HomeMy Public PortalAboutFiscal Year 2013 Annual Comprehensive Financial Report (ACFR)
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
JUNE 30, 2013 AND 2012
Report prepared and submitted by the
Department of Finance
Janice M. Zimmerman
Director of Finance
Contents
Page
Part I - Introductory Section:
Letter Of Transmittal ............................................................................................. i - xii Organizational Chart ................................................................................................. xiii
Certificate Of Achievement For Excellence
In Financial Reporting .......................................................................................... xiv
Part II - Financial Section:
Independent Auditors’ Report .......................................................................... 1 - 2
Management’s Discussion And Analysis - Required
Supplementary Information ........................................................................ 3 - 13
Basic Financial Statements
Statement Of Net Position ............................................................................. 14 - 15
Statement Of Revenues, Expenses And Changes In Net Position ..................... 16
Statement Of Cash Flows ............................................................................... 17 - 18
Notes To Financial Statements ...................................................................... 19 - 70
Required Supplementary Information - Schedule Of Funding Progress
Employees’ Pension Plan And Post-Employment Benefit Plan ............... 71
Part III – Statistical Section:
Net Position By Component .................................................................................. 72
Change In Net Position ......................................................................................... 73
Operating Revenues By Source ............................................................................. 74
Operating Expenses ............................................................................................... 75
Non-Operating Revenues And Expenses .............................................................. 76
User Charge Rates ................................................................................................. 77
Sewer User Charges (Composite-Annual) ............................................................ 78
Number Of Customers By Type ............................................................................ 79
Ten Largest Customers ......................................................................................... 80
Ratios Of Outstanding Debt By Type ................................................................... 81
Computation Of Overlapping Debt ....................................................................... 82
Pledge Revenue Coverage ..................................................................................... 83
Demographic And Economic Statistics ................................................................. 84
Principal Employers (St. Louis Metropolitan Area) ............................................ 85
Employment Level ................................................................................................. 86
Average Flow .......................................................................................................... 87
Operating And Capital Indicators ........................................................................ 88
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
November 22, 2013
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, 2013, 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, members of the Civil Service Commission, management
staff, and an organization chart as of June 30, 2013. 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 462 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 Proposed Plan of MSD (the 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 (the 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.
MSD must set user charge rates in compliance with the Federal Clean
Water Act. These rates must be approved by 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
iv
During fiscal 2013, the primary source of funding for the operation and maintenance of
MSD’s wastewater system was a user charge averaging $376.68 per year or $31.39 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 2013, the operation and maintenance of the District’s stormwater system
was funding by a combination of property taxes and flat fee billing of 24¢ for residential
and commercial properties and 18¢ cents 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. The outstanding bond indebtedness of the District cannot exceed
five percent of the assessed valuation of the area benefited.
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 (“MDNR”) 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-million dollar capital
improvement program and rehabilitate significant portions of the existing wastewater
sewer system. This effort will 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
v
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.
The impervious based stormwater rate was again increased on January 1, 2009. 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 appealed the ruling and on March 27, 2012 the
Appellate Court upheld the Trial Court’s decision. In a subsequent decision the Trial
Court ruled that the District did not have to refund any monies collected under the
impervious based rate. The court decision to stop the impervious based stormwater
funding negated the culmination of a 20-year effort to adequately fund much needed
stormwater services for District ratepayers. 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. In Fiscal Year 2011, the District reinstated its
previous stormwater funding mechanism of property taxes and per property flat fee
billing in an effort to mitigate the loss of this revenue and to provide a minimal level of
stormwater services. A monthly flat fee of 24¢ is charged for residential and
commercial properties and 18¢ cents per unit for multi-unit properties. In April 2012
the District filed a Motion for Rehearing by the appellate court and an Application for
Transfer to the Missouri Supreme Court. The appellate court denied both. In May
2012 the District filed an application for transfer directly with the Missouri Supreme
Court. On June 1, 2012 the National Association of Clean Water Agencies was allowed
to file suggestions in support of the District’s application for transfer. The Missouri
Supreme Court accepted transfer and on May 21, 2013 heard oral arguments in the
case. On November 12, 2013, the Missouri Supreme Court affirmed the judgment of the
trial court in all respects and remanded the case for the limited purpose of having the
trial court hear and determine ratepayers’ (or plaintiffs’) motion for appellate fees and
costs. At this time the District is evaluating the decision.
The Board of Trustees
The Metropolitan St. Louis Sewer District
vi
The District continues its use of debt to fund its multi-billion dollar, multi-decade
wastewater capital improvement program. In February 2004, St. Louis voters approved
a $500 million authorization allowing the District to issue wastewater revenue bonds.
Beginning in fiscal year 2004, the District issued $336 million in bonds. An additional
$124 million was issued during fiscal year 2005 through 2007 with the remaining $40
million issued in fiscal year 2009. On August 5, 2008, St. Louis voters authorized the
issuance of an additional $275 million in wastewater revenue bonds. $183 Million of
these bonds were issued in fiscal years 2009 through 2011, with the remaining $92
million issued during fiscal year 2012. As of June 30, 2012, the District had received
voter authorization for the issuance of an additional $945 million of revenue bonds. In
August 2012, the District issued $225 million in wastewater revenue bonds as part of
this $945 million authorization. In November 2012, the District took advantage of
lower interest rates and issued $142 million in wastewater revenue bonds to advance
refund a portion of its 2004A bond series. On October 31, 2013, the District closed on a
$52 million State Revolving Fund loan also under the $945 million authorization. The
issuance of an additional $150 million in wastewater revenue bonds is anticipated by
December 31, 2013. The District’s long-term wastewater capital improvement program
will continue to be funded through a combination of additional bonds and wastewater
rate increases.
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 Rate Commission was established in the District’s Plan by
amendment in 2000. The District submits rate increase proposals to the Rate
Commission as needed in accordance with the Plan. After deliberation of a proposal,
the Rate Commission delivers its recommendation to the Board for consideration and
action. Since 2002, MSD has submitted four proposals resulting in the implementation
of annual wastewater rate increases through July 1, 2011 and voter authorization for
the issuance of $775 million in revenue bonds. The District’s March 1, 2007 proposal
also resulted in the replacement of its stormwater property tax funding with an
impervious area based stormwater rate. This rate was found to be unconstitutional by
the Missouri Supreme Court on November 12, 2013 as previously discussed. The
District is currently assessing the Court’s decision. The District’s most recent rate
proposal was submitted on May 10, 2011. The Rate Commission’s Recommendation
Report was delivered as required by the Plan, to the Board on October 17, 2011.
Wastewater rate increases each July 1st for 2012 through 2015 were approved by the
Board through Ordinance No. 13402. This Board action also resulted in voter
authorization of an additional $945 million in revenue bonds to fund the District’s
capital infrastructure improvement program.
The Board of Trustees
The Metropolitan St. Louis Sewer District
vii
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 9,578 miles of pipe and channel
and grows larger every year due to new development. 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 7 wastewater treatment facilities. These facilities treated an
average flow of 326.7 million gallons per day (MGD) in fiscal 2013 compared to 300.0
MGD in fiscal 2012. The design capacity and average flow, by watershed, in MGD was
as follows in fiscal 2013:
MAJOR
WATERSHED
LEVEL OF
TREATMEN
T
NUMBER OF
FACILITIES
DESIGN
CAPACITY
AVERAGE FLOW
FISCAL 2013
Mississippi River Secondary Two 417 240.9
Missouri River Secondary Two 68 53.2
Meramec River Secondary Three 42.75 32.6
Total Seven 527.75 326.7
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.
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 8.0 percent in June 2013 and higher than the
national unemployment rate of 7.8 percent for the same time period.
The Board of Trustees
The Metropolitan St. Louis Sewer District
viii
MSD has its own internal barometers for measuring economic development within the
District. These are listed below for fiscal 2013 and 2012:
2013 2012
Sewer Plan Reviews:
Number of Plans Approved 447 396
Number of Miles of Sewers 22 23
Sewer construction Permits:
Number of Permits Issued 2,020 1,912
Number of Miles of Sewers 19 16
Customer Connections:
Number of Connection Permits Issued 1,345 802
Connection Fee Revenue (in millions) $1.1 $.6
Value of Sewers Dedicated to
MSD by Developers (in millions)$17.5 $9.5
Over the years, the St. Louis economy has undergone a transformation from reliance on
traditional manufacturing industries to those industries based on advanced technology
and services. The St. Louis area is a center for health care, biotechnology, banking,
finance, transportation, tourism, and education and has a strong and diverse
manufacturing economy. The area has an abundance of energy, water, and sewerage
facilities and can sustain future economic growth.
Financial Information
Proprietary Operations. The current financial condition of MSD remains stable. The
District realized a net income from operations of $11.8 million compared to a net
operating income of $9.7 million the prior year. The increase is explained by an
increase in sewer service revenues due to the beginning of a new four-year wastewater
cycle in addition to a decrease in the provision for doubtful accounts, as part of
increased collection activities. 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 Discussion and Analysis section that appears
later in this report.
The Board of Trustees
The Metropolitan St. Louis Sewer District
ix
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 U.S. 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 footnotes to the
financial statements.
Cash Management. In compliance with its Plan, the District invests temporarily idle
funds in cash, cash equivalents and investments such as collateralized certificates of
deposit, collateralized repurchase agreements, and United States Treasury
instruments. The District utilizes competitive bidding for investment purchases and
monitors market conditions daily. MSD receives interest on certificates of deposit
monthly and reinvests it to maximize yields. Investment maturities are limited to a
maximum five years per ordinance.
The Board of Trustees
The Metropolitan St. Louis Sewer District
x
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 a 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, performs preventative maintenance to it, and maintains excess
liability coverage.
MSD maintains automobile and general liability insurance. The District is self-insured
for workers’ compensation and funds those costs through annual appropriations from
the District’s general 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.
The District provides group medical coverage for its employees and offers dependent
medical coverage on a contributory basis through a self-insured plan. At January 31,
2013, the District maintained stop loss coverage for specific claims exceeding $125,000
per year and for total annual claims greater than 125 percent of the annual claims
estimate. As of February 1, 2010, the District increased this limit to $150,000. 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 annually to a vision care program for employees. The
District reevaluates insurance coverage and providers annually.
For most construction projects, insurance is obtained by the individual contractor and
included in the contract price.
The Board of Trustees
The Metropolitan St. Louis Sewer District
xi
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 1996 amendments to the Federal Single Audit
Act and the United States Office of Management and Budget (OMB) Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations. A Single Audit
Report was issued as of June 30, 2013.
The financial statements of the Metropolitan St. Louis Sewer District’s Employees’
Pension Plan, Deferred Compensation Plan and Defined Contribution Plan are also
audited annually. These audits were issued as of December 31, 2012 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, 2012. The Certificate
of Achievement is a prestigious national award that recognizes conformance with the
highest standards for preparation of state and local government financial reports.
To be awarded the Certificate of Achievement, a government unit must publish an
easily readable and efficiently organized CAFR, the contents of which conform to
program standards. The CAFR must satisfy both U.S. generally accepted accounting
principles and applicable legal requirements. A Certificate of Achievement is valid for
one year only. The District has received a Certificate of Achievement for the last
twenty-five 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 Board of Trustees
The Metropolitan St. Louis Sewer District
xii
The District also received the GFOA’s Distinguished Budget Presentation award for its
fiscal 2013 annual budget. The District has received this award for twenty-six
consecutive years. We believe the FY14 budget presentation continues to meet the
GFOA’s high standards and submitted it August 26, 2013, for consideration.
Janice M. Zimmerman
Director of Finance
xiii
ORGANIZATION
(as of June 30, 2013)
BOARD OF TRUSTEES
James H. Buford, Chair; Michael Yates, Vice Chair; Bob Berry;
James Faul; Annette Mandel; Valerie Patton
OFFICE OF INTERNAL AUDITOR
RATE COMMISSION
Leonard P. Toenjes, Chair
OFFICE OF SECRETARY
TREASURER
Brenda Schaefer
Secretary/Treasurer
CIVIL SERVICE COMMISSION
William C. Duffe
Mavis T. Thompson
R. Gary Durney
EXECUTIVE DIRECTOR
Brian L. Hoelscher
FINANCE
Janice M. Zimmerman
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
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, 2013
and 2012, 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, 2013 and 2012, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis and Schedule of Funding Progress for the Employees’
Pension Plans and 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the District’s basic financial statements. The introductory section and
statistical section are presented for purposes of additional analysis and are not a required part
of the 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, 2013, 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, 2013
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Years Ended June 30, 2013 And 2012
The annual report of The Metropolitan St. Louis Sewer District (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.
2013 Financial Highlights
The District increased current, restricted and other assets by $195.4 million as
the result of inflows from bond proceeds and increased revenue from rising sewer
rates and improved collection activities.
The District placed $200.6 million of capital assets into service during fiscal year
2013. The continued high level of capitalization reflects the District’s work to
meet long-term plans. Capitalized assets included:
Collection and pumping plant $178.4 million
Treatment and disposal plant and equipment $15.5 million
Land $4.0 million
General plant and equipment $2.7 million
In conjunction with the new assets, accumulated depreciation increased by $66.5
million and construction in progress decreased $18.6 million.
The District issued one new senior bond for $225 million and refunded an
existing bond with favorable interest reduction.
2012 Financial Highlights
The District placed $170.9 million of capital assets into service during fiscal year
2012. This high level of capitalization and construction is reflective of an
accelerated building program to meet the needs of the District. These capitalized
assets include:
Collection and pumping plant $112.1 million
Treatment and disposal plant and equipment $41.0 million
Land $9.1 million
General plant and equipment $8.7 million
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 4
In conjunction with the new assets, accumulated depreciation increased by $55.7
million.
