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6.2 Waive the rules requiring two readings of an ordinance and adopt AN ORDINANCE TO AMEND WATER AND SEWER RATES SET FORTH IN APPENDIX A, DIVISION II, VILLAGE CODE OF MOUNT PROSPECT, ILLINOIS
All Item Cover Page Subject Waive the rules requiring two readings of an ordinance and adopt AN ORDINANCE TO AMEND WATER AND SEWER RATES SET FORTH IN APPENDIX A, DIVISION II, VILLAGE CODE OF MOUNT PROSPECT, ILLINOIS Meeting December 2, 2025 - REGULAR MEETING OF THE MOUNT PROSPECT VILLAGE BOARD Fiscal Impact (Y/N) Dollar Amount Budget Source Category CONSENT AGENDA Type Ordinance Information The Village conducted an initial water rate study in 2017. The approved study concluded that the Village's Capital Improvement Plan was insufficient and would result in an overall replacement of the system over 600 years, while the actual lifespan of water/sewer infrastructure is 75 to 100 years. The Village adopted the new rate study and executed bond issuances in 2018, 2019, and 2022. The study recommended an 8% increase in overall water and sewer rates to support the infrastructure improvement plan and pay for the added debt service payment. The project life cycle and cash needs were evaluated when the study revised in 2023. The Village executed planned increases of 8% in the water/sewer rates from 2018 to 2023, a 5.95% increase in 2024, and a 6.75% increase in 2025. Discussion The study calls for a 6.75% increase in 2026 and 2027. The Village normally adopts an ordinance fixing water/sewer rates for the coming two years, and the same has been proposed. The approved budget for 2026 includes increased water and sewer rates. The attached ordinance formally adopts the rates proposed in the 2026 budget. The table below summarizes the rate changes from the current year. An average household using 5,000 gallons will see an increase of $88.94 annually and pay an annual fee of $1,402.46 in water and sewer charges. 2027 will see an increase of $94.42, resulting in annual charges of $1,496-88. (The data in the below table involves rounding). Water Base III ee - Fixed (Mointhly) VOILImetric IIF'ee (per 1,000galloins) Sewer Base IIFee - Fixed (Mointhly) VOILImetric IIF'ee (per 1,000galloins) %, I ncrem w %, I ncrem,e lnicrem,e f rorn 2025 lnicrem,e f rorn 2026 2025 2026 f rorn 2025 Rate,s, 2027 f rorn 2026 Rate,s, $ 9.07 $ 9.31 $ 0.64, $ 15.49 $ 16.,58 $ 109 $ 6.04 $ 639 $ 035 $ 338 $ 157 $ 0.19 7.06"Au $ 1039 $ 0.68 7.00%, 7.04"Au $ 17.34, $ L16 7.00%, 5.75"Ail $ 3.38 $ 0.21 5.751%, Combined Base IlFee IlFiiiiixed $ 15.11 $ 16.,10 $ 0.92 6.09% $ 17.14, $ 1.04, 6.461%, VOILImetric III ee (per 1,000galloins) $ 18.87 $ 20.,15' $ 1.20 6361% $ 21.52 $ 137 6.381%, Month Ly BII,L,- 5,000 gay errs, $ '109.46 $ 116.87 $ 7.41 635% $ 124,34, $ 7.87 6,.75%f 11 Total An n Ltal Bi LI $ 1,313.52 $ 1,402.46 $ 88.94 635% $ 1,496.88 $ 94.42 635% 11 These rate increases are necessary for the smooth operation of the water and sewer utilities, debt service payments, as well as for needed infrastructure improvements and planned capital projects. Staff recommends approval of the attached ordinance. A copy of the ordinance and water rate study from 2023 is attached. M 0, AN 1. Waive the rules requiring two readings of an ordinance and adopt the attached water/sewer rate ordinance for 2026 and 2027. 2. Action at the discretion of the Village Board. Staff Recommendation Waive the rules requiring two readings of an ordinance and adopt the attached water/sewer rate ordinance for 2026 and 2027. Attachments 1. Water and Sewer Rate Ordinance - 2026-2027 2. Mt Prospect Rate Study - Final Report ORDINANCE NO. AN ORDINANCE TO AMEND WATER AND SEWER RATES SET FORTH IN APPENDIX A, DIVISION II, VILLAGE CODE OF MOUNT PROSPECT, ILLINOIS WHEREAS, the Village of Mount Prospect is a home rule municipality as defined by Article VII, § 6 of the Illinois Constitution of 1970; and WHEREAS, the President and Board of Trustees of the Village of Mount Prospect desire to make certain amendments to the Village Code of Mount Prospect as set forth below; and WHEREAS, pursuant to the authority granted under the Illinois Municipal Code and in accordance with home rule authority granted to home rule municipalities, the President and Board of Trustees of the Village of Mount Prospect approve the amendments set forth below. NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS: SECTION ONE: Appendix A, Section 9.410, "Water Rates," to Division II, "Fees, Rates and Taxes," to Chapter 9, "Public Utilities, Pavement and Tree Regulations," to the Mount Prospect Village Code shall be amended to read in its entirety as follows: Sec. 9.410 WATER RATES: The following rates are effective for water bills rendered on or after January 1, 2026: A. All village water users within the village, having a direct or indirect connection with village water mains or pipes: $16.58 per 1,000 gallons of water consumed or portion thereof. All village water users within the village shall have the following monthly Base Fees per account: 5/8 inch meter $9.71 3/4 inch meter $9.71 1 inch meter $9.71 1 '/2 inch meter $14-56 2 inch meter $21.84 3 inch meter $71.60 4 inch meter $89.81 6 inch meter $132.28 8 inch meter $182.04 All village water users outside the corporate limits of the village having a direct or indirect connection with village water mains or pipes: $33-16 per 1,000 gallons of water consumed or portion thereof. 1 All village water users outside the village shall have the following monthly Base Fees per account: 5/8 inch meter $19.42 3/4 inch meter $19.42 1 inch meter $19.42 1 '/2 inch meter $29.13 2 inch meter $43.69 3 inch meter $143.20 4 inch meter $179.61 6 inch meter $264.56 8 inch meter $364.08 B. Hookup charge for water furnished by truckload: $16.58 The following rates are effective for water bills rendered on or after January 1, 2027: A. All village water users within the village, having a direct or indirect connection with village water mains or pipes: $17.74 per 1,000 gallons of water consumed or portion thereof. All village water users within the village shall have the following monthly Base Fees per account: 5/8 inch meter $10.39 3/4 inch meter $10.39 1 inch meter $10.39 1 '/z inch meter $15-58 2 inch meter $23-37 3 inch meter $76.61 4 inch meter $96.09 6 inch meter $141.54 8 inch meter $194.78 All village water users outside the corporate limits of the village having a direct or indirect connection with village water mains or pipes: $35.48 per 1,000 gallons of water consumed or portion thereof. All village water users outside the village shall have the following monthly Base Fees per account: 5/8 inch meter $20.78 3/4 inch meter $20.78 1 inch meter $20.78 1 '/2 inch meter $31.17 2 inch meter $46.75 3 inch meter $153.23 4 inch meter $192.18 6 inch meter $283.08 8 inch meter $389.56 2 B. Hookup charge for water furnished by truckload: $17.74 SECTION TWO: Appendix A, Section 9.507, "Sewer Rates," to Division II, "Fees, Rates and Taxes," to Chapter 9, "Public Utilities, Pavement and Tree Regulations," to the Mount Prospect Village Code shall be amended to read in its entirety as follows: Sec. 9.507 SEWER RATES: The following rates are effective for sewer bills rendered on or after January 1, 2026: C. All village sewer users within the corporate limits of the village having a direct or indirect connection with the village sewer and water mains or pipes: $3.57 per 1,000 gallons of water consumed or portion thereof. All village sewer users within the corporate limits of the village having a direct or indirect connection with the village's sewer mains or pipes but not with village water mains or pipes: $8.82 utilization fee per month per account. All village sewer users outside the corporate limits of the village having a direct or indirect connection with the village's water and sewer mains or pipes: $7.14 per 1,000 gallons of water consumed or portion thereof. All village sewer users outside the corporate limits of the village having a direct or indirect connection with the village's sewer mains or pipes, but not with village water mains or pipes: $17.64 utilization fee per month per account. The monthly Base Fee per account for sewer users within the village shall be $6.39. The monthly Base Fee per account for sewer users outside the village shall be $12.77. The following rates are effective for sewer bills rendered on or after January 1, 2027: D. All village sewer users within the corporate limits of the village having a direct or indirect connection with the village sewer and water mains or pipes: $3.78 per 1,000 gallons of water consumed or portion thereof. All village sewer users within the corporate limits of the village having a direct or indirect connection with the village's sewer mains or pipes but not with village water mains or pipes: $9.33 utilization fee per month per account. All village sewer users outside the corporate limits of the village having a direct or indirect connection with the village's water and sewer mains or pipes: $7.55 per 1,000 gallons of water consumed or portion thereof. All village sewer users outside the corporate limits of the village having a direct or indirect connection with the village's sewer mains or pipes, but not with village water mains or pipes: $18.66 utilization fee per month per account. The monthly Base Fee per account for sewer users within the village shall be $6.75. The monthly Base Fee per account for sewer users outside the village shall be $13.51. 3 SECTION THREE: that this Ordinance shall be in full force and effect from and after its passage, approval and publication in pamphlet form in the manner provided by law. AYES: NAYS: ABSENT: PASSED and APPROVED this day of ATTEST: Karen M. Agoranos, Village Clerk 4 .2025. Paul Wm. Hoefert, Mayor c'DONINELL '.,1UR /,,, Water and Sewer Rat... Study Village of Mount Prospect, Illinois Water and Sewer Rate Study Project No. 158546 Final Report 9/11/2023 14 Water and Sewer Rate Study prepared for Village of Mount Prospect, Illinois Water and Sewer Rate Study Mount Prospect, Illinois Project No. 158546 Final Report 9/11/2023 prepared by Burns & McDonnell Engineering Company, Inc. COPYRIGHT © 2023 BURNS & McDONNELL ENGINEERING COMPANY, INC. Water and Sewer Rate Study Draft Report Table of Contents TABLE OF CONTENTS Page No. 1.0 EXECUTIVE SUMMARY...................................................................................1-1 1.1 Project Background.............................................................................................. 