HomeMy Public PortalAboutFiscal Year 2019 Annual Comprehensive Financial Report (ACFR)THE METROPOLITAN ST. LOUIS SEWER DISTRICT • ST. LOUIS, MISSOURI
FENTON WASTEWATERTREATMENT PLANT
COMPREHENSIVE ANNUALFINANCIAL REPORT
FISCAL YEARS ENDED JUNE 30, 2019 AND 2018
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
ST. LOUIS, MISSOURI
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEARS ENDED JUNE 30, 2019 AND 2018
Report Prepared And Submitted By The
Department of Finance
Marion M. Gee
Director Of Finance
Contents
Page
Part I – Introductory Section:
Letter Of Transmittal ................................................................................................................... i
Organization Chart ................................................................................................................... xiii
Certificate Of Achievement For Excellence In Financial Reporting ...................................... xiv
Part II – Financial Section:
Independent Auditors’ Report ..................................................................................................... 1
Management’s Discussion And Analysis .................................................................................... 3
Basic Financial Statements
Statements Of Net Position ................................................................................................. 16
Statements Of Revenues, Expenses, And Changes In Net Position ................................. 18
Statements Of Cash Flows .................................................................................................. 19
Notes To Financial Statements ........................................................................................... 21
Required Supplementary Information
Schedule Of Changes In Net Pension Liability And Related Ratios ................................ 93
Schedule Of Employer Contributions – Employees’ Pension Plan ................................... 94
Schedule Of Changes In Total OPEB Liability .................................................................. 95
Part III – Statistical Section:
Net Position By Component ................................................................................................ 96
Changes In Net Position ...................................................................................................... 97
Operating Revenues By Source ........................................................................................... 98
Operating Expenses ............................................................................................................. 99
Non-Operating Revenues And Expenses .......................................................................... 100
User Charge Rates ............................................................................................................. 101
User Charge Revenues....................................................................................................... 102
Sewer User Charges (Composite-Annual) ........................................................................ 103
Number Of Customers By Type ........................................................................................ 104
Ten Largest Customers...................................................................................................... 105
Ratios of Outstanding Debt By Type ................................................................................ 106
Computation Of Overlapping Debt ................................................................................... 107
Pledged Revenue Coverage ................................................................................................ 108
Demographic And Economic Statistics ............................................................................. 109
Principal Employers (St. Louis Metropolitan Area) ........................................................ 110
Employment Level ............................................................................................................. 111
Average Flow ...................................................................................................................... 112
Operating And Capital Indicators .................................................................................... 113
Introductory Section
Vision Statement
Quality Service Always
Mission Statement
To protect the public’s health, safety, and water
environment by responsibly providing wastewater
and stormwater management
Values
Integrity
Teamwork
Excellence and Innovation
The District Employees
Customer Satisfaction
Mission, Vision, Value statements are important elements of a
strategic business plan. The Mission statement keeps the
District focused on its essential activity, the Vision statement
points to its ideal purpose, and the Value statement conveys the
principles that must shape our actions.
i
October 9, 2019 The Board of Trustees The Metropolitan St. Louis Sewer District The Comprehensive Annual Financial Report (“CAFR”) of The Metropolitan St. Louis Sewer District (“MSD” or the “District”) for the fiscal year ended June 30, 2019 is submitted herewith. The District’s Finance Department prepared this report. The District is responsible for the accuracy of the data and the completeness and fairness of the presentation of the financial statements and other information presented herein. We believe the presentation is accurate in all material respects and includes all disclosures necessary to enable the reader to gain a reasonable understanding of the District’s financial activities. In the CAFR, the District’s financial activities are measured on a single enterprise fund basis where all funds of the District and its sub-districts are consolidated. The District’s CAFR includes an Introductory Section, a Financial Section, and a Statistical Section. The Introductory Section includes this transmittal letter, an organization chart as of June 30, 2019 which lists the District’s Board of Trustees, Rate Commission Chair, members of the Civil Service Commission, and management staff and the Government Finance Officers Association’s Certificate of Achievement For Excellence In Financial Reporting presented to the District for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2018. The Financial Section includes the independent auditors’ report, management’s discussion and analysis, and the District’s basic financial statements. The Statistical Section includes financial, economic, and demographic information, generally presented on a multi-year basis. The CAFR includes all funds of the District. The operations of these funds, as reflected in the financial statements, are under the control of the District’s governing body. The District has determined there were no other agencies or entities that met the established criteria for inclusion in the reporting entity.
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Organization
MSD was created in 1954 to provide a metropolitan-wide sewer system to serve the City of St. Louis and most of the more heavily populated areas of St. Louis County. Before MSD’s creation, the City of St. Louis, various municipalities, and private sewer companies provided sewer service that primarily included only collecting and transporting sewage from small geographic areas to nearby rivers and streams with little or no treatment. Most of the municipalities or private sewer companies serving the area did not have the jurisdictional authority or financial resources needed to eliminate health hazards from untreated sewage. When the District began operations, it took over the publicly owned wastewater and stormwater drainage facilities within its jurisdiction and began the construction of an extensive system of collector and interceptor sewers and treatment facilities. In 1977, voters approved the District’s annexation of a 270 square mile area of the lower Missouri River and lower Meramec River watersheds. The District purchased the Fee Fee Trunk Sewer Company and the Missouri Bottoms Sewer Company in 1978. MSD has since acquired other investor-owned or municipally operated systems. The District’s service area now encompasses 520 square miles including all 66 square miles of the City of St. Louis and 454 square miles of St. Louis County. The current population served by the District is approximately 1.3 million representing approximately 427,000 accounts. MSD is organized pursuant to Article VI, Section 30 of the Missouri State Constitution that empowers the people of St. Louis County and the City of St. Louis “to establish a metropolitan district for functional administration of services common to the area.” MSD is the only district established pursuant to that section of the Missouri State Constitution. The Charter of MSD (“Plan”), approved by voters in 1954 and amended in 2000 and 2012, established the District. The Plan describes the District as “a body corporate, a municipal corporation, and a political subdivision of the state.” As a political subdivision of the state, MSD is comparable to a county or city, such as St. Louis County or the City of St. Louis. The Plan established the governing body of the District as a six-member Board of Trustees (“Board”) with three members appointed by the Mayor of St. Louis and three members appointed by the St. Louis County Executive. Each Trustee shall be appointed for a term of four years. No Trustee shall serve more than two full consecutive terms plus any portion of an unexpired term. Provided, however, that each Trustee shall serve until his/her successor shall be appointed and qualified. No more than two trustees appointed from the City or County can be affiliated with the same political party.
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Unlike a corporation’s board of directors that is responsible solely to the stockholders who choose to invest in the corporation, MSD’s Board members are trustees of public property and public funds. They are responsible to all citizens within the District. According to the Plan, the Board enacts District ordinances, determines policies, and appoints the Executive Director, the Secretary-Treasurer, and the Internal Auditor. The Executive Director appoints all other District officials. Among its duties, the Board makes all appropriations, approves contracts for improvements, and engages an accounting firm to perform the annual independent audit of the District. The Plan prescribes other duties of the Board and grants numerous broad powers, subject to federal and state laws, to the District and the Board of Trustees. Among other things, the Plan outlines the following requirements or provisions:
• Requires that MSD operate with a balanced budget;
• Details how MSD can tax property and requires an annual public hearing on all taxes levied by the District;
• Details how MSD can establish user charges;
• Requires MSD to establish civil service rules and regulations governed by a Civil Service Commission;
• Provides how the original boundaries of the District may be extended to include any area in St. Louis County; and
• Requires MSD to approve all plans and designs for proposed construction, alteration, or reconstruction of sewer or drainage facilities within the District’s boundaries. The District is also governed by the Missouri State Constitution and various federal and state laws that among other requirements mandate the following:
• MSD must hold permits for all sanitary discharges. These permits require a minimum of secondary treatment;
• MSD must provide wastewater treatment in an area-wide manner to qualify for federal and state grants;
• MSD must operate, maintain, and replace facilities to provide proper wastewater treatment or be subject to penalties and fines; and
• MSD must set user charge rates in compliance with the Federal Clean Water Act. These rates must be submitted to the Missouri Department of Natural Resources to receive future construction grants and to avoid the possibility of refunding past grants.
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During fiscal 2019 the primary source of funding for the operation and maintenance of MSD’s wastewater system was a user charge averaging $602.76 per year or $50.23 per month for a single-family residence. The District’s charges for residential wastewater service are tied to the amount of measured water usage during a winter quarter. For residential properties without water meters, the charges are based on housing attributes (such as the number of rooms, baths, and toilets) that correlate to water usage. That methodology is the same billing methodology used by the City of St. Louis Water Division for their non-metered properties. Multi-family residential and non-residential rates are proportionate to the single-family charge and are based on water consumption and the strength of the discharge. During fiscal 2019 the District’s stormwater system was funded through property taxes of 1.9¢ per one hundred dollars assessed valuation for stormwater regulatory activities and 9.8¢ per one hundred dollars assessed valuation for operations and maintenance of the District’s stormwater utility. The District also performs limited capital improvements with the revenues generated by the 9.8¢ tax. Prior to fiscal year 2017, the operation and maintenance of the District’s stormwater system was funded by a combination of property taxes and flat fee billing of 24¢ per month for residential and commercial properties and 18¢ per month per unit for multi-unit properties. On April 5, 2016, over 62% of voters in MSD’s service area approved Proposition S which placed all MSD customers under the same property tax rates to fund stormwater services. The flat fee billings were eliminated. MSD also receives some federal, state, and local grants to help defray the cost of constructing sewage treatment and drainage facilities and improvements. The District also charges fees for plan review, permits, construction inspection of new system development, and special discharges. The District charges a uniform connection fee in all service areas. The District, itself, may issue general obligation bonds and revenue bonds to finance the cost of improvements and extensions to the sewer system. The District also may issue, on behalf of each of its subdistricts, general obligation bonds, revenue bonds, or special assessment bonds.
Major Initiatives Affecting The Financial Resources Of The District Throughout MSD’s service area, there are hundreds of points where a combination of rainwater and wastewater discharges into local waterways from the wastewater sewer system during moderate to heavy rainstorms. These sewer overflow points act as relief valves when too much rainwater enters the sewer system, and without them, our community could experience thousands of basement backups and/or extensive street flooding. (Even with these overflows points, basement backups can easily number in the
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dozens or hundreds during particularly heavy rains). Depending on where sewer overflows are located within MSD’s system, they are classified as combined sewer overflows --or-- constructed separate sewer overflows. Many of these overflows are a legacy of the way our wastewater systems were first built. Though most overflows predate the District’s creation in 1954, they are still MSD’s responsibility and efforts to address the problem must continue. Sewer overflows have been a significant focus of MSD’s work for many years. From 1992 to 2012, MSD spent approximately $2.7 billion to eliminate over 380 overflows. Today, our work to address sewer overflows and improve water quality continues through a Consent Decree that stems from a lawsuit filed against MSD by the State of Missouri and the United States Environmental Protection Agency (“EPA”) in June 2007. The State of Missouri and the EPA were later joined in the lawsuit by the Missouri Coalition for the Environment. After lengthy mediation, the EPA announced a settlement agreement in August 2011. On April 27, 2012, the United States District Court for The Eastern District of Missouri entered a Consent Decree, thus concluding the litigation. The Consent Decree calls for $6 billion in upgrades to the existing wastewater sewer system (in 2018 dollars). Also known as MSD Project Clear, this work was originally scheduled to take place over 23 years and addresses our community’s wastewater collection and treatment capabilities on a system-wide basis. The work is a mammoth undertaking that will benefit St. Louisans – and our environment – for generations to come. On June 22, 2018, a United States District Judge approved an amendment to the Consent Decree that extends the schedule from 23 years to 28 years. (Necessary approvals were also received from the State of Missouri on August 13, 2018.) The motivation behind the amendment is regulatory changes that compel MSD to accelerate certain projects that do not fall within the scope of the Consent Decree. The time extension will allow MSD to address new regulatory requirements in a fiscally responsible way, while better projecting and controlling needed rate increases. MSD submits rate proposals to an independent Rate Commission. The Rate Commission was established in 2000 through voter approved amendments to MSD’s Charter. The commission is composed of 15 member organizations representing a broad cross-section of MSD customers and is meant to provide the public with a formal role in MSD’s rate setting process. In March 2019, the Rate Commission received a wastewater rate proposal from staff for fiscal years 2021 – 2024. The wastewater rate proposal seeks to fund a four-year, $1.58 billion capital improvement program to meet regulatory and system improvement needs.
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After thoroughly reviewing the proposal, with assistance from its own team of experts working at its direction, the Rate Commission held a series of public hearings to garner ratepayers’ feedback on the proposed rates. The Commission approved a resolution and Rate Recommendation Report with proposed increases for fiscal years 2021 – 2024 with or without bonding. The table below depicts recommended rate increases proposed by MSD staff and the Rate Commission.
The Rate Commission submitted its Rate Recommendation Report to the Board on August 16, 2019. The Rate Commission chair briefed the Board of Trustees on their report on September 12, 2019. If approved by the Board, voters will decide in Spring 2020 or Spring 2021 whether to authorize the District to issue an additional $500 million in bonds. Changes to rates would be effective July 1, 2020. Combined with similar bond elections held in 2004, 2008, 2012 and 2016, voters residing within MSD’s service area have authorized a total issuance of $2.6 billion in wastewater revenue bonds. As of June 30, 2019, MSD has issued $1.9 billion of the total authorization. Consistent with past financing strategies, MSD anticipates funding future Consent Decree and other work related to the wastewater collection and treatment system through a combination of rate increases and voter approved bond issuances. On April 5, 2016 over 62% of voters in MSD’s service area approved Proposition S. The approval of Proposition S placed all MSD customers under the same property tax rates to pay for stormwater service. In turn, all MSD customers will receive the same level of stormwater service. This process occurred gradually throughout MSD’s fiscal year 2017 (July 1, 2016, through June 30, 2017). Prior to July 1, 2016, MSD’s stormwater services were paid for through a variety of property taxes and a flat stormwater fee on each month's MSD bill. With the approval of Proposition S and the implementation of a new funding structure for stormwater services,
FY 21 FY 22 FY 23 FY 24
MSD Staff Proposal 1.9% 3.8% 3.8% 3.8%
Rate Commission Proposal 1.5% 3.4% 3.5% 3.7%
MSD Staff Proposal 1.9% 15.1% 17.1% 13.1%
Rate Commission Proposal 1.5% 15.4% 17.1% 13.0%
Increase with Bond Authorization
Increase without Bond Authorization
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MSD had “fund balances” left over from the former taxing and fee system. However, this limited and set amount of money barely begins to address the overall need for stormwater projects throughout MSD’s service area. In February 2018, staff submitted a Stormwater Capital Rate to the Rate Commission calling for an impervious-area-based Stormwater Capital Rate to fund capital improvements to address localized flooding and erosion problems throughout MSD’s service area. After thoroughly reviewing the proposal, the Rate Commission made a recommendation to MSD’s Board of Trustees in August 2018. Accordingly – and pursuant to MSD’s Charter – the Board considered the Rate Commission’s recommendation and accepted it in September 2018. In April 2019, voters rejected the proposal, thus no districtwide funding is available for stormwater capital projects. Prior to Proposition S in 2016, the District collected additional personal property taxes in 18 taxing subdistricts throughout the service area. These taxing subdistricts are formally called OMCI or Operation, Maintenance, and Construction Improvement Funds and are generally located west of the City of St. Louis and east of I-270. Each OMCI subdistrict was authorized to levy a tax up to $.10 per $100 of assessed property valuation, and all taxes collected in the subdistricts had to be spent within the taxing district boundaries. Customers who did not live within an OMCI subdistrict did not pay this tax and did not receive the associated services. Following the passage of Proposition S in 2016, the Board of Trustees set the tax rates in the OMCI subdistricts to zero. The district is currently in discussion with municipalities and community stakeholders within those OMCI subdistricts to determine if there is a desire to resume levying those taxes so the District could construct projects to address flooding and erosion control within the subdistricts. For fiscal year 2018 (“FY18”), the Metropolitan St. Louis Sewer District (“District”) enforced two cost saving measures during the budget development process. The first measure was to limit discretionary wastewater operations and maintenance spending to FY17 budget levels. Non-discretionary items were defined as salary and wages and benefits for existing employees and existing vacancies. The second cost saving measure was to disallow acceleration of Consent Decree projects funded with sewer service charge revenues. Both of these cost saving measures were necessary to offset shortfalls in sewer service charge revenues experienced in FY17 and anticipated to continue throughout the current approved rate period which spans FY17 through FY20. Revenues projected in the District’s approved rate plan have not been realized in the most part due to lower water usage by our customers; however, the District has been able to manage this revenue shortfall by reducing expenses.
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Operations
The Executive Director and his staff administer the operation and maintenance of the District’s collection and treatment systems. The District’s wastewater, stormwater, and combined sewer collection system includes more than 9,400 miles of pipe and channel and will grow larger over the long term due to new development. Some years may actually see a reduction in total miles of pipe. This is due to the replacement of inefficiently placed pipe with shorter, more direct lines of pipe. The District’s responsibilities for stormwater drainage range from cleaning and maintaining street inlets to operating and maintaining the floodwall pump stations along the Mississippi River. MSD currently operates seven wastewater treatment facilities. These facilities treated an average flow of 396.4 million gallons per day (“MGD”) in fiscal 2019 compared to 270.1 MGD in fiscal 2018. Significant rain events in fiscal 2019 contributed to the increase in average flow when compared to fiscal 2018. The design capacity and average flow, by watershed, in MGD was as follows in fiscal 2019:
MAJOR WATERSHED LEVEL OF TREATMENT NUMBER OF FACILITIES
DESIGN CAPACITY (MGD)
AVERAGE FLOW FISCAL 2019 (MGD)
Mississippi River Secondary Two 472.00 304.70
Missouri River Secondary Two 78.00 52.00
Meramec River Secondary Three 42.75 39.70
Total Seven 592.75 396.40
In addition to construction initiated by the District to protect the public’s health and property from raw sewage and flooding, the District also provides various engineering-related design review and inspection services for the construction of wastewater and stormwater sewers by individuals, businesses, and municipalities in the community.
Economic Conditions In The St. Louis Metropolitan Area As a rule, the District’s major revenue sources do not fluctuate with the local and national economy as much as local governments that depend on sales or income taxes for their major sources of revenue. The combined unemployment rate for the City of St. Louis and St. Louis County was 3.5 percent in June 2019 and lower than the national unemployment rate of 3.7 percent for the same time period.
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MSD has its own internal barometers for measuring economic development within the District. These are listed below for fiscal 2019 and 2018:
2019 2018
Sewer Plan Reviews: Number of Plans Approved 514 673 Number of Miles of Sewers 46 49 Sewer Construction Permits: Number of Permits Issued 3,792 3,769 Number of Miles of Sewers 24 125 Customer Connections: Number of Connection Permits Issued 2,384 2,178 Connection Fee Revenue (in millions) $0.9 $1.2 Value of Sewers Dedicated to MSD by Developers (in millions) $16.6 $24.8 Over the years, the St. Louis economy has undergone a transformation from reliance on traditional manufacturing industries to those industries based on advanced technology and services. The St. Louis area is a center for health care, biotechnology, banking, finance, transportation, tourism, and education and has a strong and diverse manufacturing economy. The area has an abundance of energy, water, and sewerage facilities and can sustain future economic growth.
Financial Information Proprietary Operations. The current financial condition of MSD remains stable. The District realized a net operating income of $110.4 million in fiscal 2019 compared to a net operating income of $94.5 million the prior year. The increase in operating revenues of $32.8 million is explained by an increase in sewer service revenue as a result of rate increases. Operating expenses increased $16.9 million due primarily to increases in pension expenses to comply with Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions (Employer Reporting) (“GASB 68”), additional wastewater backup claims due to the occurrence of several significant rain events, increases in billing and collection expenses and the recording of additional depreciation expense. A more in-depth analysis of the District’s financial position and the magnitude of the capital improvement and replacement program (“CIRP”) is provided in the Management’s Discussion and Analysis section that appears later in this report.
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Budgetary Controls. The District’s Plan requires MSD to submit a proposed budget to the Board by March 15th each year. After Board review, a final budget is approved in June. The District’s Plan also requires MSD to maintain budgetary controls and to adopt a balanced budget. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the appropriation process approved by the Board. The annual appropriated budget includes activities of the District’s operating and debt service funds. The Board adopts ordinances to appropriate funds for capital improvement expenditures at the time of the contract award and acceptance of any grant offers. Budgetary control is by Division and major expenditure category within the General Fund, each Debt Service Fund, and each capital improvement contract. The District utilizes an encumbrance accounting system in conjunction with internal variance and projection analysis to maintain budgetary control. Certain encumbrances carry over from one year to the next as approved by the Board during the budget process. Monthly and year-end financial reports are prepared in accordance with United States generally accepted accounting principles for Enterprise Funds. Adjustments are made to the accounting records, where necessary, to reflect the full accrual method of accounting. Under the full accrual method of accounting, revenues are recognized when earned and expenses are recorded as liabilities when incurred. Encumbrances and unearned capital and operating grants are eliminated under the full accrual method of accounting. These amounts are disclosed as commitments in the notes to financial statements. Cash Management. In compliance with its Plan, the District invests temporarily idle funds in cash, cash equivalents and investments such as collateralized certificates of deposit, collateralized repurchase agreements, obligations of any agency of the United States, and United States Treasury instruments. The District utilizes competitive bidding for investment purchases and monitors market conditions daily. Risk Management. In-house staff and consultants jointly conduct risk management activities. MSD maintains third-party commercial insurance coverage for various risks while self-insuring for other risks and liabilities at levels customary for similar enterprises. The District maintains replacement cost property and casualty insurance with a policy limit of $1.25 billion on certain facilities and equipment that have an estimated replacement cost of $1.5 billion. The District assumes the risk of loss (including payment of water backup claims to its customers) on the majority of its underground pumping facilities and collection system. MSD is one of the few sewer districts in the country known to provide water backup claim coverage to its customers. The underground pumping facility and collection system assets have an estimated replacement cost of $9.9 billion. To minimize exposure to loss, the District inspects its facilities regularly and performs preventative maintenance on them.
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MSD maintains automobile, general liability and excess liability insurance. The District is self-insured for workers’ compensation and funds those costs through annual appropriations from the District’s general insurance fund. The District maintains reinsurance for workers’ compensation liabilities in excess of specified limits up to the statutory limit. Risk control activities include using a third-party claims administrator, maintaining a computerized claim tracking system, and annually reevaluating workers’ compensation cost. The District also has programs designed to promote safety in the workplace and employee wellness. The District provides group medical coverage for its employees and offers dependent medical coverage on a contributory basis through a self-insured plan. Effective February 1, 2014, the District maintained stop loss coverage for specific claims exceeding $175,000 per year and for total annual claims greater than 125 percent of the annual claims estimate. The District provides its employees with contributory group dental insurance coverage and non-contributory life insurance and contributory optional life insurance coverage. The District also contributes $100 every fiscal year, up to a maximum of $300, to a vision care program for employees. Effective July 1, 2013, spouses were eligible to use the benefits; effective July 1, 2016, dependent children up to age 26 were eligible to use the benefits; however, the amount could not exceed the maximum amount of $300. The District reevaluates insurance coverage and providers annually by reevaluating medical insurance claims and health benefit costs. For most construction projects, insurance is obtained by the individual contractor and included in the contract price. Internal Controls. District Management is responsible for designing, establishing, and maintaining an internal control system that protects District assets from loss, theft, or misuse and ensures that adequate accounting data is compiled to prepare financial statements in conformity with United States generally accepted accounting principles. Internal control systems are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and that the evaluation of costs and benefits requires estimates and judgments by management. The District’s internal control system is subject to periodic evaluation by Management, the Board and the District’s independent accountants.
Other Information Audit Requirements. The District’s Plan requires an annual audit by independent certified public accountants. The District’s CAFR includes a report on the District’s financial statements by the accounting firm of CliftonLarsonAllen LLP.
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Besides meeting the requirements set forth in the Plan, the annual audit is also designed to meet the requirements of the 2013 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) that was issued by the Office of Management and Budget (“OMB”). A Single Audit Report will be issued for the year ended June 30, 2019. The financial statements of The Metropolitan St. Louis Sewer District Employees’ Pension Plan, The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust and The Metropolitan St. Louis Sewer District Defined Contribution Plan are also audited annually. These audit reports were issued for the periods ending December 31, 2018 and 2017 and are available to interested parties upon request. Awards. The Government Finance Officers Association of the United States and Canada (“GFOA”) awarded a Certificate of Achievement for Excellence in Financial Reporting to MSD for its CAFR for the fiscal year ended June 30, 2018. The Certificate of Achievement is a prestigious national award that recognizes conformance with the highest standards for preparation of state and local government financial reports. To be awarded the Certificate of Achievement, a government unit must publish an easily readable and efficiently organized CAFR, the contents of which conform to program standards. The CAFR must satisfy both U.S. generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. The District has received a Certificate of Achievement for the last thirty-one consecutive years. We believe the current CAFR continues to conform to the GFOA’s high standards, as reflected in the Certificate of Achievement program requirements, and are submitting it again this year for consideration. The District also received the GFOA’s Distinguished Budget Presentation award for its fiscal 2019 annual budget. The District has received this award for thirty-two consecutive years. We believe the fiscal year 2020 budget presentation continues to meet the GFOA’s high standards and submitted it on July 2, 2019, for consideration.
