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Agenda 01/26/2021 Item #16C 1 (Contract #20-7792 Financial Consulting Services - Raftelis Financial Consultants, Inc.)16.C.1 01/26/2021 EXECUTIVE SUMMARY Recommendation to award an Agreement for Request for Proposal ("REP") No. 20-7792, "Financial Consulting Services," to Raftelis Financial Consultants, Inc. OBJECTIVE: To procure financial consulting services to perform user rate studies, impact fee rate studies and other types of financial analyses. CONSIDERATIONS: Financial consulting services are primarily utilized by the Public Utilities Division for user rate and impact fee studies to ensure rates and fees are set to generate sufficient revenues to recover the costs to operate the utility, fund the capital repair and rehabilitation program to sustain the utility asset base, and meet all debt service obligations. The Consultant may be used for other financial analyses including, but not limited to, solid waste rate studies, benchmarking studies, business valuations, financial feasibility studies, and strategic planning. Use of the Consultant provides the utility with broad expertise and legal nexus for the appropriate setting of fee structures. This Agreement will provide staff with accessibility to a stable and reliable source of financial consulting services. Request for Proposal (RFP) #20-7792, "Financial Consulting Services" was publicly advertised on August 4, 2020. A total of 26,433 firms were successfully invited through the County's online bidding system. The bid package was downloaded by 168 firms. The solicitation closed on October 7, 2020 after it was extended by a month to allow for additional competition. Staff contacted several firms that viewed the solicitation but did not submit a proposal. The firms advised that they do not have the qualifications required by the solicitation. Two proposals were received by the closing date of October 7, 2020. One proposal was deemed non -responsive and non -responsible. A Selection Committee reviewed the one proposal that was deemed responsive and responsible, submitted by Raftelis Financial Consultants, Inc., and met on October 27, 2020 to score and rank this remaining firm. By consensus of the Committee, Raftelis Financial Consultants, Inc. was found to be satisfactory. Staff research found that the vendor provided comparable pricing to Sarasota County in a contract awarded in October 2020. Pricing was negotiated to be held for the lifetime of the contract. The negotiated Agreement terms are for an initial three years with two, one-year renewal options. Any purchase orders issued under Agreement #14-6353 prior to the expiration of the Agreement period will survive and remain subject to the terms and conditions of that Agreement until the completion or termination of the purchase order(s). FISCAL IMPACT: Annual expenditures are not expected to exceed $662,000 but will be dependent on the number and scope of the proposals. The funding for each proposal under the approved Agreement will come from each user Department/Division. Public Utilities Department sources of funds are anticipated to be Water User Fees Fund (412), Sewer User Fees Fund (414), County Water/Sewer Operating Fund (408) and Solid and Hazardous Waste Disposal Fund (470). Funding is available in and consistent with the FY2021 budget approved by the Board of County Commissioners on September 17, 2020. Proposals made in the fiscal years beyond 2021 will be consistent with future budgets. GROWTH MANAGEMENT IMPACT: There are no impacts on the Growth Management Plan. LEGAL CONSIDERATIONS: This item is approved as to form and legality, and requires majority vote for Board approval. -SAA RECOMMENDATION: To award an Agreement for Request for Proposal No. 20-7792, "Financial Consulting Services," to Raftelis Financial Consultants, Inc., and to authorize the Chairman to sign the Packet Pg. 568 O1/26/2021 16.C.1 attached Agreement. Prepared by: Amia Curry, Financial and Operational Support Manager, Public Utilities Operation Support Joseph Bellone, Director, Public Utilities Financial & Operational Support ATTACHMENT(S) 1.20-7792 Final Ranking (PDF) 2.20-7792 NORA (PDF) 3.20-7792 RaftelisFinancial_Insurance_12-29-20 (PDF) 4.20-7792 RaftelisFinancialConsultants VendorSigned (PDF) 5.20-7792 Solicitation (PDF) 6. [Linked] Raftelis_Proposal (PDF) Packet Pg. 569 16.C.1 01/26/2021 COLLIER COUNTY Board of County Commissioners Item Number: 16.C.1 Doe ID: 14455 Item Summary: Recommendation to award an Agreement for Request for Proposal ("RFP") No. 20-7792, "Financial Consulting Services," to Raftelis Financial Consultants, Inc. Meeting Date: 01/26/2021 Prepared by: Title: Manager - Operations Support - PUD — Public Utilities Operations Support Name: AmiaMarie Curry 12/29/2020 12:22 PM Submitted by: Title: Division Director - Operations Support — Public Utilities Operations Support Name: Joseph Bellone 12/29/2020 12:22 PM Approved By: Review: Public Utilities Operations Support Donna Deeter Additional Reviewer Public Utilities Operations Support Joseph Bellone Additional Reviewer Procurement Services Ana Reynoso Level 1 Purchasing Gatekeeper Procurement Services Sue Zimmerman Additional Reviewer Procurement Services Catherine Bigelow Additional Reviewer Procurement Services Deborah McCormick Additional Reviewer Public Utilities Department Drew Cody Level 1 Division Reviewer Public Utilities Department George Yilmaz Level 2 Division Administrator Review Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Budget and Management Office Ed Finn Additional Reviewer County Manager's Office Dan Rodriguez Level 4 County Manager Review Board of County Commissioners MaryJo Brock Meeting Pending Completed 12/29/2020 12:30 PM Completed 12/29/2020 1:11 PM Completed 12/30/2020 1:20 PM Completed 12/30/2020 3:25 PM Completed 12/31/2020 8:05 AM Completed 01/04/2021 9:37 AM Completed 01/04/2021 10:42 AM Completed 01/05/2021 8:28 AM Completed 01/07/2021 8:40 AM Completed 01/08/2021 10:50 AM Completed 01/13/2021 12:53 PM Completed 01/13/2021 3:15 PM 01/26/2021 9:00 AM Packet Pg. 570 16.C.1.a Corley cauxty Administrative Services Division Procurement Services RFP #: 20-7792 Title: FINANCIAL CONSULTING SERVICES Selection Committee Final Ranking IIonka Name of Firm Rose Burke Bart Zautcke Tara Castillo Ian Barnwell Total Scores Washburn Raftelis Financial Consultants, Inc j 85j 83j 94j 92j 95j 449.00 Procurement Professional IDeborah McCormick Page 1 of 1 Packet Pg. 571 DocuSign Envelope ID: 34F7DB61-B374-4F86-87A1-75871D471591 ',, 16.C.1.b 00111'ev County Administrative Services Department Procurement Services Division Notice of Recommended Award Solicitation: 20-7792 Title: Financial Consulting Service Due Date and Time: October 7, 2020 at 10:00 a.m. est. Respondents: Company Name City County State Final Ranking Responsive/Responsible Raftelis Financial Consultants, Inc Maitland Orange FL 1 Yes/Yes Aquadratic LLP Surfside Miami- Dade FL Not Ranked No/No Utilized Local Vendor Preference: Yes 0 No - Recommended Vendors) For Award: On August 4, 2020 the Procurement Services Division released notices of Request for Proposals 20-7792 Financial Consulting Services. 26,433 firms were notified, 168 firms viewed the bid information and two (2) proposals was received by the due date of October 7, 2020. The solicitation was extended an additional month to allow for additional competition. Aquadratic LLP was deemed non-responsive/non-responsible for not providing a proposal or any of the required forms. The selection committee convened on October 27, 2020, to score and rank the remaining firm, Raftelis Financial Consultant, Inc. based on the criteria outlined in the solicitation. Staff contacted firms that viewed the bid information but did not respond to the solicitation. They stated they did not have the required certifications. Award is recommended to Raftelis Financial Consultants, Inc. Contract Driven = Purchase Order Driven 0 Required Signatures DocuSigned by: Project Manager: Amia Curry I ft— ''—'rl 11/20/2020 DocuSigned by: Procurement Strategist: Deborah McCormick G 11/20/2020 Services Director: $-� H 11/23/2020 Sandra Herrera Date Packet Pg. 572 Client#: 1722483 RAFTEFIN DATE (M 16.C.1.c I ACORD.. CERTIFICATE OF LIABILITY INSURANCE 112/28/2020 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer any rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT NAME: Linda Rolfe Cameron M Harris & Co, LLC PHONE gg0-265-5804 FAX A/C, No, Ext : A/C, No): Div USI Ins E-MAIL linda.rolfe@usi.com 6100 Fairview Road Ste 1400 INSURER(S) AFFORDING COVERAGE NAIC # Charlotte, INC 28210 National Fire Insurance Co of Hartford 20478 INSURED Raftelis Financial Consultants, Inc. 227 West Trade Street, Ste. 1400 Charlotte, NC 28202 INSURER A . INSURER B : Continental Insurance Company 35289 INSURER C : American Casualty Company of Reading PA 20427 INSURER D: Continental Casualty Company 20443 INSURER E : INSURER F : COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. LT R LTR TYPE OF INSURANCE ADDL INSR SUBR WVD POLICY NUMBER POLICY EFF MM/DD/YYYY POLICY EXP MM/DD/YYYY LIMITS A X COMMERCIAL GENERAL LIABILITY X 6076000011 1/21/2020 01/21/2021 EACH OCCURRENCE $1,000,000 CLAIMS -MADE � OCCUR PREMISES ERENTED .0 nce $ 500,000 MED EXP (Any one person) $15,000 PERSONAL & ADV INJURY $1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 R- POLICYFI JECT LOC PRODUCTS - COMP/OPAGG $2,000,000 $ OTHER: D AUTOMOBILE LIABILITY 6076000025 1/21/2020 01/21/2021 CM EaaccideDnt)SINGLELIMIT $1'000,000 BODILY INJURY (Per person) $ ANY AUTO OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY (Per accident) $ PROPERTY DAMAGE Per accident $ X HIRED NON -OWNED AUTOS ONLY X AUTOS ONLY B X UMBRELLA LIAB X OCCUR 6076000039 1/21/2020 01/21/2021 EACH OCCURRENCE s5,000,000 AGGREGATE s5,000,000 EXCESS LIAB CLAIMS -MADE DED X RETENTION $10000 $ C WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? N (Mandatory in NH) N / A 6076305637 6076000042 1/21/2020 1/21/2020 01/21/2021 01/21/2021 x PER OTH- TAT TE ER E.L. EACH ACCIDENT $1,000,000 E.L. DISEASE - EA EMPLOYEE $1,000,000 If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE - POLICY LIMIT $1,000,000 D Prof. Liability 652071235 1/21/2020 01/21/2021 $5,000,000 Occurrence $5,000,000 Aggregate DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) RE: #20-7792, Financial Consulting Services. Collier County Board of County Commissioners is included as additional insured with respect to General Liability and Automobile Liability policies and umbrella will follow form. The coverage afforded to the additional insured is on a primary and non contributory basis for General Liability, Business Auto and Umbrella if required by written contract. 30 day notice of cancellation will be given except for non-payment of premium will be 10 days if required by written contract. CERTIFICATE HOLDER CANCELLATION Collier County Board of County Commissioners 3295 Tamiami Trail E. Naples, FL 34112 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE © 1988-2015 ACORD CORPORATION. All ri hts reserved. ACORD 25 (2016/03) 1 of 1 The ACORD name and logo are registered marks of ACORD Packet Pg. 573 #S30755381 /M27719186 SQAZP This page has been left blank intentionally. 16.C.1.c L 3 a L O U N N V d U) O) C 7 N C O U c O c LL LO LO N ti ti O N C N E t V r r Q Packet Pg. 574 16.C.1.d FIXED FEE PROFESSIONAL SERVICE AGREEMENT # 20-7792 for Financial Consulting Services THIS AGREEMENT, made and entered into on this day of 20 21 , by and between R_afteiis Financial Consultants, Inc. authorized to do business in the State of Florida, whose business address is 227 West Trade Street, Suite 1400, Charlotte, NC 28202 , (the "Contractor") and Collier County, a political subdivision of the State of Florida, (the "County"): WITNESSETH: The Agreement shall be for a three ( 3 ) year period, commencing W upon the date of Board approval ten- - - and terminating three ( 3 ) year(s) from that date or until all outstanding Purchase Order(s) issued prior to the expiration of the Agreement period have been completed or terminated. The County may, at its discretion and with the consent of the Contractor, renew the Agreement under all of the terms and conditions contained in this Agreement for two (2) additional one (1 ) year(s) periods. The County shall give the Contractor written notice of the County's intention to renew the Agreement term prior to the end of the Agreement term then in effect. The County Manager, or his designee, may, at his discretion, extend the Agreement under all of the terms and conditions contained in this Agreement for up to one hundred and eighty (180) days. The County Manager, or his designee, shall give the Contractor written notice of the County's intention to extend the Agreement term prior to the end of the Agreement term then in effect. 2. COMMENCEMENT OF SERVICES. The Contractor shall commence the work upon issuance of a ❑■ Purchase Order ❑ 3. STATEMENT OF WORK. The Contractor shall provide services in accordance with the terms and conditions of ❑■ Request for Proposal (RI=P) ❑ Invitation to Rod ❑ Other -f # 20-7732 including all Attachment(s), Exhibit(s) and Addenda and the Contractor's proposal referred to herein and made an integral part of this Agreement. 0 The Contractor shall also provide services in accordance with Exhibit A - Scope of Services attached hereto. Page 1 of' 15 Fixed Price Professional Service Agreement #2017.001 (Ver 1) Packet Pg. 575 16.C.1.d 3.1 This Agreement contains the entire understanding between the parties and any modifications to this Agreement shall be mutually agreed upon in writing by the Parties, in compliance with the County's Procurement Ordinance, as amended, and Procurement Procedures in effect at the time such services are authorized. 3.2 The execution of this Agreement shall not be a commitment to the Contractor to order any minimum or maximum amount. The County shall order items/services as required but makes no guarantee as to the quantity, number, type or distribution of items/services that will be ordered or required by this Agreement. 4. THE AGREEMENT SUM. The County shall pay the Contractor for the performance of this Agreement based on Exhibit B- Fee Schedule, attached hereto and the price methodology as defined in Section 4.1. Payment will be made upon receipt of a proper invoice and upon approval by the County's Contract Administrative Agent/Project Manager, and in compliance with Chapter 218, Fla. Stats., otherwise known as the "Local Government Prompt Payment Act". 4.1 Price Methodology (as selected below): F� Lump Sum (Fixed Price); A firm fixed-tota te-ttae-satisfacta--of-th r price contract is aut or+zed: ❑■ Time and Materials: The County agrees to pay the contractor for the amount of labor time spent by the contractor's employees and subcontractors to perform the work (number of hours times hourly rate), and for materials and equipment used in the project (cost of materials plus the contractor's markup). This methodology is generally used in projects in which it is not possible to accurately estimate the size of the project, or when it is expected that the project requirements would most likely change. As a general business practice, these contracts include back-up documentation of costs; invoices would include number of hours worked and billing rate by position (and not company (or subcontractor) timekeeping or payroll records), material or equipment invoices, and other reimbursable documentation for the project, costs, in tuding or, materials, equipment. -over . e-product a service-d -perper-package--or cartop, etr..)-. The invoice must identify the wpit price apd the number f units received (no contradar-inventory or cost verification). Page 2 of 15 Fixed Price Professional Service Agreement #2017-001 (Ver.2) Packet Pg. 576 16.C.1.d 4.2 Any County agency may obtain services under this Agreement, provided sufficient funds are included in their budget(s). 4.3 Payments will be made for services furnished, delivered, and accepted, upon receipt and approval of invoices submitted on the date of services or within six (6) months after completion of the Agreement. Any untimely submission of invoices beyond the specified deadline period is subject to non-payment under the legal doctrine of "laches" as untimely submitted. Time shall be deemed of the essence with respect to the timely submission of invoices under this Agreement. 4.4 ❑0 Travel and Reimbursable Expenses: Travel and Reimbursable Expenses must be approved in advance in writing by the County. Travel expenses shall be reimbursed as per Section 112.061 Fla. Stats. Reimbursements shall be at the following rates: Mileage $0.44.5 per mile Breakfast $6.00 Lunch $11.00 Dinner $19,00 Airfare Actual ticket cost limited to tourist or coach class fare Rental car Actual rental cost limited to compact or standard -size vehicles Lodging Actual cost of lodging at single occupancy rate with a cap of no more than $150.00 per night Parking Actual cost of parking Taxi or Airport Limousine Actual cost of either taxi or airport limousine Reimbursable items other than travel expenses shall be limited to the following: telephone long-distance charges, fax charges, photocopying charges and postage. Reimbursable items will be paid only after Contractor has provided all receipts. Contractor shall be responsible for all other costs and expenses associated with activities and solicitations undertaken pursuant to this Agreement. 5. SALES TAX. Contractor shall pay all sales, consumer, use and other similar taxes associated with the Work or portions thereof, which are applicable during the performance of the Work. Collier County, Florida as a political subdivision of the State of Florida, is exempt from the payment of Florida sales tax to its vendors under Chapter 212, Florida Statutes, Certificate of Exemption # 85-8015966531 C. Page 3 of 15 Fixed Price Professional Service Agreement 62017.001 (Vcr l ) Packet Pg. 577 16.C.1.d 6, NOTICES. All notices from the County to the Contractor shall be deemed duly served if mailed or emailed to the Contractor at the following: Company Name: Address: Raftelis Financial Consultants, Inc. 341 N, Maitland Avenue, Suite 300 Maitland, FL 32751 Authorized Agent: Peiffer Brandt, President Attention Name & Title: Robert J Ori, Executive Vice President Telephone: (0: (407) 628-2600/ M: (321) 436-4121 E-Mail(s): Rori@raftelis.com All Notices from the Contractor to the County shall be deemed duly served if mailed or emailed to the County to: Board of County Commissioners for Collier County, Florida Division Director: Joseph Bellone Division Name: Operations Support Division Address: 3339 Tamiami Trail East, Suite 301 Naples, Florida 34112 Administrative Agent/PM: Amia Curry, Manager Telephone: (239) 252-6028 E-Mail(s): Amia.Curry@colliercountyfl.gov The Contractor and the County may change the above mailing address at any time upon giving the other party written notification. All notices under this Agreement must be in writing. 7. NO PARTNERSHIP. Nothing herein contained shall create or be construed as creating a partnership between the County and the Contractor or to constitute the Contractor as an agent of the County. 8, PERMITS: LICENSES: TAXES. In compliance with Section 218.80, F.S., all permits necessary for the prosecution of the Work shall be obtained by the Contractor. The County will not be obligated to pay for any permits obtained by Subcontractors. Payment for all such permits issued by the County shall be processed internally by the County. All non -County permits necessary for the prosecution of the Work shall be procured and paid for by the Contractor. The Contractor shall also be solely responsible for payment of any and all taxes levied on the Contractor. In addition, the Contractor shall comply with all rules, regulations and laws of Collier County, the State of Florida, or the U. S. Government now in force or hereafter adopted. The Contractor agrees to comply with all laws governing the responsibility of an employer with respect to persons employed by the Contractor. Page 4 of 15 Fixed Price Professional Service Agreement 02017-001 (Ver.2) Packet Pg. 578 16.C.1.d 9. NO IMPROPER USE. The Contractor will not use, nor suffer or permit any person to use in any manner whatsoever, County facilities for any improper, immoral or offensive purpose, or for any purpose in violation of any federal, state, county or municipal ordinance, rule, order or regulation, or of any governmental rule or regulation now in effect or hereafter enacted or adopted. In the event of such violation by the Contractor or if the County or its authorized representative shall deem any conduct on the part of the Contractor to be objectionable or improper, the County shall have the right to suspend the Agreement of the Contractor, Should the Contractor fail to correct any such violation, conduct, or practice to the satisfaction of the County within twenty-four (24) hours after receiving notice of such violation, conduct, or practice, such suspension to continue until the violation is cured. The Contractor further agrees not to commence operation during the suspension period until the violation has been corrected to the satisfaction of the County. 10. TERMINATION. Should the Contractor be found to have failed to perform his services in a manner satisfactory to the County as per this Agreement, the County may terminate said Agreement for cause; further the County may terminate this Agreement for convenience with a thirty (30) day written notice. The County shall be the sole judge of non-performance. In the event that the County terminates this Agreement, Contractor's recovery against the County shall be limited to that portion of the Agreement Amount earned through the date of termination. The Contractor shall not be entitled to any other or further recovery against the County, including, but not limited to, any damages or any anticipated profit on portions of the services not performed. 11. NO DISCRIMINATION. The Contractor agrees that there shall be no discrimination as to race, sex, color, creed or national origin. 12. INSURANCE. The Contractor shall provide insurance as follows; A. ■❑ Commercial General Liability: Coverage shall have minimum limits of $1,000,000 Per Occurrence, $ 2,000,000 aggregate for Bodily Injury Liability and Property Damage Liability. This shall include Premises and Operations; Independent Contractors; Products and Completed Operations and Contractual Liability. B. � Business Auto Liability: Coverage shall have minimum limits of $ 500,000 Per Occurrence, Combined Single Limit for Bodily Injury Liability and Property Damage Liability. This shall include: Owned Vehicles, Hired and Non - Owned Vehicles and Employee Non -Ownership. C. 7 Workers' Compensation: Insurance covering all employees meeting Statutory Limits in compliance with the applicable state and federal laws. k'age 5 of 15 Fixed Price Professional Service Agreement #12017-001 (Ver.2) Packet Pg. 579 16.C.1.d The coverage must include Employers' Liability with a minimum limit of $ 500,000 for each accident. D, Q Professional Liability Shall be maintained by the Contractor to ensure its legal liability for claims arising out of the performance of professional services under this Agreement. Contractor waives its right of recovery against County as to any claims under this insurance. Such insurance shall have limits of not less than $ 2,000,000 each claim and aggregate. E= ❑ Cyber Liabiili = i-love--minam+am limits of $ per essurrence. G-. ❑ WatmF #t'Coverage shall have--minknurn-limits of per occurrence-. ■ . cr - �' °- - - e as - - -' = -�� -'- ❑. ❑ Special Re uirements: Collier County Board of County Commissioners, OR, Board of County Commissioners in Collier County, OR, Collier County Government shall be listed as the Certificate Holder and included as an "Additional Insured" on the Insurance Certificate for Commercial General Liability where required. This insurance shall be primary and non-contributory with respect to any other insurance maintained by, or available for the benefit of, the Additional Insured and the Contractor's policy shall be endorsed accordingly. Current, valid insurance policies meeting the requirement herein identified shall be maintained by Contractor during the duration of this Agreement. The Contractor shall provide County with certificates of insurance meeting the required insurance provisions. Renewal certificates shall be sent to the County thirty (30) days prior to any expiration date. Coverage afforded under the policies will not be canceled or allowed to expire until the greater of: thirty (30) days prior written notice, or in accordance with policy provisions. Contractor shall also notify County, in a like manner, within twenty-four (24) hours after receipt, of any notices of expiration, cancellation, non -renewal or material change in coverage or limits received by Contractor from its insurer, and nothing contained herein shall relieve Contractor of this requirement to provide notice. Page 6 of I5 Fixed Price Professional Service Agreement #2017-001 (Ver.2) Packet Pg. 580 16.C.1.d Contractor shall ensure that all subcontractors comply with the same insurance requirements that the Contractor is required to meet. 13. INDEMNIFICATION. To the maximum extent permitted by Florida law, the Contractor shall defend, indemnify and hold harmless Collier County, its officers and employees from any and all liabilities, damages, losses and costs, including, but not limited to, reasonable attorneys' fees and paralegals' fees, whether resulting from any claimed breach of this Agreement by Contractor, any statutory or regulatory violations, or from personal injury, property damage, direct or consequential damages, or economic loss, to the extent caused by the negligence, recklessness, or intentionally wrongful conduct of the Contractor or anyone employed or utilized by the Contractor in the performance of this Agreement. This indemnification obligation shall not be construed to negate, abridge or reduce any other rights or remedies which otherwise may be available to an indemnified party or person described in this paragraph. This section does not pertain to any incident arising from the sole negligence of Collier County. 13,1 The duty to defend under this Article 13 is independent and separate from the duty to indemnify, and the duty to defend exists regardless of any ultimate liability of the Contractor, County and any indemnified party. The duty to defend arises immediately upon presentation of a claim by any party and written notice of such claim being provided to Contractor. Contractor's obligation to indemnify and defend under this Article 13 will survive the expiration or earlier termination of this Agreement until it is determined by final judgment that an action against the County or an indemnified party for the matter indemnified hereunder is fully and finally barred by the applicable statute of limitations. 14. AGREEMENT ADMINISTRATION. This Agreement shall be administered on behalf of the County by the Public Utilities Operations Support Division 15. CONFLICT OF INTEREST. Contractor represents that it presently has no interest and shall acquire no interest, either direct or indirect, which would conflict in any manner with the performance of services required hereunder. Contractor further represents that no persons having any such interest shall be employed to perform those services. 16. COMPONENT PARTS OF THIS AGREEMENT. This Agreement consists of the following component parts, all of which are as fully a part of the Agreement as if herein set out verbatim: Contractor's Proposal, Insurance Certificate(s), ❑■ Exhibit A Scope of Services, Exhibit B Fee Schedule, ❑■ RFP1 ❑ IT&❑ f# 20-7792 including Exhibits, Attachments and Addenda/Addendum, ❑ Subsequent quotes and ❑ Other i=x#i At went Page 7 of 15 Fixed Price Professional Service Agreement 42017-001 (Ver 2) Packet Pg. 581 16.C.1.d 17. APPLICABILITY. Sections corresponding to any checked box (0) will expressly apply to the terms of this Agreement. 18. SUBJECT TO APPROPRIATION. It is further understood and agreed by and between the parties herein that this Agreement is subject to appropriation by the Board of County Commissioners, 19, PROHIBITION OF GIFTS TO COUNTY EMPLOYEES. No organization or individual shall offer or give, either directly or indirectly, any favor, gift, loan, fee, service or other item of value to any County employee, as set forth in Chapter 112, Part III, Florida Statutes, Collier County Ethics Ordinance No. 2004-05, as amended, and County Administrative Procedure 5311. Violation of this provision may result in one or more of the following consequences: a. Prohibition by the individual, firm, and/or any employee of the firm from contact with County staff for a specified period of time; b. Prohibition by the individual and/or firm from doing business with the County for a specified period of time, including but not limited to: submitting bids, RFP, and/or quotes; and, c. immediate termination of any Agreement held by the individual and/or firm for cause. 20. COMPLIANCE WITH LAWS. By executing and entering into this Agreement, the Contractor is formally acknowledging without exception or stipulation that it agrees to comply, at its own expense, with all federal, state and local laws, codes, statutes, ordinances, rules, regulations and requirements applicable to this Agreement, including but not limited to those dealing with the Immigration Reform and Control Act of 1986 as located at 8 U.S.C. 1324, et seq. and regulations relating thereto, as either may be amended; taxation, workers' compensation, equal employment and safety including, but not limited to, the Trench Safety Act, Chapter 553, Florida Statutes, and the Florida Public Records Law Chapter 119, including specifically those contractual requirements at F.S. § 119.0701(2)(a)-(b) as stated as follows: IF THE CONTRACTOR HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THE CONTRACTOR'S DUTY TO PROVIDE PUBLIC RECORDS RELATING TO THIS CONTRACT, CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT: Communication and Customer Relations Division 3299 Tamiami Trail East, Suite 102 Naples, FL 34112-5746 Telephone: (239) 252-8999 The Contractor must specifically comply with the Florida Public Records Law to: Keep and maintain public records required by the public agency to perform the service. Page 8 of 15 Nixed Price Professional Service Agreemem #2017-001 (Ver.2) Packet Pg. 582 16.C.1.d 2. Upon request from the public agency's custodian of public records, provide the public agency with a copy of the requested records or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided in this chapter or as otherwise provided by law. 3. Ensure that public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law for the duration of the contract term and following completion of the contract if the Contractor does not transfer the records to the public agency. 4. Upon completion of the contract, transfer, at no cost, to the public agency all public records in possession of the Contractor or keep and maintain public records required by the public agency to perform the service. If the Contractor transfers all public records to the public agency upon completion of the contract, the Contractor shall destroy any duplicate public records that are exempt or confidential and exempt from public records disclosure requirements. If the Contractor keeps and maintains public records upon completion of the contract, the Contractor shall meet all applicable requirements for retaining public records. All records stored electronically must be provided to the public agency, upon request from the public agency's custodian of public records, in a format that is compatible with the information technology systems of the public agency. If Contractor observes that the Contract Documents are at variance therewith, it shall promptly notify the County in writing. Failure by the Contractor to comply with the laws referenced herein shall constitute a breach of this Agreement and the County shall have the discretion to unilaterally terminate this Agreement immediately. 21. OFFER EXTENDED TO OTHER GOVERNMENTAL ENTITIES. Collier County encourages and agrees to the successful Contractor extending the pricing, terms and conditions of this solicitation or resultant Agreement to other governmental entities at the discretion of the successful Contractor. 22. AGREEMENT TERMS. If any portion of this Agreement is held to be void, invalid, or otherwise unenforceable, in whole or in part, the remaining portion of this Agreement shall remain in effect. 23. ADDITIONAL ITEMS/SERVICES. Additional items and/or services may be added to this Agreement in compliance with the Procurement Ordinance, as amended, and Procurement Procedures. 24. DISPUTE RESOLUTION. Prior to the initiation of any action or proceeding permitted by this Agreement to resolve disputes between the parties, the parties shall make a good faith effort to resolve any such disputes by negotiation. The negotiation shall be attended by representatives of Contractor with full decision -making authority and by County's staff person who would make the presentation of any settlement reached during negotiations to County for approval. Failing resolution, and prior to the Page 9 of 15 Fixed Price Professional Service Agreement 42017-001 (Ver.2) Packet Pg. 583 16.C.1.d commencement of depositions in any litigation between the parties arising out of this Agreement, the parties shall attempt to resolve the dispute through Mediation before an agreed -upon Circuit Court Mediator certified by the State of Florida. The mediation shall be attended by representatives of Contractor with full decision -making authority and by County's staff person who would make the presentation of any settlement reached at mediation to County's board for approval. Should either party fail to submit to mediation as required hereunder, the other party may obtain a court order requiring mediation under section 44.102, Fla. Stat. 25. VENUE. Any suit or action brought by either party to this Agreement against the other party relating to or arising out of this Agreement must be brought in the appropriate federal or state courts in Collier County, Florida, which courts have sole and exclusive jurisdiction on all such matters, 26. ■❑ KEY PERSONNEL. The Contractor's personnel and management to be utilized for this project shall be knowledgeable in their areas of expertise. The County reserves the right to perform investigations as may be deemed necessary to ensure that competent persons will be utilized in the performance of the Agreement. The Contractor shall assign as many people as necessary to complete the services on a timely basis, and each person assigned shall be available for an amount of time adequate to meet the required service dates. The Contractor shall not change Key Personnel unless the following conditions are met: (1) Proposed replacements have substantially the same or better qualifications and/or experience. (2) that the County is notified in writing as far in advance as possible. The Contractor shall make commercially reasonable efforts to notify Collier County within seven (7) days of the change. The County retains final approval of proposed replacement personnel. • •.- ■- • • •.- 27. ■7 ORDER OF PRECEDENCE. In the event of any conflict between or among the terms of any of the Contract Documents, the terms of solicitation the Contractor's Proposal, and/or the County's Board approved Executive Summary, the Contract Documents shall take precedence. R .} �•- -• r - • . -rr-• r- - 1-• • a r - � _ rr • r • • • - - .11 • - WIN Packet Pg. 584 16.C.1.d ..y._ .. ... -9 0 oral e L►1.1414. ..T-TWI. .. m�--..-. ... .- 28. ASSIGNMENT. Contractor shall not assign this Agreement or any part thereof, without the prior consent in writing of the County. Any attempt to assign or otherwise transfer this Agreement, or any part herein, without the County's consent, shall be void. If Contractor does, with approval, assign this Agreement or any part thereof, it shall require that its assignee be bound to it and to assume toward Contractor all of the obligations and responsibilities that Contractor has assumed toward the County. 29, SECURITY. The Contractor is required to comply with County Ordinance 2004-52, as amended. Background checks are valid for five (5) years and the Contractor shall be responsible for all associated costs. If required, Contractor shall be responsible for the costs of providing background checks by the Collier County Facilities Management Division for all employees that shall provide services to the County under this Agreement. This may include, but not be limited to, checking federal, state and local law enforcement records, including a state and FBI fingerprint check, credit reports, education, residence and employment verifications and other related records. Contractor shall be required to maintain records on each employee and make them available to the County for at least four (4) years. All of Contractor's employees and subcontractors must wear Collier County Government Identification badges at all times while performing services on County facilities and properties. Contractor ID badges are valid for one (1) year from the date of issuance and can be renewed each year at no cost to the Contractor during the time period in which their background check is valid, as discussed below. All technicians shall have on their shirts the name of the contractor's business. The Contractor shall immediately notify the Collier County Facilities Management Division via e-mail (DL-FMOPS@colliergov.net) whenever an employee assigned to Collier County separates from their employment. This notification is critical to ensure the continued security of Collier County facilities and systems. Failure to notify within four (4) hours of separation may result in a deduction of $500 per incident. (Intentionally left blank -signature page to follow) Page l t of 15 Fixed Price Professional Service Agreement #2017-00I (Ver.2) Packet Pg. 585 16.C.1.d IN WITNESS WHEREOF, the parties hereto, by an authorized person or agent, have executed this Agreement on the date and year first written above. ATTEST: Crystal K. Kinzel, Clerk of Courts & Comptroller By: Dated: (SEAL) Contractor's Witnesses: &1� ®r Co tractor's First Witness ari 3ml- h TTyp !print witness naa--meT Contract is Second Witness' Pe L. Re- or T print witness na et Approved as to Form and Legality: County Attorney Print Name BOARD OF COUNTY COMMISSIONERS COLLIER COUNTY, FLORIDA By: , Chairman Raftelis Financial Consultants, Inc. Contractor By:. ignatur _ ✓ rr Ay4'e%{' 'Orr L�X�Cic}i�P �:C'c' %�Sec�rxf - TTypelprint signature and titleT Page 12 of 15 Fixed Price Professional Service Agreement42017-001 (Ver.2) CCA, Packet Pg. 586 16.C.1.d Exhibit A Scope of Services ❑■ following this page (pages 1 through ? ) ❑ this exhibit is not applicable Page 13 of 15 Fixed Price Professional Service Agreement #2017-001 (Ver.2) Packet Pg. 587 16.C.1.d RFP # 20-7792 "Financial Consulting Services" EXHIBIT A SCOPE OF SERVICES BACKGROUND Periodically Departments within the County require consulting services to perfonn rate studies for user fees, fees for services, and impact fees, provide financial modeling, assist with acquisitions, review financial analyses and perform benchmarking studies when the County does not have the expertise or resources to complete the required tasks. DETAILED SCOPE OF WORK The Contractor/Consultant, at a minimum, must achieve the requirements of the Specifications or Scope of Work stated herein to include, but shall not be limited to, assistance in budgeting, forecasting, rate making, management accounting assistance, business valuations/acquisitions, financing activities assistance and financial analysis of systems. The County foresees utilizing the Contractor/Consultant for the following services: 1. Cost of Service/Rate Studies: a. Review and redesign as considered necessary based on cost of services principals, the potable water, wastewater, bulk water, and reuse rates, landfill tipping fees, solid waste collection fees, recycling fees, and other miscellaneous charges. b. Investigate, evaluate and develop potential water, wastewater and reclaimed water rates associated with the provision of such type of service. Create a multi -year financial forecast model for the water and wastewater system (the "System") to determine the overall sufficiency of the System revenues and financial resources to meet identified System expenditures and funding requirements. Revenue and revenue requirements will be projected separately for water, wastewater and reclaimed water. Rate study analysis will include, but will not be limited to, number of customers and usage, a projection of revenues and operating expenses, a capital funding analysis, evaluation of financial targets and compliance requirements, design of monthly rates, development of presentations and participation in the public hearing process for rate approval. c. Assist the County in development of water and wastewater impact fees to evaluate adequacy of the recovery of the respective capital and carrying costs from new development. d. Identify the allocable net revenue requirements associated with providing wholesale potable water service and design of a wholesale potable water rate for the recovery of such costs. e. Development of rate comparisons and surveys. f. Review of master plan to ensure consistency with the rate studies. 2. Other Revenue Sources a. Review and design as considered necessary, appropriate fees for other miscellaneous services as provided by Water and Wastewater utility systems and other County Divisions. b. Review operations of the Water and Wastewater utility and Landfill systems and other County financial services to determine if additional services, charges and revenue enhancements are appropriate. 3. Acquisitions �a. Perform financial due diligence activities related to the acquisition of utility systems or service areas. 4. County Contracts / Documents a. Aid in development and/or review of County contracts, policies and agreements. Such contracts and documents including, but not limited to, rate ordinances and resolutions, service agreements, franchise agreements, acquisition contracts, extension and development agreements, reclaimed water usage agreements, and inter -local agreements between the County and other entities. Services may involve drafting agreements, review of documents, negotiations among affected parties and performance of economic analyses required for evaluation. Page 1 of 2 Exhibit A- Scope of Services Packet Pg. 588 16.C.1.d S. Financing�FundinE. a. Preparation of financial feasibility reports in support of the issuance of revenue bonds, including preparation for and attendance of presentations before rating agencies, bond insurance companies, potential investors and purchasers of instruments of debt, and other required parties. b. Aid in the preparation of loan documents to obtain funds from agencies such as the Florida Department of Environmental Protection, Rural Development, Department of Community Affairs and others. c. Financial modeling of financing plans and CIP affordability. 6. General Financial Services a, Perform financial sensitivity analyses on utility and other operations considering such factors as capital program implementation, regulatory changes and other such issues that may cause a need to review financial operations. b. Review operations and performance by the Public Utilities Department and other County Departments. c. Evaluate financial forecasts and analyses related to the Public Utilities Department as prepared by staff and other consultants. d. Aid in strategic planning activities with the Public Utilities Department and other County Departments. e. Aid and guidance in development of accounting, financial, and business policies. f. Aid with privatization and managed competition activities as well as cost evaluations. 7. Substitution of Personnel In the event the Contractor/Consultant wishes to substitute personnel for the key personnel identified by the Contractor/Consultants Proposal, the Contractor/Consultant must notify the County in writing and request written approval for the substitution at least ten (10) business days prior to effecting such substitution. 8. Professional Registration The Contractor/Consultant shall be properly registered and maintain registration, while this Agreement is in effect, with the U.S. Securities Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a Municipal Advisor. 9. Survivability Purchase Orders: The Contractor/Consultant agrees that any Purchase Order that extends beyond the expiration date of an Agreement shall survive and remain subject to the terms and conditions of that Agreement until the completion or termination of said Purchase Order. New consulting services will not be initiated after the expiration of the Agreement. Page 2 of 2 Exhibit A- Scope of Services Packet Pg. 589 16.C.1.d Exhibit B Fee Schedule following this page (pages 1 through Pagc 14 ul' 15 Fixed Price Professional Service Agreement #2017-001 (Ver.2) Packet Pg. 590 16.C.1.d RFP # 20-7792 "Financial Consulting Services" EXHIBIT B FEE SCHEDULE Project Team Member/Job Classification Executive Vice President Senior Manager Manager Senior Consultant Consultant Senior Associate Associate Senior Analyst Analyst Administrative Direct Hourly Rate* $240 $200 $185 $150 $125 $115 $100 $90 $75 $70 *Direct labor hourly rates shall remain firm for the initial term and renewal terms of this contract. Page 1 of 1 Exhibit A- Scope of Services Packet Pg. 591 16.C.1.d Other Exhibit/Attachment Description: ❑ following this page (pages through ) ❑1■ this exhibit is not applicable Pau 15of15 1 iwd Price Professional Service Agreement 92017-001 (Vev2) Packet Pg. 592 16.C.1.e collier county Administrative Services Department Procurement Services Division COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS REQUEST FOR PROPOSAL (RFP) FOR FINANCIAL CONSULTING SERVICES SOLICITATION NO.: 20-7792 DEBORAH MCCORMICK, PROCUREMENT STRATEGIST PROCUREMENT SERVICES DIVISION 3295 TAMIAMI TRAIL EAST, BLDG C-2 NAPLES, FLORIDA 34112 TELEPHONE: (239) 252-4270 Deborah.McCormick@colliercountyfl.gov (Email) This solicitation document is prepared in a Microsoft Word format (Rev 8/7/2017). Any alterations to this document made by the Vendor may be grounds for rejection of proposal, cancellation of any subsequent award, or any other legal remedies available to the Collier County Government. Packet Pg. 593 16.C.1.e SOLICITATION PUBLIC NOTICE REQUEST FOR PROPOSAL (RFP) NUMBER: 20-7792 PROJECT TITLE: FINANCIAL CONSULTING SERVICES PRE -PROPOSAL CONFERENCE: DATE & TEME LOCATION: PROCUREMENT SERVICES DIVISION, CONFERENCE ROOM A, 3295 TAMIAMI TRAIL EAST, BLDG C-2, NAPLES, FLORIDA 34112 DUE DATE: 3 n ra SEPTEMBER 23 2020 i� i 1.00 A.M. SEPTEMBER 9 2020 a4 October 7 2020 k 11:00 A.M. PLACE OF RFP OPENING: PROCUREMENT SERVICES DIVISION 3295 TAMIAMI TRAIL EAST, BLDG C-2 NAPLES, FL 34112 All proposals shall be submitted online via the Collier County Procurement Services Division Online Bidding System hltps://www.bidsync.com/bidsync-cas INTRODUCTION As requested by the Public Utilities Department Division (hereinafter, the "Division or Department"), the Collier County Board of County Commissioners Procurement Services Division (hereinafter, "County") has issued this Request for Proposal (hereinafter, "RFP") with the intent of obtaining proposals from interested and qualified vendors in accordance with the terms, conditions and specifications stated or attached. The vendor, at a minimum, must achieve the requirements of the Specifications or Scope of Work stated. The results of this solicitation may be used by other County departments once awarded according to the Board of County Commissioners Procurement Ordinance. Historically, County departments have spent approximately $662,000; however, this may not be indicative of future buying patterns. BACKGROUND Periodically Departments within the County require consulting services to perform rate studies for user fees, fees for services, and impact fees, provide financial modeling, assist with acquisitions, review financial analyses and perform benchmarking studies when the County does not have the expertise or resources to complete the required tasks. TERM OF CONTRACT The contract term is intended to be for three (3) years with two (2) - one (1) year renewals. Prices shall remain firm for the initial term of this contract. Surcharges will not be accepted in conjunction with this contract, and such charges should be incorporated into the pricing structure. The County Manager, or designee, may, at his discretion, extend the Agreement under all of the terms and conditions contained in this Agreement for up to one hundred eighty (180) days. The County Manager, or designee, shall give the Contractor written notice of the County's intention to extend the Agreement term not less than ten (10) days prior to the end of the Agreement term then in effect. DETAILED SCOPE OF WORK The Vendor, at a minimum, must achieve the requirements of the Specifications or Scope of Work stated herein. Collier County Public Utilities Department is seeking a provider of these services which may consist of, but shall not be limited to, assistance in budgeting, forecasting, rate making, management accounting assistance, business valuations/acquisitions, financing activities assistance and financial analysis of systems. The County foresees utilizing the successful proposer for the following services: 1. Rate Studies: a. Review and redesign as considered necessary based on cost of services principals, the potable water, wastewater, bulk water, and reuse rates, landfill tipping fees, solid waste collection fees, recycling fees, and other miscellaneous charges. c 0 M 2 0 Cn N CD ti ti 6 N c m E 0 .r Q 2 Packet Pg. 594 16.C.1.e b. Investigate, evaluate and develop potential water, wastewater and reclaimed water rates associated with the provision o such type of service. Create a multi -year financial forecast model for the water and wastewater system (the "System") to determine the overall sufficiency of the System revenues and financial resources to meet identified System expenditures and funding requirements. Revenue and revenue requirements will be projected separately for water, wastewater and reclaimed water. Rate study analysis will include, but will not be limited to, number of customers and usage, a projection of revenues and operating expenses, a capital funding analysis, evaluation of financial targets and compliance requirements, design of monthly rates, development of presentations and participation in the public hearing process for rate approval. c. Assist the County in development of water and wastewater impact fees to evaluate adequacy of the recovery of the respective capital and carrying costs from new development. d. Identify the allocable net revenue requirements associated with providing wholesale potable water service and design of a wholesale potable water rate for the recovery of such costs. e. Development of rate comparisons and surveys. f. Review of master plan to ensure consistency with the rate studies. 2. Other Revenue Sources a. Review and design as considered necessary, appropriate fees for other miscellaneous services as provided by Water and Wastewater utility systems and other County Divisions. b. Review operations of the Water and Wastewater utility and Landfill systems and other County financial services to determine if additional services, charges and revenue enhancements are appropriate. 3. Acquisitions a. Perform financial due diligence activities related to the acquisition of utility systems or service areas. 4. County Contracts / Documents a. Aid in development and/or review of County contracts, policies and agreements. Such contracts and documents including, but not limited to, rate ordinances and resolutions, service agreements, franchise agreements, acquisition contracts, extension and development agreements, reclaimed water usage agreements, and inter -local agreements between the County and other entities. Services may involve drafting agreements, review of documents, negotiations among affected parties and performance of economic analyses required for evaluation. 5. Financin2/Funding a. Preparation of financial feasibility reports in support of the issuance of revenue bonds, including preparation for and o attendance of presentations before rating agencies, bond insurance companies, potential investors and purchasers of instruments of debt, and other required parties. 0 b. Aid in the preparation of loan documents to obtain funds from agencies such as the Florida Department of Environmental N CM Protection, Rural Development, Department of Community Affairs and others. ti c. Financial modeling of financing plans and CIP affordability. N 6. General Financial Services m a. Perform financial sensitivity analyses on utility and other operations considering such factors as capital program E implementation, regulatory changes and other such issues that may cause a need to review financial operations. .r b. Review operations and performance by the Public Utilities Department and other County Departments. Q c. Evaluate financial forecasts and analyses related to the Public Utilities Department as prepared by staff and other consultants. d. Aid in strategic planning activities with the Public Utilities Department and other County Departments. e. Aid and guidance in development of accounting, financial, and business policies. f Aid with privatization and managed competition activities as well as cost evaluations. 7. Substitution of Personnel Packet Pg. 595 16.C.1.e In the event the Vendor wishes to substitute personnel for the key personnel identified by the Vendor's Proposal, the v en or must notify the County in writing and request written approval for the substitution at least ten (10) business days prior to effecting such substitution. 8. Professional Registration Vendor shall be properly registered and maintain registration, while this Agreement is in effect, with the U.S. Securities Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a Municipal Advisor. 9. Survivability Purchase Orders: The Vendor agrees that any Purchase Order that extends beyond the expiration date of an Agreement resulting from this solicitation shall survive and remain subject to the terms and conditions of that Agreement until the completion or termination of said Purchase Order. New consulting services will not be initiated after the expiration of the Agreement. REQUEST FOR PROPOSAL (RFP) PROCESS 1.1 The Proposers will submit a qualifications proposal which will be scored based on the criteria in Evaluation Criteria for Development of Shortlist, which will be the basis for short -listing firms. The Proposers will need to meet the minimum requirements outlined herein in order for their proposal to be evaluated and scored by the COUNTY. The COUNTY will then score and rank the firms and enter into negotiations with the top ranked firm to establish cost for the services needed. The COUNTY reserves the right to issue an invitation for oral presentations to obtain additional information after scoring and before the final ranking. With successful negotiations, a contract will be developed with the selected firm, based on the negotiated price and scope of services and submitted for approval by the Board of County Commissioners. 1.2 The COUNTY will use a Selection Committee in the Request for Proposal selection process. 1.3 The intent of the scoring of the proposal is for respondents to indicate their interest, relevant experience, financial capability, c staffing and organizational structure. c 1.4 The intent of the oral presentations, if deemed necessary, is to provide the vendors with a venue where they can conduct ii discussions with the Selection Committee to clarify questions and concerns before providing a final rank. W 1.5 Based upon a review of these proposals, the COUNTY will rank the Proposers based on the discussion and clarifying I* r questions on their approach and related criteria, and then negotiate in good faith an Agreement with the top ranked Proposer. _ 1.6 If, in the sole judgment of the COUNTY, a contract cannot be successfully negotiated with the top -ranked firm, negotiations 0 w with that firm will be formally terminated and negotiations shall begin with the firm ranked second. If a contract cannot be successfully negotiated with the firm ranked second, negotiations with that firm will be formally terminated and negotiations o shall begin with the third ranked firm, and so on. The COUNTY reserves the right to negotiate any element of the proposals vn in the best interest of the COUNTY. N CD ti ti 0 N RESPONSE FORMAT AND EVALUATION CRITERIA FOR DEVELOPMENT OF SHORTLIST: 1.7 For the development of a shortlist, this evaluation criterion will be utilized by the COUNTY' S Selection Committee to score c E each proposal. Proposers are encouraged to keep their submittals concise and to include a minimum of marketing materials. Proposals must address the following criteria: Evaluation Criteria Maximum Points Q 1. Cover Letter / Management Summary 5 Points 2. Certified Woman and/or Minority Business Enterprise 5 Points 3. Experience and Capacity of the Firm 25 Points 4. Business Plan 25 Points 5. Cost of Services to the County 15 Points 6. Specialized Expertise of Team Members 25 points TOTAL POSSIBLE POINTS 100 Points Tie Breaker: In the event of a tie at final ranking, award shall be made to the proposer with the lower volume of work 4 Packet Pg. 596 16.C.1.e previously awarded. Volume of work shall be calculated based upon total dollars paid to the proposer in the twen y- our (24) months prior to the RFP submittal deadline. Payment information will be retrieved from the County's financial system of record. The tie breaking procedure is only applied in the final ranking step of the selection process and is invoked by the Procurement Services Division Director or designee. In the event a tie still exists, selection will be determined based on random selection by the Procurement Services Director before at least three (3) witnesses. Each criterion and methodology for scoring is further described below. ***Proposals must be assembled, at minimum, in the order of the Evaluation Criteria listed or your proposal may be deemed non -responsive*** EVALUATION CRITERIA NO. 1: COVER LETTER/MANAGEMENT SUMMARY (5 Total Points Available) Provide a cover letter, signed by an authorized officer of the firm, indicating the underlying philosophy of the firm in providing the services stated herein. Include the name(s), telephone number(s) and email(s) of the authorized contact person(s) concerning proposal. Submission of a signed Proposal is Vendor's certification that the Vendor will accept any awards as a result of this RFP. EVALUATION CRITERIA NO. 2: CERTIFIED WOMAN AND/OR MINORITY BUSINESS ENTERPRISE (5 Total Points Available) Submit certification with the Florida Department of Management Service, Office of Supplier Diversity as a Certified Woman and/or Minority Business Enterprise. EVALUATION CRITERIA NO. 3: EXPERIENCE AND CAPACITY OF THE FIRM (25 Total Points Available) 1. Provide information that documents your firm's and subcontractors' qualifications to produce the required deliverables, including abilities, capacity, skill and financial strength, and number of years of experience in providing the required services. 2. Describe the various Team members' successful experience in working with one another on previous projects. 3. List current projects underway or completed in the last three years in an Excel format below that can be sorted by project description: Project Client Location Start End Original Final Project Number of Description (City, County, Date Date Budget Cost Change State) Orders The County request that the vendor submits five (5) completed reference forms from clients whose projects are of a similar nature to this solicitation as a part of their proposal. Provide information on the projects completed by the vendor that best represent projects of similar size, scope and complexity of this project using the form provided. Vendors may include two (2) additional pages for each project to illustrate aspects of the completed project that provides the information to assess the experience of the Proposer on relevant project work. EVALUATION CRITERIA NO.4: BUSINESS PLAN (25 Total Points Available) 1. Provide an example of a detailed plan of approach for a user fee rate study and impact fee rate study for Water and Wastewater (including major tasks and sub -tasks). 2. Provide an example of a detailed timeline for completion of the projects. 3. Include with the Business Plan or as an attachment, a copy of a user fee rate study report and impact fee study report for Water and Wastewater, as an example of work product. This should be for one of the projects listed as a reference. In addition, provide a sample of another financial service report completed by your firm (with preference to Solid Waste rate study). EVALUATION CRITERIA NO. 5: COST OF SERVICES TO THE COUNTY (15 Total Points Available) 1. Provide proposed fee schedule of principals and staff (including sub -consultants). C M .2 0 Cn N CD ti ti O N C m E V M .r Q EVALUATION CRITERIA NO. 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS (25 Total Points Available) Packet Pg. 597 16.C.1.e 1. Provide a description of the proposed Contract Team and the role to be played by each member of the Team. 2. Attach brief resumes of all proposed Project Team Members who will be involved in the management of the total package of services, as well as the delivery of specific services. 3. Attach resumes of any sub -consultants and attach letters of intent from stated sub -consultants must be included with the proposal submission. 4. Identify the number of fulltime equivalents that will be assigned to Collier County from the firm. (Fulltime is defined as 100% assigned to Collier County.) (Attach resumes.) 5. Identify the number of part-time equivalents that will be assigned to Collier County from the firm. (Specify anticipated % of time that will be assigned to the Collier County account.) (Attach resumes.) VENDOR CHECKLIST ***Vendor should check off each of the following items as the necessary action is completed (please see, Vendor Check List)*** Packet Pg. 598 RAFTELIS Financial Consulting Services SOLICITATION 20-7792/OCTOBER 7, 2020 Collier Cal i Diversity and inclusion are an integral part of Raftelis' core values. We are committed to doing our part to fight prejudice, racism, and discrimination by becoming more informed, disengaging with business partners that do not share this commitment, and encouraging our employees to use their skills to work toward a more just society that has no barriers to opportunity. REGISTERED IIIMUNICIPAL ADVISOR Raftelis is registered with the U.S. Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a Municipal Advisor. Registration as a Municipal Advisor is a requirement under the Dodd -Frank Wall Street Reform and Consumer Protection Act. All firms that provide financial forecasts that include assumptions about the size, timing, and terms for possible future debt issues, as well as debt issuance support services for specific proposed bond issues, including bond feasibility studies and coverage forecasts, must be registered with the SEC and MSRB to legally provide financial opinions and advice. Raftelis' registration as a Municipal Advisor means our clients can be confident that Raftelis is fully qualified and capable of providing financial advice related to all aspects of financial planning in compliance with the applicable requlations of the SEC and the MSRB. Table of Contents Section 1: Cover Letter/Management Summary Section 2: Certified Woman and/or Minority Business Enterprise Section 3: Experience and Capacity of the Firm Section 4: Business Plan Section 5: Cost of Services to the County Section 6: Specialized Expertise of Team Members lilt Appendix A: Required Forms 139 Appendix B: Work Samples This page was intentionally left blank to facilitate two-sided printing SECTION 1: COVER LETTER/MANAGEMENT SUMMARY SECTION 1: Cover Letter/ Management Summary SECTION 1: COVER LETTER/MANAGEMENT SUMMARY RAFTELIS September 24, 2020 R R A F T E L I S Ms. Deborah McCormick Procurement Strategist 3295 E. Tamiami Trail Building C2 Naples, FL 34112 Subject: Proposal for Financial Consulting Services (Solicitation 20-7792) Dear Ms. McCormick: Raftelis is pleased to respond to Collier County's (County) solicitation for financial consulting services for the water, wastewater, solid waste, and other County departments. We appreciate the opportunity to submit this proposal, which details our qualifications and experience within the utility industry and in providing services to the public sector. As Raftelis has the largest and most experienced practice in the nation focused on financial, organizational, and technology consulting for public -sector utilities, we have the ability to assist the County in achieving its long-term financial and strategic objectives. Our submittal is based upon our understanding of the rate and financial consulting service needs as set forth in the County's Solicitation and the previous work that we have performed for the County and similar clients. We believe that our proposal demonstrates how we can continue to successfully provide the County's required utility financial planning and rate consulting services in a timely, efficient, and professional manner and that we are committed to achieving these goals. Robert J. Ori, an Executive Vice President with the firm and our proposed Project Director to be assigned to the County, will be the authorized contact concerning our proposal. Robert works at our Florida office, located at 341 N. Maitland Avenue, Suite 300, Maitland, FL 32751. He can be reached by phone at 407-628-2600 (office) or 321-436-4121 (mobile) as well as by email at rori@raftelis.com. Raftelis provides a full range of financial, rate, and business consulting services to publicly owned utilities and local governments. We offer cost-effective, innovative business solutions based on industry -recognized best management practices and high quality, responsive service resulting in a level of value that has been consistently recognized by our clients. Based on our review of the Solicitation, we understand that the County seeks to engage a utility rate and financial consultant to provide a variety of services, including the preparation of revenue sufficiency and rate evaluations, bond feasibility and disclosure reports, connection and miscellaneous fee reviews, valuation reports in support of utility acquisitions, assistance in the development of agreements and contracts for service and rate application, and other related rate and financial management studies for the County's water, wastewater, reuse, and solid waste systems (System). Raftelis offers the highly specialized capabilities, skills, and experience required to successfully deliver the utility rate consulting services requested by the County from our Florida office. As the County reviews our proposal, we would like to bring to your attention the following attributes of the firm and our proposed project team: Raftelis has been a leader in assisting local governments developing business plans to achieve their rate, fiscal, operational, and service delivery objectives since 1993. Our Florida -based project team has worked for over 175 publicly owned utility systems in Florida and throughout the nation over the past 26 years for: i) water, wastewater, reuse, solid waste, electric, stormwater, and chilled water utility systems; and ii) governmental services such as police, fire, and recreation impact fees; fleet maintenance cost models; parks and recreation cost recovery and user fees; and planning, zoning, and building services fees. • Our Project Director and team that we propose to assign to the County have had a longstanding and successful working relationship with the County. Since 2001, we have assisted the County with a variety of utility rate, impact fee, financing, and management consulting projects for the System and for parks and recreation services. SECTION 1: COVER LETTER/MANAGEMENT SUMMARY RAFTELIS This relationship has promoted continuity and maintenance of institutional knowledge, which has been critical to project success. The firm is an industry leader in assisting publicly owned utilities in issuing debt to finance capital improvement projects. Our Project Director and team have been involved in the issuance of almost $7.5 billion in utility revenue bonds for the County and municipally owned utilities located throughout Florida, Virginia, and the U.S. Virgin Islands. Our project team staff members have also prepared capital finance plans for State Revolving Fund (SRF) loan applications, USDA loans, and other forms of financing and have participated in numerous presentations and conferences with bond rating agencies and bond insurance companies to assist our clients in receiving the most favorable credit rating possible. The team has also assisted Bond Counsels in the drafting of language modifications to authorizing bond resolutions to identify appropriate financial reporting and fiscal compliance requirements for our clients. We fully understand the flow of funds and bond -related rate covenants and how these requirements impact utility system rate revenue requirements. • Raftelis has considerable experience in assisting public utility systems with ratemaking issues related to system expansion, such as water and wastewater system capacity charges or impact fees, guaranteed revenue charges, service availability charges and capacity reservation fees, and the development of extension policies and cost recovery programs, all of which are designed to help fund the cost of facilities required to serve to new users. Members of our proposed project team regularly contribute to the development of utility industry rate and financial practices and standards through their involvement in regional and national industry trade organizations such as the American Water Works Association (AWWA), the Water Environmental Federation (WEF), the National Association of Clean Water Agencies (NACWA), and the national and Florida Government Finance Officers Association (GFOA). As discussed in our proposal, Raftelis personnel and members of our project team have co-authored many of the industry's leading guidebooks regarding water and wastewater financial and management issues and have made numerous presentations regarding critical issues facing the industry. • Our proposed project team has been involved in over 66 utility transactions that involved over 140 separate utility systems, representing only public -sector clients, and we have extensive experience in the financial evaluation, acquisition, and transition of water, wastewater, and reclaimed/irrigation systems. Services have included the purchase of utilities, service territory swaps, the sale of treatment capacity entitlements among participants in a jointly owned treatment facility, and other related utility transactions. • Our proposed project team has developed detailed financial forecasts to develop solid waste collection and disposal financial plans, including programs with waste -to -energy facilities. We have also been involved in evaluations of alternative disposal options, have developed cost -based rates for disposal and collection service, and have assisted in the review of collection agreements and other related services for several counties located in Southwest Florida. • Our approach to addressing the County's utility rate and financial planning issues has been facilitated by the use of our interactive utility rate and financial planning model that has been adapted to specifically accommodate the County's existing budgetary process and the data that is readily available from financial information, customer billing systems, and operating reports. The rate and financial model has been an excellent tool to support decision -making and communicate the sensitivity of key variables to County staff and elected officials. • Raftelis' added value is our client focus, dedicated employees, industry insight, and experience that allows us to develop innovative business solutions based on shared experience from our significant client base and our industry leadership role. Our rate and financial models help communicate the issues and simplify the understanding of dynamic financial relationships among customer demand, operations, capital, management, and policy decisions and how these key variables affect rate requirements. Our comprehensive business approach and planning tools have allowed our project team to work closely with County Utilities Department staff utilizing interactive work sessions to develop pricing strategies and business plans. This effort has resulted in the Raftelis has the largest utility industry Human Resources financial and rate consulting practice in Florida and the nation. Raftelis' services are focused solely on providing financial, rate, and Business Objective management consulting services to the public utility industry. For the past 27 years, Raftells has assisted Industry Experience hundreds of publicly owned utilities throughout Florida and the United States with financial and rate consulting services. Raftelis' utility rate and financial Technical Resources evaluation process and models formalize the utility financial and business planning process. Raftelis has assisted hundreds of public Effective utilities with the successful adoption of Communication Skills utility rate and business plans and has a practice dedicated to public outreach. Raftelis is a leader within the industry, Industry Leadership having co-authored many of the Industry's leading guidebooks and through our continuous involvement with our clients. Our qualified personnel and expertise allow us to successfully complete our client's diverse project needs and provide resources to address Issues. We provide our clients value with independent evaluations and objective advice based on our highly specialized utility business skills. We fully understand the County and utility business, provide innovative solutions to utility rate and financial problems, and use Industry best practices. Our integrated modeling tools allow us to evaluate different policy options, capital funding plans, and cost recovery strategies in interactive work sessions. Our team's communication skills ensure that the public, decision -makers, and stakeholder groups are well informed about utility rate and financial issues. Our industry leadership role allows us to Identify emerging trends and utility Issues and provides us with the Insight needed to create Innovative solutions. SECTION 1: COVER LETTER/MANAGEMENT SUMMARY RAFTELIS With this proposal, we affirm our continued commitment to assist the County in successfully achieving its financial and administrative goals and objectives and meeting project schedules and deadlines in a cost-effective manner that provides value to the County. We look forward to the opportunity to continue to work with the County and thank you for allowing us to submit our proposal for your consideration. Sincerely, a"�. Robert J. Ori, CPA Executive Vice President SECTION 2: CERTIFIED WOMAN AND/OR MINORITY BUSINESS ENTERPRISE SECTION 2- Certified Woman and/or Minority Business Enterprise SECTION 2: CERTIFIED WOMAN AND/OR MINORITY BUSINESS ENTERPRISE RAFTELIS Certified Woman and/or Minority Business Enterprise Raftelis is not a Certified Woman and/or a Minority Business Enterprise so no certification materials or documents have been included in this section of our Solicitation response. SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM SECTION 3: Experience and Capacity of the Firm SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS Experience and Capacity of the Firm Firm Overview In 1993, Raftelis was founded to provide services that help utilities function RAFTELIS IS THE as sustainable organizations while providing the public with clean water and TRUSTED ADVISOR wastewater treatment at an affordable price. With this goal in mind, Raftelis has grown to have the largest and most experienced public utility financial TO UTILITIES AND and rate consulting practice in the nation. Raftelis has experience providing THE PUBLIC SECTOR these services to hundreds of utilities across the country and abroad, allowing us to provide our clients with innovative and insightful recommendations that are founded on industry best practices. Throughout our history, we have maintained a strict focus on the financial and management aspects of utilities, building a staff with knowledge and skills that are extremely specialized to the services that we provide and, thus, allowing us to provide our clients with independent and objective advice. Over the past 19 years and prior to July 2019, Public Resources Management Group, Inc. (PRMG) served as the County's rate consultant providing ongoing water, wastewater, reclaimed water, and solid waste consulting services on a variety of projects. On July 1, 2019, Raftelis acquired PRMG, and Raftelis has continued to serve the County since the acquisition. Over the past 27 years, PRMG and Raftelis have followed similar paths —focusing on delivering lasting business solutions for public -sector agencies. The combination of the two firms provides our clients with the capabilities and resources of Raftelis, the nation's largest and most experienced practice focused on financial and management consulting for public -sector utilities, coupled with the regional insights and understanding of PRMG, then considered as one of Florida's leading utility financial, rate, and business solutions consulting firm. The acquisition will provide a lasting benefit to the County from increased professional services that are now available, lessons and experience learned from a national perspective as well as a local level, and the availability of additional resources. Since 1993, the philosophy of Raftelis is to provide value to our clients by facilitating sound decision -making and offering alternative utility business solutions that enhance and sustain utility operations for the benefit of the customers served. The Right Fit We believe that Raftelis is the right fit to serve the County. The following are several key factors that will benefit the County and help the County successfully meet its strategic utility goals and objectives for the benefit of its customers. t• • ' •:. 0.3? • f • • ` I♦ • ?� .A • • i • ••••� r. r •� • fir' % . •• General Firm Experience Highlights: The project team that has served the County for over 19 years will continue to serve the County, preserving the institutional knowledge learned over the years coupled with maintaining a continuity of service, a key to the ability to continue to meet the challenges facing the County. Our firm's experience and knowledge of water, wastewater, reclaimed water, and solid waste user fee evaluations, preparing bond financing disclosure reports, performing utility valuations, assisting in the regulation of and understanding the rate -making practices of franchised utilities, and providing ongoing management consulting services is significant. The following are some key experience milestones about the firm and the project team that further illustrates our abilities, capacity, skill, and financial strength in serving our clients for over 27 years: SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 10 Raftelis has assisted more than 1,200 public agencies and utilities across the U.S., and, in the past year alone, Raftelis has worked on more than 900 rate and financial/organizational/technology consulting projects for over 600 public agencies in 44 states. During the history of our firm, Raftelis has served more than 25% of the U.S. population as highlighted on the map on the previous page. Raftelis has extensive experience supporting the issuance of bonds secured by a pledge of utility revenues, assessments, and capacity fees. Services provided by the project team have included the preparation of bond feasibility disclosure reports, rate covenant and additional bonds compliance tests evaluations, assisting in the drafting of bond resolutions and ordinances, assisting our clients in the presentation of the utility credits to bond rating agencies, and preparing capital finance plans in support of securing low interest rates through the SRF loan program. The project team has participated in approximately 140 utility and solid waste financing transactions for almost 50 utility and local government issuers, totaling almost $7.5 billion in bond proceeds. • The project team has been involved in over 65 utility valuation and acquisition transactions involving hundreds of utility systems, primarily dealing with private -to -public transactions in support of the regionalization of utility service. We have evaluated utilities using the income, cost, and comparable sales approaches in the determination of value, reviewed purchase and sales agreements, assisted in the negotiation of utility asset transactions, prepared presentations in support of public interest hearings before the County and affected stakeholders, and assisted in transition activities to transfer utility assets to public ownership. • Representatives of the project team have served as expert witnesses on over 20 private utility rate cases assisting public -sector agencies in the review of rate filings and have also testified before public service commissions and circuit courts on rate and financial issues in support of bond validations, impact fee issues and challenges, adoption of extension policies, and other utility issues. • Project team members have assisted clients in evaluating, drafting, and negotiating wholesale service agreements, capacity purchase and lease agreements, developer/extension and capacity recovery charges, and other service agreements on behalf of local governments. • Firm personnel have co-authored many of the industry's leading guidebooks regarding water and wastewater financial and management issues. • Raftelis is financially stable and has the resources to provide the requested services to the County in a satisfactory manner. Raftelis is a firm with local and national expertise in the development of water, wastewater, reclaimed water, and solid waste rate evaluations and the development of financial forecasts and business plans. Serving only public utilities, Raftelis' only business and focus is on finding the best, most appropriate financial and business solutions for our clients. Our staff for this project possesses both a local perspective and is nationally recognized in utility rates, economic evaluations, the preparation of utility capital financing programs, and the development of utility business solutions. In all, we bring to the County: • A firm whose sole practice area is public -sector utility finance and management • A proven track record in Florida regarding the evaluation of sustainable utility business and rate implementation plans • Nationally recognized expertise in the development of rates and charges • Teamwork and the largest Florida -based rate consulting team • Continuity with County staff, promoting a level of "trust" with the Raftelis project team The remainder of this section provides a summary of our project team work experience for the County; a summary of our experience serving local governments in Florida, nationally, and internationally; a listing of our references and services SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 11 provided for five specific clients; and a summary listing of Raftelis' current projects underway or completed in the last three years that are similar to the County's scope of service requirements (we have also provided this list in an Excel format as requested). Collier County Experience: As discussed in Section 6: Specialized Experience of Team Members, the project team has been serving the County for over 19 years on a variety of rate, financial, and business consulting projects and has developed detailed financial and business models for the two enterprise funds, evaluated rates for services, assisted in system financings, and provided other ongoing financial and business support projects. The following table provides a general overview of the services that have been performed by our project team that further highlight our ability to provide the diverse service needs required of the County. Water, Wastewater, and We have prepared several detailed revenue sufficiency evaluations and have designed Reuse Rate Studies cost -based rates to provide for the full recovery of costs to provide service since 2003. The most recent study was completed in May 2018 and included: i) a six -year forecast of the operations of the water, wastewater, and reuse utility; ii) a comprehensive capital improvement plan funding analysis and flow of funds evaluation; iii) the redesign of rates (including a rate -phasing wastewater commercial base charge rates) to promote consistency in capacity allocation between the capacity factors used for impact fees and the monthly user rates; iv) an evaluation of compliance with the rate covenants of the authorizing bond resolution; and v) the development of a detailed management dashboard to graphically illustrate the projected fiscal position of the utility and in support of the potential issue of bonds (strong credit rating) to assure that the financial position and overall revenue sufficiency is consistent with County objectives and to support strategic planning efforts and maintain a strong fiscal position. This study was approved by the Board of County Commissioners and included the implementation of a three-year rate plan (the last year is scheduled for implementation effective October 1, 2020). Bond Feasibility We have assisted the County and prepared financial disclosure reports in support of Disclosure Reports $186.4 million principal amount of bonds (two issues). Services included: i) the performance of historical rate covenant evaluation and additional bonds test associated with the issuance of additional parity bonds as required by the authorizing bond resolution; ii) the preparation of a five -fiscal -year financial forecast of utility operations and cash flow, including a summary of the basis and assumptions, of the utility system and ability to meet the rate covenants; iii) the preparation of a comprehensive disclosure report for inclusion in the Preliminary and Final Official Statements prepared in support of marketing the bonds; iv) assisting the County's Financial Advisor with the presentation of the utility credit to the credit rating agencies; and v) the preparation of financial certificates in support of closing the transaction. Based on the results of the County's continued evaluation of the utility, including the rate evaluations, the bonds are currently rated "AAA" by Fitch Ratings, Inc. and "AAA" by Moody's Investors Service, Inc. Water and Wastewater We have assisted the County with its evaluation of the impact fees charged to new Impact Fee Evaluations development for requested water and wastewater capacity (the most recent study completed in September 2019). The evaluations have included: i) a detailed functionalization of the fixed asset is a service to identify "system" expenditures; ii) the evaluation of capital improvements contained in the master planning and other capital SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 12 planning documents prepared for the utility; iii) the evaluation of water and wastewater capacity utilization and levels of service; iv) the design of the fees for service; v) the presentation assistance to the Development Services Advisory Committee (DSAC) (i.e., County developers and builders) of the basis and determination of the fees; and vi) a presentation to the Board of County Commissioners. Regarding the presentation to DSAC, this has included the methodology for the development of the fees, which was recognized as being reasonable by the committee. Utility Acquisition We have prepared financial evaluations and provided assistance to the County with Services respect to the acquisition of certain utilities in the County, including developing financial evaluations of the impact to the existing system associated with the acquisitions. Wholesale Service The team has assisted the County in the review of wholesale water and wastewater Rates service to the City of Marco Island and the Florida Governmental Utility Authority. Activities have included the allocation of revenue requirements to the wholesale function, the design of rates for service, the review of service agreements and terms, and other related services. Reuse Policies and The project team assisted the County with the establishment of its policies and Ordinance and Rates ordinances for the Reuse Water System. We assisted in the development and review with County staff and its legal advisors of i) the basic and major user agreements for the delivery and reuse of reclaimed water; ii) the criteria for the capacity entitlement for major users; iii) the County's Irrigation Quality Water Policy; iv) modifications to the then existing reclaimed water ordinance; and v) the criteria for the general rate structure. As part of the rate study activities, the project team developed proposed user rates from bulk (large user) and pressurized and distributed services. Solid Waste Services The project team has assisted the County in the preparation of the Annual Update and Inventory Report (AUIR) and the development of a financial forecast and cost -of -service model to evaluate the revenue requirements for both the disposal and residential assessment funds for the design of proposed rates. The update to the AUIR included calculating the capacity associated with the construction of new cells and changes to permitted landfill height and the update of other data to the AUIR model in order to forecast landfill capacity utilization and compliance with County policies. The financial forecast and cost -of -service model included a 10-year forecast of the operating expenses, capital needs, evaluation of the closure and long-term care liability, cash flow and reserves requirements (including emergency reserves for storm events), and the performance of sensitivity on the rates based on different funding and service options. The projected funding requirements were then allocated by service to calculate recommended rates for consideration by County staff. Other Related Services The project team assisted the County in: i) the evaluation of parks and recreation fee determination policy and fee development; ii) performing evaluations of certain miscellaneous charges of the System; iii) preparing a General Fund transfer comparative analysis; and iv) other financial support and rate services. Team Member Experience: As discussed in Section 6: Specialized Experience of Team Members and presented herein, Raftelis has the resources and experience necessary to perform the services identified in the County's solicitation. The following is a summary of consulting services provided to local governments during the past several years by professionals located in our Maitland, FL office that are similar in scope to the County's solicitation. Many of the local governments SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 13 shown in the following experience summaries have been long-standing clients of the Maitland office, which is a testimony to our team members' successful experience in working with one another on previous projects, including for the County. A primary factor in our success is our ability to work as a team, with each project being managed by a seasoned veteran in the industry that: i) allows for the ability to immediately address client utility issues and strategies that promote success; ii) promotes mentorship of the project team, a key to team cohesiveness that benefits our clients, including the County; and iii) provides continuous quality assurance/quality control (QA/QC) of the rate and financial evaluations, which is the key value being received by the clients. The following table further illustrates our experience relative to the various items included in the County's scope of services for providing water, wastewater, and irrigation quality (reclaimed) water system rate, financial, and management consulting services. Maitland Office Sample Experience: This E d table is a summary of consulting services o a provided to local governments served by our N professionals located in our Maitland, FL ° z 3, office that are similar in scope to the 3 a)L) w rn w Q ° � U) N oCc County's and that further illustrates our `� u, ° 'o " ,� _ N L .", 6 c a m .� experience relative to the various items p �' R d E ) N LL� a ` a�, a p �'� � ° � Y included in the County's scope of services. = w s y y m y d O :+ ;, 0 w r LY i w Q o W"W m M m R DU) �z w �w 0L) State Client OfficeMaitland FL Apopka, City • • FL Bay, County • • • FL Bonita Springs Utilities, Inc. • FL Brevard, County • FL Charlotte, County • • • FL Citrus, County • • • FL Collier, County • • • FL Daytona Beach, City • • • • FL Englewood Water District • FL Florida Governmental Utility Authority • • • • FL Fort Pierce Utilities Authority • • FL Hernando, County • • • FL Haines City, City • • • FL Hillsborough, County • • • • _ FL Lakeland, City • . • FL Lee, County • • • • • FL Manatee, County • • • • • FL Marco Island, City • • • • • • FL Martin, County • • • • • FL Melbourne, City • • • FL Mount Dora, City • • FL North Port, City • . • . . • FL Oakland Park, City • • • • • SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 14 FL Ocala, City FL Orlando, City FL Palm Coast, City FL Polk, County FL Sanford, City FL Sanibel, City FL Sarasota, City FL Sarasota, County FL St. Johns, County FL St. Lucie, County FL Stuart, City FL Sunrise, City FL Tampa, City FL Volusia, County FL West Palm Beach, City AL Auburn, Waterworks Board, City AL Spanish Fort Water System, Town GA Newton County Water and Sewerage Authority GA Valdosta, City GA Warner Robins, City IA Grimes, City LA New Orleans, Sewerage and Water Board, City NC Wrightsville Beach, Town VA Alexandria Renew Enterprises VA Fairfax, County VA Frederick -Winchester Service Authority VA Leesburg, Town VA Loudoun Water VA Stafford, County VA Winchester. Town Belize Ulaanbaatar, Mongolia (Millennium Challenge Corporation, USA) Virgin Islands Water and Power Authority c t; m d L E V � > O /0 ` U y Q V N y > _ E CU dp N LL LL Q CL Vy ml0 •VlO md O = f0C6 E WO£. U) N Q V N E N 7E T •M Q T _ E O d O t1 N yCL v 0 y O O N co d N d o d iC d' d' t R _ 7 O r m R _ lC jH +O" N =Z X W d % X W W O OU SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 15 The following table further illustrates our experience relative to the various items included in the County's scope of services for providing solid waste system rate, financial, and management consulting services. Maitland Office Solid Waste Experience: This matrix shows some of the solid waste clients in Florida and throughout the U.S. that our Maitland office staff have assisted and the services performed for the local governments. State Client FL Arcadia, City FL Babcock Ranch Community Independent Special District FL Clermont, City FL Collier, County FL Charlotte, County FL DeFuniak Springs, City FL Edgewater, City FL Hernando, County FL Hillsborough, County FL Lee, County FL Martin, County FL Manatee, County FL North Sumter County Utility Dependent District FL Miami Shores, Village FL Oakland Park, City FL Palm Beach, Town FL Plant City, City FL Panama City, City FL Pinellas, County FL Sarasota, County FL Stuart, City FL Tampa, City FL Wellington, Village FL Winter Garden, City AK Anchorage, City AL Auburn, City AZ Chandler, City C O a) Ct M N C O O c_ t) y v a3 h w c O O a ; m at ut 2tt at G U N = s c O U r U •= a) ut 2 at O 2 V d cw .2 N C C O C C —0aN N fnuart at Twr C6 W= V —0O E O p N00 00 ul Ci ciy W y Q O CEa) Ciy ciy N N0 LL a3 Q at N t0.1 f6 '— a N E LL a7 N CQ u> CQ a1 j� a3 j� w 3 N y N N O C Q G V •� O d' 0)L 0) C a1 T w M T w rd+ a7 0: rn at W rn R O. � N 0 7 m rn at 0 N N 0)a N S z at Q a1 O 2M a7 r a rn at w M in The following table provides a listing of Raftelis' current projects underway or completed in the last three years that are similar to the County's scope of service requirements. In our proposal package, we have also provided a copy of this table in Excel, which can be sorted by project description. O w 9 W Q E E m c J Z L u 0 i m O p O m O O O O m c c 0 0 C 0 0 O O C p N 0mommmo0 o m N oO O O O O M O O O ON m O o NC Oo O 0_C oOO Vn O m cNCNC CC ry cm NCoCpC Ca� N m c O O OnO O O O O O O O O OnO O O O d v �p o o O O O o O O o O t0 o o N c O I. 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LE E� O d v -o -o 0 0 o c u a a u u A o ¢v� F O v o o u° c� u u =_ = c c o 0 0 0 0 0 o a " evn wv _____�2 2 2 2a a lo'u 'u 'u 'u 'u 'u 'u 'x >> o SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 22 As requested by the County in its Solicitation, we have attached five completed reference forms from clients whose projects are similar to the County's project. All of the references are from County -owned systems that: i) were developed based on utility acquisitions and new development; ii) currently are facing the need to or have recently expanded treatment capacity due to growth; iii) manage their solid waste collection and disposal services and are facing challenges due to the need to expand disposal capacity, re -bid the cost of collection service that has seen extremely high market rate changes in the last few years, and to promote a sufficient credit rating to issue bonds; and iv) are faced with other challenges such as the need to extend wastewater and water service to address on -site production/disposal systems that are failing or not meeting regulations, changes in the economy and revenue recovery due to COVID-19, the need to maintain a strong credit to attract capital coupled with the sensitivity of rate affordability, and other factors. We have also included several work product examples in Section 4: Business Plan that are associated with the references attached in this section. Registered Municipal Advisor Raftelis is registered with the U.S. Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a Municipal Advisor. Registration as a Municipal Advisor is a requirement under the Dodd -Frank Wall Street Reform and Consumer Protection Act. All firms that provide financial forecasts that include assumptions about the size, timing, and terms for possible fixture debt issues, as well as debt issuance support services for specific proposed bond issues, including bond feasibility studies and coverage forecasts, must be registered with the SEC and MSRB to legally provide financial opinions and advice. Raftelis' registration as a Municipal Advisor means our clients can be confident that Raftelis is fully qualified and capable of providing financial advice related to all aspects of financial planning in compliance with the applicable regulations of the SEC and the MSRB. SECTION 3: EXPERIENCE AND CAPACITY OF THE FIRM RAFTELIS 23 Reference Forms We have provided completed reference forms for projects of a similar nature to the needs of the County and that are "county utility systems" and considered local or representative to Collier County on the following pages. The following is a summary of our references and the utilities service. Years Working with Client Reference Client Utilities Served Hernando County, FL 23 years Water, Wastewater, Solid Waste Hillsborough County, FL 25 years Water, Wastewater, Solid Waste, Stormwater, Street Lighting Lee County, FL 17 years Water, Wastewater, Solid Waste Martin County, FL 26 years Water, Wastewater, Solid Waste Sarasota County, FL 22 years Water, Wastewater, Solid Waste General Services Rates, bonds, acquisitions, and management consulting Rates, financial feasibility reports, acquisitions, and management consulting Rates, bonds, and management consulting Rates, bonds, acquisitions, and management consulting Rates, bonds, acquisitions, and management consulting Collier County Solicitation 20-7792 Collier County Administrative Services Department Procurement Services Division Form 5 Reference Questionnaire (USE ONE FORM FOR EACH REOUIRED REFERENCE) Solicitation: Solicitation 20-7792 Financial Consulting Services Reference Questionnaire for: Raftelis Financial Consultants (Name of Company Requesting Reference Information) Robert Ori (Name of Individuals Requesting Reference Information) Name: Amy Gillis, Director of Financial Services Company: Hernando County Government (Evaluator completing reference questionnaire) (Evaluator's Company completing reference) Email: AGIIIIS d)hernar doderk.org FAX: 352-754-4225 Telephone: 352-540-6656 Collier County has implemented a process that collects reference information on firms and their key personnel to be used in the selection of firms to perform this project. The Name of the Company listed in the Subject above has listed you as a client for which they have previously performed work. Please complete the survey. Please rate each criteria to the best of your knowledge on a scale of 1 to 10, with 10 representing that you were very satisifed (and would hire the firm/individual again) and 1 representing that you were very unsatisfied (and would never hire the firm/indivdival again). If you do not have sufficient knowledge of past performance in a particular area, leave it blank and the item or form will be scored "0." Project Description: 2019 Water and Wastewater Rate and Charge Study Completion Date: June 2019 Project Budget: $87,400 Project Number of Days: 240 Item Criteria Score (must be completed) 1 Ability to manage the project costs (minimize change orders to scope). 10 2 Ability to maintain project schedule (complete on -time or early). 10 3 Quality of work. 10 4 Quality of consultative advice provided on the project. 10 5 Professionalism and ability to manage personnel. 10 6 Project administration (completed documents, final invoice, final product turnover; invoices; manuals or going forward documentation, etc.) 10 7 Ability to verbally communicate and document information clearly and succinctly. 10 8 Abiltity to manage risks and unexpected project circumstances. 10 9 Ability to follow contract documents, policies, procedures, rules, regulations, etc. 10 10 Overall comfort level with hiring the company in the future (customer satisfaction). 10 TOTAL SCORE OF ALL ITEMS 100 8/4/2020 2:50 PM p. 17 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 Collier County Administrative Services Department Procurement Services Division Form 5 Reference Questionnaire (USE ONE FORM FOR EACH REOUIRED REFERENCE) Solicitation: Solicitation 20-7792 Financial Consulting Services Reference Questionnaire for: Raftelis Financial Consultants (Name of Company Requesting Reference Information) Robert Ori (Name of Individuals Requesting Reference Information) Name: Koni Cassini, Division Director Company: Hillsborough County -Public Utilities Dept. (Evaluator completing reference questionnaire) (Evaluator's Company completing reference) Email: CassiniK@HillsboroughCounty.org FAX: 813-272-5589 Telephone: 813-209-3001 Collier County has implemented a process that collects reference information on firms and their key personnel to be used in the selection of firms to perform this project. The Name of the Company listed in the Subject above has listed you as a client for which they have previously performed work. Please complete the survey. Please rate each criteria to the best of your knowledge on a scale of 1 to 10, with 10 representing that you were very satisifed (and would hire the firm/individual again) and 1 representing that you were very unsatisfied (and would never hire the firm/indivdival again). If you do not have sufficient knowledge of past performance in a particular area, leave it blank and the item or form will be scored "0." Rate Evaluation for Water and Wastewater System-FY2019 & 2020 July 2020 Project Description: Completion Date: Project Budget: $120, 500 Project Number of Days: 300 Item Criteria Score (must be completed) 1 Ability to manage the project costs (minimize change orders to scope). 10 2 Ability to maintain project schedule (complete on -time or early). 10 3 Quality of work. 10 4 Quality of consultative advice provided on the project. 10 5 Professionalism and ability to manage personnel. 10 6 Project administration (completed documents, final invoice, final product turnover; invoices; manuals or going forward documentation, etc.) 10 7 Ability to verbally communicate and document information clearly and succinctly. 10 8 Abiltity to manage risks and unexpected project circumstances. 10 9 Ability to follow contract documents, policies, procedures, rules, regulations, etc. 10 10 Overall comfort level with hiring the company in the future (customer satisfaction). 10 TOTAL SCORE OF ALL ITEMS 100 8/4/2020 2:50 PM p. 17 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 C0 Ier CoKnty Administrative Services Department Procurement Services Division Form 5 Reference Questionnaire (USE ONE FORM FOR EACH REOUIRED REFERENCE) Solicitation: Solicitation 20-7792 Financial Consulting Services Reference Questionnaire for: Raftelis Financial Consultants (Name of Company Requesting Reference Information) Robert Ori (Name of Individuals Requesting Reference Information) Name: Peter Cloutier, Business Operations Manager Company: Lee County Government -Utilities (Evaluator completing reference questionnaire) (Evaluator's Company completing reference) Email: PCIOUtIer@IeegOV.COM FAX: 239-485-8500 Telephone: 239-533-8512 Collier County has implemented a process that collects reference information on firms and their key personnel to be used in the selection of firms to perform this project. The Name of the Company listed in the Subject above has listed you as a client for which they have previously performed work. Please complete the survey. Please rate each criteria to the best of your knowledge on a scale of 1 to 10, with 10 representing that you were very satisifed (and would hire the firm/individual again) and 1 representing that you were very unsatisfied (and would never hire the firm/indivdival again). If you do not have sufficient knowledge of past performance in a particular area, leave it blank and the item or form will be scored "0." Project Description: 2019 Water, Wastewater, and Solid Waste Rate Study Completion Date: June 2019 Project Budget: $78,580 Project Number of Days: 180 Item Criteria Score (must be completed) 1 Ability to manage the project costs (minimize change orders to scope). 10 2 Ability to maintain project schedule (complete on -time or early). 10 3 Quality of work. 10 4 Quality of consultative advice provided on the project. 10 5 Professionalism and ability to manage personnel. 10 6 Project administration (completed documents, final invoice, final product turnover; invoices; manuals or going forward documentation, etc.) 9 7 Ability to verbally communicate and document information clearly and succinctly. 9 8 Abiltity to manage risks and unexpected project circumstances. 10 9 Ability to follow contract documents, policies, procedures, rules, regulations, etc. 10 10 Overall comfort level with hiring the company in the future (customer satisfaction). 10 TOTAL SCORE OF ALL ITEMS 98 p�, Vlu�� 8/21/20 8/4/2020 2:50 PM p. 17 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 C0 7113T County Administrative Services Department Procurement Services Division Form 5 Reference Questionnaire (USE ONE FORM FOR EACH REOUIRED REFERENCE) Solicitation: Solicitation 20-7792 Financial Consulting Services Reference Questionnaire for: Raftelis Financial Consultants (Name of Company Requesting Reference Information) Robert Ori (Name of Individuals Requesting Reference Information) Name: Sam Amerson, Utilities/Solid Waste Director Company: Martin County Utilities (Evaluator completing reference questionnaire) (Evaluator's Company completing reference) Email: SAmeI-SOn@martln.fl.US FAX: 772-221-1447 Telephone: 772-223-7942 Collier County has implemented a process that collects reference information on firms and their key personnel to be used in the selection of firms to perform this project. The Name of the Company listed in the Subject above has listed you as a client for which they have previously performed work. Please complete the survey. Please rate each criteria to the best of your knowledge on a scale of 1 to 10, with 10 representing that you were very satisifed (and would hire the firm/individual again) and 1 representing that you were very unsatisfied (and would never hire the firm/indivdival again). If you do not have sufficient knowledge of past performance in a particular area, leave it blank and the item or form will be scored "0." Revenue S.Mciency and Financial Forecast and General Consulting Svcs:FY2078 Project Description: Completion Date: February 2019 Project Budget: $49,850 Project Number of Days: 180 Item Criteria Score (must be completed) 1 Ability to manage the project costs (minimize change orders to scope). 10 2 Ability to maintain project schedule (complete on -time or early). 9 3 Quality of work. 10 4 Quality of consultative advice provided on the project. 10 5 Professionalism and ability to manage personnel. 10 6 Project administration (completed documents, final invoice, final product turnover; invoices; manuals or going forward documentation, etc.) 10 7 Ability to verbally communicate and document information clearly and succinctly. 10 8 Abiltity to manage risks and unexpected project circumstances. 10 9 Ability to follow contract documents, policies, procedures, rules, regulations, etc. 10 10 Overall comfort level with hiring the company in the future (customer satisfaction). 10 TOTAL SCORE OF ALL ITEMS 99 8/4/2020 2:50 PM p. 17 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 Collier County Administrative Services Department Procurement Services Division Form 5 Reference Questionnaire (USE ONE FORM FOR EACH REOUIRED REFERENCE) Solicitation: Solicitation 20-7792 Financial Consulting Services Reference Questionnaire for: Raftelis Financial Consultants (Name of Company Requesting Reference Information) Robert Ori (Name of Individuals Requesting Reference Information) Name: Mike Murphy Company: Sarasota County Government (Evaluator completing reference questionnaire) (Evaluator's Company completing reference) Email: mmurphy@scgov.net FAX: 941-861-5443 941-350-1628 Collier County has implemented a process that collects reference information on firms and their key personnel to be used in the selection of firms to perform this project. The Name of the Company listed in the Subject above has listed you as a client for which they have previously performed work. Please complete the survey. Please rate each criteria to the best of your knowledge on a scale of 1 to 10, with 10 representing that you were very satisifed (and would hire the firm/individual again) and 1 representing that you were very unsatisfied (and would never hire the firm/indivdival again). If you do not have sufficient knowledge of past performance in a particular area, leave it blank and the item or form will be scored "0." 2020 Revenue Sufficiency and RetailMholesele Cost of Service/Rate Design Analysis July 2020 Project Description: Completion Date: Project Budget: $40,785 Project Number of Days: 190 Item Criteria Score (must be completed) 1 Ability to manage the project costs (minimize change orders to scope). 10 2 Ability to maintain project schedule (complete on -time or early). 9 3 Quality of work. 9 4 Quality of consultative advice provided on the project. 10 5 Professionalism and ability to manage personnel. 9 6 Project administration (completed documents, final invoice, final product turnover; invoices; manuals or going forward documentation, etc.) 9 7 Ability to verbally communicate and document information clearly and succinctly. 10 8 Abiltity to manage risks and unexpected project circumstances. 10 9 Ability to follow contract documents, policies, procedures, rules, regulations, etc. 10 10 Overall comfort level with hiring the company in the future (customer satisfaction). 10 TOTAL SCORE OF ALL ITEMS 96 8/4/2020 2:50 PM p. 17 ***UPDATED JANUARY 28, 2020*** SECTION 4: BUSINESS PLAN SECTION 4: Business Pl an SECTION 4: BUSINESS PLAN RAFTELIS 30 Project Understanding The County is the 16th most populous county in the Florida and has grown over time through the acquisition of private utilities and new development. The County, through the Collier County Water -Sewer District (District), currently provides water service to approximately 73,000 retail water accounts (102,000 Equivalent Residential Connections or "ERCs") and approximately 74,000 retail wastewater accounts (103,000 ERCs) and provides wholesale water service to the City of Marco Island. The water, wastewater, and reclaimed water system (System) utility investment made by the County in the System is significant; as of September 30, 2019, the gross utility plant investment in the System (including non -depreciable assets such as land and construction work in progress) was reported by the County to be approximately $1.4 billion dollars. The issues facing the County include, but are not limited to: i) the need to meet the capacity needs due to continued growth in new service areas of the County; ii) the continued need to implement Capacity, Management, Operating, and Maintenance (CMOM) programs for the sanitary sewer collection system; iii) the need to provide funding for any water and wastewater extension programs to provide long-term water and wastewater service and to regionalize service in support of the County's Comprehensive Plan; iv) promoting a strong fiscal position and credit rating to attract external capital to fund its ongoing capital program while maintaining a viable capital re -investment strategy; and v) other issues, including the effects of the COVID-19 pandemic. We understand the needs of the County, and, as mentioned in previous sections, we have the resources available to help the County to address these needs and meet its business and strategic objectives. Due to the diversity of the needs of the County, it is difficult to provide a scope or approach for all the services that may be provided. As provided in the County's Solicitation, a project need was delineated to include the preparation of a utility revenue sufficiency and rate study and present the findings to the Board of County Commissioners (Board). Based on these guidelines, we have prepared the following scope of services and compensation estimate for the County's consideration. Project Approach GENERAL We have developed the following proposed project approach to the project outlined in the County's Solicitation that includes the following scope items and assumptions: The County is expecting a significant amount of growth in the Northeast Service Area of the utility that is requiring the need to construct water and wastewater treatment facilities (the County issued the Water and Sewer Revenue Bonds, Series 2019 in the principal amount of $76,185,000 to provide funding for the initiation of the capacity needs in this service area). The development of a customer and demand forecast is a critical component of the study since it serves as the link to the revenues being realized and the need to construct permanent capacity for the Northeast Service Area. Prepare a detailed projection of the operating expenses for utility service, which recognizes estimated impacts due to inflation, customer growth, bringing into service new capacity and capital infrastructure, regulatory requirements (e.g., deep injection well mechanical integrity test at the North and South County Wastewater Treatment Plants), and other factors that will affect utility costs and, more importantly, identify the net operating margins. • A major driver of the County's utility rate evaluation plan is the development of a capital funding plan. Identification of the capital improvement needs of the System and development of (validation) a capital funding SECTION 4: BUSINESS PLAN RAFTELIS 31 plan that provides for the total financing of the program that balances future debt, capital re -investment from operations, the use of growth -related fees, and other sources such that a balanced financing plan is achieved will be a critical component of the study. • To the extent additional bonds are required to finance a component of the capital funding plan, work with the County and its Financial Advisor to evaluate the debt service payments associated with the additional parity bonds, which will be directly secured from the net revenues and impact fees. • Develop a financial model/forecast to incorporate: i) the change in customers to be served based on the extension/connection policies of the County; ii) the potential additional debt to be issued to finance the capital needs of the System; iii) identify the additional revenues from rates and other charges; iv) measure the effect of increased expenses that may result from System growth and increased service area demands; v) evaluate the projected financial position of the System based on a recommended schedule of proposed rate adjustments designed to meet the financial objectives of the County; and vi) evaluate compliance with the rate covenants/flow of funds as delineated in the authorizing Bond Resolution and the financial policies of the County. The financial model will also include an update to the management dashboard that presents the overall fiscal position of the System with the objective of developing a base case analysis and for evaluating capital funding and rate implementation scenarios for the System. • Design rates for water and wastewater service to fully recover the identified cost of providing service in a reasonable and equitable basis. • Evaluate the reclaimed water rates for service and identify the business relationships (costs) of the system in support of the amount of revenue requirements to be recovered from such rates and with the policies and objectives as delineated in the County's Reclaimed Water Policies and Ordinances. • Review and develop updated impact fees to ensure that the fees are consistent with the State of Florida Impact Fee Act (Act) and are predicated on the capital costs identified to meet the near term service demands for water, wastewater, and reclaimed water in order to promote the localized cost provisions of the Act. • Assist the County in the presentation of the financial forecast, capital improvement or infrastructure funding plan, and customer impact analysis and rate plan to the Board on behalf of the District. PROJECT MANAGEMENT As presented in Section 6, the project team will be directed by Robert Ori with Thierry Boveri serving as Project Manager. Both Robert and Thierry will serve as the primary contacts with the County. Robert has over 40 years of experience and has worked directly with Thierry for over 15 years; together, they have successfully provided the utility and solid waste rate and financial consulting services required by the County. Robert and Thierry will be supported in the technical aspects of the project by Lead and Project Analysts for each specific project performed by Raftelis. The project team individuals to be included on the project have significant prior experience working with the County and on similar projects throughout Florida. The project team also includes administrative support staff. Raftelis has developed a reputation for being responsive to our clients, which has resulted in many long-term client relationships, and the assembled project team will continue to provide this same level of service to the County. Based on the project as referenced in the County's Solicitation, we developed a staffing plan based on our working experience with the County to perform the scope of services as described previously. Our plan includes involvement by senior management personnel to fully address the issues facing the County and to assist in developing the business strategies for financing and successfully implementing the various projects for the County. Figure 4.1 summarizes our target utilization plan for the County projects predicated on our understanding of the needs of the County based on prior experience and the scope of services delineated in the County's Solicitation. SECTION 4: BUSINESS PLAN RAFTELIS 32 Figure 4.1: Targeted Project Team Workload Allocation for County Project Executive Vice President Senior Manager Senior Consultant Senior Associate Administrative Project Director 20% Project Manager 30% Senior Analyst 38% Analyst 10% Administration/Clerical 2% Total A As can be seen above and based on our understanding of the County and its needs, 50% of the project hours will be allocated to senior project level personnel. Our approach includes project management and quality control steps to ensure that study results are reasonable, achieved cost effectively, and on schedule. Robert will provide quality control review for the duration of each project. In order to ensure the best possible work product, we propose to conduct the study in a series of phases as shown in our project work plan presented later in this section. The phased approach will allow for review of the analytical and study results throughout the course of the project, including ongoing review of project results with County staff. A rate study preparation schedule will be developed in conjunction with County staff. The schedule will be reviewed by our Project Manager, Thierry Boveri, on an ongoing basis and updated, as required, to keep track of study progress. Scheduling problems and corrective measures and adjustments, as necessary, will be coordinated with County staff as they occur. A key element of the project activities will be ongoing status meetings with County staff throughout the project. An anticipated schedule to perform the project is included at the end of this section. SAMPLE PROJECT APPROACH This section describes the project team's understanding of the utility rate and financial consulting services required by the County. Based on the County's Solicitation, the project to be scoped includes a user fee and impact fee study. Based on our overall understanding and assumptions recognized for the project, the activities to be required in support of the project include: • Review of the County's financial planning and rate documents, including historical rate reports, financial statements, customer billing statistics, asset data, loan agreements, bond documents, rate resolutions and ordinances, wholesale water service agreements and any amendments thereto, and current rate administrative practices as necessary to prepare the user fee and impact fee report. • Analyze historical customer billing data for each utility and customer class and develop projections of utility customers, usage levels, and service characteristics for financial planning and rate evaluation purposes. This step would include the incremental customer additions associated with the extension of service. • Review of the County's utility operations to identify issues such as the cost of operations, capital program implementation, utility service area development and contractual constraints, Federal, State and local regulatory requirements, and other issues that may affect the cost of future utility operations, infrastructure needs, and financial requirements. • Evaluate the overall financial position of the System and compliance with financial performance measures and targets, including cash reserve levels. SECTION 4: BUSINESS PLAN RAFTELIS 33 • Review the County's capital improvements plan and develop a capital funding plan that minimizes any future rate impact of funding such improvements. Assist the County with its evaluation of such rate impacts associated with the use of debt versus pay-as-you-go financing to minimize or eliminate future rate adjustments. • Review the County's utility operating budget and develop projections of the annual cash revenue requirements for the System. • Update and modify the County's rate and financial model based on changes in operations and financial needs (e.g., the planned expansions of capacity in the Northeast Service Area) and the incremental customer, operations, and capital funding requirements associated with the extension program. The interactive rate and financial model will support the evaluation of alternative financial plans and any change in rates that may be required to accomplish the County's rate administrative goals and financial/capital funding objectives. • Identify the sufficiency of existing rate revenues to fully fund the System revenue requirements, which will include financial compliance with County policies, Bond Resolution covenants, and best management practices associated with maintaining the County's current AAA (Moody's Investor Service) and AAA (Fitch) ratings for the System. • Evaluate the capital or infrastructure capacity cost expressed on a "per gallon basis" and the level of service allocated to an ERC in support of the determination of the impact fees. This will also include a detailed evaluation and functionalization of the fixed assets in service and the identified capital plan to determine the infrastructure costs to be considered/recovered in the impact fees. • After internal County Management review, present the rate and impact fee studies to the Development Services Advisory Committee (DSAC) for consideration of the evaluations and acceptance of the report. • Assist the County with any public information programs and presentations to the Board to consider adoption of the recommended user fee and impact fee rate proposal, the effects on customers (affordability), and the overall drivers/reasons for the recommended rates and charges. PROJECT GOALS AND OBJECTIVES We believe that the major goals and objectives to be accomplished by the study are the following: Since the System is managed as an enterprise fund, System Gross Revenues (rates) form the primary source of funds for the repayment of the revenue requirements (expenditures and funding needs) and the pledge for the repayment of bonds. Rates should maintain the financial integrity and sustainability of the System. System revenues should be sufficient to fully fund existing and near future operating expenses and other costs, provide for financing of the County's capital improvement program, including funds for system expansion, service extensions, and the capital reinvestment associated with renewals and replacement of utility infrastructure (have a proper blend in the amount of net utility plant investment funded from debt and System equity), and allow for appropriate operating and capital cash reserve fund levels. 2. As a condition to issue any additional bonds and to the extent that an adjustment to System rates is considered warranted based on the rate and feasibility evaluation, any rate adjustment should be adopted prior to the issuance of such additional bonds. This will allow increased flexibility in meeting the additional bonds test and provide an improved basis to meeting the rate covenant requirements as delineated in the Bond Resolution during the Forecast Period reflected in the user fee study. The rates for service must satisfy any existing or future debt -related rate covenant requirements. These requirements include flow of fund requirements, cash flow and debt service coverage targets and reserve fund balance targets. An objective will be to evaluate the financial targets relative to the minimum requirements as contained in the Bond Resolution. SECTION 4: BUSINESS PLAN RAFTELIS 34 4. Communication of the overall financial and rate implementation program, including the basis for any proposed changes to the water, wastewater, and reclaimed water rates, including disclosure of the estimated customer impact of such proposed rates, fees, and charges to the Board, is critical to the success of the study. If potential rate adjustments are identified, a detailed comparison of the existing and proposed rates will be provided to illustrate the effect of proposed rates on the County's existing customers as well as illustrate the affordability of such rates with industry standards (also used by credit rating agencies). This is an important project objective since factors other than cost of providing service may need to be addressed in order to meet the reasonableness and "political tests" associated with adopting the overall financial plan that may affect the price for service to the ultimate customer (e.g., adopting an increase in capital reinvestment above current levels due to asset age and service issues may cause a need to increase rates). In order to deal with such factors, the phase -in of rate levels over time to avoid "rate shock" to customers may be warranted. Development and update of the County's integrated Microsoft Excel based rate and financial planning model to allow the County to prepare alternative financial forecasts to accommodate the County's financial and capital planning process, identify changes to and impacts from the implementation of the wastewater extension program, and evaluate alternative capital financing plans, cost recovery strategies, and rate design options. The rate and financial planning model as developed over the years will formalize the County's objectives and criteria related to achieving financial stability and financial/rate sufficiency. 6. Promote the overall County policy of "The customer who benefits pays, and the customer who pays benefits." PROJECT METHODOLOGY Raftelis utilizes a comprehensive business planning approach to address utility rate and financial issues. We believe that the County's utility rate and financial planning process should be consistent with management and policy goals and objectives, financial information systems and accounting practices, and the utility planning process and should address the issues shown below in Figure 4.2. Figure 4.2 — Utility Business Plan Capital Improvement Plan Financial Plan System Growth & Expansion Utility Revenues Renewals & Replacements Utility Operating & Extensions & Developer Policies Maintenance Expenditures .40' Regulatory Compliance Policy & Business Goals Capital Expenditures Financial Policies / Bond & Loan Cash Reserve Funds Covenant Compliance Financial Performance Funds Political/ Economic Development Operational Administrative Interlocal / Service Agreements Service Area Issues Capital Funding / Conservation of Water Resources Flan Cost of Service Capital Finance Plan Design of Rates, Fees, & Additional Debt / Loans _- Charges Timing of Rate Adjustments Customer Impact / Affordability Rate Phasing Strategies SECTION 4: BUSINESS PLAN RAFTELIS 35 The business planning process links the County's overall utility program policy and business goals with utility program costs, resources, and pricing methods. Water, Wastewater, Irrigation (Reclaimed) Water, and Solid Waste Rate Issues Over the past several years, we have developed an in-depth understanding of the County's major water, wastewater, and solid waste rate issues that must be addressed in the project. These major issues include: • Water, wastewater, irrigation water, and solid waste customer and sales trends • Significant increases in the cost of solid waste collection coupled with continued market constraints (depressed recycling markets, changes in service due to pandemic, etc.) • The timing of capital projects and need to meet capacity needs in Northeast Service area • Cash reserve balances/fiscal position • Utility cost structure • The phasing of rate adjustments • Reclaimed water rates Water Sales/Billed Sewer Trends Over the past several years, the County has experienced a significant downward trend in water sales and the corresponding billed wastewater flows. The preparation of the detailed by class customer and sales trend forecast and billing frequency has allowed Raftelis and the County to identify the effects of these changes on revenues (by water conservation block) and the adjustment of rates that placed additional emphasis on water conservation pricing. Since the projection of customer demands is not only a major factor in the development of rates but also in the determination of the needs for new infrastructure construction, the County must carefully monitor sales levels so that the rate plan accurately recognizes the underlying sales trends. Timing of Capital Projects The County's capital plan includes over $365 million in projects through the Fiscal Year 2025 for the Water Sewer District (with a major emphasis on capacity expansion for the Northeast Service Area) and approximately $24 million for the solid waste operations. Since these expenditures are a major rate driver, we will need to work carefully with County staff to adjust project priority and expenditure timing to yield the desired rate phasing/implementation results. A challenge will be to maintain the proper balance of pay -as -you go capital funding from rates, the issuance of new debt while preserving debt leveraging capability for future significant capital expenditure needs (e.g., a change in regulations), and competitive rate levels over the long-term. Cash Reserve Balances The County has maintained a strong cash position for its utility system that has been favorably supported by the credit rating agencies with their issuance of a "AAA" rating. The availability of unrestricted cash reserves has historically enabled the County to gradually phase the water, wastewater, and reclaimed water rate increases (a form of rate stabilization) while implementing a capital funding plan on a balanced platform with a strong emphasis to pay-as-you-go funding. Although minimum operating reserve fund targets are expected to be maintained (assuming rate increases), the solid waste system will need to carefully monitor its revenue margins and liquidity position due to the anticipated reduction in financial position (disposal capital reserves) in this system. The long-term availability of cash and cash funding levels within the enterprise funds should be carefully monitored to maintain a sufficient cash reserve level and the overall strong credit rating of the County. Utility Cost Structure Utility rate structure changes have been adopted over the years as recommended by Raftelis to promote revenue stability and to provide a better cost recovery match of the water and sewer systems' fixed costs (a better blend in cost recovery of the fixed versus variable costs for the water and wastewater utility systems). This issue is a component in focusing on SECTION 4: BUSINESS PLAN RAFTELIS 36 changes in water sales that can result in revenue (sales) volatility and setting equitable rates. The continued evaluation of the costs incurred and cost recovery from rates will be necessary to ensure that the revenue stability targets are maintained yet promote a reasonable balance in recovery from a customer standpoint. Phasing of Rate Adjustments The County has historically adjusted rates on a phased approach, reflecting gradual rate increases designed to maintain operating margins in support of maintaining the long-term sustainability of the System. We have helped the County to periodically update and adapt the utility rate plans since the initial rate implementation in Fiscal Year 2001 to continue to achieve this objective and have also developed a solid waste forecast model to identify long-term strategic and financial issues and assist in implementing a similar rate implementation plan. Reclaimed Water Rates In 2013, the County adopted the Reclaimed Water Ordinance, policies, and service agreements to provide the necessary business guidance for the implementation of the reclaimed water program; our Project Director assisted in the development of these governing documents. The upcoming challenge will be to recalibrate the reclaimed water rates to meet these objectives, fully recover the costs of providing service, and link the customer capacity entitlements with the availability of the water resources. UTILITY RATE AND FINANCIAL MODEL Raftelis' approach to addressing the County's utility rate and financial planning issues will be facilitated by the use of the utility rate and financial planning model that has been prepared with the County over the past several years, which has been adapted to specifically accommodate the County's budgetary process and business requirements. Our comprehensive business approach and planning tools have allowed our project team to work closely with County staff over the years (for both the water, wastewater, and the solid waste enterprise funds), and we recommend that this successful approach be continued. We believe in the common team concept or approach and will continue to utilize interactive work review sessions to develop strategies that result in a balanced and sustainable rate and financial plan that supports the disclosure requirements associated with the issuance of additional parity bonds and/or subordinated obligations. The utility rate and financial model that has been developed with the County formalizes the business planning and rate development process. The model helps communicate the issues and simplifies the understanding of dynamic financial relationships among customer demand, the cost of operations, the effects associated with implementing capital expenditure and corresponding funding programs, availability, and hierarchy of the use of impact fees for capital expenditure and debt service funding, recognition of management and policy decisions, and how these key variables affect the overall revenue requirements and funding needs to be financed from System rates. It has been shown that over the years the rate and financial model has been and continues to be an excellent tool to support decision making and communicate the sensitivity of key variables to management, the Board, and the credit rating agencies. We believe Raftelis' added value is our client focus, dedicated employees, industry insight, and experience that allows us to assist the County in the development of innovative business solutions based on shared experience from our significant client base and our industry leadership role. The rate and financial model recognize the appropriate level of information and analytical detail to: • Identify and track key policy variables • Allow the County to forecast financial or revenue requirements to meet enterprise fund goals and objectives • Allow the County to evaluate alternative financial, capital, and funding scenarios • Allow the County to examine trends and measure performance • Allow the County to evaluate the sufficiency of the current rates for service and the effects of funding the identified revenue requirements SECTION 4: BUSINESS PLAN RAFTELIS 37 • Allow the County to evaluate alternative utility cost recovery strategies and rate levels As Figure 4.3 shows, the various rate and financial model components are supported by a general user input section and a management dashboard highlighting the forecast results and estimated fiscal position. Figure 4.3 — Utility Financial Forecast Model Customer Sales Retail Revenue Gross Revenue, Income, & Cash Balances Other Revenue Gross Revenue, Requirements, & Capital Investments 01 Debt Service To evaluate the results of the utility financial plan with key County staff members, the management dashboard has been consistently used to identify and track key policy and management objectives related to financial performance and the adequacy of utility rates. Many components of the model are driven by the dashboard so immediate financial impact analyses can be identified to aid in financial planning and alternative scenario development. Based on the rate and financial model inputs supported by the County, the management dashboard is used to create and review a summary of forecast results on a real time basis. This allows Raftelis and the County to conduct interactive work sessions and develop the parameters of the utility rate and financial plan on a collaborative basis, which is efficient and allows the County to identify assumptions and results. This is also critical as it relates to the presentation of the financial forecast to the credit rating agencies by County staff since they have a full understanding of the analytical process. Figure 4.4 shows a management dashboard that illustrates the key variables and performance measures incorporated into the rate and financial model. SECTION 4: BUSINESS PLAN RAFTELIS 38 Figure 4.4 - Collier County Management Dashboards and Performance Metrics SLMMARY OF REYEh UEiuDJUS'1'MEN'1S AHO4E "OF IEDRAPES SUU!LLS I(➢Er1CLENCY)At9U LASH EAL.4NCES U-NDMPROPUSEU RA'M(S do ill) Fiscal \'we. Fndin 8 .mhw 30, Fi,rl Vrar Fndin R anher 30, Td Hfi.d Rrrn,u. Adj.--a 2019 2fi 2n 2027 2622 1023 2n24 Annual Surplu.�(T�nfi rim ry): 2019 20M 2021 2022 2011 20M tamer 5yxtem 0.0095 0.009n O.00ao 0.009E 0.009n 0.0096 l4'arer Sysreaa $534 $29 949 $86 $61 $116 Wnelewvta• Sw1rm 0.00Rb 0.00R4 0.009b 0.0096 0.009i 0.00n'o Pmcm[ot Hatc Rcr-muc 0.8% 0.096 O.E, 0.1R4 O.196 0.19u Naatzwater System 1,076 S4,512 S3.071 31,3"5 $999 $1.403 IQW-11xtem 0.0m U.0006 0.0U46 U.000£ DAM 0.004E C.nmbin ud SyuOm-W, R' ,nndiQ 6.009fi 0.0046 n.no%6 0.0095 0.069. n.0ft% Paean-nrRmeR-- 9.0% 5.696 3.7M1n 1.696 ].09n 1.5.%u IQW- S,.- ($827) (SL117) ($934) ($946) ($940) ($1,064) Camatail S,ysOem-Wand WWO k, 0.0m 0.0090 0.00n6 0.9m 0.009a 0.00%6 El , ,ahl.iJI of H-.AjJ.- rs IXY. Orr. (1 Oh. On. Utt. P-tofR- 22.3% 29.6% 11.296 21.0% 211.49 226% Combined saxraa MISS 33.443 S2.186 $515 $40 5456 Water Sy- 12 12 l2 12 12 12 R'ad.e.wal ar Syal nn 12 12 12 12 12 12 ar Pcml nrA n1, Res�wiue 4.5% 2.2% 1.49h 0.396 O.n94 0.3%6 N'mWn Ca iMl(:arh Ralan re. and 408 A.N.141 S41,985 S39,671 317,287 S36,54i 536,403 I War.er S alnm 12 12 12 12 12 12 1) Revenue Requirements - Water System MID 5so E $60 E$40 3 $20 1 $C - 2019 202C 2021 2D22 2C23 2024 Olher lnterfund Transfers Allmancefor Addl Cap Funding and Reserves Capital Funded From Rates Transfer to water C fital Acmunt Net Deht Service['1 Operating Expenses -Projected Revenue Under Proposed Rates -Projected Revenues Under Existing Rates 3) Revenue Requirements - IQ Water System $7 .... _ ......... ......._..._ $5 $s fi $4 �p $3 E � $2 $D 2019 202C 2021 2022 2C23 2[124 Operating Expenses NAID&t Service [-I IIIIIIIIIIIIIIIiCapTtpl Funded From Races -Projected Pxvenue Under Proposed Rates -Projected Revenues Under Existing Rates 5) Ending Cash Balance - Combined Funds $14C $12C $1ne e - 58C E 66C c $4a s20 $0 2019 202C 2021 2022 21123 202d ■ Unrestricted (Operating and Capital Accounts] Restricted(R&R and Impact Fee Funds) 7) Ending Cash Balance - Water Capital (Fund 412) $40 $35 $30 $25 E $2n $15 C $10 $5 $0 2019 2C20 2021 2022 2023 2024 Ending Cash Balance Minimum Deposit Additional Deposit Annual Depreciation -Target 8�.ii�� -Caoaal Expenditures $lzD Z) Revenue Requirements - Wastewater System $100 $so E $60 6 $40 4 $20 $0 2019 2020 2021 2022 2C23 2024 �Ope is Ling Expenses Net Debt Service I'] Translerto Wastewater Gpital Account Cepltal Funded From Rates EEEEIIIIIIAIIowance for Add', Cap Funding and Reserves Other l morfund Transfers Projected Revenue Under Pmposed Rates -Projected Revenues Under Existing Rates uUU 4) Revenue Requirements - Combined System $180 $1W $140 S120 _ 5100 - $60 $60 $$0 2919 202D 2021 2022 2023 2024 a Dperati,g Expenses Net Debts -ice ["] Transfer Lola piLal Aavunls IIIIIIIIIIIIIIIiCapital Funded Frmn Rates Allowancefor Add'I Cap Funding and Reserves Projected Revenue Under Proposed Rates -Pmjected Revenues Under Existing Rates 6) Ending Cash Balance - Operating Fund (Fund 408) $50 $45 $4D $3s 0 E $30 $25 E0 $29 a $1s $10 $s $0 2019 202D 2021 2D22 2021 2U24 Ending Cash Ralance - -9n Days of Revenue -90 Days of Operating Expenses 8) Ending Cash Balance - Wastewater Capital (Fund 414) $60 $60 $40 E $30 E $20 $10 $0 2019 2020 � Ending Cash Rels nce Additional Deposit -Capltal uKnditu'es 2021 2022 2n23 202d - Minimum Deposit -Annual Depreciation -Target Rala not SECTION 4: BUSINESS PLAN RAFTELIS 39 9) Ending Cash Balance -1Q Water Capital (Fund 414) $4 $3 — — — — 53 _ E $2 $2 E $1 51 3019 2020 2011 2022 2023 3034 _Ending Cash Balance .,,l Deposit =G Additional Deposit Annual Depreciation -Target Balance —Capital Evpendltures 11) Annual Debt Service Payments 32s $20 p $15 E E $1D E a $5 So -Sp '60 dye 'g-5 '60 ,Ptiv tio31 vo•s3 ,P35 yo�9 to-5� 'SP —foisting Senior Lien Bond Payments Loan Payments III— Proposed Debt Service —Total Annual Payment 13) All -In Debt Service Coverage: Net Revenues and System Development Fees 35D% 300% 2303E 20D36 150% 1009E sw. 0% 1" 1 2019 2020 1— 2022 2023 1014 �AIFJn Debt service Coverage Target Debt service coverage[200'.S) 10) Capital Improvement Program Funding Sources (Total CIP = $532.8 Million) 2.3% • Wastewater and IQ Water Capital Account Deposits, Reserves, and Rate Revenue • Water Capital Account ❑eposlis, Reserves, and Rate Revenue 12) Existing and Proposed Debt Outstanding - Ending Principal Balance S350 $300 $250 E $200 � S1s0 $100 5s0 S0 �7 ■Fiisting Senior Lien bonds ■Eclsting5ubortlEnate Lien Loans ■Anticipated/Proposed Debt 14) All -In Debt Service Coverage: Net Revenues Only 500% 450% "O l 390% 300;6 2113% 200% 150% H 1DOl HI i 0% 0% 2019 2020 2021 2022 2023 2024 �AII-In Debt service Coverage —Target Debt service CoyerSge(200%) 15) Net Revenue Margin 16) Debt to Net Plant Investment 10.0% 5o.00% 45.0% OOD% 40,0% 35 t% ae.11 35,0% 4000% 30,0% 25,0% 3000% - 3a06Yo 291 20.0% 21a1% 2000% 150% 10,0% 1000% 5,u% 0,0% 0(X0% 2019 2020 2021 W22 2023 2024 2019 2020 2021 2022 2023 2D24 Calculatcd operating Ratio —Fitch Median(41%) ­iDcbt to Net Plant Investment —Maximum Target l50%) 17) Free Cash Flow to Depreciation 181 Single Family Residential Hill Affordability s aD% 120,0Dss 100,00% t00.d9Y5 92,73% 6a, 16'M e5b9S� q00=/ 80 M 3 00% 60 00 2 00% 0 00% 1 OD�o 20 00% 1 0,W% 000% 2019 2020 2021 2022 2023 2024 2019 2020 2C21 2022 2023 2024 — Free Cas h Flow to Depreciation --Lower LimitTarge[[90%) Median Household In ome(FY18-$C2,198) 50%01VIedlan household lnt—JFY1R-$31,099) —tipper Limit rarget(110%) —G one ral Target-2.0%of MR —Upper Target-4.5%(EPA) SECTION 4: BUSINESS PLAN RAFTELIS 40 FINANCIAL DISCLOSURE (FEASIBILITY) CONSIDERATIONS In the development of the user rate study and any corresponding financial feasibility disclosure report in support of the issuance of any additional utility revenue bonds, the primary issue in the industry is disclosure that ultimately focuses on the ability of the System revenues to: i) fully fund the annual System expenditure requirements (both operating and capital); ii) comply with the minimum rate covenants as delineated in the Bond Resolution authorizing the issuance of the senior lien bonds and covenants coupled with debt service coverage ratios associated with the issuance of the Water and Sewer Refunding Revenue Note (Subordinate), Series 2016 that refunded all of the then outstanding loans issued through the SRF loan program (subordinate obligations); iii) meet the financial targets either formally established by policy by the Board or internally by management; and iv) reduce the overall financial risks of the System such that repayment of the debt is ensured and the ability of such payment is sustainable. This can be seen more clearly in the rating framework or approach currently being used by the credit rating agencies. Generally, the credit rating methodology rates issuers according to two independent risk profiles: enterprise risk and financial risk. The approach has a scale —weakest to strongest —which is used to formulate a score based on the identified risk profiles. For Moody's Investor Service, which has rated the County, the risk profiles are summarized in Figure 4.5. Figure 4.5 — Municipal Scorecard Factors Broad Scorecard Factors Factor Weighting Subfactars Subfactor Weighting System Characteristics 30% Asset Condition (Remaining Useful Life) 10% Service Area Wealth (Median Family Income} 12.5% System Size (O&M) 7.5% Financial Strength 40% Annual Debt Service Coverage 15% Days Cash on Hand 15% Debt to Operating Revenues 10% Management 20% Rate Management 10% Regulatory Compliance and Capital Planning 10% Legal Provisions 10% Rate Covenant 5% Debt Service Reserve Requirement 5% Total 100% Total 100% Source: Moody's Investor Service, US Municipal Utility Revenue Debt, October 19, 2017 As can be seen in Figure 4.5 regarding financial strength, the debt service coverage, which links the ability to pay the annual debt requirements and the capital reinvestment, and liquidity, cash reserves from both an operating and capital perspective, metrics are critical in the credit rating process. Our approach in the determination of the financial forecast and in the preparation of the user rate study focuses on the above referenced risk profile factors, where applicable and as it relates to the water and wastewater utility, in order to assist the County with maintaining its "AAA" credit ratings and in the overall rating process and to meet the disclosure requirements dictated by the industry. For example, the detailed customer forecast developed in support of the rate revenue forecast supports the coverage metrics risk profile and is also based on certain economic fundamentals (service area conditions and growth) such that there is a link between the customer service and demands use with the financial forecast. SECTION 4: BUSINESS PLAN RAFTELIS 41 GENERAL PROJECT APPROACH Our general approach to providing the proposed utility rate and financial consulting services for the County will place major emphasis on the coordination elements of the study process. The Raftelis project team includes a management team that has worked together for over 15 years on a variety of utility industry projects. As shown in Section 6, the management team members have also individually managed numerous water, wastewater, reclaimed water, and other utility rate and financial studies for public -sector clients in Florida and throughout the nation. They have proven experience as team players working with the County's management and staff on past projects to successfully achieve the County's goals and objectives. The proposed rate study work plan includes meetings with County staff to initiate the project, confirm project goals and objectives, finalize the work plan and schedule, and gather data. The work plan also includes meetings to review study progress and results with County administration and attendance of public hearings to present the study results to DSAC and the Board. Experience has taught us to perform rate and financial studies in a series of phases. We have found this approach to be very successful in meeting the rate and financial planning needs of our clients. We believe a phased approach to the work plan will help to successfully coordinate the efforts of our project team and County staff for the following reasons. 1. A phased approach allows County staff to get involved in the fundamental planning assumptions and analysis at various points throughout the study and to continuously monitor the study progress. 2. It allows County staff to provide more effective input to the rate, financial planning, and capital cost recovery process to make strategic decisions and to affirm that the study is on course and consistent with the County's policies, goals, and objectives, thus ensuring a successful project. 3. It allows County staff to fully understand the individual study components and promotes a more effective public information program. PROJECT APPROACH The development of the water and wastewater user fee and impact fee study encompasses three primary components, including: i) the development of a revenue sufficiency analysis for the system (the County model evaluates by utility system); ii) development of the impact fee study; and iii) the preparation of the rate and fee report and the presentation to DSAC, the Board, and the public. Our proposed project work plan for these aspects of the project is based on a multi- tasked approach, as set forth below: General Study Tasks: Task 1 Kick-off Meeting Task 2 Prepare Data Request/Data Gathering Task 3 Review of the County's Financing and Utility Rate and Financial Issues User Fee Tasks: Task 4 Develop Customer, Sales, and Usage Forecast Task 5 Develop Utility System Revenue Forecast Task 6 Revenue Sufficiency Analysis and Cost Recovery Plan Task 7 Rate Model Development - Cost Functionalization and Allocation Task 8 Rate Model Development - Design of Monthly Utility Rates and Charges Task 9 Other Miscellaneous Service Charge Analysis Task 10 Meetings to Review Proposed Rate Design Analysis and Customer Impact SECTION 4: BUSINESS PLAN RAFTELIS 42 Impact Fee Tasks: Task 11 Evaluation of Existing Fixed Assets Task 12 Review of Levels of Service and Capacity Analysis Task 13 Design (Update) Water and Wastewater Impact Fees rresentation ai,u rteport Tasks: Task 14 Prepare User Rate and Impact Fee Report Task 15 Present Results to the DSAC/Others Task 16 Rate Ordinance and Resolution Assistance Task 17 Present Study Results Our approach also includes project management and quality control steps to ensure that study results and the preparation of the user rate and impact fee report are reasonable, cost effective, and on schedule. A project execution schedule will be prepared with the County at the beginning of the project that is consistent and supports the water, wastewater, and reclaimed water user fee study and the impact fee study (assumed to be done concurrently in our proposed work plan). A proposed schedule based on our experience with the County is shown in Figure 4.6. The project schedule will be reviewed by our Project Manager, Thierry Boveri, on an ongoing basis and updated, as required, to keep track of study progress. Scheduling problems, corrective measures, and adjustments, as necessary, will be coordinated with the County staff as they occur. Additionally, a detailed cost estimate by study task will be prepared for each specific project phase and task. This cost estimate will be used to track actual project costs and will be reviewed periodically to ensure project cost control. PROJECT WORK PLAN The following is a detailed discussion of our proposed project work plan for the water, wastewater, and reclaimed water user fee study and the impact fee study by individual project phase or task. General Study Tasks: Task 1: Kick-off Meeting This task will involve attendance at an onsite project kick-off meeting to review and confirm the study goals and objectives, identify project and System issues, finalize the project work plan responsibilities and timing of milestones (project schedule), initiate the data compilation activities, and review information required to prepare the financial forecast (model update) and revenue sufficiency analysis for the respective enterprise funds and in the development of the water and wastewater impact fees. Task 2: Prepare Data Request/Data Gathering To perform the rate evaluations on a timely basis, it will be necessary to collect as much information as possible at the beginning of the study process. A detailed data request will be prepared to assist County staff with compiling specific information about the operations of the respective systems. The data requested will include budgetary, accounting, and financial data, customer billing profiles and statistical information, existing fixed asset records and future plant in-service requirements to meet service area needs, service area agreements, and historical and projected system demand requirements. The data needed for the evaluations will include the following types of information and will consist of an update to information received from the County in prior tasks (Raftelis will not have to request all the necessary data since we have a lot of information already): SECTION 4: BUSINESS PLAN RAFTELIS 43 • System Operating Data: This data will include monthly water and wastewater treatment plant operating reports, reclaimed water availability and distribution to the reclaimed water system (coupled with alternative raw water resource use), solid waste deliveries by waste type, and information regarding any anticipated changes in costs and staffing due to future regulatory or statutory changes and changes in operation due to capital projects or addition of new facilities. • Economic Data: Statistical and demographic data for the utility service area will be requested, including any relevant information regarding: building permit activity by land use, population estimates developed or used by the County, and developer's agreements and data regarding potential growth by development located within the County's service area. Additionally, any information on the median income of the affected properties and assessed property values will be required to evaluate issues regarding the collectability of the assessments. Financial Planning Data: Financial data will be requested, including the operating budget for the current fiscal year, detailed historical information presented on a budget line -item basis to identify trends and expenditure needs, capital improvement program budgets and costs for construction work in progress approved in prior periods, Trial Balance and audited financial statements (Comprehensive Annual Financial Reports), plant accounts or fixed asset records by functional component, detailed statistics regarding current staffing and future staffing needs, information regarding administrative fund transfers, and account balances for operating and reserve funds, impact fee funds, and other related funds. Customer/Billing Data: We will request existing System customer and billing data by utility type (e.g., water), class of customer (e.g., residential), and service (flow basis, disposal, or collection, etc.), major customer additions or changes in customer use, and detailed customer statistics derived from County billing systems (to prepare billing frequency and rate structure [recovery] strategies). Financing Data: This data includes any amendments to the current governing bond resolution or financing documents, official statements or subordinated debt documents associated with any outstanding indebtedness for the System, schedules of future indebtedness, grant agreements, new subordinate obligations agreements and debt schedules, and interest earnings rates for debt service sinking funds, reserve funds, and other fund balances. Rate Administrative Data: We will request copies of any changes to the County's Utility Rate and Impact Fee Ordinances, adopted County Rate and Assessment Resolutions, and rates and service levels of other neighboring local governments and utilities for rate comparison purposes. Task 3: Review of the County's Financing and Utility Rate and Financial Issues In this task, the project team will review all budget documents, ordinances, resolutions, loan agreements, wholesale agreements and previous rate/financial forecast models to identify appropriate financial requirements and criteria, including financial performance measurements to track compliance with such requirements. In addition, as appropriate, management objectives including cost recovery issues from the reclaimed water customers, rate administrative issues, pricing philosophy, operating criteria and internal financial policies related to fund transfers (e.g., landfill closure and long-term care funding), and reserve and cash fund balance levels will be discussed with County staff during this task. The purpose of this institutional background update is to ensure that the utility rate and financial plan addresses the County's current key policy issues. The identification of the key issues and factors at this stage of the project will establish the basis for the final System revenue sufficiency and forecast results. SECTION 4: BUSINESS PLAN RAFTELIS 44 Specific User Fee Tasks: Task 4: Develop Customer, Sales, and Usage Forecast Task 4.1: Development of Customer Bill Profiles To develop a meaningful analysis of the revenues of the system, it is necessary to evaluate the trends in customers served (growth), water and wastewater billed sales, and waste generation statistics (solid waste produced). A five-year analysis will be performed on a "by -class of customer" basis to identify average customer growth, billed water and wastewater use per ERC, as well as System finished water and wastewater treatment demands in support of cost escalation and capacity utilization measurement. A by -class analysis is important since growth and the levels of service required are different among classes for the County, to provide additional information regarding the basis for capacity utilization, and to estimate changes in the liability for landfill closure and long-term care. Task 4.2: Develop Billing Frequency Analysis With respect to the water and wastewater utility and to evaluate any proposed rate structure changes, as well as document rate impacts to the customer base for any rate structure or rate level change, it will be beneficial to have a bill frequency analysis or customer profile performed for the County's system. This task is associated with the development of a detailed billing analysis to identify the customer usage characteristics. Raftelis will work closely with the County's staff to get the detailed information to perform a bill frequency calculation utilizing the County's utility billing facilities. This aspect of the study will need to begin immediately to get the proper bill frequency information available as early in the study process as possible. The bill frequency analysis is critical to the quality of the study since it provides the foundation for the development of rate structures and revenues, provides critical information for the design of rate structure alternatives and pricing considerations, and assists in the evaluation of customer impact analyses due to changes in rate structure. Areas of concern that will be considered in the development of the billing frequency analysis may include the billing of any seasonal accounts by the County, final bills not reflected in the customer information statistics, the recognition of active and inactive accounts that sometimes are mixed in with customer statistical information, and the recognition of utility billing errors and adjustments, which could misstate water and wastewater consumption records. As a result of these billing issues, adjustments to the bill frequency data may be necessary to calibrate the revenue model discussed in Task 5. Task 4.3: Development of Customer and Sales Forecast This task will involve the forecast of additional customers based on a review of the County's projection of new development and incremental customer additions associated with the extension of service to new service areas within the County. Based on recent historical trends in customer growth and usage/waste generation requirements, discussions with County staff about potential development within the service area, population projections prepared by the County as contained in the Annual Update and Inventory report and others (Office of Economic and Demographic Research), Raftelis will develop a customer and sales forecast for the respective enterprise fund systems. For purposes of the financial forecast, a range of alternative growth and customer use forecasts will be evaluated to examine the impact of growth on utility rate and cash reserve levels. The key is to prepare a forecast that is reasonable and achievable. The forecast will be prepared on a basis consistent with the County's service area designations and existing customer classes since: i) each class of customer may have different service requirements and rates of growth that help identify sales trends and changes in the customer base on a per class basis; ii) the forecast will form the basis for the determination of utility rate revenues that represents the largest amount of revenues received by the System (approximately 96% of recurring revenue) and promotes consistency in the demand projections and revenue projections; and iii) the forecast can be used in the overall design of any future rates, including any rate structure adjustments that could affect cost recovery, if considered necessary by the County. SECTION 4: BUSINESS PLAN RAFTELIS 45 Task 5: Development of Utility System Revenue Forecast This task involves the development of rate revenues from existing rates and a forecast of other revenues for the six -fiscal - year period ending September 30, 2026 (Forecast Period) recognizing the results of the customer billing analysis and customer and sales forecasts conducted in Task 4 and the County's existing rates for utility service. A rate revenue "reasonableness test" will also be prepared to test the results of the customer billing data (i.e., the billing frequency analysis) against the most recent historical rate revenues shown in the Comprehensive Annual Financial Reports and other financial information provided by the County. This task will also involve the projection of other operating revenues, such as: i) the initiation of service charges; ii) other miscellaneous charges; iii) interest income earned on unrestricted and restricted fund balances; and iv) other available revenue sources such as grants. Task 6: Revenue Sufficiency Analysis and Cost Recovery Plan This task estimates the amount of revenues to be recovered individually from the water, wastewater, and reclaimed water rates (solid waste rates and assessments when evaluating the solid waste system), and other System sources. Specifically, this component of the study will include an estimate of net revenue requirements of each utility function. This task also includes the development of detailed projections of operating costs, capital improvements and associated funding sources including debt service requirements, and reserve fund requirements. A six -year financial forecast will be the basis for the development of the net revenue requirements from rates (budget year plus five additional fiscal years), the preparation of a capital improvement funding plan, and the determination of cost recovery strategies. Based on the rate and financial model developed for the County, alternative scenarios (including capital recovery options) will be developed as may be required by the County to examine the effect of projected growth and funding alternatives, and a cost recovery strategy will be developed to identify any proposed rate adjustments for each fiscal year of the forecast. The following is a discussion of the major subtasks anticipated for this phase. Task 6.1: Development of Operating Expense Projections The primary purpose of this task is to develop the level of operating expenses required to be recovered from System revenues. This task will be done in sufficient detail in order to: i) recognize the types of expenses incurred by the System; ii) assist in the projection of expenditures for the Forecast Period; iii) recognize changes in certain costs consistent with changes in utility operations, including the implementation of the capital improvement program and any water and wastewater extension programs; iv) recognize changes in operating costs due to changes in regulatory requirements; and v) have sufficient detail to properly allocate the costs among the rate classes as well as rate structure attributes if need be. Included in this analysis will be a detailed projection of operating expenses based upon the County's line -item operating budgets and a review of trends in historical expenses based on information provided by the County, recognition of changes in staffing levels due to growth and capacity expansions, and the development of cost escalation factors. Finally, to the extent the County plans to incorporate any other changes in operations such as the continued acquisition of franchised utilities, which could affect expenses, these changes will be recognized in this analysis. Other operating expenses, such as interfund transfers, administrative allocations, operating contingencies, insurance needs, and other expenses, will also be evaluated to ensure that rates are designed to recover the full cost of providing service. As part of this task, project team members will identify key utility system characteristics and current and future operations and maintenance needs, proposed System expansions and the service extensions, and other challenges facing the utility systems. The Raftelis project team has a good understanding of the County's utility system, current operations and maintenance budget reporting structure and needs, proposed system expansions, and other challenges facing the utility based on our previous projects with the County. SECTION 4: BUSINESS PLAN RAFTELIS 46 Task 6.2: Review of Capital Improvement Program Needs and Capital Funding Alternatives One of the major expenditure requirements (and rate driver) of the County is the construction of capital improvements to meet service needs and regulatory requirements and extend the service life of assets through the funding of renewal and replacements (the six -year 2020 to 2025 capital budget, including prior period capital project appropriations, is approximately $365 million). This phase involves a detailed review of the County's capital improvement program and an analysis to identify all sources of funds applicable to the capital improvement program. An important goal of the study is to structure the funding of such improvements to produce a reasonable capital finance plan with a minimal impact on utility rates. This task will also involve a determination of the priority of the use of funds to balance near term capital funding with an overall strong fiscal position. This task will include a review of all restricted/unrestricted fund balances available for funding the capital improvement program, identification of the timing of when funds will be expended for the capital facilities, and providing assistance in determining the need for external funding sources in order to fully fund the capital plan and limit any potential rate impacts. In most instances, it is this portion of the financial plan that allows for the most flexibility relative to the evaluation of future rate adjustments and the overall fiscal position of the System. Task 6.3: Other Revenue Requirement Identification To meet the financial obligations of the County's individual utility systems, Raftelis will recognize other revenue requirements that need to be included in the analysis. A major component of other revenue requirements is scheduled debt service principal and interest payments associated with outstanding and anticipated debt. This task will also incorporate fiscal policies and best management practices discussed/identified during the Task 2 activities, the funding requirements regarding the capital costs funded from revenues identified in the capital funding plan as well as any required cash reserve fund requirements, and the recognition of any other transfer requirements, including General Fund transfers. Other revenue requirements that may be reflected in this task deal with certain financial and accounting issues, such as: i) the establishment and maintenance of adequate working capital balances; ii) the identification of proper capital reinvestment (renewal and replacement) funding allowances; and iii) the recognition of other financial policies (e.g., funding of fleet maintenance reserves, depreciation equivalence funding, intrafund cost allocations, OPEB contributions, etc.). As part of this task, Raftelis will work with the County and its Municipal Financial Advisor to structure any additional parity bonds or subordinate bonds needs and corresponding debt service payments identified as part of the capital plan funding analysis. Raftelis will provide estimates of. i) net revenue margins after the payment of existing debt service and other funding requirements; ii) estimates of debt service coverage based on proposed debt structures provided by the Municipal Financial Advisor; iii) projected rate adjustments, increased revenues to be received from new assessments, and liquidity position assuming the new bond debt assumptions; and iv) other financial information included in the financial forecast to assist in the overall structure and effect on the additional bonds test compliance test. Task 6.4: Development of Net Revenue Requirements Based on the aforementioned subcomponents for this phase of the project, Raftelis will prepare a summary of the total net revenue requirements of the System and the accompanying revenues and sufficiency of the revenues to meet the expenditure and funding requirements for each separate utility comprising the System. Specifically, we will identify the estimated annual rate revenue surplus or deficiency for each fiscal year of the Forecast Period. This analysis will be performed to work with County staff to develop cost recovery strategies and/or rate phasing alternatives. Task 6.5: Rate Comparisons As part of the disclosure requirements and to evaluate rate levels and competitiveness, Raftelis will prepare comparisons of the County's existing rates and any identified proposed rates at various usage levels to illustrate customer impacts. Raftelis will also include in the comparison a summary of the rates charged by other neighboring or similar utilities. This SECTION 4: BUSINESS PLAN RAFTELIS 47 will provide an indication to the County of the rate and charge levels and billing methods used by others in relation to the existing and proposed rates of the County. Task 6.6: Fiscal Position Evaluation Although not a rate covenant of the County, Raftelis will review other financial ratios and metrics for consideration by the County to assist in the credit rating process and to evaluate the overall current and projected financial position. The ratios will be in support of the credit rating agency risk profile evaluation presented earlier in this section and will include, but not be limited to: i) operating and capital liquidity or reserves; ii) operating margins; iii) all -in debt service coverage; iv) debt to equity (net plant) position; v) free cash to depreciation (capital reinvestment) ratios; vi) rate affordability; vii) outstanding debt and net plant to ERC relationships; and viii) other ratios as identified by the County and Raftelis that may be valuable from a long-term management review perspective and may assist in the presentation of the System's fiscal position to the credit rating agencies. Based on the results of the fiscal position evaluation, modifications to the recovery of the net revenue requirements from rates may be needed to balance the projected financial plan and fiscal position and the rates to be charged for service. Task 6.7: Meetings to Review Revenue Sufficiency Analysis and Cost Recovery Plan with County This task involves presentation of findings through interactive work sessions with County staff and County administration to review the study results with County staff, discuss the effects on customers and cost recovery plans, discuss issues identified during such process that may affect or should be recognized in the financial forecast, and identify the financial forecast and capital funding plan in support of the rates for service that will ultimately be presented to the Board for consideration and approval. This task will include a presentation to County administration to get approval/direction on the financial and rate implementation plan (from a change in rate revenue perspective —not a rate structure perspective — that will be developed in subsequent tasks). It is contemplated that during the development of the financial plan and revenue sufficiency analysis that Raftelis will attend an onsite meeting to review results with County utility staff and County administration. Additionally, during the study period, Raftelis staff will attend several virtual Microsoft Teams meetings or teleconference meetings with County staff to review financial model results and assumptions and the overall progress of the preparation of the revenue sufficiency analysis with the County. At the conclusion of this task, and as requested by the County, Raftelis will provide a revenue sufficiency financial model. Task 7: Rate Model Development - Cost Functionalization and Allocation This task involves allocating the net revenue requirements between the utility systems to identify the specific cost of service by utility and in support of the design of rates for full cost recovery purposes. In order to facilitate the allocation of utility costs, the first step of the process will be the organization of costs by utility function. Examples of these functions include water treatment, water transmission and distribution, wastewater treatment, wastewater collection, consumer accounting and billing, and administrative and general. Once the costs have been categorized by function, they will be allocated among the various utility systems. Examples of allocation factors include the relative number of customers; the relative number of services weighted by meter size, wage, and salary analyses; utility plant account balances; revenues for each system; specific debt allocation based upon the purpose of the bond issue; waste tons generated by class and delivered to disposal sites; and direct assignment of specific costs where appropriate. SECTION 4: BUSINESS PLAN RAFTELIS 48 Task 8: Rate Model Development - Design of Monthly Utility Rates and Charges This component of the project will include the development of the monthly rates and charges for water, wastewater, and reclaimed water service (and solid waste service as would be required) based on the revenue requirements and customer forecast developed in the aforementioned tasks. This task will include the classification and allocation of costs to the associated rate structure components, the design of the user fees under various rate structure and cost recovery options, and the development of other miscellaneous service charges. This task will also include the presentation of the effects of proposed rates on the existing customers of the utility systems and comparisons of the proposed rates and charges with those of other neighboring utilities. The following is a discussion of the major tasks anticipated for this phase of the project. Task 8.1: Development of Utility Equivalent Billing Units Since the water and wastewater rates vary by meter size and consumption block and the reclaimed water rates vary by meter size but also by type of service, it will be necessary to develop an equivalent unit rate such that the price differentials can be determined. This task will involve the determination of the equivalent billing units based on: i) the number of customers served by meter size; ii) water consumption by potential usage block or by specific type of service as may be required; iii) the development of certain weighted customer allocation factors; and iv) other rate design parameters such as water and wastewater ERCs. The purpose of this task is to develop the number of billing units necessary to achieve a "uniform" basis for the rate structure components. Task 8.2: Allocation of Net Revenue Requirements This task involves the classification and allocation of the net revenue requirements of the individual utility systems to the rate structure components in order to design cost -based rates. This process will involve the classification of net revenue requirements (i.e., for the utility system capacity, volumetric, peak demand, customers, revenue, etc.) and the allocation of such costs to the appropriate rate structure components. The costs will be allocated based on the nature of the expenditure (e.g., variable costs such as treatment chemicals and pumping are typically allocated on the volume of water use). For solid waste service, this would involve the allocation of the solid waste net revenue requirements to the various customer classifications based on the benefit provided to the class (e.g., direct assignment of curbside collection to residential class, cost of landfill maintenance based on class waste contributions, etc.). Task 8.3: Design of Water Rates Based on the allocated costs developed during this phase of the study, the details of the customer forecast and bill frequency data and the rate policies of the County and others (e.g., water management district), Raftelis will design proposed utility rates for the County's consideration. The rates will be designed to recover the costs allocable to the water utility system, meet the financial requirements of the utility, and promote the rate and fiscal policy goals of the County. A detailed review of the monthly base charge as it relates to the hydraulic capacity of meter sizes, equivalent residential units, and ERC to meter size relationships will be conducted. The monthly base charge should recover readiness -to -serve costs, customer service costs, billing costs, and the cost of meter amortization. Task 8.4: Design of Wastewater Rates Based on the net revenue requirements and bill frequency analysis and the relationships of water consumption and wastewater revenue gallons and the rate policies of the County, Raftelis will design proposed wastewater rates. The wastewater rate design should be based on a method that is consistent with the rate structure of the water system. For example, both rates should reflect a uniform approach to developing the monthly base charge (e.g., meter equivalency versus ERC approach) for the recovery of a portion of the "fixed" revenue requirements in order to consistently reflect cost -of -service principles. In the design of the water and wastewater rates, discussions will be held with County staff to SECTION 4: BUSINESS PLAN RAFTELIS 49 determine appropriate rate structures in order to: i) meet the financial goals of the County; ii) design rates that reflect cost - of -service principles; and iii) implement rates that are politically acceptable to the County and its customers. As such, rate alternatives may need to be proposed that could deviate from general cost -of -service principles, if such deviation is determined to be appropriate by the County. Reasons for deviations from cost -based rates could relate to avoiding rate shock to customers due to rate structure/level changes, County policy on multi -unit or commercial rate applications, competitiveness with neighboring utilities, and administrative concerns. Task 8.5: Design of Reclaimed Water Rates The utility revenue requirements will be apportioned between the total system function and the reclaimed water function based on the business parameters of providing service (i.e., where does the reclaimed water utility begin). Once the total reclaimed water system costs are identified, then the reclaimed water rates by customer type will be developed based on the type of cost and corresponding service requirements. All customers will pay for reclaimed water pumping and transmission; customers without onsite storage facilities will be responsible for aquifer storage and recovery costs. This will include consideration of the capacity entitlement basis reflected in the County's reclaimed water policy and major customer agreements. The review of reclaimed water rates should address the County's goals and objectives relative to the provision of reclaimed water services and ensure that the reclaimed pricing strategy is consistent with potable water pricing considerations to guarantee that reclaimed water rates provide an incentive to use the service for irrigation purposes in lieu of potable water resources or is considered on the same cost basis as potable water. Task 8.6: Rate Impact Analysis As the County is aware, any change in rate structure or level will have an impact on the existing users of the utility. To assist the County in the review of the proposed rates, an analysis of the monthly billing impact to the existing water, wastewater, and reclaimed water utility will be prepared. This will include a comparison of existing and proposed rates at varying usage levels for the different customer classes and will highlight average or typical customer consumption levels for the utility system and the annual solid waste rates for curbside residential customers. The rate impact analysis will be prepared for both the individual and combined utility systems to show the impact on the total utility bill. If the proposed rates reflect a change in cost recovery for the commercial class (i.e., all customers not classified as individually metered residential) or if the number of water use tiers is adjusted, a detailed rate impact evaluation based on the results of the billing frequency can be developed for the County that would include a "by -utility customer" evaluation to identify the customers most impacted (both from a positive and negative standpoint). Task 8.7: Update to Rate Comparisons with Other Utilities To assist in the evaluation of the rate design and rate level alternatives, Raftelis will prepare updated comparisons of the existing and proposed rates with other neighboring or similar utilities to provide an indication to the County of the rate and charge levels and billing methods used by others in relation to the existing and proposed rate structures of the County. Task 9: Other Miscellaneous Service Charge Analysis Task 9.1: Identify Cost of Service to Perform Miscellaneous Services Raftelis will perform a review of the miscellaneous service charges to ensure that all charges recover the actual cost of providing service (at a minimum, the direct cost of service). Raftelis will work with County staff to identify the charges for service that need to be reviewed and updated. The review of the charges may include meter installation and service connections, meter rereads, premise visits, late payment charges, turn-on/off, specific services requested for which no specific fee is applicable, permit review fees, and other specific charges. SECTION 4: BUSINESS PLAN RAFTELIS 50 Based on the information received during the Task 1 activities, we will subsequently interview the appropriate staff onsite to identify/validate the scope of services being conducted for which a fee is charged; determine the time spent by specific direct employee (e.g., customer service representatives, field services, etc.) to perform the "typical" specific service request or activity; and identify any other related costs (vehicle use or special services provided by other departments or third parties), issues, or new service fees that should be adopted by the County or existing fees that are no longer applicable. A review of the County's services and charges will be performed with utility management and operating staff to ascertain if additional fees and charges should be established. The cost analysis will include labor, materials, equipment charges, allowance for direct and indirect overheads, and allowances for asset replacements, where appropriate. The scope of services assumes that the interview process would be over a two-day period since several employees may need to be consulted relative to the determination of the cost to provide service. Task 9.2: Miscellaneous Service Charge Comparison Raftelis will prepare a miscellaneous service charge comparison for up to eight public utilities to identify the types and level of fees charged in the region to assist the County in its evaluation of the proposed fee levels. Task 9.3: Design of Miscellaneous Service Charges Based on the identification of the direct and total cost (i.e., fully burdened with overhead costs) analysis, the level of fees charged by other neighboring communities in the region, and the level of fees currently being charged by the County, Raftelis will design an initial schedule of proposed miscellaneous services fees for the County's consideration. A presentation will be made to County staff via a virtual Microsoft Teams meeting to present the initial fees and obtain County staff comment on the fee development such that the final fees can be developed for consideration by County administration and for presentation to the Board. Task 10: Meetings to Review Proposed Rate Design Analysis and Customer Impact This task will involve attendance at several meetings with County staff and County administration during Tasks 7 through 9 to review the results of the proposed rates with County staff and discuss the economic impact to customers as a result of the proposed System rate adjustments needed to fund the full cost of providing service and the potential change in rates based on any changes in rate structure or cost recovery plans. This task will include a presentation to County administration to get approval/direction on the proposed rates. It is contemplated that during the development of the proposed rates and miscellaneous charges that Raftelis will attend three onsite meetings to interview staff in the development of the miscellaneous charges and present findings through interactive work sessions with County staff and subsequently with County administration. Additionally, during the study period, Raftelis staff will attend several virtual Microsoft Teams meetings or teleconference meetings with County staff to review the design of the rates, the effects on customers, and the overall progress of the preparation of this component of the study with the County. Specific Impact Fee Tasks: Task 11: Evaluation of Existing Fixed Assets Raftelis will evaluate existing installed facility costs as of September 30, 2020 that are considered available to provide utility service to future service needs or build -out population. Raftelis will functionalize the utility costs to the service categories to evaluate current installed assets in place to provide service; the following categories shall be recognized based on data availability: • Water production and treatment facilities • Reclaimed water treatment facilities representing equipment and associated costs to treat wastewater effluent to reclaimed (irrigation water) standards SECTION 4: BUSINESS PLAN RAFTELIS 51 • Water pumping, storage, and backbone transmission components • Wastewater pumping and backbone transmission components • Reclaimed water pumping and backbone transmission components • Water and reclaimed water distribution components, including meters, hydrants, and services • Wastewater collection and local lift station components, including manholes and laterals • Miscellaneous equipment and components as needed (General Plant) Raftelis will also work with County staff to identify any constructed utility treatment plant additions that are considered as being fully used from a total water or wastewater system capacity utilization standpoint (first -in, first -used capacity basis by service area). This task will also include the allocation of any plant -in-service that was constructed in advance of a tranche of capacity that may relate in part to a capacity addition, if any, that is considered outside the capital planning horizon of the study (e.g., wastewater treatment plant headworks designed for full capacity but where not all of the treatment trains are recognized). This task will also identify any contributed capital (e.g., developer contributions, grants, etc.) that would serve to offset the cost of constructed capacity allocated to new development. This task will also involve working with staff to identify the installed cost of the most recent expansion of the water and wastewater plant (production/treatment) facilities that will serve as a reasonableness check to the ultimate impact fee as determined in subsequent tasks. Task 12: Review of Levels of Service and Capacity Analysis Based on existing level of service (LOS) standards and constructed plant capacity, an analysis of the existing and projected equivalent residential connection (ERC) requirements will be conducted. This analysis is necessary to evaluate the capacity utilization of the water and wastewater facilities (from both an existing and prospective capital facility standpoint). Task 12.1: Identify Current LOS As part of the document review and working with County staff, Raftelis will document the existing LOS standards. This task will encompass a review of County Ordinances and other available documentation (e.g., County's Comprehensive Land Use Plan, development agreements, impact fee worksheets, utility and development Code of Ordinances, utility master plans and strategic capital planning documents, etc.). Task 12.2: Evaluate LOS for Water and Wastewater System Based on the available data (Task 1) and billing frequency analysis (Task 4), Raftelis will work with the County to review and identify finished water and wastewater demands for the historical period from both an average annual and peak day demand basis and compare that to the estimated population served to determine per capita usage demands. Based on the available data and the corresponding analyses conducted and discussions with the County, a LOS expressed on a "gallons per day" per ERC will be identified for both the water and wastewater system. Task 13: Design (Update) Water and Wastewater Impact Fees Task 13.1: Capacity Availability Analysis Raftelis will work with the County to identify the total and available dependable and remaining water supply, treatment, and conveyance plant capacity constructed or contracted to serve future growth (the analysis will recognize existing constructed plant capacity and the amount of contracted capacity previously reserved with other entities). Raftelis will also work with the County to identify the total and available dependable and remaining wastewater treatment, biosolids SECTION 4: BUSINESS PLAN RAFTELIS 52 and effluent disposal, and conveyance plant capacity constructed or contracted to serve future growth. The analysis will recognize the timing of when capacity was constructed to determine the most recent capital investment that is considered as being available from a capacity standpoint. This analysis will identify the total infrastructure capacity that may be available to serve new development in support of the fee development. Task 13.2: Evaluation of Capital Improvement Program Raftelis will review the System's most recent and updated capital improvement program (CIP), engineering master planning documents, other information, and the corresponding capacity additions necessary to provide service to new development growth and incorporate the corresponding CIP into the fee analysis. Raftelis will work with County staff to identify capital expenditures that: i) are allocable to new development or growth within the identified capital planning horizon; ii) serve to upgrade or enhance utility plant that has remaining capacity allocable to growth; iii) are allocable to new development of growth outside of the identified capital planning horizon; and iv) are for renewals and replacements of assets associated with serving only existing customers and capacity. Raftelis will review the System CIP and categorize proposed projects as described in Task 11. Raftelis will evaluate the CIP projects on whether the specific project is a mission -critical function or is regarded as a System expansion and will be represented as a percentage of total project cost. Task 13.3: Design of Water and Wastewater Impact Fees Raftelis will design water and wastewater system impact fees based on the "system buy -in" method. The proposed impact fees will be developed on a "per gallon of capacity" basis and on an ERC (i.e., an ERC equivalent to the capacity allocated to a standard or typical single-family residence) basis. Raftelis will work with the County to identify any contributed capital, such as grants and other General Fund reimbursements, that would serve to reduce the County's cost of providing water and wastewater capacity. Additionally, to the extent that there are other dedicated revenue sources to fund the installed or future infrastructure, such additional contributions will be identified with staff. The capital costs for reclaimed water that are recognized in the fee development will be incorporated in the water and/or wastewater impact fees; this scope of services does not recognize the development of an independent reclaimed water impact fee. No presentation to staff is recognized in this phase of the project; such presentations are assumed to occur concurrently with the user fee analysis. To the extent the rate evaluations were not done concurrently, a presentation of the proposed impact fees would be made to County administration to review the results of the proposed fees and discuss the impact to the development community. Included in this task is the presentation of the impact fee analysis, methodology, and report for review and comment by the County's outside Impact Fee Counsel. Upon acceptance by the Counsel, the report will be adjusted and finalized for presentation to the development committees and the Board. Task 13.4: Impact Fee Comparison A comparison of the existing and proposed individual water and wastewater impact fees with neighboring or similar utilities will be prepared. Such impact fee comparisons will include: i) level of fee charged; ii) method of application where readily available; and iii) LOS per ERC and the overall rate per gallon for such capacity. This task will be performed concurrent with the impact fee determination to assist in the finalization of the impact fees. Specific Presentation and Report Tasks: Task 14: Prepare User Rate and Impact Fee Report A detailed user rate and impact fee report will be prepared documenting the analyses, assumptions, and recommendations for consideration and use by the County. The report will include an executive summary highlighting the report for use in the presentation to the DSAC. SECTION 4: BUSINESS PLAN RAFTELIS 53 Task 15: Presentation of Results to the DSAC/Others Raftelis will assist the County in the preparation of a presentation document in support of presenting the results of the user fee and impact fee study to the DSAC. Raftelis will attend one formal meeting with the Committee to discuss the results, basis, and methodology in the development of the fees for service and reserving capacity. If required, Raftelis will be available to attend meetings with other parties (e.g., the Productivity Committee or its equivalent if still active) as considered necessary by the County. Task 16: Rate Ordinance and Resolution Assistance Raftelis will assist the County attorney, as required, in reviewing the County's draft of the rate ordinance that sets forth the proposed user rates, impact fees, miscellaneous service charges, and potential changes in the text (language) of the rate ordinance. The review of the rate ordinance will include any potential changes in rate level or structure, potential rate phasing requirements that may be put in place as a result of the rate study, and other rate requirements that need to be codified for the County. Task 17: Present Study Results Raftelis will prepare a detailed presentation of the study results and recommendations and the results of the DSAC and other committee presentations and will present the study to the Board at a public workshop and/or public hearing for their consideration and approval. Based upon the presentation format selected by the County, Raftelis will assist County staff in addressing and subsequently presenting any Board interrogatories regarding the study. LIST OF ANTICIPATED DELIVERABLES Based on the consulting services required by the County and our proposed work plan to address these needs, the following deliverables are expected to be provided to the County: 1. Initial data request 2. Draft and final report on: i) revenue sufficiency study; ii) proposed water, wastewater, and reclaimed water user fees; iii) proposed miscellaneous service fees; and iv) proposed impact fees 3. Rate survey and comparison 4. If requested by the County, a revenue sufficiency financial model 5. Presentation/briefing document for the DSAC and other committee presentations as may be required 6. Rate ordinance/resolution review by Raftelis 7. Presentation/briefing document for the Board of County Commissioners SCHEDULE Our experience is that in order to complete the utility and solid waste rate evaluation, it typically takes between 90 to 120 days to complete the evaluation and present to the Board of County Commissioners. This timeframe varies based on the complexity of the enterprise fund operations, issues identified in the rate evaluation process, timing and overall magnitude of the rate adjustment, the need to modify rate structures that may affect customers differently, multiple rate presentation requirements (e.g., rate and development committees and governing board), and the overall needs of the local government. Based on our experience with the County, we have recognized a four -month project schedule for completion of the study for subsequent presentation of findings and recommendations to the DSAC and the Board. A presentation of the estimated timeline for the development of the utility and solid waste rate evaluation studies is shown in Figure 4.6. SECTION 4: BUSINESS PLAN RAFTELIS 54 Figure 4.6 - Project Timeline GENERAL STUDY TASKS 1. Kick-off Meeting, Data Request, Data Gathering, and Identify Financing and Utility Rate Issues TASK REFERENCE MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 NO. 1, 2, & 3 SPECIFIC USER RATE STUDY TASKS 2, Historical and Forecasted Customer Statistics 4 3. Preparation and Validation of Revenue Forecast 5 4. Operating Expense Allocation and Forecast 6 5. Develop Capital Funding Plan 6 6. Identify Other Revenue Requirements and 6 Funding Needs 7. Identify Revenue Sufficiency and Rate Revenue Adjustments, Management Dashboard Interactive Work Sessions with County Staff and 6 Administration, and Provide Financial Model Deliverable 8. Perform and Provide Rate Survey Comparison 6 Deliverable 9. Cost Allocation, Rate Design, and Customer 7 & 8 Impact 10. Miscellaneous Fee Cost of Service and Staff 9 i Interviews 11. Meetings to Review Proposed Rate Design Analysis Customer Impact 10 it and IMPACT FEE STUDY 12. Evaluation of Existing Fixed Assets 11 13. Review of Levels of Service and Capacity 12 Analysis 14. Design of Water and Wastewater Impact Fees 13 and Fee Comparison SPECIFIC PRESENTATION AND REPORT TASKS 15. Prepare User Rate and Impact Fee Report 14 16. Formal Presentation of Results to DSAC 15 17. Rate Ordinance and Resolution Assistance 16 18. Formal Presentation of Results to BOCC 17 i{ is In -Person Meetings 40 Web Meetings F Deliverables SECTION 4: BUSINESS PLAN RAFTELIS 55 COUNTY STAFF ASSISTANCE As with any major study performed for a public utility, County staff may be called upon to provide assistance to the consulting team in order to successfully complete the engagement on a timely basis. We believe that County staff time will be limited primarily to data gathering and a review and supervisory role and that the primary analytical activities will be performed by the Raftelis project team members. The following is a list of the tasks anticipated to be performed by the project team members that will require some assistance by County staff- 1 . The gathering of specific customer, operational, and facility data and information to be used in the project 2. Compiling certain data and assistance in the identification of and allocation of costs 3. Providing utility customer, sales, and billing reports or compilations of billing statistics, including a detailed data file of the customers served (a year's worth of information such that a billing frequency can be prepared by Raftelis) 4. Assistance in the formulation of policy decisions for escalation of costs, capital funding plan, and benchmarks for fiscal position evaluation (an example would include rate phasing strategies, capital improvements project prioritization, and proposed liquidity targets) 5. Providing review and comments on the results of our analyses and draft report/presentation documents 6. Assistance in any public relations program, scheduling of public meetings, and communication of the results of the project 7. Development of the draft rate and assessment ordinances/resolutions by the County attorney QUALITY CONTROL No single criterion for the selection of a utility rate and financial consulting team can be considered more compelling than the assurance that the services provided will reflect a high degree of quality, accuracy, and cost effectiveness. Raftelis has quality control procedures in place for all projects conducted by the firm. QA/QC begins with the first day of project effort and continues until the final acceptance of the work product by the client. The most important QA/QC efforts of a rate study or the preparation of a financial forecast in support of rates to be charged for service occur during the project planning phase of the study. In order to promote the QA/QC process and provide a high -quality work product to the County, we have assigned a senior employee principal to serve as Project Director and manage the overall aspects of the project, which in this case is Robert Ori, who is an Executive Vice President with the firm. Robert's role is to continuously review the project results before final submittal to the County for accuracy and content to ensure the highest quality product on behalf of the County. As the Project Director, he will establish the criteria necessary to evaluate progress milestones, evaluate the reasonableness of the financial forecast based on the institutional knowledge gained by working with the County for almost 20 years and in the industry for over 40 years, working with the Project Manager who will coordinate reviews of the project, and perform a detailed evaluation of work products. Additionally, he will continually emphasize quality control concerns by strategically scheduled discussions among project team members and with the County as the work progresses. Examples of specific QA/QC procedures that we will implement as part of the financial and rate consulting services for the County include the following: 1. Understanding the goals and objectives for each project assignment. The QA/QC process starts by knowing our client's needs and understanding their expectations. 2. Ensuring that highly qualified team members are assigned to the project. This ensures the highest level of quality, innovation, and project success and reduces the potential for errors and omissions. 3. Cooperative determination of study assumptions and criteria with the County staff. This cooperative effort ensures the methodology employed is defensible and the project components are reasonable. 