WEBVTT Kind: captions Language: en 00:00:04.000 --> 00:00:05.910 align:start position:0% hello i'm brian steglitz the interim public services area administrator and i'm going to be presenting to you today the fy 23 budget overview um before i start i'd like to thank those who have helped prepare this presentation which include all of the unit managers and public services and some of their staff as well as the finance staff so thank those who have helped a lot of effort went into pulling all this information together before i dive into the the agenda for this presentation i wanted to reflect on the few pictures that we've intentionally selected to show on this first slide first picture up on the left hand corner is the allen creek railroad berm project which is an innovative solution that public services has designed to address multiple multiple issues one being storm water management and flood protection in the community as well as non-motorized traffic improvements by adding a connection to the border to border trail the slide in the middle illustrates a pedestrian safety project where we're using solar powered rapid flashing beacons and finally the project on the right reflects emergency response activities that are provided by services this is one of these projects that we're trying to to put out of our memories but this is the large water main break project that happened at the intersection of maple and jackson road that required significant resources to come together to address repair and get back in service these these pictures really illustrate the breadth of the services provided by the public services unit they touch everyone in the community every day including residents and those that come to commute and recreate and dine and enjoy the amenities that ann arbor has to offer so as part of this presentation i will be going through an overview of the service area and the organization and the structure of the service unit i'll be talking about a financial overview going through the fund summaries the major funds that the public services unit oversees which include the water sewer storm water utility enterprise funds the major and local street funds street village street bridge and sidewalk millage as well as the solid waste millage i'll talk a little bit about utility rates and what our projections are for the future and then hit some service unit highlights and some horizon issues the perf this public services area is organized into six service units um with a small administration unit and then the five other units that you see on this slide the the engineering unit is responsible for overseeing the capital project management and maintenance programs such as the annual road resurfacing program the public works service unit maintains all the buried infrastructure in the city it manages our urban forest the compost materials recycling facility the solid waste program compost recycling collection the drop-off station roads maintenance such as pothole repair and snow plowing so lots of services that interface with the community the systems planning unit manages the cip plan development for for the whole city assisting planning also oversees asset management community engagement reviews development petitions for work in the right of way and that impacts city utilities planning areas also include floodplain and water resources management storm water management and this group also works closely with the office's sustainability on topics such as climate resiliency the water treatment services area pretty intuitively provides safe drinking water to over 125 000 um customers in ann arbor and um some neighboring communities they're responsible for delivering safe water from the source to the tap of our customers in addition the water treatment services unit also oversees and manages the four dams along the huron river two of which generate hydro power the wastewater treatment services unit um or resource recovery facility will treat the wastewater generated by the community and return it to the environment and also serves over a hundred thousand customers in the city and um surrounding area the wastewater treatment service use also um produces um a residual from their treatment process that is land applied a beneficial reuse of the waste products that are generated by the wastewater treatment process um you see capital projects which is sort of a box by itself so while the public service area overseas and manages um the capital improvements program there are capital projects that are also um realized as part of the work this group does and in fiscal year 23 we have over 75 million dollars worth of capital projects planned associated with public services in the community the public services area has budgeted for fiscal year 23 um a total of 232 and a half full-time equivalent staff oops sorry about that i went too quickly um now i will dive into um the the utility front so a few notes as i talk about the water the three utility phones these slides represent a snapshot in time and are regularly updated as conditions change changing conditions could include an unanticipated infrastructure failure such as the large water main break at jackson and maple that i illustrated on the first slide it could also include revenue adjustments based on actual water uses versus projected and our financial plan is structured to ensure that we can safely execute both our operational and capital plans the operating fund graph illustrates water fund balance over the next five fiscal years it illustrates our use of fund balance to cover capital expenditures in the near term until fiscal year 24 when we'll begin issuing debt to cover capital needs fluctuating levels over the time of our fund balance can be due to capital project schedule impacts such as we've experienced over the past few years due to the impact of the global pandemic on supply chain and our ability to safely execute capital projects in the plan and in the community the cash flow figure on the bottom left indicates both cash in and cash out over the next five years cash in and cash out are projected to match beginning in fiscal year 24 which is why there appears to be only a single line um between fiscal year 24 and 27. moving on to the capital funding graph the gray bar you'll see a stack bar a gray bar and a red bar the gray bar represents the cash funded capital expenditures and the red bar represents debt service for capital expenditures so note the increasing spending and debt service between fiscal years 25 and 29. this is due to the over 100 million dollar water treatment plant improvement project to replace infrastructure that was built in the 1930s the rate projections that you will see on a subsequent slide take into account the significant capital investment that we are anticipating sewage disposal fund um slides illustrate well the first slide the operating fund illustrates a sewage disposal fund balance over the next five fiscal years and as in the water fund it illustrates our use of fund balance to cover capital expenditures in the near term until fiscal year 24 when we begin issuing debt to cover capital needs cash flows for the sewage disposal fund also converge in fiscal year 24 as illustrated in the cash flow graphic in the capital funding graph on the bottom right of the screen your screen you will note the increased significant capital expenditures in fy23 which will be used to address both the administrative consent order which requires capital investment in the sewage collection system such as lining sewer lining and inspections during this year the wastewater plant will also initiate its headworks project which is estimated at 15 million beginning in fiscal year 24 you will notice an increase in debt service to cover the future capital needs the stormwater fund the operating slides this operating slides also illustrate stormwater the operating fund excuse me slide um also indicates that stormwater balance fund over the next five fiscal years this slide illustrates use of fund balance to cover capital expenditures in the near term until fiscal year 24 similar to the the other utility funds where we will begin issuing debt to cover capital needs in the capital funding slide um our graphic you will notice the increased capital expenditures in fy 24 which we use to address several projects to help us abate flooding the largest project is the edgewood schneider improvements project that are estimated at just under 9 million also included this fiscal year are significant stream bank stabilization projects why don't you note that is one item to note that is unique to the stormwater fund in the stack bars that you see in the capital funding site is the yellow bar which indicates other debt other debt reflects the city working with its partner in this case the washington county drain commission who will issue debt on the city's behalf to address system needs that benefit both parties note the city is still responsible for this debt however it is issued by a third party which provides the city with some financial benefit this slide illustrates our rate plan our current rate plan and our proposed rate plan