Marion M. Gee Director of Finance
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ORGANIZATION (As of June 30, 2019)
BOARD OF TRUSTEES Michael Yates, Chair; Annette Mandel, Vice Chair; James Faul; James I. Singer; Freddie Dunlap; 1 vacant position (1)
OFFICE OF INTERNAL AUDITOR
RATE COMMISSION Leonard P. Toenjes, Chair
OFFICE OF SECRETARY
TREASURER Tim R. Snoke Secretary/Treasurer
CIVIL SERVICE COMMISSION Annette Adams Daniel Gonzales 1 vacant position (2)
EXECUTIVE DIRECTOR Brian L. Hoelscher/CEO
FINANCE Marion M. Gee Director
OFFICE OF GENERAL COUNSEL Susan M. Myers General Counsel
OPERATIONS Bret A. Berthold Director
ENGINEERING Rich Unverferth Director
OFFICE OF HUMAN RESOURCES Tracey Coleman Director
INFORMATION SYSTEMS Jonathon C. Sprague Director
(1) Amy Fehr was appointed to the Board of Trustees on 9-6-19
(2) Rev. Michael F. Jones, Sr. was appointed to the Civil Service
Commission on 7-5-19
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Government Finance Officers Association Certificate Of
Achievement
For Excellence
In Financial
Reporting
Presented to Metropolitan St. Louis Sewer District
Missouri
For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018
Executive Directors/CEO
Financial Section
METROPOLITAN ST. LOUIS SEWER DISTRICT
SERVICE AREAS
(1)
INDEPENDENT AUDITORS’REPORT
Board of Trustees
The Metropolitan St. Louis Sewer District
St. Louis, Missouri
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activity of The
Metropolitan St. Louis Sewer District (the District),as of and for the years ended June 30, 2019 and
2018, and the related notes to the financial statements,which collectively comprise the District’s
financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control.Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Board of Trustees
The Metropolitan St. Louis Sewer District
(2)
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the business-type activity of the District as of June 30, 2019 and 2018,
and the respective changes in financial position and cash flows thereof for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis, Schedule of Changes in Net Pension Liability and Related Ratios for the
Employees’Pension Plan, Schedule of Employer Contributions to Employees’ Pension Plan and
Schedule of Changes in Total OPEB Liability, as listed in the table of contents, be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United
States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the District’s basic financial statements. The introductory section and statistical section are
presented for purposes of additional analysis and are not a required part of the basic financial
statements.These sections have not been subjected to the auditing procedures applied in the audit of
the basic financial statements, and accordingly, we do not express an opinion or provide any assurance
on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 9,
2019,on our consideration of the District’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is solely to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of the District’s internal control over financial reporting or on compliance.That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering
the District’s internal control over financial reporting and compliance.
a
CliftonLarsonAllen LLP
St. Louis, Missouri
October 9, 2019
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS For The Years Ended June 30, 2019 And 2018 The annual report of The Metropolitan St. Louis Sewer District (“MSD” or the “District”) includes the independent auditors’ report, management’s discussion and analysis (“MD&A”), and the financial statements accompanied by notes essential to the user’s understanding of the financial statements. Management of the District has provided this MD&A to be used in combination with the District’s financial statements. This narrative is intended to provide the reader with more insight into management’s knowledge of the transactions, events, and conditions reflected in the accompanying financial statements and the fiscal policies that govern the District’s operations.
2019 Financial Highlights
The District increased capital assets by $185.5 million as a result of increases in construction in progress ($120.2 million), land ($1.0 million) and depreciable capital assets net of depreciation ($64.3 million).
The District placed $150.2 million of capital assets into service during fiscal year 2019. The continued high level of capitalization reflects the District’s work to meet long-term plans. Capitalized assets included:
Collection and pumping plant $140.6 million General plant and equipment $6.9 million Treatment and disposal plant and equipment $1.7 million Land $1.0 million The net increase to accumulated depreciation was $76.6 million which takes into consideration the recording of depreciation relating to new assets in addition to depreciation on existing assets, offset by the accumulated depreciation relieved for assets retired during the year. During the 2019 fiscal year, the District implemented Governmental Accounting Standards Board Statement No. 88, Certain Disclosures Related to Debt, Including Direct
Borrowing and Direct Placements (“GASB Statement No. 88”). This Statement amends Statement No. 34, Basic Financial Statements—and Management’s Discussion and
Analysis—for State and Local Governments, paragraph 119 and Statement No. 38,
Certain Financial Statement Note Disclosures, paragraphs 10 and 12. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. The requirements of this Statement will improve financial reporting by
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 4
providing users of financial statements with essential information that currently is not consistently provided. 2018 Financial Highlights
The District increased capital assets by $194.0 million as a result of increases in construction in progress ($128.4 million), land ($2.6 million) and depreciable capital assets net of depreciation ($63.0 million).
The District placed $149.0 million of capital assets into service during fiscal year 2018. The continued high level of capitalization reflects the District’s work to meet long-term plans. Capitalized assets included:
Collection and pumping plant $139.0 million General plant and equipment $4.0 million Treatment and disposal plant and equipment $3.4 million Land $2.6 million The net increase to accumulated depreciation was $73.3 million which takes into consideration the recording of depreciation relating to new assets in addition to depreciation on existing assets, offset by the accumulated depreciation relieved for assets retired during the year. During the 2018 fiscal year, the District implemented Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions (“GASB Statement No. 75”) which replaces the requirements of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other
than Pensions (“GASB Statement No. 45”), as amended. This Statement improves accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or “OPEB”). This Statement also establishes standards for recognizing and measuring liabilities, deferred outflows and inflows of resources, and expense. The impact of implementing GASB Statement No. 75 resulted in the District recording a $24.2 million total OPEB liability, recording a total of $1.3 million OPEB-related deferred outflows of resources, restating beginning net position by $14.1 million and calculating OPEB expense according to the new Statement. No assets are accumulated in a trust that meets the criteria of paragraph 4 of GASB Statement No. 75 to pay OPEB-related benefits. Required Financial Statements The financial statements presented by the management of the District include the Statements of Net Position; Statements of Revenues, Expenses, and Changes in Net Position; and Statements of Cash Flows. These statements are prepared using the accrual basis of accounting. This method of accounting recognizes revenue at the time it
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 5
is earned and expenses when the related liability occurs. As a result of using this method of accounting, the District’s performance over the time period being reported is more easily determinable. The Statements of Net Position provide a report of the District’s current, restricted, and other non-current assets such as cash, investments, receivables, and capital assets. Also, the Statements of Net Position provide a summary of the District’s current, restricted, and non-current liabilities, including contracts and accounts payable, deposits and accrued expenses, pension and OPEB liabilities and bonds and notes payable. Deferred outflows and inflows, where applicable, are also included. The final section of the Statements of Net Position, the net position section, contains earnings retained for use by the District. Increases or decreases in the net position section may be indicative of an improving or declining financial position. This statement provides the basis for computing rate of return, evaluating the capital structure of the District, and assessing the liquidity and financial flexibility of the District. The Statements of Revenues, Expenses, and Changes in Net Position summarize all of the year’s revenue and expense. These statements indicate how successful the District was at maintaining expenses below the level of revenue earned. The Statements of Cash Flows account for the net change in cash and cash equivalents by summarizing cash receipts and cash disbursements resulting from operating activities, non-capital financing activities, capital and related financing activities, and investing activities. These statements assist the user in determining the sources of cash coming into the District, the items for which cash was expended, and the beginning and ending cash balances.
Financial Analysis The District’s financial position improved in the current year, as evidenced by the increase in net position of $129.2 million. The improvement is due primarily to an increase in net investment in capital assets, debt service funds and unrestricted funds of $94.8 million, $2.9 million and $36.6 million, respectively; offset by a decrease of $5.1 million in subdistrict construction and improvement funds. Net capital assets increased $185.5 million while debt related to the capital assets increased $22.7 million and when netted with the $109.4 million decrease in unspent cash proceeds received upon the issuance of senior debt in 2018, net debt decreased net investment in capital assets $86.7 million. The increase in construction-related liabilities of $3.2 million and the amortization of the deferred loss of $0.8 million also decreased net investment in capital assets.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 6
Condensed Financial Statements and Analysis
2019 Analysis Current, restricted and other assets decreased $61.6 million or 7.0% in the current year. The decrease is predominately due to a decrease in investments offset by an increase in cash due to higher sewer rates charged and maturity of investments. Capital assets net of accumulated depreciation increased by $185.5 million or 5.4% in the current year as the result of continued high levels of construction and acquisition of assets by the District. Current liabilities increased by $9.9 million or 7.1% due primarily to an increase in deposits and accrued expenses and retainage held on capital projects which correlate with the increase in construction.
Increase Increase
June 30, June 30,(Decrease)June 30,(Decrease)
2019 2018 2019-2018 2017 2018-2017
Assets:
Current, restricted, and other assets 821,030$ 882,667$ (61,637)$ 743,572$ 139,095$
Capital assets (net of accumulated depreciation)3,631,716 3,446,232 185,484 3,252,238 193,994
Total Assets 4,452,746 4,328,899 123,847 3,995,810 333,089
Deferred Outflows of Resources:
Bonds and notes payable-Deferred loss on refunding 11,343 12,099 (756) 11,321 778
Pension-related outflows 34,238 17,333 16,905 37,666 (20,333)
OPEB-related outflows 1,246 1,278 (32) — 1,278
Total Deferred Outflows of Resources 46,827 30,710 16,117 48,987 (18,277)
Liabilities:
Current liabilities 149,991 140,082 9,909 133,679 6,403
Non-current liabilities 1,723,830 1,722,146 1,684 1,515,345 206,801
Total Liabilities 1,873,821 1,862,228 11,593 1,649,024 213,204
Deferred Inflows of Resources:
Pension-related inflows 4,341 6,065 (1,724) 4,605 1,460
OPEB-related inflows 887 — 887 — —
Total Deferred Inflows of Resources 5,228 6,065 (837)4,605 1,460
Net Position:
Net investment in capital assets 2,063,519 1,968,740 94,779 1,876,249 92,491
Restricted 127,414 129,579 (2,165) 135,259 (5,680)
Unrestricted 429,591 392,997 36,594 379,660 13,337
Total Net Position 2,620,524$ 2,491,316$ 129,208$ 2,391,168$ 100,148$
Condensed Statements of Net Position
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 7
Non-current liabilities increased by $1.7 million or 0.1% primarily due to a $26.0 million increase in net pension liability, offset by $24.3 million net decrease in bonds and notes payable. The net decrease in bonds and notes payable is comprised of a $52.6 million decrease for fiscal 2020 senior and subordinate debt payments reclassified to current liabilities and a $7.0 million decrease in unamortized premium net of discount offset by a $35.3 million increase in new debt.
Net deferred outflows and inflows increased $17.0 million or 68.8% due primarily to updates to various information provided by the District’s actuary such as economic/demographic gains or losses, assumption changes or inputs, and investment gains or losses related to the District’s net pension liability or total OPEB liability.
2018 Analysis
Current, restricted and other assets increased $139.1 million or 18.7% in the current year. The increase is predominately due to an increase in cash and investments due to higher sewer rates charged, with a corresponding increase in cash collected from customers, and due to the unspent cash received on the senior debt issued in fiscal 2018.
Capital assets net of accumulated depreciation increased by $194.0 million or 6.0% in the current year as the result of continued high levels of construction and acquisition of assets by the District.
Current liabilities increased by $6.4 million or 4.8% due primarily to an increase in the current portion of bonds and notes payable and retainage held on capital projects which correlates with the increase in construction.
Non-current liabilities increased by $206.8 million or 13.6% primarily due to a $209.0 million increase in bonds and notes payable relating to the $343.3 million new senior and subordinate debt issued in fiscal 2018 and the related net increase in premiums on debt of $42.4 million, offset by $125.8 million advance refunding of existing debt and $50.9 million for fiscal 2019 senior and subordinate debt payments reclassified to current liabilities. In addition, non-current liabilities increased by $24.2 million as the District implemented GASB Statement No. 75 resulting in recognition of the District’s total OPEB liability. Decreases in the net pension liability of $18.7 million and in deposits and accrued expenses of $8.1 million for the removal of the net OPEB obligation previously recorded under GASB Statement No. 45 are the other components primarily accounting for the change in non-current liabilities. Net deferred outflows and inflows decreased $19.7 million or 44.5% due primarily to updates to various information provided by the District’s actuary such as economic/demographic gains or losses, assumption changes or inputs, and investment gains or losses related to the District’s net pension liability, offset by the establishment of the District’s OPEB-related outflows.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 8
For the Fiscal For the Fiscal Increase For the Fiscal Increase
Year Ended Year Ended (Decrease)Year Ended (Decrease)
June 30, 2019 June 30, 2018 2019-2018 June 30, 2017 2018-2017
Operating Revenues:
Sewer service charges 399,929$ 364,165$ 35,764$ 330,873$ 33,292$
Recovery (provision) for doubtful
sewer service charge accounts (4,349) (2,990) (1,359) (2,513) (477)
Licenses, permits, and other fees 3,063 3,777 (714) 4,036 (259)
Other 2,478 3,359 (881) 1,095 2,264
Total Operating Revenues 401,121 368,311 32,810 333,491 34,820
Non-operating Revenues:
Property taxes levied by the District 34,108 33,749 359 32,458 1,291
Investment income 16,699 7,406 9,293 2,903 4,503
Rent and other income 301 254 47 106 148
Total Non-operating Revenues 51,108 41,409 9,699 35,467 5,942
Total Revenues 452,229 409,720 42,509 368,958 40,762
Operating Expenses:
Pumping and treatment 63,197 60,735 2,462 60,203 532
Collection system maintenance 45,617 44,786 831 43,928 858
Engineering 11,447 11,218 229 11,290 (72)
General and administrative 67,462 59,012 8,450 58,535 477
Water backup claims 5,600 1,557 4,043 5,035 (3,478)
Depreciation 83,640 81,326 2,314 81,194 132
Asset management 13,755 15,131 (1,376) 14,893 238
Total Operating Expenses 290,718 273,765 16,953 275,078 (1,313)
Non-operating Expenses:
Net loss on disposal and sale of capital assets 971 1,834 (863) 673 1,161
Non-recurring projects and studies 15,628 9,296 6,332 7,459 1,837
Interest expense 33,082 36,695 (3,613) 31,251 5,444
Total Non-operating Expenses 49,681 47,825 1,856 39,383 8,442
Total Expenses 340,399 321,590 18,809 314,461 7,129
Income Before Capital
Grants And Contributions 111,830 88,130 23,700 54,497 33,633
Capital Grants And Contributions 17,378 26,077 (8,699) 9,614 16,463
Change in Net Position 129,208 114,207 15,001 64,111 50,096
Net Position - Beginning of Year, As Previously Stated 2,491,316 2,391,168 100,148 2,327,057 64,111
Effect of Adoption of GASB 75 — (14,059) 14,059 — (14,059)
Net Position - Beginning of Year, As Restated 2,491,316 2,377,109 114,207 2,327,057 50,052
Net Position - End of Year 2,620,524$ 2,491,316$ 129,208$ 2,391,168$ 100,148$
Statements of Revenues, Expenses, and Changes in Net Position
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 9
2019 Analysis Net position increased $129.2 million or 5.2% over the prior year. The largest impact to net position was the increase in sewer service charges revenue which increased due to rate increases. Total revenue increased by $42.5 million or 10.4%. Sewer service charges increased $35.8 million or 9.8% and the provision for doubtful accounts increased correspondingly by $1.4 million or 45.5%. Other operating revenue decreased $0.9 million or 26.2% due to a reduction in forfeited construction deposits. Investment income increased $9.3 million or 125.5% due to the increase in unrealized gain and purchase interest gain. Total expenses increased by $18.8 million or 5.8% resulting primarily from the increase in operating expenses. Operating expenses increased $17.0 million or 6.2% with the largest increase in general and administrative expense of $8.5 million or 14.3% due to higher pension expense and costs related to system upgrades and water backup claims of $4.0 million or 259.7% due to spring flooding and pump station failures. Non-operating expenses increased $1.9 million or 3.9% with a large increase in non-recurring projects and studies of $6.3 million or 68.1% due primarily to the increase in green infrastructure expenditures and treatment plant concrete repairs offset by interest expense decrease of $3.6 million or 9.8% due to more interest capitalized to large capital projects. Capital grants and contributions decreased $8.7 million or 33.4% with the majority of the decrease resulting from capital contributions as the number of capital projects contributed to the District decreased significantly in fiscal 2019.
2018 Analysis Net position increased $100.1 million after the $14.1 million restatement decreased beginning net position due to GASB Statement No. 75 or 4.2% over the prior year. The largest impact to net position was the increase in sewer service charges revenue which increased due to rate increases. Total revenue increased by $40.8 million or 11.0%. Sewer service charges increased $33.3 million or 10.1% and the provision for doubtful accounts increased correspondingly by $0.5 million or 19.0%. Other operating revenue increased $2.3 million or 206.8% due to a reduction in insurance recoveries recorded in fiscal 2017 not repeated in fiscal 2018 and an increase in forfeited construction deposits. Investment income increased $4.5 million or 155.1% due to the increase in cash from unspent bond proceeds available to be invested and higher interest rates.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 10
Total expenses increased by $7.1 million or 2.3% resulting primarily from the increase in interest expense of $5.4 million or 17.4% due to the new Senior debt issued in December 2017. Operating expenses actually decreased $1.3 million or 0.5% with the largest decrease in water backup claims of $3.5 million or 69.1% due to fewer significant rain events in fiscal 2018. Total non-operating expenses, including the interest expense referenced above, increased $8.4 million or 21.4%. Capital grants and contributions increased $16.5 million or 171.2% with the majority of the increase resulting from capital contributions. The number of capital projects contributed to the District increased significantly in fiscal 2018 due to the improving economy and the average value per project also increased in fiscal 2018.
2019 Analysis The District ended the year with $56.8 million in cash and cash equivalents for an increase of $22.4 million or 65.0% from the prior year. Cash flows from operating activities increased by $24.2 million or 15.1% as a result of increased receipts from customers offset by an increase in payments to suppliers for goods and services and an increase in payments to employees. Cash flows from non-capital financing activities increased by $0.7 million or 2.0%. Cash flow from capital and related financing activities
For the Fiscal For the Fiscal Increase For the Fiscal Increase
Year Ended Year Ended (Decrease)Year Ended (Decrease)
June 30, 2019 June 30, 2018 2019-2018 June 30, 2017 2018-2017
Cash flows from operating
activities 185,226$ 160,989$ 24,237$ 148,108$ 12,881$
Cash flows from non-capital
financing activities 33,850 33,181 669 32,013 1,168
Cash flows from capital
and related financing
activities (310,046) (72,534) (237,512) (146,484)73,950
Cash flows from investing
activities 113,338 (135,363) 248,701 (34,720) (100,643)
Net increase (decrease) in
cash and cash equivalents 22,368 (13,727)36,095 (1,083) (12,644)
Cash and cash equivalents
at beginning of year 34,386 48,113 (13,727)49,196 (1,083)
Cash And Cash Equivalents
At End Of Year 56,754$ 34,386$ 22,368$ 48,113$ (13,727)$
Condensed Statements of Cash Flows
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 11
decreased by $237.5 million or 327.4% due primarily to $229.8 million decrease in bond proceeds and premiums received in fiscal year 2019 compared to fiscal year 2018 and $11.8 million increase in principal, interest and fees paid on bonds, offset by $5.4 million decrease in spending for capital assets. Cash flows from investing activities increased by $248.7 million or 183.7%. The increase primarily stems from more investments maturing than purchased in fiscal 2019 while the opposite occurred in fiscal 2018 – more investments were purchased than matured.
2018 Analysis The District ended the year with $34.4 million in cash and cash equivalents or a decrease of $13.7 million or 28.5% from the prior year. Cash flows from operating activities increased by $12.9 million or 8.7% as a result of increased receipts from customers offset by an increase in payments to suppliers for goods and services and an increase in payments to employees. Cash flows from non-capital financing activities increased by $1.2 million or 3.6%. Cash flow from capital and related financing activities increased by $74.0 million or 50.5% due to decreased spending for capital assets, offset by an increase in bond proceeds and premiums received in fiscal year 2018 compared to fiscal year 2017, and increased principal, interest and fees paid on bonds. Cash flows from investing activities decreased by $100.6 million or 289.9%. The decrease primarily stems from a greater change in the purchase of investments than in the proceeds from sale and maturity of investments from fiscal 2017 to fiscal 2018.
Capital Assets
Condensed Statements of Capital Assets
Net of Depreciation
(000's)
Increase Increase
June 30, June 30,(Decrease)June 30,(Decrease)
2019 2018 2019-2018 2017 2018-2017
Land 74,274$ 73,262$ 1,012$ 70,695$ 2,567$
Construction in progress 956,321 836,105 120,216 707,739 128,366
Treatment and disposal plant
and equipment 660,732 694,390 (33,658) 727,949 (33,559)
Collection and pumping plant 1,916,993 1,821,344 95,649 1,724,422 96,922
General plant and equipment 23,396 21,131 2,265 21,433 (302)
Total 3,631,716$ 3,446,232$ 185,484$ 3,252,238$ 193,994$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 12
2019 Analysis
Total capital assets, net of accumulated depreciation, increased by $185.5 million or 5.4% over the prior year. Construction in progress contained the majority of the increase with net additions of $120.2 million or 14.4% consisting of $244.0 million in additions offset by $123.8 million of assets placed into service. The net increase in collection and pumping plant assets was $95.6 million or 5.3%, primarily for capitalization of assets including new and improved sewers, dedicated assets and infrastructure repairs. Land increased $1.0 million or 1.4% due to the acquisition of easements and other land. General plant and equipment increased $2.3 million or 10.7% primarily due to fleet replacements and plant upgrades. These increases are offset by net treatment and disposal plant and equipment decrease of $33.7 million or 4.8% due to no large projects being capitalized in fiscal 2019 to offset the depreciation charge for the year. For more detailed information, see Note 4, Capital Assets, in the accompanying notes to the financial statements.
2018 Analysis
Total capital assets, net of accumulated depreciation, increased by $194.0 million or 6.0% over the prior year. Construction in progress contained the majority of the increase with net additions of $128.4 million or 18.1% consisting of $249.7 million in additions offset by $121.3 million of assets placed into service. The net increase in collection and pumping plant assets was $96.9 million or 5.6%, primarily for capitalization of assets including new and improved sewers, dedicated assets and infrastructure repairs. Net treatment and disposal plant and equipment decreased $33.6 million or 4.6% due to no large projects being capitalized in fiscal 2018 to offset the depreciation charge for the year. Land increased $2.6 million or 3.6% due to the acquisition of easements and other land. General plant and equipment decreased $0.3 million or 1.4% primarily due to depreciation of existing assets. For more detailed information, see Note 4, Capital Assets, in the accompanying notes to the financial statements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 13
Long-Term Debt
Increase Increase
June 30, June 30,(Decrease)June 30,(Decrease)
2019 2018 2019-2018 2017 2018-2017
Senior Revenue Bonds:
Series 2010B 85,000$ 85,000$ —$ 85,000$ —$
Series 2011B 15,945 18,055 (2,110) 43,410 (25,355)
Series 2012A 154,040 159,340 (5,300) 214,700 (55,360)
Series 2012B 128,840 131,935 (3,095) 134,710 (2,775)
Series 2013B 113,615 116,615 (3,000) 146,000 (29,385)
Series 2015B 190,135 192,810 (2,675) 221,355 (28,545)
Series 2016C 144,535 147,295 (2,760) 150,000 (2,705)
Series 2017A 312,760 316,175 (3,415) — 316,175
Water Infrastructure Finance &
Innovation Act (WIFIA) Bonds:
Series 2018A 262 — 262 — —
Subordinate Revenue Bonds:
Series 2004B 64,590 73,190 (8,600) 81,545 (8,355)
Series 2005A 3,120 3,465 (345) 3,800 (335)
Series 2006A 20,965 23,315 (2,350) 25,600 (2,285)
Series 2006B 7,400 8,140 (740) 8,860 (720)
Series 2008AB 21,765 23,700 (1,935) 25,605 (1,905)
Missouri DNR:
Series 2009A 14,218 15,342 (1,124) 16,441 (1,099)
Series 2010A 5,468 5,849 (381) 6,222 (373)
Series 2010C 24,906 26,656 (1,750) 28,361 (1,705)
Series 2011A 32,241 33,988 (1,747) 35,692 (1,704)
Series 2013A 43,349 45,596 (2,247) 47,786 (2,190)
Series 2015A 65,902 69,246 (3,344) 67,149 2,097
Series 2016A 13,129 3,094 10,035 147 2,947
Series 2016B 45,583 27,418 18,165 8,986 18,432
Series 2018B 2,880 — 2,880 — —
Energy Loan Program 16 51 (35) 68 (17)
T otal 1,510,664$ 1,526,275$ (15,611)$ 1,351,437$ 174,838$
Condensed Statements of Long-Term Debt
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 14
2019 Analysis
The District ended fiscal year 2019 with $1.5 billion in long-term debt outstanding. The District added one new Water Infrastructure Finance and Innovation Act (“WIFIA”) bond (“Series 2018A”) totaling $0.3 million. In addition, the District added one new State Revolving Fund (“SRF”) bond (“Series 2018B”) totaling $2.9 million and the District withdrew $10.9 million and $21.3 million in loan proceeds from the Series 2016A and Series 2016B SRF bonds, respectively. These amounts represent new borrowings and do not reflect the principal payments made in fiscal 2019 on Series 2016A and Series 2016B. For more detailed information, see Note 6, Long-Term Liabilities, in the accompanying notes to the financial statements.
2018 Analysis
The District ended fiscal year 2018 with $1.5 billion in long-term debt outstanding. The District had one senior revenue bond addition this year (“Series 2017A”) for a total of $316.2 million of which $116.2 million was used to partially advance refund the Series 2011B, Series 2012A, Series 2013B and Series 2015B. Premium related to the refunding received on the new Series 2017A and excess funds in the bond reserve account were also used to partially advance refund principal and interest on the four Series referenced above. In addition, the District withdrew $5.4 million, $3.4 million and $18.4 million in loan proceeds from the Series 2015A, Series 2016A and Series 2016B State Revolving Fund (“SRF”) bonds, respectively. These amounts represent new borrowings and do not reflect the principal payments made in fiscal 2018 on Series 2015A and Series 2016A. For more detailed information, see Note 6, Long-Term Liabilities, in the accompanying notes to the financial statements.
