Resolution 127-1991
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Community Services Division
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RESOLUTION NO. 127 -1991
, A 0 RESOL~+rON OF INTENT OF THE BOARD OF COUNTY
CO~MISSIONERS OF MONROE COUNTY. FLORIDA. TO
CONNECT INTO THE SEWAGE COLLECTION SYSTEM OF THE
CITY OF KEY WEST TO SERVICE THE KEY WEST INTERNA-
TIONAL AIRPORT AND OTHER ADJACENT MONROE COUNTY
OWNED PROPERTIES.
WHEREAS, Monroe County is desirous of renovating and
expanding the terminal of the Key West International Airport. and
WHEREAS. the City of Key West is willing to extend its
existing sewer collection system to service the needs of the
Airport and other adjacent county-owned properties. and
WHEREAS. the City of Key West will expeditiously undertake
and complete the sewer extension to meet the construction
schedule of the Airport project, now, therefore,
BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF
MONROE COUNTY, FLORIDA, that the Board hereby states its intent
to connect into the sewage collection system of the City of Key
West subject to the following conditions:
1. The City of Key West will begin work on the sewer
extension in a timely manner and deliver the service to the
County within one year of the date of this Resolution.
2. The connection fees, impact fees, and monthly rate
charges shall be consistent with those outlined in the attached
Revised Evaluation of Wastewater Service to Airport Area, dated
3-5-91, prepared by CH2M HILL.
3. It is understood that if the City desires to construct
lift stations on county property that a fair market value for an
easement to use said property will be determined and those sums
will be deducted from the total of connection fees and impact
fees.
PASSED AND ADOPTED by the Board of County Commissioners of
Monroe County, Florida, at a regular meeting of said Board held
on the
3rd day of
Apr il
1991.
Mayor Harvey Yes
Mayor Pro Tem London Yes
Commissioner Cheal Yes
Commissioner Jones Yes
Commissioner Stormont No
BOARD OF COUNTY COMMISSIONERS
OF MONROE COUNTY, FLORIDA
. 4 ~
By: ~'~aJ~...,,-,",-. ~ ~~
Mayor/Chairman
(SEAL)
ATTEST: DANNY L. KOLHAGE, CLERK
By:~&'~f
e ty er
By
~
S 'FFICIENeY.
Attome,Y'8 Office
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@_ Engineers
_ ,Planners
~ Economists
_ Scientists
,
March 5, 1991
SEF20064.GE.05
REVISED
Mr. Paul Cates
Director of Technical Services
City of Key West
Post Office Box 1409
Key West, Florida 33041
RE: Evaluation of Extending Wastewater Service to Airport Area
Dear Paul:
This letter supersedes our February 25, 1991 letter in which estimated impact fee
revenues were based on an outdated version of the Sewer Impact Fee Ordinance. In
this letter estimated impact fee revenues are based on the current Sewer Impact Fee
Ordinance of $2.00 per gallon per day of estimated sewage flow. This revision does
not, however, change the overall conclusion that extension of wastewater service to
the airport area is expected to be financially beneficial to the wastewater system, but
only revises the dollar amounts of Option 2.
The ~ity of Key West requested that CH2M HILL evaluate the economic feasibility
of extending wastewater service to the area around the Key West International
Airport. The extension of service would result in the connection of the following
establishments: Key West International Airport, Florida Highway Patrol, Monroe
County Youth Center, Martello Museum, Martha's and Benihana Restaurants, Key
Wester Resort Inn, and the Key Ambassador Resort Inn.
CH2M HILL had previously projected anticipated wastewater flows from the Airport
area, and had estimated the project costs of providing wastewater service to this area
in a letter report, dated January 31, 1990 (copy enclosed). This present letter
compares the costs and revenues projected to result frorp' the extension of service to
the airport area in order to assess the impact on the City's Wastewater Enterprise
Fund.
CH2M HILL Key West Office 3154 Northside Drive. Suites 101-102
Key West. Florida 33040
305.294,1645
FAX NO. 305.294,6809
Mr. Paul Cates
Page 2
March 5, 1991
SEF20064.GE.05
PROJECfED CAPITAL COSTS AND CONTRIBUTIONS
The January 1990 estimated project cost of $786,000 was adjusted upwards to reflect
the impact of price inflation through to the most likely construction period of 1992.
This resulted in a revised estimated project cost of approximately $834,000.
This projected anticipated capital cost to the City was compared to projections of
connection fee and impact fee revenues to be paid by the establishments in the
airport area (see Table 1). Connection fee and impact fee payments were estimated
as a function of the projected wastewater flows for each establishment, and of our
understanding of the connection fee and impact fee provisions in the City's
wastewater service ordinance. These estimates are based on our. interpretation of the
City ordinance. The City should verify that our interpretation is correct and
consistent with existing City policy.
