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HomeMy WebLinkAboutMWMC Agenda Packet AGENDA IIa. • • • • • • • • • • • • • • • • • • AGENDA IV. Regional Wastewater Program Annual Financial Report Fiscal Year 2021-2022 Metropolitan Wastewater MANAGEMENT COMMISSION partners in wastewater management Attachment 1 FY2021-22 Annual Financial Report METROPOLITAN WASTEWATER MANAGEMENT COMMISSION OF THE EUGENE-SPRINGFIELD METROPOLITAN AREA For the Years Ended June 30, 2022 and 2021 ANNUAL FINANCIAL REPORT 5-7 11-16 19 20 21 23-32 35 36 37 41-42 Page III METROPOLITAN WASTEWATER MANAGEMENT COMMISSION ANNUAL FINANCIAL REPORT For the years ended June 30, 2022 and 2021 TABLE OF CONTENTS INTRODUCTORY SECTION Governing Board FINANCIAL SECTION Independent Auditor's Report Management's Discussion & Analysis Basic Financial Statements Comparative Statements of Net Position Comparative Statements of Revenues, Expenses and Changes in Net Position Comparative Statements of Cash Flows Notes to Financial Statements Supplemental Information Combining Statement of Revenues, Expenses and Changes in Fund Net Position Schedule of Revenues, Expenses and Changes in Fund Net Position (Non-GAAP Budgetary Basis) - Budget and Actual Regional Wastewater Fund Regional Wastewater Capital Fund COMPLIANCE SECTION Independent Auditor's Report Required by Oregon State Regulations ,QWURGXFWRU\6HFWLRQ I II GOVERNING BOARD June 30, 2022 Jennifer Yeh Eugene Council Representative Eugene, OR 97401 President Joe Pishioneri Springfield Council Representative Springfield, OR 97478 Vice-President Pat Farr Lane County Board of Commissioners Representative Eugene, OR 97401 Walt Meyer Eugene Citizen Representative Eugene, OR 97405 Peter Ruffier Eugene Citizen Representative Eugene, OR 97405 Bill Inge Lane County Citizen Representative Eugene, OR 97402 Doug Keeler Springfield Citizen Representative Springfield, OR 97477 ADMINISTRATION 225 Fifth Street Springfield, Oregon 97477 Matt Stouder MWMC General Manager/Executive Officer Dave Breitenstein Wastewater Division Director Nathan Bell MWMC Finance Officer Metropolitan Wastewater MANAGEMENT COMMISSION partners in wastewater management III IV )LQDQFLDO6HFWLRQ Page 1 of 42 Attachment 1 Page 2 of 42 Attachment 1 ,QGHSHQGHQW$XGLWRU¶V5HSRUW Page 3 of 42 Attachment 1 Page 4 of 42 Attachment 1 INDEPENDENT AUDITOR’S REPORT Governing Board Metropolitan Wastewater Management Commission Springfield, Oregon Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the business-type activities of Metropolitan Wastewater Management Commission (MWMC), as of and for the years ended June 30, 2022 and 2021, and the related notes to the financial statements, which collectively comprise MWMC’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the business-type activities of Metropolitan Wastewater Management Commission, as of June 30, 2022 and 2021, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of MWMC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements MWMC’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about MWMC’s ability to continue as a going concern for one year after the date that the financial statements are issued. Page 5 of 42 Attachment 1 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of MWMC’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about MWMC’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis (MD&A) be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Page 6 of 42 Attachment 1 Supplemental Information Our audit was conducted for the purpose of forming opinion on the financial statements that collectively comprise MWMC’s basic financial statements. The other supplemental information is presented for purposes of additional analysis and are not a required part of the basic financial statements. The other supplemental information as listed in the table of contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Minimum Standards for Audits of Oregon Municipal Corporations In accordance with Minimum Standards for Audits of Oregon Municipal Corporations, we have issued our report dated December 19, 2022 on our consideration of MWMC's compliance with certain provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing and not to provide an opinion on compliance. GROVE, MUELLER & SWANK, P.C. CERTIFIED PUBLIC ACCOUNTANTS By: Ryan T. Pasquarella, A Shareholder December 19, 2022 Page 7 of 42 Attachment 1 This page intentionally left blank. Page 8 of 42 Attachment 1 0DQDJHPHQW¶V 'LVFXVVLRQDQG$QDO\VLV Page 9 of 42 Attachment 1 This page intentionally left blank. Page 10 of 42 Attachment 1 Page 11 of 42 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the Metropolitan Wastewater Management Commission (MWMC), we offer readers of MWMC’s financial statements this narrative overview and analysis of the financial activities of MWMC for the fiscal year ended June 30, 2022. Please read it in conjunction with MWMC’s basic financial statements, which begin on page 17. Mission The purpose of the MWMC is to protect health, safety and the environment by providing high quality wastewater management services to the Eugene-Springfield metropolitan area. The MWMC and its regional partners are committed to providing these services in a manner that is effective, efficient, and meets customer service expectations. Since the mid-1990’s, the Commission and staff have worked together to identify key outcome areas within which to focus the annual work plan and budget priorities, as well as planning capital and construction administration. Responsibility and Controls The City of Springfield performs all administrative duties, as well as planning and capital construction of major capital assets for the MWMC in accordance with the provisions of an intergovernmental service agreement among the City of Springfield, the City of Eugene, and the MWMC. The City of Eugene performs all operations and maintenance duties for the MWMC in accordance with the provisions of the intergovernmental service agreement among the City of Eugene, the City of Springfield, and the MWMC. FINANCIAL HIGHLIGHTS Total assets and deferred outflows of resources at June 30, 2022 were $239.8 million and exceeded liabilities and deferred inflows of resources by $205.1 million (i.e. net position). The increase in net position for the fiscal year ended June 30, 2022 was $9.5 million. The increase in net position for the fiscal year ended June 30, 2021 was $8.5 million. The increase of $1.0 million was the result of a $2.3 million increase in operating revenues, offset by $796 thousand in operating costs and $1.7 million in non-operating revenues including capital contributions. Of the total net position, $10.2 million is restricted for capital improvements, $113.7 million represents net investment in capital assets, $.05 million for debt service, and $81.2 million is unrestricted and available for future appropriation. Operating revenues for the year were $36,731,644. This is 6.6% more than the fiscal year 2021 operating revenue of $34,456,365. Fiscal year 2021 decreased from 2020 with a change to operating revenues by $82,279. Attachment 1  Total operating and maintenance expenses for the year were $14.5 million and the total administration expenses were $4.2 million compared to the prior year when expenses were $15.3 and $4.3 million respectively, and 2020 when they were $14.7 and $3.9 million respectively. OVERVIEW OF ANNUAL FINANCIAL REPORT Management’s Discussion and Analysis (MD&A) serves as an introduction to the basic financial statements and supplementary information. The MD&A represents management’s examination and analysis of MWMC’s financial condition and performance. The financial statements report information about MWMC using the accrual basis of accounting. As such, revenues are recognized when they are earned and expenses are recognized when they are incurred. The financial statements include a statement of net position, a statement of revenues, expenses, and changes in net position, a statement of cash flows and notes to the financial statements. The statement of net position provides information about the nature and amount of resources and obligations at year-end. The statement of revenues, expenses, and changes in net position presents the results of the business activities over the course of the fiscal year and information on how the net position changed during the year. The statement of cash flows presents changes in cash and cash equivalents resulting from operational, capital and related financing, and investing activities. This statement presents information about cash receipts and cash disbursements, without consideration of the earnings event, when an obligation occurs, or depreciation of capital assets. The notes to the financial statements provide required disclosures and other information that are essential to a full understanding of material data provided in the statements. The notes present information about the MWMC’s accounting policies, significant account balances and activities, material risks, obligations, commitments, and contingencies. The financial statements represent a consolidation of two budgetary funds: the Regional Wastewater Fund and the Regional Wastewater Capital Fund. For financial reporting purposes, management considers the activities relating to the operation of wastewater management to be of a unitary nature and they are reported as such. For operational purposes, the accounts of wastewater management are organized on the basis of funds, each of which is considered a separate accounting entity. Supplementary information comparing the budget to actual revenues and expenses is provided. The financial statements were prepared by City of Springfield staff from the detailed books and records of the MWMC. The financial statements were audited during the independent external audit process. Page 12 of 42 Attachment 1 Financial Analysis The following comparative condensed financial statements serve as the key financial data and indicators for management, monitoring, and planning. CONDENSED FINANCIAL STATEMENTS Statements of Net Position As restated, 2022 2021 2020 97,059,893$91,306,511$107,720,486$Current and other assets Capital assets, net, where applicable, 136,501,018 134,532,472130,556,071of accumulated depreciation 225,838,983233,560,911238,276,557Total assets 2,197,7981,851,2031,504,607Deferred outflows of resources 6,886,945 5,946,5286,367,262Current liabilities 32,774,883 34,981,95028,182,099Long-term liabilities 40,928,47839,661,82834,549,361Total liabilities 127,93895,879Deferred inflows of resources Net position: 116,286,944 110,829,285113,678,083Net investment in capital assets 8,231,886 5,387,37710,200,201Restricted for capital improvement 183,192 183,19250,000Restricted for debt service 70,920,326 70,708,44981,207,640Unrestricted 187,108,303$195,622,348$205,135,924$Total net position The largest portion of the MWMC’s net position is net investment in capital assets, followed by unrestricted assets, and then the restricted amounts held for investment in the capital improvement plan and finally, the remaining amount that is restricted for debt service. Total net position for MWMC continues to show a growth trend with increases to the categories of unrestricted and restricted for capital improvement. Net investments in capital assets decreased due to asset depreciation being greater than asset additions in FY22. MWMC is deliberately focused on a robust capital program that will maintain plant infrastructure to withstand the wear and tear of time, to meet current and future regulatory requirements, to survive natural disasters and to incorporate modern technologies. At the same time, MWMC has taken opportunities to retire long-term debt when cash has accumulated and interest rates are favorable. Page 13 of 42 Attachment 1 Statements of Revenues, Expenses, and Changes in Net Position 2022 2021 2020 34,538,644$34,456,365$36,731,644$Operating revenues (14,683,457)(15,280,858)(14,484,573)Operations & maintenance (3,908,139)(4,275,285)(4,197,186)Administration (9,175,822)(9,389,412)(9,876,657)Depreciation 6,771,2265,510,8108,173,228Operating income Non-operating revenues (expenses), net 2,487,5513,003,2351,340,348(includes capital contributions) 9,258,777$8,514,045$9,513,576$Change in net position Operating revenues increased by 6.6% from fiscal year 2021 to 2022 and decreased by .2% from fiscal year 2020 to 2021. The fiscal year 2022 increase was primarily due to a $2.3 million increase to sewer user fees collected. Additionally, beginning in 2022 revenue was received from RNG (renewable natural gas) and RINs (renewable identification number) sales totaling $622 thousand. Operations & maintenance expenses decreased by approximately $796 thousand or 5.2% compared to fiscal year 2021. The MWMC experienced small increases and decreases throughout the budget but there were a couple of items with significance worth detailing. Personal Services decreased by $1.2 million from fiscal year 2021 to 2022, of which $558 thousand was due to positions that remained vacant in 2022 at both Springfield and Eugene. This was offset by increases to operations and indirect costs, comprised of increases in parts and components ($228 thousand), utilities ($144 thousand), contractual services ($86 thousand), and legal expense ($80 thousand). Net non-operating revenues/(expenses) decreased from $3 million in fiscal year ending June 30, 2021 to $1.3 million for the year ending June 30, 2022. This was mainly due to the decrease in system development charge revenue of $869 thousand and a decrease to interest income of $493 thousand. Capital Assets MWMC’s investment in capital assets as of June 30, 2022 was $130.6 million (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, buildings, machinery and equipment, and other assets. The net decrease in the MWMC’s investment in capital assets for the current fiscal year was 4.36%. MWMC added $3.5 million of assets this year as part of the continuing capital improvement plan in place for the facilities upgrades, and this was offset by $9.9 million in annual depreciation. Page 14 of 42 Attachment 1 Major capital asset events during the current fiscal year included the following:  Work completed on the Renewable Natural Gas Upgrade project, with expenses of $0.9 million and $12.3 million transferred from Work in Progress to Plant and Building.  