which will come to council later this um later this spring over the next couple months for approval the drivers for our rates continue to be the same from fiscal year 22 which include water quality and regulatory compliance um issues and challenges for the water fund infrastructure reinvestment needs across all of the different all three of the utility funds and level of service increases we'll for example will be inspecting 20 of the sport of the storm system using cctv and it also reflects maintenance of our level of service goals and expectations of the community you will see an average bill for customers a current customer average customer and future average customer with the projected rate modifications for the next fiscal year the total rate increase for the average customer is estimated to be about 2.6 percent um note this includes an assumption of 18 ccf usage which is 100 cubic feet which is how we measure water consumption for our customers as well as that the customer is in the tier 2 for the stormwater rates and it also includes the one-time on-time payment discount the rate projections that you see here are similar to um they have not changed since what was provided to you last year um so the rate projections are the same and you can see for water we continue to estimate six percent waste increases over the next five fiscal years for sewer there will be no rate increases for the next two fiscal years and then we'll be transitioning to three percent increases in fy25 and for storm water you'll notice four percent rate increases for the next two fiscal years and three percent um rate increases for fiscal year 25-27 transitioning to the major and local street funds on the financial plan for major in the local street funds is structured to maintain and repair road based on community priorities which are reflected in our pavement asset management plan goals the first graph reflects fund balance and how it's distributed between major and local streets major streets being in the green and local streets being in the blue these funds are um received from state shared revenue that's what supports the major and local streets funds this is comes from what we call act 51 which is from state gas and weight taxes in the revenue versus expenditures line graph you will notice the uptick in expenditures and revenue in fiscal year 23. this is due to the proposed bond issuance of nine million dollars six million dollars for major roads and three million dollars for local roads for pavement asset management this this the intention is to use these funds to move the needle on improving road conditions and the road conditions rating in the community by accelerating projects that were planned in future fiscal years um the the intent is that this bond would become for before council for approval over the coming months the pie graph illustrates how these funds will be distributed distributed amongst the different area amongst the different areas in the local major street funds which include right-of-way which would be about half of the expenditures traffic control about a third and then the smaller parts go to alternate transportation the street bridge and sidewalk millage financial summary illustrates to you the fund balance over the next um or the past fiscal years and plan for fiscal year 23. as in the major and local street funds note that the revenues and expenditures are closely matched as the city plans unused all the funds that are raised by this millage to address street bridge and sidewalk improvements there there's also an intent to issue to issue approximately six million dollars of of a bond for additional work that can be done to support the work that is part of this millage so the total bond that will be coming before council for approval will be the nine million dollars for the street major uh local street funds plus six million for street bridge and sidewalk millage for a total of 15 million having the street bridge in sidewalk millage provides a second source of funding to the community to address community driven needs and allows us to do more than what state shared revenue can provide as illustrated in the pie chart almost two-thirds of the millage goes to annual resurfacing program with smaller portions to sidewalk and ramp repair bridge capital projects and road projects the fact that the city has a millage to to supplement the needs for these for road sidewalk and bridge improvements is not something that all communities had so ann arbor is is well positioned to address the needs with this additional source of of uh income to for the public services folks to use to address infrastructure condition solid waste fund financial summary solid waste is funded on also by a millage plus a fee for service for some of the services provided in the downtown for example to businesses for solid waste collection in this case the city will contract out some those services to a third party vendor and recruits its costs through service the budget for solid waste in this fiscal year includes move transitioning four temporary positions to full-time equivalent positions these would be field operation technicians um who are drivers responsible for picking up solid waste compost and recycled material similar to the road millage the solid waste millage carefully balances revenue and expenditures when or if additional services are considered a revenue source must be identified to ensure it is financially sustainable the fund balance will be used to improve facilities such as the drop-off station which i'll be talking about in the future slide if you look at the breakdown of expenditures in the solid waste you see about a third of the funds are spent on solid waste a third on material recovery and then a smaller percentage on compost and other expenses the other portion of the pie which is 19 includes sustainability landfill oversight and management administration and customer service roles so if you've seen any of the other budget presentations you'll see the same theme when we we're looking at the the highlights of the projects that we will be delivering the services we would provide um underneath each of these four pillars sustainability quality of life positioning for investment and infrastructure as you think about public services we really impact the community very closely in the services we provide and are significantly influenced um under each one of these pillars and there is really great alignment with the services we provide on the following slides we'll identify budget highlights that will include a blend of annual and operation annual and capital projects both recurring and one time um that are aligned with each of these pillars sometimes it's hard to differentiate the funding sources because much of what we do in public services is a blend of operation and maintenance of infrastructure such as roads paths bridges and investment in their rehabilitation you'll also note that many of the projects that we've identified may fall under multiple categories but we've done our best to align them where we think that they're they're best fit but most things probably apply to more than one of these pillars so the first pillar i will talk about is sustainability and i would like to mention that the the costs included in the pillar in all of the slides that you'll see with the highlights are not necessarily comprehensive of all the projects that we're doing in public services this this presentation would probably have three times as many slides if we were going to include all of the work that we're doing but as council has an opportunity to review the details in the budget books they will be provided they will see a lot more granular information on many of these projects we've also in some cases rolled up several budget line items into one initiative to share the information in a more condensed version for this presentation so while i won't also discuss all the projects i will highlight a few on each of the slides to give you an example of the types of things that we're doing that fall underneath each one of these pillars so for sustainability engineering is working to modify its specifications for concrete to to use a low carbon embodied concrete which is less carbon intensive to produce this new concrete formulation has a smaller carbon footprint and of course we lose a lot of concrete in public service inc in infrastructure projects solid waste management clearly has a clear interface with sustainability we're seeing large quantities of packing material associated with deliveries as an example and we need to come up with sustainable solutions that improve our diversion rate um increasing recyclable and reducing solid waste for downtown businesses and come up with an affordable program that meets their business needs and expectations and this is what's captured in the second starred project under public works that i'm talking i'm referring to which is improving commercial and downtown solid waste including a new solid waste project management assistance and we will be working closely with the community associations the neighborhood associations downtown and businesses