4. Independent technical review of all draft work products and deliverables by Raftelis prior to their submission to the County. SECTION 4: BUSINESS PLAN RAFTELIS 56 Overall, the Project Director has the ultimate responsibility for the quality, consistency, and accuracy of all work products delivered to the County. Technical advisors, QA/QC reviewers, and the County will be called upon, at the appropriate times, to review draft work products prior to their final submittal to the County. Raftelis will utilize Excel -based spreadsheets and workbooks to conduct the analyses for Collier County. As a value- added service, executable copies of these workbook spreadsheets will be provided to the County. The quality control and review process utilized by Raftelis is designed to avoid errors and omissions. In over 27 years of providing utility consulting services, Raftelis has never had a client make an error and omissions claim. WORK SAMPLES Included in our proposal are several examples of our work product for the County's consideration. These examples were selected to illustrate the detail that the proposed project team uses in the development of our financial and rate evaluations as well as the diversity of our services provided. All of these examples were managed by the Project Director and performed by the primary project team members selected for the County's projects. The following work product examples are located in Appendix B of our proposal and include: • Hernando County, Florida — Water and Wastewater Rate Study and Miscellaneous Service Fee Analysis — Fiscal Year 2019. This report was selected because it addressed user fees, including a change in rate recovery by rate component, and miscellaneous charges. The study included a multi -year financial projection of water and wastewater utility needs, the evaluation of financial performance and compliance with policies, and a modification in cost recovery from rates. This study was presented to and accepted by the Board of County Commissioners. • Hillsborough County, Florida — Sufficiency of Water and Wastewater Rates Report. This report was prepared by Raftelis for submittal by the Water Resources Department to the Board of County Commissioners and encompassed a five-year forecast of revenue requirements and compliance with bond covenants and financial policies. This report was selected since it supports a rate and financing plan for a large county encompassing over 180,000 customers. The analysis included recommendations developed with the County by Raftelis relative to modifying the basis for the determination of the price index adjustment and implementation of a fixed rate adjustment that was presented to and approved by the Board of County Commissioners. Raftelis also opined on the ability to meet the rate covenant requirements as delineated in the authorizing bond resolution that authorized the senior lien debt for the utility enterprise fund. • Lee County, Florida — Solid Waste Revenue Sufficiency Study — Fiscal Year 2020. This report was selected because it provides an example of a solid waste study that was prepared by Raftelis and presented to the County. The study included the preparation of a detailed disposal and collection forecast, evaluation of landfill closure and long-term liabilities and funding of such liabilities, development of a capital funding plan that included funding of a landfill replacement reserve for future disposal requirements, and the determination of rates for service based on a detailed cost allocation analysis. The solid waste rates identified for the Fiscal Year 2020 were approved by the Board of County Commissioners. Manatee County, Florida — Financial Feasibility Disclosure Report. This report was prepared in support of the County's issuance of $74,695,000 Public Utilities Revenue Improvement Bonds, Series 2018. This report was selected since it included both water and wastewater and a solid waste forecast since they comprise the System from a net revenue pledge. This report illustrates the detail recognized by the project team in preparing the disclosure report. The report was well received by the County financing team and was instrumental in obtaining the utility credit from the rating agencies. SECTION 4: BUSINESS PLAN RAFTELIS 57 Martin County, Florida — Water and Wastewater System 10-Year Financial Forecast. This report was prepared in support of the County's strategic planning process to evaluate the financial and rate position of the utility over a longer term (10 years), to determine the need for future rate adjustments and to evaluate the long-term fiscal position of the enterprise fund. The report was also prepared in support of evaluating the County's water and wastewater extension program to remove private wells and septic tanks from service for environmental concerns and to regionalize utility service in the County. Additionally, the report was prepared to provide a basis for the continuation of the automatic price index that was scheduled to expire in October 2024. The report was presented to the Board of County Commissioners, and all recommendations, including the extension of the price index for an additional five years, was approved by Board of County Commissioners. SECTION 5: COST OF SERVICES TO THE COUNTY SECTION 5 Cost Of Services to the County SECTION 5: COST OF SERVICES TO THE COUNTY RAFTELIS 59 Cost of Services to the County General This section sets forth our estimated hourly billing rates for our professionals, staff, and subconsultants to be used to invoice the County for the rate, financial, and management consulting services provided to the County. The estimated percent of time that the Raftelis personnel will be allocated to a project will be based on the specific County request for services and the complexity of the projects to be performed. As highlighted in Section 4: Business Plan, for all projects performed for the County, Raftelis will prepare a comprehensive scope, timeline, and price estimate that will be discussed with the County before any project is initiated. This will allow for consistency in expectations by the County and the work effort performed by Raftelis. For all of our projects that have been performed for the County in the past, all of the billings were based on an hourly, not -to -exceed contract cost basis and not on a lump -sum basis. To the extent the actual cost for the services provided by Raftelis is less than the contract cost estimate assigned to the project, we generally would only bill the County for the actual services provided; thus, the realized contract price by the County may be less. We typically have used this method of billing to the County to provide the County any benefits resulting from coming "under budget." We encourage the County to review prior projects awarded to Raftelis (and PRMG prior to the acquisition in July 2019) and the relationship of the billed service costs compared to the contract budget. For the majority of the past engagements performed for the County, the amount billed was less than or equal to the contract budget. In only a few instances, and due to the request for additional services, has the contract budget been adjusted. For any services that may be required in addition to or a change in the scope of services, the hourly billing rates shown in this section are recommended to be used to determine contract budgets. In addition to labor billing rates, we generally request the ability to directly invoice for all related out-of-pocket expenses associated with delivery charges, copy charges, travel and lodging expenses, telephone, and direct project supplies at either a predetermined rate (e.g., the County's adopted standard mileage rate) or the actual cost incurred by Raftelis. Such expenses are included in the proposed cost for the services provided to the County in advance of any work authorization approval. Additionally, any subconsultants required for a project will be billed at cost for the services rendered by the subconsultant for the project. To perform the rate services contemplated in this proposal, no subconsultants are anticipated to be required by Raftelis. The billing rates herein are proposed to be effective for a minimum period of 12 months from the anniversary date of the award of the contract to Raftelis as a result of the acceptance of our proposal. We propose that such rates may be adjusted annually based on the change in the lessor of the Consumer Price Index or 5.0% per a formula approved by the County and only by formal request by Raftelis. The indexing of our billing rates is subject to approval by the County. SECTION 5: COST OF SERVICES TO THE COUNTY RAFTELIS 60 Schedule of Labor Billing Rates A schedule of Raftelis' hourly billing rates by job classification is as follows: Executive Vice President $240 Senior Manager $200 Manager $185 Senior Consultant $150 Consultant $125 Senior Associate $115 Associate $100 Senior Analyst $90 Analyst $75 Administrative $70 * Direct labor hourly rates effective 12 months after the date of execution of the Agreement; rates may be adjusted by not more than the net percentage change (but not less than 0%) in the Consumer Price Index — Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniversary date of each year thereafter until project completion or termination of the Agreement between the parties. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS SECTION 6: Specialized Expertise of Team Members SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 62 Specialized Expertise of Team Members WE HAVE DEVELOPED A TEAM OF In order to provide the County with the right resources to get the CONSULTANTS WHO SPECIALIZE IN job done and meet all the issues that the County may face over THE SPECIFIC ELEMENTS THAT the next several years —resulting from such factors as growth, WILL BE CRITICAL TO THE ONGOING aging infrastructure replacement, impacts of increased regulations SUCCESS OF THE COUNTY'S for providing service, new technology, climate change, impacts of WATER/WASTEWATER AND SOLID changing labor force (secession planning), continued inflation WASTE ENTERPRISE FUNDS. and national economic impacts on cost —a project team that has experience in all aspects of water, wastewater, and irrigation quality and solid waste utility rates, finance, management, and strategic planning will be required. Our proposed project team includes a mix of senior staff members and experienced project analysts that have worked together and with the County for many years. The organizational chart highlights both the key project 0 team members that are located in our Maitland, FL office that will be responsible for the majority of the work effort as well as other strategic project team members that are available to assist T the County on other specialized needs and issues such as public I outreach, information technology, organizational structure and optimization, and other management and business needs that Project Director may arise. At the end of this section, we have included resumes Robert Ori, CPA for all of our team members that detail their qualifications as well as a description of their role on the project. Project ManagP- Thierry Boveri, CGFM Lead Analysts Ryan Smith Nick Smith, CGFM Trevor McCarthy Key Project Team All of whom are located in our Maitland, FL office Strategic Project Team Additional support available to assist the County on other specialized needs Management and Organization Seth Garrison Strategic Project Team Public Outreach and Affordability Melissa Elliott, APR Sam Villegas, APR IIIIIL Information Technology and Data Chris McPhee SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 63 The performance of the requested County services will be managed and performed by our team located in the Maitland, FL office, just a little over three hours away from the County. In order to show the depth of Raftelis and the resources available to the County, the following table summarizes our local office resources that will be available to support the County by experience (both in terms of years of utility experience and the type of experience). As shown on the following staff summary, all of the Maitland office professionals and project team members have accounting, financial, or economic backgrounds and the industry knowledge to address the County's issues and needs as well as the services that may be requested. Utility and solid Rates, finance, contract negotiations, competitive analyses, acquisitions, Robert Ori, CPA* 42 waste rate bond feasibility and compliance, special assessments, governmental Executive Vice President consultant services, strategic planning, franchise utility rate review, accounting issues, privatization, and public relations Mike Burton General Rates, finance, contract negotiations, acquisitions, bond feasibility and Executive Vice President 43 government compliance, special assessments, governmental services, strategic consultant planning, and public relations Henry Thomas Utility and Rates, finance, economics, public relations, contract negotiations, Vice President 42 stormwater rate competitive analyses, acquisitions, special assessments, bond feasibility consultant and compliance, and strategic planning Tony Hairston Utility rate Rates, finance, economics, public relations, contract negotiations, Vice President 23 consultant competitive analyses, acquisitions, special assessments, bond feasibility and compliance, and strategic planning Murray Hamilton, CPA 17 Utility rate Rates, finance, computer modeling, special assessments, stormwater, Senior Manager consultant governmental services, and accounting issues Thierry Boveri, CGFM* Utility and solid Rates, finance, economics, bond feasibility and compliance, contract Senior Manager 15 waste rate negotiations, special assessments, strategic planning, and computer consultant modeling Jeffrey Wilson 28 Utility rate Rates, acquisitions, franchise utility rate review, finance, special Manager consultant assessments, and computer modeling Ryan Smith* Manager 10 Utility rate consultant Rates, acquisitions, finance, and computer modeling Joe Williams 8 Utility rate Rates, finance, governmental services, franchise utility rate review, and Manager consultant computer modeling Mike Rocca 41 Utility rate Rates, finance, accounting and budgeting issues, special assessments, Senior Consultant consultant secondary disclosure, and computer modeling Dianne Holloway, CPA 37 Utility rate Rates, franchise utility rate review, finance, acquisitions, special projects, Senior Consultant consultant secondary disclosure, and computer modeling Shawn Ocasio 11 Utility rate Rates, finance, stormwater, governmental services, and computer Senior Consultant consultant modeling Matthew Or! Utility rate and Senior Consultant 7 stormwater Rates, finance, stormwater, and computer modeling consultant Nick Smith, CGFM* Utility and solid Consultant 6 waste rate Rates, finance, stormwater, and computer modeling consultant Mark Tuma Utility and solid Consultant 5 waste rate Rates, finance, stormwater, and computer modeling consultant SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 64 Trevor McCarthy* 3 Utility rate Analytical and cost allocation support, revenue requirements analyses, Consultant consultant and customer statistical use Michael Noga Associate Consultant Michelle Galvin Associate Consultant Peggy Perry Administrative Assistant Donna Cox Administrative Assistant 2 Utility rate consultant 1 Utility rate consultant 25 Administrative 18 Administrative Analytical and cost allocation support, revenue requirements analyses, and customer statistical use Analytical and cost allocation support, revenue requirements analyses, and customer statistical use Administrative and clerical Administrative and clerical * Denotes that they are a part of our primary project team. Resumes for each of our team members are on the following pages. During the performance of the projects as required by the County, it is anticipated that all of the designated project team members will be dedicated (assigned) to the County. Furthermore, our Project Director will be dedicated at a 50% availability rate and our Project Manager will be dedicated out at 75% availability rate. Therefore, 4.25 full-time equivalents will be assigned to the County's projects. As always, we will have available and will assign the necessary resources from both our Maitland office pool of professionals and our national team based on the specific expertise required to assure that the County's utility and solid waste projects are completed on time and on budget. We have not recognized any subconsultants to assist Raftelis in performing the services as described by the County in its Solicitation. Additionally, no part-time equivalents have been assigned to the County project. Not only is Raftelis extremely knowledgeable of the County and the south/central Florida region through our continuing service to Hillsborough, Manatee, Charlotte, Lee, Sarasota, Pinellas, Polk, and Hernando Counties, Raftelis is also involved nationally in the utility industry. The following page highlights some of the firm's unique accomplishments that further illustrate the depth of the firm and the resources available to the County. Unique Accomplishments Leading the industry Raftelis staff shapes industry standards for water and wastewater utility finance and management through our active leadership in the Association of Metropolitan Water Agencies (AMWA), the American Water Works Association (AWWA), the Water Environment Federation (WEF), and the Environmental Protection Agency (EPA). Leadership positions and projects for these organizations include: We wrote the book Raftelis staff members have co-authored many of the industry's leading guidebooks regarding water and wastewater financial and management issues, including: AMWA • INSIGHT database and survey AWWA • President • Asset Management Committee - 1 member • Benchmarking Committee - 1 member • Finance, Accounting, and Management Controls Committee - Chair and 2 members • Management and Leadership Division - Vice Chair & Trustee • Rates and Charges Committee - Chair and 4 members • Strategic Management Practices Committee - Chair • Co -lead biennial National Water & Wastewater Rate Survey WEF • Finance and Administration Subcommittee - Chair • Technical Practices Committee - 1 member • Utility Management Committee - 5 members • WEFTEC Conference Planning Committee - 1 member EPA • Environment Financial Advisory Board - 1 member • Affordability of Wastewater Service (WEF) • Manual of Practice No. 27, Financing and Charges for Wastewater Systems (WEF) • Manual M1, Principles of Water Rates, Fees and Charges (AWWA) • Manual M5, Water Utility Management (AWWA) • The Effective Water Professional (WEF) • The Water Resource Roadmap (WEF) Water and Wastewater Finance and Pricing: The Changing Landscape Water and Wastewater Rate Survey (conducted and published collaboratively with AWWA and Raftelis) • Water Rates, Fees, and the Legal Environment (AWWA) Recent utility services The key project team members have assisted the County on a variety of projects for over 17 years, including: 1) the ongoing evaluation of the sufficiency of rates to fully fund the cost of providing service, including the restructuring of rates; 2) the determination of impact fees charged to new development to promote growth paying its own way; 3) preparing financial feasibility disclosure reports and supporting the County in $186.4 million in utility debt financings; 4) assisting in the development of the reuse management program, including assisting in the development of the reuse ordinance, service and rate policies, major and basic agreements, and the rates for service; 5) developing wholesale service rates for service to other local governments; 6) developing solid waste forecasts and financial evaluations in support of its ongoing rate and strategic planning process; 7) as well as other services and projects for the County. This unique understanding of the utility and its recent history has resulted in Raftelis being a trusted, valued advisor to the County and a valuable team member as the County continues to meet the challenges and issues the utility will face in the future. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 66 Litigation Statement Raftelis Financial Consultants, Inc. (Raftelis) has not been involved in any lawsuits (firm and sub -consultants) relative to the services performed or failed to perform over the last five years. Raftelis has not failed to complete services under contract in the last five years. No officer or partner of Raftelis in the last five years has failed to complete a contract handled in his/her name. Robert J. Ori Executive Vice President Raftelis Financial Consultants, Inc. 341 N. Maitland Avenue, Suite 300 Maitland, FL 32751 Office: 407.628.2600 Mobile: 321.436.4121 Fax: 407.62.2610 Email: rori@raftelis.com SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 67 Robert J. Ori CPA PROJECT DIRECTOR Executive Vice President ROLE Rob will be responsible for overall project accountability and will provide quality assurance and control, industry perspective, and insights into the project. Rob has: 1) performed utility revenue sufficiency and cost -of -service studies for over 175 local governments; 2) prepared financial feasibility and disclosure reports for approximately 90 transactions totaling over $7.5 billion in proceeds in the traditional bond market, state revolving loans and rural development loans, 3) prepared financial due diligence evaluations for over 35 utility transactions; 4) served as the public service commission staff in the evaluation of franchised utility rate cases and has submitted testimony as an expert witness in support of rates; and 5) developed specialized rates such as low and high pressure reclaimed water rates, raw water rates, conservation rates, wholesale service and emergency service rates, development charges, and miscellaneous customer service rates. Rob has also been involved in the preparation of the capital improvement element for comprehensive land use plans, development and monitoring of municipal budgets, preparation of financial policies regarding liquidity and financial position, developed extension policies and agreements, assisted in development of service and capacity sales agreements and participated in contract negotiations, provided litigation support litigation services, and other related accounting, utility and public management advisory services. Rob has been a frequently invited speaker addressing rate, accounting, and industry issues and has recently been involved in the American Water Works Association (AWWA) Rates and Charges Committee and the Finance, Accounting and Management Controls Committee. He is a contributing author to the newest addition of AWWA's Manual of Practice No. 29, Fundamentals of Water Utility Capital Financing, Fourth Edition and for the most recent published volume of AWWA's Manual ofPractice No. 1, Principles of Water Rates, Fees and Charges, Seventh Edition and Contributing Author for the Water Environment Federation's 2017 published special publication, The Water Reuse Roadmap. KEY PROJECT EXPERIENCE Millennium Challenge Corporation (Mongolia) Rob directed the development of a financial forecast and rate tariff evaluation and plan in support of the Mongolia Second Compact Development for the Millennium Challenge Corporation (MCC) as documented in the "Financial and Institutional Sustainability study related to the Expansion of Bulk Water Supply in Ulaanbaatar, Mongolia" (the "MCC Report"). With respect to this project, Rob participated in on -site meetings with the Water Supply and Sewerage Specialties • Cost -of -service & rate studies • Utility acquisitions • Bond financing • Wholesale service • Developer/service agreements & policies • Connection/development fees • Business/strategic plans • Asset prioritization • Expert witness Professional History • Raftelis: Executive Vice President (2019-present) • PRMG: President (1994-2019) Education • Master of Science in Business Administration, Accounting - Rollins College (1985) • Bachelor of Science in Business Administration in Accounting & Finance - University of Central Florida (1977) Certifications • Certified Public Accountant - Florida, No. 15822 Professional Memberships • WEF • AWWA • Government & Florida Finance Officers Association • American & Florida Institute of Certified Public Accountants • Florida Stormwater Association • City of Winter Springs: Chair • Member of Citizens Advisory Group for Seminole County Educational Impact Fees (2017) • Member of the Charter Review Committee for the City of Winter Springs, Florida (2001) • Member of Florida Section AWWA Water Conservation Committee (1992-1997) SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 68 Authority of Ulaanbaatar (USAG - the water and wastewater utility purveyor), the Water Services Regulatory Commission (WSRC - the regulator for the establishment of rates), Housing and Public Utilities Company of Ulaanbaatar City (OSNAAUG - the primary wholesale customer), and other third parties to compile information and gain an understanding of the rate -making process and needs of the service area and developed a detailed financial model that included both a "utility -basis approach" (method generally employed by WSRC) and "cash needs approach" in the evaluation of revenue requirements and amounts to be recognized in the establishment of rates. The financial evaluation/model included: i) a customer and demand forecast, projections of operating expenses which also included incremental expenses associated with the MCC investment; ii) a utility plant (fixed assets) evaluation to estimate asset replacement for cash flow analyses and depreciation expense for tariff development; iii) a capital funding evaluation to identify debt/pay-as-you-go/and capital contributions in the evaluation of financial position; iv) a management dashboard that details the estimated fiscal position of the utility (liquidity, tariff sufficiency, capital contribution margins, debt leverage relationships, and other financial targets; and v) a schedule of proposed rate tariffs considered necessary to fund the revenue requirements of the utility. Rob also assisted in the preparation of the MCC Report. Martin County (FL) Rob has served the water, wastewater, and solid waste departments of Martin County (County) since 1994 and has performed a variety of utility services for the County. The initial services were associated with the performance of a rate evaluation to consolidate three separate districts into a single enterprise. In order to address the utility rate needs, Rob directed the development of a detailed cost -of -service analysis, which included the re -structuring of utility rates, development of reclaimed water rates, and the design of system development fees. Rob assisted in the financial valuation and acquisition of 12 privately owned utilities to bring the utilities under public ownership, eliminate small wastewater treatment systems, and to further regionalize system service to promote economies of scale. Rob also developed financial forecasts, rate covenant and additional bonds tests, and assisted in the rating agency presentations for seven separate bond issues totaling $140,840,000 in bond and state revolving fund loan proceeds. He also directed the development of a detailed solid waste business forecast to model the financial needs of the system and to develop tipping or disposal fees and collection fees, including the amount of fees that should be on the ad valorem tax bill (assessment) for residential service. As part of a managed competition (privatization) initiative of the County, Rob assisted the utility department in preparing a price bill (Rob was responsible for the Finance and Customer Service Component of the bill), which was won by the County and also assisted the department in the preparation and presentation of a change order to the bid price. Other services have included the development of wholesale service assisted with charges and assisted with the negotiation of a water and sewer capacity swap with the City of Stuart, FL, development of reclaimed water rates and large user agreements, providing assistance for the development of a wastewater extension/septic tank replacement program, development of a price index rate adjustment formula for operating margin maintenance, and providing on -going utility rate and financial services. City of West Palm Beach (FL) Rob has performed a variety of utility services for the City of West Palm Beach (City) since 1994. He directed the development of a detailed utility rate study for the City's water, wastewater, and stormwater enterprise funds. Responsibilities included overseeing the development of a detailed billing frequency to identify customer use attributes by class, development of a five-year revenue requirements analysis and capital funding plan, the design of rates for service including a water conservation rate structure, and the design of other rates including raw water rates, wholesale water and wastewater rates for full and emergency service, system development charges, and miscellaneous fees for service. Rob has continuously updated this study on behalf of the City. Rob has also developed financial forecasts, rate covenant and additional bonds tests, financial disclosure reports, and assisted in the rating agency presentations for 10 separate bond issues totaling $483,145,000 in bond proceeds, including the East Central Regional Treatment Operations Board financing which the City is the administrator for the facility. Other services have included providing assistance in wholesale service agreements, development of capital funding analyses in support of the utility master planning process and water treatment facility options, and other ongoing rate and financial services. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 69 Alexandria Renew Enterprises (VA) Rob directed the development of a detailed revenue sufficiency analysis and rate evaluation for the Alexandria Renew Enterprises wastewater utility. The evaluation included the development of a 10-year financial forecast of revenue requirements, which recognized a joint capacity partner in the treatment facility, the development of financial targets and performance measures based on best management practices and credit evaluation criteria, implementation of a new rate structure to increased fixed cost recovery and promote revenue stability, and the development of a sustainable capital finance plan. The financial forecast model has been updated annually and serves as the basis for the development of the annual utility budget. Most recently, Rob assisted in the conversion of moving from a quarterly to a monthly based billing process. Other services have included the development of sewer deduct and metering policies, review of customer service and billing agreements, and preparing financial forecasts and rate covenant evaluations associated with securing low interest loans from the Virginia Resources Authority. Hillsborough County (FL) Rob has performed a variety of services to Hillsborough County (County) over the past twenty-five years. The first engagement directed by Rob was an evaluation of the financial position, rates, and business issues and the identification of alternatives to improve financial performance and sustaining rates. This led to the development of the Blue Ribbon Committee by the Board of County Commissioners that developed a strategy/list of recommendations to improve the utility; Rob served as the lead consultant assisting the County staff during the Blue Ribbon Committee deliberations. Rob also directed the preparation of a detailed cost -of -service analysis to modify the rates for service. Attributes included the development of a detailed billing frequency to identify customer use attributes by class, development of a five-year revenue requirements analysis and capital funding plan, the design of innovative rates for service based on an equivalent residential unit basis (flow based by customer, not by meter size) which also included a water conservation rate structure, and the development of a purchased water pass -through adjustment and a price index adjustment clause to allow for operating margin stability. Rob also developed a financial disclosure report including rate covenant and additional bond compliance tests, assisted in the preparation of language revisions to the governing bond resolutions for operating, financing and accounting issues, and participated in the rating agency presentations for the issuance of utility revenue bonds (including Build America and Economic Recovery Bonds) totaling $448,179,000,000 and solid waste revenue bonds totaling $4,230,000 in bond proceeds. He also directed the development of a detailed solid waste business forecast to evaluate the financial needs of the system and to develop tipping or disposal fees and collection fees, including the amount of fees that should be on the ad valorem tax bill (assessment) for residential service. The financial forecasts for the water and wastewater system and the solid waste system have been updated annually as part of the County's strategic planning process. Most recently, he developed a street light rate evaluation (assessments) for approximately 740 lighting districts in the County, including the development of a revenue sufficiency analysis and multi -year forecast of needs, a cost allocation evaluation to recover costs, managed the development of the property assessment roll to bill the district rates, and assisted in the update of the Street Lighting Ordinance. Fairfax County (VA) Rob directed the development of a detailed revenue sufficiency analysis and rate evaluation for the Fairfax County (County) wastewater utility. The evaluation included a 10-year financial forecast of revenue requirements, which recognized the County's participation in several joint wastewater treatment capacity partnerships, the development of financial targets and performance measures based on best management practices and credit evaluation criteria, implementation of a new rate structure to increased fixed cost recovery and promote revenue stability, and the development of a sustainable capital finance plan. The financial forecast model has been updated annually and serves as the basis for the development of the annual utility budget and the ongoing five-year adopted rate schedule. Rob also developed a financial disclosure report including rate covenant and additional bond compliance tests for the Series 2010 Bonds issues totaling $152,255,000 in bond proceeds. Other services have included: the performance of a financial evaluation associated with the potential acquisition of both a private and public utility system; the development of a SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 70 wastewater capacity lease and sales agreement, including the price of such capacity, with another public utility in a jointly owned treatment facility, assistance in the development of a capital project tracking system; the development of wastewater system development fees; and the design of water system filing criteria for the regulation of water systems by the County. Newton County Water and Sewerage Authority (GA) This project directed by Rob included the development of a five-year financial forecast model and revenue sufficiency analysis to evaluate financial performance, revenue sufficiency, and the ability to sustainably fund the capital needs of the water and wastewater utility system. The analysis also included the phase -in of a re -design of rates to eliminate minimum water use allowances in the base charge, increase large customer fixed cost contributions based on implied capacity availability, increase water conservation incentives, and to promote revenue stability and fairness and the development of a purchased water pass -through consumption charge mechanism. Rob also assisted the Newton County Water and Sewerage Authority (Authority) in the development of wholesale wastewater rates to service a neighboring local government, including the preparation of a comprehensive wholesale rate agreement between the parties. Other services have included: evaluation of the wholesale wastewater effluent disposal charges for land application; review of customer billing and late fee application, development of large user rates for industrial customers, and providing continued financial model updates to monitor rates and financial conditions. Lee County (FL) Rob directed the preparation of a comprehensive cost -of -service study for the water and wastewater system which included a detailed customer billing frequency analysis, development of net revenue requirements, identification of a capital financing plan and cash flow evaluation, and the design of rates for service. Subsequent to the rate evaluation, Rob was responsible for overseeing the preparation of the financial due diligence, development of a system financial and rate consolidation analysis, and preparation of the bond feasibility disclosure report in support of the issuance of $134,615,000 in utility revenue bonds which financed a utility acquisition that increased the water customer base by 64% and the wastewater customer base by 37%. Since the acquisition, Rob has been involved in a number of projects for Lee County (County), including: i) the preparation of detailed bond feasibility reports for three transactions totaling $233,595,000 in bond proceeds; ii) the preparation of an update to the rate study to adopt a series of multi -year rate adjustments which were approved by the Board of County Commissioners as presented; iii) assisted in the valuation and negotiations of the purchase of the Gateway Services District wastewater treatment plant and regional site and the development of a separate bulk wastewater services agreement; iv) development of a detailed financial policy for the utility (maintenance of operating and capital reserves, financial targets, and long-term revenue sufficiency which was adopted by the Board of County Commissioners); and v) performing other miscellaneous services as requested by the County from time to time (e.g., development of a capital planning tool for staff to evaluate changes in CIP planning, evaluation of absorption of other private and publicly -owned utilities in the County, design of reclaimed water rates, etc.). He also directed the development of a detailed solid waste business forecast to evaluate the financial needs of the system and to develop tipping or disposal fees and collection fees, including the amount of fees that should be on the ad valorem tax bill (assessment) for residential service. Collier County (FL) Rob has been involved in directing numerous projects for Collier County (County) since 2001. Rob has directed: i) utility rate studies which involved the evaluation of the financial requirements of the utility, including the development of a sustainability plan (primary objectives being capital re -investment and financial sustainability) and the adoption of a multi -year rate phasing plan that was approved by the Board of County Commissioners; ii) the development of water and wastewater impact fees; iii) the design of wholesale rates; iv) assisting in the development of a reclaimed water policy, ordinance, major and basic user agreements for service, and the design of low and high pressure reclaimed water rates; v) the development of a bond feasibility disclosure reports in support of the issuance of $233,700,000 in bond proceeds; and vi) the development of an acquisition evaluation to consolidate a privately -owned utility system into the County SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 71 System. He also directed the development of a detailed solid waste business forecast to evaluate the financial needs of the system and to develop tipping or disposal fees and collection fees, including the amount of fees that should be on the ad valorem tax bill (assessment) for residential service. PROJECT LIST • Ascension Parrish (LA) • Brevard County (FL) • City of Boca Raton (FL) • Charlotte County (FL) • East Central Regional Wastewater Treatment Operations Board (Palm Beach County, Cities of West Palm Beach, Riviera Beach, Lake Worth and Town of Palm Beach) (FL) • Florida Governmental Utility Authority (FL) • Florida Keys Aqueduct Authority (FL) • City of Grimes (IA) • Hernando County (FL) • Town of Jupiter (FL) • Town of Jupiter Island (FL) • Town of Leesburg (VA) • Loudoun County (VA) • Manatee County (FL) • City of Miami Beach (FL) • Newton County (GA) • City of North Port (FL) • Oconee County (GA) • City of Palm Coast (FL) • Sarasota County (FL) • Spanish Fort Water System, Inc. (AL) • Stafford County (VA) • St. Lucie County (FL) • City of Sunrise (FL) • City of Waycross (GA) • City of Winchester (VA) • Town of Wrightsville Beach (NC) LITIGATION EXPERIENCE • Presented testimony as an expert witness or provided litigation support services before the following state and federal jurisdictions on utility rate, acquisition, and cost -of -service issues • Sarasota County, Public Utilities Commission - Pluris Southgate, Inc. (No Docket) • Charlotte County Board of County Commissioners, Waste Management of Florida, Inc. Rate Case, Docket No. WM016-001-SW (2016) • Lake Osborne Waterworks, Inc. vs. City of Lake Worth, Florida in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida - Case No. 502014-CA-008137 (2016) • Fletcher Allen, et. al. vs. The Water Works Board of the City of Birmingham in the Circuit Court of Jefferson County, Alabama - Civil Action No. CV 2009 908 • Sarasota County, Public Utilities Commission - Aqua Utilities Florida, Inc. (2008) (No Docket) • City of Treasure Island vs. City of St. Petersburg in the Circuit Court for Pinellas County, Florida Circuit Civil Division - Case No. 08-15359-CI-11 • Hillsborough County, Public Utilities Commission - Windermere Utility Co., Inc. (2006) (No Docket) SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 72 • City of Marco Island vs. State of Florida in the Circuit Court of the Twentieth Judicial Circuit in and for Collier County, Florida - Case No. 06-261-CA-TB (2006) • Sarasota County, Public Utilities Commission - Aqua Utilities Florida, Inc. Limited Rate Filing (2006) (No Docket) • Sarasota County, Public Utilities Commission - South Gate Utilities, Inc. (2006) (No Docket) • Citrus County Water and Wastewater Regulatory Authority Docket No. WS 05 01 • Pine Island Community Development District v. State of Florida Validation Hearing Case No. 04-CH3084 Fifth Judicial Circuit in and for Lake County • Sarasota County, Public Utilities Commission - Siesta Key Utilities, Inc. (2004) (No Docket) • City of West Palm Beach, et al. v. Department of Community Affairs and Palm Beach County — Case Nos. 04-4336GM, 04-4337GM, and 04-465OGM • Sarasota County, Public Utilities Commission - AquaSource Utilities, Inc. (2003) (No Docket) • Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, State of Florida — Case No. 01-CA-1921-16-9 • Circuit Court of the Sixteenth Judicial Circuit of the State of Florida, in and for Monroe County, Florida General Civil Division - Case No. CA-K-00-1525 • Town of Ft. Myers Beach, Lee County - Twentieth Judicial Circuit Case No. 99 1753-CA-JBR • American Arbitration Association - Town of Vernon, CT and Vernon W.P.C.A. vs. Town of Ellington and Ellington W.P.C.A. - Case No. 12 199 00150 98 • Circuit Court for Pinellas County, Florida General Civil Division - Case No. 98 000747-CI-011 • Circuit Court of St. Charles County, State of Missouri - Case No. CV196 7425CC (1997) • Polk County Utilities Commission - Grenelefe Utilities Co., Inc. (1995) (No Docket) • Twentieth Judicial Circuit Court, Collier County, Florida - Case No. 95 2052 CA-01-TB • Seventeenth Judicial Circuit, Broward County, Florida - Case No. 93-13263-14 • Charlotte County, Florida - Docket No. 92-106.06-WS • Federal Energy Regulatory Commission - Docket No. ER83-369 • Louisiana Public Service Commission - Docket No. U-15684 (1983) • North Carolina Utilities Commission - Docket No. G-21, Sub 235 (1983) PUBLICATIONS • "Preparing for Rate Studies and Bond Financings: Is Your Utility Ready?" Florida Water Resources Journal, 2013 • "Utility Rates and the Political Environment," AWWA Journal, 2011 • "The Water Reuse Roadmap," WEF Published Special Publication, 2011 • "Fundamentals of Water Utility Capital Financing," AWWA Manual of Practice 29, Fourth Edition • "Principles of Water Rates, Fees, and Charges," AWWA Manual of Practice 1, Seventh Edition PRESENTATIONS • "Capital Financing Plan: What Are My Options?" Florida Government Finance Officers Association (FGFOA) Annual Conference, 2016 • "A Water and Wastewater Utility Perspective on Water Supply and Pricing," Broward Leaders Water Academy, 2013 • "Preparing for Rate Studies and Bond Financings: Is Your Utility Ready?" Florida Section of the AWWA Conference, 2012 • "Financial Analysis of Utility Systems," FGFOA Annual Conference, 2010 • "Utilities are Big Business" FGFOA Annual Conference, 2009 • "Managing Wastewater Reuse Implementation as an Emerging Utility" The First Idaho Wastewater Reuse Conference, 2005 • "Developing Meaningful Management Reports," FGFOA Annual Conference, 2004 • "Contract Operations: The Martin County Experience," Seventh Annual American Water Works Association Customer Service Workshop, 1998 • "Competition and Customer Service," AWWA Customer Service Issues Conference, 1997 SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 73 • "Public -Private Partnering for Utility Infrastructure Financing in Collier County, Florida," AWWA Annual Conference and Exposition, 1995 • "Innovative Water Conservation Ratemaking," Florida Water Resources Journal, 1995 • "Utility Acquisitions," AWWA Water Utility Financing Conference, 1993 • "Establishing Water Conservation Rates," Florida Water Resources 67th Annual Conference, 1992 • "Water Conservation Rates and Solid Waste Variable Rates," FGFOA 49th Annual Conference, 1991 • "Innovative Financing Alternatives," AWWA Water Management Issues Conference, 1990 PROFESSIONAL HONORS • AWWA Management and Leadership Division 2011 Best Paper Award SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 74 Thierry Boveri CGFM PROJECT MANAGER Senior Manager 4ilo ROLL Specialties • Water & sewer rate study Thierry will manage the day-to-day aspects of the project ensuring it is within • Solid waste study budget, on schedule, and effectively meets the County's objectives. He will also • Bond/state loan feasibility study assist Rob in leading the consulting staff in conducting analyses and preparing • Utility acquisition/valuations deliverables for the project. Thierry will serve as the County's main point of wholesale service rates contact for the project. • Impact fee study • Business/strategic plans/negotiations PROFILE • Desktop financial asset evaluation/ reinvestment Thierry brings a client -focused approach with a strong desire to provide value and • Cost/benefit analysis client satisfaction. Thierry has performed numerous utility revenue sufficiency • Financial policies/best management and cost -of -service studies for more than 40 local governments throughout the practices southeastern united states, prepared financial feasibility and disclosure reports Professional History totaling over $1 billion in debt proceeds issued through the traditional bond • Raftelis: Senior Manager (2019- market, state revolving loans, and rural development loans; and assisted in a present) variety of economic and miscellaneous fee studies. Thierry has also been involved • PRMG: Associate (2005-2019) in the formulation of financial policies regarding liquidity and financial position Education related to industry best management practices. He has supported contract • Bachelor of Arts in Economics; negotiations and provided other related utility and management advisory Bachelor of Arts in International services. Business - Rollins College (2005) Thierry is an active member of AWWA, WEF, GFOA and SWANA through his Certifications • Certified Government Financial participation on several committees, periodic conference presentations on subject Manager, No. 15483 matters ranging from effective utility management (EUM) to the Circular Economy and as a principal author to WEF's Manual of Practice No. 27, Financing Professional Memberships and Charges for Wastewater Systems and the WEF Water Reuse Road Map. Most • AWWA: Florida Section - Finance & Rates Committee recently, Thierry served on the selection committee for WEF's inaugural national • WEF: Utility Management Stormwater and Green Infrastructure Symposium. Committee • Government Finance Officers Association KEY PROJECT EXPERIENCE • Solid Waste Association of North America: Florida - Finance & City of Cooper City (FL) Planning Committee Thierry has assisted the City of Cooper City (City) since 2007, including periodic revenue sufficiency evaluations, financial evaluations in support of the City's Utility Master Plan, development of conservation tiered rates and presentation of rate recommendations to City Commission. Thierry served as the primary analyst and project manager for the most recent engagement. Martin County (FL) Thierry has performed a variety of services for Martin County (County) since 2005, including annual updates to the water and wastewater financial forecast and periodic updates of the solid waste models. Thierry has assisted the County with the issuance of the Utilities System Improvement Revenue Bonds Series 2009 issued in the principal amount of approximately $36.7 million. Thierry served as the project manager for the most recent engagement. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 75 City of Sunrise (FL) Thierry has assisted the City of Sunrise (City) since 2007, including periodic revenue sufficiency evaluations, financial evaluations in support of the City's Utility Master Plan and reclaimed water rate evaluations. During 2010, Thierry performed a detailed utility rate evaluation and a subsequent bond feasibility study, the primary purpose to support the capital program identified in the City's utility master plan. The study resulted in the adoption of a 40% rate increase to fund the capital improvement program and issuance of approximately $118,615,000 of Utility System Revenue Bonds, Series 2010 (which included Federally Taxable Build America Bonds). Thierry serves as a primary point of contact and project manager for the most recent engagements. Lee County (FL) Thierry has assisted Lee County (County) with a comprehensive revenue sufficiency and rate study for the water and wastewater system and solid waste system resulting in the adoption of multi -year rate plan, financial policies, issuance of indebtedness and recommendations concerning development and changes to bond covenants, miscellaneous fees, review of service agreements, and other activities. The adopted rate plans included review of trends in historical operating results and detailed customer and tonnage billing statistical analysis, forecast of the net revenue requirements, and identification of a capital financing plan and cash flow evaluation, and the design of rates for service. Subsequent to the rate evaluation, Thierry assisted the County in development of a detailed financial policy as adopted by the Board of County Commissioners to formalize the financial management goals including: maintenance of operating and capital reserves, limitations on the issuance of debt, cash flow for capital reinvestment and long-term revenue sufficiency. Thierry also assisted the County in the development of an abridged financial model (capital planning tool) specifically designed for use by staff to determine effects on financial position and rates over various capital financing scenarios and overall capital funding levels. Hillsborough County (FL) Thierry has performed a variety of services for Hillsborough County (County) since 2007, including annual updates to the water, wastewater and solid waste financial forecast models. Specifically, Thierry began assisting the County through improvements to the water and wastewater financial management dashboard and development of a detailed customer statistical and revenue model used in the County's budget process. Thierry was the principal analyst in the development of a comprehensive solid waste financial forecast model used by staff to identify revenue sufficiency and rate design relative to solid waste fees and to aid in cost benefit decisions related to solid waste disposal options, negotiations, economic analyses of fixed and marginal costs and other fiscal related analyses. Thierry has assisted the County with the recent issuance of the water and wastewater system Utility Revenue Bonds Series 2016 in the principal amount of approximately $208 million and the Solid Waste and Resource Recovery Facility Bonds Series 2016 A/B in the combined principal amount of approximately $114 million. Thierry has also assisted the County with review of contracts and validation of compliance with application of indexing provisions to charges by the County's solid waste franchise haulers. Fairfax County (VA) Thierry has been the lead analyst and project manager for Fairfax County (County) since 2012, performing annual updates to the detailed revenue sufficiency analysis, availability fee determination and rate evaluation for the wastewater utility. As part of the annual study updates, Thierry participates in the annual planning conference with utility management to identify critical issues facing the utility. The issues addressed through the annual studies have included, but are not limited to: • Modeling and analyzing the contractual relationships and the cost of treatment capacity among the County's own WWTP relative to its capacity entitlements with five other local governments/authorities; • Assisting in establishing quarterly fixed charges through analyses to determine the appropriate level of fixed cost recovery; SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 76 Determining and justifying the current level of "Pay -Go" capital reinvestment from user rate revenues (currently at 3% of gross fixed assets) through desktop evaluation of fixed asset records; Assisting in the formulation of the methodology, valuation and structure of the sale of capacity by the County to existing wholesale customers; and Analyzing potential causes for differences among reported revenues and billed revenues. This process of continual evaluation of the County's financial position and evaluation of specific rate study objectives that are ever evolving has been effective in supporting a sustainable financial plan with predictable rate needs. Manatee County (FL) Thierry has assisted Manatee County (County) with a comprehensive cost -of -service study for the water and wastewater system which resulted in the adoption of the recommended rate design. Subsequent to the rate evaluation, Thierry assisted the County in the financial due diligence and financial feasibility report supporting the issuance of $78.1 million in utility revenue bonds for funding improvements to the water, wastewater, solid waste and stormwater utility system. Thierry is currently assisting the County with a revenue sufficiency and financial forecast study for the water and wastewater utility, which included the formulation of internal policies for financial management targets to promote the overall credit worthiness of the utility in anticipation of potential issuance of additional bonds identified in the near -term. PROJECT LIST • Alexandria Renew Enterprises (VA) • City of Arcadia (FL) • Brevard County (FL) • Collier County (FL) • Crossings at Fleming Island CDD (FL) • Daphne (AL) • DeSoto County (FL) • Dunes CDD (FL) • Hernando County (FL) • Town of Jupiter (FL) • Key Largo Wastewater Treatment District (FL) • Town of Leesburg (VA) • Loudoun County (VA) • City of Miramar (FL) • Sarasota County, FL • South Martin Regional Utility (FL) • City of St. Marys (GA) • Stafford County (VA) • City of Sunrise (FL) • City of Winchester (VA) • City of Zephyrhills (FL) SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 77 Ryan Smith LEAD ANALYST Manager KV LL Specialties • Retail & wholesale cost -of -service & Ryan will serve as a Lead Analyst and will work at the direction of Thierry in rate evaluations conducting analyses and preparing deliverables for the project. • Bond feasibility & capital finance plans • Financial forecast modeling PROFILE • Customer billing analysis Ryan has focused on specialized utility rate, infrastructure, and business issues • Utility valuations • Franchise fee evaluations facing water, wastewater, reclaimed water, solid waste, and stormwater utilities. Ryan has performed cost -of -service studies, revenue sufficiency studies, impact Professional History fee evaluations, wholesale rate evaluation, utility valuations, and capital finance • Raftelis: Manager (2020-present); plans for water, wastewater, stormwater, reclaimed water, and solid waste Senior Consultant (2019-2019) enterprise funds for more than 40 government entities. He has also assisted with • PRMG: Consultant (2011-2019) the preparation of financial feasibility and disclosure reports and capital finance Education plans in support of the issuance of over $985,000,000 of bonds and securing over • Bachelor of Science in Accounting - $185,000,000 of state revolving loans. He has evaluated compliance of the receipt University of Central Florida (2010) of electric franchise fees with interlocal agreements; performed utility valuations in support of private to public transactions; and provided related accounting, Professional Memberships financial, utility, and public management advisory services such as the • Florida Government Finance Officers Association preparation of financial analyses in support of the capital improvement planning • Georgia Government Finance process as well as the development and monitoring of municipal budgets. Officers Association • American Water Works Association KEY PROJECT EXPERIENCE Newton County Water and Sewerage Authority (GA) Ryan assisted in the development of a five-year financial forecast model and revenue sufficiency analysis to evaluate financial performance, revenue sufficiency, and the ability to sustainably fund the capital needs of the water and wastewater utility system. The analysis also included the phase -in of a re -design of rates to eliminate minimum water use allowances in the base charge, increase large customer fixed cost contributions based on implied capacity reservations, increase water conservation incentives, and to promote revenue stability through the development of a water supply charge (pass -through) mechanism. Other services have included: review of customer billing and late fee application and providing continued financial model. Newton County Water Department (GA) Ryan managed the development of a five-year revenue sufficiency and capital funding analysis to evaluate the ability to sustainably fund the capital needs of the county's owned and operated water assets. The evaluation assisted the department in developing a capital funding plan which relied upon both "Pay -As -You -Go" (cash) and debt to fund the near and long term capital requirements of the system while improving the financial position of the department. Ryan has continued to provide annual financial model updates to monitor capital, rates and financial stability. City of West Palm Beach (FL) Ryan has performed a variety of utility services for the City of West Palm Beach (City) since 2011. The City of West Palm Beach Water and Wastewater Utility System provides service to over 65,000 customers and is currently an AA rated utility as rated by Standard and Poor's. Ryan assisted in the development of a detailed utility rate study for the SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 78 City's water, wastewater, and stormwater enterprise funds in 2012. Responsibilities included the development of a detailed billing frequency to identify customer use attributes by class, development of a five-year revenue requirements analysis and capital funding plan, and the design of other rates including wholesale water and wastewater rates for full and emergency service, and miscellaneous fees for service. Ryan has worked with the City to continuously update and perform sensitivity support services to the financial forecast to recognize changes in revenues, expenses, cost allocations, capital needs, financial position, and capital financing assumptions to assist the City with its long-range utility planning process. East Central Regional Operations Board (FL) The East Central Regional Water Reclamation Facility (ECRWRF) is a wastewater treatment facility which has a rated capacity of 70 million gallons per day (MGD) and provides wastewater treatment service to the City of West Palm Beach, Palm Beach County, the City of Riviera Beach, the City of Lake Worth, and the Town of Palm Beach. Ryan assisted in the development of a detailed revenue sufficiency analysis and bond feasibility analysis for the issuance of $87,665,000 in utility revenue bonds by the East Central Regional Operations Board to fund sludge residual processing and other facility improvements. The evaluation included the development of a five-year financial forecast of revenue requirements, which recognized the allocation of costs to the joint capacity partners in the ECRWRF, the development of financial targets and performance measures based on best management practices and credit evaluation criteria, and the development of a sustainable capital finance plan. Other services have included the development of annual continuing disclosure documents associated with annual financial reporting requirements. City of Daytona Beach (FL) Ryan assisted in the development of a detailed revenue sufficiency analysis and rate evaluation for the City of Daytona Beach's (City) water, wastewater and stormwater utility. The evaluation included the development of a five-year financial forecast of revenue requirements, the development of financial targets and performance measures based on best management practices and rating agency credit evaluation criteria, and the development of a sustainable capital finance plan. Other services have included: the performance of an ongoing financial evaluation of the City's capital improvement plan, assistance in financial disclosure documents for the State of Florida Revolving Loan Program (SRF), the performance of an analysis or an automated meter replacement/increased metered water revenue analysis, and the development of a wholesale wastewater cost allocation and rate analysis. PROJECT LIST • Fairfax County (VA) • Florida Keys Aqueduct Authority (FL) • Hillsborough County (FL) • Town of Jupiter Island (FL) • Lee County (FL) • City of Leesburg (FL) • Town of Leesburg (VA) • Martin County (FL) • North Sumter County Utility Development District (FL) • City of Oakland Park (FL) • City of Palm Coast (FL) • Village of Palm Springs (FL) • City of Pinecrest (FL) • St. Lucie West Services District (FL) • City Sunny Isles Beach (FL) • City of Sunrise (FL) • City of Tampa (FL) • City of Titusville (FL SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 79 Nick Smith CGFM LEAD ANALYST Consultant ROLE Nick will serve as a Lead Analyst and will work at the direction of Thierry in conducting analyses and preparing deliverables for the project. Ia:Z6lyl,4 Nick has six years of professional experience in rate and financial consulting services. Nick provides analytical support for projects involving water, wastewater, and solid waste enterprise systems focusing on data analysis and financial forecasts and utility rate studies. These projects have involved tasks including customer statistical analyses, projections of system revenues and expenditures, and developing client -specific financial models. KEY PROJECT EXPERIENCE Lee County (FL) Nick has assisted on multiple projects for Lee County (County), including updating the financial forecast for the water and wastewater system and the development of a comprehensive revenue sufficiency study for the County's solid waste system. The solid waste study included review and analysis of historical operating results, customer billing and tonnage statistics, waste -to -energy (WTE) facility operations and agreements to identify revenue sufficiency. Nick assisted in the multi -year design of solid waste disposal fees and assessment rates. Additionally, Nick assisted the County with the issuance of the Solid Waste System Refunding Revenue Bonds, Series 2016 in the principal amount of approximately $66 million. Specialties • Financial/computer modeling • Rate design & customer impact analyses • Customer billing analysis • Utility rate surveys Professional History • Raftelis: Consultant (2019-present) • PRMG: Senior Rate Analyst (2016- 2019); Rate Analyst (2014-2016) Education • Bachelor of Science in Business Administration, Economics - University of Central Florida, University Honors, summa cum laude(2014) Certifications Certified Government Financial Manager (CGFM) Professional Memberships • AWWA: Rates & Charges Committee • Solid Waste Association of North America • WEF • Florida Government Finance Officers Association Hillsborough County (FL) Nick was the primary analyst in the annual revenue sufficiency and rate design studies for Hillsborough County's (County) solid waste system. Nick has assisted the County with review of contracts and validation of compliance with application of indexing provisions to charges by the County's solid waste franchise haulers, rate impact analyses related to solid waste various disposal options, and other fiscal analyses. Additionally, Nick assisted the County with the issuance of the Solid Waste and Resource Recovery Facility Bonds, Series 2016 A&B in the combined principal amount of approximately $114 million. Collier County (FL) Nick has performed a range of services for Collier County (County). He was the primary analyst in annual revenue sufficiency and rate design studies, impact fee studies, and miscellaneous fee studies for the County's water and sewer system. The revenue sufficiency studies involved capital funding strategies to optimize the use of existing cash resources, while employing additional borrowing to mitigate customer rate impacts. Additionally, Nick assisted the County with the issuance of the Water and Sewer Revenue Bonds, Series 2019 in the principal amount of approximately $76 million. Nick also served as the primary analyst for the revenue sufficiency studies performed for the County's solid waste system. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 80 Hernando County (FL) Nick assisted in the development of a detailed 10-year financial forecast to evaluate the sufficiency of revenues to cover the solid waste system's operating, capital, and other expenditure needs. This assignment required an in-depth analysis of Hernando County's (County) historical and budgeted operating expenses and customer statistics to serve as a basis for expenditure and revenue projection. Additionally, an analysis of landfill capacity utilization, cost of closure, and long- term care expenses was prepared to identify the required transfers to the County's closure and capital improvement funds, as required by the Florida Department of Environmental Protection. Sarasota County (FL) Nick assisted in the development of a 10-year Fire Assessment and Emergency Medical Services (EMS) revenue requirements forecast. Throughout the study he performed projections of assessment and ad -valorem tax revenues, operating expenses, the funding of capital projects and personnel allocation between Fire and EMS. From these analyses he was able to assist in developing projected fire assessment rates and the EMS component of Sarasota County's property tax millage rate. Charlotte County (FL) Nick assisted in the analysis and rate review of estimated rates being developed by Charlotte County's franchise hauler. The sanitation rate case included review and analysis of the rate filing and the development of a rate evaluation model. The model evaluated the cost of providing collection services and included an analysis of customer billing statistics, operating expenses, and fixed assets. City of Plant City (FL) Nick was the primary analyst in the revenue sufficiency and rate design study for the City of Plant City's solid waste system. The solid waste study included an analysis of collection customers, tonnage disposal statistics, and various capital scenarios (e.g., conversion to automated collection in order to determine revenue sufficiency. Cost of service rate design by customer class was evaluated in order to ensure fair and equitable rates among the customer classes. Miami Shores Village (FL) Nick was the primary analyst in the revenue sufficiency and rate design study for Miami Shores Village's solid waste system. The solid waste study included an analysis of collection customers, tonnage disposal statistics, and capital funding in order to determine revenue sufficiency. Cost of service rate design by customer class was evaluated in order to ensure fair and equitable rates among the customer classes. City of Orlando (FL) Nick has assisted the City of Orlando (City) in the development of the five-year wastewater system financial forecast in support of the revenue sufficiency, benefit fee, and rate design study. Nick updated the City's rate/financial model, including customer statistics, revenues, and wastewater operating cost. He prepared and analyzed detailed customer billing records in support of bill frequency analysis and customer demand forecast, projection of operating and maintenance expenses and financial sensitivity analyses due to changes in timing and overall level of funding for identified capital improvement projects of the wastewater system. Nick assisted with various rate design sensitivity analyses including equitable rate design structures for multi -family customers and level of service. Additionally, Nick assisted with the calculation of benefit (impact) fees which involved analysis of city fixed asset records, reserved capacity agreements, and annual flow data. City of Edgewater (FL) Nick was the primary analyst in the revenue sufficiency study for the City of Edgewater's solid waste system. The solid waste study included an analysis of customer statistics, operating expenses, and capital funding in order to determine revenue sufficiency and develop the recommended revenue adjustments. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 81 Babcock Ranch Community Independent Special District (FL) Nick served as the primary analyst for the financial forecast in support of the development of a lease option to purchase agreement for Babcock Ranch Community Independent Special District's (District) start-up solid waste system. The financial forecast included development of projected customer growth, which served as the basis for the acquisition of additional waste collection vehicles and equipment, collection containers, and disposal of waste for strategic planning purposes. With the assistance of District staff and the solid waste system's operational experts, a forecast of operating expenses and other funding requirements was developed resulting in the derivation of preliminary collection rates for the solid waste system. Pinellas County (FL) Nick served as the primary analyst for Pinellas County's revenue sufficiency study for the solid waste system. The solid waste study included review and analysis of historical operating results, customer billing and tonnage statistics, waste -to - energy (WTE) facility operations, and contractual agreements and invoices to identify revenue sufficiency. Nick assisted in the multi -year design of solid waste disposal fees, as well as over 20 rate scenarios evaluating the potential effects of contractual revenue changes for the system. City of Apopka (FL) Nick has assisted in an analysis of the City of Apopka's (City) recreational municipal impact fees. He performed an analysis of population projections, dwelling unit relationships, and developed corresponding growth projections. He also assisted in discussions with the City regarding the determination of level of service (LOS) standards and the capital requirements needed to serve new development. Nick assisted in the design of the impact fees for the residential customer classes. City of Umatilla (FL) Nick has assisted in an analysis of the City of Umatilla's (City) police, fire protection, and recreational municipal impact fees. He performed an analysis of population projections, dwelling unit relationships, and developed corresponding growth projections. He also assisted in discussions with the City regarding the determination of level of service (LOS) standards and the capital requirements needed to serve new development. Nick assisted in the design of the impact fees for the residential and non-residential customer classes. City of Miramar (FL) Nick has assisted in an analysis of the City of Miramar's (City) recreational municipal impact fees. He performed an analysis of population projections, dwelling unit relationships, and developed corresponding growth projections. He also assisted in discussions with the City regarding the determination of level of service (LOS) standards and the capital requirements needed to serve new development. Nick assisted in the design of the impact fees for the residential customer classes. City of Clermont (FL) Nick was the primary analyst in the revenue sufficiency study for the City of Clermont's solid waste system. The solid waste study included an analysis of customer statistics, operating expenses, and capital funding in order to determine revenue sufficiency and develop the recommended revenue adjustments City of Lakeland (FL) Nick was the primary analyst in the annual revenue sufficiency studies for the City of Lakeland's water and sewer system. The studies included an analysis of customer statistics, operating expenses, and capital funding in order to determine revenue sufficiency and develop the recommended revenue adjustments. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 82 City of Sanibel (FL) Nick was the primary analyst in the annual revenue sufficiency studies for the City of Sanibel's water and sewer system. The studies included an analysis of customer statistics, operating expenses, and capital various capital funding scenarios in order to determine revenue sufficiency and develop the recommended revenue adjustments. City of Haines City (FL) Nick was the primary analyst in the annual revenue sufficiency studies for the City of Haines City's water and sewer system. The studies included an analysis of customer statistics, operating expenses, and capital funding in order to determine revenue sufficiency and develop the recommended revenue adjustments. PROJECT LIST • City of Apopka (FL) • Babcock Ranch Community Independent Special District (FL) • Charlotte County (FL) • City of Clermont (FL) • Collier County (FL) • City of Davenport (FL) • City of Edgewater (FL) • City of Eustis (FL) • City of Groveland (FL) • Hernando County (FL) • Hillsborough County (FL) • Immokalee Water and Sewer District (FL) • City of Lakeland (FL) • Lee County (FL) • Manatee County (FL) • City of Melbourne (FL) • Miami Shores Village (FL) • City of Miramar (FL) • City of Orlando (FL) • City of Panama City (FL) • City of Panama City Beach (FL) • Pinellas County (FL) • City of Plant City (FL) • Sarasota County (FL) • City of St. Augustine (FL) • City of Stuart (FL) • City of Tampa (FL) • City of Umatilla (FL) • Virgin Islands Water and Power Authority (Virgin Islands) • City of West Palm Beach (FL) PUBLICATIONS The Water Reuse Roadmap, "Chapter 5 — Financial Sustainability," WEF, 2018 Manual of Practice 27: Financing and Charges for Wastewater Systems, Fourth Edition, "Chapter 10 — System Development Charges," WEF, 2018 PRESENTATIONS • "A Multi -Faceted Approach to Affordability," Florida Section AWWA Fall Conference, 2018 • "Water Rate Affordability," Central Florida Government Finance Officers Association Annual Meeting, 2019 SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 83 Trevor McCarthy LEAD ANALYST Consultant Rapt Trevor will serve as a Lead Analyst and will work at the direction of Thierry in conducting analyses and preparing deliverables for the projects and services requested. PROFILE Trevor has contributed to projects involving water, wastewater, solid waste, and stormwater enterprise systems. These projects have focused on the evaluation of financial position and involved developing revenue and expense projections, analyzing customer data, the development of user rates and fees, and developing client specific financial models. I:/=d;J:T-ON*1a*:1»:114ZLai � Bay County (FL) Trevor assisted in the analysis of revenue sufficiency for the County's retail and wholesale water and wastewater enterprise systems. The evaluation comprised of a detailed customer analysis to determine the effects of Hurricane Michael in 2018 to projected revenues. City of Edgewater (FL) Trevor assisted in the development of a five-year financial forecast to evaluate 2 Specialties • Financial modeling/forecasting • Revenue sufficiency studies • Customer billing analysis • Utility impact fee analysis Professional History • Raftelis: Consultant (2020-Present); Associate Consultant (2019-2019) • PRMG: Rate Analyst (2018-2019) Education • Bachelor of Science in Business Administration, Finance - University of Central Florida (2017) Professional Memberships - AWWA Florida Government Finance Officers Association financial performance and the ability to meet projected funding requirements of the City of Edgewater's water and wastewater, refuse, and stormwater enterprise systems. The analyses included revenue and expense projections and revenue requirements for each system based on historical and projected customer and other utility data. Collier County (FL) Trevor has assisted in the analysis of revenue sufficiency and rate design for Collier County's Solid and Hazardous Waste Management division. This involved developing detailed projections of revenues and expenses, customer growth, and capital funding requirements to develop a ten-year forecast. Trevor also assisted in the development of a financial dashboard that County staff could use to test the sensitivity of rate requirements based on various capital financing scenarios and financial objectives. Lee County (FL) Trevor has assisted with multiple projects for Lee County, including financial forecast for the water and wastewater system, revenue sufficiency, and impact fee evaluation. Trevor has also assisted in ongoing updates to a capital planning tool designed for County staff to determine effects on financial position and rates over various capital financing scenarios. Sarasota County (FL) Trevor assisted in the preparation of a financial feasibility study in support of Sarasota County's issuance of Utility System Revenue Refunding Bonds, Series 2019A in the principal amount of approximately $38.7 million. This included a SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 84 comprehensive analysis of the County's financial position and creation of a 5-year financial forecast to evaluate the sufficiency of revenues. Trevor continues to support the County in annual revenue sufficiency studies. City of Valdosta (GA) Trevor has assisted in projects for the city including updating a detailed financial forecast in order to assess revenue sufficiency, review of the City of Valdosta's adopted utility rates, and analysis of capital projects and financing. PROJECT LIST • Bay County (FL) — Water and wastewater rate study (retail and wholesale systems) • City of Canton (GA) — Water and wastewater rate study • Collier County (FL) — Solid waste cost -of -service rate study • City of Davenport (FL) — Water and wastewater rate, miscellaneous fee, and impact fee study • City of Edgewater (FL) — Water, wastewater, refuse, and stormwater rate study • Town of Goffstown (NH) — Water and wastewater rate study • City of Haines City (FL) — Water and wastewater rate, miscellaneous fee, and impact fee study • City of Inverness (FL) — Water and wastewater rate study • Key Largo Wastewater Treatment District (FL) — Wastewater rate study • Lee County (FL) — Water and wastewater rate study, capital planning tool • Martin County (FL) — Water and wastewater rate study • Newton County (GA) — Wholesale water rate study • Newton County Water and Sewerage Authority (GA) — Water and wastewater rate study • City of Oakland Park (FL) — Water and wastewater rate and miscellaneous fee study • City of Ocoee (FL) — Water and wastewater rate study and reclaimed water rate design • Okeechobee Utility Authority (FL) — Water and wastewater rate study • City of Orlando (FL) — Reclaimed water cost -of -service analysis • City of Palm Coast (FL) — Parks and recreation services and fire and EMS impact fee studies • City of Panama City (FL) — Water and wastewater rate study, solid waste rate study • City of Sanford (FL) — Water and wastewater rate study • Sarasota County (FL) — Stormwater capital planning tool, bond feasibility, and water and wastewater rate study • St. Lucie West Services District (FL) — Water and wastewater rate study • City of Tampa (FL) — Bond feasibility study • City of Valdosta (GA) — Water and wastewater rate study • City of Winter Garden (FL) — Water and wastewater rate study, stormwater rate study, and impact fee study SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 85 Seth Garrison MANAGEMENT AND ORGANIZATION Senior Manager pik ROLL Specialties Seth will be available to provide support for potential management • Utility and asset management . Performance management (measurement, and organizational components of this engagement. benchmarking, dashboarding, etc.) • Operational efficiency and effectiveness PROFILE • Organizational and operations assessments • Capital planning and budgeting Seth has over 25 years of experience leading, consulting with, and • Organizational capacity building regulating utilities and public agencies of all sizes, both public and • Utility governance and policy private. He combines over 15 years of hands-on experience as the former General Manager of a regional utility and as a board Professional History member of two water and wastewater utilities, with an additional 15 • Raftelis: Senior Manager (2016-present) - Portland Water District: Board of Trustees - years of overlapping consulting experience advising several of the Administration & Finance Committee Chair largest and best-known utilities in the U.S., the U.S. Agency for (2014-present) Scarborough Sanitary District: Board of Trustees International Development (USAID), and several foreign Member (2013-2016) governments on management, organizational development, • Woodard & Curran, Inc.: Vice President/Utility operations practices, and strategy. Seth has extensive knowledge of Management Practice Leader (2012-2016) performance management techniques, advanced operations and • CDM Smith, Inc.: Senior Management Consultant (2004-2012) maintenance practices, and change management frameworks. • Bath Water District: General Manger/Superintendent • (1995-2004) Seth has a history of seeking challenging assignments where he can • State of Maine: Drinking Water Program: Surface Water Treatment Coordinator (1993-1995) apply his extensive public sector experience and multi -disciplinary education in management, economics, and engineering to complex Education problems. He began his career as a regulator, leading • Master of Public Policy & Management - University of implementation of the complex and enormously expensive Surface Maine (2010) Water Treatment Rule. He then became the general manager of a - Masters Certificate in Performance Management - University of Maine (2009) failing utility that was teetering on the edge of financial insolvency. - Masters Certificate in Non -Profit (Public Sector) He turned the organization around and into an award -winning Management - University of Maine (2008) organization. Later as a consultant, Seth worked internationally, • Bachelor of Science in Engineering (Minor Economics) - Rensselaer Polytechnic Institute (1993) helping the governments of Afghanistan, Jordan, Guam, Mozambique, and the U.S. implement management practices and Certifications environmental policy at the national level, while simultaneously • Certified Lean Six Sigma Master Black Belt assisting various development agencies with the implementation of • BAMI-I (CTAM) Certification in Infrastructure Asset Management (Indiana University) more than $500 million in aid. In addition, he has assisted well- . Class IV Water System Operator (lapsed) known utility organizations in the U.S. like Pittsburgh Water and • Conflict Resolution Program - Harvard Business Sewer Authority, Metro Water Services (Nashville), Boston Water School and Sewer Commission, New York City DEP, Denver Water, Philadelphia Water, North Texas Municipal Water District, and Professional Memberships . AWWA: Chair of Strategic Management Practices PRASA (Puerto Rico) solve complex management and Committee & Member of the Benchmarking infrastructure strategic challenges. Committee • WEF: Utility Management Committee Seth is the former chair of the AWWA s Strategic Management • New England Water Environment Association: Utility Management Committee Practices Committee, which recently rewrote AWWA's MS Utility • New England Water Works Association Management Manual — the industry guide for utility management • Maine Water Utilities Association: Past Board of Directors Member SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 86 practices. He participates bi-annually on producing AWWA's Benchmarking Performance Indicators for Water and Wastewater as a member of the Benchmarking Advisory Committee. I:/=d;J:Z•rJ=101i*:l»:114ZLai � Management and Performance Improvement Experience Pittsburgh Water and Sewer Authority (PA) Threatened with privatization and challenged by Lead and Copper Rule exceedances and high -profile infrastructure failures, Pittsburgh Water and Sewer Authority (PWSA) was labeled a "failing utility" by many. Thanks to strong leadership and the help of Seth and the team from Raftelis, things have turned around. Raftelis provided assistance with both the financial and the organizational aspects of PWSA. Raftelis was instrumental in helping PWSA enact a series of rate adjustments totaling 5 1 % over 3 years to provide the necessary revenue to hire additional staff and begin fixing a decades -long backlog of infrastructure needs. Seth, who worked side -by -side with PWSA leadership, helped address major organizational challenges. Seth and the Raftelis team provided an aggressive Compliance and Organizational Plan that convinced business leaders and community officials that PWSA had a framework for success. They then helped PWSA implement elements of the plan including creation of a new PWSA Performance Improvement office, aligned PWSA practice with Pennsylvania Public Utility Commission requirements, and fixed a series of onerous legacy rules about hiring, resource sharing and metering that limited performance. PWSA is now on a path to success and is rapidly gaining the confidence of its customers. Anchorage Water and Wastewater Utility (AK) Seth has worked on several projects over the years with Anchorage Water and Wastewater Utility (AWWU). These efforts have included a comprehensive organizational study as well as asset management projects. The organizational and operations assessment included a detailed look at how the utility operates, considering staffing, work processes and potential partial consolidation with other municipal department such as solid waste. This work included interviews with senior staff, as well as managers and supervisors through the organization. Benchmarking and business process work was done to highlight areas for improvement. The project produced a revised organizational design and decision -making process to help meet desired levels of service affordably. In partnership with CDM Smith, he performed a comprehensive assessment of all the assets at two major AWWU facilities, the Ships Creek Water Treatment Facility and Asplund Wastewater Treatment Facility, to determine asset renewal priorities and implementation strategies for advanced risk -based Asset Management practices. These elements were incorporated into an overall facilities master plan. The project identified maintenance strategies, data collection methods, new approaches, and capital prioritization techniques to ensure sustainability at the lowest lifecycle cost. Implementing risk -based Asset Management practices was especially important for AWWU given the additional challenges of a harsh climate, the relative remoteness of the facilities, and the seismic hazards in the region. North Texas Municipal Water District (TX) North Texas Municipal Water District (District) is one of the largest regional water, wastewater and solid waste utilities in the US. The District serves a rapidly growing population of approximately 2 million people in 90 communities in 10 counties in the North Dallas metro region. With over 700 employees and 15 separate treatment facilities spread over an area the size of Delaware, there are multiple organizational challenges. These challenges are aggravated by chronic water resource limitations and explosive population growth; the region is expected to double in size by 2050. Seth and the team from Raftelis performed a series of detailed assessments of the District's organization and staffing, as well as key practices, and recommended performance improvements. The effort included benchmarking characteristics against best appropriate practices and metrics from world -class utilities and peers using industry -accepted metrics. The recommendations were instrumental in justifying the hiring of over 50 staff and realizing performance improvements in the areas of maintenance, asset management and training. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 87 Puerto Rico Aqueduct and Sewer Authority (Puerto Rico) Puerto Rico Aqueduct and Sewer Authority (PRASA) has made considerable progress becoming more efficient in the last 10 years; reducing its workforces from over 7,000 to now roughly 5,000 employees, eliminating over a dozen treatment facilities, and increasing productivity by over 10%. Despite these positive changes, PRASA still deals with a relatively poor service population, high energy costs, and restrictive Commonwealth rules and regulations. Seth and the Raftelis team performed an assessment of PRASA's organization, operations and finances to find additional opportunities for efficiency. The project is also providing an independent assessment of the organization for perspective buyers of PRASA bonds and commercial debt. Metro Water Services of Nashville and Davidson County (TN) Seth has helped Metro Water Services of Nashville and Davidson County (MWS) with several organization -wide projects over the last 10 years. He has worked with MWS during their strategic planning process to identify organizational culture characteristics using the Organizational Cultural Assessment Instrument tool that could be leveraged to increase performance. This led to a series of implementation activities in the MWS Strategic Plan. He also helped them optimize their operations, design, capital planning and asset renewal practices to increase efficiency and reduce costs for their 4,500-mile distribution system. Using a risk -based assessment approach, supported by hydraulic molding, field data collection and GIS analysis, he developed operations, testing and planning standards for MWS infrastructure based on newly -establish Levels of Service goals. These Levels of Service goals ensure that infrastructure is not over or under designed and that operations and maintenance activities are executed at the lowest possible costs to ensure services are reliably provided. Polk County Utilities Department (FL) Seth served as project manager on an organizational and operations assessment of Polk County Utilities Department Water and Wastewater Utilities Division. He worked with JSK Consulting to assess Polk County's water and wastewater Operations and Maintenance Division's organizational structure, maintenance practices, staffing and cost structures to determine where there are areas for efficiency improvement, cost savings and organizational enhancement. Where applicable, Operations and Maintenance Division information was benchmarked against operations and performance data from similar utilities. The assessment recommended implementable ways to save money, improve services and maximize resources. Orange County Utilities (FL) Seth and a team from ATKINS (formerly PBS&J) performed a comprehensive multi -year assessment and facilities evaluation for the Water Division, which serves the greater Orlando, Florida metropolitan area. The project established and evaluated key performance indicators (KPIs) to improve the efficiency of the utility. The program resulted in a plan for addressing performance gaps. The WCMOM program received considerable national recognition including full length articles in the January 2010 AWWA Journal and the June 2010 New England Water Works Association Journal. City of Portland (ME) Seth helped the City of Portland (City) increase efficiency and minimize the lifecycle cost of its sanitary sewer, stormwater and combined sewer systems through a comprehensive organizational assessment, Capital Improvement Plan (CIP), and process enhancement program. The effort applied performance improvement and Capacity, Management, Operations and Maintenance (CMOM) principals, as well as advanced Asset Management and Effective Utility Management (EUM) techniques in concert to minimizing costs and increase efficiency. The nearly $1 million consulting effort will generate both a short and long-term CIP, operations and organizational plans, as well as improve the value of their GIS and computerized maintenance management system (CMMS) - CityWorks systems. Seth also worked with a team of City and sub -consultant staff from Amec to develop a new stormwater fee and wastewater rate that will more equitably allocate stormwater and combined sewer costs. The new fee rectifies the issues associated with high volume SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 88 wastewater users that contribute little to the stormwater system, paying for the bulk for the stormwater and combined sewer improvements. Cost are reallocated to those users that contribute the most stormwater. One of the significant achievements to come from the effort was finding ways to collaborate more effectively with Portland Water District who provides regional pumping and wastewater treatment service to the City of Portland. New collaborative programs included sharing SCADA data and operational responsibilities for several large stormwater storage conduits, consolidating industrial pretreatment programs into one joint program, sharing CCTV data, and contracting Portland Water District to provide sewer billing for the City of Portland on a joint water and sewer bill. City of Charleston (SC) Charleston, SC is one of the nation's foremost historic cities. It possesses a very diverse mix of 150,000 plus residents, community assets, and economic drivers, including internationally -recognized tourism and manufacturing industries like Boeing and Volvo, but it also faces unique challenges from the weather, its aging infrastructure and its location as a low- lying coastal community. Raftelis, working in cooperation with the Novak Consulting Group, performed a comprehensive assessment of the City of Charleston's (City) services. Seth and his team's focus was on delivery of capital programs to address a wide variety of stakeholder needs. The team reviewed the metrics and processes used by the Capital Projects Division group and associated agencies, consultants and contractors to bring public projects from conception through budgeting, permitting, construction, and handover. This included coordinating the selection of consultants and contractors, managing project budgets, construction inspection, and liaising with other City department and external stakeholders. The team developed improved processes and recommendations for streamlining and monitoring capital project delivery. Recommendations including additional specialized inspection staff, implementing an electronic project management system with document storage and routing capabilities, and improving the process for projecting operations and maintenance costs of completed facilities. Asset Management and Strategic Planning Experience Cobb County -Marietta Water Authority (GA) Seth lead a team that assessed the full spectrum of asset management activities at Cobb County -Marietta Water Authority, the second largest water supplier in Georgia, serving 800,000 people through 13 wholesale contracts. With nearly $500 million in assets including dams; reservoirs; over 200 miles of transmission mains; and two treatment plants with a combined capacity of 180 million gallons per day, developing an efficient and cost-effective asset management strategy is imperative. The project included an assessment of financial, operation and maintenance activities, capital planning and the methods for cataloging and tracking information through their Computerized Maintenance Management System (CMMS). Using a series of quantitative and qualitative review steps, the team identified opportunities for improvement. Using multiple assessment methods in a coordinated manner revealed not only which practices were strong and weak, but also illuminated potential reasons for the scoring. Recommendations are targeted to save the organization tens of millions over the then next 5 years. City of Westminster (CO) The City of Westminster (City) is a thriving suburb of Denver with a well-balanced mix of commercial and residential properties and a growing population, who like many other western U.S. communities, struggles with limited water resources and projected infrastructure costs. Raftelis assisted Westminster by developing detailed utility financial and cost -of -service projections, allowing the City to justify a series of rate adjustments and capture adequate revenue to address system needs. A critical part of the engagement was validating and helping Westminster adjust utility capital renewal and growth projections. This involved carefully examining lifecycle cost projections and renewal intervals. With hundreds of millions of dollars at stake, Raftelis was able to help Westminster find the optimal mix to minimize rate adjustments, while maintaining levels of services and managing lifecycle costs. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 89 Louisville Water Company (KY) Seth was responsible for directing the operations and management, as well as the asset management and organizational review tasks of the Facilities Plan project. This included reviewing existing LWC business practices, suggesting changes that would increase organizational efficiency (productivity), and recommending innovative programs to address strategic plans. Seth developed a comprehensive Asset Management strategy to bridge several of LWS's existing activities including operations and maintenance activities, business case justifications, capital planning and annual budget development. The total value of services provided was more than $2 million. Boston Water and Sewer Commission (MA) Seth directed the asset management, operations and maintenance and technology planning components of a multi -year water distribution system master planning and capital improvement study for BWSC's 1,200-mile pipe network. He was responsible for assessing the condition and predicting the life expectancy of pipes through an extensive, multi -year field sampling program and by modeling the effects of various degradation factors (age, material, performance characteristics, flow conditions, etc.) on pipe condition, longevity and performance. Using cutting -edge Asset Management methods, and performance indicators, his team developed a 20-year Capital Improvement Plan that is saving over $6 million per year in capital costs. He also developed recommendations for improved operations management systems (CASSWORKS CMMS, GIS and CIS) to assist with operations and maintenance, asset management, and capital planning. A paper on the capital planning approach employed titled The Art of Advanced Capital Planning to Control Risk appeared in the December 2011 NEWWA Journal. It was awarded best paper by NEWWA for 2011. Northeast Ohio Regional Sewer District (OH) Seth managed a team that developed a comprehensive set of asset management and capital prioritization practices for NEORSD's wastewater treatment and collections systems, valued at several billion dollars. The multi -year program impacted every aspect of asset use, management, maintenance and renewal. Components include a new capital prioritization process based on risk; enhanced maintenance practices using RCM, PM and other techniques; a revised asset registry; comprehensive training activities and organizational development activities; and improved condition assessment and criticality measures. Philadelphia Water Department (PA) Seth led a team that redesigned PWD's existing buried infrastructure rehabilitation and replacement (renewal) prioritization system for their 4,000-mile pipe network. The revised system utilizes statistical modeling techniques to determine which factors are correlated with pipe degradation and by how much, thus eliminating many of the assumptions associated with renewal and condition assessment programs. These factors will be used to develop service life curves for long-term macro models which will guide capital planning and budgeting. Factors that are correlated with pipe degradation will be combined with consequence of failure information available in various GIS layers to develop a robust micro model for prioritizing individual pipe segments for annual capital renewal. Denver Water (CO) Seth developed a new water transmission and distribution pipe Capital Improvement Plan (CIP) prioritization process for Denver's 5,000-mile pipe network that uses Asset Management techniques and advanced modeling (CARE-W derived suite of software and MWH CapPlan). The prioritization of improvements was based on "risk" criteria using a Triple - Bottom -Line framework that considers social, environmental and economic criteria. The new CIP prioritization process determines renewal and replacement schedules for several billion dollars of Denver Water pipeline assets. New York City Department of Environmental Protection (NY) Seth coordinated a team of engineering, management and technology integration experts to create an agency -wide asset registry based on a 6-level hierarchy for New York City Department of Environmental Protection's (NYC DEP) extensive systems of treatment, storage and 7,000 miles of pipe assets. The asset registry supports risk -based prioritization and SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 90 scheduling of renewal priorities of major NYC DEP water and wastewater assets. The completed database provides a tool for measuring the aggregate risk of failure for major system assets that have a total value of nearly $100 billion. International Experience USEPA Task 4 Contract to Guam Waterworks Authority (GWA), Guam Seth led a major initiative to transform the way GWA manages its operations, maintenance and capital planning functions. The project, paid for through a $2 million EPA grant, reorganized how asset information is collected, stored and managed. This includes the business process to support asset management activities, software systems and operations and maintenance practices. US Agency for International Development (USAID), Amman, Jordan Seth was the leader of a team of international and Jordanian consultants that assessed the operations and maintenance, organizational and managerial capacity of three large cities in Jordan, Jerash, Tafilah and Ma'an, that serve a total of 500,000 people. The project involved reviewing staffing levels, training opportunities, and organizational structures as well as cultural and operations factors impacting sustainable performance. The result was a series of culturally appropriate interventions to improve existing performance and enhance utility effectiveness. US Agency for International Development (USAID), Kabul, Afghanistan Seth was Program Deputy Director and Institutional Advisor for the $43 million Afghanistan Urban Water Supply and Sanitation Program (AUWSP) under USAID, the development arm of the US State Department; the comprehensive water sector initiative involved major construction, national level policy development and capacity building initiatives throughout Afghanistan. He managed an international staff of over 100 expatriates, local and third country national personnel of various educational backgrounds and disciplines that spoke 12 different native languages. He provided institutional capacity development services to the Afghanistan Ministry of Urban Development and Housing (MUDH), including the provision of policy documents, advised MUDH on policy matters and provided a range of related advisory services. He was a senior advisor to the Minister of MUDH and the President of the Central Agency of Water Supply and Sanitation (CAWSS). Seth was co-author of the Urban Water Supply and Sewage Sector Policy for Afghanistan and contributing editor to the Afghanistan National Policy on Urban Environmental Sanitation; these national -level policies guide the operation, administration and organization of water and wastewater regulatory agencies and utilities within Afghanistan. Finally, Seth was the leader of a multi -national feasibility study team that assessed the physical and organizational conditions at seven provincial capitals for future infrastructure development. The population of these cities ranged from 10,000 to over 500,000. US Millennium Challenge Corp. (MCC), Maputo, Mozambique Seth assessed the feasibility of major water infrastructure programs for MCC, a division of the US State Department, in the context of a $500 million development aid package to the Government of Mozambique. He acted as the utility management and operations consultant for the project team. His project duties included analysis of the financial, managerial and operations capacity of large utilities in northern Mozambique to determine a sustainable level of infrastructure, the degree of technological sophistication that was manageable and the level of development that was appropriate for the economic conditions. PUBLICATIONS AND PRESENTATIONS (SELECT) • "How Are You Handling the People Component of Performance Improvement?" presented at the AWWA/WEF Utility Management Conference, February 2018 in Austin, TX. • "Growing Along Successfully: Benchmarking Performance at the Rapidly Growing North Texas Municipal Water District" presented with Thomas W. Kula, Executive Director, and Brian Brooks, Process Improvement Advisor, NTMWD at the AWWA/WEF Utility Management Conference, February 2018 in Austin, TX. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 91 • "Employing an Organizational Profiling Tool to Understand Your Organization" presented with Toby Fedder, Woodard & Curran, at the AWWA Annual Conference & Exhibition, June 2016 in Chicago, IL. • "Utilities Improve Performance Using Private Business Techniques," AWWA Annual Conference and Exhibition, and NEWEA Annual Conference, 2015 • "Asset Management for Sanitary Sewer Systems - Beyond CMOM and Asset Management," APWA Congress, 2014 • "Establishing Levels of Service for Your Utility," GAWP Conference, 2014 • "Creating Change Starts with an Organizational Assessment: A Field -Tested Approach," NEWEA Annual Conference, 2014 • "Cobb County -Marietta Water Authority (CCMWA) Building on Past Successes to Streamline Operations and Optimize Asset Management," AWWA ACE, 2013 • "The Art of Advanced Capital Planning to Control Risk," NEWWA Journal Vol. 125, 4, 2011 • "Creating Change Starts with an Organizational Assessment: A Field -Tested Approach," AWWA ACE, 2011 SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 92 Melissa Elliott APR PUBLIC OUTREACH AND AFFORDABILITY Senior Manager ROLL Specialties Melissa will be available to provide support for potential public outreach and • Strategic communication planning. Stakeholder engagement affordability components of this engagement. • Public involvement • Community outreach PROFILE • Crisis & risk communication • Reputation management Melissa's 25+ year public relations career is focused on helping water and • Coalition building & campaigns wastewater utilities and municipalities tell their stories. She oversees strategic communication planning, stakeholder engagement and risk communication Professional History strategies for Raftelis. She also provides strategic counsel and facilitates public • Raftelis: Director of Strategic Communication Services (2018- involvement efforts and public meetings. Melissa has extensive experience present) working with elected officials, stakeholders and the public on issues as diverse as • Denver Water: Director of Public drought, water quality, potable reuse, affordability, rate structure change, Affairs (2012-2018); Manager of impactful construction projects, rate increases, customer assistance programs and Water Conservation (2008-2012) . Aurora Water: Manager of Public demand management. Highly active in the water industry, Melissa is President of Relations (2000-2008) the American Water Works Association, is a former chair of AWWA's Public Affairs Council, and a regular volunteer for The Water Research Foundation. She Education has an M.S. in technical communication and a B.A. in journalism and is • Graduate, Water & WastewaterLeadership Center - University of Accredited in Public Relations (APR) from the Public Relations Society of North Carolina, Kenan-Flagler America. Prior to joining Raftelis, Melissa directed the public affairs efforts at Business School (2016) Denver Water, which included creating public engagement strategies for massive • Master of Science in Technical Communication (Public Relations) - infrastructure projects, developing a nationally recognized lead service line Colorado State University (2005) replacement program, and leading conservation outreach efforts through the • Bachelor of Arts in Technical innovative "Use Only What You Need" campaign. Journalism (Public Relations) - Colorado State University (1991) KEY PROJECT EXPERIENCE Professional Memberships • AWWA: President; Former Public American Water Works Association Affairs Council Chair; Former American Water Works Association (AWWA) looked to Raftelis to develop a Strategic Planning Committee Chair comprehensive risk communication guide for utilities: Trending in an Instant. • AWWA/WEF Transformative Issues Melissa served as principal investigator and key author for this guidance Symposium on Affordability: Former Chair document, which helps utilities enhance their ability to communicate effectively • WEF when they find themselves unexpectedly in the traditional and social media • NACWA spotlight. The guide provides research into the psychology and behavior behind • Public Relations Society of America: Accredited in Public Relations (APR) consumer response to media -driven community fears and, more importantly, deliver targeted tools and action steps to help utilities respond effectively before, during, and after a high -profile communications issue in their service area. The guide describes proven risk communication techniques, such as how to return to productive conversation when people are communicating in a perceived high -risk environment and offers social media strategies to employ during crisis, such as how to prepare, how to react, and what to do after the crisis ends. Aurora Water (CO) The City of Aurora's (City) Prairie Waters system includes 34 miles of 60-inch diameter pipeline, three pump stations, a natural purification area and the Binney Purification Facility. Designed to protect the City against drought the system SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 93 uses a sustainable water source by recapturing river water. The project met the definition of an indirect potable reuse project; however, the project was branded as a drinking water project. Melissa led the communication program for this project with the assistance of an outside contractor, which included branding the project name and water purification facility in a way that would build support from the public without concern for this new water source. Birmingham Water Works Board (AL) Birmingham Water Works Board's (BWWB) is redesigning its website and has asked Melissa to help provide strategy and guidance on the look, feel and content of the new site, which is being developed with in-house resources. In addition, during BWWB's cost -of -service study the utility made recommendations for changes needed to recover costs to serve customers in proportion to their use of the water system. Melissa worked hand -in -hand with BWWB staff and rate consultants to implement a communications strategy that built public trust in the cost -of -service study decision -making process through a variety of community outreach tactics. City of Craig (CO) A small community in Northwestern Colorado, the City of Craig (City) has experienced an economic downturn and struggled in the past to get support for much needed tax increases. Facing the need to determine how best to fund significant upcoming water and wastewater capital needs, the City sought community outreach and communications assistance. Melissa developed a strategic communications plan that included several community outreach tactics that the City used successfully. Daphne Utilities (AL) Raftelis is currently under contract with Daphne Utilities to provide strategic communications services, crisis communications, media training, and to help them build capacity for enhanced communication and community engagement. The primary focus of Melissa's work with Daphne Utilities is on clean water, and that utility's challenges with enhancing their reputation following a major sewage spill that contaminated the Mobile Bay. The utility has made great strides in their operations and Raftelis has assisted with strategic counsel and the development of a strategic communications plan that aims to inform the community of the commitment the utility has to protecting and enhancing the water quality in the bay. Denver Water (CO) Denver Water exceeded the action level for lead in 2012, setting off the state's largest ever public health risk notification. Within just two months of that exceedance Melissa led the effort to notify every resident, pediatrician, obstetrician, school, child care facility and special population in the treated water service area -six counties in size. That risk communication plan then evolved into a much larger effort to address the looming public health and reputational threat that was posed when the utility became aware that nearly one in three homes in Denver had a lead service line. Melissa's work on this effort involved a risk communication plan and strategic communication. The result of these efforts was the fortification of Denver Water's position as a national leader during the lead in drinking water controversy, maintaining customer trust and satisfaction with drinking water quality even during the Flint water quality crisis. Expanding Gross Reservoir will help Denver Water protect its customers from negative impacts of a future drought and shortfalls in Denver Water's overall water storage system. This project will increase Gross Reservoir's capacity to 119,000 total acre feet by adding an additional 77,000-acre feet. With this project, Denver Water will provide more water to customers while improving the environment surrounding the planned expansion. The project is in Boulder County, Colorado and residents living near the reservoir will not benefit from its expansion. Melissa's work on this project included overseeing a strategic communication and public engagement program with assistance from an outside consultant and staff. The program rebranded the Gross Reservoir Expansion Project (formally called the Moffat Collection System Project) and focused efforts on the community living near the reservoir who will be directly impacted SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 94 by construction. That effort has been followed by a more active outreach program with Denver Water customers who will need to know the value of this project as they see increases on their water bills. City of Eagan Pubic Works Utilities Department (MN) The City of Eagan Public Works Utilities Department was preparing for their future by developing a strategic plan. Melissa prepared and facilitated two workshops with all public works utilities employees, including a strengths, opportunities, aspirations and results (SOAR) analysis and development of the organization's values statement. The work done in the workshops served as the foundation for the utility's strategic plan. Fort Collins -Loveland Water District (CO) Fort Collins -Loveland Water District's (FCLWD) rate study recommendations demonstrate the need for significant changes to both their water rates and their system development fees. The utility is investing in increasing their water supply and had not previously done public engagement work and needed a way to explain the rate study to customers while seeking customer acceptance of higher rates and developer acceptance of a new way of charging for tap fees. Melissa developed a strategic communications plan for FCLWD, guided staff through the plan implementation and developed several community outreach strategies for the utility including hosting two successful community open houses to provide context for the proposed changes. City of Golden (CO) The City of Golden (City) had not done a rate study for more than 20 years. As the city was preparing to dive into its water, wastewater, and drainage fees, it decided to include a citizens advisory committee to help the City recommend changes to its rate structures. Melissa facilitated the committee's work in addition to leading the development and implementation of a strategic communication plan to ensure that the community was brought along on the City's exploration of the future of its rate structures. Green Bay Water Utility/Central Brown County Water Authority (WI) In an effort to improve efficiency and reduce costs, Green Bay Water Utility and Central Brown County Water Authority joined together to develop a shared services approach with assistance from Raftelis. Melissa led the strategic communications program for this regional effort, working with communication professionals from both the utility and the authority to ensure that all parties stayed on message, internal communication was prioritized, and that the effort had a brand that could live beyond the initial first year of work. Branded SPLASH (Sustainable Partnership Linking Area Services and H2O) the successful effort is now a role model for other agencies looking to share services or move into a regional structure. City of Lakewood (OH) The City of Lakewood (City) is working through a regulatory response and developing an infrastructure plan to address combined sewer overflows. Melissa developed an extensive community engagement program to demonstrate that the City is advocating on behalf of their citizens in terms of an affordable plan to address regulatory concerns. The engagement efforts implemented by Melissa and City staff included facilitated round table discussions, electronic voting at a large public meeting and a community open house to gather public input. The engagement effort touched hundreds of residents on a topic that is typically difficult to get community traction on. Louisville Water Company (KY) Louisville Water Company developed a strategic business plan and wanted to ensure that employees were engaged and inspired by the plan. Melissa developed an internal communications plan to roll out the strategic business plan to employees that included a "first six months" timeline and task list to keep the plan at the forefront of employee communication. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 95 Mojave Water Agency (CA) Located in the and California high desert, Mojave Water Agency (MWA) is a water provider to tens of thousands of residents through its wholesale water agencies. MWA is faced with the need to invest in future water supply that will meet the demands of the growing community it serves and doing so will require increased revenue. Melissa facilitated several meetings with MWA's Technical Advisory Committee to help MWA determine the best approach to increasing revenue. In addition, Melissa provided a training session for MWA employees on delivering effective presentations. Mount Pleasant Waterworks (SC) Mount Pleasant Waterworks is currently contract with Raftelis for strategic communication services. As the project manager, Melissa provided strategic counsel, the development of an annual strategic communications plan, a communications review and brand assessment, and a communications plan for capital improvements. Municipal Authority of Westmoreland County (PA) Municipal Authority of Westmoreland County (MAWC) is the third largest utility in Pennsylvania but has limited staff resources for communications efforts. Recognizing the need to have strategic counsel available, MAWC contracted with Melissa to provide as -needed communications consulting for issues management and strategic planning purposes. New York Section of American Water Works Association (NY) The New York Section of AWWA (NYSAWWA) looked to Raftelis for strategic counsel on how to respond to legislative initiatives to regulate PFAS/PFOA in the state. Melissa wrote testimony and letters for technical experts. In addition, Melissa helped NYSAWWA develop a three-part communications training webinar and a successful communications track for their annual conference. City of Newport (OR) The City of Newport has two dams that have recently been found to be structurally deficient if the coastal community were to experience an earthquake. The dams are listed as the state engineer's second and third most needed dam replacements in the state. The community is small and the cost to replace this infrastructure is estimated to be $75 million. Melissa developed a communications strategy for a campaign to build community awareness about the project to support government relations efforts seeking state and federal funding for a significant portion of the project costs. City of Newport Beach (CA) The City of Newport Beach (City) successfully approved a five-year rate increase after implementing a robust strategic communication plan developed by Melissa that included the use of infographics, a community presentation, Proposition 218 notice and community outreach strategies. Northern Water (CO) As Northern Water begins transitioning into a new, more broad -based outreach phase for their Northern Integrated Supply Project, the agency sought assistance with developing and implementing communications strategies that support several major efforts. Raftelis' work will include development of messaging and informational material; development and implementation of stakeholder feedback surveys and assistance maintaining online public involvement tools; development and facilitation of project open houses and events; social and traditional media planning and execution including the development of media calendars and content, develop and implement strategies to increase earned and paid media, media tracking, assisting with media pitches, news releases and responses to questions, media prep, and scheduling of interviews. Northwestern Water and Sanitation District (OH) The growing Northwestern Water and Sanitation District (NWWSD) now serves dozens of townships and communities within its service area. In many of these cases, expansion occurred at the request of federal and state regulators SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 96 (EPA/Ohio EPA) asking that they step in and "adopt" poor performing water and/or sewer utilities in the area. Raftelis assisted NWWSD with developing and modernizing their rate structure approach for the future and Melissa worked with district staff to develop the best way to communicate this change. City of Port Hueneme (CA) A rate study had not been performed for some time for this small coastal city, and the City Council stressed that affordability was a key factor for their approval. As the strategic communications project manager, Melissa led public outreach efforts for the City of Port Hueneme (City) that included the development of an infographic that explains the City's rate structure changes, a Proposition 218 notice, and three public workshops to explain the changes. City of Richmond (TX) Following the completion of a rate study, the City of Richmond (City) had challenges getting approval of the recommendations from its City Council. Melissa provided strategic counsel and communication planning to ensure that residents and businesses in the town were informed about why a rate increase was necessary that helped ease the City Council's concerns. Following that work, the City asked Raftelis to write the mayor's State of the City speech. Richmond Department of Public Utilities (VA) The City of Richmond Department of Public Utilities (DPU) has done considerable work to develop their MetroCare Water Assistance Program. The program is intended to bridge the gap for at -risk customers experiencing a challenge in paying their water bill. DPU has also implemented rate structure changes to factor in affordability by creating a lifeline rate for essential water use. Although the MetroCare Water Assistance Program appears to be funded adequately, and there is a demonstrated need in the community, the number of households receiving assistance has declined and has never met the available funding in the three years the program has been in existence. Melissa assisted DPU with developing strategies to improve program outreach and participation. Sacramento Utility Collaboration and Integration Study The Sacramento Region Water Utility Collaboration/Integration Study will provide an opportunity for collaboration to help address water resource issues. The seven participating water supply agencies in the Sacramento Region are seeking to build successful collaborative efforts to benefit all agencies and their customers. The Sacramento Collaboration/Integration Study is identifying and nurturing mutually beneficial opportunities that can lead to: • Cost savings for customers • Leveraging of economies of scale • Beneficial integration of resources • Improved services • More efficient use of staff, equipment, and capital resources Melissa will provide facilitation and strategic communications planning to help the partners determine how best to talk about the study, it's benefits, and their relationship to each other. Sweetwater Authority (CA) Sweetwater Authority (SWA) serves drinking water to 190,000 people in southern California. The utility had not had a rate increase since 2015 and wished to build community support for the need for investment in infrastructure. Melissa provided a strategic communications plan, guidance on messaging strategy and community outreach tactics. SWA approved a five-year rate increase and the communications efforts for this project will receive the AWWA Public Communications Award in 2019. Following on the rate increase communication work, in 2019 SWA asked Melissa to develop a 5-year master communications plan to provide structure and strategy to the utility's communications efforts. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 97 Upper Thompson Sanitation District (CO) Located just outside of Rocky Mountain National Park, Upper Thompson Sanitation District (UTSD) needed to invest in a new wastewater treatment plant to meet future regulatory requirements and ensure that it could handle the needs of a community that swells in size when tourists visit the famous national park. As project manager, Melissa oversaw the development of a strategic communication plan and accompanying outreach that helps inform UTSD's customers and build support from UTSD's key influencers for the new treatment plant before UTSD must increase rates to help fund the infrastructure investment. WSSC Water (MD) WSSC Water successfully adopted a major rate structure change in 2018 following a regulatory directive to do so. The utility spent considerable effort in 2017 engaging customers to get input into rate structure design. WSSC Water sought assistance with developing a communications and outreach strategy to inform stakeholders and customers of the rate change that will be implemented, along with major new customer service initiatives in July 2019. Melissa audited the utility's current rate communication efforts, developed and tested a message platform, and worked with WSSC Water staff to create a communication strategy aligned with other customer service initiatives to increase customer acceptance of the rate change. PUBLICATIONS "Trending in an Instant," Risk Communication Guide for Utilities, Lead Author, AWWA, 2019 "Consider the Importance of Risk Communication," Article, Journal AWWA, 2019 "Public Affairs - Getting to Know Your Stakeholders in Advance of a Rate Change," Article, Journal AWWA, 2017 PRESENTATIONS • "Communications and Infrastructure Investment," Jersey Water Works Annual Conference, 2019 • "Getting to Yes, Communication Strategies to Gain Support for Rate Increases," Association of California Water Agencies Spring Conference, 2019 • "Putting People as Our Focus," Keynote for WaterNow Alliance Annual Summit, 2019 • "Telling Your Story Through Content Marketing," Half -day Workshop at Utility Management Conference, 2019 • "Putting the Water Industry's Focus in the Right Place," Young Professionals Summit, 2019 • "Communication Strategies to Gain Support for Capital Replacement Funding," Utility Management Conference, 2019 • "The Shape of Water," Engaging Local Government Leaders Annual Meeting, 2018 • "Building Support for Rate Structure Change," WaterNow Alliance Annual Summit, 2018 • "How to Ace Your Rate Study," Special District Association Annual Conference, 2018 • "Building Support for Rate Structure Change," WaterNow Alliance Workshop, 2017 • "Communicating About Water Quality: Lead Case study #1: Denver Water," AWWA Annual Conference and Exposition, 2017 • "Providing a Customer Outreach Program Related to Lead Service Line Replacement," AWWA Annual Conference and Exposition, 2017 • "The Recipe to Success in Implementing a Water Rates Campaign: Case Studies," AWWA Annual Conference and Exposition, 2017 • "Factoring Affordability into Rate Structure Change," Webinar for AWWA Infrastructure Finance Series: Innovative Strategies for Customer Affordability, 2017 SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 98 Sam Vi11egaS APR PUBLIC OUTREACH AND AFFORDABILITY Senior Consultant ROLE Specialties • Stakeholder engagement/public Sam will be available to provide support for potential public outreach and involvement programs affordability components of this engagement. • Strategic communications planning & execution • Crisis & risk communications PROFILE planning, messaging & execution Sam is an award -winning communications and outreach strategist, with more • Community -based social marketing(behavioural change marketing) than 25 years of experience conducting public outreach for public works, in the . Outreach program assessment & areas of water, energy, solid waste and recycling. Sam has assisted utilities and measurement public works agencies with branding, reputation and crisis management, as well • Development & oversight of paid as the execution of communications strategies to ensure successful positioning for (advertising), earned (stories placed), shared (social) & owned media rate increases, capital projects and change management. Sam played the lead • Writing & copyediting communications role for 10 years at water and wastewater utility Loudoun • Public speaking Water, where she cultivated enterprise -wide understanding and support for a proactive public outreach program and she successfully executed education Professional History campaigns that raised awareness of programs, changed behaviors and attitudes, • Raftelis: Senior Consultant • Savi PR, LLC: Owner and built trust in the organization. After Loudoun Water, Sam led external affairs • American Water: vice President for nine state subsidiaries of investor -owned American Water. Then, as an • Loudoun Water: Manager of independent consultant, Sam continued to advise water and wastewater utilities, Communications as well several municipal solid waste and recycling offices with strategic • CEC: Public Affairs Specialist. Lisboa: Senior Account Manager communication and public engagement. Because of her extensive work in this . Mitchell Petersen: Account Executive field, Sam is a sought-after speaker, and has frequently delivered presentations at Virginia's combined AWWA/WEF "JAM" conference, as well as at AWWA's Education Annual Conference and Expo and SWANA's WasteCon. Sam has been actively • Accredited in Public Relations - The involved in both the American Water Works Association (AWWA), where she Public Relations Society of America • Master of Science in Environmental served on the Public Affairs Council and the VA AWWA Public Information Policy - Johns Hopkins University Committee, and the Public Relations Society of America (PRSA), where she has • Bachelor of Science in Biology held several leadership roles, and currently serves on its Board of Directors. (Environmental Science) - Pennsylvania State University KEY PROJECT EXPERIENCE Professional Memberships American Water • AWWA • International Association of Public As VP of External Affairs for its Eastern Division, Sam led external affairs for Participation nine state subsidiaries of the nation's largest investor -owned water and • NACWA wastewater utility, American Water. Sam provided executive level proactive and • Public Relations Society of America: strategic PR counsel to her division's leadership and successfully directed the Board Member . Social Marketing Association of North development and execution of nine fully integrated communications strategies America across nine states to explain complex water issues, and to elicit widespread understanding and support for rate increases, as well as positive environmental behaviors. Sam ensured all state strategies were aligned with corporate strategies and all were measurably successful using quantitative methods. Under Sam's guidance and direction, her team of six managers (1) averted a condemnation attempt in TN; (2) restored public trust following a crisis in VA; (3) obtained a favorable ruling on a rate increase in WV; and (4) garnered widespread public support for a major infrastructure project in KY. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 99 American Water Works Association Communicating About Opportunistic Pathogens in Premise Plumbing Legionella is responsible for the majority of opportunistic premise plumbing pathogen (OPPP) outbreaks. Controlling OPPPs is complex and requires a multifaceted approach, which necessitates a dramatic shift in leadership strategies from centering the responsibility on the water provider alone to a shared responsibility by multiple stakeholders, including residential, institutional, commercial, industrial, or high -risk customers and regulatory agencies. For this project, Sam and her team developed a guide for water systems on Legionella advocacy. The three primary tasks were to (1) prepare a summary of the typical elements of Legionella control -related state legislation or regulatory initiatives; (2) prepare a summary of the organizations that have an interest in Legionella control legislation (opposition/potential partner research); and (3) develop key messages and supporting points for AWWA section and individual water utility advocacy. Communicating about Lead in Drinking Water Upon the growing discussion of the health risks from very low levels of lead in drinking water, Sam was hired to assist AWWA in the development of a guidance document for water systems, on how and why they should proactively communicate with customers about lead exposure from drinking water, lead service line replacement, and other issues pertaining to the shared responsibility customers have with their utility, to jointly protect their family's health. For this guide, Sam compiled and developed key messages, sample outreach materials and she provided a framework for conducting outreach on all facets of the issue. Arlington County Water Pollution Control Bureau (VA) In recognition of the specific and direct impacts biosolids master planning can have on the community, Sam was retained to develop a comprehensive outreach plan over the course of the master planning process. Two key pieces of the effort were a stakeholder advisor committee, comprising a cross section of interested and impacted stakeholders in the County, which met quarterly over two years, and a strategic communication plan the County staff could execute through each stage of the project through design, build and operations. This program enabled early, frequent and two-way communication with key stakeholders and residents throughout the Planning, Design and Construction phases of the project, with the goal of exchanging ideas and knowledge, as well as garnering recommendations and asking support for the technology selected. The final biosolids master plan was presented to the County Board of Supervisors with support from most stakeholders. Association of State Drinking Water Administrators Sam began supporting the Association of State Drinking Water Administrators (ASDWA) with strategic communication and organizational development services in 2017. Sam transformed member engagement with revamped communications products such as its "Year in Review" annual report, and she has developed fact sheets, stakeholder emails, and revamped its board packet. Sam copyedits for voice, tone and grammar, all major documents and reports for ASDWA, such as its report to EPA on shortfalls of statewide funding for drinking water programs and its comments on the new Lead and Copper Rule Revisions. From a management standpoint, Sam plans and facilitates staff retreats and work sessions, coaches staff on project management, and she led the ASDWA staff and Board through the development of its first strategic plan. Sam continues to support ASDWA with strategic plan implementation and technical writing. Connecticut Water (CT) Sam conducted a comprehensive audit and evaluation of Connecticut Water's employee communications program with surveys, one-on-one interviews, and small -group meetings. She also benchmarked its employee communication performance against several companies of similar structure and size. City of Cleveland (OH) Sam developed a comprehensive engagement strategy to turn around public opinion of the City's plan for sustainably managing its waste. The strategy spelled out specific tactics to achieve the City's objectives that included a new message SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 100 platform, a series of community meetings, partnership development, and a social media plan, which was intended to work in tandem with other efforts to reset the public discourse on the topic, educate stakeholders on the waste issues the City is seeking to solve, and meaningfully engage the community in a dialogue about solutions. Daphne Utilities (AL) Sam developed a crisis communication plan, crisis communication training and media spokesperson training for Daphne Utilities, a water, wastewater and gas utility in Alabama. For the crisis training, Sam walked the staff through a series of table -top exercises to test and apply the plan. For the media training, Sam provided both off and on -camera guidance, where participants learned how to hook, bridge, and flag. She then filmed them so they could apply what they learned in mock, on -camera interviews, and then she facilitated a team coaching session while watching the videos. Fort Worth Solid Waste Division (TX) Sam designed and executed comprehensive public involvement plan to engage businesses and citizens in the development of the City's comprehensive solid waste management plan. She designed and executed intercept interviews, online surveys, focus group and workshop moderator guides, and provided general counsel to leadership team on best practices for engagement and soliciting input. As a result, the City had a solid waste management plan that had the buy -in and input from its community stakeholders. Howard County Recycling Division (MD) Sam conducted a comprehensive analysis of the division of recycling's communications and outreach program. The assessment included conducting a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis with the internal team; a County wide digital survey, three focus groups and benchmarks with three similar communities. The Howard County Recycling Division's (Division) current communications plan and all its educational materials as well as outreach efforts were reviewed and assessed for effectiveness in meeting the Division's goals and all was captured in a detailed report, with specific recommendations for improvement. Loudoun Water (VA) Sam served for 10 years as the organization's first official spokesperson and lead strategic public relations counsel beginning in 1999. She planned and executed comprehensive and integrated communications strategy across multiple platforms to explain complex water issues and elicit positive environmental behaviors; she established the utility's first social media platforms and educated staff on their value and use; she established the utility's first media policy and employed proactive media strategies to garner story placements in local papers, and DC's broadcast media; she initiated and oversaw the successful and comprehensive re -branding of the organization from Loudoun County Sanitation Authority to Loudoun Water; she initiated and oversaw two major upgrades to the utility's internet and intranet sites automating several services and improving engagement opportunities with the public; she initiated and oversaw the design and production of a 3,500 square -foot education center; she developed and oversaw the utility's official outreach efforts on all capital projects; and she served as spokesperson to customers, elected officials, the media, community partners, school groups and others on topics of infrastructure investment, conservation, safe disposal of waste, rates, and watershed protection. Sam was an active participant and leader in the Washington DC -area on water and wastewater outreach efforts and campaigns. Demand Management/Conservation Campaigns Brown is the New Green: Samantha designed and executed a summer education campaign in 2008 to encourage Loudoun homeowners to let their lawns go brown. With lawn watering comprising more than half of all summer water use, it was determined that focusing on this single behavior during the summer months would prove to have the largest impact in reducing maximum daily demand. Through a mix of strategies that included earned media, social media, and direct outreach to customers, Loudoun Water promoted "Brown is the New Green," a photo contest that challenged customers to let their lawns go brown. The photo submitted in August of the ugliest, brownest, crispiest lawn would win SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 101 a prize pack of water conservation materials and devices. The contest garnered Washington DC broadcast TV coverage, local print coverage, and reduced the maximum daily demand by about 15 percent. Water You Thinking: After experiencing two 100-year droughts in one decade, Loudoun Water saw the need to be more proactive with communications about using water wisely all the time, not just when there was a drought. In collaboration with a local ad agency, Samantha developed a long-term outreach campaign called "Water You Thinking" which focused on Loudoun residents' overwatering of their lawns, a behavior that accounted for more than 50 percent of all summer water use. The print and digital materials featured beloved local personalities donning inflatable pool toys, with a "tongue in cheek" message to get residents to think twice about their water use by providing guidance about proper lawn watering. The materials were featured in HOA newsletters, in Loudoun Town Center kiosks and food court table tents, in direct mail to customers, and in local publications. A survey completed post campaign revealed an increase in awareness of proper lawn watering. Rates Communication and Outreach Sam developed and executed a communication plan for two major rate increases over the 10 years she led communication and outreach for Loudoun Water. The strategy relied on the development of relationships with key community stakeholders, such as HOA leadership, environmental groups, and elected officials to build trust and credibility for the utility's work. Following the announcement of the utility's largest increase in its history, the editorial board of the local paper wrote an Op -Ed urging all customers to trust the utility and support the rate increase, and at the public hearing, several customers spoke in favor of it. Maryland American Water (MD) To address long-term water supply issues, Maryland American Water was planning to build a lined, earthen embankment with a capacity of 90 million gallons of raw water on a 40-acre historic site, which would provide a 100-day water supply in case of drought or emergency. Sam developed and executed a comprehensive stakeholder engagement strategy to build public understanding and support for the project. The plan applied a mix of strategies that included media outreach, the establishment of a stakeholder advisory committee to advise the company throughout the planning and design of the project; and storytelling through a variety of means, including direct mail, social media and e-mail. Because of these efforts, Maryland American Water was able to construct the impoundment with the support of local Town and County elected officials, the development and business communities, the department of parks and recreation who partnered with the team to plan a trail system through the site, and the family whose ancestors owned the property. Historic structures were preserved throughout construction and Maryland American earned the community's trust for developing the project with their concerns at heart. Metropolitan Washington Council of Governments (DC) More than 15 different water and wastewater agencies serve the residents and businesses of the metropolitan Washington, DC region. With constant movement of customers across jurisdictional boundaries for work and play, it's hard for any single utility to reach them well; having a shared media market doesn't always help. Sam has been working with the group to elevate their communications coordination efforts to ensure these agencies coordinate their messaging to consumers and are as consistent as possible, focusing on the topics of greatest need and least public awareness. For this project Sam oversaw deployment of the first regional digital survey on water and wastewater awareness and behaviors, as well as a series of In -Depth Interviews with utility leaders. Using this data, she developed a strategic communications plan, coordinated messaging on key focus areas, and a seasonal content calendar to ensure consistency among - and credibility for - the region's water and wastewater sector. Sam's work with COG continues, as she is counseling the Anacostia Watershed Messaging Partnership with a comprehensive 3-year strategic outreach and messaging plan in support of raising awareness of and changing behaviors to protect the Anacostia River and its watershed. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 102 Prince William County (VA) Sam conducted a comprehensive analysis of the division of solid wastes' communications and outreach program. The assessment included conducting a literature search; developing and conducting email surveys of the commercial sector and multi -family sector; and intercept interviews of residents. The Division's current communications plan and all its educational materials were reviewed and assessed for effectiveness in meeting the Division's goals and all was captured in a detailed report, with specific recommendations for improvement. Virginia American Water (VA) Infrastructure Outreach Alexandria, VA is one of the oldest towns in the country, with water infrastructure dating back more than 100 years. They began a comprehensive program to replace the city's aging water distribution system in 2013. With more than 30 miles of pipe, at a replacement rate of approximately three to four miles of pipeline per year, it will take Virginia American Water 100 years to replace the entire system. For the residents of this historic town, that's a lot of disruption for a long time. Sam was hired to build understanding and support for this long-term endeavor, among residents, elected officials, businesses, commuters and other city agencies. Through a series of face-to-face meetings, key partnerships, grassroots marketing and a mix of digital strategies, Virginia American has obtained the cooperation from town agencies, its businesses and its citizens. Rates Communication and Outreach Virginia American Water provides water service to the communities of Alexandria, Dale City, Hopewell and the Northern Neck. In 2015, Sam developed and executed the communication plan for a complicated rate increase that affected all four communities differently and added a new sewer rate structure to Dale City customer bills. Sam developed the strategy, wrote talking points, handled media calls, developed and responded to social media posts and provided guidance to all customer service representatives. Water Research Foundation For this study, Sam developed and validated a series of messages to inform those that maintain building water systems about Opportunistic Pathogens in Premise Plumbing (OPPPs), with a focus on Legionella, and to offer proven steps they can take to protect themselves (and their tenants) from waterborne disease. More specifically, Sam was tasked with (1) identifying the target audiences, routes of communication, and messages based on a series of interviews, workgroups, and material review of existing guidelines; (2) hosting a workshop to elicit experts' review and feedback on messaging materials; (3) refine the messages and routes of communication developed in the workshop. The final document was published by the Water Research Foundation and furnished to member water utilities. U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Sam was hired on a temporary part-time (and for 12 weeks, full-time basis) to support DOE's Office of Energy Efficiency and Renewable Energy (EERE). In this role, Sam ghost wrote blog posts on energy efficiency in manufacturing, she copyedited progress alerts, stakeholder emails, news releases, blog posts and web updates; she wrote talking points and prepared staff for media interviews; she oversaw all emailed requests from the media for information and interviews; she rewrote the content for the Technology to Market website and created a new navigational structure and content; she supported the development of a key message platform for Technology to Market group; and she trained managers in public speaking and program elevator pitches. PROJECT LIST American Water — Strategic communication and public outreach for rate increases and infrastructure projects for nine state subsidiaries American Water Works Association — Provided strategic communication services for lead and Legionella Arlington County (VA) — Provided public outreach and facilitation for biosolids master plan SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 103 • Association of State Drinking Water Administrators — Strategic communication and organizational development • Connecticut Water — Comprehensive assessment of employee communication program • Cleveland (OH) — Strategic communication and outreach for waste to energy plant • Fort Worth (TX) — Developed public involvement campaign for comprehensive solid waste master plan • Howard County (MD) — Assessed recycling division's public outreach program • Maryland American Water (MD) — Public awareness campaign for large, capital project • Metropolitan Washington Council of Governments (DC) — strategic communication and outreach planning • Kentucky American Water (KY) - Public outreach plan for rate case • Loudoun Water (VA) - Public awareness campaign for rate increase, public awareness campaign to promote conservation during drought, public involvement program/risk communication for well under influence of surface water, stakeholder engagement program for advanced water reclamation facility, stakeholder engagement program for securing sustainable water supply • Prince William County (VA) — Assessed public outreach program for recycling division • Tennessee American Water (TN) - Public awareness campaign to prevent condemnation • Virginia American Water (VA) - Public involvement plan for cyanotoxins issue, rate increase and comprehensive watermain replacement program • Water Research Foundation — Strategic communication and public outreach services on Legionella • U.S. Department of Energy (DC) — strategic communication, branding, and public speaking training PUBLICATIONS • "Public Outreach Part II: More Cost Savings Than Cost Center," Waste Advantage, 2015 • "Public Outreach Part I: More Science Than Art," Waste Advantage, 2015 • "Eleven Myths About Social Media Every Water Utility Manager Should Know," AWWA Journal, 2013 • "Take the PR Pledge, Ragan Communications," The PR Daily, 2013 • "What Howard Stern Can Teach Us About PR," The PR Daily, 2012 • "Re-examining A Utility's Brand Image," AWWA Journal, 2007 • "A Brand -New Day - Things That Shocked Me While Rebranding," PRSA Tactics, 2007 • "Hydrant Use: Balancing Access and Protection," AWWA Opflow, 2006 • "Changing Behavior with Social Marketing Techniques," PRSA On the Environment Horizon, 2000 PRESENTATIONS • "It's Scary Out There — How to Use Social Science in Communication to Decrease Fear and Build Trust," CAPIO Webinar, March, 2020 • `Bea Trusted Source: How to Handle Communication Challenges During COVID-19," AWWA Webinar, March 2020 • "Trending in an Instant —Principles of Risk Communication," Utility Management Conference, WEF, Anaheim, February, 2020 • "Get Your (Communications) Assessment in Gear," Catalyst Conference, June, 2019 • "So, Your Market's Been Disrupted, Now What?" Virginia Recycling Association Conference, May, 2019 • "Communications Guidance for Legionella in Building Water Systems," San Francisco Public Utilities Commission Workshop, November, 2018 • "Communications on the Other Side of the Meter," AWWA ACE, Philadelphia, 2017 • "Media Myths and Magic," AWWA ACE, 2016 • "Public Outreach, It's More Science Than Art," WasteCon, 2015 • "Communicating About Lead Service Lines," AWWA ACE, 2014 • "Eleven Myths About Social Media," North Texas Water Symposium, 2013 • "The Power of Proactive Communications," VAAWWA/VAWEA JAM, 2013 • "Building a Sustainable Brand: How to Identify, Attract and Engage Stakeholders in Your Mission," Smart and Sustainable Pre -Conference Workshop, 2013 SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 104 Chris McPhee INFORMATION TECHNOLOGY AND DATA Director of Data Services/Senior Manager (4 ROLE Specialties Chris will be available to provide support for potential information technology • Application development • Database architecture & design and data components of this engagement. • Geographic information systems • Data & systems integration PROFILE • Stormwater finance & utility implementation Chris has 12 years of experience in the fields of application development and data • Business process development & analysis in support of water, wastewater, stormwater, and solid waste projects. As improvement a data analyst and application developer, he has experience including financial Professional History modeling, impervious area digitization and quantification, stormwater utility Raftelis: Director of Data financial analysis, relational database development, Oracle and SQL Server Services/Senior Manager (2019- programming, and desktop/web/mobile application development. His present); Director of Data Services qualifications include specialized training in ESRI ArcGIS analysis and tool (2014-2018); Senior Consultant (2013); Consultant (2012) development, Microsoft .Net programming in the C# and VB.Net languages, web • AMEC Earth & Environmental, Inc.: application programming in the ASP.Net framework, and mobile application Application Developer (2008-2011) development for the iOS (iPhone) and Windows Phone platforms. He is well versed in the entire lifecycle of stormwater utility development including Education • Master of Forestry in Forest feasibility studies, implementation, customer service, data maintenance, and Resource Management - Duke process improvement. He is also familiar with water, wastewater, and solid waste University (2008) financial modeling including cost -of -service studies, rate structure design, • Master of Science in Geoscience - University of Arizona (2006) affordability and impact analyses, and billing system best management practices. • Bachelor of Arts in Environmental Studies - Yale University (2004) KEY PROJECT EXPERIENCE Certifications Village of Islamorada (FL) • GIS Certificate: NC (2008) Chris serves as Lead Developer for a custom application supporting accurate billing of wastewater for the Village of Islamorada (Village). He gathered requirements about the data maintenance application and worked with Village staff to understand what needs they had with regard to billing data maintenance. He developed the application and published it on Village servers. He converted wastewater billing data to feed into the new application and provided training to staff on how to use the new application. He maintains the application for the Village and assists with wastewater billing needs as requested. Florida Rural Water Association (FL) Chris serves as Software Project Manager assisting with the design and implementation of a web -based financial planning tool, RevPlan, built for small rural communities in Florida on behalf of the Florida Department of Environmental Protection. Chris gathered requirements for the RevPlan tool via on -site meetings with FRWA and FDEP staff and developed functional and technical requirements for the tool. He directed software developers in the prototyping and development of the tool. He served as the project's main point of contact and was responsible for ensuring the success of the project. He now directs the ongoing maintenance of the tool on behalf of FRWA. City of Marathon (FL) Chris served as Data Analyst for a billing data reconciliation project with the City. He was responsible for comparing billing and customer data maintained by the City with the data used by the City's third -party biller. He compiled data SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 105 from both sources and processed them into a format where they could be compared on an account -level basis. He identified accounts where the City and its biller were out of sync and suggested recommended fixes. City of Baltimore (MD) Chris serves as Application Developer, Database Developer, and Data Management Practice Lead for the new stormwater utility implementation for the City of Baltimore (City). He directs quality control efforts on the City's GIS parcel and impervious area layers used as the basis for billing. He is responsible for developing the City's Stormwater Account Information System (SAIS) to store and maintain stormwater billing information that will be consumed by the City's legacy water/wastewater billing system. He designs and modifies the SQL Server 2012 database tier underlying the SAIS application and designs and programs the SAIS application in Visual Studio 2010 in the C# and WPF languages. Chris processes GIS and tabular data to populate the SAIS database and creates map figures for use by customer service representatives. He creates application lifecycle documentation including functional requirements, technical documentation, and training documentation. Chris also facilitates process documentation interviews and creates process flow diagrams detailing optimal workflows for City staff. In addition to his work on the City's stormwater utility, Chris has performed data analysis on the water/wastewater financial data in support of the City's internal audit. He translated the City's mainframe COBOL/VSAM system into a database warehouse to facilitate rapid data analysis and performed analysis as directed by City staff. City of Philadelphia (PA) Chris serves as data analyst in support of systems analysis and report development for Philadelphia Water Department's basis2 Customer Information System (CIS). He was responsible for creating Oracle PL/SQL code to extract information for use in the 2015 rate case. He also checked the City's CIS for data integrity, database optimizations, and performance improvements that could speed reporting going forward. He created ad -hoc reports and verified metrics used by executive staff for critical decision -making regarding rates and financial policies. He also verified that the stormwater fee was being billed by the CIS as expected. Chris previously served as Application Developer and data analyst in support of Philadelphia Water Department's assessment of stormwater program modifications in 2011. He was responsible for modeling the overall and account -by - account financial impacts of a variety of policy scenarios. He developed a dashboard tool for rapid visualization of revenue impacts from a variety of inputs to best understand the implications of changes to a fee structure. He also performed a units -of -service analysis to determine the current and proposed impacts of a revised fee credit program. He modelled these analyses on the City's large rate base with over 500,000 parcels and over 650,000 accounts. He developed data summaries that could be used by policymakers to inform their decision -making process. Pittsburgh Water and Sewer Authority (PA) Chris serves Software Project Manager assisting with the design and implementation of the Headwaters Performance management dashboard for PWSA. He developed the prototype application and gathered requirements from PWSA staff and Raftelis management consulting team members. He directed software developers in the development of the database and design of the cloud -based dashboard. He directed consulting staff in the collection of key performance indicator data that would be visualized by the dashboard. He served as the project's main point of contact and was responsible for ensuring the success of the project. He now directs the ongoing maintenance of the dashboard on behalf of PWSA. City of Dallas (TX) Chris serves as data analyst in support of the storm drain management program fund stability analysis. He was responsible for collecting and reviewing storm drain management billing data from GIS and billing system (SAP) sources. He compiled these data and ran them through a series of tests in accordance with data best management practices. He SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 106 also compared the current billing methodology against the recommended billing methodology to assist with producing account -level impact analyses. In addition to data analysis, Chris assisted in conducting a study on the information tools used in support of the Trinity stormwater program. He interviewed dozens of employees regarding the systems that they use on a daily basis as well as the limitations of those systems. He assembled a report on the needs of staff including priorities and suggestions for improvement. After this study he assisted with fixes to the stormwater information tools in greatest need of updates. Northeast Ohio Regional Sewer District (OH) Chris serves as a Database Developer assisting with architecture and maintenance of the Northeast Ohio Regional Sewer District (District) stormwater billing database. In this role, he develops and revises data in support of policy and financial decision -making. He alters the District's Oracle lOg database to meet workflow, application, and data integrity needs through modifications to tables, views, indexes, and stored procedures. He develops external routines used for quality control and maintenance. He generates database documentation in the form of schema metadata, entity relationship diagrams, and a workflow narrative. He also performs GIS analysis to assist with tying units of service to accounts. City of Richmond (VA) Chris serves as Software Project Manager assisting with the design and implementation of an affordability application processing web application. Chris gathered requirements for the MetroCare tool via on -site meetings with City staff and developed functional and technical requirements for the tool. He directed software developers in the prototyping and development of the tool. He served as the project's main point of contact and was responsible for ensuring the success of the project. He now directs the ongoing maintenance of the tool on behalf of the City. City of New York City (NY) Chris served as data analyst in support of an emergency rate study. He managed and analyzed data from the City of New York City's (City) CIS on accounts and consumption, as well as one year's worth of AMI data for all city accounts. He assisted in the development of an emergency water rate model and presented information on annual trends in water consumption to City staff. DC Water (DC) Chris served as data analyst in support of an affordability analysis regarding DC Water's water rates. He extracted data on consumption from the DC Water's CIS and matched that information to geographic locations using GIS. He then performed a geospatial analysis comparing census data on median household income against water usage. This analysis was used to assist in tailoring rates to assist low income customers while retaining revenue stability to support the utility's needs. Grand Strand Water and Sewer Authority (SC) Chris served as lead consultant for an organizational review of Grand Strand Water and Sewer Authority's (GSWSA) Information Technology department. He developed interview questions and a needs analysis of the organization to see how the greater organization could be impacted by the loss of key staff during a period of transition. He gathered detailed information on the resources available to and maintained by GSWSA IT staff. He developed recommendations on how to proceed during the period of transition and suggested improvements to staffing that could be implemented prior to the departure of key staff. City of Boston (MA) Chris serves as data analyst in support of the Water and Sewer Commission's implementation of a new stormwater fee. He provides recommendations on how to connect GIS data with the new CIS being implemented in anticipation of the fee. He documents connectivity between systems and assists in the development of interfaces to communicate SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 107 information between them. He develops geoprocesses and other automation to support the streamlined data maintenance processes needed to stand up the new fee. American Metropolitan Water Agencies (DC) Chris served as project manager for American Metropolitan Water Agencies' (AMWA) implementation of a new dashboard to display the results of the bi-annual Utility Financial Indicators survey. He gathered requirements about the we based dashboard and worked with AMWA staff to understand what needs they had with regard to the visualization of the survey data. He coordinated with AMWA IT support staff to tie the new site into the existing AMWA.net site. He directed development staff to achieve the vision set forth in the project requirements. He ensured that the result met AWMA's needs within the desired timeframe. Sewerage and Water Board of New Orleans (LA) Chris served as data analyst in support of the Sewerage and Water Board of New Orleans' (Board) drainage program as it explores new methods of funding. He assembled and analyzed the available GIS data that could be used as the basis for billing a drainage fee. He supervised the digitizing of a sample of residential and non-residential parcels to facilitate an estimate of the Board's Equivalent Residential Unit (ERU) and to provide a correction factor to the Board's building footprints layer. He processed the data for each parcel and created rate structure scenarios to present to Board staff. Chris also assisted the Board with a billing system audit of its legacy mainframe and Cogsdale billing systems. He designed the audit analysis and assisted in the processing of data to arrive at conclusions regarding the accuracy of billing post system conversion. City of Jackson (MS) Chris served as data analyst in support of a customer information system audit. He performed data management activities to stand up a copy of the City of Jackson's (City) CIS on firm hardware and performed ad -hoc analyses as requested by the City. He also created an application to restore history files created by the CIS to gather transactional level detail on changes made in the CIS. Using this information, he was able to locate questionable activities occurring within the CIS as well as demonstrate CIS flaws and process disconnects resulting in lost revenue. His analysis located over $lM in annual lost revenue due to the misapplication of sewer rates and identified possible fraudulent activity. He also provided information as needed to support the City in its discussions with the implementer of a new CIS and AMI meters. City of Tacoma (WA) Chris served as project manager and data analyst for a statistical analysis project for City of Tacoma (City) Public Utilities. He assisted with the assembly of CIS and external data for use in two multivariate regression analyses used to forecast short-term water demand and long-term water production. He created automated tools to extract weather and demographic data from public sources and assisted with the pre-processing and post processing of data variables. He also assisted in creating automated scenarios for the long-term forecast. The forecast data was then used to drive decision - making regarding cost -of -service, as well as retail and wholesale rates. City of El Paso (TX) Chris served as Application Developer creating a rate model for use in selecting the optimal rate structure for the City. The rate model was developed in Microsoft Access to integrate billing history data pulled from the City's CIS. The rate model presented the user with many options for customizing the rate structure and allowed for the rapid development and testing of rates under a variety of scenarios. The model was used during on -site discussions to arrive at the optimal scenario to be used by the City during its next rate increase. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 108 City of Thornton (CO) Chris served as Application Developer in the creation of a web bill calculator for the City of Thornton (City). The website, https://apps.cityofthomton.net/WaterBillCalculator/Calculator, allows the user to enter their customer account number and address for verification in order to view their water bills and a comparison of bills at their current rates to the updated rates proposed by the City given a rate increase. Chris translated a user story and storyboard into a fully functional website leveraging City CIS data and the current and proposed rate schedules. This project was completed under a particularly tight schedule of 3 weeks and served the City in its effort to educate its customers on the upcoming rate increase. City of Morristown (TN) Chris served as Application Developer and Database Developer for the City of Morristown's (City) department of public works. He designed and created a billing system solution that could be used for the review and maintenance of billing data for the City's core utility services of solid waste, stormwater, water, and wastewater. He designed and implemented a SQL Server database to house the City's solid waste and stormwater billing information. He also designed and built a program to combine data previously maintained by the City across a variety of databases into one, easy -to -use application. The application could be used to view and modify accounts and create update files to send to the City's third - party biller. The application can also read data from the third -party biller via the internet and provides reports comparing the two data sources to identify where they are out of sync. Chris provided on -site consultations during the design phase, as well as training sessions for users of the application. City of Flint (Ml) Chris served as data analyst assisting the City of Flint (City) in auditing its CIS data. He extracted information for use in a cost -of -service study and created account -level trends to identify problem accounts. He provided analysis on a major discrepancy in water purchased from the City's wholesale provider (Detroit) when compared against water sold to customers. He demonstrated decreasing trends in account creation and water consumption and arrived at a conclusion regarding the estimation practices by both the City and its wholesaler that were significantly impacting the utility's bottom line. City of Portland (OR) Chris served as data analyst assisting the City of Portland (City) in updating its rate model. He was responsible for ensuring that the rate model would function given a more recent software environment and assisted with connecting the model's analytical tools with and external database containing detailed information on budgets and costs. County of San Diego (CA) Chris served as data analyst assisting the County of San Diego (County) with its stormwater funding scenario project. He gathered the County's GIS parcel and impervious surface coverage layers and prepared them for a rate base estimate for one of the possible funding options. He cleaned and repaired the layers and aggregated and simplified them due to their size and complexity. He geoprocessed the GIS data into usable tabular data and prepped a database for use in rate structure scenarios and analysis. He also contributed to the project's final report. Town of Kernersville (NC) Chris served as Consultant to the Town of Kernersville (Town) during its billing process improvement project. Calling upon his experience with utility implementation and billing system best management practices, he assisted City staff in developing an improved process for maintaining and updating stormwater billing data. He created process flow diagrams in addition to written instructions regarding the recommended data flows and tools. He also provided a geoprocessing script and database queries that could be applied to the Town's data during future update periods. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 109 Granville -Person Cooperative Stormwater Services (NC) Chris served as Data Analyst in support of a multi jurisdictional stormwater utility implementation in North Carolina. He was responsible for managing impervious area digitization in two counties and for processing GIS data to result in fees to be billed on tax bills. He also assisted in decision -making regarding the rate structure. City of Charlotte and Mecklenburg County (NC) Chris served as a consultant for City for Charlotte and Mecklenburg County (CMSWS) Stormwater Services in support of their business process improvement effort. He attended meetings with staff to hear their thoughts about current processes and suggestions for improvement. He organized and wrote narratives of the 11 meetings with CMSWS' 33 employees. He translated their ideas into process flow diagrams detailing how tasks are performed and by whom. He aggregated all of the concerns about the program and provided solutions that could be implemented by CMSWS to increase revenue collection and decrease resource needs. Lexington -Fayette Urban County Government (KY) Chris served as Application Developer and data analyst for the stormwater utility project for this combined city -county government. His primary responsibility was to develop a customer service application for the stormwater utility. The application was developed in C# founded upon a SQL Server 2008 database tier. This application has been in production use by customer service representatives since early 2009. Chris also assisted with GIS analysis and account modification. He created a GIS application to generate customer service maps with detailed property and account information. This tool was used to generate over 10,000 maps mailed to customers describing their property and associated stormwater utility fees. In addition to these tasks, Chris also acted as a database administrator, administering SQL Server 2008 databases in support of LFUCG's customer service application. He created relational databases using SQL Server Management Studio to support billing and customer service, and generated tables, indexes, relationships and stored procedures that could be leveraged by the associated front-end application. Chris was able to provide seamless, end -to - end service delivery of technology supporting the client's customer service needs. Wake County (NC) Chris served as Application Developer for multiple technology products in support of the Wake County's (County) On - Site Wastewater program. The program decided to undergo a transition from paper to digital septic system permits so that they could be made accessible within the County as well as to the general public. Chris developed a desktop database application to be used by County employees to access and modify digital permits. He also made modifications to the County's Oracle lOg database to support application and accessibility needs. To encourage general access to the permit data, he developed a plug-in for the Wake County IMAPS GIS website that allows users to view permits for septic systems found on properties in the County. Chris has provided ongoing support for these technology products since they were released in early 2009. Granville -Person Cooperative Stormwater Services (NC) Chris served as data analyst in support of a multi jurisdictional stormwater utility implementation in North Carolina. He was responsible for managing impervious area digitization in two counties and for processing GIS data to result in fees to be billed on tax bills. He also assisted in decision -making regarding the rate structure. AMEC Earth and Environmental, Inc. (TN) Chris served as Lead Application Developer for AMEC Earth and Environmental, Inc.'s (AMEC) first iPhone application, Sustain. This application was developed to highlight AMEC's sustainability initiative and has been used a marketing tool for the company. Chris designed, wrote, revised, and submitted the application. This application is currently available for free for iPhone, iPod, and iPad devices. SECTION 6: SPECIALIZED EXPERTISE OF TEAM MEMBERS RAFTELIS 110 PROJECT LIST • City of Birmingham (AL) - Billing data management for financial model • City of Chandler (AZ) - Billing data management for financial model • City of Chester (SC) - Billing data management for financial model • City of Detroit (MI) - Billing data management for financial model • Florida Keys Aqueduct Authority - Billing data management (Cogsdale) • City of Gulfport (FL) - Billing data management for financial model (Incode) • City of Hartsville (SC) - Billing data management for financial model • County of Indian River (FL) - Billing data management for financial model • City of Manor (TX) - Billing data management for financial model (Incode) • City of Nashville (TN) - Billing data management for financial model • City of Newport (RI) - Geospatial data management for stormwater feasibility • City of Newport News (VA) - Billing data management for financial model (SAP) • City of Patterson (NJ) - Billing data management for financial model • City of Portland (OR) - Billing data management for financial model • City of Round Rock (TX) - Billing data management for financial model • City of Saginaw (MI) - Billing data management for financial model (BS&A) • City of Salt Lake (UT) - Billing data management for financial model • City of Santa Cruz (CA) - Billing data management for desalinization model • City of Santa Rosa (NM) - Billing data management for financial model (Incode) • City of Sheridan (WY) - Billing data management for financial model (Inhance) • City of St. Louis (MO) - Billing data management for financial model • City of Stillwater (OK) - Billing data management for financial model • City of Wichita (KS) - Billing data management for financial model (Ventyx Advantage) • City of Winston-Salem (NC) - Billing data management for financial model PRESENTATIONS • "Wrangling Your Users: ArcObjects UI/UX Design Fundamentals," Esri DevSummit, 2011 • "Impact Analysis and Targeted Outreach for Water Utilities with Spatial Data," Esri User Conference, 2014 • "Long -Term Water Demand Forecasting for Sustainable Supply Planning," AWWA/WEF Utility Management Conference, 2016 • "How Fast Can We Restart Stormwater Fee Billing for 330,000 Account? SWiFTly!" AWWA/WEF Utility Management Conference, 2018 APPENDIX A: REQUIRED FORMS APPENDIX A: Required Forms Collier County Solicitation 20-7792 AT u"L Pdmirsstrabm Snmo s Deparlmcm Fronrw-en[ Senices QNrwn Form 1: Vendor Declaration Statement BOARD OF COUNTY COMMISSIONERS Collier County Government Complex Naples, Florida 34112 Dear Commissioners: The undersigned, as Vendor declares that this response is made without connection or arrangement with any other person and this proposal is in every respect fair and made in good faith, without collusion or fraud. The Vendor hereby declares the instructions, purchase order terms and conditions, requirements, and specifications/scope of work of this solicitation have been fully examined and accepted. The Vendor agrees, if this solicitation submittal is accepted by Collier County, to accept a Purchase Order as a form of a formal contract or to execute a Collier County formal contract for purposes of establishing a contractual relationship between the Vendor and Collier County, for the performance of all requirements to which this solicitation pertains. The Vendor states that the submitted is based upon the documents listed by the above referenced solicitation. The Vendor agrees to comply with the requirements in accordance with the terms, conditions and specifications denoted herein and according to the pricing submitted as a part of the Vendor's bids. Further, the Vendor agrees that if awarded a contract for these goods and/or services, the Vendor will not be eligible to compete, submit a proposal, be awarded, or perform as a sub -vendor for any future associated work that is a result of this awarded contract. IN WITNESS WHEREOF, WE have hereunto subscribed our names on this 28 day of September , 2020 in the County of Orange , in the State of Florida Firm's Legal Name: Raftelis Financial Consultants, Inc. Address: 341 N. Maitland Avenue, Suite 300 City, State, Zip Code: Maitland, FL 32751 Florida Certificate of F05000000923 Authority Document Number Federal Tax 20-1054069 Identification Number *CCR # or CAGE Code *Only if Grant Funded Telephone: 407.628.2600 Email: rori@raftelis.com Signature by: Robert J. Ori (Typed and written) Title: Executive Vice President 8/4/2020 2:50 PM P. 11 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 Additional Contact Information Send payments to: Raftelis Financial Consultants, Inc. (required if different from Company name used as payee above) Contact name: Matthew Jackson Title: Controller Address: 227 W. Trade Street, Suite 1400 City, State, ZIP Charlotte, NC 28202 Telephone: 704.910.8194 Email: mjackson@raftelis.com Office servicing Collier County to place orders (required if different from above) Contact name: Robert J. Ori Title: Executive Vice President Address: 341 N. Maitland Avenue, Suite 300 City, State, ZIP Maitland, FL 32751 Telephone: 407.628.2600 Email: rori@raftelis.com 8/4/2020 2:50 PM p. 12 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 'r c0way Administrative Senrices Deparhnertt Procurement services viviston Form 2: Conflict of Interest Certification Affidavit The Vendor certifies that, to the best of its knowledge and belief, the past and current work on any Collier County project affiliated with this solicitation does not pose an organizational conflict as described by one of the three categories below: Biased ground rules —The firm has not set the "ground rules" for affiliated past or current Collier County project identified above (e.g., writing a procurement's statement of work, specifications, or performing systems engineering and technical direction for the procurement) which appears to skew the competition in favor of my firm. Impaired objectivity — The firm has not performed work on an affiliated past or current Collier County project identified above to evaluate proposals / past performance of itself or a competitor, which calls into question the contractor's ability to render impartial advice to the government. Unequal access to information — The firm has not had access to nonpublic information as part of its performance of a Collier County project identified above which may have provided the contractor (or an affiliate) with an unfair competitive advantage in current or future solicitations and contracts. In addition to this signed affidavit, the contractor / vendor must provide the following: 1. All documents produced as a result of the work completed in the past or currently being worked on for the above -mentioned project; and, 2. Indicate if the information produced was obtained as a matter of public record (in the "sunshine") or through non-public (not in the "sunshine") conversation (s), meeting(s), document(s) and/or other means. Failure to disclose all material or having an organizational conflict in one or more of the three categories above be identified, may result in the disqualification for future solicitations affiliated with the above referenced project(s). By the signature below, the firm (employees, officers and/or agents) certifies, and hereby discloses, that, to the best of their knowledge and belief, all relevant facts concerning past, present, or currently planned interest or activity (financial, contractual, organizational, or otherwise) which relates to the project identified above has been fully disclosed and does not pose an organizational conflict. Raftelis Financial Consultants, Inc. Company Name I Signature Robert J. Ori, Executive Vice President Print Name and Title Countyof I)PArlc e The foregoing instrument was acknowledged before me by means of K physical presence or ❑ online notarization, this kw day of SEPTEMgF_R (month), Z 2 (year), by ROBERE: X. QRT_ (name of person acknowledging). t onally Known OR Produced Identification Type of Identification Produced 8/4/2020 2:50 PM (Signature of Notary Public - State of Florida) 1>Ca-A L. ct-)� (Print, Type, or Stamp Commissioned Name of Notary Public) DONNA L COX w COMMISSION # oG 2mo EQ—:78w 6XPIRE&*91G.2W p. 13 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 coL trr cou"ty Administrative Services Departrnent Procurement Sernces Division Form 3: Immigration Affidavit Certification This Affidavit is required and should be signed, by an authorized principal of the firm and submitted with formal solicitation submittals. Further, Vendors are required to be enrolled in the E-Verify program (httys://www.e-verify.gov/), at the time of the submission of the Vendor's proposal/bid. Acceptable evidence of your enrollment consists of a copy of the properly completed E- Verify Company Profile page or a copy of the fully executed E-Verify Memorandum of Understanding for the company which will be produced at the time of the submission of the Vendor's proposal/bid or within five (5) day of the County's Notice of Recommend Award. FAILURE TO EXECUTE THIS AFFIDAVIT CERTIFICATION AND SUBMIT WITH VENDOR'S PROPOSAL/BID MAY DEEM THE VENDOR'S AS NON -RESPONSIVE. Collier County will not intentionally award County contracts to any Vendor who knowingly employs unauthorized alien workers, constituting a violation of the employment provision contained in 8 U.S.C. Section 1324 a(e) Section 274A(e) of the Immigration and Nationality Act ("INA"). Collier County may consider the employment by any Vendor of unauthorized aliens a violation of Section 274A (e) of the INA. Such Violation by the recipient of the Employment Provisions contained in Section 274A (e) of the INA shall be grounds for unilateral termination of the contract by Collier County. Vendor attests that they are fully compliant with all applicable immigration laws (specifically to the 1986 Immigration Act and subsequent Amendment(s)) and agrees to comply with the provisions of the Memorandum of Understanding with E-Verify and to provide proof of enrollment in The Employment Eligibility Verification System (E-Verify), operated by the Department of Homeland Security in partnership with the Social Security Administration at the time of submission of the Vendor's proposalibid. Raftelis Financial Consultants, Inc. Company Name ?4-t, t. 4 , ..:- Signature Robert J. Ori, Executive Vice President Print Name and Title State of 6- ORIDA County of C)RA A &C The foregoing instrument was acknowledged before me by means of X physical presence or ❑ online notarization, this 1,5� day of 3EMMseg (month), 204 (year), by (name of person acknowledging). ersonally Know i OR Produced Identification Type of Identification Produced (Signature of Notary Public - State of Florida) (Print, Type, or Stamp Commissioned Name of Notary Public) iRIle.., DONMLCOX MY COMM MN p GG 284950 EXPI W AprA 16.21W QED Bonded 11NU WtWy PU * ihId811N W 8/4/2020 2:50 PM p. 14 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 Adminnrabve Sam:m Department r-1 oawecrent Sov ces GY-on Form 4: Vendor Submittal — Local Vendor Preference Certification (Check Appropriate Boxes Below) Not Applicable State of Florida (Select County if Vendor is described as a Local Business) ❑ Collier County ❑ Lee County Vendor affirms that it is a local business as defined by the Procurement Ordinance of the Collier County Board of County Commissioners and the Regulations Thereto. As defined in Section Fifteen of the Collier County Procurement Ordinance: Local business means the vendor has a current Business Tax Receipt issued by the Collier County Tax Collector prior to bid or proposal submission to do business within Collier County, and that identifies the business with a permanent physical business address located within the limits of Collier County from which the vendor's staff operates and performs business in an area zoned for the conduct of such business. A Post Office Box or a facility that receives mail, or a non -permanent structure such as a construction trailer, storage shed, or other non -permanent structure shall not be used for the purpose of establishing said physical address. In addition to the foregoing, a vendor shall not be considered a "local business" unless it contributes to the economic development and well-being of Collier County in a verifiable and measurable way. This may include, but not be limited to, the retention and expansion of employment opportunities, support and increase to the County's tax base, and residency of employees and principals of the business within Collier County. Vendors shall affirm in writing their compliance with the foregoing at the time of submitting their bid or proposal to be eligible for consideration as a "local business" under this section. A vendor who misrepresents the Local Preference status of its firm in a proposal or bid submitted to the County will lose the privilege to claim Local Preference status for a period of up to one year under this section. Vendor must complete the following information: Year Business Established in ❑Collier County or ❑ Lee County: Number of Employees (Including Owner(s) or Corporate Officers): Number of Employees Living in ❑ Collier County or ❑ Lee (Including Owner(s) or Corporate Officers): If requested by the County, Vendor will be required to provide documentation substantiating the information given in this certification. Failure to do so will result in vendor's submission being deemed not applicable. Sign and Date Certification: Under penalties ofperlury, I certify that the information shown on this form is correct to my knowledge. Company Name: Address in Collier or Lee County: Signature: Date: Title: 8/4/2020 2:50 PM p. 16 ***UPDATED JANUARY 28, 2020*** Collier County Solicitation 20-7792 INSURANCE AND BONDING REQUIREMENTS Insurance / Bond Type Required Limits 1. ® Worker's Compensation Statutory Limits of Florida Statutes, Chapter 440 and all Federal Government Statutory Limits and Requirements Evidence of Workers' Compensation coverage or a Certificate of Exemption issued by the State of Florida is required. Entities that are formed as Sole Proprietorships shall not be required to provide a proof of exemption. An application for exemption can be obtained online at https:H/ !pps.Rdfs.com/bocexgmpt/ 2. ® Employer's Liability $_500,000_ single limit per occurrence 3. ® Commercial General Bodily Injury and Property Damage Liability (Occurrence Form) patterned after the current $_1,000,000 single limit per occurrence, $2,000,000 aggregate for Bodily ISO form Injury Liability and Property Damage Liability. This shall include Premises and Operations; Independent Contractors; Products and Completed Operations and Contractual Liability. 4. ® Indemnification To the maximum extent permitted by Florida law, the ContractorNendor shall defend, indemnify and hold harmless Collier County, its officers and employees from any and all liabilities, damages, losses and costs, including, but not limited to, reasonable attorneys' fees and paralegals' fees, to the extent caused by the negligence, recklessness, or intentionally wrongful conduct of the Contractor/ Vendor or anyone employed or utilized by the ContractorNendor in the performance of this Agreement. 5. ® Automobile Liability $_500,000_ Each Occurrence; Bodily Injury & Property Damage, Owned/Non-owned/Hired; Automobile Included 6. ® Other insurance as noted: ❑ Watercraft $ Per Occurrence ❑ United States Longshoreman's and Harborworker's Act coverage shall be maintained where applicable to the completion of the work. $ Per Occurrence ❑ Maritime Coverage (Jones Act) shall be maintained where applicable to the completion of the work. $ Per Occurrence ❑ Aircraft Liability coverage shall be carried in limits of not less than $5,000,000 each occurrence if applicable to the completion of the Services under this Agreement. $ Per Occurrence ❑ Pollution $ Per Occurrence ® Professional Liability $ _2,000,000 Per claim & in the aggregate ❑ Project Professional Liability $ Per Occurrence ❑ Valuable Papers Insurance $ Per Occurrence ❑ Cyber Liability $ Per Occurrence ❑ Technology Errors & Omissions $ Per Occurrence 7. ❑ Bid bond Shall be submitted with proposal response in the form of certified funds, cashiers' check or an irrevocable letter of credit, a cash bond posted with the County Clerk, or proposal bond in a sum equal to 5% of the cost proposal. All checks shall be made payable to the Collier County Board of County Commissioners on a bank or trust company located in the State of Florida and insured by the Federal Deposit Insurance Corporation. 8/4/2020 2:50 PM p. 20 Collier County Solicitation 20-7792 8. ❑ Performance and Payment For projects in excess of $200,000, bonds shall be submitted with the executed Bonds contract by Proposers receiving award, and written for 100% of the Contract award amount, the cost borne by the Proposer receiving an award. The Performance and Payment Bonds shall be underwritten by a surety authorized to do business in the State of Florida and otherwise acceptable to Owner; provided, however, the surety shall be rated as "A-" or better as to general policy holders rating and Class V or higher rating as to financial size category and the amount required shall not exceed 5% of the reported policy holders' surplus, all as reported in the most current Best Key Rating Guide, published by A.M. Best Company, Inc. of 75 Fulton Street, New York, New York 10038. 9. ® Vendor shall ensure that all subcontractors comply with the same insurance requirements that he is required to meet. The same Vendor shall provide County with certificates of insurance meeting the required insurance provisions. 10. ® Collier County must be named as "ADDITIONAL INSURED" on the Insurance Certificate for Commercial General Liability where required. This insurance shall be primary and non-contributory with respect to any other insurance maintained by, or available for the benefit of, the Additional Insured and the Vendor's policy shall be endorsed accordingly. 11. ® The Certificate Holder shall be named as Collier County Board of County Commissioners, OR, Board of County Commissioners in Collier County, OR Collier County Government, OR Collier County. The Certificates of Insurance must state the Contract Number, or Project Number, or specific Project description, or must read: For any and all work performed on behalf of Collier County. 12. ® On all certificates, the Certificate Holder must read: Collier County Board of County Commissioners, 3295 Tamiami Trail East, Naples, FL 34112 13. ® Thirty (30) Days Cancellation Notice required. 14. Collier County shall procure and maintain Builders Risk Insurance on all construction projects where it is deemed necessary. Such coverage shall be endorsed to cover the interests of Collier County as well as the Contractor. Premiums shall be billed to the project and the Contractor shall not include Builders Risk premiums in its project proposal or project billings. All questions regarding Builder's Risk Insurance will be addressed by the Collier County Risk Management Division. 7/27/20 — CC Vendor's Insurance Statement We understand the insurance requirements of these specifications and that the evidence of insurability may be required within five (5) days of the award of this solicitation. The insurance submitted must provide coverage for a minimum of six (6) months from the date of award. Name of Firm Raftelis Financial Consultants, Inc. Vendor Signature X Print Name Robert J. Ori Insurance Agency Agent Name USI Insurance Linda Rolfe Date September 28, 2020 Telephone Number 980.265.5804 8/4/2020 2:50 PM p. 21 Client#: 1722483 RAFTEFIN ACORDTM CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY) 1/20/2020 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer any rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT NAME: Linda Rolfe Cameron M Harris & Co, LLC PHONE gg0-265-5804 FAX A/C, No, Ext : (A/C, No): Div USI Ins E-MAIL linda.rolfe@usi.com 6100 Fairview Road Ste 1400 ADDRESS: Charlotte, NC 28210 INSURER(S) AFFORDING COVERAGE NAIC # INSURER A : National Fire Insurance Co. of Hartford 20478 INSURED Raftelis Financial Consultants, Inc. 227 West Trade Street, Ste. 1400 Charlotte, NC 28202 COVERAGES CERTIFICATE NUMBER: INSURER B : Continental Insurance Company 35289 INSURER C : American Casualty Company of Reading PA 20427 INSURER D : Continental Casualty Company 20443 INSURER E : INSURER F : REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OF INSURANCE ADDL INSR SUBR WVD POLICY NUMBER POLICY EFF MM/DD/YYY POLICY EXP MM/DD/YYY LIMITS A X COMMERCIAL GENERAL LIABILITY 6076000011 1/21/2020 01/21/2021 EACH OCCURRENCE $1 000000 CLAIMS -MADE OCCUR PREMISES ERENTED occur ante $500,000 MED EXP (Any one person) $15,000 PERSONAL & ADV INJURY $1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 POLICY ECOT LOC PRODUCTS -COMP/OP AGG $2,000,000 $ OTHER: D AUTOMOBILE LIABILITY 6076000025 1/21/2020 01/21/2021 EOaccideDnt)SINGLELIMIT 1,000,000 BODILY INJURY (Per person) $ ANY AUTO OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY (Per accident) $ PROPERTY DAMAGE Per accident $ HIRED NON -OWNED X AUTOS ONLY X AUTOS ONLY B X UMBRELLA LIAB X OCCUR 6076000039 1/21/2020 01/21/2021 EACH OCCURRENCE $5000000 AGGREGATE s5,000,000 EXCESS LIAB CLAIMS -MADE DED X RETENTION $10000 $ `+ WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVE — OFFICER/MEMBER EXCLUDED? (Mandatory in NH) N / A 6076305637 6076000042 1/21/2020 1/21/2020 01/21/2021 01/21/2021 x PTERAT TE EOR" E.L. EACH ACCIDENT $1 000000 E.L. DISEASE - EA EMPLOYEE $1,000,000 If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE - POLICY LIMIT $1,000,000 D Prof. Liability 652071235 1/21/2020 01/21/2021 $5,000,000 Occurrence $5,000,000 Aggregate DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) The Pittsburgh Water & Sewer Authority is named as additional insured with respects to General & Auto Liability. Umbrella follows form. Insurance is primary & non-contributory. Waiver of Subrogation applies in favor of additional insureds with respects to all coverages. 30 day notice of cancellation except 10 days for non -pay. IL" a.f I IidP7G\Ilis: PJA all aG t911►I"a, AG\I17J9 Raftelis Financial Consultants, Inc. 227 W. Trade Street Suite 1400 Charlotte, NC 28202-0000 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE © 1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25 (2016/03) 1 of 1 The ACORD name and logo are registered marks of ACORD #S27738122/M27719186 HKYZP ., Request for Taxpayer Give Form to the FOFm (Raw. October2018) Identification Number and Certification requester. Do not Deparimant oi11M Treasury send to the IRS, Int'-w Revenue Service l► Go to www,irs,rgovfFarmW9 for instructions and the latest information, 1 Namo (as shown on your income tax ralurn). Name is required an this line; do not leave this line blank. Raftelis Financial Consultants. Inc 2 BurinM nameldieregarded entity name. if diftereF t from above Raftelis 3 Check appropriate box for federal tax olassifloaation of the person whma rkame is entered on Gne 1. Chock Cr1Iy one of the following seven boxes. LJ InWwJdijuV 4e propde7or or ❑ C CeWalion 0 S corporation ❑ Partnership ❑ TruBVestate single -member LLC ❑ Limited Ilabllity comoar%y. fnter the tar€ Claw cation JG=C aorporalian, S=S corparalian, P=Parinershig) F Note: Check the a MM$Aatu box In Ih9 IinB above for the tax classification of the single -member owner. DD not cheek LLC if the LLC IS classified as a si"16l member LLG that ie disregarded from the owner unless the owner of the LLQ i4 another LLC t1Wt is not6sragarded from the owner for U.S. federal lax purposes. 01hervise, a single-membu LLC thel is disregarded from the owner should check the apprepriata box for the Tax plegsi5cation of its owner, jJ Other (see! InstNClkWN ► 8 Addmss 6wmber, street, and apt, br suite oo,) Sao irwiructions- 227 West Trade Streat. Suite 1400 6 City, stale, and 21P code Charlotte, NC 28202 T L4I acewni numberls) r.om (Wional A ExgmplipnT, (i eS ap* only to oerlain entities, not individuals; sea inStruct*ft an page 3j- Exempt payee code V any) Exemption from FATCA reporling code (if any) ?App�rs macaw-rs mrnL.nE 'a M*M4 Ftequabter's name and 9Cdraes (optional) KjMM TaxpaVer Identification Nurnber IN Enter your TIN i n the appropriate box- The TI N provided must match lh 6 name givers on line Y to avold Scclal secudty number backup withholding- l'pr individuals. this is generally your social security number 1ater However, fa► a resident alien, sole proprietor, or disregarded entity, s n6 the instructiofor Part C, I�tgr. For ether erntitles, k is your employer identif cation number (E IN), If you do not have a number. see Flow fa get a Tfa4, later, or Note; I} The as+aeount is in more than one name, see The instruct ions for line 1. Also see What Name aelc{ I Errilpk"r ldehllncetloh number Number To Give the Requester for guidelines on whose number to enter, 2 I} F- 1 1 4 1 5 1 4 1 0 1 B 1 9 Certification Under penafties o} perjury, J certify that- 1, The number shown on this form is my correct taxpayer identification number (or I am walting for a number to be Issued to rne); and 2, 1 am not subject to backup withholding because; (a) I am exempt from backup withholding, or (b) I have not been notified by Itte Internal Revenue Service pFIS) that I am subjlect to backup withholding as a rasiilt of a failure to report all interest or dividends, or (a) the IRS has notified ma that I am no longer subject to backup wlthhvld'ing; and 3.1 am a U.S_ citizen or other U-. per50r'n (defined below); and 4- The FATCA coda(s) entered on this form (if any) Indicating that I am exempt from FATCA reporting is correct. Certification instructions. You must arm pelt item 2 abode if you have been notified by the IRS Thal you are currently subject to backup wllhholding because you have Oiled to reporl all irntereel and dividends on your tax return. For real estate transactions, item 2 does nol apply- For mortgage Interest paid, acquisition or abandonment of secured property, ranceilaticm of debt, contribul ions to an individual reliremant wrartpement (IRA), and generally, payments other than interesT and dividends, you ire not required to sign tha cartification, but you must provide ywr Correct TIN- SM Ihg nrkSJFnlnons for Part II, laler, Sign Signature of Here U.S. person ► General Instructions eclion references are to The Internal Revenue Code unless otherwise noted. Future developments, For the latest informalion about developments relaled to Form 1N-9 and its ingtrucliorl5, such as Iegislalion enacted after they were published, go to www.irs,govJForm"_ Purpose of Form An individual or entity (Form W-9 fegeiggterj who is required to file an informaliorl r0lurrn with The IRS must obtain your correct taxpayer identification number (FIN) which may be your social sowrily number (SSI%4, individual taxpayer identification number (1TI N), adoption taxpayer identification number (ATIN), Or ertlployer identification number (EINI, to report an an information return The amount paid to yotl, or other amount reportable on sn informzaion rgtum. Examples of infarmaTaon returns include, but are not limfted to, the following. • Form 1099-I#M!T (inleresl earned or paid) ■ Form 409E-DIV (dividends, including those from stocks or mutual kods) ■ Form I099-MISC (varioui6 type6 4f Income. prizes, awards, or gross proceeds) • Form 1099-B (slock or mutual fund sales and certain other Iransactions by brokers) ■ Form 1099-S (proceeds from real estate transactions) * Forrn 1099-It (merchant card and third party network leans7aclions) ■ Form 1098 (}home mortgage interest), 1098-E (student loan interest), 1098-T (tuition) * Form 1099-C (canceled debt) • Form 1099-A (acquisltionl or abandonment of secured property) Use Form W-9 only if you are a U.S. person (including a residerl alien), to prmlride your correct TiN. Y you do not rlatown Form -9 to the requester with a T?N, you might be subject fa backup wifhhakting- See What Is backup withholding, kner, Cat. No. 10231 X Form -9 ¢tev. 10.201 % 0fler county Adn�nisbmtw SeNoi s DNWn ProaverrbL�nR Serywes Date: August 19, 2020 Email: Deborah.McCormick@colliercountyfl.gov Telephone: 239-252-4270 Addendum 1 From: Deborah McCormick, Procurement Strategist To: Interested Bidders Subject: Addendum # 1: 20-7792 Financial Consulting Services The following clarifications are issued as an addendum identifying the following clarification to the scope of work, changes, deletions, or additions to the original solicitation document for the referenced solicitation: Change 1. Attached are the most recent contract and RFP response for the last award of services If you require additional information please post a question on our Bid Sync (www.bidsypc.com) bidding platform under the solicitation for this project. Please sign below and return a copy of this Addendum with your submittal for the above referenced solicitation. a-r J 1, �. (Signature) Raftelis Financial Consultants, Inc. (Name of Firm) September 28, 2020 Date CAW Adminstfatye Sarmces R vkgon Prp(CWer"M SCrviGEB Date: September 8, 2020 Email: Deborah.McCormick@colliercountyfl.gov Telephone: 239-252-4270 Addendum 2 From: Deborah McCormick, Procurement Strategist To: Interested Bidders Subject: Addendum # 2: 20-7792 Financial Consulting Services The following clarifications are issued as an addendum identifying the following clarification to the scope of work, changes, deletions, or additions to the original solicitation document for the referenced solicitation: Change 2. Scheduled RFP opening for has been changed from September 9, 2020 at 3:00 P.M. to September 23, 2020 at 11:00 A.M. DUE DATE: SEPTEMBE o 2020 at 3 SEPTEMBER 23, 2020 k 11:00 A.M. QUESTION AND ANSWER DEADLINE Septe ff.be. 202O M 5:00 p , SEPTEMBER 16, 2020 AT 5:00 P.M. If you require additional information please post a question on our Bid Sync (www.bidsync.com) bidding platform under the solicitation for this project. Please sign below and return a copy of this Addendum with your submittal for the above referenced solicitation. a, L , September 28, 2020 (Signature) Date Raftelis Financial Consultants, Inc. (Name of Firm) CAW Adminstfatye Sarmces R vkgon Prp(CWer"M SCrviGEB Date: September 22, 2020 Email: Deborah.McCormick@colliercountyfl.gov Telephone: 239-252-4270 Addendum 3 From: Deborah McCormick, Procurement Strategist To: Interested Bidders Subject: Addendum # 3: 20-7792 Financial Consulting Services The following clarifications are issued as an addendum identifying the following clarification to the scope of work, changes, deletions, or additions to the original solicitation document for the referenced solicitation: Change 2. Scheduled RFP opening for has been changed from September 23, 2020 at 11:00 A.M. to October 7, 2020 at 11:00 a.m. DUE DATE: SEPTEN4BE 23 2020 n i i .nn n N4. October 7, 2020 at 11:00 a.m. QUESTION AND ANSWER DEADLINE nTEMBEn ' 20-20 TT 5:nn�. September 30, 2020 at 5:00 pm If you require additional information please post a question on our Bid Sync (www.bidsync.com) bidding platform under the solicitation for this project. Please sign below and return a copy of this Addendum with your submittal for the above referenced solicitation. aI ' � . September 28, 2020 (Signature) Date Raftelis Financial Consultants, Inc. (Name of Firm) CAW Adminstfatye Sarmces R vkgon Prp(CWer"M $erviU6 Date: September 22, 2020 Email: Deborah.McCormick@colliercountyfl.gov Telephone: 239-252-4270 Addendum 4 From: Deborah McCormick, Procurement Strategist To: Interested Bidders Subject: Addendum # 4: 20-7792 Financial Consulting Services The following clarifications are issued as an addendum identifying the following clarification to the scope of work, changes, deletions, or additions to the original solicitation document for the referenced solicitation: Scheduled RFP opening for has been changed from September 23, 2020 at 10:00 A.M. to October 7, 2020 at 10:00 a.m. DUE DATE: SEPTEN4B 'D 23 2020 i-� i i:00 n r,r October 7, 2020 at 10:00 a.m. QUESTION AND ANSWER DEADLINE SEPTEMBET ' 2020AT5=00P: September 30, 2020 at 5:00 pm If you require additional information please post a question on our Bid Sync (www.bidsync.com) bidding platform under the solicitation for this project. Please sign below and return a copy of this Addendum with your submittal for the above referenced solicitation. (Signature) Raftelis Financial Consultants, Inc. (Name of Firm) September 28, 2020 Date E-Verify Company ID Number: 266589 x x ke I% E IVERIFY IS A SERVICE OF DHS THE E-VERIFY PROGRAM FOR EMPLOYMENT VERIFICATION MEMORANDUM OF UNDERSTANDING ARTICLE I PURPOSE AND AUTHORITY This Memorandum of Understanding (MOU) sets forth the points of agreement between the Department of Homeland Security (DHS) and Raftelis Financial Consultants, Inc. (Employer) regarding the Employer's participation in the Employment Eligibility Verification Program (E- Verify). This MOU explains certain features of the E-Verify program and enumerates specific responsibilities of DHS, the Social Security Administration (SSA), and the Employer. E-Verify is a program that electronically confirms an employee's eligibility to work in the United States after completion of the Employment Eligibility Verification Form (Form 1-9). For covered government contractors, E-Verify is used to verify the employment eligibility of all newly hired employees and all existing employees assigned to Federal contracts. Authority for the E-Verify program is found in Title IV, Subtitle A, of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), Pub. L. 104-208, 110 Stat. 3009, as amended (8 U.S.C. § 1324a note). Authority for use of the E-Verify program by Federal contractors and subcontractors covered by the terms of Subpart 22.18, "Employment Eligibility Verification", of the Federal Acquisition Regulation (FAR) (hereinafter referred to in this MOU as a "Federal contractor") to verify the employment eligibility of certain employees working on Federal contracts is also found in Subpart 22.18 and in Executive Order 12989, as amended. ARTICLE II FUNCTIONS TO BE PERFORMED A. RESPONSIBILITIES OF SSA 1. SSA agrees to provide the Employer with available information that allows the Employer to confirm the accuracy of Social Security Numbers provided by all employees verified under this MOU and the employment authorization of U.S. citizens. 2. SSA agrees to provide to the Employer appropriate assistance with operational problems that may arise during the Employer's participation in the E-Verify program. SSA agrees to provide the Employer with names, titles, addresses, and telephone numbers of SSA representatives to be contacted during the E-Verify process. 3. SSA agrees to safeguard the information provided by the Employer through the E-Verify program procedures, and to limit access to such information, as is appropriate by law, to individuals responsible for the verification of Social Security Numbers and for evaluation of the E-Verify program or such other persons or entities who may be authorized by SSA as governed by the Privacy Act (5 U.S.C. § 552a), the Social Security Act (42 U.S.C. 1306(a)), and SSA regulations (20 CFR Part 401). Page 1 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 x x ke I% E IVERIFY IS A SERVICE OF DHS 4. SSA agrees to provide a means of automated verification that is designed (in conjunction with DHS's automated system if necessary) to provide confirmation or tentative nonconfirmation of U.S. citizens' employment eligibility within 3 Federal Government work days of the initial inquiry. 