Clark Regional Wastewater District. Adopted Budget. Expanding the Boundaries of Service

Transcription

1 Clark Regional Wastewater District Adopted Budget Expanding the Boundaries of Service

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3 Adopted Budget Clark Regional Wastewater District Clark County, Washington For Fiscal Year January 1 through December 31, Adopted by Resolution No Dated: December 27, 2016

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5 Table of Contents 1. Introduction Directory of Officials... 1 Budget Message... 3 Budget in Brief... 7 District History... 9 Organizational Chart District Service Area Map District Departments and Services GFOA Distinguished Budget Presentation Award Strategic Plan District Mission, Vision and Values Strategic Planning Fiscal Year Goals and Objectives Budget Process Budget Process Budget Calendar Adopted Budget by Account Description of Accounts Budget Overview Operations and Maintenance Account Alliance Reserves Account Unemployment Reserve Account Debt Service Account Debt Service Reserve Account Existing Assets Restoration and Replacement Account New Assets Capital Improvement Projects Account Budget Summary Fund Balance Summary Six-Year Capital Program Appendix Appendix 1 Financial Policies Appendix 2 Equivalent Residential Units Appendix 3 Service and Connection Charges Appendix 4 Where Does My Money Go? Appendix 5 Outstanding Debt/Loans by Type Appendix 6 Debt/Loans Repayment Schedule Appendix 7 Limitation of Indebtedness Appendix 8 Employees (FTEs) by Function Appendix 9 Salary Range and Positions Appendix 10 Demographic Statistics Appendix 11 Employees for Ten Principal Employers Appendix 12 Ten Largest Customers Current and Ten Fiscal Years Ago Appendix 13 Glossary... 97

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7 Directory of Officials RCW provides for a Board of Commissioners consisting of three members to serve as a governing body for the District. Each Commissioner serves a 6-year term with elections held every two years. Elected Officials Serving During President Vice President Secretary Denny Kiggins Norm Harker L. Neil Kimsey Term: 6 Years Term: 6 Years Term: 6 Years Expiration: December Expiration: December 2021 Expiration: December 2019 General Manager Finance Director/Treasurer Attorney John M. Peterson, P.E. Ken Andrews, CPA Rod Kaseguma Mailing Addresses: District Office: PO Box 8979 Vancouver, WA Attorney: PO Box C Bellevue, WA

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9 Budget Message Board of Commissioners Clark Regional Wastewater District s Customers and Partners: Clark Regional Wastewater District (District) is pleased to present its Adopted Budget for the Fiscal Year (FY ), from January 1 to December 31,. This budget is presented in accordance with the District s financial policies and direction from the Board of Commissioners. The budget document is formatted to provide an overview to help readers better understand the District s FY Adopted Budget as a financial planning road map. Comparisons in this Budget Message are budget to budget from the Board adopted FY 2016 budget to this FY Adopted Budget, unless otherwise noted. While not required to prepare a budget under Washington State law, the District chooses to prepare a budget in order to both plan for and track the District s operations. A budget is balanced when the sum of estimated sources equals or exceeds the sum of estimated uses. For FY the District has forecasted a balanced budget. Budget Summary The Adopted Budget for FY is $28.9 million for all sources of funds and $28.8 million for all uses of funds. Sources include $19.4 million from sewer service charges, $7.6 million from connection fees, and $1.9 million from other revenues. Uses include $9.1 million for treatment costs, $6.0 million for salaries and benefits, $3.2 million for services, supplies and other expenses, $1.9 million for debt service and $8.6 million for capital construction costs and capital purchases. Total budgeted revenues for FY are 16.9% higher than the prior year budget. Included in this is higher sewer service and System Development Charge (SDC) connection revenues of 4.9% and 62.1%, respectively. Total sources in are only 1.2% higher than 2016 when considering the $4.0 million fund balance draw down that was budgeted to balance the budget. Total operating and maintenance (O & M) expenditures for FY are expected to increase by 5.8% primarily due to the increase in Discovery Clean Water Alliance s (Alliance) treatment expenses by 12.1% related to increased capital expenditures for. Salaries and benefits are also budgeted to increase by 9.5%, primarily due to the addition of 3 FTEs and increased benefits rates in. 3

10 District Sewer Rates Sanitary sewer base rates are unchanged at $38 per equivalent residential unit (ERU) per month for the Central service area in the. In addition, the District established rates of $55.70 per ERU for the Ridgefield service area, which includes the base rate of $38 per month and a $17.70 per month System Integration Charge (SIC). This represents a decrease of $.80 per ERU per month for the Ridgefield service area customers for. Sources Sewer service charges: $19.4 million. Sewer service charges are budgeted to increase $0.9 million, or 4.9% in. Growth in the District service areas is the driver behind the budgeted increase in sewer service charges for. Connection fees: $7.6 million. The District is forecasting a total of 1,540 new paid connections in which is an increase of 600 over the 2016 budget. The budgeted increase in connections results in an increase in budgeted connection fee revenue over the prior year of 62.1%. The District utilizes a three tiered System Development Charge (SDC) structure (based on where sewer flows for treatment). SDC revenue is used to fund new capital improvement projects within the District s service areas. Other revenues: $1.9 million. Investment interest is budgeted for $0.3 million, intergovernmental revenues for $0.6 million, miscellaneous revenues for $0.8 million and local facilities charge (LFC) reimbursements for $0.2 million. Uses Salaries and benefits: $6.0 million. Salaries and benefits are budgeted to increase by 9.5% over the 2016 budget. Salary grades were independently market adjusted by 1-3% for. Included in the budget are performance based merit increases of 3% (meets expectations) on employee anniversary dates for employees not at the top of their pay grade and a potential 1.5% (exceeds expectations) for all employees. Benefits were increased in line with higher pension contributions to the Washington Public Employees Retirement System (which will realize a 1.3% increase as of July 1, ) and higher medical and dental costs in. Also increasing the salaries and benefits budget is the addition of 3 FTEs for a total of 53 FTEs compared to the 50 FTEs from Services, supplies and other expenses: $3.2 million. Service costs are budgeted at $0.9 million, supplies at $0.7 million and other expenses (insurance, utilities and B&O taxes) for $1.6 million. 4

11 Treatment costs: $9.1 million. Treatment costs are budgeted 2.9% higher, primarily due to an increase in capital expenditures supporting an Alliance treatment cost increase of 12.1%. Debt service: $1.9 million. Debt service (principal and interest) for District issued bonds and all Public Works Trust Fund loans in total $1.9 million. Consistent with the 2016 Budget. Construction costs and capital purchases: $8.6 million. Construction costs are budgeted at $1.8 million for existing assets restoration and replacement projects/purchases and $6.8 million for new asset capital improvement projects/purchases. Outlook Clark County continues to experience solid economic growth indicating a strong recovery from the 2008 recession. By the end of 2015, the County s employment base was 9.0% above its prerecession peak. Major industries in the County include healthcare, professional & business services, retail trade, leisure & hospitality and manufacturing. Clark County and its unincorporated areas have seen year over year population growth and there is no indication that it will slow in the near term. The unincorporated areas realized a 5.0% percent increase from 2010 to The county population as a whole is anticipated to increase 36.0% overall from the 2010 census count by the year Budget Priorities and Direction The adopted budget continues to reflect the District s mission of Providing customerfocused, professional wastewater services in an environmental and financially responsible manner, and its vision to be an active partner in Clark County, to support economic development and to manage and protect water resources. With the anticipated growth not only in population but the overall economy comes opportunity and challenge for the District. The adopted budget highlights the following ways in which it seeks to embrace opportunity in the face of these challenges. Maintain a Stable Rate Structure. The District charges a flat base rate for monthly sewer service charges. The Central service area rate (base rate) will remain the $38 rate it was in The Ridgefield service area rate will be $55.70, base rate of $38 plus a system integration charge of $17.70, which is a decrease of $.80 from 2016 rates. The system integration charge will continue to decrease year by year as growth continues to increase in the Ridgefield service area. The District is able to keep rates relatively low compared to other local agencies largely due to the fact that it does not bill based on consumption. All District customers, based on which 5

12 service area they live in, are billed one flat rate per month. The District also takes advantage of opportunities that reduce operating expenses such as piggybacking on the County contract for the purchase of calcium nitrate, an odor control agent. Maintain Existing Assets of the District. As the inventory of sewer system components within the Districts collection system age it is important that we maintain these assets appropriately to keep them in service as long as possible or to replace them when necessary to prevent system failures. This budget includes funds for restoration or replacement of the Districts current collection system assets. Assets being restored or replaced are identified through a criticality assessment performed by the Engineering and Maintenance departments. Also included in this budget are funds for the replacement of fleet and facility assets. As the District experiences growth it has been determined necessary to upgrade, maintain or replace assets in our office and operations center. Position the District for Growth. As of January 1, 2014, the sewer utility customers of the City of Ridgefield became customers of the District. The population in Ridgefield to date is approximately 7,000. It is anticipated that by 2035 Ridgefield s population will nearly triple. The District has included in its Six-Year Capital Program $9.5 million in funds concentrated on building new infrastructure to sustain this growth. Of this $9.5 million investment in new capital assets, $3.6 million is budgeted for. A large part of these funds are allocated to building new pump stations and trunk sewer lines within the city. Customer Service. With the addition of the sewer utility customers of the City of Ridgefield in 2014, serving as Administrative Lead for the Alliance (formed in 2013) and year over year customer base growth, it has become necessary for the District to assess the workload of its departments and evaluate staffing levels needed for the District to maintain efficient and effective customer service. The budget addresses some immediate staffing needs of the District by adding 4 FTEs. New positions for the District include a Control Systems Administrator, Assistant Engineering Technician, Accounting Technician and an Administrative Assistant I. Sincerely, John M. Peterson, P.E. General Manager Ken Andrews, CPA Finance Director/Treasurer 6

13 Budget in Brief 2016 Sources Charges for Sewer Services 74.8% Sources Charges for Sewer Services 67.1% Connection Fees 19.0% Intergovernmental Revenue 2.6% Misc. Other Sources 3.6% 2016 Sources Budget Budget Charges for Sewer Services $ 18,477,588 $ 19,387,580 Connection Fees 4,703,880 $ 7,626,300 Intergovernmental Revenue 630,500 $ 643,000 Misc. Other Sources 889,493 $ 1,231,325 Total Sources $ 24,701,461 $ 28,888,205 Connection Fees 26.4% Intergovernmental Revenue 2.2% Misc. Other Sources 4.3% 7

14 Budget in Brief Uses Supplies & Supplies Services & Services 10.2% 10.2% Salaries & Benefits Salaries 19.1% & Benefits 19.1% Treatment Costs Treatment 30.8% Costs 30.8% Debt Service 6.8% Capital Expenditures 33.1% Capital Debt Service Expenditures 6.8% 33.1% 2016 Uses Supplies & Services 11.0% Treatment Costs 31.6% Salaries & Benefits 20.9% Debt Service 6.7% Capital Expenditures 33.2% 29.9% 2016 Uses Budget Budget Salaries & Benefits $ 5,499,178 $ 6,023,161 Supplies & Services 2,928,889 3,160,845 Treatment Costs 8,848,295 9,102,494 Debt Service 1,955,625 1,921,089 Capital Expenditures 9,495,100 8,614,300 Total Uses $ 28,727,088 $ 28,821,890 8

15 District History Clark Regional Wastewater District (formerly known as Hazel Dell Sewer District and Clark County Public Sewer District No. 1) has a rich history of service and support for the communities it serves. In 1958, the District was formed to meet the needs of a growing business community that was not served by sewer. The newly formed District provided wastewater treatment and collection for 300 Hazel Dell customers. In the 1970s, through separate interlocal agreements with Clark County and the City of Vancouver, the parties acknowledged the economies of scale for treatment. This allowed the District to focus on collection and transmission, with the County and City providing treatment through their existing plants. In 1993, the County requested the District to take over all of its collection and transmission functions, leaving the County to focus only on treatment at the Salmon Creek Treatment Plant (SCTP). In 1995, the County, the City of Battle Ground and the District entered into a three-way agreement to expand and improve the SCTP. In 2003, the three partners, under the direction and management of the District, undertook a $77.0 million dollar capital improvement upgrade of the Salmon Creek Wastewater Management System (SCWMS). The project, completed in 2009, has provided additional treatment capacity for years to come. In 2009, an initial Sewer Coalition Planning Study was completed with participation from twelve Clark County public agencies, including all that provide sewer service within the county, to explore the potential for improved efficiencies in providing wastewater services to Clark County residents. This study resulted in a county-wide comprehensive sewer plan, detailing transmission and treatment facilities necessary to provide sewer service within the county for the next 50 years. In 2012, another result of the 2009 study, four partner agencies (Clark Regional Wastewater District, Clark County and the Cities of Ridgefield and Battle Ground) signed a Memorandum of Understanding (MOU) providing an agreement-in-principle for the framework of a new regional partnership. The regional sewer entity, Discovery Clean Water Alliance (Alliance), was formally incorporated in early 2013 by the four member agencies. Alliance transition activities occurred throughout 2013 and The Alliance became fully operational effective January 1, 2015 with all members, including the District, transferring debt and assets as outlined in the Interlocal Formation Agreement (IFA) to the Alliance. Effective January 1, 2015, the Alliance owns and operates transmission lines, pump stations and treatment plants to provide sewer treatment service to the mid-clark County region (City of Battle Ground and the District s service areas including City of Ridgefield). Also in 2012, the District and the City of Ridgefield (Ridgefield) signed a MOU for transfer of ownership of all of Ridgefield s sewer utility collection system assets, liabilities and all its sewer 9

16 utility customers to the District. A final collection system transfer agreement and franchise agreement were finalized and signed by the District and Ridgefield in As of January 1, 2014, Ridgefield s sewer utility customers became customers of the District. The District, throughout its history, has responded to the growing and changing needs of its stakeholders including its current and future ratepayers. In, the District is budgeted to grow from 50 to 54 employees (54 FTEs). The District will maintain over 633 miles of pipe and 64 pump stations throughout the 46 square miles of District service territory. The District supports, on a limited basis, the needs of multiple local cities while leveraging District equipment and expertise by contracting for services to provide line cleaning, closedcircuit television (CCTV) camera evaluation of these entities collection and transmission lines and emergency response support. The costs associated with these services are reimbursed by these government entities when the work is completed. District Organization Clark Regional Wastewater District is a special purpose District organized under Revised Code of Washington (RCW), Title 57. As a special purpose District, it is chartered to provide sanitary sewer services to unincorporated Clark County and the City of Ridgefield. As a public agency, it has a three-member Board of Commissioners who reside within the District service area and is elected by the ratepayers within those areas to six-year terms. The General Manager, hired by the Board of Commissioners, is the District s administrator and manages the 54 budgeted District employees within Operations, Finance, Administration and Engineering departments. Our Ratepayers and Stakeholders The District provides sewer services and receives monthly rates from over 30,500 customers. The District s customer base is comprised of both residential and commercial customers. The District anticipates their customer base to grow to approximately 31,500 by the end of FY. In addition, the District provides wastewater industry leadership, engineering expertise and, in many cases, maintenance field support to the smaller cities within Clark County. 10

