HomeMy WebLinkAboutCOM 0689.004 1996-1998 MARYA KUSAKA ~,~-j OF
_ ~soe +F- CESAR C. PORTUGAL
R ~ '~G COUNT' ENGINEER
f~~„'~ TELEPHONE 241 -6600
N R RUSSELL SUGANO
a 1Q
T w ^P ACTING DEPUT' COUNT' ENGINEER
O~ ~A TELEPHONE 24I-6600
AN EpUAL OPPORTUNITY EMPLOYER
~ COUNTY OF KAUAI
DEPARTMENT OF PUBLIC WORKS
/ ~ ~ DIVISION OF WASTEWATER MANAGEMENT e~~
- / II 4444 RICE STREET ~-`~Y~i
MO'IKEHA BUILDING, SUITE 200 • ` - f' u~-`~+~cii
LIHU'E, KAUAI, HAWAII 96766
January 30,1998 Dare.__.._..-....-__.::.~.;.`..,___~
County Council
Ms. Liana Cox
County of Hawaii
Hawaii County Building
25 Aupuni Street
Hilo, Hawaii 9672()
Dear Ms. Cox:
Subject: Sewer User Charge System Review and Financial Planning Study
As requested in your January 22, 19981etter, enclosed is a copy of the
aforementioned study conducted for sewer rate determination.
If you have any questions, please contact Eric Agena of my staff at 241-6642.
Very truly yours,
f?
i
HARRY F'UNAMURA, Chief
Division of Wastewater Management
Enclosure
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BLACK & VEATCH
r, Veni~~re, Setle J15. Irvmo, 7a61omia 92718-3317 7141 753-0500, Fax 7141 75J-1252
March 31, 1995
Mr. Harry Funamura, Head
Wastewater Section
Department of Public Works
County of Kauai
3021 Umi Street
Lihue, HI 96766
Dear Mr. Funamura:
In accordance with our agreement, we are hereby submitting our Report on the Sewer User
Chazge System Review and Financial Planning Study for the County's Sewer Utility. The
report provides documentation of the study undertaken to develop both a short and long term
financial plan to begin moving the sewer utility toward becoming aself-supporting enterprise
and designing revised sewer rates based on cost of service.
We want to thank you and the County staff for providing us with the extensive background
information and data needed to prepare this report.
We appreciate the opportunity to serve the County in this matter.
Very truly yours,
B CK & V ATCH
acob Boomhouwer, P.E.
Project Manager
Enclosure
Contents
[ntroduction 1
Background I
Purpose 1
Scope 2
Sewer Utility .........................................................3
Summary of Findings 4
Revenue Under Existing Rates 7
Customer Growth .....................................................7
Sewer Service Charge Revenue ............................................7
Capital Improvement Program 10
Existing Facilities 10
Proposed Facilities 10
Sewer Utility Capital Fund 12
Fund Structure 12
Source of Funds 12
Funds on Hand 12
Transfer from the Operating Fund 12
Sewer Assessment Fees 12
Proposed Revenue Bonds IS
Proposed General Obligation (G.O.) Bonds 15
Proposed State Revolving Loans 15
Anticipated Grant Funds/Contributions 15
Interest Income 15
Uses of Funds 15
Major Capital Improvements I S
Bond Reserve Account Requirements 16
Capital Financing Issuance Expense 16
Transfers to the Operating Fund 16
Funds On Hand at Year End 16
Sewer Utility Operating Fund 17
Revenue 17
Sewer Service Charge Revenue 17
Transfer from the General Fund 17
Transfer from the Capital Fund 17
Miscellaneous Income 17
Interest Income From Operations 19
Interest Income From Restricted Reserves 19
Revenue Requirements 19
Operation and Maintenance Expense 19
Debt Service 21
Routine Capital Expenditures 21
Transfers to Capital Fund 21
Indicated Wastewater Service Charge Revenue Adjustments 23
Cost of Wastewater Service Allocations . 25
Test Year 25
Cost of Service to be Allocated 25
Functional Cost Components 25
Allocation To Functional Cost Components 27
Plant Investment and Capital Costs 27
Operating Expense 27
Allocation of Costs To Customer Classes 30
Customer Classifications 30
Units of Service 30
Unit Costs of Service 32
Customer Class Costs of Service 34
Wastewater Rate Adjustments 37
Existing Wastewater Rates 37
Proposed Wastewater Rates 37
Typical Bills 39
Wastewater Assessment Fees 44
Existing Wastewater Assessment Fees 44
Proposed Wastewater Assessment Fees 44
Tables
Table 1 Projected Number of Accounts, Volume, and Revenue 8
Table 2 Existing Sewer Service Charges 9
Table 3 Proposed Major Capital Improvement Program 11
Table 4 Capital Fund Flow of Funds 13
Table 5 Proposed Sources of Funds 14
Table 6 Description of Alternatives 18
Table 7 Historical and Projected Operation and Maintenance Expense 20
Table 8 Projected Staffing Requirements 21
Table9 Annual Debt Service 22
Table 10 Annual Percentage Increase by Alternative . 23
Table 1 I Operating Fund Flow of Funds 24
Table 12 Allocation of Revenue Requirements 26
Table 13 Allocation of Estimated Net Plant Investment 28
Table 14 Allocation of Operation and Maintenance Expense 29
Table 15 Estimated Units of Service 31
Table 16 Wastewater Characteristics 32
Table 17 Development of Unit Costs of Service 33
Table IS Allocation of Costs of Service to Customer Classes 35
Table 19 Comparison of Allocated Costs of Service with Revenue Under Existing Rates 36
Table 20 Proposed Rates and Charges 38
Table 21 Typical Residential Monthly Sewer Bills 40
Table 22 Typical Nonresidential Monthly Sewer Bills 41
Table 23 Comparison of Customer Revenues Under Proposed Rates With Test Year Cost of
Service 43
Table 24 Sewer Utility Treatment Expansion Projects 45
Table 25 Determination of Total Available Capacity 46
Table 26 County-Wide Wastewater Assessment Fee 47
Table 27 Assessment Fee Phase-in 48
Table 28 Wastewater Assessment Fee by Water Meter Size 49
iii
County of Kauai
Report on
Sewer User Charge System Review
and Financial Planning Study
Introduction
Background
The County of Kauai sewer system serves Kapaa, Wailua, Lihue, Hanapepe, Eleele, and Waimea.
As with the other Counties in Hawaii, Kauai has no separate municipal governments. Kauai County
has an elected Mayor with a four year term and a seven member Council with two year terms.
Tourism is Kauai's main source of income. This was adversely affected by Hurricane Iniki in
1992. In addition, the overall economic slow down in consumer spending attributed to recent downturns
in both the United States (particularly California) and world-wide economies have slowed tourism in
recent years. Current trends, however, show a resurgence.
The County's priorities in the coming years include supporting the building of affordable housing.
This policy requires the construction of additional infrastructure to meet these demands. Programs to
expand wastewater treatment facilities aze underway. A major challenge will be to balance the
requirements of expanded infrastructure with the available County revenues. All planned expenditures
will need prioritization to assure that the limited financial resources aze used in the most effective way.
Purpose
The purpose of the sewer user charge system review and long range financial plan is to:
insure compliance with federal and state regulations covering user charges (40 CFR
35.2208);
• analyze and project the County's historical and future revenues and revenue
requirements;
plan for financing of the adopted capital improvement program proposed by the
County;
meet the financial requirements of the new plant expansions and other system
improvements;
• prepare a cost of service analysis;
propose an equitable wastewater rate structure based on proper customer
classification;
develop an equitable wastewater rate structure based on customer water usage;
I
design wastewater rates based on cost of service which will generate adequate
revenues to support revenue requirements;
develop an approach for gradually making the services provided by the Sewer
Utility a self supporting enterprise activity;
develop a computer model for the County to use in updating the wastewater rates;
and
develop aCounty-wide wastewater treatment plant assessment fee.
The first step of the sewer user charge system review is to estimate future revenues of the
wastewater system under existing rates. Projections are then also made for operating expenses and
financing requirements associated with the capital improvement program. The corresponding revenues
are then evaluated to determine if they are adequate to meet the operating expenses and capital
improvement program needs. Six years are shown for planning purposes (fiscal years 1995-2000).
The second step is a cost of service analysis which distributes expenses in accordance with
various customer class demands. This distribution of costs provides for uniform unit costs to customers.
Customer classifications are then assigned costs of service based on their own customer demands or
loadings to the wastewater facilities. The cost of service analysis provides a guide toward making rate
adjustments for each customer class.
From the results of the cost of service analysis, the final step, rate design, is accomplished. We
recommend that residential customers be charged a fixed base charge plus a charge based on metered
water usage, subject to a volume cap. Such an approach more closely corresponds with the cost of
providing service. The billing process must be coordinated with the Department of Water before usage-
based rates can be implemented. The maximum volume cap for residential units is recommended to
be 9,000 gallons per month which assumes a family of three at 100 gallons per capita per day. This
amount is fairly standard and is the same maximum cap used in both Honolulu and Maui. (Honolulu
eliminated its cap last year).
Scope
This study includes the results of analyzing the costs of providing wastewater services by the
Sewer Utility. As discussed earlier, total revenue requirements are developed, allocation of costs to
customer classes is completed with the resulting proposed wastewater rates based on a system of
metered water and metered wastewater usage.
Analyses of historical trends are included which show the number of customers, number of units,
water sales and wastewater flows and strengths. Annual growth projections are included for the study
period.
Revenue requirements include operation and maintenance, existing and proposed debt service
requirements, capital improvement projects, and equipment replacement reserves. Changing conditions
such as additional facilities, recognition of growth, and nonrecurring maintenance expenditures are
recognized. Inflation for ongoing expenditures as well as capital improvement projects is included to
reflect cost escalation.
2
The cash flow analyses compare projected revenue requirements with projected revenue under
existing rates, and indicate the level of needed revenue adjustments for several alternatives. The
proposed rates have been designed to provide sufficient revenues to meet projected system requirements
for the selected alternative.