to ensure that we can come up with a solution that meets their needs and is financially sustainable the second project under public works that i want to mention is the regional drop-off station so this is the current drop-off station is in um in a state of disrepair it's um not sufficiently sized to meet the needs of the community and it's also um the building is deteriorating it's built on the landfill and the landfill is settling and needs to be replaced so we've been planning for that and we were intending to to earmark some of the fun waste solid waste fund balance for this project this is really uh also a significant sustainability focus for the the city and some of the region so we intend to work with our regional partners we have a grant that we have um coming to support this investment and we're also looking for shared contributions from some of the other communities who will benefit by from this project and we look forward to beginning this initiative in the coming fiscal year in systems planning resiliency and adaption adaption planning will be added to the cip in the fall we're working with the county to frame this project in response to the flooding events um such as the june storm which created significant flooding in portions of the city there are portions of the city that receive rainfall in excess of 100 year storm and we're seeing more and large we're seeing more frequent and larger storms and need to be positioned to ensure that our storm water infrastructure is capable of handling these events in the future land application of biosolids the first project under wastewater treatment is part of our annual operating budget we land application is a beneficial reuse it's been a successful program that we've used for many many years and we need to make sure that we're um and so we need to make sure that we're evaluating um alternate so the the next project as i'm transitioning which is completing the biodigester feasibility study is an alternative to land application and because of potential risks of not being able to land apply biosolids in the future due to the contents such as one of the challenges we're facing with pfas in our biosolids we need to look at alternatives to make sure that we're positioned to handle the residuals and that is the reason for the completion of the bio digester facility study which we will begin in this fiscal year and continue working on in fy 23. moving on to quality of life it's hard to talk about quality of knife without mentioning vision zero which is a council approved and community supported program to reduce uh accidents and um create a safe environment for pedestrians throughout the city um the vision zero program is funded primarily through one-time non-recurring funds with the exception of some funds for local traffic coming so a recurring source of funding will be important in order to realize division zero goals and we look forward to working with the community and council to develop a long-term funding plan as part of the conversation and development of this action plan within public works a quality of life project is increasing the non-motorized assets in the community and as we build and add more bike lanes and and non-motorized transportation um infrastructure we need to make sure that we have the resources in order to maintain them they are maintained differently and they and in some cases can be more costly to maintain and in this year we've increased our budget um over previous fiscal years to make sure that we have the resources to maintain these assets as we're working on all of these projects that have a direct impact on many of the on the community we need to make sure that we're also developing communication plans and outreach to ensure that we are reflecting the community's desires and needs as we deliver some of these projects and that's also built into the work that we're doing and then the the last item that i want to highlight here about under quality of life for public works is the inspection and maintenance of our sanitary sewer system this is very personal for a lot of folks in the community and as we work on inspecting and maintaining our system one in compliance with the administrative consent order but this also will help us reduce the potential for sewer backups and overflows in the future and we have 625 000 in the fiscal year 23 to dedicate to that activity flood mitigation is also a major quality of life if you issue we are investing in storm in storm water storage and detention activities and other also other flood mitigation activities as part of this work we will also be revisiting our stormwater design storms and using our utility models to account for the increasing intensity of wet weather events this is a continuation of the same theme that i've already talked about under the sustainability pillar and you'll also see some of these projects as part of our infrastructure investments one example is the briarwood and churchill project which we're working on in partnership with the county who's our regional partner on many stormwater related projects i mentioned the importance of public engagement and commute public education and community engagement so many of the projects that we're working on in public service touch the community in so many different ways and we need to be prepared to work with folks to get input and make sure that people's views and thoughts are are reflected in the projects that we deliver and we were working on increasing to augment staff's capability to engage the community on all of these various projects you also notice that the amount identified here is tbd and we really try to incorporate community engagement into all the projects that we do so there's not necessarily a separate budget line item but it's built into the project budgets for the projects that we deliver so third the third pillar positioning for investment we all know that we're in a position right now where there are lots of federal funding programs um that are being initiated for investment in infrastructure and we need to make sure we're well positioned to take advantage of that the iija is the infrastructure investment and jobs act and we are working um and we'll be working with a consultant to make sure that we're positioned and understand how we can access funds that might be available to communities such as ann arbor for infrastructure projects a couple of examples of some well one success story associated with our ability to position for investment is a project that we're doing to replace valves at our raw water pump station in the water system barton pump station this is a five million dollar project a little over five million dollar project where we've been able to receive 1.3 million in loan forgiveness this project was designed and shovel ready in anticipation of this um potential having this financial benefit for the city of loan forgiveness so it's a really success story for what's being positioned to take advantage of state and federal funding sources for infrastructure projects the water treatment plant plant one replacement pilot plant is a project that we'll also be initiating in fiscal year 23. we are on the verge of the largest project in the history the largest capital project in history of the city's water system with replacing a portion of the water treatment plant that could cause will cost the city over 100 million dollars this pilot plant will allow us to evaluate and determine what the best way to treat and meet the city's water quality goals in the most cost effective manner the results of this plant will help us more accurately size and chill and select technologies um and it could potentially save the city tens of million dollars on final construction costs the last pillar which is infrastructure highlights um i have a couple things that i would like to highlight so first is the the implementation of the public infrastructure projects in the capital improvement program and you'll see we have almost 50 million dollars worth of projects associated with pavement condition improvements bridge maintenance and repair sidewalk repair and sidewalk gaps sanitary sewer lining storm water sanitary water pipe replacement and upsizing this is a tremendous amount of infrastructure improvement in the community this is a reasonable amount higher than we spent in recent years and it's really about a commitment to addressing the community feedback it needs to replace aging and deteriorating infrastructure in the public works group we have an upright we have funding to do ongoing repair and capital maintenance activities of the city's infrastructure including televising cleaning main repair street base repair and pothole repair over 5 million dollars in the fy 23 budget to complete these types of maintenance activities on the city's infrastructure in the publix works group we are continuing to work on our water meter replacement program we've replaced the majority of the residential meters in the community and now we're focusing on the large meters these large meters are critical because accurate and reliable meters are critical for long-term viability of the enterprise funds