Contracts and accounts payable decreased by $18.2 million due to a decrease in
water backup claims, a decrease in litigation claims and a decrease in
outstanding construction payables.
Operating expenses declined by $28.2 million as the result of declines in asset
management costs as expenditures shifted to capital.
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 bond and notes payable. Deferred outflows and inflows, where
applicable, will also be included. The final section of the Statements of Net Position,
the net position section, contains earnings retained for use by the District. Increases or
decreases in the net position section may be indicative of an improving or declining
financial position. This statement provides the basis for computing rate of return,
evaluating the capital structure of the District, and assessing the liquidity and financial
flexibility of the District.
The Statements of Revenues, Expenses, and Changes in Net Position summarize all of
the years’ revenue and expense. These statements indicate how successful the District
was at maintaining expenses below the level of revenue earned.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 5
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 $30.9 million. The main reason for the improvement is the
increase in unrestricted funds of $70.0 million as the District has increased the use of
bond funding for capital projects. Net investment in capital assets decreased by $49.8
million as more debt was incurred than capital created during 2013.
Condensed Financial Statements and Analysis
Increase Increase
(Decrease)(Decrease)
2013 2012 2013-2012 2011 2012-2011
Assets:
Current, restricted, and other assets $ 603,104 $ 407,731 $ 195,373 $ 403,397 $ 4,334
Capital assets (net of accumulated
depreciation)2,659,806 2,548,816 110,990 2,469,496 79,320
Total Assets 3,262,910 2,956,547 306,363 2,872,893 83,654
Liabilities:
Current liabilities 89,432 86,337 3,095 101,429 (15,092)
Non-current liabilities 924,281 651,916 272,365 574,445 77,471
Total Liabilities 1,013,713 738,253 275,460 675,874 62,379
Net Position:
Net investment in capital assets 1,886,831 1,936,590 (49,759) 1,915,233 21,357
Restricted 117,365 106,694 10,671 94,926 11,768
Unrestricted 245,001 175,010 69,991 186,860 (11,850)
Total Net Position $ 2,249,197 $ 2,218,294 $ 30,903 $ 2,197,019 $ 21,275
Condensed Statements of Net Position
(000s)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 6
2013 Analysis
Current restricted and other assets increased $195.4 million or 47.9% in the current
year. The increase is predominately due to the restricted cash and investments
received as part of the issuance of debt in 2013, used to fund more of the capital
program.
Capital assets net of accumulated depreciation increased by $111.0 million or 4.4% in
the current year as the result of continued high levels of construction and acquisition of
assets by the District.
Current liabilities increased by $3.1 million or 3.6%, as the result of increases in
deposits and accrued expenses from water backup claims and additional interest
accruals on new debt.
Non-current liabilities increased by $272.4 million or 41.8% as the District issued $225
million in new senior debt with premium.
2012 Analysis
Current restricted and other assets increased $4.3 million or 1.1% in the current year.
The increase is predominately due to the restricted cash and investments required as
part of the issuance of debt in 2012.
Capital assets net of accumulated depreciation increased by $79.3 million or 3.2% in the
current year as the result of continued high levels of construction and acquisition of
assets by the District.
Current liabilities decreased by $15.1 million or 14.9%, as the result of decreases in
contracts and accounts payable from the prior year water backup claims payables and
the stormwater litigation costs.
Non-current liabilities increased by $77.5 million or 13.5% as the District issued $93.3
million in new debt and paid down existing debt.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 7
Increase Increase
(Decrease)(Decrease)
2013 2012 2013-2012 2011 2012-2011
Operating Revenues:
Sewer service charges 238,635$ $ 227,677 $ 10,958 $ 223,276 $ 4,401
Provision for doubtful
sewer service charge accounts (2,655) (6,911) 4,256 (6,249) (662)
Provision for uncollected
stormwater charge accounts — — — (2,374) 2,374
Licenses, permits, and other fees 2,731 2,684 47 2,976 (292)
Other 3,235 2,550 685 1,815 735
Total Operating Revenues 241,946 226,000 15,946 219,444 6,556
Non-operating Revenues:
Property taxes levied by the district 26,017 24,604 1,413 27,126 (2,522)
Investment income 1,057 2,407 (1,350) 3,847 (1,440)
Rent and other income 293 295 (2) 443 (148)
Total Non-operating Revenues 27,367 27,306 61 31,416 (4,110)
Total Revenues 269,313 253,306 16,007 250,860 2,446
Operating Expenses:
Pumping and treatment 54,526 49,005 5,521 50,532 (1,527)
Collection system maintenance 37,877 36,695 1,182 33,152 3,543
Engineering 12,020 8,544 3,476 12,486 (3,942)
General and administrative 41,485 33,180 8,305 36,075 (2,895)
Water backup claims 3,503 2,050 1,453 8,912 (6,862)
Depreciation 70,030 66,742 3,288 66,854 (112)
Asset management 10,717 20,092 (9,375) 36,492 (16,400)
Total Operating Expenses 230,158 216,308 13,850 244,503 (28,195)
Non-operating Expenses:
Net loss on disposal and sale of
capital assets 796 3,163 (2,367) 3,486 (323)
Non-recurring projects and studies 4,676 6,403 (1,727) 10,801 (4,398)
Legal Claims — 5 (5) 4,829 (4,824)
Interest expense 20,315 15,811 4,504 7,971 7,840
Total Non-operating Expenses 25,787 25,382 405 27,087 (1,705)
Total Expenses 255,945 241,690 14,255 271,590 (29,900)
Income Before Capital Grants
And Contributions 13,368 11,616 1,752 (20,730) 32,346
Capital Grants And Contributions 17,535 9,659 7,876 10,099 (440)
Change in Net Position 30,903 21,275 9,628 (10,631) 31,906
Net Position - Beginning of Year 2,218,294 2,197,019 21,275 2,207,650 (10,631)
Net Position - End of Year $ 2,249,197 $ 2,218,294 $ 30,903 $ 2,197,019 $ 21,275
Statements of Revenues, Expenses, and Changes in Net Position
(000s)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 8
2013 Analysis
Net position increased by $30.9 million or 1.4% over the prior year. Sewer service
revenue increased as a result of rate increases and improved collection over the prior
year, expenses also increased primarily from some increases in operating costs, as well
as increased water backup claims from the prior year.
Total revenue increased by $16.0 million or 6.3%. Sewer service charges increased
$11.0 million and the provision for doubtful accounts decreased by $4.3 million or 61.6%
as part of the increased collection activities. Property tax revenue increased by $1.4
million from increased in property valuation. Other revenue increased by $0.7 million
due to projects completed for the City of Arnold. Investment income declined by $1.4
million or 56.1% due to changing market conditions
Total expenses increased by $14.3 million or 5.9%. Operating expenses increased by
$13.8 million. General and administrative costs increased by $8.3 million primarily as
the result of a large insurance reimbursement in FY12 that was not repeated in FY13.
Operations increased by $6.7 million or 7.8% as a result of increased personnel costs,
costs related to heavy spring rains, equipment repair and replacement. Water backup
claims increased $1.5 million from increased claims over the prior year when drought
conditions limited flooding claims. Engineering costs increased by $3.5 million or 40.7%
primarily due to personnel costs related to non-capital, asset management projects.
Depreciation costs increased by $3.3 million in conjunction with new asset
capitalization. Asset management decreased $9.4 million as costs were eliminated.
Non-operating expenses increased by $0.4 million or 1.6% as the result of increased
interest expense countered by decreased costs of both losses on disposal of assets and
non-recurring projects and studies.
2012 Analysis
Net position increased by $21.3 million or 1.0% over the prior year. While revenue
increased slightly over the prior year, expenses decreased rapidly, as more District
resources were targeted toward capital projects.
Total revenue increased by $2.4 million or 1.0%. Sewer service charges increased $4.4
million and the provision for uncollected stormwater charges was eliminated as part of
the discontinuation of the stormwater impervious fee discussed below, increasing
operating revenue by $6.6 million. At the same time, property tax revenue decreased by
$2.5 million from decreases in property valuation. Investment income also declined by
$1.4 million as a result of low interest rates.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 9
Total expenses decreased by $29.9 million or 11.0%. Operating expenses decreased by
$28.2 million. Asset management decreased $16.4 million as costs were eliminated and
water backup claims decreased $6.9 million from the non-repetition of overland flooding
in the prior year. Non-operating expenses decreased by $1.7 million. Non-recurring
projects and studies decreased by $4.4 million and legal claims decreased by $4.8
million from the prior year stormwater legal claim. Capital asset sale losses declined by
$0.3 million. Interest expenses increased by $7.8 million in connection with new debt
issuance.
Increase Increase
(Decrease)(Decrease)
2013 2012 2013-2012 2011 2012-2011
Cash flows from operating
activities $ 84,882 $ 67,839 $ 17,043 $ 56,676 $ 11,163
Cash flows from non-capital
financing activities 23,014 24,604 (1,590) 27,125 (2,521)
Cash flows from capital
and related financing
activities 83,449 (91,085) 174,534 (141,136) 50,051
Cash flows from investing
activities (168,410) 60,540 (228,950) 25,355 35,185
Net increase (decrease) in
cash and cash equivalents 22,935 61,898 (38,963) (31,980) 93,878
Cash and cash equivalents
at beginning of year 158,820 96,922 61,898 128,902 (31,980)
Cash And Cash Equivalents
At End Of Year $ 181,755 $ 158,820 $ 22,935 $ 96,922 $ 61,898
Condensed Statements of Cash Flows
(000s)
2013 Analysis
The District ended the year with $181.8 million in cash and cash equivalents or $22.9
million more than the prior year. Cash flows from operating activities increased by
$17.0 million or 25.1% as the result of increased sewer service charge revenue noted
above. Cash flows from non-capital financing activities decreased by $1.6 million or
6.5% from a decrease in tax revenue collected. The decrease stems from both a decrease
in property tax collection and a decision by the District to eliminate some sub-district
taxes because of sufficient fund balance. Cash flow from capital and related financing
activities increased by $174.5 million or 191.6% as the result of new bond proceeds
partially offset by payments for capital improvement. Cash flows from investing
activities decreased by $229.0 million or 378.2%. The decrease primarily stems from
the volume of purchases and maturities of investments.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 10
2012 Analysis
The District ended the year with $158.8 million in cash and cash equivalents or $61.9
million more than the prior year. Cash flows from operating activities increased by
$11.2 million as the result of the decrease in litigation and water backup costs noted
above. Cash flows from non-capital financing activities decreased by $2.5 million from a
decrease in tax revenue. The decrease stems from both a decrease in property values
and also a decision by the District to eliminate some sub-district taxes because of
sufficient fund balance. Cash flow from capital and related financing activities
increased by $50.1 million as the result of new bond proceeds offset by payments for
capital improvement. Cash flows from investing activities increased by $35.2 million.
The increase mostly stems from the volume in the purchases and maturities of
investments.
Capital Assets
Increase Increase
(Decrease)(Decrease)
2013 2012 2013-2012 2011 2012-2011
Land 50,077$ 46,027$ 4,050$ 36,924$ 9,103$
Construction in progress 360,508 379,119 (18,611) 400,756 (21,637)
Treatment and disposal plant
and equipment 599,178 611,249 (12,071) 597,316 13,933
Collection and pumping plant 1,614,112 1,471,147 142,965 1,393,394 77,753
General plant and equipment 35,931 41,274 (5,343) 41,106 168
Total 2,659,806$ 2,548,816$ 110,990$ 2,469,496$ 79,320$
Condensed Statements of Capital Assets
Net of Depreciation (000s)
2013 Analysis
Total capital assets, net of depreciation, increased by $111.0 million over the prior year.
Collection and pumping plants contained the majority of the increase with $143.0
million coming on-line this fiscal year. Land increased $4.0 million from the acquisition
of easements and other land. Construction in progress decreased by $18.6 million as
constructed assets were moved into service. Treatment and disposal plant and
equipment decreased by $12.1 million as the District’s plants depreciated. General
plant and equipment decreased by $5.3 primarily due to depreciation of existing assets.
For more detailed information, see Note 4, capital assets, in the accompanying notes to
the financial statements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 11
2012 Analysis
Total capital assets, net of depreciation, increased by $79.3 million over the prior year.
Collection and pumping plants contained the majority of the increase with $77.8 million
coming on-line this fiscal year. Construction in progress decreased by $21.6 million as
$159.6 million in constructed assets were moved into service. Treatment and disposal
plant and equipment increased by $13.9 million. Land contributed $9.1 million from
acquisition of easements and other land.
Long-Term Debt
Increase Increase
(Decrease)(Decrease)
2013 2012 2013-2012 2011 2012-2011
Senior Revenue Bonds:
Series 2004A $ 2,375 $ 163,630 $ (161,255) $ 165,590 $ (1,960)
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 50,610 52,250 (1,640) — 52,250
Series 2012A 225,000 — 225,000 — —
Series 2012B 141,730 — 141,730 — —
Subordinate Revenue Bonds:
Series 2004B 108,780 115,960 (7,180) 123,055 (7,095)
Series 2005A 4,750 5,055 (305) 5,370 (315)
Series 2006A 32,085 34,225 (2,140) 36,335 (2,110)
Series 2006B 10,945 11,620 (675) 12,285 (665)
Series 2008AB 32,040 33,833 (1,793) 35,610 (1,777)
Missouri DNR:
Series 2009A 20,093 21,085 (992) 22,053 (968)
Series 2010A 7,472 5,880 1,592 2,852 3,028
Series 2010C 33,999 35,519 (1,520) 329 35,190
Series 2011A 31,963 1,007 30,956 — 1,007
Energy Loan Program 225 237 (12) 25 212
Oracle/Blue Heron — 3,096 (3,096) 6,096 (3,000)
Total $ 877,067 $ 658,397 $ 218,670 $ 584,600 $ 73,797
The Metropolitan St. Louis Sewer District
Condensed Statements of Long-Term Debt
(000s)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 12
2013 Analysis
The District ended fiscal year 2013 with $877.1 million in long-term debt outstanding.
