Operating and Capital Budget

Transcription

1 Fiscal Year Operating and Capital Budget Napa Sanitation District Napa, California Clean Water. Healthy Communities.

2 2 Napa Sanitation District Budget Acknowledgements Board of Directors Jill Techel, Chair Keith Caldwell, Vice-Chair Peter Mott, Director Charles Gravett, III, Director Charles Shinnamon, Director Mark Luce, Alternate Director Mary Luros, Alternate Director Executive Team Tim Healy, General Manager/District Engineer Jeff Tucker, Director of Administrative Services/Chief Financial Officer Cheryl Schuh, Clerk to the Board/Human Resources Officer Management Team Wastewater Treatment Plant James Keller, Wastewater Treatment Plant Manager Frank Ziliotto, Operations Supervisor Mark Egan, Plant Maintenance Supervisor Mark Koekemoer, Laboratory Supervisor Collections System Keith Sorsdal, Collection System Manager Nick Becker, Collection System Supervisor Water & Biosolids Reclamation David Martin, Reclamation Systems Director Engineering Services Andrew Damron, Capital Program Manager Administrative Services Cyndi Bolden, Senior Accountant

3 FY 2015/16 Budget 3 Table of Contents Transmittal Letter...5 Budget Resolution...15 District Overview...17 Mission History Public Services Performance Measurement Strategic Planning Goals and Objectives Financial Policies Summary Compliance with Financial Policies Organization Organization Chart Position Control Roster Map of NSD Service Area Budget Summary...29 Fund Structure Basis of Accounting Basis of Budgeting Budget Appropriation Budget Development Process Budget Amendment Process Budget Calendar for FY 2015/ Sources of Funds/Revenues Uses of Funds/Expenditures Fund Equity Reserves GFOA Budget Award Detailed Tables of Revenues and Operating Expenditures...39 Revenues All Sources Operating Expenditures All Accounts Operating Expenditures By Major Expense Category Operating Expenditures By Department Expenditure Budgets by Department...47 Board of Directors General Manager s Office Administrative Services Safety, Training & Fleet Maintenance Treatment Plant Operations Treatment Plant Maintenance Collection System Water & Biosolids Reclamation Engineering Treatment Plant Laboratory Pollution Prevention Non-Departmental Expenses Capital Improvement Plan Program Description Definition of Capital Expenditures Capital Plan Development Process Vehicle Replacement Guidelines Sources of Capital Expenditure Funding Use of Capacity Charges for Expansion Changes from Prior CIP Summary of FY 2015/16 Capital Projects Partner-Funded Projects Unfunded or Delayed Projects Impact of Projects on Operating Budget FY 2015/16 Capital Project Descriptions FY 2014/15 Capital Projects Allocation of Capacity Charges Ten-Year Capital Improvement Plan Table of Projects Ten-Year Financial Plan Plan Description Link to Strategic Plan Revenue Forecast Operating Cost Forecast Capital Costs Pay-Go vs. Debt Financing Ten-Year Cash Flow Unbalanced Forecast Sewer Service Charge Rate Adequacy Calculation of Sewer Service Charge Rate Based on Asset-Life-Cycle Cost Debt Debt Policy Current Debt Obligations Debt Covenants Debt Capacity & Debt Limitations Future Debt Issues Debt Coverage Ratio Calculation Debt Service Schedules Appendix A Glossary of Terms Appendix B Statistics & Economic Data Appendix C Strategic Plan Appendix D Financial Policies Appendix E 2014 Performance Measurement Report Appendix F Capacity Charges Report for Fiscal Year 2013/ PDF bookmarks are available to assist in viewing this document. The Table of Contents is hyperlinked throughout.

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5 5 NAPA SANITATION DISTRICT Dedicated to Preserving the Napa River for Generations to Come DATE: June 3, 2015 TO: FROM: SUBJECT: Honorable Board of Directors and Customers served by the Napa Sanitation District Tim Healy, General Manager/District Engineer Jeff Tucker, Director of Administrative Services/Chief Financial Officer FY 2015/16 Operating and Capital Budget On behalf of the entire Executive and Management Team, we are pleased to present to you the Proposed FY 2015/16 Napa Sanitation District Operating and Capital Budget. This Budget is the financial plan for the coming year and serves as a source of information about the District and its programs. Economic Condition Napa County and the City of Napa have seen solid economic growth recently, with no indication that the economy will slow in the short term. The unemployment rate in Napa has dropped to 4.6% (March, preliminary), significantly below the 6.4% from a year ago. 1 Approximately 9.7% of the county population is at or below the poverty line, compared to 16.8% statewide. 2 Hotel occupancy is also up, a significant indicator of local economic activity in the wine and hospitality industries, with the City of Napa projecting increases in transient occupancy taxes next year (2%) and the year after (7%) due primarily to an increase in the number of rooms. 3 In FY 2014/15, development in the District did not reach the 0.75% annual growth rate that was predicted, but activity in planning referrals and the review of development plans for building permits indicates that there are several projects anticipating construction in FY 2015/16. These projects will have an impact on the District, both in the receipt of capacity charges as well as growing the base of sewer service charges. These projects include new hotels, single and multi-family housing developments, new and expanded restaurants, and other developments. The FY 2015/16 Napa Sanitation District Operating and Capital Budget was developed with recognition of the improving local economy, incorporating known development projects, but not assuming rapid growth in any specific areas of the economy. 1 US Department of Labor Bureau of Labor Statistics for City of Napa. 2 California Center for Jobs and the Economy, Economic Indicators for Napa County, City of Napa proposed FY and FY Budget, May 12, 2015.

6 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 2 6 Budget Priorities and Direction The proposed budget represents a continuation of the service levels seen in prior years, with the goal of not increasing the operating budget any more than necessary. The budget allocates resources toward activities that implement the goals and objectives established by the Board of Directors in its Strategic Plan, including maintaining a focus on quality customer service, preventive maintenance, and investments in staff and infrastructure that improve efficiency, effectiveness and safety. The proposed budget addresses the following challenges facing the District and the community, with budget priorities and direction developed to address these challenges: Keep Rates and Expenses at the Rate of Inflation. The Board has established a priority of maintaining sewer rate affordability by striving to keep rate growth to no more than the Consumer Price Index (CPI). This has been challenging, as the District s operating expenses (wages, health care, retirement, electricity, chemicals, etc.) tend to increase faster than CPI. For the past 9 years, the District has maintained the goal of not increasing rates beyond inflation by investing in capital projects and processes that reduce operating expenses. Recently, this has meant accepting fats, oil and grease (FOG) into the plant for use in creating biogas used to generate heat and electricity and offset the purchase of electricity from PG&E, and replacing the flocculating clarifier with a Dissolved Air Floatation (DAF) clarifier which decreases the amount of chemicals needed to treat the wastewater and saves the District over $100,000 annually. In the current budget, the District has partnered with private companies to develop a 1 MW photo-voltaic solar array and a 1 MW stationary storage system, both designed to significantly reduce the District s electricity costs and demand charges. The District is also working with private business partners to develop a waste-to-energy project to provide further energy cost savings as well as developing additional new revenue sources for the District. The calculation of sewer service charges rates based on asset life cycle costs (in the Ten-Year Financial Forecast section of the budget document) highlights that, even with the cost saving measures implemented by the District, the sewer service charges are not adequate to meet the renewal and replacement needs of the District. The Board will need to address this issue during the next fiscal year through the planned rate study and Proposition 218 rate setting process. Respond to Drought Conditions. FY 2015/16 begins with all of California in the fourth year of lower than normal rain and snowfall. The District is facing this problem head on with its continued focus on expanding recycled water into the community. The use of recycled water offsets the need to use potable water or groundwater for irrigation and landscaping needs. The FY 2015/16 budget includes the completion of the Phase 1 Recycled Water Expansion Project to increase the quantity of recycled water the District can provide in the summer months from 2,000 acre feet to 3,700 acre feet. The District has partnered with Napa County and the Los Carneros Water District to build 14 miles of recycled water distribution pipe to expand the area where recycled water is available. The District is also part of the North Bay Water Reuse Authority that focuses on the long-term financing of recycled water projects in Marin, Sonoma and Napa Counties.

7 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 3 7 Maintain Assets for Future Generations. Like in most communities, the bulk of the sewer system in the District was built from the 1950s through 1970s. These assets, along with those already in service prior to the Second World War, are deteriorating and reaching the end of their useful lives. It is the District s responsibility to ensure that these assets are maintained appropriately to keep them in service as long as possible, and to replace those assets when necessary to avoid system failures. The FY 2015/16 Budget includes the realignment of an engineering position (currently vacant) to become an Asset Management Analyst. The budget also includes $250,000 in support of the District s efforts to establish an asset management program. This program will focus on the maintenance, rehabilitation, and replacement of existing District assets plant, collections and recycled water. The resulting plans will integrate into the 10-Year CIP and 10-Year Financial Plan, providing much better and more focused attention on the maintenance and longevity of our assets. The District continues to use pay-as-you-go financing for the renewal and replacement of its sewers and other capital assets. The Collection System portion of the capital plan includes the continuation of annual expenses dedicated to main line sewer rehabilitation and lateral replacements, and identifies specific sewer rehabilitation and replacement projects deemed most critical. Currently, the District is planning to rehabilitate or replace between 0.8% and 1.0% of its sewer assets annually. The Board has directed staff, through the Strategic Planning process, to evaluate the impacts of maintaining this plan versus a potential increase in to asset replacement schedule. This analysis work will be completed during FY 2015/16. Position the District for Growth. If the community of Napa is to continue to develop according to its 20-year growth projections and with the densities of use identified in its Downtown Specific Plan, the Napa Sanitation District needs to plan for and build capacity for the anticipated new users of the sewer system and the increased flows and loading in the treatment plant. The proposed budget includes several projects that are designed to accommodate the growth that is anticipated in these plans. Most notably, the plan includes design and construction of the Browns Valley Road Sewer Interceptor project, which will increase capacity in the sewers in Browns Valley and will divert much of that flow away from downtown, thus increasing the capacity of downtown sewer mains. The Ten-Year Capital Improvement Plan (CIP) also includes expansion of other processes, including the aeration basins and the digester several years from now, in an effort to accommodate anticipated growth. Strengthen the District s Organizational Structure. Organizationally, the District is preparing for the future by evaluating the workload of various workgroups, and reorganizing some divisions and positons to better respond to anticipated future needs. The reorganization includes the elimination of the Assistant General Manager position, creating a Technical Services Director position, and elevating the Plant Manager position to Operations Services Director. This change will focus the efforts on the three function areas of the District, with high level oversight. Other changes, discussed in further detail in the District Overview section of the budget document, will help to direct resources to areas in most critical need at the District.

8 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 4 8 Prepare for the Next Economic Downturn. It is inevitable that the current growth in the local economy will be followed by a period of economic slowdown. The District should plan and make decisions now that will position it for the future. The proposed budget represents both a short-term (one year) plan for spending as well as a 10-year look forward in revenues, operating expenses and capital expenditures and strives to ensure that the decisions made this year are sustainable into the foreseeable future. When making decisions regarding capital projects, a total cost of ownership approach is employed, whereby the total cost of a decision, including both the initial capital cost and the ongoing operational costs, are considered. Decisions about changing levels of service are also evaluated long-term to determine the ability to sustain those changes. The proposed budget includes no changes in programs, service levels or overall staffing levels. Balance the Long-Range Forecast. The long-range forecast shows the District able to meet its operational and debt service demands, but unable to complete its Capital Improvement Plan. This imbalance will need to be addressed. The 10-Year Capital Improvement Plan is balanced for the next three years. Staff will be evaluating the CIP and making recommendations to the Board for how the District can meet its needs for the rehabilitation and replacement of assets and prepare for future growth in the community, while still maintaining a responsible rate structure and balancing the long-term financial health of the District. Financial Overview The District maintains one fund for accounting and budgeting purposes. Within the fund there are three departments or subfunds that track the following: 1) operating revenues and expenses, 2) capacity charge revenue, which is a restricted revenue, and 3) capital project expenses and associated revenues, such as grants. Operating expenses total $14.8 million, compared to $13.9 million in FY 2014/15, for an increase of 6.5%. Debt service expenses remained constant at $4.8 million. Intrafund transfers from operating to capital are budgeted at $7.9 million. The proposed capital budget of $30.5 million is about $6.5 million less than the FY 2014/15 approved capital budget. The capital budget includes the continuation of construction of the MST and LCWD recycled water pipelines, with these projects being entirely financed by federal grants, state grants and contributions from the County of Napa and Los Carneros Water District. The total operating and capital budget for the District, $50.1 million, is down 10.1% from last year. This decrease is made up from a 4.6% increase in Salaries & Benefits from prior year, 9.9% increase in Services & Supplies, and 17.7% decrease in Capital. The District is anticipated to increase its ending fund equity by $11.4 million during the fiscal year, due to the issuance of debt toward the end of FY 2015/16 for the Browns Valley Sewer Interceptor project. The operating emergency reserves and cash flow reserves are fully funded, per District financial policy. The cash flow reserve increased $2.75 million in anticipation of increased cash flow needs related to the MST and LCWD recycled water pipeline projects.

9 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 5 9 Summary of the FY 2015/16 Budget Revenues Sewer Service Charges (SSCs), the District s largest source of revenues, are collected annually as assessments on the property tax rolls. This budget continues a policy of not increasing the sewer service charges any higher than inflation, following the stated Board intention to maintain this policy through FY 2015/16. The FY 2015/16 budget includes an increase in the rate of 2.7%, equal to the December 2014 Consumer Price Increase-Urban Consumers (CPI) for the San Francisco/Oakland/ San Jose area. Other revenues were projected conservatively using economic indicators and trend analysis. Economic-based revenues such as capacity charges were projected based on specific evidence of activity and known large projects, and investment earnings rates were assumed to remain flat through next year. More information on the forecast methods can be found in the Sources of Funds/Revenues section of the Budget Summary. FY 2015/16 revenues from all sources are expected to be $61,477,100, excluding intrafund transfers. Projected operating revenue, which excludes revenues associated with capital projects (capacity charges, grants, intergovernmental revenue, bond proceeds and sale of capital assets), increased from just over $19.8 million in FY 2014/15 to $21.3 million this year (7.3 % increase). Sewer service charges are anticipated to increase 3.0% due to the CPI increase and an increase in the number of users. Recycled water sales revenues are expected to increase 58.9%, resulting from both increased rates and increased sales in the MST and LCWD areas. Intergovernmental revenues are budgeted at $21,971,000, including $4,838,700 in federal grant revenue for the Phase 1 Recycled Water Expansion project, North/South Recycled Water Pump Station Split project and MST recycled water pipeline project. Capacity charge revenue is projected lower, at $2,998,000, compared to $3,925,000 budgeted (and only about $1 million actually anticipated) in the prior year, based on a new large hotel project being built and due to the fee increase from $8,723 to $8,950 schedule for July 1 as structured in District ordinance. Operating Expenditures Operating expenditures for the District are expected to be $14,802,400 (total operating budget of $27,509,850, minus intrafund transfers of $7,900,000, taxes and assessments of $28,250 and debt service payments of $4,779,200). This represents an increase in budgeted operating expenditures of $912,930 or 6.6%. Including intrafund transfers, taxes and debt service, District operations is budgeted to increase $6,947,930 (33.8%) from the FY 2014/15 budget. Salary and benefit expenses are proposed to increase 4.6%. Salaries are set to increase 2.5% in accordance with the Memorandum of Understanding. Benefit increase make up the difference, with the largest increase coming from retirement expenses (up 8.6%) and workers compensation insurance (25.5%). The current Memorandum of Understanding was approved in June 2014 and sets salary and benefit levels through June 2020.

10 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 6 10 For FY 2015/16, there are again no increases in staffing levels for the District, with salary and benefits budgeted to accommodate the anticipated new labor agreements. There are, however, a number of changes to positions in accordance with the new Employee Master Plan and reorganization plan. The Employee Master Plan recommended that the total number of employees increase from 51 to 53. The FY 2015/16 does not include the two new employees. This recommendation will be evaluated further and incorporated into the rate study. The base budget for services and supplies in total is proposed to increase 1.2% over the prior year s budget. The base includes $136,250 in new electricity and chemical expenses associated with increased recycled water production, but these new expenses are offset by increased revenue from recycled water sales. Without these new recycled water expenses, the base services and supplies budget would have decreased 1.4%. In addition to the base services and supplies budget, four one-time projects were added, projects that were either identified in the District s Strategic Plan for completion this year or are at the request of the Board: $65,000 for a Communications and Outreach Plan, to craft messages, identify audiences and develop strategies for pollution prevention and general district communications $90,000 for a rate study for sewer service charges and capacity charges. The study is required as part of the Proposition 218 rate setting process and must be done at least every five years. $250,000 for asset management implementation and support. This would be in addition to staffing changes, and would include a gap analysis and recommendations on how to get from our existing level of proficiency to a higher-level asset management program. $50,000 for potential litigation. There is a significant possibility of litigation during the next fiscal year. The budget sets aside some resources to respond to this potential need. In total, including the base budget and the one-time projects, the services and supplies budget is increasing 9.9% in FY 2015/16. Capital Expenditures The District maintains a Ten-Year Capital Improvement Plan (CIP) and includes the acquisition and construction of new facilities and assets as well as the renewal and rehabilitation of existing assets, when that rehabilitation extends the useful life of those assets. The District continues to implement the strategies identified in the Collection System Master Plan, through implementation of stormwater and groundwater inflow & infiltration (I/I) reduction projects. The Wastewater Treatment Plant Master Plan was approved in March 2011, with the capital components included in the capital plan. The CIP continues projects to expand the recycled distribution system to meet increasing recycled water demand and improve the operational resiliency of the District. The capital expenditure budget for FY 2015/16, the first year of the ten-year plan, is $30.5 million. Three projects, the MST Recycled Water Pipeline, the LCWD Recycled Water Pipeline, and the Sarco Creek Pipeline Replacement, are paid for by external sources.

11 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 7 11 Further details can be found in the Capital Improvement Plan chapter of this budget document. Debt and Debt Service The District has four distinct debts for which it pays annual debt service. All of the District s debt has a fixed interest rate. Total debt service for FY 2015/16 is expected to be just under $4.8 million. It is anticipated that the District will issue debt in FY 2015/16 to pay for the Browns Valley Road Sewer Interceptor project, currently estimated at $15.2 million. Fund Equity and Reserves The ending fund equity for FY 2014/15 is estimated to be $12,345,900. This number assumes that most of the capital budget in FY 2014/15 is spent, or that any underspending is carried forward into this fiscal year. As proposed, the ending fund equity for the District is projected to be $23,753,700 on June 30, 2016 and is allocated as follows: $2,227,000 15% Operating Reserve This is 15% of the District s budgeted operating expenditures, excluding taxes, transfers and debt service. $10,987,000 Operating Cash Flow Reserve This amount is necessary on July 1 to cover the anticipated operating expenses of the District between the start of the fiscal year and December, when the District receives the bulk of its cash receipts from sewer service charges billed on property tax statements. $10,539,700 Available for Use This is the projected amount of fund equity, including bond proceeds, available to the District for use on capital projects at the end of FY 2015/16. Following is a summary table of the revenue, expenditure and intrafund transfer budgets for FY 2015/16, along with information on fund equity and reserves.

12 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 8 12 Budget Summary FY 14/15 FY 15/16 Percent Adjusted Budget Budget Change Beginning Fund Equity $22,413,420 $12,345,900 (44.9%) Revenue All funds, excluding transfers Sewer Service Charges (incl. delinquencies) $18,963,000 19,534, % Capacity Charges 3,925,000 2,998,000 (23.6%) Waste Hauler Fees 230, , % Recycled Water Sales 319, , % Land Leases 113, , % Intergovernmental / Grants 21,809,000 21,971, % Interest on Invested Funds 116,100 77,000 (33.7%) Construction/Building Permit Review Fees 35,700 95, % Penalties on Delinquent Sewer Fees 25,000 25, % Sale of Capital Assets 20,000 0 (100.0%) Bond Proceeds 0 15,200,000 - Other Revenues 54, , % Total Revenues $45,609,800 $61,477, % Expenditures All funds, excluding transfers Salaries & Benefits $8,656,840 $9,054, % Services & Supplies 5,232,630 5,748, % Taxes & Other 33,150 28,250 (14.8%) Subtotal Operating Expenses $13,922,620 $14,830, % Capital Expenditures $37,002,900 $30,459,450 (17.7%) Debt Service (incl. debt administration expenses) 4,751,800 4,779, % Subtotal Capital Expenses $41,754,700 $35,238,650 (15.6%) Total Expenditures $55,677,320 $50,069,300 (10.1%) Ending Fund Equity $12,345,900 $23,753, % Reserves 15% Operating Reserve $2,085,000 $2,227, % Operating Cash Flow Reserve 8,240,000 10,987, % Total Reserves $10,325,000 $13,214, % Available for Use (Ending Fund Equity minus Reserves) $2,020,900 $10,539, % FY 14/15 FY 15/16 Percent Adjusted Budget Budget Change Intrafund Transfers Transfer from Operations to Capital Projects $1,887,500 $7,900, % Transfer from Expansion to Capital Projects 3,847,000 2,998,000 (22.1%) Transfer from Debt Proceeds to Capital Projects 20,000,000 1,350,000 (93.3%) Total Intrafund Transfers $25,734,500 $12,248,000 (52.4%)

13 FY 2015/16 Operating and Capital Budget June 3, 2015 Page 9 13 Ten-Year Budget Projections The District has been able to weather low levels of SSC growth and decreases in non-ssc revenues in recent years through prudent control of its expenditures. The reduction of capacity charge revenue, as a result of reduced demand for new connections to the system requires special emphasis and attention be placed on the ongoing review of the Capital Improvement Plan by District management and the Board. The Capital Improvement Plan is only balance for the next three fiscal years. Management and the Board will need to work together to develop a long-term strategy to bring planned expenditures in line with expected revenues. The cost of employee benefits continues to rise for the District. Specifically the cost of health and retirement benefits is a major contributor to increased operating costs over the foreseeable future. The solar project and the stationary storage project will help to contain and control future electricity costs. Chemical costs will likely rise over the next ten years and require regular monitoring by staff. The increased demand for recycled water anticipated for this new fiscal year and beyond will be offset by the additional revenue generation. The forecast assumes modest annual increases in sewer service charges (by CPI), annual increases in capacity charge rates (by CPI), a significant increase in development (particularly hotels), and annual increases for recycled water fees (by CPI). Further detailed information regarding the District s Ten- Year Financial Plan can be found in the budget document. Identified Areas of Potential Significant Variability in Forecast The Ten-Year Financial Forecast includes various assumptions about the rates of increase for revenues and expenditures. There are two assumptions in the forecast that have significant risk or variability associated with them. If these assumptions do not materialize as projected, it will be necessary for the District to reevaluate its operating and capital budgets and make adjustments. The first major assumption is in the forecast for recycled water usage. As part of the fee setting process in FY 2011/12 to set the recycled water fee for 2016 and beyond, the District assumed that recycled water sales would be 2,400 acre feet. Current sales are estimated at approximately 1,300 acre feet. The projected increases in future years assumes that Napa State Hospital switches over to recycled water (200 AF), that the MST area takes 500 acre-feet, that HCV Napa completes development of the Montelcino Resort (300 AF), and that the resort development on Stanly Ranch is completed (200 AF). It is also assumed that if these projects do not take water, that water would be available for other users, such as the Los Carneros Water District. The assumptions seem reasonable given recent construction and development activity, but if these use targets are not met, there will be insufficient sales to meet the revenue projections. The second major assumption is in capacity charge revenues. The current forecast assumes the sale of 335 EDU in capacity charges in FY 2015/16, increasing to 598 in FY 2016/17, and to 590 in FY 2017/18 to recognize likely hotel developments in the service area. These numbers can be compared to the 214 EDU in FY 2013/14 and the estimated 110 EDU in FY 2014/15. If economic development does not increase by these levels, there will be lower than anticipated revenues to pay for capital projects, and lower than anticipated sewer service charges to pay for ongoing operations.

14 FY 2015/16 Operating and Capital Budget June 3, 2015 Page Acknowledgments The General Manager's Office and the Administrative Services Department staff sincerely appreciate the direction offered by the District s Finance Committee, Long Term Planning Committee and Board of Directors, and the cooperation and assistance of District staff, in developing a responsible and thoughtful budget for FY 2015/16. Many people throughout the organization have put a great deal of effort and skill into producing this document and the proposed budget. Finally, as always, we look forward to your comments and suggestions so that we may continue to refine the document and make it as readable and useful as possible to the District Board, its customers, and the community at large. Respectfully submitted, Tim Healy General Manager Jeff Tucker Director of Administrative Services/ Chief Financial Officer

15 15 RESOLUTION NO. RESOLUTION OF THE NAPA SANITATION DISTRICT ADOPTING A BUDGET AND CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEAR 2015/16 WHEREAS, the Board of Directors of the Napa Sanitation District is charged with the duty of adopting an annual budget; and, WHEREAS, the Board of Directors of the Napa Sanitation District has studied and considered in detail a Preliminary Operating Budget and Capital Improvement Program for FY 2015/16; and, WHEREAS, the Final Budget (Operating and Capital Improvement Program Expenditures, Revenues and Reserves) has been submitted to the Board of Directors (copy attached); and, NOW, THEREFORE BE IT RESOLVED that the Board of Directors, as the governing body of the Napa Sanitation District, has determined that the attached Final Budget, describing: Operating Budget Appropriation of $19,617,577, plus intrafund transfer of $7,900,000 to support Capital Projects, for a total of $27,517,577; and, Expansion Appropriation of $2,998,000 in intrafund transfer to support Capital Projects; and, Intrafund transfer appropriation of $1,350,000 from the Debt Proceeds account to Capital Projects; and, Capital Projects Appropriation of $30,459,450; and, Full-Time Equivalent (FTE) Employee authorization of 51 employees, plus 5 Board Directors; be hereby adopted as the Final Budget for the Napa Sanitation District for FY 2015/16. I hereby certify that the foregoing Resolution was duly and regularly adopted by the Board of Directors of the Napa Sanitation District, at its regularly scheduled meeting on the 3 rd day of June, 2015, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Chair, Board of Directors Secretary, Board of Directors

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17 FY 2015/16 Budget 17 Napa Sanitation District Overview Mission It is the mission of the Napa Sanitation District to collect, treat, beneficially reuse, and dispose of wastewater in an effective and economical manner that respects the environment, maintains the public's health and meets or exceeds all local, state and federal regulations. History Napa Sanitation District, located in the Napa Valley in Northern California, has been serving the public since it was organized under the California Health and Safety Code in November Soscol Water Recycling Facility The District provides wastewater collection, treatment and disposal services to the residents and businesses in the City of Napa and surrounding unincorporated areas of Napa County. As a special district, the Napa Sanitation District is an independent local agency governed by a Board of Directors made up of three elected officials from the City and County and two public appointees. Until 1998, wastewater was processed at both the Imola Treatment Plant located north of Imola Avenue and west of Soscol Avenue, and the Soscol Water Recycling Facility (SWRF) near Napa County Airport. In 1998, all wastewater treatment activities were shifted to the SWRF. The Imola Avenue treatment facility was demolished in 2002 after completion of the Napa County Flood Control District Project relocating the railroad tracks onto the District s Imola property. The District's Administration, Engineering and Collection System offices were relocated to the SWRF in Public Services There are approximately 36,800 connections within the District's service area of approximately 21 square miles of service area. Through a network of approximately 270 miles of underground sewer mains, assisted by a system of three lift stations, the sewage makes its way to the SWRF for treatment. (Additional demographics are available in Appendix B Statistics and Economic Data.) The SWRF is a secondary and tertiary biological physical-chemical treatment facility that treats a mixture of domestic and industrial wastewater. The District wastewater processes include primary treatment, activated sludge facilities, oxidation ponds, clarifiers, sludge digestion and solids de-watering facilities. The SWRF has a dry weather treatment design capacity of 15.4 million gallons per day (MGD). The wastewater is treated and discharged in various manners, depending on the source of the wastewater and the time of year. The District's regulating body, the Regional Water Quality Control Board, permits discharge to the Napa River from November 1 through April 30 (the wet season period). The average annual wet weather season discharge of treated water to the Napa River is approximately 13.8 MGD. The District provides full secondary treatment at its wastewater facility whenever discharging to the Napa River. Recycled water storage From May 1 through October 31 (the dry season period) discharge to the Napa River is prohibited and wastewater is either stored in stabilization ponds or treated and beneficially reused for landscape irrigation in industrial parks, golf courses, parks, pasturelands and vineyards. This high quality Title 22 Unrestricted Use recycled water is provided to all recycled water users.

18 FY 2015/16 Budget 18 Performance Measurement The District created and issued its Performance Measurement Report for Calendar Year 2014 in March The report identifies 65 performance measures that, when taken as a whole, should give the reader a sense of how well the utility is performing and being managed. The report uses the Effective Utility Management (EUM) framework for presenting the performance information. EUM was developed in 2009 by six major water and wastewater associations and the United States Environmental Protection Agency to help utility managers make practical, systematic changes to achieve excellence in utility performance. This framework is specific to water and wastewater utilities and provides for the possibility of comparing the District to other wastewater utilities once more providers begin using EUM for measuring and reporting on performance. The performance measures are organized into EUM s Ten Attributes of Effectively Managed Water Sector Utilities: 1. Product Quality 2. Customer Service 3. Employee and Leadership Development 4. Operational Optimization 5. Financial Viability 6. Infrastructure Stability 7. Operational Resiliency 8. Community Sustainability 9. Water Resource Adequacy 10. Stakeholder Understanding & Support The District rates satisfactory in 55 measures (85%). These measures include, among many others, meeting NPDES discharge limits for BOD and total suspended solids, having fewer sewer overflows than the state average, lower than average worker injury rates, solid financial measures, and proactive practices on preventive maintenance. The District rates watch on six measures (9%). A watch designation signifies that the District is in danger of not meeting its goals, that the trend is indeterminate, or that there is insufficient data to make an assessment. Measures in this category include asset inventory, renewal and replacement of sewer mains and public laterals, the uptime for pumps at the influent pump station, long-term recycled water supply adequacy, and the comparative ranking of the District s sewer service charge rate. The District rates unsatisfactory on one measures (2%). Unsatisfactory signifies that the District has not met its goals or that the trend is negative. This rating was for critical parts and equipment resiliency. Several of the performance measures have been identified as Key Performance Indicators (KPIs) for determining whether the District is meeting its Strategic Goals. Those KPIs have been identified below in the Strategic Planning Goals and Objectives section. Most of the performance measures in the Performance Measure Report have also been included in the narratives of the Expenditure by Department section of this budget document. A complete copy of the Performance Measurement Report for Calendar Year 2014 can be found in Appendix E of this budget.

19 FY 2015/16 Budget 19 Strategic Planning Goals and Objectives In April 2015, the Board of Directors updated its Strategic Plan, articulating the long-term goals, objectives and priorities of the District. The following are excerpts from the Strategic Plan. The Strategic Plan provides detail on these goals and specific objectives, a copy of which can be found in Appendix C of this document. On a quarterly basis, progress on these goals and objectives is reported to the Board of Directors and posted on the District s website. Mission The mission of the District is to collect, treat, beneficially reuse and dispose of wastewater in an effective and fiscally responsible manner that respects the environment, maintains the public s health and meets or exceeds all local, state and federal regulations. Goal 1 - Infrastructure Reliability The goal is to build, maintain and operate a cost-effective and reliable wastewater treatment system for the District s service area. Systematic replacement of the District s aging infrastructure is priority number one. A long term capital facilities plan is needed, drawing on accurate information about current facility conditions and projects of future service area needs: five, ten or more years from now. The District must ensure that treatment capacity will be in place to address current and projected future needs. Key Performance Indicators Actual Actual Actual Actual Target Target Target Indicator Met? Renewal & Replacement of Assets 2.8% 3.0% 2.6% 8.8% 2% - 4% 2% - 4% Yes Sewer Main Renewal & Replacement 0.7% 0.7% 0.0% 1.8% 1% 1% No Public Sewer Lateral Renewal & Replacement 0.8% 0.6% 0.2% 0.9% 1% 1% No Collection System Failures Yes Plant Planned Maintenance Ratio (Hours) 50% 64% 58% 66% > 60% > 60% Yes Collections Planned Maintenance Ratio (hours) 92% 90% 88% 88% > 85% > 85% Yes Uptime for Cogeneration Engine 82% 84% 96% 96% > 90% > 90% Yes Uptime for Pumps at Influent Pump Station 67% 81% 79% 99% > 95% > 95% No (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Completion: 1A: Implement Treatment Plant Master Plan critical projects, including pond Dec aeration, recycled water equalization and filters and DAF clarifier, and replacement of the influent pump station 1B: Complete cost/benefit analysis of wet weather inflow/infiltration Dec C: Determine target for renewal and replacement of sewers June D: Develop and asset management program June E: Design and construct the Browns Valley Road Interceptor Dec F: Amend the Collection System Master Plan June G: Study whether to implement a Private Lateral Program Dec. 2017

20 FY 2015/16 Budget 20 Related Department Objectives: Rehabilitate 60 public laterals annually (Collection System) Work to eliminate higher maintenance sewer mains by replacing or repairing them (Collection System) Enhance and organize inventory system to reduce down time (Plant Maintenance) Begin designs of the Browns Valley Road Interceptor Project (Engineering) Begin implementation of a formal asset management plan (Engineering) Amend the 2007 Collection System Master Plan (Engineering) Design and construction I/I pilot projects (Capital Improvement Plan) Complete the replacement of the Influent Pump Station (Capital Improvement Plan) Install new spare digester mixer to improve redundancy and reliability (Capital Improvement Plan) Goal 2: Financial Stability The goal is to ensure adequate fiscal resources to fulfill the District s mission. The District Board has a fiduciary responsibility to ensure that adequate financial resources are in place to operate the District and carry out its mission. Key Performance Indicators Actual Actual Actual Actual Estimate Target Target Indicator FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 Met? Bond Rating AA- AA- AA- AA- AA- AA- Yes Debt Service Coverage Ratio 328% 325% 247% 276% 195% > 125% Yes Revenue-to-Expenditure Ratio (0.02) (0.24) 0.05 > 0 Yes Rates Based on Life-Cycle Cost 4.3% 7.9% 6.1% 3.0% (1.6%) ± 5% Yes Sewer Bill Affordability 0.64% 0.64% 0.66% 0.68% 0.68% < 1% Yes (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Completion: 2A: Develop non-rate, revenue-generating opportunities that fit within the Ongoing District s mission, either on its own or through private/public investment 2B: Complete a study of plan check/inspection fees and methodology options for Sept calculating and assessing capacity charges, and make recommendations 2C: Conduct a Sewer Service Charge fee study prior to the next Proposition 218 March 2016 hearing 2D: Develop financing plan for Browns Valley Road project, and implement Dec Related Department Objectives: Conduct a study of the District s Sewer Service Charges in support of a Proposition 218 process (Administrative Services) Analyze assumptions in long-range plans for sensitivity to economic or regulatory changes (Administrative Services) Review cash flow and emergency reserves for adequacy (Administrative Services) Maintain and adjust ten-year plan for fleet sustainment, acquisition, rehabilitation and attrition (Safety, Training and Fleet Maintenance) Continue to implement an effective life cycle equipment replacement schedule for better budgetary expense projections (Plant Maintenance) Develop and utilize capital program management system to monitor and report progress of active capital projects (Engineering) Flocculating clarifier demolition

21 FY 2015/16 Budget 21 Goal 3: Operational Capability The goal is to implement and maintain effective operational practices. The District Board wants to operate the District at or above best practices, utilizing proven technology. Customers, ratepayers and internal staff all deserve high quality service. Key Performance Indicators Actual Actual Actual Actual Target Target Target Indicator Met? Compliance with NPDES Permit 100% 100% 100% 100% 100% 100% Yes Sanitary Sewer Overflows (Cat. 1) per 100 miles Yes Self-Generated Electricity 22.1% 23.3% 33.7% 32.6% > 25% > 25% Yes Electricity Consumption Efficiency (MWh per million gallons-summer) < 6.0 < 6.0 Yes Chemical Consumption (gallons hypochlorite per MG treatedsummer) < 210 < 210 Yes Recycled Water Service Availability 98% 100% 100% 100% 100% 100% Yes (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Completion: 3A: Partner with winery industry to research and develop a mutually beneficial June 2017 alternative to treating winery waste 3B: Negotiate a new 5-year NPDES permit Dec Related Department Objectives: Continue to respond to the needs of the community in a timely and professional manner within 30 minutes, while trying to reduce the number of emergency service calls (Collection System) Continue to maintain efficiency of preventive maintenance operations, cleaning at least 40% of the District sewer mains per year (Collection System) Video inspect 10% of the sewer mains in the District s system (Collection System) Continual process optimization of the plant control systems to achieve a reduction in chemical and energy costs (Plant Operations) Install additional online instrumentation, reducing the amount of chemicals needed for treatment and reducing on-call operator time (Plant Operations) Continue producing an effluent that meets the NPDES permit requirements (Plant Operations) Continue enhancement and organization of the inventory system to reduce down time (Plant Maintenance) Review and update operational data sampling and analysis management for an efficient process control operational strategy (Plant Laboratory) Review and return development plans within 30 days of submittal to District (Engineering) Develop performance goals for increased and improved inspection of non-categorical dischargers, and continue monitoring, sampling and reporting for all categorical dischargers (Pollution Prevention) Continue the Jameson Reuse Site sprinkler rehabilitation project, to increase the efficiency of recycled water application (Water & Biosolids Reclamation) Training on Arc Flash protective equipment Goal 4: Employee Development The goal is to maintain a dynamic and skilled workforce through employee engagement, professional development and opportunities for advancement. The District Board wants to create a positive and respectful working environment that encourages all employees to do the best job possible for the ratepayers of the District.

