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Utility Fund Revenues
Sales revenue makes up 99% of the Utility Fund’s revenue. Sales revenue is comprised of sewer collection and treatment fees, charges for in-city water, wholesale water sales, all other water and sewer related fees, and refuse and recycling fees. The interest and penalty category makes up the majority of the remaining 1% and is comprised of penalties charged on utility accounts and interest collected on funds held in checking accounts and investments.
UTILITY RATES
The Fiscal Year 2022 Budget includes no increase in the water, sewer, or garbage utility rates.
REVENUE SUMMARY
Sales Revenue Interest & Penalty Miscellaneous Transfers In
Utility Revenue
History Projected Budget
2020 Actual 2021 Budget 2021 Revised 2022 Budget % Change 18,504,931 19,075,733 21,603,873 22,775,390 19.39% 157,441 169,500 185,600 155,600 -8.20% 12,066 6,500 6,500 6,500 - - -
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18,674,438 19,251,733 21,795,973 22,937,490 19.15%
Average Residential Bill
6,200 gallons Water Usage Sewer Average Sewer Service Charge Garbage Sales Tax
Average Use Increase Monthly Annual 2019 2020 2021 2022 39.15 40.11 40.11 40.11 35.32 38.86 42.75 42.75 16.00 16.00 16.00 16.00 11.57 12.14 12.75 12.75 0.96 1.01 1.06 1.06 103.00 108.12 112.67 112.67
4.79 5.12 4.55 57.45 61.50 54.60 -
Senior Citizen Account*
6,200 gallons Water Usage Sewer Average Sewer Service Charge Garbage Sales Tax 2019 2020 2021 2022 30.47 32.77 32.77 32.77 32.45 35.69 39.26 39.26 16.00 16.00 16.00 16.00 10.46 10.98 11.53 11.53 0.86 0.90 0.95 0.95 90.24 96.35 100.51 100.51
Average Use Increase Monthly Annual
4.72 6.11 4.16 56.61 73.30 49.96 -
Sales Revenue - $22,775,390
SALES REVENUE History Projected Budget
2020 Actual 2021 Budget 2021 Revised 2022 Budget % Change 40201 Sewer PreTreatment 50,735 50,735 40,564 44,451 -12.39% 40225 Sewer Pro Rata Fees 1,054 1,200 4,000 1,200 40228 Industrial Sewer Sales 724,145 753,089 840,000 1,439,755 91.18% 40229 Sewer Sales 3,855,842 4,089,665 4,478,002 4,975,060 21.65% 40230 Wholesale Sewer Sales 269,740 410,289 738,238 796,209 94.06% 40231 Sewer Discharge Sales 67,714 55,000 55,000 55,000 40232 BackFlow Testing Revenue 2,410 8,000 - - -100.00% 40245 Industrial Water Sales 1,177,711 1,125,845 1,125,845 1,195,000 6.14% 40246 Water Sales 4,612,643 4,366,331 4,835,000 5,175,000 18.52% 40247 Wholesale Water Sales 4,758,137 5,486,179 5,567,404 5,884,815 7.27% 40248 Water Rebate 19,614 - 419,920 - 40249 Reclaimed Water Sales 1,720,141 1,500,000 1,700,000 1,700,000 13.33% 40251 Meter Sales 83,425 65,000 175,000 100,000 53.85% 40261 Transfer Fees 720 900 900 900 40262 Connection Fees 31,300 25,000 32,000 31,000 24.00% 40263 Fire Hydrant Meter Rental Fee 14,500 12,000 12,000 12,000 40264 Sewer Connection Fee 162,840 88,500 450,000 250,000 182.49% 40265 Payment Processing Fee - 85,000 155,000 120,000 41.18% 40284 Refuse & Recycling 952,260 953,000 975,000 995,000 4.41%
Sales Revenue 18,504,931 19,075,733 21,603,873 22,775,390 19.39%
Sewer Pre-Treatment - $44,451 The North Texas Municipal Water District provides sewer pre-treatment services for industrial use. The budget is provided to the City by the North Texas Municipal Water District. Estimates are based on actual volumes being treated from the period from August to July of the preceding year. The City is billed for this service and the expense is booked to the Utility Billing department. The expense is then passed on to Smurfit Kappa and Luminant Energy and booked to this revenue account.
