Columbus Water Works. Component Unit of the Consolidated Government of Columbus, Georgia. Comprehensive Annual Financial Report

Transcription

1 Columbus Water Works Component Unit of the Consolidated Government of Columbus, Georgia Comprehensive Annual Financial Report Fiscal Year Ended June 25, 2016 and 2015

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3 COLUMBUS, GEORGIA COMPREHENSIVE ANNUAL FINANCIAL REPORT A COMPONENT UNIT OF THE CONSOLIDATED GOVERNMENT OF COLUMBUS, GEORGIA FOR THE FISCAL YEAR ENDED JUNE 25, 2016 AND 2015 Prepared by Division of Finance Timothy J. Murphy, Senior Vice-President Columbus Water Works 1421 Veterans Parkway Columbus, Georgia 31901

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5 COLUMBUS, GEORGIA Comprehensive Annual Financial Report A Component Unit of the Consolidated Government of Columbus, Georgia For the Fiscal Year Ended June 25, 2016 and 2015 INTRODUCTION This Section Contains the Following Subsections TABLE OF CONTENTS MANAGERIAL CHART LISTING OF PRINCIPAL OFFICIALS AND CONSULTANTS MEMBERS, BOARD OF WATER COMMISSIONERS LETTER OF TRANSMITTAL CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING -1-

6 TABLE OF CONTENTS Page I. Introductory Section Title Page 1 Table of Contents 2 Managerial Chart 4 Listing of Principal Officials and Consultants 5 Board of Water Commissioners 6 Letter of Transmittal 7 Certificate of Achievement 17 II. Financial Section Title Page 19 Independent Auditor s Report 20 Management Discussion and Analysis 22 Financial Statements Statements of Net Position 42 Statements of Revenues, Expenses & Changes In Net 44 Position Statements of Cash Flows 46 Notes to the Financial Statements 48 Required Supplementary Information 82 III. Statistical Section Title Page 83 Statistical Section Contents 84 Financial Trends Net Position by Component 85 Change in Net Position 86-2-

7 TABLE OF CONTENTS Page Revenue Capacity -Schedule of Operating Revenues by Source 87 Capital Contributions by Source 89 Schedule of Water, Wastewater & CSO Rates 90 Schedule of Connection and Service Fees 91 Comparison- Water and Sewer Rates 92 Debt Capacity Revenue Covering All Debt 93 Outstanding Debt 94 Demographic and Economic Information General Information 96 Selected Economic Characteristics 97 Population Statistics 98 Labor Market Information 99 Operating Information Schedule of Employees by Division 105 Schedule of Expenses by Function 106 Schedule of Ten Largest Water Customers 107 Schedule of Number of Available Service Installations 108 Schedule of Capital Assets and Volumetric Usage

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9 Columbus Water Works Columbus, Georgia Listing of Principal Officials and Auditors Board of Water Commissioners Mr. Karl Douglass, Chair Mr. Reynolds Bickerstaff, Treasurer Mr. G. Sanders Griffith III Mrs. Becky Rumer Honorable Mayor Teresa Tomlinson President Steven R. Davis, P.E. Executive Vice-President Engineering & Field Services Billy Cobb, P.E. CFO, Water Board Secretary Finance, Asset Management, Security, Customer Services, Information & Environmental Services Timothy J. Murphy, CPFO Senior Vice-President, Strategic Planning, Employee Services & Corporate Relations GwenDolyn H. Ruff, SPHR Senior Vice-President, Water Resource Operations & Managed Maintenance John T. Peebles Auditors Robinson, Grimes & Company, P.C. -5-

10 Columbus Water Works Board of Water Commissioners Mr. Karl Douglass Chairman Mr. Reynolds Bickerstaff Treasurer Mr. G. Sanders Griffith Mrs. Becky Rumer -6- Honorable Teresa Tomlinson Mayor Ex-Officio

11 October 20, 2016 Board of Water Commissioners Steven R. Davis, President Timothy J. Murphy, Senior Vice President Finance Columbus Water Works Columbus, Georgia Ladies and Gentlemen: The Comprehensive Annual Financial Report (CAFR) of the Columbus Water Works (CWW) for the fiscal year ended June 25, 2016 and 2015 is hereby submitted. This report describes the Columbus Water Works financial activities, economic condition and services as a whole and is presented in three sections: Introductory, Financial and Statistical. Management is responsible for the accuracy of the data and the contents of this report to include all disclosures. To the best of our knowledge and belief, the enclosed data is accurate in all material aspects and is reported in a manner designed to fairly represent the financial position and operations of CWW. All disclosures required to ensure a full understanding of this report have been included. Columbus Water Works is responsible for the financial statements and the related information in this report. A system of internal accounting controls is maintained to provide reasonable assurance that assets are safeguarded and that the records reflect only authorized transactions. Limitations exist in any system of internal controls. However, based on recognition that the cost of the system should not exceed its benefits, management believes its system of internal accounting controls maintains an appropriate cost/benefit relationship. -7-

12 Columbus Water Work s system of internal accounting controls is evaluated on an ongoing basis by the internal financial staff. Independent external auditors also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements. Management believes that its policies and procedures provide guidance and reasonable assurance that the CWWs operations are conducted according to management s intentions and to a high standard of business ethics. In management s opinion, the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the Water Works in conformity with accounting principles generally accepted in the USA. Government Profile The Board of Water Commissioners of Columbus, Georgia was created pursuant to legislative authority granted originally in 1902 and reaffirmed by the ratification in 1971 of the Charter of the Consolidated Government of Columbus. The Board is responsible for the supervision and control of building, construction, operation of the water and sewerage utilities in Muscogee County and the Ft. Benning Military Installation, charged with exclusive jurisdiction, control and management of all water and sewerage facilities with powers including, but not limited to, the power to establish and charge rates, to operate water and sewerage systems as one revenue producing undertaking, and to charge separately or collectively for such services. The Board of Water Commissioners consists of five members including the Mayor of Columbus (exofficio) and four members appointed by the Council of Columbus to serve fouryear staggered terms. The President and staff of the CWW supervise day-today operations. Employee staffing was established and approved for 280 positions fiscal year ending Economic Condition and Outlook Columbus (population served 255,779) is in west central Georgia, 110 miles southwest of Atlanta and 82 miles east of Montgomery, Alabama. Located on the east bank of the Chattahoochee River, which is the Georgia-Alabama State boundary, Columbus draws commercial activity from east Alabama as well as from nearby Georgia counties. Columbus acts as a regional trade center and is -8-

13 the hub of a Metropolitan Statistical Area (MSA) that includes Phenix City (Alabama) and Ft. Benning. The Columbus MSA civilian labor force as of June 2016 was 125,592. In addition to this civilian labor base, the area s economy includes 40,000 soldiers and civilians employed at Ft. Benning, the home of the Maneuver Center of Excellence and the Army Infantry School. Construction activity for the Columbus community remained stable as reflected by 2,994 building permits issued with an accumulated valuation of $369,506,946 through June The addition of new offices, commercial businesses and manufacturing facilities either relocating or expanding in the community, have added 833 new jobs and a total of 120 million in capital investments this fiscal year. Unemployment in Muscogee County is slightly higher than the state average. The total civilian labor force in Muscogee County for June 2016 was 79,630 of which 74,092 were employed and 5,538 were unemployed. The largest major industry sector was Health Care and Social Assistance, with 18.23% of the employment, followed by Accommodation and Food Services with 12.44%, and Retail Trade with 12.18%, respectively. Water and Sewage System Water Supply and Distribution The North Columbus Water Resource Facility (NCWRF) derives its water supply from Lake Oliver Reservoir on the Chattahoochee River with the Ft. Benning Water Treatment Facility deriving its water supply directly from the Chattahoochee. The distribution system is comprised of 6,146,248 feet of pipe in Columbus and 1,170,807 feet of pipe in Ft. Benning. The combined water treatment permitted capacity of 98 million gallons per day (MGD) is ample to meet the average daily consumption of MGD for NCWRF and 2.40 MGD for Ft. Benning. The NCWRF had a maximum day s filtration of MGD and the Ft. Benning Plant had a maximum day s filtration of 4.03 MGD for the period ending June 25, The water distribution system served 65,847 active metered accounts as of June 25,

14 The capacity of various components of the water system is as follows: Intakes MGD North Columbus Pumps MGD Raw Water Pumps MGD Ft. Benning Storage 5.75 MG Raw Water Mains MGD High Service Storage MG Clearwells MG NCWRF Storage 4.00 MG High Service Pumps MGD Raw Water Storage 8.00 MG Sewage System Columbus Water Works operates the sewer system within Muscogee County and has one pollution control facility, the South Columbus Water Resource Facility (SCWRF). The hydraulic design capacity of the SCWRF is 42 MGD per day, but flow is not a condition of the National Pollutant Discharge Elimination System (NPDES) permit. The SCWRF maximizes flows during wet weather periods, treating peak flows up to 84 MGD. The capacity of the treatment plant is therefore determined by the mass quantities of total suspended solids (TSS) and carbonaceous biochemical oxygen (CBOD) demand in the effluent discharge. The average daily flow for the twelve months ending June 25, 2016 was MGD. In addition to the SCWRF, CWW operates and maintains two Combined Sewer Overflow (CSO) treatment facilities with a maximum combined treatment capacity of 121 MGD. The sewage collection system is comprised of 5,318,042 feet of pipe in Columbus and 863,066 feet of pipe in Ft. Benning, ranging in size from 6 inches to 96 inches. The total treated final effluent flow for the twelve months ending June 25, 2016 was billion gallons. As of June 25, 2016, the sewer system served 60,295 active sewer accounts. All the water and sewage facilities are reported to be in good condition. Service availability has not been restricted by inadequate facilities nor has expansion been limited by any regulatory agency. Strategic Planning and Effective Utility Management (EUM) Initiative Since 2010, Columbus Water Works has incorporated the concepts of the EUM Initiative into our strategic planning processes. The EUM Initiative identifies Ten Attributes of Effectively Managed Water Sector Utilities (Attributes) which describe desired outcomes that are applicable to all water and wastewater utilities. The Attributes emerged from an extensive analysis of current utility management practices and discussions with leaders in the utility industry, -10-

15 regarding what they viewed as promising developments in utility management efforts. These Attributes can be viewed as a continuum of, or a set of building blocks for, management improvement opportunities. They are deliberately not listed in a particular order, since utility managers determine their relevance and relative importance based on individual circumstances. The Ten Attributes identified by the study are: Product Quality Employee and Leadership Development Financial Viability Operational Resiliency Water Resource Adequacy Customer Satisfaction Operational Optimization Infrastructure Stability Community Sustainability Stakeholder Understanding and Support Columbus Water Works has also embraced the concept of the Five Keys to Management Success, which is a complement report from the EUM study. These five keys are specific management approaches and systems which have been proven to help water and wastewater utilities manage more effectively. They create a supportive climate for a utility as it works towards the outcomes outlined in the Attributes, and can help integrate the utility s improvement efforts across the Attributes. The Five Keys to Management Success are: Leadership Effective leadership ensures that our strategic direction is understood, communicated, embraced, and followed on an ongoing basis throughout the organization. Leadership has an important responsibility to communicate with our stakeholders, community leaders and customers. This reflects our commitment to organizational excellence, leading by example to establish and reinforce our culture to embrace positive change and to strive for continual improvement. -11-

16 Strategic Business Planning Preparation of a strategic business plan involves taking a long-term view of our goals and operations and establishing a clear vision and mission. The strategic business plan guides our goals, objectives, performance measurement efforts, and operational activities. Organizational Approaches Effective organizational approaches actively engage our employees in improvement efforts. It deploys an explicit change management process that anticipates and plans for change and encourages staff at all levels to embrace change. It also utilizes effective implementation strategies that seek, identify, and celebrate early, step-by-step victories. Measurement An effective measurement system helps us to focus on operational issues, identifying performance expectations, and facilitating decision making. This system is supported by a well-defined decision framework which ensures performance metrics are evaluated, communicated, and responded to in a timely manner. Continual Improvement Management Framework A continual improvement management framework requires us to conduct an honest and comprehensive self-assessment to identify management strengths and operational areas for improvement. It also defines and implements operational requirements, procedures and establishes priorities, supporting roles and responsibilities. Columbus Water Works strategic direction is spelled out in strategies, goals, and objectives, which are supported by tactics, actions, and responsibilities with targeted measurable performance indicators. Each strategic initiative is spearheaded by individual organized teams made up of diverse groups of CWW employees who reflect an equitable distribution of our skills and resources. Our six strategic initiatives serve as the foundation for achieving our mission: Enhance Customer Satisfaction Use effective customer service relationships and approaches to achieve excellence in customer satisfaction. -12-

17 Strengthen Regional Partnerships Expand CWW influence and increase regional service opportunities. Leverage Information Technology Provide Information Technology capabilities to realize the benefits of improved organizational effectiveness and efficiency to maximize customer satisfaction. Optimize Infrastructure Performance Optimize asset functionality, condition and operations to provide our customers with the Best in Class utility performance. Develop Sustainable Workforce Recruit, retain and maintain a workforce that is competent, motivated, diverse and adaptive. Maintain Financial Stability Use sound financial planning and management, develop revenues and identify potential revenue sources, while effectively controlling operational costs. Our Vision, To be an outstanding provider of utility services, dedicated to protecting the environment, aspiring to new opportunities and compelled to excel in service to our community, serves as the driver for all of our operational decisions and is reflected in our six core values: Integrity Customer-Focused Employee-Oriented Environmental Stewardship Innovation Community Leadership Our core values form the foundation on which we perform our work for our customers and what we abide by. They are not bare descriptions of our work, but they underlie our work, how we interact with our customers and community partners and how we fulfill our commitment to the community. These are the practices we strive to use every day in everything we do. As a component of our strategic planning process, we actively solicit feedback and participation from our customers and key stakeholders. We conduct monthly customer satisfaction surveys, in addition to periodic stakeholder interviews, as a venue to gain valuable community input on significant issues. We also evaluate and consider -13-

18 industry trends, as well as legislative, economic and environmental concerns when developing our strategic programs. During FY 14-15, CWW conducted a comprehensive mid-cycle review of the current Five-Year Strategic Plan as a way to ensure our strategic initiatives continue to be relevant, timely and support our efforts towards continuous improvement. This has proven to be extremely successful for us and we will continue to utilize this practice. We incorporated feedback from our stakeholder interview process, our customer satisfaction survey results, an online community leaders survey, and from core members of the strategy teams. As a result of the mid-cycle review, we developed a fiscal year planning document which identified key projects and activities which aligns with our operational direction and also provides a deliberate and strategic approach to achieving these specific goals. A number of these initiatives were implemented during FY and have resulted in significant operational improvements and efficiencies. For FY 16-17, CWW will evaluate our current strategic program and initiate efforts to update the strategic plan document. As a part of this process, we will continue to identify and explore opportunities to improve our operational activities to ensure that wastewater is efficiently collected and properly treated, that our community is provided with a safe and dependable drinking water supply, and that we embrace our legacy of being economically and environmentally responsible. As a premier leader in the water and wastewater industry, our strategic focus in the upcoming years is on customer service and satisfaction, effective communications, employee and leadership development, the implementation of operational cost-efficiencies, sustainability, and to continue to strengthen our community and regional partnerships. Other Information Columbus Water Works continues to enjoy a stable financial position. This stability is based upon the organization s solid liquidity position, conservative budgeting, and programmed annual rate increases. CWWs financial policies include a component for management of reserve funds and a component relative to coverage requirements. The following is a summary of these policies: -14-

19 Reserve Fund Policy: Operating Reserve maintained at days of annual revenue requirements. Capital Reserve maintained at one year of average annual CIP expenditures. Coverage Requirements: Senior Debt Service Coverage is maintained at 1.2 times revenue as required by bond covenants. MADS (Maximum Annual Debt Service) Coverage 1.2 times ratio to demonstrate ability to issue additional debt when needed. All Obligations Coverage must maintain a 1.05 times ratio as required by State mandate. To support these operational policies, since 2002, CWWs annual study conducted by Raftelis Financial Consultants reviewed rates as well as financial conditions and needs. As a result of the annual studies, CWW will or has implemented the following rate adjustments as indicated: Five Year Rate Plan January 2012 No Rate Increase January 2013 Average rate increase 4.95% - adopted January 2014 Average rate increase 4.73% - adopted January 2015 Average rate increase 4.88% - adopted January 2016 Average rate increase 3.94% - adopted Five Year Rate Plan January 2017 Average rate increase 4.95% - proposed January 2018 Average rate increase 4.95% - proposed January 2019 Average rate increase 4.95% - proposed January 2020 Average rate increase 4.95% - proposed January 2021 Average rate increase 4.95% - proposed Projected rate increases over the next few years are consistent with the national average of historical increases. The smoothing of future rate impacts depends on reserve fund balances that are within policy limits and continuation of the capital improvement plan. -15-

20 In accordance with the bond resolutions and ordinances, the Board has audits of the System performed by certified public accounting firms. Accordingly, the Component Unit Financial Statements as of June 25, 2016 were examined by Robinson, Grimes & Company, P.C., Certified Public Accountants Consultants, and a copy of the independent auditor s report on the Component Unit Financial Statements is included in the financial section of this report. Detailed information is outlined in the Management s Discussion and Analysis, which is included in the Financial Section. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to CWW for its comprehensive annual financial report for the fiscal year ending June 25, This is the twenty-second year that CWW has received this prestigious award. In order to be awarded a Certificate of Achievement, CWW must publish an easily readable and efficiently organized comprehensive annual financial report satisfying both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a one-year period. We believe that our current comprehensive annual financial report continues to meet the requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Respectfully submitted, Steven R. Davis President Timothy J. Murphy, CPFO Senior Vice President, Finance -16-

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23 COLUMBUS, GEORGIA Comprehensive Annual Financial Report A Component Unit of The Consolidated Government of Columbus, Georgia For the Fiscal Year Ended June 25, 2016 and 2015 FINANCIAL SECTION This Section Contains the Following Subsections REPORT OF INDEPENDENT AUDITORS MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS -19-

24 Independent Auditor s Report The Board of Water Commissioners Columbus Water Works Columbus, Georgia Report on the Financial Statements We have audited the accompanying financial statements of Columbus Water Works, a component unit of the Consolidated Government of Columbus, Georgia, as of and for the years ended June 25, 2016 and 2015, and the related notes to the financial statements, which collectively comprise Columbus Water Works basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Columbus Water Works management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion Whitesville Rd. P.O. Box 4299, Columbus, Georgia Telephone Fax info@robinsongrimes.com Members of: American Institute of CPAs and related Private Companies Practice Section, Employee Benefit Plan Audit Quality and Government Audit Quality Center Center for Audit Quality Georgia Society of CPAs CPAmerica International

