MANAGER'S REPORT
8/14/24
Budget Position Report
Actual cash in the door was $120,741.66, which includes Late Fees, Investment interest, Rate Payer revenue, and new meter installation revenue. Operational expenditures total $82,652.24. So operational revenues exceeded operational expenditures by $38,089.42. There was a capital expenditure (Generator transfer switch and As-Built project) of $26,103.93. Total cash out the door was $108,756.17. So cash-in exceeded cash-out by $6,014.51.
We contributed $18,578.00 to reserves:
Out to Capital Replacement Fund: $ 14,378.00
Out to Major Repair Fund: $ 0.00
Out to USDA Loan Reserve: $ 4,200.00
We have to keep up contributions to these two funds even when revenues don’t completely cover the amounts.
I have included a Reconciled Budget Position Report for all funds, including beginning balances, for your information.
Treasurer’s Report: Current EOY 2023
Fund Balances:
Regular Maintenance Fund: $ 27,691.07 $ 81,720.29
Capital Replacement Fund: $ 207,902.26 $205,953.45
Major Repair Reserve: $1,083,053.72 $666,893.55
General Facilities Fund: $ 166,698.72 $162,586.55
Total Funds Available: $1,485,345.77 $1,117,154.25
2025 Budget
Working off the base report from last month, I have worked through each line item and made the best estimation, given the information available at this time, as to what next year will look like.
You have the 5-year budget comparison in your packets. I will be going over this in some detail at the meeting.
2024
Revenues:
At this point in 2024 (as of July 31) we have collected $801,885. That rate projects out to an estimated annual revenue of $1,603,770. Our actual revenues, if history holds, will be very close to that. We projected, based on rates and history, revenue of $1,220,703.
Because of the transfer of payroll responsibilities from the County to the District, we discontinued use of the revenue clearing account. So 2024 regular maintenance revenues show up in the General Maintenance Income line item and as income from the 601 Revenue Clearing line item.
Expenditures:
So far in 2024 we have spent $491,692 in operating expenses. That puts us on track to spend $983,384 by the end of the year. We budgeted $881,528. So we are over budget for 2024.
Capital Expenditures:
We have, so far, spent $172,894 on capital projects. There are primarily two, the water system plan, and the Well #5 pump replacement.
I expect we will finalize a truck purchase and a generator or vac-trailer purchase before the end of the year.
2025
Revenues:
Note that money will be transferred from reserve accounts into the Regular Maintenance Fund. All revenue and expenses find their way through this fund in one way or another. So when we make purchases from reserve funds, money has to be transferred from the reserve fund to the Regular Maintenance Fund.
In this iteration I am proposing an 8% rate increase. The percentage is based on the 2024 projection, not actual 2024 revenues. At that rate I am projecting rate payer revenues of $1,318,359.
Income from late fees and investments is estimated from history. Total actual income (excluding interfund transfers) for 2025 is projected at $1,577,240.
Expenditures:
In working up payroll expenses, I developed a spreadsheet that takes into account the salary and benefits for the new general manager as well as a 6% increase for the staff. The spreadsheet bundles the salaries and benefits. In future iterations, I will break those numbers out.
For the rest of the expenses I went through each line item and made estimates based on 2024 expenditures, taking into account usual and unusual expenses, for each line item. Using past history, I attempted to make an estimate as to which line items are likely to have significant increases, and which will have modest or no increases.
I have not included the USDA payments, as that is the one case where we record the payments directly from the reserve fund. The money for the payment is recorded in the interfund transfer section.
Capital Expenditures:
I have included the purchase of a service truck in the 2025 budget, though we need to resolve that issue this year. That purchase will impact next year’s budget, so it appears here. For the same reason the generator or vac-trailer are included in 2025.
The money for the service truck will come out of the Capital Replacement Fund.
The other capital projects are the reservoir access roads. That money comes from operational revenues, not reserve funds.
Interfund Transfers:
The transfers to the Capital Replacement fund are based on my Capital Asset Management spreadsheet. I have included a copy in your packets. Talk about exercising the crystal ball. The life expectancy is a method to attribute money to the asset. Money for repairs and upgrades to the asset may be drawn from this reserve fund. The cost and life expectancy of the repair or upgrade would be folded back into the calculation.
The transfers to the Major Repair Reserve are essentially determined by subtracting all the other expenses from revenues. It is very much an estimate, as I transfer whatever income is left over from expenditures each month to this reserve fund. The objective of the rate increase is to ensure that some money goes into this fund to replace any expenditures. A realistic goal for this fund is a running balance of $1.5 million. We aren’t there yet. One really major water main break would eat through that much money in a matter of a few hours. Water main breaks are not and cannot be covered by insurance.
Though this fund is labelled as Major Repair Reserve, we can use it for whatever comes up, subject to commissioner approval.
