Commentary: Facts Regarding Water / Wastewater CIP Monies (September 2023)

Commentary 2023-70

Basic Statistics

  • Combined, the 2011 and 2016 water and wastewater rate studies listed a total of 77 unique projects totaling $22 million.
  • During this same timeframe an additional 23 water and wastewater CIP projects were incorporated into the CIP, for a total of 100 projects.
  • During the 10 years incorporated in the 2011 and 2016 studies, the City expended 73% of the estimated CIP project funding ($16 million out of $22 million).
  • A total of 62 projects were completed consisting of 40 projects listed in the rate study and 22 additional projects.
  • In other words, 40 of the 77 projects analyzed in the studies were completed, and 22 of the 23 additional projects were completed.

Combined Water and Wastewater CIP Chart 1

There were several projects listed in the 2011 and 2016 rate studies and, for a variety of reasons, only a little over half of the original projects were completed, 62% of the total list was completed and about 73% of the funds were expended. This is because actual costs for some projects were higher than estimated, and projects that were not anticipated were implemented. It should be noted that during the period in question, the City experienced multiple challenges including staff turnover in several key positions (5 Directors of Public Works since 2011) which can have a detrimental impact on operations and projects. Staff have presented this information to the City Council in public meetings many times. On August 22, 2023, staff provided an updated presentation (PDF) of facts related to the FY 2011 to FY 2021 CIP. The table provides a summary of the recent presentation.

2011 and 2016 Water and Wastewater Rate Study Chart 2

As shown in these charts, the City's water and wastewater operations did not spend all the money budgeted for CIPs over the 10-year period covered by the 2011 and 2016 studies. The unexpended funds remained in the fund balances to be expended on future water and wastewater-related items. The Water Enterprise's ending fund balance as of June 30, 2021, was $4.158 million higher than estimated and the Wastewater Enterprise's ending fund balance was $1.8 million higher than estimated.

During FY 2022 there were decreases in the water and wastewater fund balances. There were two contributing factors to the decrease for the Water Enterprise:

  1. Lower than anticipated revenues due to the water emergency - $1.7 million less than estimated
  2. The extended contract with OTS for water treatment plant operators due to a shortage of qualified staff

The Wastewater Fund balance decreased $3.7 million. There were two contributing factors to the decrease:

  1. Lower than anticipated revenues - $1.6 million less than expected
  2. Increased CIP expenditures for the new Wastewater Treatment Plant Facility - $4.75 million spent in FY 2022

While the past completion rate of CIP projects is not enviable, the City with City Council is committed to completing long overdue capital projects and implementing the $57 million in CIP that is due to be completed in the next 5 years - of this $57 million, $42 million is for water and wastewater projects. The current staff is highly motivated and is taking a new approach to completing CIP projects. Recognizing that the City has a small staff, as part of the new strategy, staff is engaging several firms with expertise in design, construction, and project management for assistance. For transparency and internal management, staff has launched an online CIP portal which provides data on the progress of the 69 CIP projects contained in the adopted FY 2024 to FY 2028 CIP.

The resident-led Water and Wastewater Rate Study Advisory Committee grappled with the enormity of the project list and its effect on rate payers and recommended cutting approximately $10 million from the initial proposed water and wastewater CIP budget of $55 million. For that reason, some projects, although important, were not included in the final list. The City's finances are audited by an independent Certified Public Accountant (CPA) each year and the City's financial data is available online. City staff are happy to provide further information and invite any community member to schedule time to review the data.

A version of this piece originally appeared in the St. Helena Star on August 30, 2023.