1-1 1.2 Industry Trends in Water and Sewer Rates.......................................................... 1-1 1.3 Financial Planning............................................................................................... 1-2 1.4 Proposed Rates..................................................................................................... 1-3 2.0 FINANCIAL PLANNING ANALYSIS................................................................2-1 2.1 Project Approach................................................................................................. 2-1 2.2 Introduction to Financial Planning....................................................................... 2-2 2.3 Water and Sewer Utility Revenues under Existing Rates .................................... 2-2 2.3.1 Historical and Projected Customers...................................................... 2-2 2.3.2 Historical and Projected Volumes........................................................ 2-3 2.3.3 Existing Water and Sewer Rates........................................................... 2-4 2.3.4 User Revenues under Existing Rates .................................................... 2-5 2.4 Water and Sewer Utility Expenditures................................................................ 2-6 2.4.1 O&M Expenses..................................................................................... 2-6 2.4.2 Projected Capital Improvement Expenditures ...................................... 2-7 2.4.3 Existing and Proposed Debt Service Requirements .............................. 2-8 2.4.4 Water Utility Flow of Funds................................................................. 2-8 2.4.5 Sewer Utility Flow of Funds............................................................... 2-11 2.4.6 Consolidated Utility Flow of Funds .................................................... 2-12 3.0 PROPOSED RATES.........................................................................................3-1 3.1 Introduction.......................................................................................................... 3-1 3.2 Existing Water and Sewer Rates.......................................................................... 3-1 3.3 Proposed Water and Sewer Rates........................................................................ 3-2 3.4 Regional Water and Sewer Typical Bills............................................................. 3-4 3.5 Statement of Limitations...................................................................................... 3-5 Village of Mount Prospect TOC-1 Burns & McDonnell Water and Sewer Rate Study Draft Report Table of Contents LIST OF TABLES Page No. Table 1-1: Proposed Water and Sewer System Revenue Increases ............................................ 1-3 Table 1-2: Existing and Proposed Water and Sewer Rates......................................................... 1-4 Table 1-3 : Typical Water and Sewer Bills Under Existing and Proposed Rates ......................... 1-4 Table 2-1: Historical and Projected Water Accounts and Volume .............................................. 2-3 Table 2-2: Historical and Projected Sewer Accounts and Volume .............................................. 2-3 Table 2-3: Existing Water and Sewer Rates................................................................................ 2-4 Table 2-4: Historical and Projected Water User Revenues......................................................... 2-5 Table 2-5: Historical and Projected Sewer User Revenues......................................................... 2-5 Table 2-6: Historical and Projected Operation and Maintenance Expenses ................................ 2-7 Table 2-7: Capital Improvement Program................................................................................... 2-7 Table 2-8: Existing and Proposed Debt Service.. .................................................. o ..................... 2-8 Table 2-9 : Water Utility Financial Plan..................................................................................... 2-10 Table 2-10: Sewer Utility Financial Plan................................................................................... 2-12 Table 2-11: Combined Water and Sewer Utility Financial Plan ............................................... 2-13 Table 3 -1: Existing Water and Sewer Rates................................................................................ 3-1 Table 3-2: Existing and Proposed Water and Sewer Rates. ................ ................ o o o o o o o o o ...... 3-2 Table 3-3: Typical Water Bills Under Existing and Proposed Rates ........................................... 3-3 Table 3-4: Typical Sewer Bills Under Existing and Proposed Rates .......................................... 3-3 Table 3-5: Typical Combined Water and Sewer Bills Under Existing and Proposed Rates....................................................................................................................... 3-4 LIST OF FIGURES Page No. Figure 1-1: Changes in General Inflation and Water and Sewer Rates ....................................... 1-1 Figure2-1: Study Methodology................................................................................................... 2-1 Figure 3-1: Residential Water and Sewer Bill Comparison at 5,000 Gallons per Month ........... 3-4 Village of Mount Prospect TOC-2 Burns & McDonnell Water and Sewer Rate Study Draft Report List of Abbreviations LIST OF ABBREVIATIONS Abbreviation Term/Phrase/Name AWWA American Water Works Association BLS Bureau of Labor Statistics CIP Capital Improvement Program CPI-U Consumer Price Index for all Urban Consumers DSC Debt Service Coverage FY Fiscal Year Kgal Thousand Gallons of Water MHI Median Household Income MWRDGC Metropolitan Water Reclamation District of Greater Chicago NACWA National Association of Clean Water Agencies O&M Operation & Maintenance Expense the Study Water and Sewer Rate Study the Village Village of Mount Prospect, Illinois WEF Water Environment Federation Village of Mount Prospect i Burns & McDonnell Water and Sewer Rate Study Draft Report Executive Summary 1.0 EXECUTIVE SUMMARY 1.1 Project Background Burns &McDonnell was initially engaged by the Village of Mount Prospect (the Village) in 2016 to conduct a water and sewer rate study that (1) evaluated the financial planning implications of the recommended capital improvements, and (ii) proposed rates to recover costs for the water and sewer utilities. Since 2016 the Village has engaged Burns &McDonnell to periodically update the analysis to reflect current conditions. In 2023, the Village requested a water and sewer rate study update (the Study) be completed to reflect current conditions and provides a new 10-year forecast. This Report summarizes the results of this update. 1.2 Industry Trends in Water and Sewer Rates Replacement of aging infrastructure is one of several dynamics impacting water and sewer utility rates. Other dynamics may include regulatory requirements, inflation on operating and capital costs, and a general trend in declining consumption most often associated with more efficient fixtures and appliances and greater awareness of water conservation. Each utility is different, and the relative importance of these dynamics will vary by utility. However, there is no doubt that water and sewer rate increases have substantially outpaced general inflation in the United States. The United States Bureau of Labor Statistics (BLS) tracks many facets of inflation. The most commonly referenced measure is the Consumer Price Index for all Urban Consumers (CPI-U) which measures inflation at the consumer level. The BLS also tracks a combined inflation index for consumer water and sewer costs. Figure 1-1 compares changes in the consumer price index to changes in the water and sewer cost index. Figure 1-1: Changes in General Inflation and Water and Sewer Rates Village of Mount Prospect 1-1 Burns & McDonnell Water and Sewer Rate Study Draft Report Executive Summary Since 2000, the annual water and sewer index has been increasing at nearly 5 percent per year, while CPI's annual rate of change is about 2.4 percent per year. Other industry surveys reach similar conclusions regarding water and/or sewer rates. The National Association of Clean Water (NACWA) annually updates its Cost of Clean Water Index, which specifically surveys sewer utilities across the nation regarding the cost of residential sewer service. From 1985 through 2021, the annual increase according to this survey has been 4.8 percent per year. American Water Works Association (AWWA) also conducts a broad, biennial water and sewer rate survey with results indicating average annual rate increases of 5.7 percent per year for water and 5.8 percent per year for sewer from 1996 to 2018. Every utility is unique, and the dynamics impacting rates can vary widely. However, funding renewal and replacement of underground infrastructure is a consistent and substantial influence on costs for most water and sewer utilities. The Village has placed an emphasis in recent years on increasing funding for renewal and replacement of water and sewer mains, which has been a primary driver of rate increases since 2017 and is likely to continue for the foreseeable future. 1.3 Financial Planning Comprehensive financial planning conducted for the water and sewer utilities indicates that revenues under existing rates are not sufficient to meet the projected cash obligations of the utilities over the ten- year study period. The need for revenue adjustments is influenced by the following factors: • Anticipated declines in customer usage, forecasted to be approximately 1 percent per year, offset slightly by growth in customers; • Implementation of the proposed capital plans, including renewal and replacement programs for the aging water distribution system and the sewer collection system, and lead water line replacement; • Inflationary impacts on operation and maintenance expenses and future capital improvements. Several financial planning scenarios were evaluated to fund the operating and capital needs of the utilities. Financial planning assumptions are described in Section 2 of this report. Financial plans were evaluated based on the following guiding principles: 1. Minimize the need for sudden and substantial revenue adjustments. 