St. Johns County (County) maintains a continuing agreement with Raftelis to conduct a variety of utility impact fee, rate, and financial studies for both the Main and Ponte Vedra water and wastewater utility systems.
The County engaged Raftelis to conduct a study that included an evaluation of the existing rate structure, a revenue sufficiency analysis, and an update to the five-year capital funding program. To accomplish the evaluation of the rate structure and revenue sufficiency, Raftelis conducted a review of the customer classifications and characteristics, together with allocations of fiscal requirements to appropriated categories pursuant to cost-of-service principles. These activities were managed within a dynamic operating computer rate model, allowing for analysis of alternatives and projection of the impacts on customers and the utility.
The capital funding program portion of the study was accomplished through reviews of historic and current financial data, along with meetings with County staff members responsible for the management, operations and scheduling of capital projects. We used the information acquired from the reviews and meetings to develop a master funding forecasting schedule identifying the sources and uses of funds for capital improvements. This forecasting schedule was incorporated into the utility system’s dynamic operating computer rate model, which identified the impact on rates and fund balances as changes were made to the master funding forecasting schedule.
Multi-year rate adjustments were identified, together with strategic funding amounts and timing, to allow for the utility to provide for ongoing quality services, maintain its investment grade ratings, address the necessary capital improvements, and build cash reserves for financial stability and future needs. Raftelis fully documented all activities, findings, and conclusions in a rate study report, which was presented to the County for their use and adoption.
Raftelis also conducted a recent unit connection fee update (impact fee) study. The objective of this unit connection fee update study was to ensure equitable recover of expansion costs driven by historic and recent utility investments to address growth returning after the economic downturn between 2009 and 2014 ensure compliance with the County’s goals. The impact fee study update utilized a full cost recovery approach, which includes engineering, land, general plant and all associated financing costs in full compliance with the requirements in the Florida Statutes and case law. This full cost recovery method addresses local current costs and importantly appropriate credits resulting from user fees that pay for a portion of the expansion facilities. Another feature of the impact fee structure was to incorporate a unit connection fees for connections with and without reclaimed water based on different level of service associated with such connections.
Individual acquisition financial feasibility studies were developed for each of these investor-owned utilities by St. Johns County, which were acquired separately. The studies identified and addressed the sensitivities of rate increases needed to affect the capital improvements and fund the acquisition. After considerable discussion including comparative analysis on rates, revenue, operating expenses capital improvement and rate impacts on both acquisition and existing customers, it was determined that these utilities would be combined as an individual utility and share the rate structure and utility policies of the County’s existing utility, they would remain as an independent operation and not integrated with the County’s existing utility system.
The results of the study were extensively utilized during negotiation and public hearing process, providing County leaders with instant understanding of alternatives regarding funding, rates, and policies.
