ALEXANDRIA RENEW ENTERPRISES

Transcription

1 ALEXANDRIA RENEW ENTERPRISES ALEXANDRIA RENEW ENTERPRISES FISCAL YEAR 2016 OPERATING & CAPITAL BUDGET -FINAL- October 1, 2015 September 30, 2016 Public Hearing: September 15, 2015 Adopted: September 15, 2015

2 Board of Directors John Hill, Chairman Thomas Van Wagner, Vice Chairman William Dickinson, Secretary-Treasurer Matt Ries, Member Bruce Johnson, Member Alexandria Renew Staff Karen Pallansch, Chief Executive Officer Lester Robinson, Chief Financial Officer Cortlin Davidson, Chief Human Resources Officer Janelle Okorie, Chief Engineering and Technology Officer David Brewster, Chief Operations & Maintenance Lisa Van Riper, Chief Enterprise Communications Officer Robert Oshode, Controller Adopted September 15,

3 Table of Contents AlexRenew Board of Directors and Staff Chief Executive Officer s Message...4 AlexRenew Board 2040 Vision...5 Understanding the Budget Summary of Proposed FY 2016 Consolidated Budget...8 AlexRenew Budget Development Process...9 Forecast Scenarios...10 Consolidated Enterprise Budget FY Revenue Fund Budget FY Revenue Fund Budget Ten-Year Forecast FY 2016 Ten-Year Plan...13 Revenue from Fairfax County FY AlexRenew Utility Rates Change...15 Operating Fund Explanatory Notes...16 Operating Fund Proposed Budget FY Alexandria Renew Enterprises Organizational Chart...18 Workforce Overview...19 Parity Debt Service Fund Explanatory Notes...20 Parity Fund Budget FY Joint Improvement, Renewal & Replacement Fund Explanatory Notes...22 Joint Improvement, Renewal & Replacement Proposed Budget FY General Fund Explanatory Notes...24 General Fund Proposed Budget FY General Fund IR&R Proposed Budget FY Project Fund Explanatory Notes...27 Project Fund Proposed Budget FY Project Fund Summary Sources for Joint CIP...29 FY 2016 Capital Improvement Program Overview...30 Alexandria Only Capital Improvement Program (CIP) Details Joint Capital Improvement Program (CIP) Details Ten-Year Capital Improvement Plan: Alexandria Only and Joint Use...57 FY 2016 Calculations of Reserves and Debt Coverage...58 Adopted September 15,

4 CEO s Message to AlexRenew Board of Directors and Customers May 29, 2015 To the Board of Directors, Alexandria Renew Enterprises: The Fiscal Year 2016 budget is a reflection of the 2040 Board Vision and Strategic Outcomes that were developed during the past year. Our financial picture remains strong, and our practices of ensuring sustainable and stable finances and maintaining operational excellence continue. We are focusing on finding innovative solutions for our community in the coming years -- renewing our City through the transformational work we do, both in reusing the byproducts of our process, and in activating a new area of the Eisenhower Valley community our West Site. With the multipurpose field atop our new nutrient management facility and our Environmental Center, which invites the community in to experience AlexRenew and all we have to offer, we are investing in community engagement and inspiring water stewardship like never before. From an organizational standpoint, we are reinforcing the talent in our workforce through cost-effective apprentice programs, which continue to attract the best and brightest to AlexRenew. Our apprentices, many of whom have advanced degrees when they enter one of our three apprentice programs, are studying for and passing their certification exams, continuing our emphasis on world class performance. We continue our focus on sustainable operations and finding ways to offset costs by using resources recovered from our water processing, such as using methane gas to help heat our campus, and reclaimed water to help run our equipment. Reclaimed water will also be used in the coming year to irrigate the development on our West Site, which will help reduce the nutrient load that is going into the Chesapeake Bay. We are also implementing mainstream Anammox this year, an innovative water cleaning process that will reduce energy costs, and save on the chemicals we use to remove nitrogen, since the Anammox microbes do it naturally. All of this work we are doing will only continue to strengthen our financial future. Thank you for your ongoing support and thank you to the AlexRenew team that helps us do the innovative, transformational, and sustainable work to clean Alexandria s dirty water and ensure stable rates and finances for us. Respectfully Submitted, Karen L. Pallansch Chief Executive Officer Alexandria Renew Enterprises Adopted September 15,

5 Board 2040 Vision Adopted September 15,

6 Understanding the Budget What is Alexandria Renew s Budget? Alexandria Renew s budget is the documentation of the financial policy and capital investment decisions necessary to provide a clean, healthy water environment for our community. AlexRenew is charged with the responsibility to construct, operate, and maintain a Wastewater Treatment system in compliance with state and federal water pollution control laws. Current expenses and capital expenditures are estimates based on experience and judgment related to cost trends, labor, materials and services required to operate and maintain the facilities. Alexandria Renew has no options with respect to the level of service it must provide to meet the requirements of the law and no discretionary programs within its assigned scope of activity. The primary purpose of the budget is to ensure Alexandria Renew maintains its mandated level of service and satisfies the requirements of the Master Trust. Alexandria Renew has two major sources of revenue: wastewater treatment charges paid by Alexandria customers, and reimbursement of a proportion of expenses from Fairfax County. The County reimburses Alexandria Renew under an amended and restated Service Agreement dated October 1, Under this Agreement, Fairfax County pays a percentage of expenses based upon flow volume. The County also contributes to the Improvement, Renewal & Replacement (IRR) Fund at 60% and Capital Improvement Program (CIP) Project Fund, at the same percentage, to allow for the replacement and rejuvenation of capital assets as they depreciate, as well as asset additions associated with regulatory compliance. Flow of Funds Explained Under the Master Trust, the Revenue Fund is the depository for all revenues of Alexandria Renew. Alexandria Renew shall make transfers from the Revenue Fund in the following order of priority: I. To the Operating Fund, an amount that will cause the balance on deposit to be equal to one-sixth of the current year s budgeted amount for operating expenses. II. To the Parity Debt Service Fund, an amount that will cause the balance on deposit to be sufficient to pay the principal and interest on the respective payment dates. III. To the Joint Improvement, Renewal & Replacement Fund (IRR), an amount equal to the Alexandria portion (40%) of the annual calculation of the required contribution to the Fund. IV. To the General IRR, an amount equal to 0.5% of the total amount of the annual calculation to the Fund. V. To the General Fund, any amount that remains after making the deposits required above. Adopted September 15,

