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8 Water Meter Replacement ProgrCITYOF CHANHASSEN MEMORANDUM TO: Scott A. Botcher, City Manager ~90 CiO, Center Drive, PO Box' 147 Chanhassen, Minnesota 55317 &one 612.93Z 1900 General Fa.,: 612. 93 7. 5739 Engineering Fax' 612.93Z9152 ~ub/ic Safety Fax 612.934.2524 Web wwu:d, chanhassen, mn. tls FROM: DATE: SUBJ: Teresa J. Burgess, Public Works Director/City Engine .f~ March 12, 2001 Continue Discussion Regarding Meter Replacement Program On February 26, 2001, the City Council discussed the meter replacement program. This discussion was continued to tonight so Staff could gather additional information as requested by Council. Staff is recommending to use the funds allocated in 2001-2002 for drilling of Well No. 9 to initiate the meter replacement program. All of the wells would be delayed two years, from the current CIP with the laSt well in 2012-2013. The City of Chanhassen has major system improvements proposed in the CEP including Water. Treatment' in years 2002-2005. In addition, the City has not adjusted water and sewer rates in several years. The City has discussed-a Possible . rate study in 2001; however, it is recommended that a program to address unaccounted water be initiated prior to a rate study. The City did a comparison survey of Utility Departments with the following results' CITY Victoria Hopkins Eden Prairie Chaska Minnetonka Edina Chanhassen UTILITY UTILITY BILLS WORKERS MAILED 6 Approx. 1,300 (billed quarterly) 6 4,600 I Utility 16,500 (billed Manager quarterly) 12 Plant Empl. 12 Outside (wells, water towers, etc.) 7 4468 (billed monthly) 11 FT 18,000 (Residential 5 PT Meter billed quarterly/Apts. Readers (160 Churches, Commercial hrs./month) billed monthly) 13 Approx. 14,500 (billed quarterly) 7 Approx. 6,058 (billed (1 currently on quarterly) medical leave) METER READ METHOD Radio Read by US Filter Employees *Radio Read (1/3 installed) & Hand Held *Radio Read by RMR Svs. (30-35% installed) *Staff walk remaining areas using touch key or key in information Hand held by staff (Versaterm) *Radio Read - Just implementing (Commercial & apartments) *Hand Held - Takes 2 weeks Radio Read (Commercial accounts still being read manually -in the process of converting to radio read) Staff use hand held reader on touch pad or key in information Cit~, of Cha,hassen. A Ovwhtf community, with c[ean {akes, auafin, schools, a cham~in~ downtown, thrivin? businesses, a,d beautihd oarks. A creat o/ace to live. work. and ola~. Scott Botcher March 12, 2001 Page 2 Reading the meters is time intensive and takes crew members away from other duties. The following calculations use an hourly rate of $26.92. This number is based on the average salary of the 5 employees who do radio reads plus the indirect costs. Time Required Number of Percent of City Employee Cost for Employees Read meter reads 1 week 4 33.3% $4,307.2/month $51,686.40/year 4 hours 1 100% $107.68/month $1,292.16/year *Note: Chanhassen has not reached full development. The Arboretum Village development on tonight's agenda for example proposes to add 342 units. Increased numbers of meters will require additional read time and employees. The City requested US Filter supply a cost benefit analysis based on the following factors: · The cost proposal byUS Filter · 1 year replacement program (The City is not proposing a 1 year replacement, ho~vever, a time period was necessary for the analysis.) · Previous experience with other Cities The cost per meter read used by US Filter is significantly lower than'the actual costs experienced by the City. ($2.30 for meter read and billing versus $8.53 actual cost for meter read alone) The cost benefit analysis was reviewed by the City's Finance Director. This cost benefit analysis was done at no cost to the City. If this project is approved by the City Council, a specification for the meter replacement and radio retrofit will be written so that the City can advertise for bids for the work. Attachments: 1) February 26, 2001 Staff Report 2) Cost Benefit Analysis 3) Sewer and Water Enterprise Fund Summary with Meter Replacement. 