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HomeMy Public PortalAboutFiscal Year 2013 Popular Annual Financial ReportPopular Annual Financial Report FISCAL YEAR ENDING JUNE 30, 2013 St. Louis, MO TABLE OF CONTENTS Letter to Readers ........................................................................1 Our History ..................................................................................2 Organization ...............................................................................3 Our Customers ...........................................................................5 Key Financial Information Statement of Net Position ....................................................6 What We Owe and What We Own .......................................7 Income Statement ................................................................8 Expenses and Revenues ......................................................9 Cash Flow Statement ..........................................................10 Performance Against Budget .............................................11 Credit Rating ........................................................................11 Performance, Accomplishments, Hurdles & Initiatives ........12 Looking Ahead ..........................................................................15  The Government Financial Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the Metropolitan St. Louis Sewer District for its Popular Annual Financial Report for the fiscal year that ended June 30, 2012. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In Order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability and reader appeal. We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to the GFOA. Government Finance Officers Association Award for Outstanding Achievement in Popular Annual Financial Reporting Presented to Metropolitan St. Louis Sewer District, Missouri For its Annual Financial Report for the Fiscal Year Ended June 30, 2012 Executive Director/CEO 16 Letter to Readers The Metropolitan St. Louis Sewer District (MSD) is pleased to share with you the Fiscal Year 2013 (FY2013) Popular Financial Annual Report. Much of the work MSD does is performed out of the sight of most members of our community. This report is designed to give you a glimpse into our world. Using non-technical language, it provides a snapshot of our activities from our most recent fiscal year, which ran from July 1, 2012 to June 30, 2013. As you read it, you will learn how we are carefully investing the funds we receive to improve and manage our region’s wastewater and stormwater systems. Our mission is simple: to protect the public’s health and safety, and safeguard water quality in our region’s waterways. This report also contains financial information for this past fiscal year that summarizes the much more detailed information found in our Comprehensive Annual Financial Report. While the summary information you’ll find here uses principles and guidelines consistent with Generally Accepted Accounting Principles (known in the accounting world as GAAP), it has been simplified for general audiences and is not a GAAP-compliant publication. If you prefer more detailed information, you are invited to review our Comprehensive Annual Financial Report (CAFR) and audited financial statements, both of which are available online at http://www.stlmsd.com/aboutmsd/fiscal/annualreport. You may also request a printed copy of this information by contacting MSD at 314-768-6260. As you will see as you review the following pages, MSD is working hard to create a 21st Century stormwater management & wastewater collection and treatment system for our region. We hope you find this information useful, and welcome your comments and suggestions on how we might improve future reports to better meet your interests and needs. Respectfully submitted, Brian Hoelscher Janice Zimmerman Executive Director Director of Finance 1 Our History St. Louis first learned the importance of maintaining a safe water supply more than 100 years before the Metropolitan St. Louis Sewer District was founded. Up until 1849, when a major cholera epidemic killed over 4,000 of the city’s residents, St. Louis had no significant sewer systems; wastewater was diverted into a honeycomb of limestone caves beneath the city or directed to an area creek or river. Serious efforts to protect public health began thereafter, when the City of St. Louis and individual municipalities began building their own sewage collection systems. Following standard practice for the times, these sewers collected and transported sewage and stormwater away from neighborhoods, through the same sewer pipe, to the Mississippi River or smaller streams. However, this sewage was not receiving treatment before reaching local waterways. By the mid-1900’s, our region’s