and at the wastewater plant the headwork screening project and grip placement project follows in investments of 150 million dollars in renewing infrastructure at the wastewater treatment plant and with this project at its conclusion we'll position the wastewater treatment plant or the resource recovery plant for the next several generations note that all of these projects are multi-year projects so the um the values listed here in some cases represent the values that we'll be spending in fiscal year 23 but the 15 million for the headworks project is is that is a multi-year project and will be spent over multiple fiscal years not all in fiscal year 23. so my last slide i would like to talk a little bit about horizon issues these are issues that we will be facing as we move forward into future fiscal years the city needs to be well positioned to address right and i've categorized them into four categories and i'll start with human resources um succession planning we've had um some we've had a reasonable amount of turnover in the public services area over the last year and we also have several people several um public services staff who are um reaching their retirement age and so we'll be losing um even more over the coming year in the coming years and we need to be prepared to replace those folks we have some really great success stories in staff who we have worked with trained and developed to be positioned to take on leadership roles and associated with some recent departures and retirements we've had and move movement in the organization we've had people step up and fill those roles and that's really a positive um for the city but as people move around and take on new roles and responsibilities it does create vacancies in the organization and with that we need to make sure that we are filling those with folks who are who are qualified and can continue to provide the service that our our customers demand and focusing on workforce development is a really important part of that um and i can as a sort of a personal experience story in the water group um we we had about over the last year about 30 turnover in our water utility technicians which are these are the front line folks who operate and maintain the water system infrastructure at the plant and at the dams um and we've been fortunate to hire and replace the the folks who have left um with some great new young staff who are who are eager and willing and excited about learning about what we do in ann arbor um but this place is a burden on existing staff who have to be working to not only continue to deliver the services that that our community expects but also train new folks and we need to make sure that we have um programs and commit time in the future to develop these folks so we can continue to meet the service level expectations of the community financial and infrastructure we're all aware of the challenges that we're facing right now in the economy with inflation with supply chain issues when we're not an exception to having to deal with those issues in public services costs um are becoming higher for things that we had not anticipated um the lead time on getting equipment is very long and it's impacting our ability to deliver some projects on time um and also on budget so we will be continuing to work and develop solutions to these challenges but it's something that we anticipate that we'll be seeing for some time to come at the same time we need to make sure that we're continuing to work on um rehab and replacement of aging infrastructure you saw that we're um almost recognized numbers of investment 75 million dollars in fiscal year 23 for infrastructure projects um and we need to continue to do that to move the needle on what the condition of our infrastructure infrastructure is in this community so much of this infrastructure was built you know um at the turn of the the century the last century we're still operating um components of our water system and some of our buried infrastructure that are over 100 years old um and so we're and we're continuing to work on renewing renewing that infrastructure we need to make sure that we also maintain funding for and maintenance of our increased increased non-motorized assets i've already talked about that as part of the budget highlights but we will as we this part of our community continues to grow we will need to make sure we continue to contribute and make sure we have the resources to maintain the infrastructure that we we add respect to that non-motorized assets dam rehabilitation the dams also were built in some cases um over a hundred years ago and we're still operating and maintaining those there have been some recent experience of dam failures around the country and in michigan um and we need to make sure that we're doing all the right things to make sure our dams are safe and also can will last for the next generation so we will be um spending some resources on rehabilitating those in future fiscal years so what um what things are on the horizon that impact the community well i've already also talked a little bit about restructuring our commercial solid waste fees we'll continue to work with our partners downtown to make sure that we can come up with a solution that works for them meets service expectations and is affordable the regional drop-off station is also a big initiative that will beginning this fiscal year um and while there are challenges with funding the capital investment to build the drop-off station we also need to come up with an operational and funding structure that will allow it to be successful into the future and that has yet to be worked on and determined as we work on our urban forest management plan there will be recommendations that come out of that that have future budget implications and we'll need to be prepared for that as well and of course i as i've mentioned several times throughout this presentation increasing the need there's an increasing need and demand for community engagement associated with all of these projects so many of so much of the work we do in public services is is outward facing and involves the community and we need to have an effective and robust community engagement program to engage folks so their voices are heard and then finally associated with utilities there's the water treatment plant rehabilitation so we'll be beginning to work on this pilot plant and make decisions about what the service levels are going to be for the water system in the future and as we transition into future fiscal years we will be beginning to build this improvement and it will be a large project it will take many many years to build and then it will have significant cost associated with it but these are costs that we have built into our financial plan and are planning for and are reflected in the rate projections that i shared with you today the gilman plume is is a a topic that has interest broader interest in the community it's something that we continually um are involved in and monitoring we are we are awaiting whether the environmental protection agency may come in and take a leadership role in um in cleaning up this um contaminated plume which is under a portion of the city of ann arbor in the groundwater um and it will involve us to continue to be involved and and monitor and um ensure that it doesn't for one impact the city's drinking water but also that it doesn't impact public health in other ways in the community um so definitely a horizon issue for for ann arbor and then finally environmental and legislative challenges um on the on the drinking water side um there have been recent new regulations to address emerging contaminants such as tfas um we're dealing with um and possibly we will see similar regulations coming down the road on pfas associated with wastewater plant residuals management as an example we need to be prepared for that which is the reason for our bio digester study there are other environmental regulations too that we'll be continuing to monitor and see how they might impact the city and the services we provide um also at the wastewater plant are very very low phosphorus levels as part of their permit and returning of um their treated water into the huron and we will continue to look at what we can do to try to um meet the permit requirements um in a reasonable and cost-effective manner that can protect the environment uh and all of these right these legislative and these type of environmental issues will things that we will need to continue to track and make sure that we're well positioned um to address in the future i thank you for the opportunity to present the fiscal year 23 public services budget um to you all today if you have any questions please send them to sarah higgins and copy mr dahony ms prashan and ms busselmeyer and um and we will be preparing responses they will be organized by topic and responded throughout the budget season so thank you very much 00:00:05.910 --> 00:00:07.990 align:start position:0% hello i'm brian steglitz the interim public services area administrator and i'm going to be presenting to you today the fy 23 budget overview um before i start i'd like to