Customer since 2018 | Population: 6,800
- 2014 consultant report identified several key issues with the city’s water system, non-compliance being just one.
- The report told them what needed to be done but not how to do it.
- As a result, the master plan that came out of that report sat unaddressed for almost four years.
RESULTS & BENEFITS
- Waterworth provided a tool for both rate analysis and long-term financial forecasting.
- Waterworth’s easy-to-understand data visualization tools helped give city staff a deeper understanding of their revenue needs and how to achieve them.
- They now have more confidence when speaking with elected officials and can garner support for rate increases more easily, allowing them to finally tackle their master plan.
Located in Central Oregon, the City of Madras is a community of approximately 6,800. The city’s Public Works department had been struggling with the implementation of a water service master plan that was generated from a 2014 independent consultant’s report. The report had identified several key issues, including compliance issues, but provided little direction on how to resolve them. The report created a sense of urgency among city staff but left them ill-equipped to spark any concrete action.
In addition, implementing the 10-15 year master plan would require rate increases to generate the needed revenue. Madras buys water from nearby Deschutes Valley Water District at a bulk rate and those rates were also going up, compounding the problem even further. But because staff didn’t fully understand the reasoning or the math behind the consultant’s findings, it was virtually impossible for them to clearly explain them to elected officials. “We couldn’t get the message across,” says Jeff Hurd, Public Works Director, “a big part of it was I didn’t understand exactly how their numbers worked, where they came from or what they were telling us.” This lack of clarity made political support for rate hikes difficult to obtain and City staff found themselves at an impasse.
By 2018, they had not yet begun to tackle the master plan. In that year, City Finance Director Kristal Hughes met the Waterworth team at the Oregon Government Finance Officers Association conference and she was immediately intrigued by the software. She says her first thought was, “Oh, my gosh — we can totally use this.”
Madras staff saw the value of Waterworth right away. They were able to quickly and easily experiment with different rate scenarios, and the impact each would have on both immediate cash flow and long-term revenue goals. Waterworth also made it easy to factor in operating expenses, whereas the consultant’s report focused primarily on capital projects. And the best part, according to Hurd was that Waterworth’s built-in data visualization tools gave him a deeper understanding. “I could speak intelligently about it,” he says, “and defend what I was asking for.”
This improved understanding has led to better conversations with elected officials. After starting with Waterworth, Madras city council approved an 11% rate increase last year, with a similar increase due to take effect in 2019. Hughes highlights, “I think the best thing is whenever we can say with confidence that if we don’t raise rates, then it is going to negatively affect our cash flow. And being able to demonstrate that quickly allows us to have better conversations both between ourselves as a staff, and also have more confidence with the council, the governing board.”
Additionally, by making it easier for staff to explain and justify rate increases to council, Waterworth’s financial visualizations also help provide elected officials with a deeper understanding. This, in turn, allows them to more clearly articulate the increases, and the reasons for them, to the electorate. “And as simple as that sounds,” says Hurd, “it just makes it that much easier. People can understand [visualizations]. If you’re not in it every day, to grasp what we’re doing is difficult. So to simplify it is a huge help.”
The City has already been able to use the revenue generated to efficiently integrate water infrastructure improvements into other projects, such as road works, while leveraging that improved cash flow to obtain grant funding to further their master plan.
A TOOL FOR TODAY, A TOOL FOR THE FUTURE
Madras now has a tool that they can use to plan for the long-term. According to Hughes, Waterworth is, “A financial forecasting tool rather than just a rate study tool.” It has allowed them to consider all expenditures and existing revenues over the next several years. From there they are able to forecast where their cash reserves need to be, then model rate increase scenarios to find the best path to meeting those revenue targets. They have now sketched out a five-year schedule of rate increases.
And they’ve done it far more easily and more efficiently than they might have with unwieldy spreadsheets. Says Hughes: “If you’re budgeting for a large organization, say with 30 funds, (which means 30 spreadsheets), then you try to apply a long-range forecast to that — oh, my. It gets cumbersome really quickly.” And if you’re trying to incorporate historical data — to identify trends, for instance — the complexity compounds exponentially. “So having it all in one place is so much easier,” she adds.
A key difference for Hughes is the way Waterworth, “Is very intentional in how it projects forward [to model different scenarios], whether the assumption is a percentage increase or a dollar amount,” to demonstrate both the immediate and long-range impact on revenues. “All of those nuances,” she says, “are easily identified within the software.”
Annual rate increases still need to be approved by council but staff remain confident. The five-year plan can be updated as circumstances change, such as obtaining a grant for a capital project, so the plan is continuously evolving, and rate increases continuously adjusted, based on current data. The data-supported conversations with council that result have more validity, and carry more weight, than those previously based on assumptions and gut feelings.
And the Waterworth support team is with Madras staff every step of the way. City staff appreciate that support is available when they need it. Not only that, Hughes points out that Waterworth support staff aren’t just experts on the software, they also have significant industry experience, so they can meet clients, “…where they are and take them to the next step… and speak to the need,” for both the current year’s rate increase and the long-range plan. “Your customer service is by far the best I’ve come into contact with,” she says.
When Madras signed on with Waterworth, the city was at a standstill when it came to water rates and system improvements. The 2014 consultant’s report had identified several issues with the city’s water system, including compliance issues, but failed to provide any direction on how to address them. As a result, their master plan sat virtually untouched for almost four years. Now the city has set a plan in motion to roll out incremental rate increases over the next five years, with the 2018 and 2019 increases already approved by council. They’ve beaten the catch-22 they found themselves in and begun to improve their cash flow and tackle their master plan.