7 Understanding the Budget continued The following notes provide additional information for the budget: Beginning Balance: Alexandria Renew is required, by banking agreement, to maintain a minimum balance of $100,000. Receipts: Two main sources of income are the Wastewater Treatment charges (fees charged to City customers) and the Fairfax County contributions to the Operating Fund. The gallonage charge beginning on October 1, 2015, will be $6.77/1000 gallons used. In 2010, Alexandria Renew adopted a new fixed "Base Charge" to recover the fixed costs of operations associated with nutrient control. The Base Charge, as of October 1, 2015, is $8.38 per month for residential customers, and a monthly fee for commercial customers based on meter size. Investment income is expected to be minimal, given today s investment climate. Disbursements: As noted above, the Master Trust requires certain monies to be transferred to each Fund to ensure appropriate levels of support. How is the Budget Organized? The Consolidated Enterprise Budget combines all of the resources of Alexandria Renew. The remaining Budget documents are organized in accordance with the flow of funds provisions included in the Master Trust. The major Funds of the budget are: Revenue Fund; Operating Fund; Parity Debt Service Fund; Improvement, Renewal & Replacement (IRR) Fund; General Fund; and Project Fund. A description of each fund is included with the related budget details in the pages that follow. Budgets are prepared for the Capital Projects basis and cover the life of the project. Adopted September 15,

8 Summary of Proposed FY16 Consolidated Budget The following is an overview of the major spending elements of the FY 2016 Alexandria Renew budget. BUDGET SUMMARY Millions of Dollars FY 2014 FY 2015 FY 2016 $ Change % Change Expenses Actual Final Proposed Revised FY 15 vs. FY 16 Operating Fund $ $ $ $ % Debt Service Fund % General Fund (3.62) % Joint IR & R Fund % General Fund IR&R % Project Fund (32.81) % Total $ $ $ $ (33.17) % The FY 2016 proposed budget is $93.39 million, of which $43.35 million is in large infrastructure construction investment. The construction decrease of -43 % is driven primarily by the completion of the Nutrient Removal Compliance Program. Alexandria Renew s operating expenses are projected to increase slightly. The General Fund decrease is primarily driven by the Four Mile Run Pump Station and the multi-purpose field completion. Adopted September 15,

9 AlexRenew Budget Development Process Month Customer Board of Directors Staff February April Proposed Budget Development Departments prepare budget proposals; CEO develops a balanced proposed budget May The CEO presents the proposed budget to the Board of Directors June Budget Review (June-July) Board of Directors requests additional information on specific budget issues from staff. July Public Notice Board authorizes staff to Public Notice public notice proposed AlexRenew budget August Public Notice Public Notice September Public Hearing Public Hearing & Final Adoption Board of Directors makes final decisions and adopts the AlexRenew budget for the upcoming fiscal year Execute adopted FY 2016 Budget starting 10/1/2015 Adopted September 15,

10 Forecast Scenarios Ten-Year Financial Plan AlexRenew has developed a 10-year plan for financial sustainability to identify future needs and revenue challenges and develop strategies for addressing them. AlexRenew is a capital intensive utility, driven first and foremost by Federal, State and local water related regulations. Revenue Growth Assumptions Ten year modeled revenue is assumed to grow slowly, at 2.0 %. This aligns with historical water revenue growth data. Fairfax operations and maintenance (O&M) costs are projected to grow at an annual rate of 2%. Expenditure Growth Assumptions Modeled expenditures are independently analyzed by line item. A range of inflation factors is used, from 2.00% to 3.50% based on historical CPI inflation factors. Adopted September 15,

11 CONSOLIDATED ENTERPRISE FY 2016 BUDGET Revised FY 2014 Mid-Year 2015 FY 2016 % Change Orig Actual Budget Budget to Mid-year Revenues and Other Sources: Wastewater Treatment Charges $ 37,606,611 $ 37,500,000 $ 38,250, % Fairfax County: Operating 10,953,398 11,158,900 10,989, % IR&R 2,184,600 2,348,900 2,670, % Total $ 50,744,609 $ 51,007,800 $ 51,909, % Expenditures: Personnel services 13,063,195 13,511,987 13,138, % Fuel, Power & Utilities 3,224,653 3,057,508 3,172, % Chemicals 1,660,137 1,500,000 1,480, % Operations Maintenance 2,225,072 2,390,500 2,436, % Business Support 1,399,477 1,528,000 2,337, % Professional Services 1,438,891 1,399,500 1,336, % Arlington Sewage Disposal 1,641,233 1,685,000 1,928, % Improvement, Renewal & Replacement (Alex only) 36, , , % Joint Improvement, Renewal & Replacment 4,063,720 5,945,000 6,096, % Capital Projects (Alex only) 4,002,813 7,059,910 3,291, % Other Expenses (Alex only) ,000 Joint Capital Projects 70,496,761 76,155,062 43,345, % Total $ 103,252,316 $ 114,557,467 $ 79,099, % Non-operating Revenues (Expenditures): Investment Income 326, , , % Debt Principal Payments (7,810,804) (8,035,082) (9,287,662) 15.59% Debt Interest Expense (3,725,770) (4,161,523) (4,585,113) 10.18% Proceeds from Debt 14,094,979 15,500,000 10,000, % Finance Fees (43,620) (410,000) (420,000) 2.44% Grants 8,075,005 4,021, % Fairfax County Capital Contributions 41,901,391 41,183,537 23,469, % Other income (Land Sale) 1,000, Total $ 53,818,074 $ 48,324,685 $ 19,360, % Excess (Deficiency) of Revenues over Expenditures $ 1,310,367 $ (15,224,983) $ (7,828,881) Fund Balance - Beginning $ 46,718,676 $ 41,106,959 $ 25,881,976 Fund Balance - Ending $ 48,029,043 $ 25,881,976 $ 18,053,095 Adopted September 15,

