2018 Budget Performance Summary

Transcription

1 2018 Budget Performance Summary Management projects a year-end budget surplus of approximately $344,773 in the Operating Budget. However, it should be noted that Operating Revenue is projected $27,627 more than budgeted. The operating surplus is the result of $135,088 of debt expenses for the new treatment plant being expended, and the accumulation of $179,000 below budgeted individual departmental budgets. The operating revenue surplus is due primarily to water consumption, customer penalties, and dye testing fees being slightly more than projected. The operating expenses surplus was the result of the parting of one management personnel, budgeted amount for legal fees and maintenance and repair not expended. Total Projected Revenues for 2018, which includes Operating Revenues, and Non-Operating Revenues (Taps, Assessments, and Trustee Account Interest), are expected to total $3,968,334 which is $231,991 or 5.5% less than our 2018 budget forecast. Total Projected Expenses for 2018, which includes Operating Expenses, Debt Service, and Debt Service Coverage are expected to total $3,457,526 which is $314,181, or 8.3% less than our 2018 budget forecast. (Budget worksheets summarizing expenses by department are located at end of each department section and detailed budget memos are provided in the Appendix) 2018 Operating Budget Performance Summary Projections Total Operating Revenue $3,802,299 Total Expense (excluding Equip Replace Allowance) $3,232,526 Total Equipment Replacement Allowance $225,000 Total Expenses $3,457,526 Surplus Available $344, Non-Operating Budget Performance Summary General Purpose Tap Fees (excluding Tap Fee Reimbursements) $128,559 Special Purpose Tap Fees and Assessment Payments $4,279 Rental Income, Gas Lease Royalties, Trustee Interest $33,197 Total Non-Operating Revenue $166,035 Final_2018 Budget Performance Summary 12/19/ _1 of 33

2 Where our money comes from: 2018 Total Projected Revenues Sewer Consumption Charges $2,566,430 Debt and Administrative Charges $1,112,526 Penalties & Interest $37,542 Dye Testing Fees $45,550 Miscellaneous Revenues $40,251 Operating Revenue Total $3,802,299 Non-Operating Revenues $166,035 Total Revenues $3,968,334 Dye Testing Fees 1% Penalties & Interest 1% D&A Charges 28% Misc. Revenues 2% Non-Operating 4% Consumption Charges 64% What we spend it on: 2018 Total Projected Expenses Consumable Supplies & Misc. $130,673 Vehicle Expense $28,661 Equipment & Facilities $41,974 Maintenance & Repairs $198,965 Utilities, Biosolids, POTW Fees $325,235 Personnel, Benefits, Training $1,289,401 Professional Services & Computers $94,671 Insurance & Administrative Services $151,564 Equipment Replacement Allowance $225,000 Debt Service $971,382 Total Expenses $3,457,526 Insurance & Admin. Services 4% Equipment Replmt Allowance 7% Debt Service 28% Professional Services & Computers 3% Consumable Supplies 4% Vehicle Expense 1% Personnel, Benefits, Training 35% Equipment & Facilities 1% Maint. & Repairs 9% Utilities, Biosolids, POTW Fees 9% Final_2018 Budget Performance Summary 12/19/ _2 of 33

3 Operating Revenue Transfers to Capital Improvement Fund (CIF) Note: During 2015 the Series 2009 bonds were redeemed, which allowed changes in procedure that were previously required by its Trust Indenture. One of the changes was the former Capital Improvement and Redemption Fund (CIRF) became the Capital Improvement Fund (CIF). We discuss the Capital Improvement Fund (CIF) funding at this place in the report because it is directly related to Budget Performance overall, as well as Tap Fee Revenue performance. We strive to be on budget in order to properly fund the Capital Improvement Plan. The Authority finances its capital improvements through borrowed funds which are set aside in Construction Funds, or through our accumulated surplus which is held in the CIF. In order to have an ongoing capital improvement program to provide for the upgrade of our sewer system and facilities it is necessary to have a mechanism to regularly fund the CIF. Otherwise, we would have to rely on borrowed funds for all major projects. The CIF is funded by: 1) sewer tap fees, 2) interest earned on CIF investments, 3) any operating budget surplus available at the end of the year, and 4) the Equipment Replacement Allowance balance. Each year, after year-end reconciliation, the Authority transfers funds accumulated in the Tap & Capital subaccount, and the Equipment Allowance/Operating Surplus to the CIF. Table I - Operating Surplus and Tap Fees Transferred to the CIF Operating Fund Taps/Assessments Total 2009 $240,000 $250,000 $490, $321,296 $148,000 $469, $460,000 $241,000 $701, $511,197 $91,760 $602, $484,604 $315,000 $799, $473,022 $170,000 $643, $586,401 $152,000 $738, $497,000 $154,800 $651, $958,000 $180,000 $1,138, $1,143,706 $60,000 $1,203,706 Total: $5,675,226 $1,762,560 $7,437,786 Average: $567, $176, $743, During 2018, a total of $1,203,706 was transferred to the CIF, which is 30% more than the 10-year average. In 2017 and 2018, the large surplus was the result of capital transfers of $387,000 each year, attributed to the debt service for the new treatment not expended from the operating budget but was deferred, and capitalized. Final_2018 Budget Performance Summary 12/19/ _3 of 33

