BuffaloGrove.Wtr-SewerRateStdy.FINAL DRAFT.052319.CJUR:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-
SewerRateStdy.1307.002.April2019.CJU\Report\_Mosaic.docx
Report
Village of
Buffalo Grove, IL
May 2019
Water and Sewer
Rate Study
FINAL DRAFT - 05/23/19
Report for
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study
Prepared by:
STRAND ASSOCIATES, INC.®
IDFPR No. 184-001273
1170 South Houbolt Road
Joliet, IL 60431
www.strand.com
May 2019
FINAL DRAFT - 05/23/19
i
TABLE OF CONTENTS
Page No.
or Following
SECTION 1–INTRODUCTION
1.01 Purpose of Study ...................................................................................... 1-1
1.02 Scope ....................................................................................................... 1-1
1.03 Definitions and Abbreviations ................................................................... 1-2
SECTION 2–DESCRIPTION OF WATER SYSTEM AND SEWER COLLECTION SYSTEMS
2.01 Overview of Water and Systems .............................................................. 2-1
2.02 Current Rate Structures ............................................................................ 2-3
2.03 Water and Sewer Usage Analysis ............................................................ 2-7
2.04 Historical Water and Sewer Revenue and Expenses ................................ 2-10
SECTION 3–WATER FUND CASH–NEEDS ANALYSIS AND RATE DEVELOPMENT
3.01 Projected Water System Expenses .......................................................... 3-1
3.02 Rate Structure Considerations .................................................................. 3-3
3.03 Rate Structure Development .................................................................... 3-5
3.04 Debt Service Rate Alternative................................................................... 3-9
3.05 Resulting Anticipated Revenue from Proposed Rate Structure ................. 3-14
SECTION 4–SEWER UTILITY RATE ANALYSIS
4.01 Projected Sewer Utility Revenue Requirement ......................................... 4-1
4.02 Rate Structure Alternatives ....................................................................... 4-3
4.03 Proposed Rates........................................................................................ 4-4
4.04 Resulting Anticipated Revenue from Proposed Rate Structure ................. 4-8
SECTION 5–WATER AND SEWER CONNECTION FEE STUDY
5.01 Introduction .............................................................................................. 5-1
5.02 Population Projections .............................................................................. 5-1
5.03 Costs Associated with Future Water System Improvements ..................... 5-3
5.04 Water Connection Fees ............................................................................ 5-3
5.05 Costs Associated with Future Sewer System Improvements .................... 5-6
5.06 Sanitary Sewer Connection Fees ............................................................. 5-7
SECTION 6–RECOMMENDED RATE STRUCTURE AND PROJECTED CASH FLOW
6.01 Recommended Water and Sewer Rate Structures ................................... 6-1
6.02 Projected Cash Flow Balance Sheets for 2020 through 2024 ................... 6-3
FINAL DRAFT - 05/23/19
TABLE OF CONTENTS Continued
Page No.
or Following
ii
TABLES
2.01-1 Number of Water Meters Per Size and User Classification ....................... 2-2
2.02-1 Village’s Historical Water Charge Increases ............................................. 2-3
2.02-2 Average Residential Water Service Cost Comparison for Similar
and Regional Communities.................................................................... 2-4
2.02-3 Village’s Historical Sewer Rate Increases ................................................ 2-5
2.02-4 Typical Resident Sewer Charge Comparison ........................................... 2-5
2.02-5 Average Residential Water and Sewer Service Cost Comparison for
Similar and Regional Communities ......................................................... 2-6
2.03-1 Historical Water Usage and Forecasts ..................................................... 2-8
2.04-1 Water Utility 2017 and 2018 Budget ......................................................... 2-10
2.04-2 Sewer Utility 2017 and 2018 Budget......................................................... 2-11
3.01-1 Forecasted O&M Expenses ...................................................................... 3-1
3.01-2 Summary of Anticipated Capital Improvement Expenses ......................... 3-2
3.01-3 Total Forecasted Cash Expenses for Years 2019 through 2024 ............... 3-3
3.03-1 Water Rate Allocation for All Alternatives (2020) ...................................... 3-6
3.03-2 Uniform Water Rate Structure 2020 to 2024 ............................................. 3-6
3.03-3 Uniform Water Rate with Fixed Fee Rate Structure 2020 to 2024 ............ 3-7
3.03-4 Increasing Block Rate Structure 2020 to 2024 .......................................... 3-7
3.03-5 Impacts to Average Residential Users’ Monthly and Yearly Billing ........... 3-8
3.04-1 Total Forecast Expenses for Years 2019 Through 2024 ........................... 3-10
3.04-2 Water Rate Allocation for Debt Service Alternative (2020) ........................ 3-11
3.04-3 Uniform Water Rate with Fixed Fee Rate Structure 2020 to
2024 (Debt Service Alternative) ............................................................ 3-11
3.04-4 Impacts to Average Residential Users’ Monthly and Yearly Billing ........... 3-12
3.05-1 Resulting Revenue from Proposed Rate Increases .................................. 3-14 4.01-1 Forecasted O&M Expenses ...................................................................... 4-1
4.01-2 Summary of Anticipated Capital Improvement Expenses ......................... 4-2
4.01-3 Total Minimum Sales Revenue Requirements .......................................... 4-3
4.03-1 Sewer Rate Allocation .............................................................................. 4-4
4.03-2 Uniform Volume Charge Rate Structure ................................................... 4-4
4.03-3 Uniform Volume Charge with Fixed Fee Rate Structure ........................... 4-5
4.03-4 Impacts to Average Residential User’s Monthly and Yearly Billing ........... 4-6
4.04-1 Resulting Revenue from Proposed Rate Increases .................................. 4-7
5.02-1 Past New Connections ............................................................................. 5-1
5.04-1 Current Water Connection Fees ............................................................... 5-4
5.04-2 Meter Size Conversion Ratios .................................................................. 5-5
5.04-3 Recommended Water Connection Fees ................................................... 5-5
5.06-1 Existing Sewer Connection Fees .............................................................. 5-7
5.06-2 Recommended Sanitary Sewer Connection Fees .................................... 5-8
6.01-1 Proposed 2020 to 2024 Water Fees ......................................................... 6-1
6.01-2 Proposed 2020 to 2024 Sewer Fees ........................................................ 6-2
6.01-3 Recommended Water Connection Fees ................................................... 6-2
6.01-4 Recommended Sewer Connection Fees .................................................. 6-2
6.01-5 Impacts to Average Residential Users’ Monthly and Yearly
Water and Sewer Billing ......................................................................... 6-4
6.02-1 Projected Water Fund Cash Flow ............................................................. 6-5
6.02-2 Projected Sewer Fund Cash Flow ............................................................ 6-6
FINAL DRAFT - 05/23/19
TABLE OF CONTENTS Continued
Page No.
or Following
iii
FIGURES
2.02-1 Average Residential Water Service Cost Comparison for
Similar and Regional Communities ......................................................... 2-4
2.02-2 Average Residential Sewer Service Cost Comparison for
Similar and Regional Communities ......................................................... 2-6
2.02-3 Average Residential Water and Sewer Service Cost Comparison
for Similar and Regional Communities .................................................... 2-7
2.03-1 Water Usage Trends and Forecasts ......................................................... 2-9
2.03-2 Water Usage as a Percent of Total Demand by User Classification ......... 2-9
3.03-1 Proposed Water Rate Increases on Average Residential Cost of Water
Per Month Comparison with Similar and Neighboring Communities ...... 3-9
3.04-1 Proposed Water Rate Increases on Average Residential Cost of Water
Per Month Comparison with Similar and Neighboring
Communities (Debt Service) .................................................................. 3-13
4.03-1 Proposed Sewer Rate Increases on Average Residential Cost of Water
Per Month Comparison with Similar and Neighboring Communities ...... 4-6
5.02-1 Buffalo Grove Population Projections ....................................................... 5-2
5.04-1 Existing Water Connection Fees for Comparable Municipalities ............... 5-4
5.04-2 Proposed Water Connection Fees Compared to Comparable
Municipalities ......................................................................................... 5-6
5.06-1 Existing Sewer Connection Fees Compared to Comparable
Municipalities ......................................................................................... 5-7
5.06-2 Proposed Sewer Connection Fees Compared to Comparable
Municipalities ........................................................................................ 5-8
6.01-1 Typical Combined Residential Water and Sewer Monthly Bills ................. 6-3
FINAL DRAFT - 05/23/19
SECTION 1
INTRODUCTION
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 1–Introduction
Prepared by Strand Associates, Inc. 1-1
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S1.docx
1.01 PURPOSE OF STUDY
The purpose of this rate study is to develop updated rates for the Village of Buffalo Grove,
Illinois (Village), water and sewer utilities. This study includes an evaluation of the current rate
structures, alternate rates structures, and the projected expenses of both water and sewer utilities. All
references to the sewer utility or sewer system in this report refers to only the sanitary sewer utility or
sanitary sewer system.
A cash flow analysis for the water and sewer utilities evaluates the rates for the proposed 5-year capital
improvements plan (CIP).
Additional goals of this study are to review alternatives to the current block rate structure and to review
financial impacts on utility customers to cover the cost of service. The methodology to evaluate the rate
structures and develop rates are in accordance with American Water Works Association (AWWA)
Manual M1 Principles of Water Rates, Fees and Charges. The study also considers factors such as
water conservation, overhead costs to the utilities, analysis of residential versus other customer
classifications water usage, and the impact of planned water and sewer utility improvements on water
rates.
The scope of the study is detailed in Section 1.02.
1.02 SCOPE
The general scope of the study is as follows:
A. Kickoff Meeting and Data Collection: Conduct one kickoff meeting (combined with the Water
System Model portion of the project) to establish goals, collect data, and request additional
information.
B. Metric Identification: Identify four metrics for the water and sewer system to track and evaluate
operational efficiency. Comparisons against regional and industry benchmarks are provided.
C. Revenue Forecasting: Prepare revenue requirement forecasts for the water system and sewer
system over the 5-year period covered by the CIPs and other planning documents.
D. Service and Growth Projections: Prepare projected units of service and growth for the 5-year
planning period for number of meters, water sales, and peak usage.
E. Cost of Service Analysis: Provide cost of service analysis, including review of cost allocations of
water and sewer systems, base charges, analysis of proportionality of revenues versus costs for
user classifications, and justification of consumer classification types.
F. Rate Structure Alternatives: Compare three water and sewer rate structure alternatives and
rate-setting strategies for promoting short- and long-term financial sustainability versus the
existing rate structure.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 1–Introduction
Prepared by Strand Associates, Inc. 1-2
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S1.docx
G. Cash-Flow Analysis: Review revenues generated of proposed rates, including impacts for
typical ratepayers for each user classification and provide a 5-year cash-flow analysis for
impacts on reserve balances. The cash-flow analysis will review rate impacts for funding CIP
projects through combinations of reserves and financing options.
H. Rate-Setting Spreadsheet: Prepare a rate-setting spreadsheet model that covers short- and
long-term revenue requirements and maintains the stability of the revenue stream to facilitate
capital infrastructure improvements and replacement of infrastructure.