17 Organizational Chart Capital Program Manager 1 FTE (16) Senior Project Manager 1 FTE (15) Project Manager 1 FTE (14) District Engineer 1 FTE (17) Development Program Manager 1 FTE (15) Senior Engineering Technician (Development) 1 FTE (11) Engineering Technician (Pretreatment) (Development) (Inspection) 3 FTE (10) Control System Administrator (Regional System) 1 FTE (14) Pretreatment Coordinator 1 FTE (12) Senior Engineering Technician (GIS) 1 FTE (11) Rod Kaseguma Legal Counsel (Contract) HR/Risk Mgmt Director 1 FTE (15) Senior Electrician / Systems Integrator 1 FTE (12) Lead Maintenance Specialist (Pressure Systems) 1 FTE (11) Maintenance Specialist III 2 FTE (9) Operations Manager 1 FTE (16) Maintenance Supervisor 1 FTE (13) BOARD OF COMMISSIONERS General Manager 1 FTE (Contract) Assistant Manager 1 FTE (18) Facilities Technician 1 FTE (8) Lead Maintenance Specialist (Gravity) 1 FTE (11) Maintenance Specialist III 2 FTE (9) Accounting Manager 1 FTE (14) Senior Accountant 1 FTE (12) Accountant 1 FTE (10) Finance Director/ Treasurer 1 FTE (17) Finance Specialist Supervisor 1 FTE (11) Senior Finance Specialist 1 FTE (9) Finance Specialist 3 FTE (8) Senior Administrative Assistant 1 FTE (9) Board Clerk/ Administrative Services Manager 1 FTE (13) Administrative Assistant III 4 FTE (8) Administrative Assistant II 1 FTE (6) Administrative Assistant I 1 FTE (4) Engineering Technician (Capital) 1 FTE (10) Assistant Engineering Technician (Development) 1 FTE (8) Maintenance Specialist II 3 FTE (8) Maintenance Specialist II 3 FTE (8) Accounting Technician 1 FTE (8) Assistant Finance Specialist 1 FTE (6) Dotted Line = Contract legal counsel Solid Line = Direct reporting relationship ( ) = Salary Range Total FTE: 54 Note: 54 positions are approved but only 53 FTEs are funded for. Maintenance Specialist I 1 FTE (7) Maintenance Specialist I 1 FTE (7) 11

18 District Service Area Map 12

19 District Departments and Services Operations Department The Operations department, with a staff of eighteen (18) skilled, full-time employees, provides many services for the District including: Underground collection system condition assessments Maintenance and preservation programs Pump station maintenance Septic Tank Effluent Pumping (STEP) system maintenance Engineering assistance Facility maintenance / Fleet management Risk mitigation and Optimization of Resources Asset optimization Underground Collection System Condition Assessments. In addition to ongoing condition assessments of the District owned collection and transmission system, the Operations staff also partners with our customers, in a diagnostic and advisory role, in various line maintenance challenges that occur with customer-owned assets. The District has a Grounds Equipment and Maintenance (GEM) agreement with regional agencies and provides CCTV inspection (CCTV) condition assessment and line cleaning services for other local government agencies in Clark County. Maintenance and Preservation Programs. Mainline maintenance consists of inspecting and cleaning sewer pipeline ranging from 6-inches to 36-inches in diameter. The District, within its two service areas, owns and maintains approximately 71 miles of pressure mains. The total pipe inventory as of January 1, is just over 633 miles, including service laterals. CCTV uses specialized video equipment to inspect the inside of pipes to identify defects or problematic lines. Then the lines are routinely cleaned using high pressure water cleaning (HVC) with a vacuum system for debris removal, along with specialized cleaning processes such as mechanical root cutting and chemical root treatments. Operations staff identifies lines that have potentially higher levels of grease and debris and accelerates the cleaning frequencies for grease removal in those areas. Line assessment and cleaning activities include a condition assessment rating for each pipe segment, including the identification of any pipe defects. These ratings drive several of the maintenance and engineering programs, including assessment and maintenance schedules, restoration and replacement budgets, criticality ratings utilized for building emergency response plans, capacity issues and long-term capital programs. Operations staff 13

20 also manages the chemical dosing and air treatment systems designed to treat odorous and corrosive gasses that reside in the wastewater systems. Pump Station Maintenance. The Operations staff provides the operation and maintenance of 64 sewer-pumping stations. Force main maintenance is also part of the pump station maintenance program. Current maintenance standards and practices include detailed tasks that are performed on a daily, weekly, monthly and annual basis to preserve the life of the stations assets. Detailed annual maintenance standards are documented in the department s maintenance plan. STEP System Maintenance. The Operations staff maintains the functionality of 835 individual STEP systems. These STEP systems are located in the satellite areas of Meadow Glade, Hockinson, Van Ridge and South Ridge. The STEPs are individual pumping systems that pump into a community force main (pressure pipe) often used in areas with flat topography. The Operations department is responsible for the inspection of new construction systems in these areas, as well as maintenance, customer contact for property access and repairs of the existing STEP systems. Engineering Assistance. The Operations department provides support to the District s Engineering department in the flow monitoring and pretreatment functions. The Operations staff provides pipeline inspection data from the CCTV inspections to aid in identifying sewer lines that are in need of repair or replacement. Operations staff also assists with the plan review of new pump station designs and piping systems and works with Engineering to establish District standards. Facility Maintenance / Fleet Management. The District s administration and maintenance facilities are managed by the Operations department. The District outsources the repair and annual maintenance of District vehicles and equipment. Fleet management responsibilities include minor maintenance activities related to passenger vehicles, pickups and small construction and safety equipment. The Operations staff manages the routine maintenance schedules of all fleet vehicles owned by the District. Risk Mitigation and Optimization of Resources. Risk mitigation is a central function of the Operations department. One tool instrumental to risk mitigation is the department s Supervisory Control and Data Acquisition (SCADA) monitoring system that monitors the pump stations 24-hours per day, 365 days a year. This automation provides continuous monitoring to alert staff of any potential risk associated with equipment failure, and the optimization of electricity used to run the stations pumping systems and optimization of chemical usage for odor control. Implementation and upgrading of the SCADA system has resulted in cost savings due to the elimination of phone lines as well as overtime costs, as issues are identifiable before 14

21 they become an afterhours emergency. Risk Mitigation is the most value-added feature of SCADA, as alarms sound in real time to alert staff of an issue before it becomes a sewer spill, potentially creating a hazard to our customers as well as the environment. Asset Optimization. The Operations department employs Lucity, a software package designed for public works, for asset management and maintenance needs. With Lucity, the Operations department has been able to seamlessly integrate most of their major systems including inventory, inspection, maintenance management and GIS. In 2015, the Operations staff integrated Lucity Mobile, a component of the Lucity software that has allowed staff to get locates, work orders, GIS mapping and enter inspection data, all from the field, on a tablet or other mobile device, without making trips to the office to sit at a computer. This allows the District to recognize cost savings of not only man hours, but less fuel and maintenance costs relating to vehicle use. Finance Department The Finance department, with a staff of eleven (11) dedicated, full-time employees, provides a wide range of services for the District under the direction of a licensed certified public accountant. These services include but are not limited to the following: Customer Service Permits Accounting Treasury management Budget/forecasting Application system management/development Discovery Clean Water Alliance (Alliance) Customer Service. As a customer-focused utility, Finance considers customer service an ongoing improvement process. We continue to evaluate how to improve and enhance our levels of service while providing the same quality of service to our customers that we would expect as customers. In, the District anticipates managing close to 35,000 telephone calls, processing approximately 192,000 billing statements and receipting nearly 1,900 walk-in payments. In addition, the District will continue to manage about 200 high-resource customers monthly. Permits. In addition to utility billing customer service responsibilities, the Finance department is responsible for issuing side sewer permits. Finance is on track to issue roughly 1,500 permits in 2016, an increase of 438 permits over

22 Accounting. The department maintains the financial records of the District in compliance with state and federal regulations. The financial statements of the District are audited annually by the Washington State Auditor s Office (SAO) for adherence to Generally Accepted Accounting Principles (GAAP). For the last 34 years, SAO has had no findings to include in their Auditors report. In addition to maintaining the financial records and preparing the statements for audit, core accounting functions provided by Finance include payroll, accounts payable, project accounting, accounts receivable and maintaining the general ledger. Various reports, such as the Comprehensive Annual Financial Report, Board reports, management financials and other audit and bond compliance statements are prepared monthly, quarterly and annually. The District has been awarded the Certificate of Achievement for Excellence in Financial Reporting for the last 28 years and strives to continue to provide financial information for District stakeholders that are transparent, informative and relevant. Treasury Management. The primary responsibility and goal of the treasury function is to ensure the financial resources of the District are safeguarded and the District s cash reserves are invested in a safe and prudent manner. To accomplish this, the District issues and/or defeases debt, in an effort to provide the lowest financing costs to our ratepayers. In addition, the assets and cash transactions are secured by evaluating and enhancing internal controls and improving business processes, like the recording of assessments, liens and the satisfaction thereof. Budget/Forecasting. The District utilizes a six-year revenue and expense forecast to ensure adequate revenues are available for necessary operational and capital expenditures. The budget is a piece of the six-year forecast in that it is developed from the compiled information and considers the needs of each department to develop an operating budget. Budget preparation also necessitates internal coordination and facilitation of the capital plan information with Engineering, specifically to determine how future projects will affect the Existing Assets Restoration and Replacement (R & R) account, as well as the New Assets Capital Improvement Projects (CIP) account. District management of all departments provide valuable input throughout the budget preparation process. The budget is presented to the Board of Commissioners for their review and adoption as the final step. The District evaluation of current revenue forecasts necessary to adequately fund future capital and R & R needs and keep pace with the increased costs of operational activities, had indicated that the base rates will remain stable with those of The District will continue to manage costs and spend down some reserves to minimize the need for future rate increase. The District base rates continue to be more affordable and stable than 32 other providers in Clark County and across Western Washington. Throughout the 2010 to 2016 period, other providers raised their rates on average $10 per month, where the District raised rates a total of $4 per month. This is reflective of the District s efforts to keep cost increases at or below the rate of inflation. 16

23 In recognition of its budgetary efforts, The District received the WFOA and GFOA (See Page 22) Distinguished Budget Awards for its 2016 Adopted Budget. These awards are the highest form of recognition in fiscal planning and budgeting within the State of Washington (WFOA) and nationwide (GFOA). Application System Management/Development. As needed, the Finance department upgrades its existing financial systems and related components, as well as implements new system modules, in an effort to eliminate redundancies and facilitate integration of workflow. An example of this is in 2015 when the District added a quick pay feature to its online bill pay system, another added convenience for customers to pay their sewer bill. In utilizing the quick pay feature, customers no longer need to register an account to pay online. This is yet another way the District demonstrates its focus on customer service. Discovery Clean Water Alliance (Alliance). The District, in conjunction with its partners (Clark County and the Cities of Battle Ground and Ridgefield), formed the Alliance under the Joint Municipal Utility Services Act statute in January The District provides Administrative Lead services for the Alliance. The Finance department provides financial and treasury services for the Board of Directors of the Alliance. These services include, but are not limited to, the preparation of the operating and capital budgets, quarterly and annual financial reporting, CAFR development, SAO audit process management, financial policies compliance, debt and investment management, accounts receivable and accounts payable. The District s Finance Director is the appointed Treasurer for the Alliance. Administration Department The Administration department, with a staff of eleven (11) provides executive support to the District Board of Commissioners and is responsible for administering and managing the overall affairs of the District. The department is led by the General Manager, with support from the Assistant Manager, Human Resources/Risk Management Director, Board Clerk/Administrative Services Manager and seven (7) Administrative Assistant support staff. The Administration department s core functions include: District management Support to the Board of Commissioners APWA Accreditation Human Resources (HR) Risk Management (RM) Succession Planning Discovery Clean Water Alliance (Alliance) 17

24 District Management. The Administration department is active in all of the general management practices and in oversight of all District services and activities. Administrative staff administers and maintain oversight of intergovernmental coordination with partner agencies throughout the community. Specific day-to-day operations of District functions are the responsibility of department Managers. The Managers work closely with Administrative staff in providing customer-focused, professional wastewater services in an environmentally and financially responsible manner. In addition, public involvement and outreach activities along with the development and implementation of key documents, presentations and initiatives are consistently provided by the Administration department. Support to the Board of Commissioners (Board). Board support is provided by Administrative staff to ensure all applicable laws and regulations for open public meetings are adhered to and ensure effective and efficient due process for all individuals, organizations and businesses that seek to appear before the Board at their regularly scheduled meetings. In addition, Administrative staff prepares and produce at least 36 Board packets each year. APWA Accreditation. The Administration staff is instrumental in facilitating the process of APWA Accreditation. Originally accredited in 2005 and re-accredited in 2009 and 2015, the District is the first and only Special Purpose Government to carry the APWA Accreditation in North America. The purpose of the accreditation process is to provide a means of formally verifying and recognizing public works agencies for compliance with the recommended practices set forth in the Public Works Management Practices Manual. The accreditation process is completely voluntary. Human Resources (HR). Administration of the HR program includes employment, recruitment, compensation / benefits, employee relations, training and employee development, personnel record management, personnel policy and procedure development, legal compliance and internal consulting. The District offers a very competitive benefits package upon hire. The benefits include Washington State PERS, fully paid medical and dental benefits including vision coverage, paid sick leave, paid vacation, basic life insurance, medical and dependent care spending accounts options, as well as short and long-term disability options. The Board of Commissioners has approved an annual market adjustment by pay grade of 1-3% for the budget cycle. Along with the market adjustment by pay grade each year, employees can receive up to a 4.5% increase in pay based on performance on their anniversary date. Risk Management (RM). The District s Human Resource/Risk Management Director ensures compliance with all applicable laws, ordinances, policies and guidelines concerning safety, health and employment throughout the District. HR administers Risk Management program activities, including general liability insurance and claims processing, risk assessment and mitigation strategies and the design, development and implementation of District safety programs and 18

25 procedures in accordance with Washington Industrial Safety and Health Administration (WISHA) and Occupational Safety and Health Administration (OSHA) standards. Succession Planning. A priority for the Human Resource/Risk Management Director is managing succession planning. With individuals in key positions at or nearing retirement age, the District is focusing not only on recruitment efforts for these positions, but also career development within the existing staff. This planning is necessary to increase the availability of experienced and capable employees to fill these positions when they become available. Discovery Clean Wastewater Alliance (Alliance). The District, in conjunction with its partners (Clark County and the Cities of Battle Ground and Ridgefield), formed the Alliance under the Joint Municipal Utility Services Act statute in January The General Manager and Administrative staff also provides support to the Board of Directors of the Alliance. These responsibilities include executive and administrative services such as agency coordination, clerk for the Board, public outreach and oversight of the operational committees. Additionally, the District s HR/RM Director serves as the Risk Management representative of the Alliance with the Water and Sewer Risk Management Pool (WSRMP). The District is also responsible for coordination with the Alliance legal counsel, via contract, and for overseeing the development of the complete administrative framework. Engineering Department The Engineering department provides full-service engineering services to the District and its customers under the direction of the District Engineer, a licensed professional engineer and twelve (12) additional staff approved in the Organizational Chart for a total department size of thirteen (13). These services include: Annexation process management Development review Capital facility planning Geographic information system (GIS) Capital program management Septic Elimination Program (SEP) Pretreatment program Discovery Clean Water Alliance (Alliance) Annexation Process Management. The Engineering department oversees the annexation process for the District. Annexation is the formal process by which the District expands its service area, administered in accordance with RCW The District is designated the service provider to roughly nine (9) new square miles of urban growth area within the County s