Sewer Utility
This study has been completed for the Department of Finance and Department of Public Works.
The services provided by the Sewer Fund are those of a typical public utility and therefore we use the
term "Sewer Utility" in this report. Such terminology is consistent with the objective of making the
activities of the Utility entirely supported by charges levied for services rendered.
3
Summary of Findings and Recommendations
Although a slow down in growth has occurred, the study provides for continued increase in the
number of residential customer units for sewer service. This report uses a conservative, yet realistic,
approach to recognize the slower economy and help assure that adequate revenues will be generated.
If more growth occurs than projected, higher revenues will result. If a more optimistic estimate were
used but growth did not materialize, revenue shortfalls would be the result.
The increase in customers resulting from general system growth is projected to add approximately
60 customers a year during the 1995 to 2000 fiscal year period. The projected residential growth rate
vazies depending on the customer category. Below are the annual percentage growth rates used for the
various customers:
Annual
Customer Cateeorv Growth Rate
Residential 2.0 percent
Other/Commercial 2.0 percent
Hotels/Motels/Resorts 0.0 percent
Private Septage Haulers 0.0 percent
In addition to general system growth, three proposed capital improvement projects will add
approximately 380 new customers to the system by extending sewers into currently unsewered areas.
With all customer categories included, the total number of projected accounts ranges from 3,074 in 1995
to 3,786 by the year 2000.
The County's projected Capital Improvement Program (CIP) for 1996 through 2000 totals
$44,353,200. The projects include improvements at the five sewerage system service areas of
Hanapepe-Eleele, Wailua-Kapaa, Waimea, Lihue, and Poipu-Koloa. Projects currently under
construction are not included in the plan since they are already funded.
Projects identified in the Hanapepe-Eleele service azea total $5,951,900 and include the Eleele
collector sewer rehabilitation and construction of Hanapepe collector sewers. Approximately 120 new
users will be connected.
Wailua-Kapaa improvement projects total $12,802,700 and include the construction of the Kapaa
town collector sewers. Approximately 180 new users will be connected in the Kapaa area.
Projects budgeted for Waimea total $15,755,500 and include the STP expansion and rehabilitation
of the Waimea collector sewer.
The improvements in the Lihue service area total $7,804,300 and include rehabilitation of the
Lihue collector sewer and the construction of the Kupolo collector sewer. The Kupolo collector sewer
will add approximately 80 new users to the system.
Site acquisition for a treatment plant and pump station and sewerage system design are among
[he projects planned in the Poipu-Koloa service area. Projects total $2,038,800.
Proposed additional financing for the capital improvement projects includes revenues from sewer
assessment fees totaling $2,204,000 for the study period. The revenues are based on a phased-in
approach to achieve the full level of the assessment fee by the year 2000 and includes the new users
4
being added to the system due to the Hanapepe, Kapaa, and Lihue collector sewer projects. Because
this study has developed a plan to eventually make the utility self-supporting, use of revenue bonds for
capital financing is recommended for projects in fiscal year 2000 and forward. Revenue bonds would
not be included in the County's debt limit thereby enhancing the ability of the County to issue General
Obligation Bonds for other County purposes. General Obligation Bond financing should continue to
be used until such time as sufficient revenues are generated from the utility to support its debt service
and coverage requirement for revenue bonds. A total of $18,200,000 in General Obligation Bonds and
$6,000,000 in revenue bonds have been planned throughout the study period. The results of the study
would not be materially different if the County continued funding all improvements with General
Obligations Bonds.
State Revolving Fund (SRF) loans totaling $18,610,000 in financing have been assumed for the
study period.
Operation and maintenance expenses are projected to increase between 6 and IS percent per year
throughout the study period. The increases are slightly higher in the first few years mainly due to
filling vacant staff positions and adding additional manpower needed for the plant expansions.
Administrative costs increase in 1996 to account for approximately $200,000 of indirect cost incurred
by the Finance Department on behalf of the sewer enterprise. Costs for the Department of Water to
do the billing have not been specifically included but are assumed to have a net effect on the casts
incurred from the finance department.
DOH and EPA regulations mandate that an adequate level of reserve funds be provided and set
aside for equipment replacements. Based on an analysis of the utility's fixed assets, we estimate that
$175,000 per year beginning in fiscal yeaz 1997 is an appropriate level of equipment replacement
reserves. The funds are to be used annually, as needed, to replace plant equipment when it wears out.
If the funds are not spent in a given year, they should be carried over in a reserve for use in future
years.
Required revenue increases throughout the study period are based on an analysis of the sewer
utility's revenues and revenue requirements. Several alternative financing strategies were evaluated and
presented to the County, ranging from continuance of the current rate setting approach to a full
enterprise fund operation.
After evaluating the alternatives, the County selected an altemative whereby OM&R costs will
be fully recovered through user rates in each year and existing SRF costs will be fully recovered by the
end of the study period. This altemative will still require $20,518,400 in support from the General Fund
during the study period.
A cost of service approach is used to develop rates for wastewater service. This means that
customers are charged based on their proportional usage of facilities. The proposed rates are consistent
with USEPA guidelines and recognized rate industry standards as described in the Wastewater
Environment Federation (formally Wastewater Pollution Control Federation) rate manual. Rates are
developed using uniform unit costs. These are applied to loadings and demands for service from each
customer category. The rate schedule which then follows is based on a uniform cost of service and
recognizes loadings from each customer class. All the customer classifications have been left the same
for this sewer user charge update, only the rates have changed. We have added non-residential dual
meter rates to the user classifications for those users who elect to have separate irrigation meters.
5
The proposed rate schedule consists of a service charge or base charge plus a volume charge for
each customer class. Our approach is to convert the residential flat rate to a base chazge plus volume
charge. The net effect is [o lower monthly cost to low volume users next year. Thereafter, we
recommend holding the service charge constant through the year 2000. The result will then be minimal
monthly increases for low volume users. While this approach is not a true lifeline rate based on
external measures such as family income, etc., it is much simpler to administer and will satisfy EPA
user charge guidelines. A billable volume cap of 9,000 gallons per month per unit is recommended for
residential customers. We suggest the cap be increased over time, however, a low initial cap avoids
large increases to high volume users. Since this rate structure will require billing by the Department
of Water, we have also developed a residential flat rate for fiscal year 1996 for implementation while
transitioning to the volume based structure.
Uniform County-wide wastewater treatment facility assessment fees have been developed and are
an important element in deriving revenues for the capital improvement program. This study found that
wastewater facility assessment fees totaling $3,900 per single family unit could be supported.
Commercial customers would pay $9.76 per gallon per day for their projected flow. At the County's
request, we have developed afive-year phased-in approach to assessing the fees. We recommend
separate collection system assessment fees be developed for each service azea. Development of those
fees is not part of this report.
6
Revenue Under Existing Rates
Development of projected revenues under existing rates provides the benchmark upon which [o
evaluate the need for revenue adjustments throughout the six year study period. Utility revenue is
primarily obtained from charges for service. Such revenue is a function of the number of customers
served, the quantity of metered water or wastewater usage, and the level of current rates.
Customer Growth
Table I presents projections of the number of sewer customers, a combination of wastewater
volume for metered wastewater customers and water volume for all others (1,000 gallons), and revenue
under existing rates for the study period. Growth estimates vary depending on the customer category.
We have assumed a two percent (2%) annual rate in the number of residential and commercial
customers. To be conservative and recognizing economic slowdown, we have assumed no growth in
the number of hotels and resorts connected to the sewer system nor any additional metered wastewater
customers. Private septage haulers were also assumed to have no growth. In addition to general system
growth, three proposed capital improvement program projects (discussed in more detail later) will add
approximately 380 new customers to the system by extending sewers into currently unsewered areas.
As shown in the table, we project the number of sewer utility customers to increase from 3,074 in 1995
to 3,786 in the year 2000.
Volumes shown in Table 1 are broken down into residential and non-residential. Residential
volume represents total water sales to residential users of the sewer system. The amounts were obtained
by assuming an average usage of 150,000 gallons per unit per year for both single family and
multifamily. We have not differentiated between single and multifamily units because we have no data
verifying a difference. Actual water and wastewater volumes for 1994 for non-residential customers
were provided by the County and have been used to project future sates. We have assumed that the
Westin Hotel (Marriott) will be back in operation in the summer of 1995 at approximately 75 percent
of its previous usage. Our projections do not include a return to operations by the Cocoa Palms Resort.
Sewer Service Charge Revenue
Revenue under existing rates is obtained by applying the current rate schedule to the projected
number of customers or units for residential classifications, and to water or wastewater volume for non-
residential customers. As shown in Table 1, revenues under existing rates are projected to increase from
$2,256,500 in 1995 to $2,892,000 in 2000. Single and multifamily residential sewer customers currently
pay a flat monthly charge of $24.00. The volume charge for metered water customers is $3.87/1,000
gallons for industrial customers; $2.39/1,000 gallons for hotels/motels/resorts; and $2.12/1,000 gallons
for all other commercial customers on metered water. The volume charge for metered wastewater
customers is $5.44/1,000 gallons for industrial customers; $4.48/1,000 gallons for hotels/motels/resorts;
and $3.10/1,000 gallons for all other commercial customers on metered wastewater. Private haulers for
cesspool disposal at R.T.S pay $5.00/1000 gallons and private haulers for septage disposal (WWTP)
and waste activated sludge pay $30.00/1,000 gallons. A summary of all existing monthly wastewater
charges is shown in Table 2.
7
TABLE 1
SEWER UTILITY
PROJECTED NUMBER OF ACCOUNTS, VOLUME, AND REVENUE
(1) (2) (3) (4)
Projected
Projected Projected Total Revenue
Fiscal Average Volume (a) Under
Year Ended Number of Existing
June 30 Accounts Residential Non-Residential Rates
1,000 gallons $
1995 3,074 528,750 535,616 2,256,500
1996 3,134 538,350 689,116 2,624,100
1997 3,196 550,350 694,616 2,658,800
1998 3,561 611,100 701,216 2,789,400
1999 3,712 636,300 707,816 2,851,800
2000 3,786 649,950 714,416 2,892,000
(a) Water volume for residential and water or wastewater volume for nonresidential.
