PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY COMMISSIONERS MEETING. DRAFT AGENDA May 22, :30 PM

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1 PLEDGE OF ALLEGIANCE PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY COMMISSIONERS MEETING DRAFT AGENDA May 22, :30 PM CONSENT AGENDA 1. Approval of Agenda 05/22/18 2. Approval of Minutes 05/08/18 Commission Meeting 05/15/18 Special Joint Commission Meeting with Port of Skagit County 3. Ratification of Vouchers 05/15/18 4. Approval of Vouchers 05/22/18 5. Recommendation to Award (Granite Construction) Repaving Township Street, South of State Route 20 AUDIENCE COMMENTS NEW BUSINESS 6. Presentation of Draft Strategic Plan BERK Consulting TREASURER S REPORT April 2018 OLD BUSINESS 7. Manager s Report NEW BUSINESS MISCELLANEOUS COMMISSIONER COMMENTS ADJOURNMENT JUDY RESERVOIR ELEVATION

2 Agenda Item #2 MINUTES OF THE REGULAR MEETING OF THE COMMISSION PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY, WASHINGTON May 8, 2018 The regular meeting of the Commission of Public Utility District No. 1 was held in the Aqua Room of the utility located at 1415 Freeway Drive, Mount Vernon, Washington, on May 8, The meeting was called to order at 4:30 PM. Those Commissioners in attendance were: Robbie Robertson, President; Eron Berg, Vice President; and Al Littlefield Secretary. Also in attendance were: George Sidhu, General Manager; Mark Handzlik, Engineering Manager, Sally Saxton, Treasurer, Peter Gilbert, Attorney; and Kim Carpenter, Clerk of the Board; Audience: Patsy Martin, Sara Young and Andrew Entrikin, Port of Skagit County, Brad Furlong, Judy Littlefield, and District Employees: Kathy White, Mike Fox, Mark Semrau, Kevin Tate, and Luis Gonzalez. Commissioner Littlefield led the Pledge of Allegiance. Commissioner Littlefield moved to approve the Consent Agenda for May 8, 2018: CONSENT AGENDA 1. Approval of Agenda 05/08/18 2. Approval of Minutes 04/24/18 Commission Meeting 3. Ratification of Vouchers 05/01/18 No Voucher Nos , Payroll Check Nos ($420,063.33) 4. Approval of Vouchers 05/08/18 No Voucher Nos ($188,116.97) 5. Project Acceptance Summersun Estates LLC (Mount Vernon) There were no audience comments. Under Old Business: 6. Manager s Report Manager Sidhu reported on the following items: The last Strategic Plan work session will be held on Friday, May 11 and the draft plan will be presented at the meeting of May 22. Presented an update regarding the Lake Samish meeting on May 4 with representatives from DOH, DOE, Samish Water District and residents of south Lake Samish. To coincide with American Water Works Association (AWWA) Drinking Water Week, community tours of the WTP and Judy Reservoir will be held tomorrow starting at 11:30. Reservations are full and depending on success, will possibly schedule such tours on an annual basis. s were sent to all staff and Commission regarding staff presentations and competitions at the annual PNWS-AWWA spring meeting. The Top Ops team Commission Meeting 1 May 8, 2018