Sewer Pro-Rata Fees - $1,200 The Sewer Pro Rata charge is made against the customer, developer or property owner to pay for the installation of sanitary sewer mains. The current budget is based on average collections in the current and previous years, this amount has been trending down and has been decreased for the upcoming year.
Industrial Sewer Sales - $1,439,755 Industrial Sewer accounts for only two users: Smurfit Kappa and Luminant Energy. Smurfit Kappa pays for sewer under the terms of an industrial sewer agreement that allows for the company to pay the city at cost for every gallon that flows through the sewer system with an annual fixed profit margin. The agreement states that the cost per 1,000 will increase when the city’s costs are increased and that the agreed upon profit margin will be based on the calendar year. Smurfit’s cost per 1,000 gallons will increase by 48% in October, and the fixed
profit margin will increase by 3% in January. Fiscal Year 2022 is the final year of the existing agreement.
Luminant Energy pays for sewer based on regular commercial rates and will receive no increase for Fiscal Year 2022.
The significant increase shown in industrial sewer is not directly related to increased industrial sewer flow. The revenue received for industrial sewer is split and booked into two funds to cover both treatment and transmission costs. During Fiscal Year 2021, the Utility Billing software was upgraded. Unfortunately, the new software will no longer automatically book this revenue into two separate funds. Going forward, 100% of the revenue will be booked into the Utility Fund and there will be an annual budget transfer to the Interceptor Fund.
Sewer Sales - $4,975,060 The City’s sanitary sewer is delivered to the North Texas Municipal Water District for treatment via the interceptor systems. Residential and senior monthly charges are calculated using the average water usage of the three months with the lowest usage during the four-month period of November through February. Commercial sewer is calculated using the same base rate and tiered scale as residential, but is based on actual month to month water usage.
With the substantial growth that has continued into and throughout Fiscal Year 2021, it is anticipated that sewer revenues will see an increase from the addition of new connections. A conservative estimate of 10% is included to account for this growth.
BUDGETING FOR UTILITY REVENUES
With regard to both sewer sales and water sales, it should be noted that staff uses a conservative approach in preparing the revenue estimates. Both revenue categories are based on customer usage and are directly impacted by weather conditions in a region where the conditions can rapidly go from drought to flood and back again. These variables can make determining estimates for year end and upcoming years challenging. Timing presents an additional challenge. Budgets are finalized during the final three months of the fiscal year, and those same months record the highest levels of revenue in the Utility Fund.
It must be taken into account that while this growth increases revenues, it also increases costs. More connections to the City’s sewer system increase the rate of flow, which impacts the immediate cost of moving wastewater. There is also a more costly effect in that more connections also lead to a long term need for more sewer capacity and this requires that infrastructure be expanded and upgraded.
Many of the areas currently experiencing rapid development are on the City’s sewer system, but purchase water from one of the three utility districts that overlap the city limits. These connections have an additional cost increase as the utility districts charge the city an administration fee for billing city sewer on their water bills.
Wholesale Sewer Sales - $796,209 The City provides wholesale sewer services to two housing developments located within the ETJ: Devonshire and Vintage Meadows/Lakewood Trails. These sewer contracts are structured similar to the city’s agreements with the Water Districts. The Sewer Districts are responsible for a minimum annual amount based on actual usage from previous years, with a possible adjustment at the conclusion of the year.
While wholesale sewer revenue is increasing as these areas develop, a large portion of this increase is similar to the one seen with Industrial Sewer Sales. A change in the Utility Billing software has resulted in the need to book all of the revenue into the Utility Fund and transfer a portion to the Interceptor Fund to cover the debt on transmission lines.