thank those who have helped prepare this presentation which include all of the unit managers and public services and some of their staff as well as the finance staff so thank those who have helped a lot of effort went into pulling all this information together before i dive into the the agenda for this presentation i wanted to reflect on the few pictures that we've intentionally selected to show on this first slide first picture up on the left hand corner is the allen creek railroad berm project which is an innovative solution that public services has designed to address multiple multiple issues one being storm water management and flood protection in the community as well as non-motorized traffic improvements by adding a connection to the border to border trail the slide in the middle illustrates a pedestrian safety project where we're using solar powered rapid flashing beacons and finally the project on the right reflects emergency response activities that are provided by services this is one of these projects that we're trying to to put out of our memories but this is the large water main break project that happened at the intersection of maple and jackson road that required significant resources to come together to address repair and get back in service these these pictures really illustrate the breadth of the services provided by the public services unit they touch everyone in the community every day including residents and those that come to commute and recreate and dine and enjoy the amenities that ann arbor has to offer so as part of this presentation i will be going through an overview of the service area and the organization and the structure of the service unit i'll be talking about a financial overview going through the fund summaries the major funds that the public services unit oversees which include the water sewer storm water utility enterprise funds the major and local street funds street village street bridge and sidewalk millage as well as the solid waste millage i'll talk a little bit about utility rates and what our projections are for the future and then hit some service unit highlights and some horizon issues the perf this public services area is organized into six service units um with a small administration unit and then the five other units that you see on this slide the the engineering unit is responsible for overseeing the capital project management and maintenance programs such as the annual road resurfacing program the public works service unit maintains all the buried infrastructure in the city it manages our urban forest the compost materials recycling facility the solid waste program compost recycling collection the drop-off station roads maintenance such as pothole repair and snow plowing so lots of services that interface with the community the systems planning unit manages the cip plan development for for the whole city assisting planning also oversees asset management community engagement reviews development petitions for work in the right of way and that impacts city utilities planning areas also include floodplain and water resources management storm water management and this group also works closely with the office's sustainability on topics such as climate resiliency the water treatment services area pretty intuitively provides safe drinking water to over 125 000 um customers in ann arbor and um some neighboring communities they're responsible for delivering safe water from the source to the tap of our customers in addition the water treatment services unit also oversees and manages the four dams along the huron river two of which generate hydro power the wastewater treatment services unit um or resource recovery facility will treat the wastewater generated by the community and return it to the environment and also serves over a hundred thousand customers in the city and um surrounding area the wastewater treatment service use also um produces um a residual from their treatment process that is land applied a beneficial reuse of the waste products that are generated by the wastewater treatment process um you see capital projects which is sort of a box by itself so while the public service area overseas and manages um the capital improvements program there are capital projects that are also um realized as part of the work this group does and in fiscal year 23 we have over 75 million dollars worth of capital projects planned associated with public services in the community the public services area has budgeted for fiscal year 23 um a total of 232 and a half full-time equivalent staff oops sorry about that i went too quickly um now i will dive into um the the utility front so a few notes as i talk about the water the three utility phones these slides represent a snapshot in time and are regularly updated as conditions change changing conditions could include an unanticipated infrastructure failure such as the large water main break at jackson and maple that i illustrated on the first slide it could also include revenue adjustments based on actual water uses versus projected and our financial plan is structured to ensure that we can safely execute both our operational and capital plans the operating fund graph illustrates water fund balance over the next five fiscal years it illustrates our use of fund balance to cover capital expenditures in the near term until fiscal year 24 when we'll begin issuing debt to cover capital needs fluctuating levels over the time of our fund balance can be due to capital project schedule impacts such as we've experienced over the past few years due to the impact of the global pandemic on supply chain and our ability to safely execute capital projects in the plan and in the community the cash flow figure on the bottom left indicates both cash in and cash out over the next five years cash in and cash out are projected to match beginning in fiscal year 24 which is why there appears to be only a single line um between fiscal year 24 and 27. moving on to the capital funding graph the gray bar you'll see a stack bar a gray bar and a red bar the gray bar represents the cash funded capital expenditures and the red bar represents debt service for capital expenditures so note the increasing spending and debt service between fiscal years 25 and 29. this is due to the over 100 million dollar water treatment plant improvement project to replace infrastructure that was built in the 1930s the rate projections that you will see on a subsequent slide take into account the significant capital investment that we are anticipating sewage disposal fund um slides illustrate well the first slide the operating fund illustrates a sewage disposal fund balance over the next five fiscal years and as in the water fund it illustrates our use of fund balance to cover capital expenditures in the near term until fiscal year 24 when we begin issuing debt to cover capital needs cash flows for the sewage disposal fund also converge in fiscal year 24 as illustrated in the cash flow graphic in the capital funding graph on the bottom right of the screen your screen you will note the increased significant capital expenditures in fy23 which will be used to address both the administrative consent order which requires capital investment in the sewage collection system such as lining sewer lining and inspections during this year the wastewater plant will also initiate its headworks project which is estimated at 15 million beginning in fiscal year 24 you will notice an increase in debt service to cover the future capital needs the stormwater fund the operating slides this operating slides also illustrate stormwater the operating fund excuse me slide um also indicates that stormwater balance fund over the next five fiscal years this slide illustrates use of fund balance to cover capital expenditures in the near term until fiscal year 24 similar to the the other utility funds where we will begin issuing debt to cover capital needs in the capital funding slide um our graphic you will notice the increased capital expenditures in fy 24 which we use to address several projects to help us abate flooding the largest project is the edgewood schneider improvements project that are estimated at just under 9 million also included this fiscal year are significant stream bank stabilization projects why don't you note that is one item to note that is unique to the stormwater fund in the stack bars that you see in the capital funding site is the yellow bar which indicates other debt other debt reflects the city working with its partner in this case the washington county drain commission who will issue debt on the city's behalf to address system needs that benefit both parties note the city is still responsible for this debt however it is issued by a third party which provides the city with some financial benefit this slide illustrates our rate plan our current rate plan and our proposed rate plan which will come to council later this um later this spring over the next couple months for approval the drivers for our rates continue to be the same from fiscal year 22 which include water quality and regulatory compliance um issues and challenges for the