Metro Water District

Budget & Audit

Review the current Budget.

Review the most recent Audited Financial Statements.

Review the Procurement Policy.


Budget Development – A priority driven process was utilized to create the budget. Each team manager works with staff and submits their recommendations for new programs and any significantly increased line items over of the previous year. All requests are prioritized and then the priorities are compiled into an overall integrated priority list based on the District's mission of delivering safe, reliable water to our customers. The draft budget is reviewed and discussed with the Finance Oversight Committee, who makes a recommendation to the Board of Directors regarding the financial plan. The Board reviews with staff each budget line item in a study session and the budget is officially presented to the Board of Directors for a final review and adoption at the June Board meeting. No rate or fee changes were request for Fiscal Year 2018, so a rate hearing was not held.  The revenue stability achieved in the prior two fiscal year along with fiscal stewardship have helped to make this possible.
 
Budget – Metro Water District has a $25.1 million dollar Adopted Budget for Fiscal Year 2018, with $3.4 million dollars budgeted for depreciation and amortization.  The budget includes the following planed expenditures:
 
Operating Expenditures – $11,551,156

  • Major operating expense include salaries and benefits for employees (50.38 full-time equivalent positions) totaling $4,300,759.
  • CAP water purchases per the District's CAP allocation / AVRP O&M, and regulatory fees accounting for another large portion of the budget at $3,156,331.
  • Other operating expenses include consultant/contract services $1.18 million, general operating expenses $1.16 million, purchased power $1.15 million, and supplies at $0.6 million.

Other Budget Disbursements – $6,970,611

  • Principal and interest on outstanding debt service is $6,389,790.
  • Other budget disbursements for capital equipment, non-bond capital projects, a contingency for sick and vacation payout liabilities of $80,821, and a $500,000 contingency in case of an emergency.

Revenue – Metered water sales (Water Availability Rate and Water Consumption Charges) make up 83% of the District's revenue. The other 17% consists of various fees, interest earnings, water storage, water rebates, and penalties/service charges.
 
Finance Oversight Committee – In 2010, the Board of Directors decided to add additional responsibilities to the Bond Oversight Committee and reconstitute that committee as the Finance Oversight Committee. The Finance Oversight Committee was asked to review and advise the Board of Directors regarding the District's long-range financial planning including the budget and rate structure as well as to continue to review the progress of the Capital Improvement Program, along with the bonds and agreements issued to finance those projects. The Committee is comprised of seven members who are all residents of the District.
 
Bond Issuance – The District issued revenue bonds in 1999 and 2002 totaled $52,840,000. This debt included $23,000,000 authorized by voters in 1997 for the District's first Capital improvement Program. Other components of the debt include refinancing the original bonds used to purchase the District, settle the City of Tucson litigation, along with refinancing funds used to construct the Herb Johnson Reservoir, District offices, and the District warehouse.
 
In 2005, District voters authorized another $28,000,000 of debt for a second Capital Improvement Program. The first phase for the improvement projects were funded with a $15,375,000 loan from the Water Infrastructure Financing Authority of Arizona (WIFA), while the second phase started in 2007 with a WIFA loan for the remaining $12,625,000.
 
Debt Refinance and Restructuring – In 2009 the District refinanced the 1999 bonds and the same year a new WIFA loan was established to refinance the 2005 WIFA loan. The most recent restructuring took place In December 2012, when the Board approved the refinancing of the 2002 Senior Water Revenue Bonds and the restructuring of the 2002 Subordinate Obligation Revenue Refunding Bonds and deferring principal payments until 2020. In July 2016, the WIFA loan for the Riverside well was paid in full 16 years early saving customers over $110,000. The outstanding debt balance as of June 30, 2017 is $39.04 million.
 
Bond Rating – In 2017, Moody’s Investment Service affirmed the Aa3 rating on senior lien revenue bonds stating that the financial position of Metro water is strong and favorable in comparison to this rating. The District has 387 days of cash on hand and the District liquidity has improved significantly from 2012 to 2016 with annual debt service coverage increasing from 1.25 to 1.74.
 
In 2016, Fitch Rating Agency affirmed the AA- bond rating on the 2009 revenue bonds and the A+ bond rating on the 2011 revenue bonds. During this review they stated that the District continues to produce sound operating margins and fiscal year 2016 debt service coverage aligns closely to a Fitch’s ‘A’ category median. They mentioned the robust liquidity with marked improvement with 425 days of cash on hand. They commented that rates are somewhat high relative to median household income levels, however, recent adjustment to the fixed base rate provide additional stability to the revenue stream. The District leverage, which was previously noted as high due to prior acquisitions has moderated and debt amortization is rapid and all debt ratios are trending downward.

 

 

 

 

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  • © Metropolitan Domestic Water Improvement District
  • 6265 N. La Cañada, Tucson, Arizona 85704
  • 520-575-8100 (office)
  • 520-575-8454 (fax)

Office hours: Monday – Thursday 7:30am - 5:30pm and Friday 7:30am - 12 noon