ADOPTED OPERATING BUDGET & CAPITAL IMPROVEMENTS PLAN ADOPTED ON: OCTOBER 30, 2014

Transcription

1 ADOPTED 2015 OPERATING BUDGET & CAPITAL IMPROVEMENTS PLAN ADOPTED ON: OCTOBER 30, 2014

2 GFOA AWARD The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to Madison Metropolitan Sewerage District, Wisconsin for its annual budget for the fiscal year beginning January 1, In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. 2

3 OFFICERS COMMISSIONERS (left to right) John Hendrick Caryl Terrell, President Topf Wells Thomas Hovel, Vice President Ezra Meyer, Secretary 2015 BUDGET TEAM (back row left to right) Janelle Werner, Executive Coordinator Jeff Brochtrup, Director of Administration Mike Simon, Assistant Chief Engineer & Director Michael Mucha, Chief Engineer & Director Paul Nehm, Director of Operations & Maintenance (front row left to right) Laurie Dunn, Information Systems Manager Shirley Fox, Controller Dave Taylor, Director of Ecosystem Services Stephanie Calkins, Accountant Bruce Borelli, Director of Engineering 3

4 TABLE OF CONTENTS SECTION 1 INTRODUCTION TO THE DISTRICT BUDGET 5 Budget Process, Amendment Procedures, Philosophy & Principles 8-11 Budget Calendar (Table 1) 9 Budget Amendment Procedures (Table 2) Combined Summary of Operating, Capital Projects, & Debt Service Budgets 12 Fund Structure for Budgets (Table 3) 12 Combined Summary of Revenues & Expenditures (Table 4) 13 Operating & Capital Project Budgets Combined Summary (Table 5) 14 Combined Summary of Revenues & Expenditures (Tables 6 & 7) 15 SECTION OPERATING BUDGET SUMMARY 16 Operating Budget (Table 8) 17 Full-Time Equivalent Positions (Table 9) 20 Program Narratives 20 SECTION CAPITAL IMPROVEMENTS PLAN & BUDGET 24 Capital Projects Budget (Table 10) Six-Year Capital Projects Summary 30 Six-Year Capital Projects Summary (Table 11) Capital Projects Cash Flow Summary (Table 12) 35 SECTION DEBT SERVICE Debt Service Budget (Table 13) 38 Six-Year Debt Service Summary (Table 14) 39 Debt Service Payment Schedule (Table 15) 41 Scenarios/Charts (Charts 1-3) SECTION 5 APPENDICES Appendix A: Project Summaries Appendix B: Completed Projects & Retainers Appendix C: Budget Summaries Appendix D: Represented Wage Schedule 63 Appendix E: Non-Represented Wage Schedule 64 Appendix F: Organizational Chart 65 Appendix G: Director Narratives Appendix H: Statistical and Supplemental Information Appendix I: Glossary of Acronyms & Definitions

5 SECTION 1 Introduction to the District Budget Commissioners: I am pleased to present the 2015 Budget and Capital Improvements Plan. Efforts to keep service charges as low as possible have been a priority. Over the last few years, the District has focused on achieving efficiencies that have resulted in over $250,000 in reduced costs that are reflected in this budget. The key areas are energy efficiency, plant process optimization and task optimization. It has also been a priority over the last several years to improve budget planning and reporting to increase transparency and assist the Commission in making informed budget policy decisions. This could not have been accomplished without an engaged Commission and dedicated, knowledgeable and experienced employees. The Commission spent time ahead of this budget process to: Received information on longer term cost and revenue trends and financial scenario s in May using the District s new financial model. Accepted a long term staffing strategy in May to scale up pollution prevention and source reduction programs as a cost effective means to achieve permit compliance. Accepted the Draft 2015 Capital Improvements Plan in June that included improved business case evaluations. The 2015 Operating and Capital Budget provides substantially more information than the budget from just two years ago in regards to budget reporting. The expansion in content is driven by a desire to achieve best in class budget presentation standards as set forth by the Government Finance Officers Association and to enable the Commission to readily and accurately see how the recommended budget differs from the current budget with an explanation of significant differences. The result is a budget document that tells a story as to how service charge revenues are being used and what results are being achieved. The narrative format will be more accessible to and easily understood by the public. The Budget Team deserves thanks for the visible changes to the quality of this document. While the budget document itself has undergone improvements, the District also continues to improve our effectiveness as a regional utility. The District overarching budget goals include taking care of existing infrastructure, supporting an effective workforce, and proactively addressing future regulatory requirements. This combination has allowed the District to achieve outstanding environmental performance and maintain stable service charges over time. 5

6 Budget Highlights Some of the highlights of this budget include investments in the following areas to address priorities and issues: Built Infrastructure: This budget continues to invest in infrastructure consistent with the District s Collection System Facilities Plan to address aging infrastructure and improve reliability. Projects include the rehabilitation of Pumping Stations 11, 12 and 15, construction of Pumping Station 18 and Force Main, the replacement of the Rimrock Interceptor and several lining projects throughout the collection system. This budget also includes projects for Nine Springs Wastewater Treatment Plant such as the upgrades to the plant Process Control System and Aeration and Peak Capacity Facilities Plan. Human Infrastructure. To assure that the District will operate efficiently and effectively, the District believes in establishing competitive wage and benefit packages that will attract talented individuals to long term service with the District. The national average in salary/wage escalation is anticipated to be 1.85% for 2015 (the Madison area may be a bit higher). The budget includes a 3% market adjustment to account for the fiscal impacts of Act 10 on employees and to share the savings resulting in a shift to a new healthcare provider. Virtual Infrastructure. To ensure the District is able to manage and assess critical data, this budget directs funds to modernize our information technology systems. An emphasis is being placed on key areas to ensure sound business decisions around asset management, permit compliance, and adaptive management. There has not been any growth in information technology staffing or budget capacity for over ten years, even though information needs have increased exponentially. There will be increased emphasis for laboratory information management, pollution prevention, mapping to address our customers needs, and environmental monitoring. This budget includes some modest staffing increases to sustain current systems and funds to develop strategic plans for GIS and information systems. Health and Efficiencies. This budget supports the safety and health of our employees as well as physical efficiencies through investments in: o o Construction of a new modern maintenance facility that will consolidate all maintenance in one location for increased efficiencies and provide employees with a safe and healthy workplace. Sewer monitoring technology to reduce the frequency and duration of high-risk confined space entry and data collection. Pollution Prevention and Source Reduction. This budget invests in pollution prevention and source reduction (PPSR) as an alternative to traditional brick and mortar solutions. Modest investments in PPSR efforts allow the District to avoid significant future capital expenditures for treatment technology and associated annual operating costs. Major PPSR efforts 6

7 currently underway include those associated with phosphorous and chlorides. This budget invests more in watershed adaptive management as the District prepares to transition from the pilot study phase to full scale implementation. It also includes an increased emphasis on chloride reduction using a variety of policy, communication, and outreach tools to reduce chloride loads at the source. Resource Recovery. The District will pursue and implement resource recovery initiatives based upon the business case around social, environmental, and economic criteria. Additional efforts include research to increase energy production through acceptance of high-strength waste and diversifying the biosolids reuse program. Partnerships The District values our partners and the opportunities that emerge through collaboration. This budget includes funds to leverage already strong relationships to advance important priorities. For example, funds are included to work with the City of Madison to conduct manhole inspections using new technology, with resulting information being used to enhance our asset management program. Funds are also included to work with Dane County in advancing adaptive management efforts to reduce nutrient pollution in our lakes and streams. Finally, funds are being used to supplement a grant to work with the University of Wisconsin to study the feasibility of accepting food waste as a potential feedstock to generate more energy. In closing, the 2015 Budget and Capital Improvement Plan allows the District to maintain and improve District facilities, advance pollution prevention/source reduction initiatives and continue to provide a high level of service to District customers. The District continues to be a role model for nurturing a strong regional approach to getting things done to advance environmental quality and making effective use of our customer service revenues. I look forward to 2015 being another year of progress. Respectfully Submitted, D. Michael Mucha, P.E. Chief Engineer and Director 7

8 Budget Process, Amendment Procedures, Philosophy & Principles Budget Process The purpose of the annual budgeting process is to assure that the District has adequate resources to deliver its planned services during the upcoming year and in future years. Questions that need to be answered as part of this process include: 1. What are the estimated expenses for operating the District s facilities next year? 2. What are the estimated costs for construction of new or replacement facilities over the next six years? 3. How much money can the District expect from the various revenue sources next year, and how much money will the District need to recover through service charges? 4. How much money will the District need to borrow to finance construction work? 5. How much money does the District need in the bank to assure adequate cash flow, to fulfill promises made when borrowing money, and to address unforeseen emergencies? The annual budget process addresses the upcoming year s financial management plan in three areas: 1. The Operating Fund budget addresses the operation of facilities and includes recovery of future years debt service costs to comply with promises made at the time the District borrows money to finance construction projects. The primary source of funds to pay for the operation of facilities is service charge revenue. 2. The Capital Projects Fund budget addresses construction of new or replacement facilities. Larger projects are typically funded with proceeds from a Clean Water Fund loan. These loans are administered by the State of Wisconsin. The District uses its taxing authority as collateral for these loans; however, the intent is to repay these loans with revenues generated through service charges. Smaller construction projects are funded through connection charge revenue and interest earned on the fund s investments. 3. The Debt Service Fund budget addresses debt service, the annual principal and interest payments due on borrowed funds. When the District borrows money from the state in the form of a Clean Water Fund loan, the District promises to place the amount of the next year s debt service payments on the tax roll unless the Debt Service Fund has a balance by October 1 sufficient to make those payments. Since the District intends to repay its debt through service charges, each year s Operating Fund budget includes sufficient amounts of principal and interest in its operating expenses to fulfill this requirement. This money is transferred from the Operating Fund to the Debt Service Fund prior to October 1 each year to assure that no amount needs to be placed on the tax roll. 8

9 The Chief Engineer and Director submits annually a Proposed Operating Budget, Proposed Capital Projects Budget, and Proposed Debt Service Budget. These proposed budgets are typically submitted at the first Commission meeting in September. After a public hearing and further consideration by the Commission, the Commission typically approves the Operating, Capital Projects, and Debt Service budgets at the second Commission meeting in October. Table 1 summarizes the budget calendar for the 2015 Budget and Capital Improvements Plan. Budget Amendment Procedures Amendments to the proposed Operating, Capital Projects, and Debt Service budgets or to the approved budgets can be initiated by either the Commission or staff. Once the Commission approves the budgets for the succeeding calendar year, amendments to the budgets must be approved by the Commission as shown in Table 2. June-July July-August August August 14 th September 10 th September 11 th September 12 th September 25 th October 13 th October 16 th October 30 th November 1 st Budget Calendar TABLE 1 Commission review and acceptance of the Draft Capital Improvements Plan The Executive Team discusses critical needs, expense and revenue trends and goals. The team is made up of the Chief Engineer and Director, Department Directors, HR Manager and Executive Coordinator Department staff develops and submits their budget requests to the Budget Review Team (Chief Engineer and Director, Director of Administration and Controller/Office Manager). The team balances revenue and expenditures and develops the Chief Engineer and Director s proposed budget Staff presents preliminary view of issues and drivers for the upcoming budget A summary of the proposed budget is published and notice given of the upcoming budget hearing as required by Wisconsin Statutes Section Chief Engineer and Director presents preliminary budget Notification of MMSD 2015 Budget & Budget Hearing mailed to communities Public hearing and Commission discussion Deadline to receive written comments from the public on the proposed budget Commission discussion and direction to staff Commission adopts operating, capital, and debt service budgets and service charge rates Notify customers and septage haulers of new rates and estimated charges Budget Operating Budget Capital Projects Budget Debt Service Budget Amendment Procedures Requirements for Budget Amendments Any increase in the total authorized expenditures Any increase in the budget total for the year The addition of a new project not previously included in the adopted budget Any increase to a previously approved total project cost TABLE 2 Any change to the approved amount to be transferred from the Operating Fund to the Debt Service Fund 9

10 Budget Philosophy Several principles combine to form the District s philosophy related to payment for the services provided by the District: 1. Users pay charges based on the cost of the service. 2. Operating costs are funded on a pay-as-you-go basis. Annual costs for operating the District s facilities are recovered from current users through the payment of service charges that reflect the customer s use of the service and the current costs of providing that service. The District does not use borrowed money to pay for current operating costs. 3. Construction of new facilities is financed primarily with debt. New facilities are built to last twenty years or more and built with sufficient capacity to handle increasing loads caused by expected growth over their useful lives. Debt for new facilities is generally paid back over a twenty-year period. This spreads the up-front construction costs over those users that are actually using the facility during its service life. 4. Detailed long-range planning helps to assure stable rates and charges. The District s Capital Projects Fund budget includes a 6-year projection of construction-related expenses and revenues. The financial plan that evaluates the impacts of long-term borrowing on future budgets uses a 20-year projection. Budget Principles A number of principles guide the preparation of the annual budget for each of the three District funds. The Operating Fund budget principles are: 1. Maintain a minimum fund balance equal to 180 days of the annual operating costs (does not include debt service), to assure adequate cash flow capabilities. 2. Balance the budget by calculating the required service charge revenues so that total revenues equal the total expenditures. Service charge rates are reviewed and set annually so that the projected flows and loadings will provide the required service charge revenue. The Capital Projects Fund budget principles are: 1. Maintain a minimum fund balance of $3 million to fund any unforeseen project that may arise during the year. 2. Utilize reserve funds, interest earnings, and connection charge revenues to pay project costs before borrowing additional funds, unless the estimated project cost significantly exceeds the sum of these sources. In such cases, money is borrowed to finance the project. (Since the early 1990 s, the Clean Water Fund program has been the lowest cost source of 10

11 debt financing for the District. All District loans since 1992 have been through the Clean Water Fund program.) The Debt Service fund budget principles are: 1. Maintain a minimum balance in the Debt Service Fund to assure that no amounts have to be placed on the tax roll. Definitions Fiscal Year: The fiscal year for Madison Metropolitan Sewerage District begins on January 1 of each year and ends on December 31 of that year. The fiscal year is the accounting and budget year. Enterprise Fund: The District prepares its financial statements on an enterprise fund basis. Generally Accepted Accounting Principles (GAAP) require state and local governments to use the enterprise fund to account for business-type activities activities similar to those found in the private sector. Business-type activities include services primarily funded through service charges. Balanced Budget: The Madison Metropolitan Sewerage District is required to annually adopt a budget that is balanced. A balanced budget is one in which anticipated District revenues equal anticipated District expenditures for the fiscal year. The District achieves this for the Operating Budget by offsetting expenditures with service charge billings, other operating income, and fund reserves. The District s Capital Projects Budget achieves this by offsetting total project expenditures with Clean Water Fund loans, fund reserves, and all other capital projects fund income. The District s Debt Service Budget achieves this by offsetting total debt service expenses with funds transferred from the Operating Fund, debt service reserves, and interest income. Fund Balance: Fund balance is the difference between the assets and liabilities of a fund. It is a measure of the amount available to budget or spend in the future. 11

12 2015 Combined Summary of Operating, Capital Projects, & Debt Service The District prepares its financial statements and budgets on an enterprise fund basis. The District s operating expenses are funded within the Operating Budget, the capital expenditures are funded within the Capital Projects Budget and the Debt Service Budget is funded by transfers from the Operating Fund. The Operating Fund is the main fund. The Operating Budget authorizes use of the Operating Fund. The Capital Projects Budget authorizes use of the Capital Projects Fund. The Debt Service Budget authorizes use of the Debt Service Fund. Table 3 summarizes the fund structure for the Operating, Capital Projects, and Debt Service budgets. Table 4 provides a combined summary of revenues and expenditures for 2013 through Table 5 provides details on the sources of funds, use of funds, basis of accounting, and basis for expense for the Operating and Capital Projects budgets. Operating Budget (Operating Fund) Operating Funding User Charges Servicing Pumping Stations Septage Disposal Struvite Fertilizer Sales Interest Income Other Income Operating Expenditures Net Operating Expenses* Transfers to Debt Service Fund FUND STRUCTURE FOR BUDGETS Capital Projects Budget (Capital Projects Fund) Capital Funding Wisconsin Clean Water Fund Loans Interceptor and Treatment Plant Connection Charges Interest Income Capital Expenditures Treatment Plant Projects Conveyance System Projects TABLE 3 Debt Service Budget (Debt Service Fund) Debt Funding Transfers from Operating Fund Interest Income Debt Expenditures Principal and Interest Payments *Net operating expenses are reported after charges to the Capital Project Budget have been subtracted. 12

13 REVENUE CATEGORY COMBINED SUMMARY OF REVENUES & EXPENDITURES (Net of Transfers and Reserves) 2013 Actual 2014 Estimated Total 2014 Budget 2015 Budget Change from 2014 Budget Percent Change OPERATIONS & MAINTENANCE Sewer Service Charges $27,278,717 $27,800,000 $27,383,435 $29,272,449 $1,889, % Septage Disposal Income 382, , , ,000 30, % Servicing Pumping Stations 249, , , ,000 (23,000) -8.52% Struvite Fertilizer Sales - 160, , ,000 (235,000) % All Other Operating Income 258, , , ,630 (970) -0.50% Cash Reserves , , , % TOTAL OPERATIONS & MAINTENANCE REVENUES $28,168,962 $28,897,420 $28,769,035 $30,883,079 $2,114, % CAPITAL PROJECTS Clean Water Fund Loans $24,771,422 $29,599,000 $38,409,000 $20,218,000 ($18,191,000) % Interceptor & Treatment Plant Connection Charges 1,087,480 1,500, , , , % Interest on Investments (6,918) 40,000 25,000 34,000 9, % TOTAL CAPITAL PROJECTS REVENUES $25,851,984 $31,139,000 $39,184,000 $21,152,000 ($18,032,000) % DEBT SERVICE Transfer from Operating Fund $9,878,000 $10,865,000 $10,865,000 $11,843,000 $978, % Interest on Investments (13,917) 40,000 18,000 35,000 17, % TOTAL DEBT SERVICE REVENUES $9,864,083 $10,905,000 $10,883,000 $11,878,000 $995, % TOTAL REVENUES (net of transfers & reserves) $54,007,029 $60,076,420 $67,821,035 $51,466,079 ($16,354,956) % EXPENSE CATEGORY 2013 Actual 2014 Estimated Total 2014 Budget 2015 Budget Change from 2014 Budget TABLE 4 Percent Change OPERATIONS & MAINTENANCE Administration, Engineering & Commission $3,053,334 $3,140,429 $3,281,041 $3,668,867 $387, % User Charge & Pretreatment Program 432, , , ,550 23, % Wastewater Collection 2,213,113 2,166,137 2,308,893 2,273,971 (34,922) -1.51% Wastewater Treatment 8,784,422 9,857,550 9,660,480 10,103, , % Effluent Diversion 116,937 99,543 95, ,090 14, % Metrogro Biosolids Reuse Program 1,497,587 1,567,743 1,517,695 1,585,584 67, % Capital Outlay 386, , , , , % Servicing Pumping Stations Owned by Others 249, , , ,000 (23,000) -8.52% Transfer to Debt Service Fund 9,878,000 10,865,000 10,865,000 11,843, , % TOTAL OPERATIONS & MAINTENANCE EXPENDITURES $26,612,314 $28,729,637 $28,769,035 $30,883,079 $2,114, % CAPITAL PROJECTS Nine Springs Wastewater Treatment Plant Projects $11,862,663 $6,595,000 $10,420,000 $11,055,000 $635, % Interceptors 7,664,718 1,991,000 1,053,000 2,587,000 1,534, % Pumping Stations and Force Mains 3,688,720 22,546,000 23,988,000 6,527,000 (17,461,000) % Capital Budget Expenses 46, , , ,000 (338,000) % TOTAL CAPITAL PROJECTS EXPENDITURES $23,262,429 $31,735,000 $36,069,000 $20,439,000 ($15,630,000) % DEBT SERVICE Principal Payments $5,114,733 $5,568,912 $6,017,000 $9,086,000 $3,069, % Interest Payments 2,508,797 3,062,292 2,827,000 3,624, , % TOTAL DEBT SERVICE EXPENDITURES $7,623,530 $8,631,204 $8,844,000 $12,710,000 $3,866, % TOTAL EXPENDITURES (net of transfers & reserves) $47,620,273 $58,230,841 $62,817,035 $52,189,079 ($10,627,956) % 13

14 OPERATING & CAPITAL PROJECT BUDGETS COMBINED SUMMARY TABLE 5 ITEM OPERATIONS CAPITAL Sources of Funds Use of Funds Budgetary Basis of Accounting Basis for Expense Service Charges, Servicing Pump Stations, Struvite Fertilizer Sales, Reserve Funds, Interest and Other Income. Operating and Maintenance Expenses, Debt Service Actual revenues and expenses are recorded on a full accrual basis in accordance with Generally Accepted Accounting Principles. Revenues and expenses are budgeted on a full accrual basis, except capital outlays. These are budgeted as expense in the year incurred, but capitalized and depreciated for financial reporting purposes. Depreciation is not budgeted. Costs of operating and maintaining the sewerage system. Costs also include asset repair and replacement that is necessary to maintain the capacity and performance to meet the needs of the communities we serve, our regulatory requirements, and to protect the environment. Wisconsin Clean Water Fund Loans, Interceptor and Treatment Plant Connection Charges, Reserve Funds, and Interest. Project Expenses and All Other Capital Expenses For financial reporting, actual revenues and expenses are recorded on a full accrual basis in accordance with Generally Accepted Accounting Principles. Revenues are budgeted on a cash basis. Because the Capital Budget serves as a financing plan, it is important to plan when revenues are received rather than when they are earned. Expenses are budgeted according to what is projected to be completed for that particular year. Costs of acquiring, purchasing, planning, designing, construction, extending and improving all or any part of the sewerage system. 14