Sewer Discharge Sales - $55,000 Luminant Energy uses water to produce electricity and the water is metered, discharged, and then treated. The City is paid per gallon for the additional expense resulting from treating this water.
Industrial Water Sales - $1,195,000 Industrial Water, like Industrial Sewer, currently only has two users: Smurfit Kappa and Luminant Energy. The terms of Smurfit Kappa’s water agreement are the same as the sewer agreement. The company pays for water flow at the same rate as the city pays the North Texas Municipal Water District per gallon. There is also an agreed upon annual fixed profit margin. Smurfit Kappa’s rate per 1,000 gallons for water will not increase in October, and the fixed profit
margin will increase by 3% in January. Fiscal Year 2022 is the final year of the current agreement.
Luminant Energy relies heavily on reclaimed water, and their total potable water consumption is relatively low. Their water is billed at the regular commercial rate and will not increase for the 2022 Fiscal Year.
Water Sales – $5,175,000
This represents water sales generated from approximately 6,700 residential and just over 400 commercial water customers inside the city limits. The amount charged for water service is a base rate plus a tiered scale for any usage over 2,000 gallons. The City’s water is purchased from the North Texas Municipal Water District (NTMWD) for resale to our customers.
No increase in water rates is budgeted for Fiscal Year 2022. The North Texas Municipal Water District will not be increasing their water rates for the upcoming fiscal year.
Water District Water Sales - $5,884,815 The City contracts with four water districts for the provision of water on a take or pay basis. This allows the City to plan for a minimum revenue stream on which it can rely to purchase the supply for such contracts. Contracts are based on a water consumption period that runs from August to July. This allows the city to bill adjustments for any overages, and notify the water districts of rates for the upcoming year prior to the fiscal year end. The revenue budgeted for the next fiscal year is the minimum amount the contract will produce and is determined on a formula basis contained in the contracts.
On average, the water districts account for approximately 50% of the City’s take-or-pay contract minimum with the North Texas Municipal Water District.
Reclaimed Water Sales - $1,700,000 The City purchases reclaimed water from the City of Garland and in turn sells it to Luminant Energy at a mark-up of $0.10 per 1,000 gallons. This type of water cannot be utilized as a potable source but is an excellent alternative for this type of industrial application. The arrangement is a straight-forward demand purchase, meaning that less demand from our end user results in less reclaimed water purchased from the City of Garland.
Meter Sales - $100,000 This fee is charged for each new meter set connecting to the City’s water system and is based on the size of the meter being purchased.
Transfer Fees - $900 This fee is charged for transferring existing utility services from one location within the city limits to another.
Connection Fees - $31,000 The connection fee is a charge of $25.00 applied to each new service.
Fire Hydrant Meter Rental Fee - $12,000 This fee is retained by the city when a contractor returns a fire hydrant meter used on a construction project within the city limits.
Sewer Connection Fee - $250,000 The City added a sewer connection fee in Fiscal Year 2021. This fee is charged as part of a development agreement and will replace sewer impact fees for a single development within the ETJ.
Payment Processing Fee - $120,000 The City added a payment processing fee in Fiscal Year 2021. Credit card companies charge an average of 3% per transaction to process credit card payments and the city has absorbed these fees for a number of years.
Refuse and Recycling Sales - $995,000 The City contracts refuse and recycling collection with Community Waste Disposal (CWD) for residential and senior utility customers. Commercial services are not provided by the City and must be contracted directly with CWD. The current garbage contract expires in February of 2026.
Interest & Penalty - $155,600
INTEREST & PENALTY
40805 Interest Income 40806 Penalty Income
Interest & Penalty
History Projected Budget
2020 Actual 2021 Budget 2021 Revised 2022 Budget % Change 4,288 4,500 600 600 -86.67% 153,153 165,000 185,000 155,000 -6.06%