5. SSA agrees to provide a means of secondary verification (including updating SSA records as may be necessary) for employees who contest SSA tentative nonconfirmations that is designed to provide final confirmation or nonconfirmation of U.S. citizens' employment eligibility and accuracy of SSA records for both citizens and aliens within 10 Federal Government work days of the date of referral to SSA, unless SSA determines that more than 10 days may be necessary. In such cases, SSA will provide additional verification instructions. B. RESPONSIBILITIES OF DHS 1. After SSA verifies the accuracy of SSA records for aliens through E-Verify, DHS agrees to provide the Employer access to selected data from DHS's database to enable the Employer to conduct, to the extent authorized by this MOU: • Automated verification checks on alien employees by electronic means, and Photo verification checks (when available) on employees. 2. DHS agrees to provide to the Employer appropriate assistance with operational problems that may arise during the Employer's participation in the E-Verify program. DHS agrees to provide the Employer names, titles, addresses, and telephone numbers of DHS representatives to be contacted during the E-Verify process. 3. DHS agrees to provide to the Employer a manual (the E-Verify User Manual) containing instructions on E-Verify policies, procedures and requirements for both SSA and DHS, including restrictions on the use of E-Verify. DHS agrees to provide training materials on E-Verify. 4. DHS agrees to provide to the Employer a notice, which indicates the Employer's participation in the E-Verify program. DHS also agrees to provide to the Employer anti- discrimination notices issued by the Office of Special Counsel for Immigration -Related Unfair Employment Practices (OSC), Civil Rights Division, U.S. Department of Justice. 5. DHS agrees to issue the Employer a user identification number and password that permits the Employer to verify information provided by alien employees with DHS's database. 6. DHS agrees to safeguard the information provided to DHS by the Employer, and to limit access to such information to individuals responsible for the verification of alien employment eligibility and for evaluation of the E-Verify program, or to such other persons or entities as may be authorized by applicable law. Information will be used only to verify the accuracy of Social Security Numbers and employment eligibility, to enforce the Immigration and Nationality Act (INA) and Federal criminal laws, and to administer Federal contracting requirements. 7. DHS agrees to provide a means of automated verification that is designed (in conjunction with SSA verification procedures) to provide confirmation or tentative Page 2 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 x I 'VERIFY IS A SERVICE OF DHS nonconfirmation of employees' employment eligibility within 3 Federal Government work days of the initial inquiry. 8. DHS agrees to provide a means of secondary verification (including updating DHS records as may be necessary) for employees who contest DHS tentative nonconfirmations and photo non -match tentative nonconfirmations that is designed to provide final confirmation or nonconfirmation of the employees' employment eligibility within 10 Federal Government work days of the date of referral to DHS, unless DHS determines that more than 10 days may be necessary. In such cases, DHS will provide additional verification instructions. C. RESPONSIBILITIES OF THE EMPLOYER 1. The Employer agrees to display the notices supplied by DHS in a prominent place that is clearly visible to prospective employees and all employees who are to be verified through the system. 2. The Employer agrees to provide to the SSA and DHS the names, titles, addresses, and telephone numbers of the Employer representatives to be contacted regarding E-Verify. 3. The Employer agrees to become familiar with and comply with the most recent version of the E-Verify User Manual. 4. The Employer agrees that any Employer Representative who will perform employment verification queries will complete the E-Verify Tutorial before that individual initiates any queries. A. The Employer agrees that all Employer representatives will take the refresher tutorials initiated by the E-Verify program as a condition of continued use of E- Verify, including any tutorials for Federal contractors if the Employer is a Federal contractor. B. Failure to complete a refresher tutorial will prevent the Employer from continued use of the program. 5. The Employer agrees to comply with current Form 1-9 procedures, with two exceptions: • If an employee presents a "List B" identity document, the Employer agrees to only accept "List B" documents that contain a photo. (List B documents identified in 8 C.F.R. § 274a.2(b)(1)(B)) can be presented during the Form 1-9 process to establish identity.) If an employee objects to the photo requirement for religious reasons, the Employer should contact E-Verify at 888-464-4218. If an employee presents a DHS Form 1-551 (Permanent Resident Card) or Form 1-766 (Employment Authorization Document) to complete the Form 1-9, the Employer agrees to make a photocopy of the document and to retain the photocopy with the employee's Form 1-9. The employer will use the photocopy to verify the photo and to assist DHS with its review of photo non -matches that are contested by employees. Note that employees retain the right to present any List A, or List B and List C, documentation to complete the Form 1-9. DHS may in the future designate other documents that activate the photo screening tool. Page 3 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 FmilqNk- 6. The Employer understands that participation in E-Verify does not exempt the Employer from the responsibility to complete, retain, and make available for inspection Forms 1-9 that relate to its employees, or from other requirements of applicable regulations or laws, including the obligation to comply with the antidiscrimination requirements of section 274B of the INA with respect to Form I-9 procedures, except for the following modified requirements applicable by reason of the Employer's participation in E-Verify: (1) identity documents must have photos, as described in paragraph 5 above; (2) a rebuttable presumption is established that the Employer has not violated section 274A(a)(1)(A) of the Immigration and Nationality Act (INA) with respect to the hiring of any individual if it obtains confirmation of the identity and employment eligibility of the individual in compliance with the terms and conditions of E-Verify; (3) the Employer must notify DHS if it continues to employ any employee after receiving a final nonconfirmation, and is subject to a civil money penalty between $550 and $1,100 for each failure to notify DHS of continued employment following a final nonconfirmation; (4) the Employer is subject to a rebuttable presumption that it has knowingly employed an unauthorized alien in violation of section 274A(a)(1)(A) if the Employer continues to employ an employee after receiving a final nonconfirmation; and (5) no person or entity participating in E-Verify is civilly or criminally liable under any law for any action taken in good faith based on information provided through the confirmation system. DHS reserves the right to conduct Form 1-9 compliance inspections during the course of E-Verify, as well as to conduct any other enforcement activity authorized by law. 7. The Employer agrees to initiate E-Verify verification procedures for new employees within 3 Employer business days after each employee has been hired (but after both sections 1 and 2 of the Form 1-9 have been completed), and to complete as many (but only as many) steps of the E-Verify process as are necessary according to the E-Verify User Manual. The Employer is prohibited from initiating verification procedures before the employee has been hired and the Form 1-9 completed. If the automated system to be queried is temporarily unavailable, the 3-day time period is extended until it is again operational in order to accommodate the Employer's attempting, in good faith, to make inquiries during the period of unavailability. In all cases, the Employer must use the SSA verification procedures first, and use DHS verification procedures and photo screening tool only after the SSA verification response has been given. Employers may initiate verification by notating the Form 1-9 in circumstances where the employee has applied for a Social Security Number (SSN) from the SSA and is waiting to receive the SSN, provided that the Employer performs an E-Verify employment verification query using the employee's SSN as soon as the SSN becomes available. 8. The Employer agrees not to use E-Verify procedures for pre -employment screening of job applicants, in support of any unlawful employment practice, or for any other use not authorized by this MOU. Employers must use E-Verify for all new employees, unless an Employer is a Federal contractor that qualifies for the exceptions described in Article II.D.1.c. Except as provided in Article II.D, the Employer will not verify selectively and will not verify employees hired before the effective date of this MOU. The Employer understands that if the Employer uses E-Verify procedures for any purpose other than as authorized by this MOU, the Employer may be subject to appropriate legal action and termination of its access to SSA and DHS information pursuant to this MOU. 9. The Employer agrees to follow appropriate procedures (see Article III. below) regarding tentative nonconfirmations, including notifying employees of the finding, providing written referral instructions to employees, allowing employees to contest the finding, and not taking Page 4 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 E-Verify Company ID Number: 266589 ��•� 41111� .- adverse action against employees if they choose to contest the finding. Further, when employees contest a tentative nonconfirmation based upon a photo non -match, the Employer is required to take affirmative steps (see Article III.B. below) to contact DHS with information necessary to resolve the challenge. 10. The Employer agrees not to take any adverse action against an employee based upon the employee's perceived employment eligibility status while SSA or DHS is processing the verification request unless the Employer obtains knowledge (as defined in 8 C.F.R. § 274a.1(1)) that the employee is not work authorized. The Employer understands that an initial inability of the SSA or DHS automated verification system to verify work authorization, a tentative nonconfirmation, a case in continuance (indicating the need for additional time for the government to resolve a case), or the finding of a photo non -match, does not establish, and should not be interpreted as evidence, that the employee is not work authorized. In any of the cases listed above, the employee must be provided a full and fair opportunity to contest the finding, and if he or she does so, the employee may not be terminated or suffer any adverse employment consequences based upon the employee's perceived employment eligibility status (including denying, reducing, or extending work hours, delaying or preventing training, requiring an employee to work in poorer conditions, refusing to assign the employee to a Federal contract or other assignment, or otherwise subjecting an employee to any assumption that he or she is unauthorized to work) until and unless secondary verification by SSA or DHS has been completed and a final nonconfirmation has been issued. If the employee does not choose to contest a tentative nonconfirmation or a photo non -match or if a secondary verification is completed and a final nonconfirmation is issued, then the Employer can find the employee is not work authorized and terminate the employee's employment. Employers or employees with questions about a final nonconfirmation may call E-Verify at 1-888-464-4218 or OSC at 1-800- 255-8155 or 1-800-237-2515 (TDD). 11. The Employer agrees to comply with Title VII of the Civil Rights Act of 1964 and section 274B of the INA by not discriminating unlawfully against any individual in hiring, firing, or recruitment or referral practices because of his or her national origin or, in the case of a protected individual as defined in section 27413(a)(3) of the INA, because of his or her citizenship status. The Employer understands that such illegal practices can include selective verification or use of E-Verify except as provided in part D below, or discharging or refusing to hire employees because they appear or sound "foreign" or have received tentative nonconfirmations. The Employer further understands that any violation of the unfair immigration -related employment practices provisions in section 274B of the INA could subject the Employer to civil penalties, back pay awards, and other sanctions, and violations of Title VII could subject the Employer to back pay awards, compensatory and punitive damages. Violations of either section 274B of the INA or Title VII may also lead to the termination of its participation in E-Verify. If the Employer has any questions relating to the anti -discrimination provision, it should contact OSC at 1-800-255-8155 or 1-800-237-2515 (TDD). 12. The Employer agrees to record the case verification number on the employee's Form 1-9 or to print the screen containing the case verification number and attach it to the employee's Form 1-9. 13. The Employer agrees that it will use the information it receives from SSA or DHS pursuant to E-Verify and this MOU only to confirm the employment eligibility of employees as Page 5 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 E-Verify Company ID Number: 266589 ��•� 41111� .- authorized by this MOU. The Employer agrees that it will safeguard this information, and means of access to it (such as PINS and passwords) to ensure that it is not used for any other purpose and as necessary to protect its confidentiality, including ensuring that it is not disseminated to any person other than employees of the Employer who are authorized to perform the Employer's responsibilities under this MOU, except for such dissemination as may be authorized in advance by SSA or DHS for legitimate purposes. 14. The Employer acknowledges that the information which it receives from SSA is governed by the Privacy Act (5 U.S.C. § 552a(i)(1) and (3)) and the Social Security Act (42 U.S.C. 1306(a)), and that any person who obtains this information under false pretenses or uses it for any purpose other than as provided for in this MOU may be subject to criminal penalties. 15. The Employer agrees to cooperate with DHS and SSA in their compliance monitoring and evaluation of E-Verify, including by permitting DHS and SSA, upon reasonable notice, to review Forms 1-9 and other employment records and to interview it and its employees regarding the Employer's use of E-Verify, and to respond in a timely and accurate manner to DHS requests for information relating to their participation in E-Verify. D. RESPONSIBILITIES OF FEDERAL CONTRACTORS 1. The Employer understands that if it is a Federal contractor subject to the employment verification terms in Subpart 22.18 of the FAR it must verify the employment eligibility of any "employee assigned to the contract" (as defined in FAR 22.1801) in addition to verifying the employment eligibility of all other employees required to be verified under the FAR. Once an employee has been verified through E-Verify by the Employer, the Employer may not reverify the employee through E-Verify. a. Federal contractors not enrolled at the time of contract award: An Employer that is not enrolled in E-Verify as a Federal contractor at the time of a contract award must enroll as a Federal contractor in the E-Verify program within 30 calendar days of contract award and, within 90 days of enrollment, begin to use E-Verify to initiate verification of employment eligibility of new hires of the Employer who are working in the United States, whether or not assigned to the contract. Once the Employer begins verifying new hires, such verification of new hires must be initiated within 3 business days after the date of hire. Once enrolled in E-Verify as a Federal contractor, the Employer must initiate verification of employees assigned to the contract within 90 calendar days after the date of enrollment or within 30 days of an employee's assignment to the contract, whichever date is later. b. Federal contractors already enrolled at the time of a contract award: Employers enrolled in E-Verify as a Federal contractor for 90 days or more at the time of a contract award must use E-Verify to initiate verification of employment eligibility for new hires of the Employer who are working in the United States, whether or not assigned to the contract, within 3 business days after the date of hire. If the Employer is enrolled in E-Verify as a Federal contractor for 90 calendar days or less at the time of contract award, the Employer must, within 90 days of enrollment, begin to use E-Verify to initiate verification of new hires of the contractor who are working in the United States, whether or not assigned to the contract. Such verification of new hires must be initiated within 3 business days after the date of hire. An Employer enrolled as a Federal contractor in E-Verify must initiate verification of each employee assigned to the Page 6 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 E-Verify Company ID Number: 266589 ��•� 41111� .- contract within 90 calendar days after date of contract award or within 30 days after assignment to the contract, whichever is later. C. Institutions of higher education, State, local and tribal governments and sureties: Federal contractors that are institutions of higher education (as defined at 20 U.S.C. 1001(a)), State or local governments, governments of Federally recognized Indian tribes, or sureties performing under a takeover agreement entered into with a Federal agency pursuant to a performance bond may choose to only verify new and existing employees assigned to the Federal contract. Such Federal contractors may, however, elect to verify all new hires, and/or all existing employees hired after November 6, 1986. The provisions of Article II.D, paragraphs 1.a and 1.b of this MOU providing timeframes for initiating employment verification of employees assigned to a contract apply to such institutions of higher education, State, local and tribal governments, and sureties. d. Verification of all employees: Upon enrollment, Employers who are Federal contractors may elect to verify employment eligibility of all existing employees working in the United States who were hired after November 6, 1986, instead of verifying only those employees assigned to a covered Federal contract. After enrollment, Employers must elect to do so only in the manner designated by DHS and initiate E-Verify verification of all existing employees within 180 days after the election. e. Form 1-9 procedures for Federal contractors: The Employer may use a previously completed Form 1-9 as the basis for initiating E-Verify verification of an employee assigned to a contract as long as that Form 1-9 is complete (including the SSN), complies with Article II.C.5, the employee's work authorization has not expired, and the Employer has reviewed the information reflected in the Form 1-9 either in person or in communications with the employee to ensure that the employee's stated basis in section 1 of the Form 1-9 for work authorization has not changed (including, but not limited to, a lawful permanent resident alien having become a naturalized U.S. citizen). If the Employer is unable to determine that the Form 1-9 complies with Article II.C.5, if the employee's basis for work authorization as attested in section 1 has expired or changed, or if the Form 1-9 contains no SSN or is otherwise incomplete, the Employer shall complete a new 1-9 consistent with Article II.C.5, or update the previous 1-9 to provide the necessary information. If section 1 of the Form 1-9 is otherwise valid and up-to- date and the form otherwise complies with Article II.C.5, but reflects documentation (such as a U.S. passport or Form 1-551) that expired subsequent to completion of the Form 1-9, the Employer shall not require the production of additional documentation, or use the photo screening tool described in Article II.C.5, subject to any additional or superseding instructions that may be provided on this subject in the E-Verify User Manual. Nothing in this section shall be construed to require a second verification using E-Verify of any assigned employee who has previously been verified as a newly hired employee under this MOU, or to authorize verification of any existing employee by any Employer that is not a Federal contractor. 2. The Employer understands that if it is a Federal contractor, its compliance with this MOU is a performance requirement under the terms of the Federal contract or subcontract, and the Employer consents to the release of information relating to compliance with its verification responsibilities under this MOU to contracting officers or other officials authorized to review the Employer's compliance with Federal contracting requirements. Page 7 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 E-Verify Company ID Number: 266589 ARTICLE III REFERRAL OF INDIVIDUALS TO SSA AND DHS A. REFERRAL TO SSA x ke E IVERIFY IS A SERVICE OF DHS 1. If the Employer receives a tentative nonconfirmation issued by SSA, the Employer must print the tentative nonconfirmation notice as directed by the automated system and provide it to the employee so that the employee may determine whether he or she will contest the tentative nonconfirmation. 2. The Employer will refer employees to SSA field offices only as directed by the automated system based on a tentative nonconfirmation, and only after the Employer records the case verification number, reviews the input to detect any transaction errors, and determines that the employee contests the tentative nonconfirmation. The Employer will transmit the Social Security Number to SSA for verification again if this review indicates a need to do so. The Employer will determine whether the employee contests the tentative nonconfirmation as soon as possible after the Employer receives it. 3. If the employee contests an SSA tentative nonconfirmation, the Employer will provide the employee with a system -generated referral letter and instruct the employee to visit an SSA office within 8 Federal Government work days. SSA will electronically transmit the result of the referral to the Employer within 10 Federal Government work days of the referral unless it determines that more than 10 days is necessary. The Employer agrees to check the E-Verify system regularly for case updates. 4. The Employer agrees not to ask the employee to obtain a printout from the Social Security Number database (the Numident) or other written verification of the Social Security Number from the SSA. B. REFERRAL TO DHS 1. If the Employer receives a tentative nonconfirmation issued by DHS, the Employer must print the tentative nonconfirmation notice as directed by the automated system and provide it to the employee so that the employee may determine whether he or she will contest the tentative nonconfirmation. 2. If the Employer finds a photo non -match for an employee who provides a document for which the automated system has transmitted a photo, the employer must print the photo non - match tentative nonconfirmation notice as directed by the automated system and provide it to the employee so that the employee may determine whether he or she will contest the finding. 3. The Employer agrees to refer individuals to DHS only when the employee chooses to contest a tentative nonconfirmation received from DHS automated verification process or when the Employer issues a tentative nonconfirmation based upon a photo non -match. The Employer will determine whether the employee contests the tentative nonconfirmation as soon as possible Page 8 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 after the Employer receives it. x ke E IVERIFY IS A SERVICE OF DHS 4. If the employee contests a tentative nonconfirmation issued by DHS, the Employer will provide the employee with a referral letter and instruct the employee to contact DHS through its toll -free hotline (as found on the referral letter) within 8 Federal Government work days. 5. If the employee contests a tentative nonconfirmation based upon a photo non -match, the Employer will provide the employee with a referral letter to DHS. DHS will electronically transmit the result of the referral to the Employer within 10 Federal Government work days of the referral unless it determines that more than 10 days is necessary. The Employer agrees to check the E- Verify system regularly for case updates. 6. The Employer agrees that if an employee contests a tentative nonconfirmation based upon a photo non -match, the Employer will send a copy of the employee's Form 1-551 or Form 1-766 to DHS for review by: • Scanning and uploading the document, or • Sending a photocopy of the document by an express mail account (furnished and paid for by DHS). 7. The Employer understands that if it cannot determine whether there is a photo match/non-match, the Employer is required to forward the employee's documentation to DHS by scanning and uploading, or by sending the document as described in the preceding paragraph, and resolving the case as specified by the Immigration Services Verifier at DHS who will determine the photo match or non -match. ARTICLE IV SERVICE PROVISIONS SSA and DHS will not charge the Employer for verification services performed under this MOU. The Employer is responsible for providing equipment needed to make inquiries. To access the E-Verify System, an Employer will need a personal computer with Internet access. ARTICLE V PARTIES A. This MOU is effective upon the signature of all parties, and shall continue in effect for as long as the SSA and DHS conduct the E-Verify program unless modified in writing by the mutual consent of all parties, or terminated by any party upon 30 days prior written notice to the others. Any and all system enhancements to the E-Verify program by DHS or SSA, including but not limited to the E-Verify checking against additional data sources and instituting new verification procedures, will be covered under this MOU and will not cause the need for a supplemental MOU that outlines these changes. DHS agrees to train employers on all changes made to E- Verify through the use of mandatory refresher tutorials and updates to the E-Verify User Manual. Even without changes to E-Verify, DHS reserves the right to require employers to take Page 9 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 x I 'VERIFY IS A SERVICE OF DHS mandatory refresher tutorials. An Employer that is a Federal contractor may terminate this MOU when the Federal contract that requires its participation in E-Verify is terminated or completed. In such a circumstance, the Federal contractor must provide written notice to DHS. If an Employer that is a Federal contractor fails to provide such notice, that Employer will remain a participant in the E-Verify program, will remain bound by the terms of this MOU that apply to non -Federal contractor participants, and will be required to use the E-Verify procedures to verify the employment eligibility of all newly hired employees. B. Notwithstanding Article V, part A of this MOU, DHS may terminate this MOU if deemed necessary because of the requirements of law or policy, or upon a determination by SSA or DHS that there has been a breach of system integrity or security by the Employer, or a failure on the part of the Employer to comply with established procedures or legal requirements. The Employer understands that if it is a Federal contractor, termination of this MOU by any party for any reason may negatively affect its performance of its contractual responsibilities. C. Some or all SSA and DHS responsibilities under this MOU may be performed by contractor(s), and SSA and DHS may adjust verification responsibilities between each other as they may determine necessary. By separate agreement with DHS, SSA has agreed to perform its responsibilities as described in this MOU. D. Nothing in this MOU is intended, or should be construed, to create any right or benefit, substantive or procedural, enforceable at law by any third party against the United States, its agencies, officers, or employees, or against the Employer, its agents, officers, or employees. E. Each party shall be solely responsible for defending any claim or action against it arising out of or related to E-Verify or this MOU, whether civil or criminal, and for any liability wherefrom, including (but not limited to) any dispute between the Employer and any other person or entity regarding the applicability of Section 403(d) of IIRIRA to any action taken or allegedly taken by the Employer. F. The Employer understands that the fact of its participation in E-Verify is not confidential information and may be disclosed as authorized or required by law and DHS or SSA policy, including but not limited to, Congressional oversight, E-Verify publicity and media inquiries, determinations of compliance with Federal contractual requirements, and responses to inquiries under the Freedom of Information Act (FOIA). G. The foregoing constitutes the full agreement on this subject between DHS and the Employer. H. The individuals whose signatures appear below represent that they are authorized to enter into this MOU on behalf of the Employer and DHS respectively. Page 10 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 x x ke �% E IVERIFY IS A SERVICE OF DHS To be accepted as a participant in E-Verify, you should only sign the Employer's Section of the signature page. If you have any questions, contact E-Verify at 888-464-4218. Employer Raftelis Financial Consultants, Inc. Diane Adams Name (Please Type or Print) Electronically Signed Signature Department of Homeland Security - Verification Division USCIS Verification Division Name (Please Type or Print) Electronically Signed Signature Title 10/21 /2009 Date title 10/21 /2009 Date Page 11 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 Information Required for the E-Verify Program Information relating to your Company: Company Name: Raftelis Financial Consultants, Inc. Company Facility Address: 1031 South Caldwell Street, Suite 100 Charlotte, NC 28203 Company Alternate Address: County or Parish: MECKLENBURG Employer Identification Number: 201054069 North American Industry Classification Systems Code: 541 Parent Company: Number of Employees: 20 to 99 Number of Sites Verified for: 1 x x ke �% E IVERIFY IS A SERVICE OF DHS Are you verifying for more than 1 site? If yes, please provide the number of sites verified for in each State: NORTH CAROLINA 1 site(s) Page 12 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify E-Verify Company ID Number: 266589 x ke E IVERIFY IS A SERVICE OF DHS Information relating to the Program Administrator(s) for your Company on policy questions or operational problems: Name: Diane Adams Telephone Number: (704) 910 - 8961 Fax Number: E-mail Address: dadams@raftelis.com Page 13 of 13JE-Verify MOU for Employerl Revision Date 10/29/08 www.dhs.gov/E-Verify State of Florida Department of State I certify from the records of this office that RAFTELIS FINANCIAL CONSULTANTS, INC. is a North Carolina corporation authorized to transact business in the State of Florida, qualified on February 10, 2005. The document number of this corporation is F05000000923. I further certify that said corporation has paid all fees due this office through December 31, 2020, that its most recent annual report/uniform business report was filed on January 29, 2020, and that its status is active. I further certify that said corporation has not filed a Certificate of Withdrawal. Given under my hand and the Great Seal of the State of Florida at Tallahassee, the Capital, this the First day of July, 2020 Secretary ofState Tracking Number: 2223424962CU To authenticate this certificate,visit the following site,enter this number, and then follow the instructions displayed. https://services.sunbiz.org/Filings/C ertificateOfstatus/CertificateAuthentication APPENDIX B: WORK SAMPLES APPENDIX B: Work Samples Hernando County FLORIDA Project Name: Water and Wastewater Rate Study and Miscellaneous Service Fee Analysis — Fiscal Year 2019 Date: August 6, 2019 This study provides an example of a recent water and wastewater revenue sufficiency and rate evaluation on behalf of the County with the focus on the ability of utility rates to meet the expenditure and financial requirements of the County. As part of the study, the Project Team prepared an interactive financial model that encompassed a five- year forecast period. Study highlights included: • Preparation of a detailed billing frequency to identify customer class water and wastewater usage characteristics and demands. • Prepared a detailed forecast of the operation and maintenance expenses recognizing the implementation of the capital improvement plan, customer growth, and other service area attributes. • Developed a capital re -investment plan and developed a funding analysis to finance the capital plan of the utility, including the use of loans derived from the State Revolving Fund loan program as administered by the Florida Department of Environmental Protection. • Prepared a revenue sufficiency analysis and rate phasing plan to allow for a programmed approach to the implementation of rate adjustments. • Redesigned water and wastewater rates to improve revenue stability and fairness associated with the recovery of the identified net revenue requirements for each utility system. • Evaluated compliance with the senior and subordinate lien rate covenants and development of a management dashboard to monitor fiscal position and overall financial performance. • Designed other miscellaneous fees to support the full recovery of cost. • Presenting the findings to the Board of County Commissioners and assisting in the preparation of the proposed rate resolution which included a five-year rate implementation plan. In support of the County's ongoing utility management program, the Project Team has been requested to continuously update the financial forecast to allow for the continued evaluation and monitoring of the ability of utility revenues to meet utility financial obligations and to ensure proper cost recovery. In addition to the evaluation of the monthly rates for service, the Project Team has also assisted the County in the establishment of other rates and charges for the utility, including: i) reclaimed water rates; ii) backflow charges; iii) septage fees; and iv) other miscellaneous service charges. The Project Team has also assisted the County in evaluating the financial impact of converting certain customers located within the County service territory currently on septic systems to the County's centralized wastewater water treatment system and supported the County in securing external debt for capital project funding. HERNANDO COUNTY, FLORIDA -0O0 :rl WATER AND WASTEWATER RATE STUDY AND MISCELLANEOUS SERVICE FEE ANALYSIS FISCAL YEAR 2019 August 6, 2019 IS N o w PART OF R A F T E L I S �111. 10 IS NOW PART OF �111. August 6, 2019 Ms. Grace Sheppard, MBA Finance Manager Hernando County Utility Department Division of Environmental Services 15365 Cortez Blvd. Brooksville, FL 34613 R A F T E L I S Subject: Water and Wastewater Rate Study and Miscellaneous Service Fee Analysis — Fiscal Year 2019 Ladies and Gentlemen: Raftelis Financial Consultants, Inc. ("Raftelis"), formerly known as Public Resources Management Group, Inc. ("PRMG"), has completed the 2019 Water and Wastewater Rate Study and Miscellaneous Service Fee Analysis (the "Study") on behalf of Hernando County, Florida (the "County") and has presented the results of our analyses, assumptions, and recommendations in this report for your consideration. The focus of the Study was to update the forecast of utility operations and the corresponding expenditure and funding needs (the "revenue requirements") to: i) evaluate the sufficiency of the water and wastewater utility (the "Utility" or "System") revenues to meet such projected revenue requirements; ii) evaluate and redesign monthly water and wastewater rates, where appropriate; iii) and to review the System's current Miscellaneous Service Fees and recommended adjustments if necessary. The Study period evaluated a forecast of operations for the Fiscal Years 2019 through 2024 (the "Forecast Period") to identify the estimated financial effects to Utility rates from changes in operations, timing and level of capital funding requirements. Specifically, the Study evaluated for each respective utility system the ability of the existing rate revenues: i) to fund day-to-day operations and the capital improvements of the System; ii) meet anticipated rate covenant requirements delineated in the authorizing resolution and loan agreements associated with the issuance of utility bonds / loans on behalf of the System by the County; and iii) promote the overall financial sustainability of the System to limit financial risk and maintain sustainable long-term rates. The current rates for utility service were last formally reviewed in Fiscal Year 2014 and reflected a multi -year rate -phasing plan for Fiscal Years 2015 through 2019 as adopted by the Board of County Commissioners ("BOCC") on May 13, 2014 pursuant to per Resolution No. 2014-63 (the "Rate Resolution"). The County is now in the last year of the rate phasing plan as delineated in the Rate Resolution. Based on the projected expenditure and funding needs of the System and the projected financing plan for the capital program, it is projected that the current rates will not be sufficient to meet such needs and that the rates for monthly utility service will need to be increased. The recommended overall system rate adjustments are assumed to become effective on October Pt K:\DC\1039-17\Rpt\Rate Study Report (2019) Final 341 NORTH MAITLAND AVENUE — SUITE 300 — MAITLAND, FL 32751 Tel: 407-628-2600 • Fax: 407-628-2610 • Email: PRMG@PRMGinc.com • Website: www.PRMGinc.com Ms. Grace Sheppard, MBA Finance Manager Hernando County Utility Department August 6, 2019 Page 2 of each Fiscal Year during the Forecast Period beginning with the Fiscal Year 2020. The recommended rate adjustments by Fiscal Year are summarized on the following page: Estimated System Average Rate Percentage Adjustment Water System Wastewater Combined Price Indexing Additional Price Indexing Additional Water and Fiscal Effective Rate Revenue Combined Rate Revenue Combined Wastewater Year Date Adjustment [1] Adjustment Increase Adjustment [*] Adjustment Increase Increase [2] 2020 10/1/2019 2.40% 1.60% 4.00% 2.40% 2.60% 5.00% 4.75% 2021 10/1/2020 2.60% 1.40% 4.00% 2.60% 2.40% 5.00% 4.75% 2022 10/1/2021 2.50% 1.50% 4.00% 2.50% 2.50% 5.00% 4.75% 2023 10/1/2022 2.50% 0.00% 2.50% 2.50% 2.50% 5.00% 4.44% 2024 10/1/2023 2.40% 0.10% 2.50% 2.40% 2.60% 5.00% 4.44% [1] For Fiscal Years 2020 through 2024 the price index is estimated based on projections of the Consumer Price Index from the Congressional Budget Office regarding future inflation rates. [2] Amounts shown represents the average annual increase in rate revenue when recognizing the water and wastewater rate adjustments on a combined basis. As can be seen above and based on the assumptions recognized for the development of the System revenue requirements, additional increases above annual price indexing adjustments have been identified to be implemented during Fiscal Years 2020 through 2024 to maintain the operating margins of the System. The Study assumes that monthly rates would be redesigned in Fiscal Year 2020 (in regard to the level of monthly base charges and usage charges) and future rate increases for Fiscal Years 2021 through 2024 would be applied uniformly to all of the monthly base charges and consumption charges in effect. The table below provides a summary of the estimated monthly impact to the typical monthly water and wastewater bill for a County resident using 6,000 gallons per month of service (reflects average monthly use for a typical County individually metered residential customer). Estimated Residential Monthly Bill Impact from Proposed Rates - Monthly Service at 6,000 Gallons Water Wastewater Combined Effective Date PROPOSED ADJUSTMENTS: Existing Average Bill October 1, 2019 October 1, 2020 October 1, 2021 October 1, 2022 October 1, 2023 Average Average Average Proposed Residential Proposed Residential Residential Monthly Increase Bill Increase Increase Bill Increase Bill Increase $15.94 $46.72 $62.66 4.00% 16.86 $0.92 5.00% 49.20 $2.48 66.06 $3.40 4.00% 17.55 $0.69 5.00% 51.63 $2.43 69.18 3.12 4.00% 18.26 $0.71 5.00% 54.24 $2.61 72.50 3.32 2.50% 18.73 $0.47 5.00% 56.96 $2.72 75.69 3.19 2.50% 19.20 $0.47 5.00% 59.80 $2.84 79.00 3.31 The primary reasons for the increase in rates for the Forecast Period are due to: KADCU039-17\Rpt\Rate Study Report (2019) Final Ms. Grace Sheppard, MBA Finance Manager Hernando County Utility Department August 6, 2019 Page 3 1. The need to recover increased operating and maintenance expenses associated with the impacts of general inflation, the effects of an improved economy which is affecting the cost for materials and professional / contracted services, and increased additional personnel assumed during the Forecast Period due to System growth and facility expansions; 2. Increased debt service requirements associated with financing of additional and recently identified capital improvements to the County's water and wastewater utility facilities; 3. To provide for the funding of a dedicated capital re -investment plan (represents annual transfers to fund capital expenditures for the renewal, replacement, betterment and upgrade of System assets) in order to limit (balance) the amount of debt financing and long-term financing costs to the System, which will promote ongoing rate stability; 4. Provide sufficient funds necessary to comply with the rate covenant requirements as delineated in the Bond Resolution which authorized the issuance of the outstanding senior lien bonds of the System and the Loan Agreements entered into with the Florida Department of Environmental Protection associated with securing low -interest loans from the State Revolving Fund loan program which are considered as subordinated indebtedness; and 5. Maintain the creditworthiness of the System and bond credit rating, which included maintaining working cash (fund balance) reserves to limit the financial risk to the utility due to unforeseen changes in revenues, the incurrence of unexpected operating or increased capital expenditures, and to provide a plan to achieve the lowest cost of borrowers (interest rates) for capital financing to promote the long term financial stability of the System. The average single-family (individually -metered) residential customer uses approximately 6,000 gallons of monthly water and wastewater service and the average bills produced at this typical usage range from the current adopted rates for Fiscal Year 2019 and proposed for Fiscal Year 2020 are generally lower on average than other neighboring utilities; and are considered reasonable and comparable to other neighboring utility systems. This comparison is shown in more detail on Tables 18 through 20, at the end of this report, and is summarized below: Comparison of Proposed Bills with Neighboring Utilities [1] Water Wastewater Combined Service Hernando County: Existing Rates FY 2019 $15.94 $46.72 $62.66 Proposed Rates FY 2020 $16.86 $49.20 $66.06 Neighboring Surveyed Utilities $29.53 $51.45 $80.98 [*] Amounts shown derived from Tables 18 through 20 at the end of this report; neighboring surveyed utilities represent current (Fiscal Year 2019) rates and have not been adjusted for any possible change to such rates that are under consideration by the surveyed utilities. KADCU039-17\Rpt\Rate Study Report (2019) Final Ms. Grace Sheppard, MBA Finance Manager Hernando County Utility Department August 6, 2019 Page 4 In addition to charging user fees for monthly water and wastewater service, the County also charges fees for certain specifically requested miscellaneous services or needs. Examples of these fees include water meter installation charges, service visits, disconnect / reconnect charges, and charges for late payment. Revenues from these charges tend to reduce the level of expenditures funded from user fees. Generally, these fees are designed on a cost recovery basis predicated on the specific cost of the services requested. A review of the cost of miscellaneous services based on data from the County has been used to develop the proposed schedule of miscellaneous charges shown on Table 21 at the end of this report. Following this letter, we have provided an executive summary that provides an overview of the study results and outlines our recommendations and conclusions. The remainder of the report provides additional details regarding the rate and financial analysis conducted on behalf of the County. We appreciate the opportunity to be of service to the County and would like to thank the County's staff for their assistance and cooperation during the course of this study. Respectfully submitted, Raftelis Financial Consultants, Inc. -/,�-, ,�- n", Robert J. Ori Executive Vice President W-,t� Jeffrey M. Wilson Manager RJO/dlc Attachments KADCU039-17\Rpt\Rate Study Report (2019) Final HERNANDO COUNTY, FLORIDA WATER AND WASTEWATER RATE STUDY AND MISCELLANEOUS SERVICE CHARGE ANALYSIS — FISCAL � O R 1 p P YEAR 2019 TABLE OF CONTENTS Title Page No. Letter of Transmittal Tableof Contents..................................................................................................................... i Listof Tables.......................................................................................................................... ii Introduction.............................................................................................................................. I Forecastof Revenues...............................................................................................................2 Customer and Demand Forecast.........................................................................................2 ProjectedRevenues.............................................................................................................4 Revenue Requirements............................................................................................................5 Principal Assumptions and Considerations.........................................................................6 Net Revenue Requirements — Water System.....................................................................12 Net Revenue Requirements — Wastewater System............................................................14 Debt Service Coverage and Covenant Compliance................................................................16 Debt Service Covenant Compliance..................................................................................16 ratedesign...............................................................................................................................17 General...............................................................................................................................17 Proposed Rate Design — General Criteria..........................................................................17 Water System Rate Design................................................................................................18 Wastewater System Rate Design.......................................................................................21 Customer Impact Analysis.................................................................................................23 K:\DCAt039-17\RptARate Study Report (2019) Final —i— HERNANDO COUNTY, FLORIDA WATER AND WASTEWATER RATE STUDY AND MISCELLANEOUS SERVICE CHARGE ANALYSIS — FISCAL YEAR 2019 TABLE OF CONTENTS (cont'd.) Title Page No. Comparison of Monthly Rates...........................................................................................24 Other Financial Considerations and Performance..................................................................25 Projected Net Revenue Margin Ratio................................................................................25 All -In Debt Service Coverage............................................................................................26 Operating Fund (Working Capital) Balance......................................................................27 Debt Outstanding to Net Plant Investment (Debt) Ratio...................................................29 Miscellaneous service fees......................................................................................................30 rate observations and recommendations.................................................................................30 K:\DC\1039-17\Rpts\Rate Study Report (2019) Final —ii— n o C, HERNANDO COUNTY, FLORIDA WATER AND WASTEWATER RATE STUDY AND x MISCELLANEOUS SERVICE CHARGE ANALYSIS — FISCAL �_� o R X o YEAR 2019 Table No. LIST OF TABLES Title 1 Summary of Historical Customer Statistics — Water System 2 Summary of Projected Customer Statistics — Water System 3 Summary of Historical Customer Statistics — Wastewater System 4 Summary of Projected Customer Statistics —Wastewater System 5 Summary of Projected Revenues 6 Summary of Projected Operating Expenses — Water System 7 Summary of Projected Operating Expenses —Wastewater System 8 Summary of Projected Escalation Factors 9 Projected Capital Improvement Program 10 Projected Net Revenue Requirements — Water System 11 Projected Net Revenue Requirements — Wastewater System 12 Projected Debt Service Coverage Analysis — Water and Wastewater System 13 Projected Fund Cash Balances and Interest Income 14 Summary of Allocated Water Revenue Requirements for Rate Design 15 Summary of Allocated Wastewater Revenue Requirements for Rate Design 16 Summary of Rate Design — Water System 17 Summary of Rate Design — Wastewater System 18 Comparison of Typical Monthly Residential Bills for Water Service 19 Comparison of Typical Monthly Residential Bills for Wastewater Service 20 Comparison of Typical Monthly Residential Bills for Water and Wastewater Service 21 Summary of Existing and Proposed Miscellaneous Service Fees K:\DC\1039-17\Rpt\Rate Study Report (2019) Final —iii— HERNANDO COUNTY, FLORIDA WATER AND WASTEWATER RATE STUDY AND MISCELLANEOUS SERVICE CHARGE ANALYSIS — FISCAL YEAR 2019 INTRODUCTION Raftelis Financial Consultants, Inc. ("Raftelis"), formerly known as Public Resources Management Group, Inc. ("PRMG"), has completed the 2019 Water and Wastewater Rate Study and Miscellaneous Service Fee Analysis (the "Study") on behalf of Hernando County, Florida (the "County") and has presented the results of our analyses, assumptions, and recommendations in this report for your consideration. The purpose of the analysis was to: i) analyze the sufficiency of the existing rates for service as it relates to funding the identified revenue requirements or expenditure needs of the water and wastewater system (the "System" or "Utility"); ii) identify any potential changes in rates that are considered necessary to promote the financial creditworthiness of the System for the Fiscal Years 2019 through 2024 (the "Forecast Period"), including compliance with the Bond Covenants as delineated in the Bond Resolution No. 2013-74 adopted by the Board of County Commissioners (the "BOCC") on May 14, 2013, as amended and supplemented from time to time (the "Bond Resolution") and the covenants contained in the loan agreements executed between the County and the Florida Department of Environmental Protection (the "FDEP") with respect to obtaining various low -interest loans from the State Revolving Fund ("SRF") loan program (collectively, the "Loan Agreement"); iii) evaluate and redesign monthly water and wastewater rates, where appropriate; iv) review the System's current Miscellaneous Service Fees and recommended adjustments if necessary; and v) the presentation of the identified financing plan and rate implementation plan for the Forecast Period. The County has established and accounts for the System as a utility enterprise fund (the "Utility Fund"). In general, the Utility Fund must have revenues equal to the costs of the services provided by the System and the County must establish monthly user charges or rates sufficient to cover the cost of operating, maintaining, repairing and financing of the System. According to the Governmental Accounting Standards Board, "Enterprise Funds should be used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that costs of providing services to the general public on a continuing basis be financed or recovered primarily through user charges." The goal of this study is to assist the County in establishing water and wastewater rates on a prospective basis sufficient to recover the cost of operating, maintaining, repairing, and financing the utility system (the "revenue requirements"). The County requested that Raftelis prepare an update to the water and wastewater rate study completed in 2014 which formed the basis for the rate phasing plan that was adopted by the BOCC on May 13, 2014 pursuant to Resolution No. 2014-63 (the "Rate Resolution"). This study includes a six -year projection of the System revenue requirements (i.e., the projected expenditures and funding needs of the System) and the determination of the ability of the rate revenues to fund such projected needs (referred to as "revenue sufficiency"). Specifically, Raftelis was tasked to: i) provide a projection of revenue requirements for the System and each individual utility for the six -year period ending September 30, 2024; and ii) provide a forecast of future rate adjustments necessary to fund the projected revenue requirements. K:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 1- The recommendations of this study are based on a financial forecast developed for the water and wastewater system. The financial forecast starts with the identification of the accounts and System demands, next considers the funding of the operating and maintenance expenses and the determination of a plan to finance the capital needs, and finally establishes the timing of rate adjustments and the corresponding level of rates to be charged to meet the projected needs of the System. The basis for the rate study's recommendations is a financial plan developed for Fiscal Years 2019 through 2024 (the "Forecast Period"). FORECAST OF REVENUES The revenues for the Utility are principally generated from the rates for water and wastewater service, which during the Fiscal Year 2019, are estimated to account for approximately 96% of the Utility's gross revenues, not including income from Connection Fees. The balance of the recurring revenues of the System is provided from miscellaneous charges such as service fee and late payment charges and interest income on unrestricted investments. Growth -related fees (i.e., Connection Fees) presently account for approximately 5.0% of the Utility's total gross inflow of financial resources (cash) and are a significant financial resource to the Utility; such amounts are restricted to the funding of expansion -related capital investment.. Since revenues are primarily generated from the monthly rates for Utility service, the forecast of rate revenues was predicated on assumptions of the number of customers receiving service and their anticipated usage demands and the assumed change in customers for the Forecast Period. Customer and Demand Forecast The forecast of water service revenues relied upon a review of recent historical trends in customer account growth and sales (water sold) statistics and discussions with County staff. The following table provides a summary of recent water customer billing statistics and demands for the Fiscal Years ended September 30, 2015 through 2018 (the "Historical Period"), as well as the projected accounts to be served and the corresponding usage demands estimated for the Forecast Period: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -2- Historical and Projected Customer Accounts and Statistics — Water System [1] Fiscal Year Ended Average Average Monthly September 30, Annual Average Annual Water Sales Water Use (Historical) Water Accounts ERCs [2] (000s of Gallons) per Account 2015 61,901 67,951 5,450,132 6,684 2016 62,318 68,421 5,551,640 6,762 2017 62,770 68,917 5,402,741 6,533 2018 63,471 69,691 5,435,454 6,499 Average Annual Historical Growth Rate 0.63% 0.63% -0.07% Fiscal Year Ending Average Average Monthly September 30, Annual Average Annual Water Sales Water Use (Projected) Water Accounts ERCs [2] (000s of Gallons) per Account 2019 (est.) [3] 63,997 70,275 5,455,885 6,470 2020 64,519 70,845 5,457,281 6,419 2021 64,911 71,270 5,461,848 6,386 2022 65,253 71,644 5,462,657 6,354 2023 65,570 71,993 5,461,422 6,322 2024 65,862 72,316 5,458,179 6,290 Average Annual Projected Growth Rate [4] 0.48% 0.48% 0.01% [ 1 ] Amounts shown derived from Tables 1 and 2 at the end of this report. [2] ERUs determined based on: i) an application of meter equivalent factors to active accounts served for the residential and commercial class, which is consistent with the water system and was based on meter capacity information as published by the American Water Works Association; and ii) number of units served for the multi -family class. [3] Amounts shown based on 6 months of actual customer and sales statistics available at the time the analysis was prepared and 6 months of projected customer and sales statistics. [4] Reflects average annual projected compounded growth from Fiscal Year 2018 to Fiscal Year 2024. As can be seen from the above table, water sales are expected to increase primarily due to customer growth associated with ongoing new development / construction in the County service area. Based on discussions with County staff and a review of the recent customer growth trends, it is assumed for the Forecast Period that the County may experience average annual growth in customer accounts due to normal or general development of approximately 0.48% per year and corresponding billed water sales corresponding to such growth of approximately 0.01% per year (the lower water sales projection results in a continuing decline in the average monthly use per household, which is the long-term trend being experienced by utilities in Florida and nationwide and is due to a variety of factors, including increased conservation by the customers served by the System). With respect to the wastewater system, the historical and projected customer accounts and billed flow statistics has reflected similar trends as discussed for the water system. The following table provides a summary of the recent historical and projected wastewater system customer billing statistics: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -3- Historical and Projected Customer Accounts and Statistics — Wastewater System [1] Average Monthly Fiscal Year Ended Average Annual Billed Wastewater September 30, Wastewater Average Annual Wastewater Sales Flow (Historical) Accounts ERCs [2] (000s of Gallons) [3] per Account 2015 28,682 33,547 1,945,803 4,834 2016 29,007 33,972 1,990,947 4,884 2017 29,485 34,578 2,047,598 4,935 2018 30,240 35,479 2,056,231 4,830 Average Annual Historical Growth Rate 1.33% 1.41% 1.39% Average Monthly Fiscal Year Ending Average Annual Billed Wastewater September 30, Wastewater Average Annual Wastewater Sales Flow (Projected) Accounts ERCs [2] (000s of Gallons) [3] per Account 2019 est. [4] 30,759 35,073 2,121,793 5,041 2020 31,274 35,633 2,143,780 5,014 2021 31,659 36,049 2,156,985 4,986 2022 32,013 36,578 2,184,171 4,976 2023 32,336 36,931 2,209,825 4,986 2024 [5] 32,621 37,246 2,217,064 4,960 Average Annual Projected Growth Rate [4] 0.98% 1.01% 0.73% [ 1 ] Amounts shown derived from Tables 3 and 4 at the end of this report. [2] ERUs determined based on: i) an application of meter equivalent factors to active accounts served for the residential and commercial class, which is consistent with the water system and was based on meter capacity information as published by the American Water Works Association; and ii) number of units served for the multi -family class. [3] Based on metered water consumption, which serves as the basis for billed wastewater flows. [4] Amounts shown based on 6 months of actual customer and sales statistics available at the time the analysis was prepared and 6months of projected customer and sales statistics. [5] Reflects average annual projected compounded growth from Fiscal Year 2018 to Fiscal Year 2024. Projected Revenues The revenue forecast was based on the customer and demand forecast and the proposed charges for service, which will be discussed later in this Study. The revenue forecast can be categorized into five primary groups, which comprise: water service (rate) revenues, sewer service (rate) revenues, other operating revenues from miscellaneous fees and charges, connection fees revenues derived solely from new growth or development, and investment earnings or interest income (not considered as a rate revenue but earnings on available cash balances which is a source of income to the System). Monthly water and sewer service charge revenues comprise the majority of the total rate and fee revenues and are projected to account for approximately 96% of the total rate and fee revenues for Fiscal Year 2019 not including connection fee revenue. Service revenues are projected to increase over the Forecast Period due to: i) anticipated increases in the monthly water and wastewater user charges; and ii) greater water and wastewater flows as a result of assumed customer growth associated with new development and infill of existing developed areas within the County. Connection fee revenues are derived from charges to new development and were based on actual Fiscal Year 2018 and Fiscal Year-to-date 2019 revenues and the projected growth in the County customer base assumed for the Forecast Period. The following table summarizes the rate revenues, including annual average projected rate revenue adjustments, for the Forecast Period. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -4- Estimated Rate and Charge Revenues During the Forecast Period Water Rate Sewer Rate Other Connection Fee Total Rate and Fiscal Year Adjustment [l] Adjustment [l] Water Service Sewer Service Revenues Revenues Fee Revenues 2019 2.00% 4.50% $17,332,580 $17,802,422 $2,023,566 $1,947,789 $39,106,358 2020 4.00% 5.00% 17,442,085 18,936,053 1,717,958 $1,835,499 39,931,595 2021 4.00% 5.00% 18,161,711 20,012,116 1,691,995 $1,361,899 41,227,721 2022 4.00% 5.00% 18,899,093 21,252,430 1,712,642 $1,196,020 43,060,186 2023 2.50% 5.00% 19,407,113 22,508,165 1,759,000 $1,113,080 44,787,358 2024 2.50% 5.00% 19,907,351 23,723,344 1,775,801 $1,141,646 46,548,142 Growth Rate 2.34% 4.90% -2.15% -8.52% 2.95% [ 1 ] Amounts shown for Fiscal Years 2019 reflect rate increases previously adopted by the BOCC as reflected in the Rate Resolution (which were part of a 5-year rate phasing plan); the amounts shown for the Fiscal Year 2019 represents the adopted rate adjustments and do not represent additional increases above those as previously adopted. REVENUE REQUIREMENTS The foundation of the study and the primary objective of the utility rates are to reasonably recover the cost of providing service, cost of infrastructure investment and compliance with covenants of the outstanding loans and identified or adopted fiscal policies / targets (referred to as the "revenue sufficiency" evaluation). + Cost of Operation and Maintenance + Capital Expenditures and Debt Service + Fund Transfers Out/ Rate Covenant Compliance — Other Revenue and Income — Fund Transfers -In and Contributions — Net Revenue Requirements (Funded from Rates) As shown in the preceding figure, the various components of cost associated with operating and maintaining a municipally owned water system, as well as the cost of financing the renewal and replacement of facilities and capital improvements for upgrades and expansion, and maintaining rK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -5- compliance with the covenants of outstanding loans and identified or adopted policy are generally referred to as the utility cash revenue requirements (the "revenue requirements"). The sum of these cost components, after adjusting for other income and other operating revenues available to the utility, represents the net revenue requirements of the utility system and the amount of expenditures assumed to be recovered by or funded from water and wastewater rates. The revenue requirements for this rate study were predicated on an analysis of System costs for the six (6) fiscal year period ending September 30, 2024 (i.e., Fiscal Years 2019 through 2024 and previously defined as the "Forecast Period"). The projected revenue requirements included the various generalized cost components described as follows: • Operating Expenses: These expenses include the cost of labor, utilities, chemicals, sludge disposal, operating supplies, repairs and maintenance, allocated General Fund administrative costs, and other items necessary for the operation and maintenance of the System. • Capital Reinvestment: Capital reinvestment includes the amount of annual deposits made from rates to fund ongoing renewals, replacements, improvements, and betterments not financed by the issuance of debt obligations. • Debt Service: Debt service includes the principal of and interest on the County's currently outstanding and any future anticipated debt or loan obligations payable from the net operating revenues of the System. • Other Revenue Requirements: This component of cost includes any other funding requirements from rates including, but not limited to, payments to the General Fund for administrative allocations that are attributable to the System and other payments and transfers to reserves for future year expenditures to promote overall creditworthiness (limit financial risk). Principal Assumptions and Considerations The projected cash revenue requirements, as shown on Tables 10 and 11 at the end of this report for the water and wastewater system respectively, are based upon certain assumptions, considerations, and analyses. The major assumptions, considerations, and analyses that are included in the development of the projected revenue requirements for the Forecast Period are as follows: 1. The Adopted Fiscal Year 2019 Operating Budget and actual Fiscal Year 2018 and 2019 year- -to-date operating expenditures associated with the operations of the System as provided by the County served as the primary basis for the System expenditure projections, and such amounts are shown on Tables 6 and 7 at the end of this report for the water and wastewater systems, respectively. The budgeted projections represent the most recent financial forecast of the System as approved by the BOCC and were based on historical operating results and trends, known or anticipated conditions, and projected overall System financial needs. 2. Projected operating expenses associated with operation and maintenance of the System were escalated from estimated Fiscal Year 2019 Budget levels based upon several assumptions cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -6- and the nature of the expense. These projected expenditures were escalated for the Forecast Period as follows: a. Based on discussions with the County, the escalation of wages and salaries above Fiscal Year 2019 Budget amounts were increased on average 4.50% annually over the Forecast Period to reflect increases due to merit increases (2.0% annually overall) and inflation and cost of living adjustments (based on the annual change in the Consumer Price Index as published by the Congressional Budget Office as of August for each Fiscal Year). With the exception of medical insurance (escalated at 5% annually), personnel benefits (i.e., contributions toward retirement, FICA, etc.) were projected to remain at the same percentage relationship to total salaries as was reflected in Fiscal Year 2019 Budget based on discussions with the County. b. The estimate of the electric expenses were based on the Fiscal Year 2019 Budget, recent historical trends, the recognition of growth in water and wastewater sales or flow, and the application of general inflation allowances assumed at a base inflationary adjustment equal to 3.00%, which considered the twenty-year average change (1998-2018) in the Consumer Price Index for All South Urban Consumers for Electricity (CUSROOOOSEFHOI) as published by the Bureau of Labor Statistics (2.67%), and to reflect potential changes in the market. The estimate of chemical expenses were based on the Fiscal Year 2019 Budget, recent historical trends, the recognition of growth in water and wastewater sales or flow, and the application of general inflation allowances assumed at a base inflationary adjustment equal to 3.00%, which considered the ten and twenty-year average change in the U.S. City Average Producer Price Index for Industrial Chemicals (WPU061) as published by the Bureau of Labor Statistics, which were (1.52%) and (4.03%) respectively, and to reflect potential changes in the market. d. The financial projections of the operations and maintenance expense include the recognition of additional water distribution system employees that are anticipated to be required perform in-house line maintenance and infrastructure improvement projects. The recognition of the additional employees was based on information provided by County staff and represent additional salaries and benefits expenses associated with the addition of five (5) new employees, budgeted for Fiscal Year 2020, consisting of a Water System Operator II, three (3) Water System Operator I, and a System Worker, which added an average of approximately $301,000 in annual costs over the Forecast Period. An average contingency allowance of approximately three (3.0%) of total operating expenses was recognized in each Fiscal Year of the Forecast Period. The allowance has been included in order to recognize unknown or unplanned expenditures, which may occur in each Fiscal Year and to recognize potential changes in the revenues that may occur due to weather, conservation, and other factors. Over the Forecast Period, recognition of this allowance increased the estimated operating expenses of the System by approximately $726,000. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -7- f. Although considered a System operating expense for financial reporting purposes, depreciation and amortization expenses have not been recognized as an operation and maintenance expense consistent with the provisions of the Bond Resolution since such amounts represent non -cash expenses. 3. The County is estimated to have outstanding as of October 1, 2018 in the principal amount $27,065,000 of senior lien utility revenue bonds issued pursuant to the Bond Resolution and were originally issued to finance capital improvements to the water and wastewater systems (the "Senior Lien Bonds") as shown below: Principal Senior Lien Debt Outstanding Principal Issue Outstanding [1] Non -Ad Valorem Refunding Revenue Bonds, Series 2010 $178,333 Water and Sewer Refunding Revenue Bonds, Series 2013A 26,886,667 Total Outstanding Senior Lien Bonds $27,065,000 [1] Estimated amount outstanding at October 1, 2018. The Debt Service requirements included in this Study for the repayment of the Bonds issued pursuant to the Bond Resolution (the "Senior Lien Bonds") were based on the actual debt service schedules for each issue and are presented on a "gross" basis (i.e., not net of interest earnings on any debt service -related funds or accounts). Furthermore, the amounts shown are based on the monthly funding requirements to the various sinking funds as required by the Bond Resolution, which authorized the issuance of the debt (essentially an accrual basis) as opposed to when the debt service requirements are actually paid. The average annual debt service requirements for the Outstanding Senior Lien Bonds represents essentially level payments averaging approximately $2.4 million annually during the Forecast Period. The County has recognized a liability associated with a repayment obligation for Subordinated Indebtedness that was issued to finance capital improvements to the System. All of the Subordinated Indebtedness allocable to the System represents loans derived from the State of Florida's State Revolving Fund (SRF) Loan Program that is administered by the Florida Department of Environmental Protection (FDEP). The SRF Loan Program provides low -interest loans to public utilities such as the County to finance capital projects (the "SRF Program"). Repayment of the Subordinated Lien Debt is secured by the Pledged Revenues as defined in the Loan Agreements for such debt, which represents the Net Revenues and Impact Fees (Connection Fees) less payment of the debt service requirements on all Senior Lien Bonds. A summary of the estimated Subordinated Lien Debt liability as reported by the County as of October 1, 2018 is summarized below: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -8- Subordinate Lien Debt State Revolving Loan — WW627090 State Revolving Loan — WW270130 State Revolving Loan — WW270131 State Revolving Loan — WW270140 State Revolving Loan — WW270100 State Revolving Loan — WW270150 Subordinate Lien Debt Outstandill Liability Outstanding as of October 1, 2018 Total Subordinated Lien Debt Liability Loan Status Loan Officially Closed with FDEP; $1,305,554 Payments being Made Loan Officially Closed with FDEP; 8,241,887 Payments being Made Loan Officially Closed with FDEP; 2,024,205 Payments being Made Loan Officially Closed with FDEP; 4,430,320 Payments being Made Loan Officially Closed with FDEP; 1,740,516 Payments being Made Loan Closed August 2017 FDEP; 31,665,156 Payments being Made 49.407.638 The average annual loan payments on associated with the existing SRF Loan Program represent level payments averaging approximately $3,777,000 during the Forecast Period. 4. As a result of the funding of the Capital Improvement Plan, it is anticipated during the Forecast Period that additional System debt and loans will be issued or secured payable from the Net Revenues of the System. Specifically and based on discussions with the County, it was assumed that the County would issue Utility System Revenue Bonds, Series 2019 (the "Series 2020 Bonds") on a parity basis with the outstanding senior lien debt to fund a deposit to the Series 2020 Bonds Project Fund of approximately $18,700,000 to finance a portion of the six -year capital improvement plan identified for the System (the "CIP"). It was also assumed that the County would issue Utility System Revenue Bonds, Series 2021 (the "Series 2022 Bonds") on a parity basis with the outstanding senior lien debt and the additional Series 2020 Bonds to fund a deposit to the Series 2022 Bonds Project Fund of approximately $16,391,000 to finance a portion of the six -year CIP. Also, it was also assumed that the County would issue Utility System Revenue Bonds, Series 2023 (the "Series 2023 Bonds") on a parity basis with the outstanding senior lien debt and the additional Series 2020 and Series 2022 Bonds at the beginning of the Fiscal Year 2024 (during the calendar year 2023) to fund a deposit to the Series 2023 Bonds Project Fund of approximately $28,981,900 to finance a portion of the six -year CIP (collectively for all additional Bond to be issued to be secured, the "Additional Debt"). The following is a summary of the assumptions regarding the issuance of the Additional Debt for the System capital improvements: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -9- Total Projected Estimated Principal Average Annual Assumed Amount of Projected Annual Term/ Additional Debt Maturity Proposed Additional Bonds/Loans Bonds [*] Issuance Date Interest Rate Years Service Date Additional Revenue Bonds, Series 2020 $19,655,000 January 1, 2020 4.50% 30 $1,206,651 January 2050 Additional Revenue Bonds, Series 2022 $17,230,000 January 1, 2022 4.50% 30 $1,057,776 January 2052 Additional Revenue Bonds, Series 2023 $30,475,000 October 1, 2023 4.75% 30 $1,926,308 October 2053 [*] Amounts shown are estimates for the development of this financial forecast and include the deposits to the Project Fund or appropriations for the capital project, the cost to issue the debt or secure the loan for project financing, capitalized interest during construction where applicable, and other related costs associated with the financing. The County intends to work with its Municipal Financial Advisor for each series of debt or loans secured to determine the amount, structure and timing of when the debt or loans are to be incurred by the County. As can be seen from the table above, it is anticipated that the County will experience an increase in overall Debt Service payments through Fiscal Years 2024 as a result of the issuance of the Additional Debt to finance a portion of the six -year Capital Improvement Program. Based on the assumptions regarding the issuance of the Additional Debt, it is projected that County's annual debt service payments will in increase by approximately $4.2 million over the Forecast Period. 5. Pursuant to the terms and conditions of the Bond Resolution, the County must establish and maintain a Renewal and Replacement Fund (the "R&R Fund"). With respect to the R&R Fund, such amounts shall be used by the County for the purpose of paying the costs of major repairs, extensions, improvements or additions to, or the replacement or renewal of capital assets of the System, or extraordinary repairs to the System. The required annual deposit to such fund shall be at least equal to five percent (5%) of the Gross Revenues derived from the operation of the utility during the immediately preceding fiscal year until the amount therein is equal to the R&R Fund Requirement as described below. No deposit to such fund is required if the amount on deposit is equal to: i) five percent (5%) of the Gross Revenues received in the immediately preceding fiscal year; or ii) or such greater or lesser amount as determined and certified by the County's Consulting Engineers as an amount appropriate for the purposes of the Bond Resolution (the "R&R Fund Requirement"). Typically, the County annually funds a deposit to the R&R Fund in order to accrue moneys for capital asset replacement and betterment of the System and to meet the R&R Fund Requirement. With respect to the development of the financial projections of the System (projections of System cash flow) and based on discussions with the County staff, it has been assumed that the County will annually transfer approximately 10.0% of the current year's sales revenues from rates to continue accruing funds for future facility replacement and betterment and to minimize the use of debt financing for capital projects. The County has also established a Capital Fund as a separate account and transfers 5.0% of current year's sales revenues from rates to accrue additional funds for future facility improvements and to minimize the use of debt financing for capital projects. For the purposes of developing the revenue requirements from rates, the annual deposit to the R&R Fund and the Capital Fund has been recognized to: i) promote pay-as-you-go ("PAYGO") funding of these projects (which generally benefit the existing ratepayer); ii) increase the County's equity in the System; iii) preserve the leveraging capability of the System for expansion -related or large capital projects that are anticipated beyond the Forecast Period by the County; and iv) promote the long-term rate cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 10- stability of the System. The projected annual R&R Fund transfer and the projected annual Capital Fund transfer for each year of the Forecast Period was assumed as follows: Estimated R&R Fund and Capital Fund Transfer — For the Forecast Period R&R Fund R&R Fund Required Additional Capital Fund Total Transfer Fiscal Year Transfer Amount [ 1 ] Transfer Amount [ 1 ] Transfer Amount [2] Amount Recognized 2019 $1,708,309 $1,708,310 $1,708,309 $5,124,928 2020 1,857,928 1,857,929 1,857,928 5,573,785 2021 1,904,805 1,904,805 1,904,805 5,714,415 2022 1,993,291 1,993,291 1,993,291 5,979,873 2023 2,093,208 2,093,209 2,093,208 6,279,625 2024 2,183,714 2,183,714 2,183,714 6,551,142 [1] Pursuant to the Bond Resolution the County is required to transfer 5% of the prior year's Gross Revenues into the Renewal and Replacement Fund; an additional amount in order to achieve a total of 10% of current year's sales revenues is being transferred to meet the ongoing capital needs of the System and limit the issuance of future debt financings. [2] Represents an annual transfer to the Capital Fund equal to 5% of current year's sales revenues to meet the ongoing capital needs of the System and limit the issuance of future debt financings. 6. Investment income on funds and accounts created by the Bond Resolution and by the County (e.g., customer deposits) has been estimated utilizing average annual interest rate of 1.50% over the Forecast Period. The interest rates have been applied to estimated balances, if any, in the Operating Fund, Customer Deposit Account, the R&R Fund, the Debt Service Reserve Fund, the Connection Fee Funds (both Water and Sewer), and the Capital Fund. We have also assumed that any interest earnings on the Connection Fee Funds, if any, will be deposited in the respective funds and not be available for operating expense or debt service requirements consistent with the provisions of the Bond Resolution. Table 13 provides a summary of the transfers in and out of each fund / account and corresponding ending cash balances for each fund / account maintained by the County on behalf of the System. 7. The capital improvement program for the System was based on data derived from the County's most recent capital improvement plan. The capital funding plan was based on: i) the purpose of the expenditures (e.g., expansion -related); ii) available balances in the funds and accounts established by the County that are available for capital projects; iii) anticipated Connection Fees receipts derived from new development; and iv) the use of additional Senior Lien debt to finance water and wastewater projects. Also included in the capital improvement program is the use of the R&R Fund and the Capital Fund to finance recurring capital projects (i.e., essentially the betterment or replacement of assets). The recognition of these revenue requirements is necessary in order to allow the County an annual funding mechanism to continue to provide high quality service (i.e., maintain same level of service) to its customers as the utility system ages. The capital improvement plan, as provided by County staff is reflected in today's dollar value for all years of the program; such estimate amounts were escalated for purposes of this analysis based on an average inflationary factor of approximately 3.0% annually predicated on the average change in the last 10 years of the Construction Cost Index as published by the Engineering News Record (the "ENR Index"). The timing, priority, and funding of such capital needs were developed with the guidance of County staff. The following is a summary of capital expenditures and the corresponding estimated funding sources assumed in the development of the Financial Forecast: cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - I I - Five -Year Capital Improvement Program Summary of Projects and Funding Sources Fiscal Year Ending September 30, [1] 2019 2020 2021 2022 2023 2024 Total Capital Projects: Water System $10,944,637 $10,268,974 $2,915,118 $139,627 $143,815 $281,447 $24,693,618 Wastewater System 20,520,361 27,279,334 9,966,969 19,963,039 5,817,667 38,683,825 122,231,195 Total System Capital Projects S31,464, 998 537,548,308 $12,882,OK S20,102, 666 S5.961,482 538,965, 772 $146,924,813 Funding Sources: Operating Reserves $0 $0 $0 $0 $0 $0 $0 Renewal and Replacement Fund 3,140,000 4,047,900 3,564,624 109,273 2,251,018 365,172 13,477,987 Connection Fees Fund 4,650,000 4,789,500 0 0 0 1,159,274 10,598,774 Rate Revenue 296,699 642,513 314,768 324,212 333,938 343,956 2,256,086 Capital Fund 21,285,193 3,862,500 5,569,725 3,278,181 3,376,526 8,114,919 45,487,044 Grants 2,093,106 5,505,895 3,432,970 0 0 0 11,031,971 Additional Bonds 0 18,700,000 0 16,391,000 0 28,981,900 64,072,900 Total Funding Sources 531,464,998 S37,548,308 12.882.087 S20,102,666 1 4 2 SDJ S,272 $146,924,813 [1] Amounts shown derived from Table 9 at end of Study and reflect when funding projected to be required and maybe different from when funds are actually expended through project completion. Amounts include current available funds on deposit in such funds, as well as future anticipated deposits to such funds. 8. All contracts, agreements, statutes, rules, and regulations that have been relied upon by us in preparing this report and the projected operating results contained herein will be fully enforceable and remain in effect in accordance with their terms and conditions and such terms and conditions will be complied with by the parties involved throughout the study period. We make no representations or warranties and provide no opinion concerning the enforceability or legal interpretation of such contractual and legal requirements. Net Revenue Requirements — Water System The purpose of the development of the net revenue requirements for the water system is to determine the required level of revenue from monthly user rates necessary to meet the financial obligations of such system. The projected net revenue requirements for the water system for the Forecast Period are presented on Table 10 and are shown below. The development of the net revenue requirements for the water system were based upon: i) the water system customer and sales forecast; ii) the existing rates for service; iii) the operating and maintenance expense assumptions as discussed above; iv) the capital improvement plan as identified by the County and the corresponding funding analysis assumed herein; and v) the rate covenants as defined in the Bond Resolution and SRF Loan Agreements, all as discussed throughout this study. Summarized below are the projected net revenue requirements and overall recommended rate adjustments for the water system: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 12- Projected Water System Net Revenue Requirements [11 Fiscal Year Ending September 30, Description 2019 2020 2021 2022 2023 2024 Total Operating and Maintenance Expenses $12,614,062 $13,032,677 $13,648,861 $14,217,481 $14,809,843 $15,491,814 Debt Service and Loan Repayment Existing Bonds and Loans $2,729,331 $2,126,937 $2,126,051 $2,125,460 $2,127,970 $2,127,380 Additional Bonds and Loans 0 0 0 0 0 0 Total Debt Service and Loan Repayment $2,729,331 $2,126,937 $2,126,051 $2,125,460 $2,127,970 $2,127,380 Other Revenue Requirements Capital Funded from Rate Revenues $127,778 $468,524 $135,560 $139,627 $143,815 $148,130 Transfers to Renewal and Replacement Fund 1,770,636 1,925,713 1,974,300 2,066,015 2,169,577 2,263,385 Transfers to Capital Fund 885,318 962,856 987,150 1,033,007 1,084,788 1,131,692 Transfers to Operating Fund 500,000 500,000 600,000 600,000 600,000 600,000 Transfers To Rate Stabilization Fund 0 0 0 0 0 0 Total Other Revenue Requirements $3,283,732 $3,857,093 $3,697,010 $3,838,649 $3,998,180 $4,143,207 Gross Water Revenue Requirements $18,627,125 $19,016,707 $19,471,922 $20,181,590 $20,935,993 $21,762,401 Less Income from Other Sources Other Revenues $782,736 $786,886 $790,002 $792,721 $795,241 $797,563 Interest Income 381,379 214,250 195,270 201,275 222,311 225,993 Transfer from Rate Stabilization Fund 0 0 0 0 0 0 Transfer from Operating Reserves 0 0 0 0 0 0 Transfer from Renewal &Replacement Fund 835,982 866,986 899,483 933,063 967,926 1,003,955 Transfer from Connection Fee Fund 0 0 0 0 0 0 Transfer from Capital Fund 0 0 0 0 0 0 Net Revenue Requirements $16,627,027 $17,148,585 $17,587,167 $18,254,531 $18,950,515 $19,734,890 Existing Revenues $17,332,580 $16,771,235 $16,816,357 $16,850,089 $16,877,769 $16,899,465 Existing Surplus / (Deficiency) $705,553 ($377,349) ($770,810) ($1,404,442) ($2,072,746) ($2,835,425) % of Rate Revenues 4.07% -2.25% -4.58% -8.33% -12.28% -16.78% Rate Adjustments Annual Indexing Adjustment 0.00% 2.40% 2.60% 2.50% 2.50% 2.40% Additional Rate Adjustment above Adopted 0.00% 1.60% 1.40% 1.50% 0.00% 0.10% Rate Adjustments Total Recognized Rate Adjustment 0.00% 4.00% 4.00% 4.00% 2.50% 2.50% Revenue from Current Period Rate Adjustments $0 $670,849 $672,654 $674,004 $421,944 $422,487 Revenue from Prior Period Rate Adjustments 0 0 672,700 1,375,000 2,107,400 2,585,400 Total Revenue with Rate Adjustments $17,332,580 $17,442,085 $18,161,711 $18,899,093 $19,407,113 $19,907,351 Net Surplus / (Deficiency) After Rate Adj. $705,553 $293,500 $574,544 $644,562 $456,599 $172,461 Percent of Total Water Rate Revenues 4.07% 1.68% 3.16% 3.41% 2.35% 0.87% [ 1 ] Amounts shown derived from Table 10 at the end of this report. As shown in the table above, the current monthly water user charges are not anticipated to be adequate to meet the water system's needs over the Forecast Period. Based on the results of the revenue requirement evaluation, it is recommended that the monthly water user rates be increased cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 1 3- annually effective October 1" by 4% for Fiscal Years 2020 through 2022 and by 2.5% for Fiscal Years 2023 and 2024. The forecasted water rate revenues, with the recognition of the proposed rate adjustments through Fiscal Year 2024 are anticipated to be sufficient to adequately fund the identified net revenue requirements of the water system and provide funds to maintain operating reserves to maintain a strong utility credit. Net Revenue Requirements — Wastewater System The purpose of the development of the net revenue requirements for the wastewater system is to determine the required level of revenue from monthly user rates necessary to meet the financial obligations of such system. The projected net revenue requirements for the wastewater system for the Forecast Period are presented on Table 11 and are shown below. The development of the net revenue requirements for the wastewater system were based upon: i) the customer forecast identified herein; ii) the existing rates for service; iii) the operating and maintenance expense assumptions as discussed above; iv) the capital improvement plan as identified by the County and the corresponding funding analysis assumed herein; and v) the rate covenants as defined in the Bond Resolution and SRF Loan Agreement, all as discussed throughout this study. Summarized below are the projected net revenue requirements and overall recommended rate adjustments for the wastewater system: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 14- Projected Wastewater System Net Revenue Requirements [11 Fiscal Year Ending September 30, Description 2019 2020 2021 2022 2023 2024 Total Operating and Maintenance Expenses $11,110,366 $11,233,546 $11,772,925 $12,284,376 $12,817,473 $13,419,301 Debt Service and Loan Repayment Existing Bonds and Loans Additional Bonds and Loans Total Debt Service and Loan Repayment Other Revenue Requirements Capital Funded from Rate Revenues Transfers to Renewal and Replacement Fund Transfers to Capital Fund Transfers to Operating Fund Transfers To Rate Stabilization Fund Total Other Revenue Requirements Gross Wastewater Revenue Requirements Less Income from Other Sources Other Revenues Interest Income Transfer from Rate Stabilization Fund Transfer from Operating Reserves Transfer from Renewal & Repl.Fund Transfer from Connection Fee Fund Transfer from Capital Fund Net Revenue Requirements Existing Revenues Existing Surplus / (Deficiency) % of Rate Revenues Rate Adjustments $4,205,740 $4,051,559 $4,051,445 $4,051,369 $4,051,692 $4,051,616 0 904,988 1,206,651 1,999,983 2,264,427 4,190,735 $4,205,740 $4,956,547 $5,258,096 $6,051,352 $6,316,119 $8,242,351 $168,921 $173,989 $179,208 $184,585 $190,123 $195,826 1,645,983 1,790,144 1,835,310 1,920,567 2,016,840 2,104,043 822,991 895,072 917,655 960,284 1,008,420 1,052,022 1,000,000 1,250,000 1,250,000 1,250,000 1,500,000 500,000 0 0 0 0 0 0 $3,637,895 $4,109,205 $4,182,173 $4,315,436 $4,715,383 $3,851,891 $18,954,002 $20,299,299 $21,213,194 $22,651,164 $23,848,975 $25,513,543 $556,930 $561,772 $565,392 $568,721 $571,758 $574,438 302,521 155,050 141,330 149,925 169,689 177,807 0 0 0 0 0 0 0 0 0 0 0 0 1,026,200 1,064,048 1,103,743 1,144,741 1,187,300 1,231,259 0 0 0 0 0 0 0 0 0 0 0 0 $17,068,351 $18,518,428 $19,402,728 $20,787,776 $21,920,228 $23,530,039 $17,802,422 $18,034,336 $18,192,872 $18,440,315 $18,638,348 $18,746,137 $734,071 ($484,092) ($1,209,856) ($2,347,462) ($3,281,880) ($4,783,901) 4.12% -2.68% -6.65% -12.73% -17.61% -25.52% Annual Indexing Adjustment 0.00% Additional Rate Adjustment above Adopted 0.00% Rate Adjustments Total Recognized Rate Adjustment 0.00% Revenue from Current Period Rate Adjustments $0 Revenue from Prior Period Rate Adjustments 0 Total Revenue with Rate Adjustments $17,802,422 Net Surplus / (Deficiency) After Rate Adj. $734,071 Percent of Total Wastewater Rate Revenues 4.12% [ 1 ] Amounts shown derived from Table 11 at the end of this report. 2.40% 2.60% 2.50% 2.50% 2.40% 2.60% 2.40% 2.50% 2.50% 2.60% 5.00% 5.00% 5.00% 5.00% 5.00% $901,717 $909,644 $922,016 $931,917 $937,307 0 909,600 1,890,100 2,937,900 4,039,900 $18,936,053 $20,012,116 $21,252,430 $22,508,165 $23,723,344 As shown in the table above, the current monthly wastewater user charges are not anticipated to be adequate to meet the water system's needs over the Forecast Period. Based on the results of the cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 1 5- revenue requirement evaluation, it is recommended that the monthly wastewater user rates be increased annually effective October 1st by 5% for Fiscal Years 2020 through 2024. The forecasted wastewater rate revenues, with the recognition of the proposed rate adjustments through Fiscal Year 2024 are anticipated to be sufficient to adequately fund the identified net revenue requirements of the wastewater system and provide funds to maintain operating reserves to maintain a strong utility credit. DEBT SERVICE COVERAGE AND COVENANT COMPLIANCE Debt Service Covenant Compliance The Bond Resolution includes a provision requiring the County to establish and maintain rates, which will always provide in each Fiscal Year, Net Revenues to satisfy the following debt coverage requirements: "... (a) Net Revenues and Connection Fees, together with the Fund Balance, equal to at least 120% of the Annual Debt Service becoming due in such Fiscal Year, provided (b) such Net Revenues shall be adequate at all times to pay in each Fiscal Year at least 110% of (1) the Annual Debt Service becoming due in such Fiscal Year, (2) any amounts required by the terms of the Resolution to be deposited in the Reserve Account or with any issuer of a Reserve Account Letter of Credit or Reserve Account Insurance Policy in such Fiscal Year to pay Policy Costs, and (3) any amounts required by the Resolution to be repaid to the Water Connection Fees Fund and Sewer Connection Fees Fund in such Fiscal Year. " The Bond Resolution established these minimum debt coverage requirements for the protection of the holders of the Bonds. Table 12 at the end of this report summarizes the ability of the System Pledged and Net Revenues to meet the rate covenant provisions of the Bond Resolution for the Forecast Period. Based on the results of the financial forecast, it is expected that funds generated from System operations during the Forecast Period, including the implementation of the adopted rate adjustments as recommended in this report, will provide sufficient resources to meeting the operations and maintenance requirements of the System as well as fund the projected capital needs as identified in the County's capital improvement program. As can be seen on Table 12 and as shown below, it is anticipated that the Pledged Revenues derived from System operations should be sufficient to meet the rate covenant requirements as defined in the Bond Resolution. (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -1 6- Debt Service Coverage Calculated Senior Lien Coverage Calculated All -In Coverage Fiscal Year (Required 110%) (Target 200%) [1] (Target 150%) [1][2] 2019 425.48% 193.71 % 2020 418.35% 195.24% 2021 400.50% 195.61 % 2022 349.21 % 187.88% 2023 343.88% 190.04% 2024 250.23% 159.07% [1] Represents targets recommended by Raftelis to maintain or promote a favorable bond credit rating. [2] All -in debt coverage includes all debt allocable to the System including Senior Lien Bonds and Subordinated Indebtedness. Target reflects rating agency median ratio for an "AA" rated utility credit. RATE DESIGN General This section sets forth the derivation of the proposed monthly rates for water and wastewater services for the Test Year 2020, including a discussion of general rate design criteria and the methods used to classify and allocate costs in order to design rate structures. The proposed rates are predicated on the rate revenue requirements and the customer and sales forecast presented above. This section also summarizes typical monthly bill comparisons for the proposed rates versus the existing rates as well as a comparison of the proposed rates with the current rates charged by neighboring utility systems. Proposed Rate Design — General Criteria Rate design typically involves the development of a rate structure and calculation of monthly rates and charges for each customer classification and/or rate structure component. The goal of this task was to establish a pricing structure or formula to recover the total revenue requirements of the System in a reasonable manner, consistent with the cost of providing service, regulatory guidelines, overall revenue stability, and the fiscal and pricing policies of the County. Generally, proposed utility rates, to the extent practical, should meet the following criteria for service provided by publicly owned utilities: • Utility rates should be based on a policy that calls for the lowest possible prices consistent with the requirements of providing quality service on an ongoing basis. • Utility rates should be simple and understandable. • Utility rates should be equitable among customers, taking into consideration the cost of providing service to the various users of the Water and Wastewater System. • Utility rate and cost recovery strategies should recognize the current financial needs of the water and wastewater system and when rates were last adjusted and, where possible, recognize approaches to avoid "rate shock" in the future. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 1 / - • Utility rates should be designed to encourage the most efficient use of the County's utility investment and discourage unnecessary or wasteful use of resources (promote water conservation). • Utility rates should comply with applicable orders and requirements of state and federal regulatory authorities, if any, that may have jurisdiction. Other considerations that have an effect on the design of the user fees include revenue stability, historical rate form, and competitiveness with neighboring utility systems. Water System Rate Design The County's existing water rate structure includes the following two-part rate structure: i) a monthly base facility charge per account that varies by meter size but does not vary by flow (also serves as the minimum bill); and ii) an inclining block volumetric or usage charge based on monthly metered water use. The monthly service charge component costs generally do not vary with consumption but are considered as being either fixed in relation to capacity needs or represent the cost of meter reading, billing, and collection. The County's usage charge generally includes all of the variable -related expenditures of the utility and that portion of the fixed costs not recovered in the base facility charge. These costs are recovered through a charge expressed on a per thousand gallons of potable water use basis. The allocated net revenue requirements were apportioned to the fixed rate component and the volumetric or usage components in order to determine the "per equivalent unit cost" of providing service. The allocation recognized the nature of the expenditures being incurred; cost allocation parameters used by the Florida Public Service Commission in the regulation of private utilities; and other factors. Once the costs were allocated to the cost recovery classifications (fixed, variable, etc.), then the costs were allocated to the rate structure components. With respect to the design of the monthly Water System base charges, the allocated fixed costs were allocated to the various meter sizes based on the use of meter equivalent factors. The determination of the meter equivalent factors were based on: i) the size of the meter serving the account as reported by the County; and ii) equivalent factors based on the instantaneous flow capacities of such meters based on information published by the American Water Works Association which is used by many utilities, including the County and the Florida Public Service Commission, in the establishment of base facility or service charge rates. The use of the meter equivalent factors serves to provides a reasonable representation of the service provided since it attempts to place all customers within this class on an equivalent basis as to capacity needs (i.e., the larger the meter in service, the higher the capacity requirement of such customer). The design of the consumption charge recognized the amount of billed flow, adjusted for service location, in the determination of the equivalent usage charges. Based on the allocation process discussed above, the allocation of costs to the respective cost recovery parameters and the design of the rate per equivalent unit were determined as follows: cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 1 8- Water System Rate Per Equivalent Billing Unit — For the Test Year 2020 Total System Base Charge Usage Charge Adjusted Classified Net Revenue Requirements Equivalent Billing Determinants: Equivalent Units Equivalent Gallons (000's) Proposed Rate Per Equivalent Unit / Thousand Gallons Existing Rate Per Equivalent Unit / Thousand Gallons Percentage Increase $17,442,085 $6,776,037 $10,666,048 838,542 6,401,388 $8.09 $1.67 $7.37 $1.62 9.77% 3.09% As shown above the redesigned proposed water monthly base charges are calculated to have a larger percentage overall increase than the monthly proposed user charge increases and larger than the overall recommended system -wide 4.0% increase identified for the water system for Fiscal Year 2020. This proposed change is being recommended to promote rate equity and improve revenue stability through increased fixed cost recovery for the water system. As shown on Table 18 at the end of this report, the County's current water monthly base charges are the lowest of all the 17 neighboring communities surveyed as part of this analysis, therefore it is being recommended that the County increase the proportion of the overall revenue requirement recovery from the monthly base charges compared to the monthly usage charges. Based on the determination of the equivalent unit costs and the anticipated System identified net revenue requirements and funding needs identified for the remainder of the Forecast Period subsequent to the Fiscal Year 2020, the Water System rates are proposed as follows: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final - 19- Water Monthly User Rates Proposed Existing 2020 2021 2022 2023 2024 Monthly Base Charge: Residential Single -Family Service and Residential Irrigation Service: Base Charge All Meter Sizes $7.37 $8.09 $8.41 $8.75 $8.97 $9.19 Commercial, Residential Multi - Family and Commercial Irrigation Service: Meter Size 5/8 x 3/4" $7.37 $8.09 $8.41 $8.75 $8.97 $9.19 3/4" 11.07 12.14 12.63 13.14 13.47 13.81 1" 18.43 20.23 21.04 21.88 22.43 22.99 1-1/2" 36.87 40.46 42.08 43.76 44.85 45.97 2" 58.99 64.73 67.32 70.01 71.76 73.55 3" 117.96 129.44 134.62 140.00 143.50 147.09 4" 184.32 202.25 210.34 218.75 224.22 229.83 6" 368.65 404.50 420.68 437.51 448.45 459.66 8" 589.83 647.20 673.09 700.01 717.51 735.45 10" 847.89 930.35 967.56 1,006.26 1,031.42 1,057.21 12" 1,585.16 1,739.35 1,808.92 1,881.28 1,928.31 1,976.52 Consumption Charge Per 1,000 Gallons Residential Single -Family Service: 0 - 5,000 Gallons $1.39 $1.42 $1.48 $1.54 $1.58 $1.62 5,001 - 10,000 Gallons 1.62 1.67 1.74 1.81 1.86 1.91 10,001 - 20,000 Gallons 2.43 2.51 2.61 2.71 2.78 2.85 20,001 - 30,000 Gallons 3.26 3.34 3.47 3.61 3.70 3.79 30,001 - 50,000 Gallons 4.88 5.01 5.21 5.42 5.56 5.70 50,001 - 75,000 Gallons 8.12 8.35 8.68 9.03 9.26 9.49 Above 75,000 Gallons 16.23 11.69 12.16 12.65 12.97 13.29 Residential Irrigation Service: 0 - 10,000 Gallons $1.62 $1.67 $1.74 $1.81 $1.86 $1.91 10,001 - 20,000 Gallons 2.43 2.51 2.61 2.71 2.78 2.85 20,001- 30,000 Gallons 3.26 3.34 3.47 3.61 3.70 3.79 30,001 - 50,000 Gallons 4.88 5.01 5.21 5.42 5.56 5.70 50,001 - 75,000 Gallons 8.12 8.35 8.68 9.03 9.26 9.49 Above 75,000 Gallons 16.23 11.69 12.16 12.65 12.97 13.29 Commercial, Residential Multi -Family and Commercial Irrigation Service [1] Block 1 $1.62 $1.67 $1.74 $1.81 $1.86 $1.91 Block 2 2.43 2.51 2.61 2.71 2.78 2.85 Block 3 3.26 3.34 3.47 3.61 3.70 3.79 Block 4 4.88 5.01 5.21 5.42 5.56 5.70 Block 5 8.12 8.35 8.68 9.03 9.26 9.49 Block 6 16.23 11.69 12.16 12.65 12.97 13.29 Footnotes on following page cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -20- [11 Block Sizes for Commercial and Irrigation Service based on Meter Size. Meter Size Block 1 Gallons Block 2 Gallons Block 3 Gallons 5/8 x 3/4-inch 0-10,000 10,001-20,000 20,001-30,000 3/4-inch 0-15,000 15,001-30,000 30,001-45,000 1-inch 0-25,000 25,001-50,000 50,001-75,000 1-1/2-inch 0-50,000 50,001-100,000 100,001-150,000 2-inch 0-80,000 80,001-160,000 160,001-240,000 3-inch 0-160,000 160,001-320,000 320,001-480,000 4-inch 0-250,000 250,001-500,000 500,001-750,000 6-inch 0-500,000 500,001-1,000,000 1,000,001-1,500,000 8-inch 0-800,000 800,001-1,600,000 1,600,001-2,400,000 10-inch 0-1,150,000 1,150,001-2,300,000 2,300,001-3,450,000 12-inch 0-2,150,000 2,150,001-4,300,000 4,300,001-6,450,000 Wastewater System Rate Design Block 4 Gallons Block 5 Gallons Block 6 Gallons 30,001-50,000 50,001-75,000 75,000 + 45,001-75,000 75,001-112,500 112,500 + 75,001-125,000 125,001-187,500 187,500 + 150,001-250,000 250,001-375,000 375,000+ 240,001-400,000 400,001-600,000 600,000+ 480,001-800,000 800,001-1,200,000 1,200,000+ 750,001-1,250,000 1,250,001-1,875,000 1,875,000 + 1,500,001-2,500,000 2,500,001-3,750,000 3,750,000+ 2,400,0014,000,000 4,000,001-6,000,000 6,000,000+ 3,450,001-5,750,000 5,750,001-8,625,000 8,625,000+ 6,450,001-10,750,000 10,750,001-16,125,000 16,125,000 + The County's existing wastewater rate structure for all customer classes is consistent with the general structure of the water system (promotes rate consistency) and include the following two rate structure components: i) a monthly base facility charge per account that does not vary by flow (also serves as the minimum bill) and which is the same for all residential customers and varies by meter size for all commercial customers; and ii) a volumetric or usage charge based on monthly metered water use that serves as a proxy for wastewater flow allocable to the premises being served. With respect to the residential class, the monthly volumetric charges are capped at 10,000 gallons per month. This policy and level of use threshold are common in the state and serves to recognize that not all of the potable water used in a residential household returns to the wastewater system but is used for discretionary purposes as outdoor irrigation and other general uses. The wastewater rates have the same rate structure as the water rates which i) promote consistency between the two utility systems and recover the same general cost components as previously discussed for the Water System (i.e., the fixed and variable cost components); and ii) is generally consistent with the rate making policies employed by the Florida Public Service Commission. The allocated net revenue requirements were allocated to the fixed rate component and the volumetric or usage components in order to determine the "per unit cost" of providing service. The allocation recognized the nature of the expenditure being incurred; cost allocation parameters used by the Florida Public Service Commission in the regulation of private utilities, and other factors. Once the costs were allocated to the cost recovery classifications (fixed, variable, etc.), then the costs were allocated to the rate structure components. With respect to the design of the Wastewater System base charge, the allocated fixed costs were allocated to the various meter sizes based on the use of meter equivalent factors. The determination of the meter equivalent factors were based on: i) the size of the meter serving the account as reported by the County; and ii) equivalent factors based on the instantaneous flow capacities of such meters based on information published by the American Water Works Association which is used by many utilities, including the County and the Florida Public Service Commission, in the establishment of base facility or service charge rates. The use of the meter equivalent factors serves to provide a reasonable representation of the service provided since it attempts to place all customers on an equivalent basis as to capacity needs (i.e., the larger the meter in service, the higher the capacity requirement of such customer). The design of the consumption charge recognized the amount of billed wastewater flow, in the determination of the usage charges. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -21- Based on the allocation process discussed above, the allocation of costs to the respective cost recovery parameters and the design of the rate per equivalent unit were determined as follows: Wastewater System Rate Per Equivalent Billing Unit — For the Test Year 2020 Total System Base Charge Usage Charge Classified Net Revenue Requirements Equivalent Billing Determinants: Equivalent Units Equivalent Gallons (000's) Proposed Rate Per Equivalent Unit / Thousand Gallons Existing Rate Per Equivalent Unit / Thousand Gallons Percent Increase $18,936,052 $8,902,631 $10,033,422 422,834 2,143,780 $21.06 $4.69 $20.38 $4.39 3.34% 6.83% As shown above, unlike the water system monthly user charges the redesigned proposed wastewater monthly base charges were calculated to show a percentage increase that is closer to the overall proposed wastewater rate adjustment of 5% for Fiscal Year 2020 indicating that the existing wastewater monthly base charges are currently providing adequate revenue stability and fixed cost recovery of the wastewater system net revenue requirements as compared to the monthly usage charges. As shown on Table 18 at the end of this report, the County's current wastewater monthly base charges are very similar to the overall average of the 17 neighboring communities surveyed as part of this analysis. Based on the determination of the equivalent unit costs and the anticipated System identified net revenue requirements and funding needs identified for the remainder of the Forecast Period subsequent to the Fiscal Year 2020, the Wastewater System rates are proposed as follows: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -22- Monthly Base Charge: Residential Single -Family Service Base Charge All Meter Sizes Commercial and Residential Multi - Family Service: Base Charge by Meter Size 5/8 x 3/4", 3/4" 3/4" 1" 1-1/2" 2" 3" 4" 6" 8" 10" 12" Consumption Charge (per 1,000 Gallons of Metered Water): Residential Single -Family Service [1] Commercial, Residential Multi - Family Service (customer with 5/8" Meter through 10" Meter) Commercial, Residential Multi - Family Service (customer with 12" Meter) [thly Wastewater Monthlv User Rates Existing Proposed Rate 2020 2021 2022 2023 2024 $20.38 $21.06 $22.11 $23.22 $24.38 $25.60 $20.38 $21.06 $22.11 $23.22 $24.38 $25.60 30.57 31.59 33.17 34.83 36.57 38.40 50.94 52.66 55.29 58.05 60.95 64.00 101.88 105.31 110.58 116.11 121.92 128.02 163.01 168.51 176.94 185.79 195.08 204.83 326.00 336.96 353.81 371.50 390.08 409.58 509.37 526.50 552.83 580.47 609.49 639.96 1,018.75 1,053.00 1,105.65 1,160.93 1,218.98 1,279.93 1,630.01 1,684.80 1,769.04 1,857.49 1,950.36 2,047.88 2,343.14 2,421.90 2,543.00 2,670.15 2,803.66 2,943.84 4,380.64 4,527.90 4,754.30 4,992.02 5,241.62 5,503.70 $4.39 $4.69 $4.92 $5.17 $5.43 $5.70 4.39 4.69 4.92 5.17 5.43 5.70 5.03 4.69 4.92 5.17 5.43 5.70 [1] Residential single-family monthly consumption charge limited to 10,000 gallons per month; there is no billing threshold for commercial and master -metered residential (multi -family) accounts. Customer Impact Analysis With the exception of the Fiscal Year 2020 rate adjustment (restructured rates), it is proposed that the future rate increases be applied uniformly to all of the monthly base charges and consumption charges in effect. It should be noted that because the Fiscal Year 2020 rates are being restructured to promote rate equity and improve revenue stability through increased fixed cost recovery, the Fiscal Year 2020 4.0% water increase and the 5.0% wastewater increase represent an average overall system increase in rate revenues and not the specific rate components; increases by specific customer class and usage levels will vary based on the redesigned proposed rates. The following is a summary of the impacts to the various customer classes based on a typical monthly bill for each specific customer group: (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -23- Residential (6,000 Gallons): Existing Rates Proposed Rates Monthly Increase - Amount Percentage Increase Commercial (10,000 Gallons): Existing Rates Proposed Rates Monthly Increase - Amount Percentage Increase Typical Monthly Bill for a 5/8- inch Metered Customer Water Wastewater Combined $15.94 $46.72 $62.66 16.86 49.20 66.06 0.92 2.48 3.40 5.77% 5.31 % 5.43% $23.57 $64.28 $87.85 24.79 67.96 $92.75 $1.22 $3.68 $4.90 5.18% 5.72% 5.58% Note: Percent of bills represents the total bills that receive service through a 5/8-inch meter. Comparison of Monthly Rates In order to provide additional information to the County regarding existing and proposed rate levels, a survey of other neighboring utilities levels of monthly user rates assessed to residential single family 5/8" metered customers for water and wastewater service was compiled within Tables 14 through 16 included at the end of this report and is summarized below: Comparison of Typical Monthly Water and Wastewater Bill Residential Service Assuming 6,000 Gallons of Utility Service [1] Water Wastewater Total Hernando County Existing Rates - FY 2019 $15.94 $46.72 $62.66 Proposed Rates FY 2020 16.86 49.20 $66.06 Other Neighboring/Surveyed Utilities Citrus County [2] $19.54 $63.57 $83.11 City of Brooksville 30.48 36.47 66.95 City of Clearwater 49.38 61.32 110.70 City of Crystal River 30.73 48.54 79.27 City of Dunnellon 35.56 84.79 120.35 City of Inverness 21.95 47.25 69.20 City of Lakeland [2] 22.49 43.53 66.02 City of Leesburg [2] 15.66 34.71 50.37 City of New Port Richey 32.49 42.26 74.75 City of Ocala 16.09 42.73 58.82 City of St. Petersburg [2] 40.00 59.46 99.46 City of Tarpon Springs 51.05 49.67 100.72 City of Tavares 27.49 43.44 70.93 Hillsborough County [2] 36.15 41.52 77.67 Marion County 19.89 56.97 76.86 Pasco County 21.90 51.30 73.20 Polk County [2] 25.51 75.02 100.53 Town of Lady Lake 35.15 43.55 78.70 Other Florida Utilities'- Average $29.53 $51.45 $80.98 [1] Based on utility survey shown on Tables 14 through 16; reflects inside -County service rates for municipal utility systems. [2] Utilities are currently involved in or contemplating a rate study, or are expecting a change in the rates charged during the next twelve months; the proposed rate adjustments, if any, are not reflected in the current rate above. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -24- As can be seen above, the average bills produced from the current rates for Fiscal Year 2019 and as proposed for Fiscal Year 2020 as delineated in this report are generally lower on average than other neighboring utilities and are considered reasonable and comparable. It should be noted that several of the utilities surveyed are anticipating a rate change in the next twelve months (pursuant to a rate evaluation that is underway, an adopted rate -phasing program, or through the application of a price [inflationary] index), which should maintain the competitive position of the System from what is indicated above. OTHER FINANCIAL CONSIDERATIONS AND PERFORMANCE Included as part of the development of the financial forecast and the review of the overall sufficiency of System revenues is an evaluation of the projected financial position of the System. This evaluation includes the development of certain ratios and the review of financial performance indicators to evaluate "where the System is anticipated to be financially." The analysis includes a series of charts and figures prepared to provide the County a visual representation of the financial and statistical trends in the selected financial ratios or benchmarks anticipated for the System over the Forecast Period. The following is a brief description of financial ratio evaluated by Raftelis on behalf of the System. Projected Net Revenue Margin Ratio The Net Revenue Margin Ratio is a measure of a utility system's ability to meet its operating expenses and indicates the net contribution margin estimated to be earned by the System. The contribution margin represents the amount of net revenues that are available to meet the other expenditure requirements of the System after the payment of the operating expenses (e.g., debt service, deposits to the R&R Fund, etc.). A relatively low Net Revenue Ratio (say, 25 percent) indicates that a large portion of operating revenue is used to pay operating expenses. A high Net Revenue Ratio (say, 45 percent) indicates a significant portion of operating revenues is available for purposes other than the payment of operating expenses. We are of the opinion that the County should maintain a minimum Net Revenue Ratio of 40% to 45% to promote the System's financial health over the Forecast Period. As can be seen below and recognizing that a portion of the funds deposited in the R&R Fund are used to pay repair and maintenance expenses of the System, it is projected the County will generally maintain a favorable Net Revenue Ratio throughout the majority of the Forecast Period. It should be noted that if the County were to redirect the R&R Funds that are currently used for the funding of annual operating expenses towards capital, the estimated Net Revenue Margin that would result would not be considered as favorable and would warrant ongoing attention / monitoring by the County. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -25- Projected Net Revenue Margin (Net Revenue / Operating Revenue) 50% 45% 35% 30% 25% -- - 20% 15% 10% 2020 2021 2022 2023 2024 Net Revenue Margin - R&R Contribution Related Net Revenue Margin - Without R&R Contribution —Target -Upper Range • Target - Lower Range All -In Debt Service Coverage This ratio illustrates the ability to cover the debt service payments which is a primary ratio used by credit rating agencies in the evaluation of utility credits. For the purpose of this analysis, the debt service coverage is for the aggregate of all System debt and loans pledged for payment from System revenues, which more accurately reflects the ability to fund the debt requirements from rates. The ratio only includes the Net Revenues (gross revenues less operating and maintenance expenses) of the System since Connection Fees (although considered as a pledged revenue) are one-time fees and not considered as a recurring revenue for long-term debt repayment purposes. Additionally, the credit rating agencies rely on this ratio in the review of utility credits since it links to the total ability to pay debt from ongoing revenues of the utility and presents the overall leveraging capability of such utility. The All -In Debt Service Coverage ratio is presented on the following figure: cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -26- All -In Debt Service Coverage 210% 200% 190% �R 180% 170% 160% 140% 130% 120% 110% 100% _Aki, a, 2020 2021 2022 2023 2024 wr All -In Net Revenue Debt Coverage — —Minimum Target The median debt service coverage ratio is 2.00 as reported by Moody's Investor Service, Inc. (for AA — rated credit) and the minimum debt service coverage ratio target was set at 1.50 which is representative of an "A" — rated credit. As can be seen above, the All -In debt service coverage ratio, assuming the implementation of the proposed rate increases, is anticipated to meet or exceed the minimum target of 1.5-times debt coverage ratio over the Forecast Period which is considered to be favorable, even though it is expected to decline as a result of additional debt service expected over the Forecast Period. Operating Fund (Working Capital) Balance An important component of the evaluation of the System is the resulting ending Working Capital / Operating Reserves cash or liquidity position of the Utility since it indicates the ability of the utility to fund short-term unforeseen expenditures or revenue shortfalls and reduces the overall financial risk of the utility. The estimated cash flow (deposits and withdrawals) to the account are shown in detail on Table 13 at the end of this report. Below is a graphical representation of the unrestricted cash (working capital) and targeted ending balance: cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final —2 / — $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 1 2020 Operating Reserves Ending Cash Balance 2021 2022 2023 2024 Operating Reserves — — -Targeted Days of Operating Expenses (120) As can be seen above and assuming the implementation of the recommended rate adjustments, the Working Capital / Operating Reserve cash balances for the System are anticipated to achieve the targeted ending cash balance over the Forecast Period which was set at a minimum of 120 days of operating expenses for the purposes of this evaluation. The targeted minimum 120 days cash balance is looked favorably by credit rating agencies and will serve to reduce the future cost of borrowing due to the higher credit rating. Any unrestricted funds above the minimum target level would be available for any System purpose, including increased capital project funding that may periodically occur, and also serves as a hedge in case of any extraordinary event that may occur that would affect operations or rate revenue collectability. (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -28- Debt Outstanding to Net Plant Investment (Debt) Ratio This ratio presents the net equity of the utility (in terms of plant investment) and provides an indication of the reliance on debt to fund existing assets as well as the flexibility in terms of funding future capital assets and overall rate stability. Generally, the higher the ratio, the greater the need to have a larger portion of the rate revenues being dedicated to principal retirement. The 2019 median Debt Ratio is 43% as reported by FITCH Ratings for water and wastewater utilities (note that this is an average). With respect to the County and based on our experience, we have identified a maximum target range for the ratio of 40% to 50%; generally when utilities are above this ratio, rates tend to be high and the System may be overcapitalized (resulting in a lack of flexibility to fund capital and meet expenditure needs due to high cost of carry). As can be seen below, the Debt Outstanding to Net Plant Investment Ratio is projected to remain relatively stable during the Forecast Period and is below the lower range band which we considered to be coincident with the increase in utility revenue bonds anticipated to occur during the which is considered to be favorable with respect to the County. Outstanding Debt to Net Plant Investment 60% 50% 40% 30% 20% 10% 0% 2019 2020 2021 2022 2023 2024 Debt to Net Investment — --Maximum Target -Upper Range Maximum Target -Lower Range (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -29- MISCELLANEOUS SERVICE FEES The County has provided information regarding the cost of providing a variety of miscellaneous services. These services are typically customer -specific costs that are recovered through a variety of miscellaneous fees and charges. Examples of miscellaneous service fees include meter installation charges, late payment fees and field service visits. Based on the information provided by the County the proposed miscellaneous service fees are shown on Table 21 at the end of this report. The following is a brief discussion of the recommendations. The County's estimated costs to install water and wastewater services including the meter and tap and to provide other services currently exceed the adopted charges. A one-time adjustment effective on or after October 1, 2019 is proposed as shown in Table 21 to provide for the full recovery of the identified direct expenses associated with the performance of the water meter installation and a service line installation (water tap). Additionally, as shown on Table 21, increases in the customer deposits is recommended to keep pace with rising utility bills. Also, new fees for general site visits and after -hour service requests, delinquency fees for disconnection and reconnection of service, meter testing, backflow inspection, septage fees, and other various miscellaneous charges are also proposed. RATE OBSERVATIONS AND RECOMMENDATIONS The following is a summary of Raftelis's rate observations and recommendations: 1. The current monthly water user charges are not anticipated to be adequate to meet the water system's needs over the Forecast Period. Based on the results of the revenue requirement evaluation, it is recommended that the monthly water user rates be increased annually by 4% for Fiscal Years 2020 through 2022 and by 2.5% for Fiscal Years 2023 and 2024. The forecasted water rate revenues, with the recognition of the proposed rate adjustments through Fiscal Year 2024 are anticipated to be sufficient to adequately fund the identified net revenue requirements of the water system and provide funds to maintain operating reserves to maintain a strong utility credit. 2. The current monthly wastewater user charges are not anticipated to be adequate to meet the water system's needs over the Forecast Period. Based on the results of the revenue requirement evaluation, it is recommended that the monthly wastewater user rates be increased annually by 5% for Fiscal Years 2020 through 2024. The forecasted wastewater rate revenues, with the recognition of the proposed rate adjustments through Fiscal Year 2024 are anticipated to be sufficient to adequately fund the identified net revenue requirements of the water system and provide funds to maintain operating reserves to maintain a strong utility credit. cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -30- The primary reasons for the projected rate adjustments are to: a. The need to recover increased operating and maintenance expenses associated with the impacts of general inflation, the effects of an improved economy which is affecting the cost for materials and professional / contracted services, and increased additional personnel assumed during the Forecast Period due to System growth and facility expansions; b. Increased debt service requirements associated with financing of additional and recently identified capital improvements to the County's water and wastewater utility facilities; c. To provide for the funding of a dedicated capital re -investment plan (represents annual transfers to fund capital expenditures for the renewal, replacement, betterment and upgrade of System assets) in order to limit (balance) the amount of debt financing and long-term financing costs to the System, which will promote ongoing rate stability; d. Provide sufficient funds necessary to comply with the rate covenant requirements as delineated in the Bond Resolution which authorized the issuance of the outstanding senior lien bonds of the System and the Loan Agreements entered into with the Florida Department of Environmental Protection associated with securing low -interest loans from the State Revolving Fund loan program which are considered as subordinated indebtedness; and e. Maintain the creditworthiness of the System and bond credit rating, which included maintaining working cash (fund balance) reserves to limit the financial risk to the utility due to unforeseen changes in revenues, the incurrence of unexpected operating or increased capital expenditures, and to provide a plan to achieve the lowest cost of borrowers (interest rates) for capital financing to promote the long term financial stability of the System. 3. The BOCC should consider the adoption of the proposed Miscellaneous Service Fees identified in this report. 4. As shown on Tables 18 through 20 at the end of this study, the recommended rates for the water and wastewater system are projected to remain competitive when compared to rates charges by other local governments (public utilities) in the region. It is further anticipated that this competitive relationship will remain during the Forecast Period. 5. Based on the implementation of the proposed rates as presented in this Study, it is anticipated that the System will produce sufficient Net Revenues to maintain compliance with the rate covenants as delineated in the Bond Resolution (senior lien debt) and the Loan Agreements (subordinate lien loans) and continue to be in a strong credit position, which will provide flexibility in the future relative to the funding of future capital investment and maintaining rates at competitive levels. (Remainder of page intentionally left blank) cK:\DC\1039-17\Rpt\Rate Study Report (2019) Final -3 1 - DO 0 HERNANDO COUNTY, FLORIDA x Water and Wastewater Rate Study and Miscellaneous Service Fee Analysis — P Fiscal Year 2019 Table No. LIST OF TABLES Title 1 Summary of Historical Customer Statistics — Water System 2 Summary of Projected Customer Statistics — Water System 3 Summary of Historical Customer Statistics — Wastewater System 4 Summary of Projected Customer Statistics — Wastewater System 5 Summary of Projected Revenues 6 Summary of Projected Operating Expenses — Water System 7 Summary of Projected Operating Expenses — Wastewater System 8 Summary of Projected Escalation Factors 9 Projected Capital Improvement Program 10 Projected Net Revenue Requirements — Water System 11 Projected Net Revenue Requirements — Wastewater System 12 Projected Debt Service Coverage Analysis — Water and Wastewater System 13 Projected Fund Cash Balances and Interest Income 14 Summary of Allocated Water Revenue Requirements for Rate Design 15 Summary of Allocated Wastewater Revenue Requirements for Rate Design 16 Summary of Rate Design — Water System 17 Summary of Rate Design — Wastewater System 18 Comparison of Typical Monthly Residential Bills for Water Service 19 Comparison of Typical Monthly Residential Bills for Wastewater Service 20 Comparison of Typical Monthly Residential Bills for Water and Wastewater Service 21 Summary of Existing and Proposed Miscellaneous Service Fees Page 1 of 1 Line No. Description Water System: Residential Class 1 Normal Account Growth 2 Incremental Account Growth 3 Average Accounts Served 4 Average Annual ERCs 5 Water Sales (000's) 6 Average Monthly Flow per Account (Gallons) Commercial Class 7 Normal Account Growth 8 Incremental Account Growth 9 Average Accounts Served 10 Average Annual ERCs 11 Water Sales (000's) 12 Average Monthly Flow per Account (Gallons) Irrigation - Residential Class 13 Normal Account Growth 14 Incremental Account Growth 15 Average Accounts Served 16 Average Annual ERCs 17 Water Sales (000's) 18 Average Monthly Flow per Account (Gallons) Irrigation - Commercial Class 19 Normal Account Growth 20 Incremental Account Growth 21 Average Accounts Served 22 Average Annual ERCs 23 Water Sales (000's) 24 Average Monthly Water Use per Account Total Water System 25 Average Annual Accounts 26 Average Annual ERCs 27 Total Water Sales (000's) 28 Water Production (000's) Non -Revenue Water: 29 Amount 30 Percent of Production 31 Average Annual Daily Flow (mgd) Table 1 Hernando County, Florida Water and Wastewater Rate Study Summary of Historical Customer Statistics - Water System Ill Fiscal Year Ended September 30, 2011 2012 2013 2014 2015 2016 2017 2018 NA 104 83 135 165 400 430 671 0 0 0 0 0 0 0 0 57,741 57,845 57,928 58,063 58,228 58,628 59,058 59,729 58,530 58,635 58,719 58,856 59,023 59,429 59,864 60,545 5,369,985 4,607,121 4,507,450 4,627,862 4,689,782 4,753,860 4,599,262 4,635,628 7,750 6,637 6,484 6,642 6,712 6,757 6,490 6,468 NA 14 (6) 10 8 19 15 23 0 0 0 0 0 0 0 0 1,897 1,911 1,905 1,915 1,923 1,942 1,957 1,980 6,806 6,856 6,834 6,870 6,899 6,967 7,021 7,103 527,279 562,819 552,028 556,796 579,796 591,871 593,936 603,582 23,163 24,543 24,148 24,230 25,125 25,398 25,291 25,403 NA 101 15 0 (49) 0 7 2 0 0 0 0 0 0 0 0 1,388 1,489 1,504 1,504 1,455 1,455 1,462 1,464 1,388 1,489 1,504 1,504 1,455 1,455 1,462 1,464 133,212 119,962 95,514 86,743 91,743 96,468 100,505 85,429 7,998 6,714 5,292 4,806 5,254 5,525 5,729 4,863 NA (4) (1) (14) (3) (2) 0 5 0 0 0 0 0 0 0 0 317 313 312 298 295 293 293 298 616 609 607 579 574 570 570 579 88,542 90,957 88,160 78,811 88,811 109,441 109,038 110,815 23,276 24,216 23,547 22,039 25,088 31,127 31,012 30,989 61,343 61,558 61,649 61,780 61,901 62,318 62,770 63,471 67,340 67,589 67,664 67,809 67,951 68,421 68,917 69,691 6,119,018 5,380,857 5,243,151 5,350,212 5,450,132 5,551,640 5,402,741 5,435,454 6,945,987 6,279,623 5,958,975 5,997,561 6,301,049 6,357,561 6,404,894 6,421,590 826,969 898,766 715,824 647,349 850,917 805,921 1,002,153 986,136 11.91% 14.31% 12.01% 10.79% 13.50% 12.68% 15.65% 15.36% 19.03 17.16 16.33 16.43 17.26 17.37 17.50 17.55 Footnotes: [1] Historical customer statistics were based developed from detailed customer billing statistics as provided by the County. Page 1 of 1 Table 2 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Customer Statistics - Water Svstem Line No. Description Estimated 2019 Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Water System: Residential Class 1 Normal Account Growth 500 500 375 325 300 275 2 Incremental Account Growth 0 0 0 0 0 0 3 Average Accounts Served 60,229 60,729 61,104 61,429 61,729 62,004 4 Average Annual ERCs 61,052 61,559 61,939 62,268 62,572 62,851 5 Water Sales (000's) 4,661,725 4,665,171 4,670,509 4,671,874 4,671,216 4,668,566 6 Average Monthly Flow per Account (Gallons) 6,450 6,402 6,370 6,338 6,306 6,275 Commercial Class 7 Normal Account Growth 19 15 10 10 10 10 8 Incremental Account Growth 0 0 0 0 0 0 9 Average Accounts Served 1,999 2,014 2,024 2,034 2,044 2,054 10 Average Annual ERCs 7,171 7,225 7,261 7,297 7,333 7,369 11 Water Sales (000's) 597,301 597,270 597,234 597,184 597,119 597,041 12 Average Monthly Flow per Account (Gallons) 24,900 24,713 24,590 24,467 24,344 24,223 Irrigation - Residential Class 13 Normal Account Growth 5 5 5 5 5 5 14 Incremental Account Growth 0 0 0 0 0 0 15 Average Accounts Served 1,469 1,474 1,479 1,484 1,489 1,494 16 Average Annual ERCs 1,469 1,474 1,479 1,484 1,489 1,494 17 Water Sales (000's) 92,459 91,846 91,466 91,317 91,166 91,015 18 Average Monthly Flow per Account (Gallons) 5,245 5,193 5,154 5,128 5,102 5,077 Irrigation - Commercial Class 19 Normal Account Growth 2 2 2 2 2 2 20 Incremental Account Growth 0 0 0 0 0 0 21 Average Accounts Served 300 302 304 306 308 310 22 Average Annual ERCs 583 587 591 595 599 603 23 Water Sales (000's) 104,400 102,994 102,639 102,282 101,921 101,557 24 Average Monthly Water Use per Account 29,000 28,420 28,136 27,854 27,576 27,300 Total Water System 25 Average Annual Accounts 63,997 64,519 64,911 65,253 65,570 65,862 26 Average Annual ERCs 70,275 70,845 71,270 71,644 71,993 72,316 27 Total Water Sales (000's) 5,455,885 5,457,281 5,461,848 5,462,657 5,461,422 5,458,179 28 Estimated Water Production (000's) 6,418,688 6,420,331 6,425,704 6,426,655 6,425,202 6,421,386 Non -Revenue Water: 29 Amount 962,803 963,050 963,856 963,998 963,780 963,208 30 Percent of Production 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 31 Average Annual Daily Flow (mgd) 17.585 17.590 17.605 17.559 17.603 17.593 Page 1 of 1 Table 3 Hernando County, Florida Water and Wastewater Rate Study Summary of Historical Customer Statistics - Wastewater System 111 Line Fiscal Year Ended September 30, No. Descrintion 2011 2012 2013 2014 2015 2016 2017 2018 Wastewater System: Residential Class 1 Normal Growth N/A 39 72 276 230 294 437 714 2 Incremental Growth 0 0 0 0 0 0 0 0 3 Average Accounts Served 26,672 26,711 26,783 27,059 27,289 27,583 28,020 28,734 4 Average Annual ERCs 27,469 27,509 27,583 27,867 28,104 28,407 28,857 29,592 5 Billed Flow (000's) [2] 1,237,925 1,442,530 1,546,983 1,504,019 1,494,019 1,541,791 1,599,066 1,610,546 6 Average Monthly Gallons per Account 3,868 4,500 4,813 4,632 4,562 4,658 4,756 4,671 Commercial Class 7 Normal Growth N/A 28 (6) 25 (32) 31 41 41 8 Incremental Growth 0 0 0 0 0 0 0 0 9 Average Accounts Served 1,367 1,395 1,389 1,414 1,382 1,413 1,454 1,495 10 Average Annual ERCs 5,373 5,483 5,460 5,558 5,432 5,554 5,715 5,876 11 Billed Flow (000's) 434,926 472,970 457,525 463,784 451,784 449,155 448,532 445,685 12 Average Monthly Revenue Gallons 26,513 28,254 27,449 27,333 27,242 26,489 25,707 24,843 Residential Unmetered Sewer 13 Normal Growth N/A 0 0 0 0 0 0 0 14 Incremental Growth 0 0 0 0 0 0 0 0 15 Average Accounts Served 4 4 4 4 4 4 4 4 16 Average Annual ERCs 4 4 4 4 4 4 4 4 17 Billed Flow (000's) N/A N/A N/A N/A N/A N/A N/A N/A 18 Average Monthly Revenue Gallons N/A N/A N/A N/A N/A N/A N/A N/A Commercial Unmetered Sewer 19 Normal Growth N/A 0 0 0 0 0 0 0 20 Incremental Growth 0 0 0 0 0 0 0 0 21 Average Accounts Served 2 2 2 2 2 2 2 2 22 Average Annual ERCs 2 2 2 2 2 2 2 2 23 Billed Flow (000's) N/A N/A N/A N/A N/A N/A N/A N/A 24 Average Monthly Revenue Gallons N/A N/A N/A N/A N/A N/A N/A N/A Commercial Sewer Only - Metered 25 Normal Growth N/A 0 0 1 0 0 0 0 26 Incremental Growth 0 0 0 0 0 0 0 0 27 Average Accounts Served 4 4 4 5 5 5 5 5 28 Average Annual ERCs 4 4 4 5 5 5 0 5 29 Billed Flow (000's) N/A N/A N/A N/A N/A N/A N/A N/A 30 Average Monthly Revenue Gallons N/A N/A N/A N/A N/A N/A N/A N/A Total Wastewater System 31 Average Accounts Served 28,049 28,116 28,182 28,484 28,682 29,007 29,485 30,240 32 Average Annual ERCs 32,852 33,002 33,053 33,436 33,547 33,972 34,578 35,479 33 Total Metered / Billed Flow Gallons (000's) 1,672,851 1,915,500 2,004,508 1,967,803 1,945,803 1,990,947 2,047,598 2,056,231 34 Estimated Wastewater Treatment (000's) 1,389,776 1,469,838 1,448,239 1,444,897 1,474,611 1,474,611 1,510,521 1,536,001 35 Average Annual Daily Flow (mgd) 3.81 4.02 3.97 3.96 4.04 4.03 4.14 4.21 36 Treatment Per ERC Served (Gallons) 3,525 3,711 3,651 3,601 3,663 3,617 3,705 3,702 Footnotes: [1] Historical customer statistics were based developed from detailed customer billing statistics as provided by the County. [2] Resolution 2012-2 1, approved January 24, 2012, increased the residential sewer billing cap from 6,000 gallons per month to 10,000 gallons per month effective February 1, 2012. Page 1 of 1 Table 4 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Customer Statistics - Wastewater Svstem Line No. Description Estimated 2019 2020 Fiscal Year Ending 2021 September 30, 2022 2023 2024 Wastewater System: Residential Class 1 Normal Growth 500 500 375 325 300 275 2 Sewer Extension (OSDS Elimination) Program Growth 0 0 0 13 13 0 3 Incremental Growth 0 0 0 0 0 0 4 Average Accounts Served 29,234 29,734 30,109 30,447 30,760 31,035 5 Average Annual ERCs 29,633 30,140 30,520 30,863 31,180 31,459 6 Billed Flow (000's) 1,631,257 1,650,861 1,663,323 1,673,586 1,682,336 1,688,890 7 Average Monthly Gallons per Account 4,650 4,627 4,604 4,581 4,558 4,535 Commercial Class 8 Normal Growth 19 15 10 10 10 10 9 Incremental Growth 0 0 0 0 0 0 10 Average Accounts Served 1,514 1,529 1,539 1,549 1,559 1,569 11 Average Annual ERCs 5,432 5,485 5,521 5,557 5,593 5,629 12 Billed Flow (000's) 490,536 492,919 493,662 494,385 495,089 495,774 13 Average Monthly Revenue Gallons 27,000 26,865 26,731 26,597 26,464 26,332 Septic to Sewer: Commercial Class 14 Normal Growth 0 0 0 6 0 0 15 Incremental Growth 0 0 0 0 0 0 16 Average Accounts Served 0 0 0 6 6 6 17 Average Annual ERCs 0 0 0 150 150 150 18 Billed Flow (000's) 0 0 0 16,200 32,400 32,400 19 Average Monthly Revenue Gallons 0 0 0 225,000 450,000 450,000 Residential Unmetered Sewer 20 Normal Growth 0 0 0 0 0 0 21 Incremental Growth 0 0 0 0 0 0 22 Average Accounts Served 4 4 4 4 4 4 23 Average Annual ERCs 4 4 4 4 4 4 24 Billed Flow (000's) N/A N/A N/A N/A N/A N/A 25 Average Monthly Revenue Gallons N/A N/A N/A N/A N/A N/A Commercial Unmetered Sewer 26 Normal Growth 0 0 0 0 0 0 27 Incremental Growth 0 0 0 0 0 0 28 Average Accounts Served 2 2 2 2 2 2 29 Average Annual ERCs 4 4 4 4 4 4 30 Billed Flow (000's) N/A N/A N/A N/A N/A N/A 31 Average Monthly Revenue Gallons N/A N/A N/A N/A N/A N/A Commercial Sewer Only - Metered 32 Normal Growth 0 0 0 0 0 0 33 Incremental Growth 0 0 0 0 0 0 34 Average Accounts Served 5 5 5 5 5 5 35 Average Annual ERCs 0 0 0 0 0 0 36 Billed Flow (000's) N/A N/A N/A N/A N/A N/A 37 Average Monthly Revenue Gallons N/A N/A N/A N/A N/A N/A Total Wastewater System 38 Average Accounts Served 30,759 31,274 31,659 32,013 32,336 32,621 39 Average Annual ERCs 35,073 35,633 36,049 36,578 36,931 37,246 40 Total Metered / Billed Flow Gallons (000's) 2,121,793 2,143,780 2,156,985 2,184,171 2,209,825 2,217,064 41 Estimated Wastewater Treatment (000's) 1,561,439 1,586,398 1,604,919 1,628,447 1,644,169 1,658,177 42 Average Annual Daily Flow (mgd) 4.28 4.35 4.40 4.45 4.50 4.54 43 Treatment Per ERC Served (Gallons) 3,710 3,710 3,710 3,710 3,710 3,710 O M N N y � O N N bA V1 �I F1.1 •�+ C� U � ON � O N it w ram+ O N N Q � kn 0 00 O M O M ,It kn 110 00 N O N cp M cp � O `O N N r- r- 00 r-- 00 O N O- r-� 0000 M M 00 kn o0 kn l� O l� kn l� l� 01 0000 O N N r- 0000 00 O O 00 Cl) It O M -- � kn O 01 r- O oo m� N - M Okn o D\ 0000 It 00 0 "T -o O - r- 00 D\ N O - � r- a1 00 00 � N O 06 N N .--I N -� N 69 A 6q 6q 110 � N O NT M N 00 M 00 00 l- O N 00 Ile0000 O N It r- � O M- kn 00 01 M M It -- � O 00 l- 00 -� -� .-- N 5� 5� A 5� - M M� r M N't �--� N + � 00 00 M 00 00 l- l� -- -- .7 O l- O M l� O It � 00 O l� M 0\ O 00 00 t- 0000 - 't �T N kn - M O � It It M 06 M � NC) kn N 00 kr) O 00 00 I O b9 b9 b9 6os N w d U � > u N w d � N V U Cz O H � r- oo a, o N - "o M O O It 01 110 00 110 O kf kr in 1-- 00 01 v-i M 59 O kn 01 00 M 01 01 0\ N 01 00 kn cp� -- -- O O `0 M -� M M 59 — 00 01 \,0 r-- kn 01 110 kn 01 It W) 00 t 00 kn M 69 i O `O 00 O kn r- kr M l� M N V N M 5q N w � U U Page 1 of 6 Table 6 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Operatine Expenses - Water Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Descriution 2019 2020 Reference 2021 2022 2023 2024 OPERATING EXPENSES ADMINISTRATION - DEPT 07091 1 Salaries & Wages - Regular $ 110,014 $ 116,395 Labor $ 122,913 $ 128,444 $ 134,224 $ 140,264 2 Additional Personnel - - Input - - - - 3 Salaries & Wages - Overtime 323 342 Labor 361 377 394 412 4 Special Pay 78 83 Labor 87 91 95 100 5 FICA Taxes - Matching 8,422 8,911 Labor 9,410 9,833 10,276 10,738 6 Retirement Contributions 26,524 28,063 Labor 29,634 30,968 32,361 33,818 7 Life & Health Insurance 25,135 26,593 Labor 28,083 29,346 30,667 32,047 8 Workers Comp Premiums 95 100 Labor 106 111 116 121 9 OPEB 1,212 1,283 Labor 1,354 1,415 1,479 1,546 10 Professional Services 10,771 11,395 Labor 12,033 12,575 13,141 13,732 11 Contr Sry - Janitorial / Pest 12,442 12,940 ProfSvc 13,458 13,996 14,556 15,138 12 ContrSrv-Mowing 1,616 1,654 Inflation 1,697 1,740 1,783 1,826 13 Contr Sry - Security 612 626 Inflation 643 659 675 691 14 Travel & Per Diem 592 607 Inflation 622 638 654 670 15 Communication Devices 194 199 Inflation 204 209 214 219 16 Postage & Freight 108 110 Inflation 113 116 119 122 17 Utility Sry - Elec / Wtr / Swr 32,312 33,087 Inflation 33,948 34,796 35,666 36,522 18 Utility Sry - Trash Removal 963 993 Electric - W 1,023 1,054 1,085 1,117 19 Rental/Lease- Equipment 452 463 Inflation 475 487 499 511 20 Rental / Lease - Land - - Inflation - - - - 21 Insurance & Bonds -Premium 518,945 531,399 Inflation 545,216 558,846 572,817 586,565 22 Repair/ Maint- Bldg & Grd 172,533 176,674 Inflation 181,267 185,799 190,444 195,015 23 Repair / Maint - Vehicles 549 571 Repair 594 618 642 668 24 Repair / Maint - Software 463 482 Repair 501 521 542 564 25 Repair / Maint - Radio Costs 128 133 Repair 139 144 150 156 26 Printing & Binding 686 714 Repair 742 772 803 835 27 Advertising - Legal 343 351 Inflation 361 370 379 388 28 Fees / Costs - Filing Fees 172 176 Inflation 180 185 189 194 29 Fees / Costs - Cst Alloc Pin 328,445 336,328 Inflation 345,072 353,699 362,541 371,242 30 Fees / Costs - FLT GPS TRCKN 206 211 Inflation 216 222 227 233 31 Fees / Costs - Fit Cap Recv - - Inflation - - - - 32 Fees / Costs - Fit Fclty Al 152 156 Inflation 160 164 168 172 33 Fees / Costs - Fleet / Admin 243 249 Inflation 255 262 268 275 34 Fees/ Costs- Bank Charges 219,609 221,400 Grth-Water 222,745 223,919 225,007 226,009 35 Fees / Costs - New Hires 104 107 Inflation 110 112 115 118 36 Fees / Costs - T.S. Cap Recv 1,137 1,164 Inflation 1,195 1,225 1,255 1,285 37 Office Supplies 2,402 2,460 Inflation 2,524 2,587 2,651 2,715 38 Office Supplies - Comp Hardware - - hnflation - - - - 39 Operating Supplies 2,059 2,108 Inflation 2,163 2,217 2,273 2,327 40 Gas. Oil & Lubricants 207 212 Inflation 218 223 229 234 41 Janitorial Supplies 2,059 2,108 Inflation 2,163 2,217 2,273 2,327 42 Oper Supp - Cmptr Software 341 349 Inflation 358 367 376 386 43 Oper Supp - Cmptr Hardware 539 552 Inflation 566 580 595 609 44 Books / Publications / Subscr 117 119 Inflation 123 126 129 132 45 Dues and Memberships 2,237 2,291 Inflation 2,351 2,409 2,470 2,529 46 Educ - Training & Tuition 789 808 Inflation 829 850 871 892 47 Tuition Reimbursement 2,059 2,108 Inflation 2,163 2,217 2,273 2,327 48 Grants & Aid 23,716 24,286 Inflation 24,917 25,540 26,178 26,807 49 Bad Debt Expense (0.20%) 34,665 34,884 Calculated 36,323 37,798 38,814 39,815 50 Contingency(2.00%) 226,690 234,189 Calculated 305,403 380,123 459,989 613,324 51 OPEB Expenses - - Labor - - - - 52 Miscellaneous Expenses - - Inflation - - - - 53 Total Administration $ 1,773,463 $ 1,820,433 $ 1,935,019 $ 2,050,966 $ 2,172,674 $ 2,367,734 FINANCE ADMIN - DEPT 07093 54 Salaries & Wages- Regular $ 236,260 $ 249,963 Labor $ 263,961 $ 275,839 $ 288,252 $ 301,223 55 Additional Personnel - - Input - - - - 56 Salaries & Wages - Overtime 824 871 Labor 920 961 1,005 1,050 57 FICA Taxes- Matching 18,074 19,122 Labor 20,193 21,102 22,051 23,043 58 Retirement Contributions 30,820 32,608 Labor 34,434 35,983 37,602 39,294 59 Life & Health hnsurance 65,553 69,355 Labor 73,239 76,535 79,979 83,578 60 Workers Comp Premiums 211 224 Labor 236 247 258 269 61 OPEB 1,992 2,107 Labor 2,225 2,325 2,430 2,539 62 Professional Services 89,216 92,785 ProfSvc 96,496 100,356 104,370 108,545 63 Travel & Per Diem 926 949 Inflation 973 998 1,023 1,047 64 Comm SVCS, Devices and Accessories - - Inflation - - - - 65 Postage and Freight 343 351 Inflation 361 370 379 388 66 Insurance & Bonds - Premium 472 483 Inflation 496 508 521 534 67 Rental/Lease Equipment 931 953 Inflation 978 1,002 1,027 1,052 68 Repair / Maint - Vehicles 686 714 Repair 742 772 803 835 69 Repair / Maint - Equipment 137 143 Repair 148 154 161 167 70 Repair / Maint - Software 299 311 Repair 324 337 350 364 71 Printing & Binding 2,745 2,811 Inflation 2,884 2,956 3,030 3,103 72 Advertising - Legal 137 141 Inflation 144 148 152 155 73 Fees / Costs - Cst Alloc Pin 44,931 46,010 Inflation 47,206 48,386 49,596 50,786 74 Fees / Costs - Fit GPS Tracking 211 216 Inflation 221 227 233 238 Page 2 of 6 Table 6 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Oneratime Expenses - Water Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 75 Fees / Costs - Flt FCLTY Al 149 152 Inflation 156 160 164 168 76 Fees / Costs - Fleet / Admin 243 249 Inflation 255 262 268 275 77 Fees / Costs - New Hires 104 107 Inflation 110 112 115 118 78 Fees / Costs - T.S. 1,092 1,118 Inflation 1,147 1,176 1,205 1,234 79 Office / Operating Supplies 3,775 3,892 Gas 4,012 4,137 4,265 4,397 80 Gas, Oil & Lubricants 157 161 Inflation 165 169 173 178 81 Operating Supplies - Computer Hardware / Software 892 914 Inflation 937 961 985 1,008 82 Dues & Memberships 264 271 Inflation 278 285 292 299 83 Educ - Training & Tuition 635 650 Inflation 667 684 701 718 84 Tuintion Reimbursement - - Inflation - - - - 85 Miscellaneous Expenses - - Inflation - - - - 86 Total Finance Admin $ 502,080 $ 527,629 $ 553,909 $ 577,151 $ 601,389 $ 626,606 ENGINEERING - DEPT 07096 87 Salaries & Wages - Regular $ 397,003 $ 420,029 Labor $ 443,551 $ 463,511 $ 484,369 $ 506,165 88 Additional Personnel - - Input - - - - 89 Salaries & Wages - Overtime 1,036 1,097 Labor 1,158 1,210 1,265 1,321 90 Special Pay -Stipends 451 477 Labor 504 526 550 575 91 FICATaxes- Matching 30,405 32,169 Labor 33,970 35,499 37,096 38,766 92 Retirement Contributions 53,031 56,107 Labor 59,249 61,915 64,701 67,613 93 Life & Health Insurance 81,716 86,456 Labor 91,297 95,406 99,699 104,186 94 Workers Comp Premiums 2,152 2,277 Labor 2,404 2,512 2,625 2,743 95 Unemployment Compensation - - Labor - - - - 96 OPEB 3,742 3,959 Labor 4,181 4,369 4,566 4,771 97 Professional Services 570,066 207,297 ProfSvc Lower 215,589 224,212 233,181 242,508 98 Contracted Services 31,754 33,024 ProfSvc 34,345 35,719 37,147 38,633 99 Travel & Per Diem 4,422 4,528 Inflation 4,646 4,762 4,881 4,998 100 Communication Services 1,318 1,350 Inflation 1,385 1,420 1,455 1,490 101 Postage and Freight 1,296 1,327 Inflation 1,361 1,395 1,430 1,464 102 Rental/Lease Equipment 891 912 Inflation 936 959 983 1,007 103 Insurance & Bonds - Premium 4,029 4,126 Inflation 4,233 4,339 4,447 4,554 104 Repair / Maint - Vehicles 5,980 6,124 Inflation 6,283 6,440 6,601 6,759 105 Repair / Maint - Equipment 518 531 Inflation 544 558 572 586 106 Repair / Maint - DP Equipment 2,362 2,419 Inflation 2,482 2,544 2,607 2,670 107 Repair / Maint - Software 11,925 12,211 Inflation 12,528 12,842 13,163 13,479 108 Repair / Maint - Radio Costs 629 644 Inflation 661 678 694 711 109 Printing & Binding 3,109 3,184 Inflation 3,267 3,349 3,432 3,515 110 Advertising - Legal 259 265 Inflation 272 279 286 293 ill Fees / Costs - Cst Alloc Pln 47,217 48,350 Inflation 49,607 50,848 52,119 53,370 112 Fees / Costs - Flt GPS Tracking - - Inflation - - - - 113 Fees / Costs - Flt Cap Recv 1,758 1,801 Inflation 1,847 1,894 1,941 1,988 114 Fees / Costs - Flt FCLTY Al 450 461 Inflation 473 484 497 508 115 Fees / Costs - Fleet / Admin 733 750 Inflation 770 789 809 828 116 Fees / Costs - New Hires 308 315 Inflation 323 332 340 348 117 Fees / Costs - T.S. 2,904 2,974 Inflation 3,051 3,128 3,206 3,283 118 Office / Operating Supplies 2,674 2,738 Inflation 2,810 2,880 2,952 3,023 119 Gas, Oil & Lubricants 3,675 3,789 Gas 3,907 4,028 4,153 4,281 120 Uniforms 193 197 Inflation 203 208 213 218 121 Tools & Small Implements 881 902 Inflation 926 949 972 996 122 Safety Gear & Supplies 52 53 Inflation 54 56 57 59 123 Operating Supplies - Computer Hardware / Software 881 902 Inflation 926 949 972 996 124 Uncapital Equipment Tech 933 955 Inflation 980 1,005 1,030 1,054 125 Books / Publications / Subscriptions 259 265 Inflation 272 279 286 293 126 Dues and Memberships 769 788 Inflation 808 828 849 869 127 Educ-Training & Tuition 4,586 4,697 Inflation 4,819 4,939 5,063 5,184 128 Tuition Reimbursement - - Inflation - - - - 129 Miscellaneous Expenses - - Inflation - - - - 130 Total Engineering $ 1,276,370 $ 950,449 $ 996,622 $ 1,038,036 $ 1,081,209 $ 1,126,105 BILLING - DEPT 07098 131 Salaries & Wages - Regular $ 258,193 $ 273,169 Labor $ 288,466 $ 301,447 $ 315,012 $ 329,188 132 Additional Personnel - - hiput - - - - 133 Salaries & Wages - Overtime 206 218 Labor 230 240 251 262 134 Special Pay - Stipends - - Labor - - - - 135 FICA Taxes- Matching 19,752 20,897 Labor 22,068 23,061 24,098 25,183 136 Retirement Contributions 40,502 42,851 Labor 45,251 47,287 49,415 51,639 137 Life & Health Insurance 59,881 63,354 Labor 66,902 69,913 73,059 76,346 138 Workers Comp Premiums 222 235 Labor 248 260 271 283 139 Unemployment Compensation - - Labor - - - - 140 OPEB 2,460 2,602 Labor 2,748 2,872 3,001 3,136 141 Contracted Services 52,843 54,957 ProfSvc 57,155 59,442 61,819 64,292 142 Contracted Services- Programming 26,679 27,746 ProfSvc 28,856 30,010 31,211 32,459 143 Contracted Services - Janitor - - ProfSvc - - - - 144 Contracted Services - Billing 308,825 316,237 Inflation 324,459 332,570 340,885 349,066 145 Travel & Per Diem 206 211 Inflation 216 222 227 233 146 Postage and Freight 236,766 242,448 Inflation 248,752 254,971 261,345 267,617 147 Rental/Lease Equipment 974 1,013 Repair 1,053 1,095 1,139 1,185 Page 3 of 6 Table 6 Hernando County, Florida Water and Wastewater Rate Study Summary of Protected Operatine Expenses - Water Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 148 Repair / Maint - Bldg & Grd - - Repair - - - 149 Repair / Maint - Equipment 69 71 Repair 74 77 80 83 150 Repair / Maint - Software 26,362 27,416 Repair 28,513 29,654 30,840 32,073 151 Repair / Maint - Radio Costs 197 205 Repair 213 222 230 240 152 Printing & Binding 1,373 1,405 Inflation 1,442 1,478 1,515 1,551 153 Fees / Costs - Filing Fees 1,373 1,405 Inflation 1,442 1,478 1,515 1,551 154 Fees / Costs - Cst Alloc Pin 56,169 57,517 Inflation 59,013 60,488 62,000 63,488 155 Fees / Costs - New Hires 104 107 Inflation 110 112 115 118 156 Fees / Costs - Fit Cap Recv 2,261 2,315 Inflation 2,375 2,434 2,495 2,555 157 Office / Operating Supplies 2,402 2,460 Inflation 2,524 2,587 2,651 2,715 158 Operating Supplies - Computer Hardware / Software 1,887 1,933 Inflation 1,983 2,032 2,083 2,133 159 Books/Publications/Subscriptions 137 141 Inflation 144 148 152 155 160 Educ-Training & Tuition 1,098 1,124 Inflation 1,154 1,182 1,212 1,241 161 Tuition Reimburesement - - Inflation - - - - 162 Memberships and Dues - - Inflation - - - - 163 Miscellaneous Expenses - - Inflation - - - - 164 Total Billing $ 1,100,940 $ 1,142,038 $ 1,185,391 $ 1,225,282 $ 1,266,623 $ 1,308,794 METER READING - DEPT 07100 165 Salaries & Wages - Regular $ 194,363 $ 205,636 Labor $ 217,152 $ 226,924 $ 237,136 $ 247,807 166 Additional Personnel - - hiput - - - - 167 Salaries & Wages - On Call 8,842 9,355 Labor 9,879 10,323 10,788 11,273 168 Salaries & Wages - Overtime 8,811 9,322 Labor 9,844 10,287 10,750 11,234 169 Special Pay - Stipends 796 842 Labor 889 929 971 1,015 170 FICA Taxes - Matching 14,930 15,796 Labor 16,680 17,431 18,215 19,035 171 Retirement Contributions 28,927 30,605 Labor 32,319 33,773 35,293 36,881 172 Life & Health Insurance 70,542 74,634 Labor 78,813 82,360 86,066 89,939 173 Workers Comp Premiums 3,876 4,101 Labor 4,331 4,525 4,729 4,942 174 Unemployment Compensation - - Labor - - - - 175 OPEB 2,151 2,276 Labor 2,404 2,512 2,625 2,743 176 Proffessional Services 51,471 53,530 ProfSvc 55,671 57,898 60,214 62,622 177 Contracted Services 137 143 ProfSvc 148 154 161 167 178 Contracted Services - Uniforms 1,208 1,256 ProfSvc 1,306 1,359 1,413 1,470 179 Communication Services 3,821 3,913 Inflation 4,015 4,115 4,218 4,319 180 Insurance & Bonds - Premium 7,445 7,623 Inflation 7,822 8,017 8,218 8,415 181 Travel & Per Diem 137 141 Inflation 144 148 152 155 182 Postage and Freight 21 21 Inflation 22 22 23 23 183 Repair / Maint - Vehicles 10,294 10,706 Repair 11,134 11,580 12,043 12,524 184 Repair / Maint - Equipment 4,333 4,506 Repair 4,687 4,874 5,069 5,272 185 Repair / Maint - Software 2,110 2,195 Repair 2,283 2,374 2,469 2,568 186 Repair/Maint - Radio Costs 1,098 1,142 Repair 1,188 1,235 1,285 1,336 187 Printing & Binding 137 141 Inflation 144 148 152 155 188 Fees / Costs - Filing Fees - - Inflation - - - - 189 Fees / Costs - CST Alto Pin 24,373 24,958 Inflation 25,607 26,247 26,903 27,549 190 Fees / Costs - Flt GPS Tracking 1,647 1,687 Inflation 1,730 1,774 1,818 1,862 191 Fees / Costs - Fit Fclty Al 1,191 1,219 Inflation 1,251 1,282 1,314 1,346 192 Fees / Costs - Fleet / Admin 1,940 1,987 Inflation 2,038 2,089 2,142 2,193 193 Fees / Costs - New Hires 104 107 Inflation 110 112 115 118 194 Fees / Costs - T.S. Cap Recv 1,662 1,702 Inflation 1,746 1,790 1,835 1,879 195 Fees / Costs - Fit Cap Recv 15,412 15,782 Inflation 16,192 16,597 17,012 17,420 196 Office / Operating Supplies 4,262 4,364 Inflation 4,478 4,589 4,704 4,817 197 Gas, Oil & Lubricants 18,447 19,019 Gas 19,609 20,216 20,843 21,489 198 Clothing & Uniform Supplies 275 281 Inflation 288 296 303 310 199 Safety Gear 137 141 Inflation 144 148 152 155 200 Janitorial Supplies 343 351 Inflation 361 370 379 388 201 Operating Supplies - Computer Hardware / Software 275 281 Inflation 288 296 303 310 202 Uncapital Equipment Tech - - Inflation - - - - 203 Educ-Training & Tuition 1,640 1,680 Inflation 1,723 1,766 1,810 1,854 204 Tuition Reimbursement - - Inflation - - - - 205 Miscellaneous Expenses - - Inflation - - - - 206 Total Meter Reading $ 487,160 $ 511,442 $ 536,440 $ 558,561 $ 581,620 $ 605,585 CUSTOMER SERVICE / FINANCE - DEPT 07101 207 Salaries & Wages - Regular $ 347,475 $ 367,629 Labor $ 388,216 $ 405,686 $ 423,942 $ 443,019 208 Additional Personnel - - Input - - - - 209 Salaries & Wages - On Call - - Labor - - - - 210 Salaries & Wages - Overtime 1,235 1,307 Labor 1,380 1,442 1,507 1,575 211 Special Pay - Stipends - - Labor - - - - 212 FICA Taxes- Matching 26,582 28,123 Labor 29,698 31,035 32,431 33,891 213 Retirement Contributions 51,258 54,231 Labor 57,268 59,845 62,538 65,352 214 Life & Health Insurance 114,260 120,888 Labor 127,657 133,402 139,405 145,678 215 Workers Comp Premiums 607 642 Labor 678 708 740 773 216 Unemployment Compensation - - Labor - - - - 217 OPEB 3,735 3,951 Labor 4,173 4,360 4,557 4,762 218 Contracted Services 91 94 ProfSvc 98 102 106 110 219 Contracted Services - Uniforms - - ProfSvc - - - - 220 Contracted Services -Programming 35,326 36,739 ProfSvc 38,209 39,737 41,327 42,980 Page 4 of 6 Table 6 Hernando County, Florida Water and Wastewater Rate Study Summary of Protected Operatine Expenses - Water Svstem Line No. Description Adjusted 2019 Budgeted 2020 Escalation Reference 2021 Fiscal Year Ending September 30, 2022 2023 2024 221 Dispatch 14,130 14,696 ProfSvc 15,284 15,895 16,531 17,192 222 Travel & Per Diem 480 492 Inflation 505 517 530 543 223 Communication Services 1,716 1,757 Inflation 1,803 1,848 1,894 1,939 224 Postage and Freight 343 351 Inflation 361 370 379 388 225 Rental/Lease Equipment 1,075 1,101 Inflation 1,130 1,158 1,187 1,216 226 Rental / Lease Buildings - - Inflation - - - - 227 Insurance & Bonds -Premium 931 953 Inflation 978 1,002 1,027 1,052 228 Utility Sry - Elec / Wtr / Swr - - Inflation - - - - 229 Repair / Maint - Vehicles 412 428 Repair 445 463 482 501 230 Repair / Maint - Equipment 137 143 Repair 148 154 161 167 231 Repair / Maint - Bldg & Grd - - Repair - - - - 232 Repair / Maint - Computer Hardware - - Repair - - - - 233 Repair / Maint - Computer Hardware - - Repair - - - - 234 Repair / Maint - Software 26,591 27,655 Repair 28,761 29,911 31,108 32,352 235 Repair / Maint- Radio Costs 1,095 1,139 Repair 1,185 1,232 1,281 1,333 236 Printing & Binding 1,578 1,616 Inflation 1,658 1,700 1,742 1,784 237 Fees / Costs - Cst Allo Pin 66,328 67,920 Inflation 69,686 71,428 73,214 74,971 238 Fees / Costs - Fit Fclty Al 152 156 Inflation 160 164 168 172 239 Fees / Costs - Fleet / Admin 243 249 Inflation 255 262 268 275 240 Fees / Costs - New Hires 104 107 Inflation 110 112 115 118 241 Fees / Costs - Fit Cap Recv 4,296 4,399 Inflation 4,514 4,626 4,742 4,856 242 Office / Operating Supplies 4,392 4,498 Inflation 4,615 4,730 4,848 4,964 243 Gas, Oil & Lubricants 119 122 Gas 126 130 134 138 244 Janitorial Supplies 343 351 Inflation 361 370 379 388 245 Operating Supplies - Computer Hardware / Software 1,098 1,124 Inflation 1,154 1,182 1,212 1,241 246 Books / Publications / Subscriptions 103 105 Inflation 108 111 114 116 247 Dues and Memberships 103 105 Inflation 108 ill 114 116 248 Educ - Training & Tuition 2,539 2,600 Inflation 2,668 2,734 2,803 2,870 249 Tuition Reimburesment - - Inflation - - - - 250 Miscellaneous Expenses - - Inflation - - - - 251 Total Customer Service/Finance $ 708,879 $ 745,673 $ 783,497 $ 816,528 $ 850,984 $ 886,832 WATER OPERATIONS - DEPT 07111 252 Salaries&Wages - Regular $ 1,812,786 $ 1,917,928 Labor $ 2,025,332 $ 2,116,471 $ 2,211,713 $ 2,311,240 253 Additional Personnel - 272,938 Input 288,222 301,192 314,746 328,909 254 Salaries & Wages- On Call 43,080 45,579 Labor 48,131 50,297 52,560 54,926 255 Salaries & Wages - Overtime 59,328 62,769 Labor 66,284 69,267 72,384 75,641 256 Special Pay -Stipends 4,350 4,602 Labor 4,860 5,079 5,307 5,546 257 FICA Taxes - Matching 131,643 139,278 Labor 147,078 153,696 160,613 167,840 258 Retirement Contributions 254,496 269,257 Labor 284,335 297,130 310,501 324,474 259 Life & Health Insurance 530,919 561,712 Labor 593,168 619,861 647,754 676,903 260 Workers Comp Premiums 29,620 31,338 Labor 33,093 34,582 36,138 37,764 261 Unemployment Compensation - - Labor - - - - 262 OPEB 17,845 18,880 Labor 19,937 20,834 21,772 22,752 263 Professional Services 225,000 238,050 Labor 251,381 262,693 274,514 286,867 264 Contracted Services 450 468 ProfSvc 487 506 526 547 265 Contracted Services - Uniforms 9,080 9,443 ProfSvc 9,821 10,214 10,622 11,047 266 Contracted Services - Programming - - ProfSvc - - - - 267 Contracted Services - Janitorial / Pest 5,093 5,297 ProfSvc 5,509 5,729 5,958 6,196 268 Contracted Services - Mowing 50,000 52,000 ProfSvc 54,080 56,243 58,493 60,833 269 Contracted Services -Security 360 374 ProfSvc 389 405 421 438 270 Contracted Services - Sample / Analysis 39,614 41,199 ProfSvc 42,847 44,560 46,343 48,196 271 Travel & Per Diem 1,600 1,638 Inflation 1,681 1,723 1,766 1,808 272 Communication Services 19,212 19,673 Inflation 20,185 20,689 21,206 21,715 273 Postage and Freight 1,500 1,536 Inflation 1,576 1,615 1,656 1,695 274 Utility Sry - Elec / Wtr / Swr 875,000 901,474 Electric - W 929,273 957,288 985,790 1,014,779 275 Rental/Lease Equipment 5,375 5,504 Inflation 5,647 5,788 5,933 6,075 276 Insurance & Bonds -Premium 63,520 65,044 Inflation 66,736 68,404 70,114 71,797 277 Repair/ Maint- Bldg & Grd 60,000 62,400 Repair 64,896 67,492 70,192 72,999 278 Repair / Maint - Vehicles 71,809 74,681 Repair 77,669 80,775 84,006 87,367 279 Repair / Maint - Equipment 15,500 16,120 Repair 16,765 17,435 18,133 18,858 280 Repair / Maint - Fire Hydrant 99,100 103,064 Repair 107,187 111,474 115,933 120,570 281 Repair / Maint - Software 54,420 56,597 Repair 58,861 61,215 63,664 66,210 282 Repair / Maint - Radio Costs 8,372 8,707 Repair 9,055 9,417 9,794 10,186 283 Printing & Binding 6,600 6,758 Inflation 6,934 7,107 7,285 7,460 284 Advertising - Legal 500 512 Inflation 525 538 552 565 285 Fees / Costs - Permit Appin 16,300 16,691 Inflation 17,125 17,553 17,992 18,424 286 Fees / Costs - Cst Allo Pin 234,857 240,494 Inflation 246,746 252,915 259,238 265,460 287 Fees / Costs - Fit GPS Tracking 8,100 8,294 Inflation 8,510 8,723 8,941 9,155 288 Fees / Costs - Fit Cap Recv 131,205 134,354 Inflation 137,847 141,293 144,826 148,301 289 Fees / Costs - Fit Fclty Al 9,755 9,989 Inflation 10,249 10,505 10,768 11,026 290 Fees / Costs - Fleet / Admin 14,485 14,833 Inflation 15,218 15,599 15,989 16,372 291 Fees / Costs -New Hires 1,520 1,556 Inflation 1,597 1,637 1,678 1,718 292 Fees / Costs - T.S. 11,832 12,116 Inflation 12,431 12,742 13,060 13,374 293 Office / Operating Supplies 76,990 78,838 Inflation 80,888 82,910 84,982 87,022 294 Gas, Oil & Lubricants 131,232 135,300 Gas 139,494 143,819 148,277 152,874 295 Clothing & Uniform Apprl 1,400 1,434 Inflation 1,471 1,508 1,545 1,582 296 Tools & Small Implements 23,200 23,757 Inflation 24,374 24,984 25,608 26,223 Page 5 of 6 Table 6 Line No. Description 297 Safety Gear and Supplies 298 Chemicals & Deodorants 299 Janitorial Supplies 300 Operating Supplies - Computer Hardware / Software 301 Uncapital Equipment Tech 302 Books / Publications / Subscriptions 303 Dues & Memberships 304 Educ - Training & Tuition 305 Tuition Reimbursement 306 Miscellaneous Expenses 307 Total Water Operations WATER CONSERVATION - DEPT 07151 308 Salaries & Wages - Regular 309 Additional Personnel 310 Salaries & Wages - Overtime 311 FICA Taxes - Matching 312 Retirement Contributions 313 Life & Health Insurance 314 Workers Comp Premiums 315 Unemployment Compensation 316 OPEB 317 Contracted Services 318 Travel & Per Diem 319 Communication Services 320 Postage & Freight 321 Rental/Lease- Equipment 322 Insurance & Bonds - Premium 323 Repair / Maint - Vehicles 324 Repair / Maint - Equipment 325 Repair / Maint - Software 326 Printing & Binding 327 Fees / Costs - Cst Alloc Pin 328 Fees / Costs - Fit Fclty Al 329 Fees / Costs - Fleet / Admin 330 Fees / Costs - Fit Cap Recv 331 Office / Operating Supplies 332 Gas, Oil & Lubricants 333 Operating Supplies - Computer Hardware / Software 334 Books / Publications / Subscriptions 335 Dues & Memberships 336 Educ - Training & Tuition 337 Tuition Reimbursement 338 Miscellaneous Expenses 339 Total Water Conservation Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Operatine Expenses - Water System Adjusted Budgeted Escalation Fiscal Year Ending September 30, 2019 2020 Reference 2021 2022 2023 2024 3,600 3,686 Inflation 3,782 3,877 3,974 4,069 155,095 158,817 Inflation 162,947 167,020 171,196 175,304 4,000 4,096 Inflation 4,202 4,308 4,415 4,521 1,500 1,536 Inflation 1,576 1,615 1,656 1,695 - - Inflation - - - - 300 307 Inflation 315 323 331 339 3,310 3,389 Inflation 3,478 3,565 3,654 3,741 15,725 16,102 Inflation 16,521 16,934 17,357 17,774 - - Inflation - - - - - - Inflation - - - - $ 5,340,578 $ 5,860,411 $ 6,130,713 $ 6,371,552 $ 6,621,878 $ 6,881,183 $ 117,986 $ 124,829 Labor $ 131,820 $ 137,752 $ 143,950 $ 150,428 - - Input - - - - 600 635 Labor 670 701 732 765 9,026 9,550 Labor 10,084 10,538 11,012 11,508 15,335 16,224 Labor 17,133 17,904 18,710 19,552 25,392 26,865 Labor 28,369 29,646 30,980 32,374 100 106 Labor 112 117 122 127 - - Labor - - - - 1,083 1,146 Labor 1,210 1,264 1,321 1,381 8,000 8,320 ProfSvc 8,653 8,999 9,359 9,733 2,210 2,263 Inflation 2,322 2,380 2,439 2,498 456 467 Inflation 479 491 503 515 250 256 Inflation 263 269 276 283 688 705 Inflation 723 741 759 778 1,356 1,389 Inflation 1,425 1,460 1,497 1,533 1,000 1,040 Repair 1,082 1,125 1,170 1,217 - - Repair - - - - 8,000 8,320 Repair 8,653 8,999 9,359 9,733 3,000 3,072 Inflation 3,152 3,231 3,311 3,391 21,287 21,798 Inflation 22,365 22,924 23,497 24,061 217 222 Inflation 228 234 240 245 354 362 Inflation 372 381 391 400 903 925 Inflation 949 972 997 1,021 5,600 5,734 Inflation 5,883 6,031 6,181 6,330 578 596 Gas 614 633 653 673 700 717 Inflation 735 754 773 791 150 154 Inflation 158 162 166 170 400 410 Inflation 420 431 442 452 150 154 Inflation 158 162 166 170 1,873 1,918 Inflation 1,968 2,017 2,067 2,117 - - Inflation - - - - $ 226,694 $ 238,174 WRWSA H2O SPLY PGM FY 14 - DEPT 33711 340 Salaries & Wages - Regular $ 341 Additional Personnel 342 Salaries & Wages - Overtime 343 FICA Taxes - Matching 344 Retirement Contributions 345 Life & Health Insurance 346 Workers Comp Premiums 347 Unemployment Compensation 348 Contracted Services 349 Travel & Per Diem 350 Utility Sry - Cons Rebate 351 Postage and Freight 352 Repair / Maint - Bldg & Ord 353 Promotional Activities 354 Advertising - Other 355 Operating Supplies 356 Fees / Costs - Flt Cap Recv 357 Office / Operating Supplies 358 Gas, Oil & Lubricants 359 Operating Supplies - Computer Hardware / Software 360 Educ - Training & Tuition 361 Grants & Aid 362 Total Water Conservation $ $ 249,998 $ 260,316 $ 271,072 $ 282,244 $ Labor $ $ $ $ hiput - - Labor - - - - - - Labor - - - - - - Labor - - - - - - Labor - - - - Labor - - Labor - - - - - - ProfSvc - - - - 1,500 1,536 Inflation 1,576 1,615 1,656 1,695 31,700 32,461 Inflation 33,305 34,137 34,991 35,831 950 973 Inflation 998 1,023 1,049 1,074 - - Inflation - - - - 24,000 24,576 Inflation 25,215 25,845 26,491 27,127 26,500 27,136 Inflation 27,842 28,538 29,251 29,953 3,300 3,379 Inflation 3,467 3,554 3,643 3,730 - - Inflation - - - - - - Inflation - - - - Gas - - Inflation - - - - 750 768 Inflation 788 808 828 848 8,000 8,192 Inflation 8,405 8,615 8,830 9,042 96,700 $ 99,021 $ 101,595 $ 104,135 $ 106,739 $ 109,300 Page 6 of 6 Line No. 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 Table 6 Hernando County, Florida Water and Wastewater Rate Study Summary of Protected Operatine Expenses - Water Svstem Adjusted Budgeted Escalation Fiscal Year Ending September 30, Description 2019 2020 Reference 2021 2022 2023 2024 OTHER EXPENSES AND TRANSFERS Principal - Bond Retirement $ - $ - Inflation - Interest - Bonds - - Inflation - - - - Paying Agent / Trustee Fee - - Inflation - - - - Budget P.O. Carry Fwd - - Eliminate - - - - Budget Reserve for Contingency - - Inflation - - - - Tmsf - HCUD R&R (4121) - - Inflation - - - - Tmsf - Loan Proceeds (4142) - - Inflation - - - - Tmsf - HCUD Capital - - Inflation - - - - Trnsf-HCUD/WRWSAReimb 48,350 48,350 Constant 48,350 48,350 48,350 48,350 Total Other Operating Expenses $ 48,350 $ 48,350 $ 48,350 $ 48,350 $ 48,350 $ 48,350 RECLASSIFIED OPERATING EXPENSES FROM CAPITAL BUDGETS Water Renewal and Replacement Fund Expenses $ 869,868 $ 901,684 Calculated $ 935,084 $ 969,554 $ 1,005,329 $ 1,042,256 Wastewater Renewal and Replacement Fund Expensi - - Calculated - - - - Water Connection Fee Fund Expenses 156,457 160,212 Calculated 164,378 168,487 172,700 176,844 Wastewater Connection Fee Fund Expenses - - Calculated - - - - Water Capital Fund Expenses 26,523 27,160 Calculated 27,866 28,562 29,276 29,979 Wastewater Capital Fund Expenses - - Calculated - - - - Total Other Operating Expenses $ 1,052,848 $ 1,089,056 $ 1,127,327 $ 1,166,604 $ 1,207,305 $ 1,249,079 380 TOTAL OPERATING EXPENSES $ 12,614,062 $ 13,032,677 $ 13,648,861 $ 14,217,481 $ 14,809,843 $ 15,491,814 Page l of 5 Table 7 Hernando County, Florida Water and Wastewater Rate Study Summary of Projected Operating Expenses -Wastewater System Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 OPERATING EXPENSES ADMINISTRATION - DEPT 07091 1 Salaries & Wages - Regular $ 94,271 $ 99,739 Labor $ 105,324 $ 110,063 $ 115,016 $ 120,192 2 Additional Personnel - - Input - - - - 3 Salaries & Wages- Overtime 277 293 Labor 309 323 338 353 4 Special Pay 67 71 Labor 75 78 82 85 5 FICA Taxes - Matching 7,217 7,635 Labor 8,063 8,426 8,805 9,201 6 Retirement Contributions 22,729 24,047 Labor 25,394 26,536 27,730 28,978 7 Life & Health Insurance 21,539 22,788 Labor 24,064 25,147 26,278 27,461 8 Workers Comp Premiums 81 86 Labor 91 95 99 104 9 OPEB 1,039 1,099 Labor 1,161 1,213 1,267 1,324 10 Professional Services 9,229 9,599 ProfSvc 9,982 10,382 10,797 11,229 11 Conk Sry - Janitorial / Pest 10,662 10,918 Inflation 11,201 11,482 11,769 12,051 12 ContrSry - Mowing 1,384 1,418 Inflation 1,454 1,491 1,528 1,565 13 Contr Sry - Security 524 537 Inflation 551 565 579 593 14 Travel & Per Diem 508 520 Inflation 533 547 560 574 15 Communication Devices 166 170 Inflation 175 179 183 188 16 Postage & Freight 92 95 Inflation 97 99 102 104 17 Utility Sry - Elec / Wit / Swr 27,688 28,806 Electric - S 29,847 31,119 32,418 33,497 18 Utility Sry - Trash Removal 826 845 Inflation 867 889 911 933 19 Rental / Lease - Equipment 388 397 Inflation 407 417 428 438 20 Rental / Lease - Land - - Inflation - - - - 21 Insurance & Bonds - Premium 482,411 493,989 Inflation 506,833 519,504 532,491 545,271 22 Repair / Maint - Bldg & Grd 78,871 80,764 Inflation 82,864 84,935 87,059 89,148 23 Repair / Maint - Vehicles 251 261 Repair 271 282 294 305 24 Repair / Maint - Software 212 220 Repair 229 238 248 258 25 Repair / Maint - Radio Costs 59 61 Repair 63 66 69 71 26 Printing & Binding 314 326 Repair 339 353 367 382 27 Advertising- Legal 157 161 Inflation 165 169 173 177 28 Fees / Costs - Filing Fees 78 80 Inflation 82 84 87 89 29 Fees / Costs - Cst Alice Pin 150,144 153,748 Inflation 157,745 161,689 165,731 169,708 30 Fees / Costs - FLT GPS TRCKN 94 96 Inflation 99 101 104 106 31 Fees / Costs - Fit Cap Recv - - Inflation - - - - 32 Fees / Costs - Fit Fclty Al 70 71 Inflation 73 75 77 79 33 Fees / Costs - Fleet / Admin ill 114 Inflation 117 120 123 126 34 Fees / Costs - Bank Charges 100,391 102,072 Grth-Sewer 103,329 104,484 105,538 106,468 35 Fees / Costs - New Hires 48 49 Inflation 50 51 53 54 36 Fees / Costs - T.S. Cap Recv 520 532 Inflation 546 560 574 588 37 Office Supplies 1,098 1,124 Inflation 1,154 1,182 1,212 1,241 38 Office Supplies - Comp Hardware - - Inflation - - - - 39 Operating Supplies 941 964 Inflation 989 1,014 1,039 1,064 40 Gas. Oil & Lubricants 95 97 Inflation 100 102 105 107 41 Janitorial Supplies 941 964 Inflation 989 1,014 1,039 1,064 42 Oper Supp - Cmptr Software 156 160 Inflation 164 168 172 176 43 Oper Supp - Cmptr Hardware 246 252 Inflation 259 265 272 278 44 Books / Publications / Subscr 53 55 Inflation 56 57 59 60 45 Dues and Memberships 1,023 1,047 Inflation 1,075 1,101 1,129 1,156 46 Educ - Training & Tuition 361 369 Inflation 379 389 398 408 47 Tuition Reimbursement 941 964 Inflation 989 1,014 1,039 1,064 48 Grants & Aid 10,842 11,102 Inflation 11,390 11,675 11,967 12,254 49 Bad Debt Expense (0.20%) 35,605 37,872 Calculated 40,024 42,505 45,016 47,447 50 Contingency(2.00%) 196,544 198,188 Calculated 258,675 322,560 391,035 521,902 51 OPEB Expenses - - Labor - - - - 52 Miscellaneous Expenses - - Inflation - - - - 53 Total Administration $ 1,261,261 $ 1,294,763 $ 1,388,643 $ 1,484,807 $ 1,586,358 $ 1,749,921 FINANCE ADMIN - DEPT 07093 54 Salaries & Wages - Regular $ 108,003 $ 114,267 Labor $ 120,666 $ 126,096 $ 131,770 $ 137,700 55 Additional Personnel - - Input - - - - 56 Salaries & Wages- Overtime 376 398 Labor 421 440 459 480 57 FICA Taxes - Matching 8,262 8,741 Labor 9,231 9,646 10,080 10,534 58 Retirement Contributions 14,089 14,906 Labor 15,741 16,449 17,189 17,963 59 Life & Health Insurance 29,967 31,705 Labor 33,480 34,987 36,561 38,207 60 Workers Comp Premiums 97 102 Labor 108 113 118 123 61 OPEB 910 963 Labor 1,017 1,063 1,111 1,161 62 Professional Services 40,784 42,415 ProfSvc 44,112 45,876 47,711 49,620 63 Travel & Per Diem 424 434 Inflation 445 456 467 479 64 Comm SVCS, Devices and Accessories - - Inflation - - - - 65 Postage and Freight 157 161 Inflation 165 169 173 177 66 Insurance & Bonds - Premium 216 221 Inflation 227 232 238 244 67 Rental Lease Equipment 425 436 Inflation 447 458 470 481 68 Repair / Maint - Vehicles 314 321 Inflation 330 338 346 355 69 Repair / Maint - Equipment 63 65 Repair 68 71 73 76 70 Repair / Maint - Software 137 142 Repair 148 154 160 166 71 Printing & Binding 1,255 1,305 Repair 1,357 1,412 1,468 1,527 72 Advertising - Legal 63 64 Inflation 66 68 69 71 73 Fees / Costs - Cst Aline Pin 20,540 21,033 Inflation 21,580 22,119 22,672 23,216 74 Fees / Costs - Fit GPS Tracking 96 99 Inflation 101 104 106 109 75 Fees / Costs - Fit FCLTY Al 68 70 Inflation 72 73 75 77 76 Fees / Costs - Fleet / Admin ill 114 Inflation 117 120 123 126 77 Fees / Costs - New Hires 48 49 Inflation 50 51 53 54 78 Fees / Costs - T.S. 499 511 Inflation 524 538 551 564 Page 2 of 5 Table 7 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Ooeratin¢ Exuenses - Wastewater Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 79 Office / Operating Supplies 1,725 1,767 Inflation 1,813 1,858 1,905 1,950 80 Gas, Oil & Lubricants 72 74 Inflation 75 77 79 81 81 Operating Supplies - Computer Hardware / Software 408 420 Gas 434 447 461 475 82 Dues & Memberships 121 124 Inflation 127 130 133 137 83 Educ - Training & Tuition 290 297 Inflation 305 313 320 328 84 Tuintion Reimbursement - - Inflation - - - - 85 Miscellaneous Expenses - - Inflation - - - - 86 Total Finance Admin $ 229,519 $ 241,204 $ 253,225 $ 263,857 $ 274,944 $ 286,480 ENGINEERING - DEPT 07096 87 Salaries & Wages - Regular $ 369,054 $ 390,459 Labor $ 412,325 $ 430,879 $ 450,269 $ 470,531 88 Additional Personnel - - Input - - - - 89 Salaries & Wages - Overtime 964 1,019 Labor 1,076 1,125 1,176 1,228 90 Special Pay - Stipends 419 443 Labor 468 489 511 534 91 FICA Taxes - Matching 28,265 29,904 Labor 31,579 33,000 34,485 36,037 92 Retirement Contributions 49,298 52,157 Labor 55,078 57,556 60,146 62,853 93 Life & Health Insurance 75,964 80,369 Labor 84,870 88,689 92,680 96,851 94 Workers Comp Premiums 2,000 2,116 Labor 2,235 2,335 2,440 2,550 95 Unemployment Compensation - - Labor - - - - 96 OPEB 3,479 3,681 Labor 3,887 4,062 4,244 4,435 97 Professional Services 529,934 192,703 ProfSvc Lower 200,411 208,428 216,765 225,435 98 Contracted Services 29,518 30,699 ProfSvc 31,927 33,204 34,532 35,913 99 Travel & Per Diem 4,111 4,210 Inflation 4,319 4,427 4,538 4,646 100 Communication Services 1,226 1,255 Inflation 1,288 1,320 1,353 1,385 101 Postage and Freight 1,204 1,233 Inflation 1,265 1,297 1,329 1,361 102 Rental / Lease Equipment 828 848 Inflation 870 892 914 936 103 Insurance & Bonds - Premium 3,745 3,835 Inflation 3,935 4,033 4,134 4,233 104 Repair / Maint - Vehicles 5,559 5,781 Repair 6,013 6,253 6,503 6,763 105 Repair / Maint - Equipment 482 501 Repair 521 542 564 586 106 Repair / Maint - DP Equipment 2,196 2,284 Repair 2,375 2,470 2,569 2,672 107 Repair / Maint - Software 11,085 11,529 Repair 11,990 12,469 12,968 13,487 108 Repair / Maint - Radio Costs 585 608 Repair 633 658 684 712 109 Printing & Binding 2,891 2,960 Inflation 3,037 3,113 3,191 3,267 110 Advertising - Legal 241 247 Inflation 253 259 266 272 ill Fees / Costs - Cst Alloc Pin 43,893 44,946 Inflation 46,115 47,268 48,450 49,612 112 Fees / Costs - Fit GPS Tracking - - Inflation - - - - 113 Fees / Costs - Fit Cap Recv 1,635 1,674 Inflation 1,717 1,760 1,804 1,848 114 Fees / Costs - Fit FCLTY At 418 428 Inflation 439 450 462 473 115 Fees / Costs - Fleet / Admin 681 698 Inflation 716 734 752 770 116 Fees/ Costs- New Hires 286 293 Inflation 301 308 316 323 117 Fees / Costs - T.S. 2,700 2,765 Inflation 2,836 2,907 2,980 3,052 118 Office / Operating Supplies 2,486 2,546 Inflation 2,612 2,677 2,744 2,810 119 Gas, Oil & Lubricants 3,417 3,523 Gas 3,632 3,744 3,860 3,980 120 Uniforms 179 184 Inflation 188 193 198 203 121 Tools & Small Implements 819 839 Inflation 860 882 904 926 122 Safety Gear & Supplies 48 49 Inflation 51 52 53 54 123 Operating Supplies - Computer Hardware / Software 819 839 Inflation 860 882 904 926 124 Uncapital Equipment Tech 867 888 Inflation 911 934 957 980 125 Books/Publications/Subscriptions 241 247 Inflation 253 259 266 272 126 Dues and Memberships 715 732 Inflation 751 770 789 808 127 Educ-Training & Tuition 4,264 4,366 Inflation 4,479 4,591 4,706 4,819 128 Tuition Reimbursement - - Inflation - - - - 129 Miscellaneous Expenses - - Inflation - - - - 130 Total Engineering $ 1,186,513 $ 883,856 $ 927,076 $ 965,913 $ 1,006,407 $ 1,048,546 BILLING - DEPT 07098 131 Salaries & Wages - Regular $ 118,030 $ 124,875 Labor $ 131,868 $ 137,802 $ 144,004 $ 150,484 132 Additional Personnel - - Input - - - - 133 Salaries & Wages - Overtime 94 100 Labor 105 110 115 120 134 Special Pay - Stipends - - Labor - - - - 135 FICA Taxes - Matching 9,029 9,553 Labor 10,088 10,542 11,016 11,512 136 Retirement Contributions 18,515 19,589 Labor 20,686 21,617 22,589 23,606 137 Life & Health Insurance 27,374 28,962 Labor 30,583 31,960 33,398 34,901 138 Workers Comp Premiums 102 108 Labor 114 119 124 130 139 Unemployment Compensation - - Labor - - - - 140 OPEB 1,124 1,190 Labor 1,256 1,313 1,372 1,434 141 Contracted Services 24,157 25,123 ProfSvc 26,128 27,173 28,260 29,390 142 Contracted Services - Programming 12,196 12,684 ProfSvc 13,191 13,719 14,268 14,838 143 Contracted Services - Janitor - - ProfSvc - - - - 144 Contracted Services - Billing 141,175 146,822 ProfSvc 152,695 158,803 165,155 171,761 145 Travel & Per Diem 94 96 Inflation 99 101 104 106 146 Postage and Freight 108,234 110,832 Inflation 113,713 116,556 119,470 122,338 147 Rental / Lease Equipment 445 456 Inflation 468 479 491 503 148 Repair / Maint - Bldg & Grd - - Repair - - - - 149 Repair / Maint - Equipment 31 33 Repair 34 35 37 38 150 Repair / Maint - Software 12,051 12,533 Repair 13,034 13,556 14,098 14,662 151 Repair / Maint - Radio Costs 90 94 Repair 97 101 105 110 152 Printing & Binding 627 643 Inflation 659 676 693 709 153 Fees / Costs - Filing Fees 627 643 Inflation 659 676 693 709 154 Fees / Costs - Cst Afire Pin 25,677 26,293 Inflation 26,977 27,651 28,342 29,023 155 Fees / Costs - New Hires 48 49 Inflation 50 51 53 54 Page 3 of 5 Table 7 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Oueratin¢ Exuenses - Wastewater Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 156 Fees / Costs - Fit Cap Recv 1,033 1,058 Inflation 1,086 1,113 1,141 1,168 157 Office/Operating Supplies 1,098 1,124 Inflation 1,154 1,182 1,212 1,241 158 Operating Supplies - Computer Hardware / Software 863 883 Inflation 906 929 952 975 159 Books/Publications/Subscriptions 63 64 Inflation 66 68 69 71 160 Educ-Training & Tuition 502 514 Inflation 527 541 554 567 161 Tuition Reimburesement - - Inflation - - - - 162 Memberships and Dues - - Inflation - - - - 163 Miscellaneous Expenses - - Inflation - - - - 164 Total Billing $ 503,280 $ 524,319 $ 546,244 $ 566,872 $ 588,314 $ 610,449 METER READING - DEPT 07100 165 Salaries & Wages- Regular $ 88,851 $ 94,004 Labor $ 99,268 $ 103,735 $ 108,403 $ 113,281 166 Additional Personnel - - Input - - - - 167 Salaries & Wages - On Call 4,042 4,276 Labor 4,516 4,719 4,931 5,153 168 Salaries & Wages - Overtime 4,028 4,261 Labor 4,500 4,703 4,914 5,135 169 Special Pay -Stipends 364 385 Labor 407 425 444 464 170 FICA Taxes - Matching 6,825 7,221 Labor 7,625 7,968 8,327 8,702 171 Retirement Contributions 13,224 13,991 Labor 14,774 15,439 16,134 16,860 172 Life & Health Insurance 32,248 34,118 Labor 36,028 37,650 39,344 41,114 173 Workers Comp Premiums 1,772 1,875 Labor 1,980 2,069 2,162 2,259 174 Unemployment Compensation - - Labor - - - - 175 OPEB 984 1,041 Labor 1,099 1,148 1,200 1,254 176 Proffessional Services 23,529 24,470 ProfSvc 25,449 26,467 27,526 28,627 177 Contracted Services 63 65 ProfSvc 68 71 73 76 178 Contracted Services - Uniforms 552 574 ProfSvc 597 621 646 672 179 Travel & Per Diem 63 64 Inflation 66 68 69 71 180 Communication Services 1,747 1,789 Inflation 1,835 1,881 1,928 1,974 181 Postage and Freight 9 10 Inflation 10 10 10 11 182 Insurance & Bonds - Premium 3,403 3,485 Inflation 3,576 3,665 3,757 3,847 183 Repair / Maint - Vehicles 4,706 4,894 Repair 5,090 5,293 5,505 5,725 184 Repair / Maint - Equipment 1,981 2,060 Repair 2,142 2,228 2,317 2,410 185 Repair/Maint- Software 965 1,003 Repair 1,043 1,085 1,129 1,174 186 Repair / Maint - Radio Costs 502 522 Repair 543 565 587 611 187 Printing & Binding 63 64 Inflation 66 68 69 71 188 Fees / Costs - Filing Fees - - Inflation - - - - 189 Fees / Costs - CST Allo Pin 11,142 11,409 Inflation 11,706 11,999 12,299 12,594 190 Fees / Costs - Fit GPS Tracking 753 771 Inflation 791 811 831 851 191 Fees / Costs - Fit Cap Recv 7,045 7,214 Inflation 7,402 7,587 7,777 7,963 192 Fees / Costs - Fit Fclty Al 544 557 Inflation 572 586 601 615 193 Fees / Costs - Fleet / Admin 887 908 Inflation 932 955 979 1,002 194 Fees / Costs - New Hires 48 49 Inflation 50 51 53 54 195 Fees / Costs - T.S. Cap Recv 760 778 Inflation 798 818 839 859 196 Office / Operating Supplies 1,948 1,995 Inflation 2,047 2,098 2,150 2,202 197 Gas, Oil & Lubricants 8,433 8,694 Gas 8,964 9,242 9,528 9,824 198 Clothing & Uniform Supplies 125 129 Inflation 132 135 139 142 199 Safety Gear 63 64 Inflation 66 68 69 71 200 Janitorial Supplies 157 161 Inflation 165 169 173 177 201 Operating Supplies - Computer Hardware / Soflwara 125 129 Inflation 132 135 139 142 202 Uncapital Equipment Tech - - Inflation - - - - 203 Educ-Training & Tuition 750 768 Inflation 788 807 828 847 204 Tuition Reimbursement - - Inflation - - - - 205 Miscellaneous Expenses - - Inflation - - - - 206 Total Meter Reading $ 222,699 $ 233,799 $ 245,226 $ 255,339 $ 265,880 $ 276,835 CUSTOMER SERVICE / FINANCE - DEPT 07101 207 Salaries & Wages - Regular $ 158,844 $ 168,057 Labor $ 177,468 $ 185,454 $ 193,799 $ 202,520 208 Additional Personnel - - Input - - - - 209 Salaries & Wages - On Call - - Labor - - - - 210 Salaries & Wages - Overtime 565 597 Labor 631 659 689 720 211 Special Pay - Stipends - - Labor - - - - 212 FICATaxes- Matching 12,151 12,856 Labor 13,576 14,187 14,825 15,493 213 Retirement Contributions 23,432 24,791 Labor 26,179 27,357 28,588 29,875 214 Life & Health Insurance 52,233 55,262 Labor 58,357 60,983 63,727 66,595 215 Workers Comp Premiums 277 293 Labor 310 324 338 354 216 Unemployment Compensation - - Labor - - - - 217 OPEB 1,707 1,806 Labor 1,907 1,993 2,083 2,177 218 Contracted Services 41 43 ProfSvc 45 47 48 50 219 Contracted Services - Uniforms - - ProfSvc - - - - 220 Contracted Services -Programming 16,149 16,795 ProfSvc 17,467 18,165 18,892 19,648 221 Dispatch 6,460 6,718 ProfSvc 6,987 7,266 7,557 7,859 222 Travel & Per Diem 220 225 Inflation 231 236 242 248 223 Communication Services 784 803 Inflation 824 845 866 887 224 Postage and Freight 157 161 Inflation 165 169 173 177 225 Rental Lease Equipment 492 503 Inflation 516 529 543 556 226 Rental / Lease Buildings - - Inflation - - - - 227 Insurance & Bonds- Premium 425 436 Inflation 447 458 470 481 228 Utility Sry - Elec / Wtr / Swr - - Electric - S - - - - 229 Repair / Maint - Vehicles 188 196 Repair 204 212 220 229 230 Repair / Maint - Equipment 63 65 Repair 68 71 73 76 231 Repair / Maint - Bldg & Grd - - Repair - - - - 232 Repair / Maint - Computer Hardware - - Repair - - - - 233 Repair / Maint - Software 12,156 12,642 Repair 13,148 13,674 14,221 14,789 Page 4 of 5 Table 7 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Ooeratin¢ Exuenses - Wastewater Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 234 Repair / Maint - Radio Costs 501 521 Repair 542 563 586 609 235 Printing & Binding 722 739 Inflation 758 777 796 816 236 Fees / Costs - Cst Alin Pin 30,321 31,049 Inflation 31,856 32,652 33,469 34,272 237 Fees / Costs - Flt Fclty Al 70 71 Inflation 73 75 77 79 238 Fees / Costs - Fleet / Admin 111 114 Inflation 117 120 123 126 239 Fees / Costs - New Hires 48 49 Inflation 50 51 53 54 240 Fees / Costs - Flt Cap Recv 1,964 2,011 Inflation 2,063 2,115 2,168 2,220 241 Office / Operating Supplies 2,008 2,056 Inflation 2,109 2,162 2,216 2,269 242 Gas, Oil & Lubricants 54 56 Gas 58 59 61 63 243 Janitorial Supplies 157 161 Inflation 165 169 173 177 244 Operating Supplies - Computer Hardware / Software 502 514 Inflation 527 541 554 567 245 Books/Publications/Subscriptions 47 48 Inflation 49 51 52 53 246 Dues and Memberships 47 48 Inflation 49 51 52 53 247 Educ - Training & Tuition 1,161 1,189 Inflation 1,220 1,250 1,281 1,312 248 Tuition Reimbureement - - Inflation - - - - 249 Miscellaneous Expenses - - Inflation - - - - 250 Total Customer Service / Finance $ 324,055 $ 340,874 $ 358,165 $ 373,265 $ 389,016 $ 405,403 WASTEWATER OPERATION - DEPT 07121 251 Salaries & Wages - Regular $ 2,124,490 $ 2,247,710 Labor $ 2,373,582 $ 2,480,393 $ 2,592,011 $ 2,708,652 252 Additional Personnel - - Input - - - - 253 Salaries & Wages - On Call 43,080 45,579 Labor 48,131 50,297 52,560 54,926 254 Salaries & Wages - Overtime 48,960 51,800 Labor 54,700 57,162 59,734 62,422 255 Special Pay - Stipends 4,350 4,602 Labor 4,860 5,079 5,307 5,546 256 FICA Taxes - Matching 161,908 171,299 Labor 180,891 189,032 197,538 206,427 257 Retirement Contributions 298,235 315,533 Labor 333,202 348,197 363,865 380,239 258 Life & Health Insurance 578,680 612,243 Labor 646,529 675,623 706,026 737,797 259 Workers Comp Premiums 27,893 29,511 Labor 31,163 32,566 34,031 35,563 260 Unemployment Compensation - - Labor - - - - 261 OPEB 21,794 23,058 Labor 24,349 25,445 26,590 27,787 262 Professional Services - - ProfSvc - - - - 263 Contracted Services 600 624 ProfSvc 649 675 702 730 264 Contracted Services - Uniforms 10,000 10,400 ProfSvc 10,816 11,249 11,699 12,167 265 Contracted Services - Sludge Hauling 398,063 413,986 ProfSvc 430,545 447,767 465,677 484,305 266 Contracted Services - Janitorial / Pest 5,093 5,297 ProfSvc 5,509 5,729 5,958 6,196 267 Contracted Services - Mowing 35,000 36,400 ProfSvc 37,856 39,370 40,945 42,583 268 Contracted Services - Security 500 520 ProfSvc 541 562 585 608 269 Contracted Services - Sample / Analysis 37,595 39,099 ProfSvc 40,663 42,289 43,981 45,740 270 Travel & Per Diem 1,600 1,638 Inflation 1,681 1,723 1,766 1,808 271 Communication Services 17,422 17,840 Inflation 18,304 18,762 19,231 19,692 272 Postage and Freight 1,500 1,536 Inflation 1,576 1,615 1,656 1,695 273 Utility Sry - Elec / Wtr / Swr 930,000 967,537 Electric - S 1,002,523 1,045,234 1,088,868 1,125,101 274 Utility Sry - Trash Removal 15,859 16,240 Inflation 16,662 17,078 17,505 17,925 275 Rental / Lease Equipment 3,875 3,968 Inflation 4,071 4,173 4,277 4,380 276 Insurance & Bonds - Premium 83,504 85,508 Inflation 87,731 89,925 92,173 94,385 277 Repair / Maint - Vehicles 131,520 136,781 Repair 142,252 147,942 153,860 160,014 278 Repair / Maint - Equipment 30,000 31,200 Repair 32,448 33,746 35,096 36,500 279 Repair / Maint - Bldg & Grd 30,000 31,200 Repair 32,448 33,746 35,096 36,500 280 Repair / Maint - Fire Hydrant - - Repair - - - - 281 Repair / Maint - Software 87,730 91,239 Repair 94,889 98,684 102,632 106,737 282 Repair / Maint - Radio Costs 10,997 11,437 Repair 11,894 12,370 12,865 13,380 283 Printing and Binding 2,400 2,458 Inflation 2,521 2,585 2,649 2,713 284 Advertising - Legal 100 102 Inflation 105 108 110 113 285 Fees / Costs - Permit Appin 10,225 10,470 Inflation 10,743 11,011 11,286 11,557 286 Fees / Costs - Cst Alto Pln 260,265 266,511 Inflation 273,441 280,277 287,284 294,178 287 Fees / Costs - Flt GPS Tracking 12,900 13,210 Inflation 13,553 13,892 14,239 14,581 288 Fees / Costs - Flt Cap Recv 234,713 240,346 Inflation 246,595 252,760 259,079 265,297 289 Fees / Costs - Flt Fclty Al 12,790 13,097 Inflation 13,437 13,773 14,118 14,457 290 Fees / Costs - Fleet / Admin 20,137 20,620 Inflation 21,156 21,685 22,227 22,761 291 Fees / Costs - New Hires 2,970 3,041 Inflation 3,120 3,198 3,278 3,357 292 Fees / Costs - T.S. Cap Recv 13,231 13,549 Inflation 13,901 14,248 14,605 14,955 293 Office / Operating Supplies 108,060 110,653 Inflation 113,530 116,369 119,278 122,141 294 Gas, Oil & Lubricants 158,499 163,412 Gas 168,478 173,701 179,086 184,637 295 Clothing & Uniform Apprl 1,500 1,536 Inflation 1,576 1,615 1,656 1,695 296 Tools & Small Implements 8,500 8,704 Inflation 8,930 9,154 9,382 9,608 297 Safety Gear and Supplies 4,780 4,895 Inflation 5,022 5,148 5,276 5,403 298 Chemicals & Deodorants 276,644 283,283 Inflation 290,649 297,915 305,363 312,692 299 Janitorial Supplies 5,000 5,120 Inflation 5,253 5,384 5,519 5,652 300 Operating Supplies - Computer Hardware / Software 6,544 6,701 Inflation 6,875 7,047 7,223 7,397 301 Uncapital Equipment Tech - - Inflation - - - - 302 Books/Publications/Subscriptions 300 307 Inflation 315 323 331 339 303 Dues & Memberships 1,155 1,183 Inflation 1,213 1,244 1,275 1,306 304 Educ - Training & Tuition 15,440 15,811 Inflation 16,222 16,627 17,043 17,452 305 Tuition Reimbursement - - Inflation - - - - 306 Miscellaneous Expenses - - Inflation - - - - 307 Total Wastewater Operation $ 6,296,401 $ 6,588,794 $ 6,887,104 $ 7,164,497 $ 7,452,542 $ 7,742,093 Page 5 of 5 Table 7 Hernando County, Florida Water and Wastewater Rate Study Summary of Proiected Ooeratin¢ Exuenses - Wastewater Svstem Line Adjusted Budgeted Escalation Fiscal Year Ending September 30, No. Description 2019 2020 Reference 2021 2022 2023 2024 OTHER EXPENSES AND TRANSFERS 308 Principal - Bond Retirement $ - $ - Inflation $- 309 Interest - Bonds - - Inflation - - - - 310 Paying Agent / Trustee Fee - - Inflation - - - - 311 Budget P.O. Carry Fwd - - Eliminate - - - - 312 Budget Reserve for Contingency - - Inflation - - - - 313 Trnsf - HCUD R&R (4121) - - Inflation - - - - 314 Trnsf- Loan Proceeds (4142) - - Inflation - - - - 315 Trust- HCUD Capital - - Inflation - - - - 316 Tmsf - HCUD / WRWSA Reimb - - Inflation - - - - 317 Total Other Operating Expenses $ - $ - $ - $ RECLASSIFIED OPERATING EXPENSES FROM CAPITAL BUDGETS 318 Water Renewal and Replacement Fund Expenses $ - $ - Inflation $ - $- 319 Wastewater Renewal and Replacement Fund Expem 1,060,086 1,098,747 Inflation 1,139,344 1,181,231 1,224,703 1,269,560 320 Water Connection Fee Fund Expenses - - Inflation - - - - 321 Wastewater Connection Fee Fund Expenses 30 31 Eliminate 32 32 33 34 322 Water Capital Fund Expenses - - Inflation - - - - 323 Wastewater Capital Fund Expenses 26,523 27,160 Inflation 27,866 28,562 29,276 29,979 324 Total Capital Related Expenses $ 1,086,639 $ 1,125,937 $ 1,167,241 $ 1,209,826 $ 1,254,012 $ 1,299,573 325 TOTAL OPERATING EXPENSES $ 11,110,366 $ 11,233,546 $ 11,772,925 $ 12,284,376 $ 12,817,473 $ 13,419,301 r-I N O N O O O O O O O O O 00 O MIt M 0 0 0 0 V) 00 kn oo It M O O kn 0 0 to :t 01 M 01 M 0 0 0 0 00 M N M l� O O O O O O O O O O O O O O O O O O O O O O O O Cl .--i .--i .--i - .--i - - ,--i - .--i .--i - .--i ,--i ,--i ,--i ,--i ,--i ,--i O O O O O O O O O a1 — 00 l-- 00 l-- O O O O 01 — 01 — 00 l-- O to "t to (= W) O O — "o 01 01 ,--i 01 — O O O O O 01, zt IC O N N N � W) It M (11kf) Nlzt N It kn N M O O O O O O O O O O O O O O O O O O O O O O O O O '-' '-' '-' - - - - - '-' ••-a - - - - - ^ '-' O � '-' '-' '-' '-' `-' '-' 0 0 0 0 0 0 0 0 (= M N M N— O V) N V) (= kn O O -- O N O N O N O O O O to O N N NIt V 1 M \O MI- M'It V) O O O O O O O O O O O O O O O O O O O O O O O O O - -- - -- -- .--i .--i .--i .--i .--i — ,--i — .--i — — O — - - -- — -- -- O O O O O O O O O M o0 00 N oo N O O O O --� M •--� M oo N O N N NIt In V) It MIt V) M M M M V) -- O O -- M M N M O O O O O O O O O O O O O O O O O O O O O O O O O — .--i .--i ,--i — .--i — .--i — .--i — ,--i — .-ti — — — O '--a — — .--i .--i .--i .--i O O O O O O l-- O O M l� M M O O O N l� N l-- MI�t O O It O M �O O — 1.0 M O N O It O N cV N V) ',O H M O ',0 M'It M'It kn M N M - ,--i - ,--i .--i .--a .--i - .--i - . 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'A�..i P-i O W �N �N 'Z �N cC z z Z y_ O ,p U }+ a) `r. . z F U N 'b A 0 > ~ > Q b y w ov a�i C� aAi a�i 3 x N a� Ca a� Ca a� Ga Q N w ro 0p �"� 3 v m N v- Ca a) Ga 0 Q a o •� h 4x .� � � � h cnzg4 a:UC7vnw41z Z4.