8
TABLE 2
EXISTING SEWER SERVICE CHARGES
Volume Chazee
Customer Class Flat Fee/Fixed
Chazge
($/month) Metered Metered
Water Wastewater
($/1,000 Gallons) ($/1,000 Gallons)
Residential
Single Family 24.00
Multi-Family 24.00
Non-Residentia(
Industrial 3.87 5.44
Hotels/Motels 2.39 4.48
All Others 2.12 3.10
Septic Disposal Haulers
R.T.S 5.00
WWTP 30.00
WAS 30.00
9
Capital Improvement Program
Existing Facilities
The County provides wastewater treatment facilities, pumping stations, and laterals [o serve
wastewater customers. A total of four wastewater treatment plants currently provide service for the
County. The following list summarizes the facilities, their locations and existing plant capacities.
Wastewater Treatment Plant Existing WWTP Design
Facility Capacity (MGD)
Eleele WWTP 0.4
Lihue WWTP I.5
Waimea WWTP 0.3
Wailua WWTP I.5
Proposed Facilities
Table 3 presents the proposed capital improvement program (CIP) for the sewer utility for fiscal
yeaz 1996 through fiscal year 2000. The program identifies approximately $44 million of improvements
not including the expansions currently under construction at the Eleele and Lihue wastewater treatment
plants. All costs include inflation allowances estimated at four percent (4%) per year.
We have grouped the improvement projects into the five sewerage system service areas of
Hanapepe-Eleele, Wailua-Kapaa, Waimea, Lihue, and Poipu-Koloa. Following is a brief description
of the improvements for each area with the corresponding project costs for the study perjod.
Hanaoeoe-Eleele Seweraee Svstem -The improvements in this area include rehabilitation of the
existing collector sewer lines within the older sections of Hanapepe and Eleele, and construction of the
Hanapepe Heights and Hanapepe Town collector sewers to provide service to those areas not presently
served. Approximately 120 new users will be connected. The projects total $5,951,900.
Wailua-Kaoaa Seweraee Svstem -The improvements in this area include the construction of the
Kapaa town collector sewers, effluent disposal improvements, and a new wastewater facilities plan
update for Wailua-Kapaa. Approximately 180 new users will be connected in the Kapaa area. The
projects total $12,802,700.
Waimea Seweraee Svstem -The improvements in this area include the STP expansion plans and
construction, effluent disposal project, sludge holding tank, and the rehabilitation of the Waimea
collector sewer. The timing of the STP expansion, currently planned for 1998, is dependent upon
development. The projects total $15,755,500.
Lihue Seweraee Svstem -The improvements in this area include an effluent disposal facilities
plan, construction for the Lihue Industrial Parks, rehabilitation of the Lihue collector sewer, and
construction of the Kupolo collector sewer. Approximately 80 new users will be connected to the
system. The projects total $7,804,300.
Poipu-Koloa Seweraee Svstem -The improvements in this area include STP and SPS site
acquisition, Poipu-Koloa sewerage system design, and facility planning. The projects total $2,038,800.
10
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11
Sewer Utility Capital Fund
Fund Structure
To facilitate sewer utility financial analysis two funds have been established. The first is a
Capital Fund, used to finance the construction of utility capital improvements. The second is an
Operating Fund. The Operating Fund is used to meet annual obligations of the utility including annual
capita( costs such as debt service. The purpose of the two Funds is to clearly show capital monies (such
as SRF loans, bond proceeds, etc.) are used solely for the planning, design and construction of facilities,
not annual operations. Similarly, through the Operating Fund it can be shown that annual revenues are
sufficient to meet annual operation, maintenance and replacement costs.
To provide for the continuing capital needs of the County, adequate financing sources must be
available to the utility. A proposed plan for financing the CIP shown in Table 3 is summarized in this
section and shown in Table 4. Additional detail, showing the proposed funding source for each project,
is shown in Table 5.
Source of Funds
Obligations of the sewer utility Capital Fund can be met from a combination of available funds
on hand, transfers from the Operating Fund, sewer assessment fees, proposed bonds and loans,
anticipated grant funds/contributions, and interest income.
Funds on Hand
The Eleele expansion constructed in fiscal year 1994 was funded from revenues remaining from
the 1992 G.O. Bond issue. The Lihue expansion was funded with a State Revolving Loan. Funds for
both these projects were assumed to be spent during fiscal years 1994 and 1995, leaving a zero
beginning balance for fiscal yeaz 1996.
Transfer from the Operating Fund
No transfers are planned to occur from the Operating Fund based on this study. The Capital
Fund is solely supported from capital related revenue sources. If the Operating Fund had excess
revenues, they could be made available to finance capital improvements. There are no excess operating
funds projected during the study period.
Sewer Assessment Fees
Revenues generated from the proposed new County-wide sewer assessment fees (discussed in
more detail later) for wastewater treatment capacity are shown in this revenue category. These revenues
are available to fund the capital projects listed in [he capital improvement program. Our analyses
indicates that a charge of $3,900 for a new single family dwelling could be supported and we have
assumed aphased-in approach to reach the full charge by fiscal year 2000. (discussed in more detail
later). Non-residential new connections would pay proportionally greater amounts. We estimate annual
revenues based on the phased-in amount and 60 new connections per year. Revenues generated from
new customers resulting from the sewer extension projects in the CIP are included for a total of
$2,204,000 during the shady period.
12
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13
TABLE 5
PROPOSED SOURCE OF PROJECT FUNDING
Year/ Revenue G.O. SRF
Description of Project Bonds Bonds Loan
1996
Eleele Collector Sewer Rehab 0 1,081,600 0
Kapaa Town Collector Sewer Plans 0 273,400 270,400
Waimea STP Expansion Plans 0 378,550 378,550
Waimea Effluent Disposal (Construction.) 0 1,081,600 0
Lihue Facilities Plans -Effluent Disposal 0 540,800 0
Lihue Industrial Parks, Unit 1 0 757,100 0
Poipu-Koloa STP & SPS Site Acquisition 0 649,000 0
Poipu-Koloa PH 1 Design 0 757,100 0
Subtotal 1996 0 5,516,150 648,550
1997
Wailua-Kapaa Effluent Disposal 0 562,450 562,450
Waimea Headworks 0 393,700 393,700
Waimea Collector Sewer Rehabilitation 0 2,249,700 0
Lihue Effluent Disposal 0 899,900 899,900
Subtotal 1997 0 4,105,750 1,856,050
1998
Hanapepe Collector Sewer (Construction) 0 2,339,700 0
Kapaa Town Collector Sewers (Construction) 0 2,632,175 7,896,525
Waimea STP Expansion (Construction) 0 2,719,925 8,159,775
Kupolo Collector Sewer (Plans) 0 331,000 0
Subtotal 1998 0 8,042,800 16,056,300
1999
Wailua-Kapaa Facilities Plan 0 608,300 0
Kupolo Collector Sewer (Construction) 0 1,825,000 0
Subtota11999 0 2,433,300 0
2000
Hanapepe Town Collector Sewer (Construction) 2,530,600 0 0
Lihue Collector Sewer Rehab 2,530,600 0 0
Poipu-Koloa Facilities Planning 632,700 0 0
Subtota12000 5,693,900 0 0
14
Proposed Revenue Bonds
The County has traditionally funded local costs through the sale of G.O. Bonds. However, once
the sewer utility is operating as an enterprise fund, it will be possible to issue revenue bonds for capital
improvements. Although issuance of revenue bonds may cost more than G.O. Bonds, they have the
advantage of not counting toward the County's bonded debt capacity. Revenue bonds require additional
issuance cost and establishment of debt service reserves. Those costs are indicated to be financed with
the bond proceeds. The financing plan shown in Table 4 assumes revenue bonds totaling $6,000,000
in fiscal year 2000 will be issued to finance system improvement projects such as sewer rehabilitation
and effluent disposal.
Proposed Genera/ Obligation /G.O1 Bonds
We have assumed that G.O. Bonds totaling $18,200,000 will be used to finance the capital
improvements until such time as the utility generates sufficient revenues to cover the additional issuance
costs, reserve requirements, and debt coverage requirements. Once the utility becomes self-supporting,
we recommend revenue bond financing for capital improvements.
Proposed State Revolving Loans
The Hawaii Department of Health (DOH) currently has limited funds available for the SRF.
Kauai is fortunate to have received such funding for the Kapaa sewer line and Lihue expansion. SRF
money is generally limited to projects designed to correct NPDES Permit violations or address potential
public health concerns. Therefore, we have assumed such funds would not be available for sewer
rehabilitation projects. Revenues from new SRF loans totals $18,610,000 for the study period.
Anticipated Grant Funds/Contributions
The Hanapepe-Eleele WWTP expansion received $2 million in grant funding in fiscal year 1994.
We do not anticipate further grant funds or contributions.
/merest /ncome
Interest income is generated from the investment of available monies in the sewer utility Capital
Fund. An average annual interest rate of 3.5 percent is assumed. The estimated earned interest in this
fund is nominal.
Uses of Funds
Capital funds on hand each fiscal year are used to help fund the projects in the capital
improvement program. Analysis of the sources and uses of sewer capital funds during the six-year
study period is summarized in this section and shown in Table 4.
Major Capita/ /mprovements
The major capital improvements shown on Line l l are the same total as shown in Table 3.
These major capital improvements exclude the routine capital improvements which are found in the
Operating Fund of the sewer utility.
15
Bond Reserve Account Requirements
A bond reserve account deposit is shown for the proposed revenue bonds to be issued in fiscal
year 2000. The bond reserve account must always be at the maximum annual debt service for all
outstanding revenue bonds. When additional debt is issued, the additional bond reserve account deposit
is added to the existing bond reserve account. The proposed revenue bonds are estimated to be issued
at 6.75 percent annual interest rate. The term of the bonds is 20 years. The bond reserve account
requirement is $555,400 in fiscal year 2000. Note that the bond reserve account must remain as an
untouched reserve due to bond requirements. Monies in the account can only be used to make the last
yeaz's debt service payment for each bond issue.