The District had two bond additions this year, a senior revenue bond (Series 2012A) for
$225.0 million and a refunding of 2004A for $141.7 million (Series 2012B). In addition,
the District added to SRF bonds 2010A ($1.9M) and 2011A ($31.0M). For more detailed
information, see Note 6, long-term liabilities, in the accompanying notes to the financial
statements.
2012 Analysis
The District ended fiscal year 2012 with $658.4 million in long-term debt outstanding.
The District had two bond additions this year, a senior revenue bond (Series 2011B) for
$52.3 million and an SRF Bond (2011A) for $1.0 million and added to SRF bonds 2010C
($35.2M) and 2010A ($3.0M).
Decisions Impacting The Future
On July 7, 2011, the District entered into a Consent Decree (CD) with the U.S.
Environmental Protection Agency and the Coalition for the Environment settling a
lawsuit for alleged violations of the Clean Water Act. Along with providing a schedule
for implementation of various system improvements and programs, the CD also
addressed all allegations made by the Plaintiffs in this action. The public comment
period ended October 10, 2011. The Court extended the stay of litigation until
November 18, 2011, with a joint status report due on November 25, 2011. The CD did
not become final until it was entered by the Federal Court on April 27, 2012. See Note
12 for additional information regarding this litigation.
The District continued to implement the next phase of the capital program reflected in
the $1 billion of projects through FY16 in order to comply with the CD. At an election
held on June 5, 2012, voters within the District approved the issuance by the District of
$945,000,000 in sewer system revenue bonds to enable the District to comply with
federal and state clean water requirements. The District may use the proceeds of such
revenue bonds for the purpose of constructing, repairing, replacing and equipping new
and existing District wastewater facilities. In August of 2012 the District issued the
first $225,000,000 in bonds under this authorization, funding capital expenditures for
the current year and next year.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Management’s Discussion And Analysis (Continued)
Page 13
The District implemented an impervious area based stormwater rate in March 2008. In
conjunction, the District elected to discontinue the assessment of approximately $24.4
million per year in property taxes and flat fees previously used for stormwater funding.
The impervious stormwater rate structure in place throughout the 2010 fiscal year
generated $90.9 million in revenue for stormwater services across the St. Louis region.
On July 9, 2010, the Circuit Court of St. Louis County of Missouri ruled the impervious
rate unconstitutional. As a result, the District’s Board of Trustees rescinded the
impervious based rate effective August 1, 2010. The elimination of the rate resulted in
an estimated $48.3 million loss in revenue anticipated to address stormwater issues
throughout the St. Louis region. The District reinstated the property taxes and flat fees
previously discontinued in order to provide a base level of stormwater services as
required by the District’s Charter. Stormwater services were drastically reduced in
fiscal year 2011 and have continued at reduced levels since. On May 29, 2012, MSD
filed its Application directly to the Missouri Supreme Court requesting a transfer. On
June 1, 2012, the National Association of Clean Water Agencies was allowed to file
suggestions in support of the Application for Transfer. On May 21, 2013, the Missouri
Supreme Court heard oral arguments. The District is currently awaiting their ruling.
Requests For Information
This financial report is designed to provide a general overview of the District’s finances
for all those with an interest in the District’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information
should be addressed or e-mailed to:
Janice M. Zimmerman, Director of Finance
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
314-768-6200
jzimmer@stlmsd.com
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 14
STATEMENT OF NET POSITION
Ended June 30,
2013 2012
Current Assets
Unrestricted Current Assets
Cash and cash equivalents 84,400,724$ 104,532,663$
Investments 67,190,638 12,228,539
Sewer service charges receivable, less allowance of
$3,819,791 in 2013 and $4,038,932 in 2012 34,207,405 34,608,839
Unbilled sewer service charges receivable, less allowance of
$351,645 in 2013 and $362,806 in 2012 17,582,233 18,140,324
Property taxes receivable, less allowance of $590,868 in 2013 2,325,743 —
Accrued income on investments 807,632 436,251
Other receivables 964,595 928,832
Supplies inventory 6,621,892 6,301,034
Total Unrestricted Current Assets 214,100,862 177,176,482
Restricted Current Assets
Cash and cash equivalents 69,449,837 12,709,234
Investments 79,625,995 39,253,780
Total Restricted Current Assets 149,075,832 51,963,014
Total Current Assets 363,176,694 229,139,496
Non-Current Assets
Restricted Assets
Cash and cash equivalents 27,904,044 41,577,877
Investments 22,940,929 20,573,626
Long-term investments 83,261,367 49,958,324
Property taxes receivable, less allowance of $360,660 in 2013 676,622 —
Accrued income on investments 202,049 266,592
Total Restricted Non-Current Assets 134,985,011 112,376,419
Other Assets
Notes receivable 14,640,552 14,417,074
Long-term investments 90,301,826 51,798,633
Total other assets 104,942,378 66,215,707
Capital Assets
Depreciable:
Treatment and disposal plant and equipment 1,027,055,525 1,011,798,185
Collection and pumping plant 2,226,256,235 2,050,326,859
General plant and equipment 92,176,648 91,264,888
3,345,488,408 3,153,389,932
Less: Accumulated depreciation 1,096,266,136 1,029,720,453
Net depreciable assets 2,249,222,272 2,123,669,479
Non-depreciable:
Land 50,076,644 46,026,763
Construction in progress 360,507,521 379,119,335
Net capital assets 2,659,806,437 2,548,815,577
Total Non-Current Assets 2,899,733,826 2,727,407,703
Total Assets 3,262,910,520 2,956,547,199
For The Years
Assets
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 15
STATEMENT OF NET POSITION (Continued)
Ended June 30,
2013 2012
Current Liabilities
Contracts and accounts payable 27,421,384$ 27,152,656$
Deposits and accrued expenses 27,268,022 22,949,200
Retainage payable 9,749,687 8,694,165
Current portion of bonds and notes payable 19,435,714 21,857,997
83,874,807 80,654,018
Current Liabilities-Payable From Restricted Assets
Contracts and accounts payable 5,342,074 5,399,672
Retainage payable 215,334 283,053
5,557,408 5,682,725
Total Current Liabilities 89,432,215 86,336,743
Non-Current Liabilities
Deposits and accrued expenses 10,398,107 9,572,545
Bonds and notes payable 913,883,345 642,343,570
Total Non-Current Liabilities 924,281,452 651,916,115
Total Liabilities 1,013,713,667 738,252,858
Net investment in capital assets 1,886,830,927 1,936,590,862
Restricted for:
Debt service 47,140,132 39,892,760
Subdistrict construction and improvement 70,225,233 66,800,934
Unrestricted 245,000,561 175,009,785
Total Net Position 2,249,196,853$ 2,218,294,341$
For The Years
Liabilities
Net Position
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 16
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
2013 2012
Operating Revenues
Sewer service charges 238,634,709$ 227,677,430$
Provision for doubtful sewer service charge accounts (2,654,644) (6,911,849)
Licenses, permits and other fees 2,731,497 2,683,823
Other 3,234,775 2,550,316
Total Operating Revenues 241,946,337 225,999,720
Operating Expenses
Pumping and treatment 54,526,256 49,005,251
Collection system maintenance 37,876,932 36,695,192
Engineering 12,019,666 8,543,316
General and administrative 41,485,255 33,180,189
Water backup claims 3,503,220 2,049,901
Depreciation 70,029,840 66,742,064
Asset management 10,717,264 20,092,052
Total Operating Expenses 230,158,433 216,307,965
Operating Income 11,787,904 9,691,755
Non-Operating Revenues
Property taxes levied by the District 26,016,135 24,604,173
Investment income 1,056,966 2,407,485
Rent and other income 293,159 294,591
Total Non-Operating Revenues 27,366,260 27,306,249
Non-Operating Expenses
Net loss on disposal and sale of capital assets 795,527 3,162,723
Non-recurring projects and studies 4,676,203 6,402,888
Legal claims — 5,000
Interest expense 20,314,841 15,811,045
Total Non-Operating Expenses 25,786,571 25,381,656
Income Before Capital Grants And Contributions 13,367,593 11,616,348
Capital Grants And Contributions
Utility plant contributed 17,510,735 9,495,264
Grant revenue 24,184 163,593
Total Capital Grants And Contributions 17,534,919 9,658,857
Change In Net Position 30,902,512 21,275,205
Net Position - Beginning Of Year 2,218,294,341 2,197,019,136
Net Position - End Of Year 2,249,196,853$ 2,218,294,341$
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 17
STATEMENT OF CASH FLOWS
2013 2012
Cash Flows From Operating Activities
Received from customers 242,341,372$ 225,182,816$
Paid to employees for services (92,818,922) (85,434,376)
Paid to suppliers for goods and services (64,640,786) (71,909,584)
Net Cash Provided By Operating Activities 84,881,664 67,838,856
Cash Flows Provided By Non-Capital Financing Activities
Taxes levied and collected 23,013,770 24,604,173
Cash Flows From Capital And Related Financing Activities
Proceeds from capital grants 24,639 164,164
Proceeds from issuance of debt 257,888,292 93,347,308
Premium on sale of bonds 35,097,262 6,104,835
Interest received on bond proceeds to be used for capital improvements 250,753 141,569
Principal paid on debt (21,857,996) (19,551,825)
Interest and fees paid on debt (35,117,398) (25,391,770)
Payments for capital assets (154,847,862) (147,723,685)
Proceeds from sale of capital assets 269,073 82,464
Build America bond tax credit 1,742,160 1,742,160
Net Cash Provided By (Used In) Capital And Related
Financing Activities 83,448,923 (91,084,780)
Cash Flows From Investing Activities
Purchase of investments (671,031,454) (222,515,358)
Proceeds from sale and maturity of investments 497,314,140 278,208,830
Investment income 5,014,629 4,551,539 Proceeds from rents 293,159 294,591
Net Cash Provided By (Used In) Investing Activities (168,409,526) 60,539,602
Net Increase In Cash And Cash Equivalents 22,934,831 61,897,851
Cash And Cash Equivalents At Beginning Of Year 158,819,774 96,921,923
Cash And Cash Equivalents At End Of Year 181,754,605$ 158,819,774$
Non-Cash Capital And Investing Activities
Capital asset additions included in accounts payable 15,362,389$ 13,744,285$
Utility plant contributed by other governments and developers 17,510,735 9,495,264
Fair value investment adjustment gain (loss)(3,140,483) (778,235)
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
See the accompanying notes to financial statements. Page 18
STATEMENT OF CASH FLOWS (Continued)
2013 2012
Reconciliation Of Operating Income To Net Cash Flows
Provided By Operating Activities
Operating Income 11,787,904$ 9,691,755$
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 70,029,840 66,742,064
Change in operating assets and liabilities:
(Increase) decrease in billed and unbilled sewer service
charges receivable 959,525 (1,110,166)
Increase in other receivables (91,259) (172,227)
(Increase) decrease in supplies inventory (320,858) 660,251
Decrease in contracts and accounts payable (1,109,475) (7,408,601)
Increase (decrease) in deposits and accrued expenses 3,625,987 (564,220)
Net Cash Provided By Operating Activities 84,881,664$ 67,838,856$
For The Years
Ended June 30,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 19
NOTES TO FINANCIAL STATEMENTS
1. Organization And Summary Of Significant Accounting Policies
Organization
The Metropolitan St. Louis Sewer District (the 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 (the 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 20
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. 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.
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, 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 (GASB 33), which establishes
accounting and financial reporting standards for nonexchange transactions
involving financial or capital resources.
GASB 33 groups non-exchange 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 non-exchange 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 21
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 33, have been met. Any
resources received before 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 all highly liquid investments that are immediately
available to the District to be cash equivalents.
Investments
The District accounts for its investments at fair value. Fair value is determined
using quoted market prices. 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.
Reclassifications
Certain amounts in prior year financial statements have been reclassified for
comparative purposes to conform to the presentation in the current year financial
statements. More specifically, in 2013, the District created new categories for
cash and investments, to enhance transparency and facilitate greater
understanding of the District’s cash and investment position.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 22
In prior years, the statement of net position contained the categories cash, pooled
cash and investments, and investments. The District now divides these assets
into the categories cash and cash equivalents, investments, and long-term
investments. Cash and cash equivalents have maturities of 90 days or less,
investments mature between 91-365 days, and long-term investments mature
after 365 days. The reclassification presented in the 2012 financial statements is
as follows:
Unrestricted Current Assets Current Assets
Cash and cash equivalents 104,532,663$ Cash 15,322,804$
Investments 12,228,539 Pooled cash and investments 162,269,011
116,761,202 Investments 42,931,034
220,522,849
Restricted Current Assets
Cash and cash equivalents 12,709,234
Investments 39,253,780
51,963,014
Non-Current, Restricted Assets Non-Current, Restricted Assets
Cash and cash equivalents 41,577,877 Cash 5,256,795
Investments 20,573,626 Pooled cash and investments 72,357,560
Long-term investments 49,958,324 Investments 34,495,472
112,109,827 112,109,827$
Non-Current Other Assets
Long-term investments 51,798,633$
Old Categories in FY 2012New Categories in FY 2012
The presentation of Restricted and Unrestricted Assets has changed from prior
years to reflect the net position for unspent bond proceeds from recent debt issues
restricted solely for sanitary construction projects. Previously, these balances
were presented in the pooled cash and investments category as Unrestricted
Current Assets. These are now presented in a new category as Restricted
Current Assets.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 23
Capital Assets
Capital assets are valued at historical cost or estimated historical cost based in
part upon a study performed in 1981. Donated capital assets are recorded at fair
value at the time of the contribution to the District. 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 10 to 70 years
Collection and pumping plant 10 to 100 years
General plant and equipment 3 to 50 years
When designing 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. Previously, the District defined capital assets as assets with an
initial, individual cost of more than $1,000 and an estimated useful life in excess
of three years. In April of 2010 the District updated this policy and as a result,
an asset must now have an individual cost of more than $5,000 to be considered a
capital asset. This change in policy does not have a retroactive effect on capital
assets put in place before April 2010.