waterways were becoming more and more polluted by this untreated sewage. MSD was formed in 1954 to address the serious water quality issues the region was facing. Today, MSD is the compilation of 79 individual sewer systems that formerly served all 62 square miles of St. Louis City and 462 square miles -- or about 90% -- of St. Louis County. Today MSD operates and maintains 6,550 miles of sanitary and combined sewers that transport wastewater to one of seven plants for treatment before returning it to local waterways. Because it is responsible for protecting our region’s five major watersheds,* MSD is also currently in the process of addressing hundreds of overflow points where a combination of stormwater and wastewater still discharge into area rivers and streams during and after medium to heavy rainstorms. As the St. Louis region’s clean water advocate, MSD has made significant improvements to local watersheds and water quality in its 59-year history. Significant additional investment in this essential natural resource is planned for the years ahead. DID YOU KNOW? * A watershed is an area of land that eventually drains into a particular body of water. Watersheds are important because they supply our drinking water, provide a habitat for fish and wildlife, and are the source of the water needed for irrigation, industry, and recreational activities. All of our region’s watersheds drain eventually into either the Missouri or Mississippi River. 2 WHAT MSD DOES Created under a provision of the Missouri State Constitution, MSD is actually two separate utilities – a wastewater utility and a stormwater utility under one organizational umbrella. Each one has distinct responsibilities and its own source of funding: WHAT IT INCLUDES “Used” water disposed of in sinks, toilets, and floor drains by house- holds and businesses Rainfall and drainage that is not naturally absorbed in the soil Our primary responsibility To collect this water and treat it to high standards before returning it to our region’s waterways Manage this water in accordance with established funding levels and appropriate regulations WASTEWATER MANAGEMENT STORMWATER MANAGEMENT Organization MSD is governed by a six-person Board of Trustees appointed by the St. Louis City Mayor and the St. Louis County Executive. Our Executive Director reports to this Board, which sets policy and adopts our annual budget. MSD’s Rate Commission, which is made up of representatives from 15 local organizations, makes recommendations to the Board regarding all proposed wastewater, stormwater, and tax rate and structure changes. 3 MSD BY THE NUMBERS OUR MISSION: To protect the public’s health, safety, and water environment by responsibly providing wastewater and stormwater management. Number of wastewater Seven treatment plants: Average Daily 356 million gallons Wastewater treated: Sewers operated 9,578 miles, including 3,028 miles of stormwater sewers, 4,744and maintained: miles of sanitary sewers, and 1,806 miles of combined sewers*. Miles of sewers that have 834 miles, including 523 miles that are more than 80 yearsreached the end of their old and 311 miles that are more than 120 years old.useful life: MSD’s wastewater collection system is the fourth largest in the country -- roughly the same size as the wastewater system in Los Angeles, which has more than twice the population to support it. No. of employees: 931 DID YOU KNOW? * Combined sewers collect both sanitary sewage and stormwater runoff in a single pipe. No longer built in new communities, combined sewers are found in older cities like St. Louis. Overflows from these sewers during wet weather are a source of water pollution. 4 Our Customers Our service area: MSD serves all of St. Louis City and approximately 90 percent of St. Louis County, including county residents generally east of Highway 109. No. of customers: Approximately 1.3 million, representing more than 424,000 accounts. About two-thirds of our customers are in St. Louis County and one-third from the City of St. Louis. MSD'S 10 largest customers in FY2013: 1. A-B InBev 2. Washington University 3. Mallinckrodt, Inc. 4. City of St. Louis 5. St. Louis University Hospital 6. Sigma-Aldrich 7. Boeing Co. 8. Sensient Colors Inc. 9. St. Louis Zoo 10. Prairie Farms Dairy 5 KEY FINANCIAL INFORMATION CONDENSED STATEMENT OF NET POSITION (in thousands) FY2013 FY2012 ASSETS: Current, restricted, and other assets $ 603,104 $ 407,731 Capital assets (net of accumulated depreciation) $2,659,806 $2,548,816 Total Assets $3,262,910 $2,956,547 LIABILITIES: Current liabilities $89,432 $86,337 Non-current liabilities $924,281 $651,916 Total Liabilities $1,013,713 $738,253 NET POSITION: Net investment in capital assets $1,886,831 $1,936,590 Restricted $117,365 $106,694 Unrestricted $245,001 $175,010 Total Net Position $2,249,197 $2,218,294 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): the total value of all fixed assets, including all sanitary infrastructure, general plant and equipment, and land.Current liabilities: money owed by the District that is due within 12 months. Non-current liabilities: money owed by the District that is due more than 12 months into the future. Net investment in capital assets: the value or net worth of all fixed assets, after related liabilities are deducted.