Napa Sanitation District Napa, California. Fiscal Year 2013/14 Operating and Capital Budget. Clean Water. Healthy Communities.

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1 Napa Sanitation District Napa, California Fiscal Year 2013/14 Operating and Capital Budget Clean Water. Healthy Communities.

2 Napa Sanitation District Budget Acknowledgements Board of Directors Jill Techel, Chair Mark Luce, Vice-Chair Peter Mott, Director Charles Gravett, III, Director Charles Shinnamon, Director Keith Caldwell, Alternate Director Alfredo Pedroza, 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 Todd Herrick, 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 2

3 Table of Contents Transmittal Letter...5 Budget Resolution...13 District Overview...15 Mission...15 History...15 Public Services...15 Strategic Planning Goals and Objectives...16 Financial Policies Summary...17 Compliance with Financial Policies...17 Performance Measurement...18 Organization...19 Organization Chart...19 Position Control Roster...20 Map of NSD Service Area...21 Budget Summary...22 Basis of Accounting...22 Fund Structure...22 Basis of Budgeting...22 Budget Appropriation...22 Budget Development Process...22 Budget Amendment Process...23 Budget Calendar for FY 2013/ Sources of Funds/Revenues...24 Uses of Funds/Expenditures...27 Fund Equity...28 Reserves...28 GFOA Budget Award...29 Detailed Tables of Revenues and Operating Expenditures...31 Revenues All Sources...33 Operating Expenditures All Departments...34 Expenditure Budgets by Department...37 Board of Directors...38 General Manager s Office...40 Administrative Services...42 Safety, Training & Fleet Maintenance...44 Collection System...46 Treatment Plant Operations...48 Treatment Plant Maintenance...50 Treatment Plant Laboratory...52 Engineering...54 Pollution Prevention...56 Water & Biosolids Reclamation...58 Non-Departmental Expenses

4 Table of Contents (cont.) Capital Improvement Plan...61 Program Description...63 Definition of Capital Expenditures...63 Capital Plan Development Process...63 Vehicle Replacement Guidelines...63 Sources of Capital Expenditure Funding...64 Use of Capacity Charges for Expansion...64 Changes from Prior CIP...64 Summary of FY 2013/14 Capital Projects...65 Unfunded Projects...66 Impact of Projects on Operating Budget...67 FY 2013/14 Capital Project Descriptions...68 FY 2013/14 Capital Projects Allocation of Capacity Charges...72 Ten-Year Capital Improvement Plan Table of Projects...73 Ten-Year Financial Plan...79 Plan Description...81 Link to Strategic Plan...81 Revenue Forecast...81 Operating Cost Forecast...82 Capital Costs...82 Pay-Go vs. Debt Financing...82 Ten-Year Cash Flow...83 Finance Committee Recommendations...84 Sewer Service Charge Rate Adequacy...86 Calculation of Sewer Service Charge Rate Based on Asset-Life-Cycle Cost...86 Debt...87 Debt Policy...89 Current Debt Obligations...89 Debt Covenants...89 Debt Capacity & Debt Limitations...90 Future Debt Issues...90 Debt Coverage Ratio Calculation...90 Debt Service Schedules...91 Appendix A Glossary of Terms...97 Appendix B Statistics and Economic Data Appendix C Strategic Plan Appendix D Financial Policies Appendix E 2012 Performance Measurement Report Appendix F Capacity Charges Report for Fiscal Year 2011/

5 NAPA SANITATION DISTRICT Dedicated to Preserving the Napa River for Generations to Come DATE: June 5, 2013 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 2013/14 Operating and Capital Budget On behalf of the entire Executive and Management Team, we are pleased to present to you the Proposed FY 2013/14 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. Budget Priorities and Direction Over the past several years, as the economy faltered, state and local government revenue shrank as unemployment increased, incomes decreased, and many people have less disposal income. Governments responded by increasing efforts to improve the efficiency and effectiveness of vital services, and making strategic budget reductions in services that were in line with the community s needs and values. The current economic climate shows signs of improved market conditions. The unemployment rate in the state and in Napa County is lower than this same time last year, property values have stabilized, and transient lodging taxes show increased tourist activity for the region. But these improvements are tenuous, and the gains may not be experienced by everyone equally. The FY 2013/14 Napa Sanitation District Operating and Capital Budget was developed with a recognition of the continued difficult economic realities facing our residential, commercial and industrial ratepayers, while still working to achieve the high quality service they rightfully expect and meeting state and federal environmental requirements. 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 recently established by the Board of Directors in its Strategic Plan update, including maintaining a focus on quality customer service, preventive maintenance, and investments in staff and infrastructure that improve efficiency, effectiveness and safety. 5

6 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 2 The following describes the priorities and decisions made in developing this proposed budget: Sewer Service Charges 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 2013/14 budget includes an increase in the rate of 2.2%. Other Revenues Revenues were projected conservatively using economic indicators and trend analysis, with particular attention placed on any recent downward trends due to economic conditions. Economic-based revenues such as capacity charges were projected to assume a slight increase from prior years, 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. Staffing Four years ago, the District set the path for controlling future salary and benefit costs. The District successfully negotiated long-term agreements with its unions that provide predictability for salary growth while limiting employee benefit cost growth. Changes were made to health benefits and in-lieu-of payments to decrease the overall costs for these programs. Retirement benefits for new employees were changed, reducing the long-term retirement liabilities for the District (recent state-wide changes in the retirement benefits will further reduce these liabilities). For FY 2013/14, there are again no increases in staffing levels for the District, with salary and benefits budgeted in accordance with current agreements. All current and future position vacancies will be evaluated to determine whether the position is still necessary and classified correctly for the position prior to rehiring. Services and Supplies The proposed budget assumed a zero-growth budget for services and supplies, except for those expenses with contractual or known increases. All one-time-only expenses that were approved in the prior year budget were removed. Some minor one-time increases are proposed and focus on efficiency improvements, cyclical expenses or directly support Board priority objectives identified in the Strategic Plan. The changes from prior fiscal year are noted in each of the department budget narratives in the Expenditure Budgets by Department section of the budget document. Capital Program 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 water filtration system and replace the Influent Pump Station, both vital projects identified in the Treatment Plant Master Plan and necessary to meet increasing recycled water demand and improve the operational resiliency of the District. These projects are debt financed from the proceeds of the sale of Certificates of Participation last fiscal year. Other projects focus primarily on the renewal and rehabilitation of existing facilities and assets. 6

7 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 3 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 $13.60 million, compared to $13.55 million in FY 2012/13, for an increase of 0.4%. Debt service expenses increased to $4.8 million from $3.3 million in FY 2012/13, and from the usual $2.8 million because of the issuance of new debt last year. Intrafund transfers are budgeted at $1.66 million. The proposed capital budget of $25.0 million is about double the FY 2012/13 approved capital budget, excluding carry forwards from prior years (or $5.5 million more than the adjusted FY 2012/13 capital budget including carry forwards) and is due to the construction expenses for IPS and the recycled water system Phase 1 expansion. The capital budget also includes the first year of construction of the MST recycled water pipeline, with this project being entirely financed by grants and contributions from the County of Napa. The total operating and capital budget for the District, $43.4 million, is up 19% from last year. This increase is made up from a 4.7% increase in Salaries & Benefits from prior year, 6.1% decrease in Services & Supplies, 27% increase in Capital, and 45% increase in debt service. The District is anticipated to decrease its ending fund equity by $16.7 million during the fiscal year, due to planned spending of debt proceeds on capital projects. The operating emergency reserves and cash flow reserves are fully funded, per District financial policy. Summary of the Revenues Included in the FY 2013/14 proposed budget is a 2.2% Sewer Service Charge rate increase, equal to the December 2012 Consumer Price Increase-Urban Consumers (CPI) for the San Francisco/ Oakland/San Jose area. FY 2013/14 revenues from all sources are expected to be $26,692,850, 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 almost $18.8 million in FY 2012/13 to almost $19.2 million this year (2.2% increase). Interest on invested funds is expected to be $62,000 higher because of earnings on the unspent debt proceeds. Rental income is higher than last year (1.5%) based on contract-based inflationary increases, but they do not include a reinstatement of lease revenue from HCV Napa for the Somky Ranch property (discussed later in this letter and in the Sources of Funds/Revenue and Ten-Year Financial Plan sections of the budget document). Intergovernmental revenues are budgeted at $5,325,000, consisting of $625,000 in federal grant revenue for the Phase 1 Recycled Water Expansion project, and $300,000 in federal grants and $4,400,000 from Napa County for the MST recycled water pipeline project. Capacity charge revenue is projected higher, at $2,075,000, compared to $1,400,000 budgeted in the prior year, 7

8 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 4 because of an assumed increase in activity from 200 EDU to 250 EDU and due to the fee increase from $7,000 to $8,300 schedule for July 1 as approved by the Board in FY 2011/12 as part of a threeyear phase-in plan. Operating Expenditures Operating expenditures for the District are expected to be $13,578,840 (total operating budget of $20,036,130, minus intrafund transfers of $1,657,000, taxes and assessments of $25,050 and debt service payments of $4,775,240). This represents an increase in budgeted operating expenditures of $49,052 or 0.36%. Including interfund transfers, taxes and debt service, District operations is budgeted to decrease $780,872 (3.8%) from the FY 2012/13 budget. Salary and benefit expenses are proposed to increase 4.7%. Salaries increased a total of 4.6%, accounting for increases in cost of living at 2.4% per union agreements, and step increases for those eligible. Retirement benefit costs are anticipated to increase 7.5%, health insurance premiums by 5.3%, and other post employment benefits by 8.8%. These increases were offset by decreases in medical in lieu payments (31.9% reduction) and unemployment compensation (100% reduction). Services and Supplies budgets in total are proposed to be 6.1% less than FY 2012/13. There are anticipated savings in several line items, as the District maintains the direction to have a zero growth budget in those cost areas that are controllable. The most significant cost controls are in electricity (0.1% growth) as this next year is the second year of operation of the new FOG receiving station, and in chemicals (2.8% reduction) due to continued efforts to improve plant processes. Other reductions include several areas where one-time only projects were removed and not replaced with other projects. Capital Expenditures The District maintains a Ten-Year Capital Improvement Plan 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 capital expenditure budget for FY 2013/14, the first year of the ten-year plan, is $25.0 million. Of that, $8.6 million constitutes expansion expenses and can be paid for with capacity charges. The remaining amount is renewal and rehabilitation and is paid for by other revenues, predominantly from sewer service charges, recycled water revenues, partner agencies and sale of district-owned property. The Ten-Year Capital Improvement Plan includes the continuation of significant new capital projects that were identified as part of the Treatment Plant Master Plan. Further details can be found in the Capital Improvement Program chapter of the budget document. Debt and Debt Service With the issuance of new debt in 2012, and the refinancing of the Series 2009A variable rate debt, the District has four distinct debts for which it pays annual debt service. The new issue resulted in $33 million being available for capital projects. With these changes, the District no longer has any variable rate debt outstanding. 8

9 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 5 Total debt service for FY 2013/14 is expected to be just under $4.8 million, about $1.5 million more than the prior year adjusted budget and $2.0 million more than the budget prior to the issuance of new debt. Fund Equity and Reserves The ending fund equity for FY 2012/13 is estimated to be $42,158,150. This number assumes that most of the capital budget in FY 2012/13 is spent, or that any underspending is carried forward into next fiscal year. It also takes into account outstanding debt proceeds and the payment from The Gasser Foundation for Hartle Court property that is due upon completion of the Administration Building and Corporation Yard project. As proposed, the ending fund equity for the District is projected to be $25,4768,970 on June 30, 2014 and is allocated as follows: $2,056,000 15% Operating Reserve This is 15% of the District s budgeted operating expenditures, excluding taxes, transfers and debt service. $8,000,000 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. This reserve increased in FY 2013/14 to accommodate debt service payments on August 1 st for the new Series 2012 Certificates of Participation. $0 Debt Service Liquidity Reserve This reserve, previously $1,850,000, was required as part of the Series 2009A variable rate Certificates of Participation bond covenants. Since these bonds were defeased in FY 2012/13, this reserve is no longer necessary. The cash in this reserve was put into the Operating Cash Flow Reserve. $15,412,970 Available for Use This is the projected amount of fund equity available to the District for use in operations or on capital at the end of FY 2013/14. This amount has been identified for use in the capital program in future years. Following is a summary table of the revenue, expenditure and interfund transfer budgets for FY 2013/14, along with information on fund equity and reserves. 9

10 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 6 Budget Summary FY 12/13 FY 13/14 Percent Adjusted Budget Proposed Change Beginning Fund Equity $19,162,300 $42,158, % Revenue All funds, excluding transfers Sewer Service Charges (incl. delinquencies) $17,956,000 18,401, % Capacity Charges 1,400,000 2,075, % Waste Hauler Fees 230, , % Recycled Water Sales 277, , % Land Leases 133, , % Intergovernmental / Grants 875,000 5,325, % Interest on Invested Funds 120, , % Sale of Property 2,980,000 0 (100%) Proceeds from Loan 33,000,000 0 (100%) Other Revenues 52,000 57, % Total Revenues $57,023,700 $26,692,850 (53.2%) Expenditures All funds, excluding transfers Salaries & Benefits $8,055,150 $8,437, % Services & Supplies 5,474,638 5,141,200 (6.1%) Taxes & Other 25,050 25, % Subtotal Operating Expenses $13,554,838 $13,603, % Capital Expenditures $19,656,800 $25,002, % Debt Service (incl. debt administration expenses) 3,292,164 4,775, % Subtotal Capital Expenses $22,948,964 $29,778, % Total Expenditures $36,503,802 $43,382, % Ending Fund Equity $39,682,198 $25,468,970 (35.8%) Reserves 15% Operating Reserve $1,980,000 $2,056, % Debt Service Liquidity Reserve 1,850,000 0 (100%) Operating Cash Flow Reserve 5,650,000 8,000, % Total Reserves $9,480,000 $10,056, % Available for Use (Ending Fund Equity minus Reserves) $30,202,198 $15,412,970 (49.0%) FY 12/13 FY 13/14 Percent Adjusted Budget Proposed Change Intrafund Transfers Transfer from Operations to Capital Projects $3,970,000 $1,657,000 (58.3%) Transfer from Expansion to Capital Projects 1,400,000 2,075, % Transfer from Debt Proceeds to Capital Projects 8,908,041 15,631, % Total Intrafund Transfers $14,278,041 $19,363, % 10

