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Home My Public Portal AboutOfficial-Statement Series 2022B $109mmNEW ISSUE Book-Entry Only Ratings S&P: AAA Moody’s: Aa1 See “RATINGS” herein $109,070,000 The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds Series 2022B Dated: Date of Delivery Due: As shown on the inside cover pages The Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B (the “Series 2022B Bonds”) will be issued by The Metropolitan St. Louis Sewer District (the “District”) to provide funds to (a) refund the Refunded Bonds (defined herein), (b) pay a portion of the costs of the Series 2022B Project (as defined herein), and (c) pay the Costs of Issuance (as defined herein) of the Series 2022B Bonds. The Series 2022B Bonds will be secured by a pledge of certain revenues of the District as further described herein under the section captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS.” As further described herein, the Series 2022B Bonds are not secured by a debt service reserve fund. The Series 2022B Bonds are issuable only as fully-registered bonds and when issued will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), New York, NY. See the section herein captioned “THE SERIES 2022B BONDS – Book-Entry Only System.” Principal of the Series 2022B Bonds is payable to the registered owners of the Series 2022B Bonds as set forth on the inside cover pages of this Official Statement. Interest on the Series 2022B Bonds is payable semiannually on May 1 and November 1 of each year, beginning on November 1, 2022. UMB Bank, N.A. is serving as Bond Registrar and Paying Agent (each as defined herein). The Series 2022B Bonds and the interest thereon are limited obligations of the District payable solely from the Pledged Revenues, as defined herein, on a parity with the District’s Outstanding Prior Senior Bonds (as defined herein). The Series 2022B Bonds and the interest thereon shall not constitute a general or moral obligation of the District nor a debt, indebtedness or obligation of, or a pledge of the faith and credit of, the District or the State of Missouri (the “State” or “Missouri”) or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. Neither the faith and credit nor the taxing power of the District, the State or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, or interest on the Series 2022B Bonds or other costs incident thereto. The District has no authority to levy any taxes to pay the Series 2022B Bonds. Neither the members of the Board of Trustees of the District nor any person executing the Series 2022B Bonds shall be personally liable on the Series 2022B Bonds by reason of the issuance thereof. The Series 2022B Bonds are subject to optional and mandatory redemption as described herein. See the section herein captioned “THE SERIES 2022B BONDS – Redemption Provisions.” Maturities, Principal Amounts, Interest Rates, Yields, Prices and CUSIP Numbers are shown on the inside cover pages. This cover page contains certain information for quick reference only and is not a summary of the issue. Investors must read this entire Official Statement, including the appendices hereto, to obtain information essential to the making of an informed investment decision. See “RISK FACTORS” herein for a discussion of certain risks and other considerations associated with an investment in the Series 2022B Bonds. The Series 2022B Bonds are offered when, as and if issued by the District and accepted by the group of Underwriters shown below (collectively, the “Underwriters”), subject to prior placement, withdrawal or modification of the offer without notice and subject to the approval of their validity by Gilmore & Bell, P.C., St. Louis, Missouri, and White Coleman & Associates, LLC, St. Louis, Missouri, Co-Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the District by its General Counsel. Armstrong Teasdale LLP, St. Louis, Missouri, Disclosure Counsel, will pass upon certain legal matters relating to this Official Statement. Certain legal matters will be passed upon for the Underwriters by their co-counsel, Thompson Coburn LLP, St. Louis, Missouri, and Richard G. Hughes & Associates, LLC, St. Louis, Missouri. It is expected that the Series 2022B Bonds will be available for delivery through the facilities of DTC in New York, NY on or about June 8, 2022. In the opinion of Gilmore & Bell, P.C. and White Coleman & Associates, LLC, Co-Bond Counsel to the District (as defined herein), under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), the interest on the Series 2022B Bonds (as defined herein) (1) is excludable from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax, and (2) is exempt from income taxation by the State of Missouri. The Series 2022B Bonds have not been designated as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. See the section herein captioned “TAX MATTERS” and the form of opinion of Co-Bond Counsel attached hereto as Appendix E. BofA Securities, Inc. Loop Capital Markets Siebert Williams Shank & Co., LLC Wells Fargo Corporate & Investment Banking RBC Capital Markets The date of this Official Statement is May 24, 2022. $109,070,000 The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds Series 2022B MATURITY SCHEDULE Series 2022B Serial Bonds Maturity (May 1) Principal Amount Interest Rate Yield Price CUSIP1 2023 $ 6,345,000 5.000% 1.850% 102.788% 592481 QK4 2024 6,285,000 5.000 2.130 105.306 592481 QL2 2025 1,650,000 5.000 2.340 107.406 592481 QM0 2026 1,730,000 5.000 2.400 109.615 592481 QN8 2027 1,820,000 5.000 2.500 111.453 592481 QP3 2028 1,910,000 5.000 2.650 112.749 592481 QQ1 2029 2,005,000 5.000 2.780 113.843 592481 QR9 2030 2,105,000 5.000 2.870 114.952 592481 QS7 2031 2,210,000 5.000 2.930 116.106 592481 QT5 2032 2,320,000 5.000 2.980 117.200 592481 QU2 2033 2,435,000 5.000 3.050c 116.547 592481 QV0 2034 2,555,000 5.000 3.090c 116.176 592481 QW8 2035 2,685,000 5.000 3.170c 115.438 592481 QX6 2036 2,820,000 5.000 3.210c 115.071 592481 QY4 2037 2,960,000 5.000 3.250c 114.706 592481 QZ1 2038 3,110,000 5.000 3.300c 114.251 592481 RA5 2039 3,265,000 5.000 3.340c 113.888 592481 RB3 2040 3,425,000 5.000 3.370c 113.618 592481 RC1 2041 3,600,000 5.000 3.380c 113.527 592481 RD9 2042 3,780,000 5.000 3.400c 113.347 592481 RE7 Series 2022B Term Bonds 2047 $ 21,930,000 5.000% 3.500%c 112.452% 592481 RF4 2052 28,125,000 5.250 3.550c 114.079 592481 RG2 _______________________________ 1CUSIP is a registered trademark of The American Bankers Association. CUSIP data is provided by CUSIP Global Services, and is included solely for the convenience of the registered owners. CUSIP Global Services is managed on behalf of The American Bankers Association by FactSet Research Systems Inc. Neither the District nor the Underwriters nor the Co-Municipal Advisors shall be responsible for the selection of CUSIP numbers nor do the District nor the Underwriters nor the Co-Municipal Advisors make any representation as to the correctness of such numbers on the Series 2022B Bonds or as indicated herein. cYield to the first optional par call date of May 1, 2032. THE METROPOLITAN ST. LOUIS SEWER DISTRICT BOARD OF TRUSTEES Michael Evans, Chair Amy Fehr, Vice Chair Brian Wahby, Member Greg Nicozisin, Member Ret. Col. Richard Wilson, Member Brian K. Watson, Member ADMINISTRATION Brian L. Hoelscher, P.E., Executive Director Tim R. Snoke, Secretary-Treasurer John Strahlman, Assistant Secretary-Treasurer Susan M. Myers, General Counsel Marion M. Gee, Director of Finance Richard Unverferth, P.E., Director of Engineering Tracey Coleman, Director of Human Resources Bret A. Berthold, P.E., Director of Operations Jonathon C. Sprague, P.E., Director of Information Systems ADVISORS AND CONSULTANTS Co-Bond Counsel Gilmore & Bell, P.C. White Coleman & Associates, LLC St. Louis, Missouri St. Louis, Missouri Co-Municipal Advisors PFM Financial Advisors LLC Independent Public Advisors, LLC Cleveland, Ohio Kansas City, Missouri Disclosure Counsel Armstrong Teasdale LLP St. Louis, Missouri Financial Feasibility Consultant Raftelis Financial Consultants, Inc. Kansas City, Missouri Co-Underwriters’ Counsel Thompson Coburn LLP Richard G. Hughes & Associates, LLC St. Louis, Missouri St. Louis, Missouri ____________________________ REGARDING USE OF THIS OFFICIAL STATEMENT ____________________________ THE SERIES 2022B BONDS HAVE NEITHER BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS ANY DOCUMENT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE DISTRICT AND THE TERMS OF THE OFFERING. THE SERIES 2022B BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with and as part of their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. No dealer, broker, salesman or other person has been authorized by the District, the Underwriters or the Co-Municipal Advisors to give any information or to make any representations with respect to the Series 2022B Bonds other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement neither constitutes an offer to sell nor the solicitation of an offer to buy nor shall there be any sale of the Series 2022B Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the District and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Co-Municipal Advisors or the Underwriters. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to its date. References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement. ____________________________ CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT ____________________________ Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “anticipate,” “project,” “budget” or other similar words. Forward-looking statements include, but are not limited to, certain statements under the section in this Official Statement captioned “RISK FACTORS” and certain statements contained in the Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B in Appendix D hereto. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE DISTRICT NOR ANY OTHER PARTY PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE BASED OCCUR EXCEPT AS DESCRIBED IN THE SECTION HEREIN CAPTIONED “CONTINUING DISCLOSURE.” i TABLE OF CONTENTS INTRODUCTION ..................................................... 1 Purpose of this Official Statement .......................................... 1 The District .............................................................................. 1 Purpose of and Authority for the Series 2022B Bonds .............................................................................. 2 Security and Sources of Payment for the Series 2022B Bonds .................................................................. 2 Other Indebtedness .................................................................. 5 Continuing Disclosure Information ........................................ 6 Additional Information ........................................................... 6 THE SERIES 2022B BONDS ................................... 7 General .................................................................................... 7 Redemption Provisions ........................................................... 7 Effect of Notice of Redemption .............................................. 9 Book-Entry Only System ........................................................ 9 Registration, Transfer and Exchange of Series 2022B Bonds ................................................................ 12 Persons Deemed Owners of Series 2022B Bonds ................ 12 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS .......................... 12 General .................................................................................. 12 Pledged Revenues ................................................................. 13 Pro Forma Statement of Pledged Revenues and Debt Service Coverage................................................. 15 Flow of Funds ....................................................................... 17 Rate Covenant ....................................................................... 20 Senior and Subordinate Bonds .............................................. 21 Other Indebtedness ................................................................ 21 PLAN OF FINANCE .............................................. 21 Purpose of and Authority for the Series 2022B Bonds ............................................................................ 21 Estimated Sources and Uses of Funds .................................. 22 DEBT SERVICE SCHEDULE ............................... 23 THE DISTRICT ...................................................... 24 General .................................................................................. 24 Organization and Management ............................................. 25 Board of Trustees .................................................................. 26 Administration ....................................................................... 26 The System ............................................................................ 28 Employees and Employee Relations ..................................... 28 Economic Conditions in the District ..................................... 29 Security .................................................................................. 29 Insurance ............................................................................... 29 THE CIRP ............................................................... 30 General .................................................................................. 30 Historical Capital Improvement Expenditures ..................... 31 Financing Plans for the CIRP ............................................... 31 Total Capital Expenditures under CIRP ............................... 32 Capital Finance Plans Contemplated Under Consent Decree ............................................................ 32 FINANCIAL OPERATIONS OF THE DISTRICT 33 General .................................................................................. 33 Budget and Appropriation Process ....................................... 34 Finance Department .............................................................. 34 Fund Structure ....................................................................... 34 Basis of Accounting .............................................................. 35 Financial Statements ............................................................. 35 Cash and Investments ............................................................ 35 MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW ................................ 36 2021 Financial Audit ............................................................. 36 2020 Financial Audit ............................................................. 38 Sewer Rates and Revenues ................................................... 39 Other Sources of Revenue ..................................................... 39 Rate Commission and Rate Setting Process ......................... 40 Billing and Collections ......................................................... 42 Rate Increases ....................................................................... 42 Historical and Projected Sewer Rates and Charges .............. 43 Customer Accounts ............................................................... 45 Largest User Charge Customers ........................................... 45 User Charge Revenues .......................................................... 46 Outstanding Indebtedness ..................................................... 46 Employee Benefits ................................................................ 48 Other Post-Employment Benefits ......................................... 49 Tax Limitation Amendment – Hancock Amendment .................................................................. 49 REGULATORY REQUIREMENTS ...................... 49 General .................................................................................. 49 Regulatory Matters – Consent Decree .................................. 50 RISK FACTORS ..................................................... 51 Factors Affecting the District ............................................... 51 Summary Financial Information ........................................... 52 Certain Bankruptcy Risks ..................................................... 52 Secondary Markets and Prices .............................................. 52 Risk of Taxability of Series 2022B Bonds ........................... 53 Risk of Audit of Series 2022B Bonds .................................. 53 Limited Obligations .............................................................. 53 Loss of Premium Upon Early Redemption .......................... 53 Potential Risks Relating to COVID-19 ................................ 53 No Debt Service Reserve Account Securing the Series 2022B Bonds ..................................................... 54 Cybersecurity Risks .............................................................. 54 Global Climate Change ......................................................... 54 LITIGATION .......................................................... 55 TAX MATTERS ..................................................... 55 Opinion of Co-Bond Counsel ............................................... 55 Other Tax Consequences ...................................................... 56 LEGAL MATTERS ................................................ 57 RATINGS ................................................................ 57 CONTINUING DISCLOSURE ............................... 57 UNDERWRITING .................................................. 58 CERTAIN RELATIONSHIPS ................................ 60 FINANCIAL FEASIBILITY CONSULTANT ....... 60 CO-MUNICIPAL ADVISORS ............................... 60 INDEPENDENT AUDITORS ................................ 60 MISCELLANEOUS ................................................ 60 APPENDIX A - Independent Auditors’ Report, Management’s Discussion and Analysis and Basic Financial Statements of The Metropolitan St. Louis Sewer District for the Fiscal Years ended June 30, 2021 and 2020 APPENDIX B - Information Regarding the District’s Service Area APPENDIX C - Definitions and Summaries of Certain Provisions of the Bond Ordinance and the Continuing Disclosure Agreement APPENDIX D - Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B APPENDIX E - Form of Opinion of Co-Bond Counsel OFFICIAL STATEMENT $109,070,000 The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds Series 2022B INTRODUCTION The following introductory information is not a summary of this Official Statement. It is only a brief description of, and is qualified by and subject in all respects to more complete and detailed information contained elsewhere in, this Official Statement, including the cover page and appendices hereto and the documents described herein. The order and placement of materials in this Official Statement, including the appendices hereto, are not to be deemed a determination of relevance, materiality or relative importance. This Official Statement, including the cover page and appendices, should be considered in its entirety. The offering of the Series 2022B Bonds to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not otherwise defined herein, including in Appendix C – “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT,” have the meanings set forth in the Bond Ordinance, as defined below. Purpose of this Official Statement The purpose of this Official Statement is to set forth certain information concerning The Metropolitan St. Louis Sewer District (the “District”), a body corporate, municipal corporation and political subdivision organized and existing under the laws of the State of Missouri (the “State” or “Missouri”), and the District’s Charter (Plan), approved by the voters of The City of St. Louis, Missouri (the “City”) and St. Louis County, Missouri (the “County”) at a special election on February 9, 1954, as amended, and approved by the voters of the City and the County at special elections on November 7, 2000, June 5, 2012, and April 6, 2021 (collectively and as amended, the “Charter”), and the $109,070,000 principal amount of Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B (the “Series 2022B Bonds”) to be issued by the District. See the sections herein captioned “THE DISTRICT” and “THE SERIES 2022B BONDS.” The District The District was created in 1954 to provide a metropolitan-wide system of wastewater treatment and sanitary sewerage facilities for the collection, treatment and disposal of sewage to serve the City and most of the more heavily populated areas of the County. 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. The District’s service area now encompasses approximately 520 square miles, including approximately all 66 square miles of the City and approximately 454 square miles (approximately 87%) of the County. The current population served by the District is approximately 1.3 million. A map of the District’s service area is included on the back cover hereof. See the sections herein captioned “THE DISTRICT,” “THE CIRP,” “FINANCIAL OPERATIONS OF THE DISTRICT,” “MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW,” and “REGULATORY REQUIREMENTS.” 2 Purpose of and Authority for the Series 2022B Bonds At a special election held on April 5, 2016, District voters approved the issuance by the District of $900,000,000 in sewer system revenue bonds (the “Current Authorization”). The Current Authorization enables the District to comply with federal and State clean water requirements. The District may use the proceeds of such sewer system revenue bonds for the purpose of designing, constructing, improving, renovating, repairing, replacing and equipping new and existing District sewer and drainage facilities and systems. At an election held on April 6, 2021, the District voters authorized the issuance by the District of $500,000,000 in sewer system revenue bonds (the “2021 Authorization”). Like with the four proceeding authorizations, the 2021 Authorization will enable the District to comply with federal and State clean water requirements. The Series 2022B Bonds are not being issued under the 2021 Authorization. The District previously issued bonds in a par amount of $546,873,204 from the Current Authorization, consisting of $152,500,000 of the Series 2017A Bonds representing a portion of the project portion of the Series 2017A Bonds, $47,722,204 of the Series 2018A Bond (each as defined herein), $25,267,000 of the District’s Subordinate Wastewater System Revenue Bonds (State of Missouri – Direct Loan Program), Series 2018B, $23,952,000 of the District’s Subordinate Wastewater System Revenue Bonds (State of Missouri – Direct Loan Program), Series 2019A, $52,130,000 of the Series 2019B Bonds (as defined herein), $22,000,000 of the District’s Subordinate Wastewater System Revenue Bonds (State of Missouri – Direct Loan Program), Series 2020A, $120,000,000 of the District’s Wastewater System Revenue Bonds, Series 2020B, $63,101,000 of the District’s Subordinate Wastewater System Revenue Bonds (State of Missouri – Direct Loan Program), Series 2021A, and $40,201,000 of the District’s Subordinate Wastewater System Revenue Bonds (State of Missouri – Direct Loan Program), Series 2021B. After the issuance of the Series 2022B Bonds, the remaining amount of the Current Authorization will be $253,126,796. No other bonds have been issued from the Current Authorization. The District will issue the Series 2022B Bonds pursuant to the Current Authorization and the Master Bond Ordinance No. 11713 (the “Master Bond Ordinance”) that was adopted by the Board of Trustees of the District (the “Board”) on April 22, 2004, as supplemented by Ordinance No. 15906 adopted on May 12, 2022 (the “2022B Ordinance”, together with the Master Bond Ordinance being collectively referred to herein as, the “Bond Ordinance”). Pursuant to the Current Authorization and the Master Bond Ordinance, as supplemented by the 2022B Ordinance, the District will issue the Series 2022B Bonds to provide funds to (a) refund the Refunded Bonds (defined herein); (b) pay a portion of the costs of the Series 2022B Project (as defined herein), and (c) pay the Costs of Issuance (as defined in Appendix C to this Official Statement) of the Series 2022B Bonds. For more information, see the sections herein captioned “THE CIRP” and “PLAN OF FINANCE - Purpose of and Authority for the Series 2022B Bonds.” A description of the Series 2022B Bonds is contained in this Official Statement under the caption “THE SERIES 2022B BONDS.” All references to the Series 2022B Bonds are qualified in their entirety by the definitive form thereof and the provisions with respect thereto in the Bond Ordinance. Security and Sources of Payment for the Series 2022B Bonds General. The Series 2022B Bonds are sewer system revenue bonds secured by and payable from certain revenues of the District received from operation of its sanitary sewer system (as further defined herein, the “System”) on a parity with the prior outstanding series of bonds (the “Prior Senior Bonds”) issued by the District as shown in the following table. 3 Name of Issue Series Designation Issue Date Original Principal Amount Outstanding Principal Amount as of May 5, 2022 Taxable Wastewater System Revenue Bonds (Build America Bonds – Direct Pay), Series 2010B (“Series 2010B Bonds”) 01/28/2010 $85,000,000 $85,000,000 Wastewater System Revenue Bonds, Series 2012A (“Series 2012A Bonds”) 08/23/2012 $225,000,000 $3,675,000 Wastewater System Refunding Revenue Bonds, Series 2012B (“Series 2012B Bonds”)** 11/14/2012 $141,730,000 $10,250,000 Wastewater System Revenue Bonds, Series 2013B (“Series 2013B Bonds”) 12/18/2013 $150,000,000 $35,470,000 Wastewater System Improvement and Refunding Revenue Bonds, Series 2015B (“Series 2015B Bonds”) 12/15/2015 $223,855,000 $162,960,000 Wastewater System Revenue Bonds, Series 2016C (“Series 2016C Bonds”) 12/20/2016 $150,000,000 $135,670,000 Wastewater System Improvement and Refunding Revenue Bonds, Series 2017A (“Series 2017A Bonds”) 12/14/2017 $316,175,000 $300,090,000 Wastewater System Revenue Bond (WIFIA - Deer Creek Sanitary Tunnel Pump Station and Sanitary Relief Project), Series 2018A (“Series 2018A Bond”) 12/18/2018 $47,722,204* $261,480 Wastewater System Revenue Bonds, Series 2019B (“Series 2019B Bonds”) 12/4/2019 $52,130,000 $50,415,000 Taxable Wastewater System Refunding Revenue Bonds, Series 2019C (“Series 2019C Bonds”) 12/4/2019 $276,260,000 $273,200,000 Wastewater System Revenue Bonds, Series 2020B (“Series 2020B Bonds”) 12/17/2020 $120,000,000 $116,160,000 Wastewater System Refunding Revenue Bonds, Series 2021C (“Series 2021C Bonds”) 5/3/2021 $5,620,000 $5,620,000 Wastewater System Refunding Revenue Bonds, Series 2022A (“Series 2022A Bonds”) 5/3/2022 $39,845,000 $39,845,000 ______________________ * The Series 2018A Bond was issued in a principal amount of not to exceed $47,722,204 of which $261,479.86 has been drawn and remains outstanding as of May 5, 2022. The District anticipates applying for a new WIFIA loan in calendar year 2022, to be drawn down over time in an amount not to exceed approximately $250 million dollars. ** Denotes Prior Senior Bonds, of which the 2023 and 2024 maturities are to be refunded by the Series 2022B Bonds. Outstanding Principal amounts are as of May 5, 2022. 4 Collectively, the Series 2022B Bonds, any Outstanding Prior Senior Bonds and any additional Bonds then Outstanding issued with a right to payment and secured by a lien on a parity therewith are referred to herein as the “Senior Bonds.” The Senior Bonds are also secured by amounts in the Renewal and Extension Fund (as defined herein). See the section herein captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS.” The District has authorized the issuance of $23,040,000 original principal amount of Wastewater System Refunding Revenue Bonds, Series 2023A (the “Series 2023A Bonds”) to be issued on May 1, 2023. The Series 2023A Bonds were purchased by Morgan Stanley Municipal Funding, Inc. pursuant to the Amended and Restated Forward Delivery Bond Purchase Agreement dated March 23, 2020. The District plans to use the proceeds of the Series 2023A Bonds to refund a portion of the Series 2013B Bonds, being those Series 2013B Bonds maturing on May 1 in the years 2030, 2033, 2034, 2035 and 2039 outstanding in the aggregate principal amount of $31,775,000 (the “Series 2013B Redeemed Bonds”). The Series 2013B Redeemed Bonds will be called for redemption at the option of the District on May 1, 2023 conditioned upon the receipt by the paying agent for the Series 2013B Bonds, on or before said redemption date, of sufficient funds to pay the redemption price of the Series 2013B Redeemed Bonds. The District has authorized the issuance of $133,560,000 original principal amount of Wastewater System Refunding Revenue Bonds, Series 2025A (the “Series 2025A Bonds”) to be issued on May 1, 2025. The Series 2025A Bonds were purchased by Morgan Stanley Municipal Funding, Inc. pursuant to the Amended and Restated Forward Delivery Bond Purchase Agreement dated March 23, 2020. The District plans to use the proceeds of the Series 2025A Bonds to refund a portion of the Series 2015B Bonds being those bonds maturing in the years 2030 through 2038, inclusive, outstanding in the aggregate principal amount of $113,945,000, and $38,860,000 principal amount of the $57,260,000 original principal amount of the Series 2015B Bonds scheduled to mature on May 1, 2045 (the “Series 2015B Redeemed Bonds”). The Series 2015B Redeemed Bonds will be called for redemption at the option of the District on May 1, 2025 conditioned upon the receipt by the paying agent for the Series 2015B Bonds, on or before said redemption date, of sufficient funds to pay the redemption price of the Series 2015B Redeemed Bonds. The District has authorized the issuance of $106,930,000 original principal amount of Wastewater System Refunding Revenue Bonds, Series 2026A (the “Series 2026A Bonds”) to be issued on May 1, 2026. The Series 2026A Bonds were purchased by Barclays Capital Inc., pursuant to the Forward Delivery Bond Purchase Agreement dated October 6, 2021. The District plans to use the proceeds of the Series 2026A Bonds to currently refund $122,100,000 of the Series 2016C Bonds (the “Series 2016C Redeemed Bonds”). All of the Series 2016C Redeemed Bonds will be called for redemption at the option of the District on May 1, 2026 conditioned upon the receipt by the paying agent for the Series 2016C Bonds, on or before said redemption date, of sufficient funds to pay the redemption price of the Series 2016C Redeemed Bonds. The Series 2022B Bonds and the interest thereon are limited obligations of the District, payable solely from the Pledged Revenues, as defined herein, on a parity with the other Senior Bonds. The Series 2022B Bonds and the interest thereon shall not constitute a general or moral obligation of the District nor a debt, indebtedness, or obligation of, or a pledge of the faith and credit of, the District, the State or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. Neither the faith and credit nor the taxing power of the District, the State, or any political subdivision thereof is pledged to the payment of the Principal of, premium, if any, or interest on the Series 2022B Bonds or other costs incident thereto. The District has no authority to levy any taxes to pay the Series 2022B Bonds. Neither the members of the Board nor any person executing the Series 2022B Bonds shall be liable personally on the Series 2022B Bonds by reason of the issuance thereof. 5 Pledged Revenues. The Series 2022B Bonds are sewer system revenue bonds secured by a pledge of certain revenues of the System, referred to herein as “Pledged Revenues.” See the sections herein captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS – Pledged Revenues” and “ – Flow of Funds” and “FINANCIAL OPERATIONS OF THE DISTRICT” for further discussion of the specific District revenues constituting Pledged Revenues under the Bond Ordinance. Renewal and Extension Fund. The Bond Ordinance establishes a Renewal and Extension Fund into which the District may deposit a portion of the Pledged Revenues. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS – Flow of Funds - Deposits to and Uses of Moneys in the Renewal and Extension Fund.” Series 2022B Bonds Not Secured by the Debt Service Reserve Account. The Bond Ordinance also establishes a Debt Service Reserve Account for the Senior Bonds, excluding any Senior SRF Bonds (as defined in Appendix C to this Official Statement) and Senior Uncovered Bonds. “Senior Uncovered Bonds” means all series of Senior Bonds, other than Senior SRF Bonds, with respect to which the District has specified pursuant to a Series Ordinance (as defined in Appendix C to this Official Statement) that such series of Senior Bonds will not be secured by the Debt Service Reserve Account. The Series 2022B Bonds are Senior Uncovered Bonds and therefore are not secured by the Debt Service Reserve Account. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS − Flow of Funds − Deposits to and Uses of Moneys in the Debt Service Reserve Account.” Additional Bonds. The Bond Ordinance authorizes the District to issue additional Bonds thereunder which may be either “Senior Bonds” or “Subordinate Bonds,” subject to certain requirements of the Bond Ordinance. The Bond Ordinance defines “Senior Bonds” as Bonds that have a right to payment and are secured by a lien on a parity with the Outstanding Senior Bonds and any additional Bonds issued on a parity (except with respect to any Credit Facility which may be available only to one or more series of Senior Bonds and except that Senior SRF Bonds and Senior Uncovered Bonds are not secured by the Debt Service Reserve Account) with respect to the Pledged Revenues. The Master Bond Ordinance defines “Subordinate Bonds” as Bonds, including Subordinate SRF Bonds (as defined in Appendix C to this Official Statement), issued with a right to payment from the Pledged Revenues and secured by a lien on the Pledged Revenues expressly junior and subordinate to the Senior Bonds. The Series 2022B Bonds and any other Senior Bonds or Subordinate Bonds issued by the District previously or in the future under the Master Bond Ordinance are referred to herein collectively as the “Bonds.” See “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto for a discussion of the requirements that must be satisfied under the Master Bond Ordinance prior to the issuance of additional Bonds thereunder. Other Indebtedness Not including the Series 2022B Bonds, there are thirty-one series of Outstanding Bonds previously issued by the District (including the Series 2012B Bonds, which will be refunded in part by the Series 2022B Bonds), which are payable from Pledged Revenues of the System for the purpose of financing or refinancing the cost of designing, constructing, improving, renovating, repairing, replacing and equipping new and existing District wastewater facilities. As of May 5, 2022, the aggregate principal amount of Senior Bonds Outstanding is $1,218,616,480. In addition to the thirteen series of outstanding Senior Bonds (not including the Series 2022B Bonds, but including the Series 2012B Bonds), the District has five additional series of outstanding Subordinate Bonds payable from Pledged Revenues on a subordinate basis to the Senior Bonds, which are outstanding as of May 5, 2022 in the aggregate principal amount of $73,505,000 that were purchased by the State Environmental Improvement and Energy 6 Resources Authority of the State of Missouri (the “Authority”) through the Missouri State Revolving Fund Program (the “SRF Program”) of the Authority and the Missouri Department of Natural Resources (“DNR”). The District also has thirteen additional series of Outstanding Bonds payable from Pledged Revenues on a subordinate basis to the Senior Bonds, which are outstanding as of May 5, 2022 in the aggregate principal amount of $342,009,581 under the State’s Direct Loan Program, which were issued as Subordinate Bonds under the Master Bond Ordinance and the applicable Series Ordinances. For additional information on the eighteen series of Subordinate Bonds (collectively, the “Subordinate SRF Bonds”), see the section herein captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS – Other Indebtedness.” Continuing Disclosure Information At the time of issuance of the Series 2022B Bonds, the District will enter into a Disclosure Dissemination Agent Agreement dated as of June 1, 2022 (the “Continuing Disclosure Agreement”) with Digital Assurance Certification, L.L.C. (“DAC”), under which the District will designate DAC as Disclosure Dissemination Agent (as defined in Appendix C to this Official Statement). Pursuant to the Continuing Disclosure Agreement, the District will covenant to provide certain financial and operating information with respect to the District on an on-going basis and notice of certain events in accordance with Rule 15c2-12 promulgated by the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (“Rule 15c2-12”). These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12. See the section herein captioned “CONTINUING DISCLOSURE” and “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto. Additional Information Appendix A to this Official Statement contains the Independent Auditors’ Report, Management’s Discussion and Analysis and Basic Financial Statements of the District for the Fiscal Years ended June 30, 2021 and 2020. Appendix B to this Official Statement contains certain information regarding the service area of the District. Appendix C to this Official Statement includes definitions of certain capitalized terms used in this Official Statement and summaries of certain provisions of the Bond Ordinance and the Continuing Disclosure Agreement. Appendix D to this Official Statement contains the Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B prepared on behalf of the District with respect to the Series 2022B Bonds (the “Feasibility Report”). Appendix E to this Official Statement contains the proposed form of the opinions that are anticipated to be rendered by Co-Bond Counsel at the time of delivery of the Series 2022B Bonds. Brief descriptions of the Series 2022B Bonds, the Bond Ordinance and the District are included in this Official Statement. Such descriptions, information and summaries provided herein do not purport to be comprehensive or definitive. All references herein to any documents are qualified by the terms of such documents in their entirety. Until the issuance and delivery of the Series 2022B Bonds, copies of the documents described herein may be obtained from the District. After delivery of the Series 2022B Bonds, copies of such documents will be available for inspection at the corporate trust office of UMB Bank, N.A. in St. Louis, Missouri, as the Paying Agent under the Bond Ordinance (the “Paying Agent”). 