HomeMy WebLinkAboutR-2024-056 Adopting the Stormwater Revenue Sufficiency ReportRESOLUTION NO. 2024-_Q�Q
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF DANIA
BEACH, FLORIDA, ADOPTING THE STORMWATER REVENUE
SUFFICIENCY REPORT PREPARED IN CONJUNCTION WITH RAFTELIS
FINANCIAL CONSULTANTS, INC. AND AUTHORIZING THE FINANCE
DEPARTMENT TO PROCEED WITH A STORMWATER INFRASTRUCTURE
CAPITAL FINANCING PLAN; PROVIDING FOR CONFLICTS; FURTHER,
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, two goals of the City's adopted Strategic Plan are "financially sound and
responsible city providing services valued by the community", and "investment in upgrading city
infrastructure and facilities", including major investments in the City's stormwater / drainage
infrastructure to reduce groundwater flooding mitigate damages caused by catastrophic rainfall
events; and
WHEREAS, the City engaged Raftelis Financial Consultants, Inc. ("Raftelis") to conduct
a comprehensive analysis and review of the Stormwater Utility Fund and underlying revenues and
develop a financial model and revenue sufficiency report, the purpose of which is to demonstrate
the financial feasibility of debt financing backed by the Stormwater Non -Ad Valorem Special
Assessment; and
WHEREAS, Raftelis has completed the review of the stormwater rates for the City and
has summarized the results of their analyses, assumptions, recommendations, and conclusions in
the revenue sufficiency report (the "Report"), which Report is attached as Exhibit "A", and has
been made a part of and incorporated into this Resolution by this reference; and
WHEREAS, the City Administration recommends acceptance of the Report which
includes a multi -year strategic roadmap for financing investments in the City's drainage
infrastructure; and
WHEREAS, the Finance Department is seeking to utilize this report as the basis for a debt
financing plan to provide necessary funding for several planned major capital projects, including
the Southeast Drainage Phases I and H, certain identified neighborhood drainage projects, and
other projects to be determined through the forthcoming Stormwater Infrastructure Master Plan
(the "Improvements").
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF DANIA BEACH, FLORIDA:
Section 1. That the foregoing "Whereas" clauses are ratified and confirmed to be true
and correct, and they are made a part of and are incorporated into this Resolution by this reference.
Section 2. That the City Commission accepts the Raftelis Report, which Report is
attached as Exhibit "A", and has been made a part of and incorporated into this Resolution by this
reference.
Section 3. That the Finance Department is authorized to seek capital financing for the
Improvements, to include a combination of both short and long-term financing, formally
authorized by the City Commission at a duly noticed public meeting.
Section 4. That all resolutions or parts of resolutions in conflict with this Resolution
shall be repealed to the extent of such conflict.
Section 5. That this Resolution shall be effective 10 days after passage.
PASSED AND
ADOPTED
� on, ` - , 2024.
Motion by Wl1 - U S second/by � i oc,
FINAL VOTE ON ADOPTION: Unanimous v
Commissioner Joyce L. Davis
Commissioner Tamara James
Commissioner Marco Salvino
Vice Mayor Lori Lewellen
Mayor Archibald J. Ryan IV
ATTEST:
ELORAIF
CITY CLERK
APPROVED AS TO FORM AND
,�—is
TEY
1 , .
Yes No
0�
ARCIIIBALD
MAYOR
2 RESOLUTION #2024-SLf�W
Stormwater Rate Study
FINAL REPORT / April 29, 2024
R RAFTELIS
April 29, 2024
Frank DiPaolo
Chief Financial Officer
City of Dania Beach
100 W Dania Beach Blvd
Dania Beach, FL 33004
Subject: 2024 Stormwater Rate Study
Dear Mr. DiPaolo:
Raftelis Financial Consultants, Inc. (Raftelis) has completed our review of the stormwater rates for the City of
Dania Beach, Florida (the City) and has summarized the results of our analyses, assumptions, recommendations,
and conclusions in this report which is submitted for your consideration. The analysis encompassed a financial
evaluation for the five (5) fiscal year (FY) period of October 1, 2023 through September 30, 2028 (the Forecast
Period). Based on the assumptions relied upon in the development of the projected revenues and expenditure
needs, Raftelis has identified the need for stormwater rate adjustments, which are summarized in this report.
The proposed rates are designed to meet a number of goals and objectives. The single most important objective of
our analysis was to develop proposed rates that will produce revenues sufficient to meet the projected expenditure
requirements of the stormwater system. Other goals and objectives considered in the study include:
• The proposed rates should allow the stormwater enterprise fund to maintain a financial position that is
both sustainable and consistent with performance criteria established by the City and based on industry
standards.
The proposed rates should comply with any anticipated rate covenant requirements associated with
existing debt and proposed future borrowings.
• The proposed rates should be based on full cost recovery principles.
• The proposed rates, to the extent practical, should be comparable with those of neighboring and other
similarly situated stormwater systems.
The proposed charges for stormwater service are designed to meet the goals and objectives outlined above and
should be sufficient to provide for the recovery of the total costs anticipated over the Forecast Period.
Following this letter, we have provided an executive summary which briefly summarizes the results of our study
and outlines our recommendations and conclusions. The remainder of the report provides additional details
regarding the rate and financial analysis conducted on behalf of the City.