I. Fee Evaluation: Evaluate water and sewer connection fees and other service charges.
J. Rate Study Reports: Discuss the methods used, evaluations, findings, and recommendations in
the consumption rates study report and connection rate study report. A meeting will be held to
review the draft report with the Village and will prepare a final report incorporating Village
comments.
1.03 DEFINITIONS AND ABBREVIATIONS
AWWA American Water Works Association
ccf hundred cubic f eet
CIP capital improvement plan
gal gallon
MG million gallons
NWC Northwest Water Commission
O&M operation and maintenance
REU resident equivalent unit
SCADA Supervisory Control and Data Acquisition
US United States
Village Village of Buffalo Grove, Illinois
FINAL DRAFT - 05/23/19
SECTION 2
DESCRIPTION OF WATER SYSTEM AND SEWER COLLECTION SYSTEMS
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-1
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
2.01 OVERVIEW OF WATER AND SYSTEMS
The Village is located approximately 25 miles northwest of Chicago in both Lake and Cook County,
Illinois. The Village is a suburban community with a population of 41,226, according to the 2017 United
States (US) Census. The Village’s planning boundary is approximately 4 miles from west to east and 6
miles north to south. The Village is primarily residential, however, there are areas of commercial and
industrial development in the southern, central, and northeastern sections of the Village.
The Village has approximately 13,000 water and sewer service accounts. Of these, approximately
11,200 are residential. The remaining accounts consist of multifamily, commercial, institutional,
governmental, and industrial customers. Specific information on the water and sewer utility systems
follows.
A. Water System
The Village operates a public water supply system under the jurisdiction of the Village’s Public Works
Department. As indicated in the Water System Study, the Village’s water is supplied at four points by
the Northwest Water Commission (NWC). The Village’s water supply system consists of four ground
level storage reservoirs and pumping station sites, deep aquifer emergency backup wells, and nearly
185 miles of water main ranging in size from 6-inch diameter to 24-inch diameter. Each pumping station
draws water from its adjacent reservoirs and pumps into the distribution system using anywhere from
three to eight pumps, depending on the station. Pipe materials in the system include cast iron and
ductile iron. The water system consists of a single pressure zone, and no elevated storage tanks.
Water revenue for operation of the water system is generated through bimonthly billing of residential
users and monthly billing of multi-family, commercial, and industrial users. The billing is currently a
volumetric charge based on water usage, with no availability charge. This billing system is further
described in Section 2.02. Table 2.01-1 shows the approximate number of meters per water user
classification and size. Each user classification in Table 2.01-1 is separated between Lake County and
Cook County because of the sewer system.
B. Sewer Utility
The sewer utility includes the sanitary sewer system for the Village. The Village sanitary sewer system
in Lake County conveys wastewater to the Lake County Public Works for treatment, and the Village
sanitary sewer in Cook County conveys wastewater to the Metropolitan Water Reclamation District of
Greater Chicago. The Village maintains the 134 miles of gravity lines, 5 miles of force mains, and 12 lift
stations.
Revenues for operation of the sewer utility are generated through billing based on water meter
volumetric usage and are further described in Section 2.02.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-2
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Table 2.01-1 Number of Water Meters Per Size and User Classification
Chevy Chase
Golf Course
Cook County Commercial/
Multi-Family
Cook County
Residential
Lake County
Commercial Water Only
Lake County
Commercial
Lake County
Exempt
Lake County
Multi-Family
Lake County
Residential
Lake County
Residential Water Only Other Total
No size given 0 0 5 0 0 0 0 7 0 0 12
1/2 inch 0 0 0 0 0 0 2 0 0 0 2
5/8 inch 0 0 1 0 0 0 0 0 0 0 1
3/4 inch 0 24 3,081 2 32 4 2 7,469 1 0 10,615
1 inch 0 0 36 0 0 2 206 560 3 0 807
1 1/2 inch 0 152 0 4 178 10 202 99 0 0 645
2 inch 2 234 0 0 174 8 94 0 0 0 512
3 inch 0 44 0 2 118 10 2 1 0 0 177
4 inch 0 22 0 0 22 0 10 0 0 0 54
6 inch 0 0 0 2 0 0 0 0 0 0 2
Total 2 476 3123 10 524 34 518 8,136 4 0 12,827
Source: 2017 Village Water Meter Billing Data Spreadsheets
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-3
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Year
Water Charge Cost per
1000 gallons
Water Charge Percent
Change
1983 to 2008 $1.57 -
2009 $1.97 25.0
2010 $2.40 22.0
2011 $2.40 -
2012 $2.40 -
2013 $3.24 35.0
2014 $4.20 30.0
2015 $4.38 4.0
2016 $4.56 4.0
2017 $4.74 4.0
2018 $4.92 4.0
2019 $5.12 4.0
Table 2.02-1 Village’s Historical Water Charge Increases
2.02 CURRENT RATE STRUCTURES
A. Water System
The Village currently uses a uniform water rate structure, meaning that all water users and usage is
billed at the same rate. The Village bills residential users bi-monthly for water and sewer services.
The bills consist of itemized charges that include both water and sewer charges. Sewer charges are
discussed in Section 2.02.B. The water system-specific charges are identified in the following.
1. Water Charge: This charge is the direct cost associated with pumping, treating, and
transmitting water to the service location. The water charge is determined by the volume
of water provided to the service address recorded on the water meter. Water volume is
billed in units of 1,000 gallons.
2. Adjustments: This charge reflects items such as miscellaneous water credits posted to
an account since the previous bill.
3. Late Fee: A 10 percent late fee for water charges is added if the bill is not paid by the
due date.
The Water Charge portion of the rate structure has increased annually from 2015 to 2019, at a uniform
4 percent increase. Before 2009, the Village had not increased its water rates since 1983 (more than
25 years). This is a considerable amount of time to operate a water system without raising rates. It is
recommended that rates be continually monitored and adjusted for changes in both revenue and
expenses. Table 2.02-1 shows the historical rate increases since 2015.
Table 2.02-2 and Figure 2.02-1 show average monthly water bills for a Village resident compared to the
equivalent monthly water bills for residents in surrounding communities. Communities are ranked from
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-4
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
lowest cost to highest cost and assume a typical residential customer using 4.5 thousand gallons of
water each month. Rates for some of the communities have been adjusted to an “equivalent” monthly
gallon-based bill for comparison to the Village.
As can be seen in Table 2.02-2, the Village’s typical bill for residents is below the average for the
surrounding area and similar communities. Comparisons to other communities should be done critically.
The Village’s infrastructure may significantly differ from other communities. This study is intended to
evaluate the true cost of producing and distributing water in the Village and recommending rates to
generate the necessary revenue. These communities were selected for comparison as they were either
members of the NWC, one of the thirteen comparable communities given by the Village, or they are
similar in both system infrastructure and customer base. Elk Grove Village was excluded as they
charge using a combined water and sewer rate structure instead of charging each separately.
Municipality Population
Billing
Cycle Fixed Fee Water Charge
Average Monthly
Water Bill
Wilmette 27,000 quarterly $1.08 $2.75 per 1,000 gal $16.92
Palatine* 69,000 monthly $2.34 $4.25 per 10,000 ccf
$5.46 above 10,000 ccf
$21.47
Buffalo Grove* 41,500 bimonthly $- $5.12 per 1,000 gal $23.04
Mundelein 31,000 monthly $- $5.40 per 1,000 gal $24.30
Wheeling* 22,500 monthly $- $6.09 per 1,000 gal $27.41
Arlington Heights* 75,000 bimonthly $- $6.39 per 1,000 gal $28.76
Average - - - - $33.09
Gurnee 30,700 monthly $10.84 $5.01 per 1,000 gal $33.39
Glenview 47,500 quarterly $17.13 $6.87 per 1,000 gal $36.63
Niles 29,000 monthly $- $8.44 per 1,000 gal $37.98
Park Ridge 37,000 monthly $9.68 $8.11 per 1,000 gal $46.18
Morton Grove 23,000 monthly $- $10.81 per 1,000 gal $48.65
Elmhurst 46,500 monthly $- $10.92 per 1,000 gal $49.14
Mount Prospect 54,000 monthly $4.00 $10.33 per 1,000 gal $50.49
Hoffman Estates 51,700 monthly $6.45 $10.14 per 1,000 gal $52.08
*Municipality is a member of the NWC.
Table 2.02-2 Average Residential Water Service Cost Comparison for Similar and
Regional Communities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-5
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Year
Sewer
Charge per
1,000 gal
Percent
Increase
1983 to
2008
$0.23 -
2009 $0.43 87.0
2010 $0.60 39.5
2011 $0.60 -
2012 $0.60 -
2013 $0.81 35.0
2014 $1.05 30.0
2015 $1.10 4.0
2016 $1.13 3.2
2017 $1.17 3.5
2018 $1.21 3.4
2019 $1.25 3.3
Table 2.02-3 Village’s Historical
Sewer Rate
Increases
B. Sewer Collection System
The Village maintains the sewer systems within the
Village. The businesses and residents of the Village are
billed for sewer service based on water usage volume.
The sewer maintenance charge is $1.25 per thousand
gallons. As with the water rates, the Village did not adjust
rates between 1983 and 2008. Historic sewer fees are
presented in Table 2.02-3. The average monthly
residential sewer charge in the Village is estimated based
on an average usage of 4.5 thousand gallons per month
and includes a $4.08 fixed pass through fee for Lake
County customers. Cook County residents are charged
on their tax bill instead of on the Village’s rates. Average
monthly sewer charges for a Village resident are
comparable to the equivalent monthly charge by
surrounding communities, shown in Table 2.02-4 and
Figure 2.02-2. The surrounding communities combined
water and sewer bills are shown in Table 2.02-5 and
Figure 2.02-3.
Figure 2.02-1 Average Residential Water Service Cost Comparison for Similar and
Regional Communities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-6
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Municipality Population Billing Cycle Fixed Fee Sewer Charge
Average
Monthly Sewer Bill
Niles 29,000 monthly $- $0.75 $3.38
Morton Grove 23,000 monthly $- $1.15 $5.18
Glenview 47,500 quarterly $- $1.39 $6.26
Wheeling* 22,500 monthly $- $1.50 $6.75
Palatine* 69,000 monthly $2.34 $1.25 $6.80
Arlington Heights* 75,000 monthly $- $1.65 $7.43
Buffalo Grove*+ 31,200 bimonthly $4.00 $1.25 $7.63
Park Ridge 37,000 monthly $3.55 $1.51 $10.35
Gurnee 30,700 monthly $3.61 $1.56 $10.63
Average - - - - $11.84
Hoffman Estates 51,700 monthly $6.45 $1.45 $12.98
Mount Prospect 54,000 monthly $5.00 $2.09 $14.41
Mundelein 31,000 monthly $- $3.60 $16.20
Wilmette 27,000 quarterly $- $4.24 $25.52
Elmhurst 46,500 monthly $- $7.17 $32.27
*Municipality is a member of the NWC.
+Cook County sewer is billed on the user’s tax bill
Table 2.02-4 Typical Resident Sewer Charge Comparison
Figure 2.02-2 Average Residential Sewer Service Cost Comparison for Similar and
Regional Communities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-7
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
2.03 WATER AND SEWER USAGE ANALYSIS
This section discusses anticipated water usage volumes including assumptions on usage per user
classification. Sewer conveyance volumes are based on the results of the water usage analysis.
