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Home My WebLink AboutIR 8433 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8433 To the Mayor and Members of the City Council October 1, 2002 Page 1 of 3 SUBJECT: El Rancho Estates (FW3) Cost/Benefit Analysis fats BACKGROUND: On June 18, 2002, the City Council was briefed on the cost benefit analysis for the Far West Zone. Within the analysis report, the subdivision of El Rancho Estates was identified as study area Far West 3 (FW3). During the second public hearing for proposed limited purpose annexation on August 27, 2002, held at R. D. Evans Community Center, Mr. Randall McCarty and Mr. Gary Havener presented a revised cost benefit analysis for the El Rancho Estates area identifying the following: Total infrastructure costs to be invested in El Rancho Estates totals $2.186 million for 53 existing residences at $41,248 per residence. • Break even for the City of Fort Worth will occur in 43 years with many of those years having cash flow deficits in excess of$100,000. In Mr. McCarty's original analysis, projected revenues from water and wastewater charges were not included. On September 11, 2002, Mr. McCarty issued a revised revenue/expenditure difference spread sheet. For the purpose of this reconciliation report comparing their analysis and the City's prepared cost/benefit analysis, this report is being divided into the appropriate service funds (General and Water). GENERAL FUND: The Development Department's report estimated capital needs for the El Rancho Estates area totaling $1,030,500. This amount was roughly 44% of the estimated capital needs for the entire west zone. The entire $1,030,500 total was associated with street improvements. Following the assumption that only 25%for the City's capital needs are met during any individual Bond Program,the amount of$500,000 was utilized in the staff's prepared cost/benefit analysis. Mr. McCarty's ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS - INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8433 Tr% To the Mayor and Members of the City Council October 1, 2002 Page 2 of 3 SUBJECT: El Rancho Estates (FW3) Cost/Benefit Analysis analysis assumed the entire $1,030,500 would be a part of the next Capital Improvement Program and the Capital Debt services begins in FY 2005/06. Applying Mr. McCarty's same assumptions regarding an increase in revenues and expenditures, and the City's assumption that only 25%of all capital needs are met with any given bond election, staff has prepared a revised Revenue/Expenditure difference table for the general fund, This revised sheet for El Rancho Estates (only) is attached for your information. In considering Mr. McCarty's analysis it is important to note that the payback period of 28 years presented by the Water Department was for the Far West Zone as a whole and did not isolate the El Rancho Estates area. As a regional water and wastewater system, the City of Fort Worth designs system extensions to provide service using a comprehensive planning approach. Mains are designed to serve the entire planning area, as opposed to an individual subdivision. For this reason, the expense associated with the system extension depends on revenues from the larger area to recover costs. The City's cost/benefit analysis was determined on a long-term basis and assumes that most expansions of the system eventually lead to ftiture In general, Mr. McCarty's analysis reflects the same accounting procedures undertaken in the City's analysis. However, some factors were not included in Mr. McCarty's revenue and expenditure estimates. There are three primary revenue factors that account for the difference in the payback period for El Rancho Estates. First, Mr. McCarty's revised cost benefit analysis does not account for all anticipated revenue sources. Although Mr. McCarty's revenue projections correlate to the monthly billing revenues anticipated by the Water Department, additional revenue from impact and tap fees were not included in his estimates. Impact and tap fees represent a significant revenue source, as residents tie in to the system and new development occurs. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS ' INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8433 To the Mayor and Members of the City Council October 1, 2002 Page 3 of 3 r SUBJECT: El Rancho Estates (FW3) Cost/Benefit Analysis rats Another significant difference is the estimated rate at which current residents may choose to tie into the water and wastewater system. The City assumed that the existing 53 residences would connect to the system over a three-year period. Mr. McCarty's model anticipates that only 50% of residences (26.5 households)will tie into the system over an eight-year period. Mr. McCarty's analysis maintained a constant water and wastewater rate over the next 42 years. A 1.5% annual adjustment in water and wastewater rates is assumed in the City's analysis. Finally, Mr. McCarty's expenditure analysis averaged the costs of the "approach mains only" scenario and the scenario that provides for the extension of all lines. Both of these scenarios included costs for the approach mains, which may result in redundancy of estimated expenditures. Additionally, the costs for the on-site mains should be reduced by 50% based on his assumption of a partial build out. Should you have any questions, please let me know or contact Bob Riley at 871-8901. zi Gary W. Jackson , City Manager , , ISSUED BY THE CITY MANAGER FORT WORTH, 'TEXAS C F H r N d m O N � m m to d In m �dW m n AY h N•- M m N mm y N O M M �'M tp O N N IWPi N 9mi O � b pmi� O d C N •- W � unf M aNa�� d 0 Iii M °i p y d C p LL M N N q re M y o 8 m w a lY..n N r' ° # E S rn� L a n i•'N'. 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