15 2015 Combined Summary of Revenues & Expenditures The District s 2015 combined budget totals approximately $51 million dollars. As seen in Table 6, the primary sources of revenue in the 2015 combined budgets are sewer service charges (57%) and Clean Water Fund loans (39%). Millions $35 $30 $25 $20 $15 $10 $ Combined Summary of Revenue TABLE 6 $0 Sewer Service Charge Clean Water Fund Loans All Other Revenue On the expenditure side (Table 7), the capital budget comprises (39%) of the 2015 combined budget while operations and maintenance of the District facilities (net of debt service) totals (37%). Debt service is (24%) of 2015 expenditures. Millions $25 $ Combined Summary of Expenditures TABLE 7 $15 $10 $5 $0 Net O&M Expenses Capital Projects Debt Service 15

16 SECTION 2 SECTION Operating Budget Summary Overview Table 8 summarizes the District s operating expenditures, revenues, and operating reserves for the years 2013 through The proposed 2015 Operating Budget includes a 7.35% increase ($2.1 million) in expenses over the current year s budget and will require a 6.9% increase ($1.9 million) in service charge revenues. The smaller increase in service charges is due to the use of cash reserves. Staff project 2014 revenues to be $278,000 more than budgeted with 2014 expenses $39,000 less than budgeted. Operating budget reserves are projected to increase by $168,000 in The expected operating reserves at the end of this year are $13.5 million Revenues Staff estimate 2014 revenues will be approximately $278,000 or 1% more than budgeted. This is due to revenues from estimated service charges being $417,000 or 1.5% more than budgeted, septage disposal fees $50,000 more than budgeted, miscellaneous income $42,000 more than budgeted, and revenue from struvite fertilizer sales being $240,000 less than budgeted. Higher than normal precipitation for the first half of the year caused higher than anticipated wastewater flows. Pollutant loadings for biochemical oxygen demand, nitrogen, and phosphorus are slightly higher than the budgeted values. Pollutant loadings for suspended solids are expected to be slightly lower than budgeted. Struvite fertilizer sales are estimated to be $240,000 less than budgeted because of lower than expected struvite production. Income from servicing pumping stations is estimated to be $10,000 more than budgeted due to slightly higher than expected levels of required maintenance. Miscellaneous income is estimated to be $42,000 more than budgeted, half of this increase came from an unbudgeted gain from the sale of equipment. Septage revenues are estimated to be $50,000 higher than budgeted due to higher than budgeted volumes of septage discharges at Nine Springs. Interest on investments is expected to be $2,000 more than budgeted, and annexation and plan review fees $3,000 less than budgeted Expenditures The District anticipates expenditures for 2014 to be $39,000, or 0.1%, less than budgeted. Amounts under budget for Administration and Engineering ($141,000), and Wastewater Collection ($143,000) offset amounts over budget for Wastewater Treatment ($197,000) and the Metrogro Program ($50,000). 16

17 REVENUE CATEGORY Operating Budget 2013 Actual REVENUES 2014 Thru June Estimated Total 2014 Budget 2015 Budget Percent Change Sewer Service Charges $27,278,717 $13,960,138 $27,800,000 $27,383,435 $29,272, % Servicing Pumping Stations 249, , , , , % Rent 67,210 36,313 68,420 67,600 69, % Interest 11,999 6,682 12,000 10,000 12, % Annexation and Plan Review Fees 47,400 22,500 47,000 50,000 50, % Miscellaneous Income 113,451 72,528 92,000 50,000 45, % Septage Disposal Revenue 382, , , , , % Pretreatment Monitoring 18,684-18,000 18,000 18, % Struvite Fertilizer Sales - 63, , , , % Cash Reserves , , % TOTAL REVENUES $28,168,962 $14,439,630 $28,897,420 $28,769,035 $30,883, % EXPENSE CATEGORY 2013 Actual EXPENDITURES 2014 Thru June 2014 Estimated Total 2014 Budget 2015 Budget Percent Change Administration, Engineering & Commission $3,053,334 $1,462,140 $3,140,429 $3,281,041 $3,668, % User Charge & Pretreatment Programs 432, , , , , % Wastewater Collection 2,213, ,975 2,166,137 2,308,893 2,273, % Wastewater Treatment 8,784,422 4,769,139 9,857,550 9,660,480 10,103, % Effluent Diversion 116,937 28,979 99,543 95, , % Metrogro Biosolids Reuse Program 1,497, ,326 1,567,743 1,517,695 1,585, % Capital Outlay 386,820 (81,580) 287, , , % Servicing Pumping Stations Owned by Others 249,364 99, , , , % Transfer to Debt Service Fund 9,878,000-10,865,000 10,865,000 11,843, % TOTAL EXPENDITURES $26,612,314 $7,817,480 $28,729,637 $28,769,035 $30,883, % OPERATING FUND BALANCE OPERATING FUND BALANCE 2013 Actual 2014 Thru June 2014 Estimated Total 2014 Budget 2015 Budget Percent Change Beginning Balance $11,735,948 $13,292,596 $13,292,596 $12,215,886 $13,460, % TOTAL REVENUES less cash reserves used $28,168,962 $14,439,630 $28,897,420 $28,619,035 $30,279, % TOTAL EXPENDITURES $26,612,314 $7,817,480 $28,729,637 $28,769,035 $30,883, % Ending Balance $13,292,596 $19,914,746 $13,460,379 $12,065,886 $12,856, % 2015 Revenues The budgeted revenues for 2015 are 7.35% greater than the budget for 2014 and 6.9% greater than the estimated 2014 revenues. Required service charge revenues will increase $1,889,000 (6.9%) over the 2014 budgeted amount and $1,470,000 over the estimated 2014 revenues. Overall rates would increase 6.9% with no growth in loadings over the budgeted loadings for 2014, and about 5.9% if there was a 1% growth in loadings. Revenues from struvite fertilizer sales are estimated to decrease by $235,000 compared to budgeted 2014 revenues due to TABLE 8

18 lower than expected struvite production. Revenues from servicing pump stations are expected to decrease by $23,000. Revenues from septage disposal are expected to increase by $30,000. Staff expect interest rates to remain low and interest income to increase slightly by $2,000 to $12,000. Plan review and annexation fees are projected to be remain unchanged Expenditures The budgeted expenditures of $30.9 million are $2.1 million, 7.35%, more than the budget for Total operating budget personnel services related costs (salaries, benefits, payroll taxes, etc.) increase by $370,000, 4.1%, to $9.36 million. Non-personnel related costs increase by $1.74 million, 8.8%, to $21.5 million. The personnel services increase is due to the following factors: Base wage increase of 3.0% on January 1, 2015 for represented and non represented employees. Step and/or longevity increases for represented employees. Progression increases for non-represented employees. Net addition of two full-time equivalent positions total salary and benefits cost of $180,000. Employee WRS contributions of 6.8% for represented and non-represented employees An 11% decrease in health insurance rates. District contributions to health insurance of 88% of the average single and family premiums for The District contribution to health insurance was 95% at the beginning of 2014 and changed to 88% on September 1, The net effect of the various health insurance changes is that the District s cost for health insurance is estimated to decrease by 14.0% compared to These changes include a decrease in health insurance premiums, the reduced District contribution to health insurance, and the provision of domestic partner benefits. Significant non-personnel related operating expenditure changes include: Increase in Clean Water Fund debt service expenses $978,000 Added costs for operation of 11 th Addition facilities (chemicals, etc.) $250,000 Adaptive Management brokerage services 150,000 Replace Laboratory Information System 150,000 LaserFlow meters 140,000 WAM license/maintenance fee increase 70,000 See Appendix G Director Narratives for more detail on individual department budgets. Impacts of Capital Investments on the Operating Budget The District s capital investments have a major effect on the District s operating budget. The largest effect is from debt service expenses. Debt service accounts for 38.3% of the proposed operating budget expenditures in 2015 and accounted for 37.8% of budgeted expenditures in 18

19 2014. The District s 2015 Capital Improvements Plan includes increases of 9.0% in debt service expenses raised through service charges for 2015 through This increase in debt service by itself will drive an annual increase in total operating budget expenditures of at least 3.4% per year over the next 3 years. The District also funds some smaller capital investments in the capital outlay line item of the operating budget. The 2015 proposed operating budget includes $548,000 of capital outlay items, or 1.8% of total operating expenditures. Capital outlay items were budgeted at $290,000, or 1.0% of total operating expenditures in Operating Fund Balance The Operating Fund balance is projected to decrease by 4.5% or $604,000 in 2015 compared to the estimated 2014 ending balance. This decrease is due to the budgeted use of $604,000 of reserves. The District expects the actual Operating Fund 2014 ending balance to increase $168,000 over the 2013 ending balance. The increase is due to wet weather leading to higher than expected service charges for volume. The District s Operating Fund balance includes the District s Equipment Replacement Fund of $3,000,000 and unrestricted operating reserves. The projected Operating Fund balance at the end of 2015 of $12.9 million includes unrestricted operating reserves of 189 days operating expenses and meets the District s target end-of-year minimum balance of 180 days operating expenses. Operating expenses for this purpose are defined as the Operating Budget expenditure total less the debt service expenditures. Personnel The District s current workforce consists of two categories of employees: a) represented and b) management and non-represented. Unionized employees are represented by Wisconsin Council 40, Local 60, AFSCME, AFL-CIO. The Labor agreement with represented employees is due to expire on December 31, In March 2014, the District Commissioners agreed to negotiate a one-year labor agreement with the union for At that time, the WI Supreme Court ruling on Act 10 was not yet made. The outcome of these negotiations was that the 2015 base wage rate shall not be below the 2014 wage rates. In addition, the contract language reflected the change in the premium cost sharing of the health insurance from 5% to 12%. Other benefits and working conditions remain unchanged in the 2015 contract. Benefits and the requirement to pay WRS contributions and health care premiums is the same for represented and non-represented employees. Table 9 shows changes in the District s overall staffing from The increase in 2015 staffing levels is due to added staff for Pollution Prevention (Ecosystem Services) and Information Systems (Administration). 19

20 Full-Time Equivalent Positions (FTE) Department Changes for 2015 Administration Added an Information Systems position Chief Engineer & Director Engineering Operations Ecosystem Services Added a new position Total TABLE 9 Program Narratives Revenues Sewer Service Charges This category covers charges paid by the District s customer communities for the wastewater conveyance and treatment services provided by the District. Customer communities pay these charges according to the volume and strength of the wastewater they discharge to the District. These charges are the primary revenue source for the District. The District currently serves five cities, seven villages, and twenty-five sanitary or utility districts. Servicing Pumping Stations This category covers charges to various customer communities for District services to operate and maintain pumping stations owned by the communities. The District currently services forty-five pumping stations owned by others. The station owner and the number of stations served as of August 31, 2014 are shown below: Owner Number of Pumping Stations City of Madison 29 City of Verona 2 Village of Maple Bluff 3 Town of Dunn Sanitary District No. 1 4 Town of Dunn Sanitary District No. 3 3 Town of Madison 3 Dane County Lake Farm Park 1 Rent This category covers rent the District receives for use of District-owned property. The District rents three houses; one set of farm buildings including a house, barn, sheds, and associated acreage; one hundred fifty-seven acres of farmland; and land for an electrical substation. 20

21 Interest This category covers interest earned on the District s cash reserves. Annexation & Plan Review Fees This category covers District expenses for the annexation process and sewer plan review and approval processes. Customer communities pay annexation fees when new lands are added to the District. Customer communities pay sewer plan review fees for modifications or additions to their sewer systems. Miscellaneous Income This category covers income received for various revenues that do not fit in other categories. For instance, the income from the sale of scrap materials and income for laboratory services performed for others is placed in this category. Septage Disposal Income This category covers charges the District receives for wastes delivered by truck to the Nine Springs Treatment Plant. The largest single source of waste delivered by truck is septage from homes and businesses on septic systems. Twenty-eight haulers have permits to discharge at the treatment plant as of August 31, Pretreatment Monitoring This category covers the District s expenses for industrial monitoring. The fees are paid by businesses that are required to have industrial treatment permits issued by the District. Nineteen businesses have industrial discharge permits issued by the District as of August 31, Struvite Fertilizer Sales This category covers the income from the sale of struvite fertilizer pellets. In 2014, the District began operating a process to recover phosphorus from the wastewater treated at the Nine Springs Wastewater Treatment Plant. The process recovers phosphorus in the form of struvite pellets, which is sold as a fertilizer. Cash Reserves This category covers funds used from our cash reserves. Expenditures Administration, Engineering & Commission This cost center includes Accounting, Information Systems, Engineering, and the Chief Engineer s office. Accounting: Provides general accounting, payroll, grants and loan administration. Information Systems: Ensures data integrity, optimal network functionality, and 21

22 provides hardware, software and user support. IS also provides technological expertise to District staff. Engineering: Oversees engineering, design and construction of projects within the District s capital improvement plan and the planning for the District s long-term and asset management needs. Chief Engineer and Director: Provides organizational leadership to the District. Oversees communication and public information, coordinates District strategic efforts, and oversees overall District performance and general administration of District business. Human Resources: Provides opportunities for growth of the organizational culture and performance. Provides cost effective employee management services for recruitment, safety, and leadership development while minimizing the District s liability in employment matters. Ecosystem Services: Oversees a wide range of regulatory, legislative, environmental and strategic initiatives that impact District operations and/or help establish overall District focus. User Charge & Pretreatment Program This cost center implements state and federal requirements directed towards industrial users and implements strategies for pollution prevention and source control. In addition, this cost center includes wastewater flow and loadings data sampling and analysis for customer billing. Wastewater Collection This cost center provides funding to operate and maintain the District s gravity sewers, pumping stations, and raw wastewater force mains. The District operated and maintained ninety-five miles of gravity sewer, seventeen pumping stations and twenty-nine miles of raw wastewater force mains as of August 31, The District plans to begin operating one new pumping station and an additional three miles of raw wastewater force main in spring Wastewater Treatment This cost center includes funding to operate and maintain the Nine Springs Wastewater Treatment Plant. This plant treats about forty million gallons of wastewater per day from our customer communities and districts. The plant treats wastes from thirty seven customer communities and accepts septage from twenty-eight permitted haulers as of August 31, Effluent Diversion This cost center includes operations and maintenance for the District s force mains that discharge treated effluent to Badfish Creek and the Badger Mill Creek. The cost center also includes monitoring to determine the impact on receiving streams. 22

23 Metrogro Biosolids Reuse Program This cost center recycles biosolids to agricultural land through the Metrogro program. Capital Outlay This cost center funds asset purchases such as vehicles and equipment. Service Pumping Stations Owned by Others This cost center funds activities to operate and maintain on a contract basis local pumping stations owned by other cities and districts. The District operated and maintained fortyfive such pumping stations as of August 31, Transfer to Debt Service This cost center pays the annual debt service on the District s long-term debt. 23

24 SECTION 3 SECTION Capital Improvements Plan & Budget Introduction The District s Capital Improvements Plan (CIP) represents the foreseen major capital projects for the next six years and in some cases, beyond. The projects included represent the best estimate of what might happen over the next six-year period. Staff updates this plan on an annual basis using the latest information and estimates available integrating the District s current financial situation. The CIP is a planning document subject to change. Projects and projections in the near-term are typically less speculative than are those anticipated further in the future. As a planning document, one of the main purposes of the District s Capital Improvements Plan is to set the stage for development of the next year s Capital Projects Fund Budget (also known as the Capital Budget or Capital Projects Budget). Therefore, the CIP includes the proposed projects for the next six-year period with approximate costs and timeframes for planning, design, and construction. Please note that in some cases, costs and schedule are not yet well defined, but are included as allocations or placeholders, subject to change as final scopes and plans are developed. The proposed 2015 Capital Budget has been developed from the Capital Improvements Plan, the status of ongoing and pending projects, and the District s current financial situation. The Capital Budget shows past actual revenues and expenditures through 2013, anticipated revenues and expenditures through the remainder of 2014, and projected revenues and expenditures for In addition, the Capital Budget includes anticipated total project expenditures for projects underway and those that will be approved prior to the end of Projects in the CIP that will begin after 2015 will require approval in subsequent budgets and approval of the Capital Budget on an annual basis provides a means to reauthorize funding for ongoing projects. The present revenues and expenditures information and total project costs typically change somewhat from development of the draft Capital Improvements Plan (the Draft 2015 Capital Improvements Plan was published on June 26, 2014) until the budget process is completed. The District takes a conservative approach to budgeting and anticipates project spending as early and often. This typically means that subsequent projections show less spending in the nearer term and more spending later. Additionally, estimates are updated to the latest best estimate, which can be less or more than previously anticipated. Appendix A includes brief project summaries for projects within the six-year timeframe. Appendix B provides a short summary of completed projects and retainers. Business case summaries highlighting the need for each new project are available on the District s website via the Draft 2015 Capital Improvements Plan. The business case summaries will be updated 24

25 following budget approval and published as a separate supplement to the adopted budget. For near-term projects, the project s anticipated financing mechanism has been identified with any resulting debt or debt service included in the debt service projection. Beyond three years into the future, the funding mechanism for each project is uncertain; however, many of the projects, especially larger projects, will require funding and most often, this will be through the use of a Clean Water Fund loan. Overview and Highlights For 2015, the Capital Improvements Plan (CIP) anticipates total funds received (identified as revenues) of $21.2 million, expenditures of $20.4 million, and a projected 2015 year-end operating reserve of $6.8 million. The plan predicts that the District will incur additional debt of $20.2 million from construction activities during 2015 and that debt service revenue collected in rates will increase from $10,865,000 to $11,843,000. This level of increase, $978,000 (9%), is necessary to continue addressing debt service related to the Eleventh Addition ($49 million) and the Pumping Station 18 related projects ($35 million) among other projects for which the District has incurred debt. Major construction activities through 2015 include completion of a new Pumping Station 18; completion of the Process Control System Upgrade; a new Maintenance Facility and other space needs improvements at the Nine Springs Wastewater Treatment Plant; rehabilitations of the District s Pumping Stations 11 and 12; construction of a new interceptor extension near Morse Pond; relief of the District s Rimrock Interceptor; and lining projects on the Northeast Interceptor and West Interceptor will also bring follow-up studies and planning related to the District s recently completed Energy Study and the start of planning efforts related to upgrading the Nine Springs Wastewater Treatment Plant s aeration systems and associated facilities, and addressing the plant s peak capacity constraints. Planning and design will also begin on the rehabilitation of Pumping Station 15, improvements at Pumping Station 7, a relief force main for Pumping Station 17, two lining projects, and potential relocation of a small portion of the Nine Springs Valley Interceptor near the intersection of County Highway PD and Verona Road. In addition to those projects listed above, staff anticipate numerous other projects will occur during the years 2016 through 2020 and beyond. Table 11 highlights some of these projects in a six-year projection of anticipated capital expenditures. A summary of each of the projects in the six-year capital plan is included in Appendix A. Table 10 summarizes the District s 2015 Capital Budget showing actual results from 2013, ongoing information related to 2014, and expected 2015 activities. The anticipated Capital Projects Fund cash flow for 2015 to 2020 is included in Table 12. The plan s impact on the District s debt and debt service is summarized in Tables 13 through 15 in the next section (Section 4 Debt Service). Charts 1 to 3 and subsequent discussion, also in Section 4 on Debt Service, provide a longer term discussion on debt and potential scenarios that might drive debt. 25

26 The Future Debt Service Scenarios section of this document (see Section 4 on Debt Service) includes several scenarios for comparison. The scenarios include significant costs for plant additions related to nutrient removal. Staff expect that the District s next discharge permit (end of 2015) will include language related to reducing additional amounts of phosphorus in our effluent. In addition, nitrogen will become a greater issue and stricter related regulations may be included in the District s permit as early as In anticipation of these potential changes to our permit, District staff have included two scenarios that show what the effects of these additional nutrient regulations might be to the District s long-term debt and finances. Other changes to the District s permit requirements will likely include thermal regulations and more stringent chloride restrictions. At this time, staff anticipate that the financial impacts of these two items on the District s capital improvement plan will be minimal; however, there is uncertainty of the true impacts. The 2015 Capital Improvements Plan (CIP) forecasts annual increases in debt service of 9% through 2017, at which time the increase in debt service reduces to 5.5% for two years and then falls to 3.5% in 2020 and beyond. The anticipated 9% increases through 2017 have mainly resulted from construction of the Eleventh Addition to the plant and construction of a new Pumping Station 18 and its force main. Rather than a one-time very large increase, the District implemented multiple-year, yet still larger-than-normal, increases in debt service to address the debt impacts of the new facilities. In addition, several other trends continue to drive higher levels of construction and incurrence of debt. These include the need to replace or refurbish aging facilities, many of which the District constructed around the same timeframe, the need for more capacity in certain parts of the District s system due to long-term growth, and lower amounts of connection charge revenues and interest over the past several years. Although connection charge revenues have rebounded from their low point, interest on capital continues to remain at historic lows. District staff cannot anticipate all projects that may become necessary in the future, but staff believe that the District s asset management efforts, which include plant asset management planning and collection system facilities planning, coupled with annual capital improvements planning reasonably anticipate most necessary major expenditures and reflect good long-term planning. Planning efforts continue throughout the year, not just while formulating the budget, with a process that is continuous and constantly evolving. Staff updates its formal plans annually for presentation to the District s Commission and to the general public. However, as new information becomes available, plans, schedules, and corresponding estimates change to reflect the most recent information Capital Projects Budget Summary Table 10 provides a summary of the Capital Budget for years 2013 through For 2013, the summary shows the actual year-end totals for revenue and expenses for each project; for the current year, 2014, the summary shows the budgeted amount, the actual revenue and expenses through June, and the estimated year-end totals; and for 2015, the summary shows 26