Municipality Population
Average
Monthly Water
Bill
Average
Monthly Sewer
Bill
Average
Combined Bill
Palatine 69,000 $21.47 $6.80 $28.26
Buffalo Grove 41,500 $23.04 $7.63 $30.67
Wheeling 22,500 $27.41 $6.75 $34.16
Arlington Heights 75,000 $28.76 $7.43 $36.18
Mundelein 31,000 $24.30 $16.20 $40.50
Niles 29,000 $37.98 $3.38 $41.36
Wilmette 27,000 $16.92 $25.52 $42.44
Glenview 47,500 $36.63 $6.26 $42.88
Gurnee 30,700 $33.39 $10.63 $44.02
Average - $33.09 $11.84 $44.93
Morton Grove 23,000 $48.65 $5.18 $53.82
Park Ridge 37,000 $46.18 $10.35 $56.52
Mount Prospect 54,000 $50.49 $14.41 $64.89
Hoffman Estates 51,700 $52.08 $12.98 $65.06
Elmhurst 46,500 $49.14 $32.27 $81.41
Table 2.02-5 Average Residential Water and Sewer Service Cost Comparison for Similar
and Regional Communities
Figure 2.02-3 Average Residential Water and Sewer Service Cost Comparison for Similar
and Regional Communities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-8
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Additionally, the Village’s Lake County sewer users are billed with a summer sewer credit between the
months of June and September. This summer sewer credit caps the volume of sewer used that can be
billed. This cap is calculated as 120 percent of the average sewer used throughout the rest of the year
from October to May. This Lake County summer sewer credit was accounted for in this rate study’s
sewer usage, billing, and rates.
A. Water System
Data provided by the Village includes annual water delivered to the system from the NW C, and water
volumes billed to customers. While the NW C deliverance numbers are important in analysis of water
losses and capital improvement planning, this rate study will focus on trends in water usage billings.
The cash-needs analysis includes the future revenue needed to meet forecasted expenses. This
revenue is mainly from water sales to the end users.
Table 2.03-1 and Figure 2.03-1 show the historic trends for billed water usage, a current trend in water
use based on the past two years, a water demand growth scenario used in the Water System Study,
and the conservative projections used for this rate analysis, all in millions of gallons demanded per
year.
The current trends projects forward to 2023 the water usage decrease observed from 2016 to 2017.
The water usage could be declining due to increases in water conservation, resulting in a lower rate of
water usage.
Water System Study includes an evaluation of the water system and identifies capital improvement
needs. The Water System Study used conservatively high water demands to meet future demands. For
this rate study, using high water usage forecasts could result in less revenue than expected. The
current trend forecast in millions of gallons (MG) is used in this rate study to calculate rates.
Year Historical (MG) Current Trend (MG)
Water System Study
Projection (MG)
2008 1,401
2009 1,368
2010 1,334
2011 1,351
2012 1,369
2013 1,350
2014 1,281
2015 1,223
2016 1,222
2017 1,201
2018 1,179 1,222
2019 1,157 1,233
2020 1,135 1,245
2021 1,113 1,256
2022 1,092 1,268
2023 1,070 1,279
Table 2.03-1 Historical Water Usage and Forecast
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-9
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Figure 2.03-2 Water Usage as a Percent of Total Demand by User
Classification
The water usage by user classification was reviewed. The Village tracks this information and presented
it in the 2011 Master Plan. Figure 2.03-2 shows the water usage for each user classification.
Figure 2.03-1 Water Usage Trends and Forecasts
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-10
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Description FY 2017 FY 2018 FY 2019
Revenue
Building Revenue and
Fees
$5,000.00 $10,000.00 $10,000.00
Sales of Water $5,764,543.89 $5,944,689.84 $6,767,000.00
Revenue Total: $5,769,543.89 $5,954,689.84 $6,777,000.00
Expenses
Personnel Wages $676,217.00 $638,330.00 $689,883.00
Personnel Benefits $386,182.00 $396,618.00 $365,826.00
Operating Expenses* $1,716,518.00 $1,716,350.00 $1,748,800.00
Commodities $286,300.00 $254,000.00 $253,800.00
Maintenance and
Repairs
$118,900.00 $134,500.00 $142,900.00
Capital Reserve
Transfers
$61,700.00 $61,700.00 $61,700.00
Capital Projects $1,125,700.00 $1,175,000.00 $1,420,000.00
Existing Debt Service $416,136.00 $423,053.00 $486,390.00
Future Debt Service $- $- $-
Contractual Services $120,443.00 $122,005.00 $122,005.00
Internal Service
Transfers
$425,492.00 $427,289.00 $357,702.00
Operating Transfers $945,000.00 $945,000.00 $945,000.00
Expenses Total: $6,278,588.00 $6,293,845.00 $6,594,006.00
Source: Village of Buffalo Grove Budget (2017 to 2019)
*Includes Village’s NWC expenses
Table 2.04-1 Water Utility 2017 to 2019 Budget
2.04 HISTORICAL WATER AND SEWER REVENUE AND EXPENSES
A. Water System
Data from the Village was used to tabulate current and historical revenues and expenses for the Water
Fund. Table 2.04-1 shows summaries of the operating revenues and expenses for 2017 to 2019 from
the Village’s comprehensive annual budgets.
The next section of this study follows the Village’s financial reporting format to forecast operating
expenses, existing and proposed debt service, and capital repair and replacement to determine
revenue requirements.
B. Sewer Collection System
The budget Sewer Fund operating revenues and expenses from 2017 to 2019 are shown in
Table 2.04-2. Section 4 of this study includes the projected operating expenses, existing and
proposed debt service, and capital repair and replacement to determine revenue requirements.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 2–Description of Water System and Sewer Collection Systems
Prepared by Strand Associates, Inc. 2-11
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S2.docx
Description FY 2017 FY 2018 FY 2019
Revenue
Building Revenue and Fees $3,795,539.85 $3,591,000.00 $3,590,800.00
Sales of Sewer $1,405,815.08 $1,434,154.92 $1,643,200.00
Revenue Total: $5,201,354.93 $5,025,154.92 $5,234,000.00
Expenses
Personnel Wages $348,000.00 $294,221.00 $248,912.00
Personnel Benefits $247,252.00 $214,982.00 $199,161.00
Operating Expenses $12,075.00 $12,800.00 $12,700.00
Commodities $3,496,500.00 $3,626,600.00 $3,626,750.00
Maintenance and Repairs $35,900.00 $42,800.00 $42,800.00
Capital Reserve Transfers $30,944.00 $30,944.00 $30,944.00
Capital Projects $954,000.00 $954,000.00 $1,744,000.00
Existing Debt Service $- $- $-
Future Debt Service $- $- $-
Contractual Services $24,000.00 $24,000.00 $24,000.00
Internal Service Transfers $231,721.00 $205,777.00 $207,049.00
Expenses Total: $5,380,392.00 $5,406,124.00 $6,136,316.00
Source: Village of Buffalo Grove Budget (2017 to 2019)
Table 2.04-2 Sewer Utility 2017 to 2019 Budget
C. Reserve Funds
The Village’s water fund currently has approximately $3,785,000 in total reserves as of December
31, 2018. The Village does not have separate accounts for its reserve between water and sewer.
By allocating the reserve at 55.3 percent water and 44.7 percent sewer, the water and sewer
balances are $2,093,105 and $1,691,895, respectively.
AWWA M1 recommends around 25 percent of one year’s budgeted expenses. The minimum cash
balance to meet a 25 percent reserve of the 2018 budget correlates to approximately $1,573,000
for the water utility and $1,351,000 for the sewer utility. At this time, the Village meets this target
reserve level for both water and sewer.
FINAL DRAFT - 05/23/19
SECTION 3
WATER FUND CASH–NEEDS ANALYSIS AND RATE DEVELOPMENT
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-1
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
This section uses historical trends to develop a forecast of the water system expenses. The expenses
are separated into operation and maintenance (O&M) expenses, capital improvements, and debt
service. The overall forecasted expenses are the revenue requirement for developing the
recommended rates.
3.01 PROJECTED WATER SYSTEM EXPENSES
A. O&M Expenses
Using the Village budget methodology, the water utility O&M expenses include the following line items:
1. Personnel Services
2. Personnel Benefits
3. Operating Expenses
4. Maintenance and Repairs
5. Commodities
Administrative support and salary costs have leveled out over the past couple years. Based on inflation
data obtained from the Bureau of Labor Statistics, a 2 percent yearly expense growth was assumed for
personnel services and benefits, operating expenses, and commodities, for the purposes of this rate
analysis.
Maintenance and repairs have declined between 2017 and 2018. This may be because less capital
projects have been completed caused by decreased revenues. However, this is not sustainable. An
increase of 2 percent a year was assumed in this analysis.
In summary, O&M expenses are forecasted to increase by about 2 percent a year or approximately
10 percent over the next five years. Table 3.01-1 provides a summary of the forecasted
O&M expenses. Discussion with NWC revealed that typical increases in yearly NWC expenses are 2 to
4 percent, however, as the Village’s water demand is declining, a 2 percent increase was assumed.
Note, the Maintenance and Repair line only includes miscellaneous maintenance and repair from the
Village’s budget (e.g. hydrants, valves, etc.) that are not included in Table 3.01-2 as planned capital
improvement expenses.
Line Item 2019 2020 2021 2022 2023 2024
Personnel Services $689,883 $703,681 $717,754 $732,109 $746,752 $761,687
Personnel Benefits $365,826 $373,143 $380,605 $388,217 $395,982 $403,901
Operating Expenses $1,748,800 $1,783,776 $1,819,452 $1,855,841 $1,892,957 $1,930,817
Maintenance and Repair $142,900 $145,758 $148,673 $151,647 $154,680 $157,773
Commodities $253,800 $258,876 $264,054 $269,335 $274,721 $280,216
TOTAL $3,201,209 $3,265,233 $3,330,538 $3,397,149 $3,465,092 $3,534,393
Table 3.01-1 Forecasted O&M Expenses
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-2
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
Line Item 2019 2020 2021 2022 2023 2024
SCADA Improvements $70,000 $10,000 $10,000 $10,000 $10,000 $10,000
Pump House and Security
Improvements $150,000 $640,000 $500,000 $220,000 $220,000 $1,500,000
Water Study $35,000 - - - - -
Lake Cook Road
Improvements $535,000 $535,000 $535,000 - - -
Weiland Road 1
Improvements $40,000 - - - - -
Weiland Road 2
Improvements - $25,000 - - - -
Buffalo Grove Road
Improvements - $100,000 - - - -
Prairie Road Improvements - - - - $500,000 -
Annual Leak Detection $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Village-wide Water Main
Replacement Program* - $1,197,000 $1,730,000 $2,952,000 $3,982,000 $5,193,000
Annual Meter Upgrades $315,000 $315,000 $315,000 $315,000 $315,000 $315,000
Total $1,195,000 $2,872,000 $3,140,000 $3,547,000 $5,077,000 $7,068,000
*May be financed through debt service, see Section 3.04
Table 3.01-2 Summary of Anticipated Capital Improvement Projects
B. Capital Improvements
The Village has plans for nearly $23,000,000 in water system infrastructure by 2024 based on the
Village’s 2019 CIP and additional guidance from the Village. Because aging water main has an
increased likelihood of failures, the Village plans to increase annual replacement. Additional details
about the Village-wide Water Main Replacement Program and the recommended future capital
improvement plan can be found in section 9.04 of the 2019 Water System Study. Table 3.01-2 outlines
the anticipated capital improvement expenses over the next five years.