11 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 7 Ten-Year Budget Projections The District has been able to weather decreases in 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 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. Energy and chemical costs in general will likely rise over the next ten years and require regular monitoring by staff. While the new FOG receiving station is anticipated to result in lower energy costs in the short term, the increased demand for recycled water anticipated when the new filters are constructed will offset those savings. The forecast assumes modest annual increases in sewer service charges (by CPI), annual increases in capacity charge rates (by CPI) and a fee increase for recycled water in FY 2015/16. The forecasted rental revenue changed significantly from the prior year s Ten-Year Forecast, as the current budget assumes that HCV Napa will not make its anticipated deferred rental payment of $1.4 million on June 30, 2013, nor will it start to make its regular rental payments of $600,000 annually starting in FY 2013/14. This change in assumptions has a $7.4 million impact on the Ten-Year Forecast. Further detailed information regarding the District s Ten-Year Financial Plan can be found in the budget document. The Ten-Year Financial Plan shows the District unable to fund its current and future operating and capital plan. The Ten-Year Financial Plan shows that it is underfunded by about $3 million in FY 2019/20, and remains underfunded by $1.9 million by the end of the ten-year forecast period. The Finance Committee has recommended changes to the Sewer Service Charges calculation for inflation that would have a positive effect on the underfunding in the forecast. The change, if approved by the full Board, would not impact the FY 2013/14 budget. The recommendation is more fully described in the Ten-Year Financial Plan section of 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 three 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 that HCV Napa will not make an anticipated lease payment for the Somky property to the District on June 30, 2013 of $ 1.4 million to make up for deferred lease payments. Additionally, the projections assume that HCV Napa will not resume making lease payments in FY2013/14 of $600,000 annually. While HCV Napa is contractually obligated to make these payments, there is no indication that HCV Napa is in a position to secure construction financing and repay the deferred lease. By removing the deferred lease payment and the ongoing lease 11

12 FY 2013/14 Operating and Capital Budget June 5, 2013 Page 8 payments from the forecast, the forecast shows the District unable to finance its Capital Improvement Program as planned. The second 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 2,350 acre feet. Current sales are approximately 1,000 acre feet. The increase assumes that Napa State Hospital switches over to recycled water (200 AF), that the MST area votes to pay for a new recycled water pipeline through that area (500 AF), that HCV Napa completes development of the Montelcino Resort and Golf Club (300 AF), and that the St. Regis Resort development is completed (200 AF). If these use targets are not met, there will be insufficient sales to meet the revenue projections. The difference between current use and the assumed use in 2016 represents just over $4 million over the Ten-Year Forecast period. On the positive side, it appears that the Los Carneros Water District is making progress toward the use of recycled water from the District, which is not assumed in the current forecast, which could vary from 300-1,100 AF annually. The third major assumption is in capacity charge revenues. The current forecast assumes the sale of 250 EDU in capacity charges in FY 2013/14, increasing to 290 in FY 2014/15 and beyond. The assumption also includes an additional 125 EDU in FY 2014/15, 150 EDU in FY 2015/16 and 100 EDU in FY 2017/18 to recognize likely hotel developments in the service area. If economic development does not increase by these levels, there will be lower than anticipated revenues to pay for capital projects. The difference between the 200 EDU estimated for FY 2012/13 and the forecast represents about $15.4 million over the Ten-Year Forecast period in capacity charges and associated sewer service charges. 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 2013/14. Many people throughout the organization have put a great deal of effort and skill into producing this document. 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/ District Engineer Jeff Tucker Director of Administrative Services/ Chief Financial Officer 12

13 RESOLUTION NO. RESOLUTION OF THE NAPA SANITATION DISTRICT ADOPTING A BUDGET AND CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEAR 2013/14 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 2013/14; 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 $18,379,130, plus intrafund transfer of $1,657,000 to support Capital Projects, for a total of $20,036,130; and, Expansion Appropriation of $2,075,000 in intrafund transfer to support Capital Projects; and, Intrafund transfer appropriation of $15,631,900 from the Debt Proceeds account to Capital Projects; and, Capital Projects Appropriation of $25,002,900; 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 2013/14. 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 5 th day of June, 2013, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Chair, Board of Directors Secretary, Board of Directors 13

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15 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 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 Soscol Water Recycling Facility ponds, clarifiers, sludge digestion and solids dewatering 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. 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. Public Services There are over 36,200 connections within the District's Sphere of Influence of approximately 20 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. 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 Recycled water storage 15

16 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. Valves at Riverpark Lift Station Strategic Planning Goals and Objectives In May 2013, 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. 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 costeffective 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. Goal 1 Objectives: 1A: Implement Treatment Plant Master Plan critical projects (pond aeration, recycled water equalization and filters and DAF clarifier, and influent pump station) 1B: Complete cost/benefit analysis of wet weather inflow/infiltration 1C: Complete SCADA master plan implementation Goal 2 Objectives: 2A: Develop non-rate, revenue-generating opportunities that fit within the 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 calculating and assessing capacity charges 2C: Provide policy choices regarding long-term strategies and goals for replacement of sewers 2D: Conduct a Sewer Service Charge fee study prior to the next Proposition 218 hearing 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. Goal 3 Objectives: 3A: Prepare safety and security vulnerabilities study and public communications plan 3B: Develop policy and programs regarding the impact of wineries based on the 2009 Winery Study 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. Goal 4 Objectives: 4A: Develop a management succession plan and identify and train back-up staff for all mission-critical positions 4B: Conduct third employee survey 4C: Develop a transition plan for the new administrative building 4D: Create an employee master plan 4E: Prepare for and complete MOU negotiations 16

17 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. Goal 5 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 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. Goal 6 Objectives: 6A: Implement capital projects in partnership with local agencies for the distribution of recycled water 6B: Study the feasibility of expanding system storage capacity for recycled water 6C: 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 6D: Explore the possible beneficial reuse of algae 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. 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. 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. 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. Financial Policy Compliance NSD Policy Target FY 13/14 Balanced Budget Operating revenues minus $7,789,010 operating expenditures > $0 Operating Reserve 15% of Operating Budget 15.14% Cash Flow Reserve As necessary $8.0 million Debt Coverage Ratio 1.25x coverage 1.63x 17

18 Specifically, the District has taken the following actions to ensure compliance with the Financial Policies: The annual operational expenditures for the District are less than the annual revenue forecasted to be received, meeting the requirement for a balanced budget. Additionally, there are adequate revenues available to transfer to the Capital Projects Fund to meet the forecasted 10-year needs in the Capital Improvement Plan. In FY 2013/14, the District has designated an Operating Reserve of 15% of budgeted operating revenues ($2,056,000) and a Cash Flow/Liquidity Reserve of $8,000,000. 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 budget includes adequate resources for the maintenance of District assets. There are no deferred maintenance projects, either in the operating budget or in the capital budget. Maintenance and renewal/rehabilitation projects take priority over new projects in annual and long-term planning. 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. Performance Measurement The District created and issued its third Performance Measurement Report in February The report identifies 64 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 51 measures (80%). 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 five measures (8%). 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 succession planning, asset inventory and assessment, long-term recycled water supply adequacy, and the comparative ranking of the District s sewer service charge rate. The District rates unsatisfactory on five measures (8%). Unsatisfactory signifies that the District has not met its goals or that the trend is negative. Measures here include sewer main and lower lateral renewal and replacement, pollution prevention inspections, the uptime for pumps at the Influent Pump Station, and critical parts and equipment resiliency. Most of the performance measures in the report have been included in the narratives of the Expenditure by Department section of this budget document. A complete copy of the 2012 Performance Measurement Report can be found in Appendix E of this budget. 18

19 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. There are five main departments in the District: Administration: includes finance and accounting services, human resources, risk management, safety and training, fleet management, pollution prevention and outreach, and general administrative services. This Department includes Board of Directors, General Manager s Office, Administrative Services, Safety, Training & Fleet Maintenance, Pollution Prevention, and Non-Departmental Expenses in the Expenditure Budgets by Department section of this budget document. Wastewater Treatment Plant: includes operation and maintenance of the wastewater treatment plant and laboratory services. This Department includes Treatment Plant Operations, Treatment Plant Maintenance, and Treatment Plant Laboratory in the Expenditure Budgets by Department section of this budget document. Collection System Maintenance: includes preventive and corrective maintenance and operation of the sewer system. This Department includes Collection System Maintenance in the Expenditure Budgets by Department section of this budget document. 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 Department section of this budget document. Engineering: includes development review, capital project management, project design/engineering and inspection. This Department includes Engineering in the Expenditure Budgets by Department section of this budget document. CUSTOMERS Board of Directors General Manager / District Engineer 1 FTE Legal Counsel (Contracted Service) Meyers Nave Assistant General Manager 1 FTE Clerk of the Board / Human Resources Officer 1 FTE Director of Admin. Services / Chief Financial Officer 1 FTE Engineering 6 FTE Accounting & Office Support 4 FTE Collection System 13 FTE Safety, Training & Fleet Maintanance 1 FTE Water & Biosolids Reclamation 4 FTE Management Analyst & Outreach Coordinator 1 FTE Treatment Plant Total: 51 Employees Operations 9 FTE Maintenance 5 FTE Laboratory 4 FTE 19

20 Napa Sanitation District Position Control Roster As adopted on July 1 Position Series (excluding Board Members) FY 10/11 Adopted FY 11/12 Adopted FY 12/13 Adopted FY 13/14 Proposed General Manager's Office General Manager Assistant General Manager Administrative Services Director of Administrative Services/Chief Financial Officer Clerk to the Board/Human Resources Officer Senior Accountant Accountant Senior Office Assistant Office Assistant Management Analyst & Outreach Coordinator Safety, Training and Fleet Maintenance Safety, Training & Fleet Maintenance Officer 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 Operations Supervisor Operator OIT/I/II/III Treatment Plant Maintenance Plant Maintenance Supervisor Equipment Maintenance Specialist I/II Plant Attendant Treatment Plant Laboratory Lab Supervisor Laboratory Technician I/II Engineering Senior Civil Engineer Junior/Assistant/Associate Engineer Senior Engineering Technician District Inspector I/II Senior Construction Inspector Construction Inspector Water & Biosolids Reclamation Reclamation Systems Director Reclamation Maintenance Worker I/II Plant Attendant Totals

21 Napa Sanitation District Map of NSD Service Area NSD Sphere of Influence NSD Service Area 21

22 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 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 over 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 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. 22

23 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. 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 10 Year CIP Staff Recommended Annual Budget Analysis of Impacts Long Term Planning Committee Input Finance Committee Input Long Term Planning Committee Recommended 10 Year CIP Finance Committee Recommended Annual Budget Board Review & Input Board Review & Input Stakeholder Input Adopted Budget & 10 Year CIP Citizen Input Budget Calendar for FY 2013/14 Jan. 8, 2013 Finance Committee meeting, to discuss budget development calendar, assumptions for next year, and policy direction. Feb. 6, 2013 Budget direction discussed and confirmed with Board of Directors. Jan. to March Staff develops proposed budget and Ten-Year CIP. April 12, 2013 Finance Committee reviews Operating Budget. April 19, 2013 Finance Committee makes recommendations. April 19, 2013 Long Term Planning Committee reviews Ten-Year CIP and makes recommendations. May 1, 2013 Board of Directors receives and discusses the Proposed Operating Budget for FY 2013/14 May 6, 2013 Mailing of Notices for Sewer Service Charge increase. May 15, 2013 Board of Directors receives and discusses the Ten-Year CIP for FY 2013/14 through FY 2022/23. June 5, 2013 Board of Directors adopts the FY 2013/14 Operating and Capital Budget and Ten-Year CIP. 23

24 Sources of Funds/Revenues The District has a stable revenue foundation, with 69% of the District s revenues (excluding bond proceeds 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, grants and intergovernmental revenues, recycled water sales, waste hauler fees, land leases, and interest earnings. 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. 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 2013/14 and for the following two fiscal years. For FY 2013/14, the annual fee will increase from $ to $ per Equivalent Dwelling Unit (EDU). Sewer Service Charges 5-Year History Charge per % Increase EDU FY 09 $ FY 10 $ % FY 11 $ % FY 12 $ % FY 13 $ % FY 14 $ % Sewer service charges revenue is forecasted for FY 2012/13 based on the actual number of EDUs (40,275) 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. 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. Millions $19 $18 $17 $16 SSC's FY10 FY11 FY12 FY13 FY14 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 Sources of Funds Total* = $43,382,030 Sewer Service Charges 42.4% * Excludes Transfers Capacity Charges 4.8% Grants and Intergovernmental 12.3% Other 2.1% Fund Equity and Bond Proceeds Used to Balance 38.5% 24 Grants and intergovernmental revenues are those revenues that are paid to the District by another government, specifically for performing some specific task. In FY 2013/14, the District is continuing projects funded from a U.S. Bureau of Reclamation grant for design and engineering of the continuation of the recycled water pipeline into the Milliken- Sarco-Tulocay (MST) Creeks area, and for engineering and construction of the expansion of recycled water facilities at the Soscol Water Recycling Facility. The District is also expecting to receive revenues from the County of Napa. These revenues are to reimburse the District for expenses related to membership in the North Bay Water Reuse Authority, and for expenses related to the design, engineering and construction of the recycled water pipeline through the MST area.

25 Capacity charges, sometimes referred to as connection fees, are fees paid for the issuance of a permit to connect to the District s sewer system. Capacity charges are forecasted for the next year based on the cost per EDU and an assumed growth rate of 250 EDU being developed during the fiscal year. This growth projection is higher than the low point seen in FY 2008/09 and 2009/10 and is slightly higher than the average of the last three years. The projection is significantly lower than the levels seen in the middle of last decade, and do not include significant hotel projects anticipated in the community, such as the development of the St. Regis resort or the Ritz-Carlton Hotel # of EDU FY10 FY11 FY12 FY13 FY14 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 current fee of $7,000 per EDU is scheduled to increase to $8,300 on July 1, 2013, and thereafter increase annually with construction inflation. 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 Every July 1 Increase by an inflation factor thereafter 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 985 acre-feet (321 million gallons), which is based on historical use adjusted for increases or decreases in anticipated use. For example, the anticipated use of water at Chardonnay Golf Course has decreased, as they have converted part of the golf course to vineyard use. The anticipated use is then multiplied by the cost to calculate projected revenue. 25 The current cost is $0.96 per 1,000 gallons, with an increase anticipated in January 2014 based on an inflation factor. Rates will increase with CPI annually through In 2016, the rates will increase to $1.57 per 1,000 gallons in the peak demand period, with lower rates for off-peak use and for those customers that enter long-term 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. 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. FY 2013/14 will represent a complete fiscal year of operation of this facility. Thousands 1,100 1, $300 $200 $100 $0 Acre Feet of Recycled Water FY10 FY11 FY12 FY13 FY14 Waste Hauler Fee Revenue FY10 FY11 FY12 FY13 FY14 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 2013/14 are flat for septage haulers, based on trends seen the past three years, but the overall revenue is expected to increase due to the acceptance of FOG. Land Leases generate revenue for the District. The District currently leases several parcels of land. The leases have inflation factors identified within them. The revenue forecast is set based on these contracts.