27 anticipated revenues and expenditures. Please note that estimates are rounded to the nearest thousand dollars. Capital Projects Budget REVENUES REVENUE CATEGORY Percent Actual Thru June Est. Total Budget Budget Change CWF LOANS $24,771,422 $11,981,000 $29,599,000 $38,409,000 $20,218, % Operations Building HVAC Rehab 308,642 NMF Eleventh Addition 11,063,041 2,024,000 4,264,000 3,768, % Process Control System Upgrades 2,757, ,000 1,489,000 4,766, , % NEI - Far East Interceptor to Southeast Interceptor 7,749, , NMF Pumping Station 18 2,893,075 3,173,000 11,305,000 10,283, , % Pumping Station 18 FM - 5,967,000 12,362,000 12,982, % Maintenance Facility/Space Needs Improvements ,710,000 10,649, % PS 11 & 12 Rehab ,900,000 6,323, % West Int. West Randall to Near PS 2 (lining project) ,333,000 NMF Rimrock Int. Replacement/Relief ,000 NMF CONNECTION CHARGE REVENUES $1,087,480 $1,255,778 $1,500,000 $750,000 $900, % INTEREST ON INVESTMENTS & MISC. INCOME -$6,918 $25,723 $40,000 $25,000 $34, % TOTAL REVENUES $25,851,984 $13,262,501 $31,139,000 $39,184,000 $21,152, % EXPENDITURES EXPENSE CATEGORY Percent Actual Thru June Est. Total Budget Budget Change NINE SPRINGS WASTEWATER TREATMENT PLANT $11,862,663 $2,440,666 $6,595,000 $10,420,000 $11,055, % Operations Building HVAC System Rehab 156,105 10,000 10,000 10, % Engine Stacks & Oxidation Catalysts (for Air Permit) 172,917 7, , , % Eleventh Addition to Nine Springs WTP 9,626,918 1,608,979 4,085,000 3,768,000 20, % Nine Springs Process Control System Upgrade 1,711, ,003 1,335,000 1,585, , % New Maintenance Facility/Space Needs Improvements 47,125 30, ,000 4,330,000 9,785, % Plant Energy Projects , , , % Plant Aeration and Peak Capacity Facilities Plan ,000 NMF Annual Clarifier Coating 148,584 24, , , , % Annual Pavement Improvements ,000 30, % INTERCEPTORS $7,664,718 $534,729 $1,991,000 $1,053,000 $2,587, % West Int. Rehab at Old University Avenue 5, NMF NEI - PS 10 to Lien Road Relief 25, NMF East Monona Int. at Fair Oaks u/s of Starkweather Creek 5, NMF Lower Badger Mill Creek Int. - Phase 3 5, , NMF NEI - Far East Int. to Southeast Int. Junction 7,607, , ,000 20,000 20, % West Int. Extension & West Point Extension (lining project) 15, , ,000-5,000 NMF NEI - Rehab West of Airport (lining project) - Phase ,815 1,086, ,000 13, % NSVI - Morse Pond Extension ,000 24, , % West Int. - West Randall to Near PS 2 (lining project) ,000 46,000 1,288, % Rimrock Int. Replacement/Relief ,000 46, , % NSVI - Mineral Point Extension - Relocation at CTH PD - - 5,000-52,000 NMF NEI - Rehab West of Airport (lining project) - Phase ,000 NMF Northend Int. - Sherman Avenue (lining project) ,000 NMF PUMPING STATIONS AND FORCE MAINS $3,688,720 $7,782,052 $22,546,000 $23,988,000 $6,527, % PS 6 & 8 Rehab-Maintenance Retainer - 20,000 20,000 20, % PS 18 Construction 3,166,581 1,898,576 10,029,000 10,283, , % PS 18 Force Main Construction 272,700 5,631,864 11,700,000 12,009,000 35, % PS 11 & 12 Rehab 249, , ,000 1,650,000 5,377, % PS 15 Rehab ,000 26, , % PS 17 Force Main Relief - Phase ,000 NMF PS 7 Improvements - Phase ,000 NMF PS 16 Ventilation Modifications , ,000 NMF EXPENSE CATEGORY Percent Actual Thru June Est. Total Budget Budget Change CAPITAL BUDGET EXPENSES $46,328 $148,368 $603,000 $608,000 $270, % Table continued on next page 27 TABLE 10

28 Capital Budget Expenses 46,328 71, , , , % PS 14 Service Area I/I Study - 76, , ,000 5, % Chloride Study , , % TOTAL EXPENDITURES $23,262,429 $10,905,815 $31,735,000 $36,069,000 $20,439, % CAPITAL PROJECTS FUND BALANCE CAPITAL PROJECTS FUND BALANCE Percent Actual Thru June Est. Total Budget Budget Change BEGINNING BALANCE $4,045,542 $6,635,097 $6,635,000 $3,647,000 $6,039, % TOTAL REVENUES 25,851,984 13,262,501 31,139,000 39,184,000 21,152, % TOTAL EXPENDITURES 23,262,429 10,905,815 31,735,000 36,069,000 20,439, % ENDING BALANCE $6,635,097 $8,991,783 $6,039,000 $6,762,000 $6,752, % NMF=No Meaningful Figure 2013 Summary 2013 revenues of $25.9 million exceeded 2013 expenditures of $23.3 million leaving an end-ofyear balance of $6.64 million. Revenues included clean water fund loan proceeds of $24.8 million, connection charge revenues of $1.09 million, and a loss of almost $7,000 on investment income. Expenditures included $11.9 million in treatment plant project expenses, $7.7 million in interceptor project expenses, $3.7 million in pumping stations and force mains projects expenses, and $46,000 in capital budget expenses Summary The 2014 Capital Budget showed 2014 revenues exceeding expenditures by $3.1 million; staff now anticipate expenditures will exceed revenues by $600,000. The year-end fund balance will be $6.0 million, which is somewhat lower than the budgeted $6.8 million. This difference and the difference in the projected end-of-year 2013 balance are primarily the result of changing project schedules and hence, changes in receipt of loan amounts that cover and offset the District s costs for the planning and design for projects. The District experienced lower than anticipated expenditures in 2013 that moved into 2014 and some loans anticipated to close in 2014 may close in This will not cause any cash flow concerns; it just becomes reflected in a slightly lower end-of-year balance for For Clean Water Fund loan projects, the District pays for planning and design from reserves until projects have been bid and move into the construction phase. For larger projects, planning and design costs can be significant and at times in the future, short-term lending may be required to fund these costs until loans close after the bidding process. Another possible way to cover these costs would be to increase the amount that the District keeps in reserves. The District s minimum balance is presently set at $3 million or 10% of the next year s total capital expenditures, whatever is greater. Presently, no changes in the reserve amount are contemplated Revenues & Expenditures The proposed 2015 Capital Improvements Plan anticipates revenues from all sources totaling $21.2 million and expenditures of $20.4 million with a resulting year-end fund balance of $6.8 million, which represents a fund balance increase of $0.7 million above the estimated yearend balance for

29 As detailed in Table 10, anticipated 2015 revenues include $20.2 million in Clean Water Fund loan proceeds for the six projects listed below: New Maintenance Facility/Space Needs Improvements ($10.6 million) Pumping Stations 11 & 12 Rehabs ($6.3 million) West Interceptor West Randall to Near PS 2 - lining project ($1.3 million) Rimrock Interceptor Replacement/Relief ($0.8 million) Pumping Station 18 ($0.6 million) Process Control System Upgrade ($0.5 million) Other anticipated revenues include $900,000 in interceptor and treatment plant connection charges (connection charge revenues), and $34,000 in interest on investments. Since its low point, staff have begun to see moderate increases in connection charge amounts and anticipate that connection charge amounts will continue to increase gradually. Interest on investments continues to remain at historically low amounts and staff does not anticipate any significant changes in the near-term. Also detailed in Table 10, the highest expense items for 2015 include the following projects: New Maintenance Facility/Space Needs first year construction ($9.8 million) Pumping Stations 11 & 12 Rehab first year construction ($5.4 million) West Interceptor West Randall to Near PS 2 - lining project ($1.3 million) Rimrock Interceptor Replacement/Relief ($0.8 million) Pumping Station 18 completion ($0.6 million) Plant Aeration and Peak Capacity Facilities Plan ($0.5 million) Process Control System Upgrade - completion ($0.5 million) Other anticipated expenditures include an additional $1.4 million in other capital project expenditures as well as $270,000 in Capital Budget Expenses Capital Projects Fund Balance The Capital Projects Fund 2015 ending balance of $6,752,000 is projected to decrease by 0.1%, or $10,000, in 2015 compared to the budgeted 2014 ending balance of $6,762,000 and to increase by 11.8%, or $713,000, compared to the present estimated 2014 ending balance of $6,039,000. The end-of-year Capital Projects Fund balance can vary significantly from year-toyear depending upon the timing of project expenses and loan proceeds. Per District policy, staff aim to maintain a minimum Capital Projects Fund balance (or reserve) of the greater of $3,000,000 or 10% of anticipated expenditures. Therefore, for 2015, the minimum acceptable beginning-of-year balance should be $3.0 million (10% of $20.4 million is less than $3 million). The projected 2015 end-of-year balance is projected to be $6.8 million, which is also well above the minimum acceptable amount for anticipated 2016 expenditures of $13.1 million. 29

30 Six-Year Capital Projects Summary Table 11 provides a Six-Year Capital Projects Summary for the period 2015 to This projection includes completion of projects currently underway and future projects identified as higher priority in MMSD s Collection System Facilities Plan and plant Asset Management Plan, as well as projects required to address other facility and regulatory requirements. As with the 2014 Capital Budget and Capital Improvements Plan, this projection assumes implementation of Master Plan Alternative 1A or potentially, Alternative 1B or 1C, and relief of the Nine Springs Valley Interceptor and other related capacity relief projects. Alternative 1A maintains the present effluent return flow of 3.6 million gallons per day to Badger Mill Creek while Alternative 1B or 1C would increase flows to match the amount of flow taken out of the Sugar River basin. Future regulations and decisions will help determine if either Alternative 1B or 1C is a feasible option. Per the District s 2009 Master Plan, Alternative 1 options (1A, 1B, or 1C) are centralized treatment options as opposed to Alternative 2 options, which would require construction of a satellite treatment plant in the Sugar River Basin. Alternative 1 options rely on continued pumping to the Nine Springs Wastewater Treatment Plant and return of treated effluent to the Sugar River Basin. For clarity, the base alternative includes no advanced nutrient removal alternatives. A more thorough discussion of advanced nutrient removal scenarios occurs below as well as in Section 4 on Debt Service. At this time, the advanced nutrient removal scenarios are still somewhat speculative; however, the Nutrient Removal Cost Study completed by CH2M Hill in 2011 to 2012, ongoing Adaptive Management discussions, and the Adaptive Management Pilot Project continue to provide more clarity to each scenario. The District will not know the full impact of more stringent nutrient regulations until they are included in the District s permit renewal in The base scenario shows $93 million worth of expenditures over the six-year period of 2015 to 2020, representing projects whose costs total $200 million. At the bottom of the summary, the two advanced nutrient removal scenarios speculate additional expenditures based upon construction of advanced phosphorus removal facilities or an adaptive management approach. Both nutrient removal scenarios anticipate advanced nitrogen removal facilities as a requirement in the District s 2020 discharge permit. It appears that this would be the earliest that more stringent nitrogen regulations might necessitate construction of additional treatment facilities. Note that the comparison between adaptive management and phosphorus removal facilities is somewhat inaccurate since adaptive management would likely, but not necessarily, be a program cost that appears in the District s operating budget versus a facilities cost included in 30

31 the District s capital budget. However, the method staff used provided the simplest means to compare the two alternatives and to show the large magnitude of cost differences between the two alternatives. In addition, new facilities for advanced phosphorus removal and/or advanced nitrogen removal would both require significant additional operating and maintenance costs. These O&M costs, simply added to the debt service costs in this analysis, would alone be greater than costs for an adaptive management program. A more detailed analysis of the life cycle costs associated with nutrient removal is included in the CH2M Hill cost study available upon request. 31

32 NO. Six-Year Capital Projects Summary PROJECT TABLE 11 TOTAL PROJECT COST COST NINE SPRINGS WASTEWATER TREATMENT PLANT PROJECTS $107,547,000 $52,030,000 $11,055,000 $2,706,000 $9,560,000 A01 Eleventh Addition to Nine Springs WTP 48,761,000 20,000 20,000 A02 Nine Springs Process Control System Upgrade 5,034, , , A03 New Maintenance Facility/Space Needs Improvements 11,749,000 10,885,000 9,785,000 1,080,000 20,000 A04 Plant Energy Projects 11,780,000 11,065, , , ,000 A05a Plant Aeration and Peak Capacity Facilities Plan 500, , , A05b Plant Aeration Systems Projects 8,914,000 8,914, ,000 3,688,000 A06 Plant Unit Substation Improvements 2,708,000 2,708, ,000 2,485,000 A07 Plant Peak Capacity Improvements 4,096,000 4,096, ,000 1,881,000 A08 Headworks Facility Rehab Project 4,032,000 4,032, ,000 A09 Metromix Facility Expansion 2,073,000 2,073, ,000 A10 UV Disinfection System Replacement/Rehab 5,157,000 5,157, A11 Annual Clarifier Coating 690, , , , ,000 A12 Annual Pavement Improvements 312, ,000 30,000 53,000 55,000 A13 Metrogro Applicators 1,741,000 1,126, ,000 INTERCEPTORS $31,564,000 $13,380,000 $2,587,000 $2,605,000 $918,000 B01 NEI - Far East Int. to Southeast Int. Junction 7,990,000 20,000 20, B02 West Int. Extension and West Point Extension (lining project) 273,000 5,000 5, B03 NEI - Rehab West of Airport (lining project) - Phase 1 1,100,000 13,000 13, B04 NSVI - Morse Pond Extension 846, , , ,000 22,000 B05 West Int. - West Randall to Near PS 2 (lining project) 1,344,000 1,299,000 1,288,000 11,000 - B06 Rimrock Int. Replacement/Relief 849, , ,000 11,000 - B07 NSVI - Mineral Point Extension - Relocation at CTH PD 875, ,000 52, ,000 22,000 B08 NEI - Rehab West of Airport (lining project) - Phase 2 1,156,000 1,156,000 25,000 1,120,000 11,000 B09 Northend Int. - Sherman Avenue (lining project) 162, ,000 15, ,000 11,000 B10 Lower Badger Mill Creek Int. Project - Phase 4 970, , , ,000 B11 NEI - Truax Extension (lining project) - Phase 1 1,817,000 1,817, ,000 B12 West Int. - PS 5 to Gammon Junction (lining project) 440, , B13 NEI - Far East Int. to Southeast Int. Junction (lining project) 1,461,000 1,461, B14 NEI - Truax Extension Relief 9,180, , B15 NEI - Truax Extension (lining project) - Phase 2 2,118,000 2,106, B16 West Int. - Spring Street Relief (lining project) 983, , PUMPING STATIONS AND FORCE MAINS $59,148,000 $26,124,000 $6,527,000 $7,504,000 $1,911,000 C01 PS 18 Construction 14,794, , ,000 20,000 - C02 PS 18 Force Main Construction 12,392,000 35,000 35, C03 PS 11 & 12 Rehab 10,699,000 9,753,000 5,377,000 4,356,000 20,000 C04 PS 15 Rehab 4,204,000 4,179, ,000 1,947,000 1,869,000 C05 PS 17 Force Main Relief - Phase 1 1,060,000 1,060,000 62, ,000 22,000 C06 PS 7 Improvements - Phase 1 218, ,000 13, ,000 - C07 PS 13 & 14 Rehab 8,910,000 8,885, C08 PS 4 Revisions 1,444, , C09 PS 7 Improvements - Phase 2 2,650, , C10 PS 17 Capacity Upgrade 2,577, , C11 PS 16 Ventilation Modifications 200, , , CAPITAL BUDGET EXPENSES $1,965,000 $1,720,000 $270,000 $273,000 $281,000 D01 Capital Budget Expenses 1,715,000 1,715, , , ,000 D02 PS 14 Service Area I/I Study 250,000 5,000 5, TOTALS BEFORE NUTRIENT REMOVAL PROJECTS $200,224,000 $93,254,000 $20,439,000 $13,088,000 $12,670,000 NUTRIENT REMOVAL PROJECTS Advanced Phosphorous Removal Facilities ($135 million over 6 years) 135,000, , Advanced Nitrogen Removal Facilities (beyond 6 year planning period) 78,000, TOTALS INCLUDING NUTRIENT REMOVAL FACILITIES ALTERNATIVE $413,224,000 $93,930,000 $20,439,000 $13,088,000 $12,670,000 Adaptive Mgt. ($127k/year - 3 yr. pilot study, $405k/year for 20 yrs.) 8,500,000 1,318, , , ,000 Advanced Nitrogen Removal Facilities (beyond 6 year summary) 78,000, TOTALS INCLUDING TRADING/ADAPTIVE MGMNT APPROACH $286,724,000 $94,572,000 $20,566,000 $13,215,000 $12,797,000 32

33 NO. Six-Year Capital Projects Summary PROJECT TABLE 11 TOTAL PROJECT COST COST NINE SPRINGS WASTEWATER TREATMENT PLANT PROJECTS $107,547,000 $52,030,000 $7,463,000 $12,231,000 $9,015,000 A01 Eleventh Addition to Nine Springs WTP 48,761,000 20, A02 Nine Springs Process Control System Upgrade 5,034, , A03 New Maintenance Facility/Space Needs Improvements 11,749,000 10,885, A04 Plant Energy Projects 11,780,000 11,065, ,000 4,637,000 4,776,000 A05a Plant Aeration and Peak Capacity Facilities Plan 500, , A05b Plant Aeration Systems Projects 8,914,000 8,914,000 3,377,000 1,159,000 - A06 Plant Unit Substation Improvements 2,708,000 2,708, A07 Plant Peak Capacity Improvements 4,096,000 4,096,000 1,937, A08 Headworks Facility Rehab Project 4,032,000 4,032, ,000 1,739,000 1,791,000 A09 Metromix Facility Expansion 2,073,000 2,073, ,000 1,739,000 - A10 UV Disinfection System Replacement/Rehab 5,157,000 5,157, ,000 2,319,000 2,388,000 A11 Annual Clarifier Coating 690, , , A12 Annual Pavement Improvements 312, ,000 56,000 58,000 60,000 A13 Metrogro Applicators 1,741,000 1,126, ,000 - INTERCEPTORS $31,564,000 $13,380,000 $2,218,000 $1,565,000 $3,487,000 B01 NEI - Far East Int. to Southeast Int. Junction 7,990,000 20, B02 West Int. Extension and West Point Extension (lining project) 273,000 5, B03 NEI - Rehab West of Airport (lining project) - Phase 1 1,100,000 13, B04 NSVI - Morse Pond Extension 846, , B05 West Int. - West Randall to Near PS 2 (lining project) 1,344,000 1,299, B06 Rimrock Int. Replacement/Relief 849, , B07 NSVI - Mineral Point Extension - Relocation at CTH PD 875, , B08 NEI - Rehab West of Airport (lining project) - Phase 2 1,156,000 1,156, B09 Northend Int. - Sherman Avenue (lining project) 162, , B10 Lower Badger Mill Creek Int. Project - Phase 4 970, ,000 23, B11 NEI - Truax Extension (lining project) - Phase 1 1,817,000 1,817,000 1,767,000 12,000 - B12 West Int. - PS 5 to Gammon Junction (lining project) 440, , ,000 12,000 - B13 NEI - Far East Int. to Southeast Int. Junction (lining project) 1,461,000 1,461,000-1,449,000 12,000 B14 NEI - Truax Extension Relief 9,180, , ,000 B15 NEI - Truax Extension (lining project) - Phase 2 2,118,000 2,106,000-46,000 2,060,000 B16 West Int. - Spring Street Relief (lining project) 983, ,000-46, ,000 PUMPING STATIONS AND FORCE MAINS $59,148,000 $26,124,000 $698,000 $4,260,000 $5,224,000 C01 PS 18 Construction 14,794, , C02 PS 18 Force Main Construction 12,392,000 35, C03 PS 11 & 12 Rehab 10,699,000 9,753, C04 PS 15 Rehab 4,204,000 4,179,000 23, C05 PS 17 Force Main Relief - Phase 1 1,060,000 1,060, C06 PS 7 Improvements - Phase 1 218, , C07 PS 13 & 14 Rehab 8,910,000 8,885, ,000 4,144,000 4,066,000 C08 PS 4 Revisions 1,444, , , ,000 C09 PS 7 Improvements - Phase 2 2,650, , ,000 C10 PS 17 Capacity Upgrade 2,577, , ,000 C11 PS 16 Ventilation Modifications 200, , CAPITAL BUDGET EXPENSES $1,965,000 $1,720,000 $290,000 $299,000 $307,000 D01 Capital Budget Expenses 1,715,000 1,715, , , ,000 D02 PS 14 Service Area I/I Study 250,000 5, TOTALS BEFORE NUTRIENT REMOVAL PROJECTS $200,224,000 $93,254,000 $10,669,000 $18,355,000 $18,033,000 NUTRIENT REMOVAL PROJECTS Advanced Phosphorous Removal Facilities ($135 million over 6 years) 135,000, , , ,000 Advanced Nitrogen Removal Facilities (beyond 6 year planning period) 78,000, TOTALS INCLUDING NUTRIENT REMOVAL FACILITIES ALTERNATIVE $413,224,000 $93,930,000 $10,669,000 $18,693,000 $18,371,000 Adaptive Mgt. ($127k/year - 3 yr. pilot study, $405k/year for 20 yrs.) 8,500,000 1,318, , , ,000 Advanced Nitrogen Removal Facilities (beyond 6 year summary) 78,000, TOTALS INCLUDING TRADING/ADAPTIVE MGMNT APPROACH $286,724,000 $94,572,000 $10,796,000 $18,760,000 $18,438,000 33

34 Project Summaries and Business Cases Summary descriptions for each of the projects in Table 11 are included in Appendix A. Projects are categorized as Nine Springs Wastewater Treatment Plant Projects, Interceptor Projects, or Pumping Station and Force Main Projects. Projects are identified using an alphanumeric identifier. Specific identifiers included in Table 11 will match those used in the appendices. Project IDs for Nine Springs Wastewater Treatment Plant projects all begin with the letter A, those for Interceptor projects begin with the letter B, and those for Pumping Station Projects begin with the letter C. Business case summaries for most projects have been included in the District s Draft Capital Improvements Plan published on June 26, 2014 and available on the District s website at Excluded are some of the projects already underway and routine annual expenditures. A supplemental document with updated business cases will be available following budget approval. Since some projects are closely connected or contingent upon other projects, more than one project may be included in a single business case. Note that some business cases, and hence associated costs, are more developed than in others. Where costs have not been fully developed, amounts have still been included as placeholders or allowances to identify the need. As with all projects, these costs will be modified as better estimates become available. Capital Projects Budget Expenses Planning for the future ensures long-term quality service for the District s customers. The final category of expenditures in Table 11 is Capital Budget Expenses (letter D). These expenses typically include expenses related to planning and studies assessed against the capital fund, but which would be difficult to capitalize to a specific asset. The 2014 budget included $258,000 related to ongoing planning efforts in the collection system and at the treatment plant including, but not limited to, planning-level asset management expenses (note that anticipated 2014 and budgeted 2015 costs are shown in Table 10). Other expenses in this category include studies similar to the Nutrient Removal Cost Study. For 2014, other expenditures in this category include the Pumping Station 14 Service Area I/I (inflow and infiltration) Study ($250,000 total cost) and a $100,000 Chloride Study aimed at identifying the costs associated with reducing the level of chlorides in the District s effluent. For 2015, staff anticipate inclusion of $265,000 of general capital budget expenses and at this time, no specific studies or planning efforts related to this category have been identified. Increasing levels of funds are included annually for each year beyond 2015 anticipating this as an annual inflation-adjusted expense. Subsequent Capital Budget Expense category expenditures have been shown in years 2015 through 2020 reflecting an ongoing approach to funding the Asset Management Program and capital budget efforts similar to those funded in the past. 34