341 N. Maitland Avenue, Suite 300, Maitland, FL 32751
www.raRelis.eom
City of Dania Beach
April 29, 2024
Page 2
We appreciate the opportunity to be of service to the City and would like to thank the City staff for their valuable
assistance and cooperation throughout the course of this study.
Respectfully Submitted,
Raftelis Financial Consultants, Inc.
Henry Thomas
Thomas
Vice President
Joe Williams
Senior Manager
1;" jatvYt4fj
Tristen Townsend
Consultant
City of Dania Beach / Stormwater Rate Study
Contents
Summary ..........................................................................1
Introduction...........................................................................................................................1
Summaryof Study Results...................................................................................................2
Observations and Recommendations.................................................................................4
Section1 - Introduction................................................................... 5
Background...........................................................................................................................5
Section 2 - Customers .and Revenues ............................................. 6
General...................................................................................................................................6
Existing Stormwater Methodology......................................................................................6
Rate Structure Adjustments.................................................................................................7
Customer Growth & Revenue Projection............................................................................7
Section 3 - Revenue Requirements ................................................. 9
Operating and Maintenance Expenses................................................................................9
CapitalImprovement Plan..................................................................................................10
Existing and Proposed Debt...............................................................................................11
Total Revenue Requirements.............................................................................................12
section t! - Revenw- S"f#irien+ry .....F_,.E ;..<....,.a... ,..... Il
General.................................................................................................................................13
Revenue Sufficiency Forecast...........................................................................................13
CashBalances.....................................................................................................................14
Debt Service Compliance...................................................................................................14
Proposed Residential Stormwater Rates and Comparisons...........................................15
City of Dania Beach / Stormwater Rate Study
Table ES-1: Stormwater Improvement Projects.......................................................................................
2
Table ES-2: Proposed Rate Adjustments per ESU...................................................................................
3
Figure ES-1:
Financial Forecast...............................................................................................................
3
Table 1:
Projected Customer Growth.......................................................................................................
8
Table 2:
Projected Rate Revenues Under Existing Rates........................................................................
8
Table 3:
Operating Expenses.................................................................................................................
10
Table 4:
Stormwater Improvement Projects...........................................................................................
10
Table5:
Stormwater CIP........................................................................................................................
11
Table 6:
Proposed Debt Service Obligations..........................................................................................
11
Table 7:
Total Annual Revenue Requirements.......................................................................................
12
Table 8:
Proposed Rate Adjustments per ESU......................................................................................
13
Figure1:
Financial Forecast...................................................................................................................
14
Table 9:
Projected Year -End Cash Balances at Proposed Rates...........................................................
14
Table 10:
Debt Service Compliance.......................................................................................................
15
Figure 2:
Comparison of Residential Stormwater Rates on a Monthly Fee Basis ...................................
15
Exhibit 1: Operating Budget Forecast
Exhibit 2: Capital Improvement Plan and Funding Sources
Exhibit 3: Projected Revenue Requirements
Exhibit 4: Reserve Balance Forecast
City of Dania Beach /SlormwaterRate Study
Executive Summary
The City of Dania Beach (City) has retained Raftelis Financial Consultants, Inc. (Raftelis) to review the City's
stormwater utility business requirements, primarily focused on funding significant capital improvements through a
combination of issuance of new debt and cash on hand, as well as to evaluate the need for future rate increases.
The City's stormwater utility is established as an enterprise fund, meaning the utility should have revenues equal to
the costs of the services provided and should establish rates sufficient to cover the cost of operating, maintaining,
repairing, and financing system operations. According to the Governmental Accounting Standards Board,
"Enterprise Funds should be used to account for operations that are financed and operated in a manner similar to
private business enterprises — where the intent of the governing body is that costs of providing services to the
general public on a continuing basis should be financed or recovered primarily through user charges."
While the City annually reviews the financial position of the stormwater system as part of the budgetary process,
the City last adjusted its stormwater utility rates in October 2021. To evaluate the sufficiency of the current
stormwater rates, the City authorized Raftelis to conduct a comprehensive rate analysis to estimate the adequacy of
rates through fiscal year (FY) 2028.
The foundation of the study and the primary objectives of the stormwater rates are to reasonably recover the cost of
providing service, including the cost of operating the stormwater utility and the cost of infrastructure investment, as
well as to comply with covenants of the outstanding and anticipated future indebtedness and identified fiscal
policies / targets (referred to as the `revenue sufficiency" evaluation).
Expenses
Rate
Revenues
As shown in the preceding figure, the various components of cost associated with operating and maintaining a
municipally owned utility, as well as the cost of financing the renewal and replacement of facilities and capital
improvements for upgrades and expansion, are generally referred to as the gross revenue requirements. The sum of
these cost components, after adjusting for other income and other operating revenues available to the utility,
represents the net rate revenue requirements of the utility system.
City of Dania Beach / Stormwater Rate Study
The revenue requirements for this rate study were predicated on an analysis of stormwater costs projected through
the FY ending September 30, 2028 (i.e., FYs 2024 through 2028). The projected revenue requirements included the
various generalized cost components described as follows:
• Operating Expenses: Operating expenses include the cost of labor, utilities, operating supplies, repairs and
maintenance, allocated General Fund administrative costs, and other items necessary for the operation and
maintenance of the utilities.
• Capital Investment: Capital investment includes the amount of funding on an annual basis made from
rates (pay -go spending) to fund ongoing renewals, replacements, improvements, and upgrades not financed
by the issuance of debt obligations.