26 REVENUE - ALL SOURCES Actual Actual Budget Estimated Proposed Percent Account Description FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change 780-Operations Interest: Invested Funds 144,452 88, ,000 75,000 64,000 (46.7%) Rent - Building/Land 168, , , , , % Construction/Bldg Permit Review 11, ,830 18,000 17,000 18,000 - Hauler Fees 210, , , , , % Sewer Usage Fees 17,173,259 17,400,473 17,956,000 17,956,000 18,351, % Penalties on Delinquent Sewer Fees - 49,297-50,000 50,000 - Recycled Water Sales 230, , , , , % Forfeitures and Penalties 78,603 30,718 14,000 12,000 14,000 - Miscellaneous 168, ,877 20,000 55,000 25, % Total-Operations 18,186,344 18,444,872 18,768,700 18,812,700 19,174, % 781-Capital Improvement Projects Interest: Invested Funds 23, , ,500 - Federal Grants - USBR 225,875 1,103, , , , % Other Government Agencies 468, , ,000 1,100,000 4,400, % Bond Proceeds ,000,000 33,000,000 - (100.0%) Sale of Capital Assets 96,063 14,160 2,980,000 2,930,000 - (100.0%) Interfund Transfers In 3,941, Intrafund Transfers In 558,536 5,357,798 14,278,041 14,278,000 19,363, % Total-CIP 5,290,546 7,194,858 51,133,041 51,685,300 24,806,400 (51.5%) 782-Expansion Interest: Invested Funds 1, Capacity Charges 1,339,100 1,425,486 1,400,000 1,600,000 2,075, % Total-Expansion 1,339,100 1,426,868 1,400,000 1,600,500 2,075, % Total-All Departments 24,815,990 27,066,599 71,301,741 72,098,500 46,056,750 (35.4%) In 2010, the largest of the land leases, the lease of the Somky Ranch to HCV Napa for development of a golf course, was rewritten. From July 2010 through June 2013, the lease payments were deferred, awaiting the construction loan for the resort and golf facility. The deferred lease payments was to be paid all at once, including 4% compounded interest on the deferred payments, although this payment is not included in the revenue forecast. 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 calendar year For FY 2013/14, the District has assumed an earnings rate of 0.5% for the entire year. The overall revenue both last year and this year is higher because of the bond proceeds being invested. 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. For most of past four years, the Federal Funds rate was between 0.00%-0.25%. This is the rate to which most allowable investments trend. These rates Thousands $300 $200 $100 $0 Interest Earnings FY10 FY11 FY12 FY13 FY14 26

27 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), 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 also expects to receive grant money from the USBR to support the expansion of recycled water capacity at the Soscol Recycled Water Facility. 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 benefits. This category also includes expenses for funding the District s OPEB ( Other Post Employment Benefits ) liability. In accordance with labor agreements, salaries for represented employees increase by the Consumer Price Index (CPI), with a minimum of 2% and a maximum of 4.25%. In FY 2013/14, the CPI was Uses of Funds Total* = $43,382,030 Capital 57.6% Salaries & Benefits 19.4% Chemicals 2.7% 2.4%, so the budget includes a salary increase of this amount. Individual salaries were also impacted, with some employees moving up steps within their current classification, and vacancies budgeted at the bottom step. Overall, salaries increased 4.6% from prior year. Health benefits are known for the first two quarters in FY 2013/14. 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. For FY 2013/14, the retirement costs increased 7.5% from the prior year. Payments in lieu of health benefits were down almost 32% from prior year, based on changes made in union contracts in 2009 and changes made by specific employees in insurance coverage Workers compensation insurance costs are higher than prior year by 11.4%, due to a slight increase in the Experience Modification Rate and an error in the FY 2012/13 budget that budgeted too low for the actual expenses. Overall, salaries and benefits increased 4.7% over the prior fiscal year. Electricity 1.7% Other Supplies & Services 7.6% 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. Debt Service 11.0% * Excludes Transfers 27

28 EXPENSES OPERATING AND CAPITAL Actual Actual Budget Estimated Budget Percent Account Description FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits 6,421,686 7,289,778 8,055,150 7,452,100 8,437, % Services & Supplies 4,513,514 4,886,520 5,474,638 4,813,300 5,141,200 (6.1%) Capital Expenses 7,009,522 8,121,627 19,656,800 19,469,350 25,002, % Debt Service 2,571,936 2,563,475 3,292,164 3,064,900 4,775, % Taxes & Assessments 23,607 23,637 25,050 25,000 25, % Transfers 3,375,000 3,967,778 14,278,041 14,278,000 19,363, % Total All Expenses $23,915,265 $26,852,815 $50,781,843 $49,102,650 $62,745, % Total w/o Transfers $20,540,265 $22,885,037 $36,503,802 $34,824,650 $43,382, % Total supplies and services for FY 2013/14 are budgeted to be 6.1% lower than the prior fiscal year. This is due to the removal of one-time only projects that were budgeted in FY 2012/13 and a concerted effort to align budgeted expenses with historical trends. 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 10-Year Capital Improvement Plan (CIP), later in this budget document. Specifically in FY 2012/13 is the beginning of construction expenses for the IPS Replacement project, the Phase 1 Recycled Water Expansion project, and the MST Recycled Water Pipeline project. Debt service includes the principal and interest payments for all of the District s outstanding loans. In FY 2012/13, the District refinanced its Series 2009A COPs and issued additional debt for capital projects. This new debt significantly increased debt service requirements. 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 ($1,657,000) from Expansion into the Capital Projects account ($2,075,000) from Debt Proceeds account into the Capital Projects account ($15,631,900) 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. For FY 2013/14, the estimated Ending Fund Equity is 39% lower than the Beginning Fund Equity. This represents a decrease of $16,332,180, and is the result of planned spending of capital expenditures during the year. To the extent that planned capital projects are not fully expended in FY 2012/13, the remaining project budget will be carried forward into FY 2013/14 through a budget amendment. Reserves In prior fiscal years, the District maintained three cash reserves. With the refinancing of its variable rate debt, 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. 28

29 Financial Overview 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, the debt service liquidity reserve is 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 due on August 1 st. FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Actuals Actuals Budget Estimate Proposed Beginning Fund Equity 16,309,619 20,385,825 19,162,300 19,162,300 42,158,150 Revenues Use of Money/Property 312, , , , ,650 Charges for Services 19,043,600 19,514,832 19,881,000 20,088,000 20,961,200 Intergovernmental 702,878 1,799, ,000 1,277,300 5,325,000 Loan Proceeds ,000,000 33,000,000 0 Miscellaneous Revenues 160, ,014,000 3,047,000 89,000 Total Revenues 20,219,449 21,557,302 57,023,700 57,820,500 26,692,850 Operating Expenditures Salaries and Benefits 6,421,686 6,502,898 8,055,150 7,452,100 8,437,640 Services and Supplies 4,513,514 4,904,729 5,474,638 4,813,300 5,141,200 Taxes and Assessments 23,607 23,638 25,050 25,000 25,050 Debt Service 2,571,936 2,563,475 3,292,164 3,064,900 4,775,240 Total Operating Expenditures 13,530,743 13,994,740 16,847,002 15,355,300 18,379,130 Capital Expenditures 7,009,518 8,121,627 19,656,800 19,469,350 25,002,900 GAAP Adjustments 4,397, , Total Expenditures 16,143,243 22,780,788 36,503,802 34,824,650 43,382,030 Ending Fund Equity 20,385,825 19,162,339 39,682,198 42,158,150 25,468,970 15% Operating Reserve 1,881,000 1,908,000 1,980,000 1,980,000 2,056,000 Debt Service Liquidity Reserve 1,850,000 1,850,000 1,850,000 1,850,000 0 Operating Cash Flow Reserve 5,069,000 5,288,000 5,650,000 5,650,000 8,000,000 Total Reseves 8,800,000 9,046,000 9,480,000 9,480,000 10,056,000 Available for Use 11,585,825 10,116,339 30,202,198 32,678,150 15,412,970 (Fund Equity minus Reserves) The numbers above are net of transfers in and out. 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 2013/14 budget continues to conform to program requirements and will be submitting it to GFOA to determine its eligibility for another award. 29

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31 Detailed Tables of Revenues and Operating Expenditures Recycled Water Pump Station Soscol Water Recycling Facility 31

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33 Napa Sanitation District REVENUE - ALL SOURCES Actual Actual Budget Estimated Proposed Percent Account Account Description FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Operations Interest: Invested Funds 144,452 88, ,000 75,000 64,000 (46.7%) Rent - Building/Land 168, , , , , % Construction/Bldg Permit Review Svcs 11, ,830 18,000 17,000 18, Hauler Fees 210, , , , , % Sewer Usage Fees 17,173,259 17,400,473 17,956,000 17,956,000 18,351, % Penalties on Delinquent Sewer Fees - 49,297-50,000 50, Recycled Water Sales 230, , , , , % Forfeitures and Penalties 78,603 30,718 14,000 12,000 14, Miscellaneous 168, ,877 20,000 55,000 25, % Total - Operations 18,186,344 18,444,872 18,768,700 18,812,700 19,174, % Capital Improvement Projects Interest: Invested Funds 23, , , Federal Grants - USBR 225,875 1,103, , , , % Other Government Agencies 468, , ,000 1,100,000 4,400, % Bond Proceeds ,000,000 33,000,000 - (100.0%) Sale of Capital Assets 96,063 14,160 2,980,000 2,930,000 - (100.0%) Interfund Transfers In 3,941, Intrafund Transfers In 558,536 5,357,798 14,278,041 14,278,000 19,363, % Total - Capital Improvement Projects 5,290,546 7,194,858 51,133,041 51,685,300 24,806,400 (51.5%) Expansion Interest: Invested Funds 1, Capacity Charges 1,339,100 1,425,486 1,400,000 1,600,000 2,075, % Total - Expansion 1,339,100 1,426,868 1,400,000 1,600,500 2,075, % Total - All Departments 24,815,990 27,066,599 71,301,741 72,098,500 46,056,750 (35.4%) 33

34 Napa Sanitation District OPERATING EXPENDITURES - ALL DEPARTMENTS Actual Actual Adj. Budget Proposed Percent Account Account Description FY 10/11 FY 11/12 FY 12/13 FY 13/14 Change Salaries and Wages 3,936,277 4,079,572 4,391,100 4,594, % Overtime 140, , , , % Holiday Pay 4,335 5,981 9,000 8,820 (2.0%) Vacation Payout 23,800 3, Cell Phone Allowance 2,040 3, Director Pay 30,102 23,513 32,500 32, Medicare 60,954 61,252 63,600 66, % F.I.C.A. / Social Security 832 2,000 2, Employee Insurance Premiums 983,413 1,079,841 1,262,500 1,328, % Workers Compensation 62,332 62,596 66,100 73, % Unemployment Compensation 7,398 11,713 4,500 (100.0%) Retirement 1,299,779 1,399,766 1,657,000 1,781, % Other Post Employment Benefits 242, , , , % Other Employee Benefits 208, , , ,280 (31.9%) Subtotal Salaries & Benefits $6,999,891 $7,289,778 $8,055,150 $8,437, % Accounting/Auditing Services 46,995 75,000 81, % Information Technology Services 284, , , % Legal Services 182, , , ,000 (18.9%) Engineer Services 7,000 7, Temporary/Contract Help 27,572 32,646 58,600 48,600 (17.1%) Actuarial Services 3,600 5, Medical/Laboratory Services 47,497 45,149 47,700 81, % Training Services 17,850 16,148 12,000 17, % Consulting Services 259, , , , % Waste Disposal Services 30,149 35,550 37, % Hazardous Waste Disposal Services 2,240 4,200 4, Security Services 1,059 2,893 5,000 11, % Landscaping Services 6,660 14,900 18, % Janitorial Services 68,864 65,775 57,600 57,180 (0.7%) Other Professional Services 509, , , ,200 (29.7%) Maintenance Equipment 78, , , ,740 (18.4%) Maintenance Bldgs/Improvements 68,926 55,215 82,800 67,750 (18.2%) Maintenance Software 8,762 7,057 33,050 59, % Maintenance Vehicles 73,608 71,183 66,850 65,750 (1.6%) Rents and Leases Equipment 63,232 72,157 59,650 63, % Rents and Leases Buildings/Land 8,335 8,248 26,300 3,150 (88.0%) Insurance Liability 199, , , ,000 (5.2%) Insurance Claims 20,000 20, Communications/Telephone 27,313 46,226 55,000 44,580 (18.9%) Advertising/Marketing 8,145 4,129 33,400 35, % Printing and Binding 3,000 3, Bank Charges 844 1,500 1,500 34

35 Napa Sanitation District OPERATING EXPENDITURES - ALL DEPARTMENTS Actual Actual Adj. Budget Proposed Percent Account Account Description FY 10/11 FY 11/12 FY 12/13 FY 13/14 Change Publications and Legal Notices 8,418 4,673 5,900 4,420 (25.1%) Permits/License Fees 7, ,423 93, , % Training/Conference Expenses 54,126 70,411 77,400 92, % Business Travel/Mileage (Meetings) 2,400 4, % Office Supplies 42,349 29,718 29,050 27,600 (5.0%) Office Supplies Furniture/Fixtures 1,600 1, Freight/Postage 9,526 12,488 8,900 8, Books/Media/Subscriptions 22,474 20,208 4,800 3,800 (20.8%) Memberships/Certifications 116,699 44,048 59,950 57,880 (3.5%) Utilities Gas 70,767 19,915 23,000 15,000 (34.8%) Utilities Electric 736, , , , % Utilities Fire Suppression Systems 4,800 5, % Utilities Water % Fuel 102, , , ,600 (8.4%) Clothing and Personal Supplies 18,129 18,001 21,400 24, % Medical/Laboratory Supplies 68,137 61,942 61,650 57,500 (6.7%) Safety Supplies 71,571 77,968 32,450 29,880 (7.9%) Janitorial Supplies 3,270 16,950 15,950 (5.9%) Chemicals 1,039,764 1,006,622 1,198,100 1,164,420 (2.8%) Maintenance Supplies 351, , , ,300 (21.1%) Infrastructure Repair Supplies 8,182 9,250 11,200 8,700 (22.3%) Minor Equipment/Small Tools 47,878 39,594 43,600 50, % Computer Equipment/Accessories 5,300 6, % Computer Software/Licensing Fees 800 5, % Special Department Expense 26,377 23,218 20,050 19,850 (1.0%) Service Awards 12,402 12,058 11,500 12, % Business Related Meals/Supplies 1,495 1,700 1,650 (2.9%) Wellness Reimbursement 10,435 8,435 9,200 9, % Education Reimbursement Subtotal Services & Supplies $4,475,393 $4,886,520 $5,474,638 $5,141,200 (6.1%) Principal on Bonds/COPs 1,469,599 1,481,919 1,559,498 2,341, % Interest on Bonds/COPs 987, ,831 1,216,366 2,425, % Administration on Bonds/COPs 139, , ,300 7,600 (98.5%) Taxes and Assessments 23,607 23,637 25,050 25, Intrafund Expenditures 3,375,000 3,967,778 3,970,000 1,657,000 (58.3%) Subtotal Other $5,995,542 $6,554,890 $7,287,214 $6,457,290 (11.4%) TOTALS $17,470,826 $18,731,188 $20,817,002 $20,036,130 (3.8%) 35

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37 Expenditure Budgets by Department Treatment Plant Operator cleaning the flocculating clarifier, Soscol Water Recycling Facility 37

38 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. The Board adopts the annual Operating Budget, Ten- Year Capital Improvement Plan, Ten-Year Financial Plan and sets the priorities for the District. Department Goals 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 Continued to provide oversight on the construction of the new administration building and corporate yard. Provided direction to staff on efforts to increase non-rate revenues and decrease the District s reliance on non-green energy sources. Provided guidance on refinancing existing debt and the issuance of new debt for the construction and expansion of facilities at the Soscol Water Recycling Facility. Changes from FY 2012/13 Service Levels There is no change in service levels from the prior fiscal year. The budget for legal services was reduced to match recent historical usage. The training and conference budget was reduced because CASA will no longer have a conference in April. Objectives for FY 2013/14 Continue to oversee the policy and strategic direction of the District and set levels of service for its customers. Continue to participate in inter-agency communications and planning for delivering recycled water to the Milliken-Sarco-Tulocay (MST) creeks area. Provide guidance on restructuring the methodology for assessing capacity charges on development. Link to District Goals in Strategic Plan The Board of Directors establishes the Strategic Plan s long-term goals, objectives and priorities. Accomplishments in FY 2012/13 Successfully oversaw the policy direction of the District and set levels of service for the customers. Worked with senior management to update the District s Strategic Plan. Provided policy guidance regarding the impacts of wineries based on the 2009 Winery Study. Provided guidance and revised fee policy for the FOG receiving station. Adopted, revised and monitored a long-term policy document for prioritizing the delivery of recycled water outside the current service areas. 38