Capita/ Financing /ssuance Expense
The proposed revenue and G.O. bonds have issuance expenses associated with them. The
issuance expenses are assumed to be 1 percent of the total bonds. Revenue bond issuance expense is
shown in the same fiscal yeaz as the bonds are issued and total $60.000. We have assumed that the
County will absorb the issuance expense for G.O. bonds.
Transfers to the Operating Fund
Revenues that aze in excess of capital improvement needs can be transferred to the operating fund
to aid in paying annual capital costs and equipment replacement requirements. We have assumed no
transfers to the Operating Fund.
Funds On Hand at Year End
Table 4 shows a projected Capital Fund balance by the year 2000 of $52,600. The fund balance
ranges from a low of $34,900 in fiscal year 1996 to a high in 1999 of $124,800. The analysis is based
on adopted capital improvement projects and financing assumptions for 1996 through 2000.
We suggest that the County annually review and update the projected CIP. Estimates shown are
based in most cases on estimated CIP costs for similaz projects and will need to reflect any changed
conditions. The County has been provided a computerized financial planning and rate model to
facilitate this task.
16
Sewer Utility Operating Fund
To provide for the continued operation of the sewer utility on a sound financial basis, annual
revenue must be sufficient to meet annual revenue requirements. This section of the report analyzes
projected sewer utility revenues and revenue requirements during the six year study period. Revenue
increases needed to meet future revenue requirements are also set forth. These revenue increases are
based on an analysis of the sewer utility Operating Fund. These analyses also facilitate evaluation of
alternative financing strategies, a number of which will be presented.
Revenue
Revenue for the sewer utility Operating Fund is derived from sewer service charges, transfers
from the General Fund in support of the sewer enterprise, transfers from the Capital Fund (whenever
excess revenues exist), miscellaneous income, interest income from operations, and interest income from
restricted operating reserves.
Sewer Service Charge Revenue
Sewer utility revenue is derived principally from sewer service chazges. Estimates of future
wastewater service chazge revenue are based on an analysis of sewer usage for 1994 and projected
growth in customers. Total revenue under existing sewer service charges is projected to increase from
$2,256,500 in 1995 to $2,892,000 in 2000.
Transfer from the Genera/ Fund
Transfers from the General Fund is a vaziable to make the sewer enterprise whole when sewer
service chazge revenue is insufficient to meet all costs. The amount of support required during the
study period is dependent upon the financing strategy alternative. Table 6 describes each alternative
evaluated and shows the General Fund support required for each. The selected altemative requires
$20,518,400 in General Fund support during the study period.
Transfer from the Capita/ Fund
No transfers from the Capital Fund are assumed during the study period.
Misce//aneous /ncome
Miscellaneous income reflects chazges for cesspool disposal at the Lihue (R.T.S) for private waste
haulers. Revenues from this source have been estimated at $2,000 per year for fiscal year 1995 and
$1,000 per year [hereafter.
17
r,
TABLE 6
DESCRIPTION OF ALTERNATIVES
Alternative Sewer Rate Phasing Support From
Revenue Pays GENERAL FUND
1 OM&R Only None $24,829,500
2 OM&R, Routine None $17,976,700
Capital, and Existing
SRF
2A OM&R, Routine Uniformly to yeaz $19,705,800
Capital, and Existing 2000
SRF
3 OM&R, Routine None $13,826,200
Capital, Existing SRF,
and New SRF
3A OM&R, Routine Uniformly to year $16,467,400
Capital, Existing SRF, 2000
and New SRF
4 OM&R, Routine None $7,153,700
Capital, Existing SRF,
New SRF, and New
Bonds
4A OM&R, Routine Uniformly to year $11,473,100
Capital, Existing SRF, 2000
New SRF, and New
Bonds
5 OM&R, Routine None $1,137,500
Capital, Existing SRF,
New SRF, New Bonds,
and Existing G.O.
Bonds
SA OM&R, Routine Uniformly to year $8,583,500
Capital, Existing SRF, 2000
New SRF, New Bonds,
and Existing G.O.
Bonds
l8
r
/merest /ncome From Operations
Interest income is generated from the investment of available monies in the Operating Fund. An
average annual interest rate of 3.5 percent is assumed.
/nterest /ncome From Restricted Reserves
The interest income earned from restricted reserves comes from the revenue bond reserve
account. The annual interest income is based on an assumed annual average interest rate of 3.5 percent.
Revenue Requirements
Revenue requirements for the sewer utility Operating Fund include operation and maintenance
expense and annual capital related expenditures.
Operation and Maintenance Expense
Projection of annual operation and maintenance costs requires consideration of the need for
additional personnel, annual replacements as defined by DOH and EPA, interdepartmental costs, and
cost escalation due to growth and inflation. Table 7 presents the results of the analyses for the six year
study period.
For purposes of our study, costs have been grouped into eight cost centers: the four wastewater
treatment plants; administration; collection system maintenance; centralized plant maintenance; and
laboratory. Fiscal yeaz 1995 and 1996 budgeted staff personnel have been assigned to these cost
centers. Table 8 shows the number of budgeted personnel by cost center and the projected increases.
Staff increases at the WWTPs reflect expansion of those facilities and the corresponding need for
personnel to operate them. Similarly, plant maintenance is indicated to increase in order to properly
maintain the existing and new facilities. Increases in administrative personnel aze necessary to supervise
the additional maintenance crews and provide engineering and administrative support for the utility.
Current Expenses are comprised of utilities (electric and water), chemicals, and miscellaneous
materials and supplies. Fiscal year 1995 and 1996 budgets were used for OM&R. Far future years,
electric, water and chemical costs have been projected to increase six percent (6%) per year to reflect
inflation of four percent (4%) and growth of two percent (2%). All other costs have been increased for
inflation only. Administration costs increase in 1996 to account for approximately $200,000 of indirect
costs (billing, accounting, finance, etc.) incurred by other departments on behalf of the sewer enterprise.
DOH and EPA regulations require the inclusion of replacements in operation and maintenance
expense. Replacements are defined as those equipment expenditures necessary during the life of
WWTPs to maintain their effective operation. Based on our analysis, we estimate that an appropriate
level of expenditures for replacements would be $175,000 per year beginning in fiscal year 1997. The
replacement reserve was estimated using the utility's fixed asset listing. We assumed 25 percent of
treatment plant costs and 25 percent of pumping stations are equipment with a 15 year life. We used
25 percent of the original cost for depreciation and annual replacements were estimated at 6.67 percent
of the depreciated value. If funds are not spent in a given year they should be carried over in a reserve
such that sufficient funds are available in those years when major equipment needs to be replaced.
Total operation and maintenance expense, including replacement reserves, is projected to increase
from $2,185,200 in fiscal year 1995 to $3,842,600 by 2000.
19
K
TABLE ]
SEWER UTILITY
HISTORICAL ANO PROJECTED OPERATION AND MAINTEIUNCE E%PENSE
111 121 (3) Idl (51 BI
fiubgel Bu0ge1 PmjecleD
una - - -
Np. ACCpunt Title 1995 1998 199] 1999 1999 2000
_ $ $ $ $ $ 6
I Hanalxpe-Eleale Sewerage Syalem
2 Labor 106.500 111.]00 154,900 161,100 209A00 21],600
3 Cunenl Expereas 134.]00 140.200 146,800 19,400 166,900 1]fi.800
a Subtotal 2dt$00 251.900 303,500 318.500 3]fi.200 394.800
5 Walua-Kapae Seweage System
fi Labor 168,100 1]6,300 163.300 190.]00 199,300 20Q200
] Curtmt Expenses 151.100 155.900 1135.200 1]5.100 165.500 196.800
6 6u0tptal 318,200 332,200 3a8,500 365,900 383.800 402,900
9 Waimea Sewerage System
10 Labor 103700 109,]00 113,100 11 ],fi00 122.300 169,600
I1 Curtain Expenses 59,900 fi1,600 65.300 69,100 ]3,200 ]],800
12 Subtotal 163.500 1]0,300 1]8,400 198,]00 195,500 24],200
13 Libpe Sewerage System
td Labor 169,100 1]fi,300 220.000 228.800 23],900 24].500
15 CurtenlEryemes 2M,200 275,500 292.000 309.d00 328.000 3d],800
16 Subtotal 440,300 d5L800 512.000 538.200 585.900 595,100
I] AEminiatrali0n
18 Labor 313,800 338,800 490,300 fi55.600 ]9,800 945,500
19 Cunenl Expenaes 124,300 233.000 2d2,300 252.000 2fi2,000 2]2.500
20 Subtotal a3],900 569,900 ]32.800 90],800 t,019.fi00 1,218,000
21 Cptlectlon System Mmntananca
22 Labor 101,500 109,600 114,000 118,500 123,300 128,200
23 Curtern Expenses 124,100 119,100 125,800 132,800 160,300 148.200
24 5uD1ola1 228,800 228.700 239,800 251,300 263,600 2]fi,40U
25 Plant MVnlenanca
28 Labor 110,300 115]00 1fi0,400 250.300 303.]00 315.800
2) Cunenl Erpensas 180,100 120,300 125,100 130,100 135,300 140,]00
28 6uDlolal 290,]00 238,000 285,500 380,400 639,000 456.500
29 Laboratory
30 labor 9,000 6t,0pp 63,40p fi6.000 68,600 ]1.300
31 Curtant Expereas B,B00 4,500 4,000 5,100 5.400 5,]00
32 SYblotal 83,900 fi5,500 68.200 ]1,100 ]d,000 ]],000
33 Total Operation and Mantenance 2,185,200 2.306,200 2.668.500 3.019,600 3.317.800 3.86].600
3a Replacement Reserve 0 0 1]5,000 1]5.000 1]5.000 1]5.000
35 Total Openabon, MainLfl Rplml 2,185,200 2,306,200 2.943,500 3,194,600 3A92.600 3,842,600
36 Routine Capilel Outlay 48,000 46,300 65],800 25,000 15,000 150,000
37 Total OMflR anb Routine Capital 2,231,200 2,352,500 3,301,300 7.219,800 3.50],600 3,992,600
20
TABLE 8
PROJECTED STAFFING REQUIREMENTS
Cost Centers 1995 1996 1997 1998 1999 2000
Hanapepe-Eleele 3 3 4 4 5 5
Wailua-Kapaa 5 5 5 5 5 5
Waimea 3 3 3 3 3 4
Lihue 5 5 6 6 6 6
Administration 5 ~ 7 9 10 12
Collection System Maint 3 3 3 3 3 3
Plant Maintenance 3 3 4 6 7 7
Laboratory 1 1 1 1 ] I
Total 28 28 33 37 40 43
Debt Service
Annual debt service and SRF loan repayments include existing and proposed requirements. Table
9 summarizes the annual requirements during the study period.