4 2018 Operating Revenue Summary Operating Revenues for 2018 are projected at $3,802,299 which is $27,627 more than budgeted. Detailed memos are provided in the Appendix for all major operating revenue sources. Residential Sewer Rentals provided revenue of $2,020,610, which is about $18,946 more than our budget forecast, equal to -0.95% of the budgeted amount. Residential water consumption increased 0.5% from the 2017 water consumption. Water consumption, after deduct meter adjustments, was 282,602,780 gallons, which is 2,649,790 gallons more than what the budget was based on. The chart below compares the current year residential water consumption with the previous five years. Clearly, water consumption indicates a substantial decline. Refer to the memo in the Appendix for more detailed information. The Projected 2018 residential average quarterly water consumption was 12,032 gallons, the equivalent of 132 gallons/day. Figure I Residential Water Consumption Trend 2014 through 2018 Final_2018 Budget Performance Summary 12/19/ _4 of 33

5 Non-Residential Sewer Rentals were less than the budget forecast by approximately 1.3%, with a total of 76,338,462 gallons, generating $545,820 in revenue, or $7,068 less than the budget forecast. Deduct Meter Credits. The Authority permits the use of deduct meters for both Residential and Non- Residential customers. A deduct meter is a separate meter installed and maintained by the property owner. It is utilized to measure any water consumption which does not flow into the sanitary sewer system. Typically, a deduct meter is installed for lawn irrigation systems. The deduct meter credits issued in 2018 minus the read fee charge was $91,130. There are currently 510 active Residential customers with deduct meters. The chart below illustrates the Total Water Consumption and Total Deduct Credits in gallons. Figure II Residential Water Consumption and Deduct Meter Consumption 2014 through 2018 Debt and Administrative Charges provided $1,112,526 in revenue, under the budget forecast by $4,274, mostly due to Non-Residential charges. Debt and Administrative Charges are the Minimum Service Charge of $36.00/quarter for customers connected to the sewer system, applied regardless of the volume of water consumed. The Non-Residential customers are charged $36.00 per quarter per billing unit, with a billing unit equal to the average residential water consumption, plus a meter charge based on size of their water meter. Miscellaneous Revenue of $85,801 exceeded the budget forecast by $14,481. These sources of revenue include lien letter fees, dye testing fees, curtailment revenues, property rental, deduct meter read fees, inspection fees, interest revenues, and labor reimbursements from capital or developer funds. Final_2018 Budget Performance Summary 12/19/ _5 of 33

6 Figure III Total Revenues Budgeted vs. Projected $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- Sewer Rentals on budget Sewer Rentals Operating Revenues D&A on budget D&A Charges Pentalty & Interest Misc. Non-Operating Revenues Tap&Assmt Pmts Trustee Interest Total Budgeted vs. Projected Budgeted $2,554,552 $1,116,800 $32,000 $71,320 $421,653 $4,000 $4,200,325 Projected $2,566,430 $1,112,526 $37,542 $85,801 $141,641 $24,394 $3,968,334 Total Non-Operating Revenues, which consist of General Purpose Taps, Special Purpose Taps, Assessments, and Trustee Account Interest, totaled $166,035, which is $259,618 less than the budget forecast. Tap fee revenue fell short of the budget target by $279,569, due to several developments not proceeding as anticipated. The developments included the Waters Senior Living, Brookwood Village, and Justabout Farms. General Purpose Tapping Fee Revenue Summary. Table II provides a summary of sewer taps sold by sewer system and identifies tap reimbursements. The projected General-Purpose Tap Fee revenue is $128,559. There were no tap reimbursements. Also see detailed memos in the Appendix. Table II Summary of Sewer Taps By Sewer System Projected to end of year Brush Run Sewer System Donaldson s Crossroads Sewer System Non- Non- Item Residential Residential Residential Residential Taps Sold Revenues $26,120 $9,639 $92,800 $0 0 Total Taps Total Revenues $35,759 $92,800 Grand Total $128,559 (net Tap Reimb) Tap Reimbursements Residential Final_2018 Budget Performance Summary 12/19/ _6 of 33

7 Special Purpose Taps and Assessments are projected to total $4,279 consisting of special purpose taps and assessment payment plans. No Valley View Special Purpose taps were sold during The Authority permits assessments and special purpose tapping fees to be paid by the customer by entering into payment plan agreements. There are currently 8 properties with payment plans consisting of: 1) Ivy Lane sewer extension project has 5 customers with payment plans, with a total balance of $5,610, and 2) Valley View sewer extension project has 3 customers with payment plans with a total balance of $8,542. Trustee Account Interest of $24,394 exceeded the budget forecast by $20,394. The bond proceeds and capital funds for DC Plant Replacement project were not drawn down as quickly as anticipated, and entered into several investment vehicles earning a higher rate than the money market account. End of 2018 Revenue Section Final_2018 Budget Performance Summary 12/19/ _7 of 33

8 2018 Operating Expense Summary The 2018 Operating Expenses and Debt Service expense combined is projected to total $3,457,526 which is approximately $314,181 or 8.3% less than the budgeted amount. Operating Expenses by themselves are projected at $2,486,144 which is $179,094 less than budgeted. The major categories with a budget surplus are: Personnel at $29,971 or 2%, Maintenance & Repair at $63,835 or 24%, and Professional Services at $22,126 or 22%. There were no significant budget overrun that occurred in the Budget. Figure III Operating Expenses, Budgeted vs. Projected $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Misc. & Supplies Equip. Facilities, Vehicles Main. & Repair Utilities, Biosolids, POTW Personnel Profession & Computer Services Insurance &Admin. Services Debt Service Equip. Replacmt Allowance Budgeted 140,015 73, , ,025 1,319, , ,625 1,106, ,000 Projected 130,673 70, , ,235 1,289,401 94, , , ,000 Final_2018 Budget Performance Summary 12/19/ _8 of 33