22 FY 2015/16 Budget 22 Key Performance Indicators Actual Actual Actual Actual Target Target Target Indicator Met? Safety Training Completed On-Time 79% 79% 99% 99% > 98% > 98% Yes Employee Survey: Supervisor supports career growth 3.98 na na 3.95 > 3.0 > 3.0 Yes Employee Survey: Adequate resources to do job 3.68 na na 3.83 > 3.0 > 3.0 Yes Employee Survey: Received training to work efficiently 3.32 na na 3.74 > 3.0 > 3.0 Yes Employee Survey: High job performance is rewarded 3.34 na na 3.26 > 3.0 > 3.0 Yes (Survey: 1=Unfavorable to 5=Very Favorable) (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Completion: 4A: Promote NSD as a progressive, professional organization to foster a Ongoing reputation regionally and state-wide as a great place to work 4B: Conduct Employee Survey in Fall 2017 Feb C: Implement Employee Master Plan recommendations Dec D: Participate in programs to develop qualified and trained operators Ongoing Related Department Objectives: Continue to provide direction to all departments, aligning efforts to promote and be consistent with the District s goals and policy directives (General Manager s Office) Complete an update of the District s Employee Job Descriptions (Administrative Services) Develop and implement periodic review plan for District safety policies and programs (Safety, Training and Fleet Maintenance) Prepare for and coordinate the safety review conducted by CSRMA, the District s worker s compensation insurance carrier (Safety, Training and Fleet Maintenance) Gather, store and disseminate asset and work information in an economical way with completeness and accuracy, including sharing with other departments in the District and others as needed (Collection System) Develop and implement an analyst educational outreach training program (Plant Laboratory) Goal 5: Community Outreach and Communication The goal is to provide ratepayers with the information they need to understand the District s mission, operations, finances and rate structures. The District Board wants to ensure that the District operates in a transparent manner and serves as a resource to all ratepayers of the service area. Key Performance Indicators Actual Actual Actual Actual Target Target Target Indicator Met? Media Coverage Quantity > 20 > 20 Yes Media Coverage Accuracy 92% 86% 90% 97% > 85% > 85% Yes Customer Satisfaction-Plug Ups (percent good or excellent ) 100% 99.5% 100% 99.5% > 95% > 95% Yes Customer Satisfaction-Cleanouts (percent good or excellent ) 90.0% 94.3% 97.9% 100% > 95% > 95% Yes (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: 5A: Be proactive in developing partnerships with local businesses and other public agencies to achieve common goals 5B: Create a communications plan to address NSD outreach and public information needs Completion: Ongoing June 2016

23 FY 2015/16 Budget 23 Related Department Objectives: Develop a communications master plan (General Manager s Office and Pollution Prevention) Complete the District s sixth Performance Measurement Report (Administrative Services) Respond to requests for information from the general public and other local agencies within three working days of request (Engineering) Expand the medication collection program to include more drop-off sites (Pollution Prevention) Conduct plant tours and make public presentations (Pollution Prevention) Promote and deliver classroom presentations targeting elementary school students (Pollution Prevention) Develop and disseminate to stakeholders pollution prevention BMPs as necessary (Pollution Prevention) Complete activities necessary to achieve Fish Friendly Certification at the reuse sites (Water & Biosolids Reclamation) Goal 6: Resource Recovery The goal is to implement policies and technologies to recover resources from wastewater for beneficial reuse. The District Board wants to recover resources for reuse when economically viable and a market exists for their beneficial reuse. The District must also use the resources available to ensure a reliable energy supply during emergency conditions as well as during normal times. Key Performance Indicators Actual Actual Actual Actual Target Target Target Indicator Met? Recycled Water Reused on Non- District Property 56% 62% 72% 75% > 60% > 90% Yes Biosolids Beneficially Reused 90% 100% 100% 100% > 90% > 90% Yes Digester Gas Beneficial Reuse 94% 91% 98% 95% > 90% > 90% Yes (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Completion: 6A: Implement capital projects in partnership with local agencies for the June 2016 distribution of recycled water 6B: Participate with local partners on long-tern opportunities for water reuse Dec C: Study and develop pathway to become energy independent Ongoing Related Department Objectives: Work with private sector partners to develop partnerships for solar energy, energy storage and other technologies, lowering the District s electricity costs and providing non-rate revenues (Administrative Services) Continue to receive fats, oil and grease (FOG) collected from siphon to the FOG receiving station at SWRF (Plant Operations) Optimize production of biogas in digester resulting from FOG receiving program (Plant Operations) With the City of Napa, promote the Recycle More Program that provides curbside collection of used cooking oil for use as biofuel (Pollution Prevention) Put 100% of the biosolids applied to District land to beneficial reuse, through active agricultural practices on the land (growing crops, grazing sheep, etc.) (Water & Biosolids Reclamation) Complete construction of the Phase 1 Recycled Water Expansion project (Capital Improvement Program) Complete construction of the MST and LCWD recycled water pipelines, and the expansion of the recycled water pump station through the North/South Split project (Capital Improvement Program) Continue planning efforts within the North Bay Water Reuse Project for future development of recycled water programs and EIR/EIS documentation (Capital Improvement Program)

24 FY 2015/16 Budget 24 Financial Policies Summary The District maintains, and regularly reviews and revises, a comprehensive set of Financial Policies to govern the overall financial management and health of the District. Policy areas include: Reserves Revenue Budgeting and Capital Asset Management Debt Issuance and Management Investments Financial Reporting Accounting Several of the Financial Policies have direct impact on the construction of the budget: Balanced Budget the District maintains a balanced budget and does not use long-term debt to fund short-term or operational expenses. Operating Reserves the District maintains an operating reserve at least equal to 15% of budgeted annual operating expenses, excluding debt service and transfers. Liquidity the District maintains a liquidity reserve to ensure adequate cash is on hand to cover expenses in those months where expenses outpace revenues. The majority of the District s revenues are received in December and in April through property assessments. Revenues the District estimates revenues conservatively and does not use one-time or unpredictable revenues to fund ongoing expenses. Maintenance the District protects its investment in its capital assets by budgeting for their adequate maintenance as a priority. Debt the District will not issue debt unless it can pay the debt service and still meet its other obligations from current revenues. A complete copy of the Financial Policies can be found in Appendix D of this document. Compliance with Financial Policies The District is in full compliance with the Financial Policies adopted in May 2012, as described above and provided in their entirety in Appendix D. Specifically, the District has taken the following actions to ensure compliance with the Financial Policies: The annual operational expenditures for the District, including debt service, are less than the annual operating revenue forecasted to be received, meeting the requirement for a balanced budget. The District has designated an Operating Reserve of 15% of budgeted operating revenues ($2,226,000) and a Cash Flow/Liquidity Reserve of $10,987,000. These reserves meet the minimum requirements established in the Financial Policies. The District has estimated revenues conservatively for the current fiscal year. Additionally, one-time revenue sources have not been used to balance the operating budget, and there are no unpredictable revenues forecast in the budget or used to balance the budget. The District has adequately budgeted to meet all of its debt service requirements, and has maintained its debt service coverage ratio at a level higher than is required by bond covenants. There are adequate revenues available to transfer to the Capital Projects Fund to meet the near-term needs in the Capital Improvement Plan, although there are some shortfalls projected in some years of the plan. A description of how the District will manage those shortfalls can be found in the Capital Improvement Plan section of this budget document. Financial Policy Compliance NSD Policy Target FY 15/16 Balanced Budget Operating revenues minus $1,671,153 operating expenditures > $0 Operating Reserve 15% of Operating Budget 15.0% Cash Flow Reserve As necessary $10,987,000 Debt Coverage Ratio > 1.25x coverage 1.98x

25 FY 2015/16 Budget 25 Organization The Napa Sanitation District is governed by a Board of Directors. Two directors are members of the Napa City Council. One director is a member of the Napa County Board of Supervisors. Two directors are citizen appointees, one appointed by the City and one by the County. The District is managed by a General Manager. Starting this fiscal year, the District will modify its organizational structure. The District will now be organized into three departments, each headed by a Director. The Assistant General Manager position will be eliminated. The laboratory will move under the Technical Services Director, as will the responsibility for pollution prevention and outreach activities. Operations Services includes those divisions associated with operations and maintenance. They include the following functions: o Collection System Maintenance: includes preventive and corrective maintenance and operation of the sewer system. This Division includes Collection System Maintenance in the Expenditure Budgets by Division section of this budget document. o Wastewater Treatment Plant Operations: includes operation of the wastewater treatment plant and lift stations. This Department includes Treatment Plant Operations, in the Expenditure Budgets by Division section of this budget document. o Wastewater Treatment Plant Maintenance: includes mechanical and electrical maintenance of the wastewater treatment plant and lift stations. This Department includes Treatment Plant Maintenance in the Expenditure Budgets by Division section of this budget document. o Water and Biosolids Reclamation: includes recycled water system management and disposal of biosolids through land application. This Department includes Water & Biosolids Reclamation in the Expenditure Budgets by Division section of this budget document. Technical Services includes those divisions associated with planning and implementing capital projects and asset management, construction inspection and overseeing regulatory compliance functions. They include the following functions: o Capital & Engineering: includes development review, capital project management, project design/engineering and inspection. This Division includes Engineering in the Expenditure Budgets by Division section of this budget document. o Regulatory Compliance: includes all regulatory compliance and reporting functions, including the Laboratory, Pretreatment, Pollution Prevention, and Outreach activities. This Division includes Treatment Plant Laboratory and Pollution Prevention in the Expenditure Budgets by Division section of this budget document. Administrative Services: includes finance and accounting services, human resources, risk management, safety and training, fleet management, and general administrative services. This Department includes Board of Directors, General Manager s Office, Administrative Services, Safety, Training & Fleet Maintenance, and Non-Departmental Expenses in the Expenditure Budgets by Division section of this budget document.

26 FY 2015/16 Budget 26 Organization Chart CUSTOMERS Board of Directors Financial Auditor (Contracted Service) General Manager 1 FTE Legal Counsel (Contracted Service) Operations Director 1 FTE Technical Services Director / District Engineer 1 FTE Admin. Services Director / Chief Financial Officer 1 FTE Collection System 13 FTE Plant Operations 8 FTE Capital & Engineering 6 FTE Engineering Clerk of the Board / Human Resources Officer 1 FTE Accounting & Office Support 4 FTE Plant Maintenance 6 FTE Water & Biosolids Reclamation 3 FTE Asset Management Inspection Regulatory Compliance 5 FTE Safety, Training & Fleet Maintanance 1 FTE Laboratory Pollution Prevention & Outreach Total: 51 Employees

27 FY 2015/16 Budget Napa Sanitation District Position Control Roster As adopted on July 1 27 Position Series (excluding Board Members) FY 12/13 Adopted FY 13/14 Adopted FY 14/15 Adopted FY 15/16 Proposed General Manager's Office General Manager Assistant General Manager Administrative Services Director of Administrative Services/Chief Financial Officer Human Resources Clerk to the Board/Human Resources Officer Accounting Senior Accountant Accountant Senior Office Assistant Office Assistant Administrative Assistant I/II Management Analyst & Outreach Coordinator Safety, Training and Fleet Maintenance Safety, Training & Fleet Maintenance Officer Operations Services Director of Operations Services Collections System Maintenance Collection System Manager Collection System Supervisor Collection System Technician Collection System Worker III Collection System Worker IT/I/II Treatment Plant Operations Plant Manager Plant Operations Supervisor Operator OIT/I/II/III Treatment Plant Maintenance Plant Maintenance Supervisor Equipment Maintenance Specialist I/II Plant Attendant Water & Biosolids Reclamation Reclamation Systems Manager Reclamation Maintenance Worker I/II Technical Services Director of Technical Services Engineering Capital Projects Manager/Senior Civil Engineer Junior/Assistant/Associate Engineer Asset Management Analyst District Inspector I/II Regulatory Compliance Regulatory Compliance Manager Lab Supervisor Laboratory Technician I/II Pollution Prevention and Outreach Specialist Totals

28 28 FY 2015/16 Budget Napa Sanitation District Map of NSD Service Area NSD Sphere of Influence NSD Service Area

29 FY 2015/16 Budget Budget Summary Fund Structure The District s financial structure is comprised of one enterprise fund. This fund includes all District revenues, including restricted revenues. The fund also includes all District expenditures, including operating expenditures, debt service and capital expenditures. Under this structure, restricted revenues (including associated interest earnings) are still accounted for separately and discretely, as required by state law. Basis of Accounting The Basis of Accounting refers to the specific time and method at which revenues and expenses are recognized in the accounts and reported in the financial statements. The Basis of Accounting for the District in its financial statements is full accrual. However, the budget is adopted on a modified accrual basis of accounting consistent with Generally Accepted Accounting Principles (GAAP). Under the modified accrual basis, revenues are recognized when they are susceptible to accrual, i.e., when they become both measurable and available. Measurable means the amount can be determined and available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related liability is incurred. Capital expenditures and debt principal payments are included in the annual adopted budget and used as a limit on expenditures, but these expenses are removed when recorded in the financial statements to conform to GAAP. Basis of Budgeting The District s budgetary procedures conform to state regulations and Generally Accepted Accounting Principles. While the District uses full accrual accounting in its annual financial statements, the District uses a modified accrual basis of accounting for budgeting and reporting on budgeted versus actual expenditures in its monthly and quarterly reports. The following are some of the differences between the way the District budgets and the way it accounts for revenues and expenses in its financial statements: Grant revenues are budgeted on a modified cash basis rather than an accrual basis; Fixed assets are depreciated for some financial reporting, but are fully expensed in the year acquired for budgetary purposes; and Capital expenditures and debt principal payments are budgeted as expenses for budget authority and compliance purposes but are removed in annual financial reporting. The District budgets this way so that it is easier for rate payers and stakeholders to see and track different types of expenses within the budget. Budget Appropriation Budgets are adopted for all expenditures of the District. Total operating expenses and total capital expenses are adopted as separate appropriations. The General Manager is authorized to transfer an unlimited amount of appropriation between operating departments so long as the total operating expense appropriation does not increase. The General Manager is also authorized to transfer appropriation between capital projects as long as the total capital appropriation does not increase. Only the Board of Directors can increase the total allowable operating and capital appropriations. The General Manager is authorized to hire regular employees up to the number approved by the Board of Directors, in accordance with the Position Control Roster. Budget appropriations lapse at the end of the fiscal year. Unspent amounts on specific capital and operations projects may be carried forward to the following fiscal year only with the authorization of the Board of Directors. Budget Development Process The budget process begins each year with a review of current expenditures, to determine how well the budget plan is working. Unanticipated expenses are identified, and revenue and expenditure patterns are analyzed. This information is presented to the Finance Committee, a subcommittee of the full Board of Directors. With this information, the Finance Committee, the General Manager and the Chief Financial Officer develop recommendations on assumptions and policy direction for the next budget year. These recommendations are brought to the full Board of Directors for input and approval. With this direction, department managers develop line item proposals. At the same time, the Capital Program Manager works with department managers 29

30 FY 2015/16 Budget to update the Ten-Year Capital Improvement Plan (CIP). Proposals are made to the Chief Financial Officer and General Manager, who review the proposals and make changes, as appropriate. The proposed Operating Budget is provided to the Finance Committee, a subcommittee of the Board of Directors, who reviews the budget for consistency with the Board s budget direction and to ensure that there are adequate resources aligned to meet Board priorities. The proposed CIP is provided to the Long Term Planning Committee, a subcommittee of the Board of Directors, to review the CIP. Both committees make reports and recommendations to the full Board of Directors. The proposed budget and CIP are presented to the Board of Directors, and meetings are held to seek input from interested stakeholders and the general public. The Board can direct staff to make changes to the proposed budget. All of the changes are then compiled and presented to the Board for final adoption of the budget and CIP. 30 Budget Amendment Process During the year, the budget can be increased through a budget amendment resolution, voted on and approved by a majority of the Board of Directors during a regular board meeting. There is no legal restriction on the amount or frequency that the budget can be amended. Budget Development Process Master Plans Revenue Forecast Budget Assumptions District Strategic Plan Financial Policies Staff Recommended Ten-Year CIP Staff Recommended Annual Budget Analysis of Impacts Long-Term Planning Committee Input Finance Committee Input Long-Term Planning Committee Recommended Ten-Year CIP Finance Committee Recommended Annual Budget Board Review & Input Board Review & Input Stakeholder Input Adopted Budget & Ten-Year CIP Citizen Input Budget Calendar for FY 2015/16 Jan. 8, 2015 Finance Committee meeting, to discuss budget development calendar, assumptions for next year, and policy direction. Feb. 11, 2015 Budget direction and assumptions confirmed with Board of Directors. Jan. to March Staff develops proposed budget and Ten-Year CIP. April 6, 2015 Finance Committee makes recommendations. April 14, 2015 Long Term Planning Committee reviews Ten-Year CIP and makes recommendations. May 6, 2015 Board of Directors receives and discusses the Proposed Operating Budget for FY 2015/16 May 15, 2015 Mailing of Notices for Sewer Service Charge increase. May 20, 2015 Board of Directors receives and discusses the Ten-Year CIP for FY 2015/16 through FY 2024/25. June 3, 2015 Board of Directors adopts the FY 2015/16 Operating and Capital Budget and Ten-Year CIP.

31 FY 2015/16 Budget Sources of Funds/Revenues The District has a stable revenue foundation, with 80% of the District s operating revenues (excluding grants and intergovernmental revenue and the use of fund equity) coming from sewer service charges collected as assessments on property tax bills. Other significant revenue sources include capacity charges, recycled water sales, waste hauler fees, land leases, and interest earnings. Sources of Funds Total* = $61,477,100 Bond/Loan Proceeds 24% * Excludes Transfers Sewer Service Charges 32% Capacity Charges 5% Grants and Intergovernmental 36% Other 3% Sewer service charges (SSC s) are the fees charged to residences and businesses for sewer use. For most residences and businesses, these fees are paid annually as assessments on property tax bills. Some industrial and commercial customers are charged monthly, rather than annually, based either on water usage or actual sewer flows. Sewer service charges are a highly distributed revenue source for the District. The top ten sewer service customers represent only 9% of revenue from this category. This lack of concentration equates to a more stable revenue stream and is less susceptible to fluctuations in the economy or local business climate. Sewer service charges are subject to California s Proposition 218, which requires that increases to the fee be noticed to all property owners, with the opportunity to protest the increase through letters and statements at a public hearing. If there is a majority of the property owners in protest of the fee increase, the increase cannot proceed. The District followed the Proposition 218 process in 2011, providing the necessary notices and holding public hearings. At that time, the fee was set to increase annually by the Consumer Price Index for All Urban Consumers in the San Francisco/ Oakland/San Jose region. The fee is set to increase by CPI in FY 2015/16 from $ to $ per Equivalent Dwelling Unit (EDU). Sewer Service Charges 5-Year History Charge per % Increase EDU FY 12 $ % FY 13 $ % FY 14 $ % FY 15 $ % FY 16 $ % Sewer service charges revenue is forecasted for FY 2015/16 based on the actual number of EDUs (40,394) and the sewer service charge fee of $ per EDU. The total budgeted revenue is adjusted by a small percentage to account for delinquencies and non-payments. Millions $20 $18 $16 $14 SSC's FY12 FY13 FY14 FY15 FY16 31 Grants and intergovernmental revenues are those revenues that are paid to the District by another government, specifically for performing some specific task. In FY 2015/16, the District will receive U.S. Bureau of Reclamation WaterSMART grant funding for construction of the continuation of the recycled water pipeline into the Milliken-Sarco- Tulocay (MST) Creeks area, and for construction of expansion of the recycled water facilities at the Soscol Water Recycling Facility. There is additional WaterSMART grant funding for the modification of the Soscol Recycled Water Pump Station to adequately serve the MST and Los Carneros Water District recycled water distribution systems (North- South Split project). The District is also expecting to receive revenues from the County of Napa and the Los Carneros Water District. These revenues are to reimburse the District for expenses related to the construction of the recycled water pipelines.

32 FY 2015/16 Budget Capacity charges, sometimes referred to as connection fees or impact fees, are fees paid by developers to pay for expanded capacity in the sewer collection and treatment systems to convey and treat wastewater. Capacity charges are forecasted for the next year based on the cost per EDU and an assumed growth rate of 335 EDU being developed during the fiscal year. The growth was projected to be higher than the average of the last three years in FY15 and was based on the significant hotel projects that were in the planning phase. However, those projections have been adjusted to more closely align with the assumption that the building permits for the hotel projects will be issued over the next three years starting in FY # of EDU FY12 FY13 FY14 FY15 FY16 In September 2010, the Board of Directors approved a phased-in increase to the capacity charges. Prior to that date, the fee had not increased since The capacity charge fee is scheduled to increase 2.6% to $8,950 on July 1, 2015, based on the construction inflation index for the San Francisco area. Capacity Charges Fee Schedule $5,660 per EDU Jan. 1, 2012 Increase to $6,000 per EDU July 1, 2012 Increase to $7,000 per EDU July 1, 2013 Increase to $8,300 per EDU July 1, 2014 Increase to $8,723 per EDU July 1, 2015 Increase to $8,950 per EDU Recycled Water Sales are collected from customers who purchase recycled water from the District. Most recycled water is used for landscape irrigation. The demand for recycled water is almost exclusively during the May to October period. Recycled water sales are forecast to be about 1,500 acre-feet (489 million gallons), which includes an increase of recycled water usage compared to historical averages due to the completion of both the MST and Los Carneros Water District Recycled Water Pipeline projects. The 2015 rate is $1.01 per 1,000 gallons. In 2016, the rates will increase to $1.57 per 1,000 gallons in the peak demand period, with lower rates for offpeak use and for those customers that enter longterm contracts for significant water use. Recycled water sales are affected by the weather. Cooler, wetter spring and summer months result in less need to irrigate and therefore lower volumes of water are sold. As a result of the drought, recycled water sales have increased in FY15. However, FY16 assumes a typical year for 2016 weather. Waste Hauler Fees are fees collected from private companies who have been permitted to collect septage from private residences and companies not connected to the District s sewerage works and dispose of that waste at the wastewater treatment plant. In FY 2012/13, the District started accepting Fats, Oil and Grease (FOG) waste generated at food service establishments. Thousands 2,000 1,000 0 $300 $200 $100 $0 Acre-Feet of Recycled Water FY12 FY13 FY14 FY15 FY16 Waste Hauler Fee Revenue FY12 FY13 FY14 FY15 FY16 32 Revenues are forecasted based on a three-year average of volume multiplied by the current fee for the specific type of waste. Fees increase at the same inflation factor used for sewer service charges. Forecast fee revenues for FY 2015/16 are flat for septage and FOG haulers, based on trends seen the past three years.

33 FY 2015/16 Budget 33 REVENUE - ALL SOURCES Actual Actual Budget Estimated Proposed Percent Account Description FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Operations Interest: Invested Funds 147,780 99,944 50, ,000 50,000 - Rent - Building/Land 1,488, , , , , % Construction/Bldg Permit Review Svcs 17,677 29,753 35,700 25,000 95, % Hauler Fees 202, , , , , % Sewer Usage Fees 17,965,150 18,665,200 18,963,000 18,963,000 19,534, % Penalties on Delinquent Sewer Fees 59,415 37,796 25,000 25,000 25,000 - Recycled Water Sales 390, , , , , % Forfeitures and Penalties 14,191 11,733 4, (100.0%) Miscellaneous 319,225 92,784 50, , , % Total - Operations 20,604,859 20,274,878 19,789,700 20,526,000 21,281, % Capital Improvement Projects Interest: Invested Funds 52, ,358 66,000 35,000 27,000 (59.1%) Federal Grants - USBR 183,542 2,245,400 5,236,000 3,500,000 4,838,700 (7.6%) Other Government Agencies 1,559, ,406 16,573,000 6,000,000 17,132, % Miscellaneous - 98, Bond Proceeds 33,000, ,200,000 - Sale of Capital Assets - 2,848,164 20,000 10,000 - (100.0%) Interfund Transfers In Intrafund Transfers In 14,278,041 18,070,283 25,734,500 23,800,000 12,248,000 (52.4%) Total - Capital Improvement Projects 49,073,554 23,913,943 47,629,500 33,345,000 49,446, % Expansion Interest: Invested Funds (100.0%) Capacity Charges 1,516,677 1,774,081 3,925, ,000 2,998,000 (23.6%) Total - Expansion 1,516,677 1,774,235 3,925, ,100 2,998,000 (23.6%) Total - All Departments 71,195,090 45,963,057 71,344,300 54,821,100 73,725, % Land Leases generate revenue for the District. The District currently leases a couple of parcels of land. The leases have inflation factors identified within them. The revenue forecast is set based on these contracts. In February 2015, the lease of the Somky Ranch to HCV Napa for development of a golf course was transferred to Napa LH 1, LLC. They have paid all of the deferred lease payments, property taxes and the 4% compounded interest on the deferred payments. The lease payment for FY 15/16 is included in the revenue forecast. Interest Earnings is the revenue the District receives on idle cash and reserves that it maintains in its accounts. Cash is invested by the County of Napa Treasurer on the District s behalf and in accordance with state law, and posted to the District s funds quarterly.

34 FY 2015/16 Budget For most of the past four years, the Federal Funds rate was between 0.07%-0.16%. This is the rate to which most allowable investments trend. These rates equate to an investment rate for the District of approximately 0.5%, depending on liquidity needs and the specific investments made. The financial markets do not expect the Federal Funds rate to increase until late in calendar year For FY 2015/16, the District has assumed an earnings rate of 0.5% for the entire year. The overall revenue this year is lower because of the 2012 bond proceeds being spent down. Thousands $300 $200 $100 $0 Interest Earnings FY12 FY13 FY14 FY15 FY16 Grants and Intergovernmental Revenues are expected in support of specific recycled water capital projects. For the construction of the MST Recycled Water Pipeline, the District has been awarded a grant from the US Bureau of Reclamation (USBR) and one from Proposition 84 funds, with the remaining cost of the project being paid for by Napa County through an SRF loan. The loan will be paid by through property taxes collected in a Community Facilities District. The District has also been awarded grant money from the USBR to support the expansion of recycled water capacity at the Soscol Recycled Water Facility. The District has also contracted with the Los Carneros Water District to manage the construction of approximately 9 miles of recycled water pipeline. There are grant funds that were awarded for this project as well. Uses of Funds/Expenditures The District expenses can be described in four major categories: salaries and benefits, services and supplies, capital expenses and debt service. Salaries and benefits are those expenses related to payroll and staffing. They include salary and wages of employees, overtime, payroll taxes such as Medicare, health insurance benefits, and retirement Uses of Funds Total* = $61,477,100 Debt Service 8% Other Supplies & Services 6% * Excludes Transfers Electricity 2% Capital 49% Salaries & Benefits 15% Chemicals 1% Reserved for Future Capital 19% benefits. This category also includes expenses for funding the District s OPEB ( Other Post Employment Benefits ) liability. The new labor agreements went into effect on July 1, 2014, and will expire on June 30, Salaries will increase 2.5% for a cost of living adjustment per the new agreements. Individual salaries were also adjusted, with some employees moving up steps within their current classification, and vacancies budgeted at the bottom step. Overall, salaries are budgeted to increase 3.5% over prior year. Health benefits are known for the first two quarters in FY 2015/16. The budget assumes an 8% increase in employer costs for the last two quarters. Retirement benefits are budgeted based on a percentage of budgeted salary. That percentage is determined by CalPERS based on actuarial assumptions regarding retirement rates and investment earnings. Prior to the new MOUs, the District paid both the employer and employee contribution for retirement benefits. In the new MOUs, the employees will pick up 2% of the employee contribution for FY 2015/16. The retirement cost budget is expected to increase by 8.6%. Payments in lieu of health benefits are expected to decrease by 9.2% due to changes in the MOUs and changes made by specific employees in insurance coverage. 34

35 FY 2015/16 Budget 35 EXPENSES - OPERATING AND CAPITAL Actual Actual Adj. Budget Estimated Proposed Percent Account Description FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $7,716,230 $7,808,764 $8,656,840 $7,895,907 $9,054, % Services & Supplies 4,793,537 4,956,172 5,232,630 4,707,141 5,748, % Capital Expenses 12,537,009 20,120,117 41,855,944 40,645,395 30,459,450 (27.2%) Debt Service 4,215,591 4,769,367 4,751,800 4,779,912 4,779, % Taxes & Assesments 24,186 24,022 33,150 25,212 28,250 (14.8%) Transfers 47,278,041 18,070,283 25,734,500 23,800,000 12,248,000 (52.4%) Total All Expenses $76,564,594 $55,748,725 $86,264,864 $81,853,568 $62,317,300 (27.8%) Total w/o Transfers $29,286,553 $37,678,442 $60,530,364 $58,053,568 $50,069,300 (17.3%) Workers compensation insurance costs are higher than prior year by 41.8%, due to an increase in the Experience Modification Rate from 0.66 to 0.84 and an increase to account for under budgeting in FY 2013/14. In total, salaries and benefits increase 4.6% over the prior fiscal year. Services and supplies include the purchase of supplies and equipment to maintain and operate the various systems in the District. It also includes a number of service contracts and professional contracts. In the pie chart in this section, this category has been further broken down into chemicals and electricity, as these are the two largest supply expenses. Total services and supplies for FY 2015/16 are budgeted to be 10% higher than the prior fiscal year. It includes higher electricity and chemical costs due to increased recycled water usage in FY 2015/16. There are also several one-time only projects that have been added to the budget. Without these additional expenses, the base services and supplies budget would have decreased by 1.4%. Capital expenses include expenses to build or acquire any capital asset, or to rehabilitate and extend the useful life of existing assets. Details of these expenses can be found in the Ten-Year Capital Improvement Plan (CIP), later in this budget document. Significant projects in the FY 2015/16 capital plan include the Basin L I&I Reduction Project 5, the Collection System Master Plan amendment, the ACP mains rehabilitation project, a pilot project to rehabilitate 40 private laterals, the Browns Valley Trunk Interceptor project and a project to line the recycled water reservoirs. Debt service includes the principal and interest payments for all of the District s outstanding loans. Debt service is approximately $4.78 million and is anticipated to remain at that level for several years. More details on this new debt issuance can be found in the Debt section of this budget document. Transfers Out represent the following intrafund transfers: from Operations into the Capital Projects account ($7,900,000) from Expansion into the Capital Projects account ($2,998,000) from Debt Proceeds account into the Capital Projects account ($1,350,000) These intrafund transfers are between accounts that are segregated for accounting or legal purposes, and they have no positive or negative impact on the overall financial position of the District. Fund Equity Fund equity, for the basis of the District s budgeting and financial planning purposes, is defined as current assets including restricted assets, less current liabilities excluding capital-related liabilities. This number is meant to represent the amount of cash that the District has available to commit to operating or capital expenses now or in the future, and is comparable to Fund Balance in governmental-type funds.

36 FY 2015/16 Budget 36 For FY 2015/16, the estimated Ending Fund Equity is 92% higher than the Beginning Fund Equity. This represents an increase of almost $11.4 million, and is the result of receipt of debt proceeds for the Browns Valley Trunk Interceptor project that will begin at the end of FY 2015/16. To the extent that planned capital projects are not fully expended in FY 2014/15, the remaining project budget will be carried forward into FY 2015/16 through a budget amendment. Financial Overview FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Actuals Actuals Budget Estimate Proposed Beginning Fund Equity 19,162,339 46,516,757 37,082,086 37,082,086 12,345,900 Revenues Use of Money/Property 1,688, , , , ,000 Charges for Services 20,166,153 21,127,447 23,472,700 20,518,000 23,370,000 Intergovernmental 1,892,183 2,769,935 21,809,000 11,796,300 21,971,100 Bond Proceeds 33,000, ,200,000 Sale of assets 0 2,848,164 20,000 Miscellaneous Revenues 319, ,110 79, , ,000 Total Revenues 57,066,369 27,890,939 45,609,800 33,317,400 61,477,100 Operating Expenditures Salaries and Benefits 7,033,573 6,966,672 8,656,840 7,895,907 9,054,200 Services and Supplies 4,793,505 4,956,175 5,232,630 4,707,141 5,748,200 Taxes and Assessments 24,185 24,022 33,150 25,212 28,250 Debt Service 3,043,356 4,769,367 4,751,800 4,779,912 4,779,200 Total Operating Expenditures 14,894,619 16,716,236 18,674,420 17,408,173 19,609,850 Capital Expenditures 12,537,009 20,120,117 41,855,944 40,645,395 30,459,450 GAAP Adjustments 2,280, , Total Expenditures 29,711,951 37,325,610 60,530,364 58,053,568 50,069,300 Ending Fund Equity 46,516,757 37,082,086 22,161,522 12,345,918 23,753,700 15% Operating Reserve 1,980,000 2,056,000 2,085,000 2,085,000 2,227,000 Debt Service Liquidity Reserve 1,850, Operating Cash Flow Reserve 5,650,000 8,000,000 8,240,000 8,240,000 10,987,000 Total Reseves 9,480,000 10,056,000 10,325,000 10,325,000 13,214,000 Available for Use 37,036,757 27,026,086 11,836,522 2,020,918 10,539,700 (Fund Equity minus Reserves) The numbers above are net of transfers in and out.

37 FY 2015/16 Budget Reserves In prior fiscal years, the District maintained three cash reserves. With the refinancing of its variable rate debt in 2012, one of those reserves is no longer required. The first reserve is an operating reserve designed to assist the District during emergencies. This reserve is maintained at 15% of annual operating expenses, excluding debt service and transfers. The second reserve is an operating cash flow reserve. This reserve is the amount of cash necessary for the District to have on hand on July 1 to cover its anticipated expenses through the summer and fall until the District receives the bulk of its operating revenues (sewer services charges collected as property assessments) in December. GFOA Budget Award The Government Finance Officers Association of the United States and Canada (GFOA) presented the Distinguished Budget Presentation Award to Napa Sanitation District, California for its annual budget for the fiscal year beginning July 1, In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This award is valid for a period of one year only. District staff believes that this current FY 2015/16 budget continues to conform to program requirements and will be submitting it to GFOA to determine its eligibility for another award. 37 The third reserve was a debt service liquidity reserve. The District was required as part of bond covenants on its Series 2009A variable rate debt to maintain a debt service liquidity reserve of $3.7 million, measured twice a year on June 30 and December 31. This reserve ($1,885,000) was combined with the operating reserve to meet the debt service liquidity reserve. With the refinancing of this debt in 2012, the debt service liquidity reserve is no longer required as part of bond covenants. The cash in this reserve was moved into the Operating Cash Flow Reserve, as this reserve needed to increase due to the new Series 2012A debt service payments being due on August 1 st.

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39 FY 2015/16 Budget 39 Detailed Tables of Revenues and Operating Expenditures Recycled Water Pump Station Soscol Water Recycling Facility

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41 41 Napa Sanitation District FY 2015/16 Proposed Budget REVENUE - ALL SOURCES Actual Actual Budget Estimated Proposed Percent Account Description FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Operations Interest: Invested Funds 147,780 99,944 50, ,000 50,000 - Rent - Building/Land 1,488, , , , , % Construction/Bldg Permit Review Svcs 17,677 29,753 35,700 25,000 95, % Hauler Fees 202, , , , , % Sewer Usage Fees 17,965,150 18,665,200 18,963,000 18,963,000 19,534, % Penalties on Delinquent Sewer Fees 59,415 37,796 25,000 25,000 25,000 - Recycled Water Sales 390, , , , , % Forfeitures and Penalties 14,191 11,733 4, (100.0%) Miscellaneous 319,225 92,784 50, , , % Total - Operations 20,604,859 20,274,878 19,789,700 20,526,000 21,281, % Capital Improvement Projects Interest: Invested Funds 52, ,358 66,000 35,000 27,000 (59.1%) Federal Grants - USBR 183,542 2,245,400 5,236,000 3,500,000 4,838,700 (7.6%) Other Government Agencies 1,559, ,406 16,573,000 6,000,000 17,132, % Miscellaneous - 98, Bond Proceeds 33,000, ,200,000 - Sale of Capital Assets - 2,848,164 20,000 10,000 - (100.0%) Intrafund Transfers In 14,278,041 18,070,283 25,734,500 23,800,000 12,248,000 (52.4%) Total - Capital Improvement Projects 49,073,554 23,913,943 47,629,500 33,345,000 49,446, % Expansion Interest: Invested Funds (100.0%) Capacity Charges 1,516,677 1,774,081 3,925, ,000 2,998,000 (23.6%) Total - Expansion 1,516,677 1,774,235 3,925, ,100 2,998,000 (23.6%) Total - All Departments 71,195,090 45,963,057 71,344,300 54,821,100 73,725, %

42 Napa Sanitation District FY 2015/16 Budget 42 OPERATING EXPENDITURES - ALL ACCOUNTS Actual Actual Adj. Budget YTD Estimated Proposed Percent Account Account Description FY 12/13 FY 13/14 14/15 12/31/14 14/15 15/16 Change Salaries and Wages 4,285,092 4,369,312 4,688,760 1,954,675 4,181,426 4,852, % Overtime 181, , , , , , % Holiday Pay 5,760 9,075 7,450 5,062 8,440 9, % Vacation Payout 33, , ,260 - (100.0%) B Employer Contribution ,100 77,600 81, Cell Phone Allowance 3,870 3,615 3,600 2,460 5,840 7, % Director Pay 20,187 27,070 36,410 12,974 23,165 23,200 (36.3%) Medicare 65,540 68,089 68,040 30,784 62,015 70, % F.I.C.A. / Social Security 1,252 1,678 1, ,300 1,400 (16.7%) Employee Insurance - Premiums 1,164,198 1,222,107 1,461, ,646 1,311,741 1,438,580 (1.6%) Workers Compensation 100,888 85, , , , , % Unemployment Compensation Retirement 1,466,412 1,498,798 1,690, ,314 1,481,617 1,835, % Other Post Employment Benefits 244, , , , , , % Other Employee Benefits 143, , ,280 49,910 97, ,040 (9.2%) Subtotal Salaries & Benefits $7,716,230 $7,808,764 $8,656,840 $3,779,085 $7,895,907 $9,054, % Property Tax/Assessment Admin - 12,191-12,215 12,500 12, Accounting/Auditing Services 75,994 62,242 76,500 45,973 69,000 70,000 (8.5%) Information Technology Services 276, , , , , , % Legal Services 80, , ,000 26, , , % Engineer Services - - 7, (100.0%) Temporary/Contract Help 55,056 60,522 70,700 39,459 83,600 70, % Actuarial Services - 3,600 6,000-3,000 8, % Medical/Laboratory Services 44,247 62,769 36,150 4,586 35,623 38, % Training Services 10,573 15,998 13,000 3,329 13,000 19, % Consulting Services 79, , ,250 53, , , % Waste Disposal Services 31,872 40,631 41,250 14,011 42,350 46, % Hazardous Waste Disposal Services 2,514 4,322 4,200 1,203 4,300 5, % Security Services 6,662 12,598 11,600 5,829 11,578 12, % Landscaping Services 11,570 6,500 8,400 3,250 8,400 19, % Janitorial Services 55,440 56,549 58,450 24,222 58,166 59, % Other Professional Services 554, , ,500 50, , ,850 (5.2%) Maintenance - Equipment 149, , ,950 40, , ,800 (8.9%) Maintenance - Bldgs/Improvements 61,844 82,100 90,500 11,720 83,538 89,900 (0.7%) Maintenance - Software 24,843 56,719 80,350 14,165 79,729 58,350 (27.4%) Maintenance - Vehicles 108,360 95,174 87,900 55,422 78,800 82,400 (6.3%) Rents and Leases - Equipment 59,674 64,202 67,450 23,308 64,436 65,000 (3.6%) Rents and Leases - Buildings/Land 31,902 1,139 1,000-1,252 1, % Insurance - Premiums 178, , , , , , % Insurance - Claims 6,999 11,137 15,000 8,761 15,000 15, % Communications/Telephone 57,177 36,454 40,950 12,760 34,810 36,800 (10.1%) Advertising/Marketing 25,575 30,146 35,950 1,714 8,240 38, % Printing and Binding 2,566 1,544 3,000-2,000 6, % Bank Charges ,200-1,200 1, % Publications and Legal Notices 2,941 2,931 4,450 1,291 4,450 7, % Permits/License Fees 110, , , , , , % Training/Conference Expenses 43,519 63,090 88,350 27,131 71,530 97, % Business Travel/Mileage (Meetings) 1,588 1,337 3, ,060 1,550 (51.6%) Office Supplies 29,886 20,395 29,250 7,567 17,600 17,650 (39.7%) Office Supplies - Furniture/Fixtures 136,846 13, % Freight/Postage 13,334 12,928 14,400 2,481 14,000 16, % Books/Media/Subscriptions 1,800 2,156 3,700 1,718 2,700 2,750 (25.7%) Summary Printed as of: 2/26/15 1:24p

