HomeMy Public PortalAboutExhibit MSD 10 - 2016 Comprehensive Annual Financial Report (CAFR)COMPREHENSIVE ANNUALFINANCIAL REPORTTHE METROPOLITAN ST. LOUIS SEWER DISTRICTST. LOUIS, MISSOURI
FISCAL YEARENDINGJUNE 30, 2016
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THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEARS ENDING JUNE 30, 2016 AND 2015
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 - xiv
Organizational Chart .................................................................................................. xv
Certificate Of Achievement For Excellence In Financial Reporting .......................................................................................... xvi
Part II - Financial Section:
Independent Auditors’ Report .......................................................................... 1 - 3
Management’s Discussion And Analysis - Required
Supplementary Information ........................................................................ 4 - 17
Basic Financial Statements
Statements Of Net Position............................................................................ 18 - 19
Statements Of Revenues, Expenses And Changes In Net Position ................... 20
Statements Of Cash Flows ............................................................................. 21 - 22
Notes To Financial Statements ...................................................................... 23 - 83
Required Supplementary Information - Schedule Of Changes
In Net Pension Liability And Related Ratios, Schedule Of
Employer Contributions - Employees’ Pension Plan And Other
Post-Employment Benefit Plan Schedule of Funding Progress ....... 84 - 85
Part III – Statistical Section:
Net Position By Component .................................................................................. 86
Changes In Net Position ........................................................................................ 87
Operating Revenues By Source ............................................................................. 88
Operating Expenses ............................................................................................... 89
Non-Operating Revenues And Expenses .............................................................. 90
User Charge Rates ................................................................................................. 91
User Charge Revenues .......................................................................................... 92
Sewer User Charges (Composite-Annual) ............................................................ 93
Number Of Customers By Type ............................................................................ 94
Ten Largest Customers ......................................................................................... 95
Ratios Of Outstanding Debt By Type ................................................................... 96
Computation Of Overlapping Debt ....................................................................... 97
Pledged Revenue Coverage ................................................................................... 98
Demographic And Economic Statistics ................................................................. 99
Principal Employers (St. Louis Metropolitan Area) .......................................... 100
Employment Level ............................................................................................... 101
Average Flow ........................................................................................................ 102
Operating And Capital Indicators ...................................................................... 103
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 17, 2016
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, 2016, 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, lists of the
District’s Board of Trustees, Rate Commission Chair, members of the Civil Service
Commission, management staff, and an organization chart as of June 30, 2016. 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.
The Board of Trustees
The Metropolitan St. Louis Sewer District
ii
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 525 square miles including all 62 square
miles of the City of St. Louis and 463 square miles of St. Louis County. The current
population served by the District is approximately 1.3 million.
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. No more than two trustees from
each area can be of the same political affiliation.
The Board of Trustees
The Metropolitan St. Louis Sewer District
iii
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.
The Board of Trustees
The Metropolitan St. Louis Sewer District
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During fiscal 2016 the primary source of funding for the operation and maintenance of
MSD’s wastewater system was a user charge averaging $488.64 per year or $40.72 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.
In fiscal year 2016, 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.
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 sub-districts, general obligation bonds, revenue bonds, or special
assessment bonds.
Major Initiatives Affecting The Financial Resources Of The District
In June 2007 the District was sued by the Department of Justice on behalf of the
United States Environmental Protection Agency (“EPA”) and the Missouri Department
of Natural Resources (“DNR”) for various alleged violations of the Clean Water Act.
The Missouri Coalition for the Environment joined the suit as an intervener in August
2007. After a lengthy mediation, a Consent Decree (“CD”) was entered by the Federal
Court on April 27, 2012. This entry resolved all alleged violations. Compliance with
the CD requires the District to implement a multi-decade, multi-billion dollar capital
improvement program and rehabilitate significant portions of the existing wastewater
sewer system. This effort will continue to be funded by a combination of rate increases
and issuance of additional debt based on the completion of milestones defined in the
CD.
The Board of Trustees
The Metropolitan St. Louis Sewer District
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Integral to helping MSD’s rate payers understand the Consent Decree is MSD’s
initiation of Project Clear. MSD Project Clear is a long-term effort by MSD, undertaken
as part of the Consent Decree agreement with the U.S. Environmental Protection
Agency and the Missouri Coalition for the Environment. Project Clear’s aims are to:
Improve water quality for everyone;
Solve problems for some of our customers created by the very nature and design
of St. Louis’ wastewater system; and
Provide clear, up-to-date information to the public about Consent Decree
activities.
MSD Project Clear focuses on three categories of work: Get the rain out; Repair and
maintain; and Build system improvements. Get the rain out focuses on preventing
excess stormwater from entering the sewer system through a variety of project types,
including downspout disconnections, and rainscaping. Repair and maintain continues
the work MSD has done to repair, maintain, and renew the existing sewer system, on a
faster timeline. Build system improvements involves new construction of wastewater
management structures, including deep underground tunnels and above-ground storage
tanks.
In December 2015, a prolonged period of rainfall occurred from the early morning hours
of December 26th to the evening of December 28th. The St. Louis area received a range
of 6 to 12 inches of precipitation, with an average of 9 inches of rain falling over the
three days. This rainfall impacted area rivers, causing severe flooding throughout the
region. The Meramec River reached record flood levels at 44.1’ - eclipsing the level
reached during the Great Flood of 1993 - causing flooding and damage at three MSD
treatment plants. MSD crews and contractors worked around the clock to bring the
Grand Glaize and Fenton Wastewater Treatment Plants back online as soon as possible
and to repair damage to the Missouri River Wastewater Treatment Plant.
The Board of Trustees
The Metropolitan St. Louis Sewer District
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In addition to the damage sustained at the three treatment plants, the District received
approximately 3,000 calls for service during the rain event and subsequent
flooding. MSD crews responded accordingly. MSD saw 1,382 basement backups due to
overcharged mains, meaning that during the rain event, more water entered the system
than it could handle. MSD also verified 263 basement backups due to blocked mains,
meaning that flood debris prevented water from flowing through the mains. An
additional 350 calls were related to street flooding, to which MSD crews also
responded. About 1,000 service calls were overland flooding and stormwater. Overland
flooding is unrelated to the operations of the sewer system.
To date, MSD has sustained an estimated $25 million dollars in overall expenses and
damages due to the rain and flood event. Insurance and disaster assistance from the
Federal Emergency Management Agency (“FEMA”) and other governmental agencies
are expected to cover the majority of these losses. However, it is not yet possible to
determine exact numbers as MSD is in the process of submitting claims to FEMA and
its insurance carrier.
The District’s Board of Trustees implemented an impervious based stormwater rate on
March 1, 2008, replacing its prior funding mechanism of property taxes and user
fees. On July 9, 2010, a circuit court of St. Louis County found this impervious rate to
be unconstitutional under Missouri law. In response to this ruling, the Board
suspended the impervious based stormwater rate and reinstituted the District’s
stormwater property taxes and user fees, previously rolled back on a voluntary basis, as
part of the stormwater rate plan. The District lost both of its subsequent appeals to the
Appellate and Missouri Supreme Court negating the culmination of a 20-year effort to
adequately fund much needed stormwater services for District rate payers. The impact
of this court decision has resulted in a dramatic reduction in stormwater services being
provided across the District with many customers receiving little or no stormwater
services until an alternative funding source is identified.
The District submitted a rate change proposal to the MSD Rate Commission on
February 26, 2015. The proposal recommended an increase in MSD’s wastewater rates
in order to adequately fund the work required by the Consent Decree. The proposal also
recommended the establishment of a new District-wide tax structure to replace the
multi-layered taxes now assessed on the real estate value of our customers’ property.
These taxes have traditionally been used to fund stormwater services, including
operations, maintenance, very limited capital projects, and regulatory compliance. The
Rate Commission’s recommendation to the District’s proposal was received by the Board
on August 5, 2015. On October 8, 2015, the Rate Commission’s recommendation was
adopted by the Board of Trustees.
The Board of Trustees
The Metropolitan St. Louis Sewer District
vii
The Rate Commission was established in the District’s Plan by amendment in 2000.
Beginning in 2002, the District began submitting rate increase proposals to the MSD
Rate Commission to fund its operations and multi-decade capital infrastructure
improvement program. The District submits rate increase proposals to the Rate
Commission as needed in accordance with the Plan.
Since February 2004, the voters of St. Louis have authorized the District to issue a total
of $2.6 billion in wastewater revenue bonds. As of June 30, 2016, the District has
issued $1.4 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.
On April 5, 2016, MSD presented two initiatives to voters that reside within MSD’s
service area.
Proposition Y: Wastewater Bond Authorization
Per an agreement with the U.S. Environmental Protection Agency and the Missouri
Coalition for the Environment, MSD must implement $1.5 billion in wastewater
projects from July 1, 2016 through June 30, 2020. Similar to what MSD has done in the
past (2004, 2008, and 2012), an option for financing wastewater projects was presented
to voters on April 5, 2016, versus paying for the projects strictly through increased
rates.
Seventy six percent of voters in MSD’s service area approved Proposition Y and the
issuance of $900 million in bonds. The bond financing – which is to be used exclusively
for projects associated with the agreement – will help lessen the steepness of rate
increases over the next few years. For example, with the approval of Proposition Y, the
average single family home’s monthly MSD bill will eventually increase from $40.72 per
month on July 1, 2015, to $60.44 per month on July 1, 2019. Without Proposition Y,
that same bill would have increased to $95.13 per month on July 1, 2019.
Proposition S: Stormwater Funding & Service Equalization
Through the same April 5, 2016, election, 62% of voters in MSD’s service area also
approved Proposition S. The approval of Proposition S puts 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 will occur 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. The amount of
property taxes paid by an individual customer – and the stormwater service received –
The Board of Trustees
The Metropolitan St. Louis Sewer District
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was dependent on where a customer lived. Thus, not all customers paid the same rates
and, not all customers received the same level of stormwater service.
Proposition S allows MSD to rollback and eliminate several existing taxes; eliminate
the stormwater fee; and, in lieu of these funding mechanisms, institute or leave in place
two taxing districts that cover MSD’s entire service area.
The overriding benefit of Proposition S is that customers will be treated equally under
the new system. This means that all customers are subject to the same tax rates and
all customers receive the same level of stormwater services. One tax structure for
everyone means some customers will receive a reduction in what they pay annually to
MSD; some customers will essentially pay the same annually to MSD; and other
customers will see an increase in what they pay to MSD.
With the approval of Proposition S and the implementation of a new funding structure
for stormwater services, MSD will have “fund balances” left over from the former taxing
and fee system. These fund balances will allow for a finite and limited four-year
stormwater capital program of $67 million, starting in fiscal year 2017 (July 1, 2016
through June 30, 2017).
However, this limited and set amount of money barely begins to address the overall
need for stormwater projects throughout MSD’s service area. The development of a
funding solution for longer term stormwater projects began in 2016. Any proposed
solution is subject to future review by the Rate Commission, approval by the Board of
Trustees, and a vote of MSD customers.
The District completed an extensive upgrade of its billing and collection system in fiscal
year 2016. The updated system resulted in more efficient processes and the ability to
continue to expand customer outreach efforts. Full implementation of the system
occurred on September 1, 2015.
In 2013, MSD completed a Disparity Study to identify any disparities in the District’s
expenditure of public funds when compared to the availability of minority and women
owned firms. The study also examined the number of minorities and women working
on MSD projects compared to the racial and gender composition of workers available to
work on MSD projects. Procurement and contractual changes based on the study’s
findings were put into place in August 2013.
The Disparity Study also made recommendations for other activities the District should
consider as part of a successful Diversity Program.
The Board of Trustees
The Metropolitan St. Louis Sewer District
ix
To help implement some of the recommendations, MSD developed a Community
Benefits Agreement (“CBA”). A CBA is a formal agreement between MSD and
community organizations that establishes a framework for addressing issues in
workforce training, business development, and other areas that often act as obstacles in
developing a diverse labor pool and contracting community. (In short, it’s one thing to
have inclusion goals, but it’s another to have a program that helps develop the capacity
to meet those goals.) The CBA will support the development of initiatives that address
these issues, both in terms of workforce and business ownership. To our knowledge, the
CBA is the only one of its kind in the St. Louis region.
Operations
The Executive Director and his staff administer the operation and maintenance of the
District’s collection and treatment systems. The District’s sanitary, stormwater, and
combined sewer collection system includes more than 9,700 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 335.2 million gallons per day (“MGD”) in fiscal 2016 compared to
327.5 MGD in fiscal 2015. The design capacity and average flow, by watershed, in
MGD was as follows in fiscal 2016:
MAJOR
WATERSHED
LEVEL OF
TREATMENT
NUMBER
OF
FACILITIES
DESIGN
CAPACITY
AVERAGE FLOW
FISCAL 2016
Mississippi River Secondary Two 417.00 249.3
Missouri River Secondary Two 78.00 53.2
Meramec River Secondary Three 42.75 32.7
Total Seven 537.75 335.2
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 sanitary and
stormwater sewers by individuals, businesses, and municipalities in the community.
The Board of Trustees
The Metropolitan St. Louis Sewer District
x
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 4.9 percent in June 2016 and lower than the
national unemployment rate of 5.1 percent for the same time period.
MSD has its own internal barometers for measuring economic development within the
District. These are listed below for fiscal 2016 and 2015:
2016 2015
Sewer Plan Reviews:
Number of Plans Approved 613 529
Number of Miles of Sewers 38 22
Sewer Construction Permits:
Number of Permits Issued 4,546 3,447
Number of Miles of Sewers 30 33
Customer Connections:
Number of Connection Permits Issued 2,165 2,017
Connection Fee Revenue (in millions) $1.7 $1.8
Value of Sewers Dedicated to
MSD by Developers (in millions)$11.3
$12.3
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.
The Board of Trustees
The Metropolitan St. Louis Sewer District
xi
Financial Information
Proprietary Operations. The current financial condition of MSD remains stable. The
District realized a net operating income of $46.8 million in fiscal 2016 compared to a net
operating income of $33.9 million the prior year. The increase is explained by an
increase in sewer service revenue (as a result of rate increases) and insurance
recoveries due to the December 2015 rain event offset by an increase in operating
expenses (primarily water backup and other costs related to the flooding in December
2015 and depreciation). 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.
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.
The Board of Trustees
The Metropolitan St. Louis Sewer District
xii
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.
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 medical
insurance claims and health benefit costs. 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.
The Board of Trustees
The Metropolitan St. Louis Sewer District
xiii
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 RubinBrown LLP.
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
was issued for the year ended June 30, 2016.
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, 2015 and 2014 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, 2015. 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.
The Board of Trustees
The Metropolitan St. Louis Sewer District
xiv
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
twenty-eight 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 2016 annual budget. The District has received this award for twenty-nine
consecutive years. We believe the fiscal year 2017 budget presentation continues to
meet the GFOA’s high standards and submitted it on August 29, 2016, for
consideration.
Marion M. Gee
Director of Finance
xv
ORGANIZATION
(as of June 30, 2016)
BOARD OF TRUSTEES
Michael Yates, Chair; James Faul, Vice Chair; Rev. Ronald Bobo;
Ruby Bonner; Annette Mandel; James I. Singer
OFFICE OF INTERNAL AUDITOR
RATE COMMISSION
Leonard P. Toenjes, Chair
OFFICE OF SECRETARY
TREASURER Tim R. Snoke
Secretary/Treasurer
CIVIL SERVICE COMMISSION
Tara Buckner
Annette Adams
Daniel Gonzales
EXECUTIVE DIRECTOR
Brian L. Hoelscher/CEO
FINANCE
Marion M. Gee
Director
OFFICE OF GENERAL COUNSEL Susan M. Myers
General Counsel
OPERATIONS Jonathon C. Sprague
Director
ENGINEERING
Rich Unverferth
Director
OFFICE OF HUMAN RESOURCES
Vicki L. Taylor Edwards
Director
INFORMATION SYSTEMS
Barbara E. Mohn
Director
xvi
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, 2015
Executive Directors/CEO
Financial Section
METROPOLITAN ST. LOUIS SEWER DISTRICT
SERVICE AREAS
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 activities of
The Metropolitan St. Louis Sewer District (the District) as of and for the years ended
June 30, 2016 and 2015, 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 an opinion on these financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Controller 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 opinion.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of the business-type activities of the District as of June 30,
2016 and 2015, and the 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.
Change In Accounting Principle
As discussed in Note 1 to the financial statements, the District adopted the provisions of
Governmental Accounting Standards Board Statement No. 72, Fair Value Measurement
and Application in fiscal year 2016. Our opinion is not modified with respect to this
matter.
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, Employees’ Pension Plan
Schedule of Employer Contributions and Schedule of Funding Progress for the Other
Post-Employment Benefit Plan, 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.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 3
Other Information
Our audit was conducted for the purpose of forming an opinion on 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 financial statements.