7 THE SERIES 2022B BONDS General The Master Bond Ordinance authorizes the issuance of Bonds thereunder from time to time in one or more series substantially in the form set forth in the related Series Ordinance. The 2022B Ordinance further authorizes the execution, issuance and delivery of a series of Bonds thereunder and under the Master Bond Ordinance to be designated as “The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B” in the aggregate principal amount of $109,070,000 which series of Bonds shall be executed, issued and delivered under, and secured by, the Master Bond Ordinance and the 2022B Ordinance. Additional Senior Bonds and Subordinate Bonds may also be issued from time to time as provided in, and subject to the limitations set forth in, the Master Bond Ordinance and the 2022B Ordinance. See “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto. The Series 2022B Bonds shall be issued in fully registered form in the denomination of $5,000 each or integral multiples thereof and shall be dated the date of delivery thereof. Each Series 2022B Bond shall be numbered in a convenient manner, established by UMB Bank, N.A. in St. Louis, Missouri (the “Bond Registrar”), and shown on the Bond Register. The Series 2022B Bonds shall bear interest at the rates per annum set forth on the inside cover page hereof, computed on the basis of a 360-day year consisting of twelve 30-day months, payable on November 1, 2022, and semiannually thereafter on May 1 and November 1 of each year and shall mature in the principal amounts as set forth on the inside cover page hereof, unless earlier called for redemption. So long as any of the Series 2022B Bonds are in book-entry form, the Principal, redemption premium, if any, and interest on such Series 2022B Bonds are payable by check or draft mailed, or wire transfer, to Cede & Co. as Registered Owner thereof and will be redistributed by DTC and the participants as described below under “Book-Entry Only System.” So long as Cede & Co. is the registered owner of the Series 2022B Bonds, as nominee of DTC, references herein to the Bondowners, Owners or Registered Owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (herein defined) of the Bonds. Redemption Provisions Optional Redemption of Series 2022B Bonds. At the District’s option, the Series 2022B Bonds or portions thereof maturing on May 1, 2033 and thereafter may be called for redemption and payment prior to their stated maturity on May 1, 2032, and thereafter, in whole or in part on any date in such order of maturity as shall be determined by the District at the redemption price of 100% of the principal amount thereof plus accrued interest thereon to the redemption date. Mandatory Redemption of Series 2022B Bonds. The Series 2022B Bonds maturing in the years 2047 and 2052 are Term Bonds and are subject to mandatory redemption prior to maturity on May 1 in each of the years set forth in the following tables (each a “mandatory redemption date”), at 100% of the principal amount thereof plus accrued interest to the redemption date, without premium: 8 Series 2022B Bonds Maturing May 1, 2047 Year Principal Amount 2043 $3,970,000 2044 4,165,000 2045 4,375,000 2046 4,595,000 2047+ 4,825,000 _____________ +Final maturity Series 2022B Bonds Maturing May 1, 2052 Year Principal Amount 2048 $5,065,000 2049 5,330,000 2050 5,610,000 2051 5,905,000 2052+ 6,215,000 _____________ +Final maturity The District shall redeem such an aggregate Principal amount of the Series 2022B Bonds that are Term Bonds at a redemption price equal to the Principal amount thereof plus the interest due thereon to the mandatory redemption date. Selection of Bonds to be Redeemed; Redemption Among Series. If less than all of the Bonds of like maturity of any series shall be called for redemption, the particular Bonds, or portions of Bonds, to be redeemed shall be selected by the Paying Agent in such equitable manner as the Paying Agent may determine. The portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the Principal amount of $5,000 or an integral multiple thereof, and, in selecting portions of such Bonds for redemption, the District shall treat each such Bond as representing that number of Bonds which is obtained by dividing the Principal of such Bond to be redeemed in part by $5,000. Subject to the redemption provisions of any Series Ordinance, the District in its discretion may redeem the Bonds of any series, or a portion of the Bonds of any such series, before it redeems the Bonds of any other series. Within any particular series, any redemption of Bonds shall be effected in the manner provided in the Master Bond Ordinance and in any Series Ordinance. Notice of Redemption. Unless waived by any registered owner of Bonds to be redeemed and except as may be otherwise provided in a Series Ordinance, official notice of any such redemption shall be given by the Bond Registrar on behalf of the District by mailing a copy of an official redemption notice by first class mail, at least 30 days and not more than 60 days prior to the date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such registered owner to the Bond Registrar. All official notices of redemption shall be dated, shall contain the complete official name of the Bond issue, and shall state: (1) the redemption date; (2) the redemption price; (3) the interest rate and maturity date of the Bonds being redeemed; (4) if less than all the Outstanding Bonds are to be redeemed, the Bond numbers, and, when part of the Bonds evidenced by one Bond certificate are being redeemed, the respective Principal amounts of such Bonds to be redeemed; (5) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after such date; and (6) the place 9 where such Bonds are to be surrendered for payment of the redemption price (which place of payment shall be the principal payment office of the Paying Agent or at such other office designated by the Paying Agent for such purpose) and the name, address, and telephone number of a person or persons at the Paying Agent who may be contacted with respect to the redemption. Any notice of redemption of any Bonds may specify that the redemption is contingent upon the deposit of moneys with the Paying Agent in an amount sufficient to pay the redemption price (which price shall include the redemption premium, if any) of all the Bonds or portions of Bonds which are to be redeemed on that date. Prior to any redemption date, the District shall deposit with the Paying Agent an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. For so long as DTC is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified in the Bond Ordinance to DTC. It is expected that DTC shall, in turn, notify its participants and that the participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of DTC or a participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, a participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Any defect in any notice of redemption shall not affect the validity of proceedings for redemption of the Bonds. Effect of Notice of Redemption Official notice of redemption having been given in the manner and under the conditions provided in the Bond Ordinance and moneys for payment of the redemption price being held by the Paying Agent as provided in the Bond Ordinance, the Bonds or portions of Bonds called for redemption shall, on the redemption date designated in such notice, become and be due and payable at the redemption price provided for redemption of such Bonds or portions of Bonds on such date, and from and after such date interest on the Bonds or portions of Bonds called for redemption shall cease to accrue, such Bonds or portions of Bonds shall cease to be entitled to any lien, benefit, or security under the Bond Ordinance, and the owners of such Bonds or portions of Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. Upon surrender for partial redemption of any Bond, there shall be prepared for and delivered to the registered owner a new Bond or Bonds of the same series, maturity, and interest rate in the amount of the unpaid Principal. Book-Entry Only System The Series 2022B Bonds are available in book-entry only form. Purchasers of the Series 2022B Bonds will not receive certificates representing their interests in the Series 2022B Bonds. Ownership interests in the 2022B Bonds will be available to purchasers only through a book-entry system (the “Book-Entry System”) maintained by DTC, New York, NY. The information provided immediately below concerning DTC and the Book-Entry Only System, as it currently exists, has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the District. The District makes no assurances that DTC, Direct Participants, Indirect Participants or other nominees of the Beneficial Owners will act in accordance with the procedures described herein or in a timely manner. General. DTC, New York, NY, will act as securities depository for the Series 2022B Bonds. The Series 2022B Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of 10 DTC. One fully-registered Series 2022B Bond certificate will be issued for each maturity of the Series 2022B Bonds, each in the aggregate principal amount of such maturity, and will be deposited with the Paying Agent as DTC’s “FAST Agent.” DTC and Participants. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has an S&P Global Ratings’ rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Ownership Interests. Purchases of Series 2022B Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2022B Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2022B Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2022B Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2022B Bonds, except in the event that use of the Book-Entry System for the Series 2022B Bonds is discontinued. Transfers. To facilitate subsequent transfers, all Series 2022B Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2022B Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2022B Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2022B Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to 11 Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2022B Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2022B Bonds, such as redemptions, tenders, defaults and proposed amendments to the Series 2022B Bond documents. For example, Beneficial Owners of the Series 2022B Bonds may wish to ascertain that the nominee holding the Series 2022B Bonds for their benefit has agreed to obtain and transmit notice to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2022B Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2022B Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2022B Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal, Redemption Price and Interest. Redemption proceeds, distributions, and dividend payments on the Series 2022B Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the District or the Paying Agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor the Paying Agent, nor the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry Only System. DTC may discontinue providing its services as depository with respect to the Series 2022B Bonds at any time by giving reasonable notice to the Paying Agent or the District. Under such circumstances, in the event that a successor depository is not obtained, Series 2022B Bond certificates are required to be printed and delivered. The Direct Participant holding a majority position in the Series 2022B Bonds may decide to discontinue use of the system of book-entry transfer through DTC (or a successor securities depository). In that event, Series 2022B Bond certificates will be printed and delivered to DTC. The information above concerning DTC and DTC’s book-entry system has been obtained from DTC and is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the District. The District does not make any assurance that DTC, Direct Participants, Indirect Participants or other nominees of the Beneficial Owners will act in accordance with the procedures described above or in a timely manner. 12 Registration, Transfer and Exchange of Series 2022B Bonds The Paying Agent has been appointed the Bond Registrar and as such shall maintain the Bond Register for the registration and transfer of Series 2022B Bonds as provided in the Bond Ordinance. Any Series 2022B Bond may be transferred only upon the books kept for the registration and transfer of Series 2022B Bonds upon surrender thereof to the Paying Agent duly endorsed for transfer or accompanied by a written instrument of transfer duly executed by the registered owner or his or her attorney or legal representative in such form as shall be satisfactory to the Paying Agent. Upon any such transfer, the District shall execute and the Paying Agent shall authenticate and deliver in exchange for such Series 2022B Bond a new fully registered Series 2022B Bond or Series 2022B Bonds, registered in the name of the transferee, of any denomination or denominations authorized by the Bond Ordinance. Any Series 2022B Bond, upon surrender thereof at the principal corporate trust office of the Paying Agent together with a written instrument of transfer duly executed by the registered owner or his or her attorney or legal representative in such form as shall be satisfactory to the Paying Agent, may at the option of the registered owner thereof, be exchanged for an equal aggregate principal amount of Series 2022B Bonds of the same series and maturity and bearing interest at the same rate. In all cases in which Series 2022B Bonds shall be exchanged or transferred, the District shall execute and the Paying Agent shall authenticate and deliver, at the earliest practicable time, Series 2022B Bonds in accordance with the provisions of the Bond Ordinance. All Series 2022B Bonds surrendered in any such exchange or transfer shall forthwith be cancelled by the Paying Agent. The District or the Paying Agent may charge the Bondholder requesting the same for every such exchange or transfer of Series 2022B Bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or transfer, and such charge shall be paid before any such new Series 2022B Bond shall be delivered. Persons Deemed Owners of Series 2022B Bonds The person in whose name any Series 2022B Bond shall be registered as shown on the Bond Register required to be maintained by the Paying Agent shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and redemption premium, if any, and interest on any such Series 2022B Bond shall be made only to or upon the order of the Registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2022B Bond, including the interest thereon, to the extent of the sum or sums so paid. SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS General The Series 2022B Bonds are sewer system revenue bonds secured by and payable from Pledged Revenues on a parity with the District’s Outstanding Senior Bonds and any other Senior Bonds issued under the terms of the Master Bond Ordinance. The Senior Bonds are also secured by amounts on deposit in the Renewal and Extension Fund and, except with respect to Senior Uncovered Bonds, the Debt Service Reserve Account. The Series 2022B Bonds are Senior Uncovered Bonds and therefore are not secured by the Debt Service Reserve Account. The Series 2022B Bonds and the interest thereon are limited obligations of the District payable solely from the Pledged Revenues on a parity with the other Senior Bonds. The Series 2022B Bonds and 13 the interest thereon shall not constitute a general or moral obligation of the District nor a debt, indebtedness or obligation of, or a pledge of the faith and credit of, the District or the State or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. Neither the faith and credit nor the taxing power of the District, the State or any political subdivision thereof is pledged to the payment of the Principal of, premium, if any, or interest on the Series 2022B Bonds or other costs incident thereto. The District has no authority to levy any taxes to pay the Series 2022B Bonds. Neither the members of the Board nor any person executing the Series 2022B Bonds shall be liable personally on the Series 2022B Bonds by reason of the issuance thereof. Pledged Revenues Pursuant to the Master Bond Ordinance, the District has pledged all Pledged Revenues to the payment of the Principal of, premium, if any, and interest on all Bonds issued thereunder. Such pledge is for the equal and proportionate benefit and security of the District’s Outstanding Senior Bonds and any other Senior Bonds issued under the terms of the Master Bond Ordinance regardless of the time or times of their issuance or maturity. In the Master Bond Ordinance, the District covenants that it will not issue obligations of any kind or nature payable from, or with a lien on, the Pledged Revenues or any part thereof having priority over or, except as permitted in the Master Bond Ordinance for the issuance of Senior Bonds, on a parity with the Series 2022B Bonds. Notwithstanding the foregoing, the Master Bond Ordinance permits the issuance of Subordinate Bonds secured by the Pledged Revenues on a subordinate basis to the Senior Bonds. “Pledged Revenues” means (a) Net Operating Revenues (as defined herein) of the System (as defined in the directly below paragraph), (b) Investment Earnings (as defined in the Bond Ordinance as all interest received on and profits derived from investments of moneys in all funds and accounts of the District other than investments derived from or with respect to (i) stormwater revenues, as described below, (ii) all funds and accounts established in connection with SRF Bonds and (iii) obligations issued by the District on behalf of any of its subdistricts), (c) Hedge Receipts and (d) all moneys paid or required to be paid into, and all moneys and securities on deposit from time to time in, the funds and accounts specified in the Bond Ordinance, but excluding any amounts required in the Bond Ordinance to be set aside pending, or used for, rebate to the United States of America government pursuant to Section 148(f) of the Internal Revenue Code of 1986, as amended (the “Code”), including, but not limited to, amounts in the Rebate Fund created in the Bond Ordinance. The Bond Ordinance defines the “System” as the sanitary sewer system of the District, as it now exists and as it may be added to, extended, improved and equipped, either from the proceeds of the Bonds or from any other sources at any time, including without limitation, (a) all sanitary sewers, all combined sewers, all pumping stations, all wastewater treatment plants, and all equipment used in connection therewith, all facilities for the collection, treatment and disposal of sewage and wastewater, including industrial wastes, and (b) all other facilities or property of any nature or description, real or personal, tangible or intangible, owned or used by the District in the collection, treatment and disposal of sewage. The Bond Ordinance defines “Net Operating Revenues” as all Operating Revenues, after provision for payment of all Expenses of Operation and Maintenance. The Bond Ordinance defines “Operating Revenues” as all income and revenue of any nature derived from the operation of the System, including periodic wastewater billings, service charges, other charges for wastewater service and the availability thereof (other than any special assessment proceeds), connection or tap fees (whether accounted for as revenues or as contributed capital), net proceeds from business interruption insurance, the principal of gifts, bequests, contributions, grants and donations available to pay debt service of Bonds, and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, 14 renovation and equipping of facilities to be applied during the period of determination to pay interest on Bonds. The Bond Ordinance expressly excludes the following from the definition of Operating Revenues: (1) any profits or losses on the early extinguishment of debt or on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and local, state or federal grants or other moneys received for the payment of Expenses of Operation and Maintenance (See Appendix C for definition of “Expenses of Operation and Maintenance”), (2) local, state, or federal grants, loans (including Government Loans), capital improvement contract payments, or other moneys received for capital improvements to the System, (3) Investment Earnings, (4) any stormwater charges (referred to herein as the “Stormwater Service Charges”) and (5) any property tax revenues. Although revenues from the Stormwater Service Charge are not included in Operating Revenues and thus are not available for payment of debt service on any Bonds issued under the Bond Ordinance, including the Series 2022B Bonds, such revenues are accounted for and included in the amount of Operating Revenues identified in the Independent Auditor’s Report and Financial Statements included as Appendix A to this Official Statement. The schedule of Pledged Revenues shown on the following page was prepared to show the amount of Pledged Revenues available historically to pay debt service on the Bonds. [Remainder of page intentionally left blank] 15 WASTEWATER SEGMENT SCHEDULE OF PLEDGED REVENUES For the Fiscal Years Ended June 30, 2017 Through 20211 (In Thousands) 2017 2018 2019 2020 2021 Operating Revenues Sewer service charges2 $330,883 $364,171 $399,932 $430,400 $425,250 Recovery (provision) of doubtful sewer services charge account (2,534) (3,010) (4,361) (5,623) (5,354) Licenses, permits and other fees 4,036 3,777 3,063 3,012 3,754 Other 1,085 3,355 2,474 10,193 3,495 Total Operating Revenues $333,470 $368,293 $401,109 $437,982 $427,145 Nonoperating Revenues3 Investment income $2,457 $6,356 $14,439 $14,211 $5,740 Total Operating and Nonoperating Revenues $335,926 $374,649 $415,548 $452,193 $432,886 Operating Expenses Pumping and treatment $60,203 $60,735 $63,197 $62,030 $64,475 Collection system maintenance 33,477 29,266 29,309 34,416 35,006 Engineering 4,722 2,840 1,153 938 902 General and administrative 51,256 54,588 58,699 59,813 61,334 Water backup claims 5,035 1,548 5,436 4,653 3,985 Asset Management 14,143 14,048 12,791 13,999 15,141 Total Operating Expenses $168,836 $163,026 $170,585 $175,849 $180,844 Total Expenses $168,835 $163,026 $170,585 $175,849 $180,844 Pledged Revenues $167,091 $211,622 $244,963 $276,344 $252,042 Senior Bond Debt Service $58,182 $67,923 $77,941 $75,660 $81,685 Subordinate Bond Debt Service 31,178 32,476 36,192 36,860 37,616 Total Debt Service2 $89,361 $100,399 $114,133 $112,520 $119,301 Senior Bond Debt Coverage Ratio 2.9x 3.1x 3.1x 3.7x 3.1x Total Debt Service Coverage Ratio 1.9x 2.1x 2.1x 2.5x 2.1x ______________________ Source: District 1 For the purposes of this Official Statement figures have been rounded. 2 These numbers are based on the District’s year end audited financial statements and may differ from the historical numbers shown on Page 16 hereof and Table 9 of the Feasibility Report. These differences are due to presentation requirements for auditing purposes. 3 Audited figures exclude Build America Bond federal subsidy payments from non-operating revenues and reduce the total annual debt service figure by the corresponding amount. Pro Forma Statement of Pledged Revenues and Debt Service Coverage The following table shows actual wastewater revenues and expenditures and debt service coverage for Fiscal Year 2021 and pro forma statements(1) showing projected wastewater revenues and expenditures and debt service coverage on existing and anticipated revenue bonds during the current Fiscal Year and the next four Fiscal Years. 16 COMPARISON OF PROJECTED PLEDGED REVENUES AND PROJECTED DEBT SERVICE COVERAGE(1)(2) FY 2021 Actual FY 2022 Projected FY 2023 Projected FY 2024 Projected User Charge Revenue $ 419,326,522 $ 446,244,487 $ 459,279,591 $ 475,048,501 Other Miscellaneous Revenue Other Operating Revenue(3) $ 6,226,797 $ 8,452,003 $ 5,253,182 $ 5,488,600 Connection Fee Revenue 1,592,052 1,257,842 1,124,000 1,124,000 Subtotal Other Miscellaneous Revenue $ 7,818,849 $ 9,709,844 $ 6,377,182 $ 6,612,600 Interest Income – Operating and Capital(4) 5,740,324 7,435,003 8,616,024 11,264,405 Total Wastewater Revenue $ 432,885,695 $ 463,389,335 $ 474,272,797 $ 492,925,506 Gen. Fund Operating Expenses $ 165,055,194 $ 169,911,058 $ 184,014,455 $ 189,459,921 Other Operating Expenses 15,788,482 2,524,128 4,472,778 5,549,774 Subtotal Operating Expenses $ 180,843,676 $ 172,435,186 $ 188,487,233 $ 195,009,695 Net Revenue Available for Debt Service $ 252,042,019 $ 290,954,149 $ 285,785,564 $ 297,915,811 Actual and Projected Debt Service (Payments To Bondholders) Senior Bonds $ 81,376,563 $ 82,592,946 $ 96,192,773 $ 106,019,139 Subordinate SRF Bonds 38,397,368 39,508,542 42,970,499 47,784,109 Total Projected Debt Service $ 119,773,931 $ 122,101,488 $ 139,163,271 $ 153,803,249 Total Projected Senior Debt Coverage 3.09x 3.54x 2.96x 2.83x Total Projected Coverage for all Debt 2.11x 2.37x 2.06x 1.93x _________ Source: Feasibility Report (1) See Appendix D – Feasibility Report page D-33 for detailed discussion of principal assumptions upon which projections are based. (2) For the purposes of this Official Statement figures have been rounded. (3) Includes interest earned from the Missouri American Water Loan and City of Arnold, Missouri. (4) Does not match figures included in Appendix A, due to exclusion of $4,435,778 net unrealized losses. 17 Flow of Funds Funds and Accounts. The Bond Ordinance establishes or ratifies the establishment of the following funds and accounts and provides that the moneys deposited in such funds and accounts are held by U.S. Bank, N.A., St. Louis, Missouri, as the depository (the “Depository”) for the account of the District, in trust for the purposes set forth in the Bond Ordinance: (1) The Metropolitan St. Louis Sewer District Wastewater Revenue Fund (the “Revenue Fund”); (2) The Metropolitan St. Louis Sewer District Wastewater Sinking Fund (the “Sinking Fund”), and within such Sinking Fund a Payments Account and a Debt Service Reserve Account; (3) The Metropolitan St. Louis Sewer District Wastewater Renewal and Extension Fund (the “Renewal and Extension Fund”); (4) The Metropolitan St. Louis Sewer District Wastewater Rebate Fund (the “Rebate Fund”), and within such Rebate Fund a Series 2022B Rebate Account; and (5) The Metropolitan St. Louis Sewer District Wastewater Project Fund (the “Project Fund”), and within such Project Fund a Series 2022B Project Account. Deposits to and Uses of Moneys in the Revenue Fund. The Bond Ordinance requires that the District deposit all Operating Revenues into the Revenue Fund from time to time as and when received. The Bond Ordinance also requires that the District apply moneys in the Revenue Fund, prior to the occurrence and continuation of an Event of Default under the Bond Ordinance, in the following order of priority: (1) to pay Expenses of Operation and Maintenance; (2) to deposit into the Sinking Fund the amounts required by the Bond Ordinance, as described below under the heading captioned “Deposits to and Uses of Money in the Sinking Fund”; (3) to make Replenishment Payments (as defined herein) to the Debt Service Reserve Account and to pay to any Credit Facility Provider any amounts due under any Credit Facility Agreement, including Additional Interest; (4) to deposit into the Rebate Fund the amounts required by the Bond Ordinance; (5) to pay any amounts due any Reserve Account Credit Facility Provider pursuant to a Reserve Account Credit Facility Agreement; (6) to deposit the amounts required to be deposited into the funds and accounts created by any Series Ordinance authorizing the issuance of Subordinate Bonds, for the purpose of paying Principal of (whether at maturity, upon mandatory redemption or as otherwise required by a Series Ordinance relating to Subordinate SRF Bonds) and interest on Subordinate Bonds, making Hedge Payments under Subordinate Hedge Agreements, and accumulating reserves for such payments; (7) to make Accumulation Payments to the Debt Service Reserve Account in accordance with the Bond Ordinance; and 18 (8) to pay any amounts required to be paid with respect to any Other System Obligations. In addition to, and after, the deposits described above, the District may from time to time deposit into the Renewal and Extension Fund any moneys and securities held in the Revenue Fund in excess of 45 days’ estimated Expenses of Operation and Maintenance. If at any time the amounts in any account of the Sinking Fund are less than the amounts required by the Bond Ordinance, and there are not on deposit in the Renewal and Extension Fund available moneys sufficient to cure any such deficiency, as described herein under the subsection captioned “Deposits to and Uses of Moneys in the Renewal and Extension Fund,” then the District shall withdraw from the funds and accounts of the District relating to Subordinate Bonds which are not Subordinate SRF Bonds and deposit in such account of the Sinking Fund, as the case may be, the amount necessary (or all the moneys in such funds and accounts, if less than the amount required) to make up such deficiency. Deposits to and Uses of Moneys in the Sinking Fund. After the District deposits all Operating Revenues into the Revenue Fund and applies such moneys to pay Expenses of Operation and Maintenance, then the Master Bond Ordinance provides for deposits to and uses of moneys in the accounts and subaccounts in the Sinking Fund as follows: Payments Account – General. Sufficient moneys shall be paid in periodic installments from the Revenue Fund into the Payments Account for the purpose of paying the Principal of and interest (excluding Additional Interest) on the Senior Bonds as they become due and payable and for the purpose of making Hedge Payments under Senior Hedge Agreements. Amounts held in the Payments Account shall be used solely to pay interest (excluding Additional Interest) and Principal of the Senior Bonds as the same become due and payable (whether at maturity or upon redemption) and to pay Hedge Payments under Senior Hedge Agreements when due. As of the date of this Official Statement, there are no Senior Hedge Agreements or Subordinate Hedge Agreements in effect. Interest. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the 30th day preceding each Interest Payment Date for Senior Bonds (or, in the case of Senior Bonds bearing interest at a Variable Rate, on or before the Business Day preceding each Interest Payment Date), the District shall deposit in the Payments Account an amount which, together with any other moneys already on deposit therein and available to make such payment and, in the case of Senior SRF Bonds, anticipated investment earnings on reserve funds held by a bond trustee relating to such Senior SRF Bonds, is not less than the interest (excluding Additional Interest) coming due on such Senior Bonds on such Interest Payment Date. The District shall also deposit and continue to deposit all Hedge Receipts under Senior Hedge Agreements in the Payments Account from time to time as and when received. Principal. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the 30th day preceding each Principal Maturity Date for Senior Bonds, the District shall deposit in the Payments Account an amount which, together with any other moneys already on deposit therein and available to make such payment, is not less than the Principal coming due on such Senior Bonds on such Principal Maturity Date. Hedge Payments. On or before the 30th day preceding each payment date for Hedge Payments under Senior Hedge Agreements, the District shall deposit in the Payments Account an amount which, together with any other moneys already on deposit therein and available to make such payment, is not less than such Hedge Payments coming due on such payment date. 19 Application of Moneys in Payments Account. No further payments need be made into the Payments Account whenever the amount available in the Payments Account, if added to the amount then in the Debt Service Reserve Account (without taking into account any amount available to be drawn on any Reserve Account Credit Facility), is sufficient to retire all Senior Bonds then Outstanding and to pay all unpaid interest accrued and to accrue prior to such retirement. No moneys in the Payments Account shall be used for or applied to the optional purchase or redemption of Senior Bonds prior to maturity unless: (i) provision shall have been made for the payment of all the Senior Bonds; or (ii) such moneys are applied to the purchase and cancellation of Senior Bonds which are subject to mandatory redemption on the next mandatory redemption date, which falls due within 12 months, such Senior Bonds are purchased at a price not more than would be required for mandatory redemption, and such Senior Bonds are cancelled upon purchase; or (iii) such moneys are applied to the purchase and cancellation of Senior Bonds at a price less than the amount of Principal which would be payable on such Senior Bonds, together with interest accrued through the date of purchase, and such Senior Bonds are cancelled upon purchase; or (iv) such moneys are in excess of the then required balance of the Payments Account and are applied to redeem a part of the Senior Bonds Outstanding on the next succeeding redemption date for which the required notice of redemption may be given. Deposits to and Uses of Moneys in the Debt Service Reserve Account. The Bond Ordinance provides that with respect to Senior Bonds which are not Senior Uncovered Bonds that the Debt Service Reserve Account will be funded in an amount equal to the Debt Service Reserve Requirement for the Senior Bonds which are not Senior Uncovered Bonds. The Bond Ordinance requires that the District deposit into the Debt Service Reserve Account the amounts specified in the Series Ordinances with respect to Senior Bonds. Notwithstanding the foregoing, there shall be no deposit into the Debt Service Reserve Account with respect to any SRF Bonds or Senior Uncovered Bonds nor shall the Debt Service Reserve Account secure any SRF Bonds or Senior Uncovered Bonds. The Series 2022B Bonds are Senior Uncovered Bonds and therefore are not secured by the Debt Service Reserve Account. Whenever for any reason the amount in the Payments Account is insufficient to pay all interest or Principal becoming due on the Senior Bonds within the next seven days (or, in the case of Senior Bonds bearing interest at a Variable Rate, on the next Business Day), the District shall make up any deficiency by transfers first from the Renewal and Extension Fund and second from the funds and accounts of the District relating to Subordinate Bonds which are not Subordinate SRF Bonds. Whenever, on the date that such interest or Principal is due, there are insufficient moneys in the Payments Account available to make such payment on Senior Bonds (except with respect to Senior SRF Bonds and Senior Uncovered Bonds which are not secured by the Debt Service Reserve Account), the District shall, without further instructions, apply so much as may be needed of the moneys in the Debt Service Reserve Account to prevent default in the payment of such interest or Principal, with priority to interest payments. Whenever by reason of any such application or otherwise (other than required Accumulation Payments, as required in the Bond Ordinance) the amount remaining to the credit of the Debt Service Reserve Account is less than the amount then required to be in the Debt Service Reserve Account, such deficiency shall be remedied by monthly deposits (“Replenishment Payments”) from the Revenue Fund, to the extent funds are available in the Revenue Fund for such purpose after all required transfers set forth above have been made. The District may elect to satisfy in whole or in part the Debt Service Reserve Requirement by means of a Reserve Account Credit Facility, subject to certain requirements as set forth in the Bond Ordinance. See “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto. Deposits to and Uses of Moneys in the Renewal and Extension Fund. All sums accumulated and retained in the Renewal and Extension Fund shall be used first to prevent default in the payment of 20 interest on or Principal of the Senior Bonds when due and then shall be applied by the District from time to time, as and when the District shall determine, to the following purposes and, prior to the occurrence and continuation of an Event of Default, in the order of priority determined by the District in its sole discretion: (a) for the purposes for which moneys held in the Revenue Fund may be applied pursuant to the Bond Ordinance and as described above; (b) to pay any amounts which may then be due and owing under any Hedge Agreement (including termination payments, fees, expenses, and indemnity payments); (c) to pay any governmental charges and assessments against the System or any part thereof which may then be due and owing; (d) to make acquisitions, betterments, extensions, repairs, or replacements or other capital improvements (including the purchase of equipment) to the System deemed necessary by the District (including payments under contracts with vendors, suppliers, and contractors for the foregoing purposes); (e) to acquire Senior Bonds by redemption or by purchase in the open market at a price not exceeding the callable price as provided and in accordance with the terms and conditions of the Bond Ordinance, which Senior Bonds may be any of the Senior Bonds, prior to their respective maturities, and when so used for such purposes the moneys shall be withdrawn from the Renewal and Extension Fund and deposited into the Payments Account for the Senior Bonds to be so redeemed or purchased; and (f) for any other purpose of the District. Rate Covenant The Bond Ordinance provides that the District shall continuously own, control, operate, and maintain the System in an efficient and economical manner and on a revenue producing basis and shall at all times prescribe, fix, maintain, and collect rates, fees, and other charges for the services, facilities, and commodities furnished by the System fully sufficient at all times to: (1) provide for 100% of the Expenses of Operation and Maintenance and for the accumulation in the Revenue Fund of a reasonable reserve therefor; and (2) produce Net Operating Revenues in each Fiscal Year which, together with Investment Earnings: (a) will equal at least 125% of the Debt Service Requirement on all Senior Bonds then Outstanding for the year of computation and 115% of the Debt Service Requirement on all Bonds then Outstanding for the year of computation; (b) will enable the District to make all required payments, if any, into the Debt Service Reserve Account and the Rebate Fund and to any Credit Facility Provider, any Reserve Account Credit Facility Provider, and any Qualified Hedge Provider; (c) will enable the District to accumulate an amount to be held in the Renewal and Extension Fund which, in the judgment of the District, is adequate to meet the costs of major renewals, replacements, repairs, additions, betterments, and improvements to the System, necessary to keep the same in good operating condition or as is required by any governmental agency having jurisdiction over the System; and (d) will remedy all deficiencies in required payments into any of the funds and accounts established under the Bond Ordinance from prior Fiscal Years. If the District fails to prescribe, fix, maintain, and collect rates, fees, and other charges, or to revise such rates, fees, and other charges, in accordance with these provisions of the Bond Ordinance, the owners of not less than 25% in aggregate Principal amount of the Bonds then Outstanding, without regard to whether any Event of Default shall have occurred, may institute and prosecute in any court of 21 competent jurisdiction an appropriate action to compel the District to prescribe, fix, maintain, or collect such rates, fees, and other charges, or to revise such rates, fees, and other charges, in accordance with the requirements of the Bond Ordinance. Senior and Subordinate Bonds Upon satisfaction of certain conditions, the Bond Ordinance permits the District, for specified purposes, to issue additional Senior Bonds without express limit as to principal amount, which will be equally and ratably secured on a parity basis with the Series 2022B Bonds and Outstanding Prior Senior Bonds under the Bond Ordinance. The Debt Service Requirement, as defined in the Bond Ordinance, which is used in the calculation of the additional bonds test, allows the District to take into account the anticipated receipt of U.S. Treasury Interest Subsidy payments to arrive at a net debt service figure with respect to the Series 2010B Bonds issued as “Build America Bonds.” The District may issue additional Senior Bonds in the future to finance part of the cost of capital improvements identified in the District’s Capital Improvement & Replacement Program (the “CIRP”). See the section herein captioned “THE CIRP.” The Bond Ordinance also permits the District to issue Subordinate Bonds which would be secured by a lien on the Pledged Revenues that would be junior and subordinate to the Series 2022B Bonds and any other Senior Bonds. See “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto. Other Indebtedness The Series 2022B Bonds are sewer system revenue bonds secured by and payable from Pledged Revenues on a parity with the Prior Senior Bonds. The District has also issued eighteen series of outstanding Subordinate Bonds. See the section herein captioned “MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW – Outstanding Indebtedness - Other Outstanding Debt” for a summary of the outstanding long-term debt of the District. For more information on the District’s long- term liabilities, see Note 6 in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. PLAN OF FINANCE Purpose of and Authority for the Series 2022B Bonds As previously discussed herein, at a special election held on April 5, 2016, voters within the District approved the Current Authorization. The Current Authorization enables the District to comply with federal and State clean water requirements. The District may use the proceeds of such sewer system revenue bonds for the purpose of designing, constructing, improving, renovating, repairing, replacing and equipping new and existing District wastewater facilities. The District will issue the Series 2022B Bonds to (a) refund the Refunded Bonds, (b) pay a portion of the costs of the Series 2022B Project as described below under the heading “THE CIRP − Capital Finance Plans Contemplated Under Consent Decree”, and (c) pay the Costs of Issuance of the Series 2022B Bonds. The Refunded Bonds consist of the Outstanding Series 2012B Bonds maturing in the years 2023 and 2024 (the “Refunded Bonds”). The District has elected to refund the Refunded Bonds pursuant to the provisions of the Master Bond Ordinance, and Ordinance No. 13521 authorizing the issuance of the Series 2012B Bonds. The Refunded Bonds will be redeemed at a redemption price of par plus redemption premium, if any, and accrued interest to the redemption date of the Refunded Bonds pursuant 22 to the Master Bond Ordinance and the Series Ordinances authorizing the issuance of each series of Refunded Bonds. Estimated Sources and Uses of Funds The following table summarizes the anticipated sources and uses of funds in connection with the issuance of the Series 2022B Bonds. Sources of Funds Par amount of Series 2022B Bonds $109,070,000.00 Plus Original Issue Premium 13,734,167.15 Total: $122,804,167.15 Uses of Funds Deposit to Series 2022B Project Account** $113,013,017.71 Deposit for Series 2012B Refunded Bonds 9,382,255.56 Underwriters’ Discount 408,893.88 Total: $122,804,167.15 ______________________________ **Includes costs of issuance [Remainder of page intentionally left blank] 23 DEBT SERVICE SCHEDULE The following table sets forth the debt service requirements for all Outstanding Prior Senior Bonds, the Series 2022B Bonds, and the Subordinate Bonds and total debt service on all System revenue as set forth in the below table. At the time of issuance of the Series 2022B Bonds, no additional debt service payments will be made for Fiscal Year 2022. Year Ending June 30 Debt Service on Outstanding Prior Senior Bonds(1) Debt Service on Series 2022B Bonds Debt Service on Subordinate Bonds(2)(3) Total Debt Service 2023 $ 84,577,942 $ 11,301,087 $ 41,792,693 $ 137,671,722 2024 84,773,224 11,491,563 44,155,085 140,419,872 2025 82,948,510 6,542,313 44,284,780 133,775,603 2026 86,122,237 6,539,813 44,100,128 136,762,178 2027 88,707,363 6,543,313 37,562,595 132,813,271 2028 91,747,833 6,542,313 33,952,624 132,242,770 2029 91,523,502 6,541,813 33,230,012 131,295,327 2030 92,115,637 6,541,563 30,916,667 129,573,867 2031 91,635,172 6,541,313 29,588,759 127,765,244 2032 91,412,637 6,540,813 27,047,755 125,001,205 2033 88,417,242 6,539,813 26,929,755 121,886,810 2034 88,215,529 6,538,063 27,062,410 121,816,002 2035 87,186,986 6,540,313 22,894,070 116,621,369 2036 86,996,180 6,541,063 16,288,048 109,825,291 2037 85,997,894 6,540,063 16,340,978 108,878,935 2038 86,056,384 6,542,063 12,747,279 105,345,726 2039 88,620,299 6,541,563 10,394,255 105,556,117 2040 92,102,314 6,538,313 10,421,949 109,062,576 2041 92,089,663 6,542,063 10,451,270 109,082,996 2042 92,096,232 6,542,063 6,490,512 105,128,807 2043 54,226,828 6,543,063 5,117,278 65,887,169 2044 44,223,982 6,539,563 3,734,117 54,497,662 2045 44,235,447 6,541,313 1,870,898 52,647,658 2046 38,177,469 6,542,563 - 44,720,032 2047 28,634,469 6,542,813 - 35,177,282 2048 15,483,719 6,541,563 - 22,025,282 2049 15,480,719 6,540,651 - 22,021,370 2050 12,038,219 6,540,826 - 18,579,045 2051 4,241,969 6,541,301 - 10,783,270 2052 4,241,969 6,541,288 - 10,783,257 2053 4,241,969 - - 4,241,970 Totals(4) $ 2,038,569,539 $ 205,946,228 $ 537,373,917 $2,781,889,684 _________________ (1) Debt service figures are reduced by a 33% federal interest rate subsidy on the District’s Series 2010B Bonds for the years 2023 through 2030 and by a 35% federal interest rate subsidy thereafter. Such subsidy may be changed or eliminated at any point in the future. (2) Amounts include administrative and DNR fees, but are net of reserve fund earnings. (3) Assumes the full draw amount on all Subordinate Bonds. (4) For the purposes of this Official Statement figures have been rounded. 24 THE DISTRICT General The District is organized pursuant to Article VI, Section 30 of the Missouri Constitution which empowers the people of the County and the City “to establish a metropolitan district for functional administration of services common to the area included therein.” The District is the only special district in the State established pursuant to that section of the Missouri Constitution. The Charter established the District. The District was created to provide a metropolitan-wide system of wastewater treatment and sanitary sewerage facilities for the collection, treatment and disposal of sewage to serve the City and most of the more heavily populated areas of the County. Before the District’s creation, the City, various municipalities in the County 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 in 1956 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 in the County. The District purchased the Fee Fee Trunk Sewer Company and the Missouri Bottoms Sewer Company in 1978. The District has since acquired other investor-owned or municipally-operated systems. The District operates the fourth largest wastewater treatment system in the United States of America. The District’s service area now encompasses approximately 520 square miles including approximately all 66 square miles of the City and approximately 454 square miles (approximately 87%) of the County. Only the far western section of the County is not served by the District. The District provides sanitary sewer collection and treatment and stormwater management to a current population of approximately 1.3 million. As of June 30, 2021, the District served approximately 428,000 accounts, including approximately 362,803 single-family residences, approximately 41,533 multi-family apartments and condos, and approximately 23,960 commercial/industrial businesses. For further description of the District’s service area, see the service area map located on the back cover of this Official Statement. For certain economic and demographic information regarding the City and the County, see Appendix B to this Official Statement. The Charter describes the District as “a body corporate, a municipal corporation and a political subdivision of the state.” The District’s Charter was amended in 2000 in order to update the District’s procedures and improve its operations. The amendments provided additional flexibility and structure to several aspects of District operations, including (1) establishment of an independent 15-member Rate Commission to review adjustments to the District’s wastewater and stormwater charges before the Board acts on them; (2) authorization for the District to issue revenue bonds on a District-wide basis and lowering the margin required for passage of both revenue and general obligation bonds to be consistent with the Missouri Constitution; (3) requiring a mandatory rotation of outside auditors every five years and the appointment of an internal auditor; (4) requiring a periodic independent management audit; and (5) permitting the investment of the District’s funds in the same manner as authorized by the Missouri Constitution for the investment of State funds. Other amendments to the Charter include (1) limiting the term of (a) Board trustees to two full consecutive terms plus any portion of an unexpired term (provided, however, that a Board trustee shall serve until his/her successor shall be appointed and qualified), and (b) commissioners on the three-member civil service commission (the “Civil Service Commission”) to two terms plus any portion of an unexpired term (provided, however, that each commissioner shall serve 25 until his/her successor shall be appointed and qualified), (2) requiring the publication of Board vacancies, and (3) requiring the Board to make a written report to the Mayor and Board of Alderman of the City and to the County Executive and County Council of the County on an annual basis. Eight additional amendments to the Charter were approved by voters at the special election held on June 5, 2012. The approved changes (1) remove the actual boundaries of the District from the Charter so that boundary changes do not require Charter amendment and are kept by the Office of the Secretary- Treasurer; (2) streamline the process of forming subdistricts; (3) more clearly delineate the District’s responsibility for stormwater management; (4) allow use of electronic media, or such other form of communication as may be required by Missouri law; (5) provide that the budget include a list of capital projects to be undertaken; (6) allow the District to use the design-build approach for projects; (7) provide that each Rate Commission representative organization shall serve until its successor shall be appointed and qualified; and (8) support gender neutrality. Additional amendments to the Charter grouped into five propositions were approved by voters at the election held on April 6, 2021. The approved changes consist broadly of (1) updating language of the Charter and removing obsolete provisions, (2) rules governing the passage of ordinances, (3) the Rate Commission process, (4) increase compensation for Board members and the Civil Service Commission, and (5) the competitive bid process for auditors. The Charter requires the District to adopt a continuing five-year strategic and operating plan on an annual basis. The strategic and operating plan states the District’s objectives for the succeeding five years and includes objective targets against which the District’s performance in meeting these objectives is measured. The District is subject to the provisions of the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251 et seq. (commonly referred to and defined herein as the, “Clean Water Act”), the stated objective of which is to restore and maintain the chemical, physical, and biological integrity of the nation’s waters. The District is also subject to the Missouri Clean Water Law, Sections 644.006 through 644.141 of the Revised Statutes of Missouri, as amended (the “Missouri Clean Water Law”), and other laws and regulations. The regulatory requirements are administered by the United States Environmental Protection Agency (“EPA”) through the DNR. See the section herein captioned “REGULATORY REQUIREMENTS”. Organization and Management General. The Charter established the Board as the governing body of the District. The Board is composed of six members, with three members appointed by the Mayor of the City and three members appointed by the County Executive of the County. No more than two trustees from each area can be of the same political affiliation. According to the Charter, 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 officers. 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 Board’s standing committees include Audit, Finance, Pension, Program Management and Stakeholder Relations. Administration of district-wide operations is by the executive staff under the direct supervision of the Executive Director. The Civil Service Commission serves in an advisory position regarding personnel administration and civil service matters, and hears appeals of disciplinary actions. The 15-member Rate Commission, an advisory body established pursuant to the amendments to the Charter adopted on November 7, 2000 (the “Rate Commission”) makes recommendations to the Board regarding all 26 proposed changes in wastewater rates, stormwater rates and tax rates or regarding changes in structure to the foregoing. See the section herein captioned “MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW – Rate Commission and Rate Setting Process”. Board of Trustees The current members of the Board are as stated below. Currently, there are no vacancies on the Board. Name Current Term Expires Michael Evans, Chair March 15, 2025 Amy Fehr, Vice Chair March 15, 2024 Brian Wahby, Member March 15, 2024 Greg Nicozisin, Member March 15, 2025 Ret. Col. Richard Wilson, Member March 15, 2022 Brian K. Watson, Member March 16, 2026 Set forth below is certain biographical information on the members of the Board. Michael Evans, Chair (St. Louis City). Mr. Evans is an attorney at the law firm of Hartnett Reyes-Hones LLC. Mr. Evans has served on the Board since August 14, 2020. Amy Fehr, Vice Chair (St. Louis County). Ms. Fehr is an attorney with the law firm of Capes, Sokol, Goodman & Sarachan, P.C. She has served on the Board since September 6, 2019. Brian Wahby, (St. Louis City). Mr. Wahby is the President and CEO of Eximus Productions, an event production company. He has served on the Board since January 20, 2021. Greg Nicozisin, (St. Louis County). Mr. Nicozisin is a Pipefitter with Plumbers and Pipefitters Local Union 652. He has served on the Board since March 16, 2021. Ret. Col. Richard Wilson (St. Louis City). Ret. Col. Wilson is a retired colonel in the United States Army, and has served on the Board since February 10, 2020. Brian K. Watson (St. Louis County). Mr. Watson is the Business Agent/Recording Secretary for the Laborers’ International Union of North America, Local No. 42. He has served on the Board since March 16, 2021. Administration Management of the District is provided by a management team that reports to the Board, including an Executive Director, Secretary-Treasurer, Assistant Secretary-Treasurer, Internal Auditor, General Counsel, and Directors of Finance, Engineering, Human Resources, Operations and Information Systems. Set forth below is certain biographical information regarding selected members of the executive management staff of the District. Brian Hoelscher, P.E., Executive Director. Mr. Hoelscher served as the District’s Director of Engineering for more than nine years before his appointment as Executive Director on March 27, 2013. As the Director of Engineering, he was responsible for the delivery of the District’s CIRP as well as other environmental and regulatory duties. Mr. Hoelscher held several other management positions in the District’s engineering department prior to his tenure as Director of Engineering. Before joining the District in May 1995, Mr. Hoelscher served as the St. Louis area office manager for consulting engineers 27 Consoer, Townsend, Envirodyne Engineers of Missouri, Inc. (now AECOM). Mr. Hoelscher has a Bachelor of Science in Chemical Engineering from Washington University in St. Louis, and is licensed as a professional engineer in Missouri and Illinois. Tim R. Snoke, Secretary-Treasurer. Mr. Snoke joined the District as Secretary-Treasurer in May 2014. Before becoming Secretary-Treasurer, he spent 21 years at the former Ralcorp Holdings, Inc. in various finance and treasury management positions, most recently as Assistant Treasurer. Mr. Snoke holds a Bachelor of Science degree in Business Administration from Valparaiso University and a Masters of Business Administration from Saint Louis University. John Strahlman, Assistant Secretary-Treasurer. Mr. Strahlman was hired by the District in January 2015. His previous experience includes treasury management positions at Metropolitan Pier and Exposition Authority in Illinois, and at the Cook County, Illinois Treasurer’s office. He holds a Bachelor of Science degree in Public Finance from Indiana University and a Masters of Business Administration from DePaul University. Susan M. Myers, General Counsel. Ms. Myers has been employed by the District as in-house counsel since 2001 and was promoted to General Counsel in 2011. Prior to joining the District, she served as an environmental engineer for two years with EPA Region VII in RCRA Permitting and for nine years on a billion dollar Department of Energy Superfund clean-up project. Ms. Myers earned her law degree from the Saint Louis University School of Law and a Bachelor of Science in Geological Engineering from the University of Missouri-Rolla (currently Missouri University of Science and Technology). Marion M. Gee, Director of Finance. Mr. Gee was hired by the District in September 2015. Mr. Gee most recently served as Assistant Finance Director for the City of San Antonio, Texas. He previously served as the Finance Director for the Louisville Metropolitan Sewer District for 11 years. Mr. Gee is a certified public accountant and has a Bachelor of Science in Business Administration and a Masters of Business Administration, both from the University of Louisville. Richard Unverferth, P.E., Director of Engineering. Mr. Unverferth has served as the District’s Director of Engineering since May 2013. Prior to his current position, he held numerous positions in the District’s Engineering and Operations departments. Mr. Unverferth has a Bachelor of Science in Civil Engineering from the University of Missouri-Rolla (currently Missouri University of Science and Technology), and is a licensed professional engineer in Missouri. Tracey Coleman, Director of Human Resources. Ms. Coleman has served as the Director of Human Resources at the District since 2018. Before her promotion to her current position, Ms. Coleman was the Manager of Training and Organizational Development at the District. Before joining the District, she held positions at Laclede Gas, Edward Jones, HealthLink and A.G. Edwards. Ms. Coleman received her Master’s Degree from Webster University and a Chancellor’s Certification in Database Technology from the University of Missouri-St. Louis. Bret A. Berthold, P.E., Director of Operations. Mr. Berthold was named the District’s Director of Operations in December 2018. Mr. Berthold joined the District in April 2009 as the Operation Division Manager at the Bissell Point Wastewater Treatment Plant and transitioned to the Assistant Director of Operations position in September 2011. Before joining the District, Mr. Berthold held several positions at Spectrum Brands, Inc. Mr. Berthold received a Bachelor of Science in Mechanical Engineering from Missouri University of Science and Technology (formerly, University of Missouri – Rolla) and a Masters of Business Administration from Webster University. 28 Jonathon C. Sprague, P.E., Director of Information Systems. Mr. Sprague has been the Director of Information Systems for the District since December 2018. Before his promotion to his current position, he joined the District in May 2005 as Assistant Director of Operations and became the District’s Director of Operations in 2007. Mr. Sprague has a Bachelor of Science in Electrical Engineering from The University of Akron and a Masters of Business Administration from the College of William and Mary. The System The District owns and operates the System, which consists of sanitary, stormwater and combined collection sewers, pumping stations, and wastewater treatment facilities in its service area. The District provides sewer collection, pumping and treatment services within three major watersheds located within the District’s service area, including the Mississippi River watershed, the Missouri River watershed and the Meramec River watershed. In addition, the District provides a variety of other services, including sanitary sewer maintenance, stormwater sewer maintenance, floodwater control, monitoring of industrial waste, issuance of pretreatment discharge permits, engineering design and specification, construction of sewer lines, plan review and approvals, issuance of connection permits, public education and customer service. Collection and Trunk Sewers. As of October 1, 2021, the District owns and maintains 9,365 miles of collection and trunk sewers and force mains, ranging in size from six inches to 29 feet in diameter. They are classified as one of three types: wastewater, storm or combined. Sanitary sewers accommodate household and industrial waste. Storm sewers carry rainwater and surface water runoff. Combined sewers carry both types of waste. The System currently includes approximately 4,724 miles of wastewater sewers and force mains, approximately 2,980 miles of stormwater sewers and force mains, and approximately 1,661 miles of combined sewers that handle both wastewater and stormwater flows. Maintenance of the System is controlled and conducted out of three regional facilities. Pumping Stations and Force Mains. The District currently owns and maintains 282 pumping stations and 134 miles of force mains (which are included in the sewer system totals above). Pump station and force main support is divided into three geographic regions under a pump station manager. All pump stations are maintained regularly and monitored continuously by telemetry. Of the 282 stations, 40 are floodwall (overflow regulation and wet weather relief tank stations), 4 are stormwater and the remaining 238 are wastewater and combined sewage pump stations which move the flow of wastewater through the wastewater system and into District treatment plants. Wastewater Treatment Facilities. The District currently owns and operates seven wastewater treatment facilities. These facilities treated an average flow of 332.7 million gallons of wastewater per day for the District’s previous five Fiscal Years 2017 to 2021. The Bissell Point and Lemay wastewater treatment plants are the District’s two largest plants. Both of these plants serve the Mississippi River watershed. The Coldwater Creek and Missouri River wastewater treatment plants service the Missouri River watershed. The remaining wastewater treatment plants serve the Meramec River watershed. Employees and Employee Relations The District had 1,017 budgeted positions for Fiscal Year 2022, of which 930 are filled. Approximately 85.6% of the District’s employees within the Operations Department are represented by one of five unions: American Federation of State, County and Municipal Employees; Bricklayers; International Brotherhood of Electrical Workers; International Union of Operating Engineers; and Service Employees International. The District has entered into new collective bargaining agreements with all of its bargaining units in 2020, with contracts for each bargaining unit that extend through June 30, 29 2024. Salary increases between FY 2020 and FY 2024 average 3% annually. The District also retains private companies and consultants from time to time to supplement and expand its existing staffing resources. Economic Conditions in the District Generally, the District’s major revenue sources do not fluctuate with the local and national economies as much as local governments that depend on sales or income taxes for their major sources of revenue. The District uses several measures to forecast economic development in the District. Such factors are listed below for Fiscal Years 2017 through 2021: 2017 2018 2019 2020 2021 Sewer Plan Reviews: Number of Plans Approved 524 673 514 435 525 Number of Miles of Sewers 34 49 46 41 44 Sewer Construction Permits: Number of Permits Issued 4,523 3,769 3,792 2,277 2,130 Number of Miles of Sewers 23 25 24 23 21 Customer Connections: Number of Connection Permits Issued 2,490 2,178 2,384 1,742 1,621 Connection Fee Revenue $2,076,413 $1,249,104 $922,979 $919,405 $1,600,000 Value of Sewers Dedicated to the District by Developers $6,807,147 $24,800,000 $16,600,000 $6,500,000 $12,900,000 _________ Source: District Over the years, the City and County’s economies have each undergone a transformation from reliance on traditional manufacturing industries to those industries based on advanced technology and service. The St. Louis area is a center for health care, banking, finance, transportation, tourism, and education and has a strong and diverse manufacturing economy. The combined unemployment rate for the City and County was 5.8% in June 2021, which was lower than the national unemployment rate of 5.9% for the same time period. The June 2021 unemployment rate of 5.8% is lower than the June 2020 rate of 9.6% due to the diminishing impact of COVID-19 (as defined herein). For more information on economic and demographic trends in the City and the County, see Appendix B hereto. Security The System is subject to safety and security inspections on a continuing basis by the District. All treatment plants are maintained as secure facilities with fences, locked gates and electronic surveillance equipment. The District does not represent that any existing or additional safety or security measures will be adequate in the event that terrorist activities are directed at the System. Further, damage to components of the System could have a material adverse impact on the District’s expenditures for repairs to the System. Insurance The District maintains third-party commercial insurance coverage for various risks while self-insuring for other risks and liabilities. Presently commercial insurance coverage is maintained for 30 officers’, directors’ and general liability, property, boiler and machinery, excess flood and earthquake, combined liability, cyber liability, business auto liability, excess workers’ compensation, public entity fiduciary liability, crime, contractors equipment (inland marine), major facility pollution liability, employment practices liability, cleanup costs associated with the release of petroleum from covered storage tanks, and sewer backup (blocked line and overcharged line). Such policies contain liability limits, deductions and retentions that management of the District believes to be customary for similar enterprises. Total premiums for third-party insurance coverage for Fiscal Year 2021 were $5,880,367, an approximately 40.8% increase from Fiscal Year 2020. In addition, the District has established a risk management program and self-insures a portion of the risk related to its obligation to provide workers’ compensation and medical and hospitalization benefits to its employees and water backup claims of its customers. The estimated liabilities for payment of incurred (both reported and unreported) but unpaid claims relating to these matters are included in the District’s financial statements as a component of current deposits and accrued expenses. As of June 30, 2021 and 2020, these liabilities amounted to $5,148,770 and $4,755,168, respectively. 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. For more information regarding the District’s self-insurance program, see Note 10, Self- Insurance Programs, to the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. The District has taken several actions to mitigate cyber threats and the business disruptions associated therewith, including enhancing the District’s security in relation to cyber threats. The District has reorganized its Information Technology Department to include a security division with two full time security specialists and has hired a Chief IT Security Officer that is shared with other government service providers. The focus of these new hires is to improve the District’s cybersecurity tools, operating procedures and incident response protocols. The District also included security and disaster recovery initiatives to its Fiscal Year 2022 strategic plan. These actions provide for additional resources for monitoring and provide for disaster recovery to help prevent and minimize the risk of a cybersecurity incident. See “RISK FACTORS – Cybersecurity Risks” herein. THE CIRP General The District developed the CIRP in 2004 which identifies proposed expenditures by the District for capital improvements to the District’s sewer facilities over the next several decades. The general objectives of the CIRP are to meet federal and State requirements and District policy regarding water pollution control, to provide a satisfactory level of service to users of the District’s sewer system, including reduction of building back-ups, and to continue the District’s program to rehabilitate its infrastructure system. The CIRP addresses the District’s infrastructure capital improvement projects involving the construction, repair, replacement and upgrade of sanitary and combined sewers, force mains, pump stations, tanks, tunnels, treatment plants, and stormwater sewers. The District has designated the portion of the CIRP improvements agreed to under the Consent Decree (as defined herein), hereinafter defined, as “Project Clear.” This multi-decade Project Clear effort is estimated to cost $6 billion dollars (in 2018 dollars), with $2.1 billion dollars of capital improvement expenditures for improvements to the System being funded from Fiscal Year 2012 through the end of Fiscal Year 2021. As of May 5, 2022, the District has met all requirements related to Project Clear dictated by the Consent Decree within mandated deadlines and within budget. 