water fund infrastructure reinvestment needs across all of the different all three of the utility funds and level of service increases we'll for example will be inspecting 20 of the sport of the storm system using cctv and it also reflects maintenance of our level of service goals and expectations of the community you will see an average bill for customers a current customer average customer and future average customer with the projected rate modifications for the next fiscal year the total rate increase for the average customer is estimated to be about 2.6 percent um note this includes an assumption of 18 ccf usage which is 100 cubic feet which is how we measure water consumption for our customers as well as that the customer is in the tier 2 for the stormwater rates and it also includes the one-time on-time payment discount the rate projections that you see here are similar to um they have not changed since what was provided to you last year um so the rate projections are the same and you can see for water we continue to estimate six percent waste increases over the next five fiscal years for sewer there will be no rate increases for the next two fiscal years and then we'll be transitioning to three percent increases in fy25 and for storm water you'll notice four percent rate increases for the next two fiscal years and three percent um rate increases for fiscal year 25-27 transitioning to the major and local street funds on the financial plan for major in the local street funds is structured to maintain and repair road based on community priorities which are reflected in our pavement asset management plan goals the first graph reflects fund balance and how it's distributed between major and local streets major streets being in the green and local streets being in the blue these funds are um received from state shared revenue that's what supports the major and local streets funds this is comes from what we call act 51 which is from state gas and weight taxes in the revenue versus expenditures line graph you will notice the uptick in expenditures and revenue in fiscal year 23. this is due to the proposed bond issuance of nine million dollars six million dollars for major roads and three million dollars for local roads for pavement asset management this this the intention is to use these funds to move the needle on improving road conditions and the road conditions rating in the community by accelerating projects that were planned in future fiscal years um the the intent is that this bond would become for before council for approval over the coming months the pie graph illustrates how these funds will be distributed distributed amongst the different area amongst the different areas in the local major street funds which include right-of-way which would be about half of the expenditures traffic control about a third and then the smaller parts go to alternate transportation the street bridge and sidewalk millage financial summary illustrates to you the fund balance over the next um or the past fiscal years and plan for fiscal year 23. as in the major and local street funds note that the revenues and expenditures are closely matched as the city plans unused all the funds that are raised by this millage to address street bridge and sidewalk improvements there there's also an intent to issue to issue approximately six million dollars of of a bond for additional work that can be done to support the work that is part of this millage so the total bond that will be coming before council for approval will be the nine million dollars for the street major uh local street funds plus six million for street bridge and sidewalk millage for a total of 15 million having the street bridge in sidewalk millage provides a second source of funding to the community to address community driven needs and allows us to do more than what state shared revenue can provide as illustrated in the pie chart almost two-thirds of the millage goes to annual resurfacing program with smaller portions to sidewalk and ramp repair bridge capital projects and road projects the fact that the city has a millage to to supplement the needs for these for road sidewalk and bridge improvements is not something that all communities had so ann arbor is is well positioned to address the needs with this additional source of of uh income to for the public services folks to use to address infrastructure condition solid waste fund financial summary solid waste is funded on also by a millage plus a fee for service for some of the services provided in the downtown for example to businesses for solid waste collection in this case the city will contract out some those services to a third party vendor and recruits its costs through service the budget for solid waste in this fiscal year includes move transitioning four temporary positions to full-time equivalent positions these would be field operation technicians um who are drivers responsible for picking up solid waste compost and recycled material similar to the road millage the solid waste millage carefully balances revenue and expenditures when or if additional services are considered a revenue source must be identified to ensure it is financially sustainable the fund balance will be used to improve facilities such as the drop-off station which i'll be talking about in the future slide if you look at the breakdown of expenditures in the solid waste you see about a third of the funds are spent on solid waste a third on material recovery and then a smaller percentage on compost and other expenses the other portion of the pie which is 19 includes sustainability landfill oversight and management administration and customer service roles so if you've seen any of the other budget presentations you'll see the same theme when we we're looking at the the highlights of the projects that we will be delivering the services we would provide um underneath each of these four pillars sustainability quality of life positioning for investment and infrastructure as you think about public services we really impact the community very closely in the services we provide and are significantly influenced um under each one of these pillars and there is really great alignment with the services we provide on the following slides we'll identify budget highlights that will include a blend of annual and operation annual and capital projects both recurring and one time um that are aligned with each of these pillars sometimes it's hard to differentiate the funding sources because much of what we do in public services is a blend of operation and maintenance of infrastructure such as roads paths bridges and investment in their rehabilitation you'll also note that many of the projects that we've identified may fall under multiple categories but we've done our best to align them where we think that they're they're best fit but most things probably apply to more than one of these pillars so the first pillar i will talk about is sustainability and i would like to mention that the the costs included in the pillar in all of the slides that you'll see with the highlights are not necessarily comprehensive of all the projects that we're doing in public services this this presentation would probably have three times as many slides if we were going to include all of the work that we're doing but as council has an opportunity to review the details in the budget books they will be provided they will see a lot more granular information on many of these projects we've also in some cases rolled up several budget line items into one initiative to share the information in a more condensed version for this presentation so while i won't also discuss all the projects i will highlight a few on each of the slides to give you an example of the types of things that we're doing that fall underneath each one of these pillars so for sustainability engineering is working to modify its specifications for concrete to to use a low carbon embodied concrete which is less carbon intensive to produce this new concrete formulation has a smaller carbon footprint and of course we lose a lot of concrete in public service inc in infrastructure projects solid waste management clearly has a clear interface with sustainability we're seeing large quantities of packing material associated with deliveries as an example and we need to come up with sustainable solutions that improve our diversion rate um increasing recyclable and reducing solid waste for downtown businesses and come up with an affordable program that meets their business needs and expectations and this is what's captured in the second starred project under public works that i'm talking i'm referring to which is improving commercial and downtown solid waste including a new solid waste project management assistance and we will be working closely with the community associations the neighborhood associations downtown and businesses to ensure that we can come up with a solution that meets their needs and is financially sustainable the second project under public works that i want to mention is the regional drop-off station so this is the current drop-off station is in um in a state of