C. Debt Service
The Village intends to primarily finance future capital improvement projects with the water and sewer
reserves, instead of through debt service. The Village currently repays approximately $500,000 in
principal and interest on current debt service, according to their 2019 budget, payments of which are
trending to increase over the next five years.
A rate structure alternative examining the water rates if the Village were to take on additional debt
service for their Village-wide Water Main Replacement Program can be found in Section 3.04.
D. Reserves
The Village manages a capital equipment reserve and an operating transfer fund in addition to the
general water and sewer reserves. These are used to replace broken capital equipment, and to transfer
money between accounts, respectively. Both the capital equipment reserve and the operating transfers
fund are assumed to grow by 2 percent each year for the purposes of this rate study analysis.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-3
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
E. Total Revenue Requirement
The resulting forecasted expenses, or required revenue, for 2019 through 2024 are shown in
Table 3.01-3.
3.02 RATE STRUCTURE CONSIDERATIONS
Along with the determination of projected expenses or revenue requirements, the rate structures were
evaluated.
A. Fixed Charges
Many neighboring communities have a standard charge associated with water billing. Some
communities call it a meter charge or a service charge, other communities charge a rate for a certain
minimum amount of water used, then proceed with a volumetric charge for use beyond the minimum.
The flat rate is also referred to as a fixed charge, which is a more direct definition of the charge. This is
consistent with AWWA M1 Principles of Water Rates, Fees, and Charges terminology. There is a
minimum cost associated with making the water available for consumption. This analysis will use this
approach and review recommended adjustments to the fixed charge.
According to AWWA M1 Principles of Water Rates, Fees, and Charges, expenses allocated to the fixed
charge should be all costs associated with running the water system that would be realized whether or
not any water was delivered and sold to a user. This may include costs for minimal administrative and
operational staff, some debt service payments, insurance, and even some contractual services. If all or
even several of these costs are used in the determination of how much the fixed charges should be, the
fixed charge becomes a major portion of the water bill total. Coverage of two or more of these types of
expenses with the fixed fee is not recommended.
Line Item 2019 2020 2021 2022 2023 2024
O&M $3,201,209 $3,265,233 $3,330,538 $3,397,149 $3,465,092 $3,534,393
Capital
Improvements* $1,195,000 $2,872,000 $3,140,000 $3,547,000 $5,077,000 $7,068,000
Capital Reserve
Transfers
$61,700 $62,934 $64,193 $65,477 $66,786 $68,122
Contractual Services $122,005 $124,445 $126,934 $129,473 $132,062 $134,703
Internal Service
Transfers $357,702 $404,239 $412,324 $420,571 $428,982 $437,562
Operating
Transfers $945,000 $945,000 $945,000 $945,000 $945,000 $945,000
Existing Debt
Service $486,390 $524,003 $565,342 $608,374 $651,406 $694,438
Future Debt
Service $ - $ - $ - $ - $ - $ -
Total $6,369,006 $8,197,855 $8,584,331 $9,113,042 $10,766,328 $12,882,218
*Portions may be financed through debt service, see Section 3.04
Table 3.01-3 Total Forecasted Cash Expenses for Years 2019 Through 2024
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-4
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
The Village does not have a fixed fee structure in place at this time, and currently has a purely
volumetric-based billing structure. This current rate structure, however, does not collect revenue from
accounts without water use in a billing period.
B. Alternatives
There are several common volumetric rate structures, including:
1. a uniform rate structure
2. a uniform rate structure with a fixed fee
3. an increasing block rate structure
These rates apply to the total volume of water registered by the meter during the billing cycle. Different
methods of volumetric use billing are typically implemented to influence user decision-making regarding
water use. The following provides a discussion of each of these three common options.
C. Uniform Rate Structure
The Village currently uses a uniform rate structure. With this structure, the user is charged a consistent
rate for each unit, regardless of how little or how much is used. As mentioned in Section 2, the Village
currently charges $5.12 per thousand gallons of water used. Uniform rates do not offer incentives or do
not provide discounts to wholesale or major users, they also do not provide an incentive for water
conservation. An advantage of a uniform rate structure is simple to administer, and users can predict or
verify their billing.
The alternative for a uniform rate structure is discussed further in Section 3.03.
D. Uniform Rate Structure with Fixed Charge
A uniform rate structure with a fixed charge is a variant on the Village’s current rate structure. With this
structure, the Village would bill users at a uniform volumetric rate for the amount of water used and
include a fixed charge to every bill to collect revenue from accounts that are not billed any volume. The
addition of a fixed charge could also provide more stable revenue. As with the uniform rate structure,
this rate structure does not offer any incentives regarding wasting water or water conservation and
does not provide any discounts to large users.
Further discussion of this rate structure can be found in Section 3.03.
E. Increasing Block Rate Structure
An increasing block rate structure is becoming more common to promote conservation. This structure
offers lower volume users a lower rate than higher volume users. The rate for the first set amount of
water would be less than the next set amount of water and would be more expensive for each
additional tier. Users recognize that by conserving water and reducing waste, they can reduce their
water bills by staying within the lower rate water volumes.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-5
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
The current trend for water usage in the Village is declining, possibly because of user conservation.
The decline in water use will likely plateau or increase with growth at some point. Implementing an
increasing rate structure to further reduce water usage does not appear necessary based on existing
system capacity and water supply. This type of rate structure change may be confusing to users and
would result in more significant rate increase for users that consume more.
Furthermore, an increasing block rate structure can cause uncertain decreases in water consumption.
Revenues may be impacted much more significantly than expected, which would require more frequent
evaluation of the water rates for each tier.
Detailed historical data is needed to determine where the block volumes should stop and start for the
varying rates.
Again, because the Village water users seem to be decreasing water consumption through
conservation, we do not recommend developing and implementing an increasing block rate structure.
3.03 RATE STRUCTURE DEVELOPMENT
The following three rate structure alternatives were evaluated further and potential rates for each
alternative we developed.
1. Uniform volume charge: This alternative is to continue the existing rate structure with a
volume charge.
2. Uniform volume charge with a fixed charge: This alternative includes a volume charge
and a fixed charge for each billing period. A single fixed charge is included for all user
classes and meter sizes. The residential fixed charge is for two months because of the
bimonthly billing cycle. The other user classes are billed monthly.
3. Increasing Block Rate: The increasing block rate for the volume charge for this
alternative is for the residential users. The other classifications would have a uniform
volume charge. This alternative does not include a fixed fee.
B. Cost of Service Methodology
Each alternative is based on the Village’s forecasted expenses and revenue requirements, developed
earlier in this section. These expenses were allocated into different categories based on the Base-Extra
Capacity methodology in the AWWA M1 Principles of Water Rates, Fees, and Charges manual. For the
water portion of this rate study, there were six total categories used in allocating rates: base, extra
capacity-maximum day, extra capacity-maximum hour, customer meters and services, customer billing
and collection, and fire protection. The base, extra capacity-maximum day, extra capacity-maximum
hour, and fire protection categories were allocated to the volumetric charge, as these costs are
associated with the water distribution system itself and can vary from customer to customer. These
allocations were assumed to remain relatively constant on a percentage basis. Capital improvement
projects were allocated on an individual basis, examining which components of the allocation each
project should be allocated to.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-6
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
For the uniform volume charge with fixed fee alternative, the customer meters and services and
customer billing and collection categories were allocated to the fixed fee charge, as these are costs that
are relatively the same regardless of customer volume usage. The resulting allocations can be seen in
Table 3.03-1. This allocation will change slightly from year to year as the budget expenses and
revenues change. These rate allocations are the same for the uniform volume charge and the
increasing block structure alternatives. However, as there is no fixed fee in these alternatives all
categories were allocated to the volume charge.
The monthly fixed charge is then calculated by dividing the total cost allocation for customer meters and
services plus customer billing and collection categories by the number of metered customers and then
dividing by 12 months. The uniform volume charge is calculated by dividing the total sum of the base,
extra capacity-maximum day, extra capacity-maximum hour by the total projected metered volume to
be billed (per 1,000 gallons used) for that year.
Based on these rate allocations, the proposed rates for 2020 through 2024 are presented in
Tables 3.03-2, 3.03-3, and 3.03-4.
Ta ble 3.03-2 shows the resulting uniform water rate structure increases that met the forecasted revenue
requirements over the next five years. This annual percent increase includes the annual 4 percent rate
increase per year that Village currently implements.
Rate
Allocation
Component Total Base
Extra
Capacity
Maximum
Day
Extra
Capacity
Maximum
Hour
Customer
Meters and
Services
Customer
Billing and
Collection
Fire
Protection
Debt Service $524,003 $524,003 $0 $0 $0 $0 $0
Capital
Replacement
Fund
$62,934 $23,641 $9,692 $3,525 $10,929 $14,235 $911
Capital
Improvements
$2,872,000 $1,277,907 $702,290 $572,660 $316,737 $2,262 $145
O&M $4,738,918 $2,991,076 $439,834 $158,830 $483,650 $606,929 $58,603
Non-Rate
Revenues*
($121,000) ($45,454) ($18,634) ($6,777) ($21,013) ($27,369) ($1,752)
Total $8,076,855 $4,771,173 $1,133,182 $728,238 $790,303 $596,056 $57,907
% of Total 100.00% 59.07% 14.03% 9.02% 9.78% 7.38% 0.72%
* Includes miscellaneous revenue such as fees, meter sales, and connection charges.
Table 3.03-1 Water Rate Allocation for All Alternatives
Current Proposed Water Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$5.12 $7.02 $8.00 $9.11 $10.37 $11.81
Annual Percent Increase 37% 14% 14% 14% 14%
Table 3.03-2 Uniform Water Rate Structure 2020 to 2024
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-7
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
Table 3.03-3 shows the resulting uniform water rate with fixed fee rate structure that met the forecasted
revenue requirements over the next five years. This annual percent increase includes the annual
4 percent rate increase per year that Village currently implements. Based on Village input, the fixed fee
was held constant at the calculated 2024 value rather than having relatively small annual fixed charge
increases. By using the calculated 2024 fixed fee for all 5 years, a conservative fixed fee value is used.
Table 3.03-4 shows the resulting increasing block rate structure for the forecasted revenue
requirements over the next five years. This annual percent increase includes the annual 4 percent rate
increase per year that Village currently implements.
Proposed Water Volumetric Fee (per 1,000 gal)
2020 2021 2022 2023 2024
Residential Tier 1 (to 2,660 gal/month) $4.81 $5.53 $6.36 $7.32 $8.41
Residential Tier 2
(2,661 gal to 4,150 gal/month)
$5.94 $6.83 $7.85 $9.03 $10.39
Residential Tier 3
(above 4,150 gal/month)
$7.02 $8.07 $9.28 $10.68 $12.28
Commercial/Industrial $7.02 $8.07 $9.28 $10.68 $12.28
Annual Percent Increase -% 15% 15% 15% 15%
Table 3.03-4 Increasing Block Rate Structure 2020 to 2024
Current Proposed Water Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$5.12 $7.02 $7.73 $8.51 $9.37 $10.32
Annual Percent Increase 37% 10% 10% 10% 10%
Current
Proposed Water Fixed Fee per Month*
2020 2021 2022 2023 2024
$ - $9.26 $9.26 $9.26 $9.26 $9.26
Annual Percent Increase - - - - -
*Users are charged on a bimonthly basis.
