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HomeMy Public PortalAboutFiscal Year 2017 Popular Annual Financial ReportPoPular annual Financial rePort Fiscal Year Ending June 30, 2017 METROPOLITAN ST. LOUIS SEWER DISTRICTST. LOUIS, MISSOURI ONEYEARAGO–URBANHARVESTSTLF O O D R O O F FARM INITIALPLANTING–URBANHARVESTST L F O O D RO OF FARM AUGUST2017 –URBAN HARVEST STL FOOD ROOF FARM MSD MISSION MSD PROJECT CLEAR “Toprotectthepublic’shealth,safety, andwaterenvironment by responsiblyproviding wastewaterandstormwatermanagement.” MSDProjectClearisourinitiativetoimprovewaterqualityandalleviatemany wastewaterconcernsintheSt.Louisregion.Itwillinvest billions of dollars overa generationinplanning,designing,andbuildingcommunity rainscaping,system improvements,andanambitiousprogramofmaintenanceandrepair. Urban Harvest STL has been growing food in downtown St. Louis since 2012, helping tocombat food insecurity in the area. To serve more local families, the nonprofit, with thehelp of grant money from the MSD Project Clear Rainscaping Large Scale Grant Program,built the Urban Harvest STL FOOD ROOF Farm – a rooftop farm and rain garden atop adowntown building. MSD’s rainscaping program seeks to engage partners to identify jointopportunities to incorporate rainscaping techniques – like the example on the cover – intoongoing programs and future redevelopment projects. Each grant awarded allows MSDto create a public-private partnership that contributes to the environmental, social, andeconomic health of the St. Louis region. ON THE COVER TABLE OF CONTENTS Directors’ Letter............................................................................................................3 December 2015 Flood v. April/May 2017 Flood..............................4-5 What We Do.....................................................................................................................6-7 MSD at Work in the Community...............................................................8-9 Year in Review.................................................................................................................10 Looking Ahead................................................................................................................11 Condensed Statement of Net Position...............................................12 MSD Assets and Long-Term Obligations...........................................13 Income Statement.......................................................................................................14 Revenues and Expenses..........................................................................................15 Cash Flow Statement.............................................................................................16 Performance Against Budget and Credit Rating....................17 POPULAR ANNUAL FINANCIAL REPORT FY 17 |1 2 |METROPOLITAN ST. LOUIS SEWER DISTRICT “Government Finance Officers Association of the United States and Canada (GFOA) has givenan Award for Outstanding Achievement in Popular Annual Financial Reporting to the MetropolitanSt. Louis Sewer District for its Popular Annual Financial Report for the fiscal year ended June 30, 2016.The Award for Outstanding Achievement in Popular Annual Financial Reporting iss a restigiousnational award recognizing conformance with the highest standards for preparation of state andlocal government popular reports.In order to receive an Award for Outstanding Achievement in Popular Annual FinancialReporting, a government unit must publish a Popular Annual Financial Report, whose contentsconform to program standards of creativity, presentation, understandability, and reader appeal.We believe our current report continues to conform to the Popular Annual Financial Reportingrequirements, and we are submitting it to the GFOA to determine its eligibility for another Award.” We appreciate your interest in the Metropolitan St. Louis Sewer District (MSD) and are honoredto present our Popular Annual Financial Report for the Fiscal Year 2017 (FY 17).MSD fulfills the daily needs of residents by providing basic