12 REVENUE FUND BUDGET FY 2016 FY Revised Actual Budget FY 2016 Budget Revenues and Other Sources: Wastewater Treatment Charges $ 37,606,611 $ 37,500,000 $ 38,250,000 Fairfax County - Operating Expense Charge 10,953,398 10,822,700 11,206,000 Fairfax County - IRR 2,184,600 2,348,900 2,670,308 Interest Income 1,300 1,300 1,300 Other Income 3, Total Revenues $ 50,749,389 $ 50,672,900 $ 52,127,608 Expenditures: Transfer to Operating Fund $ 25,538,000 $ 25,072,495 $ 25,829,891 Transfer to Operating Fund - Financial Policy - Transfer to Parity Debt Service Fund 11,934,335 12,212,564 13,050,500 Transfer to IRR Fund - Fairfax County 2,184,600 2,348,900 2,670,308 Transfer to IRR Fund 1,456,436 1,565,923 1,791,702 Transfer to IRR General Account (Alex Only) 356, , ,000 Transfer to General Fund 9,220,500 9,029,918 8,445,137 Total Expenditures $ 50,690,571 $ 50,586,500 $ 52,047,538 Excess (Deficiency) of Revenues over Expenditures $ 58,818 $ 86,400 $ 80,070 Fund Balance - Beginning $ 100,000 $ 100,000 $ 186,400 Fund Balance - Ending $ 158,818 $ 186,400 $ 266,470 Adopted September 15,

13 REVENUE FUND BUDGET FY 2016 TEN-YEAR FORECAST FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Revenues and Other Sources: Wastewater Treatment Charges $ 38,250,000 $ 39,015,000 $ 39,795,300 $ 40,591,206 $ 41,403,030 $ 42,231,091 $ 43,075,713 $ 43,937,227 $ 44,815,971 $ 45,712,291 Fairfax County - Operating Expense Charge $ 11,206,000 $ 11,430,120 $ 11,658,722 $ 11,891,897 $ 12,129,735 $ 12,372,329 $ 12,619,776 $ 12,872,172 $ 13,129,615 $ 13,392,207 Fairfax County - IRR $ 2,670,308 $ 2,723,714 $ 2,778,188 $ 2,833,752 $ 2,890,427 $ 2,948,236 $ 3,007,200 $ 3,067,344 $ 3,128,691 $ 3,191,265 Investment Income 1,300 $ 1,300 $ 1,300 $ 1,300 $ 1,300 $ 1,300 $ 1,300 $ 1,300 $ 1,300 $ 1,300 Other Income Transfer from General Fund Total Revenues $ 52,127,608 $ 53,170,134 $ 54,233,511 $ 55,318,155 $ 56,424,492 $ 57,552,956 $ 58,703,989 $ 59,878,043 $ 61,075,578 $ 62,297,063 Expenditures: Transfer to Operating Fund $ 25,829,891 $ 26,346,489 $ 26,873,419 $ 27,410,887 $ 27,959,105 $ 28,518,287 $ 29,088,653 $ 29,670,426 $ 30,263,834 $ 30,869,111 Transfer to Operating Fund - Financial Policy Transfer to Parity Debt Service Fund 13,050,500 14,997,856 15,000,389 14,950,000 14,994,084 14,177,892 14,785,739 7,185,569 5,641,319 5,754,145 Transfer to IRR Fund - Fairfax County 2,670,308 2,820,781 3,034,880 3,136,331 3,199,058 3,263,039 3,328,299 3,394,865 3,462,763 3,532,018 Transfer to IRR Fund 1,791,702 1,944,650 1,905,587 1,973,221 2,012,685 2,052,939 2,093,997 2,135,877 2,178,595 2,222,167 Transfer to IRR General Account (Alex Only) 260, , , , , , , , , ,724 Transfer to General Fund 8,445,137 6,795, ,148,702 7,571,702 7,978,098 9,253,663 9,114,398 17,192,547 19,224,336 19,608,797 Total Expenditures $ 52,047,538 $ 53,169,984 $ 54,233,480 $ 55,318,055 $ 56,424,462 $ 57,552,880 $ 58,703,889 $ 59,877,942 $ 61,075,478 $ 62,296,963 Excess (Deficiency) of Revenues over Expenditures $ 80,070 $ 150 $ 30 $ 100 $ 30 $ 75 $ 100 $ 100 $ 100 $ 100 Fund Balance - Beginning $ 186,400 $ 266,470 $ 266,620 $ 266,650 $ 266,750 $ 266,780 $ 266,855 $ 266,955 $ 267,055 $ 267,155 Fund Balance - Ending $ 266,470 $ 266,620 $ 266,650 $ 266,750 $ 266,780 $ 266,855 $ 266,955 $ 267,055 $ 267,155 $ 267,255 Adopted September 15,

14 REVENUE FROM FAIRFAX COUNTY FY 2016 Final Operating Fund Contribution FY 2014 FY 2015 FY 2016 Actual Budget Budget FY 2017 FY 2018 FY 2019 Total Estimated Operating Expenses $ 24,682,165 $ 25,072,495 $ 25,829,891 $ 26,346,489 $ 26,873,419 $ 27,410,887 Less Estimated "Alexandria Only" Expenses (3,649,089) (3,649,089) (3,649,089) (3,722,070) (3,796,512) (3,872,442) Net Estimated Joint Operating Expense 21,033,076 21,423,407 22,180,803 22,624,419 23,076,907 23,538,445 Estimated Ratio of Net County Flow to Total Flow Received 50.6% 50.6% 50.6% 50.6% 50.6% 50.6% Preliminary Estimate of County Share of O&M Expenses 10,642,737 10,840,244 11,223,486 11,447,956 11,676,915 11,910,453 Less Charges for Alexandria City flow (17,526) (17,526) (17,526) (17,526) (17,526) (17,526) Net Fairfax County Share of O&M $ 10,625,200 $ 10,822,700 $ 11,206,000 $ 11,430,400 $ 11,659,400 $ 11,892,900 Improvement, Renewal & Replacement (IRR) Fund Contribution Joint Use IRR Expenditures $ 559,260,479 $ 559,260,479 $ 637,429,923 $ 680,775,923 $ 705,780,923 $ 729,935,923 Funding Percentage from Agreement 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% Fairfax County Eligible Share of Joint CIP at 49% ,985 99, , ,562 Fairfax County Eligible Share of Joint CIP at 26% - - 2,874 12,311 18,453 18,453 Fairfax County Share of Joint CIP at 60% - - 2,653,449 2,708,784 2,873,865 2,975,316 Fairfax County Total IR&R Share 2,348,900 2,348,900 2,670,308 2,820,781 3,034,880 3,136,331 Total Needs 3,914,823 3,914,823 4,462,009 4,765,431 4,940,466 5,109,551 Joint Capital Improvement Program (CIP) Capital Contribution Estimated Joint Capital Improvements $ 68,109,949 $ 45,980,062 $ 27,320,000 $ 23,655,000 $ 22,655,000 $ 21,730,000 Fairfax County Share of Joint CIP at 60% 39,492,950 27,588,037 16,392,000 14,193,000 13,593,000 13,038,000 Estimated Joint Capital Improvements 50% ,000 1,350,000 1,500,000 5,000,000 Fairfax County Share of Joint CIP at 50% , , ,000 2,500,000 Estimated Joint Capital Improvements 49% 4,077,281 25,000,000 12,500, Fairfax County Share of Joint CIP at 49% 1,997,867 12,250,000 6,125, Estimated Joint Capital Improvements 26% 1,579,130 5,175,000 3,375, Fairfax County Share of Joint CIP at 26% 410,574 1,345, , Fairfax Construction Contribution - 41,183,537 23,469,500 14,868,000 14,343,000 14,343,000 Total Contribution from Fairfax: $ 54,875,491 $ 54,355,137 $ 37,345,808 $ 29,119,181 $ 29,037,280 $ 30,567,231 Adopted September 15,