Table 3.03-3 Uniform Water Rate with Fixed Fee Rate Structure 2020 to 2024
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-8
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
C. Recommended Rate Structure Type
Because of the trends in the Village’s water demand, as well as a need for a stable revenue source, it is
recommended the Village moves to the uniform water rate with fixed fee rate structure.
Table 3.03-5 shows that, for the fixed fee rate structure, the percentage increase in the rates for water
usage does not translate to the same percentage increase in the user’s bill. The projected water billing
volumes from Section 2 has users consuming less water each year.
When comparing the cost for water service in other communities using the same approach as that
explained in Section 2, the Village would be above average for the average residential monthly cost.
However, this assumes the other communities will maintain their current rate structure and not increase
rates. This may not the case because the other communities will experience higher revenue
requirements and will increase rates as well. Figure 3.03-1 shows how the Village rates compare with
similar and neighboring communities, using a typical usage of 4,500 gallons used per month.
2019 2020 2021 2022 2023 2024
Average Monthly
Usage (1,000 gal)
4.50 4.50 4.50 4.50 4.50 4.50
Base Charge* $0.00 $9.26 $9.26 $9.26 $9.26 $9.26
Volumetric Rate $5.12 $7.02 $7.73 $8.51 $9.37 $10.32
Volume Charge $23.04 $31.59 $34.79 $38.30 $42.17 $46.44
Average Monthly
Bill
$23.04 $40.85 $44.05 $47.56 $51.43 $55.70
Monthly Increase - $17.81 $3.20 $3.51 $3.87 $4.28
Cumulative
Increase
- $17.81 $21.01 $24.52 $28.39 $32.66
Average Yearly
Usage (1,000 gal)
54.00 54.00 54.00 54.00 54.00 54.00
Average Yearly
Billings
$276.48 $490.20 $528.54 $570.66 $617.10 $668.40
Yearly Increase - $213.72 $38.34 $42.12 $46.44 $51.30
Cumulative
Increase
- $213.72 $252.06 $294.18 $340.62 $391.92
Percent Increase - 77.30% 7.82% 7.97% 8.14% 8.31%
*Users are charged on a bimonthly basis.
Table 3.03-5 Impacts to Average Residential Users’ Monthly and Yearly Billing
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-9
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
3.04 DEBT SERVICE RATE ALTERNATIVE
As an alternative to the Village primarily funding future capital improvement projects with the water and
sewer reserves and annual revenues, the Village is considering potentially issuing approximately
$15 million in revenue-backed bond in 2020 to finance the water main replacement program. The total
of the 5-year water main replacement program in Table 3.01-2 is $15,054,000. For the purposes of this
alternative evaluation, only the $15 million of the water main replacement program is included. The
Village anticipates that, for a 20-year amortization, the annual uniform cost to cover the debt service’s
principal and interest would be $1,239,840. Additionally, the remaining capital improvements in
Table 3.01-2 are assumed to be funded by annual revenues and reserves. Table 3.04-1 shows the
projected expenses for this debt service scenario.
Figure 3.03-1 Proposed Water Rate Increases on Average Residential Cost of Water Per
Month Comparison with Similar and Neighboring Communities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-10
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
The 20-year amortization schedule was used for the purposes of this rate alternative. The Village could
evaluate a shorter amortization schedule if desired, however, this would increase annual debt service
payments and increase rates. The Village should evaluate funding and financing options with its
municipal advisor.
Using the same rate allocation methodology as outlined in Section 3.03, the water rate allocation for the
debt service alternative is in Table 3.04-2
Line Item 2019 2020 2021 2022 2023 2024
O&M $3,201,209 $3,265,233 $3,330,538 $3,397,149 $3,465,092 $3,534,393
Capital Improvements* $1,195,000 $1,675,000 $1,410,000 $595,000 $1,095,000 $1,875,000
Capital Reserve
Transfers
$61,700 $62,934 $64,193 $65,477 $66,786 $68,122
Contractual Services $122,005 $124,445 $126,934 $129,473 $132,062 $134,703
Internal Service
Transfers $357,702 $404,239 $412,324 $420,571 $428,982 $437,562
Operating Transfers $945,000 $945,000 $945,000 $945,000 $945,000 $945,000
Existing Debt
Service $486,390 $524,003 $565,342 $608,374 $651,406 $694,438
Future Debt
Service $ - $1,239,840 $1,239,840 $1,239,840 $1,239,840 $1,239,840
Total $6,369,006 $8,240,695 $8,094,171 $7,400,882 $8,024,168 $8,929,058
*Excluding Village-wide Water Main Replacement Program (funded through debt service).
Table 3.04-1 Total Forecasted Expenses for Years 2019 Through 2024
Rate
Allocation
Component Total Base
Extra
Capacity
Maximum
Day
Extra
Capacity
Maximum
Hour
Customer
Meters
and
Services
Customer
Billing
and
Collection
Fire
Protection
Debt Service $1,763,843 $1,763,843 $0 $0 $0 $0 $0
Capital
Replacement
Fund
$62,934 $23,641 $9,692 $3,525 $10,929 $14,235 $911
Capital
Improvements
$1,675,000 $739,257 $403,040 $213,560 $316,737 $2,262 $145
Operations
and
Maintenance
$4,738,918 $2,991,076 $439,834 $158,830 $483,650 $606,929 $58,603
Non-Rate
Revenues
($121,000) ($45,454) ($18,634) ($6,777) ($21,013) ($27,369) ($1,752)
Total $8,119,695 $5,472,363 $833,932 $369,138 $790,303 $596,056 $57,907
% of Total 100.00% 67.40% 10.27% 4.55% 9.73% 7.34% 0.71%
Table 3.04-2 Water Rate Allocation for Debt Service Alternative
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-11
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
For this alternative, only the uniform water rate with fixed fee rate structure was considered, as
this was the recommended rate structure from Section 3.03. Given the rate allocations outlined in
Table 3.04-2, the rate structure for the debt service alternative is shown in Table 3.04-3.
Table 3.04-4 shows that, for the fixed fee rate structure under the debt service alternative, the
percentage increase in the rates for water usage does not translate to the same percentage increase in
the user’s bill.
Figure 3.04-1 shows how the Village rates compare with similar and neighboring communities, using a
typical usage of 4,500 gallons used per month. Using this rate structure alternative, the Village would
be slightly above the average billing for comparable communities.
The Water System Study identified $95 million worth of water main beyond its service life to be
replaced in the next 20 years. The debt service alternative includes financing $15 million for the first
five years of water main replacement. To replace the remaining $80 million of water main over the
following 15 years would require a $5.33 million annual capital cost. This annual cost would be in
addition to the projected debt service payment of approximately $1,240,000 until 2040. As a result,
water rates after 2024 would be higher in the debt service alternative than the water rates with annual
revenues funding the water main replacement program.
Current Proposed Water Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$5.12 $7.02 $7.29 $7.58 $7.87 $8.18
Annual Percent Increase 37% 4% 4% 4% 4%
Current
Proposed Water Fixed Fee Per Month*
2020 2021 2022 2023 2024
$ - $9.26 $9.26 $9.26 $9.26 $9.26
Annual Percent Increase - - - - -
*Users are charged on a bimonthly basis.
Table 3.04-3 Uniform Water Rate with Fixed Fee Rate Structure 2020 to 2024 (Debt Service
Alternative)
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-12
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
2019 2020 2021 2022 2023 2024
Average Monthly
Usage (1,000 gal)
4.50 4.50 4.50 4.50 4.50 4.50
Base Charge* $0.00 $9.26 $9.26 $9.26 $9.26 $9.26
Volumetric Rate $5.12 $7.02 $7.29 $7.58 $7.87 $8.18
Volume Charge $23.04 $31.59 $32.82 $34.10 $35.43 $36.81
Average Monthly
Bill
$23.04 $40.85 $42.08 $43.36 $44.69 $46.07
Monthly Increase - $17.81 $1.23 $1.28 $1.33 $1.38
Cumulative
Increase
- $17.81 $19.04 $20.32 $21.65 $23.03
Average Yearly
Usage (1,000 gal)
54.00 54.00 54.00 54.00 54.00 54.00
Average Yearly
Billings
$276.48 $490.20 $504.98 $520.34 $536.30 $552.89
Yearly Increase - $213.72 $14.78 $15.36 $15.96 $16.58
Cumulative
Increase
- $213.72 $228.50 $243.86 $259.82 $276.41
Percent Increase - 77.30% 3.02% 3.04% 3.07% 3.09%
*Users are charged on a bimonthly basis
Table 3.04-4 Impacts to Average Residential Users’ Monthly and Yearly Billing
Figure 3.04-1 Proposed Water Rate Increases on Average Residential Cost of Water Per
Month Comparison with Similar and Neighboring Communities (Debt Service)
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 3–Water Fund Cash-Needs Analysis and Rate Development
Prepared by Strand Associates, Inc. 3-13
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S3.docx
3.05 RESULTING ANTICIPATED REVENUE FROM PROPOSED RATE STRUCTURE
Table 3.05-1 shows the resulting revenue of the proposed rate changes with the non-debt service
alternative.
Fixed Fee Revenue 2020 2021 2022 2023 2024
Subtotal $1,400,647 $1,466,694 $1,481,360 $1,496,174 $1,511,136
Water Usage Revenue
Chevy Chase Golf
Course $13,974 $15,185 $16,501 $17,931 $19,485
Cook County
Commercial/Multi-Family $1,269,798 $1,379,850 $1,499,440 $1,629,395 $1,770,613
Cook Residential $1,201,299 $1,305,415 $1,418,554 $1,541,498 $1,675,099
Lake County
Commercial Water Only $60,484 $65,726 $71,422 $77,612 $84,339
Lake County
Commercial $1,133,722 $1,231,980 $1,338,755 $1,454,783 $1,580,868
Lake County Exempt $26,087 $28,347 $30,804 $33,474 $36,375
Lake County
Multi-Family $889,698 $966,807 $1,050,600 $1,141,654 $1,240,600
Lake Residential $3,509,166 $3,813,301 $4,143,796 $4,502,934 $4,893,200
Lake Residential Water
Only $1,048 $1,139 $1,238 $1,345 $1,461
Other $0 $0 $0 $0 $0
Subtotal $8,105,274 $8,807,750 $9,571,109 $10,400,627 $11,302,039
Total Projected
Revenue from
Water Sales
$9,288,383 $10,274,444 $11,052,470 $11,896,802 $12,813,175
Table 3.05-1 Resulting Revenue from Proposed Rate Increases
FINAL DRAFT - 05/23/19
SECTION 4
SEWER UTILITY RATE ANALYSIS
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-1
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
4.01 PROJECTED SEWER UTILITY REVENUE REQUIREMENT
The 2019 through 2023 revenue requirements for the sewer utility were developed using a similar
methodology to the water utility rate section. The expense categories include O&M, capital
improvements, equipment fund contributions, and debt service. The specific amounts required for each
item are discussed separately.