• Debt Service: Debt service includes the principal and interest on the City s currently outstanding and any
future anticipated debt or loan obligations payable from the net operating revenues of the systems.
• Other Revenue Requirements: This component of cost includes any other funding requirements from rates
including, but not limited to, transfers to the General Fund above allocated administrative costs, and
transfers to reserves for future year expenditures.
The following is a summary of the net revenue requirements derivation:
+ Cost of Operation and Maintenance
+ Debt Service Payments
+ Transfers and Administration Payments
+ Capital Project Financing
+ Equipment Purchases
+ Working Capital Reserves / Financial Compliance
— Other Operating Revenue
— Interest Income
= Net Revenue Requirements (Funded from ratesl
Summary ®f Study Results
Based on the assumptions relied upon in the development of the projected revenue requirements, Raftelis has
identified the need for rate adjustments for the stormwater systems. The primary reasons for the rate adjustments
include the need to fund major capital projects as shown on the following table:
Table ES-1: Stormwater Improvement Projects
Description
Timing
Funding Source
Tidal Valves - Stormwater System
2024
Operating
NW 2nd Avenue Drainage Pipe Replacement
2024
Operating
SW 341 Terrace Drainage Project
2024
Operating
SW 52nd Street Drainage Project
2024
Operating/Grants
SE Drainage Project Phase I
2024
2024 Bonds/Grants
SE Drainage Project Phase II
2025
2024 Bonds
NW 31st Ave
2025
2024 Bonds
Gulfstream Rd
2025
2024 Bonds
Project Cost
$250,000
2,000,000
800,000
1,200,000
16,815,805
16,818,932
2,000,000
1,750,000
Total $41,634,737
City of Dania Beach / Storm ter Rate Study
To provide adequate funding for the projects identified, a bond issuance will be pursued during 2024. By leveraging
bond funding, the City will be able to spread out repayment of the improvements over a 30-year period that better
aligns payment for the improvements with the life of the assets and the property owners who benefit from them.
Additionally, issuing bonds will help minimize the rate adjustments in the near term.
Based on the financial forecast and funding plan for the stormwater system which are described in detail in this
report, the following rate adjustments are recommended:
Table ES-2: Proposed Rate Adjustments per ESU
Description
FY 2024 FY 2025
FY 2026
FY 2027
FY 2028
Annual Rate per ESU
$60.00 $100.00
$101.00
$102.00
$103.00
Increase ($)
$40.00
$1.00
$1.00
$lm
Monthly Basis
$5.00 $8.33
$8.42
$8.50
$8.58
Increase ($)
$3.33
$0.09
$0.08
$0.08
As outlined on the table above, stormwater rate adjustments are proposed to support fully funding the CIP as well
as providing adequate net revenues each year to meet debt service coverage ratios and maintain targeted minimum
reserve levels. As demonstrated on the chart below, the rate adjustments will provide for sufficient revenues and
generate roughly $730,000 annually in pay -go cash for capital projects over the Forecast Period.
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Figure ES-1: Financial Forecast
--------------------------
2024 2025
Operating Expenses
—Revenues at Existing Rates
2026 2027 2028
Debt Service
— — — Revenues at Proposed Rates
Certain adjustments to customer classes are being considered to enhance equity between property types that
demonstrate similar characteristics in layout and impervious area that led to a slight decrease in the total number
of equivalent stormwater units (ESUs) that can be seen by the slight decrease in revenue under existing rates on
the figure above.
City of Dania Beach / Stor wafer Rate Study
Observations and Recommendations
The following is a summary of the observations and recommendations developed by Raftelis during our
investigation, analyses, and preparation of this report:
1. The City's existing fees for stormwater services are not anticipated to be adequate to fully recover the
City's projected revenue requirements, nor to meet expected bond covenants, during the Forecast Period.
2. The City should consider adopting the proposed stormwater rates at $100.00 per ESU as calculated for
FY 2025. The proposed adjustment for FY 2025 represents a $40.00 increase, equivalent to $3.33 per
month, above the existing stormwater rates.
3. The City should use debt funding to complete several of the large stormwater projects that have been
identified as necessary to begin improving the most vulnerable parts of the system.
4. The City should continue performing periodic updates to the financial forecast to ensure that the
stormwater rates provide adequate funding. Once the City completes the stormwater master plan, this
will likely warrant an update to the stormwater financial forecast to plan for funding additional
improvements beyond FY 2025.
5. The City should consider reviewing the stormwater rate structure to confirm/update the following items:
a. Square feet of impervious area per equivalent stormwater unit of 1,836.
It. That upon certification of occupancy of new development and redevelopment, the City should
review and ensure that ESUs assigned to each property are correct given the activity that takes place
over a period of time and does not always get adequately captured and reflected in the establishment
of stormwater ESUs.
6. The City should review certain properties within DOR Codes 01, 04, 05, 08 and consider adjusting the
stormwater rate application methodology to better align properties with similar development
characteristics.
a. For properties within DOR Code 01, the City should assign the lesser of 1.0 ESUs or the current
ESUs assigned.
b. For properties consisting of one (1) or two (2) stories within DOR Codes of 04 and 05, the City
should assign the lesser of 1.0 ESUs per unit or the current ESU's assigned based on prior
impervious area measurements.
c. For properties within DOR Code 08 and sub -types 01 and 02, the City should assign the lesser of 1.0
ESUs or the current ESUs assigned.
d. Care should be taken to consider overall revenue implications of making these adjustments as to not
materially impact the repayment of the anticipated bond issuance and associated debt covenants.
e. Additionally, in order to appropriately implement these changes the City should adopt the
appropriate ordinance changes regarding the stormwater rate structure. Consideration should be
given to adding a provision for "administrative flexibility", or a similar provision, to allow for
application of ESUs in a more equitable way.
