The URL can be used to link to this page

Home My WebLink About2025/05/20 - Pre-Budget Utility Rate WorkshopMason County Agenda Request Form To: Board of Mason County Commissioners Item No. From: Stephanie Buhrman and Richard Dickinson Ext: 456 Department: Utilities & Waste Briefing: ☒ Action Agenda: ☐ Public Hearing: ☐ Special Meeting: ☐ Briefing Date(s): May 20, 2025 Agenda Date(s): Workshop Internal Review: ☐ Finance ☐ Human Resources ☐ Legal ☐ IT ☐ Risk ☐ Other (This is the responsibility of the requesting Department) Item: Pre-Budget Utility Rate Workshop Background/Executive Summary: Preliminary utility budgets have been prepared for 2026, and staff wish to present water and sewer rate options ahead of the budget submittal. Attached is a document presenting 5 rate scenarios for each water and sewer utility. The document identifies whether certain financial “tests” are met such as ratepayer affordability, providing adequate revenue for O&M, debt service, operating and capital reserves. Staff will have spreadsheets available during the work session to present more details and address the commissioner’s questions. The details include assumptions regarding new connections, interest rates, capital improvements, and collectability, (amongst others), for a 10- year projection period. Staff also evaluated the potential impact to the Belfair sewer fund should 0.09 funds are not available. Budget Impact: Not known at this time. Public Outreach: None at this time. Requested Action: Request Commissioners review rate scenarios and recommendations and identify any questions or additional scenarios you may wish to see. Attachments: Rate Scenario Tables for each utility NORTH BAY CASE INLET Staff recommend Scenario Rate #4: NBCI Sewer rate to $130.35, an increase of 4.4% of 2023-June 2024 rate of $124.86 but an 8.6% increase of $120 current rate. Staff recognize MHI of $138.18 minimal hardship rate for sewer. This rate anticipates a 2.2% annual increase over 10 years based on CBO projections in lieu of CPI estimates. This rate covers operating costs and maintains the Capital reserve over 10 years. BELFAIR SEWER Staff recommend Scenario Rate #4: Belfair sewer to $122.25, an increase of 10.59% of current year rate of $110.54. Staff recognize MHI of $138.18 minimal hardship rate for sewer. This rate would cover operating costs but does NOT maintain a sufficient Capital reserve over 10 years. Water 2.00%Drinking Water Target 2.% (US EPA) Sewer 2.50%Wastewater Target 2.5% (US EPA) Median Income 66,325$ https://www.arcgis.com/apps/instant/basic/index.html?appid=530f2b69471f48a5a25074f0c6d86acb District Current Rate Max Rate Capacity % of MHI Beards Cove-Water*44.32$ 110.54$ 66.22$ 40%Less than 2% minimal hardship Belfair Sewer 110.54$ 138.18$ 27.64$ 80%2-3% Moderate Hardship Rustlewood-Water*55.00$ 110.54$ 55.54$ 50%3-4% elevated hardship Rustlewood-Sewer 118.15$ 138.18$ 20.03$ 86%greater than 5% is severe hardship NBCI-Sewer 120.00$ 138.18$ 18.18$ 87% *Base Rate Only District Current Rate Max Rate Capacity % of MHI NBCI-Sewer 120.00$ 138.18$ 18.18$ 86.8% District Rate Max Rate Capacity % of MHI % Increase Additional Notes O&M Reserve Debt Service Ratio Subsidy Needed Capital Reserve NBCI-Sewer 124.86$ 138.18$ 13.32$ 90.4%104.05%Return to Prior Year Rate YES YES NO YES NBCI-Sewer 132.00$ 138.18$ 6.18$ 95.5%110.00%10% increase YES YES NO YES NBCI-Sewer 137.99$ 138.18$ 0.19$ 99.9%114.99%If had followed CPI since 2017 YES YES NO YES NBCI-Sewer 130.35$ 138.18$ 7.83$ 94.3%108.63%124.86 with 4.4% CPI YES YES NO YES NBCI-Sewer 138.18$ 138.18$ (0.00)$ 100.0%115.15%2% MHI minimal hardship rate YES YES NO YES RATE SCENARIOS District Current Rate Max Rate Capacity % of MHI Belfair Sewer 110.54$ 138.18$ 18.18$ 2.17% District Rate Max Rate Capacity % of MHI % Increase Additional Notes O&M Reserve Debt Service Ratio Subsidy Needed Capital Reserve Belfair Sewer 124.50$ 138.18$ (13.68)$ 90.10%112.63%Breakeven O&M only- NO 09 YES NO YES YES Belfair Sewer 114.41$ 138.18$ (23.77)$ 82.80%103.50%3.5% CPI EST. Increase NO NO YES YES