sewer services, and it looks ahead intothe future by planning and implementing small- to large-scale improvements that will benefit theregion for years to come. In FY 17, MSD appropriated funds for 223 new or continuing wastewaterand stormwater projects that are scheduled for either design or construction.This annual report provides a non-technical overview of MSD’s work and a snapshot of ouractivities from the most recent fiscal year – July 1, 2016 to June 30, 2017. Within these pages, you’llfind information on how MSD carefully invests the funds it receives to manage and improve ourregion’s wastewater and stormwater systems.You’ll also find a summary of financial information for the past fiscal year. Please note that while the summary information uses principles and guidelines consistent with Generally Accepted AccountingPrinciples (GAAP), it has been simplified for general audiences and is not GAAP-compliant.A more in-depth financial review of MSD’s operations can be found in its Comprehensive AnnualFinancial Report. You can find this document, as well as this Popular Annual Financial Report, onlineat www.stlmsd.com/our-organization/fiscal-investor-relations/annual-reports. To request a printedcopy of this information, contact MSD at 314-768-6260 or send an email to: customersvc@stlmsd.com.We hope you find this report useful and informative. As always, comments and suggestions onhow we might improve future reports to better serve your interests and needs are welcome. Respectfully submitted, Brian Hoelscher, P.E.Marion Gee Executive Director & CEO Director of Finance DIRECTORS’ LETTER POPULAR ANNUAL FINANCIAL REPORT FY 17 |3 Extreme rains in 2015 and the heavy downfalls in 2017 resulted in major flooding along the Meramec River, impacting MSD’s Grand Glaize and Fenton Wastewater Treatment Plants. In December 2015, parts of the St. Louis region received more than 9 inches of rain in three days,causing the Meramec River to flood. It crested at more than 44 feet, which is the highest level onrecord. On December 28, the inflow at the Fenton Wastewater Treatment Plant exceeded the plant’scapacity, causing internal flooding. The decision was made to cut the electrical power in order tominimize additional damage to the plant. The following day, flash flooding caused the river level to overtop the levee that protected the plant. The facility had to be abandoned.The Grand Glaize Wastewater Treatment Plant was also threatened, but there was more time toreact. By December 29, MSD reviewed the plant’s topographical map and developed an emergencysandbagging plan, which was executed over the next two days with the help of crew members fromother treatment plants. The efforts were mostly successful; however, the Grand Glaize plant stillpartially flooded.The Fenton plant was back up and running after 91 days, at a cost of $8.15 million. The GrandGlaize plant was fully functional after nine days, at a cost of $3.3 million.Sixteen months later, in April 2017, St. Louis again experienced near historic levels of floodingalong the Meramec, but because the river did not rise as quickly, there was more time to prepare.Once the likelihood of flooding was announced, MSD quickly mobilized extra manpower and pumpsand installed a temporary block wall, along with secondary protection in case the new wall failed. Atthe Fenton plant, MSD also mobilized extra resources and built a sandbag wall on top of the levee foradditional protection.The spring 2017 rainfall caused the Meramec River to crest just inches below the 2015 flood level,but this time neither the Fenton nor Grand Glaize plants flooded, and both remained operational.Enhanced protection against flooding is planned at both plants, including building a new permanentflood wall at Grand Glaize and raising the levee at the Fenton plant. DECEMBER 2015 FLOOD V. APRIL/MAY 2017 FLOOD 4 |METROPOLITAN ST. LOUIS SEWER DISTRICT DECEMBER 2015 FLOODV. APRIL/MAY 2017 FLOOD Regional Flooding POPULAR ANNUAL FINANCIAL REPORT FY 17 |5 WHAT WE DO MSD’sDualFunction MSD’s service area encompasses approximately 520 square miles, including all 66 