Following the Executive Summary, the remainder of this report outlines the assumptions for the projected revenues
and expenditures for the enterprise fund.
City of Dania Beach / Sto"water Rate Study
Section 1 - Introduction
The City is located in Broward County in the South Florida area and has an estimated population of over 31,900
residents according to Census reports. The City's stormwater system benefits residential and non-residential
development in the City, which account for approximately 14,081 stormwater customers as of FY 2023. The City
has engaged Raftelis Financial Consultants, Inc. (Raftelis) to conduct a rate study to review the sufficiency of the
stormwater system's (System) ability to meet financial requirements including operating costs, capital
improvements, and reserve fund requirements over the FYs 2024 through 2028 (Forecast Period).
The City constructs, upgrades, maintains, and operates the stormwater system with the intent of preserving
property and providing adequate drainage of rainwater, high tide and groundwater flooding, and storm surge.
Additionally, the system must ensure compliance with state and federal rules and regulations. This section provides
a summary of the costs associated with the operations, upkeep, and upgrades to the stormwater system and the
associated rates to provide adequate funding. The City has identified several large capital improvements in FY
2024 and FY 2025 that will require issuance of new debt of approximately $30 million. The capital improvement
plan (CIP) developed for the purposes of the study only accounts for immediate projects in FY 2024 and FY 2025
since the City is currently in the process of creating a stormwater master plan, which is not yet finalized. This
master plan will identify future projects, which will then result in an updated stormwater rate study to address
future funding needs beyond the next two years. The issuance of $30 million of new debt provides approximately
$3 million of additional funds, beyond what is identified in the FY 2024 and FY 2025 CIP, for potential future
projects from the master plan.
The recommendations of this study are based on a financial forecast developed for the stormwater system that
relies on a dynamic Excel based model which forecasts future customers, revenues, operating expenses, debt
service payments, and accounts for various cost escalations and rate adjustments. This model is available to City
staff for use in management and strategic decision -making processes. The study began with the identification of
utility operating and capital needs, next considered the capital financing plan and, finally, established the timing of
rate adjustments and expected borrowings based on staff input. The financial forecast serves as the basis for the rate
recommendations for FY 2024 and FY 2025.
(Remainder ofPage Intentionally Left Blank)
City of Dania Beach / Stormwater Rate Study
Section 2 - Customers and Revenues
General
A major component in the determination of sustained revenue sufficiency for stormwater service is the
development of a forecast of customers and Equivalent Stormwater Units (ESUs), to which existing rates are
applied to calculate revenues. The customer forecast is an essential component of this study that helps align the
timing of future rate adjustments with capital projects and anticipated increases to ongoing operations. This section
provides a discussion of the recent historical trends and the forecast of customers through FY 2028.
Existing Stormwater Methodology
The City is currently experiencing a period of redevelopment and increased densities that provide an increased
need and demand for the City's stormwater system. Per the City's existing stormwater code', an ESU means the
impervious area of a typical single family developed property located within the City. When the code was
established, the typical impervious area for developed single family properties was 1,836 square feet. Single family
properties are defined as having a DOR code of 011. The code further defines single family as falling into one of
three categories for small, medium, and large parcels. The small parcels each have an impervious area of 918
square feet or less and are assigned 0.5 ESUs each. The medium parcels have an impervious area of between 918
square feet and 3,672 square feet and are assigned 1.0 ESUs each. Finally, the large parcels have an impervious
area greater than 3,672 square feet and are measured and ESUs based on the impervious area divided by the
standard ESU value of 1,836 square feet.
It is common for cities to update the ESU basis from time to time, when there is evidence the underlying development
trends are changing. The task of updating the ESU basis was not part of this study but is something the City should
consider in the future.
For other customer classes, the following describes the process as identified in Resolution 73-96 for identifying the
number of ESUs:
• Condominium Parcels (DOR code 04/05): First the impervious area of the entire condominium property is
measured. This value is then divided by the ESU value of 1,836 square feet to determine the total number of
ESUs for the property. The total ESUs for the property are then divided by the number of condo units to
determine the ESUs for each unit.
• General Parcels (all other DOR codes): ESUs are determined by dividing the impervious area of the parcel
by the ESU value of 1,836 square feet.
Additionally, the City has developed and adopted a mitigation credit factor that is applied as properties build and
maintain the appropriate on -site retention.
(Remainder of Page Intentionally Left Blank)
'Dania Beach, Florida, Resolution 73-96
'Department of Revenue (DOR) codes as assigned to properties by the Broward County Property Appraiser.
City of Dania Reach/ Stonnwater Rate Study
Rate Structure Adjustments
Since determination of customer classes is based on DOR codes, different methodologies for stormwater fee
application may be occurring despite properties having similar development characteristics. However, it is more
reasonable to treat parcels with similar development characteristics in like ways. Therefore, the City should
consider adjusting the stormwater fee application methodology to better align properties that demonstrate similar
characteristics in layout and impervious area, rather than relying solely on the DOR codes. Analysis of the City's
assessment roll suggests parcels with the DOR code of 04 and 05 that have one (1) or two (2) stories are more
similar in nature to certain parcel types classified within the DOR code of 01 and therefore, should only be charged
up to 1.0 ESU. Therefore, certain adjustments have been identified through discussions with City staff to increase
the equity of the stormwater rate structure.