15 Alexandria Renew Utility Rates Change Monthly Rate Structure (1) This schedule shall apply to all individually metered residential customers and commercial customers discharging sewage to and/or requiring wastewater treatment service by Alexandria Renew Enterprises (wastewater customers). Commercial wastewater customers include all commercial, industrial, government and other public agencies, master-metered residential, and all other accounts or customers not classified as individually metered residential customers. The wastewater customer's monthly bill for wastewater collection, treatment and disposal services (sewer service) shall be based upon the sum of: i) the base charge; and ii) the wastewater treatment charge calculated based on water meter readings at the customer premise. The base charge shall serve as the minimum monthly bill for sewer service for all customers receiving wastewater service from Alexandria Renew Enterprises. Wastewater Treatment Charge - A charge per 1,-000 gallons of water consumption will be billed monthly for wastewater customers at the rates shown below. Description Meter size Effective Effective October 1, 2014 October 1, 2015 Per 1,000 Gallons Per 1,000 Gallons Individually Meterest Residential Wastewater Treatment Charge (2) All Meters $ 6.64 $6.77 Commercial Wastewater Treatment Charge All Meters $ 6.64 $6.77 Base Charge a charge per account predicated on the size of the meter serving the customer premise, will be billed to all wastewater customers at the rates show below: Description Meter size Effective Effective October 1, 2014 October 1, 2015 Monthly Monthly Residential Base Charge All Meters $ 8.38 No Change Commercial Base Charge 5/8 $ No Change 3/4 $ No Change 1 $ No Change 1-1/2 $ No Change 2 $ No Change 3 $ No Change 4 $ No Change 6 $ 1, No Change 8 $ 2, No Change (1) Rates shown reflect charges for Alexandria Renew Enterprises and do not include any Sewer Service Charges or connection fees for the City of Alexandria. (2) The individually metered residential (single-family) customer's monthly Wastewater Treatment Charges shall be based on water meter readings at the customer's premise. Individually-metered Residential Customers shall be billed the Wastewater Treatment Charges utilizing a monthly wastewater treatment billing cap that shall be determined annually. The wastewater treatment billing cap per customer shall be established based on the greater of: a) 4,000 gallons a month; or b) the customer's average monthly metered water consumption (gallons) recognized on bills rendered during the winter period which is defined as the months of December, January, and February. The monthly wastewater treatment billing cap is not effective for bills rendered during the winter period months. If no bills are rendered to the customer for water service during the winter period, then the monthly wastewater treatment billing cap shall be established at 4,000 gallons a month until a winter period average can be established. Adopted September 15,

16 Operating Fund Explanatory Notes Under the Master Trust, the Operating Fund shall pay operating expenses for administration and operation and maintenance of the Wastewater Treatment system as they become due and in accordance with the purposes and amounts provided in the Budget. The following notes provide additional information for the Budget: Beginning & Ending Balance Reserve : The Financial Policy provides for an operating reserve equal to or greater than 120 days of the operating expenses budgeted for the current fiscal year. Personnel Services: Includes all compensation related items; health and welfare; personal safety shoes and other required personal protective equipment and clothing; training and professional development; licensing and dues. This element of the operating budget is about 51% of the total estimated expenditures. Fuel, Power & Utilities: Includes costs for the natural gas, electricity and water to run the plant. Equipment: All preventative and corrective maintenance for infrastructure assets are included in this category as required by the Trust Indenture. This category also includes general safety equipment. Process Chemicals: All chemicals needed to control process and meet all regulatory compliance obligations. Product Support: Ancillary services required to ensure clean, safe water. Laboratory testing, biosolids reuse, and grit disposal from the wastewater are included. Business Support: This category includes software and licenses; billing collection fees; office supplies; telephone and communications; office equipment; property and liability insurance; and community education and outreach. Professional Services: Legal, financial, and engineering firms used to support annual program needs and support operational efficiency. External Wastewater Services: The cost of supporting the operations and maintenance associated with the City of Alexandria s allocated capacity at the Arlington County Water Pollution Control Plant. Adopted September 15,