2. Maintain projected annual operating reserves at a minimum of 90 days of O&M and projected annual capital reserves at a minimum of about $1 million for each utility. Village of Mount Prospect 1-2 Burns & McDonnell Water and Sewer Rate Study Draft Report Executive Summary 3. Reduce capital funding reliance on new debt issuance over time. 4. Funding the system renewal/replacement program targets. Based on its ability to meet the guiding principles, the recommended financial plan detailed in this report proposes the following revenue increases to be effective January 1 of each year indicated. The combined increase represents the weighted increase based on the relative size of each utility. Table 1-1: Proposed Water and Sewer System Revenue Increases Proposed 2024 6.00% 5.75% 5.95% Proposed 2025 7.00% 5.75% 6.75% Proposed 2026 7.00% 5.75% 6.75% Proposed 2027 7.00% 5.75% 6.76% Proposed 2028 7.00% 5.75% 6.76% Proposed 2029 7.00% 5.75% 6.76% Proposed 2030 7.00% 5.75% 6.76% Proposed 2031 7.00% 3.50% 6.34% Proposed 2032 6.50% 3.50% 5.95% Proposed 2033 6.50% 3.50% 5.96% 1.4 Proposed Rates Proposed rates have been developed for 2024 through 2033. Existing and proposed water and sewer rates are shown in Table 1-2. Village of Mount Prospect 1-3 Burns & McDonnell Water and Sewer Rate Study Draft Report Executive Summary Table 1-2: Existing and Proposed Water and Sewer Rates Existing I Proposed Line 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 No. Description Base Charge $/bill $/bill $/bill $/bill $/bill $/bill $/bill $/bill $/bill $/bill $/bill Water - Inside Village 1 5/8" $ 8.00 $ 8.48 $ 9.07 $ 9.71 $ 10.39 $ 11.12 $ 11.89 $ 12.73 $ 13.62 $ 14.50 $ 15.44 2 3/4" $ 8.00 $ 8.48 $ 9.07 $ 9.71 $ 10.39 $ 11.12 $ 11.89 $ 12.73 $ 13.62 $ 14.50 $ 15.44 3 1" $ 8.00 $ 8.48 $ 9.07 $ 9.71 $ 10.39 $ 11.12 $ 11.89 $ 12.73 $ 13.62 $ 14.50 $ 15.44 4 1.5" $ 12.00 $ 12.72 $ 13.61 $ 14.56 $ 15.58 $ 16.67 $ 17.84 $ 19.09 $ 20.43 $ 21.75 $ 23.17 5 2" $ 18.00 $ 19.08 $ 20.42 $ 21.84 $ 23.37 $ 25.01 $ 26.76 $ 28.63 $ 30.64 $ 32.63 $ 34.75 6 3" $ 59.00 $ 62.54 $ 66.92 $ 71.60 $ 76.61 $ 81.98 $ 87.72 $ 93.86 $100.43 $106.95 $113.91 7 4" $ 74.00 $ 78.44 $ 83.93 $ 89.81 $ 96.09 $ 102.82 $ 110.02 $117.72 $125.96 $134.14 $142.86 8 6" $ 109.00 $ 115.54 $ 123.63 $ 132.28 $ 141.54 $ 151.45 $ 162.05 $173.39 $185.53 $197.59 $ 210.44 9 8" $ 150.00 $ 159.00 $ 170.13 $ 182.04 $ 194.78 $ 208.42 $ 223.01 $ 238.62 $ 255.32 $ 271.92 $ 289.59 Water - Outside Village 10 5/8" $ 16.00 $ 16.96 $ 18.15 $ 19.42 $ 20.78 $ 22.23 $ 23.79 $ 25.45 $ 27.23 $ 29.00 $ 30.89 11 3/4" $ 16.00 $ 16.96 $ 18.15 $ 19.42 $ 20.78 $ 22.23 $ 23.79 $ 25.45 $ 27.23 $ 29.00 $ 30.89 12 1" $ 16.00 $ 16.96 $ 18.15 $ 19.42 $ 20.78 $ 22.23 $ 23.79 $ 25.45 $ 27.23 $ 29.00 $ 30.89 13 1.5" $ 24.00 $ 25.44 $ 27.22 $ 29.13 $ 31.17 $ 33.35 $ 35.68 $ 38.18 $ 40.85 $ 43.51 $ 46.33 14 2" $ 36.00 $ 38.16 $ 40.83 $ 43.69 $ 46.75 $ 50.02 $ 53.52 $ 57.27 $ 61.28 $ 65.26 $ 69.50 15 3" $ 118.00 $ 125.08 $ 133.84 $ 143.20 $ 153.23 $ 163.95 $ 175.43 $187.71 $ 200.85 $ 213.91 $ 227.81 16 4" $ 148.00 $ 156.88 $ 167.86 $ 179.61 $ 192.18 $ 205.64 $ 220.03 $ 235.43 $ 251.91 $ 268.29 $ 285.73 17 6" $ 218.00 $ 231.08 $ 247.26 $ 264.56 $ 283.08 $ 302.90 $ 324.10 $ 346.79 $ 371.06 $ 395.18 $ 420.87 18 8" $ 300.00 $ 318.00 $ 340.26 $ 364.08 $ 389.56 $ 416.83 $ 446.01 $ 477.23 $ 510.64 $ 543.83 $ 579.18 19 Sewer - Inside Village $ 5.40 $ 5.71 $ 6.04 $ 6.39 $ 6.75 $ 7.14 $ 7.55 $ 7.99 $ 8.27 $ 8.56 $ 8.85 20 Sewer - Outside Village $ 10.80 $ 11.42 $ 12.08 $ 12.77 $ 13.51 $ 14.28 $ 15.10 $ 15.97 $ 16.53 $ 17.11 $ 17.71 Volume Charge $/KgaI $/I<gal $/KgaI $/Kgal $/KgaI $/KgaI $/Kgal $/KgaI $/I<gaI $/KgaI $/Kgal 21 Water - Inside Village $ 13.66 $ 14.48 $ 15.49 $ 16.58 $ 17.74 $ 18.98 $ 20.31 $ 21.73 $ 23.25 $ 24.76 $ 26.37 22 Water - Outside Village $ 27.32 $ 28.96 $ 30.99 $ 33.16 $ 35.48 $ 37.96 $ 40.62 $ 43.46 $ 46.50 $ 49.52 $ 52.74 23 Sewer - Inside Village $ 3.02 $ 3.19 $ 3.38 $ 3.57 $ 3.78 $ 3.99 $ 4.22 $ 4.47 $ 4.62 $ 4.78 $ 4.95 24 Sewer - Outside Village $ 6.04 $ 6.39 $ 6.75 $ 7.14 $ 7.55 $ 7.99 $ 8.45 $ 8.93 $ 9.25 $ 9.57 $ 9.90 The impact of proposed water and sewer rates on typical customers is shown in Table 1-3. Table 1-3: Typical Water and Sewer Bills Under Existing and Proposed Rates Billable M onth ly 0,-ill Un der Rates Line Flow Existing Ad opted Pry posed Nib. utrra,er Titr Size NaI 2023 2024 2025 2025 2027 2028 2020 20 30 2031 2032 2033 Waiter aired Sewer Utitty 1 5 °" 5.0 $ 96.80 $ 102.56 $ 109.46 $ 115.84 $ 12 4.7 2 $ 1,3 3.13 $ 142.11 $ 151. 70 $ 101. 25 $ 170.79 0 $ 1 0 .0 2 2 3 4"" 10.0 $ 1 0.20 $ 1910.92 $ 20 3.2 $ 217.5 $ 232.20 $ 248.00 $ 204.77 $ 2 2.5 $ 3,00.52 $ 31 .53 $ 337.54 3 1H 15.0 $ 203.50 $ 279.29 $ 298.17 $ 318.33 $ 53 . 7 $ 502. 5 $ 387.43 $ 413. 0 $ 439-99 $ 465.2 $ 404.1 C Kange, in $ over prior year 4 5 °" $ 5.75 $ 6.91 $ 738 TH 8.41 8.98 $ ° -59 $ 9 56 $ 9 54 $ 10.13, 5 3 4 °" $ 10. 72 $ 12.89 13.77 $ 14.70 $ 15.70 $ 16.77 $ 17. 91 $ 17. 94 $ 17. 91 $ 10.01 0 1H $ 15.59 18.88 $ 20.10 $ 21.53 $ 23.00 $ 24.5 $ 2 .23 $ 25.33 $ 25.27 $ 27.00 C f-nange in ro over prior year 7 5 °" 5-9 5 o 0.74 o 5.74% S.,74 o 0.74 o 0.75 ro 0.75 o 0310% 5..025 5..03% 8 3 4 °" 5-9 5 o 0.7 5 o 0. 75% S., 75 o 0. 755ro 0. 7% 0.76% 3151 5..0 5 5..07' 1H 5-9 5 o 0.75 o 0. 75% S., 75 o 0. 77 o 0. 775ro 0.7Tvo S.,3 7'% 5..07 5 5..0:5' As a part of its budget process, the Village evaluates the sufficiency of revenues and proposed debt issuance to meet budget year expenses and capital costs and provide desired reserves and debt service Village of Mount Prospect 1-4 Burns & McDonnell Water and Sewer Rate Study Draft Report Executive Summary coverage. As a matter of practice, Burns & McDonnell encourages the Village to continue this process, and consider updates to the rate study every five years, or sooner if conditions change. Village of Mount Prospect 1-5 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis 2.0 FINANCIAL PLANNING ANALYSIS 2.1 Project Approach To meet the project objectives identified by the Village, Burns &McDonnell conducted the rate study in a two-step approach. This approach, depicted in Figure 2-1, is grounded in the principles established by the American Water Works Association (AWWA) MI Rate Manual and the Water Environment Federation (WEF) Financing and Charges for Wastewater Systems. Figure 2-1: Study Methodology Step 1: Financial Planning provides an indication of the adequacy of the revenue generated by current rates. The results of the financial forecast analysis answer the questions "Are the existing rates adequate?" and "If not, what level of overall revenue increase is needed?" The Financial Planning Analysis is presented in this section of our report. Step 2: Rate Design provides for the required revenue recovery. Once the overall level of revenue required is identified and customer class responsibility for that level of revenue is determined, schedules of rates for each rate class are developed that will generate revenues accordingly. The Rate Design Analysis is detailed in Section 3.0 of this report. Village of Mount Prospect 2-1 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis 2.2 Introduction to Financial Planning The primary issue addressed in the Financial Planning Analysis is revenue sufficiency. The results of the Financial Planning Analysis answer the questions: • Are the existing rates sufficient to fund anticipated operating and capital costs? • If not, what level of overall revenue increase is needed? To determine if the existing schedule of rates can generate revenues to meet the Village's operating and capital costs, Burns & McDonnell prepared a financial projection of revenues and expenditures for the water and sewer utilities through 2033. A comparison of projected revenues and expenditures provides insight into the adequacy of overall revenue levels. Our approach to Financial Planning involves the following basic steps: 1. Project revenues under existing rates. 2. Project water and sewer utility expenditures, including operating and capital costs. 3. Develop a ten-year financial forecast, including the budget year and a ten-year forecast period. The planning period includes the current fiscal year (FY) 2023 as a budget year and aten-year forecast period, FY 2024 through FY 203 3. The Village's fiscal year ends on December 31, and the projected periods in the financial plan recognize the same fiscal year ending December 31. 2.3 Water and Sewer Utility Revenues under Existing Rates The first step in the Financial Plan Analysis was to project revenues under the existing schedule of rates. To complete this effort required an analysis of water and sewer customers, volumes, and revenues. 2.3.1 Historical and Projected Customers Table 2-1 presents the historical water customers served by the Village from 2020 to 2022 and the projection of customers for the 2023 to 2033 planning period. In recent years, Mount Prospect has experienced minimal change in the number of accounts. Considering this trend in account growth, the projection of accounts assumes a small allowance for annual growth in customer accounts for 2023 through 2033. Table 2-2 presents the historical sewer customers served by the Village from 2020 to 2022 and the projection of customers for the 2023 to 2033 planning period. Similar to the water utility, Mount Prospect has experienced minimal change in the number of sewer accounts in recent years. The projection of sewer Village of Mount Prospect 2-2 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis accounts assumes a small allowance for growth in customer accounts for 2023 through 2033, consistent with the approach to forecasting water accounts. Table 2-1: Historical and Projected Water Accounts and Volume Line Historical Projected No. 