3 Agenda Item #2 including Gary Tollefson, Emilia Blake and Riley Smith won their competition and will compete at the annual AWWA conference in Las Vegas. 7. Quarterly Report IT Department IT Manager Chrysler presented the quarterly report for the IT Department, including updates regarding the software and network updates, linked in learning, unfunded DOH security improvements, Skagit County Community Development grant application for Cook Road to Sedro-Woolley fiber, PSE nondisclosure agreement, Cayenta, Office 365, 2019 budget, and the last group of draft IT Department AP&Ps. Manager Sidhu indicated that all the draft AP&Ps have been provided and will be revisited in June along with associated policies. Discussion ensued regarding various aspects of the updates presented. Under New Business: 8. Modification #01 to Work Order #011 with GeoEngineers - Action Design Work and Construction Support of Conway I-5 Crossing Project Commissioner Berg moved to authorize the General Manager to execute Modification #011 with GeoEngineers, Inc., in the amount of $67, to provide design work and construction support services related to the Conway I-5 Crossing Project. Commissioner Littlefield asked about the fiscal impact and where the funds are coming from; Manager Sidhu replied the Revenue Fund. The motion passed. 9. Policy #1028 Code of Conduct Action Revision from Administrative Practice & Procedure#2014 to Policy Manager Sidhu reviewed the proposed policy stating it used to be AP&P #2014; however, it seemed some language was better suited to policy. He stated that the draft policy has been reviewed by counsel. Discussion ensued regarding the addition of item 2 (possession of firearms or other weapons on District property in areas not open to the public) under Prohibited Behavior. Manager Sidhu stated that the policy will be developed further and brought back at a future meeting for action. 10. Skagit PUD-Port of Skagit County Fiber Backbone LLC Discussion Manager Sidhu reviewed the revisions to the current draft of the agreement and stated he was happy to hear additional comments. Manager Sidhu suggested a Special Joint Commission Meeting of both boards on May 15 if the Commission is ready to move forward. Discussion ensued regarding various aspects of the draft agreement, including multiple signatories, money handling, contribution vs. income, and interfund loans. The joint meeting was scheduled for May 15 at 4:30 PM. Under Miscellaneous, Manager Sidhu stated that the Commission notebooks include a Skagit Valley Herald article regarding the water plan for the Big Lake area. Under Commissioner Comments, Commissioner Robertson stated he would be attending the WA PUD Association (WPUDA) Telecom Workshop and NoaNet Board of Commissioners meetings in Spokane and will report on both at the Commission meeting of May 22. Commission Meeting 2 May 8, 2018

4 Agenda Item #2 At this time, President Robertson recessed the regular meeting to go into executive session regarding Mundt Creek Water Rights per RCW (1)(i)(ii) for an approximate duration of 60 minutes. The meeting was recessed at 5:29 PM. The executive session convened at 5:32 PM President Robertson reconvened the regular meeting of the Commission at 6:47 PM. Having no further business to come before the Board, Commissioner Littlefield moved for adjournment. The motion passed and the meeting of May 8, 2018 was adjourned at 6:50 PM. Respectfully submitted: Kim Carpenter Clerk of the Board Commission Meeting 3 May 8, 2018

5 Agenda Item #2 MINUTES OF THE SPECIAL MEETING OF THE COMMISSIONS OF PUBLIC UTILITY DISTRICT NO. 1 AND THE PORT OF SKAGIT COUNTY, WASHINGTON May 15, 2018 The special meeting of the Commissions of Public Utility District No. 1 (District) and the Port of Skagit County (Port) was held in the Aqua Room of the District located at 1415 Freeway Drive, Mount Vernon, Washington, on May 15, The meeting was called to order at 4:32 PM by Port Commissioner Ware and by District Commissioner Roberson. Those District Commissioners in attendance were: Robbie Robertson, President; Eron Berg, Vice President; and Al Littlefield Secretary. Those Port Commissioners in attendance were: Kevin Ware, District 1; Steven Omdal, District 2; and Bill Shuler, District 3. Also in attendance for the District were: George Sidhu, General Manager, Peter Gilbert, Attorney; and Kim Carpenter, Clerk of the Board. Also in attendance for the Port were: Patsy Martin, Executive Director, Sara Young, Director of Planning and Facilities, Andrew Entrikin, Community Outreach Administrator, Sarah Hastings, Legal and Special Projects Assistant, Greg Thramer, Finance Director, and Brad Furlong, Legal Counsel. Audience: District Employees: Gary Chrysler, Kathy White, Mark Handzlik, Sally Saxton, Luis Gonzalez, Julia-Grace Sanders, Skagit Valley Herald. District Commissioner Littlefield led the Pledge of Allegiance. There were no audience comments. Under New Business: 1. Skagit PUD-Port of Skagit County Fiber Backbone LLC Action District Manager Sidhu welcomed the Commission from the Port stating the meeting is a follow-up to previous District agenda items regarding the LLC Agreement. Changes were suggested to the Port and each Commissioner has the track changes version of the agreement in front of them. The Port Commission reviewed the document yesterday. Port Executive Director Martin stated that one additional change has been suggested, which is the removal of Subsection 5.3.B.iv as it is redundant and she recommended said removal. She also indicated that while both entities have discussed hiring a project manager together, they are not ready to do that and will be back in the fall with a proposed plan. She stated that it would be nice to submit the grant application for segment 4 to Sedro-Woolley under SkagitNet. Port Commissioner Ware stated that the Port Commission approved the LLC Agreement yesterday and is now looking to approve the revised agreement and requested a motion from Attorney Furlong. Attorney Furlong suggested a motion to readopt the LLC Agreement with the deletion of subsection 5.3.B.iv. Port Commissioner Shuler stated so moved, the motion was seconded and passed. Commission Meeting 1 May 15, 2018