square miles of St. Louis City and 454 square miles (87 percent) of St. Louis County. The current population served by MSD is approximately 1.3 million, representing more than 426,000 accounts. The Metropolitan St. Louis Sewer District owns, operates, and maintains a sewer system which consists of wastewater, stormwater, and combined collection sewers – carrying both wastewater and stormwater – pumping stations, and wastewater treatment facilities that have been incorporated into one entity over the last 60-plus years. It is one of the largest and most complex systems in the United States. MSD is two separate utilities within one organizational structure: Wastewater –collect “used” water disposed of in sinks, toilets, and floor drains by households and businesses, and then treat it to regulatory standards before returning it to the region’s waterways. Stormwater – operate and maintain the public storm sewer system and help coordinate regional efforts to address pollution carried in or caused by stormwater runoff. 6 |METROPOLITAN ST. LOUIS SEWER DISTRICT ColdwaterWWTP Grand GlaizeWWTP FentonWWTP MissouriRiverWWTP LemayWWTP Bissell PointWWTP LowerMeramecWWTP I-270 I-270 I-270 I-44 I-44 I-64 I-64 I-255 I-55 I-170 I-70 I-70 MSD Wastewater Treatment Plants (WWTP) Service Area Memphis Light, Gas and Water “2017 Utility Bill Comparisons” Survey Rates as of January 1, 2017, based on 10 CCF RESIDENTIALWASTEWATER USERCHARGE ST. LOUISANDOTHERMUNICIPALITIES SURVEYAVERAGE NASHVILLEST.LOUISNEWORLEANSDETROITBOSTON $0 $10 $20 $30 $40 $50 $60 $70 COLUMBUS SPRINGFIELD MSD engages with the public at a variety of events throughout the year to inform and educate residents about wastewater and stormwater issues, as well as MSD programs and services, including: St. Louis Earth Day –Even frosty morning temperatures didn’t keep MSD volunteers from handing out information about Project Clear, stormwater management, and flood zone awareness to 2017 St. Louis Earth Day attendees. MSD’s involvement didn’t end there – MSD Project Clear also sponsored the environmental-themed bus painting event. The theme was rain gardens, highlighting the power of beautiful flowers and grasses coupled with an engineered drainage system to reduce the amount of stormwater sent through our storm sewer system. Green Homes Festival – MSD Project Clear sponsored the NatureScaping display at the 16th annual Green Homes Festival at the Missouri Botanical Garden. This popular event is a celebration of sustainable living and healthy lifestyles. MSD handed out reusable bags containing information on MSD Project Clear and responsible stormwater management. Sista Strut Walk sm –MSD was a sponsor for the 7th Annual Sista Strut SM Breast Cancer Walk, which supports breast cancer awareness and provides information and resources, saving the lives of women of color in the local community. This event is the largest of its kind in the nation – in 2016, 8,000 walkers participated in St. Louis. Eight MSD employees volunteered to staff a table to provide information on MSD Project Clear and the Customer Assistance Program. The latter offers a 50 percent rate reduction to qualified low-income, elderly, and disabled customers. St. Louis Auto Show –At the St. Louis Auto Show in January, MSD employees provided attendees with information on MSD Project Clear and stormwater best practices. MSD also participated in: •Enterprise Holdings Employee Eco Fairs •TEDxSTL events, and •The Greater St. Louis Hispanic Festival PublicEducationandCommunityOutreach POPULAR ANNUAL FINANCIAL REPORT FY 17 |7 St.LouisEarthDay St. Louis Auto Show Green Homes Festival St. Louis Earth Day MSD AT WORK IN THE COMMUNITY 8 |METROPOLITAN ST. LOUIS SEWER DISTRICT Throughout MSD’s service area, thereare points where wastewater discharges intolocal waterways from the sewer system duringmoderate to heavy rainstorms – these seweroverflow points act as necessary relief valveswhen too much stormwater enters the wastewatersystem, saving the St. Louis community fromwidespread basement backups. Many of theseoverflow points are a product of the way theSt. Louis