The level of existing County G.O. debt service allocated to the sewer utility is based on an
analysis of disposition of proceeds from past issues. We found that approximately 40 percent of the
1988 bond issue (since refinanced) was for sewer improvements. About two thirds of the 1990(1992)
bond issue has been used or will be used for sewer improvements. Existing SRF loan repayments
consist of three loans: I) the Kapaa sewer interceptor; 2) the Kapaa sewer change order No. 9; and 3)
the Lihue expansion. Payments on the Kapaa intercepter are scheduled to begin April, 1996. Payments
on the Kapaa change order are scheduled to begin December 1995, and payments on the Lihue SRF
loan are scheduled to begin March, 1995. Proposed G.O. and Revenue Bond debt service is based on
the timing and issue amounts for such bonds shown in Table 4.
Routine Capita/ Expenditures
Routine capital outlays are for additions and replacement of items such as furniture and fixtures,
vehicles, computers, and specialized tools and equipment. The projected expenditure stream varies over
the study period to reflect additional equipment needs for new maintenance crews, aone-time vehicle
expense, aone-time expense at the Lihue WWTP, and miscellaneous light equipment.
Transfers to the Capita/ Fund
No transfers to the Capital Fund have been assumed.
21
TABLE 9
ANNUAL DEBT SERVICE
Year Existing SRF Loan Proposed Debt Total
G.O.Debt
Existing Proposed G.O. Revenue
1995 1,137,500 508,700 0 0 0 1,646,200
1996 1,134,100 1,286,500 45,700 490,100 0 2,956,400
1997 1,133,900 1,262,800 176,600 853,100 0 3,426,400
1998 1,250,300 1,262,800 1,309,400 1,470,300 0 5,292,800
]999 1,248,500 1,262,800 1,309,400 1,651,800 0 5,472,500
2000 1,249,400 1,262,800 1,309,400 1,651,800 555,400 6,028,800
Total 7,153,700 6,846,400 4,150,500 6,117,100 555,400 24,823,100
22
- Indicated Wastewater Service Charge Revenue Adjustments
To provide for the continued operation of the sewer utility on a sound financial basis, revenue
must be sufficient to meet revenue requirements. In addition, revenues should be sufficient to maintain
an adequate Operating Fund balance estimated at about 45 days of annual operating expense, which is
a standard used for working capital allowances.
As previously shown in Table 6, five possible alternative strategies have been evaluated ranging
from continuance of the current rate setting approach to full enterprise fund operation whereby all costs
are met through rates and charges for services. More possibilities exist, however, they would only be
a vaziation of the rate implementation, not the overall objective. Table 10 shows the annual adjustments
in revenues that will be required to meet the objectives of each alternative.
TABLE 10
ANNUAL PERCENTAGE INCREASE BY ALTERNATIVE
Alternative
Year 1 2 2A 3 3A 4 4A 5 SA
1996 0 40.0 14.5 45.0 19.5 64.0 26.0 ] 06.0 29.5
1997 7.5 21.0 14.5 25.0 19.5 30.0 26.0 24.0 29.5
1998 7.5 0 14.5 15.0 19.5 22.0 26.0 20.0 29.5
1999 7.5 0 14.5 2.5 19.5 5.0 26.0 3.0 29.5
2000 7.5 7.0 14.5 6.5 19.5 11.0 26.0 10.0 29.5
As a minimum, the County must adjust sewer service charges to recover OM&R costs as
presented in Alternative 1. DOH and EPA Rules and Regulations require such costs be paid by system
users. Beyond that, it is a policy decision as to the level of annual capital costs, currently the obligation
of the County General Fund, which are to be met in the future from sewer service charges. Our
recommendation is that at least OM&R, routine capital, and SRF loans should be repaid from sewer
service charges. Ideally, all costs would be met from sewer service charges such that only the users
of the system pay for its costs. To accomplish that objective, however, will require five years of
significant rate adjustments.
Afrer evaluation of the five alternatives; the County selected an alternative whereby OM&R costs
will be fully recovered through user rates in each year and existing SRF costs will be fully recovered
through user rates by the end of [he study period. Under this alternative, rates will need to increase 14
percent in fiscal year 1996 and then 12 percent annually throughout the remainder of the study period.
This alternative will require $20,518,400 in support from the General Fund. Table I1 presents the
results of the cash flow analyses using the selected alternative.
23
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24
Cost of Wastewater Service Allocations
As the basis for developing an equitable wastewater rate structure, the utility's total cost of
service is allocated to the various customer classes according to the service requirements of each class.
Allocation of the total cost of service to each class takes into account each customer classification's
wastewater volumes and strengths. The cost of service assumptions, methodology, and allocations used
for this study are discussed below.
Test Year
Cost of service allocations are made for a test yeaz considered representative of the period
resultant rates are expected to be in effect. Fiscal year 1996 is selected as the test year for presentation
in this report. For the study, costs were allocated for each year in the study period.
Cost of Service to be Allocated
The cost of service to be allocated to the various customer classes is the total revenue
requirements for the test year. The 1996 test yeaz costs to be recovered from wastewater rates total
$2,991,500, as derived in Table 11, Line 10. Cost of service is the amount to be recovered through
rates and needs to be broken down between OM&R and capital costs for allocation purposes. As shown
in Table 12, the total cost of service comprises net operating expenses of $2,305,200 and net capital and
other costs of $686,300. The $686,300 is the cost of debt service and routine capital less revenues
received from the General Fund to help meet costs not covered through rates. Interest from operations
is assumed to be used to help pay debt service and is therefore included under capital and other costs
on Table 12, Line 9. Interest income cannot be used to pay OM&R under EPA user charge
requirements.
Functional Cost Components
For this analysis, sewer utility costs of service are assigned to three basic functional cost
components including volume related costs, strength related costs, and customer related costs.
Functional cost components relate to services provided and not activities of the Department.
Volume costs are those which vary directly with the quantity of wastewater contributed and
include capital costs related to the investment in the system facilities which are sized on the basis of
wastewater volume and operation and maintenance expense related to those facilities.
Wastewater strength costs consist of the operation and maintenance expense and capital costs
related to system facilities which are designed principally on the basis of the quantity of pollutants in
the wastewater. Strength costs are further separated into biochemical oxygen demand (BOD), and
suspended solids.
Customer costs are those which tend to vary in proportion to the number of customers served.
These include billing and collection expenses and general administration.
The separation of costs of service into these principal components provides the means for further
allocation of such costs to the various customer classes on the basis of their respective volume and
customer requirements for service.
25
s
TABLE 12
SEWER UTILITY
ALLOCATION OF REVENUE REQUIREMENTS
Test Year 1996
~1) ~2) ~3)
Line Operating Capital and
No Expense Other Costs Total
$ $ $
TOTAL REVENUE REQUIREMENTS
1 Operation & Maintenance and Replacement 2,306,200 2,306,200
2 Total Debt Service 2,956,400 2,956,400
3 Routine Capital Outlay 46,300 46,300
4 Transfer to Capital Fund 0 0
5 Subtotal 2,306,200 3,002,700 5,308,900
LESS OTHER OPERATING REVENUE
6 Miscellaneous Revenue 1,000 1,000
7 Transfer from General Fund 0 2,311,500 2,311,500
8 Transfer from Capital Fund 0 0
9 Interest Income 4,900 4,900
10 Operating Reserves 0 0
11 Subtotal 1,000 2,316,400 2,317,400
12 Total Cost of Service 2,305,200 686,300 2,991,500
26
e
Allocation To Functional Cost Components
The County of Kauai Sewer Utility includes various facilities, each designed and operated to
fulfill a given function. The cost of service elements associated with these facilities are allocated to
functional cost components on the basis of the design function(s) respective facilities serve. Operating
expenses are allocated directly to cost functions to the extent possible. Capital costs of the sewer utility
are distributed to cost functions based on a functional allocation of test year estimated net plant
investment. A functional cost allocation is a method used to develop charges where costs are allocated
on the basis of the function performed, typically being based on customer cost functions, BOD removal
and treatment, suspended solids removal and treatment, and flow handling.
Plant Investment and Capital Costs
Capital costs include routine capital improvements and debt service. A reasonable method of
assigning capital costs to functional components is to allocate such costs on the basis of net plant
investment.
Net plant investment is represented by the total cost of sewer utility facilities. The estimated test
year net plant investment in wastewater facilities consists of net plant in service as of the period ending
July 1, 1992. The County's "Sewer Enterprise Fixed Assets" list was used for existing facilities. Based
on the construction estimates, the new WWTP facility expansions for Eleele, Lihue, and Waimea were
added. In addition, the estimated cost of proposed capital improvements through fiscal year 1995 were
included.