6 Agenda Item #2 District Commissioner Berg moved to approve the Skagit Net LLC Agreement between the District and the Port of Skagit County with removal of subsection 5.3.B.iv. The motion passed. Attorney Furlong stated that he and Sara Young would file the certification of formation on the Secretary of State website and SkagitNet should be an official entity of Washington State tomorrow. District Commissioner Robertson entertained a motion for adjournment. Having no further business to come before the Boards, Port Commissioner Shuler moved to adjourn, Port Commissioner Omdal seconded the motion, and the motion passed. District Commissioner Littlefield moved for adjournment. The motion passed and the meeting of May 15, 2018 was adjourned at 4:42 PM. Respectfully submitted: Kim Carpenter Clerk of the Board Commission Meeting 2 May 15, 2018

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11 Agenda Item #6 STRATEGIC PLAN Recommended Draft 5/16/18

12 Agenda Item #6 SKAGIT PUD COMMISSIONERS Eron Berg Al Littlefield Robbie Robertson PLANNING COMMITTEE Mike Benton, Project Manager Gary Chrysler, IT Manager Mike Fox, Operations Manager Angie Garza, Customer Service Representative Mark Handzlik, Engineering Manager Cody Haugstad, Construction Worker Rob Sager, Water Treatment Plant Operator Sally Saxton, Treasurer George Sidhu, General Manager Doug Streeter, Contracted Auditor and Interim Finance Manager Kevin Tate, Community Relations Manager Matt Walker, Meter Technician Kathy White, Human Resources Manager

13 LETTER FROM SKAGIT PUD S GENERAL MANAGER Since 1936, Skagit PUD has committed to providing safe and reliable utility services to meet the current and future needs of Skagit County residents. As the largest water purveyor in Skagit County, we have a responsibility to serve our customers, but also to manage the water resources that have been placed in our trust. We strive to be a responsible steward of those resources by being a customer-focused, forward-looking, and fiscally responsible utility. During the strategic planning process, we received a tremendous amount of valuable input from a broad range of people that helped determine plan objectives. Our local partners and employees were surveyed for their insights and a Strategic Planning Committee comprised of staff from all of our departments was created to help direct and guide the process. Skagit PUD s 5-year Strategic Plan establishes our strategic objectives in three main areas: 1. Customer-Focused Services (Water, Telecom, Sewer) 2. Communication with the Public and Partners 3. Internal Operations, Communication, and Organizational Development The focus of the Strategic Plan is on the short-term horizon to help guide decisions that will define our organization going forward. The challenges that we face in Skagit County are similar to many of the challenges facing Washington State and the nation. Water system planning, aging infrastructure, increasing rates, strong communications, and hiring and retaining a high quality workforce are many of the complex issues we will address during this planning horizon. It is critical for our organization to have a clear vision of where we want to be and a commitment on how we intend to get there. The completion of this Strategic Plan is the first step in outlining our commitments, and developing an implementation plan to achieve our strategic objectives. I want to recognize everyone who worked on this Strategic Plan and the collaborative approach that was used. On behalf of the Strategic Planning Committee, we extend our thanks to the partners and District staff that participated in pre-planning surveys. Our team is excited about the challenges and opportunities that will result from the Strategic Plan, and we are eager to realize the continuous quality improvements coming to Skagit PUD. signature and photo to be added Agenda Item #6 George Sidhu, P.E. General Manager

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15 Agenda Item #6 CONTENTS Overarching Guidance: Mission, Vision, and Core Values...2 Summary of Goals and Strategies...3 I. Customer-Focused Services...4 A. Water... 7 B. Telecommunications...11 C. Sewer II. Communication with the Public and Partners...17 III. Internal Operations, Communication, and Organizational Development...21

16 PAGE 2 Agenda Item #6 OVERARCHING GUIDANCE VISION, MISSION, AND CORE VALUES Our Vision is to be an outstanding regional leader and innovative utility provider. Our Mission is to provide our customers with high-quality water services at an affordable price. As we pursue our Vision and advance our Mission, we demonstrate and maintain balance among our Core Values: Quality. We seek to exceed customer expectations by providing exceptional service. Environmental Stewardship. We act to preserve our region s natural resources. Financial Prudence. We strive to keep our rates as low as possible while making wise capital investments and strategic business decisions.