These sections have not been subjected to the auditing procedures applied in the audit
of the financial statements and, accordingly, we do not express an opinion or provide
any assurance on them.
Other Reporting Required By Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 17, 2016, 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 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 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.
October 17, 2016
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Years Ended June 30, 2016 And 2015
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.
2016 Financial Highlights
The District increased capital assets by $160.5 million as a result of an increase
in construction in progress for $122.3 million, in land for $13.2 million and in
depreciable capital assets net of depreciation for $25.0 million.
The District placed $123.6 million of capital assets into service during fiscal year
2016. The continued high level of capitalization reflects the District’s work to
meet long-term plans. Capitalized assets included:
Collection and pumping plant $80.0 million
Treatment and disposal plant and equipment $25.9 million
Land $13.3 million
General plant and equipment $4.4 million
In conjunction with the new assets, the net increase to accumulated depreciation was
$79.3 million.
During the year, the District implemented Governmental Accounting Standards Board
(“GASB”) Statement No. 72, Fair Value Measurement and Application. The primary
objective of this Statement is to improve financial reporting by state and local
governments by clarifying the definition of fair value for financial reporting purposes,
establishing general principles for measuring fair value, providing additional fair value
application guidance, and enhancing disclosures about fair value measurements. The
impact of adopting GASB Statement No. 72 is minimal as all material investments have
been and are valued at fair value. No restatement is required as no changes were made
to the prior year financial statements in order to comply with the new Statement.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 5
2015 Financial Highlights
The District increased capital assets by $128.2 million as a result of an increase
in construction in progress for $108.5 million, in land for $1.0 million, and in
depreciable capital assets net of depreciation for $18.7 million.
The District placed $100.1 million of capital assets into service during fiscal year
2015. The continued high level of capitalization reflects the District’s work to
meet long-term plans. Capitalized assets included:
Collection and pumping plant $62.9 million
Treatment and disposal plant and equipment $33.8 million
General plant and equipment $2.4 million Land $1.0 million
In conjunction with the new assets, the net increase to accumulated depreciation was
$65.1 million.
During the year, the District implemented GASB Statement No. 68, Accounting and
Financial Reporting for Pensions (Employer Reporting). The primary objective of this
Statement is to improve accounting and financial reporting by state and local
governments for pensions, in particular updates to the financial statements pension-
related liabilities and corresponding deferred outflows and inflows and these effects on
net position. Non-current liabilities increased by $43.8 million or 3.9% as the District
implemented GASB Statement No. 68 resulting in recognizing the District’s net pension
liability. Net deferred outflows and inflows increased $15.8 million or 156.2% primarily
due to the implementation of GASB Statement No. 68 resulting in various pension-
related transactions.
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 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 property. 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, and bonds and notes payable. Deferred outflows and inflows, where
applicable, are also included. The final section of the Statements of Net Position, the
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 6
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 balance.
Financial Analysis
The District’s financial position improved in the current year, as evidenced by the
increase in net position of $48.9 million. The improvement is due to the increases in
unrestricted funds of $42.3 million and net investment in capital assets of $11.8 million.
Unrestricted funds increased $23.6 million from fiscal year 2015 due to the GASB
Statement No. 68 reduction to net position in fiscal year 2015 and increased $29.4
million as operating revenues increased due to rate changes and due to the insurance
recoveries recorded as a result of the December 2015 rain event; however, these
increases were partially offset by an increase in operating expenses of $11.2 million
(excluding depreciation) due partially to increased costs related to the December 2015
flooding. While debt increased at an amount greater than the capital to which it
relates, the unspent cash received upon the issuance of the new senior debt (“Series
2015B”) accounts for the net increase in the net position’s net investment in capital
assets. The unrestricted funds and net investment in capital asset increases were offset
by a decrease in restricted funds of $5.2 million resulting primarily from the use of
excess bond reserve funds to partially advance refund existing debt.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 7
Condensed Financial Statements and Analysis
2016 Analysis
Current, restricted and other assets increased $78.8 million or 12.5% in the current
year. The increase is predominately due to an increase in cash and investments due to
higher sewer rates charged and collected and due to the unspent cash received on the
senior debt issued in fiscal 2016. In addition, receivables recorded for insurance
recoveries due to the December 2015 rain event increased current, restricted and other
assets.
Capital assets net of accumulated depreciation increased by $160.5 million or 5.5% in
the current year as the result of continued high levels of construction and acquisition of
assets by the District.
Increase Increase
Fiscal Year Fiscal Year (Decrease) Fiscal Year (Decrease)
2016 2015 2016-2015 2014 2015-2014
Assets:
Current, restricted, and other assets 707,033$ 628,246$ 78,787$ 704,266$ (76,020)$
Capital assets (net of accumulated
depreciation)3,052,043 2,891,569 160,474 2,763,413 128,156
Total Assets 3,759,076 3,519,815 239,261 3,467,679 52,136
Deferred Outflow of Resources:
Bonds and Notes Payable-Deferred Loss 11,974 9,599 2,375 10,108 (509)
Pension-related Outflows 31,144 19,210 11,934 — 19,210
Total Deferred Outflow of Resources 43,118 28,809 14,309 10,108 18,701
Liabilities:
Current liabilities 125,284 109,153 16,131 95,196 13,957
Non-current liabilities 1,344,141 1,158,445 185,696 1,114,639 43,806
Total Liabilities 1,469,425 1,267,598 201,827 1,209,835 57,763
Deferred Inflow of Resources:
Pension-related Inflows 5,712 2,910 2,802 — 2,910
Total Deferred Inflow of Resources 5,712 2,910 2,802 — 2,910
Net Position:
Net investment in capital assets 1,841,178 1,829,394 11,784 1,845,394 (16,000)
Restricted 146,105 151,292 (5,187) 142,764 8,528
Unrestricted 339,774 297,430 42,344 279,794 17,636
Total Net Position 2,327,057$ 2,278,116$ 48,941$ 2,267,952$ 10,164$
Condensed Statements of Net Position
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 8
Current liabilities increased by $16.1 million or 14.8% due to an increase in the current
portion of bonds and notes payable, contracts and accounts payable and retainage held
on capital projects.
Non-current liabilities increased by $185.7 million or 16.0% due to the senior and
subordinate debt issued in fiscal 2016, offset partially by the advance refunding of
existing debt, and the increase in the District’s net pension liability resulting from the
implementation of GASB Statement No. 68 in fiscal year 2015.
Net deferred outflows and inflows increased $11.5 million or 44.4% due primarily to the
cumulative effect of the implementation in fiscal year 2015 of GASB Statement No. 68
resulting in various pension-related transactions.
2015 Analysis
Current, restricted and other assets decreased $76.0 million or 10.8% in fiscal 2015.
The decrease is predominately due to lower amounts of unrestricted and restricted cash
and investments relative to 2014 when the District issued debt. This was offset slightly
as unrestricted receivables increased due to higher sewer rates.
Capital assets net of accumulated depreciation increased by $128.2 million or 4.6% in
fiscal 2015 as the result of continued high levels of construction and acquisition of
assets by the District.
Current liabilities increased by $14.0 million or 14.7%, due to an increase in the current
portion of bonds and notes payable and deposits and accrued expenses.
Non-current liabilities increased by $43.8 million or 3.9% as the District implemented
GASB Statement No. 68 resulting in recognizing the District’s net pension liability.
Net deferred outflows and inflows increased $15.8 million or 156.2% due to the
implementation of GASB Statement No. 68 resulting in various pension-related
transactions.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 9
Increase Increase
Fiscal Year Fiscal Year (Decrease) Fiscal Year (Decrease)
2016 2015 2016-2015 2014 2015-2014
Operating Revenues:
Sewer service charges 306,119$ 284,367$ 21,752$ 250,133$ 34,234$
Recovery (provision) for doubtful
sewer service charge accounts (4,107) (2,096) (2,011) 7,210 (9,306)
Licenses, permits, and other fees 3,620 6,657 (3,037) 6,563 94
Other 14,226 1,460 12,766 1,867 (407)
Total Operating Revenues 319,858 290,388 29,470 265,773 24,615
Non-operating Revenues:
Property taxes levied by the district 25,671 24,764 907 27,450 (2,686)
Investment income 4,636 3,001 1,635 2,967 34
Rent and other income 103 37 66 302 (265)
Total Non-operating Revenues 30,410 27,802 2,608 30,719 (2,917)
Total Revenues 350,268 318,190 32,078 296,492 21,698
Operating Expenses:
Pumping and treatment 59,100 60,766 (1,666) 54,126 6,640
Collection system maintenance 42,853 40,162 2,691 39,988 174
Engineering 10,998 10,954 44 12,184 (1,230)
General and administrative 55,315 48,551 6,764 45,661 2,890
Water backup claims 7,631 3,862 3,769 2,713 1,149
Depreciation 83,984 78,641 5,343 74,087 4,554
Asset management 13,215 13,586 (371) 12,539 1,047
Total Operating Expenses 273,096 256,522 16,574 241,298 15,224
Non-operating Expenses:
Net loss on disposal and sale of
capital assets 325 1,421 (1,096) 5,248 (3,827)
Non-recurring projects and studies 11,000 12,317 (1,317) 3,493 8,824
Interest expense 28,943 27,139 1,804 25,661 1,478
Total Non-operating Expenses 40,268 40,877 (609) 34,402 6,475
Total Expenses 313,364 297,399 15,965 275,700 21,699
Income Before Capital
Grants And Contributions 36,904 20,791 16,113 20,792 (1)
Capital Grants And Contributions 12,037 12,997 (960) 7,102 5,895
Change in Net Position 48,941 33,788 15,153 27,894 5,894
Net Position - Beginning of Year 2,278,116 2,267,952 10,164 2,240,058 27,894
Effect of Adoption of GASB 68 — (23,624) 23,624 — (23,624)
Net Position - Beginning of Year, As Restated 2,278,116 2,244,328 33,788 2,240,058 4,270
Net Position - End of Year 2,327,057$ 2,278,116$ 48,941$ 2,267,952$ 10,164$
Statements of Revenues, Expenses, and Changes in Net Position
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 10
2016 Analysis
Net position increased $48.9 million or 2.1% over the prior year. Sewer service revenue
increased as a result of rate increases. Other operating revenue increased due to the
insurance recoveries recorded related to the December 2015 rain event. Operating
expenses also increased primarily from various increases in operating costs, costs
related to the December 2015 rain event, GASB Statement No. 68 pension expense and
depreciation.
Total revenue increased by $32.1 million or 10.1%. Sewer service charges increased
$21.8 million or 7.6% with the provision for doubtful accounts increasing by $2.0 million
or 95.9% due to increased receivables. Other operating revenue increased $12.8 million
or 874.4% as explained above.
Total expenses increased by $16.0 million or 5.4%.
Operating expenses increased by $16.6 million or 6.5%. This increase is primarily the
result of the following:
$6.8 million or 13.9% increase in general and administrative costs primarily
related to an increase in the GASB Statement No. 68 pension expense. In
addition, costs incurred by the District related to the December 2015 rain event
are recorded in the General Insurance Fund in the general and administrative
operating expense line;
$5.3 million or 6.8% increase in additional depreciation due to new asset
capitalization;
$3.8 million or 97.6% increase in water backup costs resulting from the historic
flooding in December 2015.
Non-operating expenses decreased by $0.6 million or 1.5%.
2015 Analysis
Net position increased $10.2 million after the restatement of net position due to GASB
Statement No. 68 or 0.4% over the prior year. Sewer service revenue increased as a
result of rate increases. In fiscal year 2014 the methodology for calculating the
provision for doubtful sewer service charges changed which resulted in an adjustment
not repeated in fiscal year 2015. Operating expenses also increased primarily from
various increases in operating costs and depreciation. Non-operating expenses also
increased due to expenses related to non-recurring projects and studies.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 11
Total revenue increased by $21.7 million or 7.3%. Sewer service charges increased
$34.2 million or 13.7% with the provision for doubtful accounts increasing by $9.3
million or 129.1% as explained above. Property tax revenue decreased by $2.7 million
or 9.8% due to revenue recorded net of commission fees for collection from the County in
fiscal year 2015 compared to fiscal year 2014.
Total expenses increased by $21.7 million or 7.9%.
Operating expenses increased by $15.2 million or 6.3%. This increase is a result of the
following:
$6.6 million or 12.3% increase in pumping and treatment primarily related to
increase in utility costs resulting from excessive rain. In addition, there was an
increase in chemicals and supplies for the fiscal year 2015 completion of in-house
disinfection;
$4.6 million or 6.1% increase in additional depreciation due to new asset
capitalization;
$2.9 million or 6.3% increase in general and administrative costs resulting from
professional fees associated with the implementation of the new billing system,
and IS professionals and associated costs related to an increase in collection
efforts;
$1.2 million or 42.4% increase in water backup costs due to overcharged mains
claims resulting from excessive rain in fiscal year 2015;
Non-operating expenses increased by $6.5 million or 18.8%. This increase is a result of
the following:
$8.8 million or 252.6% increase in non-recurring projects and studies due
primarily to Green Infrastructure projects;
$1.5 million or 5.8% increase in interest expense due primarily to the first full
fiscal year for Series 2013B interest payments;
Offset by a decrease of $3.8 million or 72.9% in net loss on disposals and sale of
capital assets due to an asset demolition in fiscal year 2014 not repeated in fiscal
year 2015.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 12
2016 Analysis
The District ended the year with $49.2 million in cash and cash equivalents or a
decrease of $12.6 million from the prior year. Cash flows from operating activities
increased by $11.2 million or 9.6% as a result of increased receipts from customers.
Cash flows from non-capital financing activities decreased by $0.2 million or 0.9% due
to less tax revenue collected. Cash flow from capital and related financing activities
increased by $134.3 million or 59.5% as the result of increased bond proceeds and
premiums received in fiscal year 2016 compared to fiscal year 2015. Cash flows from
investing activities decreased by $160.7 million or 186.1%. The decrease primarily
stems from a net outflow of cash related to purchases and proceeds in investments in
fiscal year 2016, whereas fiscal year 2015 had a net inflow.
In fiscal year 2016, cash and cash equivalents include only investments with original
maturities less than 91 days. Under the new policy, investments with an original
maturity of greater than 90 days remain as investments until they mature and the cash
is received. The retroactive change resulted in $90.1 million, $87.7 million and $120.0
million from cash and cash equivalents to investments in fiscal year 2016, 2015, and
2014, respectively.
Increase Increase
Fiscal Year Fiscal Year (Decrease)Fiscal Year (Decrease)
2016 2015 2016-2015 2014 2015-2014
Cash flows from operating
activities 127,665$ 116,430$ 11,235$ 81,864$ 34,566$
Cash flows from non-capital
financing activities 25,583 25,824 (241) 27,468 (1,644)
Cash flows from capital
and related financing
activities (91,512) (225,778) 134,266 (25,597) (200,181)
Cash flows from investing
activities (74,347) 86,331 (160,678) (75,473) 161,804
Net increase (decrease) in
cash and cash equivalents (12,611) 2,807 (15,418) 8,262 (5,455)
Cash and cash equivalents
at beginning of year 61,807 59,000 2,807 50,738 8,262
Cash And Cash Equivalents
At End Of Year 49,196$ 61,807$ (12,611)$ 59,000$ 2,807$
Condensed Statements of Cash Flows
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 13
2015 Analysis
The District ended the year with $61.8 million in cash and cash equivalents or an
increase of $2.8 million from the prior year. Cash flows from operating activities
increased by $34.6 million or 42.2% as a result of increased receipts from customers.
Cash flows from non-capital financing activities decreased by $1.6 million or 6.0% due
to less tax revenue collected. Cash flow from capital and related financing activities
decreased by $200.2 million or 782.0% as the result of decreased bond proceeds and
premiums received in fiscal year 2015 compared to fiscal year 2014. Cash flows from
investing activities increased by $161.8 million or 214.4%. The increase primarily
stems from a net inflow of cash related to purchases and proceeds in investments in
fiscal year 2015, whereas fiscal year 2014 had a net outflow.
Capital Assets
Increase Increase
(Decrease) (Decrease)
2016 2015 2016-2015 2014 2015-2014
Land 69,702$ 56,521$ 13,181$ 55,538$ 983$
Construction in progress 530,734 408,464 122,270 299,945 108,519
Treatment and disposal plant
and equipment 729,884 739,563 (9,679) 737,833 1,730
Collection and pumping plant 1,697,795 1,659,321 38,474 1,637,375 21,946
General plant and equipment 23,928 27,700 (3,772) 32,722 (5,022)
Total 3,052,043$ 2,891,569$ 160,474$ 2,763,413$ 128,156$
Condensed Statements of Capital Assets
(000's)
Net of Depreciation
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 14
2016 Analysis
Total capital assets, net of depreciation expense, increased by $160.5 million or 5.5%
over the prior year. Construction in progress contained the majority of the increase
with net additions of $122.3 million or 29.9% consisting of $231.8 million in additions
offset by $109.5 million placed into service. Collecting and pumping plant increased
$38.5 million or 2.3% primarily for capitalization of assets including dedicated assets
and infrastructure repairs. Land increased $13.2 million or 23.3% including $12.4
million land reclass from Lower Meramec treatment plant asset and $0.8 million from
the acquisition of easements and other land. Treatment and disposal plant and
equipment decreased a net $9.7 million or 1.3% with $25.5 million increase in additions
offset by $35.2 million in additional depreciation partially driven by Lower Meramec
treatment plant asset reclass in February 2016 resulting in a $12.4 million decrease in
treatment plant assets which was reclassified to land and an increase of $3.2 million in
additional depreciation. General plant and equipment decreased $3.8 million or 13.6%
primarily due to depreciation of existing assets. For more detailed information, see Note
4, Capital Assets, in the accompanying notes to financial statements.