26 Comprehensive Plan update. Generally expanded via the petition method of annexation, at the request of property owners, the District has annexed approximately 70% of the existing urban growth area through year-end Development Review. The Engineering department provides assistance for new development, current customers and existing homes in need of sewer service. In addition, property owners obtain record drawing information for assistance in locating their existing system for connection. Capital Facility Planning. Planning within the District is a two-part process initiated with longrange planning and followed by sub-basin planning. Long-range basin planning is performed to develop a 20-year General Sewer Plan (GSP) to address the infrastructure needs to support urban incorporation by the County and City of Ridgefield. The District s GSP is currently being updated in conjunction with Clark County s comprehensive plan update in compliance with requirements of the Growth Management Act. The GSP provides a summary of the capital improvement projects and the associated costs for the planning period. More detailed subbasin planning is performed within the framework of the GSP to identify the means and methods of extending service to individual parcels. Geographic Information System (GIS). The District maintains a state-of-the-art computer mapping, archiving and analysis system. The GIS platform is used in support of Engineering, Finance and Maintenance functions at the District. The mapping system covers both of the District s service areas, and is used extensively for support to customer service, planning, design and decision making. GIS is also an integral part of the District s Maintenance Management System (MMS). Capital Program Management. Capital Program Management includes design, inspection services and construction management activities. The District administers an active Capital Program to maintain and expand the sanitary sewer collection system. The Capital Program provides in-house services in support of Restoration and Replacement (R & R) projects and developing and increasing capacity and infrastructure through Capital Improvement Projects (CIP). District staff directs the overall Capital Program and each individual project, including prioritizing, planning, project management, bid processing, construction contracting and construction closeout. Under a District staff Project Manager, spot repair projects are designed internally for bid and construction, but most projects are designed by professional engineering consultants for bid and construction. District staff provides construction management and inspections for most projects while utilizing consultant services when needed for large or complex projects and during peak construction periods to supplement staff. All work is performed under the direction of a licensed professional Engineer. The District utilizes a process that combines GIS analysis with the Maintenance Management System (MMS) data to produce an R & R program that identifies sewer pipes that are in the 20

27 worst condition and likely to cause the greatest environmental harm if failure were to occur. By identifying critical infrastructure that has a higher risk of failure, the District can focus capital expenditures most effectively. The Capital Program will continue to reflect projects identified by this process. The annual budget identifies the total expected expenditure for each of the projects contained within the Capital Program. The District maintains an ongoing detailed Six-year Capital Program, with an annual Capital Program coming out of that detailed plan for the Board s review and approval. Septic Elimination Program (SEP). Supporting the District s vision of partnerships to protect water resources in the District s service area, the District maintains a formally established Septic Elimination Program (SEP) which extends sewer service to residential homes within the District. The District also continues to work closely with the Clark County Public Health Department to provide sewer service for customers who are faced with the removal of their failing septic systems through other Local Facilities programs (i.e. Customer Generated Infrastructure and District Installed Infrastructure). Pretreatment Program. The District operates the state-mandated Industrial Pretreatment Program for the Salmon Creek Wastewater Management System implementing national pretreatment standards necessary to protect receiving treatment systems. By agreement, the District operates the program within the unincorporated areas of Clark County, an area in which the District discharges into the City of Vancouver s Westside Treatment Plant and within the Cities of Battle Ground and Ridgefield. This includes comprehensive pretreatment responsibility within the District system of sewers, as well as compliance sampling at the Salmon Creek Treatment Plant and pretreatment review at the City of Battle Ground. The District performs pretreatment surveys, mandated inspections of both private and public commercial and industrial facilities and produces a required yearly compliance report. Discovery Clean Water Alliance (Alliance). The District, in conjunction with its partners (Clark County and the Cities of Battle Ground and Ridgefield), formed the Alliance under the Joint Municipal Utility Services Act statute in January The Engineering department provides capital program management support services for the Alliance. Capital program management support services include capital plan development, capital plan delivery, regional asset development review, regional asset wastewater volume and quality management and regulatory compliance management, as well as other non-listed Engineering support services. 21

28 GFOA Distinguished Budget Presentation Award 22

29 District Mission, Vision and Values Mission Providing customer-focused, professional wastewater services in an environmentally and financially responsible manner. Vision An active partner in Clark County, to support economic development and to manage and protect water resources. Values The District is committed to provide a high level of service to its customers and the community. The District fulfills this commitment through its staff, a team of innovative, talented, highperforming individuals who work together seeking to make a difference and keeping the customer first. Stewardship of the environmental and financial resources entrusted to the District Employees who are talented and motivated professionals that work together in a spirit of cooperation Responsibility, integrity and fairness in every decision, every interaction and in every challenge we undertake Valued Partner involved and active within our communities Innovation & Learning, creating an environment of personal and professional growth Communication that is active, open, honest and timely Efficient & Effective Solutions that are reliable, consistent and meet the needs of our communities 23

30 Strategic Planning The District strives to make each year an integral step in fulfilling its Mission and Vision. By adhering to its Values, the District continues to put the needs of its customers and community first; so much so that some in the community have recognized this as unexpected and fresh for a public agency. For the District, it s consistent with our vision of being an integrated community partner. The District s strategic plan establishes five core focus areas, referred to as our strategic planning objectives. More information and a copy of the District s complete strategic plan may be found at The strategic planning objectives are: Planning - Establish the future direction of the District; its purpose and vision in support of its stakeholders needs. Partnership - Strengthening existing and building new partnerships with our local public agencies. Outreach - Enhancing public awareness and education of the District and its services. Culture - Instilling the Mission, Vision and Values into the culture of the District. Effectiveness - Improving the core business processes to allow the District to efficiently and effectively meet the current and future needs of its stakeholders. For each of the strategic objectives the District establishes and pursues realistic and timely goals and initiatives that are designed to propel the organization forward to accomplishing its Vision. Annually, these goals are reviewed and updated in a multi-year context, looking both retrospectively and prospectively. The goals are adopted by the Board of Commissioners as the General Manager/Organizational Goals for the year. The General Manager assigns the goals, within each department, but more specifically to individual Managers. Likewise, individual goals are then formally integrated into each Manager s annual performance management program. This process maintains focus across the entire organization on the strategic initiatives and most important priorities. 24

31 Fiscal Year Goals and Objectives Goal Structure and Prioritization Annually, organizational goals are developed to guide the District forward. The goals are categorized within each of the five (5) strategic planning objective areas. For any one year, the emphasis may lie more heavily in one of the particular objectives (e.g. Effectiveness vs. Outreach). The intent is to continue growing in all areas while allowing the organization to be dynamic and responsive to the environment, including social, political and economic factors. More specifically, to always be responsive to the policy direction of the Board of Commissioners. The District has been successful each year in more efficiently and effectively delivering services to the community. This is accomplished in part by focusing not only externally, on the community, but also internally on the work being done. Over the past few years the District s goals have been concentrated on planning and partnerships objectives, with a significant external focus. This has resulted in important long-term benefit to the District and its customers through such initiatives as the formation of the Discovery Clean Water Alliance in 2013 and fully operational in 2015, transfer of the Ridgefield Collection System in 2014 and construction of the Discover Corridor Wastewater Transmission system completed in For the policy direction for the organization will have an internal focus. The bulk of the goals are categorized as organizational effectiveness and process optimization initiatives. This focus is appropriate so that adequate time, energy and resources are devoted to ensuring that internal policies, practices and procedures are firmly established and systems are in place following the recent expansion of organizational roles and service area in prior years. Once identified, the annual goals are then prioritized using a three-tier system. Tier 1 is the highest priority and is referred to as Strategic Initiatives. Tier 2 represents Operational Initiatives, while the Tier 3 is referred to as the Growth Initiatives. If resources were to become limited or policy direction changes during the course of the year, accommodations would be made starting with deferring of Tier 3 initiatives. Prioritizing the goals is a key element of communicating across the organization, to all staff, which initiatives are most important to achieving success. Each of the Tier 1 Strategic Initiatives for FY are discussed briefly below. Discovery Clean Water Alliance (Administrative Lead) Discussion. This goal encapsulates the District s continued participation and leadership in the administration of the Discovery Clean Water Alliance (Alliance). The Alliance is a regional waste water partnership, under the Joint Municipal Utility Services Act (JMUSA) per RCW

32 Regional operations commenced on January 1, The Alliance provides regional wastewater transmission and treatment services to the District and the City of Battle Ground. The District operates as the Administrative Lead, via contract with the Alliance Board of Directors, and is the lead member to oversee and manage the operations of the Alliance. For detail on services provided under this contract see District Departments and Services on page 13. Alliance activities are funded from Regional Service Charges (RSCs) billed by the Alliance to its Members, including the District. The RSC is set by the Alliance Board of Directors as part of their biennial budget adoption. The Alliance revenue requirements for include Administrative Lead costs, costs to operate and maintain the regional assets (Salmon Creek Wastewater Management System and Battle Ground Force Main, operated by Clark County, and the Ridgefield Treatment Plant, operated by City of Ridgefield) as well as capital needs as identified through the Alliance Capital Plan. The basis for the Alliance budget is to provide a higher level of service in the operations of the regional assets, consistent with regional utilities of a similar scale. Budget Implications. In, treatment operating expenses due to the Alliance increased by 12.1%. In, the Alliance is set up financially through previously issued bond proceeds and carefully calculated RSC s to fund daily operations as well as fund, at various levels, six R & R and two CIP projects. The District will also realize a slight increase of 3.2% in revenues over 2016, associated with the Alliance reimbursing the District for its Administrative Lead services. Operating Impacts. RSC s payable to the Alliance will increase 12.1% or $916,000 in Intergovernmental revenues from Alliance are projected to be $643,000 in General Sewer Plan (GSP) Discussion. Wastewater collection is a very capital asset intensive utility service. The District s current system, inclusive of the Ridgefield service area, consists of over 633 miles of gravity and pressure sewers and 64 pump stations spread across 46+ square-miles of service area. Significant portions of the service area are undeveloped and require major infrastructure improvements and investments. Other portions of the system are over 50 years old and are beginning to reach their useful life. Therefore, having a long range plan, referred to as the General Sewer Plan (GSP), for the expansion and R & R of the existing collection system is critical to the long-term success of the District. The vision for the District s GSP is a readily accessible and easy to understand infrastructure plan that is based on practical planning assumptions. The GSP describes the activities the District 26

33 uses to manage the wastewater collection system effectively. The effective management of a wastewater collection system includes, but is not limited to: Maintaining or improving the condition of the collection system infrastructure in order to provide long term reliable sewer service, and Providing adequate wastewater collection capacity while cost-effectively extending and expanding the system to accommodate design storm flows A GSP combines policy decisions, technical issues and ratepayer values to create a 20-year infrastructure investment plan. It includes the general location, condition, demand, capacity, cost and description of the collection system facilities, including trunk and interceptor sewers, pump stations, monitoring and control facilities. The plan includes engineering in adequate detail to assure technical feasibility for the expansion and R & R of the system in a logical manner. The plan presents all known infrastructure project needs for the District in order to meet system asset management, capacity, levels of service and regulatory requirements Chartering Public Outreach Planning & Design Criteria 2016 Hydraulic Modeling Asset Management Program Policy Review & Development Capital Facilities Plan Cost Estimates Adoption Public Outreach 2018 Processes GSP Preparation Stakeholder Endorsement Budget Implications. For FY, there are limited budget implications associated with the GSP project outside of the planned expenditures for Professional Services. However, upon the completion of the GSP, the District will be better positioned to analyze and consider potential long-term operational and financial strategies. Once an updated plan is in place, the District will have accurate long term system costs in terms of both new capital improvements and R & R of the existing collection system. Together, in, these costs consume about one-third of the District s total annual budgeted expenditures and also influence the operating budget necessary to maintain the system. Operating Impacts. $279,000 in Professional Services 27

34 28

35 Budget Process The budget is an essential element of the financial plan, control and evaluation process for governments and businesses. In its most general sense, the budget is a framework that reflects the planned financial operation of an entity for a given period. The District elects to use the cash basis for budgeting purposes. Cash basis is the process of recognizing revenue and expense when cash is exchanged. In the District s cash based budget, fixed assets, capital expenditures and debt principal payments are budgeted for as expenses. The use of this method of budgeting helps the District to plan for cash flow needs as they occur. While the District uses the cash basis for budgeting purposes, the full accrual method is used for the basis of accounting and financial reporting. This method of accounting differs from the cash basis in that revenues are recognized when earned and expenses are matched to the period in which they help to earn the revenue. Fixed assets, capital expenditures and debt principal payments are accounted for in conformity with GAAP and removed from expenses for financial reporting purposes. The District monitors account activity regularly and presents quarterly budget to actual financial reports to the Board to ensure expenditures do not exceed the adopted budget. As a special purpose district, Clark Regional Wastewater District operates as an Enterprise fund. The District maintains one fund with various accounts (sub-funds) used to segregate restricted assets, if any, and complies with bond covenants and other District financial policies. In the District will operate with the following accounts (sub-funds): Operations & Maintenance (O & M) Alliance Reserves Unemployment Reserve Debt Service Debt Service Reserve Existing Assets Restoration & Replacement (R & R) New Assets Capital Improvement Projects (CIP) The nature of the operations of an Enterprise fund are financed and accounted for so the demand for services determines the appropriate level of resources to be applied. Increased demand for sewer services causes a higher level of resources to be applied and determines the rates that are used in recovering that level of service. Thus, as in private sector accounting, flexible budgets typically are better for Enterprise funds for planning, control and evaluation purposes than are fixed line-item budgets. 29

36 When formally adopted, the expense estimates of flexible budgets typically are not viewed as appropriations but as approved plans. Budgetary control and evaluation are affected by comparing actual interim and annual revenues and expenses with planned revenues and expenses at the actual level of activity for the period. With that in mind, the operating budget can be considered moderately flexible and will be monitored to determine consistency with the level of service required by system growth. It is critical that the District continues its prudent financial management of establishing sound fiscal policies and reviewing its rates and the structure of those rates through studies and analysis. The District currently uses a combination of consultants and internal analysis to develop its rates and policies. The District reviews its fiscal policies on an ongoing basis, as well as the appropriate amount of funding for the restoration and replacement of its assets. The District has adopted and achieved a funding strategy for the Existing Assets Restoration and Replacement (R & R) account where rates are transferred into this account, yearly, to maintain a maximum fund balance of $11.0 million. We have budgeted to transfer from the O & M account $1.7 million in to maintain the fund balance of $11.0 million. As the District service areas and customer base continues to grow, so does the requirement to manage sound practices and fiscal policies as they relate to debt. Construction of the Discovery Corridor Wastewater Transmission System by the District required PWTF loans of $20.0 million, with a large portion of construction costs reflected in 2014 and 2015 capital outlays. With the Alliance being operational effective January 1, 2015, the District transferred approximately $13.0 million in loans and in late 2015, the District defeased and the Alliance refinanced $8.7 million in revenue bonds, all associated with expansion of the Alliance owned Salmon Creek Wastewater Management System to ensure that the Alliance is appropriately reflecting the debt associated with regional assets transferred from other member agencies. This transfer reduced the amount of debt reported on the District s books; however, will not reduce the amount of debt the District is obligated to pay. 30

37 Budget Calendar Budget Preparation (July) Budget decision package form provided to departments Letter sent to Neighborhood Associations regarding Budget schedule Website updated with Budget schedule Adopted Budget (December) Budget Public Hearing Budget Adoption Budget Requests (August) BDP's due to Accounting Manager Develop: 6-Year Financial Model Capital Program O & M Budget Proposed Budget (October - November) Board provided BDP's Work Session #1: 6-Year Financial Model and Capital Program discussion Work Session #2: Budget by Account and BDP's Work Session #3: O & M Budget and Training Budget Review Budget (September) Management review of: BDP's 6-Year Financial Model Capital Program O & M Budget 31

38 32

39 Description of Accounts 33

40 34 Budget Overview OPERATIONS DEBT CAPITAL TOTAL Operations Alliance Unemployment Debt Debt Service Existing Assets New Assets ACCOUNTS & Maintenance Reserves Reserve Service Reserve R & R CIP All Accounts BEGINNING BALANCES $ 14,267,254 $ 4,153,944 $ 22,950 $ 753,101 $ 1,905,842 $ 11,000,000 $ 3,000,000 $ 35,103,091 SOURCES Rates 19,411,036 19,411,036 Senior Low-Income Discount Program (23,455) (23,455) SDC Connection Fees 7,626,300 7,626,300 LFC Reimbursements 175, ,000 Investment Interest 114,138 33, ,025 15,247 88,000 24, ,825 Intergovernmental Revenues 643, ,000 Other Miscellaneous Revenue 775, ,500 Subtotal Sources 21,095,218 33, ,025 15,247 88,000 7,650,300 28,888,205 TRANSFERS Transfer Debt Service (1,921,089) 1,921,089 - Transfer LFC Reimbursements (175,000) 175,000 - Transfer B&O Tax 114,395 (114,395) - Transfer Existing Assets R & R (1,720,000) 1,720,000 - Transfer Unemployment Reserve (1,821) 1,821 - Subtotal Transfers (3,703,516) - 1,821 1,921,089-1,720,000 60,606 - USES Debt Service (1,921,089) (1,921,089) Operating Expenses (18,286,500) (18,286,500) Capital Construction Costs / Purchases (1,808,000) (6,806,300) (8,614,300) Subtotal Uses (18,286,500) - - (1,921,089) - (1,808,000) (6,806,300) (28,821,890) ENDING BALANCES $ 13,372,457 $ 4,187,176 $ 24,955 $ 759,126 $ 1,921,089 $ 11,000,000 $ 3,904,606 $ 35,169,408