wastewater systems were first built,predating the District’s creation in 1954 butultimately falling under its jurisdiction today.In April 2012, a consent decree agreementbetween MSD, the Environmental ProtectionAgency, and the Missouri Coalition for theEnvironment was entered by the United States District Court for the Eastern District of Missouri. Prior to the consent decree, from 1992 to 2012, MSD spent approximately $2.7 billion to remove more than 350 overflows. The consent decree sets a timetable for continued improvements to the sewer system, including upgrades and maintenance, and additional overflow removals. As part of its consent decree work, MSD Project Clear implemented an aggressive cleaning and preventive maintenance program, called Capacity, Management, Operations, and Maintenance (CMOM). Recent additions to the CMOM program include: the use of an acoustic inspection device to provide sewer line blockage assessment in less than five minutes; the purchase of a second Rapid View 3D scanner truck to support the stormwater inlet inspection program made possible by the passage of Proposition S in 2016; and the addition of GPS capabilities on the rapid scan trucks. The additional technologies allow for quicker, more efficient, and cost-effective determination if cleaning is required, precise system inspection, and improvement to the overall accuracy of system maps. These trucks are capable of a combined 15,000 to 20,000 manhole/inlet inspections annually. ConsentDecreeUpdate AcousticInspectionDevice RapidView3DScanner In FY 17, MSD introduced an updated title quote system to simplify the search process for title companies. Title companies perform a search and contact MSD to finalize sewer billing for the previous customer and to ensure there are no outstanding MSD debts or liens on the property. By requesting title quotes, buyers are protected from unexpected expenses after closing and unforeseen delays in taking ownership of the new property. Improvements to MSD’s title quote system make the process easier and more efficient.Title companies can now access informationimmediately, whereas previously there was a 48-hour waiting period. Additional changes makethe system more accurate. A new account is nowonly created after a sale is finalized; this meansthat if a sale falls through, the potential buyerwon’t receive an MSD bill in error. The systemalso now calculates final bills based on usage,rather than calculating based on the last billamount, thus improving billing accuracy. POPULAR ANNUAL FINANCIAL REPORT FY 17 |9 UpdatedTitleQuoteSystem MSD’sUpdatedTitleQuoteSystem Capital Improvement MSD Project Clear made 223 appropriations for new or continuing wastewater and stormwater design and construction projects in FY 17, totaling $287.9 million. These numbers include $1.6 million appropriated for three emerging repair projects. Diversity MSD understands the role of diversity in creating a strong and vibrant St. Louis community. Accordingly, it has had policies in place for many years that help develop and grow minority- and women-owned business enterprises (MWBE). In recent years, MSD has expanded its focus to ensure broader workforce diversity for its capital construction projects. In FY 17, minority-owned firms performed $37,324,055 in capital work, representing 17.03 percent of the District’s capital program spending for the time period. Women-owned firms performed $6,490,358 in capital work, representing 2.96 percent of the District’s capital program spending.* During that same timeframe, minority workforce participation was 460,077 hours or 28.95 percent of total hours worked on capital projects by contractors, and women participation was 77,021 hours or 4.85 percent of total hours worked on capital projects by contractors.