Further, the stormwater ESU basis of 1,836 square feet was established many years ago and it would be prudent for
the City to evaluate whether this figure is still representative of the typical single family property. Lastly, over time
properties redevelop and change, and these characteristics are not always captured in the development of
stormwater ESUs. The City should perform some level of measurement activity to verify and update the ESUs for
each property.
Customer Growth & Revenue Projection
Based on analyzing historical billing data for FYs 2022 through 2024, the following customer summary has been
developed. From 2024 to 2028, it is projected that single family parcels will represent approximately 10% of the
total ESUs, with condominium and general parcels representing the remaining 8% and 82%, respectively. The City
is mostly built -out but is undergoing some redevelopment. City staff provided development information and
identified if the property would represent redevelopment or development of a vacant lot. For the redevelopment
properties, it is estimated there will be a 20% increase in impervious area. Additionally, a factor was developed to
estimate a conversion from multi -family units to ESUs. Multi -family units are captured under the General Parcels
class where each properties' impervious area is measured and assigned ESUs based on this measurement. Using
the data available for 35 existing multi -family properties, a factor of 0.87 ESUs per multi -family unit was
calculated. This factor is applied to new development of multi -family parcels. Using this development data, as
converted to ESUs as discussed above, it is forecast the City will grow at an average rate of 0.5% ESUs per year.
As mentioned previously, minor adjustments to the existing rate structure are recommended. These recommended
adjustments have been incorporated into the existing forecast and result in a reduction of 3,889 ESUs. These
adjustments coupled with the customer growth assumptions form the basis for the revenue forecast. Under existing
rates, the City is projected to collect around $3.0 million in FY 2024 and slightly less at $2.8 million beginning in
FY 2025. This growth forecast is intended to be conservative and the slight decline is a result of the ESU
adjustment having a larger short-term effect than customer growth in the City. The following tables summarize the
projected customer growth and rate revenues anticipated under existing rates:
(Remainder of Page Intentionally Left Blank)
City or Dania Beach / Stomwater Rate Study
8
Table 1: Projected Customer Growth
Description
2023
2024
2025
2026
2027
2028
Single Family ESUs
5,171
5,191
5,056
5,069
5,088
5,128
Condo ESUs
4,211
4,211
1,925
1,925
1,925
1,925
General ESUs
44,064
44,244
43,049
43,471
43,726
43,900
Total ESUs
53,446
53,646
50,030
50,465
50,739
50,953
Single Family ESU Growth
20
17
13
19
40
Condo ESU Growth
0
0
0
0
0
General ESU Growth
180
267
422
255
174
Total ESU Growth
200
284
435
274
214
Annual Growth Percent
0.4%
0.5%
0.9%
0.5%
0.4%
Table 2: Projected Rate Revenues Under Existing Rates
Description 2024 2025 2026 2027 2028
Projected Rate Revenues $3,025,600 $2,821,700 $2,846,100 $2,861,600 $2,873,800
(Remainder ofToge Intentionally Left Blank)
City of Dania Beach / Stormwaler Rate Study
Section 3 - Revenue Requirements
The City recovers the cost of providing stormwater services through an annual stormwater assessment. Operating
cash revenue requirements is the term that defines the various components of cost associated with operating and
maintaining the System. The sum of these cost components, less any other income generated, represents the net
revenue requirements that are funded from the annual stormwater assessment. The projected revenue requirements
over the Forecast Period include the various generalized cost components described below:
• Operating and Maintenance (O& vD Expenses: These expenses include the cost of labor, insurance, utilities,
contractual services, maintenance, materials, supplies, administration, indirect cost transfers, and other items
necessary for the operations and maintenance of the System.
• Debt Service: Debt service includes the principal and interest on outstanding debt obligations payable from
the net operating revenues. The projected revenue requirements include the assumption that there will be a
large additional debt issuance during the Forecast Period to fund major capital improvements.
• Other Revenue Requirements: This component of cost includes, in general, any ongoing capital
improvements to be financed from revenues, purchases of new/replacement vehicles, transfers to reserves
for future infrastructure rehabilitation or construction, and funding of certain larger capital projects on a pay-
as-you-go basis.
Operating and Maintenance Expenses
The adopted FY 2024 budget associated with the operations and maintenance of the stormwater system served as
the basis for the system's expenditure projections. The budget was then projected for the remaining four (4) years of
the Forecast Period (i.e., through FY 2028). Projections for FYs 2025 through 2028, reflect the anticipated impacts
of inflation, labor and benefit adjustments, growth, and other increases affecting ongoing expenses. These impacts
are addressed on a budget line -item basis using specific escalation factors. Unless otherwise noted, the underlying
assumptions and expenditure amounts included therein were assumed to be reasonable and reflect anticipated
operations. The primary assumptions used in the projection of net rate requirements for the years subsequent to FY
2024 are:
• Expenditures anticipated to be impacted by inflation increase at 2.5 percent annually through FY 2028.
• Salaries, merit and associated benefits increase by 6.0 percent in FY 2025 and 5.0 percent annually thereafter.