41 Operations and Maintenance Account The Operations and Maintenance (O & M) account provides for the daily routine needs to financially sustain effective delivery of District core functions. The District s policy for account reserves is to maintain a minimum of 120 days of current year budgeted operating expenses. For Fiscal Year this is approximately $6.1 million. 35

42 Operations and Maintenance Account I. Sources and Uses The general O & M account is primarily funded from monthly wastewater service charges. Additional funding into this account is from intergovernmental revenues, contract receivables, penalties, inspections, permit fees and investment income from account reserves. The District charges a fixed base rate of $38 per Equivalent Residential Unit (ERU) per month for wastewater services, which is consistent with 2016 rates. An ERU is equal to one home that is connected to the sewer system. In addition to the fixed base rate, customers in the Ridgefield service area are charged a System Integration Charge (SIC). In, this is $17.70 per month, which represents a $0.80 decrease from the $18.50 charged in 2016 per ERU per month for Ridgefield service area customers. The SIC represents the District s additional costs of operation, maintenance, repair, replacement and investment of the Collection System infrastructure in the City. Revenues of the O & M account fund all general operating expenses, including but not limited to salaries and wages, employee benefits, supplies, professional services, contractual services, other expenses and treatment costs. Operational expenses, such as salaries, benefits and treatment costs are the primary uses of funds in the O & M account representing 22.4%, 10.6% and 49.8% of the budget, respectively. O & M expenses in the aggregate will see a 5.8% increase over 2016 levels. This increase is primarily due to increases to salaries and benefits resulting from a planned increase of 3 full-time employees in, as well as increased treatment costs associated with higher levels of capital project activity for the Alliance. Utility rates also provide funding, transfer of rates out of the O & M account, to the R & R account to maintain the $11.0 million funding threshold, the Debt Service and Debt Service Reserves accounts for all debt service requirements and for the Unemployment Reserve account to maintain the required funding level per District policy. 36

43 II. Operations and Maintenance Account Revenue Forecast OPERATIONS & MAINTENANCE ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ 5,046,686 $ 5,615,876 $ 9,783,872 $ 8,698,023 $ 14,267,254 SOURCES Operating Revenue Charges for Services 14,886,319 16,207,640 18,533,446 18,500,147 19,411,036 Senior Low-Income Discount Program (17,763) (20,799) (23,935) (22,560) (23,455) Intergovernmental Revenues - Battle Ground 877, , Intergovernmental Revenues - Other 226, ,340 87, , ,000 Penalties 31, , , , ,000 Permit Fees 20, , , , ,000 DEA Fees 36,600 83, ,005 95, ,500 LFC Reimbursements 149, , , , ,000 Ridgefield City Operating Fee - 139, , , ,000 Other Miscellaneous Revenue 15, ,716 88,072 64, ,000 Total Operating Revenue 16,226,235 18,722,255 19,369,291 19,790,763 20,981,080 Non-Operating Revenue Transfer from New Assets CIP Account (B&O Taxes) 49,107 73,278 97,347 70, ,395 Investment Interest 8,707 87,339 53,997 57, ,138 Transfer from Other Funds - 5,301,864 6,572, Total Non-Operating Revenue 57,814 5,462,481 6,723, , ,533 USES Operating Expenses (11,563,990) (13,321,028) (15,670,751) (17,276,363) (18,286,500) Transfer to Existing Assets R&R Account (1,100,000) (2,842,341) (1,045,745) (3,657,400) (1,720,000) Transfer to Unemployment Reserve Account (12,991) (7,484) (1,600) (669) (1,821) Transfer to Debt Service Account (2,888,353) (3,529,839) (3,522,283) (1,927,476) (1,921,089) Transfer to New Assets CIP Account (LFC Reimbursement) (149,524) (316,048) (163,076) (115,000) (175,000) Total Operating Uses (15,714,858) (20,016,740) (20,403,455) (22,976,908) (22,104,410) ENDING ACCOUNT BALANCE $ 5,615,876 $ 9,783,872 $ 15,473,688 $ 5,639,844 $ 13,372,457 37

44 III. Operations and Maintenance Account Expenditure Forecast OPERATIONS & MAINTENANCE / OPERATING EXPENSE DETAILS ACTUAL ACTUAL ACTUAL BUDGET BUDGET BUDGET CHANGE Salaries & Wages Maintenance / Facilities 1,078,411 1,154,045 1,187,165 1,221,266 1,248,754 Customer Service 293, , , , ,613 Engineering 676, , , ,369 1,063,263 Pretreatment 167, ,098 93,058 74,731 75,298 General Administration 943, ,566 1,081,800 1,174,470 1,296,035 Commissioners 34,070 35,778 36,234 37,032 37,032 Total Salaries & Wages 3,193,625 3,364,359 3,627,392 3,790,683 4,089, % Employee Benefits Pension 255, , , , ,586 Unemployment 1, Health Insurance 839, , , ,085 1,069,943 Uniforms / Incentives / Other 41, , ,480 29,695 29,896 Social Security / Medicare 241, , , , ,556 Labor and Industries 37,027 42,118 43,474 50,920 42,231 Total Employee Benefits 1,416,085 1,527,984 1,735,421 1,708,495 1,933, % Supplies Materials / Supplies - Collection System 43,488 36,953 42,471 38,700 41,250 Materials / Supplies - Pump Stations 141, , , , ,000 Office Supplies - General 182, , , , ,105 Maintenance & Facilities Supplies 79,355 61,496 58,539 21,350 16,750 Small Equipment / Tools - Maintenance 37,308 48,282 26,935 46,500 48,500 Transportation Expense - Fuel 64,239 71,032 53,023 65,000 60,000 Transportation Expense - Repair / Maintenance 4,456 5,237 3,840 6,500 5,000 Safety Supplies 18,576 12,276 17,150 13,000 13,000 Total Supplies 570, , , , , % Professional Services Professional Services - Alliance 18, , , , ,000 Professional Services - Engineering 19,825 92, ,673 55,000 80,000 Professional Services - Auditor 27,931 17,039 22,509 38,000 30,000 Professional Services - Legal 164, , , , ,000 Professional Services - Communications 10,000 18,021 19,927 20,000 20,000 Professional Services - Computer / IT 26,066 23,936 22,559 32,500 40,000 Professional Services - Consultant - 21,931 28,479 56,980 65,000 Professional Services - Temp 64,089 80,257 30,582 35,000 35,000 Total Professional Services 331, , , , , % Contractual Services Contract Equipment Rental ,902 2,000 2,000 Contract Service - Maintenance / Repair Lines 31,280 45,260 72,626 55,500 63,000 Contract Service - Equipment 15,672 37,673 3,597 23,000 10,000 Contract Service - Vehicles 40,276 74,100 70,777 62,000 82,000 Contract Service - Office / Building Equipment 70, , , , ,825 Total Contract Services 158, , , , , % Other Expenses Insurance - Pool 109,187 99, , , ,000 Education / Travel Employees 62,129 60,863 78, , ,224 Education / Travel Commissioners 18,952 13,532 16,865 28,923 27,941 Dues / Memberships / Subscriptions 30,540 30,940 28,584 33,245 37,450 Postage 74,135 79,236 75,500 82,250 88,500 Telephone 42,033 41,850 46,324 57,125 68,800 Utilities - Pump Stations 69,782 80,233 92,194 91, ,000 Utilities - Admin / Shop 42,097 42,236 39,060 45,200 45,500 Damage Claims 10,506 2,887 2,306 5,000 5,000 Advertising 6,578 6,757 3,743 8,350 8,000 Public Relations 21,073 13,269 12,133 13,500 14,500 Miscellaneous General Administration 124, , , , ,000 Ridgefield City Operating Fee 139, , , ,000 Business and Occupation (B&O) Taxes 410, , , , ,000 Alliance Miscellaneous 2,414 7, ,847 7,000 3,500 Government Services / Impact Fees 45,775 37,190 25,260 30,000 45,000 Total Other Expenses 1,069,892 1,288,768 1,605,356 1,444,205 1,581, % Sub-total Operating Costs 6,739,729 7,501,914 8,529,105 8,428,067 9,184, % Treatment Costs Sewage Treatment - Clark County 3,959,749 3,959,748 23,480 - Sewage Treatment - Alliance 306, ,538 6,428,188 7,576,246 8,492,500 Sewage Treatment - Vancouver 505,698 56, , , ,216 Sewage Treatment - Battle Ground 52, ,428 58,644 63,366 69,778 Sewage Treatment - Ridgefield - 975, , ,775 - Total Treatment Costs 4,824,261 5,819,114 7,141,646 8,848,295 9,102, % TOTAL OPERATING EXPENSES $ 11,563,990 $ 13,321,028 $ 15,670,751 $ 17,276,363 $ 18,286, % 38

45 IV. Budget Narrative Operations and Maintenance Account Revenues Charges for Services: $19,387,580 Charges for services are reported here, net of reduced rates associated with the District s Senior Low-Income Discount Program. The budget reflects a forecast of 1,550 new ERUs (1,540 paid and 10 through developer credits) for the year based upon prior year growth patterns and anticipated construction. The additional ERUs have been included in the budgeted utility service revenue projections. Monthly charges for services are divided into three sources - residential, multi-family residential and commercial: Residential includes all single-family residential homes and condominiums Multi-family residential includes all apartments and mobile home parks Commercial includes all businesses and industries, including schools For, our customer base will increase to approximately 31,500 accounts serving approximately 43,149 ERUs. This increase will have a ripple effect with the net result being additional inspections, maintenance and customer service calls, as well as treatment costs. Intergovernmental Revenues: $643,000 The District will continue to act as Administrative Lead to the Alliance and invoice the Alliance monthly for these contracted services. The budgeted amount of contracted services in will remain consistent with Penalties: $105,000 These represent penalties assessed on past due utility balances. The District s past due balances is expected to decrease as we continue to realize the impacts of refining our collections processes. Fees: $275,500 DEA, permits, tap and inspection fee activity, along with development, is demonstrating an upward trend. Therefore, the revenue projection is increased for the budget. Ridgefield City Operating Fee: $190,000 As compensation for the collection system, the District pays the City of Ridgefield a City Operating Fee equal to 10.0% of sewer service charges (rates) that are collected from collection system customers. The District has the right to recover the City Operating 39

46 Fee from collection system customers per the Collection System Transfer Agreement with the City of Ridgefield. The budget anticipates the revenues for the Ridgefield City Operating Fee to increase 13.2% or $22,175, due to the growth in the City of Ridgefield. Expenses Salaries and Wages: $4,089,994 The District Board of Commissioners has approved an annual market adjustment by pay grade of 1-3% for the budget cycle. Along with the market adjustment by pay grade each year, employees not at the top of their range receive a 3.0% increase in pay and can receive an extra 1.5% increase, performance based, on their anniversary date. The budget depicts related costs for fifty three (53) employees and three (3) Commissioners, an increase of 3 FTE s over the 2016 budget. Salaries and wages will increase overall by 7.9% when compared to the 2016 budget. Since the District is the Administrative Lead for the Alliance, a portion of total District staff salaries will be invoiced to the Alliance during. Included in the budgeted salary amount are the Commissioners salaries and a budgeted amount for staff overtime and Maintenance staff weekend pump runs. Commissioner salaries include a stipend that represents reimbursement for their attendance at all regular District Board or business meetings. In, the District is budgeting for the Commissioners salaries based on the full amount available to be paid ($37,032) per statute, including $350 per month for the Secretary of the Board. Effective in 1992, Washington State law allows for the payment of medical benefits to elected Commissioners. All three Commissioners are eligible for and receive this benefit. Employee Benefits: $1,933,167 Overall, benefits for are expected to be 13.2% higher than in the 2016 budget. Pension. The Washington Public Employee Retirement System (PERS) pension rate paid by employers is 11.2% at January 1,. The Washington Office of the State Actuary has forecasted the employer contribution rate will increase to 12.5% as of July 1,. Uniforms, Incentives, Other. The budgeted uniform costs, the Reward and Recognition program and administration costs for the Flexible Spending Account (FSA) are $22,396, $7,000 and $500, respectively. These amounts are consistent with the 2016 budget. Health Insurance. Healthcare insurance continues to comprise a large portion of the benefits budget. The District uses the State of Washington s Healthcare Authority (HCA), as the administrator for two insurance carriers (Kaiser Permanente and Uniform Medical) to provide employee healthcare benefits in. Both carriers negotiate with HCA for 40

47 statewide benefits. Kaiser Permanente premiums will increase by 6.7% and Uniform Medical premiums will increase by 10.9% in, resulting in an approximate $152,000 increase in budgeted health insurance expenses when combined with the increase of 3 FTE s in. The District currently funds the entire healthcare premium. The District also allows employees who have other adequate medical coverage to opt out of District-paid medical insurance in exchange for a cash payment equal to a single premium for Uniform Medical insurance. This incentive has been beneficial to employees and will continue to result in reduced medical insurance premiums paid by the District. Social Security / Medicare. An additional 3.0 full-time employees and anticipated step increases, performance-based increases, and market adjustments will have a direct effect on payroll taxes, creating a 7.3% increase in FICA and Medicare budgeted for. Labor and Industries. In, the Washington Department of Labor and Industries insurance rates billed to the District are budgeted to decrease in comparison to prior years budgets for an estimated cost savings of about $8,700 in. Supplies: $663,605 All items of a consumable nature are budgeted as supplies. This includes office supplies, general system repair and maintenance supplies, in-house vehicle repairs, facilities supplies and vehicle fuel. Materials / Supplies for the collection system and pump stations are anticipated to increase by 6.6% and 5.3%, respectively, while costs related to Fuel and Maintenance & Facilities Supplies are expected to decrease by 7.7% and 21.5%, respectively. This results in a net effect of the amount budgeted for supplies being consistent with the 2016 budgeted amount. Professional Services: $598,000 Non-capital professional services provided such as legal counsel, the Washington State Auditor s Office annual audit, information technology support, communication and engineering consulting services are budgeted as professional services. For, the District anticipates a 5.2% increase in professional services compared to the 2016 budget. The primary component in Professional Services Expenses is related to the Alliance Administrative Lead services that will be subsequently reimbursed to the District. An $8,020 increase from 2016 in consulting professional services will assist the District with capital program planning and workload throughout the year. Professional Services Engineering. The District is budgeting $80,000 in the budget for on-call consulting assistance on various projects, an increase of $25,000 over the 2016 budgeted amount. This increase is largely due to an increased need for outside development inspection services that is driven by the high volume of development in the District service areas. 41