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 remaining assets after remaining liabilities are deducted. 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 same point in time. OUR FY2013 BALANCE SHEET SHOWS THAT: • MSD’s assets exceed liabilities by $2.25 billion. • MSD’s assets are overwhelmingly in the form of capital assets, including treatment plants, collec- tion systems and equipment that we use to provide wastewater and stormwater management. The $2.66 billion in net capital assets is split into the five categories shown in the pie chart on page 7. • Of the $1.01 billion in liabilities, $.92 billion are in the form of bonds and notes payable. An historic look at MSD’s debt level is illustrated in the following table: HistoricDebt Level 6 FISCAL YEAR AMOUNT 2004 $ 336,753,275 2005 342,723,599 2006 379,940,538 2007 445,985,230 2008 437,276,799 FISCAL YEAR AMOUNT 2009 $499,243,290 2010 605,156,058 2011 584,600,880 2012 658,396,362 2013 877,066,658 7 What we own: MSD Assets Condensed Statement of Capital Assets-Net of Depreciation (in millions) What we owe: MSD Long-term Obligations $50 $361 $599 $1,614 $36 $86 Land Construction in progress Treatment and disposal plant and equipment Collection and pumping plant General plant and equipment $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Millions Bonds and Notes Payable INCOME STATEMENT Statement of Revenues, Expenses and Changes in Net Position (in thousands) FY2013 FY2012 FY2011 FY2010 FY2009 OPERATING REVENUES: Sewer Service Charges $238,635 $227,677 $223,276 $251,683 $254,378Provision for doubtful sewer service charge accounts (2,655) (6,911) (6,249) (10,188) (9,678)Provision for uncollected stormwater charge accounts 0 0 (2,374) 0 0Licenses, permits and other fees 2,731 2,684 2,976 3,085 3,475Other Operating Revenue 3,235 2,550 1,815 2,007 1,550 TOTAL OPERATING REVENUE 241,946 226,000 219,444 246,587 249,725 NON-OPERATING REVENUES: Property taxes levied by the district 26,017 24,604 27,126 1,401 2,129Investment income 1,057 2,407 3,847 6,554 13,116Rent and other income 293 295 443 265 215 TOTAL NON-OPERATING REVENUES 27,367 27,306 31,416 8,220 15,460 TOTAL REVENUES 269,313 253,306 250,860 254,807 265,185 OPERATING EXPENSES: Pumping and treatment 54,526 49,005 50,532 47,266 44,746Collection system maintenance 37,877 36,695 33,152 36,082 32,917Engineering 12,020 8,544 12,486 15,773 13,736General and administrative 41,485 33,180 36,078 39,237 37,922Water backup claims 3,503 2,050 8,912 3,951 6,817Depreciation 70,030 66,742 66,854 54,012 47,370Asset management 10,717 20,092 36,492 32,458 28,669 TOTAL OPERATING EXPENSES 230,158 216,308 244,503 228,780 212,178 NON-OPERATING EXPENSES: Net (gain) loss on disposal and sale of capital assets 796 3,163 3,486 2,719 2,162Non-recurring projects and studies 4,676 6,403 10,801 9,872 7,104Legal claims 0 5 4,829 0 0Interest expense 20,315 15,811 7,971 13,189 9,079 TOTAL NON-OPERATING EXPENSES 25,787 25,382 27,087 25,780 18,345 TOTAL EXPENSES 255,945 241,690 271,590 254,560 230,523 INCOME BEFORE CAPITAL Grants and contributions 13,368 11,616 (20,730) 247 34,662Capital grants and contributions 17,535 9,659 10,099 19,786 26,993 CHANGE IN NET POSITION 30,903 21,275 (10,631) 20,033 61,655 Net Position – Beginning of Year 2,218,294 2,197,019 2,207,650 2,187,617 2,125,962 NET POSITION – END OF YEAR $2,249,197 2,218,294 2,197,019 2,207,650 2,187,617 Definitions:Operating Revenues: all income received from the District’s daily normal business. Operating Expenses: all expenses related to the District’s daily normal business. Non-operating Revenues: all income not related to the District’s daily normal business. Non-operating Expenses: all expenses not related to the District’s normal business activities. What it tells youAn income statement tells you where MSD gets its funds and how they are spent. It also shows how much money MSD made or lost over a specific period of time. OUR FY2013 INCOME STATEMENT SHOWS THAT:• MSD’s sewer service charges increased as a result of the scheduled rate increase that occurred in FY2013.