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Comparison of Nashua Residential Sewer Rates with Selected
Regional Rates (2020)

Estimated Quarterly Household Bill based on water consumption of 20 CCF

teeny Ci Fee per CCF Household Quarterly Bill

Nashua $31.94 $2.36 $79.14
Manchester $21.18 $3.47 $90.58
Concord NA $5.01 $100.20
Keene $77.70 $5.31 $183.90
Portsmouth NA $13.77 First10 CCF; then $289.10
$15.14 per CCF
Salem, NH NA $4.85 per CCF $96.90
Lowell MA NA $4.85 First 50 CCF $96.90
Average Quarterly Bill for Above Cities (not including Nashua) $142.93
2018 NH State Average Quarterly Sewer Bill** $169.61

** Source: UNC Environmental Finance Center, NH Wastewater Rates Dashboard

Proposed Residential Sewer Increases 2021 through 2023

A 20 percent increase in sewer user fees in 2021 followed by a 15 percent increase in 2022 and no increase
(0 percent) in 2023

sitet Oe fe

Rate per CCF $2.36 $2.83 $3.26 $3.26

Quarterly Flat $31.94 $38.33 $44.08 $44.08
Charge

Average $79.14 $94.97 $109.22 $109.22
Household
Quarterly Bill

Increase iN ——s === === === $15.83 $14.25 $14.25
Average Quarterly
Household Bill

Average Increase _~_ --------------- $63.31 $57.00 $57.00
in Household
Annual Bill

* The estimated average quarterly household bill assumes 20 hundred cubic feet (ccf) of water is used per quarter which equates to
about 170 gallons per day.

Sewer Bill Compared to EPA Affordability Metric

EPA uses 2 percent of Household Income as the threshold of sewer bill affordability

2.5%
2.0%
15% 1.4% 1.4%
1.2%
1.0%
1.0%
0.8% 0.8%

9 0.6% 0.6%

a 5 0.5% oe ee nay 0:5% 0.5%
- 7 alk i B of |
0.0%

20th Percentile 40th Percentile 60th Percentile

mag pct. HHI 2020 mam pct. HHI 2021 mam pct. HHI 2022 mam pct. HHI 2023 = EPA Affordabilty Thresholds

Primary Drivers of Required Rate Increases

Major Cost Drivers are associated with expenditures on required Capital Projects

¢ Current and future required capital project investments are substantially increasing

annual debt service costs:
¢ Annual Debt Service is projected to increase from $5.1 million in FY2020 to $8.4 million in FY2025 (10%
average annual increase)

¢ Annual Operation and Maintenance expenditures are projected to increase at a modest rate of 3 percent
per annum during same period

¢ Rate Increases are the only stable source of revenue available for cover the growing
debt service costs:

¢ Almost all projected revenue is generated by User Fees
— In FY 2020, 94% of Wastewater Revenues were derived from retail user fees
— Asmall amount of Wastewater revenue are collected through Sewer Permit fees

Hazen 7

Planned Future Major Capital Expenditures

¢ More than $52 million in upcoming required capital investments from FY2020-
FY2025:

Pump Stations Rehabilitation (Phase 1 and Phase 2): $10.86 million

CMOM Plan: $5.20 million

Sewer Infrastructure Program: $30.40 Million

Wastewater Treatment Primary Tanks Upgrades: $3.90 million

Phosphorus Removal and Storage Facility: $1.00 million

¢ Wastewater Plant Booster Stations: $0.80 million

Nashua Capital Funding Strategies to Minimize Ratepayer Impacts

¢ Nashua employs a mix of financing strategies to minimize ratepayer impacts:

¢ Maximize use of Federal and State Financing Loan Programs to lower debt service costs
¢ The City will access low interest SRF financing as much possible (2% interest rate as of 2019)
— CMOM Program and Pump Stations are being financed through SRF
— Other Projects will be financed through a mix of Bond issuances and SRF financing
¢ Fund smaller capital projects through cash where practical.
¢ Maintain capital equipment reserve fund to reduce year to year rate impacts.

¢ Stringently manage operation and maintenance costs to keep annual cost increase to
inflation growth.