17 Agenda Item #6 PAGE 3 SUMMARY OF GOALS AND STRATEGIES I. CUSTOMER-FOCUSED SERVICES A. Water 1. Make prioritized and strategic capital infrastructure investments to maintain existing assets and quality to serve the growing Skagit community. 2. Steward partnership-based efforts that advance the strategic regional use of water resources. B. Telecommunications 1. Invest in the telecommunications infrastructure necessary to securely and efficiently manage our water system and serve government agencies and essential service providers with excess capacity. 2. Stay current and decide whether we should enter the telecom industry as a retail provider if public utility districts are given the authority to do so. C. Sewer 1. Explore and understand the connection between sewage and reclaimed water. II. COMMUNICATION WITH THE PUBLIC AND PARTNERS 1. Strengthen communications and engagements with our customers. 2. Seek opportunities to engage youth in water-related education. 3. Ensure our policy-setting and decision-making processes are transparent and easily accessible. 4. Strengthen our provision of high-quality customer service. 5. Strengthen our relationships with our partners. III. INTERNAL OPERATIONS, COMMUNICATION, AND ORGANIZATIONAL DEVELOPMENT 1. Strengthen internal systems and the use of technology to create efficiencies. 2. Address our aging District headquarters facility. 3. Attract, retain, and develop a high-quality workforce. 4. Improve internal communications throughout the organization.

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21 Agenda Item #6 A. WATER STATEMENT OF INTENT Skagit PUD s core focus is providing water to residential, business, and agricultural customers. We make strategic and sustainable investments to ensure our water rights, infrastructure, and other resources are managed for the benefit of our customers and for the long-term benefit of the region. The most significant contribution we can make to environmental sustainability is by improving the efficiency of our system and by encouraging smart water use among our customers. By making strategic investments to reduce wasted water, we will also diminish our need for finding additional water sources and for making large capital improvements in the future. The District will play a supportive role in addressing the legal availability of water for agriculture and rural land owners.

22 PAGE 8 CUSTOMER-FOCUSED SERVICES Agenda Item #6 1 Make prioritized and strategic capital infrastructure investments to maintain existing assets and quality to serve the growing Skagit community. a. Refine existing criteria for assessing, prioritizing, and selecting capital projects and operational improvements. Implement and provide additional resources to our asset management system, including development of an economic risk model. Reduce equipment failure rates. Collect data from existing infrastructure at every opportunity, especially main breaks, leak repairs, and low pressure events. Perform regular and routine maintenance on infrastructure to develop a database of information. b. Expand the inputs that inform our capital planning. Develop a GIS-based, extended-period, hydraulic model to be used for water system planning, flushing program development, and contaminant transport simulation. Update our Customer Buildout Capacity Analysis. c. Update our Water System Plan and Capital Improvement Program that: Identifies major capital facilities and components. Identifies maintenance procedures and replacement criteria. Establishes a level of service for the system. Establishes goals for preventative maintenance. d. Implement SCADA systems to maintain security of our infrastructure [see development of internally-focused fiber network under B. Telecommunications].

23 Agenda Item #6 CUSTOMER-FOCUSED SERVICES PAGE 9 2 Steward partnership-based efforts that advance the strategic regional use of water resources. a. Engage Skagit County and the City of Anacortes in identifying and planning efficient solutions to meet future demands throughout Skagit County through an update of the Coordinated Water System Plan. b. Foster outreach to partners to identify synergy projects and community development programs [coordinate with efforts under II.5]. c. Reduce water waste by making strategic investments in District technology and infrastructure and by increasing our efforts to encourage smart water use among our customers. d. Apply strategic resources to the issue of the legal availability of water for agriculture and rural land owners by continuing to advocate for a state level solution and exploring potential regional solutions. 5-YEAR RESOURCE NEEDS Goal 2 includes significant investment in existing and potentially new infrastructure to serve current and future water customers as directed by our Capital Improvement Program. By focusing additional staff capacity in asset management and planning as directed by Goal 1, we will prioritize making smart long-term investments that maximize and prolong the value of our infrastructure, water rights, and other resources.

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25 Agenda Item #6 B. TELECOMMUNICATIONS STATEMENT OF INTENT Investment in telecommunications infrastructure is necessary to the security and effective management of Skagit PUD s water systems. The development of telecommunications services are also desired to support the growth and prosperity of the Skagit County community. Skagit PUD needs to be careful in this area, as the provision of telecommunication services, either wholesale or retail, would require acquiring significant new expertise and capacity, including specialized staff, equipment, and systems to manage infrastructure investment, operations, maintenance, and customer service. Further, participation in the highly competitive and specialized telecommunications market may come at considerable financial and operational risk.