17 OPERATING FUND BUDGET FY 2016 FY 2014 FY 2015 % Change $ Change Actual Final Budget FY 2016 Budget FY15 to FY16 FY15 to FY16 Revenues and Other Sources: Transfers from Revenue Fund $ 25,538,000 $ 25,072,495 $ 25,829, % $ 757,396 Transfers from Revenue Fund - Financial Policy % - Investment Income 8,844 5,000 5, % - Total $ 25,546,844 $ 25,077,495 $ 25,834, % $ 757,396 Expenditures: Personnel Services $ 13,063,195 $ 13,511,987 13,138, % $ (373,602) Fuel, Power & Utilities 3,224,653 3,057,508 3,172, % 115,243 Operations Maintenance 806, , , % 51,500 Chemicals 1,660,137 1,500,000 1,480, % (20,000) Product Support 1,447,796 1,603,000 1,597, % (5,500) Business Support 1,399,477 1,528,000 2,337, % 809,292 Professional Services 1,438,891 1,399,500 1,336, % (63,000) Arlington Sewage Disposal 1,641,233 1,685,000 1,928, % 243,463 Total $ 24,682,165 $ 25,072,495 $ 25,829, % $ 757,396 Excess (Deficiency) of Revenues over Expenditures $ 864,679 $ 5,000 $ 5, % $ 0 Fund Balance - Beginning $ 7,970,810 $ 7,975,810 $ 5,000 Fund Balance - Ending $ 7,970,810 $ 7,975,810 $ 7,980,810 $ 5,000 Adopted September 15,

18 Adopted September 15,

19 Workforce Overview The FY 2016 proposed budget fully funds all filled positions and all vacant positions. Department FY 2014 Actual FY 2015 Adopted FY 2016 Proposed Executive Communications Finance Human Resources Sustainability Engineering & Technology Process Operations Maintenance TOTAL Adopted September 15,

20 Parity Debt Service Fund Explanatory Notes The Parity Debt Service Fund was created by the Master Trust to provide for the payment of principal and interest on outstanding debt. The Alexandria Renew Enterprises borrowing from the Virginia Revolving Loan Fund (VRLF), through its financial administrator the Virginia Resources Authority (VRA), is considered parity debt under the Master Trust. It is anticipated that Alexandria Renew will require additional financing to design and construct nitrogen removal called the State-of-the-Art Nitrogen Upgrade Program (SANUP). Design is underway on several projects within the program; construction projects began in FY The following notes provide additional information for the Budget: Transfers from the Revenue Fund are made to fund the required principal and interest payments on March 1 st and September 1 st. Adopted September 15,

21 Parity Fund Budget FY 2016 FY Actual Final Budget 2016 Budget 2017 Budget 2018 Budget 2019 Budget REVENUES Transfers from Revene Fund $ 11,934,335 $ 12,212,564 $ 13,050,500 $ 14,997,856 $ 15,000,389 14,950,000 Investment Income 88,684 60,000 10,000 20,000 10,000 5,000 Total Revenue $ 12,023,019 $ 12,272,564 $ 13,060,500 $ 15,017,856 $ 15,010,389 14,955,000 EXPENDITURES BANK FEES $ 462 $ - $ - $ - $ - VRA BD SERIES 98A INTEREST 72,146 59,875 46,315 32,433 18,224 3,679 VRA BD SERIES 98A PRINCIPAL 560, , , , , ,098 VRA BD SERIES 00A INTEREST 343, , , , ,592 75,474 VRA BD SERIES 00A PRINCIPAL 1,432,791 1,483,377 1,535,750 1,589,972 1,646,107 1,646,107 VRA BD SERIES 00B INTEREST 1,493,682 1,384,108 1,260,432 1,131, , ,010 VRA BD SERIES 00B PRINCIPAL 3,058,915 3,180,936 3,307,823 3,439,773 3,576,985 4,040,116 VRA BOND SERIES 04 INTEREST 415, , , , , ,593 VRA BOND SERIES 04 PRINCIPAL 1,066,355 1,099,668 1,134,022 1,169,449 1,205,983 1,243,657 VRA BD SERIES 06 INTEREST 266,382 54, , , , ,559 VRA BD SERIES 06 PRINCIPAL 725, , , , , ,559 VRA BOND SERIES 2008B INTEREST 490, ,867 34, , , ,047 VRA BOND SERIES 2008B PRINCIPAL 175, , , , , ,000 VRA BOND SERIES 2009 INTEREST 448,459 20, , , , ,954 VRA BOND SERIES 2009 PRINCIPAL 622, , , , ,924 VRA BOND SERIES 2011 INTEREST 174, , , , , ,808 VRA BOND SERIES 2011 PRINCIPAL 169, , , , , ,402 VRA BOND SERIES 2014A Interest 21, , , , , ,625 VRA BOND SERIES 2014A PRINCIPAL - 336, , , , ,897 VRA BOND Reclaimed SERIES 2014B Interest , ,631 66,464 63,265 VRA BOND Reclaimed SERIES 2014B PRINCIPAL , , , ,407 VRA BOND SERIES 2014 C Interest - 37, , , , ,127 VRA BOND SERIES 2014 C PRINCIPAL - 850,000 15,000 15,000 15,000 15, bonds issued in last quarter 2016 INTEREST , , , , bonds issued in last quarter 2016 PRINCIPAL , , , ,529 TOTAL EXPENSES 11,537,036 12,196,605 13,797,775 14,997,856 15,000,389 14,948,781 Excess (Deficit) 485,983 75,959 (737,275) 20,000 10,000 6,219 Fund Balance - Beginning 1,779,700 2,265,683 2,341,642 1,604,367 1,624,367 1,634,367 Fund Balance - Ending 2,265,683 2,341,642 1,604,367 1,624,367 1,634,367 1,640,586 Adopted September 15,

22 Joint Improvement, Renewal & Replacement Explanatory Notes The Joint Improvement, Renewal & Replacement (IRR) Fund provides for payment of capital improvements, renewals and replacements for portions of the system and facility used jointly by the City of Alexandria and Fairfax County. Those improvements for portions of the system within the City of Alexandria only are budgeted in a separate category within the General Fund. The contribution to the IRR Fund is 0.7% of the total amount of capital expenditures made subsequent to October 1, 1997, for the joint portion of the system, as set forth by the service agreement with Fairfax County. A number of projects that Alexandria Renew will be working on during FY 2016 are identified. Projects include planned overhauls and maintenance on critical equipment, energy efficiency and alternative energy generation projects, information technology projects, and required asset replacements. Adopted September 15,