Decisions Impacting the Future Integral to helping MSD’s rate payers understand the Consent Decree (“CD”) with the U.S. Environmental Protection Agency, the State of Missouri, and the Missouri Coalition for the Environment, which settled a lawsuit for alleged violations of the Clean Water Act, was the initiation of MSD Project Clear. See Note 12, Commitments And Contingencies, for additional information regarding this litigation. The goal of MSD Project Clear is to help MSD’s rate payers have a clear understanding of MSD’s goals and objectives. MSD Project Clear consists of three main components:
• Getting The Rain Out which is focused on reducing excess stormwater from entering the sewer system infrastructure to help reduce basement back-ups and overflows;
• Performing Repair and Maintenance to the existing infrastructure to ensure it operates as well as possible for as long as possible, and
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 15
• Building System Improvements where needed to increase the capacity of the system. MSD Project Clear will greatly affect the daily lives of many of our rate payers and is needed to help the rate payer understand the individual and regional, as well as the immediate and long-term, benefits of the program. Since February 2004, the voters in the District’s service area have authorized the District to issue a total of $2.6 billion in wastewater revenue bonds. As of June 30, 2019, the District has issued $1.9 billion of the total authorization. The District’s long-term wastewater capital improvement program will continue to be funded through a combination of additional bonds and wastewater rate increases.
Requests For Information
This financial report is designed to provide a general overview of the District’s finances to interested parties. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed or e-mailed to: Marion M. Gee, Director of Finance The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-2555 314-768-6200 mgee@stlmsd.com
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 16
STATEMENTS OF NET POSITION
Continued on Next Page
June 30,
Assets 2019 2018
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 33,303,010$ 13,134,990$
Investments 219,636,085 303,522,982
Sewer service charges receivable, less allowance of $61,739,562 in 2019 and
$58,429,895 in 2018 66,032,777 60,544,838
Unbilled sewer service charges receivable 31,773,136 29,140,461
Property taxes receivable, less allowance of $9,806 in 2019 and $22,544 in 2018 479,914 689,128
Accrued income on investments 1,927,804 1,669,319
Other receivables, less allowance of $22,118 in 2019 and $52,120 in 2018 5,331,693 4,495,551
Supplies inventory 8,306,515 8,109,878
Total Unrestricted Current Assets 366,790,934 421,307,147
Restricted Current Assets
Cash and cash equivalents 1,747,847 1,009,872
Investments 15,117,921 26,469,179
Other receivables 115,556 54,092
Total Restricted Current Assets 16,981,324 27,533,143
Total Current Assets 383,772,258 448,840,290
Non-Current Assets
Restricted Assets
Cash and cash equivalents 21,703,207 20,241,459
Investments 152,079,763 249,558,518
Long-term investments 73,020,492 79,334,215
Property taxes receivable, less allowance of $20,954 in 2019 and $45,453 in 2018 1,355,724 1,379,842
Accrued income on investments 536,365 474,478
Total Restricted Non-Current Assets 248,695,551 350,988,512
Other Assets
Notes receivable 11,156,415 11,814,529
Long-term investments 177,405,293 71,023,440
Total Other Assets 188,561,708 82,837,969
Capital Assets
Depreciable:
Treatment and disposal plant and equipment 1,277,635,246 1,276,275,567
Collection and pumping plant 2,749,946,498 2,612,344,501
General plant and equipment 99,318,349 97,380,391
4,126,900,093 3,986,000,459
Less: Accumulated depreciation 1,525,779,330 1,449,135,797
Net depreciable assets 2,601,120,763 2,536,864,662
Non-depreciable:
Land 74,274,584 73,261,965
Construction in progress 956,321,065 836,105,343
Net Capital Assets 3,631,716,412 3,446,231,970
Total Non-Current Assets 4,068,973,671 3,880,058,451
Total Assets 4,452,745,929 4,328,898,741
Deferred Outflows of Resources
Bonds and notes payable-Deferred loss on refunding 11,342,745 12,099,160
Pension-related outflows 34,238,270 17,332,857
OPEB-related outflows 1,246,327 1,278,437
Total Deferred Outflows of Resources 46,827,342 30,710,454
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 17
STATEMENTS OF NET POSITION (Continued)
June 30,
Liabilities 2019 2018
Current Liabilities
Current Liabilities-Payable From Unrestricted Assets
Contracts and accounts payable 36,098,219$ 34,527,687$
Deposits and accrued expenses 43,703,869 38,885,341
Retainage payable 15,855,232 13,894,496
Current portion of bonds and notes payable 52,603,763 50,942,663
Total Current Liabilities-Payable From Unrestricted Assets 148,261,083 138,250,187
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable 801,529 1,100,845
Retainage payable 928,645 731,026
Total Current Liabilities-Payable From Restricted Assets 1,730,174 1,831,871
Total Current Liabilities 149,991,257 140,082,058
Non-Current Liabilities
Deposits and accrued expenses 7,352,522 7,329,985
Net pension liability 74,396,737 48,388,938
Total OPEB liability 24,164,395 24,193,972
Bonds and notes payable 1,617,916,402 1,642,233,069
Total Non-Current Liabilities 1,723,830,056 1,722,145,964
Total Liabilities 1,873,821,313 1,862,228,022
Deferred Inflows of Resources
Pension-related inflows 4,341,116 6,064,985
OPEB-related inflows 886,686 —
Total Deferred Inflows of Resources 5,227,802 6,064,985
Net Position
Net investment in capital assets 2,063,518,988 1,968,740,050
Restricted for:
Debt service 58,262,631 55,329,147
Subdistrict construction and improvement 69,150,974 74,249,353
Unrestricted 429,591,563 392,997,638
Total Net Position 2,620,524,156$ 2,491,316,188$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 18
STATEMENTS OF REVENUES, EXPENSES, AND
CHANGES IN NET POSITION
2019 2018
Operating Revenues
Sewer service charges 399,929,150$ 364,165,372$
Provision for doubtful sewer service charge accounts (4,349,247) (2,990,148)
Licenses, permits and other fees 3,063,458 3,777,200
Other 2,477,778 3,359,053
Total Operating Revenues 401,121,139 368,311,477
Operating Expenses
Pumping and treatment 63,197,081 60,735,056
Collection system maintenance 45,616,891 44,785,482
Engineering 11,446,900 11,217,590
General and administrative 67,461,720 59,012,162
Water backup claims 5,600,419 1,557,385
Depreciation 83,639,843 81,326,342
Asset management 13,754,655 15,131,189
Total Operating Expenses 290,717,509 273,765,206
Operating Income 110,403,630 94,546,271
Non-Operating Revenues
Property taxes levied by the District 34,107,619 33,748,932
Investment income 16,699,153 7,405,957
Rent and other income 301,446 253,799
Total Non-Operating Revenues 51,108,218 41,408,688
Non-Operating Expenses
Net loss on disposal and sale of capital assets 970,825 1,833,908
Non-recurring projects and studies 15,628,590 9,296,358
Interest expense 33,082,384 36,695,083
Total Non-Operating Expenses 49,681,799 47,825,349
Income Before Capital Grants And Contributions 111,830,049 88,129,610
Capital Grants And Contributions
Capital assets contributed 16,635,468 24,799,116
Grant revenue 742,451 1,278,558
Total Capital Grants And Contributions 17,377,919 26,077,674
Change In Net Position 129,207,968 114,207,284
Net Position - Beginning Of Year, As Previously Stated 2,491,316,188 2,391,168,054
Effect of Adoption of GASB 75 — (14,059,150)
Net Position - Beginning Of Year, As Restated 2,491,316,188 2,377,108,904
Net Position - End Of Year 2,620,524,156$ 2,491,316,188$
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 19
STATEMENTS OF CASH FLOWS
Continued on Next Page
2019 2018
Cash Flows From Operating Activities
Received from customers 395,246,801$ 356,658,318$
Paid to employees for services (101,374,404) (96,464,294)
Paid to suppliers for goods and services (108,646,478) (99,205,100)
Net Cash Provided By Operating Activities 185,225,919 160,988,924
Cash Flows Provided By Non-Capital Financing Activities
Taxes levied and collected 33,850,110 33,180,969
Cash Flows From Capital And Related Financing Activities
Proceeds from capital grants 130,670 1,634,250
Proceeds from issuance of debt 35,149,238 227,157,189
Premium on sale of bonds — 37,823,556
Principal paid on debt (50,942,662) (43,667,013)
Interest and fees paid on debt (65,117,717) (60,603,135)
Payments for capital assets (231,228,233) (236,673,660)
Proceeds from sale of capital assets 331,346 170,578
Build America Bond tax credit 1,630,662 1,624,563
Net Cash Provided By (Used In) Capital And Related
Financing Activities (310,046,696) (72,533,672)
Cash Flows From Investing Activities
Purchase of investments (649,590,176) (774,026,450)
Proceeds from sale and maturity of investments 752,424,000 630,795,000
Investment income 10,275,355 7,614,739
Proceeds from rents 229,231 253,799
Net Cash Provided By (Used In) Investing Activities 113,338,410 (135,362,912)
Net Increase (Decrease) In Cash And Cash Equivalents 22,367,743 (13,726,691)
Cash And Cash Equivalents At Beginning Of Year 34,386,321 48,113,012
Cash And Cash Equivalents At End Of Year 56,754,064$ 34,386,321$
Statements of Net Position Classification
Current Assets - Unrestricted Cash and cash equivalents 33,303,010$ 13,134,990$
Current Assets - Restricted Cash and cash equivalents 1,747,847 1,009,872
Non-Current Assets - Restricted Cash and cash equivalents 21,703,207 20,241,459
Statements of Net Position Total Cash And Cash Equivalents 56,754,064$ 34,386,321$
Non-Cash Capital And Investing Activities
Proceeds from debt issuance placed into escrow to refund bonds —$ 116,175,000$
Principal amount reduced and placed in escrow less reserve funds — (124,825,675)
Capital asset additions included in accounts payable 18,871,621 18,008,669
Capital assets contributed by other governments and developers 16,635,468 24,799,116
Fair value investment adjustment loss (gain)(6,621,441) 185,620
Grant revenue 742,451 1,172,306
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 20
STATEMENTS OF CASH FLOWS (Continued)
2019 2018
Reconciliation Of Operating Income To Net Cash Flows
Provided By Operating Activities
Operating Income 110,403,630$ 94,546,271$
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 83,639,843 81,326,342
Non-recurring projects and studies (15,628,590) (9,296,358)
Change in operating assets and liabilities:
(Increase) in billed and unbilled sewer service
charges receivable (8,120,614) (9,530,516)
Decrease in other receivables 954,005 1,012,988
(Increase) in supplies inventory (196,637) (438,672)
Decrease (increase) in pension-related outflows (16,905,413) 20,332,929
Decrease (increase) in OPEB-related outflows 32,110 (1,278,437)
Increase in contracts and accounts payable 382,247 954,822
(Decrease) increase in deposits and accrued expenses 5,524,299 (9,585,487)
(Decrease) increase in net pension liability 26,007,799 (18,650,247)
(Decrease) increase in total OPEB liability (29,577) 10,134,822
(Decrease) increase in pension-related inflows (1,723,869) 1,460,467
Increase in OPEB-related inflows 886,686 —
Net Cash Provided By Operating Activities 185,225,919$ 160,988,924$
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 21
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019 AND 2018
1. Organization And Summary Of Significant Accounting Policies
Organization
The Metropolitan St. Louis Sewer District (“District”) was authorized by the voters, established and chartered under the provisions of the Constitution of Missouri as a municipal corporation and a political subdivision of the State of Missouri. Upon creation in 1954, the District assumed responsibilities to provide for the construction, operation, and maintenance of the sewer facilities within its defined boundaries. The District’s service area now comprises all of the City of St. Louis and most of St. Louis County. Subdistricts within the District’s total service area represent separate geographic areas within which specific taxes can be levied for the retirement of indebtedness issued to finance construction of wastewater or stormwater facilities within the area or to operate, maintain, or construct improvements within the subdistrict. The District also maintains all of the publicly owned stormwater sewers within its original boundaries and is continuing to accept maintenance of the stormwater sewers in the remainder of its service area. Pursuant to provisions of its Charter and subject to limitations imposed by the Constitution of Missouri, all powers of the District are vested in a six-member Board of Trustees (“Board”), three of whom are appointed by the Mayor of the City of St. Louis and three of whom are appointed by the County Executive of St. Louis County. Not more than two Trustees appointed from said City or County, as the case may be, shall be affiliated with the same political party.
Reporting Entity
The District defines its financial reporting entity to include all component units for which the District’s governing body is financially accountable. To be considered financially accountable, the component unit must be fiscally dependent on the District and the District must either 1) be able to impose its will on the component unit or 2) the relationship must have the potential for creating a financial benefit or imposing a financial burden on the District. Based on the foregoing, the District’s financial statements include all funds that are established under the authority of the District’s charter. There are no agencies, boards, commissions, or authorities that are controlled by or dependent on the District.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 22
Measurement Focus, Basis Of Accounting And Financial Statement
Presentation
The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing accounting and financial reporting standards for U.S. state and local governments that follow generally accepted accounting principles (“GAAP”). As a political subdivision of the State of Missouri, the District follows GASB Pronouncements as codified under GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in
Pre-November 30, 1989 FASB and AICPA Pronouncements. Throughout the year, the District maintains its detailed accounting records on a modified accrual basis of accounting. In order to account for the transactions related to certain subdistricts and restricted resources, separate fund accounting records are maintained. For financial reporting purposes, the District reports its operations as a single enterprise fund and the financial statements are prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. Accordingly, the accounting records are converted to the accrual basis of accounting and all interfund transactions are eliminated. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized when the related liability is incurred. The District’s measurement focus is on the flow of economic resources. Revenues and expenses are divided into operating and non-operating items. Operating revenues generally result from providing services in connection with the District’s principal ongoing operations. The principal operating revenues of the District are user fees, licenses, and permits for wastewater treatment services. Operating expenses include the costs associated with the conveyance and treatment of wastewater and stormwater, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses. Non-recurring projects and studies (shown as non-operating expenses) consist of expenses related to unusual charges or losses that are unlikely to occur again in the formal course of business such as work related to federally declared disasters, projects originally intended to be capitalized that changed scope when a decision was made to no longer build an asset, and any non-reimbursed work performed on assets not owned or maintained by the District but is necessary to protect District owned assets or to mitigate a threat to the health and safety of the general public.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 23
The District follows GASB Statement No. 33, Accounting and Financial Reporting
for Nonexchange Transactions, which establishes accounting and financial reporting standards for nonexchange transactions involving financial or capital resources. GASB Statement No. 33 groups nonexchange transactions into the following four classes, based upon their principal characteristics: derived tax revenues, imposed nonexchange revenues, government-mandated nonexchange transactions, and voluntary nonexchange transactions. The District recognizes assets from imposed nonexchange revenue transactions in the period when an enforceable legal claim to the assets arises or when the resources are received, whichever occurs first. Revenues are recognized in the period when the resources are required to be used for the first period that use is permitted. The District recognizes revenues from property taxes, net of estimated refunds and estimated uncollectible amounts, in the period for which the taxes are levied. Imposed nonexchange revenues also include licenses, permits, and other fees. Intergovernmental revenues, representing grants and assistance received from other governmental units, are generally recognized as revenues in the period when all eligibility requirements, as defined by GASB Statement No. 33, have been met. Any resources received where all requirements are met with the exception of the time requirement are recorded as deferred inflows. All other resources received before any other eligibility requirements are met are reported as unearned revenues. Cash And Cash Equivalents
The District considers highly liquid investments that have original maturity of less than 91 days to the District to be Cash Equivalents. Investments
The District accounts for its investments at fair value. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles pursuant to GASB Statement No. 72. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statements of Revenues, Expenses and Changes in Net Position.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 24
Restricted Cash, Cash Equivalents And Investments
Cash, cash equivalents and investments that are externally restricted are classified as restricted assets. These assets are used to make debt service payments, maintain sinking or reserve funds, purchase or construct capital or other non-current assets or for other restricted purposes.
Accounts Receivable
Accounts receivable is composed primarily of charges to customers for wastewater services. Accounts are considered past due 30 days from the invoice date. Receivables are reported at their gross values net of an allowance for uncollectible amounts. This allowance for uncollectible amounts is based on historical collection experience. Unbilled sewer service charge revenues are accrued by the District based on estimated billings for services provided through the end of the current fiscal year.
Capital Assets
Acquired capital assets are recorded at historical cost on the acquisition date. In accordance with GASB Statement No. 72, donated capital assets are recorded at acquisition value at the time the asset is considered operational. Interest cost is capitalized as part of the historical cost of acquiring certain assets when the effect of such capitalization is material to the financial statements. Interest is not capitalized on assets constructed with contributions from other governmental sources. Depreciation is calculated on a straight-line basis over the following estimated useful lives:
Treatment and disposal plant and
equipment 3 to 100 years
Collection and pumping plant 7 to 100 years
General plant and equipment 3 to 12 years When developing user charge rates, the District includes funding for replacement cost of assets, which may differ from depreciation expense recorded for financial reporting purposes. Normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Betterments are capitalized and depreciated over the remaining useful lives of the related assets, as applicable. The District defines capital assets as assets with an initial, individual cost between $5,000 and $15,000, depending on the asset category, and an estimated useful life in excess of three years.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 25
Costs incurred for capital construction and acquisition are carried in construction in progress until completion of the related projects. The major components of construction in progress are the costs incurred to construct new tunnels, storage facilities and sewer lines, rehabilitate and separate existing sewer lines, and to make improvements to pump stations and treatment plants. Costs related to projects not pursued are expensed when terminated.
Capitalization Of Interest
Interest costs are capitalized as part of the costs of capital assets during the period of construction based on the related weighted average net borrowing costs incurred. Interest earned on temporary investments acquired with the proceeds of such borrowed funds, from the date of the borrowing until the assets are ready for their intended use, is used to reduce the interest costs capitalized on the constructed assets. Interest is not capitalized for outlays financed by capital grants (or other outside parties) externally restricted for the acquisition of specified assets. In fiscal 2019 and 2018, the District’s total net interest cost incurred on tax-exempt borrowings during the fiscal year was $47,228,368 and $48,114,072, respectively. Of this net interest cost, $19,476,685 and $17,494,620 was capitalized and $27,751,683 and $30,619,452 was expensed in fiscal 2019 and 2018, respectively.
Supplies Inventory
Supplies inventory consists of parts and supplies to be used to operate and maintain treatment facilities and various treatment-related equipment at the District. This inventory figure is netted against those materials and supplies deemed to be obsolete. All inventory is stated at weighted average cost and expenses are recognized when the inventory is consumed.
Net Position
One component of the District’s net position is the net investment in capital assets which consists of capital assets, including restricted capital assets, net of accumulated depreciation, reduced by the net outstanding debt and construction-related liabilities, including premiums and discounts on such debt, which is attributable to the acquisition, construction, or improvement of those assets. The outstanding debt is net of the cash and investments from the debt that has not yet been expended. Deferred losses on refundings are also included in the net investment in capital assets net position.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 26
The restricted component of net position consists of assets and liabilities regulated by external constraints imposed by creditors, grantors, contributors, laws, or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Property taxes levied by the various subdistricts and other revenues received for construction in those sub-districts have also been restricted for that use. Sewer extension and connection fees, grants, and other revenues received for construction within certain sub-districts have been restricted for that use. In addition, a portion of wastewater sewer charges have been restricted for the payment of principal and interest, including accrued interest, on certain debt of the District. The unrestricted net position component of net position consists of net position that does not meet the definition of restricted or net investment in capital assets. The District first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available.
Deferred Outflows Of Resources And Deferred Inflows Of Resources
In addition to assets, financial statements may report a separate section for deferred outflows of resources. Deferred outflows of resources consists of the consumption of net position that is applicable to a future reporting period and so will not be recognized as an outflow of resources until then. Deferred outflows of resources related to refunding long-term debt is reported in the Statements of Net Position. A deferred bond refunding amount results from the difference in the carrying value of refunded debt and its reacquisition price, and is amortized over the shorter of the life of the refunded or refunding debt. The pension related deferred outflows of resources represent contributions made to the plan between the measurement date of the pension liabilities and the beginning of the next fiscal year as well as certain actuarial differences and changes that are amortized over future periods. The other postemployment benefit (“OPEB”) related deferred outflows of resources represent benefit payments made between the measurement date of the total OPEB liability and the beginning of the fiscal year following the measurement date and certain actuarial differences and changes that are amortized over future periods. In addition to liabilities, financial statements may report a separate section for deferred inflows of resources. Deferred inflows of resources consists of the acquisition of net position that is applicable to a future reporting period and so will not be recognized as an inflow of resources until then. The District’s deferred inflows of resources relate to certain changes in pension and OPEB obligations that are amortized over future periods.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 27
Capital Contributions
Capital contributions to the District represent government grants and other aid used to fund capital projects. In accordance with GASB Statement No. 33, capital contributions are recognized as revenue when the expenditure is made and the amount becomes subject to claim for reimbursement.
Bonds, Bond Premiums, Discounts And Issuance Costs
Bonds and notes payable are recorded at the principal amount outstanding and are reported net of any applicable bond premium or discount. In the District’s financial statements, bond premiums and discounts are amortized over the life of the bonds using the effective interest method. Bond issuance costs are expensed when incurred pursuant to GASB Statement No. 65, Items Previously Reported as
Assets and Liabilities. Bonds which have been advance refunded and in substance defeased, are not included in long-term debt and the related assets deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded debt are not included in investments.
Compensated Absences
Vacation
Under the terms of the District’s personnel policies, employees are allowed to carry a maximum of 30 to 45 days of vacation (depending on length of service) from one calendar year to the next. Since vacation accrued at year-end is expected to be used by the employee during the following fiscal year, the accrual is reported as a component of current deposits and accrued expenses payable.
Sick Leave
Employees earn sick pay benefits at accrual rates ranging from 10 days per year to 12 days per year (depending on length of service). Unused sick leave can be carried over at year-end without limitation. An employee retiring from the District with five or more years of service will be compensated for any unused accrued sick leave at the rate of 1.25% for each year of District service multiplied by the unused accrued sick leave remaining at the employee’s current rate of pay up to a maximum of $50,000. The District has recorded a liability which has been actuarially determined to be equal to the accumulated expense charge that will amortize the employees’ benefits over their period of District service. The liability, included in current deposits and accrued expenses payable, includes vested accumulated rights to receive sick leave benefits estimated to be paid within one year. The portion of sick leave expected to be paid after one year is recorded as a component of non-current deposits and accrued expenses payable.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 28
Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, the fiduciary net position of The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Plan”) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan, which has a December 31 reporting period. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Use Of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.
Income Tax Status The District is exempt from federal income tax under the Internal Revenue Code as a political subdivision of the State of Missouri.
Adoption Of New Accounting Standards During fiscal year 2019, the District implemented GASB Statement No. 88,
Certain Disclosures Related to Debt, Including Direct Borrowing and Direct
Placements (“GASB Statement No. 88”). This Statement amends Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for
State and Local Governments, paragraph 119 and Statement No. 38, Certain
Financial Statement Note Disclosures, paragraphs 10 and 12. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not consistently provided. This Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. The disclosures required by this Statement are presented in Note 6, Long-Term Liabilities.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 29
The following GASB Statement which became effective during fiscal year 2019 is not applicable to the District and there is no implementation impact on the District’s financial reporting at this time. • Statement No. 83, Certain Asset Retirement Obligations During fiscal year 2018, the District implemented GASB Statement No. 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions (“GASB Statement No. 75”). This Statement replaces the requirements of Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other than Pensions (“GASB Statement No. 45”), as amended. This Statement improves accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or “OPEB”). This Statement also establishes standards for recognizing and measuring liabilities, deferred outflows and inflows of resources, and expense. In addition, this Statement requires the identification of the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. The disclosures required by this Statement are presented in Note 9, Postemployment Benefits Other Than Pensions (“OPEB”), and new required supplementary information is also presented. The District’s adoption of GASB Statement No. 75 in fiscal year 2018 resulted in restating the beginning balance of net position due to the recognition of a beginning total OPEB liability, a beginning deferred outflow of resources for the amount paid by the District for OPEB subsequent to the measurement date of the beginning total OPEB liability but before the beginning of the District’s fiscal year and for the removal of the net OPEB obligation previously recorded based on GASB Statement No. 45. It was not practical to retroactively restate prior periods due to the implementation of GASB Statement No. 75 as the cost and time to develop the required actuarial calculations would be prohibitive. The cumulative effect of applying GASB Statement No. 75 and the resulting restatement of beginning net position on the District’s Statements of Revenues, Expenses, and Changes in Net Position is detailed as follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 30
Recent Accounting Standards GASB has issued additional guidance that is not yet effective. The District is currently reviewing the provisions of the following GASB Statements to determine the impact of implementation in future periods. • Statement No. 84, Fiduciary Activities (fiscal 2020) • Statement No. 87, Leases (fiscal 2021) • Statement No. 89, Accounting for Interest Cost Incurred Before the End of a
Construction Period (fiscal 2021) • Statement No. 90, Majority Equity Interests, an amendment of GASB
Statements No. 14 and No. 61 (fiscal 2020) • Statement No. 91, Conduit Debt Obligations (fiscal 2022)
Reclassifications
Prior period financial statement amounts may have been reclassified to conform to current period presentation. These reclassifications, if any, had no effect on the changes in net position or total net position.
July 1,
2017
Net Position - Beginning Of Year, As Previously Stated 2,391,168,054$
Effect of Adoption of GASB 75 (14,059,150)
Net Position - Beginning Of Year, As Restated 2,377,108,904$
Effect of Adoption of GASB 75 - Restatement Consists Of
Total OPEB liability reported as a noncurrent liability at July 1, 2017 (22,838,813)$
Benefit payments made subsequent to the beginning total OPEB
liability's measurement date of December 31, 2016 but before
July 1, 2017 are reported as deferred outflows of resources 716,582
Removal of GASB 45 net OPEB obligation balance as of July 1, 2017 8,063,081
Effect of Adoption of GASB 75 (14,059,150)$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 31
2. Deposits and Investments
Deposits
At June 30, 2019 the reported amount of the District’s deposits was $26,062,172 and the bank balance was $32,463,138. Of the bank balance, $1,060,057 was covered by the Federal Deposit Insurance Corporation (“FDIC”); $31,403,081 was collateralized with securities held by a third party financial institution in the District’s name. In addition, the District has money market mutual funds of $19,225,251 held in a trusted escrow account for the State that will be used to make future bond payments. At June 30, 2018 the reported amount of the District’s deposits was $13,048,424 and the bank balance was $17,112,744. Of the bank balance, $1,013,392 was covered by the Federal Deposit Insurance Corporation (“FDIC”); $16,099,352 was collateralized with securities held by a third party financial institution in the District’s name. In addition, the District has money market mutual funds of $18,849,126 held in a trusted escrow account for the State that will be used to make future bond payments. Custodial credit risk for deposits is the risk that, in the event of bank failure, the District’s deposits may not be returned to the District. Deposits in each bank are insured by the FDIC in the amount of $250,000 for interest bearing accounts and noninterest bearing accounts. The District’s investment policy complies with the provisions of state laws and requires collateralization on repurchase agreements, time certificates of deposit and deposits with banking institutions, not covered by the FDIC, and the collateralization level shall be 103% and shall be based on the market value of the pledged collateral.
