ITEM #: 7.
DATE: 01/27/2025
AI #:2365 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: |
APPROVE BUDGET AMENDMENT AND EXPENDITURE AUTHORITY FOR NEW WATER METERS AND CENTRAL ARIZONA PROJECT (CAP) WATER DELIVERY CHARGES
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| STAFF PRESENTER(S): |
Barbara Chappell, Water Services Director |
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| SUMMARY |
Approve budget amendment from the Water Operating Fund balance for increased Central Arizona Project (CAP) water delivery charges, and for new water meters related to development, and approve expenditure authority.
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| STRATEGIC PLAN ALIGNMENT |
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| RECOMMENDATION |
| Approve a budget amendment and expenditure authority for fiscal year (FY) 2025 in the amount of $756,500 from the Water Operating Fund balance for increased charges for CAP water delivery, and to purchase new water meters and equipment necessary for installation for new development. (Barbara Chappell, Water Services Director) |
| FISCAL IMPACT |
| This action will amend the FY2025 budget to increase the Water Services Department (Water Services) budget by $756,500. These additional funds are requested to support the installation of new water meters for development through the end of the fiscal year as well as increased fees for water delivery from the CAP. |
| BACKGROUND AND PREVIOUS ACTIONS |
Budget amendments are permitted by Arizona Revised Statute 42-17106(B), which provides authorization for cities and towns to exceed expenditures in a budget item after final adoption of a city/town budget by transferring appropriations between budget items. All budget transfers are completed within city policy established by Resolution 2022-2256. Budget amendments requiring City Council approval are presented as necessary throughout the year to keep the Council and public informed about the city’s current fiscal year revenues and expenditures. The FY2025 expenditure limitation budget was adopted on June 12, 2024.
On May 20, 2024, Council authorized FY2025 budget expenditures in excess of $500,000 for routine operating expenses (AI-1782), including $1,156,100 for new and replacement water meters and $6,070,900 for annual water order and subcontract charge. This budget amendment will increase those expenditure levels to $1,806,100 for water meters and $6,177,400 for annual water order and subcontract charge.
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| STAFF ANALYSIS |
New Water Meters for Development:
The monthly amount of residential building permits has been increasing steadily, from 72 permits in January 2024 to 133 permits issued in November 2024. Through November 2024, single family permits are 79% higher in 2024 than in 2023. These figures do not include larger meters for industrial and commercial buildings, which average around 100 meters per year.
To date in FY2025, Water Services has installed 622 new meters and estimates a need to install a total of 1,581 new meters in FY2025. Of the $250,000 budgeted for new meter expenses, $164,600 (or 66%) has been expended through November 2024. Through this same time period, $341,000 in revenue has been received for new meter permit fees (or 94%), with an estimate of $809,800 in total new meter revenue to be collected by the end of FY2025. Water Services estimates that an additional $650,000 is necessary to purchase new meters and materials through the end of FY2025.
CAP Delivery Charges:
When preparing the FY2025 budget request, Water Services utilized CAP’s “Final 2024-2028 Board Approved Rate Schedule”, which only included advisory rates for 2025. Their advisory rate for the Municipal and Industrial Subcontract was $289 per acre-foot. The firm rate for 2025 of $295 per acre-foot was not established until June 2024. Water Services received its first CAP invoice and billing schedule in December 2024, which reflected a charge of $295 per acre-foot, which would result in a FY2025 shortage of $106,500 from the budgeted amount based on the City’s full allocation of 17,742 acre-feet of CAP water.
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