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 2013 and 2012, the District capitalized $12,305,615 and
$7,412,451, respectively, of net interest expense.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 24
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 is stated at 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 outstanding
debt that is attributable to the acquisition, construction, or improvement of those
assets.
The restricted component of net position consists of constraints placed on net
position through 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.
Capital Contributions
Capital contributions to the District represent government grants and other aid
used to fund capital projects. In accordance with GASB 33, capital contributions
are recognized as revenue when the expenditure is made and the amount
becomes subject to claim for reimbursement.
Bond Issuance Costs/Bond Premiums And Discounts
Bond issuance costs incurred, as well as bond premiums and discounts, are paid
from the proceeds of revenue bond issues and are deferred and amortized using
the straight-line method over the term of the bonds.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 25
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, who has unused accrued sick leave
remaining, will be compensated for that portion of unused accrued sick leave at
the rate of 1-1/4% for each year of District service. 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.
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.
2. Deposits And Investments
Deposits
At June 30, 2013, the reported amount of the District’s deposits was $37,781,854
and the bank balance was $40,154,696. Of the bank balance, $585,749 was
covered by federal depository insurance and $39,568,947 was collateralized with
securities held by a third party financial institution in the District’s name.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 26
At June 30, 2012, the reported amount of the District’s deposits was $56,122,489
and the bank balance was $54,926,226. Of the bank balance, $45,540,519 was
covered by federal depository insurance and $9,385,707 was collateralized with
securities held by a third party financial institution in the District’s name.
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 market value of 103%.
Effective January 1, 2013, deposits in each bank are insured by the Federal
Deposit Insurance Corporation (FDIC) in the amount of $250,000 for interest-
bearing accounts and non-interest-bearing accounts. Prior to January 1, 2013,
deposits in non-interest-bearing accounts were fully insured.
Investments
With the approval of the District’s Board of Trustees, the Secretary-Treasurer is
authorized to invest excess cash in any investment authorized by the District’s
charter. The District’s investment policy conforms to the investment policy
guidelines for the State of Missouri. The District’s investment policy authorizes the
District to invest in the following instruments: U.S. Treasury obligations,
certificates of deposit, obligations of any agency or instrumentality of the U.S.,
repurchase agreements, bankers’ acceptances, and commercial paper rated in the
three highest classifications, for terms specified in the policy. The District also has
investments in money market mutual funds. This investment and the related
interest represent an escrow account for potential legal fees. At June 30, 2013 and
2012, all of the District’s investments were in compliance with the District’s
investment policy and charter.
A summary of deposits and investments as of June 30, 2013 and 2012 is as
follows:
Investment Type Cost Fair Value Cost Fair Value
Deposits 37,781,854$ 37,781,854$ 56,122,489$ 56,122,489$
Money Market Mutual Funds 4,857,117 4,857,117 4,851,168 4,851,168
Certificates of deposit 200,000 200,000 900,000 900,000
U.S. Treasury and agency
obligations 388,684,118 386,857,519 180,442,248 181,714,022
Commercial paper 95,318,691 95,378,870 81,436,568 81,485,196
Bankers’ acceptance notes — — 7,554,253 7,559,801
Total 526,841,780$ 525,075,360$ 331,306,726$ 332,632,676$
2013 2012
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 27
Reconciliation to the financial statements:
2013 2012
Cash and Cash Equivalents
Unrestricted current 84,400,724$ 104,532,663$
Restricted current 69,449,837 12,709,234
Restricted non-current 27,904,044 41,577,877
Investments
Unrestricted current 67,190,638 12,228,539
Restricted current 79,625,995 39,253,780
Restricted non-current 22,940,929 20,573,626
Long-term Investments
Restricted non-current 83,261,367 49,958,324
Other 90,301,826 51,798,633
525,075,360$ 332,632,676$
Interest Rate Risk
As of June 30, 2013 and 2012, the District had the following investments and
maturities:
Weighted Weighted
Average Average
Maturity Maturity
Investment Type Fair Value (Years)Fair Value (Years)
Money market mutual 4,857,117$ 0.00 4,851,168$ 0.00
Certificates of deposit 200,000 2.07 900,000 1.11
U.S. Treasury obligations 188,141,798 0.65 50,229,767 0.78
U.S. agency obligations 198,715,721 2.05 131,484,255 2.25
Commercial paper 95,378,870 0.19 81,485,196 0.11
Bankers’ acceptance notes — 0.00 7,559,801 0.16
Total 487,293,506$ 1.13 276,510,187$ 1.28
2013 2012
In accordance with the District’s investment policy, the District will minimize the
risk that the fair value of debt securities in the portfolio will fall due to increases
in general interest rates by:
1. Structuring the investment portfolio so that securities mature to meet cash
requirements for ongoing operations, thereby avoiding the need to sell
securities on the open market prior to maturity.
2. Investing operating funds primarily in short-term securities.
3. State law limits the maximum stated maturities to five years on any
investment from the date of purchase.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 28
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. A large portion of the District’s long-term
investments are considered 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, 2013 and 2012, the District’s
investments in commercial paper were rated A1 by Standard & Poor’s and P-1 by
Moody’s Investors Service. 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 Standard & Poor’s of “AA+.” The District’s investment in money
market mutual funds carries a rating assigned by Standard & Poor’s of A1.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 29
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; and
collateralized repurchase agreements are limited to 50% of the portfolio. U.S.
agency obligations are limited to 30% of the portfolio, and commercial paper and
bankers’ acceptances are limited to 25% each. The following table lists
investments in issuers that represent 5% or more of total investments at June 30,
2013 and 2012:
Issuer 2013 2012
Treasury Notes 35.4 10.5
Federal Home Loan Bank 13.3 9.7
Federal National Mortgage Association 13.1 25.7
Federal Home Loan Mortgage Corporation 10.1 7.8
Percent Of
Total Investments
3. Note Receivable
The District has a note receivable with the City of Arnold, Missouri (the “City”)
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 new
loans added during the 2013 fiscal year bear interest of 4.50% and 3.52%. The
current portion of this note is contained in the other receivables line on the
statement of net position. The note receivable will mature in 2033. At June 30,
2013, future payments are as follows:
2014 $ 1,148,340
2015 1,154,696
2016 1,154,696
2017 1,154,696
2018 1,154,696
2019-2023 5,773,479
2024-2028 5,773,479
2029-3033 5,182,582
22,496,664
Less: Amount representing interest 7,348,531
$ 15,148,133
Classification in Statement Of Net Position: Current $ 507,581
Non-Current 14,640,552
Total $ 15,148,133
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 30
4. Capital Assets
The following is a summary of capital assets changes for the fiscal years ended
June 30, 2013 and 2012:
Balance Balance
June 30, 2012 June 30, 2013
Capital assets not being depreciated:
Land 46,026,763$ 4,049,881$ —$ 50,076,644$
Construction in progress 379,119,335 160,031,402 178,643,216 360,507,521
Total capital assets not being depreciated 425,146,098 164,081,283 178,643,216 410,584,165
Capital assets being depreciated:
Treatment and disposal plant
and equipment 1,011,798,185 15,479,009 221,669 1,027,055,525
Collection and pumping plant 2,050,326,859 178,420,467 2,491,091 2,226,256,235
General plant and equipment 91,264,888 2,747,756 1,835,996 92,176,648
Total capital assets being depreciated 3,153,389,932 196,647,232 4,548,756 3,345,488,408
Less: Accumulated depreciation:
Treatment and disposal plant
and equipment (400,549,004) (27,550,389) (221,669) (427,877,724)
Collection and pumping plant (579,180,437) (34,411,858) (1,449,645) (612,142,650)
General plant and equipment (49,991,012) (8,067,593) (1,812,843) (56,245,762)
Total accumulated depreciation (1,029,720,453) (70,029,840) (3,484,157) (1,096,266,136)
Total capital assets being depreciated, net 2,123,669,479 126,617,392 1,064,599 2,249,222,272
Total Capital Assets 2,548,815,577$ 290,698,675$ 179,707,815$ 2,659,806,437$
Additions Deletions
Balance Balance
June 30, 2011 June 30, 2012
Capital assets not being depreciated:
Land 36,924,144$ 9,102,619$ —$ 46,026,763$
Construction in progress 400,756,348 137,925,986 159,562,999 379,119,335
Total capital assets not being depreciated 437,680,492 147,028,605 159,562,999 425,146,098
Capital assets being depreciated:
Treatment and disposal plant
and equipment 979,444,620 41,013,831 8,660,266 1,011,798,185
Collection and pumping plant 1,941,575,848 112,106,178 3,355,167 2,050,326,859
General plant and equipment 84,858,812 8,721,309 2,315,233 91,264,888
Total capital assets being depreciated 3,005,879,280 161,841,318 14,330,666 3,153,389,932
Less: Accumulated depreciation:
Treatment and disposal plant
and equipment (382,129,043) (26,025,377) (7,605,416) (400,549,004)
Collection and pumping plant (548,181,682) (32,259,885) (1,261,130) (579,180,437)
General plant and equipment (43,753,142) (8,456,802) (2,218,932) (49,991,012)
Total accumulated depreciation (974,063,867) (66,742,064) (11,085,478) (1,029,720,453)
Total capital assets being depreciated, net 2,031,815,413 95,099,254 3,245,188 2,123,669,479
Total Capital Assets 2,469,495,905$ 242,127,859$ 162,808,187$ 2,548,815,577$
Additions Deletions
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 31
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 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 distributed to the
District monthly.
On June 12, 2008, pursuant to Ordinance 12661, the District set the property tax
rate at zero and began charging a stormwater service charge on March 1, 2008
based on the property’s impervious area.
Only July 9, 2010, the St. Louis County Circuit Court declared that the
stormwater user charge was a tax that requires voter approval under the
Hancock Amendment I. In July, the District ceased charging customers for
stormwater usage and reenacted the property tax that was previously charged.
In fiscal years 2013 and 2012, the District recorded revenue from property taxes
in the amount of $26,016,135 and $24,604,173, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 32
6. Long-Term Liabilities
The following is a summary of changes in the District’s long-term liabilities for
the year ended June 30, 2013:
Original Balance BalanceIssuance June 30,June 30, Current
Amounts 2012 Additions Retirements 2013 Portion
Bonds and notes payable:
Wastewater System Senior Revenue
Bonds:
Series 2004A 175,000,000$ 163,630,000$ —$ 161,255,000$ 2,375,000$ 2,375,000$
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 52,250,000 — 1,640,000 50,610,000 1,685,000
Series 2012A 225,000,000 — 225,000,000 — 225,000,000 — Series 2012B 141,730,000 — 141,730,000 — 141,730,000 —
Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Loans Program):
Series 2004B 161,280,000 115,960,000 — 7,180,000 108,780,000 7,442,500
Series 2005A 6,800,000 5,055,000 — 305,000 4,750,000 310,000
Series 2006A 42,715,000 34,225,000 — 2,140,000 32,085,000 2,172,500
Series 2006B 14,205,000 11,620,000 — 675,000 10,945,000 685,000
Series 2008A/B 40,000,000 33,832,500 — 1,792,500 32,040,000 1,810,000
Missouri Department
of Natural Resources:
Energy Loan Program 98,595 13,468 — 12,156 1,312 1,312
Energy Loan Program 223,793 223,793 — — 223,793 32,402
Series 2009A 23,000,000 21,084,500 — 991,100 20,093,400 1,014,000
Series 2010A 7,980,700 5,880,389 1,932,311 341,100 7,471,600 348,000
Series 2010C 37,000,000 35,519,000 — 1,520,000 33,999,000 1,560,000 Series 2011A 39,769,300 1,006,572 30,955,981 — 31,962,553 —
Capital Lease:
Oracle/Blue Heron 12,000,000 3,096,140 — 3,096,140 — —
1,154,052,388$ 658,396,362$ 399,618,292$ 180,947,996$ 877,066,658 19,435,714$
Add:
Unamortized premium, net 76,008,897
Less:
Deferred loss on refunding (10,617,604)
Bond issue costs, net (9,138,892)
Total 933,319,059$
Deposits and accrued
expenses:
Landfill closure and
postclosure costs 721,066$ 14,734$ —$ 735,800$ —$
Compensated
absences 7,269,231 853,872 598,306 7,524,797 1,881,199 Net OPEB obligation 3,399,555 2,132,454 1,513,300 4,018,709 —
Total 11,389,852$ 3,001,060$ 2,111,606$ 12,279,306$ 1,881,199$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 33
The following is a summary of changes in the District’s long-term liabilities for
the year ended June 30, 2012:
Original Balance BalanceIssuanceJune 30,June 30,CurrentAmounts2011Additions Retirements 2012 PortionBonds and notes payable:
Wastewater System Senior Revenue Bonds:Series 2004A 175,000,000$ 165,590,000$ —$ 1,960,000$ 163,630,000$ 2,165,000$
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 — 52,250,000 — 52,250,000 1,640,000
Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Loans Program):Series 2004B 161,280,000 123,055,000 — 7,095,000 115,960,000 7,180,000
Series 2005A 6,800,000 5,370,000 — 315,000 5,055,000 305,000 Series 2006A 42,715,000 36,335,000 — 2,110,000 34,225,000 2,140,000 Series 2006B 14,205,000 12,285,000 — 665,000 11,620,000 675,000
Series 2008A/B 40,000,000 35,610,000 — 1,777,500 33,832,500 1,792,500
Missouri Departmentof Natural Resources:
Energy Loan Program 98,595 25,251 — 11,783 13,468 12,157 Energy Loan Program 223,793 — 223,793 — 223,793 — Series 2009A 23,000,000 22,053,200 — 968,700 21,084,500 991,100
Series 2010A 7,980,700 2,852,447 3,195,942 168,000 5,880,389 341,100 Series 2010C 37,000,000 329,000 36,671,000 1,481,000 35,519,000 1,520,000 Series 2011A 39,769,300 — 1,006,572 — 1,006,572 —
Capital Lease:Oracle/Blue Heron 12,000,000 6,095,982 — 2,999,842 3,096,140 3,096,140
787,322,388$ 584,600,880$ 93,347,307$ 19,551,825$ 658,396,362 21,857,997$
Add: Unamortized
premium, net 14,196,464 Less: Bond issuecosts, net (8,391,259)
Total 664,201,567$
Deposits and accruedexpenses:Landfill closure and
postclosure costs 709,120$ 11,946$ —$ 721,066$ —$ Compensatedabsences 6,601,946 851,568 184,283 7,269,231 1,817,307
Net OPEB obligation 2,704,799 2,090,556 1,395,800 3,399,555 —
Total 10,015,865$ 2,954,070$ 1,580,083$ 11,389,852$ 1,817,307$
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. From the total
voter authorization of $1,720,000,000, $720,000,000 has not been issued as of
June 30, 2013. These funds were sought to enable the District to comply with
federal and state clean water requirements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 34
In November 2012, the District issued $141,730,000 of Wastewater System
Revenue Bonds Series 2012B (Series 2012B). These bonds were issued pursuant
to the June 2012 authorization: in this case to advance refund the Series 2004A
Bonds maturing in 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 have been
removed from the financial statements. This refunding decreases 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 payments 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. 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. 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.