�Z a> wzwz4.Z o F. �OrxUa:UC7v�wK U c F ° O O O o �o a o00000 �O 0 N m D1 000-,-.,-.,-. - 0 .a Z - — -.,- -- w`� Page 1 of 1 Table 10 Hernando County, Florida Water and Wastewater Rate Study Projected Net Revenue Requirements - Water System Line No. Description 2019 2020 Fiscal Year Ending September 30, 2021 2022 2023 2024 Operating Expenses: 1 Administration - Dept 07091 $ 1,773,463 $ 1,820,433 $ 1,935,019 $ 2,050,966 $ 2,172,674 $ 2,367,734 2 Finance Admin - Dept 07093 502,080 527,629 553,909 577,151 601,389 626,606 3 Engineering - Dept 07096 1,276,370 950,449 996,622 1,038,036 1,081,209 1,126,105 4 Billing - Dept 07098 1,100,940 1,142,038 1,185,391 1,225,282 1,266,623 1,308,794 5 Meter Reading - Dept 07100 487,160 511,442 536,440 558,561 581,620 605,585 6 Customer Service / Finance - Dept 07101 708,879 745,673 783,497 816,528 850,984 886,832 7 Water Operations - Dept 07111 5,340,578 5,860,411 6,130,713 6,371,552 6,621,878 6,881,183 8 Water Conservation - Dept 07151 226,694 238,174 249,998 260,316 271,072 282,244 9 Wrwsa H2O Sply Pgm Fy 14 - Dept 33711 96,700 99,021 101,595 104,135 106,739 109,300 10 Other Expenses And Transfers 48,350 48,350 48,350 48,350 48,350 48,350 11 Water Renewal and Replacement Fund Expenses 869,868 901,684 935,084 969,554 1,005,329 1,042,256 12 Water Connection Fee Fund Expenses 156,457 160,212 164,378 168,487 172,700 176,844 13 Water Capital Fund Expenses 26,523 27,160 27,866 28,562 29,276 29,979 14 Total Operating Expenses $ 12,614,062 $ 13,032,677 $ 13,648,861 $ 14,217,481 $ 14,809,843 $ 15,491,814 Other Revenue Requirements: 15 Existing Debt Service - Bonds $ 2,729,331 $ 2,126,937 $ 2,126,051 $ 2,125,460 $ 2,127,970 $ 2,127,380 16 Existing Debt Service - SRF 0 0 0 0 0 0 17 Existing Debt Service - Loans 0 0 0 0 0 0 18 Proposed Debt - Bonds 0 0 0 0 0 0 19 Proposed Debt Service - SRF 0 0 0 0 0 0 20 Proposed Debt Service - Loans 0 0 0 0 0 0 21 Capital Funded From Rates 127,778 468,524 135,560 139,627 143,815 148,130 22 Transfer to R&R Fund 1,770,636 1,925,713 1,974,300 2,066,015 2,169,577 2,263,385 23 Transfer to Capital Improvement Fund 885,318 962,856 987,150 1,033,007 1,084,788 1,131,692 24 Transfer to Operating Reserves 500,000 500,000 600,000 600,000 600,000 600,000 25 Transfer to Rate Stabilization Fund 0 0 0 0 0 0 26 Total Other Revenue Requirements $ 6,013,063 $ 5,984,030 $ 5,823,061 $ 5,964,109 $ 6,126,150 $ 6,270,587 27 Gross Revenue Requirements $ 18,627,125 $ 19,016,707 $ 19,471,922 $ 20,181,590 $ 20,935,993 $ 21,762,401 Less Income and Funds from Other Sources: 28 Other Revenues $ 782,736 $ 786,886 $ 790,002 $ 792,721 $ 795,241 $ 797,563 29 Interest Income 381,379 214,250 195,270 201,275 222,311 225,993 30 Connection Fees Used to Pay Debt Service 0 0 0 0 0 0 31 Transfer from Rate Stabilization Fund 0 0 0 0 0 0 32 Transfer from Operating Reserves 0 0 0 0 0 0 33 Transfer from Renewal and Replacement Fund 835,982 866,986 899,483 933,063 967,926 1,003,955 34 Transfer from Connection Fee Fund 0 0 0 0 0 0 35 Transfer from Capital Fund 0 0 0 0 0 0 36 Net Revenue Requirements $ 16,627,027 $ 17,148,585 $ 17,587,167 $ 18,254,531 $ 18,950,515 $ 19,734,890 37 Existing and Approved Water Rate Revenue $ 17,332,580 $ 16,771,235 $ 16,816,357 $ 16,850,089 $ 16,877,769 $ 16,899,465 38 Revenue Surplus / (Deficiency) (Existing Rates) $ 705,553 $ (377,349) $ (770,810) $ (1,404,442) $ (2,072,746) $ (2,835,425) 39 As Percent of Existing Revenue 4.07% (2.25%) (4.58%) (8.33%) (12.28%) (16.78%) Water Rate Adjustments: 40 Assumed Annual Indexing 0.00% 2.40% 2.60% 2.50% 2.50% 2.40% 41 Additional Rate Adjustments 0.00% 1.60% 1.40% 1.50% 0.00% 0.10% 42 Total Projected Rate Adjustment 0.00% 4.00% 4.00% 4.00% 2.50% 2.50% 43 Effective Month October October October October October October 44 % of Current Effective Year 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 45 Current Year Rate Adjustments $0 $670,849 $672,654 $674,004 $421,944 $422,487 46 Cumulative Prior Year Rate Adjustments 0 0 672,700 1,375,000 2,107,400 2,585,400 47 Adjusted Water Rate Revenue $ 17,332,580 $ 17,442,085 $ 18,161,711 $ 18,899,093 $ 19,407,113 $ 19,907,351 48 Revenue Surplus Deficiency After Adjustments $ 705,553 $ 293,500 $ 574,544 $ 644,562 $ 456,599 $ 172,461 49 As Percent of Existing Revenue 4.07% 1.68% 3.16% 3.41% 2.35% 0.87% Table 11 Page 1 of 1 Hernando County, Florida Water and Wastewater Rate Study Projected Net Revenue Requirements - Wastewater System Line Fiscal Year Ending September 30, No. Description 2019 2020 2021 2022 2023 2024 Operating Expenses: 1 Administration - Dept 07091 $ 1,261,261 $ 1,294,763 $ 1,388,643 $ 1,484,807 $ 1,586,358 $ 1,749,921 2 Finance Admin - Dept 07093 229,519 241,204 253,225 263,857 274,944 286,480 3 Engineering - Dept 07096 1,186,513 883,856 927,076 965,913 1,006,407 1,048,546 4 Billing - Dept 07098 503,280 524,319 546,244 566,872 588,314 610,449 5 Meter Reading - Dept 07100 222,699 233,799 245,226 255,339 265,880 276,835 6 Customer Service / Finance - Dept 07101 324,055 340,874 358,165 373,265 389,016 405,403 7 Wastewater Operation - Dept 07121 6,296,401 6,588,794 6,887,104 7,164,497 7,452,542 7,742,093 8 Other Expenses And Transfers 0 0 0 0 0 0 9 Wastewater Renewal and Replacement Fund Expenses 1,060,086 1,098,747 1,139,344 1,181,231 1,224,703 1,269,560 10 Wastewater Connection Fee Fund Expenses 30 31 32 32 33 34 11 Wastewater Capital Fund Expenses 26,523 27,160 27,866 28,562 29,276 29,979 12 Total Operating Expenses $ 11,110,366 $ 11,233,546 $ 11,772,925 $ 12,284,376 $ 12,817,473 $ 13,419,301 Other Revenue Requirements: 13 Existing Debt Service - Bonds $ 428,101 $ 273,919 $ 273,805 $ 273,729 $ 274,053 $ 273,976 14 Existing Debt Service - SRF 3,777,640 3,777,640 3,777,640 3,777,640 3,777,640 3,777,640 15 Existing Debt Service - Loans 0 0 0 0 0 0 16 Proposed Debt - Bonds 0 904,988 1,206,651 1,999,983 2,264,427 4,190,735 17 Proposed Debt Service - SRF 0 0 0 0 0 0 18 Proposed Debt Service - Loans 0 0 0 0 0 0 19 Capital Funded From Rates 168,921 173,989 179,208 184,585 190,123 195,826 20 Transfer to R&R Fund 1,645,983 1,790,144 1,835,310 1,920,567 2,016,840 2,104,043 21 Transfer to Capital Improvement Fund 822,991 895,072 917,655 960,284 1,008,420 1,052,022 22 Transfer to Operating Reserves 1,000,000 1,250,000 1,250,000 1,250,000 1,500,000 500,000 23 Transfer to Rate Stabilization Fund 0 0 0 0 0 0 24 Total Other Revenue Requirements $ 7,843,635 $ 9,065,752 $ 9,440,269 $ 10,366,788 $ 11,031,502 $ 12,094,242 0 25 Gross Revenue Requirements $ 18,954,002 $ 20,299,299 $ 21,213,194 $ 22,651,164 $ 23,848,975 $ 25,513,543 Less Income and Funds from Other Sources: 26 Other Revenues $ 556,930 $ 561,772 $ 565,392 $ 568,721 $ 571,758 $ 574,438 27 Interest Income 302,521 155,050 141,330 149,925 169,689 177,807 28 Connection Fees Used to Pay Debt Service 0 0 0 0 0 0 29 Transfer from Rate Stabilization Fund 0 0 0 0 0 0 30 Transfer from Operating Reserves 0 0 0 0 0 0 31 Transfer from Renewal and Replacement Fund 1,026,200 1,064,048 1,103,743 1,144,741 1,187,300 1,231,259 32 Transfer from Connection Fee Fund 0 0 0 0 0 0 33 Transfer from Capital Fund 0 0 0 0 0 0 34 Net Revenue Requirements $ 17,068,351 T18,518,428 $ 19,402,728 $ 20,787,776 $ 21,920,228 $ 23,530,039 0 35 Existing & Approved Wastewater Rate Revenue $ 17,802,422 $ 18,034,336 $ 18,192,872 $ 18,440,315 $ 18,638,348 $ 18,746,137 36 Revenue Surplus / (Deficiency) (Existing Rates) $ 734,071 $ (484,092) $ (1,209,856) $ (2,347,462) $ (3,281,880) $ (4,783,901) 37 As Percent of Existing Revenue 4.12% (2.68%) (6.65%) (12.73%) (17.61%) (25.52%) Wastewater Rate Adjustments 38 Assumed Annual Indexing 0.00% 2.40% 2.60% 2.50% 2.50% 2.40% 39 Additional Rate Adjustments 0.00% 2.60% 2.40% 2.50% 2.50% 2.60% 40 Projected Rate Adjustment 0.00% 5.00% 5.00% 5.00% 5.00% 5.00% 41 Effective Month October October October October October October 42 % of Current Effective Year 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 43 Current Year Rate Adjustments $0 $901,717 $909,644 $922,016 $931,917 $937,307 44 Cumulative Prior Year Rate Adjustments 0 0 909,600 1,890,100 2,937,900 4,039,900 45 Adjusted Wastewater Rate Revenue $ 17,802,422 $ 18,936,053 $ 20,012,116 $ 21,252,430 $ 22,508,165 $ 23,723,344 46 Revenue Surplus Deficiency After Adjustments $ 734,071 $ 417,624 $ 609,388 $ 464,654 $ 587,937 $ 193,305 47 As Percent of Existing Revenue 4.12% 2.21% 3.05% 2.19% 2.61% 0.81% Page 1 of 2 Table 12 Hernando County, Florida Water and Wastewater Rate Study Projected Debt Service Coverage Analysis - Water and Wastewater System Line Fiscal Year Ending September 30, No. Description 2019 2020 2021 2022 2023 2024 System Revenues: 1 Water and Wastewater Rate Revenue [1], [2] $ 35,135,003 $ 36,378,138 $ 38,173,827 $ 40,151,523 $ 41,915,279 $ 43,630,696 2 Other Operating Revenue 1,339,666 1,348,658 1,355,395 1,361,442 1,367,000 1,372,001 3 Unrestricted Interest Income [3] 683,900 369,300 336,600 351,200 392,000 403,800 4 Transfer (To) / From Rate Stabilization Fund [4] - - - - - - 5 Total Gross System Revenues $ 37,158,569 $ 38,096,096 $ 39,865,822 $ 41,864,166 $ 43,674,278 $ 45,406,497 6 Operating Expenses[5]: $ 23,724,429 $ 24,266,223 $ 25,421,786 $ 26,501,856 $ 27,627,316 $ 28,911,115 7 Net Revenues $ 13,434,140 $ 13,829,873 $ 14,444,036 $ 15,362,310 $ 16,046,962 $ 16,495,382 Annual Debt Service - Senior Lien Debt: 8 Existing Debt Payments [6] $ 3,157,431 $ 2,400,856 $ 2,399,856 $ 2,399,190 $ 2,402,023 $ 2,401,356 9 Proposed Debt Payments [6] - 904,988 1,206,651 1,999,983 2,264,427 4,190,735 10 Total Senior Lien Indebtedness $ 3,157,431 $ 3,305,844 $ 3,606,507 $ 4,399,173 $ 4,666,450 $ 6,592,091 Rate Covenant Compliance Rate Covenant (A) - Net Revenues, Connection Fees and Fund Balance 11 Net Revenues $ 13,434,140 $ 13,829,873 $ 14,444,036 $ 15,362,310 $ 16,046,962 $ 16,495,382 12 Connection Fees [7] 1,947,789 1,835,499 1,361,899 1,196,020 1,113,080 1,141,646 13 Fund Balance[8] 10,105,473 13,045,097 12,506,221 11,540,153 11,499,369 11,643,904 14 Revenues available for Debt Service $ 25,487,402 $ 28,710,469 $ 28,312,156 $ 28,098,482 $ 28,659,411 $ 29,280,932 15 Net Revenues, Connection Fees, and Fund Balance Basis 807% 868% 785% 639% 614% 444% 16 Minimum Coverage Required 120% 120% 120% 120% 120% 120% Rate Covenant (B) - Net Revenues 17 Net Revenues $ 13,434,140 $ 13,829,873 $ 14,444,036 $ 15,362,310 $ 16,046,962 $ 16,495,382 18 Net Revenue Basis 425% 418% 400% 349% 344% 250% 19 Minimum Coverage Required 110% 110% 110% 110% 110% 110% Subordinated Indebtedness Debt Service Requirement [91 20 State Revolving Loan- WW627090 $ 116,106 $ 116,106 $ 116,106 $ 116,106 $ 116,106 $ 116,106 21 State Revolving Loan- WW270130 716,509 716,509 716,509 716,509 716,509 716,509 22 State Revolving Loan - W W270131 173,208 173,208 173,208 173,208 173,208 173,208 23 State Revolving Loan- WW270140 382,400 382,400 382,400 382,400 382,400 382,400 24 State Revolving Loan- WW 2014 175,560 175,560 175,560 175,560 175,560 175,560 25 State Revolving Loan- WW 2016 2,213,856 2,213,856 2,213,856 2,213,856 2,213,856 2,213,856 26 Proposed State Revolving Loan - - - - - - 27 Total Subordinate Indebtedness Requirement $ 3,777,640 $ 3,777,640 $ 3,777,640 $ 3,777,640 $ 3,777,640 $ 3,777,640 Subordinate Indebtedness Coverage1101 Determination of Pledged Revenues 28 Net Revenues $ 13,434,140 $ 13,829,873 $ 14,444,036 $ 15,362,310 $ 16,046,962 $ 16,495,382 29 Less: 110%ofBond Service Requirement (3,473,174) (3,636,429) (3,967,158) (4,839,090) (5,133,095) (7,251,301) 30 Adjusted Pledged Revenues Available for Coverage $ 9,960,966 $ 10,193,444 $ 10,476,879 $ 10,523,220 $ 10,913,867 $ 9,244,081 31 Pledged Revenue Basis 264% 270% 277% 279% 289% 245% 32 Minimum Required Coverage 115% 115% 115% 115% 115% 115% 33 Net Available after Payment of Debt Service $ 6,499,069 $ 6,746,389 $ 7,059,890 $ 7,185,497 $ 7,602,873 $ 6,125,651 Less Other Required Transfers 34 Bond Service Reserve Account [I I] - - - - - - 35 Renewal and Replacement Fund [12] $ 1,708,309 $ 1,857,928 $ 1,904,805 $ 1,993,291 $ 2,093,208 $ 2,183,714 36 Total Other Required Transfers $ 1,708,309 $ 1,857,928 $ 1,904,805 $ 1,993,291 $ 2,093,208 $ 2,183,714 37 Available for Other System Purposes [ 13] $ 4,790,760 $ 4,888,461 $ 5,155,085 $ 5,192,206 $ 5,509,665 $ 3,941,937 Footnotes on Page 2 of 2 Table 12 Hernando County, Florida Water and Wastewater Rate Study Projected Debt Service Coverage Analysis - Water and Wastewater System Page 2 of 2 [1] Amounts shown include sales revenues based upon projected customer and usage statistics shown on Table 2 for water and Table 4 for wastewater. [2] Includes additional sales revenues related to an anticipated water and wastewater rate adjustments for Fiscal Year 2020 through 2024, assumed to be effective October 1, of each respective year the additional water and wastewater adjustments assumed are as follows: Rate Adjustments Status Water Wastewater Combined 2019 Adopted 2.00% 4.50% 3.85% 2020 Projected 4.00% 5.00% 4.52% 2021 Projected 4.00% 5.00% 4.52% 2022 Projected 4.00% 5.00% 4.52% 2023 Projected 2.50% 5.00% 3.81% 2024 Projected 2.50% 5.00% 3.81% [3] Amounts shown reflect estimated interest income earned on projected balances of the various funds created by the Bond Resolution. [4] Fund established by the Bond Resolution, assumed no transfers (to) / from the Rate Stabilization Fund during the Forecast Period. [5] Amounts shown do not include depreciation or amortization expenses which are non -cash expense of the System and not considered as a component of the Cost of Operation and Maintenance in the Bond Resolution. [6] Reflects Debt Service Requirements associated with bonds issued in accordance with the provisions of the Bond Resolution and which have a senior lien on the Pledged Revenues of the System. The amounts are shown based on the monthly funding requirements of the various sinking funds as required by the Bond Resolution (essentially an accrual basis) as opposed to when the Bond Service Requirement may actually be paid. [7] Amounts reflect Connection Fees considered available for determination of compliance with the Rate Covenant as defined in the Bond Resolution. [8] Per the Bond Resolution represents unrestricted fund balances available for Debt Service Coverage. [9] Amount shown reflects existing indebtedness associated with a State Revolving Fund Loans secured by the County to fund improvements to the water and wastewater system. [10] Pursuant to the SRF Loan Agreement, Pledged revenues for SRF Loan repayment is after the recognition of payment of Senior Lien Bonds, including an allowance for coverage. For purposes of this Report, a 10% coverage allowance was assumed on the Senior Lien Bonds. [11] Debt Service Reserve Requirement is assumed to be fully funded through a cash deposit and/or secured by a Reserve Fund Insurance Policy throughout the Forecast Period; therefore no deposits are recognized as being required. [12] Amount shown reflects the annual funding requirement of the Renewal and Replacement Fund in the amount equal to 5% of the water and wastewater system's Gross Revenues for the immediately preceding Fiscal Year consistent with the provisions of the Bond Resolution. [13] Amounts shown represent sum of excess Net Revenues above required transfers; amounts shown available for other purposes of the System. Pagel of3 Table 13 Hernando County, Florida Water and Wastewater Rate Study Proiected Fund Cash Balances and Interest Income Interest Line Unrestricted Fiscal Year Ending September 30, No. Description / Restricted 2019 2020 2021 2022 2023 2024 (U)/(R) ENDING CASH BALANCE SUMMARY: 1 UTILITY OPERATING FUND - 4111 $ 13,045,097 $ 12,506,221 $ 11,540,153 $ 11,499,369 $ 11,643,904 $ 10,109,671 2 RATE STABILIZATION FUND - - - - - - 3 CUSTOMER DEPOSITS 2,971,839 2,971,839 2,971,839 2,971,839 2,971,839 2,971,839 4 RENEWAL AND REPLACEMENT FUND - 4121 5,477,385 3,217,309 1,462,070 3,264,575 3,047,748 4,817,790 5 DEBT SERVICE RESERVE ACCOUNT - - - - - - 6 CAPITAL FUND -4144 839,064 1,834,492 2,169,572 3,884,682 5,601,364 2,670,159 7 WATER CONNECTION FEES FUND - 4131 4,540,942 231,598 567,390 867,837 1,152,511 1,421,313 8 SEWER CONNECTION FEES FUND - 4131A 1,099,140 2,516,882 3,594,390 4,561,362 5,479,468 5,292,438 9 BOND PROCEEDS FUND 4141 - - - - - - 10 LOAN PROCEEDS FUND 4142 - - - - - - 11 TOTAL PROJECTED END OF YEAR BALANCES $ 27,973,466 $ 23,278,341 $ 22,305,413 $ 27,049,664 $ 29,896,835 $ 27,283,210 UTILITY OPERATING FUND - 4111 (If) 12 Beginning Balance $ 10,105,473 $ 13,045,097 $ 12,506,221 $ 11,540,153 $ 11,499,369 $ 11,643,904 13 Transfers In - Operations(Programmed) 1,500,000 1,750,000 1,850,000 1,850,000 2,100,000 1,100,000 14 Transfers In - DOT Reimbursement - - - - - - 15 Total Funds Available $ 11,605,473 $ 14,795,097 $ 14,356,221 $ 13,390,153 $ 13,599,369 $ 12,743,904 16 Transfers Out - CIP - - - - - - 17 Transfers Out- Capital Fund - 3,000,000 4,000,000 3,000,000 3,000,000 3,000,000 18 Transfers Out - Debt Service Reserve - - - - - - 19 Transfers Out - Operations - - - - - - 20 Transfer Out to R&R Fund - - - - - - 21 Total Transfers Out of Funds $ - $ 3,000,000 $ 4,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 22 Transfers In - End of Year Surplus 1,439,624 711,124 1,183,932 1,109,216 1,044,536 365,767 23 Transfers Out - End of Year Deficiency - - - - - - 24 Interest Rate 2.00 % 1.50% 1.50% 1.50% 1.50% 1.50% 25 Interest Income on Fund 217,100 186,300 171,500 164,500 165,700 160,400 26 Ending Balance $ 13,045,097 $ 12,506,221 $ 11,540,153 $ 11,499,369 $ 11,643,904 $ 10,109,671 27 Requirement - Days of Operating Expenses 120 120 120 120 120 120 28 Requirement Minimum Available Cash 7,799,812 7,977,936 8,357,847 8,712,939 9,082,953 9,505,024 29 Requirement Minimum Cash Balance Met - Yes or No Yes Yes Yes Yes Yes Yes 30 Percent Allocable to Water System 63.63 % 63.63 % 63.63 % 63.63 % 63.63 % 63.63 % 31 Amount Allocable to Water System 138,136 118,539 109,122 104,668 105,431 102,059 32 Amount Allocable to Wastewater System 78,964 67,761 62,378 59,832 60,269 58,341 RATE STABILIZATION FUND 33 Beginning Balance $ - $ - $ - $ - $ - $ - 34 Transfers In - - - - - - 35 Transfers Out 36 Interest Rate 2.00 % 1.50% 1.50% 1.50% 1.50% 1.50% 37 Interest Income on Fund - - - - - - 38 Use of Interest Income to Fund Revenue Requirements (U) - - - - - - 39 Ending Balance $ - $ - $ - $ - $ - $ - 40 Percent Allocable to Water System 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 41 Amount Allocable to Water System - - - - - - 42 Amount Allocable to Wastewater System CUSTOMER DEPOSITS 43 Beginning Balance $ 2,971,839 $ 2,971,839 $ 2,971,839 $ 2,971,839 $ 2,971,839 $ 2,971,839 44 Transfers In - - - - - - 45 Transfers Out 46 Interest Rate 2.00% 1.50% 1.50% 1.50% 1.50% 1.50% 47 Interest Income on Fund 59,400 44,600 44,600 44,600 44,600 44,600 48 Use of Interest Income to Fund Revenue Requirements (U) 59,400 44,600 44,600 44,600 44,600 44,600 49 Ending Balance $ 2,971,839 $ 2,971,839 $ 2,971,839 $ 2,971,839 $ 2,971,839 $ 2,971,839 50 Percent Allocable to Water System 68.63% 68.63% 68.63% 68.63% 68.63% 68.63% 51 Amount Allocable to Water System 40,765 30,608 30,608 30,608 30,608 30,608 52 Amount Allocable to Wastewater System 18,635 13,992 13,992 13,992 13,992 13,992 Page 2 of 3 Table 13 Hernando County, Florida Water and Wastewater Rate Study Protected Fund Cash Balances and Interest Income Interest Line Unrestricted Fiscal Year Ending September 30, No. Description / Restricted 2019 2020 2021 2022 2023 2024 nfi /!n\ 53 Beginning Balance 54 Transfers In - Operations 55 Transfers In - Operating Reserves 56 Transfers In - Capital Improvement Fund 57 Transfers In - Sale of Scrap 58 Transfers Out- CIP 59 Transfers Out - Operating Expenses 60 Transfers Out - Capital Improvement Fund 61 Interest Rate 62 Interest Income on Fund 63 Use of Interest Income to Fund Revenue Requirements (U) 64 Ending Balance 65 Percent Allocable to Water System 66 Amount Allocable to Water System 67 Amount Allocable to Wastewater System DEBT SERVICE RESERVE ACCOUNT 68 Beginning Balance 69 Transfers In - Senior Lien Bond Proceed Funded Reserve 70 Transfers In - Operating Reserves (Required Minimum Balance) 71 Transfers Out - Debt 1 72 Transfers Out - Debt 2 73 Transfers Out - Debt 3 74 Interest Rate 75 Interest Income on Fund 76 Use of Interest Income to Fund Revenue Requirements 77 Ending Balance 78 Percent Allocable to Water System 79 Amount Allocable to Water System 80 Amount Allocable to Wastewater System CAPITAL FUND - 4144 81 Beginning Balance 82 Transfers In - Operations 83 Transfers In - FDOT 84 Transfers In - Renewal and Replacement 85 Transfers In - General Reserves 86 Transfers Out- CIP 87 Transfer Out - to Renewal and Replacement Fund 88 Transfers Out - Operating Expenses 89 Transfer Out - Repay SRF Pre -Construction Loan 90 Interest Rate 91 Interest Income on Fund 92 Use of Interest Income to Fund Revenue Requirements 93 Ending Balance 94 Percent Allocable to Water System 95 Amount Allocable to Water System 96 Amount Allocable to Wastewater System WATER CONNECTION FEES FUND - 4131 97 Beginning Balance 98 Transfers In - Connection Fee Revenue 99 Transfers Out -CIP 100 Transfers Out -Payment of Debt Service 101 Interest Rate 102 Interest Income on Fund 103 Use of Interest Income to Fund Revenue Requirements 104 Ending Balance 105 Percent Allocable to Water System 106 Amount Allocable to Water System 107 Amount Allocable to Wastewater System SEWER CONNECTION FEES FUND - 4131A 108 Beginning Balance 109 Transfers In - Connection Fee Revenue 110 Transfers Out - Capital Improvements III Transfers Out -Payment of Debt Service (R) (U) (R) $ 7,059,948 $ 5,477,385 $ 3,217,309 $ 1,462,070 $ 3,264,575 $ 3,047,748 3,416,619 3,715,857 3,809,610 3,986,582 4,186,417 4,367,428 3,000 3,000 3,000 3,000 3,000 3,000 3,140,000 4,047,900 3,564,624 109,273 2,251,018 365,172 1,862,182 1,931,034 2,003,225 2,077,803 2,155,226 2,235,214 2.00% 1.50% 1.50% 1.50% 1.50% 1.50% 125,400 65,200 35,100 35,400 47,300 59,000 125,400 65,200 35,100 35,400 47,300 59,000 $ 5,477,385 $ 3,217,309 $ 1,462,070 $ 3,264,575 $ 3,047,748 $ 4,817,790 51.82% 51.82% 51.82% 51.82% 51.82% 51.82% 64,988 33,789 18,190 18,346 24,513 30,576 60,412 31,411 16,910 17,054 22,787 28,424 2.00% 1.50% 1.50% 1.50% 1.50% 1.50% 39.36% 39.36% 39.36% 39.36% 39.36% 39.36% $ 20,415,948 $ 839,064 $ 1,834,492 $ 2,169,572 $ 3,884,682 $ 5,601,364 1,708,309 1,857,928 1,904,805 1,993,291 2,093,208 2,183,714 - 3,000,000 4,000,000 3,000,000 3,000,000 3,000,000 21,285,193 3,862,500 5,569,725 3,278,181 3,376,526 8,114,919 2.00% 1.50% 1.50% 1.50% 1.50% 1.50% 212,600 20,100 30,000 45,400 71,100 62,000 212,600 20,100 30,000 45,400 71,100 62,000 $ 839,064 $ 1,834,492 $ 2,169,572 $ 3,884,682 $ 5,601,364 $ 2,670,159 51.82% 51.82% 51.82% 51.82% 51.82% 51.82% 110,178 10,417 15,547 23,528 36,847 32,131 102,422 9,683 14,453 21,872 34,253 29,869 $ 4,084,195 $ 4,540,942 $ 231,598 $ 567,390 $ 867,837 $ 1,152,511 521,347 444,657 329,892 289,747 269,674 249,602 150,000 4,789,500 - - - - 2.00% 1.50% 1.50% 1.50% 1.50% 1.50% 85,400 35,500 5,900 10,700 15,000 19,200 $ 4,540,942 $ 231,598 $ 567,390 $ 867,837 $ 1,152,511 $ 1,421,313 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 85,400 35,500 5,900 10,700 15,000 19,200 $ 4,120,997 $ 1,099,140 $ 2,516,882 $ 3,594,390 $ 4,561,362 $ 5,479,468 1,426,443 1,390,843 1,032,007 906,273 843,406 892,044 4,500,000 - - - - 1,159,274 Page 3 of 3 Table 13 Hernando County, Florida Water and Wastewater Rate Study Projected Fund Cash Balances and Interest Income Interest Line Unrestricted Fiscal Year Ending September 30, No. Description / Restricted 2019 2020 2021 2022 2023 2024 (U)/(R) 112 Interest Rate 2.00 % 1.50% 1.50% 1.50% 1.50% 1.50% 113 Interest Income on Fund 51,700 26,900 45,500 60,700 74,700 80,200 114 Use of Interest Income to Fund Revenue Requirements (R) - - - - - - 115 Ending Balance $ 1,099,140 $ 2,516,882 $ 3,594,390 $ 4,561,362 $ 5,479,468 $ 5,292,438 116 Percent Allocable to Water System 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 117 Amount Allocable to Water System - - - - - - 118 Amount Allocable to Wastewater System 51,700 26,900 45,500 60,700 74,700 80,200 BOND PROCEEDS FUND 4141 119 Beginning Balance $ - $ - $ - $ - $ - $ - 120 Transfers In -New Debt Proceeds - 18,700,000 - 16,391,000 - 28,981,900 121 Transfer Out - CIP Draw Down - 18,700,000 - 16,391,000 - 28,981,900 122 Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 123 Interest Income on Fund - - - - - - 124 Use of Interest Income to Fund Revenue Requirements (R) - - - - - - 125 Ending Balance $ - $ - $ - $ - $ - $ - 126 Percent Allocable to Water System 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 127 Amount Allocable to Water System - - - - - - 128 Amount Allocable to Wastewater System LOAN PROCEEDS FUND 4142 129 Beginning Balance 130 Transfers In - New Debt Proceeds - - - - - 131 Transfer Out - CIP Draw Down - - - - - - 132 Transfer Out - Repay SRF Preconstruction Balance - - - - - - 133 Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 134 Interest Income on Fund - - - - - - 135 Use of Interest Income to Fond Revenue Requirements (R) - - - - - - 136 Ending Balance $ - $ - $ - $ - $ - $ - 137 Percent Allocable to Water System 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 138 Amount Allocable to Water System - - - - - - 139 Amount Allocable to Wastewater System SINKING FUND ACCOUNT 140 Sinking Fund Deposit $ 6,935,071 $ 7,083,484 $ 7,384,147 $ 8,176,812 $ 8,444,090 $ 10,369,731 141 Average Balance (50% of Annual Debt Service) 3,467,535 3,541,742 3,692,073 4,088,406 4,222,045 5,184,866 142 Interest Rate 2.00% 1.50% 1.50% 1.50% 1.50% 1.50% 143 Interest Income on Fund 69,400 53,100 55,400 61,300 63,300 77,800 144 Use of Interest Income to Fund Revenue Requirements (U) 69,400 53,100 55,400 61,300 63,300 77,800 145 Percent Allocable to Water System 39.355% 39.355% 39.355% 39.355% 39.355% 39.355% 146 Amount Allocable to Water System 27,313 20,898 21,803 24,125 24,912 30,619 147 Amount Allocable to Wastewater System 42,087 32,202 33,597 37,175 38,388 47,181 INTEREST INCOME SUMMARY 148 Unrestricted Interest Income $ 683,900 $ 369,300 $ 336,600 $ 351,200 $ 392,000 $ 403,800 149 Restricted Interest Income 137,100 62,400 51,400 71,400 89,700 99,400 150 Total Interest Income $ 821,000 $ 431,700 $ 388,000 $ 422,600 $ 481,700 $ 503,200 Unrestricted Interest Income 151 Allocated To Water System $ 381,379 $ 214,250 $ 195,270 $ 201,275 $ 222,311 $ 225,993 152 Allocated To Wastewater System 302,521 155,050 141,330 149,925 169,689 177,807 153 Total $ 683,900 $ 369,300 $ 336,600 $ 351,200 $ 392,000 $ 403,800 Restricted Interest Income 154 Allocated To Water System $ 85,400 $ 35,500 $ 5,900 $ 10,700 $ 15,000 $ 19,200 155 Allocated To Wastewater System 51,700 26,900 45,500 60,700 74,700 80,200 156 Total $ 137,100 $ 62,400 $ 51,400 $ 71,400 $ 89,700 $ 99,400 Total Interest Income 157 Allocated To Water System $ 466,779 $ 249,750 $ 201,170 $ 211,975 $ 237,311 $ 245,193 158 Allocated To Wastewater System 354,221 181,950 186,830 210,625 244,389 258,007 159 Total $ 821,000 $ 431,700 $ 388,000 $ 422,600 $ 481,700 $ 503,200 Page 1 of 6 Table 14 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Water Revenue Requirements for Rate Desien Line Revenue Requirements Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity OPERATING EXPENSES ADMINISTRATION - DEPT 07091 1 Salaries & Wages - Regular $ 116,395 25% 75.00% $ 29,099 $ 87,296 2 Additional Personnel - 25% 75.00% - - 3 Salaries & Wages - Overtime 342 25% 75.00% 85 256 4 Special Pay 83 25% 75.00% 21 62 5 FICA Taxes - Matching 8,911 25% 75.00% 2,228 6,683 6 Retirement Contributions 28,063 25% 75.00% 7,016 21,047 7 Life & Health Insurance 26,593 25% 75.00% 6,648 19,945 8 Workers Comp Premiums 100 25% 75.00% 25 75 9 OPEB 1,283 25% 75.00% 321 962 10 Professional Services 11,395 25% 75.00% 2,849 8,547 11 Contr Sry - Janitorial / Pest 12,940 25% 75.00% 3,235 9,705 12 Contr Sry - Mowing 1,654 25% 75.00% 414 1,241 13 Contr Sry - Security 626 25% 75.00% 157 470 14 Travel & Per Diem 607 25% 75.00% 152 455 15 Communication Devices 199 25% 75.00% 50 149 16 Postage & Freight 110 25% 75.00% 28 83 17 Utility Sry - Elec / Wtr / Swr 33,087 25% 75.00% 8,272 24,816 18 Utility Sry - Trash Removal 993 25% 75.00% 248 744 19 Rental / Lease - Equipment 463 25% 75.00% 116 347 20 Rental / Lease - Land - 25% 75.00% - - 21 Insurance & Bonds - Premium 531,399 25% 75.00% 132,850 398,550 22 Repair / Maint - Bldg & Grd 176,674 25% 75.00% 44,168 132,505 23 Repair / Maint - Vehicles 571 25% 75.00% 143 428 24 Repair / Maint - Software 482 25% 75.00% 120 361 25 Repair / Maint - Radio Costs 133 25% 75.00% 33 100 26 Printing & Binding 714 25% 75.00°% 178 535 27 Advertising - Legal 351 25% 75.00% 88 264 28 Fees / Costs - Filing Fees 176 25% 75.00% 44 132 29 Fees / Costs - Cst Alloc Pln 336,328 25% 75.00% 84,082 252,246 30 Fees / Costs - FLT GPS TRCKN 211 25% 75.00% 53 158 31 Fees / Costs - Flt Cap Recv - 25% 75.00% - - 32 Fees / Costs - Flt Fclty Al 156 25% 75.00% 39 117 33 Fees / Costs - Fleet / Admin 249 25% 75.00% 62 187 34 Fees / Costs - Bank Charges 221,400 25% 75.00°% 55,350 166,050 35 Fees / Costs - New Hires 107 25% 75.00% 27 80 36 Fees / Costs - T.S. Cap Recv 1,164 25% 75.00°% 291 873 37 Office Supplies 2,460 25% 75.00% 615 1,845 38 Office Supplies - Comp Hardware - 25% 75.00% - - 39 Operating Supplies 2,108 25% 75.00% 527 1,581 40 Gas. Oil & Lubricants 212 25% 75.00% 53 159 41 Janitorial Supplies 2,108 25% 75.00% 527 1,581 42 Oper Supp - Cmptr Software 349 25% 75.00% 87 262 43 Oper Supp - Cmptr Hardware 552 25% 75.00% 138 414 44 Books / Publications / Subscr 119 25% 75.00% 30 90 45 Dues and Memberships 2,291 25% 75.00% 573 1,718 46 Educ - Training & Tuition 808 25% 75.00% 202 606 47 Tuition Reimbursement 2,108 25% 75.00% 527 1,581 48 Grants & Aid 24,286 25% 75.00°% 6,071 18,214 49 Bad Debt Expense (0.20%) 34,884 25% 75.00% 8,721 26,163 50 Contingency (2.00%) 234,189 25% 75.00% 58,547 175,641 51 OPEB Expenses - 25% 75.00% - - 52 Miscellaneous Expenses - 25% 75.00% - - 53 Total Administration $ 1,820,433 $ 455,108 $ 1,365,325 FINANCE ADMIN - DEPT 07093 54 Salaries & Wages - Regular $ 249,963 25% 75.00% $ 62,491 $ 187,472 55 Additional Personnel - 25% 75.00% - - 56 Salaries & Wages - Overtime 871 25% 75.00% 218 653 57 FICA Taxes - Matching 19,122 25% 75.00% 4,781 14,342 58 Retirement Contributions 32,608 25% 75.00% 8,152 24,456 59 Life & Health Insurance 69,355 25% 75.00% 17,339 52,016 60 Workers Comp Premiums 224 25% 75.00% 56 168 61 OPEB 2,107 25% 75.00% 527 1,580 62 Professional Services 92,785 25% 75.00% 23,196 69,589 63 Travel & Per Diem 949 25% 75.00% 237 712 64 Comm SVCS, Devices and Accessories - 25% 75.00% - - 65 Postage and Freight 351 25% 75.00% 88 264 66 Insurance & Bonds - Premium 483 25% 75.00% 121 363 67 Rental / Lease Equipment 953 25% 75.00% 238 715 68 Repair / Maint - Vehicles 714 25% 75.00% 178 535 69 Repair / Maint - Equipment 143 25% 75.00% 36 107 70 Repair / Maint - Software 311 25% 75.00% 78 233 71 Printing & Binding 2,811 25% 75.00°% 703 2,108 72 Advertising - Legal 141 25% 75.00% 35 105 Page 2 of 6 Table 14 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Water Revenue Reauirements for Rate Desien Line Revenue Requirements Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 73 Fees / Costs - Cst Alloc Pin 46,010 25% 75.00% 11,502 34,507 74 Fees / Costs - Fit GPS Tracking 216 25% 75.00% 54 162 75 Fees / Costs - Fit FCLTY Al 152 25% 75.00% 38 114 76 Fees / Costs - Fleet / Admin 249 25% 75.00% 62 187 77 Fees / Costs - New Hires 107 25% 75.00% 27 80 78 Fees / Costs - T.S. 1,118 25% 75.00% 280 839 79 Office / Operating Supplies 3,892 25% 75.00% 973 2,919 80 Gas, Oil & Lubricants 161 25% 75.00% 40 121 81 Operating Supplies - Computer Hardware / Software 914 25% 75.00% 228 685 82 Dues & Memberships 271 25% 75.00% 68 203 83 Educ - Training & Tuition 650 25% 75.00% 163 488 84 Tuintion Reimbursement - 25% 75.00% - - 85 Miscellaneous Expenses - 25% 75.00% - - 86 Total Finance Admin $ 527,629 $ 131,907 $ 395,722 ENGINEERING - DEPT 07096 87 Salaries & Wages - Regular $ 420,029 25% 75.00% $ 105,007 $ 315,022 88 Additional Personnel - 25% 75.00% - - 89 Salaries & Wages - Overtime 1,097 25% 75.00% 274 822 90 Special Pay - Stipends 477 25% 75.00% 119 358 91 FICA Taxes - Matching 32,169 25% 75.00% 8,042 24,127 92 Retirement Contributions 56,107 25% 75.00% 14,027 42,080 93 Life & Health Insurance 86,456 25% 75.00% 21,614 64,842 94 Workers Comp Premiums 2,277 25% 75.00% 569 1,707 95 Unemployment Compensation - 25% 75.00% - - 96 OPEB 3,959 25% 75.00% 990 2,969 97 Professional Services 207,297 25% 75.00% 51,824 155,473 98 Contracted Services 33,024 25% 75.00% 8,256 24,768 99 Travel & Per Diem 4,528 25% 75.00% 1,132 3,396 100 Communication Services 1,350 25% 75.00% 338 1,013 101 Postage and Freight 1,327 25% 75.00% 332 995 102 Rental / Lease Equipment 912 25% 75.00% 228 684 103 Insurance & Bonds - Premium 4,126 25% 75.00% 1,031 3,094 104 Repair / Maint - Vehicles 6,124 25% 75.00% 1,531 4,593 105 Repair / Maint - Equipment 531 25% 75.00% 133 398 106 Repair / Maint - DP Equipment 2,419 25% 75.00% 605 1,814 107 Repair / Maint - Software 12,211 25% 75.00% 3,053 9,158 108 Repair / Maint - Radio Costs 644 25% 75.00% 161 483 109 Printing & Binding 3,184 25% 75.00% 796 2,388 110 Advertising - Legal 265 25% 75.00% 66 199 lit Fees / Costs - Cst Alloc Pin 48,350 25% 75.00% 12,088 36,263 112 Fees / Costs - Fit GPS Tracking - 25% 75.00% - - 113 Fees / Costs - Fit Cap Recv 1,801 25% 75.00% 450 1,350 114 Fees / Costs - Fit FCLTY Al 461 25% 75.00% 115 345 115 Fees / Costs - Fleet / Admin 750 25% 75.00% 188 563 116 Fees / Costs - New Hires 315 25% 75.00% 79 236 117 Fees / Costs - T.S. 2,974 25% 75.00% 743 2,230 118 Office / Operating Supplies 2,738 25% 75.00% 685 2,054 119 Gas, Oil & Lubricants 3,789 25% 75.00% 947 2,842 120 Uniforms 197 25% 75.00% 49 148 121 Tools & Small Implements 902 25% 75.00% 226 677 122 Safety Gear & Supplies 53 25% 75.00% 13 40 123 Operating Supplies - Computer Hardware / Software 902 25% 75.00% 226 677 124 Uncapital Equipment Tech 955 25% 75.00% 239 716 125 Books/Publications/Subscriptions 265 25% 75.00% 66 199 126 Dues and Memberships 788 25% 75.00% 197 591 127 Educ-Training & Tuition 4,697 25% 75.00% 1,174 3,522 128 Tuition Reimbursement - 25% 75.00% - - 129 Miscellaneous Expenses - 25% 75.00% - - 130 Total Engineering $ 950,449 $ 237,612 $ 712,837 BILLING - DEPT 07098 131 Salaries&Wages - Regular $ 273,169 100% 0.00% $ 273,169 $ 132 Additional Personnel - 100% 0.00% - 133 Salaries & Wages - Overtime 218 100% 0.00% 218 134 Special Pay - Stipends - 100% 0.00% - 135 FICA Taxes - Matching 20,897 100% 0.00% 20,897 136 Retirement Contributions 42,851 100% 0.00% 42,851 137 Life & Health Insurance 63,354 100% 0.00% 63,354 138 Workers Comp Premiums 235 100% 0.00% 235 139 Unemployment Compensation - 100% 0.00% - 140 OPEB 2,602 100% 0.00% 2,602 141 Contracted Services 54,957 100% 0.00% 54,957 142 Contracted Services - Programming 27,746 100% 0.00% 27,746 143 Contracted Services - Janitor - 100% 0.00% - - Page 3 of 6 Table 14 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Water Revenue Reauirements for Rate Desien Line Revenue Requirements Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 144 Contracted Services - Billing 316,237 100% 0.00% 316,237 145 Travel & Per Diem 211 100% 0.00% 211 146 Postage and Freight 242,448 100% 0.00% 242,448 147 Rental / Lease Equipment 1,013 100% 0.00°% 1,013 148 Repair / Maint - Bldg & Grd - 100% 0.00% - 149 Repair / Maint - Equipment 71 100% 0.00% 71 150 Repair / Maint - Software 27,416 100% 0.00% 27,416 151 Repair / Maint - Radio Costs 205 100% 0.00°% 205 152 Printing & Binding 1,405 100% 0.00% 1,405 153 Fees / Costs - Filing Fees 1,405 100% 0.00% 1,405 154 Fees / Costs - Cst Alloc Pln 57,517 100% 0.00% 57,517 155 Fees / Costs - New Hires 107 100% 0.00% 107 156 Fees / Costs - Flt Cap Recv 2,315 100% 0.00% 2,315 157 Office / Operating Supplies 2,460 100°% 0.00% 2,460 158 Operating Supplies - Computer Hardware / Software 1,933 100% 0.00% 1,933 159 Books / Publications / Subscriptions 141 100°% 0.00°% 141 160 Educ-Tmining&Tuition 1,124 100% 0.00% 1,124 161 Tuition Reimburesement - 100% 0.00% - 162 Memberships and Dues 100% 0.00% 163 Miscellaneous Expenses - 100% 0.00% - 164 Total Billing $ 1,142,038 $ 1,142,038 $ METER READING - DEPT 07100 165 Salaries & Wages - Regular $ 205,636 100% 0.00% $ 205,636 $ 166 Additional Personnel - 100% 0.00% - 167 Salaries & Wages - On Call 9,355 100% 0.00% 9,355 168 Salaries & Wages - Overtime 9,322 100% 0.00°% 9,322 169 Special Pay - Stipends 842 100% 0.00% 842 170 FICA Taxes - Matching 15,796 100% 0.00% 15,796 171 Retirement Contributions 30,605 100% 0.00% 30,605 172 Life & Health Insurance 74,634 100% 0.00% 74,634 173 Workers Comp Premiums 4,101 100% 0.00% 4,101 174 Unemployment Compensation - 100% 0.00°% - 175 OPEB 2,276 100% 0.00% 2,276 176 Proffessional Services 53,530 100% 0.00°% 53,530 177 Contracted Services 143 100% 0.00% 143 178 Contracted Services - Uniforms 1,256 100% 0.00°% 1,256 179 Communication Services 3,913 100% 0.00% 3,913 180 Insurance & Bonds - Premium 7,623 100% 0.00% 7,623 181 Travel & Per Diem 141 100% 0.00% 141 182 Postage and Freight 21 100% 0.00% 21 183 Repair / Maint - Vehicles 10,706 100% 0.00% 10,706 184 Repair / Maint - Equipment 4,506 100°% 0.00% 4,506 185 Repair / Maint - Software 2,195 100% 0.00% 2,195 186 Repair / Maint - Radio Costs 1,142 100% 0.00% 1,142 187 Printing & Binding 141 100% 0.00% 141 188 Fees / Costs - Filing Fees - 100°% 0.00°% - 189 Fees / Costs - CST Allo Pln 24,958 100% 0.00% 24,958 190 Fees / Costs - Flt GPS Tracking 1,687 100% 0.00% 1,687 191 Fees / Costs - Flt Fclty Al 1,219 100% 0.00% 1,219 192 Fees / Costs - Fleet / Admin 1,987 100% 0.00°% 1,987 193 Fees / Costs - New Hires 107 100% 0.00% 107 194 Fees / Costs - T.S. Cap Recv 1,702 100% 0.00% 1,702 195 Fees / Costs - Flt Cap Recv 15,782 100% 0.00% 15,782 196 Office / Operating Supplies 4,364 100% 0.00% 4,364 197 Gas, Oil & Lubricants 19,019 100% 0.00% 19,019 198 Clothing & Uniform Supplies 281 100°% 0.00% 281 199 Safety Gear 141 100% 0.00% 141 200 Janitorial Supplies 351 100°% 0.00% 351 201 Operating Supplies - Computer Hardware / Software 281 100% 0.00% 281 202 Uncapital Equipment Tech - 100°% 0.00°% - 203 Educ-Training & Tuition 1,680 100% 0.00% 1,680 204 Tuition Reimbursement - 100°% 0.00% - 205 Miscellaneous Expenses - 100% 0.00% - - 206 Total Meter Reading $ 511,442 $ 511,442 $ - CUSTOMER SERVICE / FINANCE - DEPT 07101 207 Salaries & Wages - Regular $ 367,629 25% 75.00°% $ 91,907 $ 275,722 208 Additional Personnel - 25% 75.00% - - 209 Salaries & Wages - On Call - 25% 75.00% - - 210 Salaries & Wages - Overtime 1,307 25% 75.00% 327 980 211 Special Pay - Stipends - 25% 75.00% - - 212 FICA Taxes - Matching 28,123 25% 75.00% 7,031 21,092 213 Retirement Contributions 54,231 25% 75.00°% 13,558 40,673 214 Life & Health Insurance 120,888 25% 75.00% 30,222 90,666 Page 4 of 6 Table 14 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Water Revenue Reauirements for Rate Desien Line No. Description Revenue Requirements 2020 Factors Base Facility Quantity Allocated Revenue Requirements Base Facility Quantity 215 Workers Comp Premiums 642 25% 75.00% 160 481 216 Unemployment Compensation - 25% 75.00% - - 217 OPEB 3,951 25% 75.00% 988 2,964 218 Contracted Services 94 25% 75.00% 24 71 219 Contracted Services - Uniforms - 25% 75.00% - - 220 Contracted Services - Programming 36,739 25% 75.00% 9,185 27,554 221 Dispatch 14,696 25% 75.00% 3,674 11,022 222 Travel & Per Diem 492 25% 75.00% 123 369 223 Communication Services 1,757 25% 75.00% 439 1,318 224 Postage and Freight 351 25% 75.00% 88 264 225 Rental / Lease Equipment 1,101 25% 75.00% 275 826 226 Rental / Lease Buildings - 25% 75.00% - - 227 Insurance & Bonds - Premium 953 25% 75.00% 238 715 228 Utility Sry - Elec / Wtr / Swr - 25% 75.00% - - 229 Repair / Maint - Vehicles 428 25% 75.00% 107 321 230 Repair / Maint - Equipment 143 25% 75.00% 36 107 231 Repair / Maint - Bldg & Grd - 25% 75.00% - - 232 Repair / Maint - Computer Hardware 25% 75.00% 233 Repair / Maint - Computer Hardware - 25% 75.00% - - 234 Repair / Maint - Software 27,655 25% 75.00% 6,914 20,741 235 Repair / Maint - Radio Costs 1,139 25% 75.00% 285 854 236 Printing & Binding 1,616 25% 75.00% 404 1,212 237 Fees / Costs - Cst Alto Pin 67,920 25% 75.00% 16,980 50,940 238 Fees / Costs - Fit Fclty Al 156 25% 75.00% 39 117 239 Fees / Costs - Fleet / Admin 249 25% 75.00% 62 187 240 Fees / Costs - New Hires 107 25% 75.00% 27 80 241 Fees / Costs - Flt Cap Recv 4,399 25% 75.00% 1,100 3,299 242 Office / Operating Supplies 4,498 25% 75.00% 1,124 3,373 243 Gas, Oil & Lubricants 122 25% 75.00% 31 92 244 Janitorial Supplies 351 25% 75.00% 88 264 245 Operating Supplies - Computer Hardware / Software 1,124 25% 75.00% 281 843 246 Books / Publications / Subscriptions 105 25% 75.00% 26 79 247 Dues and Memberships 105 25% 75.00% 26 79 248 Educ - Training & Tuition 2,600 25% 75.00% 650 1,950 249 Tuition Rehnburesment - 25% 75.00% - - 250 Miscellaneous Expenses - 25% 75.00% - - 251 Total Customer Service / Finance $ 745,673 $ 186,418 $ 559,255 WATER OPERATIONS - DEPT 071 It 252 Salaries & Wages - Regular $ 1,917,928 25% 75.00% $ 479,482 $ 1,438,446 253 Additional Personnel 272,938 25% 75.00% 68,234 204,703 254 Salaries & Wages - On Call 45,579 25% 75.00% 11,395 34,184 255 Salaries & Wages - Overtime 62,769 25% 75.00% 15,692 47,077 256 Special Pay - Stipends 4,602 25% 75.00% 1,151 3,452 257 FICA Taxes - Matching 139,278 25% 75.00% 34,820 104,459 258 Retirement Contributions 269,257 25% 75.00% 67,314 201,943 259 Life & Health Insurance 561,712 25% 75.00% 140,428 421,284 260 Workers Comp Premiums 31,338 25% 75.00% 7,834 23,503 261 Unemployment Compensation - 25% 75.00% - - 262 OPEB 18,880 25% 75.00% 4,720 14,160 263 Professional Services 238,050 25% 75.00% 59,513 178,538 264 Contracted Services 468 25% 75.00% 117 351 265 Contracted Services - Uniforms 9,443 25% 75.00% 2,361 7,082 266 Contracted Services - Programming - 25% 75.00% - - 267 Contracted Services - Janitorial / Pest 5,297 25% 75.00% 1,324 3,973 268 Contracted Services - Mowing 52,000 25% 75.00% 13,000 39,000 269 Contracted Services - Security 374 25% 75.00% 94 281 270 Contracted Services - Sample / Analysis 41,199 25% 75.00% 10,300 30,899 271 Travel & Per Diem 1,638 25% 75.00% 410 1,229 272 Communication Services 19,673 25% 75.00% 4,918 14,755 273 Postage and Freight 1,536 25% 75.00% 384 1,152 274 Utility Sry - Elec / Wtr / Swr 901,474 0% 100.00% - 901,474 275 Rental / Lease Equipment 5,504 25% 75.00% 1,376 4,128 276 Insurance & Bonds - Premium 65,044 25% 75.00% 16,261 48,783 277 Repair / Maint - Bldg & Grd 62,400 25% 75.00% 15,600 46,800 278 Repair / Maint - Vehicles 74,681 25% 75.00% 18,670 56,011 279 Repair / Maint - Equipment 16,120 25% 75.00% 4,030 12,090 280 Repair / Maint - Fire Hydrant 103,064 25% 75.00% 25,766 77,298 281 Repair / Maint - Software 56,597 25% 75.00% 14,149 42,448 282 Repair / Maint - Radio Costs 8,707 25% 75.00% 2,177 6,530 283 Printing & Binding 6,758 25% 75.00% 1,690 5,069 284 Advertising - Legal 512 25% 75.00% 128 384 285 Fees / Costs - Permit Appin 16,691 25% 75.00% 4,173 12,518 286 Fees / Costs - Cst Alto Pln 240,494 25% 75.00% 60,123 180,370 287 Fees / Costs - Fit GPS Tracking 8,294 25% 75.00% 2,074 6,221 288 Fees / Costs - Fit Cap Recv 134,354 25% 75.00% 33,588 100,765 Page 5 of 6 Table 14 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Water Revenue Reauirements for Rate Desien Line Revenue Requirements Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 289 Fees / Costs - Flt Fclty Al 9,989 25% 75.00% 2,497 7,492 290 Fees / Costs - Fleet / Admin 14,833 25% 75.00% 3,708 11,124 291 Fees / Costs - New Hires 1,556 25% 75.00% 389 1,167 292 Fees / Costs - T.S. 12,116 25% 75.00% 3,029 9,087 293 Office / Operating Supplies 78,838 25% 75.00% 19,709 59,128 294 Gas, Oil & Lubricants 135,300 25% 75.00% 33,825 101,475 295 Clothing & Uniform Apprl 1,434 25% 75.00% 358 1,075 296 Tools & Small Implements 23,757 25% 75.00% 5,939 17,818 297 Safety Gear and Supplies 3,686 25% 75.00% 922 2,765 298 Chemicals & Deodorants 158,817 0% 100.00% - 158,817 299 Janitorial Supplies 4,096 25% 75.00% 1,024 3,072 300 Operating Supplies - Computer Hardware / Software 1,536 25% 75.00% 384 1,152 301 Uncapital Equipment Tech - 25% 75.00% - - 302 Books / Publications / Subscriptions 307 25% 75.00% 77 230 303 Dues & Memberships 3,389 25% 75.00% 847 2,542 304 Educ - Training & Tuition 16,102 25% 75.00% 4,026 12,077 305 Tuition Reimbursement - 25% 75.00% - - 306 Miscellaneous Expenses - 25% 75.00% - - 307 Total Water Operations $ 5,860,411 $ 1,200,030 $ 4,660,381 WATER CONSERVATION - DEPT 07151 308 Salaries & Wages - Regular $ 124,829 0% 100.00% $ $ 124,829 309 Additional Personnel - 0% 100.00% - 310 Salaries & Wages - Overtime 635 0% 100.00% 635 311 FICA Taxes - Matching 9,550 0% 100.00% 9,550 312 Retirement Contributions 16,224 0% 100.00% 16,224 313 Life & Health Insurance 26,865 0% 100.00% 26,865 314 Workers Comp Premiums 106 0% 100.00% 106 315 Unemployment Compensation - 0% 100.00% - 316 OPEB 1,146 0% 100.00% 1,146 317 Contracted Services 8,320 0°% 100.00% 8,320 318 Travel & Per Diem 2,263 0% 100.00% 2,263 319 Communication Services 467 0°% 100.00°% 467 320 Postage & Freight 256 0% 100.00% 256 321 Rental / Lease - Equipment 705 0% 100.00% 705 322 Insurance & Bonds - Premium 1,389 0% 100.00% 1,389 323 Repair / Maint - Vehicles 1,040 0% 100.00°% 1,040 324 Repair / Maint - Equipment - 0% 100.00% - 325 Repair / Maint - Software 8,320 0°% 100.00°% 8,320 326 Printing & Binding 3,072 0% 100.00% 3,072 327 Fees / Costs - Cst Alloc Pin 21,798 0°% 100.00% 21,798 328 Fees / Costs - Flt Fclty Al 222 0% 100.00% 222 329 Fees / Costs - Fleet / Admin 362 0% 100.00% 362 330 Fees / Costs - Flt Cap Recv 925 0% 100.00% 925 331 Office / Operating Supplies 5,734 0% 100.00% 5,734 332 Gas, Oil & Lubricants 596 0% 100.00% 596 333 Operating Supplies - Computer Hardware / Software 717 0°% 100.00°% 717 334 Books / Publications / Subscriptions 154 0% 100.00% 154 335 Dues & Memberships 410 0% 100.00% 410 336 Educ - Training & Tuition 154 0% 100.00% 154 337 Tuition Reimbursement 1,918 0% 100.00°% 1,918 338 Miscellaneous Expenses - 0% 100.00% - - 339 Total Water Conservation $ 238,174 $ $ 238,174 WRWSA H2O SPLY PGM FY 14 - DEPT 33711 340 Salaries & Wages - Regular $ - 0% 100.00% $ $ - 341 Additional Personnel 0% 100.00% 342 Salaries & Wages - Overtime 0% 100.00% 343 FICA Taxes - Matching 0% 100.00% 344 Retirement Contributions 0% 100.00°% 345 Life & Health Insurance 0% 100.00% 346 Workers Comp Premiums 0% 100.00% 347 Unemployment Compensation 0% 100.00% 348 Contracted Services - 0°% 100.00°% - 349 Travel & Per Diem 1,536 0% 100.00% 1,536 350 Utility Sry - Cons Rebate 32,461 0% 100.00% 32,461 351 Postage and Freight 973 0% 100.00% 973 352 Repair / Maint - Bldg & Grd - 0% 100.00% - 353 Promotional Activities 24,576 0% 100.00% 24,576 354 Advertising - Other 27,136 0% 100.00% 27,136 355 Operating Supplies 3,379 0% 100.00% 3,379 356 Fees / Costs - Flt Cap Recv - 0% 100.00% - 357 Office / Operating Supplies 0% 100.00% Page 6 of 6 Table 14 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Water Revenue Reauirements for Rate Desien Line Revenue Requirements Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 358 Gas, Oil & Lubricants 0% 100.00% 359 Operating Supplies - Computer Hardware / Software - 0% 100.00% - 360 Educ - Training & Tuition 768 0% 100.00% 768 361 Grants & Aid 8,192 0% 100.00% 8,192 362 Total Water Conservation $ 99,021 $ $ 99,021 OTHER EXPENSES AND TRANSFERS 363 Principal - Bond Retirement $ - 100% 0.00% $ $ - 364 Interest - Bonds 100% 0.00% 365 Paying Agent / Trustee Fee 100% 0.00% 366 Budget P.O. Carry Fwd 100% 0.00% 367 Budget Reserve for Contingency 100% 0.00% 368 Tmsf - HCUD R&R (4121) 100% 0.00% 369 Tmsf - Loan Proceeds (4142) 100% 0.00% 370 Tmsf - HCUD Capital - 100% 0.00% 371 Tmsf - HCUD / WRWSA Reimb 48,350 100% 0.00% 48,350 372 Total Other Operating Expenses $ 48,350 $ 48,350 $ - RECLASSIFIED OPERATING EXPENSES FROM CAPITAL BUDGETS 373 Water Renewal and Replacement Fund Expenses $ 901,684 25% 75.00% $ 225,421 $ 676,263 374 Wastewater Renewal and Replacement Fund Expense - 25% 75.00% - - 375 Water Connection Fee Fund Expenses 160,212 25% 75.00% 40,053 120,159 376 Wastewater Connection Fee Fund Expenses - 25% 75.00% - - 377 Water Capital Fund Expenses 27,160 25% 75.00% 6,790 20,370 378 Wastewater Capital Fund Expenses - 25% 75.00% - - 379 Total Other Operating Expenses $ 1,089,056 $ 272,264 $ 816,792 380 TOTAL OPERATING EXPENSES $ 13,032,677 $ 4,185,170 $ 8,847,507 Page 1 of 5 Line No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Table 15 Hernando County, Florida Water and Wastewater Rate Study Summary Description of Allocated Wastewater Revenue Requirements for Rate Design Revenue Requirement Factors 2020 Base Facility Quantity Allocated Revenue Requirements Base Facility Quantity OPERATING EXPENSES ADMINISTRATION - DEPT 07091 Salaries & Wages - Regular $ 99,739 25% 75.00% $ 24,935 $ 74,804 Additional Personnel - 25% 75.00% - - Salaries & Wages - Overtime 293 25% 75.00% 73 220 Special Pay 71 25% 75.00% 18 53 FICA Taxes - Matching 7,635 25% 75.00% 1,909 5,727 Retirement Contributions 24,047 25% 75.00% 6,012 18,035 Life & Health Insurance 22,788 25% 75.00% 5,697 17,091 Workers Comp Premiums 86 25% 75.00% 21 64 OPEB 1,099 25% 75.00% 275 824 Professional Services 9,599 25% 75.00% 2,400 7,199 Contr Sry - Janitorial / Pest 10,918 25% 75.00% 2,729 8,188 Contr Sry - Mowing 1,418 25% 75.00% 354 1,063 Contr Sry - Security 537 25% 75.00% 134 403 Travel & Per Diem 520 25% 75.00% 130 390 Communication Devices 170 25% 75.00% 43 128 Postage & Freight 95 25% 75.00% 24 71 Utility Sry - Elec / Wtr / Swr 28,806 25% 75.00% 7,201 21,604 Utility Sry - Trash Removal 845 25% 75.00% 211 634 Rental / Lease - Equipment 397 25% 75.00% 99 298 Rental / Lease - Land - 25% 75.00% - - Insurance & Bonds - Premium 493,989 25% 75.00% 123,497 370,492 Repair / Maint - Bldg & Grd 80,764 25% 75.00% 20,191 60,573 Repair / Maint - Vehicles 261 25% 75.00% 65 196 Repair / Maint - Software 220 25% 75.00% 55 165 Repair / Maint - Radio Costs 61 25% 75.00% 15 46 Printing & Binding 326 25% 75.00% 82 245 Advertising - Legal 161 25% 75.00% 40 120 Fees / Costs - Filing Fees 80 25% 75.00% 20 60 Fees / Costs - Cst Alloc Pin 153,748 25% 75.00% 38,437 115,311 Fees / Costs - FLT GPS TRCKN 96 25% 75.00% 24 72 Fees / Costs - Fit Cap Recv - 25% 75.00% - - Fees / Costs - Fit Fclty Al 71 25% 75.00% 18 53 Fees / Costs - Fleet / Admin 114 25% 75.00% 28 85 Fees / Costs - Bank Charges 102,072 25% 75.00% 25,518 76,554 Fees / Costs - New Hires 49 25% 75.00% 12 37 Fees / Costs - T.S. Cap Recv 532 25% 75.00% 133 399 Office Supplies 1,124 25% 75.00% 281 843 Office Supplies - Comp Hardware - 25% 75.00% - - Operating Supplies 964 25% 75.00% 241 723 Gas. Oil & Lubricants 97 25% 75.00% 24 73 Janitorial Supplies 964 25% 75.00% 241 723 Oper Supp - Cmptr Software 160 25% 75.00% 40 120 Oper Supp - Cmptr Hardware 252 25% 75.00% 63 189 Books / Publications / Subset 55 25% 75.00% 14 41 Dues and Memberships 1,047 25% 75.00% 262 785 Educ - Training & Tuition 369 25% 75.00% 92 277 Tuition Reimbursement 964 25% 75.00% 241 723 Grants & Aid 11,102 25% 75.00% 2,775 8,326 Bad Debt Expense (0.20%) 37,872 25% 75.00% 9,468 28,404 Contingency(2.00%) 198,188 25% 75.00% 49,547 148,641 OPEB Expenses - 25% 75.00% - - Miscellaneous Expenses 25% 75.00% 53 Total Administration $ 1,294,763 $ 323,691 $ 971,072 FINANCE ADMIN - DEPT 07093 54 Salaries & Wages - Regular $ 114,267 25% 75.00% $ 28,567 $ 85,700 55 Additional Personnel - 25% 75.00% - - 56 Salaries & Wages - Overtime 398 25% 75.00% 100 299 57 FICA Taxes- Matching 8,741 25% 75.00% 2,185 6,556 58 Retirement Contributions 14,906 25% 75.00% 3,727 11,180 59 Life & Health Insurance 31,705 25% 75.00% 7,926 23,779 60 Workers Comp Premiums 102 25% 75.00% 26 77 61 OPEB 963 25% 75.00% 241 722 62 Professional Services 42,415 25% 75.00% 10,604 31,811 63 Travel & Per Diem 434 25% 75.00% 108 325 64 Comm SVCS, Devices and Accessories - 25% 75.00% - - 65 Postage and Freight 161 25% 75.00% 40 120 66 Insurance & Bonds - Premium 221 25% 75.00% 55 166 67 Rental / Lease Equipment 436 25% 75.00% 109 327 68 Repair / Maint - Vehicles 321 25% 75.00% 80 241 69 Repair / Maint - Equipment 65 25% 75.00% 16 49 70 Repair / Maint - Software 142 25% 75.00% 36 107 71 Printing & Binding 1,305 25% 75.00% 326 979 72 Advertising - Legal 64 25% 75.00% 16 48 Page 2 of 5 Table 15 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Wastewater Revenue Requirements for Rate Design Line Revenue Requirement Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 73 Fees / Costs - Cst Alloc Pln 21,033 25% 75.00% 5,258 15,775 74 Fees / Costs - Fit GPS Tracking 99 25% 75.00% 25 74 75 Fees / Costs - Fit FCLTY Al 70 25% 75.00% 17 52 76 Fees / Costs - Fleet / Admin 114 25% 75.00% 28 85 77 Fees / Costs - New Hires 49 25% 75.00% 12 37 78 Fees / Costs - T.S. 511 25% 75.00% 128 383 79 Office / Operating Supplies 1,767 25% 75.00% 442 1,325 80 Gas, Oil & Lubricants 74 25% 75.00% 18 55 81 Operating Supplies - Computer Hardware / Software 420 25% 75.00% 105 315 82 Dues & Memberships 124 25% 75.00% 31 93 83 Educ - Training & Tuition 297 25% 75.00% 74 223 84 Tuintion Reimbursement - 25% 75.00% - - 85 Miscellaneous Expenses - 25% 75.00% - - 86 Total Finance Admin $ 241,204 $ 60,301 $ 180,903 ENGINEERING - DEPT 07096 87 Salaries & Wages - Regular $ 390,459 25% 75.00% $ 97,615 $ 292,844 88 Additional Personnel - 25% 75.00% - - 89 Salaries & Wages - Overtime 1,019 25% 75.00% 255 765 90 Special Pay - Stipends 443 25% 75.00% 111 333 91 FICA Taxes - Matching 29,904 25% 75.00% 7,476 22,428 92 Retirement Contributions 52,157 25% 75.00% 13,039 39,118 93 Life & Health Insurance 80,369 25% 75.00% 20,092 60,277 94 Workers Comp Premiums 2,116 25% 75.00% 529 1,587 95 Unemployment Compensation - 25% 75.00% - - 96 OPEB 3,681 25% 75.00% 920 2,760 97 Professional Services 192,703 25% 75.00% 48,176 144,527 98 Contracted Services 30,699 25% 75.00% 7,675 23,024 99 Travel & Per Diem 4,210 25% 75.00% 1,052 3,157 100 Communication Services 1,255 25% 75.00% 314 941 101 Postage and Freight 1,233 25% 75.00% 308 925 102 Rental / Lease Equipment 848 25% 75.00% 212 636 103 Insurance & Bonds - Premium 3,835 25% 75.00% 959 2,876 104 Repair / Maint - Vehicles 5,781 25% 75.00% 1,445 4,336 105 Repair / Maint - Equipment 501 25% 75.00% 125 376 106 Repair / Maint - DP Equipment 2,284 25% 75.00% 571 1,713 107 Repair / Maint - Software 11,529 25% 75.00% 2,882 8,646 108 Repair / Maint - Radio Costs 608 25% 75.00% 152 456 109 Printing & Binding 2,960 25% 75.00% 740 2,220 110 Advertising - Legal 247 25% 75.00% 62 185 III Fees / Costs - Cst Alloc Pin 44,946 25% 75.00% 11,237 33,710 112 Fees / Costs - Fit GPS Tracking - 25% 75.00% - - 113 Fees / Costs - Fit Cap Recv 1,674 25% 75.00% 418 1,255 114 Fees / Costs - Fit FCLTY Al 428 25% 75.00% 107 321 115 Fees / Costs - Fleet / Admin 698 25% 75.00% 174 523 116 Fees / Costs - New Hires 293 25% 75.00% 73 220 117 Fees / Costs - T.S. 2,765 25% 75.00% 691 2,073 118 Office / Operating Supplies 2,546 25% 75.00% 636 1,909 119 Gas, Oil & Lubricants 3,523 25% 75.00% 881 2,642 120 Uniforms 184 25% 75.00% 46 138 121 Tools & Small Implements 839 25% 75.00% 210 629 122 Safety Gear & Supplies 49 25% 75.00% 12 37 123 Operating Supplies - Computer Hardware / Software 839 25% 75.00% 210 629 124 Uncapital Equipment Tech 888 25% 75.00% 222 666 125 Books / Publications / Subscriptions 247 25% 75.00% 62 185 126 Dues and Memberships 732 25% 75.00% 183 549 127 Educ-Training & Tuition 4,366 25% 75.00% 1,091 3,274 128 Tuition Reimbursement - 25% 75.00% - - 129 Miscellaneous Expenses - 25% 75.00% - - 130 Total Engineering $ 883,856 $ 220,964 $ 662,892 BILLING - DEPT 07098 131 Salaries & Wages - Regular $ 124,875 100% 0.00% $ 124,875 $ - 132 Additional Personnel - 100% 0.00% - 133 Salaries & Wages - Overtime 100 100% 0.00% 100 134 Special Pay - Stipends - 100% 0.00% - 135 FICA Taxes - Matching 9,553 100% 0.00% 9,553 136 Retirement Contributions 19,589 100% 0.00% 19,589 137 Life & Health Insurance 28,962 100% 0.00% 28,962 138 Workers Comp Premiums 108 100% 0.00% 108 139 Unemployment Compensation - 100% 0.00% - 140 OPEB 1,190 100% 0.00% 1,190 141 Contracted Services 25,123 100% 0.00% 25,123 142 Contracted Services - Programming 12,684 100% 0.00% 12,684 143 Contracted Services - Janitor - 100% 0.00% - - Page 3 of 5 Table 15 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Wastewater Revenue Requirements for Rate Design Line Revenue Requirement Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 144 Contracted Services - Billing 146,822 100% 0.00% 146,822 145 Travel & Per Diem 96 100% 0.00% 96 146 Postage and Freight 110,832 100% 0.00% 110,832 147 Rental / Lease Equipment 456 100% 0.00% 456 148 Repair / Maint - Bldg & Grd - 100% 0.00% - 149 Repair / Maint - Equipment 33 100% 0.00% 33 150 Repair / Maint - Software 12,533 100% 0.00% 12,533 151 Repair / Maint - Radio Costs 94 100% 0.00% 94 152 Printing & Binding 643 100% 0.00% 643 153 Fees / Costs - Filing Fees 643 100% 0.00% 643 154 Fees / Costs - Cst Alloc Pin 26,293 100% 0.00% 26,293 155 Fees / Costs - New Hires 49 100% 0.00% 49 156 Fees / Costs - Fit Cap Recv 1,058 100% 0.00% 1,058 157 Office / Operating Supplies 1,124 100% 0.00% 1,124 158 Operating Supplies - Computer Hardware / Software 883 100% 0.00% 883 159 Books / Publications / Subscriptions 64 100% 0.00% 64 160 Educ-Training & Tuition 514 100% 0.00% 514 161 Tuition Reimburesement - 100% 0.00% - 162 Memberships and Dues 100% 0.00% 163 Miscellaneous Expenses - 100% 0.00% - 164 Total Billing $ 524,319 $ 524,319 $ METER READING - DEPT 07100 165 Salaries & Wages - Regular $ 94,004 100% 0.00% $ 94,004 $ 166 Additional Personnel - 100% 0.00% - 167 Salaries & Wages - On Call 4,276 100% 0.00% 4,276 168 Salaries & Wages - Overtime 4,261 100% 0.00% 4,261 169 Special Pay - Stipends 385 100% 0.00% 385 170 FICA Taxes - Matching 7,221 100% 0.00% 7,221 171 Retirement Contributions 13,991 100% 0.00% 13,991 172 Life & Health Insurance 34,118 100% 0.00% 34,118 173 Workers Comp Premiums 1,875 100% 0.00% 1,875 174 Unemployment Compensation - 100% 0.00% - 175 OPEB 1,041 100% 0.00% 1,041 176 Proffessional Services 24,470 100% 0.00% 24,470 177 Contracted Services 65 100% 0.00% 65 178 Contracted Services - Uniforms 574 100% 0.00% 574 179 Travel & Per Diem 64 100% 0.00% 64 180 Communication Services 1,789 100% 0.00% 1,789 181 Postage and Freight 10 100% 0.00% 10 182 Insurance & Bonds - Premium 3,485 100% 0.00% 3,485 183 Repair / Maint - Vehicles 4,894 100% 0.00% 4,894 184 Repair / Maint - Equipment 2,060 100% 0.00% 2,060 185 Repair / Maint - Software 1,003 100% 0.00% 1,003 186 Repair / Maint - Radio Costs 522 100% 0.00% 522 187 Printing & Binding 64 100% 0.00% 64 188 Fees / Costs - Filing Fees - 100% 0.00% - 189 Fees / Costs - CST Allo Pin 11,409 100% 0.00% 11,409 190 Fees / Costs - Fit GPS Tracking 771 100% 0.00% 771 191 Fees / Costs - Fit Cap Recv 7,214 100% 0.00% 7,214 192 Fees / Costs - Fit Fclty Al 557 100% 0.00% 557 193 Fees / Costs - Fleet / Admin 908 100% 0.00% 908 194 Fees / Costs - New Hires 49 100% 0.00% 49 195 Fees / Costs - T.S. Cap Recv 778 100% 0.00% 778 196 Office / Operating Supplies 1,995 100% 0.00% 1,995 197 Gas, Oil & Lubricants 8,694 100% 0.00% 8,694 198 Clothing & Uniform Supplies 129 100% 0.00% 129 199 Safety Gear 64 100% 0.00% 64 200 Janitorial Supplies 161 100% 0.00% 161 201 Operating Supplies - Computer Hardware / Software 129 100% 0.00% 129 202 Uncapital Equipment Tech - 100% 0.00% - 203 Educ-Training & Tuition 768 100% 0.00% 768 204 Tuition Reimbursement - 100% 0.00% - 205 Miscellaneous Expenses - 100% 0.00% - - 206 Total Meter Reading $ 233,799 $ 233,799 $ - CUSTOMER SERVICE / FINANCE - DEPT 07101 207 Salaries & Wages - Regular $ 168,057 25% 75.00% $ 42,014 $ 126,042 208 Additional Personnel - 25% 75.00% - - 209 Salaries & Wages - On Call - 25% 75.00% - - 210 Salaries & Wages - Overtime 597 25% 75.00% 149 448 211 Special Pay - Stipends - 25% 75.00% - - 212 FICA Taxes - Matching 12,856 25% 75.00% 3,214 9,642 213 Retirement Contributions 24,791 25% 75.00% 6,198 18,593 214 Life & Health Insurance 55,262 25% 75.00% 13,816 41,447 Page 4 of 5 Table 15 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Wastewater Revenue Requirements for Rate Desien Line No. Revenue Requirement Description 2020 Factors Base Facility Quantity Allocated Revenue Requirements Base Facility Quantity 215 Workers Comp Premiums 293 25% 75.00% 73 220 216 Unemployment Compensation - 25% 75.00% - - 217 OPEB 1,806 25% 75.00% 452 1,355 218 Contracted Services 43 25% 75.00% 11 32 219 Contracted Services - Uniforms - 25% 75.00% - - 220 Contracted Services - Programming 16,795 25% 75.00% 4,199 12,596 221 Dispatch 6,718 25% 75.00% 1,679 5,038 222 Travel & Per Diem 225 25% 75.00% 56 169 223 Communication Services 803 25% 75.00% 201 602 224 Postage and Freight 161 25% 75.00% 40 120 225 Rental / Lease Equipment 503 25% 75.00% 126 378 226 Rental / Lease Buildings - 25% 75.00% - - 227 Insurance & Bonds - Premium 436 25% 75.00% 109 327 228 Utility Sry - Elec / Wtr / Swr - 25% 75.00% - - 229 Repair/Maint- Vehicles 196 25% 75.00% 49 147 230 Repair / Maint - Equipment 65 25% 75.00% 16 49 231 Repair / Maint - Bldg & Grd - 25% 75.00% - - 232 Repair / Maint - Computer Hardware - 25% 75.00% - - 233 Repair / Maint - Software 12,642 25% 75.00% 3,161 9,482 234 Repair / Maint - Radio Costs 521 25% 75.00% 130 391 235 Printing & Binding 739 25% 75.00% 185 554 236 Fees / Costs - Cst Allo Pin 31,049 25% 75.00% 7,762 23,286 237 Fees / Costs - Fit Fclty Al 71 25% 75.00% 18 53 238 Fees / Costs - Fleet / Admin 114 25% 75.00% 28 85 239 Fees / Costs - New Hires 49 25% 75.00% 12 37 240 Fees / Costs - Fit Cap Recv 2,011 25% 75.00% 503 1,508 241 Office / Operating Supplies 2,056 25% 75.00% 514 1,542 242 Gas, Oil & Lubricants 56 25% 75.00% 14 42 243 Janitorial Supplies 161 25% 75.00% 40 120 244 Operating Supplies - Computer Hardware / Software 514 25% 75.00% 129 386 245 Books / Publications / Subscriptions 48 25% 75.00% 12 36 246 Dues and Memberships 48 25% 75.00% 12 36 247 Educ - Training & Tuition 1,189 25% 75.00% 297 891 248 Tuition Reimburesment - 25% 75.00% - - 249 Miscellaneous Expenses 25% 75.00% 250 Total Customer Service / Finance $ 340,874 $ 85,219 $ 255,656 WASTEWATER OPERATION - DEPT 07121 251 Salaries & Wages - Regular $ 2,247,710 25% 75.00% $ 561,928 $ 1,685,783 252 Additional Personnel - 25% 75.00% - - 253 Salaries & Wages - On Call 45,579 25% 75.00% 11,395 34,184 254 Salaries & Wages - Overtime 51,800 25% 75.00% 12,950 38,850 255 Special Pay - Stipends 4,602 25% 75.00% 1,151 3,452 256 FICA Taxes - Matching 171,299 25% 75.00% 42,825 128,474 257 Retirement Contributions 315,533 25% 75.00% 78,883 236,649 258 Life & Health Insurance 612,243 25% 75.00% 153,061 459,183 259 Workers Comp Premiums 29,511 25% 75.00% 7,378 22,133 260 Unemployment Compensation - 25% 75.00% - - 261 OPEB 23,058 25% 75.00% 5,765 17,294 262 Professional Services - 25% 75.00% - - 263 Contracted Services 624 25% 75.00% 156 468 264 Contracted Services - Uniforms 10,400 25% 75.00% 2,600 7,800 265 Contracted Services - Sludge Hauling 413,986 0% 100.00% - 413,986 266 Contracted Services - Janitorial / Pest 5,297 25% 75.00% 1,324 3,973 267 Contracted Services - Mowing 36,400 25% 75.00% 9,100 27,300 268 Contracted Services - Security 520 25% 75.00% 130 390 269 Contracted Services - Sample / Analysis 39,099 25% 75.00% 9,775 29,324 270 Travel &Per Diem 1,638 25% 75.00% 410 1,229 271 Communication Services 17,840 25% 75.00% 4,460 13,380 272 Postage and Freight 1,536 25% 75.00% 384 1,152 273 Utility Sry - Elec / Wtr / Swr 967,537 0% 100.00% - 967,537 274 Utility Sry - Trash Removal 16,240 25% 75.00% 4,060 12,180 275 Rental / Lease Equipment 3,968 25% 75.00% 992 2,976 276 Insurance & Bonds - Premium 85,508 25% 75.00% 21,377 64,131 277 Repair / Maint - Vehicles 136,781 25% 75.00% 34,195 102,586 278 Repair / Maint - Equipment 31,200 25% 75.00% 7,800 23,400 279 Repair / Maint - Bldg & Grd 31,200 25% 75.00% 7,800 23,400 280 Repair / Maint - Fire Hydrant - 25% 75.00% - - 281 Repair / Maint - Software 91,239 25% 75.00% 22,810 68,429 282 Repair / Maint - Radio Costs 11,437 25% 75.00% 2,859 8,578 283 Printing and Binding 2,458 25% 75.00% 614 1,843 284 Advertising - Legal 102 25% 75.00% 26 77 285 Fees / Costs - Permit Appin 10,470 25% 75.00% 2,618 7,853 286 Fees / Costs - Cst Allo Pin 266,511 25% 75.00% 66,628 199,884 287 Fees / Costs - Fit GPS Tracking 13,210 25% 75.00% 3,302 9,907 288 Fees / Costs - Fit Cap Recv 240,346 25% 75.00% 60,087 180,260 Page 5 of 5 Table 15 Hernando County, Florida Water and Wastewater Rate Study Summary of Allocated Wastewater Revenue Requirements for Rate Desien Line Revenue Requirement Factors Allocated Revenue Requirements No. Description 2020 Base Facility Quantity Base Facility Quantity 289 Fees / Costs - Flt Fclty Al 13,097 25% 75.00% 3,274 9,823 290 Fees / Costs - Fleet / Admin 20,620 25% 75.00% 5,155 15,465 291 Fees / Costs - New Hires 3,041 25% 75.00% 760 2,281 292 Fees / Costs - T.S. Cap Recv 13,549 25% 75.00% 3,387 10,161 293 Office / Operating Supplies 110,653 25% 75.00% 27,663 82,990 294 Gas, Oil & Lubricants 163,412 25% 75.00% 40,853 122,559 295 Clothing & Uniform Apprl 1,536 25% 75.00% 384 1,152 296 Tools & Small Implements 8,704 25% 75.00% 2,176 6,528 297 Safety Gear and Supplies 4,895 25% 75.00% 1,224 3,671 298 Chemicals & Deodorants 283,283 25% 75.00% 70,821 212,463 299 Janitorial Supplies 5,120 25% 75.00% 1,280 3,840 300 Operating Supplies - Computer Hardware / Software 6,701 25% 75.00% 1,675 5,026 301 Uncapital Equipment Tech - 25% 75.00% - - 302 Books / Publications / Subscriptions 307 25% 75.00% 77 230 303 Dues & Memberships 1,183 25% 75.00% 296 887 304 Educ - Training & Tuition 15,811 25% 75.00% 3,953 11,858 305 Tuition Reimbursement - 25% 75.00% - - 306 Miscellaneous Expenses - 25% 75.00% - - 307 Total Wastewater Operation $ 6,588,794 $ 1,301,818 $ 5,286,976 OTHER EXPENSES AND TRANSFERS 308 Principal - Bond Retirement $ - 25% 75.00% $ - $ - 309 Interest - Bonds 25% 75.00% 310 Paying Agent / Trustee Fee 25% 75.00% 311 Budget P.O. Carry Fwd 25% 75.00% 312 Budget Reserve for Contingency 25% 75.00% 313 Tmsf - HCUD R&R (4121) 25% 75.00% 314 Tmsf - Loan Proceeds (4142) 25% 75.00% 315 Trnsf - HCUD Capital 25% 75.00% 316 Trnsf - HCUD / WRWSA Reimb 25% 75.00% 317 Total Other Operating Expenses $ - $ - $ - RECLASSIFIED OPERATING EXPENSES FROM CAPITAL BUDGETS 318 Water Renewal and Replacement Fund Expenses $ - 25% 75.00% $ $ - 319 Wastewater Renewal and Replacement Fund Expens 1,098,747 25% 75.00% 274,687 824,060 320 Water Connection Fee Fund Expenses - 25% 75.00% - - 321 Wastewater Connection Fee Fund Expenses 31 25% 75.00% 8 23 322 Water Capital Fund Expenses - 25% 75.00% - - 323 Wastewater Capital Fund Expenses 27,160 25% 75.00% 6,790 20,370 324 Total Capital Related Expenses $ 1,125,937 $ 281,484 $ 844,453 325 TOTAL OPERATING EXPENSES $ 11,233,546 $ 3,031,594 $ 8,201,952 — r �c.6 m �00000 rvoo r o 000o co m r1o0 69 69 � -4 t1 W V W di df ti -4 r� W V W d d d d d d d Q d Q Q Q Q Q Q Q Q Q d Q d Q d d Q d Q d Q d Q d Q d 2.%2. %.7. .7. .7.%%%% %2.%Z.%%. %.%2.%2.%%. %.'Zi r7i d d d d d d Q Q d Q Q Q Q Q Q Q Q Q d Q d Q d d Q d Q d Q Q Q d Q d z z z z z z Zi xi xi xi ,7-i ,7-i ,7-i ,7-i ,7-i ,7-i ,7-i ,7-i xi xi xi .`!+ % ,Z Zi Zi xi Zi Zi Zi Zi Zi Zi .7i N V n V P N V r V N v�i N N V n V N N V n V N v�i O vi r dddddd d d¢d¢dQd e z z z z z z zQzd¢QQQzQzQzQzQ z z z z z it, z z z z z zdQzdQz z z z z z z z c z 000000 88888888888 00000o 00000000000 8��888 er�eeeeeeee 8�8888 8��888888�8 � d 0 N q W C7 U W rog r g w�., cs' ,a r,nd U�M oU W R UdA6 � tG Ca � N o r, M M M M M r, 11 " o v 1 y v v v v v v \}}}({\( \\(\[)} }(\}\}} ((}(\j( 311-81.1.1 IM \\ } ») � 2\\;))(/ })fA;wwwwww a lwwwwwww /Aww;w; w=� elw7=� \: ,,,,, N O� 't .--i a � r W va a 6 d 6 d 6 cs 6 6 a d a d d a d d d d cC z z z z z z z z z z z z z z z z z a r o � Y a o ¢ a 6 d d d 6 6 6 a d d d d d d d d a U W �cn n a o _ O o00000 0 o o, o, h O N N N N N N N M `� M vNi O �O V 1 aW a � Z U •--� •--^ N � P� 69 69 =d a adadad adaaaaaaaaa e F ar'y �a z'zz'zz'z 'z'zzzzzzzzzz o 3Q sw o x ' C 3 A O O O O O O 0 o 0 0 0 0 O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 0 0 a� ti = O o 0 0 0 0 o 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O w a W d O r O �O d p r C p�.•q�� � C Cz'.J s's's's's' C C � o � n '� •�, chi chi r0 a � 2 2 Q Q / )/ )� �/ , , }f\ ))� ^ \\\ _ _ ;{� $ $ �}� , w . !�� j�� �)! ; £�/ � a ,7= � §. \/\ _ _ )\§ ° �j ) - - ! § _ \ ±~ 7 /k \) � � � � � ,_ � \ } ,! � \\ �\)\ ) § § &&a )\\\ m � }( \()_§}\/ /)) , \) , m/)2\e/; � !7 ; §7 ; )/)f§{{N s /! ! e ae*�; / _ /2� , , , , ,,,,,,,, Table 18 Page 1 of 1 Hernando County Revenue Sufficiency Study Comparison of Typical Monthly Residential Bills for Water Service (1) Residential Service for a 5/8" or 3/4" Meter Line 0 2,000 3,000 5,000 6,000 10,000 No. Description Gallons Gallons Gallons Gallons Gallons Gallons Hernando County 1 Current Rates $7.37 $10.15 $11.54 $14.32 $15.94 $22.42 2 Proposed Alternative 1 Rates 8.09 10.93 12.35 15.19 16.86 23.54 Other Florida Utilities: 15,000 20,000 Gallons Gallons $34.57 $46.72 36.09 48.64 3 Citrus County (2) $10.42 $13.46 $14.98 $18.02 $19.54 $25.62 $35.17 $44.72 4 City of Brooksville 24.04 24.04 24.04 27.26 30.48 43.95 63.00 82.05 5 City of Clearwater 22.29 22.29 22.29 40.35 49.38 87.85 144.75 201.65 6 City of Crystal River 9.84 16.44 19.74 26.34 30.73 48.29 81.24 138.99 7 City of Dunnellon 17.40 21.94 24.21 31.02 35.56 53.72 86.67 119.62 8 City of Inverness 8.09 12.71 15.02 19.64 21.95 31.19 43.59 55.99 9 City of Lakeland (2) 9.71 13.97 16.10 20.36 22.49 32.45 47.45 64.74 10 City of Leesburg (2) 9.17 11.20 12.21 14.38 15.66 21.29 30.19 41.83 11 City of New Port Richey 10.52 17.56 21.08 28.12 32.49 49.97 79.02 119.02 12 City of Ocala 9.91 11.97 13.00 15.06 16.09 20.20 28.11 41.22 13 City of St. Petersburg (2) 12.48 21.50 26.01 35.03 40.00 66.72 105.22 156.07 14 City of Tarpon Springs 22.01 30.31 34.46 42.76 51.05 84.21 136.11 201.11 15 City of Tavares 17.56 20.26 21.61 25.53 27.49 38.96 55.91 77.26 16 Hillsborough County (2) 12.97 20.27 23.92 31.22 36.15 55.87 80.52 111.87 17 Marion County 12.75 15.13 16.32 18.70 19.89 26.29 37.92 51.97 18 Pasco County 9.51 13.27 15.15 18.91 21.90 33.86 63.86 104.31 19 Polk County (2) 10.18 14.66 16.90 22.64 25.51 36.99 63.99 90.99 20 Town of Lady Lake 18.89 23.71 26.12 32.14 35.15 48.87 66.72 84.57 21 Other Florida Utilities'- Average $13.76 $18.04 $20.18 $25.97 1 $29.53 $44.79 $69.41 $99.33 Footnotes: (1) Unless otherwise noted, amounts shown reflect residential rates believed to be in effect July 2019 and are exclusive of taxes or franchise fees, if any, and, where applicable, reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges offered by each listed utility. (2) Utility currently has a rate study in progress or anticipates conducting a rate evaluation in the near future. ❑ Represents average monthly bill for County System. Table 19 Page 1 of 1 Hernando County Revenue Sufficiency Study Comparison of Typical Monthly Residential Bills for Wastewater Service (1) Line No. Description Hernando County 1 Current Rates 2 Proposed Alternative 1 Rates Other Florida Utilities: Residential Service for a 5/8" or 3/4" Meter 0 2,000 3,000 5,000 6,000 10,000 15,000 Gallons Gallons Gallons Gallons Gallons Gallons Gallons 20,000 Gallons $20.38 $29.16 $33.55 $42.33 1 $46.72 $64.28 $64.28 $64.28 21.06 30.44 35.13 44.51 49.20 67.96 67.96 67.96 3 Citrus County (2) $23.43 $36.81 $43.50 $56.88 63.57 $63.57 $63.57 $63.57 4 City of Brooksville 28.15 28.15 28.15 32.31 36.47 53.11 73.91 94.71 5 City of Clearwater 30.66 30.66 30.66 51.10 61.32 102.20 153.30 204.40 6 City of Crystal River 16.20 26.98 32.37 43.15 48.54 70.10 97.05 124.00 7 City of Inverness 15.09 25.81 31.17 41.89 47.25 68.69 95.49 95.49 8 City of Dunnellon 17.11 34.03 42.49 67.87 84.79 152.47 237.07 321.67 9 City of Lakeland (2) 18.57 26.89 31.05 39.37 43.53 60.17 68.49 68.49 10 City of Leesburg (2) 24.52 27.92 29.62 33.01 34.71 41.51 50.00 51.20 11 City of New Port Richey 13.16 22.86 27.71 37.41 42.26 61.66 85.91 85.91 12 City of Ocala 24.04 30.27 33.38 39.61 42.73 54.33 54.33 54.33 13 City of St. Petersburg (2) 18.00 31.82 38.73 52.55 59.46 87.10 121.65 156.20 14 City of Tarpon Springs 17.52 26.70 31.29 40.47 49.67 86.47 132.47 178.47 15 City of Tavares 21.48 28.80 32.46 39.78 43.44 58.08 72.72 72.72 16 Hillsborough County (2) 14.16 23.28 27.84 36.96 41.52 50.64 50.64 50.64 17 Marion County 22.53 34.01 39.75 51.23 56.97 56.97 56.97 56.97 18 Pasco County 18.00 29.10 34.65 45.75 51.30 73.50 73.50 73.50 19 Polk County (2) 36.14 49.10 55.58 68.54 75.02 81.50 81.50 81.50 20 Town of Lady Lake 22.25 29.35 32.90 40.00 43.55 57.75 75.50 93.25 21 Other Florida Utilities' - Average $21.17 $30.14 $34.63 $45.44 $51.45 $71.10 $91.34 $107.06 Footnotes: (1) Unless otherwise noted, amounts shown reflect residential rates believed to be in effect July 2019 and are exclusive of taxes or franchise fees, if any, and, where applicable, reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges offered by each listed utility. (2) Utility currently has a rate study in progress or anticipates conducting a rate evaluation in the near future. ❑ Represents average monthly bill for County System. Table 20 Page 1 of 1 Hernando County Revenue Sufficiency Study Comparison of Typical Monthly Residential Bills for Water and Wastewater Service (1) Residential Service for a 5/8" or 3/4" Meter 6,000 10,000 15,000 20,000 Line 0 2,000 3,000 5,000 No. Description Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons Hernando County 1 Current Rates $27.75 $39.31 $45.09 $56.65 $62.66 $86.70 $98.85 $111.00 2 Proposed Alternative 1 Rates 29.15 41.37 47.48 59.70 66.06 91.50 104.05 116.60 Other Florida Utilities: 3 Citrus County (2) $33.85 $50.27 $58.48 $74.90 $83.11 $89.19 $98.74 $108.29 4 City of Brooksville 52.19 52.19 52.19 59.57 66.95 97.06 136.91 176.76 5 City of Clearwater 52.95 52.95 52.95 91.45 110.70 190.05 298.05 406.05 6 City of Crystal River 26.04 43.42 52.11 69.49 79.27 118.39 178.29 262.99 7 City of Inverness 32.49 47.75 55.38 72.91 82.81 122.41 182.16 215.11 8 City of Dunnellon 25.20 46.74 57.51 87.51 106.74 183.66 280.66 377.66 9 City of Lakeland (2) 28.28 40.86 47.15 59.73 66.02 92.62 115.94 133.23 10 City of Leesburg (2) 33.69 39.12 41.83 47.39 50.37 62.80 80.19 93.03 11 City of New Port Richey 23.68 40.42 48.79 65.53 74.75 111.63 164.93 204.93 12 City of Ocala 33.95 42.24 46.38 54.67 58.82 74.53 82.44 95.55 13 City of St. Petersburg (2) 30.48 53.32 64.74 87.58 99.46 153.82 226.87 312.27 14 City of Tarpon Springs 39.53 57.01 65.75 83.23 100.72 170.68 268.58 379.58 15 City of Tavares 39.04 49.06 54.07 65.31 70.93 97.04 128.63 149.98 16 Hillsborough County (2) 27.13 43.55 51.76 68.18 77.67 106.51 131.16 162.51 17 Marion County 35.28 49.14 56.07 69.93 76.86 83.26 94.89 108.94 18 Pasco County 27.51 42.37 49.80 64.66 73.20 107.36 137.36 177.81 19 Polk County (2) 46.32 63.76 72.48 91.18 100.53 118.49 145.49 172.49 20 Town of Lady Lake 41.14 53.06 59.02 72.14 78.70 106.62 142.22 177.82 21 Other Florida Utilities' - Average $34.93 $48.18 $54.80 $71.41 $80.98 $115.90 $160.75 $206.39 Footnotes: (1) Unless otherwise noted, amounts shown reflect residential rates believed to be in effect July 2019 and are exclusive of taxes or franchise fees, if any, and, where applicable, reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges offered by each listed utility. (2) Utility currently has a rate study in progress or anticipates conducting a rate evaluation in the near future. Represents average monthly bill for County System. Table 21 Hernando County, Florida Water and Wastewater Rate Study Existing and Proposed Customer Deposits and Miscellaneous Service Charges for Hernando County Line No. Description Existing Fees Proposed Fees DEPOSITS A. Customer Deposits - Residential: 1 Water or Wastewater Homeowner $ 100.00 2 Water Homeowner N/A 50.00 3 Wastewater Homeowner N/A 125.00 4 Water and Wastewater Homeowner 200.00 175.00 5 B. Non-residential/Commercial: Existing Fees Proposed Fees 6 Meter Size - Water Water Water 7 5/8 or 3/4 inch $ 125.00 $ 125.00 8 1inch 150.00 125.00 9 1 1/2 inch 175.00 250.00 10 2 inch 200.00 400.00 11 3 inch 300.00 800.00 12 4 inch 400.00 1,250.00 13 6 inch 600.00 2,500.00 14 8inch 800.00 4,000.00 15 10 inch 1,000.00 5,750.00 16 12 inch 1,200.00 10,750.00 17 Meter Size - Wastewater Wastewater Wastewater 18 5/8 or 3/4 inch N/A $ 125.00 19 1 inch N/A 312.00 20 1 1/2 inch N/A 625.00 21 2 inch N/A 1,000.00 22 3 inch N/A 2,000.00 23 4 inch N/A 3,125.00 24 6 inch N/A 6,250.00 25 8 inch N/A 10,000.00 26 10 inch N/A 14,375.00 27 12 inch N/A 26,875.00 28 Meter Size - Combined Water and Sewer Water and Sewer 29 5/8 or 3/4 inch $ 225.00 $ 250.00 30 1 inch 225.00 437.00 31 1 1/2 inch 325.00 875.00 32 2 inch 400.00 1,400.00 33 3 inch 600.00 2,800.00 34 4 inch 800.00 4,375.00 35 6 inch 1,000.00 8,750.00 36 8 inch 1,200.00 14,000.00 37 10 inch 1,500.00 20,125.00 38 12 inch 1,800.00 37,625.00 C. Failure to pay: Failure to pay usage charges may result in a deposit increase to three times the average monthly usage charge. TAP -IN CHARGES: 39 Existing Fees Proposed Fees 40 Water Meter Size Minimum Charge Minimum Charge 41 5/8 inch x 3/4 inch Drop -In (Meter Only) $ 250.00 $ 350.00 42 5/8 inch x 3/4 inch Drop -In and Service Line Installation 350.00 690.00 43 1 inch Drop -In and Service Line Installation 750.00 860.00 44 1 1/2 inch Drop -IN and Service Line Installation 1,170.00 1,550.00 45 2 inch Drop -In and Service Line Installation 1,400.00 1,685.00 46 Above 2 inch NO CHARGE Actual Cost Additional fees may be charged where roads will be crossed, and/or where lines will be extended. Table 21 Hernando County, Florida Water and Wastewater Rate Study Existing and Proposed Customer Deposits and Miscellaneous Service Charges for Hernando County Line No. Description Existing Fees Proposed Fees SERVICE FEE: 47 Miscellaneous Charges Existing Fees Proposed Fees 48 Trip Charge On Workdays- 8 a.m. to 2 p.m. $ 35.00 $ 40.00 49 Trip Charge After 2 p.m., week -ends, and holidays 70.00 80.00 50 Reconnect due to Delinquent, Non -Payment of Services 30.00 40.00 51 Temporary Reconnect (Including Seasonal Customers) 30.00 40.00 52 Testing and/or inspection of Backflow 70.00 75.00 53 Removal of Meter Or Pull Meter (Delinquent and unauthorized use up to 1 ") 70.00 85.00 54 Customer Requested Meter Inspection (No charge for Inaccurate Meter) 70.00 50.00 55 Return Trip to Re -Read Meter due to Obstruction, customer negligence or at customer request 35.00 40.00 56 Returned Mail Per Piece Returned (not including final statements) 5.00 5.00 57 Septage Dumping - Delinquent and account Reinstatement 150.00 150.00 58 Broken Meter, Cap, Lock or any other damage to the Meter 65.00 75.00 59 Installation of Lockbox on meter (Per Customer Request) 30.00 45.00 60 Meter Certification Bench Test (No Charge for Inaccurate Meter) 15.00 85.00 61 Lien filing fee 55.00 80.00 62 Release of Lien fee 45.00 50.00 63 Late Fee (if bill remains unpaid next month) 5% 5% SEPTAGE / CHEMICAL TOILET USER FEE: 64 Cost per 1,000 Gallons $ 77.43 $ 85.00 TEMPORARY WATER SERVICE DEPOSIT: 65 Existing Fees Proposed Fees 66 Deposits for Temporary Hydrant Meters $ 1,400.00 $ 1,800.00 TEMPORARY WATER SERVICE CHARGE: 67 Non-refundable service charge for temporary water $ 50.00 $ 85.00 TEMPORARY WATER SERVICE AND BULK PURCHASE RATE: TEMPORARY WATER MONTHLY RATE (MINIMUM CHARGE): 68 Bulk Purchase Per 1,000 Gallons $ 2.00 $ 2.10 69 Bulk Purchase Base Charge 6.00 8.50 70 Hydrant Meter 2" Meter or Larger Base Charge $ 48.00 $ 70.00 71 Hydrant Meter 2" Meter or Larger Base Charge Per 1,000 Gallons 2.00 2.10 RETURNED CHECK CHARGES OR REJECTED ELECTRONIC: 72 Return Check Charges Per FL Statute Per FL Statute Hillsborough County FLORIDA Project Name: Sufficiency of Water and Wastewater Rates Report Date: July 2020 The Project Team has been serving Hillsborough County since 1995 on a variety of issues. The study example we provided is the most recent Sufficiency of Water and Wastewater Rates Report that is prepared annually by the Project Team for the County as part of the covenants of the Bond Resolution authorizing the outstanding senior lien bonds. This report serves to: i) evaluate rates and any changes considered necessary for consideration by the Board of County Commissioners; ii) present compliance with the rate and flow of funds requirements as delineated in the Bond Resolution for the current and subsequent fiscal year (referred to as the "Review Period"); iii) summarize the projected financial position of the water and wastewater system for the Review Period and five-year projected period which is annually provided to the credit rating agencies; and iv) contains a letter prepared by Raftelis, as the Qualified Rate Consultant, that documents the review procedures and evaluations performed as part of the study process and our observations and conclusions for consideration by the County. The evaluation prepared by the Project Team associated with the preparation of the study included: • An historical compilation of customer billing statistics and preparation of a by -class customer and usage forecast. • Prepared a detailed forecast of the operation and maintenance expenses recognizing the implementation of the capital improvement plan, customer growth, and other service area attributes. • Development of a dispatch of purchased water requirements from Tampa Bay Water and other public utility providers. • Developed a capital re -investment plan and developed a funding analysis to finance the capital plan of the utility, including the use of additional bonds. • Prepared a revenue sufficiency analysis and rate phasing plan to allow for a programmed approach to the implementation of rate adjustments. • Modified the price index pass -through adjustment and implemented a fixed rate adjustment based on the financial needs of the utility system. • Evaluated compliance with the rate covenants and development of a management dashboard to monitor fiscal position and overall financial performance. • Assisted the Water Resources Department (utility) and the County's Legal Department in the preparation of a comprehensive change to the Rate Resolution (which also included the change in impact fees which was prepared under a separate study). • Presenting the findings to the Board of County Commissioners and getting the rate plan implmented. In addition to the evaluation of the monthly rates for water and wastewater service, the Project Team has also assisted the County in the establishment of solid waste rates and charges, prepared bond feasibility disclosure reports in support of capital infrastructure utility financings for both the utility and solid waste enterprise funds, provided utility acquisition services as part of the County's regionalization efforts, assisted in the regulation of the franchised utilities, as well as other related services. EST 1834 SM Hillsborough County Florida SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT July 2020 WATER RESOURCES DEPARTMENT HILLSBOROUGH COUNTY, FLORIDA WATER RESOURCES DEPARTMENT SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT TABLE OF CONTENTS Title Page No. Tableof Contents................................................................................................................... i List of Tables and Attachments............................................................................................ iii ExecutiveSummary..........................................................................................................ES-1 Sufficiency of Water and Wastewater Rates..................................................................... l Introduction............................................................................................................................1 RateStudy Purpose................................................................................................................ 3 Monthly User Charges Rate Review Process........................................................................ 3 Existing Rates and Charges for Service.................................................................................4 Customer Accounts and Sales Forecast................................................................................. 8 WaterSystem.................................................................................................................. 8 WastewaterSystem........................................................................................................11 Customers Served (Bills Rendered)...............................................................................13 Water Purchase Requirements.......................................................................................15 Wastewater Treatment Requirements............................................................................15 Capital Improvement Program — Sources and Uses of Funds..............................................17 Revenue Requirements — Monthly User Charges................................................................. 22 General........................................................................................................................... 22 Significant Forecast Assumptions................................................................................. 23 Sufficiencyof Rates....................................................................................................... 33 Customer Impact Analysis and Comparisons with Other Neighboring Utilities .......... 34 Bond Resolution Compliance............................................................................................... 36 Debt Service Coverage.................................................................................................. 36 -1- HILLSBOROUGH COUNTY, FLORIDA WATER RESOURCES DEPARTMENT SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT TABLE OF CONTENTS (cont'd.) Title Page No. Other Financial Considerations and Performance................................................................ 37 Figure 1 — Available Working Capital and Cash Balances ........................................... 38 Figure 2 — Capital -related Account Balances................................................................ 39 Figure 3 — Projected Net Revenue Margin Ratio........................................................... 40 Figure 4 — Projected Revenue Liquidity Ratio.............................................................. 41 Figure 5 — Principal Amount of Outstanding Indebtedness per Equivalent Residential Connection (ERC)................................................................. 42 Figure 6 — Debt Outstanding to Net Plant Investment (Debt) Ratio .............................. 43 Figure 7 — Net Free Cash to Depreciation..................................................................... 44 Rate Observations and Recommendations............................................................................ 44 HILLSBOROUGH COUNTY, FLORIDA WATER RESOURCES DEPARTMENT SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT LIST OF TABLES AND ATTACHMENTS Table No. Description 1 Summary of Historical Customer Statistics and Sales — Water System 2 Summary of Historical Customer Statistics and Sales — Wastewater System 3 Summary of Projected Customer Statistics and Sales — Water System 4 Summary of Projected Customer Statistics and Sales — Wastewater System 5 Summary of Capital Improvement Projects for the Forecast Period — Cash Basis 6 Summary of Projected Revenue Requirements and Revenue Sufficiency for the Forecast Period 7 Summary of Projected Operating Expenses for the Forecast Period — Escalation Factors 8 Comparison of Typical Monthly Residential Bills for Water Service 9 Comparison of Typical Monthly Residential Bills for Wastewater Service 10 Comparison of Typical Monthly Residential Bills for Combined Water and Wastewater Service 11 Comparison of Water and Wastewater Impact Fees for 5/8" Residential Service 12 Summary of Projected Debt Service Coverage 13 Summary of Projected Cash Balance and Fund Transfers Attachment Description A Rate Consultant "2021 Sufficiency of Water and Wastewater Rates Report" HILLSBOROUGH COUNTY, FLORIDA WATER RESOURCES DEPARTMENT SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT EXECUTIVE SUMMARY The Water Resources Department (the "Department") has completed its analysis of the Sufficiency of Water and Wastewater Rates for the Fiscal Year 2020 (the "Sufficiency Report") for consideration by the Board of County Commissioners (the 'Board"), our customers and other interested citizens. The purpose of the analysis was to: • Analyze the sufficiency of the existing rates for service as it relates to funding the identified revenue requirements or expenditure needs of the water and wastewater system (the "System"); • Identify any potential changes in rates that are considered necessary to meet the expenditure needs and promote the financial creditworthiness of the System, including compliance with the rate covenants as delineated in the Amended and Restated Utility System Bond Resolution No. R03-112, adopted by the Board on June 4, 2003, as amended from time to time and as particularly amended by Resolution No. R10-151 dated October 6, 2010, Resolution No. R16-065 dated June 2, 2016 and Resolution No. R19-129 dated October 16, 2019 (the 'Bond Resolution"); • Support the review of the Fiscal Year 2020 year-to-date results and development of the Fiscal Year 2021 Budget; and • Review the current rate resolution to codify any proposed changes in rates and fees. The analysis of the rates and charges are based on a five (5) year forecast, which encompassed the current fiscal year 2020 and the subsequent four (4) Fiscal Years 2021 through 2024 (collectively referred to for the five-year period as the "Forecast Period"). All capitalized undefined terms reflected in this report have the same meaning as prescribed in the Bond Resolution, which authorized the issuance of the outstanding utility system revenue bonds. The following is a summary of the observations, findings, and recommendations based on the results of the analysis, which follows this Executive Summary. 1. The rates for monthly water and wastewater service (referred to as the "Monthly User Charges") include the following components: a. Customer Service Charge (per bill rendered); b. Water and Wastewater Base Facility Charge (per respective equivalent residential connection ["ERC"] served per account) and when including the Customer Service Charge, equates to the minimum bill rendered to each account; ES-1 c. Water Consumption Charge, which includes a water conservation pricing structure (per 1,000 gallons of metered water consumption); d. Purchased Water Pass -Through Consumption Charge to pass -through any increase or decrease in the cost of purchased water to the customer (all potable water is purchased by the County; no water is produced from County Facilities — per 1,000 gallons of metered water consumption); and e. Wastewater Consumption Charge, which includes a monthly maximum billing threshold for individually -metered residential accounts at 8,000 gallons (per 1,000 gallons of metered water consumption, which serves as the basis for billed wastewater flow; all domestic water used by commercial customer is billed the wastewater consumption charge). 2. The existing rates and rate structures for monthly water and wastewater service (i.e., the "Monthly User Rates") charged by the County were established historically through several approved rate resolutions by the Board as follows: a. On May 14, 2003, the Board adopted Rate Resolution No. R03-091, which adjusted the Monthly User Rates to promote a higher water conservation incentive to large users and to reward low-water users with a cost reduction. b. On May 5, 2005, the Board adopted Resolution No. R05-106, which modified the application of the Purchased -Water Pass -Through Consumption Charge, which provides a pass -through recovery of all purchased water costs (the pass -through adjustment provision was initially adopted by the Board during Fiscal Year 2001). c. On May 20, 2009, the Board adopted Resolution No. R09-070; the primary purpose of such resolution being to modify the application of the annual price index rate adjustment uniformly for monthly water and wastewater service by the index adjustment effective June 1, 2010. d. On August 21, 2019, the Board adopted Resolution No. R19-106, which i) adjusted the formula in which to apply the automatic rate indexing of certain water, wastewater and reclaimed rates charged to customers; ii) adjusted the timing of the automatic rate indexing to coincide with the County's fiscal year; iii) sunsets the automatic rate indexing at September 30, 2021; and iv) implemented an annual automatic rate adjustment of 4% for the two (2) fiscal years effective October 1, 2019. e. On June 17, 2020, the Board adopted Resolution No. R20-047, which continued the automatic rate indexing through September 30, 2025. The rate resolutions as described above are referred to collectively throughout this report as the "Rate Resolution". With the exception of changes in rates for the pass -through of purchased water costs and the price indexing to provide a mechanism to recover the estimated impacts of inflation on certain components of the Cost of Operation and Maintenance, Resolution No. R19-106 approved the first adjustment to Monthly User ES-2 Rates producing additional revenue since the Fiscal Year 2000Et1 (the restructuring of the water conservation usage blocks in 2003 was designed as a "revenue neutral" adjustment). 3. The County purchases all of its treated water from the Tampa Bay Water Authority and several other public utilities (municipalities) located in Hillsborough County. The majority of water purchases or 97.4% of total purchases are from the Tampa Bay Water (TBW). The water purchases are then retreated and distributed to customers throughout the County. As previously noted, to recover the cost of purchase water the County charges customers the Purchased Water Pass -Through Consumption Charge, which is currently $2.93 per 1,000 gallons of metered water use. While the majority of the purchased water expenses are funded by the Purchased Water Pass -Through Consumption Charge, a portion of the total expense is funded from pledged water impact fees collected by the County since it is for the repayment of expansion -related debt issued by TBW and is consistent with the fee application provisions as delineated in the Bond Resolution. Based on current projections of water demands / purchases, the contracted cost of treatment and assumed collection and use of water impact fees to repay allocable expansion debt, the Purchased Water Pass -Through Consumption Charge is projected to require an increase to adequately recover the estimated cost of water purchases during the Forecast Period. It is estimated that the Purchased Water Pass -Through Consumption Charge will need to increase beginning in Fiscal Year 2021 and be adjusted annually. The recommended and projected increases are shown below: Summary of Existing and Estimated Purchased Water Pass -Through Consumption Charge - For the Forecast Period Fiscal Year Ending September 30, Existing Recommended Projected Description 2020 2021 2022 2023 2024 Purchased Water Pass -Through (000s) $2.93 $3.02 $3.06 $3.13 $3.20 Percentage Change ---% 3.07% 1.32% 2.29% 2.24% 4. The County began applying the annual Price Index Adjustment beginning in the Fiscal Year 2010, even though the ability to index rates was provided for earlier in previous resolutions approved by the Board. The purpose of the index is to allow the System to provide a mechanism to recover the estimated effects of inflation on the operating expenses of the System, less any costs that may be subject to a pass -through adjustment as defined in the Rate Resolution (i.e., purchased water and purchased wastewater treatment costs, etc.). The application of the price index also contributes towards the System maintaining revenue margins and its strong investment credit rating (currently rated AAA by Fitch). The price index is applied to the "Applicable Rates" as delineated in the Rate Resolution, which includes the Monthly User Charges, reclaimed water rates, and bulk (wholesale) service charges; however, is exclusive of the Purchased Water Pass -Through Consumption Charge and the residential reclaimed Committed Class charges. [1] During the Fiscal Year 1997, the Board established a Blue -Ribbon Committee to review the overall financial position of the System. The committee recommended and the Board adopted a multi -year rate phasing plan, which ended in the Fiscal Year 2000. ES-3 The following table is a summary of the historical price indices recognized in the adjustment of rates since the Fiscal Year 2010: Effective Date of Price Index Adjustment October 1, 2009 June 1, 2010 June 1, 2011 June 1, 2012 June 1, 2013 June 1, 2014 June 1, 2015 June 1, 2016 June 1, 2017 June 1, 2018 June 1, 2019 October 1, 2019 [2] Percent Increase in Monthly Service Rates [1] 1.72% 0.37% 0.66% 1.29% 0.84% 0.72% 0.87% 0.71 % 0.83% 1.04% 1.40% 0.74% [1] The Price Index is calculated pursuant to a formula as delineated in the Rate Resolution and has approximated from 55% to 65% of the General Price Deflator Index published annually by the Florida Public Service Commission. [2] Resolution No. R19-106, adopted August 21, 2019 revised the Price Index formula to utilize the U.S. Bureau of Labor Statistics Water and Sewer Maintenance Index as well as adjust the timing to coincide with the County's fiscal year. The October 1, 2019 stated increase represents the difference due to the change in the formula; the combined Fiscal Year 2019 index was 2.14% when recognizing the index application adjustment for the respective fiscal year. a. With the adoption of Resolution No. R19-106, the referenced index contained in the Rate Resolution was changed from the Florida Public Service Commission ("FPSC") Price Index to the U.S. Bureau of Labor Statistics ("BLS") Water and Sewer Maintenance Index. The effective date has also been changed to coincide with the County's fiscal year. Additionally, the calculated change in the index has been modified to reflect the January year -over -year change. The Resolution adopted the automatic Price Index for the Fiscal Years 2020 and 2021 only. To keep pace with the projected growth in operating and maintenance expenses (e.g., labor costs, etc.). Resolution R20- 047 was adopted to continue the Price Index Adjustments through September 30, 2025. b. For informational purposes, on June 1, 2019 the automatic Price Index was applied in accordance with the formula in effect at that time and was calculated at 1.40%. Upon adoption of Resolution No. R19-106, the adjusted formula calculated the rate index at 2.14%. Effective October 1, 2019 the difference of .74% was applied to certain water, wastewater and reclaimed rates charged to customers. 5. It is projected that the System may require additional rate increases above the annual price indexing and pass -through adjustments in subsequent years of the Forecast. Period (i.e., after the implementation of the additional 4.0% rate adjustments). The Department recommends closely monitoring the need for additional rate adjustments and will provide formal recommendations closer to when the additional rate adjustments may be warranted based on the then costs of providing service and the fiscal position of the System. Based on the projected funding requirements of the System, the Department has the flexibility to ES-4 recommend phasing in the additional rate adjustments over a longer period of time to minimize customer impact if necessary. 6. Based on the assumptions reflected in the Sufficiency Report, including the adopted changes to the Price Index and additional approved rate adjustments, the following table provides an indication of the projected rate changes and the associated residential customer bill impacts for a typical residential customer using 7,000 gallons of water and wastewater service a month through the end of the Forecast Period: Summary of Existing and Projected Rates - For the Forecast Period Fiscal Year Ending September 30, Existing Adopted Projected Description 2020 2021 2022 2023 2024 Monthly Residential Bill & 7,000 Gallons: $90.32 $95.36 $97.28 $99.50 $101.74 Change in Bill - Amount $0.00 $5.04 $1.92 $2.22 $2. 24 Change in Bill - Percent 0.00% 5.58% 2.01% 2.28% 2.25% Percent Rate Adiustments: Effective Date 10/1/2019 10/1/2020 10/1/2021 10/1/2022 10/1/2023 Price Index [1][2] 0.74% 2.25% 2.23% 2.23% 2.22% Additional Rate Adjustments [2] 4.00% 4.00% --% ---% ---% Estimated Purchased Water Pass -Through [3] ---% 3.07% 1.32% 2.29% 2.24% Existing and Adiusted Monthly Rates for Service: Customer Service Charge (per Bill) $4.41 $4.69 $4.79 $4.90 $5.01 Water Charges: Base Facility Charge (per ERC) $9.18 $9.76 $9.98 $10.20 $10.43 Usage Charges (per 1,000 Gallons) [4] Block 1 (0-5,000 Gallons/ERC) $0.75 $0.80 $0.82 $0.84 $0.86 Block 2 (5,001-15,000 Gallons/ERC) 2.09 2.22 2.27 2.32 2.37 Block 3 (15,001-30,000 Gallons/ERC) 3.50 3.72 3.80 3.88 3.97 Block 4 (30,001 Gallons or More/ERC) 5.23 5.56 5.68 5.81 5.94 Water Pass -Through (per 1,000 Gallons) [3] $2.93 $3.02 $3.06 $3.13 $3.20 Wastewater Charges: Base Facility Charge (per ERC) $14.83 $15.77 $16.12 $16.48 $16.85 Usage Charges (per 1,000 Gallons) 4.78 5.08 5.19 5.31 5.43 Reclaimed Charges - Unmetered Service Residential Flat Charge $9.00 $9.00 $9.00 $9.00 $9.00 Reclaimed Charges - Metered Service Base Facility Charge (per Account) $4.36 $4.64 $4.74 $4.85 $4.96 Residential Usage (per 1,000 Gallons) Block 1 (0-5,000 Gallons) $0.27 $0.29 $0.30 $0.31 $0.32 Block 2 (5,000-15,000 Gallons) 0.45 0.48 0.49 0.50 0.51 Block 3 (Above 15,000 Gallons) 0.62 0.66 0.67 0.68 0.70 Commercial Usage (per 1,000 Gallons) [4] Block 1 (0-15,000 Gallons per ERC) $0.12 $0.13 $0.13 $0.13 $0.13 Block 2 (15,000-30,000 Gallons per ERC) 0.22 0.23 0.24 0.25 0.26 Block 3 (Above 30,000 Gallons per ERC) 0.57 0.61 0.62 0.63 0.64 Table continued following page (Remainder of page intentionally left blank) ES-5 Summary of Existing and Proposed Rates — For the Forecast Period (cont'd.) ERC = Equivalent Residential Connection [1 ] Resolution R19-106, adopted by the Board on August 21, 2019 revised the formula of the Price Index adjustment and changed the effective date to applicable rates to October 1 st of each given fiscal year. Resolution No. R20-047, adopted by the Board on June 17, 2020 continues the application of the Price Index through September 30, 2025. [2] The price index and additional rate adjustments identified are only applied to Applicable Rates and exclude revenues produced from the application of the Purchased Water Pass -Through Consumption Charge and the residential reclaimed Committed Class charges. The rate adjustments indicated for the Fiscal Year 2020 have already been implemented and are included in the bill comparison identified as the "Existing'; such amounts are shown for comparative purposes. [3] Percent increases shown are only effective to the purchased water pass -through charges; such amounts are estimated and will be based on the actual costs incurred by the System and the then actual charges may be different (higher or lower) than the amounts shown. [4] The County charges an inclining block structure that increases with use per month. Additionally, the usage blocks or tier ranges increase with the number of associated ERCs served per customer account. 7. Assuming implementation of the identified price index and rate adjustments as previously discussed, it is projected that the proposed rates for the Forecast Period for monthly service will: a. Meet the rate covenants as defined in Section 11.02 of the Bond Resolution and make all the necessary deposits to the various funds and accounts identified in the flow of funds requirements as delineated in Section 9 of such resolution for the Forecast Period. b. Provide sufficient Net Revenues to meet the requirements associated with the issuance of additional parity bonds, which bonds are anticipated to be issued during the Forecast Period to fund a portion of the capital improvement plan, as defined in Section 11.15 of the Bond Resolution. Provide sufficient revenues to finance the capital improvement program as currently identified by the Department for the Forecast Period, which includes the use of available proceeds from the issuance of the Utility Revenue Bonds, Series 2016 (the "Series 2016 Bonds") and the issuance of additional parity bonds. d. Maintain the minimum operating reserves (working capital) as required by the Bond Resolution, and maintain on deposit in the Rate Stabilization Account a minimum fund balance of $74 million based on the historic recommendations of the Debt Management Department and previous discussions with the credit rating agencies associated with the issuance of the Outstanding Bonds in order to provide increased liquidity to reduce financial risk and improve the overall credit rating, which results in lower overall borrowing costs. 8. The current rates for monthly service are competitive with the rates charged by other neighboring utilities for water and wastewater service. A summary of a comparison of the County's utility rates with other neighboring utilities at 7,000 gallons of monthly use, which represents the average (typical) monthly usage level for the average single-family residential customer, is shown on Table 10 at the end of this summary. ES-6 9. The Department currently charges Impact Fees (also referred to as capacity fees), to new customer growth, which requests or requires new capacity to meet the needs / demands of such customers. This fee has been applied for over twenty-five (25) years by the County and is a common mechanism of cost recovery used by local governments to fund expansion - related capital expenditures, including the payment of expansion -related debt service. At the request of the Department, the County's Rate Consultant was requested to evaluate the adequacy of the current impact fees and make recommendations for changes to more accurately recover the cost of necessary capital improvements required to serve new development, equitably recover the cost to provide service and to meet the stated financial goals of the County. On June 17, 2020 the Board adopted Resolution No. R20-047 which i) set separate fees for water and wastewater impact fees for the Northwest Service Area and the South/Central Service Area; and ii) increases water and wastewater impact fees from current levels effective October 1, 2020, as shown below. Impact Fees Effective October 1, 2020 Difference Effective System Current October 1, 2020 Amount Percent Impact Fees Water Northwest Service Area $1,750 $1,863 $113 6.5% South / Central Service Area 1,750 2,214 464 26.5% Wastewater Northwest Service Area $1,800 $2,951 $1,151 63.9% South / Central Service Area 1,800 3,651 1,851 102.8% Combined Utility Systems Northwest Service Area $3,550 $4,814 $1,264 35.6% South / Central Service Area 3,550 5,865 2,315 62.2% 10. The Water and Wastewater Impact Fees adopted by the County for securing capacity by new development are competitive with the fees charged by other neighboring utilities. A comparison of the existing Impact Fees for the County and those presently charged by other neighboring utilities is shown on Table 11 at the end of this report. 11. Additionally, the County's Rate Consultant was also requested to determine the estimated Accrued Guaranteed Revenue Fees ("AGRF") originally adopted in 1997 and suspended by the Board (i.e., the fee was set at $0) in April 2014 pursuant to the adoption of Resolution No. R14-034 in order to minimize cost for and to promote new development. The effect of the suspension of the AGRF fees resulted in a reduction in annual revenues of approximately $6 million at that time, with revenue losses estimated to increase to approximately $9 million associated with higher levels of growth now being experienced by the System. Recognizing i) the long-term capital needs of the System; ii) the need to limit future rate adjustments; and iii) that the County has issued debt and anticipates significant additional borrowings to finance expansion -related capital projects, which includes the repayment of interest which is ES-7 not a cost component included in the impact fees, the Board adopted Resolution No. R20- 047 on June 17, 2020 which reinstated the AGRF. The table below summarizes the historical AGRF rates as compared to the reinstated AGRF rate effective October 1, 2020. Accrued Guaranteed Revenue Fee (AGRF) Effective October 1, 2020 Effective Prior to April After April October 1, Utility 2014 2014 2020 Water $1,005 $0 $833 Wastewater 940 0 989 Total $1,945 $0 $1,822 12. The County's Rate Consultant has assisted in the preparation of and has reviewed the financial forecast and Monthly User Charge recommendations and supports the recommendations as identified in this report. A copy of the opinion letter is included in Attachment A at the end of the Sufficiency Report. 13. During the Fiscal Year 2019 (the most recently completed Fiscal Year) and estimated for the Fiscal Year 2020, the System provided service to the following accounts and equivalent residential customers ("ERC") and had the following billed water sales / wastewater flow. Fiscal Year 2019 Fiscal Year 2020 (Actual) (Estimated) [*] Water Svstem: Average Annual Accounts 178,517 185,150 Average Annual ERCs 245,492 254,116 Billed Sales (000s of Gallons) 21,103,004 21,705,738 Average Monthly Use per ERC (Gallons) 7,164 7,118 Wastewater Svstem: Average Annual Accounts 162,118 167,787 Average Annual ERCs 260,275 268,845 Billed Flow (000s of Gallons) 15,883,678 16,305,594 Average Monthly Flow per ERC (Gallons) 5,086 5,054 *] Amounts shown are based on eight (8) months of actual billing data through May 31, 2020 The estimated Fiscal Year 2020 billing statistics represents an increase in billed water and wastewater flows when compared to the prior Fiscal Year 2019. The increase was predicated on eight (8) months of actual billed water data and reflects more normalized water use and billed wastewater flows per customer based on a review of water use characteristics for the past six (6) fiscal years. For purposes of the financial forecast, water and wastewater account growth and average water use / billed wastewater flow per customer for the Forecast Period were further adjusted downward from Fiscal Year 2020 estimated levels to be more consistent with the most recent five- (5) year trend in growth and sales. ES-8 14. The net revenue requirements, which represents the annual expenditures and funding requirements which are recovered from Monthly User Charges, include the following components: a. Operating and Maintenance Expenses; plus b. Annual Payment of Bond Service Requirement and Subordinate Indebtedness payments; plus Deposits to Renewal and Replacement Account; plus d. Other Capital Funding Programmed on a Pay -As -You -Go ("Pay -Go") basis; plus Funding of Working Capital / Reserves / Other Financial Requirements; less f. Pledged Capacity [Impact] Fees applied for payment of i) the debt service component associated with contracted water purchases from TBW; and ii) the County Bond Service Requirement, all as delineated in the Bond Resolution; less g. Other Revenues (not from Monthly User Charges) and investment income that is considered available to fund System operations. 15. Annual rate revenues from Monthly User Charges for the Fiscal Year 2020 are estimated to be approximately $263 Million, which represent approximately 92% of total System revenues and cash contributions (e.g., Impact Fees). The Department is of the opinion that the rate revenues from Monthly User Charges, when recognizing the adjustments previously discussed, will be sufficient to meet the projected net revenue requirements of the System for the Fiscal Year 2020 and the subsequent Fiscal Year 2021 (the "Review Period"). 16. Operating expenses presently account for approximately 69% of the gross revenue requirements of the System funded from System revenues. Absent the cost of purchased water, such costs generally increase due to inflation and System growth. For reference, the consumer price index has increased by approximately 17.7% since 2010. In order to offset the ongoing effects of inflation on the cost of operations, the rate study forecast recognizes the application of the Price Index Adjustment through Fiscal Year 2025 (as referenced in No. 4 above). In the development of the financial forecast for the Fiscal Year 2020, the analysis considered actual Fiscal Year 2018 and 2019 results and fiscal year-to-date 2020 results. Based upon a review of year-to-date Fiscal Year 2020 actual operating expenses, budget adjustments made during the Fiscal Year 2020 and discussions with the Department, it is estimated that the Department will spend approximately 94% of the operating budget. The preliminary operating expense budget provided by the Department for Fiscal Year 2021 includes an 8.5% increase over the Fiscal Year 2020 adjusted budget which was relied upon in the development of the financial forecast reflected in this report. For the remainder of the Forecast Period, operating expenses are projected to increase approximately 4% annually. 17. On December 10, 2019, the County issued $90,375,000 in Utility Refunding Revenue Bonds ("Series 2019") to advance refund all the outstanding Utility Revenue Bonds, Series 2010B ES-9 (Federally Taxable — Build America Bonds — Direct Payment). As a result of issuing the Series 2019 Bonds, the County recognized approximately $8,692,663 in net present value savings. As of December 31, 2019, it is anticipated that the System will have outstanding in the principal amount of $319,870,000 in existing debt issued in accordance with the Bond Resolution; there is currently no Subordinated Indebtedness allocable to the System payable from System revenues. For the Fiscal Year 2020, the existing (including the issuance of the Series 2019 Bonds) annual Bond Service Requirement paid from System Pledged Revenues is approximately $16.4 million. The payment of the annual Bond Service Requirement on currently Outstanding Bonds is approximately 5.7% of the projected total gross revenue requirements of the System for the Forecast Period. 18. The Department has identified the continuation of significant growth in South Hillsborough, which is greater than previous projections that is consistent with regional projections developed by Southwest Florida Water Management District ("SWFWMD") and TBW. As a result of this increased population growth and development, the County envisions the construction of the "One Water Campus" during the Forecast Period to meet the needs for new water and wastewater capacity (facilities) to accommodate the increased growth. In order to meet the short-term and long-term projected demands, the County has developed a phased approach for the construction of the One Water Campus in the capital improvement program. Phase 1 recognizes: i) the construction of a transmission main from the Lithia Water Treatment Plant to South County, which is assumed to be placed in service by the end of Fiscal Year 2024 at a projected cost of $111 million; ii) the construction of a water in - line booster pump station, which is assumed to be placed in service by Fiscal Year 2023 at a projected cost of $13 million; iii) the expansion of the existing South County Regional Advanced Wastewater Treatment Plant ("AWWTP") using modular components that can be later relocated to the One Water Campus, which is assumed to be placed in service by the end of Fiscal Year 2024 at a projected cost of $88.2 million; and iv) additional wastewater flow diversion pump stations and pipelines, which is assumed to be placed in service during the first quarter of Fiscal Year 2022 at a cost of $12 million. Phase 2 recognizes i) the construction of a wastewater treatment and collection facility at a projected cost of $440 million and is anticipated to be placed in service by the end of Fiscal Year 2029 (outside of the Forecast Period); and ii) the construction of a potable water treatment and distribution facility at a projected cost of $80 million that is also anticipated to be placed in service by the end of Fiscal Year 2029 (outside of the Forecast Period). As discussed in the capital improvement spending plan (reference No. 20 below) and based on information provided by the County's Municipal Financial Advisor, it is anticipated that additional parity bonds will be issued to fund the construction of these new expansion -related facilities. It is estimated that parity bonds in the amount of $80 million will be issued in Fiscal Year 2021 and $558 million in Fiscal Year 2025 (outside of the Forecast Period) to provide funds for the construction of these projects by the assumed in-service dates. It is also anticipated in the capital financing plan that internally generated funds will be used to finance a portion of the new facility construction to limit the amount of additional parity bonds to be issued. ES-10 The principal amount of the then Outstanding Bonds projected at the end of the Forecast Period is considered manageable when recognizing the significant amount of net utility plant investment that is needed to meet increased service area needs, accounting for approximately 23.5% of the projected net utility plant assumed to be in service by the Fiscal Year 2024. It has also been assumed that approximately $54 million of Wastewater Impact Fee Assessment Bonds, Series 2021 ("2021 IFAU Bonds") will be issued in Fiscal Year 2021 to partially fund the construction of the South County WWTP Modular Expansion which is considered to be 100% expansion -related. The Impact Fee Assessments specifically pledged for the repayment of the 2021 IFAU Bonds will not be included as a financial resource to the Department since they are specifically restricted for future debt repayment. Additionally, the 2021 IFAU Bonds are not considered a debt to the System which will improve the overall fiscal position of the System. 19. Pursuant to the Fiscal Year 2019 Water and Wastewater System Annual Financial Report, the System currently has a gross capital investment in utility plant and facilities of $2,487,172,000[21 reported as of September 30, 2019 of which approximately $2.2 billion is classified as depreciable property The reinvestment in depreciable capital assets will require continued upgrade, replacement, and renewal which are expected by the Department to increase over time as the System ages and the utility plant reaches its service lives. The Department continues to update its Asset Management Program to maximize the utilization of its existing capital investment for the ultimate benefit of the ratepayers and to identify overall asset condition and the criticality of any future asset expenditures to provide continued and reliable utility service. In 2015, the County's Consulting Engineers performed an evaluation to identify the capital reinvestment needs for the next twenty (20) years. Based on the findings of the evaluation, the Consulting Engineers have recommended targeting an annual minimum capital reinvestment rate of approximately $57.4 million a year which does not include the ongoing replacement of General Plant (represents vehicles, equipment and other assets with short service lives). The minimum capital reinvestment rate water established reflecting 2015 dollars and is now estimated to be $66.5 million based on today's dollars, which the County is expected to meet based on the current capital improvement spending plan (reference No. 21 below). Funding for capital reinvestment from rate revenues assumes annual transfers to the Renewal and Replacement Account at a minimum of 5% of Gross Revenues per the Bond Resolution and additional deposits to the General Revenue Capital Expense Account of approximately $53.4 million a year or approximately 100% of the recommended capital reinvestment rate. The annual transfer from System revenues, which recognizes the implementation of the rate adjustments as previously discussed (referred to as "Pay -Go" funding) during the Forecast Period averages $68 Million or 96% of the recommended "inflation adjusted" reinvestment rate (which is considered reasonable when assuming the application of a 3.0% construction cost inflation rate for the Forecast Period, which is representative of the most recent average 20-year construction cost index as published by the Engineering News Record). This level of capital funding from rate revenues is considered as a reasonable and prudent capital reinvestment rate by the County's Qualified [2] Amount shown includes land and construction -work -in -progress, which reflects expenditures to date for capital improvements under construction associated with depreciable fixed assets, which are considered as non -depreciable assets. ES-11 Rate Consultant, especially when considering the amount of capital needs required by the System over the next five to ten years by the Department. 20. The Department has identified the need to fund approximately $676 million in capital improvements through the Fiscal Year 2024. As described in (reference No. 18 above) a principal component of the capital improvement program is to accommodate the significant growth in South -Central Hillsborough County. To meet short-term and long-term projected demands and as previously mentioned, the Department is planning the development of the One Water Campus. Phase 1 is planned to occur during the Forecast Period and includes: i) water facility improvements associated with the construction of a new water transmission main from the Lithia Water Treatment Plant to South County and the construction of a water in -line booster pump station for a total of $124 million; and ii) wastewater facility improvements for the expansion of the existing South County Regional AWWTP using modular components that can be later relocated to the One Water Campus and additional wastewater flow diversion pump stations and pipelines totaling $100.2 million. It is anticipated that funding mechanisms will include the use of impact fees on deposit, the issuance of wastewater impact fee assessment bonds and the issuance of additional parity bonds. Phase 2 of the One Water Campus project is estimated to begin in Fiscal Year 2025 (outside of the Forecast Period) and includes the construction of a new wastewater reclamation facility and a new potable water treatment facility currently estimated at a total of $520 million. It is anticipated that additional parity bonds will be issued to fund to majority of the cost of these new facilities. In addition to the new capacity expansions located in the South -Central service area, the Northwest Regional Water Reclamation Facility expansion and capacity consolidation project (the "NWRWRF" and "NWRWRF Consolidation") is currently under construction and is scheduled for completion in March 2021. This facility promotes economies of scale and increased regionalization of the treatment plant facilities in the North service area and is expected to provide for a reduction in utility expenditures over the long run. To accommodate the increased flows to the NWRWRF, the capital improvement program incorporates funding for expansion of the facility and the construction of new and upgraded conveyance facilities and during the Forecast Period, approximately $26 million is projected to be spent on this project with 56.8% of those funds derived from the proceeds from the previous issuance of the Series 2016 Bonds. A benefit of the project is expected net operational cost savings from consolidation, however for purposes of this report no savings were assumed during the Forecast Period since such amounts are estimated and would not be realized until completion of the project expected on or about the Fiscal Year 2021. The balance of the capital improvements identified for the Forecast Period are primarily for the continued renewals, replacements, betterments, upgrades to existing facilities and certain expansion -related projects. a. Beginning in Fiscal Year 2021, the Department has designated funding for the Low - Pressure Sewer System ("LPSS") initiative. The LPSS Project will upgrade 300 homes annually to vacuum sewer systems with an approximate cost of $8 million annually. b. The Department is contributing to the Consolidated and Hardened Maintenance East, South and West Facilities Service Units. This project includes the construction upgrades ES-12 to facilities for the Public Works, Water Resources and Fleet Services Departments to replace existing facilities which are nearing the end of their useful lives and will provide efficient and secure locations for pre- and post- disaster response. The Department's portion of the construction costs are approximately $33 million, and it is currently under construction. A summary of the capital improvement program reflected in the financial forecast for the Forecast Period is summarized as follows: Fiscal Year Ending September 30, [1] Description 2020 2021 2022 2023 2024 Total Capital Program ($000s) Wastewater Treatment $44,628 $26,716 $65,675 $68,392 $35,670 $241,081 Wastewater Collection 13,577 11,088 11,547 3,768 3,722 43,702 Water Treatment 8,880 22,773 37,835 60,612 23,426 153,526 Water Distribution 3,963 3,287 30,029 30,005 29,914 97,198 Reclaimed Water 11,112 3,603 893 172 173 15,953 Low Pressure Sanitary Sewer Program (LPSS) -- 8,073 8,073 8,073 8,073 32,292 Other [2] 29,348 16,515 5,314 1,631 931 53,739 Departmental Capital [3] 11,753 10,474 5,448 5,500 5,553 38,728 Total Capital Program $123,261 $102,529 $164,814 $178,153 $107,462 $676,219 [ 1 ] Amounts shown derived from Table 5 at the end of this report and is based on the Fiscal Year 2020 capital cash funding budget and includes i) an allowance for Departmental capital expenditures (e.g., new vehicles, equipment, etc.), which is funded from rates; and ii) capital projects that are accounted for in other funds, which includes contributions from the System for its share of the project costs (project benefits several County Departments). Amounts shown include capital expenditures approved and funded in prior years that are currently ongoing from a project implementation basis (e.g., construction -work -in -progress). Additionally, amounts shown do not include any capital expenditures associated with water supply and treatment projects, which are the sole responsibility of Tampa Bay Water. [2] The capital expenditures designated as Other are primarily comprised of. i) the Consolidate and Hardened Maintenance Facilities Project in the amount of $33M; and ii) utility relocations related to transportation projects in the amount of $10.9M. [3] Amounts shown reflect expenditures for general capital that supports Department operations as a component of the Operating Budget and include but not limited to, a general renewal and replacement allowance for minor projects and vehicle replacement, customer service facilities and other general projects or general plant assets (not included as a component of the expenditures recognized in the CIP). 21. The capital funding program recognized in the financial forecast for the five -fiscal year period and included in the rate sufficiency evaluation is summarized below: (Remainder of page intentionally left blank) ES-13 Description Capital Funding Program ($000s) Renewal & Replacement Account General Revenue Capital Expense Acct. Existing Bond Proceeds Additional Bond Proceeds Impact Fees [2] Wastewater IFAU Bonds [3] Other Available Sources [4] Annual Operations (Rates) [5] Total Capital Funding Sources Fiscal Year Ending September 30, [1] 2020 2021 2022 2023 2024 Total $16,797 $12,808 $21,731 $15,494 $15,294 $82,124 76,789 58,675 79,370 56,566 55,804 327,204 14,644 6,276 -- -- -- 20,920 -- 2,544 17,712 43,048 16,696 80,000 -- 4,745 19,390 32,049 9,173 65,357 -- 5,893 19,641 24,096 4,240 53,870 3,278 1,114 1,524 1,400 700 8,016 11,753 10,474 5,446 5,500 5,555 38,728 $123,261 $102,529 $164,814 $178,153 $107,462 $676,219 [1] Amounts shown include available unencumbered funds and funds anticipated to be derived from operations during the Forecast Period. [2] The majority of the Water and Wastewater Impact Fees are considered as Pledged Impact Fees and are used to fund: i) the Debt Service Component of the Cost of Contracted Water from Tampa Bay Water (water -only impact fees); and ii) the expansion component of annual Bond Service Requirement. Use of impact fees reflects amounts currently on deposit in the fund from prior periods and amounts not considered as Pledged Impact Fees (refers only to a limited amount of Water -related Impact Fees) that are assumed to be received during the Forecast Period. The Impact Fees shown represent amounts on deposit in the fund and additional fees to be realized above what is considered as being a pledged fee, if any. [3] The County is planning to issue in the principal amount of $53.5 million of Impact Fee Assessment Unit (IFAU) Bonds in Fiscal Year 2021 to fund a portion of the Hillsborough County One Water Campus- Wastewater Modular Capacity Expansion Project. The payment of the 2021 IFAU Bonds are secured solely from a pledge of certain IFAU assessments resulting from the IFAU program and not from System Net Revenues; such assessments are not included in the financial forecast presented in this report since the respective IFAU assessments are specifically pledged to the payment of the 2021 IFAU Bonds, which are considered as a debt of the County's General Fund and not considered as a System debt. [4] Amounts shown include miscellaneous funding sources such as grants and other contributions. [5] Amounts shown reflect expenditures identified in the Department water and wastewater budget and are funded annually from System Operations (rates). As can be seen above, additional indebtedness is anticipated to be required to fund the projected capital needs of the System, which recognizes the assumption of the continued implementation of the price index adjustments and the additional rate adjustments as disclosed in this report. 22. The County established and funded, at the time of the adoption of the Bond Resolution, a Rate Stabilization Account. Based on prior recommendations of the Debt Management Department and previous discussions with the credit rating agencies, the County internally targets an account balance of $74 million for the Rate Stabilization Account to provide increased liquidity to reduce financial risk and improve the overall credit rating, which results in lower overall borrowing costs. The ending account balance in Fiscal Year 2019 exceeded the funding reserve target balance by approximately $40.6 million and therefore the financial forecast assumes a transfer of approximately $40.6 million to the General Revenue Capital Expense Account to provide future funding for the capital needs of the System and to maintain a projected ending Rate Stabilization Account cash balance of $74,000,000 for the Forecast Period. It is assumed that the County would not deposit any additional funds into the Rate Stabilization Account from Gross Revenues, nor would it withdraw any additional funds from the account to be included as Gross Revenues, for the remainder of the Forecast Period. 23. The forecast identifies Impact Fee collections of approximately $20.0 million annually, which includes interest income of Impact Fee balances and earned through the impact fee ES-14 assessment program (i.e., a fee installment payment process), comprising approximately $7.3 million in "up -front" cash payments and approximately $12.7 million in annual impact fee assessment receipts (net of the 4.0% statutory discount and payment of billing expenses for the IFAU program. As mentioned earlier in this report, it is assumed that County will issue 2021 IFAU Bonds to fund the near -term wastewater capacity expansion projects — this serves to reduce the amount of impact fee collections when compared to prior periods. 24. The Water Impact Fees anticipated to be received by the Department during the Forecast Period are projected to be pledged towards: i) the payment of the Debt Service Component of the Cost of Contracted Water Supply (i.e., Tampa Bay Water) for this component of the fee; and ii) the annual Bond Service Requirement on the Bonds for the County for the other cost components of the fee, all as provided in the Bond Resolution. The forecast does recognize that the majority of projected Water Impact Fees received are assumed as being Pledged Impact Fees during the Forecast Period. The forecast also recognizes that certain Water Impact Fees collected in Fiscal Year 2021 are not be considered as Pledged Impact Fees and will be available to fund future expansion -related projects in the future. Due to the anticipation of issuing additional parity bonds to partially fund a Water Transmission Main from Lithia Water Treatment Plant to South County in the Fiscal Year 2021, which are currently considered to be 100% expansion -related, most of the water impact fees collected will be considered as being pledged to the payment of the Debt Service Component of the Cost of Contracted Water Supply (i.e., TBW debt) and County Bond Service Requirement associated with the County -issued Bonds allocated to the Water System. The Wastewater Impact Fees anticipated to be received by the Department during the Forecast Period are projected to be pledged entirely towards the payment of the annual Bond Service Requirement on the Bonds of the County as provided in the Bond Resolution. None of Wastewater Impact Fees received for the benefit of the System is anticipated by the Department to be used to directly fund expansion -related wastewater capital expenditures. The County has established an Impact Fee (Capacity) Assessment Unit program (IFAU) that allows Impact Fees to be paid on an installment basis whereby the developer agreed to have the installment payment placed on the ad valorem tax bill as a non -ad valorem assessment pursuant to Florida Statutes, Chapter 197, which would be paid in future installments from the owners of the then -developed property. In many instances the election of entering the IFAU program occurs prior to when the impact fee is legally due (i.e., at issuance of building permit) which provides a benefit to the County. The County has issued in the principal amount $101,110,000 in Capacity (Impact Fee) Assessment Special Assessment Revenue Bonds, Series 2006 dated April 11, 2006 (referred to as "2006 IFAU Bonds"); of which the proceeds were used to fund expansion -related capital projects. The Impact Fee assessments that are specifically pledged for the repayment of the 2006 IFAU Bonds are not included as a financial resource to the Department since they are specifically restricted for future debt repayment. 25. The County adopted the Accrued Guaranteed Revenue Fee (AGRF) in 1997 to assist in the funding of the interest component of the capital improvements and the operating and maintaining facilities, both of which are related to unused capacity in the County's potable water and wastewater systems. Pursuant to the adoption of Resolution No. R14-034 dated March 19, 2014, the County set the AGRF rate to $0.00. The County has re -instated the ES-15 application of the AGRF charge pursuant to the adoption of Resolution No. R20-047 on June 17, 2020 which is scheduled to become effective on or about October 1, 2020. The Forecast recognizes the additional revenues anticipated to be earned associated with the imposition of the AGRF fee on new development. It is anticipated that all previously permitted development will be grandfathered in at the previous rate ($0.00) and that the full potential of the increased revenues will be phased in as new development is permitted. Based on the estimated new customer forecast, the projected revenues from the re -instatement of the AGRF fee are expected to range from approximately $2.4 million in Fiscal Year 2021 to $4.9 million in Fiscal Year 2024 (which is significantly less than the amount of AGRF revenues received prior to the Fiscal Year 2014). (Remainder of page intentionally left blank) ES-16 HILLSBOROUGH COUNTY, FLORIDA WATER RESPURCES DEPARTMENT SUFFICIENCY OF WATER AND WASTEWATER RATES INTRODUCTION The Water Resources Department (the "Department") has completed the Sufficiency of Water and Wastewater Rates analysis for the Fiscal Year 2020 (the "Sufficiency Report") for consideration by the Board of County Commissioners (the "Board") of Hillsborough County (the "County"), our customers and other interested citizens. The purpose of the analysis was to: i) analyze the sufficiency of the existing rates for service as it relates to funding the identified revenue requirements or expenditure needs of the water and wastewater system (the "System"); ii) identify any potential changes in rates (both structure or level) that are considered necessary to meet the expenditure needs and promote the financial creditworthiness of the System, including compliance with the rate covenants as delineated in the Amended and Restated Utility System Bond Resolution No. R03-112, adopted by the Board on June 4, 2003, as amended from time to time and as particularly amended by Resolution No. R10-151 dated October 6, 2010, Resolution No. R16-065 dated June 2, 2016 and Resolution No. R19-129 dated October 16, 2019 (the "Bond Resolution"); iii) in conjunction with the Qualified Independent Consultant, evaluate estimated Fiscal Year 2020 results and in support Fiscal Year 2021 projections as required by Section 11.03 of the Bond Resolution (the two fiscal years being referred to as the "Review Period"); iv) identify future trends and the ability of the rate revenues to fund the projected revenue requirements through the Fiscal Year 2024 (collectively with the Review Period, the five year period being referred to as the "Forecast Period"); and v) review the current rate resolution to codify any proposed changes in rates and fees. A five-year projection period was selected in order to provide the County management information regarding rate adjustments that may be required in the near future as part of the development of an acceptable cost recovery strategy and to assist the Department in the development of capital funding analyses and financial projections associated with the issuance of any additional utility indebtedness related to the funding of the System's capital improvement program as may be needed. The County has established and accounts for the System as a utility enterprise fund (the "Utility Fund"). In general, the Utility Fund must have revenues equal to the costs of the services provided by the System and the County must establish Monthly User Charges or rates sufficient to cover the cost of operating, maintaining, repairing and financing of the System. According to the Governmental Accounting Standards Board, "Enterprise Funds should be used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that costs of providing services to the general public on a continuing basis be financed or recovered primarily through user charges." Pursuant to Bond Resolution, the County has authorized the issuance of several series of bonds, which are currently outstanding and are secured by the Pledged Revenues of the System (the "Outstanding Bonds"). The following is a summary of the estimated amount of the Outstanding Bonds as of December 31, 2019 (Fiscal Year 2020). -1- Principal Amount as of December 31, Outstanding Bonds 2019 Utility Revenue Bonds, Series 2010C (Federally Taxable -Recovery Zone Economic Development Bonds -Direct Payment) (the "Series 2010C Bonds") $21,700,000 Utility Revenue Bonds, Series 2016 (the "Series 2016 Bonds") 207,795,000 Utility Refunding Revenue Bonds, Series 2019 (the "Series 2019 Bonds") 90,375,000 Total Outstanding Bonds $319,870,000 The pledge for repayment of the Outstanding Bonds is derived from the revenues and certain Impact Fees of the System (neither the credit nor the taxing power of the County is pledged for the debt repayment of the Outstanding Bonds). The Bond Resolution, which is a contract between the Utility Fund and the Bond Holders or lenders, includes a rate covenant requiring, among other things, that the County's governing body must set rates sufficient to meet certain financial criteria. The Bond Resolution also requires the County to maintain the System in good condition and operate it efficiently. The rate covenant as defined in Section 11.02 of the Bond Resolution specifically requires the County to maintain rates and fees that will always provide Gross Revenues and Pledged Capacity Fees sufficient to pay one hundred percent (100%) of the Required Deposits under the Bond Resolution and at least one hundred twenty percent (120%) of the annual Bond Service Requirement on all bonds then outstanding issued pursuant to the Bond Resolution (considered as the minimum coverage requirement). Other required payments include the maintenance of certain funds established by the Bond Resolution, including an annual contribution of at least five percent (5%) of previous year Gross Revenues into a Renewal and Replacement Account for the replacement, upgrade, and betterment of utility assets. This requirement is established as a minimum funding level that is intended to help ensure that the System is maintained in good condition. In addition to the rate covenant and as previously mentioned, the Department is required to annually review the rates for service. In accordance with Section 11.03 of the Bond Resolution, the Department must: "...at least annually the Issuer [County] will retain a Qualified Independent Consultant to review and make written recommendations to the Director of the Department [Water Resources Department] with respect to changes in the System's rate structure which such consultant deems necessary or appropriate to ensure continuing compliance with the rate covenant set forth in Section 11.02 of this Resolution. " In order to comply with the Bond Resolution and to evaluate the ability of the System Revenues to meet the expenditure needs of the System, the Department has prepared this report of the rates required to provide service, which was also reviewed by Raftelis Financial Consultants, Inc. ("Raftelis") the County's Qualified Independent Consultant (the "Rate Consultant"). The remainder of this Sufficiency Report includes a discussion of the customer projections and capacity needs of the System, a summary of the capital improvement program and the anticipated financial resources anticipated to fund the program, and a discussion of the ability of the System to fund the Cost of -2- Operation and Maintenance, which includes the Cost of Contracted Water Supply (collectively, the "Operating Expenses"), and make the necessary transfers for debt repayment and capital funding needs. All undefined capitalized terms included in this report will have the same meaning as defined in the Bond Resolution. RATE STUDY PURPOSE The study provides a review of the Monthly User Charges, including the underlying structure and cost recovery practices, to meet the overall financial objectives of the System. The last review of the sufficiency of the Monthly User Rates was conducted during the Fiscal Year 2019. This year's focus included the following: • To evaluate the overall sufficiency of the System revenues for the Review Period recognizing the need to meet the anticipated capital improvement program of the such System; • To evaluate the cost recovery for the System in total; and • To determine if utility rates and the underlying structure will produce sufficient revenues to meet rate covenant requirements delineated in the Bond Resolution, financial obligations and continue to allow the System to meet its overall financial targets and business goals initially established in the Fiscal Year 1996 during the "Blue Ribbon" Committee deliberations, and which was presented to the credit rating agencies. MONTHLY USER CHARGES RATE REVIEW PROCESS The various components of costs associated with the operations, maintenance, and financing of the System renewals, replacements, and capital improvements are generally considered the revenue requirements of a publicly -owned and operated utility system. The development of the net revenue requirements is a critical component of the rate study process since rates should be designed to recover the full cost of providing utility service. The determination of revenue requirements was made in a manner generally consistent with the methods employed for other publicly -owned utilities utilizing revenue bond financing to meet their capital needs. This method of defining revenue requirements focuses primarily on the water and wastewater utilities' cash expenditure needs including allowances for proper levels of renewals and replacements and cash reserves. This approach is also consistent with governmental and enterprise fund budgeting requirements and practices. With respect to this study, the determination of the water and wastewater rates for the System has been developed using a style of rate making known as the cash flow approach. Under this approach, the rates for service permitted for the System include the summation of the following revenue requirements or expenditure components (generally on a cash -needs basis and supports the County's budget process and is consistent with the flow of funds and covenant requirements delineated in the Bond Resolution): 1. Operation and maintenance expenses; plus 2. Payment of the annual Bond Service Requirement and Subordinate Indebtedness payments; plus -3- 3. Deposits to Renewal and Replacement Account; plus 4. Other Capital Funding on a pay-as-you-go basis from operations; plus 5. Any Payment -in -lieu -of Tax charges to the General Fund; plus 6. Funding of deposits to or for Working Capital / Reserves / Other Financial Requirements; less 7. Pledged Capacity (Impact) Fees for payment of expansion -related debt service component associated with water purchases from Tampa Bay Water ("TBW") and the County Bonds; less 8. Other Revenues (not from Monthly User Rates) and investment income that is considered available to fund System operations. When rates are functioning properly, the total charges or rates imposed by a utility to its customers should at least equal the above referenced items (i.e., the "net revenue requirements"). The development of the financial forecast included in this report was for a five- (5) fiscal year period. The Forecast Period for the study included an estimate of the Fiscal Year 2020 and the projected four fiscal years ending September 30, 2024. A five-year projection period was selected in order to provide information regarding rate adjustments that may be required in the near future as part of the development of an acceptable cost recovery strategy and to assist the utility in the development of capital funding analyses and financial projections, including the need to evaluate the need to issue any additional utility indebtedness related to the County's System capital improvement program. Although a five-year forecast of System operations was prepared, the evaluation of the sufficiency of the Monthly User Fees and the recommendations in this report was for the Review Period. EXISTING RATES AND CHARGES FOR SERVICE The sales revenues derived from the monthly rates or user charges, Impact Fees, and other operating revenues, all as reflected on Table 6 at the end of this Sufficiency Report associated with the projected operating results for the System, were developed based on rates and charges that were placed into effect on of October 1, 2019. Such rates and charges were approved by the Board pursuant to the adoption of Resolution No. R03-91 by the Board on May 14, 2003, which was amended by Resolution No. R05-106 on May 5, 2005, Resolution No. R09-070 on May 20, 2009, Resolution No. R14-034 on March 19, 2014 and by Resolution No. R19-106 on August 21, 2019 and have been subsequently adjusted annually for the application of certain expense pass -through and price index adjustments with the most recent adjustment occurring on October 1, 2019 (collectively, the "Rate Resolution"). The resolution adopted by the Board on August 21, 2019 approved certain rate adjustments and changes to automatic Price Index and the Pass -Through adjustments (discussed below). Prior to the adoption of Resolution No. R19-106 in August 2019, rate structures have been in place for approximately 16 years. Since 2003 and as mentioned above, the Board has adopted certain amendments to the Rate Resolution to reflect minor administrative revisions / clarifications and to me recognize: i) adjustments in the calculation basis for the Purchased Water Pass -Through Consumption Charge and the automatic Price Index and Pass -Through adjustments; and ii) to reflect minor rate adjustments as a result of "turning on" the automatic price index adjustment beginning in Fiscal Year 2009 as recommended by the Department and its Rate Consultant. Resolution No. 19-106 approved the: i) adjusted formula in which to determine the automatic rate indexing of certain water, wastewater and reclaimed rates charged to customers; ii) adjusted timing of the automatic rate indexing to coincide with the County's fiscal year; iii) sunset of the automatic rate indexing at September 30, 2021; and iv) application of an additional annual automatic rate adjustment of 4% for two (2) fiscal years effective October 1, 2019. Most recently, the Board adopted Resolution No. R20-047 on June 17, 2020 which continued the automatic rate indexing through September 30, 2025 (the "2020 Rate Resolution") and adjusted the impact fees and re- instated the Accrued Guaranteed Revenue Fee ("AGRF") charged to new development as discussed later in this report. The user rates for monthly service (referred to as the "Monthly User Charges") include the following components: 1. Customer Service Charge (per bill rendered); 2. Water and Wastewater Base Facility Charge (per respective ERC served per account) and when including the Customer Service Charge, equates to the minimum bill rendered to each account; 3. Water Consumption Charge (per 1,000 gallons of metered water use), which includes a water conservation pricing structure; 4. Purchased Water Pass -Through Consumption Charge (per 1,000 gallons of metered water use) to pass -through any increase or decrease in the total cost of purchased water to the customer (note all potable water is purchased, no water is produced from County Facilities); and 5. Wastewater Consumption Charge (per 1,000 gallons of metered water use, which serves as the basis for wastewater demand), which includes a monthly maximum billing threshold for individually -metered residential accounts at 8,000 gallons. (Remainder of page intentionally left blank) -5- A summary of the current water and wastewater Monthly User Charges as established pursuant to the Rate Resolution is summarized below: Monthly User Charges [1] Customer Service Charge (per Bill Rendered) $4.41 Water Service Rates: Base Facility Charge (per ERC) $9.18 Usage Charges (per 1,000 Gallons) Block 1 — 0 to 5,000 Gallons $0.75 Block 2 — 5,001 to 15,000 Gallons 2.09 Block 3 — 15,001 to 30,000 Gallons 3.50 Block 4 — Above 30,000 Gallons 5.23 Pass -Through Consumption Charge [2] $2.93 Wastewater Service Rates: Base Facility Charge (per ERC) $14.83 Usage Charges (per 1,000 Gallons) [3] $4.78 [1] Amounts shown were effective October 1, 2019 and reflect the current rates in effect for service as contained in the Rate Resolution. [2] Reflects pass -through of all purchased water costs (primarily Tampa Bay Water) based on formula contained in Rate Resolution; amount shown billed uniformly for all water consumption, regardless of consumption block (is added to the usage charges) and reflects the charge currently in effect (being billed) for the Fiscal Year 2020. [3] Wastewater usage charge billed based on metered water use; individually metered single-family residential service usage charge capped at 8,000 gallons per month and each living unit served within a master -metered residential complex is capped at 5,600 gallons per unit per month. In addition to the monthly rates for water and wastewater service, the County currently charges System Impact Fees to new connections based upon an equitable and proportionate share of the cost for: i) water production and transmission facilities; and ii) wastewater transmission, treatment and effluent disposal capacity of the System. The purpose of the Impact Fees is for paying or reimbursing the equitable share of the capital costs relating to the construction, expansion, or equipping of excess or unused capacity of the System in order to serve new users. The obligation for the payment of these charges is from new customers or development. At the request of the Department, the County's Rate Consultant was requested to evaluate the adequacy of the current impact fees and make recommendations for changes to more accurately recover the cost of necessary capital improvements required to serve new development, equitably recover the cost to provide service and to meet the stated financial goals of the County. On December 13, 2019, the County's Rate Consultant issued the Fiscal Year 2020 Water and Wastewater Impact Fee and AGRF Study for consideration of the Department and the Board. At the recommendation of the Department and County's Rate Consultant, the Board adopted the 2020 Rate Resolution which i) set separate fees for water and wastewater impact fees for the Northwest Service Area and the South/Central Service Area; and ii) increases water and wastewater impact fees from current levels. (Remainder of page intentionally left blank) la The table below summaries the changes to the water and wastewater impact fees with the adoption of the 2020 Rate Resolution on June 17, 2020. Impact Fees Effective October 1, 2020 Change Effective System Current October 1, 2020 Amount Percent Impact Fees Water Northwest Service Area $1,750 $113 6.5% South / Central Service Area 1,750 2,214 464 26.5% Wastewater Northwest Service Area $1,800 $2,951 $1,151 63.9% South / Central Service Area 1,800.00 3,651 1,851 102.8% Combined Utility Systems Northwest Service Area $3,550 $4,814 $1,264 35.6% South / Central Service Area 3,550 5,865 2,315 62.2% As previously discussed, in addition to the Impact Fees the County previously charged new customers or development an Accrued Guaranteed Revenue Fee or "AGRF", which represents i) the estimated interest cost associated with financing the expansion facilities and ii) the fixed cost of operating and maintaining the facilities allocable to growth, both of which are related to unused capacity in the County's potable water and wastewater systems. The purpose of this fee is to recover the cost of holding the capital investment until such time that an applicant requests and pays for capacity. In April 2014, the Board approved a motion to suspend charging the AGRF fee in order to incentivize development. The Board adopted 2020 Rate Resolution reinstated the application of the AGRF to new development. The following table summarizes the historical AGRF rates as compared to the reinstated AGRF rate effective October 1, 2020. Accrued Guaranteed Revenue Fee (AGRF) Effective October 1, 2020 System Utility Water Wastewater Total Utility Effective Prior to April After April October 1, 2014 2014 2020 $1,005 $0 $833 940 0 989 $1,945 $0 $1,822 The Rate Resolution also contains a number of additional fees and rates applied to customers of the System. Such fees are for: i) a particular service (e.g., reclaimed water); ii) a charge for a customer requested service or customer action (e.g., utility turn -on, late payment fee, etc.); iii) a deposit to ensure payment; or iv) another service need (e.g., reimbursement for line extension). Such fees are customary in the utility industry and have not been summarized in this report since no proposed changes in the amount of such rates is being requested by the Department at this -7- time and the amount of revenue earned by the utility from these fees accounts for less than 2% of the total Gross Revenue of the System. CUSTOMER ACCOUNTS AND SALES FORECAST This section of the report summarizes the recent trends in water and wastewater customers, water purchases and wastewater treatment, and associated sales and usage characteristics of the System. The historical period reflected in this report covers the Fiscal Years 2015 through 2019 (the "Historical Period"). Table 1 at the end of this report reflects the historical active customers or accounts (terms used synonymously) and the corresponding equivalent residential connections receiving utility service as well as metered water sales (gallons sold) for the Water System. Similar information regarding the historical customers and billed wastewater flow (revenue gallons) for the Wastewater System is shown on Table 2 at the end of this report. Tables 3 and 4 also summarizes the projected customers and metered water sales and billed wastewater flow for the Water and Wastewater Systems, respectively for the Forecast Period. Water System The Water System has experienced an increase in customers served due to continued development located within the service area but a declining / stabilizing trend in average water sales per account over the past several years as a result of increased water use awareness by such customers, which is being offset due the prior effects of the negative economy that is now in a more robust condition (e.g., reduced vacancies, increased water use due to construction use, etc.). As mentioned, Table 1 at the end of this report summarizes the historical accounts served and the corresponding equivalent residential connections ("ERC") provided water service, billed water sales, and average ERC usage statistics for the Water System. An ERC is representative of the average daily capacity of a single-family residential unit and generally represents the lowest level and the most common level of use and is used to evaluate the size and capacity needs of a utility system. The County still has a significant amount of development and additional vacant property located within the Urban Service Area within the unincorporated County, which constitutes the System service area. As mentioned, Table 3 provides projected Water System statistics for the Forecast Period. (Remainder of page intentionally left blank) The historical and projected customer accounts and ERCs for the Water System are summarized as follows: Fiscal Year Ended September 30, (Historical) 2015 [3][4] 2016 2017 [5] 2018 2019 Average Annual Historical Growth Rate Fiscal Year Ending September 30, (Projected) 2020 [6] 2021 2022 2023 2024 Average Annual Projected Growth Rate [7] Historical and Average Annual Accounts Served [2] 156,984 162,788 167,586 170,995 178,517 3.27% Average Annual Accounts Served [2] 185,150 190,224 195,294 199,851 203,902 2.69% Projected ERCs and Sales Statistics - Water System [1] Average Annual Water Sales Average Monthly Use ERCs Served [2] (000s Gallons) per ERC (Gallons) 214,972 17,549,981 6,803 222,814 18,741,224 7,009 229,496 20,294,946 7,369 235,002 20,329,849 7,209 245,492 21,103,004 7,164 3.37% Average Annual ERCs Served [2] 254,116 260,528 266,765 272,280 277,222 2.46% 4.72% Water Sales (000s Gallons) 21,705,738 22,205,430 22,697,651 23,125,669 23,526,402 2.20% 1.30% Average Monthly Use per ERC (Gallons) 7,118 7,103 7,090 7,078 7,072 (0.26%) [1] Amounts derived from Tables 1 and 3 at the end of this report; amounts shown include all customer classes with exception to fire flow customers. It should be noted that the average use per single-family residential customer, the largest customer class of the System, averaged approximately 7,146 gallons per month of water use per average account served during the last five years ended Fiscal Year 2019. [2] Reflects average annual statistics; ERC means Equivalent Residential Connection and represents an average daily potable water flow of 300 gallons per day (gpd) as defined in Resolution No. R05-106 adopted by the County on May 5, 2005, as amended and supplemented from time to time (i.e., the Rate Resolution). Average annual water accounts exclude fire protection service customers. [3] The decline in Water System average use per customer may be attributable to higher rainfall, continued water conservation measures by the Water System customers and other factors. [4] Amounts shown include the effects of acquiring the Pluris Holdings, LLC systems and the Hillsborough Water Works, Inc. water utility systems during Fiscal Year 2015. [5] The increase in Water System average use per customer may be attributable to a decline in precipitation (rainfall) of over 20% from Fiscal Year 2016 to Fiscal Year 2017. [6] Amounts shown based on eight (8) months of actual information. [7] Reflects average annual compound growth rate from Fiscal Year 2019 through Fiscal Year 2024. The Water System customer base consists primarily of single-family residential customers. As shown in the following table, this class accounted for over 96% of the total estimated accounts served by the Water System during the estimated Fiscal Year 2020. The number of ERCs served by the Water System for the same period was approximately 37% greater than the accounts served based on the information shown on the summary below. Annual Average Water Accounts and ERCs - Estimated Fiscal Year 2020 Average Annual No. Percent Equivalent Residential Percent of Accounts to Total Connections [*] to Total Residential Single -Family 179,367 96.46% 179,367 70.59% Residential Master -Metered 920 0.49% 39,525 15.55% Commercial 4,863 2.62% 35,224 13.86% Subtotal 185,150 Fire Line 792 Total 185,942 99.57% 0.43% 100.00% 254,116 N/A 254,116 100.00% N/A 100.00% [*] ERC is defined as Equivalent Residential Connection and represents an average daily potable water flow of 300 gallons per day (gpd) as defined in the Rate Resolution. in As summarized on the table above, the Water System provides service to approximately 254,000 ERCs, which is greater than the number of accounts (bills) served. As previously mentioned, an ERC represents the equivalent usage requirements of a single-family residential customer. Since commercial or multi -family customers are generally served by larger -sized meters than the standard residential customer, it is useful to equate such customers on a basis equivalent to the residential class for a more consistent presentation of the total equivalent customer base (overall size of utility) served. It is expected that the County will continue to grow and increase the water and wastewater customer base of the System during the Forecast Period. The development of the Water System customer forecast for the projected period reflected in this report was based on: i) discussions with Utility Planning staff responsible for new development within the System service area; ii) a review of recent historical trends in securing capacity assessment units, which represent Impact Fees for development that will be assessed to the properties (an indicator for future growth, and which generally precede the connection to the System by a period ranging from six months to two years); iii) the level of actual accounts being served through May 2020; vi) incremental growth related to the acquisition of franchise utilities (e.g., Pluris System franchise) and extension of service within the County to developed but unserved areas (e.g., the Palm River area); and vii) the overall historical trends in customer, ERC and water sales growth. It was assumed that the average annual customers served (active services) for the Water System would increase at an average compound rate of growth of approximately 2.69% per year. This rate of growth is in line with the recent historical trends due to an observed rebound in residential and commercial development. The increase in accounts during the Fiscal Years 2015 through 2019 is considered more representative of recent trends associated with an improving economy. The impact of the COVID-19 pandemic on growth is unknown and although growth has been on the rise, the customer projections for the Forecast Period assume a more conservative but positive forecast (a slowing of the economy to more normal conditions during the Forecast Period). The first seven (7) months of Fiscal Year 2020 indicates a strong demand for capacity with an estimated increase of 17.22% increase in upfront impact fees paid and impact fee assessment revenue over the same time period in Fiscal Year 2019. Water meter installation revenue is slightly down from this time last year at-3.58%. Growth will continuously be monitored by the Department. The water customer statistical projections shown on Table 3 served as the basis for the projection of revenues derived from monthly water user charges for the Forecast Period reflected in the report. As previously mentioned, the County has adopted a water conservation rate structure to promote the efficient use of potable water by the customers of the System. The application of a water conservation rate was first introduced in 1993 as a result of the Water Use Caution Area Rules adopted by the Southwest Florida Water Management District, which required the imposition of water conserving rate structure. The County has maintained a conservation pricing incentive in its consumption rates for over twenty (20) years. Since the imposition of the water conservation rates over 20 years ago, the average water use per residential customer has reduced from an average of 10,000 gallons per month to approximately 7,200 gallons per month as of the Fiscal Year 2019. There are four water usage blocks that are priced at an increasing rate to promote water conservation. (Remainder of page intentionally left blank) -10- The following table provides a summary of the dispersion of billed water flows by water usage block to all applicable customers as estimated for the Fiscal Year 2020: Estimated Fiscal Year 2020 Water Consumption Der Block (000s of Gallons Monthly Consumption Residential Billed Commercial Billed Total Billed % of Total Range per ERC Consumption [*] Consumption Consumption Consumption Block 1 0-5 10,850,449 1,563,024 12,413,473 57.19% Block 2 5 — 15 6,261,587 839,397 7,100984 32.71% Block 3 15 — 30 1,519,889 107,906 1,627,795 7.50% Block 4 > 30 495,416 68,070 563,486 2.60% Totals 19,127,341 2,578,397 21,705,738 100.00% [*] Amounts shown include single-family and master -metered residential water consumption. As can be seen above and estimated for the Fiscal Year 2020, the amount of water consumption in the first block accounted for approximately 57% of the total billed water consumption (primarily representative of indoor or essential use). Moreover, the total consumption for the first two usage blocks represent approximately 90% of the total billed water consumption; which provides an indication that the conservation pricing appears to be effective and that the amount of water consumption in the last consumption block (considered as excess water sales use) is not material at approximately 3% percent of the total metered potable water billed. As such, the Department does not believe that a change in the structure of the water use pricing is necessary for implementation in Fiscal Year 2021. Wastewater System The Wastewater System has experienced an increase in customers and billed wastewater now (sales) over the past several years, which is generally consistent with the trends experienced by the Water System. The growth is attributable to continued development / growth within the County's service area. For billing purposes, wastewater charges are determined from the quantity of monthly metered water sales since wastewater flows are not metered at the customer level. While all metered water flows are billed as wastewater flows for the commercial customers, the residential customers receive the benefit of a billing cap or limit equal to 8,000 gallons (per ERC) per month. This assumes, unlike commercial, that not all residential water use is returned to the wastewater collection system for treatment (e.g., landscape irrigation, car washing, etc.). As a result, billed wastewater flows are less variable than water flows that include outdoor use, which is affected by weather and / or other factors / use. Billed wastewater flows generally tend to track more closely to the growth in customer accounts and to a lesser degree the amount of overall water use. Table 2 at the end of this report summarizes the historical accounts and ERCs provided wastewater service, billed wastewater flow (sales), and average ERC usage statistics for the Wastewater System. Table 4 also provides the projected wastewater statistics for the Forecast Period. Remainder of page intentionally left blank) -11- The historical and projected customer statistics for the Wastewater System are summarized below: Historical and Proiected ERCs and Sales Statistics - Wastewater Fiscal Year Ended September 30, (Historical) [2] 2015 [4] 2016 2017 2018 2019 Average Annual Historical Growth Rate Fiscal Year Ending September 30, (Projected) 2020 2021 2022 2023 2024 Average Annual Projected Growth Rate [6] Average Annual Wastewater Accounts 144,454 149,706 153,316 156,733 162,118 2.93 % Average Annual Wastewater Accounts 167,787 172,128 176,466 180,365 183,825 2.55% Average Annual ERCs [3] 230,639 238,875 245,146 251,175 260,275 3.07% Average Annual ERCs [2] 268,845 275,155 281,233 286,557 291,274 2.28% Billed Wastewater Flow (000s Gallons) 13,869,923 14,513,578 15,108,054 15,363,303 15,883,678 Average Monthly Billed Wastewater Flow per ERC (Gallons) 5,011 5,063 5,136 5,097 5,086 3.45% 0.37% Billed Wastewater Flow (000s Gallons) 16,305,654 16,680,429 17,040,250 17,353,809 17,630,387 2.11% Average Monthly Billed Wastewater Flow per ERC (Gallons) 5,054 5,052 5,049 5,047 5,044 (0.16%) [ 1 ] Amounts derived from Tables 2 and 4 at end of report. [21 During this period and continuing in some form today, the SWFWMD had imposed water use restrictions on the use of potable water in order to reduce water demands and promote water conservation to preserve water resources; since billed wastewater flow is based on metered water consumption, an estimated reduction in billed wastewater per customer occurred but to a lesser degree since there is a billing cap on residential water use (discussed later in report), which limits the effects of changes in irrigation use. [31 Reflects average annual statistics; ERC is defined as Equivalent Residential Connection and represents an average daily wastewater flow of 200 gpd as defined in the Rate Resolution. [4] Amounts shown include the effects of acquiring the Pluris Holdings, LLC systems during Fiscal Year 2015. [51 Amounts shown based on eight (8) months of actual information. [6] Reflects average annual compound growth rate from Fiscal Year 2019 through Fiscal Year 2024. The Wastewater System customer base also consists primarily of single-family residential customers. As shown in the following table, this class accounted for approximately 97% of the total estimated accounts served by the Wastewater System estimated for the Fiscal Year 2020. The number of ERCs served by the Wastewater System was approximately 61 % greater than the accounts served based on the information as shown below. Annual Average Wastewater Accounts and ERCs - Estimated Fiscal Year 2020 Average Annual Percent to Equivalent Residential Percent to No. of Accounts Total Connections [*] Total Residential Single -Family 163,388 97.38% 163,388 60.77% Residential Master -metered 640 0.38% 57,415 21.36% Commercial 3,759 2.24% 48,042 17.87% Total 167,787 100.00% 268,845 100.00% [*] Reflects average annual statistics; ERC means Equivalent Residential Connection and represents an average daily wastewater flow of 200 gallons per day (gpd) as defined in the Rate Resolution. -12- As summarized on the table above, the Wastewater System provides service to approximately 269,000 ERCs, which is greater than the number of accounts (bills) served. As previously mentioned, an ERC represents the equivalent usage requirements of a single-family residential customer. Since commercial or multi -family customers are generally served by larger -sized meters than the standard residential customer, it is useful to equate such customers on a basis equivalent to the residential class for a more consistent presentation of the total equivalent customer base served. The Wastewater System has incurred a historical growth rate in the average number of ERCs served of approximately 2.93% per year since the Fiscal Year 2015, which is slightly lower but similar to the historical growth rate recently experienced for the Water System (most new water accounts receive wastewater service). This growth is due to both the infill of existing developments where service was available, as well as, the continued addition of new development within the utility service area (the urban service area). The forecast of Wastewater System ERCs and billed wastewater flow (sales) was based on recent historical trends, discussions with Department planning staff associated with the permitting of new development, the Water System customer account and ERC forecast presented earlier, and the assumption that growth will continue at recent historical trends during the Forecast Period. The wastewater customer projections shown on Table 4 served as the basis for the projection of revenues derived from monthly wastewater user charges for the Forecast Period reflected in the report. Customers Served (Bills Rendered) As previously discussed, the County charges customers a monthly billing charge associated with the cost of rendering the bill and providing ongoing account services to the customer. While the majority of customers receive both water and wastewater service from the County, some customers may only receive one type of utility service. As a result, the County provides service to a greater number of total customers than is independently reported for the respective water and wastewater systems. In order to project the associated service charge revenues a forecast of the total number of customers receiving both water and wastewater service, as well as, customers that receive water - only and wastewater -only service was prepared. (Remainder of page intentionally left blank) -13- The historical and projected information for the total bills rendered by service is shown on Tables 1 through 4 at the end of this report and summarized as follows: Historical and Projected Customers Served - Combined Utility Systems [1] Fiscal Year Ended Average Annual Customers Served [2] September 30, (Historical) Water Only Water and Wastewater Wastewater Only Total Customers 2015 [3] 24,482 132,502 11,952 168,936 2016 25,197 137,591 12,115 174,903 2017 26,542 141,044 12,272 179,858 2018 26,541 144,454 12,279 183,274 2019 28,780 149,737 12,381 190,898 Average Annual Historical Growth Rate 4.13% 3.10% 0.89% 3.10% Fiscal Year Ending September 30, (Projected) 2020 2021 2022 2023 2024 Average Annual Projected Growth Rate [4] Average Annual Customers Served [2] Water Only Water and Wastewater Wastewater Only Total Customers 29,284 155,866 11,921 197,071 29,796 160,428 11,700 201,924 30,317 164,977 11,489 206,783 30,848 169,003 11,362 211,213 31,388 172,514 11,311 215,213 1,75% 2,87% (1.79%) 2.43% [1] Amounts derived from Tables 1 through 4 at end of report. [2] Reflects total average customers served during the year (bills rendered), regardless of service type (water -only, wastewater -only, or combined water and wastewater service). [3] Average customer statistics include the incremental customer additions associated with the purchase of the Pluris Holdings, LLC systems and the Hillsborough Water Works, Inc. water -only system during Fiscal Year 2015. [4] Reflects average annual compound growth rate from Fiscal Year 2019 through Fiscal Year 2024. The financial forecast assumes Wastewater System account growth at approximately 9 1 % of the projected Water System account growth for the Forecast Period. Although the specific utility service areas are different and the County does provide service to water -only and wastewater -only customers, it should be noted that most of the water customers added to the System are associated with property development (not due to extensions of service to existing developed areas or acquisition of utility systems) and are expected to receive wastewater service. The average number of customers receiving both water and wastewater service as estimated for the Fiscal Year 2020 approximated 79.1 % of the total number of customers served. The total number of customers served (billed) is consistent with the ERC growth rate discussed in regard to the Water and Wastewater Systems. (Remainder of page intentionally left blank) -14- Water Purchase Requirements The County purchases all its potable water needs from several water service providers. As can be seen in the following table, water purchases from TBW accounted for approximately 97.4% of the total water purchased requirements for the estimated Fiscal Year 2020: Water Purchases — Estimated Fiscal Year 2020 Water Provider: Tampa Bay Water City of Tampa [ 1 ] City of Plant City [2] City of Oldsmar [3] City of Temple Terrace [3] Water Purchases (000s of Gallons) Percent of Total Water Purchases 23,758,190 97.42% 596,490 2.44% 31,668 0.13% 22 0.00% 2,100 0.01 % Total Water Purchased 24,388,470 100.00% [1] The County purchases water from the City of Tampa to provide service primarily to the Seaboard Service Area, which was acquired by the County from Florida Water Services Corporation during the Fiscal Year 2004. [2] The County purchases water from the City of Plant City to provide service to County retail customers in an area referred to as Oak Utilities. [3] The County purchases water from the Cities of Oldsmar and Temple Terrace for service to unincorporated areas, which are contiguous to the respective Cities' municipal boundaries and cannot be directly served by the County through water purchases from Tampa Bay Water. The forecast of water production requirements was based on the forecast of water sales shown on Table 3, adjusted for non -revenue water to recognize water that may not be billed due to line flushing, leaks, metered internal water use (e.g., Department use at wastewater lift stations), and other factors. Once the forecast of the total water usage needs was identified, such amounts were subsequently allocated among the various potable water service providers based on the anticipated water ERC growth assumed for each area served by the water providers. The projected water purchases for the various water providers for the Forecast Period is summarized below: Water Purchases (000s of Gallons) [*] Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Tampa Bay Water 23,758,190 24,313,676 24,860,709 25,335,543 25,779,659 City of Tampa 596,490 602,455 608,480 614,565 620,711 City of Plant City 31,668 31,668 31,668 31,668 31,668 City of Oldsmar 22 22 22 22 22 City of Temple Terrace 2,100 2,100 2,100 2,100 2,100 Total Water Purchases 24,388,470 24,949,921 25,502,979 25,983,898 26,434,160 [*] Amounts shown based on water sales forecast adjusted for a "non -revenue water factor" of 11.0% of total water purchased (represents historical average of non -revenue water relationships). Wastewater Treatment Requirements As of the end of Fiscal Year 2019, the Department owned and operated 5 separate wastewater treatment plants with a combined wastewater treatment capacity of 65.7 million gallons per day -15- (MGD) expressed on an annual average daily flow basis. A summary of the current wastewater treatment plant capacity by specific facility and service area location is summarized as follows: Current Permitted Wastewater Treatment Plant Capacity (MGD) [1] Northwest South -Central Treatment Facility Service Area Service Area Northwest Regional WRF [2] 30.0 --- River Oaks AWWTP [2] 0.0 --- Van Dyke WWTP 1.7 --- Falkenburg Road AWWTP --- 12.0 South County Regional AWWTF --- 10.0 Valrico AWWTF --- 12.0 Total Wastewater Capacity 31.7 34.0 AWWTF = Advanced Wastewater Treatment Facility WRF = Wastewater Reclamation Facility WWTP = Wastewater Treatment Plant [1] The permitted capacity for the Northwest Wastewater Treatment Plant is in terms of a 3-month maximum daily flow basis; all other facilities are permitted on an average annual daily flow basis with the Florida Department of Environmental Protection. [2] The River Oaks AWWTP was removed from service on October 1, 2019 and is now in the process of being decommissioned and fully taken out of service. All flows from the facility were transferred to the Northwest Regional WRF, which was expanded from 10.0 MGD to 24.0 MGD; the interconnection of the wastewater treatment facilities and the expansion of the Northwest Regional WRF were funded, in part, from the proceeds of the previously issued Series 2016 Bonds. As shown above, the Wastewater System has two distinct service areas, for which treatment capacity has been constructed by the Department. Additionally, in order to add interim capacity on a temporary basis in the Northwest Service Area, if required (e.g., expansion of a facility or maintenance outage), the Department also has wastewater interconnection with the City of Tampa such that flows could be diverted to the City's wastewater treatment facilities. The County treats approximately 98% of all wastewater flows through the County's existing wastewater treatment facilities. The remainder of wastewater treatment is purchased from other public utilities for small portions of the County's service area that are located close to the jurisdictional boundaries of the Cities of Tampa, Plant City and Temple Terrace, respectively, which are more economically served on a wholesale service basis. The forecast of wastewater treatment requirements was based on the forecast of ERCs for the Wastewater System, the recent trends in flow growth and treatment requirements experienced by the individual wastewater service areas, and other factors. (Remainder of page intentionally left blank) -16- The following table provides a summary of the projected wastewater treatment requirements assumed for the Forecast Period: Projected Wastewater Treatment Requirements for the Forecast Period Fiscal Year 2020 2021 2022 2023 2024 MGD-ADF = Million Gallons per Day, Average Daily Flow Wastewater Treated (MGD-ADF) [ 1 ] 45.08 46.14 47.15 48.05 48.84 [1] Reflects total Wastewater System estimated treatment requirements during Forecast Period and includes wholesale wastewater purchases from other treatment providers; reference Table 4 at end of report for summary. [2] Wastewater treatment for Fiscal Year 2020 is estimated; includes an allowance for wastewater treatment services from other public utilities. CAPITAL IMPROVEMENT PROGRAM — SOURCES AND USES OF FUNDS A significant component of the evaluation of the sufficiency of rates deals with the funding of the capital improvements of the System. The County has an adopted five-year capital improvement plan ("CIP") as part of the budgetary process, which reflects both expansion -related projects and expenditures associated with the renewal, replacement, betterment and upgrade of existing facilities for the Water and Wastewater Systems. In addition, the Department has certain projects underway (under design or currently classified as construction -work -in -progress) that were approved in prior years (funding has been designated), which are anticipated to be completed during the Forecast Period. The following provides a summary of the capital plan by utility plant type by Fiscal Year presented on an "annual cash funded -basis" representing when project expenditures are anticipated to be incurred by the Department. (Remainder of page intentionally left blank) -17- Fiscal Year Ending September 30, [1] Description 2020 2021 2022 2023 2024 Total Capital Program ($000s) Wastewater Treatment $44,628 $26,716 $65,675 $68,392 $35,670 $241,081 Wastewater Collection 13,577 11,088 11,547 3,768 3,722 43,702 Water Treatment 8,880 22,773 37,835 60,612 23,426 153,526 Water Distribution 3,963 3,287 30,029 30,005 29,914 97,199 Reclaimed Water 11,112 3,603 893 172 173 15,953 Low Pressure Sanitary Sewer Program (LPSS) -- 8,073 8,073 8,073 8,073 32,292 Other [2] 29,348 16,515 5,314 1,631 931 53,739 Departmental Capital [3] 11,753 10,474 5,448 5,500 5,553 38,728 Total Capital Program $123,261 $102,529 $164,814 $178,153 $107,462 $676,219 [ 1 ] Amounts shown derived from Table 5 at the end of this report and is based on the Fiscal Year 2020 capital cash funding budget and includes i) an allowance for Departmental capital expenditures (e.g., new vehicles, equipment, etc.), which is generally funded from operations (rates); and ii) capital projects that are accounted for in other funds, which includes contributions from the System for its share of the project costs (project benefits several County Departments). Amounts shown include capital expenditures approved and funded in prior years that are currently ongoing from a project implementation basis (e.g., construction -work -in -progress). Additionally, amounts shown do not include any capital expenditures associated with water supply and treatment projects, which are the sole responsibility of Tampa Bay Water and the other wholesale water providers. [2] Other is primarily comprised of. i) the Consolidate and Hardened Maintenance Facilities Project in the amount of $33M; and ii) utility relocations related to transportation projects in the amount of $10.9M. [3] Amounts shown reflect expenditures for general capital that supports Department operations as a component of the Operating Budget and include but not limited to, a general renewal and replacement allowance for minor projects and vehicle replacement, customer service facilities and other general projects or general plant assets (not included as a component of the expenditures recognized in the CIP). As can be seen from the prior table, the projected cost of capital improvements identified for the Forecast Period totals approximately $676 million. This total capital expenditure requirement is anticipated by the Department to be funded from remaining bond proceeds associated with the Series 2016 Bonds, new additional parity bonds anticipated by the Department to be issued for the construction of new facilities, additional wastewater impact fee assessment bonds, available unrestricted cash reserves, additional funds from ongoing operations produced from ongoing utility operating revenues (rates), and unpledged and available impact fees. The forecast of the cost of capital improvements was based on estimates made by the Department's planning engineers and outside Consulting Engineers and is based in 2020 dollars. Table 5 at the end of this report summarizes the projects and improvements identified by the Department. As previously discussed, the NWRWRF Consolidation, including flow diversion and the final decommissioning of the River Oaks WWTP is reflected in the capital plan. The NWRWRF expansion is now essentially completed. The County is anticipating significant growth in the South -County service area based on: i) current development activity and requests for new permitted capacity; and ii) regional demand projections prepared by SWFWMD and TBW and has identified the need to ultimately construct the One Water Campus in the south-central portion Hillsborough County. Phase 1 of the One Water Campus is included in the Forecast Period and consists of the construction of a transmission water main from the Lithia Water Treatment Plant to South County, the construction of a water in -line booster pump station, the expansion of the South County Regional AWWTP using modular components to increase the plant capacity to 16.0 MGD that can be later relocated to the One Water Campus (in Phase 2) and additional wastewater flow diversion pump stations and pipelines. Phase 2 of the One Water Campus is planned to begin on or about the Fiscal Year 2025 (outside of the Forecast Period) and is to include a new wastewater reclamation facility and a new potable water treatment facility. These additional plant capacity additions represent a challenge change in the overall capital improvement plan when compared to recent prior financial forecasts and will be funded by additional bonds and ultimately through the receipt of impact fees. To provide additional information, the following table provides a summary of the top ten (10) capital projects by expenditure amount recognized in the financial plan: Top Ten (10) Capital Projects by Expenditure Amount Fiscal Year Ending September 30, [1] Description 2020 2021 2022 2023 2024 Total Capital Funding Program ($000s): Hillsborough County One Water Campus - Water Transmission Main from Lithia to South County $-- $3,530 $24,575 $59,727 $23,165 $110,997 Hillsborough County One Water Campus - Wastewater Modular Capacity Expansion [2] -- 9,652 32,169 39,466 6,944 88,231 Northwest RWRF System Improvements [3] 23,511 10,076 -- -- -- 33,587 Consolidated & Hardened Maintenance Facilities [4] 23,100 9,900 -- -- -- 33,000 LPSS to Sewer Connection Program [5] -- 8,073 8,073 8,073 8,073 32,292 South Hillsborough Aquifer Recharge Program 3,320 12,174 6,640 - -- 22,134 Hillsborough County One Water Campus - Potable Water In -Line Booster Station 172 5,934 6,270 624 -- 13,000 Flow Diversion from Falkenburg (Pump Stations & Piping) [6] 383 4,108 7,462 47 -- 12,000 South County WWTP Expansion Project 10,330 1,148 -- -- -- 11,478 Waterset Sports Complex Reclaimed Water Pump Station/Storage Tank 7,043 2,516 503 -- -- 10,062 Sub -Total $67,859 $67,111 $855,692 $107,937 $38,182 $366,781 Recurring Capital RR&I - Master Projects [7] 7,908 6,681 6,681 6,681 6,590 35,541 Total Capital Expenditures $75,767 $73,792 $92,373 $114,618 $44,772 $401,322 [1] Amounts shown derived from Table 5 at the end of this report. [2] This project will expand the existing South County Regional Advanced Wastewater Treatment Plant, using modular components that can later be relocated to the One Water Campus. [3] NWRWRF Consolidation includes C10239 NWRWRF Improvements and C10276 River Oaks Pump Station and Forcemain funded in part by the Series 2016 Bonds. [4] Represents the Utility System's portion of the Government Facilities Program to design and construct new consolidated and hardened maintenance facilities for Public Works, Water Resources and Fleet Service. The new facilities will also provide efficient and secure facilities for pre- and post -disaster response. [5] The Low -Pressure Sewer System (LPSS) Project is a Department initiative to upgrade 300 homes to vacuum sewer systems per year beginning in Fiscal Year 2021. [6] This project is included in Phase One of the One Water Campus project. [7] Master Projects are defined as general renewal, replacement, and improvement (RR&I) projects that are performed annually for the total service area but are not specifically identified as a single project. The amounts shown represent the consolidated total of fourteen (14) individual master projects. The top ten (10) capital projects identified above currently account for approximately 59% of the total CIP. The capital funding requirements are presented on a "cash basis" (i.e., when expenditures are anticipated to be incurred by the Department) as opposed to an "appropriations -basis" (i.e., when funds are assigned to procure contracts). Based on the need to fully appropriate funds for the capital plan, the recently adopted rate, impact fee and AGRF fee adjustments coupled with the adopted changes to the price index and the anticipation of issuing additional parity bonds and wastewater impact fee assessment bonds, the County should have sufficient resources to appropriate funds for all of the projects identified. -19- The following table provides a summary of the estimated funding plan for the identified cash basis CIP: Fiscal Year Ending September 30, [1] Description 2020 2021 2022 2023 2024 Total Capital Funding Program ($000s) Renewal & Replacement Account $16,797 $12,808 $21,731 $15,494 $15,294 $82,124 General Revenue Capital Expense Acct. 76,789 58,675 79,370 56,566 55,804 327,204 Existing Bond Proceeds 14,644 6,276 -- -- -- 20,920 Additional Bond Proceeds -- 2,544 17,712 43,048 16,696 80,000 Impact Fees [2] -- 4,745 19,390 32,049 9,173 65,357 Wastewater IFAU Bonds [3] -- 5,893 19,641 24,096 4,240 53,870 Other Available Sources [4] 3,278 1,114 1,524 1,400 700 8,016 Annual Operations (Rates) [5] 11,753 10,474 5,446 5,500 5,555 38,728 Total Capital Funding Sources $123,261 $102,529 $164,814 $178,153 $107,462 $676,219 [1] Amounts shown include available unencumbered funds and funds anticipated to be derived from operations during the Forecast Period. [2] The majority of the Water and Wastewater Impact Fees are considered as Pledged Impact Fees and are used to fund: i) the Debt Service Component of the Cost of Contracted Water from Tampa Bay Water (water -only impact fees); and ii) the expansion component of annual Bond Service Requirement. Use of impact fees reflects amounts currently on deposit in the fund from prior periods and amounts not considered as Pledged Impact Fees (refers only to a limited amount of Water -related Impact Fees) that are assumed to be received during the Forecast Period. The Impact Fees shown represent amounts on deposit in the fund and additional fees to be realized above what is considered as being a pledged fee, if any. [3] The County is planning to issue in the principal amount of $53.5 million of Impact Fee Assessment Unit (IFAU) Bonds in Fiscal Year 2021 to fund a portion of the Hillsborough County One Water Campus- Wastewater Modular Capacity Expansion Project. The payment of the 2021 IFAU Bonds are secured solely from a pledge of certain IFAU assessments resulting from the IFAU program and not from System Net Revenues; such assessments are not included in the financial forecast presented in this report since the respective IFAU assessments are specifically pledged to the payment of the 2021 IFAU Bonds, which are considered as a debt of the County's General Fund and not considered as a System debt. [4] Amounts shown include miscellaneous funding sources such as grants and other contributions. [5] Amounts shown reflect expenditures identified in the Department water and wastewater budget and are funded annually from System Operations (rates). In the development of the capital funding plan, the following major assumptions and fund priorities were recognized: To the extent available, all cash reserves allocable to fund capital expenditures (e.g., Renewal and Replacement Account) were considered as the first priority for funding projects in lieu of the use of external funding. 2. All water and wastewater Impact Fees received during the Forecast Period that were determined to be Pledged Capacity (Impact) Fees were used for paying i) the Debt Service Component of the Cost of Contracted Water Supply (Water Impact Fees only) and ii) the expansion -related component of the annual Bond Service Requirement; any remaining fees that were not considered as Pledged Capacity Fees were used to fund future expansion - related capital projects. 3. For each year of the Forecast Period, a transfer from operations to the Renewal and Replacement Account was recognized. The transfer was based on the sum of i) five percent (5%) of the previous Fiscal Year's Gross Revenues as defined in the Bond Resolution, which averaged approximately $14,700,000 annually for the Forecast Period; ii) a deposit during each year of the Forecast Period for the installment payments being received by the County associated with the sale of water capacity to Tampa Bay Water as part of the governance initiative during the Fiscal Year 1998 in the annual amount of $1,238,468 (such deposits are anticipated to end in Fiscal Year 2029); and iii) the proceeds from the sale of any surplus -20- equipment or plant, which occurs on an annual basis, which for purposes of the financial forecast none were assumed. Any available funds in the Renewal and Replacement Account were used to fund the replacement of utility system assets that are anticipated by the Department to reach their annual service lives. 4. The minimum working capital reserve was assumed at 45 daysE31 of Operating Expenses: for the purposes of developing the financial forecast and recognizing general rating criteria associated with strong financial credits, a minimum operating reserve balance of 150 days of operating expenses was recognized and was essentially met for the Forecast Period assuming the implementation of the recommended index and rate adjustments. The majority of all surplus funds derived from the operation of the System were assumed to be transferred to the General Revenue Capital Expense Account, which was established by the Department in addition to the minimum transfer to the Renewal and Replacement Account for the funding of both expansion -related and R&R-related capital project expenditures. The General Revenue Capital Expense Account is an internal account of the Department and is considered as a sub -fund of the General Purpose Account established by the Bond Resolution. 5. The capital improvement plan includes the construction of Phase 1 of the One Water Campus wastewater facility improvements including the 6.0 MGD expansion of the existing South County Regional Advanced Wastewater Treatment Plant ("AWWTP") using modular components that can be later relocated to the One Water Campus (in Phase 2), which is assumed to be placed in service by the end of Fiscal Year 2024 at a projected cost of $88.2 million and additional the construction of wastewater flow diversion pump stations and pipelines, which is assumed to be placed in service during the first quarter of Fiscal Year 2022 at a cost of $12 million. It is anticipated that these projects will be funded with a combination of impact fees on deposit and the issuance of wastewater impact fees assessment bonds in FY 2021. 6. The capital improvement plan includes the construction of Phase 1 of the One Water Campus water facility improvements including the construction of a transmission main from the Lithia Water Treatment Plant to South County, which is assumed to be placed in service by the end of Fiscal Year 2024 at a projected cost of $111 million and the construction of a water in -line booster pump station, which is assumed to be placed in service by Fiscal Year 2023 at a projected cost of $13 million. It is anticipated that these projects will be funded with a combination of impact fees on deposit and the issuance of additional parity bonds. 7. The County's capital improvement plan includes the design and construction of three (3) new consolidated and hardened maintenance facilities for Public Works, Water Resources and Fleet Services to replace existing facilities that are near the end of their useful service lives and will provide efficient and secure facilities for pre and post disaster response. Department staff has determined that its share of the cost of these new facilities is approximately $33 million. [3] Department policy target set equal to 45 days of operating expenses; Bond Resolution requires a reserve at least equal to the greater of. i) subsequent budgeted monthly operating expenses; or ii) 30 days in accordance with the flow of funds requirements. -21- 8. Beginning in Fiscal Year 2021, the Department has designated funding for the Septic to Sewer and Low -Pressure Sewer System (LPSS) initiatives to connect certain customers to the County's regional wastewater system; this will be a multi -year phased program. The LPSS Project has been assumed by the Department to provide for the upgrade of 300 homes to vacuum sewer systems with an approximate cost of $8 million annually. 9. Anticipating the issuance of additional parity bonds to fund the Phase 1 water facility improvements discussed above, the following represents the projected Bond Service Requirement recognized for the Forecast Period (presented on a cash basis which reflects when payments are made to Bond Holders which is consistent with the determination of rate covenant compliance). Projected Annual Bond Service Requirement — for the Forecast Period ($000s) Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Outstanding Debt ($000s) Series 2010B Bonds [1] [2] $1,365 $-- $-- $-- $-- Series 2010C Bonds [1] 732 732 732 732 732 Series 2016 Bonds 9,981 9,983 9,981 9,981 9,982 Series 2019 Bonds [2] 4,576 7,131 7,131 7,132 7,135 Additional Parity Debt ($000s) Series 2021 Bonds -- 2,684 3,221 3,221 4,466 Sub -Total $16,654 $20,530 $21,065 $21,066 $22,315 Less Interest Income on Debt Service and Reserve Accounts [3] (267) (206) (222) (230) (232) Total Annual Bond Service Requirement $16,387 $20,324 $20,843 $20,836 $22,083 [11 Bonds are Build America Bonds and amounts shown are net of assumed Federal Direct Payments (offset to interest expense on the respective Bonds). [2] On December 10, 2019, the Series 2010B Bonds were advanced refunded with proceeds of the Series 2019 Bonds and are no longer considered as being outstanding. [2] Pursuant to the Bond Resolution, any interest income on the debt -related accounts are considered as a direct deposit to the Debt Service Account and serve to reduce the payment of the annual Bond Service Requirement from System rates. REVENUE REQUIREMENTS — MONTHLY USER CHARGES General The various components of cost associated with operating and maintaining a utility system, as well as the cost of financing the renewal and replacement of facilities and capital improvements for upgrades and expansion, are generally referred to as the utility revenue requirements. The sum of these cost components, after adjusting for other income and miscellaneous utility revenues, represents the net revenue requirements; the level of expenditures and utility funding needs that must be recovered from rates. The forecast of the revenue requirements of the System encompassed the five -fiscal year period ending September 30, 2024 (previously defined as the "Forecast Period"). The revenue requirements for the Fiscal Year 2020 were based on the approved budget and subsequently adjusted for reported year-to-date results. The Fiscal Year 2021 was based on the preliminary budget as prepared by the Department and the projected Fiscal Year -22- 2020 budget, which was adjusted for any known or anticipated events (e.g., personnel additions). The estimated Fiscal Year 2020 and preliminary Fiscal Year 2021 results served as the baseline for the financial projections for the remainder of the Forecast Period. The projected revenue requirements can be classified into the following generalized expenditure components: • Operating Expenditures — These expenditures include the cost of utilities labor, materials, supplies, and other items necessary for the operation and maintenance of the water and wastewater system. These costs also include indirect allocated costs from other supporting departments for administration and customer service. • Bond Service — Bond service includes the payment of principal and interest on the System's current and any future debt obligations from the net operating revenues of the water and wastewater system. • Capital Funding from Rates (Pay Go) — Includes capital expenditures funded annually from the operations (rates) of the System, which is in addition to capital expenditures funded from external sources such as bonds, grants, Impact Fees, and other sources. This would include deposits to the Renewal and Replacement Account and the General Revenue Capital Expense Account. • Other Revenue Requirements — This component of need includes, in general, any other expenditures funded annually from rates, including the funding of deposits to working capital and rate stabilization reserves, funding of any Subordinated Indebtedness or loans, and other transfers to other accounts established by the County that may require funding from the System revenues. Significant Forecast Assumptions As part of the report, existing conditions and potential liabilities were considered to ensure that implementation of the Sufficiency Report recommendations would meet the financial requirements of the System, comply with the rate covenants as defined in the Bond Resolution, fully support the financing of the projected capital improvement program, and promote the conservation of water resources. The development of the financial projections for the Forecast Period included the following primary assumptions: 1. Projected revenues from current Monthly User Charges for the System have been based on: i) the schedule of rates and charges currently in effect, which are contained in Rate Resolution, including: i) the annual application of the Purchased Water Pass -Through Consumption Charge, the change in the application of the annual Price Index adjustment through Fiscal Year 2025 and the additional 4.0% rate adjustments for the Fiscal Years 2020 and 2021; and ii) the forecast of water and wastewater customers and sales (water use and billed wastewater flow) for the respective utility systems as previously discussed and presented on Tables 3 and 4. The forecast in water and wastewater ERCs, water sales, corresponding wastewater billed flow, and customers billed was based on i) recent historical trends, including the amount of water used and wastewater flow billed per ERC; ii) customer bill frequency information for the Fiscal Years 2015 through 2019 (flows incurred (and billed) per consumption block by customer class) and the overall billed water sales and -23- wastewater flow for the Fiscal Years 2015 through the current year-to-date 2020; iii) recent projections prepared by the Department as discussed previously; and iv) other factors. 2. The County purchases all its treated water from Tampa Bay Water and several other municipalities located in Hillsborough County. The majority of water purchases or 98% of total purchases are from Tampa Bay Water. The water purchases are then retreated and distributed to customers throughout the County. As previously noted, to recover the cost of purchase water the County charges customers the Purchased Water Pass -Through Consumption Charge, which is currently $2.93 per 1,000 gallons of metered water use. While the majority of the purchased water expenses are funded by the Purchased Water Pass - Through Consumption Charge, a portion of the total expense is funded from pledged water impact fees collected by the County since it is for the repayment of the Debt Service Component of the Cost of Contracted Water Supply (i.e., expansion -related debt) issued by Tampa Bay Water. Based on current projections of water demands / purchases, the contracted cost of treatment and assumed collection and use of water impact fees to repay allocable Debt Service Component, the Purchased Water Pass -Through Consumption Charge is projected that it will need to increase beginning in Fiscal Year 2021 and be adjusted annually thereafter. The estimated increases to the Purchased Water Pass -Through Consumption Charge are shown below: Summary of Existing and Estimated Purchased Water Pass -Through Consumption Charge For the Forecast Period Fiscal Year Ending September 30, Existing Projected Description 2020 2021 2022 2023 2024 Purchased Water Pass -Through Consumption Charge $2.93 $3.02 $3.06 $3.13 $3.20 Percentage Change --- 3.07% 1.32% 2.29% 2.24% Based on the assumptions reflected in the Sufficiency Report, including the recently adopted changes to the Price Index and additional rate adjustments, the following table provides an indication of the projected rate changes and the associated residential customer bill impacts for a typical customer using 7,000 gallons a month: (Remainder of page intentionally left blank) -24- Summary of Existing and Projected Rates - For the Forecast Period Fiscal Year Ending September 30, Existing Adopted Projected Description 2020 2021 2022 2023 2024 Monthly Residential Bill @ 7,000 Gallons: $90.32 $95.36 $97.28 $99.500 $101.74 Change in Bill - Amount $0.00 $5.04 $1.92 $2.22 $2.24 Change in Bill - Percent 0.00% 5.58% 2.01% 2.28% 2.25% Percent Rate Adjustments: Effective Date Estimated Price Index [1][2] Additional Rate Adjustments [2] Estimated Purchased Water Pass -Through Consumption Charge [3] Existing and Adjusted Monthly Rates for Service: Customer Service Charge (per Bill) Water Charges: Base Facility Charge (per ERC) Usage Charges (per 1,000 Gallons) [4] Block 1 (0-5,000 Gallons/ERC) Block 2 (5,001-15,000 Gallons/ERC) Block 3 (15,001-30,000 Gallons/ERC) Block 4 (30,001 Gallons or More/ERC) Purchased Water Pass -Through Consumption Charge (per 1,000 Gallons) [3] Wastewater Charges: Base Facility Charge (per ERC) Usage Charges (per 1,000 Gallons) Reclaimed Charges - Unmetered Service Residential Flat Charge Reclaimed Charges - Metered Service Base Facility Chare (Per Account) Residential Usage (per 1,000 Gallons) Block 1 (0-5,000 Gallons) Block 2 (5,000-15,000 Gallons) Block 3 (Above 15,000 Gallons) Commercial Usage (per 1,000 Gallons) [4] Block 1 (0-15,000 Gallons per ERC) Block 2 (15,000-30,000 Gallons per ERC) Block 3 (Above 30,000 Gallons per ERC) ERC = Equivalent Residential Connection 10/ 1 /2019 10/ 1 /2020 10/ 1 /2021 10/ 1 /2022 10/ 1 /2023 0.74% 2.25% 2.23% 2.23% 2.22% 4.00% 4.00% --% --% --% --% 3.07% 1.32% 2.29% 2.24% $4.41 $4.69 $4.79 $4.90 $5.01 $9.18 $9.76 $9.98 $10.20 $10.43 $0.75 $0.80 $0.82 $0.84 $0.86 2.09 2.22 2.27 2.32 2.37 3.50 3.72 3.80 3.88 3.97 5.23 5.56 5.68 5.81 5.94 $2.93 $3.02 $3.06 $3.13 $3.20 $14.83 $15.77 $16.12 $16.48 $16.85 4.78 5.08 5.19 5.31 5.43 $9.00 $9.00 $9.00 $9.00 $9.00 $4.36 $4.64 $4.74 $4.85 $4.96 $0.27 $0.29 $0.30 $0.31 $0.32 0.45 0.48 0.49 0.50 0.51 0.62 0.66 0.67 0.68 0.70 $0.12 $0.13 $0.13 $0.13 $0.13 0.22 0.23 0.24 0.25 0.26 0.57 0.61 0.62 0.63 0.64 [ 1 ] Resolution R19-106, adopted by the Board on August 21, 2019 revised the formula of the Price Index Adjustment and changed the effective date to applicable rates to October 1 st of each given fiscal year. Resolution No. R20-047, adopted by the Board on June 17, 2020 continues the application of the Price Index through September 30, 2025. [2] The price index and additional rate adjustments identified are only applied to Applicable Rates and exclude revenues produced from the application of the Purchased Water Pass -Through Consumption Charge and the residential reclaimed flat rate charges. [3] Percent increases shown are only effective to the purchased water pass -through consumption charges. [4] The County charges an inclining block structure that increases with use per month. Additionally, the usage blocks or tier ranges increase with the number of associated ERCs served per customer account. 3. Included in the financial projections are other operating revenues associated with service initiation and delinquent fees, meter -testing fees, permit review fees, return check charges, -25- and other related customer requested services revenues (such fees and revenues being customary to the utility industry). For the purposes of the financial forecast presented in this report, other operating revenues were based on: i) a review of historical amounts received from such charges as reported by the County, with an emphasis on the Fiscal Year 2019 audited and current Fiscal Year-to-date 2020 actual operating results; ii) the estimated other operating revenues as budgeted for the Fiscal Year 2020 and Fiscal Year 2021; and iii) the forecast of customer growth for the System. Based on a review of such sources, it was assumed that such revenues would either increase in proportion to System growth (customer service fees) or generally remain constant during the Forecast Period. Furthermore, no additional revenues associated with any change in miscellaneous services fees or addition of new fees was recognized in the financial forecast presented in this report. 4. As previously discussed, in June 2020 the Board approved a motion to reinstitute the AGRF fees to new development to become effective on October 1, 2020. It is anticipated that all previously permitted development will be grandfathered in at the previous rate ($0.00) and that the full potential of the increased revenues will be phased in as new development is permitted. Based on the estimated new customer forecast, the projected revenues from the re -instatement of the AGRF fee are expected to range from approximately $2.4 million in Fiscal Year 2021 to $4.9 million in Fiscal Year 2024 (which is significantly less than the amount of AGRF revenues received prior to the Fiscal Year 2014). 5. The projected Operating Expenses were based on the approved Fiscal Year 2020 budget as adjusted for year-to-date results and known or anticipated changes subsequent to the adoption of the approved budgets. Also taken into consideration was the preliminary Fiscal Year 2021 as provided by the Department. Such amounts were escalated above the Fiscal Years 2021 estimates for the remainder of the Forecast Period based on a variety of escalation factors to estimate the operating costs and allowances for System growth in customers served, finished water purchased, and wastewater treated; for the Fiscal Year 2020, such amounts also recognized the results of the preliminary 2021 budget process. These escalation factors were based on i) the Implicit Price Deflator and Consumer Price Index forecast prepared by the Congressional Budget Office as contained in The Economic and Budget Outlook dated January 2020; ii) historical trends in certain categories of costs such as electricity, fuel oil, certain chemicals as published by the Bureau of Labor Statistics; iii) estimates and forecast parameters prepared by the County's Budget Department; and iv) recent historical trends regarding the change in expenses. A summary of the escalation factors is summarized on Table 7 at the end of this report. 6. Although an Operating Expense for financial reporting purposes, depreciation and amortization expenses have not been recognized since they are a non -cash expense; however, the financial forecast does recognize dedicated transfers from operations to fund capital improvements, which are estimated to be approximately equal to the annual depreciation expense. 7. The projected cost of Tampa Bay Water purchases is based on i) the estimated Unitary Rate as projected by Tampa Bay Water, which is identified in the Fiscal Year 2020 Annual Budget as adopted by Tampa Bay Water and the preliminary Fiscal Year 2021 Annual Budget as prepared by Tampa Bay Water; ii) the estimated water purchase requirements based on the -26- water sales forecast summarized on Table 3 and an unbilled water allowance equal to 11 % of purchased water requirements; and iii) recognition of Water Quality Credits applied to the total cost also as provided by Tampa Bay Water. The annual amortization of Credits associated with the purchase of County's water supply in 1999 by Tampa Bay Water (both the principal and interest components of the payment made by TBW) has been recognized as a deposit to the Renewal and Replacement Account in accordance with the provisions of the Bond Resolution regarding the deposit of funds associated with the sale of System assets. The following is a summary of the Tampa Bay Water Costs reflected in the financial forecast: Tampa Bay Water Purchases Summary — for the Forecast Period Unitary Rate Estimated per TBW Water Purchases Annual Cost of Tampa Fiscal Year ($/1,000 Gallons) [1] (000s) Bay Water Purchases [2] 2020 $2.5660 23,758,190 $65,737,743 2021 2.5590 24,313,676 71,703,236 2022 2.5842 24,860,709 73,883,256 2023 2.6082 25,335,543 76,604,864 2024 2.6355 25,779,659 79,336,315 [1] Calculated unitary rate for Forecast Period based on Tampa Bay Water estimates as contained in Fiscal Year 2020 Budget for the agency. [2] Includes annual water quality credit of $36,000 for each Fiscal Year of the Forecast Period. In addition to the cost of purchased water from Tampa Bay Water, the System also purchases water from other local governments, primarily to serve utilities that were acquired by the County and are not interconnected to the County's regional potable water system (i.e., not serviced from Tampa Bay Water). The projected cost of these purchases was based on the current rates in effect by the various water suppliers, discussions with the local governments with respect to anticipated rate adjustments, and projections of growth based on recent historical trends within the specific areas that these supplemental water purchases are attributable to. The following is a summary of the total estimated purchased water costs from those entities other than Tampa Bay Water for the Forecast Period. Purchased Water from Water Suppliers Other than Tampa Bav Water N Water Purchases Estimated Fiscal Year (000s) Expenditure Amount 2020 630,280 $2,621,271 2021 636,245 2,724,942 2022 642,270 2,832,863 2023 648,355 2,931,267 2024 654,501 3,030,151 [*] Amounts shown reflect the cumulative purchases from the Cities of Tampa, Temple Terrace, Oldsmar, and Plant City. 8. The Department also purchases wastewater treatment service from other local governments, primarily to serve utilities that have been acquired by the County, which were not interconnected to the County's regional Wastewater System. For the Forecast Period, the projected cost of these purchases was based on the current rates in effect by the various -27- wastewater suppliers, discussions with the local governments with respect to anticipated rate adjustments, and projections of growth within the specific areas that these supplemental wastewater treatment services are attributable to. The following is a summary of the total estimated purchased wastewater treatment costs from those entities for the Forecast Period. Purchased Wastewater Treatment Services [*] Wastewater Purchases Estimated Fiscal Year (000s) Expenditure Amount 2019 335,092 $3,234,102 2020 338,057 3,358,098 2021 341,052 3,487,622 2022 344,076 3,607,041 2023 347,131 3,728,287 [*] Amounts shown reflect the cumulative purchases from the Cities of Tampa, Temple Terrace, and Plant City. 9. As previously discussed, the deposits to the Renewal and Replacement Account were based on the provisions of the Bond Resolution, which requires a deposit equal to five percent (5%) of the previous year's Gross Revenue. Based on this funding requirement, the resulting annual deposit from System revenues is projected to average approximately $14,700,000 during the Forecast Period. It should be noted that this transfer is considered by the Department to be a minimum capital re -investment funding requirement from operations (pay-as-you-go financing) for the purpose of financing renewals and replacements to the existing capital infrastructure of the System, including land, or any unusual, unanticipated or extraordinary maintenance or repairs of the System. Additionally, the System receives annual payments of $1,238,468 (principal and interest) for the installment sale of certain Water System utility plant assets (capacity) to Tampa Bay Water as part of the governance initiative in 1999; such installment payments will discontinue after Fiscal Year 2029. Since this was an asset sale by the County to Tampa Bay Water and in accordance with the provisions of the Bond Resolution, such amounts are required to be deposited into the Renewal and Replacement Account and are not considered as revenue of the System. 10. In addition to the minimum deposit to the Renewal and Replacement Account as required by the Bond Resolution, additional deposits to fund ongoing capital expenditures (primarily associated with renewals, replacements, betterments and upgrades) from operations has been recognized for the financial forecast. As of September 30, 2019, the County reports that the net investment in gross utility plant (exclusive of land but including construction -work -in - progress) is approximately $2.5 billion. The reinvestment in capital assets will require continued upgrade, replacement, and renewals, which are expected by the Department to increase over time as the System ages and assets reach their useful service life and need replacement or upgrade. The Department continues to update its Asset Management Program to maximize the capital investment use to the ultimate benefit of the ratepayers and to identify so overall asset condition and the criticality of any future asset expenditures to provide continued and reliable utility service. In 2015, the County's Consulting Engineers performed an evaluation to identify the capital reinvestment needs for the next twenty (20) years. Based on the findings of the evaluation, the Consulting Engineers have recommended targeting an annual capital reinvestment rate of approximately $57.4 million a year expressed in 2015 dollars; expressed in today's dollars the targeted annual capital reinvestment rate was estimated to be $66.5 million (prior to the application of future inflationary adjustment), which the County is generally expected realize based on the current capital improvement spending plan. Funding for capital reinvestment from rate revenues is considered critical to long-term rate sustainability and assumes annual transfers to the Renewal and Replacement Account and the General Revenue Capital Expense Account assuming the implementation of the approved price index and rate adjustments as presented in this report. The annual transfer from System revenues (referred to as Pay -Go) during the Forecast Period is approximately $76.0 Million annual and meets the capital funding objectives of the Department and as identified by its Consulting Engineers. This level of capital funding from rate revenues is considered as a favorable capital reinvestment rate but will need to be monitored over time as service and regulatory conditions and capital re -investment needs change. 11. The aggregate principal amount of Bonds issued in accordance with the provisions of the Bond Resolution that are estimated to be outstanding as of December 31, 2019 (the "Outstanding Bonds") is $319,870,000 as shown below: Principal Amount as of December 31, Outstanding Bonds 2019 Utility Revenue Bonds, Series 2010C (Federally Taxable -Recovery Zone Economic Development Bonds -Direct Payment) (the "Series 2010C Bonds") $21,700,000 Utility Revenue Bonds, Series 2016 (the "Series 2016 Bonds") 207,795,000 Utility Refunding Revenue Bonds, Series 2019 (the "Series 2019 Bonds") 90,375,000 Total Outstanding Bonds $319,870,000 The annual Bond Service Requirement associated with the System's Outstanding Bonds were based on the actual debt service repayment requirements for such outstanding issues and are presented on a "gross" basis (i.e., not net of interest earnings on any Debt Service related funds or accounts or the payment of Federal Direct Payments). Furthermore, for the determination of the revenue requirements the amount shown is based on the monthly funding requirements to the Debt Service Account (to fund the principal and interest payments) from Pledged Revenues as required by the Bond Resolution, which authorized the issuance of the Outstanding Bonds (essentially an accrual basis) as opposed to when the Bond Service Requirement is actually paid. The principal amount of the Series 2010C Bonds was issued as Federally Taxable - Recovery Zone Economic Development Bonds in accordance with the American Recovery and Reinvestment Act. As part of the provisions for the issuance of such bonds, the County will receive a Federal Direct Payment from the Federal Government to offset a portion of the -29- interest expense, which reduces the annual debt service liability of the System. The Federal Direct Payment is equal to 45% of the annual interest payments for the Series 2010C Bonds. Such direct payments have been assumed to be received annually during the Forecast Period by the County consistent with the interest payment dates for such bonds and are considered as an offset to the interest expense payment to be funded annually from operations as provided in the Bond Resolution. The Federal Budget Control Act of 2011 (the "BCA") required cuts to federal programs to reduce spending. These cuts are referred to as the "sequester." The first such cuts were ordered January 2, 2013 for Fiscal Year 2013. As a result, the subsidy payments to issuers of "direct -pay" bonds were cut by 8.7% for the Fiscal Year 2013. Additionally, Congress may enact other cuts of an equal or larger amount or take other action to postpone or change the provisions of the BCA. For Fiscal Year 2020 the reduction in the Federal Direct Payments were 5.9%. For the remainder of the financial forecast and based on discussions with industry professionals, a 5.9% reduction in the total estimated Federal Direct Payments anticipated to be received was assumed during the Forecast Period. This resulted in an annual reduction to the subsidy payments of approximately $33,700 during the Forecast Period. 12. The Financial Forecast recognizes that the County will issue tax-exempt Bonds on parity with the Outstanding Bonds for the primary purpose of financing certain capital improvement projects identified by the County. Specifically, it was assumed that the County would issue Utility Revenue Bonds, Series 2021 (the "Series 2021 Bonds") to finance capital improvements to the System. The assumptions provided by the County's Municipal Financial Advisor associated with the issuance of the Series 2021 Bonds include: i) the total par amount of the bonds issued at $65,435,000 issued with a premium of $15,155,523 to fund a Construction Account deposit of $80,000,000; ii) an assumed average annual coupon rate of 5.0%; iii) a bond repayment term of thirty -years; iv) no funding requirement of a debt service Reserve Account for the Series 2021 Bonds; v) a debt repayment schedule assuming, after the first three (3) years structured as an interest -only payment, a level Bond Service Requirement for the Series 2021 Bonds of approximately $4.46 million per year; and vi) the payment of issuance expenses associated with the Series 2021 Bonds funded from the proceeds of such bonds. It is assumed that the Series 2021 Bonds would be issued on or about August 1, 2021. With respect to the Additional Parity Bonds, the timing, structure, and amount of such bonds to be issued will be coordinated with the County's Municipal Financial Advisor to meet the overall financial objectives of the County. 13. In addition to the issuance of additional parity bonds, the financial forecast also assumes the issuance of Wastewater Impact Fee Assessment Unit Bonds, Series 2021 (the "2021 IFAU Bonds"). Based on information provided by the County's Municipal Financial Advisor and the "seasoned" wastewater IFAU to be received, the County will have the capability to issue approximately $54 million of 2021 IFAU Bonds in Fiscal Year 2021 to partially fund the construction of the South County AWWTP Modular Expansion which is considered to be 100% expansion -related. The respective wastewater impact fee assessments that were historically recognized as a pledged capacity fee to the existing expansion -related debt service will now be specifically pledged for the repayment of the 2021 IFAU Bonds, thus reducing the need to issue additional wastewater bonds. The respective IFAU assessments will not be included as a financial resource to the Department since they will be specifically -30- restricted for future debt repayment. Additionally, the 2021 IFAU Bonds are not considered a debt to the System but are reported as a general government liability which will improve the overall fiscal position of the System and financial metrics which will be favorable since it is anticipated that additional bonds will be issued beyond the Forecast Period to further finance the construction of additional facilities for the One Water Campus. 