Investments
The Secretary-Treasurer is authorized to invest, with the approval of the Board, funds not immediately needed for the purpose to which said funds are applicable, in the same manner as the state treasurer may invest funds of the State of Missouri pursuant to Section 15, Article IV of the Constitution of Missouri, as amended from time to time. The District’s investment policy conforms to the investment policy guidelines for the State of Missouri. The District’s investment policy authorizes the District to invest in the following instruments: U.S. Treasury obligations, certificates of deposit, obligations of any agency or instrumentality of the U.S., repurchase agreements, bankers’ acceptances, and commercial paper, all according to terms specified in the policy. The District also has investments in money market mutual funds that hold securities approved by the District’s investment policy. At June 30, 2019 and June 30, 2018, all of the District’s investments were in compliance with the District’s investment policy and charter.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 32
A summary of deposits and investments as of June 30, 2019 and June 30, 2018 is as follows:
Reconciliation to the financial statements:
Investment Type Cost F air Value Cost Fair Value
Deposits 26,062,172$ 26,062,172$ 13,048,424$ 13,048,424$
Money Market Mutual Funds 19,225,251 19,225,251 18,849,126 18,849,126
U.S. Treasury and
Agency Obligations 499,933,657 503,997,289 584,981,410 582,563,488
Commercial Paper 143,707,677 144,728,906 148,952,277 149,833,617
Total 688,928,757$ 694,013,618$ 765,831,237$ 764,294,655$
20182019
2019 2018
Cash and Cash Equivalents
Unrestricted Current 33,303,010$ 13,134,990$
Restricted Current 1,747,847 1,009,872
Restricted Non-Current 21,703,207 20,241,459
Investments
Unrestricted Current 219,636,085 303,522,982
Restricted Current 15,117,921 26,469,179
Restricted Non-Current 152,079,763 249,558,518
Long-Term Investments
Restricted Non-Current 73,020,492 79,334,215
Other 177,405,293 71,023,440
Total 694,013,618$ 764,294,655$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 33
Interest Rate Risk
As of June 30, 2019 and 2018, the District had the following investments and maturities:
In accordance with the District’s investment policy, the District will minimize the risk that the fair value of debt securities in the portfolio will fall due to increases in general interest rates by: 1. Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. 2. Investing operating funds primarily in short-term securities. 3. State law limits the maximum stated maturities to five years on any investment from the date of purchase.
Long-Term Investments
While the majority of the District’s portfolio is made up of short-term investments, the District also categorizes a sizeable amount as long-term under the categories discussed in Note 1, Organization and Summary of Significant Accounting Policies. The District is allowed to purchase long-term callable securities. These callable securities give the issuer the right to redeem at predetermined prices at a specific time prior to maturity. When a security is called, the District reflects an immediate reclassification from long-term investment to cash.
Weighted Weighted
Average Average
Maturity Maturity
Investment Type Fair Value (Years)Fair Value (Years)
U.S. Treasury Obligations 166,467,925$ 0.48 264,811,868$ 0.64
U.S. Agency Obligations 337,529,364 1.38 317,751,620 1.05
Commercial Paper 144,728,906 0.18 149,833,617 0.19
Total 648,726,195$ 0.88 732,397,105$ 0.73
2019 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 34
Custodial/Credit Risk
The District will minimize credit risk for investments, the risk of loss due to failure of the security issuer or backer, by:
1. Prequalifying the financial institutions, broker/dealers, intermediaries, and advisors with which the District will do business. 2. Diversifying the portfolio so that potential losses on individual securities will be minimized. In accordance with its investment policy, the District limits its investments in these investment types to the top rating issued by Nationally Recognized Statistical Rating Organizations. As of June 30, 2019 and June 30, 2018, the District’s investments in commercial paper were rated A-1 by Standard & Poor’s (“S&P”) and P-1 by Moody’s Investors Service (“Moody’s”). The District’s investments in U.S. Agency obligations that do not carry the explicit guarantee of the U.S. Government all carry a rating assigned by S&P of AA+ or higher. Money market investments are rated as AAAm and Aaa-mf by S&P and Moody’s, respectively.
Concentration of Credit Risk
The District’s investment policy places no limit on the amount the District may invest in any one issuer with respect to collateralized time and demand deposits. U.S. Treasury obligations are not limited. U.S. Agency obligations and government-sponsored enterprises are limited to 60% of the portfolio, with no more than 30% of the total portfolio invested in securities of any one agency; and collateralized repurchase agreements are limited to 50% of the portfolio. U.S. Agency callable securities are limited to 30% of the portfolio, and commercial paper and bankers’ acceptances are limited to 25% each, with no more than 5% of the total portfolio invested in any one issuer. The following table lists investments in issuers that represent 5% or more of total investments at June 30, 2019 and June 30, 2018:
Issuer 2019 2018
Treasury Notes 25.7 36.2
Federal Home Loan Bank 16.1 22.1
Tennessee Valley Association 11.0 2.6
Federal Farm Credit Funding Corp 9.1 2.2
Federal National Mortgage Association 5.8 8.2
Federal Home Loan Mortgage Corporation 5.1 6.4
Federal Agriculture Mortgage Association 5.0 1.8
Total Investments
Percent Of
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 35
Fair Value Measurement and Application
The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles pursuant to GASB Statement No. 72, Fair Value Measurement and Application. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.
The District has the following recurring fair value measurements as of June 30, 2019 and 2018:
• Money Market Mutual Funds of $19.2 million and $18.8 million, respectively, are valued using a market approach to measuring fair value prices that considers relevant information generated by market transactions involving identical or similar assets or groups of assets. (Level 2 inputs)
• U.S. Treasury and Agency Obligations of $504.0 million and $582.6 million, respectively, are valued using a market approach to measuring fair value prices that considers relevant information generated by market transactions involving identical or similar assets or groups of assets. (Level 2 inputs)
• Commercial Paper of $144.7 million and $149.8 million, respectively, is valued using a market approach to measuring fair value prices that considers relevant information generated by market transactions involving identical or similar assets or groups of assets. (Level 2 inputs)
3. Notes Receivable The District has a note receivable with Missouri American Water Company (“MOAM”) for its portion of the capital costs related to the Lower Meramec Wastewater Treatment Plant. The original loan bears interest at 4.35%, while the two loans added during fiscal year 2013 bear interest at 4.50% and 3.52%. The current portion of this note is included in the Unrestricted Other Receivables line on the Statements of Net Position. The note receivable will mature in fiscal year 2033.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 36
At June 30, 2019, future payments are as follows:
At June 30, 2018, future payments were as follows:
The District also has a note receivable due to its participation in the Contractor Loan Fund, a consortium of local organizations desiring to pool bank loans, private investment, and new market tax credits to provide access to capital for Minority and Women-owned Business Enterprise companies that are certified through a City of St. Louis agency. At June 30, 2019 and 2018, MSD’s note receivable related to the Contractor Loan Fund is $59,786 and $60,860, respectively.
2020 1,154,696$
2021 1,154,696
2022 1,154,696
2023 1,154,696
2024 1,154,696
2025-2029 5,773,479
2030-2033 4,027,886
15,574,845
Less: Amount representing interest 3,821,176
Total Notes Receivable 11,753,669$
Classification in Statement of Net Position:
Current - Other receivables 657,040$
Non-current - Notes receivable 11,096,629
Total Notes Receivable 11,753,669$
2019 1,154,696$
2020 1,154,696
2021 1,154,696
2022 1,154,696
2023 1,154,696
2024-2028 5,773,479
2029-2033 5,182,581
16,729,540
Less: Amount representing interest 4,346,474
Total Notes Receivable 12,383,066$
Classification in Statement of Net Position:
Current - Other receivables 629,397$
Non-current - Notes receivable 11,753,669
Total Notes Receivable 12,383,066$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 37
4. Capital Assets
The following is a summary of capital assets changes for the fiscal years ended June 30, 2019 and 2018:
Note to Schedules: The Accumulated depreciation numbers (Balance June 30, 2017, Additions and Balance June 30, 2018) for both the Treatment and disposal plant and equipment and Collection and pumping plant categories were adjusted with offsetting amounts to properly reflect depreciation and accumulated depreciation in the correct categories.
Balance Balance
June 30, 2018 June 30, 2019
Capital assets not being depreciated:
Land 73,261,965$ 1,012,619$ —$ 74,274,584$
Construction in progress 836,105,343 244,064,243 (123,848,521) 956,321,065
Total capital assets not being depreciated 909,367,308 245,076,862 (123,848,521) 1,030,595,649
Capital assets being depreciated:
Treatment and disposal plant
and equipment 1,276,275,567 1,727,943 (368,264) 1,277,635,246
Collection and pumping plant 2,612,344,501 140,626,577 (3,024,580) 2,749,946,498
General plant and equipment 97,380,391 6,864,804 (4,926,846) 99,318,349
Total capital assets being depreciated 3,986,000,459 149,219,324 (8,319,690) 4,126,900,093
Less: Accumulated depreciation:
Treatment and disposal plant
and equipment (581,885,579) (35,374,280) 356,361 (616,903,498)
Collection and pumping plant (791,000,584) (43,873,740) 1,920,449 (832,953,875)
General plant and equipment (76,249,634) (4,391,822) 4,719,499 (75,921,957)
Total accumulated depreciation (1,449,135,797) (83,639,842) 6,996,309 (1,525,779,330)
Total capital assets being depreciated, net 2,536,864,662 65,579,482 (1,323,381) 2,601,120,763
Total Capital Assets 3,446,231,970$ 310,656,344$ (125,171,902)$ 3,631,716,412$
Additions Deletions
Balance Balance
June 30, 2017 June 30, 2018
Capital assets not being depreciated:
Land 70,695,016$ 2,566,949$ —$ 73,261,965$
Construction in progress 707,738,709 249,651,675 (121,285,041) 836,105,343
Total capital assets not being depreciated 778,433,725 252,218,624 (121,285,041) 909,367,308
Capital assets being depreciated:
Treatment and disposal plant
and equipment 1,279,143,367 3,402,355 (6,270,155) 1,276,275,567
Collection and pumping plant 2,475,709,689 138,979,030 (2,344,218) 2,612,344,501
General plant and equipment 94,793,873 4,024,990 (1,438,472) 97,380,391
Total capital assets being depreciated 3,849,646,929 146,406,375 (10,052,845) 3,986,000,459
Less: Accumulated depreciation:
Treatment and disposal plant
and equipment (551,194,569) (35,872,561) 5,181,551 (581,885,579)
Collection and pumping plant (751,287,382) (41,205,127) 1,491,925 (791,000,584)
General plant and equipment (73,360,462) (4,248,654) 1,359,482 (76,249,634)
Total accumulated depreciation (1,375,842,413) (81,326,342) 8,032,958 (1,449,135,797)
Total capital assets being depreciated, net 2,473,804,516 65,080,033 (2,019,887) 2,536,864,662
Total Capital Assets 3,252,238,241$ 317,298,657$ (123,304,928)$ 3,446,231,970$
Additions Deletions
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 38
5. Property Tax
On or before October 1 of each year, the District levies ad valorem taxes on all taxable tangible property, real and personal, within its boundaries based on assessed valuations established by the City of St. Louis and St. Louis County Assessors. Taxes levied are used for stormwater operations and maintenance, debt service, and construction. Taxes are recorded as non-operating revenues and recognized, net of estimated refunds and estimated uncollectible amounts, in the period for which the taxes are levied. Property tax bills are typically mailed in October. They become delinquent and represent a lien on the related property if not paid by December 31. All property taxes are billed and collected by the City of St. Louis and St. Louis County Collectors of Revenue and are remitted to the District monthly. In fiscal years 2019 and 2018, the District recorded revenue from property taxes in the amount of $34,107,619 and $33,748,932, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 39
6. Long-Term Liabilities
The following is a summary of changes in the District’s long-term liabilities for the year ended June 30, 2019:
Original Balance Balance
Issuance June 30,June 30,Current
Amounts 2018 Additions Retirements 2019 Portion
Bonds and Notes Payable:
Wastewater System Senior Revenue Bonds:
Series 2010B 85,000,000$ 85,000,000$ —$ —$ 85,000,000$ —$
Series 2011B 52,250,000 18,055,000 — 2,110,000 15,945,000 2,220,000
Series 2012A 225,000,000 159,340,000 — 5,300,000 154,040,000 5,300,000
Series 2012B 141,730,000 131,935,000 — 3,095,000 128,840,000 3,390,000
Series 2013B 150,000,000 116,615,000 — 3,000,000 113,615,000 3,250,000
Series 2015B 223,855,000 192,810,000 — 2,675,000 190,135,000 2,785,000
Series 2016C 150,000,000 147,295,000 — 2,760,000 144,535,000 2,840,000
Series 2017A 316,175,000 316,175,000 — 3,415,000 312,760,000 3,520,000
Water Infrastructure Finance and Innovation Act (WIFIA) Bonds:
Series 2018A 47,722,204 — 261,480 — 261,480 —
Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program):
Series 2004B 161,280,000 73,190,000 — 8,600,000 64,590,000 8,860,000
Series 2005A 6,800,000 3,465,000 — 345,000 3,120,000 355,000
Series 2006A 42,715,000 23,315,000 — 2,350,000 20,965,000 2,415,000
Series 2006B 14,205,000 8,140,000 — 740,000 7,400,000 750,000
Series 2008A/B 40,000,000 23,700,000 — 1,935,000 21,765,000 1,970,000
Missouri Department of Natural Resources:
Energy Loan Program 223,793 51,025 — 34,862 16,163 16,163
Series 2009A 23,000,000 15,342,000 — 1,123,900 14,218,100 1,149,900 Series 2010A 7,980,700 5,849,100 — 380,900 5,468,200 388,700
Series 2010C 37,000,000 26,656,000 — 1,750,000 24,906,000 1,795,000
Series 2011A 39,769,300 33,988,300 — 1,747,000 32,241,300 1,792,000
Series 2013A 52,000,000 45,596,000 — 2,247,000 43,349,000 2,305,000
Series 2015A 75,000,000 69,246,000 — 3,344,000 65,902,000 3,424,000
Series 2016A 20,000,000 3,093,765 10,878,299 843,000 13,129,064 861,000
Series 2016B 75,500,000 27,417,916 21,311,710 3,147,000 45,582,626 3,217,000
Series 2018B 25,267,000 — 2,880,349 — 2,880,349 —
2,012,472,997$ 1,526,275,106$ 35,331,838$ 50,942,662$ 1,510,664,282 52,603,763$
Add:
Unamortized premium, net of discount 159,855,883
Total Bonds and Notes Payable 1,670,520,165$
Current Portion of Bonds and Notes Payable 52,603,763$
Non-Current Bonds and Notes Payable 1,617,916,402
Total Bonds and Notes Payable 1,670,520,165$
Net Pension Liability 48,388,938$ 26,007,799$ —$ 74,396,737$ —$
Total OPEB Liability 24,193,972$ (29,577)$ —$ 24,164,395$ —$
Deposits and Accrued Expenses Landfill closure and
postclosure costs 565,493$ 53,891$ —$ 619,384$ —$
Compensated absences 9,019,323 808,146 849,952 8,977,517 2,244,379
Net OPEB obligation — — — — —
Total Deposits and Accrued Expenses 9,584,816$ 862,037$ 849,952$ 9,596,901$ 2,244,379$
Current Portion (Compensated absences) in Current Deposits and Accrued Expenses 2,244,379$
Non-Current Deposits and Accrued Expenses 7,352,522
Total Deposits and Accrued Expenses 9,596,901$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 40
The following is a summary of changes in the District’s long-term liabilities for the year ended June 30, 2018:
Original Balance Balance
Issuance June 30,June 30,Current
Amounts 2017 Additions Retirements 2018 Portion
Bonds and Notes Payable:
Wastewater System Senior Revenue Bonds:
Series 2010B 85,000,000$ 85,000,000$ —$ —$ 85,000,000$ —$
Series 2011B 52,250,000 43,410,000 — 25,355,000 18,055,000 2,110,000
Series 2012A 225,000,000 214,700,000 — 55,360,000 159,340,000 5,300,000
Series 2012B 141,730,000 134,710,000 — 2,775,000 131,935,000 3,095,000
Series 2013B 150,000,000 146,000,000 — 29,385,000 116,615,000 3,000,000
Series 2015B 223,855,000 221,355,000 — 28,545,000 192,810,000 2,675,000
Series 2016C 150,000,000 150,000,000 — 2,705,000 147,295,000 2,760,000
Series 2017A 316,175,000 — 316,175,000 — 316,175,000 3,415,000
Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program):
Series 2004B 161,280,000 81,545,000 — 8,355,000 73,190,000 8,600,000
Series 2005A 6,800,000 3,800,000 — 335,000 3,465,000 345,000
Series 2006A 42,715,000 25,600,000 — 2,285,000 23,315,000 2,350,000 Series 2006B 14,205,000 8,860,000 — 720,000 8,140,000 740,000
Series 2008A/B 40,000,000 25,605,000 — 1,905,000 23,700,000 1,935,000
Missouri Department of Natural Resources:
Energy Loan Program 223,793 68,135 — 17,110 51,025 34,863
Series 2009A 23,000,000 16,440,500 — 1,098,500 15,342,000 1,123,900
Series 2010A 7,980,700 6,222,400 — 373,300 5,849,100 380,900
Series 2010C 37,000,000 28,361,000 — 1,705,000 26,656,000 1,750,000
Series 2011A 39,769,300 35,692,300 — 1,704,000 33,988,300 1,747,000
Series 2013A 52,000,000 47,786,000 — 2,190,000 45,596,000 2,247,000
Series 2015A 75,000,000 67,148,734 5,363,265 3,265,999 69,246,000 3,344,000
Series 2016A 20,000,000 146,500 3,362,265 415,000 3,093,765 843,000
Series 2016B 75,500,000 8,986,258 18,431,658 — 27,417,916 3,147,000
1,939,483,793$ 1,351,436,827$ 343,332,188$ 168,493,909$ 1,526,275,106 50,942,663$
Add:
Unamortized premium, net of discount 166,900,626
Total Bonds and Notes Payable 1,693,175,732$
Current Portion of Bonds and Notes Payable 50,942,663$
Non-Current Bonds and Notes Payable 1,642,233,069
Total Bonds and Notes Payable 1,693,175,732$
Net Pension Liability 67,039,185$ (18,650,247)$ —$ 48,388,938$ —$
Total OPEB Liability —$ 24,193,972$ —$ 24,193,972$ —$
Deposits and Accrued Expenses
Landfill closure and
postclosure costs 508,422$ 57,071$ —$ 565,493$ —$
Compensated absences 8,754,916 816,576 552,169 9,019,323 2,254,831
Net OPEB obligation 8,063,081 — 8,063,081 — —
Total Deposits and Accrued Expenses 17,326,419$ 873,647$ 8,615,250$ 9,584,816$ 2,254,831$
Current Portion (Compensated absences) in Current Deposits and Accrued Expenses 2,254,831$
Non-Current Deposits and Accrued Expenses 7,329,985
Total Deposits and Accrued Expenses 9,584,816$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 41
Wastewater System Revenue Bonds Payable
In February 2004, the District received voter authorization for $500,000,000 of revenue bonds. In August 2008, the District received voter authorization for an additional $275,000,000 of revenue bonds. In June 2012, the District received voter authorization for another $945,000,000 of revenue bonds and finally, in April 2016, the District received voter authorization for another $900,000,000 of revenue bonds. From the total voter authorization of $2,620,000,000, $674,510,796 has not been issued as of June 30, 2019. These funds were sought to enable the District to comply with federal and state clean water requirements. In December 2017, the District issued $316,175,000 of Wastewater System Revenue Bonds Series 2017A (“Series 2017A”). These bonds were issued for two purposes: $116,175,000 was issued to partially advance refund the Series 2011B bonds maturing in fiscal years 2022 through 2029 totaling $23,345,000, the Series 2012A bonds maturing in fiscal years 2023 through 2032 totaling $50,060,000 (excludes $240,000 of the May 2030 principal payment due), the Series 2013B bonds maturing in fiscal years 2024 through 2029 totaling $26,385,000, and the Series 2015B bonds maturing in fiscal years 2026 through 2029 totaling $25,970,000. The remaining $200,000,000 was issued for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities and as of June 30, 2019, $115,667,763 has been expended. Approximately $47,500,000 was issued pursuant to the June 2012 authorization and $152,500,000 was issued pursuant to the April 2016 authorization. A premium of $37,823,556 was received on the $200,000,000 portion of the Series 2017A. The 2017A senior bonds have interest rates ranging from 2.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2047. The Series 2017A refunding net proceeds of $141,343,662 (including a premium of $25,967,878 and additional proceeds of $1,220 and after payments of $428,483 in underwriting fees and $371,953 in issuance costs) and the $934,325 in excess debt service reserves the District contributed were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for the future debt service payments defined above on the Series 2011B, Series 2012A, Series 2013B, and Series 2015B bonds. The sum of the $142,277,987 deposited into escrow and the earnings on the U.S. government securities will fund the $125,760,000 advanced refunded principal payments on their call dates (May 1, 2021 for Series 2011B, May 1, 2022 for Series 2012A, May 1, 2023 for Series 2013B, and May 1, 2025 for Series 2015B) and the interest thereon. Interest only payments of $6,017,025 were made from the escrow account in fiscal year 2019. All $125,760,000 debt defeased in substance to be paid from the escrow account remains outstanding as of June 30, 2019. As a result of placing the cash with an escrow agent in a trust, Series 2011B, Series 2012A, Series 2013B,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 42
and Series 2015B bonds were partially defeased and the related liability for those bonds were removed from the District’s financial statements in fiscal 2018. This advance refunding decreased total debt service payments over the next 14 years by $12,623,385, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt adjusted for the additional cash paid) of $9,481,147. In December 2016, the District issued $150,000,000 of Wastewater System Revenue Bonds Series 2016C (“Series 2016C”). These bonds were issued pursuant to the June 2012 authorization; in this case for the purpose of construction, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. A premium of $17,678,054 was received on the issuance of Series 2016C. These 2016C senior bonds have interest rates ranging from 2.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2046. In December 2015, the District issued $223,855,000 of Wastewater System Revenue Bonds Series 2015B (“Series 2015B”). These bonds were issued for two purposes: $73,855,000 was issued to advance refund the Series 2006C and Series 2008A bonds and $150,000,000 was issued pursuant to the June 2012 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These 2015B senior bonds have interest rates ranging from 3.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2045; however, in December 2017, there was an advance refunding of the non-refunding Series 2015B bonds for the years 2026 through 2029 totaling $25,970,000. As a result of this advance refunding, Series 2015B bonds are considered partially defeased. See the explanation for Series 2017A above for further information. The Series 2015B refunding net proceeds of $86,848,034 (including a premium of $13,623,487 and after payments of $337,848 in underwriting fees and $292,605 in issuance costs) and the $8,945,557 in excess debt service reserves the District contributed were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the Series 2006C and Series 2008A bonds. All principal and interest payments on the advance refunded Series 2006C and Series 2008A bonds have been paid from escrow and no amounts remain outstanding on these bonds. As a result of placing the cash with an escrow agent in a trust, Series 2006C and Series 2008A bonds were defeased and the liability for those bonds were removed from the District’s financial statements in fiscal 2016. The original $60,000,000 2006C bonds were issued pursuant to the February 2004 authorization and the original $30,000,000 2008A bonds were issued pursuant to
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 43
the August 2008 authorization. This refunding decreased total debt service payments over the next 22 years by $33,032,176, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt adjusted for additional cash paid) of $14,544,866. In December 2013, the District issued $150,000,000 of Wastewater System Revenue Bonds Series 2013B (“Series 2013B”). These bonds were issued pursuant to the June 2012 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have interest rates ranging from 2.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2043; however, in December 2017, there was an advance refunding of the Series 2013B bonds for the years 2024 through 2029 totaling $26,385,000. As a result of this advance refunding, Series 2013B bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In November 2012, the District issued $141,730,000 of Wastewater System Refunding Bonds Series 2012B (“Series 2012B”). These bonds were issued to advance refund the Series 2004A bonds maturing in fiscal years 2015 and thereafter. These 2012B senior bonds have interest rates ranging from 1.3% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2034. The Series 2012B’s net proceeds of $169,991,298 (including a premium of $29,613,138 and after payments of $761,593 in underwriting fees and $590,247 in issuance costs) were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the bonds. All principal and interest payments on the advance refunded Series 2004A bonds have been paid from escrow and no amounts remain outstanding on these bonds. As a result of placing the cash with an escrow agent in a trust, Series 2004A bonds were partially defeased and the liability for those bonds related to a date after May 1, 2014 were removed from the District’s financial statements in fiscal 2013. The original $175,000,000 2004A bonds were issued pursuant to the February 2004 authorization. This refunding decreased total debt service payments over the next 22 years by $28,601,189, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt) of $22,439,375.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 44
In August 2012, the District issued $225,000,000 of Wastewater System Revenue Bonds Series 2012A (“Series 2012A”). These bonds were issued pursuant to the June 2012 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have interest rates ranging from 2.5% to 5.3% and are payable in semiannual installments at varying amounts through May 1, 2042; however, in December 2017, there was an advance refunding of the Series 2012A bonds for the years 2023 through 2032 totaling $50,060,000 (excludes $240,000 of the May 2030 principal payment due). As a result of this advance refunding, Series 2012A bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In December 2011, the District issued $52,250,000 of Wastewater System Revenue Bonds Series 2011B (“Series 2011B”). These bonds were issued pursuant to the August 2008 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have interest rates ranging from 3.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2032; however, in December 2017, there was an advance refunding of the Series 2011B bonds for the years 2022 through 2029 totaling $23,345,000. As a result of this advance refunding, Series 2011B bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In January 2010, the District issued $85,000,000 of Taxable Wastewater System Revenue Bonds (Build America Bonds – Direct Pay) Series 2010B (“Series 2010B”). These bonds were issued pursuant to the August 2008 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have an interest rate of 5.9% and are payable in semiannual installments at varying amounts through May 1, 2039. As Build America Bonds under The American Recovery and Reinvestment Act (“ARRA”) of 2009, the District receives a subsidy payment from the Federal government equal to a percentage of the interest paid. In fiscal years 2013 and prior, the rate was 35%. Beginning with refund payments processed on March 1, 2013 and annually beginning on October 1, 2013, the IRS has adjusted this rate as part of the sequestration. In fiscal year 2019 the subsidy percentage was 32.8% while for 2018 the subsidy percentage was 32.7%. In fiscal year 2020 the subsidy percentage is expected to be 32.9%.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 45
The revenue bonds do not constitute a legal debt or liability for the District, the State of Missouri, or for any political subdivision thereof and do not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Revenue derived from the operations of the Wastewater System is pledged for the retirement of the outstanding Wastewater System Revenue Bonds listed above. Under the provisions of the bond indentures, the District covenants to establish rates for the services of the Wastewater System sufficient to fund operations, maintain reserves, and provide revenues to apply principal and interest on these bonds. The issuance of the revenue bonds does not obligate the District to levy any form of taxation or to make any appropriation for their payments in any fiscal year. The principal and interest on the bonds are expected to be paid from future wastewater revenues.