Net plant investment is allocated to cost components on a design basis recognizing the principal
function governing the design of the facilities which influence the majority of its costs. For example,
chlorine tanks, pumping stations and clarifiers are designed in relation to the average volume of
wastewater flow, and costs are allocated to the volume cost component. Aeration tanks and air blowers
aze designed based on BOD loading and are thus assigned to BOD. Digesters, sludge dewatering,
pumping, thickening and drying are designed to meet BOD and suspended solid requirements, and thus
the investment in these facilities is allocated to the BOD and suspended solids cost functions. Other
capital components utilize similar rationale in determining the allocation of costs to the flow, BOD and
suspended solids parameters. Investment in general plant facilities, including vehicles, furniture and
miscellaneous equipment, not directly allocable to a specific cost function, is allocated in relation to the
total investment in other system facilities.
The resulting allocation of net plant investment of $32,731,500 is shown in Table 13. It is the
basis for recovery of the 1996 test year net capital costs of $686,300.
Operating Expense
Projected net operating expense for the test year is allocated to cost components on the basis of
an allocation of operation and maintenance expense as shown in Table 14.
Operation and maintenance expense for the test year is allocated to cost components in the same
manner as plant investment, based on the design criteria of the plant facilities.
27
A
TABLE 13
SEWER UTILITY
ALLOCATION OF ESTIMATED NET PLANT INVESTMENT
TO FUNCTIONAL COST COMPONENTS
Test Year 1996
(1) (2) (3) (4)
Estimated Strength
Line Net Plant
No. Description (a) Investment Volume BOD SS
$ $ $ $
1 Collection/Distribution 7,058,100 7,058,100 0 0
2 Pumping 1,328,800 1,328,800 0 0
3 Treatment 23,852,500 9,779,500 10,495,100 3,577,900
4 General Plant 492,100 277,300 160,200 54,600
5 Total 32,731,500 18,443,700 10,655,300 3,632,500
(a) Includes major capital improvement additions and routine capital.
28
A
TABLE 14
SEWER UTILITY
ALLOCATION OF OPERATION AND MAINTENANCE EXPENSE
TO FUNCTIONAL COST COMPONENTS
Test Vear 1996
(t) (2) (3) 14) 151
Strength
Line Total Suspentletl
No. Cost Component Expense Volume BOO Solitls Customer
S 5 S S 6
t Hanapape~Eleele Sewerage System 251,900 103,300 110,800 3],800 0
2 Wailua-Kapae Sewerage System 332,200 t3fi200 148200 49,800 0
3 Waimea Sewerage System 1]0,300 69,900 ]4,900 25,500 0
4 Lihue Sewerage System 451,800 165,200 198.800 fi],800 0
6 CenVal Sarvice9 200,000 0 0 0 200.000
6 Collection System Mainlanence 226,700 228,]00 0 0 0
] Plant Maintenance 236.000 96,800 103,800 35,400 0
B Laboratory 65.600 0 32.800 32.]00 0
9 Atlmmislration 389.800 156,600 12],400 4],600 36200
10 Tcul Operation 8 Maintenance 2.30fi.200 976.700 ]91,]00 298,600 238.200
t t Annual Raplacamenl Co919 0 0 0 0 0
12 Total Operauoq Maintenance & Replacement Fxpense 2,306200 9]6)00 ]94700 298,600 236200
29
s
Administrative and general expenses related to customer services are allocated to the customer
casts. The remaining administrative and general expenses are related to total system operations, and
as such, are allocated in relation to all other operating expenses. Central services, as shown in Table
14, Line 5 are costs incurred by other departments for providing service to the utility. Administration
costs (Line 9) are direct cost of the utility.
Allocation of Costs To Customer Classes
The total cost responsibility of each customer class may be estimated by the distribution of the
functionally allocated total cost of service for the utility among the classes based on the respective
service requirements of each class.
The allocation percentages require updating when new or expanded facilities become operational
or if certain facility components are abandoned. The County has been provided with a financial model
which provides for this modification.
The allocation of costs of service into these principal components (customer, volume and strength
related) provides a means for further allocation of costs to the various customer classes on the basis of
their respective volume and strength.
Customer C/assifications
Sewer utility customers are currently separated by the County into four main categories:
residential customers, non-residential customers with metered water, non-residential customers with
metered wastewater, and private septic disposal haulers. Residential customers are further broken down
into single family and multi-family. Non-residential customers are further broken down into industrial,
hotels/motels/resorts, and other.
Units of Service
Estimated units of service for the various customer classifications are shown in Table 15. Cost
responsibility by customer class is based on each class' share of units of service. That is, if a class
contributed one-third of the wastewater flow it will be assigned one-third of volume related costs. The
same is done for strength related costs and customer costs. Metered water and wastewater data for
fiscal year 1994 was used to estimate customer usage by customer category and to balance total
wastewater plant loadings.
Estimates of the wastewater volume of each class are based upon water usage records and
includes an estimated return factor for water reaching the wastewater system. Return factors and
estimated strengths are shown in Table 16. The estimated total wastewater volume for the test year
1996 is 753,369 (1,000 gallons). Infiltration is not included.
30
e
TABLE 15
SEWER UTILITY
ESTIMATED UNITS OF SERVICE
Test Year 1996
(1) (2) (a) (4) (5)
Strength
Line Wastewater Suspentled Number of Number of
No. Customer Class Volume BOD Solids Accounts Units
1,000 gal. Ibs Ibs
Resitlential
1 Single Family 230,753 308,101 288,844 2,797 2,797
2 Multi-Family fi5,340 87,242 81,789 33 792
Non-Resitlential (Metered Water)
3 Intlustdal 0 0 0 0 0
4 Holels/MOlels/Resods 234,650 685,354 587,446 19 19
5 All Others 195,910 261,579 245,230 274 274
Non-Resitlential (Metered Wastewater)
6 Industrial 0 0 0 0 0
7 Hotels/Molels/Resorts 0 0 0 0 0
8 All Others 26,500 35,383 33,171 2 2
9 Septage Disposal (WWiP) 120 10,014 8,011 3 3
10 Waste Adivaled Slutlge (WAS) 96 1,362 2,724 6 6
it Total 753,369 1,389,034 1,247,217 3,134 3,893
31
TABLE 16
WASTEWATER CHARACTERISTICS
Wastewater Strengths
Customer Return Factor BOD SS
Classification % mg/L mg/L
Residential
Single Family SS I60 1S0
Multi-Family SS I60 ISO
Non-Residential (Metered Water)
Industrial 6S 4S0 450
Hotels/Motels/Resorts 65 3S0 300
Other 65 160 ISO
Non-Residential (Metered Wastewater/Dual Meter)
Industrial 100 4S0 4S0
Hotels/Motels/Resorts 100 3S0 300
Other 100 160 1S0
Private Haulers-Septage Disposal (WWTP) 100 10,000 8,000
Private Haulers-Waste Activated Sludge 100 1,700 3,400
Total system strength loadings for the test yeaz were initially based on the County's prior
wastewater rate study prepazed in 1991 by Fukunaga & Associates, Inc., "County of Kauai Sewer User
Charge Update." When this total adjusted water was compared to the plant records, it indicated that
additional factoring was needed. In order to balance water sales data to actual plant influent data,
additional work was performed. A return factor of SS percent for residential customers was used. Next,
a return factor of 6S percent was used for non-residential customers with metered water. Finally, a
return factor of 100 percent was used for customers with wastewater meters and for private Septage
haulers. The use of these newly computed return factors result in wastewater flow which then balance
closely to plant records. These return factors also coincide well with what other counties in the state
experience after actual sampling verifies wastewater flows.
The total strength correlates closely to current plant data for total pounds of BOD and suspended
solids.
The three parameters, flow, BOD and SS, are used to develop all customer's proportionate share
of the wastewater facilities' costs.
Unit Costs of Service
Unit costs of service are based on the total costs of service under each cost component divided
by the applicable units of service. The development of 1996 test year unit costs of service for each cost
component is shown in Table 17. Line 5 on the Table indicates the total unit cost for flow, BOD,
Suspended Solids and Customer. Line 6 includes only the unit costs associated with operation,
maintenance, and replacements. Line 6, therefore, excludes the costs associated with capital costs.
Note that the $61.1611 unit cost for Customer translates [o $5.10 per month.
32
n
TABLE 17
SEWER UTILITY
DEVELOPMENT OF UNIT COSTS
Test Vear 1996
(1) (2) (3) (4) (6)
Strength
Line Suspentletl
No. Total Volume BOD Solitls Customer
$ $ $ $ $
1 Net Operating Expense 2,305,200 976,200 794,400 296,500 238.100
2 Capital Costs 666,300 386,700 223,400 76,200 0
3 Total Cost of Service 2,991,500 1,362,900 1,017,800 372,700 238,100
4 Total Units of Service 753,369 1,389.034 1.247,217 3,893
1,000 gal. pounds pounds units
5 Total Unit Casts of Service - $/unil 1.8091 0.7327 0.2988 fi1.1611
6 O,M & R Unit Cast - $/unit 1.2958 0.5719 0.2377 61.1611
33
s
Customer Class Costs of Service
The costs of service allocated to customer classes are summarized in Table 18. Total costs of
service for each class are based on unit costs of service from Table 17 and units of service from Table
15.
Comparison of the cost of service for each customer class with revenue under existing charges
and the indicated percentage adjustment in the level of revenue from each class required to meet those
costs is shown in Table 19.
The result of the cost of service and analysis is very informative. Table l9 clearly shows that
certain customers have been paying less than their fair share of costs while other types of users have
been paying in excess of cost of service. The variations, however, are not great indicating that the
existing rate schedule is very fair and users are currently paying close to the proper amounts for
wastewater services. Adoption of rates based on the cost of service analysis will cause varying rate
increases for certain users. The most significant deviation from cost of service occurs in the septage
disposal-private haulers classification.