A. O&M Expenses
As previously stated in Section 2, O&M expenses include all costs associated with operating the
Village’s sanitary sewer system. O&M line items are the same for the Village’s sewer utility as with the
water utility. O&M expenses are estimated to increase by 2 percent each year from the 2019 O&M
expenses. Table 4.01-1 provides a summary of the forecasted O&M expenses.
B. Capital Improvements
Historically, capital improvement costs related to the Village’s sewer system have varied from year to
year. The Village has plans to invest approximately $8,500,000 into sewer system infrastructure by
2024 according to the Village’s 2019 CIP. Table 4.01-2 outlines what planned investments are
scheduled in the coming years.
Line Item 2019 2020 2021 2022 2023 2024
Personnel
Services
$248,912 $253,890 $258,968 $264,147 $269,430 $274,819
Personnel
Benefits
$199,161 $203,144 $207,207 $211,351 $215,578 $219,890
Operating
Expenses
$12,700 $12,954 $13,213 $13,477 $13,747 $14,022
Maintenance
and Repair
$42,800 $43,656 $44,529 $45,420 $46,328 $47,255
Commodities $3,626,750 $3,699,285 $3,773,271 $3,848,736 $3,925,711 $4,004,225
Total $4,130,323 $4,212,929 $4,297,188 $4,383,132 $4,470,794 $4,560,210
Table 4.01-1 Forecasted O&M Expenses
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-2
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
Line Item 2019 2020 2021 2022 2023 2024
Capacity Management O&M $55,000 $42,000 $19,000 $39,000 $50,000 $50,000
Lift Station Repair and
Maintenance $34,000 $1,200,000 $40,000 $1,200,000 $40,000 $1,000,000
SCADA Improvements $70,000 $10,000 $10,000 $10,000 $10,000 $10,000
Aptakisic Road
Improvements $100,000
Trunk Sewer Lining
Improvements $400,000
Sewer Rehabilitation $500,000 $1,000,000 $500,000 $1,000,000 $500,000
Manhole Rehabilitation $100,000 $100,000 $100,000 $100,000 $100,000
Sewer Televising $50,000 $75,000 $75,000 $75,000 $75,000
Total $559,000 $1,902,000 $1,244,000 $2,024,000 $1,275,000 $1,735,000
Table 4.01-2 Summary of Anticipated Capital Improvement Expenses
C. Capital Equipment Reserves
The Village contributes annually to a reserve for repair and replacement of capital equipment. For the
purposes of this rate analysis, it is assumed that contributions to this fund will increase annually by
2 percent.
D. Debt Service
At this time, the Village does not have any existing or planned debt service for its sewer system. Future
capital improvement projects will be funded by the sewer reserves.
E. Total Revenue Requirement
Based on the 2017 to 2019 budget, revenues are generated from sewer tap on fees, sewer billings, or
miscellaneous sources. The projected revenue requirements to meet forecasted expenses and other
miscellaneous revenues for years 2019 through 2023 are summarized in Table 4.01-3.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-3
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
4.02 RATE STRUCTURE ALTERNATIVES
The follow two rates structures were reviewed for the sewer system.
1. Uniform Volume Charge
2. Uniform Volume Charge with a fixed charge
An increasing block rate structure is not common for sewer systems and was not reviewed.
A. Uniform Volume Charge
Similar to the water rates, the existing sewer rate structure is a uniform volume charge without any
fixed charges. Proposed rates were reviewed for this alternative to continue with the existing rate
structure.
B. Uniform Volume Charge with Fixed Charges
As an alternative to the existing rate structure, a uniform volume charge with a fixed charge was
evaluated and proposed rates for this alternative was developed. A fixed charge covers expenses
that are not dependent on volume and charges those users that use little or no volume a minimum
charge for having sewer service available.
Line Item 2019 2020 2021 2022 2023 2024
O&M $4,130,323 $4,212,929 $4,297,188 $4,383,132 $4,470,794 $4,560,210
Capital
Improvements $559,000 $1,902,000 $1,244,000 $2,024,000 $1,275,000 $1,735,000
Capital Reserve Transfers $30,944 $31,563 $32,194 $32,838 $33,495 $34,165
Contractual
Services $24,000 $24,480 $24,970 $25,469 $25,978 $26,498
Internal Service Transfers $207,049 $211,190 $215,414 $219,722 $224,116 $228,599
Existing Debt
Service $- $- $- $- $- $-
Future Debt
Service $- $- $- $- $- $-
Lake County
Sewer Revenues and
Fees (excludes
sewer sales)
($3,590,800) ($3,590,800) ($3,590,800) ($3,590,800) ($3,590,800) ($3,590,800)
Total Minimum Sales Revenue Required
$1,360,516 $2,791,362 $2,222,966 $3,094,361 $2,438,584 $2,993,672
Table 4.01-3 Total Minimum Sales Revenue Requirements
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-4
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
4.03 PROPOSED RATES
A. Uniform Volume Charge Proposed Rates
The Village currently operates the sewer system under a uniform volume charge rate structure. From
the projected sewer volumes in Section 2 and the sewer fee revenue requirements, the annual rates
per 1,000 gallons were able to be determined after allocating expenses to different rate allocation
components. These expenses were allocated into different categories based on the Base-Extra
Capacity methodology in the AWWA M1 Principles of Water Rates, Fees, and Charges manual. For the
sewer portion of this rate study, the maximum day, maximum hour, and fire protection categories were
not used, as they are not relevant to the sewer system and its rate structure. The base category was
allocated to the volumetric charge the customer meters and services, and customer billing and
collection categories were allocated to the fixed charge. The resulting allocations can be seen in
Table 4.03-1. These allocations are the same for all sewer rate structure alternatives. Based on these
rate allocations, the uniform volume charge rate structure is shown in Table 4.03-2.
Rate Allocation
Component Total Base
Customer Meters
and Services
Customer Billing
and Collection
Debt Service $0.00 $0.00 $0.00 $0.00
Capital
Replacement Fund
$31,562.88 $18,942.23 $5,481.37 $7,139.34
Operations and
Maintenance
$6,350,599.44 $1,633,038.03 $2,289,100.38 $2,428,465.59
Non-Rate
Revenues
($3,591,000) $0 ($1,795,500) ($1,795,500)
Total $2,791,162.32 $1,651,980.26 $499,081.74 $640,104.93
Percent of Total 100.00% 59.19% 17.88% 22.93%
Table 4.03-1 Sewer Rate Allocation
Current Proposed Sewer Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$1.25 $2.87 $2.98 $3.10 $3.22 $3.35
Annual Percent Increase 229% 4% 4% 4% 4%
Table 4.03-2 Uniform Volume Charge Rate Structure
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-5
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
B. Uniform Volume Charge with Fixed Charges Proposed Rates
Similar to the water rate structure, a uniform volume charge with a fixed fee is useful to provide a stable
source of revenue for sewer utilities. Using the same rate allocations that are in Table 4.02-1, the
uniform volume charge with a fixed fee rate structure can be seen in Table 4.03-3. The fixed fee
includes the current $4.00 monthly fee currently assessed to users.
C. Cash Reserve
The Village maintains, at a minimum, 25 percent of annual expenses in the cash reserve. The proposed
rates were developed to meet the estimated annual cash needs; therefore, the cash reserve is
assumed to remain the same.
D. Impact to Residential Users
Because of the trends in the Village’s sewer demands, as well as a need for a stable revenue source, it
is recommended the Village moves to the uniform sewer rate with fixed fee rate structure.
Table 4.03-4 shows that, for the fixed fee rate structure, the percentage increase in the rates for water
usage does not translate to the same percentage increase in the user’s bill.
Current Proposed Sewer Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$1.25 $1.70 $1.76 $1.83 $1.91 $1.98
Annual Percent Increase 36% 4% 4% 4% 4%
Current
Proposed Sewer Fixed Fee Per Month*
2020 2021 2022 2023 2024
$ - $8.13 $8.13 $8.13 $8.13 $8.13
Annual Percent Increase - - - - -
*Users are charged on a bimonthly basis
Table 4.03-3 Uniform Volume Charge with Fixed Fee Rate Structure
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-6
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
When comparing the cost for sewer service in other communities using the same approach as that
explained in Section 2, the Village is above average for the average residential monthly cost. This
assumes the other communities will maintain their current rate structure and not increase rates.
Figure 4.03-1 shows how the Village rates compare with similar and neighboring communities.
4.04 RESULTING ANTICIPATED REVENUE FROM PROPOSED RATE STRUCTURE
Figure 4.03-1 Proposed Sewer Rate Increases on Average Residential Cost of Sewer Per
Month Comparison with Comparable Communities
2019 2020 2021 2022 2023 2024
Average Monthly Usage 4.50 4.50 4.50 4.50 4.50 4.50
Base Charge* $4.00 $8.13 $8.13 $8.13 $8.13 $8.13
Volumetric Rate $1.25 $1.70 $1.76 $1.83 $1.91 $1.98
Volume Charge $5.63 $7.65 $7.92 $8.24 $8.60 $8.91
Average Monthly Bill $7.63 $15.78 $16.05 $16.37 $16.73 $17.04
Monthly Increase - $8.15 $0.27 $0.32 $0.36 $0.31
Cumulative Increase - $8.15 $8.42 $8.74 $9.10 $9.41
Average Yearly Usage 54.00 54.00 54.00 54.00 54.00 54.00
Average Yearly Billings $91.50 $189.36 $192.60 $196.38 $200.70 $204.48
Yearly Increase - $97.80 $3.24 $3.78 $4.32 $3.78
Cumulative Increase - $97.80 $101.04 $104.82 $109.14 $112.92
Percent Increase - 106.82% 1.71% 1.96% 2.20% 1.88%
*Users are billed on a bimonthly basis
Table 4.03-4 Impacts to Average Residential Users’ Monthly and Yearly Billing
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 4–Sewer Utility Rate Analysis
Prepared by Strand Associates, Inc. 4-7
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S4.docx
When the proposed rate structure, considering the yearly increases to fixed and to the volumetric
consumption, is applied to the current number and sizes of meters and the forecasted sewer usage per
user classification, the revenue generated from sewer sales trends more closely to the expected
expenses. Table 4.04-1 shows the resulting revenue of the proposed rate changes.
