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City of Detroit Water and Sewerage Department

City of Detroit Water and Sewerage Department. SEMCOG Infrastructure Task Force January 14, 2010. Presentation Qualifiers Regarding Conceptual Framework Matrix. DWSD provides both Drinking Water and Sanitary Sewer service to the region

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City of Detroit Water and Sewerage Department

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  1. City of DetroitWater and Sewerage Department SEMCOG Infrastructure Task Force January 14, 2010

  2. Presentation Qualifiers Regarding Conceptual Framework Matrix • DWSD provides both Drinking Water and Sanitary Sewer service to the region • Storm Sewer service also provided through its Combined Wastewater System for many regional communities, including Detroit • Except where noted, the quantitative information presented herein are combined water and sewer figures • Certain of the opinions expressed herein are those of THE FOSTER GROUP and/or industry perspectives and are not intended to necessarily reflect DWSD policies or philosophies Page 2 1/14/10

  3. City of DetroitWater and Sewerage Department Current Level of Investment

  4. Annual Capital Improvement Investments Combined Water & Sewer Systems – ($ millions) Page 4

  5. DWSD FY 2010-11 Combined Water / Sewer Revenue Req’t Page 5 1/14/10

  6. DWSD Combined Water / Sewer Revenue Req’t FY 2010-11 FY 2003-04 Page 6 1/14/10

  7. DWSD W&S Rev Req’t / Water Sales Comparison ($ millions / mgd) Page 7 1/14/10 Cost / MGD $1.24 $1.92

  8. City of DetroitWater and Sewerage Department Needs

  9. Annual Capital Improvement Investments Combined Water & Sewer Systems – ($ millions) Page 9

  10. DWSD CIP Comparison (Water & Sewer Combined) July 2009 vs. July 2008– ($ millions) Page 10

  11. DWSD Debt Service – Fund CIP thru 2013 (last year) Page 11

  12. DWSD Debt Service – Fund CIP thru 2014 (this year) Page 12

  13. City of DetroitWater and Sewerage Department Structure of Financing

  14. DWSD Financing Vehicles • DWSD employs a “maximum debt financing” concept when funding major infrastructure investments • Utilize revenue bond debt to greatest possible legal and practical extent • Aggressively pursue SRF and other low-cost financing terms • Attempt to augment with other vehicles to reduce local share responsibility • Aligns cost recovery and useful life of investment • Capital cost recovery for suburban customers on Utility Basis • Over useful life irrespective of financing decisions Page 14 1/14/10

  15. Sample Capital Cost Recovery for DWSD Infrastructure Investment Page 15 * Includes principal, interest, and debt service coverage ** Includes depreciation expense and return on rate base

  16. City of DetroitWater and Sewerage Department Trends

  17. Annual Water Sales – (mgd) Page 17 1/14/10

  18. Annual Billed Wastewater Volumes – (mgd) Page 18 1/14/10

  19. Potential DWSD Water Financial Plan – Mild Contraction Scenario Page 19 1/14/10

  20. City of DetroitWater and Sewerage Department Game Changers

  21. DWSD Infrastructure Financing Potentially Impacted By . . . • Affordability of Existing Level of Service • Regulatory Pressure to Enhance Existing Level of Service • Availability of Efficient Financing Vehicles Page 21 1/14/10

  22. Compliance with Wastewater Treatment Standards - A Very Possible Potential Reality Stormwater CSO Sanitary Page 22 1/14/10

  23. Federal Representative EPA Citizen Goals State Agency Utility Communities Funding WastewaterInfrastructure:A Historical Perspective Page 23 1/14/10

  24. Water Industry (AWWA) Perspective on Financing Infrastructure • Primary focus has always been local, and should remain so • Aging infrastructure is an issue in the US, but it is not at a crisis, and it is not all “crumbling” • There is a role for the federal government in lowering cost of capital and in special circumstances, but water infrastructure challenges are not primarily federal problems Page 24 1/14/10

  25. Water Industry (AWWA) Perspective on Financing Infrastructure • Water trust fund is not the most effective option • Overhead costs of sending money to Washington rather than retaining it locally • Encouragement of delay in establishing true cost rates while local officials wait for trust fund assistance • Congress’ history of not spending revenues on purpose for which they were collected Page 25 1/14/10

  26. Water Industry (AWWA) Perspective on Financing Infrastructure • More effective financing tools include: • Enhancement of existing SRF programs • Removal of annual volume caps for private activity bonds • Full cost pricing for water service • Creation of federal water infrastructure bank • AWWA opposes national water tax • Inefficient, regressive, inequitable and punishes communities that have responsibly addressed local concerns Page 26 1/14/10

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