disrepair it's um not sufficiently sized to meet the needs of the community and it's also um the building is deteriorating it's built on the landfill and the landfill is settling and needs to be replaced so we've been planning for that and we were intending to to earmark some of the fun waste solid waste fund balance for this project this is really uh also a significant sustainability focus for the the city and some of the region so we intend to work with our regional partners we have a grant that we have um coming to support this investment and we're also looking for shared contributions from some of the other communities who will benefit by from this project and we look forward to beginning this initiative in the coming fiscal year in systems planning resiliency and adaption adaption planning will be added to the cip in the fall we're working with the county to frame this project in response to the flooding events um such as the june storm which created significant flooding in portions of the city there are portions of the city that receive rainfall in excess of 100 year storm and we're seeing more and large we're seeing more frequent and larger storms and need to be positioned to ensure that our storm water infrastructure is capable of handling these events in the future land application of biosolids the first project under wastewater treatment is part of our annual operating budget we land application is a beneficial reuse it's been a successful program that we've used for many many years and we need to make sure that we're um and so we need to make sure that we're evaluating um alternate so the the next project as i'm transitioning which is completing the biodigester feasibility study is an alternative to land application and because of potential risks of not being able to land apply biosolids in the future due to the contents such as one of the challenges we're facing with pfas in our biosolids we need to look at alternatives to make sure that we're positioned to handle the residuals and that is the reason for the completion of the bio digester facility study which we will begin in this fiscal year and continue working on in fy 23. moving on to quality of life it's hard to talk about quality of knife without mentioning vision zero which is a council approved and community supported program to reduce uh accidents and um create a safe environment for pedestrians throughout the city um the vision zero program is funded primarily through one-time non-recurring funds with the exception of some funds for local traffic coming so a recurring source of funding will be important in order to realize division zero goals and we look forward to working with the community and council to develop a long-term funding plan as part of the conversation and development of this action plan within public works a quality of life project is increasing the non-motorized assets in the community and as we build and add more bike lanes and and non-motorized transportation um infrastructure we need to make sure that we have the resources in order to maintain them they are maintained differently and they and in some cases can be more costly to maintain and in this year we've increased our budget um over previous fiscal years to make sure that we have the resources to maintain these assets as we're working on all of these projects that have a direct impact on many of the on the community we need to make sure that we're also developing communication plans and outreach to ensure that we are reflecting the community's desires and needs as we deliver some of these projects and that's also built into the work that we're doing and then the the last item that i want to highlight here about under quality of life for public works is the inspection and maintenance of our sanitary sewer system this is very personal for a lot of folks in the community and as we work on inspecting and maintaining our system one in compliance with the administrative consent order but this also will help us reduce the potential for sewer backups and overflows in the future and we have 625 000 in the fiscal year 23 to dedicate to that activity flood mitigation is also a major quality of life if you issue we are investing in storm in storm water storage and detention activities and other also other flood mitigation activities as part of this work we will also be revisiting our stormwater design storms and using our utility models to account for the increasing intensity of wet weather events this is a continuation of the same theme that i've already talked about under the sustainability pillar and you'll also see some of these projects as part of our infrastructure investments one example is the briarwood and churchill project which we're working on in partnership with the county who's our regional partner on many stormwater related projects i mentioned the importance of public engagement and commute public education and community engagement so many of the projects that we're working on in public service touch the community in so many different ways and we need to be prepared to work with folks to get input and make sure that people's views and thoughts are are reflected in the projects that we deliver and we were working on increasing to augment staff's capability to engage the community on all of these various projects you also notice that the amount identified here is tbd and we really try to incorporate community engagement into all the projects that we do so there's not necessarily a separate budget line item but it's built into the project budgets for the projects that we deliver so third the third pillar positioning for investment we all know that we're in a position right now where there are lots of federal funding programs um that are being initiated for investment in infrastructure and we need to make sure we're well positioned to take advantage of that the iija is the infrastructure investment and jobs act and we are working um and we'll be working with a consultant to make sure that we're positioned and understand how we can access funds that might be available to communities such as ann arbor for infrastructure projects a couple of examples of some well one success story associated with our ability to position for investment is a project that we're doing to replace valves at our raw water pump station in the water system barton pump station this is a five million dollar project a little over five million dollar project where we've been able to receive 1.3 million in loan forgiveness this project was designed and shovel ready in anticipation of this um potential having this financial benefit for the city of loan forgiveness so it's a really success story for what's being positioned to take advantage of state and federal funding sources for infrastructure projects the water treatment plant plant one replacement pilot plant is a project that we'll also be initiating in fiscal year 23. we are on the verge of the largest project in the history the largest capital project in history of the city's water system with replacing a portion of the water treatment plant that could cause will cost the city over 100 million dollars this pilot plant will allow us to evaluate and determine what the best way to treat and meet the city's water quality goals in the most cost effective manner the results of this plant will help us more accurately size and chill and select technologies um and it could potentially save the city tens of million dollars on final construction costs the last pillar which is infrastructure highlights um i have a couple things that i would like to highlight so first is the the implementation of the public infrastructure projects in the capital improvement program and you'll see we have almost 50 million dollars worth of projects associated with pavement condition improvements bridge maintenance and repair sidewalk repair and sidewalk gaps sanitary sewer lining storm water sanitary water pipe replacement and upsizing this is a tremendous amount of infrastructure improvement in the community this is a reasonable amount higher than we spent in recent years and it's really about a commitment to addressing the community feedback it needs to replace aging and deteriorating infrastructure in the public works group we have an upright we have funding to do ongoing repair and capital maintenance activities of the city's infrastructure including televising cleaning main repair street base repair and pothole repair over 5 million dollars in the fy 23 budget to complete these types of maintenance activities on the city's infrastructure in the publix works group we are continuing to work on our water meter replacement program we've replaced the majority of the residential meters in the community and now we're focusing on the large meters these large meters are critical because accurate and reliable meters are critical for long-term viability of the enterprise funds and at the wastewater plant the headwork screening project and grip placement project follows in investments of 150 million dollars in renewing infrastructure at the wastewater treatment plant and with this project at its conclusion we'll position the