Contributions from Developers and Others Developer contributions may consist of cash, property, water mains, sanitary sewer lines, pumping stations, fire hydrants, manholes and associated infrastructure received from developers and governmental entities. Fluctuations in the value of contributions from year to year are due to the number of development projects and the timing of when developers complete expansion projects and convey the related assets to the Authority. 2020-2019 Comparison Revenue from developer contributions decreased by $13.2 million, or 48.8%, from fiscal year 2019. Assets deeded to the Authority in fiscal years 2020 and 2019 were approximately $13.9 million and $27.1 million, respectively. 2019-2018 Comparison Revenue from developer contributions increased by $11.3 million, or 71.5%, from fiscal year 2018. Assets deeded to the Authority in fiscal years 2019 and 2018 were approximately $27.1 million and $15.8 million, respectively. Operating Expenses Operating expenses consist of personnel services, purchased resources, contractual services, materials and supplies, and other operating expenses, which consist of insurance, training, travel and rent expense. 2020-2019 Comparison Operating expenses increased $3.3 million, or 3.8%, from fiscal year 2019. Purchased resources increased $2.7 million, or 10.6%, due to increased wholesale water and sewer costs. Purchased water costs increased as a result of a higher wholesale rates and higher consumption from favorable weather and account growth. In addition, higher operating costs at UOSA resulted in a higher purchased sewer rate. Expenses related to personnel services increased by $1.3 million, or 3.3%, from fiscal year 2019. Although payroll expense declined slightly from the prior year, actuarial adjustments to post- employment benefits, such as the Service Authority’s pension plan, increased personnel expense by $1.3 million. Other operating expenses increased $670,000, or 11.1%, predominantly due to increases in telecommunication expense related to additional remote monitoring sites and an increase in the allowance for doubtful accounts. Contractual services and materials and supplies decreased by $1.3 million collectively due to the coronavirus pandemic work slowdowns. 2019-2018 Comparison Operating expenses increased $4.4 million, or 5.3%, from fiscal year 2018. Expenses related to personnel services increased by $1.6 million or 4.4% from fiscal year 2018 primarily due to changes in staffing levels and annual merit increases. Although water consumption was down due to lower demand in fiscal year 2019, purchased resources increased $960,000, or 3.9% due to an increase to the Fairfax Water wholesale rate and slight account growth year-over-year. Other operating expenses increased $873,000, or 16.9% due to increases in rent expense for additional office space and higher electricity costs during fiscal year 2019, combined with an increase of $666,000 or 6.9% in contractual services and $251,000, or 4.2%, in materials and supplies. Non-Operating Expenses Non-operating expenses consist of interest expense, payments for UOSA debt service and purchased capacity costs. Interest expense is a function of interest accruals on outstanding debt, plus or minus the amortization of bond premiums, discounts, and deferred amounts on refunding. Payments for UOSA debt service represent the Authority’s share of the annual debt obligations of the joint venture, including both principal and interest. Purchased capacity is the Authority’s purchase of rights to transmission main capacity from wholesale providers. 2020-2019 Comparison Non-operating expenses were relatively flat, down only $76,000, or 0.5%, in fiscal year 2020 as compared to fiscal year 2019. The factors impacting the decrease were a $111,000 decrease in interest expense, resulting from lower principal balances, a $56,000 increase in purchased capacity based on established amortization schedules and a $21,000 decrease in payments for UOSA debt service, based on established amortization schedules. 2019-2018 Comparison Non-operating expenses decreased by approximately $663,000, or 4.3%, in fiscal year 2019 as compared to fiscal year 2018. The factors impacting the decrease were a $456,000 decrease in interest expense, mainly resulting from lower principal balances, an $111,000 decrease in purchased capacity based on established amortization schedules and a $95,000 decrease in payments for UOSA debt service, based on established amortization schedules. MANAGEMENT’S DISCUSSION AND ANALY SIS FINANCIAL SECTION 23
Prince William County Service Authority | 4 County Complex Court Woodbridge, VA 22192
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