34
TABLE 18
SEWER UTILITY
ALLOCATION OF COSTS OF SERVICE 70 CUSTOMER CLASSES
Test Year 1996
(1) (2) (3) (4) (5)
Strength
Line Suspentletl
No.. Total Volume BOD Solids Customer
$ $ $ $ $
1 Unil Cost of Service 1.8091 0.7327 0.2988 61.1611
Residential
Single Family
2 Units 230.753 308,101 288,844 2,797
3 Cost-$ 900,700 417,500 225,800 06.400 171,000
Multi-Family
4 Units 65,340 87,242 81,789 792
5 Cost - $ 254,900 118,200 63,900 24,400 48,400
Non-Residential (Metered Water)
IndusMal
6 Units 0 0 0 0
7 Cost 0 0 0 0 0
Holels/Molels/Resorts
B Units 234,650 665,354 587,446 19
9 Cast-$ 1,103,400 424,500 502,200 175,500 1,200
All Others
10 Units 195,910 261,579 245,230 274
it Cost-$ 63fi,200 354,400 191,700 73,300 16,800
Non-Residential (Meteretl Wastewater)
IndusMal
12 Units 0 0 0 0
13 Cost 0 0 0 0 0
HatelsrMOtels/Resorts
14 Units 0 0 0 0
15 Cost 0 0 0 0 0
All Others
76 Units 26,500 35,383 33,171 2
17 Cost-$ 83,800 47,900 25,900 9,900 100
Septage Disposal (WWiP)
18 Units 120 10,014 8,011 3
19 Cast-$ 10,100 200 7,300 2,400 200
Waste Activated Sludge (WAS)
20 Units 96 1,362 2,724 6
21 Cost-$ 2,400 200 1,000 800 400
22 Total Cost of Service-$ 2,991,500 1,362,900 1,017,800 372,700 238,700
35
TABLE 19
SEWER UTILITY
COMPARISON OF ALLOCATED COSTS OF SERVICE
WITH REVENUE UNDER EXISTING RATES
Test Year 1996
(1) (2) (3)
Revenue
Total Under Indicated
Line Cost of Existing Revenue
No. Customer Class Service Rates Increase
$ $ $
Residential
1 Single Family 900,700 805,500 11.82%
2 Multi-Family 254,900 228,100 11.75%
Non-Residential (Metered Water)
3 Industrial 0 0 0.00%
4 Hotels/Motels/Resorts 1,103,400 862,800 27.89%
5 All Others 636,200 639,000 -0.44%
Non-Residential (Metered Wastewater)
6 Industrial 0 0 0.00%
7 Hotels/Motels/Resorts 0 0 0.00%
8 All Others 83,800 82,206 1.95%
9 Septage Disposal (WWTP) 10,100 3,600 180.56%
10 Waste Activated Sludge (WAS) 2,400 2,900 -17.24%
11 Total 2,991,500 2,624,100 14.00%
36
Wastewater Rate Adjustments
In general, class cost of service allocations serve as a "guide" to the necessity for, and extent of,
rate adjustments. Other considerations such as the change from previous rate levels, public reaction to
rate changes, past local policies and practices, and local regulations may modify indicated cost of
service adjustments. The end result of any rate adjustment process, however, should be rate schedules
which are simple to apply, clearly understood, and as equitable to each customer class as possible.
The background, basis, and recommendations for wastewater rate adjustments effective July 1,
1995 and each July 1 thereafrer through July I, 1999 follows.
Existing Wastewater Rates
The current wastewater rate structure is comprised of a flat rate for residential customers and a
volume chazge for industrial, hotel/motels/resorts, other commercial, and private septic disposal hauler
customers. As costs for wastewater services continue to increase, it becomes important to adopt a rate
structure whereby all customers can control their monthly bill through adjustments in water usage.
Proposed Wastewater Rates
The cost of service analysis provides the basis for adjusting wastewater service charges. The cost
of service study shows the need fora 14 percent adjustment in fiscal yeaz 1996 and then 12 percent
adjustments each yeaz through 2000. The cost of service allocation study provides the unit costs of
service used in the rate design process and gives a basis for determining whether resultant rates will
recover costs of service from customer classes and provide the total level of revenue required.
A schedule of proposed wastewater rates for fiscal yeazs 1996 through 2000 is shown in Table
20. All the rates presented in the Table already incorporate return factors and are meant to be applied
to total water usage or measured wastewater volume. The proposed fiscal year 1996 wastewater rates
will change the existing flat monthly residential rate structure to one with a base chazge plus a volume
charge based on water usage. The net effect is to lower monthly cost to low volume users next year.
This rate structure change for residential customers can be justified for a number of significant factors:
a volume charge will encourage and support conservation efforts;
charges will more closely reflect individual usage;
customers can more closely manage and control their bills;
lower volume users will experience decreases or smaller increases; and
• this type of rate structure is consistent with EPA rate policy.
Another change to the existing rate structure is to add provisions for a cap or maximum chazge
for the metered water for residential customers. The recommended cap for the residential customers
is 9,000 gallons per month. This cap is the same as used by the County of Maui and is in line with
residential water usage typically reaching the wastewater system. The implementation of this proposed
rate structure far residential customers will require billing by the Kauai Department of Water, the
Honolulu Department of Water, or implementing a billing system within the Kauai Department of
Finance, each of which would take considerable effort and time. For this reason, we have also
developed a residential flat rate for fiscal year 1996 to be charged while transitioning from the flat rate
billing to the volume billing.
37
0
TABLE 20
SEWER UTILITY
PROPOSED RATES AND CHARGES
l1) (2) (3) _ (4) (5)l,
1996 1997 1998 1999 2000
Monthly Monthly Monthly Monthly Monthly
SERVICE CHARGE Charge Charge Charge Charge Charge
Residential ~ ~ - ~ - ~ ~ ~ ~ -
Single Family 21.00 21.00 21.00 21.00 21.00
Multi-Family 21.00 21.00 21.00 21.00 21.00
Non-Residential (Metered Water)
Industrial 5.75 5.75 5.75 5.75 5.75
Hotels/Motels/Resorts 5.75 5.75 5.75 5.75 5.75
All Others 5.75 5.75 5.75 5.75 5.75
Non-Residential (Metered Wastewater/Dual Meter)
Industrial 5.75 5.75 5.75 5.75 5.75
Hotels/Motels/ResoRS 5.75 5.75 5.75 5.75 5.75
All Others 5.75 5.75 5.75 5.75 5.75
VOLUME CHARGE $/1,000 Gal $/1,000 Gal $/1,000 Gal $/1,000 Gal $/1,000 Gal
Residential (a)
Single Family 0.77 1.25 1.74 2.26 2.89
Multi-Family 0.77 1.25 1.74 2.26 2.89
Non-Residential (Metered Water)
Industrial 3.52 3.90 4.31 4.68 5.15
Hotels/Motels/Resorts 3.05 3.46 3.89 4.39 4.91
All Others 2.12 2.31 2.62 2.97 3.35
Non-Residential (Metered Wastewater/Dual Meter)
Industrial 5.42 6.00 6.63 7.20 7.92
Hotels/Motels/Resorts 4.47 4.94 5.47 6.00 6.61
All Others 3.16 3.55 4.04 4.57 5.16
Septage Disposal (WWTP) 84.00 95.00 108.00 119.00 132.00
Waste Activated Sludge (WAS) 30.00 30.00 30.00 33.00 37.00
Residential flat rate of $26.85 per unit per month should be used for FY 1996 until implementation of usage based rates.
(a) Volume charge applies only to first 9,000 gallons per month per dwelling unit.
L , ~ C < ~ ~ ~ ~ ,
C,
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38
The proposed service charge for residential customers is significantly higher than for
nonresidential customers in an attempt to phase in the volume chazge without significantly affecting
residential customers. The service charge portion of user fees typically reflect customer related costs
of a utility; however, to phase in the volume charge and prevent lazge increases for low volume users,
we have assumed a constant service charge for the study period.
For non-residential customers, the proposed fiscal year 1996 wastewater rates will change the
existing volume charge only rate structure to one with a base chazge plus a volume charge.
The difference between the metered water and metered wastewater rates for non-residential
customers should be the return factor, and is for all years other than 1996. Because the current rate for
"all others" exceed cost of service for 1996, we recommend keeping them at that level rather than
decreasing them in fiscal year 1996 and then increasing them again in fiscal year 1997.
We have added non-residential dual meters rates to the user classifications for those users who
may elect to have separate irrigation meters. This rate is the same as that for non-residential metered
wastewater customers. The rate assumes a 100 percent return factor for non-irrigation water usage.
No change to the existing wastewater rate structure for the private hauler services related to
cesspool pumping is proposed when dumping at the Lihue R.T.S. Private haulers currently disposing
of cesspool wastewater at the Lihue R.T.S. should be charged based upon the following rates when
disposing at a wastewater treatment plant:
Fiscal $/1000
Year alg Ions
1996 11.69
1997 13.35
1998 14.85
1999 16.60
2000 18.37
Typical Bills
Table 21 presents typical residential customer bills for zero to 9,000 gallons of water usage.
Because residential customers would have a maximum or cap on usage chazges, i.e. 9,000 gallons, the
charge for 9,000 gallons would apply to all higher usages. Certain customers may see small variations
in their wastewater bills. Low volume water users will actually experience a decrease in their overall
monthly charge because the base charge is reduced, while high volume users should expect only
nominal overall increases. We suggest maintaining the base charge at $21 per month throughout the
five year study period thereby providing relief from future rate increases for low volume users. We
recommend that the County consider raising the cap or eliminating it completely in the future.
Table 22 presents a typical bill comparison for non-residential customers. The table shows bills
for hotels/motels/resorts will increase while those for all other commercial will change only slightly.