In January 2010, the District issued $85,000,000 of Wastewater System Revenue
Bonds 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. 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 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 2012, the rate was 35%. Subsequent
to year end, the District was notified the subsidy percentage would be reduced to
32% beginning in fiscal year 2014.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 35
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 improvements and
replacement program. These senior bonds have interest rates ranging from 5.1%
to 5.3% and are payable in semiannual installments at varying amounts through
May 1, 2038.
In November 2006, the District authorized and issued $60,000,000 of Wastewater
System Revenue Bonds Series 2006C (Series 2006C) for the purpose of providing
funds to finance the initial phase of its capital improvements and replacement
program, including constructing, repairing, and replacing new wastewater
facilities. These senior bonds have interest rates ranging from 4.1% to 5.0% and
are payable in semiannual installments at varying amounts through May 1,
2036.
In May 2004, the District authorized and issued $175,000,000 of Wastewater
System Revenue Bonds Series 2004A (Series 2004A) for the purpose of providing
funds to finance the initial phase of its capital improvements and replacement
program, including constructing, repairing, and replacing new wastewater
facilities. 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 are considered to
be partially defeased. The original senior bonds had semiannual installments
through May 1, 2034 but as a result of the refunding the semiannual
installments are now through May 1, 2014. The liability related to Series 2004A
after May 1, 2014 has been removed from the financial statements. 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 METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 36
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 scheduled payment of the principal of and interest on
the outstanding Series 2006C and 2004A Bonds are guaranteed under a financial
guaranty insurance policy.
Water Pollution Control And Drinking Water Revenue Bonds Payable
In October 2008, the State Environmental Improvement and Energy Resources
Authority (the 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
make loans to fourteen Missouri political subdivisions that were used 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 in the aggregate principal amount of $40,000,000, the
proceeds of which will be used for constructing, repairing, and equipping new and
existing wastewater facilities. The District’s Participant Bonds have interest
rates ranging from 4% 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 make loans to seven Missouri political subdivisions that were
used 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 in the
aggregate principal amount of $14,205,000, the proceeds of which will be used for
constructing, repairing, and equipping new and existing wastewater facilities.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 37
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 make loans to 13 Missouri political subdivisions that were used 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 in
the aggregate principal amount of $42,715,000, the proceeds of which will be used
for constructing, repairing, and equipping new and existing wastewater facilities.
The District’s Participant Bonds have interest rates ranging from 3.5% to 4.5%
and are payable in semiannual installments at varying amounts through July 1,
2026.
In May 2005, the Authority authorized and issued $53,060,000 of State Revolving
Funds Programs Series 2005A (Series 2005A). The Series 2005A bonds provided
funds to make loans to ten 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 in the aggregate principal amount of $6,800,000, the
proceeds of which will be used for constructing, repairing, and equipping new and
existing wastewater facilities. 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 seven 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 in the
aggregate principal amount of $161,280,000, the proceeds of which will be used to
finance the District’s three water pollution control construction projects outlined
in the agreement. The District’s Participant Bonds have interest rates ranging
from 2.0% to 5.3% and are payable in semiannual installments at varying
amounts through January 1, 2027.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 38
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 and 2011A direct loans (pages 40-43) do not obligate the District to
levy any form of taxation therefore 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, 2008A/B
bonds, the District participates in the State Revolving Loan Program established
by the Missouri Department of Natural Resources (the DNR). Monies from
federal capitalization grants and state matching funds are used to fund a reserve
account for each participant.
As the District incurs approved capital expenses, the DNR reimburses the
District for the expenses from the bond proceeds account and deposits in a bond
reserve fund in the District’s name an additional 60% of the expenditure amount
for the Series 2004B bonds or 70% for the Series 2005A, 2006A, 2006B bonds or
100% for the Series 2008A/B bonds. Interest earned from this reserve fund 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 reserve account to the master trustee an
amount equal to 60% of the principal payment for the Series 2004B bonds or 70%
for the Series 2005A, 2006A, 2006B bonds or 100% for the series 2008A/B bonds.
The costs of operation and maintenance of the wastewater treatment and
sewerage facilities and the debt service is payable from wastewater revenues.
In accordance with the Series 2004A, 2004B, 2005A, 2006A, 2006B, 2008A/B
bonds, 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 portion of principal and interest due on all senior bonds and
at least 115% of the current portion of principal and interest due on all bonds. At
June 30, 2013 and 2012, the District was in compliance with this covenant.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 39
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, 2013 are as follows:
Years Ending June 30, Principal Interest Total
2014 16,480,000$ 38,591,403$ 55,071,404$
2015 16,440,000 37,849,836 54,289,836
2016 22,395,000 37,086,774 59,481,774
2017 23,242,500 36,050,811 59,293,311
2018 23,917,500 34,942,274 58,859,774
2019-2023 131,842,500 157,224,025 289,066,525
2024-2028 134,072,500 124,050,926 258,123,426
2029-2033 138,132,500 91,899,861 230,032,361
2034-2038 141,660,000 57,583,323 199,243,323
2039-2042 135,132,500 17,287,550 152,420,050
Total 783,315,000$ 632,566,783$ 1,415,881,783$
Wastewater System Revenue Bonds Payable/
Water Pollution Control and Drinking Water
Revenue Bonds Payable
Energy Efficiency Leveraged Note Payable
In April 2004, the DNR loaned $98,595 to the District. The Energy Efficiency
Leveraged Note Payable bears interest at a rate of 3.2% per annum and is
payable through August 1, 2013. The purpose of this note is to finance the
design, acquisition, installation, and implementation of energy conservation
measures. The principal and interest on this note is paid from the energy
savings from the projects or avoided costs resulting from the projects.
Principal And Interest Requirements On Energy Efficiency Leveraged
Note Payable
The annual principal and interest requirements to maturity on the Energy
Efficiency Leveraged Note Payable outstanding as of June 30, 2013 are as
follows:
Years Ending June 30, Principal Interest Total
2014 1,312$ 21$ 1,332$
Energy Efficiency Leveraged Note Payable
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 40
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 is to finance
the design, acquisition, installation, and implementation of energy conservation
measures. As of June 2013, the District has completed the specific energy
conservation projects and spent $199,489 of the $223,793 loan amount. The
remaining $24,203 will be returned to the DNR as a principal payment. The
principal and interest on this note will be paid from the energy savings from the
projects or avoided costs resulting from the projects.
Principal And Interest Requirements On Energy Efficiency Leveraged
Note Payable
The annual principal and interest requirements to maturity on the Energy
Efficiency Leveraged Note Payable outstanding as of June 30, 2013 are as
follows:
Years Ending June 30, Principal Interest Total
2014 32,402$ 3,520$ 35,922$
2015 31,332 4,590 35,922
2016 32,120 3,802 35,922
2017 32,928 2,994 35,922
2018 33,756 2,166 35,922
2019-2020 61,254 1,762 63,017
Total 223,793$ 18,834$ 242,627$
Energy Efficiency Leveraged Note Payable
State Of Missouri Direct Loan Series 2009A
In October 2009, the DNR loaned $23,000,000 to the District. The State of
Missouri Direct Loan Series 2009A bears interest at a rate of 1.5% per annum
and is payable through January 1, 2030. The purpose of this note is to finance
the designing, constructing, improving, renovating, repairing, replacing and
equipping new and existing sewer facilities within the District. The principal
and interest on the bonds are expected to be paid from future wastewater
revenues.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 41
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2009A
As the District incurs approved capital expenses, the DNR reimburses the
District for the expenses from the bond proceeds account and deposits the
approved amount in a bond reserve fund. The District repays the bond at an
interest rate of 1.5% based on the amount that has been borrowed. All funds
have been drawn on this loan.
The annual principal and interest requirements to maturity on the State of
Missouri Direct Loan Series 2009A outstanding as of June 30, 2013 are as
follows:
Years Ending June 30,Principal Interest Total
2014 1,014,000$ 289,684$ 1,303,684$
2015 1,037,500 274,794 1,312,294
2016 1,061,500 259,560 1,321,060
2017 1,086,000 243,973 1,329,973
2018 1,111,100 228,026 1,339,126
2019-2023 5,953,300 887,712 6,841,012
2024-2028 6,674,300 429,934 7,104,234
2029-2031 2,155,700 31,592 2,187,292
Total 20,093,400$ $ 2,645,275 $ 22,738,675
State of Missouri Direct Loan Series 2009A
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 $7,980,700 for the construction, improvement,
renovation, repair, replacement and equipping of its wastewater system, under
the authority of and in full compliance with the District’s Charter (Plan). The
District’s interest rate is 1.5% and is payable in semiannual installments at
varying amounts through July 1, 2031.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2010A
As the District incurs approved capital expenses, the DNR reimburses the
District for the expenses from the bond proceeds account and deposits the
approved amount in a bond reserve fund. The District repays the bond at an
interest rate of 1.5% based on the amount that has been borrowed. All funds
have been drawn on this loan.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 42
The annual principal and interest requirements to maturity on the State of
Missouri Direct Loan Series 2010A outstanding as of June 30, 2013 are as
follows:
Years Ending June 30, Principal Interest Total
2014 348,000$ 109,299$ 457,299$
2015 355,000 104,122 459,122
2016 362,300 98,842 461,142
2017 369,600 93,452 463,052
2018 377,100 87,955 465,055
2019-2023 2,003,800 353,316 2,357,116
2024-2028 2,215,600 198,108 2,413,708
2029-2032 1,440,200 37,616 1,477,816
Total 7,471,600$ 1,082,710$ 8,554,310$
State of Missouri Direct Loan Series 2010A
State Of Missouri Direct Loan Series 2010C
In December 2010, the State of Missouri Direct Loan Program - ARRA 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. 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 incurs approved capital expenses, the DNR reimburses the
District for the expenses from the bond proceeds account and deposits the
approved amount in a bond reserve fund. The District repays the bond at an
interest rate of 1.7% based on the amount that has been borrowed. All funds
have been drawn on this loan.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 43
The annual principal and interest requirements to maturity on the State of
Missouri Direct Loan Series 2010C outstanding as of June 30, 2013 are as
follows:
Years Ending June 30,Principal Interest Total
2014 $ 1,560,000 554,590$ $ 2,114,590
2015 1,600,000 528,685 2,128,685
2016 1,641,000 502,120 2,143,120
2017 1,684,000 474,862 2,158,862
2018 1,727,000 446,903 2,173,903
2019-2023 9,335,000 1,788,996 11,123,996
2024-2028 10,611,000 972,593 11,583,593
2029-2032 5,841,000 145,835 5,986,835
Total 33,999,000$ 5,414,584$ $ 39,413,584
State of Missouri Direct Loan Series 2010C
State Of Missouri Direct Loan Series 2011A
In November 2011, the State of Missouri Direct Loan Program - ARRA 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. The District’s interest rate is 1.5% and is payable in
semiannual installments at varying amounts through January 1, 2034.
In accordance with the Direct Loan Series 2009A, 2010A, 2010C and 2011A, 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 portion of principal and interest due on all bonds. At June 30, 2013 and
2012, the District was in compliance with this covenant.
Principal And Interest Requirements On State Of Missouri Direct Loan
Series 2011A
As the District incurs approved capital expenses, the DNR reimburses the
District for the expenses from the bond proceeds account and deposits the
approved amount in a bond reserve fund. The District repays the bond at an
interest rate of 1.5% based on the amount that has been borrowed. As of
June 30, 2013 the outstanding loan balance was $31,962,553. The payment
requirements to maturity will be determined after the debt is fully issued.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 44
Master Equipment Lease / Purchase Agreement
In June 2009, the District entered into a lease purchase agreement in which the
District has received proceeds in the total amount of $12,000,000 in varying
installments. These proceeds were used to lease technology related to the
District’s upgrade to a new enterprise system. The lease bears interest at a rate
of 3.2% and was payable through June 19, 2013, at which time the District has
the option to purchase the leased equipment.