Belfair Sewer 121.59$ 138.18$ (16.58)$ 88.00%110.00%10% increase NO NO YES YES Belfair Sewer 129.90$ 138.18$ (8.28)$ 94.01%117.51%If had followed CPI since 2017 YES NO YES YES Belfair Sewer 122.25$ 138.18$ (15.93)$ 88.47%110.59%Breakeven O&M only YES NO YES YES Belfair Sewer 138.18$ 138.18$ 0.00$ 100.00%125.00%2% MHI minimal hardship rate YES NO YES YES RATE SCENARIOS RUSTLEWOOD SEWER Staff recommend Scenario #2: Rustlewood sewer to $129.97 an increase of 10% of the prior year rate of $118.15. Staff recogni ze MHI of $138.18 minimal hardship rate for sewer. This rate would require $82,000 in additional funding to meet O&M ; Debt Service and a minimal Capital Reserve of $50,000 would not be met. More than $1.6mil of outside funding over 10 years is anticipated to be needed for O&M and Debt Service. RUSTLEWOOD WATER Staff recommend Scenario #1: Rustlewood water to $79.90, an increase of 45% of the prior year rate of $55. Staff recognize M HI rate of $110.54 minimal hardship rate for water. This rate would require $87,000 in additional funding to meet O&M and a minima l $30,000 Capital Reserve would be met. This is the rate if CPI increases were followed per old Mason County Code of annual CPI increases starting in 2009. The rate in 2009 was $33. More than $1,000,000 in outside funding would be anticipated over the next 10 years of operations. BEARDS COVE WATER Staff recommend Scenario #1: Rustlewood water to $79.90, an increase of 80% of the prior year rate of $44.32. Staff recogniz e MHI rate of $110.54 minimal hardship rate for water. This is the rate if CPI increases were followed per old Mason County Code o f annual CPI increases starting in 2009. The rate in 2009 was $33. O&M operating reserve and a Capital Reserve of $1,200,000 would be met with this rate. District Current Rate Max Rate Capacity % of MHI Rustlewood-Sewer 118.15$ 138.18$ 20.03$ 85.5% District Rate Max Rate Capacity % of MHI % Increase Additional Notes O&M Reserve Debt Service Ratio Subsidy Needed Est. Subsidy Capital Reserve Rustlewood-Sewer 134.90$ 138.18$ 3.28$ 97.6%114.18%Followed CPI YES NO YES 72,000$ NO Rustlewood-Sewer 129.97$ 138.18$ 8.21$ 94.1%110.00%10% increase YES NO YES 82,000$ NO Rustlewood-Sewer 156.37$ 138.18$ (18.19)$ 113.2%132.35%O&M Covered- REET for Debt Service- Annual 5% inc YES NO YES 62,000$ NO Rustlewood-Sewer 190.00$ 138.18$ (51.82)$ 137.5%160.81%Breakeven YES NO YES -$ NO Rustlewood-Sewer 138.18$ 138.18$ -$ 100.0%116.95%MHI @ 2.5% minimal hardship for sewer-Annual 3.5% inc YES NO YES 82,000$ NO RATE SCENARIOS District Current Rate Max Rate Capacity % of MHI Rustlewood-Water*55.00$ 110.54$ 55.54$ 1.00% District Current Rate Max Rate Capacity % of MHI % Increase Additional Notes O&M Reserve Debt Service Ratio Subsidy Needed Est. Subsidy Capital Reserve Rustlewood-Water*79.90$ 110.54$ 30.64$ 72.3%145.3%CPI Code rate if followed YES N/A YES 87,000$ YES Rustlewood-Water*60.50$ 110.54$ 50.04$ 54.7%110.0%10% increase YES N/A YES 120,000$ YES Rustlewood-Water*80.65$ 110.54$ 29.89$ 73.0%146.6%In Line w/ Belfair & Shelton Rate YES N/A YES 85,000$ YES Rustlewood-Water*130.36$ 110.54$ (19.82)$ 117.9%237.0%Breakeven YES N/A NO -$ YES Rustlewood-Water*110.54$ 110.54$ 0.00$ 100.0%201.0%MHI 2% minimal hardship rate YES N/A YES 35,000$ YES *Base Rate Only RECOMMENDED RATES District Current Rate Max Rate Capacity % of MHI Beards Cove-Water*44.32$ 110.54$ 66.22$ 0.80% RECOMMENDED RATES District Rate Max Rate Capacity % of MHI % Increase Additional Notes O&M Reserve Debt Service Ratio Subsidy Needed 2026 Est. Subsidy Capital Reserve Beards Cove-Water*79.90$ 110.54$ 30.64$ 72.28%180.28%CPI Code rate if followed YES YES NO -$ YES Beards Cove-Water*46.27$ 110.54$ 61.79$ 41.86%104.40%4.4% increase, Est. CPI YES YES NO -$ NO Beards Cove-Water*80.65$ 110.54$ 29.89$ 72.96%181.97%In Line w/ Belfair & Shelton Rate YES YES NO -$ YES Beards Cove-Water*53.18$ 110.54$ 66.22$ 48.11%120.00%20% increase YES YES NO -$ NO Beards Cove-Water*110.54$ 110.54$ 0.00$ 100.00%249.41%MHI @ Minimal Hardship rate YES YES NO -$ YES *Base Rate Only