35 Capital Projects Cash Flow Summary TABLE 12 REVENUES Clean Water Fund Loan Proceeds 20,218,000 8,893,000 11,311,000 9,197,000 16,684,000 16,162,000 Connection Charges Collected $900,000 $1,050,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 Interest 34,000 52,000 72,000 71,000 71,000 71,000 TOTAL REVENUES $21,152,000 $9,995,000 $12,583,000 $10,668,000 $18,355,000 $18,033,000 EXPENDITURES Nine Springs WW Treatment Projects $11,055,000 $2,706,000 $9,560,000 $7,463,000 $12,231,000 $9,015,000 Interceptors 2,587,000 2,605, ,000 2,218,000 1,565,000 3,487,000 Pumping Stations & Force Mains 6,527,000 7,504,000 1,911, ,000 4,260,000 5,224,000 Capital Budget Expenses 270, , , , , ,000 TOTAL EXPENDITURES $20,439,000 $13,088,000 $12,670,000 $10,669,000 $18,355,000 $18,033,000 CAPITAL PROJECTS FUND CASH FLOW BEGINNING BALANCE $6,039,000 $6,752,000 $3,659,000 $3,572,000 $3,571,000 $3,571,000 TOTAL REVENUES 21,152,000 9,995,000 12,583,000 10,668,000 18,355,000 18,033,000 TOTAL EXPENDITURES 20,439,000 13,088,000 12,670,000 10,669,000 18,355,000 18,033,000 ENDING BALANCE $6,752,000 $3,659,000 $3,572,000 $3,571,000 $3,571,000 $3,571,000 Capital Projects Cash Flow Summary Table 12 provides a summary of the District s construction account cash flow for the period 2015 to The table includes anticipated revenue and expenditures for this six-year period. Total revenues for the period are anticipated at $90.8 million with total expenditures anticipated at $93.3 million and an ending balance of $3.6 million. Further details related to revenues are provided below, while expenditures were discussed previously as part of the sixyear capital project summary for the District s Capital Improvements Plan. The District s construction account includes revenues from three sources: loan proceeds, interceptor and treatment plant connection charges, and interest received on account balances. The projection anticipates funds from each of these sources during the six-year period; $82.5 million from loan proceeds, $8.0 million from collection of connection charges, and $0.4 million from interest. Wisconsin Clean Water Fund Program Although the District can and may fund future projects with general obligation bonds, staff anticipate continued use of the Wisconsin Clean Water Fund Program to fund most of our larger projects and to ensure adequate capital reserves to address any unforeseen capital costs. As of August 27, 2014, the District has borrowed $194 million from this program for the following projects: 35

36 Modifications to Pumping Station No. 7 ($1.9 million) Eighth Addition to Nine Springs ($19.9 million) Replacement of Pumping Station No. 5 ($1.2 million) Verona Force Main and Pumping Station ($2.7 million) Ninth Addition to Nine Springs ($14.9 million) Badger Mill Creek Effluent Return Project ($4.7 million) Pumping Station No. 2 Force Main Replacement ($3.8 million) Rehabilitation of Pumping Stations 1, 2, & 10 ($8.0 million) Tenth Addition to Nine Springs ($35.4 million) Effluent Equalization/Aeration Tanks 1-6 Rehab ($1.7 million) WI Ext. Replacement/PS 13 & PS 14 Firm Capacity Improvements ($2.6 million) Rehabilitation of PS 6 & PS 8/NEI Truax Extension Liner ($8.4 million) NEI PS 10 to Lien Road and FEI Cottage Grove Extension Liner ($8.9 million) Operations Bldg. HVAC Rehab ($3.0 million borrowed and $0.3 million grant) Eleventh Addition ($47.4M thru 8/27/ $48.5M anticipated) NEI - FEI to SEI Junction $7.9 million NS Process Control Syst. Upgrade ($3.6M thru 8/27/2014 with $ 4.7M anticipated) Pumping Station 18 ($9.8M thru 8/27/2014 with $14.7M anticipated) Pumping Station 18 Force Main ($7.7M thru 8/27/2014 with $12.4M anticipated) The District anticipates that funding for many of the following future projects will be through debt instruments and that many of them will be funded with Clean Water Fund loans: New Maintenance Facility/Space Need Improvements ($11.7M in ) Rehabilitation of PS 11 and PS 12 ($10.7 million in ) West Interceptor West Randall to PS 2 Lining Project ($1.3 million in 2015) Rimrock Interceptor Replacement/Relief ($0.8 million in 2015) Plant Aeration System Projects ($9.1 million in ) Plant Unit Substation Improvements ($2.7 million in 2017) NEI West of Airport Lining - Phase 2 ($1.2 million in 2016) Rehabilitation of PS 15 ($4.2 million ) PS 17 Force Main Relief - Phase 1 ($1.1 million in 2016) NEI - Truax Lining Project Phase 1 ($1.8 million in 2018) Plant Energy Projects ($11.8 million in ) Headworks Facility Rehab Project ($4.0 million in ) Plant Peak Capacity Improvements ($4.3 million in ) Metromix Facility Improvements ($2.1 million in 2019) NEI - FEI to SEI Junction Lining ($1.5 million in 2019) Rehabilitations of PS 13 and PS 14 ($8.9 million in ) UV Disinfection System Replacement/Rehab ($5.3 million in ) NEI Truax Extension Relief ($9.2 million in 2021) 36

37 NEI - Truax Lining Project Phase 2 ($2.1 million in 2020) Pumping Station 4 Revisions ($1.4 million in ) NEI Waunakee Extension Relief ($10.4 million in 2022) PS 7 Improvements Phase 2 ($2.7 million in ) PS 17 Capacity Upgrade ($2.6 million in ) If facilities are required for phosphorous and/or nitrogen removal in lieu of implementing an adaptive management approach, the District will incur additional borrowing related to construction of these facilities. Staff anticipate that this additional borrowing would most likely be from the Clean Water Fund program and would represent significant additional borrowing, anticipated at $135 million and $78 million respectively. The Clean Water Fund Program (CWFP) provides financial assistance to municipalities for wastewater treatment facilities and urban storm water runoff projects. 37

38 SECTION Debt Service Overview The District s Debt Service Budget supports the District s Capital Budget and Capital Improvements Plan. The District collects service charge revenues into the Operating Budget to meet debt service obligations. By October 1 of each year, the District deposits sufficient funds, enough to make principal and interest payments for the following year, in a designated debt service fund. Doing so allows the District to abate levying a property tax to meet its debt service obligations. As part of a rate smoothing strategy, the District may deposit, in a particular year, more or less revenue in the Debt Service Fund than is needed to fund the following year s debt service Debt Service Budget Table 13 provides a summary of the 2013 through 2015 Debt Service Budget details. Funds transferred from the Operating Fund provide the primary revenue source. The District pays principal payments on its Clean Water Fund loans on May 1 of each year and interest payments each May 1 and November Debt Service Budget REVENUES REVENUE CATEGORY Percent Actual Thru June Est. Total Budget Budget Change Transfer from Operating Fund $9,878,000 $0 $10,865,000 $10,865,000 $11,843, % Interest (13,917) 34,044 40,000 18,000 35, % TOTAL REVENUES $9,864,083 $34,044 $10,905,000 $10,883,000 $11,878, % EXPENDITURES EXPENSE CATEGORY Percent Actual Thru June Est. Total Budget Budget Change First Half Interest $1,219,409 $1,480,292 $1,480,292 $1,101,000 $1,794, % Principal 5,114,733 5,568,912 5,568,912 6,017,000 9,086, % Second Half Interest 1,289,388-1,582,000 1,726,000 1,830, % TOTAL EXPENDITURES $7,623,530 $7,049,204 $8,631,204 $8,844,000 $12,710, % DEBT SERVICE FUND BALANCE DEBT SERVICE FUND BALANCE Percent Actual Thru June Est. Total Budget Budget Change BEGINNING BALANCE $13,842,214 $16,082,767 $16,082,767 $16,087,072 $18,356, % TOTAL REVENUES 9,864,083 34,044 10,905,000 10,883,000 11,878, % TOTAL EXPENDITURES 7,623,530 7,049,204 8,631,204 8,844,000 12,710, % ENDING BALANCE $16,082,767 $9,067,607 $18,356,563 $18,126,072 $17,524, % 38 TABLE 13

39 The amount of debt service necessary to pay the May 2015 principal and interest and November 2015 interest is $12,709,000. The amount recovered through service charges in 2015 for debt service will be $11,843,000. The District will use $832,000 of its accumulated debt service fund reserves for 2015 debt service payments Debt Service Fund Balance The Debt Service Fund ending balance is projected to decrease by 3.3% to $17.5 million in Although decreasing, it is still adequate to pay the required principal and interest payments on existing and anticipated Clean Water Fund loans. The budgeted debt service balance at the end of 2015 meets the District s policy requirement to maintain a balance sufficient to abate levying a property tax to satisfy our debt service obligations. Six-Year Debt Service Summary TABLE DEBT SERVICE PAYMENTS $12,709,000 $12,224,000 $13,517,000 $14,057,000 $14,782,000 $15,988,000 DEBT SERVICE COLLECTED IN RATES Debt Service Requirements $12,224,000 $13,517,000 $14,057,000 $14,782,000 $15,988,000 $17,067,000 Addition to (use of) Debt Service Reserve DEBT SERVICE REQUIREMENTS INCLUDED IN SERVICE CHARGE RATES (381,000) (608,000) 14,000 63,000 (326,000) (856,000) $11,843,000 $12,909,000 $14,071,000 $14,845,000 $15,662,000 $16,211,000 PRINCIPAL AMOUNT. OF OUTSTANDING DEBT AT FIRST OF THE YEAR $135,196,000 $146,328,000 $146,912,000 $148,696,000 $147,968,000 $154,145,000 Six-Year Debt Service Summary & Debt Service Limit In Table 14, the bottom line shows the effect that future loans will have on the District s principal amount of outstanding debt as of the first of each year 2015 through Thus on January 1, 2015, anticipated District debt will be roughly $135 million while on January 1, 2020 it will be roughly $154 million. Although not shown in Table 14, the District s anticipated debt at the end of the planning period, December 31, 2020, will be roughly $159 million. The Wisconsin Statutes sets the District s legal debt limit at 5% of the equalized property valuation of the District. For 2013, the equalized property valuation was $36.65 billion. Therefore, the District s legal debt limit as of January 1, 2014 was $1.83 billion. At the end of 2013, the District s debt of $111 million was at 6.1% of this limit. If the debt limit does not increase, the District s debt at the end of 2020 would be less than 9% of this limit. 39

40 Although the District s debt has increased during 2014 and the equalized property valuation has not yet been updated for 2014, it is clear from the 2013 numbers that the District s debt, though increasing, will not exceed its legal limit over the time-period shown in Table 14. However, other factors such as EPA s affordability criterion (i.e., 2% of median household income for wastewater services) and other local and regional factors can and will be considered when assuming more debt. Table 14 also shows the resulting levels of debt service that will be collected and paid from service charge revenues during the period of 2015 to Debt service payments will increase from $12.7 million in 2015 to $16.0 million in The District s debt service requirements that are included in its rates will increase from $11.8 million in 2015 to $16.2 million in The debt service requirements collected each year are stabilized or smoothed by collecting more or less than needed in a given year to smooth the levels of increases over time. Further discussion of this technique is provided in the next section on Debt Stabilization. Debt Stabilization In 2004, the District transferred $1,515,000 from the General Fund to the Debt Service Fund above the amount necessary to satisfy the 2004 debt service requirements. Those extra funds have been used strategically, beginning in 2005, to smooth and limit the annual increases in the future debt service expenses raised through service charges. In 2005 and 2006, these funds were used to limit the increase to 2.0%. Due to projected increases in the cost of future collection system and treatment plant projects, beginning in 2007 the annual increase was raised to 3.4%. For the 2010 and 2011 budgets, due to further projected increases in the cost of future collection system and treatment plant projects, including the Eleventh Addition, staff projected annual increases of at least 4.8% in debt service expenses over an extended period would be necessary to fund the District s ongoing capital improvements. For 2012, a significant increase in projected debt service required the annual amount collected for debt service (the transfer rate) to increase to 12% and it appeared that similar increases would be required through the year Since the Eleventh Addition project will cost about 10 million dollars less than anticipated for the 2012 budget, the required increase in the amount collected for debt service was decreased to 10% for 2013 and Annual increases will remain relatively high through 2017, but are anticipated to lessen to a 9% increase for 2015 to After 2017, the transfer rate increases taper back to 3.5% after being at 5.5% for 2018 and However, this does not take into account increases that may be required for advanced phosphorous or nitrogen removal facilities, or any additional costs for trading or adaptive management approaches. A large portion of the increase over the 2014 projection is still associated with the anticipated additional debt service required for the Eleventh Addition and for Pumping Station 18 and related projects. Should the cost of any project change significantly from the projections, next year s projections will be modified accordingly. 40

41 The actual cash flows and costs for the projects in this summary will have significant impacts on the District s resulting debt service. Although, as with any projection, there is some uncertainty related to what actual project cash flows and costs will be, there is certainty that the District s debt increased due to the Eleventh Addition and will continue to increase based on the costs of other ongoing projects. Staff will soon have a better understanding of the final costs of the Eleventh Addition project as well as the Pumping Station 18 related projects. However, every new project brings a certain amount of uncertainty regarding cost. Given the District s needs, funding projects through use of debt instruments requires users to pay for those assets during a significant portion of the assets lives. Although growing, the importance of keeping ahead of the District s needs and subsequent debt service cannot be overstated; by keeping ahead of its pending debt, the District will help prevent more significant rate increases in future years. Thus, given the present outlook, staff believe and recommend that a transfer growth rate now anticipated at 9% through 2017 is appropriate and necessary. Current Debt Service Schedule Currently all debt is financed through the state of Wisconsin Clean Water Fund program. The District makes principal payments on its long-term debt in May of each year, and interest payments in May and November of each year. Future principal and interest due on existing long-term debt incurred as of August 31, 2014 are approximately as shown in Table 15. Note that this does not include any debt that will be incurred beyond August 31, Debt Service Payment Schedule TABLE 15 YEARS ENDING ST DECEMBER 31 PRINCIPAL INTEREST TOTAL ,629,000 3,144,000 11,773, ,714,000 2,922,000 10,636, ,921,000 2,713,000 10,634, ,802,000 2,503,000 10,305, ,547,000 9,283,000 50,830, ,818,000 4,622,000 34,440, ,706,000 1,069,000 21,775,000 TOTAL $124,137,000 $26,256,000 $150,393,000 41

42 Future Debt Service Scenarios The attached three charts are intended to help provide a better picture of what the District s long-term future debt service needs might look like based upon three different scenarios. The first scenario, the base scenario, contains no provisions for any advanced nutrient removal facilities. The second scenario includes provisions for both advanced phosphorus and nitrogen removal facilities. The third scenario includes provisions for an adaptive management approach along with nitrogen removal facilities. The charts all show the annual amounts collected through service charges and used to fund capital projects or pay debt service since Each chart also provides a forecast for the next twenty years of: 1) the amount of required funds that the District will have to deposit in a debt service reserve each year to satisfy the bond ordinances; and 2) the projected annual amounts that the District will have to collect through service charges to address debt service. Note that to make a good comparison of the alternatives, the amounts in scenarios 2 and 3 also include funds for adaptive management and O&M costs. The projections for each scenario are speculative in nature and contain numerous assumptions, all subject to change. The intent is merely to provide a long-term view of what might happen. Scenario Assumptions All three scenario projections include known projects through 2024 and in some cases beyond. In addition, beginning in 2025, expenditures are included for the projects that begin in 2024 or earlier but run past the end of the projection, as well as assumed costs for undefined projects. The assumed costs for the undefined future projects are based on annual expenditures of $10 million (in 2013 dollars). That amount is inflated to the correct year for each year where it is included in the projection; inflation is assumed at 3% per year. These represent longer range projects that will result from future collection system and plant asset management planning, and the ongoing interceptor and plant inspection and maintenance programs. Identification and prioritization of these projects will be addressed in future budgets as specific projects are defined. The costs for treatment plant additions associated with new phosphorus limits and potential nitrogen limits are, at this time, not entirely definite, but are based upon the Nutrient Removal Cost Study completed in 2011 to This scenario (Scenario 2) assumes the new limits for phosphorus would require the addition of chemical polishing and effluent filtration processes with associated capital costs estimated to be $135 million (future costs in ). Likewise, new tanks and processes associated with advanced nitrogen treatment (included in Scenarios 2 and 3) are assumed to be $78 million (future costs in ). Adaptive management approaches (Scenario 3) are assumed to cost $405,000 per year starting in 2019 with pilot study costs of $127,000 from 2013 to Actual costs could be more or less than these assumptions and those differences will affect each scenario accordingly. 42

43 Chart 1, the base scenario or Scenario 1, shows debt service for anticipated projects assuming no additional projects or debt for advanced nutrient removal. As discussed previously, transfer rate increases of 9% from 2015 to 2017 will be required to fund debt service associated with the Eleventh Addition and other near term projects. In 2018 and 2019, the transfer rate decreases to 5.5%; and in 2020 and beyond, the transfer rate will be 3.5% or lower. Chart 2, Scenario 2, shows the effect of the debt for a $135 million plant expansion related to advanced phosphorus treatment. In this scenario, construction of such a facility is anticipated in 2023 and The chart also shows the impact of a $78 million plant expansion related to advanced nitrogen treatment. For purposes of this scenario, construction of such a facility is anticipated in 2025 and Chart 3, Scenario 3, still includes the impact of a $78 million plant expansion related to advanced nitrogen treatment; however, in lieu of a plant expansion for advanced phosphorus treatment, the projection shows $127,000 per year for pilot study costs from 2013 to 2018 and $405,000 per year starting in 2019 to address adaptive management needs. The $127,000 or $405,000 per year would most likely be an additional operating expense and not a debt service expense. However, these expenses are shown on the chart as a simple means to show the significant differences of the alternatives. Please note that success of an adaptive management approach does not directly increase the amount of funds available to the District for other purposes, it merely means that the District would not incur the additional debt that would otherwise be required to construct advanced phosphorus treatment facilities. By comparison, the District s anticipated debt at the beginning of 2025 would increase to $310 million or roughly 74% more than its anticipated debt of $178 million without construction of such advanced treatment facilities. It is difficult to estimate service charge rates directly since there are so many variables that affect them. The discussion herein is provided for comparative purposes only and does not reflect actual rate increases that will be seen, especially since those are typically different for different communities served by the District. Debt service increases in the 9% range may mean increases for a typical District household in the neighborhood of $7 to $8 more each year. This would add to any increase or decrease resulting from changes in general operating expenses. Thus, at the end of three more years (through 2017), a typical household could be paying $21 to $24 more per year for the additional debt service. Under the plant expansion scenario, i.e., construction of advanced phosphorus treatment facilities and advanced nitrogen facilities, a typical resident in 2027 might pay $18 per month in debt service versus the $6 per month they now pay in In addition, they might pay an additional $4 more per month for O&M costs. Under the adaptive management approach, a resident in 2027 might pay $13 per month to cover debt service (includes advanced nitrogen removal facilities) and an additional $0.20 per 43

44 month for the District s adaptive management program costs. They might also expect to pay $2 more per month in O&M for the nitrogen removal facilities. It is not possible to envision or project all of the possible scenarios that might happen. This debt analysis represents a few potential scenarios and our best prospective view of the scope of projects staff see going forward, their relative timeframes, their relative levels of cost, and the level of debt the District might incur. That view will be modified as new information becomes available. Chart 1 44

45 Chart 2 45

46 Chart 3 46

47 SECTION SECTION 5 5 Appendices Appendix A: Project Summaries Nine Springs Wastewater Treatment Plant Projects A01. Eleventh Addition to Nine Springs WTP The Eleventh Addition to Nine Springs Wastewater Treatment Plant included multifaceted improvements to the plant that: A. Increase the plant s solids handling capacity to the year B. Improve biosolids handling with higher temperature digestion processes providing the District with Class A biosolid products and a diversified biosolids end-use program. C. Harvest struvite from the District s biosolids processing stream, thereby decreasing the amount of phosphorous in its biosolids end-products while improving plant operations and allowing sale of the struvite back to the system vendor. D. Mitigate plant operational problems associated with grease and foaming. Design of the Eleventh Addition facilities, based on recommendations contained in the Solids Handling Facilities Plan, began in late 2009 and continued into fall Design phase costs totaled about $3.4 million. The project bid in fall 2011 and resulted in a $40 million dollar construction contract, awarded to C.D. Smith. The latest budget projection anticipates $48.8 million for the entire project including planning, design, and construction. Construction began in late 2011 with project completion anticipated in mid to late Major work included construction of two acid digesters, two anaerobic digesters and related control building, a waste activated sludge thickening facility, a struvite harvesting facility, and other plant improvements. This project is financed through a Clean Water Fund loan. A02. Nine Springs Process Control System Upgrade The process control system upgrade will improve reliability and efficiency, and address existing control system obsolescence. The District installed its existing process control system in 1996 as part of the Ninth Addition to the plant. Although fully functional, parts of the system are obsolete and in need of new computers, software upgrades, and controller replacements. Facility planning took place during 2010 and 2011 with design beginning in late 2011 and implementation commencing in the fall of Implementation includes replacement of the operations reporting system, purchase of a new development system, and construction to replace the process control system 47