2015 Analysis
Total capital assets, net of depreciation expense, increased by $128.2 million or 4.6%
over the prior year. Construction in progress contained the majority of the increase
with net additions of $108.5 million or 36.2% consisting of $191.5 million in additions
offset by $83.0 million placed into service. Collection and pumping plant increased $21.9
million or 1.3% primarily for capitalization of assets including dedicated assets and
infrastructure repairs. Treatment and disposal plant and equipment increased a net
$1.7 million or 0.2% with $30.2 million in additions offset by $28.5 million in additional
depreciation. Land increased $1.0 million or 1.8% from the acquisition of easements and
other land. General plant and equipment decreased $5.0 million or 15.3% primarily due
to depreciation of existing assets. For more detailed information, see Note 4, Capital
Assets, in the accompanying notes to financial statements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 15
Long-Term Debt
2016 Analysis
The District ended fiscal year 2016 with $1.2 billion in long-term debt outstanding. The
District had one senior revenue bond addition this year (“Series 2015B”) for a total of
$223.9 million of which $73.9 million was used to partially advance refund the Series
2006C and the Series 2008A debt. Premium received on the new Series 2015B and
excess funds in the bond reserve account were used to advance refund the remaining
principal and interest on the Series 2006C and the Series 2008A debt. In addition, the
District added a new State Revolving Fund (“SRF”) bond (“Series 2015A”) for $42.6
million. For more detailed information, see Note 6, Long-Term Liabilities, in the
accompanying notes to financial statements.
Increase Increase
(Decrease) (Decrease)
2016 2015 2016-2015 2014 2015-2014
Senior Revenue Bonds:
Series 2006C —$ 60,000$ (60,000)$ 60,000$ —$
Series 2008A — 30,000 (30,000) 30,000 —
Series 2010B 85,000 85,000 — 85,000 —
Series 2011B 45,325 47,170 (1,845) 48,925 (1,755)
Series 2012A 220,000 225,000 (5,000) 225,000 —
Series 2012B 137,280 139,605 (2,325) 141,730 (2,125)
Series 2013B 149,000 150,000 (1,000) 150,000 —
Series 2015B 223,855 — 223,855 — —
Subordinate Revenue Bonds:
Series 2004B 89,650 97,520 (7,870) 105,155 (7,635)
Series 2005A 4,125 4,440 (315) 4,750 (310)
Series 2006A 27,950 29,915 (1,965) 32,085 (2,170)
Series 2006B 9,565 10,260 (695) 10,945 (685)
Series 2008AB 27,475 29,320 (1,845) 31,140 (1,820)
Missouri DNR:
Series 2009A 17,514 18,564 (1,050) 19,589 (1,025)
Series 2010A 6,588 6,947 (359) 7,299 (352)
Series 2010C 30,024 31,644 (1,620) 33,224 (1,580)
Series 2011A 37,354 38,974 (1,620) 39,769 (795)
Series 2013A 49,920 52,000 (2,080) 16,043 35,957
Series 2015A 42,623 — 42,623 — —
Energy Loan Program 118 151 (33) 166 (15)
Total 1,203,366$ 1,056,510$ 146,856$ 1,040,820$ 15,690$
Condensed Statements of Long-Term Debt
(000's)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 16
2015 Analysis
The District ended fiscal year 2015 with $1.1 billion in long-term debt outstanding. The
District did not issue any new senior bonds or new SRF bonds in fiscal year 2015 but
did add $36.0 million to SRF Series 2013A. For more detailed information, see Note 6,
Long-Term Liabilities, in the accompanying notes to 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 and the Missouri Coalition for the Environment,
which settled a lawsuit for alleged violations of the Clean Water Act, was the initiation
of Project Clear. See Note 12, Commitments And Contingencies, for additional
information regarding this litigation. The goal of Project Clear is to help MSD’s rate
payers have a clear understanding of MSD’s goals and objectives. Project Clear consists
of three main components:
Getting The Rain Out which is focused on reducing 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
Building System Improvements where needed to increase the capacity of the
system.
Project Clear will greatly affect the daily lives of many of our rate payers. Project Clear
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 of St. Louis have authorized the District to issue a total
of $2.6 billion in wastewater revenue bonds. As of June 30, 2016, the District has
issued $1.4 billion of the total authorization. The District’s long-term wastewater
capital improvement program will continue to be funded through a combination of
additional bonds and wastewater rate increases.
The District also upgraded its extensive billing and collection system to incorporate the
latest utility technology. The new system will result in more efficient processes and the
ability to continue to expand its customer outreach efforts. The new technology will
provide state of the art capabilities to utilize the multiple ways now available to better
communicate with its customers, understand their needs, and continue to align the
District’s responsiveness accordingly. Full implementation of the system occurred on
September 1, 2015.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 17
Requests For Information
This financial report is designed to provide a general overview of the District’s finances
for all those with an interest in the District’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information
should be addressed or e-mailed to:
Marion M. Gee, Director of Finance
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
314-768-6200
mgee@stlmsd.com
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 18
STATEMENTS OF NET POSITION
June 30,
Assets 2016 2015
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 26,934,021$ 34,101,094$
Investments 166,147,564 106,369,986
Sewer service charges receivable, less allowance of
$55,728,507 in 2016 and $53,205,047 in 2015 50,025,233 49,975,078
Unbilled sewer service charges receivable 24,728,826 22,169,181
Property taxes receivable, less allowance of
$39,127 in 2016 and $44,595 in 2015 1,265,106 1,413,045
Accrued income on investments 805,879 618,436
Other receivables, less allowance of $98,460 in 2016
and $32,962 in 2015 10,184,895 1,650,498
Supplies inventory 7,088,804 6,360,539
Total Unrestricted Current Assets 287,180,328 222,657,857
Restricted Current Assets
Cash and cash equivalents 2,065,003 1,859,493
Investments 13,393,010 8,670,810
Total Restricted Current Assets 15,458,013 10,530,303
Total Current Assets 302,638,341 233,188,160
Non-Current Assets
Restricted Assets
Cash and cash equivalents 20,197,452 25,846,754
Investments 134,209,021 108,223,482
Long-term investments 69,479,563 70,493,703
Property taxes receivable, less allowance of
$22,419 in 2016 and $21,956 in 2015 724,886 511,835
Accrued income on investments 300,628 308,455
Total Restricted Non-Current Assets 224,911,550 205,384,229
Other Assets
Notes receivable 12,999,370 13,563,540
Long-term investments 166,483,086 176,110,060
Total Other Assets 179,482,456 189,673,600
Capital Assets
Depreciable:
Treatment and disposal plant and equipment 1,239,993,981 1,214,483,762
Collection and pumping plant 2,419,647,020 2,341,025,509
General plant and equipment 92,393,025 92,198,891
3,752,034,026 3,647,708,162
Less: Accumulated depreciation 1,300,427,525 1,221,123,113
Net depreciable assets 2,451,606,501 2,426,585,049
Non-depreciable:
Land 69,702,470 56,520,708
Construction in progress 530,734,241 408,463,554
Net Capital Assets 3,052,043,212 2,891,569,311
Total Non-Current Assets 3,456,437,218 3,286,627,140
Total Assets 3,759,075,559 3,519,815,300
Deferred Outflows of Resources
Bonds and notes payable-Deferred loss on refunding 11,973,700 9,599,096
Pension-related outflows 31,144,263 19,210,323
Total Deferred Outflows of Resources 43,117,963 28,809,419
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 19
STATEMENTS OF NET POSITION (Continued)
June 30,
Liabilities 2016 2015
Current Liabilities-Payable From Unrestricted Assets
Contracts and accounts payable 37,420,758$ 34,082,818$
Deposits and accrued expenses 38,958,762 37,559,072
Retainage payable 9,119,490 6,952,750
Current portion of bonds and notes payable 38,059,873 29,620,359
Total Current Liabilities-Payable From Unrestricted Assets 123,558,883 108,214,999
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable 1,286,539 736,658
Retainage payable 438,547 201,441
Total Current Liabilities-Payable From Restricted Assets 1,725,086 938,099
Total Current Liabilities 125,283,969 109,153,098
Non-Current Liabilities
Deposits and accrued expenses 14,198,048 13,067,791
Net pension liability 52,600,003 39,895,991
Bonds and notes payable 1,277,342,521 1,105,481,067
Total Non-Current Liabilities 1,344,140,572 1,158,444,849
Total Liabilities 1,469,424,541 1,267,597,947
Deferred Inflow of Resources
Pension-related inflows 5,711,868 2,910,142
Total Deferred Inflow of Resources 5,711,868 2,910,142
Net Position
Net investment in capital assets 1,841,178,265 1,829,394,892
Restricted for:
Debt service 66,328,378 73,177,341
Subdistrict construction and improvement 79,776,581 78,114,762
Unrestricted 339,773,889 297,429,635
Total Net Position 2,327,057,113$ 2,278,116,630$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 20
STATEMENTS OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
2016 2015
Operating Revenues
Sewer service charges 306,118,545$ 284,366,564$
Provision for doubtful sewer service charge accounts (4,106,652) (2,096,371)
Licenses, permits and other fees 3,620,240 6,656,831
Other 14,225,598 1,459,565
Total Operating Revenues 319,857,731 290,386,589
Operating Expenses
Pumping and treatment 59,099,820 60,765,831
Collection system maintenance 42,853,337 40,160,207
Engineering 10,997,619 10,953,900
General and administrative 55,315,372 48,551,121
Water backup claims 7,631,197 3,862,390
Depreciation 83,983,749 78,641,259
Asset management 13,214,611 13,586,440
Total Operating Expenses 273,095,705 256,521,148
Operating Income 46,762,026 33,865,441
Non-Operating Revenues
Property taxes levied by the District 25,671,058 24,764,324
Investment income 4,635,866 3,000,591
Rent and other income 102,865 37,321
Total Non-Operating Revenues 30,409,789 27,802,236
Non-Operating Expenses
Net loss on disposal and sale of capital assets 324,513 1,420,902
Non-recurring projects and studies 11,000,403 12,317,488
Interest expense 28,943,200 27,138,546
Total Non-Operating Expenses 40,268,116 40,876,936
Income Before Capital Grants And Contributions 36,903,699 20,790,741
Capital Grants And Contributions
Utility plant contributed 11,271,085 12,304,126
Grant revenue 765,699 692,628
Total Capital Grants And Contributions 12,036,784 12,996,754
Change In Net Position 48,940,483 33,787,495
Net Position - Beginning Of Year, As Previously Stated 2,278,116,630 2,267,952,795
Effect of Adoption of GASB 68 — (23,623,660)
Net Position - Beginning Of Year, As Restated 2,278,116,630 2,244,329,135
Net Position - End Of Year 2,327,057,113$ 2,278,116,630$
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 21
STATEMENTS OF CASH FLOWS
2016 2015
Cash Flows From Operating Activities
Received from customers 307,087,452$ 285,114,625$
Paid to employees for services (94,386,428) (94,150,602)
Paid to suppliers for goods and services (85,035,869) (74,533,975)
Net Cash Provided By Operating Activities 127,665,155 116,430,048
Cash Flows Provided By Non-Capital Financing Activities
Taxes levied and collected 25,583,025 25,824,104
Cash Flows From Capital And Related Financing Activities
Proceeds from capital grants 22,649 692,920
Proceeds from issuance of debt 192,622,808 35,956,725
Premium on sale of bonds 26,727,475 —
Interest received on bond proceeds to be used for capital improvements — 291,725
Principal paid on debt (38,565,916) (20,268,080)
Interest and fees paid on debt (47,582,180) (43,213,255)
Payments for capital assets (227,194,869) (201,243,602)
Proceeds from sale of capital assets 834,701 390,173
Build America bond tax credit 1,623,694 1,614,982
Net Cash Provided By (Used In) Capital And Related
Financing Activities (91,511,638) (225,778,412)
Cash Flows From Investing Activities
Purchase of investments (414,418,954) (422,750,555)
Proceeds from sale and maturity of investments 333,435,010 503,079,743
Investment income 6,533,672 5,965,270
Proceeds from rents 102,865 37,321
Net Cash Provided By (Used In) Investing Activities (74,347,407) 86,331,779
Net Decrease In Cash And Cash Equivalents (12,610,865) 2,807,519
Cash And Cash Equivalents At Beginning Of Year 61,807,341 58,999,822
Cash And Cash Equivalents At End Of Year 49,196,476$ 61,807,341$
Non-Cash Capital And Investing Activities
Proceeds from debt issuance placed into escrow to refund bonds 73,855,000$ —$
Principal amount reduced and placed in escrow less reserve funds (81,054,443) —
Capital asset additions included in accounts payable 24,337,151 19,226,222
Utility plant contributed by other governments and developers 11,271,085 12,304,126
Fair value investment adjustment gain 1,763,059 249,364
For The Years
Ended June 30,
Continued on Next Page
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 22
STATEMENTS OF CASH FLOWS (Continued)
2016 2015
Reconciliation Of Operating Income (Loss) To Net Cash Flows
Provided By Operating Activities
Operating Income (Loss) 46,762,026$ 33,865,441$
Adjustments to reconcile operating income (loss) to net cash
provided by operating activities:
Depreciation 83,983,749 78,641,259
Change in operating assets and liabilities:
Increase in billed and unbilled sewer service
charges receivable (2,609,800) (5,348,620)
Increase in other receivables (7,749,740) (593,338)
Increase in supplies inventory (728,265) (137,440)
Increase in contracts and accounts payable 2,564,950 4,100,708
Increase in deposits and accrued expenses 1,870,437 5,929,890
Net increase (decrease) in pension-related liability, inflows & outflows 3,571,798 (27,852)
Net Cash Provided By Operating Activities 127,665,155$ 116,430,048$
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 23
NOTES TO FINANCIAL STATEMENTS
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 are
levied for the retirement of indebtedness issued to finance construction of
sanitary 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.
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 24
Measurement Focus, Basis Of Accounting And Financial Statement
Presentation
Throughout the year, the District maintains its detailed accounting records on
the 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. 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.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 25
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 outflows. All other
resources received before any other eligibility requirements are met are reported
as unearned revenues.
When both restricted and unrestricted resources are available for use, it is the
District’s policy to use restricted resources first, and then unrestricted resources
as they are needed.
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. In fiscal year 2016 the
District changed the investment policy to only include investments with original
maturity of less than 91 days in the Cash Equivalents category from all liquid
investments included in Cash Equivalents in the past year.
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.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 26
Accounts Receivable
Accounts receivable is composed primarily of charges to customers for
wastewater and stormwater services. Receivables are reported at their gross
values net of an allowance for uncollectible amounts. 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
In order to measure long-term assets such as capital assets, including
infrastructure, a study was performed in 1981 to value existing assets at
historical cost or estimated historical cost. Capital assets acquired since that
historical study 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 16 to 100 years
Collection and pumping plant 20 to 100 years
General plant and equipment 3 to 10 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 of more than $5,000 and an estimated useful life in excess of three
years.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 27
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 2016 and 2015, the District’s total interest cost incurred on
tax-exempt borrowings during the fiscal year was $37,475,123 and $35,613,319,
respectively. Of this net interest cost, $14,733,405 and $11,502,639 was
capitalized and $22,741,718 and $24,110,680 was expensed in 2016 and 2015,
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
The District’s net position is calculated as follows: the net investment in capital
assets component of net position consists of capital assets, including restricted
capital assets, net of accumulated depreciation and reduced by the net
outstanding debt, including premiums and discounts on such debt, that is
attributable to the acquisition, construction, or improvement of those assets.
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 sanitary
sewer charges have been restricted for the payment of principal and 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 METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 28
The District first applies restricted resources when an expense is incurred for
purposes for which both restricted and unrestricted net position is available.
Deferred Outflow Of Resources And Deferred Inflow 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 statement 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 obligations and the end of the fiscal year as
well as 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. Deferred inflows of
resources relate to certain changes in pension obligations that are amortized over
future periods.
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.
Bond Premiums, Discounts And Issuance Costs
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. Bonds and notes payable are
reported net of the applicable bond premium or discount.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 29
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.
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.