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
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.
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 2012B bonds, monies in the Debt Service Reserve Fund shall be disbursed
and expensed 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, 2013 and
2012, cash and investments in the Debt Service Reserve Fund totaled
$46,962,390 and $34,861,380, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 45
Special Participant Bond Reserve Account
For the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds, the District
shall deposit into the Special Participant Bond Reserve Account amounts in
accordance with the bond ordinance, 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, 2013 and 2012, cash and investments in the Special
Participant Bond Reserve Account held on behalf of the District totaled
$129,456,509 and $137,354,308, respectively. Monies in this account are not
considered to be District funds. However, interest earnings on this account may
be 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, 2013.
Project Fund
The Project Fund 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, and 2012A bonds, shall be deposited into the Project Fund.
At June 30, 2013 and 2012, cash and investments in the Project Fund totaled
$160,339,298 and $51,976,851, 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, 2013 and 2012, cash and investments in the Rebate Fund totaled
$234,238 and $234,216, respectively.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 46
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 shall
immediately withdraw the fee amounts when due. Monies held in this account
shall not be invested.
Fair Value Of Financial Instruments
The value of the District’s long-term debt is estimated based on the current rates
offered to the District for debt of the same remaining maturities. The carrying
amount and estimated fair value of the District’s long-term debt as of June 30,
2013 was $877,066,658 and $950,947,897, respectively. The carrying amount
and estimated fair value of the District’s long-term debt as of June 30, 2012 was
$658,396,362 and $733,956,055, respectively.
7. Pension Plan
Plan Description
The Metropolitan St. Louis Sewer District Employees’ Pension Plan (the Plan) is
a non-contributory 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 December 31,
2010, were eligible to be covered by the Plan. As of January 1, 2011 the Plan was
frozen to new employees. Instead, new employees of the District may participate
in the District’s Defined Contribution Plan and/or the Deferred Compensation
Plan. Current employees with less than ten years of service on this date could
also voluntarily elect to transfer from the Plan and enter the Defined
Contribution Plan.
The District’s Board of Trustees, primarily to improve benefits to members,
amends the Plan, established on November 1, 1967. 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 Plan. A committee of the District’s Board of Trustees, with the
aid of an investment advisor, reviews and evaluates the Plan’s investments and
the related rates of return on a periodic basis. The Plan is exempt from the
requirements of the Employee Retirement Income Security Act of 1974 and, as
such, is not subject to the Act’s reporting requirements.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 47
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 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 January 1, 1999, Ordinance No.
10491 amended the Plan benefits formula. The annual benefit payable became
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. Also, the annual reduction for early
retirement was revised from 5% to 2% prior to age 60 and from 2.5% to 1% after
age 60.
Ordinance No. 10664, effective January 1, 2000, amended the Plan benefits
formula to 1.45% 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. This ordinance also provided
for a survivor’s benefit for vested members who have not yet reached their
normal retirement date or earned 75 points. The survivor’s benefit is equal to the
greater of 50% of the member’s monthly accrued retirement benefit as of the date
of death, or 15% of the monthly earnings and the member’s monthly accrued
retirement benefit actuarially reduced under the 100% joint and survivor annuity
option. Members are also able to select a Contingent Annuity Pop-Up option.
This option allows the member to elect a survivor annuity for life, with the
provision that if the beneficiary should predecease the member, the benefit shall
increase to the amount payable had the survivor option not been selected.
Ordinance Number 10872, effective January 1, 2001, further amended the Plan
to extend the cost of living increases for retirees from a maximum of 30% to 45%
of the original benefit.
Effective August 1, 2004, Ordinance No. 11781 amended the 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 times the amount of
leave accrued. Also, the 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
Plan.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 48
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.
Effective August 27, 2011, Ordinance No. 13288 amended the 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 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.
Funding Policy
The District’s employees do not contribute to the Plan. Ordinances establishing
the 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.
Annual Pension Cost
Contributions of $11,564,228 and $10,719,154, excluding certain professional fees
paid by the District, were made to the Plan during the District’s fiscal years
ended June 30, 2013 and 2012, respectively. These contributions were made in
accordance with actuarially determined contribution requirements based on
actuarial valuations performed at December 31, 2012 and 2011, respectively, and
for 2012 consisted of a) $6,195,693 normal cost plus b) $4,748,053 amortization of
the unfunded actuarial accrued liability and prior changes c) multiplied by an
interest factor of 1.0725.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 49
The District provides certain professional fees, office space, utilities, and other
services to the Plan at no cost. Other costs of administering the Plan are
financed from plan net assets.
Significant actuarial assumptions used in the valuations are as follows:
Latest valuation date December 31, 2012
Actuarial cost method Entry Age Normal
Amortization method Level dollar closed
Amortization period 20-year period
Asset valuation method Three-year average of adjusted market values
Post-retirement benefit increases CPI with maximum 3% of current benefit or $50/month,
and benefit increases lifetime maximum 45% in the
original benefit or $750/month
Investment rate of return 7.25% per annum (1)
Projected salary increases 4.5% - 10.0% per annum (1)
Social Security wage base 4.0% per annum increase (1)
Includes inflation component of 3.0%
Trend Information
Certain actuarial assumption changes were made and went into effect January 1,
2012. They are as follows:
The assumed interest rate was decreased from 7.5% to 7.25%.
A five-year projection was added to the healthy mortality assumption to
reflect expected future mortality improvements.
The amount of assumed investment related expenses paid from the Trust
was decreased to reflect a more conservative interest rate assumption.
Historical trend information about the District’s participation in the Plan is
presented below to help readers assess the Plan’s funding status on a going-
concern basis and assess progress being made in accumulating assets to pay
benefits when due.
Annual
Pension Percentage Of Net Pension
Fiscal Year Cost (APC) APC Contributed Obligation
2013 11,564,228$ 100% —$
2012 10,719,154 100%—
2011 10,500,769 100%—
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 50
Funded Status And Funding Progress
As of January 1, 2013, the Plan was 83.0% funded. The actuarial accrued
liability for benefits was approximately $266,371,000, and the actuarial value of
assets was approximately $221,144,000, resulting in an unfunded actuarial
accrued liability (UAAL) of approximately $45,227,000. The covered payroll
(annual payroll of active employees covered by the plan) was approximately
$48,333,000, and the ratio of the UAAL to covered payroll was 93.6%.
The schedule of funding progress, presented as RSI following the notes to the
financial statements, presents multiyear trend information about whether the
actuarial value of plan assets are increasing or decreasing over time relative to
the actuarial accrued liability for benefits.
8. Other Pension Plans
Deferred Compensation Plan
The District offers its employees a Deferred Compensation Plan created in
accordance with Internal Revenue Code Section 457. The Deferred
Compensation 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 Deferred Compensation Plan.
The Deferred Compensation Plan was amended and restated to comply with the
Economic Growth and Tax Relief Reconciliation Act of 2001 (the Act). The Act
made significant changes to Section 457(b) of the Internal Revenue Code of 1986,
as previously amended. The Deferred Compensation 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 Deferred Compensation Plan are not included in the
accompanying financial statements.
The Deferred Compensation 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 51
Defined Contribution Plan
The Plan is a defined contribution benefit plan established by the District’s Board
of Trustees through Ordinance 13180 and became effective January 1, 2011. The
following employees are eligible to participate in the Plan: (i) employees first
hired on or after January 1, 2011, and (ii) employees hired prior to January 1,
2011 who elect 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
Plan on the first day on which he performs an hour of service for the District.
The District’s Board of Trustees, primarily to improve benefits to members,
amends the 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 Plan. A
committee of the District’s Board of Trustees, with the aid of an investment
advisor, reviews and evaluates the Plan’s investments and the related rates of
return on a periodic basis.
This 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.
The 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.
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 52
Employer Matching Contributions: For each payroll period, the District
contributes an amount equal to 50% of the covered compensation of such
participant withheld as an annual deferral (as defined in the Deferred
Compensation Plan); 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 Plan year.
In no event shall the sum of the employer contributions and employee
contributions allocated to the account of a participant for the 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 $523,670 and $254,433 for
the years ended June 30, 2013 and 2012, respectively.
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
Notes To Financial Statements (Continued)
Page 53
9. Post-Employment Benefits Other Than Pensions
Plan Description
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 provides a single-employer defined benefit
health care plan to employees who retire from the District on or after age 62 and
with five years of service or whose age plus years of service equal 75 points (“Rule
of 75”). The District pays the monthly group health insurance premium for the
individual until the retiree becomes eligible for Medicare at age 65. In addition,
there is a closed group of disabled former employees who receive life insurance
coverage from the District.
Contributions for retirees are as follows:
Coverage Tier Monthly Premium
Retiree* $478.98
Retiree + Spouse $1,020.35
Retiree + Child $927.09
Family (1 child) $1,414.15
*The District pays the retiree’s premium for a retiree who retires after age 62 or after attaining
75 points. Eventually, affected retirees will have to pay up to 10% of the above premium.
The District’s annual other post-employment benefit (OPEB) cost (expense) is
calculated based on the annual required contribution (ARC) of the employer, an
amount actuarially determined in accordance with the parameters of GASB 45
and in conjunction with Plan benefits currently in force. The actuarial valuations
have been determined using estimated data provided by the District in
combination with assumptions on the probability of future events, while also
keeping an eye on long-term viability. These valuations are subject to continual
revision as future actuarial measurements may differ significantly from current
measurements due to the realization of new estimates and factors.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 54
The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and to amortize any unfunded actuarial
liabilities. The District’s annual OPEB cost for the current year and the related
information are as follows:
Amortization of past service cost 839,500$
Normal cost 1,166,900
Interest to end of fiscal year 90,300
Annual Required Contribution (ARC)2,096,700$
Interest on net OPEB obligation 152,980$
Adjustment to ARC (117,226)
Annual OPEB cost 2,132,454
Contributions made (1,513,300)
Increase in net OPEB obligation 619,154
Net OPEB obligation - beginning of year 3,399,555
Net OPEB obligation - end of year 4,018,709$
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.
Trend Information
Annual
Required Percentage
Fiscal Contribution Of ARC Net OPEB
Year (ARC) Contributed Obligation
2013 2,096,700$ 72.2 4,018,709$
2012 2,059,000 67.8 3,399,555
2011 2,142,000 64.5 2,704,799
As of June 30, 2013, the Plan was not funded. The actuarial accrued liability for
benefits as of July 1, 2011, the latest actuarial valuation was approximately
$24,103,000, and there were no assets, resulting in an unfunded actuarial accrued
liability (UAAL) of approximately $24,103,000. The covered payroll (annual payroll
of active employees covered by the plan) in 2011 was approximately $52,649,000,
and the ratio of the UAAL to covered payroll was 45.8%.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 55
The schedule of funding progress, presented as RSI following the notes to the
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, 2011
Actuarial cost method Projected Unit Credit Discount rate 4.5% per annum
Amortization method Level percentage of payroll amount, open
Amortization period 30-year period
Inflation rate 3.0%
Investment Rate of Return 4.5% annual returns net of both administrative and
investment expenses
Health cost trend assumption Getzen Trend Model - 7.6% graded to 4.7% over 70
years
Medical Trend:
Year Medical Year Medical
2011 2040
2012 6.9 2045 5.3
2013 6.3 2050 5.3
2014 6.0 2055 5.3
2015 6.0 2060 5.3
2016 6.0 2065 5.2
2020 5.9 2070 5.2
2025 5.8 2075 5.0
2030 5.8 2080 4.8
2035 5.7 4.7
7.6% 5.4%
2081+
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 56
The healthcare trends used in this valuation are based on long term healthcare
trends generated by the Getzen Trend Model (the 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.
Payroll inflation 4.5% per annum
Mortality RP 2000 Mortality Table (employee and healthy
annuitant tables)
Years Of Attained
Service Rate Age Rate
020
1 12.0 30 3.7
2 7.5 40 1.1
50+0.0
Select rates based on service.
Ultimate rates based on attained age.
Ultimate rates are from the Sarason T-1 Table above.
20.0%5.5%
Termination Of Employment:
Select Rates Ultimate Rates
(0 to 4 years of service)(after 4 years of service)
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%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 57
Percent
Becoming
Age Disabled
20
30 0.064
40 0.102
50 0.311
Disability
0.056%
Future Retiree Coverage: 90.0% of eligible employees retiring prior to age 65 are assumed to
elect medical coverage Future Dependent Care: 25.0% elect spouse coverage 0.0% dependent children coverage
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, 2013 and 2012, these liabilities amounted to $3,041,045
and $2,575,977, respectively.
The claims liabilities reported are based on the requirements of GASB Statement
No. 10, which requires that a liability for claims be reported if information
obtained prior to the issuance of the financial statements indicates it is probable
that a liability has been incurred and the amount of the liability can be
reasonably estimated. Changes in the balance of claims liabilities during fiscal
2013 and 2012 were as follows:
2013 2012
Liability, beginning of year 2,575,977$ 5,557,000$
Current year claims and changes in estimates 12,547,715 9,350,602
Claim payments (12,082,647) (12,331,625)
Liability, end of year 3,041,045$ 2,575,977$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 58
The District obtains periodic funding valuations from the third-party
administrators managing the self-insurance programs and adjusts the charges as
required to maintain the appropriate level of estimated claims liability. The
District also maintains excess liability insurance coverage for workers'
compensation and medical and hospitalization claims; general liability; and
water backup damage to customers’ property.
The District purchases commercial insurance for all other risks of loss. Settled
claims have not exceeded this commercial coverage in any of the past three years.