9 Table III - Cost to Collect and Treat 1,000 Gallons of Sewage Total Million Gallons of Sewage Treated: (previous 12 months) Cost per 1,000 gallons of Sewage Treated: $3.46 Total Million Gallons of Water Consumed: (Residential and Non-Residential prev 12 months) Total Infiltration / Inflow Treated: million gallons Infiltration % 64% Infiltration Based on water consumption, 64% of the sewage processed at our treatment plants in 2018 was infiltration. Table IV at right compares previous years. The first ten months of 2018 were the wettest in comparison to the previous five years, with an increase in the monthly rainfall average (58%) and the yearly rainfall total (62%). PTSA experience is that the increased rainfall (totals and averages) raises the ground water table and increases the effect of Infiltration on the private sewer component of the collection system. Table IV Historic Infiltration Percentage Year % Infiltration % % % % % % Individual Department Performance The Expense Summary expenses categorizes across the four major departments, with Debt Service/Capital Transfer being considered a separate department, are shown in Figure IV. Figure IV Expenses by Departments Departments The Treatment Department and the Debt Service demands the highest percentage of the budget at 28%, with the Administration Department at 22%, followed by the Collection System Department at 21%. 28% 28% 22% 21% Final_2018 Budget Performance Summary 12/19/ _9 of 33

10 INDIVIDUAL DEPARTMENT PERFORMANCE SUMMARY TREATMENT DEPARTMENT Overall, Management believes we continue to improve and optimize operations and maintenance of both treatment plants while operating within the budgeted amounts. The budget provides for adequate funding to properly maintain the facilities. Brush Run WPCP This December will mark the 24-year anniversary of the startup of the first half of the upgraded treatment plant. During these years we have been in compliance with the NPDES effluent discharge limits 100% most of the time, with the exception of one excursion in 2014 for daily Total Residual Chlorine, and one excursion in 2015 for CBOD. After 24 years of operation, equipment availability remains near 100%. That is, all new equipment and previous existing equipment is operational, including automatic control systems, with the exception of the effluent flow meter, which was removed from service in All equipment and facilities are considered in good to excellent condition. The vast majority of plant equipment not already replaced will need to be replaced within the next five years. During the DC Plant Alternative Analysis the Authority established the probable design life of major equipment. With the exception of clarifier drives and collectors, which have a design life of 40 years, the remaining equipment design life is 25 years or less. Therefore, beginning in 2018, the Authority s maintenance plan includes replacement of a minimum of one major equipment system annually through the Capital Improvement Fund, as well as increased funding of Brush Run Maintenance & Repair line item. The major equipment system planned to be replaced in 2019 is the Non-Potable Water Supply Pumps, which supply treated plant effluent for use as plant wash-down water, and is the source of the chlorine solution water, belt press wash water, and other in-house uses. See the Capital Improvement Plan for details. Brush Run Plant Treatment Statistics The Brush Run WPCP provides sewage treatment and disposal to 3922 residential households, and 138 nonresidential customers (546 EDU s), which combined, generate the sewage flow of approximately 4,468 Equivalent Dwelling Units (EDUs). Based on the census per capita of 2.91 persons/household, 4,060 EDUs is the equivalent population of 13,001 persons. The treatment plant s design hydraulic capacity remains 2.0 Million Gallons/Day (MGD), however, the Wet Weather Improvements Project in 2011 obtained PADEP s Part II approval of a 2.5 MGD capacity rating. The Authority elected to not pursue a Part I NPDES capacity rating of 2.5 MGD because the capacity is not required at this time. The current 12-month average flow is 1.35 MGD. The plant was not expected to need a major upgrade/expansion project for another 15 to 20 years. However, the Township s rezoning to higher dwelling unit densities beginning in 2017 will likely shorten the life of the existing plant capacity to perhaps 10 to 15 years at most. Final_2018 Budget Performance Summary 12/19/ _10 of 33

11 During the previous 12 months (November 1, 2017 through October 31, 2018) the plant: Treated approximately million gallons of wastewater Removed from the waste: 97% of the Biochemical Oxygen Demand (BOD) 95% of the Suspended Solids, and 93% of the ammonia nitrogen Disposed of approximately 1,381 tons of digested biosolids by landfill (includes DC biosolids) The dewatering of biosolids was reduced in 2018 due to the increased storage capacity with the new treatment plant digesters coming online in September Brush Run Plant Major Operation and Maintenance Items in 2018 Areas of major work items completed through the use of operating funds at the Brush Run plant included: Participated in Laboratory Proficiency Testing and achieved an Acceptable rating by PADEP. Participated in Electrical Energy Demand Response Program, including one test of curtailment capability, earning approximately $4,900 in curtailment revenue (both plants combined). Grout repairs on Clarifier No. 2, which included corner sweep repairs Shaft repair of the Belt Filter Press drive roller, and partial replacement of the conveyor Replacement of the heater and furnace in the Headworks Building Replacement of the HVAC unit in the Laboratory Major Plant Capital Improvements Procured Lab equipment for TN, TP, and Bromide limits Procured 6 ceramic lined piping and valves for replacement of the DSD discharge piping. Donaldson s Crossroads WPCP While effluent performance has not been as exemplary as at the Brush Run Plant, we have stayed in compliance at the DC Plant with its NPDES discharge limits for the past 20 years with the exception of several excursions, and the period immediately after the September 17, 2004 flood. During 2018, the plant incurred one excursion relating to effluent TSS loadings. DC Plant Treatment Statistics The DC WPCP provides sewage treatment and disposal to 1,832 residential households, and 145 nonresidential customers (1,143 EDU s), which combined, generate the sewage flow of approximately 2,945 Equivalent Dwelling Units (EDUs). Based on the census per capita of 2.91 persons/household, 2,945 EDUs is the equivalent population of 8,657 persons. The treatment plant s design hydraulic capacity is 1.2 MGD, and its design year was Current annual average flow is 0.82 MGD. The plant is at its design organic loading and is in process of being replaced and expanded, at an estimated construction cost of $16 million. Construction began in January 2018, and will be completed in the summer of The plant capacity at completion of construction will be 1.75 MGD, a 46% increase in capacity. Final_2018 Budget Performance Summary 12/19/ _11 of 33