Pensions
For purposes of measuring the net pension liability, deferred outflows of
resources and deferred inflows of resources related to pensions, and pension
expense, information about 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. 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 30
Adoption Of New Accounting Standards
During fiscal year 2016, the District implemented GASB Statement No. 72, Fair
Value Measurement and Application. This Statement supersedes selected
paragraphs and footnotes and amends selected paragraphs in various Statements
of the Governmental Accounting Standards Board. The primary objective of this
Statement is to improve financial reporting by state and local governments by
clarifying the definition of fair value for financial reporting purposes,
establishing general principles for measuring fair value, providing additional fair
value application guidance, and enhancing disclosures about fair value
measurements. The District accounts for investments at fair value by using
quoted market prices which materially matches the new GASB Statement No.
72. No restatement was required. The disclosures required by this Statement
are presented in Footnote 2, Deposits and Investments.
During fiscal year 2015, the District implemented GASB Statement No. 68,
Accounting and Financial Reporting for Pensions (Employer Reporting). This
Statement replaced the requirements of GASB Statement No. 27, Accounting for
Pensions by State and Local Governmental Employers, as well as the
requirements of GASB Statement No. 50, Pension Disclosures. The primary
objective of this Statement was to improve accounting and financial reporting by
state and local governments for pensions, in particular bringing to the financial
statements pension-related liabilities and corresponding deferred outflows and
inflows and these effects on net position. In addition, the District implemented
GASB Statement No. 71, Pension Transition for Contributions Made Subsequent
to the Measurement Date in fiscal year 2015. This statement established
accounting requirements related to certain pension contributions made by
employers.
The District’s adoption of GASB Statement No. 68 in fiscal year 2015 resulted in
restating the beginning balance of net position due to the recognition of a
beginning net pension liability net of any deferred outflows of resources. The
impact of this change on the District’s Statement of Net Position was as follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 31
2. Deposits And Investments
Deposits
At June 30, 2016 the reported amount of the District’s deposits was $33,734,360
and the bank balance was $37,603,299. Of the bank balance, $865,854 was
covered by federal depository insurance; $36,653,652 was collateralized with
securities held by a third party financial institution in the District’s name; and
$83,793 represents cash equivalent funds in a prime money market fund. In
addition, the District has money market mutual funds of $15,462,116 held in a
trusted escrow account for the State that will be used to make future bond
payments.
At June 30, 2015 the reported amount of the District’s deposits was $42,838,260
and the bank balance was $50,312,948. Of the bank balance, $762,049 was
covered by federal depository insurance; $49,550,899 was collateralized with
securities held by a third party financial institution in the District’s name. In
addition, the District had money market mutual funds of $13,971,481 held in a
trusted escrow account for the State that was used to make future bond
payments.
July 1,
2014
Net Position - Beginning Of Year,
As Previously Stated 2,267,952,795$
Effect of Adoption of GASB 68:
Establishing a Beginning Net Pension Liability (23,623,660)
Net Position - Beginning Of Year, As Restated 2,244,329,135$
Restatement consists of:
Net Pension Liability reported as a noncurrent liability
at July 1, 2014 (29,409,433)$
Contributions made subsequent to the beginning net
pension liability's measurement date of December 31,
2013 are reported as deferred outflows of resources 5,785,773
(23,623,660)$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 32
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. 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 with a fair value of 103%.
Deposits in each bank are insured by the Federal Deposit Insurance Corporation
(“FDIC”) in the amount of $250,000 for interest bearing accounts and noninterest
bearing accounts.
Investments
With the approval of the District’s Board of Trustees, the Secretary-Treasurer is
authorized to invest excess cash in any investment authorized by the District’s
Charter. 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, 2016 and 2015, all of the District’s investments
were in compliance with the District’s investment policy and charter.
A summary of deposits and investments as of June 30, 2016 and 2015 is as
follows:
Investment Type Cost Fair Value Cost Fair Value
Deposits $ 33,734,360 $ 33,734,360 42,838,260$ 42,838,260$
Money Market Mutual Funds 15,462,116 15,462,116 13,971,481 13,971,481
Certificates of Deposit 100,000 100,000 100,000 100,000
U.S. Treasury and Agency
Obligations 495,637,069 496,034,377 404,229,430 402,931,741
Commercial Paper 53,478,311 53,577,867 71,781,633 71,833,900
Total 598,411,856$ 598,908,720$ 532,920,804$ 531,675,382$
2016 2015
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 33
Reconciliation to the financial statements:
Interest Rate Risk
As of June 30, 2016 and 2015, 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.
2016 2015
Cash and Cash Equivalents
Unrestricted Current 26,934,021$ 34,101,094$
Restricted Current 2,065,003 1,859,493
Restricted Non-Current 20,197,452 25,846,754
Investments
Unrestricted Current 166,147,564 106,369,986
Restricted Current 13,393,010 8,670,810
Restricted Non-Current 134,209,021 108,223,482
Long-Term Investments
Restricted Non-Current 69,479,563 70,493,703
Other 166,483,086 176,110,060
598,908,720$ 531,675,382$
Weighted Weighted
Average Average
Maturity Maturity
Investment Type Fair Value (Years)Fair Value (Years)
Money Market Mutual Funds 15,462,116$ 0.00 13,971,481$ 0.00
Certificates of Deposit 100,000 0.72 100,000 1.72
U.S. Treasury Obligations 252,489,204 0.39 287,004,218 1.30
U.S. Agency Obligations 243,545,173 0.73 115,927,523 1.38
Commercial Paper 53,577,867 0.24 71,833,900 0.19
Total 565,174,360$ 1.03 488,837,122$ 1.15
2016 2015
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 34
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 reclass from long-term investment to
cash.
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, 2016 and 2015, 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+” except for five short-
term U.S. agency obligations that carry a rating of “A-1+”, with a value of
$4,543,869 in fiscal year 2016. Money market investments are rated as “AAAm”
and “Aaa-mf” by S&P and Moody’s, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 35
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 U.S. Treasury obligations and
collateralized time and demand deposits. 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,
2016 and 2015:
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. 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,
2016:
Money Market Mutual Funds of $15.5 million 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 $495.6 million 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)
Issuer 2016 2015
Treasury Notes 45.9 58.8
Federal Home Loan Bank 20.6 9.3
Federal National Mortgage Association 10.5 3.6
Federal Home Loan Mortgage Corporation 11.3 11.0
Percent Of
Total Investments
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 36
Commercial Paper of $53.6 million 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)
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 contained in the Other Receivables line on the
Statements of Net Position. The note receivable will mature in fiscal year 2033.
At June 30, 2016, future payments are 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, 2016, MSD’s note receivable
related to the Contractor Loan Fund is $13,385.
2017 1,154,696$
2018 1,154,696
2019 1,154,696
2020 1,154,696
2021 1,154,696
2022-2026 5,773,479
2027-2031 5,773,479
2032-2033 1,718,495
19,038,933
Less: Amount representing interest 5,475,392
13,563,541$
Classification in Statement of Net Position:
Current 577,556$
Non-current 12,985,985
Total 13,563,541$
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, 2016 and 2015:
Balance Balance
June 30, 2015 June 30, 2016
Capital assets not being depreciated:
Land 56,520,708$ 13,261,762$ 80,000$ 69,702,470$
Construction in progress 408,463,554 231,846,707 109,576,024 530,734,241
Total capital assets not being depreciated 464,984,262 245,108,469 109,656,024 600,436,711
Capital assets being depreciated:
Treatment and disposal plant
and equipment 1,214,483,762 25,920,471 410,251 1,239,993,981
Collection and pumping plant 2,341,025,509 80,022,506 1,400,995 2,419,647,020
General plant and equipment 92,198,891 4,374,911 4,180,777 92,393,025
Total capital assets being depreciated 3,647,708,162 110,317,888 5,992,023 3,752,034,026
Less: Accumulated depreciation:
Treatment and disposal plant
and equipment (474,920,704) (35,577,561) (387,883) (510,110,382)
Collection and pumping plant (681,703,916) (40,728,438) (580,015) (721,852,339)
General plant and equipment (64,498,493) (7,677,750) (3,711,440) (68,464,804)
Total accumulated depreciation (1,221,123,113) (83,983,749) (4,679,338) (1,300,427,525)
Total capital assets being depreciated, net 2,426,585,049 26,334,139 1,312,686 2,451,606,501
Total Capital Assets 2,891,569,311$ 271,442,609$ 110,968,709$ 3,052,043,212$
Additions Deletions
Balance Balance
June 30, 2014 June 30, 2015
Capital assets not being depreciated:
Land 55,537,816$ 982,892$ —$ 56,520,708$
Construction in progress 299,944,922 191,548,710 83,030,078 408,463,554
Total capital assets not being depreciated 355,482,738 192,531,602 83,030,078 464,984,262
Capital assets being depreciated:
Treatment and disposal plant
and equipment 1,184,278,860 33,797,176 3,592,274 1,214,483,762
Collection and pumping plant 2,286,108,470 62,947,593 8,030,554 2,341,025,509
General plant and equipment 93,600,648 2,365,107 3,766,864 92,198,891
Total capital assets being depreciated 3,563,987,978 99,109,876 15,389,692 3,647,708,162
Less: Accumulated depreciation:
Treatment and disposal plant
and equipment (446,446,188) (31,634,323) (3,159,807) (474,920,704)
Collection and pumping plant (648,732,430) (39,645,122) (6,673,636) (681,703,916)
General plant and equipment (60,878,853) (7,361,814) (3,742,174) (64,498,493)
Total accumulated depreciation (1,156,057,471) (78,641,259) (13,575,617) (1,221,123,113)
Total capital assets being depreciated, net 2,407,930,507 20,468,617 1,814,075 2,426,585,049
Total Capital Assets 2,763,413,245$ 213,000,219$ 84,844,153$ 2,891,569,311$
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. Tax rates vary by sub-district and purpose. Taxes levied are used for
operations and stormwater maintenance, debt service, and construction. Taxes
are recorded as non-operating revenues. 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 2016 and 2015, the District recorded revenue from property taxes
in the amount of $25,671,058 and $24,764,324, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 39
6. Long-Term Liabilities
The following is a summary of changes in the District’s long-term liabilities for
the year ended June 30, 2016:
Original Balance Balance
Issuance June 30, June 30, Current
Amounts 2015 Additions Retirements 2016 Portion
Bonds and Notes Payable:
Wastewater System Senior Revenue Bonds:
Series 2006C 60,000,000$ 60,000,000$ —$ 60,000,000$ —$ —$
Series 2008A 30,000,000 30,000,000 — 30,000,000 — —
Series 2010B 85,000,000 85,000,000 — — 85,000,000 —
Series 2011B 52,250,000 47,170,000 — 1,845,000 45,325,000 1,915,000
Series 2012A 225,000,000 225,000,000 — 5,000,000 220,000,000 5,300,000
Series 2012B 141,730,000 139,605,000 — 2,325,000 137,280,000 2,570,000
Series 2013B 150,000,000 150,000,000 — 1,000,000 149,000,000 3,000,000
Series 2015B 223,855,000 — 223,855,000 — 223,855,000 2,500,000
Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program):
Series 2004B 161,280,000 97,520,000 — 7,870,000 89,650,000 8,105,000
Series 2005A 6,800,000 4,440,000 — 315,000 4,125,000 325,000
Series 2006A 42,715,000 29,915,000 — 1,965,000 27,950,000 2,350,000
Series 2006B 14,205,000 10,260,000 — 695,000 9,565,000 705,000
Series 2008A/B 40,000,000 29,320,000 — 1,845,000 27,475,000 1,870,000
Missouri Department of Natural Resources:
Energy Loan Program 223,793 150,565 — 32,359 118,206 33,173
Series 2009A 23,000,000 18,563,600 — 1,049,400 17,514,200 1,073,700
Series 2010A 7,980,700 6,947,000 — 358,600 6,588,400 366,000
Series 2010C 37,000,000 31,644,000 — 1,620,000 30,024,000 1,663,000
Series 2011A 39,769,300 38,974,300 — 1,620,000 37,354,300 1,662,000
Series 2013A 52,000,000 52,000,000 — 2,080,000 49,920,000 2,134,000
Series 2015A 75,000,000 — 42,622,810 — 42,622,810 2,488,000
1,467,808,793$ 1,056,509,465$ 266,477,810$ 119,620,359$ 1,203,366,916 38,059,873$
Add:
Unamortized premium, net 112,035,478
Total Bonds and Notes Payable 1,315,402,394$
Current Portion of Bonds and Notes Payable 38,059,873$
Non-Current Bonds and Notes Payable 1,277,342,521
Total Bonds and Notes Payable 1,315,402,394$
Net Pension Liability 39,895,991$ 12,704,012$ —$ 52,600,003$ —$
Deposits and Accrued Expenses
Landfill closure and
post-closure costs 783,473$ 38,259$ —$ 821,732$ —$
Compensated absences 8,421,028 825,228 749,142 8,497,114 2,124,274
Net OPEB obligation 5,968,543 2,554,734 1,519,800 7,003,477 —
Total Deposits and Accrued Expenses 15,173,044$ 3,418,221$ 2,268,942$ 16,322,323$ 2,124,274$
Current Portion of Deposits and Accrued Expenses 2,124,274$
Non-Current Deposits and Accrued Expenses 14,198,048
Total Deposits and Accrued Expenses 16,322,323$
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, 2015:
Original Balance Balance
Issuance June 30, June 30, Current
Amounts 2014 Additions Retirements 2015 Portion
Bonds and Notes Payable:
Wastewater System Senior Revenue Bonds:
Series 2006C 60,000,000$ 60,000,000$ —$ —$ 60,000,000$ —$
Series 2008A 30,000,000 30,000,000 — — 30,000,000 —
Series 2010B 85,000,000 85,000,000 — — 85,000,000 —
Series 2011B 52,250,000 48,925,000 — 1,755,000 47,170,000 1,845,000
Series 2012A 225,000,000 225,000,000 — — 225,000,000 5,000,000
Series 2012B 141,730,000 141,730,000 — 2,125,000 139,605,000 2,325,000
Series 2013B 150,000,000 150,000,000 — — 150,000,000 1,000,000
Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program):
Series 2004B 161,280,000 105,155,000 — 7,635,000 97,520,000 7,870,000
Series 2005A 6,800,000 4,750,000 — 310,000 4,440,000 315,000
Series 2006A 42,715,000 32,085,000 — 2,170,000 29,915,000 1,965,000
Series 2006B 14,205,000 10,945,000 — 685,000 10,260,000 695,000
Series 2008A/B 40,000,000 31,140,000 — 1,820,000 29,320,000 1,845,000
Missouri Department of Natural Resources:
Energy Loan Program 223,793 166,445 — 15,880 150,565 32,359
Series 2009A 23,000,000 19,589,300 — 1,025,700 18,563,600 1,049,400
Series 2010A 7,980,700 7,298,500 — 351,500 6,947,000 358,600
Series 2010C 37,000,000 33,224,000 — 1,580,000 31,644,000 1,620,000
Series 2011A 39,769,300 39,769,300 — 795,000 38,974,300 1,620,000
Series 2013A 52,000,000 16,043,275 35,956,725 — 52,000,000 2,080,000
1,168,953,793$ 1,040,820,820$ 35,956,725$ 20,268,080$ 1,056,509,465 29,620,359$
Add:
Unamortized premium, net 78,591,961
Total Bonds and Notes Payable 1,135,101,426$
Current Portion of Bonds and Notes Payable 29,620,359$
Non-Current Bonds and Notes Payable 1,105,481,067
Total Bonds and Notes Payable 1,135,101,426$
Net Pension Liability —$ 39,895,991$ —$ 39,895,991$ —$
Deposits and Accrued Expenses
Landfill closure and
post-closure costs 756,936$ 26,537$ —$ 783,473$ —$
Compensated absences 7,983,223 856,080 418,275 8,421,028 2,105,253
Net OPEB obligation 5,067,254 2,474,689 1,573,400 5,968,543 —
Total Deposits and Accrued Expenses 13,807,413$ 3,357,306$ 1,991,675$ 15,173,044$ 2,105,253$
Current Portion of Deposits and Accrued Expenses 2,105,253$
Non-Current Deposits and Accrued Expenses 13,067,791
Total Deposits and Accrued Expenses 15,173,044$
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. 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, $1,193,000,000 has
not been issued as of June 30, 2016. These funds were sought to enable the
District to comply with federal and state clean water requirements.
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 and as of June 30,
2016, $83,305,619 has been expended. A premium of $26,727,475 was received
on the $150,000,000 portion of Series 2015B. 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.
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 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. The
sum of the $95,793,591 deposited into escrow and the earnings on the U.S.
government securities will fund the $90 million in principal payments
outstanding at June 30, 2016 relating to the Series 2006C and Series 2008A
bonds on their May 1, 2017 call date and the interest thereon. Interest only
payments of $2,267,218 were made from escrow in fiscal year 2016. 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
financial statements. 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 42
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.
