KLWTD Budget

Fiscal Year 2023/2024 Narrative

Sewer Utility Fund

The Key Largo Wastewater Treatment District (“District”) was formed as an autonomous independent Special District and political body formed in 2002 by the Legislature of the State of Florida by House Bill 471, enacted as Chapter 2002-337, Laws of Florida, for the purpose of carrying out the planning, acquisition, development, operation, and management of a wastewater management system within the District’s boundaries in Key Largo, Monroe County, Florida.

The District operates and maintains a wastewater utility from mile marker 91 to 106 and southern portions of C-905 in North Key Largo. It provides service to approximately 10,500 improved parcels and approximately 10,200 accounts are billed monthly, representing approximately 15,100 EDUs. Operating as an enterprise fund, customer charges and assessments pay for the cost of operations and maintenance, debt service, and administrative costs.

Fund Overview

The District is structured on the basis of one individual enterprise fund. An enterprise fund is established by a government to account for activities similar to private business operations. The intent is that user charges make up for the costs of providing goods or services to the public. Enterprise funds use the accrual basis of accounting. Under this method of accounting revenues are recorded when earned and expenses are recorded when the liability is incurred, regardless of when the cash is received or paid. Also, all assets and liabilities associated with the entity are included on the balance sheet. Generally, accepted accounting principles applicable to enterprise funds are similar to those applicable in the private sector.

Budget Development

The annual budget is considered one of the most important documents adopted by the District’s Board of Commissioners each year. The budget reflects the District’s financial policies for the upcoming year by allocating the sources of funds for District services, and projecting expenditures for those services.

The District is focused on improvements that will continue to supply high quality service to our customers. Staff will continue to focus on the collection and disposal of wastewater in the most effective and efficient methods available. External funding sources, including grants, will continue to be aggressively sought.

Revenue Overview

The FY23-24 projected revenues and other sources of the District are as follows:

	FY 2023-24 Budget	% of Total	FY 2022-23 Budget	% of Total
Wastewater Service Revenue	$7,600,000	26.01%	$7,410,000	29.66%
Non Ad Valorem Assessments	3,203,238	10.96%	3,265,000	13.07%
Grant Revenue - Stewardship	9,627,886	32.95%	6,475,000	25.92%
Grant Revenue - ACOE	2,000,000	6.84%	2,000,000	8.01%
Monroe County ILA	2,125,000	7.27%	2,125,000	8.51%
Islamorada ILA Revenue	1,355,000	4.64%	1,358,000	5.44%
SDC Prepayments	40,000	0.14%	150,000	0.60%
Interest Income	900,000	3.08%	175,000	0.70%
Miscellaneous Revenue	50,000	0.17%	50,000	0.20%
Planned Use of Repair & Replacement Reserves	2,695,558	9.23%	1,132,000	4.53%
Use of/(Addition to) Reserves	(378,094)	-1.29%	842,792	3.37%
	$29,218,588	100%	$24,982,792	100%

Where the Money Comes From

Wastewater Service Revenue ($7,600,000)

The District’s revenues, charges for wastewater services represent the largest source of budgeted operating revenue for the District. This revenue is derived by providing sewer collection and treatment services to the public. Users are charged for this service on their monthly water bill from the Florida Keys Aqueduct Authority (“FKAA”). Customers are charged a base service charge and a usage charge, which is based on their monthly water consumption.

Non Ad Valorem Assessments ($3,203,238)

Non ad valorem assessments revenue is the annual assessments of system development charges to customers for providing the sewer infrastructure. Initially, assessments were levied in phases and customers were given the option to prepay the assessment in full, or to have the assessment spread over 20 years as a non ad valorem assessment on their tax bill from Monroe County. The assessment charge is calculated on the number of equivalent dwelling units (“EDU”) for the serviced parcel. An EDU represents the equivalent to a single family unit and is based on 167 gallons per day of potable water usage.

Stewardship Grant Revenue ($9,627,886)

The District was awarded Stewardship funding from the State of Florida. This cost reimbursable grant program will fund several of the District’s capital projects.

ACOE Grant Revenue ($2,000,000)

The District anticipates that it will receive $2,000,000 from the Federal Government through the Army Corps of Engineers for the reimbursement of capital project expenditures that are included in the project cooperation agreement (PCA).

Monroe County ILA ($2,125,000)

The District successfully negotiated an interlocal agreement with Monroe County to exchange the $17,000,000 of Stan Mayfield funding that the State allocated to the District in FY13/14. In FY15/16 the District exchanged $1,250,000 of Stewardship funding in return for annual payments from the County of funds that have an unrestricted use.

Stan Mayfield funding exchange	$ 17,000,000
Stewardship Bill Funding Exchange	1,250,000
Payments received from Monroe County	(13,625,000)
Balance due from Monroe County	$4,625,000

Expected Mayfield $17M & Stewardship
2024	$2,125,000
2025	2,125,000
2026	125,000
2027	125,000
2028	125,000
	$4,625,000

Islamorada Wastewater Service & Insurance Surcharge Revenue ($1,355,000)

The District and Islamorada, Village of Islands (“Village”) have an interlocal agreement for the use of 32% of the District’s plant capacity. The Village is charged a base rate of $4.65 per 1,000 gallon of influent, not including any rate surcharges, at the District’s advanced wastewater treatment plant. That rate is calculated at $4.30 for treatment cost and $0.35 for repair and replacement funding. The District began receiving flows from the Village on June 16, 2014.

The Interlocal agreement with the Village requires them to pay 32% of the insurance expense for the advanced treatment plant. The District invoices the Village annually for this surcharge.

System Development Charge Advance Payoff Revenue ($40,000)

Customers have the option to pay off their system development charge at any time. Although substantially all of the serviced parcels have been assessed, customers may choose to either pay down or pay off their assessment in advance.