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Accounts 1 WATER N/C - Water No Charge 14 13 13 13 13 13 13 13 13 13 13 13 13 13 2 Water - Inside Village 12,189 12,286 12,226 12,235 12,244 12,253 12,262 12,271 12,280 12,289 12,298 12,307 12,316 12,325 3 Water - Outside Village 10 11 10 10 10 10 10 10 10 10 10 10 10 10 4 Total Accounts 12,213 12,310 12,249 12,258 12,267 12,276 12,285 12,294 12,303 12,312 12,321 12,330 12,339 12,348 Billed Volume (1,000Ga11ons) 5 WATER N/C - Water No ChargE 5,458 5,969 5,284 5,284 5,284 5,284 5,284 5,284 5,284 5,284 5,284 5,284 5,284 5,284 6 Water - Inside Village 1,118,401 1,110,583 1,086,102 1,076,033 1,066,056 1,056,171 1,046,377 1,036,674 1,027,060 1,017,534 1,008,097 998,746 989,482 980,303 7 Water - Outside Village 873 1,063 997 997 997 997 997 997 997 997 997 997 997 997 8 Total Billed Volume 1,124,732 1,117,615 1,092,383 1,082,314 1,072,337 1,062,452 1,052,658 1,042,955 1,033,341 1,023,815 1,014,378 1,005,027 995,763 986,584 Table 2-2: Historical and Projected Sewer Accounts and Volume Historical I Projected 1 Sewer Inside (w/ water) 12,124 12,216 12,156 12,165 12,174 12,183 12,192 12,201 12,210 12,219 12,228 12,237 12,246 12,255 2 Sewer Inside (w/o water) 33 37 36 36 36 36 36 36 36 36 36 36 36 36 3 Sewer No Charge 12 11 11 11 11 11 11 11 11 11 11 11 11 11 4 Sewer Outside (w/ water) - - - - - - - - - - - - - - 5 Sewer Outside (w/o water) 13 13 14 14 14 14 14 14 14 14 14 14 14 14 6 Total Accounts 12,182 12,277 12,217 12,226 12,235 12,244 12,253 12,262 12,271 12,280 12,289 12,298 12,307 12,316 Billed Volume (1,000Gallons) 7 Sewer Inside (w/ water) 1,108,634 1,101,330 1,076,184 1,066,211 1,056,330 1,046,540 1,036,840 1,027,229 1,017,707 1,008,272 998,925 989,663 980,487 971,396 8 Sewer Inside (w/o water) - - - - - - - - - - - - - - 9 Sewer No Charge 5,341 5,810 5,128 5,128 5,128 5,128 5,128 5,128 5,128 5,128 5,128 5,128 5,128 5,128 10 Sewer Outside (w/ water) - - - - - - - - - - - - - - 11 Sewer Outside (w/o water) - - - - - - - - - - - - - - 12 Total Billed Volume 1,113,975 1,107,140 1,081,312 1,071,339 1,061,458 1,051,668 1,041,968 1,032,357 1,022,835 1,013,400 1,004,053 994,791 985,615 976,524 2.3.2 Historical and Projected Volumes Table 2-1 and Table 2-2 also present the historical and projected volumes. Table 2-1 presents historical water volumes based on water sales for 2020 to 2022, and the projection of volumes for the 2023 to 2033 planning period. Based on trends in historical data, Inside Village use per account was estimated to decline 1.0 percent annually from 2023 through 2033. Decreasing average use per account reflects an industry trend associated with the prevalence of more efficient appliances and fixtures, and a greater customer awareness regarding water use and conservation. Forecasting use per account to decline provides a slightly more cautious forecast of water sales and ultimately, revenue under existing rates. Other classes were estimated to remain at 2022 levels of usage per account. The impact of declining use per account is offset slightly by assumed growth in customer accounts, resulting in an annual reduction in billed water volume of about 0.9 percent per year. Table 2-2 presents historical sewer volumes based on billed sewer volume for 2020 to 2022, and the projection of volumes for the 2023 to 2033 planning period. Consistent with the forecasting approach with the water volume projection, Inside Village sewer use per account was estimated to decline I.0 percent annually beginning in 2023. The other classes were estimated to remain at the 2022 level of sewer use per account. Comparable to the water volume projection, the impact of declining use per account is Village of Mount Prospect 2-3 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis offset slightly by assumed growth in customer accounts, resulting in an annual reduction in billed sewer volume of about 0.9 percent per year. 2.3.3 Existing Water and Sewer Rates The water and sewer rate schedule is shown in Table 2-3. The water rate consists of a base charge per bill that varies by meter size and a volumetric charge per thousand gallons of usage for both Inside and Outside Village customers. The sewer rate also consists of a base charge per bill and a volumetric charge per thousand gallons. Table 2-3: Existing Water and Sewer Rates Existing Line 2023 No. Description Base Charge $/bill Water - Inside Village 1 5/8" $ 8.00 2 3/4" $ 8.00 3 1" $ 8.00 4 1.5" $ 12.00 5 2" $ 18.00 6 3" $ 59.00 7 4" $ 74.00 8 6" $ 109.00 9 8" $ 150.00 Water - Outside Village 10 5/8" $ 16.00 11 3/4" $ 16.00 12 1" $ 16.00 13 1.5" $ 24.00 14 2" $ 36.00 15 3" $ 118.00 16 4" $ 148.00 17 6" $ 218.00 18 8" $ 300.00 19 Sewer - Inside Village $ 5.40 20 Sewer - Outside Village $ 10.80 21 Water - Inside Village $ 13.66 22 Water - Outside Village $ 27.32 23 Sewer - Inside Village $ 3.02 24 Sewer - Outside Village $ 6.04 Village of Mount Prospect 2-4 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis As a matter of practice, rates for service provided to Outside Village customers are set at 2.0 times Inside Village rates. Water and sewer rates applicable to Outside Village customers are reflective of this multiplier for both base and volume charges. The Village has implemented annual rate increases in recent years, prompted in part by inflation in operating costs but largely driven by capital investment in renewal and replacement. 2.3.4 User Revenues under Existing Rates Table 2-4 and Table 2-5 present historical user charge revenues for 2020 to 2022 and a projection of user charge revenues under 2023 rates for the 2023 to 2033 planning period. The projection of user charge revenues was estimated based on the forecasted accounts and volumes factored by the schedule of 2023 water and sewer rates. As shown in Table 2-4, historical water user charge revenues increased from $13.1 million to $14.9 million from 2020 to 2022, impacted by rate increases and fluctuations in actual water demand. Forecasted user charge revenues are based on projected accounts and water volume presented in Table 2-1 and the 2023 water rates. Overall, water user charge revenues are projected to increase in 2023 to $15.7 million as a result of the 2023 rate increase, then gradually decline to $14.3 million in 2033 due to projections of lower water use. Table 2-4: Historical and Projected Water User Revenues 1 WATER N/C - Water No Charge $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 2 Water- Inside Village $ 13,102,791 $ 14,049,980 $ 14,846,326 $ 15,628,200 $ 15,483,300 $ 15,339,700 $ 15,197,500 $ 15,056,600 $ 14,916,900 $ 14,778,600 $ 14,641,500 $ 14,505,700 $ 14,371,100 $ 14,237,800 3 Water - Outside Village $ 22,941 $ 29,561 $ 30,504 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 $ 32,400 4 Total UC Revenues $ 13,125,732 $ 14,079,541 $ 14,876,830 $ 15,660,600 $ 15,515,700 $ 15,372,100 $ 15,229,900 $ 15,089,000 $ 14,949,300 $ 14,811,000 $ 14,673,900 $ 14,538,100 $ 14,403,500 $ 14,270,200 As shown in Table 2-5 historical sewer user charge revenues increased from $3.2 million to $3.7 million from 2020 to 2022. Forecasted user charge revenues are based on projected accounts and sewer volume presented in Table 2-2 and the 2023 sewer rates. Overall, sewer user revenues are projected to increase to $3.9 million as a result of the 2023 rate increase, then gradually decline to $3.6 million in 2033 due to projections of lower billable flow. Table 2-5: Historical and Projected Sewer User Revenues Line Historical I Projected No. 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 User Charge Revenues Sewer Inside (w/ water) 3,243,161 3,479,907 3,686,732 3,908,200 3,872,000 3,836,100 3,800,600 3,765,400 3,730,500 3,695,900 3,661,600 3,627,700 3,594,000 3,560,700 Sewer Inside (w/o water) 2,259 2,563 2,776 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 Sewer No Charge - - - - - - - - - - - - - - Sewer Outside (w/ water) - - - - - - - - - - - - - - Sewer Outside (w/o water) 1,821 1,966 2,124 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 Total UC Revenues $ 3,247,241 $ 3,484,436 $ 3,691,632 $ 3,913,100 $ 3,876,900 $ 3,841,000 $ 3,805,500 $ 3,770,300 $ 3,735,400 $ 3,700,800 $ 3,666,500 $ 3,632,600 $ 3,598,900 $ 3,565,600 [1] Forecasted slight account growth for water inside village customer class. [2] Sewer Inside Village volume declining by 1% per year, all other class' forecasted usage held constant at 2022 levels. Village of Mount Prospect 2-5 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis 2.4 Water and Sewer Utility Expenditures Typically, a municipal water or sewer utility's primary cash expenditures include the following direct operating and capital costs: • Operation and Maintenance (O&M) Expenses • Capital Improvement Program Expenditures • Debt Service Principal and Interest Payments Each of these cash obligations is described further below. 2.4.1 O&M Expenses Table 2-6 presents the recent water and sewer O&M expense history and the projection of water and sewer system O&M expenses through the 2033 planning period. Expenses summarized on Table 2-6 reflect operating costs only; costs related to capital projects are excluded from Table 2-6 and are addressed later in this report. In recent history, water O&M expenses ranged from $11.9 million in 2020 to $11.0 million in 2022. Sewer O&M expenses ranged from $2.2 million in 2020 to $1.6 million in 2022. Anticipated 2023 O&M costs are based on the Village's approved budget. In general, projected O&M expenses are anticipated to increase from budgeted 2023 amounts at approximately 3.0 percent annually on average. The overall inflationary increase is a function of the following inflation rate assumptions developed in collaboration with Public Works and Finance Department staff. Recent union labor contract negotiations are anticipated to increase personnel costs such as labor and benefits roughly 30 percent from 2023 to 2027. The cost of Lake Michigan water supply is expected to effectively increase 3% per year until 2029, and 2% per year thereafter. This increase reflects the combined effect of anticipated rate increases, partially offset by projected declines in water use. All other expenses are assumed to increase 5 percent per year in 2024 and 2025, 4 percent per year in 2026 and 2027, and 3 percent per year starting in 2028. Village of Mount Prospect 2-6 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis Table 2-6: Historical and Projected Operation and Maintenance Expenses Line Historical I Budgeted I Projected No. 