39 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Performance measures for this department are inherently captured in the performance measures of other departments. As such, there are no specific performance measures listed. Percent of Operating Budget Board of Directors 1.9% Proposed Budget Actual Actual Adj. Budget Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 30,581 $ 25,019 $ 35,500 $ 24,764 $ 35,500 - Services & Supplies $ 234,273 $ 177,532 $ 259,860 $ 185,181 $ 224,910 (13.4%) Other* TOTAL EXPENDITURES $ 264,854 $ 202,551 $ 295,360 $ 209,945 $ 260,410 (11.8%) * In FY 09/10, interfund transfers, depreciation and insurance were budgeted in this department. Starting in FY 10/11, these expenses were moved to "Non-DepartmentalExpenses." Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 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

40 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. The General Manager s Office includes the General Manager position and the Assistant General Manager position. Department Goals The General Manager s Office goals are: Implement the policy direction of the Board of Directors. Provide leadership and management throughout the District. 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 2014 (Goal Four: Employee Development, Objective 4B), ensuring an adequate transition plan for the new administration building (Goal Four: Employee Development, Objective 4C), preparing for and completing the next labor negotiations (Goal Four: Employee Development, Objective 4E) and developing partnerships with stakeholders to achieve common goals (Goal Five: Community Outreach and Communications, Objective 5A). Continued to oversee the design, engineering and construction of the new administration building and corporation yard. Changes from FY 2012/13 Service Levels The budget includes a one-time expense of $40,000 for a study and recommendation on the District s capacity fee structure and to make recommendations on plan review and inspection fees. The budget removed a one-time expense in FY 12/13 of $15,000 to update the District s Strategic Plan. The budget reduced the training/conference budget for the GM to attend CASA conferences, as the April conference will no longer occur. Objectives for FY 2013/14 Continue to provide direction to all departments, aligning efforts to promote and be consistent with the District s goals and policy directives. Complete a study of the District s Capacity Charge Structure and make recommendations to the Board regarding structure changes to improve fairness and equity in the fee calculation methodology. Continue to provide overall direction to the engineering staff regarding significant capital projects, including IPS replacement, Phase 1 Recycled Water expansion, and MST pipeline construction. Accomplishments in FY 2012/13 Provided direction to all departments, aligning efforts to promote and be consistent with the District s goals and policy directives. Represented the District at the North Bay Water Reuse Authority, specifically working to bring federal money to the District for the Napa State Hospital Recycled Water Pipeline construction and the design of the MST Recycled Water Pipeline. 40

41 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Performance measures for this department are inherently captured in the performance measures of other departments. As such, there are no specific performance measures listed. Percent of Operating Budget Proposed Budget General Manager's Office 5.6% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 443,720 $ 346,523 $ 565,300 $ 373,383 $ 619, % Services & Supplies $ 40,655 $ 98,731 $ 134,400 $ 67,940 $ 104,520 (22.2%) Other TOTAL EXPENDITURES $ 484,375 $ 445,255 $ 699,700 $ 441,323 $ 724, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 General Manager Assistant General Manager/District Engineer Totals

42 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. Department Goals The Administrative Services Department goals are: Provide financial management system to help managers and directors provide stewardship of the District. Provide time sensitive and necessary Human Resources support throughout the District. Provide general administrative support to employees and serve the requests of the general public. 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) and preparing and presenting policy options for financing the replacement of sewers (Objective 2C). This department will also be responsible for conducting a Sewer Service Charge fee study prior to the next Proposition 218 hearing (Objective 2D). The Administrative Services Department also supports Goal Four: Employee Development by taking the lead on developing and implementing management succession plans (Objective 4A) and creating an employee master plan (Objective 4D). Accomplishments in FY 2012/13 Completed the District s Comprehensive Annual Financial Report (CAFR), an enhanced version of financial statements Received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA) for the FY2010/11 CAFR. Received the Distinguished Budget Presentation Award from the Government Finance Officers Association (GFOA) for the FY 2012/13 Budget. 42 Completed the creation of a District Code. Update the District s procurement policies to improve clarity and conform to existing law. Completed third year s Performance Measurement Report. Coordinated the move of the Administration, Engineering and Collection System Department offices to the new facilities at the SWRF. Completed and implemented succession plans for the 6 most critical positions at the District. Took the lead on assessing the inventory and condition assessment system for the District s capital assets to determine whether additional efforts were necessary. Changes from FY 2012/13 Service Levels The budget includes various reorganizations of expenses related to moving the administrative offices to the SWRF. The update of the District Employee Handbook was carried forward into FY 2013/14 ($25,000). The budget includes rewriting the District s job descriptions to better conform to existing work and to assist with the return-to-work program. ($15,000) The budget includes a one-time expense of sending the Director of Administrative Services/CFO to the Water/Wastewater Leadership Center. ($14,000) Objectives for FY 2013/14 Continue to provide general administrative, human resource and financial support to managers, supervisors and staff, in support of District activities. Complete an update of the District s Employee Handbook. Complete the fourth year s Performance Measurement Report Provide additional support for the continued development of additional succession plans and document key business processes for business continuity planning.

43 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. Experience Turnover Rate (Lower is better) % 3.92% 3.01% 5.72% 2% 0% Revenue-to-Expense Ratio (positive number is goal) Debt Service Coverage Ratio (greater than 125% is required) % 275% 328% 325% 200% 200% Other Measures These are measures that are not in the Performance Measurement Report, but are still important to evaluate the performance of the department. Numbers for 2013 are estimates, while numbers for 2014 are goals. Accounts receivable at 90+ days as of June 30 (Goal is to remain under $30,000) $434k $8k $94k $174k $30k $30k Employee Survey Results These are the percentage of employees who rated the following statement either positively or were neutral: The forms and process used for annual employee performance evaluations are user friendly na 40% 89% na na 90% (Note: the next employee survey will not be done until Fall 2014.) Sewer Service Charge Bill Affordability (goal is to remain under 1.0% per EPA guidance) % 0.64% 0.64% 0.65% 0.65% 0.65% Percent of Operating Budget Proposed Budget Administrative Services 12.5% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 1,001,155 $ 1,069,165 $ 1,127,100 $ 1,075,789 $ 1,160, % Services & Supplies $ 453,484 $ 486,058 $ 516,300 $ 492,993 $ 543, % Other $ 36 $ 36 $ 50 $ 40 $ 50 - TOTAL EXPENDITURES $ 1,454,675 $ 1,555,258 $ 1,643,450 $ 1,568,822 $ 1,704, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Director of Admin Services/Chief Financial Officer Clerk to the Board/Human Resources Officer Senior Accountant Accountant Management Analyst and Outreach Coordinator Senior Office Assistant Office Assistant Totals

44 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. Department Goals The Safety, Training and Fleet Maintenance Department goals are: Implement programs that result in improved safety and lower accidents and incidents rates Facilitate proper management of fleet vehicles to ensure they are safe and reach their intended useful lifespan Link to District Goals in Strategic Plan This Department supports all of the goals of other departments by ensuring that the workplace is safe and employees are adequately trained. The Department specifically supports the District s Goal Three: Operational Capability by being responsible for preparing a safety and security vulnerabilities study and public communications plan (Objective 3A). Accomplishments in FY 2012/13 Completed the 10-year plan for fleet maintenance, rehabilitation and replacement that integrates with the Capital Improvement Plan. Authored and implemented the Electrical Safety Work Program to ensure compliance and safe operations with electrical equipment. With others, implemented into the District Facilities Emergency Action Plan a public communications plan ensuring time sensitive information is disseminated to the public as quickly as possible. Completed FCC requirement for narrowbanding of District s frequencies. Implemented and conducted cross-departmental quarterly safety inspections within the District ensuring a fresh set of eyes are reviewing work place safety practices. Developed / implemented pre-use inspections checklist for District non-commercial vehicles to ensure compliance with District policies. Partnered with City of Napa Fire on purchase of respirator fit testing machine ensuring annual fit test requirement is met for District employees. Conducted comprehensive injury & illness analysis identifying workgroups most affected by sprains and strains. Conducted the following trainings: - Confined space team training - Safety Committee and Investigation Team training - CPR / 1 st Aid / AED training - Industrial truck instructor / operator certification - Backhoe operator certification Changes from FY 2012/13 Service Levels The includes training for several district-wide classes that are required once every three years ($5,100). Some one-time only expenses for Arc Flash analysis and the development of an electrical safety program were removed from the base budget ($18,350). Fire monitoring and alarm services were moved from various departments and consolidated here. Objectives for FY 2013/14 Maintain 10-year plan for fleet maintenance, rehabilitation and replacement. Develop and implement periodic review plan for District safety policies and programs. Amend current safety policies and programs to meet new requirements due to relocation of three departments. Prepare for and coordinate the safety review conducted by CSRMA, the District s workers compensation insurance carrier. Continue on 5-year plan to implement fully the lockout-tagout Standard Operating Procedures (SOP) development and revision project, in conjunction with plant maintenance staff. 44

45 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. District s Experience Modification (XMOD) Rate (lower is better; NSD is compared to the CSRMA risk pool member average) 08/09 09/10 10/11 11/12 12/13 13/14 NSD Avg na na 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 Lost Time Hours (lower is better) Number of Insurance Claims (number of claims per 200,000 hours of work) 08/09 09/10 10/11 11/12 12/13 13/ Severity of Insurance Claims (cost of claims per 200,000 hours of work) 08/09 09/10 10/11 11/12 12/13 13/14 0 $18k $12k $16k $10k $0 Online Safety Training Hours Completed by Staff ,201 1,438 1,269 1,167 1,150 1,150 Percent of Operating Budget Proposed Budget Safety, Training & Fleet Maintenance 1.8% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 90,472 $ 139,936 $ 165,000 $ 143,808 $ 171, % Services & Supplies $ 75,617 $ 69,730 $ 51,100 $ 55,898 $ 73, % Other TOTAL EXPENDITURES $ 166,089 $ 209,666 $ 216,100 $ 199,706 $ 244, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Safety, Training & Fleet Maintenance Officer Totals

46 Collection System Description The purpose of the Collection System Department is to clean and maintain, inspect, repair, replace or rehabilitate sewers 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. Department Goals The Collection System Department goal is to respond to the sewer maintenance needs of the community in a timely manner, first proactively by performing preventive maintenance to avoid problems, and then by responding to customer problems within 30 minutes, 24 hours a day. 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). Accomplishments in FY 2012/13 Performed deflection testing on 1,400 feet of 8 SDR26 PVC main line that has been in the ground between 9 and 12 years. All 1,400 feet passed the deflection test. Assisted Treatment Plant Staff with the rebuilding of the 4 sand filters at the plant. Removed 4 abandoned sewer manholes that were significant sources of I & I. Root foamed 27,024 feet of sewer main, 231 laterals and 11 manholes to reduce the root intrusion into these facilities. Installed 400 feet of 8 sanitary sewer mainline in the vicinity of Morlan Drive west of Solano Avenue to alleviate surcharging in the West Pueblo area during the winter months and reduce the potential of a wet weather overflow. Performed preventive maintenance on laterals and mains (Calendar Year 2012), including: - Cleaned 46% of the sewer mains in the system. - Cleaned 1,611 sewer laterals - Video inspected 10% of the sewer mains in the District s system as well as 2247 sewer laterals 46 Responded to 590 emergency calls (CY 2012): were after hours, weekend or holidays - 10 were plugged mains, 353 were homeowners laterals, 227 were District plugged laterals Completed 1,873 Underground Service Alert (USA) Mark & Locates (CY 2012) Repaired and replaced clean-outs, laterals and mains (CY 2012): - Repaired 22 clean-outs and raised or lowered 49 clean-outs - Installed136 District clean-outs - Replaced 5 District sewer laterals, repaired 19 sewer laterals, and rehabilitated 39 laterals. - Performed spot repairs on sanitary sewer mains in Montoyas Alley, Cross Street and an easement line off of Montecito Boulevard - Completed 10 cement jobs, replacing sidewalks after removing them for lateral replacements. Changes from FY 2012/13 Service Levels FY 2013/14 budget includes $25,000 to implement an easement maintenance program to allow collections staff better access to facilities located outside of the public right of way. FY 2013/14 budget includes $20,000 in temporary help while an employee is on leave for an injury. Objectives for FY 2013/14 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. Continue to maintain efficiency of preventive maintenance operations, cleaning at least 40% of District sewer mains per year. Work to eliminate higher maintenance sewer mains by replacing or repairing them. Continue with the sewer lateral preventive maintenance program. Replace or rehabilitate 60 street laterals. Video inspect 10% of the sewer mains in the District s system 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.