• Operating expenses increased due to increased personnel costs, costs related to heavy spring rains, and increased claims associated with those rains.8 REVENUES $26,017 $235,980 $7,316 Property taxes levied by the District Sewer Service Charges, Net Other Where the Money Comes From (in thousands) EXPENSES $91,939 $14,534 $31,134 $70,030 $20,315 $27,994 Employment Costs Utilities Contracted Services Depreciation Interest Expense Other Where the Money Goes (in thousands) 9 CASH FLOW STATEMENT Condensed Statement of Cash Flows (in thousands) FY2013 FY2012 Cash flows from operating activities $ 84,882 $ 67,839 Cash flows from non-capital financing activities 23,014 24,604 Cash flows from capital activities 83,449 (91,085) Cash flows from investing activities (168,410) 60,540 Net increase (decrease) in cash and cash equivalents 22,935 61,898 Cash and cash equivalents at beginning of year 158,820 96,922 Cash and Cash Equivalents at End of Year $181,755 $158,820 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: cash received or spent related to construction of MSD’s infrastructure.Cash flows from investing activities: 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 FY2013 CASH FLOW STATEMENT SHOWS THAT: • Cash flows from operating activities increased due to more payments received from customers. This was a result of MSD’s FY2013 rate increase. • Cash flows from capital and related financing activities increased due to bond proceeds received during FY2013. • Cash flows from investing activities decreased as unspent bond proceeds were invested until the cash is needed to pay expenses. Operating activities Non-capital financing activities Capital activities Investing activities FY2013 $84,882 $23,014 $83,449 ($168,410) FY2012 $67,839 $24,604 ($91,085)$60,540 ($200,000) ($150,000) ($100,000) ($50,000) $0 $50,000 $100,000 Operating Activities Comparison 10 $0 $100 $200 $300 $400 $500 Budget Actual Millions FY2013 Actual Spending Vs. Budget PERFORMANCE AGAINST BUDGET What it tells you A performance against budget statement shows the link between the funds used to serve the public and the outcomes of those services. In our case, it shows that MSD has been good stewards of the funds allocated to us: • We minimized increases to our operating budget and are controlling our pension expenses by moving new employees to a defined contribution, rather than a defined benefit, pension plan. • Our debt service and capital requirements, however, are rising as we accelerate the pace of our capital improvement program. Our $933 million in outstanding debt will increase as we take on an additional $720 million in debt over the next 4 years. WE SPENT LESS MONEY THAN BUDGETED, WITH SAVINGS COMING FROM THREE MAJOR AREAS: • We spent $58 million less on capital projects than budgeted, due mostly to decisions to delay some project starts while awaiting completion of the District’s Diversity Study. • Operating expenses for day-to-day items such as payroll, supplies, utilities, and contract services were under budget by almost $6.8 million, due mostly to savings in contract services. • The principal and interest we paid on our debt were also below budget by almost $4.5 million. We achieved this savings by issuing less new debt than expected and by refinancing some existing debt with a lower interest rate. 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. We have demonstrated to creditors and credit rating agencies our ability to manage large annual capital plans. Our solid financial management, including close monitoring of our financial performance, strong debt coverage, and liquidity also contribute to these ratings, which have remained constant the past two years. Credit Rating Agency FY2012 FY2013 Moody’s Aa1 Aa1 Standard & Poors (S&P) AAA AAA Fitch AA+ AA+ 11 FY2013 Performance Accomplishments,Hurdles & Initiatives MSD completes first year of Project Clear on schedule, under budget Project Clear, MSD’s 23-year $4.7 billion initiative to improve our region’s water quality, got off to a strong start in FY2013, meeting -- and in some cases, exceeding -- all its first-year goals and objectives. This initiative, a product of MSD’s Consent Decree with the U.S. Environmental Protection Agency, is designed to eliminate the 350-plus points where a combination of stormwater and wastewater currently discharge into local waterways from the sanitary sewer system during moderate to heavy rainstorms. Between FY2013 and FY2016, we are scheduled to invest over $900 million in improvements that will remove rain from local sanitary sewers, with the goal of reducing basement backups and sewer overflows, and improving water quality for the whole region. Fiscal Year Planned Investments in our Capital Improvement & Replacement Program 2013 (Actual) $177.6 million 2014 (Forecast) $247.7 million 2015 (Forecast) $285.5 million 2016 (Forecast) $246.8 million TOTAL FOUR-YEAR PROGRAM $957.6 million Pace of planning, design, and construction accelerates The pace of Project Clear planning, design, and construction all picked up speed in FY2013, as MSD completed projects valued at nearly $200 million, up more than 60% over the prior year. FY2013 accomplishments included: • Eliminating overflows -- We completed the removal of 50 sanitary sewer overflows that had been designated as ‘high priority,’ in advance of our Consent Decree deadline of December 31, 2012. • New construction -- We awarded a total of 46 new construction contracts in FY2013, totaling more than $89 million. That includes a $26.1 million, 10-foot-diameter tunnel that will increase the amount of sewage that can be transported to the Lemay Wastewater Treatment Plant -- the first major project in Project Clear. 