48 Professional Services Auditor. The budget for Washington State Auditor s Office CAFR and Accountability audit services is budgeted to be consistent with We anticipate a reduced need for support from financial consultants, decreasing this overall budget line item by 21.1% from Professional Services Computer / Information Technology (IT). The budget increased 23.1% or $7,500 from the 2016 budget as a result of increased data backup procedures planned for. Professional Services Consultant. The District is budgeting a 14.1% or $8,020 increase in consultant services. This increase is primarily due to Management and Communications Consultants that were not included in the 2016 budget. Consultant services also include costs for investment consultants and various Facilities projects consultants. Contractual Services: $317,825 Contractual Services includes equipment rentals, maintenance and repairs of lines, equipment repairs, vehicle repairs, office equipment maintenance and building maintenance. The budget is 25.5% higher than the 2016 budget. Contract Service Maintenance / Repair Lines. The District anticipates contracted line maintenance to increase by 13.5% in, due to increased routine treatment of hot spots requiring additional root treatment and biennial work scheduled for ice pigging. Contract Service Equipment / Vehicles. Budgeted to increase by 8.2% as compared to the 2016 budget. This increase is primarily due to a planned expense of $10,000 for vehicle washing that did not occur in The District contracts with Clark County and other local service providers for vehicle and equipment maintenance. Equipment rentals usually occur in inclement weather when power failures occur. It is anticipated such events and costs in will be similar to historical events for the District. Contract Service Office / Building Equipment. Maintenance costs are budgeted to increase by 45.1% in. The increase in costs is mostly related to a new janitorial service contract beginning in, as well as an increase in contract services related to grounds maintenance. An increase is also planned for a new Konica Minolta printer in. The District s other copier and printer maintenance costs remain relatively flat with the outsourcing of statement printing, mailroom processing equipment, heating system maintenance and annual fire inspection costs. Other Expenses: $1,581,415 Overall, Other Expenses will increase $137,210 or 9.5% in the budget. The most significant increase of $37,000 will occur in Miscellaneous General Administration. 42

49 Education and travel will remain relatively flat utilizing online/webinar training opportunities. Insurance - Pool. Insurance costs in are expected to increase by 14.7% as compared to 2016, primarily due to the increase in number of assets that are being covered under Liability Insurance. Telephone. Included in are budgeted amounts for local and long distance phone, cell phone and pager service and after-hours call center costs. The budget reflects an increase of 20.4% or $11,675 for these services due to anticipated service rate increases and an increase in cell phone costs. Utilities Pump Stations. Included in are budgeted amounts for twenty-four hour Supervisory Control and Data Acquisition (SCADA) monitoring, electrical costs for all pump stations, including natural gas and water. The SCADA system continues to provide value in an overall reduction of power and phone costs. SCADA is being used to monitor all District pump stations. The budget anticipates an increase of 17.7% or $16,250 which is primarily due to additional pump stations and increased utility rates. Miscellaneous General Administration. Bank service charges, credit card processing fees, remittance processing by lockbox payment providers, employee physicals, pretreatment sampling costs and bad debt are all included in this budget item. The budget anticipates expenses will increase by 25.9% from the 2016 budgeted amount based on general fee increases, including an increase in expenses for credit card processing fees. Ridgefield City Operating Fee. As compensation for the collection system, the District pays the City of Ridgefield a City Operating Fee equal to 10% of sewer service charges (rates) that are collected from collection system customers. The District has the right to recover the City Operating Fee from collection system customers per the Collection System Transfer Agreement with the City of Ridgefield. The budget anticipates the City Operating Fee to increase 13.2% or $22,175, due to the growth in the City of Ridgefield. Government Services / Impact Fees. The budget reflects a 50.0% or $15,000 increase from the 2016 budget based on the presence of election costs. Treatment Costs: $9,102,494 The Alliance became operational on January 1, 2015, and now owns and operates the Salmon Creek Treatment Plant, as well as the Ridgefield Treatment Plant. In, the District will continue to contract with the City of Vancouver, City of Battle Ground and the Alliance for costs related to sewage treatment. 43

50 City of Battle Ground Treatment. The District pays the City of Battle Ground for pass through usage of their holding facility for Hockinson and Meadow Glade customers. For, this cost is budgeted at $69,778. These flows are included in the 89.1% of District flows treated by the Alliance at the Salmon Creek Treatment Plant. City of Vancouver Treatment. The City of Vancouver treats approximately 5.9% of the District customers wastewater, at a budgeted cost of $540,216, a slight increase from The District has not seen much change in the monthly treatment costs paid to the City of Vancouver over the past several years. In 2010, the District and the City of Vancouver initiated a coordination of services agreement, which reduced the rate per million gallons delivered to a wholesale, versus a retail rate. The new rate was recalibrated again for. Discovery Clean Water Alliance (Alliance). The District is budgeted to pay the Alliance $8,492,500 in to treat approximately 94.1% of the District s wastewater treatment flow. The Alliance owns and operates two wastewater treatment facilities. The Salmon Creek Treatment Plant (SCTP) treats approximately 89.1% of the District s flow and the Ridgefield Treatment Plant treats approximately 5.0%. The District s portion of the operations and maintenance, debt service and the restoration and replacement costs of the Salmon Creek and Ridgefield Treatment Plants, recognize an increase of 12.1% or $916,254 in from the 2016 budget. Transfer to Existing Assets Restoration and Replacement Account: $1,720,000 The District has a policy to fund and accumulate a reserve that will be used to pay for future restoration and replacement of existing sewer infrastructure and other depreciable assets. The targeted reserve is $11.0 million. For, rates will provide budgeted funding of $1.7 million for the Existing Assets R & R account, to maintain the $11.0 million maximum threshold. Transfer to Unemployment Reserve Account: $1,821 Unemployment Reserves have a 2016 ending balance of $22,950. The District will transfer rates of $1,821 and accumulate interest on investments in that account for a budgeted ending reserve account balance of $24,955. Transfer to Debt Service Account: $1,921,089 A portion of the rates is also transferred to the Debt Service account to accumulate funds to pay principal and interest on all debt obligations due in. 44

51 Alliance Reserves Account The Alliance Reserves account was established at fiscal year-end 2013 to set aside the District s estimated pro rata share of reserve requirements as establishment in the Interlocal Formation Agreement (IFA) for Discovery Clean Water Alliance, dated September 27, The IFA requires that the Alliance maintain reserves that ultimately the Member agencies are responsible to fund, for Operations and Maintenance, Rate Stabilization, Restoration and Replacement, New Capital and Debt Service Reserves. 45

52 Alliance Reserves Account I. Revenue Sources and Uses This account maintains reserves for the Alliance Operations and Maintenance, Rate Stabilization, Restoration and Replacement and Debt Service Reserve accounts. Reserves for have been calculated at $4.2 million to meet the required minimum amounts. Interest will continue to be earned on these reserves throughout. No other activity is anticipated for this account in. II. Alliance Reserves Account * ALLIANCE RESERVES ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ - $ 1,500,000 $ 5,232,500 $ 4,812,106 $ 4,153,944 SOURCES Investment Interest - 6,208 20,808 31,760 33,232 Transfer from Other Funds 1,500,000 3,726, Total Sources of Funds 1,500,000 3,732,500 20,808 31,760 33,232 USES Transfer to Other Funds - - (445,968) - - Total Uses of Funds - - (445,968) - - ENDING ACCOUNT BALANCE $ 1,500,000 $ 5,232,500 $ 4,807,340 $ 4,843,866 $ 4,187,176 * The Alliance minimum reserves requirement decreased in 2016 and. Funds were transferred to the O & M Account. III. Budget Narrative Alliance Reserves Account Sources Investment interest of $33,232 is budgeted. Uses There are no budgeted uses of this account in. 46

53 Unemployment Reserve Account The Unemployment Reserve account was established as required by Washington State Law for a reimbursable employer. The District is self-insured against unemployment claims and has set aside funds to cover the actual cost of unemployment insurance for employees terminated from the District. 47

54 Unemployment Reserve Account I. Sources and Uses Funds from the O & M account will be transferred into the Unemployment Reserve account to ensure that the District is properly reserving the required funds to cover one unemployment claim for the budget year. Claims, if they occur, are then paid from this account. II. Unemployment Reserve Account UNEMPLOYMENT RESERVE ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ - $ 13,000 $ 20,500 $ 22,135 $ 22,950 SOURCES Transfer from O & M Account 12,991 7,484 1, ,821 Investment Interest Total Sources of Funds 13,000 7,500 1, ,005 USES Unemployment Payments ENDING ACCOUNT BALANCE $ 13,000 $ 20,500 $ 22,135 $ 22,950 $ 24,955 III. Budget Narrative Unemployment Reserve Account Sources Budgeted revenue for is investment interest on account reserves of $184. For, $1,821 in transfers from O & M rates is budgeted. Uses The District budget does not assume that unemployment claims will be filed during. In the event claims are filed during the year, the funding from the O & M account for reimbursement will appear in the 2018 budget. 48

55 Debt Service Account The Debt Service account holds restricted amounts for the principal and interest payments on 2012 bonds, PWTF loan to expand the Ridgefield collection system and two PWTF loans to construct the DCWTS. As a result of the Alliance becoming operational on January 1, 2015, the District has transferred all PWTF and SRF loans related to the Salmon Creek Wastewater Treatment Plant (SCTP) to the Alliance. Additionally, the Alliance has issued bonds used to defease the District s 2005 bond, also related to the SCTP. This transfer and defeasance of District debt has reduced the future debt service requirements of the District, thus reducing the required amount held in the Debt Service Reserve Account. 49

56 Debt Service Account I. Sources and Uses Funds from the O & M account will be transferred into the Debt Service account and restricted by Board policy for the principal and interest payments on the outstanding bond and loans. Investment income will be earned on all account reserves during. II. Debt Service Account * DEBT SERVICE ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ 743,297 $ 743,464 $ 745,773 $ 748,163 $ 753,101 SOURCES ULID Receipts 2,184 3, Investment Interest 2,158 1,143 2,832 4,938 6,025 Transfers from O & M Account 2,888,353 3,529,839 3,522,283 1,927,476 1,921,089 Total Sources of Funds 2,892,695 3,533,996 3,525,975 1,932,414 1,927,114 USES Debt Service Payments (2,892,528) (3,106,762) (3,416,144) (1,927,476) (1,921,089) Transfers to Other Funds (424,925) (107,441) - - Total Uses of Funds (2,892,528) (3,531,687) (3,523,585) (1,927,476) (1,921,089) ENDING ACCOUNT BALANCE $ 743,464 $ 745,773 $ 748,163 $ 753,101 $ 759,126 * In conjunction with the Alliance becoming operational January 1, 2015, the District transferred all debt related to the SCTP to the Alliance. The Alliance issued debt to fund the defeasance of the District's 2005 Sewer Revenue Bonds in 2015 resulting in lower debt service requirements. III. Budget Narrative Debt Service Account Sources Budgeted revenues for include interest on account reserves of $6,025. In addition, this account will receive $1.9 million in transfers from O & M rates. Uses Debt service payments of $1.9 million are the only budgeted use of the Debt Service account funds in. 50

57 Debt Service Reserve Account The Debt Service Reserve account was established to maintain a reserve, equal to one year of debt service for all debt on the District books. 51

58 Debt Service Reserve Account I. Sources and Uses This reserve account includes debt service reserves for all bond and loan payments that the District is directly obligated to pay. II. Debt Service Reserve Account * DEBT SERVICE RESERVE ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ - $ 4,585,000 $ 3,210,031 $ 1,955,625 $ 1,905,842 SOURCES Transfer from O & M Account 4,585, Investment Interest - 15,546 37,836 12,907 15,247 Total Sources of Funds 4,585,000 15,546 37,836 12,907 15,247 USES Transfer to Other Funds - (1,390,515) (1,292,969) - - Total Uses of Funds - (1,390,515) (1,292,969) - - ENDING ACCOUNT BALANCE $ 4,585,000 $ 3,210,031 $ 1,954,898 $ 1,968,532 $ 1,921,089 * In conjunction with the Alliance becoming operational January 1, 2015, the District transferred all debt related to the SCTP to the Alliance. The Alliance issued debt to defease the District's 2005 Sewer Revenue Bond in 2015 resulting in lower debt service reserve requirements. III. Budget Narrative Debt Service Reserve Account Sources Budgeted revenues for are investment interest on account reserves of $15,247. There are no planned transfers from O & M rates into this account for. Uses There are no budgeted uses from this account in. 52

59 Existing Assets R & R Account The Existing Assets Restoration and Replacement (R & R) account was established for the purpose of restoration and replacement of the sewer system network and other existing depreciable assets of the District. The depreciation of existing utility plant-in-service and equipment, together with increasing capital costs, creates a substantial future liability for system restoration and replacements. Current rates are set to include all costs of service, including reserving funds for infrastructure and other fixed asset restoration and replacement. The R & R account is used to accumulate reserves and, together with investment earnings, restore and replace utility plant-in-service and other depreciable equipment. 53

60 Existing Assets Restoration and Replacement Account I. Sources and Uses As existing infrastructure and other depreciable equipment is restored or replaced, the District will continue to fund from rates the amount necessary to maintain the $11.0 million maximum reserve funding level. R & R reserves will earn investment interest during the year on all unexpended funds. R & R reserves will pay for all capital assets that are restored or replaced during the year. This will include restoration and replacement of collection or transmission lines and replacement of other depreciable assets. II. Existing Assets Restoration and Replacement Account Annual Forecast EXISTING ASSETS R & R ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ 10,264,270 $ 10,326,717 $ 11,000,000 $ 11,000,000 $ 11,000,000 SOURCES Transfer from O & M Account 1,100,000 2,842,341 1,045,745 3,657,400 1,720,000 Intergovenmental Revenue - 28, Investment Interest 49,088 65,371 79,581 72,600 88,000 Total Sources of Funds 1,149,088 2,907,712 1,154,267 3,730,000 1,808,000 USES Transfers to Other Funds - (824,184) (337,720) - - Capital Projects Central Service Area (1,032,021) (1,264,875) (606,958) (3,225,000) (1,464,000) Capital Projects Ridgefield Service Area - (35,976) (61,852) (70,000) (50,000) Capital Purchases (54,620) (109,394) (111,186) (435,000) (294,000) Total Uses of Funds (1,086,641) (2,234,429) (1,117,715) (3,730,000) (1,808,000) ENDING ACCOUNT BALANCE $ 10,326,717 $ 11,000,000 $ 11,036,552 $ 11,000,000 $ 11,000,000 III. Budget Narrative Existing Assets Restoration and Replacement Account Sources Budgeted sources include a $1.7 million transfer of rates revenues from the O & M account and investment interest on account reserves of $88,000. Uses Approximately $1.8 million is budgeted to be expended on repair and replacement projects throughout. 54

61 New Assets CIP Account The New Assets Capital Improvement Projects (CIP) account is used to fund future infrastructure needs for residents in the District s service area currently not receiving service. The District s General Sewer Plan updates and Clark County s Growth Management Act updates, a planning process that occurs every six years, establish a funding structure that allows the District to meet demands associated with changing growth patterns in our service areas. 55

62 New Assets CIP Account I. Sources and Uses The System Development Charge (SDC) is the primary funding source for the CIP account and the Capital Improvement Projects in the budget. SDCs are paid as new connections hook up to the District s sewer collection system. SDCs are charged on a tiered system (depending on where sewer flows for treatment) as follows: Tier 1 City of Vancouver s Westside Treatment Plant: $1,720 Tier 2 Clark County s Salmon Creek Treatment Plant: $4,708 Tier 3 City of Ridgefield s Treatment Plant: $7,550 SDC charges, investment interest and local facility charges received in the will fund new construction of trunk lines, pump stations and force mains budgeted for the year. Capital projects reflect the demands placed on the system based on growth and development within the District s Central and Ridgefield service areas. The District expends CIP funds where development and growth is occurring, and coordinates capital construction projects in conjunction with County Road and City Projects for additional cost savings. II. New Assets CIP Account NEW ASSETS CIP ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING ACCOUNT BALANCE $ 10,307,977 $ 15,450,471 $ 12,090,302 $ 4,100,000 $ 3,000,000 SOURCES SDC Connection Fees 2,954,374 5,896,931 6,503,537 4,703,880 7,626,300 Investment Interest 50, , ,378 27,060 24,000 LFC Reimbursements 149, , , , ,000 PWTF Loans Draws 913,361 9,871,564 8,507, Transfer from O & M Account 3,550, Intergovernmental Revenues , Grant Receipts 896,385 44, Total Sources of Funds 8,515,080 16,240,164 15,550,388 4,845,940 7,825,300 USES Debt Service (148,686) (147,442) (145,995) (28,149) - Transfers to O & M Account (B&O Taxes) (49,107) (73,278) (97,347) (70,558) (114,395) Transfers to Other Funds - (6,388,532) (4,388,538) - - Capital Projects Central Service Area (3,164,717) (12,144,045) (17,951,447) (3,483,100) (3,230,300) Capital Projects Ridgefield Service Area - (847,036) (819,393) (2,277,000) (3,576,000) Capital Purchases (10,076) - - (5,000.00) - Total Uses of Funds (3,372,586) (19,600,333) (23,402,720) (5,863,807) (6,920,695) ENDING ACCOUNT BALANCE $ 15,450,471 $ 12,090,302 $ 4,237,970 $ 3,082,133 $ 3,904,606 56