14. As previously discussed, in addition to the Outstanding Bonds, it is assumed that additional parity bonds will need to be issued to fund new water and wastewater facilities. The following is a summary of the projected annual Bond Service Requirement to be made from System operations (net of Federal Direct Subsidy Payments associated with the Series 2010 Bonds) during the Forecast Period for both the Outstanding Bonds and the Additional Parity Bonds: Projected Annual Bond Service Requirement — for the Forecast Period Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Annual Debt Service Payments: [1] Outstanding Bonds ($000s): Series 2010B Bonds [2] [3] $725 $-- Series 2010C Bonds [2] 732 732 732 732 732 Series 2016 Bonds 9,981 9,983 9,981 9,981 9,981 Series 2019 Bonds [3] 5,764 7,131 7,131 7,133 7,135 Additional Parity Bonds ($000s): Series 2021 Bonds -- 3,221 3,221 3,428 4,465 Total Annual Debt Service Payments $17,202 $21,067 $21,065 $21,274 $22,313 Reconciliation Adjustments [4] (815) (743) (222) (438) (230) Total Annual Bond Service Requirement $16,387 $20,324 $20,843 $20,836 $22,083 [1] Amounts shown reflect debt repayment schedule based on when deposits to Debt Service Account are required to be made from System revenues (rates) pursuant to Bond Resolution and reflects the debt repayment amounts recognized for the determination of the Revenue Requirements to be funded from rates. Amounts shown do not reflect any adjustment for interest earnings on Bond Service- related accounts, which is defined in the Bond Resolution for the determination of the Bond Service Requirement. Amounts rounded for calculation purposes. [2] Amounts shown are net of assumed Federal Direct Payments. [3] On December 10, 2019, the Series 2010B Bonds were advanced refunded with proceeds of the Series 2019 Bonds and will no longer be considered as a liability of the System. [4] Adjustments to reflect Bond Service Requirement, which is based on when payments are made on the Bonds and include i) adjustments for the recognition of interest earnings on Bond Service -related funds, which is recognized as a credit to the determination of the Bond Service Requirement and ii) timing differences between when Debt Service Account deposits are made and when payments are made on the Bonds to Bond Holders. 15. The Impact Fees assumed to be received by the Department during the Forecast Period include: i) upfront payments at time of development; and ii) installment payments received through the Impact Fee Assessment Unit ("IFAU") program have been recognized in the development of the financial forecast. As previously discussed, the County has issued in the principal amount $101,110,000 in Capacity (Impact Fee) Assessment Special Assessment Revenue Bonds, Series 2006 dated April 11, 2006 (previously referred to as "2006 IFAU Bonds"), which are a debt of the County's General Fund and not the Utility Enterprise Fund; the proceeds, which were used to fund expansion -related System capital projects. The -31- payment of the 2006 IFAU Bonds are secured from a pledge of certain IFAU assessments resulting from the IFAU program; such assessments are not included in the financial forecast presented in this report since the respective IFAU assessments are specifically pledged to the 2006 IFAU Bonds, which are not considered as a System debt. The majority of the Water Impact Fees assumed to be received during the Forecast Period by the Department are considered as being Pledged Water Capacity (Impact) Fees as defined in the Bond Resolution and will be applied toward: i) the payment of the Debt Service Component of the Cost of Contracted Water Supply (i.e., purchases from Tampa Bay Water representing 59% of the total water fees received) and ii) the payment of expansion -related portion of the annul Bond Service Requirement allocable to the Water System (30% of the water fees received). The forecast does recognize that 11 % of the Water Impact Fees received will not be considered as Pledged Impact Fees and will be available to fund future expansion - related projects during the Forecast Period. With respect to the anticipated Wastewater System Impact Fees projected to be received by the Department during the Forecast Period, all of the anticipated fees were considered as being Pledged Wastewater Capacity (Impact) Fees as defined in the Bond Resolution and will be applied entirely towards the payment of the expansion -related portion of the annual Bond Service Requirement allocable to the Wastewater System. None of Wastewater Impact Fees received for the benefit of the System is anticipated by the Department to be available to directly fund expansion -related wastewater capital expenditures. The following is a summary of the Impact Fees assumed to be received by the Department for the Forecast Period: Amount and Disposition of Pledged Capacity (Impact) Fees Water Fees H Contracted Cost Fiscal Year of Water Supply 2020 [3] $6,795,522 2021 7,450,228 2022 7,196,559 2023 7,078,279 2024 7,081,228 Wastewater Fees County Allocable County Expansion - Expansion -Related Bonds Related Bonds [4] $815,370 $12,640,127 4,210,508 8,210,590 4,317,965 7,532,708 4,316,664 7,755,526 4,574,939 8,141,128 Total Pledged Capacity (Impact) Fees $13,455,497 12,421,098 11,850,673 12,072,190 12,716,067 [1] The majority of the projected Water Impact Fees projected to be received during each fiscal year are assumed as being Pledged Impact Fees during the Forecast Period. The following is a summary of the estimated Water Impact Fees not considered as Pledged Capacity Fees during the Forecast Period. Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 $33,823,606 $875,404 $594,780 $642,947 $485,856 Note: Reduction in non -pledged water capacity fees is due to recognition of the Series 2021 Bonds being issued, which was considered ass being 100% expansion -related. [2] All the projected Wastewater Impact Fees projected to be received during each fiscal year are assumed as being Pledged Impact Fees during the Forecast Period. Amounts shown include interest earnings on Impact Fee cash balances and the interest component of the IFAU special assessments that are not specifically pledged towards the repayment of outstanding and additional IFAU Bonds. [3] Amounts estimated based on eight (8) months of actual receipts during the Fiscal Year 2020. [4] The reduction of the wastewater impact fee pledge is due to the anticipated issuance of $54 million of Wastewater 2021 IFAU Bonds in Fiscal Year 2021 to fund certain wastewater expansion -related capital projects. The respective wastewater impact fee assessments are specifically pledged to the repayment of the 2021 IFAU Bonds and are not included as a financial resource to the Department since they are specifically restricted for future debt repayment. These bonds are not considered a debt to the System. -32- 16. The County established and funded, at the time of the adoption of the Bond Resolution, a Rate Stabilization Account. As of September 30, 2019, the cash balance in the Rate Stabilization Account was approximately $114.6 million. Based on historical recommendations of the Debt Management Department and previous discussions with the credit rating agencies, the County internally targeted an account balance of $74 million for the Rate Stabilization Account to provide increased liquidity to reduce financial risk and improve the overall credit rating, which results in lower overall borrowing costs. The ending account balance in Fiscal Year 2019 exceeded the target balance by approximately $40.6 million and therefore the financial forecast assumes a transfer of approximately $40.6 million to the General Revenue Capital Expense Account to provide future funding for the capital needs of the System and to maintain a projected ending Rate Stabilization Account cash balance of $74.0 million for the Forecast Period. It is assumed that the County would not deposit any additional funds into the Rate Stabilization Account from Gross Revenues nor would it withdraw any additional funds from the account to be included as Gross Revenues for the remainder of the Forecast Period. 17. Investment income on funds and accounts created by the Bond Resolution or internally by the County has been estimated utilizing average annual interest rates ranging from 1.75% and 2.00% during the Forecast Period. The interest rates have been applied to estimate balances within the funds and accounts created in conformance to the Bond Resolution and as internally created by the County. It is assumed that any interest earnings on the Impact Fee Accounts or Construction Accounts established with the issuance of Bonds issued pursuant the Bond Resolution, including any Additional Parity Bonds will be restricted to the respective funds for their designated use and not available for the payment of the Operating Expenses or the annual Bond Service Requirement consistent with the provisions of the Bond Resolution. Table 13 provides a summary of the transfers in and out of each fund / account and corresponding ending cash balances for each fund / account maintained by the Department on behalf of the System. Sufficiency of Rates As previously discussed and assuming the implementation of the approved price index and additional rate adjustments and the assumptions regarding the revenue requirements to be funded from System rates as delineated above, the Department is of the opinion that rate revenues will be sufficient to meet the projected net revenue requirements of the System for the Fiscal Year 2020 budget year and the Subsequent Fiscal Year 2021 (the "Review Period") and be in compliance with the rate covenant as delineated in the Bond Resolution. It must be noted that the financial forecast does not recognize the probable capital expenditures associated with the continued construction of the One Water Campus and the implementation of a septic -to -sewer program to promote the environmental stewardship and regionalization of the service area which are anticipated to be financed beyond the Forecast Period for the purposes of this financial forecast. These capital projects are significant and could have a material effect on the financial position of the System. This may indicate the need for additional rate adjustments in future periods coupled with the projected need (outside of the Forecast Period) to issue additional parity bonds for the construction of the One Water Campus regional wastewater and water treatment plants. The Department recommends closely monitoring the need for additional rate adjustments and will -33- provide formal recommendations closer to when that additional rate adjustments may be implemented. As shown in Table 6 at the end of this Sufficiency Report and as summarized below, the projected revenues after application of the identified rate adjustments are anticipated to be sufficient to meet the expenditure needs of the System. Summary of Sufficiency of Rate Revenues ($000s) - for the Forecast Period Fiscal Year Ending September 30, [1] Estimated Projected 2020 2021 2022 2023 2024 Total Revenue Requirements: Operating Expenses [2] $197,618 $214,310 $223,504 $233,095 $242,471 Existing Debt Service Payments 17,202 17,845 17,844 17,846 17,848 Additional Debt Service Payments -- 3,221 3,221 3,428 4,465 Deposit to R&R Account 13,299 13,592 14,826 15,556 16,238 Departmental Capital 11,753 10,474 5,446 5,500 5,555 Deposit to Capital Expend. Acct. [3] 48,087 48,563 56,162 56,703 57,420 Deposit to/ (Use) of Reserves (1,138) -- -- 2,045 3,855 Total Gross Revenue Requirements $286,821 $308,005 $321,003 $334,173 $347,852 Less Pledged Impact Fees to Pay Debt [4] (13,455) (12,421) (11,851) (12,072) (12,716) Less Other Revenues [5] (10,075) (12,095) (13,067) (13,626) (14,422) Net Revenue Requirements $263,291 $283,489 $296,085 $308,475 $320,714 Total Charges for Services [6] $263,291 $283,489 $296,085 $308,475 $320,714 Net Revenue Available/(Deficiency) [7] $0 $0 $0 $0 $0 [1] Amounts derived from Table 6. [2] Amounts shown reflect the operating expenses net of Pledged Water Capacity Fees associated with the payment of the Debt Service Component of the Cost of Contracted Water Supply associated with water purchases from TB W. [3] Deposits to the General Revenue Capital Expense Account are made after all other required deposits as defined in the Bond Resolution are made (separately identified for additional pay-as-you-go capital funding). [4] Reflects Pledged Impact Fees used to pay the Bond Service Requirement associated with expansion -related debt service for the Outstanding and Additional Parity Bonds of the System as required by the Bond Resolution. [5] Includes projected investment income, water line maintenance fees, planning service fees and other miscellaneous service charges and revenues. [6] Amounts shown include additional revenues associated with: i) identified rate increases as previously discussed associated with the phase -in of an increase in capital re -investment and to provide funds for the payment of the Bond Service Requirement associated with the Additional Bonds; ii) the implementation of the Purchased Water Pass -Through Consumption Charge; and iii) the application of the annual Price Index Adjustment. [7] Amounts shown available for additional capital funding, deposits to the Rate Stabilization Account, or for any other purpose of the System. Customer Impact Analysis and Comparisons with Other Neighboring Utilities For informational purposes, Tables 8 through 10 provide a comparison of the current rates of the County to neighboring or comparable Florida utilities at a variety of usage levels. It should be noted that when making a comparison of the rates charged by other utilities for water and wastewater service, several factors have an effect on the level of rates charged, including: i) operation of multiple water / wastewater plants as opposed to single -plant systems; ii) source of water supply and level of treatment required before the distribution of water to the ultimate customer; iii) level of wastewater treatment and effluent disposal methods of wastewater service; iv) plant capacity utilization, and assistance in the funding of such plant capacity by federal grants, connection fees, etc.; v) density of the customer base served as well as the type of customer -34- serve0l; vi) general fund and administrative fee transfer made by municipal and county systems, which may account for differences in the level of rates charged; vii) bond covenants and funding requirements of the rates; and viii) level of capital improvements required to meet service area needs, including the construction of growth -related assets in anticipation of service area expansion. As can be seen below, the County rates for the typical (average) single-family residential customer using 7,000 gallons of utility service are comparable with the rates charged by other major utilities in the central and southern portions of western Florida: Combined Residential Water and Wastewater Service [1] Hillsborough County (Effective 10/1/2019) Hillsborough County (Effective 10/1/2020) Utilities Surveyed: City of Bradenton City of Cape Coral Charlotte County [2] City of Clearwater [2] Collier County [2] City of Lakeland [2] Lee County Manatee County [2] City of New Port Richey [3] City of North Port [2] Pasco County [2][3] Pinellas County [2][3] City of Plant City Polk County [2] Sarasota County [2] City of St. Petersburg [3] City of Tampa [3] City of Temple Terrace Survey Average 7,000 Gallons (Average) $90.32 $95.36 $85.20 130.27 139.09 135.13 118.70 74.61 97.70 83.73 83.97 129.32 85.72 95.89 79.58 110.52 107.14 118.82 71.03 96.57 $102.39 [1] Amounts shown derived from Table 10 at the end of this report. [2] Utility is currently involved in a rate review or is planning a change in rates over the next 12 months. [3] Reflects utilities that purchase water from the Tampa Bay Water Authority. As previously discussed, the County imposes Water and Wastewater System Impact Fees to new customers or development requesting water and wastewater capacity from the System to recover the incremental capital (i.e., treatment capacity and backbone transmission / collection) costs allocable to new customers. Application of Water and Wastewater System Impact Fees is commonly used by Florida utilities to minimize the financial burden and incremental cost of growth upon existing customers of the System. This concept is commonly referred to in the industry as having "Growth Pay for Growth" and is generally considered equitable to both existing and future customers of the System. Table 11 at the end of this Sufficiency Report provides a comparison of the County's current Impact Fees and those charged by other public utilities located in central- and southwest Florida. The charges shown are based on an ERC basis. As previously [4] Certain utilities may have higher usage requirements resulting in lower cost per unit relationships (rates), which is a common situation for utilities with high commercial or industrialized customer bases or a very affluent customer base. -35- discussed, an ERC is representative of the average daily capacity of a single-family residential unit and generally represents the lowest level and the most common level of use. As shown below, the current Water and Wastewater System Impact Fees are comparable (lower) to the fees charged by the other surveyed utilities in the comparison: Impact Fees — Rate per ERC Water Wastewater Combined Hillsborough County — Current Rates $1,750 $1,800 $3,550 Hillsborough County —Effective 10/1/2020 Northwest Service Area $1,863 $2,951 $4,814 South/Central Service Area $2,214 $3,651 $5,865 Neighboring Utility Average [*] $1,868 $2,480 $4,178 [*] Based on utility survey shown on Table 11. It should be noted that a number of factors could affect the level of charges collected by other utilities including, but not limited to, level of treatment required for service, asset age, density of customer base, level of service adopted by local government, amount of grant (contributions) funds received, and other factors. No in-depth analysis has been performed to determine the affect these factors could have on the fees charged by other utilities or to determine the methods used in the development of the water and wastewater fees imposed by others, nor has any analysis been made to determine whether 100% of the cost of new facilities is recovered from the other utilities' charges, or some percentage less than 100% with the balance recovered through the user charges. It should be noted that for the wastewater system, the County provides advanced wastewater treatment for the processing of waste (higher removal of nitrogen and phosphorus) which requires a higher level of service and capital cost. The majority of the utilities included on the survey do not provide this higher service standard which would result in a cost difference between the County and the surveyed utilities. BOND RESOLUTION COMPLIANCE A significant financial parameter of the System is associated with the ability to maintain compliance with the Bond Covenants as set forth in Section 11.02 in the Bond Resolution. The Bond Resolution was adopted by the County and authorized the issuance of the Bonds currently outstanding on behalf of the System. The Bond Resolution contains, among other things, certain covenants that must be satisfied in order to provide assurances to Bond Holders that the debt payments will be made. Generally, these covenants are in the form of. i) certain debt service coverage ratios, which are applicable to the level of rates charged and the revenue margins achieved; ii) priority of the disposition of revenues through the System funds / accounts (i.e., "Flow of Funds"); and iii) certain requirements associated with the provision of service (e.g., provision of no free service). The following provides a discussion of the ability of the System to meet the bond covenant requirements as defined by the Bond Resolution. Debt Service Coverage The Bond Resolution includes a provision requiring the County to establish and maintain rates that will always provide the following in each Fiscal Year: -36- i. Gross Revenues and Pledged Available Capacity (Impact) Fees must fund at least 100% of the Required Deposits identified in the Bond Resolution including deposits to the Operation and Maintenance Account to pay Operating Expenses, Debt Service Account, and Renewal and Replacement Account (Referred to as Test 1); and ii. Net Revenues and Pledged Available Capacity (Impact) Fees must fund at least 120% of the Bond Service Requirement under the Bond Resolution (Referred to as Test 2); and iii. Net Revenues must fund at least 100% of the Bond Service Requirement (Referred to as Test 3). The Bond Resolution established these minimum debt coverage requirements for the protection of the holders of the Bonds. Table 12 at the end of this report summarizes the ability of the System Pledged and Net Revenues to meet the rate covenant provisions of the Bond Resolution for the Forecast Period. Based on the assumptions recognized and the results of the financial forecast, it is expected that funds generated from System operations during the Forecast Period will provide sufficient resources to meet the rate covenants as contained in the Bond Resolution as shown on Table 12 at the end of this report and summarized below: Projected Rate Covenant Compliance - for the Forecast Period Fiscal Year Ending September 30, Rate Covenant Tests 2020 2021 2022 2023 2024 Test 1 — Calculated [1] 126% 124% 124% 124% 124% Test 1— Minimum Required 100% 100% 100% 100% 100% Test 2 — Calculated [1] 543% 460% 467% 484% 476% Test 2 — Minimum Required 120% 120% 120% 120% 120% Test 3 — Calculated [1][2] 461% 399% 410% 426% 419% Test 3 — Minimum Required 100% 100% 100% 100% 100% [1] Represents the various rate covenant requirements as defined in Section 11.02 of the Bond Resolution. [2] Represents a rate covenant test based on Net Revenues only. Overall and with the adoption of the 4% rate adjustments in Fiscal Years 2020 and 2021 coupled with the modifications to the annual price index adjustment, the financial forecast adequately demonstrates that the System should maintain a favorable fiscal position for the Forecast Period. OTHER FINANCIAL CONSIDERATIONS AND PERFORMANCE An evaluation of the financial position of the System was performed as part of the development of the financial forecast and overall review of the System revenue sufficiency. This evaluation includes the development of certain ratios and the review of financial performance indicators to evaluate the financial strength of the System. The analysis includes a series of charts and figures prepared to provide a visual representation of the financial and statistical trends in the selected -37- financial ratios or benchmarks over the Forecast Period. The following provides a brief description of financial ratios evaluated by the Department on behalf of the System. Figure 1- Available Working Capital and Cash Balances An important component of the evaluation of the System is the resulting liquidity / ending cash position of the utility (this is a key financial metric for the credit rating agencies). The projected cash flows (deposits and withdrawals) affecting the System liquidity by specific account is shown in detail on Table 13 at the end of this report. Below is a summary of the ending cash balances by specific fund for the Forecast Period. Estimated Ending Cash Balances by Fund - ($000s) [1] Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Revenue/Operating Account $96,657 $96,657 $96,657 $98,701 $102,556 Renewal and Replacement Account 9,303 11,326 5,659 6,959 9,141 Debt Service Account [2] 8,680 9,217 9,217 9,425 9,424 Reserve Account [3] 2,170 2,170 2,170 2,170 2,170 Rate Stabilization Account 74,000 74,000 74,000 74,000 74,000 General Revenue Capital Expense 77,810 67,698 44,490 44,627 46,243 Account [4] Other Miscellaneous Accounts 10,253 10,254 10,254 10,253 10,254 Customer Deposits 16,169 16,169 16,169 16,169 16,169 Impact Fee Accounts [5] 68,797 64,928 46,132 14,726 6,039 Construction Account [6] 6,219 77,456 59,744 16,696 - Total Ending Cash Balances $370,059 $429,875 $364,492 $293,727 $275,996 [1] Amounts shown derived from Table 13. [2] The Debt Service Account earnings reflect only those earnings on funds deposited on account for the next Interest Payment Date and the Principal Maturity Date associated with the Bond Service Requirement for the Outstanding Bonds. [3] Represents the debt service Reserve Account for the Series 2010C Bonds. [4] Reflects funds on deposit within the General Revenue Capital Expense Account and is made after payment of all required transfers and is generally used by the Department for a designated System purpose such as the funding of capital improvements or as additional working capital. [5] For purposes of this analysis, assumed earnings on the Impact Fee Accounts are restricted to such accounts and are considered as a component of the Pledged Impact Fee determination. [6] Represents bond proceeds deposited into the respective Construction Account for capital project funding; assumes unused proceeds deposited to the Construction Funds from the issuance of the Series 2016 Bonds as well as additional proceeds associated with the issuance of the Additional Parity Bonds (i.e., the Series 2021 Bonds) during the Forecast Period. As can be seen above the ending cash balance for the utility funds declines during the Forecast Period reflecting the significant level of capital funding identified during the Forecast Period. Working capital represents the cash that is considered unrestricted by purpose and would exclude restricted funds for the payment of the Bond Service Requirement, expansion -related capital expenditure funding (Impact Fees), customer service liability (deposits), and for capital re- investment (Renewal and Replacement Account). Working capital may be considered available to fund operations and maintenance expenses, outstanding current liabilities, and other requirements of the System. The availability of working capital reduces the financial risk to a utility due to unforeseen issues as a loss in revenue due to a force majeure event (e.g., hurricane or storm event), effects of regulatory actions, or changes in market conditions such as a downturn in the economy. No Below is a graphical representation of the unrestricted cash (working capital) and ending balance projected for the Forecast Period: $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $4010001000 $20,000,000 $0 Figure 1- Operating Related Unrestricted Fund Balances 2020 2021 2022 2023 2024 � Operating Reserves � Rate Stabilization Account —150 Days of Operating Expense — —150 Days of Rate Revenue As can be seen above the recommended rate adjustments serve to maintain the minimum targeted ending cash balance throughout the Forecast Period, which was set at 150 days of operating expenses for the purposes of this evaluation; the estimated higher ending balances shown above are more indicative of a highly -rated utility by the credit rating agencies and will serve to reduce the future cost of borrowing due to the higher credit rating. Any unrestricted funds above the minimum target level would be available for any System purpose, including increased capital project funding that may periodically occur, and also serves as a hedge in case of any extraordinary event that may occur (e.g., significant storm event, continuation of the COVID-19 pandemic, etc.) that would affect operations or rate revenue collectability. Figure 2 — Capital -related Account Balances The Department annually funds the Renewal and Replacement Account and designates additional funds above such required deposit into the General Purpose (Capital Expenditure) Account for ongoing capital needs. The cash funding of the capital improvements over time improves the long- term equity position of the System and stabilize rates over the long-term (through the avoidance of additional debt). This stabilization is evident in the rate comparison presented earlier in this report; the County rates have remained consistent with the average rate charged by other utilities in the neighboring area for many years even though the County generally provides a higher level of treatment standards. The Department and the Rate Consultant recognize that capital funding from rates ("Pay -Go") should be an annual funding requirement even though capital spending can fluctuate from year to year. A significant amount of the capital projects for the Forecast Period and over time will be for asset renewals, replacements, betterments, and upgrades as opposed to utility plant expansions. It should be noted that as of the end of Fiscal Year 2019, the System had gross depreciable assets including construction -work -in -process, recorded at an original costEsl,of approximately $2.5 billion. Assuming an average service life for all depreciable assets of 50 years [51 Assets are recorded at original installed cost when placed into service and do not represent include any adjustment for current replacement value of the assets, which is anticipated by the Department to be greater. -39- (i.e., a 2% re -investment rate at original cost of installation of the assets), the annual accrual would be approximately $50 million; the current annual depreciation expense reported in the 2019 Annual Financial Report was approximately $77.1 million. As can be seen below, the annual deposits from operations to fund capital investment projects forecasted to be $68.1 million annually, which approximates 88.3% of reported depreciation expense and 3.12% of gross depreciable assets. This annual capital funding allowance from rates will allow the utility to avoid the over -issuance of bonds to fund capital and is viewed favorably by the credit rating agencies; however, this minimum funding level must be maintained subsequent to the Forecast Period in order to provide for a sustainable capital re -investment and rate implementation plan. Figure 2 - R&R and General Revenue Capital Accounts Ending Cash Balances vs Deposits $140 $100 1 The capital expenditures reflect the anticipated year of funding for projects. The Department plans to use existing funds in the respective capital accounts to fund the capital plan for the ongoing asset replacement component of the capital financing plan and issue debt for the expansion component of the capital financing plan to provide a better match of future growth to the purpose of the capital needs for the Forecast Period and to continually reinvest funds annually in the System from operations to reduce the overall long-term debt burden on the System for the Forecast Period. Figure 3 —Projected Net Revenue Margin Ratio The Net Revenue Margin Ratio (also referred to as the Operating Margin) is a measure of a utility system's ability to annually meet its Operating Expenses and indicates the net contribution margin estimated to be earned by the System. The contribution margin can be considered as what may be available for reinvestment in the capital infrastructure of the System (by payment of debt service or through pay-as-you-go capital funding) and for the maintenance of liquidity for System emergencies and ongoing reserve (credit) levels. A declining net revenue margin indicates a reduction in net available funds after payment of Operating Expenses for such purposes. Generally, it is recommended that the Net Revenue Ratio target of approximately 42% be maintained (reflects Fitch Ratings 2020 median); however, since the County purchases all of its finished water supply from other local governments and the debt payments for such purchases is considered as a component of operating expenses for financial reporting and budgetary purposes, a lower ratio was considered at 35% to promote the System's financial health over the long-term. As can be seen below, the net revenue margin is within the targeted range during the Forecast Period. Figure 3 - Net Revenue Margin 50.0% 40.0% 30.0% 2.5% I 2.5% 20.0% ow 25.0 10.0 0.0% 2020 2021 2022 2023 2024 ]Net Revenue Margin (Operating) Net Revenue Margin (w / Pledged Capacity Fees) —Minimum Target (35%) The Net Revenue Margin shown above identifies the net income or contribution margin after the payment of operating expenses from revenues with the recognition of impact fees assumed for the payment of the annual Bond Service Requirement. As discussed later in this section, the System currently has a very manageable debt balance. As referenced on Figure 5, the debt per ERC served is low (less than $1,500 per ERC). More importantly, the debt to net plant ratio as shown on Figure 6 is also very low at approximately 25% which states that most of the utility plant in service has been funded from equity (i.e., cash flow) and not through the issuance of debt. However, it is recognized that significant capital investment is needed during and beyond the Forecast Period and the Department will closely monitor the net revenue margin and projected capital needs over the near and long-term in order to ensure adequate reinvestment to the capital infrastructure Figure 4 — Projected Revenue Liquidity Ratio This figure presents the amount of total available unrestricted fund balances in relation to total System revenues during the Forecast Period. The unrestricted fund balances include operating reserves and the general revenue capital expense account. The maintenance of a strong liquidity ratio reduces the overall financial risk of the System. The purpose of this ratio is to determine if a utility is maintaining a level of reserves commensurate with the corresponding revenue stream of the system. Although it is projected that the amount of unrestricted fund balances is anticipated to decline during the Forecast Period associated with the capital needs of the System, the projected liquidity ratio, which averages approximately 73% during the Forecast Period, is assumed by the Department to be sufficient during the Forecast Period (greater than an estimated minimum target ratio of 60%). (Remainder of page intentionally left blank) -41- 100% 80% 60% 40% 20% 0% Figure 4 - Revenue Liquidity Ratio 2020 2021 2022 2023 2024 6-1 Revenue Liquidity —Target Liquidity Figure 5 — Principal Amount of Outstanding Indebtedness per Equivalent Residential Connection (ERC) The ratio of the amount of debt outstanding per ERC measures the amount of financial risk a utility has undertaken relative to the customers served. The higher the net ERC debt burden, generally the greater the stress on rates for service and the greater reliance on impact fees or other external sources of funds to meet System operating needs. It is also an indication of the amount of potential "leveraging" capability a utility may have relative to funding future capital needs. Figure 5 shown below illustrates for the projected Forecast Period, the amount of outstanding principal senior lien indebtedness in relation to the amount of projected water system ERCs. Figure 5 - Net Outstanding Debt (Less Debt Reserve) Per ERC $1, 450 $1,400 $1, 350 $1, 300 $1, 250 1,424 1,364 J0 $1, 200 1,30 1,229 $1,150 $1,100 2020 2021 2022 2023 2024 As can be seen above, the amount of debt per ERC is expected to increase during the Forecast Period associated with the issuance of the Additional Bonds identified to fund the System capital improvement program. The projected amount of the debt per ERC is considered significantly less -42- than historical levels experienced by the County (in 1996 the debt per ERC was over $4,500 per ERC (which does not assume any inflationary adjustment knowing the cost of capital construction is much higher today than in 1996). The low debt per ERC was an element of financial strength reported by FITCH in the 2018 credit report and rating upgrade to AAA, which has been maintained by the County since the upgrade was awarded. Department staff will continue to evaluate and prioritize capital funding with the level of indebtedness in mind in order to maintain a manageable level of indebtedness, while still providing for future leveraging capability to the extent changes in the capital program due to increased regulations, changes in service area characteristics, or other factors result in the need to issue additional parity bonds or subordinate debt above what is contemplated during the Forecast Period. Figure 6 — Debt Outstanding to Net Plant Investment (Debt) Ratio This figure illustrates the amount of debt issued to fund the net plant investment in service to meet the potable water and wastewater demands of the System service area. This ratio presents the net equity of the utility (in terms of plant investment) and provides an indication of the reliance on debt to fund existing assets as well as the flexibility in terms of funding future capital assets and overall rate stability. Generally, the higher the ratio, the greater the need to have a larger portion of the rate revenues being dedicated to principal retirement. The Department has identified a maximum target for this ratio since it links to debt financing at a particular time and provides information to the extent additional capital projects need to be funded from additional bond proceeds in the future. As can be seen below, the Debt Ratio is projected to increase during the Forecast Period but is well below the maximum debt outstanding target level during the Forecast Period. The Department considers the ratio to be favorable with respect to funding System infrastructure and illustrates the capital financing flexibility of the System but also understands the need to monitor future debt issues after the water and wastewater plant expansion for the South County service area (also supports the reason for the additional rate adjustments to promote a continued capital reinvestment rate). Figure 6 - Debt Outstanding to Net Plant Investment 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2020 2021 2022 2023 2024 Outstanding Debt Per Net Plant ---Maximum Target -43- Figure 7 — Net Free Cash to Depreciation This figure illustrates the amount of funds available for equity capital funding or for other System purposes after the payment of Operating Expenses and the Bond Service Requirement. The free cash is derived from System operating revenues and Pledged Impact Fees used to pay for the expansion -related component of the Bond Service Requirement as required by the Bond Resolution. This is a key ratio of the credit rating agencies since it is an indicator of annual cash flows available for capital reinvestment. The ability to fund ongoing capital reinvestment was also an indicator of financial strength relied upon by FITCH in their 2018 Credit Report and rating upgrade. As can be seen on the following graph, the availability of funds for capital reinvestment approximates about 98% of the total depreciation expense of the System with an increasing trend in contribution, which is considered favorable. The reason of the decline in the ratio in Fiscal Year 2021 is due to the issuance of the Additional Bonds and the corresponding payment of the Bond Service Requirement, which reduces the immediate Fiscal Year cash flow and correspondingly the available funds for capital re -investment. $120 $100 $80 c 0 $60 $40 $20 Figure 7 - Free Cash Flow as Percent of Depreciation $73 — — — — $73 _ _ $7 $78 $79 $20 $59 _d1L1 $20 $53 2020 $20 2021 $19 2022 $19 2023 2024 Free Cash Flow ® Free Cash Flow Including Pledged Capacity Fees —80% of Depreciation — —100% of Depreciation RATE OBSERVATIONS AND RECOMMENDATIONS The following is a summary of the Department's rate observations and Rate Consultant recommendations: 1. In order to maintain the creditworthiness and financial position of the System, it is recommended that the County continue with implementation of the adopted Purchased Water Pass -Through Consumption Charge and the adopted Price Index Adjustment currently in effect through September 30, 2025 in order to: a. Maintain targeted unrestricted working cash (fund balance) reserves within the System; b. Fund increased Operating Expenses associated with general inflation, energy increases and the residual effects on the cost of doing business (chemicals, repairs, travel, etc.) and increases in labor due to System growth and overall complexity in the operation of the System; c. Provide dedicated annual transfers to fund capital expenditures for the renewal, replacement, betterment and upgrade of System assets in order to limit the amount of debt financing and long-term costs to the System, which will promote rate stability; and d. Maintain the creditworthiness of the System and meet necessary rate covenant requirements of the Bond Resolution. 2. In order to recover the increasing cost of operations and maintenance and maintain margins for ongoing capital reinvestment, it is recommended that the automatic Price Index be re- evaluated prior to the sunset of the adjustment application in September 30, 2025 as it is considered critical by the Rate Consultant to allow the System to maintain a strong fiscal position and limit financial risk. 3. Based on the amount of investment in utility infrastructure and the amount of capital re- investment needed for the System coupled with the projected need for new expansion -related facilities outside of the Forecast Period, it is recommended that the Department closely monitor the sufficiency of rates annually by staff as part of the annual budget process to determine the need for additional rate adjustments and provide formal recommendations closer to when that additional rate adjustments may be implemented. This will allow the Department to maintain a strong fiscal position, meets its capital re -investment objectives, and promote rate stability over time. 4. This rate sufficiency study has demonstrated that the current and proposed rates and fees achieve compliance with the Rate Covenant as delineated in the Bond Resolution and meet the anticipated funding requirements of the System for the Review Period. (Remainder of page intentionally left blank) -45- HILLSBOROUGH COUNTY, FLORIDA WATER RESOURCES DEPARTMENT SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT LIST OF TABLES AND ATTACHMENTS Table No. Description 1 Summary of Historical Customer Statistics and Sales — Water System 2 Summary of Historical Customer Statistics and Sales — Wastewater System 3 Summary of Projected Customer Statistics and Sales — Water System 4 Summary of Projected Customer Statistics and Sales — Wastewater System 5 Summary of Capital Improvement Projects for the Forecast Period — Cash Basis 6 Summary of Projected Revenue Requirements and Revenue Sufficiency for the Forecast Period 7 Summary of Projected Operating Expenses for the Forecast Period — Escalation Factors 8 Comparison of Typical Monthly Residential Bills for Water Service 9 Comparison of Typical Monthly Residential Bills for Wastewater Service 10 Comparison of Typical Monthly Residential Bills for Combined Water and Wastewater Service 11 Comparison of Water and Wastewater Impact Fees for 5/8" Residential Service 12 Summary of Projected Debt Service Coverage 13 Summary of Projected Cash Balance and Fund Transfers Attachment Description A Rate Consultant "2021 Sufficiency of Water and Wastewater Rates Report" Page 1 of 1 Table 1 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Historical Customer Statistics and Sales - Water Svstem R Line No. Description 2015 [2] For the Fiscal Year Ended September 30 2016 2017 2018 2019 Individually Metered Residential 1 Average Annual Accounts 151,614 157,335 162,072 165,470 172,867 2 Average Annual ERCs [3] 151,614 157,335 162,072 165,470 172,867 3 Billed Potable Water Sales (000's) 12,186,020 13,149,276 14,584,332 14,465,832 15,105,265 4 Average Monthly Use per Account (gal.) 6,698 6,965 7,499 7,285 7,282 5 Average Monthly Use per ERC (gal.) 6,698 6,965 7,499 7,285 7,282 Master Metered Residential 6 Average Annual Accounts 855 857 862 868 887 7 Average Annual Units 68,691 70,230 71,668 73,232 76,250 8 Average Annual ERCs [3] 34,346 35,115 35,834 36,616 38,125 9 Billed Potable Water Sales (000's) 3,065,998 3,200,470 3,244,113 3,359,660 3,450,453 10 Average Monthly Use per Account (gal.) 298,830 311,209 313,623 322,548 324,169 11 Average Monthly Use per Unit (gal.) 3,720 3,798 3,772 3,823 3,771 12 Average Monthly Use per ERC (gal.) 7,439 7,595 7,544 7,646 7,542 Commercial 13 Average Annual Accounts 4,515 4,596 4,652 4,657 4,763 14 Average Annual ERCs [3] 29,012 30,364 31,590 32,916 34,500 15 Billed Potable Water Sales (000's) 2,297,963 2,391,478 2,466,501 2,504,357 2,547,286 16 Average Monthly Use per Account (gal.) 42,413 43,362 44,184 44,813 44,567 17 Average Monthly Use per ERC (gal.) 6,601 6,563 6,507 6,340 6,153 Total System 18 Average Annual Accounts 156,984 162,788 167,586 170,995 178,517 19 Average Annual ERCs 214,972 222,814 229,496 235,002 245,492 20 Billed Potable Water Sales (000's) 17,549,981 18,741,224 20,294,946 20,329,849 21,103,004 21 Average Monthly Use per Account (gal.) 9,316 9,594 10,092 9,908 9,851 22 Average Monthly Use per ERC (gal.) 6,803 7,009 7,369 7,209 7,164 Water Purchased (000's): 23 Tampa Bay Water 18,939,350 20,142,760 21,806,490 22,261,110 23,708,980 24 All Other Public Systems [4] 392,003 489,265 567,679 564,032 620,833 25 Total Water Purchased 19,331,353 20,632,025 22,374,169 22,825,142 24,329,813 26 Non -Revenue Water (000's) 1,781,372 1,890,801 2,079,223 2,495,293 3,226,809 27 Percent of Water Purchased 9.21% 9.16% 9.29% 10.93% 13.26% 28 Average Monthly Finished Water per ERC (gal; 7,494 7,716 8,124 8,094 8,259 Average Water Accounts 29 Receiving Water and Wastewater Service 132,502 137,591 141,044 144,454 149,737 30 Water -only Service Accounts [5] 24,482 25,197 26,542 26,541 28,780 31 Total Average Water Accounts 156,984 162,788 167,586 170,995 178,517 Footnotes: [1] Amounts based on detailed customer statistical information as provided by the Water Resources Department; commercial class does not include fire flow customers. The average fireline customers (which are not billed for any flow that may be metered for fire service) for each fiscal year is summarized belo For the Fiscal Year Ended September 30 2015 2016 2017 2018 2019 Fire Flow Average Accounts 665 694 729 747 772 [2] During the Fiscal Year 2015, the County acquired five (5) individual franchised water utility systems from: i) Pluris Holdings, LLC systems representing approximately 2,517 water ERC's; and ii) Hillsborough Water Works, Inc. systems representing approximately 125 water ERC's. The County acquired the franchise systems mid -year and therefore recognized growth in the average customer accounts from the acquitisitions are presented in the Fiscal Years 2015 and 2016. For assumed growth in water customer accounts for the Fiscal Year 2020 please reference Table 3. [3] Reflects total equivalent residential connections (ERCs) served and calculated based on reported monthly base charge revenues by the County. [4] Amounts shown reflect water service provided by other public utilities for service to certain isolated portions of the County's water service area. Amounts summarized as follows: For the Fiscal Year Ended September 30 2015 2016 2017 2018 2019 City of Tampa 373,069 470,614 550,332 513,531 592,932 City of Plant City 15,852 15,019 14,465 25,477 23,991 City of Oldsmar 23 27 27 29 22 City of Temple Terrace 3,059 3,605 2,855 24,995 3,888 Total Purchases - Other Public Systems 392,003 489,265 567,679 564,032 620,833 [5] Amounts shown do not include Fire Service accounts (reference footnote 1 above for these water -only accounts). Page 1 of 1 Table 2 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Historical Customer Statistics and Sales - Wastewater Svstem R Line No. Description 2015 [2] 2016 2017 2018 2019 Individually Metered Residential 1 Average Annual Accounts 140,412 145,587 149,148 152,523 157,830 2 Average Annual ERCs [3] 140,412 145,587 149,148 152,523 157,830 3 Billed Wastewater Flow (000's) 8,291,091 8,734,320 9,203,722 9,299,831 9,730,273 4 Average Monthly Billed Flow per Account (gal.) 4,921 4,999 5,142 5,081 5,138 5 Average Monthly Billed Flow per ERC (gal.) 4,921 4,999 5,142 5,081 5,138 Master Metered Residential 6 Average Annual Accounts 581 590 596 599 619 7 Average Annual Units 71,654 73,288 74,783 76,333 79,361 8 Average Annual ERCs [3] 50,158 51,302 52,348 53,433 55,553 9 Billed Wastewater Flow (000's) 3,164,540 3,258,620 3,289,756 3,387,599 3,459,428 10 Average Monthly Billed Flow per Account (gal.) 453,893 460,257 459,977 471,285 465,728 11 Average Monthly Billed Flow per Unit (gal.) 3,680 3,705 3,666 3,698 3,633 12 Average Monthly Billed Flow per ERC (gal.) 5,258 5,293 5,237 5,283 5,189 Commercial 13 Average Annual Accounts 3,461 3,529 3,572 3,611 3,669 14 Average Annual ERCs [3] 40,069 41,986 43,650 45,219 46,892 15 Billed Wastewater Flow (000's) 2,414,292 2,520,638 2,614,576 2,675,873 2,693,977 16 Average Monthly Billed Flow per Account (gal.) 58,131 59,522 60,997 61,753 61,188 17 Average Monthly Billed Flow per ERC (gal.) 5,021 5,003 4,992 4,931 4,788 Total System 18 Average Annual Accounts 144,454 149,706 153,316 156,733 162,118 19 Average Annual ERCs [3] 230,639 238,875 245,146 251,175 260,275 20 Billed Wastewater Flow (000's) 13,869,923 14,513,578 15,108,054 15,363,303 15,883,678 21 Average Monthly Billed Flow per Account (gal.) 8,001 8,079 8,212 8,169 8,165 22 Average Monthly Billed Flow per ERC (gal.) 5,011 5,063 5,136 5,097 5,086 Wastewater Treated (000's): 23 County Facilities 14,437,831 14,290,515 15,110,042 15,316,134 15,370,636 24 Purchased Wastewater Service [4] 299,252 300,343 230,057 254,080 331,546 25 Total Wastewater Treated 14,737,083 14,590,858 15,340,099 15,570,214 15,702,182 26 Average Annual Daily Flow (mgd) 40 40 42 43 43 27 Annual Wastewater Treated Per ERC (gal.) 5,325 5,090 5,215 5,166 5,027 Average Retail Wastewater Accounts 28 Receiving Water and Wastewater Service 132,502 137,591 141,044 144,454 149,737 29 Wastewater -only Service Accounts 11,952 12,115 12,272 12,279 12,381 30 Total Average Retail Wastewater Accounts 144,454 149,706 153,316 156,733 162,118 Footnotes: [1] Amounts based on detailed customer statistical information as provided by the Water Resources Department. [2] During the Fiscal Year 2015, the County acquired two (2) individual franchised wastewater utility systems from Pluris Holdings, LLC systems representing approximately 2,358 wastewater ERC's. The County acquired the franchise systems mid -year and therefore recognized growth in the average customer accounts from the acquitisitions are presented in the Fiscal Years 2015 and 2016. For assumed growth in water customer accounts for the Fiscal Year 2020, please reference Table 4. [3] Reflects total equivalent residential connections (ERCs) served and calculated based on reported monthly base charge revenues by the County. Amounts do not include Bulk Wastewater Service. [4] Amounts shown reflect wastewater service provided by certain service providers (local governments) for certain isolated portions of the County's wastewater service area. Purchased wastewater by provider is summarized as follows: 2015 2016 2017 2018 2019 City of Tampa 275,405 275,754 207,637 219,598 294,716 City of Plant City (a) 15,852 15,018 14,465 25,477 24,000 City of Temple Terrace (b) 7,995 9,571 7,955 9,005 12,830 Total Purchases - Other Public Systems 299,252 300,343 230,057 254,080 331,546 (a) Reflects purchases for wastewater service to a remote County system referred to as Oak Utilities (approximately 200 residential accounts). (b) Reflects purchase for wastewater service near the perimeter of the respective City's service area where the County does not have sewer collection lines (incidental service). Page 1 of 2 Table 3 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Proiected Customer Statistics and Sales - Water Svstem Line No. Description Historical [1] 2019 2020 Fiscal Year Ending September 30, 2021 2022 2023 2024 Individually Metered Residential [2] 1 Normal Growth [3] 7,397 6,500 5,000 5,000 4,500 4,000 2 Incremental Growth - - - - - - 3 Average Annual Accounts 172,867 179,367 184,367 189,367 193,867 197,867 4 Average Annual ERCs [4] 172,867 179,367 184,367 189,367 193,867 197,867 5 Billed Potable Water Sales (000's) 15,105,265 15,551,119 15,929,309 16,315,861 16,657,053 16,976,989 6 Average Monthly Use per ERC (gal.) 7,282 7,225 7,200 7,180 7,160 7,150 Master Metered Residential [2] 7 Normal Unit Growth [3] 3,018 2,800 2,100 1,750 1,450 1,375 8 Incremental Growth - - - - - - 9 Average Annual Accounts 887 920 944 964 981 997 10 Average Annual Units 76,250 79,050 81,150 82,900 84,350 85,725 11 Average Annual ERCs [4] 38,125 39,525 40,575 41,450 42,175 42,863 12 Billed Potable Water Sales (000's) 3,450,453 3,576,222 3,671,226 3,750,396 3,815,994 3,878,199 13 Average Monthly Use per Unit (gal.) 3,771 3,770 3,770 3,770 3,770 3,770 14 Average Monthly Use per ERC (gal.) 7,542 7,540 7,540 7,540 7,540 7,540 Commercial [2] 15 Normal Growth [3] 106 100 50 50 40 35 16 Incremental Growth - - - - - - 17 Average Annual Accounts 4,763 4,863 4,913 4,963 5,003 5,038 18 Average Annual ERCs [4] 34,500 35,224 35,586 35,948 36,238 36,492 19 Billed Potable Water Sales (000's) 2,547,286 2,578,397 2,604,895 2,631,394 2,652,622 2,671,214 20 Average Monthly Use per ERC (gal.) 6,153 6,100 6,100 6,100 6,100 6,100 Total System 21 Account Growth 7,522 6,633 5,074 5,070 4,557 4,051 22 ERC Growth 10,490 8,624 6,412 6,237 5,515 4,942 23 Average Annual Accounts 178,517 185,150 190,224 195,294 199,851 203,902 24 Total Equivalent Residential Connections [4] 245,492 254,116 260,528 266,765 272,280 277,222 25 Billed Potable Water Sales (000's) 21,103,004 21,705,738 22,205,430 22,697,651 23,125,669 23,526,402 26 Average Monthly Use per Account (gal.) 9,851 9,769 9,728 9,685 9,643 9,615 27 Average Monthly Use per ERC (gal.) 7,164 7,118 7,103 7,090 7,078 7,072 Water Purchased (000's) 28 Tampa Bay Water 23,708,980 23,758,190 24,313,676 24,860,709 25,335,543 25,779,659 29 All Other Public Systems [5] 620,833 630,280 636,245 642,270 648,355 654,501 30 Total Water Purchased 24,329,813 24,388,470 24,949,921 25,502,979 25,983,898 26,434,160 31 Non -Revenue Water (000's) 3,226,809 2,682,732 2,744,491 2,805,328 2,858,229 2,907,758 32 Percent of Water Purchased 13.26% 11.00% 11.00% 11.00% 11.00% 11.00% 33 Average Monthly Use per Account (gal.) 11,357 10,977 10,930 10,882 10,835 10,803 34 Average Monthly Use per ERC (gal.) 8,259 7,998 7,981 7,967 7,953 7,946 Average Water Accounts 35 Receiving Water and Wastewater Service 149,737 155,866 160,428 164,977 169,003 172,514 36 Water -only Accounts [6] 28,780 29,284 29,796 30,317 30,848 31,388 37 Total Average Water Accounts 178,517 185,150 190,224 195,294 199,851 203,902 Footnotes: [ 1 ] Amounts shown derived from Table 1. [2] Amounts reflect the customer forecast used in the development of projected rate revenues; commercial class does not include fire flow customers. The average projected fireline customers (which are not billed for any flow that may be metered for fire service) for each fiscal year is summarized below: Historical [1] Fiscal Year Ending September 30, 2019 2020 2021 2022 2023 2024 Normal Growth 25 20 15 15 13 12 Incremental Growth - - - - - Average Fire Flow Accounts 772 792 807 822 835 847 [3] Growth assumptions are based on historical trends. Footnotes Continued on Page 2 of 2. Page 2 of 2 Table 3 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Customer Statistics and Sales - Water System Footnotes Continued [4] Reflects total equivalent residential connections (ERCs) served and calculated based on reported monthly base charge revenues by the County. [5] Amounts shown reflect purchased water from other public utilities to service certain isolated portions of the County's water service area. Amounts summarizes as follows: Historical [1] Fiscal Year Ending September 30, 2019 2020 2021 2022 2023 2024 City of Tampa Percent Growth 15.46% 0.60% 1.00% 1.00% 1.00% 1.00% Purchased Water 592,932 596,490 602,455 608,480 614,565 620,711 City of Plant City Percent Growth -5.83% 32.00% 0.00% 0.00% 0.00% 0.00% Purchased Water 23,991 31,668 31,668 31,668 31,668 31,668 City of Oldsmar Percent Growth -24.14% 0.00% 0.00% 0.00% 0.00% 0.00% Purchased Water 22 22 22 22 22 22 City of Temple Terrace Percent Growth -84.45% -46.00% 0.00% 0.00% 0.00% 0.00% Purchased Water 3,888 2,100 2,100 2,100 2,100 2,100 Total Purchases - Other Public Systems 620,833 630,280 636,245 642,270 648,355 654,501 [6] Amounts shown do not include Fire Service accounts (reference footnote 2 above for these water -only accounts). Page 1 of 2 Table 4 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Proiected Customer Statistics and Sales - Wastewater Svstem Line No. Description Historical [1] 2019 2020 Fiscal Year Ending September 30, 2021 2022 2023 2024 Individually Metered Residential [2] 1 Normal Growth [3] 5,307 5,558 4,275 4,275 3,848 3,420 2 Incremental Growth - - - - - 3 Average Annual Accounts 157,830 163,388 167,663 171,938 175,786 179,206 4 Average Annual ERCs [4] 157,830 163,388 167,663 171,938 175,786 179,206 5 Billed Wastewater Flow (000's) 9,730,273 9,999,346 10,250,916 10,501,973 10,726,462 10,924,398 6 Average Monthly Billed Flow per ERC (gal.) 5,138 5,100 5,095 5,090 5,085 5,080 Master Metered Residential [2] 7 Normal Unit Growth [3] 3,028 2,660 1,995 1,663 1,378 1,306 8 Incremental Growth - - - - - 9 Average Annual Accounts 619 640 656 669 680 690 10 Average Annual Units 79,361 82,021 84,016 85,679 87,057 88,363 11 Average Annual ERCs [4] 55,553 57,415 58,811 59,975 60,940 61,854 12 Billed Wastewater Flow (000's) 3,459,428 3,567,914 3,654,696 3,727,037 3,786,980 3,843,791 13 Average Monthly Billed Flow per Unit (gal.) 3,633 3,625 3,625 3,625 3,625 3,625 14 Average Monthly Billed Flow per ERC(gal.) 5,189 5,179 5,179 5,179 5,179 5,179 Commercial [2] 15 Normal Growth [3] 58 90 50 50 40 30 16 Incremental Growth - - - - - 17 Average Annual Accounts 3,669 3,759 3,809 3,859 3,899 3,929 18 Average Annual ERCs [4] 46,892 48,042 48,681 49,320 49,831 50,214 19 Billed Wastewater Flow (000's) 2,693,977 2,738,394 2,774,817 2,811,240 2,840,367 2,862,198 20 Average Monthly Billed Flow per ERC (gal.) 4,788 4,750 4,750 4,750 4,750 4,750 Total System 21 Account Growth 5,385 5,669 4,341 4,338 3,899 3,460 22 ERC Growth 9,100 8,570 6,310 6,078 5,324 4,717 23 Average Annual Accounts 162,118 167,787 172,128 176,466 180,365 183,825 24 Total Equivalent Residential Connections [4] 260,275 268,845 275,155 281,233 286,557 291,274 25 Billed Wastewater Flow (000's) 15,883,678 16,305,654 16,680,429 17,040,250 17,353,809 17,630,387 26 Average Monthly Billed Flow per Account (gal.) 8,165 8,098 8,076 8,047 8,018 7,992 27 Average Monthly Billed Flow per ERC (gal.) 5,086 5,054 5,052 5,049 5,047 5,044 Wastewater Treated 28 County Facilities (000's of Gallons) 15,370,636 16,118,222 16,501,429 16,870,408 17,193,212 17,478,838 29 Purchased Wastewater Service (000's) [5] 331,546 335,092 338,057 341,052 344,076 347,131 30 Total Wastewater Treated 15,702,182 16,453,314 16,839,486 17,211,460 17,537,288 17,825,969 31 Average Annual Daily Flow 43.02 45.08 46.14 47.15 48.05 48.84 32 Average Monthly Treated Flow per Account (gal.) 8,071 8,172 8,153 8,128 8,103 8,081 33 Average Monthly Treated Flow per ERC (gal.) 5,027 5,100 5,100 5,100 5,100 5,100 Average Retail Wastewater Accounts 34 Receiving Water and Wastewater Service 149,737 155,866 160,428 164,977 169,003 172,514 35 Wastewater -only Accounts 12,381 11,921 11,700 11,489 11,362 11,311 36 Total Average Retail Wastewater Accounts 162,118 167,787 172,128 176,466 180,365 183,825 Footnotes: [1] Amounts shown derived from Table 2. [2] Amounts reflect the customer forecast used in the development of projected rate revenues [3] Growth assumptions are based on historical trends. [4] Reflects total equivalent residential connections (ERCs) served and calculated based on reported monthly base charge revenues by the County Footnotes Continued on Page 2 of 2 Table 4 Page 2 of 2 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Customer Statistics and Sales - Wastewater System Footnotes Continued [5] Amounts shown reflect wastewater service provided by City of Tampa, Plant City, and Temple Terrace for certain isolated portions of the County's wastewater service area. Amounts summarized as follows: Historical [1] Fiscal Year Ending September 30, 2019 2020 2021 2022 2023 2024 City of Tampa Percent Growth 34.21% 0.60% 1.00% 1.00% 1.00% 1.00% Purchased Wastewater Service 294,716 296,484 299,449 302,444 305,468 308,523 City of Plant City (a) Percent Growth -5.80% 32.00% 0.00% 0.00% 0.00% 0.00% Purchased Wastewater Service 24,000 31,680 31,680 31,680 31,680 31,680 City of Temple Terrace (b) Percent Growth 42.48% -46.00% 0.00% 0.00% 0.00% 0.00% Purchased Wastewater Service 12,830 6,928 6,928 6,928 6,928 6,928 Total Purchases - Other Public Systems 331,546 335,092 338,057 341,052 344,076 347,131 (a) Reflects purchases for wastewater service to a remote County system referred to as Oak Utilities (approximately 200 residential accounts). (b) Reflects purchase for wastewater service near the perimeter of the respective City's service area where the County does not have sewer collection lines (incidental service). Page 1 of2 Table 5 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Capital Improvement Projects for the Forecast Period - Cash Flow Basis III Line No CIP Ref. No. Project Description Type 2020 Fiscal Year Ending September 30, 2021 2022 2023 2024 Total Period Departmental Capital 121 1 Water D $ 2,925,260 $ 820,727 $ 426,718 $ 430,985 $ 435,295 $ 5,038,985 2 Wastewater D 6,072,673 9,522,942 4,951,236 5,000,748 5,050,755 30,598,354 3 Customer Service D 2,169,702 13,734 7,141 7,212 7,284 2,205,073 4 Reclaimed D 585,236 116,266 60,450 61,054 61,665 884,671 5 Total Departmental Capital $ 11,752,871 $ 10,473,669 $ 5,445,545 $ 5,499,999 $ 5,554,999 $ 38,727,083 Wastewater System 6 C10138 Countywide Wastewater Pump Stations R&R * W WC $ 1,910,020 $ 1,910,020 $ 1,910,020 $ 1,910,020 $ 1,910,020 $ 9,550,098 7 C10143 South County WWTP Expansion Project WWT 10,330,504 1,147,834 - - - 11,478,338 8 C10171 Countywide Wastewater Collection and Transmission System R&R* WWC 1,602,121 1,602,121 1,602,121 1,602,121 1,602,121 8,010,605 9 C10239 Northwest RWRF System Improvements WWT 18,442,485 7,903,922 - - - 26,346,407 10 C10243 19th Avenue Wastewater Forcemain WWC 1,086,815 - - - - 1,086,815 11 C10275 Falkenburg AWTP Mechanical Bar Screens Replacements WWC 2,172,956 1,086,478 362,159 - - 3,621,593 12 C10276 River Oaks Diversion Forcemain (RO To NWRWRF) & Pump Station W WC 5,068,365 2,172,157 - - - 7,240,522 13 C10280 Flow Diversion From Falkenburg (Pump Stations & Piping) W WC 382,800 4,107,600 7,462,800 46,800 - 12,000,000 14 C10281 Southeast County Landfill Biosolids Composting Facility WWT 3,443,751 - - - - 3,443,751 15 C10288 Van Dyke Generator Replacement WWT 4,049,814 449,979 - - - 4,499,793 16 C10289 Falkenburg Install De -Watering Equipment WWT 1,046,151 373,626 74,725 - - 1,494,502 17 C10290 Valrico Solar Power Installation WWT 2,700,000 300,000 - - - 3,000,000 18 C10291 Valrico Equalization Basin WWT 1,700,000 1,650,000 1,650,000 - - 5,000,000 19 C10292 Woodberry Super Station Rehabilitation WWT 907,111 880,431 880,431 - - 2,667,973 20 C10293 Falkenburg Structural Rehabilitation WWT 400,000 1,800,000 1,600,000 200,000 - 4,000,000 21 C10294 Advanced Water Treatment Demonstration Program WWT 425,000 212,500 212,500 - - 850,000 22 C10295 South County Regional AWTF Odor Control WWT 675,000 337,500 337,500 - - 1,350,000 23 C10296 Ruskin and Wimauma Sewer System SS - 200,000 900,000 800,000 100,000 2,000,000 24 C10298 Hillsborough County One Water Campus - Wastewater Modular Capacity Expansion WWT - 9,652,471 32,169,023 39,465,726 6,943,780 88,231,000 25 C10299 Gibsonton Area Septic To Sewer Conversion Program SS - 600,000 600,000 600,000 600,000 2,400,000 26 C 10300 Van Dyke Flow Diversion (Pump Station & Pipeline) W WC 200,000 - - - - 200,000 27 C10745 Regional Wastewater Treatment Plant R&R * WWT 508,081 508,081 508,081 508,081 508,081 2,540,405 28 C10750 Wastewater Slip Lining* WWC 944,700 - - - - 944,700 29 C10768 Low Pressure Sewer System (LPSS) LPSS - 8,072,988 8,072,988 8,072,988 8,072,988 32,291,952 30 C31978 Public Utilities SCADA Network & Support * W WC 209,534 209,534 209,534 209,534 209,534 1,047,670 31 C46266 Stormwater Utility Allocation O 148,449 - - - - 148,449 32 C69635 Transportation Utility Allocation O 1,860,329 1,792,082 1,792,082 - - 5,444,494 33 C77832 Consolidated & Hardened Maintenance Facilities O 11,550,000 4,950,000 - - - 16,500,000 34 NewS 15 CMMS Software Implementation and Service O 1,000,000 1,000,000 - - - 2,000,000 35 NewS18 Purchase of Land for One Water Campus WWT - 1,500,000 - - - 1,500,000 36 NewS20 Allowance for Future Wastewater Projects WWT - - 28,243,243 28,217,845 28,217,845 84,678,932 37 Total Wastewater System Capital Improvement Projects $ 72,763,986 $ 54,419,324 $ 88,587,207 $ 81,633,114 $ 48,164,368 $ 345,567,999 Reclaimed Water System 38 C10217 19Th Avenue Reclaimed Water Transmission Main RW $ 3,018,418 $ 335,380 $ - $ - $ - $ 3,353,798 39 C10238 Northwest Hillsborough Aquifer Recharge Program(NHARP) WT $ 1,257,106 $ 448,967 $ 89,793 $ - $ - $ 1,795,866 40 C10242 Waterset Sports Complex Reclaimed Water PS/Storage Tank RW $ 7,043,427 $ 2,515,510 $ 503,102 $ - $ - $ 10,062,039 41 C10259 South Hillsborough Aquifer Recharge Program(SHARP) WT $ 3,320,088 $ 12,173,658 $ 6,640,177 $ - $ - $ 22,133,923 42 C10287 Kracker Ave Estuary Reclaimed Water Main Extension RW $ 797,648 $ 284,874 $ 56,975 $ - $ - $ 1,139,497 43 C10795 Reclaimed Water PS & Remote Telemetry Monitoring * RW $ 172,608 $ 172,608 $ 172,608 $ 172,608 $ 172,608 $ 863,038 44 C19017 Reclaimed Water Trans. Main Extensions - New & Existing Customers RW $ 80,236 $ 294,197 $ 160,471 $ - $ - $ 534,904 45 Total Reclaimed System Capital Improvement Projects $ 15,689,531 $ 16,225,193 $ 7,623,126 $ 172,608 $ 172,608 $ 39,883,065 Water System 46 C30116 Potable Water Treatment Plant R&R * WT $ 260,824 $ 260,824 $ 260,824 $ 260,824 $ 260,824 $ 1,304,120 47 C31945 Utility Relocation * WD 625,511 625,511 625,511 625,511 625,511 3,127,557 48 C31957 Fire Flow Deficiency * WD 90,945 90,945 90,945 90,945 - 363,778 49 C31968 Countywide Fire Hydrant Replacement * WD 130,354 - - - - 130,354 50 C31977 Coumywide Potable Water T&D System R&R * WD 1,070,381 1,070,381 1,070,381 1,070,381 1,070,381 5,351,907 51 C31979 Coumywide Non -Urgent Facility R&R * O 230,662 230,662 230,662 230,662 230,662 1,153,308 52 C31982 19Th Ave. Water Transmission Main (I-75 To Us 41) WD 512,686 - - - - 512,686 53 C31986 Countywide Potable Water Main Extension Program * WD 152,512 - - - - 152,512 54 C31987 Coumywide Potable Water Quality Monitoring WD 556,446 - - - - 556,446 55 C31992 Palm River Utility Expansion Program WD 824,471 - - - - 824,471 56 C31999 South County Repump Station Chemical Addition & Yard Piping WT 37,006 - - - - 37,006 57 C32001 South County Potable Repump Station Expansion (Includes Tank & Pumps) WT 3,832,073 425,786 - - - 4,257,859 58 C32011 Hillsborough County One Water Campus - Potable Water In -Line Booster Station WT 171,600 5,934,500 6,269,900 624,000 - 13,000,000 59 C32013 Hillsborough County One Water Campus - Water TM from Lithia to South County WT - 3,529,701 24,574,714 59,727,432 23,165,053 110,996,900 59 C46266w Stormwater Utility Allocation O 148,449 - - - - 148,449 60 C69635w Transportation Utility Allocation O 1,860,329 1,792,082 1,792,082 - - 5,444,494 61 C77832w Consolidated & Hardened Maintenance Facilities O 11,550,000 4,950,000 - - - 16,500,000 62 NewW 18 CMMS Software Implementation and Service O 1,000,000 1,000,000 - - - 2,000,000 63 NewW 19 Allowance for Future Water Projects - R&R Fund WD - - 28,243,243 28,217,845 28,217,845 84,678,932 64 NewW20 Purchase of Land for One Water Campus WD - 1,500,000 - - - 1,500,000 65 Total Water System Capital Improvement Projects $ 23,054,249 $ 21,410,392 $ 63,158,262 $ 90,847,599 $ 53,570,276 $ 252,040,778 66 Total System Capital Improvement Project WD $ 123,260,637 $ 102,528,578 $ 164,814,140 $ 178,153,320 $ 107,462,250 $ 676,218,925 (*) Denotes Master Project Page 2 of 2 Line No Table 5 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Capital Improvement Projects for the Forecast Period - Cash Flow Basis Il] CIP Ref. Fiscal Year Ending September 30, No. Project Description Type 2020 2021 2022 2023 2024 Total Period Total System Capital Improvements by Project Type 67 Wastewater Treatment WWT $ 44,627,897 $ 26,716,344 $ 65,675,503 $ 68,391,652 $ 35,669,705 $ 241,081,101 68 Wastewater Collection and Transmission WWC 13,577,311 11,087,909 11,546,634 3,768,474 3,721,674 43,702,002 69 Water Treatment WT 8,878,698 22,773,435 37,835,408 60,612,256 23,425,877 153,525,674 70 Water Transmission, Storage, and Distribution WD 3,963,306 3,286,837 30,030,080 30,004,682 29,913,737 97,198,643 71 Reclaimed Water RW 11,112,337 3,602,569 893,156 172,608 172,608 15,953,276 72 Septic to Sewer SS - 800,000 1,500,000 1,400,000 700,000 4,400,000 73 Low Pressure Sanitary Sewer LPSS - 8,072,988 8,072,988 8,072,988 8,072,988 32,291,952 74 General Projects (Administration / Customer Service l Other) O 29,348,218 15,714,826 3,814,826 230,662 230,662 49,339,194 75 Departmental Capital D 11,752,871 10,473,669 5,445,545 5,499,999 5,554,999 38,727,083 76 Total System Capital Improvements by Project Typ $ 123,260,637 $ 102,528,578 $ 164,814,140 $ 178,153,320 $ 107,462,250 $ 676,218,925 Total System Capital Improvements by Funding Source 77 W W IFAU Bonds Series 2021 $ - $ 5,893,455 $ 19,641,257 $ 24,096,364 $ 4,239,624 $ 53,870,700 78 GRANT 3,278,150 1,113,992 1,523,250 1,400,000 700,000 8,015,392 79 Impact Fees Fund - 4,744,718 19,390,479 32,048,794 9,173,209 65,357,200 80 R&R Fund 16,796,145 12,807,676 21,731,298 15,494,383 15,294,383 82,123,884 81 General Revenue Capital Projects 76,789,017 58,674,874 79,370,311 56,565,780 55,804,036 327,204,018 82 Existing Debt Proceeds - Series 2016 Bonds 14,644,454 6,276,194 - - - 20,920,648 83 Water Rate Revenues 2,925,260 820,727 426,718 430,985 435,295 5,038,985 84 Wastewater Rate Revenues 6,072,673 9,522,942 4,951,236 5,000,748 5,050,755 30,598,354 85 Reclaimed Rate Revenues 585,236 116,266 60,450 61,054 61,665 884,671 86 Customer Service Rate Revenues 2,169,702 13,734 7,141 7,212 7,284 2,205,073 87 Proposed Debt - Series 2021 Bonds - 2,544,000 17,712,000 43,048,000 16,696,000 80,000,000 88 Total System Capital Improvements by Funding Spurr $ 123,260,637 $ 102,528,578 $ 164,814,140 $ 178,153,320 $ 107,462,250 $ 676,218,925 Footnotes: [1] Amounts show reflect the prohected capital needs associated with the adopted Capital Improvement Plan provided by the Department. Amounts shown do not reflect the capitalized labor cost of County engineering staff responsible for project management. [2] The Departmental capital outlay expenditures, which are included as a component of the Comfy's Operating Budget and reflect recurring expenditures for assets with a short duration or life (e.g., vehicles), and are funded from ongoing utility operations (e.g. water and wastewater rate revenues). Page 1 of 2 Table 6 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Revenue Requirements and Revenue Sufficiency for the Forecast Period Line No. Description Combined System Operating Expenses 1 Salaries and Wages 2 Other Employee Benefits 3 Health Insurance 4 OPEB 5 Professional Services 6 Other Contracted Services 7 Trash, Garbage & Sludge Removal 8 Travel and Per Diem 9 Communications 10 Freight and Postage 11 Electricity 12 Insurance 13 Repair and Maintenance 14 Fleet Services 15 Equipment Rental 16 Office Supplies 17 Administrative 18 Bad Debt 19 Bulk Water Purchases 20 Bulk Wastewater Purchases 21 Chemicals 22 Training and Memberships 23 Equipment 24 Miscellaneous Expenses 25 Incremental O&M - Water Distribution 26 Incremental O&M - Wastewater Collection 27 Incremental O&M - Customer Svc. / Field Svc. / Call Center 28 Incremental O&M - Meter Reading Incremental O&M - Planning & Proj. Mgmt. 29 Incremental O&M - Billing System 30 Contingency 31 Total Combined System Operating Expenses Adjustments to Bulk Water Purchases 32 Pledged Capacity Fees [1] 33 Total Adjustments to Bulk Water Purchases 34 Adjusted Combined System Operating Expenses Debt Service Requirement 35 Existing Debt [2] 36 Proposed Debt[3] 37 Total Debt Service Requirement Other Revenue Requirements 38 Transfer to Renewal and Replacement Account [4] 39 Capital Funded from Rates 40 Transfer to General Revenue Capital Expenditure Acct. 41 Total Other Revenue Requirements 42 Gross Revenue Requirements Footnotes on Page 2 of 2. Projected Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 $ 44,495,477 $ 45,114,987 $ 46,465,666 $ 47,860,285 $ 49,294,116 8,612,617 9,255,004 9,532,571 9,818,577 10,113,022 10, 814, 899 14,210, 746 15,205,501 16,269, 886 17,408,772 683,700 1,242,297 1,279,566 1,317,953 1,357,491 9,712,202 12,076,356 12,427,906 12,788,380 13,157,987 3,234,173 3,474,600 3,564,995 3,654,191 3,741,979 5,034,797 5,120,767 5,347,281 5,564,695 5,774,472 235,695 361,543 372,427 383,408 394,477 858,721 858,721 881,048 908,712 931,677 1,201,817 1,201,817 1,258,024 1,312,564 1,365,154 9,382,912 9,386,272 9,864,216 10,337,318 10,811,047 1,978,858 2,559,311 2,687,229 2,821,541 2,962,567 17,726,087 19,254,967 19,851,314 20,491,171 21,177,592 1,688,349 1,688, 349 1,767,558 1,850,369 1,93 6,953 296,152 323,668 332,083 340,385 348,555 2,196,296 3,616,682 3,710,716 3,815,453 3,909,477 9,930,109 9,569,224 9,822,627 10,072,456 10,318,098 364,850 296,250 308,845 321,256 333,532 68,360,183 74,428,404 76,716,404 79,535,815 82,367,052 3,234,102 3,358,098 3,487,622 3,607,041 3,728,287 3,558,238 3,558,238 3,777,693 3,999,086 4,225,095 655,764 628,458 644,623 663,449 679,919 32,710 32,710 33,560 34,399 35,225 124,448 143,128 146,872 150,563 154,196 - - - 163,017 167,810 163,017 167,810 - 74,211 71,017 73,048 630,990 646,765 662,287 583,708 1,210,176 1,880,763 $ 204,413,156 $ 221,760,597 $ 230,701,045 $ 240,172,946 $ 249,552,675 $ (6,795,522) $ (7,450,228) $ (7,196,559) $ (7,078,279) $ (7,081,228) $ (6,795,522) $ (7,450,228) $ (7,196,559) $ (7,078,279) $ (7,081,228) $ 197,617,634 $ 214,310,369 $ 223,504,486 $ 233,094,667 $ 242,471,447 $ 17,202,036 $ 17,845,409 $ 17,844,201 $ 17,846,076 $ 17,848,368 - 3,220,750 3,220,750 3,428,250 4,465,358 $ 17,202,036 $ 21,066,159 $ 21,064,951 $ 21,274,326 $ 22,313,726 $ 13,298,679 $ 13,591,741 $ 14,825,773 $ 15,556,471 $ 16,237,644 11,752,871 10,473,669 5,445,545 5,499,999 5,554,999 48,087,245 43,000,000 44,000,000 45,000,000 46,000,000 $ 73,138,795 $ 67,065,410 $ 64,271,318 $ 66,056,470 $ 67,792,643 $ 287,958,465 $ 302,441,937 $ 308,840,756 $ 320,425,463 $ 332,577,816 Table 6 Page 2 of 2 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Revenue Requirements and Revenue Sufficiency for the Forecast Period Line Projected Fiscal Year Ending September 30, No. Description 2020 2021 2022 2023 Less Income and Funds from Other Sources 43 Other Operating Revenues [5] 44 Interest Income 45 Impact Fees Pledged for Debt Service [1] 46 Total Income and Funds from Other Sources 47 Total Net Revenue Requirements 48 Total Existing Rate Revenue [6] Recognized Rate Adjustments 49 Water Rate Adjustments 50 Wastewater Rate Adjustments 51 Reclaim Rate Adjustment 52 Customer Service Rate Adjustment 53 Months Rate Increase In Effect 54 Amount of Increase Rate Revenue from Recognized Rate Adjustments: 55 Existing Rate Revenue 56 Rate Revenue from Current Period Rate Adjustment 57 Cumulative Prior Year Rate Adjustment Revenue 58 Total Applicable Rate Revenue Revenue Surplus / (Deficiency) Recognizing Rate Adjustments 59 Amount 60 Percent of Rate Revenue Allocation of Revenue Surplus / (Deficiency) 61 Current Period Revenue Surplus / (Deficiency) First Priority - Operating Reserves (#40100, #40102) 62 Ending Cash Balance before Allocation of Revenue Surplus / (Def.) 63 Minimum Target Reserve Balance at 150 Days 64 Deposit to Operating Reserves 65 Transfer from Operating Reserves Second Priority - General Revenue Capital Projects (#40105) 66 Remaining Surplus - Transfer to General Revenue Capital Proj. 67 Remaining (Deficiency) - Transfer from General Revenue Cap. Proj. 2024 $ 4,576,318 $ 6,707,137 $ 7,743,594 $ 8,437,031 $ 9,139,306 5,497,568 5,387,776 5,323,835 5,188,048 5,283,361 13,455,497 12,421,098 11,850,673 12,072,190 12,716,067 $ 23,529,383 $ 24,516,011 $ 24,918,102 $ 25,697,269 $ 27,138,733 $ 264,429,082 $ 277,925,926 $ 283,922,653 $ 294,728,194 $ 305,439,083 $ 263,290,960 $ 283,488,971 $ 296,084,712 $ 308,475,390 $ 320,713,992 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 11 11 11 11 11 $ 263,290,960 $ 283,488,971 $ 296,084,712 $ 308,475,390 $ 320,713,992 $ 263,290,960 $ 283,488,971 $ 296,084,712 $ 308,475,390 $ 320,713,992 $ (1,138,122) $ 5,563,045 $ 12,162,059 $ 13,747,196 $ 15,274,909 -0.43% 1.96% 4.11% 4.46% 4.76% $ (1,138,122) $ 5,563,045 $ 12,162,059 $ 13,747,196 $ 15,274,909 $ 97,794,778 $ 96,656,656 $ 96,656,656 $ 96,656,656 $ 98,701,211 84,005,407 91,134,492 94,808,649 98,701,211 102,555,894 $ - $ - $ - $ 2,044,555 $ 3,854,683 $ 1,138,122 $ - $ - $ - $ - $ $ 5,563,045 $ 12,162,059 $ 11,702,641 $ 11,420,226 Footnotes: [ 1 ] The majority of the Water and Wastewater Impact Fees are considered as Pledged Capacity (Impact) Fees and are used to fund: i) the Debt Service Component of the Cost of of Contracted Water from Tampa Bay Water (water only impact fees); and ii) the expansion component of the annual Bond Service Requirement. Use of impact fees reflects amounts currently on deposit in the fund from prior periods and amounts not considered as Pledged Impact Fees (refer only to a limited amount of Impact Fees). [2] Amounts shown are net of any capitalized interest and Federal Direct Payments. The Federal Direct Payments represent a subsidy from the Federal government as part of the Build America Bond program equal to i) 35% of the interest expense to the outstanding Series 2010B Bonds; ii) 45% of the interest expense to the outstanding Series 2010C Bonds; and iii) adjustments for the current effect of sequestration. In December of 2019, the Series 2010B Bonds were advanced refunded with the tax-exempt Series 2019 Bonds. For Fiscal Year 2020, the annual Federal Direct Payments anticipated to be received associated with payment of the interest expense to the Series 2010B and Series 2010C Bonds is approximately $1.2 million. Beginning in FY 2021 and for the remaining of the the Forecast Period, the annual Federal Direct Payments anticipated to be received associated with payment of the interest expense to the Series 2010C Bonds is approximately $538,000. [3] Amounts represent the anticipated issuance of the Series 2021 Bonds to fund new facilities to meet significant growth projections by the County. [4] Represents minimum required deposit to the Renewal and Replacement Account in accordance with the funding provisions delineated in the Bond Resolution. [5] Amounts shown include other operating revenues derived from miscellaneous customer service charges including, but not limited to building permits, settlements, planning services processing fees, parking fees, bad check fees, etc. [6] Amounts shown are based on existing rates currently in effect as referenced in the Rate Resolution and include annual increases for the Purchased Water Pass -Through and the price index adjustment. Page 1 of 1 Table 7 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Operating Expensess for the Forecast Period - Escalation Factors Line Escalation Factor No. Escalators Reference 2021 2022 2023 2024 General: 1 Constant Constant 1.0000 1.0000 1.0000 1.0000 2 General Inflation - CBO Jan 2020 - CPI Inflation 1.0250 1.0260 1.0250 1.0240 3 General Inflation - CBO Jan 2020 - GDP GDP 1.0200 1.0210 1.0210 1.0210 4 Labor Labor 1.0300 1.0300 1.0300 1.0300 5 Medical Insurance Medlns 1.0700 1.0700 1.0700 1.0700 6 Professional Services ProfSvc 1.0300 1.0300 1.0300 1.0300 7 Fuel and Oil Fuel 1.0500 1.0500 1.0500 1.0500 8 Marginal Escalator Marginal 1.0100 1.0100 1.0100 1.0100 9 Eliminate Eliminate 0.0000 0.0000 0.0000 0.0000 10 Chemical Expense Chemical 1.0400 1.0400 1.0400 1.0400 11 Repairs and Maintenance Repair 1.0300 1.0315 1.0330 1.0345 12 Insurance Insurance 1.0500 1.0500 1.0500 1.0500 13 Electrical Expense Electric 1.0300 1.0300 1.0300 1.0300 14 Solid Waste Disposal & Collection Service SWDisp 1.0113 1.0383 1.0093 1.0533 Personnel Additions Adjusted: 15 Monthly Auto and Cell Phone Stipend GenLaborInf 1.0250 1.0260 1.0317 1.0253 16 Personnel -Related Supplies IncPerSup 1.0250 1.0260 1.0317 1.0253 Customer and Flow Adjusted: 17 Customer Growth - Water WaterCust 1.0267 1.0260 1.0228 1.0199 18 Customer Growth - Sewer SewerCust 1.0252 1.0246 1.0216 1.0188 19 Customer Growth - Total System TotalCust 1.0255 1.0248 1.0219 1.0191 20 Customer Growth - Total System + Inflation TotalCustInf 1.0505 1.0508 1.0469 1.0431 21 Delta Water Growth Delta-W 0.7446 0.9733 0.8783 0.8713 22 Flow Growth+Inflation-Water F1owW 1.0481 1.0482 1.0440 1.0414 23 Flow Growth+Inflation-Sewer F1owS 1.0485 1.0482 1.0440 1.0406 24 Treated Water Flows + Chemical W-Chemical 1.0634 1.0626 1.0592 1.0577 25 Treated Sewer Flows + Chemical S-Chemical 1.0638 1.0625 1.0593 1.0568 26 Treated Water Flows + Electric W-Electric 1.0532 1.0523 1.0491 1.0475 Rate Revenue Adiusted: 27 Rate Revenue - Water WaterRev 1.0642 1.0416 1.0403 1.0388 28 Rate Revenue - Sewer SewerRev 1.0778 1.0435 1.0401 1.0376 29 Rate Revenue - Total System TotalRev 1.0711 1.0425 1.0402 1.0382 Other Factors: 30 RRF Electric Purchases - Central WTP RRF-W-EIec 1.0225 1.0217 1.0185 1.0170 31 Treated Sewer Flows + Electric S-Electric 1.0536 1.0523 1.0491 1.0467 32 RRF Electric Purchases - Falkenburg W WTP RRF-S-EIec 1.0229 1.0216 1.0186 1.0162 33 Capital Outlay CapOutlay 0.4311 0.5199 1.0100 1.0100 34 Customer Billing Postage Postage 1.0505 1.0508 1.0469 1.0431 Page 1 of 1 Table 8 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study COMPARISON OF TYPICAL MONTHLY RESIDENTIAL BILLS FOR WATER SERVICE [1] Residential Service for a 5/8" or 3/4" Meter Line No. Hillsborough County 1 Current Rates - Effective 10/1/2019 [3] 2 Effective 10/1/2020 [3] Other Florida Utilities: 0 2,000 5,000 6,000 7,000 10,000 15,000 20,000 Gallons Gallons Gallons Gallons $13.59 $20.95 $31.99 $37.01 $14.45 $22.09 $33.55 $38.79 3 City of Bradenton $15.35 $20.17 $30.32 $34.19 4 City of Cape Coral 17.32 25.12 36.82 41.37 5 Charlotte County [4] 25.40 36.34 52.75 58.22 6 City of Clearwater [4] 23.16 23.16 41.94 51.33 7 Collier County [4] 23.41 29.73 39.21 43.98 8 City of Lakeland [4] 10.15 14.61 21.30 23.53 9 Lee County 12.59 19.13 28.94 32.21 10 Manatee County [4] 9.45 14.01 20.85 23.13 11 City of New Port Richey [5] 10.52 17.56 28.12 32.49 12 City of North Port [4] 19.52 27.84 42.40 48.64 13 Pasco County [4] [5] 9.84 13.74 19.59 22.68 14 Pinellas County [4] [5] 6.80 17.06 32.45 37.58 15 City of Plant City 7.74 11.38 16.84 19.25 16 Polk County [4] 10.43 15.01 23.16 26.09 17 Sarasota County [4] 16.07 20.95 28.91 31.99 18 City of St. Petersburg [5] 12.89 22.21 36.19 41.32 19 City of Tampa [5] 2.00 7.75 16.96 20.30 20 City of Temple Terrace 6.73 11.11 17.68 19.87 21 Other Florida Utilities' Average Cost $13.30 $19.27 $29.69 $33.79 canons lz_ Gallons Gallons Gallons $57.09 $82.19 $114.34 $59.75 $85.95 $119.65 $49.67 $69.02 $88.37 59.57 93.87 145.12 83.34 121.30 165.26 91.34 150.54 209.74 63.06 94.76 126.46 33.95 49.64 67.72 48.57 71.48 99.29 34.53 48.78 82.98 49.97 79.02 119.02 78.66 131.27 203.00 35.04 66.09 107.94 58.10 83.75 109.40 28.89 40.94 57.49 37.81 65.46 93.11 48.81 85.93 137.03 68.90 108.65 161.15 34.30 62.30 91.35 31.41 49.31 67.21 $52.00 $81.78 $118.42 Footnotes: [1] Unless otherwise noted, amounts shown reflect residential rates in effect June 2020 and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges imposed by each listed utility. [2] Represents the estimated median use for the County's individually metered residential class; the average monthly water use for this class approximates 7,000 gallons. [3] Amounts shown include the current Purchased Water Pass -Through Consumption Charge of $2.93 per 1,000 gallons for all billed water consumption which is estimated to increase beginning in Fiscal Year 2021 and adjusted annually as shown below: Fiscal Year Ending September 30, Existing Proj ected Description 2020 2021 2022 2023 2024 Purchased Water Pass -Through (000s) $ 2.93 $ 3.02 $ 3.06 $ 3.13 $ 3.20 Percentage Change % 3.07% 1.32% 2.29% 2.24% [4] Utility is currently involved in a rate study, is planning to conduct a rate study, or will implement a rate revision within the next twelve months. [5] Reflects utilities that receive water from Tampa Bay Water. Page 1 of 1 Line No. Table 9 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study COMPARISON OF TYPICAL MONTHLY RESIDENTIAL BILLS FOR WASTEWATER SERVICE [1] Residential Service for a 5/8" or 3/4" Meter 0 2,000 5,000 6,000 7,000 10,000 15,000 20,000 Gallons Gallons Gallons Gallons Hillsborough County 1 Current Rates - Effective 10/1/2019 [3] $14.83 $24.39 $38.73 2 Effective 10/1/2020 [3] $15.77 $25.93 $41.17 Other Florida Utilities: $43.51 $46.25 3 City of Bradenton $22.68 $26.80 $38.00 $42.57 4 City of Cape Coral 21.07 39.15 66.27 75.31 5 Charlotte County [3] 37.77 48.29 64.07 69.33 6 City of Clearwater [3] 31.89 31.89 53.15 63.78 7 Collier County [3] 35.23 45.15 60.03 64.99 8 City of Lakeland [3] 19.03 27.55 40.33 44.59 9 Lee County 20.45 32.15 49.70 55.55 10 Manatee County [3] 22.54 32.60 47.69 52.72 11 City of New Port Richey 13.16 22.86 37.41 42.26 12 City of North Port [3] 29.50 42.34 61.60 68.02 13 Pasco County [3] 19.00 30.70 48.25 54.10 14 Pinellas County [3] 14.96 25.88 42.26 47.72 15 City of Plant City 16.97 28.67 46.22 52.07 16 Polk County [3] 36.14 49.10 68.54 75.02 17 Sarasota County [3] 16.63 32.47 56.23 64.15 18 City of St. Petersburg 19.44 34.36 56.74 64.20 19 City of Tampa [4] 2.00 14.97 34.42 40.90 20 City of Temple Terrace 3.67 23.91 54.27 64.39 21 Other Florida Utilities' Average Cost $21.23 $32.71 $51.40 $57.87 vanonslz $48.29 $51.33 Gallons Gallons Gallons $53.07 $53.07 $53.07 $56.41 $56.41 $56.41 $60.85 $83.70 $106.55 111.47 156.67 201.87 90.37 90.37 90.37 106.30 159.45 212.60 84.83 109.63 109.63 61.63 70.15 70.15 73.10 73.10 73.10 72.84 72.84 72.84 61.66 85.91 85.91 93.70 106.54 106.54 77.50 77.50 77.50 69.56 69.56 69.56 75.47 104.72 104.72 81.50 81.50 81.50 95.83 95.83 95.83 94.04 131.34 168.64 66.84 66.84 66.84 104.87 155.47 206.07 $82.35 $99.51 $111.12 Footnotes: [1] Unless otherwise noted, amounts shown reflect residential rates in effect June 2020 are approved rates effective within 30 days and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges imposed by each listed utility. [2] Represents the estimated median use for the County's individually metered residential class; the average monthly water use for this class approximates 7,000 gallons. [3] Utility is currently involved in a rate study, is planning to conduct a rate study, or will implement a rate revision within the next twelve months. [4] The City of Tampa has user specific wastewater billing caps, based on a recorded two months of average winter flow. For comparison purposes it was assumed that the wastewater flow would be capped at 10,000 gallons of flow. Page 1 of 1 Table 10 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study COMPARISON OF TYPICAL MONTHLY RESIDENTIAL BILLS FOR COMBINED Residential Service for a 5/8" or 3/4" Meter Line 0 2,000 5,000 No. Description Gallons Gallons Gallons Hillsborough County 1 Current Rates - Effective 10/1/2019 [3] $28.42 $45.34 $70.72 2 Effective 10/1/2020 [3] $30.22 $48.02 $74.72 Other Florida Utilities: 6,000 7,000 10,000 15,000 20,000 Gallons Gallons [2 $80.52 F$95 32 $85.0436 3 City of Bradenton $38.03 $46.97 $68.32 $76.76 4 City of Cape Coral 38.39 64.27 103.09 116.68 5 Charlotte County [4] 63.17 84.63 116.82 127.55 6 City of Clearwater [4] 55.05 55.05 95.09 115.11 7 Collier County [4] 58.64 74.88 99.24 108.97 8 City of Lakeland [4] 29.18 42.16 61.63 68.12 9 Lee County 33.04 51.28 78.64 87.76 10 Manatee County [4] 31.99 46.61 68.54 75.85 11 City of New Port Richey [5] 23.68 40.42 65.53 74.75 12 City of North Port [4] 49.02 70.18 104.00 116.66 13 Pasco County [4] [5] 28.84 44.44 67.84 76.78 14 Pinellas County [4] [5] 21.76 42.94 74.71 85.30 15 City of Plant City 24.71 40.05 63.06 71.32 16 Polk County [4] 46.57 64.11 91.70 101.11 17 Sarasota County [4] 32.70 53.42 85.14 96.14 18 City of St. Petersburg [5] 32.33 56.57 92.93 105.52 19 City of Tampa [5] 4.00 22.72 51.38 61.21 20 City of Temple Terrace 10.40 35.02 71.95 84.26 21 Other Florida Utilities' Average Cost $34.53 $51.98 $81.09 $91.66 $85.20 130.27 139.09 135.13 118.70 74.61 97.70 83.73 83.97 129.32 85.72 95.89 79.58 110.52 107.14 118.82 71.03 96.57 $102.39 Gallons Gallons Gallons $110.16 $135.26 $167.41 $116.16 $142.36 $176.06 $110.52 $152.72 $194.92 171.04 250.54 346.99 173.71 211.67 255.63 197.64 309.99 422.34 147.89 204.39 236.09 95.58 119.79 137.87 121.67 144.58 172.39 107.37 121.62 155.82 111.63 164.93 204.93 172.36 237.81 309.54 112.54 143.59 185.44 127.66 153.31 178.96 104.36 145.66 162.21 119.31 146.96 174.61 144.64 181.76 232.86 162.94 239.99 329.79 101.14 129.14 158.19 136.28 204.78 273.28 $134.35 $181.29 $229.55 Footnotes: [1] Unless otherwise noted, amounts shown reflect residential rates in effect June 2020 are approved rates effective within 30 days and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges imposed by each listed utility. [2] Represents the estimated median use for the County's individually metered residential class; the average monthly water use for this class approximates 7,000 gallons. [3] Amounts shown include the current Purchased Water Pass -Through Consumption Charge of $2.93 per 1,000 gallons for all billed water consumption which is estimated to increase beginning in Fiscal Year 2021 and adjusted annually as shown below: Fiscal Year Ending September 30, Existing Projected Description 2020 2021 2022 2023 2024 Purchased Water Pass -Through (000s) $ 2.93 $ 3.02 $ 3.06 $ 3.13 $ 3.20 Percentage Change -% 3.07% 1.32% 2.29% 2.24% [4] Utility is currently involved in a rate study, is planning to conduct a rate study, or will implement a rate revision within the next twelve months. [5] Reflects utilities that receive water from Tampa Bay Water. [6] The City of Tampa has user specific wastewater billing caps, based on a recorded two months of average winter flow. For comparison purposes it was assumed that the wastewater flow would be capped at 10,000 gallons of flow. Page 1 of 1 Table 11 Line No. Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study COMPARISON OF WATER AND WASTEWATER IMPACT FEES - 5/8" RESIDENTIAL SERVICE (1 ERC) [1] Water Wastewater Combined Description Impact Fee Impact Fee Fee Hillsborough County 1 Current Rates $1,750 $1,800 $3,550 2 Northwest Service Area - Effective 10/1/2020 $1,863 $2,951 $4,814 3 South / Central Service Area - Effective 10/1/2020 $2,214 $3,651 $5,865 Other Florida Utilities: 4 Charlotte County 1,290 1,610 2,900 5 City of Clearwater 480 900 1,380 6 Collier County 3,382 3,314 6,696 7 Lee County 2,440 2,660 5,100 8 Manatee County 1,738 3,175 4,913 9 City of North Port 1,872 2,213 4,085 10 Pasco County 1,561 2,730 4,291 11 Pinellas County 352 2,060 2,412 12 Polk County 2,844 4,195 7,039 13 Sarasota County 2,720 2,627 5,347 14 City of Tampa [2] N/A 1,796 1,796 15 Other Florida Utilities' Average Cost $1,868 $2,480 $4,178 Footnotes: [1] Unless otherwise noted, amounts shown reflect residential rates in effect January 2020 and are exclusive of taxes or franchise fees, if any, and reflect charged for inside city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar ser, for comparison purposes only and is not intended to be a complete listing of all rates and charges imposed by each listed utility. [2] The City of Tampa charges varying sewer impact fees to seven different geographic areas (districts). For purposes of this comparison and based on talks with City staff, the amount shown for the sewer impact fee reflects the Central Zone (District Code S27), which is anticipated to receive the majority of future growth within the City and generally is a lower sewer impact fee compared to the other districts within the City. Page 1 of 4 Line No. Summary Description Table 12 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System of Projected Oneratine Results and Bond Service Coverage Fiscal 2020 2021 Year Ending September 30, 2022 2023 2024 Gross Revenues Charges for Services Revenues from Monthly User Charges [ 1 ] 1 Water Sales $ 124,628,799 $ 133,180,615 $ 138,954,551 $ 144,786,731 $ 150,638,038 2 Wastewater Sales 125,782,254 136,390,313 142,585,976 148,541,539 154,344,529 3 Customer Billing Charges 10,389,583 11,307,744 11,865,208 12,396,091 12,914,932 4 Reclaimed Water Sales 2,490,324 2,610,299 2,678,977 2,751,029 2,816,493 5 Total Revenues from Monthly User Charges $ 263,290,960 $ 283,488,971 $ 296,084,712 $ 308,475,390 $ 320,713,992 Other Operating Revenues 6 Accrued Guaranteed Revenue Fees [2] $ - $ 2,464,857 $ 3,512,718 $ 4,189,472 $ 4,878,886 7 Line Maintenance Fee 2,317,400 2,317,400 2,317,400 2,317,400 2,317,400 8 Line Extension Fees 84,305 72,707 71,803 67,799 64,080 9 Meter Installation Charges 539,025 401,336 390,608 343,080 298,926 10 Industrial Pretreatment 100,000 100,000 100,000 100,000 100,000 11 Other Miscellaneous Revenues [3] 761,035 761,248 761,474 761,698 761,917 12 Total Other Operating Revenues $ 3,801,765 $ 6,117,546 $ 7,154,003 $ 7,779,449 $ 8,421,210 13 Total Charges for Services $ 267,092,725 $ 289,606,517 $ 303,238,715 $ 316,254,839 $ 329,135,202 14 Investment Income [41 $ 5,230,136 $ 5,182,084 $ 5,101,791 $ 4,958,227 $ 5,051,471 15 Other Reciepts / Non -Impact Fee Assessments $ 774,553 $ 589,591 $ 589,591 $ 657,582 $ 718,096 Transfers (To) / From Rate Stabilization Account $ - $ - $ - $ - $ - 16 Gross Revenues [5] $ 273,097,414 $ 295,378,192 $ 308,930,097 $ 321,870,648 $ 334,904,769 17 Pledged Capacity Fees [61 $ 13,455,497 $ 12,421,098 $ 11,850,673 $ 12,072,190 $ 12,716,067 18 Gross Revenues and Pledged Capacity Fees $ 286,552,911 $ 307,799,290 $ 320,780,770 $ 333,942,838 $ 347,620,835 Cost of Operation and Maintenance [71 19 Employee Services $ 64,606,693 $ 69,823,034 $ 72,483,304 $ 75,266,701 $ 78,173,402 20 Purchased Water [81 68,360,183 74,428,404 76,716,404 79,535,815 82,367,052 21 Other Contractual Services 32,165,997 34,523,753 35,603,898 36,671,467 37,734,275 22 Fleet Services 1,688,349 1,688,349 1,767,558 1,850,369 1,936,953 23 Repairs & Maintenance 17,726,087 19,254,967 19,851,314 20,491,171 21,177,592 24 Utilities 11,443,450 11,446,810 12,003,288 12,558,594 13,107,878 25 Supplies 5,787,244 7,207,630 7,521,970 7,848,939 8,169,797 26 Other Operating Expenses 2,635,153 3,387,650 3,538,611 3,695,897 3,859,795 27 Incremental O&M - - 630,990 1,043,816 1,145,166 28 Contingency 583,708 1,210,176 1,880,763 29 Subtotal $ 204,413,156 $ 221,760,597 $ 230,701,045 $ 240,172,946 $ 249,552,675 30 Less Contracted Water Supply Capacity Fees [8] (6,795,522) (7,450,228) (7,196,559) (7,078,279) (7,081,228) 31 Total Cost of Operation and Maintenance $ 197,617,634 $ 214,310,369 $ 223,504,486 $ 233,094,667 $ 242,471,447 32 Pledged Revenues [9] $ 88,935,277 $ 93,488,922 $ 97,276,284 $ 100,848,171 $ 105,149,389 33 Bond Service Requirement[101 8.88% 3.07% 3.68% 3.56% Senior Lien Debt Service - Cash Basis Series 2010B Bonds, Taxable BAB's $ 2,035,556 $ - $ - $ - $ - 34 Series 2010C Bonds, Taxable RZEDB 1,269,450 1,269,450 1,269,450 1,269,450 1,269,450 35 Series 2016 Bonds 9,981,025 9,983,100 9,980,850 9,980,600 9,981,850 36 Utility Refunding Revenue Bonds, Series 2019 4,575,737 7,130,700 7,131,200 7,132,950 7,135,450 37 Proposed Debt - Series 2021 Bonds - 2,683,958 3,220,750 3,220,750 4,465,750 Less Federal Direct Subsidy Payment - Applicable to the 38 Series 2010B Bonds &Series 2010C Bonds (1,207,959) (537,549) (537,549) (537,549) (537,549) 39 Less Interest Income on Debt Service & Reserve Account (267,432) (205,692) (222,044) (229,821) (231,890) 40 Total Bond Service Requirement $ 16,386,377 $20,323,967 $20,842,657 $20,836,380 $22,083,061 Rate Covenant Test 1 [11]: 41 Gross Revenues and Pledged Capacity Fees $ 286,552,911 $ 307,799,290 $ 320,780,770 $ 333,942,838 $ 347,620,835 Required Deposits 42 Cost of Operation and Maintenance 197,617,634 214,310,369 223,504,486 233,094,667 242,471,447 43 Renewal and Replacement Account Requirement 13,298,679 13,591,741 14,825,773 15,556,471 16,237,644 44 Bond Service Requirement [101 16,386,377 20,323,967 20,842,657 20,836,380 22,083,061 45 $ 227,302,690 $ 248,226,076 $ 259,172,917 $ 269,487,519 $ 280,792,152 46 Coverage Ratio - Calculated 1.26 1.24 1.24 1.24 1.24 47 Coverage Ratio - Required 1.00 1.00 1.00 1.00 1.00 Footnotes on Page 2 of 4. Page 2 of 4 Table 12 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Protected Oneratine Results and Bond Service Coverage Line No. Description AND Rate Covenant Test 2 [11]: 48 Net Revenues plus Pledged Capacity Fees 49 Bond Service Requirement [10] 50 Coverage Ratio - Calculated 51 Coverage Ratio - Required AND Rate Covenant Test 3 [11]: 52 Net Revenues 53 Bond Service Requirement [10] 54 Coverage Ratio - Calculated 55 Coverage Ratio - Required 56 Net Revenues after Payment of Bond Service Requirement Other Required Transfers [ 12]: 57 Renewal & Replacement Account Requirement Debt Service Reserve Account [13] 58 Total Other Required Transfers 59 Excess of Net Revenues above Required Transfers [ 141 Footnotes: Fiscal Year Ending September 30, [11 2020 2021 2022 2023 2024 $ 88,935,277 $ 93,488,922 $ 97,276,284 $ 100,848,171 $ 105,149,389 $ 16,386,377 $ 20,323,967 $ 20,842,657 $ 20,836,380 $ 22,083,061 5.43 4.60 4.67 4.84 4.76 1.20 1.20 1.20 1.20 1.20 $ 75,479,780 $ 81,067,824 $ 85,425,611 $ 88,775,981 $ 92,433,322 $ 16,386,377 $ 20,323,967 $ 20,842,657 $ 20,836,380 $ 22,083,061 4.61 3.99 4.10 4.26 4.19 1.00 1.00 1.00 1.00 1.00 $ 59,093,403 $ 60,743,856 $ 64,582,954 $ 67,939,600 $ 70,350,261 13,298,679 13,591,741 14, 825,773 15,556,471 16,237,644 $ 13,298,679 $ 13,591,741 $ 14,825,773 $ 15,556,471 $ 16,237,644 $ 45,794,724 $ 47,152,116 $ 49,757,180 $ 52,383,129 $ 54,112,616 [ 1 ] Amounts shown include additional revenues associated with i) the application of an annually recurring automatic inflation based rate adjustment assumed to be effective October 1st of each Fiscal Year beginning with the Fiscal Year 2021; and ii) any anticipated Purchased Water Pass -Through Consumption Charges associated with any increase or decrease in the cost of purchased water from Tampa Bay Water and other service providers. Amounts shown include additional rate adjustments, if any, over and above the price index and pass -through adjustments which are assumed to be implemented by the County during the Forecast Period. The following is a summary of the assumed rate adjustments for utility service: Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Price Index Adjustments - Effective October 1 (a) 0.74% 2.25% 2.23% 2.23% 2.22% Additional Rate Ajustments - Effective October 1 (b) 0.00% 0.00% 0.00% 0.00% 0.00% Applicable Revenues (c) $ 198,163,112 $ 215,061,838 $ 225,170,124 $ 234,689,890 $ 244,028,607 Purchased Water Adjustments (d) 0.00% 3.07% 1.32% 2.29% 2.24% Purchased Water Revenues (d) $ 63,597,812 $ 66,893,857 $ 69,379,152 $ 72,248,444 $ 75,147,249 Flat Rate Reclaimed Revenues (e) $ 1,530,036 $ 1,533,276 $ 1,535,436 $ 1,537,056 $ 1,538,136 Total Revenues from Monthly User Charges $ 263,290,960 $ 283,488,971 $ 296,084,712 $ 308,475,390 $ 320,713,992 Annualized Effective Rate Increase (f) 0.55% 2.43% 2.01% 2.23% 2.21% (a) Increases shown reflected the anticipated adopted automatic Price Index adjustments to applicable revenues (reference note (c) below). Such rate increases are assumed effective every October 1st of the respective Fiscal Year. (b) Increases shown reflect additional rate adjustments to applicable revenues (reference note (c) below) to maintain operating margins target and a minimum all -in debt coverage from Net Revenues equal to or about 2.Ox for the Forecast Period. Such rate increases have not been adopted by the Board and should be re-evaluated closer to when such adjustments may be required. It is assumed that such rate increases would become effective at the outset of the respective Fiscal Year on October 1 St. (c) Applicable revenues reflect water, wastewater and certain reclaimed rate revenues which may be adjusted by the Price Index and adopted 4% rate adjustments for Fiscal Year 2020 and 2021 as defined in the Rate Resolution. Such revenues exclude charges for service associated with the Purchased Water Pass -Through Charge and the Flat Rate Reclaimed Water charge. Amounts shown reflect projected revenues assuming application of the identified rate adjustments noted above. (d) It is estimated that the Purchased Water Pass -Through Charge rate will need to increase above the amount currently being charged ($2.93 per 1,000 gallons of metered water service) beginning in Fiscal Year 2021 and adjusted annually during the Forecast Period as shown below: Fiscal Year Ending September 30, Existing Projected 2020 2021 2022 2023 2024 P,-hased Water Pasa-Through (00N) $2.93 $3.02 $3.06 $3.13 $3.20 Percentage Change 0,00% 3,07% 1.32% 2.29% 2,24% (e) The existing Flat Rate reclaimed water monthly rates are assumed to remain unadjusted during the Forecast Period. (f) Reflects the estimated effective annual increase to total System rate revenues from the application of the Price Index, Purchased Water Pass -Through and Additional Rate Adjustments. Footnotes Continued to Page 3 of 4. Page 3 of 4 Table 12 Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Proiected Oneratine Results and Bond Service Coveraee Footnotes Continued [2] Amounts reflect revenues derived from fees charged to new development which represent the recovery of certain costs to carry and maintain plant investment on behalf of such customers prior to receiving service. Such revenues are considered as a Revenue of the System and are in addition to the collection of Impact Fees from new development. Such fees were discontinued as of April 2014. On June 17, 2020, the Board adopted Resolution No. R20-046, which reinstated the Accrued Guaranteed Revenue Fees (AGRF). Effective October 1, 2020, the fees were set at $833 for potable water and $989 for wastewater. [3] Amounts shown includes various charges and other operating revenues including, but not limited to, building permits, planning services processing fees, parking fees, bad check fees, etc. [4] Amounts shown include interest earning on unrestricted funds as defined in the Bond Resolution, and do not include coming on the Capacity Fees or the Construction Accounts since such earnings are restricted to such funds. Amounts shown do not include investment earnings on the Debt Service Account or Reserve Account since earnings serve to reduce the amount of the Bond Service Requirement funded from Revenues of the System as provided in the Bond Resolution. Amounts shown determind as follows: Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Total Interest Income (a) $ 6,914,082 $ 6,670,392 $ 6,396,211 $ 5,790,603 $ 5,488,954 Adjustments to Investment Income: Less Impact Fees and Equivalents (b) (1,183,615) (1,225,616) (1,072,376) (602,555) (205,593) Less Construction Account Income (232,899) (57,000) - - - Less Interest on Debt Service and Reserve Accounts (267,432) (205,692) (222,044) (229,821) (231,890) Less Other Restricted Income - - - - - Net Investment Income Recognized $ 5,230,136 $ 5,182,084 $ 5,101,791 $ 4,958,227 $ 5,051,471 (a) Amounts shown reflect projections of total interest earnings on fund balances for the Forecast Period. For a complete listing of projected interest income by fund please reference Table 13. Additionally, amounts shown exclude interest payments received on an installment basis associated with non -bonded Impact Fee Assessment Unit (IFAU) which are included as a component in the determination of Pledged Capacity Fees (reference note 6 below). (b) Interest income earned from balances held in Impact Fee Accounts are included as a component in the determination of Pledged Capacity Fees (reference note 6 below). Impact fee equivalents include interest received on impact fee assessment units (essentially an installment -based collection of impact fees that is assessed to property owners which is elected prior by the owner [developer]) as part of the overall development process. [5] Amounts shown were not adjusted for any transfers to or from the Rate Stabilization Account as disclosed in the Report for purposes of determining compliance with the Rate Covenant of the Bond Resolution. [6] Amounts shown are based on information provided by the County, and the use of bond proceeds associated with the issuance of the Series 2019 Bonds. Amounts also include the use of proceeds from the anticipated issuance of additional parity bonds in Fiscal Year 2021 fund new facilities. All Capacity Fees Received by the County were considered as Pledged revenues and were calculated as follows: Fiscal Year Ending September 30, Total Annual Bond Service Requirement $ 16,386,377 $ 20,323,967 $ 20,842,657 $ 20,836,380 $ 22,083,061 Expansion Project Percentage (a) Water System 4.22% 20.72% 20.72% 20.72% 20.72% Wastewater System 22.46% 18.59% 18.59% 18.59% 18.59% Expansion Related Annual Bond Service Requirement Water System $ 691,761 $ 4,210,508 $ 4,317,965 $ 4,316,664 $ 4,574,939 Wastewater System 3,680,861 3,779,092 3,875,539 3,874,371 4,106,183 Water System Calculation: Total Water System Capacity Fees Received / Realized Full Payment of Fee $ 3,018,750 $ 2,384,127 $ 2,135,484 $ 1,843,614 $ 1,688,067 Payment of Fee at Builder Payment 634,708 951,882 853,079 736,574 673,582 Assessments (Principal and Interest) 7,218,870 8,459,557 8,459,621 9,091,242 9,657,301 Water System Allocable Interest Earnings on Capacity Fees Fund Balances 562,170 740,574 661,120 366,460 123,073 Total Water System Capacity Fees Received / Realized (b) $ 11,434,498 $ 12,536,140 $ 12,109,304 $ 12,037,890 $ 12,142,023 Less Amount Pledged to Debt Service Component of Cost of Contracted Water Supply (c) (6,795,522) (7,450,228) (7,196,559) (7,078,279) (7,081,228) Net Water System Capacity Fees Available to Pledge $ 4,638,976 $ 5,085,912 $ 4,912,745 $ 4,959,611 $ 5,060,795 Expansion Related Annual Bond Service Requirement - Water System $ 691,761 $ 4,210,508 $ 4,317,965 $ 4,316,664 $ 4,574,939 Beginning Balance - Water System Capacity Fee Carryforward $ 123,609 $ - $ - $ - $ - Amount (First Year Estimated) Total Available Balance for Water System Capacity Fee Pledge $ 815,370 $ 4,210,508 $ 4,317,965 $ 4,316,664 $ 4,574,939 Net Amount of Water System Capacity Fees Pledged Payment of Current Year Debt Service $ 815,370 $ 4,210,508 $ 4,317,965 $ 4,316,664 $ 4,574,939 Transfer to Capacity Fee Account 3,823,606 875,404 594,780 642,947 485,856 Ending Balance - Water System Capacity Fee Carryforward Amount $ $ $ $ $ Footnotes Continued to Page 4 of 4. Page 4 of 4 Table 12 Footnotes Continued Hillsborough County - Water Resources Department Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Protected Oueratine Results and Bond Service Coveraee Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Wastewater System Calculation: Total Wastewater System Capacity Fees Received / Realized Full Payment of Fee $ 3,085,200 $ 3,776,315 $ 3,344,193 $ 2,915,022 $ 2,666,452 Payment of Fee at Builder Payment 911,848 1,509,805 1,337,890 1,164,880 1,066,350 Assessments (Principal and Interest) 8,021,634 2,439,428 2,439,369 3,439,529 4,325,806 Wastewater System Allocable Interest Earnings on Capacity Fees Fund Balances 621,445 485,042 411,256 236,095 82,520 Net Wastewater System Capacity Fees Available to Pledge (b) $ 12,640,127 $ 8,210,590 $ 7,532,708 $ 7,755,526 $ 8,141,128 Expansion Related Annual Bond Service Requirement - Wastewater System $ 3,680,861 $ 3,779,092 $ 3,875,539 $ 3,874,371 $ 4,106,183 Beginning Balance - Wastewater System Capacity Fee Carryforward $ 116,481,087 $ 107,521,821 $ 103,090,324 $ 99,433,155 $ 95,552,000 Amount (First Year Estimated) Total Available Balance for Wastewater System Capacity Fee Pledge $ 120,161,948 $ 111,300,913 $ 106,965,863 $ 103,307,526 $ 99,658,183 Net Amount of Wastewater System Capacity Fees Pledged Payment of Current Year Debt Service $ 12,640,127 $ 8,210,590 $ 7,532,708 $ 7,755,526 $ 8,141,128 Transfer to Capacity Fee Fund - - - - - Ending Balance - Wastewater System Capacity Fee Caryforward Amount $ 107,521,821 $ 103,090,324 $ 99,433,155 $ 95,552,000 $ 91,517,055 Ending Balance - Total System Capacity Fee Carryforward Amount $ 107,521,821 $ 103,090,324 $ 99,433,155 $ 95,552,000 $ 91,517,055 Summary of Pledged Capacity Fees Pledged Water Capacity Fees $ 815,370 $ 4,210,508 $ 4,317,965 $ 4,316,664 $ 4,574,939 Pledged Wastewater Capacity Fees 12,640,127 8,210,590 7,532,708 7,755,526 8,141,128 Total System Pledged Capacity Fees $ 13,455,497 $ 12,421,098 $ 11,850,673 $ 12,072,190 $ 12,716,067 (a) Expansion percentages calculated based on a review of the expansion related improvements financed by the issuance of the outstanding bonds for the respective period shown. (b) Capacity Fee equivalents include interest received on Capacity Fee assessment units (essentially an installment -based collection of Capacity Fees that is assessed to property owners which is elected prior by the owner [developer]) as part of the overall development process. (c) The pledge of Water System Capacity Fees for the payment of the Debt Service Component of the Cost of Contracted Water Supply associated with Tampa Bay Water (TB W) was determined as follows: Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Beginning Contracted Water Supply Water Capacity Fee Carryforward Amount $ 27,812,603 $ 28,248,470 $ 27,936,454 $ 27,967,724 $ 28,236,594 County Allocable Expansion Related TBW Debt Service 7,231,389 7,138,212 7,227,829 7,347,149 7,361,924 Less: Water Capacity Fees Collected Allocable to TRW Payment 6,795,522 7,450,228 7,196,559 7,078,279 7,081,228 Ending Contracted Water Supply Water Capacity Fee Carryforward Amount $ 28,248,470 $ 27,936,454 $ 27,967,724 $ 28,236,594 $ 28,517,290 [7] Amounts shown derived from Table 6 and do not include depreciation or amortization expenses which are not considered a Cost of Operation and Maintenance Expense of the System as defined in the Bond Resolution. [8] Included as a component of the Water System Capacity Fees is the cost of expansion -related water production and conveyance facilities of Tampa Bay Water. Amounts shown reflect apportionment of such estimated amounts collected applied toward the payment of the Debt Service Component of the Cost of Contractual Water Supply which is considered as a Cost of Operational Maintenance. Reference is also made to footnote 6 identifying the Pledged Capacity Fee determination. Additionally, the use of the Capacity Fees applied to the payment of the Debt Service Component of the Cost of Contractual Water Supply is reflected in the determination of the annual Purchased Water Pass -Through Consumption Charge. The determination of the net purchased water costs were estimated as follows: Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 Total Cost of Purchased Water $ 68,360,183 $ 74,428,404 $ 76,716,404 $ 79,535,815 $ 82,367,052 Less Pledged Capacity Fees toward Debt Service Component of Cost of Contractual Water (6,795,522) (7,450,228) (7,196,559) (7,078,279) (7,081,228) Net Cost of Purchased Water $ 61,564,661 $ 66,978,176 $ 69,519,845 $ 72,457,536 $ 75,285,824 [9] As defined in the Bond Resolution, Pledged Revenues include Net Revenues and Pledged Capacity Fees. [10] As defined in the Bond Resolution, the Bond Service Requirement does not include any capitalized interest from Bond Proceeds, if any, that have been deposited into the Debt Service Account or any interest earned from the investment of funds on deposit in the Debt Service Account and the Reserve Account. [11] The Bond Resolution contains a Rate Covenant that requires that the County will maintain and collect Revenues that will always provide for the following: Test 1 - Gross Revenues, together with Pledged Capacity Fees at least equal to 100 % of the Required Deposits; and Test 2 - Net Revenues, together with Pledged Capacity Fees; at least equal to 120% of the Bond Service Requirement; and Test 3 - Net Revenues at least equal to 100% of the Bond Service Requirement. [12] Reflects other required transfers which are recognized in the rate covenant requirements of the Bond Resolution, payments which are subordinated to the payment of the Bond Service Requirement. [13] No deposit to the Reserve Account was recognized since the fund was considered fully funded during the Forecast Period by i) proceeds from the issuance of Outstanding and additional parity bonds or ii) secured by a debt service reserve credit facility during such period. Page 1 of3 Table 13 Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Cash Balances and Fund Transfers Line No. 1 Ending Cash Balance 2 Operating Reserves (#40100, #40102) 3 Customer Deposits (#710) 4 Renewal & Replacement Account (#40104) 5 General Purpose Account (Capital Expenditure) (#40105) 6 Impact Fee Accounts Water / Sewer (#40103, #40118) 7 Debt Service Reserve Account( (#40129, #40130, #40131) 8 Debt Service Account (#40101, #40127, #40128) 9 RWIU Asmt., Project Fund & Infrastructure Asmt. (#40116, #40117, #40119) 10 Rate Stabilization Account (#40115) 11 Construction Account - Series 2016 Bonds (#40156) 12 Construction Account - Proposed Series 2021 Bonds 13 Other Misc. Funds (#40107, #40110, #40154, #40157, #40159, #40160, #40161, #40164) 14 Total Ending Cash Balance 15 Unrestricted Cash 16 Restricted Cash Operating Reserves (#40100, #40102) 17 Beginning Balance 18 Transfers In - System Operations 19 Total Funds Available 20 Transfers Out - Other Misc Funds 21 Total Transfers Out 22 Ending Balance Before Other Adjustments 23 Transfer In Year End Surplus / (Transfer Out Year End Deficiency) 24 Interest Rate 25 Interest Income on Fund Balance 26 Interest Income to Fund Revenue Requirements 27 Ending Balance 28 Operating Expenses 29 Days of O&M 30 Targeted Days of O&M (Per Bond Reso Sec 9.03 Requires Min 30 Days) 31 Minimum Target Reserve Balance at 150 Days 32 Days of O&M (w/ Rate Stabilization) Customer Deposits (#710) 33 Beginning Balance 34 Transfers In - Additional Deposit Receipts 35 Total Funds Available 36 Transfers Out - Payments to Customers / Application to Final Bills 37 Total Transfers Out 38 Interest Rate 39 Interest Income on Fund Balance 40 Interest Income to Fund Revenue Requirements 41 Ending Balance Renewal & Replacement Account ( #40104) 42 Beginning Balance 43 Transfers In - Required Deposit 44 Transfers In - TBW Purchase Discounts for Asset Sales Due to Governance (Ends FY 2029) 45 Total Funds Available 46 Transfers Out - CIP 47 Transfers Out - Capital Improvement Fund 48 Total Transfers Out 49 Interest Rate 50 Interest Income on Fund Balance 51 Interest Income to Fund Revenue Requirements 52 Ending Balance Restrictions Fiscal Year Ending September 30, Rev. Req. 2020 2021 2022 2023 2024 Unrestricted $ 96,656,656 $ 96,656,656 $ 96,656,656 $ 98,701,211 $ 102,555,894 Unrestricted 16,168,861 16,168,861 16,168,861 16,168,861 16,168,861 Unrestricted 9,303,413 11,325,946 5,658,889 6,959,446 9,141,175 Unrestricted 77,810,327 67,698,498 44,490,246 44,627,107 46,243,297 Restricted 68,796,981 64,927,667 46,131,968 14,726,121 6,038,768 Unrestricted 2,170,000 2,170,000 2,170,000 2,170,000 2,170,000 Unrestricted 8,680,253 9,216,753 9,217,003 9,425,128 9,423,903 Unrestricted 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 Unrestricted 74,000,000 74,000,000 74,000,000 74,000,000 74,000,000 Restricted 6,219,194 - - - - Restricted - 77,456,000 59,744,000 16,696,000 - Restricted 36,409 36,409 36,409 36,409 36,409 $ 370,060,117 $ 429,874,813 $ 364,492,055 $ 293,728,306 $ 275,996,330 $ 295,007,533 $ 287,454,737 $ 258,579,678 $ 262,269,775 $ 269,921,153 $ 75,052,584 $ 142,420,076 $ 105,912,377 $ 31,458,530 $ 6,075,177 $ 97,794,778 $ 96,656,656 $ 96,656,656 $ 96,656,656 $ 98,701,211 97,794,778 96,656,656 96,656,656 96,656,656 98,701,211 (1,138,122) - - 2,044,555 3,854,683 1.75% 1.85% 1.95% 2.00% 2.00% 1,701,450 1,788,148 1,884,805 1,933,133 1,974,024 (1,701,450) (1,788,148) (1,884,805) (1,933,133) (1,974,024) $ 96,656,656 $ 96,656,656 $ 96,656,656 $ 98,701,211 $ 102,555,894 $ 204,413,156 $ 221,760,597 $ 230,701,045 $ 240,172,946 $ 249,552,675 173 159 153 150 150 I50 150 150 150 150 $ 84,005,407 $ 91,134,492 $ 94,808,649 $ 98,701,211 $ 102,555,894 305 281 270 262 258 $ 16,168,861 $ 16,168,861 $ 16,168,861 $ 16,168,861 $ 16,168,861 16,168,861 16,168,861 16,168,861 16,168,861 16,168,861 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 282,955 299,124 315,293 323,377 323,377 (282,955) (299,124) (315,293) (323,377) (323,377) $ 16,168,861 $ 16,168,861 $ 16,168,861 $ 16,168,861 $ 16,168,861 $ 49,562,411 $ 9,303,413 $ 11,325,946 $ 5,658,889 $ 6,959,446 13,298,679 13,591,741 14,825,773 15,556,471 16,237,644 1,238,468 1,238,468 1,238,468 1,238,468 1,238,468 64,099,558 24,133,622 27,390,187 22,453,828 24,435,558 16,796,145 12,807,676 21,731,298 15,494,383 15,294,383 38,000,000 - - - - 54,796,145 12,807,676 21,731,298 15,494,383 15,294,383 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 515,076 190,822 165,602 126,183 161,006 (515,076) (190,822) (165,602) (126,183) (161,006) Page 2 of 3 Table 13 Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Cash Balances and Fund Transfers Line Restrictions Fiscal Year Ending September 30, No. Rev. Req. 2020 2021 2022 2023 2024 General Purpose Account (Capital Expenditure) (#40105) 53 Beginning Balance 54 Transfers In - Renewal and Replacement Fund 55 Transfers In - Rate Stabilization Account 56 Transfers In - Operations 57 Transfers In - Impact Fees (Budget Amendment 4/15/2020) 58 Total Funds Available 59 Transfers Out - CIP 60 Total Transfers Out 61 Ending Balance Before Other Adjustments 62 Transfer In Year End Surplus / (Transfer Out Year End Deficiency) 63 Interest Rate 64 Interest Income on Fund Balance 65 Interest Income to Fund Revenue Requirements 66 Ending Balance 67 Impact Fee Accounts Water / Sewer (#40103, #40118) 68 Beginning Balance 69 Transfers In - Water Impact Fees & Assessments 70 Transfers In - Wastewater Impact Fees & Assessments 71 Total Funds Available 72 Transfers Out - CIP 73 Application of Capacity Fees to TBW Charges (debt component) 74 Pledged (Payments) to Debt Repayment (Transfer to Fund 40100,40102) 75 Budget Amendment dated 4/15/2020 moves IF to Fund 40105 for One Water Campus 76 Total Transfers Out 77 Interest Rate 78 Interest Income on Fund Balance 79 Interest Income to Fund Revenue Requirements 80 Ending Balance Debt Service Reserve Account( (#40129, #40130, #40131) 81 Beginning Balance 82 Transfers In - Proposed Series 2021 Bonds 84 Total Funds Available Transfers Out - Source of Funds Used in Issuance of Series 2019 Bonds & Refunding of Series 85 2010B Bonds 86 Total Transfers Out 87 Interest Rate 88 Interest Income on Fund Balance 89 Interest Income to Fund Revenue Requirements 90 Ending Balance Debt Service Account (#40101, #40127, #40128) 91 Beginning Balance 92 Transfers In - Rate Revenues 93 Transfers In - BAB's & RZEDB's Subsidy 94 Total Funds Available 95 Transfers Out - Existing Debt Service - Senior 96 Transfers Out - Proposed Debt Service - Senior 97 Transfers Out - Revenue Fund 98 Total Transfers Out 99 Interest Rate 100 Interest Income on Fund Balance 101 Interest Income to Fund Revenue Requirements 102 Ending Balance $ 25,260,694 $ 77,810,327 $ 67,698,498 $ 44,490,246 $ 44,627,107 38,000,000 - - - - 40,567,869 - - - - 48,087,245 43,000,000 44,000,000 45,000,000 46,000,000 2,683,536 - - - - 154,599,344 120,810,327 111,698,498 89,490,246 90,627,107 76,789,017 58,674,874 79,370,311 56,565,780 55,804,036 76,789,017 58,674,874 79,370,311 56,565,780 55,804,036 77,810,327 62,135,453 32,328,187 32,924,466 34,823,071 - 5,563,045 12,162,059 11,702,641 11,420,226 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 901,871 1,345,957 1,093,840 891,174 908,704 (901,871) (1,345,957) (1,093,840) (891,174) (908,704) $ 77,810,327 $ 67,698,498 $ 44,490,246 $ 44,627,107 $ 46,243,297 $ 67,656,911 $ 68,796,981 $ 64,927,667 $ 46,131,968 $ 14,726,121 10,872,328 11,795,566 11,448,184 11,671,430 12,018,950 12.018.682 7725,548 7,121,452 7,519A31 8,058,608 - 4,744,718 19,390,479 32,048,794 9,173,209 6,795,522 7,450,228 7,196,559 7,078,279 7,081,228 13,455,497 12,421,098 11,850,673 12,072,190 12,716,067 2,683,536 - - - - 1.75% 1.85% 1.95% 2.00% 2.00% Restricted 1,183,615 1,225,616 1,072,376 602,555 205,593 $ 68,796,981 $ 64,927,667 $ 46,131,968 $ 14,726,121 $ 6,038,768 $ 11,581,375 $ 2,170,000 $ 2,170,000 $ 2,170,000 $ 2,170,000 11,581,375 2,170,000 2,170,000 2,170,000 2,170,000 9,411,375 - - - - 9,411,375 - - - - 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 120,325 40,145 42,315 43,400 43,400 (120,325) (40,145) (42,315) (43,400) (43,400) $ 8,132,026 $ 8,680,253 $ 9,216,753 $ 9,217,003 $ 9,425,128 17,202,036 21,066,159 21,064,951 21,274,326 22,313,726 1,207,959 537,549 537,549 537,549 537,549 17,861,768 18,383,250 18,381,500 18,383,000 18,386,750 - 2,683,958 3,220,750 3,220,750 4,465,750 17,861,768 21,067,208 21,602,250 21,603,750 22,852,500 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 147,107 165,547 179,729 186,421 188,490 (147,107) (165,547) (179,729) (186,421) (188,490) $ 8,680,253 $ 9,216,753 $ 9,217,003 $ 9,425,128 $ 9,423,903 Page 3 of 3 Table 13 Fiscal Year 2020 Revenue Sufficiency Study Water and Wastewater System Summary of Projected Cash Balances and Fund Transfers Line Restrictions Fiscal Year Ending September 30, No. Rev. Req. 2020 2021 2022 2023 2024 RWIU Asmt., Project Fund & Infrastructure Asmt. (#40116, #40117, #40119) 103 Beginning Balance 104 Transfers In - R&R Fund 105 Total Funds Available 106 Transfers Out - Capital Improvements 107 Total Transfers Out 108 Interest Rate 109 Interest Income on Fund Balance 110 Interest Income to Fund Revenue Requirements III Ending Balance Rate Stabilization Account (#40115) 112 Beginning Balance 113 Transfers In - Rate Revenues 114 Total Funds Available 115 Transfers Out - Reclassification of Funds to General Revenue Capital Expenditure Account Transfers Out - CIP (not transferred to General Revenue Account 40102) Transfers Out - Transfer to General Revenue Account (40102) 116 Total Transfers Out 117 Interest Rate 118 Interest Income on Fund Balance 119 Interest Income to Fund Revenue Requirements 120 Ending Balance Construction Account - Series 2016 Bonds (#40156) 121 Beginning Balance 122 Transfers In 123 Total Funds Available 124 Transfers Out - CIE 125 Total Transfers Out 126 Interest Rate 127 Interest Income on Fund Balance 128 Interest Income to Fund Revenue Requirements 129 Ending Balance Construction Account - Proposed Series 2021 Bonds 130 Beginning Balance 131 Transfers In - Proceeds from Proposed Series 2020 Bonds 132 Total Funds Available 133 Transfers Out - CIE 134 Total Transfers Out 135 Interest Rate 136 Interest Income on Fund Balance 137 Interest Income to Fund Revenue Requirements 138 Ending Balance Other N1isc. Funds (#40107, #40110) 148 Beginning Balance 149 Transfer In - Contributions / Grants 150 Total Funds Available 151 Transfers Out - CIE 152 Total Transfers Out 153 Interest Rate 154 Interest Income on Fund Balance 155 Interest Income to Fund Revenue Requirements 156 Ending Balance 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 10,218,023 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 178,815 189,033 199,251 204,360 204,360 $ 114,567,869 $ 74,000,000 $ 74,000,000 $ 74,000,000 $ 74,000,000 40,567,869 40,567,869 - - - - 1.75% 1.85% 1.95% 2.00% 2.00% Unrestricted 1,649,969 1,369,000 1,443,000 1,480,000 1,480,000 (1,649,969) (1,369,000) (1,443,000) (1,480,000) (1,480,000) $ 74,000,000 $ 74,000,000 $ 74,000,000 $ 74,000,000 $ 74,000,000 $ 20,630,748 $ 6,219,194 $ - $ - $ 20,630,748 6,219,194 - - 14,644,454 6,276,194 - - 1.75% 1.85% 1.95% 2.00% 2.00% Restricted 232,899 57,000 - - - $ 6,219,194 $ - $ - $ - $ - $ - $ - $ 77,456,000 $ 59,744,000 $ 16,696,000 80,000,000 - - - 80,000,000 77,456,000 59,744,000 16,696,000 2,544,000 17,712,000 43,048,000 16,696,000 2,544,000 17,712,000 43,048,000 16,696,000 0.00% 0.00% 0.00% 0.00% 0.00% Restricted - - - - - $ - $ 77,456,000 $ 59,744,000 $ 16,696,000 $ - $ 36,409 $ 36,409 $ 36,409 $ 36,409 $ 36,409 36,409 36,409 36,409 36,409 36,409 0.00% 0.00% 0.00% 0.00% 0.00% Restricted - - - - - $ 36,409 $ 36,409 $ 36,409 $ 36,409 $ 36,409 ATTACHMENT A RATE CONSULTANT "2021 SUFFICIENCY OF WATER AND WASTEWATER RATES REPORT" ME341 N. Maitland Avenue Phone: 407-628-2600 www.raftelis.com s Now R A F T E L I S suite 300 Fax: 407-628-2610 PART O F Maitland, FL 32751 July 31, 2020 Ms. Beth Schinella Director of Water Resources Hillsborough County — Water Resources Dept. 925 E. Twiggs Street Tampa, FL 33602 Subject: 2021 Sufficiency of Water and Wastewater Rates Report Dear Ms. Schinella: Raftelis Financial Consultants, Inc. ("Raftelis") has reviewed the rate revenue and financial projections for the Hillsborough County (the "County") water and wastewater enterprise system (the "System") as prepared by the Water Resources Department staff. The primary purpose of our review of the rate revenue and financial projections was to: i) comment on the adequacy of the existing rates and fees as reflected in Resolution No. R19-106 adopted by the Board of County Commissioners (the 'Board") on October 1, 2019 and Resolution No. R20-047 adopted by the Board on June 17, 2020 (collectively, the "Rate Resolution"), in meeting the projected financial requirements of the System as estimated by Water Resources Department management; and ii) determine whether the existing rates and fees would allow the System to be in compliance with the rate covenant set forth in Section 11.02 of the Amended and Restated Utility System Bond Resolution No. R03-112, adopted on June 4, 2003, as amended from time to time and as particularly amended by Resolution No. R10-151 dated October 6, 2010, Resolution No. R16-065 dated June 2, 2016 and Resolution No. R19-129 dated October 16, 2019 (the 'Bond Resolution"), which authorized the issuance of the Outstanding BondsEll. All capitalized undefined terms reflected in this report have the same meaning as prescribed in the Bond Resolution, which authorized the issuance of the outstanding utility system revenue bonds. In order to provide the opinion of rate sufficiency and compliance, Raftelis reviewed the financial projections prepared by Water Resource Department staff. The financial projections prepared by the Water Resources Department staff included the Fiscal Year 2020 (the current budget year) through the Fiscal Year 2024 (collectively, the "Forecast Period") and in support of the financial forecast, our review considered each year of the Forecast Period and our opinion in accordance with the Bond Resolution. The Fiscal Years 2020 and 2021 are referred to as the "Review Period", which represent the most current year in the financial forecast. The review of the Water Resources Department financial forecast for the Forecast Period conducted by Raftelis included the following analytical procedures: [11 As of December 31, 2019, the Outstanding Bonds included: i) the Utility Revenue Bonds, Series 2010C (Federally Taxable - Recovery Zone Economic Development Bonds -Direct Payment) in the estimated principal amount of $21,700,000; ii) the Utility Revenue Bonds, Series 2016 in the estimated principal amount of $207,795,000; and the iii) Utility Refunding Revenue Bonds, Series 2019, in the estimated amount of $90,375,000; collectively for all Bonds in the estimated principal amount outstanding of $319,870,000. Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 2 1. Review of the customer and sales (water usage and billed wastewater flow) statistics for the Forecast Period as provided by Water Resources Department staff and comparison of such estimates to recent historical trends; 2. Review of the projected rate revenues to be collected by the System based on the application of the existing rates and fees, as may be adjusted for annual automatic rate adjustments, all as provided in the Rate Resolution, to the projected customer billing statistics; 3. Review of customer billing records and "revenue proof reports" of the System as prepared by Water Resources Department staff for the Fiscal Years 2018 and 2019 and eight (8) months of Fiscal Year 2020; 4. Review of year-to-date Fiscal Year 2020 operating expenses, estimates of such expenses for the current Fiscal Year and a comparison of such expenses to the 2020 Budget and Fiscal Year 2019 actual results as provided by the Water Resources Department; 5. Review of the Fiscal Year 2021 preliminary budgeted operating expenses and compared such expenses to actual Fiscal Year 2019 and estimated Fiscal Year 2020 results; 6. Review of the System operating expenses projected for the remainder of the Forecast Period consisting of the Fiscal Years 2021 through 2024; 7. Review of the existing annual Bond Service Requirement of the System for the Forecast Period as well as projections of future parity and / or subordinate debt requirements, if any, that may be identified in order to fund the capital improvement program of the System; 8. Review of estimated escalation factors used to project operating expenses for the Forecast Period and the reasonableness of such factors, including a review of recent trends in certain inflationary indexes and projections made by others; 9. Examination of the Forecast Period projected cost of water purchases from Tampa Bay Water ("TBW") and other municipally -owned utility systems, including the effects on how the County's water rates should be adjusted during the Forecast Period relative to the pass - through provisions of such water purchases as provided in the Rate Resolution; 10. Reviewed the estimate of the price index rate adjustment calculation recognized during the Forecast Period relative to the current formula codified in the Rate Resolution to the projected revenues of the System; 11. Review of the estimated Impact (Capacity) Fees anticipated to be collected during the Forecast Period and the determination of the amount of such fees being considered as a Pledged Impact (Capacity) Fee in accordance with the provisions of the Bond Resolution and the application of such Pledged Impact (Capacity) Fees for the payment of the Debt Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 3 Service Component on the Cost of Contracted Water Supply and for the payment of the expansion -related Bond Service Requirement; 12. Review of the deposit requirements pursuant to the disposition of Pledged Revenues (flow of funds) as delineated in the Bond Resolution, including deposits as may be required to the Operations and Maintenance Account, Debt Service Account, Renewal and Replacement Account, Rate Stabilization Account, as well as the deposits to the General Revenue Capital Expense Account, which is considered as a sub -fund of the General Purpose Account as also delineated in the Bond Resolution; 13. Review of other revenues accruing to the benefit of the System during the Review Period, including interest earnings and miscellaneous operating revenues such as meter installation fees; potential revenues from the application of the Accrued Guaranteed Revenue Fees ("AGRF"), which was set by the Board of County Commissioners at a zero rate in April 2014 and reinstated effective October 1, 2020; and the collection of Impact (Capacity) Fees and the subsequent pledge of Impact (Capacity) Fees for the payment of the Debt Service Component of the Cost of Contracted Water Supply and for deposit into the Debt Service Account as provided by the Bond Resolution; 14. Review of the capital projects appropriations and anticipated expenditure year forecast as developed by the Department and the estimated funding sources to finance the disbursement of funds for such capital expenditures and evaluated the funding sources for such projects, including a comparison of such expenditures to available fund balances in each account established by the Water Resources Department; 15. Review of the overall cash flow of the System and the resulting fiscal position and compliance with the Rate Covenant as delineated in the Bond Resolution, which reflected a series of financial ratios used by credit rating agencies and the County in the review of the overall financial position of the System; and 16. Performance of analytical procedures to validate certain components of the Water Resources Department financial forecast results to determine general calculation accuracy. The review performed by Raftelis included such procedures as we considered necessary to evaluate the reasonableness of the financial forecast for the Review Period and the Forecast Period based on the assumptions and data provided by or developed with the Water Resources Department to Raftelis, especially as it related to the ability of the existing and anticipated rates to meet the projected revenue requirements of the System. The financial forecast for the Forecast Period is summarized on Table 6 of the Sufficiency Report and the ability of the System revenue to comply with the rate covenant defined in the Bond Resolution is summarized on Table 12 of the Sufficiency Report. Based on our review of the assumptions and analyses incorporated in the financial forecast for the Forecast Period, the following significant observations were noted: Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 4 1. The water use per equivalent residential connection ("ERC") has been in steady decline from the Fiscal Year 2006 through the Fiscal Year 2015, with notable rebounds in water demands reported for the Fiscal Years 2016 through Fiscal Year 2018. However, such average billed water use per ERC declined in Fiscal Year 2019 by 0.62% and estimated for the Fiscal Year 2020 to decline from Fiscal Year 2019 levels by approximately 0.64%. Overall, the long- term declining trend in water use is due, in part, to increased water use restrictions imposed by the Southwest Florida Water Management District ("SWFWMD"), increased awareness in water conservation by the System customers, the effects of weather on use, housing development, and other factors such as changed demographics experienced in the region. It should be noted that other public utilities in the region and the State are experiencing the same trends in water use demands and it is the opinion of Raftelis that the continued reduction in water use demands over the long-term will continue due to the factors and influences briefly mentioned above. The net effect of this decline is to reduce rate revenue contribution margins from existing customers which puts an additional financial burden on the System. It should be noted that the decline in water sales may allow the County the ability to possibly defer capital expansions due to declines in customer demands. The County continuously monitors the availability of both water and wastewater capacity recognizing the changing landscape of the customer needs and configuration with their ultimate objective to not over- build capacity to provide service. 2. Customer growth in the average number of accounts and ERCs served has continued to be strong since the significant downturn in the economy (i.e., the great recession) as reported for the Fiscal Years 2015 through 2020. These trends are expected to continue by the Department based on the permitted and planned development scheduled for the System utility service area. The overall forecast in accounts / ERCs for the Forecast Period reflects the continuation of a stable economic position for the region as discussed with the Department and the change in accounts / ERCs will continue but at a lower rate over time as development occurs. The anticipated growth of the System will continue to have a direct positive impact on the growth in future sales revenues and funds received from the application of the Impact Fees and the AGRF fees. 3. The Department's Annual Financial Report for the Fiscal Year 2019 reported the following: a. Increase in the water, wastewater and customer service revenues (included as a component and represents the majority of the Charges for Services) of approximately $9.7 million or 4% when compared to Fiscal Year 2018 reported amounts. Relative to this increase, the following was observed: The net change in the average annual customers served increased by 4.2% when compared to the prior year, which represents a net increase in average annual accounts served for the year of over 7,600 accounts. Water sales increased 3.8% and wastewater sales also increased 3.39% when compared to the prior fiscal year. Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 5 Sales growth is expected with customer growth however usage per ERC is slightly lower which supports Observation 1 above. ii. During the Fiscal Year 2019, the Purchased Water Pass -through Consumption Charge remained constant, however application of the Price Index rate adjustment (1.40% effective June 1, 2019) contributed to the increase in the water, wastewater and customer service revenues and contributed to the maintenance of System net revenue margins [21 for the Fiscal Year. b. Net operating margins (income before payment of the Bond Service Requirement and the funding of capital reinvestment primarily for infrastructure renewals, replacements, and betterments) realized by the System were approximately $84.4 Million in 2019, whereas the Fiscal Year 2018 reported net operating margins of approximately $88.4 Million, which represents a decrease in margins from the prior Fiscal Year and supports the reasoning for the continued annual application of the Purchased Water Pass -through, the Price Index adjustments and the adopted rate adjustments. These measures will help to maintain such margins, which is critical to the financial position of the System. c. For the Fiscal Year 2019, the County reported the addition of approximately $120 Million in depreciable capital assets and an ending balance of construction -work -in - progress of approximately $275 Million. The gross (undepreciated) utility -plant -in- service was reported to be $2.5 Billion as of September 30, 2019, which represents a significant infrastructure investment by the County. 4. It should be noted that the County issued $90,375,000 aggregate principal amount of Utility Refunding Revenue Bonds, Series 2019, in December 2019 to advance refund all of the Series 2010B (Federally Taxable — Build America Bonds — Direct Payment), recognizing approximately $8,692,663 in net present value savings. Based on the capital improvement plan as developed by the Department for the five fiscal years ending 2024, it is anticipated that the County will need to issue additional parity bonds during the Forecast Period to meet the increased demands associated with growth, and which will affect the financial position of the System especially from a capital reinvestment standpoint. Recognizing, among other things, the current liquidity position of the System and the ability to cash fund the immediate needs of the capital plan, the County's utility system is a very strong credit with Fitch rating at "AAA", Moody's at "Aaa" and S&P at "AA+". These credit ratings speaks highly of the Water Resources Department and County management and the overall financial position of the System and will allow for the issuance of any additional bonds at a lowest cost of borrowing, which is always critical to the development of the ongoing capital funding plan; the maintenance of this strong credit rating is recommended to be continued to maintain the ability to attract capital and promote the long-term sustainability in rates. [21 Net Revenue Margin defined as Net Revenues (Gross Revenues less operating expenses without depreciation expense) divided by Gross Revenues and measures the percentage amount of the funds available for debt and capital funding from operations. Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 6 5. Operating expenses have outpaced inflation over the recent historical period. In the past five (5) years, operating expenses, excluding depreciation, have increased by approximately $50 Million or 33.4%. The application of the price index allowance provided an increase in rates of approximately 4.9%. The majority of the difference between the price indexing and the increase in operating expenses is attributed to increased growth in ERC served for the benefit of the System. However, it is expected by the Department that the increased trend in operating expenses will continue outpacing increased revenues from growth for the review period. It is expected by the Department that current operating expenses for Fiscal Year 2020 may be 5% greater than Fiscal Year 2019 actual results and the Fiscal Year 2021 preliminary budget is 8.5% greater than the adopted Fiscal Year 2020 budget. These increases are due to a variety of factors, including increases in salaries to retain personnel coupled with increases in staffing to meet service area needs and to manage the capital program identified for the System, increased costs of purchased water from TBW, increased inflation, higher prices for contractual services and construction due to limited resources resulting from the current robust economy, the need to maintain revenue margins and other factors that are uncontrollable to the County such as the COVID-19 pandemic. At the current pace of growth in expenses resulting from growth and other system needs, the application of only the Price Index to adjust System rate revenues is not anticipated to be sufficient to maintain current net revenue margins during the Forecast Period. 6. The County's Consulting Engineers performed a utility plant evaluation during 2015 associated with the funding of existing asset replacements, renewals and upgrades, which may result due to such utility plant reaching its average service life from an economic and service sustainable standpoint. The evaluation identified the need to reinvest approximately $57.4 million a year (estimated at $66.5 million to reflect today's dollars) from ongoing operations in capital renewals, replacements, and rehabilitation to existing utility infrastructure over the next twenty (20) years. Based on current forecasts, it is expected that the County will require additional rate adjustments above the estimated Price Index adjustments in the coming years in order to meet this level of recurring capital investment from rate revenues. Based on the observations discussed above, which included the rates as presented in Resolution No. R19-106 and Resolution No. R20-047 as recently adopted by the Board, the analytical procedures conducted by Raftelis with respect to the review of the financial forecast, and discussions with Water Resources Department staff, nothing came to our attention that caused us to believe that the County would not meet the minimum compliance requirement of the rate covenant defined in the Bond Resolution for the Review Period (i.e., the Fiscal Years 2020 and 2021). The rate covenant provisions include the maintenance of adequate debt service coverage ratios and the making of required deposits to funds established by the Bond Resolution (e.g., Renewal and Replacement Account). Additionally, Raftelis did not identify the need to change the System's rate structure (monthly user charges) in order to ensure continuing minimum Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 7 compliance with the rate covenant as set forth in Section 11.02 of the Bond Resolution for these respective fiscal years. Based on our review of the analyses and assumptions, coupled with the need to issue additional parity debt to fund recently identified expansions to water and wastewater infrastructure, it is expected that the County may require additional rate adjustments above the estimated Price Index adjustments in the coming years to assure that the Rate Covenant and corresponding financial performance target objectives are met and provide adequate capital reinvestment to promote rate sustainability in the future. Additionally, to the extent that the System i) continues to experience a long-term reduction in water use due to changes in customer usage characteristics, ongoing water restrictions imposed by SWFWMD, or due to ongoing conservation measures enacted by its customers; ii) identifies the need to increase the level of capital re -investment beyond the amount reflected in the current capital budget and as identified by the County's Consulting Engineers; iii) is impacted by increased regulations on the cost of operations (e.g., increased wastewater treatment or changes in effluent disposal requirements); or iv) is affected by any future downturn in economic conditions, which may impact the estimated System growth assumed for the financial forecast, the need for further additional rate adjustments may be needed to meet the rate covenants as defined in the Bond Resolution and maintain a favorable financial position for the System. It should be noted that the rates for utility service in both Florida and nationally are anticipated to increase over time based on our conversations with several other utilities in Florida and information published on a national perspective regarding the needs for future rate adjustments. The table below provides a national indication of the recent trends in rate adjustments (referred to as the NACWA Index, which is based on a composite of 176 utilities serving 110 million people) as compared to the consumer price index, all as published by the National Association of Clean Water Agencies ("NACWA"). As can be seen below, NACWA reports that the adjustments to rates has most recently outpaced inflation for many years and a forecast in rate adjustments ranging from 3.4% to 3.9% over the next five years is anticipated. The revised price index over the next the same time period is estimated to average 2.21% annual which is below the projected increases as identified by NACWA. Additionally, the price index will currently sunset on September 30, 2025. It is recommended that the sufficiency of rates is closely monitored annually to determine the need for additional rate adjustments. (Remainder of page intentionally left blank) Ms. Beth Schinella Hillsborough County — Water Resources Dept. July 31, 2020 Page 8 Annual Change in Cost of Clean Water Index vs. Inflation 10% ❑ NACWA Index Consumer Price Index 82'° s% n 7.3% 6.5% n 6% 4% 3.6% 3.0% H n n 2.2�„ 2% 0% -2% J 6.0% 6.0% I 61% n 5.4 ; Inl M 5.5% 2020 - 2024 Projected Service Charge Changes Based on Approved and Anticipated Rate Increases 4.1 % 3.9% 3.6 % 3.8% 3.8% 3.4 % 3.8% 36Y 3.8% 3.1 % 1 1 ro 2.7% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 This letter relates only to matters specific to compliance to the Bond Resolution and does not extend to any financial statements of the County. We appreciate the opportunity to perform this financial review of the System and to provide this letter to the Water Resources Department regarding the ability of the System revenues to comply with the rate covenants defined in the Bond Resolution and to meet the overall financial needs of the System. Very truly yours, Raftelis Financial Consultants, Inc. Robert J. Ori Executive Vice President Thierry A. Boveri, CGFM Senior Manager Dianne S. Holloway Senior Consultant Lee County FLORIDA Project Name: Fiscal Year 2020 Solid Waste Revenue Sufficiency Study Date: March 5, 2020 This study provides an example of a system financial forecast, revenue sufficiency analysis and financial forecast model prepared on behalf of the County's Solid Waste Division, which included both disposal and collection services. The financial forecast and model were prepared to evaluate the current and projected fiscal position, support the development of proposed collection and disposal fee rates for service based on the allocated cost of providing services, and develop a funding plan for ongoing capital re -investment. The financial forecast encompassed a six -year planning horizon. Study tasks included: • Compilation of historical solid waste deliveries received by the County, by waste type, and the projection of solid waste tonnage to estimate residential assessment and tipping fee disposal revenues. • Preparation of forecast of residential/dwelling unit, and commercial customer growth, and waste generation rates to estimate solid waste collection revenues as well as the delivery of municipal solid waste to the County disposal facilities. • Projection of electric rate revenues derived from the operation of the waste -to -energy (WTE) facility, recognizing changes in fuel prices, and contractual arrangements for the sale of electricity to other utilities. • Projection of operating expenses, including contractual fees for: • Operation of the landfill and other disposal facilities • Providing collection services by the County's contractors • Preparation of change in landfill closure and long-term liability for expense recognition and funding considerations. • Development of a capital funding plan, including the funding of a landfill replacement reserve (new landfill) for future disposal requirements. • Developed cost allocation and development of rates based on cost to provide service by customer and waste type. • Providing the rate and financial model for County staff s internal use. The proposed Project Team has annually updated the financial and revenue sufficiency model in support of annual budget process, to review the financial position of the system, and to maintain compliance with the overall business plan adopted by the Board of County Commissioners. In addition to the evaluation of the monthly rates for solid waste service, the Project Team has also assisted the County in the establishment of water and wastewater rates and charges for the respective utility, prepared bond feasibility disclosure reports in support of capital infrastructure utility financings, provided utility acquisition services as part of the County's regionalization efforts, prepared a financial policy for the water and wastewater utility that was approved by the Board of County Commissioners, and other related services. LEE CO NTY Fiscal Year 2020 Solid Waste Revenue Sufficiency Study Report / March 5, 2020 Pi14 t PIS ARTOF � R A F T E L I S ��� Lee County I���r 'SaU7TJasfe Pit is Now R R A F T E L I S 1114,14 "'; PART OF March 5, 2020 Ms. Pamela S. Keyes P.E. Director Lee County Solid Waste Department P.O. Box 398 Fort Myers, FL 33902-0398 Subject: Fiscal Year 2020 Solid Waste Revenue Sufficiency Study Dear Ms. Keyes: Raftelis Financial Consultants, Inc. (formerly Public Resources Management Group, Inc. now "Raftelis") has completed, for your consideration, our annual review and analysis of the Lee County (the "County") Solid Waste Department (the "Department") revenue sufficiency and rate study update (the "Study"). The Study review period encompassed the Fiscal Years 2020 (current budget year) through 2025 (collectively, the "Forecast Period") with the accounting period from October 1 through September 30 being the "Fiscal Year". The purpose of the Study was to: • Identify the ability of revenues derived from the current charges for solid waste disposal service and ongoing operations of the Department to fund the projected expenditures of the Department and provide sufficient net revenues to fund necessary transfers for future landfill closure, long-term care; • Provide an evaluation of the Integrated Solid Waste Management System's (the "System") overall financial position and cash balances / reserves relative to identified need (i.e., accumulated landfill closure and long-term care liabilities, operating expenses, capital expenditures, etc.), and recommendations concerning internal financial targets; • Evaluate the cost of service for waste collection and disposal services and provide recommendations concerning the rates to recover the cost of such service; and • Develop a financial plan with County staff to maintain or promote the creditworthiness of the Department and assist in the overall strategic planning process with the ultimate objective to promote long-term rate sustainability. The Study is based on information provided by Department staff including, but not limited to, the number of residential properties assessed for collection and disposal service, historical waste deliveries to County facilities, historical financial operating results, budgetary information, capital plans, operating reports for the County's waste -to -energy ("WTE") facility, long-term liabilities associated with future closure of the County's landfills, and other financial and statistical information. Following this letter is a report detailing the principal assumptions, findings, and recommendations of this analysis including an executive summary. 341 N. Maitland Avenue, Suite 300 Maitland, FL 32751 www.raftelis.com Ms. Pamela S. Keyes, P.E. Lee County Solid Waste Department March 5, 2020 Page 2 Principal Findings and Recommendations: Based on the assumptions and analyses reflected in this report, which should be read in its entirety, we are of the opinion that the current rates of the Department will not be sufficient to meet the projected revenue requirements of the Department for the Forecast Period. The following provides a brief summary of the key findings and recommendations of the Study: Waste generation per capita has outpaced population growth since 2010. Waste deliveries have grown by approximately 3.0% a year through the Fiscal Year 2019 (adjusted to exclude Hurricane Irma), while population growth averaged approximately 1.8% over the same period. It is assumed that the greater rate of growth in waste generation is due to increased economic activity. Recognizing we may be at or approaching a peak in the business/economic cycle, the forecast assumes a reduced waste generation growth rate of approximately 0.7% a year for the Forecast Period. The reduced growth rate is conservative for financial planning purposes since it minimizes the dependency on additional revenues from increased tip fees. Operation and maintenance expenses are forecasted to increase over estimated Fiscal Year 2020 levels by approximately 2.9% or $2.6 million annually resulting in an overall increase of approximately $13.0 million in expenses by the Fiscal Year 2025. The increases are due to: o Private contracted service providers, such as the County's contracted franchise collection haulers, WTE facility operators, recycling processing, and other contract services represent the majority or approximately 75% of the total System operating expenses. During the Forecast Period, the majority or $9.8 million of the overall increase in expenses is assumed to be attributable to contract service increases due to: i) continued inflation or indexing not under the County's control pursuant to contractual arrangements for the provision of service; ii) increases to the net cost of processing and marketing recovered curbside recycling; and iii) assumed renegotiation of current collection hauler contracts. o All other operating expenses, including personnel, utilities, maintenance, insurance, and indirect cost allocations, among others, represents approximately 25% of the total operating expenses of the System. During the Forecast Period, approximately $3.2 million of the overall increase in expenses is assumed to be attributable to general inflation in the cost of labor, chemicals, parts and repair, and other operating costs The Study assumes no additional debt issuances and that all capital will be funded using existing reserves or future revenues over the Forecast Period. As a result, the Department's annual debt service payments will remain at the current level of approximately $8.6 million per year. (Remainder of Page Intentionally Left Blank) Ms. Pamela S. Keyes, P.E. Lee County Solid Waste Department March 5, 2020 Page 3 The Study assumes increasing deposits to: i) fund closure deposits; ii) fund budgetary capital outlays; and iii) the Rate Stabilization Fund and operating reserves for future and near -term capital needs of the System. The following table provides a summary of the projected deposits: Closure, Capital, and Rate Stabilization Fund Deposits Projected Fiscal Year Ending September 30, 2020 2021 2022 2023 2024 2025 Rate Stabilization / Reserves $0 $2,251,144 $3,825,048 $5,327,143 $6,902,624 $7,664,516 Capital Outlay $2,576,500 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Net Deposits / Capital Outlay $2,576,500 $4,751,144 $6,325,048 $7,827,143 $9,402,624 $10,164,516 Closure Fund $1,498,572 $689,340 $719,486 $786,937 $843,143 $853,537 The deposits to the Rate Stabilization Fund and operating reserves are expected to promote: i) compliance with the rate covenants (i.e., debt service coverage) as delineated in the Indenture of Trust previously adopted by the County as a condition of the sale of solid waste bonds; and ii) the overall creditworthiness of the System recognizing recent historical declines in debt service coverage ratios (i.e., net revenues / annual debt service). Based on the findings of this Study, the forecasted revenues under existing charges are not anticipated to be sufficient to fully fund the projected increases in the cost of operation, debt service, and capital needs of the System. The following table provides a summary of the identified revenue adjustments for the Forecast Period including a comparison to the Prior Study forecasts: Identified Rate Revenue Adjustments by Fiscal YearEll Adopted Recommended Identified Description 202012] 2021 2022 2023 2024 2025 Disposal Assessment / Tip Fee Rev. Prior Study —FYI 9 Forecast 0.00% 6.00% 6.00% 6.00% 6.00% N/A Current Study — FY20 Forecast N/A 6.25% 5.00% 5.00% 5.00% 4.00% Incremental Revenue Addition N/A $3.21m $2.75m $2.91m $3.07m $2.59m Cumulative Revenue Addition N/A $3.21m $5.98m $8.93m $12.06m $14.72m Collection Assessment Revenues Prior Study — FY19 Forecast 0.00%[31 1.96%131 1.96%131 1.96%131 1.96%131 N/A Current Study — FY20 Forecasti3l N/A 5.24%[31 1.96%131 1.96%131 1.97%[31 1.97%131 Incremental Revenue Addition N/A $1.33m $0.53m $0.55m $0.57m $0.59m Cumulative Revenue Addition N/A $1.33m $1.88m $2.45m $3.04m $3.66m [1] Reflects identified increases to revenues from the collection / disposal assessment and tipping fees for service. Actual increases to customer charges will vary by waste and service. It is important to note that the financial forecast does not assume investment in expanded or new facilities, which is contingent upon Board of County Commissioners approval of the recommendations of the solid waste master plan, with the exception of the landfill expansion. [2] Recommended rate revenue adjustments of approximately 6.0% for disposal from the Prior Study were not adopted. Additionally, increases from the franchised haulers were not passed through. [3] Reflects projected increases in collection for revenue identified to recover estimated cost of contracted collection services which vary by franchised area As can be seen above, the recommended rate revenue increase for the Fiscal Year 2021 is generally consistent with what was previously forecasted in the prior Fiscal Year 2019 Solid Waste Revenue Sufficiency and Rate Study dated July 2019 (the "Prior Study") supporting the adopted Fiscal Year 2019 solid waste collection and disposal assessment, Municipal Service Taxing Unit ("MSTU"), and rates and fees for service. The only exception relates to the Fiscal Year 2021 collection adjustment, which is greater than previously forecasted recognizing that the County deferred collection increases from the prior period. Ms. Pamela S. Keyes, P.E. Lee County Solid Waste Department March 5, 2020 Page 4 • Recommended Fiscal Year 2021 Residential Assessment: o Collection Assessment - Recommend continuing the practice of applying the solid waste collection assessment as a direct pass -through of collection expenses. o Disposal Assessment - Recommend increasing the residential disposal assessment due to increasing MSW waste deliveries per residential property from 0.90 tons to 0.96 tons. o Recycling Fee - Recommend creation of a residential recycling fee of $11.51 per year to be added to the residential disposal assessment to recover the increased net costs associated with recycling operations. It should be noted that the proposed fee does not recover the full net cost of recycling operations. Additionally, under the terms of the existing municipal agreements, the County cannot charge for recycling. Based on discussions with LCU staff, this Study assumes that the result of the current and on -going renegotiation of the municipal agreements would allow the County to charge the proposed recycling fee. The following provides a summary of the overall recommended change to residential assessments for the Franchise Areas 1 through 5. Existing and Proposed Residential Assessment Existing Proposed Annual Increase Area 2020 2021 Amount Percent Area 1 $214.32 $235.71 $21.39 10.0% Area 2 202.94 223.87 20.93 10.3% Area 3 230.57 252.60 22.03 9.6% Area 4 226.98 255.21 28.23 12.4% Area 5 247.07 269.77 22.70 9.2% • Recommended Fiscal Year 2021 Disposal Facility Assessment and Tipping Fees: o In addition to the residential recycling fee per household it is recommended that the Department adopt a recycling tipping fee of $38.12 per ton. o No adjustments to existing tipping fees are recommended for Fiscal Year 2021. Existing and Proposed Tipping Fees Existing Proposed Annual Increase Tipping Fee 2020 2021 Amount Disposal Facility Assessment $17.25 $17.25 $0.00 MSW 50.20 50.20 0.00 C&D 32.95 32.95 0.00 Yard Waste 25.46 25.46 0.00 Recycling N/A 38.12 38.12 Percent 0.0% 0.0% 0.0% 0.0% N/A Ms. Pamela S. Keyes, P.E. Lee County Solid Waste Department March 5, 2020 Page 5 Other Forecast Risks and Considerations: New Disposal Facilities: Due to the growing amount of waste deliveries and limited processing capacity at the waste -to -energy ("WTE") facility, the Department is actively evaluating alternative disposal options through a strategic master planning exercise to better assess the latest technologies, options and alternatives for waste disposal (the "Master Plan"). It is important to note that the financial forecast does not assume any investment in expanded or new waste disposal facilities beyond the currently planned landfill expansion. To the extent that the Department recommends investment in additional facilities, additional rate revenue adjustments above what is currently identified in this Study may be required. Recycling Revenues and Costs: As previously discussed, recent declines in the revenue derived from the sale of recycled materials and increasing costs to reduce contamination and improve quality of the recovered materials has resulted in a material increase to the net cost of recycling. To the extent that the value for local recovered materials declines below what is currently contemplated in this Study, the Department may incur further net increases to the cost of recycling and negatively affect fixture identified rate revenue adjustments. Expiring Interlocal and Contractual Agreements: The majority of the County's agreements for contracted service, as well as, the interlocal agreements for service to municipalities in the County will expire during the Forecast Period of the Study. It should be noted that the current municipal interlocal agreements with the County do not allow the County to charge for recycling service. The County is currently involved in active negotiations to revise the agreement, including provisions that would allow the County to charge for such service. For purposes of this Study it is assumed that the municipalities will agree with such changes, however no agreement has been finalized as of the date of this report. Additionally, the Study assumes continuation of the terms and conditions of other contract services as disclosed in more detail in subsequent sections to this report. To the extent that the County experiences material changes to the assumed terms of renegotiated agreements or contractual operations (i.e., collection contract cost increases) above what is contemplated in this Study, additional rate revenue adjustments above what is currently identified in this Study may be required. The Economy and Inflation: Since the end of the recent great recession, the unemployment rate has significantly improved within the County from approximately 13.9% in 2009 to 2.8% in 2019, as reported in the County's comprehensive annual financial report ("CAFR"). While the current economic expansion currently ranks as the longest in U.S. history, many economists predict the potential for a slow down or possible recession in the near -term. A slowdown in the economy during the Forecast Period could place additional upward rate pressures to disposal -related rate increases due to declining waste deliveries. Additionally, uncertainty surrounding inflation can have a significant effect on the forecast of contracted services, of which many of the agreements include indexing provisions or pass -through provisions to the County. To the extent that waste deliveries decline below projections in the Study or inflation is greater than assumed, additional rate revenue adjustments above what is currently identified in this Study may be required. (Remainder of Page Intentionally Left Blank) Ms. Pamela S. Keyes, P.E. Lee County Solid Waste Department March 5, 2020 Page 6 Based on the current needs of the System and coupled with market conditions, it is recommended that the County consider implementation of the Fiscal Year 2021 rate increases to promote the creditworthiness of the System, fund the identified capital requirements, and mitigate further declines in the fiscal position of the System. It is also recommended that the Department continue to perform annual updates to this Study in order to adjust for changes in actual conditions. As always, we greatly appreciate the opportunity to be of service to the County and would like to take the opportunity to thank staff for their efforts and time in providing the necessary assistance in the provision of data, insight into recent trends, and general guidance in the development of this Study. Sincerely, Thierry A. Boveri, CGFM Senior Manager Nick Smith, CGFM Consultant Attachments LEE COUNTY, FLORIDA FISCAL YEAR 2020 SOLID WASTE REVENUE SUFFICIENCY STUDY TABLE OF CONTENTS Title Page No. Letter of Transmittal Tableof Contents........................................................................................................................ i Listof Tables............................................................................................................................. ii PRIMARY ASSUMPTIONS AND RECOMMENDATIONS ExecutiveSummary................................................................................................................................. 1 Revenue Sufficiency and Cost of Service Methodology............................................................. 1 Principal Findings and Observations............................................................................................ 2 Summary of Recommendations.................................................................................................. 14 Introduction.............................................................................................................................................. 1 Section 1: General Overview................................................................................................................... 1 Facilities.......................................................................................................................................... 2 Waste -to -Energy (WTE) Facility............................................................................. 3 Material Recovery Facility(MRF)........................................................................... 4 Construction and Demolition Debris (C&D) Recycling Facility .......................... 6 Lee / Hendry Regional Landfill............................................................................... 7 CompostingFacility.................................................................................................. 8 Section 2: Enterprise Fund and Revenue Sufficiency Methodlogy...................................................... 9 Section3: Agreements............................................................................................................................10 ContractOperations..................................................................................................................... 10 Franchised Collection Services................................................................................10 Waste -to -Energy Facility (WTE) Operations......................................................... 11 Materials Recovery Facility (MRF) Operations.................................................... 13 Lee / Hendry Regional Landfill Operations.......................................................... 13 -1- LEE COUNTY, FLORIDA FISCAL YEAR 2020 SOLID WASTE REVENUE SUFFICIENCY STUDY TABLE OF CONTENTS (cont'd.) Title Page No. Electric Sales Agreements............................................................................................................ 13 Rainbow Energy Marketing Corporation............................................................... 13 Interlocal Agreements................................................................................................................... 14 City of Bonita Springs and Town of Fort Myers Beach ........................................ 14 Villageof Estero.......................................................................................................14 Cityof Cape Coral.................................................................................................... 15 Cityof Fort Myers.................................................................................................... 15 Cityof Sanibel.......................................................................................................... 16 HendryCounty......................................................................................................... 17 OtherAgreements......................................................................................................................... 17 Lee / Hendry Regional Landfill / Landowner Agreement .................................. 17 Section 4: Solid Waste Assessment and Fees........................................................................................17 Section 5: Historical and Projected Customer / Tonnage Statistics.................................................... 21 Section 6: Revenue Composition and Forecast.................................................................................... 24 Section 7: Revenue Requirements Composition and Forecast............................................................ 25 OperatingExpenses...................................................................................................................... 25 Contracted Collection of Franchise Areas.............................................................. 26 WTE Contracted Operations................................................................................... 28 Financial Effects of Landfill Diversions................................................................. 28 Other Expense Forecast Assumptions.................................................................... 30 Capital Expenditures and Major Maintenance.......................................................................... 30 DebtService.................................................................................................................................. 31 Closure and Post -closure Transfers............................................................................................. 32 Section 8: Revenue Sufficiency and Financial Compliance................................................................. 34 KVDCU042-33\Rpt\SW 2020 Rpt_final3 620 —ii— LEE COUNTY, FLORIDA FISCAL YEAR 2020 SOLID WASTE REVENUE SUFFICIENCY STUDY TABLE OF CONTENTS (cont'd.) Title Collection Revenue Requirements Disposal Revenue Requirements ............................. Bond Resolution and Rate Covenant Compliance. Recommended Financial Targets ..... Section 9: Cost of Service and Rate Design Early Prepayment Discount Customer Impact ................. Rate Comparison Section 10: Recommendations Page No. 35 36 36 38 41 43 43 44 44 KVDCU042-33\Rpt\SW 2020 Rpt_final3 620 -111- LEE COUNTY, FLORIDA FISCAL YEAR 2020 SOLD WASTE REVENUE SUFFICIENCY STUDY LIST OF TABLES Table No. Description ES-1 Dashboard and Summary of Projected Financial Position and Operational Statistics 1 Historical and Projected Assessed Residential Customer Billing Units and Tonnage Statistics 2 Historical and Projected Disposal Facility Assessment Customer Billing Statistics 3 Historical and Projected Waste Flow Summary by Type of Waste 4 Historical and Projected Waste Flow Summary by Disposal Facility 5 Historical and Projected Waste -to -Energy (WTE) Operational Statistics 6 Projected Assessment and Disposal Fee Revenues Under Existing Rates 7 Historical and Projected Electric Sales Revenue 8 Historical and Projected Operating Expenses 9 Projected Operating Expense Escalation Factors 10 Projected Capital Expenditures 11 Projected Annual Debt Service Payments — Accrual Basis 12 Projected Fund Balance and Interest Income 13 Projected Solid Waste Disposal Net Revenue Requirements from Rates 14 Projected Solid Waste Collection Net Revenue Requirements from Rates 15 Projected Solid Waste Disposal and Collection Net Revenue Requirements from Rates 16 Projected Rate Covenant Compliance 17 Historical, Current and Proposed Assessment, Tipping and Gate Fees -1v- LEE COUNTY, FLORIDA FISCAL YEAR 2020 SOLID WASTE REVENUE SUFFICIENCY STUDY EXECUTIVE SUMMARY Raftelis Financial Consultants, Inc. (formerly Public Resources Management Group, Inc. now "Raftelis") was tasked with the preparation of a solid waste revenue sufficiency and rate study on behalf of the Lee County (the "County") Solid Waste Department (the "Department"). The purpose of the study was to: i) prepare a six year financial forecast of operations to determine the sufficiency of existing disposal and collection fees, and other Department revenues to fund necessary expenditures and fund transfers; and ii) allocate costs to the respective fees for service to provide recommendations concerning the level of rates charged for collection and disposal service. The following executive summary is intended to provide a brief overview of the methodology, major findings or observations and recommendations for the study; however, it is encouraged that the report be read in its entirety. Revenue Sufficiency and Cost of Service Methodology The foundation of the study and the primary objective of the solid waste rates are to reasonably recover the cost of providing service, cost of infrastructure investment and compliance with covenants of the outstanding bonds and internal fiscal targets (referred to as the "Revenue Sufficiency" evaluation). Other (Electric, Recycling, etc.) F1 Ensuring adequate cash reserves and appropriate cash flows generally results in a sustainable long-term financial plan that can mitigate the financial and operating risk from unanticipated or sudden events to financial operations (e.g., reduced electric sales, changes in market conditions affecting operations and recovered materials revenues, reduced growth or tonnages, unanticipated or extraordinary outages, unfunded mandates, etc.). The identified revenue requirements to be funded from rates are then allocated among the respective collection and disposal functions. The allocated costs are then assigned to the respective service and rate (e.g., collection, municipal solid waste ["MSW"] disposal, construction and ES-1 demolition ["C&D"] debris disposal, class III disposal, tire disposal, etc.) to determine the estimated cost of service and divided by the billing units to determine the rates for service. The recommended rates are based on the cost of service and are adjusted to reflect the integrated nature of the solid waste operations, incentivizing particular behaviors, or to be comparable to current market rates for service. Principal Findings and Observations The County provides waste disposal service to approximately 730,000 residents within unincorporated and incorporated areas of the County and processed approximately 1 million tons of waste for the most recently completed Fiscal Year 2019. The chart below provides a recent history and forecast of delivered waste tonnages by type: 1,200,000 Waste by Type (Tons) 1,000,000 800,000 600,000 1 � 400,000 ' 200,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ■ MSW / Other Process. ■ C&D / Class III ■ Yard Waste ■ Sludge Recycling (less Rejects) ■ Tires Due to Hurricane Irma, the Department experienced a significant increase to C&D waste deliveries associated with increased disposal of roofing materials. Based on discussions with Department staff, it is expected that more typical C&D waste deliveries will resume in the current Fiscal Year 2020. It should also be noted that the chart above does not reflect any yard waste debris associated with Hurricane Irma since such amounts were processed directly by private contractors which did not enter the County's waste management systems. Excluding one-time increases in C&D waste deliveries associated with Hurricane Irma, it is estimated that waste deliveries have grown by approximately 18,000 tons per year on average since the Fiscal Years 2015 with an overall increase of 72,000 tons or 9%. Waste generation per capita has outpaced population growth since 2010. This is due to the waste delivery growth rate of approximately 3.0% a year exceeding the population growth at approximately 1.8% for the recent historical period. It is assumed that the greater rate of growth in waste generation is due to increased economic activity. Recognizing that we are at or approaching a peak in the business cycle, the forecast assumes maintaining the current waste generation rate per capita, which results in the growth in waste deliveries consistent with the assumed rate of growth in residential customers at approximately 0.7% or 7,000 tons per year for the Forecast Period. The assumed growth rate is considered to be conservative for financial planning purposes since it minimizes the dependency on additional revenues from growth to fund expected near -term increases to operating expenses and capital funding requirements. To dispose of the waste, the County maintains and operates several facilities including a mass burn waste - to -energy ("WTE") facility, materials recovery facility ("MRF"), C&D debris recycling facility, yard waste / tire processing facilities, a composting facility, a regional landfill, and a household chemical waste facility. The WTE facility is currently the primary method of waste disposal for the County and processes in excess of 610,000 tons annually or over 70% of all in -bound processed waste. The chart on the following page indicates the historical and projected utilization of the WTE facility: ES-2 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 Waste -to -Energy Capacity & Processed Waste Projection 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 � Processed Waste MSW Diversions C&D Diversions � Yard Waste Diversion Design Capacity — Through -Put Capacity — — Guaranteed Capacity The County primarily processes MSW, yard waste, MRF residuals, and tires at the WTE facility. As can be seen above, the growth in such waste deliveries is expected to result in growing diversions from the WTE facility to the County's Lee / Hendry Regional Landfill (the "Lee / Hendry Landfill" or "LHLF"). The Department is evaluating disposal options and has prepared a strategic master planning study to better assess the latest technologies, options and alternatives for waste disposal (the "Master Plan"). It is important to note that the financial forecast does not assume investment in expanded or new facilities identified in the Master Plan, with exception of the currently budgeted landfill expansion. To the extent the County approves additional facility expansions or additions identified in the Master Plan (e.g., a new waste -to -energy facility or materials recovery facility), the County would be expected to require additional rate revenue increases above what is currently identified in this Study to secure additional disposal capacity. For more information about waste diversions and deliveries to the Lee / Hendry Landfill, please reference Section 5 of this report. Electricity is generated as a by-product of processing waste at the WTE facility. Historically, the County sold electricity to the Seminole Electric Cooperative Inc. ("Seminole Electric") pursuant to an electric power purchase agreement dated August 15, 2008. Effective January 1, 2017, Seminole Electric terminated the electric sale agreement with the County thereby forcing the County to sell electricity to the open market and other investor owned utilities ("IOUs")Ill. The current market rates per mega -watt hour ("MWh") of electricity sold to the open market is materially lower than the contractual rates included in the prior agreement with Seminole Electric. In terms of annual revenues, at the peak the County generated approximately $20.3 million in electric revenue during the Fiscal Year 2014 and today is forecasted to generate approximately $8.9 million in electric revenue on average for the Forecast Period. While pursuant to federal law the County can sell directly to Florida Power and Light Company, in order to reach a larger market and maximize electric revenue sales, the County entered into a non -firm power purchase, sale, and marketing agreement with Rainbow Energy Marketing Corporation ("REMC") effective November 1, 2016. The agreement allows REMC to represent the County in the sale of electricity to the open market as well as other IOU's under the Public Utility Regulatory Policies Act of 1978 ("PURPA"). [1] PURPA, as amended, requires IOUs to purchase electricity generated by the County's WTE facility since the facility qualifies as a small renewable energy producer, which is defined as an entity not engaged in the electric business and generates renewable energy from a facility of 80 megawatts or less. ES-3 Through the County's various recycling operations including curbside collection, metal separation at the WTE facility, C&D recycling, sale of recoverable materials from household hazardous waste operations (e.g., car batteries, cooking oil, etc.), sale of compost, etc., the County minimizes the amount of waste landfilled, while also generating a revenue stream through the sale of the recovered materials including paper, fiber, plastic, metal, etc. The average value of the material sold has generally been in decline and more recently has resulted in a net cost to the County to recycle pursuant to a contractual amendment to the agreement approved in Fiscal Year 2019. The following chart provides detail of the average monthly commodity price change for the sale of curbside recovered recyclables at the MRF: $160.00 $140.00 $120.00 $100.00 a E° $80.00 $60.00 $40.00 $20.00 $0.00 Average Monthly Commodity Price ($/Ton) for Recycled Materials Sales + Inbound Recycling Tonnage + Contractor's Fee Contractor's Fee 1111111111 Average MefthAxis $�omo)dity Price (Left Axis $/Ton) .--�N NNNNN M MM M M 2'=14-1= 14 n n n n h V']92 f2 nnn n o2 o2 O00202000, 0�c c;, a6ivp,vvp,p+va'gip,p+aria'9iapa�ia'9iP.p'a"is'9iaa"ia'9iP.'a"ia'9iPa Ogw�ti�Ogw�ti�Oqw�ti�Oqw�ti�0PL� Ogw�ti�OgW� olO 4, 11,000 10,000 9,000 8,000 7,000 6,000 5,000 E° 4,000 3,000 2,000 1,000 ■ FY2012 ■ FY2013 ■ FY2014 ■ FY2015 ■ FY2016 ■ FY2017 ■ FY2018 ■ FY2019 As can be seen by the prior chart, the County processes on average approximately 7,000 tons per month of curbside recycling, which is marketed and sold by ReCommunity Holdings II Inc. DBA FCR Florida LLC ("ReCommunity"). Prior to the Fiscal Year 2019, the average monthly commodity price had been greater than the contractor's processing fee, which had resulted in a shared net recycling revenue earned by the County. Based on current market conditions and the recent increase to the ReCommunity processing fee, it is expected to result in a net cost to process recyclables. The following table provides additional detail concerning the recent and projected trends in recovered material revenues, as well as, other revenues associated with operation of the WTE facility for the financial forecast: Summary of Principal Other Operating Revenues for the Historical and Projected Forecast Period Curbside Recycling Ferrous Non -Ferrous Electric Fiscal Revenue Revenue Revenue Net Revenue Year Tons 000s /Ton Tons 000s /Ton Tons 000s /Ton MWh 000s /MWh 2015 82,320 1,636 19.88 19,686 1,484 75.39 2,007 1,675 834.70 329,427 13,739 41.70 2016 85,611 1,609 18.80 24,303 141 5.80 2,410 1,655 686.70 338,309 9,004 26.62 2017 83,321 3,116 37.40 20,114 1,407 69.96 2,409 1,788 742.36 318,509 7,885 24.75 2018 84,127 782 9.29 19,311 2,289 118.52 3,084 1,715 556.16 346,085 9,325 26.94 2019 83,394 0 0.00 17,048 1,169 68.56 2,738 1,154 421.56 341,461 9,489 27.79 2020 84,959 0 0.00 16,775 1,644 98.00 2,694 1,104 410.00 329,587 8,899 27.00 2021 83,095 0 0.00 16,775 1,644 98.00 2,694 1,104 410.00 329,641 8,900 27.00 2022 83,749 0 0.00 16,775 1,644 98.00 2,694 1,104 410.00 329,622 8,900 27.00 2023 84,376 0 0.00 16,775 1,644 98.00 2,694 1,104 410.00 329,604 8,899 27.00 2024 84,979 0 0.00 16,775 1,644 98.00 2,694 1,104 410.00 329,586 8,899 27.00 2025 85,560 0 0.00 16,775 1,644 98.00 2,694 1,104 410.00 329,569 8,898 27.00 ES-4 Beyond investment in recycling -oriented disposal facilities and the challenges associated with increasing net cost of operations, the County invests in public outreach programs and has enacted local regulation to further promote recycling. County Ordinance 07-25 requires the mandatory recycling of commercial and multi -family solid waste and C&D debris. The collective measures by the County, residents, and businesses to recycle have helped in meeting compliance with recycling goals for the State pursuant to Florida Statute 403.706(7) (the "Recycling Regulation"). The goal of the Recycling Regulation is to achieve a recycling rate of 75% by the Fiscal Year 2020. The County has achieved this goal with an overall recycling rate of 77.3% for the most recently reported Fiscal Year 2018, which ranks the County first statewide. The following chart, as reported by the Florida Department of Environmental Protection ("FDEP"), indicates the overall recycling rates for the top 10 most populated counties (in order from least to most populace counties): County Recycling Credits Large Counties (2018) Brevard Polk i Lee Duval Pinellas Orange Hillsborough Palm Beach Broward Miami -Dade Statewide.. 0% 10% 20% 30% 40% 50% 60% ■ Traditional Recycling ■ Beneficially Landfill Gas Credits ■ Renewable Energy Credits Source: https://floridadep.gov/waste/waste-reduction/documents/2018-summary-recycling-credits 70% 80% 90% 1.25x Renewable Energy Credit Adj. As a component of calculating recycling credits, the FDEP recognizes renewable energy credits for energy produced at WTE facilities or from landfill gas production. The renewable energy credits are adjusted by a 1.25x factor if a county's traditional recycling credits meet or exceed 50%. The County's traditional recycling credits were 52.5% for the Fiscal Year 2018 and therefore earned the 1.25x adjustment. In aggregate the renewable energy credit with adjustments increased the County's recycling credits by 24.3%. However, it may be difficult for the County to ultimately maintain the 75% goal under the current FDEP methodology recognizing that: i) the County's existing WTE facility is currently at capacity and the County anticipates disposing of less waste at the WTE facility to promote longevity for the facility, limiting the potential for future renewable energy credits; and ii) to continue to earn the 1.25x renewable energy credit the County must continue to meet or exceed 50% for the traditional recycling credits. The County issued debt in 2006 primarily to fund an expansion of the WTE facility and to refinance certain outstanding debt at that time to achieve interest rate savings through the issuance of the Solid Waste System Revenue Bonds, Series 2006A (the "2006A Bonds") and the Solid Waste System Refunding Revenue Bonds, Series 2006B (the "2006B Bonds" and, collectively with the 2006A Bonds, the "Series 2006 Bonds"). The WTE facility expansion financed by the Series 2006 Bonds increased the waste processing capacity from 1,200 tons per day to 1,836 tons per day. In 2016, the County refinanced the Series 2006A Bonds through the issuance of the Solid Waste System Refunding Revenue Bonds, Series 2016 (AMT) (the "2016 Bonds"). The following page provides a summary of the remaining and projected debt service payments assumed in the Study: ES-5 Summary of Debt Service Payments $12,000,000 $9,000,000 $6,000,000 $3,000,000 $0 ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ■ Series 2016 Bonds As can be seen above, the Series 2016 Bonds will be fully repaid by the Fiscal Year 2027, which is beyond the Forecast Period and which will provide a benefit by adding additional bonding or leveraging capacity for future capital improvements identified by the Master Plan. As previously discussed, no additional debt issuances are assumed for the Forecast Period. Finally, and with respect to the cost of operating expenses, the Study assumes an average annual growth rate of approximately 2.9% a year above the Fiscal Year 2020 budgeted levels. The increase is primarily due to: i) incremental growth in expenses due to changes in contractual operations for recycling operations; and ii) uncontrolled increases in the cost of contracted operations and collection as set by agreement (indexing of contract costs is customary in the industry). The following table provides an indication of the revenue sufficiency and recommended / identified rate adjustments for the Forecast Period: (Remainder of Page Intentionally Left Blank) ES-6 Disposal Net Revenue Requirements and Revenue Sufficiency ($1,OOOs) [I] Projected Fiscal Year Ending September 30, Description 2020 2021 2022 2023 2024 2025 Operation and Maintenance Expenses [2] $60,858 $61,535 $63,216 $65,035 $66,918 $69,179 Annual Debt Service: Series 2016 Bonds $8 558 $8 564 $8 575 $8 589 $8 596 $8 595 Transfers and Capital [3] Gross Revenue Requirements Less Income / Funds from Other Sources: Investment Income Net Electric Revenue Franchise Fees - County Franchise Fees - Municipalities [2] WTE Ferrous / Non-ferrous - County WTE Ferrous / Non-ferrous - Covanta [2] Miscellaneous Revenue Compost Sales Other Revenues [4] Total $4,075 $5,440 $7,045 $8,614 $10,246 $11,018 $73,491 $75,540 $78,835 $82,238 $85,759 $88,792 $1,052 $1,480 $1,439 $1,388 $1,336 $1,336 8,899 8,900 8,900 8,899 8,899 8,898 2,129 2,116 2,160 2,203 2,244 2,284 571 584 596 608 619 630 1,374 1,374 1,374 1,374 1,374 1,374 1,374 1,374 1,374 1,374 1,374 1,374 1,865 1,894 1,924 1,955 1,987 2,019 300 300 300 300 300 300 40,082 3,028 3,058 3,087 3,114 3,141 $57,647 $21,052 $21,126 $21,188 $21,247 $21,357 Net Disposal Funding Requirements $15,844 $54,488 $57,709 $61,051 $64,512 $67,435 Existing Assessment and Tip Fee Revenue $50,047 $51,283 $51,728 $52,117 $52,450 $52,717 Current Period Rate Revenue Adjustments [5] n/a 6.25% 5.00% 5.00% 5.00% 4.00% Adjusted Disposal Revenue $50,047 $54,488 $57,709 $61,051 $64,512 $67,435 Surplus / (Deficiency) [6] $34,203 $0 $0 $0 $0 $0 [1] Amounts shown derived from Table 13 at the end of this report. Totals may vary due to rounding. [2] Amounts shown include the gross expenses of the system, including the cost of shared or remitted revenues such as, franchise fees collected on behalf of the County and shared electric revenues due to the County's contracted WTE facility operator. [3] Reflects transfers to the landfill closure fund, transfers to the recycling fund from recovered materials revenues and funding for certain capital equipment identified from the capital program. [4] Includes revenues from advance disposal fees related to the C&D ordinance, contracted disposal of sludge and other miscellaneous revenues. For the Fiscal Year 2020 amounts shown include reimbursements for Hurricane Irma debris removal and facility damages. [5] Reflects the current period percent (%) increase in disposal revenues. [6] Reflects assumed transfers to / (from) operating reserves. As can be seen above, the existing disposal assessment and tipping fee revenues are not projected to be sufficient to fund the disposal -related revenue requirements of the System due to increases in the cost of operation and declines in other operating revenues (e.g., recycling and electric revenues) which serve to offset the funding requirements of the disposal assessment and fees. With respect to the collection system operations and revenues, the following table provides an indication of the revenue sufficiency and recommended / identified rate adjustments for the Forecast Period: (Remainder of Page Intentionally Left Blank) ES-7 Collection Net Revenue Requirements and Revenue Sufficiency ($1,000s) [1] Projected Fiscal Year Ending September 30, Description 2020 2021 2022 2023 2024 2025 Operation and Maintenance Expenses $25,309 $26,728 $27,591 $28,464 $29,348 $30,247 Annual Debt Service 0 0 0 0 0 0 Transfers and Capital 0 0 0 0 0 0 Gross Revenue Requirements $25,309 $26,728 $27,591 $28,464 $29,348 $30,247 Less Income / Funds from Other Sources: Investment Income $0 $0 $0 $0 $0 $0 Contracted Fines [2] 25 25 25 25 25 25 Total $25 $25 $25 $25 $25 $25 Net Collection Funding Requirements $25,284 $26,703 $27,566 $28,439 $29,323 $30,222 Existing Collection Assessment Revenue $25,044 $25,374 $25,690 $25,994 $26,285 $26,566 Rate Revenue Adjustments [3] N/A 5.24% 1.96% 1.96% 1.97% 1.97% Adjusted Disposal Revenue $25,044 $26,703 $27,566 $28,439 $29,323 $30,222 Net Transfers To / (From) Reserves [4] ($240) $0 $0 $0 $0 $0 [1] Amounts shown derived from Table 14 at the end of this report. Totals may vary due to rounding. [2] Reflects minor revenues from fines related to the monitoring of contracted collection. [3] Reflects the current period percent increase in collection revenues. [4] Reflects assumed transfers to / (from) reserves. As can be seen above the existing collection component of the assessment revenues are projected to be insufficient beyond the current Fiscal Year 2020 due to assumed and expected increases to the cost of contracted collection. Based on implementation of the identified rate revenue adjustments and recognizing the assumptions made for purposes of this Study, which should be read in its entirety, the Department is expected to maintain compliance with the requirements of Resolution No. 16-08-10 adopted August 16, 2016 (the 'Bond Resolution"), which authorized the issuance of the outstanding bonds. The following chart provides the projected calculation of debt service coverage[21 compliance with the rate covenant as delineated in the Bond Resolution: (Remainder of Page Intentionally Left Blank) [2] The calculation of coverage recognizes Gross Revenues less operating expenses (exclusive of depreciation, amortization or closure expenses) should produce net revenues at least equal to 100% of the annual debt service and required transfers. ES-8 Bond Resolution Debt Service Coverage (Net Revenues) 300% 541% 250% i �ni � 1 poi 226% 226% 200% 150% 109% 100% 50% 0% 2020 2021 2022 2023 2024 2025 � w/o Rate Stab. / IRMA Bond Resolution Coverage — Minimum Target - - Forecast Target Prior to the Fiscal Year 2016, the Department had experienced recurring declines in the debt service coverage and resulted in a credit rating downgrade by Moody's Investor Service ("Moody's") from A3 to Baal [31. In response the County adopted a series of rate adjustments over the last several years, which have significantly improved the net revenues of the System. As can be seen from the chart above and based on the assumptions as delineated in this study, the recommended and identified rate revenue increases are projected to produce sufficient Net Revenues, as defined in the Bond Resolution, to generate debt service coverage equal to or above the minimum target for the entire Forecast Period. With respect to the liquidity (cash position) of the system, the Study assumes targeting overall unrestricted cash reserves equal to 12 months of operating expenses. The target is based on the Moody's credit surveillance opinion dated December 21, 2015, which had indicated that the Department could face a further credit rating downgrade should debt service coverage fall below 1.0 times and / or unrestricted cash reserves fall below 12 months operating expenses. The following table provides a summary of the projected cash reserves by fund: (Remainder of Page Intentionally Left Blank) [3] Moody's provides the following rankings for investment grade credits from highest to lowest as follows: Aaa, Aal, Aa2, Aa3, Al, A2, A3, Baal, Baa2, Baa3. ES-9 Projected Ending Fund Balance ($1,000s) Fiscal Year Ending September 30, Description 2020 2021 2022 2023 2024 2025 Fund 40100 - Operations $7,417 $7,417 $7,417 $7,417 $7,417 $7,417 Fund 40120 - Subaccount - R&R 3,396 3,396 3,396 3,396 3,396 3,396 Fund 40110 - Subaccount - System Reserve Fund 40,199 36,410 34,445 32,188 33,432 35,088 Fund 40103 - Rate Stabilization 26,250 26,250 26,250 23,250 20,000 20,000 Fund 40106/32 - System Reserve Fund - CIP 8,194 8,194 8,194 8,194 8,194 8,194 Fund 40107 - Closure Fund 13,047 13,938 14,872 15,888 16,975 18,090 Fund 40162/63/64 - Debt Service - Sinking 7,324 7,482 7,653 7,835 8,018 8,202 Fund 40170/71- Debt Service - Reserve 7,708 7,708 7,708 7,708 7,708 7,708 Total Projected Available Fund Balances $113,535 $110,795 $109,934 $105,875 $105,140 $108,095 Cash Reserve Target Compliance: Projected Fund Balance Less Restricted Funds [*] $98,481 $95,582 $94,551 $90,310 $89,392 $92,162 12 Months Operating Expenses 86,167 88,264 90,807 93,499 96,266 99,426 Amount Above or Below Target $12,313 $7,318 $3,744 ($3,190) ($6,874) ($7,265) [*] Amounts shown exclude debt -related funds and customer deposits. Although landfill closure reserves are restricted for purposes of this analysis such funds are considered to be available for the needs of the System recognizing that the restriction is established by the Board of County Commissioners action and such funds could be available during times of need or emergency should the Board of County Commissioners unrestricted such funds. As can be seen from the table above, it is projected that cash reserves are expected to generally hold constant during the Forecast Period but falls approximately 7% below the minimum targeted cash reserves equal to 12 months of operating expenses. The shortfall is expected to improve over time. For purposes of this analysis and based on discussions with Department staff, Raftelis has assumed certain minimum financial performance metrics based on industry best practices in order to maintain and ultimately improve the creditworthiness of the System. The following provides a summary of the principal minimum financial metrics relied upon in development of this Study: Net Revenues providing an annual debt service coverage ratio equal to or greater than 1.2x; 2. Operating cash reserves equal to or greater than 150 days of operating expenses to provide for necessary working capital and a hedge against declines in other operating revenues (e.g., electric revenues); Capital cash reserves at the greater of either: 6.0% of prior year's reported depreciable assets (e.g., roughly equal to two years of depreciation equivalent); or b. The average annual cost of the identified five year or 10-year CIP. 4. Landfill closure reserves equal to at least the reported liability for closure plus one year of long-term care costs incurred subsequent to the closure of the landfill; Maximum amount of system outstanding debt to gross revenues ranging from 4.Ox to 6.0x; and 6. Minimum amount of capital reinvestment to the System equal to five percent of prior year's Gross Revenues, excluding collection revenues, or as may be determined by the County's consulting engineers. For additional information concerning compliance with these financial targets, please reference Section 8 of this report. Based on the recommended financial targets, projected cost of revenue requirements and ES-10 identified rate adjustments, the net system revenue requirements were evaluated relative to the current rate structure comprised of: • Residential Collection and Disposal Assessments; • Disposal Facility Assessment; • Assessed Billing Charge; and • Tipping Fees by Type of Waste. Costs were allocated by budgetary line item to the various charges based on a rational nexus among the costs and the respective fees. Adjustments to the allocated rates were then made to recognize benefits of an integrated solid waste operation, market comparisons, pricing incentives to discourage out-of-town waste, and general rounding of rates for ease of billing. For additional detail concerning the methodology, allocation and design of the proposed Fiscal Year 2021 rates please reference Section 9 of this report. (Remainder of Page Intentionally Left Blank) ES-11 The following table provides a brief summary of the primary residential assessments and tipping fees recommended for the Fiscal Year 2021: Summary of Historical, Existing, and Recommended Rates Historical Existing Recommended Description 2019 2020 2021 Assessments: Collection (Avg. Areas 1-5) [1] $145.62 $145.62 $152.66 Disposal MSW [2] 45.18 45.18 48.19 Disposal Yard Waste [3] 6.62 6.62 6.62 Disposal Facility Assessment Charge [2] 15.53 15.53 16.56 Recycling Fee [4] 0.00 0.00 11.05 Surcharges 0.00 0.00 0.00 Billing Fee 2.45 2.45 2.45 Early Prepayment Gross Up (4%) 8.97 8.97 9.90 Gross Assessment Average for Areas 1-5 [5] $224.37 $224.37 $247.43 Assessment Paid in February = 1 % Discount $222.13 $222.13 $244.95 Assessment Paid in January = 2% Discount 219.88 219.88 242.48 Assessment Paid in December = 3% Discount 217.64 217.64 240.00 Assessment Paid in November = 4% Discount 215.40 215.40 237.53 Tipping Fees per Ton by Waste Type MSW [6] $50.20 $50.20 $50.20 Horticulture / Yard Waste 25.46 25.46 25.46 C&D 32.95 32.95 32.95 Class I11 32.95 32.95 32.95 Tires 80.00-120.00 80.00-120.00 80.00-120.00 Recycling N/A N/A 38.12 Surcharges per MSW Ton [6] [7] $0.00 $0.00 $0.00 Disposal Facility Assessment per Ton [8] $17.25 $17.25 $17.25 [1] Amounts shown reflect the average fee charged for the franchise collection areas 1-5. The recommended Fiscal Year 2021 collection rates reflect the unified cost of contracted collection per residential single-family dwelling unit. [2] County assesses residential customers the MSW disposal and the Disposal Facility Assessment based on the following waste generation assumptions: FYI - 0.90 tons FY20 - 0.90 tons FY21- 0.96 tons [3] County assesses residential customers the Yard Waste Assessment based on the following waste generation assumptions: FYI - 0.26 tons FY20 - 0.26 tons FY21- 0.26 tons [4] County will assess residential customers the Recycling Fee based on the waste generation assumption of 0.29 tons per unit for Fiscal Year 2021. [5] Reflects gross assessments before early prepayment discounts as allowed by Florida Statutes, Chapter 197. [6] Unincorporated waste generated by commercial and multi -family customers is charged a gate fee per ton including the addition of the base ripping fee plus applicable surcharges per ton for MSW deliveries. Currently the County does not charge for any surcharges. [7] Amounts shown are not charged to municipal customers, with exception to Fort Myers Beach, Bonita Springs, and the Village of Estero for which the County provides collection services and assess any applicable surcharges pursuant to interlocal agreement. Currently the County does not charge for any surcharges. [8] Presented for informational purposes only since the disposal facility assessment charge is charged to all customers by assessment and to Hendry County as part of their gate fee. The bill for residential solid waste collection and disposal is collected by non -ad valorem assessment included on the ad valorem tax bill as allowed by Florida Statutes, Chapter 197, which provides a reliable basis for solid waste services and the ability to lien a property for non-payment. As can be seen above the overall residential collection and disposal assessment for unincorporated residents of the County include a mark-up to the calculated fee for the early payment discount that is extended to customers as part of the ad valorem billing process (pursuant to Florida Statutes, customers may elect to receive a discount of up to 4% if they pay all of the charges and taxes included on the ad valorem tax bill prior to the due date of the bill). Therefore, if the full 4% discount is recognized by a property owner (the majority of the property owners elect to pay early and obtain the 4% discount), the County will collect the full rate for service (after the discount is applied); the mark-up of fees included on the ad valorem tax bill is customary and allows ES-12 the solid waste enterprise fund to fully collect the fees for service. As can be seen from the prior table, the residential solid waste charge for collection and disposal services is expected to increase by approximately $23 or $1.92 per month for the Fiscal Year 2021. Disposal cost increases for residential customers within municipalities (excluding residents of the City of Bonita Springs, the Town of Fort Myers Beach, and the Village of Estero) served by the County may see their annual charges increase (excludes collection increases) by approximately $16[41 a year or $1.31 per month. The following table provides a summary of comparable fees charged by other Florida Counties for collection and disposal service to the existing and proposed fees for the County: Solid Waste Fee Comparison with Other Florida Systems Residential Assessment Tipping Fees Description Collection Disposal Total MSW C&D Yard Waste Tires Lee County -Existing [1] [2] $130.25 - $174.38 $72.68 $202.93 - $247.06 $50.20 $32.95 $25.46 $80.00-$120.00 Lee County -FY21 [1] [2] $135.46 - $181.36 $88.41 $223.87 - $269.77 $50.20 $32.95 $25.46 $80.00-$120.00 Other Systems with Waste -to -Energy Facilities: Broward County [3] N/A N/A $270.00 N/A $50.00 $50.00 $110.00 Hillsborough County [4] $131.43 $102.89 $234.32 $73.22 $62.38 $37.06 $115.00 Miami -Dade County [5] N/A N/A $484.00 $63.38 $63.38 $63.38 $114.18 Palm Beach County [4] $170.00 - $334.00 $175.00 $345.00 - $509.00 $42.00 $52.00 $30.00 $55.00 Pasco County [4] $206.72 $72.00 $278.72 $65.69 $65.69 $65.69 $200.00 Pinellas County [4] N/A N/A $192.00 $39.75 $39.75 $39.75 $75.00 City of Tampa [4] N/A N/A $418.92 $71.00 $51.00 $71.00 $110.00 Systems without Waste -to -Energy Facilities: Charlotte County [2] $165.00 $50.73 $215.73 $37.60 $37.60 $37.60 $120.12 Collier County [4] N/A N/A $209.87 - $217.50 $72.82 $81.48 $48.51 $198.99 Hernando County [4] $172.80 $69.40 $242.20 $54.50 $45.00 $20.00 $100.00 Manatee County [4] N/A N/A $171.96 $40.00 $61.00 $40.00 $86.00 Polk County [2] $144.50 $44.00 $188.50 $36.50 $36.50 $22.00 $300.00 Sarasota County [2] N/A N/A $159.48 $57.56 $54.00 $41.37 $158.60 Other System Averages $204.75 $85.67 $305.17 $54.67 $54.04 $44.51 $137.18 [1] Amounts shown for the residential assessment reflect the gross assessment before early prepayment discounts. The billing charge is included as a component of the residential disposal assessment. [2] Denotes residential collection service at one day per week for garbage, recycling and yard waste collection. [3] Broward County residential collection includes two days per week for garbage collection, one day per week for recycling collection and one day per month yard waste collection. [4] Denotes residential collection service at two days per week for garbage collection and one day per week for recycling and yard waste collection. Note garbage collection service in Pinellas County is for one or two days per week depending on location. [5] Miami -Dade County residential collection service includes two days per week for garbage / yard waste collection and one day every other week for recycling collection. As can be seen above, the County's proposed rates being recommended for adoption by the Board of County Commissioners ("BOCC") for the Fiscal Year 2021 are projected to remain comparable to and / or below the average charged by the other surveyed counties for similar solid waste service. [4] Note that residential customers within municipalities are responsible for collection services within their boundaries and pay a separate charge for collection directly to the municipality. Amounts shown reflect only the estimated increase in cost to the average residential customer if they were to pay the County's proposed MSW and yard waste tipping fee and the assumed Disposal Facility Assessment charge per ton of delivered waste. Actual impacts to residential customers may vary due to fee application through MSTU or assessment. ES-13 Summary of Recommendations Based on the findings of this study the following observations and recommendations are provided for consideration by the BOCC and County administration: The existing disposal and collection fees for service are projected to be insufficient to fund the identified funding requirements of the System and it is recommended that the BOCC consider adopting and implementing the recommended rates for the Fiscal Year 2021; Recognizing the uncertainty surrounding changes in market conditions and pricing for recyclables, and the timing of the need for additional disposal capacity, staff should continue to closely monitor and perform annual financial projections to assess the sufficiency of System revenues to meet the expenditure needs of the System and for compliance with the rate covenants and flow of funds requirements delineated in the Bond Resolution and need for additional rate adjustments; and County should continuously review and update the financial plan to evaluate trends in service area growth, solid waste elements, costs, and capital reinvestment and financing to ensure compliance with the Rate Covenants contained in the Bond Resolution, promote the overall creditworthiness of the System and limit financial risk, and provide for long-term rate sustainability. (Remainder of Page Intentionally Left Blank) ES-14 LEE COUNTY, FLORIDA SOLID WASTE REVENUE SUFFICIENCY AND RATE STUDY INTRODUCTION On behalf of the Lee County Solid Waste Department (the "Department"), Raftelis Financial Consultants, Inc. ("Raftelis") was tasked with the preparation of a six year revenue sufficiency and rate study of the integrated solid waste management system (the "System") encompassing the Fiscal Year 2020 beginning October 1, 2019 (the current budget year) through Fiscal Year 2025 ending September 30, 2025 (the "Forecast Period"). Specifically, Raftelis was tasked with: • Updating the financial forecast model to analyze the financial and business activities of the Solid Waste Enterprise Fund, including evaluating anticipated changes over -time to the following components of the enterprise operations: o Growth or declines in assessed units and waste tonnage deliveries by customer type, category of waste and disposal facility; o Capacity utilization of the County's disposal facilities; o Inflation of expenses or changes in System operations affecting costs; o Contractual operating expenses and shared revenues; o Long-term liabilities for landfill closure and post -closure costs; o Capital funding requirements and issuance of additional debt; o Cash reserves and investment income recognized by fund type and purpose (e.g., operating versus capital funds); and o Compliance requirements of the System, including financial assurance requirements of the Florida Statutes from landfill closure and the rate covenants associated with the outstanding debt. • Evaluation of the System's overall financial position and recommended financial management policy. This report provides a summary of the recent trends, study methodology, principal assumptions, findings, and an overview of the projected financial position of the Department. SECTION 1: GENERAL OVERVIEW The Department is responsible for the disposal of solid waste for approximately 730,000 residents throughout the County and contractually responsible for disposal of waste deliveries from Hendry County associated with the shared Lee / Hendry Regional Solid Waste Disposal Facility (the "Lee / Hendry Landfill" or "LHLF"). The Department typically processes approximately 880,000 tons of solid waste annually comprised primarily of. i) garbage or class I waste (also referred to as MSW); ii) horticulture or yard waste; iii) single -stream recycling; iv) class III waste (i.e., waste that does not leach) and construction and demolition debris; and v) biosolids or sludge from wastewater treatment plant operations. -1- Facilities The County has received numerous awards and recognition of the System's facilities and staff operations, which represent both a significant achievement and investment made by the County and staff. The operations and facilities for the County are oriented towards minimizing landfilling of waste and promoting recycling. For the Fiscal Year 2018, the County achieved a recycling credit rate of 77.3%, which ranks first statewide. To achieve the high rate of recycling, the County provides once a week residential single -stream recycling collection, receives renewable energy credits for waste disposal at the waste -to -energy facility, and has adopted ordinances which require mandatory recycling for commercial and multi -family residential waste, as well as mandatory recycling of C&D wastes. The following section provides an overview of the primary disposal facilities. The Buckingham Campus shown above provides synergies for the integrated solid waste management system and includes the collocated WTE, MRF, C&D Recycling, MSW transfer station (not pictured), fleet maintenance, tire and yard waste processing facilities. Not shown are the County's other disposal facilities including: Lee / Hendry Landfill, compost facility, household chemical waste, and Hendry County transfer stations. (Remainder of Page Intentionally Left Blank) -2- Waste -to -Energy (WTE)Facility The County's WTE facility is the primary means of disposal for all inbound waste. During the Fiscal Year 2019, the County burned approximately 620,000 tons of waste or approximately 64% of the total inbound waste delivered. Waste burned at the WTE facility is referred to as processable waste and is primarily comprised of MSW, yard waste, residuals from residential and C&D recycling programs, and some tire waste. Burning waste produces approximately 535 kWh (kilowatt-hours) of net electricity per ton on average, while reducing the total volume and weight of MSW by 90% and 75%, respectively. This means burning 30 tons of waste results in enough electricity to power a typical residential home in Florida for one year and producing a dense ash by-product that weighs approximately 7.5 tons but has the same volume as only 3 tons of MSW. The following diagram provides an overview of a typical WTE facility operation: IN-1 " COMBUSTION MATERIAL PROCESS MIA • � _ A Reduce R, R. Raoycb Source: www.deltawayenergy.com POWER GENERATION END PRODUCTS S, Gen<roloi brbino � 0 O , _ Cooler Heating Dewlinixofion .