Total connection fee and impact fee revenues were estimated for three different
options that might apply in the airport area.
o
Option 1:
Charge Connection Fees to all establishments, do not
charge impact fees
o
Option 2:
Charge Connection Fees and Impact Fees to all
establishments
~
o
Option 3:
No Connection or Impact Fees
As shown in Table 2, total connection and impact fee revenues to the City for these
options range from zero for Option 3 to approximately $329,000 for Option 2.
Table 2 also presents the net capital costs to the City of Key West for providing
wastewater service to the airport area under the three different options of connection
and impact fees. The lowest net capital cost to the City (about $505,000) results in
Option 2, where all users pay both connection fees and impact fees. The highest net
capital cost (about $834,000) to the City obviously occurs in Option 3 where no
connection fees or impact fees are paid. '
Mr. Paul Cates
Page 3
March 5, 1991
SEF20064.GE.05
PROJECfED IMPACT ON OPERATING REVENUES
As shown in Table 3, 1992 revenues from user charge payments by the establishments'
in the airport area are estimated at $10,663 per month, or about $128,600 annually.
This estimate is based on historical water use data and our projections of future
wastewater system user charges in accordance with the City's wastewater billing
system.
Table 4 illustrates the anticipated impact of the extension of wastewater service to the
airport area on the wastewater system's annual operating revenues. The net capital
requirements from Table 2 are shown, and annual debt service sufficient to finance
these amounts 'is shown as an ongoing annual expenditure. This does not imply that
the City should, or would, finance the extension of service with additional debt, but
serves to illustrate the impact on existing system customers by demonstrating the
ability of the users in the new service area to "repay" existing customers of the system.
This does assume, however, that the City will fund the net capital requirements for
the airport extension from reserves of the Wastewater Enterprise Fund.
As shown in Table 4, the cost impacts on day-to-day operation of the City's
wastewater system are expected to be relatively small from this extension, with cost
increases at the WWTP and the additional cost of maintaining the collection system
estimated to total only about $6,500 per year. Additional operation and maintenance
costs are projected to result from the operation and maintenance of the three pump
stations required to serve the airport area. This increase is estimated at about $7,500
per year per pump station, totaling $22,500 per year. The sum of these above
amourtts and the assumed debt service payments is the total additional annual costs
faced by the wastewater system. These additional annual costs vary between about
$80,000 for Option 2 and $114,000 for Option 3.
For each of the three options the anticipated revenues from user charge payments is
in excess of the amount required to cover the expected increase in annual operating
and fixed costs to the wastewater system. The net annual benefit is projected to be
between approximately $14,000 and $47,000, depending on the connection fee and
impact fee option taken. '
This does not imply that the Wastewater Enterprise Fund' will be making a "profit"
should the airport area connect to the City's sewer system. Instead, because the
Wastewater Enterprise Fund operates on a cost-of-service principle, the user charge
system will spread the total cost of the operation of the wastewater system over the
Mr. Paul Cates
Page 4
March 5, 1991
SEF20064.GE.05
larger number of total users, allowing the possibility of a slight relative reduction in
rates that will benefit users in the airport area, as well as all existing system
customers.
In summary, as indicated by the positive net benefit numbers in Table 4, extension of
wastewater service to the airport area is expected to be financially beneficial to the
wastewater system.
Sincerely,
~2~HII7 ~ . .
~~3/~
Kenneth F. Williams, P.E.
mlKFW:052.51
Enclosures
cc: G. Felix Cooper/City Manager
, Ron Herron/Assistant City Manager
Paul Mitchell, P.E.\Director of Engineering and Facilities
David Fernandez/Finance Director
Bill Zieburtz/CH2M HILL/ATL
"
dbt 106/026.51
1
2
3
4
Average daily water consumption and estimated wastewater flow from CH2M HILL
Airport estimated ADF estimated at 70% of proposed WWfP size of 10,000 gpd.
Estimated monthly wastewater flows are from column 1. These flows are used for projecting connection and
Connection fees projected per schedule of fees shown in Appendix Table 1, and flows shown in column 2.
Impact fees projected as $2.00 per gpd of wastewater flow, based on flows from column 1
g
impact
fees.
letter report
dated January
31
1990.