Water Pollution Control And Drinking Water Revenue Bonds Payable
In October 2008, the State Environmental Improvement and Energy Resources Authority (“Authority”) authorized and issued $69,435,000 of Water Pollution Control and Drinking Water Revenue Bonds (State Revolving Funds Programs) Series 2008A/B (“Series 2008A/B”). The Series 2008A/B bonds provided funds to issue loans to 14 Missouri political subdivisions that used the funds to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2008A/B bonds issued by the Authority were used to purchase subordinate Participant Revenue Bonds (“Participant Bonds”) authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $40,000,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 4.0% to 5.7% and are payable in semiannual installments at varying amounts through January 1, 2029. In November 2006, the Authority authorized and issued $22,105,000 of State Revolving Funds Programs Series 2006B (“Series 2006B”). The Series 2006B bonds provided funds to issue loans to 7 Missouri political subdivisions that used the funds to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2006B bonds issued by the Authority were used to purchase Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $14,205,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 4.0%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 46
to 5.0% and are payable in semiannual installments at varying amounts through July 1, 2027. In May 2006, the Authority authorized and issued $87,505,000 of State Revolving Funds Programs Series 2006A (“Series 2006A”). The Series 2006A bonds provided funds to issue loans to 13 Missouri political subdivisions that used the funds to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2006A bonds issued by the Authority were used to purchase subordinate Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $42,715,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 3.5% to 4.5% and are payable in semiannual installments at varying amounts through July 1, 2026. In May 2005, the Authority authorized and issued $53,060,000 of State Revolving Funds Programs Series 2005A (“Series 2005A”). The Series 2005A bonds provided funds to issue loans to 10 Missouri political subdivisions and one Missouri non-profit corporation that were used to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2005A bonds issued by the Authority were used to purchase subordinate Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $6,800,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 3.0% to 5.0% and are payable in semiannual installments at varying amounts through July 1, 2026. In May 2004, the Authority authorized and issued $179,780,000 of State Revolving Funds Programs Series 2004B (“Series 2004B”). The Series 2004B bonds provided funds to issue loans to 7 Missouri political subdivisions that were used to finance water pollution control projects. A portion of the proceeds of the Series 2004B bonds issued by the Authority were used to purchase subordinate Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $161,280,000, the proceeds of which were used to finance the District’s three water pollution control construction projects outlined in the agreement. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 2.0% to 5.3% and are payable in semiannual installments at varying amounts through January 1, 2027.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 47
The Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds do not constitute a legal debt or liability for the District, the State of Missouri, or for any political subdivision thereof and do not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds and the Series 2009A, 2010A, 2010C, 2011A, 2013A, 2015A, 2016A, 2016B and 2018B direct loans (pages 49-55) do not obligate the District to levy any form of taxation or to make any appropriation for their payments in any fiscal year. The principal and interest on the bonds are expected to be paid from future wastewater revenues.
In connection with the District’s issuance of the Participant Bonds, which were purchased with the proceeds of the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds, the District participates in the State Revolving Loan Program established by the Missouri Department of Natural Resources (“DNR”). Monies from federal capitalization grants and state matching funds are used to fund a bond reserve account for the participants. As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account and deposited in a bond reserve account, in the District’s name, an additional 60% of the expenditure amount for the Series 2004B bonds and 70% for the Series 2005A, 2006A, and 2006B bonds. For the Series 2008A/B bonds, 70% of the entire anticipated borrowed amount was deposited into this bond reserve account at the beginning of the loan versus as the expenditures were reimbursed. Interest earned from this bond reserve account can be used by the District to fund interest payments on the bonds. On the date of each payment of the principal amount of the District’s Participant Bonds, the trustee transfers from this bond reserve account to the master trustee account an amount equal to 60% of the principal payment for the Series 2004B bonds and 70% for the Series 2005A, 2006A, 2006B and 2008A/B bonds. In accordance with the District’s Master Bond Ordinance No. 11713, adopted April 22, 2004, the District’s annual net operating revenues from wastewater activities, as defined in the agreement, coupled with investments earnings, must be at least 125% of the current year’s principal and interest due on all senior bonds and at least 115% of the current year’s principal and interest due on all bonds. At June 30, 2019 and 2018, the District was in compliance with this covenant.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 48
Principal And Interest Requirements On Revenue Bonds Payable
The annual principal and interest requirements to maturity on revenue bonds payable outstanding as of June 30, 2019 are as follows:
Water Infrastructure Finance and Innovation Act (WIFIA) Series 2018A
In December 2018, the Environmental Protection Agency (“EPA”) issued to the District an amount totaling $47,722,204 for the purpose of constructing the Deer Creek Sanitary Tunnel Pump Station and Sanitary Sewers Project. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the April 2016 authorization. The Series 2018A bonds are not subordinated. The District’s interest rate is 3.06% and is payable in semiannual installments at varying amounts through May 1, 2053.
Principal And Interest Requirements on Water Infrastructure Finance
and Innovation Act Series 2018A
As the District incurs approved capital expenditures, the EPA reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 3.06% based on the amount that has been borrowed. As of June 30, 2019 the outstanding loan balance was $261,480. The payment requirements to maturity will be determined after the debt is fully issued.
Years ending June 30,Principal Interest Total
2020 37,655,000$ 57,029,166$ 94,684,166$
2021 38,990,000 55,659,732 94,649,732
2022 39,775,000 54,309,582 94,084,582 2023 41,080,000 52,817,649 93,897,649
2024 42,295,000 51,342,758 93,637,758
2025-2029 218,025,000 230,741,846 448,766,846 2030-2034 239,465,000 178,620,137 418,085,137
2035-2039 276,175,000 119,489,730 395,664,730
2040-2044 266,260,000 50,311,550 316,571,550
2045-2047 62,990,000 5,453,000 68,443,000
Total 1,262,710,000$ 855,775,150$ 2,118,485,150$
Wastewater System Revenue Bonds Payable/
Water Pollution Control and Drinking Water
Revenue Bonds Payable
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 49
Energy Efficiency Leveraged Note Payable
In February 2012, the DNR loaned $223,793 to the District. The Energy Efficiency Leveraged Note Payable bears interest at a rate of 2.5% per annum and is payable through July 1, 2019. The purpose of this note was to finance the design, acquisition, installation, and implementation of energy conservation measures. The principal and interest on this note will be paid from the energy savings from the projects or avoided costs resulting from the projects.
Principal And Interest Requirements On Energy Efficiency Leveraged
Note Payable
The annual principal and interest requirements to maturity on the Energy Efficiency Leveraged Note Payable outstanding as of June 30, 2019 are as follows:
State Of Missouri Direct Loan Series 2018B
In December 2018, the State of Missouri Direct Loan Program issued to the District an amount totaling $25,267,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the April 2016 authorization. The District’s interest rate is 1.38% and is payable in semiannual installments at varying amounts through January 1, 2041.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2018B
As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 1.38% based on the amount that has been borrowed. As of June 30, 2019 the outstanding loan balance was $2,880,349. The payment requirements to maturity will be determined after the debt is fully issued.
State Of Missouri Direct Loan Series 2016B
In December 2016, the State of Missouri Direct Loan Program issued to the District an amount totaling $75,500,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The
Years ending June 30,Principal Interest Total
2020 16,163$ 202$ 16,365$
Total 16,163$ 202$ 16,365$
Energy Efficiency Leveraged Note Payable
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 50
principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through July 1, 2037.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2016B
As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 1.2% based on the amount that has been borrowed. As of June 30, 2019 the outstanding loan balance was $45,582,626. After taking into consideration the $3,147,000 principal paid in fiscal 2019, the balance to be borrowed is $26,770,374. The payment requirements to maturity will be determined after the debt is fully issued.
State Of Missouri Direct Loan Series 2016A
In December 2016, the State of Missouri Direct Loan Program issued to the District an amount totaling $20,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through January 1, 2037.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2016A
As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 1.2% based on the amount that has been borrowed. As of June 30, 2019 the outstanding loan balance was $13,129,064. After taking into consideration the $1,258,000 principal paid in fiscal 2018 and 2019, the balance to be borrowed is $5,612,936. The payment requirements to maturity will be determined after the debt is fully issued.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 51
State Of Missouri Direct Loan Series 2015A
In August 2015, the State of Missouri Direct Loan Program issued to the District an amount totaling $75,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through January 1, 2035.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2015A
As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2015A outstanding as of June 30, 2019 are as follows:
State Of Missouri Direct Loan Series 2013A
In October 2013, the State of Missouri Direct Loan Program issued to the District an amount totaling $52,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the June 2012 authorization. The District’s interest rate is 1.6% and is payable in semiannual installments at varying amounts through July 1, 2034.
Years ending June 30,Principal Interest Total
2020 3,424,000$ 793,622$ 4,217,622$ 2021 3,505,000 751,605 4,256,605
2022 3,589,000 708,588 4,297,588 2023 3,674,000 664,546 4,338,546
2024 3,762,000 619,455 4,381,455
2025-2029 20,220,000 2,382,264 22,602,264 2030-2034 22,833,000 1,078,163 23,911,163
2035 4,895,000 44,866 4,939,866
Total 65,902,000$ 7,043,109$ 72,945,109$
State of Missouri Direct Loan Series 2015A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 52
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2013A
As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2013A outstanding as of June 30, 2019 are as follows:
State Of Missouri Direct Loan Series 2011A
In November 2011, the State of Missouri Direct Loan Program issued to the District an amount totaling $39,769,300 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.5% and is payable in semiannual installments at varying amounts through January 1, 2034.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2011A
As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2011A outstanding as of June 30, 2019 are as follows:
Years ending June 30,Principal Interest Total
2020 2,305,000$ 663,036$ 2,968,036$
2021 2,365,000 627,076 2,992,076
2022 2,427,000 590,178 3,017,178 2023 2,490,000 552,319 3,042,319
2024 2,555,000 513,476 3,068,476 2025-2029 13,811,000 1,948,211 15,759,211
2030-2034 15,708,000 813,277 16,521,277 2035 1,688,000 13,082 1,701,082
Total 43,349,000$ 5,720,655$ 49,069,655$
State of Missouri Direct Loan Series 2013A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 53
State Of Missouri Direct Loan Series 2010C
In December 2010, the State of Missouri Direct Loan Program issued to the District an amount totaling $37,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.7% and is payable in semiannual installments at varying amounts through January 1, 2031.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2010C
As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan.
The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2010C outstanding as of June 30, 2019 are as follows:
Years ending June 30,Principal Interest Total
2020 1,792,000$ 483,304$ 2,275,304$ 2021 1,838,000 455,891 2,293,891 2022 1,884,000 427,778 2,311,778 2023 1,932,000 398,959 2,330,959 2024 1,982,000 369,403 2,351,403 2025-2029 10,690,000 1,376,641 12,066,641 2030-2034 12,123,300 516,321 12,639,621
Total 32,241,300$ 4,028,297$ 36,269,597$
State of Missouri Direct Loan Series 2011A
Years ending June 30,Principal Interest Total
2020 1,795,000$ 403,590$ 2,198,590$
2021 1,842,000 373,783 2,215,783 2022 1,890,000 343,192 2,233,192
2023 1,939,000 311,809 2,250,809
2024 1,989,000 279,609 2,268,609
2025-2029 10,748,000 885,052 11,633,052 2030-2031 4,703,000 97,647 4,800,647
Total 24,906,000$ 2,694,682$ 27,600,682$
State of Missouri Direct Loan Series 2010C
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 54
State Of Missouri Direct Loan Series 2010A
In January 2010, the State of Missouri’s Direct Loan Program - ARRA issued to the District an amount totaling $7,980,700 for the construction, improvement, renovation, repair, replacement and equipping of its Wastewater System, under the authority of and in full compliance with the District’s Charter (“Plan”) and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.5% and is payable in semiannual installments at varying amounts through July 1, 2031.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2010A
As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2010A outstanding as of June 30, 2019 are as follows:
State Of Missouri Direct Loan Series 2009A
In October 2009, the DNR loaned $23,000,000 to the District. The State of Missouri Direct Loan Series 2009A note bears interest at a rate of 1.5% per annum and is payable through January 1, 2030. The purpose of this note was to finance the designing, constructing, improving, renovating, repairing, replacing and equipping of new and existing sewer facilities within the District. The principal and interest on the note are expected to be paid from future wastewater revenues and the note was issued from the August 2008 authorization.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2009A
As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan.
Years ending June 30,Principal Interest Total
2020 388,700$ 79,498$ 468,198$
2021 396,600 73,717 470,317 2022 404,600 67,817 472,417
2023 412,900 61,799 474,699
2024 421,300 55,657 476,957 2025-2029 2,237,900 181,712 2,419,612
2030-2032 1,206,200 26,958 1,233,158
Total 5,468,200$ 547,158$ 6,015,358$
State of Missouri Direct Loan Series 2010A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 55
The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2009A outstanding as of June 30, 2019 are as follows:
In accordance with the Direct Loan Series 2009A, 2010A, 2010C, 2011A, 2013A, 2015A, 2016A, 2016B and 2018B ordinances, the District’s annual net operating revenues from wastewater activities, as defined in the agreement, coupled with investments earnings must be at least 115% of the current year’s principal and interest due on all bonds. At June 30, 2019 and 2018, the District was in compliance with this covenant.
Wastewater System Cash And Investments
The following accounts have been established in accordance with bond ordinances and financing agreements that require receipts generated from operations be segregated and certain reserve accounts be established:
Revenue Fund
The Revenue Fund will be used for the purpose of depositing wastewater and stormwater operating revenues, providing funds to pay for expenses related to the operation and maintenance of the District, and fulfilling Sinking Fund requirements in accordance with the bond ordinances.
Sinking Fund
The bond ordinances provide for deposits to and the use of monies in the Sinking Fund to be used for the sole purpose of principal and interest payments on the bonds. Sufficient monies shall be paid in periodic installments from the Revenue Fund.
Debt Service Fund
The Debt Service Fund shall be used by the Trustee for the sole purpose of paying the principal and interest on the bonds, as and when the same become due.
Years ending June 30,Principal Interest Total
2020 1,149,900$ 203,411$ 1,353,311$
2021 1,176,500 186,526 1,363,026
2022 1,203,700 169,251 1,372,951
2023 1,231,600 151,575 1,383,175 2024 1,260,000 133,491 1,393,491
2025-2029 6,751,100 381,212 7,132,312
2030 1,445,300 15,856 1,461,156
Total 14,218,100$ 1,241,322$ 15,459,422$
State of Missouri Direct Loan Series 2009A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 56
Debt Service Reserve Fund
After initial deposit of the amount required pursuant to the bond ordinances and financing agreements of the Series 2010B, 2011B, 2012A, 2012B and 2013B bonds, monies in the Debt Service Reserve Fund shall be disbursed and expended by the District solely for the payment of the principal and interest on the bonds and notes to the extent of any deficiency in the Debt Service Fund for such purpose. The District may disburse and expend monies from the Debt Service Reserve Fund for such purpose immediately. As of June 30, 2019 and 2018, cash and investments in the Debt Service Reserve Fund totaled $50,460,508 and $48,117,908, respectively. Series 2015B was issued without a debt service reserve fund requirement and at that time $8,945,557 in excess debt service reserves along with part of the Series 2015B proceeds were used to advance refund Series 2006C and Series 2008A. Series 2016C was issued without a debt service reserve fund requirement. Series 2017A was issued without a debt service reserve fund requirement and at that time $934,325 in excess debt service reserves along with part of the Series 2017A proceeds were used to partially advance refund Series 2011B, Series 2012A, Series 2013B and Series 2015B. Series 2018A was issued without a debt service reserve fund requirement.
Special Participant Bond Reserve Account
For the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds, the DNR deposited into the Special Participant Bond Reserve Account, amounts in accordance with the bond ordinances, which shall be disbursed and expensed by the District solely for the payment of the principal and interest on the Participant Bonds to the extent of any deficiency in the Sinking Fund for such purpose. At June 30, 2019 and 2018, cash and investments in the Special Participant Bond Reserve Account held on behalf of the District totaled $77,260,600 and $86,670,343, respectively. Monies in this account are not considered to be District funds. However, interest earnings on this account are used by the District to reduce interest payments on the bonds outstanding.
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Notes To Financial Statements (Continued)
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Renewal And Extension Fund
All sums accumulated and retained in the Renewal and Extension Fund shall be first used to prevent default in the payment of principal and interest on the bonds when due and shall then be applied by the District for purposes pursuant to the trust indenture. No monies have been deposited into this account at June 30, 2019.
Project Fund
The Project Funds for all bond issuances outstanding will be used for the purpose of providing monies to pay project costs. The proceeds from the bonds and notes, after a deposit into the Debt Service Reserve Fund for the amounts required pursuant to the bond ordinances and note agreements of Series 2010B, 2011B, 2012A, 2012B and 2013B bonds, shall be deposited into the Project Fund. At June 30, 2019 and 2018, cash and investments in the Project Fund totaled $126,410,864 and $235,843,731, respectively.
Rebate Fund
The bond ordinances provide for the creation of a Rebate Fund into which shall be deposited such amounts as are required to be deposited therein pursuant to the arbitrage instructions regarding the calculation and payment of rebate amounts due. The District does not have any rights in or claims to such money; provided, however, any funds remaining in the Rebate Fund after redemption and payment of all bonds and payment of any rebatable arbitrage amount, or provision having been made therefore, shall be remitted to the District. At June 30, 2019 and 2018, cash and investments in the Rebate Fund totaled $229,164 and $227,132, respectively.
Administrative Fee Fund
The Administrative Fee Fund will be used for the payment of the Trustee’s fees and other administrative fees pursuant to the note agreement. The Trustee has the ability to immediately withdraw the fee amounts when due. Monies held in this account shall not be invested.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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Pledged Revenues
The District pledges revenues to ensure the repayment of all outstanding revenue bonds. These bonds’ proceeds are used for the District’s capital improvement and replacement program and their repayment comes from, and is collateralized by, the District’s wastewater revenues. These revenues are pledged through 2047 at an approximate amount of $2.1 billion. The proportion of future pledged revenues to future wastewater revenues is not estimable as annual total revenues fluctuate. Principal and interest paid out during fiscal year 2019 was $114.1 million with pledged revenues of $245.0 million. This provided a coverage ratio of 2.1 and pledged revenues represented 61.1% of all net operating revenues.
Direct Borrowings and Direct Placements
The District did not have any bonds and notes from direct borrowings or direct placements in the fiscal years ending June 30, 2019 and 2018. In addition, the District had no unused lines of credit and had no assets pledged as collateral for notes from direct borrowings and direct placements in the fiscal years ending June 30, 2019 and 2018.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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7. Pension Plan
General Information About The Pension Plan
Pension Plan Description. The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Pension Plan”) is a noncontributory single employer defined benefit plan providing retirement benefits as well as death and disability benefits. As a condition of employment, all full-time employees of the District commencing service prior to January 1, 2011, were eligible to be covered by the Pension Plan. As of January 1, 2011, the Pension Plan was frozen to new employees. Instead, new employees of the District may participate in The Metropolitan St. Louis Sewer District Defined Contribution Plan (“DC Plan”) and/or The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust. Current employees with less than ten years of service on January 1, 2011 could also voluntarily elect to transfer from the Pension Plan and enter the DC Plan.
Benefits Provided. All benefits vest after five years of credited service. Members retiring at or after age 65 with five or more years credited service are entitled to a pension benefit. The Pension Plan permits early retirement with reduced benefits beginning at age 55 if the member has completed five years of employment. Ordinance No. 10664 provides for unreduced retirement benefits to any member whose combined age and term of service is equal to 75. Effective August 1, 2004, Ordinance No. 11781 amended the Pension Plan to change the benefit formula to 1.7% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings multiplied by the period of years and months of credited service not to exceed 35 years without including accrued sick leave. For vested employees who retire or die while in active service, sick leave is paid out at 1.25% per year of service multiplied by the amount of the unused accrued sick leave remaining at the employee’s current rate of pay, up to a maximum of $50,000. Also, the Pension Plan was amended to provide the retiring member with a 10% partial lump sum payment option. The balance of the distribution will be paid in accordance with any one of the other payment options available under the Pension Plan. The retirement benefit payable to a member who retires after the normal retirement date is the greater of a) the benefit that would have been payable on the normal retirement date plus a special annual retirement benefit provided by the accumulated value, at 4% per annum interest, of the monthly benefit that would have been received prior to the postponed retirement date or b) the benefit determined as of the postponed retirement date under the normal formula.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
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Effective August 27, 2011, Ordinance No. 13288 amended the Pension Plan to include the following: “Upon termination or complete discontinuance of contributions under the Plan, the rights of all Members to benefits accrued to the date of such termination or discontinuance shall be non-forfeitable, to the extent then funded.” Amounts in participants’ accounts are distributed upon retirement, death, disability, or termination of employment. The normal form of retirement benefit is either a lump sum payment or equal monthly installments. The Pension Plan reports financial data on a calendar year basis and issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103-2555.
Employees Covered by Benefit Terms. At December 31, 2018 and 2017, the financial reporting period of the Pension Plan, the following employees were covered by the benefit terms:
Required Employer Contributions. The District’s employees do not contribute to the Pension Plan. Ordinances establishing the Pension Plan provide for actuarially determined annual contributions, paid solely by the District, that are sufficient to pay benefits when due. The Entry Age Normal actuarial funding method is used to determine contributions. Contributions of $12,609,689 and $12,411,005, excluding certain professional fees paid by the District, were made to the Pension Plan during the District’s fiscal years ended June 30, 2019 and 2018, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations performed at December 31, 2018 and 2017, respectively.
Increase
2018 2017 (Decrease)
Active plan members 545 595 (50)
Retirees and beneficiaries currently receiving benefits 748 722 26
Terminated members entitled to receive benefits 181 178 3
Total 1,474 1,495 (21)
For the Years Ended
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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Net Pension Liability
The net pension liability was measured as of December 31, 2018 and 2017 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.
Actuarial Assumptions. The total pension liability in the December 31, 2018 and 2017 actuarial valuations were determined using the following actuarial assumptions, applied to all periods included in the measurement:
Effective December 31, 2018 and 2017, for current employees, mortality rates were based on the RP-2014 Employees Mortality Table, male and female rates, with generational projection from 2006 based on the MP-2018 improvement scale and MP-2017 improvement scale (improvement scale updates published annually), respectively. For retirees, the RP-2014 Healthy Annuitant Mortality Table, male and female rates, with generational projection from 2006 based on the MP-2018 improvement scale was assumed for the December 31, 2018 valuation while the MP-2017 improvement scale was assumed for December 31, 2017. For disabled lives, the RP-2014 Disabled Mortality Table, male and female rates, was utilized for both the December 31, 2018 and 2017 valuations. The actuarial assumptions are based on prior and current year experiences.
Inflation 2.50 percent
Salary Increases 4.25 percent, average, including inflation
Investment Rate of Return 6.90 percent, net of pension plan investment expense,
including inflation for December 31, 2018 and 2017
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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Long-Term Expected Rate of Return. The long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions at December 31, 2018 and 2017 are as follows:
Discount Rate. The discount rate used to measure the total pension liability at December 31, 2018 and 2017, was 6.90 percent. The Pension Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return.