48 hardware and software. The project is scheduled for completion in mid-2015 with total project costs of up to $5.0 million financed through use of a Clean Water Fund loan. A03. New Maintenance Facility/Space Needs Improvements A new maintenance facility would provide District staff with the necessary tools and equipment to address maintenance space needs well into the future. In August 2012, the District hired Bray Architects to conduct a space needs analysis for its existing maintenance facilities and operations space in order to help determine the best longterm facilities solution for its maintenance and operation needs. The District spent $37,000 in 2012 and $47,000 in 2013 to finish the needs study and begin the related design phase. The District anticipates spending $11.7 million total assuming new maintenance facility construction beginning late 2014 to early New facility construction will be followed by space needs improvements to the existing Maintenance Shop 1 and Operations building in The space needs improvements may be included as optional construction during the new maintenance facility bidding process. The projection anticipates that the District will finance this project with a Clean Water Fund loan. A04. Plant Energy Projects Improving the efficiency of the plant s energy systems will reduce overall plant energy use and improve plant performance. The purpose of this project is to address projects identified during the 2013 Energy Study relating to the plant s generation systems and process improvements. Potential changes required by the District s permit renewal in 2015 may also be included. The CIP includes $11.8 million in funds as a placeholder for these related projects. Cost estimates and project details will be presented as they become more refined. The projection anticipates study and planning into 2017, design from 2017 to 2018, and construction in 2019to Financing is anticipated through the Clean Water Fund loan program. A05a. Plant Aeration and Peak Capacity Facilities Plan An efficient aeration system will improve the plant s overall performance well into the future. This planning project will review the plant s aeration systems and address the plant s peak capacity concerns. The planning effort will be completed in 2015 with related design in 2016 (see A05b and A07). Total costs are anticipated at $500,000. A05b. Plant Aeration System Projects Improving the condition and efficiency of the plant s aeration systems will improve plant reliability and performance. The purpose of this project is to address issues related to inefficiencies, replacement, and operations and maintenance of the secondary treatment system aeration-related equipment including blowers, diffusers, control systems, electrical systems, dissolved oxygen probes, and transmitters. The CIP includes $8.9 million in funds as a placeholder for these related projects. Cost estimates and project details will be presented as they become more refined. The projection 48

49 anticipates planning (see A05a) and design in 2015 and 2016, construction in 2017 to 2019, and financing through the Clean Water Fund Program. A06. Plant Unit Substation Improvements Improving the plant s system of low voltage substations will help insure reliable power for plant operation. Three of the District s low voltage unit substations are approaching the end of their useful lives. This project will update the power system as necessary to maintain power to all plant loads fed by these substations. The CIP includes $2.7 million (2016 design, 2017 construction) and anticipates project funding with a Clean Water Fund loan. A07. Plant Peak Capacity Improvements Adding capacity or diversion capability will help the District address peak flows to the plant. With the construction of Pumping Station 18, the conveyance system has the potential to overwhelm the plant s hydraulic capacity. Potential alternatives to address this concern include, but are not limited to, adding influent storage, adding diversion/return capacity to/from the lagoons, blending options, and adding plant capacity to the areas that are hydraulically deficient. The CIP includes a $4.1 million placeholder to address peak flows with planning and design occurring in 2016 and construction in 2017 and The Plan anticipates financing through use of a Clean Water Fund loan. A08. Headworks Facility Rehab Project Keeping the plant s Headworks Facility in proper working condition will help provide effective plant operation. The Headworks Facility provides screenings and grit removal for the entire plant; processes that require significant attention and maintenance. The intent of this project is to address issues related to inefficiencies in the operations and maintenance of raw wastewater screening, screenings handling, grit handling, and septage receiving equipment and facilities. The project will also investigate the possibility of providing back-up power for the Headworks Building. The CIP includes $4.0 million as a placeholder for related work, with planning and design in 2017 and 2018, and construction in 2019 and The Plan anticipates financing through use of a Clean Water Fund loan. A09. Metromix Facility Expansion Diversifying the District s biosolids program helps ensure long-term markets for the District s biosolids. This project would expand the size of the existing Biosolids End-Use Facility providing additional space to process and store soil-amendment products. The CIP includes $2.1 million, anticipating planning and design in 2017 and 2018, and construction in Funding would be through use of the Clean Water Fund loan. A10. UV Disinfection System Replacement/Rehab Replacing the District s aging infrastructure will help insure the District continues to treat its wastewater successfully and operate within its permit limits. The ultraviolet 49

50 disinfection system, installed during the Ninth Addition in the mid-1990s, will need refurbishment or replacement to continue properly disinfecting the District s effluent prior to discharge from the plant. Planning and design would occur in 2018 with construction following in The CIP includes $5.2 million as a placeholder with funding anticipated through use of the Clean Water Fund Program. A11. Annual Clarifier Coating Recoating clarifiers increases their life and value, insuring that they can serve the District s operation well into the future. The 2014 budget included funds to sandblast and coat the metal components on two final clarifiers. For 2015, staff have included $165,000 to coat two more clarifiers. The 2015 coating projects will be funded from Capital Fund reserves. Future coating projects have been included in the CIP through the year A12. Annual Pavement Improvements Replacing the District s damaged roadways provides unimpaired access for District and customer vehicles; where possible, the District looks at environmentally friendly alternatives. The 2015 budget includes$30,000 in funds to replace damaged pavement. Subsequent years include $53,000 for improvements in year 2016 and escalating 3% annually for years following. Pavement projects are typically funded through Capital Fund reserves. A13. Metrogro Applicators New applicators will insure that the Metrogro program remains the backbone of the District s biosolids reuse program. Three new Metrogro Applicators will replace the existing aging applicators presently in use. The District will purchase the applicators individually in 2017, 2019, and The total cost for the three applicators is anticipated at $1.74 million funded with Capital Fund reserves. Interceptors B01. NEI-Far East Int. to Southeast Int. Junction A relief sewer for this portion of the Northeast Interceptor provides additional capacity for the District s east side well into the future. The Northeast Interceptor from its junction with the Far East Interceptor to its junction with the Southeast Interceptor consists of approximately 5,600 feet of 48-inch concrete sewer that needed capacity relief. Design of the project began in May 2011 in close coordination with the Pumping Station 18 and Pumping Station 18 Force Main projects. Construction began in April 2013 with project final completion in mid The final project cost is estimated at $8.0 million. The District financed this project with a Clean Water Fund loan. B02. West Int. Extension and West Point Extension (lining project) Lining this portion of the District s West Interceptor Extension and lining the West Point Extension will ensure long-term quality service to customers in this area of the District s 50

51 collection system. The District s televising program found these intercepting sewers, located in the City of Middleton, deficient and in need of rehabilitation via a cured-inplace liner. Lining was completed in the first half of 2014 at a total costs of $273,000 and project funding from Capital Fund reserves. B03. NEI-Rehab West of Airport (lining project) Phase 1 Lining this portion of the District s Northeast Interceptor will bring it back up to District standards. As part of the District s ongoing sewer maintenance program, the District televises portions of its interceptor system on an annual basis. This portion of the Northeast Interceptor, located west of the Dane County Airport, was found to be deficient and in need of rehabilitation via a cured-in-place liner. Lining will consist of three phases with Phase 1 occurring in Phase 1 includes the most deficient areas. Staff estimates total project cost for Phase 1 at $1.1 million with project funding from Capital Fund reserves. B04. NSVI-Morse Pond Extension A new interceptor to the Morse Pond area will provide sewer service to new locations within the region. This project extends a new leg of the District s Nine Springs Valley Interceptor (NSVI) to the Morse Pond area to serve future development near the intersection of County Highways M and PD, north of the City of Verona. Approximately 3,100 feet of new interceptor will serve growth in the Cities of Verona and Madison. Planning began in 2012 with design continuing into 2015 and construction planned for late 2015 and into Staff estimates total project cost at $846,000 with project funding anticipated from Capital Fund reserves. B05. West Int.-West Randall to Near PS2 (lining project) This interceptor was constructed in 1916 and is one of the District s oldest facilities in the collection system. The District s sewer televising program identified this portion of the West Interceptor along Randall Avenue and Regent Street to be deficient and in need of lining. Flows in the service area will be studied further in 2014 to determine if additional capacity is required for segments of the interceptor. Assuming adequate capacity exists, approximately 5,000 feet of 24-inch sewer will be lined in 2015 at an estimated cost of $1.34 million. The District anticipates financing this project with a Clean Water Fund loan. B06. Rimrock Int. Replacement/Relief Replacing the District s Rimrock Interceptor will improve the District s conveyance system by decreasing inflow and infiltration. The District televised the Rimrock Interceptor in 2009, finding a variety of deficiencies that included areas with root intrusion, sags, and infiltration. This sewer section has also been under further evaluation for capacity relief. Present plans include replacement of the existing sewer in 2015 at a total project cost of $849,000 with project funding anticipated with a Clean Water Fund loan. 51

52 B07. NSVI-Mineral Point Extension Relocation at CTH PD Due to road construction at the intersection of Verona Road and County Trunk Highway PD, a portion of the Nine Springs Valley Interceptor (NSVI) Mineral Point Extension may require relocation. Staff anticipates that if necessary, relocation work will be required before road construction begins and is planning for design to begin in 2015 with construction to occur in At this time, it is unclear if the Wisconsin Department of Transportation (WDOT) will provide any funding for this relocation effort and therefore, the District is conservatively planning to fund the $875,000 project from Capital Fund reserves while making efforts to recover those same costs from the WDOT. B08. NEI-Rehab West of Airport (lining project) Phase 2 Lining of this portion of the District s Northeast Interceptor will bring it back up to District standards and ensure long-term quality service for the customers served. As part of the District s ongoing sewer maintenance program, the District televises portions of its interceptor system on an annual basis. This portion of the Northeast Interceptor, located west of the Dane County Airport, was found to be deficient and in need of lining. Lining will consist of three phases with Phase 2 scheduled for Phase 2 includes areas that are less deficient than Phase 1, but still in need of attention. Staff estimates total project costs for Phase 2 of $1.16 million with financing anticipated through a Clean Water Fund loan. Phase 3 consists of areas that will need attention at some time in the future but have less urgency than the Phase 1 and Phase 2 locations. Phase 3 lining has not been scheduled at this time. B09. Northend Int. Sherman Avenue (lining project) This short section of interceptor along Sherman Avenue is in need of rehabilitation. Lining this portion of the Northeast Interceptor will address condition deficiencies in the 86-year old sewer and prolong its service life. The section to be lined consists of 1,480 feet of 10-inch and 12-inch sewer. District staff anticipates lining this sewer in 2016 at a total project cost of $162,000, with funding from Capital Fund reserves. B10. Lower Badger Mill Creek Int. Phase 4 Completion of the Lower Badger Mill Creek Interceptor will provide gravity sewer service for the entire Lower Badger Mill Creek drainage basin. A portion of the Lower Badger Mill Creek Interceptor construction, Phase 3 - originally scheduled for 2016, was completed in 2013 as a joint project between the District, the City of Verona, and Epic Systems Corporation, extending service 900 feet further to the north from the location where Phase 2 ended near Northern Lights Road in Verona. The project met all District standards of construction, but was constructed at no cost to the District except for some project inspections costs. Staff anticipates that Phase 4, about 3,850 feet of sewer from the end of Phase 3 to County Highway PD, will be constructed in Total project costs for Phase 4 are anticipated to be $970,000 and will be funded from Capital Fund reserves. 52

53 B11. NEI-Truax Extension (lining project) Phase 1 Approximately two miles of the Truax Extension, from the end of the Pumping Station 13 Force Main to Lien Road, has been found to be deficient and in need of rehabilitation. Lining the Northeast Interceptor from Lien Road to the end of the Pumping Station 13 Force Main will correct existing condition defects and prolong the service life of the sewer. This first phase, scheduled for 2018, will cover approximately one-third of the distance. Design of the second phase of the project will occur in 2019 with construction scheduled for A schedule for Phase 3 has not yet been determined. District staff anticipates funding the Phase 1 costs of $1.82 million with a Clean Water Fund loan. B12. West Int. PS 5 to Gammon Junction (lining project) This section of the West Interceptor was inspected in 2009 as part of the District s sewer televising program and was found to be suffering from internal corrosion. 3,550 feet of 18-inch diameter sewer upstream of Pump Station 5 will be lined to extend the service life of this 82-year old facility. The project, anticipated for 2018, will cost roughly $440,000 and will be funded from Capital Fund reserves. B13. NEI-Far East Int. to Southeast Int. Junction (lining project) This section of the Northeast Interceptor consists of 5,600 feet of 48-inch diameter reinforced concrete sewer. Televised in 2010 and 2011 as part of the District s sewer televising program, the interceptor contains defects related to corrosion of the interior concrete surface. Approximately 2,300 feet of the section was recently abandoned upon completion of the District s NEI - Far East Int. to Southeast Int. Replacement/Relief project. District staff anticipates lining the remaining 3,300 feet of sewer in 2019 at a cost of $1.46 million with funding from a Clean Water Fund loan. B14. NEI-Truax Extension Relief The Truax Extension, from the end of the Pumping Station 13 Force Main to Lien Road, will require capacity relief in approximately the year In order to provide the necessary system capacity, staff proposes preserving and rehabilitating the existing sewer with a cured-in-place liner, and providing additional capacity by installing approximately 9,750 feet of new sewer. Design of the relief sewer will occur in 2020 with construction beginning in Total project costs are estimated to be $9.18 million with funding anticipated through a Clean Water Fund loan. B15. NEI-Truax Extension (lining project) Phase 2 Approximately two miles of the Truax Extension, from the end of the Pumping Station 13 Force Main to Lien Road, has been found to be deficient and in need of rehabilitation. Lining the Northeast Interceptor from Lien Road to the end of the Pumping Station 13 Force Main will correct existing condition defects and prolong the service life of the sewer. The first phase, scheduled for 2018, will cover approximately one-third of the distance. Design of the second phase of the project will occur in

54 with construction scheduled for A schedule for Phase 3 has not yet been determined. District staff anticipates funding the Phase 2 costs of $2.12 million with a Clean Water Fund loan. B16. West Int. Spring Street Relief (lining) Lining this portion of the West Interceptor will help maintain the integrity of the District s conveyance system. This lining project includes 4,580 feet of West Interceptor sewer located in downtown Madison near Regent Street. The District televised the sewer and found it to be deficient. The design for lining this sewer will begin in 2019 with lining anticipated in 2020 at an estimated cost of $983,000. Pumping Stations & Force Mains C01. PS 18 Construction Pumping Station 18 and its force main will increase the capacity and reliability of the District s conveyance system. Pumping Station 7 is expected to reach firm capacity prior to the year A new Pumping Station 18, located just off of East Broadway in Monona, will provide capacity relief for Pumping Station 7 and provide much needed redundancy for the east side of the District s collection system. Design of the project began in May 2011 and construction began in late fall of The Pumping Station 18 Force Main and Northeast Interceptor Relief (SEI Junction to FEI Junction) projects have been fully coordinated with the construction of the new Pumping Station 18. Total project costs, estimated at $14.8 million, will be financed with a Clean Water Fund loan. C02. PS 18 Force Main The Pumping Station 18 Force Main will provide the means to convey raw wastewater from Pumping Station 18 to the Headworks Facility at the Nine Springs Wastewater Treatment Plant. Approximately 650 feet of 42-inch pipe was installed at the treatment plant during construction of the plant s Tenth Addition in anticipation of this project. An additional 15,000 feet of 48-inch force main will be constructed as part of this project. Design began in May 2011 in conjunction with the design of Pumping Station 18 and relief of the Northeast Interceptor between the Southeast Interceptor and the Far East Interceptor. Total project costs for the force main construction are estimated at $12.4 million. The District bid the project in the fall of 2013 with completion of construction expected in The District is financing this project with a Clean Water Fund loan. C03. PS 11 & 12 Rehab Rehabilitating Pumping Stations 11 and 12 will bring older facilities to like new condition. The District has identified many of its pumping facilities as needing rehabilitation and improvements to bring them up to the proper standards. The District prioritized its needs in its updated Collection System Facilities Plan (approved by WDNR in July of 2012). The Plan determined that Pumping Stations 11 and 12 are both in need of rehabilitation and require a closer look at their long-term capacity needs. The District constructed Pumping Station 11, located on Clayton Road to the southwest of the plant, 54

55 in 1966 and Pumping Station 12, located on Fitchrona Road, in Total project costs are estimated at$10.7 million. Design began in 2013 and completed in mid-2014 with construction anticipated to start in late 2014 and continuing into The District anticipates financing this project with a Clean Water Fund loan. C04. PS 15 Rehab Upgrading Pumping Station 15 will ensure that reliable sewer service continues. Pumping Station 15 is another pumping facility that the District has identified as needing rehabilitation and improvements to bring it up to the proper standards. Pumping Station 15, located on Allen Boulevard on the west side of Lake Mendota, needs rehabilitation and a closer look at long-term capacity needs due to the proposed Bishops Bay development in the City of Middleton and Town of Westport. The District started up Pumping Station 15 in Preliminary costs for the project are $4.20 million with design beginning in 2015 and construction in 2016 and The District anticipates financing this project with a Clean Water Fund loan. C05. PS 17 Force Main Relief Phase 1 Relief of the Pumping Station 17 Force Main will provide additional capacity to serve the City of Verona and the far west side of Madison. With future completion of the Lower Badger Mill Creek Interceptor, Pumping Station 17 and its force main will need capacity relief. This project anticipates construction of the relief force main in two phases. In Phase 1, approximately 4,600 feet of force main will be constructed in conjunction with construction of the City of Verona s East Interceptor in Total project costs for Phase 1 are projected at $1.06 million. The plan anticipates construction of the remaining 9,400 feet of force main as Phase 2 in approximately Staff presently anticipates funding Phase 1 from Capital Fund reserves subject to availability of funds. C06. PS 7 Improvements Phase 1 Improving Pumping Station 7 and constructing Pumping Station 18 will provide redundant and reliable service for the District s east side well into the future. Pumping Station 18 construction will provide significant relief to Pumping Station 7 on the east side of the District s conveyance system. Although the District rehabilitated Pumping Station 7 in 1992, the station is critical to the District s operation and is in need of condition-based improvements. District staff has identified several areas of need at Pumping Station 7. Potential improvement projects include the following: replacement of existing controllers and the control system; replacement/upgrade of the electrical switchgear; installation of an odor control system and upgrades to the HVAC system; installation of screenings equipment; separating the control room from the garage area and screen room; installing variable speed drives to optimize pumping operations; firm capacity upgrade; and installation of electric valve actuators. Since the need and/or timing for many of the improvements is dependent on how Pumping Station 7 interacts with Pumping Station 18, staff proposes that the most pressing needs be addressed in the near term while assessing the remainder of the improvements following start-up of 55

56 Pumping Station 18 in Therefore, Phase 1 improvements for Pumping Station 7 include replacing controllers and the control system in 2016 at an estimated cost of $218,000, funded from Capital Fund reserves. Phase 2 improvements, tentatively scheduled to start in 2021, will include the remaining improvements as determined from follow-up assessments. $2.65 million has been included as an allowance for these additional improvements with funding anticipated from a Clean Water Fund loan. C07. PS 13 & 14 Rehab Upgrading District Pumping Stations 13 and 14 will improve the north side of the District s conveyance system and bring both pumping stations up to present day standards. The District s Pumping Station 13, located at Amelia Earhart Drive near Truax Field, and Pumping Station 14, located near the corners of School and Wheeler Roads, have both been identified in the District s Collection System Facilities Plan as needing rehabilitation and improvements to bring them up to the proper standards. The District constructed Pumping Station 13 in 1970 and Pumping Station 14 in Preliminary costs for the project include $8.9 million with design beginning in 2018 and construction occurring in 2019 and The District anticipates financing this project with a Clean Water Fund loan. C08. PS 4 Revisions Modifications to this pumping station will improve conveyance system reliability and prevent backups. Constructed in 1967 along John Nolen Drive, Pumping Station 4 was identified in the Collection System Facilities Plan as requiring capacity upgrades, modifications to aging electrical equipment, and enhancements to the power supply system. Due to an anticipated diversion of flow from the service area in 2014, capacity upgrades are no longer necessary; however, condition factors still drive the need for some improvements. Staff anticipates total project costs at $1.4 million with design beginning in 2019 and construction starting in The District anticipates financing this project with a Clean Water Fund loan. C09. PS 7 Improvements Phase 2 Improving Pumping Station 7 and constructing Pumping Station 18 will provide redundant and reliable service for the District s east side well into the future. Pumping Station 18 construction will provide significant relief to Pumping Station 7 on the east side of the District s conveyance system. Although the District rehabilitated Pumping Station 7 in 1992, the station is critical to the District s operation and is in need of condition-based improvements. District staff has identified several areas of need at Pumping Station 7. Potential improvement projects include the following: replacement of existing controllers and the control system; replacement/upgrade of the electrical switchgear; installation of an odor control system and upgrades to the HVAC system; installation of screenings equipment; separating the control room from the garage area and screen room; installing variable speed drives to optimize pumping operations; firm capacity upgrade; and installation of electric valve actuators. Since the need and/or timing for many of the improvements is dependent on how Pumping Station 7 interacts 56

57 with Pumping Station 18, staff proposes that the most pressing needs be addressed in the near term while assessing the remainder of the improvements following start-up of Pumping Station 18 in Therefore, Phase 1 improvements for Pumping Station 7 include replacing controllers and the control system in 2016 at an estimated cost of $218,000 funded from Capital Fund reserves. Phase 2 improvements, tentatively scheduled to start in 2021, will include the remaining improvements as determined from follow-up assessments. $2.65 million has been included as an allowance for these additional improvements with funding anticipated from a Clean Water Fund loan. C10. PS 17 Capacity Upgrade Capacity improvements at Pumping Station 17 will provide additional capacity to serve the City of Verona and the far west side of Madison. With future completion of the Lower Badger Mill Creek Interceptor, Pumping Station 17 and its force main will need capacity relief. This project anticipates construction to upgrade the capacity of Pumping Station 17 prior to the expected completion of the entire Lower Badger Mill Creek Interceptor in The plan also anticipates construction of the second phase of the Pumping Station 17 force main in Design of the upgrade is anticipated to begin in 2020 with construction in 2021 and The District anticipates funding the $2.6 million project cost with a Clean Water Fund loan. C11. PS 16 Ventilation Modifications Ventilation modifications at Pumping Station 16 will reduce odors and help prevent corrosion. These improvements were originally included in the 2014 Operating Budget; however, higher than anticipated costs necessitated the use of capital funds. Overall project cost is anticipated at $200,000 with construction beginning in late 2014 and completing in the spring of