* *Numbers are as of September 14, 2017. Please note, as project documentation is finalized, precise numbers may fluctuate. Peak Performance Award In 2017, MSD was selected to receive seven Peak Performance Awards, presented by the National Association of Clean Water Agencies (NACWA). The award recognizespublic wastewater treatment facilities for theiroutstanding compliance records with theirNational Pollution Discharge EliminationSystem (NPDES) permit, granted by the Missouri Department of Natural Resourcesin the 2016 calendar year.The Lower Meramec and Fenton WastewaterTreatment Plants received Platinum Awards formaintaining a perfect compliance record for fiveconsecutive years. Gold Awards went to BissellPoint, Coldwater Creek, Grand Glaize, and theMissouri River Treatment Plants for achieving100 percent compliance with their NPDES permitfor an entire calendar year. The Lemay plant wasgiven the Silver Award, recognizing facilities thathave received no more than five NPDES permitviolations per calendar year. Green City CoalitionMSD Project Clear is committed to spending$100 million in rainscaping features in thegreen infrastructure area of the Bissell Pointwatershed, covering the combined sewer areaof St. Louis City and some of northeasternSt. Louis County that drains to the MississippiRiver. By working with the Green City Coalition– a collaborative effort led by the MissouriDepartment of Conservation, the MissouriBotanical Garden, and the City of St. Louis toconvert vacant spaces to green places – MSD willhelp fund the demolition of vacant properties.This initiative creates more green space tomanage rain where it falls and avoid excessivestormwater entering into the system, while alsohelping the City accelerate the pace of derelictbuilding demolitions. This unique agreementallows MSD to provide benefits to the regionbeyond just new sewer improvements. The goalof the demolition program is to use $13.5 millionto fund the removal of approximately 1,000structures throughout the City, creating about 50acres of green space that can absorb stormwater.After the demolition, the City will maintain theproperties and work with outside organizationsto retain the pervious surface and utilize thespaces in ways that benefit the community. YEAR IN REVIEW 10 |METROPOLITAN ST. LOUIS SEWER DISTRICT Wastewater In FY 18, MSD Project Clear has plans for 157 new, ongoing, or continued wastewater project appropriations totaling $329.2 million. These projects are funded primarily from the Sanitary Replacement fund and represent $30.4 million in continued projects and $298.8 million in new and ongoing projects. Stormwater Currently, MSD performs three District-wide stormwater services: Service MSD owns, operates, and maintains stormwater infrastructure, including stormwater sewers, inlets, improved channels, manholes, etc. Management MSD’s responsibilities include but are not limited to: • Enforcing rules and regulations for stormwater improvements • Investigating and evaluating stormwater complaints • Monitoring water quality of area creeks and rivers Compliance MSD is a co-permittee with 59 municipalities, St. Louis County, and Unincorporated St. Louis County. MSD’s responsibilities include but are not limited to: • Ensuring regulatory compliance with the state’s water quality standards • Inspecting area creeks for illegal discharges • Providing public education • Coordinating permit-related activities by municipalities and St. Louis County In addition to operating the existing stormwater system, MSD Project Clear plans 16 stormwater design and construction projects in FY 18, including continued projects from FY 17, totaling $9.9 million. The April 2016 voter approval of Proposition Sequalized stormwateroperationsandmaintenancethroughout the District. In addition to equalizingoperations and maintenance, Proposition S alsoprovided $67 million in remaining fund balancesto pay for a finite number of stormwater capitalprojects. As just noted, $67 million is a finiteamount – once it is spent, there is no otherfunding source for capital stormwater projects.There is no long-term funding solution forcapital improvements for localized flooding,erosion, and regional flooding. The Future of Stormwater - Should MSDProvide Full Regional Stormwater Services? MSD has identified approximately $500 million in erosion and flooding issues throughout its service area. MSD is not a flood- control agency and does not