43 Napa Sanitation District FY 2015/16 Budget 43 OPERATING EXPENDITURES - ALL ACCOUNTS Actual Actual Adj. Budget YTD Estimated Proposed Percent Account Account Description FY 12/13 FY 13/14 14/15 12/31/14 14/15 15/16 Change Memberships/Certifications 57,501 66,386 68,480 54,620 70,159 73, % Utilities - Gas 15,595 18,950 15,000 9,417 20,036 26, % Utilities - Electric 747, , , , , , % Utilities - Fire Suppression Systems 3, ,726 2,564 2, % Utilities - Water 2, ,151 1,200 3,910 14,445 4, % Fuel 123, , ,800 63, , , % Clothing and Personal Supplies 18,514 27,205 36,200 15,478 36,306 39, % Medical/Laboratory Supplies 66,202 64,889 60,300 38,280 70,345 71, % Safety Supplies 34,416 32,290 27,350 12,054 26,737 28, % Janitorial Supplies 15,732 17,855 17,950 5,967 17,300 17,300 (3.6%) Chemicals 946,385 1,012, , , , , % Maintenance Supplies 325, , , , , , % Infrastructure Repair Supplies 11,511 14,014 9,700 7,302 12,820 12, % Minor Equipment/Small Tools 38,883 44,969 52,000 9,676 49,520 43,100 (17.1%) Computer Equipment/Accessories 15,072 8, Computer Software/Licensing Fees 925 1, % Special Department Expense 22,467 30,676 31,350 15,206 16,766 31,100 (0.8%) Service Awards 4,898 7,584 12, ,800 12, % Business Related Meals/Supplies 2, , ,300 (13.3%) Wellness Reimbursement 7,602 8,860 9,650 3,967 8,378 10, % Education Reimbursement Subtotal Services & Supplies $4,793,537 $4,956,172 $5,232,630 $2,176,422 $4,707,141 $5,748, % Principal on Bonds/COPs 1,534,290 2,341,712 2,614,200 2,543,241 2,614,200 2,731, % Interest on Bonds/COPs 1,509,066 2,425,830 2,130,000 1,101,920 2,158,812 2,042,350 (4.1%) Administration on Bonds/COPs 1,172,235 1,825 7,600 3,390 6,900 5,100 (32.9%) Taxes and Assessments 24,186 24,022 33,150 12,580 25,212 28,250 (14.8%) Intrafund Expenditures 36,970,000 1,657,000 1,887,500 1,887,500 1,887,500 7,900, % Subtotal Other $41,209,777 $6,450,388 $6,672,450 $5,548,631 $6,692,624 $12,707, % TOTALS $53,719,544 $19,215,324 $20,561,920 $11,504,138 $19,295,673 $27,509, % Summary Printed as of: 2/26/15 1:24p

44 Napa Sanitation District FY 2015/16 Budget 44 OPERATING EXPENDITURES - BY MAJOR EXPENSE CATEGORY Actual Actual Adj. Budget Proposed Percent FY 12/13 FY 13/14 14/15 15/16 Change Salaries & Benefits Board of Directors 22,241 29,753 38,990 25,500 (34.6%) General Manager's Office 377, , , ,770 (34.9%) Administrative Services 1,108,425 1,140,922 1,196,680 1,113,610 (6.9%) Safety, Training & Fleet Maintenance 143, , , ,360 (21.9%) Collection System 1,842,345 1,849,318 2,010,620 2,106, % Treatment Plant Operations 1,413,859 1,386,706 1,511,790 1,625, % Treatment Plant Maintenance 754, , ,450 1,017, % Treatment Plant Laboratory 609, , , , % Engineering 892, ,789 1,011,730 1,273, % Pollution Prevention 15,472 17,058 18, , % Water & Biosolids Reclamation 536, , , ,880 (13.3%) Non-Departmental Expenses Subtotal Salaries & Benefits $7,716,230 $7,808,764 $8,656,840 $9,054, % Services & Supplies Board of Directors 138, , , , % General Manager's Office 39,642 72, , , % Administrative Services 463, , , , % Safety, Training & Fleet Maintenance 65,650 74,630 75,600 84, % Collection System 439, , , , % Treatment Plant Operations 2,080,353 2,332,858 2,152,380 2,285, % Treatment Plant Maintenance 657, , , , % Treatment Plant Laboratory 144, , , , % Engineering 70,315 91,842 94, , % Pollution Prevention 72,475 68,346 84,600 84, % Water & Biosolids Reclamation 230, , , , % Non-Departmental Expenses 391, , , , % Subtotal Services & Supplies $4,793,537 $4,956,172 $5,232,630 $5,748, % Other Administrative Services Treatment Plant Operations Water & Biosolids Reclamation 23,960 23,796 32,900 28,000 (14.9%) Non-Departmental Expenses 41,185,591 6,426,367 6,639,300 12,679, % Subtotal Other $41,209,777 $6,450,388 $6,672,450 $12,707, % Total $53,719,544 $19,215,324 $20,561,920 $27,509, %

45 Napa Sanitation District FY 2015/16 Budget 45 OPERATING EXPENDITURES - BY DEPARTMENT Actual Actual Adj. Budget Proposed Percent Department Category FY 12/13 FY 13/14 14/15 15/16 Change Board of Salaries & Benefits 22,241 29,753 38,990 25,500 (34.6%) Directors Services & Supplies 138, , , , % Total 160, , , , % General Manager's Salaries & Benefits 377, , , ,770 (34.9%) Office Services & Supplies 39,642 72, , , % Total 417, , , ,670 (21.7%) Administrative Salaries & Benefits 1,108,425 1,140,922 1,196,680 1,113,610 (6.9%) Services Services & Supplies 463, , , , % Other Total 1,571,964 1,615,996 1,758,530 1,689,860 (3.9%) Safety, Training & Salaries & Benefits 143, , , ,360 (21.9%) Fleet Maintenance Services & Supplies 65,650 74,630 75,600 84, % Total 208, , , ,310 (11.9%) Collection Salaries & Benefits 1,842,345 1,849,318 2,010,620 2,106, % System Services & Supplies 439, , , , % Total 2,281,778 2,186,987 2,424,370 2,522, % Treatment Plant Salaries & Benefits 1,413,859 1,386,706 1,511,790 1,625, % Operations Services & Supplies 2,080,353 2,332,858 2,152,380 2,285, % Other Total 3,494,402 3,719,753 3,664,370 3,911, % Treatment Plant Salaries & Benefits 754, , ,450 1,017, % Maintenance Services & Supplies 657, , , , % Total 1,411,787 1,464,954 1,526,450 1,726, % Treatment Plant Salaries & Benefits 609, , , , % Laboratory Services & Supplies 144, , , , % Total 754, , , , % Engineering Salaries & Benefits 892, ,789 1,011,730 1,273, % Services & Supplies 70,315 91,842 94, , % Total 962,833 1,047,632 1,106,230 1,586, % Pollution Salaries & Benefits 15,472 17,058 18, , % Prevention Services & Supplies 72,475 68,346 84,600 84, % Total 87,947 85, , , % Water & Biosolids Salaries & Benefits 536, , , ,880 (13.3%) Reclamation Services & Supplies 230, , , , % Other 23,960 23,796 32,900 28,000 (14.9%) Total 791, , , ,480 (7.3%) Non-Departmental Services & Supplies 391, , , , % Expenses Debt Service 4,215,591 4,769,367 4,751,800 4,779, % Transfers 36,970,000 1,657,000 1,887,500 7,900, % Total 41,576,897 6,696,124 6,872,850 12,925, % Total Operating Expenditures $53,719,544 $19,215,324 $20,561,920 $27,509, %

46 FY 2015/16 Budget 46 This page intentionally left blank.

47 FY 2015/16 Budget 47 Expenditure Budgets by Division Treatment Plant Operator cleaning the flocculating clarifier, Soscol Water Recycling Facility

48 FY 2015/16 Budget Board of Directors Description The Board of Directors is the policy making body that determines the overall direction of the District and services provided to the customers. The rules for connecting and discharging to the system, and the rates and charges for services, are set by the Board. The Board of Directors comprises two directors who are members of the Napa City Council, one director who is a member of the Napa County Board of Supervisors, and two citizen appointees, one appointed by the city and one by the county. The Board of Directors hires the General Manager and contracts for the District Legal Counsel and the annual financial audit. Provide direction to staff on efforts to increase non-rate revenues and decrease the District s reliance on non-green energy sources. Changes from FY 2014/15 Service Levels The Board of Directors budget includes the District s expenses for legal services and audit services, as these functions report directly to the Board. The FY 15/16 budget includes an additional $50,000 in Special Legal Services in anticipation of possible litigation expenses. 48 The Board adopts the annual Operating Budget, Ten- Year Capital Improvement Plan, Ten-Year Financial Plan and sets the priorities for the District. Link to District Goals in Strategic Plan The Board of Directors establishes the Strategic Plan s long-term goals, objectives and priorities. Department Goals Goal: The Board of Directors Department goal is to articulate the short and long-term policy direction for the District to ensure: infrastructure reliability financial stability operational capability employee development community outreach and communication resource recovery Related Department Objectives Oversee the policy and strategic direction of the District and set levels of service for its customers. Provide policy direction regarding levels of service. Work with senior management and consultant to provide direction regarding Sewer Service Charges and the next Prop. 218 Hearing. Provide policy guidance regarding alternative methods for treatment of winery waste. Adopt, revise and monitor a long-term policy document for prioritizing the delivery of recycled water outside the current service areas.

49 FY 2014/15 Budget 49 Old Administration Building on Hartle Court New Administration Building at Treatment Plant Percent of Operating Budget Board of Directors 1.9% Proposed Budget Actual Actual Adj. Budget Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 22,241 $ 29,753 $ 38,990 $ 25,282 $ 25,500 (34.6%) Services & Supplies $ 138,561 $ 172,443 $ 227,850 $ 189,210 $ 288, % Other* TOTAL EXPENDITURES $ 160,802 $ 202,195 $ 266,840 $ 214,492 $ 314, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Director-Member of Napa City Council (CC) Director-Member of Napa Board of Supervisors (BOS) Director-Public Representative Appointed by BOS Director-Public Representative Appointed by CC Totals

50 FY 2015/16 Budget General Manager s Office Description The General Manager is responsible to the Board of Directors for all aspects of the administration, operation and planning activities of the staff of the District. The General Manager is the hiring authority for all positions. Link to District Goals in Strategic Plan The General Manager s Office is responsible to ensure that all of the departments and respective management are performing toward the District s established goals. As part of the Quarterly Report to the Board of Directors, the General Manager reports on the status of each District goal, objective, and the specific projects outlined in the Strategic Plan. The General Manager s Office is specifically responsible for conducting the study of plan check/inspection fees and capacity charge methodology (Goal Two: Financial Stability, Objective 2B), overseeing the next employee survey in Fall 2016 (Goal Four: Employee Development, Objective 4B), implementing the Employee Master Plan recommendations (Goal Four: Employee Development, Objective 4C), partnering with winery industry to develop alternative methods for treating winery waste (Goal Three: Operational Capability, Objective 3A), promoting the District as a progressive, professional organization as a great place to work (Goal Four: Employee Development, Objective 4A), working with partners on long-term water reuse opportunities (Goal Six: Resource Recovery, Objective 6B) and developing partnerships with stakeholders to achieve common goals (Goal Five: Community Outreach and Communications, Objective 5A). Department Goals Goal: Implement the policy direction of the Board of Directors. Work with the community to find better ways to serve residential, commercial and industrial wastewater treatment needs. Goal: Provide leadership and management throughout the District. Related Department Objectives Provide direction to all departments, aligning efforts to promote and be consistent with the District s goals and policy directives. Provide overall direction to the engineering staff regarding significant capital projects, including IPS replacement, Phase 1 Recycled Water expansion, and MST and LCWD pipeline construction. Oversee the implementation of the Employee Master Plan. Changes from FY 2014/15 Service Levels The Assistant General Manager position has been eliminated as part of the Employee Master Plan implementation. The position was moved to Engineering to be the Technical Services Director. The budget includes a one-time expense in FY 15/16 of $90,000 for fee study required for Prop 218 hearing. The budget includes a one-time expense of $65,000 for the development of a Communications Master Plan. The Budget includes $50,000 for assistance in negotiated a new NPDES permit. The budget removed a one-time expense of $40,000 in the prior year for a study and recommendation on the District s capacity fee structure and to make recommendations on plan review and inspection fees. 50 Related Department Objectives Oversee the development of a Communications Plan for the District. Represent the District at the North Bay Water Reuse Authority, specifically working to bring federal money to the District for the MST Recycled Water Pipeline and the Phase 1 expansion of the recycled water filters. Oversee the negotiation of a new NPDES permit.

51 FY 2015/16 Budget 51 District Open House event NSD booth at the annual Ag Expo in Napa Percent of Operating Budget Proposed Budget General Manager's Office 5.6% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 377,603 $ 366,714 $ 608,260 $ 365,338 $ 395,770 (34.9%) Services & Supplies $ 39,642 $ 72,377 $ 267,800 $ 121,560 $ 289, % Other TOTAL EXPENDITURES $ 417,245 $ 439,091 $ 876,060 $ 486,898 $ 685,670 (21.7%) Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 General Manager Assistant General Manager/District Engineer Totals

52 FY 2015/16 Budget 52 Administrative Services Description Administrative Services provides administrative and financial support for all other departments of the District. The division includes accounting, payroll, budget and financial planning, human resources and risk management. The division also includes duties in support of the Board of Directors, responding to public inquiries, records management, and general administrative support. Link to District Goals in Strategic Plan The Administrative Services Department supports the District s Goal Two: Financial Stability. This Department is responsible for developing nonrate, revenue-generating or expense minimizing ideas for the District (Objective 2A). This department will also be responsible for completing a study on plan check/inspection fees and capacity charge methodologies (Objective 2B) and conducting a Sewer Service Charge fee study prior to the next Proposition 218 hearing (Objective 2C). This department will also develop the financing plan for Browns Valley Road project (Objective 2D). Department Goals Goal: Provide financial information for managers and Board to maintain financial viability of the District. Revenue-to-Expense Ratio (positive number is goal) 10/11 11/12 12/13 13/14 14/15 15/ Debt Service Coverage Ratio (greater than 125% is required) 10/11 11/12 12/13 13/14 14/15 15/16 328% 325% 247% 276% 200% 190% Sewer Service Charge Bill Affordability (goal is to remain under 1.0% per EPA guidance) 10/11 11/12 12/13 13/14 14/15 15/ % 0.64% 0.66% 0.68% 0.70% 0.70% Related Department Objectives Review cash flow and emergency reserves for adequacy. Conduct a study of the District s Sewer Service Charge rates in support of Proposition 218 process. Complete the sixth year s Performance Measurement Report. Work with private sector partners to develop partnerships for solar energy, energy storage and other technologies, lowering the District s electricity costs and providing non-rate revenues. Continue to provide financial support to managers, supervisors and staff, in support of District activities. Analyze assumptions in long-range plans for sensitivity to economic or regulatory change. Goal: Provide time sensitive and necessary Human Resources support throughout the District. Experience Turnover Rate (Lower is better) % 5.7% 0.2% 4.3% 5.0% 5.0% Employee Survey Results These are the average score of employees who rated the following statement: (1=strongly disagree / 5=strongly agree) The forms and process used for annual employee performance evaluations are user friendly na na 3.48 na 3.5 Related Department Objectives Implement the Employee Master Plan recommendations. Complete an update of the District s Employee Job Descriptions. Continue to provide human resource support to managers, supervisors and staff, in support of District activities. Goal: Provide general administrative support to employees and serve the requests of the general public. Related Department Objectives Continue to provide general administrative support to managers, supervisors and staff, in support of District activities.

53 FY 2015/16 Budget Changes from FY 2014/15 Service Levels The budget removes the Management Analyst and Outreach Coordinator position and moves it to the Pollution Prevention unit under the Regulatory Compliance Division (now as the Pollution Prevention and Outreach Specialist). 53 NSD Administrative Services staff Percent of Operating Budget Proposed Budget Administrative Services 12.5% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 1,108,425 $ 1,140,922 $ 1,196,680 $ 1,038,461 $ 1,113,610 (6.9%) Services & Supplies $ 463,503 $ 475,039 $ 561,800 $ 538,133 $ 576, % Other $ 36 $ 36 $ 50 $ 12 $ 50 - TOTAL EXPENDITURES $ 1,571,964 $ 1,615,996 $ 1,758,530 $ 1,576,606 $ 1,689,860 (3.9%) Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Director of Admin Services/Chief Financial Officer Clerk to the Board/Human Resources Officer Senior Accountant Accountant Management Analyst and Outreach Coordinator Administrative Assistant I/II Totals

54 FY 2015/16 Budget 54 Safety, Training and Fleet Maintenance Description Many of the District s activities are inherently dangerous, as they involve work in heavy traffic, repairs and installations of pipe in deep trenches susceptible to collapse, and entrance into confined spaces that potentially contain toxic gases or other hazardous conditions. This program oversees workplace safety and provides safety training for all staff to ensure safe working practices and compliance with safety regulations. This includes reviews of contractor safety programs to ensure that the District s contractors also work and operate safely. This program also includes maintenance and management of the District s fleet vehicles, communications management and general safety and security protocols. Link to District Goals in Strategic Plan This Department supports the District s value of safety, along with all of the goals of other departments by ensuring that the workplace is safe and employees are adequately trained. Department Goals Goal: Implement programs that result in improved safety and lower accidents and incidents rates District s Experience Modification (XMOD) Rate (lower is better; NSD is compared to the CSRMA risk pool member average) 10/11 11/12 12/13 13/14 14/15 15/16 NSD Avg na x Severity of Insurance Claims (cost of claims per 200,000 hours of work) 10/11 11/12 12/13 13/14 14/15 15/16 $12k $16k $33k $6k $10k $10k Online Safety Training Hours Completed by Staff % 91.6% 99.1% 99.2% 99% 99% Related Department Objectives Develop and implement periodic review plan for District safety policies and programs. Complete & coordinate the safety review requested by CSRMA, the District s workers compensation insurance carrier. Continue on five-year plan to fully implement the lockout-tagout Standard Operating Procedures (SOP) development and revision project, in conjunction with plant maintenance staff. Goal: Facilitate proper management of fleet vehicles to ensure they are safe and reach their intended useful lifespan Related Department Objectives Maintain and adjust ten-year plan for fleet sustainment, acquisition, rehabilitation and attrition. Determine right combination of mission essential vehicle types to ensure District operational effectiveness, while increasing efficiency and reducing overall cost. Oversee the District s Fleet Committee to determine proper general purpose fleet sizing to meet the goal of a common fleet approach; cross utilization of assets, increasing economy and reducing cost. Total Recordable Incidence Rate (Injuries and illnesses per 200,000 hours worked; NSD is compared to the wastewater industry average) NSD Avg na na na Number of Insurance Claims (number of claims per 200,000 hours of work) 10/11 11/12 12/13 13/14 14/15 15/

55 FY 2015/16 Budget 55 Changes from FY 2014/15 Service Levels The FY 15/16 budget includes training for several district-wide classes that are required once every three years ($6,500). Additional $3,000 in FY 15/16 budget for onetime training for the new employee. District staff training on fire extinguisher use Percent of Operating Budget Proposed Budget Safety, Training & Fleet Maintenance 1.5% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 143,009 $ 155,983 $ 184,790 $ 161,802 $ 144,360 (21.9%) Services & Supplies $ 65,650 $ 74,630 $ 75,600 $ 64,044 $ 84, % Other TOTAL EXPENDITURES $ 208,659 $ 230,614 $ 260,390 $ 225,846 $ 229,310 (11.9%) Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Safety, Training & Fleet Maintenance Officer Totals

56 FY 2015/16 Budget 56 Treatment Plant Operations Description The Treatment Plant Operations Department receives, treats and distributes wastewater and solids conveyed to the treatment plant in an environmentally sound and cost effective manner. This is done with a strong ethical foundation of protecting public health and the environment, while meeting our responsibilities to the rate payers. The department operates the plant, performs some basic preventive maintenance of plant equipment and structures, recommends improvements in plant process, assists with engineering and special studies, and prepares all regulatory reports applicable to the treatment plant. Link to District Goals in Strategic Plan The Treatment Plant Operations Department supports the District s Goal One: Infrastructure Reliability by providing support to the Engineering Department s work on implementing the Treatment Plant Master Plan critical projects (Objective 1A) and development an Asset Management program (Objective 1D). The Department will directly support the District s efforts to negotiate and obtain a new NPDES permit (Goal Three: Operational Capability, Objective 3B). To support Goal Six: Resource Recovery, this Department will provide technical analysis when setting the targets for the percentage of electricity that is self-generated and will take the lead on determining strategies for the beneficial reuse of algae (Objective 6C). Department Goals Goal: Adhere to all federal, state and local guidelines, permits and regulations in the operation of the treatment plant. Treatment for BOD and TSS Removal (Must be higher than 85% - winter monthly average) BOD 97.9% 97.3% 97.9% 97.7% 97% 97% TSS 96.9% 97.2% 97.2% 96.7% 97% 97% Total Allowable BOD and TSS (Must be lower than 30 mg/l - winter monthly average) BOD TSS Related Department Objectives Continue producing an effluent that meets the NPDES permit requirements. Test and place the new IPS pump station in service and assist engineering in the decommissioning and demolition of the old Influent Pump Station. Goal: Effectively and efficiently operate the treatment plant. Polymer per MG processed Winter and Summer Wnt Smr Hypochlorite per MG processed Wnt Smr Percent Electricity Produced by Cogen Engine % 23.3% 33.7% 32.6% 32% 38% Electricity Consumed per Million Gallons Treated (Megawatt-hours per MG processed) Wnt Smr Related Department Objectives Continuous process optimization of the plant control systems to achieve a reduction in chemical and energy costs, to match or exceed the targets noted in performance measures above. Continue installation of additional online instrumentation. Continue to receive fats, oil and grease (FOG) collected from siphon to the FOG receiving station. Continue to optimize production of biogas in digester resulting from FOG receiving program.

57 FY 2015/16 Budget Complete the construction of the recycle water expansion project and place online. Assist Engineering in the construction of the aerators and design of the automated dredge in Oxidation Pond Changes from FY 2014/15 Service Levels FY 15/16 budget includes the elimination of the Plant Manager position and creation of the Operations Services Director position. Replace a flocculating clarifier with a Dissolved Air Floatation clarifier, add new aerators, increase recycled water production, overhaul the co-gen engine, and implement solar and battery stationary storage, for a net impact of increased electricity budget of approximately $110,000. FY 15/16 budget includes an additional $15,550 in chemicals for increased recycled water output. Overseeing plant operations via SCADA interface Percent of Operating Budget Proposed Budget Treatment Plant Operations 26.4% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 1,413,859 $ 1,386,706 $ 1,511,790 $ 1,460,597 $ 1,625, % Services & Supplies $ 2,080,353 $ 2,332,858 $ 2,152,380 $ 2,011,716 $ 2,285, % Other $ 190 $ 190 $ 200 $ 200 $ TOTAL EXPENDITURES $ 3,494,402 $ 3,719,753 $ 3,664,370 $ 3,472,513 $ 3,911, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Operations Services Director Plant Manager Operations Supervisor Operator OIT/I/II/III Totals

58 FY 2015/16 Budget 58 Treatment Plant Maintenance Description The Treatment Plant Maintenance Department provides corrective and preventive maintenance and equipment installation at the wastewater treatment plant and recycled water facilities, lift stations and other assigned areas. Priorities are set through consultation with Treatment Plant Operations staff to ensure plant reliability and permit compliance. Link to District Goals in Strategic Plan The Treatment Plant Maintenance Department supports the District s Goal One: Infrastructure Reliability by providing technical assistance on major plant infrastructure projects (Objective 1A) and Asset Management implementation (Objective 1D). Department Goals Goal: Provide corrective and preventive maintenance safely, cost effectively and efficiently. Planned Maintenance Ratio of Hours Worked (Planned maintenance as a percentage of total maintenance measures the proactive nature of activity in the department and is more efficient than corrective or emergency maintenance. A higher percentage is better.) % 63.7% 58.0% 65.8% 68% 68% Goal: Maintain critical operational systems so that there is reliability and operational resiliency. Uptime for Cogeneration Engine (The Cogeneration Engine is critical for effective management of biogas through the generation of heat and electricity needed by the wastewater treatment plant to operate.) % 84% 96% 96% 85% 98% Uptime for Pumps at Influent Pump Station (The Influent Pump Station is the most critical pump station in the entire system.) % 81% 77% 99% 99% 99% Related Department Objectives: Continue enhancement and organization of the inventory system to reduce down time. Complete Bar Screen wash water delivery upgrade Complete Gas Compressor cooling water filtration project Support the Engineering Department on construction of North/South split at Recycle Station Number of work orders completed ,409 1,191 1,372 1,351 1,400 1,400 Related Department Objectives: Continue to implement an effective life cycle equipment replacement schedule for better budgetary expense projections. Expand equipment data base and associated task of Maintenance Program. Complete replacement of Stationary Gas Monitors At Treatment Plant and Lift Stations Complete replacement of Heat Exchangers in Digester Complex Complete servicing MV breakers and protective relays at Switch Gear M and SB-1

59 FY 2015/16 Budget 59 Changes from FY 2014/15 Service Levels FY 15/16 budget includes a new Equipment Maintenance Specialist I/II, moved from the Water & Biosolids Reclamation Department (reclassified from Reclamation Maintenance Worker), as part of the Employee Master Plan implementation. FY 15/16 budget includes $65,000 for increased maintenance service on pumps. Remove FY 14/15 budget one-time only expense of $30,000 for digester painting. FY 15/16 includes a planned 45-day offline period for the Co-Generation engine bottom-end rebuild. NSD s cogeneration engine burns biogas from the digester to create heat and electricity Percent of Operating Budget Proposed Budget Treatment Plant Mainenance 11.6% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 754,554 $ 773,446 $ 830,450 $ 788,802 $ 1,017, % Services & Supplies $ 657,233 $ 691,508 $ 696,000 $ 669,472 $ 709, % Other TOTAL EXPENDITURES $ 1,411,787 $ 1,464,954 $ 1,526,450 $ 1,458,274 $ 1,726, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Plant Maintenance Supervisor Equipment Maintenance Specialist I/II Plant Attendant Totals

60 FY 2015/16 Budget 60 Collection System Description The purpose of the Collection System Department is to clean and maintain, inspect, repair, replace or rehabilitate sanitary sewer lines, manholes and other related facilities to assure the structural integrity of the District s sewer system in a manner that results in the most economical operation while maintaining regulatory compliance. Link to District Goals in Strategic Plan The Collection System Department supports the District s Goal One: Infrastructure Reliability by taking both preventive and corrective actions to maintain the infrastructure of the sewer system, and by assisting the Engineering staff in the design of capital projects. Specifically, the Department provides maintenance data and analysis in support of the wet weather inflow/infiltration analysis (Objective 1B), development of an Asset Management program (Objective 1D), design of the Browns Valley Road Interceptor (Objective 1E), and the amendment to the Collection System Master Plan (Objective 1F). Department Goals Goal: To prevent sanitary sewer overflows (SSO s). Especially important is to prevent Category 1 overflows that are defined as an SSO that reached a drainage channel and/or surface water or; an SSO that reached a storm drain pipe that was not fully recovered and returned to the sanitary sewer system. Category 1 Sewer Overflows per 100 miles of pipeline (NSD compared to California average) NSD CA na na Category 1 Gallons of Spilled Sewage per 100 miles of pipeline (NSD compared to California average) NSD , CA 20,641 12,465 3,761 25,040 na na Goal: To provide quality customer service by responding to customer requests for service and being on site within 30 minutes of receiving the call. Average Number of Minutes to Respond Service Calls for District Plugged Laterals Related Department Objectives Continue to respond to the needs of the community in a timely and professional manner within 30 minutes, while trying to reduce the number of emergency service calls. Goal: To insure infrastructure stability by performing preventive maintenance on the Collection System. This includes inspection and cleaning of the sewer system. Sewer Main Condition Assessment (% of sewer mains video inspected) (Goal is 10% per year) % 9.9% 7.4% 10.3% 10% 10% Percent of Main Lines Cleaned (Goal is 40%) % 45.8% 47.6% 47.6% 40% 40% Planned Maintenance as Ratio of Total Maintenance (Goal is 90%) % 90.4% 87.6% 87.5% 90% 90% Number of Public Laterals Replaced or Rehabilitated (Goal is 60 per year) Related Department Objectives Maintain the sewer lateral preventive maintenance program at current service levels. Video inspect 10% of the sewer mains in the District s system Clean at least 40% of District sewer mains per year. Root foam 4 miles of sewer main, including related laterals and manholes, to reduce the root intrusion into these facilities. Work to eliminate higher maintenance sewer mains by replacing or repairing them. Replace or rehabilitate 60 public laterals. Move forward in gathering, storing and disseminating asset and work information in an economical way with completeness and accuracy, including sharing with other departments in the District and others as needed.

61 FY 2015/16 Budget 61 Changes from FY 2014/15 Service Levels FY 15/16 budget includes reclassifying a Collection System Worker I/II position into a Collection System Worker III position, as part of the Employee Master Plan implementation. Collection system workers excavate a sewer lateral to make repairs Percent of Operating Budget Proposed Budget Collection System 17.0% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 1,842,345 $ 1,849,318 $ 2,010,620 $ 1,958,259 $ 2,106, % Services & Supplies $ 439,433 $ 337,669 $ 413,750 $ 416,782 $ 416, % Other TOTAL EXPENDITURES $ 2,281,778 $ 2,186,987 $ 2,424,370 $ 2,375,041 $ 2,522, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Collection System Manager Collection System Supervisor Collection System Technician Collection System Worker III Collection System Worker IT/I/II Totals

62 FY 2015/16 Budget 62 Water & Biosolids Reclamation Description This department is responsible for the effective and efficient distribution of recycled water and management of biosolids in a manner that respects the environment, maintains public health and conforms to local, state and federal regulations. After the treatment of wastewater, the District generates recycled water known as Title 22 Unrestricted Use which is permitted under State of California Regulations for almost any use except potable (drinking water) reuse. The District delivers this water to vineyards, golf courses, cemeteries, parks and athletic fields, and for landscape irrigation purposes. Biosolids are managed by this department through land application. This method avoids expensive offsite hauling and disposal of biosolids, with significant savings to the ratepayers. Link to District Goals in Strategic Plan The Water & Biosolids Reclamation Department supports the District s Goal Six: Resource Recovery through its support of local partners and the Engineering Department s projects to construct distribution systems for recycled water (Objective 6A) and providing technical assistance regarding expanding water reuse (Objective 6B). Distribute up to 650 million gallons (2,000 acre feet) recycled water, with 65% sold to customers. Complete annual recycled water user site inspections, issuing no Notices of Noncompliance. Complete an update to the Program portion of the Reuse Manual. Continue the Jameson Reuse Site sprinkler rehabilitation project, to increase the efficiency of recycled water application. Complete activities necessary to achieve Fish Friendly Certification at Fegundes Ranch, with certification anticipated in FY 2015/16. Goal: Dispose of 100% of biosolids through land application on District-owned property. Biosolids Put to Beneficial Reuse (% of biosolids applied to seeded & harvested acres) % 100% 100% 100% 100% 100% Related Department Objectives Apply approximately 1,200 dry tons of dewatered biosolids on District land. Put 100% of the biosolids applied to District land to beneficial reuse, through active agricultural practices on the land (growing crops, grazing sheep, etc.). Department Goals Goal: Dispose of recycled water during the summer months through sales to customers and on Districtowned property. Recycled Water Service Availability (% of time RW is available to customers May to Oct.) % 100% 100% 100% 100% 100% Recycled Water Reuse by Customers (% of recycled water sold to customers May to Oct.) % 62.3% 71.5% 75.2% 70% 90% Related Department Objectives Maintain Recycled Water availability at 100% during the non-discharge period.

63 FY 2015/16 Budget 63 Changes from FY 2014/15 Service Levels The FY 15/16 budget eliminates a Reclamation Maintenance Worker position from this Department, moving the position into the Plant Maintenance Division (reclassified as an EM Specialist), as part of the Employee Master Plan implementation. The FY 15/16 budget includes an additional $7,000 for cathodic protection testing, which is done every two years. Irrigating Somky Ranch with recycled water Applying biosolids at Somky Ranch Percent of Operating Budget Proposed Budget Water & Biosolids Reclamation 5.6% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 536,890 $ 497,409 $ 585,880 $ 463,946 $ 507,880 (13.3%) Services & Supplies $ 230,353 $ 188,281 $ 279,300 $ 191,323 $ 296, % Other $ 23,960 $ 23,796 $ 32,900 $ 25,000 $ 28,000 (14.9%) TOTAL EXPENDITURES $ 791,203 $ 709,486 $ 898,080 $ 680,269 $ 832,480 (7.3%) Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Reclamation Systems Manager Reclamation Maintenance Worker I/II Plant Attendant Totals

64 FY 2015/16 Budget 64 Engineering Description Engineering provides technical assistance to the operational departments within the District. The group is responsible for managing most of the District s capital projects and prepares project charters for projects that are included in the District s Ten-Year Capital Improvement Plan. Engineering is responsible for reviewing development plans for conformance with District standards and inspection of sanitary sewer facilities. In some cases, the group prepares the design plans and specifications and provides construction management and inspection for collection system projects. Link to District Goals in Strategic Plan The Engineering Department supports the District s Goal One: Infrastructure Reliability and Goal Six: Resource Recovery by providing project management and leadership on all of the infrastructure projects identified: Treatment Plant Master Plan projects, such as pond aeration, recycled water equalization and filters, and influent pump station (Objective 1A) Conduct wet weather inflow/infiltration cost/benefit analysis (Objective 1B) Determine target for renewal and replacement of sewer assets (Objective 1C) Develop and Asset Management Plan (Objective 1D) Design and construct Browns Valley Road Interceptor (Objective 1E) Update the Collection System Master Plan (Objective 1F) Study whether to implement a private lateral program (Objective 1G) Working with local partners in the distribution of recycled water (Objective 6A) Study and develop pathway to become energy independent (Objective 6C) Department Goals Goal: Plan and implement the Ten-Year Capital Improvement Plan. Percent of Annual Capital Plan Expended 10/11 11/12 12/13 13/14 14/15 15/ % 67.5% 63.8% 62.8% 75% 80% Capital Expenses as Percent of Operating Expenses % 71% 106% 168% 150% 100% Related Department Objectives Initiate capital projects that are scheduled to begin within the fiscal year and finalize those projects that are scheduled to be completed within the fiscal year. Develop and utilize capital program management system to monitor and report progress of active capital projects. Complete the construction of the MST and LCWD Recycled Water Project. Begin design of the Browns Valley Road Interceptor Project. Goal: Plan projects to ensure that the renewal or replacement of existing assets is completed according to condition assessments and estimated useful lives of assets. Renewal & Replacement of Assets (as a % of asset net worth 2% minimum, 4% goal) % 3.0% 2.6% 8.8% 2% 2% Related Department Objectives Plan for and complete renewal & replacement capital projects that impact at least 2% and up to 4% of the District s assets annually. Initiate in-house design of Basin L Rehabilitation Project 5. Complete construction management of the Basin L Rehabilitation Project 4. Complete construction of the IPS Replacement project. Begin implementation of a formal asset management plan Amend the 2007 Collection System Master Plan Design and construct I/I pilot projects. Goal: Complete the first review of development plans submitted for District approval within 30 calendar days. Development Review Response Time (% of applications where 30-day goal is met) % 97.5% 96.1% 97.5% 95% 95%

65 FY 2015/16 Budget 65 Number of development plans reviewed Number of construction inspections , ,000 1,000 Related Department Objectives Review and return development plans within 30 days of submittal to District. Respond to requests for information from the general public and other local agencies within three working days of request. Responded to an estimated 620 phone requests and 210 counter requests for development related information. Conduct an estimated 1,000 activities related to construction inspection of NSD collection system facilities, include locating sewers, permit processing, preconstruction meetings, inspections, and updating record drawings. Changes from FY 2014/15 Service Levels FY 15/16 budget includes the new Technical Services Director position (the reclassified Assistant General Manager position, moved from the General Manager s division budget). District engineers review development plans for conformance to standard specifications FY 2015/16 budget converts one Engineer position into an Asset Management Specialist position. FY 2015/16 budget adds $250,000 for Asset Management Implementation Plan. FY 2015/16 budget subtracts $10,000 for hydraulic modeling not needed in current year. FY 2015/16 budget removes $15,000 for onetime expenses to modify Track-It permit software system. Percent of Operating Budget Proposed Budget Engineering 10.7% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 892,518 $ 955,789 $ 1,011,730 $ 982,392 $ 1,273, % Services & Supplies $ 70,315 $ 91,842 $ 94,500 $ 83,724 $ 313, % Other TOTAL EXPENDITURES $ 962,833 $ 1,047,632 $ 1,106,230 $ 1,066,116 $ 1,586, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Technical Services Director Senior Civil Engineer Junior/Assistant/Associate Engineer Asset Management Specialist District Inspector I/II Senior Construction Inspector Construction Inspector Totals

66 FY 2015/16 Budget 66 Treatment Plant Laboratory Description The Treatment Plant Laboratory provides support to Plant Operations with consistently high quality analytical laboratory services. Laboratory analyses fall into one of three categories: 1) Required for regulatory compliance within District s operating permits; 2) Needed for operational control of the complex treatment processes; or 3) Requested by staff or contracted consultants in support of special studies. Related Department Objectives Continue to review and update operational data sampling and analysis management for an efficient process control operational strategy. Continue to produce high quality analytical data for real-time operational changes. Continue to incorporate pretreatment sampling/analysis events to provide pretreatment regulatory compliance for the District. Continue to develop and implement an analyst educational outreach training program. To begin the assessment of NSD s collection system to determine potential loading hot spot areas. Link to District Goals in Strategic Plan The Treatment Plant Laboratory Department supports the District s goals in the Strategic Plan through its support of the Plant Operations, Plant Maintenance, and Engineering Departments, and the Pollution Prevention Program. There are no specific objectives in the Strategic Plan that this department is responsible for completing. Department Goals Goal: Provide laboratory services efficiently and reliably, while abiding by the protocols and policies of the Quality Assurance Manual, Standard Operating Procedures and laboratory safety program. Number of regulatory analyses processed ,828 4,498 4,644 5,030 5,100 5,200 Number of Process Control analyses processed ,888 11,522 14,155 15,259 15,500 15,750 Number of special request analyses processed , Number of Quality Control/Assurance analyses processed (a) 1,422 4,355 5,380 5,400 5,500 (a) New LIMS system does not quantify QA/QC conducted on process/regulatory samples. QA/QC analyses is based on required Laboratory QAQC analyses for Laboratory ELAP certification.