^r.,y pryer '^I I^I III1If�IIIII o1C 02 V Fly A;h 1' ENVIRONMENTAL CONTROLS Grate FO" ?. L°ndfill f '.................................► s Botlom Azh Mefol; �.� ........................... Age�ee�e In addition to the production of electricity and significant reduction in the volume of waste landfilled the WTE also recovers ferrous and non-ferrous metals, which are sold and recycled to help offset the cost of operation. The Florida Department of Environmental Protection (the "FDEP") provides a recycling credit for each MWh of energy production equal to one ton of recycling waste. For the Fiscal Year 2018, the County generated a gross electrical production of 0.63 MWh (megawatt -hours) per ton processed resulting in a 0.63 recycling credit for every ton burned. It should be noted that if the County achieves a traditional recycling rate above 50% (excluding waste burned at the WTE), which it did in Fiscal Year 2018, the credit for electrical production is equal to 1.25 tons per MWh of energy production. The facility operates seven days a week and 24 hours a day through a contractual agreement with Covanta Lee Inc. ("Covanta"). The agreement was amended in 2006 for the expansion of the current WTE from 1,200 tons per day to the full design capacity of 1,836 tons per day. The expansion was primarily funded by the issuance of the Series 2006 Bonds. The agreement with Covanta is valid through November 30, 2024 and identifies, among other things, that: i) a minimum amount of waste must be delivered by the County (the "Guaranteed Tonnage") and processed by Covanta (the "Process Guarantee"). The Process Guarantee -3- by Covanta is equal to 569,619 tons annually (assuming no uncontrollable events impairing operations). The Guaranteed Tonnage is established annually by written notification from the County to Covanta 90 days prior to the start of the subsequent Billing Year and must be less than or equal to the Process Guarantee; ii) Covanta is contractually responsible for the operation, maintenance, renewal and replacement of the facility and has certain performance guarantees related to the use of energy, materials and supplies required for the operation of the WTE facility; and iii) Payment to Covanta is primarily comprised of an increasing service fee based on the amount of waste processed plus revenue sharing provisions equal to 10 percent of electrical energy sold and 50 percent of any ferrous and non-ferrous metal sales. Recognizing the WTE facility is the primary means of disposal for the County it is important to note the associated risks to operations. A primary concern of operation is related to a prolonged failure of equipment due to an uncontrolled circumstance or other event impairing the function of the facility, which would result in the lack of electrical production and / or inability to process waste at the WTE. The County can divert waste to the Lee / Hendry Landfill under such circumstances but would increase the cost of disposal associated with transport and disposal, which was estimated at approximately $31 per ton pursuant to a March 2013 memorandum by the Department's then legal counsel, R. Stuart Broom (the "Broom Memo"). Pursuant to the Broom Memo, a similar event occurred to the Stanislaus Resources Recovery Facility in California in late 2011 from a failure of the generator resulting in a lack of electrical generation for an 11-month period. For reference, the County generated approximately $9.5 million in net electric revenue sales for the Fiscal Year 2019. Other risks identified in the Broom Memo include the contractual obligation to pay Covanta for the guaranteed waste deliveries, as well as, a loss of parasitic electrical production from a loss in operation of the generators at the WTE facility requiring the purchase of electricity and gas for the continued burning of waste. As a result, it is important that the County maintain adequate reserves to provide financial margins to account for the potential catastrophic or uncontrollable prolonged facility outages. Recommendations concerning Department reserves are discussed in more detail in subsequent sections to this report. Material Recovery Facility (MRF) The County's MRF is collocated with the WTE at the Buckingham Campus and is responsible for the processing all the County's single -stream recycling materials, which have averaged approximately 84,000 tons for the last five years. The MRF operates using electricity produced by the WTE facility. During processing, not all materials can be recycled resulting in residuals that are routed to the WTE facility to be burned. The MRF recycling residuals have approximated 19% of total inbound recycling materials, with an increasing trend, over the last five years. The FDEP provides credits for every ton of recycled waste. The following illustration provides an overview of the facility equipment and sorting stations. (Remainder of Page Intentionally Left Blank) -4- The processing facility is equipped with an electronically controlled conveyor belt, an optical sorter, several screens, and magnets that sort the recyclable material by product. The MRF can process up to 30 tons of recyclable material per hour. Operations for the County's MRF is contractually provided by ReCommunity Holdings ("ReCommunity") and are responsible for the processing, recycling, marketing, and sale of recycled materials. The prior agreement for operation of the MRF was extended through September 30, 2017. The County entered into a new agreement with ReCommunity effective October 1, 2017 through September 30, 2022, which was recently amended on November 27, 2018 affecting service beginning October 1, 2018. Pursuant to the amended service agreement, the contractor is paid an operations and maintenance (O&M) fee by the County, which is netted against the revenue from the sale of recyclables. Pursuant to discussions with Department staff, due to recent near -term changes in market conditions, the processing fee to the contractor was recently increased to help offset the greater processing costs due to increased labor to improve the quality of recovered materials to ensure the County can continue to market and sell recovered materials. The County shares in any revenue generated from the sale of recyclables above the contractor's fee with 85% of such revenues allocable to the County and 15% to the contractor. The chart below provides an illustration of the recent values for recycled materials relative to the contract price. (Remainder of Page Intentionally Left Blank) -5- 5160.00 $140.00 5120.00 5100.00 H580.00 $60.00 540.00 520.00 50.00 Average Monthh, Commodity Price (S/Ton) for Recycled Materials Sala + Inbound Recycling Tonnage + Contractor's Fee irbowund R� R' M to taQoaoQwa o¢ 11,000 10,000 9,000 8,000 7,000 6,000 5,000 H 4,000 3,000 2,000 1,000 ■ FY2012 ■ FY2013 ■ FY2014 ■ FY2015 ■ FY2016 FY2017 ■ FY2018 FY2019 As shown above, when the average monthly commodity price (shown as bars) falls below the contractor's fee (shown as dotted line), the County does not share in any revenues from the sale of recovered materials. During the Fiscal Year 2011 the County reported approximately $3.0 million in revenue, however recycling was a net expense in Fiscal Year 2019 and is the first year in recent history in which the County had not produced a revenue in excess of the contractor's processing fee. For purposes of this Study no recycling revenues derived from the sale of recovered materials is assumed during the Forecast Period, however, should the County generate any such revenue, such amounts could be used to fund additional future capital needs. Construction and Demolition Debris (C&D) Recycling Facility The County's C&D recycling facility is collocated with the WTE and MRF facilities at the Buckingham Campus and is responsible for the recycling of delivered class III and C&D materials, which have averaged approximately 110,000 tons over the last five years. However, it should be noted that the County received higher than average amounts of C&D in Fiscal Years 2018 and 2019 due to repairs related to Hurricane Irma. Of the processed waste in Fiscal Year 2019 approximately 26,300 tons were reported as recovered and recycled or repurposed as a landfill amendment for drainage or road maintenance. Approximately 43,550 tons were burned for energy at the WTE facility and the remainder of the waste that could not be recycled or burned was landfilled. The C&D recycling facility provides a benefit to the County by way of increasing the recycling rate of waste and consequently reducing the amount of landfilled waste. The C&D recycling facility is owned and operated by the County and incorporates mechanical separation and manual separation of materials. The following illustration provides a photograph of the initial mechanical separation of C&D materials: (Remainder of Page Intentionally Left Blank) M C Lee County C&D Debris Recycling Facility shown above. The following link provides a demonstration of the facility in operation: www.youtube.com/watch?v=P4XYXlpvt2D. Lee/ Hend Z Regional Landfill The Lee / Hendry Regional Landfill was constructed and placed in service to support the disposal of waste associated with operation of the System. It is located in Hendry County in close proximity to the County and State Road 82. Over the last five years the Lee / Hendry Landfill primarily disposed of. i) inert ash produced by the WTE facility averaging approximating 159,250 tons annually, C&D and class III waste approximating approximately 58,100 tons annually, approximately 31,200 tons of MSW, and minor amounts of sludge not used for composting. It should be noted that due to the growth in waste deliveries and capacity limitations at the WTE facility, MSW deliveries to the Lee / Hendry Landfill have increased. Additionally, the five-year averages mentioned above include higher than average waste disposal at the Lee / Hendry Landfill in Fiscal Year 2018 due to Hurricane Irma. The following provides an overview of the facility: (Remainder of Page Intentionally Left Blank) -%- The Lee / Hendry Regional Landfill shown above includes an ash monofill, class I and class Ill landfill sites, leachate management and deep injection well, and the County's composting facility. The Lee / Hendry Landfill primary disposal sites include: Ash Monofill: 36 active acres / Fully developed / Permitted capacity utilization = 46%; Class III: 25 active acres / Expandable up to 128 acres/ Permitted capacity utilization = 32%; and Class I: 38 active acres/ Expandable up to 90 acres / Permitted capacity utilization = 61%. The County entered into an interlocal agreement with Hendry County whereby the County is required to receive and dispose of waste generated by residents and businesses within Hendry County. In addition, the County is responsible for the operation and maintenance of two transfer stations located in Hendry County to receive and transfer waste to the County's disposal facilities. Only waste generated within Lee and Hendry Counties may be landfilled at the Lee / Hendry Landfill. As a condition of securing landowner support from adjacent properties for the development of the Lee / Hendry Landfill, the County entered into a separate agreement (the "Hendry Landowner Agreement") which provided for, among other things, limitations on the landfill height, runoff mitigation / setbacks and landfill use being primarily for the disposal of ash and minimal disposal of MSW. Composting Facility The County owns and operates a composting facility at the Lee / Hendry Landfill (shown in the photograph below), which receives approximately 38,000 tons of mulched yard waste and approximately 54,000 tons of sludge to produce approximately 26,000 tons of compost annually. The compost is primarily sold in bulk to local landowners for agricultural uses (e.g., orange groves, etc.). The remaining compost is sold to retail customers in bags or by cubic yard and ton at the County's facilities. El The County s composting facility utilizes specialized equipment, shown above, to periodically turn the mulch and sludge amendment to reduce heat buildup from bacteriological decomposition to more efficiently produce compost for resale. Link for brief demonstration: httns: //youtu.be/szRFHovcAIO The Department operates and is established as an enterprise fund. As such, the enterprise fund must have revenues equal to the cost of services provided by the System and the County must establish rates sufficient to cover the cost of operating, maintaining, repairing and financing the System. According to the Governmental Accounting Standards Board: Enterprise Funds should be used to account for operations that are financed and operated in a manner similar to private business enterprises — where the intent of the governing body is that costs of providing services to the general public on a continuing basis be financed or recovered primarily through user charges. The Department has historically maintained a positive financial position and annually reevaluates the sufficiency of rate / fee revenues through the budgetary and residential assessment setting procedures. The management within the Department is also responsible for evaluation of monthly financial and operating statistics. In order to evaluate the existing and forecasted financial position of the System the following methodology was recognized: An evaluation of the service area requirements for the Department was reviewed. This included an analysis of the recent historical trends in customers served and waste generation tonnage statistics in order to provide: i) a representative forecast of System needs from a financial standpoint; and ii) a projection of rate revenues consistent with the projected service area needs. 2. Collection and disposal service -related costs were independently evaluated in order to determine the sufficiency of the respective collection and disposal fees for services. A revenue and cost allocation review was performed by budgetary line item and reviewed with staff. In A projection of the Net Revenue Requirements funded from disposal fees was analyzed utilizing the following approach: Expenses+Cost of Operation and Maintenance + Capital Expenditures + Fund Transfers / Covenant Compliance — Electric / Other Revenue and Income = Net Revenue Requirements (Funded from Assessment / Tipping Fees) 4. Included as a component of Net Revenue Requirements was the development of a funding plan for the System capital equipment and facility improvements. The funding of these capital expenditures recognized the use of available cash reserves or user fees. Additional debt was assumed to aid in financing new facilities during the Forecast Period. The cash position of the System was evaluated and taken into consideration through the identification of targeted minimum ending cash balances in order to adequately reserve working capital balances for operational risks (e.g., electrical production outages, changes in market values of recyclables, etc.) and provide funds for financing future capital needs of the System. 6. Estimate the necessary annual System rate adjustments that would be required to fund the Net Revenue Requirements and meet the overall financial needs of the System. SECTION 3: AGREEMENTS Approximately 75% of the operating expenses of the System are related to payments to private providers for contractual operations or contracted services. In addition, the County generates a significant portion of revenues through contractual agreements including municipal interlocal agreements for waste disposal and from electrical sales agreement with Rainbow Energy Marketing Corporation. This section provides a brief overview of the principal agreements affecting operations for the County. Contract Operations The principal contractual operating expenses are associated with the solid waste collection services and operations of the various disposal facilities of the System. The following agreements are discussed in order of greater to lesser cost of operation to the System: Franchised Collection Services Franchised collection services represented approximately $25.5 million or 30% of total operating expenses of the System in Fiscal Year 2019. The County has contracted with several waste haulers to collect and dispose of waste for the following six franchised collection areas: -10- Area 1 - Incorporated: South / Bonita Springs, Fort Myers Beach, Village of Estero Area 2 - Unincorporated: Southwest / Captiva, Iona, McGregor Area 2 - Incorporated: Village of Estero Area 3 - Unincorporated: Southeast / San Carlos Area 3 - Incorporated: Village of Estero Area 4 - Unincorporated: Northeast / Leigh Acres, Alva Area 5 - Unincorporated: Northwest / Pine Island, North Fort Myers Area 6 - Unincorporated: Northwest / Boca Grande Collection services include automated collection and are serviced by several private hauling providers. Collection services include once -a -week garbage, yard waste, and recycling collection for single-family residences. Commercial and multi -family customers may contract directly with franchised haulers for service. With exception to commercial and multi -family customers, the County pays the franchise haulers on a monthly basis for collection services. To recover the cost of collection from residents, the County charges an annual collection assessment that varies by service area. Each franchise area is charged an established rate per residential unit, which may be indexed annually. To administer the collection program, the County charges the franchise haulers a franchise fee at 5.5% of the haulers' total collection revenues. With respect to the City of Bonita Springs, the Town of Fort Myers Beach, and the Village of Estero the County remits any associated franchise fee collections to the respective municipalities. To recover the cost of collection from residents the County in turn charges an annual collection assessment that varies by service area. It should be noted that due to the location of approximately 1,250 residences in Boca Grande (Area 6), located on Gasparilla Island, the County has entered into a service extension agreement with Waste Management Inc. of Florida to dispose of collected waste in Boca Grande at the Charlotte County disposal facilities. Waste-to-Enerav Facilitv (WTE) Operations Contract operations for the WTE represent a net cost of approximately $26.1 million (gross expense before revenue sharing = $28.4 million) or 30% of total operating expenses of the System. The County entered into agreement with Covanta Lee, Inc. dated January 31, 2006. The agreement is valid through November 30, 2024, unless otherwise terminated or extended in accordance with the agreement. Covanta is responsible for the operation, maintenance, and repair of the WTE, with exception to repairs related to uncontrollable circumstances such as hurricane, flooding, etc. The agreement provides for certain performance guarantees on behalf of both parties. The County is responsible for providing a minimum amount of processable waste, defined as the Guaranteed Tonnage, which is 569,619 tons (i.e., 85% of WTE design capacity). The County exceeded this requirement during the Fiscal Year 2019 by approximately 53,500 tons or 9% of the guarantee. Covanta has a responsibility to -11- process the tonnage delivered up to the Processing Guarantee as defined by agreement. Covanta also has a maximum performance guarantee on the use of certain materials and supplies used in the burning and generation of electricity. Pursuant to Section 6.01 of the agreement, Covanta is compensated based on the following formula: Service Fee = OM + ETF + PT + EC - RRR - LC +/- MD =/- MA Below is a description of the service fee components. • OM = Operation and Maintenance Charge represents a base fee of $21.4 million for a Process Guarantee of 569,619 during the Fiscal Year 2019, which includes annual allowances for increases to the OM charges for inflation • ETF = Excess Tonnage Fee represents an additional charge per ton of processed waste above the Processing Guarantee of 569,619 to incentivize the additional processing of waste by Covanta. The fee varies based on if the tonnage above the Process Guarantee is below or exceeds 90% Availability of the WTE facility. The ETF represents approximately $1.3 million for the Fiscal Year 2019. • PT = Pass Through Costs represents costs associated with operation of the WTE including electric, water, sewer, reclaimed, taxes, insurance, environmental testing, etc. Beginning in the Fiscal Year 2017, the purchase of chemicals is included as a PT cost. Such amounts are based on actual costs exclusive of any markup for profit and were approximately $3.8 million for the Fiscal Year 2019. • EC = Energy Credit represents sharing in the electric sales revenues generated from the operation of the WTE at 10% of the net electric revenues. The EC was approximately $0.9 million for the Fiscal Year 2019. The shared revenue is deducted from the County's charges. • RRR = Recovered Resources Revenues representing the sharing in the recovered material sales (i.e., sale of recovered ferrous and non-ferrous metal scrap) revenues generated from the operation of the WTE at 50% of the gross sales revenues. Covanta handles marketing and sales of the metals and provides an offset to the County's bill. The County recently upgraded the metal recovery equipment through an improvement to the magnet, which is expected to improve metal recovery separation from wasted ash. The total revenues from the sale of metals were approximately $2.3 million during the Fiscal Year 2019 of which approximately $1.2 million or 50% was remitted to the County by way of a reduction to the County's contract operations charges. LC = Landfill Charge represents a credit to the County for Bypassed Waste (i.e., waste which was processable and which the contractor elected not to process) equal to the tons of Bypassed Waste times the Landfill Charge. MD = Monthly Damages represents credits from Covanta to the County for exceeding performance guarantees on the maximum use of supplies or materials such as dolomitic lime, propane and / or water consumption. -12- MA = Monthly Adjustment represents a true -up performed monthly and at the close of the fiscal year primarily related to the Availability bonus for exceeding 90% Availability. Materials Recovery Facility (MRF) Operations The MRF is contractually operated by ReCommunity doing business as FCR LLC. ReCommunity is responsible for the processing and remarketing of single -stream recycling delivered and processed at the County's MRF facility. The County recently entered into a new contract valid through September 30, 2022 with an option for two additional two-year renewals. For purposes of this analysis, and based on discussions with Department staff, it is assumed that the agreement for recycling operations would be renewed or extended under the current terms and conditions for the duration of the Forecast Period. Pursuant to agreement, ReCommunity must compensate the County monthly for: i) a portion of the recycling revenues derived monthly above the contract fee; ii) a host fee; and iii) all tipping fees on residue generated from operations. The shared revenues with the County are calculated based on the product of the market value or average commodity revenue ("ACR") of the recovered material less the operations and maintenance fee times inbound tons times eighty-five percent (85%). Based on the delivery of recyclables and market value of the recyclables recycling was a net expense during the Fiscal Year 2019. For purposes of this Study, no recycling revenues from the operation of the MRF are assumed during the Forecast Period. Lee / Hendry Regional Landfill Operations Contract operations for the Lee / Hendry Landfill represented a cost of approximately $1.6 million for Fiscal Year 2019 or 2% of total operating expenses of the System. The County entered into agreement with Waste Management Inc. of Florida ("WMI") on February 2, 1994 with an initial 10-year term and an additional 10-year renewal option. Pursuant to information provided by Department staff, the current agreement is scheduled to terminate with no additional renewal options on September 30, 2022. The agreement provides for the reimbursement of actual cost plus (+) an approximate thirty percent (30%) markup for applicable costs plus (+) reimbursement of equipment taxes and other costs of operation plus (+) an indemnity rate of $1.42 per ton of waste landfill by WMI. For the purposes of this analysis, it is assumed that contract operations will continue under current provisions. Electric Sales Agreements Rainbow Energy Marketing Corporation. On November 1, 2016 the County entered into an agreement with Rainbow Energy Marketing Corporation to locate wholesale markets for electric energy and to sell and dispatch energy to such markets. REMC offers three services to the County: i. Short-term Marking Services, which represents services less than 31 days of duration; ii. Long-term Marketing Services, which represents services greater than 31 days and less than 365 days of duration; and iii. Scheduling Services. When REMC enters into a transaction with a customer, REMC purchases energy from the County, which is then sold and dispatched. The County's revenues associated with energy market sales are net of transmission, marketing, and imbalance fees. It should be noted that the Public Utility Regulatory Policies Act of 1978, as amended, requires that all investor owned utilities (IOUs) purchase electricity generated by the County's WTE and conveyed to the -13- grid since the WTE is considered a qualified small renewable energy producer[5]. The projection of gross annual electric revenue sales is estimated at approximately $8.9 million by the end of the Forecast Period. Interlocal Agreements As previously discussed, the County provides waste disposal services to incorporated residents throughout the County. Services to municipalities within the County are provided through interlocal agreements with the Cities of Bonita Springs, Cape Coral, Fort Myers, Sanibel, the Town of Fort Myers Beach, and the Village of Estero. The current interlocal agreements will all terminate September 30, 2020. The County is in process of renegotiating such municipal agreements with the most significant changes assumed to allow the County to begin charging for recycling services and eliminate certain limitations on the ability of the County to raise fees. The County also entered into interlocal agreements with Collier, Charlotte and Hendry County for other purposes as discussed in greater detail below: General / On -Going Negotiation of Interlocal Agreements As of the date of this report, the County and the municipalities are in process of negotiating the terms of the interlocal agreements beyond the Fiscal Year 2020. For purposes of this Study the terms of such agreements were generally assumed to continue with exception to: i) it is assumed that the County would be able to charge municipalities for any net cost of recycling beginning in the Fiscal Year 2021; and ii) the interlocal agreements would not limit the County in terms of passing through any cost of operations. City of Bonita Springs and Town of Fort Myers Beach The City of Bonita Spring's and the Town of Fort Myers Beach entered into the current agreements for collection and disposal services with the County in August 2010 and September 2010, respectively. The term for the agreements shall terminate September 30, 2020 with the option for the parties to renew for up to two additional five-year terms. Pursuant to the terms of the agreement between the parties, the County is and shall be responsible for the collection, billing, customer service, and disposal of MSW, vegetative waste, and residential recyclable material from within the municipalities. The County shall also be responsible for planning and developing additional solid waste disposal capacity and / or facilities that are environmentally sound and economically practical in order to provide disposal services for additional MSW generated by the municipalities due to growth. The municipalities agree, to the extent that it may lawfully do so, to cause its MSW, vegetative waste and recyclable materials to be directed to the County's System, or other County designated facilities, for the term of the agreement. The County is also responsible for providing a collection point for the disposal of household hazardous waste. The County provides equivalent service and charges residents within the municipalities in the same manner as it does the unincorporated residents of the County. It should be noted that: i) the County remits all franchise fee revenues collected from the franchise haulers for the municipalities in Franchise Area 1, including the Village of Estero which is also found in Franchise Areas 2 and 3; and ii) the County is limited by the rate at which it may escalate the MSW tipping fee charged to residents at a not -to -exceed factor of 6% per year from the then established Fiscal Year 2011 MSW tipping fee of $54.00 per ton. Village of Estero The Village of Estero was incorporated during the Fiscal Year 2015 on December 31, 2014. Subsequent to its incorporation the Village of Estero began negotiations with the County in order to continue solid waste collection and disposal activities. On September 7, 2016, the County entered into agreement with Estero under similar terms and conditions as that of the interlocal agreements with the City of Bonita Springs and [5] Defined as an entity not engaged in the electric business which generates renewable energy from a facility of eighty (80) megawatts or less. -14- the Town of Fort Myers Beach. The new agreement will terminate concurrently with the interlocal agreements of the City of Bonita Springs and Town of Fort Myers Beach on September 30, 2020 with the option for the parties to renew for up to two additional five-year terms. Pursuant to the agreement, the County remits any associated franchise revenues back to the Village of Estero. Cit of Coral The City of Cape Coral entered into the current and amended agreement for disposal -only services (i.e., the County does not administer or provide collection services) with the County on November 8, 2011. The term for the agreement shall terminate September 30, 2020 with the option for the City of Cape Coral to renew for up to one additional five-year term. Pursuant to the terms of the agreement between the parties, the County is and shall be responsible for the disposal of MSW, vegetative waste, and recycled materials recovered from within the municipality. The County shall also be responsible for planning and developing additional solid waste disposal capacity and / or facilities that are environmentally sound and economically practical in order to provide disposal services for additional MSW generated by the municipality due to growth. The municipality agrees, to the extent that it may lawfully do so, to cause its MSW, vegetative waste and recyclable materials to be directed to the County's System, or other County designated facilities, for the term of the agreement. The County is also responsible for the administration and collection of household hazardous waste within the municipality. Pursuant to a recent amendment to the interlocal agreement with the City of Cape Coral, the County shall accept all biosolids produced by the City's wastewater treatment facilities per wet ton delivered and charged at the same rate as that charged to the City of Fort Myers, which may be escalated annually as allowed by agreement. The County charges the customers within the municipality through both a Municipal Services Taxing Unit (previously defined as the "MSTU") and a tipping fee for MSW and yard waste delivered to the County. Pursuant to the agreement, the County is limited by the rate at which it may: a) charge customers through the MSTU not -to -exceed 0.5 mils; and b) escalate the MSW and yard waste tipping fee not -to -exceed a factor of 6% per year from the established MSW tipping fee of $55.00 per ton and yard waste tipping fee of $17.60 per ton during the Fiscal Year 2011. The County has since lowered the MSTU and tipping fees below the initial levels established during the Fiscal Year 2011. It should also be noted that the County charges customers within the municipality the same tipping fee as all other customers of the System, with exception to the exclusion of the solid waste operation and right-of-way surcharges. The municipality benefits from the remittance of the net recovered material sales revenues from the proportion of recycled materials delivered by the municipality to the County's MRF in the event such revenues are generated. The revenues derived from charges for disposal service under existing rates from waste generated and delivered to the County is estimated at approximately $6.3 million annually. This does not consider any revenues from the sale of recovered materials from operation of the WTE facility, which are retained by the County (i.e., ferrous and non-ferrous revenues) to offset the cost of operation for the WTE facility. City of Fort Myers The City of Fort Myers entered into the current agreement for disposal -only services (i.e., the County does not administer or provide collection services) with the County in June 2009. The term for the agreement shall terminate September 30, 2020 with the option for both parties to renew for up to one additional five-year term. Pursuant to the terms of the agreement between the parties, the County is and shall be responsible for the disposal of all MSW, residential vegetative waste, and residential recycled materials recovered from within the municipality. The County shall also be responsible for planning and developing additional solid waste disposal capacity and / or facilities that are environmental sound and economically practical in order to provide disposal services for additional MSW generated by the municipality due to growth. The municipality agrees, to the extent that it may lawfully do so, to cause all its MSW, residential vegetative waste and residential recyclable materials to be directed to the County's System, or other County designated facilities, for the term of the agreement. The County is also responsible for the grinding, shredding, screening, etc. of a portion of the municipality's horticulture waste and produces a mulch, -15- graded material substantially free of plastics and other non -organic contaminates and make available and load into municipal vehicles, up to 15 tons per week of this mulch material for the municipality's use. The County charges the customers within the municipality through both a non -ad valorem assessment and a tipping fee for MSW and yard waste delivered to the County. The County agrees that to the extent that it may lawfully do so, the tipping fee charged to the municipality shall be the same as the fee charged to similar users within the unincorporated areas of the County and other municipalities within the County. Pursuant to the agreement, the County is limited by the rate at which it may: a) charge customers a disposal facility assessment charge not -to -exceed $40.00 per Equivalent Residential Unit ("ERU") as defined by the agreement; and b) escalate the tipping fee at a not -to -exceed factor of 6% per year from the established Fiscal Year 2009 MSW disposal tipping fee of $54.00 per ton and yard waste disposal tipping fee of $17.60 per ton. The County has since lowered the disposal facility assessment charge and tipping fees below levels initially established during the Fiscal Year 2009. It should also be noted that the County does not charge customers within the municipality any solid waste operation and right-of-way surcharges. The municipality also benefits from the remittance of the net recovered material sales revenues based on the relative proportion of recycled materials delivered by the municipality to the County's MRF in the event such revenues are generated. The County shall also accept all biosolids produced by the City of Fort Myers' wastewater treatment facilities at a rate of $27.00 per ton for disposal plus $5.30 per ton for transportation (rates established effective October 1, 2011), which have been escalated per conditions of the agreement. The revenues derived from charges for disposal service under existing rates from waste generated and delivered to the County, including biosolids, is estimated at approximately $4.8 million annually. This does not consider any revenues from the sale of recovered materials from operation of the WTE facility, which are retained by the County (i.e., ferrous and non-ferrous revenues) to offset the cost of operation for the WTE facility. City of Sanibel The City of Sanibel entered into the current agreement for disposal -only services (i.e., the County does not administer or provide collection services) with the County in August 2010. The term for the agreement shall terminate September 30, 2020 with the option for both parties to renew for up to one additional five-year term. Pursuant to the terms of the agreement between the parties, the County is and shall be responsible for the disposal of MSW, vegetative waste, and recycled materials recovered from within the municipality. The County shall also be responsible for planning and developing additional solid waste disposal capacity and /or facilities that are environmentally sound and economically practical in order to provide disposal services for any growth in MSW generated by the municipality. The municipality agrees, to the extent that it may lawfully do so, to cause its MSW, vegetative waste and recyclable materials to be directed to the County's System, or other County designated facilities, for the term of the agreement. The County charges the customers within the municipality through both a non -ad valorem assessment and a tipping fee for MSW and yard waste delivered to the County. The County agrees that to the extent that it may lawfully do so, the tipping fee charged to the municipality shall be the same as the fee charged to similar users within the unincorporated areas of the County and other municipalities within the County. Pursuant to the agreement, the County is limited by the rate at which it may: a) charge customers a disposal facility assessment charge not -to -exceed $40.00 per ERU as defined by the agreement; and b) escalate the tipping fee at a not -to -exceed a factor of 3% per year from the established Fiscal Year 2011 MSW disposal tipping fee of $55.00 per ton and yard waste disposal tipping fee of $17.60 per ton. The County has since lowered the disposal facility assessment charge and tipping fees below levels established during the Fiscal Year 2011. It should also be noted that the County does not charge customers within the municipality any solid waste operation and right-of-way surcharges. The municipality also benefits from the remittance of the net recovered material sales revenues based on the relative proportion of recycled materials delivered -16- by the municipality to the County's MRF in the event such revenues are generated. The revenues derived from charges for disposal service under existing rates from waste generated and delivered to the County is estimated at approximately $0.4 million annually. This does not consider any minor revenues from the sale of recovered materials from operation of the WTE facility, which are retained by the County (i.e., ferrous and non-ferrous revenues) to offset the cost of operation for the WTE facility. Hendry County As previously discussed, the County entered into an interlocal agreement with Hendry County whereby the County is required to receive and dispose of waste generated by residents and businesses within Hendry County. In addition, the County is responsible for the operation and maintenance of two transfer stations located in Hendry County to receive and transfer waste to the County's disposal facilities. Only waste generated within Lee and Hendry Counties may be landfilled at the Lee / Hendry Landfill. As a result, the County was allowed to construct the landfill within Hendry County. Services are charged to customers of Hendry County through tipping fees, which may include a $5 per ton surcharge or higher surcharge for tires remitted back to Hendry County pursuant to the agreement. Other Agreements Lee / Hendry Regional Landfill / Landowner Agreement As previously discussed, in order to mitigate objections in the permitting of the Lee / Hendry Landfill from neighboring landowners, the County entered into the agreement June 23, 1993 with several neighboring landowners including Duda & Sons, Inc., Cooperative Producers, Inc., and Turner Foods Corporation. The agreement provides for, among other things, limitations on the landfill height, runoff mitigation / setbacks and intended use of the landfill being primarily for the disposal of inert ash and minimal disposal of MSW. SECTION 4: SOLID WASTE ASSESSMENT AND FEES The County provides waste disposal services to unincorporated and incorporated residents throughout the County. Services to municipalities within the County are provided through interlocal agreements as discussed in Section 3 of this report. The County principally charges customers for waste disposal services through: i) an annual non -ad valorem assessment or MSTU included as a component of the tax bill as allowed by Florida Statutes, Chapter 197, which provides a reliable source of revenues and the ability to lien a property for non-payment; and / or ii) a tipping fee paid per ton of waste delivered to the County's disposal facilities. The following provides a brief discussion of the existing rate structure components as understood by Raftelis: Residential Collection Assessment: Charged to franchised residential customers receiving collection services (i.e., the Franchised Areas 1-6) administered by the County and to recover the direct cost of collection services from private franchised haulers. Residential Disposal Assessment: Charged to franchised residential customers for MSW and yard waste disposal services. The fee is currently based on average disposal rates of 0.90 tons of MSW and 0.26 tons of yard waste per residential unit. However, it is assumed that for Fiscal Year 2021 the assessed disposal rates will increase to 0.96 tons for MSW and remain constant at 0.26 tons for yard waste to reflect actual historical tonnage generation Disposal Facility Assessment: Charged to all customers of the System to recover a portion of the disposal costs which benefits all disposal customers of the System (e.g., costs related to WTE, landfill, etc.). The fee is typically a fixed fee charged either by non -ad valorem assessment but may also be charged pursuant to interlocal agreement with the municipalities by MSTU. In some -17- instances, the Disposal Facility Assessment may be considered as a means to promote flow control for the System. Billing Charge: Charged to all customers of the System related to assessments, MSTU or other fees associated with the tax roll for which the Department is charged a fee by the County's property tax appraiser and collector. The billing fee represents a direct pass -through of such costs to the Department. Solid Waste Operations and Right of Way Surcharges: Charged to customers within the County's franchised service areas, including residential customers via the non -ad valorem assessment and commercial / multi -family customers via the gate / tipping fees. No solid waste operations surcharges have been applied to the residential assessment since Fiscal Year 2016. TippingFees ees by Type of Waste: Charged to customers that are not assessed the Residential Disposal Assessment for delivery of waste based on actual weighed deliveries. The following presents the recent and current rates charged by the County for collection and disposal services: Summary of Recent Historical and Existing Rates Historical Existing Description 2018 2019 2020 Assessments: Collection (Avg. Areas 1-5) [1] $144.66 $145.62 $145.62 Disposal MSW 38.63 45.18 45.18 Disposal Yard Waste 6.43 6.62 6.62 Disposal Facility Assessment Charge 14.66 15.53 15.53 Surcharges 0.00 0.00 0.00 Billing Fee 2.42 2.45 2.45 Early Prepayment Gross Up (4%) 8.62 8.97 8.97 Gross Assessment Average for Areas 1-5 [2] $215.42 $224.37 $224.37 Assessment Paid in February = 1 % Discount $213.27 $222.13 $222.13 Assessment Paid in January = 2% Discount 211.11 219.88 219.88 Assessment Paid in December = 3% Discount 208.96 217.64 217.64 Assessment Paid in November = 4% Discount 206.80 215.40 215.40 Tipping Fees per Ton by Waste Type: MSW $45.45 $50.20 $50.20 Horticulture / Yard Waste 24.72 25.46 25.46 C&D 32.95 32.95 32.95 Class III 32.95 32.95 32.95 Tires 80.00 80.00-120.00 80.00-120.00 Disposal Facility Assessment per Ton [4] $17.25 $17.25 $17.25 [1] Amounts shown reflect the average fee charged for the primary franchise collection areas 1-5. [2] Reflects gross assessments before early prepayment discounts as allowed by Florida Statutes, Chapter 197. [3] Amounts shown are not charged to municipal customers, with exception to the City of Bonita Springs, the Town of Fort Myers Beach, and the Village of Estero for which the County provides collection services. [4] Presented for informational purposes only since the disposal facility assessment charge is charged to all MSW customers by assessment, with exception to Hendry County customers. As can be seen above, the residential collection and disposal assessment for unincorporated residents of the County include an early payment discount that is extended to customers as part of the ad valorem billing process; pursuant to Florida Statutes, customers may elect to receive a discount of up to 4% if they pay all of the charges and taxes included on the ad valorem tax bill prior to the due date of the bill. The majority of customers elect to pay early and receive the full 4% discount; mortgage payments for residential homes typically include an allowance for escrow for the early prepayment of the estimated tax bill, which contributes to the high rate of early prepayments. The County began adjusting for the early prepayment in Fiscal Year 2016. -18- The following chart, as prepared by Department staff, provides additional history of the average residential assessment: $250 $200 a a a $150 $100 $0 Average Residential Assessments 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 As can be seen from the figure above, the residential assessment was increased annually from the Fiscal Year 2005 through 2007, which coincides with the expansion of the WTE and issuance of the refunded Series 2006 Bonds. Subsequent to 2011, the County annually reduced the solid waste assessments. In support of these reductions, the County applied approximately $34 million in cash reserves during Fiscal Year 2011 to defease portions of the then outstanding Solid Waste System Revenue Refunding, Series 2001 Bonds (the "Series 2001 Bonds" which are no longer outstanding). The reduction in debt service was a factor in the reduction of the residential assessment and tipping fees as shown on the following table: Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Historic Tipping Fees for the Solid Waste System Unincorporated Area [*] $54.82 $57.51 $58.40 $59.77 $59.93 $61.48 $61.44 $47.62 $37.74 $34.93 $34.33 $32.30 $37.45 $45.45 $50.20 $50.20 Source: Lee County Solid Waste Department Incorporated Area $48.15 $49.59 $51.20 $53.25 $54.00 $54.00 $55.00 $40.00 $32.00 $30.00 $30.00 $31.75 $37.45 $45.45 $50.20 $50.20 [*] Amounts shown includes surcharges. However, the County has not charged surcharges since Fiscal Year 2016. As can be seen above, the tipping fees were reduced subsequent to the defeasance of the Series 2001 Bonds during the Fiscal Year 2012. It is notable that for the unincorporated areas the fees are currently below levels charged prior to the Fiscal Year 2012 and also below levels in effect when the County had entered into the current interlocal agreements for service with municipalities as described in Section 3 of this report. In order to provide additional information relative to the fees charged for service, the following table -19- provides a summary of comparable fees charged by other Florida solid waste systems for collection and disposal service to the existing and proposed fees for the County: Solid Waste Fee Comparison with Other Florida Solid Waste Systems Residential Assessment [1] Tipping Fees Description Collection Disposal Total MSW C&D Yard Waste Tires Lee County - Existing [2] $130.25 - $174.38 $72.68 $202.93 - $247.06 $50.20 $32.95 $25.46 $80.00 - $120.00 Lee County - FY2020 [2] $135.46 - $181.35 $88.41 $223.87 - $269.76 $50.20 $32.95 $25.46 $80.00 - $120.00 Other Systems with Waste -to -Energy Facilities: Broward County [3] N/A N/A $270.00 N/A $50.00 $50.00 $110.00 Hillsborough County [4] $131.43 $102.89 $234.32 $73.22 $62.38 $37.06 $115.00 Miami -Dade County [5] N/A N/A $484.00 $63.38 $63.38 $63.38 $114.18 Palm Beach County [4] $170.00 - $334.00 $175.00 $345.00 - $509.00 $42.00 $52.00 $30.00 $55.00 Pasco County [4] $206.72 $72.00 $278.72 $65.69 $65.69 $65.69 $200.00 Pinellas County [4] N/A N/A $192.00 $39.75 $39.75 $39.75 $75.00 City of Tampa N/A N/A $418.92 $71.00 $51.00 $71.00 $110.00 Systems without Waste -to -Energy Facilities: Charlotte County [2] $165.00 $50.73 $215.73 $37.60 $37.60 $37.60 $120.12 Collier County [4] N/A N/A $209.87 - $217.50 $72.82 $81.48 $48.51 $198.99 Hernando County [4] $172.80 $69.40 $242.20 $54.50 $45.00 $20.00 $100.00 Manatee County [4] N/A N/A $171.96 $40.00 $61.00 $40.00 $86.00 Polk County [2] $144.50 $44.00 $188.50 $36.50 $36.50 $22.00 $175.00 Sarasota County [2] N/A N/A $159.48 $57.56 $54.00 $41.37 $158.60 Other System Average $204.75 $85.67 $305.17 $54.67 $54.04 $44.51 $137.18 [1] Amounts shown reflect the gross assessment before early prepayment discounts. [2] Denotes residential collection service at one day per week for garbage, recycling and yard waste collection. [3] Broward County residential collection includes two days per week for garbage collection, one day per week for recycling collection and one day per month yard waste collection. [4] Denotes residential collection service at two days per week for garbage collection and one day per week for recycling and yard waste collection. Note garbage collection service in Pinellas County is for one or two days per week depending on location. [5] Miami -Dade County residential collection service includes two days per week for garbage and yard waste collection and one day every other week for recycling collection. As can be seen above, the County's existing and recommended rates for the Fiscal Year 2020 and 2021, respectively, are competitive and / or below the averages charged by the other solid waste systems surveyed. (Remainder of Page Intentionally Left Blank) -20- SECTION 5: HISTORICAL AND PROJECTED CUSTOMER / TONNAGE STATISTICS The County provides waste disposal service to approximately 730,000 residents within unincorporated and incorporated areas of the County and processed incoming waste of approximately 1 million tons for the most recently completed Fiscal Year 2019, including waste deliveries from Hendry County residents. The table below provides an indication of the recent trends and projections of in the number of units served: Historical and Projected Disposal Customer Statistics by Class / Area [1] Historical Fiscal Year Ended September 30, Projected Fiscal Year Ending September 30, 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Franchised Area Statistics - Area 1-5 f21: Avg. Residential Units 158,488 160,395 162,452 164,682 167,369 170,058 172,331 174,511 176,601 178,608 180,545 Avg. Multi -family Units 85,503 85,724 86,457 87,481 88,573 89,783 90,778 91,316 91,829 92,320 92,792 Avg. RV Units 6,625 6,626 6,747 6,977 7,016 7,042 7,058 7,058 7,058 7,058 7,058 Commercial (000s Sq.Ft.) 96,107 96,985 98,368 101,503 104,799 106,547 108,591 109,828 111,014 112,154 113,255 Hendry CouM [31 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Municipalities / Not Franchised Primary Cape Coral [4] N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Fort Myers Avg. Residential Units 17,798 18,640 19,559 20,396 21,179 21,619 22,930 23,825 24,703 25,566 26,417 Avg. Multi -family Units 17,717 18,020 18,312 18,510 19,048 19,181 19,789 20,048 20,295 20,533 20,762 Avg. RV Units 115 110 104 104 104 104 104 104 104 104 104 Commercial (000s Sq.Ft.) 38,072 38,270 38,381 38,681 39,027 39,142 39,492 39,708 39,912 40,107 40,294 Sanibel Avg. Residential Units 3,978 4,054 4,080 4,101 4,112 4,119 4,139 4,152 4,165 4,177 4,189 Avg. Multi -family Units 3,762 3,762 3,762 3,762 3,765 3,765 3,767 3,767 3,767 3,767 3,767 Avg. RV Units 85 85 85 85 85 85 85 85 85 85 85 Commercial (000s Sq.Ft.) 1,731 1,731 1,729 1,740 1,751 1,743 1,754 1,754 1,754 1,754 1,754 [1] Amounts shown derived from Tables 1-4 at the end of this report. [2] Amounts shown reflect statistics for franchise areas 1 through 5, which include statistics associated with the City of Bonita Springs, the Town of Fort Myers Beach, and the Village of Estero. Amounts shown exclude statistics for Boca Grande (Area 6) and the Outer Islands (Area 7). [3] Amounts shown not reported since the Hendry County customers are not assessed for service and pay based on actual tonnage deliveries. Per the 2018 U.S. Census estimates, Hendry County has a population of 41,556 with approximately 14,850 housing units. [4] Amounts shown not reported since the City of Cape Coral elects billing for the Disposal Facility Assessment by MSTU. Per the 2018 U.S. Census estimates, the City has a population of 189,343 with approximately 80,900 housing units (note Census estimated occupied households of 56,900 for the same period). As shown above the majority or approximately 58% of residential units served during the Fiscal Year 2019 are located within the franchised service areas of the County at approximately 167,370 residential single- family disposal units, including approximately 43,763 franchised residential units within the municipalities of Bonita Springs, Fort Myers Beach and the Village of Estero. By contrast, other customers within Hendry County and the Cities of Cape Coral, Fort Myers, and Sanibel are estimated to represent approximately 121,600 residential housing units. The forecast assumes growth in franchised residential units of approximately 1.3% annually. The following table provides a projection of the primary waste streams by customer classification and location. (Remainder of Page Intentionally Left Blank) -21- Historical and Projected Disposal Customer Statistics [1] Historical Fiscal Year Ended September 30, Projected Fiscal Year Ending September 30, 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Franchised Area Statistics - Area 1-5 f2l Delivered MSW Tons 350,159 365,753 374,143 375,335 366,504 367,386 370,599 373,240 375,801 378,288 380,714 Yard Waste 61,821 65,356 60,801 74,271 63,123 58,661 62,083 62,565 63,026 63,468 63,895 C&D / Class III 65,444 67,896 72,802 171,997 147,023 79,098 79,889 80,688 81,495 82,310 83,133 Recycling 57,146 59,469 56,478 56,768 55,971 57,535 55,672 56,326 56,953 57,555 58,137 Hendry Countv Delivered MSW Tons 29,003 31,942 33,531 36,366 36,678 36,678 36,678 36,678 36,678 36,678 36,678 Yard Waste 3,380 4,523 4,750 4,942 3,919 3,919 3,919 3,919 3,919 3,919 3,919 C&D / Class III 3,036 4,899 5,856 7,068 5,842 5,900 5,959 6,019 6,079 6,140 6,201 Municipalities / Not Franchised Primary MSW and Yard Waste Generation Cape Coral 97,377 103,758 105,964 107,012 109,770 111,886 113,621 114,948 115,846 116,300 116,300 Fort Myers 64,687 67,039 68,388 74,858 72,587 74,250 75,614 76,657 77,363 77,720 77,720 Sanibel 8,385 8,750 8,990 8,735 8,358 8,498 8,612 8,700 8,759 8,789 8,789 Total 170,449 179,547 183,341 190,605 190,714 194,633 197,847 200,305 201,969 202,809 202,809 Recycling Generation Cape Coral 18,077 18,555 19,332 19,707 19,372 19,372 19,372 19,372 19,372 19,372 19,372 Fort Myers 5,549 6,078 6,149 6,386 6,688 6,688 6,688 6,688 6,688 6,688 6,688 Sanibel 1,548 1,508 1,362 1,265 1,363 1,363 1,363 1,363 1,363 1,363 1,363 Total 25,174 26,142 26,843 27,358 27,423 27,423 27,423 27,423 27,423 27,423 27,423 [1] Amounts shown derived from Tables 1-4 at the end of this report and totals may vary due to rounding. [2] Amounts shown reflect statistics for franchise areas 1 through 5, which include statistics associated with the City of Bonita Springs and the Town of Fort Myers Beach. Amounts shown exclude statistics for Boca Grande (Area 6) and the Outer Islands (Area 7). For the Fiscal Year 2019, the relationship of MSW and yard waste generation among the franchised (429,627 tons / 65%) and non -franchised (222,954 tons / 35%) customers is generally consistent with relationship of residential units as previously discussed. The forecast assumes an annual average growth rate of approximately 0.7% for MSW and yard waste generation. The following chart provides a historical summary and projected forecast of inbound waste to the County: 1,200,000 Waste by Type (Tons) 1,000,000 800,000 600,000 400,000 I 200,000 ' 0 2015 2016 2017 2018 2019 2020 2021 ■ MSW / Other Process. ■ C&D / Class III ■ Yard Waste ■ Sludge 2022 2023 2024 2025 Recycling (less Rejects) ■ Tires -22- Due to Hurricane Irma, the Department experienced a significant increase to C&D waste deliveries, primarily due to increases in roofing materials, in Fiscal Years 2018 and 2019. Based on discussions with Department staff, it is expected that more typical C&D waste deliveries will resume in Fiscal Year 2020. It should also be noted that the chart above doesn't include any yard waste debris associated with Hurricane Irma since such amounts were processed outside of the System. As can be seen in the prior chart waste deliveries have grown by approximately 36,000 tons per year from Fiscal Years 2015 through 2019 with overall increase of 145,000 tons or 18%. It should be noted that a large portion of this growth is related to C&D waste deliveries from Hurricane Irma, as previously mentioned. The growth in waste deliveries, excluding waste from Hurricane Irma, is attributed to the improved economy and increased population growth. Excluding the normalization in C&D waste deliveries beginning in Fiscal Year 2020, the Study anticipates continued growth of approximately 7,000 tons for the Fiscal Years 2020 through 2025. This assumes a reduction in the growth rate of waste deliveries due to an anticipated slowdown / stabilization in the economy. As previously discussed, the County maintains and operates several facilities, including a mass burn waste -to -energy facility, materials recovery facility, construction and demolition debris recycling facility, yard and tire processing facilities, composting, regional landfill, and household hazardous waste facility. A critical issue is the capacity utilization of the County's existing WTE facility. The chart below indicates the historical and projected utilization of the WTE facility: 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 Waste -to -Energy Capacity & Processed Waste Projection M M M M & 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 � Processed Waste MSW Diversions C&D Diversions � Yard Waste Diversion Design Capacity — Through -Put Capacity — — Guaranteed Capacity The WTE facility is currently the primary method of waste disposal for the County and processes over 610,000tons annually or over 70% of all in -bound processed waste. The existing WTE facility currently exceeds the estimated through -put capacity of the facility. Due to the growth in waste deliveries and a reduction in waste sent to the WTE to promote longevity and sustainability of the facility, waste diversions to the County's landfill are expected to grow. The following table provides a summary of estimated landfilled waste over the recent historical and projected period: (Remainder of Page Intentionally Left Blank) -23- 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 n Historical and Projected Landfilled Waste by Type (Tons) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ■ Ash Residue Yard Waste / Mulch ■ Cover/ Storage ■ Class III / M ■ MSW/Tire/Other ■ Sludge As can be seen from the prior chart, landfilling of C&D waste was significantly greater for the Fiscal Years 2018 and 2019 due to roofing replacements and other C&D materials associated with Hurricane Irma. Due to the continued growth in MSW deliveries to the WTE facility, increasing diversions of waste is expected to continue for the Forecast Period. Beyond the Forecast Period it is expected that increasing amounts of MSW deliveries may result in an increase to MSW and yard waste being landfilled. As previously discussed, the County is limited by agreement with adjacent landowners as to the disposal of MSW to the Lee / Hendry Landfill. To provide a long-term solution for the future growth in waste deliveries, the Department has completed a master plan to evaluate new facilities or options of waste disposal. For additional detail concerning the historical and projected customer statistics and assumptions, please reference Tables 1 through 5 at the end of this report. SECTION 6: REVENUE COMPOSITION AND FORECAST The Department is expected to generate or collect approximately $95.8 million in revenue for the Fiscal Year 2020, exclusive of reimbursements related to Hurricane Irma. This amount includes approximately $2.8 million in remittances to municipalities for franchise fees and shared recycling revenues (if any) and to the WTE facility contractor associated with shared electric revenues and ferrous and non-ferrous metal revenues. Such reimbursements are budgeted as a cost of operation in order to present the gross revenues and track the benefits through shared revenues received by the municipalities and contracted operators. For the Fiscal Year 2020, the revenues can generally be categorized as follows: 81% is generated from the collection, disposal and other service fees (e.g., compost sales); 9% is generated from gross electric sales; and 10% is generated from other revenues primarily comprised of franchise fees, recycling and recovered material revenues, other miscellaneous fees, and investment income. The revenue forecast for collection and disposal fee revenues were developed based upon the forecast of customer billing and tonnage statistics as previously discussed in Section 5 of this report and applied to the existing and projected rates for service. Electric sales revenues were based on the forecast of electrical production as presented in Table 5 at the end of this report. Other revenues, such as recycling revenue, were primarily escalated from historical or budgeted levels based on recent trends and discussions with Department staff. Due to recent market conditions revenues from sale of recyclable materials were not -24- anticipated in the Fiscal Year 2020 and for the remainder of the Forecast Period. Additionally, the Study recognizes the receipt of approximately $37 million in FEMA, State, and insurance reimbursements associated with Hurricane Irma debris clean up and facility damage. The following chart provides the forecasted revenue composition assuming implementation of the identified rate adjustments: Projected Revenue Composition (w/ Rate Increases) $140,000,000 $120,000,000 $100,000,000 � $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 2020 2021 2022 2023 2024 2025 ■ Disposal / Other Svc Fees ■ Collection Fees ■ Gross Electric Sales Gross Recycling / Metal Sales ■ Other Income / Revenue Exclusive of Hurricane Irma reimbursements expected during the Fiscal Year 2020, the projected growth in disposal and collection fees are due to increase in customers served, tonnages delivered, and application of the identified rate increases as previously discussed. Electric and other revenues are assumed to remain generally constant for the remainder of the Forecast Period. SECTION 7: REVENUE REQUIREMENTS COMPOSITION AND FORECAST The revenue requirements of the System are comprised of expenditures and required transfers: Expenditures: includes annual operating expenses, major maintenance, capital expenditures and debt service payments; and Required Transfers: includes transfers for landfill closure, transfers to operating cash reserves for maintaining minimum reserve balances and transfers to capital reserves for funding future capital expenditures. This section provides a detailed discussion of the revenue requirements and principal assumptions relied upon in development of the forecast for the System. Operating Expenses The operating expenses of the Department represent the primary recurring expenditure of the System. Unless otherwise noted operating expenses are exclusive of closure, post -closure, and periodic major maintenance (funded from the Renewal and Replacement Fund), which is consistent with the definition of operating expenses pursuant to the Bond Resolution. Approximately 75% of the operating expenses are related to contracted services for the franchised collection and operation of the System. The remaining operating expenses are primarily related to labor, materials and supplies, and repairs and maintenance. The chart below provides a summary of the total operating expenses for the Forecast Period: -25- Projected Operating Expenses $110,000,000 $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 2020 2021 2022 2023 2024 2025 ■ Contractual Services ■ Personnel ■ Materials and Supplies Other Expenses ■ Repair and Maintenance The forecast assumes average annual increases in the cost of operation equal to approximately 3% annually, which is considered reasonable when considering long-term trends of inflation. The forecast of operating expenses was based on a five-year review of historical operating expenses, the adopted Fiscal Year 2020 operating budget, and year-to-date results, modeling of the Department's principal contracted expenses, and discussions and review of projections by Department staff. Contracted Collection of Franchise Areas As discussed in Section 3, the County administers six franchised collection areas. The cost of collection represents a significant component (i.e., approximately 30%) of total operating expenses. The County makes monthly payments to the haulers for each residential franchised collection area. The following presents the historical trends and projected collection expense assumptions by residential franchised collection areas: (Remainder of Page Intentionally Left Blank) -26- Historical and Projected Franchised Hauler Collection Expense Historical Fiscal Year Ended September 30, Projected Fiscal Year Ending September 30, Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 AREA 1 - Bonita & FMB Growth 986 540 466 557 613 566 561 539 521 504 490 Average Monthly Units 24,116 24,656 25,122 25,679 26,292 26,858 27,419 27,958 28,479 28,982 29,473 Rate Change (%) 1.1% 0.0% 0.0% 0.0% 0.0% 0.0% 4.0% 2.0% 2.0% 2.0% 2.0% Collection Rate $135.96 $135.96 $135.96 $135.96 $135.96 $135.96 $141.40 $144.23 $147.11 $150.05 $153.05 Expense ($1,000s) $3,279 $3,352 $3,416 $3,491 $3,575 $3,652 $3,877 $4,032 $4,190 $4,349 $4,511 AREA 2 - SFM - West, Iona -McGregor, Captiva Growth 241 160 375 293 257 213 206 196 187 178 172 Average Monthly Units 24,275 24,434 24,809 25,102 25,359 25,573 25,779 25,974 26,161 26,339 26,511 Rate Change (%) 1.1% 0.0% 0.0% 0.0% 0.0% 0.0% 4.0% 2.0% 2.0% 2.0% 2.0% Collection Rate $125.04 $125.04 $125.04 $125.04 $125.04 $125.04 $130.04 $132.64 $135.29 $138.00 $140.76 Expense ($1,000s) $3,035 $3,055 $3,102 $3,139 $3,171 $3,198 $3,352 $3,445 $3,539 $3,635 $3,732 AREA 3 - SFM - East, San Carlos Park Growth 274 690 547 609 838 695 682 653 627 603 584 Average Monthly Units 41,531 42,221 42,768 43,376 44,214 44,910 45,592 46,245 46,871 47,474 48,059 Rate Change (%) 1.0% 0.6% 0.0% 0.0% 0.0% 0.0% 4.0% 2.0% 2.0% 2.0% 2.0% Collection Rate $150.60 $151.56 $151.56 $151.56 $151.56 $151.56 $157.62 $160.77 $163.99 $167.27 $170.62 Expense ($1,000s) $6,255 $6,399 $6,482 $6,574 $6,701 $6,807 $7,186 $7,435 $7,686 $7,941 $8,200 AREA 4 - East, Lehigh, Alva Growth 216 250 435 685 891 658 644 614 589 565 547 Average Monthly Units 46,799 47,050 47,484 48,169 49,060 49,718 50,361 50,976 51,564 52,129 52,676 Rate Change (%) 1.0% 2.1% 0.0% 0.3% 3.3% 4.0% 4.0% 2.0% 2.0% 2.0% 2.0% Collection Rate $140.16 $143.04 $143.04 $143.40 $148.08 $153.96 $160.12 $163.32 $166.59 $169.92 $173.32 Expense ($1,000s) $6,559 $6,730 $6,792 $6,907 $7,265 $7,655 $8,064 $8,325 $8,590 $8,858 $9,130 AREA 5 - Pine Island, NFM Growth 167 101 130 93 115 119 114 108 103 98 94 Average Monthly Units 21,975 22,076 22,206 22,298 22,414 22,533 22,647 22,754 22,857 22,955 23,049 Rate Change (%) 1.0% 0.6% 0.0% 0.0% 0.0% 0.0% 4.0% 2.0% 2.0% 2.0% 2.0% Collection Rate $166.44 $167.40 $167.40 $167.40 $167.40 $167.40 $174.10 $177.58 $181.13 $184.75 $188.45 Expense ($1,000s) $3,657 $3,696 $3,717 $3,733 $3,752 $3,772 $3,943 $4,041 $4,140 $4,241 $4,344 AREA 6 - Boca Grande / Gasparilla Growth 104 (98) 12 4 7 0 0 0 0 0 0 Average Monthly Units 1,338 1,240 1,252 1,256 1,262 1,262 1,262 1,262 1,262 1,262 1,262 Rate Change (%) 0.0% 0.0% 5.2% 0.0% 0.0% 25.4% 34.8% 2.0% 2.0% 2.0% 2.0% Collection Rate $136.32 $136.32 $143.40 $143.40 $143.40 $179.88 $242.52 $247.37 $252.32 $257.37 $262.52 Expense ($1,000s) $182 $169 $180 $180 $181 $227 $306 $312 $319 $325 $331 ALL AREAS - Franchise Hauler Expense Growth 1,003 1,103 1,497 1,683 2,108 1,686 1,646 1,570 1,505 1,445 1,397 Average Monthly Units 160,034 161,677 163,641 165,880 168,602 170,853 173,060 175,169 177,195 179,143 181,030 Rate Change (%) 1.0% 0.9% 0.0% 0.1% 1.0% 1.4% 4.4% 2.0% 2.0% 2.0% 2.0% Collection Rate $143.52 $144.74 $144.76 $144.83 $146.17 $148.13 $154.45 $157.51 $160.64 $163.83 $167.08 Expense ($1,000s) $22,968 $23,401 $23,689 $24,024 $24,645 $25,309 $26,728 $27,591 $28,464 $29,348 $30,247 -27- The cost of collection has marginally increased over the recent historical period; however, the majority of the franchise area agreements will terminate during the Forecast Period. As previously discussed in Section 3, the County has entered into new agreement for collection service for Area 4 and will be required to enter into new agreement with the remainder of the service areas prior to the Fiscal Year 2021. Forecasts of such costs were based on assumptions provided by Department staff, which may vary from the actual realized cost of collection, as the contracts for collection services are rebid or renegotiated, which could result in different haulers providing service and different rates for service. WTE Contracted Operations As previously discussed, the County contracts operation for the WTE facility. The cost of operation is another significant component (i.e., approximately 30%) of total operating expenses. The cost of operation is based on forecasts of processable tonnage statistics, as previously discussed (reference Section 5), and the charges for service by Covanta. The following table provides a summary of the projection of gross and net contracted operating expenses: Historical and Projected WTE Facility Contract Operations ($1,000s) Historical Fiscal Year Ended September 30, Projected Fiscal Year Ending September 30, 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Tons Processed 615,179 642,223 610,459 620,677 620,028 610,000 610,000 610,000 610,000 610,000 610,000 % Change N/A 4.4% -4.9% 1.7% -0.1% -1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Service Fee [*]: OM $19,619 $19,883 $20,169 $20,722 $21,418 $21,915 $22,262 $22,824 $23,456 $24,098 $24,750 ETF 1,088 1,793 995 1,266 1,265 1,068 1,085 1,113 1,144 1,175 1,207 PT 1,232 1,296 3,127 3,997 3,819 4,106 4,171 4,277 4,395 4,515 4,637 EC 1,780 1,313 867 881 877 881 881 881 881 881 881 RRR (1,580) (898) (1,598) (2,002) (1,161) (1,374) (1,374) (1,374) (1,374) (1,374) (1,374) LC (35) (35) (41) (52) (58) (58) (58) (58) (58) (58) (58) MD (49) (1) (129) (142) (86) 0 0 0 0 0 0 MA (21) (23) (23) (25) (27) (25) (25) (25) (25) (25) (25) True up 134 13 (6) 1 (12) 0 0 0 0 0 0 Net Fee $22,169 $23,341 $23,363 $24,645 $26,034 $26,513 $26,942 $27,638 $28,419 $29,212 $30,019 %Change N/A 5.3% 0.1% 5.5% 5.6% 1.8% 1.6% 2.6% 2.8% 2.8% 2.8% [*] Service Fee (SF) = Operation and Maintenance (OM) Charge + Excess Tonnage Fee (ETF) + Pass -Through (PT) + Energy Credit (EC) - Resources Recovery Revenue (RRR) - Landfill Credit (LC) +/- Monthly Damages (MD) +/- Monthly Adjustment (MA) The recent historical growth in the cost of contracted operations for the WTE is primarily due to increases in the amount of waste processed and indexing of service fees. On average, the cost of contracted operations for the WTE is expected to average 2.4% a year during the Forecast Period. Financial Effects of Landfill Diversions The primary cost affected by increasing diversions of waste to the landfill is the contracted cost of operation. This cost has averaged approximately $1.4 million annually for the last five years. Similar to today and prior to the expansion of the WTE in 2007, the County had waste deliveries in excess of the capacity at the WTE. During that period, the County had been required to divert increasing amounts of waste for disposal to the Lee / Hendry Landfill. For reference, the Department reported approximately 293,000 tons landfilled in 2019, which is higher than in the previous five years due to Hurricane Irma waste. As a result, the cost of contracted operations was previously greater as evidenced below: -28- Historical Contracted Landfill Operations Cost $2,500,000 400,000 350,000 $2,000,000 300,000 $1,500,000 250,000 200,000 $1,000,000 150,000 $500,000 100,000 50,000 $0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Fiscal Year � Contracted Expense —Est. Tons Landfilled Amounts shown above are provided based on reports from Department staff and the County's contracted landfill operator. Such amounts may vary with reported inbound tonnage reports to the landfill associated with: i) tonnages processed for disposal by the County through the composting operations; ii) timing of receipt and ultimate disposal of waste in the landfill; iii) lack of recognition of C&D cover materials as shown above; and iv) other variances. The cost of contracted operation for the landfill has generally declined with the level of waste deliveries over time. The current agreement for operation of the landfill is based on "actual cost, plus mark-up." Labor and other operating costs for the landfill can be scaled to the level of waste deliveries. The following chart presents the forecast of contracted landfill operating expenses: $3,000,000 $2,500,000 $2,000,000 Y c $1,500,000 v $1,000,000 $500,000 $0 Projected Contracted Landfill Operations Cost 2020 2021 2022 2023 2024 2025 Fiscal Year Contracted Expense —Est. Tons Landfilled 245,000 240,000 235,000 230,000 225,000 c 220,000 215,000 210,000 205,000 Note amounts shown do not reflect tonnages assumed for cover. In addition to the growth in the cost of contracted operations, increasing waste diversions also has the effect of increasing costs related to preparation for and transportation of waste. Based on discussions with Department staff such transfer costs -29- are assumed within the Fiscal Year 2020 operating expense budget (i.e., Solid Waste Operations) and were escalated for increases in diversions from the Buckingham Campus to the landfill. As previously discussed, the Buckingham Campus has a transfer station collocated with the WTE. The primary purpose of the facility is for diverting MSW. Recognizing that the County currently diverts minimal quantities of MSW the facility is not in use. This forecast assumes that due to anticipated growth in waste deliveries the County would prioritize and divert increasing amounts of yard waste (may conditionally require use of the transfer station for diversion) to the landfill. This is expected to provide additional capacity at the WTE for disposal of increasing amounts of MSW. However, there are limitations on the amount of additional capacity that can be provided from diverting yard waste and or other processable materials (i.e., C&D) away from the WTE to the landfill. For example, seasonality of waste deliveries also has a material effect on diversion of MSW to the landfill. Therefore, it is important to note that this forecast has not assumed any increases in the cost of operation for the Buckingham Campus transfer station operations and should the County be required to operate the transfer station will result in increased cost of operation above what is contemplated in this study. Other Expense Forecast Assumptions The remaining operating expenses after the payment of contracted operations comprise approximately 25% of the total operating expenses are primarily related to the payment of Department employee labor costs and materials and supplies for operation of the facilities. In particular, the Department must fund operating expenses related to operation of the scales, transfer stations, C&D recycling facility, composting operations, fleet / vehicle maintenance, administration and management, etc. The forecast of these costs were developed based on a five-year review of the historical expenses, application of assumed escalation factors (for more information please reference Tables 8 and 9) based on the nature of the expense (e.g., certain variable costs may be escalated based inflation, growth in tonnage, etc.) and a detailed review with Department staff. Capital Expenditures and Major Maintenance The forecast of capital and major maintenance was provided by Department staff and generally represents the periodic renewals, replacement and improvements of System infrastructure and facilities. As previously discussed, major maintenance is not a capitalized expenditure for purposes of financial reporting (i.e., operating expenses); however, the County views such periodic expenditures as capital -related and funds such expenditures from the Renewal and Replacement Fund (i.e., excluded from Operating Expenses pursuant to the Bond Resolution). For example, the County has identified the need to repave the main road leading to the Lee/Hendry Landfill and has funded this expenditure through the Renewal and Replacement Fund as a major maintenance (and non -recurring) expenditure. The following table provides a listing of the capital projects identified. (Remainder of Page Intentionally Left Blank) -30- Listing of Identified Capital and Major Maintenance Expenditures Capital Project Description Start Year Project Cost [1] Landfill Expansion: Class I/PHIII (Garbage) 2020 $16,310,940 Landfill Gas Collection System 2020 4,715,700 Landfill Expansion: Class III/PHIII (C&D) 2025 2,932,800 Buckingham Scale Improvements 2021 2,609,524 Recycling Equipment Improvement 2020 2,055,750 Umbrella — MRF Equipment 2021 1,910,596 Ash Monofill Leachate System Modification 2020 1,076,588 C&D Facility Improvements 2020 987,968 WTE Fire Protection System 2020 900,000 Parts and Equipment Storage Area 2020 798,951 Umbrella - Scales 2022 798,082 Compost Facility and Well Improvements 2020 769,938 Umbrella - Generators 2020 743,921 Materials Processing Improvements 2020 661,857 Umbrella — Mechanical Systems 2020 481,627 Umbrella — Buckingham Upgrades 2020 168,032 Capital Project Subtotal $79,128,166 Major Maintenance [2] 2020-2025 $6,817,5886 Operating Budget Capital Outlay [3] 2020-2025 15,076,500 Total $59,816,360 [1] Amounts shown derived from Table 10 and adjusted for inflation for projects identified in the Fiscal Year 2020 and for the remainder of the Forecast Period. [2] Amounts shown reflect periodic major maintenance expenses that are not capitalized, however are funded from the Renewal and Replacement Fund (i.e., excluded from Operating Expenses as defined in the Bond Resolution) and more similar to a capital expenditure (e.g., road repaving). [3] Represents annually recurring purchases of minor capital, equipment and other capitalized expenses included in the annual operating budget. As can be seen above, the County has identified approximately $59.8 million in total funding. The largest project in the plan is a class I landfill expansion and accounts for approximately $16.3 million or 27% of the total capital improvement funding requirements for the Forecast Period. The following table provides a summary of the funding plan for the Forecast Period: Capital Funding — Fiscal Years 2019-2024 [* Rate Revenue $15,076,500 25 2% System Reserve Fund 37,922,274 63.4% Renewal and Replacement Fund 6,817,586 11.4% Total Funding $59,816,360 100.0% [*] Amounts shown derived from Table 10. Table 10 at the end of this report provides additional detail concerning the projected capital and major maintenance needs and funding sources for the Forecast Period. As previously discussed, the County has completed a master plan to address the issue of the disposal facility capacity of the System. This financial forecast does not recognize any additional capital needs that may be identified as part of the master plan, with the exception of the previously mentioned landfill expansion, which could result in the need to raise rates beyond what is currently identified in this Study. Debt Service As of October 1, 2019, the System had debt outstanding of approximately $49.7 million, which is exclusive of amortized premiums and discounts. The outstanding debt is associated with the Series 2016 Bonds; no other services or subordinated debt is outstanding for the System. The associated debt service for the Series 2016 Bonds represents level payments of approximately $8.5 million annually with final repayment -31- in Fiscal Year 2026. The forecast does not assume the issuance of any additional bonds during the Forecast Period. The chart below provides a summary of the existing and projected annual debt service payments: Summary of Debt Service Payments $12,000,000 $9,000,000 $6,000,000 S3 ,000,000 $0 ■ Series 2010 Bonds It should be noted that the subsequent reduction in debt service payments after Fiscal Year 2026 may provide for additional bonding capacity for additional capital improvements identified as an outcome to the master planning activities. Closure and Post -closure Transfers Pursuant to the Florida Administrative Code (the "Code") 62-701.630, landfill operators within the State are required to demonstrate financial assurance for the final closure and subsequent on -going post -closure costs. The Code identifies several methods for demonstrating financial assurance, but the most common is to set aside funds as landfill capacity is used in a restricted fund. This is the method employed by the County in demonstrating financial assurance. The Florida Department of Environmental Protection requires the County to annually submit proof of compliance with the financial assurance requirements of the Code. The projected costs of closure and post -closure or long-term care are estimated at the time of permit renewal, typically every five years. The costs are determined based upon surveys of costs associated with closure and long-term care at the time of the permit renewal, which are reviewed by engineers and FDEP staff. While the closure cost is a one-time event, long-term care or post -closure expenses represent the cumulative cost of annual operating expenses such as grounds maintenance, security, site monitoring, or other operating costs for a 30-year period after closure. Once the closure and long-term care costs have been estimated during permitting, such costs are then escalated annually to account for inflation based on approved inflation factors by the FDEP. Closure and post -closure cost estimates are then not formally re-evaluated until the subsequent permit renewal or there are changes to the closure and long-term care plan. Additionally, closure liability is only calculated for active landfill cells that have received or are currently receiving waste. In order to estimate the capacity utilization of the landfill to determine the allocable closure liability / costs that are required for determination of financial assurance compliance, the County annually contracts for a fly -over to define the elevation of the landfill surface and calculate the volume of permitted landfill volume used during the previous year. This data provides accurate information to allow the Department to identify -32- the remaining air space or volume of permitted capacity remaining in the constructed cells. The following table provides a comparison of the estimated liability based on the landfill's capacity utilization and the corresponding cash reserves reported to be held by the Department within the Closure Fund: Estimated Closure and Post -Closure Liability as of September 30, 2019 Active Landfill Sites Closure Post -Closure [*] Total Restricted Funds Ash Monofill $3,632,160 $2,474,734 $6,106,894 N/A Class I Landfill 6,370,493 3,234,131 9,604,624 N/A Class III Landfill 1,983,111 1,514,888 3,497,999 N/A Total $11,985,764 $7,223,753 $19,209,517 $11,367,130 [*] Amounts shown reflect the cumulative post -closure liability allocable to the County based on the pro-rata share of the capacity utilized calculated assuming a 30-year maintenance expense liability for the ash monofill, and class III landfill. As can be seen from the prior table, the County has restricted approximately $11.4 million representing approximately 59% of the allocable long-term liability. The Department funds the closure liability to the FDEP requirement including 100% of the closure liability and one year of the post -closure liability. Recognizing the financial constraints to the System from the loss of electric revenues, the forecast assumes maintaining 100% of the closure liability and one year of the post -closure liability for the remainder of the Forecast Period. If financial conditions improve, it is recommended the County consider fully funding the combined closure and post -closure liability in order to match the cost of closure with the disposal of waste. The chart below presents a forecast of the cumulative liability and restricted funds for closure: $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15, 00 0, 000 $10, 00 0, 000 $5,000,000 $0 Projected Closure & Post -Closure Liability I 2020 2021 2022 2023 2024 2025 � Restricted Funds — • Closure/ Post -Closure Liability It is projected that the County will require transfers to the Closure Fund beginning in Fiscal Year 2020 to maintain the minimum balance mentioned above. The forecast assumes transfers to the closure funds averaging approximately $900,000 annually for the Forecast Period. It should be noted that closure fund liability is expected to grow at a faster rate than in recent years due to increased diversions to the landfill. -33- SECTION 8: REVENUE SUFFICIENCY AND FINANCIAL COMPLIANCE The foundation of the study and the primary objective of the solid waste rates are to reasonably recover the cost of providing service, cost of infrastructure investment and compliance with covenants of the outstanding bonds and internal fiscal targets (referred to as the "Revenue Sufficiency" evaluation). Based on the assumptions and findings of this analysis the following table provides a summary of the identified revenue adjustments for the Forecast Period recognizing financial projections under current operations. Identified Rate Revenue Adjustments by Fiscal Year M Recommended Identified Description 2021[21 2022 2023 2024 2025 Disposal Assessment / Tip Fee Rev. Percent Adjustment 6.25% 5.00% 5.00% 5.00% 4.00% Incremental Revenue Addition $3.21m $2.75m $2.91m $3.07m $2.59m Cumulative Revenue Addition $3.21m $5.98m $8.93m $12.06m $14.72m Collection Assessment Revenues Percent AdjustmentE31 5.24% 1.96% 1.96% 1.97% 1.97% Incremental Revenue Addition $1.33m $0.53m $0.55m $0.57m $0.59m Cumulative Revenue Addition $1.33m $1.88m $2.45m $3.04m $3.66m [1] Reflects identified increases to revenues from the collection / disposal assessment and ripping fees for service. It should be noted that amounts shown reflect the increase to rate revenues from increases to fees only and do not reflect any increases or decreases from changes in assumed waste generation. [2] Reflects recommended rate revenue increases to the respective systems identified. [3] Reflects projected increases to recover estimated cost of contracted collection services and may vary based on actual realized increases in such costs. The revenue increases are necessary to ensuring adequate cash reserves and appropriate cash flows produce a sustainable long-term financial plan that can mitigate the financial and operating risk from unanticipated or sudden events to financial operations (e.g., reduced electric sales, reduced growth or tonnages unanticipated or extraordinary outages, unfunded mandates, etc.). -34- Collection Revenue Requirements In order to develop rates for solid waste disposal and collection services, the revenue requirements were allocated among the disposal and collection operations. The collection fee as a component of the residential solid waste assessment only recovers the direct contracted cost of collection. The following table presents the allocated collection system revenue requirements: Collection Net Revenue Requirements and Revenue Sufficiency ($1,OOOs) [1] Projected Fiscal Year Ending September 30, Description 2020 2021 2022 2023 2024 2025 Operation and Maintenance Expenses $25,309 $26,728 $27,591 $28,464 $29,348 $30,247 Annual Debt Service 0 0 0 0 0 0 Transfers and Capital 0 0 0 0 0 0 Gross Revenue Requirements $25,309 $26,728 $27,591 $28,464 $29,348 $30,247 Less Income / Funds from Other Sources: Investment Income $0 $0 $0 $0 $0 $0 Contracted Fines [2] 25 25 25 25 25 25 Total $25 $25 $25 $25 $25 $25 Net Collection Funding Requirements $25,284 $26,703 $27,566 $28,439 $29,323 $30,222 Existing Collection Assessment Revenue $25,044 $25,374 $25,690 $25,994 $26,285 $26,566 Rate Revenue Adjustments [3] n/a 5.24% 1.96% 1.96% 1.97% 1.97% Adjusted Disposal Revenue $25,044 $26,703 $27,566 $28,439 $29,323 $30,222 Net Transfers To / (From) Reserves [4] ($240) $0 $0 $0 $0 $0 [1] Amounts shown derived from Table 14 at the end of this report. Totals may vary due to rounding [2] Reflects minor revenues from fines related to the monitoring of contracted collection. [3] Reflects the current period percent increase in collection revenues. [4] Reflects assumed transfers to / (from) reserves. Based on the allocation of costs a primary driver for the increase in the identified residential collection assessment is related to increases in the cost of contracted collections. (Remainder of Page Intentionally Left Blank) -35- Disposal Revenue Requirements The balance of all other revenue requirements is, therefore, allocable to the disposal function of operation for the System. The following table presents the allocated disposal system revenue requirements: Disposal Net Revenue Requirements and Revenue Sufficiency ($1,000s) [1] Projected Fiscal Year Ending September 30, Description 2020 2021 2022 2023 2024 2025 Operation and Maintenance Expenses [2] $60,858 $61,535 $63,216 $65,035 $66,918 $69,179 Annual Debt Service: Series 2016 Bonds $8,558 $8,564 $8,575 $8,589 $8,596 $8,595 Transfers and Capital [3] $4,075 $5,440 $7,045 $8,614 $10,246 $11,018 Gross Revenue Requirements $73,491 $75,540 $78,835 $82,238 $85,759 $88,792 Less Income / Funds from Other Sources: Investment Income $1,052 $1,480 $1,439 $1,388 $1,336 $1,336 Net Electric Revenue 8,899 8,900 8,900 8,899 8,899 8,898 Franchise Fees - County 2,129 2,116 2,160 2,203 2,244 2,284 Franchise Fees - Municipalities [2] 571 584 596 608 619 630 WTE Ferrous / Non-ferrous - County 1,374 1,374 1,374 1,374 1,374 1,374 WTE Ferrous / Non-ferrous - Covanta [2] 1,374 1,374 1,374 1,374 1,374 1,374 Recovered Materials & Misc. Rev. 1,865 1,894 1,924 1,955 1,987 2,019 Compost Sales 300 300 300 300 300 300 Other Revenues [4] 40,082 3,028 3,058 3,087 3,114 3,141 Total $57,647 $21,052 $21,126 $21,188 $21,247 $21,357 Net Disposal Funding Requirements $15,844 $54,488 $57,709 $61,051 $64,512 $67,435 Existing Assessment and Tip Fee Revenue $50,047 $51,283 $51,728 $52,117 $52,450 $52,717 Current Period Rate Revenue Adj. [5] n/a 6.25% 5.00% 5.00% 5.00% 4.00% Adjusted Disposal Revenue $50,047 $54,488 $57,709 $61,051 $64,512 $67,435 Surplus / (Deficiency) [6] $34,203 $0 $0 $0 $0 $0 [1] Amounts shown derived from Table 13 at the end of this report. Totals may vary due to rounding. [2] Amounts shown include the gross expenses of the system, including the cost of shared or remitted revenues such as, franchise fees collected on behalf of the County and shared electric revenues due to the County's contracted WTE facility operator. [3] Reflects transfers to the landfill closure fund, transfers to the recycling fund from recovered materials revenues and funding for certain capital equipment identified from the capital program. [4] Includes revenues from advance disposal fees related to the C&D ordinance, contracted disposal of sludge, Hurricane Irma reimbursements, and other miscellaneous revenues. [5] Reflects the current period percent increase in disposal revenues. [6] Reflects Assumed transfers to / (from) operating reserves. As can be seen above the existing disposal assessment and tipping fee revenues are not projected to be sufficient to fund the disposal -related revenue requirements of the System due to increases in the cost of operation, capital funding, and anticipated declining income and funds from other sources (e.g., recycling revenues) which serve to offset the funding requirements of the disposal assessment and fees. For more information on the recommended Fiscal Year 2021 rates for service, please reference Section 9 of this report, which provides detail concerning the application of the identified rate increases to proposed rates. Bond Resolution and Rate Covenant Compliance Upon issuance of the Series 2016 Bonds, the Bond Resolution took effect and superseded the prior Trust Indenture. The Bond Resolution recognized, among other things, certain changes to the definitions, creation of funds, and calculation of compliance with the Rate Covenant. The following provides a listing of the primary changes to the definitions and creation of funds, which affect the determination of projected operating results and compliance with the Rate Covenant. The following does not represent an authoritative or complete listing of changes from the prior Trust Indenture to the Bond Resolution. -36- The Bond Resolution provides for the creation of the Rate Stabilization Fund. The Rate Stabilization Fund represents a reserve available for the needs of the System to minimize the risk of default on the payment of Annual Debt Service for the Bonds. For compliance with the Rate Covenant, transfers from the Rate Stabilization Fund may be recognized as a component of Gross Revenues up to the Rate Stabilization Amount if transferred within 120 days of the respective close of the Fiscal Year, further defined as an amount not greater than 25% of prior year's ending cash balance within the Rate Stabilization Fund. Conversely, Funds transferred to the Rate Stabilization Fund have the effect of reducing Gross Revenues for determining compliance with the Rate Covenant. 2. The definition of Gross Revenues was revised to include: Recovered Materials Revenues derived from the operation of the MRF; b. Transfers from the Rate Stabilization Fund, up to the Rate Stabilization Amount, having the effect of increasing Gross Revenues; and C. Transfers to the Rate Stabilization Fund having the effect of decreasing Gross Revenues. The definition of Operating Expenses was revised to exclude: OPEB accruals and instead recognizes actual OPEB outlays; and b. Expenses funded from the Renewal and Replacement Fund (i.e., major maintenance or extraordinary expenditures). 4. The required transfer to the Renewal and Replacement Fund are governed by the flow of funds described in Section 4.05 of the Bond Resolution and the definition of the Renewal and Replacement Fund Requirement. The specific changes to the Bond Resolution are related to the required minimum annual deposit should the balance within the Renewal and Replacement Fund be less than the Renewal and Replacement Fund Requirement. The minimum annual transfer is established as either: 5% of prior year's Gross Revenues; or b. Such other amount as recommended by the Consulting Engineers. The change is intended to support a minimum transfer to the Renewal and Replacement Fund that may be more appropriate, at times, than the default of 5% of prior year's gross revenues. As previously discussed, the Debt Service Reserve Account Requirement, is defined as an amount equal to the lesser of: a. Maximum Annual Debt Service for all Outstanding Bonds secured thereby; b. 125% of the average Annual Debt Service for all Outstanding Bonds secured thereby; C. the maximum amount of Bond proceeds which may be deposited to the Debt Service Reserve Account without subjecting the same to yield restriction under the Code provided; or d. The County may establish by Supplemental Resolution a different Debt Service Reserve Account Requirement with respect to any particular Series of Bonds, which Debt Service Reserve Account Requirement may be $0.00. -37- 6. The Rate Covenant for the Bond Resolution is a two-part test as follows: Net Revenues, together with the Net Position, must equal at least 120% of the Annual Debt Service becoming due in such Fiscal Year; and b. Net Revenues shall be adequate at all times to pay in each Fiscal Year at least (1) 100% of the Annual Debt Service becoming due in such Fiscal Year, and (2) 100% of any amounts required by the terms thereof to be deposited in the Renewal and Replacement Fund or the Debt Service Reserve Account or with any issuer of a Debt Service Reserve Account Letter of Credit or Debt Service Reserve Account Insurance Policy in such Fiscal Year to pay Policy Costs. For informational purposes, projected compliance with the Rate Covenant with and without rate stabilization transfers was evaluated for the Forecast Period and presented as follows: Bond Resolution Debt Service Coverage (Net Revenues) 300% 5410/, 250% 200% 150% 109% 100% 50% 0% 2170/ 2170/ 226% 226% 2020 2021 2022 2023 2024 2025 � w/o Rate Stab. / IRMA I Bond Resolution Coverage — Minimum Target • • Forecast Target Prior to the Fiscal Year 2016, the Department had experienced recurring declines in the debt service coverage and resulted in a credit rating downgrade by Moody's Investor Service from A3 to Baa1[61. In response, the County adopted a series of rate adjustments over the last several years, which have significantly improved the Net Revenues of the System. As can be seen from the chart above, and assuming the implementation of the recommended and identified rate revenue increases, the System Net Revenues are projected to produce sufficient revenues to generate debt service coverage equal to or above the minimum target (i.e., coverage requirement in the Bond Resolution) for the entire Forecast Period. For additional information concerning the calculation of historical and projected compliance with the Rate Covenant, please reference Tables 16 and 17 found at the end of this report. Recommended Financial Targets Recognizing the credit downgrade as previously discussed and the desire for the long-term financial sustainability of the County's solid waste enterprise fund, it is recommended that the County consider [6] Moody's provides the following rankings for investment grade credits from highest to lowest as follows: Aaa, Aal, Aa2, Aa3, Al, A2, A3, Baal, Baa2, Baa3. -38- minimum financial targets in order to promote the creditworthiness of the System. The following objectives were recognized in consideration of the financial targets: Maintain adequate reserves to provide hedges against unplanned events associated with: i) sudden changes in market demand for sale of recovered materials; ii) revenue reductions / increased costs associated with short- or long-term facility outages, including changes in the determination of the rates earned from the sale of electricity generated from the County's existing or future facilities; and iii) non -recurring expenditures needed in instances of emergencies or Force Majeure Incidents (as later defined); • Target minimum financial metrics greater than those required by the Bond Resolution or subordinate loan agreements to promote the increased ability to be in compliance with the various rate and financial covenants of such agreements; • Maintain adequate rates and charges to produce sufficient revenues and financial margins to fully cover operating expenses, debt service payments, identified capital expenditures, required transfers and funding for cash reserve targets; • Maintain and promote a strong financial condition aimed at preserving and enhancing the Enterprise Fund bond ratings to minimize capital project financing costs and promote long-term System sustainability; and • The desire to maintain reasonable and well justified levels of rates and fees over the long run, in accordance with good business practices. In general, the financial targets are more restrictive than the minimum legal requirements as may be contained in Bond Resolution or subordinate loan agreements as later defined. The following table provides a brief summary of the principal financial metrics and targets recommended and reflected in the financial plan presented in this Study: (Remainder of Page Intentionally Left Blank) -39- Financial Metrics and Targets Description Basis Purpose Minimum Cash Reserves: 1.1) Operating Reserve Target 1.2) Capital Reserve Target 1.3) Closure Target 1.4) Aggregate Reserve Target Debt Capacity and Coverage: 2.1) Debt Capacity 2.2) All -in Coverage Capital Reinvestment: 3.1) Capital Reinvestment Maintain a minimum of 150 days of operating expenses within operating reserve cash balances. Maintain the greater of: a) 6% of prior year's gross assets; or b) the average annual cost of the five- or ten-year CIP. Maintain the estimated liability of landfill closure costs + one year of post -closure liability. Maintain an aggregate reserve balance at least equal to one year of budgeted Operating Expenses. Maintain a minimum Debt to Revenue Ratio from 4.Ox to 6.Ox calculated as: =[Outstanding Principal All -in Debt — Cash Balance in Debt Service Reserve Account] / [Gross Revenues — Transfers from Rate Stabilization Fund] Maintain at least 1.20x all -in debt coverage To promote the maintenance of a minimum working capital reserve balance for operating needs of the System and unexpected loss of revenues (e.g., reduction in electric revenue) or increases in costs. To promote the maintenance of a minimum capital reserve balance for System capital needs (e.g., renewals and replacements) and to allow for ongoing capital re- investment. Represents a minimum cash funded reserve for the future closure and post closure care of the landfill. Reflects an aggregate cash reserve balance in order to maintain the credit worthiness of the System. Provides a maximum range of indebtedness to be issued by the System based on financial metrics utilized by credit rating agencies in the evaluation of the debt capacity of a solid waste enterprise fund. It should be noted that the debt to revenue ratio was assumed in lieu of the debt to net equity ratio since it may be difficult to estimate the net equity associated with the County's WTE facility since repairs and replacements are performed by the County's Contract Operator. Represents a key financial metric used in assessing the creditworthiness of the Department. Transfer at least five percent of prior year's Intended to promote a minimum transfer for capital Gross Revenues, excluding collection needs of the System. revenues, to capital reserves. The County is expected to meet or exceed the recommended targets assuming implementation of the recommended and identified rate revenue adjustments by the end of the Forecast period. The following chart provides a demonstration of initial compliance with the 1.4) Aggregate Reserve Target but falls slightly below the target in the outer years of the Forecast Period. However, it is anticipated that the cash position will continue to improve as shown by the positive trend from Fiscal Years 2023 through 2025. Ending Cash Balances (Excludes Cust. Deposits, Sinking Fund, and Debt Proceeds) 120,000,000 100,000,000 80,000, 000 — 60,000,000 40,000, 000 — 20,000, 000 SEEN 0 2020 2021 2022 2023 2024 2025 � System Reserve Fund � Operations Closure Fund Rate Stabilization � Right Of Way Cleanup � Renewal And Replacement — 365 Days -40- As can be seen from the table above, it is projected that cash reserves are expected to decline during initial period of the Study primarily associated with identified capital funding requirements of the System and increased operating expenses, but generally meet or exceed the minimum targeted cash reserves equal to 12 months of operating expenses for the near -term of the Forecast Period. SECTION 9: COST OF SERVICE AND RATE DESIGN Based on the recommended financial targets, projected cost of revenue requirements and identified rate adjustments, the net system revenue requirements were evaluated relative to the current rate structure comprised of: • Residential Collection and Disposal Assessments; • Disposal Facility Assessment; • Assessed Billing Charge; • Solid Waste Operations and Right of Way Surcharges; and • Tipping Fees by Type of Waste. Costs were allocated by budgetary line item to the various charges based on a rational nexus among the costs and the respective fees. Adjustments to the allocated rates were then made to recognize: i) benefits of an integrated solid waste operation; ii) market comparisons iii) pricing incentives to discourage out-of-town waste; iv) the rate adjustment provisions of certain municipal agreements which provide for restrictions to the annual increase to the tipping fees that may be recognized; and v) general rounding of rates for ease of billing. The following table provides a brief summary of the principal assessments and fees recommended for the Fiscal Year 2021: (Remainder of Page Intentionally Left Blank) -41- Summary of Historical, Existing, and Recommended Rates - Fiscal Year 2021 Historical Existing Recommended Description 2019 2020 2021 Assessments: Collection (Avg. Areas 1-5) [1] $145.62 $145.62 $152.66 Disposal MSW (0.90 - 0.96 Tons) 45.18 45.18 48.19 Disposal Yard Waste (0.26 Tons) 6.62 6.62 6.62 Disposal Facility Assessment Charge (0.90 - 0.96 Tons) 15.53 15.53 16.56 Recycling Fee (0.29 Tons) 0.00 0.00 11.05 Surcharges 0.00 0.00 0.00 Billing Fee 2.45 2.45 2.45 Early Prepayment Gross Up (4%) 8.97 8.97 9.90 Gross Assessment Average for Areas 1-5 [2] $224.37 $224.37 $247.43 Assessment Paid in February = 1% Discount $222.13 $222.13 $244.95 Assessment Paid in January = 2% Discount 219.88 219.88 242.48 Assessment Paid in December = 3% Discount 217.64 217.64 240.00 Assessment Paid in November = 4% Discount 215.40 215.40 237.53 Tipping Fees per Ton by Waste Type MSW [3] $50.20 $50.20 $50.20 Horticulture / Yard Waste 25.46 25.46 25.46 C&D 32.95 32.95 32.95 Class III 32.95 32.95 32.95 Recycling N/A N/A 38.12 Tires 80.00-120.00 80.00-120.00 80.00-120.00 Surcharges per MSW Ton [3] [4] $0.00 $0.00 $0.00 Disposal Facility Assessment per Ton [5] $17.25 $17.25 $17.25 [1] Amounts shown reflect the average fee charged for the franchise collection areas 1-5. [2] Reflects gross assessments before early prepayment discounts as allowed by Florida Statutes, Chapter 197. [3] Unincorporated waste generated by commercial and multi -family customers is charged a gate fee per ton including the addition of the base tipping fee plus applicable surcharges per ton for MSW deliveries. The County does not currently charge any surcharges. [4] Amounts shown are not charged to municipal customers, with exception to Fort Myers Beach, Bonita Springs, and the Village of Estero for which the County provides collection services. The County does not currently charge any surcharges. [5] Presented for informational purposes only since the disposal facility assessment charge is charged to all customers by assessment and to Hendry County as part of their gate fee. As can be seen above, although the recommended rates are designed to recover the targeted revenues as indicated in Section 8 of this report, the recommended fees did not recognize uniform or across-the-board increases. In particular, with respect to the disposal fees the most significant change is the addition of a recycling fee charged both on the residential assessment, based on residential generation of 0.29 tons per unit, and as a tipping fee. Additionally, based on recent trends and historical tonnages, the County is increasing the assessed generation rates for MSW from 0.90 to 0.96 tons per residential unit based on current waste generation levels by this class of customer. The recommended disposal fees and collection fees are targeted to generate a net increase in revenues of approximately $3.2 million and $1.3 million, respectively. The following provides a brief discussion concerning the rate design assumptions in development of the recommended rates: Disposal Fees: Tipper Fees: No changes to the existing tipping fees are proposed for Fiscal Year 2021. Recycling Fee: It is recommended that the County adopt both a tipping fee per ton, to be charged to commercial and multi -family customers, as well as a single-family residential fee per unit charged on the residential assessment. These fees are proposed to help recover the increased net cost of recycling operations and processing. However, it should be noted that the proposed recycling fees do not fully recover the net cost of recycling operations. It is anticipated that funding from other fees will be used -42- to fully fund recycling operations as recycling provides a benefit to the Department's integrated solid waste management system. Surcharges: No surcharges are proposed in the Fiscal Year 2021 recommended rate design. Identified costs associated with solid waste operations were funded through the application of net franchise fee revenues. The nexus of the application of the franchise fee revenues to the surcharges relates to the link among the unincorporated customers associated with the generation of the franchise fee revenues and those same customers, which would pay the surcharges. Disposal Facility Assessment: The Disposal Facility Assessment is designed to recover the fixed costs of the System associated with operation of the disposal facilities. No increase is recommended to the Disposal Facility Assessment. Billing Fees: The billing fee represents a pass -through of the cost associated with charges from the County's property appraiser and tax collector. The recommended fee is equivalent to the proposed fee to be charged by the property appraiser and tax collector. Collection Fees: The recommended changes to the collection assessment reflects the estimated actual cost of collection in each area. Actual changes to collection charges may differ from what is assumed in the forecast based on negotiations. Early Prepayment Discount Pursuant to Florida Statutes, customers may elect to receive a discount of up to 4% if they pay all of the charges and taxes included on the ad valorem tax bill prior to the due date of the bill. The residential solid waste assessment is collected with the tax bill as allowed by Florida Statutes, Chapter 197. The majority of residential customers in the County pay taxes and the solid waste assessment early and receive a discount. The recommended assessment for the Fiscal Year 2021 assumes a mark-up to the calculated fee for the early payment discount. Therefore, if the fall 4% discount is recognized by a property owner the County will collect the full rate for service (after the discount is applied); the mark-up of fees included on the ad valorem tax bill is customary and allows the solid waste enterprise fund to fully collect the fees for service. Customer Impact The residential solid waste bill is expected to increase approximately $23.06 on average (i.e., $1.92 per month) for Fiscal Year 2021 assuming the residential customer receives the same discount from the prior year. Due to the early prepayment discount, the actual charge a customer pays may vary. Residential customers within the municipalities of Cape Coral, Fort Myers, and Sanibel disposing of waste to County facilities may see their annual disposal charges increase approximately $15.73 (i.e., $1.31 a month) for Fiscal Year 2021 assuming application of the proposed tipping fees to assumed deliveries of 0.96 tons of MSW and 0.26 tons of yard waste. It should be clarified that the County is not responsible for collection nor charges such customers for curbside collection for which the respective municipalities administer and control. Additionally, actual impacts to residential customers from application of the Disposal Facility Assessment charge may vary to customers within Cape Coral since the application of the fee is assessed by MSTU. (Remainder of Page Intentionally Left Blank) -43- Rate Comparison In order to provide additional information relative to the fees charged for service, the following table provides a summary of comparable fees charged by other Florida solid waste systems for collection and disposal service to the existing and proposed fees for the County: Solid Waste Fee Comparison with Other Florida Systems Residential Assessment Tipping Fees Description Collection Disposal Total MSW C&D Yard Waste Tires Lee County - Existing [1] [2] $130.25 - $174.38 $72.68 $202.93 - $247.06 $50.20 $32.95 $25.46 $80.00 - $120.00 Lee County - FY21 [1] [2] $135.46 - $181.36 $88.41 $223.87 - $269.77 $50.20 $32.95 $25.46 $80.00 - $120.00 Other Systems with Waste -to -Energy Facilities: Broward County [3] N/A N/A $270.00 N/A $50.00 $50.00 $110.00 Hillsborough County [4] $131.43 $102.89 $234.32 $73.22 $62.38 $37.06 $115.00 Miami -Dade County [5] N/A N/A $484.00 $63.38 $63.38 $63.38 $114.18 Palm Beach County [4] $170.00 - $334.00 $175.00 $345.00 - $509.00 $42.00 $52.00 $30.00 $55.00 Pasco County [4] $206.72 $72.00 $278.72 $65.69 $65.69 $65.69 $200.00 Pinellas County [4] N/A N/A $192.00 $39.75 $39.75 $39.75 $75.00 City of Tampa [4] N/A N/A $418.92 $71.00 $51.00 $71.00 $110.00 Systems without Waste -to -Energy Facilities: Charlotte County [2] $165.00 $50.73 $215.73 $37.60 $37.60 $37.60 $120.12 Collier County [4] N/A N/A $209.87 - $217.50 $72.82 $81.48 $48.51 $198.99 Hernando County [4] $172.80 $69.40 $242.20 $54.50 $45.00 $20.00 $100.00 Manatee County [4] N/A N/A $171.96 $40.00 $61.00 $40.00 $86.00 Polk County [2] $144.50 $44.00 $188.50 $36.50 $36.50 $22.00 $300.00 Sarasota County [2] N/A N/A $159.48 $57.56 $54.00 $41.37 $158.60 Other System Averages $204.75 $85.67 $305.17 $54.67 $54.04 $44.51 $137.18 [1] Amounts shown for the residential assessment reflect the gross assessment before early prepayment discounts. The billing charge is included as a component of the residential disposal assessment. [2] Denotes residential collection service at one day per week for garbage, recycling and yard waste collection. [3] Broward County residential collection includes two days per week for garbage collection, one day per week for recycling collection and one day per month yard waste collection. [4] Denotes residential collection service at two days per week for garbage collection and one day per week for recycling and yard waste collection. Note garbage collection service in Pinellas County is for one or two days per week depending on location. [5] Miami -Dade County residential collection service includes two days per week for garbage / yard waste collection and one day every other week for recycling collection. As can be seen above, the County's proposed rates being recommended for adoption by the BOCC for the Fiscal Year 2021 are projected to remain comparable to and / or below the average charged by the other surveyed Counties for similar solid waste service. SECTION 10: RECOMMENDATIONS Based on the findings of this study the following observations and recommendations are provided for consideration by the BOCC and County administration: The existing disposal and collection fees for service are projected to be insufficient to fund the identified funding requirements of the System and it is recommended that the BOCC consider adopting and implementing the recommended rates for the Fiscal Year 2021; Recognizing the changes in market conditions and pricing for recyclables and the timing of the need for additional disposal capacity, staff should continue to closely monitor and perform annual financial projections to assess the sufficiency of System revenues to meet the expenditure needs of the System and for compliance with the rate covenants and flow of funds requirements delineated in the Bond Resolution and need for additional rate adjustments; -44- In relation the recycling fee, it is recommended that the County perform an audit of the recycling material and generation rates for single-family and multi -family customers; and County should continuously review and update the financial plan to evaluate trends in service area growth, solid waste elements, costs, and capital reinvestment and financing to ensure compliance with the Rate Covenants contained in the Bond Resolution, promote the overall creditworthiness of the System and limit financial risk, and provide for long-term rate sustainability. (Remainder of Page Intentionally Left Blank) -45- LEE COUNTY, FLORIDA FISCAL YEAR 2020 SOLID WASTE REVENUE SUFFICIENCY STUDY LIST OF TABLES Table No. Description ES-1 Dashboard and Summary of Projected Financial Position and Operational Statistics 1 Historical and Projected Assessed Residential Customer Billing Units and Tonnage Statistics 2 Historical and Projected Disposal Facility Assessment Customer Billing Statistics 3 Historical and Projected Waste Flow Summary by Type of Waste 4 Historical and Projected Waste Flow Summary by Disposal Facility 5 Historical and Projected Waste -to -Energy (WTE) Operational Statistics 6 Projected Assessment and Disposal Fee Revenues Under Existing Rates 7 Historical and Projected Electric Sales Revenue 8 Historical and Projected Operating Expenses 9 Projected Operating Expense Escalation Factors 10 Projected Capital Expenditures 11 Projected Annual Debt Service Payments — Accrual Basis 12 Projected Fund Balance and Interest Income 13 Projected Solid Waste Disposal Net Revenue Requirements from Rates 14 Projected Solid Waste Collection Net Revenue Requirements from Rates 15 Projected Solid Waste Disposal and Collection Net Revenue Requirements from Rates 16 Projected Rate Covenant Compliance 17 Historical, Current and Proposed Assessment, Tipping and Gate Fees Q I�1 W �rVT,1� A , W T�^ma/y V1 Ln O 1 1 N a v � 1 LL 1 ~ 1 N a 1 � O o N N � ❑ 1 1 1I m o V 1 1 � 0 O N � V 1 N � 1 ❑ � I 1 N / O c v w / o >� N O m � N j U. in m ate+ w U Q O O O O O o o LO f 1 O 0 O O 0 o O o O o O O o o " 1 N 11 O11 v, v, v' � � � �^ spuesnoyl $ 0^ 00 0� u0i v m N 14 v oo oi suo!II! 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C V N m M oo 64 V O V o0 O N W .6 V V Q N N M h v3 V N h fA O E9 �j N o � �v � yv,yvl � �� `aa°a �a �EQ� � d •G U k '� p d m � � � p crn m � D 0 0 0 0 0 feu v c c c c c a9 G e o o C a 9 .� a k-a J�t PPO6O" Oaa N ,aS FO F. 000 00 WW W W0.W W000 ma �' a�.a�r'�r'�r'�m000m000 '-'moNON 'z 000m000m000 . . i . . . . . . C d V N T 69 69 69 Y V N T O fA fA fA Hf y . i. i. i. i. d N h Q G ON M W W m o q e N � r N 69 69 69 Y p . . . . . . . . . ......... . . N R O O a W o m 69 69 69 Y T N N N N N N V V �O n oo N N d N �n �v mac r m b a a r ml r F» F» F» n eo c �v m a E 0 0 N e U � � Q [v0 c7 U.,�OOa o 0 o Gd o 0 F F O F F C7 j 'z m o0 00 00 00 0`�0 00 00 00 00 00 00 00 00 00 Page 1 of 1 Table 9 Lee County, Florida Solid Waste System Fiscal Year 2020 Rate Study Proiected Operating Expense Escalation Factors Line Escalation Fiscal Year Ending September 30, No. Description Reference 2021 2022 2023 2024 2025 Operating Escalation Factors 1 Constant Constant 1.0000 1.0000 1.0000 1.0000 1.0000 2 General Inflation - Consumer Price Index (CPI-U) [*] Inflation 1.0230 1.0250 1.0250 1.0250 1.0240 3 Labor Labor 1.0300 1.0300 1.0300 1.0300 1.0300 4 Electric Electric 1.0250 1.0250 1.0250 1.0250 1.0250 5 Water and Sewer W&S 1.0500 1.0500 1.0500 1.0500 1.0500 6 Gas / Fuel Fuel 1.0400 1.0400 1.0400 1.0400 1.0400 7 Chemicals Chemicals 1.0375 1.0375 1.0375 1.0375 1.0375 8 Health Insurance HealthIns 1.0350 1.0350 1.0350 1.0350 1.0350 9 Solid Waste Disposal Fee Increase DisposalRate 1.0300 1.0300 1.0300 1.0300 1.0300 10 Repairs and Maintenance Repair 1.0311 1.0311 1.0311 1.0311 1.0311 11 Eliminate Eliminate 0.0000 0.0000 0.0000 0.0000 0.0000 12 Calculated Calculated 1.0000 1.0000 1.0000 1.0000 1.0000 13 Population Growth Pop 1.0221 1.0208 1.0197 1.0187 1.0179 14 Change in Population Growth Pop Change 0.9478 0.9420 0.9469 0.9494 0.9567 15 Population + Inflation Pop+Inf 1.0456 1.0463 1.0452 1.0442 1.0423 16 Population + Landfill Pop+LF 1.0257 1.0523 1.0460 1.0402 1.0349 17 Landfill LF 1.0036 1.0308 1.0258 1.0211 1.0167 18 Inflation + Landfill Inf+LF 1.0266 1.0558 1.0508 1.0461 1.0407 19 Labor + Landfill Labor+LF 1.0336 1.0608 1.0558 1.0511 1.0467 20 Disposal Cost Center Hauling Costs (WTE to LHLF) DisposalHauling 1.0360 1.0458 1.0426 1.0395 1.0355 21 Landfill Cost Center Hauling Costs (Sludge to LHLF) SludgeHauling 1.0353 1.0366 1.0360 1.0355 1.0340 22 Franchise Hauler MSW Diversions FranchiseDivert 1.0346 1.0342 1.0325 1.0309 1.0283 23 Municipal Cost Index MCI 1.0258 1.0258 1.0258 1.0258 1.0258 24 Urban Wage Earners and Clerical Workers (CPI-W) CPI-W 1.0250 1.0250 1.0250 1.0250 1.0250 25 Employment Cost Index (NAICS) - Total Compensation NAICS-A 1.0250 1.0250 1.0250 1.0250 1.0250 26 Employment Cost Index (NAICS) - Salaries and Wages NAICS-B 1.0250 1.0250 1.0250 1.0250 1.0250 27 Machinery and Equipment Index Machine 1.0300 1.0300 1.0300 1.0300 1.0300 Cumulative Capital Improvement Plan Escalation Factors 28 Constant Constant 1.0000 1.0000 1.0000 1.0000 1.0000 29 Capital Outlay Outlay 1.0300 1.0610 1.0930 1.1260 1.1600 30 Repairs and Maintenance Repair 1.0311 1.0630 1.0960 1.1300 1.1650 31 Marginal Increase Marginal 1.0100 1.0200 1.0300 1.0400 1.0500 32 High Increase High 1.0500 1.1030 1.1580 1.2160 1.2770 33 Inflation Inflation 1.0230 1.0490 1.0750 1.1020 1.1280 Footnote: [*] Inflation figures obtained from the "The Budget and Economic Outlook: An Update" published by the Congressional Budget Office in August 2019 w 0 bq 0. O F O N O M N PC G N O N U r C M N .d O O N W U U w N O N y R � O N lam+' e0+ N w F o3 u � e. � v 7 0 0 7 00 '. l O o0 O O O DD N �--� l� N 7 V't N 10 'n - p m 0 7 0 0o D, M N N o0 h l% h C Q, 00 O O1 r- 00 Vt � 0'n O 'o O Iq Vi t` oo O Oi vi O N �o O oo M oo N vt O o0 O N N oO0 7 01 r .N-� M N O1 00 'n O Q\ N M b9 CC 1p 00 --i M Vl O M 7 7 a0 Vt O O 'n T b9 M V N O o0 l� M 7 N M N 7 00 N •-i \D �o N O 7 'n O Vt Q, 00 D1 O1 m M 00 N O T n 'n l� W 7 O 0� O o0 N O O O O o0 00 O �o M N l� Q1 •-i '!� � W N l� ti h 69 V3 69 69 DD O l� O O O O 1 O M O O N M O 'n vt O lO � O o0 N N M O� •-� m ,--i M O O N o0 69 I V3 b9 I69 O O O O O O O O O O O o0 NC) O CD O O O O N O V't N 7 00 to lc N to O O 7 O m --� N oo M Oi •--� �+i N --' m O o0 N N N O 00 .� m •--i 'n l� O O b9 IV3 V3 I69 00 •-. Vt O l� O N� M O 7 b9 V3 V3 69 0 0 0 0 0 00 0' O Cc,m Q, O O- 0 00 O 7 O 7 cn N D1 O o0 \ o0 O O o0 N W 69 I V3 V3 I69 0o O O 'A O O O O O M O �o �o O m �0 7 N 7 M O1 O o0 O m Oi o 0o vi N o C t+i N ri O O � N --' Q1 00 •-� M O l� oo O 7 69 I6A 69 IV3 V3 I69 O O O' m' 0 0 0' N O O m 0 0 0 0 0' M O 'n O O O DD O O O w O O M 0 0 0 0 0 M O O O O N O O O 7 O O O 'A O O O O vt vt Vt 00000 � oo� 10 �oIcN0-oo 1 C m 7 a, O 'n O 7 N o0 00 00 0o O N 7 a, oo m V N h o0 O o0 cl N N 7 N Vt cl N �10 N o; � R r R m� U U 9� U U m U U m U U 1 U U m U U U U U U I� v 9 8 g 8 � � FG 0.! FG P.' dr Gd dr 69 69 a 0 0 U U d .0. O � � U v i c* o e a p o23 u > vA.• _ ea U ? 0.' C ;? C 09 C 'd 'O U U id y J7 p U. O C V bA C U G7 a o o£ ° o v o a a r r w cry '❑ v] •, c°�i �'' U mv a� •o iw a 04.4 cl �+`o R o Cx U o >> Ge0 UU0U7:Ae; Qo cG�0.o1q °?w £ •o �pa�p',�a�p,7 mF �aa��cGcC9049 � :, U°a £ P40� „ UUa aad7P4P4P4043 d F A M---- O N M 7 'n 'r N M N 7 M 00 Vl a, O O 10 M Vl 00 00 00 00 00 7 7 7 7 1� !` r d' \o 0, t` 0 0, 01 lh 0 0 0= O 0 S 0 0 0 0 N N N p 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O to M M 'z h 0 Cl 0 0 0 0 0 0 N 0 0 0 0 Cl 0 0 r 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N 7 7 7 7 7 V 7 V y O w Page 1 of 1 Table 11 Lee County, Florida Solid Waste System Fiscal Year 2020 Rate Study Proiected Annual Debt Service Payments - Accrual Basis Line Fiscal Total Debt Service - Existing and Proposed Total Ending No. Year Principal Interest Total Principal Outstanding 1 2020 $ 6,075,000 $ 2,482,750 $ 8,557,750 $ 43,580,000 2 2021 6,385,000 2,179,000 8,564,000 37,195,000 3 2022 6,715,000 1,859,750 8,574,750 30,480,000 4 2023 7,065,000 1,524,000 8,589,000 23,415,000 5 2024 7,425,000 1,170,750 8,595,750 15,990,000 6 2025 7,795,000 799,500 8,594,500 8,195,000 7 2026 8,195,000 409,750 8,604,750 - 8 2027 - - - - 9 2028 - - - - 10 2029 - - - - 11 2030 - - - - 12 2031 - - - - 13 2032 - - - - 14 2033 - - - - 15 2034 - - - - 16 2035 - - - - 17 2036 - - - - 18 2037 - - - - 19 2038 - - - - 20 2039 - - - - 21 2040 - - - - 22 2041 - - - - 23 2042 - - - - 24 2043 - - - - 25 2044 - - - - 26 2045 - - - - 27 2046 - - - - 28 2047 - - - - 29 2048 - - - - 30 2049 - - - - 31 2050 - - - - 32 2051 - - - - 33 2052 - - - - O l� 00 O —�t M Cl) �t 0 0 O o O O 7 vn O Vl o O O 7 7� O� ON �O �o O O O 01 N O� Vl Vl O1 o0 o0 00 l- 17 7 ' Vl O� 01 01 �--i vl M N l— \.O l— M ON ON 7 M �O �o M 00 7 N O, O O O, 00 00 O, 01 ON N N N N r- o0 r- M Vl o0 o0 00 l— 01 ON h 00 00 00 _O 69 01 O� 69 69 b9 V N 00 QD M o0 01 k!l W, Cl O1 M o0 l� 'O N M Vl 01 N O ON M 01 rn O, O M O l� M--� O� 01 M N N--i .--i M W N � 00 r- M M 00 [� 00 00 69 M _O 69 O1 01 69 69 69 M N 7 0 h r- o O O 7 Vl O Vl o O O O, 7 7 O O O a1 N O r- O O O O� l� Vl O 00 Vl CO o0 O� N N Vl O� a1 a1 O o0 V1 N N M M 7 r 00 M l— 0� 7 M 01 O, a O O M �O a �O "O N i O O, M O 011 GO M 00 l— M a1 00 7 00 N r- 00 0� M 01 O, --i -r 01 M Vl 00 �O Vl O --i --i N r- C- M N 00 kr M Lr l- M 00 00 y� 69 M N O 69 01 O, 69 69 1 69 D j kn 00 M kn O O O O kn o O O [� N O, 00 00 O O O 01 Vl Vl [l- O O O i 01 �O W,M oc, 00 00 _O O� l� I� k!1 M Vl lr �!1 N M N l— �O kn M 01 V M 11O \O .--i O O M N � .--� M M t N O� kn O O� 'ITO� r 'ITM O, O O O, 00 [— O a0 N 01 M a0 a0--i N r- M � 00 � �c 01 [l O O [- 00 00 69 M--i N O 69 O1 O\ 69 69 i 69 7 0 l— Vl O N M W7 0 Vl Vl o O O 7 Vl O In o O O 00 7 00 4 M O� N N O O O 41 N O r- O O O O� N Vl 7 CO 00 vl O� l- l- V1 O� a1 41 O GO Vl O O M M M a O O M It Vl --i N ON 00 O ON a1 M 7 C� N �O O N r- r- M �O 00 M �O O 00 00 l— l— 00 00 69 M N _ 69 00 00 69 69 b9 W) .; 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O a�idd O kn a, CD It Page 1 of 2 Table 16 Lee County, Florida Fiscal Year 2020 Rate Study Projected Rate Covenant Compliance [11 Line Fiscal Year Ending September 30, No. Description 2020 2021 2022 2023 2024 2025 Gross Revenues 1 Collection Revenues $ 25,043,980 $ 26,703,282 $ 27,565,701 $ 28,438,944 $ 29,323,321 $ 30,222,106 2 Disposal & Other Charges 53,111,924 57,584,421 60,835,133 64,205,070 67,694,068 70,643,196 3 Total Rate Revenues [2] 78,155,904 84,287,703 88,400,833 92,644,014 97,017,388 100,865,302 Other Revenue and Income 4 WTE Facility - Gross Electric Sales [3] $ 8,898,850 $ 8,900,318 $ 8,899,803 $ 8,899,309 $ 8,898,834 $ 8,898,376 5 Gross Ferrous and Non -Ferrous Revenues [4] 2,748,294 2,748,294 2,748,294 2,748,294 2,748,294 2,748,294 6 Gross Franchise Fee Revenues 2,700,000 2,700,000 2,756,119 2,810,361 2,862,870 2,914,048 7 Other Miscellaneous Revenues 440,000 440,000 440,000 440,000 440,000 440,000 8 Interest Income 1,052,100 1,479,900 1,439,200 1,387,800 1,336,100 1,336,200 9 Recycling Revenues [5] - - - - - - 10 Recycling Residue 965,392 994,354 1,024,184 1,054,910 1,086,557 1,119,154 11 Recycling Host Fees 500,000 500,000 500,000 500,000 500,000 500,000 12 Hurricane Irma Reimbursements 37,002,070 - - - - - 13 Transfers From / (To) Rate Stabilization Fund [6] - 14 Total Other Revenue and Income $ 54,306,706 $ 17,762,866 $ 17,807,600 $ 17,840,673 $ 17,872,656 $ 17,956,071 15 Total Gross Revenues $ 132,462,610 $ 102,050,569 $ 106,208,433 $ 110,484,686 $ 114,890,044 $ 118,821,373 Operating Expenses [7] 16 ROW Clean Up $ - $ - $ - $ - $ - $ - 17 Facilities 609,116 624,562 641,289 658,469 676,115 693,764 18 Operations/SW MGMT 28,838,908 30,079,286 31,023,831 31,980,140 32,948,624 33,923,319 19 Recycling 5,853,980 5,652,031 5,893,868 6,143,188 6,399,499 6,656,914 20 Disposal / WTE / Yard Waste 40,088,792 40,884,327 41,854,634 42,917,941 44,000,138 45,101,545 21 Buckingham Transfer Station / Diversion Transport 332,784 341,437 358,859 375,696 391,852 406,861 22 Hazardous Waste 984,715 1,011,498 1,039,940 1,069,192 1,099,277 1,129,729 23 Vehicle Maintenance - - - - - - 24 C&D Facility 1,520,729 1,561,716 1,605,407 1,650,337 1,696,542 1,743,211 25 Transfer Stations 461,740 475,563 490,011 504,911 520,275 536,012 26 LHLF 4,256,437 4,307,424 4,462,685 4,648,965 4,865,402 5,445,177 27 Closure 5,000 5,115 5,243 5,374 5,508 5,640 28 Solid Waste Fleet 3,215,158 3,320,766 3,431,022 3,545,034 3,662,935 3,784,287 29 Total Operating Expenses $ 86,167,359 $ 88,263,725 $ 90,806,789 $ 93,499,247 $ 96,266,167 $ 99,426,460 30 Net Revenues $ 46,295,251 $ 13,786,844 $ 15,401,644 $ 16,985,440 $ 18,623,877 $ 19,394,913 31 Fund Balance [8] 48,416,004 44,626,831 42,662,037 40,404,683 41,648,949 43,304,634 32 Net Revenues and Fund Balance $ 94,711,254 $ 58,413,675 $ 58,063,681 $ 57,390,123 $ 60,272,826 $ 62,699,547 Annual Debt Service [9] 33 Existing Bonds 8,557,750 8,564,000 8,574,750 8,589,000 8,595,750 8,594,500 34 Additional Bonds - - - - - - 35 Total Annual Debt Service $ 8,557,750 $ 8,564,000 $ 8,574,750 $ 8,589,000 $ 8,595,750 $ 8,594,500 Rate Covenant (Section 5.04): Test A: Net Revenues + Fund Balance 36 Calculated Coverage 11.07 6.82 6.77 6.68 7.01 7.30 37 Minimum Required Coverage 1.201 L 1201.1.2011 1.2011 1.201 L 1.20 AND Test B: Net Revenues Only 38 Calculated Coverage 5.41 1.61 1.80 1.98 2.17 2.26 39 Minimum Required Coverage 1 .001 L 1.00 1.0011 1.0011 1.001 L 1.00 40 Net Available After Debt + Coverage $ 37,737,501 $ 5,222,844 $ 6,826,894 $ 8,396,440 $ 10,028,127 $ 10,800,413 Other Required Transfers 41 Subordinate Debt Service - - - - - - 42 Debt Service Reserve Requirement 43 Renewal and Replacement Fund Requirement - - - - - - 44 Net Amount After Required Transfers $ 37,737,501 $ 5,222,844 $ 6,826,894 $ 8,396,440 $ 10,028,127 $ 10,800,413 45 Net Revenues After Debt Service $ 37,737,501 $ 5,222,844 $ 6,826,894 $ 8,396,440 $ 10,028,127 $ 10,800,413 Page 2 of 2 Table 16 Lee County, Florida Fiscal Year 2020 Rate Study Projected Rate Covenant Compliance [11 Line Fiscal Year Ending September 30, No. Description 2020 2021 2022 2023 2024 2025 Other Funding Requirements 46 Landfill Closure Fund $1,310,542 $1,444,917 $1,523,059 $1,622,848 $1,740,646 $1,796,709 47 Capital Acquisitions / Capital Outlay Funded from Rates 2,576,500 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 48 Net Available for Other System Purposes $ 41,624,543 $ 9,167,761 $ 10,849,953 $ 12,519,288 $ 14,268,772 $ 15,097,122 Footnotes: [1 ] Unless otherwise noted, amounts shown are calculated pursuant to the definitions and provisions of rate covenant pursuant to the draft of the Bond Resolution (the "Bond Resolution"). [2] Amounts shown represent Assessments, Tipping Fees and Surcharges calculated based on the reported and forecasted customer and tonnage billing statistics applied to the adopted and/or assumed rate adjustments recognized during the Forecast Period. [3] Amounts shown reflect the gross electric revenues. Pursuant to the agreement with the County's contract operator for the Waste -to -Energy (the "WTE") facility, the County remits 10% of electric revenues to the operator. The remission of revenues is reported as an operating expense for the WTE facility. [4] Ferrous and non-ferrous revenues are shown gross, of which fifty percent (50%) is shared with the contract operator for the facility and reflected as a cost of operation. [5] Pursuant to the proposed Bond Resolution, the County may recognize recycling revenues associated with shared revenues produced from operation of the Materials Recovery Facility (the "MRF"). [6] Pursuant to the proposed Bond Resolution, moneys deposited from / (to) the Rate Stabilization Fund may either be recognized as an increase/(reduction) to Gross Revenues for purposes of calculating compliance with the Bond Resolution. It should be noted that deposits from the Rate Stabilization (i.e., increasing Gross Revenues) may not be greater than 25% of Net Revenues (referred to as the "Rate Stabilization Amount") [7] Amounts shown are net of depreciation, amortization of capital costs and preparation and closures of landfill, among other things, pursuant to the definition of Operating Expenses for the Trust Indenture. [8] The proposed Bond Resolution defines "Fund Balance" as "...an amount of money equal to the unencumbered moneys on deposit in the Solid Waste System Reserve Fund as of September 30 of the immediately preceding Fiscal Year. Moneys shall be considered unencumbered to the extent such moneys are unrestricted and may be used for any lawful purpose relating to the Solid Waste System." [9] Amounts shown reflect the accrued payments for Annual Debt Service or when the payments must be deposited to the sinking fund in advance of when the actual payment is due. Line No. Table 17 Lee County, Florida Solid Waste System Fiscal Year 2020 Rate Study Historical, Current, and Recommended Assessment, Tipping and Gate Fees Historical Existing Description 2019 2020 Page 1 of 2 Recommended 2021 Residential Disposal and Collection Assessment 1 Area 1 - Bonita/Ft. Myers Beach $ 214.32 $ 214.32 $ 235.71 2 Change - Amount $ - $ 21.39 3 Change - Percent 0.00% 9.98% 4 Area 2 - SFM West/lona-McGregor/Captiva $ 202.94 $ 202.94 $ 223.87 5 Change - Amount $ - $ 20.93 6 Change - Percent 0.00% 10.31% 7 Area 3 - SFM East/San Carlos $ 230.57 $ 230.57 $ 252.60 8 Change - Amount $ - $ 22.03 9 Change - Percent 0.00% 9.55% 10 Area 4 - East/Lehigh $ 226.98 $ 226.98 $ 255.21 11 Change - Amount $ - $ 28.23 12 Change - Percent 0.00% 12.44% 13 Area 5 - Pine Island/NFM S 247.07 S 247.07 $ 269.77 14 Change - Amount $ - $ 22.70 15 Change - Percent 0.00% 9.19% 16 Disposal Facility Assessment (Grossed Up) $ 17.97 $ 17.97 $ 17.97 17 Change - Amount $ - $ - 18 Change - Percent 0.00% 0.00% Gate Fee for Tipping Waste per Ton 19 MSW - Base Tip Fee $ 50.20 $ 50.20 $ 50.20 20 Change - Amount $ - $ - 21 Change - Percent 0.00% 0.00% Gate Fee for Tinpine Waste per Ton (continued) 22 MSW Gate Fee - Unincorporated $ 50.20 $ 50.20 $ 50.20 23 Change - Amount $ - $ - 24 Change - Percent 0.00% 0.00% 25 MSW Gate Fee - Hendry County $ 72.45 $ 72.45 $ 72.45 26 Change - Amount $ - $ - 27 Change - Percent 0.00% 0.00% 28 C&D - Tip Fee per Ton $ 32.95 $ 32.95 $ 32.95 29 Change - Amount $ - $ - 30 Change - Percent 0.00% 0.00% 31 C&D & Class IlI Gate Fee - Hendry County $ 37.95 $ 37.95 $ 37.95 32 Change - Amount $ - $ - 33 Change - Percent 0.00% 0.00% 34 Class III - Tip Fee per Ton $ 32.95 $ 32.95 $ 32.95 35 Change - Amount $ - $ - 36 Change - Percent 0.00% 0.00% 37 Yard Waste - Tip Fee per Ton $ 25.46 $ 25.46 $ 25.46 38 Change - Amount $ - $ - 39 Change - Percent 0.00% 0.00% Page 2 of 2 Table 17 Lee County, Florida Solid Waste System Fiscal Year 2020 Rate Study Historical, Current, and Recommended Assessment, Tipping and Gate Fees Line Historical Existing Recommended No. Description 2019 2020 2021 40 Yard Waste Gate Fee - Hendry County $ 30.46 $ 30.46 $ 30.46 41 Change - Amount $ - $ - 42 Change - Percent 0.00% 0.00% Tires - Tip Fee per Ton $80.00 - $120.00 $80.00 - $120.00 $80.00 - $120.00 43 Change - Amount $ - $ - 44 Change - Percent 0.00% 0.00% Commercial (Non-XXL) Tires - Tip Fee per Ton - Hendry County $120.00 - 160.00 $120.00 - 160.00 $120.00 - 160.00 45 Change - Amount $ - $ - 46 Change - Percent 0.00% 0.00% 47 Sludge - Tip Fee per Ton $ 50.20 $ 50.20 $ 50.20 48 Change - Amount $ - $ - 49 Change - Percent 0.00% 0.00% 50 Sludge Gate Fee - Hendry County $ 72.45 $ 72.45 $ 72.45 51 Change - Amount $ - $ - 52 Change - Percent 0.00% 0.00% 53 Recycling - Tip Fee per Ton N/A N/A $ 38.12 54 Change - Amount N/A N/A 55 Change - Percent N/A N/A Manatee County FLORIDA Project Name: Bond Feasibility Report for the Issuance of Public Utilities Revenue Improvement Bonds, Series 2018 Date: August 2, 2018 This study provides an example of a bond feasibility disclosure report (FFR) prepared in support of the issuance of $74,695,000 of Public Utilities Revenue Improvement Bonds, Series 2018 (the "Series 2018 Bonds") to fund capital improvements to the County's water and wastewater utility system and to refund a portion of the outstanding utility bonds for interest rate savings. The pledge for repayment of the Series 2018 Bonds was essentially from the Net Revenues of the System, which included the water, wastewater, solid waste, and stormwater utility systems. Responsibilities included: • Preparation of a 5-year historical rate covenant compliance and "flow of funds" trend analysis. • Development of a financial forecast of utility operations and cash flow for bond resolution compliance purposes which included a detailed financial projection of customers and sales, revenues, and expenses, recognizing the current economic and market conditions and the development of a capital funding plan and assisted staff in timing of project implementation. • Preparation of the additional bonds test required for the issuance of additional parity bonds. • Assisting the County and its Financial Advisor with the structuring of the debt based on the net revenue projections presented in the FFR and with the presentation of the utility's financial position to the credit rating agencies. In addition to the preparation of an FFR in support of capital infrastructure financing, the Project Team has also assisted the County with: i) the establishment of water and wastewater rates and impact fees for the water and wastewater system; ii) the implementation of a stormwater utility enterprise fund; iii) assisted in the development of a capacity reservation charge associated with holding capacity for the benefit of new development; and iv) other related utility services. MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT For the issuance of Public Utilities Revenue Improvement Bonds, Series 2018 Appendix D August 2, 2018 19 Public Resources Management Group, Inc. Utility, Rate, Financial and Management Consultants 19 Public Resources Management Group, Inc. Utility, Rate, Financial, and Management Consultants August 2, 2018 Honorable Chair and Members of the Board of County Commissioners Manatee County 1112 Manatee Avenue West Bradenton, FL 34205 Subject: Bond Feasibility Report — Manatee County, Florida — Public Utilities Revenue Improvement Bonds, Series 2018 Ladies and Gentlemen: Presented herein is our Bond Feasibility Report (the "Report") prepared by Public Resources Management Group, Inc. ("PRMG" or the "Feasibility Consultant") in its capacity as the feasibility consultant to Manatee County (the "County") for inclusion in the Official Statement that summarizes our analyses, studies and conclusions with regard to the proposal by the County to issue approximately $70,435,000111 of Public Utilities Revenue Improvement Bonds, Series 2018 (the "Series 2018 Bonds"). The County plans to issue the Series 2018 Bonds to: i) fund certain capital improvements to the water and wastewater system (the "2018 Project"); and ii) pay certain expenses related to the issuance and sale of the Series 2018 Bonds. Capitalized undefined terms referenced in this letter shall have the meaning ascribed thereto in the Bond Resolution as defined later in this Report. The primary purpose of this Report is to summarize our estimate of the financial projections of the County's water, wastewater, (including, without limitation, any reuse or reclaimed water system owned, operated and maintained by the County) solid waste system, and the stormwater management system (collectively, the "Public Utilities System" or the "System") for the fiscal years ending September 30, 2018 through September 30, 2023 (the "Forecast Period") and the ability of the revenues derived from System operations to meet the estimated expenditure and funding obligations of such System. As such, the Report includes, among other things, discussions of. i) the capital improvement needs anticipated and identified by the County to be financed by System operations and System debt; ii) recent historical and projected sales and customer growth and usage statistics; iii) the schedule of the prior, currently effective, adopted, and anticipated rates and fees for ongoing service from the respective systems (enterprise funds) that comprise the Public Utilities System; and iv) the recent historical and projected financial operating results of the System. The forecast of operating results include projections of the ability of the System to meet the rate covenant requirements as set forth in Resolution No. R-91-21 adopted by the Board [ 1 ] Preliminary, subject to change. 341 NORTH MAITLAND AVENUE — SUITE 300 — MAITLAND, FL 32751 Tel: 407-628-2600 • Fax: 407-628-2610 • Email: PRMG@PRMGinc.com • Website: www.PRMGinc.com Honorable Chair and Members of the Board of County Commissioners Manatee County August 2, 2018 Page 2 of County Commissioners of Manatee County (the "Board") on January 15, 1991, as amended and supplemented from time to time (collectively, the "Bond Resolution") authorizing among other currently Outstanding Bonds, the issuance of the Series 2018 Bonds, and the issuance of additional parity bonds during the Forecast Period as discussed in more detail in the Report. The financial projections in this Report, associated with the issuance of the Series 2018 Bonds, were based on discussions with and information provided by the management of the County; the County's financial advisor, Public Resources Advisory Group, Inc. for the County (the "Municipal Financial Advisor"); Carollo Engineers, Inc. as the Consulting Engineer for the County (the "Consulting Engineers"); as well as certain assumptions and analyses made by us with respect to such financial projections. CONCLUSIONS Based upon the principal considerations and assumptions and the results of our studies and analyses, as summarized in this Report, which should be read in its entirety in conjunction with the following, we are of the opinion that: 1. Based on the customer and water sales forecast prepared for this Report and assuming the continuation of ongoing renewals, replacements and additions, the Water System currently has sufficient permitted water supply and treatment capacity to meet the projected service area needs of the Water System assumed for the development of the financial forecast for the Forecast Period. 2. Based on the customer and wastewater flow forecast prepared for this Report and assuming the continuation of ongoing renewals, replacements and additions, the Wastewater System currently has sufficient permitted wastewater treatment and effluent disposal capacity to meet the projected service area needs of the Wastewater System assumed for the development of the financial forecast for the Forecast Period. 3. Based on the customer and solid waste generation or disposal forecast prepared for this Report and assuming the continuation of ongoing renewals, replacements and additions, the Solid Waste System currently has sufficient permitted disposal capacity to meet the projected service area needs of the Solid Waste System assumed for the development of the financial forecast for the Forecast Period. 4. The projections of growth in customers and usage / sales of the System for the Forecast Period were presented to the County and are considered to represent reasonable and attainable projections for the purposes of this Report. 5. The projected growth in System Operating Expenses for the Forecast Period were presented to the County and are considered to represent conservative projections for the purposes of this Report. Honorable Chair and Members of the Board of County Commissioners Manatee County August 2, 2018 Page 3 6. The System revenues for the Forecast Period under the County's currently effective rates as delineated in the County's Utility Rate Resolution and Solid Waste Rate Resolution, as defined hereafter in this Report, along with adoption of additional proposed rate adjustments as identified in this Report, should be sufficient to pay the projected Operating Expenses, the estimated Annual Debt Service Requirement on the Outstanding Bonds, the Series 2018 Bonds, and additional parity bonds anticipated to be issued during the Forecast Period, and make projected deposits to the Capital Improvement Fund, which is available for paying the cost of additions, extensions, and improvements and the cost of replacement or renewal of capital assets of the System or extraordinary repairs to the System. 7. Based on the assumptions discussed hereinafter in this Report, which are considered reasonable by the Feasibility Consultant, the Net Revenues of the System are projected to comply with the rate covenant as delineated in the Bond Resolution. 8. The approved rates for water and wastewater service are comparable to charges for similar service provided by other publicly -owned utilities located in proximity to the County in the west -central and southwestern portions of Florida. 9. The approved rates for solid waste collection and disposal are comparable to similar charges for similar service for other communities located in proximity to the County in the west - central and southwestern portions of Florida. 10. The Water and Wastewater System Facility Investment Fees (also known as Impact Fees) are comparable to similar fees charged by neighboring utilities. The Feasibility Consultant considers these fees to be reasonable based on the utility plant in service available to serve new growth and development and the expansion -related capital requirements included in the System's adopted capital improvement plan at the time of fee determination. Based on discussions with Department staff, the application of Facility Investment Fees is not expected to negatively affect System growth. (Remainder of Page Intentionally left Blank) Honorable Chair and Members of the Board of County Commissioners Manatee County August 2, 2018 Page 4 The ability of the Net Revenues of the System to meet the Annual Debt Service Requirement and comply with the rate covenants as delineated in the Bond Resolution are solely based on the assumptions and considerations identified in this Report and information obtained during the preparation of the Report regarding the System and the associated financial conditions evaluated herein. As such, the Report should be read in its entirety with respect to such projections. Respectfully submitted, Public Resources Management Group, Inc. Robert J. Ori President Thierry A. Boveri, CGFM Associate Mark A. Tuma Senior Rate Analyst RJO/dlc Attachments MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT PUBLIC UTILITIES REVENUE IMPROVEMENT BONDS, SERIES 2018 TABLE OF CONTENTS Title Page No. Letter of Transmittal Tableof Contents................................................................................................................... i Listof Tables and Figures..................................................................................................... iii Introduction............................................................................................................................1 General................................................................................................................................... 3 Existing System Debt and Plan of Finance............................................................................ 5 Rates, Fees, and Charges....................................................................................................... 6 General.............................................................................................................................. 6 Water and Wastewater Rates for Monthly Service........................................................... 7 FacilityInvestment Fee....................................................................................................12 Miscellaneous Service Charges........................................................................................13 Security (Customer) Deposits.....................................................................................14 Water and Wastewater Connection Fees.....................................................................14 Other Water and Wastewater System Miscellaneous Service Charges ......................15 Solid Waste Collection and Disposal Rates.....................................................................17 StormwaterRates.............................................................................................................19 Water and Wastewater Rate Comparisons.......................................................................19 Solid Waste Collection Service Rate Comparisons......................................................... 21 Solid Waste Landfill Tipping Fee Comparison............................................................... 22 Historical and Projected System Sales and Customer Usage Statistics ................................ 23 General............................................................................................................................. 23 WaterSystem................................................................................................................... 24 WastewaterSystem..........................................................................................................32 -1- MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT PUBLIC UTILITIES REVENUE IMPROVEMENT BONDS, SERIES 2048 TABLE OF CONTENTS (cont'd.) Title Historical and Projected System Sales and Customer Usage Statistics (cont'd.) Page No. SolidWaste System.........................................................................................................37 StormwaterSystem.......................................................................................................... 40 Ten Largest Customers of System................................................................................... 41 Capital Improvements Program............................................................................................ 42 Capital Project Summary.................................................................................................42 Funding Sources for Capital Program..............................................................................42 2018 Project.....................................................................................................................44 Capital Improvement Fund Summary..............................................................................44 Historical Operating Results................................................................................................. 45 General............................................................................................................................. 45 Summary of Historical Operating Results.......................................................................46 Issuance of Additional Bonds.......................................................................................... 50 Projected Operating Results..................................................................................................52 General............................................................................................................................. 52 Principal Considerations and Assumptions Regarding Projected Operating Results ...... 53 Summary of Projected Operating Results........................................................................ 68 Conclusions........................................................................................................................... 69 MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT PUBLIC UTILITIES REVENUE IMPROVEMENT BONDS, SERIES 2018 LIST OF TABLES AND FIGURES Table No. Description Page No. I Summary of Historical Water System Customer Statistics ................................ [*] 2 Summary of Historical Wastewater System Customer Statistics ....................... [*] 3 Summary of Historical Solid Waste System Landfill Disposal and Collection Customer Statistics............................................................................ [*] 4 Summary of Projected Water System Customer Statistics ................................. [*] 5 Summary of Projected Wastewater System Customer Statistics ........................ [*] 6 Summary of Projected Solid Waste System Landfill Disposal and Collection Customer Statistics............................................................................ [*] 7 Projected Capital Improvement Program............................................................ [*] 8 Summary of Historical System Operating Results and Debt Coverage ............. [*] 9 Summary of Projected System Operating Results and Debt Coverage .............. [*] 10 Summary of Projected Water and Wastewater System Operating Expenses ..... [*] 11 Summary of Projected Solid Waste System Operating Expenses ...................... [*] 12 Summary of Projected Stormwater System Operating Expenses ....................... [*] 13 Summary of Projected Ending Cash Balances and Interest Income ................... [*] 14 Summary of Projected Annual Debt Service Requirement ................................ [*] 15 Comparison of Typical Monthly Residential Bills for Water Service ................ [*] 16 Comparison of Typical Monthly Residential Bills for Wastewater Service....... [*] 17 Comparison of Typical Monthly Residential Bills for Water and Wastewater Service............................................................................................. [*] [*] Represents tables that are located at the end of this Report. MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT PUBLIC UTILITIES REVENUE IMPROVEMENT BONDS, SERIES 2018 LIST OF TABLES AND FIGURES (cont'd.) Table No. Description Pam 18 Comparison of Facility Investment Fees (Impact Fees) for Water and Wastewater Service............................................................................................. [*] 19 Comparison of Solid Waste Residential Collection Fees and Tipping Fees ...... [*] Figure No. Description Page No. 1 Location Map....................................................................................................... 3 [*] Represents tables that are located at the end of this Report. -1v- MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT PUBLIC UTILITIES REVENUE IMPROVEMENT BONDS, SERIES 2018 INTRODUCTION Presented herein is the Bond Feasibility Report (the "Report") prepared by Public Resources Management Group, Inc. ("PRMG" or the "Feasibility Consultant") in its capacity as the feasibility consultant to Manatee County, Florida (the "County") for inclusion in the Official Statement that summarizes our analyses, studies and conclusions with regard to the ability of the County to issue approximately $70,435,000111 of Public Utilities Revenue Improvement Bonds, Series 2018 (the "Series 2018 Bonds"). The Series 2018 Bonds are being issued under the authority of Resolution No. R-91-21 as adopted by the Board of County Commissioners of Manatee County (the "Board") on January 15, 1991, as amended and supplemented from time to time, including Resolution No. R-10-233 adopted on November 9, 2010, Resolution No. R-10-23 8, adopted on November 16, 2010, R-11-225 adopted on October 25, 2011, Resolution No. R-15-001 adopted on March 25, 2015 and Resolution No. R-17-147 adopted on December 12, 2017 and a to -be -adopted Series Resolution authorizing the issuance of the 2018 Bonds (collectively, the "Bond Resolution"). For a more complete description of the Bond Resolution, please refer to Appendix E — Summary of Certain Provisions of the Resolution in the Official Statement relating to the Series 2018 Bonds. Capitalized undefined terms used in this Report shall have the meanings ascribed thereto in the Bond Resolution. The County plans to issue the Series 2018 Bonds to: i) fund certain capital improvements to the water and wastewater system (the "2018 Project"); and ii) pay certain expenses related to the issuance and sale of the Series 2018 Bonds. Payment of the Series 2018 Bonds and any other bonds issued by the County pursuant to the Bond Resolution on behalf of the water, wastewater, (including, without limitation, any reuse or reclaimed water system owned, operated and maintained by the County), solid waste system, and the stormwater management system (collectively, the "System" or sometimes referred to as the "Public Utilities System"), together with interest thereon, shall be payable solely from, and secured equally by, a lien on the Net Revenues derived by the County from the operation of the System. Neither the credit nor taxing power of the County will be pledged for debt repayment of the Series 2018 Bonds or any other indebtedness issued pursuant to the Bond Resolution. The primary purpose of this Report is to present projections of the estimated financial operating results of the County's System and the ability of the System to satisfy the rate covenants as defined in the Bond Resolution for the fiscal years ending September 30, 2018 through September 30, 2023 (the "Forecast Period"). PRMG was responsible for the compilation and evaluation of financial information and the preparation of the projected financial operating results. The forecast of the estimated financial operating results of the System include projections of customer and sales [1] Preliminary, subject to change. -1- revenues and the other financial components and expenditures that comprise the projected operating results of the System. PRMG is a recognized utility management consulting firm that specializes in the development of rates, charges, and financial projections for publicly -owned and not -for -profit utility systems, primarily in Florida. The firm has been involved in a number of utility financings that have involved the preparation of financial forecasts on behalf of local governments and utility corporations in Florida that issue utility bonds secured for repayment by the revenues of such utility. The firm has provided utility rate and consulting services on behalf of the System on an ongoing basis since 2007. PRMG does not offer any opinion as to the general condition of the System and its assets currently in service, the compliance with regulations promulgated and imposed by various agencies upon the operation and construction of the System, the estimated cost of or need for the improvements anticipated to be funded from System operations as referenced in this Report, or any other engineering aspects of the System. Reference is made to the Consulting Engineer's Report included in Appendix C of the Official Statement for a discussion of System capital improvements, facilities and conditions. In the preparation of this Report and the estimates of projected financial operating results summarized herein, PRMG relied upon financial, statistical, and operational data provided by the County that has been derived from operating and financial reports and records prepared and provided by County management, including information contained in the Comprehensive Annual Financial Reports ("CAFRs") for the historical Fiscal Years 2013 through 2017 (the "Historical Period"). In addition, we have been furnished certain financial, statistical, and contractual information and assumptions by the County and others, including information obtained from other utility systems in Florida and other sources. In the preparation of the Report, PRMG also relied upon certain assumptions regarding the financing of future capital improvements associated with the issuance of Bonds that will be secured for repayment from the Net Revenues. These assumptions were provided by Public Resources Advisory Group, Inc. of St. Petersburg, Florida, the County's Municipal Financial Advisor (the "Municipal Financial Advisor"). The debt -related assumptions may vary from actual results and are subject to market conditions, as well as the County's credit rating at the time of issuance. In using the Report prepared by PRMG, the County expressly acknowledges that PRMG is not a "Municipal Advisor" as defined under Section 1513(e)(4)(A) of the Exchange Act as amended by the Dodd -Frank Act and thus is not providing advice with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms and conditions and other similar matters concerning financial products or issues. While we believe the sources of such information, assumptions, and projections to be reasonable for the purposes of this Report, we offer no assurances with respect thereto. The actual results achieved during the Forecast Period reflected in this Report may vary from those projected and such variations could be material. Such projections are, therefore, subject to adjustment and we can give no assurances that the projections will be realized. This Report summarizes the results of our studies and analyses up to the date of this Report and does not reflect a current description of any matters set forth herein as of any date subsequent to the date of this Report. Changed conditions occurring or becoming known after such date could materially affect the information presented herein to the extent of such changes. -2- The remainder of this Report provides i) a general overview of the County; ii) a summary of the rates, fees and charges for the System as approved by the Board; iii) a discussion of the recent historical and projected customer statistics and service area requirements; iv) a presentation of the funding program anticipated by the County for the System's capital improvement plan; v) a summary of the recent historical and projected System operating results for the Forecast Period, including a discussion of the primary assumptions and analyses relied upon by PRMG in the development of such projections; vi) a summary of our conclusions based on the results of our analyses and forecasts; and vii) a presentation of our analyses and evaluations, which are included as attachments to and are located at the end of this Report. GENERAL Fort L—I - - - - -- Manatee County is a political 6� rl subdivision of the State of Florida P la Palm41_ Keen - overned b the State Constitution n�wa a Im •1� , , , oie Uvene_ g Y Rao 4.nCOUnty k the general laws of the State of BradCMarl _ _ :—._aNn•A,rr MV W,a HQad Florida, a, an the ounty s Carter. ' iO� r L O R I �1 .1z"3 V,1rI L Wrle bury The County occupies approximately Sar Bri1: i •ralo,a:a . '4� .. • . °�°°' ►- - - - - - = 893 square miles, of which, 741 rna Parma1 aras RASOtIA i -_ .d,,,„ 5aI�B��Y i.. square miles is land and 152 square sarasov rrlgn ^"eeg..,l ie. w" `'a° miles are water and is located on the Ri.cr' -. S . west central coast of Florida as shown Va S�In,v, on Figure 1. There are six Figure 1-Location Map _ incorporated communities within the County including the City of Anna Maria; City of Bradenton; City of Bradenton Beach; City of Holmes Beach; Town of Longboat Key; and City of Palmetto. Based on information reported by the State of Florida Office of Economic and Demographic Research (EDR), the County's total population as of April 1, 2017 was 368,782 making it the fifteenth most populous county in the State of Florida (out of 67 counties). The majority of the estimated population as reported by the EDR is located within unincorporated portions of the County accounting for approximately 291,864 or 79% of the population. It was also reported that since April 1, 2010 the County has observed total growth of 45,949 or 12.5% increase in population, of which, the majority or 40,091 occurred within the unincorporated portions of the County. This rate of population growth equates to an approximate 1.9% or 6,564 persons per year for the County and 2.1% or 5,727 per year for the unincorporated areas of the County. Based on projections published by EDR, the total population of Manatee County is projected to increase to 434,693 by 2025 corresponding to an approximate 2.1% annual growth rate. It should be noted that the County does provide water and wastewater utility service to the majority of the population located within the incorporated areas of the County, as well as, to the northern portions of Sarasota County. Specifically, the County provides service on a retail basis within the municipalities of Anna Maria, Holmes Beach, Bradenton Beach, wholesale water - only service to the City of Palmetto, and both wholesale water and wastewater service to the cities of Bradenton and the Town of Long Boat Key. The County also receives solid waste for disposal from the residential customers located within the municipalities but does not provide solid waste collection services, which is the responsibility of such municipalities. -3- In 1965, the County began acquisition and construction of a County -wide water and wastewater system to provide utility service for all unincorporated areas. The service area generally encompasses the urban services area boundaries as adopted by the Board and essentially includes the western portion of the County less those areas served by municipalities. Included in the Consulting Engineer's Report (reference Appendix C) are figures that individually illustrate the respective water and wastewater service areas of the System. The County's water system currently includes a water treatment plant located adjacent to the 1,800- acre reservoir on the Manatee River. The plant is comprised of two distinct treatment processes and three distinct treatment trains and is permitted for a maximum day treatment capacity of 84 million gallon per day ("mgd"). Future supply needs may be supplemented pursuant to a Water Supply Contract (treatment -by -contract or "TBC") that allows the County to secure additional potable water service with the Peace River / Manasota Regional Water Supply Authority ("PRMRWSA"). The water system also includes approximately 1,800 miles of transmission and distribution lines that provided potable water service to an average of approximately 116,431 retail accounts and 4 wholesale accounts during the Fiscal Year 2017 (the "Water System"). The County's wastewater system currently includes three County -owned treatment plants with a combined capacity of 33.5 mgd on an annual average day flow, approximately 1,400 miles of collection and transmission mains, more than 600 lift stations that provided service to an average of approximately 101,659 retail accounts, and 2 wholesale accounts during the Fiscal Year 2017 (the "Wastewater System"). The County's solid waste system includes: i) the Lena Road Landfill located on approximately 1,200 acres, of which, approximately 316 acres is used for solid waste disposal; the remainder of the site provides a natural buffer to the landfill site; and ii) leachate management facilities, special waste collection facilities, and a landfill gas collection system (the "Solid Waste System"). The landfill provides disposal service to the entire County, including the municipalities located within the County. The County has an exclusive franchise agreement with Waste Management Inc. of Florida and with Waste Pro of Florida Inc., which provided solid waste collection services during the Fiscal Year 2017 to approximately 103,049 residential customers and various commercial customers located in the unincorporated areas of the County (the County reports that the two franchise areas are approximately equal in terms of area and customers served). The initial term of the franchise agreements was through September 30, 2016 and the County and franchise haulers agreed to execute the one-time renewal option that effectively extended the service agreement for an additional seven-year period through September 30, 2023. Collection service is mandatory for both residential and commercial property. The County's stormwater management system consists primarily of 1,500 miles of open ditches and canals associated with the stormwater management within the unincorporated areas of the County (the "Stormwater System"). There is no stormwater utility fee in effect at this time. For a more detailed description of the various utilities and systems that comprise the Public Utilities System, please reference the Consulting Engineers Report in Appendix C of the Official Statement. 51 EXISTING SYSTEM DEBT AND PLAN OF FINANCE The County has previously issued long-term debt to fund certain capital improvements to the System. As of October 1, 2017, representing the outset of the Forecast Period, the County had Bonds outstanding in the aggregate principal amount of approximately $171,695,000 that were issued pursuant to the terms and conditions of the Bond Resolution (the "Outstanding Bonds"), which are secured by a senior lien pledge on the Net Revenues, including Federal Direct Subsidy Payments (the "Subsidy Payments") associated with the outstanding Series 2010 Bonds (as later defined). On December 14, 2017 the County issued the Public Utilities Revenue Refunding Bonds, Series 2017 ("Series 2017 Bonds") to advance refund on a cross -over basis all the Series 2010 Bonds maturing after October 1, 2020 (the "Cross -Over Date"). The proceeds of the 2017 Bonds were primarily used to purchase U.S. Treasury securities, which were placed in escrow to economically defease a portion of the Series 2010 Bonds and make certain interest payments associated with the Series 2017 Bonds. As such, the Net Revenues of the System, together with Federal Direct Payments, will be used to fund the debt service payments coming due on: i) the Series 2010 Bonds up to the Cross -Over Date; and ii) the Series 2017 Bonds coming due after the Cross -Over Date. The following is a summary of the Outstanding Bonds as of October 1, 2017, representing the beginning of the Forecast Period, and as of January 1, 2018, representing the period subsequent to the issuance of the Series 2017 Bonds based on information provided by the County and its Financial Advisor: Outstanding Bonds Federally Taxable — Direct Payment — Public Utilities Revenue Improvement Build America Bonds, Series 2010A ("Series 2010A Bonds") [2][3] Federally Taxable — Direct Payment — Public Utilities Revenue Improvement Recovery Zone Economic Development Bonds, Series 2010B ("Series 2010B Bonds") [2][3] Public Utilities Revenue Improvement Bonds, Series 2010C ("Series 2010C Bonds") [3] Public Utilities Revenue Refunding Bonds, Series 2011 ("Series 2011 Bonds") Public Utilities Revenue Refunding and Improvement Bonds, Series 2015 ("Series 2015 Bonds") Public Utilities Revenue Refunding Bonds, Series 2017 ("Series 2017 Bonds") [2] Outstanding as of Outstanding as of October 1, 2017 [1] January 1, 2018 $17,925,000 $2,880,000 45,300,000 5,410,000 5,410,000 14,735,000 14,735,000 88,325,000 88,325,000 0 55,075,000 Total Outstanding Bonds $171,695,000 $166,425,000 [ 1 ] Except as noted below, the amounts shown reflect the outstanding principal amount of the Bonds after the payment that was due and payable on October 1, 2017. [2] The change in the amount of outstanding Series 2010A Bonds and Series 2010B Bonds are a result of the cross -over refinancing from the issuance of the Series 2017 Bonds. [3] The Series 2010A Bonds, Series 2010B Bonds, Series 2010C Bonds, and the Series 201OD Bonds are collectively referred to as the "Series 2010 Bonds" in this Report. Note the Series 201 OD Bonds were repaid during the Fiscal Year 2017 and are no longer outstanding. In addition to the Outstanding Bonds issued pursuant to the Bond Resolution, the County has historically secured additional debt allocable to the System, which was subordinate to the Outstanding Bonds (the "Subordinate Obligations"). All of the Subordinate Obligations represented loans issued through the State of Florida's State Revolving Fund (SRF) Loan Program -5- as administered by the Florida Department of Environmental Protection (FDEP). The Subordinate Obligations were initially secured by the County for funding certain wastewater capital improvements. As of October 1, 2017, all of the Subordinate Obligations previously issued by the County on behalf of the System have been fully repaid and there are currently no Subordinate Obligations outstanding as of the date of this Report nor is there any pending applications that have been made by the County to secure additional subordinated loans from the FDEP through the SRF Loan Program. For the purposes of the Report and based upon preliminary debt schedules provided by the County's Municipal Financial Advisor, it was assumed that the Series 2018 Bonds would be issued in the aggregate principal amount of approximately $70,435,000 and have an estimated delivery date of September 20, 2018. The following is a summary of the estimated sources and uses of the proceeds of the Series 2018 Bonds as prepared and provided by the County's Municipal Financial Advisor, which was subsequently assumed in the development of the financial projections contained in this Report: Summary of Series 2018 Bonds Estimated Sources and Uses of Funds [* Series 2018 Bonds Sources of Funds: Bond Proceeds — Par Amount $70,435,000.00 Original Issue Premium 5,242,690.15 Total Sources of Funds $75,677,690.15 Uses of Funds: Deposit to Project Fund $75,000,000.00 Cost of Issuance 325,515.15 Underwriter's Discount 352,175.00 Total Uses of Funds $75,677,690.15 [*] Amounts prepared and provided by County's Municipal Financial Advisor and are preliminary as of July 9, 2018 and subject to change based on the actual terns regarding the sale of the Series 2018 Bonds. It is estimated that the debt to net plant ratio (i.e., the principal amount of debt divided by the estimated net utility plant) including the anticipated increase in debt and net plant associated with the issuance of the Series 2018 Bonds will be approximately 28% (includes construction work in progress and excludes land), which is considered by PRMG to be favorable. As discussed in subsequent sections of this Report, the financial projections also assume the issuance of Additional Parity Bonds. RATES, FEES, AND CHARGES General The Bond Resolution contains a covenant under which the County agrees that in each fiscal year it will fix, establish, and maintain such rates and collect such fees, rentals, or other charges for the services and facilities of the System and revise the same from time to time, whenever necessary, 0 as will always provide in each fiscal year Net Revenues, which includes Federal Direct Payments that shall be adequate to pay at least one hundred fifteen percent (115%) of the Annual Debt Service Requirement for the Bonds (includes the then Outstanding Bonds, the Series 2018 Bonds and any Additional Parity Bonds issued hereafter); and that such Net Revenues shall be sufficient to make all of the payments required by the terms of the Bond Resolution. The following is a discussion of the System rates relied upon in the projection of the System Gross Revenues. Water and Wastewater Rates for Monthly Service The rates for water and wastewater service are set by the Board. The establishment of rates is not under the jurisdiction of the Florida Public Service Commission. On February 7, 2017 the Board adopted Resolution No. R-17-002 and Resolution No. R-17-003 pertaining to rates for service in effect as of April 1, 2017 and April 1, 2018, respectively (the "Utility Rate Resolution"). While no additional rate adjustments have been formally approved beyond those currently in effect pursuant to the Utility Rate Resolution, the Board does annually evaluate rate needs as part of the water and wastewater budget preparation process and has historically implemented rate adjustments in order to maintain a strong fiscal position to assure rate covenant compliance. The adopted monthly retail rates as referenced in the Utility Rate Resolution include: i) a flat monthly base charge or readiness -to -serve charge that varies based on the customer classification and is predicated either on the number of units served (residential master -metered customers) or the size of the meter (individually -metered customers); ii) for residential and irrigation customers of the Water System, a consumption charge consisting of multiple inclining blocked rates to promote water conservation; iii) for all other customers of the Water System, a single consumption charge for metered water use; iv) for residential wastewater customers, a flow charge based on metered water use, which is capped at 10,000 gallons per month per unit; and v) for all metered customers the flow charge is based on one hundred percent (100%) of the metered water consumption. In addition to providing retail service, the County also provides water and wastewater wholesale service to certain municipalities located in the County and Sarasota County. The following table is a summary of the wholesale customers and the reserved capacity in the County water and wastewater system facilities: Wholesale Water Customers Wholesale Wastewater Customers Customer Town of Longboat Key City of Palmetto City of Bradenton Sarasota County [*] Total Reserved Capacity Reserved Capacity (MGD-ADF) 2.500 2.000 0.500 6.000 11.000 Customer Town of Longboat Key City of Bradenton Total Reserved Capacity Reserved Capacity (MGD-ADF) 2.260 1.000 3.260 [*] Amounts shown reflect reserved capacity as of the date of this report and should be noted that the County's reservation of capacity will be reduced to 5.0 MGD-ADF effective April 1, 2020 pursuant to the Sarasota Water Agreement. As later defined. (Remainder of page intentionally left blank) -7- The rates for wholesale service as referenced in the Utility Rate Resolution are similar in structure to the County retail rates and include: i) a monthly base charge predicated on the amount of reserved capacity allocated to the wholesale customer; and ii) a single consumption charge based on the metered water deliveries and wastewater flow at the point(s) of delivery of service to the respective wholesale customers. The rates for monthly water, wastewater and reclaimed services (both retail and wholesale service) accounted for approximately 93% of the reported water and wastewater system Gross Revenues (Gross Revenues include interest earnings on unrestricted fund balances but not funds where earnings are considered restricted [i.e., Facility Investment Fees or any Project / Construction Fund balances] and realized gains from the sale of investments that are considered by the County as a component of the Gross Revenues of the water and wastewater system). As part of the consumptive use permitting process, the Southwest Florida Water Management District ("SWFWMD") requires water utilities located within its boundaries to have a water conservation rate structure. This requirement is part of the SWFWMD water conservation goals related to the limiting raw water withdrawals. The SWFWMD does not regulate the rates of the System regarding rate level but does require that a conservation pricing strategy be in place. The County's Water System rates currently employ a water conservation rate structure consistent with the general water conservation program goals encouraged by SWFWMD. The following is a summary of the Water System rates that were in effect as of April 1, 2017 and April 1, 2018 pursuant to the Utility Rate Resolution. Schedule of Monthly Base Charges (per Bill Rendered): Individual Retail Meters: Meter Size: 5/8" x 3/4" 3/4" 1" 2" 3" 4" 6" 8" 10" 12" Residential Retail Master Meters: Single -Family Residential Condominium / Apartment/Hotel / Motel Mobile Home Park/Travel Trailer Park Table continued on following page. Water System Rates for Service In Effect on In Effect on April 1, 2017 [1] April 1, 2018 [1] $9.08 $9.45 12.29 12.78 18.70 19.45 34.75 36.14 54.00 56.16 98.91 102.87 163.07 169.59 323.48 336.42 515.98 536.62 740.55 770.17 1,382.19 1,437.48 $6.84/Unit $7.11/Unit 4.88/Unit 5.09/Unit 3.74/Unit 3.89/Unit in Schedule of Monthly Water System Rates for Service (cont'd.) In Effect on In Effect on April 1, 2017 [1] April 1, 2018 [1] Combined Retail Residential Potable Water Line/Fire Line: Monthly Base Charges: Meter Size: 3/4" $9.08 $9.45 1" 12.29 12.78 Large Users and Wholesale: Monthly Base Charges per 1,000,000 Gallons of Reserve Capacity $11,326.00 $11,779.00 Private Fire Protection: Monthly Base Charges: Meter Size: 1" $3.30 $3.30 1-1/2" 4.40 4.40 2" 5.75 5.75 3" 8.85 8.85 4" 13.25 13.25 6" 24.30 24.30 8" 37.55 37.55 loft 53.00 53.00 12" 97.15 97.15 Retail Temporary Use Meters: Base Charges (Quarterly): 3/4" $36.86 $38.33 2" 161.96 168.44 Monthly Retail Quantity Rates - per 1,000 Gallons: Retail Residential Individual Meters and Master Metered Single -Family [2]: First 6,000 Gallons $2.19 $2.28 Next 9,000 Gallons 2.74 2.85 Next 5,000 Gallons 6.57 6.84 Over 20,000 Gallons 9.87 10.27 Master Metered Condominiums/Apartments [2]: (Multiplied by the Number of Units) First 4,500 Gallons $2.19 $2.28 Next 6,500 Gallons 2.74 2.85 Over 11,000 Gallons 6.57 6.84 Master Metered Mobile Home/Travel Trailer Parks [2]: (Multiplied by the Number of Units) First 3,600 Gallons $2.19 $2.28 Next 5,400 Gallons 2.74 2.85 Over 9,000 Gallons 6.57 6.84 Irrigation (by Meter Size): 1" and Smaller (Single -Family, Multi -Family and Commercial): First 5,000 Gallons $2.19 $2.28 Next 15,000 Gallons 6.57 6.84 Over 20,000 Gallons 9.87 10.27 Table continued on following page 10 Schedule of Monthly Water System Rates for Service (cont'd.) In Effect on In Effect on April 1, 2017 [1] April 1, 2018 [1] Irrigation (by Meter Size): (cont'd.) 1-1/2" and Larger (Single -Family, Multi -Family and Commercial) First 5,000 Gallons $2.19 $2.28 Next 10,000 Gallons 2.74 2.85 Next 15,000 Gallons 3.54 3.68 Next 30,000 Gallons 5.44 5.66 Next 40,000 Gallons 6.57 6.84 Over 100,000 Gallons 9.87 10.27 Commercial and Industrial: $2.19 $2.28 Large Users 1.81 1.89 Wholesale [3]: Up to Daily Reserve Capacity $1.81 $1.89 Excess Demand Charge: Up to or Equal to 20% Excess Reserve Capacity $3.64 $3.79 Excess Over 20% of Reserve Capacity 6.34 6.60 [1] Rates adopted pursuant to the Utility Rate Resolution. [2] For the master -metered residential class the pricing blocks as shown are multiplied by the number of units behind the meter. [3] The following are the current reserve capacities for the existing wholesale water customers: Potable Water Town of Longboat Key 2.50 mgd City of Palmetto 2.00 mgd City of Bradenton 0.50 mgd Sarasota County 6.00 mgd The following is a summary of the Wastewater System rates that were in effect as of April 1, 2017 and April 1, 2018 as approved by the Board pursuant to the Utility Rate Resolution. Schedule of Monthly Wastewater System Rates for Service In Effect as of In Effect as of April 1, 2017 [1] April 1, 2018 [1] Monthly Base Charges (per Bill Rendered): Individual Retail Meters: Meter Size: 5/8" x 3/4" $21.67 $22.54 3/4" 31.05 32.29 1" 49.74 51.73 1-1 /2" 96.54 100.4 2" 152.67 158.78 3" 283.69 295.04 4" 470.85 489.68 6" 938.73 976.28 8" 1,500.21 1,560.22 10" 2,155.26 2,241.47 12" 4,026.82 4,187.89 Table continued on following page. -10- Schedule of Monthly Wastewater System Rates for Service (cont'd.) In Effect as of In Effect as of April 1, 2017 [1] April 1, 2018 [1] Retail Residential Master Meters: Single -Family Residential $19.56/Unit $20.34/Unit Condominium/Apartment/Hotel/Motel 13.09/Unit 13.61/Unit Mobile Home Park/Travel Trailer Park 10.46/Unit 10.88/Unit Large Users and Wholesale [2]: Monthly Base Charges per 1,000,000 Gallons of Reserved $17,618.00 $18,323.00 Capacity Retail Wastewater Temporary Use: Base Charges (Quarterly): 3/4" $94.44 $98.22 2" 458.04 476.37 Unmetered Retail Customers: Single -Family Residential $50.71 $52.74 Commercial (gallons per Month) Class 1 and Single -Family (Assumed 6,000 Gallons) $80.71 $52.74 Class 2 (Assumed 6,000 - 10,000 Gallons) 69.79 72.85 Class 3 (Assumed 10,000 - 25,000 Gallons) 115.80 120.44 Class 4 (Assumed 25,000 - 75,000 Gallons) 273.18 284.11 Class 5 (Assumed Greater than 75,000 Gallons) 534.00 555.36 Class 6 - Mobile Home/Trailer (Assumed 3,600 Gallons) 27.89/Unit 29.01 /Unit Class 7 - Condo/Apartment (Assumed 4,500 Gallons) 34.87/Unit 36.27/Unit Monthly Retail Quantity Rates - per 1,000 Gallons: Retail Wastewater Rates per 1,000 Gallons Individually Metered [3] $4.84 $5.03 Wastewater Only 4.84 5.03 Wholesale [2] Up to Daily Reserve Capacity $2.25 $2.34 Excess Demand Charge - All Excess Over Daily Capacity 4.51 4.69 [1] Rates adopted pursuant to the Utility Rate Resolution. [2] The following are the current reserve capacities for the existing wholesale wastewater customers: Customer Wastewater Town of Longboat Key 2.26 mgd City of Bradenton 1.00 mgd [3] Wastewater billed at one hundred percent of potable water consumption with a maximum monthly wastewater charge for residential individually -metered customers capped at 10,000 gallons per month. (Remainder of page intentionally left blank) -11- The following is a summary of the adopted reclaimed water rates (such rates are considered as a component of the Wastewater System) of the County, all as contained in the Utility Rate Resolution. Schedule of Monthly Reclaimed Water System Rates for Service In Effect as of In Effect as of April 1, 2017 [*] April 1, 2018 [*] Monthly Retail Reclaimed Quantity Rates: Reclaimed Water Rates per 1,000 Gallons Agricultural Facilities $0.10 $0.11 Large Recreational Facilities 0.21 0.21 Government Facilities Including Schools 0.34 0.36 Large Commercial, Industrial, and Utility Facilities (Over 500,000 Gallons per Day) 0.34 0.36 Residential and Commercial Common Areas 0.34 0.36 Master Metered Residential and Commercial 0.34 0.36 Individually -Metered Residential, Commercial and Industrial $0.86 $0.89 [*] Rates adopted pursuant to the Utility Rate Resolution. Facility Investment Fee In addition to the monthly rates for water and wastewater service, the County currently charges a Facility Investment Fee ("FIF Fee") based upon the equitable and proportionate share of the cost for the: i) water production and transmission capacity, including facilities for which the County has a contractual capacity entitlement; and ii) wastewater transmission, treatment and effluent disposal capacity of the System. The purpose of the FIF Fees is to pay for or reimburse the equitable share of capital costs related to construction, expansion, or equipping of excess or unused capacity of the System in order to serve new users. If an existing customer requests an increase in water or wastewater capacity due to increased development, an additional FIF Fee will be collected prior to the development consistent with the requested increase in demand. The current FIF Fees were enacted by the Board pursuant to: i) the adoption of Ordinance No. R-06-88 on October 24, 2006; ii) the adoption of Ordinance No. 10-70 on November 9, 2010 and effective to fees on February 1, 2011 to reflect minor adjustments to the Ordinance (the fees for new capacity were not adjusted pursuant to Ordinance No. 10-70); and iii) the adoption of Ordinance No. 15-22 on June 2, 2015 and effective to fees on October 1, 2015 to reflect an increase to the wastewater FIF (collectively, the "FIF Ordinance"). The County is in process of reviewing the FIF Fees; however, no change to the FIF Fees have been assumed during the Forecast Period. To the extent the County were to implement an increase or decrease to the FIF Fees, the projections contained herein would be assumed to be proportionally affected by the change in such fees. It should be noted that the FIFs are not pledged to pay the debt service on any of the System Bond debt. (Remainder of page intentionally left blank) -12- The following table summarizes the water and wastewater FIF Fees as adopted by the Board pursuant to the FIF Ordinance for the respective water and wastewater utility systems. Schedule of Facility Investment Fees Meter Size (in Inches) Potable Water FIF [1] Wastewater FIF [1] 5/8 x 3/4 $1,970.00 $3,027.00 3/4 2,955.00 4,541.00 1 4,925.00 7,568.00 1 1 /2 9,850.00 15,135.00 2 15,760.00 24,216.00 3 31,520.00 48,432.00 4 49,250.00 75,675.00 6 98,500.00 151,350.00 8 157,600.00 242,160.00 10 226,550.00 348,105.00 Over 10 7,164 per 1,000 14,414 per 1,000 Gallons of Reserved Gallons of Reserved Capacity per Day Capacity per Day [1] Retail Facility Investment Fees by customer classification. Classification Potable Water FIF [a] Residential, single-family [b] Residential, multifamily [c] Mobile home [d] Travel trailer [e] Hotel or motel [f] Commercial and industrial [g] Industrial Bulk[*] [h] Combined commercial and residential [**] [i] Combined commercial and hotel or motel Meter size FIF $1,345.00 per unit $1,345.00 per unit Meter size FIF Meter size FIF Meter size FIF $7,164.00 per 1,000 gallons ofreserve capacity per day $1,345.00 per unit plus meter size FIF Meter size FIF Fire Service N/A N/A $172.00 345.00 552.00 1,103.00 1,724.00 3,448.00 5,516.00 7,929.00 3.5% of Potable water FIF Based on meter size Wastewater FIF Meter size FIF $2,028.00 per unit $2,028.00 per unit Meter size FIF Meter size FIF Meter size FIF $14,414.00 per 1,000 gallons of reserve capacity per day $2,028.00 per unit plus meter size FIF Meter size FIF [*] All Wholesale customers are required to enter into a contract with the County for the purchase of potable water or wastewater service. The contract will specify a reserve capacity and may include provisions for changing the reserve capacity. The reserve capacity is subject to upward adjustment by amendment of the contracts or in accordance with provisions specified in the contracts. [**] Must be separately metered. The County does not charge a FIF or its equivalent for the Solid Waste System or for the Stormwater Management System. Miscellaneous Service Charges Pursuant to the Utility Rate Resolution, the County has also adopted a schedule of rates, fees, and charges that are applicable to miscellaneous or customer -requested ancillary services. The charges are generally imposed to recover the cost of specific services such as water and wastewater taps and utility turn -on fees. The County also requires, as a condition of service, a customer deposit to limit the risk of non-payment or an outstanding bill becoming uncollectible. The following is a discussion of the customer deposits and miscellaneous service fees and charges that have been adopted by the County with respect to providing water and wastewater utility service, which are a customary utility billing practice. (Remainder of page intentionally left blank) -13- Security (Customer) posits The County currently charges a water, a wastewater, and a solid waste security deposit to all new customers to limit the risk of non-payment of a utility bill. The following is a summary of the adopted water and wastewater security deposits for metered water and/or wastewater accounts pursuant to the Utility Rate Resolution: Summary of Water and Wastewater Security Deposits [*] Fire Line/ Residential Commercial Irrigation Master Meter For Meter Potable Water and/or Wastewater Accounts 5/8" Meter $150.00 $200.00 $100.00 $270.00 3/4" Meter 200.00 300.00 150.00 300.00 1" Meter 275.00 600.00 300.00 600.00 1-1/2" Meter 440.00 900.00 450.00 900.00 2" Meter 440.00 1,200.00 600.00 1,200.00 3" and Larger Meter N/A $600.00 per Inch $300.00 per Inch $600.00 per Inch [*] Deposit amounts per Utility Rate Resolution. An additional deposit of $20.00 per unit will be charged for master -metered accounts. In addition to the deposits for water and wastewater service, the County also charges a deposit for solid waste collection service. The deposit for a residential unit is $30.00 and the security deposit for a commercial unit shall be equal to twice the monthly commercial rate of the type of service being provided. Deposits for roll -off containers and compactors will be based on an estimated charge that includes the rental / maintenance fee plus a collection fee for the level of service requested for one (1) month. Water and Wastewater Connection Fees The County has adopted connection fees for the initiation of water and wastewater service. The fees reflect the cost of a meter installation and the service connection (i.e., the connection or tap to the water main and the connection to the wastewater collection system). The monies collected through the water and wastewater connection -related fees represent an operating revenue to the System (and are included as a component of Gross Revenue pursuant to the Bond Resolution) and are summarized below: Meter Size (in Inches) 5/8 x 3/4 3/4 1 1-1/2 2 Greater than 2 Water Connection Fees Minimum Cost Minimum Cost Developer County Installed Installed Service Service $300.00 340.00 360.00 485.00 590.00 Actual Cost $675.00 715.00 735.00 860.00 965.00 Actual Cost (Remainder of page intentionally left blank) -14- Wet Tap Fees Tap Size (in Inches) Fee Retest 2 and Smaller $300.00 $75.00 3 425.00 100.00 4 425.00 100.00 6 475.00 100.00 8 550.00 150.00 10 550.00 150.00 12 650.00 150.00 Cut -In Fee Line Size (in Inches) Fee Smaller than 3 $100.00 3 and Larger 200.00 Wastewater Line Fees (Developed Properties with Metered Potable Water Service) Meter Size (in Inches) Line Connection Fee Residential: $3,500.00 per Dwelling Unit 5/8 x 3/4 3,500.00 per Meter 3/4 4,000.00 per Meter 1 6,000.00 per Meter 1-1/2 11,000.00 per Meter 2 17,000.00 per Meter 3 22,000.00 per Meter 4 34,000.00 per Meter 6 44,000.00 per Meter 8 68,000.00 per Meter 10 78,000.00 per Meter Wastewater Line Fees (Developed Properties Without Metered Potable Water Service) Meter Size (in Inches) Line Connection Fee Single -Family Residential $3,500.00 per Dwelling Unit Commercial Class 1 and Single -Family (Assumed 6,000 Gallons) 3,500.00 per Service Class 2 (Assumed 6,000 — 10,000 Gallons) 4,000.00 per Service Class 3 (Assumed 10,000 — 25,000 Gallons) 6,000.00 per Service Class 4 (Assumed 25,000 — 75,000 Gallons) 11,000.00 per Service Class 5 (Assumed Greater than 75,000 Gallons) 22,000.00 per Service Class 6 — Mobile Home/Trailer (Assumed 3,600 Gallons) 34,000.00 per Service Class 7 — Condo/Apartment (Assumed 4,500 Gallons) 44,000.00 per Service Other Water and Wastewater System Miscellaneous Service Charges In addition to the above -referenced charges, the County also has several other charges that are applicable to miscellaneous or customer requested ancillary services or for specific water and -15- wastewater utility services. A summary of the other miscellaneous charges imposed by the County that are common in the utility industry include the following: Miscellaneous Fees for Services Service Charges for Delinquent Accounts: Potable Water and Reclaimed Water Turn -on or Unlock Meter Late Charge (on Past Due Balance Exceeding $5.00) Service Charges for All Accounts: Potable Water, Reclaimed Water and Wastewater Turn -On or Account Activation No Read Charge for Temporary Use Meter Install or Remove Temporary Use Meter Decrease in Meter Size Reinstall Meter Meter Test (Only if Meter Does Not Exceed AWWA Standards) Broken Assembly/Lock/Tag Broken or Damaged Meter Installation of Radio Frequency Meter Removal or Obstruction to Read or Maintain Meter Unauthorized Use or Meter Tampering Maintenance or Repair of Private System Test, Repair, Replace or Install Backflow Prevention Assemblies [2] Repair of Damage Caused by Other Parties Research No Read Charge (Temporary Meters) Other Charges: Dry Silver Image Photos Engineering Prints 24" x 36" Engineering Prints Larger than 24" x 36" Document Recording Fees Fire Flow Testing Fire Hydrant Installed in County Right of Way Inspection of Reclaimed Water Line 3" and Larger Amount III $50.00 2.0% of Current Bill; Min.