26 PAGE 12 CUSTOMER-FOCUSED SERVICES Agenda Item #6 1 Invest in the telecommunications infrastructure necessary to securely and efficiently manage our water system and serve government agencies and essential service providers with excess capacity. a. Develop a fiber and radio network focused on meeting District needs. b. Continue our broadband partnership with the Port of Skagit County, seeking greater clarity in roles and responsibilities. c. Carefully consider additional opportunities to develop broadband infrastructure, favoring partnerships and a focus on the wholesale provision of backbone capacity. 2 Stay current and decide whether we should enter the telecom industry as a retail provider if public utility districts are given the authority to do so. a. Monitor policy and market changes and review case studies, lessons learned, and best practices from elsewhere in the state or country. 5-YEAR RESOURCE NEEDS Beyond our current commitment to create a broadband network for a portion of the Skagit community in partnership with the Port, we do not foresee the need for substantial investment in this area based on the preceding Statement of Intent.

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29 Agenda Item #6 CUSTOMER-FOCUSED SERVICES PAGE 15 C. SEWER STATEMENT OF INTENT While Skagit PUD has the authority to provide sewer services, we do not have the expertise or systems in place to proactively take on this service area. We will consider opportunities to enter this market as a service provider only if they are presented to us by others. We will more actively pursue opportunities to use sewage as a method of increasing water availability and reducing or deferring investment in our water system infrastructure. 1 Explore and understand the connection between sewage and reclaimed water. a. Conduct an annual review of policy changes, technology trends, and the state of the sewer field, particularly in connection to water rights. b. Attend industry conferences to maintain a sense of the sewer industry and how it relates to water rights. c. Develop a contingency plan for how we would provide sewer services if mandated to do so. 5-YEAR RESOURCE NEEDS We do not foresee the need for substantial investment in this area during the coming five years.

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31 Agenda Item #6 II. COMMUNICATION WITH THE PUBLIC AND PARTNERS STATEMENT OF INTENT As a service provider and steward of public resources, it is incumbent on us to communicate effectively with our customers, members of the public, and partners.

32 PAGE 18 COMMUNICATION WITH THE PUBLIC AND PARTNERS Agenda Item #6 1 Strengthen communications and engagements with our customers. a. Develop an agency-wide Communications Plan that includes: Implementation of a focused and consistent mission-based message. Specific tactics for print, web, social media, public relations, and broadcast channels. Strategies to implement online tools that provide easy access to information for customers, generating efficiencies for customers and District staff. Identification of value communications, such as pushing out messages rather than keeping all resources available on demand at all times. 2 Seek opportunities to engage youth in water-related education. a. Continue outreach to schools and tours of the Water Treatment Plant and source water intakes. b. Explore opportunities to have a presence and offer internships at regional higher educational institutions, expanding our partnerships over time. 3 Ensure our policy-setting and decision-making processes are transparent and easily accessible. a. Maintain current efforts for making commission meetings accessible and transparent. b. Continue to assess public interest and calibrate our investments in this area.

33 Agenda Item #6 COMMUNICATION WITH THE PUBLIC AND PARTNERS PAGE 19 4 Strengthen our provision of high-quality customer service a. Improve wayfinding signage for the driveway and entrance to the building. b. Begin implementation of a regular customer satisfaction survey. c. Increase customer familiarity with payment channels. d. Monitor rate increases and consider moving to monthly billing to minimize impacts on customers. 5 Strengthen our relationships with our partners. a. Establish a prioritized plan for strengthening our relationship with partners. b. Assess our channels for communicating and sharing information with partners and make strategic improvements to key communication channels. 5-YEAR RESOURCE NEEDS Additional staff capacity may be required to develop and implement the communications plan directed by Goal 1.

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35 Agenda Item #6 III. INTERNAL OPERATIONS, COMMUNICATION, AND ORGANIZATIONAL DEVELOPMENT STATEMENT OF INTENT To provide high-quality services for our customers, it is imperative that we have strong staff and supporting systems.