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Water O&M 1 Banking Fees 28,549 44,930 59,174 45,000 47,250 49,613 51,597 53,661 55,271 56,929 58,637 60,396 62,208 64,074 2 Customer Service 138,592 137,738 132,624 156,000 166,717 178,204 184,198 190,398 196,109 201,993 206,776 211,677 216,699 221,845 3 Water Administration* 924,110 490,241 447,621 519,487 553,108 589,021 609,609 630,931 649,859 669,355 686,090 703,259 720,875 738,951 4 Equipment Maintenance 499,154 508,572 370,464 597,836 627,727 659,114 685,478 712,897 734,284 756,313 779,002 802,372 826,443 851,237 5 Maintenance of Buildings 251,955 260,765 201,066 299,440 321,335 344,878 355,982 367,449 378,472 389,826 398,492 407,356 416,425 425,703 6 Maintenance of Grounds 92,704 98,520 97,687 138,440 147,288 156,733 162,253 167,972 173,011 178,202 182,705 187,326 192,069 196,936 7 Lake Michigan Water Supply 7,517,582 7,239,644 7,406,664 7,534,000 7,760,020 7,992,821 8,232,605 8,479,583 8,733,971 8,908,650 9,086,823 9,268,560 9,453,931 9,643,010 8 Water Supply Maint. & Repair 729,416 760,785 664,268 847,666 906,878 970,398 1,002,671 1,036,038 1,067,119 1,099,133 1,124,742 1,150,973 1,177,840 1,205,360 9 Water Distribution Maint. & Rep 1,079,228 964,159 1,009,783 1,193,101 1,274,666 1,362,061 1,408,025 1,455,572 1,499,240 1,544,217 1,580,956 1,618,605 1,657,188 1,696,729 10 Water Meter Maintenance & Repair 241,624 248,000 208,768 285,392 301,732 319,054 331,011 343,423 353,725 364,337 374,361 384,668 395,266 406,163 11 Water Valve/Hydrant Maint. & Rep 410,232 407,529 362,096 469,512 501,073 534,859 553,110 571,996 589,156 606,831 621,497 636,533 651,948 667,752 12 Total Water 0&M 11,913,146 11,160,883 10,960,215 12,085,873 12,607,794 13,156,756 13,576,540 14,009,921 14,430,218 14,775,785 15,100,081 15,431,726 15,770,893 16,117,759 Sewer O&M -6.3% -1.8% 10.3% 4.3% 4.4% 3.2% 3.2% 3.0% 2.4% 2.2% 2.2% 2.2% 2.2% 13 Banking Fees 28,549 44,930 59,174 45,000 47,250 49,613 51,597 53,661 55,271 56,929 58,637 60,396 62,208 64,074 14 Customer Service 138,592 137,738 132,624 156,000 166,717 178,204 184,198 190,398 196,109 201,993 206,776 211,677 216,699 221,845 15 Sewer Administration* 924,110 490,241 447,621 519,487 553,108 589,021 609,609 630,931 649,859 669,355 686,090 703,259 720,875 738,951 16 Equipment Maintenance 499,154 508,572 370,464 597,836 627,727 659,114 685,478 712,897 734,284 756,313 779,002 802,372 826,443 851,237 17 Sanitary Sewer Maint. & Repair 598,420 651,850 600,828 809,760 864,722 923,590 954,906 987,306 1,016,925 1,047,433 1,072,522 1,098,237 1,124,595 1,151,611 18 Total Sewer O&M 2,188,825 1,833,332 -16.2% 1,610,711 -12.1% 2,128,082 32.1% 2,259,524 6.2% 2,399,542 6.2% 2,485,788 3.6% 2,575,193 3.6% 2,652,449 3.0% 2,732,022 3.0% 2,803,026 2.6% 2,875,941 2.6% 2,950,820 2.6% 3,027,717 2.6% 19 Total Water & Sewer 0&M Expenses 14,101,970 12,994,214 -7.9% 12,570,926 -3.3% 14,213,954 13.1% 14,867,318 4.6% 15,556,298 4.6% 16,062,328 3.3% 16,585,114 3.3% 17,082,667 3.0% 17,507,807 2.5% 17,903,107 2.3% 18,307,667 2.3% 18,721,713 2.3% 19,145,476 2.3% [1] The cost of Lake Michigan water supply is expected to effectively increase 3% per year until 2029, and 2% per year thereafter. This increase reflects the combined effect of anticipated rate increases, partially offset by projected declines in water use. [2] Personnel Services, Scheduled Salaries & Wages are inflated are tied to newest contracts and assume 3% thereafter [3] All other costs are inflated at 3 - 5 percent per year. * NOPEBO catch-up expenses in 2020 2.4.2 Projected Capital Improvement Expenditures Table 2-7 shows the projected capital improvement expenditures (CIP) for the 2023 to 2033 planning period. Projected capital investment totals approximately $115.1 million from 2023 through 2033, as shown on Line 30 of Table 2-7. The majority of this investment is targeted to lead water service line replacement (Line 6), Northwest Water Commission Interconnection (Line 7), water and sewer main rehabilitation (Lines 9 and 28, respectively) and combined sewer improvements (Line 22). Line No. Water Capital Improvement Projects 1 Booster Pump Station Pump Rehabilitation 2 Deep Well Rehabilitation - Well #11 3 Deep Well Rehabilitation - Well #16 4 Deep Well Rehabilitation - Well #17 5 Elevated Tank Construction 6 Lead Water Service Line Replacement 7 Northwest Water Commission Interconnect 8 VFD Replacement 9 Water Main Replacement 10 Water Reservoir Number 4 Rehabilitation 11 Wireless Telemetry System Upgrade - PLC Upgrades 12 Deep Well Rehabilitation - Well 5 13 Elevated Tank Painting 14 Water Reservoir Number 16 Painting 15 Water Reservoir Number 17 Painting 16 Oakton Water System Expansion 17 Water Reservoir Number 5N Painting 18 Water Reservoir Number 11 Painting 19 AMR Fixed Based System Replacement 20 Booster Station 5 Roof Replacement 21 Total Water Capital Improvement Projects Sewer Capital Improvement Projects 22 Combined Sewer Improvements 23 Fairview Gardens Gravity Sewer Connection 24 Fairview Lift Station Abandonment 25 Lift Station Rehabilitation - Lincoln-Wego 26 Lift Station Rehabilitation - Maple -Berkshire 27 Overhead Sewer Program 28 Sewer Main Rehabilitation 29 Total Sewer Capital Improvement Projects 30 Total Water and Sewer Capital Improvement Projects Table 2-7: Capital Improvement Program Projected 1 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Totals 65,000 185,000 185,000 185,000 185,000 185,000 185,000 185,000 185,000 185,000 185,000 1,915,000 535,000 - - - - 535,000 - 535,000 535,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 5,250,000 5,300,000 - - - - - - - - 5,300,000 - - 50,000 - - - 80,000 - - - - 130,000 4,500,000 5,400,000 6,500,000 6,500,000 6,500,000 6,630,000 6,762,000 6,910,000 7,040,000 7,180,000 7,324,416 71,246,416 - 685,000 - - - - - - - - - 685,000 80,000 100,000 - 180,000 - - 650,000 650,000 - 700,000 - 700,000 625,000 - - 625,000 - 650,000 650,000 675,000 675,000 650,000 - 650,000 2,500,000 2,500,000 - - - - - - - - - 75,000 75,000 10,400,000 6,350,000 7,270,000 6,685,000 8,060,000 9,015,000 7,777,000 8,495,000 8,625,000 8,115,000 11,509,416 92,301,416 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 8,800,000 - 2,800,000 - - - - - - - - - 2,800,000 150,000 150,000 630,000 - - - - - - - - - - 630,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,100,000 11000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000, 000 1,000,000 1,000,000 1,000,000 11,000,000 2,530,000 4,850,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 24,480,000 12,930,000 11,200,000 9,170,000 8,585,000 9,960,000 10,915,000 9,677,000 10,395,000 10,525,000 10,015,000 13,409,416 116,781,416 Village of Mount Prospect 2-7 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis 2.4.3 Existing and Proposed Debt Service Requirements Table 2-8 shows the existing and proposed debt service for the Village's water and sewer utilities. Table 2-8: Existing and Proposed Debt Service Line Projected No. 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Existing Water Debt 1 2017 192,660 197,100 201,180 203,220 208,800 213,960 218,640 222,900 224,940 232,620 235,440 2 2018A 196,500 200,280 206,580 209,280 212,880 216,120 222,000 227,400 230,640 236,580 241,620 3 2019A 367,860 376,380 384,060 390,780 399,060 406,620 413,460 422,580 431,100 439,140 449,580 4 2022A 228,893 232,406 237,569 242,225 248,489 251,960 257,039 263,599 267,324 272,106 278,709 5 Total Existing Debt 985,913 1,006,166 1,029,389 1,045,505 1,069,229 1,088,660 1,111,139 1,136,479 1,154,004 1,180,446 1,205,349 Existing Sewer Debt 6 2017 128,440 131,400 134,120 135,480 139,200 142,640 145,760 148,600 149,960 155,080 156,960 7 2018A 1311000 133,520 137,720 139,520 141,920 144,080 148,000 151,600 153,760 157,720 161,080 8 2019A 245,240 250,920 256,040 260,520 266,040 271,080 275,640 281,720 287,400 292,760 299,720 9 2022A 311,907 316,694 323,731 330,075 338,611 343,340 350,261 359,201 364,276 370,794 379,791 10 Total Existing Debt 816,587 832,534 851,611 865,595 885,771 901,140 919,661 941,121 955,396 976,354 997,551 Proposed Debt 11 Water Debt - - - - - 604,000 604,000 604,000 604,000 746,100 746,100 12 Sewer Debt - - - - - 177,700 177,700 177,700 177,700 213,200 213,200 13 Total Proposed Debt - - - - - 781,700 781,700 781,700 781,700 959,300 959,300 Existing and Proposed Debt 14 Total Water Debt 985,913 1,006,166 1,029,389 1,045,505 1,069,229 1,692,660 1,715,139 1,740,479 1,758,004 1,926,546 1,951,449 15 Total Sewer Debt 816,587 832,534 851,611 865,595 885,771 1,078,840 1,097,361 1,118,821 1,133,096 1,189,554 1,210,751 16 Totat Debt Service $ 1,802,500 $ 1,838,700 $ 1,881,000 $ 1,911,100 $ 1,955,000 $ 2,771,500 $ 2,812,500 $ 2,859,300 $ 2,891,100 $ 3,116,100 $ 3,162,200 [1] Proposed debt terms assumes 20 year term, 3.5% interest, and 1% bond issuance cost As shown on Lines 1 through 10, the Village has four outstanding debt series which provided funding for improvements to the water and sewer systems. Based on Village staff guidance the existing debt for 2017, 2018A, and 2019A was 60 percent attributed to water and 40 percent attributed to sewer, while 2022A was assumed to be attributed evenly at 50 percent to each. The proposed plan includes two debt issues, the first in 2027 amounting to $11.0 million and the second in 2031 amounting to $2.5 million. Proposed debt service payments are assumed to start in the year following debt issuance, based on an equal annual payment structure with a 20-year term, an annual interest rate of 3.5 percent with a 1.0 percent issuance expense. 