own creeks and streams. Though it cannot prevent localized flooding and erosion, MSD could provide projects that would mitigate the impacts of future localized flooding and erosion. For regional flooding, the only true answer is to fund large-scale property buyouts. During the first half of 2017, MSD held public meetings and completed surveys to seek public and municipal input on whether additional funding for stormwater projects should be secured. In the second half of 2017, the information gathered from outreach was used to develop a rate proposal for stormwater funding that will be presented to MSD’s Rate Commission in 2018. Additional public meetings are planned to explain the rate proposal. If the Rate Commission and the Board of Trustees approve this expansion of services and the corresponding funding, a ballot initiative would be presented to area voters in 2019. LOOKING AHEAD POPULAR ANNUAL FINANCIAL REPORT FY 17 |11 FY 17 FY 16ASSETS: Current, restricted, and other assets $ 743,571 $ 707,033 Capital assets (net of accumulated depreciation) 3,252,238 3,052,043Total Assets 3,995,810 3,759,076 DEFERRED OUTFLOW OF RESOURCES: Bonds and notes payable-deferred loss on refunding 11,321 11,974 Pension-related outflows 37,666 31,144Total Deferred Outflow of Resources 48,987 43,118 LIABILITIES: Current liabilities 133,679 125,284 Non-current liabilities 1,515,345 1,344,141Total Liabilities 1,649,024 1,469,425 DEFERRED INFLOW OF RESOURCES: Pension-related inflows 4,605 5,712Total Deferred Inflow of Resources 4,605 5,712 NET POSITION: Net investment in capital assets 1,876,249 1,809,386 Restricted 135,259 136,547 Unrestricted 379,660 381,124Total Net Position $ 2,391,168 $ 2,327,057 WHAT IT TELLS YOU: A Statement of Net Position, also known as a balance sheet, is a financial statement that summarizes what MSD owns and owes at a given point in time. It also shows our net worth at that specific point in time. OUR FY 17 BALANCE SHEET SHOWS THAT: •MSD’s assets and deferred outflows exceed liabilities and deferred inflows by $2.3 billion. •Overwhelmingly, MSD’s assets are in the form of capital assets. The $3.3 billion in net capital assets is split into the five categories. •Of the $1.6 billion in liabilities, $1.5 billion are in the form of bonds and notes payable. DEFINITIONS: Current, restricted, and other assets: all assets other than fixed assets that are owned or due to the District. Capital assets (net of accumulated depreciation): thetotal value of all fixed assets, including all sanitaryinfrastructure, general plant and equipment, and land. Deferred outflows:the use of resources that will be applied to future periods. Current liabilities: money owed by the District and duewithin 12 months. Non-current liabilities: money owed by the District that isdue more than 12 months in the future. Net investment in capital assets: the value or net worth of all fixed assets after related liabilities are deducted. Deferred inflows:the purchase of resources that will beapplied to future periods. Restricted:the value or net worth of all assets designated for specific purposes after related liabilities are deducted. Unrestricted: the value or net worth of all remainingassets after remaining liabilities are deducted. KEY FINANCIAL INFORMATION CONDENSEDSTATEMENTOFNETPOSITION(inthousands) 12 |METROPOLITAN ST. LOUIS SEWER DISTRICT KEYOther (see detail)Construction In ProgressTreatment, Disposal Plant,and EquipmentCollection and Pumping Plant DetailLandGeneral Plant and Equipment MILLIONSWHAT WE OWN: MSD ASSETS WHAT WE OWE: MSD LONG-TERM OBLIGATIONS CONDENSEDSTATEMENTOFCAPITALASSETSLESSNETOFDEPRECIATION(inmillions) BONDSANDNOTESPAYABLE $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 POPULAR ANNUAL FINANCIAL REPORT FY 17 |13 NOTE:Revenue Bonds and Direct Loan balances only $92 M $71 M $708 M $736 M $21 M $1,716 M 14 |METROPOLITAN ST. LOUIS SEWER DISTRICT FY 17 FY 16 FY 15 FY 14 FY 13OPERATING REVENUES: Sewer service charges $330,873 $ 306,119 $ 284,367 $ 250,133 $ 238,635 Provision for doubtful sewer service charge accounts (2,513) (4,107) (2,096) 7,210 (2,655) Licenses, permits, and other fees 4,036 3,620 6,657 6,563 2,731 Other 1,095 14,226 1,460 1,867 3,235 Total Operating Revenues 333,491 319,858 290,388 265,773 241,946 NON-OPERATING REVENUES: Property taxes levied by the district 32,458 25,671 24,764 27,450 26,016 Investment income 2,903 4,636 3,001 2,967 1,057 Rent and other income 106 103 37 303 293 Total Non-Operating Revenues 35,467 30,410 27,802 30,719 27,366 Total Revenues 368,958 350,268 318,190 296,492 269,312 OPERATING EXPENSES: Pumping and treatment 60,203 59,100 60,766 54,126 54,526 Collection system maintenance 43,928 42,853 40,162 39,988 37,877 Engineering 11,290 10,998 10,954 12,184 12,020 General and administrative 58,535 55,315 48,551 45,661 41,485 Water backup claims 5,035 7,631 3,862 2,713 3,503 Depreciation 81,194 83,984 78,641 74,087 70,030 Asset management 14,893 13,215 13,586 12,539 10,717 Total Operating Expenses 275,078 273,096 256,522 241,298 230,158 NON-OPERATING EXPENSES: Net (gain) loss on disposal and sale of capital assets 673 325 1,421 5,248 796 Non-recurring projects and studies 7,459 11,000 12,317 3,493 4,676 Interest expenses 31,251 28,943 27,139 25,661 21,062 Total Non-Operating Expenses 39,383 40,268 40,877 34,402 26,534 Total Expenses 314,461 313,364 297,399 275,700 256,692 INCOME BEFORE CAPITALGRANTS AND CONTRIBUTION: 54,497 36,904 20,791 20,791 12,620 Capital grants and contributions 9,614 12,037 12,997 7,102 17,535 CHANGE IN NET POSITION: 64,111 48,941 33,788 27,894 30,155 Net position - beginning of year 2,327,057 2,278,116 2,267,952 2,240,058 2,209,903 Effect of adoption of GASB68 —— (23,623)—— NET POSITION – END OF YEAR $ 2,391,168 $ 2,327,057 $ 2,278,116 $ 2,267,952 $ 2,240,058 INCOME STATEMENT STATEMENTOFREVENUES,EXPENSES,ANDCHANGESINNETPOSITION(inthousands) The financial information included is derived from the CAFR and presented in conformity with the GAAP. DEFINITIONS:Operating revenues:all income received from the District’s daily normal business activities.Operating expenses: all expenses related to the District’s daily normal business activities.Non-operating revenues: all income not related to the District’s daily normal business activities.Non-operating expenses: all expenses not related to the District’s daily normal business activities. WHAT IT TELLS YOU:An income statement tells you where MSD gets its funds and how they are spent. It also shows how much money MSDmade or lost over a specific period of time. OUR FY 17 INCOME STATEMENT SHOWS THAT:•Sewer service charge revenue increased as a result of the scheduled rate increase that occurred in FY 17.•Operating expenses increased due to changes in reporting requirements for pension plans, depreciation for assetadditions, and water backup claims related to excess rain. $5,243 $7,459 $32,458 $34,691 $40,598 $16,771 $51,197 $81,194 $99,357 $673 $106 $14,454 $1,095 $3,293 $3,569 $2,903 $4,036 $31,251 $328,360 REVENUES WHERETHEMONEYCOMESFROM(inthousands) EXPENSES WHERE THE MONEY GOES (in thousands) KEYOther (see detail)Sewer Service Charges, Net Detail Rent and Other IncomeOther Operating RevenuesInvestment IncomeLicenses, Permits, and Other FeesProperty Taxes Leviedby the District KEYOther (see detail)Employment CostsUtilitiesContracted ServicesDepreciationInterest Expense DetailNet Loss on Sale of AssetsMaterials and SuppliesChemical SuppliesInsuranceOther Operating ExpensesNon-Recurring Projectsand Studies POPULAR ANNUAL FINANCIAL REPORT FY 17 |15 FY 17 FY 16 Cash flows from operating activities $ 156,259 $ 127,665 Cash flows from non-capital financing activities 32,013 25,583 Cash flows from capital activities (154,634)(91,512) Cash flows from investing activities (34,721)(74,347) Net increase (decrease) in cash and cash equivalents (1,083)(12,611) Cash and cash equivalents at beginning of year 49,196 61,807 Cash and Cash Equivalents at End of Year $ 48,113 $ 49,196 DEFINITIONS:Cash flows from operating activities: all cash received or spent related to MSD’s daily normal business activities.Cash flows from non-capital financing activities: all cash received related to taxes.Cash flows from capital and related financing activities: all cash received or spent related to construction of MSD’s infrastructure.Cash flows from investing activities: all cash received or spent related to investing MSD’s cash reserves. WHAT IT TELLS YOU:A cash flow statement summarizes both the cash and the net cash coming in and going out of MSD during a given period. OUR FY 17 CASH FLOW STATEMENT SHOWS THAT:• Cash flows from operating activities increased due to increased receipts from customers.