12 During the previous 12 months (November 1, 2017 through October 31, 2018) the plant: Treated approximately million gallons of wastewater Removed from the waste: 98% of Biochemical Oxygen Demand (BOD) 95% of the Suspended Solids, and 92% of the ammonia-nitrogen These atypical bad performance statistics for a plant of its age, and outdated technology. In April 2009, the Authority established an Organic Capacity Management Plan (CMP) for the DC Sewer System to manage the remaining organic capacity to ensure the plant does not become organically over loaded prior to the plant upgrade being completed in Subsequently, the PADEP in 2015 required that a Corrective Action Plan (CAP) be developed. PADEP approved the CAP in September The CAP addresses the treatment plant and the interceptors, requiring upgrades to both, and accelerated sewer rehabilitation during the interim period until the upgrades are completed. The CAP includes limiting the number of taps to 67 in 2018, and the Authority will need to seek approval each year for the number of taps allowed. The organic loadings in 2018 through October have varied from 1,198 lbs/day to 3,192 lbs/day. The annual average loading was 2,415 lbs/day. DC Plant Major Operation and Maintenance Items in 2018 Due to the impending replacement of the plant, minimal time was invested in non-essential maintenance; however, several major improvements were achieved at the new DC Plant facilities 2018 under the Project budget: Procured (4) 12 duck bill valves for installation on internal recycle at new plant, financed through the Project Procured storage items and furniture for the new plant Treatment Department Overall Expense Summary (Both Plants) Overall, the Treatment Department s projected expenditures are $972,364, which is under budget by $62,395 or 6.1%. Most categories were slightly under budget except Material & Supplies, Equipment/Facilities, and Employee Benefits. Discussion of significant budget line items: Consumable Supplies, Material and Supplies Included in this category are the materials and supplies used to maintain the treatment plant equipment, buildings, and grounds, and includes janitorial supplies, lubricants, paper products, weed killer, insect killer, wood, screws, etc. This category was budgeted at $18,564 and is expected to be slightly over budget due to replenishment of supplies at Brush Run, and the startup of the new treatment plant. Chemicals - Included in this category are the chemicals used in the treatment process, including chlorine, sodium bisulfite, polymer for sludge thickening at DC and dewatering at Brush Run, and sodium bicarbonate for ph adjustment of sludge prior to dewatering, and occasional aeration tank ph adjustment at Brush Run and DC to stay in compliance with the NPDES Permit s ph discharge limit. This category was budgeted at $58,241 and is expected to be under budget by $9,300. However, the line item for old DC Final_2018 Budget Performance Summary 12/19/ _12 of 33

13 WWTP disinfection $6,400 is over budget $1,030 due to an increase in both plant s chlorine consumption. The unexpended $5,000 budget for Other Process Chemicals was not utilized because the anticipated acid cleaning of the Brush Run diffusers did not occur and inventory supplies of sodium bicarbonate, lime and hydrochloric acid were sufficient. The unexpended $3,900 budget for New DC Disinfection was not purchased. Lab Supplies Included in this category are routine chemicals and supplies for the laboratory, laboratory equipment, QA/QC samples, yearly calibration of lab equipment by an outside vendor, yearly flow meter calibration at Brush Run and DC, and annual sludge analysis. This category was budgeted at $31,910 and is expected to be under budget by $1,286. Vehicles The only vehicle in the Treatment Department is the 2009 tanker truck, used to haul digested biosolids from the DC Plant to the Brush Run Plant for dewatering. This category was budgeted at $11,200 and is expected to be under budget by $420. Recent changes in PA State inspection requirements for commercial vehicles (from annual to two years) contributed to lower expenses. Equipment/Facilities Included in this category are line items for replacement parts purchased for inventory, minor equipment, equipment rental, and annual NPDES fees. This category was budgeted at $21,000 and is expected to be over budget by $4,049, due to replenishment of inventory, and BR WWTP equipment rental of a mobile crane, steel plates and scaffolding utilized for the sludge piping replacement project. Equipment Replacement Allowance - The Treatment Equipment Replacement Allowance has a budgeted amount of $120,000, which is used to charge to when we elect to completely replace plant equipment instead of repairing the equipment. By allocating these unusually high replacement costs to a separate line item the normal Maintenance & Repair line items do not get ratcheted up in future years by the current year s unusual repair expenditures. It also provides a method to help segregate the expenditures that will be revised in the Asset Inventory prior to the annual audit. Beginning in 2010, any balance remaining in the Equipment Replacement Allowance is shown as Capital Fund Transfer expenditure and is transferred to the CIRF to be used to fund the Capital Budget. There were no items charged to the replacement allowance account: therefore, $120,000 will be available as the treatment allowances transfer to the CIF in Maintenance & Repair Included in this category are general maintenance costs, and the mechanical and electrical repairs costs associated with the treatment plants. This category was budgeted at $54,000 and is expected to be under budget by $7,783. The major repairs were described above. Utilities Included in this category are the utilities at each of the treatment plants, which include power, natural gas, water, and telephone expense. This category was budgeted at $182,726 and is expected to be under budget by $12,131, primarily due to the delayed startup of the new DC WWTP. Plant Power Expense: The overall treatment plant power expense was budgeted at $158,000 and we will be under budget by $12,240 or 7 %, due to a higher oxygenated influent associated with higher than normal wet weather flows. Power Generation Procurement: We are currently under contract with Constellation Energy to supply power generation under a 36-month agreement which will end January 1, The price/kwh is $ at both treatment plants as well as at the pump stations. Final_2018 Budget Performance Summary 12/19/ _13 of 33