23 JOINT IR & R BUDGET FY 2016 Approved Proposed FY 2014 FY 2015 FY 2016 % Change $ Change Actual Budget Budget FY15 to FY16 FY15 to FY16 Revenues and Other Sources: Transfer from Revenue Fund $ 1,382,000 $ 1,456,433 $ 1,791, % $ 335,269 Contribution from Fairfax County 2,073,000 2,184,600 2,670, % 485,708 Investment Income 5,576 12,000 60, % 48,000 Total $ 3,460,576 $ 3,653,033 $ 4,522, % $ 868,976 Expenditures: Interceptors, Pump Station, and Chemical Feed $ 1,486,973 $ 388,000 $ 955, % 567,000 BRB's, Air Systems, UV 507, , , % 35,000 Thickening, Prepast, Digester, Dewatering 593, ,000 1,378, % 784,000 Campus - HVAC, Fire & Gas Detection 637, ,000 1,740, % 1,196,000 Engineering - Non-nutrient Related 239,896 1,935, , % (1,610,000) Information Systems 829, , , % (380,000) Human Resources/Laboratory - 117, , % 203,000 Processing - 309, , % (39,000) Security - Construction % - Previous Year Carryover - 605, % (605,000) Total $ 4,295,151 $ 5,945,000 $ 6,096, % $ 151,000 Excess (Deficiency) of Revenues over Expenditures $ (834,575) $ (2,291,967) $ (1,573,991) % $ 717,976 Fund Balance - Beginning $ 10,629,987 $ 8,338,020 Fund Balance - Ending $ 8,338,020 $ 6,764,029 Adopted September 15,

24 General Fund Explanatory Notes The General Fund serves as reserve fund to be used for any lawful purpose of the Authority. Deposits to the General Fund are made from the Revenue Fund after all other fund expenditures and requirements have been satisfied. Alexandria Renew principally uses the General Fund to finance its specific capital improvements, provide sufficient reserves in order to maintain strong credit worthiness, and account for unanticipated expenditures experienced by Alexandria Renew in its normal course of operation. The General Fund is used by Alexandria Renew for the following main purposes: Alexandria-only capital improvements (CIP); Alexandria-only improvement, renewal and replacement (IRR); Alexandria CIP commitments to the Arlington County Water Pollution Control Plant; and As a resource for planning and future needs of a non-routine nature. For FY 2016, a contribution is made to the General IR&R category, equaling 4.87% of the total amount of expenditures for capital improvements within the City of Alexandria only. Adopted September 15,

25 GENERAL FUND BUDGET FY 2016 Approved Proposed FY 2014 FY 2015 FY 2016 % Change % Change Actual Budget Budget FY14 to FY15 FY14 to FY15 Revenues and Other Sources: Transfers from Revenue Fund $ 9,615,500 $ 8,847,918 $ 8,445, % $ (402,781) Investment Income 196, , , % - PAYMENTS FROM FAIRFAX COUNTY 48, PAYMENT FROM ALEXANDRIA CITY 146, Grant Revenues - 4,021, % (4,021,452) Debt Proceeds ,000,000 20,000,000 Transfer to Parity (395,000) Total $ 9,611,006 $ 12,969,370 $ 28,545, % $ 15,575,767 Expenditures: Capital Improvement Program (CIP) Potomac Interceptor Rehab $ - $ 250,000 $ 250, % $ - Four Mile Run Pump Station 2,660,467 4,100,000 1,400, % (2,700,000) Potomac Yard Interceptor Rehab , ,000 Collections Systems 93,029-6, % 6,000 Collections Systems Repair 40, Environmental Center 158,135 1,030, , % (880,000) Athletic Field 17,726 1,150, , % (1,050,000) Meters 61,866 50,000 50, % - Arlington County 848, ,410 1,391, % 749,705 Flow Monitoring/GIS - 75, , % 225,000 Other Professional Studies - - 6, % 6,000 Credit Line Interest 8,695 75,000 75, % - Bank Fees 10,527 13,500 10, % (3,500) Finance Fees 32, , , % - Total $ 3,931,050 $ 7,794,910 $ 4,323, % $ (3,471,795) Use of Fund Balance Use of Land Proceeds $ 2,776,000 $ 10,148,156 $ % $ (10,148,156) Transfer to Project Fund 1,050,777 13,000,000 20,375, % 7,375,500 $ 3,826,777 $ 23,148,156 $ 20,375, % $ (2,772,656) Excess (Deficiency) of Revenues over Expenditures $ 1,853,179 $ (17,973,696) $ 3,846,522 Fund Balance - Beginning $ 22,721,747 $ 4,748,051 Fund Balance - Ending $ 4,748,051 $ 8,594,573 Adopted September 15,

26 GENERAL FUND IR & R BUDGET FY 2016 Approved Proposed FY 2014 FY 2015 Fy 2016 % Change $ Change Orig Actual Budget Budget FY15 to FY16 FY15 to FY16 Revenues and Other Sources: Transfer from Revenue Fund $ 233,400 $ 356,700 $ 356, % $ - Total $ 233,400 $ 356,700 $ 356, % $ - Expenditures: Commonwealth CCTV and Cleaning $ 2,840 $ - $ - $ - Flow Monitoring/GIS - 75, , ,000 Potomac Yards CCTV and Cleaning 18, , ,000 Potomac Interceptor CCTV and Cleaning 18, , % (250,000) Total $ 40,052 $ 325,000 $ 475, % $ 150,000 Excess (Deficiency) of Revenues over Expenditures $ 193,348 $ 31,700 $ (118,300) % $ (150,000) Fund Balance - Beginning $ 619,760 $ 813,108 $ 844,808 Fund Balance - Ending $ 813,108 $ 844,808 $ 726,508 Adopted September 15,