63 III. Budget Narrative New Assets CIP Account Sources The budget anticipates the CIP account will see $7.6 million in revenue derived from 1,540 paid SDCs budgeted to be collected during. This represents a $2.9 million or 62.1% increase from the 2016 budget. Investment interest for is projected to be $24,000, a decrease of 11.3% compared to 2016 budgeted interest income. Uses Budgeted CIP expenditures in the budget total $6.8 million. The CIP account will transfer $114,395 for Business and Occupation tax to the O & M account based upon anticipated SDC connection revenues. The funds will be restricted to pay the related tax when the annual Department of Revenue report is filed with the State of Washington. The District will continue to closely monitor developer activities and coordinate construction, when economically beneficial, with County Road and City projects to assist us in our estimates of future growth and future uses of capital improvement dollars. 57

64 58 Budget Summary ALL ACCOUNTS ACTUAL ACTUAL ACTUAL BUDGET BUDGET BEGINNING BALANCES $ 35,897,912 $ 38,234,528 $ 42,082,978 $ 31,336,052 $ 35,103,091 SOURCES Rates 15,745,908 16,969,193 18,509,511 18,477,588 19,387,580 SDC Connection Fees 2,954,374 5,896,931 6,503,537 4,703,880 7,626,300 LFC Reimbursements 149, , , , ,000 Investment Interest 131, , , , ,825 Intergovernmental Revenues 226, , , , ,000 PWTF Loan Draws 913,361 9,871,564 8,507, Other Miscellaneous Revenue 1,082, , , , ,500 Subtotal Sources 21,203,254 34,825,008 34,981,493 24,701,461 28,888,205 USES Debt Service (3,041,214) (3,254,204) (3,562,139) (1,955,625) (1,921,089) Operating Expenses Salaries / Benefits (4,609,710) (4,885,039) (5,362,813) (5,499,178) (6,023,161) Supplies (562,653) (503,849) (580,516) (663,129) (663,605) Services (Professional / Contractual) (470,692) (728,668) (980,420) (821,555) (915,825) Other (1,069,892) (1,288,768) (1,605,356) (1,444,205) (1,581,415) Treatment (4,851,043) (5,914,408) (7,141,646) (8,848,295) (9,102,494) Capital Construction Costs/Purchases (4,261,434) (14,401,623) (19,550,835) (9,495,100) (8,614,300) Subtotal Uses (18,866,638) (30,976,559) (38,783,725) (28,727,088) (28,821,890) ENDING BALANCES $ 38,234,528 $ 42,082,978 $ 38,280,746 $ 27,310,426 $ 35,169,408 Notes: * Effective January 1, 2014 the District owns and operates the sewer collection system in the City of Ridgefield. The transfer of operations resulted in an increase of District revenues, operating costs and staff to manage the additional operations. ** Effective January 1, 2015 the Discovery Clean Water Alliance became fully operational. Treatment costs previously paid to Clark County and to the City of Ridgefield are now paid to the Alliance. In conjunction with the Alliance becoming operational, the District transferred all debt related to the SCTP to the Alliance. The Alliance issued debt to defease the District's 2005 Sewer Revenue Bond in 2015 resulting in lower debt service requirements for the District. The increase in treatment costs are partially related to debt service payments for the SCTP now being paid to and through the Alliance via Regional Service Charges. *** Construction of the Discovery Corridor Wastewater Transmission System accounts for the increase in Capital Construction during 2014 and Funding for the project was provided through $20 million in PWTF loans, $7 million in District capital reserves and $1.6 million in Department of Ecology Grants. The new transmission system will become operational in 2016.

65 Fund Balance Summary HISTORICAL ACTUAL BUDGETED FORECASTED Account Operations & Maintenance $ 5,615,876 $ 9,783,872 $ 15,473,688 $ 5,639,844 $ 13,372,457 $ 12,935,939 $ 11,939,475 $ 14,454,665 12,032,305 9,562,148 Alliance Reserves 1,500,000 5,232,500 $ 4,807,340 4,843,866 4,187,176 4,261,687 4,102,815 3,904,382 5,048,764 4,867,881 Unemployment Reserve 13,000 20,500 $ 22,135 22,950 24,955 26,951 29,108 31,436 33,951 36,667 Debt Service 743, ,773 $ 748, , , , , , , ,126 Debt Service Reserve 4,585,000 3,210,031 $ 1,954,898 1,968,532 1,921,089 1,914,543 1,907,998 1,901,452 1,894,906 1,888,360 Existing Assets R & R 10,326,717 11,000,000 $ 11,036,552 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 New Assets CIP 15,450,471 12,090,302 $ 4,237,970 3,082,133 3,904,606 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 TOTAL FUNDS $ 38,234,528 $ 42,082,978 $ 38,280,746 $ 27,310,426 $ 35,169,408 $ 33,898,246 $ 32,738,522 $ 35,051,061 $ 33,769,052 $ 31,114,182 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000, New Assets CIP Existing Assets R & R Debt Service Reserve Debt Service Unemployment Reserve Alliance Reserves Operations & Maintenance $5,000,000 $ Historical Actual Budgeted Forecasted

66 58 60

67 -2022 Six-Year Capital Program Clark Regional Wastewater District s (District) overall budget for is comprised of the Operating Budget and Capital Budget. The Capital Budget represents both the District s Existing Assets Restoration and Replacement account (R & R) and its New Assets Capital Improvement Project account (CIP). The CIP account represents the current year s costs necessary to construct or purchase new assets such as pump stations and trunk sewers, local collection systems (e.g. 8-inch sewers), fleet and facilities. The R & R account provides for the restoration or replacement of existing assets, once again, including pump stations, trunk sewers, local collection systems, fleet and facilities. The CIP account also accommodates reimbursing private development when they build District capital improvements within residential or commercial development projects. The District annually prepares and adopts a six-year capital program. The FY capital budget is based upon the first year of the Six-Year Capital Program. These projects, programs and purchases are all developed and scheduled out on the District s Six- Year Capital Program. Although the District budgets on an annual basis, it is not unusual for capital project commitments to span multiple years. As identified within the R & R account, CIP account and Fund Balance summary on pages 54, 56 and 59, respectively, the District has ensured stable rates and charges while supporting the Six-Year Capital Program. Over the to 2022 capital program period, 2018 is the most capital intensive year. The FY 2018 capital budget totals $9.5 million out of the six-year program of $41.1 million. Over the six-year program, $11.1 million is planned for R & R expenditures and $30.0 million is planned CIP expenditures. The District maintains the required minimum debt coverage ratios of 1.25 percent. Six-Year Capital Program Expenditures ($ Million) Six-Year Capital Program Expenditures by Fund ($ Million) $5.4 $6.4 $ $11.1 $3.8 R&R CIP $7.3 $9.5 $

68 Annual capital expenditures over the six (6) year period averages around $6.8 million with a minimum of $3.8 million in 2020 and a maximum of $9.5 million in Capital Program Expenditures ($ Million) Capital R&R The six-year program is based on the District s 20-Year Capital Plan which is reviewed and updated annually. The projects identified in the Six Year Capital Program are those needed to ensure the District s ability to meet the long-term level-of-service requirements. Continuous planning is an integral part to this process and enables the District to monitor system capacities, forecast future demands, adapt with changing regulatory requirements and prioritize capital projects to meet these demands and predict financial resource requirements. The tables on pages identify all capital projects or purchases anticipated for through 2022 for the District s Central service area and Ridgefield service area. This includes nineteen (19) specific R & R projects, ten (10) R & R programs, thirty-six (36) CIP projects or programs, fourteen (14) vehicles and ten (10) additional purchases to replace or add office furnishings and equipment. Operations Discussion The operating impacts of the capital program overall are relatively minor. In comparison to the overall operations of the District and its existing system, the capital projects represent a small increase in infrastructure and new assets. The six-year program represents the addition of more than six (6) miles of new gravity sewers and approximately six (6) miles of pressure sewers for a total of approximately twelve (12) miles. As compared to more than 633 miles of existing gravity and pressure sewers, the six-year program represents roughly a 2.0% increase in total pipe assets. The Gravity sewers require cleaning and inspection every six (6) to eight (8) years, respectively. At approximately 1,500 lineal feet and 2,500 lineal feet of production per day, respectively, this equates to an annual demand of around 0.02 FTE. 62

69 One of the largest budget items in the operations and maintenance of our system is centered on the management of 64 existing pump stations. Pump station operations and maintenance can be as much as 25-30% of the Maintenance department s annual budget. For this is estimated to be $680,000. The Six-Year Capital Program will build twelve (12) new stations and remove five (5) existing stations for a net add of seven (7) stations, or roughly a 11.0% increase in the number of pump stations. Operating impacts of adding these new stations is partially mitigated through the use of remote monitoring and operations (e.g. SCADA) and through optimization and rehabilitation of five (5) existing pump stations and an annual pump replacement program. As existing pumps age, they are replaced with new more efficient pumps. The new or restored stations utilize the latest in equipment and controls, which reduces operating costs over the historic norms, largely associated with reduction in call-outs for clogged pumps. No additional staffing is required to accommodate for the total workload impacts represented in the Six-Year Capital Program. 63

70 Capital Program Existing Assets Restoration & Replacement Central Service Area Six-Year Restoration and Replacement Account Program Restoration and Replacement - Gravity Spot Repair Program $625,000 $75,000 $100,000 $100,000 $100,000 $125,000 $125,000 n/a $625,000 I&I Program $150,000 $0 $50,000 $0 $50,000 $0 $50,000 n/a $150,000 Main Repair Program $540,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 n/a $540,000 Main Lining Program $480,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 n/a $480,000 Lateral Lining Program $600,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 n/a $600,000 Access Manhole Program $300,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 n/a $300,000 Trunk Sewer Stabilization $150,000 $0 $0 $0 $25,000 $125,000 $0 $0 $150,000 NE 78th Street Trunk (NE 13th Ave to NE 20th Ave) $1,860,000 $60,000 $1,800,000 $0 $0 $0 $0 $191,000 $2,051,000 NE 107th Ave Sidewalks CRP $19,000 $19,000 $0 $0 $0 $0 $0 $1,000 $20,000 NE 99th Street/SR 503 Intersection CRP $135,000 $135,000 $0 $0 $0 $0 $0 $20,000 $155,000 Restoration and Replacement - Gravity Totals $4,859,000 $609,000 $2,270,000 $420,000 $495,000 $570,000 $495,000 $212,000 $5,071,000 Restoration and Replacement - Pump Stations & Force Mains Pump Station Repair Program $600,000 $50,000 $50,000 $50,000 $100,000 $100,000 $250,000 n/a $600,000 Shadow Wood MOV Vault Improvements $125,000 $50,000 $75,000 $0 $0 $0 $0 $0 $125,000 Mill Creek Flood Protection $60,000 $60,000 $0 $0 $0 $0 $0 $0 $60,000 NB/SB Rest Area Pump Stations Tank Decommission $50,000 $0 $50,000 $0 $0 $0 $0 $0 $50,000 Cathodic Protection Replacement $60,000 $0 $0 $60,000 $0 $0 $0 $0 $60,000 Oro-Vega Pump Station Replacement $426,500 $0 $0 $0 $426,500 $0 $0 $58,500 $485,000 Stag Leap Pump Station Removal $135,000 $0 $135,000 $0 $0 $0 $0 $34,000 $169,000 Klineline Pump Station Replacement $210,000 $210,000 $0 $0 $0 $0 $0 $10,000 $220,000 Knoll Ridge South Pump Station Replacement $210,000 $10,000 $0 $0 $200,000 $0 $0 $15,000 $225,000 Plantation Pump Station Replacement $210,000 $0 $0 $0 $210,000 $0 $0 $10,000 $220,000 Buckman Gardens Pump Station Removal $362,000 $0 $0 $0 $47,000 $315,000 $0 $0 $362,000 Sierra Vista/Hunter's Glen Pump Station Removals $552,000 $0 $79,000 $473,000 $0 $0 $0 $0 $552,000 Restoration and Replacement - Pump Station & Force Mains Totals $3,000,500 $380,000 $389,000 $583,000 $983,500 $415,000 $250,000 $127,500 $3,128,000 Restoration and Replacement - Fleet and Facilities Campus Restoration and Replacement Program $265,000 $25,000 $45,000 $60,000 $65,000 $35,000 $35,000 n/a $265,000 Office Hub Room Fire Suppression $60,000 $60,000 $0 $0 $0 $0 $0 $15,000 $75,000 Office Security System Replacement $110,000 $110,000 $0 $0 $0 $0 $0 $0 $110,000 Office Workstation Replacement $125,000 $125,000 $0 $0 $0 $0 $0 $0 $125,000 Maintenance Bay Crew Quarters Expansion $900,000 $250,000 $650,000 $0 $0 $0 $0 $30,000 $930,000 Operations Vehicle Replacements $893,000 $156,000 $97,000 $255,000 $40,000 $300,000 $45,000 n/a $893,000 Engineering Vehicle Replacements $160,000 $0 $40,000 $40,000 $80,000 $0 $0 n/a $160,000 CCTV Cable Replacement $14,000 $0 $14,000 $0 $0 $0 $0 n/a $14,000 Buried Pipe Locating Instrument $60,000 $0 $60,000 $0 $0 $0 $0 n/a $60,000 Easement Machine $50,000 $0 $0 $50,000 $0 $0 $0 n/a $50,000 Portable Flow Meters $13,000 $13,000 $0 $0 $0 $0 $0 n/a $13,000 Telemetry System Upgrade $60,000 $30,000 $30,000 $0 $0 $0 $0 n/a $60,000 Office Telephone and Voic Systems Replacement $100,000 $0 $100,000 $0 $0 $0 $0 n/a $100,000 Office Business Machine Replacement $25,000 $0 $0 $0 $25,000 $0 $0 n/a $25,000 Office Network System Replacement $15,000 $0 $0 $15,000 $0 $0 $0 n/a $15,000 Restoration and Replacement - Fleet and Facilities Totals $2,850,000 $769,000 $1,036,000 $420,000 $210,000 $335,000 $80,000 $45,000 $2,895,000 TOTAL CENTRAL SERVICE AREA R&R $10,709,500 $1,758,000 $3,695,000 $1,423,000 $1,688,500 $1,320,000 $825,000 $384,500 $11,094,000 Spent to Date Total Project Cost Ridgefield Service Area Six-Year Restoration and Replacement Account Program Restoration and Replacement - Gravity Ridgefield Spot Repair Program $300,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 n/a $300,000 Ridgefield I&I Program $60,000 $0 $20,000 $0 $20,000 $0 $20,000 n/a $60,000 Restoration and Replacement - Gravity Totals $360,000 $50,000 $70,000 $50,000 $70,000 $50,000 $70,000 $0 $360,000 TOTAL RIDGEFIELD SERVICE AREA R&R $360,000 $50,000 $70,000 $50,000 $70,000 $50,000 $70,000 $0 $360,000 Spent to Date Total Project Cost TOTAL RESTORATION AND REPLACEMENT $11,069,500 $1,808,000 $3,765,000 $1,473,000 $1,758,500 $1,370,000 $895,000 $384,500 $11,454,000 64