67 FY 2015/16 Budget 67 Changes from FY 2015/16 Service Levels The budget eliminates the Laboratory Supervisor position and creates a Regulatory Compliance Manager position that oversees the Laboratory and Pollution Prevention. FY 15/16 budget increased by $10,000 for increased process control monitoring to assist NSD Department in collection system or treatment facility troubleshooting (Septic Study, Activated Sludge Nutrient Assessment and others). FY 15/16 budget included $2,500 for attendance at the Pitconn Laboratory Training Conference. FY 15/16 budget removes a one-time SQL training conducted last year ($4,500). NSD Lab Technicians run thousands of regulatory and process control analyses annually Percent of Operating Budget Proposed Budget Treatment Plant Laboratory 5.8% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 609,314 $ 635,666 $ 658,890 $ 633,358 $ 699, % Services & Supplies $ 144,713 $ 181,422 $ 145,500 $ 147,873 $ 155, % Other TOTAL EXPENDITURES $ 754,027 $ 817,088 $ 804,390 $ 781,231 $ 855, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Regulatory Compliance Manager Lab Supervisor Lab Technician I/II Totals

68 FY 2015/16 Budget Pollution Prevention Description The Pollution Prevention Program is a crossdepartmental program designed to ensure that discharges to the collection system and treatment plant are in compliance with the District s Sewer Use Ordinance and will not pose a hazard to the public, District employees or District facilities and treatment processes. The District's Pretreatment Program controls the amount of pollutants that are discharged to the sanitary sewer system through active regulation of numerous industrial and commercial businesses in Napa. Program activities include periodic on-site inspections, permit writing and administration, sampling of various discharges, and enforcement when necessary. The Program supports increased water recycling and reuse, as well as wastewater treatment prior to discharge to the sanitary sewer to reduce pollutant loadings to the treatment facility. The Pollution Prevention Program also supports education and outreach through school programs, community events and treatment plant tours. Link to District Goals in Strategic Plan This program supports the Strategic Plan, specifically Goal Three: Operational Capability in the outreach to develop alternative methods for treating winery waste (Objective 3A) and Goal Five: Community Outreach and Communication in the development of a communications plan to address NSD outreach and public information needs (Objective 5B). Program Goals Goal: Decrease Fats, Oil and Grease (FOG) deposited in the Collection System, thus reducing maintenance expenses and reducing the risk of Sanitary Sewer Overflows (SSOs). Restaurant Inspections (Fats, Oil & Grease) (goal is every food service establishment annually is 100%, currently 162) Lateral Overflows or Backups Due to FOG (goal is zero) Main Line Sanitary Sewer Overflows Due to FOG (goal is zero) Related Department Objectives With the City of Napa, promote the Recycle More Program which provides curbside collection of used cooking oil. Continue the inspection program for Fats, Oil and Grease (FOG). Continue public outreach on proper disposal of FOG. Goal: Prevent pollutants from being discharged into the sewer system through active regulation, promotion of Best Management Practices, and outreach to the public. Plant Tours Conducted and Presentations Made Pounds of Unwanted Pharmaceuticals Diverted ,368 2,577 3,464 2,910 3,000 3, Related Department Objectives Work with General Manager s Office to develop a Communications Plan. Expand the medication collection program to include more drop-off sites. Conduct plant tours and make public presentations. Develop and disseminate to stakeholders pollution prevention BMPs as necessary Promote classroom presentations targeting elementary school students. Develop Spanish language outreach for pollution prevention messages. Develop a wastewater treatment plant video for use online, in classrooms, and for community organizations. Develop performance goals for increased and improved inspection of non-categorical dischargers. Continue monitoring, sampling, reporting, and billing for all categorical dischargers.

69 FY 2015/16 Budget 69 Changes from FY 2014/15 Service Levels FY 15/16 includes the implementation of the Employee Master Plan, repurposing the Management Analyst and Outreach Coordinator into the Pollution Prevention and Outreach Coordinator, and moving the position from Administrative Services into this program. School tour of the Treatment Plant Headworks Percent of Operating Budget Proposed Budget Pollution Prevention 1.5% Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits $ 15,472 $ 17,058 $ 18,760 $ 17,670 $ 144, % Services & Supplies $ 72,475 $ 68,346 $ 84,600 $ 28,294 $ 84, % Other TOTAL EXPENDITURES $ 87,947 $ 85,404 $ 103,360 $ 45,964 $ 229, % Position Authorizations Position Series FY 12/13 FY 13/14 FY 14/15 FY 15/16 Pollution Prevention and Outreach Specialist Totals

70 FY 2015/16 Budget 70 Non-Departmental Expenses Description These expenses are not directly attributable to a specific department or program. They include expenses that are allocated at the District level, such as District memberships in organizations and associations, liability insurance, refunds of sewer service charges, debt service payments, and interfund transfers. Changes from FY 2014/15 Service Levels There were no changes from FY 2014/15 service levels related to insurance. Premiums were increase based on loss experience ($10,000). Treatment plant biogas holder (left) and digester (right) Percent of Operating Budget Non- Departmental 1.9% Proposed Budget Actual Actual Adjusted Estimated Proposed Percent FY 12/13 FY 13/14 FY 14/15 FY 14/15 FY 15/16 Change Salaries & Benefits Services & Supplies $ 391,306 $ 269,757 $ 233,550 $ 245,011 $ 246, % Total Operating Expenditures $ 391,306 $ 269,757 $ 233,550 $ 245,011 $ 246, % Debt Service, Transfers and Taxes $ 41,185,591 $ 6,426,367 $ 6,639,300 $ 6,667,412 $ 6,779, % TOTAL EXPENDITURES $ 41,576,897 $ 6,696,124 $ 6,872,850 $ 6,912,423 $ 7,025, %

71 FY 2015/16 Budget 71 Capital Improvement Plan Construction during Lower Alphabet Street Sewer Improvement project

72 FY 2015/16 Budget 72 This page intentionally left blank.

73 FY 2015/16 Budget Capital Improvement Plan Program Description The Capital Improvement Plan (CIP) is designed to identify capital expenditures for the next ten years and to plan appropriately for how to complete those projects within projected revenues and staffing capacity. The plan includes the replacement and rehabilitation of existing capital assets as well as the acquisition or construction of new capital assets. Definition of Capital Expenditures Capital expenditures, or capital outlays, are cash outlays by the District that result in the acquisition or construction of a capital asset. A capital asset is any asset of significant value (over $5,000) that has a useful life of over one year. Examples include land, buildings, machinery, vehicles and equipment. All capital assets acquired or constructed are included in the Capital Improvement Plan. Land is always considered a capital asset, regardless of value. Capital Plan Development Process Annually, the District updates its Ten-Year Capital Improvement Plan. The plan undergoes several levels of review and alteration. First, a project is individually evaluated to determine whether it is necessary to do the project, or if a less expensive alternative is available. If the project is still the best alternative, then an evaluation is done to determine when the project should be done, based on the condition of the existing assets or the operational and maintenance needs for the project. Management and supervisory staff also are provided an opportunity to identify new capital projects through the Project Charter process. New projects are proposed to the Capital Program Manager and the District Engineer who evaluate the projects and determine their need and level of priority. Once vetted through this process, new projects are added to the CIP as funding allows. Vehicle Replacement Guidelines The District maintains a fleet of vehicles used solely for purposes related to the direct maintenance and operations of the District. When a vehicle is purchased, it is identified at that time how long that vehicle should continue to serve its intended function, provided that the vehicle is maintained properly. The replacement of that vehicle is then scheduled in the Capital Improvement Plan, to ensure that the District has adequately planned for the replacement costs associated with the vehicle. Every year, a team of District staff reviews the list of vehicles owned by the District and the replacement schedule. The team makes the following recommendations: Move vehicles back or forward on the replacement schedule based on the maintenance history of the vehicle and any current maintenance problems; Move vehicles back or forward on the schedule based on regulatory requirements (such as CARB requirements for diesel engines); Move vehicles between organizational units when the use of the vehicle changes; Identify whether a vehicle scheduled for replacement should be recommended for surplus, or when it could still be used effectively by another department; and Identify when service needs have changed that could necessitate that a vehicle be replaced by a different type of vehicle or not at all. Senior management reviews the recommendations of the Fleet Team, accepts or rejects recommendations, and incorporates accepted changes into the Ten-Year Capital Improvement Plan. All decisions to declare a vehicle surplus and replace the vehicle are brought to the NSD Board of Directors for approval, in accordance with District procurement policy. The replacement of fleet vehicles represents just over $5.3 million, or 2.6% of the entire Ten-Year Capital Improvement Plan. All revenues collected from the sale of any vehicles declared surplus is used to offset the cost of new vehicles. The Dystor cover, which serves as the biogas holder, was replaced in FY 2013/14 due to a rip in the inner membrane. 73

74 FY 2015/16 Budget Sources of Capital Expenditure Funding There are several sources of funding for capital projects. The District collects capacity charges on new development to pay for its share of expanding the collection and treatment systems. The District also collects sewer service charges revenue in excess of operational needs to pay for replacement and rehabilitation projects. The fees collected as part of development plan review are used for capital projects, as well as grant and intergovernmental revenue. Use of Capacity Charges for Expansion The District imposes a capacity charge on new development (see the Budget Summary section, page 32, for more information on this revenue source). In August 2009, the District completed a study of capacity charges. The study determined that from FY 1995/96 to FY 2007/08, there was significantly more money spent to provide new capacity (expansion) than there was capacity charge revenue collected. As of July 1, 2008, the expansion fund (capacity charges) was in deficit to existing ratepayers and the capital projects fund by $12.6 million. As new projects are completed, their benefit to existing users and to new development is evaluated, and a split of expenses between the two is assigned. At the end of the fiscal year, the deficit is adjusted based on the amount of revenue received in capacity charges and the amount of capital expenditure for expansion projects. The following represents a summary of this accounting: FY 2008/09 Actual Beginning Deficit (7/1/08) ($12,607,167) Revenues 1,387,193 Expansion Projects 1,663,801 FY 2009/10 Actual Beginning Deficit ($12,883,775) Revenues 600,664 Expansion Projects 2,191,370 FY 2010/11 Actual Beginning Deficit ($14,474,480) Revenues 2,183,802 Expansion Projects 2,811,161 FY 2011/12 Actual Beginning Deficit ($15,101,839) Revenues 3,330,418 Expansion Projects 4,208,445 FY 2012/13 Actual Beginning Deficit ($15,979,866) Revenues 2,693,047 Expansion Projects 2,171,064 FY 2013/14 Actual Beginning Deficit ($15,457,883) Revenues 3,635,826 Expansion Projects 7,447,155 FY 2014/15 Estimated Beginning Deficit ($19,269,211) Revenues 950,000 Expansion Projects 12,029,696 Ending Deficit (30,348,907) FY 2015/16 Budget Beginning Deficit ($30,348,907) Revenues 2,998,000 Expansion Projects 3,328,700 Ending Deficit (30,679,607) A budget deficit and situation where expenses on expansion projects exceeds revenues means that the current ratepayers in the system are paying more than their allocated share of capital expenses, as the deficit is made up using sewer service charges and other revenues from operational sources. A copy of the Capacity Charges Report for Fiscal Year 2013/14 can be found in Appendix F of this budget document. Changes from Prior CIP The CIP was amended by the Board several times during FY 2014/15, after initial adoption. The following is a summary of the significant changes made to the CIP during the last fiscal year, not counting carry forwards of uncompleted capital projects from the prior year: Increased the Phase 1 Recycled Water Expansion project (CIP #13714) budget by $1,193,000. Increased the budget for the Siphon Rehabilitation Project #1 (CIP 15704) by $27,

75 FY 2015/16 Budget Created a new project for the abandonment of part of the North Napa Pump Station Force Main (CIP #15719) for $80,000. Created a new project to rehabilitate asbestoscement pipe (ACP) that was severely damaged, for $50,000. Created a new project to replace vehicle 173 (Ford F-350 truck) that was significantly damaged in an auto accident (insurance proceeds partially offset this increased cost), for $58,000. Created a new project to purchase GPS equipment to mark and locate manholes not in public rights-of-way, for $10,000. Increased the budget for the Area Drain & Pond 1 Isolation Valve project (CIP #13719) by $44,500 based on bids received. Increased the Effluent Overflow Meter project (CIP #15709) by $25,000 to meet estimated project costs. Increased the budget for the IPS Expansion project (CIP #13724) by 585,000. Combined the three SCADA projects (CIP #13725, 15715, 15716) into one project, and increased the total by $10,000. Summary of FY 2015/16 Capital Projects The following is a summary of FY 2015/16 capital projects. Dollar amounts noted are the amount budgeted for FY 2015/16, and not the entire amount of the project. For complete financial information, see the table of projects that follows, starting on page 82. Vehicles District vehicles are all purchased and owned by the District. Each vehicle is placed on the Ten-Year CIP so that their replacement can be planned. Vehicles are not replaced unless necessary. Vehicles at the end of their useful life are declared surplus property by the Board of Directors and sold at auction. There are no vehicles scheduled for purchase or replacement in FY 21015/16. Collection System Collection System projects represent routine replacement or rehabilitation of existing pipeline or equipment. These projects are designed to replace or improve assets to extend their useful lives or to improve their function by reducing how rainwater and groundwater can enter the collection system. Major projects beginning this year include the start of the Browns Valley Truck Interceptor project, an amendment to the Collection System Master Plan, Asbestos-Cement Pipe (ACP) CIPP Lining project, and the fifth I&I Reduction project in Basin L. Collection system projects for the fiscal year total $7,822,400. Collection System Equipment The Collection Department will be replacing its locatable minicamera in FY 2015/16. Total replacement cost is $10,300. Lift Stations Lift stations are pump stations within the sewer collection system. FY 2015/16 includes a Long Term Planning Study for the West Napa Pump Station, which is associated with the Browns Valley Road Interceptor and the Collection System Master Plan Amendment projects. Cost is $75,000. Treatment FY 2015/16 includes a study to determine whether algae collected during the treatment system could be used in the digester to create energy, and a number of energy efficiency improvements resulting from an energy audit conducted by PG&E. Capital costs in this area total $160,000 for this fiscal year. Treatment Equipment These projects include a number of equipment replacements, most notable of which are replacement of the stationary gas detector ($50,000), condition assessment of the primary clarifier mechanical/structural elements in preparation for rehabilitation ($40,000), and an overhaul of the cogeneration engine s bottom end ($150,000). The total FY 2015/16 expenditure is $291,500. Treatment Plant Structures There are no anticipated projects in this area anticipated for FY 2015/16. Ten-Year CIP Summary 75 FY 2015/16 10-Year CIP Collection System $7,822,400 $63,700,500 Collection System Equipment 10,300 3,350,500 Lift Stations 75, ,700 Treatment 160,000 7,612,580 Treatment Equipment 291,500 5,751,800 Treatment Structures 0 24,313,900 SCADA 0 1,063,700 Recycling-District 45,000 8,250,200 Recycling-Expansion 21,824,550 86,008,800 Other 230,700 5,689,400 Total $30,459,450 $206,330,080

76 FY 2015/16 Budget 76 SCADA SCADA is the hardware and software that is used to operate the treatment plant. In FY 2015/16, there are no SCADA projects. Recycling-District This section includes projects and equipment necessary for the District to maintain its fields, distribute recycled water, and land apply biosolids. FY 2015/16 includes lining the existing two recycled water reservoirs to increase their holding capacity ($45,000). Recycling-Expansion This section includes projects to expand the recycled water distribution system into the community. Expenses here include continued efforts through the North Bay Water Reuse Project to apply for and manage federal and state grants ($524,550), the construction of the recycled water distribution pipeline into the MST ($4,000,000) and Los Carneros areas ($15,000,000) and an associated project to split off the south distribution lines from the north lines to better manage pressure needs once the MST and LCWD projects are complete ($2,300,000). Other Development technical support ($220,700) is the capitalization of staff time spent reviewing the plans and inspections associated with contributed capital. This section also includes making acoustic improvements in the engineering section of the Administration building. Partner-Funded Projects The District has partnered with two companies to develop capital projects, where the partner will be financing, constructing and operating the new facility located on District property, and the District will be receiving benefit from the projects. The first project is the development of a 1.0 Megawatt photovoltaic (PV) solar power system. The District has entered into a Power Purchase Agreement whereby the solar provider will build, operate and maintain the PV solar system on District-owned property. The provider will sell electricity to the District at a rate lower than its current rate for grid power. The project is expected to save the District over $2.8 million NPV over 25 years. As part of the project, the District has negotiated to retain ownership of the environmental attributes of the project. The District has the option to purchase the PV solar system in the 6 th year of the agreement. Sewer main replacement The second project is the development of a 1.0 MW/ 2.0 MWh stationary storage (SS) complex. The SS provider will build, operate and maintain the facility. The District will charge the SS system using its cogeneration engine, and use the stored electricity during peak periods during the day to reduce electricity demand charges. The agreement is a shared savings agreement, whereby the District and the SS provider share the savings 50%/50%. Unfunded or Delayed Projects The Capital Improvement Plan includes projects that have been clearly identified and programmed. It also includes some placeholder projects, where the specific project has not been identified but there is money allocated nonetheless. These placeholders are included in the plan to recognize that there is the need to plan for future replacement and rehabilitation projects, even though the specific projects have not yet been scoped and planned. Providing a placeholder for these future projects will ensure that there are adequate resources to pay for these projects once they are known. A number of projects that were slated to begin in FY 2015/16 in last year s CIP have been pushed out to begin in future years. This was done after it was determined that only critical CIP project would be started in FY 2015/16, based on the 10-Year Financial Forecast. These delays allowed the District to present a capital budget for FY 2015/16 that did not exceed available resources. Staff believes that these delays will not result in deferred maintenance scenarios, nor will they delays pose an unreasonable risk for system failure or permit violation.

77 FY 2015/16 Budget Impact of Projects on Operating Budget Many of the capital projects planned for FY 2015/16 are replacements and rehabilitations of existing capital assets, so it is not expected that these capital projects will have an impact on future operating budgets. However, some the FY 2015/16 capital projects will have a significant impact on the current and future operations and maintenance budgets of the District. The I&I Reduction projects in the Collection System (CIP #14701, #16701) are designed to decrease the amount of rainwater and groundwater that get into the system. This reduces future costs by reducing the need to build bigger pipes as well as reduces the amount of influent that the plant needs to treat. It also reduces the need for cleaning and root removal maintenance activities. The immediate, short-term savings have not been calculated, but should have a positive effect on the operating budget. The Browns Valley Trunk Interceptor project (CIP #14703) will increase the amount of sewer main that will need to be maintained in the Collection System. However, it is not significant enough in size to impact the staffing levels or other direct expenses in the Collection System operating budget. The Algae to Digester with Thermal Study (CIP #16708) and the Carbon/Energy Efficiency Improvements (CIP #16709) are both energy projects that will either result in increased energy efficiency or increase the self-generation of electricity in the treatment plant. It is not possible at this point to project quantitatively the impacts of these projects. The expansion of the recycled water pipeline into MST (CIP #14726) and into the Los Carneros Water District (CIP #15718) will lead to increased maintenance and operating costs for those pipelines over time. These costs, including rehabilitation projects for all of the recycled water pipelines, are expected in future years and included in the CIP. The operating budget in FY 16/17 will need to be increased to include an additional $70,000 to pay for annual cathodic protection testing and leak detection. These costs are anticipated and included in the recycled water rates when they increase in calendar year The project to split the north and south recycled water lines and add surge protection (CIP #14727) includes the installation of jockey pumps on the lines. These new, smaller pumps will allow the District to maintain line pressure during low levels of recycled water usage without operating the larger, energy intensive recycled water pumps. This project should save the District electricity costs (estimated at $7,500 annually), as well as long-term savings from less wear-and-tear on the larger pumps. Impacts of Capital Projects on Operating Budget 77 CIP # 2015/ / / ,000 35, ,000 35, (2,500) (7,500) (7,650) Total ($2,500) $62,500 $63,750 Lining the existing recycled water reservoirs (CIP #16716) will increase the operating efficiency of the recycled water system and allow more water to be stored. However, there are no increased or decreased operating costs expected with this project. New Administration Building under construction in 2013

78 FY 2015/16 Budget 78 FY 2015/16 CIP Project Descriptions COLLECTION SYSTEM Mainline Sewer Rehabilitation FY 2015/16: $84,900 Ongoing program to conduct spot repairs to damaged sewer lines using NSD crews or an outside contractor, extending the useful life of these assets Manhole Raising / Rehabilitation FY 2015/16: $185,500 Ongoing program to fund the raising of manhole rims in streets that have been resurfaced. NSD crews replace damaged manholes in this program Lateral Replacement / Rehabilitation FY 2015/16: $69,200 Ongoing program to rehabilitate street laterals as required using NSD crews or an outside contractor Cleanout Installation / Rehabilitation FY 2015/16: $76,400 Ongoing program using NSD crews to install lateral clean-outs at the property line where one does not exist Inflow & Infiltration (I&I) Reduction Program Project Total: $700,725 FY 2015/16: $130,000 This program conducts smoke testing and flow monitoring for I&I reduction projects. A consultant will conduct an analysis to evaluate the effectiveness of the I&I reduction projects Basin L - I&I Reduction Project 4 Project Total: $4,600,000 FY 2015/16: $3,600,000 The project will be designed and constructed to reduce I&I in Basin L (north of Imola Avenue, south of Napa Creek, and west of the Napa River) Basin L - I&I Reduction Project 5 Project Total: $2,400,000 FY 2015/16: $800,000 Project 5 will be designed and constructed to reduce I&I in Basin L (north of Imola Avenue, south of Napa Creek, and west of the Napa River) Collection System Master Plan Amendment Project Total: $250,000 FY 2015/16: $250,000 This project will amend the 2007 Collection System Master Plan by incorporating the I&I Reduction results ACP CIPP Lining Project #1 Project Total: $1,000,000 FY 2015/16: $1,000,000 The project will rehabilitate existing asbestos cement pipes (ACP). The ACP mains are degrading and were determined to be in immediate need rehabilitation Upper Lateral Rehabilitation - Basin L Project Total: $225,000 FY 2015/16: $175,000 This pilot project will replace residential private sewer lateral pipes in a portion of Basin L Cleanout Replacement - Basin L (Pilot) Project Total: $30,000 FY 2015/16: $10,000 This pilot project will replace cleanouts in Basin L. The existing cleanouts have been identified during previous studies to accept stormwater inflow during rain events. The cleanouts will be replaced with cleanouts the decrease inflow Manhole Rehab - Basin L (Pilot) Project Total: $60,000 FY 2015/16: $10,000 This pilot project will rehabilitate manholes in Basin L. The existing manholes have been identified during wet weather events to collect stormwater I&I during rain events. The manholes will be rehabilitated to minimize I&I Sarco Creek Pipeline Replacement - CalTRANS Project Total: $685,900 FY 2015/16: $82,400 This project, funded by CalTRANS, will relocate sewer main pipe adjacent to Silverado Trail that crosses Sarco creek. The relocation is needed for a Caltrans bridge project.

79 FY 2015/16 Budget 79 FY 2015/16 CIP Project Descriptions Browns Valley Truck Interceptor Project Total: $16,177,156 FY 2015/16: $1,339,000 The work in FY 15/16 is the beginning of design work for the large interceptor project. The entire project will intercept sewage from the Browns Valley area and bypass it around the downtown area. The overall project goal is to convey increased amounts in the sewer system to decrease the potential for overflows Siphon Rehabilitation #1 Project Total: $79,300 FY 2015/16: $5,000 This project will rehabilitate the Atlas Peak siphon Siphon Rehabilitation #2 Project Total: $164,100 FY 2015/16: $5,000 This project will rehabilitate the S. Terrace siphon. COLLECTION SYSTEM EQUIPMENT Locatable Mini-Camera #1 Replacement Project Total: $10,300 FY 2015/16: $10,300 This project will replace the old and outdated Mini-Camera #1 used in Collections to do condition assessments. LIFT STATIONS West Napa PS-Long Term Planning Study Project Total: $75,000 FY 2015/16: $75,000 After completion of the amendment of the Collections System Master Plan, this project will study the impacts to the West Napa Pump Station and determine if future upgrades are needed to convey future flows. TREATMENT Algae to Digester with Thermal Study Project Total: $60,000 FY 2015/16: $60,000 This project will study the feasibility of using algae collected from the DAF and flocculating clarifier to generate electricity Carbon/Energy Efficiency Improvements Project Total: $100,000 FY 2015/16: $100,000 This project will implement projects identified in the 2015 PG&E Energy Audit that have a short payback in energy savings. TREATMENT - EQUIPMENT Lab - Sampler 3710FR Replacement Project Total: $6,300 FY 2015/16: $6,300 This equipment is at the end of its useful life and needs to be replaced Lab - Waterbath Project Total: $5,200 FY 2015/16: $5,200 This equipment is at the end of its useful life and needs to be replaced Main - Stationary Gas Detector Replacement Project Total: $204,974 FY 2015/16: $50,000 Stationary gas detectors are required in the treatment plant to sense hydrogen sulfide and explosive limits of combustible gases which provide for a safe working environment. Existing gas monitoring equipment is old and requires frequent replacement of parts. This project will replace existing equipment Main - Primary Clarifier Mech/Structural Rehab Project Total: $390,000 FY 2015/16: $40,000 This project will rehabilitate the existing primary clarifiers. The work in 15/16 will assess existing mechanical and structural corrosion and scope a future rehabilitation project Main - Buried Metallic Pipe Evaluation and Rehab Project Total: $110,000 FY 2015/16: $10,000 This project will rehabilitate existing piping within the Plant. The work in 15/16 will assess existing damage and scope a future rehabilitation project.

80 FY 2015/16 Budget 80 FY 2015/16 CIP Project Descriptions Main - High Voltage System Repairs Project Total: $30,000 FY 2015/16: $30,000 This project will install ground fault protection for the 12kV utility power system at the Plant Main - Cogen Bottom End Overhaul Project Total: $150,000 FY 2015/16: $150,000 This is a major maintenance project that is necessary to extend the useful life of the cogeneration engine used to produce electricity and heat for the plant. TREATMENT - STRUCTURES There are no Treatment Structure projects in FY 2015/16. SCADA There are no SCADA projects in FY 2015/16. RECYCLING - DISTRICT Line Recycled Water Reservoirs Project Total: $235,000 FY 2015/16: $45,000 This project will install a non-permeable liner on the bottom of the existing recycled water reservoirs used for daily storage and equalization. The project will increase the storage capacity of the existing ponds by approximately 30%. RECYCLING - EXPANSION North Bay Water Reuse Project FY 2015/16: $524,550 This is the cost of program development, project management, and environmental analysis associated with the expansion of recycled water production and delivery, and seeking federal and state grant revenues in support of recycled water MST RW Pipeline Construction Project Total: $14,190,937 FY 2015/16: $4,000,000 This project, financed by Napa County through WaterSmart grants and an SRF loan, will construct a recycled water pipeline from Skyline Park north through the MST area up to Hagen Road LCWD Recycled Water Pipeline Construction Project Total: $17,000,000 FY 2015/16: $15,000,000 This project, financed by the Los Carneros Water District and an SRF loan, will construct a recycled water pipeline from Stanly Ranch out through the LCWD area Split N/S Lines and Surge Protection Project Total: $2,962,166 FY 2015/16: $2,300,000 As part of making the MST and LCWD pipelines operational, it is necessary to separate and expend the recycled water pump station at the plant, to allow for different pumping pressures to the north and to the south. This will ensure that there is adequate but not unnecessary pressure in each direction. OTHER Development Technical Support FY 2015/16: $220,700 District staff reviews and comments on development plans involving sewer and recycled water facilities and contributed capital Admin/Engineering Bldg - Acoustic Improvements FY 2015/16: $10,000 This project will install acoustic panels in the Engineering Division section, to reduce sound volumes and echos in that portion of the building.

81 FY 2015/16 Budget 81 FY 2015/16 Capital Project Schedule Allocation of Capacity Charges # Name FY 15/16 % Funded by Capacity Charges % Funded by Other Revenue Total Capacity Charges Total Other Revenue COLLECTION SYSTEM Mainline Sewer Rehab 84, % - 84, Manhole Raising / Rehab 185, % - 185, Lateral Replacement / Rehab 69, % - 69, Cleanout Installation / Rehab 76, % - 76, I&I Reduction Program 130, % 60.6% 51,220 78, Basin L - I&I Reduction Project 4 3,600, % 60.6% 1,418,400 2,181, Browns Valley Trunk 1,339, % 0.0% 1,339, Upper Lateral Rehab - Basin L (Pilot) 175, % 60.6% 68, , Sarco Creek Pipeline Replacement - Caltrans 82, % - 82, Siphon Rehabilitation #1 - Atlas Peak 5, % - 5, ACP CIPP Lining Project #1 1,000, % - 1,000, Basin L - I&I Reduction Project 5 800, % 60.6% 315, , Collection System Master Plan Amendment 250, % 60.6% 98, , Cleanout Replacement - Basin L (Pilot) 10, % 60.6% 3,940 6, Manhole Rehab - Basin L (Pilot) 10, % 60.6% 3,940 6, Siphon Rehabilitation #2 - S. Terrace 5, % - 5,000 COLLECTION SYSTEM - EQUIPMENT Locatable Mini-Camera #1 Replacement 10, % - 10,300 LIFT STATIONS West Napa PS - Long Term Planning Study 75, % 60.6% 29,550 45,450 TREATMENT Algae to Digester with Thermal Study 60, % - 60, Carbon/Energy Efficiency Improvements 100, % - 100,000 TREATMENT - EQUIPMENT Main - Stationary Gas Detector Replacement 50, % - 50, Lab - Sampler 3710FR Replacement 6, % - 6, Lab - Waterbath 5, % - 5, Main - Primary Clarifier Mech/Struct Rehabilitation 40, % - 40, Main - Buried Metalic Piping (eval/rehab) 10, % - 10, Main - High Voltage System Repairs 30, % - 30, Main - Cogen Bottom End Overhaul 150, % - 150,000 RECYCLING - DISTRICT WWTP MP - Line Recycled Water Reservoir 45, % - 45,000 RECYCLING - EXPANSION North Bay Water Reuse Project 524, % - 524, MST RW Pipeline Construction 4,000, % - 4,000, Split N/S Lines, surge protection 2,300, % - 2,300, LCWD RW Pipeline Construction 15,000, % - 15,000,000 OTHER Development Technical Support 220, % - 220, Admin/Engineering Bldg - Acoustic Improvements 10, % - 10,000 TOTAL 30,459,450 $3,328,700 $27,130,750

82 Napa Sanitation District FY 2015/16 Budget 82 # Name FY 15/16 Proposed FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected FY 24/25 Projected COLLECTION SYSTEM Mainline Sewer Rehab 84,900 87,400 90,000 92,700 95,500 98, , , , , Manhole Raising / Rehab 185, , , , , , , , , , Lateral Replacement / Rehab 69,200 71,300 73,400 75,600 77,900 80,200 82,600 85,100 87,700 90, Cleanout Installation / Rehab 76,400 78,700 81,100 83,500 86,000 88,600 91,300 94,000 96,800 99, I&I Reduction Program 130, Basin L - I&I Reduction Project 4 3,600, Basin L - I&I Reduction Project 5 800,000 1,600, Collection System Master Plan Amendment 250, Collection System Master Plan , Collection System Asset Management Software - 100, ACP CIPP Lining Project #1 1,000, ACP CIPP Lining Project #2-50, , Upper Lateral Rehab - Basin L (Pilot) 175, Cleanout Replacement - Basin L (Pilot) 10,000 20, Manhole Rehab - Basin L (Pilot) 10,000 50, Soscol Ave (8th to Oil Company Rd) - 1,025,200 1,407, North Napa PS Force Main Abandonment - 201, Sarco Creek Pipeline Replacement - Caltrans 82, , Browns Valley Trunk 1,339,000 3,501,000 8,086,200 2,251, Siphon Rehabilitation #1 - Atlas Peak 5,000 74, Siphon Rehabilitation #2 - S. Terrace 5, , Siphon Rehabilitation #3 - Milliken Creek - 5, , Siphon Rehabilitation #4 - Solano Ave - 5, , Sewer Main Rehab/Replacement - - 1,856,600 1,912, Sewer Main Rehab/Replacement ,912,300 1,969, Sewer Main Rehab/Replacement ,969,600 2,028, Sewer Main Rehab/Replacement ,028,700 2,089, Sewer Main Rehab/Replacement ,089,600 1,900, Sewer Main Rehab/Replacement ,152,300 1,957,200 - Sewer Main Rehab/Replacement ,216,800 2,015,900 Sewer Main Rehab/Replacement ,283,400 COLLECTION SYSTEM - EQUIPMENT CCTV Transporter Replacement - 20, Lateral Jetter Replacement , Locatable Mini-Camera #1 Replacement 10, ,000 - Locatable Mini-Camera #2 Replacement , Locatable Mini-Camera #3 Replacement , Locatable Mini-Camera #4 Replacement , Eel Replacement #1-5, Eel Replacement # , Eel Replacement # , Vehicle Kubota , Vehicle Plugup Truck - Secondary ,900 Vehicle Ford Ranger , Vehicle Ford Ranger ,200 Vehicle Water Trailer , Vehicle Ford F , Vehicle Backhoe , Vehicle Water Truck - 213, Vehicle Hybrid Escape , Vehicle TV Truck , ,200 - Vehicle Backhoe Trailer , Vehicle Dump Truck , Vehicle Rodder ,

83 Napa Sanitation District FY 2015/16 Budget 83 # Name FY 15/16 Proposed FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected Vehicle 18 - Cement Trailer , Vehicle 16-18ft Trailer - 8, Vehicle Forklift , Vehicle Mini-Dump , Vehicle Mini-Dump , Vehicle Mini-Vactor , Vehicle Vactor , Vehicle Repair Truck , LIFT STATIONS West Napa PS - Long Term Planning Study 75, Main - Stonecrest Pump Rebuild , Main - West Napa Pump Rebuild ,000-70, Lift Station Equipment Renewal & Replacement , Lift Station Equipment Renewal & Replacement , Lift Station Equipment Renewal & Replacement , Lift Station Equipment Renewal & Replacement , Lift Station Equipment Renewal & Replacement ,000 - Lift Station Equipment Renewal & Replacement ,400 TREATMENT WWTP MP - RW Expansion - Phase ,173, Pond 1 Dredge - 590,080 2,950, Algae to Digester with Thermal Study 60, Carbon/Energy Efficiency Improvements 100, WWTP Master Plan ,738, TREATMENT - EQUIPMENT Secondary PS Pump Rebuild (3) - 37,100 38, Secondary PS VFD Replacement (3) - 53,000 54,600 56, Residual Analyzers (Deox) Replacements , WWTP MP - Activated Sludge Diffuser Replacement 500, DAFT Overflow Pumps (2) Cornell - 10,600 10, W Pipeline - Soscol PS to Plant - Rehab - 31, W Strainer - 79, WWTP MP - 3W System Improvements - 60, , Turbidimeters (7) Tertiary Replacements - 11, MLE Recirculation Pumps (2) - Nutrient Opt , Portable Pumps 10" (2) - 159, Sodium Bisulfite Tank #2-63, Ops - SBS Flash Mixers - 80, Ops - RAS System Flow Meter , Ops - Emergency Generator DPFs - 50, Lab - Upgrade Project , Lab - Sampler 3710FR Replacement , Lab - Sampler 3710FR Replacement , Lab - Sampler 3710FR Replacement , Lab - Sampler 3710FR Replacement , Lab - Sampler 3710FR Replacement , Lab - Sampler 3710FR Replacement 6, Lab - Lab Grade Dishwasher Replacement ,300 Lab - Refrigerator/Freezer Replacement , Lab - Microscope Replacement , Lab - Autoclave Replacement , Lab - UV Spectrophotometer Replacement , Lab - BOD Incubator Replacement , Lab - Sampler 4700 Replacement , Lab - Sampler 4700 Replacement , Lab - Sampler 4700 Replacement , FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected FY 24/25 Projected

84 Napa Sanitation District FY 2015/16 Budget 84 # Name FY 15/16 Proposed FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected Lab - Sampler 4700 Replacement ,900 - Lab - Sampler 4700 Replacement ,900 - Lab - Centrifuge Replacement , Lab - ICP OES - 109, Lab - Waterbath 5, Lab - FIA IC Unit , Lab - Chlorophyll A Analyzer - Pond Water - 5, Main - Stationary Gas Detector Replacement 50, Main - Rotork Actuator Replacement - 87, Main - Rotork Actuator Replacement , Main - Rotork Actuator Replacement , Main - Rotork Actuator Replacement , Main - Rotork Actuator Replacement , Main - Rotork Actuator Replacement ,700 Main - Septage Pump & Motor Replacement - 26, Main - Septage Card Reader Replacement - 21, Main - Primary Clarifier Mech/Struct Rehabilitation 40, , , Main - Secondary Clarifier Mech/Struct Rehabilitation , , Main - Floc Clarifier Recoating , Main - Aeration Basin Instrumentation and Control 50,000 50, Main - Polymer Tanks (3) replacement , Main - Buried Metalic Piping (eval/rehab) 10, , Main - 12kV Redundant Line (to RW sta) - 50, Main - High Voltage System Repairs 30, Main - Cogen Bottom End Overhaul 150, Vehicle Ford F ,800 Vehicle Ford F , Vehicle Ford F , Vehicle Ford F-250 Diesel , Vehicle Escape Hybrid , Vehicle Electric Truck , Vehicle Forklift , Vehicle Yard Dump , Vehicle Forklift TH , Vehicle Ford F-550 EM Truck , Vehicle Ford F , Vehicle Boat , Vehicle 40 - Cushman 1200X , Vehicle 41 - Cushman 1200X , Vehicle 42 - Cushman 1200X , TREATMENT - STRUCTURES WWTP MP - Headworks Improvements - 73, ,400 1,180, WWTP MP - Primary Treatment Improvements - 18,500 66, , WWTP MP - Second Digester ,500 1,972,500 13,150, WWTP MP - Aeration Basin Expansion , ,700 4,844, Building HVAC and Lab Ventilation , WWTP Site Paving 5, , WWTP MP - Pond Imp - Ph 2 - Trans Struct 2 to 4 10, , SCADA SCADA MP Phase 5-200, SCADA MP Project # , SCADA MP Project # , SCADA MP Project # , SCADA Backup System , SCADA Network Security Study - 50, SCADA Server Replacement , FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected FY 24/25 Projected

85 Napa Sanitation District FY 2015/16 Budget 85 # Name FY 15/16 Proposed FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected SCADA Server Replacement , SCADA Server Replacement , SCADA Server Replacement ,000 - RECYCLING - DISTRICT WWTP MP - Line Recycled Water Reservoir 45, , Recycled Water Reservoir - Sump Pump Replacement , Isolation Valve on Kirkland Line (Devlin Road) 49, Third Recycled Water Reservior ,000 3,914,300 - Kirkland Recycled Water Pipeline Rehabilitaton , Jameson Solids Pad Rehabilitation , Jameson PS VFD 63, Jameson Sprinkler Replacement - Field A , Jameson Sprinkler Replacement - Field B , Jameson Sprinkler Replacement - Field C , Jameson Sprinkler Replacement - Field D , Jameson Sprinkler Replacement - Field E , Equipment/Rehabs , Soscol RW Pump Replacement , Equipment/Rehabs , Soscol RW Pump Replacement , Equipment/Rehabs , Soscol RW Pump Replacement , Equipment/Rehabs ,000 - Pull Flail Chopper Replacement - 31, Vehicle Tractor 221, Vehicle Ford F , Vehicle Yanmar Tractor ,400 - Vehicle 723/720 - Attachments/Implements - 56, Vehicle Ford F , Vehicle Ford F-350 SB , Vehicle Kubota , Vehicle Kubota , Vehicle Ford F-350 SRW , Vehicle John Deer 8430T Tractor , Vehicle KubotaTractor Loader ,500 Vehicle Pipe Dolly - 13, RECYCLING - EXPANSION North Bay Water Reuse Project 524, , , , , , , , , , MST RW Pipeline Construction 4,000, LCWD RW Pipeline Construction 15,000, RW Storage Project ,000, Split N/S Lines, surge protection 2,300, RW Pump Station Upgrade 2,459,700 OTHER Development Technical Support 220, , , , , , , , , , Admin/Engineering Bldg - Acoustic Improvements 10, Solar Purchase Buy Out ,388, Generator / Micro Fuel Cell , Vehicle Ford C-Max ,300 - Vehicle Ford Escape Hybrid , Vehicle Ford F ,300 - Vehicle CSET Trailer , Vehicle Ford Taurus , Vehicle Ford F , PROJECT TOTALS $30,459,450 $10,665,950 $18,522,380 $13,687,400 $8,450,200 $7,032,100 $13,016,700 $28,818,000 $69,991,100 $5,686,800 Cumulative Total (FY 15/16 - FY 24/25) $30,459,450 $41,125,400 $59,647,780 $73,335,180 $81,785,380 $88,817,480 $101,834,180 $130,652,180 $200,643,280 $206,330,080 FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected FY 24/25 Projected

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87 FY 2015/16 Budget 87 Ten-Year Financial Plan Visitors check out microorganisms in the Plant Laboratory during the 2010 Open House event.