25 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Columbus Water Works, as of June 25, 2016 and 2015, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages and other required supplementary information on page 82 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise Columbus Water Works basic financial statements. The introductory section and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The introductory and statistical sections are presented for purposes of additional analysis, have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 18, 2016 on our consideration of Columbus Water Works internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Columbus Water Works internal control over financial reporting and compliance. Certified Public Accountants October 18,

26 MANAGEMENT S DISCUSSION AND ANALYSIS The discussion and analysis of Columbus Water Works (CWW s) financial performance provides an overall review of activities for the fiscal year ended June 25, Readers should review the financial statements and corresponding notes to enhance their understanding of CWW s financial performance. Mission Columbus Water Works mission is to provide a safe and dependable drinking water supply to protect public health and meet our customers needs, to enhance our valued water resources by collecting and treating wastewater and combined sewer flows, and to instill in future generations a legacy of responsible environmental stewardship of our watershed. Responsibility and Controls Columbus Water Works has prepared and is responsible for the financial statements and related information included in this report. A system of internal accounting controls is maintained to provide reasonable assurance that assets are safeguarded and that the records reflect only authorized transactions. Limitations exist in any system of internal controls. However, based on recognition that the cost of the system should not exceed its benefits, management believes its system of internal accounting controls maintains an appropriate cost/benefit relationship. Columbus Water Works system of internal controls is evaluated on an ongoing basis by CWW s internal financial staff. Independent external auditors also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements. Management believes that its policies and procedures provide guidance and reasonable assurance that CWW s operations are conducted according to management s intentions and to a high standard of business ethics. In management s opinion, the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the Water Works in conformity with accounting principles generally accepted in the USA. Audit Assurance The opinion of Robinson, Grimes & Company, P.C., our independent external auditors, is included in this report. -22-

27 Financial Historical Summary Beginning in 2002, the Board of Water Commissioners approved and implemented a comprehensive Five-Year Financial Plan. The projected rate increases associated with the Financial Plan have met projections. In October 2004, CWW assumed ownership of the water and wastewater facilities serving Fort Benning under a 50-year contract. Projected rate increases over the next five years are consistent with the national average of historical increases, with Columbus Water Works having one of the lowest rates in southeast cities. Financial Highlights Fiscal Year (FY) ended 2016 This section presents management s analysis of the CWW s financial condition and activities for the Fiscal Year ended June Management believes the Columbus Water Works financial condition is strong and that CWW is well within its debt covenants as well as the more stringent financial policies and guidelines set by the Board of Water Commissioners. The following are key financial highlights: Operations For Fiscal Year ended 2016, CWW delivered 8.87 billion gallons of water and treated billion gallons of wastewater, as compared to 9.73 billion gallons of water delivered and billion gallons of wastewater treated in Fiscal Year ended Liabilities and Net Position Total liabilities amounted to $ million and net position amounted to $ million at year-end. Of the net position, $34.12 million was unrestricted and was available to support short-term operations, reflective of a strong liquidity position. Long-term Debt Normal debt payments were made throughout the year, retiring current portion due of debt. For Fiscal Year ended 2016, CWW partially refunded the 2009 Bond Series and issued $50 million in new money to support the capital improvement program. Capital Contributions For FY ended 2016, capital grants and contributions were $1.19 million as compared to $5.04 million for FY ended Total Debt Service As of FY ended June 2016, debt service coverage was 1.67 as compared to 1.61 for FY ended June Operating Revenues Total combined Columbus and Fort Benning operating revenues were $65.10 million, an increase over FY ended 2015 in the amount of $3.15 million. -23-

28 Operating Expenses Operating expenses before depreciation and amortization increased $146 thousand as compared to Fiscal Year ended Operating expenses including depreciation/amortization increased $1.57 million, an increase of 2.71% as compared to Fiscal Year ended Operating Income Operating income for the year was $5.38 million, as compared to $3.81 million for FY ended This amount includes activities related to Fort Benning contractual operations. Capital Expenditures CWW expended $25.43 million in capital expenditures in FY 2016 on various Capital Improvements. Capital Contributions and Grants Capital assets of $1.2 million and $5.0 million were acquired through contributions from developers, and Fort Benning, for the FY ended 2016 and 2015, respectively. For FY ended 2016, capital grants and contributions represent contributions of contributed lines and capital by developers of $888,924 thousand and contributed water and sewer system by Fort Benning of $303,358 thousand and no capital grants. Columbus Water Works owns and operates the water/wastewater treatment facilities as well as the distribution/collection facilities for Columbus-Muscogee County. CWW serves a population of approximately 255,779, which includes Fort Benning, and provides supplemental water supply to wholesale customers - Talbot and Harris Counties. With a budget of $70 million, CWW s customer base includes over 65,847 active water accounts and 60,987 active sewer accounts. Potable water is supplied by two water treatment plants. The North Columbus Water Resource (NCWRF) plant withdraws raw water from Lake Oliver, an impoundment on the Chattahoochee River. The Fort Benning Water Treatment Plant withdraws raw water from the Chattahoochee River. CWW currently has a combined water withdrawal permit of 98 MGD. The wastewater collection system consists of 5,318,042 feet of pipe in Columbus and 863,066 feet of pipe in Fort Benning, along with 36 lift stations in Columbus and an additional 35 lift stations in Fort Benning. Advanced secondary treated wastewater is discharged to the Chattahoochee River downstream of the confluence with Bull Creek. A combined sewer treatment system (CSO) is also operated by CWW. The system includes two CSO treatment facilities to control and treat CSO overflows to ensure compliance with the State regulations and the U.S. EPA s National CSO control policy. -24-

29 Overview of the Financial Statements This report is intended to serve as an introduction to CWW s basic financial statements. The financial statements report detailed information about CWW using full accrual accounting methods as utilized by the private sector. However, rate-regulated accounting principles applicable to private sector utilities are not used by government utilities. General The following overview of the financial activities of Columbus Water Works summarizes basic financial statements for the fiscal year ended June 25, Basic financial statements consist of: Statements of Net Position Statements of Revenues, Expenses and Changes in Net Position Statements of Cash Flows Notes to Basic Financial Statements The purpose of these statements is to provide sufficient information to assess the overall financial position of Columbus Water Works. Changes in net position over a continuous period of time serve as indicators of Columbus Water Works overall financial health and are considered in conjunction with management s short and longterm plans for financing operations and programs. The Statements of Net Position present the financial position of CWW on a full accrual historical cost basis. While the Statements of Net Position provide information about the nature and amount of resources and obligations at year-end, the Statements of Revenues, Expenses, and Changes in Net Position present the results of the business activities over the course of the year and information as to how the net position changed for the year. The Statements of Net Position include all CWW s assets and liabilities and information about the nature and amounts of investments in assets and obligations to creditors (liabilities). These statements provide data for calculating analytical review measures such as rate of return, capital structure and liquidity. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. These statements also provide certain -25-

30 information about CWW s recovery of its costs. Columbus Water Works rates are based on a cost of service rate study. Rate setting policies use different methods of cost recovery not fully provided for by generally accepted accounting standards. The primary objectives of the rate model are to improve equity among customer classes and to ensure that capital costs are allocated on the basis of long-term capacity needs, ensuring that growth pays for growth. The Statements of Revenues, Expenses and Changes in Net Position account for all revenues and expenses. These statements measure the success of CWW s operations and determine cost recovery through user fees, charges, and profitability. The Statements of Cash Flows provide information regarding CWW s cash receipts, disbursements and net changes in cash as a result of operating activities, non-capital financing activities, capital financing activities, and investing activities. These statements present cash receipts and cash disbursement information, without consideration of the earnings event when an obligation arises or depreciation of capital assets. The notes to the financial statements provide required disclosures and other information that are essential to a full understanding of material data provided in the statements. The notes present information about CWW s accounting policies, significant account balances and activities, material risks, obligations, commitments, contingencies and subsequent events, if any. The financial statements were prepared from the detailed books and records of CWW. The financial statements were audited and adjusted, if material, during the independent external audit process. The following comparative condensed financial statements serve as the key financial data and indicators for management, monitoring and planning. Results of Operations Columbus Water Works finances remained strong with adequate liquid assets, reliable systems to meet demand, and a reasonable level of unrestricted net position. For FY ended June 2016, total operating expenses increased 2.71% and operating revenue increased 5.08% over FY For FY ended June 2015, total operating expenses increased 2.50% over FY 2014, and operating revenues increased 3.39%. -26-

31 Net Position The following statements, Condensed Statements of Net Position and Condensed Statements of Revenues, Expenses and Changes in Net Position, as well as Revenues by Class of Customer report CWW s net position and changes therein. The following is a summary of CWW s Statements of Net Position. Condensed Statements of Net Position (Balance Sheets) Fiscal Year 2014 to 2015 Comparison Fiscal Year 2015 to 2016 Comparison For FY ended June 25, $ Change % Change $ Change % Change Assets: Current Assets and other Assets $ 112,403, ,589,235 (4,814,631) -4.28% $ 107,589, ,172,063 43,582, % Capital Assets 527,933, ,677,130 4,743, % 532,677, ,904,410 3,227, % Total Assets 640,337, ,266,365 (70,897) -0.01% 640,266, ,076,473 46,810, % Deferred Outflows Deferred amount of bond refunding 6,838,220 6,271,375 (566,845) -8.29% 6,271,375 6,702, , % Deferred amount from pensions 2,271,308 2,117,955 (153,353) 0.00% 2,117,955 2,774, , % Total Deferred Outflows 9,109,528 8,389,330 (720,198) -7.91% 8,389,330 9,476,780 1,087, % Liabilities: Other Liabilities 16,933,414 17,404, , % 17,404,598 18,480,282 1,075, % Long-term Liabilities 229,625, ,864,201 (13,760,998) -5.99% 215,864, ,955,345 39,091, % Total Liabilities 246,558, ,268,799 (13,289,814) -5.39% 233,268, ,435,627 40,166, % Deferred Inflows Deferred from Pension Plan Investments 0 1,317,688 1,317, % 1,317,688 1,544, , % Net Position: Net investments in capital assets 355,395, ,066,987 6,671, % 362,066, ,582,857 6,515, % Restricted for capital activities and debt service 21,571,472 15,253,741 (6,317,731) % 15,253,741 18,865,351 3,611, % Unrestricted 25,920,783 36,748,480 10,827, % 36,748,480 34,124,845 (2,623,635) -7.14% Total Net Position 402,888, ,069,208 11,181, % 414,069, ,573,053 7,503, % Fiscal Year 2016 to 2015 As shown in preceding table, total net position increased by $7.50 million in Fiscal Year 2016 as compared to Fiscal Year Current and other assets increased by $43.58 million and capital assets increased $3.23 million. Statements of Revenues, Expenses and Changes in Net Position While the Statements of Net Position reflects the changes in the financial position, the Statements of Revenues, Expenses, and Changes in Net Position provide answers and more detailed information as to nature and source of these changes. An examination of the individual categories affecting the source of changes in net position is illustrated in the following table. -27-

32 Condensed Statements of Revenues, Expenses and Changes in Net Position Fiscal Year 2014 to 2015 Comparison Fiscal Year 2015 to 2016 Comparison Fiscal Year Ended June 25, $ Change % Change $ Change % Change Operating Revenues Water Sales $ 20,607,873 $ 21,718,357 $ 1,110, % $ 21,718,357 $ 22,961,046 $ 1,242, % Sewer Charges 23,713,915 23,917, , % 23,917,336 25,388,760 1,471, % Fort Benning Water and Sewer Charges 6,901,885 7,026, , % 7,026,101 7,036,223 10, % Fort Benning CM100 O&M Services 5,120,837 5,563, , % 5,563,339 5,869, , % Tapping, CSO fees and miscellaneous charges 3,579,837 3,732, , % 3,732,865 3,848, , % Total Operating Revenue 59,924,347 61,957,998 2,033, % 61,957,998 65,103,677 3,145, % Operating Expenses System Services 6,902,076 7,190, , % 7,190,561 7,494, , % South Columbus Water Resources Facility 4,591,060 4,161,531 (429,529) -9.36% 4,161,531 4,018,875 (142,656) -3.43% North Columbus Water Resources Facility 4,137,787 4,142,140 4, % 4,142,140 4,319, , % CSO Plants 1,052, ,213 (60,182) -5.72% 992,213 1,018,617 26, % Managed Maintenance 2,745,982 2,921, , % 2,921,780 2,838,810 (82,970) -2.84% Engineering 1,460,877 1,431,265 (29,612) -2.03% 1,431,265 1,446,900 15, % Information Services 1,118,345 1,370, , % 1,370,108 1,563, , % Water Quality Monitoring 1,858,625 2,026, , % 2,026,323 1,979,474 (46,849) -2.31% Fort Benning 4,508,599 4,649, , % 4,649,812 4,435,279 (214,533) -4.61% Customer Services 1,609,360 1,697,951 88, % 1,697,951 1,662,309 (35,642) -2.10% Finance, ES and Administration 4,896,314 4,864,862 (31,452) -0.64% 4,864,862 4,835,937 (28,925) -0.59% Meter Maintenance 1,692,184 1,927, , % 1,927,165 1,907,793 (19,372) -1.01% Depreciation 20,156,528 20,773, , % 20,773,415 22,200,954 1,427, % Total operating expenses 56,730,132 58,149,126 1,418, % 58,149,126 59,722,768 1,573, % Operating Income 3,194,215 3,808, , % 3,808,872 5,380,909 1,572, % Non-operating Revenue (expenses) Interest Revenue 83, ,245 52, % 136, ,343 96, % Ft Benning Financing Contract Bond Issuance 4,860,492 4,860, ,860,492 4,860, % Administrative fees and other revenue 4,264,315 1,138,833 (3,125,482) % 1,138,833 (41,665) (1,180,498) % Interest Expense (660,080) (814,702) (154,622) 23.42% (814,702) (850,935) (36,233) 4.45% City of Columbus participation expense (3,158,884) (3,243,185) (84,301) 2.67% (3,243,185) (3,462,720) (219,535) 6.77% Gain (loss) on disposal of assets 79, , , % 255, ,139 (62,677) % Total non-operating revenue (expenses) 5,469,631 2,333,499 (3,136,132) % 2,333, ,654 (1,402,845) % Income before capital grants and contributions 8,663,846 6,142,371 (2,521,475) % 6,142,371 6,311, , % Capital grants and contributions 7,195,298 5,038,660 (2,156,638) % 5,038,660 1,192,282 (3,846,378) % Change in Net Position 15,859,144 11,181,031 (4,678,113) % 11,181,031 7,503,845 (3,677,186) % Net Position at Beginning of Year 387,029, ,888,177 15,859, % 402,888, ,069,208 11,181, % Ending Net Position $ 402,888,177 $ 414,069,208 $ 11,181, % $ 414,069,208 $ 421,573,053 $ 7,503, % Fiscal Years 2016 to 2015 For Fiscal Year ended 2016, the change in net position amounted to $7.50 million as compared to $11.18 million for Fiscal Year ended Operating Revenues Water Consumption Sales For FY ended 2016, total water sales increased 5.72% ($1.24 million) from FY ended For FY ended 2015, total water sales increased 5.39% ($1.11 million) from FY ended

33 Water Consumption Sales Customer Class Water Sales by Customer Class Water Sales by Customer Class Water Sales by Customer Class Multi-Residential 1,943,864 1,753,949 1,655,749 Water Commercial 3,225,820 3,167,645 3,018,766 Harris County 632, , ,286 Talbot County 131,293 91,889 35,032 Water Sprinkler 1,956,376 1,843,447 1,689,257 Industrial Sprinkler 247, , ,258 Water Industrial 1,356,265 1,251,012 1,263,877 Water Residential 12,053,828 11,659,292 10,876,410 Other Billed 1,413,228 1,088,049 1,327,215 Water No-Bill - - 1,023 $ 22,961,046 $ 21,718,357 $ 20,607,873 Operating Revenues Wastewater Charges For FY 2016, total sewer revenue increased 6.15% ($1.47 million) over FY For FY 2015, total sewer revenues increased.86% ($203,421) over FY Wastewater Charges Customer Class Sewer Charges by Customer Class Sewer Charges by Customer Class Sewer Charges by Customer Class Multi-Residential 2,754,737 2,567,246 2,509,197 Sewer Commercial 4,514,460 4,425,680 4,304,974 Sewer Permitted 1,284,711 1,179,086 1,141,454 Sewer Industrial 576, , ,956 Sewer Residential 15,665,293 14,712,974 14,642,199 Sewer No-Bill 593, , ,135 $ 25,388,760 $ 23,917,336 $ 23,713,915 Operating Revenue - Other Revenue For FY ended 2016, other operating revenues increased 2.64% ($431,566) in combined sewer overflow fees, tapping fees, Fort Benning Services, and other miscellaneous charges. For FY ended 2015, other revenues increased 4.61% (719,746) from FY Other Revenue Fort Benning Water & Sewer Charges 7,036,223 7,026,101 6,901,885 Operating and Maintenance Fees - Fort Benning 5,869,479 5,563,339 5,120,837 CSO Fees 1,989,826 1,917,933 1,849,853 Tapping Fees and Miscellaneous Charges 1,858,343 1,814,932 1,729,984 Total Other Revenue $ 16,753,871 $ 16,322,305 $ 15,602,

34 Operating Expenses Total operating expenses increased 2.71% ($1.57 million) in FY 2016 compared to an increase of 2.50% (1.42 million) in Most of the increase was attributable to increases in sewer maintenance and information service support. For FY ended 2016, depreciation increased 6.87% ($1.43 million) over FY For FY 2015, depreciation increased by 3.06% ($616,887) over FY Non-Operating Revenues (Expenses) Total non-operating revenues (expenses) for FY ended 2016 decreased by $1.40 million from FY ended For FY 2016, interest expense increased by $36,233 and interest revenue increased by $96,098. Gain on sale of assets decreased $62,677 for FY ended Columbus Water Works participation costs to the City of Columbus increased $219,535 from FY ended Capital Contributions and Grants For FY ended 2016, contributed lines by developer were $888,924 thousand, along with the contributed water and sewerage system by Fort Benning of $303,358 thousand. For FY ended 2015, contributed lines by developers were $2.85 million, along with the contributed water and sewerage system by Fort Benning of $2.19 million. Capital Assets and Debt Administration Property, plant and equipment in service and construction in progress are recorded at cost, if purchased or constructed. Assets acquired through contributions from developers or other customers are capitalized at their estimated fair market value, if available, or at engineers estimated fair market value or cost to construct at the date of the contribution. The capitalization threshold for capital assets is $ Detailed information on capital asset activity may be found in Note 6 of the Financial Statements. -30-

