TO: Napa-Vallejo Waste Management Authority Board of Directors
FROM: Chris Celsi, Executive Director
REPORT BY: Chris Celsi, Executive Director
SUBJECT: Public Hearing Recommended 2024-2025 Fiscal Year Budget
RECOMMENDATION
10:00 A.M. PUBLIC HEARING - RECOMMENDED FISCAL YEAR 2024-2025 BUDGET
title
1. Adoption of Resolution No. 2025-01 approving the recommended final Budget for Fiscal Year 2024/2025 (weighted vote required)
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EXECUTIVE SUMMARY
The Executive Director and Auditor-Controller are submitting for adoption a recommended final budget for FY 2024-2025. This item has been advertised and noticed for a public hearing. At the conclusion of the public hearing, adoption of Resolution No. 2025-01 approving of the FY2024-2025 Budget is requested.
PROCEDURAL REQUIREMENTS
1. Open Public Hearing
2. Staff Report
3. Public Comment
4. Close Public Hearing
5. Motion, second, discussion and vote on item
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
This is the proposed operating budget for Fiscal Year 2024/2025. Adoption of a budget is required to continue operations of the Authority in the coming fiscal year. |
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Is it Mandatory or Discretionary? |
Mandatory |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
The budget covers only one fiscal year, however, decisions made in this fiscal year will impact the Authority’s financial stability in the future. |
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Consequences if not approved: |
Expenditures cannot be made. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California
Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.
BACKGROUND AND DISCUSSION
FY 2023-2024
Operating Budget
The Authority's FY 23-24 budget was based on an estimated waste flow to the Devlin Road Transfer Station (DRTS) of 263,000 tons per year. Actual tonnage to date has been higher than budgeted and is expected to be closer to 271,000 tons by the end of the fiscal year. Increases in incoming tonnage produce corresponding increases in both revenue and operating expenses. We are expected to see a surplus of $3.3 million net from Operations.
Total revenue for the fiscal year is expected to be approximately $23.4 million, which includes the sale of the 2.8 acres to the City of Napa in December 2023. If we excluded these proceeds, our revenues would have been closer to $21.7 million. We are expecting to see approximately $600,000 in additional tonnage revenue. However, because of higher tonnage and other increases of inter-departmental charges, we will experience higher transfer station, disposal and administration costs of approximately $1 million.
Capital Budget
The capital budget for FY 23-24 also included funds for additional predesign and permitting work for the proposed upgrades to C&D facility at the transfer station, and for making improvements to the ACSL Leachate Line. The ACSL Leachate Line will be completed in Fiscal Year 24-25. Costs for both projects were primarily due to unavoidable delays related to retirements of consultants and the transition of new consultants getting up to speed with both the C&D and Leachate Line projects.
Net Revenue and Reserves
Net revenue, which was budgeted at $1.7 million will be exceeded by approximately $1.6 million ($3.3 million) due mainly to the sale of the property. End of year cash reserves million are expected to be about $24.6 million.
FY 2024-2025
Operating Budget
The proposed Operating budget of $21.2 million is based on a projected waste flow of 276,000 tons to the DRTS and total anticipated revenue of about $23.6 million. Transfer Station Operations ($11.3 million) and Disposal ($7.4 million) budgets reflect inflationary increases in contracted unit costs for services from Authority service providers.
Revenue projections for FY 24-25 are based on the previously approved rate increase of $1.00 per ton for both franchise and non-franchise waste customers. These rates will go into effect on July 1, 2024 for non-franchise customers, and on October 1, 2024 for franchise customers. After the rate adjustments, rates will be $73 per ton for franchise haulers, $77 per ton for non-franchise waste, and $44 for minimum loads. We are forecasting $2.4 million net from Operations, and a year-end cash balance of $16.6 million which is about $8 million less than year-end 23-24. This is mainly due to the starting of the C&D facility construction.
Capital Budget
The $10.4 million Capital Budget includes work on the final design, bid and construction start of the C&D processing facility at the transfer station, and improvements to the leachate line system for our closed American Canyon Sanitary Landfill. We are hoping to get favorable responses from qualified building contractors to construct the proposed C & D facility at the Devlin Road Transfer Station.
Reserves
The Authority Board adopted Operating Reserve and Capital Replacement Reserve policies in 2011 and updated the Operating Reserve Policy in 2017. The Capital Reserve policy was updated in 2015 and 2019.
Operating Reserve
The Authority's Operating Reserve Policy requires maintaining an operating reserve no less than 1/6 of annual operating expenses and no more than 1/4 of annual expenses. The recommended Operating Reserve allocation of $3.5 million is consistent with this policy.
Capital Replacement Reserve
The Capital Replacement Reserve establishes a minimum reserve of $1.0 million and a maximum of $20.0 million, provided surplus funds are available after funding the Operating Reserve. The recommended allocation to the Capital Reserve for FY 24-25 is $13.1 million.
Recommendation
1. Approve the Recommended FY 24-25 Budget.
2. Adopt Resolution No. 2025-01 which sets forth the financing requirements for the Operating and Capital Improvement Programs for Fiscal Year 2024-2025, as follows:
Fund 8100 81000 - Operations
$21,185,672
Fund 8100 81010 - Capital Improvement
$10,440,000