47 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. 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 112 2, CA 6,030 57,639 29,701 17,861 na na Planned Maintenance as Ratio of Total Maintenance (Goal is 80%) % 93.6% 96.6% 95.6% 80% 80% Percent of Main Lines Cleaned (Goal is 40%) % 44.0% 56.1% 45.8% 40% 40% Sewer Main Condition Assessment (% of sewer mains video inspected) (Goal is 10% per year) % 8.7% 10.3% 9.9% 10% 10% Service Calls for District Plugged Laterals Plugged Main Lines Not Resulting in Category 1 SSO Percent of Operating Budget Proposed Budget Collection System 17.0% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 1,628,576 $ 1,708,072 $ 1,848,500 $ 1,747,402 $ 1,936, % Services & Supplies $ 303,614 $ 437,917 $ 447,800 $ 420,900 $ 371,970 (16.9%) Other TOTAL EXPENDITURES $ 1,932,190 $ 2,145,990 $ 2,296,300 $ 2,168,302 $ 2,308, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Collection System Manager Collection System Supervisor Collection System Technician Collection System Worker III Collection System Worker IT/I/II Totals

48 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. Department Goals The Treatment Plant Operations Department s goal is to adhere to all federal, state and local guidelines while effectively administering the requirements for permits and regulations. 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 SCADA projects (Objective 1C). 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 (Objective 6C) and will take the lead on determining strategies for the beneficial reuse of algae (Objective 6D). Accomplishments in FY 2012/13 Incurred no violations of the District s Discharge permit. Worked with the Engineering Department on design of SCADA Phase IV. Design completed and construction underway. Rebuilt the DynaSand filters utilizing skills from all departments resulting in savings to the district. FOG station construction completed and placed in service in August to increase digester gas production. Conversion of OPS32 to WIMS complete. Began CIWQS electronic regulatory reporting. Initiated electronic reporting for biosolids. Completed Dissolved Air Floatation (DAF) clarifier pilot program to determine optimum operational parameters for full scale DAF unit to replace flocculating clarifier as per recycle expansion project. Changes from FY 2012/13 Service Levels Increased annual NPDES permit fee ($20,000). Additional polymer anticipated when digester is brought down for mixer replacement ($7,000). Objectives for FY 2013/14 Continual process optimization of the plant control systems to achieve a reduction in chemical and energy costs. Continue installation of additional online instrumentation. Optimize the ORP control system, reducing the amount of chemicals needed for treatment and reducing on-call operator time. Continue producing an effluent that meets the NPDES permit requirements. Completion of SCADA Phase IV. Purchase new OIS tablets for operator interface with SCADA remotely during plant checks. Install a Wi-Fi system to support new OIS pads and staff interface with the plant s computer systems. Optimize production of biogas in digester resulting from FOG receiving program. Assist engineering in the design of the IPS expansion project. Assist engineering in the design of the recycle water expansion project. Assist engineering in the design of the aerators and automated dredge in Oxidation Pond 1. 48

49 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. Treatment for BOD and TSS Removal (Must be higher than 85% - winter monthly average) BOD 97.9% 97.7% 97.9% 97.3% 98% 98% TSS 97.1% 97.2% 96.9% 97.2% 97% 97% Total Allowable BOD and TSS (Must be lower than 30 mg/l - winter monthly average) BOD TSS Polymer per MG processed Winter and Summer Wnt Smr Hypochlorite per MG processed Wnt Smr Percent Electricity Produced by Cogen Engine % 23.0% 26.8% 28.2% 34% 40% Electricity Consumed per Million Gallons Treated (Megawatt-hours per MG processed) Wnt Smr Percent of Operating Budget Proposed Budget Treatment Plant Operations 27.0% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 1,328,631 $ 1,290,116 $ 1,395,200 $ 1,331,881 $ 1,444, % Services & Supplies $ 2,045,617 $ 2,062,272 $ 2,245,250 $ 2,264,638 $ 2,222,930 (1.0%) Other $ 190 $ 190 $ 200 $ 200 $ TOTAL EXPENDITURES $ 3,374,438 $ 3,352,577 $ 3,640,650 $ 3,596,719 $ 3,667, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Plant Manager Operations Supervisor Operator OIT/I/II/III Totals

50 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. Department Goals The Treatment Plant Maintenance Department goals are: Provide corrective and preventive maintenance cost effectively and efficiently. Maintain critical operational systems so that there is reliability and operational resiliency. 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 SCADE upgrade (Objective 1C), and Goal Two: Financial Stability by performing planned and corrective maintenance on plant equipment. Accomplishments in FY 2012/13 Designed and installed instrumentation to record and read BTU/cubic foot of methane. Completed CIP #3536 installing power monitoring equipment for our Energy Management Program. Completed CIP # 3543 rebuilding of second digester recirculation motor and pump. Started upgrade of pump seal water delivery systems. Provided technical support for the completion of SCADA Phase IV project. Provided technical support for the start up of the FOG Receiving Station. Enhanced and organize the inventory system to reduce down time. Provided support for upgrade in control of the Rotork valve system. Implemented SOP s of equipment for Control of Hazardous Energy. Developed Control of Hazardous Energy form. Completed Electrical/Arc-Flash survey of treatment plant, lift stations and implemented arc-flash labeling standard. Changes from FY 2012/13 Service Levels carries forward the one-time only expense of $160,000 for marsh maintenance. removes the one-time only expense for rehabilitation of the recycled water filters. The includes the maintenance budget previously in the Administrative Services Department budget for building maintenance, grounds maintenance and fire alarm monitoring, as these will be combined into this Department. removes the fire sprinkler testing expenses, as this is required only every 5 years. removes the $94,000 budgeted last year to rebuild Recycled Water Pump #2, as this project was completed. Objectives for FY 2013/14 Expand equipment data base and associated task of Maintenance Program. Continue enhancement and organization of the inventory system to reduce down time. Continue to implement an effective life cycle equipment replacement schedule for better budgetary expense projections. Continue with pump seal water delivery upgrades. Expand the inventory of lock out devices for equipment in the control of hazardous energy. Start four year CIP project to replace Rotork Actuators. 50

51 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. Planned Maintenance Ratio of Hours Worked (Higher is better) % 51.0% 49.9% 63.7% 65% 68% Other Measures These are measures that are not in the Performance Measurement Report, but are still important to evaluate the performance of the department. Numbers for 2013 are estimates, while numbers for 2014 are goals. Number of work orders completed ,602 1,791 1,409 1, ,500 Uptime for Cogeneration Engine % 68% 82% 84% 86% 88% Uptime for Pumps at Influent Pump Station % 93% 67% 81% 90% 100% Percent of Operating Budget Proposed Budget Treatment Plant Mainenance 11.1% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 663,772 $ 704,287 $ 768,200 $ 740,277 $ 789, % Services & Supplies $ 472,943 $ 695,740 $ 980,728 $ 613,343 $ 723,710 (26.2%) Other TOTAL EXPENDITURES $ 1,136,715 $ 1,400,027 $ 1,748,928 $ 1,353,620 $ 1,513,230 (13.5%) Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Plant Maintenance Supervisor Equipment Maintenance Specialist I/II Plant Attendant Totals

52 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. Department Goals The Treatment Plant Laboratory Department s goal is to 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. 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. Changes from FY 2012/13 Service Levels $32,000 for chronic toxicity screening, which is required once every 5 years as part of NPDES permit compliance. FY 2013/14 includes $3,500 for an ELAP audit to address methodological updates, QC and training requirements. An audit is typically done every 5 years. moves $20,000 from Engineering Department to this department for a paid intern. Objectives for FY 2013/14 Finalize update of the Napa Sanitation District Enforcement Response Plan (ERP) to reflect current practices and 40CFR compliance. Conduct a third party audit of the Napa Sanitation District Laboratory s Quality Assurance Program, SOP s and Analyst training program. Develop and implement an analyst educational outreach training program. 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. Accomplishments in FY 2012/13 Finalized integration and implementation of the Laboratory Information Management System (LIMS) for laboratory data management, QA/QC tracking and productivity streamlining. Update of the Napa Sanitation District Enforcement Response Plan (ERP) to reflect current practices and 40CFR compliance. Update the Laboratory QA/QC Manual and SOP s to reflect the EPA Method Update Rule and new LIMS practices. Produced high quality analytical data for realtime operational changes. Incorporated pretreatment sampling/analysis events to provide pretreatment regulatory compliance for the District. 52

53 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Performance measures for this department are inherently captured in the performance measures of other departments, most notably Plant Operations. As such, there are no specific performance measures listed from the Performance Measurement Report. Other Measures These are measures that are not in the Performance Measurement Report, but are still important to evaluate the performance of the department. Numbers for 2013 are estimates, while numbers for 2014 are goals. Number of regulatory analyses processed ,435 4,961 3,828 4,498 4,500 4,500 Number of Process Control analyses processed ,382 10,081 15,888 11,522 12,000 12,000 Number of special request analyses processed , ,300 1,300 Number of Quality Control/Assurance analyses processed ,176 6, (a) (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. Percent of Operating Budget Proposed Budget Treatment Plant Laboratory 6.0% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 541,220 $ 575,601 $ 604,400 $ 582,773 $ 627, % Services & Supplies $ 139,399 $ 134,174 $ 133,350 $ 123,517 $ 189, % Other TOTAL EXPENDITURES $ 680,619 $ 709,775 $ 737,750 $ 706,290 $ 817, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Lab Supervisor Lab Technician I/II Totals

54 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. Department Goals The Engineering Department goals are: Plan and implement the 10-Year Capital Improvement Plan. Plan projects to ensure that the renewal or replacement of existing assets is completed according to condition assessments and estimated useful lives of assets. Complete the first review of development plans submitted for District approval within 30 calendar days. Provide technical assistance to other District departments as need. 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) SCADA project implementation (Objective 1C) Build new administration building and corporation yard (Objective 1B) Working with local partners in the distribution of recycled water (Objective 6A) Studying the feasibility of expanding recycled water storage (Objective 6B) Setting a target for self-generated energy production (Objective 6C) 54 Accomplishments in FY 2012/13 Initiated in-house design of Basin L Rehabilitation Project 2&3. Completed in-house design and construction management of the Basin L Rehabilitation Project 1. Initiated design of the IPS Replacement, Pond Aeration and Recycled Water Phase 1 Expansion projects that were recommended in the WWTP MP. Completed the construction of the Imola Avenue Recycled Water Pipeline extension. Completed the SCADA Phase 4 Project design and construction. Completed the FOG Receiving Station project design and construction. Completed construction of the administration building and corporation yard. Responded to approximately 270 phone requests and 260 counter requests for development related information. Issued permits and collected fees for about 30 residential units and 20 commercial units. Conducted approximately 800 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 2012/13 Service Levels removes $30,000 for temporary project management to cover for planned staff leave. removes $17,000 per year for leasing the engineering trailer at Hartle Ct. moves $20,000 for an intern to the Treatment Plant Laboratory budget. adds $3,000 for tablet devices with mobile data service for inspectors. Objectives for FY 2013/14 Develop and utilize capital program management system to monitor and report progress of active capital projects. 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. 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.

55 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. Development Review Response Time (% of applications where 30-day goal is met) % 99% 95% 97% 96% 96% Capital Expenses as Percent of Operating Expenses % 37% 64% 71% 65% 100% Other Measures These are measures that are not in the Performance Measurement Report, but are still important to evaluate the performance of the department. Numbers for 2013 are estimates, while numbers for 2014 are goals. Number of construction inspections , (The reduction in construction inspections between 2009 and 2010 is due to a change in the calculation methodology starting in July 2009.) Number of development plans reviewed Renewal & Replacement of Assets (as a % of asset net worth 2% minimum, 4% goal) % 1.4% 2.8% 3.0% 4.0% 4.0% Percent of Operating Budget Proposed Budget Engineering 8.5% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 835,717 $ 918,358 $ 1,020,300 $ 921,287 $ 1,073, % Services & Supplies $ 185,634 $ 114,835 $ 125,250 $ 69,950 $ 76,730 (38.7%) Other TOTAL EXPENDITURES $ 1,021,351 $ 1,033,193 $ 1,145,550 $ 991,237 $ 1,150, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Senior Civil Engineer Junior/Assistant/Associate Engineer District Inspector I/II Senior Construction Inspector Construction Inspector Totals

56 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. Program Goals The Pollution Prevention Program goals are: Decrease Fats, Oil and Grease (FOG) deposited in the Collection System, thus reducing maintenance expenses and reducing the risk of Sanitary Sewer Overflows (SSOs). Prevent pollutants from being discharged into the sewer system through active regulation, promotion of Best Management Practices, and outreach to the public. Link to District Goals in Strategic Plan This program supports the Strategic Plan, specifically Goal Three: Operational Capability in the development of policy and programs regarding the impact of wineries on the NSD system (Objective 3B) and Goal Five: Community Outreach and Communication in the development of a communications plan to address NSD outreach and public information needs (Objective 5B). Participated in the annual Earth Day event, helping to coordinate the event and provide educational materials to the general public. Completed and disseminated Best Management Practices (BMPs) for wineries & breweries, mobile washers, and auto repair services. Continued participation in the toilet retrofit rebate program and PG&E High Efficiency Clothes Water Initiative, both designed to reduce water consumption and flow into the sewer system. Implemented a Project WET curriculum training for Napa teachers. Expanded the medication collection program to include Napa Kaiser facilities. Launched the new NSD website. Changes from FY 2012/13 Service Levels FY 2013/14 budget eliminates payments to a consultant for maintaining the NSD website ($7,200). It also includes an increase in service for the Recycle More Program to provide curbside collection of used cooking oil ($4,800). Objectives for FY 2013/14 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 Develop classroom presentations targeting elementary, middle and high school students. With the City of Napa, launch and promote the Recycle More Program which provides curbside collection of used cooking oil. Continue to develop and refine the inspection program for Fats, Oil and Grease (FOG) and categorical dischargers. Develop performance goals for increased and improved inspection of non-categorical dischargers. Continue monitoring, sampling, reports, and billing for all categorical dischargers. Accomplishments in FY 2012/13 Worked with partners to implement a one day medication collection event at Queen of the Valley Medical Center. 56

57 Performance Measures These measures, from the Performance Measurement Report, are those that this program directly or indirectly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. Restaurant Inspections (Fats, Oil & Grease) (goal is every food service establishment annually-178) Other Measures These are measures that are not in the Performance Measurement Report, but are still important to evaluate the performance of the program. Numbers for 2013 are estimates, while numbers for 2014 are goals. Plant Tours Conducted and Presentations Made Main Line Sanitary Sewer Overflows Due to FOG (goal is zero) Lateral Overflows or Backups Due to FOG (goal is zero) Percent of Operating Budget Proposed Budget Pollution Prevention 0.7% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 13,355 $ 14,273 $ 16,150 $ 14,062 $ 17, % Services & Supplies $ 88,593 $ 73,803 $ 74,100 $ 63,250 $ 72,770 (1.8%) Other TOTAL EXPENDITURES $ 101,948 $ 88,077 $ 90,250 $ 77,312 $ 90, % Positions in All Departments Allocated to Pollution Prevention Activities Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Plant Lab - Laboratory Supervisor Administration - Mgmt Analyst & Outreach Coord Engineering - Inspector Engineering - Engineer Steering Committee Plant Operations - Plant Manager Engineering - Senior Civil Engineer Administration - Director of Admin Services/CFO Totals

58 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. Department Goals The Water & Biosolids Reclamation Department goals are: Dispose of recycled water during the summer months through sales to customers and on District-owned property. Dispose of 100% of biosolids through land application on District-owned property. 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 storage for recycled water (Objective 6B). Conversion of common landscaped areas in the Napa Valley Commons Business Park (Napa Valley Corporate Park) for recycled water irrigation. Applied 874 dry tons of dewatered biosolids on District land. Distributed 604 million gallons (1,854 acre feet) recycled water. Completed Fish Friendly Farming planning process for Jameson and Somky ranches. Initiated Fish Friendly Farming planning process for Fegundes Ranch. Changes from FY 2012/13 Service Levels The includes additional resources for the repair of recycled water pipeline ($72,000). The includes one-time expenses related to tub grinding of trees that were pruned along Jameson and Somky in the three previous fiscal years and stored on the Somky property ($10,000). The includes additional expenses related to providing high speed network access to Jameson ($2,040). The includes the one-time expense of a new PC for staff online training ($1,200). Objectives for FY 2013/14 Complete an update to the Program portion of the Reuse Manual. Complete activities necessary to achieve Fish Friendly Certification at the reuse sites, with certification anticipated in FY 2013/14. Continue the Jameson Reuse Site sprinkler rehabilitation project, to increase the efficiency of recycled water application. Develop Biosolids Co-Composting Pilot Project with Napa Recycling Waste Services to explore the possibility of processing biosolids to Class A standards and developing a viable market product. Accomplishments in FY 2012/13 Completed annual recycled water user site inspections, issuing no Notice of Noncompliance. Continued the sprinkler system rehabilitation project by restoring 27 sprinklers at the Jameson Reclamation Site. Connected 4 infill use sites at Napa Valley Gateway Business Park for recycled water use. 58

59 Performance Measures These measures, from the Performance Measurement Report, are those that this department most directly impacts. The full report, including the definitions, calculation methodologies, and an analysis of the data can be found in Appendix E of this budget document. Numbers for 2013 are estimates, while numbers for 2014 are goals. Recycled Water Service Availability (% of time RW is available to customers May to Oct.) % 100% 97.8% 100% 100% 100% Recycled Water Reuse by Customers (% of recycled water sold to customers May to Oct.) % 54.5% 56.4% 62.3% 65% 65% Biosolids Put to Beneficial Reuse (% of biosolids applied to seeded & harvested acres) % 18% 90% 100% 100% 100% Percent of Operating Budget Proposed Budget Water & Biosolids Reclamation 6.4% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits $ 422,692 $ 498,427 $ 509,500 $ 496,673 $ 561, % Services & Supplies $ 197,933 $ 286,420 $ 241,100 $ 227,540 $ 282, % Other $ 23,381 $ 23,411 $ 24,800 $ 24,760 $ 24,800 - TOTAL EXPENDITURES $ 644,006 $ 808,259 $ 775,400 $ 748,973 $ 869, % Position Authorizations Position Series FY 10/11 FY 11/12 FY 12/13 FY 13/14 Reclamation Systems Director Reclamation Maintenance Worker I/II Plant Attendant Totals

60 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 2012/13 Service Levels There were no changes from FY 2012/13 service levels related to insurance. Budget for debt service increased based on the issuance of new debt in FY 2012/13, while budget for intrafund transfers from operations to capital decreased. Percent of Operating Budget Proposed Budget Non Departmental 1.9% Actual Actual Adjusted Estimated Proposed Percent FY 10/11 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Change Salaries & Benefits Services & Supplies $ 237,631 $ 249,308 $ 265,400 $ 228,150 $ 254,300 (4.2%) TOTAL OPERATING EXPENDITURES $ 237,631 $ 249,308 $ 265,400 $ 228,150 $ 254,300 (4.2%) Debt Service, Transfers and Taxes $ 5,971,935 $ 6,531,253 $ 7,262,164 $ 7,034,900 $ 6,432,240 (11.4%) TOTAL EXPENDITURES $ 6,209,566 $ 6,780,562 $ 7,527,564 $ 7,263,050 $ 6,686,540 (11.2%) 60

61 Capital Improvement Plan Construction during Lower Alphabet Street Sewer Improvement project 61

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63 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 63 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. 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 4.0% 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 is scheduled for replacement in FY 2015/16.