58 Appendix B: Completed Projects & Retainers 2013 Project Completions Operations Building HVAC Rehab Among other renovations, this project, completed in June 2013, updated the 30-year old heating, ventilating, and air conditioning systems in the District s Operations Building at the Nine Springs Wastewater Treatment Plant. The total cost for the project was roughly $3.3 million funded with a Clean Water Fund loan. Annual Clarifier Coating The District coated Final Clarifiers 7 and 8 at a cost of $149,000. This is part of an ongoing project to upgrade and extend the life of the final clarifiers Project Completions/Anticipated Completions Lower Badger Mill Creek Int. - Phase 3 Actual construction of Phase 3 of the Lower Badger Mill Creek Interceptor was completed in Documentation, follow-up televising, and punch list items extended final project completion into This phase of the LBMC Interceptor included 900 feet of intercepting sewer extending northwards from the end of Phase 2 near Northern Lights Road in Verona. For further information on the LBMC Interceptor project, see project summary B10. West Int. Extension and West Point Extension (lining project) This project (B02), originally scheduled to complete in late 2013, completed in mid The project included a portion of the District s West Interceptor Extension and a portion of the West Point Extension, both in Middleton. The sewers have been rehabilitated with installation of a cured-in-place liner. Final project costs were $273,000 have been funded from reserves. NEI - Far East Int. to Southeast Int. Junction Construction of replacement and relief sewers along this section of the Northeast Interceptor (NEI) was completed in 2013 with final project closeout in mid For a more detailed description, see project summary B01. Eleventh Addition to Nine Springs WTP The Eleventh Addition to Nine Springs Wastewater Treatment Plant contract should closeout in September or October 2014 with any remaining follow-up work completed by the end of See project summary A01 for further details. Engine Stacks & Oxidation Catalysts (for Air Permit) As part of the District s air permit, stacks were added to the District s combustion engines and boilers in In addition, an oxidation catalyst was added to Engine Generator 1. Staff anticipate that two additional oxidation catalysts will be installed on the remaining two combustion engines, potentially by yearend Total project cost is anticipated at $300,

59 NEI - Rehab West of Airport (lining project) - Phase 1 This section of northeast interceptor west of the Dane County Regional Airport will be lined in For further details, see the project summary and business case related to Project B08. PS 18 Force Main Construction Pumping Station 18 force main construction should be completed by the end of year A detailed description can be found in the related project summary/business case for Project C02. Annual Clarifier Coating The District will coat Final Clarifiers 10 and 11. The budgeted cost to coat these two clarifiers is $160,000 and is part of an ongoing project to upgrade and extend the life of the final clarifiers. Retainers The District often includes maintenance or performance retainers within its contracts. The retainers are typically released to the contractor at the end of one year (in some cases contracts include longer performance periods) following completion of the contract and assuming satisfactory performance. The following are retainers that the District has released or are presently withholding: West Interceptor Rehab at Old University Avenue Released a $5,000 1-year maintenance retainer to McCann s Underground, Inc. in January NEI - PS 10 to Lien Road Released a $25,000 maintenance retainer to Morgan Contracting, Inc. in February East Monona Interceptor at Fair Oaks u/s (upstream) of Starkweather Creek Released a $5,000 1-year maintenance retainer to Insituform Technologies USA, Inc. in March Pumping Station 6 & 8 Rehabilitation Released a $10,000 3-year maintenance retainer to JF Ahern in March Released a $10,000 3-year maintenance retainer to Forward Electric in April Operations Building HVAC Rehabilitation Released a $10,000 1-year maintenance retainer to Mechanical Inc. in June West Int. Extension and West Point Extension (lining project) Presently withholding a $5,000 maintenance retainer, release scheduled for NEI - Far East Int. to Southeast Int. Junction Presently withholding a $20,000 maintenance retainer, release scheduled for

60 Appendix C: Budget Summaries 2015 OPERATING BUDGET SUMMARY REVENUES Proposed 2014 Estimated Percent Revenue Category Thru June 2014 Total Budget Budget Change Sewer Service Charges $13,960,138 $27,800,000 $27,383,435 $29,272, % Servicing Pumping Stations 117, , , , % Rent 36,313 68,420 67,600 69, % Interest 6,682 12,000 10,000 12, % Annexation and Plan Review Fees 22,500 47,000 50,000 50, % Miscellaneous Income 72,528 92,000 50,000 45, % Septage Disposal Revenue 159, , , , % Pretreatment Monitoring - 18,000 18,000 18, % Struvite Fertilizer Sales 63, , , , % Cash Reserves , , % TOTAL REVENUES $14,439,630 $28,897,420 $28,769,035 $30,883, % EXPENDITURES Proposed Expenditure Category 2014 Estimated Percent Thru June 2014 Total Budget Budget Change Administration, Engineering & Commission $1,462,140 $3,140,429 $3,281,041 $3,668, % User Charge & PreTreatment Program 223, , , , % Wastewater Collection 767,975 2,166,137 2,308,893 2,273, % Wastewater Treatment 4,769,139 9,857,550 9,660,480 10,103, % Effluent Diversion 28,979 99,543 95, , % Metrogro Biosolids Reuse Program 547,326 1,567,743 1,517,695 1,585, % Capital Outlay (81,580) 287, , , % Servicing Pumping Stations Owned by Others 99, , , , % Transfer to Debt Service Fund - 10,865,000 10,865,000 11,843, % TOTAL EXPENDITURES $7,817,480 $28,729,637 $28,769,035 $30,883, % OPERATING RESERVE BALANCE Proposed Operating Reserves 2014 Estimated Percent Thru June 2014 Total Budget Budget Change Beginning Balance $13,292,596 $13,292,596 $12,215,886 $13,460, % Ending Balance $19,914,746 $13,460,379 $12,065,886 $12,856, % 60

61 CAPITAL PROJECTS BUDGET SUMMARY REVENUES Revenue Source Estimated Budgeted Budgeted Percent Thru June 2014 Total Amount Amount Change CWF Loan - Operations Building HVAC Rehab - $0 - - NMF CWF Loan - Eleventh Addition 2,024,000 4,264,000 3,768, % CWF Loan - Process Control System Upgrades 817,000 1,489,000 4,766, , % CWF Loan - NEI - Far East Interceptor to Southeast Interceptor - 179, NMF CWF Loan - Pumping Station 18 3,173,000 11,305,000 10,283, , % CWF Loan - Pumping Station 18 FM 5,967,000 12,362,000 12,982, % CWF Loan - Maintenance Facility/Space Needs Improvements - - 4,710,000 10,649, % CWF Loan - PS 11 & 12 Rehab - - 1,900,000 6,323, % CWF Loan - West Int. - West Randall to Near PS 2 (lining project) ,333,000 NMF CWF Loan - Rimrock Int. Replacement/Relief ,000 NMF CONNECTION CHARGE REVENUES 1,255,778 1,500, , , % INTEREST ON INVESTMENTS & MISC. INCOME 25,723 40,000 25,000 34, % TOTAL SOURCES OF FUNDS $13,262,501 $31,139,000 $39,184,000 $21,152, % EXPENDITURES Project 2014 Estimated Budgeted Budgeted Percent Thru June 2014 Total Amount Amount Change NINE SPRINGS WASTEWATER TREATMENT PLANT PROJECTS Operations Building HVAC System Rehab $10,000 $10,000 $10,000 $ % Engine Stacks & Oxidation Catalysts (for Air Permit) 7, , , % Eleventh Addition to Nine Springs WTP 1,608,979 4,085,000 3,768,000 20, % Nine Springs Process Control System Upgrade 759,003 1,335,000 1,585, , % New Maintenance Facility/Space Needs Improvements 30, ,000 4,330,000 9,785, % Plant Energy Projects - 100, , , % Plant Aeration and Peak Capacity Facilities Plan ,000 NMF Annual Clarifier Coating 24, , , , % Annual Pavement Improvements ,000 30, % INTERCEPTORS Lower Badger Mill Creek Int. - Phase , NMF NEI - Far East Int. to Southeast Int. Junction 308, ,000 20,000 20, % West Int. Extension and West Point Extension (lining project) 212, ,000-5,000 NMF NEI - Rehab West of Airport (lining project) - Phase 1 13,815 1,086, ,000 13, % NSVI - Morse Pond Extension - 45,000 24, , % West Int. - West Randall to Near PS 2 (lining project) - 45,000 46,000 1,288, % Rimrock Int. Replacement/Relief - 50,000 46, , % NSVI - Mineral Point Extension - Relocation at CTH PD - 5,000-52,000 NMF NEI - Rehab West of Airport (lining project) - Phase ,000 NMF Northend Int. - Sherman Avenue (lining project) ,000 NMF PUMPING STATIONS AND FORCE MAINS PS 6 & 8 Rehab-Maintenance Retainer 20,000 20,000 20, % PS 18 Construction 1,898,576 10,029,000 10,283, , % PS 18 Force Main Construction 5,631,864 11,700,000 12,009,000 35, % PS 11 & 12 Rehab 231, ,000 1,650,000 5,377, % PS 15 Rehab - 25,000 26, , % PS 17 Force Main Relief - Phase ,000 NMF PS 7 Improvements - Phase ,000 NMF PS 16 Ventilation Modifications - 75, ,000 NMF CAPITAL BUDGET EXPENSES Capital Budget Expenses 71, , , , % PS 14 Service Area I/I Study 76, , ,000 5, % Chloride Study - 100, , % TOTAL EXPENDITURES $10,905,815 $31,735,000 $36,069,000 $20,439, % CAPITAL PROJECTS RESERVE BALANCE Capital Projects Reserves 2014 Estimated Budgeted Budgeted Percent Thru June 2014 Total Amount Amount Change Beginning Reserve Balance $6,635,097 $6,635,000 $3,647,000 $6,039, % Ending Reserve Balance $8,991,783 $6,039,000 $6,762,000 $6,752, % 61

62 Revenue Category Proposed 2014 Estimated Percent Thru June 2014 Total Budget Budget Change Transfer From Operating Fund $0 $10,865,000 $10,865,000 $11,843, % Interest 34,044 40,000 18,000 35, % TOTAL REVENUES $34,044 $10,905,000 $10,883,000 $11,878, % Expenditure Category Proposed 2014 Estimated Percent Thru June 2014 Total Budget Budget Change First half Interest $1,480,292 $1,480,292 $1,101,000 $1,794, % Principal 5,568,912 5,568,912 6,017,000 9,086, % Second Half Interest - 1,582,000 1,726,000 1,830, % TOTAL EXPENDITURES $7,049,204 $8,631,204 $8,844,000 $12,710, % Debt Service Reserves Proposed 2014 Estimated Percent Thru June 2014 Total Budget Budget Change Beginning Balance $16,082,767 $16,082,767 $16,087,072 $18,356, % Ending Balance $9,067,607 $18,356,563 $18,126,072 $17,524, % Sewerage System Improvement Bonds January January January Series 1994 Pumping Station No. 5 83, Series 1995 Verona Force Main and Pumping Station 367, ,518 - Series 1996 Ninth Addition 2,130,063 1,082,237 - Series 1997 Badger Mill Creek Effluent Return 1,224, , ,078 Series 2000 P.S. No. 2 Force Main Replacement - Phase 1 786, , ,838 Series 2001 P.S. No. 2 Force Main Replacement - Phase 2 980, , ,337 Series 2003A PS's 1, 2 and 10 Rehabilitation 4,552,036 4,151,730 3,740,120 Series 2003B Tenth Addition 22,046,930 20,105,625 18,110,042 Series 2005 PS's 1, 2 and 10 Rehabilitation 186, , ,110 Series 2006 Effluent Equalization Projects and AT's 1-6 1,216,154 1,135,156 1,052,242 Series 2007 West In Ext and PS Projects 2,052,571 1,928,775 1,801,816 Series 2008 PS's 6-8 Rehabilitation and NEI Truax Ext Liner 7,238,618 6,831,053 6,413,837 Series 2010A NEI-PS 10 to Lien Rd 7,807,623 7,429,295 7,042,003 Series 2012A Nine Springs Eleventh Addition 44,236,054 48,500,000 46,179,008 Series 2012B Operations Building HVAC Rehab 2,857,428 2,743,662 2,626,484 Series 2013A NEI-SEI to FEI - Replacement Project 7,749,268 7,633,971 7,324,008 Series 2013B Pumping Station No. 18 2,893,075 14,198,549 14,164,933 Series 2013C Process Control System Upgrade 2,757,396 4,246,580 4,746,580 Series 2014A Pumping Station No. 18 Force Main - 12,362,184 11,856,440 Series 2014B PS 11 & 12 Rehabilitation - - 6,323,000 Series 2014C Maintenance Facility Expansion ,649,000 Series 2016A West Interceptor-Randall St. to Near PS2 1,333,000 Series 2016B Rimrock Interceptor Replacement/Relief 838,000 TOTAL INDEBTEDNESS 111,164,997 $135,196,034 $146,327,876 Summarized Budget Items DEBT SERVICE BUDGET SUMMARY REVENUES EXPENDITURES DEBT SERVICE RESERVE BALANCE SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS OVERALL BUDGET SUMMARY, NET OF TRANSFERS Proposed 2014 Estimated Percent Thru June 2014 Total Budget Budget Change Total Revenues $54,007,029 $60,076,420 $67,821,035 $51,466, % Total Expenditures 47,620,273 58,230,841 62,817,035 52,189, % Beginning Reserve Balance $36,010,460 $36,010,460 $31,280,992 $37,856, % Ending Reserve Balance $37,974,136 $37,856,039 $36,284,992 $37,133, % 62

63 Appendix D: Represented Wage Schedule Local 60 - Madison Metropolitan Sewerage District Classification Salary Schedule Bi-Weekly-Hourly Rates of Pay January 1-December 31, 2015 Classification Range Custodian & Grounds Worker Bi-Weekly 1, , , , , Hourly Administrative Secretary Bi-Weekly 1, , , , , Hourly Maintenance Worker 7 Bi-Weekly 1, , , , , Hourly Sr Custodian & Grounds Worker 8 Bi-Weekly 1, , , , , Hourly Bi-Weekly 1, , , , , Hourly Monitoring Services Helper; Utility II; Reuse Diesel Truck Driver I; Sr Building & Grounds Worker 10 Bi-Weekly Hourly 1, , , , , Station Maintenance Worker, Relief Oper I; Oper I; Apprentice Mech; Asst Metrogro Mech; Apprentice Electrician; Reuse Diesel Truck Driver II; Reuse Relief Diesel Truck Driver; MS/SM Worker I Building & Grounds Crew Leader; Apprentice Mech II; Apprentice Elec II; Oper II; Relief Oper II; MS/SM Worker II Metrogro Mechanic; Jrnyman Mech; Jrnyman Elect; Oper III; Relief Oper III; Sr Building & Grounds Crew leader Sr. Mechanic; Sr Mech (Metrogro); Sr Jrnyman Mech; Sr Journeyman Elect; MS/SM Crew Leader, Oper IV; Relief Oper IV Sr. Jrnyman Mech II; Sr Journeyman Electrician II; Sr Mech (Diesel & HE), Purchasing/Inventory Asst 11 Bi-Weekly Hourly 12 Bi-Weekly Hourly 13 Bi-Weekly Hourly 14 Bi-Weekly Hourly 15 Bi-Weekly Hourly 1, , , , , , , , , , , , , , , , , , , , , , , , , Schedule assumes a 3% increase 63

64 Appendix E: Non-Represented Wage Schedule Bi-Weekly--Hourly Rates of Pay January 1-December 31, Hourly Rates Grade Min $ Mid $ Max $ Schedule assumes a 3% increase 64

65 Appendix F: Organizational Chart Commissioners Chief Engineer & Director Assistant Chief Engineer & Director of Planning Director of Engineering Director of Operations & Maintenance Director of Ecosystem Services Director of Administration Human Resources Manager Staff Includes: SI Manager Electrical Const. Mgr. Electrical PE Collection System Eng. Staff Includes: 4 Civil Engineers GIS Technician Engineering Technician Purchasing Agent Staff Includes: Purchasing & Inventory Asst. Metrogro Manager Staff Includes: 2 Diesel Truck Drivers 2 Mechanics Environmental Specialist Pretreatment Coordinator Pollution Prevention Specialist Controller/Office Manager Staff Includes: Staff Accountant Accounting Clerk Business Analyst Executive Coordinator 2 Resource Team Associates Health & Safety Specialist 65 Operations Supervisor Staff Includes: 4-12 Hour Operators 5 Relief Operators Operations Engineer Staff Includes: Asst. Operations Engineer Process & Research Engineer Process Control System Programmer Asset Information Specialist Operations Supervisor (ß see box to left) Senior Maintenance Supervisor Lab Manager Staff Includes: 5 Chemists Microbiologist Information Systems Manager Staff Includes: Programmer/Analyst 2 Network Technicians 1 Vacant Position Building & Grounds Supervisor Staff Includes: 2 Custodians 8 Maintenance Workers Collection System Supervisor Staff Includes: 4 Monitoring Services/ Sewer Maintenance Workers Electrical Maintenance Supervisor Staff Includes: 8 Electricians Mechanical Maintenance Supervisor Staff Includes: 8 Mechanics and 1 HVAC Technician 2015 Madison Metropolitan Sewerage District Organizational Chart 65

66 Appendix G: Director Narratives Department 2014 Adopted Budget 2014 Estimate 2015 Budget 2015 Change from 2014 Budget % Change from 2014 Budget CED 792, , ,226 1, % Admin 1,737,079 1,659,005 2,261, , % Engineering 948, , ,335 22, % Ecosystem Services 1,557,517 1,521,095 1,871, , % Operations & Maintenance 12,868,252 13,024,717 13,141, , % Debt Service 10,865,000 10,865,000 11,843, , % TOTAL 28,769,035 28,729,636 30,883,060 2,114, % TOTAL WITHOUT DEBT SERVICE 17,904,035 17,864,636 19,040,060 1,136, % Major Expense Categories Asset Addition, Repair & Replacement 12,674,104 12,487,491 13,712,580 1,038, % Personnel Services 8,992,636 9,027,837 9,362, , % Contract Services 2,096,276 2,202,387 2,595, , % Materials & Supplies 5,006,019 5,011,921 5,212, , % TOTAL 28,769,035 28,729,636 30,883,060 2,114, % 66

67 Chief Engineer and Director s Department Department Description The Chief Engineer and Director s (CED) office provides organizational leadership to implement Commission policies that ensure the District meets its customers needs in a sustainable manner. The CED s office also provides support to employees so that they can work safely, productively and effectively fulfill the mission of the District. Programs within the CED s office include human resources, strategic communications, safety and training. Trends After 40 years of ever increasing regulatory pressures on US wastewater agencies, most of the easy and cost effective solutions are already in place. With current technology, achieving further reductions in pollutant loadings will be disproportionately expensive relative to the potential gains in water quality using non-traditional compliance approaches. Increasing extreme weather conditions tax the limits of infrastructure to maintain public health and the environment. The District must develop policies, procedures and infrastructure that are more resilient to more frequent events. Rising public interest in water quality issues and our customer s limited ability to pay more is increasing overall attention to the business of the District. The District must therefore engage more fully with others that share the local water resource through watershed based approaches and pollution prevention, enter nontraditional collaborations and employ adaptive management techniques to ensure actions maximize environmental and community benefits at the lowest cost to our customers. Several managers and directors are within the planning horizon for retirement. The Commission is dedicating more time to agenda topics and meetings are well attended. New technologies involving the way people communicate are changing and evolving at a rapid pace. Recruitment and retention of top talent will continue to get more competitive as baby boomers retire and the economy improves. The expectations of job candidates are changing such as a strong desire for flexible working arrangements. Health care reform and continued increases in health care costs will require us to examine our benefit offerings and plan designs. In 2015, the District will be subject to a 3.7% Affordable Care Act (ACA) fee on our health insurance premiums. 67

68 2014 Goals/Priorities Status Continue to be visible in the community by making presentations and getting involved with community groups and connecting with customer communities at least once a year. (Key Result Measure): Met with community administrators on a regular basis including 1:1 meetings and monthly joint administrator meetings. Delivered Pecha Kucha style presentations to three large audiences about the District and water sustainability. Hosted a successful launch event for the 11 th Addition. Develop a knowledge transfer and transition plan for retiring employees. Progress: Established a succession planning team to focus on the anticipated three retirements in Operations and Maintenance. The team has developed a five point plan of action that is on track to be completed on time. The plan will be replicated in other departments. Improve campus wide sustainability practices by leading the 2014 M-Power Champions program. (Key Result Measure) Replaced three refrigerators with high efficiency models, implemented a Community Supported Agriculture (CSA) program at the District, and added a garage door opener at Shop 1 to reduce heat loss in the winter. Projects that are scheduled for completion by the end of the year include a recycling pilot project with waste receptacles, MMSD Green Week, 2 employee education events, and a project to reclaim outdoor underutilized space for an employee meeting area. Development of crisis communication practices for communication to the public. Progress: No Progress. Development of staff capacity to assist in marketing and graphic media needs. Staff is on track to complete the graphic standards manual by end of year which will be a foundation piece for strategic communications. Also, website content managers were trained in each department and the new intranet will launch by the end of the year. Evaluate benefit options to control costs and provide better employee care. Staff is evaluating a number of options and going out to bid with other health insurance carriers for 2015 coverage. Develop an integrated District support team that will provide seamless program support to departments and consistent responsive communication to the public. Completed. Work with the Friends of the Capital Springs Recreation Area on a long term integrated communication and engagement plan that includes the treatment plant. Have been meeting quarterly with FOCSRA to share information, outline goals and objectives. Working now on the trolley tour. Implement the employee handbook. Completed. Implement safety training for the new safety manual that will help the District move toward zero lost time accidents. (Key Result Measure) Completed. Train employees on the Globally Harmonized System (GHS) for Hazard Communication. Completed. 68