Integrated Planning Framework: Reducing future costs

¢ Nashua is currently developing an Integrated Plan Framework (IPF) to comply

with its Consent Decree with the US Environmental Protection Agency:

¢ Prioritizes capital projects that best address the most pressing system needs as
determined by Nashua using City-developed criteria.

¢ Defers capital projects that are determined to confer fewer benefits for similar investment
costs.

¢ IPF smooths the “cost curve” and can mitigate future rate increases.

Conclusions

¢ Planned rate increases cover the costs to finance the capital investments that are required
to comply with regulatory mandates and to maintain the high level of services provided by
the City to its ratepayers.

¢ Despite the increases, Nashua’s sewer charges in 2023 will still be lower than its peer
utilities charge in 2020 and well below the 2018 NH State Average Household Quarterly Bill.

¢ Nashua rates are and will remain affordable to all major household income brackets based
on EPA’s 2 percent affordability metric.

¢ Nashua is developing an IPF to further reduce the rate impacts of its required capital
investments.

Board of Aldermen 12-08-2020 Page 20

Alderwoman Lu
| apologize, | thought | knew.

Attorney Bolton

A “yes” vote if it prevails will cause the Resolution to be back before the Board with a motion to override the
veto in order. A “no” vote, if that were to prevail would not allow further consideration of this Resolution and
the veto would stand.

Alderwoman Lu

Thank you.

(Roll Call Resumes)

A viva voce roll call was taken which resulted as follows:

Yea: Alderwoman Kelly, Alderman Dowd, Alderman Caron, Alderman Clemons,
Alderman Tencza, Alderman Schmidt, Alderman Laws, Alderman Cleaver,

Alderman Harriott-Gathright, Alderman Wilshire 10
Nay: Alderman Lopez, Alderwoman Lu, Alderman Jette 3
Abstain: Alderman O’Brien 1

MOTION CARRIED

MOTION BY ALDERMAN TENCZA TO OVERRIDE THE MAYOR’S VETO OF R-20-088 AS AMENDED,
BY ROLL CALL

ON THE QUESTION

President Wilshire

The motion is to override the Mayor’s veto as amended, further discussion? Alderman Schmidt?
Alderman Schmidt

Thank you, Madam President. | have gotten very many letters concerning this, very many people are
saying, we love the Fire Department, we honor their service, they deserve this raise. I’ve heard that so
many times. But! am also hearing that the one segment that the Mayor has pulled out to say this is unfair,
most people are saying that the Mayor has this right, different options should be made at this point. | know
this is late in the game and | apologize, | have not been involved in any of the two years’ worth of
discussion over this. | haven’t been involved, | don’t even know the history before that because | know
many times the firemen were set aside in favor of trying to deal with something that was urgent. | don’t
think we should set aside the raises, | think the raises are past due and | know that there is no way we
should ever even look at that part of it.

| am wondering if this part can be set aside and replaced with something at this point. I’d leave this
question up to our Corporate Counsel because | do not know if at this point in time we could simply make
that change, we could get the firemen what they need now and we could make sure that the health
insurance portion isn’t going to continue to (inaudible) us. So may | ask that question of our Attorney?

Board of Aldermen 12-08-2020 Page 21
President Wilshire
Yes.

Attorney Bolton

If the Mayor’s veto is allowed to stand, what is vetoed from the contract is the provision that (audio cuts
out).

Alderman Schmidt

Oh my goodness, have we lost him?
President Wilshire

| think so.

Alderman Lopez

That was terrible timing.

Alderman Schmidt

Not now, seriously, | need an answer. Oh no.

Alderman Harriott-Gathright

Sometimes those things happen when you really need it to move on.
President Wilshire

Yeah.

Alderman Schmidt

Yeah I’m in a really tough spot at this point.
Attorney Bolton

Hello?

Alderman Schmidt

There he is.

President Wilshire

There he is, ok?

Attorney Bolton

If the veto is upheld, what remains of the contract is everything, all of the raises except those that are
contingent upon the percentage of firefighters taking the high deductible plan. That 1% is part of what is
vetoed. Also gone is the section that writes into the contract the $3,000.00 payment for the family or two
person plan or the $1,500.00 payment toward the single person, high deductible plan.