Leon Valley, Texas Case Study

Showing the “Why” Behind Utility Rate Increases

Customer since 2018 | Population: 11,485

CHALLENGES

  • Insufficient rates not covering operating expenses or capital renewal
  • Playing catch-up from years of underfunding
  • Lack of understanding of enterprise fund’s financial forecast by elected officials
  • Public resistance to raising rates
  • Time-consuming, expensive process of hiring consultants

RESULTS & BENEFITS

  • Easy-to-understand visual representation of rates, rate increases, and how they affect capital improvements
  • Smaller, more regular rate increases
  • Full cost recovery of operating expenses
  • Confidence in the ability to fund future capital renewal
  • Better conversations with elected officials and increased public understanding of the value and cost of water delivery

BACKGROUND

The City of Leon Valley, Texas, is a suburb North West of San Antonio, home to approximately 11,000 residents. The City of Leon Valley provides water services to approximately 3,000 connections, about 90 percent of which are residential. The remainder of the population receives water service from the San Antonio Water System, which also provides wastewater treatment for Leon Valley. This complexity of service provider and lack of economies of scale has historically proven problematic for Leon Valley, as is the case with many small municipalities.

"We were not recouping enough to pay for all of our expenditures, in addition to updating infrastructure."
Yvonne Acuña
Leon Valley, Texas

THE CHALLENGE

Yvonne Acuña, Utility Billing Clerk for the City of Leon Valley, describes that when she joined the City’s Finance department, previous Public Works administration was responsible for utility rate setting. Best estimates for rate increases were made; however, the true cost of water service delivery was not known, and over the years it became apparent that small and infrequent increases would not be sufficient to support the replacement of aging infrastructure. With two water wells failing, the City was forced to issue two million in bond debt.

Following the failed wells, the City hired an external consultant to help diagnose the true, long-term needs of their water system and develop a plan to repay the bond. While the recommended rate increases, 3% over three years, partially addressed their system’s underfunding, this new approach was still infrequent and lacked depth. “Every couple of years we would hire them, and they would look at it, we would raise the rates, we’d move on,” describes Acuña.

Without a clear understanding of the financial state, and future, of Leon Valley’s water system, Staff were challenged with educating elected officials on the need for ongoing rate increases. And these increases were initially not well-received by ratepayers either. “But we had to,” says Acuña, “because we were not recouping enough to pay for all of our expenditures, in addition to updating infrastructure. And so that’s where we were at.”

“The Waterworth system is great, you hold it all in your hands."
Yvonne Acuña
Leon Valley, Texas

HOW WATERWORTH HELPED

With Waterworth’s help, Leon Valley has now adopted a better, more accurate approach to the financial management of Leon Valley’s water system. Their first “win” was to create a long-term financial model. “That was really eye-opening,” says Acuña, “We just entered our data, created our model, and could see this is where we are”. She adds, “the Waterworth system is great, you hold it all in your hands. Whoever in the City or your entity is in charge of your water rates can get an accurate picture daily.”

Waterworth has also led to better conversations with elected officials. Acuña shares, “I’ve met with the City Manager and some of the City Council members prior to a council meeting and I pulled up Waterworth and I showed them. I said, here we go, without getting into all the detail, showed them the rates. Either 3%, 8% or 10% increase. And so that was really helpful for them too, to understand. This graph has our expenditures, it has our capital, and it tells us where we need to set the rates to be successful. So that was our aha! Lightbulb moment.”

As a result of these conversations, Leon Valley has gained the confidence that decisions made today will not only allow support recovery of operating expenses but also allow them to save for infrastructure replacement in the future.

“The ease of obtaining very knowledgeable support is the main thing. You know, anyone can offer support, whether it's worth anything is another thing.”
Yvonne Acuña
Leon Valley, Texas

A BETTER ALTERNATIVE

They say you can’t have your cake and eat it too – but when it comes to utility rate setting, Leon Valley might disagree. Staff are now equipped to financially manage their water, wastewater, and stormwater systems in-house, while still receiving the peace of mind and expertise of professional support.

“The ease of obtaining very knowledgeable support is key,” shares Acuña. “You know, anyone can offer support, whether it’s worth anything is another thing. With Waterworth, knowledgeable support is right at your fingertips. It’s easy, I don’t have to call and jump through hoops.”

And for small, resource-restricted communities, ease of use, clarity, and time savings are critical. “I think what’s great about Waterworth is that I don’t have to wait for a consultant. I don’t have to compile all kinds of information. As long as my model is maintained, I can go in and get a snapshot of what I’m looking at. And so that’s what I enjoy, it’s the convenience of being able to get the information I need in a timely manner.”

Waterworth also simplifies data collection. You start with the easiest to acquire information – last year’s financials, about 1 hour to gather – and then over time, load more difficult to obtain datasets, such as billing data, to refine your model.

“A lot of us wear many hats, especially a small entity like Leon Valley, and it’s made my life a lot easier, and in the process has educated everyone, as opposed to just throwing some numbers up there and saying, okay these are what our rates need to be. I can show them the graph and they immediately understand why. This is an eye-opener for them.”

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