14 Biosolids Included in this category are biosolids disposal and screenings disposal. We will have disposed of 1,381 tons at an average cake concentration of %, which is below our target cake concentration of 15%. As anticipated, the hauling and disposal contract re-bid in September 2016 as (1) year contract with (4) option years expiring in October Disposal pricing increased 4% in October 2018 from $59.38 to $61.76/ton. This category was budgeted at $106,320 and is expected to be under budget by $33,381 or 23%. Salary & Wages Each treatment plant is staffed by one certified operator and one maintenance person, for one shift each weekday. Weekend coverage is achieved by overtime with one individual traveling between both plants to perform the required tests and data collection. Five to six hours is required each weekend day and holiday. This category (both plants) was budgeted at a total of $274,511 and is expected to be over budget by $1,156, primarily due to several rain events that required more overtime. Employee Benefits -Included in this category are the employees pension contributions, health, life, and disability insurance, uniforms, and employee certifications. This category was budgeted at $83,180 and is expected to be over budget by $10,639, primarily due to the change of status for health benefits, and pension. The pension for the union employees is a calculation of hours physically worked, therefore, as overtime is increased the pension contribution increases. Computers/Networking Included in this category are the maintenance of the SCADA system at the Brush Run Plant, the annual SCADA software maintenance fee, and other related plant computer and printer expense. This category was budgeted at $10,000 and is expected to be under budget by $4,039, due to the anticipated upgrades covered under the capital budget. POTW Fees - POTW being Publicly Owned Treatment Works. These are the fees paid to ALCOSAN based on water consumption of the 82 customers in the Marella Manor service district. ALCOSAN s 2018 charge was: Service Charge: $15.60/Quarter Gallonage Charge: $7.43/1,000 gallons Based on 2018 total charges, the average cost for treatment at ALCOSAN for the Marella Manor customer was $ per quarter, plus approximately $20.74/quarter for payments to Upper St. Clair for operation & maintenance charges, for a total of $136.68/quarter per customer, plus any cost we have billing/administration and our sewer maintenance costs. This compares to our average residential customer sewer use charge of $122.03/quarter, presenting a billing shortfall of ($14.65) per customer per quarter. By agreement we are required to budget 120% of the estimated ALCOSAN fee based on water consumption; thereby, there is always a small surplus at the end of the year. This category was budgeted at $39,900 and is expected to have a surplus of $7,730 or 17%. Professional Services - Included in this category are the routine engineering, legal, and appraisal services associated with the treatment facilities. An industrial appraisal is conducted periodically to establish the insurable values of the Authority s fixed treatment plant assets. The last physical appraisal of the Brush Run plant was performed in 2013, and is updated annually by an inflationary index and any new additions. For the Donaldson s Crossroads plant we will continue to use the 2004 appraisal, with annual adjustments, because it is in the process of being upgraded. An industrial appraisal has been scheduled for 2019 concurrent with completed construction of the dewatering facility. The Professional Services category was budgeted at $6,450 and is expected to be under budget by $5,617. Insurance The only insurance assigned individually to the Treatment Department is Worker s Final_2018 Budget Performance Summary 12/19/ _14 of 33

