Chapter 5.70
WATER SUPPLY DEVELOPMENT FUND
Sections:
5.70.010 Water Supply Development Fund, Location
5.70.020 Oversight and Sources of Funding for Water Supply Development Fund
5.70.030 Monitoring and Adjustments to Water Supply Development Fund
5.70.040 Use of Water Supply Development Fund, Distribution
5.70.010 Water Supply Development Fund, Location
The Water Supply Development Fund is established and shall be held by King County and invested in the King County Investment Pool Plus investment program pursuant to CWAC 5.65.035. [Res. 2021-10 § 1].
5.70.020 Oversight and Sources of Funding for Water Supply Development Fund
A. Board Oversight. Contributions to the Water Supply Development Fund shall be subject to Board approval during the biennial budget process and managed, monitored and adjusted by the Board, pursuant to CWAC 5.70.030, including regular periodic review of status and approval of transfers to or from the Water Supply Development Fund from the Planned Sources of Funding and utilizing the Shared Benefits strategy in this section.
B. Planned Sources of Funding. Planned contributions to the Water Supply Development Fund shall be identified and budgeted through the biennial budgeting process and the long-term financial forecast and shall derive from the following three primary sources:
1. Regional Capital Facilities Charges contributions. RCFC contributions shall be determined based on the general adequacy of the Construction Fund for planned near-term capital outlays (including budgeted items for capital risk contingencies). To the degree that the Construction Fund balance plus available capital funding over a six-year period exceeds planned capital needs for that same period, corresponding transfers of RCFC revenues to the Water Supply Development Fund shall be budgeted and made.
2. Demand Share contributions. The 20-year financial forecast shall identify projected annual contributions that shall help meet equity funding objectives while also smoothing rate increases over time. The forecasted amounts shall be used in the biennial budget process to identify and authorize specific annual contributions from the Operating Fund to the Water Supply Development Fund.
3. Investment earnings. Investment earnings on the Water Supply Development Fund balance shall be credited to and accumulated within the Water Supply Development Fund.
C. Shared Benefits. Capture of unanticipated or unplanned funding sources or opportunities. In the event of unplanned or unanticipated available financial resources, a concept of “Shared Benefit” shall be employed to divide the use of any such windfalls equally between mitigation of current financial needs and accumulation for water supply development.
The Shared Benefit standard shall provide benefit to Members from new cost savings or new revenues while also increasing Water Supply Development Fund contributions. In each case that arises, 50% of the revenues or savings shall remain available for current operating and capital uses, thus helping offset requirements from Member charges, and 50% shall be budgeted for transfer to the Water Supply Development Fund. For one-time net gains, this shall be a single transaction, while an ongoing or recurring gain shall be divided equally for its duration. Once a recurring revenue is dedicated to the Water Supply Development Fund through the Shared Benefit approach, it shall remain dedicated as an incremental annual contribution, in addition to planned sources of funding. [Res. 2021-10 § 1].
5.70.030 Monitoring and Adjustments to Water Supply Development Fund
For the purposes of the Board’s (a) monitoring of equity funding progress relative to the capital funding objective and (b) modifying or adjusting contribution levels as expected needs or schedules change, for each biennial budget process, Cascade shall present to the Board a summary of the Water Supply Development Fund including the following elements:
1. Water Supply Development Fund balance and status as compared to prior forecast.
2. Planned contributions to the Water Supply Development Fund included in the proposed biennial budget, including any recurring Shared Benefit contributions.
3. Planned changes to the Water Supply Development Fund balance for the biennium.
4. Forecast of the Water Supply Development Fund contributions and accumulation to and through the period of development of the Water Supply Project, and evaluation of sufficiency in comparison to the minimum equity funding required by fiscal policy and comparison of this forecast to the prior forecast estimate.
5. Proposed remedial steps, if any, in the event that projected funding is insufficient to satisfy fiscal policy requirements or maintain progress already made to exceed those minimum requirements.
6. An assessment of changes, known or potential, to project scope, cost or schedule that could materially alter funding requirements. Based on this, proposed modifications, if any, to the funding strategy to conform to those changing conditions. [Res. 2021-10 § 1].
5.70.040 Use of Water Supply Development Fund, Distribution
A. Use. Except as provided in subsection (C) of this section, funds in the Water Supply Development Fund shall be used only for the development of the Water Supply Project as set forth in the funding plan in subsection (B) of this section.
B. Funding Plan. When development of the Water Supply Project is imminent, but in no case later than the budgeting process for the biennium in which work shall materially commence, Cascade shall, in consultation with Cascade’s financial advisors and other consultants, develop and present to the Board a funding plan for its consideration of the Water Supply Project capital funding, and its authorization of related financial activities including bond issues, rate increases and use of the Water Supply Development Fund. The funding plan shall:
1. Address the planned and scheduled use of equity funds, loans, grants, and revenue bonds during development of the Water Supply Project.
2. Outline a schedule for the use of equity and debt resources that enables rational and timely access to bond markets, adequate funding throughout the Water Supply Project construction period, and a reasonable rate strategy to transition Member charges to a level that fully funds the development of Water Supply Project.
3. Include reasonable contingencies for unanticipated cost increases and schedule alterations.
4. If grants or low-cost loans cannot be confidently relied upon, address a structure without those sources, but with flexibility to accommodate the benefits of such funding sources if and when they are secured.
C. Exceptions. If funds in the Water Supply Development Fund are determined by the Board to not be needed as planned or to the extent anticipated or to not be protected for their intended use, then those funds shall be distributed as directed by the Board under subsection (D) of this section. Examples of exception circumstances may include, but are not limited to:
1. A major change in the Cascade supply strategy that reduces, delays or eliminates the need for the Water Supply Project.
2. Water Supply Project partnerships that materially reduce the Cascade funding obligation.
3. Major assistance in the form of grants or loans that materially reduces the Cascade funding obligation and rate impacts.
4. Adverse actions by other governmental agencies or persons potentially targeting Cascade and its funds for unintended uses.
5. Other causes that alter Cascade’s intended funding of water supply development as determined by the Board.
6. Liquidation of all or part of the Water Supply Development Fund.
D. Alternative Use or Distribution. In the event of a determination by the Board that any portion of the Water Supply Development Fund is not to be used for the Water Supply Project, the Board shall direct the use or distribution of funds for a reduction in Demand Share Charges, distribution to Cascade Members, or as directed by the Board. In the event of distribution to Members, any such distribution shall be made in proportion to the total payments of Demand Shares and RCFCs made by each Member in the preceding ten calendar years. [Res. 2021-10 § 1].