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89 FY 2015/16 Budget Ten-Year Financial Plan Plan Description Also called a Financial Master Plan or a Ten-Year Financial Forecast, the Ten-Year Financial Plan is a projection of operating and capital expenditures, along with projections of rates and the revenues they are anticipated to generate over that time. The Ten- Year Financial Plan evaluates whether the revenues are adequate to cover the projected costs. This Plan addresses the following questions. Over the next 10 years What are the District s projected revenues, and what assumptions are used? What are the District s projected operating costs, and what assumptions are used? What are the projected capital costs for the District? Will the District use pay-as-you-go financing or debt financing for its capital projects? Are sewer service charge rates sufficient? Link to Strategic Plan The District s Strategic Plan (discussed in Budget Overview on pages and included in the Appendix of this budget) includes numerous objectives and a timeframe for completion of those projects. This Ten-Year Financial Plan makes assumption that all of the objectives in that plan are completed on time, and that any one-time or ongoing financial impact resulting from implementing the Strategic Plan are included in the Ten-Year Financial Forecast. Revenue Forecast Sewer Service Charges Prior to 2006, the District last increased its sewer service charge in For FY07 through FY09, the District increased the sewer service charge by 15% per year to $315 in FY07, $362 in FY08 and $416 in FY09. Since then, the District has increased the fee annually by the Consumer Price Index (CPI). In 2011, the District went through the Proposition 218 process, thereby setting the sewer service charge to increase with CPI through fiscal year 2015/16. The forecast assumes an annual CPI (San Francisco/Oakland/San Jose CPI for All Urban Users) increase of 2.7% in FY 15/16 and 2.3% thereafter. Recycled Water Fees Recycled water fees are becoming a more significant source of revenue for the District. These are the fees charged to users of recycled water. The current fee is $1.01 per 1,000 gallons of water ($ per acre-foot). Fees are set by the Board of Directors through ordinance. In 2012, the District adopted new recycled water rates that go into effect in calendar year The rates will be as follows: Rate Description $1.57/kgal Peak demand usage (April - October) $1.25/kgal Large contract users $1.20/kgal Off peak usage (Nov. Feb.) $1.05/kgal March Rates will increase with CPI starting in The forecast assumes that the District will increase recycled water sales from the current 1,000 acre feet to 2,350 acre feet. Future customers include land owners in the MST area, the Napa State Hospital, St. Regis Resort, Los Carneros Water District and Montelcino Resort. Currently, none of these potential users are taking recycled water. Capacity Charges In July 2015 and annually thereafter, the capacity charge rate will increase with the San Francisco Engineering News Record s Construction Cost Index (ENR-CCI) for San Francisco (February-to- February), an inflation measure for capital infrastructure costs. Capacity charges increase 2.6% to $8,750 per Equivalent Dwelling Unit (EDU) in FY 2015/16. Development, especially development of hotels and restaurants, is anticipated to increase starting in FY 2015/16. The capacity charge forecast assumes that development will remain at FY 2014/15 levels of 120 EDU in FY 2015/16 with an additional 215 EDU for hotel and restaurant activity, for a total of 375 EDU. In each year following, it is assumed there will be between 200 and 290 EDU annually, with another 395 EDU increase in FY 2016/17, 300 EDU increase in FY 2017/18, and 100 EDU in FY 2017/18 related to hotel and restaurant growth. 89 Leases and Rents Lease revenues include the existing lease with Eagle Vines Golf Club and the renewal of the Somky lease with new tenants. While there is still opportunity for the District to receive lease payments from other properties, the Ten-Year Financial Plan only

90 FY 2015/16 Budget includes revenues for leases that have already been negotiated and executed. Other Revenues There are a number of other smaller revenues collected by the District. They have been forecasted based on historical collection and any anticipated increases in rates due to CPI or other factors. The North Napa Pump Station has been declared surplus property by the District. The Ten-Year Financial Plan includes $3 million in revenues from the sale of this property, although that estimate is not based on any market analysis of the property value. Operating Cost Forecast Operating expenses for the District includes salaries and benefits, maintenance and operations of the collection and treatment system, and the purchase of materials and supplies. The District must also fund its annual debt service. Salaries are controlled by three Memoranda of Understanding (MOU) with employees. The MOUs were renegotiated in 2014 and are set to expire in June Salaries have been projected based on the contracted increases (2.5%annually through FY 16/17 and 2.75% through FY 19/20). Some benefits, such as OPEB and retirement expenses, are calculated as a percentage of salary, while other benefits, such as health care, increase based on joint purchase agreements. Health care costs are assumed to increase at an 8% rate, and retirement expenses as a percentage of salary are expected to increase an additional 4-6% over the next five years, including increased employee retirement contributions over the same period. Medical in lieu payments are projected to continue per the MOU. Workers compensation insurance increased in FY 2015/16, but is expected to remain flat in future years. For the Ten-Year Financial Plan, salaries and benefits combined are projected to increase 2.8% to 3.8% annually. Services and supplies are budgeted to increase 2.0% annually to account for increases in inflation. It is assumed that there is no change in current service levels, except those anticipated as part of capital project implementation (e.g., expanded recycled water delivery). The anticipated operating expenditure impact of planned capital projects has been included in the forecast. Capital Costs There are several master plans that influence the overall Ten-Year Capital Improvement Plan, including the Treatment Plant Master Plan, the Collection System Master Plan and the Recycled Water Strategic Plan. These plans serve to identify the capital improvements that should be made within each area over the next 20 years. When all of the recommendations from the master plans are combined, there is insufficient revenue to pay for all of the projects within the next ten years. This shortfall will be addressed in the section titled Unbalanced Forecast. The budget and Ten-Year Capital Improvement Plan, described in detail in the previous section of this budget document, represent the priority projects from these plans. The Ten-Year Financial Plan incorporates the Ten-Year Capital Improvement Plan. Pay-Go vs. Debt Financing Debt financing means that the District would either sell bonds or enter into a loan (such as a State Revolving Fund loan) to get money to pay for capital projects, then pay back that money over time with interest. Pay-as-you-go financing, also called pay-go means that the District needs to accumulate the money for the project and already have it prior to the work being completed. District policy states that the District shall have a preference to finance capital improvements using pay-go financing and shall issue long-term debt only to finance capital improvements that cannot be readily financed from current revenues. Debt financed projects must be major, non-recurring improvements with a minimum of five years of useful life. The Ten-Year Financial plan assumes that debt would be issued for specific projects, with all other projects in the CIP being financed as pay-go. 90 In FY 2015/16, the District intends to issue bonds or seek other financing of approximately $15.2 million for the Browns Valley Road Interceptor project. The Ten-Year Forecast shows the proceeds from the debt in Beginning Fund Equity, as well as the associated debt service payments.

91 FY 2015/16 Budget Year Financial/Cash Flow Forecast 2015/ / / / /20 Beginning Fund Equity $12,345,900 $23,753,700 $20,158,700 $12,287,600 $4,849,200 Operating revenue Sewer service charges 19,534,000 20,148,000 20,912,000 21,698,000 22,403,000 Capacity Charges 2,998,000 1,853,000 2,780,000 2,878,000 2,978,000 Recycled Water Sales 507,000 1,085,000 1,157,000 1,250,000 1,303,000 Development Fees 95,000 97,200 99, , ,000 Hauler Fees 236, , , , ,000 Miscellaneous Revenue 143, , , , ,000 Total Operating Revenue 23,513,000 27,229,200 28,220,400 27,324,700 27,202,000 Non-Operating Revenue Interest 77, , , ,000 73,000 Rents and leases 716, , , , ,000 Sale of Property 0 0 3,000, Fed & State Grants 8,921, Other Jurisdictions 13,050, Proceeds - Sale of Bonds 15,200, Total - Non-Operating Revenue 37,964, ,000 3,923, , ,000 Total Revenue 61,477,100 28,125,200 32,143,400 28,202,700 28,002,000 Operating Expense Salaries and benefits 9,054,200 9,287,500 9,606,700 9,951,700 9,811,600 Services and supplies 5,748,200 5,863,000 5,980,000 6,100,000 6,222,000 Taxes and Other 28,250 28,800 29,400 30,000 30,600 Debt Service - Existing 4,779,200 4,775,000 4,776,000 4,772,000 4,771,000 Debt Service - New/Projected 0 1,100,000 1,100,000 1,100,000 1,100,000 Total Operating Expense 19,609,850 21,054,300 21,492,100 21,953,700 21,935,200 Capital Projects 30,459,450 10,665,950 18,522,380 13,687,400 8,450,200 Total - All Expenses 50,069,300 31,720,250 40,014,480 35,641,100 30,385,400 Net revenue (deficit) 11,407,800 (3,595,050) (7,871,080) (7,438,400) (2,383,400) Ending combined fund equity $23,753,700 $20,158,650 $12,287,620 $4,849,200 $2,465,800 RW Repair & Replacement Reserve $0 $0 $0 $0 $23,000 15% Operating Reserve $2,225,000 $2,277,000 $2,342,000 $2,412,000 $2,410,000 Cash Flow Reserve $10,987,000 $9,817,000 $10,112,000 $10,415,000 $10,727,000 Fund Equity Available for Use $10,541,700 $8,064,650 ($166,380) ($7,977,800) ($10,694,200) The plan also shows that in the sixth year of the plan, in FY 2020/21, it will be necessary to issue debt to pay for specific capital projects, namely the construction of the second digester ($15.8 million), third aeration basin ($5.8 million), and recycled water pump station upgrades ($2.5 million). Ten-Year Cash Flow The table here and on the next page shows the Ten- Year Financial/Cash Flow Forecast for the District. The table includes starting fund equity and ending fund equity on an annual basis, forecasts for operating and non-operating revenue and operating expenses. Because it is a cash flow model, the forecast includes expenses for capital outlay for the year it is expensed, as well as proceeds from issuing debt. Also, at the end of each year, there is an adjustment made to the ending fund equity numbers to account for necessary reserves to come up with an amount of equity that is available for use.

92 FY 2015/16 Budget Year Financial/Cash Flow Forecast 2020/ / / / /25 Beginning Fund Equity $2,465,800 $26,829,900 $19,799,700 -$2,776,600 -$6,481,500 Operating revenue Sewer service charges 23,075,000 23,765,000 24,476,000 25,207,000 25,958,000 Capacity Charges 3,082,000 3,190,000 3,302,000 3,418,000 3,537,000 Recycled Water Sales 1,356,000 1,417,000 1,477,000 1,538,000 1,606,000 Development Fees 106, , , , ,500 Hauler Fees 265, , , , ,000 Miscellaneous Revenue 159, , , , ,000 Total Operating Revenue 28,043,400 28,914,800 29,810,300 30,730,900 31,682,500 Non-Operating Revenue Interest 43, , , Rents and leases 730, , , , ,000 Sale of Property Fed & State Grants Other Jurisdictions Proceeds - Sale of Bonds 25,000, Total - Non-Operating Revenue 25,773,000 1,270,000 1,132, , ,000 Total Revenue 53,816,400 30,184,800 30,942,300 31,469,900 32,424,500 Operating Expense Salaries and benefits 10,172,000 10,550,500 10,945,700 11,358,400 11,789,600 Services and supplies 6,346,000 6,248,000 6,370,200 6,495,200 6,630,200 Taxes and Other 31,200 31,800 32,400 33,000 33,700 Debt Service - Existing 4,771,000 4,768,000 4,752,300 4,697,100 4,699,900 Debt Service - New/Projected 1,100,000 2,600,000 2,600,000 2,600,000 2,600,000 Total Operating Expense 22,420,200 24,198,300 24,700,600 25,183,700 25,753,400 Capital Projects 7,032,100 13,016,700 28,818,000 9,991,100 5,686,800 Total - All Expenses 29,452,300 37,215,000 53,518,600 35,174,800 31,440,200 Net revenue (deficit) 24,364,100 (7,030,200) (22,576,300) (3,704,900) 984,300 Ending combined fund equity $26,829,900 $19,799,700 ($2,776,600) ($6,481,500) ($5,497,200) RW Repair & Replacement Reserve $69,000 $135,000 $223,000 $311,000 $399,000 15% Operating Reserve $2,482,000 $2,525,000 $2,602,000 $2,683,000 $2,768,000 Cash Flow Reserve $11,049,000 $11,380,000 $11,721,000 $11,721,000 $12,073,000 Fund Equity Available for Use $13,229,900 $5,759,700 ($17,322,600) ($21,196,500) ($20,737,200) This model assumes that all fund equity available at the end of one year is rolled over for use in the following year. The model also assumes that there is no underspending of operating expenses, although traditionally there is a small percentage of operating budget that is not spent each year.

93 FY 2015/16 Budget 93 Ten-Year Financial Forecast $30 $25 $20 Note: Forecast is balanced when green line stays above columns RW R&RReserve Cash Flow Reserve 15% Operating Reserve Ending Fund Equity Millions $15 $10 $5 $0 2015/ / / / / / / / / /25 ($5) ($10) Unbalanced Forecast The Ten-Year Financial Plan and Cash Flow Forecast represents what staff believes is the most realistic projections of revenues and expenditures based on current conditions, rate policies, contracts and trends. However, the forecast shows that the Ten-Year Forecast is out of balance. There is sufficient cash flow to the District to maintain its spending plan through FY 2017/18, but thereafter the District has insufficient cash flow. There are several options to balance this shortfall: Address the shortfall in future years through reductions in planned capital expenses. Address the shortfall in future years through reductions in ongoing operational expenditures. Address the shortfall in future years through attainment of non-rate revenues, such as leases of additional district-owned land. Address the shortfall in future years through increased sewer service charges. The District has prioritized the projected capital spending for FY 2015/16 and 2016/17. Numerous projects that were originally planned for inclusion in these years has been shifted to FY 2017/18 and beyond in the Capital Improvement Plan. Because of the efforts to prioritize the next two fiscal years and the forecast showing the District to have sufficient cash flow for these years, the District has elected not to make any additional cuts to the capital program in future years. The District believes that adopting the Capital Improvement Plan and 10-Year Financial Forecast is still prudent and appropriate, for the following reasons: 1. There are a number of tentative revenue assumptions in the revenue forecast, as well as some potential revenues that have not been included. Due to this high level of uncertainty about revenue availability, it is believed to be more prudent to leave the capital plan as is, without making significant changes in the out years, since these assumptions could have significant impacts on the amount of available resources. 2. Because the shortfall is several years out into the future, it is more prudent to wait until that time to determine which capital projects have the lowest priority and could be postponed or eliminated from the CIP. 3. The overall cost of service structure for the district will be studies during the FY 2015/16 fiscal year as part of Proposition 218 Rate Setting process, which will provide additional information to the District regarding future revenues.

94 FY 2015/16 Budget 94 Sewer Service Charge Rate Adequacy The District collects the annual sewer service charge on the county property tax rolls. By law, the revenue from this charge cannot exceed the cost of providing the associated services, including ongoing operating expenses, the timely replacement and rehabilitation (R&R) of capital assets, and current and future debt service. The table assumes the current CPI increase formula. The following table shows the calculation to determine whether the sewer service charge is sufficient to meet the operating expenses and R&R needs for the District s capital assets. To meet this need, it is assumed that the R&R amount should be between 2% and 4% of depreciable net fixed assets. The table shows that over the next five years the District is not projected to meet its needs with the proposed sewer service charge. Calculation of Sewer Service Charges Rate Based on Asset-Life-Cycle Cost Budget Projected Projected Projected Projected 2015/ / / / /20 Operating Expense Salaries and benefits 9,054,200 9,287,500 9,606,700 9,951,700 9,811,600 Services and supplies 5,748,200 5,863,000 5,980,000 6,100,000 6,222,000 Taxes and Other 28,250 28,800 29,400 30,000 30,600 14,830,650 15,179,300 15,616,100 16,081,700 16,064,200 Debt Service Totals Debt Service - Existing 4,779,200 4,775,000 4,776,000 4,772,000 4,771,000 Debt Service-New 0 1,100,000 1,100,000 1,100,000 1,100,000 4,779,200 5,875,000 5,876,000 5,872,000 5,871,000 Operating Expenses + 19,609,850 21,054,300 21,492,100 21,953,700 21,935,200 Debt Service Depreciable Net Fixed Assets 176,884, ,600, ,100, ,800, ,300,000 % Annual Renewal & Replacement 3.0% 3.0% 3.0% 3.0% 3.0% Cap Contribution for R&R 5,306,540 5,628,000 6,183,000 6,594,000 6,849,000 Total Expenses 24,916,390 26,682,300 27,675,100 28,547,700 28,784,200 Offsetting Revenues Recycled Water Sales 507,000 1,085,000 1,157,000 1,250,000 1,303,000 Hauler Fees 236, , , , ,000 Development Fees 95,000 97,200 99, , ,000 Rents & Leases 716, , , , ,000 Interest & Misc 220, , , , ,000 1,774,000 2,465,200 2,575,400 2,634,700 2,621,000 Expenses less revenues 23,142,390 24,217,100 25,099,700 25,913,000 26,163,200 Projected # of EDU 40,484 40,819 41,414 42,004 42,394 Calculated SSC Rate at 3% R&R $ $ $ $ $ Forecasted Rate $ $ $ $ $ Difference -$ $ $ $ $88.70 Rate at 2% R&R Rate at 4% R&R % of R&R at Forecasted Rate 1.0% 0.8% 1.0% 1.1% 1.4%

95 FY 2015/16 Budget 95 Debt Construction of the secondary effluent equalization basin in 2014.

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97 FY 2015/16 Budget Debt The Napa Sanitation District issues long term debt for the construction of significant capital assets. Debt service is the annual or semi-annual payments the District makes to repay the principal and interest on its debt. Debt Policy As a matter of policy, the District has a preference to use pay-as-you-go financing for its capital projects and only uses debt financing for improvements that it cannot readily finance from current revenues. Exceptions can be made on a case-by-case basis for no-interest and extremely-low-interest loan programs to pay for capital projects. Debt can only be used for major, non-recurring capital items, and the debt repayment timeline cannot exceed the expected useful life of the asset being financed. Debt can only be issued when it has been shown that the District has the ability to pay all of its current obligations from current revenues and still have available 125% of the expected debt service amount to pay the debt service. The District s complete debt policy can be found in Appendix D, Section 5. Current Debt Obligations 2003 SRF In 2003, the District entered into a 20- year loan with the State of California s State Water Resource Control Board Revolving Fund (SRF). The proceeds from this loan, $901,376, were used for replacement of pipes in the collection system. The interest rate on this loan is 2.5%, with annual debt service of $60,247. (See Debt Service Table 1.) Outstanding principal on this debt obligation is $431,976 as of July 1, Series 2009B This 20-year Certificate of Participation was sold as a fixed-rate bond through competitive bid, and has a true interest cost of about 3.6%. The $26,675,000 in proceeds was used to refinance the 1998 COPs, saving the District over $250,000 annually in debt service payments. Annual debt service for this bond is $1,961,254. (See Debt Service Table 4.) Outstanding principal on this debt obligation is $21,310,000 as of July 1, Series 2012A This 20-year Certificate of Participation was delivered and executed to provide funds to repay the outstanding Adjustable Rate Refunding Revenue Certificates of Participation, Series 2009A and to finance $33 million in new capital projects. Annual debt service for this bond is $2,658,875. Outstanding principal on this debt obligation is $35,390,000 as of July 1, (See Debt Service Table 5.) Debt Covenants A debt covenant is a requirement imposed on the District by a debt holder. These requirements range from requirements to pay the principal and interest payments on particular days of the year, to preparing and filing audited financial statements, to very specific financial performance requirements. There is one significant debt covenant that has a financial impact to the District. This covenant applies to all of the District s debt, and is a debt service coverage requirement. Debt service coverage is the ratio of net revenues (revenues minus operating expenses) to annual debt service requirements. The District is required by the bond covenant to maintain a debt service coverage ratio of at least For FY 2015/16, the District s coverage ratio is budgeted to be SRF In 2008, the District entered into a 20- year loan with the State Water Resources Control Board. This loan, which came in two phases, was for a total of $1,559,673 and was used to replace aging infrastructure in the collection system. This is a zero-percent interest loan; however, the annual debt service payment of $93,581 includes a % state match and is recorded as imputed interest. (See Debt Service Tables 2 and 3.) Outstanding principal on this debt obligation is $1,143,889 as of July 1, 2015.

98 FY 2015/16 Budget 98 Debt Capacity & Debt Limitations Debt Capacity is the difference between the amount of debt the District has outstanding (sold and authorized) and the maximum amount of debt the District can incur within its legal, public policy and financial limitations. The District does not issue general obligation debt, and as such, there is no legal limitation on the amount of debt it can issue. The District is limited by the debt policies that it sets for itself (described above and in Appendix D) and by financial limitations. Financial limitations include two factors: Revenue Debt Coverage Ratio Calculation Estimated Proposed FY 14/15 FY 15/16 Sewer Service Charges $18,963,000 $19,534,000 Capacity Charges $950,000 $2,998,000 Recycled Water $350,000 $507,000 Interest $157,100 $77,000 Rents & Leases $711,000 $716,000 Other Revenue (excl. sale of property and grant revenue) $380,000 $474,000 Operating Expenses ($12,628,260) ($14,843,477) Net Revenue $8,882,840 $9,462,523 Parity Debt Service 1) willingness of the bond market to loan the District money, and 2) limitations on future debt placed on the District by current debt. First, the amount of debt the District can issue is limited by whether there are financial and other institutions and other buyers in the market willing to purchase the bonds that the District wants to issue. In tight capital markets, or if the financial health of the District is in question, the amount of debt the District can issue under favorable terms can be limited. Second, the debt coverage ratio imposed by existing debt holders also applies to any future debt the District may want to issue. By forecasting operating revenues and expenditures and applying the 1.25 debt coverage ratio, a debt capacity can be calculated. Currently, the District has the capacity to issue approximately $39 million in additional debt (3.5% TIC, 20 year term), assuming that there was a buyer for that debt in the bond market, the District could pay the debt service, and other District financial policies are maintained SRF $60,247 $60, SRF $93,581 $93, B COP $1,960,754 $1,961, A COP $2,658,375 $2,658,900 Total Debt Service (excl. debt administration expenses) $4,772,957 $4,774,100 Parity Debt Coverage Ratio (net revenue total debt service) (must be greater than 1.25) Future Debt Issues The Ten-Year Capital Improvement Plan and the Ten-Year Financial Plan includes financing the Browns Valley Road Interceptor project. It is projected that the bond or loan proceeds will be received towards the end of FY 2015/16 with debt service beginning in FY 2016/17. Both plans also assume that the District will contract with the state for a State Revolving Fund or sell Certificates of Participation in FY 2020/21 for the purpose of constructing the second digester.

99 FY 2015/16 Budget 99 Napa Sanitation District Debt Service Table 1 Napa Sanitation District 2003 SWRCB Revolving Fund Loan 2.5%, 20 year term $901,376 Fiscal Year Annual Principal Ending Total Jul 1 Interest Payment Principal Payment 2014/15 12,005 48, ,976 60, /16 10,799 49, ,529 60, /17 9,563 50, ,845 60, /18 8,296 51, ,895 60, /19 6,997 53, ,646 60, /20 5,666 54, ,065 60, /21 4,302 55, ,121 60, /22 2,903 57,343 58,777 60, /23 1,469 58,777-60, / / / / / / / / / / Source: District Documents

100 FY 2015/16 Budget 100 Napa Sanitation District Debt Service Table 2 Napa Sanitation District 2008 SWRCB Revolving Fund Loan E. Spring St. Sewer Rehabilitation Phase I 20 year term $1,376,804 Fiscal Year Imputed Principal Ending Total Jul 1 Interest Payment Principal Payment 2014/15 20,002 62,606 1,009,611 82, /16 18,834 63, ,837 82, /17 17,645 64, ,873 82, /18 16,433 66, ,697 82, /19 15,198 67, ,287 82, /20 13,941 68, ,619 82, /21 12,660 69, ,670 82, /22 11,355 71, ,417 82, /23 10,026 72, ,834 82, /24 8,672 73, ,897 82, /25 7,292 75, ,580 82, /26 5,887 76, ,859 82, /27 4,456 78, ,706 82, /28 2,998 79,611 81,096 82, /29 1,513 81,096-82, / / / / Source: District Documents

101 FY 2015/16 Budget 101 Napa Sanitation District Debt Service Table 3 Napa Sanitation District 2008 SWRCB Revolving Fund Loan E. Spring St. Sewer Rehabilitation Phase II 20 year term $182,869 Fiscal Year Imputed Principal Ending Total Jul 1 Interest Payment Principal Payment 2014/15 2,633 8, ,278 10, /16 2,479 8, ,785 10, /17 2,323 8, ,136 10, /18 2,163 8, ,327 10, /19 2,000 8,972 99,355 10, /20 1,835 9,138 90,217 10, /21 1,666 9,306 80,911 10, /22 1,494 9,478 71,433 10, /23 1,319 9,653 61,780 10, /24 1,141 9,831 51,948 10, / ,013 41,935 10, / ,198 31,737 10, / ,386 21,351 10, / ,578 10,773 10, / ,773-10, / / / / Source: District Documents

102 FY 2015/16 Budget 102 Napa Sanitation District Debt Service Table 4 Napa Sanitation District Refunding Revenue Certificates of Participation, Series 2009B (1998 Refunding Project) 3% to 4% Range, 3.6% True Interest Cost (TIC), 20 year term $26,675,000 Fiscal Year Annual Principal Ending Total Jul 1 Interest Payment Principal Payment 2014/15 800,754 1,160,000 21,310,000 1,960, /16 741,254 1,220,000 20,090,000 1,961, /17 691,779 1,265,000 18,825,000 1,956, /18 653,229 1,305,000 17,520,000 1,958, /19 613,554 1,340,000 16,180,000 1,953, /20 572,064 1,380,000 14,800,000 1,952, /21 527,518 1,425,000 13,375,000 1,952, /22 479,371 1,470,000 11,905,000 1,949, /23 427,781 1,520,000 10,385,000 1,947, /24 372,634 1,575,000 8,810,000 1,947, /25 313,431 1,635,000 7,175,000 1,948, /26 251,087 1,690,000 5,485,000 1,941, /27 184,200 1,760,000 3,725,000 1,944, /28 112,500 1,825,000 1,900,000 1,937, /29 38,000 1,900,000-1,938, / / / / Source: 2009B Official Statement

103 FY 2015/16 Budget 103 Napa Sanitation District Debt Service Table 5 Napa Sanitation District Revenue Certificates of Participation, Series 2012A 2.86% True Interest Cost (TIC), 20 year term $37,845,000 Fiscal Year Annual Principal Ending Total Jul 1 Interest Payment Principal Payment 2014/15 1,323,375 1,335,000 35,390,000 2,658, /16 1,268,875 1,390,000 34,000,000 2,658, /17 1,212,175 1,445,000 32,555,000 2,657, /18 1,153,175 1,505,000 31,050,000 2,658, /19 1,091,775 1,565,000 29,485,000 2,656, /20 1,027,975 1,625,000 27,860,000 2,652, /21 961,675 1,690,000 26,170,000 2,651, /22 892,575 1,765,000 24,405,000 2,657, /23 820,675 1,830,000 22,575,000 2,650, /24 745,875 1,910,000 20,665,000 2,655, /25 667,875 1,990,000 18,675,000 2,657, /26 586,675 2,070,000 16,605,000 2,656, /27 502,275 2,150,000 14,455,000 2,652, /28 425,825 2,230,000 12,225,000 2,655, /29 357,875 2,300,000 9,925,000 2,657, /30 287,900 2,365,000 7,560,000 2,652, /31 215,900 2,435,000 5,125,000 2,650, /32 135,275 2,520,000 2,605,000 2,655, /33 45,588 2,605,000-2,650,588 Source: 2012A Official Statement

104 FY 2015/16 Budget 104 Napa Sanitation District Debt Service Summary Tables 1-5 Table 1 Table 2 Table 3 Table 4 Table SRF 2008 SRF 2008 SRF Series 2009B Series 2012A Phase I Phase II $901,376 $1,652,171 $219,444 $26,675,000 $37,845,000 Fiscal Year FY Total All Jul 1 Total Total Total Total Total Debt Service 2014/15 60,247 82,609 10,972 1,960,754 2,658,375 4,772, /16 60,247 82,609 10,972 1,961,254 2,658,875 4,773, /17 60,247 82,609 10,972 1,956,779 2,657,175 4,767, /18 60,247 82,609 10,972 1,958,229 2,658,175 4,770, /19 60,247 82,609 10,972 1,953,554 2,656,775 4,764, /20 60,247 82,609 10,972 1,952,064 2,652,975 4,758, /21 60,247 82,609 10,972 1,952,518 2,651,675 4,758, /22 60,247 82,609 10,972 1,949,371 2,657,575 4,760, /23 60,247 82,609 10,972 1,947,781 2,650,675 4,752, /24-82,609 10,972 1,947,634 2,655,875 4,697, /25-82,609 10,972 1,948,431 2,657,875 4,699, /26-82,609 10,972 1,941,087 2,656,675 4,691, /27-82,609 10,972 1,944,200 2,652,275 4,690, /28-82,609 10,972 1,937,500 2,655,825 4,686, /29-82,609 10,972 1,938,000 2,657,875 4,689, / ,652,900 2,652, / ,650,900 2,650, / ,655,275 2,655, / ,650,588 2,650,588

105 FY 2015/16 Budget 105 Appendix A Glossary of Terms

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107 FY 2015/16 Budget 107 Glossary of Terms ARRA BMPs BOD American Recovery and Reinvestment Act of 2009 Best Management Practices Biochemical Oxygen Demand CalPERS California Public Employee Retirement System CARB CASA COPs DAF CIP CPI DAF EDU EIR EIS FOG FTE FY GAAP GFOA I & I LIMS MGD MST MOU NBWRA NPDES NSH ORP OPEB California Air Resources Board California Association of Sanitation Agencies Certificates of Participation Dissolved Air Floatation Capital Improvement Plan or Capital Improvement Program Consumer Price Index Dissolved Air Flotation Equivalent Dwelling Units Environmental Impact Report Environmental Impact Statement Fats, Oils and Grease Full-Time Equivalent Fiscal Year Generally Accepted Accounting Principles Government Finance Officers Association Inflow & Infiltration Laboratory Information Management System Million Gallons per Day Milliken/Sarco/Tulocay Creeks area Memorandum of Understanding North Bay Water Reuse Authority National Pollutant Discharge Elimination System Napa State Hospital Oxygen Reduction Potential Other Post Employment Benefits POTW RAS SCADA SRF SWRF TSS TIC Publically Owned Treatment Works Return Activated Sludge Supervisory Control and Data Acquisition State Revolving Fund Soscol Water Recycling Facility Total Suspended Solids True Interest Cost Acre Foot The volume of water required to cover one acre of land to a depth of one foot. One acre foot of water equals 43,460 cubic feet, or 325,851 gallons. Adjusted Budget The adopted budget, with any changes adopted by the Board of Directors during the fiscal year. Adopted Budget Financial plan and policy statement on the operating and capital programs of the District, approved by the Board of Directors in June for the subsequent fiscal year. American Recovery and Reinvestment Act of 2009 (ARRA) Also known as federal stimulus grants, these are grants from federal agencies designed to stimulate the economy and promote job creation and retention through infrastructure improvements and other projects. Appropriation An authorization made by the Board of Directors which permits officials to incur obligations against and to make expenditures of governmental resources. Biochemical Oxygen Demand (BOD) - A measure of the oxygen used by microorganisms to decompose waste. If there is a large quantity of organic waste in the wastewater supply, there will also be a lot of bacteria present working to decompose this waste. In this case, the demand for oxygen will be high (due to all the bacteria) so the BOD level will be high. As the waste is consumed or dispersed through the water, BOD levels will begin to decline.

108 FY 2015/16 Budget Board of Directors The five public officials appointed by the City of Napa and County of Napa to set policy direction for the District. Bond Covenant A requirement placed on the District as part of a financing agreement, such as bonds. Bonds Borrowed monies allocated to pay for specific capital programs. Debt service payments are made to repay the bond holders. Budget Calendar The schedule of key dates that the District follows in preparing and adopting the budget. Budget Document The official financial spending and resource plan, adopted by the Board of Directors and made available to the public and other interested parties. Budget Transfer An appropriation for the transfer of resources from one account, department or fund to another. See also Interfund Transfer and Intrafund Transfer. California Air Resources Board (CARB) Part of the California Environmental Protection Agency, their mission is to promote public health, welfare and ecological resources through the efficient and effective reduction of air pollutants. California Public Employees Retirement System (CalPERS) A state-wide pooled trust used by local government and state agencies to fund employee retirement benefits. Consumer Price Index (CPI) A measure of inflation maintained by the U.S. Bureau of Labor Statistics. Capacity Charge One time fee charged to new connections, or to existing connections where a change in use will result in increased discharge, to pay for the sewer and treatment plant capacity allocated to them. Capacity Fee See Capacity Charge. Capital Assets Assets of significant value (over $5,000 at the time of acquisition) that have a useful life of over one year. Examples are land, buildings, other improvements, machinery, vehicles and equipment. Capital Improvement Plan The listing of capital projects by cost and fiscal year. This is the documentation of decisions made within the Capital Improvement Program. Capital project costs include all expenditures required to purchase, design, construct and/or repair new or existing capital assets. Capital Improvement Program The District s program for the acquisition, construction, or rehabilitation of its capital infrastructure. The program includes the board-approved set of projects that will result in the construction of new capital facilities, or the modification, upgrade or rehabilitation of existing facilities over a ten-year period. Capital Outlay Cash outlays that result in the acquisition of or additions to capital assets. Cash Flow Projected cash disbursements for a given period of time. 108 Cash Flow Reserve The amount of cash necessary at the beginning of the fiscal year to ensure coverage of projected cash inflows and disbursements during the fiscal year. Certificates of Participation (COPs) A type of debt financing in which certificates are issued which represent an investor s participation in the stream of lease payments paid by the issuer. Certificates of Participation are secured by the lease payments. Voter approval is not required prior to issuance. Cogeneration The use of a heat engine or a power station to generate electricity and useful heat simultaneously. Contributed Capital Capital assets that are acquired or constructed by a third party and turned over to the District for operations, maintenance and eventual rehabilitation and replacement once completed. Most often, contributed capital is the lower lateral and sewer main infrastructure built by a developer as part of a development project. Debt Capacity The difference between the amount of debt the District has outstanding (sold and authorized) and the maximum amount of debt the District can incur within its legal, public policy and financial limitations.