64 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 26, 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 2011/12 Actual Beginning Deficit ($15,101,839) Revenues 3,330,418 Expansion Projects 4,208,445 FY 2012/13 Estimate Beginning Deficit ($15,979,866) Revenues 1,600,500 Expansion Projects 2,254,482 Beginning Deficit ($16,633,848) Revenues 2,075,500 Expansion Projects 8,624,576 Ending Deficit (23,182,924) 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 2011/12 can be found in Appendix F of this budget document. Changes from Prior CIP During the 2012/13 fiscal year, the 10-Year CIP was amended by the Board of Directors. The following is a summary of the major changes made to the plan during the year: The activated sludge diffuser replacement project was moved to FY 2015/16 based on condition assessments ($407,100). Additional appropriation (317,000) was added for the Basin L I&I Project 1 (CIP #13731). The IPS Expansion project (CIP #13724) moved appropriation ($1,309,100) from out years into FY 2012/13 as this project progressed faster than expected. The Phase 1 Recycled Water project (CIP #13714) moved appropriation ($2,179,800) from out years into FY 2012/13 as this project progressed faster than expected. FY 2010/11 Actual Beginning Deficit ($14,474,480) Revenues 2,183,802 Expansion Projects 2,811,161 64

65 Summary of FY 2013/14 Capital Projects The following is a summary of FY 2013/14 capital projects. Dollar amounts noted are the amount budgeted for FY 2013/14, and not the entire amount of the project. For complete financial information, see the table of projects that follows, starting on page 73. 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. Total vehicle replacement costs for FY 2013/14 is $489,000. This number is included in the amounts provided in the following descriptions by type. 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 a capacity expansion on Browns Valley Road, rehabilitation of the North Napa 18 and Soscol Avenue 14 seer trunks, and the final I&I Project in Basin L just south of downtown Napa. Collection system projects for the fiscal year total $2,916,700. Collection System Equipment The Collection Department will be replacing its backhoe in FY 2013/14. Total replacement cost is $165,000. Lift Stations Lift stations are pump stations within the sewer collection system. In FY 2013/14, the channel gate at the West Napa Pump Station will be replaced, for a cost of $45,000. Treatment There are three main projects in this area. FY 13/14 continues the project to install new aeration equipment into Pond 1. This will allow the ponds to be more efficient at removing waste, and thus increasing the amount of wastewater that can be treated by the pond system. The second project is the Phase 1 Recycled Water Expansion that will enter the third year of a four-year design and construction cycle. The project will double the amount of recycled water that can be produced and allow recycled water to be produced at any time of 65 Stonecrest Lift Station the year, not just during the summer months. The third project is the installation of an automated dredge on Pond 1 to remove biosolids. The FY 13/14 expenditure for these three projects is $7,431,600. Treatment Equipment These projects include a number of equipment replacements, such as replacement of digester recirculation pumps (22,500), stationary gas detectors ($100,000) and residual analyzers ($30,000). Significant new projects include solids handling improvements ($106,400). This year begins a 4-year process of replacing the Rotork actuators, scheduled for $80,000 per year. The total FY 2013/14 expenditure is $713,300, including vehicles. Treatment Plant Structures Included here is the third year of the four-year project to design and construct a replacement for the Influent Pump Station ($8,200,300). SCADA There are no SCADA improvement or replacement project scheduled for FY 2013/14. Recycling-District This section includes projects and equipment necessary for the District to maintain its fields, conduct spray disposal of water, and land apply biosolids. FY 2013/14 includes the replacement of a tractor ($72,000). 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 ($150,000), beginning the construction of the recycled water distribution pipeline into the

66 10-Year CIP Summary FY 2013/14 10-Year CIP Collection System $2,916,700 $34,445,700 Collection System Equipment 165,000 2,614,800 Lift Stations 45, ,000 Treatment 7,431,600 16,095,100 Treatment Equipment 713,300 6,306,800 Treatment Structures 8,200,300 23,961,900 SCADA 0 768,600 Recycling-District 72,000 3,170,000 Recycling-Expansion 5,160,000 18,584,500 Other 299,000 2,577,000 Total $25,002,900 $109,400,400 MST area ($4,700,000) and an associated project to split off the south distribution lines from the north lines to better manage pressure needs once the MST project is complete ($310,000). Other Development technical support ($208,000) is the capitalization of staff time spent reviewing the plans and inspections associated with contributed capital. This category also includes the replacement of vehicles used by administration, engineering and others. The total for FY 13/14 is $299,000. Unfunded 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. There are also projects that have been identified in master plan documents that have not been included in the CIP. Because there are insufficient resources to pay for all recommended projects, staff has determined that the following projects could be delayed until some future date when resources are identified to complete them. It is also staff s determination that delaying these projects will not result in a deferred maintenance scenario, nor will the delay pose an unreasonable risk for system failure or permit violation: Flocculating Clarifier Weir this project was on previous Capital Improvement Plans and was recommended in the Master Plan. This project was placed on hold in FY 2013/14. Through design changes as part of the Phase 1 Recycled Water project, it has been determined that the Flocculating Clarifier should be converted to a Dissolved Air Floatation (DAF) clarifier. This change eliminates the need to heighten the weirs. The District completed an Energy Alternatives Study that looked for ways the District could generate its own electricity, including solar and wind sources. It was determined that the Return on Investment for projects in the study, such as wind and solar energy production, is not sufficient to justify them at this time, so they have not been included in the CIP. Staff will continue to monitor rebates and equipment costs. A future project will be recommended if cost effective. Demolition of North Napa Pump Station and Force Main The North Napa Pump Station and Force Main were decommissioned after the siphon was installed under the Napa River. The pump station and force main were left intact in case unexpected operational issues with the siphon necessitated their reinstatement. The siphon has now operated successfully for several years. In the future, it is anticipated that the pump station and force main should be properly abandoned. Construction of the FOG Receiving Station 66

67 Impact of Projects on Operating Budget While most of the capital projects planned for FY 2013/14 are replacements and rehabilitations of existing capital assets, some the FY 2013/14 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 #13731, #13706, and others) 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 pond aeration project (CIP #13713) will result in increased electricity usage from pumping more air into Pond 1 (estimated at about $25,000 per year). existing system is decades old, it is anticipated that the new system will be more efficient and not result in increased energy costs. The new system will decrease maintenance costs, as the existing system requires significant effort to maintain. Estimated avoided costs of rebuilding IPS pump is approximately $70,000. The expansion of the recycled water pipeline into MST will lead to increased maintenance and operating costs for that pipeline 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 when the project is completed (FY 15/16) will need to be increased to include an additional $35,000 to pay for annual cathodic protection testing and leak detection. The increased capacity of the recycled water system (equalization and increased filters CIP #13714) will result in increased supply costs (electricity) of approximately $200,000 when fully operational and producing an additional 1,700 acre feet of water annually. These costs have been anticipated and factored into the recycled water fee increase scheduled to go into effect in calendar year The project to convert one flocculating clarifier to a DAF (part of the Phase 1 recycled water project CIP #13714) will result in decreased polymer (chemical) use that is expected to be greater than the estimated increased electricity costs from the new DAF. The net impact of this project should be to reduce operating expenses by approximately $50,000 annually or more. The Influent Pump Station replacement (CIP #13724) will allow greater flows to be pumped into the plant from the Collection System, but as the New Administration Building under construction in

68 FY 2013/14 CIP Project Descriptions COLLECTION SYSTEM Mainline Sewer Rehabilitation FY 2013/14: $79,900 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 2013/14: $174,800 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 2013/14: $65,300 Ongoing program to rehabilitate street laterals as required using NSD crews or an outside contractor Cleanout Installation / Rehabilitation FY 2013/14: $72,000 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 2013/14: $40,000 This is the second-to-last year of this program that conducts smoke testing and flow monitoring for I&I reduction projects in this program. A consultant will revise the Collection System Master Plan hydraulic model to determine the most cost effective method to address capacity deficiencies in the collection system Basin L - I&I Reduction Project 2 Project Total: $2,520,000 FY 2013/14: $932,800 Project 2 has been 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 4 Project Total: $1,643,000 FY 2013/14: $415,600 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). Staff will use the results of the winter 09/10 flow monitoring and coordination with City paving projects to determine the project's specific location North Napa 18" ACP & Soscol Ave 14"ACP Project Total: $969,000 FY 2013/14: $636,300 This project will replace sewer main pipe Browns Valley Road Project Total: $10,700,000 FY 2013/14: $500,000 The project in FY 13/14 is to expand capacity on Browns Valley near McCormick Lane to alleviate surchaging. COLLECTION SYSTEM EQUIPMENT Backhoe Replacement (Vehicle 714) Project Total: $165,000 FY 2013/14: $165,000 The project replaces the backhoe used in Collections. This unit has reached the end of its useful life, has been experiences high levels of miantenance expense, and needs to be replaced. The backhoe is typically replaced every years, based on maintenance records and condition assessment. LIFT STATIONS West Napa Channel Gate Replacement Project Total: $45,000 FY 2013/14: $45,000 The challen gate at the West Napa Pump Station is worn and requires replacement to ensure proper function of the pump station. 68

69 FY 2013/14 CIP Project Descriptions TREATMENT Pond Aeration Project Total: $2,077,500 FY 2013/14: $1,522,700 This project adds an additional 125-horsepower in mechanical aerators to the oxidation ponds to increase BOD loading treatment capacity. This project is recommended in the Wastewater Treatment Plant Master Plan Phase 1 Recycled Water Expansion Project Total: $13,900,000 FY 2013/14: $5,471,900 This project will expand the District's recycled water production capacity to 3,700 AFY by constructing secondary effluent equalization, 1,400 square feet of sand filters, a new pump station and other ancillary facilities and piping necessary to integrate the new facilities into the existing treatment plant. This project is recommended in the Wastewater Treatment Plant Master Plan Oxidation Pond 1 Dredge Project Total: $3,200,000 FY 2013/14: $437,000 This project will install a dredge on Oxidation Pond 1, designed to remove slidge materials for incorporation into the District's biosolids reclamation program. TREATMENT - EQUIPMENT Digester Recirc Pumps Project Total: $67,500 FY 2013/14: $22,500 The pumps and motors are nearing the end of their lifecycle. One pump may be rebuilt if its condition deteriorates during the fiscal year Residual Analyzers (Deox) Replacements Project Total: $90,000 FY 2013/14: $30,000 This is the third year of a 3-year plan to replace three analyzers as part of regular replacement cylce WWTP Clarifier Safety & Wiring Overhaul Project Total: $55,000 FY 2013/14: $55,000 This project was identified as a priorit project WWTP MP - Solids Handling Improvments Project Total: $800,000 FY 2013/14: $106,400 This group of projects, recommended in the Treatment Plant Master Plan, includes replacing the digester heat exchanger, adding grinders for sludge circulation piping and implementing gas storage volume programming for the Dystor Gas Compressor Cooler Project Total: $61,000 FY 2013/14: $61,000 This project replaces the existing gas compressor cooler as the existing cooler no longer meet system requirements and needs to be replaced Wash Pumps (2) Project Total: $12,000 FY 2013/14: $12,000 The wash pumps are part of a regular replacement cycle AB Caustic Equipment Building Replacement Project Total: $15,000 FY 2013/14: $15,000 The aeration basin caustic equipment building will be replaced Lab Sampler and Probe Replacements Project Total: $40,400 FY 2013/14: $40,400 thru The lab will replace several3710fr samplers, a 3740 sampler and a D.O. probe as part of regular equipment renewal and replacement Stationary Gas Detector Replacement Project Total: $100,000 FY 2013/14: $100,000 Stationary gas detectors are used to determine whether specific areas are safe for entry, among other uses. This unit is outdated and is in need of replacement. 69

70 FY 2013/14 CIP Project Descriptions Rotork Actuator Replacement Project Total: $80,000 FY 2013/14: $80,000 There are 7 Rotock actuators scheduled out over the next ten years. The replacement schedule is based on age and condition assessment Belt Press Polymer Skid Replacement Project Total: $30,000 FY 2013/14: $30,000 The belt press polymer skid will be repleced. Replacement was determined necessary based on condition assessment Vehicle Ford F-250 Replacement Project Total: $48,000 FY 2013/14: $48,000 The truck has reached the end of its useful life and needs to be replaced Vehicle Honda ATV Project Total: $12,000 FY 2013/14: $12,000 The ATV has reached the end of its useful life and needs to be replaced Vehicle Ford F-250 Diesel Replacement Project Total: $57,000 FY 2013/14: $57,000 The truck has reached the end of its useful life and needs to be replaced Vehicle Ford F-350 Replacement Project Total: $44,000 FY 2013/14: $44,000 The truck has reached the end of its useful life and needs to be replaced. TREATMENT - STRUCTURES Influent Pump Station Expansion Project Total: $15,500,000 FY 2013/14: $8,200,300 A new Influent Pump Station will be designed and constructed to replace the existing building. The pump station capacity will be increased to provide firm capacity for wet weather flows up to 60 million gallons per day. This project is recommended in the Wastewater Treatment Plant Master Plan. SCADA There are no new FY 2013/14 SCADA projects. RECYCLING - DISTRICT Vehicle Landini Tractor Project Total: $72,000 FY 2013/14: $72,000 This tractor has experienced significant mechanical problems and has reached the end of its expected useful life. RECYCLING - EXPANSION North Bay Water Reuse Project FY 2013/14: $150,000 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: $14,200,000 FY 2013/14: $4,700,000 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 Split N/S Lines and Surge Protection Project Total: $1,584,500 FY 2013/14: $310,000 As part of making the MST pipeline operational, it is necessary to separate and expend the recycled water pumps 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 too much pressure in each direction. 70