15 Compensation Insurance. The costs of other insurances are assigned to the Administration Department. This category was budgeted at $9,000 and is expected to be on budget. COLLECTION SYSTEM DEPARTMENT Collector and Interceptor Sewers The Collection System Department consists of five full-time field staff that maintain the Authority s 130 miles of collector sewers and interceptors, and eight sewage pumping stations. They also conduct property dye testing for property transfers, perform manhole inspections, locate and identify sewer lines as part of the PA One Call program, perform emergency excavation repairs, and assist with treatment plant operations and maintenance. Tasks undertaken this year from the Operating Budget included: Grouted a total of 11,089 linear feet and made 24 CIPP repairs of 106 linear feet of DC Watershed Replaced Maple Lane soft starters Repaired Rutledge Pump Station shaft Installed new capacitors at the Colony Manor Pump Station Repaired Hidden Brook Pump Station Repaired the Stratford Pump Station shaft Staff performed 220 dye tests on homes, including CCTV of building sewer, for property transfers through October, and project 40 additional through end of year for a total of 260. The charge for a dye test is now $175; thereby, the projected total revenue is approximately $42,000. Of the testing performed through October, 37% of the properties failed due to an inflow or infiltration source. Emergency landslide sewer replacements on Buffalo Ridge and Hemlock Drive Sewer projects undertaken this year from the Capital Improvement Fund included: Continuance of the design and permitting for the Sewer Conveyance projects, which include the replacement of the DC Oakwood Road and Giant Oaks Interceptor, and the replacement of the defective Hidden Brook sewers, and the installation of a new pump station. Rutledge Drive cleaning, televising and CIPP lining of existing 2,900 LF 8 pipe Our maintenance and repair strategy for the sewer system is to televise 24,000 feet each year and rehabilitate 12,000 feet of sewer each year. Due to the CAP requirements, the Authority accelerated our maintenance and repair strategy for the DC system. Combined for DC and BR systems as of October 2018: Televised: Rehabilitation/Replacement: 17,485 feet (72% of target) 14,292 feet (117% of target) In most years, we come close to achieving our target footage for televising sewers, but seldom are we able to achieve the sewer rehabilitation target of 12,000 feet. Dye Testing at Property Transfer The Authority staff began conducting the required dye tests at property transfer in July Prior to that date the dye tests were conducted by plumbers engaged by the property owners. The program change was in part undertaken to refocus the I/I removal program to sources located on private property, with the intent to Final_2018 Budget Performance Summary 12/19/ _15 of 33

16 eventually expand the program to include CCTV inspection of private building sewers and the requirement to repair defective building sewers. Since the Authority began conducting the dye tests in July 2008 the percentage of failures detected has increased from 4% when plumbers were conducting the dye tests to 37% currently. The definition of failure is a direct or indirect connection that allows rain water or groundwater into the sanitary sewer. The Authority has expanded the program to include CCTVing of the building sewer, with dye injection in the vicinity of pipe defects. If infiltration is visible it is a violation of the Authority s regulations and requires repair. We also inject dye close to all vertical risers (i.e. cleanouts and house trap vents), and more often than not these allow infiltration, and require repair. Collection Department Overall Expense Summary Overall, the Collection System Department s projected expenditures are $799,067 which is under budget by $54,200 or 5%. Discussion of significant budget line items: Materials & Supplies Included in this category are the materials and supplies used to maintain the collection system, and includes: dye testing supplies, weed killer, insect killer, and miscellaneous supplies. This category was budgeted at $11,900 and is on budget. Process Other Included in this category are chemicals for odor control for the pump stations. Waterdam pump station has historically required more odor controls. This category was budgeted at $2,300 and is under budget by $1,748, due to only one treatment of odor controls at the Waterdam pump station. Vehicles Included in this category are parts and supplies, fuel, and all repairs for the following vehicles. This category was budgeted at $18,500 and is on budget. (Note that the tanker truck is discussed in the Treatment Department). Year/ Vehicle Repair Expense Table VII - Vehicle Repair Summary Description of Repairs Annual Mileage Total Mileage 2003 Sterling Vac $1,213 Inspection, coolant change 3,685 49, Ford 350 $1,215 Inspection, brakes, rear rotors 1,535 69, Chevy Blazer $77 Inspection, emissions 1,850 70, Ford Van $802 Inspection, two tires, front ball joints 9,860 62, Ford F-350 $1,293 Inspection, (4) tires, rear brakes and 11,229 50,559 rotors, oil change 2015 Ford F-550 $1,145 Inspection, rear brakes and rotors 2,662 10,582 Dump Truck 2016 Ford F-450 $114 Inspection, rear brakes 6,062 17,032 Total: $5,859 36,883 NA Vehicle maintenance and repair expense in 2018 was $2,100 more than in Total annual mileage was 2,500 less than Final_2018 Budget Performance Summary 12/19/ _16 of 33

17 Equipment/Facilities Included in this category are replacement parts, minor equipment purchases (items like weed whackers, push mowers), safety equipment, and rental of equipment. This category was budgeted at $17,551 and is expected be under budget by $5,684 primarily due to no equipment rental (ie: mini-excavator).. Equipment Replacement Allowance - The Collection System Department s Equipment Replacement Allowance was originally budgeted at $100,000. The items charged to the replacement allowance account this year was emergency sewer line repairs as a result of landslide at Buffalo Ridge and Hemlock Drive; therefore $60,720 will be available to transfer to the CIRF. Maintenance & Repair Included in this category are general maintenance costs, the mechanical and electrical repairs costs associated with the pump stations, and the cost for more comprehensive repairs or rehabilitation of sewers. Generally sewer rehabilitation work paid out of the operating budget is limited to point repairs, chemical grouting of sewer lines, and manhole rehabilitation. Major sewer replacements or major sewer CIPP lining projects are funded from the CIRF. This category was budgeted at $199,300 and is expected to be under budget by $54,271 or 24%, due to no urgent repairs or contracted CCTV. Major projects this year charged to the Maintenance & Repair line were: 11,089 LF of 8-inch sewer pipe grouting and point repair. 160 LF of 8-inch replacement (Fieldbrook) 143 LF of 8-inch CIPP Lining (Fieldbrook) Utilities - Included in this category are the utilities at each of the pump stations which include power and telephone (for automatic telephone dialers) at each of the pump stations, water at several of the pump stations, and natural gas at the Hidden Brook Pump Station and Maple Lane Pump Station which are equipped with on-site automatic, standby emergency generators. The Waterdam Pump Station s generator is diesel powered. Additionally, the Hidden Brook Station, being our largest pump station, is equipped with a DSL line to transmit data to the Brush Run SCADA System. This provides us the ability to remotely, over the Internet, monitor the Hidden Brook Pump Station s equipment and flow. This category was budgeted at $16,091 and is expected to on budget. Salary & Wages During 2016 we expanded our collection system maintenance staff to five employees from four. The employees consist of two Skilled Maintenance and three General Maintenance employees. This category was budgeted at $281,240 and is over budget by $3,464 or 1%, due to labor allocation between the Collection Department and the Treatment Department, and overtime associated with the multiple flood and rain events. Employee Benefits Included in this category are the employees pension contributions, health, life, and disability insurance, uniforms, and employee certifications. This category was budgeted at $134,400 and is expected to be over budget by $6,108 or 4.5%, due to change in status for the health insurance, and uniform replacement charges and boot replacement. POTW Fees These are the fees paid annually to Upper St. Clair Township in accordance with the Marella Manor service agreement. Essentially, we pay 3% of the operation and maintenance costs of their Brush Run Pump Station, force main, and the trunk sewer. They invoice us annually for the previous year. This year s invoice at $4,500. This category was budgeted at $4,500 and is expected to be on budget. Professional Services Included in this category are the routine engineering, legal, computer consulting, and appraisal services associated with the collection system. This category was budgeted at $5,600 and is Final_2018 Budget Performance Summary 12/19/ _17 of 33