Work continued on the Class A Disinfection Facility project, with expenses of $0.8 million MWMC’s Capital Assets (net of accumulated depreciation) 202020212022 8,339,727$Land 9,400,632Construction in progress 70,495,403Buildings 44,112,991Machinery and equipment 2,183,719Other assets June 30, $ 8,339,727 15,862,972 68,920,609 41,438,058 1,939,652 Page 15 of 42 Debt Administration At the end of the current fiscal year, the MWMC had total bonded debt outstanding (net of unamortized premium) of $17.4 million, all of which is secured solely by sewer revenues. Notes payable were comprised entirely of one State Revolving Fund Loan (SRF) which was obtained as additional funding to implement the Facilities Plan at more advantageous interest rates than would result from issuing another revenue bond. In November 2018, two of the five SRF loans were retired, a third was retired in October 2019 and the fourth was paid off in December 2020, leaving a balance of $800 thousand as of June 30, 2022. Additional information on the MWMC’s capital assets and related debt can be found in Note J and Note H, beginning on page 29 of this report. Economic Factors and Next Year’s Budget and Rates For the year ended June 30, 2023, MWMC approved a 3.5% rate increase that was effective July 1, 2022 (a 3.5% increase was effective July 1, 2021). The new rate resulted in an average residential billing of $28.95 per month based on typical residential consumption of 5,000 gallons per month. The budget included an annual capital contribution of $14.6 million in order to fund implementation of the ongoing Capital Improvement Plan. $ 8,781,282 4,591,460 74,608,089 40,814,506 1,760,733 Total $ 130,556,070 $ 136,501,018 $ 134,532,472 Attachment 1 Requests for Information This financial report is designed to provide our citizens and rate payers with a general overview of the finances for those funds maintained by the MWMC and to show MWMC’s accountability for the funds it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: MWMC Accountant City of Springfield 225 Fifth Street Springfield, OR 97477 Page 16 of 42 Attachment 1 %DVLF)LQDQFLDO6WDWHPHQWV Page 17 of 42 Attachment 1 This page intentionally left blank. Page 18 of 42 Attachment 1 Metropolitan Wastewater Management Commission Comparative Statements of Net Position June 30, As restated, 2022 2021 86,015,958$ 77,815,970$ 13,516,250 11,766,303 851,256 275,788 5,253,946 5,457,373 67 - 720,014 585,158 286,503 138,943 45,089 43,645 700,000 700,000 233,952 148,775 97,451 127,938 24,202,699 117,183,328 112,298,319 238,276,557 233,560,911 1,504,607 1,851,203 2,681,454 3,340,195 60,048 59,311 113,958 141,083 100,000 100,000 3,410,000 3,245,000 1,802 1,356 6,367,262 6,886,945 13,471,771 14,054,606 700,000 800,000 14,010,328 17,920,277 28,182,099 32,774,883 34,549,361 39,661,828 95,879 127,938 113,678,083 116,286,944 10,200,201 8,231,886 50,000 183,192 81,207,641 70,920,326 195,622,348205,135,924 $$ ASSETS Cash and investments Unrestricted Restricted Accounts receivable Intergovernmental receivable, net Interest receivable Inventory Accrued interest Prepaid expenses Deposits Notes receivable (System Development Charges) Lease receivable Capital assets: Land and construction in progress Other capital assets, net of accumulated depreciation Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred charge for debt refunding LIABILITIES Current liabilities: Accounts and contracts payable Other accrued liabilities Interest payable Current portion of notes payable Current portion of revenue bonds payable Unearned revenues Total current liabilities Long-term liabilities: Due to other governments Notes payable Revenue bonds payable (net of unamortized premium, and current portion) Total long-term liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred revenue lease initial NET POSITION Net investment in capital assets Restricted for capital improvement Restricted for debt service Unrestricted Total net position The accompanying notes are an integral part of these statements. 13,372,742 Page 19 of 42 Attachment 1 Metropolitan Wastewater Management Commission Comparative Statements of Revenues, Expenses and Changes in Net Position 2022 2021Operating revenues: Sewer user fees 36,715,418$ 34,379,034$ Other operating receipts 16,226 77,331 Total operating revenues 36,731,644 34,456,365 Operating expenses:Operations and maintenance 14,484,573 15,280,858 Administration 4,197,186 4,275,285 Depreciation 9,876,657 9,389,412 Total operating expenses 28,558,416 28,945,555 Operating income 8,173,228 5,510,810 Non-operating revenues (expenses): Interest income 757,752 605,149Fair market value adjustment (1,251,027)(133,686) Interest expense (584,897)(745,823) Lease income 57,202 53,608Gain (loss) on disposal of capital assets (36,527)(13,685) Miscellaneous revenue 67,657 38,521 Total non-operating revenues (expenses)(989,840) (195,916) Income before contributions 7,183,388 5,314,894 Capital contributions 2,330,188 3,199,151 Change in net position 9,513,576 8,514,045 Net position, beginning of year 195,622,348 187,108,303 205,135,924Net position, end of year 195,622,348$$ The accompanying notes are an integral part of these statements. For the years ended June 30, Page 20 of 42 Attachment 1 Metropolitan Wastewater Management Commission Comparative Statements of Cash Flows 20212022 Cash flows from operating activities: Cash received from customers 36,343,377$ 33,893,034$ Cash paid to other governments 10,349,178 (10,661,753) Cash paid to suppliers for goods and services (30,408,076) (6,274,217) Other operating receipts 16,672 81,836 Net cash provided by operating activities 16,301,151 17,038,900 Cash flows from capital and related financing activities: Acquisition and construction of capital assets (3,931,710) (11,371,644) Proceeds from sale of capital assets 31,131 20,919 Proceeds of capital contributions 2,330,188 3,199,151 Principal paid on notes payable (100,000) (245,759) Principal paid on revenue bonds payable (3,398,353) (3,243,354) Interest payments (612,022) (771,808) Net cash used in capital and related financing activities (5,680,766) (12,412,495) Cash flows from investing activities: Interest received (640,835) 523,278 Notes receivable issued (284,003) (142,289) Cash received on notes receivable 198,826 119,805 Lease income 55,563 53,608 (670,449)Net cash provided by investing activities 554,402 Net increase (decrease) in cash and investments 9,949,935 5,180,808 Cash and investments, beginning of year 89,582,273 84,401,465 Cash and investments, end of year 99,532,208$ 89,582,273$ Reconciliation of operating income to net cash providedby operating activities: Operating income 8,173,228$ 5,510,810$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 9,876,657 9,389,415 Changes in assets / liabilities: Intergovernmental receivable 203,427 (413,463) Accounts receivable (575,468) (54,935) Prepaid expenses (1,444) 6,555 Accounts and contracts payable (658,741) 952,223 Due to other governments (582,098) 1,655,918 Inventory (134,856) 5,478 Unearned revenue 446 (13,098) Net cash provided by operating activities 16,301,151$ 17,038,900$ The accompanying notes are an integral part of these statements. For the years ended June 30, Page 21 of 42 Attachment 1 This page intentionally left blank. Page 22 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Metropolitan Wastewater Management Commission (MWMC) was established on February 9, 1977 through an intergovernmental agreement between Lane County and the Cities of Eugene and Springfield. It was formed to construct, operate, and maintain regional sewage facilities. The Commission is composed of seven voting members from Eugene, Springfield, and Lane County. Three of the seven members are elected officials from each of the partner agencies’ governing bodies. The financial operations of MWMC are reported as an entity using enterprise fund accounting. It is MWMC’s intent that the costs of providing services to users on a continuing basis will be financed or recovered primarily through an equitable fee levied on all user classes. Reporting Entity These financial statements include all funds, organizations, departments, and offices that are not legally separate from the MWMC. The City of Springfield performs all administrative duties and construction of major capital assets for MWMC in accordance with the provisions of a July 14, 1983 service agreement, which was updated and reaffirmed in 2005. The City of Eugene performs all operations and maintenance duties for MWMC under the same updated service agreement. The agreement is part of an arrangement among the Cities of Eugene and Springfield and MWMC whereby the two Cities perform all necessary operational and staff support activities of MWMC. Basis of Accounting The financial operations of MWMC are accounted for using the accrual basis of accounting. As such, revenues are recognized when they are earned and expenses are recognized when they are incurred. All activities of the MWMC are accounted for within two proprietary (enterprise) funds. Proprietary funds are used to account for operations that are (a) financed and operated in a manner similar to a private business enterprise where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The accounting and financial reporting treatment applied to MWMC is determined by its measurement focus. The transactions of MWMC are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets, deferred outflows, liabilities and deferred inflows associated with the operations are included on the statement of net position. Net position (i.e., total assets plus deferred outflows of resources less total liabilities plus deferred inflows of resources) is segregated into four categories: net investment in capital assets; restricted for capital improvements; restricted for debt service; and unrestricted net position. MWMC distinguishes operating revenue and expenses from non-operating items. Operating revenues and expenses generally result from providing services to users. The principal operating revenues involve charges for services and the major operating expenses include the costs of plant operation and maintenance, administration, and depreciation of capital assets. All revenues and expenses not meeting these definitions are reported in these financial statements as non-operating revenues and expenses. Page 23 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued Cash and Investments MWMC participates in a cash and investment pool maintained by the City of Springfield. The amount reported as cash and investments is the MWMC share of the total City of Springfield cash and investment pool. As of June 30, 2022, MWMC does not maintain investments separate from the investment pools. State statutes authorize the City to invest in obligations of the U.S. Treasury and its agencies, bankers’ acceptances, high grade commercial paper, the State of Oregon Local Government Investment Pool, and repurchase agreements. Fair Value Measurements Investments are stated at fair value. Fair value is defined as the price that would be received at the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes fair value measurements within the hierarchy established by GASB Statement 72. This hierarchy defines three levels of inputs used to assess fair value which allows financial statement users to identify the level of reliability and determine variance risk between actual amounts received during a sale of assets or transfer of liabilities to that which is reported in the financial statements for the measurement date. For purpose of the statement of cash flows, cash and investments in the City-wide investment pool (including restricted cash, investments and LGIP) are considered cash and cash equivalents. The pool has the general characteristics of a demand deposit account for MWMC in that MWMC may deposit additional cash at any time and may withdraw cash at any time without prior notice or penalty. Intergovernmental Receivable The municipal water utilities for the Cities of Eugene and Springfield bill and collect sewer user fees. The collected amounts are due to the MWMC. Accordingly, MWMC records the amounts due from the local water utilities as its intergovernmental receivable. Both utilities have historically collected over 99% of accounts receivable, therefore only a small allowance for uncollectible amounts is recorded. Lease Receivables Lease receivables are recognized at the net present value of the leased assets at a borrowing rate either explicitly described in the agreement or implicitly determined by the Metropolitical Wastewater Management Commission, reduced by principial payments received. Restricted Assets Assets whose use is restricted for construction or other purposes by provisions of state law, grants, bond or other agreements, are segregated. When both restricted and unrestricted resources are available for use, it is the MWMC’s practice to use restricted resources first, when applicable, then unrestricted resources as they are needed. Page 24 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued Capital Assets All capital assets are valued at historical cost or estimated historical cost. Cost includes labor, materials, and related indirect costs. The cost of additions, renewals, and betterments over $10,000 are capitalized, except as modified by the guidance in GASB Implementation Guide 2021-1. This guidance has been implemented by MWMC and therefore if an item or items are purchased at a unit cost below the capitalization threshold they are capitalized if those assets in the aggregate are significant. Repairs and minor replacements are charged to operating expenses. All depreciation is accumulated and shown as a reduction of historical costs reported on the Statement of Net Position. Depreciation has been provided over the estimated useful lives of the assets using the straight-line method. Upon disposal of such assets, the accounts are relieved of the related historical costs and accumulated depreciation and resulting gains and losses are reflected in income. The estimated useful lives agree with those used for cost analysis purposes as required by federal regulations. They are as follows: 10 – 50 yearsPlant and buildings 1 – 50 yearsMachinery and equipment Accumulated Unpaid Vacation, Sick Pay and Other Benefit Amounts The portions of accumulated unpaid vacation, sick, and compensatory time that are not expected to be paid within the year are reported as long-term liabilities as “due to other governments” since all employees are contracted from the cities of Eugene and Springfield. Long-term Debt Long-term debt is reported as a liability in the Statement of Net Position. Bond issuance costs are expensed in full in the year incurred and deferred amounts on refunding are amortized over the life of the new debt. Bond premiums and discounts are amortized using the bonds outstanding method. Use of Estimates In preparing the Commission’s financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Risk Management MWMC is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets. MWMC carries commercial insurance for such risks of loss. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Page 25 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued New Accounting Pronouncements During the fiscal year ended June 30, 2022, the MWMC implemented the following GASB pronouncements:  GASB Statement No. 87 – Leases. The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement requires recognition of certain lease assets and liabilities for leases previously classified as operating leases. MWMC implemented GASB87 for the fiscal year ended June 30, 2022.  GASB Statements No. 91, 92, 93, and 97 have gone into effect as of June 30, 2022 but do not have any implications for MWMC.  GASB Statements No. 94 and 96 – These are other pronouncements that have been issued by the GASB but not yet required to be implemented. NOTE B – INTERGOVERNMENTAL AGREEMENTS In accordance with the MWMC service agreement dated July 14, 1983 and updated on July 5, 2005, the City of Eugene is responsible for the operations of the regional sewage facilities. The agreement obligated MWMC for costs incurred by the City of Eugene in operating and maintaining the Regional Sewage Facilities. These costs include employee benefits for City of Eugene employees. The interagency payable at June 30, 2022 for operation and maintenance costs incurred by the City of Eugene is $2,167,738 ($2,489,245 for 2021). The total costs charged to MWMC for the year ended June 30, 2022 were $14,484,573 ($15,280,858 for 2021). The City of Springfield, in accordance with the MWMC service agreement dated July 14, 1983 and updated July 5, 2005, provides the technical, financial, and administrative support services to MWMC. Costs charged to MWMC for the years ended June 30, 2022 and 2021 were $4,197,186 and $4,275,285 respectively and include employee benefits for City of Springfield employees. These costs include a pro-rata share of other post-employment benefits, specifically medical, dental and vision coverage for eligible retirees, their spouses, domestic partners, and dependents on a self-pay basis. Due to the effect of age, retiree claim costs are generally higher than claim costs for all members as a whole. The difference between retiree claim costs and the amount of retiree healthcare premiums represents implicit employer contribution. In addition, life insurance benefits are provided to fully disabled employees. The actuarial computed liability for the plan at June 30, 2022 was $963,300 ($951,643 for 2021). MWMC has no employees of its own. All personnel costs reflected are related to the employees of the cities of Eugene and Springfield contracted to do the work of MWMC. In addition to the post-employment benefit liability referenced above, MWMC has recorded an interagency payable to the respective cities for the compensated absences of $930,464 ($896,889 for 2021), and the net pension liability of $11,578,006 ($12,206,074 for 2021) computed for those employees. The total interagency payable due to the cities of Eugene and Springfield is $13,471,771 ($14,054,606 for 2021.) NOTE C – COMMITMENTS AND CONTINGENCIES At June 30, 2022, MWMC was obligated by contracts for uncompleted construction projects for $2,819,532. At June 30, 2021, the obligation on contracts for capital improvement projects was $2,699,747 Page 26 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE D – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary information MWMC follows these procedures in establishing the budgetary data reflected in the statements presented in the supplementary information section. In the spring of each year, the Executive Officer submits a proposed budget to the Metropolitan Wastewater Management Commission. The budget is prepared on the modified accrual basis of accounting. Estimated revenues and expenditures are budgeted for by fund, department, and category. Information on the past year’s actual receipts and expenditures and the current-year amended budget are provided in the budget document. MWMC conducts a public hearing for the purpose of obtaining citizen comments on the budget. MWMC then adopts the budget. All three governmental bodies included in the intergovernmental agreement, the City of Springfield, the City of Eugene, and Lane County, ratify the budget as appropriate. MWMC then makes a final adoption by resolution. MWMC may change the budget throughout the year by transferring appropriations between levels of control and by adopting supplemental budgets. Any changes adopted by MWMC in this manner must also be adopted by the City of Springfield, because MWMC’s budget is included in the budget of the City of Springfield. Management may transfer budget amounts between individual line items within the control level, but cannot make changes between the legal levels of control. During the fiscal year ended June 30, 2022, MWMC adopted several transfer resolutions and supplemental budgets increasing expenditures by $8,755,969. This was funded by adjustments to beginning cash - carrying forward budget planned, but not spent at the end of FY 2021. NOTE E – RESTRICTED CASH AND INVESTMENTS The Commission maintains cash and investments in several fund accounts in accordance with bond resolutions and Commission authorization. Descriptions of these fund account types are as follows: System Development Charge Reserves – Used to account for charges assessed and collected in conjunction with installation of new sewer services in the Regional Sewer System and are restricted by State of Oregon Statutes to system enhancements and other related capital expenditures. Investments for Bond Principal and Interest – Used to account for cash and investments restricted by Bond Indentures of Trust for future payment of principal and interest on debt. State Revolving Loan Reserves – Deposits held for debt service as required by the State of Oregon Department of Environmental Quality for Clean Water State Revolving Fund Loan Agreements. Insurance Reserve - Deposits held by direction of the Commission for use towards future insurance claims. Detailed amounts for restricted cash and investments were as follows: 2022 2021 183,192$50,000$State Revolving Fund loan reserves 8,083,1119,966,250System development charge reserves 2,000,0002,000,000Investments for bond principal and interest 1,500,0001,500,000Insurance reserve 11,766,303$13,516,250$Total restricted cash and investments Page 27 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE F – LEASE RECEIVABLE For the year ended June 30, 2022, the financial statements include the adoption of GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency of information about governments' leasing activities. This statement establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. For additional information, refer to the disclosures below. On July 1, 2021, City of Springfield Metropolitan Water Waste Commission Management entered into a 35 month lease as Lessor for the use of Tower Site - 410 River Avenue. An initial lease receivable was recorded in the amount of $42,077. As of June 30, 2022, the value of the lease receivable is $28,745. The lessee is required to make monthly fixed payments of $1,122. The lease has an interest rate of 0.7270%. The Land estimated useful life was 0 months as of the contract commencement. The value of the deferred inflow of resources as of June 30, 2022 was $27,650, and City of Springfield Metropolitan Water Waste Commission Management recognized lease revenue of $14,426 during the fiscal year. City of Springfield Metropolitan Water Waste Commission Management had a termination period of 12 months as of the lease commencement. On July 1, 2021, City of Springfield Metropolitan Water Waste Commission Management entered into a 58 month lease as Lessor for the use of 410 River Avenue. An initial lease receivable was recorded in the amount of $85,861. As of June 30, 2022, the value of the lease receivable is $68,706. The lessee is required to make monthly fixed payments of $1,493. The lease has an interest rate of 1.0590%. The Infrastructure estimated useful life was 0 months as of the contract commencement. The value of the deferred inflow of resources as of June 30, 2022 was $68,229, and City of Springfield Metropolitan Water Waste Commission Management recognized lease revenue of $17,633 during the fiscal year. The lessee has 1 extension option(s), each for 60 months. City of Springfield Metropolitan Water Waste Commission Management had a termination period of 12 months as of the lease commencement. BUSINESS-TYPE ACTIVITIES:Balance as of Balance as of July 1, 2021 Additions Reductions June 30, 2022 Lease Receivable Land 28,745$42,077$ -$ 13,331$Tower Site - 410 River Avenue Infrastructure 68,70685,861 - 17,156410 River Avenue 97,451$127,938$ -$ 30,487$Total Lease Receivable BUSINESS-TYPE ACTIVITIES:Balance as ofBalance as of Additions Reductions June 30, 2022July 1, 2021 Deferred Inflow of Resources Land 27,650$42,077$ -$ 14,426$Tower Site - 410 River Avenue Infrastructure 68,22985,861 - 17,633410 River Avenue 95,879$127,938$ -$ 32,059$Total Deferred Inflow of Resources Page 28 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE F – LEASE RECEIVABLE – continued Future maturities are as follows: Interest PaymentsPrincipal PaymentsFiscal Year 80431,897 $2023 $ 31,5762024 511 17,6422025 274 16,3362026 87 1,677$97,451$ Business-Type Activities Deferred inflow of resources mirror the principal payment maturities described above. NOTE H – CAPITAL ASSETS Capital asset activity for the year ended June 30, 2022 was as follows: EndingDecreases andBeginning Increases BalanceReclassificationsBalance Capital assets, not being depreciated: 9058,339,727 440,650Land 8,781,282$$$$ 15,862,972 4,591,460(13,044,390)1,772,878Construction in progress 24,202,699Total capital assets, not being depreciated (12,603,740)1,773,783 Capital assets, being depreciated: 157,608,910Buildings 9,804,8711,536,402 128,720,426Machinery and equipment 2,318,926645,486 5,570,114Other -19,635 306,224,770291,899,450 12,123,7972,201,523Total capital assets, being depreciated Less accumulated depreciation for: (94,342,095)(88,688,301)211,120(5,864,914)Buildings (90,870,331)(87,282,368)225,226(3,813,189)Machinery and equipment (3,829,016)(3,630,462)-(198,554)Other (189,041,442)(179,601,131)436,346(9,876,657)Total accumulated depreciation 117,183,328112,298,319 12,560,143(7,675,134)Total capital assets, being depreciated, net (5,901,351)136,501,018 (43,597)Capital assets, net 130,556,070$$$$ Page 29 of 42 13,372,742 168,950,183 131,684,838 5,589,749 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE H – CAPITAL ASSETS – continued Capital asset activity for the year ended June 30, 2021 was as follows: EndingDecreases andBeginning Increases BalanceReclassificationsBalance Capital assets, not being depreciated: -8,339,727$-$$8,339,727$Land 15,862,97210,018,7179,400,632 (3,556,377)Construction in progress Total capital assets, not being depreciated 17,740,359 24,202,699(3,556,377)10,018,717 Capital assets, being depreciated: 3,556,377 157,608,910298,005153,754,528Buildings (374,190)128,720,4261,037,862128,056,755Machinery and equipment 5,570,11417,060 -5,553,054Other 291,899,4503,182,1871,352,927287,364,337Total capital assets, being depreciated Less accumulated depreciation for: -(88,688,301)(5,429,177)(83,259,125)Buildings 360,505(3,699,110)(87,282,368)(83,943,764)Machinery and equipment -(261,128)(3,630,462)(3,369,335)Other 360,505 (179,601,131)(9,389,415)Total accumulated depreciation (170,572,224) 3,542,692 112,298,319(8,036,488)Total capital assets, being depreciated, net 116,792,113 136,501,018$(13,684)$1,982,229$134,532,472$Capital assets, net NOTE I – REBATABLE ARBITRAGE On May 3, 2016 MWMC issued $32,725,000 in revenue bonds. Interest earnings on unspent bond proceeds can result in an arbitrage rebate due to the federal government. Arbitrage regulations require that the first installment date computation be made at five years from the delivery date. The rebate is required to be made within 60 days of the calculation. MWMC’s liability is estimated at zero as of June 30, 2022. NOTE J – LONG TERM DEBT Revenue Bonds MWMC issued $32,725,000 in revenue bonds as a result of a bond refunding in FY2015-16. The bond premium of $5,249,467 is being amortized over the life of the bonds. Additionally, a deferred charge for debt refunding of $3,639,258 is being amortized over the life of the 2016 bonds with $1,504,607 unamortized as of June 30, 2022. There are no longer specific reserves required by the bond covenants. As part of the Water bonds covenants MWMC is required to maintain net revenue equal to 1.25 times the annual debt service of the bonds. MWMC was in compliance with these covenants for the year ended June 30, 2022. Page 30 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE J – LONG TERM DEBT – continued Revenue obligation bonds payable transactions for the year ended June 30, 2022 are as follows: Matured OutstandingIssuedOutstandingEffectiveFinal During Due WithinDuringIssueJune 30,July 1,InterestMaturity Year One YearYearDate20222021RateDate Sewer system revenue bonds serviced by fund revenues: -$ 3,245,000$15,250,000$3,410,000$18,495,000$1.461%20275/3/2016Series 2016 2,170,328Unamortized premium (3,410,000)Due in current year 14,010,328$Total revenue bonds payable Revenue obligation bonds payable transactions for the year ended June 30, 2021 are as follows: Matured OutstandingIssuedOutstandingEffectiveFinal Due WithinDuringDuringIssueJune 30,July 1,InterestMaturity One YearYearYearDate20212020RateDate Sewer system revenue bonds serviced by fund revenues: 18,495,000$-$ 3,090,000$21,585,000$3,245,000$1.461%20275/3/2016Series 2016 2,670,277Unamortized premium (3,245,000)Due in current year 17,920,277$Total revenue bonds payable Maturities of bond principal and interest are as follows: InterestFiscal Year Principal 594,750$3,410,000$2023 419,7503,590,0002024 255,0003,750,0002025 102,0003,900,0002026 12,000600,0002027 15,250,000 1,383,500$$ Notes Payable In September 2009 the MWMC entered into a Note Payable with the Oregon Department of Environmental Quality (DEQ). The Note was a direct placement. The Note is a “Revenue Secured Loan” and the DEQ was granted a security interest in the MWMC’s Net Revenues. Other provisions include: note is subordinate to Revenue Bonds in existence at the time the Note was taken and possibly to future Revenue Bonds subject to the Master Declaration, there are no prepayment penalties, the Note is