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Fiscal Year 2020 Comprehensive Annual Financial Report (CAFR)COMPREHENSIVE ANNUAL THE METROPOLITAN ST. LOUIS SEWER DISTRICT • ST. LOUIS, MISSOURI FINANCIAL REPORT FISCAL YEARS ENDED JUNE 30, 2020 AND 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT ST. LOUIS, MISSOURI COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEARS ENDED JUNE 30, 2020 AND 2019 Report Prepared And Submitted By The Department of Finance Marion M. Gee Director Of Finance Contents Page Part I – Introductory Section:  Letter of Transmittal .................................................................................................................... i  Organization Chart .................................................................................................................... xii  Certificate Of Achievement For Excellence In Financial Reporting ...................................... xiii  Part II – Financial Section:  Independent Auditors’ Report ..................................................................................................... 1  Management’s Discussion And Analysis .................................................................................... 3  Basic Financial Statements  Statements Of Net Position ................................................................................................. 16  Statements Of Revenues, Expenses, And Changes In Net Position ................................. 18  Statements Of Cash Flows .................................................................................................. 19  Notes To Financial Statements ........................................................................................... 21  Required Supplementary Information  Schedule Of Changes In Net Pension Liability And Related Ratios ................................ 92  Schedule Of Employer Contributions – Employees’ Pension Plan ................................... 93  Schedule Of Changes in Total OPEB Liability .................................................................. 94  Part III – Statistical Section:  Net Position By Component ....................................................................................................... 95  Changes In Net Position ............................................................................................................ 96  Operating Revenues By Source ................................................................................................. 97  Operating Expenses ................................................................................................................... 98  Non-Operating Revenues And Expenses .................................................................................. 99  User Charge Rates ................................................................................................................... 100  User Charge Revenues ............................................................................................................. 101  Sewer User Charges (Composite-Annual) .............................................................................. 102  Number Of Customers By Type .............................................................................................. 103  Ten Largest Customers ............................................................................................................ 104  Ratios of Outstanding Debt By Type ...................................................................................... 105  Computation Of Overlapping Debt ......................................................................................... 106  Pledged Revenue Coverage ...................................................................................................... 107  Demographic And Economic Statistics ................................................................................... 108  Principal Employers (St. Louis Metropolitan Area)............................................................... 109  Employment Level .................................................................................................................... 110  Average Flow ............................................................................................................................ 111  Operating And Capital Indicators ........................................................................................... 112  Introductory Section Vision Statement Quality Service Always Mission Statement To protect the public’s health, safety, and water environment by responsibly providing wastewater and stormwater management Values Integrity Teamwork Excellence and Innovation The District Employees Customer Satisfaction Mission, Vision, Value statements are important elements of a strategic business plan. The Mission statement keeps the District focused on its essential activity, the Vision statement points to its ideal purpose, and the Value statement conveys the principles that must shape our actions. i    October 13, 2020 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, 2020 is submitted herewith. The District’s Finance Department prepared this report. The District is responsible for the accuracy of the data and the completeness and fairness of the presentation of the financial statements and other information presented herein. We believe the presentation is accurate in all material respects and includes all disclosures necessary to enable the reader to gain a reasonable understanding of the District’s financial activities. In the CAFR, the District’s financial activities are measured on a single enterprise fund basis where all funds of the District and its sub-districts are consolidated. The District’s CAFR includes an Introductory Section, a Financial Section, and a Statistical Section. The Introductory Section includes this transmittal letter, an organization chart as of June 30, 2020 which lists the District’s Board of Trustees, Rate Commission Chair, members of the Civil Service Commission, and management staff and the Government Finance Officers Association’s Certificate of Achievement For Excellence In Financial Reporting presented to the District for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019. 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. Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-2555 314-768-6200 www.msdprojectclear.org 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 520 square miles including all 66 square miles of the City of St. Louis and 454 square miles of St. Louis County. The current population served by the District is approximately 1.3 million representing approximately 427,000 accounts. MSD is organized pursuant to Article VI, Section 30 of the Missouri State Constitution that empowers the people of St. Louis County and the City of St. Louis “to establish a metropolitan district for functional administration of services common to the area.” MSD is the only district established pursuant to that section of the Missouri State Constitution. The Charter of MSD (“Plan”), approved by voters in 1954 and amended in 2000 and 2012, established the District. The Plan describes the District as “a body corporate, a municipal corporation, and a political subdivision of the state.” As a political subdivision of the state, MSD is comparable to a county or city, such as St. Louis County or the City of St. Louis. The Plan established the governing body of the District as a six-member Board of Trustees (“Board”) with three members appointed by the Mayor of St. Louis and three members appointed by the St. Louis County Executive. Each Trustee shall be appointed for a term of four years. No Trustee shall serve more than two full consecutive terms plus any portion of an unexpired term. Provided, however, that each Trustee shall serve until his/her successor shall be appointed and qualified. No more than two trustees appointed from the City or County can be affiliated with the same political party. The Board of Trustees The Metropolitan St. Louis Sewer District iii Unlike a corporation’s board of directors that is responsible solely to the stockholders who choose to invest in the corporation, MSD’s Board members are trustees of public property and public funds. They are responsible to all citizens within the District. According to the Plan, the Board enacts District ordinances, determines policies, and appoints the Executive Director, the Secretary-Treasurer, and the Internal Auditor. The Executive Director appoints all other District officials. Among its duties, the Board makes all appropriations, approves contracts for improvements, and engages an accounting firm to perform the annual independent audit of the District. The Plan prescribes other duties of the Board and grants numerous broad powers, subject to federal and state laws, to the District and the Board of Trustees. Among other things, the Plan outlines the following requirements or provisions:  Requires that MSD operate with a balanced budget;  Details how MSD can tax property and requires an annual public hearing on all taxes levied by the District;  Details how MSD can establish user charges;  Requires MSD to establish civil service rules and regulations governed by a Civil Service Commission;  Provides how the original boundaries of the District may be extended to include any area in St. Louis County; and  Requires MSD to approve all plans and designs for proposed construction, alteration, or reconstruction of sewer or drainage facilities within the District’s boundaries. The District is also governed by the Missouri State Constitution and various federal and state laws that, among other requirements, mandate the following:  MSD must hold permits for all sanitary discharges. These permits require a minimum of secondary treatment;  MSD must provide wastewater treatment in an area-wide manner to qualify for federal and state grants;  MSD must operate, maintain, and replace facilities to provide proper wastewater treatment or be subject to penalties and fines; and  MSD must set user charge rates in compliance with the Federal Clean Water Act. These rates must be submitted to the Missouri Department of Natural Resources to receive future construction grants and to avoid the possibility of refunding past grants. During fiscal 2020 the primary source of funding for the operation and maintenance of MSD’s wastewater system was a user charge averaging $666.84 per year or $55.57 per month for a single-family residence. The District’s charges for residential wastewater The Board of Trustees The Metropolitan St. Louis Sewer District iv service are tied to the amount of measured water usage during a winter quarter. For residential properties without water meters, the charges are based on housing attributes (such as the number of rooms, baths, and toilets) that correlate to water usage. That methodology is the same billing methodology used by the City of St. Louis Water Division for their non-metered properties. Multi-family residential and non-residential rates are proportionate to the single-family charge and are based on water consumption and the strength of the discharge. During the last quarter of fiscal year 2020, District personnel closely monitored the impact of COVID-19 on our revenue streams, particularly volume- based wastewater charges related to commercial customers, and made the needed adjustments such as reducing discretionary spending to ensure that District expenditures were supported by the reductions in revenues. Similar efforts will occur in fiscal year 2021. During fiscal 2020 the District’s stormwater system was funded through property taxes of 1.8¢ per one hundred dollars assessed valuation for stormwater regulatory activities and 9.0¢ per one hundred dollars assessed valuation for operations and maintenance of the District’s stormwater utility. The District also performs limited capital improvements with the revenues generated by the 9.0¢ tax. Prior to fiscal year 2017, the operation and maintenance of the District’s stormwater system was funded by a combination of property taxes and flat fee billing of 24¢ per month for residential and commercial properties and 18¢ per month per unit for multi-unit properties. On April 5, 2016, over 62% of voters in MSD’s service area approved Proposition S which placed all MSD customers under the same property tax rates to fund stormwater services. The flat fee billings were eliminated. MSD also receives some federal, state, and local grants to help defray the cost of constructing sewage treatment and drainage facilities and improvements. The District also charges fees for plan review, permits, construction inspection of new system development, and special discharges. The District charges a uniform connection fee in all service areas. The District, itself, may issue general obligation bonds and revenue bonds to finance the cost of improvements and extensions to the sewer system. The District also may issue, on behalf of each of its subdistricts, general obligation bonds, revenue bonds, or special assessment bonds. Major Initiatives Affecting The Financial Resources Of The District Throughout MSD’s service area, there are hundreds of points where a combination of rainwater and wastewater discharges into local waterways from the wastewater sewer system during moderate to heavy rainstorms. These sewer overflow points act as relief valves when too much rainwater enters the sewer system, and without them, our The Board of Trustees The Metropolitan St. Louis Sewer District v community could experience thousands of basement backups and/or extensive street flooding. (Even with these overflows points, basement backups can easily number in the dozens or hundreds during particularly heavy rains). Depending on where sewer overflows are located within MSD’s system, they are classified as combined sewer overflows --or-- constructed separate sewer overflows. Many of these overflows are a legacy of the way our wastewater systems were first built. Though most overflows predate the District’s creation in 1954, they are still MSD’s responsibility and efforts to address the problem must continue. Sewer overflows have been a significant focus of MSD’s work for many years. From 1992 to 2012, MSD spent approximately $2.7 billion to eliminate over 380 overflows. Today, our work to address sewer overflows and improve water quality continues through a Consent Decree that stems from a lawsuit filed against MSD by the State of Missouri and the United States Environmental Protection Agency (“EPA”) in June 2007. The State of Missouri and the EPA were later joined in the lawsuit by the Missouri Coalition for the Environment. After lengthy mediation, the EPA announced a settlement agreement in August 2011. On April 27, 2012, the United States District Court for The Eastern District of Missouri entered a Consent Decree, thus concluding the litigation. The Consent Decree calls for $6 billion in upgrades to the existing wastewater sewer system (in 2018 dollars). Also known as MSD Project Clear, this work was originally scheduled to take place over 23 years and addresses our community’s wastewater collection and treatment capabilities on a system- wide basis. The work is a mammoth undertaking that will benefit St. Louisans – and our environment – for generations to come. On June 22, 2018, a United States District Judge approved an amendment to the Consent Decree that extends the schedule from 23 years to 28 years. (Necessary approvals were also received from the State of Missouri on August 13, 2018.) The motivation behind the amendment is regulatory changes that compel MSD to accelerate certain projects that do not fall within the scope of the Consent Decree. The time extension will allow MSD to address new regulatory requirements in a fiscally responsible way, while better projecting and controlling needed rate increases. MSD submits rate proposals to an independent Rate Commission. The Rate Commission was established in 2000 through voter approved amendments to MSD’s Charter. The commission is composed of 15 member organizations representing a broad cross-section of MSD customers and is meant to provide the public with a formal role in MSD’s rate setting process. The Board of Trustees The Metropolitan St. Louis Sewer District vi The Rate Commission chair briefed the Board of Trustees on fiscal years 2021 – 2024 Rate Recommendation Report in September 2019. The wastewater rate proposal seeks to fund a four-year, $1.58 billion capital improvement program to meet regulatory and system improvement needs. The Board of Trustees accepted the Rate Commission’s recommendations via a resolution in October 2019, which would have resulted in voters deciding on bonding options in April 2020. During 2020, the United States was impacted by the worldwide pandemic of coronavirus disease (“COVID-19”). Due to COVID-19, the vote has been delayed until at least April 2021. The fiscal year 2021 increase of 1.5% (with or without bond authorization), would have been effective July 1, 2020. MSD has postponed the increase until October 1, 2020. As depicted below, the cash funded rates for fiscal years 2022 through 2024 would be significantly more than those proposed if bonding authorization is granted to fund MSD’s capital program. Increase with Bond Authorization (Projects Are Funded With Cash and Debt) FY 21 FY 22 FY 23 FY 24 Rate Commission Proposal 1.5% 3.4% 3.5% 3.7% Increase without Bond Authorization (Projects Are Funded With Cash) FY 21 FY 22 FY 23 FY 24 Rate Commission Proposal 1.5% 15.4% 17.1% 13.0% Combined with similar bond elections held in 2004, 2008, 2012 and 2016, voters residing within MSD’s service area have authorized a total issuance of $2.6 billion in wastewater revenue bonds. As of June 30, 2020, MSD has issued $2.0 billion of the total authorization. Consistent with past financing strategies, MSD anticipates funding future Consent Decree and other work related to the wastewater collection and treatment system through a combination of rate increases and voter approved bond issuances. Even through a pandemic, the Essential Work at MSD must go on. The commitment to our employees and our community required us to make some coronavirus-related changes to ensure everyone’s safety. MSD took a proactive approach to employee communications in early-March, as the situation became apparent. A special web page was created to house all employee communications, which in the beginning were rapidly changing, but have since slowed to a consistent weekly update. Steps were taken to reduce the density of employees in the building. The District added additional sanitizer stations and The Board of Trustees The Metropolitan St. Louis Sewer District vii Personal Protective Equipment (“PPE”) were made available to employees. High-touch surfaces, such as elevator buttons, door push bars, etc. were replaced or covered with Nano-Septic coverings to protect from the virus. Enhanced cleaning protocols were implemented by the District’s janitorial services. All employee work-related travel, in- person meetings, and public outreach has been restricted until at least the beginning of 2021. Face-to-face internal meetings are kept to a minimum, and social distancing and masks are required throughout all of MSD facilities. Due to the vigilance and commitment to keeping our employees and our community healthy and safe, MSD has helped to curb the spread of COVID-19. Operations The Executive Director and his staff administer the operation and maintenance of the District’s collection and treatment systems. The District’s wastewater, stormwater, and combined sewer collection system includes approximately 9,400 miles of pipe and channel and will grow larger over the long term due to new development. Some years may see a reduction in total miles of pipe. This is due to the replacement of inefficiently placed pipe with shorter, more direct lines of pipe. The District’s responsibilities for stormwater drainage range from cleaning and maintaining street inlets to operating and maintaining the floodwall pump stations along the Mississippi River. MSD currently operates seven wastewater treatment facilities. These facilities treated an average flow of 367.5 million gallons per day (“MGD”) in fiscal 2020 compared to 396.4 MGD in fiscal 2019. Flows were lower in fiscal year 2020 due to significant rain events that occurred in fiscal 2019. The design capacity and average flow, by watershed, in MGD was as follows in fiscal 2020: MAJOR WATERSHED LEVEL OF TREATMENT NUMBER OF FACILITIES DESIGN CAPACITY (MGD) AVERAGE FLOW FISCAL 2020 (MGD) Mississippi River Secondary Two 472.00 278.70 Missouri River Secondary Two 78.00 55.40 Meramec River Secondary Three 42.75 33.40 Total Seven 592.75 367.50 In addition to construction initiated by the District to protect the public’s health and property from raw sewage and flooding, the District also provides various engineering- related design review and inspection services for the construction of wastewater and stormwater sewers by individuals, businesses, and municipalities in the community. The Board of Trustees The Metropolitan St. Louis Sewer District viii 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 9.6 percent in June 2020 and lower than the national unemployment rate of 11.1 percent for the same time period. The June 2020 unemployment rate is higher than the June 2019 rate of 3.5 percent due to the impact of the COVID-19 pandemic. MSD has its own internal barometers for measuring economic development within the District. These are listed below for fiscal 2020 and 2019: 2020 2019 Sewer Plan Reviews: Number of Plans Approved 435 514 Number of Miles of Sewers 41 46 Sewer Construction Permits: Number of Permits Issued 2,277 3,792 Number of Miles of Sewers 23 24 Customer Connections: Number of Connection Permits Issued 1,742 2,384 Connection Fee Revenue (in millions) $0.9 $0.9 Value of Sewers Dedicated to MSD by Developers (in millions) $6.5 $16.6 Over the years, the St. Louis economy has undergone a transformation from reliance on traditional manufacturing industries to those industries based on advanced technology and services. The St. Louis area is a center for health care, biotechnology, banking, finance, transportation, tourism, and education and has a strong and diverse manufacturing economy. The area has an abundance of energy, water, and sewerage facilities and can sustain future economic growth. Financial Information Proprietary Operations. The current financial condition of MSD remains stable. The District realized a net operating income of $141.2 million in fiscal 2020 compared to a net operating income of $110.4 million the prior year. The increase in operating revenues of $36.9 million is explained by an increase in sewer service revenue as a result of rate increases. Operating expenses increased $6.0 million due primarily to increases in the recording of additional depreciation expense and asset management expenses such as flow metering and monitoring along with CCTV system inspections. A more in-depth analysis of the District’s financial position and the magnitude of the capital improvement The Board of Trustees The Metropolitan St. Louis Sewer District ix and replacement program (“CIRP”) is provided in the Management’s Discussion and Analysis section that appears later in this report. Budgetary Controls. The District’s Plan requires MSD to submit a proposed budget to the Board by March 15th each year. After Board review, a final budget is approved in June. The District’s Plan also requires MSD to maintain budgetary controls and to adopt a balanced budget. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the appropriation process approved by the Board. The annual appropriated budget includes activities of the District’s operating and debt service funds. The Board adopts ordinances to appropriate funds for capital improvement expenditures at the time of the contract award and acceptance of any grant offers. Budgetary control is by Division and major expenditure category within the General Fund, each Debt Service Fund, and each capital improvement contract. The District utilizes an encumbrance accounting system in conjunction with internal variance and projection analysis to maintain budgetary control. Certain encumbrances carry over from one year to the next as approved by the Board during the budget process. Monthly and year-end financial reports are prepared in accordance with United States generally accepted accounting principles for Enterprise Funds. Adjustments are made to the accounting records, where necessary, to reflect the full accrual method of accounting. Under the full accrual method of accounting, revenues are recognized when earned and expenses are recorded as liabilities when incurred. Encumbrances and unearned capital and operating grants are eliminated under the full accrual method of accounting. These amounts are disclosed as commitments in the notes to financial statements. Cash Management. In compliance with its Plan, the District invests temporarily idle funds in cash, cash equivalents and investments such as collateralized certificates of deposit, collateralized repurchase agreements, obligations of any agency of the United States, and United States Treasury instruments. The District utilizes competitive bidding for investment purchases and monitors market conditions daily. Risk Management. In-house staff and consultants jointly conduct risk management activities. MSD maintains third-party commercial insurance coverage for various risks while self-insuring for other risks and liabilities at levels customary for similar enterprises. The District maintains replacement cost property and casualty insurance with a policy limit of $1.0 billion on certain facilities and equipment that have an estimated replacement cost of $929 million. The District assumes the risk of loss (including payment of water backup claims to its customers) on most of its underground pumping facilities and collection system. MSD is one of the few sewer districts in the country known to provide water backup claim coverage to its customers. To minimize exposure to loss, the District inspects its facilities regularly and performs preventative maintenance on them. The Board of Trustees The Metropolitan St. Louis Sewer District x MSD maintains automobile, general liability and excess liability insurance. The District is self-insured for workers’ compensation and funds those costs through annual appropriations from the District’s general insurance fund. The District maintains reinsurance for workers’ compensation liabilities in excess of specified limits up to the statutory limit. Risk control activities include using a third-party claims administrator, maintaining a computerized claim tracking system, and annually reevaluating workers’ compensation cost. The District also has programs designed to promote safety in the workplace and employee wellness. The District provides group medical coverage for its employees and offers dependent medical coverage on a contributory basis through a self-insured plan. Effective February 1, 2014, the District maintained stop loss coverage for specific claims exceeding $175,000 per year and for total annual claims greater than 125 percent of the annual claims estimate. The District provides its employees with contributory group dental insurance coverage and non-contributory life insurance and contributory optional life insurance coverage. The District also contributes $100 every fiscal year, up to a maximum of $300, to a vision care program for employees. Effective July 1, 2013, spouses were eligible to use the benefits; effective July 1, 2016, dependent children up to age 26 were eligible to use the benefits; however, the amount could not exceed the maximum amount of $300. The District reevaluates insurance coverage and providers annually by reevaluating medical insurance claims and health benefit costs. For most construction projects, insurance is obtained by the individual contractor and included in the contract price. Internal Controls. District Management is responsible for designing, establishing, and maintaining an internal control system that protects District assets from loss, theft, or misuse and ensures that adequate accounting data is compiled to prepare financial statements in conformity with United States generally accepted accounting principles. Internal control systems are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and that the evaluation of costs and benefits requires estimates and judgments by management. The District’s internal control system is subject to periodic evaluation by Management, the Board and the District’s independent accountants. Other Information Audit Requirements. The District’s Plan requires an annual audit by independent certified public accountants. The District’s CAFR includes a report on the District’s financial statements by the accounting firm of CliftonLarsonAllen LLP. The Board of Trustees The Metropolitan St. Louis Sewer District xi Besides meeting the requirements set forth in the Plan, the annual audit is also