11. Closure And Post-Closure Care Costs
State and federal laws and regulations require the District to place a final cover
on its Prospect Hill Reclamation Project landfill site when it stops accepting
waste and to perform certain maintenance and monitoring functions at the site
for 30 years after closure. Although closure and post-closure care costs will be
paid only near or after the date that the landfill stops accepting waste, the
District reports a portion of these closure and post-closure care costs as an
operating expense in each period based on landfill capacity used as of the end of
the fiscal year. The $735,800 and $721,066 reported as landfill closure and post-
closure care liabilities at June 30, 2013 and 2012, respectively, represent the
cumulative amounts reported at fiscal year-end based on the use of 94.3% and
92.4% of the estimated capacity of the landfill for fiscal years ended 2013 and
2012, respectively. The District will recognize the remaining estimated cost of
closure and post-closure care of $44,202 at June 30, 2016 as the facility nears
capacity. These amounts are based on what it would cost to perform all closure
and post-closure care in 2013.
The District is required to demonstrate that it has the financial capability to
close the landfill to the State of Missouri through the use of a financial test as
specified in 10 CSR 80-2.030(4)(D)6 of the Missouri Solid Waste Management
Rules. The District has complied with the State’s requirement. The District
recognizes that estimates of closure costs may change as a result of inflation,
deflation, and/or changes in technology and applicable laws and regulations. If
closure cost estimates change, the liability currently reported on the statements
of net position will be adjusted accordingly.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 59
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 is 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 are other counts involving
violations of permit conditions. The District has been the subject of several
investigatory actions by EPA over the past several years. Negotiations have been
ongoing with the EPA and the 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 alleges that the District does not have an approved Long-Term
Control Program (“LTCP”) for the combined system. The District has been
working on these issues for several decades and has asked voters to approve
bonds and rate increases to rehabilitate and maintain the collection system. As
required by its Charter, the District has increased rates which will continue 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 60
On January 23, 2011, the Plaintiffs, excluding the State of Missouri, filed a
Motion to Enter the Proposed CD. That same day the State of Missouri filed a
Motion to Dismiss their Claims without Prejudice. On January 17, 2012, MSD
filed a Motion to Support the State of Missouri’s Motion only if conditions were
imposed. On February 9, 2012, the State filed a Motion opposing the conditions
proposed by MSD. On April 27, 2012, the Court entered the decree, thus
concluding the litigation of this lawsuit. On that same day the Court entered a
Memorandum and Order regarding the State of Missouri’s Motion to Dismiss its
Claims. The Court realigned the State of Missouri as a defendant and reaffirmed
the August 3, 2009, decision by the Eighth Circuit Court of Appeals that the
State had waived its sovereign immunity. Although this litigation matter has
concluded, MSD is working diligently to implement the CD.
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’s first report was submitted on
May 24, 2012.
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.
William Zweig et al. v. Metropolitan Sewer District.
This case was filed on July 18, 2008 and, as amended, contends that
Metropolitan Sewer District Ordinances No. 12560 and No. 12789, which enacted
increases in the District’s stormwater user charge based on the amount of
impervious area on the customer’s property, are unconstitutional. The lawsuit
claims the ordinances violate the so-called Hancock Amendment, Mo. Const. art.
X, § 22(a), because the stormwater user charge is in reality a tax that requires
voter approval. The District’s Board of Trustees passed the ordinances in
December 2007 and December 2008, respectively, without submitting them to the
voters. The District contends the stormwater user charge is not a tax and, thus,
not subject to voter approval. The original plaintiff is a District stormwater
customer who seeks to represent a class of all the District stormwater customers.
In July 2009, two more plaintiff class representatives were added to the lawsuit.
The lawsuit seeks (1) a declaration that the stormwater user charge is
unconstitutional, (2) a refund of all stormwater user charges collected, and (3)
payment of the plaintiffs’ costs, including attorneys’ fees.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 61
Trial was held April 13, 2010 through April 16, 2010. On July 9, 2010, the court
handed down Findings of Fact, Conclusions of Law, Judgment and Decree in the
first phase of the bifurcated trial. The Court declared the Stormwater User
Charge is a tax under the Hancock Amendment. The second phase of the trial
was heard on October 6, 2010, to determine the amount, if any, to be refunded.
The amount of a full refund would be approximately $87 million; a partial refund
for the additional amount collected under the user charge would amount to
approximately $35 million. The judge ruled on November 29, 2010, that no
refund would be issued by MSD. The third phase, to determine the amount of
Plaintiffs’ counsel’s attorneys’ fees, to be paid by MSD, was heard on January 18,
2011. On February 4, 2011, the judge awarded Plaintiff’s counsel $4.8 million in
attorney’s fees and expenses. The record on appeal was filed July 20, 2011, with
the Court of Appeals, Eastern District of Missouri. The attorney’s fees and
expenses were paid into escrow on September 9, 2011, and will remain in escrow
pending finality of the litigation.
The Court of Appeals heard oral argument on March 6, 2012. On March 27,
2012, the Appellate Court Ruling upheld the Trial Court’s decision that the
stormwater fee is a tax and that no refund was due, and reversed the application
of a multiplier on attorney’s fees. On April 11, 2012, MSD filed a Motion for
Rehearing by the Appellate Court and an Application for Transfer to the Missouri
Supreme Court. The Appellate Court denied both. On May 29, 2012, MSD filed
its Application directly to the Missouri Supreme Court requesting a transfer. On
June 1, 2012, the National Association of Clean Water Agencies was allowed to
file suggestions in support of our Application for Transfer. On May 21, 2013 the
Missouri Supreme Court heard oral arguments. The District is currently
awaiting their ruling.
Flooding Cases
The District was originally a defendant in five (5) different flooding cases related to
the September 14, 2008, rain event precipitating from remnants of Hurricane Ike.
These cases consisted of three (3) property damage cases and two (2) wrongful death
cases. The defense costs associated with these cases has been covered by the
District’s insurance carrier, with a reservation of rights. Of the five (5) cases, one (1)
involves flooding of Maline Creek and the others involve flooding of the River Des
Peres. Of the five (5) original cases, only two (2) cases remain. The remaining cases
are one (1) wrongful death and one (1) property damage case. Two (2) of the three
(3) cases resolved were voluntarily dismissed by the plaintiffs and the other case
was a property damage case which settled. Subsequent to June 30, 2013, five (5)
new property damage cases were filed against the District.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Notes To Financial Statements (Continued)
Page 62
Contingencies
The District has entered into construction and other contracts amounting to
$213,088,826 and $195,950,700 at June 30, 2013 and 2012, respectively. Grants
to be received from various governmental agencies and entities to partially offset
the cost of the contract commitments amounted to $5,658 and $6,113 at June 30,
2013 and 2012, respectively. As of June 30, 2013, the District had $720,000,000
in revenue bonds authorized by the voters in June 2012, but unissued. These
funds were sought to enable the District to comply with federal and state clean
water requirements.
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, 2013 and 2012 financial statements.
13. Restricted Net Position
The Statements of Net Position report $117,365,365 and $106,693,694 of
restricted net position at June 30, 2013 and 2012, respectively, of which
$70,225,233 and $66,800,934 are restricted due to enabling legislation, as of
June 30, 2013 and 2012, respectively.
14. Segment Information
The District issued wastewater revenue bonds to finance wastewater
infrastructure projects. The District accounts for both wastewater and
stormwater activities in a single enterprise fund, but investors in those bonds
rely solely on the revenue generated by the wastewater activities for repayment.
Fiscal Year 2013 and 2012 summary financial information for each business
segment is presented below.
A segment is an identifiable activity reported as a stand-alone entity for which one
or more revenue bonds are outstanding. A segment has a specifically identifiable
revenue stream pledged in support of the revenue bonds and has related expenses,
gains and losses, and assets and liabilities that are required by external parties to
be accounted for separately. The wastewater segment is the only reportable
segment that meets the requirements of GASB Statement No. 34, Basic Financial
Statements - and Management’s Discussion and Analysis - for State and Local
Governments. The stormwater segment is reported for informational purposes only.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 71
REQUIRED SUPPLEMENTARY INFORMATION
EMPLOYEES’ PENSION PLAN AND POST-EMPLOYMENT BENEFIT PLAN
June 30, 2013
Employees’ Pension Plan
Schedule Of Funding Progress
In (000s)
Unfunded
Entry Age Actuarial UAAL As A
Actuarial Actuarial Accrued Annual Percentage
Actuarial Value Accrued Liability Funded Covered Of Covered
Valuation Of Assets Liability (UAAL) Ratio Payroll Payroll
Date (1) (2) (1)-(2) (1)/(2) (3) (1)-(2)/(3)
12/31/2012 221,144$ 266,371$ (45,227) 83.0 48,333$ 93.6 %
12/31/2011 205,792 254,997 (49,205) 80.7 49,432 99.5
12/31/2010 189,012 231,599 (42,587) 81.6 51,703 82.4
12/31/2009 185,753 223,063 (37,310) 83.3 52,267 71.4
12/31/2008 183,679 212,066 (28,387) 86.6 48,077 59.0
12/31/2007 185,356 195,834 (10,478) 94.6 43,640 24.0
Post-Employment Benefit Plan
Schedule Of Funding Progress
In (000s)
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)
7/1/2011 —$ 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
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 ........................................................... 72 - 73
Revenue Capacity
These schedules contain information to help the reader assess
the District’s most significant local revenue sources, the user charge .......... 74 - 80
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. .................... 81 - 84
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. ................................................... 85 - 86
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 ............................................................ 87 - 88
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual
financial reports for the relevant year.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 72 NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (000’s) 20042005200620072008Net PositionNet investment in capital assets1,586,704$ 1,618,219$ 1,651,792$ 1,682,063$ 1,704,322$ Restricted44,329 47,584 66,973 85,447 97,422 Unrestricted171,858 190,971 247,958 278,803 324,218 Total Net Position1,802,891$ 1,856,774$ 1,966,723$ 2,046,313$ 2,125,963$ 20092010201120122013Net PositionNet investment in capital assets1,798,914$ 1,868,974$ 1,915,233$ 1,936,590$ 1,886,831$ Restricted94,769 80,782 94,926 106,694 117,365 Unrestricted293,934 257,894 186,860 175,010 245,001 Total Net Position2,187,617$ 2,207,649$ 2,197,019$ 2,218,294$ 2,249,197$ Fiscal YearFiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 73 CHANGE IN NET POSITION LAST TEN FISCAL YEARS Income/(Loss)ChangeFiscal Operating Operating Operating Non-operating before Capital Capital in NetYearRevenues Expenses Income/(Loss) Income/(Loss) Contributions Contributions Position2004157,970,382$ 150,592,370$ 7,378,012$ 18,445,656$ 25,823,668$ 35,246,721$ 61,070,389$ 2005188,993,673 162,373,895 26,619,778 4,678,347 31,298,125 22,585,702 53,883,827 2006206,803,022 175,889,536 30,913,486 25,966,334 56,879,820 53,069,364 109,949,184 2007202,205,532 183,810,507 18,395,025 36,885,268 55,280,293 24,309,430 79,589,723 2008221,925,048 225,145,882 (3,220,834) 37,259,517 34,038,683 45,609,805 79,648,488 2009249,725,358 212,177,779 37,547,579 (2,885,959) 34,661,620 26,993,385 61,655,005 2010246,587,174 228,778,874 17,808,300 (17,560,670) 247,630 19,786,012 20,033,642 2011219,444,257 244,503,099 (25,058,842) 4,329,032 (20,729,810) 10,098,552 (10,631,258) 2012225,999,720 216,307,965 9,691,755 1,924,593 11,616,348 9,658,857 21,275,205 2013241,946,337 230,158,433 11,787,904 1,579,689 13,367,593 17,534,919 30,902,512
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 74 OPERATING REVENUES BY SOURCE LAST TEN FISCAL YEARS TotalFiscal Sewer Service Licenses, Permits, OperatingYear Charges, Net and Other Fees Other Revenues2004 150,903,248$ 6,297,166$ 769,968$ 157,970,382$ 2005 181,966,427 6,549,221 478,025 188,993,673 2006 200,719,348 5,210,321 873,353 206,803,022 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