35 Description FY 2015 to 2016 Comparison FY 2015 FY 2016 % Change FY 2014 FY 2015 % Change Capital Assets not being depreciated Land $ 2,553,149 $ 2,553, % $ 2,553,149 $ 2,553, % Construction in progress 58,089,718 49,257, % 82,422,040 58,089, % 60,642,867 51,810, % 84,975,189 60,642, % Capital assets being depreciated Building and equipment 22,210,178 23,078, % 22,045,884 22,210, % Watershed study 3,010,320 3,010, % 3,010,320 3,010, % Filtration plant 53,114,699 57,323, % 39,678,503 53,114, % Sewage disposal plant 87,253,800 87,281, % 67,445,828 87,253, % Water distribution system 122,836, ,638, % 117,635, ,836, % Water system - Ft. Benning 128,070, ,083, % 126,391, ,070, % Sewer system 235,381, ,706, % 233,052, ,381, % Sewer system - Ft. Benning 84,216,251 84,517, % 83,019,542 84,216, % Elevated tanks 6,923,686 6,923, % 3,316,499 6,923, % Furniture and fixtures 3,045,476 2,874, % 2,889,617 3,045, % Autos, trucks and equipment 11,998,407 12,049, % 11,632,568 11,998, % Intercommunication system 3,845,398 3,112, % 3,418,316 3,845, % Laboratory equipment 1,121,126 1,352, % 1,052,830 1,121, % Capitalized studies/it projects 5,854,973 5,984, % 5,775,447 5,854, % 768,883, ,937, % 720,365, ,883, % Total Capital Assets 829,526, ,748, % 805,340, ,526, % Accumulated depreciation (296,849,108) (310,843,731) 4.7% (277,407,228) (296,849,108) 7.0% Capital assets, net of depreciation FY 2014 to 2015 Comparison $ 532,677,130 $ 535,904, % $ 527,933,396 $ 532,677, % Long-term Debt One area that demonstrates CWW s financial strength and future borrowing capability is seen in its debt coverage ratio. Detailed information on long-term debt activity may be found in the Notes to Financial Statements. The following table provides a comparison of the debt coverage ratio on all debt for FY 2015 to 2016 and for FY 2014 to Description FY 2015 to 2016 Comparision FY 2014 to 2015 Comparision FY 2015 FY 2016 % Change FY 2014 FY 2015 % Change Change in Net Positions 11,181,031 7,503,845-33% 15,859,144 11,181,031-29% Allowable Adjustments 19,792,642 25,325,844 28% 16,780,195 19,792,642 18% Adjusted Change in Net Position 30,973,673 32,829,689 6% 32,639,339 30,973,673-5% Debt Service Payments 19,244,627 19,652,689 2% 18,245,259 19,244,627 5% Debt Coverage % % -31-

36 Debt Administration The following is a summary of changes in the carrying costs of long-term debt obligations of Columbus Water Works for the last two fiscal years: FY ended June 25, 2016 Beginning Balance Additions, Including Amortization or Bond Discounts Decreases Balance Revenue Bonds $ 180,636,217 $ 71,019,551 $ (31,060,212) $ 220,595,556 Notes Payable 29,001,267 - (1,720,547) $ 27,280,720 $ 209,637,484 $ 71,019,551 $ (32,780,759) $ 247,876,276 FY ended June 25, 2015 Beginning Balance Additions, Including Amortization or Bond Discounts Decreases Balance Revenue Bonds $ 191,439,729 $ - $ (10,803,512) $ 180,636,217 Notes Payable 30,672,041 - (1,670,774) $ 29,001,267 $ 222,111,770 $ - $ (12,474,286) $ 209,637,484 Also listed are summaries of outstanding bond issues and current GEFA loans, as well as future committed loans to complete the Capital Improvement Program. The Five- Year financial plan with rate increases is associated with repayment of these loans. Additional information regarding the Columbus Water Works debt administration program is included in the Notes to the Financial Statements. -32-

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38 Growth Projections: The 2013 Facilities Master Plan (FMP) population projections were taken from the Regional Water Plan (RWP) for Muscogee County. These projections were produced by the Georgia Governor s Office of Planning and Budget (OPB). The population data was broken down by county, and Muscogee County projections included the population projected on base at Fort Benning. Due to the unique population trends at Fort Benning and CWW s recent history of analyzing its growth patterns, the population projections for Fort Benning were separated from the Columbus service area. Population projections for the Fort Benning service area were estimated using the Department of Defense BRAC population projections, as developed during the 2007 Master Plan. The following table provides the population projections for the CWW service area. CWW Service Area Population Projections Year Municipal Service Area 1 FB Population Projections (2007 Master Plan) ,985 59, ,306 60, ,671 61, ,892 64, ,580 71, Does not include wholesale customer or Fort Benning population served by CWW. Wastewater flow projections and water demand were developed based on the growth trends throughout the service area. Residential/commercial demands and flows are based on the population projections, while industrial and wholesale customer demands are based on proposed land use plans, development plans and contractual agreements. The following two tables present a summary of the water demand projections and the wastewater flow projections, respectively. Summary of Wastewater (WW) Flow Projections for the SCWRF Municipal Service Area WW Flow Projections Fort Benning WW Flow Projections Wholesale Customer WW Flow Projections Total SCWRF WW Flow Projections AAF 1 PDF 1 AAF 1 PDF 1 AAF 1 PDF 1 AAF 1 Year (MGD) (MGD) (MGD) (MGD) (MGD) (MGD) (MGD) PDF 1, 2 (MGD) Annual Average Flow (AAF), Peak Day Flow (PDF) 2. CWW maximizes the combined sewer flow into the SCWRF, while plant capacity is available. The current plant capacity is 84 MGD. -34-

39 Year Municipal Service Area AAD (MGD) PDD (MGD) Wholesale Customers 1 AAD (MGD) PDD (MGD) Summary of Water Demand Projections Fort Benning Service Area 2 AAD (MGD) PDD (MGD) CWW Service Area Total AAD (MGD) PDD (MGD) CWW Service Area Total with Emergency / Contractual Demand 3 AAD (MGD) PDD (MGD) AAD (MGD) CWW Service Area Planning Demands 4 PDD (MGD) Includes Harris, Talbot, Chattahoochee, and Marion counties. 2. CWW s current contractual obligation to Fort Benning is 22 MGD PDD. 3. Includes the contractual obligation amount of 22 MGD PDD (8.8 MGD AAD) for Fort Benning through 2023 and the mutual aid agreement amount of 8 MGD (PDD and AAD) for Phenix City. Additionally, it includes future planned emergency connections of 0.5 MGD in 2023 / 1.0 MGD in 2038 for Fort Mitchell Water Authority and 0.5 MGD starting in 2015 through 2038 for Marion County. 4. Master Planning Capital Improvements will not be planned around providing emergency demands (for Phenix City, Fort Mitchell, and Marion County) that do not have contractual obligations. Other Selected Information Selected Data for Analysis: Employees at year end Average Employees Water and Wastewater customers at year end: Water customers 76,653 76,319 75,717 Wastewater customers 60,295 60,987 60,303 Water consumption (millions of gallons (000)): Retail residential and commercial 8,878,000 9,727,558 9,205,649 Total water consumption 8,878,000 9,727,558 9,205,649 Wastewater treated (millions of gallons (000)): Retail residential and commercial 12,012,670 11,519,400 12,712,385 Total wastewater gallons treated 12,012,670 11,519,400 12,712,385 Per average employee: Total Operating revenues 238, , ,702 Total Operating expenses 218, , ,291 Revenues per million gallons consumed/treated: Water services revenues: Retail residential and commercial Wastewater service revenues: Retail residential and commercial Expenses per consumption/treatment: Water service expenses: Expenses excluding depreciation/amortization Expenses Wastewater service expenses: Expenses excluding depreciation/amortization Expenses Ratio of operating revenue to: Operating expenses Operating expenses net of depreciation Total assets Net Position

40 Capital Improvement Program Columbus Water Works considers sustainability when making many decisions. A simple, but powerful definition of sustainability is a program, development, or project that meets the needs of the present without compromising the ability of future generations to meet their own needs. One critical component to maintaining sustainability is the CWW Capital Improvement Plan (CIP). The CIP is a list of improvement projects developed from various CWW programs that are based on the company s goals. These programs have developed a list of 67 projects (following table) recommended over a 5-year planning horizon at an estimated cost of $98 million. In order to maintain sustainability, CWW must balance three attributes; economic impact, social impact, and environmental impact. The economic impact of funding the proposed projects within five (5) years is not sustainable relative to customer affordability; therefore, CWW has developed a prioritization tool. This prioritization tool used in conjunction with the CWW financial plan, allows CWW to maintain economic sustainability. Each of the 67 projects has a champion who is intimately familiar with the project. The project champions used the prioritization tool to score their projects. Once this scoring was complete, a team of senior staff and department managers reviewed the results to calibrate the CIP tool. Columbus Water Works staff has used an integrated approach with stakeholder involvement and financial planning to prioritize projects recommended from the following programs: Facility Master Plan, Asset Management Program, Information Technology Master Plan, Energy Gap Analysis, Project Champions and Strategy Teams. This comprehensive approach allows CWW to remain sustainable both financially and in meeting our customers level of service. The current CIP was separated into two phases. From the list of prioritized projects, the first 16 projects were chosen to begin in the first two years. The estimated cost of the projects over the timeframe totaled $25 Million. An additional 21 projects were chosen for the next 3 years at an estimated cost of $50 Million. Of the 37 total projects; 4 are complete, 9 are in construction, and the remaining are in design. Of the 9 in construction, 2 are substantially complete (lacking final closeout documentation for completion). Fort Benning Renewals and Extensions (R&E) It is a CWW goal to ensure that our Fort Benning customers receive the same high standards of water quality and service that are provided to the Columbus customers. In order to achieve that goal, CWW has developed a tool to address the Capital -36-

41 Improvement needs on Fort Benning. It will be very similar to the aforementioned CIP. Projects are introduced to the R&E program through a champion, who is intimately familiar with the capital need. The champion will utilize a prioritization tool to score their project. Like the CIP, it balances the same three attributes; economic impact, social impact, and environmental impact. Once a year the existing and new projects in addition to their scores are reviewed by a team of senior staff and department managers to evaluate the results and calibrate the R&E tool. The finalized lists of prioritized projects are then forecasted out based on the current and future R&E funds. At the time of the initial roll out, 27 projects were identified for the program. At this time five of the projects are in construction or complete. Request for Information: This financial report is designed to provide an overview of Columbus Water Works financial operations and financial condition. Should the reader have questions regarding any information included in this report or wish to request additional financial information, please contact Columbus Water Works at P.O. Box 1600, Columbus, Georgia or by phone at

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44 3, 28 Collection System Rehabilitation 5, 40 Pipe Cleaning and Lining 4, 39 Small Line Replacement 6 Meter Change Out/AMR Program # 7, 11,18, 42, 43, 47, 50, 54, 55, 56, 58, 59, 60, 61, 62, 63, 64, [Ú 35 # # 25 10, 12, 13 2, 32 # # # kj ^_ "M3Q ^_ # ^_ ^_ 8, 9, 45, 49, 72 # 5, , , 15,16, 46, 65, 66, 67, 69, 70, 73, Q 51 ^ 44 [Ú 50 kj kj 3, ^_ 4, ^_ 6 kj ^_ 30 UT # Capital Improvement Projects Underway Project # Prioritized Project Rank 1 CS05 Lake Oliver Lift Station Pump Replacement CS06 Rocky Creek Can Station Replacement CS08 Collection System Rehabilitation Project Phase I DS24 Small Pipe Replacement/Low Pressure Improvements DS25 Pipe Cleaning and Lining Replacement Meter Change Out / AMR Program Power Grid Switchgear NCWRF R1 - Customer Information System R2 - Business Continuity River Pump # Roof Replacements W14 Evaluation of Reliability of NCWRF Raw Water Transmission Mains W15 Connection for Emergency NCWRF Raw Water Pumps WW07 Influent Screen Conveyor/Compactor WW08 Influent Pumping Station WW09 Blower Improvements 76.1 Capital Improvement Project (Funded) Project # Prioritized Project Rank 18 Bulk chemical feed and storage - NCWRF /23 CS03 CS04 Marina Cove Lift Station & Force Main Upgrade CS10 Generator Installation Phase II CS13 Collection System Rehabilitation Project Phase II DS05 Green Island Hills WTM DS26 Small Pipe Replacement/Low Pressure Improvements DS27 Pipe Cleaning and Lining Replacement Electrical Distribution Grid Energy Automation Efficiency New WQM Laboratory Primary Switchgear & Security Lighting SCWRF Process Control Server Room W-7 - W08 Solids Dewatering Valve replacement NCWRF Ventilation and Dehumidification W02 NCWRF Tracer Study W16 Emergency NCWRF Raw Water Pumping Facilities W19 NCWRF Lightning Protection WW01 Disinfection Improvements WW02 & WW10 Digester Improvements WW12 Alkalinity Storage and Feed Improvements WW13 Secondary Clarifier Improvements Facility Master Plan w/cs12 Hydraulic Model Calibration WW09 SCWRF Improvements Phase II SCWRF Headworks Improvement Capital Improvement Project (Unfunded) Project # Prioritized Project Rank 17 Altitude Valves Columbus lift stations security CS01 Heiferhorn Creek Trunk Upgrade CS02 Weracoba Creek Trunk Upgrade CS09 Dozier Creek Collection System Inflow Investigation CS11 Can Station Replacement CS14 Flatrock Creek Sanitary Sewer Extension CS15 Heiferhorn Creek Sanitary Sewer Extension CS16 DOT/City Streets Projects CS19 Rocky Creek Effluent Lift Station Upgrade DS01 Shepherd Drive BPS Demolition DS02 WTM Supply for Bunker Hill Tank DS06 Old River Road BPS DS07 North Columbus Tank DS09 - Buena Vista Road Pump Station DS28 Tank Inspection and Rehabilitation Power Monitoring Improvements Pump Station Optimization Improvements R7 - GIS Projects Rollup Roofing Project- WWLS SCADA Network Solar Development W01 NCWRF Full-Scale Capacity Evaluation W04 NCWRF Replace 36-inch filtered water pipe from Filter Buildings 1 and W17 NCWRF Emergency Chlorine Scrubber Water/Wastewater Plant Optimization Impr µ Columbus Water Works CAPITAL IMPROVEMENT PROGRAM (11/14/2016) UT 17 Altitude Valves, 41 Tank Inspection and Rehabilitation [Ú 19 Columbus Lift Stations Security [Ú 48 Pump Station Optimization Improvements #* 25 Generator Installation 26 Can Station Replacement ^_

45 (A COMPONENT UNIT OF THE CONSOLIDATED GOVERNMENT OF COLUMBUS, GEORGIA) FINANCIAL STATEMENTS JUNE 25, 2016 AND

46 COLUMBUS, GEORGIA STATEMENTS OF NET POSITION JUNE 25, 2016 AND CURRENT ASSETS Cash and cash equivalents $ 11,361,892 $ 14,356,769 Accounts receivable 7,771,112 6,681,388 Inventories 954, ,310 Total current assets 20,087,013 22,003,467 NON-CURRENT ASSETS Unrestricted assets Investments 36,309,817 36,115,450 Restricted assets Cash and cash equivalents Construction 15,435,243 11,002,429 Debt service 3,334,531 3,041,176 Renewal and extension 4,351,762 3,018,265 Investments Construction 68,631,866 29,403,192 Renewal and extension 3,021,831 3,005,256 Capital assets (net of accumulated depreciation) 535,904, ,677,130 Total non-current assets 666,989, ,262,898 Total Assets 687,076, ,266,365 DEFERRED OUTFLOWS Deferred amount from bond refunding 6,702,580 6,271,375 Deferred amount from pensions 2,774,200 2,117,955 Total Deferred Outflows 9,476,780 8,389,330 Total assets and deferred outflows $ 696,553,253 $ 648,655,695 The Notes to the Basic Financial Statements are an Integral Part of the Statement. -42-

47 CURRENT LIABILITIES Revenue bonds, current portion $ 10,165,000 $ 10,160,000 Notes payable, current portion 1,776,012 1,720,547 Accounts payable 3,109,956 2,800,272 Construction contracts payable 662, ,608 Accrued payroll 598, ,935 Customer deposits 193, ,818 Accrued interest on bonds payable 1,340,152 1,031,316 Accrued interest on notes payable 55,116 58,688 Accrued compensated absences 578, ,414 Total current liabilities 18,480,282 17,404,598 NON-CURRENT LIABILITIES Revenue bonds, net of premiums and current portion 210,430, ,476,216 Notes payable, net of current portion 25,504,708 27,280,720 Accrued compensated absences, net of current portion 290, ,739 Net pension liability 11,325,697 11,508,526 Net other postemployment benefits obligation 7,404,000 6,338,000 Total non-current liabilities 254,955, ,864,201 Total Liabilities 273,435, ,268,799 DEFFERED INFLOWS Deferred inflows from pensions 1,544,573 1,317,688 NET POSITION Net investment in capital assets 368,582, ,066,987 Restricted for: Capital projects, net of related debt 15,530,819 12,212,565 Debt service 3,334,532 3,041,176 Unrestricted 34,124,845 36,748,480 Total net position 421,573, ,069,208 Total liabilities, deferred inflows, and net position $ 696,553,253 $ 648,655,695 The Notes to the Basic Financial Statements are an Integral Part of the Statement. -43-

48 COLUMBUS, GEORGIA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEARS ENDED JUNE 25, 2016 AND OPERATING REVENUES Water sales $ 22,961,046 $ 21,718,357 Sewer charges 25,388,760 23,917,336 CSO fees 1,989,826 1,917,933 Fort Benning Water and Sewer Charges 7,036,223 7,026,101 Fort Benning CM100 O&M Charges 5,869,479 5,563,339 Tapping fees and miscellaneous charges 1,858,343 1,814,932 Total operating revenues 65,103,677 61,957,998 OPERATING EXPENSES Field Services 7,494,474 7,190,561 South Columbus Water Resources Facility 4,018,875 4,161,531 North Columbus Water Resources Facility 4,319,753 4,142,140 CSO plants 1,018, ,213 Managed Maintenance 2,838,810 2,921,780 Engineering 1,446,900 1,431,265 Information Services 1,563,593 1,370,108 Water Quality Monitoring 1,979,474 2,026,323 Fort Benning 4,435,279 4,649,812 Customer Services 1,662,309 1,697,951 Finance, Employee Services and Administration 4,835,937 4,864,862 Meter Readers 1,907,793 1,927,165 Depreciation 22,200,954 20,773,415 Total operating expenses 59,722,768 58,149,126 Operating income 5,380,909 3,808,872 The Notes to the Basic Financial Statements are an Integral Part of the Statement. -44-