designed to meet the requirements of the 2013 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) that was issued by the Office of Management and Budget (“OMB”). A Single Audit Report will be issued for the year ended June 30, 2020. The financial statements of The Metropolitan St. Louis Sewer District Employees’ Pension Plan, The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust and The Metropolitan St. Louis Sewer District Defined Contribution Plan are also audited annually. These audit reports were issued for the periods ending December 31, 2019 and 2018 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, 2019. The Certificate of Achievement is a prestigious national award that recognizes conformance with the highest standards for preparation of state and local government financial reports. To be awarded the Certificate of Achievement, a government unit must publish an easily readable and efficiently organized CAFR, the contents of which conform to program standards. The CAFR must satisfy both U.S. generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. The District has received a Certificate of Achievement for the last thirty-two consecutive years. We believe the current CAFR continues to conform to the GFOA’s high standards, as reflected in the Certificate of Achievement program requirements, and are submitting it again this year for consideration. The District also received the GFOA’s Distinguished Budget Presentation award for its fiscal 2020 annual budget. The District has received this award for thirty-three consecutive years. We believe the fiscal year 2021 budget presentation continues to meet the GFOA’s high standards and submitted it on July 28, 2020, for consideration. Marion M. Gee Director of Finance xii ORGANIZATION (As of June 30, 2020) BOARD OF TRUSTEES Michael Yates, Chair; James Faul (1), Vice Chair; James I. Singer; Amy Fehr; Richard Wilson; 1 vacant position OFFICE OF INTERNAL AUDITOR RATE COMMISSION Leonard P. Toenjes, Chair OFFICE OF SECRETARY TREASURER Tim R. Snoke Secretary/Treasurer CIVIL SERVICE COMMISSION Annette Adams Daniel Gonzales (2) Rev. Michael F. Jones, Sr. EXECUTIVE DIRECTOR Brian L. Hoelscher/CEO FINANCE Marion M. Gee Director OFFICE OF GENERAL COUNSEL Susan M. Myers General Counsel OPERATIONS Bret A. Berthold Director ENGINEERING Rich Unverferth Director OFFICE OF HUMAN RESOURCES Tracey Coleman Director INFORMATION SYSTEMS Jonathon C. Sprague Director (1) Michael Evans was appointed to the Board of Trustees on 8-14-2020 replacing James Faul. (2) Daniel Gonzales resigned on 9-8-2020 and was replaced by Michael Harvey on 9/29/20. xiii Government Finance Officers Association Certificate Of Achievement For Excellence In Financial Reporting Presented to Metropolitan St. Louis Sewer District Missouri For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Executive Directors/CEO Financial Section METROPOLITAN ST. LOUIS SEWER DISTRICT SERVICE AREAS (1) INDEPENDENT AUDITORS’ REPORT Board of Trustees The Metropolitan St. Louis Sewer District St. Louis, Missouri Report on the Financial Statements We have audited the accompanying financial statements of the business-type activity of The Metropolitan St. Louis Sewer District (the District), as of and for the years ended June 30, 2020 and 2019, 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 Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Board of Trustees The Metropolitan St. Louis Sewer District (2) Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activity of the District as of June 30, 2020 and 2019, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedule of Changes in Net Pension Liability and Related Ratios for the Employees’ Pension Plan, Schedule of Employer Contributions to Employees’ Pension Plan and Schedule of Changes in Total OPEB Liability, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. These sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 13, 2020, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance. CliftonLarsonAllen LLP St. Louis, Missouri October 13, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 3 MANAGEMENT’S DISCUSSION AND ANALYSIS For The Years Ended June 30, 2020 And 2019 The annual report of The Metropolitan St. Louis Sewer District (“MSD” or the “District”) includes the independent auditors’ report, management’s discussion and analysis (“MD&A”), and the financial statements accompanied by notes essential to the user’s understanding of the financial statements. Management of the District has provided this MD&A to be used in combination with the District’s financial statements. This narrative is intended to provide the reader with more insight into management’s knowledge of the transactions, events, and conditions reflected in the accompanying financial statements and the fiscal policies that govern the District’s operations. 2020 Financial Highlights  The District increased capital assets by $216.2 million as a result of increases in construction in progress ($56.6 million), land ($4.1 million) and depreciable capital assets net of depreciation ($155.5 million).  The District placed $248.3 million of capital assets into service during fiscal year 2020. The continued high level of capitalization reflects the District’s work to meet long-term plans. Capitalized assets included: Collection and pumping plant $225.8 million Treatment and disposal plant and equipment $13.9 million General plant and equipment $4.5 million Land $4.1 million The net increase to accumulated depreciation was $83.0 million which takes into consideration the recording of depreciation relating to new assets in addition to depreciation on existing assets, offset by the accumulated depreciation relieved for assets retired during the year. During the 2020 fiscal year the District did not implement any Governmental Accounting Standards Board Statements. 2019 Financial Highlights  The District increased capital assets by $185.5 million as a result of increases in construction in progress ($120.2 million), land ($1.0 million) and depreciable capital assets net of depreciation ($64.3 million). THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 4  The District placed $150.2 million of capital assets into service during fiscal year 2019. The continued high level of capitalization reflects the District’s work to meet long-term plans. Capitalized assets included: Collection and pumping plant $140.6 million General plant and equipment $6.9 million Treatment and disposal plant and equipment $1.7 million Land $1.0 million The net increase to accumulated depreciation was $76.6 million which takes into consideration the recording of depreciation relating to new assets in addition to depreciation on existing assets, offset by the accumulated depreciation relieved for assets retired during the year. During the 2019 fiscal year the District implemented Governmental Accounting Standards Board Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements (“GASB Statement No. 88”). This Statement amends Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, paragraph 119 and Statement No. 38, Certain Financial Statement Note Disclosures, paragraphs 10 and 12. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not consistently provided. 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 capital assets. Also, the Statements of Net Position provide a summary of the District’s current, restricted, and non-current liabilities, including contracts and accounts payable, deposits and accrued expenses, pension and OPEB liabilities and bonds and notes payable. Deferred outflows and inflows of resources, where applicable, are also included. The final section of the Statements of Net Position, the net position section, contains earnings retained for use by the District. Increases or decreases in the net position section may be indicative of THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 5 an improving or declining financial position. These statements provide the basis for computing rate of return, evaluating the capital structure of the District, and assessing the liquidity and financial flexibility of the District. The Statements of Revenues, Expenses, and Changes in Net Position summarize all of the year’s revenue and expense. These statements indicate how successful the District was at maintaining expenses below the level of revenue earned. The Statements of Cash Flows account for the net change in cash and cash equivalents by summarizing cash receipts and cash disbursements resulting from operating activities, non-capital financing activities, capital and related financing activities, and investing activities. These statements assist the user in determining the sources of cash coming into the District, the items for which cash was expended, and the beginning and ending cash balances. Financial Analysis The District’s financial position improved in the current year, as evidenced by the increase in net position of $150.1 million. The improvement is due primarily to an increase in net investment in capital assets and unrestricted funds of $121.2 million and $59.3 million, respectively, offset by a decrease in debt service funds and subdistrict construction and improvement funds of $24.4 million and $6.0 million, respectively. Net capital assets increased $216.2 million offset by a $19.8 million increase in debt related to the capital assets and $65.7 million decrease in unspent bond issuance cash proceeds resulting in an overall $85.5 million decrease to net investment in capital assets. The increase in construction-related liabilities of $2.6 million, the retirement of previously recorded deferred loss on debt refunding due to the fiscal 2020 refunding debt, net of amortization, of $5.5 million, and the recognition of a deferred gain on debt refunding, net of amortization and related deferred loss retirement, of $1.4 million also decreased net investment in capital assets. The $24.4 million decrease in the debt service funds net position is due primarily to the $26.0 million cash reserves deposited into an escrow account in fiscal 2020 to partially advance refund certain debt. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 6 Condensed Financial Statements and Analysis 2020 Analysis Current, restricted and other assets decreased $34.0 million or 4.1% in the current year. The decrease is predominately due to a decrease in investments offset by an increase in cash due to higher sewer rates charged and maturity of investments. Capital assets net of accumulated depreciation increased by $216.2 million or 6.0% in the current year as the result of continued high levels of construction and acquisition of assets by the District. Current liabilities increased by $3.6 million or 2.4% due primarily to an increase in current portion of bond and notes payable and retainage held on capital projects, offset by a decrease in deposits and accrued expenses. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 7 Non-current liabilities decreased by $1.6 million or 0.1% primarily due to a $17.6 million decrease in net pension liability and total OPEB liability, offset by $15.8 million net increase in bonds and notes payable. The net increase in bonds and notes payable is related to the $373.8 million new senior and subordinate debt issued in fiscal year 2020, offset by $273.4 million advance refunding of existing debt, $56.6 million for fiscal 2021 senior and subordinate debt payments reclassified to current liabilities, a net decrease in premiums received on debt issuances of $21.4 million due to premiums retired resulting from the fiscal 2020 refunding exceeding the premium on the fiscal 2020 new debt and $6.6 million amortization of premiums, net of discount. Net deferred outflows and inflows of resources decreased $30.1 million or 72.3% due primarily to updates to various information provided by the District’s actuary such as economic/demographic gains or losses, assumption changes or inputs, and investment gains or losses related to the District’s net pension liability or total OPEB liability. 2019 Analysis Current, restricted and other assets decreased $61.6 million or 7.0% in the current year. The decrease is predominately due to a decrease in investments offset by an increase in cash due to higher sewer rates charged and maturity of investments. Capital assets net of accumulated depreciation increased by $185.5 million or 5.4% in the current year as the result of continued high levels of construction and acquisition of assets by the District. Current liabilities increased by $9.9 million or 7.1% due primarily to an increase in deposits and accrued expenses and retainage held on capital projects which correlate with the increase in construction. Non-current liabilities increased by $1.7 million or 0.1% primarily due to a $26.0 million increase in net pension liability, offset by $24.3 million net decrease in bonds and notes payable. The net decrease in bonds and notes payable is comprised of a $52.6 million decrease for fiscal 2020 senior and subordinate debt payments reclassified to current liabilities and a $7.0 million decrease in unamortized premium net of discount offset by a $35.3 million increase in new debt. Net deferred outflows and inflows of resources increased $17.0 million or 68.8% due primarily to updates to various information provided by the District’s actuary such as economic/demographic gains or losses, assumption changes or inputs, and investment gains or losses related to the District’s net pension liability. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 8 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 9 2020 Analysis Net position increased $150.1 million or 5.7% over the prior year which was a $20.9 million or 16.2% increase over last year’s net position increase. The largest impact to net position was the increase in sewer service charges revenue which increased due to rate increases. Total revenue increased by $37.8 million or 8.3%. Sewer service charges increased $30.5 million or 7.6% and the provision for doubtful accounts increased correspondingly by $1.3 million or 29.0%. Property taxes increased $1.3 million or 3.9% due primarily to higher property valuation assessments. Other operating revenue increased $7.7 million or 311.3% primarily due to a lawsuit settlement received on a sewer construction project. Investment income decreased $0.4 million or 2.6% due to the decrease in unrealized gain, offset by an increase in purchased interest and less interest revenue capitalized in fiscal 2020. Total expenses increased by $5.9 million or 1.7% resulting primarily from the increase in operating expenses. Operating expenses increased $6.0 million or 2.1% with the largest increases in depreciation of $4.0 million or 4.8% and asset management of $3.4 million or 25.0% due to increased sewer inspection costs. Non-operating expenses decreased $0.1 million or 0.3% due to a large decrease in non-recurring projects and studies of $3.1 million or 20.3%, offset by a large increase in interest expense of $3.0 million or 9.2% due to more projects being capitalized thereby reducing capitalized interest. Capital grants and contributions decreased $11.0 million or 63.2% with the majority of the decrease resulting from capital contributions as the value of capital projects contributed to the District decreased significantly in fiscal 2020. 2019 Analysis Net position increased $129.2 million or 5.2% over the prior year. The largest impact to net position was the increase in sewer service charges revenue which increased due to rate increases. Total revenue increased by $42.5 million or 10.4%. Sewer service charges increased $35.8 million or 9.8% and the provision for doubtful accounts increased correspondingly by $1.4 million or 45.5%. Other operating revenue decreased $0.9 million or 26.2% due to a reduction in forfeited construction deposits. Investment income increased $9.3 million or 125.5% due to the increase in unrealized gain and purchase interest gain. Total expenses increased by $18.8 million or 5.8% resulting primarily from the increase in operating expenses. Operating expenses increased $17.0 million or 6.2% with the largest increase in general and administrative expense of $8.5 million or 14.3% due to higher pension expense and costs related to systems upgrades and water backup claims THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 10 of $4.0 million or 259.7% due to spring flooding and pump station failures. Non-operating expenses increased $1.9 million or 3.9% with a large increase in non-recurring projects and studies of $6.3 million or 68.1% due primarily to the increase in green infrastructure expenditures and treatment plant concrete repairs offset by interest expense decrease of $3.6 million or 9.8% due to more interest capitalized to large capital projects. Capital grants and contributions decreased $8.7 million or 33.4% with the majority of the decrease resulting from capital contributions as the number of capital projects contributed to the District decreased significantly in fiscal 2019. 2020 Analysis The District ended the year with $97.1 million in cash and cash equivalents for an increase of $40.4 million or 71.1% from the prior year. Cash flows from operating activities increased by $32.6 million or 17.6% as a result of increased receipts from customers and decreased payments to suppliers for goods and services, offset by an increase in payments to employees. Cash flows from non-capital financing activities increased by $1.1 million or 3.3%. Cash flows from capital and related financing activities increased by $3.8 million or 1.2% due primarily to $74.8 million increase in bond proceeds and premiums received in fiscal year 2020 compared to fiscal year 2019, offset by $25.2 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 11 million increase in principal, interest and fees paid on bonds and $46.5 million increase in spending for capital assets. Cash flows from investing activities decreased by $19.5 million or 17.3%. The decrease primarily stems from the fact that the difference between investments maturing and investments purchased was less in fiscal 2020 compared to fiscal year 2019 as more investments matured than were purchased in both years. 2019 Analysis The District ended the year with $56.8 million in cash and cash equivalents for an increase of $22.4 million or 65.0% from the prior year. Cash flows from operating activities increased by $24.2 million or 15.1% as a result of increased receipts from customers offset by an increase in payments to suppliers for goods and services and an increase in payments to employees. Cash flows from non-capital financing activities increased by $0.7 million or 2.0%. Cash flow from capital and related financing activities decreased by $237.5 million or 327.4% due primarily to $229.8 million decrease in bond proceeds and premiums received in fiscal year 2019 compared to fiscal year 2018 and $11.8 million increase in principal, interest and fees paid on bonds, offset by $5.4 million decrease in spending for capital assets. Cash flows from investing activities increased by $248.7 million or 183.7%. The increase primarily stems from more investments maturing than purchased in fiscal 2019 while the opposite occurred in fiscal 2018 – more investments were purchased than matured. Capital Assets THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 12 2020 Analysis Total capital assets, net of accumulated depreciation, increased by $216.2 million or 6.0% over the prior year. Collection and pumping plant assets contained the majority of the increase with net additions of $177.9 million or 9.3%, primarily for capitalization of assets including new and improved sewers, dedicated assets and infrastructure repairs. Construction in progress increased $56.6 million or 5.9% consisting of $289.3 million in additions offset by $232.7 million of assets placed into service. Land increased $4.1 million or 5.5% due to the acquisition of easements and other land. These increases are offset by net treatment and disposal plant and equipment decrease of $22.0 million or 3.3% due to no large projects being capitalized in fiscal 2020 to offset the depreciation charge for the year and general plant and equipment decrease of $0.4 million or 1.6%. For more detailed information, see Note 4, Capital Assets, in the accompanying notes to the financial statements. 2019 Analysis Total capital assets, net of accumulated depreciation, increased by $185.5 million or 5.4% over the prior year. Construction in progress contained the majority of the increase with net additions of $120.2 million or 14.4% consisting of $244.0 million in additions offset by $123.8 million of assets placed into service. The net increase in collection and pumping plant assets was $95.6 million or 5.3%, primarily for capitalization of assets including new and improved sewers, dedicated assets and infrastructure repairs. Land increased $1.0 million or 1.4% due to the acquisition of easements and other land. General plant and equipment increased $2.3 million or 10.7% primarily due to fleet replacements and plant upgrades. These increases are offset by net treatment and disposal plant and equipment decrease of $33.7 million or 4.8% due to no large projects being capitalized in fiscal 2019 to offset the depreciation charge for the year. For more detailed information, see Note 4, Capital Assets, in the accompanying notes to the financial statements. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 13 Long-Term Debt THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 14 2020 Analysis The District ended fiscal year 2020 with $1.6 billion in long-term debt outstanding. The District had one tax-exempt senior revenue bond addition this year, Series 2019B, totaling $52.1 million and one taxable senior revenue bond addition, Series 2019C, totaling $276.3 million which was used to partially advance refund $273.4 million of the Series 2012A, Series 2012B, Series 2013B and Series 2015B senior revenue bonds. In addition, the District added one new Missouri Department of Natural Resources bond, Series 2019A, totaling $6.3 million and the District received $4.9 million, $18.9 million, and $15.3 million in loan proceeds from the Series 2016A, Series 2016B, and Series 2018B Missouri Department of Natural Resources bonds, respectively. These amounts represent new borrowings and do not reflect the principal payments made in fiscal 2020 on Series 2016A and Series 2016B. Total principal payments, excluding the refunding referenced above, of $52.6 million reduced outstanding debt in fiscal year 2020. For more detailed information, see Note 6, Long-Term Liabilities, in the accompanying notes to the financial statements. 2019 Analysis The District ended fiscal year 2019 with $1.5 billion in long-term debt outstanding. The District added one new Water Infrastructure Finance and Innovation Act (WIFIA) bond, Series 2018A, totaling $0.3 million. In addition, the District added one new Missouri Department of Natural Resources bond, Series 2018B, totaling $2.9 million and the District received $10.9 million and $21.3 million in loan proceeds from the Series 2016A and Series 2016B Missouri Department of Natural Resources bonds, respectively. These amounts represent new borrowings and do not reflect the principal payments made in fiscal 2019 on Series 2016A and Series 2016B. Total principal payments of $51.0 million reduced outstanding debt in fiscal 2019. For more detailed information, see Note 6, Long- Term Liabilities, in the accompanying notes to the financial statements. Decisions Impacting the Future Integral to helping MSD’s rate payers understand the District’s Consent Decree (“CD”) with the U.S. Environmental Protection Agency, the State of Missouri, and the Missouri Coalition for the Environment, which settled a lawsuit for alleged violations of the Clean Water Act, was the initiation of MSD Project Clear. See Note 12, Commitments And Contingencies, for additional information regarding this litigation. The goal of MSD Project Clear is to help MSD’s rate payers have a clear understanding of MSD’s goals and objectives. MSD Project Clear consists of three main components:  Getting The Rain Out which is focused on reducing excess stormwater from entering the sewer system infrastructure to help reduce basement back-ups and overflows; THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 15  Performing Repair and Maintenance to the existing infrastructure to ensure it operates as well as possible for as long as possible; and  Building System Improvements where needed to increase the capacity of the system. MSD Project Clear will greatly affect the daily lives of many of our rate payers and is needed to help the rate payer understand the individual and regional, as well as the immediate and long-term, benefits of the program. Since February 2004, the voters in the District’s service area have authorized the District to issue a total of $2.6 billion in wastewater revenue bonds. As of June 30, 2020, the District has issued $2.0 billion of the total authorization. The District’s long-term wastewater capital improvement program will continue to be funded through a combination of additional bonds and wastewater rate increases. Requests For Information This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the District’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed or e-mailed to: Marion M. Gee, Director of Finance The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-2555 314-768-6200 mgee@stlmsd.com THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements. Page 16 STATEMENTS OF NET POSITION Continued on Next Page June 30, Assets 2020 2019 Current Assets Unrestricted Current Assets Cash and cash equivalents  67,802,872$ 33,303,010$ Investments                                          264,322,528 219,636,085 Sewer service charges receivable, less allowance of $66,061,154 in 2020 and                   $61,739,562 in 2019 67,498,533 66,032,777 Unbilled sewer service charges receivable 33,342,430 31,773,136 Property taxes receivable, less allowance of $8,604 in 2020 and $9,806 in 2019 421,059 479,914 Accrued income on investments                        1,891,034 1,927,804 Other receivables, less allowance of $58,209 in 2020 and $49,360 in 2019 5,168,412 5,331,693 Supplies inventory                                   8,013,597 8,306,515           Total Unrestricted Current Assets                            448,460,465 366,790,934        Restricted Current Assets Cash and cash equivalents 3,580,818 1,747,847 Investments                                          17,921,368 15,117,921 Other receivables                                    48,273 115,556           Total Restricted Current Assets                            21,550,459 16,981,324           Total Current Assets                            470,010,924 383,772,258 Non-Current Assets Restricted Assets Cash and cash equivalents  25,741,021 21,703,207 Investments                                          90,301,459 152,079,763 Long-term investments                                30,682,863 73,020,492 Property taxes receivable, less allowance of $29,497 in 2020 and $28,716 in 2019 1,389,975 1,355,724 Accrued income on investments 375,676 536,365           Total Restricted Non-Current Assets                            148,490,994 248,695,551 Other Assets Notes receivable                                     10,410,729 11,156,415 Long-term investments                                158,130,241 177,405,293 Total Other Assets                             168,540,970 188,561,708 Capital Assets Depreciable:        Treatment and disposal plant and equipment           1,289,884,442 1,277,635,246        Collection and pumping plant                         2,974,542,039 2,749,946,498        General plant and equipment                          100,949,737 99,318,349                                                             4,365,376,218 4,126,900,093        Less:  Accumulated depreciation                      1,608,746,607 1,525,779,330        Net depreciable assets       2,756,629,611 2,601,120,763        Non-depreciable:        Land                                                 78,333,629 74,274,584        Construction in progress                             1,012,925,929 956,321,065 Net Capital Assets                                 3,847,889,169 3,631,716,412        Total Non-Current Assets                          4,164,921,133 4,068,973,671        Total Assets                               4,634,932,057 4,452,745,929 Deferred Outflows of Resources Bonds and notes payable-Deferred loss on refunding                                   5,888,796 11,342,745 Pension-related outflows                                          15,673,652 34,238,270 OPEB-related outflows                                          2,842,869 1,246,327 Total Deferred Outflows of Resources                             24,405,317 46,827,342 THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements. Page 17 STATEMENTS OF NET POSITION (Continued) June 30, Liabilities 2020 2019 Current Liabilities Current Liabilities-Payable From Unrestricted Assets Contracts and