109 FY 2015/16 Budget Debt Service Payment of interest and repayment of principal to holders of the District s bonds and other debt instruments. Debt Service Coverage The ratio of net revenues to debt service requirements. The District is required by bond covenants to maintain a debt service coverage ratio of at least Department A major organizational unit with overall managerial responsibility for functional programs of the District. Depreciation An expense based on the expectation that an asset will gradually decline in value or have to be replaced. The cost of the asset is therefore spread out (depreciated) over the asset s useful life. The intent is to charge the Operation over the real time of its useful life. Digester an apparatus in which substances are softened or disintegrated by moisture, heat, chemical action, or the like. The District uses an anaerobic digester to treat and process biosolids. Dissolved Air Floatation (DAF) A method of removing solids from wastewater by attaching a minute air bubble to suspended solids and causing the solids to separate from the water in an upward direction. Effluent This is the outflow of water from the wastewater treatment plant after treatment. Environmental Impact Report/Environmental Impact Statement (EIR/EIS) A detailed report or statement describing and analyzing the significant environmental effects of a project and discussing ways to mitigate or avoid the effects. Equivalent Dwelling Units (EDU) A proxy for the amount of suspended solids, biochemical oxygen demand and flow that the typical residential dwelling disposes into the sewer system in a day. This is used to determine the capacity charge and annual sewer service charge for non-residential customers of the District. Expenditure The payment of an obligation from the District s cash amounts. Fats, Oils and Grease (FOG) FOG is a problem in the sewer systems, as it can cause blockages that result in sewer overflows. FOG, when collected from its source (such as a restaurant), can be used by a wastewater treatment plant to increase the volatile organic material in its digester, resulting in more methane gas used for electricity production. Fiscal Year The 12-month period to which the annual operating budget applies and at the end of which a government determines its financial position and results of its operations. The District s fiscal year runs from July 1 to June 30 of the following year. Full-Time Equivalent (FTE) The amount of time a regular, full-time employee normally works in a year. For example, a full-time employee (1 FTE) is budgeted to work 2,080 hours per year, while a 0.5 FTE is budgeted to work 1,040 hours per year. Fund An independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, reserves and equities. Fund Accounting System of accounting popular with governments and nonprofit organizations that utilizes funds to segregate accounts and activities. There is a focus on stewardship of financial resources received and expended in compliance with legal requirements. Fund Equity Fund equity, for the basis of the District s budgeting and financial planning purposes, is defined as current assets, including restricted assets, less current liabilities, excluding capitalrelated liabilities. This number is meant to represent the amount of cash that the District has available to commit to operating or capital expenses now or in the future, and is comparable to Fund Balance in governmental-type funds. Generally Accepted Accounting Principles (GAAP) Uniform standards for financial accounting and reporting. They govern the form and content of the basic financial statements of an entity. General Manager The chief executive officer of the District hired by the Board of Directors. 109 Government Finance Officers Association (GFOA) A nonprofit professional association, serving 18,000 government finance professionals through the United States and Canada. The purpose of the GFOA is to enhance and promote the professional management of governments for the

110 FY 2015/16 Budget public benefit by identifying and developing financial policies and practices and promoting them through education, training and leadership. Inflow & Infiltration (I&I) This refers to unintended sources of water that enter the sewer system, either through unauthorized connections (such as a downspout or a sump pump) or from groundwater intrusion through cracks or gaps in the sewer line. Influent Water or wastewater entering the wastewater treatment plant, or a particular stage of the treatment process. Infrastructure The components that ensure delivery of reliable, high quality services. Typical components include pipelines, pumps, basins, filtration facilities and the like. Interest Revenues derived from the investment of idle cash and/or reserves. Interfund Transfer The transfer of resources from one fund to another. See also Budget Transfer and Intrafund Transfer. Intrafund Transfer The transfer of resources from one department or account to another within a fund. See also Budget Transfer and Interfund Transfer. Laboratory Information Management System (LIMS) A software-based laboratory and information management system that offers a set of key features, including workflow and data tracking support, flexible architecture, and smart data exchange interfaces that fully support its use in a regulated environment. Lost Time The time an employee spends not working as a result of a workplace accident. Memorandum of Understanding (MOU) A document outlining the terms and details of an agreement between parties, including the responsibilities of each party. This term is often used to describe agreements with labor groups and unions. Milliken/Sarco/Tulocay Creeks (MST) The area just to the east of the City of Napa, in unincorporated Napa County, that includes Milliken Creek, Sarco Creek and Tulocay Creek. This is an area where there is a problem with groundwater overdraft. The County of Napa and the District are working together to deliver recycled water to this area. Million Gallons per Day (MGD) One million gallons per day equals 3.07 acre feet, or about 700 gallons per minute. Napa State Hospital (NSH) The District is constructing a recycled water pipeline through the NSH property. National Pollutant Discharge Elimination System (NPDES) Permit system established by the U.S. Environmental Protection Agency to regulate discharge of treated sewage, stormwater and urban runoff. The Regional Water Quality Control Board issues the District an NPDES permit that regulates the District s discharge of treated wastewater into the Napa River. North Bay Water Reuse Authority (NBWRA) This is an organization of wastewater agencies in Napa, Sonoma and Marin Counties that have joined together to develop a regional approach to funding, producing and delivering recycled water. Other Post Employment Benefits (OPEB) These are the benefits, other than retirement pensions, that are provided to retirees of the District. Governmental Accounting Standards require that benefits that accrue to employees should be expensed when they are earned, not when they are paid out to employees. The District pays into a trust account to pay for OPEB liabilities. Oxygen Reduction Potential (ORP) In wastewater, this is the measure of how much oxygen is needed to provide adequate disinfection (disinfection is provided through the application of sodium hypochlorite). The ORP analyzers are used to determine the precise amount of chemicals needed, based on changes in oxygen demand levels. This process reduces the amount of sodium hypochlorite applied during treatment to only that which is needed and reduces the amount of sodium bisulfite used to remove excess hypochlorite in the water. Performance Measure An objective measure of efficiency or effectiveness. 110

111 FY 2015/16 Budget Publically Owned Treatment Works (POTW) For the District, this is the Soscol Water Recycling Facility (SWRF). Rates Charges for services to District customers that cover the costs of such services. Reserve A term used to indicate that a portion of fund equity is designated for a specific purpose. Resources Total dollars available for appropriations including estimated revenues and beginning fund equity. Return Activated Sludge (RAS) In the aeration process in wastewater treatment, part of the settled material, the sludge, is returned to the beginning of the aeration system to re-seed the new wastewater entering the aeration basin. The RAS Rate refers to the percentage of sludge that is returned. Revenues Monies received or earned by the District. Service Level The kind and amount of service that the District provides to its customers at a given time. Sewer Service Charges Annual or monthly fees charged to users of the District sewer works for discharges into the system. Supervisory Control and Data Acquisition (SCADA) The SCADA system is used at the Treatment Plant for the measurement and control of various processes of wastewater treatment. The system allows for some automation of processes and for the remote monitoring and control of these processes. Suspended Solids particulates dissolved in liquid. See also Total Suspended Solids. Taxes Compulsory charges levied by a government for the purpose of financing services performed for the common benefit. 111 Total Suspended Solids (TSS) particulate weight obtained by separating particles from a water sample using a filter, usually measured as milligrams per liter (mg/l). True Interest Cost (TIC) This is the real cost of issuing a bond. It includes all ancillary fees (underwriter fees, etc.) and takes into consideration any premium payments and different interest rates paid on different bonds within a series. This number can be used to compare quotes or bids for bond issues to determine the lowest bidder. Soscol Water Recycling Facility (SWRF) This is the District s wastewater treatment plant and recycled water production facility located on Soscol Ferry Road, just north of the Napa Airport. Special District Independent unit of local government generally organized to perform a single function. State Revolving Fund (SRF) A fund administered by the state for the purpose of providing low-interest loans for investments in water and sanitation infrastructure. Struvite Ammonium magnesium phosphate (NH 4 MgPO 4 6H 2 O). Struvite is a problem in sewage and wastewater treatment, particularly after anaerobic digesters release ammonium and phosphate from waste material, as it forms a scale on lines and clogs system pipes.

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113 FY 2015/16 Budget 113 Appendix B Statistics and Economic Data

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115 Napa Sanitation District FY 2015/16 Budget 115 Demographics for City of Napa (1) Population: 72,585 79,059 Median Age: Median Household Income: $49,154 $65,517 Persons Below Poverty Level 8.9% 8.7% Median Housing Value: $238,300 $428,200 Housing Units Owner-Occupied 16,362 14,710 Renter-Occupied 10,616 12,201 Not Computed Vacant 798 2,756 27,776 30,232 Source: US Census Bureau Census Data; 2013 American Community Survey 1 Year Estimates General Information for Napa Sanitation District Year of Formation: 1945 Service Area (jurisdictional): 13,292 Acres Service Population (est.): 82,700 Plant Design Capacity: 15.4 mgd (2) Connections: 36,793 Miles of Sewer: 270 miles Street Laterals: 33,000 Sewer Manholes: 5,565 On-plant pump stations: 1 Off-plant pump stations: 3 NPDES Permit Number: CA Source: Napa Sanitation District (1) Demographics are provided for the City of Napa because about 93% of the District's population resides in the City of Napa, and this data is not available specific to the District's service area. (2) MGD = Million Gallons per Day

116 Napa Sanitation District FY 2015/16 Budget 116 Historic Average Daily Influent Flow at Wastewater Treatment Plant Million Gallons per Day (MGD) Fiscal Year Ended June 30 Historic Average Daily Influent Flow at Wastewater Treatment Plant Daily Average Flow (MGD) Increase/ (Decrease) % (38.0%) % (1.2%) % % (22.9%) (6.4%) (2.6%) Source: Napa Sanitation District MGD = Million Gallons per Day

117 Napa Sanitation District FY 2015/16 Budget 117 Historic Sewer System Service Connections and Equivalent Dwelling Units (EDUs) 37,000 36,000 35,000 34,000 33,000 32,000 31,000 30, Historic Sewer System Service Connections and Equivalent Dwelling Units (EDU's) Fiscal Year Ended June 30 Single Family Multifamily Commercial/ Industrial Total Connections Total EDU's ,221 7,934 3,766 33,921 35, ,352 7,989 3,839 34,180 35, ,598 8,066 4,011 34,675 36, ,721 8,106 4,021 34,848 39, ,085 8,193 4,183 35,461 40, ,304 8,526 4,421 36,251 40, ,368 8,482 4,439 36,289 40, ,412 8,478 4,436 36,326 40, ,486 8,539 4,527 36,552 40, ,575 8,668 4,550 36,793 40,955 Source: Napa Sanitation District

118 Napa Sanitation District FY 2015/16 Budget 118 Ten Largest Sewer Users $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Ten Largest Users FY 2013/14 Napa State Hospital $462,199 Napa Valley Unified School District 236,561 Marriott Hotel 165,263 Queen of the Valley Hospital 159,494 County of Napa 146,580 Meritage Resorts (Restaurants) 145,710 Embassy Suites 127,256 Kaiser Data Center 85,723 Avia Hotel 71,756 Silverado Country Club 61,315 Total $1,661,858

119 Napa Sanitation District FY 2015/16 Budget 119 Sewer Service Rates $600 $500 $400 $300 $200 $100 $ Sewer Service Rates Historic Sewer Service Rates Fiscal Year Ended June 30 Sewer Service Rates % Increase 2007 $ % % % % % % % % % % In 2006, the NSD Board of Directors approved a three year phased-in increase to the sewer service rates. For FY 2007, 2008, and 2009, the District increased rates 15% per year. The rate thereafter increases with inflation.

120 Napa Sanitation District FY 2015/16 Budget 120 Sewer Service Rate for Surrounding Areas $1,000 $800 $600 $400 $200 $0 Fairfield- Suisun Sewer District City of Yountville Napa Sanitation District Vallejo Sanitation & Flood District Novato Sanitary District City of American Canyon City of Benicia Las Gallinas Sanitary District City of Calistoga City of Vacaville Sonoma Valley Sanitation Dist. Agency FY 2014/15 Sewer Service Rate (1) Fairfield-Suisun Sewer District $393 City of Yountville 423 Napa Sanitation District 470 Vallejo Sanitation & Flood District 520 Novato Sanitary District 533 City of American Canyon 588 City of Benicia 639 Las Gallinas Sanitary District 647 City of Calistoga 753 City of Vacaville 765 Sonoma Valley Sanitation Dist. 852 (1) Residential - Single Family Dwelling

121 Napa Sanitation District FY 2015/16 Budget 121 Sewer Service Revenue $20 $18 $16 $14 Millions $12 $10 $8 $6 $4 $2 $ Fiscal Year Ended June 30 Historic Sewer Service Revenues Sewer Service Revenues Percentage Change 2005 $10,192, ,421, % ,003, % ,051, % ,880, % ,089, % ,173, % ,400, % ,965, % ,665, %

122 Napa Sanitation District FY 2015/16 Budget 122 Capacity Charges Past Ten Fiscal Years Revenue Collected ($Millions) $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $ # of EDU's $ Historic Capacity Charges FY Ended June 30 Capacity Charges (per EDU) Total Collected Number of EDU's 2005 $5,660 $3,396, ,660 1,773, ,660 2,637, ,660 2,867, , , , , ,660 1,339, ,000 1,425, ,000 1,516, ,300 1,774,

123 Napa Sanitation District FY 2015/16 Budget 123 Recycled Water Sales in Acre Feet 2,000 $1.00 1,600 RATE $0.80 Acre Feet 1, ACRE FEET $0.60 $0.40 Rate 400 $ $ Historic Annual Recycled Water Sales Calendar Year Ending December 31 Total Acre Feet QUANTITY Total Million Gallons RATES Rate per 1,000 Gallons $ , , , , , , Source: Napa Sanitation District Note: 1 Acre Feet = Million Gallons

124 Napa Sanitation District FY 2015/16 Budget 124 Recycled Water Rate for Surrounding Areas $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Delta Diablo Sanitation District Napa Sanitation District City of American Canyon* City of San Jose City of Santa Clara Central Contra Costa Sanitation District Marin Municipal Water District** Dublin San Ramon Services District North Marin Water District City of Santa Rosa** Agency Recycled Water Rates Rate per 1,000 gallons Fiscal Year Delta Diablo Sanitation District $0.85 FY 14/15 Napa Sanitation District 1.01 FY 14/15 City of American Canyon* 1.20 FY 14/15 City of San Jose 2.82 FY 14/15 City of Santa Clara 3.09 FY 14/15 Central Contra Costa Sanitation District 3.28 FY 14/15 Marin Municipal Water District** 3.44 FY 14/15 Dublin San Ramon Services District 4.67 FY 14/15 North Marin Water District 4.73 FY 14/15 City of Santa Rosa** 5.09 FY 14/15 *Most customers are being charged this rate **Tier 1 Rate Please note that the rates reflected are based on consumption. Some agencies charge a fixed monthly charge in addition to the consumption charge.

125 FY 2015/16 Budget 125 Appendix C NSD Strategic Plan

126 FY 2015/16 Budget 126 This page intentionally left blank.

127 127 NAPA SANITATION DISTRICT Strategic Plan May 2015

128 128 Napa Sanitation District Strategic Plan Table of Contents I. Introduction and Overview... 3 II. NSD Recent Accomplishments... 3 III. Environmental Scan... 6 Current Trends, Challenges and Opportunities Constituencies and Customers IV. NSD Mission and Vision Statements... 9 V. NSD Goals and Objectives Goal One: Infrastructure Reliability Goal Two: Financial Stability Goal Three: Operational Capability Goal Four: Employee Development Goal Five: Community Outreach and Communications Goal Six: Resource Recovery VI. On-Going Plan Review and Monitoring Appendix A: Appendix B: Appendix C: Visual Depiction of Recent NSD Accomplishments Status of 2013 Strategic Plan Objectives and Priorities NSD Staff Suggestions for Additional Strategic Plan Objectives and Priorities NSD Strategic Plan 2015 Page 2

129 129 I. Introduction and Overview The purpose of the Strategic Plan is to describe the goals, objectives and priorities of the Napa Sanitation District (NSD). The Strategic Plan reflects the direction, insights and expertise of NSD Board of Directors and NSD staff. NSD strategic planning began in 2008 with two work sessions involving the Board of Directors and Department heads. Subsequent Board of Directors work sessions in 2011 and March 2013, and most recently in March 2015, provided the forum to review and critically evaluate key components of the Planning Guide adopted by the Board in 2009, including the environmental scan, the mission and vision statements, strategic goals and objectives, and priority projects and programs. This document represents the culmination of these planning activities and discussions and provides the overall strategic direction for the Napa Sanitation District. II. NSD Recent Accomplishments Since the last update of the District s Strategic Plan in 2013, NSD has made strong progress towards achieving Board priorities. Construction projects are on schedule and under budget, bonds have been refinanced at a lower rate, and the District remains on solid financial footing. Directors specifically noted a greater atmosphere of teamwork and discipline, and open communications and feedback within and among staff and the Board of Directors. Specific achievements during the last two years include: Completion of the new NSD headquarters which has had a positive effect on staff productivity and morale due to the improved working environment. Completion or significant progress toward completion of a number of key projects identified in the previous NSD Strategic Plan including:. The influent pump station. Pond aeration. Phase one recycled water. MST recycled water. LCWD recycled water. Basin L sewer rehabilitation. Earthquake recovery. In-house repair and rehabilitation NSD Strategic Plan 2015 Page 3

130 Completion of a series of programs and activities also identified in the previous NSD Strategic Plan including:. SCADA Master Plan Implementation. Employee Survey. Staffing Master Plan. Succession plans for mission-critical positions. MOU Negotiations (6-year contract). Compliance with NPDES Permit 130 The TESLA battery partnership The start-up of the asset management system The capacity charge methodology and development fee study Initial steps toward a study of the winery waste management program options NSD staff also noted the improved efficiencies in overall NSD operations which were achieved or those which are in-process including: FOG Receiving Station Reduced demand for purchased electricity by allowing District to generate additional electricity from biogas in its cogeneration engine. Dissolved Air Floatation (DAF) Clarifier Reduced the need for polymers, resulting in savings in the chemicals budget for the plant. Reduced Number of Vehicles Through the consolidation of staff at the plant and other identified efficiencies, there are 5 fewer vehicles in the fleet requiring regular maintenance and replacement than there were 5 years ago. Negotiated Savings in Employee Contracts Employee contract negotiations in 2009 and 2014 resulted in systemic reductions in the growth of retirement benefits. Federal and State Grants The District has received multiple state and federal grants to help pay for various recycled water projects, including MST, LCWD, the NSD Recycled Water Phase 1 Expansion, and the North/South RW Line Split projects. These projects also help on the operating budget side by reimbursing engineering and project management expenses. Revenues from Land Leases The lease of the Somky Ranch has and will continue to generate significant revenues for the District. Salary Savings from Holding Positions Vacant As positions are not filled, the salary and benefits savings from those positions roll over and become resources available for asset renewal and replacement. NSD Strategic Plan 2015 Page 4

131 Solar Will result in reduced energy costs to the District of approximately $70,000 the first year. 131 Stationary Storage Will reduce PG&E demand charges, saving the District an estimated $55,000 the first year. Overall Board and staff members believe that much was accomplished during the last two years in accordance with the priorities set forward in the 2013 NSD Strategic Plan. A copy of the slide show depicting several of the items listed above is provided in Appendix A along with a status report on each of the 2013 objectives and priorities in Appendix B. NSD Strategic Plan 2015 Page 5

132 III. Environmental Scan 132 CURRENT TRENDS, CHALLENGES AND OPPORTUNITIES Board members identified a myriad of issues, challenges and opportunities facing NSD as it looks to the future. This section includes items identified in the course of the Board Strategic Planning sessions since Wastewater Treatment System Increasing development activity, a trend towards more vertical development, and resulting pressure on NSD s system Recognizing and understanding treatment plant vulnerabilities, determining the level of acceptable risk and developing contingency plans and appropriate messages and responses Integrating winery waste into the NSD waste systems infrastructure Addressing aging infrastructure: maintenance and replacement of lines and equipment Increasing the capture of resources for beneficial reuse Maintaining compliance with all environmental regulations Understanding the potential impact of Constituents of Emerging Concern (CECs), such as endocrine disrupters, on the treatment process and potential regulatory requirements Updating the long-term system master plans NSD Recycled Water Services Increasing demand for recycled water Expanding use of recycled water Change in regulatory restrictions Continuing high cost of producing recycled water Continuing development of the NSD wastewater recycling program Making recycled water available to the Milliken-Sarco-Tulocay (MST) area Making recycled water available to the Carneros area Customer Service Providing excellent customer service Providing excellent plan checking services Understanding our new role as water purveyor Resource Stewardship and Efficiencies An increasing focus on water quality and nutrient removal Redefining waste as a resource that society has not yet figured out how to use Assisting efforts to address the aquifer depletion problem in MST by making recycled water available NSD Strategic Plan 2015 Page 6

133 Utilizing cost-effective green energy Maximizing energy efficiency and conservation Understanding how peak oil may affect NSD operations Exploring opportunities to utilize renewable energy sources 133 Facilities and Operations Managing extensive new construction Building in resiliency to allow for future unknowns Continuing impact of technology on NSD operations Meeting all regulatory standards now and in the future Considering the potential impact of rising sea levels on District operations Human Resources and Employee Development Creating guidelines for the organizational pay structure Creating a long-term, sustainable plan for medical and retirement benefits Developing a succession plan and having the back-up staff in place who are cross-trained and ready to take on new assignments if necessary Getting the right skilled people Maintaining an emphasis on safety Maintaining good labor and management relations Organization, Budget and Finance Determining future staffing structure and needs Maintaining a solid financial footing Creating a performance-based budget Managing the conflict between political process and financial stability Balancing low rates against future needs Keeping costs under control Staying on top of budget and financial matters and living within our means Being able to control our own destiny by being economically selfsufficient and prepared for any contingency Forming partnerships with other agencies to share resources, etc. Setting clear priorities Realizing that existing NSD management capacity limits the organization s ability to take on too many new projects Acquiring the data and information needed to make sound decisions with regard to future capital projects Advocating for sound policies at the regional, state and federal levels NSD Strategic Plan 2015 Page 7

134 134 Public Engagement, Attitudes and Perception Creating a strategic approach to community outreach Developing key messages for NSD Dedicating additional financial resources to community outreach Clearly communicating complex topics including the establishment of service and recycled water rates Addressing the increasing public skepticism about government in general Continuing need to make all aspects of the District transparent to the public NSD CONSTITUENCIES AND CUSTOMERS The Board identified NSD s core stakeholders and broadly discussed their importance and the role they play in NSD decision-making and operations. Stakeholders Stakeholder Needs and Expectations Stakeholder Contributions A. Regulators Regulatory compliance Regulatory requirements and guidelines B. Ratepayers Fair, equitable rates and Fees transparency C. Agencies Collaboration and partnership Technical information and support D. Policy-Makers Top performance and transparency Policy direction NSD Strategic Plan 2015 Page 8

135 135 I V. NSD Mission and Vision Statements Board members established the following NSD Mission, Vision and Value statements: Mission Statement The mission of NSD is to collect, treat, beneficially reuse and dispose of wastewater in an effective and fiscally responsible manner that respects the environment, maintains the public s health and meets or exceeds all local, state and federal regulations. Mission Statement (Condensed) NSD s primary function is the collection, treatment, disposal and/or reuse of wastewater. Another way to describe the NSD mission in a more colloquial, less formal sense is as follows: NSD s core business is wastewater we collect it, treat it, dispose of and/or reuse it! NSD extracts and recovers resources where feasible. The underlying goal is to view waste as something that has not yet been put to beneficial reuse. Vision Statement NSD will provide consistently reliable service to its customers in its management of Napa s critical water resources, and will remain in full compliance with all applicable regulations while anticipating and preparing for future challenges. Board members coined the phrase managing risks intelligently, referring to the process whereby NSD provides articulated levels of service at an acceptable level of risk at the lowest life cycle cost. The above vision statement encompasses this key idea. NSD Strategic Plan 2015 Page 9

136 136 Values NSD staff and Board members adhere to a set of core values in all aspects of District operations: Safety Fiscal Responsibility Environmental Stewardship Quality Customer Service Transparency Vigorous Dialog and Critical Analysis Pragmatism Professional Excellence Fairness NSD Strategic Plan 2015 Page 10

137 137 V. NSD Goals and Objectives The NSD Strategic Plan is organized according to six major goal areas: Goal One: Goal Two: Goal Three: Goal Four: Goal Five: Goal Six: Infrastructure Reliability Financial Stability Operational Capability Employee Development Community Outreach and Communications Resource Recovery The goal areas represent Board members overall top priorities. Within each goal area, Board members identified their top priority projects and programs which are summarized on the following pages. NSD Strategic Plan 2015 Page 11

138 GOAL ONE: INFRASTRUCTURE RELIABILITY 138 Build, maintain and operate a cost-effective and reliable wastewater treatment system for the NSD service area. Systematic replacement of the District s aging infrastructure is priority number one. A long term capital facilities plan is needed, drawing on accurate information about current facility conditions and projections of future service area needs in five, ten or more years from now. The District must ensure that treatment capacity will be in place to address current and projected future needs. The District Board established the following key objectives: 1A. Implement Wastewater Treatment Plant Master Plan critical projects: Pond Aeration RW Filters, Secondary Equalization and DAF Clarifier Influent Pump Station Complete by December 31, B. Wet Weather Inflow/Infiltration Cost/Benefit analysis Complete by December 31, C. Determine target for renewal and replacement of sewer assets NSD is averaging the replacement of 0.8% of its sewer assets annually, which equates to a 125 year replacement cycle. A target should be agreed upon for renewal and replacement, to set a standard/goal for the District and to build that target into rate setting. Complete by June 30, D. Develop an Asset Management program Asset Management will help the District to be proactive in addressing the management of its collection system, plant and recycled water infrastructure. It will result in better prioritization of projects and reduced costs by predicting the most cost effective timing for asset maintenance, renewal and replacement. Complete by June 30, 2020 NSD Strategic Plan 2015 Page 12

139 139 1E. Design and construct the Browns Valley Road Interceptor and any associated capacity enhancements at the West Napa Pump Station This is a significant project in the 10-year Capital Improvement Plan. Complete by December 31, F. Amend the Collection System Master Plan The current Collection System Master Plan was completed in Once the Wet Weather I&I Study has been completed, the Master Plan should be updated to incorporate the findings of the study. Complete by June 30, G. Study whether to implement a Private Lateral Program Study the benefits to the District of developing a private lateral program for the reduction of I & I. Begin with the development and implementation of pilot projects. Complete by December 31, 2017 NSD Strategic Plan 2015 Page 13

140 GOAL TWO: FINANCIAL STABILITY 140 Ensure adequate fiscal resources to fulfill NSD s mission. The District Board has a fiduciary responsibility to ensure that adequate financial resources are in place to operate the District and carry out its mission. The District Board established the following key objectives: 2A. Develop non-rate, revenue-generating or expense minimizing opportunities that fit within the District s mission, either on its own or through private/public partnership Ongoing 2B. Conduct study of plan check/inspection fees and methodology options for calculating and assessing capacity charges, and make recommendation for improvement Complete by September 30, C. Conduct a Sewer Service Charge fee study prior to the next Proposition 218 hearing Complete by March 31, D. Develop financing plan for Browns Valley Road sewer project and implement as appropriate Hire financial advisor and bond counsel, develop bond structure and Preliminary Official Statement (POS), seek rating from Standard & Poor s, and sell bonds estimated at around $17 million. Complete by December 31, 2016 NSD Strategic Plan 2015 Page 14

141 141 GOAL THREE: OPERATIONAL CAPABILITY Implement and maintain effective operational practices. The District Board wants to operate the District at or above best practices, utilizing proven technology. Customers, ratepayers and internal staff all deserve high quality service. The District Board established the following key objectives: 3A. Partner with winery industry to research and develop a mutually beneficial alternative to treating winery waste Complete by June 30, B. Negotiate a new 5-year NPDES permit Every 5 years the District must negotiate a new NPDES Permit with the Regional Board. Complete by December 31, 2016 NSD Strategic Plan 2015 Page 15

142 GOAL FOUR: EMPLOYEE DEVELOPMENT 142 Maintain a dynamic and skilled workforce through employee engagement, professional development and opportunities for advancement The District Board wants to create a positive and respectful working environment that encourages all employees to do the best job possible for the ratepayers of the District. The District Board established the following key objectives: 4A. Promote NSD as progressive, professional organization to foster a reputation regionally and state-wide as a great place to work Encourage staff to give presentations at professional organization trainings and conferences, assume leadership positions in professional organizations; form associations to research and develop Best Practices, engage in interagency exchanges of staff or trainings that showcase innovative approaches, etc. Ongoing 4B. Conduct Employee Survey in Fall 2016 Develop a pattern of surveying employees every three years. Complete by February 28, C. Implement Employee Master Plan recommendations Develop implementation plan, timeline, and develop budget per Board direction. Complete by December 31, D. Participate in Programs to Develop Qualified and Trained Operators Maintain an active role in BAYWORK, offer internship opportunities and scholarships, and include information about the Operator Profession in plant tours and public events. Ongoing NSD Strategic Plan 2015 Page 16

143 GOAL FIVE: COMMUNITY OUTREACH AND COMMUNICATION 143 Provide ratepayers with the information they need to understand NSD mission, operations, finances and rate structures. The District Board wants to ensure that NSD operates in a transparent manner and serves as a resource to all ratepayers of the service area. The District Board established the following key objectives: 5A. Be proactive in developing partnerships with local businesses and other public agencies to achieve efficiencies and common goals. Focus on accomplishments Ongoing 5B. Create a communications plan to address NSD outreach and public information needs It is important to communicate with ratepayers on an on-going basis regarding the District s aging infrastructure and what it takes to maintain system reliability. The Communications Plan would identify the specific messages and audiences for those messages, and develop specific methods and strategies for delivery of those messages. Include NSD employee suggestions and Board ideas where feasible. Complete by June 30, 2016 NSD Strategic Plan 2015 Page 17

144 GOAL SIX: RESOURCE RECOVERY 144 Implement policies and technologies to recover resources from wastewater for beneficial reuse. The District Board wants to recover resources for reuse when economically viable and a market exists for their beneficial reuse. NSD must also use the resources available to ensure a reliable energy supply during emergency conditions as well as during normal times. The District Board established the following key objectives: 6A. Implement capital projects in partnership with local agencies for the distribution of recycled water Complete by June 30, B. Participate with local partners on long-term opportunities for water reuse Determine whether to proceed with NBWRA to develop storage projects for recycled water using District ponds or other locations. Work with local partners to find or develop storage options. Calculate the anticipated impacts to rate payers for various storage and recovery options. Complete by December 31, C. Study and develop pathway to become energy independent. Begin by setting targets for the percentage of self-generated energy For example, explore the recovery of algae for potential energy source,, explore replacement or expansion of the Cogen system, look into capturing waste heat for use in electricity generation, expand solar, etc. Ongoing NSD Strategic Plan 2015 Page 18

145 V I. On- Going Plan Review and Monitoring 145 Board members and staff agree that the Quarterly Report of Priority Goals will be updated with the new goals and objectives in this Strategic Plan, with quarterly reporting continuing in a similar fashion. Board members will receive presentations by District staff members on key topics (such as infrastructure and capital needs) to explore top priorities in more depth, as needed or requested by the Board. NSD Strategic Plan 2015 Page 19

146 Appendix A: Visual Depiction of Recent NSD Accomplishments 146 NSD Strategic Plan 2015 Page 20

147 147 Recent Accomplishments Board of Directors Strategic Planning Workshop March 18, 2015

148 Influent Pump Station 148

149 Pond Aeration 149

150 Phase 1 Recycled Water 150

151 MST Recycled Water 151

152 LCWD Recycled Water 152

153 Basin L Sewer Rehabilitation 153

154 Earthquake Recovery 154

155 In-House Repair / Rehabilitation 155

156 Other Accomplishments 156 Complete SCADA Master Plan Implementation Employee Survey Staffing Master Plan Succession plans for mission-critical positions MOU Negotiations (6-year contract) Compliance with NPDES Permit

157 Appendix B: Status of 2013 Strategic Plan Objectives and Priorities 157 NSD Strategic Plan 2015 Page 22

158 Goal 1 - Infrastructure Reliability The goal is to build, maintain and operate a cost-effective and reliable wastewater collection and treatment system for the District s service area. Systematic replacement of the District s aging infrastructure is priority number one. A long term capital facilities plan is needed, drawing on accurate information about current facility conditions and projects of future service area needs: five, ten or more years from now. The District must ensure that treatment capacity will be in place to address current and projected future needs Strategic Objectives: Status: 1A: Implement Treatment Plant Master Plan critical projects, including pond aeration, RW equalization and filters and DAF clarifier, and replacement of the influent pump station Projected End Date is June B: Complete cost/benefit analysis of wet weather Projected End Date is December inflow/infiltration C: Complete SCADA master plan implementation Complete. Key Performance Indicators Actual Actual Actual Actual Actual Target Target Indicator Met? Renewal & Replacement of Assets 1.4% 2.8% 3.0% 2.6% 8.8% 2% - 4% Yes Sewer Main Renewal & Replacement 0.0% 0.7% 0.7% 0.0% 1.8% 1% No Public Sewer Lateral Renewal & Replacement 0.8% 0.8% 0.6% 0.2% 0.9% 1% No Partial or Total Sewer Pipe Collapses Yes Plant Planned Maintenance Ratio (Hours) 51.0% 49.9% 63.7% 58.0% 65.8% > 60% Yes Collections Planned Maintenance Ratio (hours) 87.7% 91.7% 90.4% 87.6% 87.5% > 85% Yes Uptime for Cogeneration Engine 68% 82% 84% 96% 96% > 90% Yes Uptime for Pumps at IPS 93% 67% 81% 79% 99% > 95% No New Objectives / Strategies for Consideration Determine target for renewal and replacement of sewer assets. (6/2016) NSD is averaging the replacement of 0.8% of its sewer assets annually, which equates to a 125 year replacement cycle. A target should be agreed upon for renewal and replacement, to set a standard/goal for the District and to build that target into rate setting. Develop an Asset Management program. (6/2020) Asset Management will help the District to be proactive in addressing the management of its collection system, plant and recycled water infrastructure. It will result in better prioritization of projects and reduced costs by predicting the most cost effective timing for asset maintenance, renewal and replacement. Design and construct the Browns Valley Road Interceptor and any associated capacity enhancements at the West Napa Pump Station. (6/2019) This is a significant project in the 10-year Capital Improvement Plan. Update the Collection System Master Plan. (6/2019) The current Collection System Master Plan was completed in Once the Wet Weather I&I Study has been completed, the Master Plan should be updated to incorporate the findings of the study as well as incorporate known significant new projects (Napa Pipe, Gasser, Downtown Redevelopment, etc.) and any changes in zoning. Study whether to implement a Private Lateral Program. (12/2017) Study the benefits to NSD of developing a private lateral program for the reduction of I & I. Complete On Track Watch Delayed 158

159 Goal 2: Financial Stability The goal is to ensure adequate fiscal resources to fulfill the District s mission. The District Board has a fiduciary responsibility to ensure that adequate financial resources are in place to operate the District and carry out its mission Strategic Objectives: Status: 2A: Develop non-rate, revenue-generating opportunities that fit within the District s mission, either on its own or through private/public investment Somky Lease assigned. Stationary Storage (Battery) and Solar project to be completed in Real Energy on hold until Fall 2015 pending regulation development by State. Complete On Track Watch Delayed 159 2B: Complete a study of plan check/inspection fees and methodology options for calculating and assessing capacity charges 2C: Provide policy choices regarding long-term strategies and goals for replacement of sewers Study Complete. Additional Outreach in March To Board for Action in late Spring Development of policy will be part of Strategic Planning discussion, with options incorporated into SSC fee study process that begins in Spring D: Conduct a Sewer Service Charge fee study prior to the next Proposition 218 hearing Will begin Spring Completion expected February Key Performance Indicators Actual Actual Actual Actual Estimate Target Target Indicator FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 Met? Bond Rating AA- AA- AA- AA- AA- AA- Yes Debt Service Coverage Ratio 328% 325% 247% 276% 195% > 125% Yes Revenue-to-Expenditure Ratio (0.02) (0.24) 0.05 > 0 Yes Rates Based on Life-Cycle Cost 4.3% 7.9% 6.1% 3.0% (1.6%) ± 5% Yes Sewer Bill Affordability 0.64% 0.64% 0.66% 0.68% 0.68% < 1% Yes New Objectives / Strategies for Consideration Issue new debt for Browns Valley Road sewer project. (3/2016) Hire financial advisor and bond counsel, develop bond structure and Preliminary Official Statement (POS), seek rating from Standard & Poor s, and sell bonds estimated at around $17 million.

160 Goal 3: Operational Capability The goal is to implement and maintain effective operational practices. The District Board wants to operate the District at or above best practices, utilizing proven technology. Customers, ratepayers and internal staff all deserve high quality service Strategic Objectives: Status: 3A: Prepare safety and security vulnerabilities Complete. study and public communications plan Complete On Track Watch Delayed 160 3B: Develop policy and programs regarding the impact of wineries based on the 2009 Winery Study Ongoing. Key Performance Indicators Actual Actual Actual Actual Actual Target Target Indicator Met? Compliance with NPDES Permit 100% 100% 100% 100% 100% 100% Yes Sanitary Sewer Overflows (Cat. 1) per 100 miles Yes Self-Generated Electricity 23.0% 22.1% 23.3% 33.7% 32.6% > 25% Yes Electricity Consumption Efficiency (MWh per million gallons-summer) < 6.0 Yes Chemical Consumption (gallons hypochlorite per MG treatedsummer) < 210 Yes Recycled Water Service Availability 100% 98% 100% 100% 100% 100% Yes New Objectives / Strategies for Consideration Partner with winery industry to research and develop a mutually beneficial alternative to treating winery waste. (6/2017) This project would proceed only if there was support from the winery industry to conduct the study. Negotiate a new 5-year NPDES permit. (12/2016) Every 5 years the District must negotiate a new NPDES Permit with the Regional Board. Conduct a research study to determine the infrastructure improvements, costs, and implementation steps necessary to sewer the Monticello Park area. (12/2016) LAFCO has identified the Monticello Park area as a potential area to be brought into the NSD Sphere of Influence, and the District is contacted several times a month by residents wanting to connect to NSD. The study would determine the most efficient sewer routing and determine the costs to build the system.

161 161 Goal 4: Employee Development The goal is to maintain a dynamic and skilled workforce through employee engagement, professional development and opportunities for advancement. The District Board wants to create a positive and respectful working environment that encourages all employees to do the best job possible for the ratepayers of the District Strategic Objectives: Status: 4A: Develop a management succession plan and identify and train back-up staff for all missioncritical positions Complete. 4B: Conduct third employee survey Complete. Complete On Track Watch Delayed 4C: Develop a transition plan for the new administrative building Complete. 4D: Create an employee master plan Complete. 4E: Prepare for and complete MOU negotiations Complete. Key Performance Indicators Actual Actual Actual Actual Actual Target Target Indicator /2016 Met? Safety Training Completed On-Time na 79% 79% 99% 99% > 90% Yes Employee Survey: Supervisor supports career growth na na 3.95 > 3.0 Yes Employee Survey: Adequate resources to do job na na 3.83 > 3.0 Yes Employee Survey: Received training to work efficiently na na 3.74 > 3.0 Yes Employee Survey: High job performance is rewarded na na 3.26 > 3.0 Yes (Survey: 1=Unfavorable to 5=Very Favorable) New Objectives / Strategies for Consideration Promote NSD as progressive, professional organization to foster a reputation regionally and statewide as a great place to work. (ongoing) Encourage staff to give presentations at professional organization trainings and conferences, assume leadership positions in professional organizations; form associations to research and develop Best Practices, engage in interagency exchanges of staff or trainings that showcase innovative approaches, etc. Conduct Employee Survey in Fall (2/2017) Develop a pattern of surveying employees every two years. Implement Employee Master Plan recommendations. (12/2016) Develop implementation plan, timeline, and develop budget per Board direction.

162 162 Goal 5: Community Outreach and Communication The goal is to provide ratepayers with the information they need to understand the District s mission, operations, finances and rate structures. The District Board wants to ensure that the District operates in a transparent manner and serves as a resource to all ratepayers of the service area Strategic Objectives: Status: 5A: Be proactive in developing partnerships with local businesses and other public agencies to achieve common goals Ongoing. Complete On Track Watch Delayed 5B: Create a communications plan to address NSD outreach and public information needs On hold, pending recruitment for new Outreach Coordinator. Key Performance Indicators Actual Actual Actual Actual Actual Target Target Indicator Met? Media Coverage Quantity > 20 Yes Media Coverage Accuracy 100% 92% 86% 90% 97% > 85% Yes Customer Satisfaction-Plug Ups (percent good or excellent ) na 100% 99.5% 100% 99.5% > 95% Yes Customer Satisfaction-Cleanouts (percent good or excellent ) na 90.0% 94.3% 97.9% 100% > 95% Yes New Objectives / Strategies for Consideration Complete the Communications Plan as identified in 5B. (12/2016) The Communications Plan would identify the specific messages and audiences for those messages, and develop specific methods and strategies for delivery those messages.

163 163 Goal 6: Resource Recovery The goal is to implement policies and technologies to recover resources from wastewater for beneficial reuse. The District Board wants to recover resources for reuse when economically viable and a market exists for their beneficial reuse. The District must also use the resources available to ensure a reliable energy supply during emergency conditions as well as during normal times Strategic Objectives: Status: 6A: Implement capital projects in partnership with local agencies for the distribution of recycled water MST project is under construction. LCWD project was awarded in March Both project scheduled to be completed by end of Complete On Track Watch Delayed 6B: Study the feasibility of expanding system storage capacity for recycled water NBWRA Phase 2 Feasibility Study includes additional RW storage. Anticipated completion of study in June C: Set a target for the percentage of energy used by the District that is self-generating, and set long-term strategies for achieving that percentage Will be completed once stationary storage and solar projects are online. 6D: Explore the possible beneficial reuse of algae Project will begin in FY 2015/16. Key Performance Indicators Actual Actual Actual Actual Actual Target Target Indicator Met? Recycled Water Reused on Non- District Property 55% 56% 62% 72% 75% > 60% Yes Biosolids Beneficially Reused 18% 90% 100% 100% 100% > 90% Yes Digester Gas Beneficial Reuse 85% 94% 91% 98% 95% > 90% Yes New Objectives / Strategies for Consideration Set targets for recovery of water, working with partners and being opportunistic. (6/2017) Determine whether to proceed with NBWRA to develop storage projects for recycled water. Work with local partners to find or develop storage options. Calculate the anticipated impacts to rate payers for various storage and recovery options. Study and development pathway to become energy independent. (12/2017) For example, explore the recovery of algae for potential energy source, evaluate expansion of FOG system to accept additional other waste products, explore replacement or expansion of the Cogen system, look into becoming a microgrid facility, expand solar, etc. Promote resource recovery efforts that have a positive Return on Investment. (ongoing) Continue to monitor new technologies to recover nutrients and other resources cost effectively.