69 Streamline and standardize the hiring and onboarding process through applicant tracking software that will reduce the # of Days to fill a vacancy. (Key Result Measure) Completed. Advance the Leadership Academy for new and prospective supervisors. Completed. Advise EPA on the Effective Practices Roadmap for water sector utilities and take the lead on sustainability practices. Also engage with professional organizations on resource recovery and sustainability issues advantageous to the District s 50 Year Master Plan. Completed. EPA published the roadmap in January Goals/Priorities Work with the Commission on efforts to respond to the Race to Equity report to prepare for the 2016 budget. Convene an informal one water working group to bring together interests from drinking water, storm water, and wastewater to discuss issues of shared benefit and mutual concern. Track anticipated regulatory issues of concern to the District during the next state biennial budget. Formalize a District intern program. Continue Succession Planning for key District positions. Develop a strategic plan for wellness. Develop a plan for District corporate strategic communications. Implement a competency based training program for new Operations and Maintenance employees to ensure they know how to safely perform their job. Continue to create equipment specific lock-out tag-out procedures. Key Result Measures Measure Target FY 2014 Actual Days to fill a vacancy Lost time accidents Connect in person with each City, Town or Village administrator at least once/year 5 Sustainable activities/projects completed (MPower) 5 2 FY 2015 Projected Goal shifts to Admin Dept. 69

70 Chief Engineer and Director s Department Summary Budget Category 2014 Adopted Budget 2014 Estimate 2015 Budget 2015 Change from 2014 Budget % Change from 2014 Budget Personnel Services 573, , ,926 2, % Asset Addition, Repair and Replacement 18,200 17,200 18, % Contract Services 99,850 97, ,900 17, % Material, Supplies and Misc. 100,525 87,939 83,200 (17,325) -17.2% Department TOTALS 792, , ,226 1, % Changes to the Budget Personnel Services An increase of 0.4% is requested in the personnel services account to satisfy an increase in health insurance and fringe benefits. Reductions were made in professional development to help offset these costs. Asset Addition, Repair and Replacement No changes to report. Contracted Services An increase of $15,000 (approximately a 17% increase in this category) is requested in the contracted services account. This recognized the need for increased strategic communications work to restore a portion of the $30,000 cut from line item in the 2014 Budget. Materials, Supplies, and Miscellaneous This category has seen a 17% reduction in supplies and meeting costs. 70

71 Operations and Maintenance Department Department Description The Operations and Maintenance Department is responsible for the core business of the District conveying wastewater to the treatment plant, treating the wastewater to meet the District s discharge permit, and recycling and reusing the effluent, biosolids, and biogas. This is central to the District s mission of protecting human health and the environment. These activities are accomplished by the following sections within the department: Operations Building and Grounds Mechanical Maintenance Electrical Maintenance Metrogro Monitoring Services/Sewer Maintenance Purchasing The Operations Section is responsible for control of the treatment processes while the Metrogro Section is responsible for recycling of all biosolids to farmland. The various maintenance sections ensure that the pumping stations operate effectively and that adequate equipment is available to treat all of the wastewater that is received at the treatment plant. Trends Pump Station 18 will be placed in service in 2015 and the 11 th Addition equipment will be fully operational. This significant increase in the number of assets will require additional operational and maintenance time. Ways to address this need in the most efficient manner will continue. The asset management team will begin to review the condition of our assets. Both operations and maintenance personnel will be involved in this process. Experienced employees will continue to approach retirement age. Staff will need to capture the knowledge that these individuals have before they leave District employment. Staff need to continue on our quest for energy independence. At this point it appears that the emphasis will need to be on developing a dependable source of high strength waste. Finding a use for the low-grade heat that will be produced by any equipment using additional digester gas will be critical to the success of this program. Interest within the industry in the struvite harvesting process will continue to grow. Staff will see an increase in the number of requests for information on the process and the number of visits to the facility. 71

72 2014 Goals/Priorities Status To proceed along the roadmap developed by the Energy Study. This will involve some immediate projects as well as some facility planning. Pilot studies with sources of food waste will be included. This work continues to progress. MMSD has entered into a research project with the University of Wisconsin-Madison on the use of food waste as a feedstock for our digesters. MMSD has a second project with the UW to provide pilot scale testing of the ability to a new strain of microorganisms to remove phosphorus and nitrogen and much lower oxygen requirements than conventional treatment. Staff are working with Focus on Energy on a project to install lower power mixers on the last quadrant on our selector basins. Staff has recently been contacted by a local company that is interested in providing a sugar and starch waste product that could serve as a feedstock to our digesters. The additional gas produced by digesting this material would be used in our generator engines. Follow up on the Staffing Study by using the procedures provided by EMA to evaluate the work being performed within the system. If justified, hire an additional Operator and an additional maintenance person. An operator and an HVAC mechanic have been hired. Staff has found that the 11th Addition processes are requiring a significant amount of operator interaction. The HVAC mechanic has been able to reduce our outside maintenance costs. Successfully complete the evaluation of formaldehyde removal from the exhaust of a generator engine by an oxidation catalyst. Based on the results of this evaluation either add oxidation catalysts to the remaining engines or recommend to DNR the best practices to control formaldehyde emissions. Tests have shown that the oxidation catalyst is removing about 97% of the formaldehyde that is in the engine exhaust gas. Staff are evaluating the results of stack tests to determine how to best approach this issue. Optimize the production of struvite. Recover at least 60% of the phosphorus in the waste activated sludge. The struvite harvesting process has been removing 60-70% of the phosphorus. Several changes to the waste activated sludge thickening process were made to improve the capture rate of the phosphorus. (Key Result Measure). Successfully operate the steam boilers and the steam injection system. The steam boilers are operating well. Changes needed to be made to provide for better boiler feed water quality control. Initially there were problems with plugging of the steam injectors. Modifications were made to reduce the frequency of plugging. Complete the conversion of the Process Control System. Have all new equipment installed and have all of the necessary displays built. Much of the equipment has been installed and displays for the processes controlled by that equipment have been built. The project is on schedule to be completed by mid Operate the collection system so there is no bypass, spill, or backup events. (Key Result Measure) There have been no bypasses, spills, or backups in the collection system this year. Meet all of the requirements of the District s discharge permit. (Key Result Measure) There was a violation of the weekly chloride limit the week of February 14. This is believed to be related to roadway salting operations. 72

73 Minimize the amount of purchased energy at the treatment plant. (Key Result Measure) Replacement of aeration tank mixers with lower horsepower mixers has saved an estimated $82,000 per year. Operating the east digester complexes at mesophilic temperatures rather than thermophilic temperatures will save an estimated $102,000 per year in electrical costs. Complete preventive maintenance work orders in a timely manner. (Key Result Measure) Preventive maintenance work orders are being completed on time. A charting system is being developed to visually show this progress Goals/Priorities Continue to find ways to reduce the amount of purchased energy. Work with a consultant to perform a study of the availability of high strength waste. Begin to accept enough high strength waste to allow for maximum engine operation. Continue the UW projects that are investigating low dissolved oxygen removal of nutrients and use of food waste as feed to anaerobic digesters. Incorporate a new scheduling process into the maintenance workgroups. This will provide for more efficient use of personnel and will provide a more structured way to address maintenance needs. This process will also assist the asset management group. Obtain an air permit for operation of emission equipment at the treatment plant and at Pump Station 18. Perform all testing required by the permit. Continue to work with Ostara to maximize the production of struvite prills. This may include modifications to the drying equipment. Complete the conversion of the Process Control System by the mid-year deadline. Convert the User Charge monitoring system to the use of flow inserts and the LaserFlow metering system. Reduce the amount of confined space entries. Produce enough Metromix to develop data on the cost of production and to determine the market for the product. Complete the move into the new Maintenance Facility. It is expected that the facility will be complete near the end of the year. Complete modifications at Pump Station 16 to address the odor concerns of neighbors. 73

74 Key Result Measures FY 2014 Actual FY 2015 Projected Measure Target Collection System: Number of bypass events Number of spill events Number of basement backup events Effluent Quality Percent of time BOD limit is met Percent of time TSS limit is met Percent of time Ammonia limit is met Percent of time Phosphorus limit is met Percent of time Fecal Coliform limit is met Percent of time Chlorides limit is met Struvite Production Tons of struvite produced Energy Usage Purchased electricity per gallon treated (kwh/gal) Maintenance Percent of preventive maintenance work orders completed within allowable timeframe 90 In progress 90 Operations and Maintenance Department Summary Budget Category 2014 Adopted Budget 2014 Estimate 2015 Budget 2015 Change from 2014 Budget % Change from 2014 Budget Personnel Services 5,362,759 5,588,217 5,520, , % Energy 3,317,045 3,200,611 3,286,070 (30,975) -0.9% Asset Addition, Repair and Replacement 1,473,454 1,336,503 1,328,655 (144,799) -9.8% Contract Services 1,318,725 1,366,736 1,400,725 82, % Material, Supplies and Misc. 1,396,269 1,532,650 1,605, , % Department TOTALS 12,868,252 13,024,717 13,141, , % Changes to the Budget Total Department Budget The 2015 budget request for the Operations and Maintenance Department is $273,000 more than the 2014 budget amount. This is an increase of 2.1%. Major factors in the requested increase are materials needed to operate the 11 th Addition equipment, an expected rate increase in the cost of electric energy, an employee wage increase, and an increase in contracted services. 74

75 Personnel The budget for personnel services is $158,000, or 2.9%, higher than the 2014 budget. This is due to a 3% increase in base wages, adjustments due to longevity, step raises, and mid-year performance reviews. There is no change in the number of authorized full-time equivalent positions. A Custodial and Grounds Worker position was vacated in After review of the work that needs to be done, it was decided to contract out a portion of the District s custodial duties at a lower cost and not fill the vacant position at this time. If experience shows that contracting meets our needs, the vacant position will not be filled later in Energy Although equipment and processes installed with the 11 th Addition have increased the amount of natural gas that is needed, reductions in the amount of required electric power results in nearly a 1% reduction in the energy budget for Electricity expenses at the pumping stations were underestimated for 2014 while electrical costs at the treatment plant were overestimated. Due to expected rate increases by MG&E, the cost of electricity for 2015 at the pumping stations was increased by 2% over expected costs for As always, the amount spent on electric power at the pumping stations is highly dependent on weather. Significant wet weather will increase these costs while less water will be flowing to the stations during dry weather. To recognize the energy savings that are being seen at the treatment plant because of new lower-horsepower mixers and operational changes, the 2015 electricity costs for the plant have been decreased by $153,000 from the amount budgeted for Natural gas is purchased to supplement the digester gas that is used for fuel in the boilers. Because of the relatively low price of natural gas compared to electricity, natural gas is purchased to keep the generator engines running at peak output. Use of the steam boilers installed in the 11 th Addition has also increased the amount of natural gas that is needed. Asset Addition, Repair, and Replacement The 2015 budget for this category is $144,800, or 9.8%, less than the 2014 budgeted amount. Included in this category are major projects and purchases. These are normally not recurring expenses. When deciding what projects to include in the budget, the entire O&M Department budget is considered. Because of significant increases in the amount requested in the Material, Supplies, and Miscellaneous category, several repair and replacement items that were proposed by department supervisors were not included in this budget request. Major expenses in this area in 2015 will be: Repair of air line, manhole, and paving on campus grounds $ 70,000 Truck for HVAC technician $ 50,000 LaserFlow meters $140,000 75

76 Most of the 2015 expenses address maintenance repair issues. However, some expenditures are related to increased efficiency. The truck for the HVAC technician will allow him to work independently. A great deal of his work is at the pumping stations. This vehicle will allow him to transport his specialized tools and equipment to his job sites and eliminate the need to return to the plant for needed items. The added mobility of the HVAC technician will minimize our dependence on contracted technicians and allow us to complete this work at a lower cost. To collect accurate flow information and to pace samplers, the members of the Monitoring Services crew need to enter manholes to install wooden weirs. Each day they enter up to twelve manholes using confined space entry techniques. Although gas detectors, retrieval systems, and other safety measures are used, this is still dangerous work. During 2014 this crew has been testing a LaserFlow system for flow measurement. This system requires one entry to set up the support structure for the meter. On subsequent visits to the manhole the meter can be placed without entering the manhole. This will reduce up to 80% of the confined space entries. Testing that was performed showed that the LaserFlow system compared very well to the accuracy of the current weir system as well as to magnetic flow meters. Contracted Services An increase of $82,000 is requested in the contracted services account. This recognizes the increase in the cost of some current services as well as the addition of three new services. The amount budgeted for the contracted Metrogro hauling and transportation services was increased to recognize expected increases. New contracts include work to perform a lead paint assessment and abatement program on older piping in the treatment plant and the custodial contract described in the personnel section. Part of the District s asset management program requires that the condition of manholes be determined. Currently members of the Sewer Maintenance crew perform visual inspections. In many cases they have to enter the manholes to take measurements and assess condition. As a continuation of an already strong partnership with the City of Madison streets department, District employees have participated in demonstrations of a system that uses cameras attached to a drive pole to monitor the entire manhole condition. The 2015 budget contains $40,000 to be used to work with the City to either purchase the system, rent it, or contract with the City to perform the assessment. Materials, Supplies, and Miscellaneous This category is strongly affected by the equipment and processes that were placed in service during the 11 th Addition to the treatment plant. When the 2014 budget was prepared, estimates on the cost of chemicals and other supplies needed to be made. Experience gained with the steam boilers, phosphorus release process, and struvite harvesting during 2014 provides a basis for better estimates for Based on this experience, the budget for this category has been increased by $209,

77 One goal of the 11 th Addition was to reduce foaming in the digesters. So far, that has shown to be the case. Because of this, the $50,000 that was budgeted in 2014 for defoamant is not being requested in the 2015 budget. Experience with the struvite harvesting process has shown that not as much sodium hydroxide as was budgeted in 2014 is needed. Therefore, the 2015 budget for this chemical has been reduced by $75,000. The struvite harvesting process was also expected to reduce the amount of ferric chloride that was needed to control struvite formation in pumps and piping. The 2015 budget for ferric chloride has been reduced by $40,000. The District had no experience with steam boilers prior to their installation in the 11 th Addition. An increase of $40,000 for chemicals for the steam boilers is requested in the 2015 budget. The addition of acid-phase sludge to the phosphorus release tanks resulted in the need for a higher polymer dosage than expected. The 2015 budget was increased by $168,000 to meet this need. Class A biosolids (Metromix) will be produced in the fall of The preference is that this product could be used directly by landscapers or homeowners. However, the 2015 budget includes $40,000 for sand and sawdust amendments to produce a soil-like material. Polymer is needed to produce the Metromix. The 2015 budget includes $168,000 for the polymer. 77

78 Engineering Department Department Description The Engineering Department oversees the design and construction of all major capital improvement projects at the District. This includes all key engineering functions, which encompass civil, structural, mechanical, plumbing, electrical, controls and HVAC disciplines. The Engineering Department also provides long-range facility planning, capital improvement planning, and asset management, all in an effort to cost-effectively manage District assets and to meet the District's mission of protecting public health and the environment. Other major programs within the Engineering Department include: Quarterly billing administration GIS/mapping services Annexations and sewer extensions Real estate and property issues Trends As the economy continues to improve, market demands for construction-related services will increase. This will likely reduce the number of contractors interested in MMSD capital improvement projects and increase project costs. MMSD's collection system and treatment plant assets will continue to age. Managing these facilities efficiently with limited funds will continue to be a challenge. Regulatory and permitting requirements are increasing with time. These will likely require additional capital to complete, thus resulting in increased capital improvement costs. As regional development continues to grow, District revenue from connection charges will increase. While this is good for the District financially, it will also require additional staff time and resources. There will be a continued emphasis for transparency in government and the need for MMSD to educate our customers. A recent example of this is annexation and connection charge policies, and requests for MMSD to provide paid area mapping to our customers. Climate change, including extreme weather events, will need further consideration during asset management and facilities planning. This may cause the need for additional system capacity and collection system capital improvements. Employees will continue to become more tenured and approach retirement age. The knowledge possessed by individuals nearing retirement will need to be captured before they leave the District. 78

79 Data intensive uses such as asset management will push the boundaries of the current GIS system. This will require a comprehensive evaluation of the GIS system and a strategic plan for where the GIS system is headed Goals/Priorities Status Complete 11 th Addition construction and start-up of facilities. This is essentially complete. 11 th Addition construction ended in the summer of 2014 and formal acceptance of work is anticipated in October of Complete the process control system upgrade. This work continues to progress and is expected to be complete in early Keep Capital Improvement construction project contract modifications below 5%. (Key Result Measure) This goal was met. Contract modifications were 3.72% for the Northeast Interceptor-SEI to FEI Relief/Replacement, 3.89% for the West Interceptor MH05-112A to MH Liner, and are expected to be 2.97% for the 11 th Addition. Complete design of the maintenance/space needs facilities. This work is in progress and is expected to be complete by the end of Complete an inflow/infiltration study of the Pumping Station 14 service area. This work is in progress and is expected to be complete by the end of Begin initial planning associated with lining of the West Interceptor from MH to Pumping Station 2. As of August 2014, this work has not started, but will be completed in the latter portion of Begin initial planning and design for replacement of the Rimrock Interceptor. This work began in July of 2014 and will continue throughout the end of Continue planning and coordination efforts associated with the Nine Springs Valley Interceptor-Morse Pond Extension. This work was minimal in 2014, as the project will be completed with reconstruction of CTH M. Design and construction of the road project has been delayed by WisDOT. Complete Phase 1 lining of the Northeast Interceptor west of the Dane County Regional Airport. This work was awarded in the summer of 2014 and construction is anticipated in late Continue I/I (Inflow-Infiltration) chloride reduction initiatives. Approximately 40 manholes were improved by MMSD staff in 2013 and another manholes are being improved in Oversee Pumping Station 18 construction activities, including resident engineering and administration. This work continued throughout 2014 and will extend into As of August 2014, the station was approximately 75% complete. 79

80 Complete construction of the Pumping Station 18 Force Main. This work continued throughout 2014 and is expected to be substantially complete by the end of the year. As of August 2014, the force main was approximately 80% complete. Complete Pumping Stations 11 & 12 Rehabilitation planning/design and bid the project. This work was completed in the first half of 2014 and the project was bid in August. Construction is anticipated to begin late in Begin initial planning activities and retain consultant services for the Rehabilitation of Pumping Station 15. As of August 2014, this work has not started, but is expected to begin late in Use the ISI (Institute of Sustainable Infrastructure) Envision tool is used to evaluate and improve sustainable features during project design and construction. This goal was completed. The ISI/Envision tool continues to be used to evaluate MMSD projects during design. The tool has been used on the PS18/PS18FM/NEI-SEI to FEI suite of projects and the Rehabilitation of PS11 and 12. It will continue to be used in the future. Perform a pilot on GIS software advancements, which would improve access to land records, sewer tapes, and record drawings. This work will be completed during the second half of Meet with customer communities and municipalities as needed to discuss MMSD procedures, especially related to annexations and sewer extensions. The Connection Charge Rate Study was initiated and an initial customer meeting was held in July An additional customer meeting is expected later in 2014, after connection charge alternatives have been identified and an approach has been recommended. Perform engineering and administrative duties associated with annual TV/clean and manhole rehabilitation. This goal was met. The Engineering Department continues to perform engineering and bidding work associated with these annual activities. Continue development and implementation of a strategic asset management program. Development of a strategic asset management program will take several years to complete and will require continuous focus and effort on the District s part. The Strategic Infrastructure Management Team is presently focusing on the collection system and projects that improve the District s ability to support data-driven decision-making. Work in 2014 includes condition ratings for all pipes; criticality ratings of all assets; and implementing criticality of assets into the work order system to prioritize preventive maintenance. The team is also evaluating cameras to eliminate the need to enter manholes for condition assessments Goals/Priorities Keep Capital Improvement construction project contract modifications below 5%. (Key Result Measure) Keep total non-construction costs for projects below 20% of the final construction contract amount. (Key Result Measure) 80

81 Complete the process control system upgrade. Begin construction of the Maintenance Facility. This includes retaining an external consultant for construction services and internal project management/contract administration. Continue development and implementation of the strategic asset management program developing a framework for asset management plans and implementing condition assessment practices and systems for equipment. Develop and implement a business-risk assessment approach for critical assets including a GIS-based analysis for pipes and manholes. Evaluate and develop an implementation plan for asset management software. Continue to improve the District s capital improvements plan (CIP) and capital budgeting processes. Integrate the Sustainable Infrastructure Management Team into CIP development. Refine and implement life cycle cost business case approach for capital project planning. Address new asset management/financial criteria for Clean Water Fund loan applications. Complete design, approvals, bidding, and construction of the Rimrock Interceptor replacement project. Complete all construction associated with Phase 1 Rehabilitation of the Northeast Interceptor west of the Dane County Regional Airport and begin planning/design for Phase 2 of the project. Begin facility planning for treatment plant aeration and peak capacity improvements. This includes selecting and retaining an external consultant to perform the work. Complete design and construction of the West Interceptor MH to PS2 Liner project. This includes coordination with the City of Madison as necessary. Begin initial planning for the rehabilitation of the North End Interceptor. Begin initial planning associated with control system improvements at PS7. Complete all construction associated with Pumping Station 18 and PS18FM, and successfully start-up and Commission the facilities. Oversee construction of the PS11 & 12 Rehabilitation project, including all contract administration and resident engineering duties. Complete planning and design for the rehabilitation of PS15 and begin construction (if the schedule permits this). Perform a comprehensive review, including an overall business/strategic plan, of the GIS system. Complete the Connection Charge Rate Study and implement the recommended approach. Includes coordination with customers and other municipalities as necessary. 81