27 Project Fund Explanatory Notes Capital Improvement Program (CIP) AlexRenew manages its Project Fund, both joint and City only, using a Capital Improvement Program (CIP). The plans for current and future capital projects, both joint and City only, at AlexRenew are summarized in a Ten-Year Plan. The CIP is a key element in planning and managing future compliance through large capital investments. This plan identifies cash needs as required by our Financial Policy, allowing for rate stability by forecasting future debt service. The Ten-Year Plan is an important tool used for formulating future project financing plans, maximizing federal and state grant opportunities, proactively planning for the replacement or reconstruction of essential assets that are nearing the end of their service life, and scheduling and coordinating execution of multiple projects to minimize operational impact. Only the first year of the Ten-Year CIP (FY 2015) represents a funding commitment for a project. Definition of Capital Projects A capital project involves expenditures to acquire or add assets of a relatively permanent nature such as property, plant and equipment. The CIP is typically used for large capital projects, new facilities, expansions and improvements requiring engineering and/or construction services such as: Studies preceding or likely to result in new facilities; New administrative facilities, expansions, major improvements and major renovations; New pump stations and major improvements; New pipelines, replacements and major rehabilitations; New treatment plants, expansions and major improvements; and Studies or projects which will take multiple years to complete. Funding of Capital Improvement Projects The CIP for joint projects is funded through the Project Fund. It can be for joint projects (facilities that are joint use with Fairfax and Alexandria). Fairfax funds 60% of the cost of the project on a cash reimbursement basis unless negotiated separately. The remaining 40% is funded from the General Fund. The CIP for City only projects is fully funded out of the General Fund. It does not include day-to-day maintenance expenditures or routine renewal and replacement of assets. Funding sources into the General Fund for CIP projects include loans from the Virginia Department of Environmental Quality (VA DEQ) Wastewater Revolving Loan Fund (WRLF); the Virginia Water Quality Improvement Fund (VA WQIF) Point Source Grant; the United States Environmental Protection Agency (US EPA) Special Appropriations Grant; and AlexRenew discretionary funds. Adopted September 15,

28 PROJECT FUND BUDGET FY 2016 Approved Proposed FY 2014 FY 2015 FY 2016 Forecast Actual Budget Budget FY 2017 FY 2018 FY 2019 Revenues and Other Sources: Payments from Fairfax County $ 41,901,391 $ 41,183,537 $ 23,469,500 $ 15,003,000 $ 12,501,000 $ 10,212,600 Transfers from General Fund 1,050,777 13,000, ,500 10,500,000 11,600,000 16,000,000 Grant 8,075, VRA Bonds Series ,079, VRA -Reclaimed Water - 2,500, VRA - Package C Additional Bonds - Series Series Series ,000,000 20,000, General Fund Land Sale Proceeds Alex Only 2,776,000 10,148, Total $ 67,883,152 $ 79,831,693 $ 43,845,000 $ 25,503,000 $ 24,101,000 $ 26,212,600 Expenditures: SANUP Package B - Centrate Pretreatment $ 2,000,863 $ 1,518,000 $420,000 $ - $ - $ - SANUP Package C - Nutrient Management Facility 52,038,816 34,981,317 3,725, SANUP Package D - Biological Reactor Basin 6 1,368,813 5, , Mainstream Deammonification 259,728 2,700,000 4,595, Reclaimed Water Disinfection, Booster Pump Station 5,669,093 2,825, Reclaimed Water Distribution Line - Eisenhower Ave. 79,524 5, ,000 $150,000 Raw Sewage Pump Station 784, , UV Disinfection System Upgrade 93, ,000 3,900,000 4,000, Scum System Upgrade ,000 1,500,000 1,500,000 - Supervisory Control and Data Acquisition System Upgrade - 250,000 1,250, Switchgear C Replacement 2,245, , Switchgear 1A Replacement 755, , Plant Electrical Reliability - 125,000 1,500,000 1,500, ,000 - Process Automation Improvements , ,000 2,000,000 Influent Screening System Upgrade ,000 3,000,000 3,000,000 Process Air Compressor (PAC) Blower Replacement - - 1,750,000 1,750, Emergency Notification System 290, , , PLC Upgrade 182, , , , ,000 - Information Technology - - 1,275,000 1,425,000 1,225,000 1,050,000 Facility Masterplan and Associated Improvements - 150,000 1,300,000 4,500,000 4,500,000 - Stormwater Rehabilitation Program - 150, , , Commonwealth Interceptor Pile Intrusion Repair ,000 2,000,000 1,850,000 - Solids Master Plan Update and Associated Improvements 198,633 15, ,000 2,500,000 5,000,000 Long Range Plan Update and Associated Improvements , , ,000 5,000,000 Wet Weather Management Strategy 1,964, ,000 4,200,000 6,050,000 7,150,000 10,250,000 Security During Construction 182, , , , , ,000 Bank Fees 416 1,000 1, Subtotal $ 68,113,963 $ 45,980,062 $ 27,471,000 $ 25,005,000 $ 24,155,000 $ 26,730,000 Environmental Center $ 4,063,180 $ 25,000,000 $ 12,500,000 $ - $ - $ - Deck Connector 1,589,217 5,175,000 3,375, Contra - Renew Environmental Center Subtotal 5,652,397 $ 30,175,000 $ 15,875,000 $ - $ - $ - Total Expenditures $ 73,766,360 $ 76,155,062 $ 43,346,000 $ 25,005,000 $ 24,155,000 $ 26,730,000 Excess (Deficiency) of Revenues over Expenditures $ (5,883,208) $ 3,676,631 $ 499,000 $ 498,000 $ (54,000) $ (517,400) Fund Balance - Beginning $ 4,082,630 $ 7,759,261 $ 8,258,261 $ 8,756,261 $ 8,702,261 Fund Balance - Ending $ 7,759,261 $ 8,258,261 $ 8,756,261 $ 8,702,261 $ 8,184,861 Adopted September 15,

29 Project Fund Summary Sources for Joint CIP The Alexandria Renew Enterprises proposed Joint Capital Improvement Plan for FY 2016 utilizes a combination of cash transfers from the General Fund, capital contributions from Fairfax County, Virginia Resources Authority loans, and bond proceeds. FY Capital Improvement Plan Funding Sources: Summary By Fund Proposed Forecasted Project Fund FY 2016 FY 2017 FY 2018 FY 2019 Total Sources of Funds Contributions from Fairfax County $ 23,469,500 $ 15,003,000 $ 12,501,000 $ 10,212,600 $ 61,186,100 Transfers from General Fund 375,500 10,500,000 11,600,000 16,000,000 $ 38,475,500 Grant $ - VRA- Reclaim Water $ - VRA - Package C $ - Additional Bonds - Series 2015, 2016, ,000, $ 20,000,000 Grand Total: All Capital Funding $ 43,845,000 $ 25,503,000 $ 24,101,000 $ 26,212,600 $ 119,661,600 Adopted September 15,