164 164 Appendix C : NSD Staff Suggestions for Additional Strategic Plan Objectives and Priorities NSD Strategic Plan 2015 Page 22

165 Strategic Planning All-Hands Brainstorm List The following is a brainstorm list gathered at the All-Hands meeting on March 10, The question was asked, What items should the Board consider as part of its priority setting workshop on March 18 th? The following are the responses to that question, complete and unedited. Brainstorm List from All-Staff Meeting Infrastructure Reliability Implement comprehensive Asset Management program Add reservoir at elevation in Recycled Water system (to reduce energy costs and improve longevity of pipes from reduced pumping) Add reservoir at elevation for plant 3-water system to reduce pumping demands Develop at Upper Lateral Program (maybe a cost sharing model similar to City s Cash for Grass incentive program) Study West Napa Pump Station and determine adequacy and/or necessary upgrades Build a better workshop for plant maintenance staff Road improvements from Soscol Ferry Road to the front gate Create new Standard Specification that requires tracer wire be included with all new sewer installations Financial Stability Revenue Generation without increasing rates: Lease property New Recycled Water customers Improve Biosolids quality from Class B to Class A Find way to convert algae to energy Develop Food-to-Energy program Improve Industrial User assessments for billing purposes Shared service are there areas we can partner with others to share costs? (lab, solids processing) Operational Capability Study the current and future impacts of waterless and low-flow fixtures on the collection system and the loadings rate into the plant Purchase biogas filtration system, instead of renting Use natural gas combustion to generate electricity for peak shaving Develop a practice where projects go through a review by maintenance staff prior to design acceptance Evaluate where our 3 rd party service come from (geographically) and see if there are efficiencies from sourcing closer to where work is done Evaluate whether the District should convert to CNG for some fleet vehicles, or to electric.

166 166 Employee Development Plant Maintenance staff should be more involved in the plant s automation (SCADA) system increased training and more active development and maintenance Look into whether the District could support scholarships for students who commit to entering into the wastewater field Encourage involvement in community-based service organizations (Lions, Rotary, Kiwanis, etc.) Encourage increased involvement in CWEA and/or other professional associations Have a BBQ annually where family is invited Evaluate rate we pay temporary worker and determine if needs to increase to attract quality workers Community Outreach and Communication Increase pollution prevention activities as they relate to Constituents of Emerging Concern (CECs), such as microbeads, pharmaceuticals, etc. Encourage plant/system tours, not just for students, but for agencies and other stakeholders Conduct some plant tours in Spanish Branding from sewer/waste agency to resource recovery Do more Public Service Announcements; increase messaging directly to users; use multimedia Get messages to ratepayers through flyers given out during plug up calls Send flyers about NSD to people who buy homes within service area (get list from Assessor) Utilize Spanish-speaking multimedia sources to communicate to the Hispanic Community (Spanish radio/tv station ads, community newspapers, etc.) Resource Recovery New cogeneration engine, to produce more energy Explore ways to capture energy from falling water (changes in elevation during treatment process) Explore whether there is any energy capture potential from harvesting residual heat in discharge water (RW or river discharge) Construct a recycled water fill station out in the community Study / evaluate indirect and direct potable reuse

167 FY 2015/16 Budget 167 Appendix D Financial Policies

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169 169 NAPA SANITATION DISTRICT FINANCIAL POLICIES Approved by the Board of Directors May 2, 2012

170 NAPA SANITATION DISTRICT FINANCIAL POLICIES 170

171 NAPA SANITATION DISTRICT FINANCIAL POLICIES 171 Table of Contents 1. General Policies Review annually 1.2. Comply with applicable laws 1.3. Administrative procedures 2. Reserves Reviewed annually 2.2. Operating reserve 2.3. Liquidity 3. Revenue Fees and Charges Setting of Fee and Charge Amounts Collection of Fees and Charges Review of Fees 3.2. Revenue Forecasting 3.3. Use of one-time and unpredictable revenues 4. Budgeting and Capital Asset Management Basis of budgeting 4.2. Balanced budget 4.3. Budget control 4.4. Capital asset acquisition, maintenance, replacement and retirement Budget for maintenance Use of operational fund balance for capital Capitalization threshold Ten-year Capital Improvement Plan Funding requirement 5. Debt Issuance and Management Use of long-term debt 5.2. Length of debt obligations 5.3. Debt service limitation 5.4. Use of credit enhancements 5.5. Bond rating 5.6. Financial disclosure 1 page

172 NAPA SANITATION DISTRICT FINANCIAL POLICIES Investments Investment policy 6.2. Annual review 7. Financial Reporting Quarterly Financial Reporting to Board of Directors 7.2. Monthly Financial Reporting to the Board of Directors 7.3. Monthly Management Report review 8. Accounting Financial statements 8.2. Annual financial audit 8.3. Accounting policies and procedures 2 page

173 NAPA SANITATION DISTRICT FINANCIAL POLICIES GENERAL POLICIES 1.1 Review annually Napa Sanitation District s financial policies shall be reviewed annually by the Board and shall be published in the adopted budget. 1.2 Comply with applicable laws The District shall comply with all applicable state and federal laws and regulations concerning financial management and reporting, budgeting, investing and debt administration. 1.3 Administrative procedures The Chief Financial Officer shall establish and maintain appropriate financial and internal control procedures to assure the integrity of the District s finances. 3 page

174 NAPA SANITATION DISTRICT FINANCIAL POLICIES RESERVE POLICIES 2.1 Reviewed annually Napa Sanitation District shall maintain reserves that are appropriate to the needs of the District. Targeted reserve levels shall be established and reviewed annually as part of the budget process. The use of fund balance or reserves for operational activities shall be explained in the annual budget document; such explanation shall describe the circumstances for such action and its expected future impact. 2.2 Operating reserves Napa Sanitation District shall maintain an operating reserve for use during operational or financial emergencies. Emergencies shall constitute significant, unforeseen events that have a dramatic and immediate impact on the operations, assets or financial condition of the District. A plan to replenish this reserve used during a fiscal year shall be developed and approved through the budgeting process in the following fiscal year. The amount of the reserve shall be at least equal to 15% of the budgeted annual operating expenses, excluding debt service, in the General Operations and Maintenance Fund. 2.3 Liquidity Napa Sanitation District shall maintain cash and investments necessary to meet the liquidity needs for the District. Furthermore, the District shall maintain unrestricted cash and investments as required by any debt covenants. Liquidity needs shall be calculated as follows: on June 30th of each year the District shall maintain a level of cash and investments, less those amounts held in reserve by a fiscal agent, in an amount at least equal to anticipated operating expenditures between July 1 and November 30, plus the amount held in Operating Reserve. 4 page

175 NAPA SANITATION DISTRICT FINANCIAL POLICIES REVENUE 3.1 Fees and Charges Setting of Fee and Charge Amounts Fees and charges shall be set to recover the current operational needs of the District, including the financing of capital improvements in accordance with the Capital Improvement Program Collection of Fees and Charges The District shall strive to collect all fees and charges imposed, and shall actively pursue and settle delinquent accounts Review of Fees The District shall review fees and charges annually to ensure they are set at appropriate amounts. 3.2 Revenue Forecasting The District shall estimate revenues conservatively, through an objective, analytical process. The District shall regularly report on forecasted vs. actual revenues, and provide explanation for significant variances. 3.3 Use of one-time and unpredictable revenues One-time revenues shall be used to support one-time expenditures or increase fund balance. Unpredictable revenues shall not be used to support ongoing operational expenses for a period longer than the revenue can reasonably be expected to support them. 5 page

176 NAPA SANITATION DISTRICT FINANCIAL POLICIES BUDGETING AND CAPITAL ASSET MANAGEMENT 4.1 Basis of budgeting All budgetary procedures will conform to state regulations and generally accepted accounting principles. As such, the District shall use a modified accrual basis of accounting for reporting on budgeted versus actual expenditures, with the following exceptions: Grant revenues are budgeted on a modified cash basis rather than an accrual basis; Fixed assets are depreciated for some financial reporting, but are fully expensed in the year acquired for budgetary purposes; 4.2 Balanced budget The District shall maintain a balanced budget, defined as total resources (operating revenue, non-operating revenue, intrafund transfers and beginning fund equity) shall equal total requirements (operating expenses, capital expenses, intrafund transfers and ending fund equity) including contingencies. Furthermore, the District considers the budget to be balanced whenever annual operating and nonoperating revenues meet or exceed annual operational expenditures. The District is committed to maintaining a balanced budget under normal circumstances and will disclose deviations from a balanced operating budget when it occurs. 4.3 Budget control The Board of Directors retains the exclusive authority to increase annual budget authority for Operational Expenditures. In no case may total operating expenditures exceed that which is appropriated by the Board without a budget amendment duly approved by the Board. The Board of Directors also retains the exclusive authority to increase the annual budget authority for Capital Expenditures. In no case may total capital expenditures exceed that which is appropriated by the Board without a budget amendment duly approved by the Board. Only the Board may authorize transfer of budget authority between Operational Expenditures and Capital Expenditures. Only the Board may increase the number of authorized positions in the Position Control Roster. The General Manager has the authority to approve budget transfers between operating departments. The General Manager has the authority to approve budget 6 page

177 NAPA SANITATION DISTRICT FINANCIAL POLICIES 177 transfers between capital projects. The General Manager has the authority to hire employees in accordance with the Position Control Roster. The Director of Administrative Services / Chief Financial Officer shall be responsible for establishing a budgetary control system to ensure compliance with this policy. 4.4 Capital asset acquisition, maintenance, replacement and retirement Budget for maintenance The District shall budget for the adequate maintenance of capital equipment and facilities to protect the public investment and ensure achievement of their maximum useful life Use of operational fund balance for capital Operational fund balances in excess of established reserves and liquidity requirements shall be used for the development, rehabilitation or replacement of capital assets Capitalization threshold An asset shall be considered a capital asset when the initial cost of the asset is $5,000 or more and has a useful life of more than one year. The initial cost shall include any costs necessary to put the asset into its intended use. Interest in real property shall always be considered a capital asset, regardless of its initial cost Ten-year Capital Improvement Plan The District shall prepare, adopt and update annually a ten-year Capital Improvement Plan that identifies and sets priorities for all major capital assets to be acquired, constructed or replaced by the District. The Capital Improvement Plan shall be included in the Adopted Budget. Major capital assets are those which result in a capitalized asset costing more than $50,000. Capital assets costing less than $50,000 may be combined into a single major capital project for Ten-year Capital Improvement Plan purposes, with the individual capital assets identified. 7 page

178 NAPA SANITATION DISTRICT FINANCIAL POLICIES Funding requirement The Capital Improvement Plan shall identify adequate funding to support the acquisition, construction and replacement of assets identified in the plan, and shall identify projects that the District believes beneficial to the system but funding has not yet been identified. Additionally, the District shall strive to develop a comprehensive strategy and funding plan for the renewal and replacement of existing capital assets. 8 page

179 NAPA SANITATION DISTRICT FINANCIAL POLICIES DEBT ISSUANCE AND MANAGEMENT 5.1 Use of long-term debt The District shall have a preference to finance capital improvements using pay-asyou-go financing and shall issue long-term debt only to finance capital improvements that cannot be readily financed from current revenues. Some exceptions to this may be made on a case-by-case basis for no-interest and extremely-low-interest loan programs for capital projects. Debt financing shall be used only for major, non-recurring items or improvements with a minimum of five years of useful life; assets with a shorter useful life shall be financed using pay-as-you-go financing. 5.2 Length of debt obligations The District shall repay all debt issued within a period not to exceed the expected useful life of the improvements financed by the debt. 5.3 Debt service limitation The District shall not issue debt where the debt service amounts exceed its ability to pay current obligations from current revenues. This shall be calculated as follows: current operating revenues, less current operating expenditures, shall be at least 125% of anticipated total annual debt service for all outstanding long-term debt. 5.4 Use of credit enhancements When issuing long-term debt, credit enhancements (letters of credit, bond insurance, etc.) may be used, but only when net debt service on the debt is reduced by more than the cost of the enhancement. 5.5 Bond rating The District shall seek to maintain and, if possible, improve its current bond rating in order to minimize borrowing costs and preserve access to credit. 5.6 Financial disclosure The District shall fully disclose financial and pertinent credit information as it relates to the District s outstanding securities. 9 page

180 NAPA SANITATION DISTRICT FINANCIAL POLICIES INVESTMENTS 6.1 Investment policy The District shall maintain the same investment policy as the County of Napa and shall invest its cash reserves in the County s investment pool. 6.2 Annual review The District shall review this policy annually and advise the Board when, in the professional opinion of the staff, it would be prudent to consider alternatives to investing its cash reserves. 10 page

181 NAPA SANITATION DISTRICT FINANCIAL POLICIES FINANCIAL REPORTING 7.1 Quarterly financial reporting to Board of Directors The District shall prepare and provide to the Board of Directors a quarterly summary report that compares actual revenues and expenditures to budgeted amounts. The report shall explain significant variances and provide analysis and interpretation of financial information. 7.2 Monthly financial reporting to Board of Directors On a monthly basis, the Board of Directors shall be provided a financial report that includes budget-to-actual financial reporting and calculation of existing cash balances. The Board shall also receive regularly a report listing payments made to vendors during the reporting period. 7.3 Monthly management report review The District shall prepare a monthly report for review and use by District management staff that compares actual revenues and expenditures to budgeted amounts, as well as additional reports as requested to assist in managing the day-today operations of the District. 11 page

182 NAPA SANITATION DISTRICT FINANCIAL POLICIES ACCOUNTING 8.1 Financial statements The District shall prepare financial statements annually, in accordance with generally accepted accounting principals for governments in the United States. 8.2 Annual financial audit The District s financial statements shall be audited annually by an independent, qualified third party in accordance with generally accepted auditing standards, and shall complete the audit within eight months of the end of the fiscal year. The audit results and any associated management response shall be presented to the Board of Directors. 8.3 Accounting policies and procedures Management shall develop internal accounting policies and procedures necessary to implement these Financial Policies and to ensure that internal controls, processes and procedures are adequate to protect the finances of the District. 12 page

183 FY 2015/16 Budget 183 Appendix E 2014 Performance Measurement Report

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185 185 Performance Measurement Report Includes Data and Analysis for Calendar Year 2014 Performance Measurements for the Napa Sanitation District Using the Effective Utility Management Framework Issue Date: March 4,

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187 187 Table of Contents Table of Contents...3 Introduction...5 Executive Summary...7 Summary of Measures and Ratings...10 Performance Measurement Report Product Quality Customer Service Employee and Leadership Development Operational Optimization Financial Viability Infrastructure Stability Operational Resiliency Community Sustainability Water Resource Adequacy Stakeholder Understanding & Support

188 188 More information about the Napa Sanitation District can be found at 4

189 189 Introduction Introduction to the Report This report is the fifth annual report by the Napa Sanitation District regarding the performance of the District. It includes performance measures that, when taken as a whole, should give the reader a sense of how well the utility is performing and being managed. This report is prepared by management for use by the District s Board of Directors and by the general public. The District has chosen to use the Effective Utility Management (EUM) framework for presenting this information. This framework is specific to water and wastewater utilities and provides for the possibility of comparing the District to other wastewater utilities once more providers begin using EUM for measuring and reporting on performance. About Effective Utility Management Effective Utility Management (EUM) is a framework for evaluating water and wastewater utilities. In May 2007, six major water and wastewater associations and the United States Environmental Protection Agency (EPA) agreed to support EUM collectively and individually throughout the water sector. EUM is designed to help utility managers make practical, systematic changes to achieve excellence in utility performance, and encapsulates the collective knowledge and experience of utilities leaders who are committed to helping improve water and wastewater management. EUM has identified Ten Attributes of Effectively Managed Water Sector Utilities. This performance measurement report has been divided into those ten attributes, as they are intended to help utilities maintain a balanced focus on all important operational areas rather than quickly moving from one problem to the next. More can be learned about Effective Utility Management by visiting the website About Performance Measures Performance measures are those things that are measured by an organization to evaluate the performance of that organization. There are several types of measures, including input, output, efficiency and effectiveness. Input and output measures tend only to capture the amount of work performed by departments or organizations. This report focuses on efficiency and effectiveness measures, and then only on the measures that are meaningful to management of the District and that the District has some ability (total or partial) to influence. 5

190 190 Quick-Glance Ratings This report includes with every measure an analysis of how the District is doing within that area. Additionally, next to each graph or qualitative measure is an icon to help the reader assess quickly how the District is performing against that measure. Those icons are as follows: Satisfactory (green star) signifies that the District has met its goals, or that the trend is positive. Watch (orange diamond) signifies that the District is in danger of not meeting its goals, that the trend is indeterminate, or that there is insufficient data to make an assessment. Unsatisfactory (red triangle) signifies that the District has not met its goals or that the trend is negative. No Measure (blue circle with slash) signifies that the District has not developed a measurement for this performance indicator. 6

191 191 Executive Summary This report is the fifth annual Performance Measurement Report produced by the Napa Sanitation District. The report is structured around the Ten Attributes of Effectively Managed Water Sector Utilities, as developed in Effective Utility Management. This report will be used by management of the District to identify specific trends or issues regarding the ten attributes. The Report is also intended to provide a partial answer to the question asked by the Board of Directors and the ratepayers alike, Is the Napa Sanitation District a well run utility? This document will be used by the District s Board of Directors as a source of information for setting District goals and priorities through its strategic planning and annual budget processes. The following is a summary of performance measurements reported in this report. Product Quality The District continues to meet or exceed regulatory compliance requirements at the wastewater treatment plant. Sanitary Sewer Overflows are few, with both the number and volume of spills remaining below the state average, except in extraordinary cases. The trend line for the number of plugged main lines is down, and the availability of recycled water is good. Recycled water reuse by customers met the targeted goal of 60%. Beneficial reuse of biosolids was at 100% last year. Customer Service The trend in reduced number of service calls due to District causes should result in more satisfied customers. The customer service surveys began in 2011 appear to support this, with very high marks for the Collections crews. The District met its stated customer service response time goals for development review and for collection system service calls. Employee and Leadership Development Retirements have been as anticipated, with an average of about 5% experience turnover rate annually for the last several years. Anticipated retirements of 20% over the next five years suggest a continuation of this trend. The employee survey results showed that while employees are generally satisfied with their jobs, there may be a lack of career advancement opportunities that could be encouraging employees to look for jobs elsewhere. The limited measures on training indicate there is continued steady performance in some training categories, and that employees are generally meeting their safety training targets. The District has drafted several succession plans for key positions, with training enabled to support the plans, and training programs are in place to capture collection system and operations knowledge. Operational Optimization Over the past decade, the plant has reduced its consumption of electricity overall, as well as its use per million gallons treated, although this number is impacted by the drought with higher than usual concentrations and greater demand for recycled water. The District s self-produced electricity is also at historic highs, continuing the increase seen in 2013 from the acceptance of fats, oil and grease at the new FOG receiving station. Chemical consumption per million gallons treated is continues to be low, although 2014 continued to be impacted by drought affects. 7

192 192 Financial Viability The ratio of revenue-to-expenditure has trended to zero in recent years, evidencing financial stability, with the two recent years the result of bond-funded projects skewing the ratio. The ratio of capital expenditures is also higher than the norm, due to capital projects that are either bond funded or being financed by other agencies. The debt service coverage ratio is significantly higher than the required 125%. The District maintains adequate financial policies and internal controls, and the District s bond rating remains high. The sewer service charge rate is pegged to CPI, and is now evaluated annually for its ability to cover lifecycle cost of service and capital funding options. The District s reserves are funded in accordance with financial policies. Infrastructure Stability While the District has not performed an inventory of critical assets in the past 5 years, it does maintain computer-based asset and condition information of its collection system and most components of the Soscol Water Recycling Facility. The District has also maintained its goals related to annual sewer main line condition assessments. The District has been spending adequately on renewal & replacement projects to meet minimum standards and targets (percentage of total assets). There is still too little data to make determinations on whether the amount of sewer main line and lower lateral replacements are adequate; this is an area the District could spend more time evaluating and developing internal goals. The District is performing very well regarding collection system failure rates. Planned maintenance as a percentage of total maintenance is high at the plant and in the collection system. District inspections of restaurant to help prevent fats, oil and grease (FOG) problems in the collection system increased to 100% in the past two years. During the past seven years in a row, collection staff has met its goal of cleaning the equivalent of 40% of main lines annually. Operational Resiliency There were no recordable incidents in the District in For seven of the past ten calendar years, the District has been lost time accident free, with lost time in the two of those years being very low, and the all of the time in 2014 related to an injury from a prior year. Insurance claims have fall off the highest level reached in FY 12/13, but was still significantly higher than prior years, keeping this measure on the watch list. The overall severity/expense of the claims, however, has remained relatively low. The District s Experience Modification Rate (a measure of the quantity and severity of workers compensation claims) has gone down steadily since FY 04 and remains below both the industry average and the CSRMA average. The District maintains adequate Emergency Response Plans and practices them regularly. The cogeneration engine has recovered from a recent downward trend in reliability, with the only significant downtime due to planned preventive maintenance and 2014 remaining at 96% uptime. In 2014, the District overcome some of the recent problems with uptime of the Influent Pump Station (IPS), but in light of the performance over the past four years, the IPS resiliency evaluation is and will remain at watch until the IPS replacement and expansion project is completed. Community Sustainability The District has invested in meeting community needs, particularly with recycled water. The District is involved in several community programs that encourage reduced potable water consumption and environmental protection and awareness, and has incorporated green practices into its capital planning. Greenhouse gas emissions from purchased natural gas, in the form of carbon dioxide, has seen a decrease in recent years, with 8

193 193 more digester gas used to produce power rather than flared than ever before. As for service affordability, sewer service charges are still significantly within the low burden rating established by the EPA. The Low Income Assistance Program saw an increase in the number of properties included in the program in FY12 and FY13, but a slight decrease in FY14. Water Resource Adequacy This attribute, reinterpreted as a measure of recycled water adequacy, shows that the District has sufficient short-term adequacy to meet customer needs. The current water supply of 2,000 acre-feet is slightly overcommitted, although some of the demand has yet to be developed, and this problem will be resolved with the current construction project to expand the recycled water filter capacity. Long term, there are more potential customers identified than water potentially available. Stakeholder Understanding and Support While the District has sought out customer input and engagement on various projects recently, there has not been an evaluation of stakeholder satisfaction or whether stakeholder input has been beneficial. The District s sewer service charges compare favorably to other provider s rates, but have dropped rapidly in the last five years indicating a potential inadequacy of the District s rates that should be watched. Media coverage for the District was adequate in terms of amount, and saw small increases in both the coverage tone and accuracy this past year. 9

194 194 Summary of Measures and Ratings More information about the specific measures and the rationale for the ratings can be found on the page number provided. Satisfactory Watch Unsatisfactory No Measure Attribute Measurement 2013 Rating 2014 Rating Page Product Quality Treatment for BOD and TSS Removal 15 Total Allowable BOD and TSS 15 Sanitary Sewer Overflows (SSOs) 15 Volume of Sewage Overflow 16 Plugged Main Lines 16 Recycled Water Service Availability 17 Recycled Water Reuse by Customers 17 Biosolids Put to Beneficial Reuse 18 Customer Service Service Calls for District Plugged Laterals 19 Service Call Response Time 19 Development Review Response Time 20 Customer Satisfaction 20 Employee and Experience Turnover Rate 21 Leadership Employee Satisfaction 22 Development Total Training Hours 22 Online Safety Training Hours 23 Succession Planning 23 Institutional Knowledge Capture 24 Operational Electricity Consumption by Source 25 Optimization Electricity Consumption Efficiency 25 Chemical Consumption 26 Financial Viability Revenue-to-Expenditure Ratio 27 Capital Expenses Compared to Operating 27 Expenses Debt Service Coverage Ratio 28 Financial Procedure Integrity 28 Bond Rating 29 Sewer Service Charges Compared to Inflation 29 Rates Based on Life-cycle Cost 29 Rate Stabilization Reserve 30 10

195 195 Satisfactory Watch Unsatisfactory No Measure Attribute Infrastructure Stability Operational Resiliency Community Sustainability Water Resource Adequacy Stakeholder Understanding & Support Measurement 2013 Rating 2014 Rating Page Asset Inventory 31 Sewer Main Condition Assessment 31 Renewal & Replacement of Assets 32 Sewer Main Renewal and Replacement 32 Lower Sewer Lateral Renewal and 32 Replacement Collection System Failure Rate 33 Plant Planned Maintenance Ratio 33 Sewer Main Line Cleaning 34 Collections Planned Maintenance Ratio 34 Pollution Prevention Inspections 34 Total Recordable Incident Rate 36 Lost Time Hours 36 Number of Insurance Claims 37 Severity of Insurance Claims 37 Experience Modification (XMOD) Rate 37 Emergency Response Plans in Place 38 Frequency of ERP trainings 38 Uptime for Cogeneration Engine 39 Uptime for Pumps at IPS 39 Power Resiliency 40 Critical Parts and Equipment Resiliency 40 Critical Staff Resiliency 41 Treatment Operations Resiliency 41 Watershed-based Infrastructure Planning 42 Green Infrastructure Approaches 42 Greenhouse Gas Emissions:Purchased Energy 43 Digester Gas Beneficial Reuse 44 SSC Bill Affordability 44 Low Income Billing Assistance 45 Short-term Water Supply Adequacy 46 Long-term Water Supply Adequacy 47 Stakeholder Consultation 48 Stakeholder Satisfaction 49 Internal Benefits from Stakeholder Input 49 Comparative Rate Rank 49 Media/Press Coverage 50 11

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199 199 EUM Attribute #1 PRODUCT QUALITY 1. Product Quality Regulatory Compliance Product Quality Regulatory Compliance measures the extent to which the District is in compliance with the Federal Water Pollution Control Act (a.k.a., the Clean Water Act), state statutes and the District s permit under the National Pollutant Discharge Elimination System (NPDES). Treatment for BOD and TSS Removal: The District is required under its NPDES permit to remove at least 85% of the biochemical oxygen demand (BOD) and total suspended solids (TSS) from the water received at the plant during the river discharge period (winter months). The chart shows the average monthly removal percentages for both BOD and TSS. The monthly average percentage removal must remain higher than 85% to stay in compliance with the permit. 100% 95% 90% 85% 80% Analysis: For all years reported here, the District has remained in compliance with this NPDES Permit requirement for the percentage removal of BOD and TSS. The District consistently removes over 90%, and regularly over 95% of these constituents from the influent during the months when the District discharges to the Napa River. 1/2005 1/2006 Removal of BOD and TSS % removed - monthly average 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 BOD TSS Min Total Allowable BOD and TSS: The District is required under its NPDES permit to remove biochemical oxygen demand (BOD) and total suspended solids (TSS) in its process so that the effluent to the river during the winter months does not exceed 30 mg/l of either. Analysis: For all years reported here, the District has remained in compliance with this NPDES Permit requirement for the total allowable BOD and TSS in its effluent discharge to the Napa River /2005 1/2006 BOD and TSS in Effluent mg/l discharged (winter only) 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 BOD TSS Max Sanitary Sewer Overflows (SSOs): The District s goal is to maintain the sewer collection system so that there are no SSOs. Especially important is to prevent overflows that reach a creek, river or other body of water, or overflows that reach a storm drain and 15

200 200 were not fully recovered, both of which are considered Category 1 SSOs. While the overall goal is to prevent all overflows, the operational goal of the District is to have fewer overflows than the industry average in California. Analysis: For the past several years, there have not been very many Category 1 SSOs in the collection system, and consistently fewer than the California state average. In 2014, there were an above average number of Category 1 SSOs in the District due primarily to the earthquake in August and a severe rainstorm in December. Volume of Sewage Overflow: It is the District s goal to prevent Sanitary Sewer Overflows. However, when an SSO occurs, the District strives to respond quickly to prevent as much spillage from reaching a body of water as possible. This measure is the volume of sewage spilled reaching surface water as a Category 1 SSO per 100 miles of sewer ,000 40,000 30,000 20,000 10,000 Category 1 Sanitary Sewer Overflows (SSOs) # of SSOs per 100 miles of sewer Analysis: The District has been very successful in keeping the 0 amount of Category 1 sewage spilled per 100 miles of sewer at a level significantly below the California state average. In 2014, there were higher than average spills reaching a body of water due primarily to overflows during the August earthquake and a severe storm in December NSD CA Average Gallons of Spilled Sewage # of gallons per 100 miles of sewer NSD CA Average Product Quality Service Delivery Product Quality Service Delivery assesses quality service based on District-established objectives and service level targets. It focuses on non-regulatory performance targets. Plugged Main Lines: This is the number of sewer mains that were plugged and needed immediate attention, but did not result in a Category 1 Sanitary Sewer Overflow (SSO) Plugged Main Lines # of plugged lines that did not result in a Category 1 SSO

201 201 Analysis: There has been a positive trend in this measure over the past few years, as the District has made increased investments and efforts toward preventive maintenance. Recycled Water Service Availability: This is the percentage of days from May 1 through October 31 that there is no interruption in recycled water delivery. Analysis: This data is available starting in In 2007, the system was down for 10% of the days between May 1 and October 100% 31. The availability increased to 99% the following year, with the 90% next two years at 100% availability during these dates. In 2011, the system was down for 4 80% days to repair a leak in a recycled water main line. From 2012 to 2014, there were no breaks in recycled water service availability. Recycled Water Service Availability % of time RW available to customers (May-Oct) Recycled Water Reuse by Customers: This is the percentage of recycled water created by the treatment plant during the months of May through October that were sold to customers, instead of being applied to spray fields. This is a measure of how much of the District s recycled water is being put to customer reuse. Analysis: From 2005 through 2008, the District increased its sales of recycled water by expanding its customer base. The years 2009 to the present saw declines from 2008 levels because of decreased recycled water use at Chardonnay Golf Course when it converted 9 holes to vineyard use. The 2010 and 2011 years were 100% 80% 60% 40% 20% 0% impacted by cool summers and wet springs. The 2012 calendar year was considered a typical weather year, while 2013 and 2014 were some of the driest years on record for Napa County. The District needs to maintain a steady rate of recycled water sales to ensure adequate storage in the ponds and avoid summer discharges to the Napa River. In 2014, the District was able to meet this requirement Recycled Water Customer Reuse % of RW sold to customers Goal - 60%

202 202 There are several development projects that have requested recycled water from the District, but those projects have not yet come on line. When they do, there will be sufficient customer demand to increase the percentage of recycled water reused by customers, and to increase the overall quantity of recycled water delivered. The current goal of 60% of recycled water used by customers equates to what s needed in a typical weather year for the District to meet customer demands and meet the District s nondischarge requirements. Biosolids Put to Beneficial Reuse: Percentage of biosolids that are applied to land that is seeded and harvested for use by livestock or associated use, based on dry tons applied to acres. Analysis: The District s current program includes the agricultural application of biosolids for beneficial reuse on District owned or leased land. All lands applied with biosolids in 2012 (175 acres), 2013 (179 acres) and 2014 (230 acres) were seeded for beneficial reuse, either for agricultural commodities or as sheep grazing land. Biosolids Put To Beneficial Reuse % of biosolids applied to seeded & harvested acres 100% 80% 60% 40% 20% 0%

203 203 EUM Attribute #2 CUSTOMER SERVICE 1. Customer Complaints Customer Complaints assesses the complaint rates experienced by the District. Currently, the District does not currently maintain records on customer complaints. Service Calls for District Plugged Laterals: The District uses the number of plugged laterals in the District s portion of the lateral as a proxy for determining customer complaints, as these problems lead to backups. The goal is to see a downward trend in this number. Analysis: There has been a steady trend toward fewer service calls that were due to plugs in the District s portion of the lateral. During the past several years, the District has focused on preventive maintenance, partially in an effort to reduce these backups. These efforts have a long-term focus, but it appears that the number of District plugged laterals has decreased as a result of these efforts Service Calls for District Plugged Laterals # of service calls Customer Service Delivery This is a measure of the District s own service level targets as they related to customer service. Service Call Response Time: The District maintains a goal of responding to service calls for sewer backups by arriving at the site of the backup within 30 minutes of the call. This measure shows the percentage of calls that were initially responded to within 30 minutes and the average response time. % response in 30 minutes 100% 80% 60% 40% 20% Service Call Response Time % of calls responded to within 30 minutes (blue line) average # of minutes to respond to calls (green column) Analysis: The District began collecting this data in 2010 and 2011 and could not be compiled for previous years from existing 0% 0 records. The measure was given a "satisfactory" rating as the four-year record shows the District meeting its goal in average response time, and meeting it for about 70% of all customers Average Response Time 19

204 204 Development Review Response Time: The District maintains a goal of completing review of development plans within 30 days of receipt of the plans. This chart shows the percentage of plans that were reviewed and returned within that goal. Analysis: Over the past four 80% years, the number of development 60% reviews have only been a fraction 40% of those received prior to the 20% beginning of the recession, allowing the District to meet its 0% goal of completing reviews within 30 days (97.5% in 2014), while maintaining the average number of days to review plans at just under 12. % Reviewed in 30 Days Development Review Response Time % of plans reviewed within 30 days (blue line) average # of days to review plans (green column) 100% Average Days per Review 3. Customer Satisfaction This is an overarching customer satisfaction measure based on requested customer feedback (surveys), not calls received or internal customer satisfaction service level commitments. Customer Satisfaction: This is the measure of how well District staff performed, according to the customer who was directly impacted by that work. Surveys were sent out for all plug-up calls and for any time the District conducted a lateral repair or installed a cleanout that affected private property. 100% 80% 60% 40% 20% 0% Plug-Up Calls % of Calls Displayed by Rating % Poor % Fair % Good % Excellent Analysis: The District started conducting these surveys in 2011, with the first full calendar year of data in The first chart is for interactions when the customer calls the District for service to clear a plugged sewer line. The second is for the installation of sewer cleanouts or lateral replacements, where the District initiates interaction and involves 100% 80% 60% 40% 20% 0% construction practices. Both measures show positively on the District in 2014, with 99.5% of plug-up surveys and 100% of cleanout or lateral repair surveys reporting that the District s service was either Excellent or Good Cleanouts or Lateral Repairs % with Rating % Poor % Fair % Good % Excellent

205 205 EUM Attribute #3 EMPLOYEE AND LEADERSHIP DEVELOPMENT 1. Employee Retention and Satisfaction This measure gauges the District s progress toward developing and maintaining a competent and stable workforce. Experience Turnover Rate: This is the percentage of years that retiring employees worked at the District compared to the total number of years of experience for all employees. It measures the amount of experience lost in any given year due to retirements at the District. Analysis: Most employees who leave employment from the District do so through retirement. Most retirements are known in advance and planned for. The experience turnover rate for is in line with expectations. There were no retirements in 2013 and one retirement in Experience Turnover Rate % of experience lost each year from retirements 10% 8% 6% 4% 2% 0% The experience turnover rate from retirements at the District is not a controllable measure, and as such this is not a performance measure as much as it is a data set that helps to inform whether there are trends in the workforce to which management needs to respond. Anticipated retirements for the next 5 years are as follows: Over the next five years, the District can expect to lose at least 20% of its workforce to retirements alone. 30% 20% 10% Eligible Retirements % of employees (cumulative) age 55 or over with at least 20 years of service 0%

206 206 Employee Satisfaction: The following charts show the response to three questions asked during employee surveys. These questions are designed to gauge employee satisfaction. The survey was conducted in 2010, 2011, and Analysis: Fall 2010 was the first time the District surveyed its employees on these three attributes. In Fall 2011 and 2014, the survey was repeated. From the survey results, it appears that employees feel valued and that they enjoy working at the District. There are a considerable number of employees who intend to look for work outside the District (8) or who neither agreed nor disagreed with the statement. In a follow up question in the 2014 survey, the majority of employees who said they intend to look for work stated they would do so to seek career advancement. 100% 80% 60% 40% 20% 0% 100% 80% 60% 40% 20% 0% 100% 80% 60% 40% 20% "I feel I am valued by my work unit." % of employees responding "agree" or "strongly agree" 2005 This measure increased its rating 0% from watch to satisfactory because of the overall results of the survey, and the follow up question regarding looking for work outside the District being related more to career advancement rather than any dissatisfaction with the District "I tell others that NSD is a great place in which to work." % of employees responding "agree" or "strongly agree" "I will look for work outside NSD in the next year." % of employees responding "disagree" or "strongly disagree" Management of Core Competencies This measure assesses the District s investment in and progress toward strengthening and maintaining employee core competencies. Total Training Hours: This is the total number of training hours provided to employees at the District. No Measure. 22

207 207 Analysis: It is the employee s responsibility to track hours necessary to maintain specific certifications. The District currently does not track total training hours by employee. A future goal of the District is to implement a system to track employee training. Online Safety Training Completion: This is the percentage of total online safety training class hours completed by staff, and the percentage that were completed prior to their due date. Analysis: The online safety program began in August 2006, 100% but performance data was not available until This measure 90% shows the completion rates and 80% on-time completion rates for online safety classes. The past two 70% years, considerable improvement 60% was made in the completion rate and on-time completion rates of these trainings, with over 99% of trainings completed on-time Online Safety Training Class Hours % of assignments completed % of on-time assignments Workforce Succession Preparedness This measure assesses the District s long-term workforce succession planning efforts to ensure critical skills and knowledge are retained and enhanced over time, particularly in light of anticipated retirement in future years. Focus is on preparing for workforce succession, including continued training and leadership development. Succession Planning: Percentage of key positions covered by long-term workforce succession plan. Seven (7) positions were identified as critical for the development of succession plans. The District has developed formal succession plans for each position and has completed the necessary cross training associated with these plans. Analysis: The District completed succession plans for the following positions: Plant Manager, Reclamation Director, Collection System Manager, Laboratory Supervisor, Human Resources Officer/Clerk of the Board, Senior Accountant and Safety, Training and Fleet Maintenance Officer. In addition to development of succession plans for the 7 most critical positions at the District, the District maintains other practices designed to capture institutional knowledge and maintain continuity during periods of staffing transition. The District has implemented the Operator III Training Program to increase operator knowledge and allow for the necessary skills to operate the plant s treatment processes and regulatory control on a day-to-day basis. The Plant Maintenance and Laboratory 23

208 208 Supervisors have also trained staff sufficiently to provide coverage in the event of vacancy. The Collection Department has a cross-training process to ensure that all employees know how to do every job and use all of the equipment in the department. Institutional Knowledge Capture: Percent of employees who believe the District is capturing critical institutional knowledge. In the Employee Survey, employees were asked to rate whether they disagree with the following statement, Efforts are being made at NSD to capture the critical institutional knowledge that may be held by one employee in order to reduce the risk of losing that knowledge all together should the employee leave. The chart shows the average rating by employees on a 1-t0-5 scale, where 1 is strongly disagree and 5 is strongly agree Analysis: Over the last four years, the District s actions in recording and retaining institutional knowledge have resulted in an increase in the belief by employees that meaningful efforts are being taken Institutional Knowledge Capture average rating by employees