71 FY 2013/14 CIP Project Descriptions OTHER Development Technical Support FY 2013/14: $208,000 District staff reviews and comments on development plans involving sewer and recycled water facilities and contributed capital Vehicle Ford Windstar Replacement Project Total: $36,000 FY 2013/14: $36,000 The Windstar has reached the end of its useful life and needs to be replaced Vehicle Ford Ranger 4x4 Replacement Project Total: $29,000 FY 2013/14: $29,000 The truck used by District Inspectors has reached the end of its useful life and needs to be replaced Vehicle Ford Taurus Replacement Project Total: $26,000 FY 2013/14: $26,000 The vehicle has reached the end of its useful life and needs to be replaced. 71

72 FY 2013/14 Capital Project Schedule Allocation of Capacity Charges % Funded by Capacity Charges % Funded by Other Revenue Total Capacity Charges Total Other Revenue # Name FY 13/14 COLLECTION SYSTEM Mainline Sewer Rehab 79, % 79, Manhole Raising / Rehab 174, % 174, Lateral Replacement / Rehab 65, % 65, Cleanout Installation / Rehab 72, % 72, I&I Reduction Program 40, % 60.6% 15,760 24, Basin L I&I Reduction Project 2 932, % 60.6% 367, , Basin L I&I Reduction Project 4 415, % 60.6% 163, , North Napa 18" ACP & Soscol Ave 14" ACP 636, % 636, Browns Valley Rd & First St 500, % 0.0% 500,000 COLLECTION SYSTEM EQUIPMENT Vehicle Backhoe 165, % 165,000 LIFT STATIONS Main West Napa Channel Gate Replacement 45, % 45,000 TREATMENT WWTP MP Pond Aeration 1,522, % 0.0% 1,522, WWTP MP RW Expansion Phase 1 5,471, % 60.6% 2,155,929 3,315, Oxidation Pond 1 Dredge 437, % 437,000 TREATMENT EQUIPMENT Digester Recirc Pumps 22, % 22, Residual Analyzers (Deox) Replacements 30, % 30, WWTP Clarifier Safety & Wiring Overhaul 55, % 55, WWTP MP Solids Handling Improvements 106, % 106, Gas Compressor Cooler 61, % 61, Wash Pumps (2) 12, % 12, Ops AB Caustic Equipment Bldg Replacement 15, % 15, Lab DO Probe Replacements 5, % 5, Lab Sampler 3710FR Replacements 35, % 35, Main Stationary Gas Detector Replacement 100, % 100, Main Rotork Actuator Replacement 80, % 80, Main Belt Press Polymer Skid Replacement 30, % 30, Vehicle 151 Ford F 250 Diesel 48, % 48, Vehicle 308 Honda ATV 12, % 12, Vehicle 162 Ford F 250 Diesel 57, % 57, Vehicle 167 Ford F , % 44,000 TREATMENT STRUCTURES WWTP MP IPS Expansion 8,200, % 60.6% 3,230,918 4,969,382 RECYCLING DISTRICT Vehicle 718 Landini Tractor 72, % 72,000 RECYCLING EXPANSION North Bay Water Reuse Project 150, % 0.0% 150, MST RW Pipeline Construction 4,700, % 4,700, Split N/S Lines, surge protection 310, % 0.0% 310,000 OTHER Development Technical Support 208, % 0.0% 208, Vehicle 161 Ford Winstar 36, % 36, Vehicle 170 Ford Ranger 4x4 29, % 29, Vehicle 605 Ford Taurus 26, % 26,000 TOTAL $25,002,900 $8,624,576 $16,378,324 72

73 Napa Sanitation District # Name FY 12/13 Amended FY 13/14 Proposed FY 14/15 Projected FY 15/16 Projected 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 Total 10 Year CIP COLLECTION SYSTEM Mainline Sewer Rehab 77,600 79,900 82,300 84,800 87,300 89,900 92,600 95,400 98, , , , Manhole Raising / Rehab 206, , , , , , , , , , ,100 2,004, Lateral Replacement / Rehab 100,200 65,300 67,200 69,300 71,300 73,500 75,700 77,900 80,300 82,700 85, , Cleanout Installation / Rehab 69,900 72,000 74,200 76,400 78,700 81,100 83,500 86,000 88,600 91,200 94, , I&I Reduction Program 162,000 40, , , Basin L I&I Reduction Project 1 481, Basin L I&I Reduction Project 2 1,547, , , Basin L I&I Reduction Project 4 415,600 1,227,400 1,643,000 Basin I/J I&I Reduction Project 1 541, , , Trancas Street Relining 200, North Napa 18" ACP & Soscol Ave 14" ACP 636, , ,000 Upper Lateral Rehab Basin L 155,700 69, ,000 Browns Valley Smoke Testing 60,000 60,000 Coombs St at Elm St. 134,600 59, ,000 Post St / Evans (from Silverado Tr to Juarez) 301, , ,000 Redwood Rd (Carol Dr to Linda Vista) 289, , ,500 Soscol Ave (8th to Oil Company Rd) 763,500 1,017,500 1,781, Browns Valley Rd & First St 500,000 1,105,000 2,914,600 3,204,300 2,976,100 10,700,000 Trunk Sewers 1,075,400 1,424,600 2,500,000 Trunk Sewers 1,286,100 1,713,900 3,000,000 Trunk Sewers 1,286,100 1,713,900 3,000,000 Trunk Sewers 1,286,100 1,713,900 3,000,000 COLLECTION SYSTEM EQUIPMENT CCTV Transporter Replacement 20,000 CCTV Transporter Replacement 20,000 20,000 Lateral Jetter Replacement 10,000 10, Locatable Mini Camera Replacement 10,000 Locatable Mini Camera Replacement 10,000 10,000 Locatable Mini Camera Replacement 10,000 10,000 Locatable Mini Camera Replacement 10,000 10,000 Locatable Mini Camera Replacement 10,000 10,000 Locatable Mini Camera Replacement 10,000 10, Eel Replacement 5,000 Eel Replacement 5,000 5,000 Eel Replacement 5,000 5,000 Eel Replacement 5,000 5, Vehicle 716 Kubota 42, Vehicle 173 Plugup Truck 52,150 Vehicle 180 Ford Ranger 34,000 34,000 Vehicle 154 Ford Ranger 29,000 29,000 Vehicle 015 Water Trailer 11,000 11,000 Vehicle 166 Ford F ,000 37,000 Vehicle Backhoe 165, , Vehicle Backhoe 165, ,000 Vehicle 510 Water Truck 201, ,000 Vehicle 175 Hybrid Escape 38,000 38,000 Vehicle 504 TV Truck 297, ,000 Vehicle 100 Backhoe Trailer 26,000 26,000 Vehicle 405 Dump Truck 115, ,000 Vehicle18 Cement Trailer 41,000 41,000 Vehicle 16 18ft Trailer 8,800 8,800 Vehicle 205 Forklift 40,000 40,000 Vehicle 179 Mini Dump 62,000 62,000 73

74 Napa Sanitation District # Name FY 12/13 Amended FY 13/14 Proposed FY 14/15 Projected FY 15/16 Projected 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 Total 10 Year CIP Vehicle 182 Mini Dump 62,000 62,000 Vehicle 528 Mini Vactor 529, ,000 Vehicle 529 Vactor 592, ,000 Vehicle 183 Repair Truck 67,000 67,000 LIFT STATIONS West Napa Odor Control 105,500 Riverpark PS VFD/Electric Sys 36,000 36, Main West Napa Channel Gate Replacement 45,000 45,000 Main Stonecrest Pump Rebuild 45,000 45,000 Main Riverpark Ventilation & Odor Control 25,000 25,000 Main West Napa Pump Rebuild 70,000 70,000 Lift Station Equipment Renewal & Replacement 100, ,000 Lift Station Equipment Renewal & Replacement 105, ,000 Lift Station Equipment Renewal & Replacement 110, ,000 Lift Station Equipment Renewal & Replacement 110, ,000 Lift Station Equipment Renewal & Replacement 115, ,000 Lift Station Equipment Renewal & Replacement 115, ,000 TREATMENT WWTP MP Pond Aeration 554,800 1,522,700 1,522, WWTP MP RW Expansion Phase 1 2,527,600 5,471,900 4,600,500 10,072,400 WWTP MP RW Expansion Phase 2 1,500,000 1,500, FOG Receiving Station 114, Oxidation Pond 1 Dredge 200, ,000 2,563,000 3,000,000 TREATMENT EQUIPMENT WWTP MP Spare Digester Mixer 400, Digester Recirc Pumps 28,700 22,500 22, Ops River Outfall Gate Replacement 75, Ops Area Drain & Pond 1 Isolation Valves 50, Ops CO2 Storage Tanks 50, Spare Chemical Pump 14, Duel Fuel Boiler Burner 59, ,000 75, Energy Management System 31, Lab Laboratory Information Management System 22, Automated BOD Analyzer 43, Secondary PS Pump Rebuild (3) 35,000 35,000 35,000 35, , Ammonia Analyzer 62,500 62,500 62, Residual Analyzers (Deox) Replacements 30,000 30,000 30, WWTP MP Activated Sludge Diffuser Replacement 407, , ,000 WWTP Clarifier Mechanical Overhaul 55,000 55, WWTP Clarifier Safety & Wiring Overhaul 55,000 55,000 DAFT Overflow Pumps (2) Cornell 10,000 10,000 20,000 Acid Dishwasher 10,000 10,000 WWTP MP 3W System Improvements 80, , , WWTP MP Solids Handling Improvements 106, , , ,000 Turbidimeters (7) Tertiary Replacements 11,000 11, Gas Compressor Cooler 61,000 61,000 Digester Draft Tube Overhaul 37,000 37, Wash Pumps (2) 12,000 12,000 Effluent Overflow Meter 362, , ,000 Ops Floc Polymer Tank Replacement 35,000 35,000 Ops RAS System Flow Meter 10,000 10, Ops AB Caustic Equipment Bldg Replacement 15,000 15,000 Ops Ops Building Space & HVAC Study 65,000 65,000 Lab Southend Hood Replacement 35,000 35,000 74

75 Napa Sanitation District # Name FY 12/13 Amended FY 13/14 Proposed FY 14/15 Projected FY 15/16 Projected 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 Total 10 Year CIP Lab Northend Hood Replacement 35,000 35, Lab DO Probe Replacements 5,000 5, Lab Sampler 3740 Replacement 5,900 5, Lab Sampler 3710FR Replacement 5,900 5, Lab Sampler 3710FR Replacement 5,900 5, Lab Sampler 3710FR Replacement 5,900 5, Lab Sampler 3710FR Replacement 5,900 5, Lab Sampler 3710FR Replacement 5,900 5,900 Lab Lab Grade Dishwasher Replacement 10,000 10,000 Lab Refrigerator/Freezer Replacement 5,500 5,500 Lab Amperometric Titrator Replacement 5,000 5,000 Lab Bioassay System Replacement 40,000 40,000 Lab Microscope Replacement 9,000 9,000 Lab Balance Replacement 6,500 6,500 Lab Sampler 3710FR Replacement 5,900 5,900 Lab Autoclave Replacement 11,000 11,000 Lab UV Spectrophotometer Replacement 5,000 5,000 Lab BOD Incubator Replacement 7,500 7,500 Lab Sampler 4700 Replacement 5,900 5,900 Lab Sampler 4700 Replacement 5,900 5,900 Lab Sampler 4700 Replacement 5,900 5,900 Lab Sampler 4700 Replacement 5,900 5,900 Lab Sampler 4700 Replacement 5,900 5,900 Lab Centrifuge Replacement 7,500 7, Main Stationary Gas Detector Replacement 100, ,000 Main New Shop & Warehouse 70,000 70, Main Rotork Actuator Replacement 80,000 80,000 Main Rotork Actuator Replacement 80,000 80,000 Main Rotork Actuator Replacement 80,000 80,000 Main Rotork Actuator Replacement 80,000 80,000 Main Rotork Actuator Replacement 85,000 85,000 Main Rotork Actuator Replacement 85,000 85,000 Main Rotork Actuator Replacement 90,000 90,000 Main Rehab Pond 1 Storage Structure 50,000 50, Main Belt Press Polymer Skid Replacement 30,000 30,000 Main Headworks Odor Control Upgrade 49,900 50, ,000 Main Septage Pump & Motor Replacement 25,000 25,000 Main Septage Card Reader Replacement 20,000 20,000 Main Primary Clarifier Mech/Struct Rehabilitation 150, , ,000 Main Secondary Clarifier Mech/Struct Rehabilitation 150, , ,000 Main Digester Sludge Feed Replacement 50,000 50,000 Main TWAS Pump Replacement 40,000 40, Vehicle 157 Ford Ranger 27, Vehicle 163 Ford Ranger 4x4 27, Vehicle 151 Ford F 250 Diesel 48,000 48, Vehicle 308 Honda ATV 12,000 12, Vehicle 162 Ford F 250 Diesel 57,000 57,000 Vehicle 165 Ford F ,000 50, Vehicle 167 Ford F ,000 44,000 Vehicle 158 Ford F 250 Diesel 56,000 56,000 Vehicle 176 Escape Hybrid 38,000 38,000 Vehicle Electric Truck 17,000 17,000 Vehicle 204 Forklift 40,000 40,000 Vehicle Yard Dump 178, ,000 75

76 Napa Sanitation District # Name FY 12/13 Amended FY 13/14 Proposed FY 14/15 Projected FY 15/16 Projected 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 Total 10 Year CIP Vehicle 206 Forklift TH , ,000 Vehicle 184 Ford F 550 EM Truck 67,000 67,000 Vehicle 131 Ford F ,000 49,000 Vehicle Cushman 1200X 13,000 13,000 Vehicle Cushman 1200X 13,000 13,000 Vehicle Cushman 1200X 13,000 13,000 TREATMENT STRUCTURES WWTP MP IPS Expansion 2,476,800 8,200,300 4,402,900 12,603,200 WWTP MP Headworks Improvements 95, , ,200 1,200,000 WWTP MP Primary Treatment Improvements 17,700 47, , ,000 WWTP MP Second Digester 59, , ,700 7,435,200 8,018,500 WWTP MP Aeration Basin Expansion 113, ,000 Building HVAC 179, ,000 WWTP Site Paving 150, ,000 Replace Dystor covers 429, ,000 Pond Improvements Phase 2 95, , ,200 SCADA SCADA MP Phase 4 862,500 SCADA MP Phase 5 494, ,800 Telemetry Upgrades 153, ,800 SCADA PLC Replacement 38,000 38, SCADA Server Replacement 25,000 SCADA Server Replacement 16,000 16,000 SCADA Server Replacement 25,000 25,000 SCADA Server Replacement 16,000 16,000 SCADA Server Replacement 25,000 25,000 RECYCLING DISTRICT WWTP MP Recycled Water Jockey Pump 115,500 WWTP MP Line Recycled Water Reservoir 68, , ,000 Main VFD Replacement 140, ,000 Jameson Sprinkler Replacement Field B 80, , Jameson Sprinkler Replacement Field C 80,000 80,000 Jameson Sprinkler Replacement Field D 80,000 80,000 Jameson Sprinkler Replacement Field E 80,000 80,000 Equipment/Rehabs 200, ,000 Equipment/Rehabs 225, ,000 Soscol RW Pump Replacement 200, ,000 Equipment/Rehabs 250, ,000 Soscol RW Pump Replacement 200, ,000 Equipment/Rehabs 275, ,000 Soscol RW Pump Replacement 200, ,000 Pull Flail Chopper Replacement 31,000 31,000 Vehicle Tractor 215, ,000 Vehicle 717 Kubota L ,000 54,000 Vehicle 172 Ford Ranger 4x4 28,000 28, Vehicle 718 Landini Tractor 72,000 72,000 Vehicle 171 Ford F ,000 65,000 Vehicle 174 Ford F 350 SB 106, ,000 Vehicle 311 Kubota 24,000 24,000 Vehicle 312 Kubota 24,000 24,000 Vehicle 178 Ford F 350 SRW 49,000 49,000 Vehicle 721 John Deer 8430T Tractor 292, ,000 RECYCLING EXPANSION North Bay Water Reuse Project 320, , , , , , , , , , ,000 2,100,000 76