$5.00 $25.00 $100.00 $30.00 $30.00 $50.00 $50.00 $50.00 Actual Cost Plus $50.00 Actual Cost Plus $50.00 Actual Cost Plus $50.00 Estimated usage plus $100.00 Actual Cost Greater of: a) $40.00 or b) Actual Cost Plus $25.00 Administrative Fee Actual Cost Actual Cost $100.00 $3.00/Each $3.00 / Each $5.00/Each Actual Costs $75.00 per Hydrant $5,000 Minimum Installation Charge or Actual Cost, if Greater $165.00 Testing (includes but not limited to Pressure Tests, and Lift Stations) Test Retest Type of Structure Potable Water Residential Single -Family $16.00 per Lot Residential, Multi -Family $8.00 per Unit - 1 Story Residential, Multi -Family $5.00 per Unit - 2 or more Stories Commercial or Industrial $300.00 per Unit Reclaimed Reclaimed Water/Wastewater Potable Water Water/Wastewater $20.00 per Lot $150.00 per $165.00 per Test Test $10.00 per Unit $150.00 per $165.00 per Test Test $7.00 per Unit $150.00 per $165.00 per Test Test $300.00 per Unit $150.00 per $165.00 per Test Test Lift Station N/A 250.00 per Lift Station N/A [1] Unless otherwise noted, reflects rates and charges as presented in the Utility Rate Resolution. [2] Backflow prevention fees adopted on February 25, 2014 pursuant to Resolution No. R-14-23. N/A -16- Solid Waste Collection and Disposal Rates The rates for Solid Waste Collection and Disposal services are also set by the Board; the establishment of rates is not under the jurisdiction of any other regulatory body such as the Florida Department of Environmental Protection ("FDEP"). The existing solid waste disposal rates for service were last established by the Board on September 22, 2015 by Resolution No. R-15-55 and became effective on November 1, 2015. The existing solid waste collection rates for service were last established by the Board on September 22, 2015 by Resolution No. R-15-56 and became effective on November 1, 2015 (collectively with Resolution No. R-15-55, the "Solid Waste Rate Resolution"). The rates for solid waste collection service are based, in part, on the cost for solid waste collection service provided by Waste Pro of Florida, Inc. and Waste Management Inc. of Florida (collectively considered as the "Authorized Collectors") pursuant to the respective franchise agreement for each specified collection service area. With respect to the residential solid waste collection rates, the County bills the customer for the collection of trash and yard waste / recyclable materials (if an applicable service required by the customer), cost of disposal, and a franchise fee. The County remits to the Authorized Collector the cost of collection at a unit cost or amount as initially delineated in the franchise agreement (which is annually adjusted for certain inflationary allowances as discussed later in this Report) and retains the remainder of the fee charged to fund the County's cost to administer and manage the solid waste management program. The following is a summary of the adopted rates, fees, and charges for the Solid Waste System of the County, as set forth in the Solid Waste Rate Resolution. Schedule of Monthlv Solid Waste Rates for Service Existing [*] Residential Collection Service: Monthly Charges: Standard Service: Residential Curbside Solid Waste Collection $8.07 Residential Curbside Recyclable Materials Collection 3.11 Residential Curbside Yard Trash Collection 3.15 Residential Non -Curbside Solid Waste Collection 26.72 Multifamily Recyclable Materials Collection 3.11 Non -Standard Service: White Goods Collection $31.39/Item Waste Tires Collection (More Than Two (2) Tires 19.13 /Event E-Scrap Collection 19.13/Event Extraordinary Services 38.25/Event Commercial Collection Service Commercial Can Collection (Twice Weekly): 32 Gallons and Smaller $20.19/Can/Month Bulk Collection (per Cubic Yard/Pick-Up) 21.03 Commercial Bin Collection: Uncompacted Bin (per Cubic Yard/Pick-Up) 9.00 Compactor 8 Cubic Yards and Smaller (per Cubic Yard/Pick-Up) 14.72 Roll -Off Container (per Cubic Yard/Pick-Up) 17.49 Compactor Collection (per Cubic Yard/Pick-Up) 19.75 Table continued on following page. -17- Schedule of Monthly Solid Waste Rates for Service (cont'd.) Description Existing [*] Commercial Bin Rental/Maintenance Monthly Charges: Bin Size: 1.0 Cubic Yard $39.33 1.5 Cubic Yards 39.33 2.0 Cubic Yards 39.33 3.0 Cubic Yards 40.42 4.0 Cubic Yards 41.51 6.0 Cubic Yards 43.70 8.0 Cubic Yards 48.07 Roll -Off Container Rental/Maintenance Monthly Charges: Container Size: 10.0 Cubic Yards $138.74 20.0 Cubic Yards 138.74 30.0 Cubic Yards 138.74 40.0 Cubic Yards 138.74 Compactor Rental/Maintenance Monthly Charges: Container Size: 2.0 Cubic Yards $338.64 3.0 Cubic Yards 345.19 4.0 Cubic Yards 355.02 5.0 Cubic Yards 364.86 6.0 Cubic Yards 373.66 7.0 Cubic Yards 397.63 8.0 Cubic Yards 414.02 20.0 Cubic Yards 527.58 40.0 Cubic Yards 620.68 Roll -Out Service: Short Distance (per Container per Month) $18.63 Long Distance (per Container per Month) 31.05 Gate Service (per Gate/per Month) $19.14 Dead Run 63.75/Event Miscellaneous and Other Charges: Administrative Fee (Account Activation) $20.00 Security Deposit Residential 30.00 Security Deposit Commercial 2X the Rate of Service Damaged Cart Fee) 60.00 Late Payment Fee 5.00 Research Actual Costs *] Rates shown reflect rates currently in effect and adopted pursuant to the Solid Waste Rate Resolution In addition to the rates for solid waste collection service, the County also charges tipping fees for disposal at the Lena Road Landfill located in east Manatee County. As previously mentioned, the disposal rates are included as a component of the cost of solid waste collection service billed to the customers of the County. The following is a summary of the existing tipping fees charged by the County: (Remainder of page intentionally left blank) -18- Solid Waste Landfill Tipping Fees for Disposal Service Existing Rates [ 1 ] [2] Tipping Fees (Solid Waste, Yard Trash and White Goods): Fee per Ton $40.00/Ton Non -Modified Automobiles Without Trailers $5.00/Automobile Minimum Fee for Loads of 1,000 Pounds or Less $20.00 Tipping Fees (Disposal of Construction and Demolition Debris): All Other Vehicles $61.00/Ton Minimum Fee for Loads of 1,000 Pounds or Less $30.50 Tipping Fees (Waste Tires): All Other Vehicles $86.00/Ton Minimum Fee for Loads of 1,000 Pounds or Less $43.00 Tipping Fees (Ash Residue, Sludge, Contaminated Soil, Asbestos, and Other Non -Standard Waste): All Other Vehicles $61.00/Ton Minimum Fee for Loads of 1,000 Pounds or Less $30.50 Miscellaneous and Other Charges: Replacement of Scale Proximity Card $25.00 Charge Account Deposit $200.00 or 2 Months Tipping Fee [1] Tipping fees above shall be double for mixed loads or loads that are insufficiently covered to prevent load loss during transportation. [2] Tipping fees above shall be triple for out -of -County waste. Stormwater Rates There is no presentation of any monthly rates for the Stormwater System since the County has not established a separate stormwater utility from a rate perspective and no rates are in effect to recover the cost of providing stormwater management services. It should be noted that the County is in process of reviewing and considering implementation of a stormwater utility. To the extent that the County were to implement stormwater charges it is anticipated that a corresponding increase in the projected financial resources may result for the benefit of the System. Water and Wastewater Rate Comparisons Tables 15 through 17 at the end of this Report provide a comparison of the monthly cost of providing water and wastewater service for a 5/8-inch x 3/4-inch water meter at various usage levels calculated under the existing rates of the System. Also included on the comparison are bills calculated using the rates of other neighboring Florida utilities as of the billing month of June 2018. The monthly bills for the various Florida utilities used for the comparison are exclusive of local taxes and surcharges, if any. For the municipally -owned utility systems, such utilities may apply a surcharge up to 50% to customers located outside the corporate limits when compared to the rates for service to customers located within the corporate limits pursuant to Florida Statutes Section 180.191. The rate comparison included in this Report reflects inside -the -city rates only, where applicable. The 5/8-inch x 3/4-inch meter or smaller comparison was prepared since this represents the majority of the System's water and wastewater residential customers and the majority of the customers for the other utilities reflected in the comparisons. As can be seen in the -19- comparison, the System rates produce bills for the County that are competitive and generally lower when compared to other neighboring utilities. The average individually -metered (single-family) residential customer for the County uses approximately 5,000 gallons of monthly water service and the comparison of water and wastewater rates at this consumption level between the County and the utilities surveyed is shown below. As can be seen on the comparisons shown on Tables 15 through 17 and the comparison below, the System residential service rates produce bills for the County that are competitive with other neighboring utilities. Residential Service - Assuming 5,000 Gallons of Water and Wastewater Utility Service [1] Water Wastewater Combined Bill Manatee County: Existing Rates - Effective April 1, 2018 $20.85 $47.69 $68.54 Other Florida Utilities: Bonita Springs Utilities, Inc. [2] $30.47 $46.98 $77.45 City of Bradenton [2] 28.55 35.81 64.36 City of Cape Coral [2] 36.82 66.27 103.09 Charlotte County [2] 46.08 55.99 102.07 City of Clearwater [2] 38.78 49.15 87.93 Collier County [2] 36.75 56.76 93.51 DeSoto County 55.61 68.08 123.69 Englewood Water District [2] 26.94 40.18 67.12 FGUA - Lehigh Acres System (Lee County) [2] 43.21 69.73 112.94 City of Fort Myers [2] 32.84 83.60 116.44 Hillsborough County [2] 30.99 36.46 67.45 Lee County [2] 28.94 49.70 78.64 Town of Longboat Key [2] 26.78 46.55 73.33 City of Marco Island [2] 58.41 58.27 116.68 City of Naples 15.09 39.91 55.00 City of North Port 40.77 60.37 101.14 Okeechobee Utility Authority [2] 44.06 55.51 99.57 City of Palmetto [2] 41.87 36.41 78.28 Pinellas County [2] 31.88 38.22 70.10 City of Punta Gorda 32.46 36.64 69.10 City of St. Petersburg [2] 33.78 48.53 82.31 City of Sarasota 34.22 57.70 91.92 Sarasota County 28.91 52.59 81.50 City of Tampa [2] 14.54 31.48 46.03 Survey Average [3] $34.95 $50.87 $85.82 FGUA = Florida Governmental Utility Authority [1] Unless otherwise noted, amounts shown reflect rates in effect June 2018. All rates are as reported by the respective county or city. This comparison is intended to show charges for similar service for comparison purposes only, and is not intended to be a complete listing of charges. [2] Utility is currently involved in a rate study, is planning to conduct a rate study, or expects to implement a rate revision within the next twelve months. [3] Amounts shown represent average of survey of 24 neighboring utility systems as shown in Tables 15 through 17. As can be seen above, the County's existing water and wastewater rates are generally lower when compared to the water and wastewater rates charged for service by the other neighboring local governments or jurisdictions. -20- As discussed previously, the County charges an FIF Fee to new development or applicants requesting water and/or wastewater capacity from the System in an effort to fund the capital cost of such capacity and to equitably assign such costs to those users that are imposing the need for the capital facilities. The application of similar fees is commonly used by Florida utilities to fund capital or plant requirements associated with new growth. Table 18 provides a comparison of the FIF Fees for the County and those charged by neighboring utilities. The County's currently effective FIF Fees for the Water System and Wastewater System are generally competitive with the utility average reflected on the comparison. Rate per Equivalent Dwelling Unit (EDU) Water Wastewater Total Manatee County [1] $1,970.00 $3,027.00 $4,997.00 Other Florida Utilities Average [2] $1,892.00 $2,500.00 $4,392.00 [1] Amounts shown derived from the FIF Ordinance. [2] Amounts shown represent average of survey of 22 neighboring utility systems as shown in Table 18. Solid Waste Collection Service Rate Comparisons Table 19 provides a comparison of the County's annual solid waste collection and disposal fees with the fees charged in other jurisdictions for residential curbside collection service (reflects the majority of the customers served). In the development of the comparison, no analysis was performed by PRMG as to the level of services provided by the jurisdiction (e.g., frequency of pick-up of waste), the amount of disposal fees included in the rates or the solid waste generation factors used to determine the disposal fee component, type of disposal method(s) relied upon (landfill or incineration) by the County, or other revenue sources or services reflected in the fees that may benefit a jurisdiction, or the overall costs of providing service. A comparison of the fees charged for residential service by the County with those of other jurisdictions is shown as follows: (Remainder of page intentionally left blank) -21- Annual Residential System Charges [1] Manatee County: Existing Rates $171.96 Other County Systems: Broward County [3] $270.00 Charlotte County [2] 172.00 Collier County [2][4] 202.90 Desoto County [2] 234.50 Hernando County [2][4] 174.95 Hillsborough County [2][3] 228.96 Lee County [2][3][4] 217.05 Miami -Dade County [3] 464.00 Orange County 220.00 Palm Beach County [3][4] 351.00 Pasco County [5] 214.28 Pinellas County [2][3][6] 192.00 Polk County 188.50 Sarasota County 159.48 Seminole County [4] 209.50 Survey Average [7] $233.27 [1] Unless otherwise noted, amounts shown reflect rates in effect June 2018. All rates are as reported by the respective county. This comparison is intended to show charges for similar service for comparison purposes only, and is not intended to be a complete listing of charges. For county's that bill all or a portion of the solid waste services on a monthly basis, amounts shown reflect annualized amounts. [2] Utility is currently involved in a rate study, is planning to conduct a rate study, or expects to implement a rate revision within the next twelve months. [3] Reflects solid waste programs that utilize a resource recovery facility (waste -to -energy), as the primary means of disposal. [4] Represents the average rate for multiple service areas or districts. [5] Pasco County does not offer garbage collection services, but charges a disposal assessment. Residents who want collection services must contact a private hauler. The collection fee included represents the maximum that a contract hauler can charge per month for household garbage collection. [6] Pinellas County does not provide residential solid waste collection services except for the Lealman District. [7] In some instances where collection or disposal charges vary by service district for a governmental agency an average was assumed for purposes of developing the survey average. As can be seen above, the County's existing Solid Waste System rates for solid waste residential collection and disposal service are generally less than rates charged by neighboring or comparable counties. Solid Waste Landfill Tipping Fee Comparison Table 19 provides a comparison of the County's Landfill Tipping Fees with the fees charged in other neighboring jurisdictions and the results are also summarized as follows: (Remainder of page intentionally left blank) -22- Disposal Service Tipping Fees (per Ton) [1] Municipal Solid Waste Construction and Description (MSW) Demolition (C&D) Yard Waste Manatee County - Existing $40.00 $61.00 $40.00 Comparable Counties Broward County [3] N/A $40.00 $50.00 Charlotte County [2] $36.00 $36.00 $36.00 Collier County [2] $67.99 $76.06 $45.27 DeSoto County $42.00 $42.00 $42.00 Hernando County [2] $53.00 $20.00 $20.00 Hillsborough County [2][3] $69.40 $59.13 $35.13 Lee County [2][3] $45.45 $32.95 $24.72 Miami -Dade County [3] $61.01 $61.01 $61.01 Orange County $34.80 $26.50 $30.00 Palm Beach County [3] $42.00 $48.00 $25.00 Pasco County $59.30 $59.30 $59.30 Pinellas County [2][3] $37.50 $37.50 $37.50 Palm Beach County [3] $42.00 $48.00 $25.00 Polk County $36.50 $36.50 $22.00 Sarasota County $57.56 $48.96 $41.37 Seminole County [2] $33.17 $33.17 $33.17 Comparable County Average $48.26 $43.81 $37.50 [1] Unless otherwise noted, amounts shown are based on rates in effect June 2018. All rates are as reported by the respective county. This comparison is intended to show charges for similar service for comparison purposes only, and is not intended to be a complete listing of charges. [2] Utility is currently involved in a rate study, is planning to conduct a rate study, or will implement a rate revision within the next twelve months. [3] Reflects solid waste programs that utilize a resource recovery / waste -to -energy facility as the primary means of disposal. As can be seen above, the County's existing tipping fees for solid waste disposal are competitive with rates charged by neighboring communities. HISTORICAL AND PROJECTED SYSTEM SALES AND CUSTOMER USAGE STATISTICS General This section of the Report summarizes the recent trends in Water, Wastewater, and Solid Waste System customers, projected water production and wastewater treatment requirements, associated sales and usage / billed flow characteristics for the Water and Wastewater Systems, solid waste deliveries to the County's disposal facilities and associated customers receiving solid waste collection service. The historical period reflected in this Report covers the fiscal years ended September 30, 2013 through 2017 (previously defined as the "Historical Period") and the Forecast Period is for the Fiscal Years 2018 through 2023. Table 1 presents a detailed summary of the historical customers or accounts (terms used synonymously) as well as metered water sales (gallons sold) for the Water System. Similar information regarding the historical customers and billed wastewater flow (revenue gallons) for the Wastewater System is shown in Table 2. Table 3 provides historical account and sales information for the Solid Waste System. There is no presentation of any customer statistics for the Stormwater System since the County has not established a separate stormwater utility from a rate and customer billing perspective. The cost of -23- operating and maintenance of the Stormwater System is funded from the Gross Revenues of the System, which is consistent with the financial presentation included in certain financial statements for the System. Tables 4 through 6 summarize the projected customers and metered water sales, billed wastewater flow, and solid waste statistics for the Water, Wastewater, and Solid Waste Systems, respectively for the Forecast Period. The projection of System sales and customer statistics served as the basis for the estimation of revenues derived from the application of the current rates for monthly water, wastewater, and solid waste service as discussed later in this Report. The following is a discussion of the historical and projected customer and sales statistics for the individual water, wastewater, and solid waste utility systems. Water System The Water System has experienced an increase in number of customers and the amount of water sold due to continued development within the service area, which is expected to continue during the Forecast Period. Table 1 summarizes the historical accounts served, billed water sales, and average account usage statistics for the Water System. The summary of the historical and projected customer and sales statistics for the Water System is summarized in Tables 1 and 4, respectively, and is shown as follows: Historical and Projected Customer Accounts and Statistics — Water System Total System Billed Retail Avg. Monthly Average Wholesale Treated Fiscal Year Ended Average Annual Water Sales Water Use per Annual Water Sales Treated Average Daily September 30, Retail Water (000s of Account Wholesale (000s of Flows (000s Flow (Historical) [1] Accounts [2] Gallons) (Gallons) Accounts Gallons) of Gallons) (mgd) 2013 105,563 9,648,060 7,616 4 2,695,695 13,402,766 36.720 2014 108,138 9,793,554 7,547 4 2,670,309 13,513,877 37.024 2015 110,960 9,891,367 7,429 4 2,656,310 13,581,307 37.209 2016 113,678 10,307,609 7,556 4 2,764,190 14,183,467 38.753 2017 116,431 10,879,109 7,787 4 2,806,563 14,625,634 40.070 Annual Average Historical Growth Rate 2.41% 3.05% 0.62% 0.00% 1.01% 2.21% 2.21% Total System Billed Retail Avg. Monthly Average Wholesale Treated Fiscal Year Ending Average Annual Water Sales Water Use per Annual Water Sales Treated Average Daily September 30, Retail Water (000s of Account Wholesale (000s of Flows (000s Flow (Projected) [3] Accounts [2] Gallons) (Gallons) Accounts Gallons) of Gallons) (mgd) 2018 [4] 119,076 10,639,508 7,446 4 2,831,388 14,530,418 39.809 2019 121,080 10,743,327 7,394 4 2,739,388 14,543,167 39.844 2020 123,360 10,838,530 7,322 4 2,639,388 [5] 14,537,992 39.721 2021 125,531 10,973,397 7,285 4 2,589,388 [5] 14,629,535 40.081 2022 127,591 11,098,096 7,248 4 2,539,388 14,710,109 40.302 2023 129,542 11,212,627 7,213 4 2,499,388 14,790,502 40.522 Annual Average Projected Growth Rate [6] 1.80% 0.50% 1.27% 0.00% 1( 91%) 0.19% 0.19% mgd = Million Gallons per Day Footnotes continued on following page (Remainder of page intentionally left blank) -24- Historical and Projected Customer Accounts and Statistics — Water System (cont'd.) Footnotes (cont d.): [1] Historical amounts shown derived from Table 1. [2] Amounts shown include fire line and retail irrigation (water -only) accounts. [3] Projected amounts shown derived from Table 4. [4] Amounts shown were estimated recognizing 9 months of actual reported billing statistics. [5] Reduction in wholesale water assumed with planned step down in reserved water capacity by Sarasota County from 6.0 mgd to 5.0 mgd on April 1, 2020. [6] Compound growth rate calculated from Fiscal Year 2017 results. As can be seen from the prior table, the Water System has experienced growth in the average water use (billed sales) per customer during the Historical Period. This increase in water sales and average use per account is consistent with trends experienced by other utilities in the region and along the central to southwest coast of Florida. The principal driver for the growth in historical water sales is associated with a strong local economy, increased development activity and greater irrigation associated with dryer conditions during the later portion of the Historical Period and particularly during the Fiscal Year 2017. These observations are evidenced by the overall increase in water sales and increase in average water use per account (with Fiscal Year 2017 being the highest use during the Historical Period). For the Fiscal year 2018 and based on a review of actual water sales reported by the County through June 30, 2018, it is expected that the County will observe a reduction in retail water sales when compared to the Fiscal Year 2017. The expected decline is attributable to reduced irrigation demands and is considered more typical of the average use per account (service area demands) for the Historical Period. With respect to retail water sales during the Forecast Period, continued growth in the number of new customer connections is expected to drive growth in such water demands. However, as noted in the prior table, assumed declines in future wholesale customer water purchases are estimated to offset any retail water sales gains resulting in an overall marginal growth rate of total water sales. It should be noted that as a component of the retail customer base, the County has entered into several franchise agreements with certain municipalities whereby the County provides retail service within the incorporated boundaries of such municipalities. The County owns the water infrastructure to provide service to such customers and the rates charged by the County for service must be the same rate as charged by the County for those customers located in the unincorporated area of the County. Specifically, the County has entered into an exclusive water service franchise agreement with the cities of Holmes Beach, Anna Maria, and Bradenton Beach (all located along the Gulf Coast) to provide retail water service within each jurisdiction's corporate boundaries. The current franchise agreements (all of which represent an extension of a previous franchise agreement) provides, among other things, the following: i) term of the agreement of approximately 15 years; ii) the right of the County to use the respective city's streets and avenues for facility installation, operation, and maintenance; iii) the ability of the city to charge a franchise fee based upon the County's potable water billings within the city; and iv) the rate applicability provisions for retail service. With respect to any franchise fees billed, such amounts are considered to be a "pass -through" charge and are not included in the Gross Revenues of the System. The franchise agreements are essentially identical in form and do not include any provision for the cities to acquire the Water System assets of the County located within the corporate limits upon expiration of the agreement. -25- As can be seen below, the term of each agreement will terminate beyond the term of the Forecast Period recognized in this Report: Summary of Water System Franchise Agreements Termination Date Term Effective Date Remaining Term City of Holmes Beach December 31, 2026 15 Years December 20, 2011 Approximately 9 Years City of Anna Maria December 31, 2026 15 Years January 24, 2012 Approximately 9 Years City of Bradenton Beach December 31, 2026 15 Years December 20, 2011 Approximately 9 Years Based on discussions with the County, it is expected that the County will continue to renew the franchise agreements in substantially the same form as the existing agreements and will continue to provide retail service to such service areas beyond the Forecast Period. With respect to the character of the retail customer base, the Water System consists primarily of single-family residential customers being serviced through a 5/8-inch or 3/4-inch meter service. As shown in the table below, this class accounts for approximately 90% of the total average annual accounts served during the Fiscal Year 2017. Estimated Average Annual Retail Water Accounts — Fiscal Year 2017 [1] Residential Multi -Family and Retail Fire Total Accounts Meter Size Single -Family Commercial [2] Industrial Irrigation Protection Amount Percent 5/8-inch and 3/4-inch 104,712 3,629 158 3,280 -- 111,778 96.00% 1-inch 219 1,284 50 153 116 1,788 1.56% 1-1/2-inch 5 783 27 52 23 884 0.76% 2-inch 2 434 20 44 196 642 0.60% 3-inch -- 126 8 1 -- 135 0.12% 4-inch -- 37 1 -- 331 276 0.32% 6-inch -- 7 1 -- 511 376 0.45% 8-inch -- 7 0 -- 191 145 0.17% 10-inch -- 3 -- -- 17 15 0.02% 12-inch -- -- -- -- -- 3 0.00% Totals 104,938 6,310 265 3,530 1,389 116,431 100.00% Percent 90.13% 5.42% 0.23% 3.03% 1.19% 100.00% [1] Amounts based on billing data provided by the County for the Fiscal Year 2017; amounts shown do not include water customers receiving wholesale water service from the County. [2] Master Metered Accounts represent approximately 46,855 average dwelling units served. Based on the estimated number of accounts served by meter size, an estimate of equivalent residential connections (ERCs) was developed. An ERC is considered by the County to represent the equivalent usage requirements of an average single-family residential connection and currently equates to 275 gallons per day of average water use. It is used as factor to convert a given average daily water requirement for any size customer or connection to an equivalent number of single- family residential connections. For the purpose of estimating the number of ERCs served, meter equivalent factors were used based on information published by the American Water Works Association ("AWWA") regarding the available capacities (gallons per minute) of typical water meters, which is used by many utilities including the County for rate application purposes, with the standard single-family residential customer representing one ERC. Since commercial or multi- -26- family customers are generally served by larger sized meters than the standard residential customer, it is useful to identify the total amount of ERCs served for the presentation of the size or magnitude of the total customer base served by the Water System. As can be seen from the following table and based on this method of estimating the number of ERCs, the ERCs served is greater than the number of accounts served. Comparison of Average Annual Retail Water Accounts to ERCs Served — Fiscal Year 2017 [*] Avg. Accounts Avg. ERCs Total System 116.431 163,527 Percent Difference 40.45% [*] Amounts shown only reflect retail water customers; does not include any ERC allowance for wholesale service. As previously discussed, the County provides wholesale water service to four (4) government - owned public utilities. During the Historical Period, the change or growth in wholesale water sales have generally mirrored the percentage change in retail water sales. Sarasota County is the largest wholesale customer and as can be seen below during the Fiscal Year 2017 they accounted for approximately 55% of the total wholesale water sales delivered from the Water System. of Billed Wholesale Water Sales — Fiscal Year 2017 Water Sales Percent of (000s of Gallons) Total Sales Sarasota County 1,548,497 55.17% Town of Longboat Key 637,222 22.70% City of Palmetto 541,254 19.29% City of Bradenton 79,589 2.84% Total Wholesale Water Sales 2,806,563 100% The projected decline that was previously discussed in wholesale water purchases for the Forecast Period is attributable to a scheduled reduction in contractual capacity reservations by Sarasota County on April 1, 2020. It should be noted that, over the last fifteen (15) years, the County has observed three (3) prior instances in which Sarasota County has had a stepped reduction in capacity reservations (was a planned reduction in accordance with the Sarasota County wholesale service agreement terms) including: i) the Fiscal Year 2003 from 14.0 mgd to 10.0 mgd; ii) the Fiscal Year 2008 from 10.0 mgd to 8.0 mgd; and iii) most recently during the Fiscal Year 2015 from 8.0 mgd to 6.0 mgd. While the initial reductions in capacity reservations had corresponded to observed declines in water use, the most recent reduction in capacity reservation for the Fiscal Year 2015 did not correspond with any decline in water purchases by Sarasota County (Sarasota County is not using it full capacity entitlement on an average daily flow basis). To the extent that the County does not observe the assumed decline in water sales from Sarasota County during Fiscal Year 2020, it is anticipated that a corresponding increase in the projected financial resources would result for the benefit of the water and wastewater utility system. -27- The wholesale service provided by the County was established based on a service agreement with each individual wholesale customer. The agreements provide, among other things, the rates charged for service, the amount of capacity reserved by each customer with the County, the service delivery requirements and responsibilities, and the term for service. All customers pay the same rate for service as established by the County per resolution (refer to the section regarding water and wastewater rates for monthly service earlier in this Report for a presentation of the current wholesale rates). The following is a summary description of the wholesale water agreements with the various public utilities: Town of Longboat Key ("LBK"): The County and LBK entered into a potable water agreement dated February 6, 2007 (the "LBK Water Agreement") that superseded the previous agreement dated March 17, 1970, as amended and supplemented from time to time. The town limits of LBK are located in both Manatee and Sarasota counties and the LBK Water Agreement has sufficient capacity to serve the entire water service area of LBK and not just that portion of the town located in Manatee County (the town does not purchase any wholesale water from any other supplier, including Sarasota County). The County provides one hundred percent (100%) of the total potable water requirements for the LBK retail water service area. The LBK Water Agreement provides that the County will reserve 2.50 mgd of capacity in the County's potable water system, which LBK may increase subject to payment of the then current Facility Investment Fees associated with the additional capacity requirements. The LBK Water Agreement also provides for the rates to be charged, including the ability to charge excess demand charges in the event LBK temporarily exceeds the reserve capacity threshold. The remaining term of the agreement is approximately 24 years and expires on September 30, 2031; the agreement includes one additional extension or renewal period of ten (10) years upon mutual written agreement between the parties. During the Fiscal Year 2017, LBK utilized approximately 70% or 1.75 mgd of its reserved water capacity on an average annual basis. City of Palmetto ("Palmetto"): The County and Palmetto entered into a potable water agreement dated October 11, 2005 (the "Palmetto Water Agreement") that superseded the previous agreement dated March 17, 1989, as amended and supplemented from time to time (which agreement expired and the County continued to provide service until the execution of the current agreement). The Palmetto Water Agreement provides that the County will reserve 2.00 mgd of capacity in the County's potable water system, which Palmetto may increase subject to payment of the then current Facility Investment Fees associated with the additional capacity requirements. The Palmetto Water Agreement also provides for the rates to be charged, including the ability to charge excess demand charges in the event Palmetto temporarily exceeds the reserve capacity threshold. The agreement was due to expire on September 30, 2019, but was extended by both parties on April 24, 2018 for an additional period of 10 years (expiration September 30, 2029). During the Fiscal Year 2017, Palmetto utilized approximately 74% or 1.48 mgd of its reserved water capacity on an average annual basis. City of Bradenton ("Bradenton"): The County and Bradenton entered into a potable water agreement dated December 11, 2012 (the "Bradenton Water Agreement") that superseded the previous agreement dated February 12, 1975, as amended and supplemented from time to time. The Bradenton Water Agreement provides that the County will reserve 0.500 mgd of capacity in the County's potable water system and includes provisions to increase the reserved capacity by am Bradenton subject to payment of the then -current Facility Investment Fees associated with additional capacity requirements. Additionally, to date no additional capacity has been reserved by the City. The Bradenton Water Agreement also provides for the rates to be charged, including the ability to charge excess demand charges in the event Bradenton temporarily exceeds the reserve capacity threshold. The remaining term of the Bradenton Water Agreement is approximately 14 years and expires on September 30, 2032; the agreement includes one additional extension or renewal period of ten (10) years upon mutual written agreement between the parties. During the Fiscal Year 2017, Bradenton utilized approximately 44% or 0.22 mgd of its reserved water capacity on an average annual basis. Sarasota County ("Sarasota"): The County and Sarasota entered into a potable water agreement dated October 21, 2003 that became effective beginning March 1, 2004 (the "Sarasota Water Agreement") and superseded the previous agreement dated February 20, 1973, as amended and supplemented from time to time. The Sarasota Water Agreement provides that the County will reserve the following amount of capacity in the County's potable water system: • April 1, 2008 through March 31, 2015 — Maximum Daily Reserve Capacity of 8 mgd; • April 1, 2015 through March 31, 2020 — Maximum Daily Reserve Capacity of 6 mgd; • April 1, 2020 through March 31, 2025 — Maximum Daily Reserve Capacity of 5 mgd; and • After March 31, 2025 — Maximum Daily Reserve Capacity of 0 mgd. The Sarasota Water Agreement also provides for the rates to be charged, including the ability to charge excess demand charges in the event Sarasota temporarily exceeds the then effective reserve capacity threshold. The remaining term of the agreement is approximately 7 years and expires on March 31, 2025; the agreement does not include any additional mutual extension periods to continue the agreement terms beyond the termination date. As of the date of this report both parties have engaged in informal discussions concerning a possible extension to the agreement, however the likelihood, level of interest and specific terms of any extension are uncertain. While a reduction in wholesale water revenue by Sarasota County would diminish the Net Revenues of the System, based on the current and projected financial strength of the County any loss in such revenues alone would not be expected to have a material impact on the County's ability to pay the Annual Debt Service Requirement. During the Fiscal Year 2017, Sarasota utilized approximately 71% or 4.24 mgd of its reserved water capacity on an average annual basis. The finished water requirements for the Water System service area are currently met through the use of County -owned water production and treatment facilities; although the County has the ability to secure future water resources from the Peace River / Manasota Regional Water Supply Authority ("PRMRWSA") based on a wholesale service contract. The County has not committed to any additional water capacity from PRMRWSA at this time nor is it anticipated to secure or receive any water from PRMRWSA during the Forecast Period. For a more detailed discussion of the water production and treatment facilities and the water service area, please refer to the Consulting Engineer's Report included as Appendix C to the Official Statement. (Remainder of page intentionally left blank) -29- The following is a summary of the available water capacity of the County as of October 1, 2017: Summary of Water System Capacity — Permitted Raw Water Withdrawals Average Annual Facility (mgd) [ 1 ] County -Owned Facilities: Lake Manatee Water Treatment Facility [2] 56.796 Treatment by Contract: [3] Peace River/Manasota Regional Water Supply Authority [4] 0.000 Total Available Water Capacity 56.796 [1] Amounts shown expressed on an annual average daily flow basis. [2] Amounts shown reflect the permitted water withdrawals on an average annual daily flow comprised of 34.9 mgd-adf from Lake Manatee, 15.98 mgd-adf from East County Wellfields I and II, 3.95 mgd-adf from Buffalo Creek and 1.96 Mosaic Wellfields. An additional 3.1 mgd-adf withdrawal is currently permitted from the East County Wellfields as conjunctive use and will convert to additional total capacity when required to meet system demands. [3] Reflects potential capacity that County has secured through a long-term service agreement. It should be noted that the County receives a very minor amount (less than 0.015 mgd) of water from the City of Bradenton for service to an isolated development referred to as Topical Shores pursuant to an agreement that was mutually extended and which expires on October 30, 2020; such amount is not shown since considered immaterial. [4] County has entered into a Master Water Supply Contract with PRMRWSA for additional long-term water supply. As of the date of this Report, the County has not secured any additional capacity commitments from PRMRWSA. It should be noted that the County and City of Bradenton have also entered into a wholesale water agreement to provide potable water service to an area referred to as Tropical Shores that is located in both the City and the County. The parties executed the Tropical Shores Water Supply Service Interlocal Agreement (the "Tropical Shores Water Agreement") whereby Bradenton will supply wholesale water service to the County for service to its share of the Tropical Shores area. The Tropical Shores Water Agreement was initially executed on October 30, 1990 with a twenty-year term with a ten-year extension provision. The agreement was extended by the County and subsequently superseded and replaced by the December 11, 2012 agreement noted previously. It should be noted that wholesale service to this area as reported by the County is minor (approximately 380,000 gallons per month, which is less than 0.003% of the retail water sales in Fiscal Year 2017) and this water supply has not been reflected as part of the water capacity utilization shown above. The available capacity from the various water production and treatment sources serves a single service area for the determination of capacity utilization of such facilities. It is estimated that the System should have sufficient water capacity available to serve the future customer demands in the Water System assumed for the development of the financial forecast, including the wholesale customers, for the Forecast Period based on the forecast of customers and sales included in the financial projections as shown in Table 4. (Remainder of Page Intentionally Left Blank) -30- The following table provides a summary of the recently completed Fiscal year 2017 and the projected capacity utilization for the Forecast Period: Summary of Permitted Water Capacity Utilization Fiscal Year Average Permitted Percent Ending Thousands of Daily Flow Withdrawals Capacity September 30, Gallons [*] (mgd) (mgd) Utilized 2017 (Act.) 14,615,671 40.04 56.796 70.50% 2018 14,537,779 39.83 56.796 70.13% 2019 14,550,534 39.86 56.796 70.19% 2020 14,545,357 39.74 56.796 69.97% 2021 14,636,945 40.10 56.796 70.61% 2022 14,717,560 40.32 56.796 70.99% 2023 14,797,994 40.54 56.796 71.38% [*] Amounts shown derived from Table 4 and includes water production to provide finished water service to both County retail and wholesale water customers. As can be seen from the table above, it is estimated that the County will utilize approximately 71 % of the total permitted water capacity expressed on an average daily flow basis available to the Water System. This capacity utilization relationship was based on the forecast of water sales as summarized in Table 4, an analysis of unbilled or non -revenue water, average day to maximum day water treatment relationships based on historical data and capacity planning information provided by the County, and the continued maintenance of the permitted capacity of the Water System during the Forecast Period (except for changes in TBC capacity as already set by agreement). Specifically, the forecasted finished water demands assumed unbilled or non -revenue water as a percent of total finished water production of 7.34%, which was held constant throughout the Forecast Period. The non -revenue water percentage was based on the most recent three (3) year historical average. Unbilled or non -revenue water is due to a variety of common factors to the industry, including water used for line flushing requirements to meet water quality regulations, hydrant testing, firefighting, internal utility uses (e.g., wash down of lift stations for maintenance purposes), under -registering meters at the customer premises, and water losses (system leakage). (Remainder of page intentionally left blank) -31- Wastewater System A summary of the historical and projected customer and sales statistics for the Wastewater System is summarized in Tables 2 and 5, respectively, and are shown below: Historical and Projected Customer Accounts and Statistics — Wastewater System Total Avg. Monthly Wastewater Total System Billed Retail Wastewater Average Wholesale System Average Daily Fiscal Year Ended Average Annual Wastewater Billed per Annual Wastewater Treated Flow — Total September 30, Wastewater Flow (000s of Account Wholesale Sales (000s of Flows (000s Treated Flows (Historical) [ 1 ] Accounts Gallons) (Gallons) Accounts Gallons) of Gallons) (mgd) 2013 92,789 7,068,552 6,348 2 610,642 8,109,688 22.218 2014 94,771 7,255,386 6,380 2 643,217 8,209,012 22.490 2015 96,984 7,305,485 6,277 2 664,428 8,224,443 22.533 2016 99,239 7,555,364 6,344 2 660,765 8,047,425 21.988 2017 101,659 7,697,677 6,310 2 621,064 7,963,064 21.817 Annual Average Historical Growth Rate 2.31% 2.15% 0.15% 0.00% 0.42% 0( 46%) 0( 46%) Total Avg. Monthly Wastewater Total System Billed Retail Wastewater Average Wholesale System Average Daily Fiscal Year Ending Average Annual Wastewater Billed per Annual Wastewater Treated Flow — Total September 30, Wastewater Flow (000s of Account Wholesale Sales (000s of Flows (000s Treated Flows (Projected) [2] Accounts Gallons) (Gallons) Accounts Gallons) of Gallons) (mgd) 2018 [3] 103,982 7,544,175 6,046 2 604,189 8,236,261 22.565 2019 106,326 7,684,501 6,023 2 604,282 8,378,194 22.954 2020 108,566 7,775,754 5,969 2 604,282 8,470,432 23.143 2021 110,703 7,887,817 5,938 2 604,282 8,583,704 23.517 2022 112,736 7,991,031 5,907 2 604,282 8,688,031 23.803 2023 114,668 8,086,864 5,877 2 604,282 8,784,898 24.068 Annual Average Projected Growth Rate [4] 2.03% 0.83% 1.18° 0.00% 0.46° 1.65% 1.65% mgd = Million Gallons per Day [1] Historical amounts shown derived from Table 2. [2] Projected amounts shown derived from Table 5. [3] Amounts shown were estimated recognizing 9 months of reported billing statistics. [4] Compound growth rate calculated from estimated Fiscal Year 2017 results. The majority of customer accounts served by the County receive both water and wastewater service. For the Fiscal Year 2017 the amount of wastewater customer accounts represented approximately 88% of water customer accounts. Since billed wastewater flows (sometimes referred to as revenue gallons) are determined from the customers metered water consumption, the historical trends in customer account growth and billed wastewater flows are generally consistent with that of the County's water system. However, not all metered water use is billed a wastewater charge (e.g., residential wastewater billing cap), which recognizes that residential customers metered water use above 10,000 gallons a month are assumed to be attributable to irrigation or outdoor use and is not charged for sewer service and that many commercial customers may have water -only use associated with manufacturing, cooling, and irrigation use. As a result, for the residential class, the average use per account for the wastewater system is lower than that of the water system. Consistent with the forecast assumptions of the water system, the wastewater system recognizes historical growth in billed flows, with a marginal reduction estimated for the Fiscal Year 2018 consistent with more typical levels of billed wastewater flows based on recent historical -32- trends. Overall, customer growth and billed wastewater flows are expected to continue to grow during the Forecast Period due to increased development in the wastewater service area. Where the wastewater system differs from that of the water system is that the wastewater system does not have the same relative amount of wholesale treatment demands and moreover, the County does not anticipate any declines in wholesale wastewater treatment demands during the Forecast Period as is assumed for the wholesale water treatment demands. An estimate of the number of wastewater ERCs served by the County was developed based on the estimated wastewater accounts served by meter size. An ERC is considered by the County to represent the equivalent usage requirements of an average single-family residential connection and equates to 210 gallons per day of estimated wastewater flow. It is used as factor to convert a given average daily wastewater requirement for any customer or connection to the equivalent number of single-family residential connections. For the purpose of obtaining the number of ERCs served, meter equivalent factors based on information published by the American Water Works Association, which is used by several utilities including the County for rate application purposes, served as the basis for such ERC determination for all classes with the standard single-family residential customer representing one ERC. As previously discussed, since commercial or multi- family customers are generally served by larger sized meters than the standard residential customer, it is useful to present the total ERCs served to recognize the size of the total customer base served by the Wastewater System. As can be seen below based on this method of estimating the number of ERCs, the ERCs are greater than the number of accounts served as shown below. Comparison of Average Annual Retail Wastewater Accounts to ERCs Served — Fiscal Year 2017 1*1 Average Annual Average Annual No. of Accounts No. of ERCs Total System 101,659 143,479 Percent Difference 41.14% [*] Amounts shown only reflect retail wastewater customers; does not include any ERC allowance for wholesale service. As mentioned regarding the Water System and as a component of the retail customer base, the County has entered into several franchise agreements with certain municipalities whereby the County provides retail service within the incorporated boundaries of such municipalities. The County owns the wastewater infrastructure to provide service to such customers and the rates charged by the County for service must be the same rate as charged by the County for those customers located in the unincorporated area of the County. Specifically, the County has entered into an exclusive wastewater service franchise agreement with the cities of Holmes Beach, Anna Maria, and Bradenton Beach to provide retail wastewater service within each jurisdiction's corporate boundaries. The current franchise agreements (all of which represent an extension of a previous franchise agreement) provides, among other things, for each respective city the following: i) term of the agreement of approximately 15 years; ii) the right of the County to use the city's streets and avenues for facility installation and maintenance; iii) the ability of a city to charge a franchise fee based upon the County's wastewater billings within a city; and iv) the rate applicability provisions relative to service. With respect to the franchise fee amounts billed, such amounts are considered as a "pass -through" charge and not included in the Gross Revenues of the -33- System. The respective franchise agreements are essentially identical in form and do not include any provision for the cities to acquire the Wastewater System assets from the County that are located within the corporate limits upon expiration of the agreement. As can be seen below, the remaining term of each agreement expires on December 31, 2026: Summary of Wastewater System Franchise Agreements Termination Date Term Effective Date Remaining Term City of Holmes Beach December 31, 2026 15 Years December 20, 2011 Approximately 9 Years City of Anna Maria December 31, 2026 15 Years January 24, 2012 Approximately 9 Years City of Bradenton Beach December 31, 2026 15 Years December 20, 2011 Approximately 9 Years Based on discussions with the County, it is expected that the County will continue to renew the franchise agreements in substantially the same form as the existing agreements and will continue to provide retail service to such service areas beyond the Forecast Period. With respect to the provision of wholesale wastewater service, the County has entered into two (2) separate service agreements with the Town of Longboat Key and the City of Bradenton. The agreements provide for, among other things, the rates for service, the amount of capacity reserved by each wholesale customer with the County, the service delivery requirements and responsibilities, and the term for service. All customers pay the same rate for service as established by the County per resolution (refer to the section regarding the rates, fees, and charges earlier in this Report for a discussion of the wholesale rates). The following is a summary description of the wholesale wastewater agreements with the various public utilities: Town of Longboat Key ("LBK"): The County and LBK entered into a wastewater agreement dated November 17, 2009 (the "LBK Wastewater Agreement") that superseded the previous agreement dated September 14, 1971, as amended and supplemented from time to time. The LBK Wastewater Agreement provides that the County will reserve 2.26 mgd of wastewater system capacity, which LBK may increase subject to payment of the then current Facility Investment Fees associated with the additional capacity requirements. As mentioned with regards to the Water System, the town limits of LBK are located in both Manatee and Sarasota counties and the LBK Wastewater Agreement has sufficient capacity to provide wastewater treatment and disposal service for entire wastewater service area of LBK and not just that portion of the town located in Manatee County (the town does not receive any other wholesale wastewater treatment service from any other supplier). The LBK Wastewater Agreement also provides for the rates to be charged and the remaining term of the agreement is approximately 16 years and expires on September 30, 2031; the agreement includes one additional extension or renewal period of ten (10) years upon mutual written agreement between the parties. During the Fiscal Year 2017, LBK utilized approximately 75% or 1.69 mgd of its reserved wastewater capacity on an average annual basis. City of Bradenton ("Bradenton"): On May 17, 1983, the County entered into a contract with the City of Bradenton whereby the City agreed to transmit County wastewater from Perico Island through its wastewater system and the County agreed to treat a portion of the City's wastewater. This contract expired May 17, 2013 and renewal / new contract was entered into on May 9, 2017 (the "Bradenton Wastewater Agreement"). The County and the City have agreed to offset services provided to each other and to make net quarterly payments to the party that is owed money. The -34- City, at its option, may also offset payments it is required to make to the County for its water supply to Perico Island against wastewater treatment it has supplied to the County. Service to Bradenton has been relatively minor; during the Fiscal Year 2017 Bradenton utilized approximately 0.015 mgd of wastewater capacity on an average annual basis. The County currently owns and operates three separate wastewater treatment plants with a combined wastewater treatment capacity of 33.50 mgd expressed on an average annual daily flow basis. A summary of the current wastewater treatment plant capacity by specific facility and service area location is summarized below. For a more detailed discussion of the wastewater treatment facilities and the wastewater service area, please refer to the Consulting Engineer's Report included as Appendix C to the Official Statement. Summary of Wastewater System Capacity Permitted Facility Capacity (mgd) [1] Southwest Regional WRF [2] 15.00 Northeast WRF 7.50 Southeast WRF 11.00 Total Available Wastewater Capacity 33.50 mgd = million gallons per day WRF = Water Reclamation Facility [1] Amounts shown expressed on an average annual daily flow basis. [2] All wholesale wastewater treated is provided at the Southwest Regional WRF. At this time, the wastewater treatment plants are not completely interconnected and were strategically constructed to serve specific sewer areas or sheds. However, since the growth of the wastewater service area applies to all service areas and no separate accounting of customers served by wastewater plant is currently available, the capacity utilization is reported on a combined system basis for the purposes of this Report (growth would occur where available capacity is located). The Wastewater System currently has a combined service area permitted facility capacity of approximately 33.50 mgd presented on an average annual daily flow basis. With respect to the Forecast Period presented in this Report and the projection of customer growth and usage requirements, the estimated utilization of the wastewater treatment capacity for the Wastewater System service area was estimated as follows: (Remainder of page intentionally left blank) -35- Estimate of Total System Wastewater Capacity Utilization During Forecast Period Average Fiscal Year Ending Daily Flow Permitted Capacity Percent Capacity September 30, (mgd) [*] (mgd) Utilized 2017 21.82 33.5 65.12% 2018 22.51 33.5 67.20% 2019 22.90 33.5 68.35% 2020 23.15 33.5 69.11 % 2021 23.46 33.5 70.03% 2022 23.75 33.5 70.88% 2023 24.01 33.5 71.67% [*] Amounts shown based on estimated account growth of the Wastewater System and historical wastewater treatment requirements for Wastewater System service area; amounts shown are less than the flow projections reflected in the County engineer's report, which reflect projecting for capacity planning purposes. As can be seen above, the use of the total permitted wastewater capacity expressed on a combined plant basis for the Wastewater System during the Forecast Period is expected to be approximately 70%. Based on the available constructed wastewater capacity in the Wastewater System, the County should have sufficient wastewater treatment capacity to serve the Wastewater System service area needs and anticipated growth assumed for the financial forecast included in this Report. The County currently utilizes its highly treated effluent derived from the wastewater treatment process to meet a portion of the System's water irrigation demands. The use of reuse water to meet these demands provides a benefit to the region since these irrigation demands are not being met by potable water or additional ground water withdrawals. The County currently includes revenues derived from the Reclaimed System as a component of the Wastewater System revenues for financial reporting purposes and for the determination of the Gross Revenues of the System. The following is a summary of the historical and projected customer and sales statistics for the Reclaimed System: (Remainder of page intentionally left blank) -36- Historical and Projected Customer Accounts and Statistics Reclaimed Water System [1] Fiscal Year Ended Average Reclaimed Metered Sales September 30, (Historical) Water Accounts (000s of Gallons) 2013 3,063 4,629,694 2014 3,711 4,863,992 2015 4,463 5,192,260 2016 5,193 5,696,136 2017 5,828 6,111,958 Average Annual Historical Growth Rate 17.450 7.19% Fiscal Year Ending September 30, (Projected) 2018 2019 2020 2021 2022 2023 Average Annual Projected Growth Rate [2] Average Reclaimed Metered Sales Water Accounts (000s of Gallons) 6,337 5,908,297 6,812 6,351,162 7,237 6,747,411 7,612 7,097,042 7,937 7,400,055 8,212 7,656,451 5.88% 3.83% [1] Amounts shown based on information provided by the County and represent statistics for all classes of customers, which include master- and individually -metered residential and commercial, governmental authority, large recreation facility, and agricultural service. [2] Reflects average annual compound growth rate from Fiscal Year 2017 through Fiscal Year 2023. Based on recent historical trends in customer growth and discussions with members of the County staff, it has been assumed that wastewater and reuse or reclaimed water customers will increase during the Forecast Period at growth rates that are lower than that recently experienced by the respective systems based on historical information provided by the County. Based on reported and anticipated development / service area information provided by the County, growth is expected to continue to be primarily residential in nature consistent with the land use requirements of the service area. Furthermore, it was assumed that the Reclaimed System, which is considered by the County to be a component of the Wastewater System, increase would be limited during the Forecast Period consistent with the general trends in System growth. The wastewater customer and sales projections shown in Table 5 and the reclaimed water shown above served as the basis for the projection of revenues derived from monthly wastewater and reuse water service rates for the Forecast Period. Solid Waste System Included as a component of the System is the Solid Waste System, which includes both disposal and collection of solid waste. As previously mentioned, the County currently operates the Lena Road Landfill and the essentially all of the Solid Waste System Revenues (net of franchise hauler payments) are derived from the solid waste tipping fees for disposal operations. The following is a summary of historical and projected solid waste deliveries to the County's disposal site, which is shown in more detail in Tables 3 and 6 at the end of this report: -37- Historical and Projected Statistics (Landfill Material Tons) - Solid Waste System [1] Residential and Fiscal Year Ended Commercial Construction Total Landfill September 30, (Historical) Waste and Demolition Waste 2013 2014 2015 2016 2017 [2] Average Annual Historical Growth Rate Fiscal Year Ending September 30, (Projected) 2018 2019 2020 2021 2022 2023 Average Annual Projected Growth Rate [3] 269,039 12,127 281,166 286,406 6,986 293,392 293,912 7,702 301,615 310,444 10,327 320,771 302,903 11,467 314,370 3.01% 1.39° 2.830 Residential and Commercial Construction Total Landfill Waste and Demolition Waste 310,783 13,760 324,542 315,960 13,760 329,720 319,643 11,696 331,339 322,630 12,047 334,677 324,903 12,408 337,311 327,217 12,780 339,998 1.30% 1 1 [1] Historical amounts shown based on information provided by the County. [2] The County observed a reduction in the amount of residential waste deliveries as a result of an increase in curbside recycling collections associated with a change in recycling operations to single stream automated collection. [3] Reflects average annual compound growth rate from Fiscal Year 2017 through Fiscal Year 2023. The projected growth in tonnage delivered to the landfill was based on: i) recent historical trends in estimated population served within the County; ii) recent trends in reported deliveries as provided by the County; iii) the consideration of projections of population growth for the County as developed by the EDR; and iv) discussions with the County staff. As noted the County implemented a change to single stream residential curbside collection beginning in the Fiscal Year 2017. The change in recycling collection practice is believed to be the cause of the one-time reduction in residential waste deliveries observed for such Fiscal Year. Irrespective of the decline in landfilled waste deliveries for the Fiscal Year 2017, the growth in waste deliveries for the Historical Period is still greater than the rate of growth in water and wastewater customer accounts. The growth in waste deliveries is typically considered a leading indicator of economic activity and indicates the overall general strength of the local economy. The Forecast Period assumes a more modest growth rate in the amount of waste deliveries, reflecting a more conservative outlook. With respect to the solid waste collection system, the County currently has two franchise collection haulers that have the exclusive right to collect residential and commercial solid waste within the specified franchise boundaries pursuant to a Solid Waste Franchise Agreement with each entity (the agreements are referred to as the "Solid Waste Franchise Agreement"). The two franchise haulers are Waste Pro of Florida, Inc. ("Waste Pro") and Waste Management Inc. of Florida ("Waste Management") and both are considered as the "Authorized Collector" of solid waste pursuant in the specified collection service area as set by each respective Solid Waste Franchise Agreement. Both entities entered into a separate Solid Waste Franchise Agreement we Unincorporated Manatee County (collection area 1 for Waste Pro and collection area 2 for Waste Management). The Solid Waste Franchise Agreement for each Authorized Collector includes, among other things, the i) delineation of the collection service area;11) terms for collection service by customer class; iii) rates for payment to the Authorized Collector by the County, which also includes a provision for rate adjustments to account for inflation on the cost of operations and fuel; and iv) other terms such as quality of service and maintenance of records. Each Solid Waste Franchise Agreement was executed on April 22, 2008 and became effective on October 1, 2008 for an eight (8) year term expiring on September 30, 2016. The Solid Waste Franchise Agreement provided for one (1) additional term not to exceed seven (7) years following a public hearing regarding such renewal by the Board and, on October 7, 2014, the Board approved the extension of the Solid Waste Franchise Agreement for each Authorized Collector commencing October 1, 2016 through September 30, 2023. The following is a summary of the customer statistics for solid waste collection services for Waste Pro and Waste Management: Historical and Projected Franchise Customer Accounts - Solid Waste System [1] Waste Pro of Florida, Inc. Waste Management Inc. of Florida Combined Franchise Areas Fiscal Year Ended September 30, (Historical) Accounts Units [2] Accounts Units [2] Accounts Units [2] 2013 48,949 69,707 44,085 60,871 93,034 130,578 2014 50,107 70,657 45,160 61,836 95,267 132,493 2015 51,299 72,396 46,178 63,326 97,477 135,722 2016 52,675 73,988 47,553 64,926 100,228 138,914 2017 54,002 75,661 49,047 67,141 103,049 142,802 Annual Average Historical Growth Rate 2.49% 2.07% 2.52% 2.48% 2.50% 2.26% Fiscal Year Ending September 30, (Projected) Accounts Units [2] Accounts Units [2] Accounts Units [2] 2018 55,044 77,122 50,016 68,470 105,060 145,592 2019 56,055 78,539 50,957 69,760 107,012 148,299 2020 57,031 79,907 51,870 71,010 108,901 150,917 2021 58,025 81,300 52,798 72,281 110,823 153,581 2022 59,036 82,718 53,743 73,576 112,779 156,294 2023 60,065 84,162 54,706 74,895 114,771 159,057 Annual Average Projected Growth Rate [3] 1.79% 1.79% 1.84% 1.84% 1.81% 1.81% [1] Historical amounts shown derived from information provided by the County. [2] Represents residential units and commercial units determined by number of bins, compactors, cans, roll -out, and gate service [3] Reflects average annual compound growth rate from Fiscal Year 2017 through Fiscal Year 2023. The projected growth in solid waste collection customers was based on i) recent historical trends in reported customers served by the respective Authorized Collectors; ii) population projections prepared by the EDR; and iii) discussions with the County staff. The projection in customers served was generally consistent with the anticipated growth in the Water and Wastewater System customers in that the rate of growth would be less than recent historical trends for the Forecast Period. The following table provides detail concerning the composition of the franchise area collection accounts by customer class, type of service and service area: (Remainder of page intentionally left blank) -39- Su of Fiscal Year 2017 Franchise Collection Billie Waste Pro of Waste Management Florida, Inc. Inc. of Florida Franchise Collection Accounts: Residential 51,765 45,882 Commercial 2,237 3,165 Total Accounts 54,002 49,047 Franchise Collection Units: Residential Commercial Bins Compactors Cans Roll Out Short Gate Service Long Roll Out Total Commercial Units Total Units Accounts and Units Percent of Total Total 97,647 94.8% 103,049 100.0% 72,623 63,362 135,985 95.2% 1,221 1,646 2,867 2.0% 23 46 69 0.0% 1,475 1,541 3,016 2.1% 53 35 88 0.1% 261 508 769 0.5% 75,661 67,141 6,817 142,802 100.0% As can be seen above, the residential customer class represents the majority or 95% of the total collection accounts and units served. The Solid Waste System customer statistics and waste delivery projections served as the basis for the projection of revenues derived from monthly tipping fees and solid waste collection fees and the payments to the Authorized Collectors for the Forecast Period reflected in the Report. Stormwater System There is no presentation of any Stormwater System customers since the County has not established a stormwater utility from a rate perspective and therefore no rates or charges are applied to properties located within the unincorporated County area at this time. (Remainder of page intentionally left blank) Ten Largest Customers of System A summary of certain information on the revenues for the System's ten largest retail customers in Fiscal Year 2017 is presented below based on information provided by the County. As shown in the following table, the ten largest customers accounted for approximately 2.35% of the System's total rate revenue. Ten Largest Revenue Retail Customers — For Twelve Months Ended September 30, 2017 [11 Top Ten Retail Percentage of Total Customer Name Type of Services Received Customers Retail Revenue Tropicana Products Commercial; Water Master Metered $1,513,246 0.88% MHC Operating Limited Partnership Master Metered Residential; Water, Sewer, and Solid Waste 1,488,573 0.86% Wws Homeowners Association Master Metered Residential; Water, Sewer, and Solid Waste 404,263 0.23% Lockheed Martin Corp Commercial; Water, Sewer, and Solid Waste 311,761 0.18% Img Academy LLC Commercial; Water, Sewer, and Solid Waste 286,861 0.17% FLU and F LW, Inc. Commercial; Water and Sewer 281,889 0.16% Benderson Development Co., Inc. Commercial; Water, Sewer, and Solid Waste 265,583 0.15% Golf Lakes Estates Master Metered Residential; Water, Sewer, and Solid Waste 262,285 0.15% Vista Palma Sola LLC Master Metered Residential; Water, Sewer, and Solid Waste 258,650 0.15% Premier Management Group Master Metered Residential; Water, Sewer, and Solid Waste 258,341 0.15% Top Ten Retail Customers Total $5,331,454 3.09% Total Water, Wastewater, and Solid Waste System Rate Revenue [2] $172,437,000 100.00% [1] For presentation purposes, the top ten (10) customers shown reflect retail customers only and exclude: i) the County's wholesale water and wastewater service customers; ii) municipal solid waste customer accounts; and iii) commercial franchised haulers providing solid waste collection services to multiple customer accounts. [2] Amounts shown are derived County's financial statements. As previously mentioned, the Water and Wastewater System also provides wholesale water and wastewater service to certain neighboring local government utilities. The wholesale customers as a group are the largest customers served by the System, and these wholesale customers account for approximately 4.9% of the total rate revenue received by the County. (Remainder of page intentionally left blank) -41- CAPITAL IMPROVEMENTS PROGRAM Capital Project Summary In order to meet future capacity needs based on increases in customer growth and projected consumption levels and to maintain the System properly, the County has developed a Capital Improvement Program ("CIP") comprising a variety of major additions, extensions, improvements and rehabilitations of the System. Projects are anticipated to be funded from Net Revenues (based on assumed rate increases hereinafter described), Facility Investment Fees, available reserves, and future borrowings. The County reports that many of the projects and improvements contemplated in the CIP are in the preliminary planning stages and contracts for the construction of the projects have not been awarded. The County reviews its CIP annually and updates the program recognizing changes in cost and the priority of the improvements. Accordingly, the total cost of the CIP could be more or less depending on future demand, actual contract awards, and other economic factors. The CIP does not include any capital expenditures associated with TBC water capacity purchases from the PRMRWSA since the County currently has sufficient water resources to meet its water capacity needs for several years beyond the Forecast Period and has not contracted for water supply from the PRMRWSA at this time. The CIP is summarized in Table 7 at the end of this Report. As can be seen in Table 7 and as summarized below, the County has identified approximately $500 million in capital expenditure needs for the Forecast Period, which includes projects with funds appropriated in prior years that have not been completed as of the date of this Report (projects are considered to be "in progress or underway"). For a more detailed description of the System Capital Improvement Program, please refer to the Consulting Engineer's Report included as Appendix C to the Official Statement. Water System — CIP Wastewater System — CIP Solid Waste System — CIP Stormwater System — CIP Department Capital [2] Total Capital Improvement Plan Estimated Capital Improvement Plan Percent Fiscal Years 2018 — 2023 [11 of Total $168,880,591 33.41 % 296,032,406 58.56% 4,842,500 0.96% 19,627,356 3.88% 16,152,582 3.19% $505,535,436 100.00% [1] Amounts shown derived from Table 7 at the end of this Report. [2] Amounts represent equipment and other related expenditures that are capitalized (not considered as an Operating Expense) but not a component of the CIP. Funding Sources for Capital Program As shown above and in Table 7 at the end of this report, the County has identified approximately $500 million in capital expenditure appropriations on behalf of the System for the Forecast Period. Based on an analysis of funds available (e.g., Facility Investment Fees, available Capital Improvement Fund reserves, etc.) and the estimated amount of proceeds to be derived from the issuance of Additional Parity Bonds (including the Series 2018 Bonds), the funding sources for the CIP are anticipated to be as follows: -42- Estimated Funding Amount [1] Percent Capital Improvement Fund/Operations [2] $315,007,071 62.31% Water Facilities Investment Fees Account 10,537,981 2.08% Wastewater Facilities Investment Fees Account 40,024,332 7.92% Existing Bond Proceeds [3] 33,045,040 6.54% Additional Parity Bonds — Series 2018 Bonds 75,000,000 14.84% Additional Parity Bonds — Series 2021 Bonds [4] 28,900,000 5.71% Annual Operations/Rate Revenues [5] 3,021,012 0.60% Totals $505,535,436 100.00% [1] Amounts derived from Table 7; amounts include encumbrances and unspent appropriations from prior periods, which represent carryover capital projects. [2] Amount reflects existing reserves and anticipated deposits to such account projected to be generated from System operations for Cn' projects based on the financial forecast as shown in Table 7. [3] Reflects use of remaining bond proceeds from the previously issued Series 2015 Bonds, which are anticipated to be fully appropriated, encumbered or spent during the Fiscal Year 2018. [4] Reflects anticipated Additional Parity Bonds assumed to be issued by the County subsequent to the Series 2018 Bonds to fund a portion of the capital improvement program. [5] Amounts reflect funding of certain annual capital expenditures from operations (capital expenditures not considered as a part of the CIP, but which, are capitalized to utility plant in service as part of the County's financial reporting process), which are generally considered as part of the System operating budget (represents funding of general utility plant allocable to specific departments such as vehicles and equipment). As can be seen above, approximately 73% of the CIP is anticipated by the County to be funded from internal sources and System revenues (i.e., excludes bond proceeds). It is further estimated that the County will fund approximately 21 % of the CIP by its issuance of Additional Parity Bonds, including the Series 2018 Bonds and Series 2021 Bonds. As shown on Table 7, the use of Series 2018 Bonds has been specifically allocated to the funding of certain projects. However, the use of such additional bonds is considered by the County to fund the general needs of the System and the project funding may change based on priority, availability of other funds, and other reasons. It should be noted that the County plans to update its CIP and corresponding funding analysis as part of the annual budget process to evaluate the use of proceeds of the Series 2018 Bonds and the timing of the issuance of the Additional Parity Bonds as appropriate due to changes in System growth, levels of service, and other factors. (Remainder of page intentionally left blank) -43- 2018 Project The County has identified several capital projects within the CIP that are anticipated to be funded from the proceeds of the Series 2018 Bonds. The following table provides a listing of the identified projects and planned funding by the Series 2018 Bonds: Summary of Capital Projects Available to be Funded from Series 2018 Bonds Funded by the Total Project CIP No. Project Name Series 2018 Bonds Cost [*] 6026075 Lake Manatee Dam Repairs $10,528,221 $34,500,000 6050470 Lake Manatee Ultra Filtration Membrane Process 24,500,000 50,533,940 6088380 SEWRF Storage Lakes and Pump Back Station Improvements 3,806,000 8,541,709 6083381 Southwest Water Reclamation Facility New Headworks 9,570,000 10,935,000 6091680 SWWRF Belt Filter Press Electrical Rehab and Monitoring/Replace Belt Filter Press Feed Pumps 3,809,000 3,809,000 6091780 SWWRF DIW Booster Station and Chlorine Contact Chamber 6,380,000 7,293,500 6088490 NWRF — EQ Tank 844,399 9,043,000 6092080 SEWRF Dedicated Plant Drain Station 2,050,600 2,050,600 6092180 Southeast Water Reclamation Facility Return Activated Sludge and Waste Activated Sludge System Upgrade 3,102,330 3,102,330 WW01254 Southwest Water Reclamation Facility Equalization System Rehabilitation 9,225,500 9,225,500 WW01256 Southwest Water Reclamation Facility Bleach Tank Roof 1,183,950 1,183,950 Total $75,000,000 $140,218,529 RWF = Reclamation Water Facility DWI = Deep Injection Well [*] Amounts shown reflect the total project budget including spending which was incurred during prior and historical fiscal years. As a result, amounts will not reconcile to total project funding identified in the CIP shown in Table 7 As can be seen above, the County anticipates several large capital improvements associated with water storage, water treatment, wastewater treatment and other improvements. For a complete listing of the timing and funding for the Series 2018 Projects please reference Table 7 at the end of this Report. Pursuant to Resolution No. R-18-084 adopted on June 12, 2018, the County may reimburse itself for project costs incurred prior to the issuance of the Series 2018 Bonds (the "Reimbursement Resolution"). The Reimbursement Resolution provides the County with ability to reimburse the System for prior capital expenditures incurred within the later of 18 months from the earliest date of the prior expenditures were incurred or the dates the projects are placed in service, but in no event later than five (5) years after the first prior expenditures were made. The County anticipates reimbursing funding attributable to the identified improvements that are currently underway also referred to as the 2018 Project. Capital Improvement Fund Summary Pursuant to the terms and conditions of the Bond Resolution, the County has established a separate Capital Improvement Fund that the County annually funds from System Revenues after the payment of Operating Expenses and deposits to the Sinking Fund. There are no specific funding criteria reflected in the Bond Resolution; however, the County annually budgets, accrues, and deposits moneys derived from System operations into the fund. As defined in the Bond Resolution, the monies held in the Capital Improvement Fund shall be used to: i) make additions, extensions and improvements to the System; ii) pay the costs of replacement or renewal of capital assets of the System or extraordinary repairs thereto; iii) establish reserves for closure costs of the County's Landfill; and iv) fund any public works projects legally permitted under applicable law and approved by the Board. Based on discussions with the County, funds on deposit in the Capital Improvement Fund are primarily used for Public Utilities System projects but the County has historically used balances in the fund to finance public works projects. The annual deposits to the Capital Improvement Fund from ongoing System operations are retained by the System for ongoing capital projects. For the Forecast Period and as discussed later in more detail, the annual average deposit to the Capital Improvement Fund from System operations is: i) approximately $35.3 million from water and wastewater operations, which on a combined basis is approximately 25% of the projected average annual water and wastewater operating charges of the System; and ii) approximately $2.1 million from solid waste operations, which is approximately 4.6% of the projected average annual solid waste service charges. HISTORICAL OPERATING RESULTS General The historical operating results for the System on a combined water, wastewater, solid waste, and stormwater system basis are presented below for the Historical Period and are shown in more detail in Table 8 at the end of this Report. The operating results for the Historical Period were summarized based on financial information compiled and provided by the County and information included in the Public Utilities System Annual Financial Reports (the "Annual Report") of the County for each fiscal year shown. The historical operating results have been presented in a manner consistent with the requirements of the Bond Resolution relative to the definition of Net Revenues of the System. Therefore, the amounts shown reflect certain differences in the presentation of the financial results compared to the financial statements to the Annual Report. Specifically, these major differences relate to: i) the determination of the Operating Expenses (i.e., depreciation and amortization expenses are not recognized); ii) the recognition of interest income (which amounts do not include earnings on Construction Fund balances associated with proceeds of Bonds issued for the System as these interest earnings are restricted to such Fund); and iii) recognition of other contributed capital (operating capital grants), which are not considered as a component of the Net Revenues. (Remainder of page intentionally left blank) -45- Summary of Historical Operating Results The historical operating results for the System are shown in Table 8 at the end of this report and are summarized below: Summary of Historical System Operating Results and Debt Coverage [1] Fiscal Year Ended September 30, Description 2013 2014 2015 2016 2017 Charges for Services $140,781,000 $143,505,000 $150,415,000 $162,432,000 $172,437,000 Miscellaneous Revenues, Operating Grants / Contributions and Interest Income [2] 1,062,000 2,181,000 3,311,000 5,831,000 4,869,000 Total Gross Revenues 141,843,000 145,686,000 153,726,000 168,263,000 177,306,000 Total Operating Expenses [3] Net Revenues Net Revenue Ratio Plus Federal Direct Payment [4] Net Revenues Adjusted for Federal Direct Payment Outstanding Bonds: Annual Debt Service Requirement Calculated Coverage Required Coverage Subordinate Obligations: [5] Net Revenues after Outstanding Bonds Payments Subordinate Obligations Debt Service Requirement (SRF) Calculated Coverage Required Coverage Net Available for Other Required Transfers [6] Other Required Transfers: Debt Service Reserve Account [7] Other Allocated Debt - Series 2013 Bonds [8] Net Available for Capital Improvement Fund Transfer [9] System Facility Investment Fees 95,356,000 104,907,000 109,517,000 116,682,000 115,132,000 46,487,000 40,779,000 44,209,000 51,581,000 62,174,000 32.77% 27.99% 28.76% 30.65% 35.07% 1,970,000 1,752,000 1,750,000 1,759,000 1,757,000 48,457,000 42,531,000 45,959,000 53,340,000 63,931,000 $20,855,028 $14,445,284 $15,752,076 $17,519,686 $17,343,066 2.32 2.94 2.92 3.04 3.69 1.15 1.15 1.15 1.15 1.15 $27,601,972 $28,085,716 $30,206,924 $35,820,314 $46,587,934 $707,355 $707,355 $0 $0 $0 39.02 39.71 N/A N/A N/A 1.15 1.15 N/A N/A N/A $26,894,617 $27,378,361 $30,206,924 $35,820,314 $46,587,934 $0 $0 $0 $0 $0 477 7Qd T77 I7t1 T157 ;CA TIA1 R'27 WIA1 Q57 $26,817,323 $27,300,991 $29,849,360 $35,478,482 $46,245,982 17F1A?A1 11071)01c, 11Or%1 75d 11;R1A';07 1Fd7717d Total Available for Other System Purposes [10] $39,432,066 $39,271,927 $43,800,614 $52,292,989 $62,723,106 [1] Amounts shown derived from Table 8 and are based on information derived from in the Public Utilities Annual Financial Report and other financial information prepared and provided by the County for each Fiscal Year. [2] Amounts shown do not include interest income earned on balances in the Construction Fund (earnings restricted to such account by Bond Resolution). [3] Amounts shown do not include depreciation or amortization expenses pursuant to the Bond Resolution. [4] Amounts shown include Federal Direct Payments received from the Federal Government associated with the issuance of the Series 2010 Bonds; for the purposes of determining compliance with the rate covenant as delineated in the Bond Resolution, the Federal Direct Payments are included as a component of the Net Revenue. [5] The County during the Historical Period had secured a low -interest loan through the State Revolving Fund ("SRF") Loan Program (referred to in this Report as the "Subordinate Obligation"). Pursuant to the Loan Agreement, the County had pledged the Net Revenues, net of any parity bonds debt service payments, toward the payment of the Subordinate Obligation. As of Fiscal Year 2015, the Subordinate Obligation was no longer outstanding. Footnotes continued on following page. Footnotes (contd.): [6] Amount represents the available Net Revenue after the payment of the Annual Debt Service Requirement on the Bonds issued pursuant to the Bond Resolution and the payment of the Subordinate Obligation. [7] The Debt Service Reserve Account on the Outstanding Bonds are each secured by a cash funded reserve from the proceeds of such bonds at the time of issue or a Reserve Account Credit Facility Substitute equal to the Debt Service Reserve Requirement for each series of Outstanding Bonds; therefore, no additional required transfers are reflected during the Historical Period. [8] Represents allocated debt service payments on the $79,640,000 in Revenue Refunding and Improvement Bonds, Series 2013 (the "County 2013 Bonds"), which are secured from County non -ad valorem revenues of the General Fund, which a portion was attributable to funding certain Solid Waste System projects (from the proceeds of the original issue that was recently refunded). Since the County budgets and allocates a portion of the debt service on the County 2013 Bonds to the Solid Waste System, such amounts were considered as a required transfer for the purposes of presentation of the Historical System operating results and rate covenant compliance with the provisions of the Bond Resolution. [9] Pursuant to the Bond Resolution, all available revenue after payment of Operating Expenses, deposits to the Rate Stabilization Fund, if any, the payment of the Annual Debt Service Requirement on all Outstanding Bonds, and other required transfers shall be deposited into the Capital Improvement Fund for the benefit of the System. Generally, this account is used by the County to fund ongoing capital expenditures that are not funded by System debt and other available funding obligations of the System. [10] It should be noted that the amounts shown as "Available for Other System Purposes" are prior to level annual transfers of $2,945,142 for watershed management protection (e.g., conservation land acquisition) to the General Fund. In the development of the historical operating results and debt service coverage ratios as shown above and in more detail in Table 8, several observations and information sources were considered. The following is a summary of such observations and information sources. 1. In addition to the change in System customers served during the Historical Period, the County implemented a series of rate adjustments that had a positive impact on Gross Revenues to help maintain net operating margins and meet funding requirements. The following is a summary of the adopted and enacted rate increases implemented by the Board during the Historical Period: Summary of Previously Adopted and Enacted Rate Increases Historical Period - Fiscal Year Ending September 30, Current FY 2013 2014 2015 2016 2017 2018 Water and Wastewater System [1] 3.00% 0.00% 4.75% 4.75% 4.00% 4.00% Effective Date 11/l/2012 N/A 1/1/2015 1/1/2016 4/1/17 4/1/18 Solid Waste Collection and Disposal [2] Residential Service: Solid Waste/Yard Waste 0.0% 0.0% 6.0% 0.0% 0.0% 0.0% Recycling 0.0% 0.0% 2.5% 0.0% 0.0% 0.0% Backdoor/White Goods/Tires/Other 2.5%-5.0% Commercial: Can Service 0.0% 0.0% 3.0%-6.0% 0.0% 0.0% 0.0% Bin Service 0.0% 0.0% 2.5% 0.0% 0.0% 0.0% Effective Date N/A N/A 11/1/2015 N/A N/A N/A Landfill Disposal Tipping Fees [3] Solid Waste, Yard Trash and White Goods 0.0% 0.0% 11.0% 0.0% 0.0% 0.0% All Other Tip Fees 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Effective Date N/A N/A 11/1/2015 N/A N/A N/A [1] Rate adjustments adopted and implemented by the County were applied "across-the-board" to all monthly user fees for water and wastewater service. [2] Residential collection service represents 46% of the total solid waste fee revenues reported for the recently completed Fiscal Year 2017. Commercial collection service represents 42% of the total solid waste fee revenues reported for the recently completed Fiscal Year 2017. [3] Tip fee revenues represent approximately 12% of the total solid waste fee revenues reported for the recently completed Fiscal Year 2017. The municipal solid waste tip fee revenue, which was increased during Fiscal Year 2015, accounts for approximately 62% of the total tip fee revenues reported for the recently completed Fiscal Year 2017. -47- 2. For the Fiscal Year 2017, water and wastewater charges for service represented approximately $128.8 million or 73% of Gross Revenues (excluding FIF Fees). The average annual growth rate in water and wastewater charges for service was approximately 5.9% and 5.7%, respectively, during the Historical Period and was due to implementation of rate increases, growth in customer accounts and growth in billed water and wastewater flows. 3. For the Fiscal Year 2017, solid waste charges for service represented approximately $43.6 million or 25% of Gross Revenues (excluding FIF Fees). The average annual growth rate in solid waste charges during the Historical Period was approximately 3.7% and was due to implementation of rate increases, growth in customer accounts and growth in waste deliveries. 4. Miscellaneous revenues and interest income experienced significant growth during the Historical Period from $1.1 million in Fiscal Year 2013 to $4.9 million in Fiscal Year 2017. Of the approximate $3.8 million growth in these revenues, $3.7 million or 97% is attributable to the following: a. $1.8 million or 47% of the revenue growth is attributable to increases in interest income. The growth in interest income is primarily attributable to a combination of increased interest rates being earned on investments and the growth in overall cash and cash equivalents reported at $222.8 million as of September 30, 2013 to $328.5 million as of September 30, 2017; b. $1.5 million or 39% of the revenue growth is attributable to implementation of late payment penalties to customer bills that began during the Fiscal Year 2014; and c. $0.4 million or 11 % of the revenue growth is attributable to greater operating grants. It should be noted that excluding the Fiscal Year 2017, on average operating grants average approximately $0.1 million annually. The increase in such revenues are assumed to be related to one-time events and would not be considered as a recurring revenue for the System for the Forecast Period. 5. With respect to miscellaneous revenues, it should be noted that the County received one- time restitution in the amount of approximately $1.8 million during the Fiscal Year 2016 associated with litigation stemming from improper engineering analysis in creation of a coffer dam requiring repairs to the Lake Manatee Dam. 6. Operating expenses increased at an average annual growth rate of approximately 4.8% or $4.9 million a year during the Historical Period. Excluding landfill closure and post -closure expenses, which were reported at -$1.7 million for the Fiscal Year 2017, the average annual growth rate for operating expenses approximated 5.5% or 5.7 million a year. The overall growth in expenses from the Fiscal Year 2013 to Fiscal Year 2017 was approximately $22.6 million when excluding closure and post -closure expenses and is primarily associated with: a. $8.6 million net increase in water and wastewater system general and administrative expenses primarily attributable to the initiation of a payment -in -lieu -of -franchise -fees ("PILOF"), which was $7.8 million for the Fiscal year 2017; b. $5.6 million increase in personnel expenses primarily due to inflation in salary and benefits as a result of the improvement in the economy and the need to adjust salaries coupled with a minor net increase in full-time employees ("FTE") from 442 to 451 FTEs associated with the water and wastewater system; $3.0 million increase in garbage collection expenses primarily associated with increased contracted cost of collection pursuant to the respective Solid Waste Franchise Agreements, and growth in collection units; d. $2.9 million increase in wastewater collection and treatment primarily related to increased contracted services and increases to the provision of reclaimed water services, which as previously noted observed significant growth from 3,063 accounts during the Fiscal Year 2013 to 5,828 accounts during the Fiscal Year 2017 coupled with system growth. $1.4 million increase in landfill disposal operations due to increased costs of operation, maintenance and waste deliveries; and f. $1.1 million increase in other expenses related to water, wastewater and stormwater operations. 7. The Net Revenues of the System (exclusive of Water and Wastewater Facility Investment Fees) have increased by $15.7 million or 33% during the Historical Period from $46.5 million during the Fiscal Year 2013 to $62.2 million during the Fiscal Year 2017. The growth in Net Revenues is primarily associated with implementation of water and wastewater system rate adjustments by the County. 8. For the Fiscal Year 2017, the County received approximately $16.6 million in one-time growth related FIF Fee (impact fee) revenues, representing an approximate $4 million or 3 1 % increase over the Fiscal Year 2013. Most of the growth in such fees were attributable to the growth in wastewater FIF Fees accounting for $3.2 million or 80% of the growth in FIF Fee revenue. While increased growth in new development contributed to the increase in FIF Fees received, the primary increase to wastewater FIF Fee revenues was associated with the implementation of a 3 1 % fee increase during the Fiscal Year 2016 from $2,315 to $3,027 per ERC. It should be noted that the Facility Investment Fees may be legally used to pay the expansion -related portion of the Annual Debt Service Requirement, which the County has historically done on an annual basis. 9. The County has issued both senior lien and subordinated obligations to fund capital expenditures on behalf of the System. The Annual Debt Service Requirement or payments shown for the Outstanding Bonds for each Fiscal Year was derived from the actual debt service repayment schedules for each series of Bonds and has been shown on an accrual basis (when deposits to the Sinking Fund was required to be made from Net Revenues as opposed to when the payments were made to bondholders / investors). The loan repayment amount as shown for the Subordinated Obligations (a loan from the State Revolving Fund ("SRF") Loan Program administered by the FDEP) was also derived from the actual loan repayment schedule for such loan and has been reflected on an accrual basis (when the Monthly Loan Deposits to the Loan Debt Service Account as defined in the loan agreement with the FDEP from System Revenues was required to be made from Net Operating Revenues as opposed to when the payments were actually made). The following was noted that during the Historical Period: a. The Public Utilities Revenue Refunding and Improvement Bonds, Series 1991C and the Public Utilities Revenue Improvement Bonds, Series 1993A matured at the end of Fiscal Year 2013 and were no longer outstanding thereafter; b. The County issued the Series 2011 Bonds to advance refund a portion of the then outstanding Public Utilities Revenue Refunding and Improvement Bonds, Series 2003 (the "Series 2003 Bonds"). The Series 2003 Bonds were no longer outstanding after the Fiscal Year 2013; c. The Public Utilities Revenue Bonds, Series 2006 matured during the Fiscal Year 2016, which a portion of the then outstanding bonds were advance refunded by the issuance of the Series 2015 Bonds; d. As of Fiscal Year 2017, the Outstanding Bonds included i) the Series 2010 Bonds; ii) the Series 2011 Bonds; and iii) the Series 2015; and During the Fiscal Year 2014, the County made final payment on the SRF loan and the County no longer has any outstanding Subordinated Obligations. Issuance of Additional Bonds Since the County is issuing additional indebtedness on a parity basis with the Outstanding Bonds (the "Additional Parity Bonds"), the County must meet certain financial tests relative to the issuance of such additional parity bonds as defined in the Bond Resolution (the "Additional Bonds Test"). The Additional Bonds Test requirements as outlined in the Bond Resolution states that the adjusted Net Revenues of the System must comply with certain debt service coverage requirements recognizing the Maximum Annual Debt Service Requirement for the Outstanding and Additional Parity Bonds for any twelve (12) consecutive months of the twenty-four complete calendar months immediately preceding the date of the issuance of such Additional Parity Bonds. The Bond Resolution provides that certain adjustments to Net Revenues can be made to reflect revisions to the rates and charges of the System as if such rate increases had been implemented before the issuance of the Additional Parity Bonds. The Additional Bonds Test calculation was developed based on: i) financial information provided by the County for the twelve (12) month period ended September 30, 2017 (the "Computation Period"); ii) customer billing statistics for the Computation Period that corresponded to the revenues derived from the application of monthly user charges; iii) estimates of changes in the cost of utility operations due to the increase in System revenues as a result of the implementation of rates that were adopted by the County pursuant to the Utility Rate Resolution; and iv) the estimated Maximum Bond Service Requirements for the Outstanding Bonds and the estimated Series 2018 Bonds based on information provided by the County's Municipal Financial Advisor. Based on the -50- provisions of the Bond Resolution, the following adjustments were made with respect to the determination of the Additional Bonds Test: 1. The Gross Revenues were increased to reflect the application of the most recently adopted water and wastewater rates by the County pursuant to the Utility Rate Resolution. Since the County had increased the rates and charges for water and wastewater service and such rates are currently in effect, the adjustment to the water and wastewater rate revenues included: i) a 2.0% adjustment to recognize the annualized 4.0% rate adjustments that was effective for 50% of the Fiscal Year 2017 and implemented on April 1, 2017; and ii) a 4.0% adjustment to recognize the April 1, 2018 rate adjustment pursuant to the Utility Rate Resolution. No additional revenues associated with the solid waste collection service was reflected since the County did not adopt any rate adjustment for such services subsequent to Fiscal Year 2017. 2. The annual debt service payments for the Outstanding Bonds were adjusted to recognize the estimated Maximum Bond Service Requirement on such Bonds, including the issuance of the Series 2018 Bonds, which were based on information as provided by the County's Municipal Financial Advisor. The Fiscal Year of the Maximum Bond Service Requirement for the System was estimated to occur during Fiscal Year 2019. 3. The Operating Expenses have been adjusted to recognize an estimated increase in PILOF and bad debt expense (additional rate revenues considered as being uncollectable) from the increase in rate revenues attributable to the implementation of Board -approved rate adjustments. With respect to the Additional Bonds Test, and based on: i) reported financial information as provided by the County for the Computation Period; ii) the estimated Maximum Annual Debt Service Requirement of the System for both the Outstanding Bonds and the Series 2018 Bonds as provided by the County's Municipal Financial Advisor; and iii) our understanding of the Additional Bonds Test requirements, the adjusted Net Revenues derived from System operations should be sufficient to satisfy the Additional Bonds Test requirements as shown in the following table: (Remainder of page intentionally left blank) -51- Historical Operating Results — Additional Bonds Test Computation Period — Twelve Months Ended September 30, 2017 County Reported Actual [1] Adjustments As Adjusted Total Charges for Services [2] $172,437,000 $10,346,220 $182,783,220 Other Operating Revenue 1,991,000 0 1,991,000 Subtotal 174,428,000 10,346,220 184,774,220 Operating Expenses [3] 115,132,000 682,851 115,814,851 Net Operating Revenue 59,296,000 9,663,369 68,959,369 Other Available Revenues [4] 2,471,000 0 2,471,000 Plus Federal Direct Payment [5] 1,757,000 0 1,757,000 Adjusted Net Revenues 63,524,000 9,663,369 73,187,369 Maximum Annual Debt Service Requirement [6] $17,343,066 2,941,442 $20,284,508 Senior Lien Debt Service Coverage — Adjusted 3.66 3.61 Senior Lien Debt Service Coverage — Requirement 1.15 1.15 [1] Amounts shown derived from Table 8 regarding the Historical Operating Results of the System. [2] As allowed by the Bond Resolution, an adjustment was made to the Charges for Services to recognize the estimated effects associated with the implementation of the adopted and implemented water and wastewater retail and wholesale rates pursuant to the Utility Rate Resolution as if such rates were in effect for the entire duration of the Fiscal Year 2017 (the "Computational Period"). The adjustment included: i) a 2.0% adjustment to recognize the annualized 4.0% rate adjustments that was effective for 50% of the Fiscal Year 2017 and implemented on April 1, 2017; and ii) a 4.0% adjustment to recognize the April 1, 2018 rate adjustment pursuant to the Utility Rate Resolution. [3] Operating expenses were adjusted to include an estimated increase in PILOF and bad debt expense anticipated as a result of the recognition of the additional water and wastewater rate revenue adjustments. [4] Includes interest income on unrestricted fund balances as defined in the Bond Resolution and operating grants. [5] Amounts shown include Federal Direct Payments received from the Federal Government associated with the issuance of the Series 2010 Bonds; for the purposes of determining compliance with the Additional Bonds Test as delineated in the Bond Resolution, the Federal Direct Payments are included as a component of the Net Revenue. [6] Reflects increase in debt service for i) the estimated debt service on the Series 2018 Bonds; and ii) the recognition of the Maximum Annual Debt Service Requirement on all Outstanding Bonds and the Series 2018 Bonds. The Maximum Annual Debt Service Requirement recognized is anticipated to occur during the Fiscal Year 2019. Note that amounts shown do not recognize the debt service payments associated with the Series 2021 Bonds, which are assumed to be issued subsequent to the issuance of the Series 2018 bonds. PROJECTED OPERATING RESULTS General Projections of the operating results for the combined Water, Wastewater, Solid Waste, and Stormwater System have been prepared for the Forecast Period. These projections were based on: i) the adopted Fiscal Year 2018 Budget and proposed Fiscal Year 2019 Budget for each respective utility or cost center; ii) actual Fiscal Year 2017 and Fiscal Year 2018 year-to-date results and other supporting financial information as reported by the County for the System; iii) discussions with County staff and its consultants regarding current and future utility needs associated with System expansion and capital improvements; iv) information provided by other utilities; and v) other information provided by the County and its consultants. Presented in Table 9 at the end of this report are the financial projections prepared by PRMG for the Forecast Period. The table includes annual projections of Gross Revenue, Operating Expenses and Annual Debt Service Requirements, including allowances for Additional Parity Bonds allocable to the System that are being repaid through Net Revenues, required deposits to the various funds and accounts established by the Bond Resolution, including the Capital -52- Improvement Fund and the series specific Debt Service Reserve Accounts, and balances available for capital outlay and other purposes. Projected revenue includes those from sales (rate revenue), interest income on the available funds, and other miscellaneous operating revenues derived from System operations. The projected sales revenue is based on revenue anticipated to be derived from existing rates as reflected in the adopted and approved water and wastewater Utility Rate Resolution and existing Solid Waste Rate Resolution and identified rate adjustments not yet approved by the Board. The projected debt service shown in Table 9 is subject to change based upon the actual terms of the sale of the Series 2018 Bonds and approval of additional rate adjustments assumed herein. Projected sales revenue is based on growth projections in customers and usage as illustrated in Tables 4 through 6 for the Water, Wastewater, and Solid Waste Systems, respectively. These forecasts were based on historical growth and usage trends and information provided by and discussions with the County relating to projected service area growth and development. Interest income has been estimated on cash balances estimated to be available during the Forecast Period. The projected Operating Expenses were based on various factors such as projected expense increases due to inflation, projected changes in expenses due to anticipated changes in operations (e.g., utility plant additions, personnel additions, etc.) and System growth. Funds received from the application of Water and Wastewater Facility Investment Fees associated with new growth have been assumed, for the purposes of the determination of expenditure financing, not to be available to pay Operating Expenses, but have been recognized for cash flow purposes to be available for the payment of the expansion -related component of the Annual Debt Service Requirement and in the development of the capital improvement plan funding analysis (as it relates to the projection of future rate adjustments as disclosed in this Report). Principal Considerations and Assumptions Regarding Projected Operating Results In the preparation of this Report and the conclusions that follow, we have made certain assumptions with respect to conditions that may occur in the future. While we believe the assumptions are reasonable, they are dependent upon future events and actual conditions may differ from those assumed, and such differences could be material. In addition, in developing the projections and estimates, we have used and relied upon certain information and assumptions provided to us or prepared by others, including: i) information and assumptions provided to us by the County regarding historical financial information and historical customer and sales statistics; ii) information contained in the County's Annual Financial Report; iii) information provided by the County's Municipal Financial Advisor with respect to assumptions regarding the issuance of the Series 2018 Bonds and additional parity bonds during the Forecast Period; and iv) information provided by the County with respect to the Capital Improvement Program, including any incremental Operating Expenses associated with the implementation of such program. While we believe use thereof to be reasonable for the purpose of this Report, we offer no further assurances with respect thereto. To the extent that actual conditions differ from those assumed by us herein or from information or assumptions provided to us, or prepared by others, the actual results will vary from those estimated and projected herein. (Remainder of page intentionally left blank) -53- In making the projections and estimates summarized in this Report, the principal considerations and assumptions made by us and the principal information and assumptions provided to us or prepared by others, include the following: 1. Projected revenue from current rates and charges for the Water and Wastewater System were based on the schedule of rates as contained in the Utility Rate Resolution. The current rates were applied to the forecast of water and wastewater customers and sales as shown in Tables 4 and 5, respectively. Included in the forecast of Water and Wastewater System Gross Revenue is additional rate revenue associated with additional rate adjustments that are anticipated to be adopted and made effective by the County on April 1st of each Fiscal Year. Such increases, expressed as a percentage of the Water and Wastewater System sales revenue, are similar to the level of rate adjustments implemented annually by the County over the past five fiscal years (the County reviews rates annually as part of the budget process but does not have an automatic inflationary index adjustment provision in the Utility Rate Resolution). The projected rate increases are as follows: Estimated Total Water and Wastewater System Average Rate Percent Adjustment [11 Water Wastewater Fiscal Year System System Status 2018 [2] 4.00% 4.00% Implemented 2019 0.00% 0.00% Projected 2020 [3] 1.90% 1.90% Projected 2021 [3] 1.90% 1.90% Projected 2022 [3] 1.90% 1.90% Projected 2023 [3] 1.90% 1.90% Projected [1] The County has historically brought forward annual rate adjustments to the Board for consideration. Based on discussion with County management, it is anticipated that staff will continue to bring forward new or adjusted rates on an annual basis consistent with the overall budgetary process and will annually implement the estimated rate adjustments. Such rate increases beyond the Fiscal Year 2018 have not been approved by the Board as of the date of this Report. [2] Reflects rates adopted by the Board pursuant to the 2018 Rate Resolution; such rates are in effect as of 4/1/18 and were shown for comparative purposes. [3] Amounts shown reflect additional planned rate adjustments assumed in the development of the financial forecast that have not been approved by the Board; adjustments included in the financial forecast reflect inflationary -related rate adjustments to maintain operating margins and an overall positive fiscal position. 2. Projected revenue from current solid waste collection rates and charges for the Solid Waste System were based on the schedule of rates and charges as adopted by the Board pursuant to the Solid Waste Rate Resolution. Based on current forecasts, the County does not anticipate the need to adjust solid waste rates during the Forecast Period. The forecast of solid waste revenues under current rates applied to the forecast of solid waste collection customers and waste deliveries is shown in Table 6. 3. The County does not currently charge and the financial projections contained herein does not assume the County will charge a stormwater service fee during the Forecast Period. It should be noted that the County is in process of evaluating and considering implementation of the Stormwater Utility Management fee. To the extent that the County were to implement a Stormwater fee, the additional revenue would accrue to the benefit of the System and may -54- improve debt service coverage as calculated herein. It should also be noted that the Stormwater System does receive transfer payments from other departments for services provided by the employees of the Stormwater System. Based on a review of historical collections, Stormwater System revenues were projected to be approximately $50,000 per year. 4. Included in the financial projections are other operating revenues associated with meter installation charges, customer -requested services (e.g., turn -on charges, meter testing fees, extension charges, etc.), and other miscellaneous revenue (e.g., late fees). The financial projections of other operating revenue were based on: i) the Fiscal Year 2017 and Fiscal Year 2018 year-to-date reported revenues and a comparison of trends in prior periods; ii) the Fiscal Year 2018 Budget estimates; and iii) discussions with the County. With respect to the meter installation charges, such revenues were based on a historical review of revenues received per account added to the System and the projection of new Water System customer connections for the Water System. With respect to the other operating revenues not specifically discussed in the following assumptions, such amounts were based on a review of historical trends in such sources, and it was assumed that such revenue would either remain constant or increase based on System account growth during the Forecast Period. 5. On September 10, 2017 Hurricane Irma made landfill over south Florida. The storm resulted in significant damage and debris clean-up efforts within the State and the County. The majority of the costs for the cleanup and disposal efforts were incurred during the current Fiscal Year 2018. Based on the most recent and available information the operating expenses incurred by the solid waste and stormwater departments of the County were estimated at $12.0 million. The cleanup and disposal costs are eligible for financial assistance and reimbursement by the Federal Emergency Management Agency ("FEMA"). The reimbursement rate varies from 75% to 90% of the actual cost incurred by the County contingent upon the type and timing of the cost incurred. Based on current estimates the County anticipates reimbursement at an approximate 80% reimbursement rate or $9 million, expected during the current Fiscal Year 2018. Such amounts were separately identified in the projection of debt service coverage and rate covenant compliance as presented herein. To the extent that the County were not to receive the funds prior to the close of the current Fiscal Year 2018, the County anticipates receipt in the immediately ensuing Fiscal Year 2019. 6. As previously discussed, the County charges water and wastewater FIF Fees to applicants that request water and/or wastewater capacity to pay or reimburse the equitable share of the capital costs related to construction, expansion, or equipping capacity of the System in order to serve new users. Based on nine (9) months of reported FIF Fee collections, such revenues were estimated at $14.7 million for the Fiscal Year 2018. Based on discussions with County staff, a reduced level of FIF Fee revenues were assumed at approximately $10 million a year on average for the remainder of the Forecast Period. This level of FIF Fee Revenue approximates 68% of the estimated FIF Fee revenues for the Fiscal Year 2018 and was assumed in order to maintain a more fiscally conservative outlook and minimize dependence on FIF Fee revenue, which represent non -recurring fee revenues associated with new development, for financial planning purposes. Although not a component of Net Revenues for purposes of determining compliance with the Rate Covenant as delineated in the Bond -55- Resolution, FIF Fee revenues were assumed to be used to first pay expansion -related debt service and then second to pay expansion -related capital identified within the Capital Improvement Program. The County actively maintains expansion -related debt service calculations for all the Outstanding Bonds and tracks use of FIF Fees to pay expansion - related debt. The expansion percentages were provided by County staff and determined from the expansion component of the projects funded by the Bond proceeds. The following is a summary of the Water System FIFs, including interest earnings and assumed use of such funds to pay Water System expansion -related debt service for the Forecast Period: Summary of Water System FIFs Received Total Payment of Water FIF- Expansion Percent (%) Estimated Fees Interest Related Funds Related Debt of Total Fiscal Year Received Earnings Received Service Water FIF 2018 $6,100,000 $252,000 $6,352,000 $587,672 9.3% 2019 3,942,365 262,100 4,204,465 587,945 14.0% 2020 4,678,422 276,300 4,954,722 623,982 12.6% 2021 4,447,401 331,400 4,778,801 489,463 10.2% 2022 4,227,721 389,100 4,616,821 382,896 8.3% 2023 3,996,701 448,200 4,444,901 382,724 8.6% The following is a summary of the Wastewater System FIFs, including interest earnings and assumed use of such funds to pay Wastewater System expansion -related debt service for the Forecast Period: Summary of Wastewater System FIFs Received Total Wastewater Payment of Percent (%) FIF-related Expansion- of Total Estimated Fees Interest Funds Related Debt Wastewater Fiscal Year Received Earnings Received Service FIF 2018 $8,611,000 $184,200 $8,795,200 $2,149,184 24.4% 2019 6,057,635 76,800 6,134,435 2,150,091 35.0% 2020 6,223,899 86,000 6,309,899 1,873,344 29.7% 2021 5,878,724 119,400 5,998,124 1,405,695 23.4% 2022 5,533,549 164,700 5,698,249 1,120,452 19.7% 2023 5,188,375 201,300 5,389,675 1,119,936 20.8% In keeping with general voluntary County policy of using the FIF Fees to pay expansion - related debt service to minimize existing ratepayers' funding of growth -related expenditures, the forecast assumes the use of approximately 19% of the FIFs collected or received, including interest earnings, to fund the Annual Debt Service Requirement. During the Forecast Period, the anticipated balance in FIF Fee funds are projected to increase and provide an additional cash reserves for any future expansion -related capital needs that may arise if growth increases at a rate greater than anticipated or for the continuation of the voluntary payment of the expansion -related Annual Debt Service Requirement (reference is made to Table 13 at end of this report for summary of cash balances by fund). -56- 7. The development of the Operating Expense for the Forecast Period relied upon, among other things: i) a review of trends in historical expenditures pursuant to detailed trial balances and audited financial statements as reported by the County; ii) recognition of the adopted Fiscal Year 2018 and Fiscal Year 2019 Budgets for the County; iii) review and identification of incremental changes to Operating Expenses, such as the addition of new personnel during the Forecast Period; and iv) adjustments for one-time or non -recurring expenditures identified within the operating budget of the County. A summary of the projected Operating Expenses is included in Tables 10 through 12. These projected expenditures were escalated for the Forecast Period as follows: a. The Fiscal Year 2018 operating budget served as the basis for the initial year of the identified Operating Expenses, which recognizes several non -recurring expenditures related to Hurricane Irma in the amount of $12.0 million and contractual services, which were carried forward from the Fiscal Year 2017. As a result, Operating Expenses are estimated at approximately $143.5 million for the Fiscal Year 2018, in contrast to actual expenses reported for the Fiscal Year 2017 of $115.1 million. b. The Fiscal Year 2019 operating budget served as the baseline of the Operating Expense forecast for the remainder of the Forecast Period. Based on discussions with County staff the principal adjustments to the operating budget recognized: i) 4% increase in personnel expenses above amounts assumed for the Fiscal Year 2018; and ii) eight (8) full-time employee ("FTE") additions. The following table provides a summary of the identified personnel additions for the Fiscal Year 2019 and the remainder of the Forecast Period: Summary of Projected Personnel Additions Projected Fiscal Year Ending September 30, Description 2019 2020 2021 2022 2023 Water and Wastewater FTE Additions 8 4 4 0 0 Annual Expense $362,000 $572,000 $789,568 $821,151 $845,785 Solid Waste FTE Additions 0 0 0 0 0 Annual Expense $0 $0 $0 $0 $0 Stormwater FTE Additions 0 0 0 0 0 Annual Expense $0 $0 $0 $0 $0 Total: FTE Additions 8 4 4 0 0 Annual Expense $362,000 $572,000 $789,568 $821,151 $845,785 As can be seen above, the forecast assumes the addition of approximately 16 FTEs resulting in an increase in salaries and benefit expenses of approximately $0.8 million annually. The projected cost of personnel (wages and salaries and associated benefits) expenses were escalated above Fiscal Year 2019 estimates by 4.0% annually as discussed with County staff to reflect increases due to inflation and allowances for salary adjustments -57- such as merit increases and cost of living adjustments. Personnel benefits (i.e., contributions toward retirement, health insurance, FICA, etc.) were projected to remain at the same percentage relationship to total salaries as was included in the Fiscal Year 2019 Budget based on discussions with the County. d. Other expenses, exclusive of personnel costs, were assumed to increase above Fiscal Year 2019 budget estimates by approximately 2.5% to 3.0% annually for the Forecast Period to account for inflationary cost increases. Assumptions for inflation were based on a variety of sources, including the Implicit Price Deflator and Consumer Price Index forecast prepared by the Congressional Budget Office as published in the April 2018 Economic and Budget Outlook, construction cost indices published by the Engineering News Record, and County -reported recent expense trends. e. The projection of variable costs for water and wastewater systems operations, which would include such expenses as utility services such as electricity and operating supplies were based on the projected growth in water production and wastewater treated plus an allowance for inflationary unit price increases. f. The projection of variable costs for the solid waste system operations, which would include contracted collection and disposal operations, fuel, etc. were based on the projected number of collection units and waste deliveries plus an allowance for inflation. g. The System makes annual transfers to the County General Fund in the amount of $2,945,142 for watershed protection (e.g., conservation land acquisition), which has a long-term benefit to the Water System and is associated with protecting water resources and providing a necessary buffer for development. Such transfers are not recognized as an Operating Expense to the System and are derived from the Net Revenues of the System after all other required transfers are made (including payment of Annual Debt Service Requirements) pursuant to requirements of the Bond Resolution relating to the disposition of revenues (i.e., flow of funds). The transfer was held constant for the Forecast Period. h. Although considered a System operating expense for financial reporting purposes, depreciation and amortization expenses have not been recognized as a component of the Operating Expenses consistent with the provisions of the Bond Resolution since such amounts represent non -cash expenses. 8. The County separately budgets for major water and wastewater maintenance expenses (e.g., tank painting, lift station rehabilitation, etc.) through the maintenance Fund 402 in order to track and manage such costs since they represent large cash outlays that are expensed and not capitalized to utility plant in service. Since the Fiscal Year 2013, the County has average approximately $4.9 million annually in major repair and maintenance expenses. Based on discussions with staff, the financial projections assume major maintenance expenses of $6 million annually. 9. The County charges a payment -in -lieu -of -property tax to the Water, Wastewater, and Solid Waste Systems, which is a property -tax equivalent and is considered as an Operating me Expense of the System. Such amounts were estimated to average approximately $3,340,000 annually during the Forecast Period. 10. Beginning with the Fiscal Year 2014, the County began charging the Water and Wastewater System a PILOF, which is franchise fee equivalent and is also is considered as an Operating Expense of the System. Such amounts were estimated to equate to 5.90% of the current period water and wastewater rate revenues and averaged approximately $8.6 million annually during the Forecast Period. 11. To recover the indirect costs of administrative and other services provided to the water, wastewater, solid waste and stormwater funds, the County's general fund charges an indirect cost allocation. Such transfers are considered an operating expense of the System and are expected to average approximately $3.7 million a year for the Forecast Period. 12. Historically the County has realized budget to actual expenditure performance that can sometimes vary in excess of 10% for the water and wastewater system. For purposes of this evaluation and based on discussions with County staff, an across-the-board reduction of three (3%) percent to the overall Operating Expenses to the water and wastewater system was assumed. The reduction averages $2.6 million a year for the Forecast Period. 13. An annual allowance for bad debt expense has been made to recognize that a certain amount of revenues will be uncollectible and written off throughout the year. This expenditure item reflects an incremental adjustment to the Fiscal Year 2018 and Fiscal year 2019 Budget and was projected based on trends incurred by utilities statewide and discussions with County staff. A bad debt expense ratio of 0.7% of sales revenues was applied to the projected sales revenues. 14. As previously discussed, the County is a party to the Peace River / Manasota Regional Master Water Supply Contract (the "Water Supply Contract"). The County entered into the original Water Supply Contract on October 5, 2005 as part of the County's long-term water resource initiatives. The County does not anticipate any purchases or sales of water pursuant to the Water Supply Contract during the Forecast Period. 15. The County, as both an owner and operator of a landfill, is currently required by Section 403.7125, Florida Statutes to ensure the availability of financial resources for the proper closure and post -closure (also referred to as long-term care). The cost of closure includes, among other things, covering the landfill disposal facilities with a liner, dirt, and sod and having a landfill gas and leachate system in place). Post -closure represents the cost to maintain the landfill site and the reserve is established to provide financial resources to maintain the site for 30 years and includes leachate and landfill gas facility maintenance, area maintenance such as mowing, erosion control, site and groundwater monitoring, and other related costs. Collectively the operating expenses and the deposit of reserves for the closure of the landfill and the post -closure activities are collectively referred to as "closure." To provide for necessary financial resources, the Florida Administrative Code Chapter 62-701 requires the County to create a closure escrow account. Accordingly, every year the County has recognized an Operating Expense related to the annual change in the estimated -59- liability to provide for the closure requirements of the Lena Road Landfill, which serves as the minimum deposit level to the escrow fund. The closure cost, which is reviewed periodically by the County, was estimated by the County's solid waste engineers. The operating expense is generally considered as a non -cash expense, which is escalated annually based on FDEP provided inflation factors. The estimate of the change in closure liability was based on: i) information provided by the County's solid waste consulting engineers for the establishment of the closure costs; ii) an assumed inflation rate of 2.0% to be applied annually to the ultimate closure cost, which is based on historical trends; and iii) the forecast of delivered solid waste to the Lena Road Landfill as summarized in Table 6. Based on these assumptions, the estimated annual closure costs that were included as a component of the Operating Expenses and estimated to be approximately $1.5 million annually for the Forecast Period. 16. As of October 1, 2017, representing the outset of the Forecast Period, the County had Bonds outstanding in the aggregate principal amount of approximately $171,695,000 that were issued pursuant to the terms and conditions of the Bond Resolution (the "Outstanding Bonds"), which are secured by a senior lien pledge on the Net Revenues, including Subsidy Payments associated with the outstanding Series 2010 Bonds. On December 14, 2017 the County issued the Public Utilities Revenue Refunding Bonds, Series 2017 ("Series 2017 Bonds") to advance refund on a cross -over basis all the Series 2010 Bonds maturing after October 1, 2020 (the "Cross -Over Date"). The proceeds of the 2017 Bonds were primarily used to purchase U.S. Treasury securities, which were placed in escrow to economically defease a portion of the Series 2010 Bonds and make certain interest payments associated with the Series 2017 Bonds. As such, the Net Revenues of the System, together with Federal Direct Payments, will be used to fund the debt service payments coming due on: i) the Series 2010 Bonds up to the Cross -Over Date; and ii) the Series 2017 Bonds coming due after the Cross -Over Date. The following is a summary of the Outstanding Bonds as of October 1, 2017, representing the outset of the Forecast Period, and as of January 1, 2018, representing the period subsequent to the issuance of the Series 2017 Bonds: (Remainder of page intentionally left blank) •1 Outstanding as of Outstanding as of Outstanding Bonds October 1, 2017 [1] January 1, 2018 [2] Federally Taxable — Direct Payment — Public Utilities Revenue Improvement Build America Bonds, Series 2010A ("Series 2010A Bonds") [2][3] $17,925,000 $2,880,000 Federally Taxable — Direct Payment — Public Utilities Revenue Improvement Recovery Zone Economic Development Bonds, Series 2010B ("Series 2010B Bonds") [2][3] 45,300,000 0 Public Utilities Revenue Improvement Bonds, Series 2010C ("Series 2010C Bonds") [3] 5,410,000 5,410,000 Public Utilities Revenue Refunding and Improvement Bonds, Series 2011 ("Series 2011 Bonds") 14,735,000 14,735,000 Public Utilities Revenue Refunding and Improvement Bonds, Series 2015 ("Series 2015 Bonds") 88,325,000 88,325,000 Public Utilities Revenue Refunding Bonds, Series 2017 ("Series 2017 Bonds") [2] 0 55,075,000 Total Outstanding Bonds $171,695,000 $166,425,000 [1] Except as noted below, the amounts shown reflect the outstanding principal amount of the Bonds after the payment that was due and payable on October 1, 2017. [2] The change in the amount of outstanding Series 2010A Bonds and Series 2010B Bonds are a result of the cross -over refinancing from the issuance of the Series 2017 Bonds. [3] The Series 2010A Bonds, Series 2010B Bonds, Series 2010C Bonds, and the Series 2010D Bonds are collectively referred to as the Series 2010 Bonds in this Report. Note the Series 2010D Bonds were repaid during the Fiscal Year 2017 and are no longer outstanding. The debt service requirements for the Outstanding Bonds were based on the actual debt service schedules for each issue and are presented on a "gross" basis (i.e., not net of interest earnings on any debt service related funds or accounts). Furthermore, the amounts shown are based on the monthly funding requirements (on an accrual basis) the various sinking funds as required by the Bond Resolution as opposed to when the debt service requirements are actually paid. A summary of the Outstanding Bonds debt service payments by series of Bonds is included in Table 14. 17. The Series 2010A Bonds represent federally taxable Build America Bonds and the Series 2010B Bonds represent federally taxable Recovery Zone Economic Development Bonds and were issued pursuant to the American Recovery and Reinvestment Act of 2009 (the "Recovery Act") that provided, among other things, that the County would be eligible to receive Subsidy Payments. The Subsidy Payments to be received by the County were initially based on at a rate of thirty-five percent (35%) of the interest expense for the Series 2010A Bonds and a rate of forty-five percent (45%) of the interest expense for the Series 2010B Bonds. Subsequent the issuance of the respective Series 2010 Bonds, the Federal Budget Control Act of 2011 (the "BCA") required cuts to federal programs to reduce spending. These cuts are referred to as the "sequester." The first such cuts were ordered January 2, 2013 for Fiscal Year 2013 and became effective on or about March 27, 2013. As a result, the Subsidy Payments to issuers of "direct -pay" bonds were cut. The financial forecast assumes a 6.8% reduction to the Subsidy Payments for the remainder of the Series 2010 Bonds debt service payments with final maturity anticipated during the Fiscal year 2020. 18. Based on the County's current plan of finance, the County anticipates issuance of the Series 2018 Bonds to: i) finance a portion of the cost of construction of the planned capital -61- improvements to the County's Water and Wastewater Systems in the amount of $75,000,000; and ii) pay certain expenses related to the issuance and sale of the Series 2018 Bonds. The Series 2018 Bonds are anticipated by the County to be issued as tax-exempt bonds on a parity basis with the Outstanding Bonds. For the purposes of the Report and based upon preliminary debt schedules provided by the County's Municipal Financial Advisor, it was assumed that the Series 2018 Bonds would be issued in the aggregate principal amount of approximately $70,435,000 and have an estimated delivery date of September 20, 2018. The following is a summary of the estimated sources and uses of the proceeds of the Series 2018 Bonds as prepared and provided by the County's Municipal Financial Advisor, which was subsequently assumed in the development of the financial projections contained in this Report: Summary of Series 2018 Bonds Estimated Sources and Uses of Funds [*] Series 2018 Bonds Sources of Funds: Bond Proceeds — Par Amount $70,435,000.00 Original Issue Premium 5,242,690.15 Total Sources of Funds $75,677,690.15 Uses of Funds: Deposit to Project Fund $75,000,000.00 Cost of Issuance 325,515.15 Underwriter's Discount 352,175.00 Total Uses of Funds $75,677,690.15 [*] Amounts prepared and provided by County's Municipal Financial Advisor and are preliminary as of July 9, 2018 and subject to change based on the actual terms regarding the sale of the Series 2018 Bonds. It is estimated that the debt to net plant ratio (i.e., the principal amount of debt divided by the estimated net utility plant) including the anticipated increase in debt and net plant associated with the issuance of the Series 2018 Bonds will be approximately 28% (includes construction work in progress and excludes land), which is considered by PRMG to be favorable. As discussed in subsequent sections of this Report, the financial projections also assume the issuance of Additional Parity Bonds. The annual payments for the Annual Debt Service Requirement for the Series 2018 Bonds as provided by the County's Municipal Financial Advisor are preliminary and subject to change. The payments of the Annual Debt Service Requirement for the Series 2018 Bonds reflected in the County's plan of finance as provided by the County's Municipal Financial Advisor include: i) total principal amount of the bonds of $70,435,000 with an assumed issuance premium of $5,242,690; ii) a Construction Account deposit of $75,000,000; iii) assumed annual tax-exempt average coupon interest on the bonds that comprise the Series 2018 Bonds of 4.11 % with an average "all -in" True Interest Cost ("TIC") of 3.64%; iv) a term of approximately thirty (30) years; v) no requirement to fund a debt service reserve for this series of bonds; and vi) the payment of issuance expenses associated with the Series 2018 Bonds. The proposed Annual Debt Service Requirement associated with the Series -62- 2018 Bonds as provided by the County's Municipal Financial Advisor assumes: i) interest - only payments through Fiscal Year 2021 and ii) annual level debt service payments for the remainder of the term of the Series 2018 Bonds. The Series 2018 Bonds were assumed to be issued and dated on or about September 20, 2018. Based on the above information provided by the County's Municipal Financial Advisor, the estimated Annual Debt Service Requirement for the Forecast Period for the Series 2018 Bonds is as follows: Projection of Annual Debt Service Requirement Series 2018 Bonds [*] Fiscal Year Ending September 30, Amount 2018 $89,775 2019 $2,938,100 2020 $2,938,100 2021 $2,938,100 2022 $4,368,100 2023 $4,370,200 [*] Amounts were derived from information provided by the County's Municipal Financial Advisor and reflects when the Debt Service Account is to be funded from Net Revenues and not when the payments of the Series 2018 Bonds may actually be made by the County. Amounts are presented on a "gross" basis and are not net of any investment income from amounts on deposit in the Debt Service Account and the Debt Service Reserve Accounts associated with such bonds. 19. In the development of the capital finance plan, it is assumed that the County will issue additional parity bonds in order to provide funds to finance additional capital improvements for the System. It should be noted that the proposed financing was identified through the County's annual long-range financial forecasting and planning exercises, but has not yet been formally adopted through the County's budget process. The need for such a financing may be proposed during the upcoming budget process or may be considered closer to the time in which the financing is anticipated; however, the assumption of the issuance of additional parity bonds has been recognized in the development of the capital finance plan included in this Report. It was assumed that the County would issue one series of Additional Parity Bonds under the provisions of the Bond Resolution (the "Future Bonds") during the Forecast Period as shown below: Issue Future Bonds Public Utility Revenue Improvement Bonds, Series 2021 (the "Series 2021 Bonds") $28,900,000 Total Principal Amount Issued — Additional Parity Bonds $28,900,000 The capital improvement funding plan assumes that the County will issue Public Utility Revenue Improvement Bonds, Series 2021 (the "Series 2021 Bonds") on parity to the Outstanding Bonds and the anticipated Series 2018 Bonds (also referred to as the "Additional -63- Bonds") in an aggregate principal amount as shown above. As provided by the County's Municipal Financial Advisor, the payments of the Annual Debt Service Requirement for the Series 2021 Bonds recognized in the capital funding plan for the System include: i) total principal amount of the bonds of $27,210,000 with an assumed issuance premium of $1,953,559 providing for a Construction Account deposit of $28,900,000; ii) assumed annual tax-exempt average coupon interest on the bonds that comprise the Series 2021 Bonds of 5.0%; iii) a term of approximately thirty (30) years; iv) no requirement to fund a debt service reserve for this future series of bonds; and v) the payment of issuance expenses associated with the Series 2021 Bonds. The Series 2021 Bonds were assumed to be issued and dated on or about June 1, 2021 and were structured to reflect) annual level debt service payments for the term of the Series 2021 Bonds. Based on the above information provided by County's Municipal Financial Advisor, the Annual Debt Service Requirement for the Forecast Period for the Series 2021 Bonds is as follows: Projection of Annual Debt Service Requirement Series 2021 Bonds [*] Fiscal Year Ending September 30, Amount 2018 $0 2019 $0 2020 $0 2021 $435,500 2022 $1,360,500 2023 $1,795,500 [*] Amounts were derived from information provided by the County's Municipal Financial Advisor and reflects when the Debt Service Account is to be funded from Net Revenues and not when the payments of the Series 2021 Bonds may actually be made by the County. Amounts are presented on a "gross" basis and are not net of any investment income from amounts on deposit in the Debt Service Account and the Debt Service Reserve Accounts associated with such bonds. 20. In accordance with normal utility operations and the flow of funds as defined in the Bond Resolution that authorized the issuance of Outstanding Bonds, the Series 2018 Bonds, and the Future Bonds, interest income has been recognized as an available revenue source to fund the annual expenditure needs of the System. Interest income was based on the estimated balances for all cash accounts or funds anticipated to be on deposit. With respect to the evaluation of the compliance with the rate covenant as defined in the Bond Resolution, interest earned on those funds that are available to meet total utility expenditures was recognized. These funds included the Sinking Fund, Revenue Fund (operating reserves), customer deposits, landfill closure reserve, and the Capital Improvement Fund. Earnings on the Construction Fund (established by the issuance of Additional Parity Bonds) were considered as being restricted and therefore maintained in such fund and was assumed: i) to not be a component of the Gross Revenues and to not be available to meet the rate covenant requirements as defined in the Bond Resolution; and ii) to be only available to provide an additional source of funds for System capital expenditure financing. In development of the estimated interest earnings on such funds and accounts, an assumed average annual interest rate ranging from 1.00% to 1.25% was applied to the estimated average fund balances in each account maintained by the County. This interest rate assumption is based on recent earnings performance results of the System, discussions with County staff, and a review of the earnings performance of available investment vehicles available to the County (e.g., Florida PRIME - State Board of Administration). The assumed average interest rate approximates the investment rates currently being earned by the County but is assumed to increase marginally in order to limit the overall volatility of such earnings in the financial plan and to provide assurance that such earnings would be available for the determination of Net Revenues. A summary of the interest earnings recognized in the financial forecast as well as the estimated cash balances by individual fund or account are presented in Table 13 and summarized as follows: Summary of Projected Interest Earnings [1] Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 Interest Earnings Recognized [2]: Revenue Fund [3] Operating Reserves $745,100 $592,800 $483,700 $518,200 $558,200 $591,000 Landfill Closure Reserve 178,700 215,500 253,000 291,100 330,100 366,800 Customer Deposits 0 0 0 0 0 0 Maintenance Project Expense Reserves 8,500 10,200 11,900 13,600 15,300 17,000 Capital Improvement Fund 430,300 135,000 296,600 402,400 499,400 581,600 Sinking Fund Debt Service Reserve Accounts [4][5] 11,700 11,900 12,100 8,500 5,000 5,200 Principal and Interest Accounts [5] 42,700 52,500 55,100 53,000 51,100 54,600 Water Facility Investment Fee Fund [6] 252,000 262,100 276,300 331,400 389,100 448,200 Wastewater Facility Investment Fee Fund [6] 184,200 76,800 86,000 119,400 164,700 201,300 Rate Stabilization Fund 0 0 0 0 0 0 Total Interest Earnings Recognized [41 $1,853,200 $1,356,800 $1,474,700 $1,737,600 $2,012,900 $2,265,700 Restricted Interest Earnings: Construction Fund (Bond Proceeds) [7] $0 $0 $0 $0 $0 $0 Total Restricted Interest Earnings $0 $0 $0 $0 $0 $0 Total Interest Earnings $1,853,200 $1,356,800 $1,474,700 $1,737,600 $2,012,900 $2,265,700 [1] Amounts shown derived from Table 13. [2] Reflects earnings recognized in development of Gross Revenues. [3] Amounts include earnings from the Revenue Fund, which, for the purposes of this Report and for the projection of funds availability for System purposes, has been subdivided into the following categories (the landfill closure reserve, the customer deposits received by the County, and the account established to manage major repair and maintenance projects have a specific purpose and have been separately recognized for the determination of interest income). [4] Amounts shown reflect earnings on the Debt Service Reserve Accounts associated with the Series 2010 Bonds, Series 2011 Bonds and Series 2015 Bonds. There are no specific Debt Service Reserve Requirement for the Series 2017 Bonds, the Series 2018 Bonds and none assumed for the Additional Bonds. [5] Amounts shown reflect reduction to the debt service reserve associated with final payment of the Series 2010 Bonds. [6] For purposes of this analysis, estimated earnings on the Facility Investment Fee Accounts are assumed to be included as a component of Gross Revenues but are restricted to such accounts and are considered as a component of the available Facility Investment Fees for cash flow purposes and in the development of the expansion -related System capital expenditure financing plan. [7] For the purposes of this presentation, all funds deposited to the Construction Fund from Bond proceeds assumed to be retained in such account to provide an inflation contingency on capital costs; therefore, no interest earnings on such fund has been recognized as a component of Gross Revenues. (Remainder of page intentionally left blank) -65- 21. The CIP for the System was based on: i) the current status of projects under construction or appropriated and funded in prior periods; ii) the County's most recent CIP for additional projects identified for the Fiscal Years 2019 to 2023; and iii) discussions with the County. The CIP is summarized in Table 7. It should be noted that the County continues to redefine and adjust the capital program due to changing service area conditions and associated capital requirements of the System and is considered to be a projection of the capital funding sources and needs. Although projects are specifically identified for funding from the Series 2018 Bonds, the use of such proceeds may be used by the County to fund the general capital needs of the System and, therefore, may be different than what is shown on Table 7. The CIP funding plan was based on i) the purpose of the expenditures (e.g., renewals and replacements); ii) available fund balances in accounts established by the County that are available for capital project financing; iii) anticipated Facility Investment Fees receipts derived from new development; and iv) the use of proceeds to be derived from the Series 2018 Bonds and the Future Bonds. Also included in the CIP is the use of a Capital Improvement Fund as established by the Bond Resolution, which is funded annually from System operations to finance recurring capital projects (for the betterment, rehabilitation, or replacement of utility plant assets). The recognition of this revenue requirement is necessary in order to allow for a recurring capital re -investment funding mechanism to continue to provide high quality service and maintain the existing level of service to its customers as the System facilities age. The following is a summary of the capital improvement funding plan assumed for the financial forecast, which is shown in detail in Table 7: Capital Improvement Program (CIP) Summary and Funding Sources Fiscal Year Ending September 30 [1] 2018 [2] 2019 2020 2021 2022 2023 Total Capital Projects: Water System $89,723,507 $37,801,960 $9,065,124 $11,150,908 $12,640,466 $9,342,932 $169,724,897 Wastewater System 129,048,047 42,865,282 25,858,694 33,245,676 35,804,087 31,387,325 298,209,112 Solid Waste System 5,688,487 1,759,383 3,772,000 2,100,000 2,100,000 2,100,000 17,519,870 Stormwater System 7,493,056 4,738,500 2,450,000 1,800,000 1,800,000 1,800,000 20,081,556 Total Capital Projects $231,953,097 $87,165,125 $41,145,819 $48,296,584 $52,344,554 $44,630,257 $505,535,436 Funding Sources: Capital Improvement Fund $127,024,414 $49,451,200 $29,127,470 $33,631,920 $34,490,947 $41,281,120 $315,007,071 Water FIF Fees 2,537,981 6,800,000 300,000 300,000 300,000 300,000 10,537,981 Wastewater FIF Fees 27,964,907 4,630,925 2,607,000 1,100,000 1,100,000 2,621,500 40,024,332 Existing Bond Proceeds 33,045,040 0 0 0 0 0 33,045,040 Series 2018 Bonds Proceeds 40,406,950 25,903,050 8,690,000 0 0 0 75,000,000 Series 2021 Bonds Proceeds 0 0 0 12,861,575 16,038,425 0 28,900,000 Annual Operations Rates [3] 973,806 379,950 421,349 403,089 415,182 427,637 3,021,012 Total Funding Sources $231,953,098 $87,165,125 $41,145,819 $48,296,584 $52,344,554 $44,630,257 $505,535,436 [1] Amounts shown reflect when funding projected to be appropriated (required) and may vary from when funds are actually expended through project completion. [2] Amounts shown include project carry -forward expenditures, which represent amounts appropriated for a project in prior years (funding established) that have yet to be spent and are still underway (considered as construction -work -in -progress). [3] Amounts shown reflect expenditures associated with equipment, machinery, and other general plant assets that are funded annually from System operations (rates) as opposed to deposits to the Capital Improvement Fund. 22. The Bond Resolution provides the System the ability to establish a Rate Stabilization Fund to pay future increases in Operating Expenses, which would affect the determination of System Net Revenues. The County has not funded or made any deposits to the Rate Stabilization Fund in prior periods (through the Fiscal Year 2017) for future period use. It has been assumed that there will be no deposits to or subsequent uses of the Rate Stabilization Fund from the revenues of the System during the Forecast Period. 23. As part of the development process, developers normally construct distribution facilities for subdivisions, then dedicate those facilities to the County. In certain instances, the subdivision systems were not accepted by the County and remain the ownership and responsibility of the property owners within the development (e.g., homeowners association). These privately - owned facilities may consist of water distribution piping, fire hydrants, wastewater collection piping, manholes and/or lift stations that connect the customers in the development or subdivision to the System (the "Private Facilities"). The County owns the meter to serve each respective customer on a retail basis. The County's current policy is to accept ownership of the Private Facilities if such facilities are upgraded or meet the County's current standards for construction of such facilities. The financial forecast does not assume County ownership or operation of the Private Facilities that would result from a change in County policy. To the extent that the County were to change policy and accept the Private Facilities on an "as - constructed" basis, the change is anticipated to result in an increase to rates based on costs as estimated by the County. However, the cost of such policy change is not expected to have a material adverse effect on the financial condition of the System or competitiveness of rates in the region. 24. All contracts, agreements, statutes, rules, and regulations that have been relied upon by us in preparing this Report and the projected operating results contained herein will be fully enforceable and remain in effect in accordance with their terms and conditions, and such terms and conditions will be compiled with by the parties involved throughout the study period. We make no representations or warranties and provide no opinion concerning the enforceability or legal interpretation of such contractual and legal requirements. (Remainder of page intentionally left blank) -67- Summary of Projected Operating Results As shown in Table 9 and summarized as follows, projections of the operating results for the System were prepared in accordance with the flow of funds prescribed by the Bond Resolution and the assumptions and considerations used in the projections as described above. Summary of Projected System Operating Results and Debt Coverage [1] Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 Charges for Services $178,466,103 $184,612,094 $187,653,076 $192,685,530 $197,760,958 $202,842,165 Other Revenues and Income [2] 12,174,351 2,639,780 2,758,915 3,023,077 3,299,669 3,553,789 Total Gross Revenues $190,640,454 $187,251,874 $190,411,991 $195,708,607 $201,060,627 $206,395,954 Total Operating Expenses [3] $143,536,898 $130,302,822 $134,075,455 $138,148,983 $142,157,079 $145,526,224 Net Revenues $47,103,556 $56,949,052 $56,336,536 $57,559,624 $58,903,548 $60,869,730 Net Revenue Ratio 24.71% 30.41% 29.59% 29.41% 29.30% 29.49% Federal Direct Payment [4] 1,759,041 1,759,041 1,759,041 0 0 0 Adjusted Net Revenues $48,862,597 $58,708,093 $58,095,577 $57,559,624 $58,903,548 $60,869,730 Outstanding and Additional Bonds: Annual Debt Service Requirement [5] $17,429,509 $20,284,508 $20,280,808 $18,662,300 $17,038,300 $17,465,150 Calculated Coverage 2.80 2.89 2.86 3.08 3.46 3.49 Required Coverage 1.15 1.15 1.15 1.15 1.15 1.15 Net Available for Other Required Transfers [6] 31,433,089 38,423,585 37,814,771 38,897,325 41,865,249 43,404,581 Other Required Transfers: Debt Service Reserve Accounts [7] 0 0 0 0 0 0 Transfer to Revenue Refunding and Improvement Bonds, Series 2013 [8] 342,077 342,079 342,302 0 0 0 Net Available for Capital Improvement Fund Transfer [9][10] 31,091,011 38,081,505 37,472,467 38,897,324 41,865,248 43,404,580 Total System Facility Investment Fees 14,711,000 10,000,000 10,902,321 10,326,125 9,761,270 9,185,075 Total Available for Other System Purposes $45,802,011 $48,081,505 $48,374,788 $49,223,449 $51,626,518 $52,589,655 [1] Amounts shown derived from Table 9. [2] Amounts shown do not include interest income earned on balances in the Construction Fund (earnings restricted to such account by the Bond Resolution). [3] Amounts shown do not include depreciation or amortization expenses pursuant to the Bond Resolution. [4] Amounts shown include Federal Direct Payments received from the Federal Government associated with the issuance of the Series 2010 Bonds; for the purposes of determining compliance with the rate covenant as delineated in the Bond Resolution, the Federal Direct Payments are included as a component of the Net Revenues. [5] Amounts shown derived from Table 14. [6] Amount represents the available Net Revenue after the payment of the Annual Debt Service Requirement. [7] No debt service reserve requirements are assumed for the Series 2018 Bonds and Future Bonds. [8] Represents allocated debt service payments on the $79,640,000 in Revenue Refunding and Improvement Bonds, Series 2013 (the "County 2013 Bonds"), which are secured from County non -ad valorem revenues of the General Fund, which a portion was attributable to funding certain Solid Waste System projects (from the proceeds of the original issue that was recently refunded). Since the County budgets and allocates a portion of the debt service on the County 2013 Bonds to the Solid Waste System, such amounts were considered as a required transfer for the purposes of presentation of the Historical System operating results and rate covenant compliance with the provisions of the Bond Resolution. [9] Pursuant to the Bond Resolution, all available revenue after payment of Operating Expenses, the Annual Debt Service Requirement, the Subordinate Obligations, and required transfers shall be deposited into the Capital Improvement Fund for the benefit of the System. Generally, this account is used by the County to fund ongoing capital expenditures not funded by System debt and other funding obligations of the System. [10] Amounts shown reflect amounts available for other System purposes. It should be noted that the forecast assumes continuation of annual transfers to the General Fund in the amount of $2,945,142 for watershed protection management or other public works projects. (Remainder of page intentionally left blank) I CONCLUSIONS Based upon the principal considerations and assumptions and the results of our studies and analyses, as summarized in this Report, which should be read in its entirety in conjunction with the following, we are of the opinion that: 1. Based on the customer and water sales forecast prepared for this Report and assuming the continuation of ongoing renewals, replacements and additions, the Water System currently has sufficient permitted water supply and treatment capacity to meet the projected service area needs of the Water System assumed for the development of the financial forecast for the Forecast Period. 2. Based on the customer and wastewater flow forecast prepared for this Report and assuming the continuation of ongoing renewals, replacements and additions, the Wastewater System currently has sufficient permitted wastewater treatment and effluent disposal capacity to meet the projected service area needs of the Wastewater System assumed for the development of the financial forecast for the Forecast Period. 3. Based on the customer and solid waste generation or disposal forecast prepared for this Report and assuming the continuation of ongoing renewals, replacements and additions, the Solid Waste System currently has sufficient permitted disposal capacity to meet the projected service area needs of the Solid Waste System assumed for the development of the financial forecast for the Forecast Period. 4. The projections of growth in customers and usage / sales of the System for the Forecast Period were presented to the County and are considered to represent reasonable and attainable projections for the purposes of this Report. 5. The projected growth in System Operating Expenses for the Forecast Period were presented to the County and are considered to represent conservative projections for the purposes of this Report. 6. The System revenues for the Forecast Period under the County's currently effective rates as delineated in the County's Utility Rate Resolution and Solid Waste Rate Resolution, as defined hereafter in this Report, along with adoption of additional proposed rate adjustments as identified in this Report, should be sufficient to pay the projected Operating Expenses, the estimated Annual Debt Service Requirement on the Outstanding Bonds, the Series 2018 Bonds, and additional parity bonds anticipated to be issued during the Forecast Period, and make projected deposits to the Capital Improvement Fund that is available for paying the cost of additions, extensions, and improvements and the cost of replacement or renewal of capital assets of the System or extraordinary repairs to the System. 7. Based on the assumptions discussed hereinafter in this Report, which are considered reasonable by the Feasibility Consultant, the Net Revenues of the System are projected to comply with the rate covenant as delineated in the Bond Resolution. 8. The approved rates for water and wastewater service are comparable to charges for similar service provided by other publicly -owned utilities located in proximity to the County in the west -central and southwestern portions of Florida. 9. The approved rates for solid waste collection and disposal are comparable to similar charges for similar service for other communities located in proximity to the County in the west - central and southwestern portions of Florida. 10. The Water and Wastewater System Facility Investment Fees (also known as Impact Fees) are comparable to similar fees charged by neighboring utilities. The Feasibility Consultant considers these fees to be reasonable based on the utility plant in service available to serve new growth and development and the expansion -related capital requirements included in the System's adopted capital improvement plan at the time of fee determination. Based on discussions with Department staff, the application of Facility Investment Fees is not expected to negatively affect System growth. (Remainder of page intentionally left blank) -70- MANATEE COUNTY, FLORIDA BOND FEASIBILITY REPORT PUBLIC UTILITIES REVENUE REFUNDING AND IMPROVEMENT BONDS, SERIES 2018 LIST OF TABLES Table No. Description 1 Summary of Historical Water System Customer Statistics 2 Summary of Historical Wastewater System Customer Statistics 3 Summary of Historical Solid Waste System Landfill Disposal and Collection Customer Statistics 4 Summary of Projected Water System Customer Statistics 5 Summary of Projected Wastewater System Customer Statistics 6 Summary of Projected Solid Waste System Landfill Disposal and Collection Customer Statistics 7 Projected System Capital Improvement Program 8 Summary of Historical System Operating Results and Debt Coverage 9 Summary of Projected System Operating Results and Debt Coverage 10 Summary of Projected Water and Wastewater System Operating Expenses 11 Summary of Projected Solid Waste System Operating Expenses 12 Summary of Projected Stormwater System Operating Expenses 13 Summary of Projected Ending Cash Balances and Interest Income 14 Summary of Projected Annual Debt Service Requirement 15 Comparison of Typical Monthly Residential Bills for Water Service 16 Comparison of Typical Monthly Residential Bills for Wastewater Service 17 Comparison of Typical Monthly Residential Bills for Water and Wastewater Service 18 Comparison of Facility Investment Fee (Impact Fee) For Water and Wastewater Service 19 Comparison of Solid Waste Residential Collection Fees and Tipping Fees Page 1 of 2 Table 1 Manatee County Public Utilities System Summary of Historical Water Svstem Customer Statistics 11112 Line Fiscal Year Ended September 30, No. Description 2013 2014 2015 2016 2017 WATER SYSTEM Residential 1 Average Annual Accounts 93,204 95,186 97,415 99,769 102,169 2 Estimated ERC's 93,579 95,570 97,808 100,171 102,581 3 Total Billed Sales (000's Gallons) 5,691,198 5,692,601 5,718,474 5,917,757 6,372,958 4 Avg. Monthly Use per ERC (Gallons) 5,068 4,964 4,872 4,923 5,177 Master Metered - Residential [31 Apartment / Condos 5 Average Annual Accounts 1,680 1,689 1,706 1,726 1,745 6 Number of Units 23,883 24,011 24,253 25,459 26,156 7 Estimated ERC's 17,913 18,008 18,190 19,094 19,617 8 Average Units per Account 14 14 14 15 15 9 Total Billed Sales (000's Gallons) 904,181 899,404 921,203 972,120 986,343 10 Avg. Monthly Use per ERC (Gallons) 4,206 4,162 4,220 4,243 4,190 11 Average Monthly Use per Unit (Gallons) 3,155 3,121 3,165 3,182 3,143 Mobile Home / Travel Trailer 12 Average Annual Accounts 109 109 109 109 109 13 Number of Units 20,883 20,883 20,883 20,951 20,699 14 Estimated ERC's 15,662 15,662 15,662 15,713 15,524 15 Average Units per Account 192 192 192 192 190 16 Total Billed Sales (000's Gallons) 632,571 634,818 636,450 632,643 625,499 17 Avg. Monthly Use per ERC (Gallons) 3,366 3,378 3,386 3,355 3,358 18 Average Monthly Use per Unit (Gallons) 2,524 2,533 2,540 2,516 2,518 Commercial / Other 19 Average Annual Accounts 4,230 4,276 4,333 4,390 4,449 20 Estimated ERC's 12,567 12,703 12,874 13,044 13,217 21 Total Billed Sales (000's Gallons) 1,218,969 1,244,782 1,227,866 1,321,315 1,352,444 22 Avg. Monthly Use per ERC (Gallons) 8,083 8,166 7,948 8,442 8,527 Industrial 23 Average Annual Accounts 265 266 266 266 265 24 Estimated ERC's 786 789 791 789 786 25 Total Billed Sales (000's Gallons) 75,730 75,028 100,148 109,167 104,555 26 Avg. Monthly Use per ERC (Gallons) 8,024 7,920 10,552 11,524 11,079 Construction 27 Average Annual Accounts 9 8 8 6 7 28 Estimated ERC's 46 38 38 31 33 29 Total Billed Sales (000's Gallons) 31,645 52,452 57,920 54,133 61,822 30 Avg. Monthly Use per ERC (Gallons) 57,328 114,026 125,912 147,101 155,072 ERC = Equivalent Residential Connection Footnotes on Page 2 of 2. Page 2 of 2 Table 1 Manatee County Public Utilities System Summary of Historical Water System Customer Statistics [11121 Line Fiscal Year Ended September 30, No. Description 2013 2014 2015 2016 2017 Direct Connect 31 Average Accounts 1,352 1,826 2,287 2,524 2,769 32 Estimated ERC's 1,352 1,826 2,287 2,524 2,769 33 Total Billed Sales (000's Gallons) 29,686 163,422 219,258 270,608 272,582 34 Avg. Monthly Use per ERC (Gallons) 1,830 7,458 7,991 8,934 8,203 Tropicana 35 Average Annual Accounts 1 1 1 1 1 36 Estimated ERC's 88 88 88 88 88 37 Total Billed Sales (000's Gallons) 669,978 667,980 657,506 670,350 699,300 38 Avg. Monthly Use per ERC (Gallons) 634,449 632,557 622,638 634,801 662,216 Fireline 39 Average Annual Accounts 1,079 1,176 1,247 1,326 1,389 40 Estimated ERC's 3,489 3,804 4,032 4,288 4,491 41 Total Billed Sales (000's Gallons) 315 181 244 186 302 42 Avg. Monthly Use per ERC (Gallons) 8 4 5 4 6 Irrigation 43 Average Annual Accounts 3,637 3,603 3,590 3,563 3,530 44 Estimated ERC's 4,554 4,511 4,495 4,461 4,420 45 Total Billed Sales (000's Gallons) 393,787 362,886 352,300 359,330 403,304 46 Avg. Monthly Use per ERC (Gallons) 7,206 6,703 6,531 6,712 7,604 TOTAL RETAIL WATER SYSTEM 47 Average Annual Accounts 105,563 108,138 110,960 113,678 116,431 48 Estimated ERC's 150,036 153,001 156,265 160,203 163,527 49 Total Billed Sales (000's Gallons) 9,648,060 9,793,554 9,891,367 10,307,609 10,879,109 50 Avg. Monthly Use per ERC (Gallons) 5,359 5,334 5,275 5,362 5,544 Wholesale Water 51 Average Annual Accounts 4 4 4 4 4 52 Total Billed Sales (000's Gallons) 2,695,695 2,670,309 2,656,310 2,764,190 2,806,563 53 Avg. Monthly Use per Account (Gallons) 56,160,315 55,631,438 55,339,781 57,587,294 58,470,054 TOTAL WATER SYSTEM 54 Average Annual Accounts 105,567 108,142 110,964 113,682 116,435 55 Estimated ERC's 150,036 153,001 156,265 160,203 163,527 56 Total Billed Sales (000's Gallons) 12,343,755 12,463,863 12,547,676 13,071,800 13,685,671 57 Total Finished Water Produced (000's Gallons) 13,402,766 13,513,877 13,581,307 14,183,467 14,625,634 58 Unbilled Water (amount) (000's Gallons) 1,059,011 1,050,014 1,033,631 1,111,667 939,963 59 Unbilled Water (Percent of Water Available) 7.90% 7.77% 7.61% 7.84% 6.43% ERC = Equivalent Residential Connection Footnotes: [ 1 ] Amounts shown derived from customer billing statistics as compiled by the County. Bill statistics for Fiscal Year 2017 were validated through a revenue test, which entailed applying the appropriate rates to the statistics and comparing them to reported revenues. [2] ERC's were calculated based on AWWA meter equivalency factors. These factors were applied to the average accounts by meter size, with the exception to: i) fireline service, which was determined to be 1/12 of the AWWA factor per meter size [3] Multi -family units were based on 3/4 of the corresponding AWWA meter equivalency factor for each unit served. Page 1 of 2 Table 2 Manatee County Public Utilities System Summary of Historical Wastewater Svstem Customer Statistics Ill12 Line Fiscal Year Ended September 30, No. Description 2013 2014 2015 2016 2017 WASTEWATER SYSTEM Residential 1 Average Annual Accounts 87,031 88,933 91,090 93,317 95,665 2 Estimated ERC's 87,252 89,159 91,321 93,554 95,908 3 Total Billed Sales (000's Gallons) 4,455,468 4,518,202 4,547,852 4,709,310 4,761,738 4 Avg. Monthly Use per ERC (Gallons) 4,255 4,223 4,150 4,195 4,137 Master Metered - Residential [3] Apartment / Condos 5 Average Annual Accounts 1,614 1,653 1,672 1,657 1,669 6 Number of Units 23,797 23,797 24,424 24,904 26,024 7 Estimated ERC's 17,848 17,848 18,318 18,678 19,518 8 Average Units per Account 15 14 15 15 16 9 Total Billed Sales (000's Gallons) 851,369 851,679 867,601 908,043 921,134 10 Avg. Monthly Use per ERC (Gallons) 3,975 3,977 3,947 4,051 3,933 11 Average Monthly Use per Unit (Gallons) 2,981 2,982 2,960 3,038 2,950 Mobile Home / Travel Trailer 12 Average Annual Accounts 124 124 124 125 124 13 Number of Units 21,278 21,278 20,971 21,229 21,089 14 Estimated ERC's 15,959 15,959 15,728 15,922 15,817 15 Average Units per Account 172 172 170 171 170 16 Total Billed Sales (000's Gallons) 587,819 608,493 611,802 611,392 656,534 17 Avg. Monthly Use per ERC (Gallons) 3,070 3,177 3,242 3,200 3,459 18 Average Monthly Use per Unit (Gallons) 2,302 2,383 2,431 2,400 2,594 Commercial 19 Average Annual Accounts 3,812 3,850 3,886 3,929 3,990 20 Estimated ERC's 11,189 11,300 11,408 11,534 11,713 21 Total Billed Sales (000's Gallons) 1,119,870 1,140,387 1,120,565 1,169,770 1,215,125 22 Avg. Monthly Use per ERC (Gallons) 8,341 8,410 8,186 8,452 8,645 Industrial 23 Average Annual Accounts 210 212 213 212 212 24 Estimated ERC's 520 525 526 525 524 25 Total Billed Sales (000's Gallons) 54,026 136,625 157,665 156,850 143,145 26 Avg. Monthly Use per ERC (Gallons) 8,657 21,687 24,967 24,897 22,775 Unmetered 27 Average Annual Accounts - - - - - 28 Estimated ERC's - - - - - 29 Implied Billable Flows - - - - - 30 Avg. Monthly Use per Account (Gallons) - - - - - ERC = Equivalent Residential Connection Footnotes on Page 2 of 2. Page 2 of 2 Table 2 Manatee County Public Utilities System Summary of Historical Wastewater System Customer Statistics 111121 Line Fiscal Year Ended September 30, No. Description 2013 2014 2015 2016 2017 TOTAL RETAIL WASTEWATER SYSTEM 31 Average Annual Accounts 92,789 94,771 96,984 99,239 101,659 32 Estimated ERC's 132,767 134,791 137,301 140,212 143,479 33 Total Billed Sales (000's Gallons) 7,068,552 7,255,386 7,305,485 7,555,364 7,697,677 34 Avg. Monthly Use per ERC (Gallons) 4,437 4,486 4,434 4,490 4,471 Wholesale Wastewater 35 Average Annual Accounts 2 2 2 2 2 36 Total Billed Sales (000's Gallons) 610,642 643,217 664,428 660,765 621,064 37 Avg. Monthly Use per Account (Gallons) 25,443,412 26,800,708 27,684,500 27,531,892 25,877,650 TOTAL WASTEWATER SYSTEM 38 Average Annual Accounts 92,791 94,773 96,986 99,241 101,661 39 Estimated ERC's 132,767 134,791 137,301 140,212 143,479 40 Total Billed Sales (000's Gallons) 7,679,194 7,898,603 7,969,913 8,216,130 8,318,741 41 Total Wastewater Treated (000's Gallons) 8,109,688 8,209,012 8,224,443 8,047,425 7,963,064 42 Monthly Amount Treated per ERC (Gallons) 5,090 5,075 4,992 4,783 4,625 ERC = Equivalent Residential Connection Footnotes: [ 1 ] Amounts shown derived from customer billing statistics as compiled by the County. Bill statistics for Fiscal Year 2017 were validated through a revenue test, which entailed applying the appropriate rates to the statistics and comparing them to reported revenues. [2] ERC's were calculated based on AWWA meter equivalency factors. These factors were applied to the average accounts by meter size, with the exception to: i) firchne service, which was determined to be 1/12 of the AWWA factor per meter size [3] Multi -family units were based on 3/4 of the corresponding AWWA meter equivalency factor for each unit served. Page 1 of 3 Table 3 Manatee County, Florida Public Utilities System Summary of Historical Solid Waste Svstem Landfill Disposal and Collection Customer Statistics H Line Fiscal Year Ended September 30, No. Description 2013 2014 2015 2016 2017 Landfill Disposal Statistics (Tons): Landfilled Materials: Residential 1 Waste Pro 48,304 49,424 52,002 54,064 51,742 2 Waste Management 42,507 44,396 45,072 46,964 45,369 3 Total Franchised Tons 90,811 93,820 97,073 101,028 97,111 4 Residential Mix - Non Franchised 2,556 1,540 2,300 1,129 1,206 5 City of Bradenton - Non Franchised 15,997 17,106 18,096 19,546 20,133 6 City of Bradenton - Waste Pro 429 1,533 1,124 981 376 7 City of Bradenton - Waste Management 0 0 0 0 0 8 Anna Maria 1,056 1,088 1,203 1,425 1,435 9 Palmetto 5,187 5,515 5,466 5,314 5,315 10 Holmes Beach 2,509 2,650 2,384 1,994 2,138 11 Longboat Key South 647 683 597 461 487 12 Longboat Key North 757 678 696 636 610 13 Trailer Estates 401 461 461 432 430 14 Total Residential Tons 120,348 125,075 129,399 132,945 129,241 Commercial 15 Waste Pro 33,558 33,852 35,873 38,270 42,855 16 Waste Management 38,924 40,979 43,868 47,730 49,761 17 Total Franchised Tons 72,482 74,830 79,741 85,999 92,617 18 Non -Franchised Tons 14,887 18,874 18,294 17,774 15,901 19 City of Bradenton - Non Franchised 20,666 20,159 20,468 20,877 21,079 20 City of Bradenton - Waste Pro 63 410 763 751 793 21 City of Bradenton - Waste Management 2,425 2,484 2,610 2,675 2,787 22 Anna Maria 985 1,203 1,155 809 373 23 Palmetto 5,434 5,622 5,717 6,404 7,146 24 Holmes Beach 1,669 1,660 2,066 2,317 3,018 25 Longboat Key South 3,537 3,379 3,526 3,886 4,332 26 Longboat Key North 4,689 4,824 4,411 3,460 3,376 27 Trailer Estates 163 227 297 399 454 28 Construction and Demolition 12,127 6,986 7,702 10,327 11,467 29 Total Commercial Tons 139,124 140,657 146,749 155,678 163,343 Footnotes on Page 3 of 3. Page 2 of 3 Table 3 Manatee County, Florida Public Utilities System Summary of Historical Solid Waste Svstem Landfill Disposal and Collection Customer Statistics H Line No. Description 2013 Fiscal Year Ended September 30, 2014 2015 2016 2017 Miscellaneous Waste 30 Sludge 11,495 24,183 23,756 29,470 18,088 31 Agricultural (AG) Waste 2,419 2,631 623 1,356 2,715 32 Debris 21 41 40 21 34 33 Illegal 180 317 588 737 297 34 Clean Up 332 357 452 515 505 35 Contaminated Soil 25 132 8 50 147 36 Wares Creek 7,222 0 0 0 0 37 Total Miscellaneous Waste 21,694 27,661 25,466 32,148 21,785 38 Total Landfilled Tonnages 281,166 293,392 301,615 320,771 314,370 Non-Landfilled Tonnages Diverted Materials 39 Yard Waste - Franchised 24,673 25,310 31,428 32,924 33,316 40 Yard Waste - Non Franchised 5,913 5,193 0 0 0 41 Tires 1,756 1,708 1,314 1,763 1,874 42 Illegal Tires 29 28 19 24 35 43 White Goods 28 32 132 199 307 44 Household Hazardous Waste 179 149 185 230 223 45 E-Scrap 191 174 143 216 254 46 Franchised E-Scrap 117 92 147 194 169 47 Total Diverted Tons 32,887 32,687 33,368 35,550 36,178 48 Mulch 0 0 0 0 0 49 Fuel 14,944 16,423 15,703 19,509 17,757 50 Tires 1,678 1,372 1,110 1,644 1,472 51 White Goods 71 63 86 161 138 52 Batteries 12 6 11 13 14 53 Waste Pro 7,498 9,531 8,209 9,743 15,562 54 Waste Management 8,969 7,532 8,248 8,768 11,893 55 Total Recycled Tons 33,172 34,928 33,367 39,839 46,836 56 Total Non-Landfilled Tonnages 66,058 67,614 66,736 75,389 83,014 57 Grand Total Tonnages 347,224 361,006 368,350 396,160 397,384 Footnotes on Page 3 of 3. Page 3 of 3 Table 3 Manatee County, Florida Public Utilities System Summary of Historical Solid Waste System Landfill Disposal and Collection Customer Statistics 111 Line Fiscal Year Ended September 30, No. Description 2013 2014 2015 2016 2017 Collection Accounts and Units: [3] Waste Pro Accounts and Units: 58 Residential Services - Accounts 46,868 47,970 49,131 50,488 51,765 59 Residential Services - Units 66,768 67,680 69,382 70,952 72,623 60 Commercial Services - Accounts 2,081 2,137 2,168 2,187 2,237 Commercial Services - Units 61 Bins 1,167 1,198 1,210 1,218 1,221 62 Compactors 21 22 23 23 23 63 Cans 1,477 1,475 1,482 1,484 1,475 64 Roll Out Short 53 52 55 54 53 65 Gate Service 216 225 239 252 261 66 Long Roll Out 5 5 5 5 5 67 Total Commercial Services 2,939 2,977 3,014 3,036 3,038 68 Total Accounts Served 48,949 50,107 51,299 52,675 54,002 69 Total Units Served 69,707 70,657 72,396 73,988 75,661 Waste Management Customers and Units: 70 Residential Services - Accounts 41,193 42,181 43,186 44,471 45,882 71 Residential Services - Units 57,340 58,251 59,703 61,249 63,362 72 Commercial Services - Accounts 2,892 2,979 2,992 3,082 3,165 Commercial Services - Units 73 Bins 1,521 1,547 1,576 1,602 1,646 74 Compactors 40 41 41 46 46 75 Cans 1,490 1,494 1,490 1,502 1,541 76 Roll Out Short 31 34 35 35 35 77 Gate Service 445 465 476 487 508 78 Long Roll Out 4 4 5 5 3 79 Total Commercial Services 3,531 3,585 3,623 3,677 3,779 80 Total Accounts Served 44,085 45,160 46,178 47,553 49,047 81 Total Units Served 60,871 61,836 63,326 64,926 67,141 Total Collection Customers and Units: 82 Residential Services - Accounts 88,061 90,151 92,317 94,959 97,647 83 Residential Services - Units 124,108 125,931 129,085 132,201 135,985 84 Commercial Services - Accounts 4,973 5,116 5,160 5,269 5,402 Commercial Services - Units 85 Bins 2,688 2,745 2,786 2,820 2,867 86 Compactors 61 63 64 69 69 87 Cans 2,967 2,969 2,972 2,986 3,016 88 Roll Out Short 84 86 90 89 88 89 Gate Service 661 690 715 739 769 90 Long Roll Out 9 9 10 10 8 91 Total Commercial Services 6,470 6,562 6,637 6,713 6,817 92 Total Accounts Served 93,034 95,267 97,477 100,228 103,049 92 Total Units Served 130,578 132,493 135,722 138,914 142,802 Footnotes: [ 1 ] Based on information provided by the County. [2] Amounts shown represent solid waste delivered to the landfill disposal area which a tipping fee is charged but is diverted for other use (e.g., yard waste for biomass fuel or composting). [3] Amounts shown reflect accounts provided solid waste collection services from the Authorized Collectors. Page 1 of 2 Table 4 Manatee County Public Utilities System Summary of Proiected Water Svstem Customer Statistics III Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 WATER SYSTEM Residential 1 Average Annual Accounts 104,579 107,029 109,379 111,629 113,779 115,829 2 Estimated ERC's 105,001 107,461 109,820 112,079 114,238 116,296 3 Total Billed Sales (000's Gallons) 6,149,245 6,293,305 6,431,485 6,563,785 6,690,205 6,810,745 4 Avg. Monthly Use per ERC (Gallons) 4,880 4,880 4,880 4,880 4,880 4,880 Master Metered - Residential Apartment / Condos 5 Average Annual Accounts 1,771 1,799 1,821 1,839 1,851 1,859 6 Number of Units 26,546 26,958 27,295 27,557 27,745 27,857 7 Estimated ERC's 19,909 20,218 20,471 20,668 20,809 20,893 8 Average Units per Account 15 15 15 15 15 15 9 Total Billed Sales (000's Gallons) 1,019,356 1,035,184 1,015,380 1,025,138 1,032,108 1,036,290 10 Avg. Monthly Use per ERC (Gallons) 4,267 4,267 4,133 4,133 4,133 4,133 11 Average Monthly Use per Unit (Gallons) 3,200 3,200 3,100 3,100 3,100 3,100 Mobile Home / Travel Trailer 12 Average Annual Accounts 109 109 109 109 109 109 13 Number of Units 20,699 20,699 20,699 20,699 20,699 20,699 14 Estimated ERC's 15,524 15,524 15,524 15,524 15,524 15,524 15 Average Units per Account 190 190 190 190 190 190 16 Total Billed Sales (000's Gallons) 620,970 620,970 620,970 620,970 620,970 620,970 17 Avg. Monthly Use per ERC (Gallons) 3,333 3,333 3,333 3,333 3,333 3,333 18 Average Monthly Use per Unit (Gallons) 2,500 2,500 2,500 2,500 2,500 2,500 Commercial 19 Average Annual Accounts 4,499 4,531 4,559 4,581 4,599 4,611 20 Estimated ERC's 13,366 13,463 13,544 13,611 13,663 13,700 21 Total Billed Sales (000's Gallons) 1,357,647 1,363,378 1,367,550 1,374,300 1,379,550 1,383,300 22 Avg. Monthly Use per ERC (Gallons) 8,465 8,439 8,414 8,414 8,414 8,414 Industrial 23 Average Annual Accounts 265 266 267 268 269 270 24 Estimated ERC's 786 789 792 795 798 801 25 Total Billed Sales (000's Gallons) 111,090 108,542 105,086 105,481 105,875 106,269 26 Avg. Monthly Use per ERC (Gallons) 11,771 11,458 11,051 11,051 11,051 11,051 Construction 27 Average Annual Accounts 9 9 8 8 7 7 28 Estimated ERC's 46 43 41 38 36 33 29 Total Billed Sales (000's Gallons) 57,780 54,570 51,360 48,150 44,940 41,730 30 Avg. Monthly Use per ERC (Gallons) 104,674 104,674 104,674 104,674 104,674 104,674 Direct Connect 31 Average Accounts 2,900 2,413 2,313 2,213 2,113 2,013 32 Estimated ERC's 2,900 2,413 2,313 2,213 2,113 2,013 33 Total Billed Sales (000's Gallons) 264,167 219,805 210,696 201,587 192,477 183,368 34 Avg. Monthly Use per ERC (Gallons) 7,591 7,591 7,591 7,591 7,591 7,591 ERC = Equivalent Residential Connection Footnotes on Page 2 of 2. Page 2 of 2 Table 4 Manatee County Public Utilities System Summary of Proiected Water Svstem Customer Statistics III Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Tropicana 35 Average Annual Accounts 1 1 1 1 1 1 36 Estimated ERC's 88 88 88 88 88 88 37 Total Billed Sales (000's Gallons) 684,825 684,825 684,825 684,825 684,825 684,825 38 Avg. Monthly Use per ERC (Gallons) 648,508 648,508 648,508 648,508 648,508 648,508 Fireline 39 Average Annual Accounts 1,424 1,424 1,424 1,424 1,424 1,424 40 Estimated ERC's 4,606 4,606 4,606 4,606 4,606 4,606 41 Total Billed Sales (000's Gallons) 393 393 393 393 393 393 42 Avg. Monthly Use per ERC (Gallons) 7 7 7 7 7 7 Irrigation 43 Average Annual Accounts 3,520 3,500 3,480 3,460 3,440 3,420 44 Estimated ERC's 4,407 4,382 4,357 4,332 4,307 4,282 45 Total Billed Sales (000's Gallons) 374,035 362,355 350,784 348,768 346,752 344,736 46 Avg. Monthly Use per ERC (Gallons) 7,072 6,890 6,709 6,709 6,709 6,709 TOTAL RETAIL WATER SYSTEM 47 Average Annual Accounts 119,076 121,080 123,360 125,531 127,591 129,542 48 Average Annual Units 47,245 47,657 47,994 48,256 48,444 48,556 49 Estimated ERC's 166,635 168,989 171,558 173,956 176,183 178,238 50 Total Billed Sales (000's Gallons) 10,639,508 10,743,327 10,838,530 10,973,397 11,098,096 11,212,627 51 Avg. Monthly Use per ERC (Gallons) 5,321 5,298 5,265 5,257 5,249 5,242 Wholesale Water 52 Average Annual Accounts 4 4 4 4 4 4 53 Total Billed Sales (000's Gallons) 2,831,388 2,739,388 2,639,388 2,589,388 2,539,388 2,499,388 54 Avg. Monthly Use per Account (Gallons) 58,987,240 57,070,573 54,987,240 53,945,573 52,903,906 52,070,573 TOTAL WATER SYSTEM 55 Average Annual Accounts 119,080 121,084 123,364 125,535 127,595 129,546 56 Estimated ERC's 166,635 168,989 171,558 173,956 176,183 178,238 57 Total Billed Sales (000's Gallons) 13,470,896 13,482,715 13,477,917 13,562,784 13,637,483 13,712,014 58 Water Production (000's Gallons) 14,530,418 14,543,167 14,537,992 14,629,535 14,710,109 14,790,502 59 Water Purchased (000's Gallons) - - - - - - 60 Total Water Production and Purchased (Available) (000's) 14,530,418 14,543,167 14,537,992 14,629,535 14,710,109 14,790,502 61 Unbilled Water (amount) (000's Gallons) 1,059,523 1,060,453 1,060,075 1,066,750 1,072,625 1,078,488 62 Unbilled Water (Percent of Water Available) 7.29% 7.29% 7.29% 7.29% 7.29% 7.29% ERC = Equivalent Residential Connection Footnotes: [1 ] Amounts shown reflect the customers and sales forecast used in the calculation of rate revenues. Line No. Summary Description Table 5 Manatee County Public Utilities System of Projected Wastewater System Customer Statistics [11 Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 Page 1 of 2 2023 WASTEWATER SYSTEM Residential 1 Average Annual Accounts 97,922 100,216 102,416 104,523 106,536 108,455 2 Estimated ERC's 98,170 100,470 102,676 104,788 106,806 108,730 3 Total Billed Sales (000's Gallons) 4,627,746 4,736,160 4,840,131 4,939,707 5,034,841 5,125,533 4 Avg. Monthly Use per ERC (Gallons) 3,928 3,928 3,928 3,928 3,928 3,928 Master Metered - Residential Apartment / Condos 5 Average Annual Accounts 1,691 1,713 1,731 1,743 1,751 1,756 6 Number of Units 26,359 26,710 26,983 27,178 27,295 27,373 7 Estimated ERC's 19,769 20,033 20,237 20,383 20,471 20,530 8 Average Units per Account 16 16 16 16 16 16 9 Total Billed Sales (000's Gallons) 960,775 1,009,990 1,016,393 1,023,735 1,028,140 1,031,077 10 Avg. Monthly Use per ERC (Gallons) 4,050 4,201 4,185 4,185 4,185 4,185 11 Average Monthly Use per Unit (Gallons) 3,037 3,151 3,139 3,139 3,139 3,139 Mobile Home / Travel Trailer 12 Average Annual Accounts 123 123 123 123 123 123 13 Number of Units 20,919 20,919 20,919 20,919 20,919 20,919 14 Estimated ERC's 15,689 15,689 15,689 15,689 15,689 15,689 15 Average Units per Account 170 170 170 170 170 170 16 Total Billed Sales (000's Gallons) 573,806 573,806 573,806 573,806 573,806 573,806 17 Avg. Monthly Use per ERC (Gallons) 3,048 3,048 3,048 3,048 3,048 3,048 18 Average Monthly Use per Unit (Gallons) 2,286 2,286 2,286 2,286 2,286 2,286 Commercial 19 Average Annual Accounts 4,035 4,063 4,085 4,103 4,115 4,123 20 Estimated ERC's 11,845 11,926 11,992 12,043 12,080 12,102 21 Total Billed Sales (000's Gallons) 1,237,415 1,220,112 1,200,990 1,206,135 1,209,810 1,212,015 22 Avg. Monthly Use per ERC (Gallons) 8,706 8,526 8,346 8,346 8,346 8,346 Industrial 23 Average Annual Accounts 212 212 212 212 212 212 24 Estimated ERC's 525 525 525 525 525 525 25 Total Billed Sales (000's Gallons) 144,434 144,434 144,434 144,434 144,434 144,434 26 Avg. Monthly Use per ERC (Gallons) 22,926 22,926 22,926 22,926 22,926 22,926 Unmetered 27 Average Annual Accounts - - - - - - 28 Estimated ERC's 29 Implied Billable Flows 30 Avg. Monthly Use per Account (Gallons) - - - - - - TOTAL RETAIL WASTEWATER SYSTEM 31 Average Annual Accounts 103,982 106,326 108,566 110,703 112,736 114,668 32 Estimated ERC's 145,999 148,643 151,119 153,429 155,571 157,576 33 Total Billed Sales (000's Gallons) 7,544,175 7,684,501 7,775,754 7,887,817 7,991,031 8,086,864 34 Avg. Monthly Use per ERC (Gallons) 4,306 4,308 4,288 4,284 4,280 4,277 ERC = Equivalent Residential Connection Footnotes on Page 2 of 2. Page 2 of 2 Table 5 Manatee County Public Utilities System Summary of Projected Wastewater System Customer Statistics [11 Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Wholesale Wastewater 35 Average Annual Accounts 2 2 2 2 2 2 36 Total Billed Sales (000's Gallons) 604,189 604,282 604,282 604,282 604,282 604,282 37 Avg. Monthly Use per Account (Gallons) 25,174,554 25,178,430 25,178,430 25,178,430 25,178,430 25,178,430 TOTAL WASTEWATER SYSTEM 38 Average Annual Accounts 103,984 106,328 108,568 110,705 112,738 114,670 39 EstimatedERC's 145,999 148,643 151,119 153,429 155,571 157,576 40 Total Billed Sales (000's Gallons) 8,148,364 8,288,783 8,380,037 8,492,100 8,595,314 8,691,147 41 Total Wastewater Treated (000's Gallons) 8,236,261 8,378,194 8,470,432 8,583,704 8,688,031 8,784,898 ERC = Equivalent Residential Connection Footnotes: [1] Amounts shown reflect the customers and sales forecast used in the calculation of rate revenues. Page 1 of 3 Table 6 Manatee County, Florida Public Utilities System Summary of Proiected Solid Waste Svstem Landfill DISDosal and Collection Customer Statistics 11 Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Landfill Disposal Statistics (Tons): Landfilled Materials: Residential 1 Waste Pro 52,777 53,780 54,748 55,733 56,737 57,758 2 Waste Management 46,277 47,156 48,005 48,869 49,748 50,644 3 Total Franchised Tons 99,054 100,936 102,753 104,602 106,485 108,402 4 Residential Mix - Non Franchised 1,206 1,206 1,206 1,206 1,206 1,206 5 City of Bradenton - Non Franchised 20,536 20,926 21,303 21,686 22,077 22,474 6 City of Bradenton - Waste Pro 376 376 376 376 376 376 7 City of Bradenton - Waste Management 0 0 0 0 0 0 8 Anna Maria 1,435 1,435 1,435 1,435 1,435 1,435 9 Palmetto 5,315 5,315 5,315 5,315 5,315 5,315 10 Holmes Beach 2,138 2,138 2,138 2,138 2,138 2,138 11 Longboat Key South 487 487 487 487 487 487 12 Longboat Key North 610 610 610 610 610 610 13 Trailer Estates 430 430 430 430 430 430 14 Total Residential Tons 131,586 133,858 136,051 138,284 140,558 142,872 Commercial 15 Waste Pro 44,998 46,123 46,700 46,992 46,992 46,992 16 Waste Management 52,249 53,556 54,225 54,564 54,564 54,564 17 Total Franchised Tons 97,248 99,679 100,925 101,555 101,555 101,555 18 Non -Franchised Tons 15,901 15,901 15,901 15,901 15,901 15,901 19 City of Bradenton - Non Franchised 21,079 21,079 21,079 21,079 21,079 21,079 20 City of Bradenton - Waste Pro 833 854 864 870 870 870 21 City of Bradenton - Waste Management 2,927 3,000 3,037 3,056 3,056 3,056 22 Anna Maria 373 373 373 373 373 373 23 Palmetto 7,504 7,691 7,788 7,836 7,836 7,836 24 Holmes Beach 3,169 3,248 3,289 3,309 3,309 3,309 25 Longboat Key South 4,548 4,662 4,720 4,750 4,750 4,750 26 Longboat Key North 3,376 3,376 3,376 3,376 3,376 3,376 27 Trailer Estates 454 454 454 454 454 454 28 Construction and Demolition 13,760 13,760 11,696 12,047 12,408 12,780 29 Total Commercial Tons 171,171 174,077 173,502 174,607 174,968 175,341 Footnotes on Page 3 of 3. Page 2 of 3 Table 6 Manatee County, Florida Public Utilities System Summary of Proiected Solid Waste Svstem Landfill DISDosal and Collection Customer Statistics 11 Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Miscellaneous Waste 30 Sludge 18,088 18,088 18,088 18,088 18,088 18,088 31 Agricultural (AG) Waste 2,715 2,715 2,715 2,715 2,715 2,715 32 Debris 34 34 34 34 34 34 33 Illegal 297 297 297 297 297 297 34 Clean Up 505 505 505 505 505 505 35 Contaminated Soil 147 147 147 147 147 147 36 Wares Creek 0 0 0 0 0 0 37 Total Miscellaneous Waste 21,785 21,785 21,785 21,785 21,785 21,785 38 Total Landfilled Tonnages 324,542 329,720 331,339 334,677 337,311 339,998 Non-Landfilled Tonnages Diverted Materials f21 39 Yard Waste - Franchised 33,649 33,986 34,326 34,669 35,016 35,366 40 Yard Waste - Non Franchised 0 0 0 0 0 0 41 Tires 1,874 1,874 1,874 1,874 1,874 1,874 42 Illegal Tires 35 35 35 35 35 35 43 White Goods 307 307 307 307 307 307 44 Household Hazardous Waste 223 223 223 223 223 223 45 E-Scrap 254 254 254 254 254 254 46 Franchised E-Scrap 169 169 169 169 169 169 47 Total Diverted Tons 36,511 36,848 37,188 37,531 37,878 38,228 Recycled Materials 48 Mulch 0 0 0 0 0 0 49 Fuel 17,757 17,757 17,757 17,757 17,757 17,757 50 Tires 1,472 1,472 1,472 1,472 1,472 1,472 51 White Goods 138 138 138 138 138 138 52 Batteries 14 14 14 14 14 14 53 Waste Pro 15,562 15,562 15,562 15,562 15,562 15,562 54 Waste Management 11,893 11,893 11,893 11,893 11,893 11,893 55 Total Recycled Tons 46,836 46,836 46,836 46,836 46,836 46,836 56 Total Non-Landfilled Tonnages 83,347 83,684 84,024 84,367 84,714 85,064 57 Grand Total Tonnages 407,890 413,404 415,363 419,044 422,025 425,061 Footnotes on Page 3 of 3 Page 3 of 3 Table 6 Manatee County, Florida Public Utilities System Summary of Proiected Solid Waste Svstem Landfill DISDOSal and Collection Customer Statistics 11 Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Collection Accounts and Units: [31 Waste Pro Accounts and Units: 58 Residential Services - Accounts 52,801 53,805 54,774 55,761 56,765 57,787 59 Residential Services - Units 74,076 75,484 76,843 78,227 79,636 81,070 60 Commercial Services - Accounts 2,243 2,250 2,257 2,264 2,271 2,278 Commercial Services - Units 61 Bins 1,221 1,221 1,221 1,221 1,221 1,221 62 Compactors 23 23 23 23 23 23 63 Cans 1,475 1,475 1,475 1,475 1,475 1,475 64 Roll Out Short 53 53 53 53 53 53 65 Gate Service 269 278 287 296 305 315 66 Long Roll Out 5 5 5 5 5 5 67 Total Commercial Services 3,046 3,055 3,064 3,073 3,082 3,092 68 Total Accounts Served 55,044 56,055 57,031 58,025 59,036 60,065 69 Total Units Served 77,122 78,539 79,907 81,300 82,718 84,162 Waste Management Accounts and Units: 70 Residential Services - Accounts 46,800 47,689 48,548 49,422 50,312 51,218 71 Residential Services - Units 64,630 65,858 67,044 68,251 69,480 70,731 72 Commercial Services - Accounts 3,216 3,268 3,322 3,376 3,431 3,488 Commercial Services - Units 73 Bins 1,679 1,713 1,748 1,783 1,819 1,856 74 Compactors 46 46 46 46 46 46 75 Cans 1,553 1,565 1,577 1,589 1,601 1,614 76 Roll Out Short 35 35 35 35 35 35 77 Gate Service 524 540 557 574 592 610 78 Long Roll Out 3 3 3 3 3 3 79 Total Commercial Services 3,840 3,902 3,966 4,030 4,096 4,164 80 Total Customers and Units Served 50,016 50,957 51,870 52,798 53,743 54,706 81 Total Customers and Units Served 68,470 69,760 71,010 72,281 73,576 74,895 Total Collection Accounts and Units: 82 Residential Services - Accounts 99,601 101,494 103,322 105,183 107,077 109,005 83 Residential Services - Units 138,706 141,342 143,887 146,478 149,116 151,801 84 Commercial Services - Accounts 5,459 5,518 5,579 5,640 5,702 5,766 Commercial Services - Units 85 Bins 2,900 2,934 2,969 3,004 3,040 3,077 86 Compactors 69 69 69 69 69 69 87 Cans 3,028 3,040 3,052 3,064 3,076 3,089 88 Roll Out Short 88 88 88 88 88 88 89 Gate Service 793 818 844 870 897 925 90 Long Roll Out 8 8 8 8 8 8 91 Total Commercial Services 6,886 6,957 7,030 7,103 7,178 7,256 92 Total Accounts Served 105,060 107,012 108,901 110,823 112,779 114,771 93 Total Units Served 145,592 148,299 150,917 153,581 156,294 159,057 Footnotes: [1] Reflects statistical forecast used to develop Authorized Collector costs and County revenues and revenues from disposal fees. [2] Amounts shown represent solid waste delivered to the landfill disposal area which a tipping fee is charged but is diverted for other use (e.g., yard waste for biomass fuel or composting). [3] Amounts shown reflect accounts provided solid waste collection services from the Authorized Collectors. Line Project No. Number Project Name DISTRIBUTION 1 6028271 Erie Road Major Water Main 2 6035171 US 301 at Ellenton Gillette Road 3 6046270 Mulholland Road Utility Extension 4 6077970 63rd Street East Loop - Braden River Road 5 6088770 Country Club Heights - Water 6 PWO1220 Potable Water Line Extensions & Participation Agreements RENEWAL & REPLACEMENT 7 6002870 Anna Marta Island 8 60t9208 Distribution Building/Annex Rehab 9 6053370 Palma Sole, Subdivision Water Line Improvements l0 6067370 Canal Road Water Main Replacement 11 6074770 Suburban System - Water l2 6074770 Suburban System - Water 13 6074870 Pic Town Estates - Water Phase 1 l4 6074870 Pic Town Estates - Water Phase 1 15 6074870 Pic Town Estates - Water Phase 1 l6 6078070 69th Avenue Water Main Loop fiom 63rd Avenue West to US 41 17 6088870 Ciprianis Subdivision lst and 2nd l8 6088970 Flamingo Coy Water Main Replacement 19 6089000 Computerized Maintenance Management System Replacement 20 6089170 Willow Woods/Lakes Estates Water Main Upgrade 21 6091870 Palmetto Pointe Water Main Replacement 22 6092370 DeSoto Memorial Highway 23 PW01023 US 41 Manatee River Crossing Water Main Replacement 24 PWO1023 US 41 Manatee River Crossing Water Main Replacement 25 PW01105 Hazelhurst Subdivision - Water 26 PWO1106 Grove Haven Subdivision - Water 27 PWO1110 End of Service Life Distribution Line Replacement 28 PWO1209 Elwood I Booster Pump Station, Pump 1,6,7 Replacement 29 PW01212 64th Avenue, 65th Avenue Drive, Winter Garden Drive 30 PWOl2l4 Cortez Gardens 31 PW01216 Fogarty's Subdivision 32 PW01219 Tangelo Park 33 PW01219 Tangelo Park 34 PWO1348 Harbor Hills 35 PW01404 Paradise Bay/Cortez Rd. WLCmssing 36 PWO1403 45th Street Watemain 37 PW01577 Ilexhurst Water Main Improvement 38 PWO1578 Whitfield Country Club Heights SUPPLY 39 6021670 Lake Manatee Watershed Land Purchases 40 6021670 Lake Manatee Watershed Land Purchases 41 6021672 Downstream Floodway Land Acquisition 42 6021672 Downstream Floodway Land Acquisition 43 6026075 Lake Manatee Dam Repairs 44 6026075 Lake Manatee Dam Repairs TRANSPORTATION RELATED WATER PROJECTS 45 6025672 45th Street East - 44th Ave East SR70 46 6044170 Rowlett Sidewalk Phase VII- Potable Water 47 6044670 Tallevast Road 15th Street E Post Office Water Relocation 48 6045671 44th Ave E. - 19th Street Ct. E/30th Street E. 49 6053671 SR70/I-75 Interchange Water Main & Facility Relocations 50 6059570 WTR-12th Street E - 57th Ave E/6Iat Ave Ter 51 6071170 44th Ave E - 30th St E/45th St E Water 52 6082870 Erie Road - 69th Street BIDS 301 Water 53 6082970 53rd Ave W to 43rd St. / 75th St W 54 6084071 WTR-EllentonGillette®69St 55 6084570 Ellenton Gillette - US 301 Moccasin Wallow Water 56 6085470 US301/CR675/Moccasjn Wallow 57 6086970 44th Avenue E - 45th Street E/44th Avenue Plaza E 58 6086970 44th Avenue E - 45th Street E/44th Avenue Plaza E 59 6093070 SR 684 (Cortez Rd) - Gulf Drive to 123rd Street Bridge 60 6093170 SR 64 SR 789 to Perico Bay Blvd. 61 6094570 Polo Ron Subdivision Phases 1 & 2 62 PWO1579 15th Street E Tallevast Rd to US 41 63 PW01351 Potable Transportation Related SURTAX PROJECTS 64 NEW Surtax Placeholder TREATMENT / Plant Protect 65 6042370 SCADA Replacement 66 6050470 Lake Manatee Ultra Filtration Membrane Process 67 6050470 Lake Manatee Ultra Filtration Membrane Process 68 6050470 Lake Manatee Ultra Filtration Membrane Process 69 6085870 WTP - Biological Treatment Unit 70 6085870 WTP- Biological Treatment Unit 71 PW01405 WTP Alum Sludge Drying Bed 72 PWO1600 WTP Sedimentation Basins Sludge Collection Upgrade 73 Total Water System SEWER SYSTEM PROJECTS COLLECTIONS 74 6005680 Colony Cove 1 and 2 - Gravity Sewer Rehabilitation 75 6005680 Colony Cove ] and 2- Gravity Sewer Rehabilitation 76 6005683 Colony Cove 2 - Sanitary Sewer Replacement/Rehab 77 6005683 Colony Cove 2 - Sanitary Sewer Replacement/Rehab 78 6005684 Colony Cove 1 Phase III Gravity Sewer Replacement/Rehab 79 6005694 Colony Cove 1 Phase III Gravity Sewer Replaceemm/Rehab 80 6018082 Trailer Estates Restore & Rehab 81 6022488 Force Main 23A Replacement 82 6022489 Force Main 11 Replacement - 52nd Street 83 6023180 Force Main 27A Rehabilitation 84 6028386 Force Main 12A Rehabilitation 85 6029387 Force Main - 30A Replacement 86 6028389 Force Main-1/1 C/Imperial House Replacement 87 6035781 Force Main ID Rehabilitation Table 7 Manatee County Public Utilities System Protected Capital Improvement Pro -ram Ill Funding Source 2018 2019 2020 2021 2022 2023 Forecast Period Total Fund404 $ 3,741,606 $ - $ - $ - $ - $ - $ 3,741,606 F-d404 224,230 - - - - - 224,230 F-d404 1,537,234 - - - - - 1537234.47 Fuad404 70,531 - - - - - 70530.74 Fund404 993,146 - - - - - 993,146 F-d404 - - 100,000 100,000 100,000 100,000 400,000 Fund404 $ 1,872,159 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 3,122,159 Fund404 142,782 - - - - - 142,782 Fund404 349,542 200,000 - - - - 549,542 F-d404 237,991 - - - - - $ 237,991 Fund404 66,126 400,000 - - - - 466,126 413 2,392 - - - - - 2,392 Fund404 63,568 - - - - - 63,568 412 106,112 - - - - - 106,112 413 1,046,276 - - - - - 1,046,276 Fund404 1,214,486 1,500,000 - - - - 2,714,486 Fund404 280,473 328,000 - - - - 608,473 Fund404 3,150,738 - - - - - 3,150,738 Fun1404 3,000,000 - - - - - 3,000,000 Fund404 660,t75 - - - - - 660,175 Fund404 800,700 5,072,314 5,072,314 - - - 10,945,328 Fun1404 307,940 - - - - - $ 307,940 F-d404 - - 193,000 81,761 - - 274,761 2021 Bonds - - - 1,684,593 - - 1,684,593 Fun1404 - 1,439,815 - - - - 1,439,815 Fund404 - 221,L80 - - - - 221,L80 Fun1404 - - 355,963 1,496,022 3,324,355 7,000,000 12,176,340 F-d404 - 456,000 - - - - 456,000 Fund404 - - 179,600 1,367,350 - - 1,546,950 Fund404 - 4t4,380 - - - - 414,380 Fund404 - 129,100 910,800 - - - 1,039,900 Fund404 - - 280,300 - - - 280,300 2021 Bonds - - - 2,728,382 - - 2,728,382 2021 Bonds - - - 125,000 1,660,025 - 1,785,025 Fund404 - - 317,344 - - - 317,344 Fund404 - - - 62,800 633,600 - 696,400 Fund404 - - - 34,672 414,000 - 449,672 F-d404 - - - - 744,917 - 744,917 Fund404 $ 90,349 $ - $ - $ - $ - $ - 90,349 FIE 295,025 100,000 100,000 100,000 100,000 100,000 795,025 Fund404 291,649 - - - - - 291,649 FIE 300,000 100,000 100,000 100,000 100,000 100,000 800,000 Fund404 4,688,446 - - - - - 4,688,446 2018 Bonds 528,221 10,000,000 - - - - 10,528,221 FIF $ 898,480 $ - $ - $ - $ - $ - 898,480 Fund404 61,300 - - - - - 61,300 Fund404 29,547 - - - - - 29,547 413 120,068 - - - - - 120,068 Fund404 24,528 - - - - - 24,528 F-d404 90,000 - - - - - 90,000 FIF 437,345 - - - - - 437,345 F-d404 213,000 - - - - - 213,000 Fund404 78,523 - - - - - 79,523 Fund404 6,780 - - - - - 6,780 Fund404 381,953 - - - - - 381,953 F-d404 123,547 - - - - - 123,547 Fund404 269,800 6,500,000 - - - - 6,769,800 FIE - 6,500,000 - - - - 6,500,000 Fund404 60,000 200,000 250,000 - - - 510,000 Fund404 25,000 200,000 200,000 50,000 - - 475,000 FIF 107,131 - - - - - 107,131 F-d404 - 25,000 25,000 25,000 200,000 50,000 325,000 Fund404 - - - 263,000 500,000 500,000 1,263,000 Fund404 $ - $ 500,000 $ 500,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 4,000,000 Fu :1404 $ 2,737,500 $ - $ - $ - $ - $ - $ 2,737,500 Fund404 21,321,357 - - - - - 21,321,357 416 771,163 - - - - - 771,163 2018 Bonds 24,500,000 - - - - - 24,500,000 Fund404 6,936,511 - - - - - 6,936,511 Fund404 3,066,226 - - - - - 3,066,226 2021 Bonds - - - 868,000 - - 969,000 2021 Bonds - - - 579,600 3,374,800 - 3,954,400 $ 89,553,427 $ 37,674,966 $ 8,934,321 $ 11,016,180 $ 12,501,697 $ 9,200,000 168,880,591 Fund404 $ 305,658 $ - $ - $ - $ - $ - $ 305,658 413 77,870 - - - - - 77,870 Fund404 1,546,000 - - - - - 1,546,000 413 12,563 - - - - - 12,563 Fun1404 1,055,000 - - - - - 1,055,000 413 15,194 - - - - - 15,194 Fund404 64,725 - - - - - 64,725 Fund404 308,587 - - - - - 308,587 Fund404 1,426,976 - - - - - 1,426,976 Fmd404 1,972,155 620,000 - - - - 2,592,155 Fund404 5,169,854 - - - - - 5,169,854 F-d404 531,471 206,362 - - - - 737,833 Fund404 757,000 - - - - - 757,000 F-d404 66,986 - - - - - 66,986 mum Table 7 Manatee County Public Utilities System Protected Canital Improvement Proeram 11 Line No. Project Number Project Name Funding Source 2018 Fiscal Year Ending September 30, 2019 2020 2021 Forecast 2022 2023 Period Total 88 6035781 Force Main ID Rehabilitation 416 5,340,462 - - - - - 5,340,462 89 6041585 Force Main 5 Rehabilitation (Anna Maria Island) Fund404 1,249,601 - - - - - 1,248,601 90 6041585 Force Main 5 Rehabilitation (Anna Maria Island) 415 I,O17,740 - - - - - 1,017,740 91 6041585 Force Main 5 Rehabilitation (Anna Maria Island) 416 3,943,845 - - - - - 3,943,845 92 6041586 Force Main RTU#057 & #058 (Anna Maria #3) Fmid404 335,000 - - - - - 335,000 93 6041587 Force Main - 11 Replacement - 56th St & Holmes Rd F-d404 147,000 1,500,000 - - - - 1,647,000 94 6049181 Force Main 13A Rehabilitation F-d404 1,542,699 - - - - - 1,542,699 95 6049181 Force Main 13A Rehabilitation 416 5,761,710 - - - - - 5,761,710 96 6052181 Force Main 3 lA Replacement F-d404 666,998 - - - - - 666,998 97 6082990 Force Main 27A ftom 51 at Street West to the SW WRY Fund404 827,562 - - - - - 827,562 98 6082980 Force Main 27A fiom 51at Street West to the SW WRF HE 1,010,182 - - - - - I,OlO,182 99 6082980 Force Main 27A fiom 51at Street West to the SW WRY 416 327,702 - - - - - 327,702 100 6083780 Force Main 18M Rehabilitation Fund404 212,872 - - - - - 212,872 101 6085780 Force Main I Rehabilitation Fund404 2,172,574 - - - - - 2,172,574 102 6085780 Force Main I Rehabilitation 416 2,975,820 - - - - - 2,975,820 103 6089380 Force Main 28A RTU#130 Replacement Fund404 264,812 232,284 - - - - 497,096 104 6089480 Force Main 1 - Replacement ofAMI RTU#054, System t Fund404 570,005 - - - - - 570,005 105 6089580 Force Main 8 RTU#063 Replacement F-d404 220,328 - - - - - 220,328 106 6089680 System 15A AMI Replacement Fund404 275,320 - - - - - 275,320 107 6089780 Force Main Orlando Avenue Replacement Fund404 826,693 415,680 - - - - 1,242,373 108 6089880 Port Manatee Force Main Replacement RTU#567 #574 Fund404 231,050 - - - - - 231,050 109 6089980 Basin 16A Infiltration/Inflows Rehab Fund404 1,853,306 - - - - - 1,853,306 1l0 WWO1259 EndofService Life Collection Line Replacement F-d404 - 3,500,000 2,165,000 - - 3,500,000 9,165,000 III W W01360 Force Main - 33A & Lift Station 36A Force Main Replacements Fund404 - 157,500 977,500 - - - 1,135,000 1l2 WWOl4II Sewer Screening System for Detention Center Fmd404 - - 745,500 - - - 745,500 113 W W01589 MLS #5 Force Main Extension to MLS 1-M Fund404 - - 795,375 4,721,750 - - 5,517,125 Ito WWO1602 MLS-203(1-M)Infiltration &Inflow F-d404 - - L092,600 L100,000 L100,000 - 3,292,600 115 W W01603 Manatee Woods Inflow and Infiltration Improvements Fund404 - - 357,000 1,909,000 - - 2,266,000 1 l6 W WOl7l0 1-75 Parallel Force Main Fmd404 - 275,400 - - - - 275,400 117 WW01711 Harrison Ranch Force Main Fund404 - - - 181,125 1,124,125 - 1,305,250 It8 WWOl7l2 Lift Station 14-A Force Main Replacement and Eztension Fund404 - - 291,974 LU2,090 - - 2,104,064 119 W W01713 69th Avenue West Force Main Improvements Fund404 - - 565,200 - - - 565,200 120 WWOl7l4 69th Avenue Parallel Force Main Fund404 - 2,101,000 - - - - 2,101,000 121 WW01714 69th Avenue Parallel Force Main FIF - 2,101,000 - - - - 2,101,000 122 WWO1715 North Service Area Force Main Replacements Fund404 - - - 78,750 510,000 - 588,750 123 W W01716 Southwest Service Area D Force Main Replacements Fund404 - - - - - 136,500 136,500 124 WWOl7l7 Force Main 32A Replacement Fand404 - - - - 42,000 288,000 330,000 GROWTH RELATED - LIFT STATIONS / TREATMENT 125 6028388 Force Main 4IA Redirect to Tara 20 FIF $ 6,707,468 $ - $ - $ - $ - $ - $ 6,707,468 126 6066180 Mocassin Wallow Read -12" Force Main Extension Fund404 323,775 - - - - - 323,775 127 6069180 Parish Village Force Main and Master Lift Station FIF 8,002,398 - - - - - 8,002,398 128 6079881 Tara 20 Parallel Force Main - Lena Road FIE 1,483,465 - - - - - 1,483,465 129 6087680 Trevesta Subdivision Phase I - Sewer Line Installation FIF 43,367 - - - - - 43,367 130 6088380 SEWRF Storage Lakes & Pmnp Back Station Improvements Fund404 4,441,438 - - - - - 4,441,438 131 6088380 SEWRF Storage Lakes & Pump Back Station Improvements 2018 Bonds 3,806,000 - - - - - 3,906,000 132 6089280 Willow Hammock- Sewer Line Installation FIE 400,000 - - - - - 400,000 133 WW01257 Line Extension & Participation FIT - - 1,000,000 1,000,000 1,000,000 1,000,000 4,000,000 134 W WO1718 Mocassin Wallow Force Main Extension from Bud Rhoden Road to Artisan Lakes MLS FIF - 1,112,050 - - - - 1,112,050 135 W W01719 CR 675 Force Main FIF - - - - - 170,100 170,100 136 W WO 1720 Lift Station 6A and 7A Force Main Replacements FIE - - - - - 1,010,150 1,010,150 137 6094980 Willow Walk Force Main - Phase 2 FIT 380,000 - - - - - 380,000 LIFT STATIONS 138 6017982 MLS Tideview 4 Emergency Generator Replacement F-d404 $ 1,260,805 $ - $ - $ - $ - $ - $ 1,260,805 139 6022287 MLS Master S Wet Well Rehabilitation Fund404 80,199 - - - - - 80,199 140 6022383 MLS 12A Pumps & Variable Frequency Drive Replacement F-d404 74,571 - - - - - 74,571 141 6022384 MLS 27A Pumps and Variable Frequency Drive Replacement Fand404 50,000 - - - - - 50,000 142 6022384 MLS 39A Emergency Generator Replacement 416 403,238 - - - - - 403,238 143 6060785 MLS Lakewood Ranch Emergency Generator Replacement F-d404 706,228 - - - - - 706,228 144 6060786 MLS Lakewood Ranch Wet Well Rehabilitation Fund404 763,066 - - - - - 763,066 145 6060787 MLS Nl-B Pumps& Variable Frequency Drive Replacement & Wet Well Rehab Fund404 624,003 - - - - - 624,003 146 6060788 End of Service Life Lift Stations Replacement & Generators F-d404 499,295 - - - - - 499,295 147 6060789 1M Electrical Rehabilitation Fund404 501,434 - - - - - 501,434 148 W WO1226 12A Motor Control Center Rehabilitation Fund404 - - 810,500 - - - 810,500 149 WW01232 13A Electrical Rehabilitation F-d404 - 630,750 - - - - 630,750 150 WWO1233 13A Wet Well Rehabilitation F-d404 - 543,000 - - - - 543,000 151 W W01237 27A Motor Control Center Rehabilitation Fund404 - 987,000 - - - - 987,000 152 W WO1238 39A Motor Control Center Rehabilitation Fund404 - 1,065,000 - - - - 1,065,000 153 W W01241 MLS 1-D Electrical Rehabilitation 2021 Bonds - - - 2,080,000 - - 2,080,000 154 W WO1258 MLS 5 Electrical Improvements Fund404 - 500,000 500,000 500,000 500,000 500,000 2,500,000 155 WW01364 Nl-B Motor Control Center Rehabilitation Fund404 - - 423,000 - - - 423,000 156 WWO1365 Tidevue Electrical Rehabilitation Fund404 - - 687,000 - - - 687,000 157 W W01366 Artisan Lakes Master Flow Meter and Wet Well Rehabilitation Fund404 - - 433,000 - - - 433,000 158 WWO1367 Bayshore Yacht Basin(RTU 101) Relocation and Force Main Replacement Fand404 - - 1,117,000 - - - 1,117,000 159 W W01368 Pope Road Master Flow Meter and Wet Well Rehabilitation Fund404 - 687,000 - - - - 687,000 160 WWO1369 Southeast Master Flow Meter and Wet Well Rehabilitation Fund404 - 600,000 - - - - 600,000 161 W W01412 Lift Station 9D (RTU 226) Rehabilitation Fund404 - - - 423,000 - - 423,000 162 W WO1413 Lift Station and Force Main 9A Improvements Fund404 - - - 423,000 - - 423,000 163 W W01414 Missionary Village Lift Station Improvements Fund404 - - - 687,000 - - 687,000 164 WW01415 13A Master - Force Main Rehab F-d404 - - - 493,500 - - 493,500 165 WW01594 13A Master - Force Main Rehab 2021 Bonds - - - - 1,156,750 - 1,156,750 166 WWO1595 31A- Force Main Replacement 2021 Bonds - - - 3,830,000 - - 3,830,000 167 WW01604 Force Main IA Whitfield Subdivision 2021 Bonds - - - - 1,361,750 - 1,361,750 168 WWO1606 Force Main IA Whitfield Subdivision 2021 Bonds - - - - 1,218,500 - 1,218,500 169 W W01701 Force Main IA Whitfield Subdivision Fund404 - - - - - 1,595,000 1,595,000 170 WWO1702 Master Lift Station lM 2021 Bonds - - - 357,000 2,112,000 - 2,469,000 171 WW01703 MLS Tidevue4 2021 Bonds - - - 231,000 2,013,000 - 2,244,000 TRANSPORTATION RELATED 172 6025682 45th Street East - 44th Ave East SR70 Sewer FIE $ 667,427 $ - $ - $ - $ - $ - $ 667,427 173 6044180 Rowlett Sidewalk Phase VII - Sewer Fund404 48,000 - - - - - 48,000 174 6053681 SR70/I75 Utility Relocate WW Fund404 62,607 - - - - - 62,607 175 6059580 SWR-12th Street E - 57th Ave E/6Iat Ave Ter Fund404 15,000 - - - - - 15,000 176 6082880 Erie Road- 69th Street E/US 301 Sewer Fund404 326,000 - - - - - 326,000 177 6082990 53rd Ave West - 43rd St W. / 75th St. W Fund404 124,814 - - - - - 124,814 178 6084081 SWR-Ellcnt.Gillette@69St Fund404 72,134 - - - - - 72,134 179 6086180 Rye Road Force Main FIF 154,081 - - - - - 154,081 180 6086980 44th Ave E - 45th St - 44th Ave Plaza E - Sewer F-d404 - 1,050,000 - - - - 1,050,000 181 6086980 44th Ave E-45th St-44th Ave Plaza E - Sewer FIF - 1,050,000 - - - - 1,050,000 182 6086990 44th Ave E - 45th St - 44th Ave Plaza E - Reclaimed Fund404 - 150,000 - - - - 150,000 183 6086990 44th Ave E - 45th St - 44th Ave Plaza E - Reclaimed FIF - 150,000 - - - - 150,000 184 6093080 SR684, Gulf Drive to 123rd Street W Bridge F-d404 60,000 200,000 50,000 - - - 310,000 185 WW01372 Transportation Related - Wastewater Fund404 - - - 396,000 1,000,000 1,000,000 2,396,000 186 WWO1608 15th Street E Tallevest Road to US 41 Fund404 - 25,000 25,000 25,000 200,000 150,000 425,000 Table 7 Manatee Couory Public Utilities System Protected Cantle] Improvement Pro -ram Ill Line Project Funding No. Number Project Name Source 2018 2019 SURTAXPROJECTS 187 NEW Surtax Placeholder Fund404 MARS PROJECTS 188 6082091 MARS RCW Management Improvements Fund404 189 6082190 MARS Chlorination System Fund404 190 6085590 MARS Erie Road Tie In FIF 191 WW01373 MARS Reclaim Participation FIT 192 W WOl4l0 Cortez Road DIW Booster Station 2021 Bonds TREATMENT 193 6016681 Southwest Water Reclamation Facility Automatic Backwash Filter Rehabilitation Fund404 194 6016681 Southwest Water Reclamation Facility Automatic Backwash Filter Rehabilitation 416 195 6050581 North Water Reclamation Facility Sludge Holding Improvements Fmd404 196 6069081 Southwest Water Reclamation Facility Class V Recharge Well & Aquifer Storage Reco, Fmd404 197 6069081 Southwest Water Reclamation Facility Class V Recharge Well & Aquifer Storage Reco, 416 198 6079080 Southwest Water Reclamation Facility Process Modifications for Nitrogen Removal Fm4404 199 6079080 Southwest Water Reclamation Facility Process Modifications for Nitrogen Removal 414 200 6079080 Southwest Water Reclamation Facility Process Modifications for Nitrogen Removal 416 201 6079480 NW WTP Deep Injection Well Fund404 202 6079480 NWWTP Deep Injection Well FIF 203 6079480 NWWTP Deep Injection Well 414 204 6079480 NWWTP Deep Injection Well 416 205 6083380 Southeast Water Reclamation Facility Headworks Rehabilitation Fmd404 206 6083381 Southwest Water Reclamation Facility New Headworks 416 207 6083381 Southwest Water Reclamation Facility New Headworks 2018 Bonds 208 6083480 Southeast Water Reclamation Facility Septage Receiving Station Fmd404 209 6083480 Southeast Water Reclamation Facility Septage Receiving Station 416 2l0 6087780 SEWRF Refurbishment of Automatic Backwash Filters t & 2 Fund404 211 6088490 North Water Reclamation Facility Equalization Tank Fund404 2l2 6088490 North Water Reclamation Facility Equalization Tank 416 213 6088490 North Water Reclamation Facility Equalization Tank 2018 Bonds 2l4 6088680 SEWRF& Landfill Network Connection Fund404 215 6091380 North Water Reclamation Facility Headworks Second Grit Removal System Fund404 2l6 6091480 North Water Reclamation Facility Secondary Clarifier 1 & 2 Refurbishment Fm4404 217 6091580 North Water Reclamation Facility South Chlorine Contact Chamber Refurbishment Fund404 2l8 6091680 SW WRF Belt Filter Press Electrical Rehab & Monitoring/Replace Belt Filter Press Fee 2018 Bonds 219 6091780 SW WRF DIW Booster Station & Chlorine Contact Chamber 416 220 6091780 SW WRF DIW Booster Station & Chlorine Contact Chamber 2018 Bonds 221 6092080 SEWRF Dedicated Plant Drain Station 2018 Bonds 222 6092180 Southeast Water Reclamation Facility Rerun Activated Sludge & Waste Activated Slud Fmd404 223 6092180 Southeast Water Reclamation Facility Return Activated Sludge & Waste Activated Stud 2018 Bonds 224 WWII 1244 North Water Reclamation Facility 4th Belt Filter Press & BFP Automation Fm4404 225 W W01244 North Water Reclamation Facility 4th Belt Filter Press & BFP Automation FIT 226 WWO1254 Southwest Water Reclamation Facility Equalization System Rehabilitation 2018 Bonds 227 W W01256 Southwest Water Reclamation Facility Bleach Tank Roofover 2018 Bonds 228 WWO1370 Southwest Water Reclamation Facility- Electrical Distribution System Rehab/Enhancer Fmd404 229 W W01416 SEWRF Replacement of Slide Gates and Sluice Gates Fund404 230 W WO1417 SEWRF Anoxic Basin Mixer Replacement F-d404 231 WW01418 SEWRF Refurbishment of Automatic Backwash Filters Fand404 232 WWII 1420 SEWRF Are Flash Mitigation Fund404 233 W W01421 NWRF Reclaimed Water Storage Lake Improvements Fund404 234 WWII 1422 NWRF 10 MG Reclaimed Water Storage Tank & HSPS Fund404 235 W W01423 SWART Second Cloth Filter Fund404 236 WWO1621 NWRF Maintenance Building Addition F-d404 237 W W01622 SEWRF Administration Building Rehab Fund404 238 WWII 1623 SEWRF Belt Filter Press Rehab F-d404 239 WW01624 SEWRF Clarifier Rehabilitation Fund,104 240 W WO1625 SEWRF Equalization Tank / Splinter Box Rehab Fund404 241 W W01626 SEWRF Second 10 MG Reclaimed Water GST and MCMRS Chlorination System Fund404 242 WWII 1627 SWWRF St-ater System Rehabilitation F-d404 243 WW01704 SWWRF- Oil Storage Building Fund404 244 WWII 1705 SW WRF Check Valves for Low and High Service Pump Station Fund404 245 W W01706 SWART Rehab Storage Pond Stations and Create Lake Filter Pump Station and Back- Fund404 246 WWII 1707 Southest Water Reclamation Facility - New Headworks Fmd404 247 W W01708 Southest Water Reclamation Facility- Third Sludge Holding Tank Fund404 248 W WO1708 Southest Water Reclamation Facility- Third Sludge Holding Tank FIF 249 W W01709 Dryer Building Improvements Fund404 250 Total Sewer System rl Year Ending September 30, Forecast 2020 2021 2022 2023 Period Total $ - 3; 500,000 3; 500,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 4,000,000 $ 1,804,423 $ - $ - $ - $ - $ - $ 1,804,423 145,996 - - - - - 145,996 2,387,000 - - - - - 2,387,000 - - 100,000 100,000 100,000 100,000 400,000 - 378,000 3,141,600 - 3,519,600 $ 687,629 $ - $ - $ - $ - $ - $ 687,629 229,161 - - - - - 229,161 507,917 - - - - - 507,917 896,185 - - - - - 896,185 816,820 - - - - - 816,820 703,553 - - - - - 703,553 61,916 - - - - - 61,916 784,312 - - - - - 784,312 5,017,618 - - - - - 5,017,618 6,729,519 - - - - - 6,729,519 42,039 - - - - - 42,039 6,815,705 - - - - - 6,815,705 289,083 - - - - - 289,083 1,226,935 - - - - - 1,226,935 9,570,000 - - - - - 9,570,000 430,689 - - - - - 430,689 115,907 - - - - - 115,907 1,269,754 - - - - - 1,269,754 6,666,055 - - - - - 6,666,055 116,589 - - - - - 116,589 844,399 - - - - - 844,399 240,483 - - - - - 240,483 168,000 1,794,000 - - - - 1,962,000 241,500 1,840,000 - - - - 2,081,500 199,500 1,805,500 - - - - 2,005,000 509,000 3,300,000 - - - - 3,809,000 913,500 - - - - - 913,500 - 6,380,000 - - - - 6,380,000 275,000 1,775,600 - - - - 2,050,600 670 - - - - - 670 374,330 2,728,000 - - - - 3,102,330 - 217,875 1,507,000 - - - 1,724,875 - 217,875 1,507,000 - - - 1,724,875 - 535,500 8,690,000 - - - 9,225,500 - 1,183,950 - - - - 1,183,950 - - 588,000 4,945,600 - - 5,533,600 - - - - 220,500 2,415,000 2,635,500 - - - 735,000 7,480,000 - 8,215,000 - - - - 441,000 5,467,000 5,908,000 - 475,000 - - - - 475,000 - - - 672,000 6,820,000 - 7,492,000 - - - - - 1,281,000 1,281,000 - - 640,500 4,510,000 - - 5,150,500 - - - - 68,250 448,500 516,750 - - - - 31,500 205,000 236,500 - - - - 682,500 4,752,000 5,434,500 - - - - 155,400 1,587,000 1,742,400 - - - 199,500 1,540,000 - 1,739,500 - - - - - 383,250 383,250 - - - 189,000 408,000 - 597,000 - - - - 100,800 720,000 820,800 - - - - - 55,120 55,120 - - - - - 546,000 546,000 - - - - - 2,037,000 2,037,000 - - - - - 341,250 341,250 - - - - - 341,250 341,250 - - - - - 73,500 73,500 $ 128,244,321 $ 42,612,326 $25,568,149 $32,977,315 $35,527,675 $31,102,620 296,032,406 251 6008205 Lena Road Landfill Gas Collection Expansion, Stage 3, Phase 3 Fmd485 $ 2,160,000 $ - $ - $ - $ - $ - $ 2,160,000 252 SW01399 Lena Road Stage II Gas Expansion - Phase I Fund485 - 302,500 1,672,000 - - - 1,974,500 253 6008900 Landfill Operations Storage Building Fund485 708,000 - - - - - 708,000 254 Total Solid Waste System $ 2,868,000 $ 302,500 $ 1,672,000 $ - $ - $ - $ 4,842,500 255 6044400 CR675 Canal Piping Fund465 256 6044500 Pipe Canal W83 (Baywest Canal Fund465 257 6086460 Tallevest Road - Tuttle Avenue / Prospect Avenue Fmd465 258 Future Stormwater Rehabilitation and Improvements Fund465 259 6039600 Tangelo Park Storm Drain Fund465 260 6093700 Stormwater Pipe Replacement - Countywide Fmd465 261 6093600 Pipe Lining - Neighborhood Specific Fund465 262 6005719 Coquina Beach Drainage Improvements Fund465 263 6007506 GT Bray Drainage Pipe Fund465 264 6028801 Wares Creek Right of Way (ROW) Acquisition Fmd465 265 ST19006 34th St W at 53rd Ave W Storm Pipe Repair Fmd465 266 ST19008 6920 26th St W Storm Pipe Outfall Replacement Fmd465 267 ST19004 Gateway East Outfall Replacements Fand465 268 ST19002 Harvard Ave Seawall Repair at Bayshore Drain/Cedar Hammock Fund465 269 ST19011 Hawthorne Park Sediment Basin Installation Fund465 270 ST19009 Mockingbird Hill/Samoset Canal Improvements at 27th St W/34th Ave Fmd465 271 ST19001 Polynesian Village Discharge to Pittsburg Drain Fmd465 272 ST19007 Ponce De Leon Ave Fmd465 273 ST19010 Reconstruct Stormwater Outfall to Braden River Fmd465 274 ST19005 Sunniland Stormwater Outfall Replacement Fmd465 275 ST19003 Tuttle Ave. Fmd465 276 Total Stormwater System $ 1,181,353 $ - $ - $ - $ - $ - $ 1,181,353 1,096,504 - - - - - 1,096,504 - 35,000 1,800,000 - - - 1,835,000 - - - 1,800,000 1,800,000 1,800,000 5,400,000 403,238 - - - - - 403,238 410,000 - - - - - 410,000 300,000 - - - - - 300,000 1,814,811 - - - - - 1,814,811 900,000 - - - - - 900,000 932,952 - - - - - 932,952 - 286,000 - - - - 286,000 - 299,000 - - - - 299,000 - 390,000 - - - - 390,000 - 520,000 - - - - 520,000 - 390,000 - - - - 390,000 - - 650,000 - - - 650,000 - 975,000 - - - - 975,000 - 357,500 - - - - 357,500 - 446,000 - - - - 446,000 - 390,000 - - - - 390,000 - 650,000 - - - - 650,000 $ 7,038,856 $ 4,738,500 $ 2,450,000 $ 1,800,000 $ 1,800,000 $ 1,900,000 $ 19,627,356 Table 7 Manatee County Public Utilities System Projected Capital Imnrovement Proeram Il Line Project Funding Fiscal Year Ending September 30, Forecast No. Number Project Name Source 2018 2019 2020 2021 2022 2023 Period Total 277 TOTAL CAPITAL IMPROVEMENT PROGRAM $ 227,704,604 $ 85,328,292 $ 38,624,470 $ 45,793,495 $ 49,829,372 $ 42,102,620 $ 489,382,853 Capital Outlay From Operations 131 278 Water System Rates 170,080 126,994 130,803 134,728 138,769 142,932 844,306 279 Wastewater System Rates 803,726 252,956 290,545 268,361 276,412 284,705 2,176,706 280 Solid Waste System Fund485 2,820,487 1,456,883 2,100,000 2,100,000 2,100,000 2,100,000 12,677,370 281 Stormwater System Fund465 454,200 - - - - - 454,200 282 Total Capital Outlay From Operations $ 4,248,493 $ 1,836,833 $ 2,521,349 $ 2,503,089 $ 2,515,182 $ 2,527,637 $ 16,152,582 283 TOTAL CAPITAL EXPENDITURES $ 231,953,097 $ 87,165,125 $ 41,145,819 $ 48,296,584 $ 52,344,554 $ 44,630,257 $ 505,535,435 Combined System Capital Funding Summary: 284 Operating Revenue Rates $ 973,806 $ 379,950 $ 421,349 $ 403,089 $ 415,182 $ 427,637 $ 3,021,012 285 Operating Reserve Fund 401 (Water and Sewer) Fund401 - - - - - - - 286 Capital Improvement Fund 404(Water and Sewer) Fund404 113,842,871 42,953,317 22,905,470 29,731,920 30,590,947 37,381,120 277,405,645 287 Capital Improvement Fond 485(Solid Waste) Fund485 5,688,487 1,759,383 3,772,000 2,100,000 2,100,000 2,100,000 17,519,870 288 Capital Improvement Fund 465(Stormwater) Fund465 7,493,056 4,738,500 2,450,000 1,800,000 1,800,000 1,800,000 20,081,556 289 Operating Reserves Fund 480 (Solid Waste) Fund480 - - - - - - - 290 Water Facility Investment Fees WFIF 2,537,981 6,800,000 300,000 300,000 300,000 300,000 10,537,981 291 Wastewater Facility I.