31 Historical Capital Improvement Expenditures Before 2004, the District financed substantially all of the capital improvements to its facilities from available revenues on a “pay-as-you-go” basis. Since Fiscal Year 2004 the District has paid for more than $2.8 billion in capital improvements through a combination of debt financing and “pay-as-you-go” financing. Since the District began implementation of the CIRP in 2004, the District has completed project improvements in the following categories:  increasing wastewater treatment capacity;  increasing quality of treatment levels to meet new regulations;  finishing construction of a new wastewater treatment plant;  improving infrastructure to reduce combined sewer overflows;  improving infrastructure to reduce and eliminate sanitary sewer overflows; and  rehabilitating and replacing aging infrastructure. Financing Plans for the CIRP There are two primary funding sources for financing the capital improvements identified in the CIRP: (1) debt, including certain Bonds issued under the Bond Ordinance; and (2) available Operating Revenues on a “pay-as-you-go” basis. The District will use the proceeds of previously issued Bonds, a portion of the proceeds of the Series 2022B Bonds and any Bonds issued by the District in the future under the Bond Ordinance to finance the infrastructure projects identified in the CIRP. The voters approved the issuance of $1,720,000,000 of sewer system revenue bonds, all of which have been issued in furtherance of the CIRP, at special elections held on February 3, 2004, August 5, 2008 and on June 5, 2012 (the “Prior Authorizations,” together with the Current Authorization and the 2021 Authorization being referred to herein as, the “Authorizations”). As previously discussed herein, at a special election held on April 5, 2016, voters within the District approved the Current Authorization in furtherance of the CIRP. After the issuance of the Series 2022B Bonds, the remaining amount of the Current Authorization will be $253,126,796. As previously discussed herein, at an election held on April 6, 2021, voters within the District approved the 2021 Authorization in furtherance of the CIRP. The Series 2022B Bonds are not being issued under the 2021 Authorization. The following table sets forth approximate voter approval percentages at the special election for each Authorization. Year of Election Percentage in Favor of Each Authorization 2004 68% 2008 75% 2012 85% 2016 76% 2021 82% Some of the major projects constructed in part or in whole with proceeds of the Prior Authorizations were the Lower Meramec Treatment Plant, $177,000,000; Deer Creek Sanitary Tunnel (Clayton Road to RDP), $150,000,000; Maline Creek CSO BP 051 & 052 Local Storage Facility, 32 $86,000,000; Coldwater Creek Treatment Plant Improvements, $61,000,000; Missouri River Treatment Plant Rehab and Improvements, $52,000,000; Grand Glaize Plant Improvements, $35,000,000; CSO/SSO Collection System Improvements, $80,000,000; Lemay Treatment Plant Improvements, $40,000,000; Maline Creek CSO BP 051 & 052 Local Storage, $86,000,000; Lemay Pump Station No. 1 Redundant Force Main, $25,000,000; Coldwater Sanitary Relief Section B, C, and D Wet Weather Storage Facility Tank C, $20,000,000; Lemay WWTP Secondary Improvements, $15,000,000; Missouri River WWTP Secondary Treatment Expansion and Disinfection, $20,000,000; Maplewood – Blendon Combined Sewer Relief, $11,000,000; Bissell & Lemay WWTP Incinerator Scrubber Replacement, $8,000,000; and FF-11 Fee Fee Creek Sanitary Relief, $7,000,000. Some of the major projects to be constructed in part or in whole with the proceeds of the Current Authorization include: Bissell & Lemay Fluidized Bed Incinerators, $575,000,000; Lower Meramec WWTF Expansion Phase II, $117,000,000; MC-02 Watson to Edgar Rd Sanitary Relief, $9,954,000; Harlem Cityshed Mitigation Basins (Ashland and Essex), $5,500,000; and Florissant/Dunn Sanitary Relief (St. Anthony Ln to I-270), $4,910,000. Total Capital Expenditures under CIRP The following table sets forth the District’s historic capital improvement expenditures for improvements to the System for Fiscal Years 2012 through 2021, including expenditures funded both by Bond proceeds and on a “pay-as-you-go” basis: Fiscal Year Ending June 30 Capital Improvement Expenditures 2012 $ 134,909,742 2013 151,321,500 2014 158,323,507 2015 196,100,162 2016 216,933,464 2017 249,487,948 2018 225,481,370 2019 221,248,644 2020 265,681,966 2021 290,256,122 Total: $2,109,744,425 ___________________ Source: District Capital Finance Plans Contemplated Under Consent Decree The District is currently constructing a multi-billion dollar, multi-decade CIRP to update and rehabilitate the District’s aging wastewater collection and treatment system. The Board has approved a budget that identifies proposed appropriations by the District for wastewater capital improvements of approximately $336 million during the District’s Fiscal Year ending June 30, 2022, for a portion of the projects that are included in the CIRP. The District estimates that the cost of the CIRP for the period of Fiscal Year 2022 through Fiscal Year 2024 will be approximately $1.2 billion. Approximately 40% of the total major capital improvement expenditures for Fiscal Year 2022 to Fiscal Year 2024 are anticipated to be funded from operating revenues and the drawdown of available fund balances and the remaining approximately 60% is expected to be funded by the issuance of 33 additional debt, including the Series 2022B Bonds, pursuant to the Current Authorization as further described herein. The District’s capital program in Fiscal Year 2022 includes more than 120 projects, a portion of which will be financed with the proceeds of the Series 2022B Bonds (the “Series 2022B Project”), “pay-as-you-go” revenues of the System and future financings under the Bond Ordinance. Among these projects, some of which are multi-year efforts, are the following projects which are budgeted at $10 million or more in Fiscal Year 2022: Project Name Task Description Fiscal Year 2022 Budget LOWER MERAMEC RIVER SYSTEM IMPROVEMENTS - BAUMGARTNER TO FENTON WWTF TUNNEL Construction (Supplemental Appropriation) $48,000,000 JEFFERSON BARRACKS TUNNEL (LEMAY WWTP TO MARTIGNEY PS) Construction (Supplemental Appropriation) $35,000,000 LOWER MERAMEC WWTF EXPANSION PHASE II Construction $30,000,000 DC-02 & DC-03 SANITARY RELIEF (BRENTWOOD BLVD TO CONWAY RD) PHASE III AND PHASE IV Construction (Supplemental Appropriation) $17,500,000 LOWER MERAMEC WWTF - INFLUENT PUMP STATION IMPROVEMENTS Construction $17,500,000 DEER CREEK SANITARY TUNNEL (CLAYTON RD TO RDP) - PUMP STATION Construction (Supplemental Appropriation) $15,000,000 BISSELL POINT WWTF TRICKLING FILTER MEDIA REPLACEMENT Construction (Supplemental Appropriation) $11,000,000 Source: District Other planned CIRP improvements in Fiscal Years 2022 through 2024 expected to be included in the approximately $1.2 billion of capital projects during this timeframe include: • infrastructure improvements to reduce combined sewer overflows; • infrastructure improvements to eliminate sanitary sewer overflows; • wastewater treatment plant improvements and repairs at various facilities; • collection systems renewal and replacement activity; and • planning and capacity, management, operation and maintenance activity. See Appendix D – “FEASIBILITY REPORT – CIRP Financing” for a summary of the projected CIRP Financing Plan for Fiscal Years 2022 through 2024. FINANCIAL OPERATIONS OF THE DISTRICT General The District is supported by various taxes and user charges imposed on taxpayers and users of its facilities within its boundaries. The District has the power, subject to voter approval, to issue general obligation bonds, District-wide revenue bonds, sub-district revenue bonds, or special assessment bonds. The Executive Director is responsible for preparing the annual budget of the District and is responsible for drawing warrants to meet the financial obligations of the District. The Executive Director appoints the Director of Finance, who is responsible for assisting the Executive Director in preparing the annual budget, maintaining the accounting records of the District, and certifying that all warrants are proper and valid under the District’s Charter. The Secretary-Treasurer is appointed by the Board and is responsible for custody of the funds of the District and investing the funds of the District pursuant to the Charter of the District and State law. 34 Budget and Appropriation Process The Executive Director of the District is responsible for preparing the District’s annual budget. Not later than the fifteenth day of March in each year, the Executive Director must submit to the Board a budget for the ensuing year. The Charter requires that the Board adopt the budget no later than June 30. In the event that the Board does not pass a new budget by June 30, the prior year’s budget continues in force until the Board adopts a new budget. The proposed budget is available for public inspection and the District conducts public hearings on the proposed budget prior to its adoption. On or before the thirtieth day of June in each Fiscal Year the Board determines the amount of taxes that will be required during the next succeeding Fiscal Year to pay the principal of and interest on general obligation bonds issued and certain costs of operations, maintenance, construction and improvements. At this time, there are no general obligation bonds outstanding. The budget provides a complete financial plan for the budget year for all District funds. In no event can the total amount of expenditures for the budget year from any fund exceed the estimated revenues to be actually received plus any unencumbered balance or less any deficit estimated for the beginning of the budget year. After submittal of the budget to the Board, the Board must hold a public hearing at least 21 days before adoption of the budget in order to obtain public comment on the proposed budget. The Board instituted “zero-based budgeting” in the development of the District’s annual budget. This budgeting process breaks the District’s budget into two distinct sections: (i) a base budget representing the cost to run basic operations and (ii) an incremental budget representing initiatives that are tied directly to the District’s Strategic Business and Operating Plan. Both sections undergo multiple reviews to ensure that planned expenditures are justified and appropriate for the supported business activity. For the incremental budget, an expenditure cannot be justified solely by a like expenditure in a previous year; the expenditure has to clearly support a business objective from the District’s Strategic Business and Operating Plan. The use of zero-based budgeting has played a strong part in helping to keep key areas of the District’s budget at or below the rate of annual inflation. Finance Department The Finance Department is enhancing its efforts to substantially reduce its portfolio of accounts receivable, using a combination of internal collection efforts and liens. In addition, a portion of the District’s past-due collections has been outsourced to several outside vendors (collection agencies and law firms). These agencies and firms focus on collecting overdue sewer bills from rate payers and during Fiscal Year 2021 they collected approximately $38.8 million on behalf of the District. The Government Finance Officers Association of the United States of America and Canada has honored the District for excellence in budgeting, financial accounting and full disclosure. In 2021, for the 34th consecutive year, the District earned the Distinguished Budget Presentation Award, the highest form of recognition in governmental budgeting. In 2020, for the 33rd consecutive year, the District also received the Certificate of Achievement for Excellence in Financial Reporting, the highest recognition in governmental accounting and financial reporting. The District also received the Government Finance Officers Association of the United States and Canada Award for Outstanding Achievement in Popular Annual Financing Reporting in 2020. The District has received this award for every year since the publication of its first Popular Annual Financial Reporting for Fiscal Year 2012. Fund Structure The General Fund was established to provide for the ordinary operations of the District. Since 1978, all operation and maintenance has been funded out of the General Fund. The General Fund receives revenues from ad valorem property taxes levied on all property, real and personal, within the District’s 35 boundaries based on assessed valuations established by the City and County assessors. Tax rates vary by subdistrict and purpose, and are levied in accordance with the Charter of the District. The District discontinued levying real and personal property taxes after Fiscal Year 2008 as a result of the impervious stormwater charge which it began collecting in March 2008. The District rescinded its stormwater impervious charge as a result of a July 9, 2010 court decision which declared the charge unconstitutional. Property taxes were reinstated effective December 31, 2010, to partially replace this stormwater funding. On April 5, 2016, a special election was held in which 62% of voters in the District’s service area approved Proposition S. The approval of Proposition S put all District customers under the same property tax rates to pay for stormwater service and, in turn, all District customers would receive the same level of stormwater service. This process occurred gradually throughout Fiscal Year 2017. Proposition S allows the District to rollback and eliminate several existing taxes, eliminate the stormwater fee and, in lieu of these funding mechanisms, institute or leave in place two taxing districts that cover the District’s entire service area; however, stormwater revenues do not constitute Pledged Revenues securing and payable to the Series 2022B Bonds. Currently, a main source of income for the General Fund is a wastewater user charge. The General Fund also receives miscellaneous income from a number of sources, and reimbursement of engineering services provides other non-operating funds. The District’s Revenue Funds consist of the Wastewater Revenue Fund and the Stormwater Revenue Fund. Wastewater user charge revenues are deposited into the Wastewater Revenue Fund and revenues from the District’s stormwater service charge are deposited into the Stormwater Revenue Fund. The District also maintains two emergency funds − the Wastewater Emergency Fund and the Stormwater Emergency Fund. These funds were created for the purpose of providing funding for emergency work or repairs requiring prompt attention in the operation and maintenance of the District. The work or repairs are of such a nature as to be non-measurable in the budgeting and appropriation of annual revenues. District policy requires minimum balances of $500,000 and $250,000 be maintained in the Wastewater Emergency Fund and the Stormwater Emergency Fund, respectively. As of June 30, 2021, the Wastewater Emergency Fund and the Stormwater Emergency Fund had fund balances of $797,579 and $2,332,664, respectively. Basis of Accounting Throughout a Fiscal 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 District’s 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. Financial Statements The accounts of the District are audited annually by an independent firm of certified public accountants. The accounting firm of CliftonLarsonAllen LLP served the District as auditor for the Fiscal Year ended June 30, 2021. The District’s audited financial statements for the Fiscal Year ended June 30, 2021, which includes audited financial statements for the Fiscal Year ended June 30, 2020, are attached hereto as Appendix A. Cash and Investments The following table shows the historic cash and investments for the previous five Fiscal Years. 36 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Unrestricted Cash & Investments (Current) $286,332,159 $300,591,076 $241,181,876 $317,158,516 $289,978,406 Total Unrestricted Cash & Investments $347,607,159 $367,855,784 $409,831,492 $467,823,163 $479,939,604 Days Cash on Hand (No Long-Term Unrestricted) 619 673 516 679 585 Days Cash on Hand (Adds Long-Term Unrestricted) 751 824 877 1001 969 MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW For the Years Ended June 30, 2021 and 2020 The Annual Comprehensive Financial Report of 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 the 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 the management’s knowledge of the transactions, events, and conditions reflected in the financial statements and certain of the fiscal policies that govern the District’s operations. 2021 Financial Audit The District’s financial position improved in Fiscal Year 2021, as evidenced by the increase in net position of $127.3 million. The improvement is due primarily to an increase in net investment in capital assets, subdistrict construction and improvement funds, and unrestricted funds of $114.6 million, $5.0 million, and $11.8 million, respectively; offset by a decrease in debt service funds of $4.1 million. The increase in net investment in capital assets net position is comprised of a $230.5 million increase in net capital assets and a $31.6 million increase in unspent bond proceeds and is decreased by a $139.6 million increase in debt related to capital assets. In addition to these changes to net investment in capital assets net position, the increase in construction-related liabilities of $6.1 million, the recognition of a deferred gain on debt refunding (net of amortization) of $1.4 million and the $0.4 million amortization of deferred losses decreased net investment in capital assets. The sum of these six components nets to the $114.6 million increase in net investment in capital assets net position. The $4.1 million decrease in the debt service funds net position is due primarily to the $4.0 million cash reserves paid out in Fiscal Year 2021 to current refund certain debt. Current, non-current, restricted, and other assets increased $40.6 million or 5.2% in Fiscal Year 2021. The increase is predominately due to an increase in investments and cash due to increased unspent bond proceeds and more taxes levies and collected. Capital assets net of accumulated depreciation increased by $230.5 million or 6.0% in Fiscal Year 2021 as the result of continued high levels of construction and acquisition of assets by the District. Current liabilities increased by $12.2 million or 7.9% due primarily to an increase in contracts and accounts payable, current portion of bond and notes payable and retainage held on capital projects. Non-current liabilities increased by $110.2 million or 6.4% primarily due to net increases in bonds and notes payable, total OPEB liability and deposits and accrued expenses of $135.1 million, $1.8 million, and $1.6 million, respectively; offset by a decrease in net pension liability of $28.3 million. The net increase in bonds and notes payable is related to the $178.6 million new senior and subordinate debt issued in Fiscal Year 2021 and a net increase in premiums 37 received on debt issuances of $37.4 million due to premiums on the Fiscal Year 2021 new debt exceeding the premium retired resulting from the Fiscal Year 2021 direct placement refunding; offset by $61.2 million for Fiscal Year 2022 senior and subordinate debt payments reclassified to current liabilities, $11.4 million current refunding of existing debt, $6.4 million amortization of premiums, net of discount, and $1.9 million for Fiscal Year 2021 senior debt payment reclassified to current liabilities payable on new Fiscal Year 2021 debt. Net deferred outflows and inflows decreased by $21.4 million or 185.6% 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. Net position increased $127.3 million or 4.6% over the prior year which was a $22.8 million or 15.2% decrease for the last year’s net position increase. The largest impacts to net position were the decrease in investment income and the increase in interest expense. Total revenue decreased by $17.5 million or 3.6% resulting primarily from the decrease in investment income. Sewer service charges decreased $5.2 million or 1.2% due to the impact of the COVID-19 pandemic on commercial customers’ charges. Other operating revenue decreased $6.7 million or 65.7% primarily due to a lawsuit settlement received on a sewer construction project in Fiscal Year 2020. Property taxes increased $8.2 million or 23.1% due primarily to higher property valuation assessment and re-instatement of tax rates for several of the stormwater subdistricts. Investment income decreased $14.9 million or 91.4% due to an unrealized loss on investments recorded in Fiscal Year 2021 compared to an unrealized gain recognized in Fiscal Year 2020. Total expenses increased by $13.6 million or 3.9% resulting primarily from the increase in interest expense. Operating expenses decreased $6.3 million or 2.1% with decreased in general and administrative, asset management and water backup claims of $10.9 million, $1.2 million, and $0.7 million, respectively; offset by increases in depreciation expense of $3.7 million or 4.2% and pumping and treatment expenses of $2.4 million or 3.9%. General and administrative decreased primarily due to a decrease in net pension expense based on the actuarial calculation resulting from favorable market values for pension assets. Non-operating expenses increased $19.9 million or 40.2% due to a large increase in interest expense of $20.5 million or 56.7% due to the early implementation in Fiscal Year 2021 of GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period (“GASB Statement No. 89”) which discontinued the practice of considering interest costs as one of the ancillary charges necessary to place assets into their intended location and condition for use. Early implementation of GASB Statement No. 89 resulted in 100% of the interest costs being expensed in Fiscal Year 2021 compared to approximately 63% being expensed in Fiscal Year 2020. Capital grants and contributions increased $8.3 million or $130.0% with the majority of the increase resulting from capital contributions as the value of capital projected contributed to the District increased in Fiscal Year 2021. The District ended Fiscal Year 2021 with $122.3 million in cash and cash equivalents for an increase of $25.1 million or 25.9% from the prior year. Cash flows from operating activities decreased by $6.3 million or 2.9% s a result of decreased receipts from customers and increased payments to employees for services and to suppliers for goods and services. Cash flows from non-capital financing activities increased by $7.7 million or 22.0% due to higher taxes receipts. Cash flows from capital and related financing activities increased by 93.7% million or 30.7% due primarily to a $99.2 million increase in bond proceeds and premiums received in Fiscal Year 2021 compared to Fiscal Year 2020, a decrease of $16.2 million in principal, interest and fees paid on bonds due primarily to the $26.0 million debt service reserves paid out to advance refund debt in Fiscal Year 2020 compared to the $4.0 million paid out in Fiscal Year 2021 to current refund debt, and increases of $2.4 million in capital grants proceeds and $1.1 million insurance proceeds; offset by a $25.2 million increase in spending for capital assets. Cash flows from investing activities decreased by $110.4 million or 117.7%. The decrease primarily stems from the fact that the different between investments maturing decreased by $69.1 million while investments purchased increased $40.5 million in Fiscal Year 2021 compared to Fiscal Year 2020. 38 Total capital assets, net of accumulated depreciation, increased by $230.5 million or 6.0% over the prior year. Construction in progress contained the majority of the increase of $181.1 million or 17.9% consisting of $299.6 million in additions offset by $118.5 million of assets placed into service. Collection and pumping plant assets increased with net additions of $68.5 million or 3.3%, primarily for capitalization of assets including new and improved sewers, dedicated assets, and infrastructure repairs. Land increased $1.2 million or 1.6% due to the acquisition of easements and other land and general plant and equipment increased $1.1 million or 5.0%. These increases are offset by net treatment and disposal plant and equipment decrease of $21.5 million or 3.4% due to no large projects being capitalized in Fiscal Year 2021 to offset the depreciation charge for the year. For more, detailed information, see Note 4, Capital Assets, in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. See also Appendix A for a more in-depth analysis of the District’s financial position. 2020 Financial Audit The District’s financial position improved in Fiscal Year 2020, 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 Year 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 Year 2020 to partially advance refund certain debt. Current, restricted and other assets decreased $34.0 million or 4.1% in Fiscal Year 2020. 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 Fiscal Year 2020 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. 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 other 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 Year 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 Year 2020 refunding exceeding the premium on the Fiscal Year 2020 new debt and $6.6 million amortization of premiums, net of discount. The District ended Fiscal Year 2020 with $97.1 million in cash and cash equivalents for an increase of $40.4 million or 71.1% from Fiscal Year 2019. 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 39 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 Year 2020 compared to Fiscal Year 2019 as more investments matured than were purchased in both years. Total capital assets, net of accumulated depreciation, increased by $216.2 million or 6.0% from Fiscal Year 2019. 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 Year 2020 to offset the depreciation charge for the year and general plant and equipment decrease of $0.4 million or 1.6%. Sewer Rates and Revenues The primary source of funding for the operation and maintenance of the System is a user charge. The following table shows the typical bill amount for a single family residence per month with the rates approved by the Board for the year indicated and the percentage increase in such charge over the prior year. Fiscal Year Monthly Rate Percentage Change 2018(1) $49.31 10.59% 2019(1) 54.63 10.79 2020(2) 55.57 1.72 2021(2) 56.40 1.50 2022(2) 58.33 3.42 ________________________________ (1) For Fiscal Years 2018 and 2019, a single family residence bill was calculated based on a use of 7 centum cubic feet per month. (2) Effective with Fiscal Year 2020, a single family residence bill was calculated based on a use of 6 centum cubic feet per month. The District’s charges for residential wastewater service are tied to the amount of measured water usage during a winter quarter. For residential properties without water meters, the charges are based on housing attributes (such as the number of rooms, baths, and toilets) that correlate to water usage. That methodology is the same billing methodology used by the City of St. Louis Water Division for its non-metered properties. Multi-family residential and commercial and industrial rates are proportionate to the single-family charge and are based on water consumption and the strength of the discharge. Other Sources of Revenue The District has other sources of revenue not securing and pledged to the repayment of the Series 2022B Bonds. Real and personal property taxes are levied by the District. The District discontinued levying real and personal property taxes after Fiscal Year 2008 as a result of the impervious stormwater charge which it began collecting in March 2008; however, the District suspended collection of the impervious stormwater charge and resumed collection of real and personal property taxes in Fiscal Year 2011 as a result of the July 9, 2010 court decision concerning the impervious stormwater charge in which the court determined that the impervious stormwater charge was in violation of the Hancock Amendment. (defined herein). In Fiscal Year 2021, the total real and personal property taxes levied for stormwater was $44 million. On April 5, 2016, a special election was held in which 62% of voters in the District’s service 40 area approved Proposition S. The approval of Proposition S put all District customers under the same property tax rates to pay for stormwater service and, in turn, all District customers would receive the same level of stormwater service. This process occurred gradually throughout Fiscal Year 2017. Proposition S allows the District to rollback and eliminate several existing taxes, eliminate the stormwater fee and, in lieu of these funding mechanisms, institute or leave in place two taxing districts that cover the District’s entire service area; however, stormwater revenues do not constitute Pledged Revenues securing and payable to the Series 2022B Bonds. The District 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 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 or revenue bonds. The issuance of general obligation bonds, payable from a general tax levy on all taxable property within the District or a subdistrict, requires the approval of either a four-sevenths or two-thirds majority of the voters voting at an election held in the District or subdistrict, as the case may be. General obligation bonds outstanding cannot exceed five percent of the assessed valuation of the area benefitted. At this time, there are no general obligation bonds outstanding. Subdistricts may also issue revenue bonds, payable from user charges (which do not constitute Pledged Revenues) after a similar procedure, but require only a simple majority vote. Rate Commission and Rate Setting Process General. The District’s Rate Commission reviews and makes recommendations to the Board regarding all proposed changes in wastewater rates, stormwater rates and tax rates or change in the structure of any of the foregoing. Upon receipt of a rate change notice from the District pursuant to the Charter, the Rate Commission recommends changes in rates to the Board that will be necessary to pay interest and principal falling due on bonds issued to finance assets of the District, the costs of operation and maintenance and such amounts as may be required to cover emergencies and anticipated delinquencies. The Rate Commission has reviewed and recommended all rate increases that were approved by the Board since August 2003. On March 4, 2019, the District submitted a rate change proposal for Fiscal Years 2021-2024 to go through the Rate Commission review process. The rate change proposal included recommended changes to the District’s revenues and expenses. The Board accepted the 2019 Rate Commission’s recommendation report on October 10, 2019. The rates for Fiscal Years 2022, 2023 and 2024 have been accepted, and approved by the Board. Membership. The Rate Commission consists of one representative from each of fifteen organizations within the District, each of which have been identified and designated by the Board as a “Rate Commission Representative Organization.” The organizations selected by the Board are diverse and represent residential customers, commercial and industrial customers, environmental interests, labor interests, community and neighborhood organizations and nonprofit organizations. The previous Rate Commission Representative Organizations were as follows: Missouri Coalition for the Environment Missouri Industrial Energy Consumers North County Incorporated St. Louis County Municipal League 41 Engineers Club of St. Louis League of Women Voters of St. Louis The Mound City Bar Association Missouri Botanical Garden Associated General Contractors of St. Louis Education Plus City of Ladue, Missouri Home Builders Association St. Louis Council of Construction Consumers Greater St. Louis Labor Council Lutheran Senior Services Term of Membership. Pursuant to Section 7.240 of the Charter, each Rate Commission Representative Organization selected by the Board shall have the right to designate a Rate Commission Delegate to the Rate Commission for a term of six years or completion of any unexpired term. The Board shall designate organizations within the District to succeed such Rate Commission Representative Organization, provided, however, that each Rate Commission Representative Organization shall serve until its successor shall be appointed and qualified. Nothing in the Charter shall bar a Rate Commission Representative Organization from being named to successive terms. Rate Setting Process. Pursuant to the Charter, whenever the District proposes or recommends a change in rates, it shall give written notice (“Rate Change Notice”) to the Board and the Rate Commission. Upon receipt of a Rate Change Notice and after review of same, the Rate Commission shall cause at least one public hearing to be held on the record regarding the proposed rate change. The Rate Commission shall issue its rate recommendation report (“Rate Commission Report”) to the Board and to the public no later than 165 days after receipt of a Rate Change Notice. If the Board accepts the Rate Commission Report or if the Board is deemed to have accepted a Rate Commission Report as set forth in the Charter, the Board enacts an ordinance consistent with the Rate Commission Report. The Board may reject, or fail to accept, the Rate Commission Report only upon a finding that such report does not conform to the requirements of the Charter. No ordinance to effect a change in rates shall be introduced for adoption under the Charter prior to the earlier of 45 days after receipt of the Rate Commission Report or 45 days after the date on which the Rate Commission Report is due. Pursuant to the Charter, any change in a rate recommended to the Board by the Rate Commission must be accompanied by a statement of the Rate Commission that the proposed rate change and all portions thereof: (1) is consistent with constitutional, statutory or common law as amended from time to time; (2) enhances the District’s ability to provide adequate sewer and drainage systems and facilities, or related services; (3) is consistent with and not in violation of any covenant or provision relating to any outstanding bonds or indebtedness of the District; (4) does not impair the ability of the District to comply with applicable Federal or State laws or regulations as amended from time to time; and (5) imposes a fair and reasonable burden on all classes of rate payers. 42 Billing and Collections The District bills residential and commercial customers monthly for sewer service charges. As previously described herein (See first paragraph under Sewer Rates and Revenues, above), sewer bills are calculated upon several different bases, including the amount of water used each quarter, the winter quarter usage only or, when water meters are not in use, the structure of the building. For customers whose bills are based upon water usage, the District purchases data from the three water agencies serving the metropolitan area: the St. Louis City Water Division, Missouri-American Water Company and Kirkwood Water. In the City, most single-family homes and smaller multi-unit buildings are not equipped with water meters. There are also a small number of properties in the County that use well water. When no water meter reading is available, the District calculates the bill based on the attributes of the structure, including the number of rooms, toilets, baths and separate showers. Single-family residential properties that have water meters are billed based on the winter quarter water usage. The winter quarter is defined as the 3-month water meter reading taken in January, February, or March. With each July sewer bill the service charges are calculated on a 91-day prorated amount using the previous winter quarter water meter reading. The monthly usage remains the same until the following July, when the process is repeated. For single-family customers who have limited income, the District offers a Customer Assistance program. For eligible customers, the monthly sewer bill is reduced by 50% each month. Commercial and multi-unit properties are billed based on the amount of water used each quarter or, in a few cases, each month. The District’s monthly bill is based on one-third of the prior quarter’s reading and this three-month average is recalculated each month. In the case of commercial properties, there is an additional compliance charge on each month’s bill and the bill may include a surcharge for difficult to treat industrial waste or there may be a reduction factor, based on water used in processing and not entering the sewer system. Multi-unit property owners also have the option of being billed on the winter quarter reading or on each quarter reading. Rate Increases Pursuant to the rate review and setting procedures discussed under the caption “Rate Commission and Rate Setting Process” above, the District submitted to the Rate Commission a request to increase wastewater user charge rates. A Wastewater Rate Change (the “Rate Change”) was presented to the Rate Commission on March 4, 2019. The Rate Commission then initiated proceedings to provide for the submission of written testimony, technical conferences, discovery procedures, a public hearing and post hearing briefs. Pursuant to the Charter, the Rate Commission is required to submit a rate recommendation to the District’s Board of Trustees upon conclusion of its deliberations. On August 16, 2019, the Rate Commission submitted its recommendation to the Board. In that report the Rate Commission found that the Rate Change is necessary to pay (i) interest and principal due on bonds issued to finance assets of the District, (ii) the costs of operation and maintenance of the System, and (iii) such amounts as may be required to cover emergencies and anticipated delinquencies. The Rate Commission recommended rates to the Board for Fiscal Years 2021, 2022, 2023, and 2024. The Board accepted the Rate Commission’s recommendation on October 10, 2019. On June 11, 2020, the Board adopted Ordinance No. 15418, approving the rate for Fiscal Year 2021, which rates were effective as of October 1, 2020. On June 10, 2021, the Board adopted Ordinance No. 15669, approving the rates for Fiscal Years 2022, 2023, and 2024, which rates were effective as of July 1, 2021. 43 Historical and Projected Sewer Rates and Charges The following table sets forth the wastewater sewer user charge rates for Fiscal Years 2018 through 2022. Effective Effective Effective Effective Effective Type of Monthly Charge July 1, 2017 (FY 2018) Actual July 1, 2018 (FY 2019) Actual July 1, 2019 (FY 2020) Actual October 1, 2020 (FY 2021) Actual July 1, 2021 (FY 2022) Current Base Charge ($/Bill) Billing & Collection Charge $ 6.02 $ 6.67 $ 7.38 $ 5.11 $ 5.29 System Availability Charge 15.50 17.16 18.97 21.29 22.02 Total Base Charge (Residential) $ 21.52 $ 23.83 $ 26.35 $ 26.40 $ 27.31 Compliance Charge ($/Bill) Tier 1 $ 2.95 $ 3.05 $ 3.14 $ 4.44 $ 4.55 Tier 2 58.94 60.89 62.61 62.16 63.64 Tier 3 129.67 133.96 137.75 133.20 136.37 Tier 4 191.56 197.91 203.49 177.60 181.83 Tier 5 250.50 258.79 266.10 222.00 227.29 Total Non-Residential Service Charge $ 24.47 $ 26.88 $ 29.49 $ 30.84 $ 31.86 Volume Charge Metered ($/Ccf) $ 3.97 $ 4.40 $4.87 $ 5.00 $5.17 Unmetered ($/Bill per fixture) Per Room 2.35 2.61 2.89 2.95 3.06 Per Water Closet 8.76 9.70 10.72 11.02 11.40 Per Bath 7.30 8.08 8.93 9.19 9.51 Per Separate Shower 7.30 8.08 8.93 9.19 9.51 Extra Strength Surcharges ($/ton) Suspended Solids over 300 mg/l $ 269.07 $ 277.03 $ 283.87 $ 302.67 $ 309.88 Biochemical Oxygen Demand over 300 mg/l $ 671.63 $ 691.50 $ 708.56 $ 812.94 $ 832.28 Chemical Oxygen Demand over 600 mg/l $ 335.82 $ 345.76 $ 354.30 $ 406.47 $ 416.14 ________________________ Source: Feasibility Report Key: Ccf = hundred cubic feet (approx. 748 gallons); mg/l = milligram per liter The Rate Commission recommended rates to the Board for Fiscal Years 2021, 2022, 2023, and 2024. The Board accepted the Rate Commission’s recommendation on October 10, 2019. On June 11, 2020, the Board adopted Ordinance No. 15418, approving the rates for Fiscal Year 2021, which rates were effective as of October 1, 2020. On June 10, 2021, the Board adopted Ordinance No. 15669, approving the rates for Fiscal Years 2022, 2023, and 2024, which rates were effective as of July 1, 2021. The following table shows the approved rates for Fiscal Years 2022, 2023 and 2024. 44 Type of Monthly Charge Effective July 1, 2021 (FY 2022) Current Effective July 1, 2022 (FY 2023) Proposed Effective July 1, 2023 (FY 2024) Proposed Base Charge ($/Bill) Billing & Collection Charge $ 5.29 $ 5.48 $ 5.68 System Availability Charge 22.02 22.78 23.61 Total Base Charge $ 27.31 $ 28.26 $ 29.29 Compliance Charge ($/Bill) Tier 1 $ 4.55 $ 4.71 $ 4.85 Tier 2 63.64 65.80 67.67 Tier 3 136.37 140.99 144.98 Tier 4 181.83 187.98 193.30 Tier 5 227.29 234.98 241.63 Volume Charge Metered ($/Ccf) $ 5.17 $ 5.35 $ 5.55 Unmetered ($/Bill) Per Room $ 3.06 $ 3.17 $ 3.29 Per Water Closet 11.40 11.80 12.23 Per Bath 9.51 9.84 10.20 Per Separate Shower 9.51 9.84 10.20 Extra Strength Surcharges ($/ton) Suspended Solids over 300 mg/l $ 309.88 $ 320.36 $ 329.43 Biochemical Oxygen Demand over 300 mg/l 832.28 860.43 884.78 Chemical Oxygen Demand over 600 mg/l 416.14 430.22 442.40 _________ Source: Feasibility Report Key: Ccf = hundred cubic feet (approx. 