accounts payable 36,317,712$ 36,098,219$ Deposits and accrued expenses 42,172,527 43,703,869 Retainage payable 16,736,184 15,855,232 Current portion of bonds and notes payable 56,629,100 52,603,763           Total Current Liabilities-Payable From Unrestricted Assets            151,855,523 148,261,083 Current Liabilities-Payable From Restricted Assets Contracts and accounts payable 912,704 801,529 Retainage payable 843,548 928,645           Total Current Liabilities-Payable From Restricted Assets                1,756,252 1,730,174           Total Current Liabilities                          153,611,775 149,991,257        Non-Current Liabilities Deposits and accrued expenses                                  7,559,792 7,352,522 Net pension liability                                     57,792,913 74,396,737 Total OPEB liability                                    23,164,618 24,164,395 Bonds and notes payable                                         1,633,705,811 1,617,916,402 Total Non-Current Liabilities                      1,722,223,134 1,723,830,056        Total Liabilities                         1,875,834,909 1,873,821,313 Deferred Inflows of Resources Bonds and notes payable-Deferred gain on refunding 1,393,209 — Pension-related inflows                                          7,149,698 4,341,116 OPEB-related inflows                                           4,330,667 886,686 Total Deferred Inflows of Resources                             12,873,574 5,227,802 Net Position Net investment in capital assets                                2,184,736,432 2,063,518,988 Restricted for:                                 Debt service                       33,856,568 58,262,631        Subdistrict construction and improvement                63,177,454 69,150,974 Unrestricted            488,858,437 429,591,563 Total Net Position                      2,770,628,891$ 2,620,524,156$   THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements. Page 18 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION 2020 2019   Operating Revenues     Sewer service charges                                   430,398,092$ 399,929,150$     Provision for doubtful sewer service charge accounts (5,611,549) (4,349,247)     Licenses, permits and other fees                       3,012,368 3,063,458     Other                                                   10,193,128 2,477,778     Total Operating Revenues                              437,992,039 401,121,139          Operating Expenses     Pumping and treatment                                   62,030,454 63,197,081     Collection system maintenance                            47,652,258 45,616,891     Engineering                                             11,628,086 11,446,900     General and administrative                              65,946,684 67,461,720     Water backup claims                                     4,653,281 5,600,419     Depreciation                                            87,633,312 83,639,843     Asset management                                               17,195,321 13,754,655     Total Operating Expenses                              296,739,396 290,717,509          Operating Income         141,252,643 110,403,630          Non-Operating Revenues     Property taxes levied by the District                   35,439,441 34,107,619     Investment income                                       16,259,182 16,699,153     Rent and other income                                   301,631 301,446     Total Non-Operating Revenues                          52,000,254 51,108,218          Non-Operating Expenses     Net loss on disposal and sale of capital assets         961,476 970,825     Non-recurring projects and studies                       12,458,231 15,628,590     Interest expense                                         36,119,362 33,082,384     Total Non-Operating Expenses                           49,539,069 49,681,799          Income Before Capital Grants And Contributions                       143,713,828 111,830,049          Capital Grants And Contributions     Capital assets contributed                               6,491,961 16,635,468     Grant revenue                                           (101,054) 742,451     Total Capital Grants And Contributions                          6,390,907 17,377,919          Change In Net Position 150,104,735 129,207,968   Net Position - Beginning Of Year 2,620,524,156 2,491,316,188   Net Position - End Of Year                                    2,770,628,891$ 2,620,524,156$ For The Years Ended June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements. Page 19 STATEMENTS OF CASH FLOWS Continued on Next Page 2020 2019 Cash Flows From Operating Activities Received from customers 430,358,284$ 395,246,801$ Paid to employees for services (104,218,386) (101,374,404) Paid to suppliers for goods and services (108,311,248) (108,646,478) Net Cash Provided By Operating Activities 217,828,650 185,225,919 Cash Flows Provided By Non-Capital Financing Activities Taxes levied and collected 34,983,525 33,850,110 Cash Flows From Capital And Related Financing Activities Proceeds from capital grants 1,099,045 130,670 Proceeds from issuance of debt 97,928,346 35,149,238 Premium on sale of bonds 12,059,976 — Principal paid on debt (52,603,763) (50,942,662) Interest and fees paid on debt (88,654,756) (65,117,717) Payments for capital assets (277,790,939) (231,228,233) Proceeds from sale of capital assets 105,228 331,346 Build America Bond tax credit 1,636,759 1,630,662 Net Cash Provided By (Used In) Capital And Related Financing Activities (306,220,104) (310,046,696) Cash Flows From Investing Activities Purchase of investments (593,156,734) (649,590,176) Proceeds from sale and maturity of investments 675,698,385 752,424,000 Investment incom e 10,995,758 10,275,355 Proceeds from rents 241,167 229,231 Net Cash Provided By (Used In) Investing Activities 93,778,576 113,338,410 Net Increase In Cash And Cash Equivalents 40,370,647 22,367,743 Cash And Cash Equivalents At Beginning Of Year 56,754,064 34,386,321 Cash And Cash Equivalents At End Of Year 97,124,711$ 56,754,064$ Statements of Net Position Classification Current Assets - Unrestricted Cash and cash equivalents 67,802,872$ 33,303,010$ Current Assets - Restricted Cash and cash equivalents 3,580,818 1,747,847 Non-Current Assets - Restricted Cash and cash equivalents 25,741,021 21,703,207 Statements of Net Position Total Cash And Cash Equivalents 97,124,711$ 56,754,064$ Non-Cash Capital And Investing Activities Net proceeds from debt issuance placed into escrow to refund bonds 275,196,961$ —$ Principal amount reduced and placed in escrow and related deferred loss (274,475,707) — Capital asset additions included in accounts payable 20,074,250 18,871,621 Capital assets contributed by other governments and developers 6,491,961 16,635,468 Fair value investment adjustment (gain)(1,626,865) (6,621,441) Grant revenue  (101,054) 742,451 For The Years Ended June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements. Page 20 STATEMENTS OF CASH FLOWS (Continued) 2020 2019 Reconciliation Of Operating Income To Net Cash Flows Provided By Operating Activities Operating Income 141,252,643$ 110,403,630$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 87,633,312 83,639,843 Non-recurring projects and studies (12,458,231) (15,628,590) Change in operating assets and liabilities: (Increase) in billed and unbilled sewer service charges receivable (3,035,050) (8,120,614) Decrease in other receivables 97,828 954,005 Decrease (increase) in supplies inventory 292,918 (196,637) Decrease (increase) in pension-related outflows 18,564,618 (16,905,413) Decrease (increase) in OPEB-related outflows (1,596,542) 32,110 (Decrease) increase in contracts and accounts payable (1,396,073) 382,247 (Decrease) increase in deposits and accrued expenses (175,735) 5,524,299 (Decrease) increase in net pension liability (16,603,824) 26,007,799 (Decrease) in total OPEB liability (999,777) (29,577) (Decrease) increase in pension-related inflows 2,808,582 (1,723,869) Increase in OPEB-related inflows 3,443,981 886,686 Net Cash Provided By Operating Activities 217,828,650$ 185,225,919$ For The Years Ended June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 21 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020 AND 2019 1. Organization And Summary Of Significant Accounting Policies Organization The Metropolitan St. Louis Sewer District (“District”) was authorized by the voters, established and chartered under the provisions of the Constitution of Missouri as a municipal corporation and a political subdivision of the State of Missouri. Upon creation in 1954, the District assumed responsibilities to provide for the construction, operation, and maintenance of the sewer facilities within its defined boundaries. The District’s service area now comprises all of the City of St. Louis and most of St. Louis County. Subdistricts within the District’s total service area represent separate geographic areas within which specific taxes can be levied to operate and maintain wastewater or stormwater facilities within the area or construct improvements within the subdistrict. The District also maintains all of the publicly owned stormwater sewers within its original boundaries and is continuing to accept maintenance of the stormwater sewers in the remainder of its service area. Pursuant to provisions of its Charter and subject to limitations imposed by the Constitution of Missouri, all powers of the District are vested in a six-member Board of Trustees (“Board”), three of whom are appointed by the Mayor of the City of St. Louis and three of whom are appointed by the County Executive of St. Louis County. Not more than two Trustees appointed from said City or County, as the case may be, shall be affiliated with the same political party. Reporting Entity The District defines its financial reporting entity to include all component units for which the District’s governing body is financially accountable. To be considered financially accountable, the component unit must be fiscally dependent on the District and the District must either 1) be able to impose its will on the component unit or 2) the relationship must have the potential for creating a financial benefit or imposing a financial burden on the District. Based on the foregoing, the District’s financial statements include all funds that are established under the authority of the District’s charter. There are no agencies, boards, commissions, or authorities that are controlled by or dependent on the District. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 22 Measurement Focus, Basis Of Accounting And Financial Statement Presentation The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing accounting and financial reporting standards for U.S. state and local governments that follow generally accepted accounting principles (“GAAP”). As a political subdivision of the State of Missouri, the District follows GASB Pronouncements as codified under GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. Throughout the year, the District maintains its detailed accounting records on a modified accrual basis of accounting. In order to account for the transactions related to certain subdistricts and restricted resources, separate fund accounting records are maintained. For financial reporting purposes, the District reports its operations as a single enterprise fund and the financial statements are prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. Accordingly, the accounting records are converted to the accrual basis of accounting and all interfund transactions are eliminated. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized when the related liability is incurred. The District’s measurement focus is on the flow of economic resources. Revenues and expenses are divided into operating and non-operating items. Operating revenues generally result from providing services in connection with the District’s principal ongoing operations. The principal operating revenues of the District are user fees, licenses, and permits for wastewater treatment services. Operating expenses include the costs associated with the conveyance and treatment of wastewater and stormwater, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses. Non-recurring projects and studies (shown as non-operating expenses) consist of expenses related to unusual charges or losses that are unlikely to occur again in the formal course of business such as work related to federally declared disasters, projects originally intended to be capitalized that changed scope when a decision was made to no longer build an asset, and any non-reimbursed work performed on assets not owned or maintained by the District but is necessary to protect District owned assets or to mitigate a threat to the health and safety of the general public. The District follows GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, which establishes accounting and financial reporting standards for nonexchange transactions involving financial or capital resources. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 23 GASB Statement No. 33 groups nonexchange transactions into the following four classes, based upon their principal characteristics: derived tax revenues, imposed nonexchange revenues, government-mandated nonexchange transactions, and voluntary nonexchange transactions. The District recognizes assets from imposed nonexchange revenue transactions in the period when an enforceable legal claim to the assets arises or when the resources are received, whichever occurs first. Revenues are recognized in the period when the resources are required to be used for the first period that use is permitted. The District recognizes revenues from property taxes, net of estimated refunds and estimated uncollectible amounts, in the period for which the taxes are levied. Imposed nonexchange revenues also include licenses, permits, and other fees. Intergovernmental revenues, representing grants and assistance received from other governmental units, are generally recognized as revenues in the period when all eligibility requirements, as defined by GASB Statement No. 33, have been met. Any resources received where all requirements are met with the exception of the time requirement are recorded as deferred inflows. All other resources received before any other eligibility requirements are met are reported as unearned revenues. Cash And Cash Equivalents The District considers highly liquid investments that have original maturity of less than 91 days to the District to be Cash Equivalents. Investments The District accounts for its investments at fair value. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles pursuant to GASB Statement No. 72, Fair Value Measurement and Application. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statements of Revenues, Expenses and Changes in Net Position. Restricted Cash, Cash Equivalents And Investments Cash, cash equivalents and investments that are externally restricted are classified as restricted assets. These assets are used to make debt service payments, maintain sinking or reserve funds, purchase or construct capital or other non-current assets or for other restricted purposes. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 24 Accounts Receivable Accounts receivable is composed primarily of charges to customers for wastewater services. Accounts are considered past due 30 days from the invoice date. Receivables are reported at their gross values net of an allowance for uncollectible amounts. This allowance for uncollectible amounts is based on historical collection experience. Unbilled sewer service charge revenues are accrued by the District based on estimated billings for services provided through the end of the current fiscal year. Capital Assets Acquired capital assets are recorded at historical cost on the acquisition date. In accordance with GASB Statement No. 72, donated capital assets are recorded at acquisition value at the time the asset is considered operational. Interest cost is capitalized as part of the historical cost of acquiring certain assets when the effect of such capitalization is material to the financial statements. Interest is not capitalized on assets constructed with contributions from other governmental sources. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Treatment and disposal plant and equipment 3 to 100 years Collection and pumping plant 7 to 100 years General plant and equipment 3 to 12 years When developing user charge rates, the District includes funding for replacement cost of assets, which may differ from depreciation expense recorded for financial reporting purposes. Normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Betterments are capitalized and depreciated over the remaining useful lives of the related assets, as applicable. The District defines capital assets as assets with an initial, individual cost between $5,000 and $15,000, depending on the asset category, and an estimated useful life in excess of three years. Costs incurred for capital construction and acquisition are carried in construction in progress until completion of the related projects. The major components of construction in progress are the costs incurred to construct new tunnels, storage facilities and sewer lines, rehabilitate and separate existing sewer lines, and to make improvements to pump stations and treatment plants. Costs related to projects not pursued are expensed when terminated. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 25 Capitalization Of Interest Interest costs are capitalized as part of the costs of capital assets during the period of construction based on the related weighted average net borrowing costs incurred. Interest earned on temporary investments acquired with the proceeds of such borrowed funds, from the date of the borrowing until the assets are ready for their intended use, is used to reduce the interest costs capitalized on the constructed assets. Interest is not capitalized for outlays financed by capital grants (or other outside parties) externally restricted for the acquisition of specified assets. In fiscal 2020 and 2019, the District’s total net interest cost incurred on borrowings during the fiscal year was $47,213,483 and $47,228,368, respectively, and of the fiscal 2020 total, $42,440,055 was incurred on tax-exempt borrowings and $4,773,428 was incurred on taxable borrowings whereas all borrowings in fiscal 2019 were tax-exempt. Of this total net interest cost, $17,616,000 and $19,476,685 was capitalized and $29,597,483 and $27,751,683 was expensed in fiscal 2020 and 2019, respectively. Supplies Inventory Supplies inventory consists of parts and supplies to be used to operate and maintain treatment facilities and various treatment-related equipment at the District. This inventory figure is netted against those materials and supplies deemed to be obsolete. All inventory is stated at weighted average cost and expenses are recognized when the inventory is consumed. Net Position One component of the District’s net position is the net investment in capital assets which consists of capital assets, including restricted capital assets, net of accumulated depreciation, reduced by the net outstanding debt and construction- related liabilities, including premiums and discounts on such debt, which is attributable to the acquisition, construction, or improvement of those assets. The outstanding debt is net of the cash and investments from the debt that has not yet been expended. Deferred gains and losses on refundings are also included in the net investment in capital assets net position. The restricted component of net position consists of assets and liabilities regulated by external constraints imposed by creditors, grantors, contributors, laws, or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Property taxes levied by the various subdistricts and other revenues received for construction in those sub- districts have also been restricted for that use. Sewer extension and connection fees, grants, and other revenues received for construction within certain sub- districts have been restricted for that use. In addition, a portion of wastewater THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 26 sewer charges have been restricted for the payment of principal and interest, including accrued interest, on certain debt of the District. The unrestricted net position component of net position consists of net position that does not meet the definition of restricted or net investment in capital assets. The District first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. Deferred Outflows Of Resources And Deferred Inflows Of Resources In addition to assets, financial statements may report a separate section for deferred outflows of resources. Deferred outflows of resources consist of the consumption of net position that is applicable to a future reporting period and so will not be recognized as an outflow of resources until then. Deferred outflows of resources related to refunding long-term debt is reported in the Statements of Net Position. A deferred bond refunding amount results from the difference in the carrying value of refunded debt and its reacquisition price, and is amortized over the shorter of the life of the refunded or refunding debt. The pension related deferred outflows of resources represent contributions made to the plan between the measurement date of the pension liability and the beginning of the next fiscal year as well as certain actuarial differences and changes that are amortized over future periods. The other postemployment benefit (“OPEB”) related deferred outflows of resources represent benefit payments made between the measurement date of the total OPEB liability and the beginning of the fiscal year following the measurement date and certain actuarial differences and changes that are amortized over future periods. In addition to liabilities, financial statements may report a separate section for deferred inflows of resources. Deferred inflows of resources consist of the acquisition of net position that is applicable to a future reporting period and so will not be recognized as an inflow of resources until then. Deferred inflows of resources related to refunding long-term debt is also reported in the Statements of Net Position due to the recognition of a deferred gain resulting from the difference in the carrying value of refunded debt and its reacquisition price and this gain is amortized over the shorter of the life of the refunded or refunding debt. The District also has deferred inflows of resources related to certain changes in pension and OPEB obligations that are amortized over future periods. Capital Contributions Capital contributions to the District represent government grants and other aid used to fund capital projects. In accordance with GASB Statement No. 33, capital contributions are recognized as revenue when the expenditure is made and the amount becomes subject to claim for reimbursement. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 27 Bonds, Bond Premiums, Discounts And Issuance Costs Bonds and notes payable are recorded at the principal amount outstanding and are reported net of any applicable bond premium or discount. In the District’s financial statements, bond premiums and discounts are amortized over the life of the bonds using the effective interest method. Bond issuance costs are expensed when incurred pursuant to GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Bonds which have been advance refunded and in substance defeased, are not included in long-term debt and the related assets deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded debt are not included in investments. Compensated Absences Vacation Under the terms of the District’s personnel policies, employees are allowed to carry a maximum of 30 to 45 days of vacation (depending on length of service) from one calendar year to the next. Since vacation accrued at year-end is expected to be used by the employee during the following fiscal year, the accrual is reported as a component of current deposits and accrued expenses payable. Sick Leave Employees earn sick pay benefits at accrual rates ranging from 10 days per year to 12 days per year (depending on length of service). Unused sick leave can be carried over at year-end without limitation. An employee retiring from the District with five or more years of service will be compensated for any unused accrued sick leave at the rate of 1.25% for each year of District service multiplied by the unused accrued sick leave remaining at the employee’s current rate of pay up to a maximum of $50,000. The District has recorded a liability which has been actuarially determined to be equal to the accumulated expense charge that will amortize the employees’ benefits over their period of District service. The liability, included in current deposits and accrued expenses payable, includes vested accumulated rights to receive sick leave benefits estimated to be paid within one year. The portion of sick leave expected to be paid after one year is recorded as a component of non-current deposits and accrued expenses payable. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 28 Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, the fiduciary net position of The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Plan”) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan, which has a December 31 reporting period. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use Of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates. Income Tax Status The District is exempt from federal income tax under the Internal Revenue Code as a political subdivision of the State of Missouri. Adoption Of New Accounting Standards During fiscal year 2020 the District did not implement any new GASB Statements. During fiscal year 2019, the District implemented GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements (“GASB Statement No. 88”). This Statement amends Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, paragraph 119 and Statement No. 38, Certain Financial Statement Note Disclosures, paragraphs 10 and 12. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not consistently provided. This Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance- related consequences, and significant subjective acceleration clauses. The disclosures required by this Statement are presented in Note 6, Long-Term Liabilities. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 29 The following GASB Statement which became effective during fiscal year 2019 is not applicable to the District and there is no implementation impact on the District’s financial reporting at this time. • Statement No. 83, Certain Asset Retirement Obligations Recent Accounting Standards GASB has issued additional guidance that is not yet effective. In addition, GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance, was issued in May 2020 which postponed several of the GASB Statements listed below. The new effective dates are indicated below. The District is currently reviewing the provisions of the following GASB Statements to determine the impact of implementation in future periods. • Statement No. 84, Fiduciary Activities (fiscal 2021) • Statement No. 87, Leases (fiscal 2022) • Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period (fiscal 2022) • Statement No. 90, Majority Equity Interests, an amendment of GASB Statements No. 14 and No. 61 (fiscal 2021) • Statement No. 91, Conduit Debt Obligations (fiscal 2023) • Statement No. 92, Omnibus 2020 (fiscal 2022) • Statement No. 93, Replacement of Interbank Offered Rates (fiscal 2022) • Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements (fiscal 2023) • Statement No. 96, Subscription-Based Information Technology Arrangements (fiscal 2023) • Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans (fiscal 2022) Reclassifications Prior period financial statement amounts may have been reclassified to conform to current period presentation. These reclassifications, if any, had no effect on the changes in net position or total net position. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 30 2. Deposits and Investments Deposits At June 30, 2020 the reported amount of the District’s deposits was $75,013,119 and the bank balance was $80,405,147. Of the bank balance, $873,413 was covered by the Federal Deposit Insurance Corporation (“FDIC”); $79,531,734 was collateralized with securities held by a third-party financial institution in the District’s name. In addition, the District has money market mutual funds of $19,589,363 held in a trusted escrow account for the State that will be used to make future bond payments. At June 30, 2019 the reported amount of the District’s deposits was $26,062,172 and the bank balance was $32,463,138. Of the bank balance, $1,060,057 was covered by the Federal Deposit Insurance Corporation (“FDIC”); $31,403,081 was collateralized with securities held by a third-party financial institution in the District’s name. In addition, the District has money market mutual funds of $19,225,251 held in a trusted escrow account for the State that will be used to make future bond payments. Custodial credit risk for deposits is the risk that, in the event of bank failure, the District’s deposits may not be returned to the District. Deposits in each bank are insured by the FDIC in the amount of $250,000 for interest bearing accounts and noninterest bearing accounts. The District’s investment policy complies with the provisions of state laws and requires collateralization on repurchase agreements, time certificates of deposit and deposits with banking institutions, not covered by the FDIC, and the collateralization level shall be 103% and shall be based on the fair value of the pledged collateral. Investments The Secretary-Treasurer is authorized to invest, with the approval of the Board, funds not immediately needed for the purpose to which said funds are applicable, in the same manner as the state treasurer may invest funds of the State of Missouri pursuant to Section 15, Article IV of the Constitution of Missouri, as amended from time to time. The District’s investment policy conforms to the investment policy guidelines for the State of Missouri. The District’s investment policy authorizes the District to invest in the following instruments: U.S. Treasury obligations, certificates of deposit, obligations of any agency or instrumentality of the U.S., repurchase agreements, bankers’ acceptances, and commercial paper, all according to terms specified in the policy. The District also has investments in money market mutual funds that hold securities approved by the District’s investment policy. At June 30, 2020 and June 30, 2019, all of the District’s investments were in compliance with the District’s investment policy and charter. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 31 A summary of deposits and investments as of June 30, 2020 and June 30, 2019 is as follows: A reconciliation to the Statements of Net Position is as follows: THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 32 Interest Rate Risk As of June 30, 2020 and 2019, the District had the following investments and maturities: In accordance with the District’s investment policy, the District will minimize the risk that the fair value of debt securities in the portfolio will fall due to increases in general interest rates by: 1. Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; 2. Investing operating funds primarily in short-term securities; 3. State law limits the maximum stated maturities to five years on any investment from the date of purchase. Long-Term Investments While the majority of the District’s portfolio is made up of short-term investments, the District also categorizes a sizeable amount as long-term under the categories discussed in Note 1, Organization and Summary of Significant Accounting Policies. The District is allowed to purchase long-term callable securities. These callable securities give the issuer the right to redeem at predetermined prices at a specific time prior to maturity. When a security is called, the District reflects an immediate reclassification from long-term investment to cash. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 33 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 those investments with the top rating issued by Nationally Recognized Statistical Rating Organizations. As of June 30, 2020 and June 30, 2019, the District’s investments in commercial paper were rated A-1 by Standard & Poor’s (“S&P”) and P-1 by Moody’s Investors Service (“Moody’s”). The District’s investments in U.S. Agency obligations that do not carry the explicit guarantee of the U.S. Government all carry a rating assigned by S&P of AA+ or higher. Money market investments are rated as AAAm and Aaa-mf by S&P and Moody’s, respectively. Concentration of Credit Risk The District’s investment policy places no limit on the amount the District may invest in any one issuer with respect to collateralized time and demand deposits. U.S. Treasury obligations are not limited. U.S. Agency obligations and government-sponsored enterprises are limited to 60% of the portfolio, with no more than 30% of the total portfolio invested in securities of any one agency; and collateralized repurchase agreements are limited to 50% of the portfolio. U.S. Agency callable securities are limited to 30% of the portfolio, and commercial paper and bankers’ acceptances are limited to 25% each, with no more than 5% of the total portfolio invested in any one issuer. The following table lists investments in issuers that represent 5% or more of total investments at either June 30, 2020 or June 30, 2019: THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 34 Fair Value Measurement and Application The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles pursuant to GASB Statement No. 72, Fair Value Measurement and Application. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The District has the following recurring fair value measurements as of June 30, 2020 and June 30, 2019:  Money Market Mutual Funds of $19.6 million and $19.2 million, respectively, are valued using a market approach to measuring fair value prices that considers relevant information generated by market transactions involving identical or similar assets or groups of assets. (Level 2 inputs)  U.S. Treasury and Agency Obligations of $513.3 million and $504.0 million, respectively, are valued using a market approach to measuring fair value prices that considers relevant information generated by market transactions involving identical or similar assets or groups of assets. (Level 2 inputs)  Commercial Paper of $50.6 million and $144.7 million, respectively, is valued using a market approach to measuring fair value prices that considers relevant information generated by market transactions involving identical or similar assets or group of assets. (Level 2 inputs) 3. Notes Receivable The District has a note receivable with Missouri American Water Company (“MOAM”) for its portion of the capital costs related to the Lower Meramec Wastewater Treatment Plant. The original loan bears interest at 4.35%, while the two loans added during fiscal year 2013 bear interest at 4.50% and 3.52%. The current portion of this note is included in the Unrestricted Other Receivables line on the Statements of Net Position. The note receivable will mature in fiscal year 2033. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 35 At June 30, 2020, future payments are as follows: At June 30, 2019, future payments were as follows: The District also had a note receivable due to its participation in the Contractor Loan Fund, a consortium of local organizations desiring to pool bank loans, private investment, and new market tax credits to provide access to capital for Minority and Women-owned Business Enterprise companies that are certified through a City of St. Louis agency. In fiscal 2020, the Contractor Loan Fund consortium elected to transfer the existing loans and future responsibility to a successor entity. The District’s remaining cash balance in the Contractor Loan Fund of $123,413 will be conveyed to the successor entity in fiscal 2021. At June 30, 2020 and 2019, MSD’s note receivable related to the Contractor Loan Fund is $0 and $59,786, respectively. 2021 1,154,696$ 2022 1,154,696 2023 1,154,696 2024 1,154,696 2025 1,154,696 2026-2030 5,773,479 2031-2033 2,873,190 14,420,149 Less: Amount representing interest 3,323,520 Total Notes Receivable 11,096,629$ Classification in Statement of Net Position: Current - Other receivables 685,900$ Non-current - Notes receivable 10,410,729 Total Notes Receivable 11,096,629$ 2020 1,154,696$ 2021 1,154,696 2022 1,154,696 2023 1,154,696 2024 1,154,696 2025-2029 5,773,479 2030-2033 4,027,886 15,574,845 Less: Amount representing interest 3,821,176 Total Notes Receivable 11,753,669$ Classification in Statement of Net Position: Current - Other receivables 657,040$ Non-current - Notes receivable 11,096,629 Total Notes Receivable 11,753,669$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 36 4. Capital Assets The following is a summary of capital assets changes for the fiscal years ended June 30, 2020 and 2019: THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 37 5. Property Tax On or before October 1 of each year, the District levies ad valorem taxes on all taxable tangible property, real and personal, within its boundaries based on assessed valuations established by the City of St. Louis and St. Louis County Assessors. Taxes levied are used for stormwater operations, maintenance, and construction. Taxes are recorded as non-operating revenues and recognized, net of estimated refunds and estimated uncollectible amounts, in the period for which the taxes are levied. Property tax bills are typically mailed in October. They become delinquent and represent a lien on the related property if not paid by December 31. All property taxes are billed and collected by the City of St. Louis and St. Louis County Collectors of Revenue and are remitted to the District monthly. In fiscal years 2020 and 2019, the District recorded revenue from property taxes in the amount of $35,439,441 and $34,107,619, respectively. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 38 6. Long-Term Liabilities The following is a summary of changes in the District’s long-term liabilities for the year ended June 30, 2020: Original Balance Balance Issuance June 30,June 30, Current Amounts 2019 Additions Retirements 2020 Portion Bonds and Notes Payable: Wastewater System Senior Revenue Bonds: Series 2010B 85,000,000$ 85,000,000$ —$ —$ 85,000,000$ —$ Series 2011B 52,250,000 15,945,000 — (2,220,000) 13,725,000 2,330,000 Series 2012A 225,000,000 154,040,000 — (108,420,000) 45,620,000 5,300,000 Series 2012B 141,730,000 128,840,000 — (87,315,000) 41,525,000 3,725,000 Series 2013B 150,000,000 113,615,000 — (71,235,000) 42,380,000 3,390,000 Series 2015B 223,855,000 190,135,000 — (21,185,000) 168,950,000 2,920,000 Series 2016C 150,000,000 144,535,000 — (2,840,000) 141,695,000 2,955,000 Series 2017A 316,175,000 312,760,000 — (3,520,000) 309,240,000 3,660,000 Series 2019B 52,130,000 — 52,130,000 — 52,130,000 835,000 Series 2019C (Taxable) 276,260,000 — 276,260,000 — 276,260,000 1,515,000 Water Infrastructure Finance and Innovation Act (WIFIA) Bonds: Series 2018A 47,722,204 261,480 — — 261,480 — Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program): Series 2004B 161,280,000 64,590,000 — (8,860,000) 55,730,000 9,105,000 Series 2005A 6,800,000 3,120,000 — (355,000) 2,765,000 365,000 Series 2006A 42,715,000 20,965,000 — (2,415,000) 18,550,000 2,475,000 Series 2006B 14,205,000 7,400,000 — (750,000) 6,650,000 760,000 Series 2008A/B 40,000,000 21,765,000 — (1,970,000) 19,795,000 2,005,000 Missouri Department of Natural Resources: Energy Loan Program 223,793 16,163 — (16,163) — — Series 2009A 23,000,000 14,218,100 — (1,149,900) 13,068,200 1,176,500 Series 2010A 7,980,700 5,468,200 — (388,700) 5,079,500 396,600 Series 2010C 37,000,000 24,906,000 — (1,795,000) 23,111,000 1,842,000 Series 2011A 39,769,300 32,241,300 — (1,792,000) 30,449,300 1,838,000 Series 2013A 52,000,000 43,349,000 — (2,305,000) 41,044,000 2,365,000 Series 2015A 75,000,000 65,902,000 — (3,424,000) 62,478,000 3,505,000 Series 2016A 20,000,000 13,129,064 4,890,366 (861,000) 17,158,430 880,000 Series 2016B 75,500,000 45,582,626 18,919,459 (3,217,000) 61,285,085 3,286,000 Series 2018B 25,267,000 2,880,349 15,348,039 — 18,228,388 — Series 2019A 23,952,000 — 6,291,992 — 6,291,992 — 2,364,814,997$ 1,510,664,282$ 373,839,856$ (326,033,763)$ 1,558,470,375$ 56,629,100$ Add: Unamortized premium, net of discount 131,864,536 Total Bonds and Notes Payable 1,690,334,911$ Current Portion of Bonds and Notes Payable 56,629,100$ Non-Current Bonds and Notes Payable 1,633,705,811 Total Bonds and Notes Payable 1,690,334,911$ Net Pension Liability 74,396,737$ (16,603,824)$ —$ 57,792,913$ —$ Total OPEB Liability 24,164,395$ (999,777)$ —$ 23,164,618$ —$ Deposits and Accrued Expenses 619,384$ 3,529$ —$ 622,913$ —$ Compensated absences 8,977,517 788,826 (517,171) 9,249,172 2,312,293 Total Deposits and Accrued Expenses 9,596,901$ 792,355$ (517,171)$ 9,872,085$ 2,312,293$ Current Portion (Compensated absences) in Current Deposits and Accrued Expenses 2,312,293$ Non-Current Deposits and Accrued Expenses 7,559,792 Total Deposits and Accrued Expenses 9,872,085$ Landfill closure and postclosure costs THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 39 The following is a summary of changes in the District’s long-term liabilities for the year ended June 30, 2019: Original Balance Balance Issuance June 30,June 30, Current Amounts 2018 Additions Retirements 2019 Portion Bonds and Notes Payable: Wastewater System Senior Revenue Bonds: Series 2010B 85,000,000$ 85,000,000$ —$ —$ 85,000,000$ —$ Series 2011B 52,250,000 18,055,000 — (2,110,000) 15,945,000 2,220,000 Series 2012A 225,000,000 159,340,000 — (5,300,000) 154,040,000 5,300,000 Series 2012B 141,730,000 131,935,000 — (3,095,000) 128,840,000 3,390,000 Series 2013B 150,000,000 116,615,000 — (3,000,000) 113,615,000 3,250,000 Series 2015B 223,855,000 192,810,000 — (2,675,000) 190,135,000 2,785,000 Series 2016C 150,000,000 147,295,000 — (2,760,000) 144,535,000 2,840,000 Series 2017A 316,175,000 316,175,000 — (3,415,000) 312,760,000 3,520,000 Water Infrastructure Finance and Innovation Act (WIFIA) Bonds: Series 2018A 47,722,204 — 261,480 — 261,480 — Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program): Series 2004B 161,280,000 73,190,000 — (8,600,000) 64,590,000 8,860,000 Series 2005A 6,800,000 3,465,000 — (345,000) 3,120,000 355,000 Series 2006A 42,715,000 23,315,000 — (2,350,000) 20,965,000 2,415,000 Series 2006B 14,205,000 8,140,000 — (740,000) 7,400,000 750,000 Series 2008A/B 40,000,000 23,700,000 — (1,935,000) 21,765,000 1,970,000 Missouri Department of Natural Resources: Energy Loan Program 223,793 51,025 — (34,863) 16,163 16,163 Series 2009A 23,000,000 15,342,000 — (1,123,900) 14,218,100 1,149,900 S eries 2010A 7,980,700 5,849,100 — (380,900) 5,468,200 388,700 Series 2010C 37,000,000 26,656,000 — (1,750,000) 24,906,000 1,795,000 Series 2011A 39,769,300 33,988,300 — (1,747,000) 32,241,300 1,792,000 Series 2013A 52,000,000 45,596,000 — (2,247,000) 43,349,000 2,305,000 Series 2015A 75,000,000 69,246,000 — (3,344,000) 65,902,000 3,424,000 Series 2016A 20,000,000 3,093,765 10,878,299 (843,000) 13,129,064 861,000 Series 2016B 75,500,000 27,417,916 21,311,710 (3,147,000) 45,582,626 3,217,000 Series 2018B 25,267,000 — 2,880,349 — 2,880,349 — 2,012,472,997$ 1,526,275,106$ 35,331,838$ (50,942,663)$ 1,510,664,282 52,603,763$ Add: Unamortized premium, net of discount 159,855,883 Total Bonds and Notes Payable 1,670,520,165$ Current Portion of Bonds and Notes Payable 52,603,763$ Non-Current Bonds and Notes Payable 1,617,916,402 Total Bonds and Notes Payable 1,670,520,165$ Net Pension Liability 48,388,938$ 26,007,799$ —$ 74,396,737$ —$ Total OPEB Liability 24,193,972$ (29,577)$ —$ 24,164,395$ —$ Deposits and Accrued Expenses 565,493$ 53,891$ —$ 619,384$ —$ Compensated absences 9,019,323 808,146 849,952 8,977,517 2,244,379 Total Deposits and Accrued Expenses 9,584,816$ 862,037$ 849,952$ 9,596,901$ 2,244,379$ Current Portion (Compensated absences) in Current Deposits and Accrued Expenses 2,244,379$ Non-Current Deposits and Accrued Expenses 7,352,522 Total Deposits and Accrued Expenses 9,596,901$ Landfill closure and postclosure costs THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 40 Wastewater System Revenue Bonds Payable In February 2004, the District received voter authorization for $500,000,000 of revenue bonds. In August 2008, the District received voter authorization for an additional $275,000,000 of revenue bonds. In June 2012, the District received voter authorization for another $945,000,000 of revenue bonds and finally, in April 2016, the District received voter authorization for another $900,000,000 of revenue bonds. From the total voter authorization of $2,620,000,000, $598,428,796 has not been issued as of June 30, 2020. These funds were sought to enable the District to comply with federal and state clean water requirements. In December 2019, the District issued $52,130,000 of Wastewater System Revenue Bonds Series 2019B (“Series 2019B”). These bonds were issued pursuant to the April 2016 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities and as of June 30, 2020, $20,316,635 has been expended. A premium of $12,059,977 was received on the issuance of Series 2019B. The 2019B senior bonds have an interest rate of 5.0% and are payable in semiannual installments at varying amounts through May 1, 2049. In December 2019, the District issued $276,260,000 of Taxable Wastewater System Refunding Revenue Bonds Series 2019C (“Series 2019C”). These bonds were issued to partially advance refund the Series 2012A bonds maturing in fiscal years 2040 through 2042 totaling $103,120,000, the Series 2012B bonds maturing in fiscal years 2028 through 2034 totaling $83,925,000 (excludes $940,000 of the May 2031 principal payment due), the Series 2013B bonds maturing in fiscal years 2031 and 2032, 2036 through 2038, and 2040 through 2043 totaling $67,985,000 and the Series 2015B bonds maturing in fiscal years 2044 through 2045 totaling $18,400,000. The Series 2019C refunding net proceeds of $274,474,218 (after payments of $1,063,039 in underwriter fees and $722,743 in issuance costs) and the $26,045,142 in excess debt service reserves the District contributed were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for the future debt service payments defined above on the Series 2012A, Series 2012B, Series 2013B and Series 2015B bonds. The sum of the $300,519,360 deposited into escrow and the earnings on the U.S. government securities will fund the $273,430,000 advanced refunded principal payments on their call dates (May 1, 2022 for Series 2012A and Series 2012B, May 1, 2023 for Series 2013B and May 1, 2025 for Series 2015B) and the interest thereon. Interest only payments of $6,835,750 were made from the escrow account in fiscal year 2020. All $273,430,000 debt defeased in substance to be paid from the escrow account remains outstanding as of June 30, 2020. As a THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 41 result of placing the cash with an escrow agent in a trust, Series 2012A, Series 2012B, Series 2013B, and Series 2015B bonds were partially defeased and the related liability for those bonds were removed from the District’s financial statements in fiscal 2020. This advance refunding decreased total debt service payments over the next 25 years by $98,737,402, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt adjusted for the additional cash paid) of $42,691,317. The 2019C senior bonds have interest rates ranging from 1.824% to 3.259% and are payable in semiannual installments at varying amounts through May 1, 2045. In December 2017, the District issued $316,175,000 of Wastewater System Revenue Bonds Series 2017A (“Series 2017A”). These bonds were issued for two purposes: $116,175,000 was issued to partially advance refund the Series 2011B bonds maturing in fiscal years 2022 through 2029 totaling $23,345,000, the Series 2012A bonds maturing in fiscal years 2023 through 2032 totaling $50,060,000 (excludes $240,000 of the May 2030 principal payment due), the Series 2013B bonds maturing in fiscal years 2024 through 2029 totaling $26,385,000, and the Series 2015B bonds maturing in fiscal years 2026 through 2029 totaling $25,970,000. The remaining $200,000,000 was issued for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities and as of June 30, 2020, $226,851,242 has been expended. Approximately $47,500,000 was issued pursuant to the June 2012 authorization and $152,500,000 was issued pursuant to the April 2016 authorization. A premium of $37,823,556 was received on the $200,000,000 portion of the Series 2017A. The 2017A senior bonds have interest rates ranging from 2.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2047. The Series 2017A refunding net proceeds of $141,343,662 (including a premium of $25,967,878 and additional proceeds of $1,220 and after payments of $428,483 in underwriting fees and $371,953 in issuance costs) and the $934,325 in excess debt service reserves the District contributed were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for the future debt service payments defined above on the Series 2011B, Series 2012A, Series 2013B, and Series 2015B bonds. The sum of the $142,277,987 deposited into escrow and the earnings on the U.S. government securities will fund the $125,760,000 advanced refunded principal payments on their call dates (May 1, 2021 for Series 2011B, May 1, 2022 for Series 2012A, May 1, 2023 for Series 2013B, and May 1, 2025 for Series 2015B) and the interest thereon. Interest only payments of $6,017,025 were made from the escrow account in fiscal year 2020. All $125,760,000 debt defeased in substance to be paid from the escrow account remains outstanding as of June 30, 2020. As a result of placing the cash with an escrow agent in a trust, Series 2011B, Series 2012A, Series 2013B, and Series 2015B bonds were partially defeased and the related liability for those THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 42 bonds were removed from the District’s financial statements in fiscal 2018. This advance refunding decreased total debt service payments over the next 14 years by $12,623,385, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt adjusted for the additional cash paid) of $9,481,147. In December 2016, the District issued $150,000,000 of Wastewater System Revenue Bonds Series 2016C (“Series 2016C”). These bonds were issued pursuant to the June 2012 authorization; in this case for the purpose of construction, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. A premium of $17,678,054 was received on the issuance of Series 2016C. These 2016C senior bonds have interest rates ranging from 2.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2046. In December 2015, the District issued $223,855,000 of Wastewater System Revenue Bonds Series 2015B (“Series 2015B”). These bonds were issued for two purposes: $73,855,000 was issued to advance refund the Series 2006C and Series 2008A bonds and $150,000,000 was issued pursuant to the June 2012 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These 2015B senior bonds have interest rates ranging from 3.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2045; however, in December 2017, there was an advance refunding of the non-refunding Series 2015B bonds for the years 2026 through 2029 totaling $25,970,000. As a result of this advance refunding, Series 2015B bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In December 2019, there was a taxable advance refunding of the Series 2015B bonds for the years 2044 through 2045 totaling $18,400,000. As a result of this advance refunding, Series 2015B bonds are considered partially defeased. See the explanation for Series 2019C above for further information. The Series 2015B refunding net proceeds of $86,848,034 (including a premium of $13,623,487 and after payments of $337,848 in underwriting fees and $292,605 in issuance costs) and the $8,945,557 in excess debt service reserves the District contributed were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the Series 2006C and Series 2008A bonds. All principal and interest payments on the advance refunded Series 2006C and Series 2008A bonds have been paid from escrow and no amounts remain outstanding on these bonds. As a result of placing the cash with an escrow agent in a trust, Series 2006C and Series 2008A bonds were defeased and the liability for those bonds were THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 43 removed from the District’s financial statements in fiscal 2016. The original $60,000,000 2006C bonds were issued pursuant to the February 2004 authorization and the original $30,000,000 2008A bonds were issued pursuant to the August 2008 authorization. This refunding decreased total debt service payments over the next 22 years by $33,032,176, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt adjusted for additional cash paid) of $14,544,866. In December 2013, the District issued $150,000,000 of Wastewater System Revenue Bonds Series 2013B (“Series 2013B”). These bonds were issued pursuant to the June 2012 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have interest rates ranging from 2.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2043; however, in December 2017, there was an advance refunding of the Series 2013B bonds for the years 2024 through 2029 totaling $26,385,000. As a result of this advance refunding, Series 2013B bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In December 2019, there was a taxable advance refunding of the Series 2013B bonds for nine years spanning within 2031 through 2043 totaling $67,985,000. As a result of this advance refunding, Series 2013B bonds are considered partially defeased. See the explanation for Series 2019C above for further information. In November 2012, the District issued $141,730,000 of Wastewater System Refunding Bonds Series 2012B (“Series 2012B”). These bonds were issued to advance refund the Series 2004A bonds maturing in fiscal years 2015 and thereafter. These 2012B senior bonds have interest rates ranging from 1.3% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2034. The Series 2012B’s net proceeds of $169,991,298 (including a premium of $29,613,138 and after payments of $761,593 in underwriting fees and $590,247 in issuance costs) were used to purchase U.S. government securities. These securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the bonds. All principal and interest payments on the advance refunded Series 2004A bonds have been paid from escrow and no amounts remain outstanding on these bonds. As a result of placing the cash with an escrow agent in a trust, Series 2004A bonds were partially defeased and the liability for those bonds related to a date after May 1, 2014 were removed from the District’s financial statements in fiscal 2013. The original $175,000,000 2004A bonds were issued pursuant to the February 2004 authorization. This refunding decreased total debt service payments over the next 22 years by $28,601,189, resulting in an economic gain (difference between the present values of the debt service requirements on the old and new debt) of $22,439,375. In December 2019, there THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 44 was a taxable advance refunding of the Series 2012B bonds for the years 2028 through 2034 totaling $83,925,000 (excludes $940,000 of the May 2031 principal payment due). As a result of this advance refunding, Series 2012B bonds are considered partially defeased. See the explanation for Series 2019C above for further information. In August 2012, the District issued $225,000,000 of Wastewater System Revenue Bonds Series 2012A (“Series 2012A”). These bonds were issued pursuant to the June 2012 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have interest rates ranging from 2.5% to 5.3% and are payable in semiannual installments at varying amounts through May 1, 2042; however, in December 2017, there was an advance refunding of the Series 2012A bonds for the years 2023 through 2032 totaling $50,060,000 (excludes $240,000 of the May 2030 principal payment due). As a result of this advance refunding, Series 2012A bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In December 2019, there was a taxable advance refunding of the Series 2012A bonds for the years 2040 through 2042 totaling $103,120,000. As a result of this advance refunding, Series 2012A bonds are considered partially defeased. See the explanation for Series 2019C above for further information. In December 2011, the District issued $52,250,000 of Wastewater System Revenue Bonds Series 2011B (“Series 2011B”). These bonds were issued pursuant to the August 2008 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have interest rates ranging from 3.0% to 5.0% and are payable in semiannual installments at varying amounts through May 1, 2032; however, in December 2017, there was an advance refunding of the Series 2011B bonds for the years 2022 through 2029 totaling $23,345,000. As a result of this advance refunding, Series 2011B bonds are considered partially defeased. See the explanation for Series 2017A above for further information. In January 2010, the District issued $85,000,000 of Taxable Wastewater System Revenue Bonds (Build America Bonds – Direct Pay) Series 2010B (“Series 2010B”). These bonds were issued pursuant to the August 2008 authorization; in this case for the purpose of constructing, repairing, replacing, and equipping new and existing District wastewater facilities. All funds from this issuance have been expended. These senior bonds have an interest rate of 5.9% and are payable in semiannual installments at varying amounts through May 1, 2039. As Build America Bonds under The American Recovery and Reinvestment Act (“ARRA”) of 2009, the District receives a subsidy payment from the Federal government equal THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 45 to a percentage of the interest paid. In fiscal years 2013 and prior, the rate was 35.0%. Beginning with refund payments processed on March 1, 2013 and annually beginning on October 1, 2013, the IRS has adjusted this rate as part of the sequestration. In fiscal year 2020 the subsidy percentage was 32.9% while for 2019 the subsidy percentage was 32.8%. In fiscal year 2021 the subsidy percentage is expected to be 33.0%. The revenue bonds do not constitute a legal debt or liability for the District, the State of Missouri, or for any political subdivision thereof and do not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Revenue derived from the operations of the Wastewater System is pledged for the retirement of the outstanding Wastewater System Revenue Bonds listed above. Under the provisions of the bond indentures, the District covenants to establish rates for the services of the Wastewater System sufficient to fund operations, maintain reserves, and provide revenues to apply principal and interest on these bonds. The issuance of the revenue bonds does not obligate the District to levy any form of taxation or to make any appropriation for their payments in any fiscal year. The principal and interest on the bonds are expected to be paid from future wastewater revenues. Water Pollution Control And Drinking Water Revenue Bonds Payable In October 2008, the State Environmental Improvement and Energy Resources Authority (“Authority”) authorized and issued $69,435,000 of Water Pollution Control and Drinking Water Revenue Bonds (State Revolving Funds Programs) Series 2008A/B (“Series 2008A/B”). The Series 2008A/B bonds provided funds to issue loans to 14 Missouri political subdivisions that used the funds to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2008A/B bonds issued by the Authority were used to purchase subordinate Participant Revenue Bonds (“Participant Bonds”) authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $40,000,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 4.0% to 5.7% and are payable in semiannual installments at varying amounts through January 1, 2029. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 46 In November 2006, the Authority authorized and issued $22,105,000 of State Revolving Funds Programs Series 2006B (“Series 2006B”). The Series 2006B bonds provided funds to issue loans to seven Missouri political subdivisions that used the funds to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2006B bonds issued by the Authority were used to purchase Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $14,205,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 4.0% to 5.0% and are payable in semiannual installments at varying amounts through July 1, 2027. In May 2006, the Authority authorized and issued $87,505,000 of State Revolving Funds Programs Series 2006A (“Series 2006A”). The Series 2006A bonds provided funds to issue loans to 13 Missouri political subdivisions that used the funds to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2006A bonds issued by the Authority were used to purchase subordinate Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $42,715,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 3.5% to 4.5% and are payable in semiannual installments at varying amounts through July 1, 2026. In May 2005, the Authority authorized and issued $53,060,000 of State Revolving Funds Programs Series 2005A (“Series 2005A”). The Series 2005A bonds provided funds to issue loans to 10 Missouri political subdivisions and one Missouri non- profit corporation that were used to finance water pollution control and drinking water projects. A portion of the proceeds of the Series 2005A bonds issued by the Authority were used to purchase subordinate Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $6,800,000, the proceeds of which were used for constructing, repairing, and equipping new and existing wastewater facilities. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 3.0% to 5.0% and are payable in semiannual installments at varying amounts through July 1, 2026. In May 2004, the Authority authorized and issued $179,780,000 of State Revolving Funds Programs Series 2004B (“Series 2004B”). The Series 2004B bonds provided funds to issue loans to seven Missouri political subdivisions that were used to finance water pollution control projects. A portion of the proceeds of the Series THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 47 2004B bonds issued by the Authority were used to purchase subordinate Participant Bonds authorized and issued by the District from the February 2004 authorization in the aggregate principal amount of $161,280,000, the proceeds of which were used to finance the District’s three water pollution control construction projects outlined in the agreement. All funds from this issuance have been expended. The District’s Participant Bonds have interest rates ranging from 2.0% to 5.3% and are payable in semiannual installments at varying amounts through January 1, 2027. The Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds do not constitute a legal debt or liability for the District, the State of Missouri, or for any political subdivision thereof and do not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds and the Series 2009A, 2010A, 2010C, 2011A, 2013A, 2015A, 2016A, 2016B, 2018B and 2019A direct loans (pages 49-55) do not obligate the District to levy any form of taxation or to make any appropriation for their payments in any fiscal year. The principal and interest on the bonds are expected to be paid from future wastewater revenues. In connection with the District’s issuance of the Participant Bonds, which were purchased with the proceeds of the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds, the District participates in the State Revolving Loan Program established by the Missouri Department of Natural Resources (“DNR”). Monies from federal capitalization grants and state matching funds are used to fund a bond reserve account for the participants. As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account and deposited in a bond reserve account, in the District’s name, an additional 60% of the expenditure amount for the Series 2004B bonds and 70% for the Series 2005A, 2006A, and 2006B bonds. For the Series 2008A/B bonds, 70% of the entire anticipated borrowed amount was deposited into this bond reserve account at the beginning of the loan versus as the expenditures were reimbursed. Interest earned from this bond reserve account can be used by the District to fund interest payments on the bonds. On the date of each payment of the principal amount of the District’s Participant Bonds, the trustee transfers from this bond reserve account to the master trustee account an amount equal to 60% of the principal payment for the Series 2004B bonds and 70% for the Series 2005A, 2006A, 2006B and 2008A/B bonds. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 48 In accordance with the District’s Master Bond Ordinance No. 11713, adopted April 22, 2004, the District’s annual net operating revenues from wastewater activities, as defined in the agreement, coupled with investments earnings, must be at least 125% of the current year’s principal and interest due on all senior bonds and at least 115% of the current year’s principal and interest due on all bonds. At June 30, 2020 and 2019, the District was in compliance with this covenant. Principal And Interest Requirements On Revenue Bonds Payable The annual principal and interest requirements to maturity on revenue bonds payable outstanding as of June 30, 2020 are as follows: Water Infrastructure Finance and Innovation Act (WIFIA) Series 2018A In December 2018, the Environmental Protection Agency (“EPA”) issued to the District an amount totaling $47,722,204 for the purpose of constructing the Deer Creek Sanitary Tunnel Pump Station and Sanitary Sewers Project. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the April 2016 authorization. The Series 2018A bonds are not subordinated. The District’s interest rate is 3.06% and is payable in semiannual installments at varying amounts through May 1, 2053. Principal And Interest Requirements on Water Infrastructure Finance and Innovation Act Series 2018A As the District incurs approved capital expenditures, the EPA reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 3.06% based on the amount that has been borrowed. Years ending June 30, Principal Interest Total 2021 41,340,000$ 52,851,655$ 94,191,655$ 2022 42,200,000 51,485,236 93,685,236 2023 43,570,000 49,919,686 93,489,686 2024 44,870,000 48,367,394 93,237,394 2025 46,600,000 46,719,533 93,319,533 2026-2030 233,145,000 205,311,844 438,456,844 2031-2035 253,580,000 155,537,456 409,117,456 2036-2040 298,605,000 97,894,092 396,499,092 2041-2045 230,350,000 36,332,555 266,682,555 2046-2049 45,755,000 3,867,250 49,622,250 Total 1,280,015,000$ 748,286,701$ 2,028,301,701$ Wastewater System Revenue Bonds Payable/ Water Pollution Control and Drinking Water Revenue Bonds Payable THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 49 As of June 30, 2020, the outstanding loan balance was $261,480. The payment requirements to maturity will be determined after the debt is fully issued. State Of Missouri Direct Loan Series 2019A In September 2019, the State of Missouri Direct Loan Program issued to the District an amount totaling $23,952,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the April 2016 authorization. The District’s interest rate is 0.98% and is payable in semiannual installments at varying amounts through July 1, 2042. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2019A As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 0.98% based on the amount that has been borrowed. As of June 30, 2020, the outstanding loan balance was $6,291,992. The payment requirements to maturity will be determined after the debt is fully issued. State Of Missouri Direct Loan Series 2018B In December 2018, the State of Missouri Direct Loan Program issued to the District an amount totaling $25,267,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the April 2016 authorization. The District’s interest rate is 1.38% and is payable in semiannual installments at varying amounts through January 1, 2041. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2018B As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 1.38% based on the amount that has been borrowed. As of June 30, 2020, the outstanding loan balance was $18,228,388. The payment requirements to maturity will be determined after the debt is fully issued. State Of Missouri Direct Loan Series 2016B In December 2016, the State of Missouri Direct Loan Program issued to the District an amount totaling $75,500,000 for the purpose of improving, renovating, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 50 repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through July 1, 2037. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2016B As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 1.2% based on the amount that has been borrowed. As of June 30, 2020, the outstanding loan balance was $61,285,085. After taking into consideration the $6,364,000 principal paid in fiscal 2019 and 2020, the balance to be borrowed is $7,850,915. The payment requirements to maturity will be determined after the debt is fully issued. State Of Missouri Direct Loan Series 2016A In December 2016, the State of Missouri Direct Loan Program issued to the District an amount totaling $20,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through January 1, 2037. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2016A As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 1.2% based on the amount that has been borrowed. As of June 30, 2020, the outstanding loan balance was $17,158,430. After taking into consideration the $2,119,000 paid in fiscal 2018 through 2020, the balance to be borrowed is $722,570. The payment requirements to maturity will be determined after the debt is fully issued. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 51 State Of Missouri Direct Loan Series 2015A In August 2015, the State of Missouri Direct Loan Program issued to the District an amount totaling $75,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through January 1, 2035. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2015A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2015A outstanding as of June 30, 2020 are as follows: State Of Missouri Direct Loan Series 2013A In October 2013, the State of Missouri Direct Loan Program issued to the District an amount totaling $52,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the June 2012 authorization. The District’s interest rate is 1.6% and is payable in semiannual installments at varying amounts through July 1, 2034. Years ending June 30, Principal Interest Total 2021 3,505,000$ 747,138$ 4,252,138$ 2022 3,589,000 708,588 4,297,588 2023 3,674,000 664,546 4,338,546 2024 3,762,000 619,455 4,381,455 2025 3,852,000 573,284 4,425,284 2026-2030 20,722,000 2,134,061 22,856,061 2031-2035 23,374,000 797,947 24,171,947 Total 62,478,000$ 6,245,019$ 68,723,019$ State of Missouri Direct Loan Series 2015A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 52 Principal And Interest Requirements On State Of Missouri Direct Loan Series 2013A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2013A outstanding as of June 30, 2020 are as follows: State Of Missouri Direct Loan Series 2011A In November 2011, the State of Missouri Direct Loan Program issued to the District an amount totaling $39,769,300 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.5% and is payable in semiannual installments at varying amounts through January 1, 2034. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2011A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. Years ending June 30, Principal Interest Total 2021 2,365,000$ 623,932$ 2,988,932$ 2022 2,427,000 590,178 3,017,178 2023 2,490,000 552,319 3,042,319 2024 2,555,000 513,476 3,068,476 2025 2,622,000 473,610 3,095,610 2026-2030 14,171,000 1,732,761 15,903,761 2031-2035 14,414,000 568,200 14,982,200 Total 41,044,000$ 5,054,476$ 46,098,476$ State of Missouri Direct Loan Series 2013A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 53 The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2011A outstanding as of June 30, 2020 are as follows: State Of Missouri Direct Loan Series 2010C In December 2010, the State of Missouri Direct Loan Program issued to the District an amount totaling $37,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.7% and is payable in semiannual installments at varying amounts through January 1, 2031. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2010C As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2010C outstanding as of June 30, 2020 are as follows: Years ending June 30, Principal Interest Total 2021 1,838,000$ 453,555$ 2,291,555$ 2022 1,884,000 427,778 2,311,778 2023 1,932,000 398,959 2,330,959 2024 1,982,000 369,403 2,351,403 2025 2,032,000 339,086 2,371,086 2026-2030 10,962,000 1,213,127 12,175,127 2031-2034 9,819,300 340,749 10,160,049 Total 30,449,300$ 3,542,657$ 33,991,957$ State of Missouri Direct Loan Series 2011A Years ending June 30, Principal Interest Total 2021 1,842,000$ 371,527$ 2,213,527$ 2022 1,890,000 343,192 2,233,192 2023 1,939,000 311,809 2,250,809 2024 1,989,000 279,609 2,268,609 2025 2,041,000 246,576 2,287,576 2026-2030 11,027,000 706,563 11,733,563 2031 2,383,000 29,560 2,412,560 Total 23,111,000$ 2,288,836$ 25,399,836$ State of Missouri Direct Loan Series 2010C THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 54 State Of Missouri Direct Loan Series 2010A In January 2010, the State of Missouri’s Direct Loan Program - ARRA issued to the District an amount totaling $7,980,700 for the construction, improvement, renovation, repair, replacement and equipping of its Wastewater System, under the authority of and in full compliance with the District’s Charter (“Plan”) and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.5% and is payable in semiannual installments at varying amounts through July 1, 2031. Principal And Interest Requirements On State Of Missouri Direct Loan Series 2010A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2010A outstanding as of June 30, 2020 are as follows: State Of Missouri Direct Loan Series 2009A In October 2009, the DNR loaned $23,000,000 to the District. The State of Missouri Direct Loan Series 2009A note bears interest at a rate of 1.5% per annum and is payable through January 1, 2030. The purpose of this note was to finance the designing, constructing, improving, renovating, repairing, replacing and equipping of new and existing sewer facilities within the District. The principal and interest on the note are expected to be paid from future wastewater revenues and the note was issued from the August 2008 authorization. Years ending June 30, Principal Interest Total 2021 396,600$ 73,237$ 469,837$ 2022 404,600 67,817 472,417 2023 412,900 61,799 474,699 2024 421,300 55,657 476,957 2025 429,800 49,391 479,191 2026-2030 2,283,300 148,424 2,431,724 2031-2032 731,000 10,855 741,855 Total 5,079,500$ 467,180$ 5,546,680$ State of Missouri Direct Loan Series 2010A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 55 Principal And Interest Requirements On State Of Missouri Direct Loan Series 2009A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2009A outstanding as of June 30, 2020 are as follows: In accordance with the Direct Loan Series 2009A, 2010A, 2010C, 2011A, 2013A, 2015A, 2016A, 2016B, 2018B and 2019A ordinances, the District’s annual net operating revenues from wastewater activities, as defined in the agreement, coupled with investments earnings must be at least 115% of the current year’s principal and interest due on all bonds. At June 30, 2020 and 2019, the District was in compliance with this covenant. Wastewater System Cash And Investments The following accounts have been established in accordance with bond ordinances and financing agreements that require receipts generated from operations be segregated and certain reserve accounts be established: Revenue Fund The Revenue Fund will be used for the purpose of depositing wastewater and stormwater operating revenues, providing funds to pay for expenses related to the operation and maintenance of the District, and fulfilling Sinking Fund requirements in accordance with the bond ordinances. Sinking Fund The bond ordinances provide for deposits to and the use of monies in the Sinking Fund to be used for the sole purpose of principal and interest payments on the bonds. Sufficient monies shall be paid in periodic installments from the Revenue Fund. Years ending June 30, Principal Interest Total 2021 1,176,500$ 184,760$ 1,361,260$ 2022 1,203,700 169,251 1,372,951 2023 1,231,600 151,575 1,383,175 2024 1,260,000 133,491 1,393,491 2025 1,289,200 114,989 1,404,189 2026-2030 6,907,200 282,078 7,189,278 Total 13,068,200$ 1,036,144$ 14,104,344$ State of Missouri Direct Loan Series 2009A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 56 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 2010B, 2011B, 2012A, 2012B and 2013B bonds, monies in the Debt Service Reserve Fund shall be disbursed and expended by the District solely for the payment of the principal and interest on the bonds and notes to the extent of any deficiency in the Debt Service Fund for such purpose. The District may disburse and expend monies from the Debt Service Reserve Fund for such purpose immediately. As of June 30, 2020 and 2019, cash and investments in the Debt Service Reserve Fund totaled $25,000,722 and $50,460,508, respectively. Series 2015B was issued without a debt service reserve fund requirement and at that time $8,945,557 in excess debt service reserves along with part of the Series 2015B proceeds were used to advance refund Series 2006C and Series 2008A bonds. Series 2016C was issued without a debt service reserve fund requirement. Series 2017A was issued without a debt service reserve fund requirement and at that time $934,325 in excess debt service reserves along with part of the Series 2017A proceeds were used to partially advance refund Series 2011B, Series 2012A, Series 2013B and Series 2015B. Series 2018A was issued without a debt service reserve fund requirement. Series 2019B was issued without a debt service reserve fund requirement. Series 2019C was issued without a debt service reserve fund requirement and at that time $26,045,142 in excess debt service reserves along with the Series 2019C proceeds were used to partially advance refund Series 2012A, Series 2012B, Series 2013B and Series 2015B. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 57 Special Participant Bond Reserve Account For the Series 2004B, 2005A, 2006A, 2006B, and 2008A/B bonds, the DNR deposited into the Special Participant Bond Reserve Account, amounts in accordance with the bond ordinances, which shall be disbursed and expensed by the District solely for the payment of the principal and interest on the Participant Bonds to the extent of any deficiency in the Sinking Fund for such purpose. At June 30, 2020 and 2019, cash and investments in the Special Participant Bond Reserve Account held on behalf of the District totaled $67,598,530 and $77,260,600, respectively. Monies in this account are not considered to be District funds. However, interest earnings on this account are used by the District to reduce interest payments on the bonds outstanding. Renewal And Extension Fund All sums accumulated and retained in the Renewal and Extension Fund shall be first used to prevent default in the payment of principal and interest on the bonds when due and shall then be applied by the District for purposes pursuant to the trust indenture. No monies have been deposited into this account at June 30, 2020. Project Fund The Project Funds for all bond issuances outstanding will be used for the purpose of providing monies to pay project costs. The proceeds from the bonds and notes, after a deposit into the Debt Service Reserve Fund for the amounts required pursuant to the bond ordinances and note agreements of Series 2010B, 2011B, 2012A, 2012B and 2013B bonds, shall be deposited into the Project Fund. At June 30, 2020 and 2019, cash and investments in the Project Funds totaled $60,765,125 and $126,410,864, 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, 2020 and 2019, cash and investments in the Rebate Fund totaled $229,909 and $229,164, respectively. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 58 Administrative Fee Fund The Administrative Fee Fund will be used for the payment of the Trustee’s fees and other administrative fees pursuant to the note agreement. The Trustee has the ability to immediately withdraw the fee amounts when due. Monies held in this account shall not be invested. Pledged Revenues The District pledges revenues to ensure the repayment of all outstanding revenue bonds. These bonds’ proceeds are used for the District’s capital improvement and replacement program and their repayment comes from, and is collateralized by, the District’s wastewater revenues. These revenues are pledged through 2049 at an approximate amount of $2.0 billion. The proportion of future pledged revenues to future wastewater revenues is not estimable as annual total revenues fluctuate. Principal and interest paid out during fiscal year 2020 was $112.5 million with pledged revenues of $276.3 million. This provided a coverage ratio of 2.5 and pledged revenues represented 63.1% of all net operating revenues. Direct Borrowings and Direct Placements The District did not have any bonds and notes from direct borrowings or direct placements in the fiscal years ending June 30, 2020 and 2019. In addition, the District had no unused lines of credit and had no assets pledged as collateral for notes from direct borrowings and direct placements in the fiscal years ending June 30, 2020 and 2019. The District has authorized the issuance of Wastewater System Refunding Revenue Bonds, Series 2021A, Series 2022A, Series 2023A, and Series 2025A, to be issued on May 3, 2021; May 3, 2022; May 1, 2023; and May 1, 2025, respectively. The par amount of the bonds will total $202,065,000 and the bonds will be purchased by Morgan Stanley Municipal Funding, Inc. pursuant to the Amended and Restated Forward Delivery Bond Purchase Agreement dated March 23, 2020. Upon issuance, the District plans to use the proceeds of the bonds to refund a portion of the outstanding Wastewater System Revenue Bonds, Series 2011B, Series 2012B, Series 2013B, and Series 2015B. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 59 7. Pension Plan General Information About The Pension Plan Pension Plan Description. The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Pension Plan”) is a noncontributory single employer defined benefit plan providing retirement benefits as well as death and disability benefits. As a condition of employment, all full-time employees of the District commencing service prior to January 1, 2011, were eligible to be covered by the Pension Plan. As of January 1, 2011, the Pension Plan was frozen to new employees. Instead, new employees of the District may participate in The Metropolitan St. Louis Sewer District Defined Contribution Plan (“DC Plan”) and/or The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust. Current employees with less than ten years of service on January 1, 2011 could also voluntarily elect to transfer from the Pension Plan and enter the DC Plan. Benefits Provided. All benefits vest after five years of credited service. Members retiring at or after age 65 with five or more years credited service are entitled to a pension benefit. The Pension Plan permits early retirement with reduced benefits beginning at age 55 if the member has completed five years of employment. Ordinance No. 10664 provides for unreduced retirement benefits to any member whose combined age and term of service is equal to 75. Effective August 1, 2004, Ordinance No. 11781 amended the Pension Plan to change the benefit formula to 1.7% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings multiplied by the period of years and months of credited service not to exceed 35 years without including accrued sick leave. For vested employees who retire or die while in active service, sick leave is paid out at 1.25% per year of service multiplied by the amount of the unused accrued sick leave remaining at the employee’s current rate of pay, up to a maximum of $50,000. Also, the Pension Plan was amended to provide the retiring member with a 10% partial lump sum payment option. The balance of the distribution will be paid in accordance with any one of the other payment options available under the Pension Plan. The retirement benefit payable to a member who retires after the normal retirement date is the greater of a) the benefit that would have been payable on the normal retirement date plus a special annual retirement benefit provided by the accumulated value, at 4% per annum interest, of the monthly benefit that would have been received prior to the postponed retirement date or b) the benefit determined as of the postponed retirement date under the normal formula. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 60 Effective August 27, 2011, Ordinance No. 13288 amended the Pension Plan to include the following: “Upon termination or complete discontinuance of contributions under the Plan, the rights of all Members to benefits accrued to the date of such termination or discontinuance shall be non-forfeitable, to the extent then funded.” Amounts in participants’ accounts are distributed upon retirement, death, disability, or termination of employment. The normal form of retirement benefit is either a lump sum payment or equal monthly installments. The Pension Plan reports financial data on a calendar year basis and issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103- 2555. Employees Covered by Benefit Terms. At December 31, 2019 and 2018, the financial reporting period of the Pension Plan, the following employees were covered by the benefit terms: Required Employer Contributions. The District’s employees do not contribute to the Pension Plan. Ordinances establishing the Pension Plan provide for actuarially determined annual contributions, paid solely by the District, that are sufficient to pay benefits when due. The Entry Age Normal actuarial funding method is used to determine contributions. Contributions of $13,062,014 and $12,609,689, excluding certain professional fees paid by the District, were made to the Pension Plan during the District’s fiscal years ended June 30, 2020 and 2019, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations performed at December 31, 2019 and 2018, respectively. Increase 2019 2018 (Decrease) Active plan members 493 545 (52) Retirees and beneficiaries currently receiving benefits 771 748 23 Terminated members entitled to receive benefits 180 181 (1) Total 1,444 1,474 (30) For the Years Ended December 31, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 61 Net Pension Liability The net pension liability was measured as of December 31, 2019 and 2018 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total pension liability in the December 31, 2019 and 2018 actuarial valuations were determined using the following actuarial assumptions, applied to all periods included in the measurement: Effective December 31, 2019, for current employees, healthy retirees, disabled retirees and contingent survivors, mortality rates were based on the Pub-2010 General Amount-Weighted Mortality Tables, male and female rates, with generational projection from 2010 using MP-2019 improvement scale (improvement scale updates published annually). Mortality rates for the December 31, 2018 valuation for current employees were based on the RP-2014 Employees Mortality Table, male and female rates, with generational projection from 2006 based on the MP-2018 improvement scale. For retirees, the RP-2014 Healthy Annuitant Mortality Table, male and female rates, with generational projection from 2006 based on the MP-2018 improvement scale was assumed for the December 31, 2018 valuation. For disabled lives, the RP-2014 Disabled Mortality Table, male and female rates, was utilized for the December 31, 2018 valuation. The actuarial assumptions are based on prior and current year experiences. Inflation 2.50 percent Salary Increases 4.25 percent, average, including inflation Investment Rate of Return 6.75 and 6.90 percent, net of pension plan investment expense, including inflation for December 31, 2019 and 2018, respectively THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 62 Long-Term Expected Rate of Return. The long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions at December 31, 2019 and 2018 are as follows: Discount Rate. The discount rate used to measure the total pension liability at December 31, 2019 and 2018, was 6.75 and 6.90 percent, respectively. The Pension Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. Long-Term Expected Arithmetic Target Real Rate Asset Class Allocation of Return Domestic Fixed Income 27.0% ** Large Cap US Equity 25.0% 4.2% Developed International Equity 12.0% 5.0% Real Estate 12.0% 3.4% Small Cap US Equity 10.0% 4.7% Global Fixed Income 8.0% 2.9% Emerging Markets Equity 6.0% 5.6% Total 100.0% ** Expected to earn less than inflation December 31, 2019 Long-Term Expected Arithmetic Target Real Rate Asset Class Allocation of Return Domestic Fixed Income 27.0% 1.2% Large Cap US Equity 25.0% 4.0% Developed International Equity 12.0% 5.0% Real Estate 12.0% 3.0% Small Cap US Equity 10.0% 4.5% Global Fixed Income 8.0% 4.3% Emerging Markets Equity 6.0% 5.7% Total 100.0% December 31, 2018 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 63 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a)(b)(a) - (b) Balances as of December 31, 2018 334,957,313$ 260,560,576$ 74,396,737$ Changes for the year: Service cost 4,902,474 — 4,902,474 Interest 22,818,417 — 22,818,417 Effect of economic/demographic gains or losses (1,966,640)— (1,966,640) Effect of assumptions changes or inputs 11,910,886 — 11,910,886 Benefit payments (18,626,890) (18,626,890)— Employer contributions — 12,725,462 (12,725,462) Net investment income — 41,543,499 (41,543,499) Balances as of December 31, 2019 353,995,560$ 296,202,647$ 57,792,913$ Changes in Net Pension Liability for the Year Ending December 31, 2019 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a)(b)(a) - (b) Balances as of December 31, 2017 326,365,153$ 277,976,215$ 48,388,938$ Changes for the year: Service cost 5,238,812 — 5,238,812 Interest 22,306,950 — 22,306,950 Effect of economic/demographic gains or losses (2,041,843)— (2,041,843) Effect of assumptions changes or inputs — — — Benefit payments (16,911,759) (16,911,759)— Employer contributions — 12,493,916 (12,493,916) Net investment income — (12,997,796) 12,997,796 Balances as of December 31, 2018 334,957,313$ 260,560,576$ 74,396,737$ Changes in Net Pension Liability for the Year Ending December 31, 2018 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 64 Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability calculated using the 6.75 and 6.90 percent discount rate for December 31, 2019 and December 31, 2018, respectively, as well as what the District’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate for each year: Pension Plan Fiduciary Net Position. Fiduciary net position is the fair value of all plan assets. Net pension liability is the plan’s total pension liability less its fiduciary net position, i.e., the plan’s unfunded accrued liability. Pension Expense And Deferred Outflows Of Resources And Deferred Inflows Of Resources Related To Pensions For the years ended June 30, 2020 and 2019, the District recognized pension expense of $17,831,390 and $19,988,206, respectively, after accounting for all deferred outflows and inflows of resources. The District reported pension-related deferred outflows of resources and deferred inflows of resources from the following sources: 1% Current 1% Decrease Discount Rate Increase (5.75%) (6.75%) (7.75%) Net Pension Liability 97,289,377$ 57,792,913$ 24,254,799$ December 31, 2019 1% Current 1% Decrease Discount Rate Increase (5.90%) (6.90%) (7.90%) Net Pension Liability 111,394,809$ 74,396,737$ 42,914,274$ December 31, 2018 Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Differences between expected and actual experience —$ 3,031,605$ —$ 4,341,116$ Changes of assumptions 8,540,488 — 3,895,543 — Net difference between projected and actual earnings — 4,118,093 23,546,115 — Contributions made subsequent to measurement date 7,133,164 — 6,796,612 — Total 15,673,652$ 7,149,698$ 34,238,270$ 4,341,116$ June 30, 2020 June 30, 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 65 In the years ending June 30, 2020 and 2019, amounts currently reported as deferred outflows of resources, $7,133,164 and $6,796,612, respectively, related to the District’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the years ended June 30, 2021 and 2020, respectively. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Payable To The Pension Plan At June 30, 2020 and 2019, the District did not have outstanding required contributions to the pension plan. 8. Other Retirement Plans Deferred Compensation Plan and Trust The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust (“Plan”), available to all District employees, permits them to defer a portion of their salary up to Internal Revenue Code limits. The District does not contribute to the Plan except where mandated by the Internal Revenue Service to compensate participants for lost deferral contributions. The deferred compensation is not available to employees until termination, retirement, death, disability or due to financial hardship as defined by the Plan. At June 30, 2020 and 2019, the District had outstanding liabilities owed to the Plan of $150,307 and $124,996, respectively. Net Deferrals of Resources Year ended June 30,: 2021 2,380,384$ 2022 2,143,301 2023 1,630,533 2024 (4,763,428) 1,390,790$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 66 The Plan was amended and restated to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (“Act”). The Act made significant changes to Section 457(b) of the Internal Revenue Code of 1986, as previously amended. The Plan assets are held in trust for the exclusive benefit of participants and their beneficiaries under Section 1448 of the Small Business Job Protection Act of 1996. As a result, the assets and liabilities of the Plan are not included in the accompanying financial statements. The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust issues a publicly available financial report that includes financial statements and supplementary information. That report may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103- 2555. Defined Contribution Plan The Metropolitan St. Louis Sewer District Defined Contribution Plan (“DC Plan”) was established by the District’s Board of Trustees, through Ordinance 13180, which became effective January 1, 2011. The following full time employees are eligible to participate in the DC Plan: (i) employees first hired on or after January 1, 2011, and (ii) employees hired prior to January 1, 2011 who elected to terminate participation in The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Pension Plan”), effective as of April 1, 2011, in accordance with the provisions of such Pension Plan, and (iii) employees rehired on or after January 1, 2011 who are not eligible to accrue benefits under the Pension Plan. An employee shall become a participant in the DC Plan on the first day on which he or she performs an hour of service for the District. The District’s Board of Trustees, primarily to improve benefits to members, amends the DC Plan in all its respects. A pension committee consisting of two members of the District’s Board of Trustees, two elected employee members and four members of the District’s management staff administer the DC Plan. A committee of the District’s Board of Trustees, with the aid of an investment advisor, reviews and evaluates the DC Plan’s investment options and the related rates of return on a periodic basis. This DC Plan is intended to provide a means whereby the District may provide retirement benefits to eligible employees and encourage such employees to establish a regular method of savings, thereby providing a measure of financial security for such employees and their beneficiaries upon retirement or in the event of death or disability. All assets of the DC Plan are the sole property of the DC Plan and are not subject to the claims of creditors of the District and the assets and liabilities of the DC Plan are not included in the accompanying financial statements. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 67 Employer Basic Contributions: For each payroll period, the District contributes an amount equal to 7% of the covered compensation earned during such period by each participant entitled to an allocation of such contribution. Upon a participant’s severance from service, the unvested amount credited to his/her individual account shall be forfeited and credited to the Employer Basic Contributions account and shall be used to reduce future Employer Basic Contributions. If a participant is rehired before incurring two consecutive years break in service, the amount previously forfeited will be restored. If rehired after two consecutive years of break in service, the amounts previously forfeited will not be restored. Employer Matching Contributions: For each payroll period, the District contributes an amount equal to 50% of the covered compensation of such participant withholding as an annual deferral (as defined in The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust) pursuant to The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust; provided that, before-tax contributions in excess of 4% of the covered compensation of the participant for the payroll period shall not be considered for purposes of Employer Matching Contributions. Employer Matching Contributions shall be up to the maximum amount of compensation that may be taken into account for the DC Plan year and the amount credited to the participant’s Employer Matching Contributions Account shall be fully vested at all times. In no event shall the sum of the employer contributions and employee contributions allocated to the account of a participant for the DC Plan year exceed the lesser of: (a) The amount specified in the applicable Internal Revenue Code, as adjusted annually for any applicable increases in the cost of living; (b) 100% of the participant’s compensation for such year. The compensation limit referred to in (b) shall not apply to any contribution from medical benefits after separation from service. The District’s contributions to the DC Plan amounted to $2,483,566 and $2,069,859 for the years ended June 30, 2020 and 2019, respectively. Forfeitures were $61,807 and $46,347, for the years ended June 30, 2020 and 2019, respectively, and the balances in the prepaid forfeitures account as of June 30, 2020 and 2019 were $4,073 and $13, respectively. At June 30, 2020 and 2019, the District had outstanding liabilities owed to the DC Plan of $81,163 and $56,997, respectively. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 68 Vesting: As of any time before the normal retirement age of a participant, the first day of the month coinciding with or next following a person’s sixty-fifth birthday and completion of sixty months of continuous service (other than upon death or permanent disability), the vested percentage of the amounts credited to the participant’s Employer Basic Contributions account shall be determined in accordance with the following schedule: The Metropolitan St. Louis Sewer District Defined Contribution Plan issues a publicly available financial report that includes financial statements and supplementary information. That report may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103- 2555. 9. Postemployment Benefits Other Than Pensions (“OPEB”) General Information About The OPEB Plan Plan Description. The District’s defined benefit OPEB plan, The Metropolitan St. Louis Sewer District Retiree Medical Coverage Plan (“Plan”), provides OPEB for all permanent full-time employees who retire from the District on or after age 62 with five years of service or whose age plus years of service equal 75 points (“Rule of 75”) as part of a total compensation package effective August 1, 2004 for general employees and, with respect for union members, the later of August 1, 2004 or the date of union ratification of a Memorandum of Understanding with respect to this Plan modification. The Plan is a single employer defined benefit OPEB plan administered by the District. The Plan was established by Ordinance No. 9826 and became effective January 1, 1996. This ordinance has been repealed and new ordinances enacted in lieu thereof with Ordinance No. 15109 covering defined contribution retirees and Ordinance No. 15110 covering defined benefit retirees, both of which were adopted on February 14, 2019, being the most current ordinances covering the Plan in its entirety. The District offers two medical plan options, a traditional open access plan and a high deductible health plan, and both THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 69 plans offer wellness rates for those employees who qualify. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension (“GASB Statement No. 75”). Benefits Provided. The Plan provides healthcare for qualified retirees and their dependents. The District pays the same amount of the monthly group health insurance premium for the qualified retiree as it would for an active single employee until the retiree becomes eligible for Medicare at age 65. In fiscal year 2020 and 2019 the monthly amount the District paid towards the retiree’s premium was $580.25 for retirees qualifying for the wellness incentive. The $580.25 paid by the District equates to 85% of the traditional plan’s premium and 91% of the high deductible plan’s premium. For retirees not qualifying for the wellness incentive, the District pays $547.75 of the premium which equates to 80% for the traditional plan and 86% for the high deductible plan. The retiree pays 100% of the spousal, children or family premium incremental increases in addition to the remaining 9-20% of the retiree’s total monthly premium. The Plan also provides life insurance coverage for a very small closed group of disabled former employees. The monthly premiums for both plans and coverage tiers are as follows: Total Retiree OPEB Benefit Net Cost Coverage Tier Premium Paid by District to Retiree Traditional Plan with wellness incentive Retiree 684.69$ 580.25$ 104.44$ Retiree + Spouse 1,458.58 580.25 878.33 Retiree + Child(ren)1,325.27 580.25 745.02 Retiree + Family 2,021.51 580.25 1,441.26 Traditional Plan with no wellness incentive Retiree 684.69 547.75 136.94 Retiree + Spouse 1,458.58 547.75 910.83 Retiree + Child(ren)1,325.27 547.75 777.52 Retiree + Family 2,021.51 547.75 1,473.76 High Deductible Plan with wellness incentive Retiree 637.05 580.25 56.80 Retiree + Spouse 1,357.08 580.25 776.83 Retiree + Child(ren)1,233.05 580.25 652.80 Retiree + Family 1,880.84 580.25 1,300.59 High Deductible Plan with no wellness incentive Retiree 637.05 547.75 89.30 Retiree + Spouse 1,357.08 547.75 809.33 Retiree + Child(ren)1,233.05 547.75 685.30 Retiree + Family 1,880.84 547.75 1,333.09 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 70 The ordinance establishing the Plan assigned the authority to establish and amend Plan benefit provisions to the District. The contribution requirements of the District and Plan members are established by the District and may be amended by the District. The Plan does not issue a publicly available report. Employees Covered by Benefit Terms. At June 30, 2020 and 2019, the following employees were covered by the benefit terms: Total OPEB Liability The District’s total OPEB liability, measured as of December 31, 2019 and December 31, 2018 was $23,164,618 and $24,164,395, respectively. The District’s total OPEB liabilities were determined by an actuarial valuation as of the valuation dates, June 30, 2019 and June 30, 2017, respectively, and were calculated based on the discount rate and actuarial assumptions below and were then projected forward to the measurement dates. There have been no significant changes between the valuation dates of June 30, 2019 and June 30, 2017, respectively, and the reporting fiscal year end dates of June 30, 2020 and June 30, 2019. Actuarial Assumptions and Other Inputs. The total OPEB liabilities based on the June 30, 2019 and June 30, 2017 actuarial valuations were determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: June 30, 2020 June 30, 2019 Inactive employees or beneficiaries currently receiving benefit payments 122 120 Inactive employees entitled to but not yet receiving benefit payments — — Active employees 955 935 Total 1,077 1,055 Inflation 2.50 percent Healthcare cost trend rates 6.40 percent for 2019, gradually decreasing to an ultimate rate of 3.70 percent for 2075 and beyond 5.90 percent for 2018, gradually decreasing to an ultimate rate of 4.00 percent for 2091 and beyond Salary increases 4.25 percent, average, including inflation Retiree's share of benefit- related costs 9-20 percent of projected health insurance premiums for retirees depending on plan selected (traditional or high deductible) and wellness Discount rate 2.74 percent for December 31, 2019 measurement date 4.10 percent for December 31, 2018 measurement date THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 71 The discount rate was based on the 20 Year Bond General Obligation Index. Mortality rates were based on the Pub-2010 General Amount-Weighted Mortality Tables for Employees, Healthy Retirees, Disabled Retirees and Contingent Survivors, male and female rates, with generational projection from 2010 using the MP-2019 scale for the measurement date of December 31, 2019. The rates for the measurement date December 31, 2018 were based on the RP-2014 Mortality Table for Employees and Healthy Annuitants, with generational projection using the MP-2018 scale and the RP-2014 Disabled Mortality Table, male and female rates, for Disabled Retirees. The actuarial assumptions are based on prior and current year experiences. The plan has not had a formal actuarial experience study performed. Changes in the Total OPEB Liability The Plan change reflected in the June 30, 2019 valuation is due to providing a $5,000 death benefit to defined contribution retirees. For defined benefit retirees, this benefit is paid by the Pension Plan. The economic/demographic gains reflected in the June 30, 2019 valuation are due to the repeal of the Affordable Care Act excise tax for high cost health plans and removal of the Health Insurer Fee beginning in 2021, both resulting from the Further Consolidated Appropriations Act, 2020 which became law on December 20, 2019 and a large experience gain primarily due to medical claims and premiums staying relatively level since the June 30, 2017 valuation. Changes in the Total OPEB Liability for the Years Ending Increase (Decrease) December 31, 2019 December 31, 2018 Total OPEB Liability Beginning Balance 24,164,395$ 24,193,972$ Changes for the year: Service cost 1,396,832 1,780,999 Interest on total OPEB liability 1,016,787 864,738 Effect of plan changes 85,519 — Effect of economic/demographic gains or losses (3,886,563) — Changes of assumptions or other inputs 1,926,188 (986,538) Benefit payments (1,538,540) (1,688,776) Net changes (999,777) (29,577) Total OPEB Liability Ending Balance 23,164,618$ 24,164,395$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 72 Changes of assumptions or other inputs reflect a change in the discount rate from 4.10 percent in 2018 to 2.74 percent in 2019 and the change in mortality assumptions referenced above. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate. The following presents the total OPEB liability of the District as of December 31, 2019, calculated using the discount rate of 2.74%, as well as what the District’s total OPEB liability would be if it were calculated using a discount rate that is 1- percentage-point lower (1.74%) or 1-percentage-point higher (3.74%) than the current discount rate. The following presents the total OPEB liability of the District as of December 31, 2018, calculated using the discount rate of 4.10%, as well as what the District’s total OPEB liability would be if it were calculated using a discount rate that is 1- percentage-point lower (3.10%) or 1-percentage-point higher (5.10%) than the current discount rate. Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates. The following presents the total OPEB liability of the District as of December 31, 2019, calculated using the current range of healthcare cost trend rates, as well as what the District’s total OPEB liability would be if it were calculated using the range of healthcare cost trend rates that were 1-percentage- point lower (5.40% decreasing to 2.70%) or 1-percentage-point higher (7.40% decreasing to 4.70%) than the current range of healthcare cost trend rates of 6.40% decreasing to 3.70%. 1%Current 1% Decrease Discount Rate Increase (1.74%)(2.74%) (3.74%) Total OPEB Liability 24,549,392$ 23,164,618$ 21,837,336$ December 31, 2019 1%Current 1% Decrease Discount Rate Increase (3.10%)(4.10%) (5.10%) Total OPEB Liability 25,636,528$ 24,164,395$ 22,759,445$ December 31, 2018 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 73 The following presents the total OPEB liability of the District as of December 31, 2018, calculated using the current range of healthcare cost trend rates, as well as what the District’s total OPEB liability would be if it were calculated using the range of healthcare cost trend rates that were 1-percentage-point lower (4.90% decreasing to 3.00%) or 1-percentage-point higher (6.90% decreasing to 5.00%) than the current range of healthcare cost trend rates of 5.90% decreasing to 4.00%. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the years ended June 30, 2020 and 2019, the District recognized OPEB expense of $2,266,677 and $2,586,148, respectively. At June 30, 2020 and 2019, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Current Healthcare Cost Trend 1% Decrease Rates 1% Increase (5.40% (6.40% (7.40% decreasing decreasing decreasing to 2.70%) to 3.70%) to 4.70%) Total OPEB Liability 20,892,086$ 23,164,618$ 25,844,165$ December 31, 2019 Current Healthcare Cost Trend 1% Decrease Rates 1% Increase (4.9% (5.9% (6.9% decreasing decreasing decreasing to 3.00%) to 4.00%) to 5.00%) Total OPEB Liability 21,668,741$ 24,164,395$ 27,109,050$ December 31, 2018 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 74 In the years ending June 30, 2020 and 2019, amounts currently reported as deferred outflows of resources, $769,270 and $888,795, respectively, related to the District’s benefit payments subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the years ended June 30, 2021 and 2020, respectively. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience —$ 3,543,833$ Changes of assumptions or other inputs 2,073,599 786,834 Benefit payments made subsequent to measurement date 769,270 — Total 2,842,869$ 4,330,667$ Deferred Deferred Outflows of Inflows of Resources Resources Changes of assumptions or other inputs 357,532$ 886,686$ Benefit payments made subsequent to measurement date 888,795 — Total 1,246,327$ 886,686$ June 30, 2020 June 30, 2019 Net Deferrals of Resources Year ended June 30,: 2021 (232,461)$ 2022 (232,461) 2023 (232,461) 2024 (232,461) 2025 (232,461) Thereafter (1,094,763) (2,257,068)$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 75 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, 2020 and 2019, these liabilities amounted to $4,755,168 and $7,920,684, respectively. The claims liabilities reported are based on the requirements of GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability for claims be reported if information obtained prior to the issuance of the financial statements indicates it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Changes in the balance of claims liabilities during fiscal 2020, 2019, and 2018 were as follows: The District obtains periodic funding valuations from the third-party administrators managing the self-insurance programs and adjusts the charges as required to maintain the appropriate level of estimated claims liability. The District also maintains excess liability insurance coverage for workers' compensation and medical and hospitalization claims; general liability; and water backup damage to customers’ property. The District purchases commercial insurance for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three years. 2020 2019 2018 Liability - Beginning of Year 7,920,684$ 4,026,003$ 4,461,069$ Current year claims and changes in estimates 18,916,140 19,320,396 15,939,863 Claim payments (22,081,656) (15,425,715) (16,374,929) Liability - End of Year 4,755,168$ 7,920,684$ 4,026,003$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 76 11. Closure And Post-Closure Care Costs State and federal laws and regulations require the District to place a final cover on its Prospect Hill Reclamation Project landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and post-closure care costs will be paid only near or after the date that the landfill stops accepting waste, the District reports a portion of these closure and post-closure care costs as an operating expense in each fiscal year. The $622,913 and $619,384 reported as landfill closure and post- closure care liabilities at June 30, 2020 and 2019, respectively, represent the cumulative amounts reported at fiscal year-end and represent 71.2% of the estimated closure and post-closure care costs of the landfill for fiscal years ended June 30, 2020 and 2019. These amounts are based on what it would cost to perform all closure and post-closure care in 2020 and 2019, respectively. The remaining disposal life estimate was calculated in 2009 and was estimated at eight years factoring in a future annual average disposal rate of 96,500 cubic yards. It was noted in the 2009 Black and Veatch study that this life could be extended further if the actual disposal rate is less than projected or alternative uses and off- site beneficial options for the incinerator ash are later developed. Since the actual average disposal rate has been less than 96,500 cubic yards, the landfill is not at capacity and MSD expects the landfill to be in use for another 9-11 years and the total capacity of the landfill and the available space as of 2017 was adjusted in 2017. In addition, a new survey of the landfill was performed in December of 2017 which increased the remaining capacity due to settlement and minor vehicle compaction. The District will continue to accrue the remaining estimated cost of closure and post-closure care annually. The 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 77 12. Commitments And Contingencies United States And State Of Missouri V. Metropolitan St. Louis Sewer District; In The United States District Court For The Eastern District Of Missouri; Case No. 07-1120. On April 27, 2012, the Court entered the consent decree (“CD”) involving the Environmental Protection Agency, Missouri Department of Natural Resources, Missouri Coalition for the Environment and The Metropolitan St. Louis Sewer District (“MSD”). The CD required the District to spend approximately $4.7 billion, in 2010 dollars, over a 23-year implementation period. Throughout this period improvements will be made to the District’s separate sewer system, combined sewer system, and wastewater treatment plants. On June 1, 2011, the State of Missouri approved Chapter 11, Chapter 12, and Appendix Q of the District’s Combined Sewer Overflow Long-Term Control Plan Updated Report, dated February 2011. On June 22, 2018, a United States District Judge approved an amendment to the CD to extend it by five years from a 23-year program to a 28-year program. Recent regulatory changes have compelled MSD to accelerate certain non-consent decree work. This amendment will allow MSD to meet these new regulatory requirements in a fiscally responsible way while better controlling rate increases over the coming years. The District continues to comply with the CD. Other Commitments and Contingencies The District is a defendant in various other matters of litigation. Of these matters, management and District’s legal counsel do not anticipate any material effect on the June 30, 2020 and 2019 financial statements. The District has entered into construction and other contracts amounting to approximately $521,000,000 at June 30, 2020, and through the audit report date. The District had $598,428,796 in revenue bonds authorized by the voters but unissued as of June 30, 2020. These funds were sought to enable the District to comply with federal and state clean water requirements. 