36 PAGE 22 INTERNAL OPERATIONS, COMMUNICATION, AND ORGANIZATIONAL DEVELOPMENT Agenda Item #6 1 Strengthen internal systems and the use of technology to create efficiencies. a. Identify needs and an appropriate solution for a document or content management system to increase efficiencies for contract approvals and other processes. b. Learn and implement the full capabilities of core software systems. c. Establish security and emergency response plans, policies, and procedures. d. Evaluate the most effective and resource-efficient use of in-house and contracted staffing and resources. e. Revisit our Strategic Plan on an annual basis, tracking our progress and ensuring it guides our budgeting and activities. 2 Address our aging District headquarters facility. a. Complete the feasibility study and determine whether the District headquarters should be housed in a new or existing building and at our current site or in a new location. b. Based on this plan, outline the scope, schedule, budget, and funding/financing plan with consideration of the impact on rate payers. c. Make repairs to the current building as necessary, or use temporary spaces until a permanent solution is in place.

37 Agenda Item #6 INTERNAL OPERATIONS, COMMUNICATION, AND ORGANIZATIONAL DEVELOPMENT PAGE 23 3 Attract, retain, and develop a high-quality workforce. a. Strengthen our ability to recruit highly capable employees. Stay current on staffing trends to develop and update our hiring and recruitment practices, including compensation trends, benefits, and what is desired by the workforce. Implement updates and best practices as appropriate while maintaining a level of consistency with hiring practices. b. Anticipate and plan for pending retirements. Identify likely staffing needs for the next five years and beyond considering anticipated retirements. Develop a succession plan based on identified needs, which can be revised and updated as operations evolve at the District. The succession plan should include evaluation of current staff and opportunities to provide development opportunities where appropriate. Continue to evaluate our needs when openings or retirements occur, seeking efficient solutions as conditions change. c. Strengthen and systematize our focus on staff development. Identify development opportunities by asking staff, reviewing needs identified in the evaluation process, and gathering input from management personnel. Establish a staff development process that benefits both employees and the District.

38 PAGE 24 INTERNAL OPERATIONS, COMMUNICATION, AND ORGANIZATIONAL DEVELOPMENT Agenda Item #6 4 Improve internal communications throughout the organization. a. Increase transparency of internal communication throughout the District. b. Use the content of this Strategic Plan to structure internal meetings and communications. c. Continuing to gather input and suggestions from staff about internal communications. 5-YEAR RESOURCE NEEDS The items listed above can be implemented with current resource levels.

39 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Interest Rate PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY TREASURER REPORT AS OF APRIL 30, 2018 Balance of District Funds Investment of District Funds % 26% General Revenue Fund $5,024,997 Local Govt Investment Pool $14,599,420 76% 0% Capital Project Fund 0 Cash 1,052,550 5% 44% Construction Fund 8,535,109 Govt Agencies/ Securities 3,500,000 18% 15% System Development Fund 2,828,252 0% 13% Debt Service Fund 2,495,414 3% Bond Funds 568,199 0% Rate Stabilization Funds 0 100% Total Funds $19,451,970 Total Funds $19,151, % District Fund Segments General Revenue Fund Bond Funds Debt Service Fund System Development Fund Construction Fund Investment of District Funds Govt Agencies/ Securities 2037 Cash Local Govt Investment Pool ## Rates of Investment Interest Received Market Value vs. Face Value of Government Securities FFCB FNMA LGIP Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1,000, , , , , , , , , , , ,000 Fed Farm Credit Bank (mat 2/18) Fed Home Loan Mtg Corp (mat 7/18) Fed Natl Mtg Assn (mat 10/19) Resolution Funding Corp (mat 7/20) Face Value Fed Natl Mtg Assn (mat 2/19) $500,000

