Fiscal Year 2019/2020 Budget Narrative
Fiscal Year 2021/2022 Budget 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 2002-37, 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 10,496 improved parcels and 9,779 accounts are billed monthly, representing 15,321 EDUs assessed and 14,771 EDUs billed. Operating as an enterprise fund, customer charges and assessments pay for the cost of operations and maintenance, debt service, and administrative costs.
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.
Table of Contents
- Sewer Utility Fund
- Fund Overview
- Budget Development
- Revenue Overview
- Wastewater Service Revenue ($9,071,622)
- Non Ad Valorem Assessments ($3,908,637)
- Monroe County ILA ($2,125,000)
- System Development Charge Advance Payoff Revenue ($150,000)
- Interest Income ($45,000)
- Use of/(Addition to) Operating Reserves ($470,444)
- Islamorada Revenues
- Islamorada Wastewater Service & Insurance Surcharge Revenue ($1,230,000)
- Expenditure Overview
- Personnel Services ($2,678,728)
- Operating Expenses ($4,164,787)
- Capital Outlay ($3,532,329)
- Debt Service ($7,562,385)
- Transfers ($1,220,000)
- Debt Reduction & Wastewater Revenue Sufficiency
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.
The FY19-20 projected revenues and other sources of the District are as follows:
|FY 2019-20 Budget||% of Total||FY 2018-19 Budget||% of Total|
|Wastewater Service Revenue||$9,071,622||47.35%||$8,750,800||46.47%|
|Non Ad Valorem Assessments||3,908,637||20.40%||3,546,694||18.83%|
|Grant Revenue – Stewardship||3,098,414||16.17%||3,333,333||17.70%|
|Monroe County ILA||2,125,000||11.09%||2,125,000||11.28%|
|Islamorada ILA Revenue||1,230,000||6.42%||1,140,000||6.05%|
|Islamorada ILA – Allocation of Capital Projects||–||0.00%||–||0.00%|
|Use of/(Addition to) Reserves||(470,444)||-2.46%||(275,000)||-1.46%|
Wastewater Service Revenue ($9,071,622)
Consisting of 47.35% of the District’s revenues, charges for wastewater services represent the largest source of budgeted revenues 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 ($3,908,637)
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.
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|
|Payments received from Monroe County||(5,125,000)|
|Stewardship Bill funding exchange||1,250,000|
|Balance due Monroe County||$13,125,000|
|Expected Mayfield $17M & Stewardship|
System Development Charge Advance Payoff Revenue ($150,000)
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 ($45,000)
The District is projected to earn $45,000 in interest earnings in FY19/20 from its interest bearing accounts.
Use of/(Addition to) Operating Reserves ($470,444)
The District’s FY19/20 budget projects that the revenues will exceed expenditures in the amount of $470,444. This surplus will increase the District operating reserves.
Islamorada Wastewater Service & Insurance Surcharge Revenue ($1,230,000)
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.
The total projected appropriations of this budget are $19,158,229. The following chart shows a summary of the budgeted appropriations by category:
|FY 2019-20 Budget||% of Total||FY 2018-19 Budget||% of Total|
Personnel Services ($2,678,728)
Personnel Services includes all salaries and benefits (including workers compensation insurance) for District employees. This represents a $118,836 increase from the FY18/19 budgeted amount.
|Department||FY19-20 FTE||FY19-20 Budget||FY18-19 FTE||FY18-19 Budget|
Operating Expenses ($4,164,787)
Operating expenditures increased by $282,435 or 7.27%. FY19/20 will be the tenth year of full operations.
Capital Outlay ($3,532,329)
The FY19/20 budget includes appropriations of $3,532,329 for capital outlay. The following chart provides the details on the specific capital outlay items requested.
|Capital Outlay Items|
|Equipment (air conditioner)||4,500|
|Equipment (vac pump rebuilds & spares)||16,000|
|Equipment (sewage pump spares for vac stations)||200,000|
|Capital Improvements (includes CEI)|
|Solar for the wastewater treatment plant||1,467,200|
|Solar for the vacuum Stations (only a portion of this project is funded in FY20, the
remainder will be funded in FY21)
|Fire Suppression at wastewater treatment plant||335,354|
|Fire Suppression at vacuum stations||428,202|
|Fire Suppression at administrative office||73,000|
|Vac Trailer/VPS piping modifications||151,884|
|Shallow Gravity Well||111,000|
|Service Connection Construction Revisions||90,000|
|Total Capital Outlay||$3,532,329|
Note: These projects, while budgeted, are still subject to board approval.
Debt Service ($7,562,385)
The FY19/20 budget includes $7,562,385 for debt service on the District’s two State Revolving Fund (SRF) loans, and the two BB&T Revenue Bonds. The SRF loans are paid semi-annually and the BB&T bonds repayments are made quarterly. Debt service includes $2,125,000 for early debt retirement.
|Debt Obligation||Loan Balance @ 9/30/19||Required Annual Debt Service||Loan Balance @ 9/30/20|
|SRF Loan 46401P||$13,657,021||$1,558,961||$12,443,951|
|SRF Loan 464010||5,468,712||2,118,581||3,478,083|
The FY19/20 budget includes transfers to the District’s following reserve accounts: repair and replacement, self insurance and insurance deductible. $1,100,000 is projected to be transferred to the reserve for future repairs and replacements. The District BB&T bonds require the District set aside 5% of the gross operating revenues from the system for 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 $20,000 for insurance deductibles, and $100,000 for self insurance. FY19/20 is the second year a contribution will be made to the self insurance fund. At the end of FY19/20, the District expects to have $5,478,348 in funding designated for repairs and replacement & insurance deductibles, and $200,000 for self insurance.
|Budgeted Transfer to R&R fund||$1,100,000|
|5% of Gross Operating Revenues||$ (453,581)|
|$0.35 of Islamorada Flow Charge||(92,581)|
|Total Required Transfer to R&R fund||(546,162)|
|Amount in EXCESS of minimum requirement||$553,838|
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, 2018||$11,552,632|
|Budgeted Revenues FY18-19||$19,107,827|
|Budgeted Expenditures & Reserve Transfers FY18-19||(18,832,827)|
|Budgeted Revenues in excess of Expenditures & Reserve Transfers FY18-19||275,000|
|Expected Unassigned Cash Balance as of Sept 30, 2019||11,827,632|
|Budgeted Revenues FY19-20||$19,628,673|
|Budgeted Expenditures & Reserve Transfers FY19-20||(19,158,229)|
|Budgeted Revenues in excess of Expenditures & Reserve Transfers FY19-20||470,444|
|Expected Unassigned Cash Balance as of Sept 30, 2020||$12,298,076|
|12 month operating reserve balance would be||$6,843,515|
|Amount in EXCESS of operating reserve||$5,454,561|
Debt Reduction & Wastewater Revenue Sufficiency
Below is a graph that depicts future debt service versus assessment and County ILA with an additional debt reduction payment of $2,125,000 in FY19/20.
Future Required Debt Service vs Assessment Revenue – with one additional advanced debt
reduction payment of $2,125,000 in FY20, applied evenly to both BB&T bonds.
Total Debt Service
|Excess Stewardship and ILA Revenue
Applied to Debt
|Difference Between Debt Service and