71 Capital Program New Assets Capital Improvement Projects Central Service Area Six-Year Capital Improvement Project Account Program General Facilities (Trunks, Pump Stations, Force Mains) General Sewer Plan Update $279,300 $279,300 $0 $0 $0 $0 $0 $569,700 $849,000 Glenwood Pump Station Upgrade $212,000 $212,000 $0 $0 $0 $0 $0 $1,968,000 $2,180,000 Pleasant Valley North Pump Station $2,500,000 $250,000 $250,000 $2,000,000 $0 $0 $0 $57,000 $2,557,000 Union Road Force Main Upgrade $283,000 $0 $0 $30,000 $253,000 $0 $0 $0 $283,000 Vista Terrace Reconstruction $110,000 $110,000 $0 $0 $0 $0 $0 $0 $110,000 NE 20th Avenue Trunk Upgrade $2,400,000 $0 $0 $0 $0 $300,000 $2,100,000 $0 $2,400,000 NE 10th Ave PS (NE 17th Ave Trunk to NE 10th Ave) $1,712,000 $150,000 $1,162,000 $400,000 $0 $0 $0 $67,000 $1,779,000 NE 10th Avenue Bridge CRP (NE 154th St to NE 164th St) $1,420,000 $710,000 $710,000 $0 $0 $0 $0 $45,500 $1,465,500 NE 119th Street CRP (87th Ave to 112th Ave) $340,000 $5,000 $5,000 $165,000 $165,000 $0 $0 $4,000 $344,000 NE 119th Street CRP (50th Ave to 72nd Ave) $800,000 $400,000 $400,000 $0 $0 $0 $0 $10,000 $810,000 NE 99th Street CRP (94th Ave - SR 503) $3,000,000 $114,000 $114,000 $25,000 $25,000 $1,361,000 $1,361,000 $97,000 $3,097,000 NE 179th Street CRP (NE Delfel Road - NE 15th Ave) $1,150,000 $0 $0 $0 $100,000 $50,000 $1,000,000 $0 $1,150,000 General Facilities Totals $14,206,300 $2,230,300 $2,641,000 $2,620,000 $543,000 $1,711,000 $4,461,000 $2,818,200 $17,024,500 District Installed Infrastructure (Extending Local Collection) Curtin Creek Pump Station - Phase 2 $1,000,000 $0 $0 $70,000 $430,000 $500,000 $0 $0 $1,000,000 District Installed Infrastructure Totals $1,000,000 $0 $0 $70,000 $430,000 $500,000 $0 $0 $1,000,000 Septic Elimination Program Septic Project Allowance $1,050,000 $0 $50,000 $250,000 $250,000 $250,000 $250,000 n/a $1,050,000 Septic Elimination Program Totals $1,050,000 $0 $50,000 $250,000 $250,000 $250,000 $250,000 n/a $1,050,000 Developer Reimbursement Developer Reimbursement Project Allowance $2,425,000 $25,000 $650,000 $250,000 $500,000 $500,000 $500,000 n/a $2,425,000 District Installed Laterals Allowance $120,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 n/a $120,000 Columbia Resource Company Force Main $40,000 $40,000 $0 $0 $0 $0 $0 $10,000 $50,000 Whipple Creek Trunk (Killian Commercial) $300,000 $0 $0 $300,000 $0 $0 $0 $0 $300,000 St. Johns Wood Pump Station $250,000 $250,000 $0 $0 $0 $0 $0 $250,000 $500,000 Curtin Creek Pump Station - Phase 1 $750,000 $650,000 $100,000 $0 $0 $0 $0 $0 $750,000 Developer Reimbursement Totals $3,885,000 $985,000 $770,000 $570,000 $520,000 $520,000 $520,000 $260,000 $4,145,000 CIP - Fleet & Facilities Campus Site Improvements $325,000 $15,000 $110,000 $0 $0 $0 $200,000 $156,000 $481,000 Fleet & Facilities Totals $325,000 $15,000 $110,000 $0 $0 $0 $200,000 $156,000 $481,000 TOTAL CENTRAL SERVICE AREA CIP $20,466,300 $3,230,300 $3,571,000 $3,510,000 $1,743,000 $2,981,000 $5,431,000 $3,234,200 $23,700,500 Spent to Date Total Project Cost 65

72 Capital Program New Assets Capital Improvement Projects Ridgefield Service Area Six-Year Capital Improvement Project Account Program General Facilities (Trunks, Pump Stations, Force Mains) Pump Station Critical Pump Spares $104,000 $51,000 $53,000 $0 $0 $0 $0 $0 $104,000 North Junction Pump Station and Trunk $2,670,000 $30,000 $1,000,000 $1,640,000 $0 $0 $0 $627,500 $3,297,500 35th Ave Roundabout $140,000 $140,000 $0 $0 $0 $0 $0 $10,000 $150,000 South Junction Trunk Upgrade $400,000 $0 $0 $0 $60,000 $340,000 $0 $0 $400,000 Hillhurst Pump Stations Redirection $360,000 $0 $50,000 $310,000 $0 $0 $0 $0 $360,000 General Facilities Totals $3,674,000 $221,000 $1,103,000 $1,950,000 $60,000 $340,000 $0 $637,500 $4,311,500 Developer Reimbursement Developer Reimbursement Project Allowance $300,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 n/a $300,000 District Installed Laterals Allowance $30,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 n/a $30,000 Urban Downs Pump Station $650,000 $650,000 $0 $0 $0 $0 $0 $0 $650,000 Royle Road Pump Station $1,500,000 $1,500,000 $0 $0 $0 $0 $0 $1,500,000 $3,000,000 Wells Property Trunk $150,000 $150,000 $0 $0 $0 $0 $0 $0 $150,000 Royle Road Trunk $550,000 $0 $550,000 $0 $0 $0 $0 $0 $550,000 Taverner Ridge Phase 8 & 9 Pump Station $550,000 $550,000 $0 $0 $0 $0 $0 $0 $550,000 Kennedy Farms Pump Stations $1,450,000 $0 $500,000 $300,000 $0 $650,000 $0 $0 $1,450,000 Pioneer Place Pump Station $450,000 $450,000 $0 $0 $0 $0 $0 $150,000 $600,000 Walker-Roher Pump Station and Trunk $200,000 $0 $0 $0 $200,000 $0 $0 $0 $200,000 Developer Reimbursement Totals $5,830,000 $3,355,000 $1,105,000 $355,000 $255,000 $705,000 $55,000 $1,650,000 $7,480,000 TOTAL RIDGEFIELD SERVICE AREA CIP $9,504,000 $3,576,000 $2,208,000 $2,305,000 $315,000 $1,045,000 $55,000 $2,287,500 $11,791,500 Spent to Date Total Project Cost TOTAL CAPITAL IMPROVEMENT PROJECTS $29,970,300 $6,806,300 $5,779,000 $5,815,000 $2,058,000 $4,026,000 $5,486,000 $5,521,700 $35,492,000 SIX-YEAR PROGRAM TOTAL $41,039,800 $8,614,300 $9,544,000 $7,288,000 $3,816,500 $5,396,000 $6,381,000 $5,906,200 $46,946,000 66

73 Capital Plan Central Service Area Existing Assets Project Summaries Restoration and Replacement - Gravity Spot Repair Program Cost: $625,000 Scope: This program allowance provides for minor repair and replacement projects, typically under $35,000. The program includes District lateral repairs. Basis: Condition Infiltration and Inflow (I & I) Program Cost: $150,000 Scope: This program allowance provides for minor repair and replacement projects, typically under $35,000. Geared towards removing sources of infiltration and inflow. Basis: I & I Abatement Main Repair Program Cost: $540,000 Scope: Projects identified via closed circuit television (CCTV) inspection and maintenance monitoring and cleaning records. Projects include open-cut lateral and mainline repair. Basis: Condition Main Lining Program Cost: $480,000 Scope: Projects identified via CCTV inspection and maintenance monitoring and cleaning records. Projects include cured in place pipe (CIPP) installation for mainlines. Basis: Condition Lateral Lining Program Cost: $600,000 Scope: Projects identified via CCTV inspection and maintenance monitoring and cleaning records. Projects include lining defective laterals either using the T-liner product or traditional CIPP and installation of mechanical spot repairs for mainline defects. Basis: Condition 67

74 Access Manhole Program Cost: $300,000 Scope: Projects identified during attempts to retrieve CCTV inspection and attempts to conduct maintenance monitoring activities. Projects include new manhole installation. Basis: Condition Trunk Sewer Stabilization Cost: $150,000 Scope: Rebuild 500 feet of stream bank. Project areas include Tenny Creek, Cougar Canyon, Sylvan Terrace, Pruitt Park Canyon and Heron Ridge (Ridgefield). Basis: Condition NE 78 th Street Trunk (NE 13 th Ave to NE 20 th Ave) Cost: $1,860,000 Scope: The existing 8-inch main is currently flowing near capacity and is on a quarterly cleaning cycle due to historic backups resulting in damage to neighboring property. The project replaces 1,550 feet of 12-inch gravity trunk and 997 feet of 8-inch gravity main from NE 13 th Avenue to Heritage Farm. Basis: Condition NE 107 th Avenue Sidewalks CRP Cost: $19,000 Scope: This project extends laterals and cleanouts behind the new sidewalk on NE 107 th Avenue from NE Covington Road to NE 67 th Street in association with a County Road Project. Basis: Condition NE 99 th Street/SR 503 Intersection CRP Cost: $135,000 Scope: This project replaces 480 feet of 8-inch gravity main with 10-inch gravity trunk in conjunction with a County Road Project at the intersection of NE 99 th Street and SR 503 (NE 117 th Avenue). Basis: Condition 68

75 Restoration and Replacement Pump Stations & Force Mains Pump Station Repair Program Cost: $600,000 Scope: This program allowance provides for annual pump, mechanical and electrical repairs and replacements over $5,000. Basis: Condition Shadow Wood MOV Vault Improvements Cost: $125,000 Scope: This project extends service life of existing vaults by upsizing access ports from 3-inch to 8-inch on the 12-inch sewers and upsize the access ports from 3-inch to 6-inch on the 6-inch sewers. Basis: Condition Mill Creek Flood Protection Cost: $60,000 Scope: Repair flood wall to prevent Mill Creek floodwaters from entering the pump station and modify the site to ensure the transformer is above the flood elevation. The 2015 December storm resulted in approximately 8-inches of standing water around the transformer and sand bags were placed within the flood wall to keep flood waters out of the pump station. Basis: Condition NB/SB Rest Area Pump Stations Tank Decommission Cost: $50,000 Scope: Abandon four 20,000 gallon existing fiberglass septic tanks in the north and south bound rest areas when they are no longer needed due to the Discovery Corridor Wastewater Transmission System running continuously. Abandonment will include pumping out the existing tanks, removing the access hatches, filling the tanks with sand, and landscaping the area above the tanks. Basis: Condition Cathodic Protection Replacement Cost: $60,000 Scope: This project will protect existing pump stations with steel-can drywells from corrosion protection. Pump stations with steel-can drywells include Knoll Ridge West, Pleasant Valley, Minnehaha and Green Meadows. Basis: Condition 69

76 Oro-Vega Pump Station Replacement Cost: $426,500 Scope: This project replaces the existing 1991 Dry Pit "Can" Station with a duplex submersible pump station. Basis: Condition Stag Leap Pump Station Removal Cost: $135,000 Scope: This project constructs 570 feet of 8-inch gravity sewer from NE 107 th Street to NE 43 rd Place in order to abandon the existing pump station. Easements are required. Basis: Condition Klineline Pump Station Replacement Cost: $210,000 Scope: This project replaces the existing HP self-priming pump station and force main at the intersection of NE 117 th Street and NE Klineline Road. Basis: Condition Knoll Ridge South Pump Station Replacement Cost: $210,000 Scope: This project replaces the existing HP submersible pump station at NE 125 th Circle and NE 6 th Court. Basis: Condition Plantation Pump Station Replacement Cost: $210,000 Scope: This project replaces the existing HP pump station and force main at NE Plantation Road. Basis: Condition Buckman Gardens Pump Station Removal Cost: $362,000 Scope: This project constructs 1,300 feet of 8-inch gravity sewer from NE 97 th Street to NE 94 th Street in order to abandon the existing pump station. Easements are required. Basis: Condition 70

77 Sierra Vista/Hunter s Glen Pump Station Removals Cost: $552,000 Scope: This project constructs 1,000 feet of 8-inch gravity sewer from the intersection of NE Meadows Drive and NE 66 th Street east under I-205 and then north in order to abandon the existing pump stations. Easements are required. Basis: Condition Restoration and Replacement Fleet and Facilities Campus Restoration and Replacement Program Cost: $265,000 Scope: This program allowance provides for restoration and replacement of critical components of the existing District office campus, including as-needed replacement of aging HVAC units and VCT tiles, and painting of open office area. Basis: Operational Optimization Office Hub Room Fire Suppression Cost: $60,000 Scope: This project provides a clean agent fire protection system and power interlock to shut down power to the equipment within the server room. Basis: Operational Optimization Office Security System Replacement Cost: $110,000 Scope: This project will replace and enhance the existing security system for the office and shop areas. Current system hardware is no longer supported or parts are not available for replacement. Basis: Operational Optimization Office Workstation Replacement Cost: $125,000 Scope: This project will replace the cubical workstations in the main level of the District office to make more effective use of the space. Basis: Operational Optimization 71

78 Maintenance Bay Crew Quarters Expansion Cost: $900,000 Scope: This project expands the locker room and crew quarters to accommodate existing and future staff. Basis: Operational Optimization Operations Vehicle Replacements Cost: $893,000 Scope: Replace operations vehicles that have exceeded the District mileage or year policy. These include two (2) lead service trucks, the Meadow Glade van, the electrician s van, the oncall van, the locate truck, the TV truck, the generator fueling truck, a pump station maintenance truck, the dump truck, a new track hoe and a new fork lift. Basis: Condition Engineering Vehicle Replacements Cost: $160,000 Scope: Replace engineering vehicles that have exceeded the District mileage or year policy. These include three (3) inspector vehicles and the industrial pretreatment van. Basis: Condition Closed Circuit TV (CCTV) Cable Replacement Cost: $14,000 Scope: The CCTV cable requires replacement about every four years (or about every 1.0 million feet of inspection performed). Basis: Condition Buried Pipe Locating Instrument Cost: $60,000 Scope: This allowance is to obtain equipment/technology to locate lines not locatable by visual/asbuilt/tracer wire or other standard locate practices. Basis: Operational Optimization Easement Machine Cost: $50,000 Scope: Invest in an easement machine to optimize staff time when cleaning gravity lines with restricted access. This equipment will optimize the use of District staff when sewer lines are in backyards. This work currently requires four (4) staff members to perform and can be done by two (2) staff members with an easement machine. Basis: Condition 72

79 Portable Flow Meters Cost: $13,000 Scope: Purchase meter capable of handling a wide range of pipe sizes and accurate when measurements are being performed on short pipe runs. Basis: Condition Telemetry System Upgrade Cost: $60,000 Scope: Build out the District s third node to support the addition of new pump stations to maintain a maximum polling rate of 30 seconds. The investment includes the hardware and technical support as needed due to workload constraints on District staff. Basis: Operational Optimization Office Telephone and Voic Systems Replacement Cost: $100,000 Scope: Replace telephone and voic hardware and software with modern technology. Vendor to provide training for staff. Basis: Operational Optimization Office Business Machine Replacements Cost: $25,000 Scope: Replace office printers, copiers, plotters and other office machines over $5,000. Basis: Operational Optimization Office Network System Replacement Cost: $15,000 Scope: Replace or upgrade system servers, including phone servers and related infrastructure. Basis: Operational Optimization Ridgefield Service Area Existing Assets Project Summaries Restoration and Replacement Ridgefield Spot Repair Program Cost: $300,000 Scope: This program allowance provides for minor repair and replacement projects, typically under $35,000. The program includes lateral repairs. Basis: Condition 73