40 PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY TREASURER REPORT For the month ending April 30, 2018 Apr 2017 Apr 2016 Apr 2015 SYSTEM DEVELOPMENT REVENUE FUND CAPITAL PROJECT FUND FUND DEBT SERVICE FUND COMBINED COMBINED COMBINED COMBINED Capital Projects Restricted Debt Reserve Bond Sinking Bond Reserve Resources: External Revenue: Water Customer Receipts 1,691,969 1,691,969 1,498,806 1,224,059 1,327,598 System Development Fees 121, ,625 67,725 92,850 32,144 Capital Contributions 254, ,860 87, ,148 72,340 Grants 30,000 30, LUD Assessments, Interest, Penalties 20,190 20,190 7,013 7,201 32,454 Investment Income 6,988 11,730 3,797 3, ,665 27,492 6,667 1, Non-Operating Revenues 3,178 3,178 12,267 13,873 27,625 Total External Revenue 1,986, , ,422 3,122 20,381 1,665 2,149,313 1,679,864 1,448,630 1,493,013 Debt Proceeds: Debt Proceeds - DWSRF Loan Draws , Debt Proceeds - Dept. of Ecology Loan Debt Proceeds - Bonds Total Debt Proceeds , Transfers from Other Funds: To Debt Reserve Fund from Revenue Fund 265, , , , ,442 To Revenue Fund from Debt Reserve Fund To Debt Reserve Fund from Bonk Sinking Fund 0 85,771 56,510 67,685 To Bond Reserve Fund from Revenue Fund To Debt Reserve Fund from System Development Fund To Capital Project Fund from Reveue Fund To Capital Project Fund from System Development Fund 0 310, Total Transfers to Other Funds , , , , ,127 Total Revenue 1,986, , , ,817 20,381 1,665 2,415,009 2,948,179 1,712,079 1,739,140 2,037 Operating Expenditures: Operations and Maintenance 844, , , , ,183 Utility and Excise Taxes 73,282 73,282 75,628 71,121 62,403 Total Operating Expenditures 918, ,017 1,036, , ,586 Capital Expenditures: Capital Projects 662, , ,828 1,428, , ,737 Total Capital Expenditures 662, , ,828 1,428, , ,737 Debt Service Payments: Interest Expense Federal Tax Credit for 2009B Bonds Principal Payments Total Debt Service Payments Transfers to Other Funds: From Revenue Fund To Debt Reserve Fund 265, , , , ,442 From Debt Reserve Fund To Revenue Fund From Bond Sinking Fund To Debt Reserve Fund 0 85,771 56,510 67,685 From Revenue Fund To Bond Reserve Fund From System Development Fund To Debt Reserve Fund From Revenue Fund To Capital Project Fund From System Development Fund To Capital Projects Fund 0 310, Total Transfers to Other Funds 265, , , , ,127 Total Expenditures 1,845, , ,955,539 3,061,047 1,749,067 1,804,450 Increase (Decrease) in Fund Balance 141,186 0 (98,001) 125, ,817 20,381 1, ,469 (112,868) (36,988) (65,310) Services sold: ERU's Services Re-Activations (under 10 years) Re-Activations (over 10 years)

41 PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY TREASURER REPORT For the four months ending April 30, % YTD 2017 YTD 2016 YTD 2015 SYSTEM PERCENTAGE ANNUAL DEVELOPMENT OF BUDGET REVENUE FUND CAPITAL PROJECT FUND COMBINED BUDGET FUND DEBT SERVICE FUND REALIZED COMBINED COMBINED COMBINED Capital Projects Restricted Debt Reserve Bond Sinking Bond Reserve connections: 25,691 25,514 24,656 24,980 Resources: External Revenue: Water Customer Receipts 7,040,294 7,040,294 22,889, % 6,254,950 5,369,798 5,214,310 System Development Fees 552, ,549 1,100, % 432, , ,739 Capital Contributions 720, ,532 1,319, % 439, , ,405 Grants 30,000 30, , % LUD Assessments, Interest, Penalties 62,101 62, , % 131,162 80,764 95,786 Investment Income 22,674 39,298 11,009 10, ,903 86,232 78, % 31,056 12,805 3,171 Non-Operating Revenues 13,715 13,715 45, % 46,997 33,903 61,247 Total External Revenue 7,827, , ,558 10,671 62,778 1,903 8,505,423 25,972, % 7,336,213 6,326,251 6,109,658 Debt Proceeds: Debt Proceeds - DWSRF Loan Draws 1,962,004 1,962, , % 1,962, , ,163 Debt Proceeds - Dept. of Ecology Loan 0 1,192, % Debt Proceeds - Bonds 0 2,694, % Total Debt Proceeds 0 0 1,962, ,962,004 4,187, % 1,962, , ,163 Transfers from Other Funds: To Debt Reserve Fund from Revenue Fund 1,067,392 1,067,392 3,893, % 800, , ,768 To Revenue Fund from Debt Reserve Fund To Debt Reserve Fund from Bonk Sinking Fund To Bond Reserve Fund from Revenue Fund 0 1,211, % To Debt Reserve Fund from System Development Fund , , ,740 To Capital Project Fund from Reveue Fund To Capital Project Fund from System Development Fund 0 1,050, % 310, Total Transfers to Other Funds ,067, ,067,392 6,154, % 1,453,616 1,053, ,508 Total Revenue 7,827, ,001, ,558 1,078,063 62,778 1,903 11,534,819 36,314, % 10,751,970 7,778,758 7,516, Uses: Operating Expenditures: Operations and Maintenance 3,742,184 3,742,184 12,328, % 3,387,102 3,439,010 3,263,967 Utility and Excise Taxes 352, ,905 1,158, % 335, , ,953 Total Operating Expenditures 4,095, ,095,089 13,486, % 3,722,654 3,721,389 3,534,920 Capital Expenditures: Capital Projects 1,910, ,461 2,619,777 19,900, % 4,680,698 2,070,954 2,150,512 Total Capital Expenditures 1,910, , ,619,777 19,900, % 4,680,698 2,070,954 2,150,512 Debt Service Payments: Interest Expense 91,474 91, , % 133, , ,457 Federal Tax Credit for 2009B Bonds 0 0 (63,201) 0.00% Principal Payments 0 0 3,416, % Total Debt Service Payments 91, ,474 4,219, % 133, , ,457 Transfers to Other Funds: From Revenue Fund To Debt Reserve Fund 1,067,392 1,067,392 3,893, % 800, , ,768 From Debt Reserve Fund To Revenue Fund From Bond Sinking Fund To Debt Reserve Fund From Revenue Fund To Bond Reserve Fund 0 1,211, % From System Development Fund To Debt Reserve Fund , , ,740 From Revenue Fund To Capital Project Fund From System Development Fund To Capital Projects Fund 0 1,050, % 310, Total Transfers to Other Funds 1,067, ,067,392 6,154, % 1,453,616 1,053, ,508 Total Expenditures 7,164, , ,873,732 43,761, % 9,990,718 7,001,396 6,844,397 Increase (Decrease) in Fund Balance 662, ,291, ,558 1,078,063 62,778 1,903 3,661, , , ,932 Services sold: ERU's Services Re-Activations (under 10 years) Re-Activations (over 10 years)