Long-Term
Expected
Arithmetic
Target Real Rate
Asset Class Allocation of Return
Large Cap US Equity 25.0%4.0%
Small Cap US Equity 10.0%4.5%
Developed International Equity 12.0%5.0%
Emerging Markets Equity 6.0%5.7%
Domestic Fixed Income 27.0%1.2%
Global Fixed Income 8.0%4.3%
Real Estate 12.0%3.0%
Total 100.0%
Long-Term
Expected
Arithmetic
Target Real Rate
Asset Class Allocation of Return
Large Cap US Equity 25.0%4.5%
Small Cap US Equity 10.0%5.5%
Developed International Equity 12.0%4.9%
Emerging Markets Equity 6.0%6.1%
Domestic Core Plus Fixed Income 14.0%1.5%
Core "Plus" Bonds 13.0%0.9%
Global Fixed Income 8.0%0.7%
Real Estate 12.0%4.0%
Total 100.0%
December 31, 2018
December 31, 2017
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
Changes in Net Pension Liability (a)(b)(a) - (b)
Balances as of December 31, 2017 326,365,153$ 277,976,215$ 48,388,938$
Changes for the year:
Service cost 5,238,812 — 5,238,812
Interest 22,306,950 — 22,306,950
Effect of economic/demographic gains or losses (2,041,843)— (2,041,843)
Effect of assumptions changes or inputs — — —
Benefit payments (16,911,759) (16,911,759)—
Employer contributions — 12,493,916 (12,493,916)
Net investment income — (12,997,796) 12,997,796
Balances as of December 31, 2018 334,957,313$ 260,560,576$ 74,396,737$
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
Changes in Net Pension Liability (a)(b)(a) - (b)
Balances as of December 31, 2016 318,049,216$ 251,010,031$ 67,039,185$
Changes for the year:
Service cost 5,157,148 — 5,157,148
Interest 22,078,790 — 22,078,790
Effect of economic/demographic gains or losses (4,728,693)— (4,728,693)
Effect of assumptions changes or inputs 1,667,047 — 1,667,047
Benefit payments (15,858,355) (15,858,355)—
Employer contributions — 12,328,093 (12,328,093)
Net investment income — 30,496,446 (30,496,446)
Balances as of December 31, 2017 326,365,153$ 277,976,215$ 48,388,938$
Changes in Net Pension Liability for the Year Ending December 31, 2017
Changes in Net Pension Liability for the Year Ending December 31, 2018
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Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability calculated using the 6.90 percent discount rate for December 31, 2018 and December 31, 2017, as well as what the District’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate for each year:
Pension Plan Fiduciary Net Position. Fiduciary net position is the market value of all plan assets. Net pension liability is the plan’s total pension liability less its fiduciary net position, i.e., the plan’s unfunded accrued liability.
Pension Expense And Deferred Outflows Of Resources And Deferred
Inflows Of Resources Related To Pensions
For the years ended June 30, 2019 and 2018, the District recognized pension expense of $19,988,206 and $15,554,154, respectively, after accounting for all deferred outflows and inflows of resources. The District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
1%Current 1%
Decrease Discount Rate Increase
(5.90%) (6.90%) (7.90%)
Net Pension Liability 111,394,809$ 74,396,737$ 42,914,274$
1%Current 1%
Decrease Discount Rate Increase
(5.90%) (6.90%) (7.90%)
Net Pension Liability 85,063,996$ 48,388,938$ 17,214,436$
December 31, 2017
December 31, 2018
Deferred Deferred Deferred Deferred
Outflows of Inflows of Outflows of Inflows of
Resources Resources Resources Resources
Differences between expected and actual experience —$ 4,341,116$ —$ 6,064,985$
Changes of assumptions 3,895,543 — 8,319,328 —
Net difference between projected and actual earnings 23,546,115 — 2,332,690 —
Contributions made subsequent to measurement date 6,796,612 — 6,680,839 —
Total 34,238,270$ 4,341,116$ 17,332,857$ 6,064,985$
June 30, 2018June 30, 2019
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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In the years ending June 30, 2019 and 2018, amounts currently reported as deferred outflows of resources, $6,796,612 and $6,680,839, respectively, related to the District’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the years ended June 30, 2020 and 2019, respectively. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Payable To The Pension Plan
At June 30, 2019 and 2018, the District did not have outstanding required contributions to the pension plan. 8. Other Retirement Plans
Deferred Compensation Plan and Trust
The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust (“Plan”), available to all District employees, permits them to defer a portion of their salary up to Internal Revenue Code limits. The District does not contribute to the Plan except where mandated by the Internal Revenue Service to compensate participants for lost deferral contributions. The deferred compensation is not available to employees until termination, retirement, death, disability or due to financial hardship as defined by the Plan. At June 30, 2019 and 2018, the District had outstanding liabilities owed to the Plan of $124,996 and $98,234, respectively.
Net Deferrals of
Resources
Year ended June 30,:
2020 9,285,541$
2021 3,829,063
2022 3,591,978
2023 6,393,960
23,100,542$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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The Plan was amended and restated to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (“Act”). The Act made significant changes to Section 457(b) of the Internal Revenue Code of 1986, as previously amended. The Plan assets are held in trust for the exclusive benefit of participants and their beneficiaries under Section 1448 of the Small Business Job Protection Act of 1996. As a result, the assets and liabilities of the Plan are not included in the accompanying financial statements. The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103-2555.
Defined Contribution Plan
The Metropolitan St. Louis Sewer District Defined Contribution Plan (“DC Plan”) was established by the District’s Board of Trustees, through Ordinance 13180, which became effective January 1, 2011. The following full time employees are eligible to participate in the DC Plan: (i) employees first hired on or after January 1, 2011, and (ii) employees hired prior to January 1, 2011 who elected to terminate participation in The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Pension Plan”), effective as of April 1, 2011, in accordance with the provisions of such Pension Plan, and (iii) employees rehired on or after January 1, 2011 who are not eligible to accrue benefits under the Pension Plan. An employee shall become a participant in the DC Plan on the first day on which he or she performs an hour of service for the District. The District’s Board of Trustees, primarily to improve benefits to members, amends the DC Plan in all its respects. A pension committee consisting of two members of the District’s Board of Trustees, two elected employee members and four members of the District’s management staff administer the DC Plan. A committee of the District’s Board of Trustees, with the aid of an investment advisor, reviews and evaluates the DC Plan’s investment options and the related rates of return on a periodic basis. This DC Plan is intended to provide a means whereby the District may provide retirement benefits to eligible employees and encourage such employees to establish a regular method of savings, thereby providing a measure of financial security for such employees and their beneficiaries upon retirement or in the event of death or disability. All assets of the DC Plan are the sole property of the DC Plan and are not subject to the claims of creditors of the District and the assets and liabilities of the DC Plan are not included in the accompanying financial statements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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Employer Basic Contributions: For each payroll period, the District contributes an amount equal to 7% of the covered compensation earned during such period by each participant entitled to an allocation of such contribution. Upon a participant’s severance from service, the unvested amount credited to his/her individual account shall be forfeited and credited to the Employer Basic Contributions account and shall be used to reduce future Employer Basic Contributions. If a participant is rehired before incurring two consecutive years break in service, the amount previously forfeited will be restored. If rehired after two consecutive years of break in service, the amounts previously forfeited will not be restored. Employer Matching Contributions: For each payroll period, the District contributes an amount equal to 50% of the covered compensation of such participant withholding as an annual deferral (as defined in The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust) pursuant to The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust; provided that, before-tax contributions in excess of 4% of the covered compensation of the participant for the payroll period shall not be considered for purposes of Employer Matching Contributions. Employer Matching Contributions shall be up to the maximum amount of compensation that may be taken into account for the DC Plan year and the amount credited to the participant’s Employer Matching Contributions Account shall be fully vested at all times. In no event shall the sum of the employer contributions and employee contributions allocated to the account of a participant for the DC Plan year exceed the lesser of: (a) The amount specified in the applicable Internal Revenue Code, as adjusted annually for any applicable increases in the cost of living. (b) 100% of the participant’s compensation for such year. The compensation limit referred to in (b) shall not apply to any contribution from medical benefits after separation from service. The District’s contributions to the DC Plan amounted to $2,069,859 and $1,736,675 for the years ended June 30, 2019 and 2018, respectively. Forfeitures were $46,347 and $29,460, for the years ended June 30, 2019 and 2018, respectively, and the balances in the prepaid forfeitures account as of June 30, 2019 and 2018 were $13 and $890, respectively. At June 30, 2019 and 2018, the District had outstanding liabilities owed to the DC Plan of $56,997 and $42,630, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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Vesting: As of any time before the normal retirement age of a participant, the first day of the month coinciding with or next following a person’s sixty-fifth birthday and completion of sixty months of continuous service (other than upon death or permanent disability), the vested percentage of the amounts credited to the participant’s Employer Basic Contributions account shall be determined in accordance with the following schedule:
The Metropolitan St. Louis Sewer District Defined Contribution Plan issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103-2555. 9. Postemployment Benefits Other Than Pensions (“OPEB”)
General Information About The OPEB Plan
Plan Description. The District’s defined benefit OPEB plan, The Metropolitan St. Louis Sewer District Retiree Medical Coverage Plan (“Plan”), provides OPEB for all permanent full-time employees who retire from the District on or after age 62 with five years of service or whose age plus years of service equal 75 points (“Rule of 75”) as part of a total compensation package effective August 1, 2004 for general employees and, with respect for union members, the later of August 1, 2004 or the date of union ratification of a Memorandum of Understanding with respect to this Plan modification. The Plan is a single-employer defined benefit OPEB plan administered by the District. The Plan was established by Ordinance No. 9826 and became effective January 1, 1996. This ordinance has been repealed and new ordinances enacted in lieu thereof with Ordinance No. 15109 covering defined contribution retirees and Ordinance No. 15110 covering defined benefit retirees, both of which were adopted on February 14, 2019, being the most current ordinances covering the Plan in its entirety. The District offers two medical plan options, a traditional open access plan and a high deductible health plan, and both plans offer wellness rates for those employees who qualify. No assets are
Months Of
Continuous Service
Vested(Non-
Forfeitable)
Percentage Less than 12 0%
12 but less than 24 20%
24 but less than 36 40%
36 but less than 48 60%
48 but less than 60 80%
60 100%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 69
accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
Benefits Provided. The Plan provides healthcare for qualified retirees and their dependents. The District pays the same amount of the monthly group health insurance premium for the qualified retiree as it would for an active single employee until the retiree becomes eligible for Medicare at age 65. In fiscal year 2019 and 2018 the monthly amount the District paid towards the retiree’s premium was $580.25 for retirees qualifying for the wellness incentive. The $580.25 paid by the District equates to 85% of the traditional plan’s premium and 91% of the high deductible plan’s premium. For retirees not qualifying for the wellness incentive, the District pays $547.75 of the premium which equates to 80% for the traditional plan and 86% for the high deductible plan. The retiree pays 100% of the spousal, children or family premium incremental increases in addition to the remaining 9-20% of the retiree’s total monthly premium. The Plan also provides life insurance coverage for a very small closed group of disabled former employees. The monthly premiums for both plans and coverage tiers are as follows:
Total Retiree OPEB Benefit Net Cost
Coverage Tier Premium Paid by District to Retiree
Traditional Plan with wellness incentive
Retiree 684.69$ 580.25$ 104.44$
Retiree + Spouse 1,458.58 580.25 878.33
Retiree + Child(ren)1,325.27 580.25 745.02
Retiree + Family 2,021.51 580.25 1,441.26
Traditional Plan with no wellness incentive
Retiree 684.69 547.75 136.94
Retiree + Spouse 1,458.58 547.75 910.83
Retiree + Child(ren)1,325.27 547.75 777.52
Retiree + Family 2,021.51 547.75 1,473.76
High Deductible Plan with wellness incentive
Retiree 637.05 580.25 56.80
Retiree + Spouse 1,357.08 580.25 776.83
Retiree + Child(ren)1,233.05 580.25 652.80
Retiree + Family 1,880.84 580.25 1,300.59
High Deductible Plan with no wellness incentive
Retiree 637.05 547.75 89.30
Retiree + Spouse 1,357.08 547.75 809.33
Retiree + Child(ren)1,233.05 547.75 685.30
Retiree + Family 1,880.84 547.75 1,333.09
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Notes To Financial Statements (Continued)
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The ordinance establishing the Plan assigned the authority to establish and amend Plan benefit provisions to the District. The contribution requirements of the District and Plan members are established by the District and may be amended by the District. The Plan does not issue a publicly available report.
Employees Covered by Benefit Terms. At June 30, 2019 and 2018, the following employees were covered by the benefit terms:
June 30, 2019 June 30, 2018
Inactive employees or beneficiaries currently receiving benefit payments 120 120
Inactive employees entitled to but not yet receiving benefit payments — —
Active employees 935 952
Total 1,055 1,072
Total OPEB Liability
The District’s total OPEB liability, measured as of December 31, 2018 and December 31, 2017 was $24,164,395 and $24,193,972, respectively. The District’s total OPEB liabilities were determined by an actuarial valuation as of the valuation date, June 30, 2017, and were calculated based on the discount rate and actuarial assumptions below, and were then projected forward to the measurement dates. There have been no significant changes between the valuation date of June 30, 2017 and the reporting fiscal year end dates of June 30, 2019 and June 30, 2018.
Actuarial Assumptions and Other Inputs. The total OPEB liabilities based on the June 30, 2017 actuarial valuation were determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:
Inflation 2.50 percent
Healthcare cost trend rates 5.90 percent for 2018, gradually decreasing to an ultimate rate of 4.00
percent for 2091 and beyond
6.10 percent for 2017, gradually decreasing to an ultimate rate of 4.00
percent for 2091 and beyond
Salary increases 4.25 percent, average, including inflation
Retiree's share of benefit-
related costs
9-20 percent of projected health insurance premiums for retirees depending
on plan selected (traditional or high deductible) and wellness qualification
Discount rate 4.10 percent for December 31, 2018 measurement date
3.44 percent for December 31, 2017 measurement date
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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The discount rate was based on the 20 Year Bond General Obligation Index. Mortality rates were based on the RP-2014 Mortality for Employees and Healthy Annuitants, with generational projection per Scale MP-2018 for December 31, 2018 measurement date and Scale MP-2017 for December 31, 2017 measurement date and Disabled Lives: RP-2014 Disabled Mortality, male and female rates for both measurement dates. The actuarial assumptions are based on prior and current year experiences. The plan has not had a formal actuarial experience study performed.
Changes in the Total OPEB Liability
Changes of assumptions or other inputs reflect a change in the discount rate from 3.44 percent in 2017 to 4.10 percent in 2018.
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate. The following presents the total OPEB liability of the District as of December 31, 2018, calculated using the discount rate of 4.10%, as well as what the District’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (3.10%) or 1-percentage-point higher (5.10%) than the current discount rate.
Changes in the Total OPEB Liability for the Years Ending
Increase (Decrease)
December 31, 2018 December 31, 2017
Total OPEB Liability Beginning Balance 24,193,972$ 22,838,813$
Changes for the year:
Service cost 1,780,999 1,622,390
Interest on total OPEB liability 864,738 894,674
Changes of assumptions or other inputs (986,538)438,058
Benefit payments (1,688,776)(1,599,963)
Net changes (29,577)1,355,159
Total OPEB Liability Ending Balance 24,164,395$ 24,193,972$
1%Current 1%
Decrease Discount Rate Increase
(3.10%)(4.10%) (5.10%)
Total OPEB Liability 25,636,528$ 24,164,395$ 22,759,445$
December 31, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
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The following presents the total OPEB liability of the District as of December 31, 2017, calculated using the discount rate of 3.44%, as well as what the District’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.44%) or 1-percentage-point higher (4.44%) than the current discount rate.
Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend
Rates. The following presents the total OPEB liability of the District as of December 31, 2018, calculated using the current healthcare cost trend rates, as well as what the District’s total OPEB liability would be if it were calculated using healthcare cost trend rates that were 1-percentage-point lower (4.90% decreasing to 3.00%) or 1-percentage-point higher (6.90% decreasing to 5.00%) than the current healthcare cost trend rates of 5.90% decreasing to 4.00%.
The following presents the total OPEB liability of the District as of December 31, 2017, calculated using the current healthcare cost trend rates, as well as what the District’s total OPEB liability would be if it were calculated using healthcare cost trend rates that were 1-percentage-point lower (5.10% decreasing to 3.00%) or 1-percentage-point higher (7.10% decreasing to 5.00%) than the current healthcare cost trend rates of 6.10% decreasing to 4.00%.
1%Current 1%
Decrease Discount Rate Increase
(2.44%)(3.44%) (4.44%)
Total OPEB Liability 25,619,420$ 24,193,972$ 22,823,906$
December 31, 2017
Current
Healthcare
Cost Trend
1% Decrease Rates 1% Increase
(4.9% (5.9% (6.9%
decreasing decreasing decreasing
to 3.00%) to 4.00%) to 5.00%)
Total OPEB Liability 21,668,741$ 24,164,395$ 27,109,050$
December 31, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 73
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows
of Resources Related to OPEB For the years ended June 30, 2019 and 2018, the District recognized OPEB expense of $2,586,148 and $2,557,327, respectively. At June 30, 2019 and 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
In the years ending June 30, 2019 and 2018, amounts currently reported as deferred outflows of resources, $888,795 and $880,642 respectively, related to the District’s benefit payments subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the years ended June 30, 2020 and 2019, respectively.
Current
Healthcare
Cost Trend
1% Decrease Rates 1% Increase
(5.1% (6.1% (7.1%
decreasing decreasing decreasing
to 3.00%) to 4.00%) to 5.00%)
Total OPEB Liability 21,894,452$ 24,193,972$ 26,898,217$
December 31, 2017
Deferred Deferred
Outflows of Inflows of
Resources Resources
Changes of assumptions or other inputs 357,532$ 886,686$
Benefit payments made subsequent to measurement date 888,795 —
Total 1,246,327$ 886,686$
Deferred Deferred
Outflows of Inflows of
Resources Resources
Changes of assumptions or other inputs 397,795$ —$
Benefit payments made subsequent to measurement date 880,642 —
Total 1,278,437$ —$
June 30, 2019
June 30, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 74
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:
10. Self-Insurance Programs
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District has established a risk management program and retains the risk related to its obligation to provide workers' compensation and medical and hospitalization benefits to its employees; and to pay water backup claims to its customers. The estimated liabilities for payment of incurred (both reported and unreported) but unpaid claims relating to these matters are included as a component of current deposits and accrued expenses, and as such, are expected to be paid within one year of the date of the Statement of Net Position. At June 30, 2019 and 2018, these liabilities amounted to $7,920,684 and $4,026,003, respectively. The claims liabilities reported are based on the requirements of GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related
Insurance Issues, which requires that a liability for claims be reported if information obtained prior to the issuance of the financial statements indicates it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Changes in the balance of claims liabilities during fiscal 2019, 2018, and 2017 were as follows:
Net Deferrals of
Resources
Year ended June 30,:
2020 (59,589)$
2021 (59,589)
2022 (59,589)
2023 (59,589)
2024 (59,589)
Thereafter (231,209)
(529,154)$
2019 2018 2017
Liability - Beginning of Year 4,026,003$ 4,461,069$ 4,076,994$
Current year claims and changes in estimates 19,320,396 15,939,863 17,648,177
Claim payments (15,425,715) (16,374,929) (17,264,102)
Liability - End of Year 7,920,684$ 4,026,003$ 4,461,069$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 75
The District obtains periodic funding valuations from the third-party administrators managing the self-insurance programs and adjusts the charges as required to maintain the appropriate level of estimated claims liability. The District also maintains excess liability insurance coverage for workers' compensation and medical and hospitalization claims; general liability; and water backup damage to customers’ property. The District purchases commercial insurance for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three years.
11. Closure And Post-Closure Care Costs
State and federal laws and regulations require the District to place a final cover on its Prospect Hill Reclamation Project landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and post-closure care costs will be paid only near or after the date that the landfill stops accepting waste, the District reports a portion of these closure and post-closure care costs as an operating expense in each fiscal year. The $619,384 and $565,493 reported as landfill closure and post-closure care liabilities at June 30, 2019 and 2018, respectively, represent the cumulative amounts reported at fiscal year-end and represent 71.2% and 66.2% of the estimated closure and post-closure care costs of the landfill for fiscal years ended June 30, 2019 and 2018, respectively. These amounts are based on what it would cost to perform all closure and post-closure care in 2019 and 2018, respectively. The remaining disposal life estimate was calculated in 2009 and was estimated at eight years factoring in a future annual average disposal rate of 96,500 cubic yards. It was noted in the 2009 Black and Veatch study that this life could be extended further if the actual disposal rate is less than projected or alternative uses and off-site beneficial options for the incinerator ash are later developed. Since the actual average disposal rate has been less than 96,500 cubic yards, the landfill is not at capacity and MSD expects the landfill to be in use for another 9-11 years and the total capacity of the landfill and the available space as of 2017 was adjusted in 2017. In addition, a new survey of the landfill was performed in December of 2017 which increased the remaining capacity due to settlement and minor vehicle compaction. The District will continue to accrue the remaining estimated cost of closure and post-closure care annually.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 76
The District is required to demonstrate that it has the financial capability to close the landfill to the State of Missouri through the use of a financial test as specified in 10 CSR 80-2.030(4)(D)6 of the Missouri Solid Waste Management Rules. The District has complied with the State’s requirement. The District recognizes that estimates of closure costs may change as a result of inflation, deflation, and/or changes in technology and applicable laws and regulations. If closure cost estimates change, the liability currently reported on the Statements of Net Position will be adjusted accordingly. 12. Commitments And Contingencies
United States And State Of Missouri V. Metropolitan St. Louis Sewer
District; In The United States District Court For The Eastern District Of
Missouri; Case No. 07-1120.
On April 27, 2012, the Court entered the consent decree (“CD”) involving the Environmental Protection Agency, Missouri Department of Natural Resources, Missouri Coalition for the Environment and The Metropolitan St. Louis Sewer District (“MSD”). The CD required the District to spend approximately $4.7 billion, in 2010 dollars, over a 23-year implementation period. Throughout this period improvements will be made to the District’s separate sewer system, combined sewer system, and wastewater treatment plants. On June 1, 2011, the State of Missouri approved Chapter 11, Chapter 12, and Appendix Q of the District’s Combined Sewer Overflow Long-Term Control Plan Updated Report, dated February 2011. On June 22, 2018, a United States District Judge approved an amendment to the CD to extend it by five years from a 23-year program to a 28-year program. Recent regulatory changes have compelled MSD to accelerate certain non-consent decree work. This amendment will allow MSD to meet these new regulatory requirements in a fiscally responsible way while better controlling rate increases over the coming years. The District continues to comply with the CD.