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 $169,991,297 (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. As a result, Series
2004A bonds were partially defeased and the liability for those bonds related to a
date after May 1, 2014 were removed from the financial statements. 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.
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.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 43
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 2016 and fiscal year 2015, the subsidy percentage
was 32.6% and 32.4%, respectively. In fiscal year 2017 the subsidy percentage is
again expected to be 32.6%.
In November 2008, the District issued $30,000,000 of Wastewater System
Revenue Bonds Series 2008A (“Series 2008A”) from the August 2008
authorization for the purpose of providing funds to finance the capital
improvement and replacement program. All funds from this issuance have been
expended. These senior bonds had interest rates ranging from 5.1% to 5.3% and
were payable in semiannual installments at varying amounts through May 1,
2038; however, in December 2015, there was an advance refunding of the Series
2008A bonds. As a result of this refunding, Series 2008A bonds are considered to
be defeased. See the explanation for Series 2015B above for further information.
In November 2006, the District authorized and issued $60,000,000 of Wastewater
System Revenue Bonds Series 2006C (“Series 2006C”) from the February 2004
authorization for the purpose of providing funds to finance the initial phase of its
capital improvement and replacement program, including constructing,
repairing, and replacing new wastewater facilities. All funds from this issuance
have been expended. These senior bonds had interest rates ranging from 4.1% to
5.0% and were payable in semiannual installments at varying amounts through
May 1, 2036; however, in December 2015, there was an advance refunding of the
Series 2006C bonds. As a result of this refunding, Series 2006C bonds are
considered to be defeased. See the explanation for Series 2015B above for further
information.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 44
In May 2004, the District authorized and issued $175,000,000 of Wastewater
System Revenue Bonds Series 2004A (“Series 2004A”) from the February 2004
authorization for the purpose of providing funds to finance the initial phase of its
capital improvement and replacement program, including constructing,
repairing, and replacing new wastewater facilities. All funds from this issuance
have been expended. These senior bonds had interest rates ranging from 2.0% to
5.0% and were payable in semiannual installments at varying amounts through
May 1, 2034; however, in November 2012, there was a partial refunding of the
Series 2004A bonds. As a result of this refunding, Series 2004A bonds were
considered to be partially defeased and the semiannual installments were
through May 1, 2014. The liability related to Series 2004A after May 1, 2014 has
been paid. See the explanation for Series 2012B above for further information.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 45
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% 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 46
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 make 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 make 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 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 and 2015A direct loans (pages 48-53) 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 47
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 Master Bond Ordinance and the Series 2004B, 2005A,
2006A, 2006B, and 2008A/B bonds’ ordinances, 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, 2016 and 2015, the
District was in compliance with this covenant.
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, 2016 are as follows:
Years ending June 30, Principal Interest Total
2017 28,640,000$ 43,546,831$ 72,186,831$
2018 29,260,000 42,683,954 71,943,954
2019 30,150,000 41,871,217 72,021,217
2020 31,295,000 40,918,206 72,213,206
2021 32,375,000 39,810,805 72,185,805
2022-2026 179,320,000 181,313,888 360,633,888
2027-2031 178,250,000 145,441,284 323,691,284
2032-2036 189,860,000 101,899,479 291,759,479
2037-2041 230,325,000 56,261,902 286,586,902
2042-2045 89,750,000 7,702,500 97,452,500
Total 1,019,225,000$ 701,450,066$ 1,720,675,066$
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 48
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 February 1, 2020. 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, 2016 are as
follows:
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 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, 2016 the outstanding loan balance was $42,622,810. The payment
requirements to maturity will be determined after the debt is fully issued.
Years ending June 30, Principal Interest Total
2017 33,173$ 2,749$ 35,922$
2018 34,007 1,915 35,922
2019 34,863 1,059 35,922
2020 16,163 202 16,365
Total 118,206$ 5,925$ 124,131$
Energy Efficiency Leveraged Note Payable
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 49
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.
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, 2016 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 $39,769,300 for the purpose of improving, renovating,
repairing, replacing and equipping the District’s Wastewater System. The
principal and interest on the bonds are expected to be paid from future
wastewater revenues and the bonds were issued from the August 2008
authorization. The District’s interest rate is 1.5% and is payable in semiannual
installments at varying amounts through January 1, 2034.
Years ending June 30, Principal Interest Total
2017 2,134,000$ 765,422$ 2,899,422$
2018 2,190,000 732,251 2,922,251
2019 2,247,000 698,089 2,945,089
2020 2,305,000 663,036 2,968,036
2021 2,365,000 627,076 2,992,076
2022-2026 12,785,000 2,562,290 15,347,290
2027-2031 14,540,000 1,511,692 16,051,692
2032-2035 11,354,000 356,562 11,710,562
Total 49,920,000$ 7,916,418$ 57,836,418$
State of Missouri Direct Loan Series 2013A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 50
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, 2016 are as
follows:
State Of Missouri Direct Loan Series 2010C
In December 2010, the State of Missouri Direct Loan Program issued to the
District an amount totaling $37,000,000 for the purpose of improving, renovating,
repairing, replacing and equipping the District’s Wastewater System. The
principal and interest on the bonds are expected to be paid from future
wastewater revenues and the bonds were issued from the August 2008
authorization. The District’s interest rate is 1.7% and is payable in semiannual
installments at varying amounts through January 1, 2031.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2010C
As the District incurred approved capital expenditures, the DNR reimbursed the
District for the expenditures from the bond proceeds account. All funds have
been drawn on this loan.
Years ending June 30, Principal Interest Total
2017 1,662,000$ 561,485$ 2,223,485$
2018 1,704,000 536,086 2,240,086
2019 1,747,000 510,025 2,257,025
2020 1,792,000 483,304 2,275,304
2021 1,838,000 455,891 2,293,891
2022-2026 9,913,000 1,843,236 11,756,236
2027-2031 11,242,000 1,045,448 12,287,448
2032-2034 7,456,300 200,418 7,656,718
Total 37,354,300$ 5,635,893$ 42,990,193$
State of Missouri Direct Loan Series 2011A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 51
The annual principal and interest requirements to maturity on the State of
Missouri Direct Loan Series 2010C outstanding as of June 30, 2016 are as
follows:
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 $7,980,700 for the construction, improvement,
renovation, repair, replacement and equipping of its wastewater system, under
the authority of and in full compliance with the District’s Charter (“Plan”) and
the bonds were issued from the August 2008 authorization. The District’s
interest rate is 1.5% and is payable in semiannual installments at varying
amounts through July 1, 2031.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2010A
As the District incurred approved capital expenditures, the DNR reimbursed the
District for the expenditures from the bond proceeds account. All funds have
been drawn on this loan.
Years ending June 30, Principal Interest Total
2017 1,663,000$ 488,559$ 2,151,559$
2018 1,705,000 460,969 2,165,969
2019 1,750,000 432,655 2,182,655
2020 1,795,000 403,590 2,198,590
2021 1,842,000 373,783 2,215,783
2022-2026 9,953,000 1,393,871 11,346,871
2027-2031 11,316,000 523,438 11,839,438
Total 30,024,000$ $ 4,076,865 $ 34,100,865
State of Missouri Direct Loan Series 2010C
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 52
The annual principal and interest requirements to maturity on the State of
Missouri Direct Loan Series 2010A outstanding as of June 30, 2016 are as
follows:
State Of Missouri Direct Loan Series 2009A
In October 2009, the DNR loaned $23,000,000 to the District. The State of
Missouri Direct Loan Series 2009A note bears interest at a rate of 1.5% per
annum and is payable through January 1, 2030. The purpose of this note was to
finance the designing, constructing, improving, renovating, repairing, replacing
and equipping of new and existing sewer facilities within the District. The
principal and interest on the note are expected to be paid from future wastewater
revenues and the note was issued from the August 2008 authorization.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2009A
As the District incurred approved capital expenditures, the DNR reimbursed the
District for the expenditures from the bond proceeds account. All funds have
been drawn on this loan.
Years ending June 30, Principal Interest Total
2017 366,000$ 96,156$ 462,156$
2018 373,300 90,717 464,017
2019 380,900 85,164 466,064
2020 388,700 79,498 468,198
2021 396,600 73,717 470,317
2022-2026 2,107,100 277,661 2,384,761
2027-2031 2,329,600 114,460 2,444,060
2032 246,200 1,822 248,022
Total 6,588,400$ 819,195$ 7,407,595$
State of Missouri Direct Loan Series 2010A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 53
The annual principal and interest requirements to maturity on the State of
Missouri Direct Loan Series 2009A outstanding as of June 30, 2016 are as
follows:
In accordance with the Direct Loan Series 2009A, 2010A, 2010C, 2011A, 2013A
and 2015A 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, 2016 and 2015, 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
2017 1,073,700$ 251,746$ 1,325,446$
2018 1,098,500 236,045 1,334,545
2019 1,123,900 219,915 1,343,815
2020 1,149,900 203,411 1,353,311
2021 1,176,500 186,526 1,363,026
2022-2026 6,303,500 665,364 6,968,864
2027-2030 5,588,200 186,020 5,774,220
Total 17,514,200$ 1,949,027$ 19,463,227$
State of Missouri Direct Loan Series 2009A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 54
Debt Service Reserve Fund
After initial deposit of the amount required pursuant to the bond ordinances and
financing agreements of the Series 2004A, 2006C, 2008A, 2010B, 2011B, 2012A,
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, 2016 and
2015, cash and investments in the Debt Service Reserve Fund totaled
$49,575,170 and $57,664,537, respectively.
Series 2015B was issued without a debt service requirement and at that time
$8,945,557 in excess debt reserves along with part of the Series 2015B proceeds
were used to advance refund Series 2006C and Series 2008A.
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, 2016 and 2015, cash and investments in the Special
Participant Bond Reserve Account held on behalf of the District totaled
$104,751,185 and $113,155,635, 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.
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, 2016.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 55
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 2004A, 2006C,
2008A, 2010B, 2011B, 2012A, and 2013B bonds, shall be deposited into the
Project Fund. At June 30, 2016 and 2015, cash and investments in the Project
Fund totaled $92,563,751 and $63,327,909, 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, 2016 and 2015, cash and investments in the Rebate Fund totaled
$228,797 and $230,318, 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.
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 2045 at
an approximate amount of $1.7 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 2016 was $82.7
million with pledged revenues of $151.0 million. This provided a coverage ratio of
2.0 and represented 47.4% of all net operating revenues.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 56
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 The
Metropolitan St. Louis Sewer District Defined Contribution Plan (“DC Plan”)
and/or the 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. 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. 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
Notes To Financial Statements (Continued)
Page 57
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, 2015 and 2014, 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 $10,096,075 and $10,359,139, excluding certain professional fees
paid by the District, were made to the Pension Plan during the District’s fiscal
years ended June 30, 2016 and 2015, respectively. These contributions were
made in accordance with actuarially determined contribution requirements based
on actuarial valuations performed at December 31, 2015 and 2014, respectively.
Increase
2015 2014 (Decrease)
Active plan members 665 710 (45)
Retirees and beneficiaries currently receiving benefits 691 660 31
Terminated members entitled to receive benefits 175 180 (5)
Total 1,531 1,550 (19)
For the Years Ended
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 58
Net Pension Liability
The net pension liability was measured as of December 31, 2015 and 2014 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, 2015 and
2014 actuarial valuations were determined using the following actuarial
assumptions, applied to all periods included in the measurement:
Mortality rates were based on the RP-2000 Healthy Annuitant Mortality Table
for Males or Females, as appropriate, with adjustments for mortality
improvements based on Scale AA and the RP-2000 Disability Mortality Table for
Males or Females.
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 7.00 percent, net of pension plan investment expense,
including inflation
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 59
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, 2015 and 2014 are as follows:
Long-Term
Expected
Arithmetic
Target Real Rate
Asset Class Allocation of Return
Large Cap US Equity 20.0% 7.1%
Small Cap US Equity 6.0% 8.1%
International Equity 10.0% 7.7%
Emerging Market Equity 4.0% 9.9%
Core Bonds 26.0% 1.2%
Global Fixed Income 9.0% 1.3%
Absolute Return/HFOF 15.0% 3.2%
Real Estate 5.0% 5.4%
Real Assets 5.0% 3.5%
Total 100.0%
Long-Term
Expected
Arithmetic
Target Real Rate
Asset Class Allocation of Return
Domestic Equity 27.0% 7.1%
International Equity 10.0% 7.6%
Emerging Market Equities 3.0% 10.8%
Global Fixed Income 35.0% 0.8%
Absolute Return/HFOF 15.0% 5.6%
Real Estate 5.0% 4.9%
Real Assets 5.0% 5.0%
Total 100.0%
December 31, 2015
December 31, 2014
Discount Rate. The discount rate used to measure the total pension liability at
December 31, 2015 and 2014, was 7.00 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 60
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, 2014 290,411,812$ 250,515,821$ 39,895,991$
Changes for the year:
Service cost 5,253,091 5,253,091
Interest 20,198,502 20,198,502
Effect of economic/demographic gains or losses (4,576,597) (4,576,597)
Benefit payments (14,474,566) (14,474,566) —
Employer contributions 10,059,004 (10,059,004)
Net investment income (1,888,020) 1,888,020
Balances as of December 31, 2015 296,812,242$ 244,212,239$ 52,600,003$
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, 2013 $275,656,711 $246,247,278 $29,409,433
Changes for the year:
Service cost 5,409,485 5,409,485
Interest 19,900,507 19,900,507
Effect of economic/demographic gains or losses (3,667,991) (3,667,991)
Effect of assumption changes or inputs * 6,500,227 6,500,227
Benefit payments (13,387,127) (13,387,127) —
Employer contributions 10,675,321 (10,675,321)
Net investment income 6,980,349 (6,980,349)
Balances as of December 31, 2014 $290,411,812 $250,515,821 $39,895,991
* In order to better reflect anticipated future experience, the discount rate was decreased from 7.25%
to 7.0% effective December 31, 2014 and the salary increase assumption was changed from 10.0%
grading down to 4.50% over the first three years of service to 4.25% for all years.
Changes in Net Pension Liability for the Year Ended December 31, 2015
Changes in Net Pension Liability for the Year Ended December 31, 2014
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 61
Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The
following presents the net pension liability calculated using the 7.00 percent
discount rate, as well as what the District’s net pension liability would be if it
were calculated using a discount rate that is 1-percentage-point lower (6.00
percent) or 1-percentage-point higher (8.00 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(6.00%) (7.00%) (8.00%)
Net Pension Liability 85,662,163$ 52,600,003$ 24,315,305$
1% Current 1%
Decrease Discount Rate Increase
(6.00%) (7.00%) (8.00%)
Net Pension Liability 72,651,593$ 39,895,991$ 11,897,781$
December 31, 2015
December 31, 2014
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, 2016 and 2015, the District recognized pension
expense of $3,571,798 and negative $27,850, respectively, after accounting for all
deferred outflows and inflows of resources. The District reported deferred
outflows of resources and deferred inflows of resources related to pensions from
the following sources:
Deferred Deferred Deferred Deferred
Outflows of Inflows of Outflows of Inflows of
Resources Resources Resources Resources
Differences between expected and actual experience —$ 5,711,868$ —$ 2,910,142$
Changes of assumptions 3,814,183 — 5,157,205 —
Net difference between projected and actual earnings 21,823,418 — 8,583,527 —
Contributions made subsequent to measurement date 5,506,662 — 5,469,591 —
Total 31,144,263$ 5,711,868$ 19,210,323$ 2,910,142$
June 30, 2016 June 30, 2015
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 62
In the years ending June 30, 2016 and 2015, amounts currently reported as
deferred outflows of resources, $5,506,662 and $5,469,591, respectively, related
to the District’s contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the year ended June 30,
2017 and 2016, respectively.
Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized in pension expense as follows:
Payable To The Pension Plan
At June 30, 2016 and 2015, the District did not have outstanding required
contributions to the pension plan.
8. Other Retirement Plans
Deferred Compensation Plan and Trust
The District offers its employees a deferred compensation plan created in
accordance with Internal Revenue Code Section 457. The Metropolitan St. Louis
Sewer District Deferred Compensation Plan and Trust (“Plan”), available to all
District employees, permits them to defer a portion of their salary up to Internal
Revenue Code limits. The District does not contribute to the Plan. The deferred
compensation is not available to employees until termination, retirement, death,
disability or due to financial hardship as defined by the Plan.
Net Deferred
Outflows of
Resources
Year ended June 30,:
2017 5,560,476$
2018 5,560,476
2019 5,466,846
2020 3,337,935
19,925,733$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 63
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 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 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 investments 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.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 64
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.