4) Sewer and Water Enterprise Fund Summary without Meter Replacement. c: Kelley Janes, Utility Superintendent GSENG\TERESA\staff reportsXataff report-2-2 6.doc CITY OF CHANHASSEN 2001-2005 Capital Improvement Program Sewer & Water Enterprise Fund* postponing well #9 & including meter replacement 2001 2002 2003 2004 2005 BUDGET BUDGET BUDGET BUDGET BUDGET BEGIN CASH BALANCE 5,462,631 5,569,881 5,692,421 6,075,463 6,481,426 Operating Revenue Operating Expenses 2,697,400 2,805,296 3,147,508 3,273,408 3,404,344 2,565,150 2,667,756 2,774,466 2,885,445 3,000,863 NET INCOME (LOSS) FROM OPERATIONS 132,250 137,540 373,042 387,963 403,482 OTHER SOURCES & USES Interest Earnings Special Assessments TOTAL OTHER SOURCES 273,132 278,494 284,621 1,500,000 865,000 315,000 1,773,132 1,143,494 599,621 CAPITAL OUTLAY (not incl in oper budget) Sanitary Sewer 810,000 Water 1,780,000 Street Projects 540,000 TOTAL CAPITAL OUTLAY 3,130,000 495,000 525,00© ,105,000 3,580,000 ! ,600,000 303,773 850,000_ 1,153,773 324,071 560,OOO 884,07t 175,000 560,000- 1,557,000 4,050,000 4,i05,000 1,732,000 4,610,000 NET OTHER SOURCES & USES BOND PROCEEDS (Initial Estimate) (1,630,000) (735,000) (3,790,000) (882,000) (4,050,000) 1,605,000 720,000 3,800,000 900,000 4,000,000 END CASH BALANCE 5,569,881 5,692,421 6,075,463 6,481,426 6,834,908 * Combined Funds 700-Sewer and Water Ent & 710-Sewer'and Water Exp as shown in the adopted ClP Additional $230K revenue in 2003 from meter replacements CITY OF CHANHASSEN 2001-2005 Capital Improvement Program Sewer & Water Enterprise Fund* 2001 2002 2003 2004 2005 BUDGET BUDGET BUDGET BUDGET BUDGET BEGIN CASH BALANCE 5,462,631 5,569,881 5,692,421 5,793,463 5,906,146 Operating Revenue Operating Expenses 2,697,400 2,805,296 2,917,508 3,034,208 3,155,576 2,565,150 2,667,756 2,826,466 2,939,525 3,057,106 NET INCOME (LOSS) FROM OPERATIONS 132,250 137,540 91,042 94,683 98,471 OTHER SOURCES & USES Interest Earnings Special Assessments TOTAL OTHER SOURCES 273,132 278,494 284,621 289,673 295,307 1,500,000 865,000 315,000 850,000 560,000 1,773,132 1,143,494 599,621 1,139,673 855,307 CAPITAL OUTLAY (not incl in oper budget) Sanitary Sewer 810,000 Water 575,000 Street Projects 540,000 TOTAL CAPITAL EXP 1,925,000 495,000 525,000 175,000 560,000 1,585,000 3,580,000 1,557,000 4,050,000 2,080,000 4,105,000 1,732,000 4,610,000 NET OTHER SOURCES & USES (425,000) (1,21 5,000) (3,790,000) BOND PROCEEDS (Initial Estimate) (882,000) END CASH BALANCE (4,050,O00) 400,000 1,200,000 3,800,000 900,000 4,000,000 5,569,881 5,692,421 5,793,463 5,906,146 5,954,616 * Combined Funds 700-Sewer and Water Ent & 710-Sewer and Water Exp as shown in the adopted CIP Additional Employee in 2003 CITYOF CHANHASSEN 690 City Center Drive, PO Box 147 Chanhassen, Minnesota 55317 Phone 612.937.1900 GeneraI Fax 612.93Z5739 Engineering tax 612.937.9152 i Public Safety Fax 612.934.2524 Web www. ci. chanhassen, mn. us MEMORANDUM TO: Scott A. Botcher, City Manager FROM: DATE: SUBJ: Teresa J. Burgess, Public Works Director/City Engine.ef~ February 26, 2001 Discussion of Contract for Meter Replacement Program It is recommended that' the City Council approve a consultant contract for meter replacement and radio read installation with US Filter in the amount of $1,267,701.45. This contract is on a per each basis. The number of units necessary has been estimated based on water billing information supplied by the City's Finance Department. US Filter is the current supplier for the meters and readers installed by the City. Because of inventory and maintenance issues, the City only uses one supplier for meters and readers. Use of US Filter will result in both a cost savings to the City and increased convenience to property owners. Using existing City_s~aff would require significant overtime. US Filter hires local utility personnel to do the work on a part-time basis, which is less expensive than overtime. In addition, the work can be done in the evening and on weekends when it is more convenient for most homeowners. This contract will accomplish two major goals for the City: 1. Improve meter read accuracy. 