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 75 OPERATING EXPENSES LAST TEN FISCAL YEARS Fiscal EmploymentMaterials and Contracted ChemicalYearCosts Utilities Supplies Services Supplies2004 54,259,559$ 10,321,708$ 9,453,919$ 21,148,553$ 843,259$ 2005 52,656,509 11,244,255 7,231,297 30,424,935 946,182 2006 56,817,238 11,963,002 11,602,773 38,472,414 1,089,564 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 31,133,522 1,455,725 Subtotal,ExpensesTotalFiscalbeforeOperatingYear Insurance Other Depreciation Depreciation Expenses20042,837,587$ 9,135,915$ 108,000,500$ 42,591,870$ 150,592,370$ 20052,968,245 12,459,569 117,930,992 44,442,903 162,373,895 20062,816,795 9,147,931 131,909,717 43,979,819 175,889,536 20072,915,236 10,604,787 138,089,529 45,720,978 183,810,507 20082,939,390 13,986,037 170,212,023 54,933,859 225,145,882 20092,746,119 13,769,203 164,807,399 47,370,379 212,177,779 20103,062,439 19,981,424 174,767,098 54,011,776 228,778,874 20112,578,316 21,353,854 177,648,834 66,854,265 244,503,099 20122,470,343 2,451,472 149,565,901 66,742,064 216,307,965 20132,696,416 8,013,944 160,128,593 70,029,840 230,158,433
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 76 NON-OPERATING REVENUES AND EXPENSES LAST TEN FISCAL YEARS 20042005200620072008Non-operating revenuesProperty taxes levied by the District21,743,767$ 22,015,870$ 23,210,982$ 24,401,167$ 27,512,070$ Investment income2,060,259 5,501,708 7,610,461 16,946,145 17,476,621 Recovery of doubtful Clean Water Improvement Surcharge accounts 115,763 — — — — Rent and other income1,010,125 1,038,074 1,026,547 878,319 529,983 Total non-operating revenues24,929,914 28,555,652 31,847,990 42,225,631 45,518,674 Non-operating expensesInterest expense— — — — — Clean Water Capital Improvement refund— 5,667,330 95,372 15,000 4,313,973 Net (gain) loss on disposal and sale of capital assets548,133 3,138,531 95,064 96,630 686,459 Non-recurring projects and studies6,935,332 8,837,532 5,563,301 5,228,733 3,258,725 Legal claims— — — — — Other183,773 — — — — Total non-operating expenses7,667,238 17,643,393 5,753,737 5,340,363 8,259,157 Net non-operating revenue (expense)17,262,676$ 10,912,259$ 26,094,253$ 36,885,268$ 37,259,517$ 20092010201120122013Non-operating revenuesProperty taxes levied by the District2,129,475$ 1,401,100$ 27,125,451$ 24,604,173$ 26,016,135$ Investment income13,115,519 6,553,760 3,847,324 2,407,485 1,056,966 Recovery of doubtful Clean Water Improvement Surcharge accounts— — — — — Rent and other income214,674 265,004 442,968 294,591 293,159 Total non-operating revenues15,459,668 8,219,864 31,415,743 27,306,249 27,366,260 Non-operating expensesInterest expense9,079,269 13,189,283 7,971,088 15,811,045 20,314,841 Clean Water Capital Improvement refund— — — — — Net (gain) loss on disposal and sale of capital assets2,161,862 2,719,163 3,485,952 3,162,723 795,527 Non-recurring projects and studies 7,104,496 9,872,088 10,800,843 6,402,888 4,676,203 Legal claims— — 4,828,828 5,000 — Other— — — — — Total non-operating expenses18,345,627 25,780,534 27,086,711 25,381,656 25,786,571 Net non-operating revenue (expense)(2,885,959)$ (17,560,670)$ 4,329,032$ 1,924,593$ 1,579,689$ Fiscal YearFiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 77 USER CHARGE RATES As Of June 30, 2013 Type of Monthly ChargeUnmetered cResidential cNon-Residential Wastewater User Charge Base Charge 13.15$ 13.15$ 13.15$ Compliance Charge a- - 36.30 Volume Charges per Ccf b- 2.28 2.28 per room 1.48 - - per water closet 5.56 - - per bath 4.64 - - per separate shower 4.64 - - Extra Strength Surcharges a SS over 300 ppm per ton- - 231.35 BOD over 300 ppm per ton- - 620.14 COD over 600 ppm per ton- - 310.07 Stormwater Service Charge per account: single residential unit0.24 0.24 0.24 per account: multi-residential unit0.18 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 DepartmentMetered
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 78 SEWER USER CHARGES (COMPOSITE-ANNUAL) LAST TEN FISCAL YEARS 2004 b2005 c2006 d20072008 eResidential: Single Family/Unit a205.32$ 249.84$ 271.44$ 271.44$ 1344.88$ Multi-Family/Unit a173.16 210.00 228.00 228.00 299.76 Commercial/Industrial: Service Charge/Unit218.28 236.28 248.28 248.28 457.20 Sanitary Sewer Usage Charge/100 CCF1.34 1.66 1.81 1.81 1.88 Storm Sewer Usage Charge/100 sq. feet of impervious area - - - - - Extra Strength Surcharges: Suspended Solids over 300 parts per million/ton162.88 200.15 218.90 218.90 218.90 Biological Oxygen Demand (BOD's) over 300 parts per million/ton319.24 412.58 461.44 461.44 529.90 Chemical Oxygen Demand (COD's) over 600 parts per million/ton159.62 206.29 230.72 230.72 264.85 2009201020112012 g2013 hResidential: Single Family/Unit a1344.88$ 1351.12$ 1333.60$ 347.64$ 379.56$ Multi-Family/Unit a299.76 305.04 285.12 296.28 324.12Commercial/Industrial: Service Charge/Unit457.20 486.60 507.00 525.60 593.35 Sanitary Sewer Usage Charge/100 CCF1.88 1.92 2.02 2.11 2.28 Storm Sewer Usage Charge/100 sq. feet of impervious area 0.12 0.14 - - - Extra Strength Surcharges: Suspended Solids over 300 parts per million/ton218.90 218.90 222.62 231.35 231.35 Biological Oxygen Demand (BOD's) over 300 parts per million/ton529.56 551.52 596.72 620.14 620.14 Chemical Oxygen Demand (COD's) over 600 parts per million/ton264.78 275.76 298.36 310.07 310.07 Notes:1 Years 2008-2010 saw an impervious rate charge that averaged $36 per year per customer. This was discontinued in 2011.a The above rates are based on actual rates and budgeted units.b Ordinance 11553, effective August 1, 2003, changed all rates. It also changed the level of suspended solids and chemical oxygen demand at which extra strength surcharges are incurred from 350 to 300 and 300 to 600 parts per million/ton, respectively.c Ordinance 11692, effective July 1, 2004, changed wastewater rates.d Ordinance 12019, effective July 1, 2005, changed wastewater rates.e Ordinance 12561, effective January 1, 2008, changed wastewater rates. Ordinance 12560, changed stormwater rates, effective March 1, 2008. f Ordinance 12754, effective July 1, 2009, changed wastewater rates.g Ordinance 13021, effective July 1, 2010, changed wastewater rates through FY 2012.Source: Finance Departmenth Ordinance 13402, effective July 1, 2012, changed wastewater rates through FY 2016.Fiscal YearFiscal Year
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 79 NUMBER OF CUSTOMERS BY TYPE LAST TEN FISCAL YEARS SingleMulti-FiscalFamilyFamilyNon-TotalYear Residential Residential Residential Accounts2004356,069 44,969 25,806 426,844 2005360,104 44,506 25,758 430,368 2006362,043 44,700 25,700 432,443 2007362,569 44,875 25,647 433,091 2008391,181 54,862 32,336 478,379 2009388,791 51,441 32,161 472,393 a2010387,670 50,867 31,939 470,476 a2011362,739 43,471 24,702 430,912 b2012360,354 41,648 24,568 426,570 2013359,243 41,117 24,441 424,801 Source: Finance Departmenta Due to the implementation of the impervious area charge in 2008, approximately 46,000 additional stormwater only accounts are billed each month. This charge was challenged and a court decision was entered on 7/9/10. Based on that decision the 46,000 accounts will not be billed an impervious charge in FY '11.b The number of accounts was revised as stormwater accounts were underreported.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 80 TEN LARGEST CUSTOMERS CURRENT YEAR AND NINE YEARS AGO CustomerAmount%Anheuser-Busch5,715,199$ 2.42%Washington University1,475,706 0.63%Mallinckrodt, Inc1,405,103 0.60%City of St. Louis1,030,029 0.44%St. Louis University Hospital1,028,812 0.44%Sigma-Aldrich735,691 0.31%Boeing Company720,564 0.31%Sensient Colors702,801 0.30%St. Louis Zoo663,673 0.28%Prairie Farms Dairy590,349 0.25%Subtotal (10 largest)14,067,927 5.96%Balance from other customers221,912,138 94.04%Grand totals235,980,065$ 100.00%CustomerAmount%Anheuser-Busch5,438,801$ 3.60%Mallinckrodt, Inc1,465,849 0.97%Washington University1,031,358 0.68%Zoological Gardens565,454 0.37%Chrysler Group558,895 0.37%St. Louis University487,781 0.32%Boeing Company452,766 0.30%Board of Education450,498 0.30%Sigma Chemical Company442,511 0.29%St. Louis City Housing Authority432,862 0.29%Subtotal (10 largest)11,326,775 7.51%Balance from other customers139,576,473 92.49%Grand totals150,903,248$ 100.00%Source: Budget Division after data is accumulated for the GFOA reportFiscal Year 2004User ChargesUser ChargesFiscal Year 2013
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 81 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS As a ShareFiscal Subordinate of PersonalYearSenior Subordinate Direct Loans Capital Lease Amount Per Capita Income2004175,000,000$ 161,280,000$ 473,275$ -$ 336,753,275$ 248 0.35 2005175,000,000 166,952,500 771,099 - 342,723,599 253 0.35 2006173,500,000 205,760,000 680,538 - 379,940,538 282 0.37 2007231,995,000 213,652,500 337,730 - 445,985,230 330 0.42 2008230,485,000 206,522,500 269,299 - 437,276,799 324 0.67 2009258,965,000 235,932,500 215,790 4,130,000 499,243,290 373 0.81 2010342,370,000 224,505,000 31,017,371 7,263,687 605,156,058 446 1.00 2011340,590,000 212,655,000 25,259,899 6,095,981 584,600,880 431 0.97 2012390,880,000 200,692,500 63,727,722 3,096,139 658,396,362 484 1.09 2013594,715,000 188,600,000 93,751,658 - 877,066,658 660 1.45 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 BureauRevenue BondsTotal
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 82 COMPUTATION OF OVERLAPPING DEBT As Of June 30, 2013 ` Amount of Debt Percentage of DebtGovernmental Unit Debt Outstanding within District Boundary within District Boundary City of St. Louis 35,050,000$ 35,050,000$ 100.0% St. Louis County 113,260,000 112,353,920 99.2 Municipalities 75,728,225 72,357,803 95.5 City of St. Louis School District 350,161,353 350,161,353 100.0 St. Louis County School Districts 1,108,622,602 1,090,414,522 98.4 Fire Districts 58,457,021 55,236,481 94.5 1,741,279,200$ 1,715,574,078$ 98.5%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 DistrictsNote: Although the District comprises all of St. Louis City and most of St. Louis County, it does not entirely match the County's boundaries.The percentage of Debt within District Boundary is based on the number of governmental units within the District.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
Page 83
PLEDGE REVENUE COVERAGE
LAST TEN FISCAL YEARS
Less:
Operating
Non- Expenses Net
Fiscal Operating operating Gross (excluding Available
Year Revenues Revenues Revenues depreciation) Revenues
2004 156,739,527$ 1,745,978$ 158,485,505$ 108,000,500$ 50,485,005$
2005 187,759,272 4,356,643 192,115,915 117,930,992 74,184,923
2006 205,554,460 6,135,347 211,689,807 131,909,717 79,780,090
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 240,597,715 956,664 241,554,379 146,372,418 95,181,961
Fiscal Coverage
Year Principal Interest Total Ratio
2004 -$ 924,164$ 924,164$ 54.6
2005 6,800,000 14,799,402 21,599,402 3.4
2006 5,407,500 13,835,332 19,242,832 4.1
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 22,956,366 39,496,566 2.3
2013 18,749,700 31,436,995 50,186,695 1.9
Fiscal Coverage
Year Principal Interest Total Ratio
2004 N/A N/A N/A N/A
2005 -$ 8,052,321$ 8,052,321$ 9.2
2006 1,500,000 8,165,734 9,665,734 8.3
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 16,489,572 18,449,572 5.0
2013 3,805,000 24,452,691 28,257,691 3.4
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.
Subordinate and Senior Debt Service
Senior Debt Service
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 84 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS PerPersonal CapitaTotalFiscalIncome PersonalLabor Number ofYear Populations (millions) Income City County State Force Households (1)2004 1,358,428 54,886$ 40,404$ 9.6 5.9 6.3 728,014 551,388 2005 1,354,830 55,841 41,216 8.8 5.5 5.7 726,390 551,388 2006 1,347,691 57,660 42,784 7.5 5.1 5.0 723,627 551,388 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 Notes:(1) The number of households was taken from http://quickfacts.census.gov/qfd/states/29000.html. The 2013 figure is basedon 2011 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.cfmhttp://www.missourieconomy.org/indicators/LAUS/default.aspxUnemployment RateSaint Louis
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 85 PRINCIPAL EMPLOYERS (ST. LOUIS METROPOLITAN AREA) CURRENT YEAR AND NINE YEARS AGO PercentagePercentageEmployerEmployees (1)of Total RankEmployees (1)of Total RankBJC HealthCare 25,374 4% 1 21,992 3% 1Boeing, Integrated Defense Systems 14,730 2% 2 15,000 2% 2Washington University in St. Louis 13,677 2% 3 10,589 2% 9Scott Air Force Base 13,020 2% 4 13,024 2% 4SSM Healthcare 11,312 2% 5 10,689 2% 8Archdiosese of St. Louis 11,207 2% 6Wal-Mart Stores Inc. 10,600 2% 7 12,311 2% 5Schnuck Markets, Inc. 10,553 2% 8 12,250 2% 6Mercy Health 10,247 2% 9McDonald's Restaurants of St. Louis 9,500 2% 10The May Department Stores 14,500 2% 3United States Postal Service 12,053 2% 7SBC Southwestern Bell Missouri 9,867 1% 10130,220 21% 132,275 19%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 2013St. Louis Business Journal's Book of Lists 2004Fiscal Year 2004Fiscal Year 2013
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 86 EMPLOYMENT LEVEL LAST TEN FISCAL YEARS 2004200520062007200820092010201120122013Administrative111 122 118 125 131 133 131 124 129 124 Office/Clerical81 76 88 86 92 94 89 84 85 86 Plant Operation & Laboratory 231 231 233 234 239 237 249 241 244 249 Engineering & Technical 117 114 119 122 133 144 151 147 153 148 Sewer Construction & Maintenance259 258 258 271 276 301 315 296 311 324 Total Employees 799 801 816 838 871 909 935 892 922 931 Source: Human Resources DepartmentFiscal Years
THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 87 AVERAGE FLOW LAST TEN FISCAL YEARS Average SewageFiscal Treatment in MillionsYear of Gallons per Day2004 342.32005 348.72006 291.32007 313.42008 363.72009 394.72010 395.52011 370.62012 300.02013 326.7Source: Operations Department