• Cash flows from non-capital financing activities increased due to more tax revenue collected.•Cash flows from capital and related financing activities increased as a result of additional payments for capital assetsduring FY 17.• Cash flows from investing activities decreased due to a decrease in the volume of maturities of investments. CASH FLOW STATEMENT CASH FLOWS COMPARISON CONDENSEDSTATEMENTOFCASHFLOWS(inthousands) -200000 -150000 -100000 -50000 0 50000 100000 150000 200000 Operating Activities Non-CapitalFinancing Activities Capital Activities Investing Activities FY 17 FY 16KEY THOUSANDS16 |METROPOLITAN ST. LOUIS SEWER DISTRICT $156,259 $32,013 ($154,634) $127,665 $25,583 ($74,347)($91,512) ($34,721) POPULAR ANNUAL FINANCIAL REPORT FY 17 |17 CREDIT RATING WHAT IT TELLS YOU: A credit rating provides an assessment of an organization’s credit worthiness, based on its history of borrowing and repayment of funds, as well as its assets and liabilities. A poor credit rating makes it more difficult to find financing and often results in higher interest rates. As the chart below illustrates, MSD has premium credit, with consistent ratings at the top of each credit rating agency’s scale. On a scale of AAA to D, MSD earned AAA and AA+ ratings from Standard & Poor’s and Fitch, respectively. Similarly, on a scale of Aaa to C, MSD earned an Aa1 rating from Moody’s. MSD has demonstrated to creditors and credit rating agencies its ability to manage large annual capital plans. The District’s solid financial management, including close monitoring of its financial performance, strong debt coverage, and liquidity also contribute to these ratings, which have remained constant the past three years.FY 17 FY 16 FY 15 Moody’s Aa1 Aa1 Aa1 Standard & Poor’s (S&P)AAA AAA AAA Fitch AA+ AA+ AA+ PERFORMANCE AGAINST BUDGET Budget Expenses Unspent Budget CapitalImprovementand ReplacementProgram (CIRP) $378.5 M $268.8 M $109.7 M The largest contributing factor to underspending thisbudget line is postponed work. Postponements canoccur for various reasons including easement acquisitiondelays, scope revisions, and delays in choosingcontractors. These delays contributed $65 million to thevariance. The remainder of the savings was a result offavorable bids. Operating $196.6 M $189.8 M $6.8 M Personnel Services, due in large part to vacancies,were $6.4 million under budget. Supply expenses werealso favorable by $4 million mostly due to savingsof approximately $1 million in Operations Support,Treatment Plants, and Maintenance Yards. Additionally,Pump Stations and Environmental Compliancecombined for another $0.7 million in savings onSupplies. Contractual Services and Capital Outlay offseta portion of these savings, with expenses exceedingthose budgets by nearly $4 million in total. Debt Service $98.8 M $91.4 M $7.4 M Debt Service expenses were favorable for the new debtissued during FY 17. The District participated in two StateRevolving Fund bonds and budgeted $5.5 million fordebt service expenses, but no debt service was paid onthese new issuances in FY 17. Additionally, the Districtissued Senior Revenue Bonds for which $4.3 million wasbudgeted in debt service expenses. Of the $4.3 millionbudgeted, only $2.5 million was required in FY 17. Total $673.8 M $549.9 M $123.9 M WHAT IT TELLS YOU:In MSD’s case, it shows that MSD has been a good steward of the funds allocated to the District. www.projectclearstl.org METROPOLITAN ST. LOUIS SEWER DISTRICT ST. LOUIS, MISSOURI www.stlmsd.com @YourMSD Facebook.com/ProjectClearSTL Facebook.com/YourMSD ProjectClearSTL YourMSD Metropolitan St. Louis Sewer District @ProjectClearSTL @YourMSD