The bottom line is, as currently configured from currently available data, this budget shows $1,577,240 operational income, $812,046 operational expenses, $350,000 major projects, for net operating income of $415,194.
There are two capital equipment expenditures proposed totaling $210,000, to be drawn from reserves, which results in a projected increase in total cash assets for the year of $205,194.
For discussions on the generator/vac-trailer, see below.
Monthly Utility Totals Report.
August billing (Section 2) is $98,662.09.
Claims Request
There seems to be a lot of bills this month. Total claims are $48,321.27.
We had quite a few calls to Brumfield for assistance, and there are a couple of instances where vendors’ invoices did not get into line. They were all emailed, so I am thinking they got lost in cyberspace somewhere. Notably, Jerome Morrisette & Associates and Seattle Techs.
Water Bill Appeal
None of which I am aware.
Receipt Register
Receipts for July according to the receipt register were $121,511.36. Anticipating about $35,000 of expenses that will paid out of the General Maintenance checking account, $86,000 will be transferred to the County Treasurer account to cover Claims paid out of that account.
IT Issues
The SCADA issues appears to be resolved.
We had some issues with the web site, but they are resolved.
Capital Asset Management
See below for discussions on the replacement service truck.
Request for Public Information
We have gathered the data and sent a letter to the person requesting the information regarding the reimbursement. Once we have received the reimbursement we will deliver the information.
Payroll Report
In your packets. No major surprises.
Isolation Valves
The as-built project is underway.
Production Data
No big surprises.
The question has arisen as to the run times and production of the two pumps. Here is the data for 2023
Pump #5 Pump #6
Starts 1,000 1,034
Run Time 1,173 2,026
Flow 64,591,879 85,592,388
Active Projects
Several projects are in process, but seem to be going slowly as preliminary work is moving forward. There is a lot on my plate and the highest priority projects get first call on my attention.
GENERATOR INVESTIGATION
PUD has provided our peak demand, which is 147kw. In order to have a margin of safety, at least 180kw would be wise.
But they don’t seem to come in that size. The standard size is 200kw. Short of actually soliciting bids, it looks like price range is in the $115,000 to $120,000 range. That may come down in a bidding situation.
In view of some re-evaluation of our risks, I am proposing to slow walk this project for the moment. See comments on the vac-trailer.
WATER SYSTEM PLAN
It is very close, but not quite finished. I had hoped it would be submitted by now.
GHC TRANSIT
No news in March. This project may drag on for some few years.
REYNVAAN EXTENSION
The signed engineering contract has been forwarded to Northwest Water Systems, Inc. The project is in their queue.
SHOP FENCE
We will be acting as soon as the fire district installs their conex.
ACCESS ROADS
I am working with JWM&A to update the engineering for these projects. Given how late we are in the year, these will have to wait until next year.
I may yank this project from JWM&A. They are raising a number of issues that are not germane to repaving private roads.
I will have some other observations at the meeting.
AS-BUILTS UPDATE
There is a new base map available. It looks spectacular. The next step is to do the field work to refine locations. I am hoping that will happen before Fall.
ON-SITE CHLORINE GENERATION
In the past year the cost of chlorine has jumped from $7.10/gallon to $10.40/gallon, a 45% increase.
It may be time to take a serious look at this project.
LEAD SERVICE LINE INVENTORY
I am making good progress on this project. At this stage it is primarily data collection and entry. So far, all the data we need is in district files. This project has consumed a good deal of my time.
CAMERAS
It has become apparent that we need additional surveillance cameras in the critical areas. I have a proposal in hand. It is a bit more expensive than I anticipated.
I am slow-walking it. We have some other substantial expenses ahead of the cameras.
ELECTRONIC LOCKS
First phase is completed.
We will work with these for awhile before I propose a second phase. So far I am very pleased.
One area of concern is access when one of the key holders is not available. There may be an instance when a commissioner needs access.
The vendor suggested keys for the commissioners. I don’t think that is practical. I am researching an outside lock box large enough to hold one of the electronic keys.
Next steps may be padlocks on the Well Site gate, the Reynvaan Booster Station Gate, and the shop site gates. The padlocks we use are pretty basic and can be defeated with a basic bolt cutter. They need to be more robust.
I am not concerned about a terrorist incident. I think our size makes us unattractive to anything sophisticated. My main concern is vandalism and theft.
VAC-TRAILER
A recent event has caused me to re-evaluate my priority recommendations. In the past year we have been evaluating the feasibility and costs of acquiring a generator capable of powering the main pump house.
Late last week we had a fairly major leak on Fairway Drive. The project was large enough to make it advisable to use a vac-truck, which our vendor provided.
However, their primary asset was tied up on another project, and they had to send a unit that, shall we say, is near the end of it’s useful life. The end result was a project that took longer than it should have, left considerable oil stains on the road, left a muddy mess in the community, and, possibly, compromised the sanitary integrity of the water main.