12 Pace of planning, design, and construction accelerates CONTINUED • Green infrastructure or Rainscaping -- We developed and implemented an “Early Action Green Infrastructure* Pilot Program” that uses environmentally friendly solutions to manage rainwater where it falls. Such methods reduce overflows into the Mississippi River and alleviate basement backups. Seven “green” pilot projects were selected through an application process and submitted for EPA approval. MSD will now track the success of those projects, using the results to guide the direction of Project Clear’s future rainscaping investments. • Treatment plant improvements -- Work continued in FY2013 on the Missouri River Treatment Plant, which we are expanding to allow more flow. Projects that further disinfect the water we discharge from all seven of our treatment plants also continued. Mandated by government regulations, these improvements are scheduled for completion prior to the December 31, 2013 regulatory deadline. • Sewer cleaning and rehabilitation -- We received EPA’s approval for the program we have used the past five years to prioritize, clean, inspect, and rehabilitate our entire sewer system. Aimed at preventing overflows and building backups, this program initially involved clearing the roots, grease build-up, and other blockages from our sewer lines, documenting their condition, and rehabilitating those with cracks, leaks, or other signs of structural instability. In FY2013, we expanded this program by adding manhole* and force main* inspections. The goal: to identify problems and prevent failures, focusing first on those most at risk of failure. This program met or exceeded all of its performance goals in FY2013, resulting in a 46% reduction in maintenance-related base- ment backups and a 43% reduction in dry weather overflows compared to historical levels. DID YOU KNOW? * Rainscaping (aka, Green Infrastructure) is any combination of plantings, water features, catch basins, permeable pavement, and other activities that manage stormwater as close as possible to where it falls, rather than moving it someplace else. Below ground level, improved soils store and filter stormwater, allowing the surrounding area to slowly absorb it over time. Above ground level, native plants, basins, and water features create public green spaces that also help store water. Used effectively, rainscaping can reclaim stormwater naturally, reduce sewer overflows, and minimize basement backups. Through Project Clear, MSD will be installing more than $100 million in rainscaping throughout the St. Louis area over the next 23 years. DID YOU KNOW? * A manhole you see in the streets is actually the lid for a vertical pipe that connects the sewer to the surface. Manholes are used to access a sewer pipe for inspection and maintenance, and as a way to vent sewer gases. MSD maintains more than 162,000 manholes, inspecting each one every 10 years. DID YOU KNOW? * A force main is a pressurized sewer line that relies on a pump to move wastewater through it. Most sewer lines use gravity to transport wastewater. MSD operates approximately 116 miles of force mains throughout our region. 13 New leadership team in place MSD experienced some significant shifts in its executive leadership in FY2013. Brian Hoelscher, P.E., was named Executive Director, replacing Jeff Theerman, who retired in January 2013. Hoelscher formerly served as MSD’s Director of Engineering, a position now filled by Richard Unverferth, P.E., former Assistant Director of Enginee- ring. In November 2012, Brenda Schaefer was named MSD’s Secretary-Treasurer, filling the post left vacant by Karl Tyminski’s retirement. Schaefer served most recently as Corporate Director of Treasury for SSM Healthcare. Bond sale, refinancing accomplished In FY2013, MSD completed a $225 million bond sale at advantageous rates to help finance Project Clear for the next four years. The bonds were part of a $945 million bond issue that 85% of voters approved in June 2012. We also refinanced approximately $142 million in bonds from 2004, saving MSD approximately $22.5 million in interest over the bonds’ life. Customer service improves Our goal is to respond to 90% of emergency calls within four hours. In FY2013, we achieved an on-time percentage of 88%, up