Fixed Fee Revenue 2020 2021 2022 2023 2024
Subtotal $1,253,195 $1,255,702 $1,258,213 $1,260,729 $1,263,251
Sewer Usage Revenue
Chevy Chase Golf Course $3,157 $3,216 $3,276 $3,337 $3,399
Cook County Commercial/
Multi-Family
$286,900 $292,239 $297,677 $303,216 $308,858
Cook Residential $271,423 $276,474 $281,619 $286,859 $292,197
Lake County Commercial $256,155 $260,921 $265,777 $270,722 $275,760
Lake County Exempt $5,894 $6,004 $6,115 $6,229 $6,345
Lake County Multi-Family $201,020 $204,760 $208,571 $212,452 $216,405
Lake Residential $792,755 $807,507 $822,533 $837,839 $853,430
Other $0 $0 $0 $0 $0
Subtotal $1,817,303 $1,851,121 $1,885,567 $1,920,655 $1,956,395
Total Projected Revenue
from Sewer Sales
$3,070,499 $3,106,822 $3,143,780 $3,181,384 $3,219,646
Table 4.04-1 Resulting Revenue from Proposed Rate Increases
FINAL DRAFT - 05/23/19
SECTION 5
WATER AND SEWER CONNECTION FEE STUDY
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-1
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
5.01 INTRODUCTION
This section of the report is intended to calculate and provide justification for connection fees relating to
water and sewer facilities required to meet the demands associated with the continued growth of the
Village. In general, the proposed connection fees are intended to provide the Village with a mechanism
to pay for the portion of facilities needed to accommodate future growth in the Village and pay for the
unrecovered investment of available capacity. The Village has an existing connection fee ordinance the
Village will need to amend to include the proposed water and sewer connection fees. The proposed
connection fees are calculated for each meter size that is installed in the Village.
The Village has not raised either water connection fees in almost 40 years, and sewer connection fees
in over 45 years. This is a considerable amount of time without raising either of these fees, as these
should be periodically reevaluated based on new connections, population, and the existing system
valuation of both the water and sewer systems. It is recommended to adjust these rates based on the
projections in this section of the report.
Information related to existing facilities and proposed water and sewer rate structures can be found in
Sections 3 and 4 of this report, respectively. For the purposes of this study, sewer account and
connection data were assumed to be equivalent to the water account and connection data, with the
“water only” accounts excluded.
5.02 POPULATION PROJECTIONS
Future population projections for this study were analyzed using a variety of sources, including
US Census data, Chicago Metropolitan Agency for Planning, LMO-2, the Illinois Environmental
Protection Agency Customer Estimates, and the Village’s 2009 Comprehensive Plan. Ultimately, the
population projection that was chosen for use in this study was a projection of the previous ten years of
census data out to 2023. This projection provided a more conservative estimate of the Village’s
population in 2023 compared to the other models, and as such it will provide a more reliable estimate of
the necessary water and sewer connection fees required in the coming decades. Figure 5.02-1 displays
some of the population projections that were analyzed for this study.
By the end of 2017, there were approximately
13,000 total metered water and sewer connections
reported in the Village’s billing data, 11,200 of which
were residential metered connections. As such, past
connection data was used in projecting the amount of
new connections made by 2023. Over the past ten
years, there has been an average of 19 new metered
water and sewer connections made each year. This
data can be seen in Table 5.02-1. This average was
used as the projected amount of new water and sewer
connections made each year out to the year 2023,
which represents an increase of 95 metered
connections. Assuming the ratio of total metered
connections to residential metered connections
remains relatively similar, this results in a projected
increase of about 84 residential metered water and sewer connections.
Year
Number of New
Connections
2008 25
2009 7
2010 50
2011 12
2012 15
2013 27
2014 9
2015 23
2016 19
2017 3
Average 19
Table 5.02-1 Past New Connections
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-2
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
Figure 5.02-1 Buffalo Grove Population Projections
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-3
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
5.03 COSTS ASSOCIATED WITH FUTURE WATER SYSTEM IMPROVEMENTS
Currently, new developers are required to provide the entire infrastructure needed within the
development, including water and sewer service lines, sidewalks, landscaping, and other private
utilities. Additionally, developers must provide appropriate connections to the existing utility
system. This study assumes that this internal infrastructure will be provided by the developer
along with the appropriate connections. The proposed water connection fees are based on costs
incurred for adding capacity and other improvements to the system. Sewer connection fees are
separate from the water utility.
The calculations used to determine these connection fees are based on the buy-in method in the
industry standard AWWA M1: Principles of Water Rates, Fees, and Charges. Because there is excess
capacity within the existing water system, the Village could recover costs associated with the
available capacity of the water system and the current value of the water system, which is known
as the capacity buy-in approach. The reasoning of this approach is that new customers should pay
for existing capacity at a rate consistent with the average value of the capacity of the existing
system. For the Village, the existing system valuation for the buy-in fee was calculated by adding
the total cost of water assets and subtracting the accumulated depreciation and outstanding debt
principal. These values were obtained from the Village’s Capital Improvement Plan, 2017 budget,
and the 2017 Water and Sewer Audit Ready spreadsheet, provided by the Village.
Cost of Water Assets $48,952,447
Accumulated Depreciation $(21,622,343)
Outstanding Debt Principal $( - )
Total Water System Valuation $27,330,103
5.04 WATER CONNECTION FEES
The Village currently charges water connection fees based on the size of the connection and the land
use of the structure that will be connected (such as single family, apartment, and commercial). It is
recommended these fees be combined collectively into one fee, and this approach is used in this
section of the report. The Village’s current water connection fees are shown in Table 5.04-1. Note, this
connection fee does not include the cost or installation of the meter. A comparison of connection fees
with comparable municipalities for a 1-inch connection is shown in Figure 5.04-1. Note, these
municipalities were chosen for this comparison as they had their connection fees readily accessible and
in the same fee structure as the others.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-4
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
Figure 5.04-1 Existing Water Connection Fees for Comparable Municipalities
Water Connection Fee
Size of Connection (in) Fee
1 $100
1 1/4 $125
1 1/2 $150
2 $400
2 1/2 $625
3 $900
4 $1,600
6 $1,800
8 $2,000
10 $2,200
Water System Improvement Fee
Structure Fee (per unit)
Single Family Dwelling $680
Townhome $585
Condominium $485
Multi-Family Apartment $390
Business, Commercial,
Industrial
$95 per 100 gallons
of Maximum Daily
Usage (gpd, from
permit)
Table 5.04-1 Current Water Connection Fees
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-5
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
Calculations for estimating water and sanitary
sewer connection fees are based on a residential
equivalent unit (REU) basis. A residential unit is
assumed to be equivalent to an average
residential housing density of 2.70 persons per
household. Changes in housing density and
growth in general should be monitored and used to
periodically amend the connection fees as
necessary. Connection fees are based on service
meter sizes and conversion ratios to determine
fees for larger users. The conversion ratios are
based on AWWA standard meter flow capacities compared to that of a 1-inch sized meter, which was
chosen as the “base” meter size. This size was chosen based on Village recommendations.
Table 5.04-2 presents the conversion ratios used to calculate water connection fees.
A total of 14,927 household connections was calculated based on dividing the 2040 design population
of 40,304 by the housing density of 2.70. With an existing system valuation of $27,330,103, the water
connection fee for each REU would be $1,830. This connection fee was calculated by dividing the
existing system valuation by the total number of household connections. This calculates the
proportionate share of capacity that each household connection would “buy in” to the system.
Table 5.04-3 presents the recommended water connection fees for each utility district, based on meter
size. Note, this connection fee does not include the cost of the meter. A comparison with comparable
municipalities for the proposed 1-inch connection size fee is shown in Figure 5.04-2.
Meter Size (inches) Conversion Ratio
3/4 0.60
1 1.00
1 1/2 2.00
2 3.20
3 6.00
4 10.00
6 and larger 20.00
Table 5.04-2 Meter Size Conversion Ratios
Meter Size (inches) Water Connection Fee
3/4 $1,098
1 $1,830
1 1/2 $3,660
2 $5,856
3 $10,980
4 $18,300
6 and larger $36,600
Table 5.04-3 Recommended Water
Connection Fees
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-6
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
5.05 COSTS ASSOCIATED WITH FUTURE SEWER SYSTEM IMPROVEMENTS
The recommended connection fees for the sewer system were determined using the same buy-in
approach as the water connection fees. These total cost of water assets, the accumulated
depreciation, and the outstanding debt principal values were obtained from the Village’s CIP,
2017 budget, and the 2017 Water and Sewer Audit Ready spreadsheet, provided by the Village.
Cost of Sewer Assets $15,339,003
Accumulated Depreciation $(7,192,892)
Outstanding Debt Principal $( - )
Total Sewer System Valuation $8,146,111
Figure 5.04-2 Proposed Water Connection Fees Compared to Comparable
Municipalities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-7
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
5.06 SANITARY SEWER CONNECTION FEES
Calculations for estimating sanitary sewer connection fees are based on the same REU basis as the
water connection fees. The housing density of 2.70 persons per household was assumed to remain
constant between the water and sewer connections. The conversion ratios were also based on the
AWWA standard meter flow capacities. These were also compared to that of a 3/4-inch sized meter,
which was chosen as the “base” meter size because of the large number of residential meters in this
size. Table 5.04-1 in Section 5.04 presents the conversion ratios used to calculate sanitary sewer
connection fees, as well as the water connection fees. The Village’s current water connection fees are
shown in Table 5.06-1. A comparison of connection fees with comparable municipalities for a 1-inch
connection is shown in Figure 5.06-1. For the purposes of this figure, a 6-inch connection in the Village
was graphed as an equivalent to a 1-inch metered connection in other municipalities, as there were no
comparable municipalities with a similar sewer connection fee structure as the Village.
Size of Connection (in) Fee
6 $50
8 $200
10 $300
Table 5.06-1 Existing Sewer Connection
Fees
Figure 5.06-1 Existing Sewer Connection Fees Compared to Comparable
Municipalities
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 5–Water and Sewer Connection Fee Study
Prepared by Strand Associates, Inc. 5-8
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S5.docx
For the Village, using a total of 14,927 household connections and an existing system valuation of
$8,146,111, the sanitary sewer connection fee for each REU would be $550. Table 5.06-2 presents the
recommended sanitary sewer connection fees for each utility district, based on connection size. These
fees would be applicable for Lake County only, as the sanitary sewer fees for Cook County are included
in the property tax bills. These fees do not include any meter fee associated with the connection. A
comparison with comparable municipalities for the proposed sewer connection fees is shown in
Figure 5.06-2.
As the Village operates their connection fees on a connection size basis instead of a meter size basis,
slight adjustments to the calculation process were necessary in order to maintain the Village’s current
fee structure. It was assumed that a 6-inch sewer connection would be equivalent to a 1-inch meter
size conversion ratio, an 8-inch connection would be equivalent to a 1 1/2-inch meter size conversion
ratio, and a 10-inch connection would be equivalent to a 2-inch meter size conversion ratio. It is
recommended the Village moves to a connection fee structure based on meter size, as it allows for a
more accurate assessment of the connection fee required. Many neighboring and comparable
communities also use a meter size-based fee structure for their sewer connection fees.
Figure 5.06-2 Proposed Sewer Connection Fees Compared to Comparable
Municipalities
Connection Size (inches) Sewer Connection Fee
6 $550
8 $1,100
10 or larger $1,760
Table 5.06-2 Recommended Sanitary Sewer
Connection Fees
FINAL DRAFT - 05/23/19
SECTION 6
RECOMMENDED RATE STRUCTURE AND PROJECTED CASH FLOW
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 6–Recommended Rate Structure and Projected Cash Flow
Prepared by Strand Associates, Inc. 6-1
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S6.docx\052319
6.01 RECOMMENDED WATER AND SEWER RATE STRUCTURES
Based on the projected revenue requirements associated with the forecasted water sales from year 2020
through 2024, a rate structure has been developed that will generate revenues to cover the requirements.
The water rate structure is shown in Table 6.01-1 and the recommended sewer rate structure is shown
in Table 6.01-2.