49 NON-OPERATING REVENUES (EXPENSES) Interest income 232, ,245 Ft Benning Financing Contract Bond Issuance 4,860,492 4,860,492 Administrative fees and other revenue (expense) (Note 15) (41,665) 1,138,833 Interest expense (850,935) (814,702) CWW - City of Columbus participation expense (3,020,378) (2,821,619) Fort Benning - City of Columbus participation expense (442,342) (421,566) Gain on disposal of assets/scrap materials 193, ,816 Total non-operating revenues 930,654 2,333,499 Income before capital grants and contributions 6,311,563 6,142,371 Capital Grants and Contributions 1,192,282 5,038,660 Change in net position 7,503,845 11,181,031 Total net position, beginning 414,069, ,888,177 Total net position, ending $ 421,573,053 $ 414,069,208 The Notes to the Basic Financial Statements are an Integral Part of the Statement. -45-

50 COLUMBUS, GEORGIA STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 25, 2016 AND CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers $ 64,033,991 $ 65,661,965 Payments to suppliers (23,486,383) (23,014,388) Payments to employees (12,986,676) (13,245,731) Net cash provided by operating activities 27,560,932 29,401,846 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Payments to City of Columbus participation expense (3,326,800) (3,280,859) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from sale of capital assets/scrap materials 193, ,479 Proceeds from capital debt, net issuance costs 50,339,660 0 Ft Benning Financing Contract Bond Issuance 4,860,492 4,860,492 Proceeds from administrative fees and other revenue 346,400 1,145,458 Purchases of capital assets (17,861,345) (14,007,422) Principal paid on capital debt (11,880,547) (11,285,774) Interest paid on capital debt (8,107,720) (7,958,854) Net cash provided by (used in) in capital and related financing activities 17,890,079 (26,996,621) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds (purchases) of investments (39,293,919) (23,487,166) Interest and dividends 234, ,246 Net cash used in investing activities (39,059,422) (23,270,920) Net increase (decrease) in cash and cash equivalents 3,064,789 (24,146,554) Beginning 31,418,639 55,565,193 Ending $ 34,483,428 $ 31,418,639 The Notes to the Basic Financial Statements are an Integral Part of the Statement. -46-

51 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 5,380,909 $ 3,808,872 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 22,200,954 20,773,415 Changes in: Receivables, net (1,069,685) 4,230,615 Inventories 11,301 34,323 Accounts and other payables 465, ,719 Accrued expenses 571,827 40,902 Total adjustments 22,180,023 25,592,974 Net cash provided by operating activities $ 27,560,932 $ 29,401,846 NONCASH CAPITAL FINANCING ACTIVITIES: Capital assets of $1,192,282 and $5,038,660 were acquired through contributions from developers and Ft. Benning for years ending June 25, 2016 and 2015, respectively. The Notes to the Basic Financial Statements are an Integral Part of the Statement. -47-

52 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 1: Reporting Entity The Board of Water Commissioners was created pursuant to legislative authority originally in 1902 and reaffirmed by the ratification of the Charter of the Consolidated Government of Columbus, Georgia ( Columbus ). The Board of Water Commissioners is responsible for the supervision and control of construction, management and operation of Columbus Water Works ( CWW ). Members of the Board of Water Commissioners are elected to serve by the Consolidated Government of Columbus, Georgia. CWW is considered a component unit of the Consolidated Government of Columbus, Georgia. CWW supplies services to approximately 70,000 water connections serving Columbus. These services include supplying water and sewer services and maintaining and installing water and sewer lines in Columbus. As part of this responsibility, CWW must make sure that all federal, state, local laws and guidelines are followed, including issues which affect the environment. To fulfill this commitment, CWW maintains water treatment plants, sewer processing facilities and a service center, which supports the maintenance of the system. Not only must CWW meet the current demands of Columbus, but they must plan and build to ensure the proper level of service in the future. NOTE 2: Summary of Significant Accounting Policies Fund Accounting CWW is an enterprise fund component of the Consolidated Government of Columbus, Georgia. Enterprise funds are used to account for operations that (a) are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of net change in net position is appropriate for management accountability purposes. The measurement focus is on determination of change in net position, financial position and cash flows. Basis of Presentation and Accounting CWW s financial statements are presented on the full accrual basis in accordance with accounting principles generally accepted in the United States of America. -48-

53 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 2: Summary of Significant Accounting Policies - (Continued) Basis of Presentation and Accounting (Continued) All activities of CWW are accounted for within a single proprietary (enterprise) fund. Proprietary funds are used to account for operations that are (a) financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The accounting and financial reporting treatment applied to CWW is determined by its measurement focus. The transactions of CWW are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operations are included on the statements of net position. Net position is segregated into net investment in capital assets; restricted for capital projects, net of related debt; debt service; and unrestricted components. Operating income reported in the financial statements includes revenues and expenses related to the primary, continuing operations. Principal operating revenues are charges to customers for sales or services. Principal operating expenses are the costs of providing goods or services and include administrative expenses and depreciation of capital assets. Other revenues and expenses are classified as non-operating in the financial statements. When both restricted and unrestricted resources are available, it is CWW s policy to use restricted resources first, then unrestricted resources as they are needed. Budgets and Budgetary Accounting CWW operates under an annual Board-approved budget prepared on the accrual basis. However, since CWW is accounted for as an enterprise fund, budgetary comparisons are not presented in the accompanying financial statements. Cash and Cash Equivalents CWW s cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. CWW utilizes a purchase order encumbrance system. These encumbrances lapse at yearend. -49-

54 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 2: Summary of Significant Accounting Policies - (Continued) Accounts Receivable CWW has elected to record bad debts using the direct write-off method. Accounting principles generally accepted in the United States of America require that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method. Inventories Inventories are stated at the lower-of-cost (determined by the first-in, first-out method) or market. Restricted Assets The accounts shown on the statement of net position as restricted assets include proceeds from grants, revenue bonds and other funds, which have been set aside either in the construction account or transferred to the debt service or renewal and extension accounts. Those funds are to be used, respectively, for approved construction, payments of principal and interest on the revenue bonds as such payments become due, and for replacements, extensions and improvements to the system including the purchase of equipment. Capital Assets and Related Depreciation and Amortization Capital assets in service and construction in progress are recorded at cost, if purchased or constructed. Assets acquired through contributions from developers or other customers are capitalized at their fair market value, if available, or at engineers estimated fair value or cost to construct at the date of the contribution. Costs of studies that directly result in specific construction projects are capitalized. The capitalization threshold for capital assets is $500. Maintenance and repairs, which do not significantly extend the value or life of property, plant and equipment, are expensed as incurred. Interest costs during construction are capitalized net of related investment earnings on the proceeds. Assets are depreciated using the straight-line method over the following estimated useful lives: Building and plant Water and sewer system Water and sewer system contributed by Ft. Benning Furniture, fixtures and equipment Automobiles, trucks and equipment years 50 years 25 years 5-10 years 5-10 years -50-

55 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 2: Summary of Significant Accounting Policies - (Continued) Deferred Outflows and Inflows of Resources -During the year ended June 25, 2014, CWW implemented the provisions of GASB No. 65, Items Previously Reported as Assets and Liabilities ( GASB 65 ). This provides financial reporting guidance related to deferred inflows of resources and deferred outflows of resources. In addition, GASB 65 requires that costs associated with the issuance of long-term debt be expensed in the period incurred. Previously, these costs were capitalized and amortized over the term of the related debt. Deferred outflows of resources related to bond refunding are the difference between the reacquisition price and the net carrying amount of the old debt resulting from current and advance bond refundings. These amounts are amortized over the remaining life of the debt which is included as a component of interest expense. For the years ending June 25, 2016 and 2015, interest expense included amortization of deferred outflows totaling $583,761 and $566,845, respectively. Deferred outflows of resources related to pensions are the CWW contributions to the pension plans made subsequent to the measurement date and will reduce the pension liability in future years. Deferred inflows of resources from pensions are the difference between the projected and actual earnings on pension plan investments and the changes in proportion and differences between employer contributions and proportionate share of contributions. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, and information about the fiduciary net position of the pension plan have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. City of Columbus Participation Columbus Council passed Resolution Number , which requires the Board of Water Commissioners to remit to Columbus six percent (6%) of the net receipts collected by CWW. -51-

56 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 2: Summary of Significant Accounting Policies - (Continued) Compensated Absences Compensated absences are those absences for which employees will be paid, such as vacation leave. A liability for compensated absences that are attributable to services already rendered and that are not contingent on a specific event that is outside the control of CWW and its employees is accrued as employees earn the rights to the benefits. Bond Premiums Bond premiums are amortized over the life of the debt using the straight line method. For the years ended June 25, 2016 and 2015 interest expense was offset by amortization of bond premiums of $1,298,217 and $1,188,512, respectively. Bond premiums are presented as liabilities increasing the face amounts of the related bonds payable. Capital Grants and Contributions Capital grants and contributions are recognized in the Statements of Revenues, Expenses and Changes in Net Position when earned. Contributions include developer contributed utility systems, capacity and other supplemental support by other utilities and industrial customers and federal, state and local grants in support of system improvements. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain items in the 2015 financial statements have been reclassified in order to be in conformity with the 2016 statement presentation. NOTE 3: Deposit and Investment Risk Disclosures Cash and investments include bank balances and investments that at June 25, 2016 and 2015 were entirely insured or collateralized by securities held by CWW s agent in CWW s name. -52-

57 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 3: Deposit and Investment Risk Disclosures - Continued Investments State statutes limit investments to: bonds or obligations of governmental entities and/or political subdivisions of this state; bonds or obligations of the U.S. government which are fully guaranteed; obligations of agencies of the U.S. government; bonds or other obligations of public housing agencies or municipal corporations in the United States; and certificates of deposit of national or state banks insured by the Federal Deposit Insurance Corporation and federal savings and loan associations. Investments are reported at fair value. Short-term investments are recorded at cost, which approximates fair value. CWW has no investment policy that would further limit its investment choices. Interest Rate Risk - CWW does not have a formal policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Concentration of Credit Risk - CWW is not limited on the amount that may be invested in any one issuer. -53-

58 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 3: Deposit and Investment Risk Disclosures (Continued) As of June 25, 2016, CWW had the following investments: Investment Type Fair Value/ Carrying Amount Cost Credit Quality Rating (a) Maturity Dates Unrestricted Investments: Certificates of Deposit $ 13,000,394 $ 13,000,394 N/A Various Federal Home Loan notes 6,265,523 6,265,523 Aaa Various U.S. Treasury/Agency Securities 17,043,900 17,005,630 Aaa Various Total Unrestricted Investments 36,309,817 36,271,547 Restricted Investments: Certificates of Deposit 3,021,831 3,021,831 N/A 08/20/16 Federal Home Loan notes 53,626,466 53,626,466 Aaa Various U.S. Treasury/Agency Securities 15,005,400 15,005,400 Aaa Various Total Restricted Investments 71,653,697 71,653,697 Total Investments $ 107,963,514 $ 107,925,

59 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 3: Deposit and Investment Risk Disclosures (Continued) As of June 25, 2015, CWW had the following investments: Investment Type Fair Value/ Carrying Amount Cost Credit Quality Rating (a) Maturity Dates Unrestricted Investments: Certificates of Deposit $ 36,115,450 $ 36,115,450 N/A Various Total Unrestricted Investments 36,115,450 36,115,450 Restricted Investments: Certificates of Deposit 3,005,256 3,005,256 N/A Various Federal Home Loan Bank Bonds 29,403,192 29,400,000 AA+ Various Total Restricted Investments 32,408,448 32,405,256 Total Investments $ 68,523,898 $ 68,520,

60 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 3: Deposit and Investment Risk Disclosures (Continued) A reconciliation of cash and investments as shown on the statements of net position is summarized as follows: Cash and Cash Equivalents $ 11,361,892 $ 14,356,769 Cash and Cash Equivalents - Restricted Assets 23,121,536 17,061,870 Total Cash 34,483,428 31,418,639 Investments 36,309,817 36,115,450 Investments - Restricted Assets 71,653,697 32,408,448 Total Investments 107,963,514 68,523,898 Total Cash and Investments $ 142,446,942 $ 99,942,537 NOTE 4: Accounts Receivable Accounts receivable are summarized as follows: Consumers - Current Bills $ 5,133,145 $ 4,578,930 Consumers - Unbilled 2,630,633 2,086,545 General 7,334 15,913 Total Accounts Receivable $ 7,771,112 $ 6,681,

61 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 5: Inventories The major classifications of inventories are summarized as follows: Materials and Supplies $ 921,633 $ 921,189 Automotive 32,376 44,121 Total Inventories $ 954,009 $ 965,

62 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 6: Capital Assets Capital assets as of June 25, 2016 are summarized as follows: Balance June 25, 2015 Additions Capital Assets, not being depreciated: Land $ 2,553,149 0 Deletions/ Reclassifications Balance June 25, 2016 $ $ 0 $ 2,553,149 Construction in Progress 58,089,718 21,260,323 (30,092,620) 49,257,421 Total not depreciated 60,642,867 21,260,323 (30,092,620) 51,810,570 Capital Assets, being depreciated: Building and Equipment 22,210, , ,318 23,078,809 Watershed Study 3,010, ,010,320 Filtration Plant 53,114,699 29,332 4,179,138 57,323,169 Sewage Disposal Plant 87,253, ,853 (367,670) 87,281,983 Water Distribution System 122,836, ,597 8,483, ,638,665 Water System - Fort Benning 128,070,507 12, ,083,121 Sewer System 235,381,781 1,693,640 10,631, ,706,710 Sewer System - Fort Benning 84,216, , ,517,629 Elevated Tanks 6,923, ,923,686 Furniture and Fixtures 3,045, ,154 (331,347) 2,874,283 Autos, Trucks, and Equipment 11,998, ,436 (876,667) 12,049,176 Intercommunication System 3,845,398 0 (732,942) 3,112,456 Laboratory Equipment 1,121,126 4, ,045 1,352,765 Capitalized Studies/IT Projects 5,854, ,826 5,984,799 Total depreciated 768,883,371 4,167,911 21,886, ,937,571 Total Capital Assets $ 829,526,238 $ 25,428,234 $ (8,206,331) $ 846,748,

63 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 6: Capital Assets (Continued) Balance June 25, 2015 Additions Deletions/ Reclassifications Balance June 25, 2016 Accumulated depreciation: Building and Equipment $ (8,351,926) $ (742,974) $ 1,475,247 $ (7,619,653) Watershed Study (2,073,351) (24,986) 0 (2,098,337) Filtration Plant (20,735,412) (1,210,103) 533,165 (21,412,350) Sewage Disposal Plant (36,178,887) (2,031,286) 431,399 (37,778,774) Water Distribution System (52,655,669) (4,643,691) 2,359,848 (54,939,512) Water System - Fort Benning (29,443,016) (2,596,312) 0 (32,039,328) Sewer System (104,517,614) (7,091,664) 837,975 (110,771,303) Sewer System - Fort Benning (25,024,903) (1,697,934) 0 (26,722,837) Elevated Tanks (1,676,055) (162,705) 0 (1,838,760) Furniture and Fixtures (2,561,791) (154,160) 421,922 (2,294,029) Autos, Trucks, and Equipment (7,322,414) (983,754) 1,279,157 (7,027,011) Intercommunication System (2,202,514) (239,972) 758,984 (1,683,502) Laboratory Equipment (845,158) (77,618) 108,634 (814,142) Capitalized Studies/IT Projects (3,260,398) (543,795) 0 (3,804,193) Accumulated Depreciation (296,849,108) (22,200,954) 8,206,331 (310,843,731) Capital Assets, Net of Depreciation $ 532,677,130 $ 3,227,280 $ 0 $ 535,904,

64 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 6: Capital Assets (Continued) Capital assets as of June 25, 2015 are summarized as follows: Balance June 25, 2014 Deletions/ Reclassifications Balance June 25, 2015 Additions Capital Assets, not being depreciated: Land $ 2,553,149 $ 0 $ 0 $ 2,553,149 Construction in Progress 82,422,040 17,949,782 (42,282,104) 58,089,718 Total not depreciated 84,975,189 17,949,782 (42,282,104) 60,642,867 Capital Assets, being depreciated: Building and Equipment 22,045, ,626 (23,332) 22,210,178 Watershed Study 3,010, ,010,320 Filtration Plant 39,678, ,828 13,237,368 53,114,699 Sewage Disposal Plant 67,445, ,512 19,142,460 87,253,800 Water Distribution System 117,635,911 1,207,117 3,993, ,836,769 Water System - Fort Benning 126,391, , , ,070,507 Sewer System 233,052,963 1,845, , ,381,781 Sewer System - Fort Benning 83,019,542 1,196, ,216,251 Elevated Tanks 3,316,499 59,800 3,547,387 6,923,686 Furniture and Fixtures 2,889,617 72,523 83,336 3,045,476 Autos, Trucks, and Equipment 11,632,568 1,046,516 (680,677) 11,998,407 Intercommunication System 3,418,316 23, ,414 3,845,398 Laboratory Equipment 1,052,830 66,145 2,151 1,121,126 Capitalized Studies/IT Projects 5,775,447 28,545 50,981 5,854,973 Total depreciated 720,365,435 7,567,367 40,950, ,883,371 Total Capital Assets $ 805,340,624 $ 25,517,149 $ (1,331,535) $ 829,526,