77 Napa Sanitation District # Name FY 12/13 Amended FY 13/14 Proposed FY 14/15 Projected FY 15/16 Projected 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 Total 10 Year CIP NSH Pipeline Construction 413, , , , , MST RW Pipeline Planning & Engineering 886, MST RW Pipeline Construction 4,700,000 7,000,000 2,500,000 14,200, Split N/S Lines, surge protection 310,000 1,274,500 1,584,500 OTHER Development Technical Support 202, , , , , , , , , , ,000 2,379, Office/Corp Yard Relocation 6,911, Eng/Div1 Computer Server Replacement 10, Vehicle 161 Ford Winstar 36,000 36, Vehicle 170 Ford Ranger 4x4 29,000 29, Vehicle 605 Ford Taurus 26,000 26,000 Vehicle 011 CSET Trailer 22,000 22,000 Vehicle 155 Ford Ranger 27,000 27,000 Vehicle 607 Ford Taurus 24,000 24,000 Vehicle 130 Ford F150 34,000 34,000 PROJECT TOTALS $19,656,850 $25,002,900 $25,879,800 $8,861,000 $6,513,700 $6,562,800 $6,517,400 $5,832,900 $5,514,200 $5,726,900 $12,988,800 Cumulative Total (FY13/14 FY19/20) $25,002,900 $50,882,700 $59,743,700 $66,257,400 $72,820,200 $79,337,600 $85,170,500 $90,684,700 $96,411,600 $109,400,400 77

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79 Ten-Year Financial Plan Visitors check out microorganisms in the Plant Laboratory during the 2010 Open House event. 79

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81 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 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 2.2% in FY 13/14 and 2.2% thereafter. 81 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 $0.96 per 1,000 gallons of water ($ per acre-foot), and increases every January 1 based on CPI. Fees are set via service contract with the end users. All end user agreements expire in October In 2012, the District adopted new recycled water rates that go into effect in 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 900 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 At the beginning of FY 2013/14, capacity charges increased to $8,300 per Equivalent Dwelling Unit (EDU). In July 2014 and thereafter, the rate will increase with the San Francisco Engineering News Record s Construction Cost Index (ENR-CCI), an inflation measure for capital infrastructure costs. Development, especially development of hotels and restaurants, is anticipated to increase starting in FY 2014/15. The capacity charge forecast assumes that development will increase to 290 EDU in FY 2014/15 with an additional 125 EDU for hotel and restaurant activity, for a total of 415 EDU. In each year following, it is assumed there will be 290 EDU annually, with another 150 increase in FY 2015/16 and 100 EDU increase in FY 2017/18 related to hotel and restaurant growth. Leases and Rents HCV Napa did not make its required $1.4 million payment in deferred lease payments that was due on June 30, The District is currently in negotiations with NCV Napa for the payment of the deferred rents as well as continued payment of future rents in accordance with its lease agreement. To remain conservative, the forecast does not include

82 the deferred lease payments and does not assume future payments of lease revenue of $600,000 annually, as prior forecasts have shown. As a result, the 10-Year Financial Forecast shows negative balances in future years. Other lease revenues include existing leases with Eagle Vines Golf Club (approx. $110,000 annually) and with Sprint (approx. $25,000 annually). 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. While the North Napa Pump Station has been declared surplus property by the District, the Ten- Year Financial Plan does not include any revenues from the sale of this property or any other assets. 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 Memoranda of Understanding (MOU) and limit annual growth to CPI, with a minimum and maximum range between 2.0% and 4.25%. Over the ten years, the CPI for salaries is assumed to increase 2.0 % annually. The labor MOU with District employees ends on June 30, Future wages will depend on the outcome of the labor negotiations for a new MOU. 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 2% starting in FY 2014/15. Medical in-lieu payments are assumed at the current rate. Workers compensation insurance is expected to remain flat. For the Ten-Year Financial Plan, salaries and benefits combined are projected to increase 4.2% 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. The anticipated operating expenditure impact 82 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 Finance Committee Recommendations. 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. In FY 2012/13, the District issued bonds and received $33 million toward the pond aeration project ($2 million), the first phase of the recycled water filters expansion ($16 million), and replacement or expansion of the Influent Pump

83 Station ($15 million). The Ten-Year Forecast shows the proceeds from the debt in Beginning Fund Equity, as well as the associated debt service payments. The plan also shows that in the tenth year of the plan, in FY 2022/23, it will be necessary again to issue debt to pay for specific capital projects, namely the construction of the second digester. 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. 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. 10-Year Financial/Cash Flow Forecast 2013/ / / / /18 Starting combined fund balance $42,158,150 $25,469,000 $13,249,200 $12,264,200 $10,438,500 Operating revenue - Sewer service charges 18,401,100 19,159,000 19,792,000 20,369,000 21,011,000 Capacity Charges 2,075,000 3,548,000 3,874,000 2,630,000 3,643,000 Recycled Water Sales 283, , ,000 1,046,000 1,069,000 Miscellaneous Revenue 291, , , , ,000 Total Operating Revenue 21,050,200 23,335,000 24,584,000 24,356,000 26,041,000 Non-Operating Revenue 0 Interest 182, ,000 66,000 92, ,000 Rents and leases 135, , , , ,000 Federal & State Grants & Other Govt Agencies 5,325,000 8,900,000 2,500, Sale of Property Proceeds from Sale of Bonds for new projects Total - Non-Operating Revenue 5,642,650 9,166,000 2,708, , ,000 Total Revenue 26,692,850 32,501,000 27,292,000 24,593,000 26,293,000 Operating Expense 0.0% Salaries and benefits 8,437,640 8,792,000 9,161,000 9,546,000 9,947,000 Services and supplies 5,141,200 5,244,000 5,449,000 5,558,000 5,669,000 Taxes and Other 25,050 26,000 26,000 26,000 26,000 Debt Service - Existing (Excl 2009A) 2,121,200 2,119,000 2,120,000 2,115,000 2,116,000 Debt Service-Series 2012A 2,654,040 2,660,000 2,660,000 2,660,000 2,660,000 Total Operating Expense 18,379,130 18,841,000 19,416,000 19,905,000 20,418,000 Capital Projects 25,002,900 25,879,800 8,861,000 6,513,700 6,562,800 Total - All Expenses 43,382,030 44,720,800 28,277,000 26,418,700 26,980,800 Net revenue (deficit) (16,689,180) (12,219,800) (985,000) (1,825,700) (687,800) Ending combined fund equity $25,468,970 $13,249,200 $12,264,200 $10,438,500 $9,750,700 RW Repair & Replacement Reserve $0 $0 $0 $0 $0 15% Operating Reserve $2,056,000 $2,109,000 $2,195,000 $2,270,000 $2,346,000 Debt Service Liquidity Reserve (2009A) $0 $0 $0 $0 $0 Cash Flow Reserve $8,000,000 $8,240,000 $8,487,000 $8,742,000 $9,004,000 Fund Equity Available for Use $15,412,970 $2,900,200 $1,582,200 ($573,500) ($1,599,300) 83

84 10-Year Financial/Cash Flow Forecast (cont.) 2018/ / / / /23 Starting combined fund balance $9,750,700 $8,894,300 $8,973,400 $9,632,200 $10,353,300 Operating revenue Sewer service charges 21,622,000 22,249,000 22,893,000 23,554,000 24,234,000 Capacity Charges 2,790,000 2,874,000 2,960,000 3,049,000 3,140,000 Recycled Water Sales 1,096,000 1,143,000 1,190,000 1,236,000 1,290,000 Miscellaneous Revenue 325, , , , ,000 Total Operating Revenue 25,833,000 26,598,000 27,382,000 28,185,000 29,018,000 Non-Operating Revenue Interest 122, , , , ,000 Rents and leases 151, , , , ,000 Federal & State Grants & Other Govt Agencies Sale of Property Proceeds from Sale of Bonds for new projects ,000,000 Total - Non-Operating Revenue 273, , , ,000 8,372,000 Total Revenue 26,106,000 26,886,000 27,697,000 28,539,000 37,390,000 Operating Expense Salaries and benefits 9,865,000 10,279,000 10,711,000 11,161,000 11,630,000 Services and supplies 5,782,000 5,898,000 6,016,000 6,136,000 6,259,000 Taxes and Other 26,000 26,000 26,000 26,000 26,000 Debt Service - Existing (Excl 2009A) 2,112,000 2,111,000 2,111,000 2,108,000 2,106,000 Debt Service-Series 2012A 2,660,000 2,660,000 2,660,000 2,660,000 2,660,000 Total Operating Expense 20,445,000 20,974,000 21,524,000 22,091,000 23,323,000 Capital Projects 6,517,400 5,832,900 5,514,200 5,726,900 12,988,800 Total - All Expenses 26,962,400 26,806,900 27,038,200 27,817,900 36,311,800 Net revenue (deficit) (856,400) 79, , ,100 1,078,200 Ending combined fund equity $8,894,300 $8,973,400 $9,632,200 $10,353,300 $11,431,500 RW Repair & Replacement Reserve $0 $23,000 $69,000 $135,000 $223,000 15% Operating Reserve $2,351,000 $2,430,000 $2,513,000 $2,598,000 $2,687,000 Debt Service Liquidity Reserve (2009A) $0 $0 $0 $0 $0 Cash Flow Reserve $9,274,000 $9,552,000 $9,839,000 $10,134,000 $10,438,000 Fund Equity Available for Use ($2,730,700) ($3,031,600) ($2,788,800) ($2,513,700) ($1,916,500) Finance Committee Recommendations 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 by approximately $3 million. There is sufficient cash flow to the District to maintain its spending plan through FY 2015/16, but thereafter the District has insufficient cash flow. 84 There are several options available to the District to balance this shortfall: Decrease operating expenses Decrease or postpone capital expenditures Increase revenues through rate increases Assume other revenue increases or wait and see if HCV Napa makes its deferred lease payments and resumes its annual payments The Finance Committee recommended that the District plan for a fee increase in the sewer service

85 charges starting in FY 2014/15 if the lease revenue from HCV Napa does not resume during the next fiscal year. The Finance Committee also recommended that when the sewer service charges are next increased as part of the Proposition 218 process, that the District change its formula for determining CPI. The Committee recommends that the District develop a composite CPI that links District expenses to associated indices, and weights each index based on the percentage of budget associated with that index. Using the following assumptions, this new composite index could change the assumed annual CPI increases for sewer service charges from 2.2% to 2.7%: Expense Type Wages Benefits Services & Supplies Capital Index Bureau of Labor Statistics CPI- Wage Earners for SF/Oak/SJ Bureau of Labor Statistics Employment Cost Index for Benefits for State and Local Government Employees Bureau of Labor Statistics CPI-All Urban Consumers for SF/Oak/SJ Engineering News Record s Construction Cost Index These four indices would be weighted based on the expense type s weight in a typical budget year: Expense Type Annual Increase Weight CPI Adj. Wages 2.4% 18% 0.43% Benefits 3.4% 15% 0.51% S&S 2.2% 20% 0.44% Capital 2.8% 47% 1.32% Total 2.70% The Finance Committee recommendations have not been presented to the full Board of Directors for discussion or adoption. Inclusion of this recommendation in this document does not indicate a policy or direction of the Board, but is designed to provide a possible way for the Board to balance the Ten-Year Financial Plan. Financial Policy requires the District to identify adequate funding for its Ten-Year Capital Improvement Plan. The inclusion of the recommendation in this document is designed to meet this policy requirement. The graph at the bottom of this page shows the impact that the Finance Committee recommendations would have on the Ten-Year Financial Forecast. Impact of Finance Committee Recommendations $30 $25 $20 Note: Forecast is balanced when green line stays above columns RW Repair & Replacement Reserve Cash Flow Reserve 15% Operating Reserve 10 Year Financial Forecast Finance Committee Recommendation Millions $15 $10 $5 $0 2013/ / / / / / / / / /23 85

86 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. This is due to the exclusion of HCV Napa lease revenues from the forecast. Calculation of Sewer Service Charges Rate Based on Asset-Life-Cycle Cost Budget 2013/ / / / /18 Operating Expense Salaries and benefits 8,437,640 8,792,000 9,161,000 9,546,000 9,947,000 Services and supplies 5,141,200 5,244,000 5,449,000 5,558,000 5,669,000 Taxes and Other 25,050 26,000 26,000 26,000 26,000 13,603,890 14,062,000 14,636,000 15,130,000 15,642,000 Debt Service Totals Debt Service - Existing 2,121,200 2,119,000 2,120,000 2,115,000 2,116,000 Debt Service-New 2,654,040 2,660,000 2,660,000 2,660,000 2,660,000 4,775,240 4,779,000 4,780,000 4,775,000 4,776,000 Allocation of Debt Service to SSC 60.6% 60.6% 60.6% 60.6% 60.6% Allocated Debt 2,893,795 2,896,074 2,896,680 2,893,650 2,894,256 Operating Expenses + 16,497,685 16,958,074 17,532,680 18,023,650 18,536,256 Allocated Debt Depreciable Net Fixed Assets 155,000, ,000, ,000, ,000, ,000,000 % Annual Renewal & Replacement 3.0% 3.0% 3.0% 3.0% 3.0% Cap Contribution for R&R 4,650,000 4,950,000 5,100,000 5,310,000 5,490,000 Total Expenses 21,147,685 21,908,074 22,632,680 23,333,650 24,026,256 Offsetting Revenues Recycled Water Sales 283, , ,000 1,046,000 1,069,000 Miscellaneous Revenue 291, , , , ,000 Interest 182, ,000 66,000 92, ,000 Rents and leases 135, , , , , , ,000 1,126,000 1,594,000 1,639,000 Expenses less revenues 20,255,935 21,014,074 21,506,680 21,739,650 22,387,256 Projected # of EDU 40,524 40,939 41,379 41,669 42,059 Calculated SSC Rate at 3% R&R $ $ $ $ $ Forecasted Rate $ $ $ $ $ Difference -$ $ $ $ $32.71 Rate at 2% R&R Rate at 4% R&R % of R&R at Forecasted Rate 1.9% 1.9% 2.0% 2.2% 2.2% 86

87 Debt Administration office location after winter rain storm 87