• In FY 2025, the City plans to add a new position to serve as a Project Manager/Engineer to support the
stormwater, water, and sewer utilities that are preparing for execution of significant capital projects. In
discussions with staff, this position has been budgeted at $60,000 annually for the stormwater department
representing approximately one third of the total labor and benefits anticipated.
• Insurance expenses increase 7.5 percent annually.
• General maintenance and contractual expenses increase 5.0 percent annually.
• Utilities, such as power consumption, increase by 10.0 percent in FY 2025 and 5.0 percent annually from
FY 2026 through FY 2028.
• The transfers for General Fund support, Facilities Fund, and IT Systems are increased annually by the 2.5
percent inflationary factor.
• The transfer for Fleet Management increases annually by 10.0 percent.
• A contingency of 5.0 percent of operating expenses, excluding the transfers to other departments, is forecast
each year.
City of Dania Beach / Stormwater Rate Study 10
The results of applying the assumptions noted above to each budget line item are demonstrated on the table below,
as summarized from Exhibit 1.
Description
Personnel
Operations
Total Operating Expense
Table 3:
Operating Expenses
2024
2025 2026
$751,977
$856,900 $899,900
1,348,668
1,321,400 1,365,500
$2,100,645 $2,178,300 $2,265,400
Capital Improvement Plan
2027 2028
$945,100 $992,400
1,412,000 1,460,300
$2,357,100 $2,452,700
The capital expenditures for the stormwater system are based on estimated project costs derived from the City's
capital improvement plan and other City staff -identified projects for FYs 2024 and 2025. The following table
details the planned stormwater capital improvement plan projects and their anticipated funding sources during the
first two years of the Forecast Period:
Table 4: Stormwater Improvement Projects
Description
Timing
Tidal Valves - Stormwater System
2024
NW 2nd Avenue Drainage Pipe Replacement
2024
SW 341 Terrace Drainage Project
2024
SW 52nd Street Drainage Project
2024
SE Drainage Project Phase I
2024
SE Drainage Project Phase II
2025
NW 31st Ave
2025
Gulfstream Rd
2025
Total
Funding Source Project Cost
Operating
$250,000
Operating
2,000,000
Operating
800,000
Operating/Grants
1,200,000
2024 Bonds/Grants
16,815,805
2024 Bonds
16,818,932
2024 Bonds
2,000,000
2024 Bonds
1,750,000
$41,634,737
There are a number of areas in the City with limited stormwater infrastructure which have a history of flooding
concerns and drainage problems. The City has identified several projects, such as the SE Drainage Project, SW 34th
Terrace Drainage Project, and SW 52°1 Street Drainage Project, to address these neighborhood drainage issues
while also improving water quality through the installation of pump stations, drainage wells and piping, swales,
and inlets. Furthermore, the City has identified existing infrastructure in need of improvements, including but not
limited to:
e. replacement of deteriorated piping with more resilient materials;
upgrades to larger pipes to increase the capacity of water that can be collected; and
installation of tidal valves on outfall piping to mitigate against back0ow from canals, lakes, and other
waterbodies.
The City is currently in the process of developing a stormwater master plan which is anticipated to be finalized at
the end of 2024. The master plan will assess the utility's current conditions and identify future projects to address
critical infrastructure needs beyond the immediate needs identified on Table 4 above. The annual stormwater fees
are being set primarily to fund the current projects listed in Table 4, with additional funding generated for future
pay -go projects based on achieving certain financial metrics including debt service coverage. A summary of the
funding sources for the CIP is shown below:
City of Dania Beach / Stor water Rate Study 11
Table 5: Stormwater CIP
Description
FY 2024
FY 2025
Total
Operating
$3,750,000
$0
$3,750,000
2024 Bonds
6,123,800
20,568,900
26,692,700
Grants
11,192,000
0
11,192,000
Total
$21,065,800
$20,568,900
$41,634,700
As shown on the table, the CIP projects currently identified will account for a majority of the 2024 bond issuance
anticipated for $30 million. By issuing $30 million, the City would have additional funds to begin implementing
projects identified in the master plan. Additionally, the City has had recent successes in obtaining grant funding for
stormwater projects and continues to pursue grants as a funding source. Completion of certain capital projects will
also open the City to further grant opportunities. If additional grant funding can be obtained, more pay -go funding
will be available for the City to execute on future master plan projects.
Existing and Proposed Debt
The stormwater system currently has two outstanding State Revolving Fund (SRF) loans, SRF 79102P and SRF
061200, resulting in a total annual principal and interest payment of approximately $64,000 per year. The loans
will mature in FYs 2028 and 2035, respectively. As discussed in the CIP funding section, it is anticipated the City
will issue a revenue bond in 2024 in the amount of $30 million. The bond issuance is slightly greater than the $26.7
million in capital projects shown in Table 5; the availability of an additional $3.3 million in funds will enable the
City to execute future master plan identified projects more quickly. The assumed terms of repayment for the
revenue bond are provided on the following table:
Table 6: Proposed Debt Service Obligations
Description 2024 Revenue Bond
Estimated Project Cost $30,000,000
Principal Amount [1) $30,300,000
Loan Term 30
Interest Rate [2] 4.50%
Annual Debt Service Payment $1,850,400
First Year of Debt Service [3] 2024
[11 Includes 1.0 percent for loan issuance costs.
[21 Estimated.
[31 The first payment is assumed to be 1 /12`", or $154,200, of the
total annual debt service payment due to timing of bond issuance.