65 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 6: Capital Assets (Continued) Balance June 25, 2014 Additions Deletions/ Reclassifications Balance June 25, 2015 Accumulated depreciation: Building and Equipment $ (7,637,173) $ (752,212) $ 37,459 $ (8,351,926) Watershed Study (2,048,365) (24,986) 0 (2,073,351) Filtration Plant (19,852,551) (886,361) 3,500 (20,735,412) Sewage Disposal Plant (34,648,846) (1,581,223) 51,182 (36,178,887) Water Distribution System (48,199,637) (4,456,032) 0 (52,655,669) Water System - Fort Benning (26,951,377) (2,491,639) 0 (29,443,016) Sewer System (97,521,271) (7,025,237) 28,894 (104,517,614) Sewer System - Fort Benning (23,343,298) (1,681,605) 0 (25,024,903) Elevated Tanks (1,596,088) (79,967) 0 (1,676,055) Furniture and Fixtures (2,414,764) (156,619) 9,592 (2,561,791) Autos, Trucks, and Equipment (7,669,270) (809,018) 1,155,874 (7,322,414) Intercommunication System (2,008,816) (193,698) 0 (2,202,514) Laboratory Equipment (786,354) (81,838) 23,034 (845,158) Capitalized Studies/IT Projects (2,729,418) (552,980) 22,000 (3,260,398) Accumulated Depreciation (277,407,228) (20,773,415) 1,331,535 (296,849,108) Capital Assets, Net of Depreciation $ 527,933,396 $ 4,743,734 $ 0 $ 532,677,

66 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 7: Capitalized Interest Net interest costs for capital asset construction are capitalized as part of the project cost. Net interest expense capitalized to date for projects under construction at June 25, 2016 and 2015 is $12,103,142 and $25,785,122, respectively. Interest expense capitalized for the years ended June 25, 2016 and 2015 totaled $6,512,016 and $6,566,006, respectively. Interest income capitalized for the years ended June 25, 2016 and 2015 totaled $137,409 and $94,939, respectively. NOTE 8: Accounts Payable Accounts payable are summarized as follows: Trade $ 1,905,147 $ 1,731,383 City of Columbus Participation 1,204,809 1,068,889 Total Accounts Payable $ 3,109,956 $ 2,800,272 NOTE 9: Accrued Compensated Absences Vacation leave for regular, full-time employees with an effective hire date on or after June 26, 2009 shall be accrued at 10 days per year during the first 10 years of employment; 15 days per year at 10 to 20 years of employment; 20 days per year at 20 to 25 years of employment; and 25 days per year after 25 years of employment. Employees with an effective hire date prior to June 26, 2009 shall accrue 10 days per year during the first complete five years of service, with one additional day for each year thereafter, to a maximum of 25 days per year after 20 complete years of service. Accrued vacation payable at June 25, 2016 and 2015 totals $869,217 and $826,153 respectively Short Term $ 578,833 $ 565,414 Long Term 290, ,739 Total Accrued Compensated Absences $ 869,217 $ 826,

67 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt At June 25, 2016 and 2015, respectively, long-term debt consists of the following: Revenue Bonds CWW issues bonds whereby the payment is made solely from the revenue of CWW Maturities Maturities Current Long-Term Current Long-Term Revenue Bond Series 2009 (remaining balance after refunding dated April 6, 2016) due in annual installments of $1,975,000 to $2,945,000 beginning May 1, 2017 through May 1, 2019; interest at 2.00 to 5.00 percent. $ 1,975,000 $ 5,780,000 $ 2,620,000 $ 25,920,000 Revenue Bond Series 2012A (partial refunding of Series 2005) due in annual installments of $1,115,000 to $5,050,000 beginning May 1, 2017 through May 1, 2025; interest at 3.00 to 5.00 percent. 1,115,000 26,590, ,705,000 Revenue Bond Series 2012B (refunding of Series 2003) due in annual installments of $4,220,000 to $5,575,000 beginning May 1, 2013 through May 1, 2020; interest at.71 to 2.75 percent. 5,175,000 16,290,000 4,395,000 21,465,

68 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) Maturities Maturities Current Long-Term Current Long-Term Revenue Bond Series 2013A (refunded Series 2007) due in annual installments of $590,000 to $7,495,000 beginning May 1, 2013 through May 1, 2031; interest at 2.00 to 5.00 percent. 1,750,000 46,420,000 1,700,000 48,170,000 Revenue Bond Series 2014 (refunded remaining Series 2005) due in annual installments of $150,000 to $3,450,000 beginning May 1,2015 through May 1, 2034; interest at 2.00 to 5.00 percent. 150,000 30,285,000 1,445,000 30,435,000 Revenue Bond Series 2016 (partial refunding of Series 2009) due in annual installments of $2,767,013 to $6,899,750 beginning November 1, 2016 through May 1, 2036; interest at 1.75 to 5.00 percent. 0 57,855, Bond Premiums, net of amortization 0 27,210, ,781,216 Total Revenue Bonds 10,165, ,430,556 10,160, ,476,

69 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) Maturities Maturities Current Long-Term Current Long-Term Notes Payable Drinking Water State Revolving Loan Fund due in eighty (80) quarterly installments, commencing February 1, 2001; interest accrues at 0 percent. 25,757 77,271 25, ,028 Clean Water State Revolving Loan Fund due in eighty (80) quarterly installments, commencing December 1, 2011; interest accrues at 3.67 percent. 183,912 3,576, ,876 3,760,419 Clean Water State Revolving Loan Fund due in two hundred fourty (240) monthly installments, commencing April 1, 2009; interest accrues at 3.00 percent. 1,157,052 16,533,568 1,121,224 17,690,

70 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) Maturities Maturities Current Long-Term Current Long-Term Clean Water State Revolving Loan Fund due in two hundred eleven (211) monthly installments, commencing September 1, 2011; interest accrues at 3.00 percent. 38, ,346 37, ,869 Drinking Water State Revolving Loan Fund due in seventy-seven (78) quarterly installments commencing December 1, 2008; interest accrues at 3 percent. 370,769 4,767, ,360 5,137,784 Total Notes Payable 1,776,012 25,504,708 1,720,547 27,280,720 Total Long-Term Debt, including bond premiums $ 11,941,012 $ 235,935,264 $ 11,880,547 $ 197,756,

71 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) As of June 25, 2016, debt service requirements to maturity for principal and interest are as follows: Bonds Payable Year Ending June 25, Principal Interest Total 2017 $ 10,165,000 $ 8,637,550 $ 18,802, ,560,000 8,244,417 18,804, ,740,000 7,904,416 18,644, ,150,000 7,561,975 18,711, ,740,000 7,221,863 17,961, ,345,000 28,447,750 84,792, ,980,000 14,656,250 72,636, ,705,000 3,641,500 29,346,500 $ 193,385,000 $ 86,315,721 $ 279,700,721 Notes Payable Year Ending June 25, Principal Interest Total 2017 $ 1,776,012 $ 816,239 $ 2,592, ,829, ,131 2,592, ,885, ,014 2,592, ,942, ,181 2,592, ,977, ,519 2,566, ,847,620 1,984,846 12,832, ,865, ,504 7,258, ,386 2, ,565 $ 27,280,720 $ 5,905,613 $ 33,186,333 Total Long-Term Debt Year Ending June 25, Principal Interest Total 2017 $ 11,941,012 $ 9,453,789 $ 21,394, ,389,120 9,007,548 21,396, ,625,236 8,611,430 21,236, ,092,069 8,212,156 21,304, ,717,975 7,810,382 20,528, ,192,620 30,432,596 97,625, ,845,302 15,049,754 79,895, ,862,386 3,643,679 29,506,065 $ 220,665,720 $ 92,221,334 $ 312,887,

72 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) Bond Covenants The various bond indentures contain significant limitations and restrictions on annual debt service requirements, maintenance of and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds, and minimum revenue bond coverage. CWW is in compliance with all such significant limitations and restrictions. During the year ended June 25, 2016, CWW advance refunded a portion of the 2009 Bond. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $1,014,966. This difference, reported in the accompanying financial statements as a deferred outflow of resources is being charged to interest expense through the year 2025 using the straight-line method. CWW completed the advance refunding to reduce its total debt service payments by $1,121,332 and to obtain an economic gain (difference between the present value of the old and new debt service payments) of $1,092,582. During the year ended June 25, 2014 CWW refunded the remaining 2005 Bond. The refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $243,732. Because the refunded bonds were called on June 13, 2014, this difference was recognized in the 2014 Statement of Revenues, Expenses, and Changes in Net Position as a decrease to interest expense. CWW completed the refunding to reduce its total debt service payments by $4,618,718 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $4,513,103. During the year ended June 25, 2013, CWW advance refunded the 2007 Bond Series and three revolving GEFA loans. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $5,158,201. This difference, reported in the accompanying financial statements as a deferred outflow of resources, is being charged to interest expense through the year 2031 using the straight-line method over the life of the new debt. CWW completed the advance refunding to reduce its total debt service payments by $3,337,982 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $2,724,

73 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) During the year ended June 25, 2012, CWW advance refunded the 2003 Bond. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $1,963,083. This difference, reported in the accompanying financial statements as a deferred outflow of resources is being charged to interest expense through the year 2020 using the straight-line method. CWW completed the advance refunding to reduce its total debt service payments by $2,850,643 and to obtain an economic gain (difference between the present value of the old and new debt service payments) of $2,698,639. During the year ended June 25, 2012, CWW advance refunded a portion of the 2005 Bond. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $2,400,017. This difference, reported in the accompanying financial statements as a deferred outflow of resources is being charged to interest expense through the year 2025 using the straight-line method. CWW completed the advance refunding to reduce its total debt service payments by $2,303,580 and to obtain an economic gain (difference between the present value of the old and new debt service payments) of $2,154,867. Changes in Long-Term Obligations The following is a summary of changes in the carrying costs of long-term debt obligations of CWW for the fiscal year ended June 25, 2016: 2016 Beginning Balance Increases, Including Amortization of Bond Premiums Decreases Ending Balances Amounts Due Within One Year Long-Term Amounts Revenue Bonds $ 180,636,216 $ 71,019,551 $ (31,060,211) $ 220,595,556 $ 10,165,000 $ 210,430,556 Notes Payable 29,001,267 0 (1,720,547) 27,280,720 1,776,012 25,504,708 Compensated Absences 826, ,478 (565,414) 869, , ,384 $ 210,463,636 $ 71,628,029 $ (33,346,172) $ 248,745,493 $ 12,519,845 $ 236,225,

74 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 10: Long-Term Debt - (Continued) The following is a summary of changes in the carrying costs of long-term debt obligations of CWW for the fiscal year ended June 25, 2015: 2015 Beginning Balance Increases, Including Amortization of Bond Premiums Decreases Ending Balances Amounts Due Within One Year Long-Term Amounts Revenue Bonds $ 191,439,729 $ 0 $ (10,803,513) $ 180,636,216 $ 10,160,000 $ 170,476,216 Notes Payable 30,672,041 0 (1,670,774) 29,001,267 1,720,547 27,280,720 Compensated Absences 823, ,966 (566,241) 826, , ,739 $ 222,935,198 $ 568,966 $ (13,040,528) $ 210,463,636 $ 12,445,961 $ 198,017,675 NOTE 11: Other Postemployment Benefits Plan description The Columbus Water Works Retiree Healthcare Plan is a singleemployer defined benefit healthcare plan administered by CWW. The Plan does not issue a separate financial report. The Plan provides continuation of medical and dental insurance benefits to eligible non-medicare retirees and their covered dependents in the active plan, a fully insured Point-of-Service Plan (POS). Non-Medicare retirees and covered dependents that are covered by the POS are also covered by a fully insured dental plan. There is no dental coverage after age 65. Medicare-eligible retirees are covered by a Medicare Supplement Plan F. Funding policy The contribution requirements of plan members are established and may be amended by CWW. The required contribution is based on a pay-as-you-go basis. The 2016 monthly participation contribution rates for POS-High Option for health coverage is $81.00 and dental coverage is $1.46 for single coverage and $ for health coverage and $5.26 for dental for family coverage. The monthly employee contribution rates to the POS-Low Option for health coverage are $37.00 for single coverage and $ for family coverage. Vision coverage is also an option at a cost of $7.22 for single coverage and $17.34 for family coverage. -70-

75 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 11: Other Postemployment Benefits (Continued) The Medicare Supplement plan does not require retiree contributions (spouses pay 100% of premium amount). The Medicare Supplement Plan F premium rates vary by age and range from $178 - $270. When a retiree becomes eligible for Medicare, the spouse may continue POS coverage until he/she reaches age 65 at family premium amount. Annual OPEB Cost and Net OPEB Obligation CWW s annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of CWW s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in CWW s net OPEB obligation to the Retiree Healthcare Plan: Normal cost $ 778,000 $ 778,000 Amortization of Actuarial liability 593, ,000 Annual Required Contribution (ARC) 1,371,000 1,371,000 Interest on net OPEB obligation 211, ,000 Adjustment to ARC (203,000) (203,000) Annual OPEB cost 1,379,000 1,379,000 Contributions made (313,000) (313,000) Increase in net OPEB obligation 1,066,000 1,066,000 Net OPEB obligation - beginning of year 6,338,000 5,272,000 Net OPEB obligation - end of year $ 7,404,000 $ 6,338,

76 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 11: Other Postemployment Benefits (Continued) CWW s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for June 25, 2016 and the two preceding years were as follows: Annual Percentage of OPEB Net OPEB Year ended OPEB cost Cost contributed Obligation June 25, 2014 $ 1,212, % $ 5,272,000 June 25, 2015 $ 1,379, % $ 6,338,000 June 25, 2016 $ 1,379, % $ 7,404,000 Funded Status and Funding Progress As of July 1, 2015, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $15,430,000, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $15,430,000, as disclosed in the following table. Unfunded Actuarial Actuarial UAAL Actuarial Actuarial Accrued Accrued as % of Valuation Value of Liability Liability Funded Covered Covered Date Assets (AAL) (UAAL) Ratio Payroll Payroll July 1, 2011 $ 0 $ 12,669,000 $ 12,669, % $ 10,538, % July 1, 2013 $ 0 $ 13,330,000 $ 13,330, % $ 12,254, % July 1, 2015 $ 0 $ 15,430,000 $ 15,430, % $ 13,286, % Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of CWW are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. -72-

77 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 11: Other Postemployment Benefits (Continued) Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing or benefit costs between CWW and the plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2015 actuarial valuation, the actuarial cost method used was the projected unit credit method with benefits attributed from date of hire to assumed termination of employment. The amortization method is 30 years, level percent of payroll. Total payroll was assumed to grow at 3.25% annually. The remaining amortization period of the UAAL is 30 years and is open. The actuarial assumptions included a 4.0% discount rate representing an unfunded (pay-as-you-go) plan. The healthcare cost trend rate is 8.00% for the POS and 6.00% for the Medicare Supplemental Plan F reduced by decrements to an ultimate rate of 4.50% after seven and two years, respectively. NOTE 12: Capital Grants and Contributions Capital grants and contributions for 2016 represent contributions of lines by developers of $888,924 and contributed water and sewer system by Ft. Benning of $303,358 for fiscal year ended June 25, Capital grants and contributions for 2015 represent contributions of lines by developers of $2,845,649 and contributed water and sewer system by Ft. Benning of $2,193,011 for fiscal year ended June 25,

78 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 13: Employee Benefit Plans CWW contributes to the Consolidated Government of Columbus, Georgia Public Employee Retirement Systems Pension and Benefit Trust Fund, a public employee retirement plan, administered by the Consolidated Government of Columbus, Georgia (Consolidated Government). The Fund is a cost sharing multiple-employer defined benefit plan. Financial information on the plans is included in the Comprehensive Annual Financial Report of the Consolidated Government of Columbus, GA. A copy of a financial report can be obtained by writing to the Consolidated Government of Columbus, Georgia, P.O. Box 1340, Columbus, Georgia The Consolidated Government of Columbus, Georgia administers three defined benefit plans-employee s Pension Plan, Death Benefit Plan, and Major Disability Income Plan of which CWW participates. Substantially all of the eligible employees of CWW are covered by these plans. Although the assets of the plans are co-mingled for investment purposes, each plan s assets may be used only for the payment of benefits to the members of the plan, in accordance with the terms of the plan. Employees Pension Plan Plan Description The Employees Pension Plan is a cost sharing multiple-employer defined benefit pension plan that covers the employees of the Consolidated Government, which includes CWW as well as other related agencies and authorities. The plan provides retirement and pre-retirement death benefits to plan members and their beneficiaries. The basic pension formula is 2% of annual earnings time up to 30 years of service. Contributions All participating employees are required to contribute 4% (for employees hired prior to July 1, 2012) or 8% (for employees hired after June 30, 2012) of their pensionable earnings to the plan. The employer s contribution to the plan is actuarially determined on an annual basis. The contribution requirements may be amended by City ordinance, but the employer contribution requirement is subject to state minimums. The amounts contributed by CWW for the plan years ended June 30, 2016, 2015 and 2014 were $1,694,993, $2,052,320 and $2,238,104, respectively, which are equal to the required contributions for each year. The required contributions for the plan as a whole for the years ending June 30, 2016, 2015 and 2014 were $9,292,726, $11,301,324, and $12,580,686, respectively. The required contributions by CWW to the plan for the years ending June 30, 2016, 2015 and 2014 were 18.24%, 18.16% and 17.79%, respectively, of the required minimum contributions for the plan as a whole. -74-

79 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 13: Employee Benefit Plans - (Continued) Death Benefit Plan for Retirees Plan Description The Death Benefit Plan is a cost sharing multiple employer defined benefit plan that covers employees of the Consolidated Government, which includes CWW as well as other related agencies and authorities. The plan provides a death benefit to those employees who on the day prior to retirement are insured for group life insurance under the Columbus, Georgia Employees Group Insurance Plan. In addition, a death benefit for spouses and dependents is optional provided a monthly premium is paid. Contributions Employees may elect to pay a monthly contribution for death benefit coverage for their spouse and dependents. The employer s contribution to the plan is actuarially determined on an annual basis and subject to state minimums. The amounts contributed by CWW for the plan years ended June 30, 2016, 2015 and 2014 were $30,885, $36,374, and $21,024, respectively, which are equal to the required contributions for each year. The required contributions for the plan as a whole for the years ending June 30, 2016, 2015, and 2014 were $313,235, $404,161, and $239,999, respectively. The required contributions by CWW to the plan for the years ending June 30, 2016, 2015 and 2014 were 9.86%, 9.00% and 8.76%, respectively, of the required minimum contributions for the plan as a whole. Major Disability Income Plan Plan Description The Major Disability Income Plan is a cost sharing multiple employer defined benefit plan that covers each full-time employee of the Consolidated Government, which includes CWW as well as other related agencies and authorities. The plan provides a monthly benefit to those employees who become totally disabled prior to attainment of age 64 years and six months and supply written proof of entitlement to a benefit under the Federal Social Security Act. Contributions Contributions by employees are neither required nor permitted. The employer s contribution to the plan is actuarially determined on an annual basis. The amounts contributed by CWW for the plan years ended June 30, 2016, 2015 and 2014 were $32,549, $29,261 and $12,180 respectively, which are equal to the required contributions for each year. -75-