subject to a late payment fee of 5% of the late payment, the MWMC must maintain a loan reserve set by the DEQ, and the MWMC must meet and report annually on Debt Service Coverage ratio of 105% of that fiscal year’s debt service payments. If there is an event of default which remains uncured, the DEQ may declare the outstanding loan amount plus unpaid accrued interest and fees to be due immediately. The DEQ may also: appoint a receiver at the MWMC’s expense, set and collect utility rates, direct the State Treasurer of the State of Oregon to withhold any amounts otherwise due to the MWMC. To date, the MWMC has complied with all of the Note provisions and there have been no events of default. Page 31 of 42 Attachment 1 METROPOLITAN WASTEWATER MANAGEMENT COMMISSION NOTES TO FINANCIAL STATEMENTS Years ended June 30, 2022 and 2021 NOTE J – LONG TERM DEBT – continued At June 30, 2022, note payable was as follows: Due WithinEndingBeginning BalanceReductionsAdditionsBalance One Year 900,000Notes payable -$(100,000)$800,000$100,000$$ At June 30, 2021, note payable was as follows: Due WithinEndingBeginning Reductions One YearBalanceBalance Additions 1,145,759Notes payable -$(245,759)$900,000$100,000$$ Principal and interest amounts due on the note payable in each of the next five years, and in five-year increments thereafter, are as follows: Fiscal Year Principal Interest 100,0002023 3,750$$ 100,0002024 3,250 100,0002025 2,750 100,0002026 2,250 100,0002027 1,750 300,0002028-2030 2,250 800,000Total 16,000$$ MWMC maintained a loan reserve of $50,000 as of June 30, 2022 in accordance with the loan agreements with the Oregon Department of Environmental Quality. Page 32 of 42 Attachment 1 Supplemental Information Page 33 of 42 Attachment 1 This page intentionally left blank. Page 34 of 42 Attachment 1 Regional Regional Wastewater Wastewater Fund Capital Fund Eliminations TotalRevenues:Charges for services 37,056,998$ -$ (284,378)$ 36,772,620$ Investment earnings (98,141) (395,134) - (493,275) Intergovernmental revenue - 811 - 811 Licenses and permits 14,715 - - 14,715 Fines and forfeitures 700 - - 700 Miscellaneous revenue 59,377 8,280 - 67,657 Total revenues 37,033,649 (386,043) (284,378) 36,363,228 Expenses:Current operating: CMO 10,237 - - 10,237 Finance 174,940 - - 174,940 Development and public works 18,770,149 10,811 (284,378) 18,496,582 Debt service: Interest and premium amortization 738,250 (153,353) - 584,897 Depreciation 9,876,657 - - 9,876,657 Total expenses 29,570,233 (142,542) (284,378) 29,143,313 Excess of revenues over (under) expenses 7,463,416 (243,501) - 7,219,915 Other financing sources (uses):Transfers in 4,377,195 13,895,000 (18,272,195) - Transfers out (13,895,000) (4,377,195) 18,272,195 - Capital contributions 76,550 2,253,638 - 2,330,188 Loss on disposal of capital assets (36,527) - - (36,527) 2,293,661-11,771,443(9,477,782)Total other financing sources (uses) 9,513,576-11,527,942(2,014,366)Change in fund net position Fund net position, beginning of year 136,493,793 59,128,555 - 195,622,348 205,135,924$-$70,656,497$134,479,427$Fund net position, end of year Year Ended June 30, 2022 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION Metropolitan Wastewater Management Commission Page 35 of 42 Attachment 1 AdjustmentsBudgetto Budget GAAP Original Revised Basis Basis Basis Budget Budget Actual Variance Actual ActualRevenues:Charges for services 36,591,421$ 36,591,421$ 36,770,930$ 179,509$ 286,068$ 37,056,998$ Investment earnings 75,000 75,000 (52,180) (127,180) (45,961) (98,141) Intergovernmental revenue - - 41,317 41,317 (41,317) - Licenses and permits 9,500 9,500 14,715 5,215 - 14,715 Fines and forfeitures - - 700 700 - 700 Miscellaneous revenue 700,000 700,000 40,960 (659,040) 18,417 59,377 Total revenues 37,375,921 37,375,921 36,816,442 (559,479) 217,207 37,033,649 Expenses:Current operating:CMO 15,777 15,777 10,237 5,540 - 10,237 Finance 181,869 181,869 174,940 6,929 - 174,940 Development and public works 20,471,365 20,592,373 19,724,187 868,186 (954,038) 18,770,149 Debt service:Principal 3,345,000 3,345,000 3,345,000 - (3,345,000) - Interest 765,375 765,375 765,375 - (27,125) 738,250 Depreciation - - - - 9,876,657 9,876,657 Total expenses 24,779,386 24,900,394 24,019,739 880,655 5,550,494 29,570,233 Excess of revenues over (under) expenses 12,596,535 12,475,527 12,796,703 321,176 (5,333,287) 7,463,416 Other financing sources (uses):Transfers in 23,172 23,172 23,172 - 4,354,023 4,377,195 Transfers out (10,550,000) (10,550,000) (10,550,000) - (3,345,000) (13,895,000) Capital contributions - - - - 76,550 76,550 Gain (loss) on disposal of assets - - - - (36,527) (36,527) Total other financing sources (uses)(10,526,828) (10,526,828) (10,526,828) - 1,049,046 (9,477,782) Change in fund net position 2,069,707 1,948,699 2,269,875 321,176 (4,284,241) (2,014,366) Fund net position, beginning of year 8,732,548 11,203,693 11,203,693 - 125,290,100 136,493,793 Fund net position, end of year 10,802,255$ 13,152,392$ 13,473,568$ 321,176$ 121,005,859$ 134,479,427$ SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION (NON-GAAP BUDGETARY BASIS) - BUDGET AND ACTUAL Year Ended June 30, 2022 Metropolitan Wastewater Management Commission REGIONAL WASTEWATER FUND Page 36 of 42 Attachment 1 Year Ended June 30, 2022 Adjustments Budget to Budget GAAP Original Revised Basis Basis Basis Budget Budget Actual Variance Actual ActualRevenues:Charges for services -$ -$ 285,294$ 285,294$ (285,294)$ -$ Investment earnings 725,000 725,000 (494,141) (1,219,141) 99,007 (395,134) Intergovernmental revenue 10 10 811 801 - 811 Miscellaneous revenue 4,000 4,000 8,282 4,282 (2) 8,280 Total revenues 729,010 729,010 (199,754) (928,764) (186,289) (386,043) Expenses:Current operating:Development and public works 1,132,000 3,678,700 1,572,707 2,105,993 (1,561,896) 10,811 Capital projects 21,700,000 24,716,723 3,077,421 21,639,302 (3,077,421) - Debt service:Interest - - - - (153,353) (153,353) Total expenses 22,832,000 28,395,423 4,650,128 23,745,295 (4,792,670) (142,542) Excess of revenues over (under) expenses (22,102,990) (27,666,413) (4,849,882) 22,816,531 4,606,381 (243,501) Other financing sources (uses): 3,345,000 13,895,000-10,550,00010,550,00010,550,000Transfers in Transfers out (23,172) (23,172) (23,172) - (4,354,023) (4,377,195) Capital contributions 1,800,000 1,800,000 2,252,737 452,737 901 2,253,638 Total other financing sources (uses)12,326,828 12,326,828 12,779,565 452,737 (1,008,122) 11,771,443 3,598,259 11,527,94223,269,2687,929,683(15,339,585)(9,776,162)Change in fund net position Fund net position, beginning of year 72,970,536 79,255,360 79,255,361 1 (20,126,806) 59,128,555 (16,528,547)$70,656,497$23,269,269$87,185,044$63,915,775$63,194,374$Fund net position, end of year SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION (NON-GAAP BUDGETARY BASIS) - BUDGET AND ACTUAL Metropolitan Wastewater Management Commission REGIONAL WASTEWATER CAPITAL FUND Page 37 of 42 Attachment 1 This page intentionally left blank. Page 38 of 42 Attachment 1 &RPSOLDQFH6HFWLRQ Page 39 of 42 Attachment 1 Page 40 of 42 Attachment 1 INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATIONS Governing Board Metropolitan Wastewater Management Commission Springfield, Oregon We have audited, in accordance with the auditing standards generally accepted in the United States of America, the basic financial statements of Metropolitan Wastewater Management Commission (MWMC) as of and for the year ended June 30, 2022, and have issued our report thereon dated December 19, 2022. Compliance and Other Matters As part of obtaining reasonable assurance about whether MWMC's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-000 through 162-10-320 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statements amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to the following:  Deposit of public funds with financial institutions (ORS Chapter 295).  Indebtedness limitations, restrictions and repayment.  Budgets legally required (ORS Chapter 294).  Insurance and fidelity bonds in force or required by law.  Programs funded from outside sources.  Authorized investment of surplus funds (ORS Chapter 294).  Public contracts and purchasing (ORS Chapters 279A, 279B, 279C).  Accountability for collecting or receiving money by elected officials – no money was collected or received by elected officials. In connection with our testing nothing came to our attention that caused us to believe MWMC was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-000 through 162-10-320 of the Minimum Standards for Audits of Oregon Municipal Corporations. Page 41 of 42 Attachment 1 Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered MWMC’s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of MWMC's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of MWMC's internal control. Restriction on Use This report is intended solely for the information and use of the governing board and management of MWMC and the Oregon Secretary of State and is not intended to be and should not be used by anyone other than these parties. GROVE, MUELLER & SWANK, P.C. CERTIFIED PUBLIC ACCOUNTANTS By: Ryan T. Pasquarella, A Shareholder December 19, 2022 Page 42 of 42 Attachment 1 December 19, 2022 Governing Body Metropolitan Wastewater Management Commission Springfield, Oregon We have audited the financial statements of Metropolitan Wastewater Management Commission (MWMC) as of and for the year ended June 30, 2022, and have issued our report thereon dated December 19, 2022. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated June 9, 2022, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of MWMC’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of MWMC solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence. Attachment 2 Page 1 of 9 Page 2 of 4 Significant Risks Identified We have identified the following significant risks:  The possibility that management could override the system of controls. This risk is always identified and addressed by our planned audit procedures. This is not indicative of any unusual circumstances observed within your organization.  The possibility revenues and receivables were not recorded or were recorded in the wrong period. This risk was identified as MWMC utilizes City of Springfield personnel to record MWMC transactions and there is the possibility of misclassifying revenues intended for MWMC as City, or City revenues as MWMC. Qualitative Aspects of MWMC’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by MWMC is included in the notes to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during the fiscal year ended June 30, 2022. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. The most sensitive accounting estimates affecting the financial statements are:  Management’s estimate of the depreciation of capital assets, based on management's determination of the useful lives and future economic benefit of the assets.  Management’s estimate of the fair market value of investments, based on third-party brokerage information.  Management’s estimate of the allowance for doubtful accounts, based on past experience with uncollected accounts.  Management’s estimate of the contractual liabilities, based on the proportionate share of the cities of Eugene and Springfield’s other post-employment benefits, net pension liability and related deferrals, and compensated absences. The other post-employment benefits and net pension liabilities are based on calculations from an independent third-party actuary. We evaluated the key factors and assumptions used to develop the estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole. Attachment 2 Page 2 of 9 Page 3 of 4 Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting MWMC’s financial statements relate to MWMC’s long-term liabilities including contractual obligations to the Cities of Eugene and Springfield and compliance Oregon Minimum Standards and Local Budget Law. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards also require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. There were no uncorrected misstatements. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of audit procedures. No misstatements were noted during audit procedures performed. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to MWMC’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the attached letter dated December 19, 2022. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with MWMC, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as MWMC’s auditors. Attachment 2 Page 3 of 9 Page 4 of 4 This report is intended solely for the information and use of the governing body and management of Metropolitan Wastewater Management Commission and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, CERTIFIED PUBLIC ACCOUNTANTS Attachment 2 Page 4 of 9 CITY OF SPRINGFIELD, OREGON FINANCE DEPARTMENT ACCOUNTING / REPORTING ACCOUNTS RECEIVABLE / PAYABLE ASSESSMENTS BUDGETING / TREASURY PAYROLL PURCHASING 225 FIFTH STREET SPRINGFIELD, OR 97477 (541) 726-3705 FAX (541) 726-3782 www.ci.springfield.or.us December 19, 2022 Grove, Mueller & Swank, P.C. 475 Cottage Street NE, Suite 200 Salem, OR 97301 This representation letter is provided in connection with your audit of the financial statements of Metropolitan Wastewater Management Commission (MWMC) as of June 30, 2022 and 2021, and for the years then ended, and the related notes to the financial statements, for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows, where applicable, of the various opinion units of MWMC in accordance with accounting principles generally accepted for governments in the United States of America (U.S. GAAP). Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information such that, in the light of surrounding circumstances, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of December 19, 2022. Financial Statements • We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated June 9, 2022 for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP. • We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. • We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud. • We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements. • We have reviewed, approved, and taken responsibility for the financial statements and related notes. • We have a process to track the status of audit findings and recommendations. • We have identified and communicated to you all previous audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented. Attachment 2 Page 5 of 9 • • • • • • • • • • • • • • • Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable. All related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP. All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP. All component units, as well as joint ventures with an equity interest, are included and other joint ventures and related organizations are properly disclosed. All funds and activities are properly classified. All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, GASB Statement No. 37, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments: Omnibus as amended, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users. All components of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, if applicable, approved. Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy. All revenues within the statement of activities have been properly classified as program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal. All expenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, if any, have been made on a reasonable basis. All interfund and intra-entity transactions and balances have been properly classified and reported. Deposit and investment risks have been properly and fully disclosed. Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated. With respect to accounting estimates: − We have taken into account all relevant information of which we are aware for significant accounting estimates. − We have consistently and appropriately selected and applied methods, assumptions, and data when making accounting estimates. − The assumptions we used in making and disclosing accounting estimates appropriately reflect our intent and ability to carry out specific courses of action on behalf of MWMC. Attachment 2 Page 6 of 9 • • • − The disclosures related to accounting estimates, including those disclosures describing estimation uncertainty, are complete and are reasonable in the context of the applicable financial reporting framework. − We are not aware of any events subsequent to the date of the financial statements that require adjustment to our accounting estimates and disclosures included in the financial statements. With respect to the supplemental information accompanying the financial statements: − We acknowledge our responsibility for the presentation of the supplemental information in accordance with U.S. GAAP. − We believe the supplemental information, including its form and content, is measured and fairly presented in accordance with U.S. GAAP. − The methods of measurement or presentation have not changed from those used in the prior period. − We believe the significant assumptions or interpretations underlying the measurement or presentation of the supplemental information, and the basis for our assumptions and interpretations, are reasonable and appropriate in the circumstances. − When the supplemental information is not presented with the audited financial statements, management will make the audited financial statements readily available to the intended users of the supplemental information no later than the date of issuance by the entity of the supplemental information and the auditor’s report thereon. − We acknowledge our responsibility to include the auditor’s report on the supplemental information in any document containing the supplemental information and that indicates the auditor reported on such supplemental information. − We acknowledge our responsibility to present the supplemental information with the audited financial statements or, if the supplemental information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplemental information no later than the date of issuance by the entity of the supplemental information and the auditor’s report thereon. With respect to the required supplementary information accompanying the financial statements: − We acknowledge our responsibility for the presentation of the required supplementary information in accordance with U.S. GAAP. − We believe the required supplementary information, including its form and content, is measured and fairly presented in accordance with U.S. GAAP. − The methods of measurement or presentation have not changed from those used in the prior period. − We believe the following significant assumptions or interpretations underlying the measurement or presentation of the required supplementary information, and the basis for our assumptions and interpretations, are reasonable and appropriate in the circumstances With regard to investments and other instruments reported at fair value: − The underlying assumptions are reasonable and they appropriately reflect management’s intent and ability to carry out its stated courses of action. − The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied. Attachment 2 Page 7 of 9 − The disclosures related to fair values are complete, adequate, and in accordance with U.S. GAAP. − There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements. Information Provided • We have provided you with: − Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements of the various opinion units referred to above, such as records, documentation, meeting minutes, and other matters; − Additional information that you have requested from us for the purpose of the audit; and − Unrestricted access to persons within MWMC from whom you determined it necessary to obtain audit evidence. • All transactions have been recorded in the accounting records and are reflected in the financial statements. • We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. • We have provided to you our analysis of MWMC’s ability to continue as a going concern, including significant conditions and events present, and if necessary, our analysis of management’s plans, and our ability to achieve those plans. • We have no knowledge of any fraud or suspected fraud that affects MWMC and involves: − Management; − Employees who have significant roles in internal control; or − Others where the fraud could have a material effect on the financial statements. • We have no knowledge of allegations of fraud, or suspected fraud, affecting MWMC’s financial statements communicated by employees, former employees, vendors, regulators, or others. • We are not aware of any pending or threatened litigation, claims, and assessments whose effects should be considered when preparing the financial statements and we have not consulted legal counsel concerning litigation, claims, or assessments. • We have disclosed to you the identity of all MWMC’s related parties and the nature of all the related party relationships and transactions of which we are aware. • There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting, internal control, or financial reporting practices. • MWMC has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities. • We have disclosed to you all guarantees, whether written or oral, under which MWMC is contingently liable. • We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASB Statement No. 62 (GASB-62), Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements. Significant estimates are estimates at the Attachment 2 Page 8 of 9 Attachment 2 Page 9 of 9 ______________________________________________________________________________ • • • • • • • • • • AGENDA V. Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP REGIONAL WASTEWATER PROGRAM CAPITAL PROGRAMS Overview The Regional Wastewater Program (RWP) includes two components: the Capital Improvement Program (CIP) and the Asset Management Capital Program (AMCP). The FY 23-24 CIP Budget, the FY 23-24 AMCP Budget, and the associated 5-Year Capital Plan are based on the 2004 MWMC Facilities Plan (2004 FP), the 2014 Partial Facilities Plan Update, and the Resiliency Planning Study (Disaster Mitigation & Recovery Plan – March 2020). The 2004 FP was approved by the MWMC, the governing bodies of the City of Eugene, the City of Springfield, Lane County, and the Oregon Department of Environmental Quality (DEQ). The 2004 FP and its 20-year capital project list was the result of a comprehensive evaluation of the regional wastewater treatment facilities serving the Eugene-Springfield metropolitan area. The DEQ issued the MWMC NPDES permit #102486 that became effective on November 1, 2022. The 2004 FP built on previous targeted studies, including the 1997 Master Plan, 1997 Biosolids Management Plan, 2001 Wet Weather Flow Management Plan (WWFMP), and the 2003 Management Plan for a dedicated biosolids land application site. The 2004 FP is intended to meet changing regulatory and wet weather flow requirements and to serve the community’s wastewater capacity and treatment needs through 2025. Accordingly, the 2004 FP established the CIP project list to provide necessary facility enhancements and expansions over the planning period. The CIP is administered by the City of Springfield for the MWMC. The AMCP implements the projects and activities necessary to maintain functionality, lifespan, and effectiveness of the MWMC facility assets on an ongoing basis. The AMCP is administered by the City of Eugene for the MWMC and consists of three sub-categories: ▪ Equipment Replacement Program ▪ Major Rehabilitation Program ▪ Major Capital Outlay The MWMC has established these capital programs to achieve the following RWP objectives: ▪ Compliance with applicable local, state, and federal laws and regulations ▪ Protection of the health and safety of people and property from exposure to hazardous conditions such as untreated or inadequately treated wastewater ▪ Provision of adequate capacity to facilitate community growth in the Eugene-Springfield metropolitan area consistent with adopted land use plans ▪ Construction, operation, and management of MWMC facilities in a manner that is as cost-effective, efficient, and affordable to the community in the short and long term ▪ Mitigation of potential negative impacts of the MWMC facilities on adjacent uses and surrounding neighborhoods (ensuring that the MWMC facilities are “good neighbors” as judged by the community) Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP Capital Program Funding and Financial Planning Methods and Policies This annual budget document presents the FY 23-24 CIP Budget, the FY 23-24 AMCP Budget, and 5-Year Capital Plan which includes the CIP and AMCP Capital Plan. The MWMC CIP financial planning and funding methods are in accordance with the financial management policies put forth in the MWMC Financial Management Plan. Each of the two RWP capital programs relies on funding mechanisms to achieve the objectives described above. The CIP is funded primarily through Capital Reserves, which may include proceeds from revenue bond sales, financing through the State of Oregon DEQ Clean Water State Revolving Fund loan program, System Development Charges, and transfers from the Operating Fund to Capital Reserves. The RWP’s operating fund is maintained to pay for operations, administration, debt service, equipment replacement contributions and capital contributions associated with the RWP. The operating fund derives the majority of its revenue from regional wastewater user fees that are collected by the City of Eugene and City of Springfield from their respective customers. In accordance with the MWMC Financial Plan, funds remaining in excess of budgeted operational expenditures can be transferred from the Operating Fund to the Capital Reserve fund. The Capital Reserve accumulates revenue to fund capital projects, including major rehabilitation, to reduce the amount of borrowing necessary to finance capital projects. In addition, the CIP is funded with System Development Charges for the projects that qualify. The AMCP consists of three programs managed by the City of Eugene and funded through regional wastewater user fees. The Equipment Replacement Program, which funds replacement of equipment valued at or over $10,000 with a life expectancy greater than one year; The Major Rehabilitation Program, which funds rehabilitation of the MWMC infrastructure such as roof replacements, structure coatings, etc.; and the Major Capital Outlay Program for the initial purchase of major equipment that will be placed on the equipment replacement list, or a one time large capital expense. The MWMC assets are tracked throughout their lifecycle using asset management tracking software. Based on this information, the three AMCP program annual budgets are established and projected for the 5-Year Capital Plan. For planning purposes, MWMC considers market changes that drive capital project expenditures. Specifically, the MWMC capital plan reflects projected price changes over time that affect cost of materials and services. Accordingly, the 2004 FP projections were based on the 20-city average Engineering News Record Construction Cost Index (ENRCCI). In addition, City of Springfield staff and MWMC design consultants monitor construction trends in Oregon and supply chain issues. Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP Regional Wastewater Capital Program Status and Budget CIP Project Status and Budget The FY 23-24 CIP Budget is comprised of the individual budgets for each of the active (carryover) or starting (new) projects in the first year of the 5-Year Capital Plan. The total of these FY 23-24 project budgets is $64,680,000. Each capital project represented in the FY 23-24 Budget is described in detail in a CIP project sheet that can be found at the end of this document. Each project sheet provides a description of the project, the project’s purpose and driver (the reason for the project), the funding schedule for the project, and the project’s expected final cost and cash flow. For those projects that are in progress, a short status report is included on the project sheet. In 2019, the MWMC Resiliency Planning consultant study focused on seismic (Cascadia magnitude 9.0 earthquake) and major flooding event(s), and recommended some infrastructure multi-year improvements for consideration during the CIP Budgeting process. Completed Capital Projects The following capital projects were completed in FY 22-23: ▪ Renewable Natural Gas Upgrades (P80095) ▪ Aeration Basin Improvements – Phase 2 (P80100 study of existing aeration systems) Carryover Capital Projects All or a portion of remaining funding for active capital projects are carried forward to the MWMC FY 23-24 budget. The on-going carryover projects are: ▪ Electrical Switchgear & Transformer Replacement ▪ Administration Building Improvements ▪ Water Quality Trading Program ▪ Class A Disinfection Facilities ▪ Aeration Basin Upgrades – (2023-2026) ▪ Comprehensive Facility Plan Update ▪ Glenwood Pump Station Upgrade ▪ Resiliency Follow-Up ▪ Recycled Water Demonstration Projects ▪ WPCF Stormwater Infrastructure ▪ Poplar Harvest Management Services Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP Overall, the budgeting for these projects follows, and is consistent with, the estimated cost of the listed capital projects and new information gathered during the MWMC design development process. FY 23-24 Capital Budget Summary (Exhibit 12) Exhibit 12 displays the adjusted budget and end-of-year expenditure estimates for FY 22-23, the amount of funding projected to be carried over to FY 23-24 and additional funding for existing and/or new projects in FY 23-24. FY 22-23 ADJUSTED BUDGET FY 22-23 ESTIMATED ACTUALS FY 22-23 CARRYOVER TO FY 23-24 NEW FUNDING FOR FY 23-24 TOTAL FY 23-24 BUDGET Project to be Completed in FY 22-23 RNG Upgrade Facilities 946,292 520,000 0 0 0 Aeration Basin Improvements - Phase 2 188,090 50,000 0 0 0 Projects to be Carried Over to FY 23-24 Electrical Switchgear & Transformer Replacement 20,000,000 600,000 19,400,000 0 19,400,000 Administration Building Improvements 7,372,277 1,072,277 6,300,000 12,400,000 18,700,000 Water Quality Trading Program 13,000,000 900,000 12,100,000 0 12,100,000 Class A Disinfection Facilities 6,882,477 92,477 6,790,000 0 6,790,000 Aeration System Upgrades (2023 to 2026)5,000,000 1,800,000 3,200,000 0 3,200,000 Comprehensive Facilities Plan Update 2,476,422 676,422 1,800,000 0 1,800,000 Glenwood Pump Station Upgrade 2,005,315 505,315 1,500,000 0 1,500,000 Resiliency Follow-Up 3,522,775 802,775 500,000 0 500,000 Recycled Water Demonstration Projects 354,121 24,121 330,000 0 330,000 WPCF Stormwater Infrastructure 300,000 90,000 210,000 100,000 310,000 Poplar Harvest Management Services 264,663 132,520 50,000 0 50,000 Tertiary Filtration - Phase 2 3,000,000 0 0 0 0 TOTAL Capital Projects $65,312,432 $7,265,907 $52,180,000 $12,500,000 $64,680,000 EXHIBIT 12 Summary of FY 23-24 MWMC Construction Program Capital Budget Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP FY 23-24 Asset Management Capital Program and Budget The AMCP consists of the following three programs: ▪ Equipment Replacement ▪ Major Rehabilitation ▪ Major Capital Outlay The FY 23-24 budget of each program is described below. Equipment Replacement Program - Budget The FY 23-24 Capital Programs budget includes $1,835,000 in Equipment Replacement purchases that are identified on the table below. Dredge, BMF – The existing dredge underwent several major rebuilds in prior years. It is now beyond repair and needs to be replaced. Strain Presses, Biosolids Drying Press (x3), BMF – The presses are used to filter, screen, dewater and transport biosolids during processing. Replacement parts are no longer available from the manufacturer. Automatic Strainer (x2), Final – The screening and washing mechanisms can no longer be rebuilt and need to be replaced. EV/Hybrid Passenger Vehicles (x2), Administration – Replacement of two 13-year old passenger vehicles per recommendation from Eugene Fleet Maintenance division. Pickup Truck with Dump Bed, Facilities – Replacement of 20-year old dump-bed pickup truck per recommendation from Eugene Fleet Maintenance and the need for four wheel drive capability. Project Description FY 23-24 Proposed Budget Dredge, BMF $560,000 Strain Presses, Biosolids Drying Press (x3), BMF 510,000 Strainer, Automatic (x2), Final 200,000 Passenger Vehicles, EV/Hybrid (x2), Administration 140,000 Pickup Truck, Dump Bed, Facilities 95,000 Tractor, John Deere, BMF 85,000 Fork Lift (All Terrain), Equipment Maintenance 75,000 Flail Mowers (x2), BMF 60,000 Electric Cart, Plant Maintenance 30,000 Electric Cart, Operations 30,000 Mower, 72” Deck, Zero Turn w/Mulcher (x2), Facilities 30,000 Actuator, Rotork – IPS2 Primary Drive Diversion Gate 20,000 Total $1,835,000 Equipment Replacement Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP John Deere Tractor, BMF – The cost of rebuilding the tractor is nearly the same as purchasing new. Staff recommend replacement with a larger tractor capable of lifting the dry polymer totes (each tote about 2,000 lbs) and useful for a wider range of BMF operations work. All Terrain Fork Lift, Maintenance – Replacement with a vehicle that will be used to both load/unload shipping trucks and also move equipment over uneven terrain. Flail Mowers (x2), BMF – After 15 years of rough use at Biocycle Farm and BMF, the main components of the flail mowers are worn out, and complete replacement of both mowers is needed. Electric Carts (x2), Maintenance & Operations – Replacement of electric carts per recommendation from Eugene Fleet Maintenance largely due to the availability of parts. Zero Turn Mower with 72” Deck and Mulcher (x2), Facilities – The 13-year old mower can no longer be operated reliably due to wear and tear and is needing replacement. Actuator, Rotork – IPS2 Primary Drive Diversion Gate – After undergoing several rebuilds, the actuator unit needs to be entirely replaced. Major Rehabilitation Program - Budget The FY 23-24 Capital Programs budget includes $630,000 for Major Rehabilitation projects that are identified on the table below. Roof Replacements (x4) – Condition assessments by staff and contractor have determined that roof replacements are needed for the Centrifuge Building, Maintenance High Bay, Gas Mixing Room #2, and Pretreatment Building. Hypochlorite Delivery and Monitoring Systems Rebuild, Phase 1 – The delivery, distribution, and drain piping for the hypochlorite system has become brittle and cracked. The piping is leaking and needs total replacement. Sludge Holding Tank Wall Repair, Digesters – Repair needed on structural wall that was damaged during the construction of #4 anaerobic digester. Roadway and Parking Area Resealing, BMF – Routine crack and resealing work is needed to maximize the longevity of the asphalt roadways and parking areas at the facility. Project Description FY 23-24 Proposed Budget Roof Replacements (x4)$300,000 Hypochlorite Delivery and Monitoring Systems Rebuild, Phase 1 150,000 Sludge Holding Tank Wall Repair, Digesters 90,000 Asphalt Resealing, Roadway and Parking Area, BMF 50,000 Masonry Weather Sealing, Operations Building, BMF 20,000 Operations/Maintenance Building Improvements 20,000 Total $630,000 Major Rehabilitation Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP Masonry Resealing, Ops Building, BMF – Routine weather sealing of the exterior masonry wall surfaces of the operations building to prolong the life of the structure. Operations and Maintenance Building Improvements – Allocation for small-scale facility improvements. Major Capital Outlay There are no new requests for Major Capital Outlay in FY 23-24. Asset Management Capital Budget Summary The following table summarizes the FY 23-24 Asset Management Capital Program Budget by project type showing a total AMCP budget of $2,465,000. Project Description FY 23-24 Proposed Budget Equipment Replacement $1,835,000 Major Rehabilitation 630,000 Major Capital - Total $2,465,000 Asset Management Capital Project Budget Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP FY 24-25 Asset Management Capital Program Status and Budget The AMCP consists of the following programs: ▪ Equipment Replacement ▪ Major Rehabilitation ▪ Major Capital Outlay The FY 24-25 budget and status of each program is described below. Equipment Replacement Program – Budget Forecast The FY 24-25 Capital Programs budget includes $700,000 in Equipment Replacement purchases that are identified in the table below. Gravity Belt Thickener (x2) – Scheduled major rebuild of both GBT units, including all wear parts. Polymer Wetting Device #1, Drying Facility, BMF – The 22-year old wetting device has reached end of service life and is essential to mixing and processing biosolids. Should a critical failure occur during the season, all solids processing would stop until the equipment is replaced. Hypochlorite (SHC) Metering Pump, Final (x4) – Recurring problems with reliable connection between the electrical and mechanical components make complete replacement necessary. Bisulfite (SBS) Metering Pump, Final (x3) – Recurring problems with reliable connection between the electrical and mechanical components make complete replacement necessary. Air Supply Unit, Digesters – The coils on the existing units have corroded. Replacement unit will have coated coils designed for longer equipment service life. Air Supply Unit Controls, Secondary – Replacement of the ad-hoc assembled controls with a standard package control system. Project Description FY 24-25 Budget Forecast Gravity Belt Thickener (x2)$400,000 Polymer Wetting Device #1, Drying Facility, BMF 90,000 Hypochlorite (SHC) Metering Pump, Final (x4)60,000 Bisulfite (SBS) Metering Pump, Final (x3)50,000 Air Supply Unit, Digesters 40,000 Air Supply Unit Controls, Secondary 40,000 Acid Distillation System, ESB Labs 20,000 Total $700,000 Equipment Replacement Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP Acid Distillation System, ESB Labs – The current system has reached end of service life. This system is used to reduce contamination in trace metals analysis, and new equipment will reduce the cost of purchasing commercially prepared acids to meet the permit-required detection limits. Major Rehabilitation Program - Budget The FY 24-25 Capital Programs budget includes $350,000 for Major Rehabilitation projects that are identified in the table below. Dewatering Facility, Roof Replacement – Condition assessment by staff and contractor have determined the need for repair or replacement of the dewatering facility roof at BMF. Hypochlorite Delivery and Monitoring Systems Rebuild – Existing piping for hypochlorite delivery is damaged, creating operational and safety concerns. Hypo delivery equipment needs to be relocated (significantly re-engineered), drains need repair, and piping upsized for operational efficiency, ease of maintenance, and worker safety. Plant Asphalt Maintenance, Crack/Slurry Sealing – Implementation of the condition assessment recommendations to repair the roadways and parking lots at the treatment plant. Operations and Maintenance Building Improvements – Allocation for small-scale facility improvements. Major Capital - Budget There are no new requests for Major Capital Outlay in FY 24-25. Summary of FY 24-25 Asset Management Capital Program Budget Project Description FY 24-25 Budget Forecast Dewatering Facility, Roof Replacement, BMF $150,000 Hypochlorite Delivery and Monitoring Systems Rebuild, Phase 2 110,000 Plant Asphalt Maintenance, Crack/Slurry Sealing 60,000 Operations/Maintenance Building Improvements 30,000 Total $350,000 Major Rehabilitation Project Description FY 24-25 Budget Forecast Equipment Replacement $700,000 Major Rehabilitation 350,000 Major Capital Outlay - Total $1,050,000 Asset Management Capital Project Budget Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP 5-Year Capital Plan (Exhibit 13) For each fiscal planning cycle, only the first year of budget authority is appropriated. The remaining four years of the CIP and AMCP Capital Plans are important and useful for fiscal and work planning purposes. However, it is important to note that the funds in the outer years of the Capital Plan are only planned and not appropriated. Also, the full amount of obligated multi-year project costs is often appropriated in the first year of the project, unless a smaller subset of the project, such as project design, can be identified and funded without budgeting the full estimated project cost. For these multi-year contracts, unspent funds from the first fiscal year will typically be carried over to the next fiscal year until the project is completed. Accordingly, the RWP Capital Plan presented herein is a subsequent extension of the plan presented in the adopted FY 22-23 Budget that has been carried forward by one year to FY 23-24. Changes to the 5-Year Plan typically occur from year to year as more information becomes available and evaluated. Exhibit 13 displays the MWMC 5-Year Capital Plan programs budget, which includes $115,520,000 in planned capital projects and $13,660,600 planned asset management capital projects for an overall 5-Year Capital Plan Budget of $129,180,600. FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 TOTAL CAPITAL PROJECTS Biosolids Management Poplar Harvest Management Services 50,000 50,000 Non-Process Facilities and Facilities Planning Comprehensive Facilities Plan Update 1,800,000 1,800,000 Facility Plan Engineering Services 450,000 140,000 150,000 150,000 890,000 Partial Facility Plan Update 650,000 650,000 Conveyance Systems Glenwood Pump Station Upgrade 1,500,000 1,500,000 Plant Performance Improvements Electrical Switchgear & Transformer Replacement 19,400,000 19,400,000 Administration Building Improvements 18,700,000 18,700,000 Water Quality Trading Program 12,100,000 12,100,000 Class A Disinfection Facilities 6,790,000 6,790,000 Aeration System Upgrades (2023 to 2026)3,200,000 25,000,000 28,200,000 Resiliency Follow-Up 500,000 500,000 800,000 800,000 2,000,000 4,600,000 Recycled Water Demonstration Projects 330,000 330,000 WCPF Stormwater Infrastructure 310,000 200,000 510,000 Waste Activated Sludge Thickening 1,500,000 5,000,000 6,500,000 Owosso Bridge Seismic Upgrades 1,000,000 5,500,000 6,500,000 Tertiary Filtration - Phase 2 7,000,000 7,000,000 TOTAL CAPITAL PROJECTS $64,680,000 $27,650,000 $6,940,000 $6,450,000 $9,800,000 $115,520,000 ASSET MANAGEMENT Equipment Replacement 1,835,000 700,000 3,163,400 1,585,600 2,445,600 9,729,600 Major Rehabilitation 630,000 350,000 844,000 1,164,000 943,000 3,931,000 Major Capital Outlay - - - - - - TOTAL ASSET MANAGEMENT 2,465,000 1,050,000 4,007,400 2,749,600 3,388,600 13,660,600 TOTAL CAPITAL IMPROVEMENTS $67,145,000 $28,700,000 $10,947,400 $9,199,600 $13,188,600 $129,180,600 EXHIBIT 13 Regional Wastewater 5-Year Capital Programs Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP POPLAR HARVEST MANAGEMENT SERVICES (P80083) Description: This project represents the commissioning phase of the initial establishment of the Biocycle Farm by managing harvest and replanting services of all three farm management units (MUs), including marketing of poplar harvest products. Upon final replanting of Management Unit 3 (MU3), the project will result in a findings and recommendation report for long-term Biocycle Farm management. The project ensures the timely harvest of each MU within the regulatory 12-year rotation limit. Upon full replanting of MU3, the long-term poplar harvest and planting will be added to operations/maintenance functions in 2024 under the Eugene Wastewater Division. Ongoing poplar end use and market development is anticipated to remain under the MWMC Capital Program team. Status: MU1 was replanted in 2016. MU2 was replanted in 2018-19. MU3 was harvested in 2021 