—truent Fees SFIF 27,964,907 4,630,925 2,607,000 1,100,000 1,100,000 2,621,500 40,024,332 292 Existing Bond Proceeds Fund 411/412 Exist Debt 33,045,040 - - - - - 33,045,040 293 Series 2018 Bonds 2018 Bonds 40,406,950 25,903,050 8,690,000 - - - 75,000,000 294 Series 2021 Bonds 2021 Bonds - - - 12,861,575 16,038,425 - 28,900,000 295 Total System Funding $ 231,953,098 $ 87,165,125 $ 41,145,819 $ 48,296,584 $ 52,344,554 $ 44,630,257 $ 505,535,436 Footnotes: [1] Amounts shown for the capital improvement projects were provided by the County and reflect adjustments to the adopted Capital Improvement Program (CIP). [2] Amounts shown f the Fiscal Year 2018 reflect increases for prior period carry forward projects as provided by the County as of September 30, 2017. [3] Represents expenditures funded annually from operations (Net Revenues) for departmental equipment requirements. Although not a component of the CIP, such amounts represent annual capital expenditures funded from rate revenues or existing cash res Pagel of3 Line No. Operating Revenue: Charges for Services: [2] 1 Water System 2 Wastewater System [3] 3 Solid Waste System 4 Stormwater System [4] 5 Total Charges for Services 6 Miscellaneous Revenues [5] 7 Total Operating Revenues 8 Operating Grants and Contributions [6] 9 Interest Income [7] 10 Total Gross Revenues [8] Operating Expenses: [9] Water and Wastewater System: 11 Personnel Services 12 General and Administrative 13 Water Treatment and Distribution 14 Wastewater Collection and Treatment Solid Waste System: 15 Personnel Services 16 Landfill Operation 17 Closure 18 Garbage Collection Stormwater System: 19 Personnel Services 20 General and Administrative 21 GASB 68 Adjustment 22 Total Operating Expenses Table 8 Manatee County Public Utilities System Summary of Historical System Operating Results and Debt Service Coverage Historical Fiscal Year Ended September 30, m 2013 2014 2015 2016 2017 23 Net Revenues 24 Net Revenue Ratio (Line No. 23 divided by Line No. 10) 25 Plus Federal Direct Payment [10] 26 Net Revenues Adjusted for Federal Direct Payment Outstanding (Senior Lien) Bonds: [111 27 Annual Debt Service Requirement Annual Debt Service Requirement Coverage: [ 12] 28 Calculated 29 Required Subordinate Obligations: [13] 30 Subordinate Obligations Loan Repayment Annual Debt Service Requirement Coverage: [ 14] 31 Net Revenues 32 Less: Annual Debt Service Requirement 33 Adjusted Net Revenues 34 Calculated 35 Required 36 Net Available for Other Required Transfers [15] Other Required Transfers [ 16]: 37 Transfer to Debt Service Reserve Fund [ 17] 38 Transfer to Revenue Refunding and Improvement Bonds, Series 2013 [18] 39 Net Revenue Available for Capital Improvement Fund Transfer [19] 40 Total System Facility Investment Fees [20] 41 Total Available for System Purposes [21] $ 42,625,000 $ 43,407,000 $ 45,467,000 $ 49,275,000 $ 53,557,000 60,342,000 61,909,000 65,440,678 70,912,308 75,218,432 37,688,000 38,136,000 39,483,000 42,183,000 43,587,000 126,000 53,000 24,322 61,692 74,568 140,781,000 143,505,000 150,415,000 162,432,000 172,437,000 359,000 1,350,000 1,880,000 3,619,000 1,991,000 141,140,000 144,855,000 152,295,000 166,051,000 174,428,000 69,000 85,000 124,000 108,000 480,000 634,000 746,000 1,307,000 2,104,000 2,398,000 $ 141,843,000 $ 145,686,000 $ 153,726,000 $ 168,263,000 $ 177,306,000 22,475,000 22,965,000 23,437,000 24,916,000 26,767,000 15,701,000 22,368,000 24,385,000 27,232,000 24,294,000 9,166,000 9,474,000 9,859,000 10,188,000 9,767,000 13,876,000 15,266,000 15,468,000 15,450,000 16,805,000 2,879,000 2,864,000 2,941,000 3,073,000 3,425,000 4,790,000 5,185,000 5,918,000 5,691,000 6,213,000 1,155,000 1,242,000 824,000 1,695,000 (1,701,000) 20,802,000 21,654,000 21,785,000 23,020,000 23,802,000 2,366,000 2,496,000 2,450,000 2,705,000 3,086,000 2,146,000 2,212,000 2,450,000 2,712,000 2,674,000 0 (819,000) 0 0 0 95,356,000 104,907,000 109,517,000 116,682,000 115,132,000 46,487,000 40,779,000 44,209,000 51,581,000 62,174,000 32.77% 27.99% 28.76% 30.65% 35.07% 1,970,000 1,752,000 1,750,000 1,759,000 1,757,000 48,457,000 42,531,000 45,959,000 53,340,000 63,931,000 20, 855,028 14,445,284 15,752,076 17,519, 686 17,343,066 2.32 2.94 2.92 3.04 3.69 1.15 1.15 1.15 1.15 1.15 707,355 707,355 - - - 48,457,000 42,531,000 N/A N/A N/A 20,855,028 14,445,284 N/A N/A N/A 27,601,972 28,085,716 N/A N/A N/A 39.02 39.71 N/A N/A N/A 1.15 1.15 N/A N/A N/A 26,894,617 27,378,361 30,206,924 35,820,314 46,587,934 0 0 0 0 0 77,294 77,370 357,564 341,832 341,952 26,817,323 27,300,991 29,849,360 35,478,482 46,245,982 12,614,743 11,970,936 13,951,254 16,814,507 16,477,124 $ 39,432,066 $ 39,271,927 $ 43,800,614 $ 52,292,989 $ 62,723,106 Footnotes start on Page 2 of 3. Table 8 Page 2 of 3 Manatee County Public Utilities System Summary of Historical System Operating Results and Debt Service Coverage Footnotes: [1 ] Amounts shown for the Fiscal Years 2013 through 2017 are derived from information contained in the Annual Financial Report for the Public Utilities System for each respective fiscal year and other financial information provided by the County. Numbers are rounded to the nearest thousand. [2] In addition to rate revenue, Charges for Services includes other system revenues such as Heavy Equipment Enterprise Charge, reimbursement for In -House Project Labor provided to other County Departments and other similar charges. [3] Revenues from Reclaimed Water sales are included in this line item as reclaimed service has been considered by the County historically as a part of the Wastewater System. [4] The County does not have a formal stormwater utility which includes the application of rates; the County's Comprehensive Annual Financial Report does recognize certain miscellaneous revenues which are classified as Charges for Services (primarily billings to other County Departments for services provided). [5] Amounts include rental income, maps and publication sales, refunds of prior year expenditures, and other miscellaneous operating revenues. [6] Amounts shown reflect the receipts of grants that are considered as an operating grant and serve to fund the Operating Expenses; amounts shown to have a proper match of Gross Revenues and Operating Expenses for the determination of Net Revenues available to fund the Annual Debt Service Requirement. [7] Amounts shown reflect investment earnings from funds and accounts established by the County that are considered by the Feasibility Consultant to be unrestricted (earnings not required to be retained in such funds and accounts and are available as a component of Gross Revenues). Earnings from Construction Fund established from previously issued Bond proceeds, are considered as being restricted to such accounts and not reflected as a component of the Gross Revenue of the System for this financial presentation. 2013 2014 2015 2016 2017 Income Reported Per Annual Financial Report $ 732,000 $ 796,000 $ 1,553,000 $ 2,577,000 $ 2,816,000 Less Construction Account Income (98,000) (50,000) (246,000) (473,000) (418,000) Net Investment Income Recognized $ 634,000 $ 746,000 $ 1,307,000 $ 2,104,000 $ 2,398,000 [8] During the Historical Period, the County did not make any deposits to or withdrawals from the Rate Stabilization Fund as provided for in the Bond Resolution and the County reports that during such period, there were no funds on deposit in such fund available to fund increases in Operating Expenses. Accordingly, the Gross Revenues do not include the recognition of any deposits / transfers to the Rate Stabilization Fund. [9] Amounts shown do not include depreciation or amortization expenses which are not considered as an Operating Expense of the System pursuant to the Bond Resolution. [10] Amounts shown for the Fiscal Year 2013 include approximately $165,000 of the eligible federal direct payments received in that year and attributable to payments due for the Fiscal Year 2012. [11] Annual Debt Service Requirement presented on an "accrual basis" which recognizes when deposits from System Net Revenues to the Sinking Fund must be made as opposed to when the actual payment of the principal and interest payments may occur. The determination of the Annual Debt Service Requirement is summarized below: 2013 2014 2015 2016 2017 Principal and Interest Payments Series 1991C Bonds Series 1993A Bonds Series 2003 Bonds Series 2006 Bonds Series2010A Bonds Series2010B Bonds Series2010C Bonds Series2010D Bonds Series 2011 Bonds Series 2015 Bonds Total Principal and Interest Payments Footnotes continue on Page 3 of 3. 3,635,000 4,330,000 5,778,795 - - - 4,208,800 4,211,600 3,770,825 3,330,788 - 1,149,634 1,149, 634 1,149, 634 1,149, 634 1,149, 634 3,300,024 3,300,024 3,300,024 3,300,024 3,300,024 295,475 295,475 295,475 295,475 1,605,475 343,501 2,588,501 2,587,306 2,586,965 1,276,333 1,015,050 2,900,050 2,903,500 2,905,150 2,899,950 - - 1,745,312 3,951,650 7,111,650 $ 24,056,279 $ 14,445,284 $ 15,752,076 $ 17,519,686 $ 17,343,066 Table 8 Page 3 of 3 Footnotes Manatee County Public Utilities System Summary of Historical System Operating Results and Debt Service Coverage Capitalized Interest Federally Taxable - Direct Payment - Public Utilities Revenue Improvement Build America Bonds, Series 2010A - Capitalized Interest Federally Taxable - Direct Payment - Public Utilities Revenue Improvement Recovery Zone Economic Development Bonds, Series 2010B - Capitalized Interest Public Utilities Revenue Improvement Bonds, Series 2010C - Capitalized Interest Taxable Public Utilities Revenue Improvement Bonds, Series 2010D - Capitalized Interest Total Capitalized Interest $ (747,262) $ $ $ $ (1,815,013) (295,475) (343,501) $ (3,201,252) $ $ $ $ Total Annual Debt Service Requirement $ 20,855,028 $ 14,445,284 $ 15,752,076 $ 17,519,686 $ 17,343,066 [12] The Bond Resolution contains a Rate Covenant that requires that the County will maintain and collect Revenues that will always provide for "...Net Revenues shall be adequate to pay at least 115% of Annual Debt Service Requirement plus all payments required by Bond Resolution." Furthermore and as defined in the Bond Resolution, the Annual Debt Service Requirement does not include any interest funded from Bond Proceeds, if any, that have been deposited into the Sinking Fund. [13] Subordinate Obligations include a low -interest State Revolving Fund (SRF) Loan as administered by the Florida Department of Environmental Protection; during the Historical Period, only one SRF Loan was outstanding; the County reports that no other indebtedness subordinate to the Outstanding Bonds (the "Subordinate Obligations") were outstanding during the Historical Period. [14] The Loan Agreement between the County and the FDEP requires that the County will maintain and collect Revenues that will always provide "...Pledged Revenues equal to or exceeding 1.15 times the sum of the Annual Loan Payment." [15] Amounts shown calculated as Net Revenues less the Annual Debt Service Requirement on Outstanding Bonds and the Monthly Loan Deposits on the Subordinate Obligations. [16] Reflects other required transfers which are recognized in the Rate Covenant requirements of the Bond Resolution, payments which are subordinate to the payment of the Annual Debt Service Requirement. [17] The Debt Service Reserve Account on the Outstanding Bonds was secured either by a Reserve Account Credit Facility Substitute or cash payment from proceeds of the Outstanding Bonds equal to the Reserve Requirement during the Historical Period; therefore no deposits to the Debt Service Reserve Account was recognized. [18] Represents allocated debt service payments on the $79,640,000 in Revenue Refunding and Improvement Bonds, Series 2013 (the "County 2013 Bonds") which are secured from County non -ad valorem revenues of the General Fund which a portion was attributable to funding certain Solid Waste System projects (from the proceeds of the original issue which was recently refunded). Since the County budgets and allocates a portion of the debt service on the County 2013 Bonds to the Solid Waste System, such amounts were considered as a required transfer for the purposes of presentation of the Historical System operating results and rate covenant compliance with the provisions of the Bond Resolution. [19] Pursuant to Bond Resolution, all available revenue after payment of Operating Expenses, the Annual Debt Service Requirement, and required transfers shall be deposited into the Capital Improvement Fund for the benefit of the System; generally this account is used by the County to fund ongoing capital expenditures not funded by System debt. Such amounts are also available to establish reserves for closure costs of the County's Landfill. [20] The annual Facility Investment Fees recognized during the Historical Period are shown exclusive of investment income. Fair market value adjustments were excluded from debt service coverage as calculated by the County beginning in the Fiscal Year 2016. Investment income on Facility Investment Fees are reflected within Interest Income (reference line no. 7). The following provides a summary of the recognized and associated income related to Facility Investment Fees. Wastewater System Facility Investment Fees shown for the Fiscal Year 2017 include $86,152 on contributed capital as reported by the County. 2013 2014 2015 2016 2017 Water System Facility Investment Fees Received $ 5,921,144 $ 5,619,528 $ 6,453,657 $ 6,969,727 $ 6,628,396 Wastewater System Facility Investment Fees Received 6,693,599 6,351,408 7,497,597 9,844,780 9,848,728 Total Facility Investment Fees Recognized $ 12,614,743 $ 11,970,936 $ 13,951,254 $ 16,814,507 $ 16,477,124 Investment Income on FIF Funds $ 36,736 $ 62,362 $ 147,867 $ 256,267 $ 472,357 Total Facility Investment Fee Related Income $ 12,651,479 $ 12,033,298 $ 14,099,121 $ 17,070,774 $ 16,949,481 [21 ] It should be noted that the amounts shown as "Available for Other System Purposes" are prior to annual transfers in the annual amount of $2,945,142 made by the water and wastewater utility fund to the general fund for watershed management protection (e.g., conservation land acquisition). Pagel of2 Table 9 Manatee County Public Utilities System Summary of Proiected Svstem ODerating Results and Debt Service Coverage Line No. Description 2018 2019 Fiscal Year Ending September 30, [1 ] 2020 2021 2022 2023 Operating Revenue: Charges for Services: [2] 1 Water System $ 57,630,932 $ 59,142,867 $ 59,883,982 $ 61,512,665 $ 63,205,054 $ 64,908,426 2 Wastewater System [3] 76,877,394 80,328,219 82,161,673 84,957,548 87,727,046 90,481,597 3 Solid Waste System 43,907,777 45,091,008 45,557,421 46,165,317 46,778,858 47,402,142 4 Stormwater System [4] 50,000 50,000 50,000 50,000 50,000 50,000 5 Total Charges for Services 178,466,103 184,612,094 187,653,076 192,685,530 197,760,958 202,842,165 6 Miscellaneous Revenues [51 1,279,346 1,282,980 1,284,215 1,285,477 1,286,769 1,288,089 7 Total Operating Revenues 179,745,449 185,895,074 188,937,291 193,971,007 199,047,727 204,130,254 8 Operating Grants [6] 9,041,805 0 0 0 0 0 9 Interest Income [7] 1,853,200 1,356,800 1,474,700 1,737,600 2,012,900 2,265,700 10 Total Cross Revenues [81 190,640,454 187,251,874 190,411,991 195,708,607 201,060,627 206,395,954 Operating Expenses: 191 Water and Wastewater System: I Personnel Services 28,415,625 29,890,250 31,271,780 32,708,123 34,007,001 35,349,387 12 General and Administrative 30,239,796 28,074,579 28,502,246 29,051,499 29,610,736 30,177,732 13 Water Treatment and Distribution 11,997,251 10,714,175 10,973,878 11,248,892 11,530,801 11,819,779 14 Wastewater Collection and Treatment 22,337,728 20,788,131 21,298,712 21,835,761 22,386,373 22,950,892 15 Budget to Actual Variance Adjustment [10] (1,653,838) (1,486,517) (1,542,726) (1,587,460) (1,629,557) (1,673,861) Solid Waste System: 16 Personnel Services 3,356,117 3,469,570 3,601,148 3,737,894 3,879,900 4,027,816 17 Landfill Operation 17,647,137 6,613,489 6,774,465 6,943,435 7,116,679 7,295,249 18 Closure 1,160,984 1,413,198 1,461,919 1,516,515 1,571,044 1,627,414 19 Garbage Collection 23,506,920 24,597,039 25,305,875 26,058,455 26,833,492 26,879,187 Stormwater System: 20 Personnel Services 3,300,748 3,238,078 3,362,601 3,491,954 3,626,327 3,765,915 21 General and Administrative 3,228,430 2,990,830 3,065,557 3,143,915 3,224,283 3,306,714 22 Total Operating Expenses 143,536,898 130,302,822 134,075,455 138,148,983 142,157,079 145,526,224 23 Net Revenues 47,103,556 56,949,052 56,336,536 57,559,624 58,903,548 60,869,730 24 Net Revenue Ratio (line 23 divided by line 10) 24.71% 30.41% 29.59% 29.41 % 29.30% 29.49% 25 Plus Federal Direct Payment [11] 1,759,041 1,759,041 1,759,041 0 0 0 26 Net Revenues Adjusted for Federal Direct Payment 48,862,597 58,708,093 58,095,577 57,559,624 58,903,548 60,869,730 Outstanding (Senior Lien) Bonds: [121 27 Annual Debt Service Requirement 17,429,509 20,284,508 20,280,808 18,662,300 17,038,300 17,465,150 Annual Debt Service Requirement Coverage: [131 28 Calculated 2.80 2.89 2.86 3.08 3.46 3.49 29 Required 1.15 1.15 1.15 1.15 1.15 1.15 30 Net Available for Other Required Transfers [14] 31,433,088 38,423,585 37,814,769 38,897,324 41,865,248 43,404,580 Other Required Transfers [151: 31 Transfer to Debt Service Reserve Fund [16] 0 0 0 0 0 0 32 Transfer to Revenue Refunding Bond and Improvement Bonds, Series 2013 [171 342,077 342,079 342,302 0 0 0 33 Net Revenue Available for Capital Improvement Fund Transfer [18] 31,091,011 38,081,506 37,472,467 38,897,324 41,865,248 43,404,580 34 Facility Investment Fees[19] 14,711,000 10,000,000 10,902,321 10,326,125 9,761,270 9,185,075 35 Total Available for System Purposes [20] $ 45,802,011 $ 48,081,506 $ 48,374,788 $ 49,223,449 $ 51,626,518 $ 52,589,655 Footnotes on Page 2 of 2. Table 9 Page 2 of2 Manatee County Public Utilities System Summary of Projected System Operating Results and Debt Service Coverage Footnotes: [1 ] Amounts shown reflect projected financial operating results and are based upon assumptions as identified within the Report and should be read in its entirety. [21 In addition to rate revenue, Charges for Services includes other system revenues such as Heavy Equipment Enterprise Charge, reimbursement for In -House Project Labor provided to other County Departments and other similar charges. [3] Revenues from Reclaimed Water sales are included in this line item as reclaimed service has been considered by the County historically as a part ofthe Wastewater System. [41 County does not have a formal stotmwater utility which includes the application of rates; the County's Comprehensive Annual Financial Report does recognize certain miscellaneous revenues which are classified as Charges for Services (primarily billings to other County Departments for services provided). Such mar ants are estimated at $50,000 per year, which is consistent with historical trends. [5] Amounts include rental income, maps and publication sales, refunds of prior year expenditures, and other miscellaneous operating revenues. [61 Amounts shown reflect assumed operating grant reimbursement from the Federal Emergency Management Agency related to clean-up and disposal expenditures related to Hurricane Irma. [7] Amounts shown reflect total investment earnings on all funds with exception to earnings on the Construction Fund which are restricted pursuant to the Bond Resolution. As shown in Table 13, for purposes of this study no interest earnings on the Construction Fund is assumed and therefore no restricted interest income is projected during the Forecast Period. [81 No deposits or transfers to or from the Rate Stabilization Fund was assumed for the Forecast Period. [9] Amounts shown do not include depreciation or amortization expenses, which are not considered as an Operating Expense of the System pursuant to the Bond Resolution. [101 A downward adjustment equivalent to 3% of water and wastewater operating expenses was assumed based on a historical review of the variance of the greater budgeted than actual expenses realized. [11 ] The County issued the Series 2017 Bonds to advance cross -over refinance all the Series 2010 Bonds maturing after October 1, 2020. As a result, no Federal Direct Subsidy payments are assumed beyond the Fiscal Year 2020. [121 Annual Debt Service Requirement presented on an "accrual basis" which recognizes when deposits from System Net Revenues to the Sinking Fund most be made as opposed to when the actual payment ofthe principal and interest payments may occur. The determination of the Annual Debt Service Requirement is summarized below: Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 Series 2010A Bonds [*] 1,149,634 1,149,634 4,029,634 - - - Series 2010B Bonds [*] 3,300,024 3,300,024 3,300,024 - - - Series 2010C Bonds 2,883,075 2,884,200 - - - - Series 2011 Bonds 2,901,750 2,903,500 2,899,750 2,905,500 2,905,000 2,903,250 Series 2015 Bonds 7,105,250 7,109,050 7,113,300 7,108,800 3,155,550 3,155,550 Series 2017 Bonds [*] - - - 5,256,400 5,249,150 5,240,650 Series 2018 Bonds 89,775 2,938,100 2,938,100 2,938,100 4,368,100 4,370,200 Series 2021 Bonds - - - 453,500 1,360,500 1,795,500 Total Annual Debt Service Requirement $ 17,429,509 $ 20,284,508 $ 20,280,808 S 18,662,300 S 17,038,300 $ 17,465,150 [*] The County issued the Series 2017 Bonds to advance cross -over refund all the Series 2010 Bonds maturing after October I, 2020 (the "Cross -Over Date"). The proceeds ofthe 2017 Bonds were primarily used w purchase U.S. Treasury securities, which were placed in escrow to economically defense a portion of the Series 2010 Bonds and make certain interest payments associated with the Series 2017 Bonds. Therefore, an debt service payments were reflected as a finding requirement ofthe Net Revenues for: i) the Series 2010 Bonds after the Fiscal Year 2020; and ii) the Series 2017 Bonds prior to the Fiscal Year 2021. [13] The Bond Resolution contains a Rate Covenant that requires that the County will maintain and collect Gross Revenues that will always provide for the following: 'Net Revenues shall be adequate to pay at least 115% of Annual Debt Service Requirement plus all payments required by Bond Resolution." Furthermore and as defined in the Bond Resolution, the Annual Debt Service Requirement does not include any interest funded from Bond Proceeds, if any, that have been deposited into the Sinking Fund. [14] Amounts shown are calculated as the Net Revenues less the Annual Debt Service Requirement on Outstanding Bonds, Series 2010 Bonds, and Future Bonds. [151 Reflects other required transfers which are recognized in the rate covenant requirements of the Bond Resolution or specifically recognized by the Feasibility Consultant, payments which are subordinate to the payment ofthe Annual Debt Service Requirement. [16] Pursuant to the 2010 Springing Amendment associated with the issuance ofthe Series 2010 Bonds, the County shall not be required to establish a Debt Service Reserve Account for any other future Series of Bonds. [171 Amounts represent the solid waste systems allocation of the annual debt service payment for the Series 2013 Revenue Refunding and bmprovement Bonds. The County considers such payments from the solid waste system to be required transfers pursuant to the covenants ofthe Bond Resolution and are paid from Non -Ad Valorem Revenues ofthe County. [18] Pursuant to Bond Resolution, all available revenue after payment of Operating Expenses, any deposits to the Rate Stabilization Fund used to satisfy the Annual Debt Service Requirement, and required transfers shall be deposited into the Capital Improvement Fund for the benefit of the System; generally this account is used by the County to fund ongoing capital expenditures not funded by System debt. [191 The annual FacilityInvestment Fees recognized during the Projected Period determined as follows: Fiscal Year Ended September 30, 2018 2019 2020 2021 2022 2023 Water System Facility Investment Fees Received (a) $ 6,100,000 $ 3,942,365 $ 4,678,422 $ 4,447,401 $ 4,227,721 $ 3,996,701 Wastewater System Facility Investment Fees Received 8,611,000 6,057,635 6,223,899 5,878,724 5,533,549 5,188,375 Total Facility Investment Fees Recognized $ 14,711,000 $ 10,000,000 $ 10,902,321 $ 10,326,125 $ 9,761,270 $ 9,185,075 Investment Income on FIF Funds 436,200 338,900 362,300 450,800 553,800 649,500 Total Facility Investment Fee Related Income $ 15,147,200 $ 10,338,900 $ 11,264,621 $ 10,776,925 $ 10,315,070 $ 9,834,575 [20] Amounts shown reflect amounts available for other system purposes. It should be noted that the forecast assumes continuation of annual transfers to the general fund in the amount of $2,945,142 for watershed protection management or other public works projects. Page 1 of 1 Table 10 Manatee County Public Utilities System Summary of Projected Water and Wastewater System Operating Expenses Ill Line No. Description 2018 2019 Fiscal Year Ending September 30, 2020 2021 2022 2023 Operating Expenses 1 Personnel $ 27,815,625 $ 28,928,250 $ 30,085,380 $ 31,288,795 $ 32,540,347 $ 33,841,961 2 Professional Services 3,544,146 1,927,660 1,975,852 2,025,248 2,075,879 2,127,776 3 Contractual Services 9,972,279 7,956,688 8,155,605 8,359,495 8,568,483 8,782,695 4 General Operating 10,577,204 10,595,475 10,849,766 11,121,011 11,399,036 11,684,012 5 Utilities 6,093,545 6,249,015 6,398,991 6,558,966 6,722,940 6,891,014 6 Operating Supplies 10,181,910 10,380,352 10,629,480 10,895,217 11,167,598 11,446,788 7 Insurance 1,516,065 1,510,034 1,555,335 1,601,995 1,650,055 1,699,557 8 Capital Outlay 973,806 379,950 421,349 403,089 415,182 427,637 9 Additional Personnel - 362,000 572,000 789,568 821,151 845,785 10 Indirect 3,241,537 3,241,537 3,338,783 3,438,947 3,542,115 3,648,378 11 Pilot 3,290,167 3,290,167 3,290,167 3,290,167 3,290,167 3,290,167 12 Other Post Employment Benefits 600,000 600,000 614,400 629,760 645,504 661,642 13 Transfers 7,978,247 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 14 Budget To Actual Variance Adjustment (2,578,686) (2,446,384) (2,520,453) (2,596,004) (2,669,188) (2,744,558) 15 Bad Debt Expense 924,848 959,867 977,727 1,008,544 1,039,631 1,070,697 16 Aid To Private Organiacationis 171,668 125,000 128,000 131,200 134,480 137,842 17 Piloff 8,008,007 8,300,957 8,452,857 8,713,905 8,977,157 9,240,174 18 Total $ 92,310,368 $ 88,360,568 $ 90,925,238 $ 93,659,904 $ 96,320,535 $ 99,051,566 Footnotes: [1] The projected Operation and Maintenance Expenses for the Water and Wastewater System have been summarized as follows for presentation purposes in Table 9. Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 Personnel Services $ 28,415,625 $ 29,890,250 $ 31,271,780 $ 32,708,123 $ 34,007,001 $ 35,349,387 General and Administrative 30,239,796 28,074,579 28,502,246 29,051,499 29,610,736 30,177,732 Water Treatment and Distribution 11,997,251 10,714,175 10,973,878 11,248,892 11,530,801 11,819,779 Wastewater Collection and Treatment 22,337,728 20,788,131 21,298,712 21,835,761 22,386,373 22,950,892 Contingency (2,578,686) (2,446,384) (2,520,453) (2,596,004) (2,669,188) (2,744,558) Bad Debt Expense 924,848 959,867 977,727 1,008,544 1,039,631 1,070,697 Total $ 91,336,562 $ 87,980,618 $ 90,503,890 $ 93,256,815 $ 95,905,354 $ 98,623,929 Page 1 of 1 Table 11 Manatee County Public Utilities System Line No. Summary Description of Proiected Solid Waste System Operatin2 Expenses [11 Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 Operating Expenses 1 Personnel $ 3,417,292 $ 3,554,534 $ 3,689,756 $ 3,830,248 $ 3,976,152 $ 4,127,678 2 Professional Services 782,186 506,484 519,146 532,125 545,428 559,064 3 Franchise Hauler Contractual Services 23,142,994 24,034,064 24,733,573 25,476,093 26,240,914 26,254,435 4 Other Contractual Services 1,336,883 1,108,200 1,135,905 1,164,303 1,193,410 1,223,245 5 General Operating 5,409,228 5,800,259 5,957,573 6,126,483 6,298,243 6,474,838 6 Utilities 321,000 321,000 328,704 336,922 345,345 353,978 7 Operating Supplies 12,026,445 1,585,285 1,623,332 1,663,915 1,705,513 1,748,151 8 Insurance 67,616 67,330 69,350 71,430 73,573 75,781 9 Contingency (1,052,025) (1,109,315) (1,141,720) (1,176,046) (1,211,357) (1,224,515) 10 Bad Debt 219,539 225,455 227,787 230,827 233,894 237,011 11 Total $ 45,671,158 $ 36,093,297 $ 37,143,406 $ 38,256,300 $ 39,401,115 $ 39,829,665 Footnotes: [1] The projected Operating Expenses for the Solid Waste System have been summarized as follows for presentation purposes in Table 9. Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 Personal Services $ 3,356,117 $ 3,469,570 $ 3,601,148 $ 3,737,894 $ 3,879,900 $ 4,027,816 Landfill Operation 17,647,137 6,613,489 6,774,465 6,943,435 7,116,679 7,295,249 Closure 1,160,984 1,413,198 1,461,919 1,516,515 1,571,044 1,627,414 Garbage Collection 23,506,920 24,597,039 25,305,875 26,058,455 26,833,492 26,879,187 Total $ 45,671,158 $ 36,093,297 $ 37,143,406 $ 38,256,300 $ 39,401,115 $ 39,829,665 Page 1 of 1 Table 12 Manatee County Public Utilities System Summary of Proiected Stormwater System Operating Expenses [11 Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Operating Expenses 1 Personnel $ 3,300,748 $ 3,238,078 $ 3,362,601 $ 3,491,954 $ 3,626,327 $ 3,765,915 2 Professional Services 136,916 62,734 64,302 65,910 67,558 69,247 3 Contractual Services 988,575 880,000 902,000 924,550 947,664 971,355 4 General Operating 1,559,770 1,617,801 1,658,259 1,701,114 1,745,082 1,790,193 5 Utilities 33,596 35,696 36,553 37,467 38,403 39,363 6 Operating Supplies 447,086 332,376 340,353 348,862 357,583 366,523 7 Insurance 62,487 62,223 64,090 66,012 67,993 70,033 8 Transfers 9 Contingency 10 Total $ 6,529,178 $ 6,228,908 $ 6,428,157 $ 6,635,868 $ 6,850,610 $ 7,072,629 Footnotes: [ 1 ] The projected Operating Expenses for the Stormwater System have been summarized as follows for presentation purposes in Table 9. Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 Personal Services $ 3,300,748 $ 3,238,078 $ 3,362,601 $ 3,491,954 $ 3,626,327 $ 3,765,915 General and Administrative 3,228,430 2,990,830 3,065,557 3,143,915 3,224,283 3,306,714 Total S 6,529,178 S 6,228,908 S 6,428,157 S 6,635,868 S 6,850,610 S 7,072,629 Page 1 of 4 Line No. Description ENDING FUND CASH BALANCE SUMMARY 1 Fund 401 & 402 - Water & Wastewater Revenue Fund 2 Fund 401 - Water & Wastewater Customer Deposits 3 Fund 403 - Sinking Fund - Existing and Proposed Debt [2] 4 Fund 403 - Debt Service Reserve Requirement [4] 5 Fund 404 - Water & Wastewater Capital Improvement 6 Fund 405 - Water Facility Investment Fee 7 Fund 406 - Wastewater Facility Investment Fee 8 Fund 411-415 - Bond Proceeds 9 Fund 460 - Storrowater Management 10 Fund 465 - Stormwater Capital Improvement 11 Fund 480 - Solid Waste Revenue Fund 12 Fund 480 - Solid Waste Customer Deposits 13 Fund 480 - Solid Waste Closure Fund 14 Fund 483 - Sinking Fund - Existing and Proposed Debt [2] 15 Fund 485 - Solid Waste Capital Improvement 16 Rate Stabilization Fund 17 Total Projected Year End Balance PROJECTED LIQUIDITY CALCULATION 18 Total Projected Year End Balances Less Restricted Fund Ending Balances: 19 Fund 401 - Water & Wastewater Customer Deposits 20 Fund 405 - Water Facility Investment Fee 21 Fund 406 - Wastewater Facility Investment Fee 22 Fund 411-415 - Bond Proceeds 23 Fond 480 - Solid Waste Customer Deposits 24 Fond 480 - Solid Waste Closure Fund 25 Total Projected Year End Balance for Liquidity 26 Projected Operating Expenses 27 Projected Ending Cash as Days of Operating Expenses Fond 401 & 402 - Water & Wastewater Revenue Fund 28 Beginning Balance 29 Transfers In - Water & Wastewater Operations 30 Transfers In - Debt Service Reserve (Retired Debt) 31 Total Funds Available 32 Transfers Out - Water & Wastewater Capital Improvements 33 Transfers Out - Fund 404 Capital Improvement Fund 34 Transfers Out - Construction Account 35 Transfers Out - Use of Cash Balances to Fund Operations 36 Total Transfers Out of Funds 37 End of Year Transfer In/(Out) from Operations 38 Interest Rate 39 Interest Income on Fund 40 Use of Interest Income to Fund Revenue Requirements 41 Ending Balance Fund 401 - Water & Wastewater Customer Deposits 42 Beginning Balance 43 Transfers In - New Accounts 44 Total Funds Available 45 Transfers Out - Closed Accounts 46 Total Transfers Out of Funds 47 Interest Rate 48 Interest Income on Fund 49 Use of Interest Income to Fund Revenue Requirements 50 Ending Balance Table 13 Manatee County Public Utilities System Summary of Projected Endine Cash Balances and Interest Income Ill 2018 2019 2020 2021 2022 2023 $ 59,755,769 $ 33,912,118 $ 34,810,518 $ 36,363,183 $ 37,233,935 $ 38,127,714 6,530,452 6,530,452 6,530,452 6,530,452 6,530,452 6,530,452 N/A N/A N/A N/A N/A N/A 1,130,317 1,130,317 1,061,486 413,892 413,892 413,892 1,308,702 19,385,385 30,689,277 36,261,280 43,715,551 45,864,778 26,683,694 23,238,114 26,992,554 30,650,492 34,195,318 37,509,294 7,671,591 6,948,210 8,691,764 12,064,794 15,377,892 16,824,830 35,727,139 9,824,089 1,134,089 17,172,514 1,134,089 1,134,089 1,574,498 1,596,498 1,597,898 1,610,898 1,625,598 1,627,198 810,632 72,132 22,132 22,132 22,132 22,132 16,206,307 14,339,527 12,697,847 11,341,817 11,341,817 9,448,032 1,704,221 1,704,221 1,704,221 1,704,221 1,704,221 1,704,221 35,922,561 36,138,061 36,391,061 36,682,161 37,012,261 37,377,395 N/A N/A N/A N/A N/A N/A 4,122,396 3,819,896 2,147,896 2,147,896 2,147,896 2,147,896 $ 199,148,279 $ 158,629,019 $ 164,471,195 $ 192,965,731 $ 192,455,052 $ 198,731,923 $ 199,148,279 $ 158,629,019 $ 164,471,195 $ 192,965,731 $ 192,455,052 $ 198,731,923 6,530,452 6,530,452 6,530,452 6,530,452 6,530,452 6,530,452 26,683,694 23,238,114 26,992,554 30,650,492 34,195,318 37,509,294 7,671,591 6,948,210 8,691,764 12,064,794 15,377,892 16,824,830 35,727,139 9,824,089 1,134,089 17,172,514 1,134,089 1,134,089 1,704,221 1,704,221 1,704,221 1,704,221 1,704,221 1,704,221 35,922,561 36,138,061 36,391,061 36,682,161 37,012,261 37,377,395 $ 84,908,621 $ 74,245,873 $ 83,027,054 $ 88,161,097 $ 96,500,821 $ 97,651,642 $ 143,536,898 $ 130,302,822 $ 134,075,455 $ 138,148,983 $ 142,157,079 $ 145,526,224 216 208 226 233 248 245 $ 70,265,353 $ 59,755,769 $ 33,912,118 $ 34,810,518 $ 36,363,183 $ 37,233,935 - - 829,569 905,071 870,753 893,778 83,888 - 68,831 647,594 - - 70,349,241 59,755,769 34,810,518 36,363,183 37,233,935 38,127,714 10,593,472 25,843,651 10,593,472 25,843,651 - 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 650,100 491,800 378,000 409,200 441,600 471,000 650,100 491,800 378,000 409,200 441,600 471,000 59,755,769 33,912,118 34,810,518 36,363,183 37,233,935 38,127,714 $ 6,530,452 $ 6,530,452 $ 6,530,452 6,530,452 6,530,452 $ 6,530,452 $ 6,530,452 $ 6,530,452 6,530,452 6,530,452 6,530,452 6,530,452 0.00% 0100% 0.00% 0.00% 0.00% 0.00% $ 6,530,452 $ 6,530,452 $ 6,530,452 $ 6,530,452 $ 6,530,452 $ 6,530,452 Fund 403 - Sinking Fund - Existing and Proposed Debt [2] 51 Sinking Fund Deposit $ 16,877,735 $ 19,732,204 $ 19,727,911 $ 18,110,031 $ 17,038,300 $ 17,465,150 52 Average Balance (25 % of Annual Debt Service) 4,219,434 4,933,051 4,931,978 4,527,508 4,259,575 4,366,288 53 Interest Rate 1.00% 1.05 % 1.10 % 1.15 % 1.20% 1.25% 54 Interest Income on Fund 42,200 51,800 54,300 52,100 51,100 54,600 55 Use oflnterest Income to Fund Revenue Requirements 42,200 51,800 54,300 52,100 51,100 54,600 Footnotes on Page 4 of 4 Page 2 of 4 Table 13 Manatee County Public Utilities System Summary of Projected Endine Cash Balances and Interest Income Ill Line Fiscal Year Ending September 30 No. Description 2018 2019 2020 2021 2022 2023 Fund 403 - Debt Service Reserve Requirement [4] 56 Beginning Balance $ 1,214,205 $ 1,130,317 $ 1,130,317 $ 1,061,486 $ 413,892 $ 413,892 57 Transfers In - New Bonds - - - - - - 58 Total Funds Available 1,214,205 1,130,317 1,130,317 1,061,486 413,892 413,892 59 Transfers Out- Fund 401 Debt Defeasance 83,888 - 68,831 647,594 - - 60 Total Transfers Out of Funds 83,888 - 68,831 647,594 - - 61 Interest Rate 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 62 Interest Income on Fund 11,700 11,900 12,100 8,500 5,000 5,200 63 Use of Interest Income to Fund Revenue Requirements 11,700 11,900 12,100 8,500 5,000 5,200 64 Ending Balance $ 1,130,317 $ 1,130,317 S 1,061,486 $ 413,892 $ 413,892 $ 413,892 Fund 404 - Water & Wastewater Capital Improvement 65 Beginning Balance $ 75,121,573 $ 1,309,702 $ 19,395,385 $ 30,699,277 $ 36,261,280 $ 43,715,551 66 Transfers In- Water and Wastewater Operations 29,406,528 35,156,349 34,179,362 35,273,923 38,015,218 39,500,348 67 Transfers In - Fund 401 - - - - - - 68 Transfers In - Proceeds from Sale of Materials 30,000 30,000 30,000 30,000 30,000 30,000 69 Transfer In - Fond 402 10,593,472 25,843,651 - - - - 70 Total Funds Available 115,151,573 62,338,702 53,594,747 65,993,200 74,306,498 83,245,898 71 Transfers Out - Capital Expenditures 113,842,871 42,953,317 22,905,470 29,731,920 30,590,947 37,381,120 72 Total Transfers Out of Funds 113,842,871 42,953,317 22,905,470 29,731,920 30,590,947 37,381,120 73 Interest Rate 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 74 Interest Income on Fund 382,200 108,600 275,400 385,000 479,900 559,900 75 Use oflnterest Income to Fund Revenue Requirements 382,200 108,600 275,400 385,000 479,900 559,900 76 Ending Balance S 1,308,702 $ 19,385,385 S 30,689,277 S 36,261,280 $ 43,715,551 $ 45,864,778 Fund 405 - Water Facility Investment Fee 77 Beginning Balance $ 23,709,347 $ 26,683,694 $ 23,238,114 $ 26,992,554 $ 30,650,492 $ 34,195,318 78 Transfers In - New Connections 6,100,000 3,942,365 4,679,422 4,447,401 4,227,721 3,996,701 79 Total Funds Available 29,809,347 30,626,060 27,916,536 31,439,955 34,979,213 38,192,018 80 TransfersOut- Payment of Debt Service-Percent[3] 10% 15% 13% 11% 9% 10% 81 Transfers Out - Payment of Debt Service - Amount [3] 587,672 597,945 623,982 499,463 392,896 382,724 82 Transfers Out- CIP 2,537,981 6,900,000 300,000 300,000 300,000 300,000 83 Total Transfers Out of Funds 3,125,653 7,387,945 923,982 789,463 682,896 682,724 84 Interest Rate 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 85 Interest Income on Fund 252,000 262,100 276,300 331,400 399,100 448,200 86 Use oflnterest Income to Fund Revenue Requirements 252,000 262,100 276,300 331,400 389,100 448,200 87 Ending Balance $ 26,683,694 $ 23,238,114 $ 26,992,554 $ 30,650,492 $ 34,195,318 $ 37,509,294 Fond 406 - Wastewater Facility Investment Fee 88 Beginning Balance $ 29,174,682 $ 7,671,591 $ 6,948,210 $ 8,691,764 $ 12,064,794 $ 15,377,892 89 Transfers In - New Connections 8,611,000 6,057,635 6,223,899 5,878,724 5,533,549 5,188,375 90 Total Funds Available 37,785,682 13,729,225 13,172,109 14,570,489 17,598,343 20,566,266 91 Tmnsfers Out - Payment of Debt Service - Percent 25% 35% 30% 24% 20% 22% 92 Transfers Out- Payment of Debt Service-Amount[3] 2,149,184 2,150,091 1,873,344 1,405,695 1,120,452 1,119,936 93 Transfers Out -CIP 27,964,907 4,630,925 2,607,000 1,100,000 1,100,000 2,621,500 94 Total Transfers Out of Funds 30,114,091 6,781,016 4,480,344 2,505,695 2,220,452 3,741,436 95 Interest Rate 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 96 Interest Income on Fund 184,200 76,800 86,000 119,400 164,700 201,300 97 Use oflnterest Income to Fund Revenue Requirements 184,200 76,800 86,000 119,400 I64,700 201,300 98 Ending Balance $ 7,671,591 $ 6,948,210 S 8,691,764 $ 12,064,794 $ 15,377,892 $ 16,824,830 Page 3 of 4 Table 13 Manatee County Public Utilities System Summary of Projected Endive Cash Balances and Interest Income Ill Line Fiscal Year Ending September 30 No. Description 2018 2019 2020 2021 2022 2023 Fund 411415 - Bond Proceeds 99 Beginning Balance $ 34,179,129 $ 35,727,139 $ 9,824,089 $ 1,134,089 $ 17,172,514 $ 1,134,089 100 Transfer In Fund 401 - - - - - - 101 Transfer In - New Debt Proceeds 75,000,000 - - 28,900,000 - - 102 Total Funds Available 109,179,129 35,727,139 9,824,089 30,034,089 17,172,514 1,134,089 103 Transfer Out- CIP Debt Funded Projects 73,451,990 25,903,050 8,690,000 12,861,575 16,038,425 - 104 Total Transfers Out of Funds 73,451,990 25,903,050 8,690,000 12,861,575 16,038,425 - 105 Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 106 Interest Income on Fond - - - - - - 107 Use of Interest Income to Fond Revenue Requirements - - - - - - 108 Ending Balance $ 35,727,139 $ 9,824,089 $ 1,134,089 $ 17,172,514 $ 1,134,089 $ 1,134,089 Fund 460 - Stormwater Management 109 Beginning Balance $ 1,546,498 $ 1,574,498 $ 1,596,498 $ 1,597,898 $ 1,610,898 $ 1,610,898 110 Transfers In - Operations - - - - - - III Total Funds Available 1,546,498 1,574,498 1,586,498 1,597,898 1,610,898 1,610,898 112 Trusters Gut - Operations - - - - - - 113 Transfers Out - Fund 465 - - - - - - 114 Transfers Out - CIP - - - - - - 115 Total Transfers Out of Funds - - - - - - 116 Interest Rate 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 117 Interest Income on Fond 7,700 9,400 11,100 12,800 14,500 16,100 118 Use of Interest Income to Fond Revenue Requirements 7,700 9,400 11,100 12,800 14,500 16,100 119 End ofYear Surplus / (Deficiency) 28,000 12,000 11,400 13,000 14,700 16,300 120 Ending Balance $ 1,574,498 $ 1,586,498 S 1,597,898 $ 1,610,898 $ 1,625,598 S 1,627,198 Fund 465 - Stormwater Capital Improvement 121 Beginning Balance $ 7,303,689 $ 810,632 $ 72,132 $ 22,132 $ 22,132 $ 22,132 122 Transfers In- Operations 1,000,000 4,000,000 2,400,000 1,800,000 1,800,000 1,800,000 123 Transfers In - Fund 460 - - - - - - 124 Total Funds Available 8,303,689 4,810,633 2,472,133 1,822,133 1,822,133 1,822,133 125 Transfers Out - CIP 7,493,056 4,738,500 2,450,000 1,800,000 1,800,000 1,800,000 126 Total Transfers Out of Funds 7,493,056 4,738,500 2,450,000 1,800,000 1,800,000 1,800,000 127 Interest Rate 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 128 Interest Income on Fond 20,300 2,600 300 200 200 200 129 Use of Interest Income to Fond Revenue Requirements 20,300 2,600 300 200 200 200 130 Ending Balance $ 810,632 $ 72,132 $ 22,132 $ 22,132 $ 22,132 $ 22,132 Fund 480 - Solid Waste Revenue Fund 131 Beginning Balance $ 18,711,376 $ 16,206,307 $ 14,339,527 $ 12,697,847 $ 11,341,817 $ 11,341,817 132 Transfers In - Operations - - - - - - 133 Transfers In - Landfill Closure Reserve Fund (Excess Deposits) - - - - - - 134 Transfer In - General Fond - - - - - - 135 Surplus Revenues - - - - - - 136 Total Funds Available 18,711,376 16,206,307 14,339,527 12,697,847 11,341,817 11,341,817 137 Transfers Out - Operations - - - - - - 138 Transfers Out - Capital Expenditures - - - - - - 139 Transfers Out- Operating Deficiency 2,505,069 1,966,781 1,641,679 1,356,031 - 1,893,784 140 Transfers Out - Closure Reserve Fond (Additional Deposits) - - - - - - 141 Transfers Out - Fund 485 Capital Improvement Fond - - - - - - 142 Total Transfers Out of Funds 2,505,069 1,866,781 1,641,679 1,356,031 - 1,893,784 143 Interest Rate 0.50% 0.60% 0.70% 0.80% 0.90% 1.001/6 144 Interest Income on Fond 87,300 91,600 94,600 96,200 102,100 103,900 145 Use of Interest Income to Fond Revenue Requirements 87,300 91,600 94,600 96,200 102,100 103,900 146 Ending Balance $ 16,206,307 $ 14,339,527 S 12,697,847 $ 11,341,817 $ 11,341,817 S 9,448,032 Footnotes on Page 4 of 4. Page 4 of 4 Table 13 Manatee County Public Utilities System Summary of Projected Endine Cash Balances and Interest Income Ill Line Fiscal Year Ending September 30 No. Description 2018 2019 2020 2021 2022 2023 Fund 480 - Solid Waste Customer Deposits 147 Beginning Balance $ 1,704,221 $ 1,704,221 $ 1,704,221 $ 1,704,221 $ 1,704,221 $ 1,704,221 148 Transfers In - - - - - - 149 Total Funds Available 1,704,221 1,704,221 1,704,221 1,704,221 1,704,221 1,704,221 150 Transfers Out - - - - - - 151 Total Transfers Out of Funds - - - - - - 152 Interest Rate 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 153 Interest Income on Fund 8,500 10,200 11,900 13,600 15,300 17,000 154 Use of Interest Income to Fund Revenue Requirements 8,500 10,200 11,900 13,600 15,300 17,000 155 Ending Balance $ 1,704,221 $ 1,704,221 S 1,704,221 $ 1,704,221 $ 1,704,221 S 1,704,221 Fund 480 - Solid Waste Closure Fund 156 Beginning Balance $ 35,743,861 $ 35,922,561 $ 36,138,061 $ 36,391,061 $ 36,682,161 $ 36,682,161 157 Transfers In - Operations - - - - - 328,435 158 Transfers In - Fund 480 - - - - - - 159 Total Funds Available 35,743,861 35,922,561 36,139,061 36,391,061 36,692,161 37,010,595 160 Transfers Out - Closure Expenditures from Reserve - - - - - - 161 Transfers Out - Operating Reserves - - - - - - 162 Total Transfers Out of Funds - - - - - - 163 Interest Rate 0.50% 0.60% 070% 0.80% 090% 1.00% 164 Interest Income on Fund 178,700 215,500 253,000 291,100 330,100 366,800 165 Use of Interest Income to Fund Revenue Requirements - - - - - - 166 Ending Balance $ 35,922,561 $ 36,138,061 S 36,391,061 $ 36,682,161 $ 37,012,261 S 37,377,395 Fund 483 - Sinking Fund - Existing and Proposed Debt [2] 167 Sinking Fond Deposit $ 435,581 $ 436,000 $ 436,469 $ 435,972 $ - $ - 168 Average Balance (25% of Annual Debt Service) 108,895 109,000 109,117 108,993 0 0 169 Interest Rate 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 170 Interest Income on Fund 500 700 800 900 0 0 171 Use of Interest Income to Fund Revenue Requirements 500 700 800 900 0 0 Fund 485 - Solid Waste Capital Improvement 172 Beginning Balance $ 6,990,396 $ 4,122,396 $ 3,819,896 $ 2,147,896 $ 2,147,896 $ 2,147,896 173 Transfers In - Operations - - - - - - 174 Transfers In - Fund 480 Reserves - - - - - - 175 Total Funds Available 6,990,396 4,122,396 3,819,896 2,147,896 2,147,896 2,147,896 176 Transfers Out- Capital Expenditures 2,868,000 302,500 1,672,000 - - - 177 Transfers Out - 2004 Transportation Bonds - - - - - - 178 Total Transfers Out of Funds 2,868,000 302,500 1,672,000 - - - 179 Interest Rate 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 180 Interest lnceme on Fund 27,800 23,800 20,900 17,200 19,300 21,500 181 Use of Interest Income to Fund Revenue Requirements 27,800 23,800 20,900 17,200 19,300 21,500 182 Ending Balance S 4,122,396 S 3,819,896 S 2,147,896 S 2,147,896 $ 2,147,896 S 2,147,896 Rate Stabilization Fund 183 Beginning Balance S - S - S - S - $ - S - 184 Transfers In - Operations - - - - - - 185 Total Funds Available - - - - - - 186 Transfers Out - Operations - - - - - - 187 Total Transfers Out of Funds - - - - - - 188 Interest Rate 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 189 Interest Income on Fond - - - - - - 190 Use of Interest Income to Fund Revenue Requirements - - - - - - 191 Ending Balance $ $ $ $ $ $ INTEREST INCOME SUMMARY 192 Unrestricted and Used to Fund Revenue Requirements $ 1,674,500 $ 1,141,300 $ 1,221,700 $ 1,446,500 $ 1,692,800 $ 1,898,900 193 Restricted to Fund (Available for Coverage- Landfill Closure) [5] 178,700 215,500 253,000 291,100 330,100 366,800 194 Restricted to Fund (Not Available for Coverage) 195 Total Interest Income $ 1,853,200 $ 1,356,800 $ 1,474,700 $ 1,737,600 $ 2,012,900 $ 2,265,700 Footnotes: [11 Beginning cash balances recognized for the Fiscal Year 2018 were based upon end of year audited financial results as reported by the County. [21 For purposes of this analysis the debt service sinking fund was not evaluated for beginning and ending cash balances. Interest income was determined based upon an assumed average balance related to the assumed annual debt service payment deposits [3] The County utilizes a portion of Facility Investment Fees to pay expansion related annual debt service. [4] The debt service reserve account requirement is secured on a series by series basis. Transfer out reflect release of debt service reserves associated with final payment or maturity of —in outstanding bonds. No debt service reserve requirement is assumed for the Series 2018 Bonds or Additional Bonds. [51 Amounts shown reflect interest income earned on cash balances, which were restricted to the Fond for fume landfill closure expenditures and made available for purposes of calculating annual debt service coverage f compliance with the Countys Bond Resolution. Page 1 of 1 Table 14 Manatee County Public Utilities System Summary of Proiected Annual Debt Service Requirement Ill Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 Outstanding Bonds: Public Utilities Revenue Improvement Bonds, Series 2010A (Federally Taxable - Build America Bonds -Direct Payment) (the "Series 2010A Bonds") [2] 1 Debt Service Payments - Principal $ - $ - $ 2,880,000 2 Debt Service Payments - Interest 1,149,634 1,149,634 1,149,634 _ 3 Total Debt Service Payments 1,149,634 1,149,634 4,029,634 4 Less Capitalized Interest _ 5 Annual Debt Service Requirement 1,149,634 1,149,634 4,029,634 Public Utilities Revenue Improvement Bonds, Series 2010B (Federally Taxable - Recovery Zone Economic Development Bonds -Direct Payment) (the "Series 2010B Bonds") [2] 6 Debt Service Payments - Principal $ - $ - $ -- 7 Debt Service Payments - Interest 3,300,024 3,300,024 3,300,024 8 Total Debt Service Payments 3,300,024 3,300,024 3,300,024 9 Less Capitalized Interest 10 Annual Debt Service Requirement 3,300,024 3,300,024 3,300,024 Public Utilities Revenue Improvement Bonds, Series 2010C (Tax -Exempt) [2] (the "Series 2010C Bonds") 11 Debt Service Payments - Principal $ 2,650,000 $ 2,760,000 $ $ $ $ 12 Debt Service Payments - Interest 233,075 124,200 13 Total Debt Service Payments 2,883,075 2,884,200 14 Less Capitalized Interest 15 Annual Debt Service Requirement 2,883,075 2,884,200 Series 2010 Bonds Summary [2]: 16 Annual Debt Service Requirement $ 7,332,733 $ 7,333,858 $ 7,329,658 $ $ $ Public Utilities Revenue Refunding Bonds, Series 2011 (the "Series 2011 Bonds") 17 Debt Service Payments - Principal $ 2,165,000 $ 2,275,000 $ 2,385,000 $ 2,510,000 $ 2,635,000 $ 2,765,000 18 Debt Service Payments - Interest 736,750 628,500 514,750 395,500 270,000 138,250 19 Annual Debt Service Requirement 2,901,750 2,903,500 2,899,750 2,905,500 2,905,000 2,903,250 Public Utilities Revenue Refunding and Improvement Bonds, Series 2013 (the "Series 2013 Bonds") 20 Debt Service Payments - Principal $ - $ - $ -- 21 Debt Service Payments - Interest 22 Annual Debt Service Requirement - - - - - - Public Utilities Revenue Refunding and Improvement Bonds, Series 2015 (the "Series 2015 Bonds") 23 Debt Service Payments - Principal $ 3,280,000 $ 3,415,000 $ 3,590,000 $ 3,765,000 $ $ 24 Debt Service Payments - Interest 3,825,250 3,694,050 3,523,300 3,343,800 3,155,550 3,155,550 25 Annual Debt Service Requirement 7,105,250 7,109,050 7,113,300 7,108,800 3,155,550 3,155,550 Public Utilities Revenue Refunding Bonds, Series 2017 (the 'Series 2017 Bonds") [2] 26 Debt Service Payments - Principal $ - $ $ - $ 2,645,000 $ 2,770,000 $ 2,900,000 27 Debt Service Payments - Interest 2,611,400 2,479,150 2,340,650 28 Annual Debt Service Requirement 5,256,400 5,249,150 5,240,650 29 Sub -Total - Outstanding Bonds 17,339,733 17,346,408 17,342,708 15,270,700 11,309,700 11,299,450 Additional Parity Bonds: Public Utilities Revenue Bonds, Series 2018 (the "Series 2018 Bonds") - New Money 30 Debt Service Payments - Principal 31 Debt Service Payments - Interest 32 Annual Debt Service Requirement Public Utilities Revenue Bonds, Series 2021 (the "Series 2021 Bonds") - New Money 33 Debt Service Payments - Principal 34 Debt Service Payments - Interest 35 Annual Debt Service Requirement 36 Sub -Total Additional Parity Bonds 37 Annual Debt Service Requirement - Total Outstanding and Additional Parity Bonds $ - $ - $ - $ - $ 1,430,000 $ 1,475,000 89,775 2,938,100 2,938,100 2,938,100 2,938,100 2,895,200 89,775 2,938,100 2,938,100 2,938,100 4,368,100 4,370,200 $ $ $ $ - $ - $ 436,598 453,500 1,360,500 1,358, 902 453,500 1,360,500 1,795, 500 $ 89,775 $ 2,938,100 $ 2,938,100 $ 3,391,600 $ 5,728,600 $ 6,165,700 $ 17,429,509 $ 20,284,508 $ 20,280,808 $ 18,662,300 $ 17,038,300 $ 17,465,150 Footnotes: [1] Amounts shown are derived from the actual debt service schedules for the Outstanding Bonds and reflect the monthly deposit requirements to the Sinking Fund presented on an "accrual' basis. The estimated repayment schedules for the Series 2018 Bonds and Series 2021 Bonds as provided by the County s Municipal Financial Advisor. [2] The County issued the Series 2017 Bonds to advance cross -over refund all the Series 2010 Bonds maturing after October 1, 2020 (the "Cross -Over Date"). The proceeds of the 2017 Bonds were primarily used to purchase U.S. Treasury securities, which were placed in escrow to economically defease a portion of the Series 2010 Bonds and make certain interest payments associated with the Series 2017 Bonds. Therefore, no debt service payments were reflected as a funding requirement of the Net Revenues for: i) the Series 2010 Bonds after the Fiscal Year 2020; and ii) the Series 2017 Bonds prior to the Fiscal Year 2021. 0 Z R F 00 U ti h 7J Q = � :.y ? 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R Page 1 of 1 Table 18 Manatee County Public Utilities System Comparison of Facility Investment Fees (Impact Fees) for Water and Wastewater Service [11 Line Per Equivalent Residential 5/8" x 3/4" Meter No. Description Water Wastewater Combined Manatee County 1 Existing Facility Investment Fee $1,970 $3,027 $4,997 Other Florida Utilities: 2 Bonita Springs Utilities, Inc. $2,600 $3,925 $6,525 3 City of Bradenton 1,183 1,545 2,728 4 City of Cape Coral 3,638 2,529 6,167 5 Charlotte County 2,407 2,251 4,658 6 City of Clearwater 480 900 1,380 7 Collier County [2] 2,562 2,701 5,263 8 DeSoto County 1,910 4,140 6,050 9 Englewood Water District 1,751 2,754 4,505 10 FGUA - Lehigh Acres System (Lee County) 2,696 2,839 5,535 11 City of Fort Myers 2,023 1,966 3,989 12 Hillsborough County 1,750 1,800 3,550 13 Town of Longboat Key 690 1,224 1,914 14 Lee County 2,440 2,660 5,100 15 City of Marco Island 3,740 4,610 8,350 16 City of Naples 1,416 2,324 3,740 17 City of North Port 1,890 2,575 4,465 18 Okeechobee Utility Authority 1,510 2,935 4,445 19 City of Palmetto 313 1,389 1,702 20 Pinellas County 352 2,060 2,412 21 City of Punta Gorda 2,646 2,677 5,323 22 City of Sarasota 900 2,577 3,477 23 Sarasota County 2,720 2,627 5,347 24 Other Florida Utilities' Average $1,892 $2,500 $4,392 Footnotes: [1] Unless otherwise noted, amounts shown reflect rates for individually metered residential service in effect June 2018 and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside city service, where applicable. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges imposed by each listed utility. [2] Utility is currently involved in a rate study, is planning to conduct a rate study, or expects to implement a rate revision within the next twelve months. O pp N p. .. .7i z z z z y z .7i .7+ ,7-i z �%'� "/'i '� 'fir "/'i "✓'i N (y 3 c o 0 oNo 0 0 0 0 o 0 0 0 o e o N N N � 69 Y3 69 EA 69 69 � 69 69 � 69 � 69 V3 69 69 InO M 6�9 69 69 6�9 6�A 6N9 69 6N9 4�9 69 6NA 69 69 6N9 6�A 69 69 d L LL "J c a O C Q � 6�9 fA 6�9 6�A 6N9 fA 69 � 6N9 6�A 69 EA 69 6�A 69 6�9 O U 3 O Q O O\ O O V V O O N 6�9 69 6�9 6�9 69 4�9 � � 69 6�A 69 69 69 69 69 6�9 is O N m'3 s � C w � C eq s O w H m C ti G I a �D O O N O r iD ....... O T 0 0 69 V) 69 a 69 O O 69 N O 7 N Z N oho o r o fA 6N9 69 � 6N9 N 6N9 � 6�9 6N9 � 6N9 fA fA fA ❑� 6N9 m O � z z a z 7 b a b z z 69 O u � 8 «oq r ❑ � T p � 3 o c g o y y b > w Q O q 5 a w :o ❑ 3 i „ ❑ m s o 0 0 .� }❑3 O a i6 u y o O s O 3 J U o I U C � ❑ N � �R p b y ❑ v a p G d D U I O e 43 ti a y o v fX Z2 U C Martin County FLORIDA Project Name: Water and Wastewater System Ten -Year Financial Forecast Date: January 21, 2019 The Project Team has been serving Martin County since 1994 on a variety of issues. The study example we provided is the most recent Water and Wastewater Ten -Year Financial Forecast (the report is currently being updated as of the date of our Proposal submittal to the County). The primary purpose of this report was to prepare a comprehensive financial forecast that: i) evaluated the ability to implement a water- and wastewater -service extension program (primarily due to improving water quality in the St. Lucie Estuary) and assist in the determination of assessment revenues; ii) evaluate the sunset of the price index rate adjustment that was previously approved by the Board of County Commissioners; iii) prepare a detailed projection of the revenues, expenses, funding of capital needs including the determination of a capital re -investment rate for asset replacement, and cash flow; iv) evaluate the fiscal position of the utility enterprise fund based on the financial forecast; and v) present the financial plan to the Board of County Commissioners. The evaluation prepared by the Project Team associated with the preparation of the study included: • An historical compilation of customer billing statistics and preparation of a by -class customer and usage forecast. • Prepared a detailed forecast of the operation and maintenance expenses recognizing the implementation of the capital improvement plan, customer growth, and other service area attributes. • Identification of the water and wastewater extension plan attributes and develop a capital funding plan / assessment revenue plan to evaluate financial impacts. • Developed a capital re -investment plan and developed a funding analysis to finance the capital plan of the utility, including the use of additional bonds and State Revolving Fund (SRF) loans. • Prepared a revenue sufficiency analysis and rate evaluation / phasing plan to allow for a programmed approach to the implementation of rate adjustments, including the extension of the price index pass -through adjustment. • Evaluated compliance with the rate covenants and development of a management dashboard to monitor fiscal position and overall financial performance. In addition to the evaluation of the monthly rates for water and wastewater service, the Project Team has also assisted the County in the establishment of solid waste rates and charges, prepared bond feasibility disclosure reports in support of capital infrastructure utility financings for the utility enterprise fund, provided utility acquisition services as part of the County's regionalization efforts, assisted in a managed competition submittal as part of the possible privatization of the operations of the utility (i.e., assisted in preparing County bid), as well as other related services. MARTIN COUNTY, FLORIDA WATER AND WASTEWATER SYSTEM TEN-YEAR FINANCIAL FORECAST JANUARY 21, 2019 IBPublic Resources Management Group, Inc. Utility, Rate, Financial and Management Consultants [B Public Resources Management Group, Inc. Utility, Rate, Financial and Management Consultants January 21, 2019 Mr. Samuel T. Amerson, P.E. Utilities and Solid Waste Director Martin County — Utilities and Solid Waste Dept. 2378 S.E. Ocean Blvd. Stuart, FL 34996-3310 Subject: Water and Wastewater System Ten -Year Financial Forecast Dear Sam: Public Resources Management Group, Inc. ("PRMG") is pleased to submit this report for your review and consideration regarding the update of the ten (10) year financial forecast (the "Financial Forecast") for the water and wastewater utility system (the "System") operations on behalf of Martin County (the "County"). The primary purpose of the development of the Financial Forecast was to identify the ability of the System operating revenues (derived primarily from monthly rates for service and other miscellaneous services charges) to adequately fund the expenditure requirements of the System, including the ten-year capital improvement plan as identified by the County. Specifically, the Financial Forecast focuses on the sufficiency of the existing rate revenues to fund the capital improvement plan and provide additional information to the County with respect to the anticipated sources of available funding (i.e., capital facility charges, anticipated indebtedness, etc.) for the projects required for service area development and capacity needs for the Fiscal Years 2018 through 2028 (the "Forecast Period"). This attached report includes: i) a discussion of the significant assumptions used in the development of the Financial Forecast; ii) an analysis of the ability of revenues of the System to meet the estimated operating and capital expenditure requirements; and iii) the presentation of the identified financing plan for the current ten-year capital program. The analysis is based on detailed financial information provided by County staff, including but not limited to, customer statistical data, annual financial and budgetary data, information regarding the extension of service to developed and un-served areas and potential development of the System service area, as well as, other information provided by the County relative to the development of the capital program. The Board of County Commissioners (the "BOCC") adopted annual rate indexing of monthly utility rates (the "Price Index") through Rate Resolution No. 16-3.15 (the "Rate Resolution"), which is tied to the Florida Public Service Commission (the "FPSC") annually published price index and pass -through adjustment. Pursuant to the Rate Resolution, the annual Price Index cannot exceed 2.5%. The Price Index is currently scheduled to sunset after October 1, 2024 (i.e., rates for the Fiscal Year 2025). Based on the assumptions and analyses reflected in this report, which should be read in its entirety, we are of the opinion that the current rates of the System will be sufficient to meet the projected revenue requirements of the System. It is recommended that the Price Index 341 NORTH MAITLAND AVENUE — SUITE 300 — MAITLAND, FL 32751 TELEPHONE: (407) 628-2600 • FAX: (407) 628-2610 • EMAIL: PRMG@PRMGinc.com Mr. Samuel T. Amerson, P.E. Martin County — Utilities and Solid Waste Dept. January 21, 2019 Page 2 adjustment be re -instated (based on the same formula as is currently in place) by the Fiscal Year 2025 to help the System to continue to provide operating margins to allow for continued capital re -investment to fund future capital needs and utility extension programs. Events may occur during this projected time period that could have an effect on the financial projections presented in this report and such effects could be material, which may alter the level of the projected future rate adjustments. As such, it is recommended the County continue to annually review the System's financial condition to monitor the potential need for such rate adjustments in the future. We appreciate the assistance provided by the County with respect to the preparation of this report. Very truly yours, Public Resources Management Group, Inc. Robert J. Ori President Thierry A. Boveri Associate Matthew N. Ori Rate Consultant RJO/dlc Attachments 4 MARTIN COUNTY, FLORIDA ? Water and Wastewater System Ten-Year Financial Forecast TABLE OF CONTENTS Title Page No. Letter of Transmittal Tableof Contents..................................................................................................................... i Listof Tables.......................................................................................................................... ill Listof Figures......................................................................................................................... iv EXECUTIVE SUMMARY General................................................................................................................................ ES-1 RecentTrends..................................................................................................................... ES-1 Observations and Recommendations Summary................................................................. ES-2 WATER AND WASTEWATER SYSTEM TEN-YEAR FINANCIAL FORECAST Introduction............................................................................................................................ 1 Financial Forecast Analysis Methodology............................................................................. 1 Water and Wastewater System Rates and Charges................................................................2 MonthlyUser Rates.......................................................................................................... 2 Reclaimed Water Service..................................................................................................4 CapitalFacility Charges.................................................................................................... 4 Service Availability Charge.............................................................................................. 5 Miscellaneous Service Charges......................................................................................... 5 CustomerDeposits....................................................................................................... 5 Water Meter Installation and Service Connect Charges .............................................. 5 -1- MARTIN COUNTY, FLORIDA ` - Water and Wastewater System Ten -Year Financial Forecast Y'rr a. TABLE OF CONTENTS (cont'd.) Title Page No. WATER AND WASTEWATER SYSTEM TEN-YEAR FINANCIAL FORECAST (cont'd.) Miscellaneous Service Charges (cont'd.) Other Miscellaneous Service Charges.......................................................................... 6 Historical and Projected System Sales and Customer Usage Statistics.................................7 WaterSystem.................................................................................................................... 7 WastewaterSystem..........................................................................................................10 Projections of Utility System Operating Results..................................................................12 Principal Considerations and Assumptions Regarding Projected Operating Results ...... 13 Net Revenue Requirements/Identified Rate Adjustments...............................................24 CustomerImpact.............................................................................................................. 26 Debt Service Coverage and Covenant Compliance.............................................................. 28 Debt Service Covenant Compliance................................................................................28 Rate Covenant Compliance..............................................................................................29 RevenueFund.............................................................................................................. 29 SinkingFund............................................................................................................... 29 ReserveAccount......................................................................................................... 30 Renewal and Replacement Fund.................................................................................30 Other Financial Considerations and Performance................................................................ 30 Rate Recommendations........................................................................................................39 MARTIN COUNTY, FLORIDA Water and Wastewater System Ten -Year Financial Forecast Y LIST OF TABLES Table No. Title 1 Summary of Historical Customer Statistics 2 Summary of Projected Customer Statistics 3 Summary of Projected System Operating Revenues 4 Summary of Projected Capital Facility Charge (CFC) Revenue 5 Summary of the Forecasted Ten -Year Capital Improvements Program 6 Summary of Combined Water and Wastewater System Revenue Requirements and Revenue Sufficiency 7 Projected Debt Service Coverage Analysis 8 Projected Fund Balances and Interest Income Determination 9 Comparison of Typical Monthly Residential Bills for Water Service 10 Comparison of Typical Monthly Residential Bills for Wastewater Service 11 Comparison of Typical Monthly Residential Bills for Combined Service MARTIN COUNTY, FLORIDA Water and Wastewater System Ten -Year Financial Forecast Y LIST OF FIGURES Figure No. Title Page No. IA Existing and Proposed Debt Payments — Principal and Interest 31 113 All -In Debt Service Coverage 32 2 Operating Reserves Ending Cash Balance 33 3 Renewal and Replacement Fund Balance 34 4 Capital Improvement Program Funding 35 5 Net Revenue Margin 37 6 Outstanding Debt per ERC Ratio 38 7 Debt Outstanding to Net Plant Investment 39 -iv- MARTIN COUNTY, FLORIDA WATER AND WASTEWATER SYSTEM TEN-YEAR FINANCIAL FORECAST EXECUTIVE SUMMARY GENERAL The Martin County (the "County") water and wastewater utility system (the "System") is accounted as a utility enterprise fund (the "Utility Fund"). As such, the Utility Fund must have revenues equal to the cost of services provided by the System and the County must establish rates sufficient to cover the cost of operating, maintaining, repairing and financing the System. According to the Governmental Accounting Standards Board, "Enterprise Funds should be used to account for operations that are financed and operated in a manner similar to private business enterprises — where the intent of the governing body is that costs of providing services to the general public on a continuing basis be financed or recovered primarily through user charges." In order to evaluate the sufficiency of existing rate revenues, a financial projection was prepared recognizing recent historical trends, anticipated future customer growth / demand and increases in the cost of providing service for the Fiscal Years 2018 through 2028 (the "Forecast Period"). The following report provides: i) a discussion of the significant assumptions used in the development of the Financial Forecast; ii) an analysis of the ability of revenues of the System to meet the operating and capital expenditure requirements; and iii) the presentation of the identified financing plan for the current ten-year capital program. RECENT TRENDS The Utility and Solid Waste Department (the "Department") has historically maintained a positive financial position relative to: i) the stabilization of rates; ii) the quality of facilities and service; iii) the maintenance of adequate reserves; and iv) the continued compliance of the rate covenants as delineated in Bond Resolution No. 94-9.2, as amended, which authorized the issuance of the outstanding senior lien bonds (the "Bond Resolution"). Besides the improving economy resulting in increased development, the County's utility customer base also continues to grow with regional water and wastewater service as a result of the County's water and wastewater line extension program to retrofit existing residential communities (i.e., funded through assessments to benefitting properties). Since the Fiscal Year 2002, the County has recognized the addition of approximately 12,655 water and 9,894 wastewater total accounts, as seen below, resulting in an average growth rate of approximately 3.3% annually, which has been a result of new development, extension of service to existing developments, and the acquisition of privately -owned (and regulated) utility systems to promote the regionalization of water and wastewater services. Acquisition of privately -owned utility systems accounted for approximately 2,186 water customers and 2,067 wastewater customers since 2002. In contrast, the County has reported population growth over the same period of approximately 1.6% annually. ES-1 Water System Wastewater System Fiscal Year Ending Average Annual Average Annual Average Annual Average Annual September 30, Accounts ERCs Accounts ERCs 2002 21,162 28,409 14,533 18,386 2003 22,714 30,158 15,714 19,917 2004 24,530 32,808 17,575 22,045 2005 25,585 34,378 18,347 23,024 2006 26,779 36,133 19,385 24,494 2007 27,709 37,479 20,145 25,448 2008 28,074 38,219 20,203 25,608 2009 28,379 38,981 20,333 25,979 2010 29,984 41,445 21,627 27,903 2011 30,594 42,861 22,162 28,821 2012 31,048 43,363 22,637 29,449 2013 31,563 43,973 23,061 30,018 2014 32,267 44,820 23,468 30,503 2015 32,874 45,562 23,840 30,856 2016 33,392 46,215 24,148 31,230 2017 33,817 46,817 24,427 31,581 2018 34,270 47,626 24,586 31,856 Average Annual Historical Growth Rate 3.06% 3.28% 3.34% 3.49% The gross revenue requirements represent the total expenditures of the System and are primarily comprised of i) operating expenses; ii) annual debt service payments; and iii) transfers to capital accounts to fund the capital improvements to the System. The cost of operations represents approximately 60% of the gross revenue requirements of the System and has increased on average by approximately 3.8% annually since the Fiscal Year 2004. The increased cost of operating expenses is related to a variety of factors, including inflation, increases in fuel, energy, and chemical prices, higher health insurance costs, the need to continue maintenance on the System, and System growth. Annual debt service payments currently reflect approximately 23.18% of the total gross revenue requirements of the System and were issued by the County to fund capital improvements of the System and utility acquisitions that are part of the County's regionalization program. The County also annually deposits funds into the Renewal and Replacement Fund to support ongoing asset replacements, betterments, upgrades and improvements (reference as "capital improvements"). The annual deposits to the fund approximately 15% of total revenue requirements. OBSERVATIONS AND RECOMMENDATIONS SUMMARY Based on the analyses and assumptions as documented in the attached report, the following are our observations and recommendations for consideration by the County: Based on the findings of our analyses, the existing rate revenues are not anticipated to be sufficient during the Forecast Period and will require the continued implementation of the price index in future years as shown below: ES-2 Summary of Projected and Identified Rate Adjustments Projected Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Price Index [1] 0.00% 1.76% 1.75% 1.75% 1.65% 1.50% 1.50% 1.50% 0.00% 0.00% 0.00% Rate Adjustments [2] -- -- -- -- Total Adjustments 0.00% 1.76% 1.75% 1.75% 1.65% 1.50% 1.50% 1.50% 0.00% 0.00% 0.00% [1] The Board of County Commissioners (the 'BOCC") adopted Resolution No. 09-8.22 providing for annual rate indexing (the 'Price Index"), not to exceed 2.50%, based upon the Florida Public Service Commission (the "FPSC") annually published price index and pass -through adjustment. The indexing provision for Resolution No. 16-3.15 is scheduled to sunset subsequent to October 1, 2024. [2] No additional rate adjustments above the annual Price Index have been adopted. For the purposes of this analysis, the price index was not assumed to be reinstated in 2026 since the BOCC has not approved this action; it is recommended by PRMG that the price index application be continued to maintain operating margins and limit financial risk. 2. The continued application of the Price Index during the financial forecast is projected to result in: a. Unrestricted cash reserve balances equal to or greater than 120 days of operating expenses, which is considered favorable by credit rating agencies; b. Total or "All -In" debt coverage[1] equal to or greater than 150%, which is considered favorable by credit rating agencies; Maintain compliance with all covenants of the Bond Resolution, which authorized the issuance of the outstanding bonds; d. Moderate declines in the Net Revenue Margin[21 within the outer years of the Forecast Period since the rate of growth on projected revenues (with the application of the rate indexing) being less than the projected rate of growth in operating expenses; and Although the price index is scheduled to sunset in Fiscal Year 2026, it is recommended that the County consider reinstating the index in 2026 to maintain operating margins and to promote on -going capital reinvestment. As previously mentioned, the price index was set at zero since this application is consistent with the provisions of the current rate resolution and such re -instatement has not been requested for consideration by the BOCC. It should be noted that there are a lot of potential financial considerations that could affect the cash flow and the need to maintain the application of the price index, including the funding of the water and wastewater expansion program, changes to the economy that could affect revenues, increased regulations on the treatment of water and [1] Debt coverage is a principle financial ratio used by credit rating agencies to assess the financial strength of a utility. Total or "All -In" debt coverage refers to the percentage of Gross Revenues less Operating Expenses (i.e., Net Revenues) divided by the total annual senior and subordinate debt service payments calculated for a given fiscal year. [2] Net Revenue Margin is calculated by dividing Net Revenues by Gross Revenues. Provides an indication of the amount of Net Revenues available to fund System debt and capital requirements. ES-3 wastewater, and the increased need to replace utility infrastructure as the assets continue to age and reach their average service lives. 3. As of the Fiscal Year 2017 (most recently completed Fiscal Year), the System provided service to approximately 33,817 water accounts / 46,817 water equivalent residential connections ("ERC") and 24,427 wastewater accounts / 31,581 wastewater ERCs on average. An ERC represents the average capacity for a single-family residential account (served by a 5/8" x 3/4" meter) and is used to evaluate the total customer base on an equivalent basis (how many total equivalent households are being served) since many customers may be a single account that serves a large customer base (e.g., a condominium) or commercial customer (e.g., a hotel). 4. The average monthly water demand or use per ERC has seen a general decline since the Fiscal Year 2006 of approximately 1.2% annually reflecting the effects of water restrictions imposed by the South Florida Water Management District (the "SFWMD"), general water conservation measures being employed by the customers, and the lingering effects of the economic downturn on general water use. 5. Based on a review of recent historical trends, anticipated customer growth and assumptions as disclosed hereafter, the estimated increase in the cost of operations and maintenance subsequent to the Fiscal Year 2018 is projected to be approximately 3.5% a year, reflecting the following assumptions: a. The adopted Fiscal Year 2018 budget and the preliminary Fiscal Year 2019 Budget served as the baseline for the forecast of operating expenses for these two fiscal years. It should be noted that the adopted operating budget for the Fiscal Year 2018 was adjusted for purposes of this financial forecast to reflect reductions in IT services, software, sludge removal, electric and chemical expenses, and changes in decommissioning costs for retired assets based on recent historical trends and discussions with Utility staff. b. Projected inflation escalation factor as applied to general expenses for the forecast of operating expenses ranging from 2.2% to 2.4% as reported by the Congressional Budget Office (the "CBO") in the Budget and Economic Outlook: Fiscal Years 2018 to 2028 dated February 2018. c. The cost of labor, power, chemicals, and sludge disposal (essentially uncontrolled costs of the System) currently account for approximately 55% of the total operating expenses of the System. Personnel expenses including wages, health insurance and other benefits were assumed to escalate, in aggregate, by approximately 3.0% per year from Budgeted Fiscal Year 2018 levels; and ii. Variable costs including electric, chemical and sludge expenses are anticipated to increase by approximately 4.6% per year based on recent historical trends and projected water and wastewater flows. ES-4 d. Repair and maintenance expenses are anticipated to increase by approximately 3.1 % per year based on recent historical trends and plant additions. e. A contingency allowance of 0.5% of total projected operating expenses was recognized to account for the potential of additional unanticipated incremental cost increases. The following is a summary of the projected operating expenses recognized in the Financial Forecast: Description Personnel and Benefits Electricity Professional and Contractual Services Chemicals Repair and Maintenance Indirect Cost Allocation Other Expenses Operating Supplies Sludge Removal Fuel Bulk Purchases Bad Debt Contingency Planned Maintenance [*] Total Summary of Forecasted Water and Wastewater Operating Expenses ($000s) Fiscal Year Endine September 30. 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 $7,389 $7,557 $7,932 $8,199 $8,553 $8,907 $9,207 $9,517 $9,976 $10,403 $10,755 1,893 1,944 2,029 2,119 2,225 2,331 2,428 2,538 2,641 2,767 2,885 3,924 3,755 3,258 3,336 3,416 3,498 3,582 3,668 3,756 3,846 3,939 1,161 1,239 1,296 1,357 1,426 1,496 1,560 1,634 1,704 1,789 1,869 1,963 2,030 2,089 2,152 2,217 2,285 2,354 2,425 2,499 2,575 2,653 1,555 1,454 1,498 1,543 1,589 1,637 1,686 1,737 1,789 1,842 1,898 929 1,220 1,244 1,302 1,321 1,350 1,376 1,389 1,412 1,443 1,424 716 500 512 524 537 551 564 578 592 607 622 1,150 1,250 1,300 1,361 1,439 1,520 1,591 1,669 1,740 1,828 1,907 254 300 319 338 359 381 405 430 456 484 514 56 56 56 56 56 56 56 56 56 56 56 53 54 56 59 62 64 65 68 70 70 71 106 110 ill 116 119 123 127 131 136 141 146 0 550 600 645 460 350 440 360 445 300 410 $21,151 $22,019 $22,299 $23,105 $23,778 $24,546 $25,441 $26,199 $27,272 $28,152 $29,148 [*] Represents planned maintenance expenses (generally significant, non -recurring expenditures), which are not considered as ongoing routine maintenance, which varies by year similar to the Capital Improvement Program ("CIP" ). 6. As discussed in greater detail in this report, the capital improvement program ("CIP") is expected to be approximately $182.9 million during the Forecast Period (which includes adjustments for inflation to estimate the project cost at time of construction initiation). The Department anticipates funding the majority or $109.9 million of the capital improvements from internal sources including existing cash reserves and future operating revenues. It should be noted that approximately $67,000,000 or 37% of the Capital Program recognized for the development of the financial forecast includes projects associated with the Septic to Sewer Extension Program and other anticipated water utility extension programs, which may have not yet been formally approved by the Board of County Commissioners (the ('Board") but are anticipated by the Department to become a component of the program in the future. All of the extension -related capital projects are to be funded, in part, by additional capital - recovery assessments to be charged to the customers connecting to the System. 7. As mentioned above, a component of the capital program includes the extension of water and/or wastewater service (funded over time through assessment programs) to developed, but currently un-served areas. The water areas include the extension of service to the James Villas (91 Water ERCs), Indian River Drive (70 Water ERCs), Evergreen (300 Water ERCs), Wind Stone (105 Water ERCs), and Palm Lake Park (222 Water ERCs) developments. For the wastewater system, the areas include Indian River Drive (70 Wastewater ERCs). The County is currently engaged in a water extension program and a septic to sewer extension ES-5 program to address areas, which have failing or outdated septic tanks and which many create environmental situations. The forecast includes for the water system the water system Martin Downs / Sunset Gardens (629 Water ERCs), Hibiscus Park (481 Water ERCs), and Port Salerno / New Monrovia (647 Water ERCs). The sewer areas include Martin Downs / Sunset Gardens (1,078 Sewer ERCs), Golden Gate (775 Sewer ERCs), and Port Salerno / New Monrovia (878 Sewer ERCs). These specific extension programs represent larger developments that were identified to i) remove the existing septic tank systems along the St. Lucie Estuary and Indian River Lagoon within the County; and ii) to the extent applicable, extend potable water service to these developments located in the wastewater extension program that do not have regional potable water service (with the objective to be installed concurrently with the installation of the wastewater collection facilities associated with the respective extension programs. The extension program recognized in the financial forecast recognize only four (4) of the twenty-four (24) wastewater areas or developments and four (4) of the eighteen (18) water areas or developments; it is anticipated that as these areas get constructed and connected to the regional system, additional areas will be added. 8. In order to provide sufficient funding for the renewal and replacement ("R&R") capital needs of the System (generally benefiting the existing customers of the utility), annual transfers funded from System operations to the R&R Fund are assumed to average approximately $5.7 million annually during the Forecast Period (with an increasing annual deposit amount occurring during such period). Figure 3 at the end of the attached report provides a summary of projected R&R Fund balance activity recognized in the financial plan during the Forecast Period. 9. The average single-family (individually -metered) residential customer uses approximately 6,000 gallons of monthly water and wastewater service. The indexed Fiscal Year 2019 rates will result in an increase in a monthly increase to the average residential customer as follows: Single -Family Residential Service — Change in Bills [*] Water Bill Wastewater Bill Total Bill Current Rates (FY 2018) $30.63 $44.23 $74.86 Indexed Rates (FY 2019) 31.17 45.03 76.20 Difference: Amount $0.54 $0.80 $1.34 Percent 1.76% 1.79% 1.79% [*] Rates reflect application of the Board approved FPSC Price Index published during the Fiscal Year 2018 of 1.76%; differences in percent adjustment due to rounding of the rates for service to the nearest cent. (Remainder of page intentionally left blank) ES-6 The anticipated Fiscal Year 2019 rates for the County are considered competitive based on a survey of other neighboring public utilities located in Southeast Florida as shown on the figure below. Single Family Residenital Service at 6,000 gal of Usage $140.00 $120.00 $100.00 $80.00 Other UtilityAverage : $76.84 $60.00 $40.00 $20.00 $0.00 met r r r 0 °A L�J�°°tt°•D G�o:y tr •4`�y�a GtGQ•�ee\'a°bLoe`a:aoe aa a eLSGL�C°�,t�Cv`'L�`e�i°e�\4 a,t3`o°a�.� �4°�P�ao 'Q�eyiPa ac .0 01, a\`a\gDG°�°s oK ���rF\yF y oC�A°�Jy�\V ° 0� At,9 CIO �IciSr W'4 �eeye J o °j` aJ ` ogee 5 e Water Sewer Utility Average (Remainder of page intentionally left blank) ES-7 MARTIN COUNTY, FLORIDA WATER AND WASTEWATER SYSTEM TEN-YEAR FINANCIAL FORECAST INTRODUCTION On behalf of the Martin County (the "County") water and wastewater utility system (the "System") through its Utilities and Solid Waste Department (the "Department"), Public Resources Management Group, Inc. ("PRMG") was retained to prepare a ten (10) year financial forecast (the "Financial Forecast") of System operations. Specifically, PRMG was tasked with analyzing the revenue requirements (expenditure needs) of the System, update the capital expenditure funding analysis and the effects on the financial position of the System, evaluate the ability of the System to meet the financial objectives of the County, and to determine the potential need for rate adjustments during the Forecast Period in order to strategically evaluate the System's overall financial position. The analysis included in this report recognizes a forward -looking projection over the next ten years, comprising the Fiscal Years ending September 30, 2018 to 2028 (the "Forecast Period"). The remainder of this report provides a discussion of the Financial Forecast analysis methodology, the water and wastewater system rates and charges, historical and projected customer statistics, identification of the revenue requirements and estimated sufficiency of the existing rates and provides a summary of the financial trends and position of the System. FINANCIAL FORECAST ANALYSIS METHODOLOGY In order to evaluate the existing and forecasted financial position of the Utility the following methodology was recognized: An evaluation of the service area requirements for the individual water and wastewater systems was performed. This included a review of recent historical customers served and corresponding usage requirements such that: i) a representative forecast of System needs from a financial standpoint could be prepared; and ii) a projection of rate revenues consistent with the projected service area needs could be developed. (Remainder of page intentionally left blank) -1- 2. A projection of the Net Revenue Requirements from rates, which equates to the expenditure requirements funded from monthly user charges, was analyzed. A summary of the definition of the Net Revenue Requirements is summarized below: + Cost of Operation and Maintenance + Debt Service Payments (Senior and Subordinate) + Transfers and Administration Payments + Capital Project Financing + Working Capital Reserve Deposits / Financial Compliance — Other Operating Revenue / Interest Income / Working Capital Reserve Use — Interest Income = Net Revenue Requirements (Funded from Rates) 3. Included as a component of Net Revenue Requirements was the development of a funding plan for the System capital improvements. The funding of these improvements recognized the following parameters: i) the use of available operating reserves or other available cash balances as a first priority (above targeted reserve balances); ii) the use of Capital Facility Charges, to the extent available, to fund expansion -related capital expenditures; iii) the recognition of a pay-as-you-go ("PAYGO") capital funding program (funded by deposits to a Renewal and Replacement Fund from rates) to finance capital projects that primarily benefit existing rate payers; and iv) the use of additional debt / loans, if needed or identified by Utility staff, to fund large expenditures with extended service lives (leveraging of System revenues to reduce annual expenditure funded from rates) to the extent other funding sources were not readily or reasonably available. 4. In addition, the cash position of the System was evaluated and taken into consideration through the identification of targeted minimum ending cash balances in order to adequately reserve working capital balances (reduce financial risk) and provide for the anticipated capital funding needs of the System. 5. Provide a review of compliance with the rate covenant requirements on outstanding debt service in accordance with the Resolution No. 94-9.2, as amended and as supplemented from time to time that authorized the issuance of the Outstanding Bonds (the 'Bond Resolution") and other loan covenant requirements as delineated in subordinate loan agreements during the Forecast Period. 6. Estimate the necessary annual total System rate adjustments that would be required to fund the identified Net Revenue Requirements and meet the overall financial needs of the System. WATER AND WASTEWATER SYSTEM RATES AND CHARGES Monthly User Rates The water rates that are currently in effect as reflected in Resolution No. 16-3.15 (the "Rate Resolution"), which was adopted by the Board of County Commissioners ("BOCC") on March 29, 2016 include: i) a constant service charge (readiness -to -serve charge), which varies by meter size; ii) a customer account charge to recover the allocated cost of billing, meter reading, and other -2- customer service needs and, combined with the constant service charge, serves as the minimum bill for water service; and iii) a volumetric flow charge based on metered water consumption, which increases as consumption increases in order to promote water conservation, for the residential class. The rates for the wastewater system as reflected in the Rate Resolution are similar in structure to that of the water system and include: i) a constant service charge (readiness -to -serve charge), which varies by meter size; ii) a customer account charge to recover the allocated cost of billing, meter reading, and other customer service needs and, combined with the constant service charge, serves as the minimum bill for wastewater service; iii) a volumetric flow charge predicated on metered water consumption, which serves as the basis for wastewater use; vi) a maximum residential billing threshold of 10,000 gallons per month per unit for the billing of the volumetric flow charge for this class of customers; and v) a separate monthly base charge (includes an allowance for service charge and volumetric charge) for unmetered wastewater customers (wastewater service customers that do not receive County water service). The Rate Resolution also provides for the application of an annual price index every June 1st based on the Florida Public Service Commission ("FPSC") water and wastewater price index. The price index provision has been applied annually by the County since the Fiscal Year 2016 and is currently scheduled to sunset after the application in the Fiscal Year 2025. The following is a summary of the current monthly System rates for service as delineated in the Rate Resolution: Water System - Monthly Service Charge Residential Single -Family Service June 1, 2017 June 1, 2018 Meter Size: 5/8" $14.51 $14.92 1" 36.74 37.29 1-1/2" 73.49 74.60 2" 117.56 119.34 Residential Multi -Family Service (per Unit) [1] $7.34 $7.45 Commercial and Irrigation Service Meter Size: 5/8" $17.48 $17.74 1" 43.80 44.46 1-1/2" 87.43 88.75 2" 139.89 142.00 3" 279.81 284.04 4" 437.21 443.81 6" 874.40 887.60 8" 1,573.94 1,597.71 Customer Account Charge (per Bill) $2.35 $2.39 Consumption Charge (per 1,000 Gallons of Metered Water) Table continued on following page Wastewater System - Monthly Service Charge Residential Service June 1, 2017 June 1, 2018 Meter Size: 5/8" $14.01 $14.22 1" 14.01 14.22 1-1/2" 14.01 14.22 2" 14.01 14.22 Residential Multi -Family Service (per Unit) [1] $7.03 $7.14 Commercial Service Meter Size: 5/8" $16.67 $16.92 1" 41.74 42.37 1-1/2" 83.39 84.65 2" 133.43 135.44 3" 266.84 270.87 4" 416.92 423.22 6" 833.89 846.48 8" 1,500.98 1,523.64 Wastewater Only Service -per Equivalent Residential Connection Customer Account Charge (per Bill) $3.67 $3.73 Consumption Charge -All Classes of Customers (per 1,000 Gallons of Metered Water) (Remainder of page intentionally left blank) -3- Water System — Monthly Service Charge (cont'd.) Wastewater System — Monthly Service Charge (cont'd.) Residential Single -Family Service June 1, 2017 June 1, 2018 June 1, 2017 June 1, 2018 0 — 10,000 Gallons [2] $2.19 $2.22 0—10,000 Gallons [2] $4.31 $4.38 10,001— 15,000 Gallons 3.09 3.14 N/A --- --- 15,001— 25,000 Gallons 3.96 4.02 N/A --- --- 25,001 and Above 4.83 4.90 N/A --- --- Residential Multi -Family Service (per Unit) June 1, 2017 June 1, 2018 June 1, 2017 June 1, 2018 0 — 5,000 Gallons $2.19 $2.22 $4.31 $4.38 5,001 — 7,500 Gallons 3.09 3.14 N/A --- --- 7,501—12,500 Gallons 3.96 4.02 N/A --- --- 12,501 and Above 4.83 4.90 N/A --- --- Commercial Service June 1, 2017 June 1, 2018 June 1, 2017 June 1, 2018 All Consumption $2.65 $2.69 All Consumption $4.31 $4.38 Irrigation Service June 1, 2017 June 1, 2018 June 1, 2017 June 1, 2018 0 — 10,000 Gallons $3.09 $3.14 N/A N/A N/A 10,001— 15,000 Gallons 3.96 4.02 N/A N/A N/A 15,001 and Above 4.83 4.90 N/A N/A N/A [1] Residential multi -family monthly service based on number of units served (each dwelling unit equivalent to 0.50 ERCs). [2] For all individually -metered residential units, the consumption charge shall not apply to monthly usage (metered water sales) in excess of 10,000 gallons. Reclaimed Water Service As reflected in the Rate Resolution, the County currently charges a reclaimed or irrigation quality ("IQ") water charge to large areas receiving service on a low-pressure basis (for redistribution by customer; the County does not provide high pressure service to end use customers) of $0.49 per 1,000 gallons of reserved capacity. Customers that receive this service currently include large users such as golf courses and homeowner associations (median or common area irrigation). Capital Facility Charges In addition to the monthly rates for water and wastewater service, the County currently charges a capital facility charge based upon an equitable and proportionate share of the cost for: i) water production and transmission facilities; and ii) wastewater transmission, treatment and effluent disposal capacity of the System. The purposes of the Capital Facility Charges are for paying or reimbursing the equitable share of the capital costs relating to the construction, expansion, or equipping of excess or unused capacity of the System in order to serve new users. The following table summarizes the current water and wastewater system Capital Facility Charges pursuant to Rate Resolution by utility service type. Capital Facility Charge Water— $ per ERC $1,710 Wastewater — $ per ERC 2,100 It should be noted that the County is conducting an impact fee study that has identified the ability to increase the fees; such increases have not been presented to the BOCC and therefore are not reflected in the financial forecast included in this report. 51 Service Availability Charge Pursuant to the Rate Resolution, the County presently charges a Service Availability Charge ("SAC") to new development after water and/or wastewater service has been approved by the County. Following the County's agreement to reserve service at the water and wastewater system facilities (which includes payment of the Capital Facility Charges), all developer -owned vacant buildable lots (reserved pursuant to a signed developer agreement) shall pay the applicable minimum SAC. The purpose of this charge is to recover the fixed operating, maintenance, and replacement costs of the facilities, which the County has built and must maintain on behalf of those requesting the reservation of service prior to connection. The current SAC for the System as delineated in the Rate Resolution is summarized below: Monthly Service Availability Charge (per ERC) [*] Water Wastewater $14.91 $14.22 [*] Monthly rate applied on a "per ERC" of capacity reserved basis where one ERC generally equates to the capacity allocation for a single- family residence on an average daily flow basis. Miscellaneous Service Charges The County has also adopted a schedule of fees, charges, and deposits that are applicable to miscellaneous or customer requested services. The fees generally are imposed to recover the cost of specific service such as water and sewer taps and utility turn -on fees or a deposit to defray the risk for nonpayment of System services. The following is a summary of miscellaneous service fees, charges, and deposits, which were adopted and are currently in effect for the System. Customer Deposits The Department requests a deposit at the time of service application by a customer in order to defray the risk of non-payment for utility services. The deposit is estimated on an individual account basis and is equivalent to two months of the water and wastewater charge for such account as determined by the Department; however, in no event can the deposit be less than $65.00 for water service and $130.00 for combined water and wastewater service per account. A refund of the deposit will be made if the account is free of delinquency notices for a twenty-five consecutive month period. Water Meter Installation and Service Connect Charges The County has adopted a fee schedule for water meter connection or installation services and service laterals installation in order to recover its cost of physically connecting a water customer to the System. Specifically, the County has adopted the following schedule of fees for this specific service: (Remainder of page intentionally left blank) -5- Water Service [*] Meter Meter Size Connection Fee Service Lateral Fee 3/4" or Less $335.00 $450.00 1 " 500.00 900.00 1-1/2" 750.00 1,000.00 2" 900.00 1,000.00 Above 2" Actual Cost Actual Cost [*] Fees derived from the Rate Resolution; service lateral fees do not include cost of meter connection. For connections i) requiring a meter 2-inches or greater in diameter; or ii) which require a tap and the installation of a service line, the fee charged will be equal to the actual cost incurred by the System for labor, materials, and overhead. Other Miscellaneous Service Charges In addition to the above -referenced charges, the County also has several other charges that are applicable to miscellaneous or customer -requested services. A summary of other miscellaneous charges imposed by the County, which are common in the utility industry include the following: Charge/Fee Description New Customer Service Application Fee Utility Turn -on at Customer Request Utility Turn-off at Customer Request Utility Turn -on Same Day Service Utility Turn -on After Hours Fee Special Services Provided in Attempt to Collect Unpaid Bill Monthly Fire Sprinkler Service Charge per Meter Size [2]: 1-1/2-inch 2-inch 3-inch 4-inch 6-inch 8-inch 10-inch 12-inch Meter Test Charge for High Bill Complaint Unauthorized Water Meter/Sewer Service Lateral Removal Charge [4] Returned Check Charge [5] Check Amount — $0 to $50.00 Check Amount — $50.01 to $300.00 Check Amount — $300.01 to $800 Amount $20.00 [1] 20.00 20.00 45.00 50.00 50.00 $9.78 14.22 26.05 39.39 76.35 135.52 194.68 320.43 20.00 [3] Actual Cost $25.00 $30.00 $40.00 [1] Charge in addition to meter/service installation charge. [2] Includes addition of account service charge. [3] Charged only if meter is tested as registering correct. If meter is incorrect, usage or volume charges will be adjusted by County and no fee shall be charged. [4] Charged due to continued unpaid charges or unauthorized use. [5] Charge represents general County policy and is based on Florida Statutes and is not included in the Rate Resolution. (Remainder of page intentionally left blank) -6- HISTORICAL AND PROJECTED SYSTEM SALES AND CUSTOMER USAGE STATISTICS A major component in the preparation of a financial forecast of a utility system and the identification of the corresponding utility rate impacts is the evaluation of customer usage (or sales) requirements and the development of a forecast of water and wastewater customers and sales. This is necessary in order to have a proper matching of rate revenues anticipated to be received under existing fee schedules with the projected operating and capital expenditure requirements of the utility system. This is significant since revenues derived from the application of the rates for monthly service (user charges) currently account for over 90% of the total System revenues. For the purposes of this financial analysis and in order to assist the County in its continuing long-term financing efforts, a financial projection period encompassing the ten (10) Fiscal Years 2018 through 2028 (previously defined as the "Forecast Period") was recognized. This analysis period was recognized in order to examine the estimated near -term financial effects of funding the County's capital program through its entire implementation schedule. Water System The development of a forecast of future water sales or usage and customers is necessary in the evaluation of water system requirements. The forecast is essential for the determination of revenues from existing rates, for the escalation of certain water production related expenses, and the identification of potential adjustments to rates for monthly service. With respect to recent historical growth levels, the water system from Fiscal Years 2007 through 2010 has experienced a reduction or slowing in customer growth and reduced water sales (in total and on a "per account" basis) when compared to prior historical years, which have affected the financial position of the System. However, since 2010, the System has recognized an increase in customers due to a general improvement in the economy, and continued development in the service area. Specifically, for the historical presentation period, the increase in customers has been due to: i) the continued development located within the System service area; ii) acquisition of certain investor -owned utility systems, which effectively increased the customer base of the water system; and iii) the extension of utility services to existing developed properties where water and/or wastewater services were previously not available. Table 1 at the end of this report provides a "by customer class" presentation of the water customers served and corresponding usage (sales) requirements. The following is a summary of the average annual water accounts and corresponding water sales since the Fiscal Year 2009. (Remainder of page intentionally left blank) -7- Fiscal Year Ended September 30, (Historical) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average Annual Historical Growth Rate Water Average Annual Water Accounts 28,379 29,984 30,594 31,048 31,563 32,267 32,874 33,392 33.817 2.22% — Historical Average Annual ERCs [2] 38,981 41,445 42,861 43,363 43,973 44,820 45,562 46,215 46.817 2.32% Water Sales (000s of Gallons) 2,933,876 2,985,069 3,124,418 3,037,137 2,880,572 3,049,797 3,187,640 3,251,293 3.450.555 2.05% Average Monthly Water Use per ERC 6,272 6,002 6,075 5,837 5,459 5,670 5,830 5,863 6.142 (0.26%) [1] Amounts shown derived from Table 1 at the end of this report. [2] ERCs determined based on i) an application of meter equivalency factors to active accounts served for the residential and commercial class and ii) number of units served for the multi -family class (0.5 ERCs per unit served). As can be seen above and as detailed on Table 1 at the end of this report, the water system has experienced a historical growth rate in the average number of accounts served of approximately 2.2% per year. The rate of growth in customer accounts has outpaced the rate of growth in water demand, which reflects, among other things, i) the imposition of watering restrictions by the South Florida Water Management District (previously defined as the "SFWMD") beginning during the Fiscal Year 2007; ii) continued water conservation awareness within the service area by the County's water customers; and iii) reduction in water demands associated with reduced construction activity (e.g., lawn establishment). The growth in the number of accounts served is primarily due to the in -fill of existing developments, the extension of utility service to previously unserved neighborhoods, as well as the acquisition of several investor -owned utilities (privately -owned utilities regulated on the basis of rates by the FPSC) during the historical period. The purchase of these utilities was made to further promote the regionalization of the utility system, assist in water resource planning, eliminate small wastewater package plants, and improve levels of service to those customers served by the investor -owned utilities. Specifically, the historical growth rate includes the acquisition of the Miles Grant and Hutchinson Island utility systems in September 2009 that increased the water and wastewater customer base by approximately 1,264 and 1,150 customers, respectively. The projection of water customer growth and water sales, which serves as the basis for water rate revenue projections during the Forecast Period, is based on recent historical trends, information regarding future development (either has reserved capacity or is in the development planning or review process), the ongoing water service extension programs that are currently underway, and discussions with Department staff. A summary of these projections is shown on Table 2 and are summarized as follows: (Remainder of page intentionally left blank) Water System - Projected [1] Average Fiscal Year Ending Average Annual Average Annual Water Sales Monthly Water September 30, (Projected) Water Accounts Water ERCs (000s of Gallons) Use per ERC 2017 (Actual) 33,817 46,817 3,450,555 6,142 2018 (Estimated) [2] 34,270 47,626 3,318,619 5,807 2019 34,770 48,206 3,317,583 5,735 2020 35,461 48,975 3,369,345 5,733 2021 36,034 49,620 3,412,742 5,731 2022 36,758 50,412 3,466,263 5,730 2023 37,344 51,065 3,510,136 5,728 2024 37,737 51,500 3,539,136 5,727 2025 38,360 52,185 3,585,515 5,726 2026 38,834 52,701 3,620,419 5,725 2027 39,127 53,036 3,642,808 5,724 2028 39,400 53,350 3,663,758 5,723 Average Annual Projected Growth Rate [3] 1.40% 1.19% 0.55% (0.64%) [1] Amounts shown derived from Table 2. [2] Estimated Fiscal Year 2018 statistics based on 6 months of actual data (through March 2018). [3] Reflects average annual projected compounded growth from the Fiscal Year 2017. As can be seen above, the customer and water sales growth are anticipated to be less than recent historical trends. These projections assume no future utility acquisitions[31 and only minor growth from water line extensions. The forecast of customer growth can be categorized in two segments: i) normal customer growth representing baseline growth projections taking into consideration historical trends and population growth forecasts (continued in -fill development); and ii) incremental growth representative of construction of new developments identified by staff or the extension of water service to existing unserved developments. For the new or recent water extension programs, the incremental ERC growth assumes the addition of the following ERCs: Total Estimated Remaining Water ERCs Connected ERCs [*] ERCs to Connect Orchid Bay 155 0 155 James Villas 91 0 91 Indian River Drive 70 0 70 Evergreen 300 0 300 Wind Stone 105 0 105 Palm Lake Park 222 0 222 Martin Downs 629 0 629 Port Salerno 647 0 647 Total 2,219 0 2,219 ERC = Equivalent Residential Connection Initial Connection Year 2018 2021 2021 2021 2021 2021 2022 2025 [*] Represents the estimated number of customer accounts anticipated to connect to the water system adjusted to reflect any connections assumed to occur during Fiscal Year 2018. [3] All of the FPSC-regulated utilities that were located within the County Service territory or contiguous to the County system have now been purchased by the County; certain other systems are available to be acquired (e.g., Indiantown Company, Inc. Utility System) but were not recognized during the Forecast Period. 91 Water sales were projected based on usage trends experienced by each class of customer over the historical period previously discussed and current fiscal year-to-date statistics, with emphasis being placed on the most recent trends in average use that have been affected by the changes in the improving economy. The Fiscal Year 2013 represented the lowest year in terms of water use per account, which has continued through Fiscal Year 2014 (partly due to increased rainfall events). However, water usage has slowly been increasing from Fiscal Years 2015 through 2017. For purposes of forecasting future water use for the Financial Forecast and to have a conservative forecast in the development of revenues, the estimated level of usage required per equivalent residential connection (ERC, which equates to the equivalent use or capacity of a single-family residential account) for the Fiscal Year 2019 was were set at the average usage levels from Fiscal Years 2012 through Year -to -Date 2018 for the Forecast Period to recognize the effects of continuing general water use restrictions and corresponding water conservation efforts by the County on long-term water use despite the increased usage levels in 2017 and 2018. Subsequent to the Fiscal Year 2019, the average level of water use per ERC was reduced over time, which assumed continued conservation in water use coupled with higher density growth, which reflects in reduced irrigation demands (lower pervious service for irrigation). Wastewater System The historical customer (account) statistics for the wastewater system as illustrated on Table 1 at the end of this report are summarized as follows: Fiscal Year Ended September 30, (Historical) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Wastewater System — Historical [1] Average Annual Billed Wastewater Average Monthly Wastewater Average Annual Flow (000s of Wastewater Gallons Accounts Wastewater ERCs Gallons) [2][3] Billed per ERC 20,333 25,979 1,562,719 5,013 21,627 27,903 1,641,260 4,902 22,162 28,821 1,676,788 4,848 22,637 29,449 1,650,840 4,671 23,061 30,018 1,632,532 4,532 23,468 30,503 1,713,314 4,681 23,840 30,856 1,745,272 4,714 24,148 31,230 1,783,556 4,759 24,427 31,581 1,839,045 4,853 Average Annual Historical Growth Rate 2.32% 2.47% 2.06% (0.40%) [1] Amounts shown derived from Table 1 at the end of this report. [2] ERCs determined based on i) an application of meter equivalency factors to active accounts served for the residential and commercial class; and ii) number of units served for the multi -family class (0.5 ERCs per unit served). [3] Amounts shown do not include any implied wastewater flow for wastewater -only customers where no water service is provided (customers have individual on -site potable water wells). As shown above, the wastewater customers of the System have experienced an average compound growth rate of approximately 2.3% since the Fiscal Year 2009, which is consistent with that reported for the water system. The rate of growth in customer accounts has outpaced the rate of growth in billed wastewater flows, which is calculated based upon metered water flows. As previously discussed the water system has experienced declines in average water demand per customer, which reflects, among other things, i) water use restrictions from the SFWMD beginning -10- during the Fiscal Year 2007; ii) the impacts associated with the negative economic conditions during the Historic Period (which has been improving beginning with 2017); and iii) continued water conservation awareness within the service area by the County's water customers. The following is a summary of the projected customer statistics and billed wastewater flow assumed for the Forecast Period reflected in this report. Wastewater System - Projected [1] Average Annual Average Annual Billed Wastewater Average Monthly Fiscal Year Ending Wastewater Wastewater Flow (000s of Wastewater Gallons September 30, (Projected) Accounts ERCs [2] Gallons) [3] Billed per ERC 2017(Actual) 24,427 31,581 1,839,045 4,853 2018 (Estimated) [4] 24,586 31,856 1,928,137 5,044 2019 24,920 32,224 1,823,805 4,716 2020 25,208 32,534 1,839,990 4,713 2021 25,731 33,094 1,868,506 4,705 2022 26,598 33,990 1,913,109 4,690 2023 27,451 34,884 1,957,822 4,677 2024 28,016 35,475 1,987,602 4,669 2025 28,647 36,145 2,021,419 4,660 2026 29,083 36,605 2,044,868 4,655 2027 29,327 36,883 2,059,691 4,654 2028 29,509 37,098 2,071,471 4,653 Average Annual Projected Growth Rate [5] 1.73% 1.47% 1.09% (0.38%) [1] Amounts shown derived from Table 2 at the end of this report. [2] ERCs determined based on i) an application of meter equivalency factors to active accounts served for the residential and commercial class; and ii) number of units served for the multi -family class (0.5 ERCs per unit served). [3] Amounts shown do not include any implied wastewater flow for wastewater -only customers when no water service is provided (customers have individual on -site potable water wells). [4] Estimated Fiscal Year 2018 statistics based on 6 months of actual data (through March 2018). [5] Reflects average annual projected compounded growth rate from the Fiscal Year 2017. The growth in average annual customers has been assumed to increase at an annual compound rate of approximately 1.7% annually from Fiscal Year 2017 levels for the Forecast Period. As with the water system, this has been based on data provided by the County regarding historical trends, building activity experienced by the wastewater system, interconnection of existing developments that have agreed to accept service from the County and is generally consistent with the forecast trends of customer account growth projected for the water system. The customer growth for the wastewater system also reflects incorporation of several existing developments / systems that are now interconnected with the County wastewater system (considered as incremental growth). As previously identified for the water system, the Fiscal Year 2013 represents the lowest average use (billed flows) per ERC in recent history. The Financial Forecast assumes an increase in average billed flows per ERC for Fiscal Year 2019, which is based on six (6) months of actual information and the forecast assumed for the water system. After Fiscal Year 2019, the average billed flow per customer was assumed to decrease consistent with the assumptions for the water system (e.g., increased conservation awareness) and to provide a reasonable and attainable forecast associated with the projection of rate revenues, which is based on the statistical forecast. For the new or recent water extension programs, the incremental ERC growth assumes the addition of the following ERCs: -11- Total Estimated Remaining Initial Wastewater ERCs Connected ERCs [*] ERCs to Connect Connection Year Indian River Drive 70 0 70 2021 North River Shores 303.5 0 303.5 2018 Martin Downs 629 0 629 2022 Golden Gate 755 0 755 2021 Port Salerno 647 0 647 2025 Total 2,405 0 2,405 ERC = Equivalent Residential Connection. [*] Represents the estimated number of customer accounts anticipated to connect to the wastewater system adjusted to reflect any connections assumed to occur during Fiscal Year 2018. PROJECTIONS OF UTILITY SYSTEM OPERATING RESULTS For the purpose of this Financial Forecast and as previously mentioned, a projected ten-year study period has been utilized for the determination of the water and wastewater systems revenue requirements. The objective of using this Forecast Period is to determine the potential rate levels that will ensure continuing and adequate service to meet future period requirements. It was determined that the revenue requirements for this analysis would be predicated on the projected utility costs for the ten fiscal year period ending September 30, 2028. This forecast of utility operations was prepared in order to provide a general surety to the County that the utility rates would be adequate in the future to meet all of the estimated System expenditure needs, satisfy any bond / loan rate covenant requirements associated with any outstanding bonds or loans during the Forecast Period and to fully fund the capital improvement program as identified by the County. The classification of revenue requirements can be organized into five main categories: i) operation and maintenance expenses (adjusted to exclude depreciation and amortization expenses); ii) annual principal and interest payments on existing and future debt / loans / notes; iii) funding of the capital improvement program; iv) transfers to other departments / cost centers of the County; and v) deposits to working capital reserves and other funds to maintain or meet management objectives / policies regarding financial position (reduce financial risk and promote creditworthiness of System). The sum of these payments represents the gross revenue requirements of the System that are to be recovered from the available financial resources of the System, including rate revenues, grants and contributions, available cash reserves, and/or proceeds from debt proceeds. The development of the estimated revenue requirements for the County's water and wastewater systems required several assumptions and considerations and the preparation of certain analyses relative to utility operations. The actual Fiscal Year 2017 results and Fiscal Year 2018 and preliminary Fiscal Year 2019 budgets served as the base years for revenue requirement projection purposes. For Fiscal Year 2018, the County provided PRMG with a copy of the adopted budget, which after certain adjustments to reflect year-to-date results and known or anticipated changes and assumptions, as well as the preliminary Fiscal Year 2019 budget served as the basis of the projection of the revenue requirements for the Forecast Period. With respect to the Fiscal Year 2019, the County provided PRMG with a copy of the preliminary budget, which after certain adjustments to reflect operating expense carry -forwards and other anticipated revisions, which -12- served as the basis for the Fiscal Year 2019 revenue requirement forecast. Based on the forecast of sales for the water and wastewater system, the assumptions and considerations set forth below with respect to the determination of projected water and wastewater system expenditures, the rate revenue surplus / (deficiencies) are anticipated to be as follows: Fiscal Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Combined Water and Wastewater System [1] Price Index [2] 0.00% 1.76% 1.75% 1.75% 1.65% 1.50% 1.50% 1.50% 0.00% 0.00% 0.00% Anticipated System Revenues[3] $32,899,746 33,185,392 34,205,652 35,314,615 36,644,769 37,904,438 38,935,413 40,120,237 40,978,472 41,257,552 41,494,154 Total Net Revenue Requirements [4] $32,899,746 33,185,392 34,205,652 35,314,615 36,644,769 37,904,438 38,935,413 40,120,237 40,978,472 41,257,552 41,494,154 Annual Surplus/ (Deficiency) $0 0 0 0 0 0 0 0 0 0 0 [1] Amounts shown derived from Table 6 at the end of this report. [2] Amounts shown reflect recognized Price Index as applied to existing rates and included within the forecast of anticipated System revenues. Pursuant to the Rate Resolution, the automatic price index is schedule to sunset after October 1, 2024 (i.e., Fiscal Year 2025); future rate adjustments are identified in subsequent years of the Forecast Period. [3] Anticipated System revenue includes effects of the Price Index. [4] Net revenue requirements represent the amount of gross revenue requirements of the System less income and funds from other sources to be funded from rate revenues. Amounts shown include deposits to the operating and capital reserves to the extent available used for funding the capital improvement program. As illustrated in the above table, the continued application of the Price Index through Fiscal Year 2025 is anticipated to produce sufficient rate revenues to fund the identified net revenue requirements for the Forecast Period. Although it is recommended the Price Index should be continued beyond Fiscal Year 2025, no further rate adjustments were assumed for purposes of the Financial Forecast. Principal Considerations and Assumptions Regarding Projected Operating Results In making the projections and estimates summarized in this report, the principal considerations and assumptions made by us and the principal information and assumptions provided to us, or prepared by others, include the following: 1. The Adopted Fiscal Year 2018 and preliminary Fiscal Year 2019 Budgets served as the basis for the financial forecast of operating expenses. Based on discussions with Department staff and a detailed review of actual reported operating expenses for the recent historical period, the Fiscal Year 2018 Budget was reduced by approximately $890,000 or 4.2% of total expenses. It should be noted that approximately $725,000 of the reductions are to move one- time budgetary projects to Fiscal Year 2019. To illustrate the composition of the operating expenses, the primary costs of personnel, repairs, electric, chemical and sludge expenses account for approximately 64% of the total operating expenses. -13- 2. Projected revenues from current rates and charges for the County's water and wastewater systems are based on the schedule of existing rates and charges as adopted by the Board on March 26, 2016 through Resolution No. 16-3.15 (previously defined as the "Rate Resolution"). Such rates and charges were also adjusted for the assumed Price Index and applied to the forecast of water and wastewater customers and sales forecast for the individual utility systems as previously discussed. A summary of projected sales revenues under existing and Price Index adjusted rates for monthly service is shown on Table 3 at the end of this report. 3. Service availability charge revenues for the Forecast Period, which are based on a monthly fee charged to owners of undeveloped buildable lots that have reserved capacity through the Department for water and/or wastewater service, were estimated by applying the existing service availability charge for water and wastewater service to the projection of applicable ERCs of reserved capacity allocable to the buildable lots through the Forecast Period. This forecast of service availability charges was based on: i) the schedule of properties currently paying the service availability charge as provided by the Department; ii) the forecast of customer growth, which recognizes that as customers connect to the System, they would no longer be charged service availability charges (connected customers assessed to be those previously reserved through development process); iii) projected increases in undeveloped buildable lots based on estimates provided by the Department relative to the future development; iv) the current rates for service; and v) discussion with Departments. The forecast assumes that as the service area approaches a built -out condition, the projected revenues from service availability fees will decline. 4. Included in the financial projections are other operating revenues associated with service initiation and discontinuance fees, meter installation charges, late payment fees, developer review fees and other related customer requested services revenues. For the purposes of this report, other operating revenues were based on: i) the Fiscal Year 2018 budgeted revenues; ii) a review of historical amounts received from such charges; and iii) discussions with the Department. Based on a review of such sources, it was assumed that such revenues would fluctuate in relation to anticipated new connections to the System or remain constant at current budget levels during the Forecast Period. 5. The County provides Irrigation Quality reclaimed (previously defined as "IQ") water service to large users such as golf courses, and homeowner's association, which include irrigation service to common areas within large residential developments. Revenues from this service are anticipated to increase during the course of the Forecast Period due to: i) the recognition of several existing large users will now begin to pay for service per previously executed contractual agreements; ii) the recognition of new large users requesting service as a result of service area development, if any; iii) no excess IQ water sales being made to uses above the customer total contracted flows (as referenced in each customers IQ water agreement); and iv) application of the Price Index to the existing reclaimed water rates. Based on these factors, the projected revenues resulting from the provision of reclaimed water service assumed for the Financial Forecast are as follows: -14- Rate per Fiscal Year 1,000 Gallons [*] Revenue 2018 $0.49 $659,204 2019 0.49 689,282 2020 0.50 838,230 2021 0.51 899,978 2022 0.52 916,723 2023 0.53 932,974 2024 0.54 950,577 2025 0.55 968,180 2026 0.56 971,215 2027 0.56 971,215 2028 0.56 971,215 [*] Assumes application of approved and identified rate adjustments as previously discussed. 6. The County has implemented several assessment programs in order to recover the capital costs associated with the extension of water and/or wastewater service to certain properties benefiting from such improvements. In order to bill and collect such assessments, the County has adopted the Uniform Method (non -ad valorem assessment collected via the property tax collection process) as allowed by Florida Statutes, Chapter 197. The County has assessed each benefiting unit with the option to pay the assessment in full at the outset of the assessment period (or any time during the repayment period) or in annual installments collected over ten (10) to twenty (20) year time frames (based on the terms of the specific assessment program). As of the date of this report the County had approximately 33 active capital extension assessment programs in effect, with the capital costs for the service extensions being primarily funded internally from available operating or cash reserves. Based on information provided by the County, annual assessment revenues for the existing assessment programs were estimated based on: i) the current assessment repayment schedules for each assessment program based on the terms and conditions of each program; ii) no future prepayments of any outstanding assessment principal balances by a property owner during the remaining assessment term; and iii) no change in the overall terms and conditions of the assessment program. The County is also expecting to implement new assessment programs for the extension of water and/or wastewater service to existing but unserved developments. The assessments recognized during the Forecast Period for these new programs represent only those programs for which the property owners have expressed an interest (through a majority vote of such property owners within the specific service area) in receiving service and paying the assessment. Based on discussions with the Department, the same assessment process that has been used for the other System assessment programs previously implemented by the County will continue for the new assessment programs as well. With the exception of the septic -to - sewer extension program (which represent areas associated with improving the water quality of the St. Lucie Estuary and Indian River Lagoon referred to as the 'Extension Program") of the programs are assumed to be internally funded by the County and all assessment proceeds have been recognized as a financial resource of the System. Currently the County has 4 of these assessment programs in place. -15- For these programs associated with the Extension Program and due to the estimated magnitude of the capital costs associated with these specific extensions, the expenditures were assumed to be debt financed by the use of low -interest loan SRF loans secured by the State Revolving Fund ("SRF") loan program as administered by the Florida Department of Environmental Protection ("FDEP"). This financing strategy was recognized to allow project construction to be completed prior to the start date for the repayment of the loan and to allow customers to connect and be assessed (improved match of cash inflow to debt repayment or cash outflow) and to allow for a 20-year installment period for the repayment of the non -ad valorem assessments (matches term of SRF loan repayment). Based on these assumptions, the projected assessment revenues are estimated as follows and are reflected as a revenue source in lieu of retail rate revenue and other utility sources of revenue. Fiscal Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Existing Assessment Programs [ 1 ] $1,411,674 1,471,448 1,471,448 1,415,025 1,188,090 1,163,740 1,065,483 661,298 463,923 414,044 414,044 System Assessment Revenues Future Assessment Programs $46,300 46,297 46,297 703,567 703,567 703,567 703,567 703,567 703,567 703,567 703,567 Extension Assessment Program $0 0 135,651 825,377 2,103,400 2,103,400 2,103,400 3,350,999 3,350,999 3,350,999 3,350,999 Total Assessment Revenue Recognized [2] $1,457,974 1,517,745 1,653,395 2,943,969 3,995,057 3,970,707 3,872,450 4,715,863 4,518,489 4,468,610 4,468,610 [1] Reason for decline in existing assessment revenues is due to specific assessment program repayment periods maturing during the Forecast Period. [2] Assessment revenue includes principal and interest payments. 7. Projected operations and maintenance expenses associated with operation of the System have been escalated from Fiscal Year 2019 estimated levels based upon several assumptions and the nature of the expense. The Fiscal Year 2019 preliminary budget represents the County's current annual financial plan for the System and based on a comparison of such projections to recent reported amounts, it was determined that the underlying assumptions used by the County in the development of such budgets were considered reasonable and reflect the estimated costs for anticipated operations of the System. Such amounts were projected for the remainder of the Forecast Period based on a variety of escalation parameters respective of the specific cost to provide service. Table 4 at the end of this report delineates the projection of the operation and maintenance expenses; a summary of the projected operating expenses is shown below: (Remainder of page intentionally left blank) -16- Summary of Forecasted Water and Wastewater Operating Expenses ($000s) Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Personnel $7,389 $7,557 $7,932 $8,199 $8,553 $8,907 $9,207 $9,517 $9,976 $10,403 $10,755 Electricity 1,893 1,944 2,029 2,119 2,225 2,331 2,428 2,538 2,641 2,767 2,885 Professional and Contractual 3,924 3,755 3,258 3,336 3,416 3,498 3,582 3,668 3,756 3,846 3,939 Chemicals 1,161 1,239 1,296 1,357 1,426 1,496 1,560 1,634 1,704 1,789 1,869 Repairs and Maintenance 1,963 2,030 2,089 2,152 2,217 2,285 2,354 2,425 2,499 2,575 2,653 Indirect Cost Allocation 1,555 1,454 1,498 1,543 1,589 1,637 1,686 1,737 1,789 1,842 1,898 Other Expenses 929 1,220 1,244 1,302 1,321 1,350 1,376 1,389 1,412 1,443 1,424 Operating Supplies 716 500 512 524 537 551 564 578 592 607 622 Sludge Removal 1,150 1,250 1,300 1,361 1,439 1,520 1,591 1,669 1,740 1,828 1,907 Fuel 254 300 319 338 359 381 405 430 456 484 514 Bulk Purchases 56 56 56 56 56 56 56 56 56 56 56 Contingency at 0.5% of Expenses 106 110 111 116 119 123 127 131 136 141 146 Bad Debt at 0.15% of Rate Revenue 53 54 56 59 62 64 65 68 70 70 71 Planned Maintenance [*] 550 600 645 460 350 440 360 445 300 410 Total $21,151 $22,019 $22,299 $23,105 $23,778 $24,546 $25,441 $26,199 $27,272 $28,152 $29,148 [*] Represents planned maintenance expenses that are non -routine in nature vary by year similar to the Capital Improvement Program ("CIP"). 8. The projected operation and maintenance expenses as summarized above and presented in Table 6 were escalated for the Forecast Period as follows: a. Materials and supplies expenses, other contractual services expenses, repair and maintenance expenses, and certain other operating expenses have been projected to increase in general from historical and current budgetary levels at an annual rate equal to inflation based on the nature of the expenditure. These escalation factors were based on the Consumer Price Index forecasts prepared by the Congressional Budget Office as contained in the Economic and Budget Outlook dated February 2018. Additionally, these escalators were compared to historical price indices used by many utilities for financial forecasting and rate review purposes. These indices included: i) the gross national product implicit price deflator index, which is used by the Florida Public Service Commission in the establishment of price indices for operating costs as required pursuant to Section 367.081(4)(a), Florida Statutes, in the regulation of private or investor -owned utilities; and ii) the consumer price index for recent historical periods. b. Based on discussions with the County, the escalation of wages and salaries above budgeted amounts is assumed at 3.0% for the Forecast Period. The increase in personnel costs reflect allowances for cost of living and inflationary adjustments. With respect to the forecast of personnel benefits (i.e., health insurance) is projected to increase by approximately 5.0% annually based on discussions with staff and a review of recent historical trends. Overall personnel expenses, including benefits, are projected to increase by approximately 4.0% above Fiscal Year 2019 budgeted amounts. The financial projections of the utility operating expenses as reflected on Table 6 includes the recognition of additional employees that are anticipated to be required to meet the increased service level needs / requirements of the utility system. The recognition of the additional personnel was based on discussions with County staff and is primarily due to serving the increased growth of the utility system service area -17- (i.e., increases in the number of customers served that pose a greater demand on the existing employee availability). Summary of Personnel Assumed to be Added During Forecast Period Assumed Additional Annual Total Number Fiscal Year(s) Personnel Services Cost by Position Description Cost Center of Positions [1] of Addition End of Forecast Period [2] Customer Service Specialist 3406 — Customer Service 1 2026 $68,627 Maintenance Specialist 3407 — Field Operations 2 2022, 2027 187,270 Maintenance Specialist 3408 — Field Operations 4 2020, 2023, 2026 307,441 Total Employee Additions 7 $563,338 [1] Employees represent full-time equivalents [2] Reflects estimated salaries and benefits by Fiscal Year 2028 (end of Forecast Period) As shown in the preceding table, the salaries and benefits of these additional full-time employees were assumed to approximate $563,000 by Fiscal Year 2028. C. The projection of variable costs for water and wastewater operations, including the cost of purchased power and chemicals were based on an allowance for inflation and the projection of flow requirements as discussed earlier in this report. Electrical, chemical and sludge expenses were escalated over the Forecast Period at factors ranging from 3.0% to 6.0%. The average annual growth rate of electrical, chemical and sludge expenses during the Forecast Period is projected to be approximately 4.6% per year based on recent historical cost increases in energy prices. d. A contingency allowance of one-half percent (0.50%) of total operating expenses was recognized in each fiscal year of the Forecast Period. The allowance has been included in order to provide funds for unknown or unplanned expenditures that may occur throughout the fiscal year and to recognize potential changes in the revenues that may occur due to weather, conservation, and other factors. This allowance increases the revenue requirements of the combined utility systems (water and wastewater) by approximately $124,000 annually and is included as a System operating expense with respect to the determination of total revenue requirements. e. An allowance for bad debt expense has been made to recognize a certain amount of revenues that will be considered as uncollectible and written off throughout the year. This expenditure item reflects an incremental adjustment to the Fiscal Year 2018 and 2019 Budgets and was projected based on trends incurred by utilities statewide and discussions with Department personnel. A bad debt ratio estimated at 0.15% of sales revenues was subsequently applied to the level of sales revenues projected for the Forecast Period in the study to estimate the amount of expense to recognize. The average increase in revenue requirements recognizing this expense item for the System is approximately $63,000 annually. f. Repair and maintenance operating expenses were escalated based upon a factor of 3.1 % over the Forecast Period, reflecting the observed trend in increased construction materials costs used in the repair and maintenance of existing water and wastewater facilities and that as facilities age, the cost of repair and maintenance tends to increase. g. Based on discussions with the County, it has been assumed that the allocation of Administrative Expenses or indirect costs allocable to the Department from the County's General Fund (e.g., costs accounted for in the County's General Fund) are assumed to increase from recent levels during the Forecast Period. Based on information provided by the County, the indirect cost expenditure recognized during the Forecast Period was escalated above the Fiscal Year 2018 budget estimate at the general rate of inflation of approximately 3%. The following forecast of the indirect expense allocation is summarized below: Fiscal Year Indirect Cost 2018 $1,554,623 2019 1,454,462 2020 1,498,096 2021 1,543,039 2022 1,589,330 2023 1,637,010 2024 1,686,120 2025 1,736,704 2026 1,788,805 2027 1,842,469 2028 1,897,743 9. The County originally issued utility revenue bonds in accordance with the provisions of the Bond Resolution to finance certain capital improvements and utility acquisitions for the water and wastewater utility systems. It is expected that as of October 1, 2017, the System had $67,235,000 in aggregate principal amount outstanding (the "Outstanding Bonds"), which is summarized as follows: Issue Principal Outstanding [*] Utilities System Improvement Refunding Bonds, Series 2016 (the "Series 2016 Bonds") $67,235,000 Total Principal Outstanding (Senior Lien Bonds) $67,235,000 [*] Amount anticipated to be outstanding at October 1, 2017 (after payment of the October 1, 2017 maturity). The debt service requirements included in this report for the Outstanding Bonds were based on the actual debt service schedules for each issue and are presented on a "gross" basis (i.e., not net of interest earnings on any debt service related funds or accounts). 10. In addition to the Outstanding Bonds, the County also secured an SRF loan funding for the purpose of financing the extension of wastewater service to the Seagate Harbor / Lighthouse Point development located within the County's existing service territory. This loan is considered as being subordinate to the Outstanding Bonds. Based on information provided by Department staff, the County entered into a loan agreement with the FDEP, the -19- administrator of the SRF program for the funding of the project, which has since been closed (finalized) (SRF Loan WWG12063607P). As was discussed for the Outstanding Bonds, the payment of the loan is presented on a "gross" basis (i.e., not net of interest earnings on any loan repayment amounts held by the County). The County previously made capital improvements to the biosolids treatment and disposal process. The total cost of the project was approximately $13.1 million and was planned by the Department to be funded in equal amounts from available System reserves and a 2014 Interfund Loan provided by the Solid Waste Enterprise Fund. In addition to the Biosolids Interfund Loan, the County received three more Interfund Loans from the Solid Waste Department for the Crane Creek Extension Program (282 water ERCs), the Orchid Bay Extension Program (155 water ERCs), the Palm Lake Estates Extension Program (222 water ERCs), and the James Villas Extension Program (91 water ERCs). The loans are subordinate to the Outstanding Bonds of the County outstanding and are considered to be subordinate to the SRF Loan since the Biosolid waste loans are internal borrowing within the County. The following provides a summary of the existing and proposed annual debt service and loan payment requirements for the Forecast Period: Summary of Existing Annual Debt/Loan Payments ($000s) Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Senior Lien Bonds: Series 2016 Bonds $6,816 $6,817 $6,818 $6,817 $6,815 $6,816 $6,817 $6,818 $6,817 $3,153 $3,158 Total $6,816 $6,817 $6,818 $6,817 $6,815 $6,816 $6,817 $6,818 $6,817 $3,153 $3,158 SRF Loans WWG12063607P $182 $182 $182 $182 $182 $182 $182 $99 $0 $0 $0 Solid Waste Interfund Loans Biosolid hiterfund Loan $540 $540 $540 $540 $540 $540 $540 $540 $540 $540 $540 Crane Creek Interfund Loan 152 152 152 152 152 152 152 152 152 152 152 Orchid Bay hiterfund Loan 80 80 80 80 80 80 80 80 80 80 80 Palm Lake Estates Interfund Loan 6 15 15 15 15 15 15 15 15 15 15 James Villas Interfund Loan 20 49 49 49 49 49 49 49 49 49 49 Total hiterfund Loans $799 $836 $836 $836 $836 $836 $836 $836 $836 $836 $836 Total Debt Service $7,782 $7,821 $7,814 $7,814 $7,816 $7,821 $7,809 $7,726 $7,632 $3,898 $3,903 The amounts shown are based on the monthly funding requirements of the various sinking funds as required by the Bond Resolution or loan agreement, which authorized the outstanding debt (essentially an accrual basis) as opposed to when the debt service requirements are actually paid. 11. A provision of the Bond Resolution requires the County to establish and i) deposit into a Renewal and Replacement Fund (the "R&R Fund") an amount equal to 5.0% of the Gross Revenues received by the System in the immediately preceding Fiscal Year; or ii) maintain a R&R Fund balance equal to either $5,000,000, or such other amount as shall be certified by the County's Consulting Engineers (collectively, the "R&R Fund Requirement"). The deposits to the R&R Fund are for the purpose of funding the cost of extraordinary repairs to, extensions, enlargements, or additions to, or the replacement of facilities of the System. The deposit to the R&R Fund as delineated in the Bond Resolution is considered as a minimum -20- funding target to annually finance ongoing capital expenditures; it is recommended that a greater deposit level be established based on the System CIP and the amount of utility plant investment to provide an ongoing / recurring funding source for asset reinvestment in order to maintain the long-term sustainability of the rates for utility service. For the purposes of developing the revenue requirements from rates and based on the current Department funding policy, the budgeted transfers to the R&R Fund for the Forecast Period were recognized reflecting transfers of approximately $5.7 million on average to: i) promote pay-as-you-go (PAYGO) funding of these projects (which generally benefits the existing ratepayer); ii) increase the County's equity in the System; iii) preserve the leveraging capability of the System for large capital projects; and iv) promote the long-term rate stability of the System. It should be noted that this funding amount is greater than the R&R Fund Requirement as reflected in the Bond Resolution. In order to illustrate the level of annual R&R Fund transfer as it relates to the estimated R&R Fund Requirement, an estimate of the annual deposit requirement based on the 5.0% transfer provision for each year of the Forecast Period is as follows: Projected Renewal and Replacement Fund Deposit from Operations ($000s) Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Renewal and Replacement Fund Transfer: Min. Deposit - 5% of Prior Year's Gross Revenue $1,629 $1,776 $1,791 $1,851 $1,950 $2,066 $2,125 $2,175 $2,281 $2,325 $2,340 Recommended Additional Deposit 3,621 3,224 3,459 3,425 3,608 3,926 3,718 3,807 3,992 4,185 4,213 Total Recognized Deposits [*] $5,250 $5,000 $5,250 $5,276 $5,559 $5,992 $5,843 $5,982 $6,273 $6,510 $6,553 [*] Amount shown for Fiscal Year 2018 represent the budgeted deposits for the System. Additional transfers above those based upon 5.0% of prior year's Gross Revenues recognize the capital funding needs for renewals, replacements, and betterments as identified by the Department. 12. The capital outlay expenditures for departmental furniture, fixtures, equipment, vehicles, and other related items were recognized as an additional capital requirement, which is funded annually from System rates. These expenditures were considered to be in addition to the R&R Fund deposits described above (reference Assumption No. 11). These capital expenditures were based on recent expenditure trends and discussions with Department staff. 13. Investment income on funds and accounts created by the Bond Resolution and by the County (e.g., customer deposits) are estimated based on projected average fund balances and assumed investment or interest rates ranging from 1.25% to 1.50% during the Forecast Period based on discussions with the County. The interest rates have been applied to estimated balances, if any, in the debt service Sinking Fund, Debt Service Reserve Account, the Renewal and Replacement Fund, the Meter Deposit Fund, and the Revenue (operating) Fund. We have also assumed that any interest earnings on the Capital Facilities Charge Funds and the Construction Funds, if any, will be deposited in the respective funds and not be available for operating expense or debt service requirements consistent with the provisions of the Bond -21- Resolution. Table 8 provides a summary of the transfers in and out of each fund / account, interest earned on the average cash balances on deposit in such funds, and corresponding ending cash balances for each fund / account maintained by the Department on behalf of the System. 14. The capital improvement program for the water and wastewater system are based on: i) the Fiscal Year 2018 Proposed Ten -Year Capital Budget; and ii) information provided by the Department regarding the status of current and anticipated projects. The primary purpose for the incurrence of the capital projects for the System are to provide for the: a. Renewal and replacement of the existing infrastructure of the System; and b. Line extensions to provide service to existing developed areas (assessment programs) and infrastructure upgrades for new growth and assessment programs. Table 5 at the end of this report provides a detailed listing of the capital projects for the water and wastewater system for the ten-year Forecast Period and includes the anticipated funding sources for each project through the entire ten-year projection period. Included in the capital improvement program is the use of the R&R Fund to finance recurring capital projects (i.e., essentially the betterment or replacement of assets). The recognition of this revenue requirement is necessary in order to allow the County a funding mechanism to continue to provide high quality service (i.e., maintain same level of service) to its customers as the utility system ages. Based on discussions with Department staff, the Capital Improvement Program (CIP) as provided by Department staff was adjusted for: i) inflation beginning with the Fiscal Year 2019 identified capital projects based on four capital cost escalators ranging from constant (no inflation) to high at 5.00%; and ii) an allowance for unspecified projects was assumed in addition to the identified capital funding requirements beginning with the Fiscal Year 2024 to account for unanticipated repairs and replacement of existing infrastructure at approximately $1,000,000 annually for the last five Fiscal Years of the Financial Forecast. The timing, priority, and funding of such capital needs were developed with the guidance of Department staff. The following is a summary of capital expenditures and the corresponding estimated funding sources assumed in the development of the financial forecast: (Remainder of page intentionally left blank) -22- Summary of Forecasted Capital Improvement Program - $000s [1] Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Capital Projects: Water System $7,455 $3,449 $5,534 $7,891 $14,040 $4,261 $5,216 $7,182 $4,062 $5,732 $4,688 $69,512 Water Other Recognized Projects [2] 1,713 2,263 6,758 4,148 0 563 3,756 0 0 0 0 19,201 Wastewater System 7,981 5,083 7,790 2,390 3,142 2,492 6,960 2,010 2,459 1,714 1,686 43,709 Wastewater Other Recognized Projects [2] 7,957 1,591 11,171 12,521 0 2,152 12,193 0 0 0 0 47,585 Vehicles and Equipment 264 220 229 238 248 258 268 279 290 302 314 2,909 Total Capital Projects $25,371 $12,606 $31,482 $27,189 $17,430 $9,726 $28,394 $9,471 $6,811 $7,748 $6,689 $182,916 Estimated Funding Sources: Renewal and Replacement - Fund 4105 $9,482 $4,380 $3,125 $8,238 $6,147 $6,354 $6,285 $4,815 $6,452 $6,140 $6,323 $67,743 Capital Facilities Charges - Fund 4103/4 3,305 530 513 1,475 332 555 4,597 4,549 250 250 250 16,606 Operating Reserves - Fund 4102 [3] 4,408 5,715 773 0 10,851 0 1,458 0 0 1,245 0 24,449 Grant Funding 1,500 0 0 0 0 0 0 0 0 0 0 1,500 Prior Bond Proceeds 1,670 0 0 0 0 0 0 0 0 0 0 1,670 Municipal Assessment Revenue Note 4,916 0 0 0 0 0 0 0 0 0 0 4,916 Debt Proceeds 0 1,888 26,977 17,378 0 2,715 15,949 0 0 0 0 64,907 Operating Rate Revenues 90 92 95 97 100 102 105 107 110 113 115 1,125 Total Estimated Funding Sources $25,371 $12,606 $31,482 $27,189 $17,430 $9,726 $28,394 $9,471 $6,811 $7,748 $6,689 $182,916 [1] Derived from Table 5 at the end of this section. [2] Amounts shown reflect projects associated with water and wastewater extensions to developed but unserved areas of the County, which reflect a continuation of the ongoing extension program and the Septic to Sewer Project, which are anticipated to be constructed by the Department but have not been formally approved by the Board as of the date of this report. [3] Operating reserves were primarily used to fund the Assessment -related projects of the System and other miscellaneous projects and to maintain a proper balance of monies in the Operating Fund and the R&R Fund during the Forecast Period. 15. As can be seen above, the capital needs of the System are projected to be approximately $182.9 million for the Forecast Period. The CIP is projected to be primarily funded from available cash reserves and revenues generated during the Forecast Period from operations (rates) and Capital Facilities Charges. It is recommended that the System continue to principally employ the pay-as-you-go funding strategy, where practical for the overall betterment of the System. This funding methodology is recommended particularly for utilities approaching build -out status for which the majority of projects are identified for existing facilities that generally benefit the existing customers of the System. It should be noted that approximately $67,000,000 or 37% of the Capital Program recognized for the development of the financial forecast includes projects associated with the Septic to Sewer Extension Program and other anticipated water utility extension programs that may have not yet been formally approved by the Board but are anticipated by the Department to become a component of the program in the future. All of the extension -related capital projects are to be funded, in part, by additional capital -recovery assessments to be charged to the customers connecting to the System. 16. For the purpose of this analysis, the Capital Facility Charges and use of such fund balances have been recognized to fund only the expansion projects of the System, thus reducing project funding from utility revenues or future debt service costs. Moreover, no funds from the imposition of Capital Facility Charges were assumed to be used to offset the payment of any debt service requirements even though such revenues are considered a component of Pledged Revenue for bond coverage purposes pursuant to the Bond Resolution. -23- With respect to the determination of the amount of Capital Facility Charges to be reflected as pledged revenue in the analysis of bond coverage purposes, such amounts were adjusted to recognize only the estimated Capital Facilities Charges debt service component in the calculation. The component was determined by multiplying the aggregate Debt Service Requirement for the Outstanding Bonds by the Expansion Percentage as defined in the Bond Resolution and comparing the amount of Capital Facilities Charges projected to be collected during the Forecast Period. The Expansion Percentage was based on: i) a review of the projects initially funded from the Outstanding Bonds; and ii) estimated capacity utilization relationships coincident with the issuance of the Outstanding Bonds, it was estimated that the Expansion Percentage to determine the Capital Facilities Charges Debt Service Component is on average 77% of the total projected Debt Service Requirement for the Forecast Period. For the projected period shown, the amount of Capital Facilities Charges recognized as a Pledged Revenue of the System were assumed as follows: Fiscal Total Debt Expansion Expansion CFC Pledged CFC Year Service Percentage Debt Service Collections [*] Revenue 2018 $7,782,418 77.13% $6,002,273 $1,906,694 $1,906,694 2019 8,662,332 77.13% 6,680,916 1,708,960 1,708,960 2020 8,655,139 77.13% 6,675,368 1,723,844 1,723,844 2021 9,871,322 77.13% 7,613,363 1,853,245 1,853,245 2022 11,277,383 77.13% 8,697,802 1,911,920 1,911,920 2023 11,282,289 77.13% 8,701,586 1,757,657 1,757,657 2024 11,270,467 77.13% 8,692,468 1,732,916 1,732,916 2025 11,502,083 77.13% 8,871,104 1,745,920 1,745,920 2026 11,408,011 77.13% 8,798,550 1,628,942 1,628,942 2027 7,674,511 77.13% 5,919,048 1,537,846 1,537,846 2028 7,679,011 77.13% 5,922,519 1,537,846 1,537,846 *] Amounts shown include estimated interest earnings on Capital Facilities Charges ("CFC") fund balances held by the County Net Revenue Requirements/Identified Rate Adjustments The net revenue requirements of the System are presented on Table 6 and are shown below and were based upon i) the customer forecast identified herein; ii) the existing rates for service; iii) the operating expense assumptions as delineated above; iv) the capital improvement plan as identified by the County and funding analysis assumed herein; and v) the rate covenants as defined in the Bond Resolution and loan documents, all as discussed throughout this report. The purpose of the development of the net revenue requirements is to determine the level of revenue from monthly user rates required to meet the financial obligations of the System. The following provides a summary presentation of the projected net revenue requirements and overall recommended rate adjustments for the System: (Remainder of page intentionally left blank) -24- Projected Combined Water and Wastewater System Net Revenue Requirements ($000s) [1] Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Operating Expenses: $21,151 $22,019 $221299 $23,105 $23,778 $24,546 $25,441 $26,199 $27,272 $28,152 $29,148 Other Revenue Requirements: Existing Debt Service $7,798 $7,716 $7,736 $7,735 $7,734 $7,734 $7,736 $7,652 $7,553 $3,889 $3,894 Proposed Debt Service 0 841 841 2,057 3,461 3,461 3,461 3,776 3,776 3,776 3,776 Capital Funded from Rates 90 92 95 97 100 102 105 107 110 113 115 Transfer to R&R Fund 5,250 5,000 5,250 5,276 5,559 5,992 5,842 5,982 6,273 6,510 6,553 Transfer to CFC Fund [2] 0 0 0 0 0 0 0 0 0 0 0 Transfer to Reserves [3] 1,036 0 508 438 392 356 620 1,605 1,215 4,068 3,318 Transfer to General Fund - Building Mortgage Payment 198 198 198 198 198 198 198 198 198 198 198 Municipal Service Benefit Unit - Special Assessment Revenue Note 0 120 101 101 100 101 100 101 100 100 100 Gross Revenue Requirements $35,523 $35,987 $37,027 $39,008 $41,322 $42,489 $43,503 $45,620 $46,497 $46,805 $47,103 Less Income and Funds from Other Sources: Other Revenues [4] $2,203 $2,267 $2,454 $3,290 $4,356 $4,334 $4,313 $5,222 $5,203 $5,195 $5,197 Interest Income 419 362 368 403 321 251 255 278 316 352 412 Transfers from Reserves 0 157 0 0 0 0 0 0 0 0 0 Net Revenue Requirements $32,900 $33,185 $34,206 $35,315 $36,645 $37,904 $38,935 $40,120 $40,978 $41,258 $41,494 Price Index [5] 0.00% 1.76% 1.75% 1.75% 1.65% 1.50% 1.50% 1.50% 0.00% 0.00% 0.00% Revenue Under Utility Rates [5] $32,900 $33,185 $34,206 $35,315 $36,645 $37,904 $38,935 $40,120 $40,978 $41,258 $41,494 Revenue Surplus/(Deficiency): 0 0 0 0 0 0 0 0 0 0 0 Percent of Rate Revenue 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% [1] Amounts shown in thousands of dollars ($1,000s) and derived from Table 6 at the end of this report. [2] As a part of the County's assessment program, a portion of the total assessment revenues are for CFC charges customers must pay when connecting for new service. Therefore, amounts shown reflect transfers to the CFC allocable portion of assessment revenues anticipated during the Forecast Period. [3] Transfers to the operating reserves are recognized for use in funding future capital improvements and maintaining adequate cash reserves. [4] Amount shown include projections of anticipated assessment revenues associated with water and wastewater line extensions. [5] Revenues under monthly utility rates recognize application of the annual Price Index rate adjustment. As can be seen above and shown in more detail on Table 6, the existing rate revenues, adjusted to recognize the continued (re -instatement) application of the Price Index through Fiscal Year 2025, is anticipated to be sufficient to adequately fund the identified revenue requirements of the System. The compound annual growth of the net revenue requirements of the System is forecasted to be approximately 2.35% for the Forecast Period. During the course of the Forecast Period, the rate revenues anticipated to be earned during the Forecast Period are projected to provide additional funds that are available to be transferred to the cash reserves of the System. These reserves are necessary in order to: i) provide funds to maintain adequate working capital target levels to allow for external attraction of funds at lower interest rates and to provide funds in case of extraordinary events (e.g., hurricane); ii) provide additional funding for future capital improvements (PAYGO funding); iii) to provide funds to allow for any phase -in of future rate increases and to provide future funds for rate stabilization purposes; and iv) fund additional indebtedness. The estimated ending cash balances within the operating fund reserves for the final fiscal year of the Forecast Period is estimated to be approximately $21.1 million and generally targets a minimum balance of 120 days of operating expenses, which is considered a reasonable and prudent level of working capital reserves. To the extent that the application of the Price Index is discontinued before Fiscal Year 2025 or is not reinstated after -25- Fiscal Year 2025, then the ability of the System revenues to fund the expenditure requirements and maintain the recommended reserve fund balances may be negatively impacted. Accordingly, the County would need to adjust the CIP, expenditures and funding plan in order to maintain the ability to fund the other System costs; such adjustment (amount) could be material. It is anticipated that the County may need to adjust rates at some point (i.e., a formal rate increase) if the Price Index application is not re -instated during the Forecast Period in order to meet the expenditure requirements of the System. Customer Impact In order to provide additional information to the County regarding the effects of the recommended change in monthly rates for service, an analysis to illustrate the impact for the standard 5/8" x 3/4" meter customer was prepared. This meter size was selected since it represents the meter used to serve approximately 99% of all residential single-family accounts served by the County. The effect of the Price Index rate adjustments for Fiscal Year 2019 to the typical or average residential customer using 6,000 gallons of metered water will receive an increase in the monthly water and wastewater bill as follows: Monthly Bill Increase — Single -Family Residential Customer Using 6,000 Gallons of Service 11] 12] Amount Existing Rates $74.86 FY 2019 Rates $76.20 Increase in Monthly Bill: Amount $1.34 Percent 1.79% [ 1 ] Based on application of the Fiscal Year 2019 Price Index to existing rates. [2] Derived from Table 11 at the end of this section. (Remainder of page intentionally left blank) -26- In addition, a survey of other neighboring utilities levels of monthly user rates assessed to residential single-family 5/8" x 3/4" metered customers was compiled within Tables 9 through 11 and is summarized below: Residential Service Assuming 6,000 Gallons of Utility Service [1] [2] Water Wastewater Total Martin County: Existing Rates $30.63 $44.23 $74.86 Fiscal Year 2019 Rates 31.17 45.03 76.18 Within Martin County: Indiantown Company, Inc. $26.04 $50.62 $76.66 South Martin Regional Utilities 30.04 46.43 76.47 City of Stuart 34.73 48.67 83.40 Outside City - City of Stuart [3] 43.43 60.86 104.29 Other Utilities' Average Within Martin County $33.56 $51.65 $85.21 Other Florida Utilities City of Boynton Beach $22.79 $32.36 $55.15 City of Deerfield Beach 30.90 27.24 58.14 City of Delray Beach 19.47 38.39 57.86 City of Fort Lauderdale [2] 28.47 48.15 76.62 Fort Pierce Utilities Authority 36.26 49.66 85.92 Indian River County 22.91 31.74 54.65 Town of Jupiter [2] 30.07 23.20 53.27 City of Lake Worth [2] 42.37 35.65 78.02 City of Melbourne [2] 35.42 52.93 88.35 Okeechobee Utility Authority 51.69 64.12 115.81 Palm Beach County [2] 26.74 33.35 60.09 City of Port St. Lucie [2] 39.73 63.35 103.08 Riviera Beach Utility District [2] 34.75 34.46 69.21 St. Lucie County [2] 46.26 66.15 112.41 St. Lucie West Services District 36.24 42.45 78.69 Seacoast Utility Authority [2] 27.53 35.10 62.63 City of Sunrise [2] 43.96 52.90 96.86 Village of Tequesta [2] 37.28 23.20 60.48 City of Vero Beach [3] 20.53 41.43 61.96 Village of Wellington [2] 32.41 30.61 63.02 City of West Palm Beach [2] 43.39 44.52 87.91 All Comparable Utilities' Average $33.77 $41.47 $75.24 [1] Amounts shown are up to date as of October 2018 and are derived from Tables 9 through 11 and assume service through a 5/8" x 3/4" meter; other Florida utilities represent utilities located in the southeast portion of the state in general proximity of the County's utility service area. [2] Utility is currently involved in a rate study, is planning to conduct a rate study, or plans on implementing a rate revision within the next twelve (12) months. [3] Utilities shown reflect bills calculated recognizing the respective city's adopted and effective outside city surcharge as applied uniformly to the inside city rates for monthly water and wastewater service. Unless otherwise noted and with exception to the City of Vero Beach, which charges a 10% outside city surcharge, all other municipal -related utilities shown reflect the application of a 25% outside city surcharge to inside city rates. As can be seen above, the average bills produced from the rates that are identified for the Fiscal Year 2018 are generally competitive with the rates charged by other neighboring jurisdictions to -27- the County. It should be noted that several of the utilities surveyed are anticipating a rate change in the next twelve months (pursuant to a rate evaluation that is underway, an adopted rate -phasing program, or through the application of a price index), which should improve the competitive position of the System rates. DEBT SERVICE COVERAGE AND COVENANT COMPLIANCE Debt Service Covenant Compliance Another important component in the development of the Financial Forecast is the determination of whether the rate covenants as outlined in the prevailing Bond Resolution authorizing the issuance of the System's Outstanding and additional parity bonds, if any, will be met. Generally, these covenants are in the form of certain debt service coverage ratios, which are applicable to the level of rates both currently and projected to be in place. The County's Bond Resolution contains specific covenants under which the County will fix, establish, and maintain rates that will provide Net Revenues in each fiscal year to meet: "... (a) one hundred twenty percent (12001o) of the Bond Service Requirement on the Bonds in the corresponding Bond Year, plus (b) one hundred percent (100%) of the required deposits into (i) the Reserve Account... and (ii) the Renewal and Replacement Fund in such Fiscal Year; /' ... (i) one hundred percent (10001o) of the Debt Service Requirement on the Bonds for such Fiscal Year, and (ii) one hundred percent (100%) of the required deposits into (A) the Reserve Account... and (B) the Renewal and Replacement Fund in such Fiscal Year; " In addition to the terms of the Bond Resolution, the County must also set rates to meet the terms and conditions of the State Revolving Loan Fund Agreement between the County and the FDEP (the "Loan Agreement"); the SRF Loan is subordinate to the Senior Lien Bonds. Under terms of the Loan Agreement, the County has adopted the following covenant: "To maintain rates and charges for the services furnished by the water and sewer systems, which together with Special Assessments, will be sufficient to provide, in each Fiscal Year, Pledged Revenues equal to or exceeding 1.1 S times the sum of the two Semiannual Loan Payments due in such Fiscal Year. " As summarized on Table 7 at the end of this report, the anticipated revenue for the water and wastewater system, assuming that the County continues to implement the proposed price index rate adjustments as identified in this report for the Forecast Period, should be adequate for the Forecast Period presented in this study to meet the rate covenant requirements defined in the County's Bond Resolution and the Loan Agreement. The projected debt service coverage requirements for the revenue bond indebtedness are summarized below: am Projected Water and Wastewater System Debt Service Coverage [1] Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Senior Lien Coverage — Rate Revenue: Coverage Ratio — Calculated 229% 194% 206% 214% 222% 228% 230% 236% 234% 436% 419% Coverage Ratio — Required [2] 120% 120% 120% 120% 120% 120% 120% 120% 120% 120% 120% Subordinate Lien Coverage — Rate Revenue: Coverage Ratio — Calculated 3324% 2415% 2880% 460% 288% 302% 306% 328% 332% 463% 439% Coverage Ratio — Required [3] 115% 115% 115% 115% 115% 115% 115% 115% 115% 115% 115% All -In Debt Coverage: [4] Coverage Ratio — Rate Revenues 200% 174% 184% 167% 152% 156% 157% 158% 158% 227% 219% Coverage Ratio — Minimum Target [5] 150% 150% 150% 150% 150% 150% 150% 150% 150% 150% 150% [ 1 ] Amounts shown derived from Table 7 at the end of this report. [2] Represents minimum rate covenant requirement of the Bond Resolution. [3] Represents minimum rate covenant requirement of the SRF Loan Agreement WWG12063607P. [4] Represents the sum of annual debt service payments made on all outstanding and anticipated bonds / loans allocable to the System ("All -In Coverage"). [5] Although the Bond Resolution or SRF loan agreement does not require maintaining a minimum "All -In" debt coverage ratio; a target equal to or greater than 150% is recommended and was based on published debt coverage medians for AA -rated utilities pursuant to leading credit agency reports. As can be seen above and assuming the implementation of the price index adjustments as identified in this report, it is anticipated that i) the Net Revenues of the System will exceed the 1.20 debt service coverage requirement on the Outstanding Bonds and any additional parity Bonds as required by the Bond Resolution; and ii) the Net Revenues after the payment of the Senior Lien Bonds will exceed the 1.15 loan coverage requirement as required by the Loan Agreement executed with the FDEP during the Forecast Period. It should be noted that, beginning with Fiscal Year 2027, the projected debt service coverage ratios are currently projected to increase (improve). This improvement is due to a significant reduction in the annual debt service payments for the Series 2016 Bonds (refunding bonds structured based on prior actual refunded bond repayment attributes). Rate Covenant Compliance The Bond Resolution also requires that certain funds be established and maintained and that revenues from utility operations be applied to the funds in a particular order or sequence. With respect to the flow of funds, we have assumed or recognized the following for the preparation of the rate study. Revenue Fund Except as noted below, all funds received from the application of rates, fees, and charges were assumed to be available to the County to meet the expenditure requirements of the System. We have not recognized as a revenue to the System, which would subsequently be deposited in the Revenue Account moneys received from: i) the application of Capital Facilities Charges; or ii) interest income on Construction Fund, or the Capital Facilities Charge Accounts. Based on our analysis of rates, we assumed that moneys held in the Revenue Fund would first be applied to the payment of Operating Expenses. Sinking For the purposes of this report, we have recognized the funding of the Sinking Fund (for the payment of the principal and interest on outstanding bonds) on an accrual basis as opposed to an -29- "as paid or cash" basis consistent with the flow of funds requirements of the Bond Resolution; this would also provide a better match to the evolution of the sufficiency of rates since it links the cash funding needs for their revenue requirement. Additionally, for ease of presentation, we have presented the funding of the Sinking Fund without the recognition of a credit for interest earnings (i.e., on a "gross funding" basis) to be consistent with the schedule of bond service payments. All earnings accrued to the utility system from the Sinking Fund Account have been recognized separately as revenue to the System. Reserve Account Pursuant to the Bond Resolution, the County must maintain a balance in the Reserve Account (defined as the Reserve Account Requirement) as a surety to the bondholders, the Reserve Account Requirement may be either cash -funded or secured, in whole or in part, by a Reserve Account Credit Facility in lieu of fully funding a Reserve Account. For the Forecast Period for the Series 2016 Bonds, no Reserve Fund Requirement was required due to the strong fiscal position of the Utility; it was assumed that the System would not be required to fund a debt service reserve or its equivalent during the Forecast Period. Accordingly, no deposits have been recognized in the determination of monthly service rates or in the determination of the coverage test on the outstanding bonds for the Forecast Period as required by the Bond Resolution. Renewal and Replacement Fund Based on the funding requirements for the Renewal and Replacement Fund as specified in the Bond Resolution, a minimum annual payment to the Renewal and Replacement Fund in the amount equal to five percent of the previous year's Gross Revenues is required unless the County's Consulting Engineers certify an amount necessary for the purposes of the Renewal and Replacement Fund (defined as the Renewal and Replacement Fund Requirement). Based upon these funding requirements, the estimated capital improvement plans of the System, and discussions with the management of the Utilities Department, an annual transfer to the Renewal and Replacement Fund of $5.7 million on average was recognized during the Forecast Period. It should be noted that the proposed rates are anticipated to produce sufficient revenues to fund anticipated departmental capital needs such as vehicle and equipment purchases in addition to the funding of the Renewal and Replacement Fund. Such amounts could be deposited in the Renewal and Replacement Fund or be maintained in the General Reserve Fund. OTHER FINANCIAL CONSIDERATIONS AND PERFORMANCE Included as part of the development of Ten -Year Financial Forecast and the review of the overall sufficiency of System revenues is an evaluation of the financial position of the System. This evaluation includes the development of certain ratios and the review of financial performance indicators to evaluate "where the System will be financially." The analysis includes a series of charts and figures prepared to provide the County a visual representation of the financial and statistical trends in the selected financial ratios or benchmarks anticipated for the System over the Forecast Period. The following is a brief description of financial ratio evaluated by PRMG on behalf of the System. -30- Figure 1 — All -In Debt Service Coverage The following Figure IA presents the Annual Debt service requirement for outstanding and projected bonds and loans outstanding. The forecast does recognize additional parity Bonds and the issuance of additional subordinate debt associated with Extension Program, which will be funded primarily from assessment revenues. $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 1A) Existing and Proposed Debt Payments - Principal and Interest 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 u Proposed Subordinate Lien Debt Payments Existing Subordinate Lien Debt Payments u Proposed Senior Lien Debt Payments i Existing Senior Lien Debt Payments Figure 1 B below presents the debt service coverage for the aggregate of all System debt and loans paid from System revenues, which more accurately reflects the ability to fund the debt requirements from rates. The ratio only includes the Net Revenues of the System since Capital Facilities Charges (although considered as a pledged revenue) are one-time fees and not considered as a recurring revenue for debt repayment purposes. Additionally, the rating agencies rely on this ratio in the review of utility credits since it links to the total ability to pay debt from ongoing revenues of the utility and presents the overall leveraging capability of such utility. The All -In Debt Service Coverage ratio is presented below: (Remainder of page intentionally left blank) -31- 240% 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 113) All -In Debt Coverage 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 iNet Revenues w/o Indirect Cost Allocation As Expense i Net Revenues w/ Indirect Cost Allocation As Expense -Minimum Target The minimum debt service coverage ratio target was set at 1.50 based on medians as reported by the leading credit rating agencies. It is worth noting that the financial target serves as broad indicator and any significant deviation is not necessarily an indicator of credit quality. The debt service coverage ratios are considered by PRMG to be favorable, especially in a utility with a high degree of investment due to stringent treatment and alternative water supply standards such as the County's. It should be noted that the debt coverage percent (above 100%) provides: i) ongoing funds for capital re -investment and ii) future debt leveraging capacity to the extent significant capital projects are required in the future, which limits the need for future rate increases above the assumed price index adjustments. Figure 2 — Available Working Capital and Cash Balances Another important component of the evaluation of the System is the resulting ending cash balance or cash position of the Utility. The estimated cash flow (deposits and withdrawals) are shown in detail on Table 8 at the end of this report. Below is a summary of the estimated ending cash balances by specific fund for the Forecast Period. (Remainder of page intentionally left blank) -32- Projected Water and Wastewater System Ending Cash Balances ($000s) [1][2] Fiscal Year Ending September 30, Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Projected Ending Cash Balances: Fund 4102- Operating Reserve $24,602 $17,158 $15,998 $17,383 $7,813 $9,068 $9,086 $11,391 $13,393 $18,034 $20,697 Sub -Fund 4102 - Customer Deposits 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 Sub -Fund 4102 - Lend a Hand 9 9 9 9 9 9 9 9 9 9 9 Fund 4105 - R&R Fund 2,064 4,184 7,808 4,846 4,258 3,895 3,452 4,618 4,439 4,809 5,039 Fund 4103 - Water System CFC 5,304 6,073 6,669 6,688 7,498 8,013 8,826 5,272 5,961 6,608 7,266 Fund 4104 - Wastewater System CFC 3,669 4,842 5,666 6,253 7,268 8,226 4,810 5,784 6,689 7,568 8,460 Construction Account 0 10,074 1,027 0 0 0 0 0 0 0 0 Debt Service Reserve Fund 196 196 196 196 196 196 196 196 0 0 0 Total Projected Ending Cash Balances $37,077 $43,770 $38,607 $36,610 $28,276 $30,641 $27,613 $28,505 $31,726 $38,263 $42,704 [ 1 ] Amounts shown in thousands of dollars ($1,000s); includes application of the approved price index rate adjustments [2] Amounts shown derived from Table 8 at the end of this report. As can be seen above the ending cash balance for the utility funds decline slightly overall during the Forecast Period reflecting the timing of the capital draws from the CIP and the level of rate adjustments recognized for the Forecast Period. Below is a graphical representation of the projected ending cash balances for the Operating Fund (working capital) and targeted ending balance: 2) Operating Reserves Ending Cash Balance $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 ..- +FUND 4102 - OPERATING FUND -120 -Days of Rate Revenue - -120 - Days ofO&M As can be seen above the recommended rate adjustments serve to generally maintain the minimum targeted ending cash balance throughout the Forecast Period. It is projected that the Operating Reserve balance falls below the target in Fiscal Year 2022 but does rebound during the Forecast Period. This is due to the need to fund capital expenditures, which allows the Department to minimize identified debt needs. It should be noted that the forecast does recognize the issuance of additional parity bonds in the principal amount of $10,324,421 during Fiscal Year 2019 to fund -33- additional capital projects; however, this additional increase in debt is considered by PRMG to be very manageable and is anticipated to not negatively affect the overall fiscal position of the System. Figure 3 — Renewal and Replacement (R&R) Fund Balance As discussed earlier in this report, it is recommended that the County increase the annual deposits to the R&R Fund in order to provide additional funding for capital improvements, to improve the long-term equity position of the System, and to stabilize rates over the long-term (through the avoidance of debt). The majority of the projects identified by the County are for asset replacement as opposed to asset expansion, especially in the latter part of the Forecast Period. Accordingly, these projects are proposed to be funded from funds deposited to the R&R Fund annually from operations. As can be seen on Figure 3 below, the capital financing plan (which assumes increased revenues due to the application of the Price Index) recognizes that sufficient funds will be available to fund the asset replacement projects and that adequate capital reserves will be maintained, then limiting the long-term financial risks to the System. $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 3) Renewal and Replacement Fund Balance 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Year End Cash Balance IAdditional Deposits IMinimum Deposits —R&R Fund Expenditures As part of the financial evaluation, PRMG would suggest that the County consider adopting a policy of maintaining a minimum balance in the R&R Fund to provide funds for capital emergencies. We would suggest that the buildup of a reserve balance equal to approximately $6.0 million in capital reserves be considered by the County. As can be seen above, recognizing implementation of all identified price index adjustments (critical to the financial forecast) and the capital plan as shown in Figure 4 below, the System will generate sufficient cash to meet the identified expenditure needs for the Forecast Period and maintain a positive cash flow position. (Remainder of page intentionally left blank) -34- Figure 4 — Capital Improvement Program Funding The following graph presents the projected capital expenditure needs (on an appropriations basis) for the Forecast Period: $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 4) Capital Improvement Program Funding 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 u CFC Funds Grants & Other i Rates u Proposed Debt i Operating Reserves and RR&I Figure 4 shown above summarizes the annual capital needs of the System and the anticipated projected funding sources of the County's Ten -Year Capital Improvement Program. The breakdown of the Capital Program, which is based on information provided by the County and its Consulting Engineers, reflects an allowance for: i) an allowance of approximately $1 million annually in unspecified funding requirements was assumed in addition to the identified capital funding requirements beginning with the Fiscal Year 2024 to account for unanticipated repairs and replacement of existing infrastructure; and ii) adjustments to reflect allowances for annual inflation rates depending on the nature of the project beginning in Fiscal Year 2019 ranging from no inflation to 5.00%. (Remainder of page intentionally left blank) -35- As can be seen below, approximately 59% of the identified capital program is anticipated to be funded from internal funding sources (i.e., operating reserves, capital facility charges, etc. A breakdown of the funding sources of the capital program is as follows: Ten -Year Capital Improvement Program (CIP) Funding ($000s) [*] Amount Percent Renewal and Replacement Fund 67,743 37.03% Operating Reserves 24,449 13.37% Capital Facility Charges 16,606 9.08% Grants 1,500 0.82% Prior Debt Proceeds 1,670 0.91% Additional Debt Proceeds 64,907 35.48% Municipal Assessment Revenue Note 4,916 2.69% Rate Revenues 1,125 0.62% Total CIP Funding $182,916 100.00% [*] Derived from Table 5 at the end of this Report. Figure 5 — Projected Net Revenue Margin Ratio The Net Revenue Margin Ratio is a measure of a utility system's ability to meet its operating expenses and indicates the net contribution margin estimated to be earned by the System. The contribution margin can be considered as what may be available for reinvestment to the capital infrastructure of the System. A declining net revenue margin indicates a reduction in net available funds after payment of operating expenses to go to fund capital improvements. Generally, it is recommended that the Net Revenue Ratio target a minimum of 40% based on industry standards to promote the System's financial health over the long-term. As can be seen below, the net revenue margin is anticipated to generally decline during the Forecast Period reflecting: i) the assumed rate of growth in operating expenses outpacing projected revenues; and ii) the sunset of the price index beginning with the Fiscal Year 2025. Overall, PRMG views the Net Revenue Margin as favorable since there is a decline in the annual Debt Service Requirement in Fiscal Year 2027, which will release a component of the restrictions on the cash flow of the Utility. (Remainder of page intentionally left blank) -36- 60.06% 55-0% 50.0°/a 45-0°Io 40.0% 35-0% 30-0% 25-0% 20.0% 15 -0% 10.0°!0 5.0% 0.0% 5) Net Revenue Margin 1 I - E 2018 2019 2020 --1021 2022 2423 2024 2075 2026 2029 2028 I - t Net Revenue Margin — -Lower Liner Tauget - 40 % —Upper Limit Target - 55 As can be seen above, the net revenue margin is anticipated to generally decline attributable to increasing operating expenses and declining assessment revenues. Figure 6 — Outstanding Indebtedness Der Eauivalent Residential Connection (ERC) The ratio of the amount of debt outstanding per ERC measures the amount of financial risk a utility has undertaken relative to the customers served. The higher the net ERC debt burden, generally the higher the rates for service and the greater reliance on impact fees or other external sources of funds to meet System operating needs. It is also an indication of the amount of potential "leveraging" capability a utility may have relative to funding future capital needs. Figure 6 shown below illustrates during the most recent historical and projected Forecast Period, the amount of outstanding principal senior lien indebtedness in relation to the amount of projected water system ERCs and is considered on being favorable by PRMG. (Remainder of page intentionally left blank) -37- S7,500 MDo S15D0 S1A00 5500 S- G) Outtanding Debt per ERC Ratio 2018 2019 2029 2021 2022 _vn 2024 2025 2026 2027 2028 As can be seen, the amount of debt per ERC is expected to fluctuate throughout the forecast due to debt payment reductions and the issuance of debt to help pay for certain capital improvements including the Extension Program. The outstanding debt per ERC is considered favorable and is generally less than other utilities in Florida. This is especially true for those utilities that have not yet addressed the issue of alternative water resources located in the SFWMD Lower East Coast Basin, which are required to implement alternative water resource initiatives (may result in a significant amount of additional indebtedness). Figure 7 — Debt Outstanding to Net Plant Investment (Debt) Ratio This figure illustrates the amount of debt issued in relation to the amount of net plant investment in service to meet the potable water and wastewater demands of the System service area. This ratio presents the net equity of the utility (in terms of plant investment) and provides an indication of the reliance on debt to fund the existing net assets as well as the flexibility in terms of funding future capital assets and overall rate stability. Generally, the higher the ratio, the greater the need to have a larger portion of the rate revenues being dedicated to debt (principal) retirement. We have identified a maximum target for the ratio since it is expected that additional expansion projects anticipated to be funded from additional bond proceeds may be required in the future (considered to be beyond the Forecast Period). As can be seen below, the Debt Ratio is projected to fluctuate during the Forecast Period, similar to the outstanding debt to ERC graph, as seen above but overall maintains a favorable fiscal position. (Remainder of page intentionally left blank) -38- 40% 30% 20% 10% 7) Debt Outstanding to Net Plant lnrvestmeiit 2018 2019 2020 2021 -n" 20113 2024 '5 2026 2027 2028 6—dCkrtsranding Debt to Net Assets Patio —Maximimt Target RATE RECOMMENDATIONS In order to maintain the creditworthiness and financial position of the Utility, it is recommended that the County maintain the application of the adopted automatic Price Index application and consider reinstating the index subsequent to Fiscal Year 2025. The primary reasons for this recommendation is to: 1. Maintain targeted cash reserves within the Operating Reserve Fund; 2. Recover increased operation and maintenance expenses associated with general inflation, energy, and chemical increases and the residual effects on the cost of doing business (repairs, maintenance, etc.); 3. Provide dedicated annual transfers to the Renewal and Replacement Fund of $5.7 million on average in support of the CIP funding program to provide for less debt in the future and promote rate sustainability; and 4. Maintain the creditworthiness of the System and meet necessary coverage requirements of the Bond Resolution. (Remainder of page intentionally left blank) -39- MARTIN COUNTY, FLORIDA Water and Wastewater System ` Ten -Year Financial Forecast LIST OF TABLES Table No. Title 1 Summary of Historical Customer Statistics 2 Summary of Projected Customer Statistics 3 Summary of Projected System Operating Revenues 4 Summary of Projected Capital Facility Charge (CFC) Revenue 5 Summary of the Forecasted Ten -Year Capital Improvements Program 6 Summary of Combined Water and Wastewater System Revenue Requirements and Revenue Sufficiency 7 Projected Debt Service Coverage Analysis 8 Projected Fund Balances and Interest Income Determination 9 Comparison of Typical Monthly Residential Bills for Water Service 10 Comparison of Typical Monthly Residential Bills for Wastewater Service 11 Comparison of Typical Monthly Residential Bills for Combined Service N � W O C N N bq a O N O N O M 7 y O N U U WM y� O N m �= k+ U V2 y w � � C U F U x � � O_ 7 Uj O N T O O N N V �n c l0 l� to l D1 M cM O N �n O O, M M O l� -0 In O V 00 O l0 a0 M M T 01 00 1p --. 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V'1 m m N N 00 01 0� m l� O1 e o 0�0 O� l� 00 N O N N 7 00 N N l— 00 ao 00 0� 00 a0 M N O N 00 N 10 � oo N O cq M .--� N lr— N 01 �--� .-� l0 ,--i 00 N N .� N M M N `--' N W 6s 69 £f3 6s 69 69 69 6s 69 69 Vl 7 M 7 I V 'n m N M '. , e e \0 l� M, �--i � N l0 00 'y ,_, --� r �oO M nM 7 kn 01 O 7 ,--i V1 �0 n 0� M 0� l� W M lO kn O ! � N 7 00 �. O In -� l- m -� �D �O l� N , 00 ,--� V1 �c ,-r y G N M m N `� N � y 69 69 69 69 69 69 69 6s 69 69 69 w R V N 01 O Cl00 01 kn l� o o N I� 00 r.-V1 N N ' N Z o0 M kq N 7 aD C U O 7 N m M N .--' N O N Vi ^ ID r 69 69 GIs 69 69 QS 69 69 6s 69 Fff3 C "O Y V1 'o 0 N O T V 'n V1 N 7 o e T o0 V) 7 00 0� O �o 'n �D Do O 7 7 O V N 'n V� �0 N Do 00 V1 N V 7 eU+ A N Inm N `� N v,--i 69 69 6s 69 69 69 6s 6s 69 69 69 aVi O •0 O T �0 N N N 'n V1 '-� V1 a1 V1 M \O O 00 O 00 O O c- M 10 V1 00 00 o0 Q1 N ~ °, V1 \0 �O N .N-i 00 v .� kn M 69 69 69 rs 6s 69 QS 69 69 69 69 � O m O Qm ti Q U U aj 0 �. tC Fn 'G Fn N R,y mo 'C 0 �" 0 Poll o U v v o cC a U. S � ° Oa o ° rA ouo°n� ° N•�,�' o 0 o s YHo�� H H z H o z�z�H H 0 N m v 'n"D r- 00 O 1Z N e o ao O �O O 7 M N O V 00 00 --� N �n 7 N b9 A fA 0 o N kf) �O O 7 00 W N \O M l� N O V1 n N 69 69 69 O M --�--i N 7 N N 6s fs9 fA O M N 7 N N 69 69 69 0 0 �•' fA 69 fA N O N C [i] 69 EA 69 s. o 0 N 0o vi t` m O rn w rs 6q fA N ai C N y 69 fH 69 W R > O o, � C7, °` 'n v W U N N H us 69 GO!) e k L R In I It Ncc cq 69 a�i o o vi a, m rn � v� fs9 6 o a. z A � > h w d g o °O' U w ti o U •• o c Q w ss c 0 0 cG p U U 6 a o 0 c.n 0 10 O Zp N N N N N N w �--� Page 1 of 3 Table 8 Martin County, Florida Water and Wastewater System Projected Fund Balances and Interest Income Determination ($1,000's) Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 FUND 4102 - OPERATING UNRESTRICTED CASH & INVESTMENTS 1 Beginning Balance [1 ] $ 27,394 $ 24,617 $ 17,188 $16,052 $17,459 $ 7,908 $ 9,177 $ 9,224 $11,559 $13,584 $18,318 2 Transfer In - Operations 1,052 - 531 460 411 370 648 1,635 1,239 4,162 3,414 3 Transfer In - Debt Service Reserve Defeasance - - - - - - - - 196 - - 4 Transfer In - Repayment of Assessment Principal (Utility Internally Fun( 579 580 605 947 889 899 856 700 591 573 590 5 Total Funds Available 29,025 25,198 18,324 17,459 18,759 9,177 10,681 11,559 13,584 18,318 22,322 6 Transfers Out - Operations - 157 - - - - - - - - - 7 Transfers Out - Capital Improvements 4,408 5,715 773 - 10,851 - 1,458 - - - 1,245 8 Transfers Out - SRF Debt Service Reserve Funding - - - - - - - - - - - Transfers Out - Wastewater Capacity Fee Fund - 637 - - - - - - - - - 9 Transfers Out - Renewal and Replacement Fund - 1,500 1,500 - - - - - - - - to Total Transfers Out of Funds 4,408 8,009 2,273 - 10,851 - 1,458 - - - 1,245 11 End of Year Transfers for Revenue Surplus / (Deficiency) - - - - - - - - - - - 12 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 13 Interest Income 325 282 241 251 190 128 138 156 189 239 296 14 Recognition of Interest Earnings in Revenue Requirements 325 282 241 251 190 128 138 156 189 239 296 15 Ending Balance 24,617 17,188 16,052 17,459 7,908 9,177 9,224 11,559 13,584 18,318 21,077 Ending Cash Balance - Financial Targets No. of Days Operating Expenses 16 Calculated 425 285 263 276 121 136 132 161 182 238 264 17 Targeted 120 120 120 120 120 120 120 120 120 120 120 FUND 4105 - RENEWAL & REPLACEMENT FUND 18 Beginning Balance $ 6,296 $ 2,064 $ 4,184 $ 7,808 $ 4,846 $ 4,258 $ 3,895 $ 3,453 $ 4,619 $ 4,441 $ 4,811 19 Transfers In- Operations 5,250 5,000 5,250 5,276 5,559 5,992 5,843 5,982 6,273 6,510 6,553 20 Transfers In - Fund 4102 - 1,500 1,500 - - - - - - - - 21 Total Funds Available 11,546 8,564 10,934 13,085 10,405 10,250 9,738 9,434 10,892 10,951 11,364 22 Transfers Out- CIP 9,482 4,380 3,125 8,238 6,147 6,354 6,285 4,815 6,452 6,140 6,323 23 Total Transfers Out of Funds 9,482 4,380 3,125 8,238 6,147 6,354 6,285 4,815 6,452 6,140 6,323 24 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 25 Interest Income 52 32 76 95 68 61 55 61 68 69 74 26 Recognition of Interest Earnings in Revenue Requirements 52 32 76 95 68 61 55 61 68 69 74 27 Ending Balance $ 2,064 $ 4,184 $ 7,808 $ 4,846 $ 4,258 $ 3,895 $ 3,453 $ 4,619 $ 4,441 $ 4,811 $ 5,041 DEBT SERVICE SINKING FUND Annual Sinking Fund Deposit: 28 Existing Debt $ 7,782 $ 7,701 $ 7,713 $ 7,714 $ 7,716 $ 7,720 $ 7,709 $ 7,625 $ 7,532 $ 3,798 $ 3,803 29 Proposed Debt - 841 841 2,057 3,461 3,461 3,461 3,776 3,776 3,776 3,776 30 Average Balance(Assumes 25% of Annual Debt Service) 1,946 2,136 2,139 2,443 2,794 2,795 2,793 2,850 2,827 1,894 1,895 31 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 32 Interest Income 24 29 31 37 42 42 42 43 42 28 28 Recognition of Interest Earnings 33 in Revenue Requirements $ 24 $ 29 $ 31 $ 37 $ 42 $ 42 $ 42 $ 43 $ 42 $ 28 $ 28 DEBT SERVICE / LOAN REPAYMENT RESERVE FUND 34 Beginning Balance $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ - $ - 35 Transfers In - Additional Debt - - - - - - - - - - - 36 Total Funds Available 196 196 196 196 196 196 196 196 196 - - 37 Transfers Out - SRF Debt Defeasance - - - - - - - - 196 - - 38 Total Transfers Out of Funds - - - - - - - - 196 - - 39 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 40 Interest Income 2 3 3 3 3 3 3 3 2 - - 41 Recognition of Interest Earnings in Revenue Requirements 2 3 3 3 3 3 3 3 2 - - 42 Ending Balance $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ 196 $ $ $ Page 2 of 3 Table 8 Martin County, Florida Water and Wastewater System Proiected Fund Balances and Interest Income Determination ($1,000's) Line Fiscal Year Ending September 30, No. Description 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 CONSTRUCTION ACCOUNT - Future Indebtedness 43 Beginning Balance $ - $ - $ 10,074 $ 1,027 $ - $ - $ - $ - $ 44 Transfers In - New Debt - 10,324 - - - - - - - - - 45 Total Funds Available - 10,324 10,074 1,027 - - - - - - - 46 Transfers Out - CIP - 250 9,047 1,027 - - - - - - - 47 Total Transfers Out of Funds - 250 9,047 1,027 - - - - - - - 48 Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 49 Interest Income - - - - - - - - - - - 50 Recognition of Interest Earnings in Revenue Requirements - - - - - - - - - - - 51 Ending Balance S $ 10,074 $ L027 $ $ $ $ $ $ $ $ CUSTOMER DEPOSITS 52 Beginning Balance $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 53 Transfers In - System Connection Fee Revenue - - - - - - - - - - - 54 Total Funds Available 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 1,235 55 Transfers Out - - - - - - - - - - - 56 Total Transfers Out of Funds - - - - - - - - - - - 57 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 58 Interest Income 15 17 18 19 19 19 19 19 19 19 19 59 Recognition of Interest Earnings in Revenue Requirements 15 17 18 19 19 19 19 19 19 19 19 60 Ending Balance $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 $ 1,235 LEND A HAND DEPOSITS 61 Beginning Balance $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 62 Transfers In - System Connection Fee Revenue - - - - - - - - - - - 63 Total Funds Available 9 9 9 9 9 9 9 9 9 9 9 64 Transfers Out - - - - - - - - - - - 65 Total Transfers Out of Funds - - - - - - - - - - - 66 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 67 Interest Income 0 0 0 0 0 0 0 0 0 0 0 68 Recognition of Interest Earnings in Revenue Requirements 0 0 0 0 0 0 0 0 0 0 0 69 Ending Balance $ 9 $ 9 $ 9 $ 9 $ 9 S 9 $ 9 $ 9 $ 9 $ 9 $ 9 FUND 4103 - WATER SYSTEM CAPACITY FEE FUND 70 Beginning Balance $ 6,119 $ 5,304 $ 6,073 $ 6,669 $ 6,688 $ 7,498 $ 8,013 $ 8,826 $ 5,272 $ 5,961 $ 6,608 71 Transfers In - System Connection Fee Revenue 727 636 595 552 515 434 443 373 339 303 303 72 Transfers In - Revenue Fund (Assessment Programs) 299 314 374 478 476 473 448 470 470 455 455 73 Total Funds Available 7,144 6,254 7,043 7,699 7,678 8,406 8,904 9,669 6,080 6,718 7,366 74 Transfers Out - Capital Improvements 1,910 255 463 1,107 282 505 200 4,499 200 200 200 75 Total Transfers Out of Funds 1,910 255 463 1,107 282 505 200 4,499 200 200 200 76 Interest Rate 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 77 Interest Income 69 74 89 96 102 112 122 101 80 90 100 78 Recognition of Interest Earnings in Revenue Requirements - - - - - - - - - - - 79 Ending Balance $ 5,304 $ 6,073 $ 6,669 $ 6,688 $ 7,498 $ 8,013 $ 8,826 $ 5,272 $ 5,961 $ 6,608 $ 7,266 Page 3 of 3 Line No. FUND 4104 - WASTEWATER SYSTEM CAPACITY FEE FUND 80 Beginning Balance 81 Transfers In - System Connection Fee Revenue 82 Transfers In - Revenue Fund (Assessment Program) Transfer In - Operating Reserves 83 Total Funds Available 84 Transfers Out - Capital Improvements 85 Total Transfers Out of Funds 86 Interest Rate 87 Interest Income 88 Recognition of Interest Earnings in Revenue Requirements 89 Ending Balance Table 8 Martin County, Florida Water and Wastewater System Proiected Fund Balances and Interest Income Determination ($1,000's) Fiscal Year Ending September 30, 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 $ 4,135 $ 3,669 $ 4,842 $ 5,666 $ 6,253 $ 7,268 $ 8,226 $ 4,810 $ 5,784 $ 6,689 $ 7,568 751 628 624 567 557 485 477 405 391 351 351 131 131 176 302 411 411 411 544 475 475 475 - 637 - - - - - - - - - 5,016 5,065 5,642 6,535 7,220 8,164 9,114 5,759 6,650 7,515 8,394 1,395 275 50 368 50 50 4,397 50 50 50 50 1,395 275 50 368 50 50 4,397 50 50 50 50 1.25% 1.35% 1.45% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 48 52 74 86 98 112 94 75 89 103 116 $ S $ S S $ 3,669 $ 4,942 $ 5.666 6.253 7268 8,226 $ 4.810 5,794 6.689 S 7,569 $ 8.460 Table 9 Martin County, Florida Water System Comparison of Typical Monthly Residential Bills for Water Service [11 Residential Service for a 5/8" or 3/4" Meter Line 0 2,000 4,000 6,000 8,000 10,000 15,000 20,000 No. Description Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons Martin County 1 Existing Rates $17.31 $21.75 $26.19 $30.63 $35.07 $39.51 $55.21 $75.31 2 Fiscal Year 2019 Rates 17.61 22.13 26.65 31.17 35.69 40.21 56.21 76.66 Other Florida Utilities: Within Martin County: 3 South Martin Regional Utility [21 4 City of Stuart [2] 5 Service Outside Corporate Limits - City of Stuart [2][3] 6 Indiantown Company, Inc. [4] Outside Martin County: 7 City of Boynton Beach 8 City of Deerfield Beach 9 City ofDehayBeach 10 City of Fort Lauderdale [2] 11 Fort Pierce Utilities Authority 12 Indian River County 13 Town of Jupiter [2] 14 City of Lake Worth [2] 15 City of Melbourne [2] 16 Okeechobee Utility Authority 17 Palm Beach County [2] 18 City of Port St. Lucie [2] 19 Riviera Beach Utility District [2] 20 St. Lucie County [2] 21 St. Lucie West Services District 22 Seacoast Utility Authority [2] 23 City of Sunrise [2] 24 Village of Tequesta [2] 25 City of Vero Beach [3] 26 Village of Wellington [2] 27 City of West Palm Beach [2] 28 Other Florida Utilities' Average [51 $20.38 $22.20 $25.24 $29.50 $33.76 $38.02 $53.97 $69.92 14.96 20.70 26.44 32.46 38.48 48.84 77.35 107.60 18.70 25.88 33.06 40.58 48.10 61.06 96.70 134.50 13.20 17.48 21.76 26.04 30.32 35.66 49.01 65.11 $12.35 $15.65 $18.95 $22.25 $25.55 $30.16 $44.96 $59.76 15.00 20.30 25.60 30.90 38.24 45.58 65.01 85.16 15.72 15.72 16.97 19.47 21.97 24.47 32.97 42.97 7.20 11.62 18.71 28.47 38.23 50.43 87.32 128.47 14.30 25.28 28.94 36.26 43.58 50.90 73.80 101.25 9.05 13.45 18.07 22.91 29.18 36.88 63.83 102.33 21.60 24.14 26.68 29.22 32.68 36.14 46.11 61.36 19.79 26.17 32.55 42.37 52.19 65.49 113.71 171.91 8.00 17.14 26.28 35.42 44.56 53.70 76.55 99.40 20.01 28.45 39.01 51.69 64.37 77.05 108.75 140.45 14.09 16.93 19.77 26.05 32.33 38.61 78.16 117.71 10.51 18.89 27.27 36.93 47.87 58.81 89.94 123.59 17.63 22.69 27.75 33.74 40.66 47.58 70.43 93.28 22.25 29.35 36.45 46.26 58.78 71.30 112.80 161.20 15.42 22.36 29.30 36.24 43.18 50.12 67.47 84.82 20.49 22.57 24.65 26.73 34.91 43.09 63.54 83.99 20.20 28.12 36.04 43.96 51.88 59.80 79.60 99.40 18.37 24.19 30.01 35.83 41.65 47.47 67.99 92.49 13.60 15.26 16.92 20.53 26.09 31.65 45.55 73.35 18.68 22.90 27.12 31.34 37.64 43.94 59.69 80.79 21.97 28.76 35.55 42.36 50.89 59.42 83.01 108.08 $16.14 $21.45 $26.76 $33.10 $40.28 $48.25 $72.33 $99.56 Footnotes: [1 ] Unless otherwise noted, amounts shown reflect residential rates in effect August 2018 and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges offered by each listed utility. [2] Utility is currently involved in a rate study, is planning a rate study, or plans to implement a rate revision or price index / pass -through adjustment within the next twelve months. [31 Utilities shown reflect bills calculated recognizing the respective city's / municipalities' adopted and effective outside city / municipality surcharge as applied uniformly to the inside city / municipality rates for monthly water and wastewater service. Unless otherwise noted and with exception to the City of Vero Beach, which charges a 10% outside city surcharge, all other utilities shown reflect the application of a 25% outside city / municipality surcharge to inside city / municipality rates. [41 Represents privately -owned utility located in the western portion of Martin County (not interconnected with the County System) and is regulated by the Florida Public Service Commission relative to the establishment of rates for monthly utility service. [5] Utility average includes other utilities located in Martin County as well as outside the County. 1 of Table 10 Martin County, Florida Wastewater System Comparison of Typical Monthly Residential Bills for Wastewater Service Ill Residential Service for a 5/8" or 3/4" Meter Line 0 2,000 4,000 6,000 8,000 10,000 15,000 20,000 No. Description Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons Martin County 1 Existing Rates $17.95 $26.71 $35.47 $44.23 $52.99 $61.75 $61.75 $61.75 2 Fiscal Year 2019 Rates 18.27 27.19 36.11 45.03 53.95 62.87 62.87 62.87 Other Florida Utilities: Within Martin County: 3 South Martin Regional Utility [2] $12.73 $23.69 $34.65 $45.61 $56.57 $67.53 $67.53 $67.53 4 City of Stuart [2] 7.93 21.03 34.13 47.23 60.33 73.43 86.53 86.53 5 Service Outside Corporate Limits - City of Stuart [2][3] 9.92 26.30 42.68 59.06 75.44 91.82 108.20 108.20 6 Indiantown Company, Inc. [4] 23.86 32.78 41.70 50.62 59.54 68.46 68.46 68.46 Outside Martin County: 7 City of Boynton Beach $18.70 $23.00 $27.30 $31.60 $33.75 $33.75 $33.75 $33.75 8 City of Deerfield Beach 10.98 16.40 21.82 27.24 32.66 38.08 43.50 43.50 9 City of Delray Beach 18.04 24.82 31.61 38.39 45.17 51.96 58.74 58.74 10 City of Fort Lauderdale [2] 10.56 18.36 30.89 48.15 65.41 82.67 125.82 168.97 11 Fort Pierce Utilities Authority 15.76 27.06 38.36 49.66 60.96 72.26 72.26 72.26 12 Indian River County 14.58 20.30 26.02 31.74 37.46 43.18 48.90 48.90 13 Town of Jupiter [2][5] 22.75 22.75 22.75 22.75 22.75 22.75 22.75 22.75 14 City of Lake Worth [2] 12.67 20.33 27.99 35.65 43.31 50.97 58.63 58.63 15 City ofMelboume[2] 11.83 25.53 39.23 52.93 66.63 80.33 114.58 148.83 16 Okeechobee Utility Authority 22.36 36.28 50.20 64.12 78.04 91.96 126.76 161.56 17 Palm Beach County [2] 15.80 19.64 23.48 32.50 41.52 50.54 50.54 50.54 18 City of Port St. Lucie [2] 13.89 28.39 42.89 57.39 71.89 71.89 71.89 71.89 19 Riviera Beach Utility District [2] 16.12 21.30 26.48 31.66 36.84 42.02 42.02 42.02 20 St. Lucie County [2] 23.61 37.79 51.97 66.15 80.33 94.51 94.51 94.51 21 St. Lucie West Services District 19.29 27.01 34.73 42.45 50.17 57.89 77.19 96.49 22 Seacoast Utility Authority [2] 29.94 31.32 32.70 34.08 35.46 36.84 36.84 36.84 23 City of Sunrise [2] 28.72 36.78 44.84 52.90 60.96 69.02 89.17 93.20 24 Village of Tequesta [2][5] 22.75 22.75 22.75 22.75 22.75 22.75 22.75 22.75 25 City of Vero Beach [3] 19.89 27.07 34.25 41.43 48.61 55.79 55.79 55.79 26 Village of Wellington 17.81 21.75 25.69 29.63 33.57 37.51 47.36 47.36 27 City of West Palm Beach [2] 12.73 22.76 32.78 42.81 52.84 62.86 72.73 72.73 28 Other Florida Utilities' Average [61 $17.33 $25.41 $33.68 $42.34 $50.92 $58.83 $67.89 $73.31 Footnotes: [1] Unless otherwise noted, amounts shown reflect residential rates in effect August 2018 and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges offered by each listed utility. [2] Utility is currently involved in a rate study, is planning a rate study, or plans to implement a rate revision or price index / pass -through adjustment within the next twelve months. [3] Utilities shown reflect bills calculated recognizing the respective city's / municipalities' adopted and effective outside city / municipality surcharge as applied uniformly to the inside city / municipality rates for monthly water and wastewater service. Unless otherwise noted and with exception to the City of Veto Beach, which charges a 10 % outside city surcharge, all other utilities shown reflect the application of a 25% outside city / municipality surcharge to inside city / municipality rates. [41 Represents privately -owned utility located in the western portion of Martin County (not interconnected with the County System) and is regulated by the Florida Public Service Commission relative to the establishment of rates for monthly utility service. [5] Wastewater service provided by the Loxahatchee Sewer District and for purposes of this comparison assumes charges associated with two (2) toilet fixtures. [6] Utility average includes other utilities located in Martin County as well as outside the County. 1 Of Table 11 Martin County, Florida Water System Comparison of Typical Monthly Residential Bills for Water and Wastewater Service [11 Residential Service for a 5/8" or 3/4" Meter Line 0 2,000 4,000 6,000 8,000 10,000 15,000 20,000 No. Description Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons Martin County 1 Existing Rates $35.26 $48.46 $61.66 $74.86 $88.06 $101.26 $116.96 $137.06 2 Fiscal Year 2019 Rates 35.88 49.32 62.76 76.20 89.64 103.08 119.08 139.53 Other Florida Utilities: Within Martin County: 3 South Martin Regional Utility [2] 4 City of Stuart [2] 5 Service Outside Corporate Limits - City of Stuart [2][3] 6 Indiantown Company, Inc. [4] Outside Martin County: 7 City of Boynton Beach 8 City of Deerfield Beach 9 City of Delray Beach 10 City of Fort Lauderdale [2] 11 Fort Pierce Utilities Authority 12 Indian River County 13 Town of Jupiter [2][5] 14 City of Lake Worth [2] 15 City ofMelboume[2] 16 Okeechobee Utility Authority 17 Palm Beach County [2] 18 City of Port St. Lucie [2] 19 Riviera Beach Utility District [2] 20 St. Lucie County [2] 21 St. Lucie West Services District 22 Seacoast Utility Authority [2] 23 City of Sunrise [2] 24 Village of Tequesta [2][5] 25 City of Vero Beach [3] 26 Village of Wellington 27 City of West Palm Beach [2] 28 Other Florida Utilities' Average [61 $33.11 $45.89 $59.89 $75.11 $90.33 $105.55 $121.50 $137.45 22.89 41.73 60.57 79.69 98.81 122.27 163.88 194.13 28.62 52.18 75.74 99.64 123.54 152.88 204.90 242.70 37.06 50.26 63.46 76.66 89.86 104.12 117.47 133.57 $31.05 $38.65 $46.25 $53.85 $59.30 $63.91 $78.71 $93.51 25.98 36.70 47.42 58.14 70.90 83.66 108.51 128.66 33.76 40.54 48.58 57.86 67.14 76.43 91.71 101.71 17.76 29.98 49.60 76.62 103.64 133.10 213.14 297.44 30.06 52.34 67.30 85.92 104.54 123.16 146.06 173.51 23.63 33.75 44.09 54.65 66.64 80.06 112.73 151.23 44.35 46.89 49.43 51.97 55.43 58.89 68.86 84.11 32.46 46.50 60.54 78.02 95.50 116.46 172.34 230.54 19.83 42.67 65.51 88.35 111.19 134.03 191.13 248.23 42.37 64.73 89.21 115.81 142.41 169.01 235.51 302.01 29.89 36.57 43.25 58.55 73.85 89.15 128.70 168.25 24.40 47.28 70.16 94.32 119.76 130.70 161.83 195.48 33.75 43.99 54.23 65.40 77.50 89.60 112.45 135.30 45.86 67.14 88.42 112.41 139.11 165.81 207.31 255.71 34.71 49.37 64.03 78.69 93.35 108.01 144.66 181.31 50.43 53.89 57.35 60.81 70.37 79.93 100.38 120.83 48.92 64.90 80.88 96.86 112.84 128.82 168.77 192.60 41.12 46.94 52.76 58.58 64.40 70.22 90.74 115.24 33.49 42.33 51.17 61.96 74.70 87.44 101.34 129.14 36.49 44.65 52.81 60.97 71.21 81.45 107.05 128.15 34.70 51.52 68.34 85.17 103.72 122.28 155.74 180.81 $33.47 $46.86 $60.44 $75.44 $91.20 $107.08 $140.22 $172.86 Footnotes: [1] Unless otherwise noted, amounts shown reflect residential rates in effect August 2018 and are exclusive of taxes or franchise fees, if any, and reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison is intended to show comparable charges for similar service for comparison purposes only and is not intended to be a complete listing of all rates and charges offered by each listed utility. [2] Utility is currently involved in a rate study, is planning a rate study, or plans to implement a rate revision or price index / pass -through adjustment within the next twelve months. [3] Utilities shown reflect bills calculated recognizing the respective city's / municipalities' adopted and effective outside city / municipality surcharge as applied uniformly to the inside city / municipality rates for monthly water and wastewater service. Unless otherwise noted and with exception to the City of Veto Beach, which charges a 10 % outside city surcharge, all other utilities shown reflect the application of a 25% outside city / municipality surcharge to inside city / municipality rates. [41 Represents privately -owned utility located in the western portion of Martin County (not interconnected with the County System) and is regulated by the Florida Public Service Commission relative to the establishment of rates for monthly utility service. [5] Wastewater service provided by the Loxahatchee Sewer District and for purposes of this comparison assumes charges associated with two (2) toilet fixtures. [6] Utility average includes other utilities located in Martin County as well as outside the County. 1 of