2.4.4 Water Utility Flow of Funds Detailed cash flow tables were developed individually for the water and sewer utility, and then combined to show the consolidated utility cash flow under the proposed plan. Table 2-9 presents the water utility cash flow, Table 2-10 presents the sewer utility cash flow, and Table 2-11 shows the consolidated utility cash flow. Beginning with the water utility, Line 1 of Table 2-9 shows user revenues under 2023 rates, identified previously in Table 2-4. Lines 2 through 11 present the proposed revenue increases. All revenue increases are assumed to be effective January 1 of each year indicated. Total user revenues are summarized on Line 14. Village of Mount Prospect 2-8 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis All other water revenues are summarized on Line 15 which in 2023 primarily includes capital funding of deep well rehabilitation on Well # 11 and the Northwest water commission interconnect in the combined amount of $5.84 million. More routine non -rate revenues are estimated to remain at 2023 budgeted levels, with the exception of water penalties and interest income. Water penalties are assumed to increase in proportion to the increase in user charge revenues and interest income is calculated based on annual fund balances. Total water O&M expenses are shown on Line 16, shown previously in Table 2-6. The Village's outstanding and proposed debt is shown on Lines 17 through 19, identified previously in Table 2-8. Total revenue requirements are summarized on Line 20 of Table 2-9,. This amount is deducted from Line 15, total revenue, to determine the annual operating balance. With the proposed revenue adjustments, the operating balance on Line 21 is positive throughout the forecast and increasing to provide cash funding needed to minimize future debt issuance and move the utility closer to its goal of achieving a pay-as-you- go strategy for renewal and rehabilitation capital improvements over time. Lines 22 through 25 project future operating reserves for the water utility. For 2023, a beginning balance of approximately $17.8 million was estimated to be available for the water utility, as shown on Line 22. The annual operating balance is added to this amount to reflect cash produced by ongoing operations of the water utility. The utility intends to maintain a minimum operating balance of 90 days (or about 25 percent) of the next fiscal year's O&M, shown as the target on Line 26. Any balances exceeding this minimum are considered available for use on capital projects and are transferred for that purpose on Line 24. The water capital flow of funds is shown in Table 2-9 on Lines 27 through 33. Sources of funds for the capital plan include the transfer of available cash from operations and the issuance of debt. As noted previously, two debt issues are proposed for the water utility amounting to $ 8.5 million in proceeds in 2027 and $2.0 million in proceeds in 2031. Issuance expense associated with the proposed debt issues is assumed to be capitalized and reflected in the debt service payment. Water capital improvement projects shown on Line 31 are consistent with those shown previously in Table 2-7. Line 33 of Table 2-9 shows the annual capital balance. As can be seen, the forecast shows funding sources sufficient to cover the capital uses in each year, leaving a positive capital balance on Line 33. Balances accumulate over the study period but eventually decrease as the capital funding strategy shifts to a pay-as-you-go capital funding approach. Village of Mount Prospect 2-9 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis Line No. Water Utility Operating Flow of Funds 1 Revenue Under Existing Rates Proposed Revenue Adjustments Year Month Increase 2 2024 1 6.0% 3 2025 1 7.0% 4 2026 1 7.0% 5 2027 1 7.0% 6 2028 1 7.0% 7 2029 1 7.0% 8 2030 1 7.0% 9 2031 1 7.0% 10 2032 1 6.5% 11 2033 1 6.5% 12 Total Proposed Additional Revenue 13 Total Water User Charge Revenue 14 Other Water Fund Revenue 15 Grand Total Water Revenue Revenue Requirements 16 Operation and Maintenance Expense Debt Service 17 Existing G.O. Debt 18 Proposed Debt 19 Total Debt Service 20 Total Revenue Requirements 21 Annual Operating Balance 22 Beginning Balance Operating Funds 23 Annual Operating Balance 24 Transfers to Capital 25 Ending Operating Balance 26 Target Annual Operating Balance [1] Table 2-9: Water Utility Financial Plan Projected 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 15,660,600 15,515,700 15,372,100 15, 229,900 15,089,000 14,949,300 14,811,000 14,673,900 14,538,100 14,403,500 14,270,200 930,900 922,300 913,800 905,300 897,000 888,700 880,400 872,300 864,200 856,200 1,140, 600 1,130,100 1,119, 600 1,109, 200 1,099,000 1,088,800 1,078,700 1,068,700 1,058,800 1,209,200 1,198,000 1,186,900 1,175,900 1,165,000 1,154, 200 1,143,500 1,133,000 1,281,800 1,270,000 1,258, 200 1,246,600 1,235,000 1,223,600 1,212,300 1,358,900 1,346,300 1,333,800 1,321,500 1,309,200 1,297,100 1,440, 500 1,427, 200 1,414, 000 1,400, 900 1,387,900 1,527,100 1,513,000 1,499,000 1,485,100 1,618,900 1,603,900 1,589,000 1,593,600 1,578,800 1,681,400 - 930,900 2,062,900 3,253,100 4,504,700 5,822,000 7,208,600 8,668,900 10,207,600 11,706,600 13,279,600 15,660,600 16,446,600 17,435,000 18,483,000 19,593,700 20,771,300 22,019,600 23,342,800 24,745,700 26,110,100 27,549,800 6,763,200 296,000 263,500 278,800 294,900 306,300 325,300 345,600 367,300 386,700 408,800 22,423,800 16,742,600 17,698,500 18,761,800 19,888,600 21,077,600 22,344,900 23,688,400 25,113,000 26,496,800 27,958,600 12,085,873 12,607,794 13,156,756 13,576,540 14,009,921 14,430,218 14,775,785 15,100,081 15,431,726 15,770,893 16,117,759 985,900 1,006,200 1,029,400 1,045,500 1,069, 200 1,088,700 1,111,100 1,136,500 1,154,000 1,180,400 1,205,300 - - - - - 604,000 604,000 604,000 604,000 746,100 746,100 985,900 1,006, 200 1,029,400 1,045,500 1,069, 200 1,692, 700 1,715,100 1,740,500 1,758,000 1,926,500 1,951,400 13,071, 773 13, 613, 994 14,186,156 14, 622, 040 15,079,121 16,122, 918 16,490, 885 16,840, 581 17,189, 726 17, 697, 393 18,069,159 9,352,028 3,128,606 3,512,344 4,139,760 4,809,479 4,954,682 5,854,015 6,847,819 7,923,274 8,799,407 9,889,441 17,750,700 3,108,800 3,244,100 3,347,600 3,454,500 3,558,100 3,643,300 3,723,300 3,805,100 3,888,700 3,974,200 9,352,028 3,128,606 3,512,344 4,139,760 4,809,479 4,954,682 5,854,015 6,847,819 7,923,274 8,799,407 9,889,441 (23,993,928) (2,993,306) (3,408,844) (4,032,860) (4,705,879) (4,869,482) (5,774,015) (6,766,019) (7,839,674) (8,713,907) (9,802,041) 3,108,800 3,244,100 3,347,600 3,454,500 3,558,100 3,643,300 3,723,300 3,805,100 3,888,700 3,974,200 4,061,600 3,108,800 3,244,100 3,347,600 3,454,500 3,558,100 3,643,300 3,723,300 3,805,100 3,888,700 3,974,200 4,061,600 Water Utility Capital Flow of Funds Sources 27 Beginning Capital Balance - 13,593,928 10,237,233 6,376,077 3,723,937 8,869,817 4,724,298 2,721,313 992,333 2,207,007 2,805,914 28 Transfer from Operations 23,993,928 2,993,306 3,408,844 4,032,860 4,705,879 4,869,482 5,774,015 6,766,019 7,839,674 8,713,907 9,802,041 29 Debt Issuance (G.O.) - - - - 8,500,000 - - - 2,000,000 - - 30 Total Capital Sources 23,993,928 16,587,233 13,646,077 10,408,937 16,929,817 13,739,298 10,498,313 9,487,333 10,832,007 10,920,914 12,607,955 Uses 31 CIP 10,400,000 6,350,000 7,270,000 6,685,000 8,060,000 9,015,000 7,777,000 8,495,000 8,625,000 8,115,000 11,509,416 32 Total Capital Uses 10,400,000 6,350,000 7,270,000 6,685,000 8,060,000 9,015,000 7,777,000 8,495,000 8,625,000 8,115,000 11,509,416 33 Ending Capital Balance 13,593,928 10,237,233 6,376,077 3,723,937 8,869,817 4,724,298 2,721,313 992,333 2,207,007 2,805,914 1,098,539 34 Debt Service Coverage 10.49 4.11 4.41 4.96 5.50 3.93 4.41 4.93 5.51 5.57 6.07 [1] Annual Operating Balance target of 90 days 0&M Existing utility debt service has been issued in the form of General Obligation bonds, to be paid from utility rate revenues. Future debt issues are assumed to be similarly structured. Although these bonds do not include covenants regarding debt service coverage (DSC), as a matter of prudent planning debt service coverage is evaluated and is shown on Line 34. DSC requirements are commonly associated with revenue bonds and generally require net revenues (defined as total utility revenue less O&M) to exceed annual debt service payments by a minimum factor that may range from 1.1Ox to 1.35x. This minimum DSC level provides assurances to bond holders that the utility has the financial wherewithal to meet its annual debt payment. Municipal bond rating agencies evaluate many criteria regarding the creditworthiness of utility debt. Debt service coverage is one of the primary indicators that is examined, and rating agencies generally reserve their stronger ratings for debt service coverage ratios that exceed Village of Mount Prospect 2-10 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis 1.5x to 2.Ox. As shown on Line 34, the water utility is anticipated to have DSC exceeding 2.Ox in each year of the forecast with a minimum of 3.9x in 2028. 2.4.5 Sewer Utility Flow of Funds Table 2-10 presents the sewer utility cash flow. Lines 2 through 11 present the proposed revenue increases. All revenue increases are assumed to be effective January 1 of each year indicated. Total user revenues are summarized on Line 13. Line 14 summarizes other sewer fund revenue, which is projected to remain at 2023 budget levels, with the exception of sewer penalties and interest income. Sewer penalties which are assumed to increase in proportion to the increase in user charge revenues and interest income are calculated based on annual balances. Line 15 shows the total operating revenue forecasted over the study period. Total sewer O&M expenses are shown on Line 16, shown previously in Table 2-6. The Village's outstanding and proposed debt is shown on Lines 17 through 19 and are identified previously in Table 2-8. Total revenue requirements are summarized on Line 20. This amount is deducted from Line 15, total revenue, to determine the annual operating balance. With the proposed revenue adjustments, the operating balance on Line 21 is positive throughout the forecast. Lines 22 through 25 project future operating reserves for the sewer utility. For 2023, a beginning balance of approximately $3.1 million was estimated to be available for the sewer utility, as shown on Line 22. The annual operating balance is added to this amount to reflect cash produced by ongoing operations of the sewer utility. The utility intends to maintain a minimum operating balance of 90 days (or about 25 percent) of the next fiscal year's O&M, shown as the target on Line 26. Any balances exceeding this minimum are considered available for use on capital projects and are transferred for that purpose on Line 24. The sewer capital flow of funds is shown in Table 2-10 on Lines 27 through 33. Sources of funds for the capital plan include the transfer of available cash from operations and the issuance of debt. There are no anticipated debt issuances for the sewer utility. The sewer utility capital plan is funded using the remaining proceeds of the 2022A debt issue, proposed future debt, and cash generated from operations. Sewer capital improvement projects shown on Line 31 are consistent with those shown in Table 2-7. Village of Mount Prospect 2-11 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis Table 2-10: Sewer Utility Financial Plan Line Projected No. 