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 plan amounted to $1,297,704 and $1,003,944
for the years ended June 30, 2016 and 2015, respectively. Forfeitures were
$45,109 and $108,383 for the years ended June 30, 2016 and 2015, respectively,
and there were no liabilities outstanding as of June 30, 2016.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 65
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:
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 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. Post-Employment Benefits Other Than Pensions
Plan Description
The District’s only post-employment benefit provides a single-employer defined
benefit health care plan (“Plan”) to 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 District pays the
same portion of the monthly group health insurance premium for the qualified
retiree as it would for an active employee until the retiree becomes eligible for
Medicare at age 65. In fiscal year 2016 the portion the District paid was 85% of
the retiree only premium for the period July 1, 2015 through January 31, 2016
and 80% for the period February 1, 2016 through June 30, 2016. In addition,
there is a closed group of disabled former employees who receive life insurance
coverage from the District.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 66
The District periodically contracts for an actuarial valuation of the Plan and the
latest actuarial valuation was performed as of July 1, 2015. While the actuarial
report has the February 2015 monthly medical premium rates, updated rates
received from the Human Resources Department for retirees, which are the same
rates for active employees, beginning February 2016 are as follows:
Premiums for retirees are as follows:
Coverage Tier Monthly Premium
Retiree* $620.70
Retiree + Spouse $1,322.26
Retiree + Child(ren) $1,201.41
Family $1,832.58
*The District pays 80% of the retiree’s premium for a retiree who retires after age 62 with five
years of service or after attaining 75 points. The retiree pays 20% of the individual retiree
premium above plus 100% of the spousal, children or family premium incremental increases.
The District’s annual other post-employment benefit (“OPEB”) cost (expense) is
calculated based on the annual required contribution (“ARC”) of the employer, an
amount actuarially determined in accordance with the parameters of GASB
Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions, and in conjunction with Plan
benefits currently in force. The actuarial valuations have been determined using
estimated data provided by the District in combination with assumptions on the
probability of future events, while also keeping an eye on long-term viability.
These valuations are subject to continual revision as future actuarial
measurements may differ significantly from current measurements due to the
realization of new estimates and factors.
The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and the amortization of any unfunded
actuarial accrued liabilities. The District’s annual OPEB cost for fiscal year 2016
and 2015 and the related information are as follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 67
The Plan was established by District Ordinance which assigned the authority to
establish and amend Plan benefit provisions to the District.
The contribution requirements of the District and Plan members are established
and may be amended by the District. The Plan does not issue a publicly available
report.
Trend Information:
As of June 30, 2016 and 2015, the Plan was not funded. The actuarial accrued
liability for benefits as of July 1, 2015, the latest actuarial valuation, was
approximately $25,308,300, and there were no assets, resulting in an unfunded
actuarial accrued liability (“UAAL”) of approximately $25,308,300. The covered
payroll (annual payroll of active employees covered by the Plan) in 2015 was
approximately $66,958,077, and the ratio of the UAAL to covered payroll was
37.8%.
2016 2015
Amortization of Past Service Cost 935,300$ 908,300$
Normal Cost 1,524,000 1,462,200
Interest to End of Fiscal Year 92,200 88,900
Annual Required Contribution ("ARC") 2,551,500 2,459,400
Interest on Net OPEB Obligation 223,820 190,022
Adjustment to ARC (220,586) (174,733)
Net Annual OPEB Cost 2,554,734 2,474,689
Actual Contribution (1,519,800) (1,573,400)
Increase in Net OPEB Obligation 1,034,934 901,289
Net OPEB Obligation - Beginning of Year 5,968,543 5,067,254
Net OPEB Obligation - End of Year 7,003,477$ 5,968,543$
Percentage of
Net Annual
Fiscal Net Annual Actual OPEB Cost Net OPEB
Year OPEB Cost Contribution Contributed Obligation
2016 2,554,734$ 1,519,800$ 59.5 7,003,477$
2015 2,474,689 1,573,400 63.6 5,968,543
2014 2,442,145 1,393,600 57.1 5,067,254
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 68
The Schedule of Funding Progress, presented as required supplementary
information following these notes to financial statements, presents trend
information about whether the actuarial accrued liability for benefits is
increasing or decreasing over time.
Actuarial funding calculations of the Plan reflect a long-term perspective. The
Plan’s actuarial valuations involve estimates of the value of reported amounts
and assumptions about the probability of events far into the future. Determined
amounts are subject to continual revision as results are compared to past
expectations and new estimates are made about the future.
Significant actuarial assumptions used in the valuation are as follows:
Latest Valuation Date: July 1, 2015
Actuarial Cost Method: Projected Unit Credit
Discount Rate: 3.75% per annum Amortization Method: Level Percentage of Payroll Amount, Open
Amortization Period: 30 years
Inflation Rate: 2.50%
Payroll Growth Rate: 3.00%
Investment Rate of Return: 3.75% annual returns, net of both administrative
and related investment expenses
Health Cost Trend Assumption: Getzen Trend Model – 6.90% graded to 4.50% over
67 years
Medical Trend:
The healthcare trends used in the valuation are based on long-term healthcare
trends generated by the Getzen Trend Model (“Model”). The Model is the result
of research sponsored by the Society of Actuaries and completed by a committee
of economists and actuaries. This Model is the current industry standard for
projecting long-term medical trends. Inputs to the Model are consistent with the
assumptions used in deriving the discount rate used in the valuation.
Year Medical Year Medical
2015 2045
2016 6.40 2050 5.80
2017 5.60 2055 5.60
2018 5.30 2060 5.50
2019 5.30 2065 5.10
2020 5.30 2070 4.60
2025 5.30 2075 4.60
2030 6.80 2080 4.60
2035 6.80 2082+ 4.50
2040 6.20
6.90% 5.90%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 69
Payroll Inflation 3.00% per annum
Healthy Mortality RP 2000 Mortality Table (employee and healthy
annuitant tables), projected 5 years from the
valuation date using Scale AA.
Disabled Mortality RP 2000 Disabled Mortality Table
Future Retiree Coverage: 90% of eligible employees retiring prior to age 65 are assumed to
elect medical coverage under the Plan.
Future Dependent Coverage: 25% elect spouse coverage and it is assumed that no dependent
children are covered in retirement.
Years Of Attained
Service Rate Age Rate
020
112.00 30 3.70
27.50 40 1.10
50+ 0.00
Select Rates based on years of service.
Ultimate Rates based on attained age.
Ultimate Rates are from the Sarason T-1 Table.
Termination Of Employment:
Select Rates Ultimate Rates
(0 to 4 years of service) (after 4 years of service)
20.00% 5.50%
Age Before 75 Points After 75 Points
55
56 2.0 10.0
57 2.0 10.0
58 2.0 10.0
59 3.0 10.0
60 4.0 15.0
61 5.0 15.0
62 20.0 35.0
63 10.0 25.0
64 20.0 25.0
65 100.0 100.0
Retirement - Rates Vary By Age
1.0% 10.0%
Percent
Becoming
Age Disabled
20
30 0.064
40 0.102
50 0.311
Disability
0.056%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 70
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, 2016 and 2015, these liabilities amounted to $4,076,993
and $4,317,384, respectively.
The claims liabilities reported are based on the requirements of GASB Statement
No. 10, Accounting and Financial Reporting for Risk Financing and Related
Insurance Issues, which requires that a liability for claims be reported if
information obtained prior to the issuance of the financial statements indicates it
is probable that a liability has been incurred and the amount of the liability can
be reasonably estimated. Changes in the balance of claims liabilities during fiscal
2016 and 2015 were as follows:
The District obtains periodic funding valuations from the third-party
administrators managing the self-insurance programs and adjusts the charges as
required to maintain the appropriate level of estimated claims liability. The
District also maintains excess liability insurance coverage for workers'
compensation and medical and hospitalization claims; general liability; and
water backup damage to customers’ property.
The District purchases commercial insurance for all other risks of loss. Settled
claims have not exceeded this commercial coverage in any of the past three years.
2016 2015
Liability - Beginning of Year 4,317,384$ 2,923,884$
Current year claims and changes in estimates 21,213,424 15,852,729
Claim payments (21,453,814) (14,459,229)
Liability - End of Year 4,076,994$ 4,317,384$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 71
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 $821,732 and $783,473 reported as
landfill closure and post-closure care liabilities at June 30, 2016 and 2015,
respectively, represent the cumulative amounts reported at fiscal year-end and
represent 100.0% and 96.7% of the estimated closure and post-closure care costs
of the landfill for fiscal years ended 2016 and 2015, respectively. These amounts
are based on what it would cost to perform all closure and post-closure care in
2016.
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
10-15 years. The District will continue to accrue the remaining estimated cost of
closure and post-closure care annually.
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 Statement of
Net Position will be adjusted accordingly.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 72
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.
A lawsuit was filed by the Department of Justice on behalf of the United States
Environmental Protection Agency (“EPA”) for various alleged violations of the
Clean Water Act. The suit was based on violations of the Clean Water Act as a
result of overflows in the combined and sanitary sewer systems causing
pollutants to reach waters of the United States. There were other counts
involving violations of permit conditions. The District had been the subject of
several investigatory actions by EPA over the past several years. Negotiations
had been ongoing with the EPA and the Missouri Department of Natural
Resources (“DNR”) regarding the sewer collection system, both the combined
system and the sanitary system, for several years. The Missouri Coalition for the
Environment (“MCE”) gave Notice of Intent to Sue the District under the citizen
suit provisions of the Clean Water Act. EPA and the DNR then brought the suit
in June 2007, and MCE moved to intervene. Intervention was granted in August
2007. In October 2007, the Court granted the District’s motion to dismiss all of
the plaintiffs’ claims for civil penalties attributable to any and all of the District’s
alleged violations of the Clean Water Act that occurred before June 11, 2002.
Also, the suit alleged that the District did not have an approved Long-Term
Control Program (“LTCP”) for the combined system. The District had been
working on these issues for several decades and had asked voters to approve
bonds and rate increases to rehabilitate and maintain the collection system. As
required by its Charter, the District had increased rates which continued to fund
the improvements sought by the EPA and the DNR. In September 2008, the
Judge put in place a Stay while the parties mediated the issues. Pursuant to
MSD Ordinance No. 13277, MSD executed the Consent Decree (“CD”) on July 15,
2011. The CD was lodged with the court on August 4, 2011. An extended public
comment period ended October 10, 2011.
On April 27, 2012, the Court approved and entered the decree, thus concluding
the litigation of this lawsuit. Although this litigation matter has concluded, MSD
continues to work diligently to implement the CD.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 73
The CD requires 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. The District continues to comply with the CD. 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.
Flooding Cases
The remaining flooding cases related to the September 14, 2008 rain event are being
covered by the District’s insurance carrier, with a reservation of rights. These cases
appear to have a very low risk of liability to the District.
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, 2016 and 2015 financial statements.
Contingencies
The District has entered into construction and other contracts amounting to
$354,141,397 and $302,603,787 at June 30, 2016 and 2015, respectively. Grants
to be received from various governmental agencies and entities to partially offset
the cost of the contract commitments amounted to $12,090 and $34,228 at
June 30, 2016 and 2015, respectively. The District had $1,193,000,000 and
$518,000,000 in revenue bonds authorized by the voters but unissued as of June
30, 2016 and 2015, respectively. These funds were sought to enable the District
to comply with federal and state clean water requirements.
13. Restricted Net Position
The Statements of Net Position report $146,104,959 and $151,292,103 of
restricted net position at June 30, 2016 and 2015, respectively, of which
$79,776,581 and $78,114,762 are restricted due to enabling legislation, as of
June 30, 2016 and 2015, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 74
14. Segment Information
The District issued wastewater revenue bonds to finance wastewater
infrastructure projects. The District accounts for both wastewater and
stormwater activities in a single enterprise fund, but investors in those bonds
rely solely on the revenue generated by the wastewater activities for repayment.
Fiscal year 2016 and 2015 summary financial information for each business
segment is presented below.
A segment is an identifiable activity reported as a stand-alone entity for which
one or more revenue bonds are outstanding. A segment has a specifically
identifiable revenue stream pledged in support of the revenue bonds and has
related expenses, gains and losses and assets and liabilities that are required by
external parties to be accounted for separately. The wastewater system is the
only reportable segment that meets the requirements of GASB Statement No. 34,
Basic Financial Statements - and Management’s Discussion and Analysis - for
State and Local Governments. The stormwater system is reported on for
informational purposes only.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 75
Financial information as of and for the years ended June 30, 2016 and 2015 of
the District’s Wastewater Segment is as follows:
Assets 2016 2015
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 25,577,264$ 31,943,006$
Investments 157,349,756 101,007,961
Sewer service charges receivable, less allowance of
$55,537,161 in 2016 and $53,052,032 in 2015 49,733,852 49,642,870
Unbilled sewer service charges receivable 24,607,682 22,049,122
Accrued income on investments 780,051 601,855
Other receivables, less allowance of $98,460 in 2016
and $32,962 in 2015 10,184,895 1,650,498
Supplies inventory 7,088,804 6,360,539
Total Unrestricted Current Assets 275,322,304 213,255,851
Non-Current Assets
Restricted Assets
Cash and cash equivalents 17,009,874 21,857,289
Investments 113,535,586 91,317,382
Long-term investments 32,736,862 28,088,302
Property taxes receivable, less allowance of $164 in 2016
and $634 in 2015 5,318 (126,463)
Accrued income on investments 144,289 216,287
Total Restricted Non-Current Assets 163,431,929 141,352,797
Other Assets
Notes receivable 12,999,370 13,563,540
Long-term investments 156,994,123 165,781,358
Total Other Assets 169,993,493 179,344,898
Capital Assets
Depreciable:
Treatment and disposal plant and equipment 1,239,993,981 1,214,483,762
Collection and pumping plant 1,798,181,091 1,727,606,247
General plant and equipment 75,752,926 75,667,913
3,113,927,998 3,017,757,922
Less: Accumulated depreciation 1,111,825,269 1,041,916,229
Net depreciable assets 2,002,102,729 1,975,841,693
Non-depreciable:
Land 63,374,303 50,292,691
Construction in progress 519,044,798 399,987,281
Net Capital Assets 2,584,521,830 2,426,121,665
Total Non-Current Assets 2,917,947,252 2,746,819,360
Total Assets 3,193,269,556 2,960,075,211
Deferred Outflows of Resources:
Bonds and notes payable-Deferred loss 11,973,700 9,599,096