39
TABLE 21
SEWER UTILITY
COMPARISON OF TYPICAL RESIDENTIAL MONTHLY SEWER BILL
PER DWELLING UNIT
Test Year 1996
(1) (2) (3) (4) (5)
Water Existing Proposed Increase Percentage ~ ,-a~'F
Usage Rate Rate (Decrease) Change Qk" 1
1,000 Gal. $ $ $ %
0 24.00 21.00 (3.00) -12.50%
1 24.00 21.77 (2.23) -9.29%
2 24.00 22.54 (1.46) -6.08%
3 24.00 23.31 (0.69) -2.88%
4 24.00 24.08 0.08 0.33%
5 24.00 24.85 0.85 3.54%
6 24.00 25.62 1.62 6.75%
7 24.00 26.39 2.39 9.96%
8 24.00 27.16 3.16 13.17%
9 24.00 27.93 3.93 16.38%
40
~ a
TABLE 22
SEWER UTILITY
COMPARISON OF TYPICAL MONTHLY BILLS
Test Year 1996
Hotels/Motels/Resorts
(1) (2) (3) (4) (5)
Water Existing Proposed Increase/ Percentage
Usage Rate Rate (Decrease) Change
1,000 Gal $ $ $ %
0 0 5.75 5.75 N/A
500 1,195.00 1,530.75 335.75 28.10%
1,000 2,390.00 3,055.75 665.75 27.86%
2,000 4,780.00 6,105.75 1,325.75 27.74%
5,000 11,950.00 15,255.75 3,305.75 27.66%
10,000 23,900.00 30,505.75 6,605.75 27.64%
20,000 47,800.00 61,005.75 13,205.75 27.63%
Other Commercial
(1) (2) (3) (4) (5)
Water Existing Proposed Increase/ Percentage
Usage Rate Rate (Decrease) Change
1,000 Gal $ $ $
0 0.00 5.75 5.75 N/A
25 53.00 58.75 5.75 10.85%
50 106.00 111.75 5.75 5.42%
100 212.00 217.75 5.75 2.71
150 318.00 323.75 5.75 1.81%
200 424.00 429.75 5.75 1.36%
41
A comparison of revenues under [he proposed rates with cost of service indicates that the
proposed rates shown in Table 23 will recover total costs of service. Some customer classification will
recover slightly more than their indicated cost of service while others will recover slightly less than their
full cost a service. This is due to 1996 being a transition year for some non-residential customers.
Over the next few years these variations will balance out as rates are gradually
increased for the users recovering less than their cost of service.
OM8~R Rates
The United States Environmental Protection Agency (USEPA) and the State Department of
Health (DOH) mandate that sewer charges be sufficient to pay for costs of operation,
maintenance and replacements in accordance with 40 CFR 35.2208. The key issues of
concern to DOH include:
• wastewater rates at a minimum need to pay for operation, maintenance and replacement
(OM&R) costs;
• costs attributed to OM&R and debt expenditures need to be easily identifiable;
• revenue sources need to be identified clearly by user class and should include cesspool and
septic tank pumping;
• an adequate financial management system should be in place which can account for
expenditure components and revenue sources;
• an equipment replacement fund should be established.
The rates proposed in Table 23, more than cover OM&R and thereby meet EPA/DOH requirements.
This study and supporting financial model developed for the County address all of the above issues.
42
i
TABLE 23
SEWER UTILITY
COMPARISON OF CUSTOMER REVENUE UNDER PROPOSED RATES
WITH TEST YEAR COST OF SERVICE
Test Year 1996
(1) (2) (3)
Estimated
Revenue
Total Under Total
Line Cost of Proposed Percent
No. Customer Class Service Rates Recovered
$ $
Residential
1 Single Family 900,700 885,800 98.3
2 Multi-Family 254,900 250,800 98.4%
Non-Residential (Metered Water)
3 Industrial 0 0 0.0%
4 Hotels/Motels/Resorts 1,103,400 1,102,400 99.9%
5 All Others 636,200 657,900 103.4%
Non-Residential (Metered Wastewater/Dual Meter)
6 Industrial 0 0 0.0%
7 Hotels/Motels/Resorts 0 0 0.0%
8 All Others 83,800 83,900 100.1
9 Septage Disposal (WWTP) 10,100 10,100 100.0%
10 Waste Activated Sludge (WAS) 2,400 2,900 120.8%
11 Total 2,991,500 2,993,800 100.1%
43
~ S
Wastewater Assessment Fees
Existing Wastewater Assessment Fees
The County does not currently have a wastewater assessment fee for treatment capacity.
Proposed Wastewater Treatment Capacity Assessment Fees
In accordance with State Statutes, wastewater assessment or capacity fees are developed based
on the cost of the remaining capacity of existing treatment facilities, plus the cost of new treatment
facilities, less outstanding debt to be repaid through user fees relative to those facilities. This method
allows new wastewater system connections to pay a share of the cost of existing facilities, termed cost
recoupment, plus a shaze of the cost of new facilities. By deducting debt planned to be retired through
user chazges, we can assure new customers that they will not pay twice for the same facilities.
The original cost of the existing treatment facilities is $7,308,853, taken from the sewer
enterprise fixed assets list. This includes the facilities at the Eleele, Wailua, Waimea, and Lihue
treatment plants. The portion of the cost attributable to the remaining capacity at those facilities is
$2,172,902. New projects include the 1994 Eleele treatment plant expansion totaling $7,504,971; the
1995 Waimea treatment plant expansion totaling $11,189,200; and [he 1994 Lihue treatment plant
expansion totaling $12,929,827. The total for new expansion projects is $31,623,998, as summarized
in Table 24.
The available treatment capacity is based on 1.1 MGD of remaining capacity at the existing
facilities, plus the expanded flows of .4 MGD for the Eleele facility; .3 MGD for the Waimea facility;
and 1.0 MGD for the Lihue facility. Table 25 summarizes the treatment plant capacities.
Table 26 summarizes the development of the proposed wastewater treatment assessment fee. The
methodology basically divides cost by capacity to arrive at a cost per gallon per day. All new
connections would be charged based on the assessment fee of $9.76 per gallon per day for their
projected flow requirement.
The outstanding debt, shown in Table 26, is 50 percent of the principal amount of the SRF loans
for the Lihue treatment facility expansion. We have assumed the remaining 50 percent will be
recovered through user fees. Part of the 1990 G.O. Bond Series and the 1992 G.O. Bond Series B and
C are attributed to existing facilities; however, since such debt is not paid for through sewer rates it is
not subtracted from the cost of the original facilities for purposes of establishing the assessment fee.
The calculation of the assessment fee per single family residential unit is based on a flow of 400
gallons per day per single family residential unit. (derived from the Sewer Design Standard for typical
residential flow). Using this method, aCounty-wide fee of $3,900 per single family unit can be
supported. Commercial customers would pay $9.76 per gallon per day for their projected flow. For
ease of administration, commercial customers can also be charged on a meter capacity ratio instead of
on gallons per day of projected flow.
The County can, if desired, charge less than the calculated fee. In addition, the fee can be phased
in. At the County's request, we have assumed the fee will be phased in over a five year period. Table
27 shows the recommended phase-in approach for residential and commercial customers.
44
TABLE 24
SEWER UTILITY
TREATMENT EXPANSION PROJECTS
Line Estimated
No. Treatment Plant Cost
Eleele Treatment Plant
1 Expansion Construction $6,049,971
2 Design $455,000
3 Construction Management $800,000
4 Contingency $200,000
5 Subtotal Eleele $7,504,971
Lihue Treatment Plant
6 Expansion Construction $10,526,024
7 Dewatering Equipment $450,927
8 Design $930,250
9 Construction Management $1,022,626
10 Subtotal Lihue $12,929,827
Waimea Treatment Plant
11 Expansion Construction $10,461,200
12 Expansion Plans $728,000
13 Subtotal Waimea $11,189,200
14 Total Expansion Projects $31,623,998
45
TABLE 25
SEWER UTILITY
DETERMINATION OF TOTAL AVAILABLE CAPACITY
Current Total
Line Treatment Design Current Remaining Planned Available
No. Plant Capacity Flows Capacity Expansion Capacity
mgd mgd mgd mgd mgd
1 Eleele 0.4 0.4 0.0 0.4 0.4
2 Lihue 1.5 1.3 0.2 1.0 1.2
3 Waimea 0.3 0.2 0.1 0.3 0.4
4 Wailua 1.5 0.7 0.8 0.0 0.8
5 Total 3.7 2.6 1.1 1.7 2.8
46
3~
TABLE 26
SEWER UTILITY
COUNTY-WIDE WASTEWATER ASSESSMENT FEE DEVELOPMENT
Line
No.
1 Remaining Capacity of Existing Treatment Facilities, Original Cost $2,172,902
2 Plus, New Expansion Projects $31,623,998
3 Sub-Total $33,796,900
4 Less Outstanding Debt, Treatment Facilities (a) $6,464,914
5 TOTAL $27,331,987
6 Available Treatment Capacity, gallons per day (b) 2,800,000
7 Assessment Fee per Gallon Per Day 9.76
8 Assessment Fee for a Single Family
Residential Unit (c) $3,904
(a) 50 percent of SRF loan for Lihue expansion
(b) Includes 1,100,000 gallons per day of remaining capacity at
existing facilities.
(c) Assumes 400 gallons per day single family unit.
47
i
TABLE 27
ASSESSMENT FEE PHASE-IN
Fiscal Commercial
Year Residential $ per gallon per day
$ per unit
1996 2,500 6.25
] 997 2,850 7.13
1998 3,200 8.00
1999 3,550 8,38
2000 3,900 9.76
Table 28 provides an alternative method of assessing the fee to nonresidential customers. Instead
of charging $9.76 per gallon per day on the estimated flow, each customer can be charged based on its
water meter size. The charges shown in the table reflect the full charge and does not incorporate the
five year phased-in approach. The approach applies only to new customers wit a 4 inch or smaller
meter. We suggest potential customers with larger water meters have [heir charges based on the actual
expected wastewater flow.
The assessment fee is for treatment only and should apply County-wide. We have not developed
a comparable fee for wastewater pumping and transmission. If the County desires such a fee, we
suggest it be developed specifically for each project and the area it serves.
48
h
TABLE 28
WASTEWATER ASSESSMENT FEE
BY METER SIZE
Assessment Fee per Gallon per Day $9.76
Development Fee for Single Family
Residential Unit (a) $3,900
Non-Residential
Water Meter
Meter Capacity Assessment
Size Ratio Fee
in.
5/8 or 3/4 1.0 $3,900
1 1.7 $6,630
11/2 3.3 $12,870
2 5.3 $20,670
3 10.7 $41,730
4 16.7 $65,130
(a) Assumes 400 gallons per day
49