(Remainder ofPage Intentionally Left Blank)
City of Dania Beach / Stormwater Rate Study
12
Total Revenue Requirements
Based on the assumptions above, a summary of the assumed annual total revenue requirements over the forecast
period are shown on the following table:
Table 7:
Total Annual Revenue Requirements
Description
FY 2024
FY 2025
FY 2026
FY 2027
Operating Costs
$2,100,645
$2,178,300
$2,265,400
$2,357,100
Existing Debt Service
64,367
64,367
64,367
64,367
Proposed Debt Service
154,200
1,850,400
1,850,400
1,850,400
Total Revenue Requirements
$2,319,212
$4,093,067
$4,180,167
$4,271,867
Less b isc. Revenue
263,900
108,100
126,100
144,300
Net Revenue Requirements
$2,055,312
$3,984,967
$4,054,067
$4,127,567
(Remainder ofPage Intentionally Left Blank)
FY 2028
$2,452,700
64,525
1,850,400
$4,367,625
162,400
$4,205,225
City of Dania Beach / Stannwater Rate Study 13
Section 4 - Revenue Sufficiency
Sufficient revenues are necessary to pay for the continuing operations of the stormwater system providing for
the health, safety and welfare of the community and protection of property. The measure of revenue sufficiency
is demonstrated not only by the ability to meet the annual operating requirements, but also to provide for
ongoing capital asset renewals and upgrades. The initial task in determining revenue sufficiency is to identity
the relative sufficiency of the revenues generated from existing rates to provide for: 1) projected O&M expenses;
2) debt service plus coverage and other covenant requirements; 3) transfers to maintain reserve funds at adequate
levels; and 4) capital improvement expenditures.
Revenue ,Sufficiency Forecast
As outlined on the table below, stormwater rate adjustments are proposed to support fully funding the CIP as well
as providing adequate net revenues each year to meet debt service coverage ratios and maintain targeted minimum
reserve levels.
Table 8: Proposed Rate Adjustments per ESU
Description
FY 2024 FY 2025
FY 2026
FY 2027
FY 2028
Annual Rate per ESU
$60.00 $100.00
$101.00
$102.00
$103.00
Increase ($)
$40.00
$1.00
$1.00
$1.00
Monthly Basis
$5.00 $8.33
$8.42
$8.50
$8.58
Increase ($)
$3.33
$0.09
$0.08
$0.08
The first increase shown for FY 2025 is largely to address the current capital improvement program including
issuance of new bonds. For FY 2026 through FY 2028, the annual rate adjustments are estimated and reflect the
increased need to address operating expense increases as demonstrated on Table 3.
The projected net revenue requirements through FY 2028 for the City's stormwater system funded from rates are
summarized below, as derived from Exhibit 3. As shown by the solid line on the chart, the existing rates will not be
sufficient to meet all revenue requirements, in particular debt service for capital needs. Therefore, it is
recommended the City implement the recommended rate adjustments. This increase will result in annual pay -go
cash of approximately $730,000. The City's strong fund balance coupled with an extra $3.3 million from the bond
issuance will enable the execution of necessary capital improvements and fund approximately $6.3 million in
future projects identified by the ongoing master plan.
City of Dania Beach / Stormwater Rate Study
14
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Figure 1: Financial Forecast
--------------------------
' � 1
i
2024 2025 2026
� Operating Expenses
—Revenues at Existing Rates
Cash Balances
2027 2028
® Debt Service
— — — Revenues at Proposed Rates
The Stormwater system should have adequate cash reserves in order to meet day-to-day funding needs, address
unexpected emergencies requiring immediate financial resources, and have sufficient funds for capital
appropriation. Based on the significant amount of funding needed for the CIP, it is recommended a fund balance is
maintained to equal approximately 50.0 percent of rate revenues. This will allow for a strong financial target,
which is necessary since the utility is capital -intensive and desires to cash -fund projects where possible. The
following table summarizes the projected cash balances for each FY of the Forecast Period based on implementing
the annual rate adjustments as recommended:
Table 9: Projected Year -End Cash Balances at Proposed Rates
Description 2024 2025 2026 2027 2028
Operating Reserve Balance $4,020,288 $4,738,120 $5,474,953 $6,212,086 $6,940,261
Reserve Target (50%of Rate Revenues) $1,512,800 $2,351,400 $2,395,450 $2,432,350 $2,466,700
Debt Service Compliance
In addition to funding the net revenue requirements (i.e., expenditure requirements), the proposed Stormwater rates
must be sufficient to meet the debt service coverage requirements of the City's existing and proposed debt. The
City's outstanding SRF loan agreements require the City to maintain rates adequate to achieve a minimum 1.15
debt service coverage ratio. The debt service coverage ratio is calculated as a ratio of gross system revenues less the
sum of operating expenses and required transfers to debt service payments. For the future revenue bond, it is
assumed the debt service coverage ratio will be 1.20 based on typical senior loan agreements and bond resolutions.