82 Conduct an audit of paid/unpaid connection charge areas and share the results with customer communities. Continue development of a District CMOM (capacity management operation and maintenance) program, ultimately meeting DNR regulations and timeframe. The intent is to complete a draft by year-end With help from Sewer Maintenance and outside resources, score interceptor segments using PACP system for all past available (70-80% of system) televising records. Key Result Measures Measure Target FY 2014 Actual Keep Capital Improvement construction project contract modifications below 5% Keep total non-construction costs for projects below 20% of the final construction contract amount Change orders less than 5% of the original contract amount Total other costs for projects less than 20% of the final construction contract amount 11 th Addition: 2.97% NEI-SEI to FEI:3.72% WI MH05-112A to MH05-119: 3.89% NEI-SEI to FEI: 8.9% WI MH05-112A to MH05-119: 9.6% FY 2015 Projected <5% <20% Budget Category 2014 Adopted Budget 2014 Estimate 2015 Budget 2015 Change from 2014 Budget % Change from 2014 Budget Personnel Services 812, , ,785 (32,343) -4.0% Asset Addition, Repair and Replacement 57,050 55,209 67,750 10, % Contract Services 69,000 60, ,200 42, % Material, Supplies and Misc. 10,600 10,921 12,600 2, % Department TOTALS 948, , ,335 22, % Changes to the Budget Personnel Services As shown above, overall Personnel Services budgeted for the Engineering Department decreased by 4.0% from 2014 to This is due to the following: A higher percentage of employee time anticipated for Operating Fund salaries versus Capital Fund salaries. This is due to several major capital projects (the 11 th Addition, Pumping Station 18, and the Pumping Station 18 Force main) ending in The addition of a part-time intern for

83 A combination of market and progression salary increases projected for Increased health insurance and fringe benefit costs. Overall Engineering Department workload is not expected to increase significantly in the near future, and therefore, no additional full-time positions are anticipated. However, work is expected to continue to shift from capital programs to general administration, which impacts the General Operating Fund. The shift to general administration includes additional involvement in plant activities, (safety initiatives, Commission agenda topics, and performance improvements), additional continuing education for Professional Engineers, and additional coordination/outreach to customers. The use of limited-term interns will be initiated to assist with engineering administrative work wherever possible. Asset Addition, Repair, and Replacement Budgeted Engineering Department amounts for Asset Addition, Repair, and Replacement, increased from $57,050 in 2014 to $67,750 in 2014 (+18.8%). This is primarily due to a new onetime line item for installing power monitors on the electrical feeds into the Nine Springs Treatment Plant (+$15,000). Contracted Services Budgeted Engineering Department amounts for Contracted Services increased from $69,000 in 2014 to $111,200 in 2015 (+61.2%). This increase is due to: A proposed one-time line item ($40,000) for a GIS strategic/business plan. Expected inflationary increases to existing contracted services. Contracted services costs being incurred on bi-annual, tri-annual, or longer, basis (i.e., not all contracted services costs are incurred every year). Materials, Supplies, and Miscellaneous Budgeted Engineering Department amounts for Materials, Supplies, and Miscellaneous, increased from $10,600 in 2014 to $12,600 in 2015 (+18.9%). This is due to anticipated increase in the Geomedia Smart Client GIS pilot project. 83

84 Ecosystem Services Department Department Description The Ecosystem Services Department is responsible for the laboratory, pretreatment and waste acceptance programs and a number of environmental and regulatory initiatives that involve working with stakeholders to reduce the demand for wastewater treatment and collection services. This includes working to advance regulatory and strategic initiatives that provide flexibility and encourage innovation while protecting and enhancing environmental quality. Ecosystem Services works across other District departments on a variety of initiatives. Recent examples include providing laboratory services to operations in support of bringing 11 th Addition processes on-line and working with engineering to address I/I issues that impact chloride loads. The Ecosystem Services Department is currently staffed by 10 full-time equivalent positions. A recently completed Ecosystem Services Staffing Study identified the need for one additional full-time equivalent position in 2015, which is reflected in the 2015 budget request. Part-time student help is used in the laboratory and to conduct private well water sampling in support of the Metrogro Program. A student intern has provided much needed assistance in the pollution prevention area in 2014, with a specific focus on chlorides. The 2015 budget request reflects the continued use of an intern(s) in the pollution prevention area. Trends Pollution prevention and source reduction as an alternative to traditional brick and mortar solutions. Traditional District approaches to address regulatory requirements and/or meet environmental objectives have relied on adding new treatment technologies or expanding capacity at the Nine Springs Wastewater Treatment Plant. This approach is discharged focused and often results in expensive and resource intensive solutions. While there may be situations where tradition brick and mortar solutions make sense, the District will increasingly utilize pollution prevention/source reduction (PPSR) approaches to meet regulatory requirements and environmental objectives. These approaches can result in equivalent and/or improved environmental outcomes at lower overall costs. Major PPSR efforts currently underway include those associated with phosphorus and chlorides. These efforts have/will cut across multiple District areas including the laboratory, pretreatment, operations, and engineering. A critical component of PPSR efforts is the ability to advance collaborative efforts. New resources and tools will be required to support these efforts. For example, the District will need to position itself to strategically utilize a wide array of communication and outreach tools/techniques. 84

85 Increased Emphasis on Process and Environmental Monitoring. There will be an increased emphasis on environmental monitoring (physical, chemical and biological parameters) and use of the resulting data to support decision-making or advance program initiatives. Efforts will focus on a number of areas, including plant process changes, resource recovery (Ostara, MetroMix, energy and water), adaptive management, PPSR initiatives, and the derivation of future effluent limitations. The District will design monitoring programs, coordinate implementation of these programs and where practical, serve as the central laboratory for associated analytical requirements. Resource Recovery. The District will pursue and implement resource recovery initiatives where the business case can be made using a triple bottom line analysis that considers social, environmental and economic factors. Current examples include energy recovery, phosphorus harvesting (Ostara) and biosolids reuse through the Metrogro Program. Additional efforts will likely focus on such areas as water reuse, increasing energy production through acceptance of high strength wastes, and diversifying the biosolids reuse program. Other opportunities will likely emerge. Proactive Engagement on Regulatory and Legislative Initiatives. The District has been well served by engaging in regulatory and legislative initiatives at the local, state and national level. This includes providing input on the development of new regulations and/or legislative initiatives, tracking a wide variety of new regulatory and legislative initiatives to determine potential impacts on District operations, and positioning the District so that it is compliant with new requirements. Recent examples include participating in the Mississippi River Nutrient Dialog series to identify nutrient reduction approaches for the Mississippi River Basin, working at the state and national levels to develop a more functional water quality trading framework, and working with the National Association of Clean Water Agencies to address resource recovery related issues (e.g. Ostara) Goals/Priorities Status Implement chloride pollution prevention/source reduction initiatives with an internal goal of achieving a 15% reduction in effluent chloride concentration and mass by the end of the District s current WPDES permit term. (Key Result Measure) Progress: 2014 focus areas were identified and progress is being made on in all areas. There are multiple ways to measure both reductions in mass and concentration, including the use of a three year rolling average and changes from the baseline 3 year rolling average. Mass reductions are probably a better indicator of progress than changes in concentrations. Staff achieved an approximately 5% decrease in mass through the end of Mass reductions will be recalculated at the end of Develop and implement a communications strategy that effectively engages District customers, local governments, the general public and other interested parties in pollution prevention/source reduction issues. Progress: Work is on-going in the adaptive management area. Kathy has formed a communications workgroup through Yahara WINS 85

86 to support this effort. Work has been also been done in the chloride area. More work is needed in the general pollution prevention/source reduction area. Rebuild key portions of the laboratory information management system (LIMS). Progress: Due to budget considerations, replacement of the LIMS system was deferred to Funds were included in the 2014 budget to better define laboratory needs for a new LIMS system and to support the development of an RFP for a new LIMS system. The needs evaluation is substantially complete and work is now underway to develop the RFP. Provide laboratory analytical services to support the adaptive management pilot project, startup of the 11 th addition processes (including struvite harvesting and development of a Class A biosolid), and chloride reduction initiatives. Progress: The lab is providing laboratory services needed to support key 11 th addition processes that are currently on-line (e.g. Ostara, Class A digestion). Support will be provided as needed for other 11 th Addition processes or related initiatives. Support is also being provided for chloride pollution prevention/source reduction initiatives (e.g. the water softener study). Finally, the Lab also serves as the contract laboratory for the Yahara WINS adaptive management project. Engage DNR on key issues related to the District s WPDES permit in advance of permit reissuance and reach agreement on how these issues will be addressed. Progress: District staff has had several discussions with DNR staff regarding adaptive management, leading to development of an MOU that will likely have permit implications. Preliminary discussions have also been held with DNR staff related to chlorides and thermal issues, which will have permit implications. Additional discussions are anticipated. Evaluate treatment technologies to address reasonably anticipated new and/or increasingly stringent regulatory requirements. Progress: The District has retained the consulting firm AECOM to evaluate treatment technologies related to chloride. This study and the resulting report should be substantially complete by the end of Evaluate long-term compliance strategies for phosphorus and identify a preferred alternative(s). Progress: This has been an on-going process, with a primary focus on adaptive management. A Commission white paper on adaptive management was completed in early 2014 that identified key considerations for the Commission relative to the adaptive management option. A Commission Adaptive Management Subcommittee was recently formed. It is anticipated that a preferred phosphorus management strategy will be identified by late 2014/early Recalculate costs associated with adaptive management using new and/or updated information developed as part of the pilot project and other related efforts. Progress: Substantial effort has been put in to developing a revised cost model for adaptive management. It is anticipated that this effort will be substantially completed by the end of Engage the Commission on key policy issues related to the 50-Year Master Plan and related sustainability issues through the development of white papers as appropriate. Progress: Most of the attention has been focused on phosphorus/adaptive management and chlorides, including the recent formation of a Commission Adaptive Management Subcommittee. An 86

87 outline has been prepared that will support development of a white paper addressing water conservation and reuse, and resource information has also been assembled. Work with DNR, EPA and other partners on initiatives related to nutrients, including water quality trading, development a statewide nutrient framework, and codification of the site specific criterion development process. Progress: This is an on-going effort. District staff participated in several initiatives at the state level (e.g. phosphorus summit, nitrogen summit, development of a state-wide nutrient strategy) and the national level (e.g. Mississippi River Nutrient Dialogs). The Ecosystem Services Director serves as the chair of the National Association of Clean Water Agencies Water Quality Trading Workgroup. The District has notified DNR of its interest in serving on a DNR Technical Advisory Committee for site specific criterion development if and when such a committee is formed. Characterizing the health/biology of the receiving streams to support the potential development of site specific criterion. Progress: District staff worked with a contractor to conduct an annual fish survey for both Badfish Creek and Badger Mill Creek. Macroinvertebrate sampling will also take place in both streams Goals/Priorities Implementation of chloride pollution prevention/source reduction initiatives with an internal goal of achieving a 15% reduction in effluent chloride concentration and mass by the end of the District s current WPDES permit term. Procure and implement a new laboratory information management system (LIMS). Develop an approach for addressing thermal requirements and reach agreement with DNR on the selected approach prior to reissuance of the District s WPDES permit. Develop a job description for a new Ecosystem Services staff position and complete hiring process. Develop a long-term plan for the use of interns to support Ecosystem Services related initiatives and begin implementing the plan. Develop and implement steps needed to support transition from an adaptive management pilot project to a full scale project: o submit an adaptive management plan to DNR for approval o complete revised cost model o complete long-term brokering agreement o develop organizational and administrative framework o develop and conduct outreach efforts with adaptive management municipal partners needed to secure participation 87

88 Key Result Measures Measure Target FY 2014 Actual FY 2015 Projected Percent of time laboratory turnaround times are met > > 97% Reduction in chloride mass 15% by permit reissuance 4% (3 yr. rolling avg.) 7% (3 yr. rolling avg.) Ecosystem Services Department Summary Budget Category 2014 Adopted Budget 2014 Estimate 2015 Budget 2015 Change from 2014 Budget % Change from 2014 Budget Personnel Services 1,137,167 1,122,509 1,301, , % Asset Addition, Repair and Replacement 66,000 56,944 60,000 (6,000) -9.1% Contract Services 233, , , , % Material, Supplies and Misc. 121, , ,350 12, % Department TOTALS 1,557,517 1,521,095 1,871, , % Changes to the Budget Personnel Services The amount budgeted for this category has increased by approximately $164,000 or 14.4% relative to the 2014 budget request. The major changes to this category are: Addition of a FTE Ecosystem Services position to support pollution prevention/source reduction related initiatives. Addition of a temporary laboratory position to help during the transition to a new Laboratory Information Management System (LIMS). Increases associated with the District s pay plan for non-represented employees. Increases in health insurance and fringe benefits. Both the FTE position and the use of temporary laboratory help during transition to a new LIMS system were identified in the Ecosystem Services Staffing Evaluation Report submitted earlier this year. Note that funding for a student intern position is retained in the 2015 budget request. Asset Addition, Repair, and Replacement The amount budgeted for this category has decreased by $6,000 or 9.1% relative to the 2014 budget request. The decrease reflects the fact that less repair work is anticipated for laboratory equipment. 88

89 Contracted Services The amount budgeted in this category increased by approximately $144,000 or 61.7% relative to the 2014 budget request. The major additions/changes to this category are as follows: $150,000 addition for adaptive management brokering services provided by Dane County. $3,000 increase in whole effluent toxicity testing to meet WPDES permit requirements. $10,000 decrease for development of site specific criterion for phosphorus and chloride (note: funding for these efforts may be included in future budgets). Materials, Supplies, and Miscellaneous The amount budgeted for this category increased by approximately $12,000 or 10% relative to the 2014 budget request. Laboratory supplies increased reflecting increased analyses anticipated with adaptive management and chloride pollution prevention/source reduction initiatives. This also includes funds to support pollution prevention/source reduction initiatives in anticipation of increased activity in the chloride area, including the launch of a pilot water softener rebate program. 89

90 Administrative Services Department Department Description The Administrative Services Department performs a variety of services for internal and external customers. The Accounting/Finance/Office work group provides accounting, payroll, rate setting, and grants and loan administration services. The group also supports the District s work and asset management and document management software and processes and provides administrative support for the Commission, Chief Engineer and Director, and the other District groups. The Information Systems group manages the District s network infrastructure and applications, ensures data integrity and security, manages the District s web site, and provides application design services and other technical assistance. The group also provides hardware, software, user support, and training. Trends District needs require staff to develop a long range financial strategy to ensure MMSD has sufficient revenues to meet existing and emerging needs. Staff sees a growing need to communicate with the general public and other interested stakeholders about District activities and initiatives. The District is using increasingly complex technology and systems as part of its business processes. A significant number of managers and supervisors have retired in the last few years and more are likely to retire in the next three years. Technology needs for external connectivity and mobility are increasing. The information systems workgroup is experiencing high workloads and has a significant work backlog Goals/Priorities Status Develop a strategic financial plan to support the District s long term financial needs. Ongoing. Developed formal financial and budgeting policies in Completed development of 10-year financial model in early Now using the model for budget preparation, forecasting, and scenario preparation. Produce budget reports (Key Result Measure), financial statements, and an annual report in a format that better tells the District s story and are more easily understood by the public. The budget document for FY 2014 again received the GFOA Distinguished Budget Presentation Award. The 2013 budget document met the mandatory criteria and 5 of 13 optional criteria. The FY 2014 budget document met the mandatory criteria and 12 of 13 optional criteria. 90

91 Maintain effective accounting and control practices to achieve financial audit reports that show no significant deficiencies or material weaknesses. Completed. Develop our capability to support our work and asset management (WAM) and document management (OnBase) software applications. Ongoing. Developed new WAM reports. Business Analyst is learning the WAM software. Replace the existing budgeting application. Began implementation of a new budgeting software application. Expect to complete implementation in fall Continue to work to develop an IT strategic plan to guide IT priorities, direction, and investments to cover the next 3 to 5 years. Plan completion scheduled for Deferred to Contract services to support development of the IT strategic plan included in the proposed FY 2014 budget were cut and not included in the adopted FY 2014 budget. Complete network development work on the process control system and application development work for the new operations reporting system (DARC). Completed. Assist with the development and implementation of a new Laboratory Information System (LIMS). Ongoing. Staff is on track to advertise by the end of 2014 a request for proposals for a new LIMS and expect to implement the new LIMS in The proposed FY 2015 budget includes $150,000 to complete the new LIMS. Maintain 97% availability for our network servers. Planned downtime that occurs during off hours early in the morning, late in the day, and weekends will not count as downtime. (Key Result Measure) Staff are on track to meet this goal with 99.0% availability for the year as of August 31, Goals/Priorities Develop a strategic financial plan to support the District s long term financial needs. Produce budget reports (Key Result Measure), financial statements, and an annual report in a format that better tells the District s story and are more easily understood by the public. Maintain effective accounting and control practices to achieve financial audit reports that show no significant deficiencies or material weaknesses. Develop our capability to support our work and asset management (WAM) and document management (OnBase) software applications. Implement a program resource group to provide administrative support, handle communications-related production work, develop lean systems, and centralize acrossdepartment support functions. Use the new budgeting application for budget reporting and preparation of the FY 2016 budget. Implement a new Laboratory Information System (LIMS). 91

92 Develop an IT strategic plan to guide IT priorities, direction, and investments to cover the next 3 to 5 years. Maintain 98% availability for our network servers. Planned downtime that occurs during off hours early in the morning, late in the day, and weekends will not count as downtime. (Key Result Measure) 5 sustainable activities/projects to be completed in In 2014, this goal shifted from the CED Department to Administrative Services. The 2014 goal is anticipated to be completed on target. (Key Result Measure) Key Result Measures Measure Target FY 2014 Actual FY 2015 Projected Achieve a rating of proficient or better on mandatory 100% 100% 100% criteria for the GFOA Budget Presentation Award Achieve a rating of proficient or better on optional 80%/100%* 92% 100% criteria for the GFOA Budget Presentation Award Maintain 98% availability for our network servers. 97%/98%** 99.0%** 98% 5 sustainable activities/projects- MPOWER 100% 100% 100% *2014 target was 80%. This target was achieved for the 2014 Budget. Increased target to 100% for **2014 target was 97% and looks likely to be exceeded. Increased 2015 target to 98%. Actual 2014 performance was 99.0% as of August 31, Administrative Services Department Summary Budget Category 2014 Adopted Budget 2014 Estimate 2015 Budget 2015 Change from 2014 Budget % Change from 2014 Budget Personnel Services 1,106, ,629 1,184,711 77, % Asset Addition, Repair and Replacement 194, , , , % Contract Services 375, , , , % Material, Supplies and Misc. 60,330 60,232 91,655 31, % Department TOTALS 1,737,079 1,659,005 2,261, , % Changes to the Budget Personnel Services The proposed 2015 budget deletes a limited term IS programmer position and adds a new junior programmer/analyst position. 92

93 Asset Addition, Repair, and Replacement The proposed budget includes the following significant one-time items: Description Laboratory Information System (LIMS) Upgrade Increase (Decrease) Comment $150,000 $50,000 budgeted in 2014 for LIMS upgrade planning. Phone System Upgrade 40,000 Deferred from The planning for the LIMS system upgrade began in 2014 and $50,000 was budgeted for this purpose in Staff are on track to complete the planning work by the end of 2014 and install a new LIMS package in 2015 ($150,000 budgeted in 2015). The office technology upgrades will support the efforts of the new program resource group to streamline paperbased office processes. Contracted Services The proposed budget includes a large increase in contracted services to support IT-related needs. The IT Strategy and Roadmap Consultant line item was proposed in 2014 but deferred to The backlog of IT related work is growing and the roadmap is intended to help define priorities and define a way forward. The DARC and PCS support costs are for new systems the District recently installed. Staff anticipated a WAM annual maintenance fee increase but did not anticipate a change in licensing fees. Oracle is changing their fee structure and the District needs to comply to be in a sustainable position for the key Oracle WAM application which is our primary business system for maintenance, timekeeping, purchasing and accounting functions. Increase Description (Decrease) Comment 50,000 Proposed in Deferred to IT Strategy and Roadmap Consultant PCS/DARC Support and Maintenance 50,000 New item to support new DARC system. WAM Annual Maintenance Fee 70,000 Increase budgeted amount from $38,000 to $108,000. Oracle is changing their fee structure. Materials, Supplies, and Miscellaneous The major changes in the miscellaneous expenses are to improve internet service and support more mobile applications (smartphones and laptops) for various workgroups. 93

94 Appendix H: Statistical and Supplemental Data Madison Metropolitan Sewerage District (the District) is a body corporate with the powers of a municipal corporation for the purpose of carrying out the provisions of Sections to of the State of Wisconsin statutes. It was created by judgment of the County Court for Dane County, entered on the 8th day of February Its existence was validated and confirmed by Chapter 132 of the Laws of 1969, effective August 2, The constitutionality of that Law was sustained by the Wisconsin Supreme Court in Madison Metropolitan Sewerage District vs. Stein, 47 Wis. 2nd 349, 177 N.W. 2nd 131 (1969). The District is governed by five Commissioners, each appointed by the Dane County Executive and approved by the County Board for five-year terms. The Commissioners of the Madison Metropolitan Sewerage District meet once or twice each month, at the office of the District at 1610 Moorland Road, Madison, Wisconsin. Special meetings are held as required upon call of any member of the Commission. Dane County Square Miles: 1,238 District Square Miles: Dane County Estimated Population Census: 509,939 MMSD Estimated Population (Fall 2014): 366,700 Dane County per Capita Personal Income: $33,473 Average Daily Influent Flow: 39 million gallons Madison Metropolitan Sewerage District services 14.7% of the entire county by area and 71.8% of the county population. Areas served include the Cities of Madison, Fitchburg, Middleton, Monona and Verona as well as the Villages of Cottage Grove, Dane, De Forest, Maple Bluff, McFarland, Shorewood Hills, Waunakee and the Towns of Blooming Grove, Burke, Dunn, Madison, Middleton, Pleasant Springs, Verona, Vienna, Westport and Windsor (MAP H-1). A complete list of District customer communities and their estimated wastewater contributions is shown in TABLE H-1. The largest taxpayers and employers in the county are shown in TABLES H-2 and H-3. The equalized property tax valuation for the District is shown in TABLE H-4. Additional information regarding Dane County and the City of Madison can be found at: and 94

95 MAP H-1 95