80 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 13: Employee Benefit Plans - (Continued) The required contributions for the plan as a whole for the years ending June 30, 2016, 2015 and 2014 were $330,108, $302,591 and $129,992, respectively. The required contributions by CWW to the plan for the years ending June 30, 2016, 2015 and 2014 were 9.86%, 9.67% and 9.37%, respectively, of the required minimum contributions for the plan as a whole. Pension liabilities, Pension expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 25, 2016, CWW reported a liability for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of July 1, An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. CWW s portion of the net pension liability was based on contributions to the plans during the year ended June 25, At June 30, 2015, measurement date, CWW s proportion of the net pension liability was % which was a decrease.3117% from its proportion measured as of June 30, For the year ended June 25, 2016 and 2015, CWW recognized pension expense of $1,146,238 and $1,827,505, respectively. At June 25, 2016 and 2015, CWW reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources: Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Differences between expected and actual experience $ 833,716 $ 0 $ 0 $ 0 Changes of assumptions 182, Net difference between projected and actual earnings on pension plan investments 0 1,544, ,317,688 Changes in proportion and differences between Employer contributions and proportionate share of contributions Employer contributions subsequent to the measurement date 1,758, ,117,955 0 Total $ 2,774,200 $ 1,544,573 $ 2,117,955 $ 1,317,

81 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 13: Employee Benefit Plans - (Continued) CWW contributions subsequent to the measurement date of $1,758,427 and $2,117,955 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 25, 2017 and June 25, 2016, respectively. Other amounts reported as deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended June 25: 2017 $ (151,367) 2018 (151,367) 2019 (151,367) , (48,842) Thereafter $ (189,371) (528,800) Actuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of July 1, 2014 using the following actuarial assumptions, applied to all periods included in the measurement: Discount rate: 6.14% per annum (2.5% is attributable to long-term inflation); this rate was used to discount all future payments Salary increases: 3.25% per annum Cost of living increases: None assumed Mortality basis: Sex-distinct rates set forth in the 1994 Group Annuity Mortality Static Table; future generational improvements in mortality have not been reflected. Retirement (General employees): Retirement is assumed to occur after 15 years of service at the rate of 5% at each of ages 55 through 60, 10% at age 61, 30% at age 62, 15% at each of ages 63 and 64, and 100% thereafter. -77-

82 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 13: Employee Benefit Plans - (Continued) Other decrements (General employees): Assumed employment termination is based on age and service; for participants with more than five years of service, termination rates range from 14.25% at age 20 to 1.53% at age 65; for participants with less than five years of service, 22.00% is added to the rate during the first year of service, 16.50% is added during the second year, 11.00% is added during the third year, 5.50% is added during the fourth year, and 2.20% is added during the fifth year. Assumed disability is based on age and ranges from 0.035% at age 20 to 1.425% at age 65. Non-investment expenses: 0.03% of future payroll Future contributions: Contributions from the employers and employees are assumed to be made as legally required. Changes: The discount rate was decreased from 6.18% per annum to 6.14% per annum. Determination of the Long-term expected rate of return on Plan Assets: Expected Target Long-term Asset Class Allocation Real Return per Annum Core fixed income 35.00% 2.17% Global fixed income 4.00% 1.83% Large cap growth equity 13.00% 4.27% Large cap core equity 13.00% 4.27% Large cap value equity 13.00% 4.27% Mid cap equity 3.00% 4.44% Small cap equity 3.00% 4.44% International equity 10.00% 5.35% Emerging markets equity 3.00% 7.22% Real estate 3.00% 4.06% Total or weighted arithmetic average % 3.64% -78-

83 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 13: Employee Benefit Plans - (Continued) Sensitivity of CWW s proportionate share of the net pension liability to changes in the discount rate: The following presents CWW s proportionate share of the net pension liability calculated using the discount rate of 6.14%, as well as what CWW s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.14%) or 1-percentage-point higher (7.14%) than the current rate: 1% Current 1% Decrease discount rate Increase 5.14% 6.14% 7.14% CWW's proportionate share of the net pension liability $ 15,996,535 $ 11,325,697 $ 7,386,978 Pension plan fiduciary net position Detailed information about the pension plans fiduciary net position is available in the stand-alone financial report issued each year. The plans fiduciary net position has been determined on the same basis used by the pension plan and is equal to the market value of assets calculated under the accrual basis of accounting. This report is available at the plans administrative office: City of Columbus, Department of Human Resources, 100 Tenth Street, Columbus, GA NOTE 14: Administrative Fees On June 2, 1992, the Consolidated Government of Columbus, Georgia passed an ordinance which requires a charge for residential solid waste collection to be billed on a monthly cycle. CWW has been appointed as the billing and collection agent only, and remits all charges collected, less an administrative fee, to the Consolidated Government of Columbus, Georgia. CWW received $132,876 and $132,654 in administrative fees for the years ended June 25, 2016 and 2015, respectively. For the years ended June 25, 2016 and 2015, CWW recognized $35,501 and $160,300 in fees from the administration of construction contracts at Ft. Benning. This is for Base Realignment and Closure (BRAC) contract modifications for Ft. Benning outside of the normal service contract. For the years ended June 25, 2016 and 2015, bond issuance costs of $381,132 and $0 were charged to other administrative expenses, respectively. -79-

84 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 15: Commitments and Contingencies CWW is under obligation for various construction contracts in the amounts of $51,441,588 at June 25, At that date, $13,670,604 had been spent, leaving an uncompleted contractual obligation of $37,770,984. In 2004, CWW entered into a fifty year contract with the Department of the Army for privatization of the Fort Benning water and sewerage system under which CWW assumed all responsibility for operations, maintenance, repairs, investments and replacement of all system components. Revenue generated during the years ended June 25, 2016 and 2015, was $12,905,702 and $12,589,440, respectively. Expenses and capital outlay during the years ended June 25, 2016 and 2015 amounted to $4,435,279 and $4,649,812 excluding debt service payments, respectively. The capital required for the construction, maintenance, repairs and operational expenses will be funded entirely from revenue generated from Fort Benning. During the year ended June 25, 2009, the Fort Benning contract was modified. As part of the modification, CWW agreed to finance the cost of necessary upgrades to the water and sewerage system through the issuance of the 2009 Revenue Bond Series. In order to offset the costs incurred by CWW, Fort Benning agreed to pay CWW monthly amounts sufficient to provide 1.25 times the debt service coverage of the 2009 Revenue Bond Series until the bonds are retired. Payments during each of the years ended June 25, 2016 and 2015 amounted to $4,860,492 and are included in non-operating revenue. CWW is the defendant in lawsuits arising from normal operations. Management has reviewed pending litigation with legal counsel and believes that the ultimate liability, if any, resulting from these actions will be settled within insurance limits and will not materially affect the financial position of CWW. -80-

85 COLUMBUS, GEORGIA NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 NOTE 16: Risk Management CWW carries commercial insurance for various risks of loss related to torts, destruction of assets and errors and omissions including coverage under auto, general liability and umbrella policies of $1,000,000, $3,000,000 and $10,000,000, respectively. In addition, CWW has established a self-funded program for workers compensation. An excess coverage insurance policy covers aggregate claims in excess of $150,000 up to $1,000,000. There have been no settlements to exceed insurance coverage in the past three fiscal years. CWW belongs to the subsequent injury fund with the State of Georgia, which reduces their exposure based on re-injured employees. Management elected to expense claims as they are paid; therefore, no estimated liability has been accrued. Claims and associated expenses are as follows: Estimated Liability at Beginning of Year $ 0 $ 0 $ 0 Claims Incurred 426, , ,232 Claims Paid (426,303) (271,230) (238,232) Estimated Liability at End of Year $ 0 $ 0 $ 0-81-

86 COLUMBUS, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEARS ENDED JUNE 25, 2016 AND 2015 Defined Benefit Pension Plans Schedule of Proportionate Share of the Net Pension Liability CWW's proportion of the net pension liability % % CWW's proportionate share of the net pension liability $ 11,325,697 $ 11,508,526 CWW's covered-employee payroll during the measurement period $ 13,292,985 $ 13,034,377 CWW's proportionate share of the net pension liability as a percentage of its covered-employee payroll 85.20% 88.29% Plan fiduciary net position as a percentage of the total pension liability 68.98% 68.70% 2016 Schedule of Contributions Pension Death benefit Disability income Contractually required contribution $ 1,694,993 $ 30,885 $ 32,549 Contributions in relation to the contractually required contribution 1,694,993 30,885 32,549 Contribution deficiency (excess) $ 0 $ 0 $ 0 CWW's covered-employee payroll $ 13,518,812 $ 13,518,812 $ 13,518,812 Contributions as a percentage of covered-employee payroll 12.54% 0.23% 0.24% 2015 Schedule of Contributions Pension Death benefit Disability income Contractually required contribution $ 2,052,320 $ 36,374 $ 29,261 Contributions in relation to the contractually required contribution 2,052,320 36,374 29,261 Contribution deficiency (excess) $ 0 $ 0 $ 0 CWW's covered-employee payroll $ 13,292,985 $ 13,292,985 $ 13,292,985 Contributions as a percentage of covered-employee payroll 15.44% 0.27% 0.22% NOTES TO REQUIRED SUPPLEMENTARY INFORMATION Methods and Assumptions Used in Calculations of Actuarially Determined Contributions The actuarial methods and assumptions below were used to determine the contractually required contributions above for the year ended June 30, The mortality basis was updated to the RP-2000 Mortality Table for annuitants projected to 2015 by Scale AA. Valuation date July 1, 2014 Actuarial cost method Frozen initial liability Amortization method Level dollar, closed Remaining amortization method 11 years Asset valuation method Three-year smoothed market value Inflation rate 2.50% Salary increases 3.25% Investment rate of return 7.00% The schedules above are intended to show information for the last 10 years. Additional years will be displayed as they become available. -82-

87 COLUMBUS, GEORGIA Comprehensive Annual Financial Report A Component Unit of the Consolidated Government of Columbus, Georgia For the Fiscal Year Ended June 25, 2016 and 2015 STATISTICAL SECTION (Unaudited) COMMENTS Statistical tables differ from financial statements because they usually cover more than two fiscal years and may contain non-accounting data. These schedules reflect financial trends of the water and sewer system and social and economic data. -83-

88 STATISTICAL SECTION This part of the Columbus Water Works comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, notes disclosures, and required supplementary information says about the organization s overall financial health. CONTENTS Financial Trends These schedules contain trend information to help the reader understand how the Columbus Water Works financial performance has changed over time. Revenue Capacity These schedules contain trend information to help the reader assess the Columbus Water Works most significant local revenue source. Debt Capacity These schedules present information to help the reader assess the affordability of the Columbus Water Works current levels of outstanding debt and the Columbus Water Works ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Columbus Water Works financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Columbus Water Works financial report relates to the services provided and the activities performed. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. -84-

89 Financial Trends Net Position by Component Fiscal Year Ended June 25, Net Investment in Capital Assets $ 312,980,325 $ 324,560,202 $ 327,465,492 $ 340,403,342 $ 355,395,922 $ 362,066,987 $ 368,582,857 Restricted 15,595,613 20,471,990 22,937,391 18,829,313 21,571,472 15,253,741 18,865,351 Unrestricted 38,869,854 40,937,978 40,338,276 27,796,378 25,920,783 36,748,480 34,124,845 Total net position $ 367,445,792 $ 385,970,170 $ 390,741,159 $ 387,029,033 $ 402,888,177 $ 414,069,208 $ 421,573,053 Note: Columbus Water Works implemented GASB 45 in FY ended 6/25/09. Columbus Water Works implemented GASB 65 restating FY 6/25/14 and 6/25/13-85-

90 Financial Trends Change in Net Position Fiscal Year Ended June 25, Operating Revenues Water Sales $ 18,474,616 $ 21,861,416 $ 21,316,670 $ 21,005,971 $ 20,607,873 $ 21,718,357 $ 22,961,046 Sewer Charges 22,030,990 23,558,758 22,847,891 22,976,172 23,713,915 23,917,336 25,388,760 Fort Benning Water and Sewer Charges 6,094,849 6,488,659 6,619,929 6,619,918 6,901,885 7,026,101 7,036,223 Fort Benning CM100 O&M Services 517, ,933 1,502,489 4,239,272 5,120,837 5,563,339 5,869,479 CSO fees 1,716,970 1,830,860 1,848,707 1,826,390 1,849,853 1,917,933 1,989,826 Tapping fees and miscellaneous charges 1,561,819 1,583,509 1,709,269 1,630,225 1,729,984 1,814,932 1,858,343 Total Operating Revenue 50,397,243 56,291,135 55,844,955 58,297,948 59,924,347 61,957,998 65,103,677 Operating Expenses Field Services 5,116,673 6,171,860 5,426,688 6,792,375 6,902,076 7,190,561 7,494,474 South Columbus Water Resources Facility North Columbus Water Resources Facility 4,124,103 4,352,811 4,532,121 4,280,253 4,591,060 4,161,531 4,018,875 3,533,378 4,332,581 4,772,404 4,429,056 4,137,787 4,142,140 4,319,753 CSO Plants 994,581 1,065,638 1,027,584 1,144,192 1,052, ,213 1,018,617 Managed Maintenance 2,352,747 2,463,691 2,492,426 2,651,699 2,745,982 2,921,780 2,838,810 Engineering 1,273,702 1,345,178 1,349,543 1,356,374 1,460,877 1,431,265 1,446,900 Information Services 915, , ,938 1,071,430 1,118,345 1,370,108 1,563,593 Water Quality Monitoring 1,491,452 1,512,279 1,556,156 1,729,145 1,858,625 2,026,323 1,979,474 Fort Benning 2,687,110 3,083,993 3,686,699 4,338,200 4,508,599 4,649,812 4,435,279 Customer Service 1,593,897 1,651,330 1,502,714 1,557,062 1,609,360 1,697,951 1,662,309 Meter Maintenance 1,521,625 1,528,406 1,537,554 1,637,318 1,692,184 1,927,165 1,907,793 Finance, Employee services and Administration 3,807,660 4,046,612 4,701,197 4,588,501 4,896,314 4,864,862 4,835,937 Depreciation and amortization 17,754,084 18,178,292 21,625,885 18,552,657 20,156,528 20,773,415 22,200,954 Total operating expenses 47,166,978 50,725,108 55,168,909 54,128,262 56,730,132 58,149,126 59,722,768 Operating Income 3,230,265 5,566, ,046 4,169,686 3,194,215 3,808,872 5,380,909 Non-operating Revenue (expenses) Interest Revenue 755, , ,561 88,619 83, , ,343 Ft Benning Financing Bond Issuance 5,265,638 4,860,492 4,860,492 4,860,492 4,860,492 4,860,492 4,860,492 Administrative fees and other revenue 581,217 3,259, ,138 (375,783) 4,264,315 1,138,833 (41,665) Interest Expense (4,063,532) (3,566,027) (3,463,050) (1,747,410) (660,080) (814,702) (850,935) City of Columbus participation expense (2,854,208) (3,307,164) (3,205,570) (3,114,733) (3,158,884) (3,243,185) (3,462,720) Gain (loss) on disposal of assets 88,243 2,575,552 77, ,206 79, , ,139 Total non-operating revenue (expenses) (227,269) 4,291,635 (773,713) (151,609) 5,469,631 2,333, ,654 Income before capital grants and contributions 3,002,996 9,857,662 (97,667) 4,018,077 8,663,846 6,142,371 6,311,563 Capital grants and contributions 5,689,174 8,666,716 4,868,656 3,268,506 7,195,298 5,038,660 1,192,282 Change in Net Position 8,692,170 18,524,378 4,770,989 7,286,583 15,859,144 11,181,031 7,503,845 Net Position at Beginning of Year $ 358,753,622 $ 367,445,791 $ 385,970, ,741,158 $ 387,029, ,888,177 $ 414,069,208 Note: Columbus Water Works implemented GASB 34 in FY ended 6/25/02. Note: Columbus Water Works implemented GASB 68 in FY ended 6/25/15. Adjustment made in Net Position at Beginning of Year for

91 Revenue Capacity Schedule of Operating Revenue by Source Last Ten Fiscal Years Fiscal Year Water Sales Sewer Charges Fort Benning Water & Sewer Charges Fort Benning CM100 O&M Services Tapping Fees & Miscellaneous Total 2007/08 $ 17,769,987 $ 20,596,764 $ 6,475,568 $0 $ 3,476,274 $ 48,318, /09 $ 18,021,776 $ 21,447,741 $ 6,094,849 $0 $ 3,273,764 $ 48,838, /10 $ 18,474,616 $ 22,030,990 $ 6,094,849 $ 517,999 $ 3,278,789 $ 50,397, /11 $ 21,861,416 $ 23,558,758 $ 6,488,659 $ 967,933 $ 3,414,369 $ 56,291, /12 $ 21,316,670 $ 22,847,891 $ 6,619,929 $ 1,502,489 $ 3,557,976 $ 55,844, /13 $ 21,005,971 $ 22,976,172 $ 6,619,918 $ 4,239,272 $ 3,456,615 $ 58,297, /14 $ 20,607,873 $ 23,713,915 $ 6,901,885 $ 5,120,837 $ 3,579,837 $ 59,924, /15 $ 21,718,357 $ 23,917,336 $ 7,026,101 $ 5,563,339 $ 3,732,865 $ 61,957, /16 $ 22,961,046 $ 25,388,760 $ 7,036,223 $ 5,869,479 $ 3,848,169 $ 65,103,

92 Revenue Capacity Comparison of Operating Revenues by Source Last Ten Fiscal Years Fiscal Year Ended June 25, Operating Revenues Water Sales $ 19,364,676 $ 17,769,987 $ 18,021,776 $ 18,474,616 $ 21,861,416 Sewer Charges 21,136,694 20,596,764 21,447,741 22,030,990 23,558,758 Fort Benning Water and Sewer Charges 6,400,042 6,475,568 6,094,849 6,094,849 6,488,659 Fort Benning CM100 O&M Services , ,933 Tapping Fees & Misc. 4,211,090 3,476,274 3,273,764 3,278,789 3,414,369 Total Operating Revenue $ 51,112,502 $ 48,318,593 $ 48,838,130 $ 50,397,243 $ 56,291,135 Fiscal Year Ended June 25, Operating Revenues Water Sales $ 21,316,670 $ 21,005,971 $ 20,607,873 $ 21,718,357 $ 22,961,046 Sewer Charges 22,847,891 22,976,172 23,713,915 23,917,336 25,388,760 Fort Benning Water and Sewer Charges 6,619,929 6,619,918 6,901,885 7,026,101 7,036,223 Fort Benning CM100 O&M Services 1,502,489 4,239,272 5,120,837 5,563,339 5,869,479 Tapping Fees & Misc. 3,557,976 3,456,615 3,579,837 3,732,865 3,848,169 Total Operating Revenue $ 55,844,955 $ 58,297,948 $ 59,924,347 $ 61,957,998 $ 65,103,