Other Commitments and Contingencies
The District is a defendant in various other matters of litigation. Of these matters, management and District’s legal counsel do not anticipate any material effect on the June 30, 2019 and 2018 financial statements. The District has entered into construction and other contracts amounting to approximately $510,000,000 at June 30, 2019, and through the audit report date. The District had $674,510,796 in revenue bonds authorized by the voters but unissued as of June 30, 2019. These funds were sought to enable the District to comply with federal and state clean water requirements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 77
13. Restricted Net Position
The Statements of Net Position report $127,413,605 and $129,578,500 of restricted net position at June 30, 2019 and 2018, respectively, of which $69,150,974 and $74,249,353 are restricted due to enabling legislation, as of June 30, 2019 and 2018, respectively. 14. Segment Information The District issued wastewater revenue bonds to finance wastewater infrastructure projects. The District accounts for both wastewater and stormwater activities in a single enterprise fund, but investors in those bonds rely solely on the revenue generated by the wastewater activities for repayment. Fiscal year 2019 and 2018 summary financial information for each business segment is presented below. The District’s adoption of GASB Statement No. 75 in fiscal year 2018, as noted in the Adoption Of New Accounting Standards section of Note 1, resulted in restating the beginning balance of net position due to the recognition of a beginning total OPEB liability, a beginning deferred outflow of resources for the amount paid by the District for OPEB subsequent to the measurement date of the beginning total OPEB liability but before the beginning of the District’s fiscal year and for the removal of the net OPEB obligation previously recorded based on GASB Statement No. 45. The impact of this change on the District’s Wastewater and Stormwater Segment Statements’ net position, as presented in the Statements of Revenues, Expenses and Changes in Net Position is as follows:
Wastewater Stormwater Total
Net Position - Beginning Of Year, As Previously Stated 1,835,146,655$ 556,021,399$ 2,391,168,054$
Effect of Adoption of GASB 75 (11,020,906) (3,038,244) (14,059,150)
Net Position - Beginning Of Year, As Restated 1,824,125,749$ 552,983,155$ 2,377,108,904$
Effect of Adoption of GASB 75 - Restatement Consists Of
Total OPEB liability reported as a noncurrent liability at July 1, 2017 (19,702,154)$ (3,136,659)$ (22,838,813)$
Benefit payments made subsequent to the beginning total OPEB
liability's measurement date of December 31, 2016 but before
July 1, 2017 are reported as deferred outflows of resources 618,167 98,415 716,582
Removal of GASB 45 net OPEB obligation balance as of July 1, 2017 8,063,081 — 8,063,081
Effect of Adoption of GASB 75 (11,020,906)$ (3,038,244)$ (14,059,150)$
Fiscal Year 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 78
A segment is an identifiable activity reported as a stand-alone entity for which one or more revenue bonds are outstanding. A segment has a specifically identifiable revenue stream pledged in support of the revenue bonds and has related expenses, gains and losses and assets, deferred outflows, liabilities and deferred inflows that are required by external parties to be accounted for separately. The wastewater system is the only reportable segment that meets the requirements of GASB Statement No. 34, Basic Financial Statements - and Management’s Discussion and
Analysis - for State and Local Governments. The stormwater system is reported on for informational purposes only.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 79
Financial information as of and for the years ended June 30, 2019 and 2018 of the District’s Wastewater Segment is as follows:
Assets 2019 2018
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 32,084,339$ 12,544,280$
Investments 209,097,537 288,046,796
Sewer service charges receivable, less allowance of
$61,613,442 in 2019 and $58,289,381 in 2018 65,960,589 60,455,316
Unbilled sewer service charges receivable 31,773,363 29,140,850
Accrued income on investments 1,869,825 1,630,002
Other receivables, less allowance of $22,118 in 2019
and $52,120 in 2018 5,331,693 4,495,551
Supplies inventory 8,306,515 8,109,878
Total Unrestricted Current Assets 354,423,861 404,422,673
Restricted Current Assets
Other receivables 115,556 54,092
Total Restricted Current Assets 115,556 54,092
Total Current Assets 354,539,417 404,476,765
Non-Current Assets
Restricted Assets
Cash and cash equivalents 19,561,186 19,193,048
Investments 133,552,809 222,080,295
Long-term investments 45,067,528 66,231,790
Property taxes receivable, less allowance $0 for 2019
and $133 in 2018 (18,019) (16,200)
Accrued income on investments 193,262 232,053
Total Restricted Non-Current Assets 198,356,766 307,720,986
Other Assets
Notes receivable 11,156,415 11,814,529
Long-term investments 168,649,616 67,264,708
Total Other Assets 179,806,031 79,079,237
Capital Assets
Depreciable:
Treatment and disposal plant and equipment 1,277,635,246 1,276,275,567
Collection and pumping plant 2,092,478,890 1,966,893,455
General plant and equipment 82,305,964 79,666,689
3,452,420,100 3,322,835,711
Less: Accumulated depreciation 1,309,151,371 1,241,579,256
Net depreciable assets 2,143,268,729 2,081,256,455
Non-depreciable:
Land 66,853,796 66,103,288
Construction in progress 931,353,208 815,408,534
Net Capital Assets 3,141,475,733 2,962,768,277
Total Non-Current Assets 3,519,638,530 3,349,568,500
Total Assets 3,874,177,947 3,754,045,265
Deferred Outflows of Resources:
Bonds and notes payable-Deferred loss on refunding 11,342,745 12,099,160
Pension-related outflows 28,929,459 14,757,358
OPEB-related outflows 1,075,940 1,102,858
Total Deferred Outflows of Resources 41,348,144 27,959,376
WASTEWATER SEGMENT
STATEMENTS OF NET POSITION
June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 80
Liabilities 2019 2018
Current Liabilities-Payable From Unrestricted Assets
Contracts and accounts payable 36,091,535$ 34,518,350$
Deposits and accrued expenses 35,444,449 31,095,559
Retainage payable 15,855,232 13,893,951
Current portion of bonds and notes payable 52,603,763 50,942,663
Total Current Liabilities-Payable From Unrestricted Assets 139,994,979 130,450,523
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable — 265,865
Retainage payable 237,442 204,936
Total Current Liabilities-Payable From Restricted Assets 237,442 470,801
Total Current Liabilities 140,232,421 130,921,324
Non-Current Liabilities
Deposits and accrued expenses 7,352,522 7,329,985
Net pension liability 63,238,325 41,435,535
Total OPEB liability 20,846,404 20,871,199
Bonds and notes payable 1,617,916,402 1,642,233,069
Total Non-Current Liabilities 1,709,353,653 1,711,869,788
Total Liabilities 1,849,586,074 1,842,791,112
Deferred Inflows of Resources:
Pension-related inflows 3,702,250 5,147,399
OPEB-related inflows 743,324 —
Total Deferred Inflows of Resources 4,445,574 5,147,399
Net Position
Net investment in capital assets 1,574,725,932 1,486,430,468
Restricted for:
Debt service 58,262,631 55,329,147
Subdistrict construction and improvement 1,991,530 3,709,735
Unrestricted 426,514,350 388,596,780
Total Net Position 2,061,494,443$ 1,934,066,130$
June 30,
WASTEWATER SEGMENT
STATEMENTS OF NET POSITION (Continued)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 81
2019 2018
Operating Revenues
Sewer service charges 399,932,002$ 364,170,182$
Recovery of (provision for) doubtful sewer service charge accounts (4,360,646) (3,009,705)
Licenses, permits, and other fees 3,063,458 3,777,200
Other 2,474,310 3,355,085
Total Operating Revenues 401,109,124 368,292,762
Operating Expenses
Pumping and treatment 63,197,081 60,735,056
Collection system maintenance 29,309,082 29,266,441
Engineering 1,153,099 2,839,996
General and administrative 65,630,150 57,984,124
Water backup claims 5,435,759 1,548,048
Depreciation 73,522,926 71,366,228
Asset management 12,790,959 14,048,473
Total Operating Expenses 251,039,056 237,788,366
Operating Income 150,070,068 130,504,396
Non-Operating Revenues
Property taxes levied by the District (1,857) 2,565
Investment income 14,438,669 6,356,029
Rent and other income 301,446 253,799
Total Non-Operating Revenues 14,738,258 6,612,393
Non-Operating Expenses
Net loss on disposal and sale of capital assets 869,490 1,682,939
Non-recurring projects and studies 14,095,510 6,510,082
Interest expense 33,082,384 36,695,083
Total Non-Operating Expenses 48,047,384 44,888,104
Income Before Capital Grants And Contributions 116,760,942 92,228,685
Capital Grants And Contributions
Capital assets contributed 9,924,920 16,433,138
Grant revenue 742,451 1,278,558
Total Capital Grants And Contributions 10,667,371 17,711,696
Change In Net Position 127,428,313 109,940,381
Net Position - Beginning Of Year, As Previously Stated 1,934,066,130 1,835,146,655
Effect of Adoption of GASB 75 — (11,020,906)
Net Position - Beginning Of Year, As Restated 1,934,066,130 1,824,125,749
Net Position - End Of Year 2,061,494,443$ 1,934,066,130$
WASTEWATER SEGMENT
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 82
2019 2018
Cash Flows From Operating Activities
Received from customers 394,747,976$ 357,876,141$
Paid to employees for services (101,374,404) (96,464,294)
Paid to suppliers for goods and services (79,155,315) (70,486,503)
Net Cash Provided By Operating Activities 214,218,257 190,925,344
Cash Flows Provided By (Used In) Non-Capital Financing Activities
Taxes levied and collected 3,942 (930)
Cash Flows From Capital And Related Financing Activities
Proceeds from capital grants 130,670 1,634,250
Proceeds from issuance of debt 35,149,238 227,157,189
Premium on sale of bonds — 37,823,556
Principal paid on debt (50,942,662) (43,667,013)
Interest and fees paid on debt (65,117,717) (60,603,135)
Payments for capital assets (221,248,644) (225,481,370)
Proceeds from sale of capital assets 279,867 136,134
Build America Bond tax credit 1,630,662 1,624,563
Net Cash (Used In) Capital And Related Financing Activities (300,118,586) (61,375,826)
Cash Flows From Investing Activities
Purchase of investments (551,116,152) (672,970,851)
Proceeds from sale and maturity of investments 647,477,312 525,720,153
Investment income 9,214,193 6,387,181
Proceeds from rents 229,231 253,799
Net Cash (Used In) Investing Activities 105,804,584 (140,609,718)
Net Increase (Decrease) In Cash And Cash Equivalents 19,908,197 (11,061,130)
Cash And Cash Equivalents At Beginning Of Year 31,737,328 42,798,458
Cash And Cash Equivalents At End Of Year 51,645,525$ 31,737,328$
Ended June 30,
WASTEWATER SEGMENT
STATEMENTS OF CASH FLOWS
For The Years
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 83
Financial information as of and for the years ended June 30, 2019 and 2018 of the District’s Stormwater Segment is as follows:
Assets 2019 2018
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 1,218,671$ 590,710$
Investments 10,538,548 15,476,186
Sewer service charges receivable, less allowance of
$126,120 in 2019 and $140,514 in 2018 72,188 89,522
Unbilled sewer service charges receivable (227) (389)
Property taxes receivable, less allowance of $9,806 in 2019
and $22,544 in 2018 479,914 689,128
Accrued income on investments 57,979 39,317
Total Unrestricted Current Assets 12,367,073 16,884,474
Restricted Current Assets
Cash and cash equivalents 1,747,847 1,009,872
Investments 15,117,921 26,469,179
Total Restricted Current Assets 16,865,768 27,479,051
Total Current Assets 29,232,841 44,363,525
Non-Current Assets
Restricted Assets
Cash and cash equivalents 2,142,021 1,048,411
Investments 18,526,954 27,478,223
Long-term investments 27,952,964 13,102,425
Property taxes receivable, less allowance of $20,954 in 2019
and $45,320 in 2018 1,373,743 1,396,042
Accrued income on investments 343,103 242,425
Total Restricted Non-Current Assets 50,338,785 43,267,526
Other Assets
Long-term investments 8,755,677 3,758,732
Total Other Assets 8,755,677 3,758,732
Capital Assets
Depreciable:
Collection and pumping plant 657,467,608 645,451,046
General plant and equipment 17,012,385 17,713,702
674,479,993 663,164,748
Less: Accumulated depreciation 216,627,959 207,556,541
Net depreciable assets 457,852,034 455,608,207
Non-depreciable:
Land 7,420,788 7,158,677
Construction in progress 24,967,857 20,696,809
Net Capital Assets 490,240,679 483,463,693
Total Non-Current Assets 549,335,141 530,489,951
Total Assets 578,567,982 574,853,476
Deferred Outflows of Resources:
Pension-related outflows 5,308,811 2,575,499
OPEB-related outflows 170,387 175,579
Total Deferred Outflows of Resources 5,479,198 2,751,078
STORMWATER SEGMENT
STATEMENTS OF NET POSITION
June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 84
Liabilities 2019 2018
Current Liabilities-Payable From Unrestricted Assets
Contracts and accounts payable 6,684$ 9,337$
Deposits and accrued expenses 8,259,420 7,789,782
Retainage payable — 545
Total Current Liabilities-Payable From Unrestricted Assets 8,266,104 7,799,664
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable 801,529 834,980
Retainage payable 691,203 526,090
Total Current Liabilities-Payable From Restricted Assets 1,492,732 1,361,070
Total Current Liabilities 9,758,836 9,160,734
Non-Current Liabilities
Net pension liability 11,158,412 6,953,403
Total OPEB liability 3,317,991 3,322,773
Total Non-Current Liabilities 14,476,403 10,276,176
Total Liabilities 24,235,239 19,436,910
Deferred Inflows of Resources:
Pension-related inflows 638,866 917,586
OPEB-related inflows 143,362 —
Total Deferred Inflows of Resources 782,228 917,586
Net Position
Net investment in capital assets 488,793,056 482,309,582
Restricted for:
Subdistrict construction and improvement 67,159,444 70,539,618
Unrestricted 3,077,213 4,400,858
Total Net Position 559,029,713$ 557,250,058$
June 30,
STORMWATER SEGMENT
STATEMENTS OF NET POSITION (Continued)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 85
2019 2018
Operating Revenues
Sewer service charges (2,852)$ (4,810)$
Recovery of (provision for) doubtful sewer service charge accounts 11,399 19,557
Other 3,468 3,968
Total Operating Revenues 12,015 18,715
Operating Expenses
Collection system maintenance 16,307,809 15,519,041
Engineering 10,293,801 8,377,594
General and administrative 1,831,570 1,028,038
Water backup claims 164,660 9,337
Depreciation 10,116,917 9,960,114
Asset management 963,696 1,082,716
Total Operating Expenses 39,678,453 35,976,840
Operating Income (Loss) (39,666,438) (35,958,125)
Non-Operating Revenues
Property taxes levied by the District 34,109,476 33,746,367
Investment income 2,260,484 1,049,928
Total Non-Operating Revenues 36,369,960 34,796,295
Non-Operating Expenses
Net loss on disposal and sale of capital assets 101,335 150,969
Non-recurring projects and studies 1,533,080 2,786,276
Total Non-Operating Expenses 1,634,415 2,937,245
Income (Loss) Before Capital Contributions (4,930,893) (4,099,075)
Capital Contributions
Capital assets contributed 6,710,548 8,365,978
Total Capital Contributions 6,710,548 8,365,978
Change In Net Position 1,779,655 4,266,903
Net Position - Beginning Of Year, As Previously Stated 557,250,058 556,021,399
Effect of Adoption of GASB 75 — (3,038,244)
Net Position - Beginning Of Year, As Restated 557,250,058 552,983,155
Net Position - End Of Year 559,029,713$ 557,250,058$
STORMWATER SEGMENT
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 86
2019 2018
Cash Flows From Operating Activities
Received from customers 498,825$ (1,217,823)$
Paid to suppliers for goods and services (29,491,163) (28,718,597)
Net Cash (Used In) Operating Activities (28,992,338) (29,936,420)
Cash Flows Provided By Non-Capital Financing Activities
Taxes levied and collected 33,846,168 33,181,899
Cash Flows From Capital And Related Financing Activities
Payments for capital assets (9,979,589) (11,192,290)
Proceeds from sale of capital assets 51,479 34,444
Net Cash (Used In) Capital And Related Financing Activities (9,928,110) (11,157,846)
Cash Flows From Investing Activities
Purchase of investments (98,474,024) (101,055,599)
Proceeds from sale and maturity of investments 104,946,688 105,074,847
Investment income 1,061,162 1,227,558
Net Cash Provided By (Used In) Investing Activities 7,533,826 5,246,806
Net Increase (Decrease) In Cash And Cash Equivalents 2,459,546 (2,665,561)
Cash And Cash Equivalents At Beginning Of Year 2,648,993 5,314,554
Cash And Cash Equivalents At End Of Year 5,108,539$ 2,648,993$
Ended June 30,
STORMWATER SEGMENT
STATEMENTS OF CASH FLOWS
For The Years
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 87
15. Tax Abatements
Tax abatements, as defined by Governmental Accounting Standards Board (“GASB”) Statement No. 77, Tax Abatement Disclosures (“GASB Statement No. 77”), are agreements between a government and an individual or entity in which the government promises to forgo tax revenues and the individual or entity promises to subsequently take a specific action that contributes to economic development or otherwise benefits the government or its citizens. This Statement requires disclosure of tax abatement information about (1) a reporting government’s own tax abatement agreements and (2) those that are entered into by other governments and that reduce the reporting government’s tax revenues. Since the District does not and has not entered into tax abatement agreements directly with any individuals or entities, the following estimates are from tax abatements entered into by other governments, specifically the county and municipalities within the District’s boundary, that have reduced the District’s tax revenues. Tax Abatements Entered Into By St. Louis County and Cities Located In St. Louis County The District’s property tax revenues were reduced through four programs that are utilized by cities located in St. Louis County and the County itself. Summaries of these four programs are as follows: Enhanced Enterprise Zone: provides real property tax abatements to new or expanding businesses in certain specified geographic areas designated by local governments and certified by the Missouri Department of Economic Development. Industrial Development Bonds: finances industrial development projects for private corporations, partnerships and individuals. Land Clearance for Redevelopment Authority: assists with the redevelopment of blighted or insanitary areas for residential, recreational, commercial, industrial or public uses. Urban Redevelopment Corporations: provides real property tax abatements to encourage the redevelopment of blighted areas by an eligible city or county.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 88
The amount of the District’s tax revenues that were abated by the county and cities initiating the programs are reported in the following tables.
Land
Enhanced Industrial Clearance for Urban
St. Louis County Enterprise Development Redevelopment Redevelopment Total Tax
or City Zones Bonds Authority Corporations Abatements
St Louis County —$ 121,961$ —$ 3,176$ 125,137$
Bellerive — 7,094 — — 7,094
Bridgeton — 768 — — 768
Brentwood — — — 7,652 7,652
Clayton — 21,044 — — 21,044
Edmundson — — — 9,752 9,752
Eureka — 198 — — 198
Ferguson — 3,673 — 587 4,260
Hazelwood 2,264 947 — 40,501 43,712
Kinloch 17,022 — — 24,092 41,114
Jennings — 274 — — 274
Maplewood — — — 8,349 8,349
Maryland Heights — — — 3,818 3,818
Normandy — — — 3,008 3,008
Overland — — — 4,631 4,631
Richmond Heights — — — 4,928 4,928
Rock Hill — — — 2,658 2,658
Sunset Hills — — — 551 551
University City — — 6,827 112 6,939
Wellston — — — 505 505
Total Tax Abatements 19,286$ 155,959$ 6,827$ 114,320$ 296,392$
For the Year Ended June 30, 2019
Land
Enhanced Industrial Clearance for Urban
St. Louis County Enterprise Development Redevelopment Redevelopment Total Tax
or City Zones Bonds Authority Corporations Abatements
St Louis County —$ 110,522$ —$ 14,519$ 125,041$
Bellerive — 9,107 — — 9,107
Berkeley 408 — — — 408
Bridgeton — 62 — — 62
Brentwood — — — 7,585 7,585
Clayton — 20,872 — — 20,872
Edmundson — — — 8,911 8,911
Eureka — 199 — — 199
Ferguson — 3,711 — 582 4,293
Hazelwood 4,685 1,951 — 11,377 18,013
Kinloch 17,090 — — 5,571 22,661
Jennings — 347 — — 347
Maryland Heights — — — 473 473
Normandy — — — 2,979 2,979
Overland — — — 4,561 4,561
Richmond Heights — — — 4,888 4,888
Rock Hill — — — 2,578 2,578
Sunset Hills — — — 546 546
University City — — 6,726 112 6,838
Wellston — — — 501 501
Total Tax Abatements 22,183$ 146,771$ 6,726$ 65,183$ 240,863$
For the Year Ended June 30, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 89
Tax Abatements Entered Into By St. Louis City The City of St. Louis offers a real estate tax abatement program as a development tool designed to assist developers, businesses and individuals with renovation and new construction projects. The tax abatement freezes the tax assessment in improvements to property at the pre-development level. To be eligible for tax abatement, a significant investment must be made in the property; generally either new construction on vacant land or gut rehabilitation of an existing building. The application must be made before construction begins and the usual term for tax abatement is five to ten years. The amount of the District’s tax revenues calculated at the District’s tax rates of $.1170 and $.1159 per $100 of assessed value for fiscal 2019 and 2018, respectively, that were abated by St. Louis City are reported in the following tables.
Reduced
Unabated Tax Abated Tax Tax
St. Louis City Values Revenue Values Revenue Revenue
Residential 170,087,710$ 199,003$ 35,565,190$ 41,611$ 157,392$
Commercial 331,824,840 388,235 126,055,310 147,485 240,750
Total 501,912,550$ 587,238$ 161,620,500$ 189,096$ 398,142$
For the Year Ended June 30, 2019
Reduced
Unabated Tax Abated Tax Tax
St. Louis City Values Revenue Values Revenue Revenue
Residential 140,187,310$ 162,477$ 33,987,320$ 39,391$ 123,086$
Commercial 328,519,340 380,754 117,961,490 136,717 244,037
Total 468,706,650$ 543,231$ 151,948,810$ 176,108$ 367,123$
For the Year Ended June 30, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 90
Tax Increment Financing Utilized By St. Louis County, Cities Located in St. Louis County and St. Louis City Missouri’s Real Property Tax Increment Allocation Redevelopment Act enables cities to finance certain redevelopment costs with the revenue generated from (i) payments in lieu of real estate taxes, as measured by the net increase in assessed valuation resulting from redevelopment and (ii) a portion of the increase in other local tax revenue associated with new economic activity. When a tax increment financing (“TIF”) plan is adopted, real estate taxes in the redevelopment are frozen at their current level. By applying the real estate tax rate of all taxing districts having taxing power within the redevelopment area to the increased assessed valuation resulting from redevelopment, a tax “increment” is produced. The real estate tax increments are referred to as payments in lieu of taxes, or “PILOTs”, and are deposited in a special allocation fund. The estimated TIF incremental values and the District’s net reduced tax revenue resulting from the TIFs adopted in St. Louis County and the cities located in the County and adopted in the City of St. Louis are as follows:
TIF TIF
Incremental Reduced Incremental Reduced
St. Louis County or City Values Tax Revenues Values Tax Revenues
St. Louis County and Cities Located
in St. Louis County 480,084,710$ 561,699$ 555,120,680$ 643,385$
St. Louis County PILOTs Received — (5,307) — (41,338)
St. Louis City 1,308,525,243 325,396 1,311,535,243 329,770
St. Louis City PILOTs Received — (83,074) — (5,268)
Total 1,788,609,953$ 798,714$ 1,866,655,923$ 926,549$
June 30, 2019
For the Years Ended
June 30, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 91
In summary, the District’s total tax revenues reduced during fiscal 2019 and 2018 as a result of the programs of other governments are as follows:
16. Subsequent Events In preparing these financial statements, the District has evaluated events and transactions for potential recognition or disclosure through October 9, 2019, the date the financial statements were available to be issued. On July 9, 2019, the IRS announced a decrease in the sequestration rate for refundable credit amounts submitted on IRS Form 8038-CP for qualified bonds from 6.2% to 5.9%. This will be effective for all refund payments processed from October 1, 2019 to September 30, 2020. Since the District participates in Build America Bonds, the District will receive 94.1% of the amount requested during its fiscal year 2020. The District received 93.8% of the amount requested during fiscal year 2019. On September 24, 2019, the State of Missouri Direct Loan Program issued to the District an amount totaling $23,952,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues. The District’s interest rate is 0.98% and is payable in semiannual installments at varying amounts through July 1, 2042.
Reduced Reduced
St. Louis County or City Tax Revenues Tax Revenues
St. Louis County and Cities Located
in St. Louis County - Tax Abatements 296,392$ 240,863$
St. Louis City - Tax Abatements 398,142 367,123
St. Louis County and Cities Located
in St. Louis County - TIFs 556,392 602,047
St. Louis City - TIFs 242,322 324,502
Total Reduced Tax Revenues 1,493,248$ 1,534,535$
For the Years Ended
June 30, 2019 June 30, 2018
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 92
As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account and deposits the approved amount in a bond reserve fund. The District repays the loan at an interest rate of 0.98% based on the amount that has been borrowed. As of the date of this report, the outstanding loan balance was $174,712. The payment requirements to maturity will be determined after the debt is fully issued.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 93
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS
June 30, 2019
Calendar Year Ending December 31,
2018 2017 2016 2015 2014
Total Pension Liability
Service cost 5,239$ 5,157$ 5,107$ 5,253$ 5,409$
Interest on total pension liability 22,307 22,079 20,609 20,199 19,901
Effect of plan changes — — — — —
Effect of economic/demographic gains or (losses)(2,042) (4,729)(883) (4,577) (3,668)
Effect of assumption changes or inputs — 1,667 11,665 — 6,500
Benefit payments (16,912) (15,858) (15,261) (14,475) (13,387)
Net Change in Total Pension Liability 8,592 8,316 21,237 6,400 14,755
Total Pension Liability - Beginning 326,365 318,049 296,812 290,412 275,657
Total Pension Liability - Ending (a)334,957 326,365 318,049 296,812 290,412
Plan Fiduciary Net Position
Employer contributions 12,494 12,328 10,146 10,059 10,676
Member contributions — — — — —
Investment income net of investment expenses (12,998) 30,496 11,913 (1,888) 6,980
Benefit payments (16,912) (15,858) (15,261) (14,475) (13,387)
Administrative expenses — — — — —
Net Change in Plan Fiduciary Net Position (17,416) 26,966 6,798 (6,304) 4,269
Plan Fiduciary Net Position - Beginning 277,976 251,010 244,212 250,516 246,247
Plan Fiduciary Net Position - Ending (b)260,560 277,976 251,010 244,212 250,516
Net Pension Liability - Ending = (a) - (b)74,397$ 48,389$ 67,039$ 52,600$ 39,896$
Fiduciary Net Position as a % of Total Pension Liability 77.79% 85.17% 78.92% 82.28% 86.26%
Covered Payroll 39,437$ 41,869$ 42,055$ 43,345$ 44,664$
Net Pension Liability as a % of Covered Payroll 188.65% 115.57% 159.41% 121.35% 89.32%
Notes to Schedule:
1. Changes of Assumptions. The actuarial discount rate and the long-term expected rate of return were both reduced to
6.90% in 2017 while both rates were 7.00% in all prior years. In 2016, the amount reported as change of assumptions
resulted from changing to the RP-2014 Mortality for Employees and Healthy Annuitants and Disabled Mortality tables,
while the 2014 change resulted primarily from adjustments to the discount rate and employee rate increases.
2. This schedule will ultimately present ten years of information when available.
Schedule of Changes in Net Pension Liability and Related Ratios
In (000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 94
REQUIRED SUPPLEMENTARY INFORMATION (Continued)
SCHEDULE OF EMPLOYER CONTRIBUTIONS TO EMPLOYEES’ PENSION
PLAN
June 30, 2019
Schedule of Employer Contributions
To Employees' Pension Plan
F iscal Year Actuarially Contribution Contribution
Ending Determined Annual Deficiency Covered as a % of
June 30,Contribution Contribution (Excess)Payroll Covered Payroll
2015 10,359,139$ 10,359,139$ —$ 46,584,987$ 22.24%
2016 10,096,075 10,096,075 — 44,996,070 22.44%
2017 11,236,828 11,236,828 — 43,818,487 25.64%
2018 12,411,005 12,411,005 — 42,751,918 29.03%
2019 12,609,689 12,609,689 — 38,166,848 33.04%
Notes to Schedule:
1. This schedule will ultimately present ten years of information when available.
2. Valuation Date: Actuarially determined contribution rates are calculated as of January 1 of the fiscal year in which
the contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial Cost Method:Entry Age Normal
Amortization Method:Level dollar layered, 20 year periods
Asset Valuation Method:3-year smoothing period
Inflation:2.50%
Salary Increases:4.25%, average, including inflation
Investment Rate of Return:6.90%, net of pension plan investment expense, including inflation for 2018
7.00%, net of pension plan investment expense, including inflation for all
years prior to 2018
Mortality:In the 2019, 2018 and 2017 actuarial valuations, assumed life expectancies were
calculated using the RP-2014 Employee and Healthy Annuitant Mortality
Table (with generational projections from 2006 based on the most current
MP improvement scale which is updated annually) and the RP-2014 Disabled
Mortality Table. In the 2016 and 2015 actuarial valuations, assumed life
expectancies were calculated using the RP-2000 Healthy Annuitant Mortality
Table and the RP-2000 Disabled Mortality Table.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 95
REQUIRED SUPPLEMENTARY INFORMATION (Continued)
SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY
June 30, 2019
Calendar Year Ending December 31,
2018 2017
Total OPEB Liability
Service cost 1,781$ 1,622$
Interest on total OPEB liability 865 895
Changes of assumptions or other inputs (987) 438
Benefit payments (1,689)(1,600)
Net change in total OPEB liability (30)1,355
Total OPEB Liability - Beginning 24,194 22,839
Total OPEB Liability - Ending 24,164$ 24,194$
Notes to Schedule:
1. Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period.
The following are the discount rates used in each period:
2018 4.10%
2017 3.44%
2016 3.78%
2. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75
to pay related benefits.
3. This schedule will ultimately present ten years of information when available.
4. Contributions to the OPEB plan are not based on a measure of pay so accordingly, no measure of payroll
is presented.
In (000's)
Schedule of Changes in Total OPEB Liability
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.
The Metropolitan St. Louis Sewer District
Statistical Section This part of the District’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health.