Totals
Airport
Florida Highway Patrol
Monroe County Youth Center
Martello Museum
Martha's and Benihana's
Key Wester Resort Inn
Key Ambassador Resort Inn
45,000
250
3,400
20,000
14,100
7,000
150
100
1,368,750
212,917
4,563
3,042
7,604
103,417
608,333
428,875
$238,625
$ 36,986
2,260
2,007
2,767
18,736
102,889
72,979
$90,000
6,800
40,000
28,200
14,000
300
200
500
Estimated
Water ADF and
Wastewater ADF
(gpd)l
Estimated
Monthly
WW Flow
2
Estimated
Connection
Fees3
$
Estimated
Impact
Fees4
Table 1
Estimated Wastewater Flows,
Connection Fees, and Impact Fees
Table 2
Capital Costs and Contributions
1992
Capital Costs
Project Costs1
$833,867
Total Capital Costs to City
$833,867
Option 1: Connection Fees Only
Connection Fees2
$238,625
Total Fee Revenues to City
$238,625
$595,242
Net Capital Cost of Option 1
Option 2: Connection Fees and Impact
Fees
Connection Fees2
Impact Fees2
$238,625
90,000
Total Fee Revenues to City
$328,625
$505,242
Net Capital Cost of Option 2
Option 3: No Connection Fees or Impact
Fees Paid by Any Users
Connection Fees2
Impact Fees2
$
o
o
Total Fee Revenues to City
$
o
Net Capital Cost of Option 3
$ 833,867
1 From CH2M HILL letter report, dated January 31, 1990. Estimated at $786,000 in
1990 dollars; this amount was adjusted upward by 3% per year for 2 years to reflect
price inflation.
2 Projected by CH2M HILL Reflects our understanding of the City's Impact Fee
and Connection Fee Ordinances. The City should verify that our interpretation is
correct and consistent with existing City policy.
dbtl06/027.51
Table 3
'Estimated 1992 Monthly Rate Payments by Airport Area Users
Estimated
Estimated Monthly Estimated
Average Water Use Monthly
Water Use for Rate Rate
(gpd) (1) Payments(2) Payments(J)
Airport 7,000 212,917 $ 1,658
Florida Highway Patrol 150 4,563 36
Monroe County Youth Center 100 3,042 27
Martello Museum 250 7,604 59
Martha's & Benihana's 3,400 103,417 805
Key Wester Resort Inn 20,000 608,333 4,738
Key Ambassador Resort Inn 14,000 428.875 3,340
TOTALS 45,000 1,368,750 $10,663
(1) Average daily water consumption from CH2M HILL report dated January 31, 1990.
(2) Estimated monthly water consumption from Column (1).
(3) Monthly rate payments estimated per schedule of fees shown in Appendix Table 1, and 80% of
water use shown in Column 2. -
..,
KWG053.51
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Table 4
Ability of User Charges from Airport Area
to Cover Operating Costs Resulting From
___ Extension of Wastewater Service
Option 1 Option 2 Option 3
Net Capital Requirementsl
$595,242
$505,242
$833,867
Increase in Annual Revenue Requirements
Projected Annual Debt Service2
Increase in P .S. O&M Costs per year3
Additional Sewerage System O&M3
Additional O&M at WWTP3
60,627
22,500
1,500
5,000
51,461
22,500
1,500
5,000
84,931
22,500
1,500
5,000
Total Additional Annual Revenue
Requirements
$ 89,627
$ 80,461
$113,931
Projected Annual Revenue From Airport Area
for 19924 $127,950 $127,950 $127,950
Net Benefit (Cost) of Airport Expansions
$ 38.323
$ 47.489 $ 14.019
1 Net Capital Requirements from Table 2.
2 Based on imputed debt service on net capital expenditures required for Airport
project at 8% for 20 years.
3 Additional O&M Expenses projected by CH2M HILL. Additional pump station
exp~nse is based on $7,500 per year per pump station, for three pump stations.
4 From Table 3.
5 Calculated as Projected Revenues less Additional Revenue Requirements. Note
that actual revenues from Airport area could be less than shown if user charges
do not increase as projected.
dbt 106/025.51
Appendix Table 1
Rates and Charges
1991 1991 1993
Anticipated Price Inflation 103% 103% 103%
Discount Rate to 1991 Dollars $8.00
City of Key West Rates & Charges
User Charges (base + vol/kgal) $9.45 $9.73 $10.03
Impact Fees Per Gallon Per Day $2.00
Residential Connection Charges per ER U $1,000 $1,000 $1,000
Commercial Connection Charges
Per point + greater of: $1,500 $1,500 $1,500
a) $400 per living unit $400 $400 $400
b) $1,000 per 6 kgal per month $1,000 $1,000 $1,000
City of Key West Average Water
Consumption (gal/mo) 4,000 -
Estimated Return to Sewer, % and gal/mo 80% $3,200
KWG068.51