Pension-related Outflows 26,520,052 16,300,636
Total Deferred Outflows of Resources 38,493,752 25,899,732
WASTEWATER SEGMENT
STATEMENTS OF NET POSITION
June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 76
Liabilities 2016 2015
Current Liabilities
Contracts and accounts payable 37,396,996$ 34,058,044$
Deposits and accrued expenses 29,325,752 30,338,248
Retainage payable 9,118,945 6,952,750
Current portion of bonds and notes payable 38,059,873 29,620,359
113,901,566 100,969,401
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable 36,495 —
Retainage payable 156,537 156,538
193,032 156,538
Total Current Liabilities 114,094,598 101,125,939
Non-Current Liabilities
Deposits and accrued expenses 14,198,048 13,067,791
Net Pension Liability 44,732,007 33,853,154
Bonds and notes payable 1,277,342,521 1,105,481,067
Total Non-Current Liabilities 1,336,272,576 1,152,402,012
Total Liabilities 1,450,367,174 1,253,527,951
Deferred Inflow of Resources:
Pension-related Inflows 4,868,566 2,469,358
Total Deferred Inflow of Resources 4,868,566 2,469,358
Net Position
Net investment in capital assets 1,373,656,883 1,363,947,246
Restricted for:
Debt service 66,328,378 73,177,341
Subdistrict construction and improvement 4,371,001 4,334,588
Unrestricted 332,171,306 288,518,459
Total Net Position 1,776,527,568$ 1,729,977,634$
June 30,
WASTEWATER SEGMENT
STATEMENTS OF NET POSITION (Continued)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 77
2016 2015
Operating Revenues
Sewer service charges 304,684,984$ 282,957,325$
Recovery of (Provision for) doubtful sewer service charge accounts (4,062,990) (2,229,949)
Licenses, permits, and other fees 3,620,240 6,656,831
Other 14,221,063 1,451,670
Total Operating Revenues 318,463,297 288,835,877
Operating Expenses
Pumping and treatment 59,099,820 60,765,831
Collection system maintenance 33,291,567 32,141,159
Engineering 3,523,227 4,589,048
General and administrative 54,802,220 48,555,339
Water backup claims 7,631,197 3,862,390
Depreciation 73,782,843 68,289,230
Asset management 12,968,747 13,373,795
Total Operating Expenses 245,099,621 231,576,792
Operating Income 73,363,676 57,259,085
Non-Operating Revenues
Property taxes levied by the District (17,525) (152,757)
Investment income 3,894,305 2,555,654
Rent and other income 102,865 37,321
Total Non-Operating Revenues 3,979,645 2,440,218
Non-Operating Expenses
Net loss on disposal and sale of capital assets 309,877 1,026,567
Non-recurring projects and studies 9,342,338 10,579,078
Interest expense 28,943,200 27,138,546
Total Non-Operating Expenses 38,595,415 38,744,191
Income Before Capital Grants And Contributions 38,747,906 20,955,112
Capital Grants And Contributions
Utility plant contributed 7,036,329 6,979,980
Grant revenue 765,699 692,628
Total Capital Grants And Contributions 7,802,028 7,672,608
Change In Net Position 46,549,934 28,627,720
Net Position - Beginning Of Year, As Previously Stated 1,729,977,634 1,721,395,422
Effect of Adoption of GASB 68 — (20,045,508)
Net Position - Beginning Of Year, As Restated 1,729,977,634 1,701,349,914
Net Position - End Of Year 1,776,527,568$ 1,729,977,634$
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 78
2016 2015
Cash Flows From Operating Activities
Received from customers 304,602,849$ 283,741,361$
Paid to employees for services (94,386,428) (94,150,602)
Paid to suppliers for goods and services (70,500,534) (66,614,057)
Net Cash Provided By Operating Activities 139,715,887 122,976,702
Cash Flows Provided By Non-Capital Financing Activities
Taxes levied and collected (86,140) —
Cash Flows From Capital And Related Financing Activities
Proceeds from capital grants 22,649 692,920
Proceeds from issuance of debt 192,622,808 35,956,725
Premium and (discounts) on sale of bonds 26,727,475 —
Interest received on bond proceeds to be used for capital improvements — 291,725
Principal paid on debt (38,565,916) (20,268,080)
Interest and fees paid on debt (47,582,180) (43,213,255)
Payments for capital assets (216,933,464) (196,100,162)
Proceeds from sale of capital assets 681,101 301,443
Build America bond tax credit 1,623,694 1,614,982
Net Cash Provided By (Used In) Capital And Related
Financing Activities (81,403,833) (220,723,702)
Cash Flows From Investing Activities
Purchase of investments (360,630,035) (332,640,382)
Proceeds from sale and maturity of investments 285,557,144 427,154,335
Investment income 5,530,955 5,383,326
Proceeds from rents 102,865 37,321
Net Cash Provided By (Used In) Investing Activities (69,439,071) 99,934,600
Net Increase (Decrease) In Cash And Cash Equivalents (11,213,157) 2,187,600
Cash And Cash Equivalents At Beginning Of Year 53,800,295 51,612,695
Cash And Cash Equivalents At End Of Year 42,587,138$ 53,800,295$
Ended June 30,
WASTEWATER SEGMENT
STATEMENTS OF CASH FLOWS
For The Years
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 79
Financial information as of and for the years ended June 30, 2016 and 2015 of
the District’s Stormwater Segment is as follows:
Assets 2016 2015
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 1,356,757$ 2,158,088$
Investments 8,797,808 5,362,025
Sewer service charges receivable, less allowance of
$191,346 in 2016 and $153,015 in 2015 291,381 332,208
Unbilled sewer service charges receivable 121,144 120,059
Property taxes receivable, less allowance of $39,127 in 2016
and $44,595 in 2015 1,265,106 1,413,045
Accrued income on investments 25,828 16,581
Total Unrestricted Current Assets 11,858,024 9,402,006
Restricted Current Assets
Cash and cash equivalents 2,065,003 1,859,493
Investments 13,393,010 8,670,810
Total Restricted Current Assets 15,458,013 10,530,303
Total Current Assets 27,316,037 19,932,309
Non-Current Assets
Restricted Assets
Cash and cash equivalents 3,187,578 3,989,465
Investments 20,673,435 16,906,100
Long-term investments 36,742,701 42,405,401
Property taxes receivable, less allowance of $22,255 in 2016
and $21,322 in 2015 719,568 638,298
Accrued income on investments 156,339 92,168
Total Restricted Non-Current Assets 61,479,621 64,031,432
Other Assets
Long-term investments 9,488,963 10,328,702
Total Other Assets 9,488,963 10,328,702
Capital Assets
Depreciable:
Collection and pumping plant 621,465,929 613,419,262
General plant and equipment 16,640,099 16,530,978
638,106,028 629,950,240
Less: Accumulated depreciation 188,602,256 179,206,884
Net depreciable assets 449,503,772 450,743,356
Non-depreciable:
Land 6,328,167 6,228,017
Construction in progress 11,689,443 8,476,273
Net capital assets 467,521,382 465,447,646
Total Non-Current Assets 538,489,966 539,807,780
Total Assets 565,806,003 559,740,089
Deferred Outflow of Resources:
Pension-related Outflows 4,624,211 2,909,687
Total Deferred Outflow of Resources 4,624,211 2,909,687
STORMWATER SEGMENT
STATEMENTS OF NET POSITION
June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 80
Liabilities 2016 2015
Current Liabilities
Contracts and accounts payable 23,762$ 24,774$
Deposits and accrued expenses 9,633,010 7,220,824
Retainage payable 545 —
9,657,317 7,245,598
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable 1,250,044 736,658
Retainage payable 282,010 44,903
1,532,054 781,561
Total Current Liabilities 11,189,371 8,027,159
Non-Current Liabilities
Net Pension Liability 7,867,996 6,042,837
Total Non-Current Liabilities 7,867,996 6,042,837
Total Liabilities 19,057,367 14,069,996
Deferred Inflow of Resources:
Pension-related Inflows 843,302 440,784
Total Deferred Inflow of Resources 843,302 440,784
Net Position
Net investment in capital assets 467,521,382 465,447,646
Restricted for:
Subdistrict construction and improvement 75,405,580 73,780,174
Unrestricted 7,602,583 8,911,176
Total Net Position 550,529,545$ 548,138,996$
June 30,
STORMWATER SEGMENT
STATEMENTS OF NET POSITION (Continued)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 81
2016 2015
Operating Revenues
Sewer service charges 1,433,561$ 1,409,239$
Recovery of (Provision for) doubtful sewer service charge accounts (43,662) 133,578
Other 4,535 7,895
Total Operating Revenues 1,394,434 1,550,712
Operating Expenses
Collection system maintenance 9,561,770 8,019,048
Engineering 7,474,392 6,364,852
General and administrative 513,152 (4,218)
Depreciation 10,200,906 10,352,029
Asset management 245,864 212,645
Total Operating Expenses 27,996,084 24,944,356
Operating Income (Loss) (26,601,650) (23,393,644)
Non-Operating Revenues
Property taxes levied by the District 25,688,583 24,917,081
Investment income 741,561 444,937
Total Non-Operating Revenues 26,430,144 25,362,018
Non-Operating Expenses
Net loss on disposal and sale of capital assets 14,636 394,335
Non-recurring projects and studies 1,658,065 1,738,410
Total Non-Operating Expenses 1,672,701 2,132,745
Income (Loss) Before Capital Contributions (1,844,207) (164,371)
Capital Contributions
Utility plant contributed 4,234,756 5,324,146
Total Capital Contributions 4,234,756 5,324,146
Change In Net Position 2,390,549 5,159,775
Net Position - Beginning Of Year, As Previously Stated 548,138,996 546,557,373
Effect of Adoption of GASB 68 — (3,578,152)
Net Position - Beginning Of Year, As Restated 548,138,996 542,979,221
Net Position - End Of Year 550,529,545$ 548,138,996$
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 82
15. Subsequent Events
In preparing these financial statements, the District has evaluated events and
transactions for potential recognition or disclosure through October 17, 2016, the
date the financial statements were available to be issued.
2016 2015
Cash Flows From Operating Activities
Received from customers 2,484,603$ 1,373,264$
Paid to employees for services — —
Paid to suppliers for goods and services (14,535,335) (7,919,918)
Net Cash Provided By Operating Activities (12,050,732) (6,546,654)
Cash Flows Provided By Non-Capital Financing Activities
Taxes levied and collected 25,669,165 25,824,104
Cash Flows From Capital And Related Financing Activities
Payments for capital assets (10,261,405) (5,143,441)
Proceeds from sale of capital assets 153,600 88,730
Net Cash Provided By (Used In) Capital And Related
Financing Activities (10,107,805) (5,054,711)
Cash Flows From Investing Activities
Purchase of investments (53,788,919) (90,110,173)
Proceeds from sale and maturity of investments 47,877,866 75,925,408
Investment income 1,002,717 581,944
Net Cash Provided By (Used In) Investing Activities (4,908,336) (13,602,821)
Net Increase (Decrease) In Cash And Cash Equivalents (1,397,708) 619,918
Cash And Cash Equivalents At Beginning Of Year 8,007,046 7,387,128
Cash And Cash Equivalents At End Of Year 6,609,338$ 8,007,046$
Ended June 30,
STORMWATER SEGMENT
STATEMENTS OF CASH FLOWS
For The Years
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 83
In December 2015, MSD facilities were damaged due to a flood that resulted from
the St. Louis area receiving a range of 6 to 12 inches of precipitation. To date,
MSD has sustained an estimated $25 million dollars in overall expenses and
damages due to the rain and flood event. Insurance and disaster assistance from
the Federal Emergency Management Agency (“FEMA”) and other governmental
agencies are expected to cover the majority of these losses. However, it is not yet
possible to determine exact numbers as MSD is in the process of submitting
claims to FEMA and its insurance carrier. FEMA has authorized potential
reimbursements of approximately $6 million of which MSD has received $80,670
in fiscal year 2017. The fiscal year 2016 financial statements included a
$743,561 accrual for FEMA approved funding. The insurance recovery receivable
recorded at June 30, 2016 was approximately $8 million dollars of which $3
million was received through October 17, 2016. Work is ongoing to mitigate and
replace damaged items.
On April 5, 2016, MSD customers voted to approve a stormwater service
proposition whereby effective July 1, 2016, MSD will begin to rollback and
eliminate several existing taxes, will eliminate the stormwater fee and, in lieu of
these funding mechanisms, institute or leave in place two taxing districts that
cover MSD’s entire service area. The overriding benefit of the stormwater
proposition is that customers will be treated equally under the new system,
meaning that all customers are subject to the same tax rates and all customers
receive the same level of stormwater services.
On July 12, 2016, MSD received notification from the U.S. Environmental
Protection Agency that the Federal Grant XP-97704601 was being decreased
$12,090 effective July 12, 2016 and MSD submitted a Final Status Report on
August 22, 2016. These funds are no longer available to partially offset the cost
of the contract commitments existing at June 30, 2016.
On August 3, 2016, the IRS announced an increase in the sequestration rate for
refundable credit amounts submitted on IRS Form 8038-CP for qualified bonds
from 6.8% to 6.9%. This will be effective for all refund payments processed from
October 1, 2016 to September 30, 2017. Since the District participates in Build
America Bonds, the District will receive 93.1% of the amount requested during
its fiscal year 2017. The District received 93.2% of the amount requested during
fiscal year 2016.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 84
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS
June 30, 2016
Schedule of Changes in Net Pension Liability and Related Ratios
In (000's)
2016 2015
Total Pension Liability
Service cost $5,253 $5,409
Interest on total pension liability 20,199 19,901
Effect of plan changes — —
Effect of economic/demographic gains or (losses) (4,577) (3,668)
Effect of assumption changes or inputs — 6,500
Benefit payments (14,475) (13,387)
Net Change in Total Pension Liability 6,400 14,755
Total Pension Liability - Beginning 290,412 275,657
Total Pension Liability - Ending (a) 296,812 290,412
Fiduciary Net Position
Employer contributions 10,059 10,676
Member contributions — —
Investment income net of investment expenses (1,888) 6,980
Benefit payments (14,475) (13,387)
Administrative expenses — —
Net Change in Plan Fiduciary Net Position (6,304) 4,269
Fiduciary Net Position - Beginning 250,516 246,247
Fiduciary Net Position - Ending (b) 244,212 250,516
Net Pension Liability - Ending = (a) - (b) $52,600 $39,896
Fiduciary Net Position as a % of Total Pension Liability 82.28% 86.26%
Covered Payroll $43,345 $44,664
Net Pension Liability as a % of Covered Payroll 121.35% 89.32%
Notes to Schedule:
1. Changes of Assumptions. In 2014, amounts reported as changes of assumptions resulted
primarily from adjustments to the discount rate and employee rate increases.
2. This schedule will ultimately present ten years of information when available.
Fiscal Year Ending June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 85
REQUIRED SUPPLEMENTARY INFORMATION (Continued)
EMPLOYEES’ PENSION PLAN AND POST-EMPLOYMENT BENEFIT PLAN
June 30, 2016
Employees' Pension Plan
Schedule of Employer Contributions
Plan Year Actuarially Contribution Covered Contribution
Ending Determined Annual Deficiency Employee as a % of
December 31, Contribution Contribution (Excess) Payroll* Covered Payroll
2006 $6,847,278 $6,847,278 — $42,113,000 16.26%
2007 7,673,240 7,673,240 — 43,640,000 17.58%
2008 7,425,602 7,425,602 — 48,077,000 15.45%
2009 8,859,535 8,859,535 — 52,267,000 16.95%
2010 10,306,739 10,306,739 — 51,703,000 19.93%
2011 10,969,154 10,969,154 — 49,432,000 22.19%
2012 11,737,168 11,737,168 — 48,333,000 24.28%
2013 11,391,287 11,391,287 — 46,600,000 24.44%
2014 10,675,321 10,675,321 — 44,663,896 23.90%
2015 10,059,004 10,059,004 — 43,344,502 23.21%
* Payroll as of prior December 31 Measurement Date
Notes to Schedule:
Valuation Date:
Actuarially determined contribution rates are calculated as of January 1 of the fiscal year in which the contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial Cost Method: Entry Age Normal
Amortization Method: Level dollar layered, 20 year periods
Asset Valuation Method: 3-year smoothing period
Inflation: 2.50%
Salary Increases: 4.25%, average, including inflation
Investment Rate of Return: 7.00%, net of pension plan investment expense, including inflation
Mortality: In the 2016 actuarial valuation, assumed life expectancies were
calculated using the RP-2000 Healthy Annuitant Mortality Table
and the RP-2000 Disabled Mortality Table.
Other Post-Employment Benefit Plan
Schedule of Funding Progress
In (000's)
Unfunded
Actuarial UAAL As A
Actuarial Actuarial Accrued Percentage
Actuarial Value Accrued Liability Funded Covered Of Covered
Valuation Of Assets Liability (UAAL) Ratio Payroll Payroll
Date (1) (2) (1)-(2) (1)/(2) (3) (1)-(2)/(3)
7/1/2015 —$ 25,308$ 25,308$ 0% 66,958$ 37.8 %
7/1/2013 — 26,264 26,264 0% 60,238 43.6
7/1/2011 — 24,103 24,103 0% 52,649 45.8
7/1/2009 — 24,412 24,412 0% 50,230 48.6
7/1/2007 — 21,938 21,938 0% 43,640 50.3
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
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual
financial reports for the relevant year.