2. Reduce meter read time. As meters age, they run slower. Mineral build up in the meter further reduces the accuracy of the meter. The older meters do not register all of the water passing through them. This means that the City is supplying more water than is being billed, normally without the property owner's knowledge. A review of the City's water production shows a significant loss of revenue. The majority of this discrepancy is through meters not recording the actual water use. (Note: The decrease from 1999 to 2000 in the amount of water lost is most likely due to the sprinkling restrictions in late summer of 2000.) Increased meter accuracy has two effects: o The property owner is billed for all of the water used. The property owner is aware of how much water is being used. This often results in conservation efforts by the property owner. (One drawback of the meter change out is that many property owners are not aware of the amount of water they are using. More accurate meter Scott Botcher February 21,2001 Page 2 reads will undoubtedly result in higher water bills for many properties in the City.) The City currently uses a combination of touch meter reader and manual read (similar to a car odometer). These two systems have some major drawbacks that radio reads will eliminate: An employee must physically touch the reader pad with an electronic reader or manually enter them on a keypad on the meter reader. Meter billing in the city of Chanhassen is don. e on a quarterly basis. One-third of the city is read each month. The monthly reading requires approximately 1 FTE (full-time equivalent). The radio read takes approximately 4 hours per month for the entire city. This reduction in staff time will allow the City to continue to operate with a small utility crew as well as improve the billing accuracy by insuring timely readings. . The reader pad is connected to the meter by a wire. Wiring the connection is a time intensive process. In addition, the wire is often damaged during construction or renovations done by the homeowner. The wire is not necessary for the radio reader. During cold weather, the generator in the reader pad can fail to register the signal from the meter in the house. It is common when the City does a final meter read for a home sale to find that a significant amount of water has been recorded by the house meter, but not by the reader pad. The City does not back charge of this water usage. The radio reader is inside the home so it does not have the cold weather problem. 4. Property owners do not like the reader pad on the side of their home. There is no need for the reader pad with radio readers. A review of the revenue losses show that the meter replacement will pay for itself in 4-5 years. While meter replacement will not eliminate the water loss, it will reduce the loss and increase the City's ability to pinpoint other losses. Public Works is proposing to delay construction of Well 9 to offset the immediate costs of the meter replacement, but this will only cover 1/2 of the total estimated cost. Well 9 is scheduled for $65,000 in 2001 and $480,000 in 2002. This leaves a shortfall of $722,701.45. This amount is proposed to be a combination of Utility Expansion Funds and Existing Budget. Attachments: 1) Proposal from US Filter. 