The water rate structure used in this section is the non-debt service rate alternative from Section 3.03 as
a long-term approach fund the water main replacement. The Water System Study identified $95 million
worth of water main beyond its service life to be replaced in the next 20 years. The debt service alternative
included financing $15 million for the first five years of water main replacement. To replace the remaining
$80 million of water main over the following 15 years would require a $5.33 million annual capital cost.
This annual cost would be in addition to the projected debt service payment of approximately $1,240,000
until 2040. As a result, water rates after 2024 would likely be higher in the debt service alternative than
the water rates with annual revenues funding the water main replacement program.
The annual revenues funding the water main replacement program increases rates to levels that generate
needed revenue to continue funding the replacement program after 2024. This approach would be less
likely to need a significant rate increase in 2025.
Current Proposed Water Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$5.12 $7.02 $7.73 $8.51 $9.37 $10.32
Annual Percent Increase 37% 10% 10% 10% 10%
Current
Proposed Water Fixed Fee Per Month*
2020 2021 2022 2023 2024
$ - $9.26 $9.26 $9.26 $9.26 $9.26
Annual Percent Increase - - - - -
*Users are charged on a bimonthly basis
Table 6.01-1 Proposed 2020 to 2024 Water Fees
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 6–Recommended Rate Structure and Projected Cash Flow
Prepared by Strand Associates, Inc. 6-2
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S6.docx\052319
Recommended connection fees for the water and sewer systems are presented in Tables 6.01-3 and
6.01-4, respectively. These connection fees do not include the cost of the meter or its installation. The
recommended water connection fee merges the current water connection fee and water system
improvement fee into a single fee, as is more typical.
Current Proposed Sewer Volumetric Fee (per 1,000 gal)
(per 1,000 gal) 2020 2021 2022 2023 2024
$1.25 $1.70 $1.76 $1.83 $1.91 $1.98
Annual Percent Increase 36% 4% 4% 4% 4%
Current
Proposed Sewer Fixed Fee Per Month*
2020 2021 2022 2023 2024
$ - $8.13 $8.13 $8.13 $8.13 $8.13
Annual Percent Increase - - - - -
*Users are charged on a bimonthly basis
Table 6.01-2 Proposed 2020 to 2024 Sewer Fees
Cost Per Connection Size
3/4 inch $1,098
1 inch $1,830
1 1/2 inch $3,660
2 inches $5,856
3 inches $10,980
4 inches $18,300
6 inches or larger $36,600
Table 6.01-3 Recommended Water
Connection Fees
Cost Per Connection Size
6 inches $550
8 inches $1,100
10 inches $1,760
Table 6.01-4 Recommended Sewer
Connection Fees
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 6–Recommended Rate Structure and Projected Cash Flow
Prepared by Strand Associates, Inc. 6-3
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S6.docx\052319
Figure 6.01-1 shows the Village’s typical combined water and sewer monthly residential bill in comparison
to neighboring utilities. Table 6.01-5 provides additional details on the residential user impacts of the
water and sewer rate increases.
Figure 6.01-1 Typical Combined Residential Water and Sewer Monthly Bills
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 6–Recommended Rate Structure and Projected Cash Flow
Prepared by Strand Associates, Inc. 6-4
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S6.docx\052319
6.02 PROJECTED CASH FLOW BALANCE SHEETS FOR 2020 THROUGH 2024
This study closely followed the Village’s accounting approach and historic data to forecast revenue and
expenses. The resulting forecasted balance sheets were created. Table 6.02-1 shows the forecasted
water cash flow and Table 6.02-2 shows the forecasted sewer cash flow when implementing the rate
structures previously recommended.
Water 2019 2020 2021 2022 2023 2024
Average Monthly
Water and Sewer
Usage (1,000 gal)
4.50 4.50 4.50 4.50 4.50 4.50
Water Base
Charge*
$- $9.26 $9.26 $9.26 $9.26 $9.26
Water Volumetric
Rate
$5.12 $7.02 $7.73 $8.51 $9.37 $10.32
Water Volume
Charge
$23.04 $31.59 $34.79 $38.30 $42.17 $46.44
Average Monthly
Water Bill
$23.04 $40.85 $44.05 $47.56 $51.43 $55.70
Monthly Increase - $17.81 $3.20 $3.51 $3.87 $4.28
Sewer
Sewer Base
Charge*
$4.00 $8.13 $8.13 $8.13 $8.13 $8.13
Sewer Volumetric
Rate
$1.25 $1.70 $1.76 $1.83 $1.91 $1.98
Sewer Volume
Charge
$5.63 $7.65 $7.92 $8.24 $8.60 $8.91
Average Monthly
Sewer Bill
$7.63 $15.78 $16.05 $16.37 $16.73 $17.04
Monthly Increase - $8.15 $0.27 $0.32 $0.36 $0.31
Total Water and
Sewer
Average Yearly
Billings
$368.04 $679.56 $721.14 $767.04 $817.80 $872.88
Yearly Increase - $311.52 $41.58 $45.90 $50.76 $55.08
Percent Increase - 84.64% 6.12% 6.36% 6.62% 6.74%
*Users are billed on a bimonthly basis
Table 6.01-5 Impacts to Average Residential Users’ Monthly and Yearly Water and Sewer
Billing
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 6–Recommended Rate Structure and Projected Cash Flow
Prepared by Strand Associates, Inc. 6-5
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S6.docx
Table 6.02-1 Projected Water Fund Cash Flow
Description 2020 2021 2022 2023 2024
OPERATING REVENUES
Building Revenues and Fees $10,000 $10,000 $10,000 $10,000 $10,000
Sales of Water
Sale of water $9,288,383 $10,274,444 $11,052,470 $11,896,802 $12,813,175
Penalties $110,000 $110,000 $110,000 $110,000 $110,000
Turn-On Fees $1,000 $1,000 $1,000 $1,000 $1,000
Construction Water $- $- $- $- $-
Total Operating Revenues $9,409,383 $10,395,444 $11,173,470 $12,017,802 $12,934,175
EXPENSES
Salary Expenses
Personnel Wages $703,681 $717,754 $732,109 $746,752 $761,687
Personnel Benefits $373,143 $380,605 $388,217 $395,982 $403,901
Salary Expenses Subtotal $1,076,823 $1,098,360 $1,120,327 $1,142,733 $1,165,588
Variable Expenses
Operating Expenses $1,783,776 $1,819,452 $1,855,841 $1,892,957 $1,930,817
Commodities $258,876 $264,054 $269,335 $274,721 $280,216
Maintenance and Repairs $145,758 $148,673 $151,647 $154,680 $157,773
Capital Reserve Transfers $62,934 $64,193 $65,477 $66,786 $68,122
Contractual Services $124,445 $126,934 $129,473 $132,062 $134,703
Internal Service Transfers $404,239 $412,324 $420,571 $428,982 $437,562
Variable Expenses Subtotal $2,780,028 $2,835,629 $2,892,342 $2,950,188 $3,009,192
Planned Capital Improvement Projects $2,872,000 $3,140,000 $3,547,000 $5,077,000 $7,068,000
Operating Transfers $945,000 $945,000 $945,000 $945,000 $945,000
Debt Service
Existing Debt Service $524,003 $565,342 $608,374 $651,406 $694,438
Future Debt Service $- $- $- $- $-
Debt Service Subtotal $524,003 $565,342 $608,374 $651,406 $694,438
Total Expenses $8,197,855 $8,584,331 $9,113,042 $10,766,328 $12,882,218
Net Total $1,211,528 $1,811,113 $2,060,427 $1,251,474 $51,957
Reserve Fund* $2,612,162 $4,423,275 $6,483,703 $7,735,177 $7,787,134
*The December 31, 2018 cash balance for water was $1,400,634. No additions to the cash reserves in 2019 is assumed. All net positive income is assumed to be added to reserves.
FINAL DRAFT - 05/23/19
Village of Buffalo Grove, Illinois
Water and Sewer Rate Study Section 6–Recommended Rate Structure and Projected Cash Flow
Prepared by Strand Associates, Inc. 6-6
R:\JOL\Documents\Reports\Archive\2019\Buffalo Grove, IL\Wtr-SewerRateStdy.1307.002.April2019.CJU\Report\S6.docx
Table 6.02-2 Projected Sewer Fund Cash Flow
Description 2020 2021 2022 2023 2024
OPERATING REVENUES
Building Revenues and Fees
Lake County Tap-On Fees $100,000 $100,000 $100,000 $100,000 $100,000
Village Tap-On Fees $800 $800 $800 $800 $800
System Improvement Fees $5,000 $5,000 $5,000 $5,000 $5,000
Sanitary Sewer Service Fees $3,485,000 $3,485,000 $3,485,000 $3,485,000 $3,485,000
Sales of Sewer $3,070,499 $3,106,822 $3,143,780 $3,181,384 $3,219,646
Total Operating Revenues $6,661,299 $6,697,622 $6,734,580 $6,772,184 $6,810,446
EXPENSES
Salary Expenses
Personnel Wages $253,890 $258,968 $264,147 $269,430 $274,819
Personnel Benefits $203,144 $207,207 $211,351 $215,578 $219,890
Salary Expenses Subtotal $457,034 $466,175 $475,499 $485,009 $494,709
Variable Expenses
Operating Expenses $12,954 $13,213 $13,477 $13,747 $14,022
Commodities $3,699,285 $3,773,271 $3,848,736 $3,925,711 $4,004,225
Maintenance and Repairs $43,656 $44,529 $45,420 $46,328 $47,255
Capital Reserve Transfers $31,563 $32,194 $32,838 $33,495 $34,165
Contractual Services $24,480 $24,970 $25,469 $25,978 $26,498
Internal Services Transfers $211,190 $215,414 $219,722 $224,116 $228,599
Variable Expenses Subtotal $4,023,128 $4,103,590 $4,185,662 $4,269,375 $4,354,763
Planned Capital Improvement Projects $1,902,000 $1,239,000 $2,024,000 $1,275,000 $1,735,000
Debt Service
Existing Debt Service $- $- $- $- $-
Future Debt Service $- $- $- $- $-
Debt Service Subtotal $- $- $- $- $-
Total Expenses $6,382,162 $5,808,766 $6,685,161 $6,029,384 $6,584,472
Net Total $279,136 $888,857 $49,419 $742,800 $225,974
Reserve Fund* $1,486,759 $2,375,616 $2,425,035 $3,167,835 $3,393,809
*The December 31, 2017 cash balance for sewer was $1,207,623. No additions to the cash reserves in 2019 is assumed. All net positive income is assumed to be added to reserves.
FINAL DRAFT - 05/23/19
Office Locations
For more location information
please visit www.strand.com
Brenham, Texas | 979.836.7937
Cincinnati, Ohio | 513.861.5600
Columbus, Indiana | 812.372.9911
Columbus, Ohio | 614.835.0460
Indianapolis, Indiana | 317.423.0935
Joliet, Illinois | 815.744.4200
Lexington, Kentucky | 859.225.8500
Louisville, Kentucky | 502.583.7020
Madison, Wisconsin* | 608.251.4843
Milwaukee, Wisconsin | 414.271.0771
Phoenix, Arizona | 602.437.3733
*Corporate Headquarters
FINAL DRAFT - 05/23/19