209 209 EUM Attribute #4 OPERATIONAL OPTIMIZATION 1. Resource Optimization This measure examines resource use efficiency, including labor and supplies & services costs per unit of output. Electricity Consumption by Source: Electricity is one of the largest expenses in the treatment process. The treatment plant uses a cogeneration engine ( Cogen ) powered by captured and compressed biogas gas to create electricity. The goal is to generate as much electricity as possible from the Cogen system, to offset purchased electricity. This chart shows the total megawatt hours of electricity purchased, electricity produced by cogeneration, and the percentage of total electricity that came from cogeneration. Analysis: In 2014, the inner Dystor membrane used for biogas storage failed. Operations crews found a way to continue the operation of the Cogen engine during this several month period, allowing the District to continue to use most of the biogas it generated for the generation of electricity. The slight increase in purchased electricity and decreased Cogen Megawatt Hours (MW-h) 10,000 8,000 6,000 4,000 2,000 Electricity Consumed by Source in MW-h, and Cogeneration as a % of total electricity used MW-h Cogen 50% 40% 30% 20% 10% 0% power generation were from those periods at the point of failure and while the new membrane was installed. 0 MW-h Purchased PG&E electricity usage data in 2009 and 2010 is understated due to an error in the District s electricity meters. The usage data starting in 2011 is accurate. The percentage of electricity produced by the Cogen increased significantly in 2013 and continued into 2014, due to increased amounts of FOG accepted at the FOG Receiving Station. Cogen % Electricity Consumption Efficiency: This chart shows overall electricity efficiency by measuring the amount of electricity consumed per million gallons of wastewater effluent. Winter months (November-April) represent wastewater processed and discharged to the river. Summer (May-October) represents wastewater processed to recycled Megawatt Hours Electricity Consumed per Million Gallons Treated Winter # of Megawatt hours per MG Summer

210 210 water standards and either sold to customers or applied to spray fields. Analysis: Electricity consumption per million gallons treated has decreased at the plant compared to 10 years ago, although there has been a slight increase in summer months recently as recycled water demand has increased. The winter figures have a more direct relationship between electricity usage and gallons treated than the summer figures, as the amount of recycled water delivered is an outlying factor that impacts the ratio. Chemical Consumption: Chemicals are a significant cost in the wastewater treatment process. Two chemicals specifically make up a majority of the chemical budget sodium hypochlorite (HCS) and polymer. HCS is used to disinfect water and remove bacteria, while polymer is used to remove suspended solids and to dewater biosolids. Usage can fluctuate based on environmental conditions, the amount of wastewater processed and the type of processing (river discharge or recycled water production), so these have been represented using gallons of chemicals per million gallons processed for both the summer and winter seasons. Analysis: Generally, chemical consumption per million gallons treated has reduced for most chemicals, although there has been a recent uptick in the amount of sodium hypochlorite used due primarily to decreased flows from the drought and associated increases in loading concentrations. Polymer use will continue to decrease as the new dissolved air floatation (DAF) clarifier came on line in late 2014 replacing the flocculating clarifier (the DAF uses less polymer to process water from the ponds). Gallons Used Gallons Used HCS Used per Million Gallons Treated # of gallons per MG Summer Winter 2014 Polymer Used per Million Gallons Treated # of gallons per MG Summer Winter

211 211 EUM Attribute #5 FINANCIAL VIABILITY 1. Budget Management Effectiveness This measure includes commonly used financial performance indicators to show the short term health and long term financial trends of the District. Revenue-to-Expenditure Ratio: This ratio is total revenue from all sources divided by total expenditures, including debt service and capital, but excluding depreciation, minus 1. This ratio shows the annual impact to fund equity. Ratio below 0 means that there were more expenses than revenues in that year, while a number above 0 means there was more revenue than expenditures. The ratio can fluctuate above and below 0, depending on the financial plan for the year, but a long-term trend of expenditures greater than revenues (a ratio of less than 0) is problematic and indicative that reserves are being used to finance the ongoing expenses of the District and that a course correction is likely. Analysis: If not for the sale of land in FY05, generating $2.8 million in revenue, FY05 would have had a ratio of The three years of 15% sewer service charge increases from FY07 to FY09 are responsible for the stabilizing trend seen through FY10. In FY13 there was a significant increase due primarily to the inflow of proceeds from debt, with corresponding debt service timing causing a temporary imbalance toward the positive. FY14 saw a decrease, as the debt proceeds were used to pay for capital projects. FY05 FY06 Revenue-to-Expenditure Ratio revenues divided by expenditures FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Capital Expenses Compared to Operating Expenses: Capital expenses as a percentage of operating expenses (less depreciation) is a measure that has meaning only when compared against itself over time, or compared to other similar agencies. An upward trend is indicative of an Capital Expenses as % of Operating Expenses expansion period or a period focused on renewal and 200% replacement of capital assets, 150% while a downward trend is indicative of decreased growth or 100% less investment in system renewal 50% and replacement. Analysis: More study is necessary to determine what an appropriate 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 27

212 212 baseline or target number should be. Much of the 10 year CIP is front loaded in the first years due to the construction of bond-funded projects and to construct the MST and LCWD recycled water projects that are being financed by other agencies, so this percentage should significantly exceed the norm through FY15, and then decrease in future years. Debt Service Coverage Ratio: The District is required by its debt covenants and financial policies to maintain a debt service coverage ratio of at least 1.25, or 125%. The calculation is made by adding all revenue sources and subtracting all operating expenses (excluding depreciation) to get net revenue. The net revenue (green bars) must be more than 125% (red line) of the sum of all debt service payments. Analysis: The District has consistently maintained a debt service coverage ratio higher than the 125% minimum requirement. This number is evaluated during each budget development and adoption process to ensure that this covenant is maintained. With the issuance of new debt in FY13, the ratio decreased, but stayed higher than the projected ratio of 200%. 400% 300% 200% 100% 0% Debt Service Coverage Ratio net revenues divided by debt service (125% minimum) The ratio should grow over time as operating revenues increase while debt service remains flat. FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY Financial Procedure Integrity These are questions that gauge the presence of best practices and internal processes to ensure a high level of financial management integrity. Does the District have financial accounting policies and procedures? (Y/N) Yes. Comprehensive policies were adopted in February 2007, and revised and updated in May 2010 and May Are the financial results and internal controls of the District audited annually? (Y/N) Yes. The District is required to conduct an annual audit both by its bond covenants and by its accounting policies. Have the number of control deficiencies and material weaknesses been reduced from previous audits? (Y/N) 28

213 213 Yes. The number of control deficiencies noted by the financial auditors in their management letters have decreased from two in FY08 to one in FY09 and none in the last five fiscal years. 3. Bond Rating Bond ratings are a general indicator of financial viability; however the rating is not entirely in the District s control as ratings also take into consideration the condition of the local economy and the condition of the capital markets. A higher bond rating is desirable and can be viewed as one of several factors of financial health. What is the District s bond rating, and has it changed recently? AA- (S&P, 2009 and 2012) Analysis: When the District refinanced most of its long term debt in 2009, Standard & Poor s upgraded the District from A+ to AA- for its fixed and variable rate revenue bonds. In December 2012, S&P confirmed the rating of AA-/Stable Outlook for the issuance of new long term debt. AA- rating means that the District s debt is considered High Grade/High Quality in the bond market. 4. Rate Adequacy These measures helps the District consider its sewer service rates relative to factors such as external economic trends, short-term financial management, and long-term financial health. Sewer Service Charges Compared to Inflation: The annual increase in sewer service charges (SSC) compared with the Consumer Price Index for all Urban Consumers (CPI- U) in the San Francisco/Oakland/San Jose area. Analysis: There were no SSC increases from FY02 through FY06. In FY07, the District began the first of three 15% increases to bring the rate up to meet operational demands and to get the rate back in line with inflationary impacts. For the last five fiscal years, the rate increased with CPI. 15% 10% 5% 0% Sewer Service Charge Compared to Inflation % of change from prior year FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Forecasted Rate Compared to Calculated Full Life-Cycle Cost of Service Rate: The calculated sewer service charge rate, based on renewal and replacement of 3% of depreciable assets, is forecast out five years by the District as part of the budget development and long-term forecast process. This life-cycle cost of service rate is 29

214 214 compared against the sewer service charge forecasted rate based on inflation assumptions. The District s rate based on annual inflationary increases should be close to 100% of the rate calculated using full life-cycle cost of service. Analysis: Sewer Service Charge rates are set based on changes to the CPI. However, as part of the budget development process, the District also calculates what the rate should be based on life-cycle cost of service. This analysis is projected over the next five fiscal years. The calculations show that the calculated rate based on life cycle cost of service and the 110% 100% 90% projected rate based on projected CPI increase are similar, although the estimated lifecycle cost of service rate is higher. The ratio appears to be stable and set to improve slightly over the next five years, earning it a satisfactory rating, although the rating assumes that a 3% of depreciable assets standard is appropriate. FY15 Cost of Service-based Rates forecasted rate as % of cost of service rate FY16 FY17 FY18 FY19 Does the District maintain a rate stabilization reserve to sustain operations during cycles of revenue fluctuation, in addition to operating reserves? (Y/N) Reserves for rate stabilization and revenue fluctuation are not necessary at this time. The District maintains adequate reserves, and rate stabilization is not an issue given the methodology for revenue collection. Analysis: Sewer service charges constitute over 85% of District operating revenues, with the significant majority of that revenue coming from residential customers. SSCs are collected as an assessment on the property tax statements, and the District has committed in Ordinance to allow for increases to the SSC rate by CPI. These structural factors combine to provide adequate revenue stability for the District. The operating and cash flow reserves, as established in the District s financial policies, are fully funded and sufficient to cover timing fluctuations in revenue collection without impacting operational readiness. 30

215 215 EUM Attribute #6 INFRASTRUCTURE STABILITY 1. Asset Inventory and Condition Assessment This measure gauges the District s efforts to assess assets and asset conditions, as a first step toward building a comprehensive asset management program. Asset Inventory: This is the percent of the District s critical assets that have been inventoried within the past 5-10 years. Inventory is maintained with 2 asset management systems one for Collections (Hansen) and one for the plant (MP2). Both systems track assets and condition assessments. Analysis: The District has not conducted a physical inventory of its assets in the past 5 years, although there are several systems at the District that keep inventory of most of the District s assets. The Hansen database is updated regularly as repair work and condition assessment CATV work is completed. The MP2 database is populated with major assets, but still needs to be completed. All capital assets are also tracked in the Fixed Asset database used for financial reporting. Sewer Main Condition Assessment: This graph shows the percent of sewer main lines that are video inspected each year and assessed for condition and maintenance problems. Analysis: The District has consistently met or come close to its goal of 10% annually. The 2013 drop in assessments was due to fewer people than usual (injuries and position vacancies) able to complete this task. This problem was partially resolved in 2014, with the department receiving assistance from another agency to conduct condition assessments after the earthquake in % 10% 5% 0% 2005 Main Line Condition Assessment % of sewer main lines video inspected each year

216 Asset Renewal / Replacement This measure assesses asset renewal/replacement rates over time. The measure should include targets, based on the District s determination of acceptable risk for different asset classes. Renewal & Replacement Expenses: This graph shows the amount actually spent toward the renewal or replacement of capital assets divided by the total net worth of assets, shown as a percent. Analysis: The District should be replacing between 2% and 4% of 9% the value of its assets, on average, 8% 7% through renewal and replacement 6% 5% of those assets. The District has 4% 4% Goal done well in eight of the past 10 3% 2% Min 2% years. The ratio is anticipated to 1% 0% stay above the goal into FY15 as the IPS and Recycled Water Phase 1 projects are completed, and then fall back into the within the target range in future years. Renewal & Replacement of Assets amount spent each year as a % of net worth of assets FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Sewer Main Renewal & Replacement: This graph shows the percent of sewer mains maintained by the District that have been replaced annually. Analysis: The District started keeping track of this metric in The District records the 2.0% mains as being replaced or rehabilitated only at the end of a 1.5% capital project. The 2014 data 1.0% represents projects completed in 0.5% the year, regardless of the year they were started. The District 0.0% needs to develop a longer track record and an internal goal to determine whether it is meeting acceptable performance expectations Sewer Main Renewal & Replacement % of mains replaced or rehabilitated Lower Sewer Lateral Renewal & Replacement: This graph shows the number of lower sewer laterals maintained by the District that have been replaced annually by the Collection Department, understanding that lower laterals are also replaced when sewer mains are replaced as part of capital improvement projects. The aspirational goal is for the Collection Department to rehabilitate or replace at least 60 lower laterals annually. Analysis: The District started keeping track of this metric in 2010 when it purchased the ability to line lower laterals itself, rather than contracting out. The District has 32

217 217 established an aspirational goal of rehabilitating or replacing 60 lower laterals annually. The District has been making steady progress toward meeting the goal, and is expected to reach it in the next calendar year, based on some enhanced in methodology Lower Lateral Renewal & Replacement # of laterals replaced or rehabilitated Goal Collection System Integrity This measure examines the frequency of collection system failures. When tracked over time, the District can evaluate whether the rate is increasing, stable or decreasing. Collection System Failure Rate: A collection system failure is when a portion of sewer pipe collapses and flows become obstructed or uncontained from that collapse, rather than being caused by sediment, grease, roots or some other foreign object Collection System Failure Rate # of collapsed sewer mains 0 Analysis: There have been only three failures in the collection system in the past 10 years. The failure in 2014 was related to the August 2014 earthquake. The District s record of failure rates is outstanding Planned Maintenance Planned maintenance (PM) includes both preventive and predictive maintenance, and is performed according to a predetermined schedule rather than in response to failure. Predictive maintenance is initiated when signals indicate that maintenance is due. All other maintenance is categorized as corrective or reactive. Plant Planned Maintenance Ratio: There are two numbers here. The first is the percentage of the number of work orders (WOs) assigned to planned maintenance at the treatment plant divided by the total number of WOs for any maintenance activity (planned and corrective). The second is the same 100% 80% 60% 40% 20% 0% Plant Planned Maintenance Ratio PM divided by total maintenance for WOs and Hours WOs Hours

218 218 ratio, but uses the total number of hours worked instead of the number of work orders. Analysis: The plant has been able to maintain a relatively consistent ratio of work orders, at about 80% on preventive maintenance activities, and 20% on corrective maintenance activities. The ratio for hours is lower, as corrective maintenance items tend to take more time to complete than performing preventive maintenance. Sewer Main Line Cleaning: This chart shows the percentage of sewer main lines cleaned during the year, compared to the District s goal of 40% cleaned annually. Analysis: Over the past decade, the District has increased its efforts in preventive maintenance and cleaning of sewer mains, with the goal of cleaning the equivalent of 40% of its sewer mains every year. The District has met this goal for the last seven years. 60% 50% 40% 30% 20% 10% 0% Sewer Main Line Cleaning % of line cleaned each year Collections Planned Maintenance Ratio by Hours: This is the total number of staff hours spent on planned maintenance in the collection system divided by the total number of hours spent doing any maintenance activity (planned and corrective). Numbers closer to 100% means that the focus is on planned maintenance activities, rather than responding to emergency repairs. Analysis: The collection system has consistently maintained a very high ratio of planned maintenance to total maintenance, both for the number of work orders and for the number of hours worked. 100% 80% 60% 40% 20% 0% Collections Planned Maintenance Ratio PM divided by total maintenance for WOs and Hours WOs Hours Pollution Prevention Inspections: Pollution prevention inspections ensure that restaurants and other Food Service Establishments (FSEs) are properly maintaining their grease interceptors and following Best Management Practices. Properly maintaining this equipment results in fewer corrective maintenance problems in the collections system. The goal is to inspect every FSE with a grease trap or interceptor at least once per year. 34

219 219 Analysis: This program began in Number of Pollution Prevention Inspections In 2011, the Board adopted % of FSEs inspected new Best Management Practices Goal 100% (BMPs) for fats, oil and grease management by food service 75% establishments (FSEs). In 2012, 50% the District increased its 25% inspections for compliance with the District s Sewer Use Ordinance 0% and with the BMPs. With concerted effort applied in this area, every restaurant with a grease trap or interceptor was inspected in 2013 and

220 220 EUM Attribute #7 OPERATIONAL RESILIENCY 1. Recordable Incidents of Injury or Illness Incidence rates can be used to show the relative level of injuries and illnesses and help determine problem areas and progress in preventing work-related injuries and illnesses. Total Recordable Incidence Rate: This is the number of work-related injuries and illnesses times 200,000 divided by the number of employee hours worked. This is a standard formula used by OSHA to normalize data. The 200,000 represents 100 employees working 40 hours per week, 50 weeks per year, and provides for the comparability of incidence rates. Analysis: The District is compared here to the Utility: Sewage Treatment Facility industry category as reported by the U.S. Bureau of Labor Statistics. The District s incidence rate is comparable to the national average. There were no recordable incidents in 2014 in the District Total Recordable Incidence Rate NSD Industry 2014 Lost Time Hours: This is the number of hours that a worker could not work due to a work-related injury or illness. Lost time begins to accrue once an employee misses one full day of work. Analysis: The District did not Lost Time Hours have a lost time accident from 1, through The District continues to have exceptionally 800 low lost time due to workplace 600 injury or illness. In 2011, there 400 were 2 lost time injury. In 2012, 200 there was 1 lost time injury. The injury resulted in significant lost time in The 2014 hours are related to the same injury in While the increases from 2012 to 2014 appear to be significant, the fact that they are related to one incident in 2012 has a mitigating impact on the rating

221 Insurance Claims These measures examine the number, type and severity of insurance claims to understand insurance coverage strength or vulnerability. Number of Insurance Claims: This is the number of general liability and automobile liability claims per 200,000 hours worked. Analysis: After a period of relatively constant rate of insurance claims per year, the District has seen a significant increase in the past three years, from one claim in 2010 to seven claims in Management responded with a safety stand down in October 2013, to call attention to the increased safety incidents and refocus District employees on safe working practices. The total number of claims in 2014 has fallen to 4, which may represent a reversing of the trend seen in recent years. While the number of claims has increased, the severity of claims during these years (see below) was not significant. FY05 Insurance Claims # of claims per 200,000 hours of work FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Severity of Insurance Claims: This is the total amount paid out for general liability and automobile liability claims per 200,000 hours worked. Analysis: With the exception of one year in the past 10 years, the District has had a relatively low average cost per claim. This represents a good trend for the District. $150,000 $100,000 $50,000 Severity of Insurance Claims cost of claims per 200,000 hours of work Experience Modification (XMOD) Rate: This is the rate used by the workers compensation insurance company to determine the District s workers compensation experience. One hundred is considered the industry average. Numbers over 100 mean that the District has more claims than the industry average, while numbers below 100 are better than the average. CSRMA is the insurance $0 FY05 FY05 FY06 FY06 FY07 FY07 FY08 FY08 FY09 FY09 FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13 FY14 FY14 Experience Modification (XMOD) Rate (lower # is better) District Industry Avg CSRMA Avg 37

222 222 pool the District is in for Workers Compensation claims and includes only sanitation districts in the state of California. Analysis: Through the implementation of several safety programs at the District, the District s XMOD rate has significantly dropped over the years. The District has now consistently performed better than the industry average and the CSRMA average for several years. 3. Risk Assessment and Response Preparedness This measure asks whether the District has assessed its all-hazards (natural and humancaused) vulnerabilities and risks and made corresponding plans for critical needs. Are Emergency Response Plans in place for the following? (Y/N) o Treatment Plant: Yes o Lift Stations: Yes o Collections: Yes Analysis: Emergency Response Plans for the plant and lift stations are in place, and are trained and practiced regularly. The Collection System staff has plans and equipment for system bypasses. Frequency of Emergency Response Plan (ERP) Trainings: This is the number of emergency response trainings conducted by the treatment plant per year. Analysis: The Plant trains on and practices its Emergency Response Plan quarterly. The plant has also started the practice of training Collection System, Administration and Engineering staff once per year on the plant s ERP. In 2013, the summer quarter training was not conducted because of the move of the Administration, Engineering and ERP Trainings # of trainings at the treatment plant per year Collection System staff to their new locations adjacent to the plant. In lieu of quarterly training, the time was spent integrating these departments into the Emergency Response Plan at the plant. In 2014, trainings were again conducted quarterly Ongoing Operational Resiliency This measure assessed the District s operational reliability during ongoing or routine operations. 38

223 223 Uptime for Cogeneration Engine: The cogeneration engine ( Cogen ) is critical equipment to reduce purchased electricity demand. The use of this equipment also reduced the need to operate the boiler. Increased boiler operation would require extensive and costly upgrades to the boiler to meet air quality standards. Analysis: In April 2012, the Cogen was offline for 28 days while it was rebuilt as part of scheduled maintenance. Since 2009, the District has maintained the Cogen at an optimal level to provide for significant uptime. With increased FOG (fats, oils and grease) deliveries at the FOG receiving station in recent years, more biogas has been produced 100% 75% 50% 25% 0% allowing for even greater operating efficiencies for the Cogen unit. The Dystor membrane over the day storage tank was damaged in late 2014, but staff was able to continue to capture biogas for use in producing energy Cogeneration Engine Uptime % of time engine is available Uptime for Pumps at Influent Pump Station: There are three pumps at the Influent Pump Station (IPS), the pump station that lifts the sewage up from the collection system and into the plant Headworks. All three pumps at IPS are necessary during significant storm events to handle the high flow volumes. Uptime is defined as the percentage of days that all three pumps are operational and in service. Analysis: VFD replacement parts have been particularly difficult to acquire for these pumps, as they must be ordered directly from Italy. In previous years, staff stockpiled some of the more difficult parts to acquire, resulting in several failures being fixed within a week of the breakdown. In 2011, the #1 pump was down for 122 days due to 2 different 100% 90% 80% 70% 60% 2005 events that caused catastrophic failures, and there were significant delays in sourcing parts for the repairs. In 2012, Pump #1 was down for 10 days and Pump #3 was down for 59 days. In 2013, Pump #2 was down for 76 days. Construction on the IPS replacement starting in late 2013 and is expected to be completed by the end of summer The rating was upgraded from "unsatisfactory" to "watch" based on the district's ability to maintain significant uptime in IPS Pumps - Uptime % of time 3 pumps are available (excludes planned maintenance)

224 Operational Resiliency Under Emergency Conditions This measure assesses the operational preparedness and expected responsiveness in critical areas under emergency conditions. Power Resiliency: This is the number of hours that backup power is available at the treatment plant (including the Influent Pump Station) and at the other three pump stations in the collections system. Treatment Plant West Napa PS Riverpark PS Stonecrest PS 23.5 hours 20.5 hours 40.0 hours 47.5 hours Analysis: These times indicate how long the facilities could operate during peak pumping without electricity from the grid and without additional deliveries of diesel fuel for the generators. During power outages longer than 20 hours, staff would be required to refuel the generator at West Napa Pump Station. Critical Parts and Equipment Resiliency: This is a measure or evaluation of lead times for the repair or replacement of operationally critical parts or equipment. o Influent Pump Station (IPS) The pumps at IPS are the most critical equipment at the plant. Other components of the process could be down and there is sufficient redundancy in processes or alternatives available to manage until repairs are made. But during severe storm events, all three pumps at IPS are needed to manage the influent, either into the plant or into the ponds. To consider IPS resilient, the station should have sufficient firm capacity, meaning that the station could handle all of the influent during high flow events, even if the largest of the three pumps were to be offline. IPS does not have firm capacity to meet the normal high flow events, so this measure has been rated as unsatisfactory. Also, as noted in the prior measurement Ongoing Operational Resiliency, the inability to get replacement parts for repairs in a timely fashion causes longer than acceptable down time periods. To mitigate the firm capacity problem, the District maintains two companies on 24- hour call notice to assist with pump repairs, if needed. Additionally, the District has in stock some of the critical electrical components of the pumps. To assist resiliency further, the District upgraded the soft starts for the variable frequency drives (VFDs), so that even in the event of VFD failure, the soft starts will run the pumps. To correct this problem for the long term, the District is currently constructing a replacement for the IPS to address both the firm capacity and the pump resiliency issues. Construction of the new OPS will be completed in o Backup Power Plant backup generators are tested two (2) hours every month, with preventive maintenance performed annually. In response to some problems in the 40

225 225 high voltage distribution system a few years back, the District performs annual preventive maintenance on the high voltage distribution system and has implement some upgrades/redundancies to avoid future failures. Critical Staff Resiliency: This is a measure of the ability for backup staff to cover critical operations and maintenance positions. o Collections: All collection system workers are cross trained on tasks and equipment. Regular tasks are rotated to ensure continued familiarity with all tasks during emergency events. Of the ten field workers, seven are on the standby rotation. o Plant Operations, Maintenance and Laboratory: All critical staff positions have backup staff trained to complete all required tasks of that position, and supervisors are trained to complete all tasks within their work unit. The Plant Manager position has limited coverage by the Operations Supervisor. Analysis: There is significant cross training for critical operations and maintenance positions to ensure adequate coverage with the appropriate skills, experiences and certifications. Treatment Operations Resiliency: This measure is the minimum daily demand that can be met with the treatment plant offline. Minimum daily demand is defined as the average daily demand for the lowest production month of the year. 88 days of capacity Analysis: The ponds provide sufficient storage should the plant be unable to produce water with the capacity of storage being dependent on the time of year. At the beginning of the summer season, the ponds are at the lowest level and at an influent flow at 7 MGD, there is 88 days of capacity, assuming there is no demand for recycled water from customers or reclamation that could extend that time horizon. At the end of summer, and at other times during the year, the pond capacity is less. 41

226 226 EUM Attribute #8 COMMUNITY SUSTAINABILITY 1. Watershed-based Infrastructure Planning This measure addresses the District s efforts to consider watershed-based approaches when making management decisions affecting infrastructure planning and investment options. Does the utility employ alternative, watershed-based approaches to align infrastructure decisions with overall watershed goals and potentially reduce infrastructure costs? (Y/N) Yes. Analysis: The District is investing in recycled water infrastructure greater than is necessary to meet the current needs of its ratepayers to avoid summer river discharge. This infrastructure has been directed toward locations within the watershed that are at risk of significant groundwater depletion. 2. Green Infrastructure Green infrastructure includes both the built and natural/non-built environment. This measure assesses the extent to which the District promotes or engages in practices that protect natural resources and the environment. Has the District explored green infrastructure approaches and opportunities that are aligned with the District s mandate, goals and objectives and community interests? (Y/N) Yes 42 Analysis: The District has implemented the following programs or practices: o Recycled Water Delivery sold to customers to offset the use of groundwater or city-provided potable water for irrigation. o Toilet Rebate Program to promote reduced potable water consumption. o Clothes Washer Rebate Program to encourage consumers to purchase appliances that use less potable water. o Regional Trails Support work cooperatively with regional trail designers and advocates to connect a non-motorized multi-modal trail segment adjacent to the treatment plant. o Pharmaceutical Disposal Program works with local clinics to encourage proper disposal of medications. o Fats, Oils and Grease (FOG) Receiving Station accept grease from food service establishment grease interceptors, reducing the need to truck this waste to Oakland, and converting the waste into biogas that can be used to generate electricity.

227 227 Does the District have procedures that incorporate green infrastructure approaches and performance into new infrastructure investments? (Y/N) Yes Analysis: The District has implemented the following programs or practices: o Green Building the new Administration/Engineering building and corporation years will incorporate green features and will comply with the new green building code. o Alternative Energy Production the District has studied ways to use the plant s resources (waste products, land) for the generation of alternative energy sources (methane, solar, wind, etc.). In 2012, the District completed its Fats, Oil and Grease (FOG) Receiving Station that will result in the District generating on its own up to half of its electricity needs. Additional projects are being evaluated, and the District will implement those recommendations that have sufficient return on investment or cost savings. o Lateral Lining System the District started using a trenchless system for lining laterals, which is used in lieu of digging trenches for the repair and replacement of laterals. This process reduces waste through reusing existing pipe rather than disposal, and reduces the use of asphalt, cement and rock to backfill the trench. There is also less diesel emissions from reduced backhoe and dump truck use. o Pipe Bursting and Cured-in-Place Pipe (CIPP) Lining the District has developed a preference for pipe bursting or CIPP lining to replace or rehabilitate sewer mains, wherever feasible. These processes eliminate most of the trenching required, thus reducing landfill waste, reducing the use of rock, cement and asphalt to backfill, and reducing diesel emissions from associated equipment. 3. Greenhouse Gas Emissions This measure is designed to evaluate how the District s operations impact greenhouse gas (GHG) emissions, and whether those emissions are increasing or decreasing over time. Purchased Energy: One source of greenhouse gas emissions is the generation of power. The goal of the District is to maximize its ability to produce its own heat and electricity and reduce the amount of energy that it purchases. The chart shows the amount of energy purchased from electricity, natural gas, fuel oil and propane, converted to kbtu equivalents. Analysis: The District started collecting this information in There is insufficient data to determine a baseline for this Millions Purchased Energy kbtu equivalent of purchased energy

228 228 measurement. In 2015, the District is planning to install solar panels that will reduce the amount of purchased energy. Digester Gas Beneficial Reuse: Biogas (predominantly methane) is a natural byproduct of anaerobic digestion and a greenhouse gas. By using the biogas as a fuel source to generate electricity, the District is reducing the exhaust of methane into the atmosphere (either directly or through flaring the gas). This is a measure of the percentage of digester gas that is used as fuel in the cogeneration engine to create electricity and heat, as opposed to flaring the biogas. Analysis: One goal of the District is to decrease the amount of digester gas flared (no beneficial reuse) and to increase the use of digester gas for electricity consumption through its cogeneration engine (beneficial reuse). Increased use of digester gas and decreased use of natural gas and purchased electricity will result in a net decrease in CO 2 100% 80% 60% 40% 20% 0% Digester Gas - Beneficial Reuse % of digester gas run through cogeneration engine 2005 emissions. The data shows a positive trend in putting the digester gas to beneficial reuse, with over 98% of digester gas being used in the cogeneration engine in In 2014, there was more gas flared (approximately 5%), which is impressive as in 2014, the dystor gas cover was significantly damaged Service Affordability Wastewater service affordability looks at community members ability to pay for sewer services. The District must balance keeping sewer service affordable while ensuring the rates needed for long-term infrastructure and financial integrity. Sewer Service Charge Bill Affordability: Affordability is subjective. However, tracked over time, the District can evaluate whether the sewer service charges (SSCs) are becoming more or less affordable as compared to median household incomes (MHI) for the Napa County, using U.S. Census Bureau data. The U.S. EPA s 1997 Financial Capability Assessment established that communities with sewer charges between 0% and 1% of MHI have a low financial burden, between 1% and 2% of MHI have a medium burden, 3.00% 2.00% 1.00% 0.00% Affordability of Sewer Service Charges (SSCs) SSCs as a % of median household income (lower is better) FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 High Medium Low 44

229 229 and over 2% as having a high burden. Analysis: The SSC as a percentage of Median Household Income (MHI) went up from FY07 to FY09, as expected, given the 15% annual fee increases during this time. The SSC as a ratio of MHI has remained steady for the past five years at a rate well within the low financial burden range. Low Income Billing Assistance: This measures the number of households that are enrolled in the District s Low Income Assistance Program for annual sewer service charges. The number of individual properties in the program is graphed (green bars), as well as the number of Sewer Service Units (SSU) that those properties represent (blue line). These numbers are different, as there may be several low income housing units situated on a single property or tax lot. For example, a multi-family apartment complex that has 10 affordable housing units in it would count as 1 property and 10 SSUs in the chart. Analysis: This program began in FY07; at the same time the District began a process to increase sewer service charges by 15% per year for three years. In FY14, the program provided a reduction of $ (28.2%) per household from the annual charges ($457.92). As anticipated with the current economic climate, the number of properties partaking in this # of properties program increased from FY12 through FY14 from prior numbers. As the economy improves, it is expected to see these numbers fall somewhat. 0 Low Income Assistance Program # of properties (green bar) and # of SSU (blue line) FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY # of SSU 45

230 230 EUM Attribute #9 WATER RESOURCE ADEQUACY 1. Water Supply Adequacy This measure is designed in the Effective Utility Management framework for potable water suppliers, and assesses short-term and long-term water supply adequacy, and related longterm supply considerations. The District has chosen to modify this attribute to refer to recycled water supply adequacy, to measure the short-term availability and long-term demands on recycled water and the ability of the District to meet those demands. Short-term Recycled Water Supply Adequacy: This chart compares three things: 1) the amount of recycled water that the District could reliably provide during the summer months for irrigation purposes, 2) how much it did produce for recycled water customers and 3) how much it produced for spray field disposal. Analysis: Demand by recycled water customers is approximately between 850 and 1,400 acre-feet per year, depending on weather and irrigation needs. With the District able to produce reliably approximately 2,000 acre-feet of recycled water per year during the irrigation season, there is sufficient recycled water supply for its current customers. 2,500 2,000 1,500 1, Recycled Water Supply Adequacy acre-feet of recycled water Customers Spray Fields Reliably Available

231 231 Long-term Recycled Water Supply Adequacy: This table shows the current and potential future demands on recycled water, in acre-feet, for a typical weather year. Current Recycled Water Supply: 2,000 Acre-feet Estimated Per Board Demand Policy Existing Uses Existing RW Customers 1,200 1,400 District Use Kennedy Park & Napa Valley College 85 (incl. above) Existing Commitments Montelcino Golf Course Valley Gate Vineyards Kirkland Ranch 15 (incl. above) Napa State Hospital Stanly Ranch/St. Regis Infill-Industrial Areas MST Area Los Carneros WD Subtotal Existing Uses & Commitments 3,235 3,700 acre-feet Recycled Water Surplus / (Deficit) (1,235) (1,700) acre-feet Current and Planned Recycled Water Supply: 3,700 Acre-feet Existing uses and Commitments 3,235 3,700 Other Possible Uses Los Carneros Water District 1,150 1,150 MST Area Suscol Mountain Vineyard Subtotal Other Possible Areas 1,500 1,300 acre-feet Total Potential Uses 4,735 5,000 acre-feet Current and Planned RW Surplus / (Deficit) (1,035) (1,300) acre-feet Analysis: If all of the existing commitments were to complete development or transition to recycled water, the District would be in danger of not meeting its current recycled water commitments. To meet the projected long-term recycled water demand, the District is currently constructing an expansion to its recycled water production system. The expanded system will produce enough water for the existing uses and commitments per Board policy, but will be inadequate to meet all of the possible future user needs. Additional storage sites for recycled water would most likely be needed to provide for the projected long-term demand. 47

232 232 EUM Attribute #10 STAKEHOLDER UNDERSTANDING & SUPPORT 1. Stakeholder Consultation This measure addresses the District s actions to reach out to and consult with stakeholders about District matters, including the District s goals, objectives and management decisions. Does the District identify stakeholders, conduct outreach, and actively consult with stakeholders about matters? (Y/N) Yes. Analysis: The District has consulted stakeholders and the general public on the following projects: o Capacity Charge Methodology (2014) three public meetings and presentations to specific individuals on a study recommending changes to the methodologies used for calculating capacity charges for commercial buildings, restaurants and industrial users. o Recycled Water User Agreements (2014) Public meeting with current and future recycled water users, seeking input on the proposed new recycled water user agreements. o Winery Industrial User Permits (2013) public meetings and presentations to the Vintners Association and Chamber of Commerce on efforts to bring unpermitted wineries into the Industrial User program. o MST Recycled Water Pipeline (2012 and 2013) partnered with the County in their outreach efforts associated with the new recycled water pipeline in the MST area. o Recycled Water Rate Policy (2011) held public meetings and small meetings with interested stakeholders regarding the methodology and rate structure for recycled water rates. o Recycled Water Policy (2010) requesting written feedback from stakeholders, inviting stakeholders to present views to Board, presentation to Chamber of Commerce, soliciting feedback from general public via press release and website comment form. o Capacity Charges Increase (2009, 2010) meetings with city staff, residential and commercial developers, and building industry association; invitations to present views to Board, presentation to Chamber of Commerce. 48

233 Stakeholder Satisfaction This measure addresses stakeholder perceptions of the District. Possible calculations of stakeholder satisfaction include overall satisfaction surveys, or message recollection for outreach programs. The District currently does not measure stakeholder satisfaction. 3. Internal Benefits from Stakeholder Input This measure addresses the value District employees believe stakeholder engagement has provided to the District s projects and activities. Measurement by the District could focus on surveying District employees running projects that have stakeholder involvement. The District currently does not measure the internal benefits of stakeholder input. 4. Comparative Rate Rank This measure depicts how the District s sewer service charge compares to similar service providers in the region (i.e., local area wastewater providers with treatment and collection systems). Comparative Rate Rank: This measure takes the District s sewer service charge (SSC) and divides it by the average SSC for comparable wastewater providers in the region. A number over 100% means the District s rate is higher than the area average, while less than 100% means the District s rate is lower than the area average. 120% 100% 80% 60% FY05 Comparative Rate Rank for SSC District rate as % of average rate FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Analysis: The three years of 15% increases from FY 07 to FY09 saw the District return to match the regional average SSC. Since then, other agencies have increased their SSCs at rates greater than CPI, resulting in NSD s rate being lower than the regional average. While a lower than average rate is beneficial to rate payers, it may also be an $1,200 $1,000 $800 $600 $400 $200 Average Rate Comparison 49

234 234 indication that the rate is not keeping up with operational costs, maintenance demands and the necessary capital improvements of the District. The rapid drop from 100% to 74% of the average resulted in the watch rating. 5. Media/Press Coverage This measure captures media portrayal of the District in terms of awareness, accuracy and tone. Amount of Coverage: This is the total number of Napa Valley Register articles concerning the District, per year. Analysis: The spikes in 2006 and 2011 were due to hearings regarding sewer service charge increases that are required under California Proposition 218, which are required at least every 5 years. The increase in articles in 2013 was partially due to the MST recycled water pipeline project. In 2014, there was a significant number of articles about the management of winery waste. In the last four years, there has been a concerted outreach effort to increase general interest stories about the District. Media Coverage Tone: this is the percent of newspaper articles, editorials or letters to the editor that cover the District in a positive or neutral way. Analysis: Coverage of the District s activities, programs and policies has been predominantly covered in a neutral or positive tone. This includes editorials and opinion columns. The decrease in 2011 was due to four letters to the editor regarding the sewer service fee increase that commented negatively on the District. The decrease in 2012 was due to guest editorials and letters to the editor that were negative toward recycled water, the County s MST recycled water pipeline and the recycled water pump station citing process that also included the District. Media Coverage Accuracy: This is the percent of newspaper articles, editorials or letters to the editor that accurately describe the District or its activities % 80% 60% 40% 20% 0% Newspaper Articles # per year Tone of Newspaper Articles % of articles that are positive or neutral

235 235 Analysis: Accuracy can be subjective, so here it has been defined narrowly as meaning that there were no significant factual errors in the story that could cause a reader to misinterpret what was being reported. Media coverage over the first 5 years noted here has been very accurate. In 2011, there were three letters to the editor that contained significant factual errors that were used as a basis 100% 80% 60% 40% 20% 0% to argue against the proposed sewer service rates. In 2012and 2013, there were three guest editorials or letters to the editor in each year that contained significant factual errors about recycled water quality and/or the District s plans regarding recycled water. In 2014, there was an article that incorrectly overstated the amount of winery waste being hauled out of the area, contributing to a significant misunderstanding in the community and among stakeholders about the extent of the practice. Overall, the accuracy of the articles has been good Accuracy of Newspaper Articles % of articles that are generally accurate