from less than 60% a decade ago. We also set a new record in overall customer satisfaction. On a scale of 1 to 10 with 10 meaning “completely satisfied,” customers gave MSD an average performance rating of 8.4 in 2012, surpassing our target of 8.0 and our former record of 8.1. Disparity Study completed MSD has had a well-recognized diversity program for many years. It goes without saying that we are proud of our program and its performance. But change is constant and a key part of the continuous improvement philosophy we employ at MSD. As we invest billions of dollars in our community over the next 23 years through Project Clear, everyone must be included. Accordingly, we completed a Disparity Study in FY2013, which is an evaluation of MSD’s procurement and contracting practices. The study focused on our utilization of African American, Asian American, Hispanic American, Native American, and women owned firms. Aside from utilization, the study examined the tools and processes we use to support our inclusion efforts, and takes a holistic approach in reviewing different facets of the program. Published in February 2013, this review resulted in 56 recommenda- tions, which have been implemented or are being considered for future implementation. Lastly, the study also established appropriate workforce goals, to help ensure those working on MSD projects – not just the owners of the companies we contract with – reflect the ethnic and gender makeup of the community we serve. The Disparity Study’s findings went into effect August 1, 2013. A banner year for treatment plant awards In 2013 the National Association of Clean Water Agencies awarded Peak Performance Awards to all seven wastewater treatment plants we operate. Four received Gold Awards for 100% compliance with their National Pollutant Discharge Elimination System (NPDES) permit for the calendar year. The other three received Platinum Awards, an honor given to plants that have received Gold Awards for five or more consecutive years. 14 Looking Ahead: FY2014 Plans Our goal: In the coming year, our focus will continue to be on removing stormwater from our sewers. Excess storm water can overwhelm our treatment plants and is a major source of sewer overflows into area rivers and streams. We’ll be accomplishing this several ways: • Public education focused on “getting the rain out” -- Much of the excess water that contributes to backups and overflows comes from residential downspouts, sump pumps, and stormwater drains that are connected directly to the sanitary sewer. Through Project Clear, we are increasing our communications to homeowners and businesses, educating them on the role they play in minimizing stormwater runoff. That includes working with them to disconnect downspouts and remove improper connections to the sanitary sewer at no cost to them. It also involves sharing information on ways to build more “rainscaping” or green infrastructure on their property so that water can drain into and be absorbed by the ground before it can enter the sewers. • Cleaning and lining sewers -- We are in the fifth year of ongoing program to clear roots, grease build-up, and other blockages from 17 million feet -- or roughly half -- of our region’s sewer pipes. It takes three years to clean all these lines, after which we start the cycle again. As we clean these sewers, we are also documenting their condition. Those with cracks, leaks, and show other signs of structural instability will be lined with a cured-in-place “pipe within a pipe” that can be installed without digging up the street and restore the sewers to “like new” condition. • Implementing “rainscaping” projects -- People who live in areas where there are combined sewers, that is, sewers that are designed to carry both stormwater AND wastewater, will continue to see projects desig- ned to minimize the amount of stormwater entering the sewer. Many will involve “rainscaping” solutions that rely on plantings and landscape design to soak up much of this runoff before it can enter the sewers. • Completing our overflow master plan -- We are now nearing completion of our master plan for eliminating 85% of the remaining overflows by 2023 and 100% by 2033. This plan -- our Sanitary Sewer Overflow Master Plan -- is due to the EPA by December 31, 2013. • Optimizing our systems -- MSD has invested significantly in recent years in information technology, including asset and maintenance management systems that allow us to track our results and better identify and plan for future needs. We will be using these systems in FY2014 to optimize our entire system -- from improving our ability to collect delinquent bills, to better managing our inventory, with the goal of saving both time and ratepayer dollars. 15 Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 Your MSD @Your MSD www.stlmsd.com