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, equipment, 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 to serve the District's mission of delivering safe, reliable water to our customers. The requested budget is reviewed and discussed with the Finance Oversight Committee who makes a recommendation to the Board of Directors to on how they would like the requested budget to move forward. The Board reviewed the requested budget with staff in a study session and the requested budget was officially presented to the Board of Directors for a final review and adoption at the May Board meeting. A rate hearing was held prior to the May board meeting approving the requested rate changes that are included within the adopted budget.

Budget – Metro Water District has a $28.5 million dollar Adopted Budget for Fiscal Year 2020, with $3.5 million dollars budgeted for depreciation and amortization. The budget includes the following planed expenses:

 Operating Budget – $19,510,242

  • Major operating expense include salaries and benefits for employees (53.33 full-time equivalent positions) totaling $4,985,148.
  • CAP water purchases per the District's CAP allocation / AVRP O&M, and regulatory fees accounting for another large portion of the budget at $3,280,043.
  • Other operating expenses include consultant/contract services $1.17 million, general operating expenses $1.21 million, purchased power $1.1 million, and supplies at $0.75 million.
  • Principal and interest on outstanding debt service is $6,422,170.
  • Other budget disbursements include a contingency for sick and vacation payout liabilities of $89,986, and a $500,000 contingency in case of an emergency. 

Other Budget Disbursements  $9,099,491
Capital investments to support the District’s mission such as equipment, trucks, software and hardware are funded at $459,822.

  • Capital projects are cash funded at $3,662,106.
  • In addition to the cash funded capital projects, an additional $1,494,460 of capital project costs related to the Northwest Recharge, Recovery and Delivery System will be paid for by the collaborative partnership with the Town of Marana and the Town of Oro Valley in accordance with the intergovernmental agreement.
  • Depreciation and Amortization are non-cash funded expenses totaling $3,483,103 dollars.

Revenue – Metered water sales (Water Availability Rate and Water Consumption Charges) make up 78% of the District's revenue. The other 22% consists of various fees, interest earnings, water storage, compensated conservation, and penalties/service charges.

The 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 annual operating and capital budgets, rate structures, continued review of the capital improvement program and the bonds and other agreements issued to finance capital 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 June 2018, the District was legally relieved of the debt associated with the Subordinate Obligation Revenue Refunding Bonds, Series 2002, by exercising a defeasance process.

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 which were paid in full on January 1, 2019, and the same year a new WIFA loan was established to refinance the 2005 WIFA loan. In 2011, Senior Water Revenue Obligation was issues for $6,630,000.  This obligation was defeased on January 1, 2019, two years early. The most recent restructuring took place In January 2013, when the Board approved the refinancing of the 2002 Senior Water Revenue Bonds, which were paid in full on July 1, 2019, three and a half years early, saving $150,150 in interest.  In 2013, the 2002 Subordinate Obligation Revenue Refunding Bonds were restructured with principal deferred until 2020. In July 2016, the WIFA loan for the Riverside well was paid in full 16 years early saving customers over $110,000 in interest payments that did not need to occur.

The note payable for the Hub Water Purchase was paid in full on June 1, 2019. The outstanding debt balance as of July 1, 2019 is $23.9 million.

Bond Rating – In 2019, Moody’s Investment Service affirmed the Aa3 rating on senior lien revenue bonds stating that the financial position of Metro Water is healthy and is strong when compared to its Aa3 rating. The District has 551 days of cash on hand and the District liquidity has improved significantly from 2014 to 2018 with annual debt service coverage increasing from 1.58 to 1.95.

 In 2018, Fitch Rating Agency affirmed the AA- senior bond rating on the 2009 revenue bonds and the A+ subordinate lien bond rating on the 2011 revenue bonds. During this review they stated that the District has seen improvement over the last five years in key financial metrics with upward trends registered in all-in debt service coverage and debt to funds available for debt service  They mentioned the cash balances remain robust with 500 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’s leverage that was previously noted as high due to prior acquisitions has moderated, 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