings in FY19/20 from its interest bearing accounts.

Use of/(Addition to) Operating Reserves ($470,444)

The District’s FY19/20 budget projects that the revenues will exceed expenditures in the amount of $470,444. This surplus will increase the District operating reserves.

Islamorada Revenues

Islamorada Wastewater Service Revenue ($1,230,000)

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 $19,158,229. The following chart shows a summary of the budgeted appropriations by category:

FY 2019-20 Budget % of Total FY 2018-19 Budget % of Total
Personnel Services $2,678,728 13.98% $2,559,892 13.59%
Operating Expenses 4,164,787 21.74% 3,882,376 20.61%
Capital Outlay 3,532,329 18.44% 3,621,917 19.23%
Transfers 1,220,000 6.37% 643,346 3.42%
Debt Service 39.47% 8,125,320 43.14%
$19,158,229 100% $18,832,827 100%
Where the Money Goes

Personnel Services ($2,678,728)

Personnel Services includes all salaries and benefits (including workers compensation insurance) for District employees. This represents a $118,836 increase from the FY18/19 budgeted amount.

Department FY19-20 FTE FY19-20 Budget FY18-19 FTE FY18-19 Budget
Commissioners NA $53,336 NA $52,188
Administrative 7 612,329 7 619,122
Plant 6 499,224 6 483,925
Field 13 1,047,048 14 1,031,713
Maintenance 6 466,791 5 372,944
Total 32 $2,678,728 32 $2,559,892

Operating Expenses ($4,164,787)

Operating expenditures decreased by $282,435 or 7.27%. Plant operating expenses increased based on the mechanical integrity testing that is required every five years. FY19/20 will be the tenth year of full operations.

Capital Outlay ($3,532,329)

The FY19/20 budget includes appropriations of $3,532,329 for capital outlay. The following chart provides the details on the specific capital outlay items requested.

Capital Outlay Items
Administrative
Equipment (air conditioner) 4,500
Field
Vehicles (1) 26,000
Equipment (vac pump rebuilds & spares) 16,000
Equipment (sewage pump spares for vac stations)) 200,000
$242,000
Capital Improvements (includes CEI)
Solar for wastewater treatment plant 1,467,200
Solar for vacuum stations (only a portion of this project is funded in
in FY20, the remainder will be funded in FY21) 504,464
Fire Suppression at wastewater treatment plant 335,354
Fire Suppression at vacuum stations 428,202
Fire Suppression at administrative office 73,000
Vac Trailer/VPS piping modifications 151,884
Shallow Gravity Well 111,000
Database 124,725
Service Connection Construction Revisions 90,000
3,285,829
Total Capital Outlay $3,532,329

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

Debt Service ($7,562,385)

The FY19/20 budget includes $7,562,385 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 $2,125,000 for early debt retirement.

Debt Obligation Loan Balance @ 9/30/19 Required Annual Debt Service Loan Balance @ 9/30/20
SRF Loan 46401P $13,657,021 $1,558,961 $12,443,951
SRF Loan 464010 5,468,712 2,118,581 3,478,083
BB&T 2013 4,250,181 879,855 3,500,574
BB&T 2014 4,251,142 879,988 3,501,432
Total 27,627,056 5,437,385 22,924,040

Transfers ($1,220,000)

The FY19/20 budget includes transfers to the District’s following reserve accounts: repair and replacement, self insurance and insurance deductible. $1,100,000 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. The District is also going to reserve $20,000 for insurance deductibles, and $100,000 for self insurance. FY19/20 is the second year a contribution will be made to the self insurance fund. At the end of FY19/20, the District expects to have $5,478,348 in funding designated for repairs and replacement & insurance deductibles, and $200,000 for self insurance.

Budgeted Transfer to R&R fund $1,100,000
5% of Gross Operating Revenues $(453,581)
$0.35 of Islamorada Flow Charge (95,581)
Total Required Transfer to R&R fund (546,162)
Amount in EXCESS of minimum requirement $553,838

Excess reserve funding is required to meet the actual reserve and replacement funding necessary based on the engineering estimates. 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 unassigned cash as a reserve balance.

Unassigned Fund Balance as of Sept. 30, 2018 $11,552,632
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 11,827,632
Budgeted Revenues FY19-20 $19,628,673
Budgeted Expenditures & Reserve Transfers FY19-20 (19,158,229)
Budgeted Revenues in excess of Expenditures & Reserve Transfers FY19-20 470,444
Expected Unassigned Fund Balance as of Sept 30, 2020 $12,298,076
12 month operating reserve balance would be $6,843,515
Amount in EXCESS of operating reserve $5,454,561

Debt Reduction & Wastewater Revenue Sufficiency

Below is a graph that depicts future debt services versus assessment and County ILA with an additional debt reduction payment of $2,125,000 in FY19/20.

Future Required Debt Service vs Assessment Revenue – with one additional advanced debt reduction payment of $2,125,000 in FY20, applied evenly to both BB&T bonds

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

FY19-20 Organizational Chart

KLWTD FY20 Organizational Chart