2) Summary of Chanhassen Water Loss. c: Kelley Janes, Utility Superintendent G:\ENG\TERESAXstaff reports'staff report-2-26.doc Job Name: CHANHASSEN METER PROJECT Location: CHANHASSEN Customer: CHANHASSEN UTILITY DEPT Engineer: Bid date: 2/20/01 Seq# Qty Description 20 3,285 30 200 40 75 50 25 60 15 5/8x3/4 SRII ECR Meter 1000g 3/4 SRII ECR Meter 1000g 1 SRII ECR Meter 1000g 1 1/2 SR Fig ECR 1000g 2 SR Fig ECR 1000g 8O 5,400 Sensus MXU Model #505 100 110 1,800 MXU INSTALLATION 3,600 METER AND MXU INSTALLATION Salesman: PAUL THOM Branch: USFILTER- EDEN PRAIRIE Phone: (952) 937-9666 Fax: (952) 937-8065 Mobile: (612) 597-8515 Units Price Ext. Price EA 75.00 246,375.00 EA 97.00 19,400.00 EA 138.00 10,350.00 -- EA 309.00 7,725.00 EA 432.00 6,480.00 EA 125.00 675,000.00 EA 35.00 63,000.00 EA 45.00 162,000.00 ALL QUANTITIES ARE ESTIMATED Bid Totals Sub Total $1,190,330.00 Tax $77,371.45' Bid Total $1,267,701.45 Date Printed: 2/20/01 "Provided for the exclusive use of US Filter customers" Page No. 1 Citv of Chanhassen Water Usage and Billing Water Rate 1.30 Sewer Rate 2.60 Total Rate 3.90 Total Water Pumped Total Water Billed Total Water Loss 1997 1998 1999 2000 Total 751,222,8OO 685,219,000 63,403,800 801,342,250 731,603,000 69,739,250 854,O28,40O .. 782,636,00O 70,092,400 895,567,05O 859,600,000 34,947,050 3,302,160,500 3,059,058,000 238,182,500 Revenue Loss 247,275 271,983 273,360 136,293 928,912 Other Factors Relatin.q to Cost Reading Costs 100% Accurate Reads (NO RE-READS) One Meter Reader for 4 hours PER MONTH 30 day period on water and sewer bills are possible Decreased billing time Greater Accountability Customer Service and Satisfaction No entry onto property No Workman Compensation Issues Cash Positive in year 5 Major Component of DNR Conservation Plan Mar 06 O1 02:~6p JRME$ C, GRILLO (763] 27~-0352 ~. 1 Sensus Technologies, Inc. Financial Benefits Analysis for City of Chanhassen 1. Year Replacement Program of I, I 1/2, 2, .5/8 Inch Meters- March 6, 2001 Prepared by: Jim Grillo Invcnsys Metering Systems 19598 Ouirm Circle NW Elk River. MN 55330 (763) 241-6957 --. j im.g r i I I o(.i.t?,i ms. invensys.com Data Submitted By: Kelly $,'m~s Superintendent Mar OG O~ 02:46p ~RMES C. G~ILLO [?G3J 874-0358 p,8 City of Chanhassen Financial Benefits Analysis Ex(scutiv¢ Su~u'I~ary All estimates are based on a 20 year analysis computed from input submitted by City ol-' Chanlnassen. To equate the value of benefits received in each of the 20 years, we have calculated its Present Value by putting the cash flow t'rom cacla year into its equivalent in today's dollars. Summary of Financial Improvement Present Value at 7.00 % Revenue increase Repair Savings Meter Reading and Billing Savings TOTAL BENEFITS: $6,543,936 $3,435,917 $788,526 $424,990 $693,399 $376,203 $8,025,861 $4,237,110 Net Outlay for Equipment. AMR Costs Installation Costs TOTAL COSTS: TOTAL NrRT RENEFIT,q: $1,04t,007 $1,049,297 $293,936 $169,967 $226,762 $226,762 $1,561,705 $1,446,026 $6,464,156 $2,791,084 It is estimated that the cash tlow from thc: repl~c, ement/cnnver.~ian prnLt, r;~m will he pc~.qitive beginning in Year 2. The payback on meters, conversions and in.stall,'~ricms, totaling $1,561,705 is esfimal, ed at 5 years 10 months. Map 06 O10~:47p JRMES C. GRILLO (763) ~74-0352 p.3 Year 1 ( 2 3 4 5 6 7 9 10 City of Chanhassen Fi ancial Benefits Analysis Executive Sumanary Annual Net Cash Flow $987. 901) Year 11 $300,062 .12 $309,495 13 ' $319,214 14 $328,85d 15 $338, 969 16 $351, 079 17 $275, '/45 18 .$285, 846 19 $400, 891 $4.].3. 279 $4~5. 775 $438, 941 $453 , 552 $468,647 $484, 55~ $500,v3a $517, 39~ Summary of Input and Assumptions 1 Year Replacement Program Of 1, 1 1./2, 2, 5/8 Inch Meters Average Accuracy of Meters to be Replaced: Average Annu.-~] Wat~.~ Bill: Number of Meters Repaired per Year: Cost per Meter for Reading alld Billing: Number of Readings per Year: Aveeage Installation Cost per Meter: avpw~g~ Tnstallation COS~ Der Conversion: Average I~snallation Cos~ per ASR Ingerface Device: Average Unit Meter Cost: Average Unit CoBversion cost: Average Unit AMR Interface Device Cost: Your estimated co~ for the Replacement/Conversion Program: ],715 Meters Less Scrap Value $276,007 1,800 Conversions $90,000 0 MiSs, 5,400 MXUs and 0 MultiRcads Auxiliary Equipment $675,000 $0 Total Equipment Costs: $1,041,007 InutallatioIl Chnr~: TOTAL EQUIPMENT an4 INSTALLATION: $226°762 $1,267,769 * This estimated cost represents reading and traJ]slation eqmpmcnt to convert readings ir) computer compatible input. 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