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…………………………………….............86 - 87
Revenue Capacity
These schedules contain information to help the reader assess
the District’s most significant local revenue sources, the user charge….………88 - 95
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…………….…...96 - 98
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………………………….…………….99 - 101
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……………………………………….……102 - 103
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 86
2007 2008 2009 2010 2011
Net Position
Net investment in
capital assets 1,682,063$ 1,704,322$ 1,798,914$ 1,868,974$ 1,915,233$
Restricted 85,447 97,422 94,769 80,782 94,926
Unrestricted 278,803 324,218 293,934 257,894 186,860
Total Net Position 2,046,313$ 2,125,962$ 2,187,617$ 2,207,650$ 2,197,019$
2012 2013 2014 2015 2016
Net Position
Net investment in
capital assets 1,928,200$ 1,877,692$ 1,845,394$ 1,829,394$ 1,841,178$
Restricted 106,693 111,066 142,764 151,292 146,105
Unrestricted 175,010 251,300 279,794 297,430 339,774
Total Net Position 2,209,903$ 2,240,058$ 2,267,952$ 2,278,116$ 2,327,057$
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(000's)
Fiscal Year
Fiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 87
Non-operating Income/(Loss) Change
Fiscal Operating Operating Operating Revenue/ before Capital Capital in Net
Year Revenues Expenses Income/(Loss) (Expenses) Contributions Contributions Position
2007 202,205,532$ 183,810,507$ 18,395,025$ 36,885,268$ 55,280,293$ 24,309,430$ 79,589,723$
2008 221,925,048 225,145,882 (3,220,834) 37,259,517 34,038,683 45,609,805 79,648,488
2009 249,725,358 212,177,779 37,547,579 (2,885,959) 34,661,620 26,993,385 61,655,005
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
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 88
Licenses,
Fiscal Sewer Service Permits, and
Year Charges, Net Other Fees Other
2007 194,798,878$ 6,030,583$ 1,376,071$ 202,205,532$
2008 216,618,417 4,345,961 960,670 221,925,048
2009 244,699,964 3,475,283 1,550,111 249,725,358
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
OPERATING REVENUES BY SOURCE
LAST TEN FISCAL YEARS
Total Operating
Revenues
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 89
Fiscal Employment Materials and Contracted Chemical
Year Costs Utilities Supplies Services Supplies
2007 58,731,260$ 11,362,805$ 12,335,366$ 40,879,286$ 1,260,789$
2008 60,787,548 12,837,998 14,081,785 64,192,143 1,387,122
2009 70,475,293 12,587,699 14,855,989 48,783,447 1,589,650
2010 85,030,456 12,355,232 13,297,892 39,561,050 1,478,605
2011 84,264,583 14,170,680 11,010,962 42,854,613 1,415,826
2012 87,148,397 12,612,858 13,942,690 29,585,028 1,355,113
2013 91,939,437 14,533,557 10,355,992 31,133,523 1,455,725
2014 93,634,080 14,986,388 11,835,900 40,148,088 2,440,843
2015 96,832,265 16,500,052 17,596,766 46,020,308 3,964,165
2016 99,162,132 16,624,607 16,202,414 49,782,063 3,498,796
Fiscal
Year Insurance Other
2007 2,915,236$ 10,604,787$ 138,089,529$ 45,720,978$ 183,810,507$
2008 2,939,390 13,986,037 170,212,023 54,933,859 225,145,882
2009 2,746,119 13,769,203 164,807,399 47,370,379 212,177,779
2010 3,062,439 19,981,424 174,767,098 54,011,776 228,778,874
2011 2,578,316 21,353,854 177,648,834 66,854,265 244,503,099
2012 2,470,343 2,451,472 149,565,901 66,742,064 216,307,965
2013 2,696,416 8,013,944 160,128,594 70,029,840 230,158,434
2014 2,737,491 1,427,638 167,210,428 74,087,207 241,297,635
2015 2,791,622 (5,825,289) 177,879,889 78,641,259 256,521,148
2016 3,218,041 623,903 189,111,956 83,983,749 273,095,705
OPERATING EXPENSES
LAST TEN FISCAL YEARS
Subtotal,
Expenses before
Depreciation Depreciation
Total Operating
Expenses
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 90
2007 2008 2009 2010 2011
Non-operating revenues
Property taxes levied by the District 24,401,167$ 27,512,070$ 2,129,475$ 1,401,100$ 27,125,451$
Investment income 16,946,145 17,476,621 13,115,519 6,553,760 3,847,324
Rent and other income 878,319 529,983 214,674 265,004 442,968
Total non-operating revenues 42,225,631 45,518,674 15,459,668 8,219,864 31,415,743
Non-operating expenses
Interest expense — — 9,079,269 13,189,283 7,971,088
Clean Water Capital Improvement refund 15,000 4,313,973 — — —
Net loss on disposal and sale
of capital assets 96,630 686,459 2,161,862 2,719,163 3,485,952
Non-recurring projects and studies 5,228,733 3,258,725 7,104,496 9,872,088 10,800,843
Legal claims — — — — 4,828,828
Total non-operating expenses 5,340,363 8,259,157 18,345,627 25,780,534 27,086,711
Net non-operating revenue (expense) 36,885,268$ 37,259,517$ (2,885,959)$ (17,560,670)$ 4,329,032$
2012 2013 2014 2015 2016
Non-operating revenues
Property taxes levied by the District 24,604,173$ 26,016,135$ 27,450,319$ 24,764,324$ 25,671,058$
Investment income 2,407,485 1,056,966 2,966,549 3,000,591 4,635,866
Rent and other income 294,591 293,159 302,506 37,321 102,865
Total non-operating revenues 27,306,249 27,366,260 30,719,374 27,802,236 30,409,789
Non-operating expenses
Interest expense 16,365,309 21,062,474 25,661,127 27,138,546 28,943,200
Net loss on disposal and sale
of capital assets 3,162,723 795,527 5,248,443 1,420,902 324,513
Non-recurring projects and studies 6,402,888 4,676,203 3,492,667 12,317,488 11,000,403
Legal claims 5,000 — — — —
Total non-operating expenses 25,935,920 26,534,204 34,402,237 40,876,936 40,268,116
Net non-operating revenue (expense) 1,370,329$ 832,056$ (3,682,863)$ (13,074,700)$ (9,858,327)$
Fiscal Year
NON-OPERATING REVENUES AND EXPENSES
LAST TEN FISCAL YEARS
Fiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 91
Type of Monthly Charge Unmetered c Residential c Non-Residential
Wastewater User Charge
Base Charge 18.25 18.25 18.25
Compliance Charge a
Tier 1 2.15
Tier 2 44.50
Tier 3 94.80
Tier 4 139.00
Tier 5 183.15
Volume Charges
per Ccf b — 3.21 3.21
per room 2.09 — —
per water closet 7.83 — —
per bath 6.53 — —
per separate shower 6.53 — —
Extra Strength Surcharges a
SS over 300 ppm per ton — — 251.88
BOD over 300 ppm per ton — — 632.38
COD over 600 ppm per ton — — 316.19
Stormwater Service Charge
per account: single residential unit 0.24 0.24 0.24
per account: multi-residential unit 0.18 0.18 0.18
Notes:
a Applicable only to non-residential customers.
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, 2016
Metered
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 92
Fiscal
Year
Wastewater
Charges Billed 1
Wastewater
Charges Collected 2
Collections as a %
of Wastewater
Charges Billed
2007 192,676,922$ 189,346,856$ 98.27%
2008 203,646,332 195,452,994 95.98%
2009 207,801,047 197,892,342 95.23%
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%
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 93
2007 2008 a 2009 2010 b 2011c
Residential:
Single Family/Unit a 271.44$ 344.88$ 344.88$ 1 351.12$ 1 333.60$ 1
Multi-Family/Unit a 228.00 299.76 299.76 305.04 285.12
Commercial/Industrial:
Service Charge/Unit 2 245.40 457.20 457.20 486.60 507.00
Sanitary Sewer Usage Charge per Ccf 1.81 1.88 1.88 1.92 2.02
Storm Sewer Usage Charge/100 sq. feet of impervious area — — 0.12 0.14 —
Extra Strength Surcharges:
Suspended Solids ("SS") over 300 parts per million/ton 218.90 218.90 218.90 218.90 222.62
Biological Oxygen Demand ("BOD") over 300 parts per million/ton 461.44 529.90 529.56 551.52 596.72
Chemical Oxygen Demand ("COD") over 600 parts per million/ton 230.72 264.85 264.78 275.76 298.36
2012 2013 d 2014 2015 2016
Residential:
Single Family/Unit a 347.64$ 379.56$ 421.08$ 434.76$ 491.52$
Multi-Family/Unit a 296.28 324.12 360.36 434.04 490.80
Commercial/Industrial:
Service Charge/Unit 2 525.60 478.56 412.56 348.12 296.80
Sanitary Sewer Usage Charge per Ccf 2.11 2.28 2.50 2.82 3.21
Storm Sewer Usage Charge/100 sq. feet of impervious area — — — — —
Extra Strength Surcharges:
Suspended Solids ("SS") over 300 parts per million/ton 231.35 231.35 231.35 244.03 251.88
Biological Oxygen Demand ("BOD") over 300 parts per million/ton 620.14 620.14 620.14 620.14 632.38
Chemical Oxygen Demand ("COD") over 600 parts per million/ton 310.07 310.07 310.07 310.07 316.19
Notes:
1 Years 2008-2010 saw an impervious rate charge that averaged $36 per year per customer. This was discontinued in 2011.2 Service Charge/Unit for Commerical/Industrial is calculated by using the sum of annualized base charge and compliance charge. Starting FY2013, MSD implemented 5-tier Compliance Charge Rate Model, so the Service Charge/Unit is based on calculated weighted average
compliance charge. FY2013, FY2014 & FY2015 Service Charge/Unit were adjusted to reflect the weighted average compliance charge calculations.
Prior to FY2013, there was only one tier compliance charge.
a Ordinance 12561, effective January 1, 2008, changed wastewater rates. Ordinance 12560, changed stormwater rates , effective March 1, 2008.
b Ordinance 12754, effective July 1, 2009, changed wastewater rates.c Ordinance 13021, effective July 1, 2010, changed wastewater rates through FY 2012.d Ordinance 13402, effective July 1, 2012, changed wastewater rates through FY 2016.
Source: Finance Department
Fiscal Year
Fiscal Year
SEWER USER CHARGES (COMPOSITE-ANNUAL)
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 94
Single Multi-
Fiscal Family Family Non- Total
Year Residential Residential Residential Accounts
2007 362,569 44,875 25,647 433,091
2008 391,181 54,862 32,336 478,379 a
2009 388,791 51,441 32,161 472,393 a
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
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 '11.
b The number of accounts were revised as stormwater accounts were underreported.
NUMBER OF CUSTOMERS BY TYPE
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 95
Customer Amount %
InBev Anheuser-Busch 5,428,513$ 1.80%
City of St. Louis 2,697,436 0.89%
Washington Unversity 1,613,905 0.53%
Bridgeton Landfill LLC 1,597,732 0.53%
Sigma-Aldrich 1,149,118 0.38%
Mallinckrodt 756,826 0.25%
Jost Real Estate 736,728 0.24%
Sensient Colors Inc 729,584 0.24%
BJC HealthCare 725,948 0.24%
Monsanto 725,861 0.24%
Subtotal (10 largest) 16,161,651 5.35%
Balance from other customers 285,850,242 94.65%
Grand totals 302,011,893$ 100.00%
Customer Amount %
Anheuser-Busch 7,748,781$ 3.98%
Mallinckrodt Inc. 1,861,938 0.96%
Washington University 812,536 0.42%
Zoological Gardens 772,108 0.40%
Sigma-Aldrich 641,540 0.33%
St. Louis Coca-Cola Bottling Co. 637,326 0.33%
Rockwood Pigments NA, Inc. 592,840 0.30%
Chrysler Corporation 545,368 0.28%
Sensient Colors Inc. 516,200 0.26%
City of St. Louis 503,653 0.26%
Subtotal (10 largest) 14,632,290 7.51%
Balance from other customers 180,166,588 92.49%
Grand totals 194,798,878$ 100.00%
Source: Budget Division after data is accumulated for the GFOA report
Fiscal Year 2007
User Charges
TEN LARGEST CUSTOMERS
CURRENT YEAR AND NINE YEARS AGO
User Charges
Fiscal Year 2016
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 96
Unamortized As a Share
Fiscal Subordinate Capital Premium, debt of Personal
Year Senior Subordinate Direct Loans Lease loss, net Amount Per Capita Income
2007 231,995,000$ 213,652,500$ 337,730$ —$ 4,189,928$ 450,175,158$ 330 0.42
2008 230,485,000 206,522,500 269,299 — 3,974,435 441,251,234 324 0.67
2009 258,965,000 235,932,500 215,790 4,130,000 2,640,838 501,884,128 373 0.81
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
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 fiscal year 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
LAST TEN FISCAL YEARS
Revenue Bonds
Total
RATIOS OF OUTSTANDING DEBT BY TYPE
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 97
Amount of Debt Percentage of Debt
within within
Governmental Unit Debt Outstanding District Boundary District Boundary
City of St. Louis 16,795,000$ 16,795,000$ 100.0%
St. Louis County 101,310,000 100,499,520 99.2
Municipalities 89,607,953 86,402,953 96.4
City of St. Louis School District 298,119,000 298,119,000 100.0
St. Louis County School Districts 1,413,594,262 1,397,300,622 98.8
Fire Districts 107,099,039 99,578,034 93.0
2,026,525,254$ 1,998,695,129 98.6%
Total Direct Debt 1,315,402,394
Total Direct and Overlapping Debt 3,314,097,523$
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
COMPUTATION OF OVERLAPPING DEBT
As Of June 30, 2016
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 terriroty. These percentages are weighted against the debt
outstanding thus providing the amount of debt within District Boundary.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 98
Less:
Operating
Non- Expenses Net
Fiscal Operating operating Gross (excluding Available
Year Revenues Revenues Revenues depreciation) Revenues
2007 200,963,085$ 13,501,751$ 214,464,836$ 138,089,529$ 76,375,307$
2008 208,981,377 13,281,919 222,263,296 142,725,186 79,538,110
2009 209,972,662 10,283,104 220,255,766 138,971,881 81,283,885
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 2,555,654 291,391,531 163,287,562 128,103,969
2016 318,463,297 3,894,305 322,357,602 171,316,778 151,040,824
Fiscal Coverage
Year Principal Interest Total Ratio
2007 7,817,500$ 16,512,429$ 24,329,929$ 3.1
2008 8,640,000 17,694,791 26,334,791 3.0
2009 12,110,000 17,503,892 29,613,892 2.7
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 2.0
Fiscal Coverage
Year Principal Interest Total Ratio
2007 1,505,000$ 9,369,084$ 10,874,084$ 7.0
2008 1,510,000 11,067,634 12,577,634 6.3
2009 1,520,000 11,677,272 13,197,272 6.2
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
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.
Senior and Subordinate Debt Service
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
Senior Debt Service
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 99
Per
Personal Capita Total
Fiscal Income Personal Labor Number of
Year Populations (millions) Income City County State Force Households (1)
2007 1,349,778 59,200$ 43,859$ 7.5 5.1 5.0 723,627 551,388
2008 1,348,462 62,135 46,079 7.9 5.9 6.0 690,006 551,388
2009 1,339,011 61,947 46,263 11.5 9.7 9.5 681,801 551,388
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
Notes:
(1) The number of households was taken from http://quickfacts.census.gov/qfd/states/29000.html. The 2016 figure is based on 2010-2014 data.
The 2015 figure is based on 2013 data. The 2011-2012 figures are based on the 2010 census. Information for prior years are 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.missourieconomy.org/indicators/LAUS/default.aspx
http://quickfacts.census.gov/qfd/states/29000.html
Unemployment Rate
Saint Louis
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 100
Percentage Percentage
Employer Employees (1)of Total Rank Employees (1)of Total Rank
BJC HealthCare 24,182 4% 1 23,001 3% 1
Wal-Mart Stores Inc. 22,006 3% 2 13,005 2% 5
SSM Healthcare 15,949 2% 3 12,582 2% 6
Washington University in St. Louis 14,692 2% 4 12,423 2% 7
Boeing Defense, Space & Security 14,617 2% 5 16,000 2% 2
Mercy 13,715 2% 6 0%
Scott Air Force Base 13,000 2% 7 13,331 2% 3
Schnuck Markets Inc. 10,897 2% 8 10,700 2% 8
Archdiocese of St. Louis 10,460 2% 9
AT & T 10,015 1% 10 9,442 1% 9
United States Postal Service 13,304 2% 4
St. John's Mercy Health Care 8,642 1% 10
149,533 22% 132,430 20%
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 2016 (as of May 2016)
St. Louis Business Journal's Book of Lists 2007
Fiscal Year 2007Fiscal Year 2016
PRINCIPAL EMPLOYERS (ST. LOUIS METROPOLITAN AREA)
CURRENT YEAR AND NINE YEARS AGO
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 101
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Administrative 125 131 133 131 124 129 124 122 129 126
Office/Clerical 86 92 94 89 84 85 86 82 84 82
Plant Operation & Laboratory 234 239 237 249 241 244 249 252 236 226
Engineering & Technical 122 133 144 151 147 153 148 151 155 152
Sewer Construction
& Maintenance 271 276 301 315 296 311 324 328 345 358
Total Employees 838 871 909 935 892 922 931 935 949 944
Source: Human Resources Department
EMPLOYMENT LEVEL
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 102
Average Sewage
Fiscal Treatment in Millions
Year of Gallons per Day
2007 313.4
2008 363.7
2009 394.7
2010 395.5
2011 370.6
2012 300.0
2013 326.7
2014 273.8
2015 327.5
2016 335.2
Source: Operations Department
AVERAGE FLOW
LAST TEN FISCAL YEARS
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 103
2007 2008 2009 2010 2011
Miles of sewers 9,764 9,723 9,812 9,900 9,843
Number of treatment plants 8 7 7 7 7
Treatment capacity (MGD) a 426 428 423 423 528
Annual engineering maximum plant capacity
(millions of gallons) 155,490 154,395 154,395 154,395 192,629
Amount treated annually (millions of gallons) 114,391 132,751 144,066 144,358 135,269
Unused capacity (millions of gallons) 41,099 21,644 10,329 10,037 57,360
Percentage of capacity utilized 74% 86% 93% 93% 70%
2012 2013 2014 2015 2016
Miles of sewers 9,738 9,578 9,563 9,531 9,700
Number of treatment plants 7 7 7 7 7
Treatment capacity (MGD) a 528 528 533 538 538
Annual engineering maximum plant capacity
(millions of gallons) 192,629 192,629 194,454 196,279 196,279
Amount treated annually (millions of gallons) 109,518 119,253 99,945 119,547 122,366
Unused capacity (millions of gallons) 83,111 73,376 94,509 76,732 73,913
Percentage of capacity utilized 57% 62% 51% 61% 62%
Sources: Operations Department and Engineering Department
Note:a Million gallons per day.
Fiscal Year
Fiscal Year
OPERATING AND CAPITAL INDICATORS
LAST TEN FISCAL YEARS