93 Revenue Capacity Capital Contributions by Source Fiscal Year Ended June 25, Capital Contributions Developer Lines $ 1,593,506 $ 968,633 $ 1,426,409 $ 3,301,207 $ 1,482,173 $ 1,269,227 $ 2,845,649 $ 888,924 Miscellaneous Contributions ,138, Fort Benning 3,588,238 4,599,561 7,220,490 1,567,449 1,773, ,014 2,193, ,358 Capital Grants 3,349, ,980 19,817-12, Total Capital Contributions* $ 8,531,222 $ 5,689,174 $ 8,666,716 $ 4,868,656 $ 3,268,506 $ 7,195,298 $ 5,038,660 $ 1,192,282 Note: Columbus Water Works implemented GASB 65 in FY ended June Restating balances for 2012 and

94 Revenue Capacity Schedule of Water & Wastewater & CSO Rates *WATER RATES Per CCF ** Monthly sewer base charge is $2.97 per account Current Rate (Effective Jan 1, 2016) **SEWER RATES Per CCF CSO RATES Per CCF MONTHLY METER CHARGE Size Charge Size Charge 5/8" $5.19 3" $ /4" $5.19 4" $ " $6.15 6" $ /2" $7.10 8" $ " $ " $86.32 Previous Fiscal Years Water and Wastewater Residential Water Industrial Water Residential Sewer Industrial Sewer Effective 1-15CCF Over Base Over Base 1-15CCF Over 15CCF 1-15 CCF 15CCF Charge 15CCF Charge 1-15CCF Over 15CCF Jan-15 $1.58 $1.70 $4.85 $1.58 $1.46 $3.06 $2.36 $2.78 $3.06 $2.36 Jan-14 $1.51 $1.63 $4.41 $1.51 $1.40 $2.93 $2.26 $2.53 $2.93 $2.26 Jan-13 $1.45 $1.56 $4.10 $1.45 $1.34 $2.80 $2.16 $2.35 $2.80 $2.16 Jan-12 $1.38 $1.49 $3.91 $1.38 $1.28 $2.67 $2.06 $2.24 $2.67 $2.06 Jan-11 $1.38 $1.49 $3.91 $1.38 $1.28 $2.67 $2.06 $2.24 $2.67 $2.06 Jan-10 $1.31 $1.41 $3.70 $1.31 $1.21 $2.59 $2.00 $2.17 $2.59 $2.00 Jan-09 $1.24 $1.33 $3.49 $1.24 $1.14 $2.52 $1.94 $2.11 $2.52 $1.94 Jan-08 $1.20 $1.29 $3.37 $1.20 $1.10 $2.42 $1.86 $2.02 $2.42 $1.86 Jan-07 $1.16 $1.25 $3.26 $1.16 $1.07 $2.32 $1.78 $1.94 $2.32 $1.78 Previous Fiscal Years Combined Sewer Overflow (CSO) PER CCF Effective Over 1004 Jan-15 $0.00 $3.21 $6.46 $64.51 $ Jan-14 $0.00 $3.06 $6.16 $61.47 $ Jan-13 $0.00 $2.92 $5.87 $58.57 $ Jan-12 $0.00 $2.78 $5.59 $55.81 $ Jan-11 $0.00 $2.78 $5.59 $55.81 $ Jan-10 $0.00 $2.71 $5.45 $54.45 $ Jan-09 $0.00 $2.64 $5.32 $53.12 $ Jan-08 $0.00 $2.58 $5.19 $51.82 $ Jan-07 $0.00 $2.52 $5.06 $50.56 $ Over Over Over Non-Industrial $1.64 $1.76 $3.17 $2.44 $0.00 $3.37 $6.78 $67.70 $ Industrial $1.64 $1.51 $3.17 $2.44 $0.00 $3.37 $6.78 $67.70 $ * Monthly meter base charge is $5.19 per account -90-

95 Revenue Capacity Connection & Service Fees Effective January 2016 Service Connection fee $ Transfer Service fee $ Delinquent charge - (lock or remove) $ Unauthorized Use - (meter pulled) $ After business hours cut on charge $ Returned check charge $ Meter locked $ Meter removed - NSF check $ Thermal Expansion Device (TED) $ Water System Connection charge 5/8" meter $ 1, (developer installed) $ " meter $ 1, (developer installed) $ /2" meter $ 2, " meter $ 2, " meter or larger COST Sewer system Connection charge Standard 6" $ 1, All other COST Locate sewer tap $ " Sewer stub out $ Garbarge Fee (billed on behalf of City of Columbus) Monthly $ Low Income Monthly Fee $ Fire Service charges Monthly (Fire Line) $ Annual fire protection (per line) $ Fire hydrants (monthly) $ 4.17 Sewer Availability Fees (Impact Fees) 5/8" meter $ " meter $ /2" meter $ 1, " meter $ 1, " meter $ 3, " Meter $ 10, " meter $ 20, " meter $ 35, " meter Cost -91-

96 Revenue Capacity Comparison of Water & Sewer Rates April 2016 (20 ccf) $ $50 $100 $150 $200 $250 $300 $350 $400 $450 Atlanta Charleston Raleigh Birmingham Chattanooga Charlotte Jacksonville Tampa Nashville Mobile Greenville Augusta Macon Montgomery Savannah Columbus Phenix City Harris County* Talbot County* $ $ $ $ $ $ $ $ $ $ $ $ $ $92.36 $89.11 $86.49 $80.47 $62.73 $ Previous Fiscal 20 ccf Atlanta $ $ $ $ $ $ $ $ $ $ Charleston $ $ $ $ $ $ $ $ $ $ Raleigh $ $ $ $ $ $ $90.04 $82.61 $71.70 $65.79 Birmingham $ $ $ $ $ $ $ $ $ $ Chattanooga $ $ $ $ $ $ $92.45 $ $ $ Charlotte $ $ $ $ $ $ $ $ $95.81 $90.22 Jacksonville $ $ $ $ $ $ $ $ $ $94.75 Tampa $ $ $ $ $ $ $ $ $ $98.53 Nashville $ $ $ $ $ $ $ $ $ $ Mobile $ $ $ $ $ $ $98.93 $98.93 $96.89 $96.89 Greenville $ $ $ $ $ $ $99.02 $99.02 $96.02 $93.03 Augusta $ $ $ $ $ $ $98.58 $95.83 $93.02 $92.03 Macon $ $ $94.00 $94.00 $87.50 $83.50 $74.80 $76.50 $73.95 $73.10 Montgomery $ $ $ $ $99.15 $98.14 $90.63 $90.85 $85.60 $81.53 Savannah $ $ $ $97.82 $92.29 $ Columbus $89.11 $85.73 $81.69 $78.00 $74.35 $74.35 $71.42 $68.65 $66.14 $63.65 Phenix City $ $81.44 $79.04 $79.04 $76.98 $ $83.88 $77.56 $76.41 $73.95 Harris County* $80.47 $80.47 $80.47 $76.23 $76.23 $76.23 $76.23 $76.23 $61.74 $61.74 Talbot County* $62.73 $62.73 $62.73 $62.73 $62.73 $62.73 $62.73 $62.73 $62.73 $62.73 * Water Only -92-

97 Debt Capacity Revenue Covering All Debt Last Ten Fiscal Years Fiscal Year Change in Net Position Allowable Adjustments Adjusted Change in Net Debt Service Payments Coverage (%) 2006/07 14,427,613 13,173,228 27,600,841 15,989, /08 791,302 22,948,721 23,740,023 17,063, /09 6,255,756 15,053,097 21,308,853 18,313, /10 8,692,170 18,585,878 27,278,048 23,076, /11 18,524,378 15,917,915 34,442,293 20,217, /12 7,404,035 23,892,311 31,296,346 19,942, /13 7,286,583 19,750,150 27,036,733 17,825, /14 15,859,144 16,780,195 32,639,339 18,245, /15 11,181,031 19,792,642 30,973,673 19,244, /16 7,503,845 25,325,844 32,829,689 19,652,

98 Debt Capacity Outstanding Debit Debt Administration The following is a summary of changes in the carrying costs of long-term debt obligations of Columbus Water Works for the fiscal year ended June 25, 2016: Beginning Balance Additions, Including Amortization or Bond Discounts Decreases Balance Revenue Bonds $ 180,636,216 $ 71,019,551 $ (31,060,211) $ 220,595,556 Notes Payable 29,001,267 - (1,720,547) $ 27,280,720 $ 209,637,483 $ 71,019,551 $ (32,780,758) $ 247,876,276 Additional detailed information on outstanding debt may be found in the Note 10 of the Financial Statements included in the Financial Section of this report. Fiscal Year Ending Balance Per Capita (1) The following table expresses the outstanding debt balance as a total of per capita and personal income for the previous ten fiscal periods: of Personal Population Personal Income Percentage Income 2005 $ 161,401,056 $ % 191,614 5,391, $ 165,638,746 $ % 185,271 5,696, $ 207,218,072 $ 1, % 188,660 6,188, $ 202,804,069 $ 1, % 187,046 6,613, $ 243,001,141 $ 1, % 186,984 7,016, $ 231,168,661 $ 1, % 190,414 7,321, $ 221,170,576 $ 1, % 189,885 7,256, $ 214,758,889 $ 1, % 194,107 7,295, $ 208,298,137 $ 1, % 198,413 8,014, $ 222,111,770 $ 1, % 202,824 8,117, $ 209,637,484 $ 1, % 202,824 8,117, $ 247,876,276 $ 1,236 * 3.1% 200,579 7,714,114 (1) - See Schedule of Demographic and Economic Statistics for population data. * Based on Previous Year Demographic Data - when current year unavailable. Also listed on the following page are summaries of outstanding bond issues and current GEFA loans, as well as future committed loans to complete the Five-Year Capital Improvement Program. -94-

99 COLUMBUS WATER AND SEWERAGE REVENUE BONDS OTHER OBLIGATIONS YEARS TO 5/1/ A 2012B Combined Principal & Interest Building Authority / ,020 5,911,700 3,921, , ,116 11,293, , , , , ,881 25,757 2,078,737 13,372,611 Building Authority /1 GEFA SRF /1/ /97-8/17 GEFA SRF /1/1992 5/92-2/12 GEFA DWSRF /02-2/22 GEFA DWSRF /01-5/20 GEFA CWSRF 97001P1 6/08-7/23 GEFA CWSRF 97001P2 6/08-7/23 GEFA DWSRF 01001P 09/08-3/28 GEFA CWSRF 03001PA 03/09-3/29 GEFA CWSRF 03001PB 03/09-3/29 TOTAL Subordinate Obligations TOTAL Bonds & Other Obligations ,820 5,939,500 3,901,563 2,165,113 1,975,163 14,330, , , , , ,881 25,757 2,087,044 16,417, ,740 5,948,250 3,903,863 2,165,113 1,975,163 14,342, , , , , ,881 25,757 1,075, , ,787 4,361,197 18,703, ,939,000 4,276,963 2,290,112 1,975,163 3,236,676 17,717, , , , , ,881 25,757 1,077, ,518 1,921,149 5,608,759 23,326, ,562,002 3,241,175 3,186,362 1,975,163 3,890,855 14,855, , , , , ,881 25,757 1,077, ,518 1,671,149 5,362,429 20,217, ,789,212 2,140,050 1,975,163 3,890,605 13,795, , , , ,881 25,757 1,077, , ,518 1,671,149 46,363 5,082,449 18,877, ,541, ,581 3,890,105 1,265,485 4,914, ,661 13,452,177 4,321,192 2,313,792 25,757 10,003, , ,518 1,671,149 55,635 19,230,665 32,682, ,547,443 3,888,905 1,248,150 4,930,026 3,967,150 15,581,674 25, , ,518 1,671,149 55,635 2,592,250 18,173, ,888,905 1,248,150 4,948,261 3,969,850 2,597,211 16,652,377 25, , ,518 1,671,149 55,635 2,592,251 19,244, ,888,105 1,248,150 4,961,734 3,970,350 2,992,100 17,060,439 25, , ,518 1,671,149 55,635 2,592,250 19,652, ,285,200 2,363,150 5,671,854 3,969,350 1,653,750 2,859,246 18,802,550 25, , ,519 1,671,149 55,635 2,592,251 21,394, ,066,200 2,322,400 5,693,704 3,304,350 1,650,750 2,767,013 18,804,417 25, , ,518 1,671,150 55,635 2,592,251 21,396, ,062,800 2,330,900 5,712,853 3,123,100 1,647,750 2,767,013 18,644,416 25, , ,518 1,671,149 55,635 2,592,250 21,236, ,320,050 5,728,312 3,121,850 1,644,750 5,897,013 18,711,975 25, , ,518 1,671,149 55,635 2,592,251 21,304, ,300,400 3,121,600 3,646,750 5,893,113 17,961, , ,518 1,671,149 55,635 2,566,493 20,528, ,273,250 3,055,350 3,669,000 5,900,250 17,897, , ,518 1,671,149 55,635 2,566,493 20,464, ,295,500 2,862,600 3,839,750 5,894,000 17,891, , ,518 1,671,149 55,635 2,566,493 20,458, ,297,750 1,847,850 3,856,250 6,899,750 17,901, , ,518 1,671,149 55,635 2,566,493 20,468, ,302,500 1,847,850 4,455,500 4,966,500 16,572, , ,518 1,671,149 55,635 2,566,493 19,138, ,722,850 2,343,000 4,463,250 14,529, , ,518 1,671,149 55,635 2,566,493 17,095, ,724,100 2,342,500 4,462,750 14,529, , ,518 1,671,149 55,635 2,566,493 17,095, ,720,600 2,343,250 4,460,750 14,524, , ,424 1,671,149 55,635 2,435,399 16,959, ,721,850 2,345,000 4,462,000 14,528, ,191 1,257,589 41,752 1,618,532 16,147, ,721,850 2,342,500 4,461,000 14,525, , ,191 14,844, ,719,850 2,345,750 4,462,500 14,528, , ,191 14,847, ,344,250 4,461,000 6,805, , ,565 6,964, ,343,000 4,461,250 6,804,250 6,804, ,346,750 4,462,750 6,809,500 6,809, ,465,000 4,465,000 4,465, ,462,500 4,462,500 4,462,500 TOTALS 1,040,580 26,300,452 25,034,151 15,589,698 11,428,512 34,988,356 40,815,835 42,561,244 85,345,011 52,749,561 84,001, ,854,548 2,117,273 1,413,190 9,642,484 1,399,291 3,951, ,600 14,312,035 6,383,786 10,289,139 33,927, ,275 84,774, ,628,912 Principal 955,000 23,095,000 47,550,000 15,665,000 40,000,000 23,615,000 27,705,000 38,685,000 53,725,000 3,295,000 57,855, ,305,000 2,041,000 1,150,000 8,002,891 1,318,722 3,293, ,598 12,417,054 4,508,728 7,663,359 25,110, ,479 Avg.Rate% Loan Date 10/1/1998 8/5/2002 8/4/2003 1/1/2005 1/18/2007 6/24/2009 4/26/2012 4/26/2012 3/21/2013 6/13/2014 4/6/2016 9/1/1991 6/1/1992 8/1/1997 2/1/1992 2/1/2002 5/1/2000 6/1/ /1/2011 9/1/2008 3/1/2009 8/1/

100 Demographic and Economic Information General Information The Census Bureau's Population Estimates Program publishes population numbers between censuses. Estimates from the Population Estimates Program are for the past, while projections provide population estimates for future dates. The Census Bureau publishes July 1 estimates for years after the last decennial census (2010), as well as for past decades. Data series for births, deaths, and domestic and international migration are used to update the decennial census base counts. In general, estimates released in a given year refer to the population on July 1 of the previous year. The 2010 population of Muscogee County was estimated at 189,885. This represents a 1.81% percent increase from the 2000 census. The total civilian labor force in Muscogee County for June, 2016 was 79,630 of which 74,092 were employed and 5,538 were unemployed. The unemployment rate was 7.0 percent. The average weekly wage for Muscogee County in 1st Quarter 2016 was $851, which equates to $21.28 per hour or $44,252 per year, assuming a 40-hour week worked year-round. The largest major industry sector was Health Care and Social Assistance, with percent of the employment, followed by Accommodation and Food Services with percent and Retail Trade with percent, respectfully. Source: Labor Market Statistics, Quarterly Census of Employment and Wages Program -96-

101 Demographic and Economic Information Selected Economic Characteristics Muscogee County Median Age of Population (years) 33.3 Estimated Total Population 200,579 Age Distribution Persons 0 19 years 28.5% Persons years 60.0% Persons 65 years and over 11.5% Median Household Income $41,362 Total Personal Income (BEA) $7,714,114 Total Housing Units 82,690 Public Road Mileage Area of Muscogee County 1, Miles Square Miles Fiscal Year Population Last Ten Fiscal Years Median Age of Population Median Household Income Annual Per Capita Personal Income BEA Total Personal Income , ,393 29,770 5,267, , ,130 30,733 5,391, , ,954 33,119 5,696, , ,406 34,836 6,188, , ,095 37,083 6,613, , ,276 38,542 7,016, , ,060 36,712 7,321, , ,359 37,527 7,256, , ,564 39,611 7,688, , ,088 40,011 8,014, , ,443 40,021 8,117, , ,339 39,012 7,714, , ,362 38,400 7,714,114 Source: United States Census Bureau (Population, age and income figures are estimates in other than census years) -97-

102 Demographic and Economic Information Population Statistics Muscogee County Last Ten Fiscal Years Year Population , , , , , , , , , ,579 *Source Georgia Department of Labor -98-

103 Demographic and Economic Information Labor Market Information MSA Labor Force & Unemployment Rates Unemployment Rate Annual Averages Last Ten Fiscal Years % % % % % % % % % % Source: Georgia Department of Labor, Workforce Information and Analysis Note: Population, age and income are estimates in other than census years Columbus-Georgia MSA Labor Force Data 2015* County Labor Force Employment Unemployment Number Rate Chattahoochee 2,199 2, % Harris 15,480 14, % Marion 3,454 3, % Muscogee 79,038 73,211 5, % MSA - Total 100,171 93,061 7, % *Does not include Russell County, Alabama -99-