18 expected to be under budget by $812 due to contracted dye test assistance not being needed. Insurance Included in this category is the workers compensation insurance for the five general maintenance personnel. This category was budgeted at $7,685 and is on budget.. ADMINISTRATIVE DEPARTMENT The Administrative Department consists of the Manager, Assistant Manager, Financial Controller, Special Projects Manager, Billing Specialist, and Administrative Assistant. Expenses include management and administrative salaries, the office overhead expenses, the bulk of the professional support services, insurance expenses, networking and computers, and billing related expenses. In 2018, the Special Projects Manager departed employment late in the year. Management s plan is to eliminate that position, and restructure the dye test program, utilizing union personnel. Overall, the Administrative Department projected expenditures are $839,169 which is under budget by $70,256 or 8%, primarily due to the change in management and administrative personnel and adjustment of hours for the administrative position, and the budgeted amount for legal fees not expended. The Administrative Department s accomplishments in 2018 included:. A significant portion of the year s administrative effort was focused on financing and construction management of the DC WPCP Replacement Project and the Interceptor project, including: Administer the $11 million PENNVEST loan Administer the Corrective Action Plan as approved by the PaDEP Applied for $4.2 million PENNVEST Loan Obtained property easements Continued with our Workplace Safety Committee, holding 12 monthly meetings, and separate monthly tailgate safety meetings with the Operation and Maintenance staff. We have participated since 2006 and receive a 5% credit on our Workmen s Compensation premium. Reorganized the Dye Testing Program. Streamlined the process by the development of property notifications within the GIS system, which eliminated duplication. Processed an estimated 371 document of certifications for property transfers, of which were for refinancing and for sales. For refinancing the Authority inspects for buried manholes on the property, requiring them to be raised before the Authority sends a lien status letter to the closing company. Continue to receive quarterly updates in the GIS System from the Township. Worked with the GIS consultant on customizing the updated GIS system, to be implemented in Continue to refine the In-House Sewage Billing Program. Customer additions Automatic Withdraw Program (ACH), MyGov Hub, online access for customers, payment plans, and ebilling Service Order creation for field staff for reading and inspecting deduct meters Integrated the G/L transfer process from the billing program to the accounting program Continue with Website updates Discussion of significant budget line items: Material & Supplies Included in this category are basic office supplies of paper, ink cartridges, envelopes, postage, advertising expense, printing, etc. This category was budgeted at $17,100 and is over budget by $1,050, several employee anniversary lunches and appreciation tokens, replenishment of Final_2018 Budget Performance Summary 12/19/ _18 of 33