30 FY 2016 Capital Improvement Program Overview The Alexandria Renew Enterprises proposed Joint Capital Improvement Plan for FY 2016 continues funding for the design and construction of nitrogen removal called the State-of-the-Art Nitrogen Upgrade Program (SANUP), which accounts for 55.23% of the total Capital Project Fund. Adopted September 15,

31 Alexandria Only Capital Improvement Program (CIP) Details Capital Improvement Program (CIP) Budget Detail Sheets The following pages contain Capital Improvement Program (CIP) detail sheets for each FY 2016 project. These detail sheets include a project description and summary of sources and uses of funds. FY 2016 Capital Improvement Program Alexandria Only Projects Diversified Revenue Operational Excellence Institutional Competency Community Engagement Watershed Partnerships Collectively Managed Innovation Incubator Four Mile Run Pump Station Upgrade Project Potomac Interceptor Rehabilitation Project Environmental Center Educational Areas and Public Restrooms SANUP Package C Nutrient Management Facility Athletic Field Adopted September 15,

32 Four Mile Run Pump Station Upgrade Project Managing Department Project Location Project Category Estimated Useful Life Engineering Arlandria, Del Ray Alexandria Only CIP Submersible Pumps: 10 years Centrifugal Pumps: 20 years Planned Expenditure Prior Year FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total $5,346,505 $1,400,000 Financing AlexRenew $1,400,000 Fairfax VRLF or VRA $3,375,532 Grant Line of Credit $1,970,973 Project Description and Justification The Four Mile Run Pump Station was originally constructed in 1954 and has reached the end of its useful life. Improvements to the facility are needed to minimize wet weather impacts. In addition, the building requires electrical improvements to ensure compliance with current code requirements. Planned improvements include replacing two, non-submersible pumps; the installation of a new dimminutor (grinder) to screen solids and grind rags and other debris, and electrical upgrades. In addition, in response to community feedback, AlexRenew will design and construct an educational exhibit that will be displayed along the fence of the pump station and inform the public about what they can do to protect the environment and inspire water stewardship. Construction commenced in FY 2014 and will be completed in FY Strategic Outcome Area This project supports the Board of Directors strategic outcomes for: Operational Excellence Impact on Operations The operating and maintenance costs associated with this facility will remain the same. Adopted September 15,

33 Potomac Interceptor Rehabilitation Project Managing Department Project Location Project Category Estimated Useful Life Engineering Old Town Alexandria Only CIP 30 years Planned Expenditure Prior Year FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total $250,000 $250,000 Financing AlexRenew $250,000 $250,000 Fairfax VRLF Grant Line of Credit Project Description and Justification Constructed in the early 1950s, the Potomac Interceptor is one of the three, original large diameter sewers that were built to convey wastewater from the City of Alexandria to AlexRenew s water resource recovery facility. Rehabilitation of portions of the Potomac Interceptor is necessary to correct deficiencies in the pipeline and manholes. These deficiencies are identified through a combination of Closed Circuit Television (CCTV) inspection, hydraulic modeling, and/or field inspection reports. Potential rehabilitation strategies include point repair and cured-in-place-pipe (CIPP) lining, among other activities. Rehabilitation of the Potomac Interceptor will extend its useful life and improve conveyance capacity. This project will also protect against catastrophic failure, such as pipe collapse. CCTV inspection and cleaning of the Potomac Interceptor began in FY 2015 as part of the IRR program. The rehabilitation program will be implemented as part of the CIP in FY Strategic Outcome Area This project supports the Board of Directors strategic outcomes for: Operational Excellence Impact on Operations This project will reduce annual maintenance costs. Adopted September 15,

34 Planned Expenditure Environmental Center Educational Areas and Public Restrooms Managing Department Project Location Project Category Estimated Useful Life Engineering West Plant Alexandria Only CIP 30 years Prior Year FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total $29,063,180 $12,500,000 Financing AlexRenew $12,924,156 $2,342,522 Fairfax $14,420,958 $6,125,000 VRLF Grant Line of Credit $1,898,066 $4,032,478 Project Description and Justification In support of the Eisenhower East Small Area Plan and strategy for the South Carlyle area development, AlexRenew is designing and constructing a new Administration Building referred to as the Environmental Center. This project will result in a 60,000 square foot, LEED and Energy Star-certified, office building. The building will include office space and support amenities for various administrative functions, a visitor center, and public restrooms for the adjacent soccer field that is being constructed on top of the Nutrient Management Facility (NMF). This portion of the project pertains to the visitor center and public restrooms. Costs associated with these portions of the building will be borne by AlexRenew only. Design and permitting of the new Administration Building was completed during FY Construction commenced in FY 2014 under a Construction Manager at Risk (CMAR) contract. Construction will be completed in FY Strategic Outcome Area This project supports the Board of Directors strategic outcomes for: Community Engagement Impact on Operations The City of Alexandria will be responsible for the operations and maintenance costs associated with the Public Restroom area accessible to individuals using the soccer field. Adopted September 15,

35 Planned Expenditure SANUP Package C - Nutrient Management Facility Athletic Field Managing Department Project Location Project Category Estimated Useful Life Engineering West Plant Alexandria Only CIP Synthetic Turf: 8-10 years Prior Year FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total $17,726 $1,150,000 Financing AlexRenew Fairfax VRLF Grant Line of Credit $1,150,000 Project Description and Justification In response to feedback provided by the City of Alexandria and various stakeholders during the Development Special Use Permit (DSUP) process for the Nutrient Management Facility (NMF), a synthetic turf soccer field will be placed on top of the NMF. In the early phases of the NMF design, above ground, cylindrical tanks were proposed. This initial design concept was rejected by the City of Alexandria and various design review boards, because it was deemed incompatible with the Eisenhower East Small Area Plan. In response to the feedback that AlexRenew received from the City of Alexandria during the DSUP process, the NMF tanks were switched to rectangular and moved to a lower elevation with only a 10 foot projection of the overall structure above grade. In addition, a regulation soccer field was incorporated into the design. Costs associated with the design and construction of the soccer field are allocated to AlexRenew only. Strategic Outcome Area This project supports the Board of Directors strategic outcomes for: Community Engagement Impact on Operations The soccer field will be operated and maintained by the City of Alexandria. The project will not increase operations or maintenance costs. Adopted September 15,