13. Restricted Net Position The Statements of Net Position report $97,034,022 and $127,413,605 of restricted net position at June 30, 2020 and 2019, respectively, of which $63,177,454 and $69,150,974 are restricted due to enabling legislation, as of June 30, 2020 and 2019, respectively. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 78 14. Segment Information The District issued wastewater revenue bonds to finance wastewater infrastructure projects. The District accounts for both wastewater and stormwater activities in a single enterprise fund, but investors in those bonds rely solely on the revenue generated by the wastewater activities for repayment. Fiscal year 2020 and 2019 summary financial information for each business segment is presented below. A segment is an identifiable activity reported as a stand-alone entity for which one or more revenue bonds are outstanding. A segment has a specifically identifiable revenue stream pledged in support of the revenue bonds and has related expenses, gains and losses and assets, deferred outflows, liabilities and deferred inflows that are required by external parties to be accounted for separately. The wastewater system is the only reportable segment that meets the requirements of GASB Statement No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments. The stormwater system is reported on for informational purposes only. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 79 Financial information as of and for the years ended June 30, 2020 and 2019 of the District’s Wastewater Segment is as follows: 2020 2019 Assets Current Assets Unrestricted Current Assets Cash and cash equivalents  65,310,175$ 32,084,339$ Investments                                          251,848,341 209,097,537 Sewer service charges receivable, less allowance of                   $65,949,200 in 2020 and $61,613,442 in 2019 67,437,606 65,960,589 Unbilled sewer service charges receivable 33,342,430 31,773,363 Accrued income on investments                        1,826,954 1,869,825 Other receivables, less allowance of  $58,209 in 2020                   and $49,360 in 2019  5,168,412 5,331,693 Supplies inventory                                   8,013,597 8,306,515           Total Unrestricted Current Assets                            432,947,515 354,423,861        Restricted Current Assets Other receivables                                      48,273 115,556           Total Restricted Current Assets                            48,273 115,556           Total Current Assets                            432,995,788 354,539,417 Non-Current Assets Restricted Assets Cash and cash equivalents  22,700,689 19,561,186 Investments                                          75,085,334 133,552,809 Long-term investments                                10,850,625 45,067,528 Property taxes receivable (17,972) (18,019) Accrued income on investments                        8,088 193,262        Total Restricted Non-Current Assets                            108,626,764 198,356,766 Other Assets     Notes receivable                                     10,410,729 11,156,415 Long-term investments                                150,664,647 168,649,616             Total Other Assets                            161,075,376 179,806,031        Capital Assets     Depreciable:        Treatment and disposal plant and equipment           1,289,884,442 1,277,635,246        Collection and pumping plant                         2,308,600,323 2,092,478,890        General plant and equipment                          84,157,157 82,305,964                                                             3,682,641,922 3,452,420,100        Less:  Accumulated depreciation                      1,382,418,916 1,309,151,371        Net depreciable assets       2,300,223,006 2,143,268,729            Non-depreciable:        Land                                                 70,404,826 66,853,796        Construction in progress                             981,883,959 931,353,208           Net Capital Assets                                3,352,511,791 3,141,475,733                    Total Non-Current Assets                         3,622,213,931 3,519,638,530                         Total Assets                               4,055,209,719 3,874,177,947 Deferred Outflows of Resources:        Bonds and notes payable-Deferred loss on refunding                          5,888,796 11,342,745        Pension-related outflows                                              13,677,832 28,929,459        OPEB-related outflows                                              2,451,365 1,075,940                  Total Deferred Outflows of Resources                        22,017,993 41,348,144 WASTEWATER SEGMENT STATEMENTS OF NET POSITION June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 80 2020 2019 Liabilities Current Liabilities-Payable From Unrestricted Assets Contracts and accounts payable  36,287,980$ 36,091,535$ Deposits and accrued expenses 32,216,981 35,444,449 Retainage payable  16,728,922 15,855,232 Current portion of bonds and notes payable  56,629,100 52,603,763 Total Current Liabilities-Payable From Unrestricted Assets 141,862,983 139,994,979 Current Liabilities-Payable From Restricted Assets Retainage payable  — 237,442 Total Current Liabilities-Payable From Restricted Assets — 237,442             Total Current Liabilities                        141,862,983 140,232,421        Non-Current Liabilities Deposits and accrued expenses 7,559,792 7,352,522 Net pension liability 48,934,083 63,238,325 Total OPEB liability 19,985,093 20,846,404 Bonds and notes payable  1,633,705,811 1,617,916,402             Total Non-Current Liabilities                       1,710,184,779 1,709,353,653                         Total Liabilities                               1,852,047,762 1,849,586,074 Deferred Inflows of Resources:     Bonds and Notes payable - Deferred gain on refunding 1,393,209 —        Pension-related inflows                                              6,863,696 3,702,250        OPEB-related inflows                                              3,710,324 743,324                  Total Deferred Inflows of Resources                         11,967,229 4,445,574 Net Position Net investment in capital assets 1,690,960,722 1,574,725,932 Restricted for:       Debt service                                       33,856,568 58,262,631       Subdistrict construction and improvement           1,965,621 1,991,530 Unrestricted 486,429,810 426,514,350                  Total Net Position               2,213,212,721$ 2,061,494,443$   June 30, WASTEWATER SEGMENT STATEMENTS OF NET POSITION (Continued) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 81 2020 2019   Operating Revenues     Sewer service charges                                   430,399,893$ 399,932,002$     Recovery of (provision for) doubtful sewer service charge accounts (5,623,090) (4,360,646)     Licenses, permits, and other fees                        3,012,368 3,063,458     Other                                                   10,192,865 2,474,310     Total Operating Revenues                              437,982,036 401,109,124          Operating Expenses     Pumping and treatment                                   62,030,454 63,197,081     Collection system maintenance                           34,416,498 29,309,082     Engineering                                             937,892 1,153,099     General and administrative                              64,650,994 65,630,150     Water backup claims                                     4,653,281 5,435,759     Depreciation                                            77,279,885 73,522,926     Asset management                                               13,998,739 12,790,959     Total Operating Expenses                              257,967,743 251,039,056          Operating Income                    180,014,293 150,070,068          Non-Operating Revenues     Property taxes levied by the District                   47 (1,857)     Investment income                                       14,210,947 14,438,669     Rent and other income                                   301,631 301,446     Total Non-Operating Revenues                          14,512,625 14,738,258          Non-Operating Expenses     Net loss on disposal and sale of capital assets         781,346 869,490     Non-recurring projects and studies                       8,887,933 14,095,510     Interest expense                                        36,119,362 33,082,384     Total Non-Operating Expenses                          45,788,641 48,047,384          Income Before Capital Grants And Contributions                       148,738,277 116,760,942          Capital Grants And Contributions     Capital assets contributed                               3,081,055 9,924,920     Grant revenue                                           (101,054) 742,451     Total Capital Grants And Contributions                          2,980,001 10,667,371   Change In Net Position 151,718,278 127,428,313   Net Position - Beginning Of Year 2,061,494,443 1,934,066,130   Net Position - End Of Year                                    2,213,212,721$ 2,061,494,443$ WASTEWATER SEGMENT STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For The Years Ended June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 82 2020 2019 Cash Flows From Operating Activities Received from customers 428,641,239$ 394,747,976$ Paid to employees for services (104,218,386) (101,374,404) Paid to suppliers for goods and services (77,739,887) (79,155,315) Net Cash Provided By Operating Activities 246,682,966 214,218,257 Cash Flows Provided By Non-Capital Financing Activities Taxes levied and collected 37,227 3,942 Cash Flows From Capital And Related Financing Activities Proceeds from capital grants 1,099,045 130,670 Proceeds from issuance of debt 97,928,346 35,149,238 Premium on sale of bonds 12,059,976 — Principal paid on debt (52,603,763) (50,942,662) Interest and fees paid on debt (88,654,756) (65,117,717) Payments for capital assets (265,681,966) (221,248,644) Proceeds from sale of capital assets 83,130 279,867 Build America Bond tax credit 1,636,759 1,630,662 Net Cash (Used In) Capital And Related Financing Activities (294,133,229) (300,118,586) Cash Flows From Investing Activities Purchase of investments (526,749,101) (551,116,152) Proceeds from sale and maturity of investments 600,558,868 647,477,312 Investment income 9,727,441 9,214,193 Proceeds from rents 241,167 229,231 Net Cash Provided By Investing Activities 83,778,375 105,804,584 Net Increase In Cash And Cash Equivalents 36,365,339 19,908,197 Cash And Cash Equivalents At Beginning Of Year 51,645,525 31,737,328 Cash And Cash Equivalents At End Of Year 88,010,864$ 51,645,525$ Ended June 30, WASTEWATER SEGMENT STATEMENTS OF CASH FLOWS For The Years THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 83 Financial information as of and for the years ended June 30, 2020 and 2019 of the District’s Stormwater Segment is as follows: 2020 2019 Assets Current Assets Unrestricted Current Assets Cash and cash equivalents  2,492,697$ 1,218,671$ Investments                                           12,474,187 10,538,548 Sewer service charges receivable, less allowance of                   $111,954 in 2020 and $126,120 in 2019 60,927 72,188 Unbilled sewer service charges receivable — (227) Property taxes receivable, less allowance of $8,604 in 2020          and $9,806 in 2019 421,059 479,914 Accrued income on investments                        64,080 57,979        Total Unrestricted Current Assets                            15,512,950 12,367,073        Restricted Current Assets Cash and cash equivalents 3,580,818 1,747,847 Investments                                           17,921,368 15,117,921        Total Restricted Current Assets                            21,502,186 16,865,768  Total Current Assets                            37,015,136 29,232,841 Non-Current Assets Restricted Assets Cash and cash equivalents  3,040,332 2,142,021 Investments                                          15,216,125 18,526,954 Long-term investments                                19,832,238 27,952,964 Property taxes receivable, less allowance of $29,497 in 2020 and $28,716 in 2019 1,407,947 1,373,743 Accrued income on investments                        367,588 343,103        Total Restricted Non-Current Assets                             39,864,230 50,338,785 Other Assets Long-term investments                                7,465,594 8,755,677             Total Other Assets                            7,465,594 8,755,677 Capital Assets     Depreciable:        Collection and pumping plant                         665,941,716 657,467,608        General plant and equipment                          16,792,580 17,012,385                                                             682,734,296 674,479,993        Less:  Accumulated depreciation                       226,327,691 216,627,959        Net depreciable assets       456,406,605 457,852,034            Non-depreciable:        Land                                                 7,928,803 7,420,788        Construction in progress                             31,041,970 24,967,857           Net Capital Assets                                495,377,378 490,240,679                    Total Non-Current Assets                         542,707,202 549,335,141                         Total Assets                               579,722,338 578,567,982        Deferred Outflows of Resources:        Pension-related outflows                                              1,995,820 5,308,811        OPEB-related outflows                                              391,504 170,387                  Total Deferred Outflows of Resources                         2,387,324 5,479,198 STORMWATER SEGMENT STATEMENTS OF NET POSITION June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 84 2020 2019 Liabilities Current Liabilities-Payable From Unrestricted Assets Contracts and accounts payable   29,732$ 6,684$ Deposits and accrued expenses  9,955,546 8,259,420 Retainage payable  7,262 — Total Current Liabilities-Payable From Unrestricted Assets 9,992,540 8,266,104 Current Liabilities-Payable From Restricted Assets Contracts and accounts payable  912,704 801,529 Retainage payable  843,548 691,203 Total Current Liabilities-Payable From Restricted Assets 1,756,252 1,492,732             Total Current Liabilities                       11,748,792 9,758,836        Non-Current Liabilities        Net pension liability                   8,858,830 11,158,412        Total OPEB liability                   3,179,525 3,317,991             Total Non-Current Liabilities                        12,038,355 14,476,403                          Total Liabilities                     23,787,147 24,235,239 Deferred Inflows of Resources:        Pension-related inflows                                              286,002 638,866        OPEB-related inflows                                         620,343 143,362                  Total Deferred Inflows of Resources                        906,345 782,228 Net Position Net investment in capital assets 493,775,710 488,793,056 Restricted for:       Subdistrict construction and improvement           61,211,833 67,159,444 Unrestricted 2,428,627 3,077,213                   Total Net Position 557,416,170$ 559,029,713$   June 30, STORMWATER SEGMENT STATEMENTS OF NET POSITION (Continued) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 85 2020 2019   Operating Revenues     Sewer service charges                                   (1,801)$ (2,852)$     Recovery of (provision for) doubtful sewer service charge accounts 11,541 11,399     Other                                                   263 3,468     Total Operating Revenues                              10,003 12,015          Operating Expenses     Collection system maintenance                            13,235,760 16,307,809     Engineering                                             10,690,194 10,293,801     General and administrative                              1,295,690 1,831,570     Water backup claims                                     — 164,660     Depreciation                                            10,353,427 10,116,917     Asset management                                               3,196,582 963,696     Total Operating Expenses                             38,771,653 39,678,453          Operating (Loss)                                         (38,761,650) (39,666,438)          Non-Operating Revenues     Property taxes levied by the District                   35,439,394 34,109,476     Investment income                                       2,048,235 2,260,484     Total Non-Operating Revenues                          37,487,629 36,369,960          Non-Operating Expenses     Net loss on disposal and sale of capital assets         180,130 101,335     Non-recurring projects and studies                       3,570,298 1,533,080     Total Non-Operating Expenses                          3,750,428 1,634,415          (Loss) Before Capital Contributions                        (5,024,449) (4,930,893)          Capital Contributions     Capital assets contributed                               3,410,906 6,710,548     Total Capital Contributions                          3,410,906 6,710,548   Change In Net Position (1,613,543) 1,779,655   Net Position - Beginning Of Year 559,029,713 557,250,058          Net Position - End Of Year                                    557,416,170$ 559,029,713$ STORMWATER SEGMENT STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For The Years Ended June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 86 2020 2019 Cash Flows From Operating Activities Received from customers 1,717,045$ 498,825$ Paid to suppliers for goods and services (30,571,361) (29,491,163) Net Cash (Used In) Operating Activities (28,854,316) (28,992,338) Cash Flows Provided By Non-Capital Financing Activities Taxes levied and collected 34,946,298 33,846,168 Cash Flows From Capital And Related Financing Activities Payments for capital assets (12,108,973) (9,979,589) Proceeds from sale of capital assets 22,098 51,479 Net Cash (Used In) Capital And Related Financing Activities (12,086,875) (9,928,110) Cash Flows From Investing Activities Purchase of investments (66,407,633) (98,474,024) Proceeds from sale and maturity of investments 75,139,517 104,946,688 Investment income 1,268,317 1,061,162 Net Cash Provided By Investing Activities 10,000,201 7,533,826 Net Increase In Cash And Cash Equivalents 4,005,308 2,459,546 Cash And Cash Equivalents At Beginning Of Year 5,108,539 2,648,993 Cash And Cash Equivalents At End Of Year 9,113,847$ 5,108,539$ Ended June 30, STORMWATER SEGMENT STATEMENTS OF CASH FLOWS For The Years THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 87 15. Tax Abatements Tax abatements, as defined by Governmental Accounting Standards Board (“GASB”) Statement No. 77, Tax Abatement Disclosures (“GASB Statement No. 77”), are agreements between a government and an individual or entity in which the government promises to forgo tax revenues and the individual or entity promises to subsequently take a specific action that contributes to economic development or otherwise benefits the government or its citizens. This Statement requires disclosure of tax abatement information about (1) a reporting government’s own tax abatement agreements and (2) those that are entered into by other governments and that reduce the reporting government’s tax revenues. Since the District does not and has not entered into tax abatement agreements directly with any individuals or entities, the following estimates are from tax abatements entered into by other governments, specifically the county and municipalities within the District’s boundary, that have reduced the District’s tax revenues. Tax Abatements Entered Into By St. Louis County and Cities Located In St. Louis County The District’s property tax revenues were reduced through four programs that are utilized by cities located in St. Louis County and the County itself. Summaries of these four programs are as follows: Enhanced Enterprise Zone: provides real property tax abatements to new or expanding businesses in certain specified geographic areas designated by local governments and certified by the Missouri Department of Economic Development. Industrial Development Bonds: finances industrial development projects for private corporations, partnerships and individuals. Land Clearance for Redevelopment Authority: assists with the redevelopment of blighted or insanitary areas for residential, recreational, commercial, industrial or public uses. Urban Redevelopment Corporations: provides real property tax abatements to encourage the redevelopment of blighted areas by an eligible city or county. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 88 The amount of the District’s tax revenues that were abated by the county and cities initiating the programs are reported in the following tables. Land Enhanced Industrial Clearance for Urban St. Louis County Enterprise Development Redevelopment Redevelopment Total Tax or City Zones Bonds Authority Corporations Abatements St Louis County —$ 155,197$ —$ 3,545$ 158,742$ Bellerive — 1,898 — — 1,898 Berkeley 398 — — — 398 Brentwood — — — 10,770 10,770 Bridgeton — 718 — 3,627 4,345 Clayton — 21,357 — 2,352 23,709 Edmundson — — — 9,723 9,723 Eureka — 320 — — 320 Ferguson — 3,756 — 614 4,370 Hazelwood 4,848 24,107 — 72,066 101,021 Kinloch — — — 26,858 26,858 Jennings — 153 — — 153 Maplewood — — — 7,092 7,092 Maryland Heights — 406 — 7,470 7,876 Normandy — — — 3,022 3,022 Overland — — — 5,165 5,165 Richmond Heights — — — 11,463 11,463 Rock Hill — — — 3,219 3,219 Sunset Hills — — — 494 494 University City — — 5,397 216 5,613 Wellston — — — 551 551 Total Tax Abatements 5,246$ 207,912$ 5,397$ 168,247$ 386,802$ For the Year Ended June 30, 2020 Land Enhanced Industrial Clearance for Urban St. Louis County Enterprise Development Redevelopment Redevelopment Total Tax or City Zones Bonds Authority Corporations Abatements St Louis County —$ 121,961$ —$ 3,176$ 125,137$ Bellerive — 7,094 — — 7,094 Brentwood — — — 7,652 7,652 Bridgeton — 768 — — 768 Clayton — 21,044 — — 21,044 Edmundson — — — 9,752 9,752 Eureka — 198 — — 198 Ferguson — 3,673 — 587 4,260 Hazelwood 2,264 947 — 40,501 43,712 Kinloch 17,022 — — 24,092 41,114 Jennings — 274 — — 274 Maplewood — — — 8,349 8,349 Maryland Heights — — — 3,818 3,818 Normandy — — — 3,008 3,008 Overland — — — 4,631 4,631 Richmond Heights — — — 4,928 4,928 Rock Hill — — — 2,658 2,658 Sunset Hills — — — 551 551 University City — — 6,827 112 6,939 Wellston — — — 505 505 Total Tax Abatements 19,286$ 155,959$ 6,827$ 114,320$ 296,392$ For the Year Ended June 30, 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 89 Tax Abatements Entered Into By St. Louis City The City of St. Louis offers a real estate tax abatement program as a development tool designed to assist developers, businesses and individuals with renovation and new construction projects. The tax abatement freezes the tax assessment in improvements to property at the pre-development level. To be eligible for tax abatement, a significant investment must be made in the property; generally either new construction on vacant land or gut rehabilitation of an existing building. The application must be made before construction begins and the usual term for tax abatement is five to ten years. The amount of the District’s tax revenues calculated at the District’s tax rates of $.1077 and $.1170 per $100 of assessed value for fiscal 2020 and 2019, respectively, that were abated by St. Louis City are reported in the following tables. Tax Increment Financing Utilized By St. Louis County, Cities Located in St. Louis County and St. Louis City Missouri’s Real Property Tax Increment Allocation Redevelopment Act enables cities to finance certain redevelopment costs with the revenue generated from (i) payments in lieu of real estate taxes, as measured by the net increase in assessed valuation resulting from redevelopment and (ii) a portion of the increase in other local tax revenue associated with new economic activity. When a tax increment financing (“TIF”) plan is adopted, real estate taxes in the redevelopment are frozen at their current level. By applying the real estate tax rate of all taxing districts Reduced Unabated Tax Abated Tax Tax St. Louis City Values Revenue Values Revenue Revenue Residential 178,760,490$ 192,525$ 35,055,120$ 37,754$ 154,771$ Commercial 292,550,470 315,077 127,193,830 136,988 178,089 Total 471,310,960$ 507,602$ 162,248,950$ 174,742$ 332,860$ For the Year Ended June 30, 2020 Reduced Unabated Tax Abated Tax Tax St. Louis City Values Revenue Values Revenue Revenue Residential 170,087,710$ 199,003$ 35,565,190$ 41,611$ 157,392$ Commercial 331,824,840 388,235 126,055,310 147,485 240,750 Total 501,912,550$ 587,238$ 161,620,500$ 189,096$ 398,142$ For the Year Ended June 30, 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 90 having taxing power within the redevelopment area to the increased assessed valuation resulting from redevelopment, a tax “increment” is produced. The real estate tax increments are referred to as payments in lieu of taxes, or “PILOTs”, and are deposited in a special allocation fund. The estimated TIF incremental values and the District’s net reduced tax revenue resulting from the TIFs adopted in St. Louis County and the cities located in the County and adopted in the City of St. Louis are as follows: In summary, the District’s total tax revenues reduced during fiscal 2020 and 2019 as a result of the programs of other governments are as follows: TIF TIF Incremental Reduced Incremental Reduced St. Louis County or City Values Tax Revenues Values Tax Revenues St. Louis County and Cities Located in St. Louis County 580,156,870$ 624,829$ 480,084,710$ 561,699$ St. Louis County PILOTs Received — (34,565) — (5,307) St. Louis City 1,308,525,243 334,873 1,308,525,243 325,396 St. Louis City PILOTs Received — (42,175) — (83,074) Total 1,888,682,113$ 882,962$ 1,788,609,953$ 798,714$ June 30, 2020 For the Years Ended June 30, 2019 Reduced Reduced St. Louis County or City Tax Revenues Tax Revenues St. Louis County and Cities Located in St. Louis County - Tax Abatements 386,802$ 296,392$ St. Louis City - Tax Abatements 332,860 398,142 St. Louis County and Cities Located in St. Louis County - TIFs 590,264 556,392 St. Louis City - TIFs 292,698 242,322 Total Reduced Tax Revenues 1,602,624$ 1,493,248$ For the Years Ended June 30, 2020 June 30, 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes To Financial Statements (Continued) Page 91 16. Subsequent Events In preparing these financial statements, the District has evaluated events and transactions for potential recognition or disclosure through October 13, 2020, the date the financial statements were available to be issued. On August 22, 2020, the IRS announced a decrease in the sequestration rate for refundable credit amounts submitted on IRS Form 8038-CP for qualified bonds from 5.9% to 5.7%. This will be effective for all refund payments processed from October 1, 2020 to September 30, 2030. Since the District participates in Build America Bonds, the District will receive 94.3% of the amount requested during its fiscal year 2021. The District received 94.1% of the amount requested during fiscal year 2020. On September 16, 2020, the State of Missouri Direct Loan Program issued to the District an amount totaling $22,000,000 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 0.80% and is payable in semiannual installments at varying amounts through July 1, 2042. As the District incurs approved capital expenditures, the DNR reimburses the District for the expenditures from the bond proceeds account. The District repays the loan at an interest rate of 0.80% based on the amount that has been borrowed. As of the date of this report, the outstanding loan balance was $163,000. The payment requirements to maturity will be determined after the debt is fully issued. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 92 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS June 30, 2020 Calendar Year Ending December 31, 2019 2018 2017 2016 2015 2014 Total Pension Liability Service cost 4,902$ 5,239$ 5,157$ 5,107$ 5,253$ 5,409$ Interest on total pension liability 22,818 22,307 22,079 20,609 20,199 19,901 Effect of plan changes — — — — — — Effect of economic/demographic gains or (losses)(1,967) (2,042) (4,729)(883) (4,577) (3,668) Effect of assumption changes or inputs 11,911 — 1,667 11,665 — 6,500 Benefit payments (18,627) (16,912) (15,858) (15,261) (14,475) (13,387) Net Change in Total Pension Liability 19,037 8,592 8,316 21,237 6,400 14,755 Total Pension Liability - Beginning 334,957 326,365 318,049 296,812 290,412 275,657 Total Pension Liability - Ending (a)353,994 334,957 326,365 318,049 296,812 290,412 Plan Fiduciary Net Position Employer contributions 12,725 12,494 12,328 10,146 10,059 10,676 Member contributions — — — — — — Investment income net of investment expenses 41,543 (12,998) 30,496 11,913 (1,888) 6,980 Benefit payments (18,627) (16,912) (15,858) (15,261) (14,475) (13,387) Administrative expenses — — — — — — Net Change in Plan Fiduciary Net Position 35,641 (17,416) 26,966 6,798 (6,304) 4,269 Plan Fiduciary Net Position - Beginning 260,560 277,976 251,010 244,212 250,516 246,247 Plan Fiduciary Net Position - Ending (b)296,201 260,560 277,976 251,010 244,212 250,516 Net Pension Liability - Ending = (a) - (b)57,793$ 74,397$ 48,389$ 67,039$ 52,600$ 39,896$ Fiduciary Net Position as a % of Total Pension Liability 83.67% 77.79% 85.17% 78.92% 82.28% 86.26% Covered Payroll 36,793$ 39,437$ 41,869$ 42,055$ 43,345$ 44,664$ Net Pension Liability as a % of Covered Payroll 157.08% 188.65% 115.57% 159.41% 121.35% 89.32% Notes to Schedule: 1. Changes of Assumptions. The actuarial discount rate and the long-term expected rate of return were both reduced to 6.75% in 2019. Both rates were changed to 6.90% in 2017 and both rates were 7.00% in 2016 and all prior years. The mortality tables utilized were changed in 2019 to the Pub-2010 General Amount-Weighted Mortality Tables and the effect is also reflected in the assumption changes. In 2016, the amount reported as change of assumptions resulted from changing to the RP-2014 Mortality for Employees and Healthy Annuitants and Disabled Mortality tables, while the 2014 change resulted primarily from adjustments to the discount rate and employee rate increases. 2. This schedule will ultimately present ten years of information when available. Schedule of Changes in Net Pension Liability and Related Ratios In (000's) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 93 REQUIRED SUPPLEMENTARY INFORMATION (Continued) SCHEDULE OF EMPLOYER CONTRIBUTIONS TO EMPLOYEES’ PENSION PLAN June 30, 2020 Schedule of Employer Contributions To Employees' Pension Plan Fiscal Year Actuarially Contribution Contribution Ending Determined Annual Deficiency Covered as a % of June 30,Contribution Contribution (Excess)Payroll Covered Payroll 2015 10,359,139$ 10,359,139$ —$ 46,584,987$ 22.24% 2016 10,096,075 10,096,075 — 44,996,070 22.44% 2017 11,236,828 11,236,828 — 43,818,487 25.64% 2018 12,411,005 12,411,005 — 42,751,918 29.03% 2019 12,609,689 12,609,689 — 38,166,848 33.04% 2020 13,062,014 13,062,014 — 37,757,169 34.59% Notes to Schedule: 1. This schedule will ultimately present ten years of information when available. 2. Valuation Date: Actuarially determined contribution rates are calculated as of January 1 of the fiscal year in which the contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method:Entry Age Normal Amortization Method:Level dollar layered, 20 year periods Asset Valuation Method:3-year smoothing period Inflation:2.50% Salary Increases:4.25%, average, including inflation Investment Rate of Return:6.75%, net of pension plan investment expense, including inflation for 2020 6.90%, net of pension plan investment expense, including inflation for 2018 and 2019 7.00%, net of pension plan investment expense, including inflation for all years prior to 2018 Mortality:In the 2020 actuarial valuation, assumed life expectancies were calculated using the Pub-2010 General Amount-Weighted Mortality Tables with generational projection based on Scale MP-2019. In the 2019, 2018 and 2017 actuarial valuations, assumed life expectancies were calculated using the RP-2014 Employee and Healthy Annuitant Mortality Table (with generational projections from 2006 based on the most current MP improvement scale which is updated annually) and the RP-2014 Disabled Mortality Table. In the 2016 and 2015 actuarial valuations, assumed life expectancies were calculated using the RP-2000 Healthy Annuitant Mortality Table and the RP-2000 Disabled Mortality Table. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 94 REQUIRED SUPPLEMENTARY INFORMATION (Continued) SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY June 30, 2020 Calendar Year Ending December 31, 2019 2018 2017 Total OPEB Liability Service cost 1,397$ 1,781$ 1,622$ Interest on total OPEB liability 1,017 865 895 Effect of plan changes 86 — — Effect of economic/demographic gains or (losses) (3,887) — — Changes of assumptions or other inputs 1,926 (987) 438 Benefit payments (1,539) (1,689) (1,600) Net change in total OPEB liability (1,000) (30) 1,355 Total OPEB Liability - Beginning 24,164 24,194 22,839 Total OPEB Liability - Ending 23,165$ 24,164$ 24,194$ Notes to Schedule: 1. Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period: 2019 2.74% 2018 4.10% 2017 3.44% 2016 3.78% 2. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 to pay related benefits. 3. This schedule will ultimately present ten years of information when available. 4. Contributions to the OPEB plan are not based on a measure of pay so accordingly, no measure of payroll is presented. In (000's) Schedule of Changes in Total OPEB Liability Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The Metropolitan St. Louis Sewer District Statistical Section This part of the District’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the District’s financial performance and well-being have changed over time .......................................... 95 – 96 Revenue Capacity These schedules contain information to help the reader assess the District’s most significant local revenue sources, the user charge ...................................................................................... 97 – 104 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 ............................................................................. 105 – 107 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 ........................................................................................... 108 – 109 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 ............................................... 110 – 112 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 95 2011 2012 2013 2014 2015 a Net Position Net investment in capital assets 1,915,233$ 1,928,200$ 1,877,692$ 1,845,394$ 1,805,453$ Restricted 94,926 106,693 111,066 142,764 142,445 Unrestricted 186,860 175,010 251,300 279,794 330,218 Total Net Position 2,197,019$ 2,209,903$ 2,240,058$ 2,267,952$ 2,278,116$ 2016 a 2017 a 2018 a 2019 a 2020 a Net Position Net investment in capital assets 1,809,386$ 1,876,249$ 1,968,740$ 2,063,519$ 2,184,736$ Restricted 136,547 135,259 129,579 127,414 97,034 Unrestricted 381,124 379,660 392,997 429,591 488,859 Total Net Position 2,327,057$ 2,391,168$ 2,491,316$ 2,620,524$ 2,770,629$ a Years 2015 to current include a change in the calculation of the net position components which is not reflected in years prior. NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (000's) Fiscal Year Fiscal Year THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 96 Non-operating Income/(Loss) Capital Change Fiscal Operating Operating Operating Revenue/ before Capital Grants and in Net Year Revenues Expenses Income/(Loss) (Expenses) Contributions Contributions Position 2011 219,444,257$ 244,503,099$ (25,058,842)$ 4,329,032$ (20,729,810)$ 10,098,552$ (10,631,258)$ 2012 225,999,720 216,307,965 9,691,755 1,370,329 11,062,084 9,658,857 20,720,941 2013 241,946,337 230,158,434 11,787,903 832,056 12,619,959 17,534,919 30,154,878 2014 265,772,853 241,297,635 24,475,218 (3,682,863) 20,792,355 7,102,480 27,894,835 2015 290,386,589 256,521,148 33,865,441 (13,074,700) 20,790,741 12,996,754 33,787,495 2016 319,857,731 273,095,705 46,762,026 (9,858,327) 36,903,699 12,036,784 48,940,483 2017 333,490,989 275,077,675 58,413,314 (3,916,119) 54,497,195 9,613,746 64,110,941 2018 368,311,477 273,765,206 94,546,271 (6,416,661) 88,129,610 26,077,674 114,207,284 2019 401,121,139 290,717,509 110,403,630 1,426,419 111,830,049 17,377,919 129,207,968 2020 437,992,039 296,739,396 141,252,643 2,461,185 143,713,828 6,390,907 150,104,735 CHANGES IN NET POSITION LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 97 OPERATING REVENUES BY SOURCE LAST TEN FISCAL YEARS Licenses, Fiscal Sewer Service Permits, and Year Charges, Net Other Fees Other 2011 214,653,310$ 2,976,253$ 1,814,694$ 219,444,257$ 2012 220,765,581 2,683,823 2,550,316 225,999,720 2013 235,980,065 2,731,497 3,234,775 241,946,337 2014 257,343,344 6,562,607 1,866,902 265,772,853 2015 282,270,193 6,656,831 1,459,565 290,386,589 2016 302,011,893 3,620,240 14,225,598 319,857,731 2017 328,359,526 4,036,362 1,095,101 333,490,989 2018 361,175,224 3,777,200 3,359,053 368,311,477 2019 395,579,903 3,063,458 2,477,778 401,121,139 2020 424,786,543 3,012,368 10,193,128 437,992,039 Total Operating Revenues THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 98 Fiscal Employment Materials and Contracted Chemical Year Costs Utilities Supplies Services Supplies 2011 84,284,762$ 14,148,746$ 11,329,023$ 44,011,352$ 1,415,826$ 2012 87,098,037 12,634,274 12,737,240 26,056,481 1,355,113 2013 91,960,314 14,534,075 12,249,397 33,670,887 1,455,725 2014 93,542,222 14,986,387 11,097,857 36,875,093 2,440,843 2015 96,759,245 16,499,964 12,651,008 41,500,864 3,964,165 2016 102,458,574 16,624,434 11,838,551 48,450,272 3,498,796 2017 106,441,619 16,783,922 12,170,738 46,502,512 3,569,449 2018 105,555,411 16,154,516 11,005,087 48,390,986 2,501,712 2019 114,570,104 16,896,093 12,446,227 52,496,518 3,667,207 2020 115,575,521 15,770,882 12,045,016 52,776,346 3,123,434 Fiscal Year Insurance Other 2011 2,557,850$ 19,901,275$ 177,648,834$ 66,854,265$ 244,503,099$ 2012 2,470,343 7,214,413 149,565,901 66,742,064 216,307,965 2013 2,696,416 3,561,780 160,128,594 70,029,840 230,158,434 2014 2,737,491 5,530,535 167,210,428 74,087,207 241,297,635 2015 2,791,622 3,713,021 177,879,889 78,641,259 256,521,148 2016 3,218,041 3,023,288 189,111,956 83,983,749 273,095,705 2017 3,293,267 5,121,777 193,883,284 81,194,391 275,077,675 2018 3,371,910 5,459,242 192,438,864 81,326,342 273,765,206 2019 3,819,449 3,182,068 207,077,666 83,639,843 290,717,509 2020 4,158,280 5,656,605 209,106,084 87,633,312 296,739,396 Note: Balances in all years have been restated to accurately reflect expenses in the appropriate category. The majority of the changes are increases to Employment Costs and Other and decreases to Materials and Supplies and Contracted Services. OPERATING EXPENSES LAST TEN FISCAL YEARS Subtotal, Expenses before Depreciation Total Operating ExpensesDepreciation THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 99 2011 2012 2013 2014 2015 Non-operating revenues Property taxes levied by the District 27,125,451$ 24,604,173$ 26,016,135$ 27,450,319$ 24,764,324$ Investment income 3,847,324 2,407,485 1,056,966 2,966,549 3,000,591 Rent and other income 442,968 294,591 293,159 302,506 37,321 Total non-operating revenues 31,415,743 27,306,249 27,366,260 30,719,374 27,802,236 Non-operating expenses Interest expense 7,971,088 16,365,309 21,062,474 25,661,127 27,138,546 Net loss on disposal and sale of capital assets 3,485,952 3,162,723 795,527 5,248,443 1,420,902 Non-recurring projects and studies 10,800,843 6,402,888 4,676,203 3,492,667 12,317,488 Legal claims 4,828,828 5,000 — — — Total non-operating expenses 27,086,711 25,935,920 26,534,204 34,402,237 40,876,936 Net non-operating revenue (expense)4,329,032$ 1,370,329$ 832,056$ (3,682,863)$ (13,074,700)$ 2016 2017 2018 2019 2020 Non-operating revenues Property taxes levied by the District 25,671,058$ 32,458,054$ 33,748,932$ 34,107,619$ 35,439,441$ Investment income 4,635,866 2,902,624 7,405,957 16,699,153 16,259,182 Rent and other income 102,865 106,562 253,799 301,446 301,631 Total non-operating revenues 30,409,789 35,467,240 41,408,688 51,108,218 52,000,254 Non-operating expenses Interest expense 28,943,200 31,250,777 36,695,083 33,082,384 36,119,362 Net loss on disposal and sale of capital assets 324,513 673,044 1,833,908 970,825 961,476 Non-recurring projects and studies 11,000,403 7,459,538 9,296,358 15,628,590 12,458,231 Total non-operating expenses 40,268,116 39,383,359 47,825,349 49,681,799 49,539,069 Net non-operating revenue (expense)(9,858,327)$ (3,916,119)$ (6,416,661)$ 1,426,419$ 2,461,185$ NON-OPERATING REVENUES AND EXPENSES LAST TEN FISCAL YEARS Fiscal Year Fiscal Year THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 100 Type of Monthly Charge Unmetered c Residential c Non-Residential Wastewater User Charge Base Charge 26.35$ 26.35$ 26.35$ Compliance Charge a Tier 1 — — 3.14 Tier 2 — — 62.61 Tier 3 — — 137.75 Tier 4 — — 203.49 Tier 5 — — 266.10 Volume Charges per Ccf b — 4.87 4.87 per room 2.89 — — per water closet 10.72 — — per bath 8.93 — — per separate shower 8.93 — — Extra Strength Surcharges a Suspended Solids ("SS") over 300 milligrams per liter — — 283.87 Biochemical Oxygen Demand ("BOD") over 300 — — 708.56 milligrams per liter Chemical Oxygen Demand ("COD") over 600 milligrams — — 354.30 per liter Notes: a Applicable only to non-residential customers, Extra Strength Surcharges priced per ton b Ccf = Hundred cubic feet c User charges for certain low income residential users will be 50 percent of the regular user charge Source: Finance Department USER CHARGE RATES As Of June 30, 2020 Metered THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 101 Fiscal Year Wastewater Charges Billed1 Wastewater Charges Collected2 Collections as a % of Wastewater Charges Billed 2011 213,503,732$ 203,520,769$ 95.32% 2012 222,425,957 217,396,623 97.74% 2013 233,882,795 233,877,875 99.99% 2014 245,555,628 241,549,548 98.37% 2015 279,555,881 275,049,684 98.39% 2016 300,803,084 299,932,808 99.71% 2017 326,663,167 322,829,334 98.83% 2018 359,628,200 351,107,233 97.63% 2019 394,518,583 386,033,225 97.85% 2020 425,147,702 419,918,978 98.77% Note: The table shows the amount of wastewater user charge revenues which were billed and collected by the District for the last ten fiscal years. 1 Wastewater Charges Billed includes wastewater user charge revenues billed and accrued for the year. 2 Wastewater Charges Collected includes wastewater user charge revenues collected for the current year and previous years billings. USER CHARGE REVENUES LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 102 2011 a 2012 2013 b 2014 2015 Residential: Single-Family/Unit 2 333.60$ 347.64$ 379.56$ 421.08$ 434.76$ Multi-Family/Unit 285.12 296.28 324.12 360.36 434.04 Commercial/Industrial: Service Charge/Unit 1 507.00 525.60 478.56 412.56 348.12 Sanitary Sewer Usage Charge per Ccf 2.02 2.11 2.28 2.50 2.82 Extra Strength Surcharges: SS over 300 milligrams per liter (price per ton)222.62 231.35 231.35 231.35 244.03 BOD over 300 milligrams per liter (price per ton)596.72 620.14 620.14 620.14 620.14 COD over 600 milligrams per liter (price per ton)298.36 310.07 310.07 310.07 310.07 2016 2017 c 2018 2019 2020 Residential: Single-Family/Unit 2 491.52$ 535.08$ 591.72$ 602.76$ 666.84$ Multi-Family/Unit 490.80 492.00 544.08 602.76 666.84 Commercial/Industrial: Service Charge/Unit 1 296.80 336.69 363.53 395.42 428.90 Sanitary Sewer Usage Charge per Ccf 3.21 3.59 3.97 4.40 4.87 Extra Strength Surcharges: SS over 300 milligrams per liter (price per ton)251.88 262.00 269.07 277.03 283.87 BOD over 300 milligrams per liter (price per ton)632.38 654.00 671.63 691.50 708.56 COD over 600 milligrams per liter (price per ton)316.19 327.00 335.82 345.76 354.30 Notes: 1 Service Charge/Unit for Commercial/Industrial is calculated by using the sum of annualized base charge and compliance charge. Starting FY 2013, MSD implemented 5-tier Compliance Charge Rate Model, so the Service Charge/Unit is based on calculated weighted average compliance charge. FY 2013, FY 2014 & FY 2015 Service Charge/Unit were adjusted to reflect the weighted average com pliance charge calculations. Prior to FY 2013, there was only one tier compliance charge. 2 Based on average usage of a typical single-family during the fiscal year listed. a Ordinance 13021, effective July 1, 2010, changed wastewater rates through FY 2012. b Ordinance 13402, effective July 1, 2012, changed wastewater rates through FY 2016. c Ordinance 14395, effective July 1, 2016, changed wastewater rates through FY 2020. Source: Finance Department SEWER USER CHARGES (COMPOSITE-ANNUAL) LAST TEN FISCAL YEARS Fiscal Year Fiscal Year THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 103 Single-Multi- Fiscal Family Family Non-Total Year Residential Residential Residential Accounts 2011 362,739 43,471 24,702 430,912 a 2012 360,354 41,648 24,568 426,570 2013 359,243 41,117 24,441 424,801 2014 358,928 40,951 24,297 424,176 2015 359,317 41,131 24,389 424,837 2016 356,926 41,585 24,001 422,512 2017 360,534 41,697 24,253 426,484 2018 360,957 41,355 24,296 426,608 2019 361,288 41,288 24,095 426,671 2020 361,545 41,365 24,066 426,976 Source: Finance Department a The number of accounts were revised as stormwater accounts were underreported. Note: Total accounts listed above are as of June 30 for each fiscal year listed. NUMBER OF CUSTOMERS BY TYPE LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 104 Customer Amount % InBev Anheuser-Busch 5,651,108$ 1.33% Washington Unversity 2,476,315 0.59% City of St. Louis 2,408,502 0.57% Sigma-Aldrich 1,660,289 0.39% Sensient Colors Inc.1,197,204 0.28% BJC Health System 1,195,080 0.28% Missouri-American Water Co.1,181,175 0.28% Jost Real Estate LLC 1,125,016 0.26% The Boeing Company 1,089,987 0.26% GKN Aerospace N America Inc.1,080,998 0.25% Subtotal (10 largest)19,065,674 4.49% Balance from other customers 405,720,869 95.51% Grand totals 424,786,543$ 100.00% Customer Amount % Anheuser-Busch 4,935,239$ 2.30% Washington University 1,268,801 0.59% Mallinckrodt 1,048,204 0.49% Cott Beverages 805,108 0.37% City of St. Louis 787,548 0.37% Zoological Gardens 710,365 0.33% Sigma-Aldrich 595,897 0.28% Boeing 593,991 0.28% BJC Health Systems 481,937 0.22% Sensient 474,099 0.22% Subtotal (10 largest)11,701,189 5.45% Balance from other customers 202,952,121 94.55% Grand totals 214,653,310$ 100.00% User Charges TEN LARGEST CUSTOMERS CURRENT YEAR AND NINE YEARS AGO Fiscal Year 2020 User Charges Fiscal Year 2011 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 105 Unamortized Fiscal Subordinate Capital Premium, Net Year Senior Subordinate Direct Loans Lease of Discount Amount Per Capita 2011 340,590,000$ 212,655,000$ 25,259,899$ 6,095,981$ 862,654$ 585,463,534$ 431$ 1.63 2012 390,880,000 200,692,500 63,727,722 3,096,139 5,805,206 664,201,567 488 1.66 2013 594,715,000 188,600,000 93,751,658 — 56,252,401 933,319,059 702 2.26 2014 740,655,000 184,075,000 116,090,820 — 82,274,845 1,123,095,665 852 2.84 2015 736,775,000 171,455,000 148,279,465 — 78,591,961 1,135,101,426 860 2.69 2016 860,460,000 158,765,000 184,141,916 — 112,035,478 1,315,402,394 997 3.71 2017 995,175,000 145,410,000 210,851,827 — 124,465,181 1,475,902,008 1,127 3.44 2018 1,167,225,000 131,810,000 227,240,106 — 166,900,626 1,693,175,732 1,297 3.83 2019 1,145,131,480 117,840,000 247,692,802 — 159,855,883 1,670,520,165 1,285 3.46 2020 1,176,786,480 103,490,000 278,193,895 — 131,864,536 1,690,334,911 1,305 3.51 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. Fiscal years 2011 through 2019 "Per Capita" and "As a Share of Personal Income (%)" were restated to conform to the caluclation used for fiscal year 2020. In FY 2012, a decision was made to discontinue considering SRF receivable amounts as liabilities. The liability is now recorded when the funds are received. Sources: Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce, and the U.S. Census Bureau Income (%) RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Total Revenue Bonds As a Share of Personal THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 106 Amount of Debt Percentage of Debt within within Governmental Unit Debt Outstanding District Boundary District Boundary City of St. Louis 74,535,000$ 74,535,000$ 100.0% St. Louis County 82,330,000 81,671,360 99.2 Municipalities 124,379,235 121,804,235 97.9 City of St. Louis School District 258,829,000 258,829,000 100.0 St. Louis County School Districts 1,461,439,770 1,444,334,330 98.8 Fire Districts 137,500,143 128,797,314 93.7 2,139,013,148$ 2,109,971,239 98.6% Total Direct Debt 1,690,334,911 Total Direct and Overlapping Debt 3,800,306,150$ Sources: City of St. Louis, Office of Comptroller St. Louis County, Department of Revenue St. Louis Public Schools, Financial/Treasurer Office Missouri Department of Education, School Finance Polled Governments Polled Fire Districts Note: Although the District comprises all of the St. Louis City and most of St. Louis County, it does not entirely match the County's boundaries. The calculation of overlapping debt is based on the percentage that a political jurisdiction's territory lies within the District's territory. These percentages are weighted against the debt outstanding thus providing the amount of debt within District Boundary. COMPUTATION OF OVERLAPPING DEBT As Of June 30, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 107 Less: Operating Expenses (excluding Non- depreciation, Net Fiscal Operating operating Gross GASB 68 & Available Year Revenues Revenues Revenues GASB 75) Revenues 2011 217,011,360$ 3,202,219$ 220,213,579$ 160,572,145$ 59,641,434$ 2012 224,882,086 2,058,300 226,940,386 135,232,302 91,708,084 2013 240,597,715 956,664 241,554,379 146,372,419 95,181,960 2014 264,422,401 2,670,333 267,092,734 153,221,914 113,870,820 2015 288,835,877 2,555,654 291,391,531 163,311,194 128,080,337 2016 318,463,297 3,894,305 322,357,602 168,258,133 154,099,469 2017 333,469,677 2,456,677 335,926,354 168,835,676 167,090,678 2018 368,292,762 6,356,029 374,648,791 163,026,313 211,622,478 2019 401,109,124 14,438,669 415,547,793 170,585,143 244,962,650 2020 437,982,036 14,210,947 452,192,983 175,848,764 276,344,219 Fiscal Coverage Year Principal Interest Total Ratio 2011 14,576,800$ 20,140,021$ 34,716,821$ 1.7 2012 16,540,200 22,517,473 39,057,673 2.3 2013 18,749,700 31,191,190 49,940,890 1.9 2014 10,037,200 34,399,261 44,436,461 2.6 2015 20,252,200 41,596,192 61,848,392 2.1 2016 29,588,000 44,171,592 73,759,592 2.1 2017 38,026,700 51,333,869 89,360,569 1.9 2018 42,716,800 57,682,698 100,399,498 2.1 2019 50,907,800 63,224,915 114,132,715 2.1 2020 52,587,600 59,932,607 112,520,207 2.5 Fiscal Coverage Year Principal Interest Total Ratio 2011 1,780,000$ 15,467,269$ 17,247,269$ 3.5 2012 1,960,000 16,488,587 18,448,587 5.0 2013 3,805,000 24,451,656 28,256,656 3.4 2014 4,060,000 30,161,408 34,221,408 3.3 2015 3,880,000 34,472,415 38,352,415 3.3 2016 10,170,000 36,211,319 46,381,319 3.3 2017 15,285,000 42,897,077 58,182,077 2.9 2018 18,365,000 49,558,285 67,923,285 3.1 2019 22,355,000 55,586,363 77,941,363 3.1 2020 23,305,000 52,355,403 75,660,403 3.7 Note: The methodology used to calculate the net available revenues and the coverage ratio was adjusted during fiscal year 2013 and all previous years were restated for comparative purposes. The 2013 change in methodology consisted of removing agency fees, previously reflected as a deduction from net available revenues, and now combining them with interest in the debt service section. Additionally, in fiscal years 2010 and 2011, the change in methodology consisted of removing the Build America Bond Tax Credit from the pledged revenue section and reapplying the credit to interest expense in the debt service section. This was made to ensure consistency with fiscal years 2012 and 2013. In fiscal year 2017 the methodology was changed to exclude GASB non-cash transactions from the debt service coverage calculation. PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Senior and Subordinate Debt Service Senior Debt Service THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 108 Per Personal Capita Total Median Fiscal Income Personal Number of Household Labor Year Populations (millions) 2 Income 2 Households 1 Income 3 City County State Force 2011 1,357,035 35,998 27,028 546,744 48,836 11.8 8.9 9.0 692,071 2012 1,360,085 40,109 29,490 546,744 51,402 9.7 6.9 7.0 672,945 2013 1,328,610 41,365 31,105 543,851 52,407 10.5 7.3 7.1 665,086 2014 1,318,610 39,593 29,728 543,991 55,573 9.6 6.9 6.6 666,200 2015 1,319,295 42,176 31,969 543,945 52,619 7.1 5.5 5.8 703,317 2016 1,319,047 42,845 32,482 542,223 53,156 5.9 4.6 4.9 718,821 2017 1,309,985 42,844 32,705 541,394 53,528 4.7 3.7 4.9 692,644 2018 1,305,352 44,248 33,897 541,832 54,821 4.3 3.3 3.5 699,882 2019 1,299,783 48,287 37,150 542,048 59,063 4.3 3.3 3.3 699,494 2020 1,294,781 48,113 37,159 544,002 59,054 12.0 8.9 7.9 677,261 Notes: 1 The number of households was taken from http://www.census.gov/quickfacts/fact/table/US-MO: 2020 figure is based on 2013-2018 data; 2019 is based on 2013-2017 data; 2018 is based on 2012-2016 data; 2017 is based on 2011-2015 data; 2016 is based on 2010-2014; 2015 is based on 2013 data; 2014 is based on 2012 data; 2011-2013 are based on 2010 census. 2 The data in fiscal years 2011-2019 were restated to conform to the calculation used for fiscal year 2020. 3 Median Household Income added to this schedule in fiscal year 2020 and all prior years updated to include this data. Sources: Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce, and Missouri Economic Resource and Information Center (MERIC) Footnotes- http://www.bea.gov/regional/reis/scb.cfm http://www.meric.mo.gov/regional-profiles/st-louis https://www.census.gov/quickfacts/fact/table/US/PST045217 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Unemployment Rate Saint Louis THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 109 Percentage Percentage Employer Employees (1)of Total Rank Employees (1)of Total Rank BJC HealthCare 29,305 5% 1 24,044 4% 1 Mercy 20,182 3% 2 9,639 2% 9 Washington University in St. Louis 17,688 3% 3 13,208 2% 4 Boeing Defense, Space & Security 14,566 2% 4 15,000 2% 2 SSM Health 13,500 2% 5 11,194 2% 5 Scott Air Force Base 13,000 2% 6 13,249 2% 3 United States Postal Service 11,727 2% 7 10,400 2% 7 Schnuck Markets Inc. 10,858 2% 8 10,985 2% 6 Archdiocese of St. Louis 9,000 2% 9 N/A N/A City of St. Louis 7,385 1% 10 N/A N/A Wal-Mart Stores Inc N/A N/A 10,300 1% 8 AT&T N/A N/A 8,847 1% 10 147,211 24% 126,866 20% Total Employment 612,393 100% 625,541 100% Notes: (1) Employees are for the St. Louis area which includes several counties not served by the District. Sources: St. Louis Business Journal's Book of Lists 2020 as of June 2020 St. Louis Business Journal's Book of Lists 2011 PRINCIPAL EMPLOYERS (ST. LOUIS METROPOLITAN AREA) CURRENT YEAR AND NINE YEARS AGO Fiscal Year 2020 Fiscal Year 2011 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 110 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Administrative 124 129 124 122 129 126 131 129 127 117 Office/Clerical 84 85 86 82 84 82 82 75 73 84 Plant Operation & Laboratory 241 244 249 252 236 226 227 222 228 231 Engineering & Technical 147 153 148 151 155 152 151 150 166 174 Sewer Construction & Maintenance 296 311 324 328 345 358 360 365 341 349 Total Employees 892 922 931 935 949 944 951 941 935 955 Notes: The total employees listed above are as of June 30 for each respective year. Source: Human Resources Department EMPLOYMENT LEVEL LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 111 Average Sewage Fiscal Treatment in Millions Year of Gallons per Day 2011 370.6 2012 300.0 2013 326.7 2014 273.8 2015 327.5 2016 335.2 2017 328.9 2018 270.1 2019 396.4 2020 367.5 Source: Operations Department AVERAGE FLOW LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 112 2011 2012 2013 2014 2015 Miles of sewers 9,843 9,738 9,578 9,563 9,531 Number of treatment plants 7 7 7 7 7 Treatment capacity (MGD) a 528 528 528 533 538 Annual engineering maximum plant capacity (millions of gallons)192,629 192,629 192,629 194,454 196,279 Amount treated annually (millions of gallons)135,269 109,518 119,253 99,945 119,547 Unused capacity (millions of gallons)57,360 83,111 73,376 94,509 76,732 Percentage of capacity utilized 70% 57% 62% 51% 61% 2016 2017 2018 2019 2020 Miles of sewers 9,700 9,400 9,400 9,400 9,400 Number of treatment plants 7 7 7 7 7 Treatment capacity (MGD) a 538 593 593 593 593 Annual engineering maximum plant capacity (millions of gallons)196,279 216,354 216,354 216,354 216,354 Amount treated annually (millions of gallons)122,366 120,033 96,534 144,754 134,502 Unused capacity (millions of gallons)73,913 96,321 119,820 71,600 81,852 Percentage of capacity utilized 62% 55% 45%67% 62% Sources: Operations Department and Engineering Department Note: a Million gallons per day. Fiscal Year Fiscal Year OPERATING AND CAPITAL INDICATORS LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 MARKET STREET, ST. LOUIS, MISSOURI 63103 WWW.MSDPROJECTCLEAR.ORG • 314-768-6260