104 Demographic and Economic Information Labor Market Information Labor Force and Unemployment Rates 2015 Annual Averages Source: Georgia Department of Labor; Workforce Information & Analysis, U.S. Bureau of Labor Statistics -100-

105 Demographic and Economic Information Labor Market Information Labor Force and Unemployment Rates As indicated in the table below, the 2015 annual average civilian labor force in Muscogee County was 79,038 of which 73,211 were employed and 5,827 were unemployed. The unemployment rate was 7.4 percent. Area Civilian Labor Number Number Unemployment Force Employed Unemployed Rate Muscogee County 79,038 73,211 5, % Georgia 4,770,873 4,490, , % United States 157,129, ,833,417 8,296, % Source: Georgia Department of Labor, Workforce Information & Analysis, Local Area Unemployment Statistics Below are the Not Seasonally Adjusted Labor Force, Employment and Unemployment data in Muscogee County for June, Civilian Labor Force Employment Unemployment Unemployment Rate (%) 79,630 74,0942 5, % Source: Georgia Department of Labor, Workforce Information & Analysis, Local Area Unemployment Statistics Below is the Not Seasonally Adjusted Labor Force, Employment and Unemployment data in Columbus MSA for July, Civilian Labor Force Employment Unemployment Unemployment Rate (%) 125, ,301 8, % Source: Georgia Department of Labor, Workforce Information & Analysis, Local Area Unemployment Statistics -101-

106 Demographic and Economic Information Labor Market Information Top Ten Employers June 2016 Employer Number of Labor Employees Force % Fort Benning 40,000 57% TSYS 4,600 7% Muscogee County School District 4,300 6% Aflac 3,670 5% Columbus Regional Healthcare System 3,180 5% Columbus Consolidated Government 3,130 4% Kia Motors Manufacturing Georgia 3,000 4% St. Francis Hospital Inc. 3,000 4% BlueCross BlueShield of Georgia 1,400 2% Columbus State University 1,360 2% Pratt & Whitney 1,000 1% Synovus Financial Corp % June 2014 Employer Number of Labor Employees Force % Fort Benning 42,000 57% Muscogee County School District 6,000 8% TSYS 4,500 6% Columbus Regional Healthcare System 4,000 5% Aflac 3,700 5% Kia Motors Manufacturing Georgia 3,000 4% Columbus Consolidated Government 2,943 4% Pezold Management 2,200 3% St. Francis Hospital Inc. 2,000 3% BlueCross BlueShield of Georgia 1,400 2% Callaway Gardens 1,200 2% Columbus State University 1,010 1% Source: Greater Columbus Chamber of Commerce June 2015 Employer Number of Labor Employees Force % Fort Benning 40,000 57% TSYS 4,690 7% Muscogee County School District 4,300 6% Aflac 3,670 5% Columbus Regional Healthcare 3,180 System 5% Columbus Consolidated 3,130 Government 4% Kia Motors Manufacturing 3,000 Georgia 4% St. Francis Hospital Inc. 3,000 4% BlueCross BlueShield of 1,650 Georgia 2% Columbus State University 1,360 2% Pratt & Whitney 1,000 1% Synovus Financial Corp % June 2013 Employer Number of Labor Employees Force % Fort Benning 42,000 57% Muscogee County School District 6,000 8% TSYS 4,300 6% Columbus Regional Healthcare System 3,883 5% Aflac 3,700 5% Kia Motors Manufacturing Georgia 3,000 4% Columbus Consolidated Government 2,943 4% Pezold Management 2,200 3% BlueCross BlueShield of Georgia 1,650 2% St. Francis Hospital Inc. 1,445 2% Callaway Gardens 1,200 2% Columbus State University 1,010 1% -102-

107 Demographic and Economic Information Labor Market Information Industries June 2012 Employer Number of Labor Employees Force % Fort Benning 42,000 57% Muscogee County School District 6,000 8% TSYS 4,300 6% Columbus Regional Healthcare System 3,883 5% Aflac 3,700 5% Kia Motors Manufacturing 3,000 4% Columbus Consolidated Government 2,943 4% Pezold Management 2,200 3% St. Francis Hospital Inc. 1,800 2% BlueCross BlueShield of Georgia 1,650 2% Callaway Gardens 1,200 2% Columbus State University 1,010 1% June 2010 Employer Number of Labor Employees Force % Fort Benning 42,000 59% Muscogee County School District 6,000 8% TSYS 4,400 6% Aflac 4,000 6% Columbus Regional Healthcare System 3,883 5% Columbus Consolidated Government 2,943 4% Pezold Management 2,200 3% BlueCross BlueShield of Georgia 1,650 2% St. Francis Hospital Inc. 1,445 2% Callaway Gardens 1,200 2% Columbus State University 1,010 1% June 2011 Employer Number of Labor Employees Force % Fort Benning 42,487 59% Muscogee County School District 6,100 9% TSYS 4,400 6% Aflac 4,000 6% Columbus Regional Healthcare System 3,883 5% Columbus Consolidated Government 2,943 4% Pezold Management 2,200 3% BlueCross BlueShield of Georgia 1,650 2% St. Francis Hospital Inc. 1,445 2% Callaway Gardens 1,200 2% Columbus State University 1,140 2% June 2009 Employer Number of Labor Employees Force % Ft. Benning 42,000 58% Muscogee County School District 6,350 9% TSYS 4,400 6% AFLAC, Inc. 3,450 5% Columbus Regional Healthcare Systems 3,400 5% Columbus Consolidated Government 2,950 4% Blue Cross and Blue Shield of Georgia 1,650 2% Pezold Management Assoc 1,500 2% St. Francis Hospital 1,450 2% Callaway Gardens Resort 1,200 2% Synovus Financial Corporation 1,050 1% Source: Greater Columbus Chamber of Commerce -103-

108 Demographic and Economic Information Labor Market Information - Industries The largest major industry sector was Health Care and Social Assistance, with 18.23%, followed by Accommodation and Food Services with 12.44% and Retail Trade with 12.18%. Major industries in Columbus MSA for the 1st Quarter 2016: Industry Group Establishments Employe % Establishments Employees % Establishments Employees % Establishments Employees % Health Care and Social Assistance , % , % , % , % Accommodation and Food Services , % , % , % , % Retail Trade , % , % , % , % Finance and Insurance 333 9, % , % , % 326 9, % Educational Services 118 7, % 115 7, % 139 9, % 119 8, % Public Administration 49 7, % 49 7, % 84 8, % 51 7, % Manufacturing 143 6, % 139 6, % 157 8, % 135 6, % Admin., Support, Waste Mgmt, Remediation 272 4, % 263 4, % 311 5, % 252 4, % Professional, Scientific & Technical Svc 404 4, % 404 4, % 446 5, % 387 3, % Construction 327 2, % 325 2, % 431 3, % 331 2, % Wholesale Trade 162 2, % 159 2, % 194 2, % 163 2, % Other Services (except Public Admin.) 432 2, % 431 2, % 473 2, % 430 2, % Transportation and Warehousing 107 1, % 105 1, % 123 1, % 99 1, % Real Estate and Rental and Leasing 248 1, % 235 1, % 250 1, % 227 1, % Mgt.of Companies and Enterprises 62 1, % 60 1, % 61 1, % 61 1, % Information 58 1, % 59 1, % 69 1, % 60 1, % Arts, Entertainment, and Recreation % % 51 1, % % Utilities % % % % Mining % % % % Ag & Forestry % % % % Industry Group Establishments Employe % Establishments Employees % Establishments Employees % Establishments Employees % es Health Care and Social Assistance , % , % , % , % Retail Trade , % , % , % , % Accommodation and Food Services , % , % , % , % Education Services 323 9, % 332 9, % 133 8, % 137 8, % Public Administration 114 8, % 132 8, % 53 6, % 53 6, % Finance and Insurance 51 7, % 54 7, % 346 5, % 378 6, % Manufacturing 135 6, % 138 6, % 145 5, % 153 6, % Information 243 4, % 245 4, % 85 5, % 84 5, % Professional, Scientific & Technical Svc 395 4, % 405 4, % 401 4, % 391 4, % Admin., Support, Waste Mgmt, Remediation 349 2, % 346 3, % 257 4, % 368 6, % Construction 174 2, % 166 2, % 362 3, % 390 3, % Wholesale Trade 446 2, % 451 2, % 172 2, % 175 2, % Other Services (except Public Admin.) 91 1, % 233 1, % 457 2, % 499 2, % Transportation and Warehousing 223 1, % 83 1, % 86 1, % 86 1, % Mgt. of Companies and Enterprises 60 1, % 60 1, % 59 1, % 56 1, % Real Estate and Rental and Leasing 65 1, % 71 1, % 235 1, % 256 1, % Arts, Entertainment, and Recreation % % % 51 1, % Utilities % % % % Mining % % % % Ag & Forestry % % % % Source: Georgia Department of Labor, Workforce Information & Analysis, Employment & Wages Unit -104-

109 Operating Information 2016 Employees by Division Administration 03 Finance, Customer and Information Services & Environmental Compliance 83 Strategic Planning, Employee Services & Corporate Relations 10 Plant Operations & MMD 79 Engineering & Field Services 105 Total Employees by Division Last Ten Fiscal Years Fiscal Year Ended Function/Division Administration Division of Finance, Customer Service, Asset Management, Information Services & Environmental Compliance Division of Strategic Planning, Employee Services & Corporate Relations Divison of Plant Operations & MMD Divison of Engineering & Field Services Customer/Employee and Financial Services Customer and Financial Services Water Resource Operations, MMD and Security Water and Environmental Resource and MMD Operations Engineering and Field Services Engineering Environmental Compliance and Communication Information/Environmental Compliance/WQM Information Services 6 6 Operations and Technical Services Total

110 Fiscal Year Operating Information Schedule of Expenses by Function Direct Cost of Providing Water Direct Cost of Treating Sewerage 2006/07 $ 10,498,936 $ 12,494,063 3,033, /08 $ 10,909,568 $ 12,684,028 3,278, /09 $ 11,597,571 $ 13,290,842 3,891, /10 $ 12,579,149 $ 13,422,857 3,298, /11 $ 13,977,459 $ 14,989,597 3,641, /12 $ 15,154,373 $ 15,206,385 4,232, /13 $ 15,659,664 $ 15,699,033 4,179, /14 $ 15,487,769 $ 16,604,649 4,449, /15 $ 15,447,357 $ 17,063,492 4,338, /16 $ 15,633,903 $ 17,051,974 4,835,937 Indirect/ Administrative Operating Total Costs $ $ 26,026,902 $ $ 26,871,834 $ $ 28,779,730 $ $ 29,300,569 $ $ 32,608,468 $ $ 34,592,984 $ $ 35,538,053 $ $ 36,542,234 $ $ 36,849,062 $ $ 37,521,814 NOTE: The expenses listed above exclude depreciation, interest and paying agent fees

111 Operating Information Schedule of Ten Largest Water Customers Fiscal Year Ended 2016 Fiscal Year Ended 2015 Customer Consumption (CCF) Water & Sewer Sales Customer Consumption (CCF) Water & Sewer Sales Usage % Amount % Usage % Amount % Fort Benning 447, % $ 7,036, % Fort Benning 425, % $ 7,026, % *Harris County 290, % 631, % *Harris County 335, % 695, % Denim North America 130, % 524, % Eastman Kodak 231, % 520, % Eastman Kodak Compan 118, % 497, % Denim North America 103, % 452, % Pratt Whitney 89, % 305, % Hostess Brands LLC 85, % 349, % DMI Columbus Inc. 71, % 218, % Jack T. Rutledge 80, % 305, % Jack T. Rutledge 58, % 231, % Mid American Apt. Co 73, % 266, % Hostess Brands 55, % 229, % Pratt Whitney 72, % 245, % Muscogee County Jail 50, % 197, % DMI Columbus Inc. 67, % 160, % Kemira Chemical INC 44, % 185, % Midtown Medical Cent 61, % 242, % Subtotal 1,357, % 10,059,325 18% Subtotal 1,535,299 12% 10,265,043 20% Balance from all others 10,125,272 88% 47,316,530 82% Balance from all others 10,971,442 88% 42,851,922 81% Total w/ft. Benning 11,482, % $ 57,375, % Total w/ft. Benning 12,506, % $ 53,116, % *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) Fiscal Year Ended 2014 Fiscal Year Ended 2013 Customer Consumption (CCF) Water & Sewer Sales Customer Consumption (CCF) Water & Sewer Sales Usage % Amount % Usage % Amount % Fort Benning 818, % $ 6,901, % Fort Benning 1,551, % $ 6,619, % *Harris County 290, % 603, % *Harris County 286, % 546, % Eastman Kodak 128, % 487, % Eastman Kodak 129, % 472, % Denim North America 120, % 422, % Denim North America 125, % 428, % Pratt Whitney 91, % 250, % Pratt Whitney 100, % 278, % Muscogee County Jail 78, % 287, % Jack T. Rutledge 85, % 300, % Midtown Medical Center 75, % 276, % Midtown Medical Cent 68, % 223, % DMI Columbus LLC 55, % 158, % DMI Columbus LLC 62, % 149, % Jack T. Rutledge 54, % 192, % Kemira 50, % 184, % Kemira Chemicals INC 39, % 150, % Muscogee County Jail 49, % 173, % Subtotal 1,753,243 15% 9,730,123 19% Subtotal 2,510,319 18% 9,378,294 16% Balance from all others 10,073,250 85% 42,189,055 81% Balance from all others 11,143,293 82% 48,485,958 84% Total w/ft. Benning 11,826, % $ 51,919, % Total w/ft. Benning 13,653, % $ 57,864, % *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) Fiscal Year Ended 2012 Fiscal Year Ended 2011 Customer Consumption (CCF) Water & Sewer Sales Consumption (CCF) Water & Sewer Sales Usage % Amount % Customer Usage % Amount % Fort Benning 2,306, % $ 6,619, % Fort Benning 1,964, % $ 6,488, % *Harris County 253, % 476, % *Harris County 432, % 778, % Eastman Kodak 164, % 539, % Eastman Kodak 189, % 663, % DMI Columbus LLC 154, % 257, % Denim North America 143, % 560, % Denim North America 122, % 419, % Mid American Apt. Corp. 105, % 350, % Pratt Whitney 96, % 264, % Pratt Whitney 87, % 655, % Mid American Apt. Corp 84, % 257, % The Medical Center 81, % 237, % The Medical Center 81, % 252, % Muscogee County Jail 64, % 218, % Muscogee County Jail 74, % 250, % Kemira 60, % 216, % Kemira 62, % 224, % Interstate Brands 58, % 230, % Subtotal 3,400,103 22% 9,563,161 19% Subtotal 3,188,213 21% 10,400,448 20% Balance from all others 11,737,776 78% 42,987,478 82% Balance from all others 11,747,201 79% 42,071,118 80% Total w/ft. Benning 15,137, % $ 52,550, % Total w/ft. Benning 14,935, % $ 52,471, % * No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) Fiscal Year Ended 2010 Fiscal Year Ended 2009 Consumption (CCF) Water & Sewer Sales Consumption (CCF) Water & Sewer Sales Customer Usage % Amount % Customer Usage % Amount % Fort Benning 1,996, % $ 6,094, % Fort Benning 3,943, % $ 6,094, % *Harris County 392, % 667, % *Harris County 451, % 729, % Denim North America 187, % 612, % Denim North America 156, % 537, % Eastman Kodak 174, % 587, % Eastman Kodak 121, % 405, % Mid American Apt. Corp. 95, % 299, % Mid American Apt. Corp. 119, % 357, % Pratt Whitney 76, % 211, % The Medical Center 97, % 260, % The Medical Center 74, % 200, % Pratt Whitney 72, % 199, % Jack T Rutledge 51, % 164, % Kemira 66, % 198, % Kemira 48, % 161, % Jack T Rutledge 55, % 171, % *Talbot County 29, % 67, % Muscogee County Jail 53, % 162, % Subtotal 3,125,120 23% 9,066,753 20% Subtotal 5,138,100 39% 9,116,906 20% Balance from all others 10,517,170 77% 36,080,298 80% Balance from all others 7,931,413 61% 36,030,145 80% Total w/ft. Benning 13,642, % $ 45,147, % Total w/ft. Benning 13,069, % $ 45,147, % *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) *No Sewer Charge - (CCF = Hundred Cubic Feet = 750 Gallons) -107-

112 Operating Information Available Service Installations Last Ten Fiscal Years Fiscal Year Residential Commercial & Industrial Total /,,, 2005/06 63,510 8,335 71, /07 63,951 8,258 72, /08 64,331 8,273 72, /09 64,713 8,674 73, /10 65,066 8,792 73, /11 66,812 7,568 74, /12 66,159 8,270 74, /13 66,196 9,029 75, /14 66,808 8,909 75, /15 67,333 8,986 76, ,279 8,374 76,653 * *65,847 active accounts Comparision of Available Service Installations Fiscal Year Ended June 25, 2016 Commercial & Industrial 11% Residential 89% Residential Commercial & Industrial -108-

113 Operating Information Capital Assets Indicators of Use & Volume Water Information: Available Water Services 73,858 74,380 74,429 75,225 75,717 76,319 76,653 Water Main Miles 1,336 1,351 1,359 1,361 1,364 1,383 1,405 Average Daily Consumption (MGD) Maximum Daily Design (MGD) Total Water Billed Gallons 11,573,428 12,056,505 11,523,399 10,479,683 9,205,649 9,727,558 8,877,241 Wastewater Information: Available Wastewater Services 59,263 59,306 59,666 59,803 60,303 60,987 60,295 Sewer Main Miles 1,135 1,153 1,153 1,154 1,159 1,166 1,187 Sewer Pumping Stations Average Daily Flow (MGD) Total wastewater gallons 14,276,350 8,975,000 9,374,580 9,400,185 12,712,385 11,519,400 12,012,670 MGD=Million Gallons Day Water Customers and Volumetric Consumption 77,000 14,000,000 76,500 76,000 12,000,000 75,500 75,000 10,000,000 74,500 74,000 73,500 73,000 72,500 73,858 74,380 74,429 75,225 75,717 76,319 76,653 8,000,000 6,000,000 4,000,000 72, ,000,000 Available Water Services Total Water Billed Gallons Wastewater Customers and Volumetric Consumption 61,500 16,000,000 61,000 14,000,000 60,500 12,000,000 60,000 10,000,000 59,500 59,000 58,500 59,263 59,306 59,666 59,803 60,303 60,987 60,295 8,000,000 6,000,000 4,000,000 58, ,000,000 Available Wastewater Services Total wastewater gallons -109-