75B - PH - METERED WATER RATE AND SEWER CHARGE

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Water Infrastructure C.I.P. Considerations The City's water system consists of approximately 476 total miles of water mains. About 217 miles of this total are old cast iron mains that will need to be replaced due to leaks caused by corrosion. Approximately 103 miles of mains are more than 50 years old and 23 miles are over 75 years old. The estimated life of water mains is about 75 years. With 476 miles, we should be replacing at least 6 miles per year. Age of Water Mains Water Main Material 23 Miles ¦ 0-49 Years Old ' ~ ¦ Cast Iron - ; . ¦ 50-74 Years Old ¦ Other 75+ Years Old y - For purposes of calculating a rough budgetary estimate of the cost of the entire water distribution system, the following assumptions will be used: All new water mains will be 8" diameter. This will result in a low estimate, since many pipelines are larger than 8" (Our system includes water mains from 6" to 30" in diameter, however 92% are 12" and smaller). The cost for 8" water main (including meters, valves and fire hydrants) is $230 per linear foot. This cost includes $170 per linear foot for construction and an additional 35% for design, inspection, street repaving and other contingencies (10% for design, 10% for inspection, and 15% for repaving and contingencies). Based on the above figures and assumptions, the total replacement cost of the water main system is approximately $578,000,000. In addition to water mains, water production facilities are also funded out of the CIP. These facilities include reservoirs, pump stations and wells. While the life span of these facilities can vary, for rough budgeting purposes a 75 year average life is reasonable. All of these types of facilities will require either replacement or significant rehabilitation in that timeframe. The City's 2010 Property Schedule (used for insurance purposes) shows the total replacement cost for all water production facilities to be $89,000,000. The total replacement cost of the entire water distribution system (mains and productions facilities) is $667,000,000. Assuming a 75 year life cycle for replacement, the annual water CIP would need to be $8.9 million. We are planning to spend $6 million during FY 2010/11 for water CIP improvements, which includes $1.2 million from the proposed 2% water rate increase and a $3.1 million prior year carry forward from savings in the water fund. This prior year carry forward amount varies widely from year to year and should not be considered along-term revenue source for the water CIP. Capital Improvement Costs v Current Capital Improvement J Prior Year Carry Forward u 2 % Water Rate Increase $10,000,000 ~ _ 8.9 M $8,000,000 1.2 M $6,000,000 N... 3.1 M - $4,000,000 % $2,000,000 ~1J M -----r----------- --f FY 2010/11 CIP 75 Year Replacement Cyle Exhibit 2 75B-7