42 SKAGIT PUD DEBT REPAYMENT AMOUNTS AS OF APRIL 30, 2018 Senior Lien Bond Debt Public Works Trust Fund Loan Debt Drinking Water State Revolving Fund Loan Debt Coupon Rates Current Rate Mature Date Beg Bal Interest Rates Mature Date Beg Bal Interest Rates Mature Date Beg Bal 2008 Refunding 3.5% % 4.25% Jul 2018 $8,835, SRD 0.50% Jul 2021 $10,000, Clearwell 1.50% Oct 2021 $1,803, B BAB 2.7%* %* 3.66% Jul 2029 $3,660, WTP Controls 0.50% Jul 2022 $10,000, SVV Distribution 1.50% Oct 2021 $704, Revenue 2.65% % 2.65% Jul 2036 $6,300, Josh Wilson Rd 0.25% Jun 2031 $3,342, SVV Controls 1.50% Oct 2021 $64, Revenue 2.65% % 2.65% Jul 2037 $4,200, Division St Tank Design 1.00% Jun 2018 $300, Transmission Line 1.50% Oct 2022 $1,758, WTP Controls 1.50% Oct 2022 $77, Division St Tank Const 1.50% draws to date $9,003,645 Year Principal Interest Interest Rate Range Principal Interest Interest Rate Range Principal Interest Interest Rate Total *(after 35% tax credit) ,324, , % 4.25% 1,356,201 31, % 1.00% 266,022 17, % $3,245, , , % 3.72% 1,281,201 25, % 0.50% 266,022 13, % $2,630, , , % 3.79% 1,281,201 19, % 0.50% 266,022 9, % $2,623, , , % 3.79% 1,281,201 13, % 0.50% 266,022 5, % $2,614, , , % 3.79% 738,777 7, % 0.50% 115,706 1, % $1,906, , , % 3.79% 176,282 3, % $1,228, , , % 3.79% 176,282 3, % $1,227, , , % 3.79% 176,282 3, % $1,225, , , % 3.79% 176,282 2, % $1,224, , , % 10.00% 176,282 2, % $1,394, , , % 10.00% 176,282 1, % $1,396, , , % 10.00% 176,282 1, % $1,393, , , % 176, % $1,035, , , % 176, % $1,034, , , % $858, , , % $858, , , % $858, , , % $858, ,051 68, % $858, ,064 7, % $274,240 $14,367,917 $5,508,297 7,525, ,332 $1,179,794 $48,585 $28,746,048 Total Principal Outstanding: $23,072,834 $ Change from previous month: Total Interest Outstanding: 5,673,214 Total Debt Repayment: $28,746, Weighted Interest Rate: 2.12%