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Sewer Utility Operating Flow of Funds 1 Revenue Under Existing Rates 3,913,100 3,876,900 3,841,000 3,805,500 3,770,300 3,735,400 3,700,800 3,666,500 3,632,600 3,598,900 3,565,600 Proposed Revenue Adjustments Year Month Increase 2 2024 1 5.75% 222,900 220,900 218,800 216,800 214,800 212,800 210,800 208,900 206,900 205,000 3 2025 1 5.75% 233,600 231,400 229,300 227,100 225,000 222,900 220,900 218,800 216,800 4 2026 1 5.75% 244,700 242,400 240,200 238,000 235,800 233,600 231,400 229,300 5 2027 1 5.75% 256,400 254,000 251,700 249,300 247,000 244,700 242,500 6 2028 1 5.75% 268,600 266,100 263,700 261,200 258,800 256,400 7 2029 1 5.75% 281,400 278,800 276,200 273,700 271,100 8 2030 1 5.75% 294,800 292,100 289,400 286,700 9 2031 1 3.50% 188,000 186,300 184,600 10 2032 1 3.50% 192,800 191,000 11 2033 1 3.50% 197,700 12 Total Proposed Additional Revenue - 222,900 454,500 694,900 944,900 1,204,700 1,475,000 1,756,100 1,927,900 2,102,800 2,281,100 13 Total Sewer User Charge Revenue 3,913,100 4,099,800 4,295,500 4,500,400 4,715,200 4,940,100 5,175,800 5,422,600 5,560,500 5,701,700 5,846,700 14 Other Sewer Fund Revenue 189,800 78,300 69,800 72,700 75,600 77,100 80,500 84,100 85,900 88,200 76,000 15 Grand Total Sewer Revenue 4,102,900 4,178,100 4,365,300 4,573,100 4,790,800 5,017,200 5,256,300 5,506,700 5,646,400 5,789,900 5,922,700 Revenue Requirements 16 Operation and Maintenance Expense 2,128,100 2,259,500 2,399,500 2,485,800 2,575,200 2,652,400 2,732,000 2,803,000 2,875,900 2,950,800 3,027,700 Debt Service 17 Existing G.O. Debt 816,600 832,500 851,600 865,600 885,800 901,100 919,700 941,100 955,400 976,400 997,600 18 Proposed Debt - - - - - 177,700 177,700 177,700 177,700 213,200 213,200 19 Total Debt Service 816,600 832,500 851,600 865,600 885,800 1,078,800 1,097,400 1,118,800 1,133,100 1,189,600 1,210,800 20 Total Revenue Requirements 2,944,700 3,092,000 3,251,100 3,351,400 3,461,000 3,731,200 3,829,400 3,921,800 4,009,000 4,140,400 4,238,500 21 Annual Operating Balance 1,158,200 1,086,100 1,114,200 1,221,700 1,329,800 1,286,000 1,426,900 1,584,900 1,637,400 1,649,500 1,684,200 22 Beginning Balance Operating Funds 3,125,600 557,100 591,700 612,900 635,000 654,000 673,600 691,200 709,100 727,600 746,600 23 Annual Operating Balance 1,158,200 1,086,100 1,114,200 1,221,700 1,329,800 1,286,000 1,426,900 1,584,900 1,637,400 1,649,500 1,684,200 24 Transfers to Capital (3,726,700) (1,051,500) (1,093,000) (1,199,600) (1,310,800) (1,266,400) (1,409,300) (1,567,000) (1,618,900) (1,630,500) (1,664,700) 25 Ending Operating Balance 557,100 591,700 612,900 635,000 654,000 673,600 691,200 709,100 727,600 746,600 766,100 26 Target Annual Operating Balance [1] 557,100 591,700 612,900 635,000 654,000 673,600 691,200 709,100 727,600 746,600 766,100 Sewer Utility Capital Flow of Funds Sources 27 Beginning Capital Balance 5,058,000 6,254,700 2,456,200 1,649,200 948,800 2,859,600 2,226,000 1,735,300 1,402,300 1,621,200 1,351,700 28 Transfer from Operations 3,726,700 1,051,500 1,093,000 1,199,600 1,310,800 1,266,400 1,409,300 1,567,000 1,618,900 1,630,500 1,664,700 29 Debt Issuance (G.O.) - - - - 2,500,000 - - - 500,000 - - 30 Total Capital Sources 8,784,700 7,306,200 3,549,200 2,848,800 4,759,600 4,126,000 3,635,300 3,302,300 3,521,200 3,251,700 3,016,400 Uses 31 CIP 2,530,000 4,850,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 32 Total Capital Uses 2,530,000 4,850,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 33 Ending Capital Balance 6,254,700 2,456,200 1,649,200 948,800 2,859,600 2,226,000 1,735,300 1,402,300 1,621,200 1,351,700 1,116,400 34 Debt Service Coverage 2.42 2.30 2.31 2.41 2.50 2.19 2.30 2.42 2.45 2.39 2.39 [1] Annual Operating Balance target of 90 days 0&M Line 33 of Table 2-10 shows the annual capital balance. As can be seen, the forecast shows funding sources sufficient to cover the capital uses in each year, leaving a positive capital balance on Line 33. Similar to the water utility, sewer DSC is projected to remain above 2.Ox during the study period reaching a low point of 2.19x in 2028. 2.4.6 Consolidated Utility Flow of Funds A combined water and sewer utility detailed cash flow table is presented in Table 2-11. On a consolidated basis, proposed revenue adjustments range from 5.95 percent to about 6.76 percent for 2024 through 2033, as shown on Lines 3 through 12. Ending operating balances meet the 90-day operating reserve in each year. The CIP is fully funded by the available cash and proposed debt issuance. The plan relies on Village of Mount Prospect 2-12 Burns & McDonnell Water and Sewer Rate Study Draft Report Financial Planning Analysis some issuance of additional debt but capital projects are primarily funded by remaining 2022A proceeds and a pay-as-you-go strategy over time. Table 2-11: Combined Water and Sewer Utility Financial Plan Line Projected No. 2023 2024 202S 2026 2027 2028 2029 2030 2031 2032 2033 Water & Sewer Utility Operating Flow of Funds 1 Water Revenue Under Existing Rates 15,660,600 15,515,700 15,372,100 15,229,900 15,089,000 14,949,300 14,811,000 14,673,900 14,538,100 14,403,500 14,270,200 2 Sewer Revenue Under Existing Rates 3,913,100 3,876,900 3,841,000 3,805,500 3,770,300 3,735,400 3,700,800 3,666,500 3,632,600 3,598,900 3,565,600 Proposed Revenue Adjustments Year Month Increase 3 2024 1 5.95% 1,153,800 1,143,200 1,132,600 1,122,100 1,111,800 1,101,500 1,091,200 1,081,200 1,071,100 1,061,200 4 2025 1 6.75% 1,374,200 1,361,500 1,348,900 1,336,300 1,324,000 1,311,700 1,299,600 1,287,500 1,275,600 5 2026 1 6.75% 1,453,900 1,440,400 1,427,100 1,413,900 1,400,800 1,387,800 1,374,900 1,362,300 6 2027 1 6.76% 1,538,200 1,524,000 1,509,900 1,495,900 1,482,000 1,468,300 1,454,800 7 2028 1 6.76% 1,627,500 1,612,400 1,597,500 1,582,700 1,568,000 1,553,500 8 2029 1 6.76% 1,721,900 1,706,000 1,690,200 1,674,600 1,659,000 9 2030 1 6.76% 1,821,900 1,805,100 1,788,400 1,771,800 10 2031 1 6.34% 1,806,900 1,790,200 1,773,600 11 2032 1 5.95% 1,786,400 1,769,800 12 2033 1 5.96% 1,879,100 13 Total Proposed Additional Revenue - 1,153,800 2,517,400 3,948,000 5,449,600 7,026,700 8,683,600 10,425,000 12,135,500 13,809,400 15,560,700 14 Total Utility User Charge Revenue 19,573,700 20,546,400 21,730,500 22,983,400 24,308,900 25,711,400 27,195,400 28,765,400 30,306,200 31,811,800 33,396,500 15 Total Utility Fund Other Revenue 6,953,000 374,300 333,300 351,500 370,500 383,400 405,800 429,700 453,200 474,900 484,800 16 Grand Total Water Revenue 26,526,700 20,920,700 22,063,800 23,334,900 24,679,400 26,094,800 27,601,200 29,195,100 30,759,400 32,286,700 33,881,300 Revenue Requirements 17 Operation and Maintenance Expense 14,213,973 14,867,294 15,556,256 16,062,340 16,585,121 17,082,618 17,507,785 17,903,081 18,307,626 18,721,693 19,145,459 Debt Service 18 Existing G.O. Debt 1,802,500 1,838,700 1,881,000 1,911,100 1,955,000 1,989,800 2,030,800 2,077,600 2,109,400 2,156,800 2,202,900 19 Proposed Debt - - - - - 781,700 781,700 781,700 781,700 959,300 959,300 20 Total Debt Service 1,802,500 1,838,700 1,881,000 1,911,100 1,955,000 2,771,500 2,812,500 2,859,300 2,891,100 3,116,100 3,162,200 21 Total Revenue Requirements 16,016,473 16,705,994 17,437,256 17,973,440 18,540,121 19,854,118 20,320,285 20,762,381 21,198,726 21,837,793 22,307,659 22 Annual Operating Balance 10,510,228 4,214,706 4,626,544 5,361,460 6,139,279 6,240,682 7,280,915 8,432,719 9,560,674 10,448,907 11,573,641 23 Beginning Balance Operating Funds 20,876,300 3,66S,900 3,83S,800 3,960,S00 4,089,500 4,212,100 4,316,900 4,414,500 4,514,200 4,616,300 4,720,800 24 Annual Operating Balance 10,510,228 4,214,706 4,626,544 5,361,460 6,139,279 6,240,682 7,280,915 8,432,719 9,560,674 10,448,907 11,573,641 25 Transfers to Capital (27,720,628) (4,044,806) (4,501,844) (5,232,460) (6,016,679) (6,135,882) (7,183,315) (8,333,019) (9,458,574) (10,344,407) (11,466,741) 26 Ending Operating Balance 3,665,900 3,835,800 3,960,500 4,089,500 4,212,100 4,316,900 4,414,500 4,514,200 4,616,300 4,720,800 4,827,700 27 Target Annual Operating Balance [1] 3,665,900 3,835,800 3,960,500 4,089,500 4,212,100 4,316,900 4,414,500 4,514,200 4,616,300 4,720,800 4,827,700 Utility Capital Flow of Funds Sources 28 Beginning Capital Balance 5,058,000 19,848,628 12,693,433 8,025,277 4,672,737 11,729,417 6,950,298 4,456,613 2,394,633 3,828,207 4,157,614 29 Transfer from Operations 27,720,628 4,044,806 4,501,844 5,232,460 6,016,679 6,135,882 7,183,315 8,333,019 9,458,574 10,344,407 11,466,741 30 Debt Issuance (G.O.) - - - - 11,000,000 - - - 2,500,000 - - 31 Total Capital Sources 32,778,628 23,893,433 17,195,277 13,257,737 21,689,417 17,865,298 14,133,613 12,789,633 14,353,207 14,172,614 15,624,355 Uses 32 Water CIP 10,400,000 6,350,000 7,270,000 6,685,000 8,060,000 9,015,000 7,777,000 8,495,000 8,625,000 8,115,000 11,509,416 33 Sewer CIP 2,S30,000 4,8S0,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 34 Total Capital Uses 12,930,000 11,200,000 9,170,000 8,585,000 9,960,000 10,915,000 9,677,000 10,395,000 10,525,000 10,015,000 13,409,416 35 Ending Capital Balance 19,848,628 12,693,433 8,025,277 4,672,737 11,729,417 6,950,298 4,456,613 2,394,633 3,828,207 4,157,614 2,214,939 36 Debt Service Coverage 6.83 3.29 3.46 3.81 4.14 3.25 3.59 3.95 4.31 4.35 4.66 [1] Annual Operating Balance target of 90 days O&M Village of Mount Prospect 2-13 Burns & McDonnell Water and Sewer Rate Study Draft Report Proposed Rates 3.0 PROPOSED RATES 3.1 Introduction The primary focus of Step 2, Rate Design, is the development of user charge rates. Generally speaking, the objective is to design rates for each utility to achieve the following goals: • Generate adequate revenues to meet the projected operating and capital costs, while maintaining sound financial performance. • Provide revenue stability. 