748 gallons); mg/l = milligram per liter [Remainder of page intentionally left blank] 45 Customer Accounts The District imposes a user charge on all customers that use its system of sewers, treatment plants and other facilities. The number of customers per category of accounts is as follows: Number of Customers by Type Last Ten Fiscal Years Fiscal Year Single Family Residential Multi- Family Residential Commercial/ Industrial Total Accounts1 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 2021 362,803 41,533 23,960 428,296 _________________ Source: District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020 citing to the District’s Finance Department Note: Total accounts listed above are as of June 30 for each Fiscal Year listed. 1 These numbers are based on the District’s year-end financial statements and may differ from the historical numbers shown on Table 4 of the Feasibility Report. These differences are due to presentation requirements for auditing purposes. Largest User Charge Customers The following table lists the District’s ten largest wastewater user charge customers for the Fiscal Year ended June 30, 2021: Customer User Charges Percent of Total InBev Anheuser-Busch $5,329,515 1.25% The City of St. Louis, Missouri 2,088,772 0.49% Sigma-Aldrich 1,839,263 0.43% Missouri-American Water Co. 1,728,302 0.41% Washington University 1,688,185 0.40% GKN Aeropsace N America Inc. 1,064,644 0.25% Jost Real Estate LLC 1,064,622 0.25% The Boeing Company 1,051,546 0.25% BJC Health System 1,034,101 0.24% St. Louis University 948,931 0.22% Subtotal (10 largest) $17,837,881 4.19% Balance from other customers $407,409,902 95.81% Grand Totals $425,247,783 100.00% __________________________ Source: District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020 46 User Charge Revenues The following table shows the amount of wastewater user charge revenues which were billed and collected by the District for the Fiscal Years ended June 30, 2012 through June 30, 2021: Collections as a Fiscal Wastewater Wastewater % of Wastewater Year Charges Billed1 Charges Collected2 Charges Billed 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% 2021 420,781,206 417,788,153 99.29% __________________________ Source: District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020 1Includes wastewater user charge revenues billed and accrued for the year. 2Includes wastewater user charge revenues collected for the current year and previous years billings. Outstanding Indebtedness General Obligation Indebtedness. As of the date of this Official Statement, the District has no outstanding general obligation indebtedness on either a District-wide or subdistrict basis. [Remainder of page intentionally left blank] 47 Other Outstanding Debt. The District ended Fiscal Year 2021 with approximately $1.66 billion in long-term sewer system revenue bond debt outstanding. The following table summarizes the outstanding long-term debt for the District at the end of Fiscal Years 2019, 2020, and 2021: Total Long-Term Debt Outstanding (000s) 2019 2020 2021 Prior Senior Bonds: Series 2010B $85,000 $85,000 $85,000 Series 2011B 15,945 13,725 - Series 2012A 154,040 45,620 40,320 Series 2012B 128,840 41,525 37,800 Series 2013B 113,615 42,380 38,990 Series 2015B 190,135 168,950 166,030 Series 2016C 144,535 141,695 138,740 Series 2017A 312,760 309,240 305,580 Series 2018A1 261 261 261 Series 2019B - 52,130 51,295 Series 2019C - 276,260 274,745 Series 2020B - - 118,055 Series 2021C - - 5,620 Series 2022A - - - Subordinate SRF Bonds: Series 2004B 64,590 55,730 46,625 Series 2005A 3,120 2,765 2,400 Series 2006A 20,965 18,550 16,075 Series 2006B 7,400 6,650 5,890 Series 2008B 21,765 19,795 17,790 Series 2009A 14,218 13,068 11,892 Series 2010A 5,468 5,080 4,683 Series 2010C 24,906 23,111 21,269 Series 2011A 32,241 30,449 28,611 Series 2013A 43,349 41,044 38,679 Series 2015A2 65,902 62,478 58,973 Series 2016A3 13,129 17,158 17,001 Series 2016B4 45,583 61,285 65,850 Series 2018B5 2,880 18,228 24,303 Series 2019A6 - 6,292 22,012 Series 2020A7 - - 9,983 Series 2021A8 - - 5,333 Series 2021B9 - - 7,261 Non-Bond Related Debt: Energy Loan Program 16 - - TOTALS: $1,510,664 $1,558,470 $1,667,066 _______________________________ Source: District 1 This series was issued in an original principal amount of not to exceed $47,722,204, of which $261,479.86 has been drawn and remains outstanding as of May 5, 2022. 2 This series was issued in an original principal amount of not to exceed $75,000,000, of which $75,000,000 has been drawn and $55,384,000 remains outstanding as of May 5, 2022. 3 This series was issued in an original principal amount of not to exceed $20,000,000, of which $20,000,000 has been drawn and $16,102,000 remains outstanding as of May 5, 2022. 4 This series was issued in an original principal amount of not to exceed $75,500,000, of which $75,000,000 has been drawn and $62,492,000 remains outstanding as of May 5, 2022. 48 Employee Benefits The District currently maintains three pension plans for its employees: (i) a noncontributory single employer defined benefit plan (the “Defined Benefit Plan”) providing retirement benefits as well as death and disability benefits to all full-time District employees commencing services prior to December 31, 2010, (ii) a defined contribution plan (the “Defined Contribution Plan”) and (iii) a deferred compensation plan (the “Deferred Compensation Plan”). A Pension Committee (consisting of two members of the District’s Board, two elected employee members and four members of the District’s management staff) administers the Defined Benefit Plan. The Defined Benefit Plan is exempt from the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”) and, as such, is not subject to ERISA’s reporting requirements. As a noncontributory plan, the District’s employees do not contribute to the Defined Benefit Plan. Ordinances establishing the Defined Benefit Plan provide for actuarially determined annual contributions, paid solely by the District, that are sufficient to pay benefits when due. Contributions of $12,771,525 and $13,062,014, excluding certain professional fees paid by the District, were made to the Defined Benefit Plan during the District’s Fiscal Year ending June 30, 2021 and 2020, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations performed at December 31, 2020, and 2019, respectively. For 2020, the actuarially determined contribution consists of (a) $4,902,474 normal cost plus (b) $7,719,224 amortization of the actuarial accrued assets in excess of the actuarial accrued liability and prior changes (c) multiplied by an inflation factor of 2.50%, which totals $12,725,462. For 2019, the actuarially determined contribution consists of (a) $5,238,812 normal cost plus (b) $7,001,606 amortization of the actuarial accrued assets in excess of the actuarial accrued liability and prior changes (c) multiplied by an inflation factor of 1.02%, which totals $12,493,916. In the 2020 valuation, the number of active members included in the valuation decreased from 545 to 493 and the number of retirees and beneficiaries increased from 748 to 771. The Funded Ratio for December 31, 2019, is 82.2%, down 0.4% from the period ended December 31, 2018. The District provides certain professional fees, office space, utilities, and other services to the Defined Benefit Plan at no cost. Other costs of administering the Defined Benefit Plan are financed from plan net assets. For more information regarding the District’s Defined Benefit Plan, see Note 7, Pension Plan, in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. Effective January 1, 2011, the District started the Defined Contribution Plan for all new hires. Current employees with less than 10 years of service on December 31, 2010, could voluntarily elect to transfer from the Defined Benefit Plan into the Defined Contribution Plan. The Defined Contribution Plan provides a basic contribution of 7% of employee annual earnings and provides a matching contribution of 50% of the first 4% of earnings the employee defers into the Deferred Compensation Plan. (This is a maximum matching contribution of 2% of earnings.) Employees decide upon the investment of these contributions and investment earnings from funds offered by Vanguard. Initial participation consisted of twenty-three employees who transferred balances totaling $70,869 from the Defined Benefit Plan. At December 31, 2019, the Defined Contribution Plan consisted of 540 participants with account balances just over $13 million in net position. For more information regarding the District’s Defined Contribution Plan, see Note 8, Other Retirement Plans at Defined Contribution Plan, in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. 5 This series was issued in an original principal amount of not to exceed $25,267,000, of which $25,174,403 has been drawn and $24,641,403 remains outstanding as of May 5, 2022. 6 This series was issued in an original principal amount of not to exceed $23,952,000, of which $23,952,000 has been drawn and remains outstanding as of May 5, 2022. 7 This series was issued in an original principal amount of not to exceed $22,000,000, of which $19,003,476 has been drawn and remains outstanding as of May 5, 2022. 8 This series was issued in an original principal amount of not to exceed $63,101,000, of which $20,853,350 has been drawn and remains outstanding as of May 5, 2022. 9 This series was issued in an original principal amount of not to exceed $40,201,000, of which $23,130,752 has been drawn and $22,256,752 remains outstanding as of May 5, 2022. 49 The District also offers its employees the Deferred Compensation Plan created in accordance with Internal Revenue Code Section 457. The Deferred Compensation Plan, available to all District employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until separation from service, or in special approved circumstances due to financial hardship as defined by the Deferred Compensation Plan. Plan assets are held in trust for the exclusive benefit of participants and their beneficiaries. As a result, the assets and liabilities of the Deferred Compensation Plan are not included in the District’s financial statements. For more information regarding the District’s Deferred Compensation Plan, see Note 8 in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. Other Post-Employment Benefits The District pays 80% to 91% of the monthly group health insurance premium for the individual until the retiree becomes eligible for Medicare. During Fiscal Years 2020 and 2019, expenses of $2,266,677 and $2,586,148, respectively, were recognized for post-retirement health care premiums as those premiums were paid. The District’s total OPEB liability at June 30, 2020 and 2019, respectively, were $23,164,618 and $24,164,395. It is estimated that for the Fiscal Year ending June 30, 2020, the District’s unfunded accrued liability will be approximately $23 million assuming a 2.74% return on investment. For more information regarding the District’s OPEB plans, see Note 9 in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement. Also see the section herein captioned “FINANCIAL OPERATIONS OF THE DISTRICT – Selected Financial Data of the District.” Tax Limitation Amendment – Hancock Amendment An amendment to the Missouri Constitution (the “Hancock Amendment”) limits the rate of increase and the total amount of taxes on property which may be imposed in any year, and the limit may not be exceeded without voter approval. Provisions are included in the amendment for rolling back tax rates to produce an amount of revenues equal to that of the previous year if the definition of the tax base is changed or if property is reassessed. The tax levy on the assessed valuation of new construction is exempt from this limitation. The Hancock Amendment also requires a political subdivision of the State to seek voter approval in order to increase any “tax, license or fee” over existing rates. A Missouri court has held that the District’s current wastewater user charge structure does not constitute a “tax, license or fee” for purposes of the Hancock Amendment’s voter approval requirements. Since the Series 2022B Bonds are approved by the voters, the Hancock Amendment does not prohibit an increase in the District’s wastewater user charges to pay debt service on the Series 2022B Bonds. REGULATORY REQUIREMENTS General The District is subject to the provisions of the (a) Clean Water Act, the stated objective of which is to restore and maintain the chemical, physical, and biological integrity of the nation’s waters, (b) the Missouri Clean Water Law, and (c) other laws and regulations. The regulatory requirements are administered by the EPA through DNR. The District is currently not subject to the federal Safe Drinking Water Act, as amended, 42 U.S.C. 300f et seq., which is also administered by the EPA. The Clean Water Act imposes several permit and regulatory requirements on wastewater treatment systems. Public sewage treatment plant owners and operators such as the District are required to 50 provide secondary treatment as established by federal regulation for all wastewater discharge from treatment plants into waters of the United States of America. Under the Clean Water Act, states also establish water quality standards, classifying water body uses, and pollutant control criteria to protect those uses. All sewage system discharges require National Pollutant Discharge Elimination System (“NPDES”) permits specifying the permissible pollutant levels in wastewater effluent discharged from the plants. In addition to secondary treatment requirements for publicly-owned treatment plants, all discharges from plants and combined sewer overflows (“CSO”) may be subject to additional stringent controls (which are then incorporated into NPDES permits) if such discharges are required to achieve the water quality standards established by the state pursuant to federal regulations. Under State law, the State also requires treatment plants to obtain state surface water discharge permits, which, in the discretion of EPA and DNR, may be issued jointly with the NPDES permit. Major wastewater treatment systems also must adopt and enforce pretreatment regulations for industries and other non-domestic sources discharging into sewers. Treatment plants are also subject to Clean Water Act and State regulations governing sludge use and disposal. The Clean Water Act is enforced by EPA through administrative orders and procedures. Violations may be the basis for federal lawsuits brought on EPA’s behalf by the U.S. Department of Justice or by private citizens. Regulatory Matters – Consent Decree In 2007, the Department of Justice filed suit on behalf of the EPA against the District for various alleged violations of the Clean Water Act. The District had been the subject of several investigatory actions by EPA over the prior several years. The District, EPA, DNR, represented by the Missouri Attorney General, and an environmental group allowed to intervene in the lawsuit engaged in several years of litigation. In 2011, the District and the EPA negotiated the Consent Decree (the “Consent Decree”) that resulted in settlement and dismissal of the original lawsuit. See Note 12, Commitments and Contingencies, in the District’s Notes to Financial Statements contained in Appendix A to this Official Statement for additional information regarding this litigation. The District’s Board adopted Ordinance No. 13277 at its June 29, 2011 meeting that authorized the District’s Executive Director and General Counsel to sign the Consent Decree. Under the Consent Decree, the District agreed to spend over $6 billion dollars (in 2018 dollars) over the next 23 years to implement various system improvements and programs designed to eliminate or reduce overflows from the combined and separate sewer system in order to improve water quality and protect human health and the environment. Most of the improvements enumerated in the Consent Decree were already addressed in the District’s long-term over $6 billion dollars (in 2018 dollars) CIRP. The State did not agree to sign the Consent Decree in its present form. However, all parties, including the State, accepted language in a motion filed with the U.S. District Court for the Eastern District of Missouri (the “Court”) in August 2011, which indicated that there were no issues remaining to be resolved in the proceedings. On August 4, 2011, the Consent Decree was lodged with the Court. An extended public comment period ended October 10, 2011. On April 27, 2012, the Court entered the Consent Decree, thus concluding the litigation of this lawsuit. On that same day the Court entered a Memorandum and Order which realigned the State as a defendant and reaffirmed a 2009 decision by the Eighth Circuit Court of Appeals that the State had waived its sovereign immunity. Although this litigation matter has concluded, the District is working diligently to implement the Consent Decree on schedule. On June 22, 2018, the Court approved an amendment to the Consent Decree to extend it by five years from a 23-year program to a 28-year program. This amendment to the Consent Decree allows the District to deliver an accelerated schedule of regulatory required non-Consent Decree work without 51 placing an additional financial burden on the District’s ratepayers, and states that the amount the District is required to spend in 2018 dollars pursuant to the Consent Degree is $6 billion. RISK FACTORS The following is a discussion of certain risks and other considerations that should be considered in conjunction with all other information contained in this Official Statement, including the Appendices hereto, by prospective investors in evaluating the Series 2022B Bonds. Such discussion is not, and is not intended to be, exhaustive and should not be considered as a comprehensive or exhaustive discussion of risks or other considerations which may be relevant to an investment in the Series 2022B Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such considerations. There can be no assurance that other risk factors not discussed herein will not become material in the future. Factors Affecting the District One or more of the following factors or events, or the occurrence of other unanticipated factors or events, could adversely affect the District’s operations and financial performance to an extent indeterminable at this time. Changes in Management or Policies. Changes in key management personnel or policies of the District could adversely affect the financial performance of the District. Future Economic Conditions. Increased unemployment or other adverse economic conditions or changes in the demographics of the District; an inability to control expenses in periods of inflation and difficulties in increasing charges could adversely affect the District’s financial performance. For more information on the District’s rate setting process see “MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW – Rate Commission and Rate Setting Process.” Insurance Claims. Increases in the cost of the District’s insurance coverages and the amounts paid in settlement of claims not covered by insurance could adversely affect the financial performance of the District. Organized Labor Efforts. Certain employees of the District’s Operations Department are represented by collective bargaining units. Labor disputes with these collective bargaining units could result in adverse labor actions or increased labor costs. Environmental Regulation. Sewer utilities are subject to continuing environmental regulation. Federal, state and local standards and procedures that regulate the environmental impact of water or sewer utilities are subject to change. These changes may arise from continuing legislative, regulatory and judicial action regarding such standards and procedures. Consequently, there is no assurance that facilities in operation will remain subject to the regulations currently in effect, will always be in compliance with further regulations or will always be able to obtain all required operating permits. An inability to comply with environmental standards could result in reduced operating levels and fines. Legislative, regulatory, administrative or enforcement actions involving environmental controls could also adversely affect the operation of the System. For example, if property of the District is determined to be contaminated by hazardous materials, the District could be liable for significant clean-up costs even if it were not responsible for the contamination. 52 Natural Disasters/Climate. The occurrence of natural disasters, such as tornados, earthquakes, floods or droughts, could damage the facilities of the District, interrupt services or otherwise impair operations and the ability of the District to produce revenues. Terrorist Attacks. Although potential terrorist attacks could temporarily disrupt wastewater treatment service, the District has taken and continues to take precautions to minimize this risk, but does not represent that any existing or additional safety or security measures will be adequate in the event that terrorist activities are directed at the System. Miscellaneous Factors. The sewer industry in general has experienced, or may in the future experience, problems including (a) the effects of inflation on the costs of operation of facilities, (b) increased financing requirements coupled with the increased cost and uncertain availability of capital, and (c) compliance with rapidly changing environmental, safety and licensing regulations and requirements. Summary Financial Information Certain summarized historical financial information and certain projected revenues and expenditures of the District are summarized in this Official Statement and its appendices. There can be no assurance that the financial results achieved by the District in the future will be similar to historical results or the projections contained herein. Such future results will vary from historical results, and actual variations may be material. Information as to the projected figures and the assumptions upon which they are based are contained in this Official Statement and its appendices. No assurance can be given that assumptions used in preparing projected revenues are accurate including, but not limited to, those as to water usage volume, operating and maintenance expenses, and the stability of the customer base. Significant variations in such assumptions may affect the actual operating and financial results. Therefore, the historical operating results of the District’s System contained in this Official Statement cannot be viewed as a representation that the District will be able to generate sufficient revenues in the future to make timely payment of principal of, redemption premium, if any, and interest on the Series 2022B Bonds. Certain Bankruptcy Risks The remedies available to the owners of the Series 2022B Bonds upon an event of default under the Bond Ordinance are in many respects dependent upon judicial actions that are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the United States Bankruptcy Code, 11 U.S.C. §§ 101, et seq. the remedies provided in the Bond Ordinance may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2022B Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by general principles of equity and by bankruptcy, reorganization, insolvency or other similar laws, affecting the rights of creditors generally. Secondary Markets and Prices The Underwriters will not be obligated to repurchase any of the Series 2022B Bonds and no representation is made concerning the existence of any secondary market for the Series 2022B Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2022B Bonds, and no assurance can be given that the initial offering prices for the Series 2022B Bonds will continue for any time period. 53 Risk of Taxability of Series 2022B Bonds For information with respect to events occurring subsequent to issuance of the Series 2022B Bonds that may require that interest on such Series 2022B Bonds be included in gross income for purposes of federal income taxation, see the caption “TAX MATTERS” in this Official Statement. Risk of Audit of Series 2022B Bonds The Internal Revenue Service (the “Service”) has established an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations should be included in gross income for federal income tax purposes. Owners of the Series 2022B Bonds are advised that, if the Service does audit such Series 2022B Bonds, under current Service procedures, at least during the early stages of an audit, the Service will treat the District as the taxpayer, and the owners of such Series 2022B Bonds may have limited rights to participate in the audit. Public awareness of any audit could adversely affect the market value and liquidity of Series 2022B Bonds during the pendency of the audit, regardless of the ultimate outcome thereof. Limited Obligations The Series 2022B Bonds are limited obligations of the District, payable solely from the Pledged Revenues generated from the operation of the System. The Series 2022B Bonds and the interest thereon shall not constitute a general or moral obligation of the District nor a debt, indebtedness, or obligation of, or a pledge of the faith and credit of, the District, the State or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. The taxing power of the District, the State or any political subdivision is not pledged to the payment of the Series 2022B Bonds or the interest thereon. The District has no authority to levy any taxes to pay the Series 2022B Bonds. Loss of Premium Upon Early Redemption Purchasers of the Series 2022B Bonds at a price in excess of their principal amount should consider the fact that the Series 2022B Bonds are subject to redemption at a redemption price equal to their principal amount plus accrued interest under certain circumstances. See “THE SERIES 2022B BONDS – Redemption Provisions.” Potential Risks Relating to COVID-19 Since December 2019, a novel strain of coronavirus (which leads to the disease known as “COVID-19”), has spread throughout the world and has been characterized by the World Health Organization as a pandemic. The impact of the COVID-19 pandemic on the U.S. economy has been and is expected to continue to be broad based and to negatively impact national, state and local economies. In response to such expectations, the President of the United States on March 13, 2020, declared a “national emergency,” which, among other effects, allowed the executive branch to disburse disaster relief funds to address the COVID-19 pandemic and related economic dislocation. On March 13, 2020, the Governor of the State of Missouri signed an Executive Order declaring a state of emergency in the State of Missouri in response to COVID-19. On August 27, 2021, the Governor of the State of Missouri terminated the Executive Order and signed Executive Order 21-09, which represented a more targeted state of emergency declaration that acknowledges the continued need of Missouri’s health care system. Executive Order 21-09 expired on December 31, 2021, currently, the State of Missouri is not under any state of emergency. 54 The spread of the strain of coronavirus and resulting disease is altering the behavior of businesses and people in a manner that is having negative effects on global, state and local economies. There can be no assurances that the spread of a pandemic, including a strain of coronavirus and resulting disease known as COVID-19, will not materially impact both local and national economies and, accordingly, have a materially adverse impact on the District’s operating and financial viability. The proliferation of COVID-19 throughout the District and the surrounding region may adversely impact the amount of Pledged Revenues the District generates from the operation of the System that are pledged to pay debt service on the Series 2022B Bonds if the economic ramifications of the spread of COVID-19 have a lasting impact on the economy in and around the District. Significant instances of late payment or nonpayment could result in Pledged Revenues that are insufficient to pay debt service on the Series 2022B Bonds. Developments regarding COVID-19 continue to occur on a daily basis and the extent to which COVID-19 will impact the general operations of the District, the operation of the System and the ability of the District to generate sufficient Pledged Revenues from the operation of the System is highly uncertain and cannot be predicted. The Series 2022B Bonds do not constitute a general or moral obligation of the District and do not constitute an indebtedness of the District within the meaning of any constitutional, statutory, or charter provision, limitation or restriction, and the taxing power of the District is not pledged to the payment of the Series 2022B Bonds or the interest thereon. See the section captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS”. No Debt Service Reserve Account Securing the Series 2022B Bonds The Series 2022B Bonds are Senior Uncovered Bonds and therefore are not secured by the Debt Service Reserve Account. Cybersecurity Risks The District relies on its information systems to provide security for processing, transmission and storage of confidential and other credit information. It is possible that the District’s security measures will not prevent improper or unauthorized access or disclosure of personally identifiable information resulting from cyber-attacks. Security breaches, including electronic break-ins, computer viruses, attacks by hackers and similar breaches can create disruptions or shutdowns of the District and the services it provides, or the unauthorized disclosure of confidential and other credit information. If personal or otherwise protected information is improperly accessed, tampered with or distributed, the District may incur significant costs to remediate possible injury to the affected persons, and the District may be subject to sanctions and civil penalties if it is found to be in violation of federal or state laws or regulations. Any failure to maintain proper functionality and security of information systems could interrupt the District’s operations, delay receipt of revenues, damage its reputation, subject it to liability claims or regulatory penalties and could have a material adverse effect on its operations, financial condition and results of operations. The District has cybersecurity insurance. Global Climate Change Certain scientific studies on global climate change indicate that, among other potential effects on the global ecosystem, sea levels may rise, extreme temperatures may become more common and extreme weather events may become more frequent in connection with a possible increase in global temperatures attributable to atmospheric pollution. Over the next 25 to 100 years, such extreme events and conditions may increasingly disrupt and damage critical infrastructure and property as well as regional economies and industries that depend on natural resources and favorable climate conditions. Disruptions could include more frequent and longer-lasting power outages, fuel shortages and service disruptions. As a result, residents, businesses, and governmental operations could be negatively impacted and possibly 55 displaced, reducing the number of rate payers and users of the System. In addition, local public agencies and governmental entities could be required to mitigate these possible climate change effects at a potentially material cost. LITIGATION Except as described in the “REGULATORY REQUIREMENTS – Regulatory Matters – Consent Decree” above, as of the date hereof, to the knowledge of the District there is no legal action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body for which the District has been served with process or official notice or threatened against or affecting the District or any reasonable basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transaction contemplated by this Official Statement or the validity of the Series 2022B Bonds, the Bond Ordinance, or any agreement or instrument to which the District is a party and which is used or contemplated for use in the transactions contemplated by this Official Statement, and no member, employee or agent of the District has been served with any legal process regarding such litigation or other proceeding. TAX MATTERS The following is a summary of the material federal and State of Missouri income tax consequences of holding and disposing of the Series 2022B Bonds. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Series 2022B Bonds as a capital asset, tax- exempt organizations, individual retirement accounts and other tax deferred accounts and foreign taxpayers) and, except for the income tax laws of the State of Missouri, does not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Series 2022B Bonds in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Series 2022B Bonds. Opinion of Co-Bond Counsel In the opinion of Gilmore & Bell, P.C. and White Coleman & Associates, LLC, Co-Bond Counsel to the District, under the law existing as of the issue date of the Series 2022B Bonds: Federal and State of Missouri Tax Exemption. The interest on the Series 2022B Bonds is excludable from gross income for federal income tax purposes and is exempt from income taxation by the State of Missouri. Alternative Minimum Tax. The interest on the Series 2022B Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax. Bank Qualification. The Series 2022B Bonds have not been designated as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code. Co-Bond Counsel’s opinions are provided as of the date of the original issue of the Series 2022B Bonds, subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2022B Bonds in order that interest thereon be, or 56 continue to be, excludable from gross income for federal income tax purposes. The District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Series 2022B Bonds in gross income for federal and State of Missouri income tax purposes retroactive to the date of issuance of the Series 2022B Bonds. Co-Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Series 2022B Bonds but has reviewed the discussion under the heading “TAX MATTERS.” Other Tax Consequences Original Issue Premium. For federal income tax purposes, premium is the excess of the issue price of a Series 2022B Bond over its stated redemption price at maturity. The issue price of a Series 2022B Bond is generally the first price at which a substantial amount of the Series 2022B Bonds of that maturity have been sold to the public. Under Section 171 of the Code, premium on tax-exempt bonds amortizes over the term of the Series 2022B Bond using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the owner’s basis in the Series 2022B Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to the owner, which will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Series 2022B Bond prior to its maturity. Even though the owner’s basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange or Retirement of Bonds. Upon the sale, exchange or retirement (including redemption) of a Series 2022B Bond, an owner of the Series 2022B Bond generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Series 2022B Bond (other than in respect of accrued and unpaid interest) and such owner’s adjusted tax basis in the Series 2022B Bond. To the extent a Series 2022B Bond is held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Series 2022B Bond has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on the Series 2022B Bonds and to the proceeds paid on the sale of the Series 2022B Bonds, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner’s federal income tax liability. Collateral Federal Income Tax Consequences. Prospective purchasers of the Series 2022B Bonds should be aware that ownership of the Series 2022B Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds. Co-Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Series 2022B Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Series 2022B Bonds, including the possible application of state, local, foreign and other tax laws. 57 LEGAL MATTERS Certain legal matters incident to the authorization, issuance, sale and delivery of the Series 2022B Bonds are subject to the approval of Gilmore & Bell, P.C., St. Louis, Missouri, and White Coleman & Associates, LLC, St. Louis, Missouri, Co-Bond Counsel, whose approving legal opinions will be delivered with the Series 2022B Bonds in substantially the form of Appendix E hereto. Certain other legal matters will be passed on for the District by its General Counsel. Certain legal matters relating to this Official Statement will be passed upon by Armstrong Teasdale LLP, St. Louis, Missouri, as Disclosure Counsel to the District. Certain legal matters will be passed upon for the Underwriters by their co-counsel, Thompson Coburn LLP, St. Louis, Missouri, and Richard G. Hughes & Associates, LLC, St. Louis, Missouri. The various legal opinions to be delivered concurrently with the delivery of the Series 2022B Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. RATINGS S&P Global Ratings, a Standard & Poor’s Financial Services LLC business and Moody's Investors Service, Inc. (collectively, the “Rating Agencies”) have assigned the Series 2022B Bonds the ratings of “AAA” and “Aa1,” respectively, based on each Rating Agency’s evaluation of the creditworthiness of the District. Such ratings reflect only the views of the Rating Agencies at the time such ratings are given, and the Underwriters, Co-Municipal Advisors and the District make no representation as to the appropriateness of such ratings. An explanation of the significance of such ratings may be obtained only from the Rating Agencies. The District has furnished the Rating Agencies with certain information and materials relating to the Series 2022B Bonds and the District that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions by the rating agencies. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing such rating, circumstances so warrant. Neither the District, nor the Co-Municipal Advisors nor the Underwriters have undertaken any responsibility to bring to the attention of the holders of the Series 2022B Bonds any proposed revision or withdrawal of a rating of the Series 2022B Bonds, or to oppose any such proposed revision or withdrawal. Any revision or withdrawal of a rating could have an adverse effect on the market price and marketability of the Series 2022B Bonds. Securities ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. CONTINUING DISCLOSURE Pursuant to the Continuing Disclosure Agreement, under which the District has designated DAC as Disclosure Dissemination Agent, the District has covenanted for the benefit of the holders and beneficial owners of the Series 2022B Bonds to provide, or cause to be provided, certain financial information and operating data relating to the District to certain parties by not later than 180 days following the end of the District’s Fiscal Year (the “Annual Report”), commencing with the report for the Fiscal Year ending June 30, 2022, and to provide notices of the occurrence of certain enumerated 58 events, if material. The Annual Report and any notices of material events will be submitted by the Disclosure Dissemination Agent on behalf of the District with the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system (“EMMA”) pursuant to Rule 15c2-12. EMMA is an internet-based, online portal for free investor access to municipal bond information, including offering documents, material event notices, real-time municipal securities trade prices and education resources available at www.emma.msrb.org. Nothing contained on EMMA relating to the District or the Series 2022B Bonds is incorporated by reference in this Official Statement. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12. The specific nature of the information to be contained in the Annual Report and in the notices of material events is summarized in “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto. The District has continuing disclosure obligations in connection with the Subordinate Bonds. During the previous five years, the District believes it has materially complied with its continuing disclosure undertakings with respect to the Subordinate Bonds by timely filing the required financial information and operating information with the master trustee; however, certain audited financial statements and financial and operating information provided by the District to the master trustee in connection with the Subordinate Bonds was not linked to all of the required CUSIP numbers. Such information has been subsequently linked to such CUSIP numbers. The District has entered into continuing disclosure undertakings similar to the Continuing Disclosure Agreement to be entered into in connection with the issuance of the Series 2022B Bonds, with respect to other series of Senior Bonds. During the previous five years, the District believes it has materially complied with the continuing disclosure undertakings related to the other series of Senior Bonds, except the District did not timely file notices of certain financial obligations incurred. The financial obligations at issue were the issuance of certain series of Subordinate Bonds. The Disclosure Dissemination Agent has only the duties specifically set forth in the Continuing Disclosure Agreement. The Disclosure Dissemination Agent’s obligation to deliver the information at the times and with the contents described in the Continuing Disclosure Agreement is limited to the extent that the District has provided such information to the Disclosure Dissemination Agent as required by the Continuing Disclosure Agreement. The Disclosure Dissemination Agent has no duty with respect to the content of any disclosures or notice made pursuant to the terms of the Continuing Disclosure Agreement. The Disclosure Dissemination Agent has no duty or obligation to review or verify any information in the Annual Report, the District’s audited financial statements, a Notice Event (as defined in the Continuing Disclosure Agreement), or any other information, disclosures or notices provided to it by the District and shall not be deemed to be acting in any fiduciary capacity for the District, the holders of the Series 2022B Bonds or any other party. The Disclosure Dissemination Agent has no responsibility for the District’s failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the District has complied with the Continuing Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon certifications of the District at all times. UNDERWRITING The Series 2022B Bonds are being purchased for reoffering by the Underwriters, pursuant to a purchase contract between the District and BofA Securities, Inc., as representative of the Underwriters (the “Purchase Contract”). Pursuant to the Purchase Contract, the Series 2022B Bonds will be purchased at the aggregate purchase price of $122,395,273.27, which amount is equal to the principal 59 amount of the Series 2022B Bonds of $109,070,000.00, plus original issue premium of $13,734,167.15, less the underwriters’ discount of $408,893.88. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the District, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the District. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect to such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. BofA Securities, Inc., an underwriter of the Series 2022B Bonds, has entered into a distribution agreement with its affiliate Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”). As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S, which may in turn distribute such securities to investors through the financial advisor network of MLPF&S. As part of this arrangement, BofA Securities, Inc. may compensate MLPF&S as a dealer for their selling efforts with respect to the Series 2022B Bonds. Wells Fargo Corporate & Investment Banking (which may be referred to elsewhere as “CIB,” “Wells Fargo Securities” or “WFS”) is the trade name used for the corporate banking, capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association (“WFBNA”), a member of the National Futures Association, which conducts its municipal securities sales, trading and underwriting operations through the Wells Fargo Bank, N.A. Municipal Finance Group, a separately identifiable department of WFBNA, registered with the U.S. Securities and Exchange Commission as a municipal securities dealer pursuant to Section 15B(a) of the Securities Exchange Act of 1934, as amended. WFBNA, acting through its Municipal Finance Group, one of the underwriters of the Series 2022B Bonds, has entered into an agreement (the "WFA Distribution Agreement") with its affiliate, Wells Fargo Clearing Services, LLC (which uses the trade name “Wells Fargo Advisors”) ("WFA"), for the distribution of certain municipal securities offerings, including the Series 2022B Bonds. Pursuant to the WFA Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the Series 2022B Bonds with WFA. WFBNA has also entered into an agreement (the “WFSLLC Distribution Agreement”) with its affiliate Wells Fargo 60 Securities, LLC (“WFSLLC”), for the distribution of municipal securities offerings, including the Series 2022B Bonds. Pursuant to the WFSLLC Distribution Agreement, WFBNA pays a portion of WFSLLC’s expenses based on its municipal securities transactions. WFBNA, WFSLLC, and WFA are each wholly-owned subsidiaries of Wells Fargo & Company. The Underwriters may offer and sell the Series 2022B Bonds to certain dealers (including dealers depositing the Series 2022B Bonds into investment trusts) and others at prices lower than the public offering price stated on the inside cover page hereof. The initial public offering price may be changed from time to time by the Underwriters. CERTAIN RELATIONSHIPS Armstrong Teasdale LLP, Thompson Coburn LLP, and White Coleman & Associates, LLC each represent the District in certain matters unrelated to the issuance of the Series 2022B Bonds. FINANCIAL FEASIBILITY CONSULTANT The District has retained Raftelis Financial Consultants, Inc., to serve as the Financial Feasibility Consultant to the District in connection with the issuance of the Series 2022B Bonds. See Appendix D – “Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B”. CO-MUNICIPAL ADVISORS PFM Financial Advisors LLC, Cleveland, Ohio, and Independent Public Advisors, LLC, Kansas City, Missouri, have served as Co-Municipal Advisors to the District in connection with the Series 2022B Bonds, relative to a plan of financing and assisting the District in drafting certain portions of this Official Statement for the sale of the Series 2022B Bonds. The Co-Municipal Advisors have participated in the compilation and editing of this Official Statement. The Co-Municipal Advisors have not, however, independently verified the factual information contained in this Official Statement nor have they conducted an investigation of the affairs of the District for the purpose of determining the accuracy or completeness of any of the information contained herein. The Co-Municipal Advisors have relied on the diligence and accuracy of the District which has certified that this Official Statement contains no material misstatement or omission of information. PFM Financial Advisors, LLC is an independent advisory firm and is not engaged in the business of underwriting, trading, or distributing municipal securities or other public securities. INDEPENDENT AUDITORS The Independent Auditors Report, Management’s Discussion and Analysis and Basic Financial Statements of the District for the Fiscal Years ended June 30, 2021 and 2020 included in Appendix A of this Official Statement has been audited by CliftonLarsonAllen LLP. MISCELLANEOUS The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is made to all such documents for full and complete statements of all matters of fact relating to the Series 2022B Bonds, the security for the payment of the Series 2022B Bonds and the rights of the owners thereof. During the period of the offering, copies of drafts of such documents may be examined by requesting same from the Co-Municipal Advisors; following delivery of the Series 2022B Bonds, copies of such documents may be examined at 61 the corporate trust office of the Paying Agent in St. Louis, Missouri. The information contained in this Official Statement has been compiled from official and other sources deemed to be reliable, and while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. It is anticipated that CUSIP identification numbers will be printed on the Series 2022B Bonds, but neither the failure to print such numbers on any Series 2022B Bonds nor any error in printing of such numbers will constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for any Series 2022B Bonds. The attached appendices are integral parts of this Official Statement and must be read together with all of the foregoing statements. The closing documents will include a certificate by the proper official or officer of the District that, to the best of his or her knowledge and belief at the time of the acceptance of the delivery of the Series 2022B Bonds, this Official Statement and any information furnished by the District supplementary thereto did not and do not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading in any material respect. Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the information presented herein since the date hereof. This Official Statement is not to be construed as a contract or agreement between the District, the Paying Agent, or the Underwriters and the purchasers or Owners of any Series 2022B Bonds. [Remainder of page intentionally left blank] 62 This Official Statement has been authorized and approved by the District. For purposes of compliance with Rule 15c2-12, this Official Statement constitutes an official statement of the District that has been deemed final by the District as of its date except for the omission of no more than the information permitted by Rule 15c2-12. This Official Statement has been duly executed and delivered on its behalf by the officials or officers signing below. By: /s/ Brian L. Hoelscher, P.E. Executive Director By: /s/ Tim R. Snoke Secretary-Treasurer APPENDIX A Independent Auditors’ Report, Management’s Discussion and Analysis and Basic Financial Statements of The Metropolitan St. Louis Sewer District for the Fiscal Years ended June 30, 2021 and 2020 [ THIS PAGE INTENTIONALLY LEFT BLANK ] THE METROPOLITAN ST. LOUIS SEWER DISTRICT • ST. LOUIS, MISSOURI ANNUALCOMPREHENSIVEFINANCIALREPORT FISCAL YEARS ENDED JUNE 30, 2021 AND 2020 D e e r C r e e k T u n nel Inspectionand Tour J e ff e r s o n B a r r a c k s TunnelVoid Location Deer C r e e k T u n n e l M an Basket Deer Creek Tunnel Reflection THE METROPOLITAN ST. LOUIS SEWER DISTRICT ST. LOUIS, MISSOURI ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEARS ENDED JUNE 30, 2021 AND 2020 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 .................................................................................................18 Statements Of Revenues, Expenses, And Changes In Net Position .................................20 Statements Of Cash Flows ..................................................................................................21 Statements of Fiduciary Net Position .................................................................................23 Statements of Changes in Fiduciary Net Position .............................................................24 Notes To Financial Statements ...........................................................................................25 Required Supplementary Information Schedule Of Changes In Net Pension Liability And Related Ratios ..............................110 Schedule Of Employer Contributions –Employees’ Pension Plan .................................111 Schedule Of Changes in Total OPEB Liability ................................................................112 Part III – Statistical Section: Net Position By Component .....................................................................................................113 Changes In Net Position ..........................................................................................................114 Operating Revenues By Source ...............................................................................................115 Operating Expenses .................................................................................................................116 Non-Operating Revenues And Expenses ................................................................................117 User Charge Rates ...................................................................................................................118 User Charge Revenues .............................................................................................................119 Sewer User Charges (Composite-Annual)..............................................................................120 Number Of Customers By Type...............................................................................................121 Ten Largest Customers ............................................................................................................122 Ratios of Outstanding Debt By Type.......................................................................................123 Computation Of Overlapping Debt .........................................................................................124 Pledged Revenue Coverage ......................................................................................................125 Demographic And Economic Statistics ...................................................................................126 Principal Employers (St. Louis Metropolitan Area)...............................................................127 Employment Level....................................................................................................................128 Average Flow ............................................................................................................................129 Operating And Capital Indicators ...........................................................................................130 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 21, 2021 The Board of Trustees The Metropolitan St. Louis Sewer District The Annual Comprehensive Financial Report (“ACFR”) of The Metropolitan St. Louis Sewer District (“MSD” or the “District”) for the fiscal year (“FY”)ended June 30, 2021 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 ACFR, 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 ACFR 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, 2021 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 Annual Comprehensive Financial Report for the fiscal year ended June 30, 2020. The Financial Section includes the independent auditors’ report, management’s discussion and analysis, the District’s basic financial statements and required supplementary information. The Statistical Section includes financial, economic, and demographic information, generally presented on a multi-year basis. The ACFR 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. Separate from the District’s enterprise financial statements, the District’s fiduciary component unit’s financial statements for The Metropolitan St. Louis Sewer District Employees’ Pension Plan are also included in the ACFR. 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 428,000 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 ofthe Missouri State Constitution. The Charter of MSD (“Plan”),approved by voters in 1954 and amended in 2000, 2012 and 2021, 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 shall be a member of 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 2021 the primary source of funding for the operation and maintenance of MSD’s wastewater system was a user charge averaging $674.31 per year or $56.20 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 fiscal year 2021, District personnel continued to closely monitor 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 reduced revenues.Similar efforts will occur again in fiscal year 2022. During fiscal 2021 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 a 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 community could experience thousands of basement backups and/or extensive street The Board of Trustees The Metropolitan St. Louis Sewer District v flooding. (Even with these overflow 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 more than $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. On April 6, 2021, voters in St. Louis City and St. Louis County overwhelmingly approved Proposition Y—81.6% —to fund MSD’s four-year, $1.58 billion capital improvement program to meet regulatory and system improvement needs. By approving Proposition Y, voters are allowing MSD to borrow $500 million in bonds to design and build nearly 300 The Board of Trustees The Metropolitan St. Louis Sewer District vi projects over the next three years to improve the wastewater system by eliminating overflows, reduce basement backups, repair and rehabilitate the system, make upgrades at the Bissell Point and Lemay Wastewater Treatment Plants, and retire the Fenton Wastewater Treatment Plant. Wastewater rates will increase 3.4% in FY 2022, 3.5% in FY 2023, and 3.7% in FY 2024. 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 $3.12 billion in wastewater revenue bonds. As of June 30, 2021, MSD has issued $2.27 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. As the pandemic continues, our vigilance and commitment to our employees and our community has helped to curb the spread of COVID-19. We continued weekly employee communications, with additional updates as needed. Reduced density of employees in the building continued. The District added additional sanitizer stations and high-touch surfaces remain covered with Nano-Septic coverings. Face-to-face internal meetings are kept to a minimum, and social distancing and masks are required throughout all of MSD facilities, according to local laws. In-person community outreach was no longer possible, so MSD shifted to virtual spaces to continue communication with stakeholders. Project meetings and outreach to municipal partners and contractors are now all done virtually. Plans to remain virtual will continue until it is once again safe to return to in-person meetings. 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 300.6 million gallons per day (“MGD”)in fiscal 2021 compared to 367.5 MGD in fiscal 2020. Flows were lower in fiscal year 2021 due to fewer rain events than occurred in fiscal 2020. The design capacity and average flow, by watershed, in MGD was as follows in fiscal 2021: The Board of Trustees The Metropolitan St. Louis Sewer District vii MAJOR WATERSHED LEVEL OF TREATMENT NUMBER OF FACILITIES DESIGN CAPACITY MGD) AVERAGE FLOW FISCAL 2021 MGD) Mississippi River Secondary Two 472.00 222.00 Missouri River Secondary Two 78.00 50.60 Meramec River Secondary Three 42.75 28.00 Total Seven 592.75 300.60 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. 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 5.8 percent in June 2021 and lower than the national unemployment rate of 5.9 percent for the same time period.The June 2021 unemployment rate of 5.8 percent is lower than the June 2020 rate of 9.6 percent due to the diminishing 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 2021 and 2020: 2021 2020 Sewer Plan Reviews: Number of Plans Approved 525 435 Number of Miles of Sewers 44 41 Sewer Construction Permits: Number of Permits Issued 2,130 2,277 Number of Miles of Sewers 21 23 Customer Connections: Number of Connection Permits Issued 1,621 1,742 Connection Fee Revenue (in millions)$1.6 $0.9 Value of Sewers Dedicated to MSD by Developers (in millions) $12.9 $6.5 Over the years, the St. Louis economy has undergone a transformation from reliance on traditional manufacturing industries to those industries based on advanced technology and services. The St. Louis area is a center for health care, biotechnology, banking, finance, transportation, tourism, and education and has a strong and diverse The Board of Trustees The Metropolitan St. Louis Sewer District viii 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 $136.7 million in fiscal 2021 compared to a net operating income of $141.2 million the prior year. The decrease in net operating income was driven by a decline in other income of $6.7 million. O ther income in FY 2020 included 6.6 million received as a result of a lawsuit settlement. Operating expenses decreased 6.3 million due primarily to a $10.9 million decrease in general and administrative expenses which consisted of a $12.3 million decline in Governmental Accounting Standards Board Statement No.68 related pension expense and a reduction of $2.4 million in litigation and claim expenses; offset by a $3.8 million increase in other administrative expenses such as benefits and compensation and property insurance. A more in-depth analysis of the District’s financial position and the magnitude ofthe capital improvement and replacement program (“CIRP”)is provided in the Management’s Discussion and Analysis section that appears later in this report. Budgetary Controls. The District’s Plan requires MSD to submit a proposed budget to the Board by March 15th each year. After Board review, a final budget is approved in June. The District’s Plan also requires MSD to maintain budgetary controls and to adopt a balanced budget. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the appropriation process approved by the Board. The annual appropriated budget includes activities of the District’s operating and debt service funds. The Board adopts ordinances to appropriate funds for capital improvement expenditures at the time of the contract award and acceptance of any grant offers. Budgetary control is by Division and major expenditure category within the General Fund, each Debt Service Fund, and each capital improvement contract. The District utilizes an encumbrance accounting system in conjunction with internal variance and projection analysis to maintain budgetary control. Certain encumbrances carry over from one year to the next as approved by the Board during the budget process. Monthly and year-end financial reports are prepared in accordance with United States generally accepted accounting principles for Enterprise Funds. Adjustments are made to the accounting records,where necessary,to reflect the full accrual method of accounting. Under the full accrual method of accounting, revenues are recognized when earned and expenses are recorded as liabilities when incurred. Encumbrances and unearned capital and operating grants are eliminated under the full accrual method of accounting. These amounts are disclosed as commitments in the notes to financial statements. The Board of Trustees The Metropolitan St. Louis Sewer District ix 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 $935 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. 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 $125 every fiscal year, up to a maximum of $500, 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 $500. 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. The Board of Trustees The Metropolitan St. Louis Sewer District x 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 ACFR includes a report on the District’s financial statements by the accounting firm of CliftonLarsonAllen LLP. Besides meeting the requirements set forth in the Plan,the annual audit is also designed to meet the requirements of the 2013 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) that was issued by the Office of Management and Budget (“OMB”).A Single Audit Report will be issued for the year ended June 30,2021. 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, 2020 and 2019 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 ACFR for the fiscal year ended June 30, 2020. 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 ACFR, the contents of which conform to program standards. The ACFR 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-three consecutive years. We believe the current ACFR 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 The Board of Trustees The Metropolitan St. Louis Sewer District xi Distinguished Budget Presentation award for its fiscal 2021 annual budget. The District has received this award for thirty-four consecutive years. We believe the fiscal year 2022 budget presentation continues to meet the GFOA’s high standards and have submitted it for consideration. The District also received the GFOA’s Award for Outstanding Achievement in Popular Annual Financial Reporting (“PAFR”) for its fiscal year 2020 PAFR. We have received this award for every year since the publication of our first PAFR for FY 2012 and intend to submit the FY 2021 PAFR for consideration. Marion M. Gee Director of Finance xii ORGANIZATION As of June 30, 2021) BOARD OF TRUSTEES Michael Evans, Chair; Amy Fehr, Vice Chair; Ret. Col. Richard Wilson; Greg Nicozisin; Brian K. Watson; Brian Wahby OFFICE OF INTERNAL AUDITOR RATE COMMISSION Leonard P. Toenjes, Chair OFFICE OF SECRETARY TREASURER Tim R. Snoke Secretary/Treasurer CIVIL SERVICE COMMISSION Rev. Michael F. Jones Marylynn Sims Michael Harvey 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 TECHNOLOGY Jonathon C. Sprague Director 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, 2020 Executive Director/CEO Financial Section METROPOLITAN ST. LOUIS SEWER DISTRICT SERVICE AREAS CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. CliftonLarsonAllen LLP CLAconnect.com 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 activities and the aggregate remaining fund information of The Metropolitan St. Louis Sewer District (the District), as of and for the years ended June 30, 2021 and 2020, 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 opinions 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. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities and the aggregate remaining fund information of the District as of June 30, 2021 and 2020, and the respective changes in its financial position and, where applicable, its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Board of Trustees The Metropolitan St. Louis Sewer District 2) Emphasis of Matter During fiscal year ended June 30, 2021, the District adopted GASB Statement No. 84, Fiduciary Activities. As a result of the implementation of this standard and the change in accounting principle (see Note 1), the District added new fiduciary financial statements. In addition, the District adopted GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period (see Note 1). Our auditors’ opinions were not modified with respect to these matters. 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 21, 2021, 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 21, 2021 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 3 MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2021 and 2020 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. 2021 Financial Highlights The District increased capital assets by $230.5 million as a result of increases in construction in progress ($181.1 million), land ($1.2 million)and depreciable capital assets net of depreciation ($48.1 million). The District placed $141.8 million of capital assets into service during fiscal year 2021. The continued high level of capitalization reflects the District’s work to meet long-term plans. Capitalized assets included: Collection and pumping plant $120.3 million Treatment and disposal plant and equipment $14.2 million General plant and equipment $6.1 million Land $1.2 million The net increase to accumulated depreciation was $86.7 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 2021 fiscal year the District implemented three Governmental Accounting Standards Board (“GASB”) Statements and two Implementation Guides. See Note 1, Summary of Significant Accounting Policies, in the accompanying notes to the financial statements for more detailed information. 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 METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 4 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. Required Financial Statements The basic financial statements presented by the management of the District include the Statements of Net Position; Statements of Revenues, Expenses,and Changes in Net Position; Statements of Cash Flows; Statements of Fiduciary Net Position; and Statements of Changes in Fiduciary Net Position. These statements are prepared using the accrual basis of accounting in conformity with generally accepted accounting principles in the United States of America as applied to government units. 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 District’s basic financial statements also include the Notes to the Financial Statements and Required Supplementary Information. In addition, certain statistical supplementary information is presented for additional analysis but is not a required part of the basic financial statements. The District implemented GASB Statement No. 84, Fiduciary Activities (“GASB Statement No. 84”) in fiscal 2021 and included the financial statements of the District’s fiduciary activities in conformity with generally accepted accounting principles in the United States of America. The fiduciary activities of the District include The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Pension Plan”). 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 5 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 an improving or declining financial position. This statement provides the basis for computing rate of return, evaluating the capital structure of the District, and assessing the liquidity and financial flexibility of the District. The Statements of Revenues, Expenses, and Changes in Net Position summarize the years’revenues and expenses. 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. The Notes to the Financial Statements provide additional information that is essential to obtain a full understanding of the data provided in the basic financial statements, such as the District’s significant accounting policies, investment instruments, outstanding debt, employee benefit plans, segment information and subsequent events to name a few. The Required Supplementary Information section provides detail in support of the changes in the net pension liability and the total other postemployment benefits OPEB”) liability and information pertaining to the District’s actuarially determined contributions to the Pension Plan. The Statistical Section provides significant data that afford the reader a better historical perspective and assist in assessing the current financial status and trends of the District for which ten years of data is generally provided. Financial Analysis The District’s financial position improved in the current year, as evidenced by the increase in net position of $127.3 million. The improvement is due primarily to an increase in net investment in capital assets, subdistrict construction and improvement funds, and unrestricted funds of $114.6 million, $5.0 million, and $11.8 million, respectively; offset by a decrease in debt service funds of $4.1 million. The increase in net investment in capital assets net position is comprised of a $230.5 million increase in net capital assets and a $31.6 million increase in unspent bond proceeds and is decreased by a $139.6 million increase in debt related to capital assets.In addition to these changes to net investment in capital assets net position, the increase in construction-related THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 6 liabilities of $6.1 million, the recognition of a deferred gain on debt refunding (net of amortization) of $1.4 million and the $0.4 million amortization of deferred losses decreased net investment in capital assets. The sum of these six components nets to the 114.6 million increase in net investment in capital assets net position. The $4.1 million decrease in the debt service funds net position is due primarily to the $4.0 million cash reserves paid out in fiscal 2021 to current refund certain debt. Condensed Financial Statements and Analysis 2021 Analysis Current,non-current,restricted, and other assets increased $40.6 million or 5.2% in the current year. The increase is predominately due to an increase in investments and cash due to increased unspent bond proceeds and more taxes levied and collected. Increa se Increase June 30,June 30,(Decrease)Ju ne 30,(Decrease) 2021 2020 2021-2020 2019 2020-2019 As sets: Curre nt, non-current, restricte d, and o the r asse ts 827,663$ 787,043$ 40,620$ 821,030$ (33,987)$ Capital asse ts (net of accumulated depreciatio n)4,078,342 3,847,889 230,453 3,631,716 216,173 Total Assets 4,906,005 4,634,932 271,073 4,452,746 182,186 Defer red Ou tflows of Res ources : Bonds and notes payable -Deferred lo ss on refundin g 5,469 5,889 (420)11,343 (5,454) Pensio n-relate d outflows 10,476 15,673 (5,197) 34,238 (18,565) OPEB-relate d outflows 3,537 2,843 694 1,246 1,597 Total Deferred Ou tflows of Res ources 19,482 24,405 (4,923)46,827 (22,422) Liabilities : Current liabilitie s 165,821 153,611 12,210 149,991 3,620 Non-current liabilitie s 1,832,387 1,722,223 110,164 1,723,830 (1,607) Total Liabilities 1,998,208 1,875,834 122,374 1,873,821 2,013 Defer red Inflows of Res ources : Bonds an d n otes payable -Deferred gain on refundin g 2,793 1,393 1,400 —1,393 Pensio n-relate d inflows 22,671 7,150 15,521 4,341 2,809 OPEB-relate d inflows 3,888 4,331 ( 443)887 3,444 Tot al Deferred Inflows of Res ources 29,352 12,874 16,478 5,228 7,646 Net Po sition: Ne t investm ent in capital asse ts 2,299,308 2,184,736 114,572 2,063,519 121,217 Restr ic te d 97,920 97,034 886 127,414 (30,380) Un re stricte d 500,699 488,859 11,840 429,591 59,268 Tot al Net Po sition 2,897,927$ 2,770,629$ 127,298$ 2,620,524$ 150,105$ Co nden sed Statements of Net Po sition 000's) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 7 Capital assets net of accumulated depreciation increased by $230.5 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 $12.2 million or 7.9% due primarily to an increase in contracts and accounts payable, current portion of bond and notes payable and retainage held on capital projects. Non-current liabilities increased by $110.2 million or 6.4% primarily due to net increases in bonds and notes payable, total OPEB liability and deposits and accrued expenses of 135.1 million, $1.8 million, and $1.6 million, respectively; offset by a decrease in net pension liability of $28.3 million. The net increase in bonds and notes payable is related to the $178.6 million new senior and subordinate debt issued in fiscal year 2021 and a net increase in premiums received on debt issuances of $37.4 million due to premiums on the fiscal 2021 new debt exceeding the premium retired resulting from the fiscal 2021 direct placement refunding;offset by $61.2 million for fiscal 2022 senior and subordinate debt payments reclassified to current liabilities, $11.4 million current refunding of existing debt,$6.4 million amortization of premiums, net of discount, and $1.9 million for fiscal 2021 senior debt payment reclassified to current liabilities payable on new fiscal 2021 debt. Net deferred outflows and inflows decreased $21.4 million or 185.6% 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. 