Review the Fiscal Year Adopted 2025 Budget – Effective July 1, 2024
Fiscal Year Adopted 2026 Budget – Effective July 1, 2025
Review the most recent Audited Financial Statements
Budget Development
A budget prioritization process was utilized to prepare the requested budget. Each team manager works with staff and submits their budget requests and recommendations for new programs, equipment, and items. All one-time requests for items or services to support the District mission are prioritized by each team, and then compiled and consolidated into one prioritized list to best serve the District’s mission of delivering safe, reliable water to our customers.
The requested budget was presented to the Board of Directors for review and recommendations. A rate hearing was held on May 15, 2023, where rate and fee changes were approved for Fiscal Year 2025 with no rate changes planned for Fiscal Year 2026. The Board of Directors were presented with the Fiscal Year 2025 requested budget at the April 8, 2024, Board Meeting, to review, discuss, and suggest any changes to be applied to the requested budget. The requested budget was officially presented to the Board of Directors for a final review and was adopted at the May 13, 2024, Board Meeting.
Budget
The Metro Water District Adopted Budget for Fiscal Year 2025 is $64.4 million with $3.55 million budgeted for depreciation and amortization. The budget contains the following:
Revenue
Metered Water Sales (Water Availability Rate, Water Consumption Charges, and Water Resource Utilization Fees) make up 82.35% of the District’s budgeted revenue. The other revenue sources account for 17.65% of the revenue from operations and consists of various fees, interest earnings, water storage, compensated conservation, penalties/service charges, and the infrastructure rehabilitation fee. Funding this year includes using $4 million of grant funding and $9,295,573 of Water Infrastructure Finance Authority of Arizona (WIFA) funding that includes principal forgiveness and 100% funding on two projects. Other funding sources include $15,343,654 from the Town of Marana and the Town of Oro Valley who are partners on a collaborative capital construction project.
Operating revenue is projected at $28,878,900 and other funding sources are planned with a total of $28,639,227.
Budgeted Operating Expenses – $20,287,171
- Operating expense include salaries and benefits for employees including 59.53 full-time equivalent positions. Salaries and benefits are budgeted at $6,458,106, which is a 1.50% increase over the prior year Adopted Budget.
- Consultants and contracted outside services are lower by 16.13% or $227,714 and general operating expenses are higher by 11.55% or $157,601.
- Electricity costs increased by 24.56%, and supply costs are higher by 13.14%. The Central Arizona Project (CAP) water cost have increased 16.05% or $425,922, and Avra Valley Recharge Project (AVRP) costs have increased 2.49% or $2,000.
- Principal and interest payments totaling $4,874,950 have been budgeted.
Capital Investments to Support the District Mission – $295,974
- Adding a node cluster to the servers and two switches.
- A physical server to replace one that was purchased in 2016.
- Warehouse roof recoating. The original coating was applied in 1999.
- A new security panel board and building access system.
- A backhoe trailer that will replace the current trailer with a larger trailer and will eliminate the need to manually lift and lower the ramps.
- An electrical upgrade to the Wildwood Well Site.
- A tablet controller for the valve machine will replace the current controller that is not working correctly.
- Mezzanine lift will provide a safer way to move items without going up and down the steep steps.
- The hydrant Saver Sockets and attachments.
- A new irrigation system for the conservation garden.
The District’s Capital Improvement Program – $24,947,637
The Northwest Recharge Recovery and Delivery System (NWRRDS) projects will continue construction with a budget of $17.31 million. The Ironwood Blend Well will continue with $1.83 million for final site improvements, well equipping and pipeline construction. The advanced metering infrastructure project and WaterSmart customer portal will move forward with an estimated cost of $6 million that includes two separate grants totaling $5 million. The DeConcini Well Granulated Active Carbon (GAC) and the Riverside Crossing Well GAC units are both eligible for 100% funding through WIFA. The lead service line inventory project is budgeted with funding totaling $250,000. The galvanized pipe replacement program was funded for design and construction in the amount of $475,000. Design for the Ina/CDO replacement well and fencing will begin. Planning for the Horizon Hills treatment will get started. The La Canada bridge pipe will be replaced and the expansion joint is planned for installation.
Non-Cash Expenses – $3,552,555
Depreciation and Amortization are non-cash funded expenses budgeted at $3,552,555, which is a decrease of $408,303 with the amortization for the system acquisition completed.
Outstanding Debt Obligations
The District will start Fiscal Year 2025 with three WIFA loans. One loan that was issued in 2007 for $12,625,000 with a 3.03% interest rate and an outstanding balance of $1,636,412.21 will be paid in full in June 2024. The 2009 loan was issued for $4,250,000 with a remaining outstanding balance of $1,988,873.37 with a 2.94% interest and fee rate.
In Arizona, the Bipartisan Infrastructure Law funding is distributed through the State Revolving Fund, which is managed by WIFA. The District submitted applications for three projects and obtained a total of $3,045,520 of principal forgiveness in the form of federal funding. The first project submitted was the E&T Well. This loan is for $1,145,198 at a 2.04% interest rate and received $610,777 of principal forgiveness. This loan was paid in full in June 2024.
The Ironwood Blending Well project received $902,243 of principal forgiveness with a loan amount of $3,095,780 with a 2.04% interest rate for ten years and can be paid in full after five years. The third-yearly principal payment will be made on July 1, 2025.
The District planned for and has obtained debt for the NWRRDS project. This project received $1,532,500 of principal forgiveness with a loan amount of $12,665,783 at an interest rate of 1.944% for ten years. This loan is payable in full after five years. The third-yearly principal payment will be made on July 1, 2025.
The only outstanding bond obligation occurred in October 2020, when the 2013 series subordinate obligation revenue bonds with a remaining par value of $7,937,000, and the WIFA Refinancing Series 2005/2009A loan with an outstanding balance of $5,785,881.28 was refunded. The outstanding balance at the time of the refunding was $13,722,881.28 and this was reduced to $9,265,000 of Series 2020 senior revenue obligations with a maturity date of January 1, 2026. The outstanding balance as of July 1, 2024, is $2,775,000.
The outstanding debt balance on all debt obligations as of July 2024, is $17.6 million.
Bond Rating
On October 21, 2021, Moody’s Investment Service affirmed the District’s senior lien revenue bond credit rating at a strong Aa3 for a U.S. water system with a modest sized system, ample liquidity, a modest debt profile, and a strong debt service coverage.