3.2 Existing Water and Sewer Rates The current 2023 water and sewer rate schedule is shown in Table 3-1. The water rate consists of a fixed fee that varies by meter size and a volumetric charge per thousand gallons for both Inside and Outside Village customers. The sewer rate consists of a uniform fixed fee and a volumetric charge per thousand gallons for both Inside and Outside Village customers. Table 3-1: Existing Water and Sewer Rates Existi Une 20,23 No Description Base Chair Water - Inside ViHage 1 5/811 8 010, 2 3/411 8 010, 3 ill $ 8 010, 4 1 5" $ 12 00 5 211 $ 18 010, 6 311 $ 59 00 7 4" $ 74 00 8 611 $ 1019 010, 9 811 $ iso, 010, Water - Outside Vfflage 10, 5/811 $ 16 00 11 3/411 $ 16 00 12 ill $ 16 00 13 1 5" $ 24 00 14 211 $ 36 00 15 311 $ 118 010, 16 411 $ 148 00 17 611 $ 218 00 18 811 $ 300.00 19 Sewer - Inside ViHage $ 5 40, 20, Sewer - Outside Viflage Wuimie Charge $/KgaIlI 21 Wateir - Inside ViHage 13 66 22 Water - Outside ViHage 27,32 23 Sewer - Inside ViHage 3 02 24 Seweir - Outside Viflage 6 04 Village of Mount Prospect 3-1 Burns & McDonnell Water and Sewer Rate Study Draft Report Proposed Rates As a matter of practice, rates for service provided to Outside Village customers are set at 2.0 times Inside Village rates. Water and sewer rates applicable to Outside Village customers are reflective of this multiplier for both base and volume charges. 3.3 Proposed Water and Sewer Rates Table 3-2 shows existing and proposed water and sewer rates. Water and sewer rates for 2024 through 2033 are anticipated to maintain the existing rate structure and increase in accordance with water and sewer rate increases shown previously in Table 2-9 and Table 2-10, respectively. Table 3-2: Existing and Proposed Water and Sewer Rates Existing, 1, d Line 202 3 202 4 2025 20�26 2027 2028 2029 2030 2031 2103,2 21033 o Desch pt on Base CharLe Water - maids llllage 3 # 8.1 a $ 9.107 9.71 10.39 11.. $ 12.73 $ 1162 14.E 1,15A4 3" 519.00 62.E 66,92 7L60 76.61 81.98 7.72 $ 93.86, $100.43 &95 $ 13:9 Water - Outside Viflage 5 3!11 11&00 125.108 133.E $ 14120 $ 15123 163.95 5. 3 7.7 $ .85 $2119 227,S 8 8H $ 300 w 100 $ 318,E ,& $ 364M $ 389w56 4161.3 $ 446.011 $ 4,7.23 $S10.64 $S43. 3 $ 5 9w 8 19 Sewer- Insi e iilIlfl ge $ 5, $ 5.7 $ &04 $ 6,,39 ° .75 $ 7.14 $ 7.55 $ 7.99, $ 8w2 ' $ 8u S6 $, 8.85 Volume Charge 21, Water - II I ll $ 1 . 6$ 14AS $ 15.49 $ 1&rS8 $ 17.74 $ 18.98 $ 20.31 $ $ 24. .37 22 Water - Outs i ° 'i01p1 , $ 28.96 $ 30.99 $ 3116$ 35.48 $ 37.96 40.62 . 4 1 $ $ 49.52 52.74 23, Y er - Inside Vi111ag . 19 $ 3.38 $ 3.57 $ 3.78 3,99$, 4.62 4.78m9 24 Sewer - Outside Vihage 6.104 $ 6.39 $ 6,.75 $ '. 14 $ 7.55 T99$ 8A5 8.9139.25 91r57 9.90 Table 3-3 shows the changes in monthly water bills over the study period, assuming all proposed rates are implemented through 2033. As shown on Lines 7 through 9, the impact of proposed rate increases aligns with percentage increases shown previously on Table 2-9. Village of Mount Prospect 3-2 Burns & McDonnell Water and Sewer Rate Study Draft Report Proposed Rates Table 3-3: Typical Water Bills Under Existing and Proposed Rates Billable Monthly Bill Under Rates Line Flow Existing Proposed No. Customer Type & Meter Size Kgal 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Water Utility 1 Residential (5/8" - 1") 5.0 $ 76.30 $ 80.88 $ 86.54 $ 92.60 $ 99.08 $ 106.01 $ 113.44 $ 121.38 $ 129.87 $ 138.31 $ 147.30 2 Residential (5/8" - 1") 10.0 $ 144.60 $ 153.28 $ 164.01 $ 175.49 $ 187.77 $ 200.91 $ 214.98 $ 230.03 $ 246.13 $ 262.13 $ 279.16 3 Residential (5/8" - 1") 15.0 $ 212.90 $ 225.67 $ 241.47 $ 258.37 $ 276.46 $ 295.81 $ 316.52 $ 338.68 $ 362.38 $ 385.94 $ 411.02 Change in $ over prior year 4 Residential (5/8" - 1") $ 4.58 $ 5.66 $ 6.06 $ 6.48 $ 6.94 $ 7.42 $ 7.94 $ 8.50 $ 8.44 $ 8.99 5 Residential (5/8" - 1") $ 8.68 $ 10.73 $ 11.48 $ 12.28 $ 13.14 $ 14.06 $ 15.05 $ 16.10 $ 16.00 $ 17.04 6 Residential (5/8" - 1") $ 12.77 $ 15.80 $ 16.90 $ 18.09 $ 19.35 $ 20.71 $ 22.16 $ 23.71 $ 23.55 $ 25.09 Change in % over prior year 7 Residential (5/8" - 1") 6.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 6.5% 6.5% 8 Residential (5/8" - 1") 6.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 6.5% 6.5% 9 Residential (5/8" - 1") 6.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 6.5% 6.5% Table 3-4 shows the changes in sewer bills over the study period, assuming all rate increases and proposed rates are implemented through 2033. As shown on Lines 7 through 9 the impact of proposed rate increases is approximately 5.75 percent per year through 2030, and then declines to 3.5 percent per year through 203 3, aligning with percentage increases shown previously on Table 2-10. Table 3-4: Typical Sewer Bills Under Existing and Proposed Rates Billable Monthly Bill Under Rates Line Flow Existing Proposed No. Customer Type & Meter Size Kgal 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Sewer Utility 1 Residential (5/8" - 1") 5.0 $ 20.50 $ 21.68 $ 22.93 $ 24.24 $ 25.64 $ 27.11 $ 28.67 $ 30.32 $ 31.38 $ 32.48 $ 33.62 2 Residential (5/8" - 1") 10.0 $ 35.60 $ 37.65 $ 39.81 $ 42.10 $ 44.52 $ 47.08 $ 49.79 $ 52.65 $ 54.49 $ 56.40 $ 58.38 3 Residential (5/8" - 1") 15.0 $ 50.70 $ 53.62 $ 56.70 $ 59.96 $ 63.41 $ 67.05 $ 70.91 $ 74.98 $ 77.61 $ 80.33 $ 83.14 Change in $ over prior year 4 Residential (5/8" - 1") $ 1.18 $ 1.25 $ 1.32 $ 1.39 $ 1.47 $ 1.56 $ 1.65 $ 1.06 $ 1.10 $ 1.14 5 Residential (5/8" - 1") $ 2.05 $ 2.16 $ 2.29 $ 2.42 $ 2.56 $ 2.71 $ 2.86 $ 1.84 $ 1.91 $ 1.97 6 Residential (5/8" - 1") $ 2.92 $ 3.08 $ 3.26 $ 3.45 $ 3.65 $ 3.86 $ 4.08 $ 2.62 $ 2.72 $ 2.81 Change in % over prior year 7 Residential (5/8" - 1") 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 3.50% 3.50% 3.50% 8 Residential (5/8" - 1") 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 3.50% 3.50% 3.50% 9 Residential (5/8" - 1") 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 3.50% 3.50% 3.50% Table 3-5 shows the combined changes in water and sewer bills over the study period, assuming all rate increases and proposed rates are implemented through 2033. Lines 7 through 9 show the percentage change from year to year which consolidates the impact of proposed water and sewer rate increases. Village of Mount Prospect 3-3 Burns & McDonnell Water and Sewer Rate Study Draft Report Proposed Rates Table 3-5: Typical Combined Water and Sewer Bills Under Existing and Proposed Rates Billable Monthly Bill Under Rates Line Flow Existing Proposed No. Customer Type & Meter Size Kgal 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Water and Sewer Utility 1 5/8" 5.0 $ 96.80 $ 102.56 $ 109.46 $ 116.84 $ 124.72 $ 133.13 $ 142.11 $ 151.70 $ 161.25 $ 170.79 $ 180.92 2 3/4" 10.0 $ 180.20 $ 190.92 $ 203.82 $ 217.59 $ 232.29 $ 248.00 $ 264.77 $ 282.68 $ 300.62 $ 318.53 $ 337.54 3 1" 15.0 $ 263.60 $ 279.29 $ 298.17 $ 318.33 $ 339.87 $ 362.86 $ 387.43 $ 413.66 $ 439.99 $ 466.26 $ 494.16 Change in $ over prior year 4 5/8" $ 5.76 $ 6.91 $ 7.38 $ 7.88 $ 8.41 $ 8.98 $ 9.59 $ 9.56 $ 9.54 $ 10.13 5 3/4" $ 10.72 $ 12.89 $ 13.77 $ 14.70 $ 15.70 $ 16.77 $ 17.91 $ 17.94 $ 17.91 $ 19.01 6 1" $ 15.69 $ 18.88 $ 20.16 $ 21.53 $ 23.00 $ 24.56 $ 26.23 $ 26.33 $ 26.27 $ 27.90 Change in % over prior year 7 5/8" 5.95% 6.74% 6.74% 6.74% 6.74% 6.75% 6.75% 6.30% 5.92% 5.93% 8 3/4" 5.95% 6.75% 6.76% 6.76% 6.76% 6.76% 6.76% 6.35% 5.96% 5.97% 9 1" 5.95% 6.76% 6.76% 6.76% 6.77% 6.77% 6.77% 6.37% 5.97% 5.98% 3.4 Regional Water and Sewer Typical Bills A comparison of rates for fifteen regional utilities (including Mount Prospect) was conducted based on rates in effect as of August 1, 2023. Figure 3-1 shows a combined water and sewer bill for a 5/8-inch meter using 5,000 gallons a month for these regional providers. As shown in Figure 3-1, the regional typical bill ranges from about $3 8 per month to about $104 per month, with Mount Prospect currently at about $97 a month under 2023 rates. The average across this survey is roughly $60 per month. Figure 3-1: Residential Water and Sewer Bill Comparison at 5,000 Gallons per Month 120 C Village of Mount Prospect 3-4 Burns & McDonnell Water and Sewer Rate Study Draft Report Proposed Rates 3.5 Statement of Limitations In preparation of the Village of Mount Prospect Rate Study (Study), Burns & McDonnell relied upon information provided by the Village. The information included various analyses, computer -generated information and reports, audited financial reports, and other financial and statistical information, as well as other documents such as operating budgets and current rate schedules. In addition, input to key assumptions regarding expected future levels of revenue, sales, and expenditures was provided by Village staff to Burns & McDonnell. While Burns & McDonnell has no reason to believe that the information provided, and upon which Burns & McDonnell has relied, is inaccurate or incomplete in any material respect, Burns & McDonnell has not independently verified such information and cannot guarantee its accuracy or completeness. Estimates and projections prepared by Burns & McDonnell relating to financial forecasting and costs are based on Burns & McDonnell's experience, qualifications, and judgment as a professional consultant. Since Burns & McDonnell has no control over weather, cost and availability of labor, material and equipment, labor productivity, contractors' procedures and methods, unavoidable delays, economic conditions, government regulations and laws (including interpretation thereof), competitive bidding, and market conditions or other factors affecting such estimates or projections, Burns & McDonnell does not guarantee the accuracy of its estimates or predictions. Village of Mount Prospect 3-5 Burns & McDonnell U NS MC.DONNELL.im CREATE AMAZING. Burns & McDonnell World Headquarters 9400 Ward Parkway Kansas City, MO 64114 O 816-333-9400 F 816-333-3690 www.burnsmcd.com