2020 Analysis Current, non-current, restricted, and other assets decreased $34.0 million or 4.1% in fiscal year 2020. 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 fiscal year 2020 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. 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 8 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 decreased $30.1 million or 72.3% due primarily to updates to various information provided by the District’s actuary such as economic/demographic gains or losses, assumption changes or inputs, and investment gains or losses related to the District’s net pension liability or total OPEB liability. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 9 For the Fiscal For the Fiscal Increase For the Fiscal Incr ease Year En ded Year Ended (Decrease)Year Ended (Decrease) Ju ne 30, 2021 June 30, 2020 2021-2020 Ju ne 30, 2019 2020-2019 Oper ating Revenues: Sewer service charges 425,248$ 430,398$ (5,150)$ 399,929$ 30,469$ Provisio n for doubtful sewer service charge acco unts (5,347) (5,612) 265 (4,349) (1,263) Licenses, permits, and other fees 3,754 3,012 742 3,063 (51) Oth er 3,497 10,193 (6,696) 2,478 7,715 Total Operating Revenues 427,152 437,991 (10,839) 401,121 36,870 Non-operating Revenues: Prope rty taxe s levied by the District 43,624 35,439 8,185 34,108 1,331 Investm ent income 1,392 16,259 (14,867) 16,699 (440) Re nt and other income 324 302 22 301 1 Total Non-operating Revenues 45,340 52,000 (6,660) 51,108 892 Total Revenues 472,492 489,991 (17,499) 452,229 37,762 Operating Expen ses: Pumpin g and treatment 64,475 62,030 2,445 63,197 (1,167) Co llection system mainte nance 48,113 47,652 461 45,617 2,035 Engineering 11,501 11,628 ( 127)11,447 181 General and administrative 55,011 65,947 (10,936) 67,462 (1,515) Water backup claims 3,985 4,653 ( 668)5,600 (947) Depreciation 91,352 87,633 3,719 83,640 3,993 Asse t management 16,024 17,195 (1,171) 13,755 3,440 Total Operating Expen ses 290,461 296,738 (6,277) 290,718 6,020 Non-operating Expen ses: Net loss on dispo sal and sale of capital asse ts 990 962 28 971 (9) Non-recurring projects and studie s 11,828 12,458 ( 630)15,628 (3,170) Inte rest expense 56,616 36,119 20,497 33,082 3,037 Total Non-operating Expenses 69,434 49,539 19,895 49,681 (142) Total Expen ses 359,895 346,277 13,618 340,399 5,878 Income B efo re Capital Grants An d Contribu tions 112,597 143,714 (31,117) 111,830 31,884 Capital Grants And Contributio ns 14,701 6,391 8,310 17,378 (10,987) Ch ange in Net Position 127,298 150,105 (22,807) 129,208 20,897 Net Positio n - Beginning of Year 2,770,629 2,620,524 150,105 2,491,316 129,208 Net Po sition - En d of Yea r 2,897,927$ 2,770,629$ 127,298$ 2,620,524$ 150,105$ Statements of Rev en ues, Expen ses, and Changes in Net Position 000's) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 10 2021 Analysis Net position increased $127.3 million or 4.6% over the prior year which was a $22.8 million or 15.2% decrease from last year’s net position increase. The largest impacts to net position were the decrease in investment income and the increase in interest expense. Total revenue decreased by $17.5 million or 3.6%resulting primarily from the decrease in investment income. Sewer service charges decreased $5.2 million or 1.2%due to the impact of the COVID 19 pandemic on commercial customers’ charges.Other operating revenue decreased $6.7 million or 65.7% primarily due to a lawsuit settlement received on a sewer construction project in fiscal year 2020. Property taxes increased $8.2 million or 23.1% due primarily to higher property valuation assessments and re-instatement of tax rates for several of the stormwater subdistricts. Investment income decreased $14.9 million or 91.4% due to an unrealized loss on investments recorded in fiscal 2021 compared to an unrealized gain recognized in fiscal 2020. Total expenses increased by $13.6 million or 3.9% resulting primarily from the increase in interest expense. Operating expenses decreased $6.3 million or 2.1% with decreases in general and administrative, asset management and water backup claims of $10.9 million, 1.2 million, and $0.7 million, respectively; offset by increases in depreciation expense of 3.7 million or 4.2% and pumping and treatment expenses of $2.4 million or 3.9%. General and administrative decreased primarily due to a decrease in net pension expense based on the actuarial calculation resulting from favorable market values for pension assets. Non-operating expenses increased $19.9 million or 40.2% due to a large increase in interest expense of $20.5 million or 56.7%due to the early implementation in fiscal 2021 of GASB Statement No.89, Accounting for Interest Cost Incurred Before the End of a Construction Period (“GASB Statement No. 89”) which discontinued the practice of considering interest costs as one of the ancillary charges necessary to place assets into their intended location and condition for use. Early implementation of GASB Statement No. 89 resulted in 100 percent of the interest costs being expensed in fiscal year 2021 compared to approximately 63 percent being expensed in fiscal year 2020. Capital grants and contributions increased $8.3 million or 130.0% with the majority of the increase resulting from capital contributions as the value of capital projects contributed to the District increased in fiscal 2021. 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 fiscal year 2019’s net position increase. The largest impact to net position was the increase in sewer service charges revenue which increased due to rate increases. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 11 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 $11.0 million or 63.2% with the majority of the decrease resulting from capital contributions as the value of capital projects contributed to the District decreased significantly in fiscal 2020. For the F isc al For the F isc al Inc rease For the Fisc al Inc rease Year End ed Year Ended (Decrease)Year Ended (Decrease) June 30, 2 021 June 30, 2020 2021-2020 June 30, 2019 2020-2019 Cash flows from operating a ctivities 210,674$ 216,970$ (6,2 96)$ 185,226$ 31,744$ Cash flows from non-ca pital financi ng a ctivities 42,689 34,983 7,706 33,850 1,133 Cash flows from ca pital a nd rela ted fina ncing a ctivities (211,637)(305,361)93,724 (3 10,046)4,685 Cash flows from inves ting a ctivities (1 6,586)93,779 (110,365) 113,338 (19,559) Net incre ase (decrease) in ca sh a nd ca sh e quivalents 25,140 40,371 (15,231)22,368 18,003 Cash a nd ca sh eq uivalent s a t begi nni ng of year 97,125 56,754 40,371 34,386 22,368 Cas h And Cash Equivalents At End Of Y ear 122,265$ 97,125$ 25,140$ 56,754$ 40,371$ Conde nsed Statements of Cash F low s 000's) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 12 2021 Analysis The District ended the year with $122.3 million in cash and cash equivalents for an increase of $25.1 million or 25.9% from the prior year.Cash flows from operating activities decreased by $6.3 million or 2.9% as a result of decreased receipts from customers and increased payments to employees for services and to suppliers for goods and services.Cash flows from non-capital financing activities increased by $7.7 million or 22.0%due to higher taxes receipts. Cash flows from capital and related financing activities increased by $93.7 million or 30.7% due primarily to a $99.2 million increase in bond proceeds and premiums received in fiscal year 2021 compared to fiscal year 2020, a decrease of $16.2 million in principal, interest and fees paid on bonds due primarily to the $26.0 million debt service reserves paid out to advance refund debt in fiscal 2020 compared to the $4.0 million paid out in fiscal 2021 to current refund debt, and increases of $2.4 million in capital grant proceeds and $1.1 million in insurance proceeds; offset by a $25.2 million increase in spending for capital assets. Cash flows from investing activities decreased by $110.4 million or 117.7%. The decrease primarily stems from the fact that the difference between investments maturing decreased $69.1 million while investments purchased increased $40.5 million in fiscal 2021 compared to fiscal year 2020. 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 $31.7 million or 17.1% 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 $4.7 million or 1.5% due primarily to a $74.8 million increase in bond proceeds and premiums received in fiscal year 2020 compared to fiscal year 2019;offset by a $25.2 million increase in principal, interest and fees paid on bonds and a $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. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 13 Capital Assets 2021 Analysis Total capital assets, net of accumulated depreciation, increased by $230.5 million or 6.0% over the prior year.Construction in progress contained the majority of the increase of 181.1 million or 17.9% consisting of $299.6 million in additions offset by $118.5 million of assets placed into service.Collection and pumping plant assets increased with net additions of $68.5 million or 3.3%, primarily for capitalization of assets including new and improved sewers, dedicated assets, and infrastructure repairs. Land increased $1.2 million or 1.6% due to the acquisition of easements and other land and general plant and equipment increased $1.1 million or 5.0%. These increases are offset by net treatment and disposal plant and equipment decrease of $21.5 million or 3.4% due to no large projects being capitalized in fiscal 2021 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. 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 $4.1 million or 5.5% due to the acquisition of easements and other land. These increases are Inc rease Inc re ase June 3 0,June 30,(Decrease)June 3 0,(Decrease) 2021 2020 2021- 2020 2019 2020-2019 Land 79,569$ 78,334$ 1,235$ 74,274$ 4,060$ Construct ion in progres s 1,194,033 1,012,926 181,107 956,321 56,605 Treatment and disposal plant and equi pment 617,238 638,730 (21,492) 660,732 (22,002) Collection a nd p um ping p lant 2,163,327 2,094,866 68,461 1,916,993 177,873 Gene ra l plant and equipment 24,175 23,033 1,142 23,396 (363) T otal 4,078,342$3,847,889$230,453$ 3,631,716$216,173$ Conde nsed Statem ents of Capit al As sets Net of Depreciation 000's) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 14 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 $0.4 million or 1.6%. For more detailed information, see Note 4, Capital Assets, in the accompanying notes to the financial statements. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 15 Long-Term Debt Inc rease Inc rease June 3 0,June 3 0,(Decrease)June 3 0,(Decrease) 2021 2020 2021-2020 2019 2020-2019 Senior Revenue Bonds: Series 2010B 85,000$ 85,000$ —$ 85,000$ —$ Series 2011B —13,725 (13,725) 15,945 (2,220) Series 2012A 40,320 45,620 (5,300) 154,040 (108,420) Series 2012B 37,800 41,525 (3,725) 128,840 (87,315) Series 2013B 38,990 42,380 (3,390) 113,615 (71,235) Series 2015B 166,030 168,950 (2,920) 190,135 (21,185) Series 2016C 138,740 141,695 (2,955) 144,535 (2,840) Series 2017A 305,580 309,240 (3,660) 312,760 (3,520) Series 2019B 51,295 52,130 (835)—52,130 Series 2019C (Taxa ble)274,745 276,260 (1,515) —276,260 Series 2020B 118,055 —118,055 —— Water Infrastructure F inanc e & Innovation Ac t (WIFIA) Senior Bonds: Series 2018A 262 262 —262 — Senior Refunding R evenue Bonds, Direct Placement: Series 2021C 5,620 —5,620 —— Subordinate R evenue Bonds State Revolving Funds Program): Series 2004B 46,625 55,730 (9,105) 64,590 (8,860) Series 2005A 2,400 2,765 (365)3,120 (355) Series 2006A 16,075 18,550 (2,475) 20,965 (2,415) Series 2006B 5,890 6,650 (760)7,400 (750) Series 2008AB 17,790 19,795 (2,005) 21,765 (1,970) Missouri Department of Natural Resources: Energy Loan Program ———16 (16) Series 2009A 11,892 13,068 (1,176) 14,218 (1,150) S eries 2010A 4,683 5,080 (397)5,468 (388) S eries 2010C 21,269 23,111 (1,842) 24,906 (1,795) Series 2011A 28,611 30,449 (1,838) 32,241 (1,792) S eries 2013A 38,679 41,044 (2,365) 43,349 (2,305) Series 2015A 58,973 62,478 (3,505) 65,902 (3,424) S eries 2016A 17,001 17,158 (157)13,129 4,029 Series 2016B 65,850 61,285 4,565 45,583 15,702 S eries 2018B 24,303 18,228 6,075 2,880 15,348 Series 2019A 22,012 6,292 15,720 —6,292 S eries 2020A 9,983 —9,983 —— S eries 2021A 5,333 —5,333 —— Series 2021B 7,260 —7,260 —— T otal 1,667,066$ 1,558,470$ 108,596$ 1,510,664$ 47,806$ Condensed Statem ents of L ong-Term Debt 000's) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 16 2021 Analysis The District ended fiscal year 2021 with $1.7 billion in long-term debt outstanding. The District had one senior revenue bond addition this year,Series 2020B, totaling $120.0 million and one senior refunding revenue bond direct placement addition,Series 2021C, totaling $5.6 million which was used to refund $11.4 million of the Series 2011B senior revenue bond. These amounts represent new borrowings and do not reflect the principal payment made in fiscal 2021 on Series 2020B. In addition, the District added three new Missouri Department of Natural Resources bonds,Series 2020A, 2021A and 2021B, totaling $10.0 million, $5.3 million and $7.3 million, respectively. The District also received $0.7 million, $7.9 million,$6.1 million,and $15.7 million in loan proceeds from the Series 2016A, Series 2016B,Series 2018B, and Series 2019A Missouri Department of Natural Resources bonds,respectively.These amounts represent new borrowings and do not reflect the principal payments made in fiscal 2021 on Series 2016A and Series 2016B. Total principal payments of $58.6 million, excluding the refunding referenced above, reduced outstanding debt in fiscal year 2021.For more detailed information, see Note 6, Long-Term Liabilities, in the accompanying notes to the financial statements. 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 of $52.6 million, excluding the refunding referenced above, 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. 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Management’s Discussion And Analysis (Continued) Page 17 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; 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 $3.1 billion in wastewater revenue bonds. As of June 30, 2021, the District has issued $2.3 billion of the total authorization. The District’s long-term wastewater capital improvement program will continue to be funded through a combination of additional bonds and wastewater rate increases. Requests for Information This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the District’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed or e-mailed to: Marion M. Gee, Director of Finance The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-2555 314-768-6200 mgee@stlmsd.com THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 18 STATEMENTS OF NET POSITION Continued on Next Page Ju ne 30, As sets 2021 2020 Cu rrent As sets Unrestricted Cu rrent As sets Cash and cash equivale nts 91,337,843$ 67,802,872$ Investments 210,940,744 264,322,528 Se wer se rvice charges receivable, less allo wance of $70,666,088 in 2021 and 66,061,154 in 2020 66,387,300 67,498,533 Unbille d sewer service charges rece ivable 34,970,247 33,342,430 Prope rty taxe s receivable , less allo wance of $7,430 in 2021 and $8,604 in 2020 363,496 421,059 Accrued income on investm ents 1,434,887 1,891,034 Other receivables, less allo wance of $60,373 in 2021 and $58,209 in 2020 2,340,234 5,168,412 Supplie s inventory 8,475,419 8,013,597 To tal Unrestrict ed Cu rrent As sets 416,250,170 448,460,465 Res tricted Cu rrent As sets Cash and cash equivale nts 4,629,689 3,580,818 Investments 12,587,475 17,921,368 Other receivables 43,590 48,273 To tal Restricted Cu rrent As sets 17,260,754 21,550,459 Total Cu rrent As sets 433,510,924 470,010,924 Non-Current As sets Res tricted As sets Cash and cash equivale nts 26,297,303 25,741,021 Investments 125,637,074 90,301,459 Long-term investments 32,199,117 30,682,863 Prope rty taxe s receivable , less allo wance of $36,447 in 2021 and $29,497 in 2020 1,750,616 1,389,975 Accrued income on investm ents 169,177 375,676 To tal Restricted Non-Cu rrent As sets 186,053,287 148,490,994 Other As sets Note s receivable 9,694,702 10,410,729 Long-term investments 198,404,102 158,130,241 To tal Other Assets 208,098,804 168,540,970 Capital Assets Depreciable: Treatment and dispo sal plant and equipm ent 1,303,648,712 1,289,884,442 Co llection and pumping plan t 3,093,068,764 2,974,542,039 General plant and equipment 103,516,644 100,949,737 4,500,234,120 4,365,376,218 Less:Accumulate d depreciatio n 1,695,494,536 1,608,746,607 Net de preciable assets 2,804,739,584 2,756,629,611 Non-depreciable: Land 79,569,310 78,333,629 Co nstruction in pro gress 1,194,033,441 1,012,925,929 Net Capital As sets 4,078,342,335 3,847,889,169 Total Non-Current As sets 4,472,494,426 4,164,921,133 Tot al As sets 4,906,005,350 4,634,932,057 Defer red Ou tflows of Res ources Bonds and note s payable-De ferred loss on refundin g 5,469,323 5,888,796 Pensio n-related outflows 10,476,420 15,673,652 OPEB-relate d outflows 3,536,916 2,842,869 Tot al Defer red Ou tflows of Resources 19,482,659 24,405,317 THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 19 STATEMENTS OF NET POSITION (Continued) Ju ne 30, Liabilities 2021 2020 Cu rrent Liabilities Current Liabilities -Payable From Un restricted As sets Contracts and acco unts payable 40,797,422$ 36,317,712$ Deposits and accrued expenses 42,276,571 42,172,527 Retain age payable 20,326,492 16,736,184 Current portio n of bonds and notes payable 61,157,300 56,629,100 Total Cu rrent Liabilities-Payable From Un restrict ed As sets 164,557,785 151,855,523 Current Liabilities -Payable From Restrict ed Assets Contracts and acco unts payable 702,175 912,704 Retain age payable 561,310 843,548 Total Cu rrent Liabilities-Payable From Restricted As sets 1,263,485 1,756,252 Total Cu rrent Liabilities 165,821,270 153,611,775 Non-Current Liabilities Deposits and accrued expenses 9,202,567 7,559,792 Net pe nsio n liability 29,495,178 57,792,913 To tal OPEB liability 24,920,628 23,164,618 Bonds and notes payable 1,768,769,051 1,633,705,811 Total Non-Current Liabilities 1,832,387,424 1,722,223,134 Total Liabilities 1,998,208,694 1,875,834,909 Deferred Inflows of Resources Bonds and notes payable-Deferred gain on refundin g 2,793,162 1,393,209 Pe nsion-relate d inflows 22,671,398 7,149,698 OPEB-rela ted inflows 3,888,085 4,330,667 Total Defer red Inflows of Res ources 29,352,645 12,873,574 Net Po sition Net in vestment in capital asse ts 2,299,307,589 2,184,736,432 Restricte d for: Debt service 29,706,793 33,856,568 Subdistrict constr uctio n and improve ment 68,212,821 63,177,454 Unrestricted 500,699,467 488,858,437 Total Net Position 2,897,926,670$ 2,770,628,891$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 20 STATEMENTS OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION 2021 2020 Operating Revenues Se wer se rvice charge s 425,247,783$ 430,398,092$ Provision for doubtful se wer service charge acco unts (5,347,419)(5,611,549) Licenses, pe rmits and other fe es 3,753,797 3,012,368 Other 3,497,401 10,193,128 Total Oper ating Rev enues 427,151,562 437,992,039 Operating Expen ses Pumpin g and tre atm ent 64,475,064 62,030,454 Colle ctio n system maintenance 48,112,996 47,652,258 Engine ering 11,500,796 11,628,086 G eneral and adm in istrative 55,011,533 65,946,684 Wate r backup claims 3,984,849 4,653,281 Depre ciatio n 91,352,269 87,633,312 Asse t manage ment 16,023,983 17,195,321 Total Oper ating Expen ses 290,461,490 296,739,396 Operating Inco me 136,690,072 141,252,643 Non-Operating Revenues Property taxes levied by the Dis tric t 43,624,302 35,439,441 Investment income 1,392,278 16,259,182 Rent and othe r income 323,662 301,631 Total Non-Oper ating Revenues 45,340,242 52,000,254 Non-Operating Expen ses Net lo ss on dispo sal and sale of capital asse ts 990,108 961,476 Non-recurring projects an d stu die s 11,827,723 12,458,231 Interest expense 56,615,868 36,119,362 Total Non-Oper ating Expen ses 69,433,699 49,539,069 Income Befo re Capit al Grants An d Contributions 112,596,615 143,713,828 Capital Grants An d Contribu tions Capital asse ts co ntributed 12,943,095 6,491,961 G rant re venue 1,758,069 (101,054) Total Capital Grants An d Co ntribu tions 14,701,164 6,390,907 Change In Net Position 127,297,779 150,104,735 Net Position - Beginning Of Year 2,770,628,891 2,620,524,156 Net Po sition - En d Of Year 2,897,926,670$ 2,770,628,891$ For Th e Years En ded Ju ne 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 21 STATEMENTS OF CASH FLOWS Continued on Next Page 2021 2020 Cash F low s F rom O perating Ac tivities Received from cus tomers 425,929,012$ 429,203,588$ Paid to employees for services (105,930,520) (104,218,386) Paid to suppliers for go ods and servi ce s (109,324,477) (108,014,954) Net Cas h Provide d By O perating Ac tivities 210,674,015 216,970,248 Cash F low s Provided By Non-Capital F inanc ing Activities Taxes levied and collected 42,688,546 34,983,525 Cash F low s From Capital And Related Financing Ac tivities Proceeds from ca pital gra nt s 3,537,577 1,099,045 Proceeds from issuance of debt 172,012,156 97,928,346 Premium on sale of bonds 37,194,201 12,059,976 Principa l paid on debt (62,599,880) (52,603,763) Interest and fees paid on debt (62,785,703) (8 8,951,050) Payments for ca pital assets (303,040,026) (277,790,939) Proceeds from s ale of capital assets 158,652 105,228 Proceeds received from other organi zation for their cont ribution to construct ion of treatment plant 1,154,696 1,154,696 Proceeds from ins urance on des troyed capital assets 1,088,835 — Build America B ond tax credit 1,642,857 1,636,759 Net Cas h (Used In) Capital And Related Financ ing Ac tivitie s (211,636,635) (305,361,702) Cash F low s F rom Investing Ac tivities Purcha se of investment s (633,675,492) (593,156,734) Proceeds from sale and maturi ty of investment s 606,554,500 675,698,385 Investment income 10,297,068 10,995,758 Proceeds from rent s 238,122 241,167 Net Cas h Provide d By (Used In) Investing Activities (16,585,802) 93,778,576 Ne t Inc re ase In Cash And Cash Eq uivalents 25,140,124 40,370,647 Cash And Cas h Eq uivale nts At Beginning Of Y ear 97,124,711 56,754,064 Cash And Cash Equivalents At End Of Year 122,264,835$ 97,124,711$ Statem ents of N et Position Classific at ion C urrent A ssets - Unres tricted Cash and cash equivalents 91,337,843$ 67,802,872$ C urrent A ssets - Restricted Cash and cash equivalent s 4,629,689 3,580,818 N on-Current A ssets - Restricted Cash and ca sh equiva lent s 26,297,303 25,741,021 Statements of Net Position T otal Cash And Cash Equivalents 122,264,835$ 97,124,711$ Non-Cash Capital And Investing Activities Net proceeds from debt issuance placed into escrow to refund bonds 7,371,752$ 275,196,961$ Principa l amount reduced and placed in escrow and related deferred loss/ga in and premium (7,371,752) (300,519,359) Proceeds from debt issuance us ed to pay underwri ters directly 932,589 374,256 Capital asset additions included in account s payable 23,958,166 20,074,250 Capital assets co nt ributed by ot her governments and developers 12,943,095 6,491,961 Fair va lue investment adjus tment (gain) los s 7,406,329 (7,431,145) Grant revenue (expense)288,446 (1 78,002) For The Y ears Ended June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 22 STATEMENTS OF CASH FLOWS (Continued) 2021 2020 Reconciliation Of Operating Income To Net Cash Flows Provided By Operating Activities Operating Income 136,690,072$ 141,252,643$ Adjustments to reconcile operating incom e to net cash provided by operating activities: Depr ec iation 91,352,269 87,633,312 Non-recurring projects and studies (11,827,723)(12,458,231) Tax commission fees 637,362 507,762 Change in oper ating assets and liabilities: Increase) in billed and unbilled sewer service charges receivable (516,584)(3,035,050) Decrease in other receivables 75,499 97,828 Dec rease (increase) in supplies inventory (461,822)292,918 Dec rease in pension-related outflows 5,197,232 18,564,618 Increase) in OPEB-related outflows (694,047)(1,596,542) Decrease) increase in contracts and accounts payable 693,426 (1,099,779) Decrease) increase in deposits and accrued expen ses 990,938 (1,838,193) Decrease) in net pen sion liability (28,297,735)(16,603,824) Decrease) increase in total OPEB liability 1,756,010 (999,777) Increase in pen sion-related inflows 15,521,700 2,808,582 Decrease) increase in OPEB-r elated inflows (442,582)3,443,981 Net Cash Provided By Operating Activities 210,674,015$ 216,970,248$ For The Years En ded June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 23 STATEMENTS OF FIDUCIARY NET POSITION EMPLOYEES’PENSION PLAN 2020 2019 Assets Investment s at Fair V alue: Collective Investment Funds 171,767,753$ 136,062,084$ Mutual Funds 60,179,174 70,580,513 Real Es tate Investment s 30,265,219 32,566,168 Corporate Obligations 27,630,867 21,981,050 Dom estic C ommon Stocks 18,552,256 14,868,772 US Treasury and Agency Obligations 13,994,724 16,428,797 Money M arket Funds 3,237,837 3,110,257 Muni ci pal Ob ligations 1,292,527 554,136 Total In ve stment s 326,920,357 296,151,777 Receiva bles Interest and Dividends Receiva ble 236,729 333,726 Total Receivables 236,729 333,726 Total Assets 327,157,086 296,485,503 Liab ilitie s Accrued Exp enses 244,402 282,856 Total Liabilities 244,402 282,856 Fuduciary Net Position Restricted for Pension Benef its 326,912,684$ 296,202,647$ December 31, THE METROPOLITAN ST. LOUIS SEWER DISTRICT See the accompanying notes to financial statements.Page 24 STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION EMPLOYEES’PENSION PLAN 2020 2019 Additions to F iduciary Net Position Attrib uted to: Investment Incom e: Net Appreci ation in Fair V alue of Inves tment s 32,083,437$ 38,919,875$ Interest and Dividends 5,514,283 3,542,825 Total Investment Income 37,597,720 42,462,700 Less - Investment M anagers ' and Advisors ' Fees 922,422 831,216 Net Inves tment Incom e 36,675,298 41,631,484 Em ployer Contributions 13,416,065 12,740,406 Total Additions 50,091,363 54,371,890 Deductions from F iduc iary Net Position Attrib uted to: Benefits Paid to Retirees and Beneficiaries 19,273,097 18,626,890 Administrative Expenses 108,229 102,929 Total Deductions 19,381,326 18,729,819 Net Inc re ase 30,710,037 35,642,071 Fiduc iary N et Position Restricted for Pension Bene fits, January 1 296,202,647 260,560,576 Fiduc iary N et Position Restricted for Pension Bene fits, Dec em ber 31 326,912,684$ 296,202,647$ For the Y ears Ended December 31, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 25 NOTES TO FINANCIAL STATEMENTS June 30, 2021 AND 2020 1.Summary of Significant Accounting Policies Organization The Metropolitan St. Louis Sewer District (“ District”) was authorized by the voters, established and chartered under Article VI, Section 30 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 a member of 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. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 26 The District sponsors a single employer defined benefit pension plan and trust for which the District contributes the actuarially determined contribution each year. Pursuant to the adoption in fiscal year 2021 of Statement No. 84 of the Governmental Accounting Standards Board, Fiduciary Activities, it was determined that the defined benefit pension plan and trust qualifies as a fiduciary component unit that meets the criteria of a fiduciary activity and the Statements of Fiduciary Net Position and the Statements of Changes in Fiduciary Net Position for The Metropolitan St. Louis Sewer District Employees’ Pension Plan are presented following the District’s basic financial statements. The District issues a publicly available report for the defined benefit pension plan and trust with audited financial statements that is available upon request and is also available on the District’s msdprojectclear.org website. While included in the separately issued report, the Cash and Investments and the Fair Value Measurement and Application note disclosures for the fiduciary activity are presented herein as Notes 16 and 17. 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. 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. 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. The District’s fiduciary financial statements are also presented in conformity with accounting principles generally accepted in the United States of America on an accrual basis of accounting. 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 for both the basic THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 27 financial statements and the financial statements of the District’s fiduciary activity 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. 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. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 28 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. 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. Throughout the fiscal year unbilled sewer service charge revenues are accrued by the District based on estimated billings for services provided and then actual unbilled sewer service charge revenue is accrued at the end of the fiscal year as all ratepayers are billed in the following month for the previous calendar month’s services with the billings spread over twenty-three different billing cycles. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 29 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 their estimated acquisition value at the acquisition date. Depreciation is calculated on a straight-line basis over the following estimated useful lives: 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 a minimum initial, individual cost between $5,000 and $15,000, depending on the class of assets as detailed above, and an estimated useful life of at least three years. At the time of retirement or disposal of capital assets, the related cost and accumulated depreciation are removed from the accounts and the resulting net gain or loss on disposal and sale of capital assets is reflected in non-operating expenses. A portion of the prior fiscal years’ interest on debt was capitalized as part of the costs of capital assets during construction based on the related weighted average net borrowing costs incurred. In fiscal year 2021 the District early implemented GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, resulting in all interest cost incurred in fiscal year 2021 being charged to interest expense in the period in which it was incurred. The amount of interest cost incurred in 2021 totaled $53,151,605 of which $44,846,148 was incurred on tax-exempt borrowings and $8,305,457 was incurred on taxable borrowings. This $53,151,605 excludes debt issuance cost, agent fees and amortization of deferred gains and losses of $3,464,263. In fiscal year 2020, the District’s total interest cost incurred on borrowings during the fiscal year was 50,688,152 and of the fiscal year 2020 total, $45,917,407 was incurred on tax- exempt borrowings and $4,770,745 was incurred on taxable borrowings. Of this total interest cost, $19,252,310 was capitalized and $31,435,842 was expensed in Cl ass of Assets Useful Life in years Buildings (recorded within other categories)20 to 50 Collection System 20 to 100 Pumping System 5 to 50 Treatmen t & Dispos al Plant 5 to 50 Vehicles 7 to 10 Gener al Suppor t Equipm ent & Furniture 3 to 10 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 30 fiscal 2020. This $31,435,842 excludes debt issuance cost, agent fees and amortization of deferred gains and losses of $4,683,520. To offset the interest costs capitalized in fiscal year 2020, interest revenue on unspent bond proceeds of 1,636,310 was netted with the interest expense resulting in a net capitalized interest of $17,616,000 in fiscal year 2020. 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. 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 potentially 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, 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 sewer charges have been restricted for the payment of principal and interest, including accrued interest,on outstanding debt of the District. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 31 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 which 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 and are reported at their estimated acquisition value. 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 32 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 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 33 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 (“Pension Plan”) and additions to/deductions from the Pension Plan’s fiduciary net position have been determined on the same basis as they are reported by the Pension 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 2021 the District implemented GASB Statement No. 84, Fiduciary Activities (“GASB Statement No. 84”), originally effective for reporting periods beginning after December 15, 2018. GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance (“GASB Statement No. 95”), postponed the effective date to reporting periods beginning after December 15, 2019. GASB Statement No. 84 describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds;(2) investment trust funds;(3) private-purpose trust funds;and (4) custodial funds. The criteria for identifying fiduciary activities are established and the focus for the criteria is on (1) whether a government is controlling the assets of the activity and (2) the beneficiaries with whom a fiduciary relationship exists. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. After adoption of GASB Statement No. 84, the District began reporting the fiduciary activities of The Metropolitan St. Louis Sewer District Employees’ Pension Plan in the financial statements. The District early implemented GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period (“GASB Statement No. 89”), originally effective for reporting periods beginning after December 15, 2019,and THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 34 subsequently postponed to reporting periods beginning after December 15, 2020, by GASB Statement No. 95. The requirements of this Statement are applied prospectively and discontinue the practice of considering interest costs as one of the ancillary charges necessary to place the asset into its intended location and condition for use. This authoritative guidance states that decisions regarding how to finance the acquisition of capital assets do not impact the service capacity of those assets and the requirements of this Statement will improve financial reporting by providing more relevant information about capital assets and the cost of borrowing for a reporting period and simplify accounting for interest cost incurred before the end of a construction period. In financial statements prepared using the economic resources measurement focus, which is the District’s measurement focus, interest cost incurred before the end of a construction period should be recognized as an expense in the period in which the cost is incurred and should not be capitalized as part of the historical cost of a capital asset. In fiscal year 2021 interest during construction is now expensed whereas interest costs related to the construction of capital assets incurred prior to fiscal year 2021 were included as a cost of those assets and will be capitalized when construction is completed and the assets are placed in service. During fiscal year 2021 the District reviewed GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans –An Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No. 32 GASB Statement No. 97), for which certain requirements were effective immediately while other requirements were effective for fiscal years and reporting periods beginning after June 15, 2021,(earlier application of these requirements was encouraged and permitted by requirement as specified within this Statement). The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency and comparability of the accounting and financial reporting for Internal Revenue Code Section 457 deferred compensation plans (“Section 457 plan”) that meet the definition of a pension plan and for benefits provided through those plans. Based on the requirements in this Statement, the District’s defined contribution plan and Section 457 plan do not qualify as fiduciary activities and their financial statements are not required to be reported with the District’s basic financial statements. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 35 During fiscal year 2021 the District implemented all applicable and relevant sections of Implementation Guide No. 2019-1, Implementation Guidance Update- 2019, for which the objective is to provide guidance that clarifies, explains, or elaborates on various GASB Statements and Implementation Guide No. 2019-2, Fiduciary Activities, for which the objective is to provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 84, Fiduciary Activities. During fiscal year 2020 the District did not implement any new GASB Statements. The following GASB Statements which became effective during fiscal year 2021 and 2020 are not applicable to the District and there is no implementation impact on the District’s financial reporting at this time. Statement No. 90, Majority Equity Interests, an amendment of GASB Statements No. 14 and No. 61 (fiscal 2021) Statement No. 83, Certain Asset Retirement Obligations (fiscal 2020) 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. 