Therefore, with the adoption of the proposed rate increases, the City is anticipated to be in compliance with the
existing and assumed coverage requirements as demonstrated below:
City of Dania Beach / Stomwater Rate Study
15
Description
Net Revenue
Table 10: Debt Service Compliance
2024 2025 2026 2027 2028
$1,188,855 $2,632,600 $2,651,600 $2,651,900 $2,643,100
Senior Debt Service
$154,200
$1,850,400
$1,850,400
$1,850,400
$1,850,400
Subordinate Debt Service
64,367
64,367
64,367
64,367
64,525
Total Debt Service
$218,567
$1,914,767
$1,914,767
$1,914,767
$1,914,925
Senior - Annual Coverage Achieved
Senior - Coverage Target
Subordinate - Annual Coverage Achieved
Subordinate - Coverage Required
7.70
1.42
1.43
1.20
1.20
1.20
16.07
12.15
12.44
1.15
1.15
1.15
Z F 111111111 11111111111111111111111111111111!11!111111111....
1.43
1.42
1.20
1.20
12.45
12.28
1.15
1.15
In order to provide additional information regarding the proposed rate changes, the City's existing and proposed
rates per ESU on a monthly fee basis have been compared with other jurisdictions. This rate comparison, as shown
on Figure 2, includes a number of utilities throughout Florida. It should be noted that funding of stormwater
programs is not equal in all cities. Some cities use stormwater fees for the majority of the funding requirements
related to stormwater improvements, whereas others may supplement stormwater programs with infrastructure
funds or other funding sources and will have the appearance of lower stormwater rates.
Figure 2: Comparison of Residential Stormwater Rates on a Monthly Fee Basis
City of Cooper City
City of Plantation
City of Deerfield Beach
City of Coconut Creek
City of Dania Beach - FY 24 Existing
City of Pompano Beach
City of North Lauderdale
City of Lauderdale Lakes
City of Wilton Manors
City of Dania Beach - FY 25 Proposed
City of Hallandalle Beach
City of Sunrise
City of Oakland Park
City of Miramar
City of Margate
City of Hollywood
City of Coral Springs
City of Tamarac
City of Lauderhill
City of Fort Lauderdale
$3.81
$4.31
$4.77
$4.91
$5.00
l - $5.90
sE $6.00
$6.25
$7.46
$8.33
$8.92
NNW
$9.47
$9.50
$10.00
$10.02
$10.62
$11.16
$13.38
$0.00 $5.00 $10.00 $15.00
$22.65
$23.68
$20.00 $25.00
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City of Dania Beach
2024 Stormwater Rate Study
Exhibit 3: Projected Revenue Requirements
Projected Fiscal Year Ending Sept. 30
Description 2024 2025 2026 2027 2028
Operating Expenses
Debt Service
SRF Loan 2007 SW79102P
SRF Loan 2014 SW061200
Proposed Debt Service
Total Debt Service
Other Expenses
Capital Funded through Rates
Gross Revenue Requirements
Miscellaneous Revenue
Interest Income
Net Revenue Requirements
Revenues from Existing Rates
Revenues from Prior Year Adjustments
Total Current Year Revenue
Percent Adjustment Proposed
Adjustment Proposed
Effective Month
Percent of Current Year Effective
Total Revenue from Current Year Adjustment
Total Revenue from Rates
Total Revenue Surplus / Deficiency
$2,100,645
$2,178,300
$2,265,400
$2,357,100
$2.452,700
$4,267
$4,267
$4,267
$4,267
$4,425
60,100
60,100
60,100
60,100
60.100
154,200
1,850,400
1,850,400
1,850,400
1,850,400
$218,567
$1.914,767
$1,914,767
$1.914,767
$1,914,925
$0
$0
$0
$0
$0
$2,319,212 $4,093,067 $4.180,167 $4,271,867 $4,367,625
$263,900 $108,100 $126,100 $144,300 $162,400
$2,055,312 $3,984,967 $4,054,067 $4,127,567 $4,205,225
$3,025,600 $2,821,700
0
$2.846,100
1.897 400
$2,861,600
1,955,400
$2,873,800
2,011,700
$3,025,600 $2,821,700
$4,743,500
$4,817,000
$4,885,500
66.67%
1.00%
0.99%
0.98%
$40.00
$1.00
$1.00
$1.00
Oct
Oct
Oct
Oct
100%
100%
100%
100%
$1,881,100
$47,400
$47,700
$47,900
$3,025,600 $4,702,800 $4,790,900 $4,864,700 $4,933,400
$970,288 $717,833 $736,833 $737,133 $728,175
Page 1 of 1
City of Dania Beach
2024 Stormwater Rate Study
Exhibit 4: Reserve Balance Forecast
Projected Fiscal Year Ending Sept. 30,
Description 2024 2025 2026 2027 2028
Ooeratino Reserve
Beginning Reserve Balance
$6,800,000
$4,020,288
$4,738,120
$5,474,953
$6,212,086
Operating Surplus/(Deficiency)
970,288
717,833
736,833
737,133
728,175
Bond Funding Reimbursement
0
0
0
0
0
Capital Funding
(3,750,000)
0
0
0
0
Ending Reserve Balance
$4,020,288
$4,738,120
$5,474,953
$6,212,086
$6,940,261
Reserve Target (50% of Rate Revenues) $1,512,800 $2,351,400 $2,395,450 $2,432,350 $2,466,700
Bond Construction Fund
Beginning Fund Balance
$0
$23,876,200
$3,307,300
$3,307,300
$3,307,300
Bond Issuance Funds
30,000,000
0
0
0
0
Reimbursement to Operating Fund
0
0
0
0
0
Capital Funding
(6,123,800)
(20,568,900)
0
0
0
Ending Fund Balance
$23,876,200
$3,307,300
$3,307,300
$3,307,300
$3,307,300
Page 1 of 1