Interest Income ($900,000)

The District is projected to earn interest income in FY23/24 from its interest bearing accounts and investing activities.

Miscellaneous Income ($50,000)

The District is projected to earn miscellaneous income in FY23/24 from various sources.

Expenditure Overview

The total projected appropriations of this budget are $29,218,587. The following chart shows a summary of the budgeted appropriations by category:

	FY 2023-24 Budget	% of Total	FY 2022-23 Budget	% of Total
Personnel Services	$3,813,021	13.05%	3,354,120	13.43%
Operating Expenses	5,539,208	18.96%	5,222,003	20.90%
Capital Outlay	15,607,397	53.42%	12,587,708	50.39%
Transfers	2,700,000	9.24%	2,260,000	9.05%
Debt Service	1,558,961	5.34%	1,558,961	6.24%
	$29,218,587	100%	$24,982,792	100%

Where the Money Goes

Personnel Services ($3,813,021)

Personnel Services includes all salaries and benefits (including workers compensation insurance) for District employees.

Department	FY23-24 FTE	FY23-24 Budget	FY22-23 FTE	FY22-23 Budget
Commissioners	NA	$66,740	NA	$62,433
Administrative	6	692,781	6	648,764
Plant	6	627,623	6	578,777
Field	16	1,650,805	14	1,350,645
Facilities	7	775,072	7	713,510
Total	35	$3,813,021	33	$3,354,120

Operating Expenses ($5,539,208)

FY23/24 will be the fourteenth year of full operations.

Capital Outlay ($15,607,397)

The FY23/24 budget includes appropriations for capital outlay. The following chart provides the details on the specific capital outlay items requested.

Capital Outlay Items

Administrative
IT Equipment	6,000
		6,000
Plant
IT Equipment	5,000
		5,000
Field
IT Equipment	7,000
		7,000
Facilities
IT Equipment	3,000
		3,000
Capital Improvements (includes Engineering Design & CEI)
VPS Piping Modifications	3,137,790
Odor Control at Vac Stations	1,160,091
Effluent Filtration Upgrade	3,265,193
Replace Lift Station Key Largo Trailer Park	310,000
Vac System Monitoring	2,622,566
Sewage Pump Replacement / Piping Modifications	15,000
Power Conditioning & Electrical Upgrades WWTP	826,693
Headworks & Screening Upgrade - Add EQ Tank	1,370,000
Ventilation Upgrade @ Vac Stations	199,000
Check Valve Combo Replacement Grinder Pump Lateral	680,391
Operations Blower Room Modification	280,000
Construction for Islamorada pinch valve on force main	275,000
Engineering Only: Capital Prelim Design & Budget	25,000
Engineering Only: Direct Potable Reuse	87,500
Engineering Only: Service Connection Revision	15,000
Spare Injection Well Pump & VFD	20,000
Effluent Injection Pump Repair	84,000
Soft Start Upgrade Vac Station to VFD	112,500
SBR Blower Spare Parts	35,000
Vac Pump Rebuild & Spare	75,000
Cabling Plant, Vac Station, Admi	8,000
Service Connection Construction Revision	50,000
Replacement of vac pit collars (no engineering)	250,000
Paint Vac Station Interior Walls & Floors (no engineering needed)	105,000
Digester Motive pump replacement	230,000
Replacement hydroxide pump project	20,000
Diffuser Sleeve Purchase	56,500
Injection well check pump valves	18,000
EOC Hardening	59,670
New forklift for plant	47,000
Vehicle (Admin, Board)	29,300
Truck (Field)	30,000
Mini Excavator	87,203	$ 15,586,397
Total Capital Outlay		$ 15,607,397

These projects, while budgeted, are still subject to board approval

Debt Service ($1,558,961)

The FY23/24 budget includes appropriations for debt service on the District’s one State Revolving Fund (SRF) loan. The SRF loan is paid semi-annually.

Debt Obligation	Loan Balance @ 9/30/23	Annual Debt Service Principal Reducation	Loan Balance @ 9/30/24
SRF Loan 46401P	$8,611,738	$1,344,563	$7,267,175

Transfers ($2,700,000)

The FY23/24 budget includes transfers to the District’s following reserve accounts: repair and replacement, self-insurance and insurance deductible. $1,200,000 is projected to be transferred to the reserve for future repairs and replacements. The ILA with the Village also requires that $0.35 of the $4.65 flow charge be set aside for future repairs and replacements. The District is also going to reserve $1,500,000 for insurance deductibles and for self-insurance. FY23/24 is the sixth year a contribution will be made to the self insurance & insurance deductible fund. At the end of FY23/24, the District expects to have $9,595,987 in funding designated for repairs and replacements, $5,080,000 for insurance deductibles and self-insurance.

Excess reserve funding is required to meet the actual reserve and replacement funding necessary based on the engineering estimates. These reserve categories are important due to the District’s unique island location. The District’s goal is to maintain twelve months of operating expenses in unassigned cash as a reserve balance.

Unassigned Cash Balance as of Sept 30, 2022		$13,393,004
Projected Revenues & Planned Used of Reserves FY22-23	$19,122,833
Projected Expenditures & Reserve Transfers FY22-23	(19,973,742)
Projected Revenues in excess of Expenditures & Reserve Transfers FY22-23		(850,909)
Expected Unassigned Cash Balance as of Sept 30, 2023		12,542,095
Budgeted Revenues & Planned Use of Reserves FY23-24	$29,596,682
Budgeted Expenditures & Reserve Transfers FY23-24	(29,218,587)
Budgeted Revenues in excess of Expenditures & Reserve Transfers FY23-24		378,094
Expected Unassigned Cash Balance as of Sept 30, 2024		$12,920,189