19 supplies. Equipment/Facilities Included in this category are minor office equipment, replacement parts, safety equipment, and the equipment replacement allowance. This category was budgeted at $4,950 and is on budget. Equipment Replacement Allowance - There were no charges to the replacement allowance account for; therefore, $5,000 will be available as the transfer to the CIRF. This category was budgeted at $5,000. Maintenance & Repair Included in this category are the maintenance fees for the color photocopier, annual phone system maintenance, administration building maintenance and repair. This category was budgeted at $9,500 and is under budget by $3,623 or 38 %, primarily due to no major repairs on the building or equipment. Utilities Included in this category are the administration office telephones, security system, cleaning, trash pickup, power, natural gas, and any utilities, taxes, and maintenance and repair of our rental Churchill property. This category was budgeted at $20,488 and is on budget. Salary & Wages The Management and Administrative staff consists of the five management employees, who are salaried employees, and an hourly Administrative Assistant, and payroll taxes associated with those employees. This category was budgeted at $425,761 and is under budget by $45,235, primarily due to reduction in management personnel from five to four employees. The Special Project Manager departed employment late in Management intends create a new hourly, union position that will incorporate the duties previously responsible by the Special Project Manager. The line item identified as Salary & Wages, Labor Allocation is the line item used to track the labor costs reimbursed from the CIF for capital projects or from developers for developer sewer extension projects. There was $243 in reimbursed wages. Employee Benefits Included in this category are employees pension, health/dental/vision insurance, and life and short-term disability. The hospitalization plan is a Highmark high deductible plan. All five employees participated in the plan. There is Employee participation to contribute to the cost of the premiums. The Single enrollment will be responsible for a contribution equal to 5% of the cost difference from the base year 2014 to the current premiums. All other enrollments the contribution is based upon 5% of the difference of the Single enrollment to their enrollment. This category was budgeted at $108,680 and is under budget by $6,043 or 5.6%., primarily due to the change in employees. Travel/Training/Meeting Included in this category are registration fees and expenses, membership dues which include PMAA membership and management employees memberships in Water Environment Federation, etc., Board Member meeting stipend; and employee training expense. This category was budgeted at $11,600 and is on budget. Computer/Networking - Included in this category are support for the treatment operating and lab maintenance software and routine consulting time for the network server and all computers. This category was budgeted at $11,700 and is slightly over budget by $636, due to the expenditures for video storage for the dye testing program.. Professional Services - Included in this category are Auditing Fees, Engineering, Legal, GIS Updates, Computer Consultant Services, and Appraisal Services. This category was budgeted at $86,450 and is under budget by $15,697, or 18%. This was primarily due a legal expenses budgeted conservatively and Final_2018 Budget Performance Summary 12/19/ _19 of 33

20 not expended. Below is the breakdown of Engineering charges to the Operating Budget ( all three departments): HRG GHD Total Operating Budget $23, $0 $23, CIF Budget $170, $193, $363, Developer Reimbursed $58, $0 $58, TOTAL: $253, $193, $446, The total amount expended on engineering through October 31, 2018 was $446,370 and expected to approach $550,000 for Engineering Fees consisting of: Operating expenditures: retainer services, and several miscellaneous tasks. CIRF expenditures: DC WWTP construction phase services, DC Interceptor Design/Hidden Brook Emergency Repair, Rutledge Sewer Rehabilitation, Stonehedge Truck Sewer Replacement, Emergency repairs Buffalo Ridge and Hemlock, and Deerfield Manor/Links Drive customer transfer. Developer expenditures for the following developments: o Just About Farms - $40,309 Juniper Woods - $3,776 o Brookwood Place - $4,470 Brookwood Village - $2,434 o Robinson Residence - $620 Manolakas Property 957 o Tuscany Plan - $1,400 Legal Fees budgeted were $45,000, and is $16,389 under budget. Legal expenses include: retainer services, personnel issues, employment related issues, Deerfield Manor customer transfer, Buffalo Ridge emergency repairs, DC sewer project easements, DC WWTP construction issues, and uniform contract review. Total Legal including Capital Funds as of October 31, 2018 are $36,200, and are expected to approach $46,700. Insurance Included in this category are all of the insurances, with the exception of Worker s Compensation for Treatment and Collection Departments. Our agent is B&W Insurance, and the insurance company is Selective Insurance. This category was budgeted at $90,590 and is slightly over budget by $3,857, due to the additional insurance required on rental equipment (mobile crane) utilized for the sludge piping replacement at Brush Run WPCP. Administrative Services This category includes Billing Expenses, Bank Fees, Bond Trustee Fees, Public Relations expenses, and the Grants Coordinator s fee. This category was budgeted at $47,350 and is under budget by $6,917, due to no charges against public relations. Final_2018 Budget Performance Summary 12/19/ _20 of 33

21 NON-OPERATING EXPENSES Debt Obligations The Authority s borrowed funds consist of the following: Sewer Revenue Bonds, Series 2016: The Authority issued guaranteed sewer revenue bonds during 2016 in the amount of $5,825,000 as partial financing of the DC WPCP Replacement Project, with a term of Interest during construction was capitalized. As of October 31, 2018 the proceeds were still being drawn down. There is a required 110% coverage requirement. Principle balance of $5,630,000 as of December 31, 2018 Annual debt service of $351,000 Final payment date is in 2040 Interest Rate (Arbitrage Yield) is 2.80% Pennvest Loan of $11,000,000 for the DC Replacement Plant Project. Final draws on loan occurred in October PV has a $550,000 holdback until project is finalized and inspected. This should occur April Principle balance of $11,000,000 as of October 31, 2018 Monthly debt service is $50, Annual debt service is estimated at $610,304 Final payment date will be determined when the final amortization schedule is prepared when the project is completed. Interest Rate is 1.055% (first five years) Interest Rate 6-20 th year is 1.835% Pennvest Loan for the Ivy Lane Sewer Extension, 2003 Principle balance of $128,838 as of December 31, 2018 Annual Debt Service $26,400 Final Payment date is March 31, 2023 Interest Rate of 2.774% Bank Note with Charleroi Bank for Valley View Sewer Extension, 2013, was defeased October 2018, by the CFS Bank Loan, CFS Bank Loan, 2018 for the refunding of the $425,000 Bank Note with Charleroi Bank for Valley View Sewer Extension, 2013, and $800,000 to fund partial construction of the DC WWTP Dewatering Facility. Principal balance of $1,225,000 of October 31, year loan with a 15-year amortization Balloon payment due 11/1/2028 in the amount of $487, Annual Debt Service $107,292 Final Payment date is 11/1/2028 Interest Rate of 3.75%. Total Outstanding Debt: $17,983,838 Final_2018 Budget Performance Summary 12/19/ _21 of 33