Contents
Page
Financial Trends These schedules contain trend information to help the reader understand how the District’s financial performance and well-being have changed over time .......................................... 96 – 97
Revenue Capacity These schedules contain information to help the reader assess the District’s most significant local revenue sources, the user charge ...................................................................................... 98 – 105
Debt Capacity These schedules present information to help the reader assess the affordability of the District’s current levels of outstanding debt and the District’s ability to issue additional debt in the future ............................................................................. 106 – 108
Demographic And Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the District’s financial activities take place ........................................................................................... 109 – 111
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the District’s financial report relates to the services the District provides and the activities it performs ............................................... 112 – 113
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 96
2010 2011 2012 2013 2014
Net Position
Net investment in
capital assets 1,868,974$ 1,915,233$ 1,928,200$ 1,877,692$ 1,845,394$
Restricted 80,782 94,926 106,693 111,066 142,764
Unrestricted 257,894 186,860 175,010 251,300 279,794
Total Net Position 2,207,650$ 2,197,019$ 2,209,903$ 2,240,058$ 2,267,952$
2015 a 2016 a 2017 a 2018 a 2019 a
Net Position
Net investment in
capital assets 1,805,453$ 1,809,386$ 1,876,249$ 1,968,740$ 2,063,519$
Restricted 142,445 136,547 135,259 129,579 127,414
Unrestricted 330,218 381,124 379,660 392,997 429,591
Total Net Position 2,278,116$ 2,327,057$ 2,391,168$ 2,491,316$ 2,620,524$
a Years 2015 to current include a change in the calculation of the net position components which is
not reflected in years prior.
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(000's)
Fiscal Year
Fiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 97
Non-operating Income/(Loss) Capital Change
Fiscal Operating Operating Operating Revenue/before Capital Grants and in Net
Year Revenues Expenses Income/(Loss)(Expenses)Contributions Contributions Position
2010 246,587,174$ 228,778,874$ 17,808,300$ (17,560,670)$ 247,630$ 19,786,012$ 20,033,642$
2011 219,444,257 244,503,099 (25,058,842) 4,329,032 (20,729,810) 10,098,552 (10,631,258)
2012 225,999,720 216,307,965 9,691,755 1,370,329 11,062,084 9,658,857 20,720,941
2013 241,946,337 230,158,434 11,787,903 832,056 12,619,959 17,534,919 30,154,878
2014 265,772,853 241,297,635 24,475,218 (3,682,863) 20,792,355 7,102,480 27,894,835
2015 290,386,589 256,521,148 33,865,441 (13,074,700) 20,790,741 12,996,754 33,787,495
2016 319,857,731 273,095,705 46,762,026 (9,858,327) 36,903,699 12,036,784 48,940,483
2017 333,490,989 275,077,675 58,413,314 (3,916,119) 54,497,195 9,613,746 64,110,941
2018 368,311,477 273,765,206 94,546,271 (6,416,661) 88,129,610 26,077,674 114,207,284
2019 401,121,139 290,717,509 110,403,630 1,426,419 111,830,049 17,377,919 129,207,968
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 98
OPERATING REVENUES BY SOURCE
LAST TEN FISCAL YEARS
Licenses,
Fiscal Sewer Service Permits, and
Year Charges, Net Other Fees Other
2010 241,495,357$ 3,084,552$ 2,007,265$ 246,587,174$
2011 214,653,310 2,976,253 1,814,694 219,444,257
2012 220,765,581 2,683,823 2,550,316 225,999,720
2013 235,980,065 2,731,497 3,234,775 241,946,337
2014 257,343,344 6,562,607 1,866,902 265,772,853
2015 282,270,193 6,656,831 1,459,565 290,386,589
2016 302,011,893 3,620,240 14,225,598 319,857,731
2017 328,359,526 4,036,362 1,095,101 333,490,989
2018 361,175,224 3,777,200 3,359,053 368,311,477
2019 395,579,903 3,063,458 2,477,778 401,121,139
Total Operating
Revenues
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 99
Fiscal Employment Materials and Contracted Chemical
Year Costs Utilities Supplies Services Supplies
2010 84,049,800$ 12,355,232$ 11,331,222$ 33,342,027$ 1,478,605$
2011 84,284,762 14,148,746 11,329,023 44,011,352 1,415,826
2012 87,098,037 12,634,274 12,737,240 26,056,481 1,355,113
2013 91,960,314 14,534,075 12,249,397 33,670,887 1,455,725
2014 93,542,222 14,986,387 11,097,857 36,875,093 2,440,843
2015 96,759,245 16,499,964 12,651,008 41,500,864 3,964,165
2016 102,458,574 16,624,434 11,838,551 48,450,272 3,498,796
2017 106,441,619 16,783,922 12,170,738 46,502,512 3,569,449
2018 105,555,411 16,154,516 11,005,087 48,390,986 2,501,712
2019 114,570,104 16,896,093 12,446,227 52,496,518 3,667,207
Fiscal
Year Insurance Other
2010 3,196,628$ 29,013,584$ 174,767,098$ 54,011,776$ 228,778,874$
2011 2,557,850 19,901,275 177,648,834 66,854,265 244,503,099
2012 2,470,343 7,214,413 149,565,901 66,742,064 216,307,965
2013 2,696,416 3,561,780 160,128,594 70,029,840 230,158,434
2014 2,737,491 5,530,535 167,210,428 74,087,207 241,297,635
2015 2,791,622 3,713,021 177,879,889 78,641,259 256,521,148
2016 3,218,041 3,023,288 189,111,956 83,983,749 273,095,705
2017 3,293,267 5,121,777 193,883,284 81,194,391 275,077,675
2018 3,371,910 5,459,242 192,438,864 81,326,342 273,765,206
2019 3,819,449 3,182,068 207,077,666 83,639,843 290,717,509
Note: Balances in all years have been restated to accurately reflect expenses in the appropriate
category. The majority of the changes are increases to Employment Costs and Other and decreases to
Materials and Supplies and Contracted Services.
OPERATING EXPENSES
LAST TEN FISCAL YEARS
Subtotal,
Expenses
before
Depreciation
Total
Operating
ExpensesDepreciation
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 100
2010 2011 2012 2013 2014
Non-operating revenues
Property taxes levied by the District 1,401,100$ 27,125,451$ 24,604,173$ 26,016,135$ 27,450,319$
Investment income 6,553,760 3,847,324 2,407,485 1,056,966 2,966,549
Rent and other income 265,004 442,968 294,591 293,159 302,506
Total non-operating revenues 8,219,864 31,415,743 27,306,249 27,366,260 30,719,374
Non-operating expenses
Interest expense 13,189,283 7,971,088 16,365,309 21,062,474 25,661,127
Net loss on disposal and sale
of capital assets 2,719,163 3,485,952 3,162,723 795,527 5,248,443
Non-recurring projects and studies 9,872,088 10,800,843 6,402,888 4,676,203 3,492,667
Legal claims — 4,828,828 5,000 — —
Total non-operating expenses 25,780,534 27,086,711 25,935,920 26,534,204 34,402,237
Net non-operating revenue (expense)(17,560,670)$ 4,329,032$ 1,370,329$ 832,056$ (3,682,863)$
2015 2016 2017 2018 2019
Non-operating revenues
Property taxes levied by the District 24,764,324$ 25,671,058$ 32,458,054$ 33,748,932$ 34,107,619$
Investment income 3,000,591 4,635,866 2,902,624 7,405,957 16,699,153
Rent and other income 37,321 102,865 106,562 253,799 301,446
Total non-operating revenues 27,802,236 30,409,789 35,467,240 41,408,688 51,108,218
Non-operating expenses
Interest expense 27,138,546 28,943,200 31,250,777 36,695,083 33,082,384
Net loss on disposal and sale
of capital assets 1,420,902 324,513 673,044 1,833,908 970,825
Non-recurring projects and studies 12,317,488 11,000,403 7,459,538 9,296,358 15,628,590
Total non-operating expenses 40,876,936 40,268,116 39,383,359 47,825,349 49,681,799
Net non-operating revenue (expense)(13,074,700)$ (9,858,327)$ (3,916,119)$ (6,416,661)$ 1,426,419$
NON-OPERATING REVENUES AND EXPENSES
LAST TEN FISCAL YEARS
Fiscal Year
Fiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 101
Type of Monthly Charge Unmetered c Residential c Non-Residential
Wastewater User Charge
Base Charge 23.83$ 23.83$ 23.83$
Compliance Charge a
Tier 1 — — 3.05
Tier 2 — — 60.89
Tier 3 — — 133.96
Tier 4 — — 197.91
Tier 5 — — 258.79
Volume Charges
per Ccf b — 4.40 4.40
per room 2.61 — —
per water closet 9.70 — —
per bath 8.08 — —
per separate shower 8.08 — —
Extra Strength Surcharges a
Suspended Solids ("SS") over 300 milligrams per liter — — 277.03
Biochemical Oxygen Demand ("BOD") over 300 — — 691.50
milligrams per liter
Chemical Oxygen Demand ("COD") over 600 milligrams — — 345.76
per liter
Notes:
a Applicable only to non-residential customers, Extra Strength Surcharges priced per ton
b Ccf = Hundred cubic feet
c User charges for certain low income residential users will be 50 percent of the regular user charge
Source: Finance Department
USER CHARGE RATES
As Of June 30, 2019
Metered
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 102
Fiscal
Year
Wastewater
Charges Billed1
Wastewater
Charges Collected2
Collections as a %
of Wastewater
Charges Billed
2010 204,248,506$ 198,138,619$ 97.01%
2011 213,503,732 203,520,769 95.32%
2012 222,425,957 217,396,623 97.74%
2013 233,882,795 233,877,875 99.99%
2014 245,555,628 241,549,548 98.37%
2015 279,555,881 275,049,684 98.39%
2016 300,803,084 299,932,808 99.71%
2017 326,663,167 322,829,334 98.83%
2018 359,628,200 351,107,233 97.63%
2019 394,518,583 386,033,225 97.85%
Note: The table shows the amount of wastewater user charge revenues which were
billed and collected by the District for the last ten fiscal years.
1 Wastewater Charges Billed includes wastewater user charge revenues billed and
accrued for the year.
2 Wastewater Charges Collected includes wastewater user charge revenues collected
for the current year and previous years billings.
USER CHARGE REVENUES
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 103
2010 a 2011 b 2012 2013 c 2014
Residential:
Single-Family/Unit 3 351.12$ 1 333.60$ 1 347.64$ 379.56$ 421.08$
Multi-Family/Unit 305.04 285.12 296.28 324.12 360.36
Commercial/Industrial:
Service Charge/Unit 2 486.60 507.00 525.60 478.56 412.56
Sanitary Sewer Usage Charge per Ccf 1.92 2.02 2.11 2.28 2.50
Storm Sewer Usage Charge/100 sq. feet of impervious area 0.14 — — — —
Extra Strength Surcharges:
SS over 300 parts per million/ton 218.90 222.62 231.35 231.35 231.35
BOD over 300 parts per million/ton 551.52 596.72 620.14 620.14 620.14
COD over 600 parts per million/ton 275.76 298.36 310.07 310.07 310.07
2015 2016 2017 d 2018 2019
Residential:
Single-Family/Unit 3 434.76$ 491.52$ 535.08$ 591.72$ 602.76$
Multi-Family/Unit 434.04 490.80 492.00 544.08 602.76
Commercial/Industrial:
Service Charge/Unit 2 348.12 296.80 336.69 363.53 395.42
Sanitary Sewer Usage Charge per Ccf 2.82 3.21 3.59 3.97 4.40
Storm Sewer Usage Charge/100 sq. feet of impervious area — — — — —
Extra Strength Surcharges:
SS over 300 parts per million/ton 244.03 251.88 262.00 269.07 277.03
BOD over 300 parts per million/ton 620.14 632.38 654.00 671.63 691.50
COD over 600 parts per million/ton 310.07 316.19 327.00 335.82 345.76
Notes:
1 Years 2009-2010 saw an impervious rate charge that averaged $36 per year per customer. This was discontinued in 2011.
2 Service Charge/Unit for Commercial/Industrial is calculated by using the sum of annualized base charge and compliance charge.
Starting FY 2013, MSD implemented 5-tier Compliance Charge Rate Model, so the Service Charge/Unit is based on calculated weighted
average compliance charge. FY 2013, FY 2014 & FY 2015 Service Charge/Unit were adjusted to reflect the weighted average compliance
charge calculations. Prior to FY 2013, there was only one tier compliance charge.
3 Based on average usage of a typical single-family during the fiscal year listed.
a Ordinance 12754, effective July 1, 2009, changed wastewater rates.
b Ordinance 13021, effective July 1, 2010, changed wastewater rates through FY 2012.
c Ordinance 13402, effective July 1, 2012, changed wastewater rates through FY 2016.
d Ordinance 14395, effective July 1, 2016, changed wastewater rates through FY 2020.
Source: Finance Department
SEWER USER CHARGES (COMPOSITE-ANNUAL)
LAST TEN FISCAL YEARS
Fiscal Year
Fiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 104
Single-Multi-
Fiscal Family Family Non-Total
Year Residential Residential Residential Accounts
2010 387,670 50,867 31,939 470,476 a
2011 362,739 43,471 24,702 430,912 b
2012 360,354 41,648 24,568 426,570
2013 359,243 41,117 24,441 424,801
2014 358,928 40,951 24,297 424,176
2015 359,317 41,131 24,389 424,837
2016 356,926 41,585 24,001 422,512
2017 360,534 41,697 24,253 426,484
2018 360,957 41,355 24,296 426,608
2019 361,288 41,288 24,095 426,671
Source: Finance Department
a Due to the implementation of the impervious area charge in 2008, approximately
46,000 additional stormwater only accounts were billed each month. This charge
was challenged and a court decision was entered on 7/9/10. Based on that decision
the impervious charge was discontinued in FY 2011.
b The number of accounts were revised as stormwater accounts were underreported.
Note: Total accounts listed above are as of June 30 for each fiscal year listed.
NUMBER OF CUSTOMERS BY TYPE
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 105
Customer Amount %
InBev Anheuser-Busch 5,380,744$ 1.36%
City of St. Louis 2,626,558 0.67%
Washington Unversity 2,109,156 0.53%
Sigma-Aldrich 1,674,339 0.42%
The Boeing Company 1,251,265 0.32%
Jost Real Estate LLC 1,085,769 0.27%
BJC Health System 1,036,583 0.26%
St Louis University 1,033,565 0.26%
Missouri-American Water Co.1,015,558 0.26%
GKN Aerospace N America Inc.891,863 0.23%
Subtotal (10 largest)18,105,400 4.58%
Balance from other customers 377,474,503 95.42%
Grand totals 395,579,903$ 100.00%
Customer Amount %
Anheuser-Busch 5,518,959$ 2.29%
Washington University 1,309,287 0.54%
City of St Louis 1,266,572 0.52%
Mallinckrodt Inc 1,250,530 0.52%
Boeing Co.667,443 0.28%
Zoological Gardens 597,152 0.25%
Sigma-Aldrich 512,958 0.21%
BJC Health System 512,642 0.21%
Sensient Colors Inc.462,261 0.19%
Cott Beverages Inc 438,501 0.18%
Subtotal (10 largest)12,536,305 5.19%
Balance from other customers 228,959,052 94.81%
Grand totals 241,495,357$ 100.00%
User Charges
TEN LARGEST CUSTOMERS
CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2019
User Charges
Fiscal Year 2010
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 106
Unamortized
Fiscal Subordinate Capital Premium, Net
Year Senior Subordinate Direct Loans Lease of Discount Amount Per Capita
2010 342,370,000$ 224,505,000$ 31,017,371$ 7,263,687$ 1,457,910$ 606,613,968$ 446$ 1.00
2011 340,590,000 212,655,000 25,259,899 6,095,981 862,654 585,463,534 431 0.97
2012 390,880,000 200,692,500 63,727,722 3,096,139 5,805,206 664,201,567 484 1.09
2013 594,715,000 188,600,000 93,751,658 — 56,252,401 933,319,059 660 1.45
2014 740,655,000 184,075,000 116,090,820 — 82,274,845 1,123,095,665 852 1.86
2015 736,775,000 171,455,000 148,279,465 — 78,591,961 1,135,101,426 860 1.83
2016 860,460,000 158,765,000 184,141,916 — 112,035,478 1,315,402,394 997 2.09
2017 995,175,000 145,410,000 210,851,827 — 124,465,181 1,475,902,008 1,127 2.33
2018 1,167,225,000 131,810,000 227,240,106 — 166,900,626 1,693,175,732 1,297 2.70
2019 1,145,131,480 117,840,000 247,692,802 — 159,855,883 1,670,520,165 1,285 2.65
Notes:
Calculation of "Per Capita" for 2011 through 2013 is based on estimated population levels.
Calculation of "As a Share of Personal Income" for 2011 through 2013 is based on estimated income levels.
In FY 2012, a decision was made to discontinue considering SRF receivable amounts as liabilities. The liability is now recorded when the funds are received.
Sources: Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce, and the U.S. Census Bureau
Income (%)
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Total
Revenue Bonds As a Share
of Personal
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 107
Amount of Debt Percentage of Debt
within within
Governmental Unit Debt Outstanding District Boundary District Boundary
City of St. Louis 74,565,000$ 74,565,000$ 100.0%
St. Louis County 87,375,000 86,676,000 99.2
Municipalities 125,162,376 122,587,376 97.9
City of St. Louis School District 231,121,477 231,121,477 100.0
St. Louis County School Districts 1,621,799,535 1,602,981,175 98.8
Fire Districts 133,413,236 124,365,407 93.2
2,273,436,624$ 2,242,296,435 98.6%
Total Direct Debt 1,670,520,165
Total Direct and Overlapping Debt 3,912,816,600$
Sources:
City of St. Louis, Office of Comptroller
St. Louis County, Department of Revenue
St. Louis Public Schools, Financial/Treasurer Office
Missouri Department of Education, School Finance
Polled Governments
Polled Fire Districts
Note: Although the District comprises all of the St. Louis City and most of St. Louis County, it does not entirely
match the County's boundaries. The calculation of overlapping debt is based on the percentage that a political
jurisdiction's territory lies within the District's territory. These percentages are weighted against the debt
outstanding thus providing the amount of debt within District Boundary.
COMPUTATION OF OVERLAPPING DEBT
As Of June 30, 2019
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 108
Less:
Operating
Expenses
(excluding
Non-depreciation, Net
Fiscal Operating operating Gross GASB 68 &Available
Year Revenues Revenues Revenues GASB 75)Revenues
2010 204,697,929$ 4,908,296$ 209,606,225$ 145,598,505$ 64,007,720$ 2011 217,011,360 3,202,219 220,213,579 160,572,145 59,641,434 2012 224,882,086 2,058,300 226,940,386 135,232,302 91,708,084 2013 240,597,715 956,664 241,554,379 146,372,419 95,181,960 2014 264,422,401 2,670,333 267,092,734 153,221,914 113,870,820 2015 288,835,877 2,555,654 291,391,531 163,311,194 128,080,337 2016 318,463,297 3,894,305 322,357,602 168,258,133 154,099,469 2017 333,469,677 2,456,677 335,926,354 168,835,676 167,090,678 2018 368,292,762 6,356,029 374,648,791 163,026,313 211,622,478 2019 401,109,124 14,438,669 415,547,793 170,585,143 244,962,650
Fiscal Coverage
Year Principal Interest Total Ratio
2010 13,022,500$ 20,187,151$ 33,209,651$ 1.9 2011 14,576,800 20,140,021 34,716,821 1.7
2012 16,540,200 22,517,473 39,057,673 2.3 2013 18,749,700 31,191,190 49,940,890 1.9 2014 10,037,200 34,399,261 44,436,461 2.6 2015 20,252,200 41,596,192 61,848,392 2.1 2016 29,588,000 44,171,592 73,759,592 2.1 2017 38,026,700 51,333,869 89,360,569 1.9 2018 42,716,800 57,682,698 100,399,498 2.1 2019 50,907,800 63,224,915 114,132,715 2.1
Fiscal Coverage
Year Principal Interest Total Ratio
2010 1,595,000$ 13,396,341$ 14,991,341$ 4.3 2011 1,780,000 15,467,269 17,247,269 3.5 2012 1,960,000 16,488,587 18,448,587 5.0 2013 3,805,000 24,451,656 28,256,656 3.4 2014 4,060,000 30,161,408 34,221,408 3.3 2015 3,880,000 34,472,415 38,352,415 3.3 2016 10,170,000 36,211,319 46,381,319 3.3 2017 15,285,000 42,897,077 58,182,077 2.9 2018 18,365,000 49,558,285 67,923,285 3.1 2019 22,355,000 55,586,363 77,941,363 3.1
Note: The methodology used to calculate the net available revenues and the coverage ratio was adjusted during fiscal
year 2013 and all previous years were restated for comparative purposes. The 2013 change in methodology consisted of
removing agency fees, previously reflected as a deduction from net available revenues, and now combining them with
interest in the debt service section. Additionally, in fiscal years 2010 and 2011, the change in methodology consisted of
removing the Build America Bond Tax Credit from the pledged revenue section and reapplying the credit to interest
expense in the debt service section. This was made to ensure consistency with fiscal years 2012 and 2013. In fiscal year
2017 the methodology was changed to exclude GASB non-cash transactions from the debt service coverage calculation.
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
Senior and Subordinate Debt Service
Senior Debt Service
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 109
Per
Personal Capita Total
Fiscal Income Personal Labor Number of
Year Populations (millions)Income City County State Force Households (1)
2010 1,356,289 60,792 44,822 12.3 9.4 9.3 682,165 551,388
2011 1,357,035 60,420 44,523 11.8 8.9 9.0 692,071 546,744
2012 1,360,085 60,283 44,323 9.7 6.9 7.0 672,945 546,744
2013 1,328,610 60,399 45,460 10.5 7.3 7.1 665,086 543,851
2014 1,318,610 60,968 46,237 9.6 6.9 6.6 666,200 543,991
2015 1,319,295 61,910 46,926 7.1 5.5 5.8 703,317 543,945
2016 1,319,047 62,983 47,749 5.9 4.6 4.9 718,821 542,223
2017 1,309,985 63,295 48,317 4.7 3.7 4.9 692,644 541,394
2018 1,305,352 62,771 48,087 4.3 3.3 3.5 699,882 541,832
2019 1,299,783 63,008 48,476 4.3 3.3 3.3 699,494 542,048
Notes:
(1) The number of households was taken from http://www.census.gov/quickfacts/fact/table/US-MO, the 2019 figure is based on
the 2013-2017 data. The 2018 figure is based on the 2012-2016 data. The 2017 figure is based on 2011-2015 data. The 2016 figure
(2010-2014). The 2015 figure is based on 2013 data. The 2011-2012 figures are based on 2010 data. Information for prior years is
unavailable; therefore, the 2000 census information is used for the other years in this table.
Sources: Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce,
and Missouri Economic Resource and Information Center (MERIC)
Footnotes-http://www.bea.gov/regional/reis/scb.cfm
http://www.meric.mo.gov/regional-profiles/st-louis
https://www.census.gov/quickfacts/fact/table/US/PST045217
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Unemployment Rate
Saint Louis
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 110
Percentage Percentage
Employer Employees (1)of Total Rank Employees (1)of Total Rank
BJC Health System 28,516 4%1 23,592 4%1
Mercy 23,011 3%2
Washington University in St. Louis 17,442 3%3 13,167 2%3
Boeing Defense, Space & Security 14,566 2%4 16,000 3%2
SSM Health 13,500 2%5 12,367 2%4
Scott Air Force Base 13,000 2%6 11,242 2%5
Schnuck Markets Inc.10,702 2%7 10,700 2%7
Archdiocese of St. Louis 10,000 1%8
City of St. Louis 7,368 1%9
St. Louis University 7,221 1%10
Wal-Mart Stores Inc 10,800 2%6
United States Postal Service 10,249 2%8
St. John's Mercy Health Center 9,793 1%9
McDonald's 9,000 1%10
145,326 21%126,910 21%
Total Employment 674,783 100%613,467 100%
Notes:
(1) Employees are for the St. Louis area which includes several counties not served by the District.
Sources:
St. Louis Business Journal's Book of Lists 2019 (as of April 2019)
St. Louis Business Journal's Book of Lists 2010
PRINCIPAL EMPLOYERS (ST. LOUIS METROPOLITAN AREA)
CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2019 Fiscal Year 2010
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 111
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 112
Average Sewage
Fiscal Treatment in Millions
Year of Gallons per Day
2010 395.5
2011 370.6
2012 300.0
2013 326.7
2014 273.8
2015 327.5
2016 335.2
2017 328.9
2018 270.1
2019 396.4
Source: Operations Department
AVERAGE FLOW
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 113
2010 2011 2012 2013 2014
Miles of sewers 9,900 9,843 9,738 9,578 9,563
Number of treatment plants 7 7 7 7 7
Treatment capacity (MGD) a 423 528 528 528 533
Annual engineering maximum plant capacity
(millions of gallons)154,395 192,629 192,629 192,629 194,454
Amount treated annually (millions of gallons)144,358 135,269 109,518 119,253 99,945
Unused capacity (millions of gallons)10,037 57,360 83,111 73,376 94,509
Percentage of capacity utilized 93% 70% 57% 62% 51%
2015 2016 2017 2018 2019
Miles of sewers 9,531 9,700 9,400 9,400 9,400
Number of treatment plants 7 7 7 7 7
Treatment capacity (MGD) a 538 538 593 593 593
Annual engineering maximum plant capacity
(millions of gallons)196,279 196,279 216,354 216,354 216,354
Amount treated annually (millions of gallons)119,547 122,366 120,033 96,534 144,754
Unused capacity (millions of gallons)76,732 73,913 96,321 119,820 71,600
Percentage of capacity utilized 61% 62% 55% 45%67%
Sources: Operations Department and Engineering Department
Note:a Million gallons per day.
Fiscal Year
Fiscal Year
OPERATING AND CAPITAL INDICATORS
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICTST. LOUIS, MO 2350 MARKET STREET, ST. LOUIS, MO 63103 WWW.STLMSD.COM • 314-768-6260