We have communicated our displeasure to the vendor. Stronger measures are not warranted. This vendor has provided a high level of service to the district over the years, often going above and beyond that which is necessary. This is a very rare problem, but caused me to evaluate our needs, risks, and vulnerabilities over the weekend. I am convinced that rethinking priorities is in order.
We have long teetered on the edge of whether or not it is advisable to acquire our own vacuum capability. Earlier in the year, with the increased cost of vac-trailers, I recommended we shelve investigating the acquisition of one.
This event has changed my thinking. We more often have need of a vac-trailer capability than a generator to power the well pumps. While an extended power outage could leave us vulnerable, we are more often vulnerable to threats to public health during line and service lateral breaks.
I am proposing that we put the investigation into a generator on hold and re-start the investigation into acquiring a vac-trailer. I have prepared a minimum specification and seek your approval to solicit bids. Acceptance of any bids must be approved by the commissioners.
It may be that we can do both the vac-trailer and a generator in the next 12 months or so, but remember we very definitely have to do something about a service truck. On the truck, I should have firm numbers on a new, suitable, truck by the time of the next meeting.
REPLACEMENT SERVICE TRUCK
I have solicited bids. At this writing, I have received only one. I hope to have at least one more by the time of the meeting.
The one bid is for just shy of $69,000. I have included a copy in your packets. In view of the fact that serviceable used trucks run $50,000+, I am proposing we drop the idea of refurbishing a used truck, unless I, once again, get very lucky.
WELL #5 REPAIR
The new pump is installed. Fortunately, American Pump considered a direct replacement more cost effective than trying to troubleshoot and repair the old pump on site.
One bowl on the old pump was cracked completely through. This casts the theory that the damage was caused by deadheading the pump into doubt. American Pump will be disassembling the old pump to see if the problem can be identified.
Another possibility is that a piece of debris got into the pump.
Along with installing the new pump, American Pump installed the new source meter. As I predicted, there is a problem. Back when we converted to SCADA, Spaulding (the meter manufacturer) stumbled all over themselves getting the old meter upgraded to talk to SCADA.
It appears that we are in the same pattern with the new meter. The new meter is not sending a signal to SCADA. We are awaiting next steps from Spaulding.
American Pump dismantled the pump, but could find no indications as to what caused the failure. They have forwarded the pump to a company specializing in analyzing this type of failure.
Hydrant Maintenance
Landscaping around the hydrants is getting done. Hydrants are also being tested. Not much painting this year.
Leak Repairs
Main repair on Clarke Road
Service Lateral on Fairway Drive
Service saddle repair on Fairway Drive
Service Lateral on Aberdeen Lake Road
Service Lateral on North Bank
Two Service Laterals on Central Park Drive
Service Lateral on Karjala Road
Service Lateral on Blaine Road
We opted to do a short term repair on the service lateral leak on Central Park Drive. The leak was flooding the customer’s yard. We will do a complete repair when we can get the services of a horizontal drill.
Rate Study
I have done considerable updating for the purposes of the Water System Plan. Sure wish my crystal ball were not so cloudy.
An assumed 5% inflation rate, which is pretty conservative for the range of products and services we use, really skates up the costs.
New Regulations
We have signed up for Small Works contracting assistance from the Municipal Research & Services Corporation (MRSC). The MRSC is a non-governmental organization, ie. not government, but funded by government grants, that provides services to government agencies.
So far, that is working out well.
Newsletter
No feed back. The next one comes out in November.
Personnel
At this writing, I am awaiting word from John Millan as to his acceptance of our counter to his counter.
Maintenance Activity:
See enclosed report.
Contractor Repairs/Assistance
401 Fairway Drive
3810 Aberdeen Lake Road
6712 Central Park Drive
6415 Karjala
7012 Blaine Road
6616 River Road
Training/Certifications
Kenny and I are current.
Mick has completed the WDM2 prep class and is awaiting clearance to schedule the test from WETRC.
The entire crew, including Randall, are current on their flagger certification.
Safety
We have a safety meeting every morning.
Vehicles
Vehicle #1: 2015 HD2500 Service Truck. See comments above under Capital Asset Management.
Vehicle #2: 2015 ½ Ton Pickup Truck: No Issues
Vehicle #3: 2019 ½ Ton Pickup Truck: No issues
Vehicle #4: 2008 HD3500 Service Truck: Service, Oil Cooler Leaks, Transmission Flush
Web Site
At this writing I have some catching up to do.
New Connections
Some inquiries, but no specific requests.
Long Distance Service Laterals
There is a new two-lot subdivision planned at the end of Mallard Lane. We will NOT allow an individual service lateral.
Respectfully Submitted:
Reg Hearn
General Manager