wastewater treatment plant or the resource recovery plant for the next several generations note that all of these projects are multi-year projects so the um the values listed here in some cases represent the values that we'll be spending in fiscal year 23 but the 15 million for the headworks project is is that is a multi-year project and will be spent over multiple fiscal years not all in fiscal year 23. so my last slide i would like to talk a little bit about horizon issues these are issues that we will be facing as we move forward into future fiscal years the city needs to be well positioned to address right and i've categorized them into four categories and i'll start with human resources um succession planning we've had um some we've had a reasonable amount of turnover in the public services area over the last year and we also have several people several um public services staff who are um reaching their retirement age and so we'll be losing um even more over the coming year in the coming years and we need to be prepared to replace those folks we have some really great success stories in staff who we have worked with trained and developed to be positioned to take on leadership roles and associated with some recent departures and retirements we've had and move movement in the organization we've had people step up and fill those roles and that's really a positive um for the city but as people move around and take on new roles and responsibilities it does create vacancies in the organization and with that we need to make sure that we are filling those with folks who are who are qualified and can continue to provide the service that our our customers demand and focusing on workforce development is a really important part of that um and i can as a sort of a personal experience story in the water group um we we had about over the last year about 30 turnover in our water utility technicians which are these are the front line folks who operate and maintain the water system infrastructure at the plant and at the dams um and we've been fortunate to hire and replace the the folks who have left um with some great new young staff who are who are eager and willing and excited about learning about what we do in ann arbor um but this place is a burden on existing staff who have to be working to not only continue to deliver the services that that our community expects but also train new folks and we need to make sure that we have um programs and commit time in the future to develop these folks so we can continue to meet the service level expectations of the community financial and infrastructure we're all aware of the challenges that we're facing right now in the economy with inflation with supply chain issues when we're not an exception to having to deal with those issues in public services costs um are becoming higher for things that we had not anticipated um the lead time on getting equipment is very long and it's impacting our ability to deliver some projects on time um and also on budget so we will be continuing to work and develop solutions to these challenges but it's something that we anticipate that we'll be seeing for some time to come at the same time we need to make sure that we're continuing to work on um rehab and replacement of aging infrastructure you saw that we're um almost recognized numbers of investment 75 million dollars in fiscal year 23 for infrastructure projects um and we need to continue to do that to move the needle on what the condition of our infrastructure infrastructure is in this community so much of this infrastructure was built you know um at the turn of the the century the last century we're still operating um components of our water system and some of our buried infrastructure that are over 100 years old um and so we're and we're continuing to work on renewing renewing that infrastructure we need to make sure that we also maintain funding for and maintenance of our increased increased non-motorized assets i've already talked about that as part of the budget highlights but we will as we this part of our community continues to grow we will need to make sure we continue to contribute and make sure we have the resources to maintain the infrastructure that we we add respect to that non-motorized assets dam rehabilitation the dams also were built in some cases um over a hundred years ago and we're still operating and maintaining those there have been some recent experience of dam failures around the country and in michigan um and we need to make sure that we're doing all the right things to make sure our dams are safe and also can will last for the next generation so we will be um spending some resources on rehabilitating those in future fiscal years so what um what things are on the horizon that impact the community well i've already also talked a little bit about restructuring our commercial solid waste fees we'll continue to work with our partners downtown to make sure that we can come up with a solution that works for them meets service expectations and is affordable the regional drop-off station is also a big initiative that will beginning this fiscal year um and while there are challenges with funding the capital investment to build the drop-off station we also need to come up with an operational and funding structure that will allow it to be successful into the future and that has yet to be worked on and determined as we work on our urban forest management plan there will be recommendations that come out of that that have future budget implications and we'll need to be prepared for that as well and of course i as i've mentioned several times throughout this presentation increasing the need there's an increasing need and demand for community engagement associated with all of these projects so many of so much of the work we do in public services is is outward facing and involves the community and we need to have an effective and robust community engagement program to engage folks so their voices are heard and then finally associated with utilities there's the water treatment plant rehabilitation so we'll be beginning to work on this pilot plant and make decisions about what the service levels are going to be for the water system in the future and as we transition into future fiscal years we will be beginning to build this improvement and it will be a large project it will take many many years to build and then it will have significant cost associated with it but these are costs that we have built into our financial plan and are planning for and are reflected in the rate projections that i shared with you today the gilman plume is is a a topic that has interest broader interest in the community it's something that we continually um are involved in and monitoring we are we are awaiting whether the environmental protection agency may come in and take a leadership role in um in cleaning up this um contaminated plume which is under a portion of the city of ann arbor in the groundwater um and it will involve us to continue to be involved and and monitor and um ensure that it doesn't for one impact the city's drinking water but also that it doesn't impact public health in other ways in the community um so definitely a horizon issue for for ann arbor and then finally environmental and legislative challenges um on the on the drinking water side um there have been recent new regulations to address emerging contaminants such as tfas um we're dealing with um and possibly we will see similar regulations coming down the road on pfas associated with wastewater plant residuals management as an example we need to be prepared for that which is the reason for our bio digester study there are other environmental regulations too that we'll be continuing to monitor and see how they might impact the city and the services we provide um also at the wastewater plant are very very low phosphorus levels as part of their permit and returning of um their treated water into the huron and we will continue to look at what we can do to try to um meet the permit requirements um in a reasonable and cost-effective manner that can protect the environment uh and all of these right these legislative and these type of environmental issues will things that we will need to continue to track and make sure that we're well positioned um to address in the future i thank you for the opportunity to present the fiscal year 23 public services budget um to you all today if you have any questions please send them to sarah higgins and copy mr dahony ms prashan and ms busselmeyer and um and we will be preparing responses they will be organized by topic and responded throughout the budget season so thank you very much 00:00:07.990 --> 00:00:09.589 align:start position:0% 00:00:09.589 --> 00:00:10.790 align:start position:0% 00:00:10.790 --> 00:00:12.789 align:start position:0% 00:00:12.789 --> 00:00:14.150 align:start position:0% 00:00:14.150 --> 00:00:15.910 align:start position:0% 00:00:15.910 --> 00:00:17.670 align:start position:0% 00:00:17.670 --> 00:00:19.349 align:start position:0% 00:00:19.349 --> 00:00:21.269 align:start position:0% 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