80 Ridgefield Infiltration and Inflow (I & I) Program Cost: $60,000 Scope: This program allowance provides for minor repair and replacement projects, typically under $35,000. Geared towards removing sources of infiltration and inflow. Basis: Condition Central Service Area New Assets Project Summaries General Facilities Projects (Trunks, Pump Stations, Force Mains) General Sewer Plan Update Cost: $279,300 Scope: The District s current General Sewer Plan (GSP) was adopted in 2001 and amended in 2006 and The plan is largely out of date in regard to accurate flow assumptions, cost estimating and timing of projects. This update will review the basin boundaries, basin service solutions, utilize flow monitoring data to develop a calibrated hydraulic model of the primary trunk lines and provide realistic planning assumptions for flow. The GSP update is necessary to maximize District investment in extending service. The update will also address the Ridgefield service area and the long-term plan for the Meadow Glade/Hockinson STEP system. Basis: Planning Glenwood Pump Station Upgrade Cost: $212,000 Scope: The Glenwood Pump Station is one of the District s largest and a critical link in its collection system. This project upgrades the existing pump station from a firm capacity of 3.4 million gallons per day (MGD) to 6.7MGD to accommodate expected growth in the Brush Prairie area. The project also includes upgrades to the electrical and heating/ventilation and cooling (HVAC) systems, modifications to the chemical feed system and odor control, and modifications to the roof. Basis: Capacity Pleasant Valley North Pump Station Cost: $2,500,000 Scope: This project extends service to the NE 50 th Avenue corridor north of Salmon Creek Avenue in association with development at the WSU Vancouver campus and a new Vancouver Public Schools STEM School. The project includes a new pump station and force main. Basis: Extending Service 74

81 Union Road Force Main Upgrade Cost: $283,000 Scope: Install 1,600 feet of 12-inch diameter force main in NE Union Road from the Union Road Pump Station to the discharge structure located near the intersection of NE 20 th Avenue and NE 154 th Street to increase capacity. Basis: Capacity Vista Terrace Reconstruction Cost: $110,000 Scope: Replace 4,800 square feet of concrete panels and seal 300 feet of cracks that were damaged during a previous construction project. Basis: Capacity NE 20 th Avenue Trunk Upgrade Cost: $2,400,000 Scope: Planning documents for the Discovery Corridor Wastewater Transmission System (DCWTS) show that the NE 20 th Avenue Trunk sewer between NE 155 th Street and NE 139 th Street will need to be upgraded to 24 and 30-inch pipe to accommodate additional flow from Ridgefield and growth in the Central service area. Basis: Capacity NE 10 th Avenue Pump Station (NE 17 th Ave Trunk to NE 10 th Ave) Cost: $1,712,000 Scope: Construct a new, duplex submersible pump station adjacent to NE 10 th Avenue and north of Whipple Creek. Construct 2,300 feet of 6-inch force main beginning east of the intersection of NE 154 th Street and NE 10 th Avenue, where the NE 10 th Avenue Bridge County Road Project (CRP) ends, and continue the force main installation east and then south along NE 15 th Avenue crossing I-5 at NE 150 th Street and connecting to an existing manhole on the east side of I-5 to extend service. Basis: Capacity NE 10 th Avenue Bridge CRP (NE 154 th St to NE 164 th St) Cost: $1,420,000 Scope: Install 1,600 feet of 6-inch force main across the proposed NE 10 th Avenue bridge as part of a County road project. Also install 4,400 feet of 8-inch gravity and wetwell for the NE 10 th Avenue Pump Station. Basis: Capacity 75

82 NE 119 th Street CRP (NE 87 th Ave to NE 112 th Ave) Cost: $340,000 Scope: This project extends service in conjunction with a County Road Project along NE 119 th Street from the Bowyer Pump Station west to NE 107 th Avenue. The project consists of extending 1,300 linear feet of gravity sewer main and local lateral connections as needed to serve adjacent parcels. This project allows for the eventual abandonment of the Boyer Pump Station. Basis: Extending Service NE 119 th Street CRP (NE 50 th Ave to NE 72 nd Ave) Cost: $800,000 Scope: This project extends service in conjunction with a County Road Project along NE 119 th Street generally between NE 50 th Avenue and NE 72 nd Avenue. The project consists of 900 feet of 10-inch gravity trunk, 1,300 feet of 8-inch gravity main, 1,900 feet of 8-inch force main and extending side sewers as needed to serve adjacent parcels. Basis: Extending Service NE 99 th Street CRP (NE 94 th Ave SR 503) Cost: $3,000,000 Scope: This project extends service in conjunction with a County Road Project along NE 99 th Street from NE 94 th Avenue to SR 503 (NE 117 th Avenue). The project consists of 2,800 feet of gravity line and extending side sewers and local collection mains as needed to serve adjacent parcels. The project allows for the abandonment of Country Meadows Pump Station. Basis: Extending Service NE 179 th Street CRP (NE Delfel Rd NE 15 th Ave) Cost: $1,150,000 Scope: This project extends service in conjunction with a County Road Project along NE 179 th Street from the Fairgrounds Pump Station through the NE 179 th Street Interchange with I-5. The project consists of 900 feet of gravity trunk and allows for the abandonment of the Fairgrounds Pump Station. Basis: Extending Service 76

83 District Installed Infrastructure (DII) Curtin Creek Pump Station-Phase 2 Cost: $1,000,000 Scope: This project extends service north of NE 119 th Street from the new Curtin Creek Pump Station west to NE 72 nd Avenue. The project consists of 2,000 feet of 8-inch gravity main to serve the Fire Station and adjacent parcels along NE 72 nd Avenue. Basis: Extending Service Septic Elimination Program (SEP) Septic Project Allowance Cost: $1,050,000 Scope: The District invests approximately $250,000 in the Septic Elimination Program on an annual basis. New projects will be identified for future years. Basis: Septic Elimination Developer Reimbursement Developer Reimbursement Project Allowance Cost: $2,425,000 Scope: This allowance provides for future developer reimbursements to construct pump stations, force mains and trunk sewers in the Central service area in accordance with the General Sewer Plan. Basis: Extending Service District Installed Laterals Allowance Cost: $120,000 Scope: This allowance provides for side sewers to be constructed in the Central service area in conjunction with private development projects. Basis: Extending Service Columbia Resource Company Force Main Cost: $40,000 Scope: This project constructs about 100 feet of 4-inch force main from the Columbia Resource transfer station to a new development between NE 112 th Drive and NE 117 th Avenue. Basis: Operational Optimization 77

84 Whipple Creek Trunk (Killian Commercial) Cost: $300,000 Scope: This project constructs about 1,500 feet of 18-inch gravity trunk on NE 179 th Street from east of NE 15 th Avenue to NE Union Road just east of the I-5 junction. The project is scheduled to be constructed in conjunction with commercial development east of the NE 179 th Street / Interstate 5 interchange. Basis: Extending Service St. Johns Wood Pump Station Cost: $250,000 Scope: This project constructs a new pump station and 900 feet of force main to serve this residential area. The station is located near NE 88 th Street and NE 51 st Avenue. Basis: Extending Service Curtin Creek Pump Station-Phase 1 Cost: $750,000 Scope: This project constructs a new pump station east of the Fire Station on NE 72 nd Avenue and north of NE 119 th Street. Basis: Extending Service Fleet & Facilities New Capital Purchases Campus Site Improvements Cost: $325,000 Scope: This project provides for District Office site improvements, including an expansion of staff and fleet asphalt parking. Basis: Operational Optimization Ridgefield Service Area New Assets Project Summaries General Facilities Projects (Trunks, Pump Stations, Force Mains) Pump Station Critical Pump Spares Cost: $104,000 Scope: This project includes the purchase of critical spare pumps that can support Ridgefield pump stations and bring the level of service to District standards. Basis: Operational Resiliency 78

85 North Junction Pump Station and Trunk Cost: $2,670,000 Scope: This project provides service to the northern quadrants of the I-5 junction area. It includes 950 feet of parallel 8-inch and 12-inch force mains northeast of the Pioneer Canyon Pump Station along N 10 th Street to a new pump station, and approximately 3,000 feet of gravity trunk east along N 10 th Street and crossing I-5 extending to NW 11 th Avenue (S 65 th Avenue) and extending south on S 65 th Avenue. A portion of this project has been built through developer reimbursement agreements for the Ridgefield Woods and Canterbury Trails residential subdivisions. Basis: Extending Service 35 th Avenue Roundabout Cost: $140,000 Scope: This project includes the construction of 550 feet of 12- inch dry force mains within the 35 th Avenue roundabout for future service. Basis: Extending Service South Junction Trunk Upgrade Cost: $400,000 Scope: Upgrade existing 8-inch gravity main to 10-inch gravity trunk to match the rest of the trunk service to the southern portion of the Ridgefield Junction to provide increased capacity to serve the southern portion of the Ridgefield Junction in support of economic development and jobs creation. Basis: Capacity Hillhurst Pump Stations Redirection Cost: $360,000 Scope: Remove flow that is currently going to the Ridgefield Treatment Plant to delay or remove the need to expand the plant capacity. This will be accomplished by capping the western end of the existing 4-inch and 6-inch force mains in S Hillhurst Road and connecting the mains to a new 8-inch force main that discharges to the proposed Royle Road trunk sewer. Basis: Operational Optimization 79

86 Developer Reimbursement Developer Reimbursement Project Allowance Cost: $300,000 Scope: This allowance provides for future developer reimbursements to construct pump stations, force mains and trunk sewers in the Ridgefield service area in accordance with the General Sewer Plan. Basis: Extending Service District Installed Laterals Allowance Cost: $30,000 Scope: This allowance provides for side sewers to be constructed in conjunction with private development projects. Basis: Extending Service Urban Downs Pump Station Cost: $650,000 Scope: The City of Ridgefield 2013 General Sewer Plan shows this pump station (PS-12) ultimately connecting via force main and gravity to the proposed PS-5. This project includes developer reimbursement for the new PS-12 northeast of the intersection between S 85 th Avenue and NE 259 th Street. This will extend service to the easternmost portion of the City of Ridgefield. Basis: Extending Service Royle Road Pump Station Cost: $1,500,000 Scope: This project includes developer reimbursement for a new pump station on NW Royle Road at the Gee Creek crossing with a 7,200 foot force main connection to the existing Pioneer Canyon Pump Station. Basis: Extending Service Wells Property Trunk Cost: $150,000 Scope: This project includes developer reimbursement for oversize gravity trunk extension of service along NW Royle Road and to and through the Wells property from the Royle Road Pump Station. Basis: Extending Service 80

87 Royle Road Trunk Cost: $550,000 Scope: This project includes developer reimbursement for oversize gravity trunk extension of T- 25W in association with future property development. Basis: Extending Service Taverner Ridge Phase 8 & 9 Pump Station Cost: $550,000 Scope: This project includes developer reimbursement for the new pump station in Phase 8 & 9 of the Taverner Ridge residential subdivision. The force main connection is being made to the existing Taverner Ridge force main in S Hillhurst Road during Phase 7 of the Taverner Ridge residential subdivision. Basis: Extending Service Kennedy Farms Pump Stations Cost: $1,450,000 Scope: This project includes developer reimbursement for two new pump stations, one on each side of NW Hillhurst Road, to serve the proposed Kennedy Farms residential subdivision and associated force mains. Basis: Extending Service Pioneer Place Pump Station Cost: $450,000 Scope: Pump station and force main along a northern extension of N 35 th Avenue serving approximately 130 acres of area along the northern city limits (north of Green Gables). Basis: Extending Service Walker-Roher Pump Station and Trunk Cost: $200,000 Scope: This project includes developer reimbursement for 1,000 feet of 10-inch gravity trunk extension of T-11 from the North Junction Pump Station and Trunk project to N 10 th Street in association with the proposed Ridgefield West residential subdivision. Basis: Extending Service 81

88 82

89 Appendix 1 Financial Policies Clark Regional Wastewater District is governed by an elected board that consists of three commissioners. The Board of Commissioners has provided direction and framework in several key areas by establishing guiding policies. The following policies shape District operations, cash reserve requirements and how funds are to be utilized for District expenses. The District's fiscal policies, as mirrored in its rate model, require segregation of the District's accounts based on their revenue sources and internally restricted uses. Accounting, Auditing and Financial Reporting The District shall maintain accounting records and report on the financial condition and results of operations in accordance with Generally Accepted Accounting Principles as promulgated by the Governmental Accounting Standards Board. The District shall have an independent financial audit performed annually by the Washington State Auditor s Office in accordance with Generally Accepted Auditing Standards and Washington State statutes. The District operates under the accrual basis of accounting as required by Generally Accepted Accounting Principles. Budgeting and Financial Planning Wastewater districts are not required by Washington State statute or administrative rule to formally adopt a budget; however, the Board of Commissioners formally adopts the annual budget as a financial plan for use as a financial control. The District includes in the adopted budget expenditures, for the single enterprise fund, the following seven accounts: 1. Operations and Maintenance 2. Alliance Reserve 3. Unemployment Reserve 4. Debt Service 5. Debt Service Reserve 6. Existing Assets Restoration and Replacement 7. New Assets Capital Improvement Projects The District annually prepares a six year financial forecast of major revenues, expenditures and other financing sources for wastewater collection operations. 83

90 Capitalization The District shall capitalize expenditures that meet a threshold. The requirements of the capitalization threshold are: The assets cost must exceed $5,000, and The asset must have a useful life greater than one year Investment The District s policy is to invest public funds in a manner in which will provide the maximum security with the highest investment returns, while meeting daily cash flow demands and conforming to all state and local statutes governing the investment of public funds. Debt The District intends to issue and defease debt when rates are favorable in order to provide the lowest capital costs to ratepayers. Debt shall only be issued for capital projects. Through effective budgeting the District maintains sufficient financial resources to cover ongoing operational expenses. The District shall strive to maintain the highest credit rating possible. The District will undertake to provide continuing disclosure as required by the Securities and Exchange Commission. All debt covenants shall be closely monitored to ensure compliance with terms. Funding and Reserves of Accounts Operations and Maintenance: Funding: Sewer service rates Reserves: A minimum balance of 120 days of operating expenses is maintained Alliance Reserves: Funding: Sewer service rates Reserves: Total District Reserve obligation to the Alliance Unemployment Reserve: Funding: Sewer service rates Reserves: Maximum claim amount if one staff member started collecting unemployment for the maximum period. 84

91 Debt Service: Funding: Sewer service rates Reserves: None required (Debt Service Reserve account) Debt Service Reserve: Funding: Sewer service rates Reserves: One years debt service requirement Existing Assets Restoration and Replacement (R & R): Funding: Sewer service rates Reserves: $11.0 million New Assets Capital Improvement Projects (CIP): Funding: System development charges Reserves: None required 85

92 Appendix 2 Equivalent Residential Units* Year Residential Multi-family Commercial Schools ** Total ,238 5,576 3, , ,473 5,578 4, , ,757 5,578 4, , ,996 5,578 4, , ,307 5,709 4, , ,839 5,792 4, , ,432 6,000 4, , ,453 6,234 4, , projected 29,119 6,656 5, ,599 budget 30,204 6,904 5, ,149 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Residential Multi-family Commercial Schools ** Note * ** The District tracks its customer base by equivalent residential unit (ERU). An ERU equals 290 gallons per day per single-family dwelling. Local census data provides that about 2.9 people live in a single-family dwelling. Engineering studies have depicted that a person uses approximately 100 gallons per day. Elementary, middle and high schools are billed at a 32 students per ERU rate calculation and colleges are billed at a 10 students per ERU rate calculation. 86