with replanting programmed in 2023-24. Justification: Regulatory land use requirements for operation of the Biocycle Farm (including agricultural rules) and assurance of optimization of farm effectiveness and efficiency, including biosolids and recycled water management strategies. Project Driver: Land Use Compatibility Statement (LUCS) issued by Lane County; Biosolids Management Plan and Recycled Water Use Plan under the MWMC’s NPDES permit. Project Trigger: Maturity of each 12-year rotation age cycle in conformance with agricultural use rules. Estimated Project Cost: $2,000,000 (estimate 2013 to June 2024) Estimated Cash Flow: FY 13-14 = $116,009; FY 14-15 = $114,465; FY 15-16 = $136,814; FY 16-17 = $105,653; FY 17-18 = $435,573; FY 18-19 = $138,388; FY 19-20 = $110,007; FY 20-21 = $36,969; FY 21-22 = $623,602; FY 22-23 = $132,520; FY 23-24 = $50,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $1,817,480 $132,520 $50,000 $0 $0 $0 $0 $2,000,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $1,817,480 $132,520 $50,000 $0 $0 $0 $0 $2,000,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP COMPREHENSIVE FACILITIES PLAN UPDATE (P80101) Description: This will be the first MWMC Comprehensive Facilities Plan Update since the 2004 MWMC Facilities Plan. The update could include WPCF stormwater planning, NPDES permit renewal, system development charge evaluation, facilities planning technical services, and cost estimating for a 20-year planning horizon. The update will draw on the most recent plant data, permit compliance requirements, and available technology able to ensure the MWMC continues to meet future regulations, environmental standards, and community growth. The MWMC NPDES permit renewal was effective on November 1, 2022. Status: As of December 2022, consultant provided WPCF stormwater master plan (December 2021). The Oregon Department of Environmental Quality finalized the NPDES permit #102486 in October 2022. The P80101 project team is working with consultants to create a new Facilities Plan and updates to the MWMC governing body. Justification: Evaluate and plan for future MWMC conveyance and treatment upgrades and solutions to meet regulatory requirements, preserve public health, community growth, and water quality standards. Project Driver: Provide MWMC comprehensive facilities planning to develop the capital program and recommendations for the upcoming 20-years. Project Trigger: The WPCF stormwater planning portion was triggered to address local building permit requirements for MWMC upcoming construction projects. The remaining project scope will be focusing on planning for at least 20 years. Estimated Project Cost: $2,600,000 Estimated Cash Flow: FY 18-19 = $35,701; FY 19-20 = $15,174; FY 20-21 = $70,567; FY 21-22 = $2,136; FY 22-23 = $676,422; FY 23-24 = $1,460,000; FY 24-25 = $340,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $0 $0 $0 $0 $0 Other $123,578 $676,422 $1,800,000 $0 $0 $0 $0 $2,600,000 Total Cost $123,578 $676,422 $1,800,000 $0 $0 $0 $0 $2,600,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP FACILITY PLAN ENGINEERING SERVICES (P80110) Description: Engineering/technical/vendor services for analysis, project definition, cost estimating, design feedback, follow up approvals, and general consultation regarding the MWMC Facilities Plan follow up (2024 to 2028). The related project P80090 was closed out in FY 21/22. Status: After the November 1, 2022 permit renewal, staff anticipates updating the MWMC Facilities Plan under P80101 and as needed follow up support via P80110 Facility Plan Engineering Services. As required by the NPDES permit #102486 (page 12) and before September 15, 2025, the MWMC must provide an inspection report to the DEQ of the treatment plant outfall system. The P80110 funding will support the inspection and evaluation of the MWMC outfall system. Justification: Consultant services to provide ongoing technical and engineering services as needed after the MWMC Comprehensive Facilities Plan Update (P80101). Project Driver: Ongoing engineering/technical/vendor services. Project Trigger: Ongoing need. Estimated Cost: $890,000 (2024 to 2028) Estimated Cash Flow: FY 24-25 = $450,000; FY 25-26 = $140,000; FY 26-27 = $150,000; FY 27-28 = $150,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $450,000 $140,000 $150,000 $150,000 $890,000 Total Cost $0 $0 $0 $450,000 $140,000 $150,000 $150,000 $890,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP PARTIAL FACILITY PLAN UPDATE (P80103) Description: This project provides a 5-year update to the Comprehensive Facilities Plan that will verify and re-evaluate the assumptions, projections, and project cost estimates. The Partial Facilities Plan Update reviews the new and evolving regulatory drivers, identifies technology changes/opportunities, evaluates needed adjustments, and provides new recommendations. The next MWMC NPDES permit renewal date is September 30, 2027. Status: Anticipate starting work in FY 27-28 or as needed. Justification: The information and basis of the Comprehensive Facilities Plan requires regular updating to ensure knowledge, data, regulations, and performance issues behind Plan recommendations are current and recommended projects are adapted and adopted based on the current fact set. Project Driver: Ongoing goal to keep planning up to date. Project Trigger: Scheduled update. Estimated Project Cost: $650,000 Estimated Cash Flow: FY 27-28 = $320,000; FY 28-29 = $330,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $650,000 $650,000 Total Cost $0 $0 $0 $0 $0 $0 $650,000 $650,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP GLENWOOD PUMP STATION UPGRADE (P80064) Description: Expand Glenwood pump station capacity to accommodate growth and meet Oregon Department of Environmental Quality (DEQ) wastewater pump station design requirements. The pump station was designed with stalls for additional pumps. Two pumps are currently installed with space for two additional pumps to be added when flow to the pump station increases with development of the Glenwood and Laurel Hill basins. In 2019, the P80096 Resiliency Planning study recommended onsite geotechnical evaluation and additional improvements. Status: As of January 2023, evaluation of existing pumping capacity and geotechnical investigation is complete. Consultant task order #1 is nearing completion. The next step is to collect wet weather flow data and start design of the pump station upgrades. Justification: Additional pumping capacity will be required at this MWMC pump station to handle increasing flows in the Glenwood area (Springfield) and the Laurel Hill area (Eugene). Project Driver: Oregon DEQ wastewater pump station redundancy requirements and 2019 Resiliency study recommendations. Project Trigger: Peak wet weather instantaneous flow reaches 80 percent of the pump station firm capacity. Estimated Project Cost: $2,050,000 (but plan to get updated construction cost estimating in 2023) Estimated Cash Flow: FY 20-21 = $1,426; FY 21-22 = $43,259; FY 22-23 = $505,315; FY 23-24 = $1,400,000; FY 24-25 = $100,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $44,685 $505,315 $1,500,000 $0 $0 $0 $0 $2,050,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $44,685 $505,315 $1,500,000 $0 $0 $0 $0 $2,050,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP ELECTRICAL SWITCHGEAR & TRANSFORMER REPLACEMENT (P80115) Description: The main electrical switchgear at the Water Pollution Control Facility (WPCF) and Willakenzie Pump Station (WPS) were installed in 1983 during construction of the regional facilities. The purpose of the equipment is to take utility power and provide it to various process areas with the use of switches. There is a main breaker to safely isolate the facility from the utility grid (EWEB), as well as protect the utility from electrical faults at the site. This project will upgrade the existing switchgear and medium voltage transformers. Status: As of December 2022, consultant developed an estimated project cost, based on recent similar projects. The MWMC received an update with recommendations on December 9, 2022. Justification: The main electrical switchgear for the WPCF and the WPS have reached the end of their service life and need to be replaced. Eighteen (18) medium voltage (MV) transformers throughout both sites are in similar condition. Major delays in equipment delivery times have placed a sense of urgency on procuring this equipment. Streamlining project delivery, design and construction, the impacts of outages to plant operations can be minimized if all equipment is replaced together through one project. Project Driver: Main switchgear and MV transformers are of paramount importance to plant operations. Replacing switchgear is a major undertaking that involves large temporary power sources, specialized contractors, manufacturer field testing, and significant coordination to reduce disruption to plant operation. Project Trigger: The September 2022 condition assessment, coupled with recent arcing events, has concluded the switchgear at the WPCF and WPS have reached the end of their useful life and need to be replaced, and it is anticipated that the MV transformers are not far behind. Estimated Project Cost: $20 million (additional cost estimating anticipated in 2023) Estimated Cash Flow: FY 22-23 = $600,000; FY 23-24 = $4,000,000; FY 24-25 = $6,400,000; FY 25-26 = $9,000,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $600,000 $19,400,000 $0 $0 $0 $0 $20,000,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $0 $600,000 $19,400,000 $0 $0 $0 $0 $20,000,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP ADMINISTRATION BUILDING IMPROVEMENTS (P80104) Description: This project will address the Administration/Operations Building workspace needs at the Water Pollution Control Facility (WPCF). It is a follow up to the 2018-2019 construction of the P80085 new laboratory building and expansion of the existing maintenance building. In 2019, the P80096 Resiliency Planning study recommended evaluating MWMC options for building space including: a) constructing a new MWMC building for immediate occupancy/use after a major natural disaster, or b) upgrade the existing building for immediate occupancy post-earthquake (magnitude 9.0 event). Three alternatives to meet workspace needs were studied and the alternative to construct a new building in the existing building’s footprint was selected by the MWMC during the October 14, 2022 meeting. Temporary operations space will need to be designed and constructed in the existing Maintenance Building for operations to continue during construction and to provide for additional operational resiliency in the future. Status: As of January 2023, the project team and design consultant are nearing the 60% design development and anticipate construction bidding in early 2024. Justification: The original design and construction of the WPCF Administration/Operations Building was completed February 1982 under older building codes. Since that time, use of the building and associated construction codes have changed substantially necessitating the need to re-evaluate the MWMC building options to address level of service goals after a natural disaster (earthquake or flooding). Project Driver: The need to update the existing Administration/Operations building is driven by the necessity to provide a safe and efficient work environment for the WPCF staff. Many of the planned changes stem from a changing wastewater/environmental business because of changing regulations since the WPCF was originally constructed in 1982. Also, address the P80096 recommended level of service goals to operate after magnitude 9.0 earthquake issue. Project Trigger: Expansion and changes needed for functionality, safety, and natural disaster resiliency. Estimated Project Cost: $20,000,000 (continue to evaluate project cost estimates during design development) Estimated Cash Flow: FY 20-21 = $17,937; FY 21-22 = $209,786; FY 22-23 = $1,072,277; FY 23-24 = $8,700,000 FY 24-25 = $10,000,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $227,723 $1,072,277 $18,700,000 $0 $0 $0 $0 $20,000,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $227,723 $1,072,277 $18,700,000 $0 $0 $0 $0 $20,000,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP WATER QUALITY TRADING PROGRAM (P80112) Description: The MWMC Water Quality Trading Program secures regulatory credits for meeting thermal load reduction through watershed restoration. The program fulfills the objectives of the MWMC Water Quality Trading Plan under the MWMC NPDES permit as approved November 2022, which defines the MWMC eligible trading area in the upper Willamette basin. The program is implemented principally through the MWMC’s membership in the Pure Water Partners collaborative via the MWMC’s contractor- provided Credit Program Manager services and MWMC’s IGA with EWEB. Water quality trading credits comprise the MWMC’s primary strategy for thermal load limit compliance and may provide ancillary future water quality or carbon benefits. Status: The MWMC with consultant help has developed a Water Quality Trading Plan for NPDES permit compliance and has fully evaluated the credit capacity, effectiveness, and scale of eligible lands in the upper Willamette basin. As of March 2019, the MWMC procured The Freshwater Trust (www.thefreshwatertrust.org) as the MWMC Credit Program Manager. As of November 2022, the MWMC has an active agreement with The Freshwater Trust to implement the permit-compliance water quality trading program scope of work to meet the 5-year credit timeline of the NPDES permit Compliance Schedule. As of January 2023, the MWMC has recorded 33.65 Mkcal/day of credits out of a 5-year target of 200 Mkcal/day. Justification: The Water Quality Trading Program will help provide cost-effective strategies for most of the thermal load compliance dates as required under the MWMC NPDES permit renewed in 2022. Project Driver: Implementation of updated thermal load limits in the MWMC’s renewed NPDES permit. Project Trigger: The NPDES permit renewal includes a 15-year Compliance Schedule with 200 Mkcal/day of credits due by October 2027. Estimated Project Cost: $13 million (estimate 2022 to 2033) Estimated Cash Flow: FY 22-23 = $900,000; FY 23-24 = $550,000; FY 24-25 = $2,100,000; FY 25-26 = $3,100,000; FY 26-27 = $2,600,000; FY 27-28 = $1,100,000; FY 28-29 = $30,000; FY 29-30 = $20,000; FY 30-31 = $1,100,000; FY 31-32 = $1,100,000; FY 32-33 = $400,000. Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $900,000 $12,100,000 $0 $0 $0 $0 $13,000,000 Total Cost $0 $900,000 $12,100,000 $0 $0 $0 $0 $13,000,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP CLASS A DISINFECTION FACILITIES (P80098) Description: Provides disinfection, storage, and distribution facilities needed to bring tertiary filtered effluent to Class A standards on a consistent and reliable basis for initial demonstration of recycled water uses on- and off-site of the MWMC treatment site. The P80098 project includes the design, bidding, construction, and permitting of Class A recycled water disinfection facilities. Status: As of January 2023, the project team is evaluating the MWMC existing filtration system and seeking grant funding. The P80098 design package is nearing 100% completion to submit for construction permits and construction bidding phase. Justification: Class A recycled water is necessary to expand recycled water to landscaping, street tree, and industrial uses. Demonstration of Class A quality and reliability is necessary for stakeholder acceptance and future adoption of expanded recycled water uses. Project Driver: The Thermal Load Mitigation Alternatives Evaluation, Recycled Water Program Implementation Planning, Phase 2 Study (dated August 2014) recommended demonstration scale use of Class A recycled water to address stakeholder acceptability issues identified as barriers to full-scale recycled water uses. Project Trigger: Pilot recycled water demonstration sites with willing, ready-to-proceed partners have been identified, including City of Eugene (street tree watering) and industrial aggregate sites for equipment washing. Estimated Project Cost: $8 million (recycled water Class A infrastructure and upgrade one structure for 9.0 magnitude earthquake preparedness related to MWMC P80096 level of service goals) Estimated Cash Flow: FY 18-19 = $836; FY 19-20 = $15,934; FY 20-21 = $339,068; FY 21-22 = $761,685; FY 22-23 = $92,477; FY 23-24 = $550,000; FY 24-25 = $6,240,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $1,117,523 $92,477 $6,790,000 $0 $0 $0 $0 $8,000,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $1,117,523 $92,477 $6,790,000 $0 $0 $0 $0 $8,000,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP AERATION SYSTEM UPGRADES [2023-2026] (P80113) Description: In 2020 and 2021, Brown and Caldwell evaluated the existing aeration systems and provided recommendations in January 2022 via project P80100. The P80113 project will implement the design and construction of additional upgrades/changes to the existing aeration systems by year 2027. Upgrades to the westerly existing aeration basins are anticipated after year 2031. Status: As of January 2023: The MWMC signed the P80113 design contract with Brown and Caldwell on October 4, 2022. The design development phase is anticipated thru 2024 with updates in the MWMC monthly report. Justification: Update aging (1984) existing equipment/systems such as piping, electrical, communication technology, blowers, HVAC, and other components related to the aeration system which is part of the MWMC secondary treatment process. Project Driver: Ongoing efforts to keep existing systems reliable and achieve required performance outcomes to address the National Pollution Discharge Elimination System (NPDES) permit. Project Trigger: Need to address aging aeration systems for reliability and performance upgrades. Estimated Project Cost: $30,000,000 (evaluate cost estimates during the P80113 design development phase) Estimated Cash Flow: FY 22-23 = $1,800,000; FY 23-24 = $3,200,000; FY 24-25 = $8,000,000; FY 25-26 = $11,500,000; FY 26-27 = $5,500,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $1,800,000 $3,200,000 $25,000,000 $0 $0 $0 $30,000,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $0 $1,800,000 $3,200,000 $25,000,000 $0 $0 $0 $30,000,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP RESILIENCY FOLLOW-UP (P80109) Description: This project provides follow-up evaluation and some implementation of the P80096 Resiliency Study (Disaster Mitigation and Recovery Plan - dated March 2020). The 2019 study recommended seismic and flooding mitigation projects estimated at $34.6-million to be coordinated with the MWMC ongoing infrastructure/facilities construction program. The main objective is to address “level of service” goals before a natural disaster such as a 9.0 magnitude earthquake or major flooding. Also, the MWMC should continue to communicate with the agencies that prepare for natural disasters that can impact the Eugene/Springfield community. Status: As of January 2023: Consultants completed geotechnical assessments near the Owosso Bridge, Willakenzie pump station, WPCF Headworks structures, and Glenwood pump station. Received consultant cost estimates for seismic retrofits to the Owosso Bridge. Justification: The MWMC’s facilities and wastewater conveyance and treatment services are integral to protection of the community and public health following a major disaster such as the anticipated Cascadia Subduction Zone Earthquake and major flooding. Project Driver: Cost effectively ensure reasonable recovery of MWMC’s core facilities and services following major disaster impacts after earthquake or flooding. Project Trigger: Per Commission direction, consultant work began in July 2018. The MWMC plan with consultant recommendations is dated March 2020. Established consultant agreements in 2021 with four engineering businesses. Estimated Project Cost: Mitigation recommendations estimate: $34.6-million (2019 dollars) Estimated Cash Flow: FY 20-21 = $4,092; FY 21-22 = $173,133; FY 22-23 = $802,775; FY 23-24 = $500,000; FY 24-25 = $500,000; FY 25-26 = $800,000; FY 26-27 = $800,000; FY 27-28 = $2,000,000; and continue the MWMC mitigation work estimated over $34-million Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $177,225 $802,775 $500,000 $500,000 $800,000 $800,000 $2,000,000 $5,580,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $177,225 $802,775 $500,000 $500,000 $800,000 $800,000 $2,000,000 $5,580,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP RECYCLED WATER DEMONSTRATION PROJECTS (P80099) Description: This project provides for stakeholder engagement, community communication/outreach, and any additional design, construction, permitting, and implementation of recycled water point-of-use needs beyond the MWMC’s point-of-delivery of Class A recycled water product. Status: As of 2022: Pilot Class A recycled water demonstration sites with ready-to-proceed partners have been identified, including City of Eugene street-tree watering and industrial aggregate site uses. Letters of intent from these partners were secured in 2020. Regulatory readiness was addressed with DEQ during the NPDES 2022 permit renewal in anticipation of project launch during the 2022-2027 permit cycle. A consultant-led outreach strategy was developed, including engaging a recycled water use advisory network in tandem with the Class A Disinfection Facilities (P80098) construction phase. Justification: Recycled water use may be an important strategy for diverting effluent from the Willamette River to meet NPDES permit discharge limits for temperature and other water quality benefits. Development of Class A recycled water is an identified water resource strategy in EWEB’s Water Management and Conservation Plan (July 2018) and the Eugene/Springfield Area Multi-Jurisdictional Natural Hazards Mitigation Plan (January 2020). Project Driver: The Thermal Load Mitigation Alternatives Evaluation-Recycled Water Program Implementation Planning, Phase 2 Study (dated August 2014) identified demonstration scale use of Class A recycled water was needed to address stakeholder acceptability issues identified as barriers to full-scale recycled water uses. Project Trigger: The 2022 NPDES permit included new temperature limits and imposes a 15-year compliance schedule to fully meet new effluent limits. The permit requires identification of a long-term strategy to meet the compliance schedule. Estimated Project Cost: $410,000 Estimated Cash Flow: FY 19-20 = $27,899; FY 20-21 = $16,859 FY 21-22 = $11,121; FY 22-23 = $24,121; FY 23-24 = $160,000; FY 24-25 = $170,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $55,879 $24,121 $330,000 $0 $0 $0 $0 $410,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $55,879 $24,121 $330,000 $0 $0 $0 $0 $410,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP WPCF STORMWATER INFRASTRUCTURE (P80111) Description: Retrofit and/or change existing stormwater infrastructure at the Water Pollution Control Facility (WPCF). Also, update the WPCF Conditional Use Permit (CUP) related to stormwater infrastructure planning for upcoming construction. Status: As of December 2022, Jacobs staff provided a Stormwater Master Plan (SWMP) dated December 16, 2021 with consultant recommendations including the need to update the MWMC existing CUP related to stormwater systems. Justification: WPCF existing stormwater and drainage systems need to be retrofitted and/or changed for upcoming construction permit approvals. Project Driver: Maintain compliance with local and state stormwater requirements at the WPCF. Project Trigger: Each infrastructure hard surface change at the WPCF can trigger stormwater quality and quantity onsite controls related to project permit requirements. Estimated Project Cost: $600,000 (update WPCF CUP for stormwater, retrofit existing three bioswales to rain gardens, and add new rain gardens) Estimated Cash Flow: FY 22-23 = $90,000; FY 23-24 = $310,000; FY 24-25 = $200,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $90,000 $310,000 $200,000 $0 $0 $0 $600,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $0 $90,000 $310,000 $200,000 $0 $0 $0 $600,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP WASTE ACTIVATED SLUDGE THICKENING (P80078) Description: Third gravity belt thickener (GBT) with associated at-grade building. Assumes additional basement floor space is not required. Status: Continue to monitor the timing of this project and P80101 findings in 2023/2024. Justification: Provide additional capacity for waste activated sludge (WAS) thickening process. Project Driver: Additional capacity to provide WAS thickening with one unit offline at upper limit flow projections. Nitrification required by the NPDES permit and increasing wastewater flows and loads generates more WAS solids. Provide ability to conduct recuperative thickening. Project Trigger: Exceeding solids and hydraulic loading rate design criteria. Estimated Project Cost: $6,500,000 Estimated Cash Flow: FY 24-25 = $1,500,000; FY 25-26 = $3,000,000; FY 26-27 = $2,000,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $1,500,000 $5,000,000 $0 $0 $6,500,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $0 $0 $0 $1,500,000 $5,000,000 $0 $0 $6,500,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP OWOSSO BRIDGE SEISMIC UPGRADES (P80116) Description: This project was identified in the Disaster Mitigation and Recovery Plan (March 2020). The MWMC owns the Owosso Bridge (constructed in 1982) and has infrastructure attached to the bridge. Status: Under the MWMC project P80109 work related to the Owosso Bridge, the MWMC received a geotechnical seismic analysis consultant report dated June 23, 2022. In August 2022, an engineering consultant provided updated cost estimates for Owosso Bridge seismic retrofits. Justification: The MWMC’s facilities and wastewater conveyance/treatment services are integral to protection of the community and public health following a major disaster such as the Oregon anticipated Cascadia Subduction Zone Earthquake. Project Driver: Cost effectively ensure reasonable recovery of MWMC’s core facilities and services following major disaster impacts after earthquake and/or river flooding. Project Trigger: Ongoing effort to address level of service recommendations/improvements from the Disaster Mitigation and Recovery Plan dated March 2020 (Project P80096). Estimated Project Cost: $6,500,000 Estimated Cash Flow: FY 25-26 = $800,000; FY 26-27 = $2,700,000; FY 27-28 = $2,800,000; FY 28-29 = $200,000 Expenditure/Category: Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $0 $1,000,000 $5,500,000 $0 $6,500,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $0 $0 $0 $0 $1,000,000 $5,500,000 $0 $6,500,000 Metropolitan Wastewater Management Commission Capital Improvement Program FY 23-24 BUDGET AND CIP TERTIARY FILTRATION - PHASE 2 (P80102) Description: The phased work program anticipates installing infrastructure/support facilities for 30 mgd of filters for tertiary filtration of secondary treated effluent. Phase 2 is planned to install filter system technology sufficient for another 10 mgd of treatment that will increase the total filtration capacity to 20 mgd. The Phase 3 project will install the remaining filtration technology to meet the capacity needs identified in the 2004 MWMC Facilities Plan and evaluate any new planning information. In January 2016, the project scope and cost (estimate $530K in 2015) increased to include updating electrical switchgear and installing tertiary filter flushing headers/pipe vents. Status: Tertiary Filtration (Phase 2) project is anticipated to start design development in FY 27- 28. Continue to evaluate timing based on upcoming P80101 planning information. Justification: The 2004 MWMC Facilities Plan proposes filters on a phased work program. Filtration provides high quality secondary effluent to help meet permit requirements and potential Class A recycled water product for public and/or private partnerships. Project Driver: Performance reliability to meet the dry weather NPDES Permit total suspended solids limit of less than 10 mg/L, reuse development, and compliance with effluent limits during peak flow conditions. Project Trigger: NPDES permit compliance for total suspended solids (TSS): Dry weather maximum month flow in excess of 49 mgd. Also, provide higher quality effluent so that reuse options can be developed. Continue to evaluate the project timing based on the MWMC upcoming P80101 Facilities Planning information. Estimated Project Cost: $17,000,000 (re-evaluate during the P80101 Comprehensive Facilities Plan Update) Estimated Cash Flow: FY 27-28 = $5,500,000; FY 28-29 = $5,600,000; FY 29-30 = $5,600,000; FY 30-31 = $300,000 Prior Years 2022-23 Est. Act.2023-24 2024-25 2025-26 2026-27 2027-28 Total Design/Construction $0 $0 $0 $0 $0 $0 $7,000,000 $7,000,000 Other $0 $0 $0 $0 $0 $0 $0 $0 Total Cost $0 $0 $0 $0 $0 $0 $7,000,000 $7,000,000 M E M O R A N D U M AGENDA VI. Memo: Evaluation of Staffing Resources February 2, 2023 Page 2 of 4 • • • • • • • • • Memo: Evaluation of Staffing Resources February 2, 2023 Page 3 of 4 • Memo: Evaluation of Staffing Resources February 2, 2023 Page 4 of 4