87, Leases (fiscal 2022) 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) Implementation Guide No. 2019-3, Leases (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 36 2.Deposits and Investments Deposits At June 30, 2021,the reported amount of the District’s deposits was $97,274,120 and the bank balance was $104,666,278. Of the bank balance, $935,107 was covered by the Federal Deposit Insurance Corporation (“FDIC”); $103,731,171 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 19,990,860 held in a trusted escrow account for the State that will be used to make future bond payments. At June 30, 2020,the reported amount of the District’s deposits was $75,013,119 and the bank balance was $80,405,147. O f 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. 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 $250,000 for interest bearing accounts and noninterest bearing accounts. The District’s investment policy complies with the provisions of state laws and requires collateralization on repurchase agreements, time certificates of deposit and deposits with banking institutions that are not covered by the FDIC, and the collateralization level shall be 103% and shall be based on the fair value of the pledged collateral. Investments The Secretary-Treasurer is authorized to invest, with the approval of the Board, funds not immediately needed for the purpose to which said funds are applicable, in the same manner as the state treasurer may invest funds of the State of Missouri pursuant to Section 15, Article IV of the Constitution of Missouri,as amended from time to time. The District’s investment policy conforms to the investment policy guidelines for the State of Missouri. The District’s investment policy authorizes the District to invest in the following instruments: U .S. Treasury obligations, certificates of deposit, obligations of any agency or instrumentality of the U.S., repurchase agreements, bankers’ acceptances, and commercial paper, all according to terms specified in the policy.The District also has investments in money market mutual funds that hold securities approved by the District’s investment policy. At June 30, 2021,and June 30, 2020, all of the District’s investments were in compliance with the District’s investment policy and Charter. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 37 A summary of deposits and investments as of June 30, 2021,and June 30, 2020 is as follows: A reconciliation to the Statements of Net Position is as follows: Investment Type Cost Fair Value Cost Fair Value Deposits 97,274,120$ 97,274,120$ 75,013,119$ 75,013,119$ Money M arket Mutual Funds 19,990,860 19,990,860 19,589,363 19,589,363 U.S. Treasury a nd A gency Ob ligations 539,097,325 538,632,467 506,727,851 513,292,985 Commercial Paper 46,126,622 46,135,900 50,443,589 50,587,703 Total 702,488,927$ 702,033,347$ 651,773,922$ 658,483,170$ 2021 2020 2021 2020 Cash and C ash Equivalent s Unrestricted Current 91,337,843$ 67,802,872$ Restricted Current 4,629,689 3,580,818 Restricted Non-Current 26,297,303 25,741,021 In vestments Unrestricted Current 210,940,744 264,322,528 Restricted Current 12,587,475 17,921,368 Restricted Non-Current 125,637,074 90,301,459 Long-Term Inve stment s Restricted Non-Current 32,199,117 30,682,863 Ot he r 198,404,102 158,130,241 Total 702,033,347$ 658,483,170$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 38 Interest Rate Risk As of June 30, 2021,and 2020, 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.Complying with state law which 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, 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. Weighted Weighted Average Average Maturity Maturity Inve stment Type Fair Value (Years)Fair Value (Years) U.S. Treasury Ob ligations 338,993,883$ 1.16 157,710,696$ 1.58 U.S. Agency Ob ligations 199,638,584 1.13 355,582,289 0.86 Commerci al Paper 46,135,900 0.24 50,587,703 0.13 Total 584,768,367$ 1.07 563,880,688$ 1.00 2021 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 39 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, 2021,and June 30, 2020, 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, 2021, or June 30, 2020: Is suer 2021 2020 Treasury Notes 58.0 28.0 Federal Home Loan Bank 13.3 19.3 Federal Farm C re dit Funding C orp 10.7 14.0 Federal Home Loan Bank Discount Note 2.7 7.7 Federal Agricul ture M ortgage A ssoci ation 1.4 7.5 Tennes see Valley A ssoci ation 0.0 6.4 Total Investm ents Percent Of THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 40 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, 2021, and June 30, 2020: Money Market Mutual Funds of $20.0 million and $19.6 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 $538.6 million and $513.3 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 $46.1 million and $50.6 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) See Notes 16 and 17 for information regarding the cash and investments held by the Fiduciary Pension Trust Fund. 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 established in fiscal year 2008 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 41 At June 30, 2021, future payments are as follows: At June 30, 2020, 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 was conveyed to the successor entity in fiscal 2021. At June 30, 2021 and 2020, MSD’s note receivable related to the Contractor Loan Fund was $0 for both fiscal years. 2022 1,154,696$ 2023 1,154,696 2024 1,154,696 2025 1,154,696 2026 1,154,696 2027-2031 5,773,479 2032-2033 1,718,494 13,265,453 Less: Amount repr es en ting interest 2,854,724 Total Notes Rec ei vable 10,410,729$ Cl assification in Statement of Net Position: Current - Other receivables 716,027$ Non-current - Notes receivable 9,694,702 Total Notes Rec eivable 10,410,729$ 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 repr es en ting interest 3,323,520 Total Notes Rec ei vable 11,096,629$ Cl assification in Statement of Net Position: Current - Other receivables 685,900$ Non-current - Notes receivable 10,410,729 Total Notes Rec eivable 11,096,629$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 42 4.Capital Assets The following is a summary of capital assets changes for the fiscal years ended June 30, 2021 and 2020: Balance Balance June 30, 2020 Ju ne 30, 2021 Capital assets not being depr ec iated: Land 78,333,629$ 1,235,681$ —$ 79,569,310$ Construction in progress 1,012,925,929 299,650,837 (118,543,325) 1,194,033,441 Total capital assets not being depr ec iated 1,091,259,558 300,886,518 (118,543,325) 1,273,602,751 Capital assets being depr ec iated: Treatm ent and disposal plant and equipment 1,289,884,442 14,244,282 (480,012) 1,303,648,712 Collection and pum ping plant 2,974,542,039 120,283,066 (1,756,341) 3,093,068,764 Gener al plant and equipment 100,949,737 6,083,654 (3,516, 747) 103,516,644 Total capital assets being depr ec iated 4,365,376,218 140,611,002 (5,753,100) 4,500,234,120 Less: Accumulated depreciation: Treatm ent and disposal pl an t and equipm en t (651,154,735) (35,699, 307) 443,044 (686, 410, 998) Collection and pumping pl an t (879,675,620) (50,729, 803) 663,491 (929, 741, 932) Gener al plant an d equipment (77,916,252) (4,923, 159) 3,497,805 (79,341, 606) Total ac cumulated depr ec iation (1,608,746,607) (91,352, 269) 4,604,340 (1,695,494, 536) Total capital assets being depr ec iated, net 2,756,629,611 49,258, 733 (1,148, 760) 2,804,739,584 Tot al Capit al Assets 3,847,889,169$ 350,145, 251$ ( 119,692, 085)$ 4,078, 342,335$ Addi tions Deletions Balance Balance June 30, 2019 Ju ne 30, 2020 Capital assets not being depr ec iated: Land 74,274,584$ 4,059,045$ —$ 78,333,629$ Construction in progress 956,321,065 289,293,915 (232,689,051) 1,012,925,929 Total capital assets not being depr ec iated 1,030,595,649 293,352,960 (232,689, 051) 1,091,259,558 Capital assets being depr ec iated: Treatm ent an d di sposal plant and equipment 1,277,635,246 13,871,749 (1,622, 553) 1,289,884,442 Collection and pum ping plant 2,749,946,498 225,843, 281 (1,247, 740) 2,974, 542,039 Gener al plant and equipment 99,318,349 4,493, 834 (2,862, 446) 100, 949,737 Total capital assets being depr ec iated 4,126,900,093 244,208, 864 (5,732, 739) 4,365, 376,218 Less: Accumulated deprec iation: Treatm ent and disposal pl an t and equipm en t (616,903,498) (35,588, 610) 1,337,373 (651, 154, 735) Collection and pumping pl an t (832,953,875) (47,278, 724) 556,979 (879, 675, 620) Gener al plant an d eq uipment (75,921,957) (4,765, 978) 2,771,683 (77,916, 252) Total ac cumulated depr ec iation (1,525,779,330) (87,633, 312) 4,666,035 (1,608, 746, 607) Total capital assets being depr ec iated, net 2,601,120,763 156,575, 552 (1,066, 704) 2,756, 629,611 Tot al Capit al Assets 3,631,716,412$ 449,928, 512$ ( 233,755, 755)$ 3,847, 889,169$ Addi tions Deletions THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 43 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. T axes 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 2021 and 2020, the District recorded revenue from property taxes in the amount of $43,624,302 and $35,439,441,respectively. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 44 6.Long-Term Liabilities The following is a summary of changes in the District’s long-term liabilities for the year ended June 30, 2021: Original Balance Balance Issuance June 30,June 30,Current Amounts 2020 Additions Retirements 2021 Portion Bonds and Notes Payable: Wastewater Sys tem Senior Revenue Bonds: Series 2010B 85,000,000$ 85,000,000$ —$ —$ 85,000,000$ —$ Series 2011B 52,250,000 13,725,000 —(13,725,000)—— Series 2012A 225,000,000 45,620,000 —(5,300,000)40,320,000 5,300,000 Series 2012B 141,730,000 41,525,000 —(3,725,000)37,800,000 4,050,000 Series 2013B 150,000,000 42,380,000 —(3,390,000)38,990,000 3,520,000 Series 2015B 223,855,000 168,950,000 —(2,920,000)166,030,000 3,070,000 Series 2016C 150,000,000 141,695,000 —(2,955,000)138,740,000 3,070,000 Series 2017A 316,175,000 309,240,000 —(3,660,000)305,580,000 5,490,000 Series 2019B 52,130,000 52,130,000 —(835,000)51,295,000 880,000 Series 2019C (Taxable)276,260,000 276,260,000 —(1,515,000)274,745,000 1,545,000 Series 2020B 120,000,000 —120,000,000 (1,945,000)118,055,000 1,895,000 Water Infrastructure Finance and Innovation Act (WIFIA) Senior Bonds: Series 2018A 47,722,204 261,480 — — 261,480 — Wastewater System Senior Refunding Revenue Bonds, Direct Placement: Series 2021C 5,620,000 — 5,620,000 — 5,620,000 — Water Pollution Control and Drinking Water Subordinate Revenue Bonds (State Revolving Funds Program): Series 2004B 161,280,000 55,730,000 —(9,105,000)46,625,000 9,540,000 Series 2005A 6,800,000 2,765,000 —(365,000)2,400,000 375,000 Series 2006A 42,715,000 18,550,000 —(2,475,000)16,075,000 2,530,000 Series 2006B 14,205,000 6,650,000 —(760,000)5,890,000 780,000 Series 2008A/B 40,000,000 19,795,000 —(2,005,000)17,790,000 2,050,000 Missouri Department of Natural Resources: Series 2009A 23,000,000 13,068,200 —(1,176,500)11,891,700 1,203,700 Series 2010A 7,980,700 5,079,500 —(396,600)4,682,900 404,600 Series 2010C 37,000,000 23,111,000 —(1,842,000)21,269,000 1,890,000 Series 2011A 39,769,300 30,449,300 —(1,838,000)28,611,300 1,884,000 Series 2013A 52,000,000 41,044,000 —(2,365,000)38,679,000 2,427,000 Series 2015A 75,000,000 62,478,000 —(3,505,000)58,973,000 3,589,000 Series 2016A 20,000,000 17,158,430 722,570 ( 880,000)17,001,000 899,000 Series 2016B 75,500,000 61,285,085 7,850,915 (3,286,000)65,850,000 3,358,000 Series 2018B 25,267,000 18,228,388 6,074,524 —24,302,912 533,000 Series 2019A 23,952,000 6,291,992 15,719,694 —22,011,686 — Series 2020A 22,000,000 —9,983,418 —9,983,418 — Series 2021A 63,101,000 —5,333,065 —5,333,065 — Series 2021B 40,201,000 —7,260,558 —7,260,558 874,000 2,615,513,204$ 1,558,470,375$ 178,564,744$ (69,969,100)$ 1,667,066,019$ 61,157,300$ Add: Unamortized premium, net of discount 162,860,332 Total Bonds and Notes Payable 1,829,926,351$ Current Portion of Bonds and Notes Payable 61,157,300$ Non-Current Bonds and Notes Payable 1,768,769,051 Total Bonds and Notes Payable 1,829,926,351$ Net Pension Liability 57,792,913$ (28,297,735)$ —$ 29,495,178$ —$ Total OPEB Liability 23,164,618$ 1,756,010$ —$ 24,920,628$ —$ Deposits and Accrued Expenses 622,913$ 64,055$ —$ 686,968$ —$ Compensated absences 9,249,172 799,410 ( 586,805) 9,461,777 946,178 Total Deposits and Accrued Expenses 9,872,085$ 863,465$ ( 586,805)$ 10,148,745$ 946,178$ Current Portion (Compensated absences) in Current Deposits and Accrued Expenses 946,178$ Non-Current Deposits and Accrued Expenses 9,202,567 Total Deposits and Accrued Expenses 10,148,745$ Landfill closure and postclosure costs THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 45 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 Am ounts 2019 Additions Retirements 2020 Portion Bonds and Notes Payable: Wa stewater Sys tem Senior Revenue B onds: S eries 2010B 85,000,000$ 85,000, 000$ —$ —$ 85,000, 000$ —$ S eries 2011B 52,250,000 15,945, 000 —(2 ,2 20,000)13,725, 000 2,330,000 S eries 2012A 225,000,000 154,040, 000 —(108,420,000)45,620, 000 5,300,000 S eries 2012B 141,730,000 128,840,000 —(87,315,000)41,525,000 3,725,000 S eries 2013B 150,000,000 113,615, 000 —(71,235,000)42,380, 000 3,390,000 S eries 2015B 223,855,000 190,135, 000 —(21,185,000) 168, 950, 000 2,920,000 S eries 2016C 150,000,000 144,535, 000 —(2 ,8 40,000) 141, 695, 000 2,955,000 S eries 2017A 316,175,000 312,760, 000 —(3 ,5 20,000) 309, 240, 000 3,660,000 S eries 2019B 52,130,000 —52,130,000 —52,130,000 835,000 S eries 2019C (Taxable)276,260,000 —276, 260,000 —276, 260, 000 1,515,000 Wa ter Infra structure Finance and Innovation A ct (WIFIA) Senior Bonds: S eries 2018A 47,722,204 261, 480 — — 261, 480 — Water Pollution Control and Drinking Wa ter Sub ordinate Revenue Bonds (S tate Revolving Funds Program): S eries 2004B 161,280,000 64,590,000 —(8 ,8 60,000)55,730,000 9,105,000 S eries 2005A 6,800,000 3,120,000 —(355,000)2,765,000 365,000 S eries 2006A 42,715,000 20,965,000 —(2 ,4 15,000)18,550,000 2,475,000 S eries 2006B 14,205,000 7,400,000 —(750,000)6,650,000 760,000 S eries 2008A/B 40,000,000 21,765,000 —(1 ,9 70,000)19,795,000 2,005,000 M issouri Department of Natura l Resources: Energy Loan Program 223,793 16,163 —(16,163)—— S eries 2009A 23,000,000 14,218, 100 —(1 ,1 49,900)13,068, 200 1,176,500 S eries 2010A 7,980,700 5,468,200 —(388,700)5,079,500 396,600 S eries 2010C 37,000,000 24,906, 000 —(1 ,7 95,000)23,111, 000 1,842,000 S eries 2011A 39,769,300 32,241, 300 —(1 ,7 92,000)30,449, 300 1,838,000 S eries 2013A 52,000,000 43,349, 000 —(2 ,3 05,000)41,044, 000 2,365,000 S eries 2015A 75,000,000 65,902, 000 —(3 ,4 24,000)62,478, 000 3,505,000 S eries 2016A 20,000,000 13,129,064 4,890,366 (861,000)17,158,430 880,000 S eries 2016B 75,500,000 45,582,626 18,919,459 (3 ,2 17,000)61,285,085 3,286,000 S eries 2018B 25,267,000 2,880,349 15,348,039 —18,228,388 — S eries 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$ A dd: Una mortized 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 L iabilit y 74,396,737$ (1 6,603,824)$ —$ 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 Ac crued 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 cos ts THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 46 Voter Approved Bond Authorizations The District has received voter authorization for revenue bonds on the dates and in the amounts presented below. These funds were sought to enable the District to comply with federal and state clean water requirements. Only new bond issuances count against these authorizations while none of the refunding issuances count against them. From the total voter authorization of $3,120,000,000, 853,126,796 has not been issued as of June 30, 2021. Wastewater System Senior Refunding Revenue Bonds Payable, Direct Placement In March 2020, the District entered into a forward-delivery direct purchase agreement to issue $5,620,000 of Wastewater System Senior Refunding Revenue Bonds Series 2021C (“Series 2021C”) which closed in May 2021 to coincide with the call date of the outstanding Series 2011B bonds. These Series 2021C bonds, which were previously identified as Series 2021A but were subsequently renamed due to the timing of their issuance, were issued to refund the Series 2011B bonds maturing in fiscal years 2030 through 2032 totaling $11,395,000. Proceeds of 7,371,752, including a premium of $1,751,752, and $4,025,780 in excess debt service reserves the District contributed were used to refund all the remaining outstanding Series 2011B bonds and the $2,532 interest accrued thereon. The related liability for the Series 2011B bonds refunded were removed from the District’s financial statements in fiscal 2021. This direct placement refunding decreased total debt service payments over the next 11 years by $7,527,111, 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 $2,553,241. These Series 2021C senior direct placement bonds have interest rates of 5.00% and are payable in semiannual installments at varying amounts through May 1, 2032. Date of Authorization Voter Authorized Am ount February 2004 500,000,000$ Augus t 2008 275,000,000 June 2 012 945,000,000 April 2016 900,000,000 April 2021 500,000,000 Total 3,120,000,000$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 47 Principal and Interest Requirements on Senior Refunding Revenue Bonds Payable, Direct Placement The annual principal and interest requirements to maturity on direct placement senior refunding revenue bonds payable outstanding as of June 30, 2021, are as follows: Wastewater System Revenue Bonds Payable In December 2020, the District issued $120,000,000 of Wastewater System Senior Revenue Bonds Series 2020B (“Series 2020B”). 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, 2021, $64,112,703 has been expended. A premium of 37,194,201 was received on the issuance of Series 2020B. These Series 2020B senior bonds have an interest rate of 5.0%and are payable in semiannual installments at varying amounts through June 1, 2050. In December 2019, the District issued $52,130,000 of Wastewater System Senior 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. All funds from this issuance have been expended. A premium of $12,059,977 was received on the issuance of Series 2019B. These Series 2019B senior bonds have an interest rate of 5.0% and are payable in semiannual installments at varying amounts through May 1, 2049. Years ending J une 3 0,Princ ipal Interest Total 2022 —$ 279,439$ 279,439$ 2023 —281,000 281,000 2024 —281,000 281,000 2025 —281,000 281,000 2026 —281,000 281,000 2027-2031 3,625,000 1,317,500 4,942,500 2032 1,995,000 99,750 2,094,750 Total 5,620,000$ 2,820,689$ 8,440,689$ Direc t Plac ement 2021C Wastew ater System Senior Refunding Revenue Bonds Payab le THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 48 In December 2019, the District issued $276,260,000 of Taxable Wastewater System Senior 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 $13,671,500 were made from the escrow account in fiscal year 2021. All $273,430,000 debt defeased in substance to be paid from the escrow account remains outstanding as of June 30, 2021. As a 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 year 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. These Series 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 Senior 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 49 wastewater facilities. All funds from this issuance have 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. These Series 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 payments of $6,017,025 and principal payments of $23,345,000 were made from the escrow account in fiscal year 2021. Of the $125,760,000 debt defeased in substance to be paid from the escrow account, $102,415,000 remains outstanding as of June 30, 2021. 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 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 Senior 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 Series 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 Senior 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 50 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 Series 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 fiscal 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 fiscal 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 removed from the District’s financial statements in fiscal 2016. The original 60,000,000 Series 2006C bonds were issued pursuant to the February 2004 authorization and the original $30,000,000 Series 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 Senior 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 Series 2013B 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 fiscal 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 51 advance refunding of the Series 2013B bonds for nine years within a span of 12 years from 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 Senior Refunding Bonds Series 2012B (“Series 2012B”). These bonds were issued to advance refund the Series 2004A bonds maturing in fiscal years 2015 and thereafter. T hese Series 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 Series 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 was a taxable advance refunding of the Series 2012B bonds for the fiscal 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 Senior 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 Series 2012A 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 fiscal 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 fiscal years 2040 through 2042 totaling THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 52 103,120,000. 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 Senior 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 Series 2011B 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 fiscal years 2022 through 2029 totaling $23,345,000. See the explanation for Series 2017A above for further information. In May 2021 there were direct placement senior refunding revenue bonds issued to refund the remaining fiscal years 2030 through 2032 totaling $11,395,000. See the explanation for Series 2021C above for further information. As a result of the advance refunding and direct placement, Series 2011B bonds are considered fully defeased. In January 2010, the District issued $85,000,000 of Taxable Wastewater System Senior 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 Series 2010B senior bonds have an interest rate of 5.9% and are payable in semiannual installments at varying amounts through May 1, 2039. As Build America Bonds under The American Recovery and Reinvestment Act ARRA”) of 2009, the District receives a subsidy payment from the Federal government equal to a percentage of the interest paid. In fiscal years 2013 and prior the rate was 35%. Beginning with refund payments processed on March 1, 2013,and annually beginning on October 1, 2013, the IRS has adjusted this rate as part of the sequestration. In fiscal year 2021 the subsidy percentage was 33.0% while for 2020 the subsidy percentage was 32.9%. In fiscal year 2022 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 Senior 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 53 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 Series 2008A/B Participant Bonds originally had interest rates ranging from 4.0% to 5.7% but effective April 1, 2021, the District’s interest rate on all outstanding principal was modified to 0.83% but are still payable in semiannual installments at varying amounts through January 1, 2029. In November 2006, the Authority authorized and issued $22,105,000 of State Revolving Funds Programs Series 2006B (“Series 2006B”). The Series 2006B bonds provided funds to issue loans to 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 Series 2006B 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 54 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 Series 2006A 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 Series 2005A 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 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 Series 2004B 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, 2019A, 2020A, 2021A, and 2021B direct loans (pages 56-65) do not obligate the District to levy any form of THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 55 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. 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. On June 30, 2021 and 2020, the District was in compliance with this covenant. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 56 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, 2021,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 (WIFIA) 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. As of June 30, 2021, 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 2021B In January 2021, the State of Missouri Direct Loan Program issued to the District an amount totaling $40,201,000 for the purpose of improving, renovating, repairing, replacing, and equipping the District’s Wastewater System. The Years e nding J une 30,Princ ip al Intere st Total 2022 44,095,000$ 56,752,922$ 100,847,922$ 2023 45,560,000 55,024,170 100,584,170 2024 46,960,000 53,403,686 100,363,686 2025 48,795,000 51,683,990 100,478,990 2026 50,490,000 49,836,979 100,326,979 2027-2031 240,315,000 218,854,834 459,169,834 2032-2036 270,650,000 166,519,042 437,169,042 2037-2041 335,055,000 102,605,928 437,660,928 2042-2046 213,865,000 37,885,111 251,750,111 2047-2050 49,550,000 5,119,250 54,669,250 Total 1,345,335,000$ 797,685,912$ 2,143,020,912$ Wastewater System R evenue Bonds Payab le/ Water Pollution Control and Drinking W ater Revenue Bonds Payab le THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 57 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 0.78%and is payable in semiannual installments at varying amounts through January 1, 2041. Principal and Interest Requirements on State of Missouri Direct Loan Series 2021B 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 0.78%based on the amount that has been borrowed. As of June 30, 2021, the outstanding loan balance was $7,260,558. The payment requirements to maturity will be determined after the debt is fully issued. State of Missouri Direct Loan Series 2021A In January 2021, the State of Missouri Direct Loan Program issued to the District an amount totaling $63,101,000 for the purpose of constructing the Lower Meramec Tunnel. 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 0.78%and is payable in semiannual installments at varying amounts through July 1, 2044. Principal and Interest Requirements on State of Missouri Direct Loan Series 2021A 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 0.78%based on the amount that has been borrowed. As of June 30, 2021, the outstanding loan balance was $5,333,065. The payment requirements to maturity will be determined after the debt is fully issued. State of Missouri Direct Loan Series 2020A In September 2020, the State of Missouri Direct Loan Program issued to the District an amount totaling $22,000,000 for the purpose of constructing the Deer Creek Tunnel Pump Stations. 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 0.80%and is payable in semiannual installments at varying amounts through July 1, 2042. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 58 Principal and Interest Requirements on State of Missouri Direct Loan Series 2020A 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 June 30, 2021, the outstanding loan balance was $9,983,418. 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, 2021, the outstanding loan balance was $22,011,686. 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, 2021,the outstanding loan balance was $24,302,912. 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 59 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, 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 1.2% 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 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 2016B outstanding as of June 30, 2021, are as follows: State of Missouri Direct Loan Series 2016A In December 2016, the State of Missouri Direct Loan Program issued to the District an amount totaling $20,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds are issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through January 1, 2037. Years ending J une 3 0,Princ ipal Interest Total 2022 3,358,000$ 780,180$ 4,138,180$ 2023 3,432,000 739,662 4,171,662 2024 3,507,000 698,256 4,205,256 2025 3,583,000 655,944 4,238,944 2026 3,661,000 612,714 4,273,714 2027-2031 19,540,000 2,381,382 21,921,382 2032-2036 21,766,000 1,150,080 22,916,080 2037-2038 7,003,000 84,342 7,087,342 Total 65,850,000$ 7,102,560$ 72,952,560$ State of M issouri Dire ct L oan Serie s 2016B THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 60 Principal and Interest Requirements on State of Missouri Direct Loan Series 2016A 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 2016A outstanding as of June 30, 2021, are as follows: State of Missouri Direct Loan Series 2015A In August 2015, the State of Missouri Direct Loan Program issued to the District an amount totaling $75,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the June 2012 authorization. The District’s interest rate is 1.2% and is payable in semiannual installments at varying amounts through January 1, 2035. Principal and Interest Requirements on State of Missouri Direct Loan Series 2015A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. Years ending J une 3 0,Princ ipal Interest Total 2022 899,000$ 201,330$ 1,100,330$ 2023 919,000 190,482 1,109,482 2024 939,000 179,394 1,118,394 2025 959,000 168,066 1,127,066 2026 981,000 156,492 1,137,492 2027-2031 5,233,000 599,736 5,832,736 2032-2036 5,829,000 270,012 6,099,012 2037 1,242,000 11,196 1,253,196 Total 17,001,000$ 1,776,708$ 18,777,708$ State of M issouri Dire ct L oan Serie s 2016A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 61 The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2015A outstanding as of June 30, 2021, 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 $52,000,000 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the June 2012 authorization. Effective April 1, 2021, the District’s interest rate on all outstanding principal was modified to 0.83% from 1.6% but is still payable in semiannual installments at varying amounts through July 1, 2034. Principal and Interest Requirements on State of Missouri Direct Loan Series 2013A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. Years ending J une 3 0,Princ ipal Interest Total 2022 3,589,000$ 708,502$ 4,297,502$ 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 3,943,000 526,015 4,469,015 2027-2031 21,237,000 1,879,691 23,116,691 2032-2035 18,916,000 526,302 19,442,302 Total 58,973,000$ 5,497,795$ 64,470,795$ State of M issouri Dire ct L oan Serie s 2015A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 62 The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2013A outstanding as of June 30, 2021, 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 $39,769,300 for the purpose of improving, renovating, repairing, replacing and equipping the District’s Wastewater System. The principal and interest on the bonds are expected to be paid from future wastewater revenues and the bonds were issued from the August 2008 authorization. The District’s interest rate is 1.5% and is payable in semiannual installments at varying amounts through January 1, 2034. Principal and Interest Requirements on State of Missouri Direct Loan Series 2011A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account. All funds have been drawn on this loan. The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2011A outstanding as of June 30, 2021, are as follows: Years ending J une 3 0,Princ ipal Interest Total 2022 2,427,000$ 385,592$ 2,812,592$ 2023 2,490,000 295,758 2,785,758 2024 2,555,000 274,958 2,829,958 2025 2,622,000 253,611 2,875,611 2026 2,691,000 231,707 2,922,707 2027-2031 14,540,000 809,487 15,349,487 2032-2035 11,354,000 190,933 11,544,933 Total 38,679,000$ 2,442,046$ 41,121,046$ State of M issouri Dire ct L oan Serie s 2013A Years ending J une 3 0,Princ ipal Interest Total 2022 1,884,000$ 427,758$ 2,311,758$ 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 2,083,000 308,010 2,391,010 2027-2031 11,242,000 1,045,448 12,287,448 2032-2034 7,456,300 200,418 7,656,718 Total 28,611,300$ 3,089,082$ 31,700,382$ State of M issouri Dire ct L oan Serie s 2011A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 63 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, 2021, are as follows: State of Missouri Direct Loan Series 2010A In January 2010, the State of Missouri’s Direct Loan Program -ARRA issued to the District an amount totaling $7,980,700 for the construction, improvement, renovation, repair, replacement and equipping of its Wastewater System, under the authority of and in full compliance with the District’s Charter (“Plan”)and the bonds were issued from the August 2008 authorization. T he District’s interest rate is 1.5% and is payable in semiannual installments at varying amounts through July 1, 2031. Years ending J une 3 0,Princ ipal Interest Total 2022 1,890,000$ 343,172$ 2,233,172$ 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 2,094,000 212,685 2,306,685 2027-2031 11,316,000 523,438 11,839,438 Total 21,269,000$ 1,917,289$ 23,186,289$ State of M issouri Dire ct L oan Serie s 2010C THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 64 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, 2021, are as follows: State of Missouri Direct Loan Series 2009A In October 2009, the DNR loaned $23,000,000 to the District. The State of Missouri Direct Loan Series 2009A note bears interest at a rate of 1.5% per annum and is payable through January 1, 2030. The purpose of this note was to finance the designing, constructing, improving, renovating, repairing, replacing and equipping of new and existing sewer facilities within the District. The principal and interest on the note are expected to be paid from future wastewater revenues and the note was issued from the August 2008 authorization. Principal and Interest Requirements on State of Missouri Direct Loan Series 2009A As the District incurred approved capital expenditures, the DNR reimbursed the District for the expenditures from the bond proceeds account.All funds have been drawn on this loan. Years ending J une 3 0,Princ ipal Interest Total 2022 404,600$ 67,814$ 472,414$ 2023 412,900 61,799 474,699 2024 421,300 55,657 476,957 2025 429,800 49,391 479,191 2026 438,500 42,998 481,498 2027-2031 2,329,600 114,460 2,444,060 2032 246,200 1,822 248,022 Total 4,682,900$ 393,941$ 5,076,841$ State of M issouri Dire ct L oan Serie s 2010A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 65 The annual principal and interest requirements to maturity on the State of Missouri Direct Loan Series 2009A outstanding as of June 30, 2021, are as follows: In accordance with the Direct Loan Series 2009A, 2010A, 2010C, 2011A, 2013A, 2015A, 2016A, 2016B, 2018B, 2019A, 2020A, 2021A, and 2021B 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, 2021 and 2020, the District was in compliance with this covenant. Wastewater System Cash and Investments The following accounts have been established in accordance with bond ordinances and financing agreements that require receipts generated from operations be segregated and certain reserve accounts be established: Revenue Fund The Revenue Fund will be used for the purpose of depositing wastewater and stormwater operating revenues, providing funds to pay for expenses related to the operation and maintenance of the District, and fulfilling Sinking Fund requirements in accordance with the bond ordinances. Sinking Fund The bond ordinances provide for deposits to and the use of monies in the Sinking Fund to be used for the sole purpose of principal and interest payments on the bonds. Sufficient monies shall be paid in periodic installments from the Revenue Fund. Debt Service Fund The Debt Service Fund shall be used by the Trustee for the sole purpose of paying the principal and interest on the bonds, as and when the same become due. Years ending June 30, Principal Interest Total 2022 1,203,700$ 169,216$ 1,372,916$ 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 1,319,000 96,059 1,415,059 2027-2030 5,588,200 186,020 5,774,220 Total 11,891,700$ 851,350$ 12,743,050$ State of Missouri Direct Loan Series 2009A THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 66 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, 2021, and 2020, cash and investments in the Debt Service Reserve Fund totaled $21,045,454 and $25,000,722, 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. Series 2020B was issued without a debt service reserve fund requirement. Series 2021C was issued without a debt service reserve fund requirement and at that time $4,025,780 in excess debt service reserves along with the Series 2021C proceeds were used in a current refunding of Series 2011B. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 67 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, 2021 and 2020, cash and investments in the Special Participant Bond Reserve Account held on behalf of the District totaled $58,050,189 and 67,598,530, 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, 2021. 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, 2021 and 2020, cash and investments in the Project Funds totaled $92,415,533 and $60,765,125, 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, 2021 and 2020, cash and investments in the Rebate Fund totaled $228,349 and $229,909, respectively. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 68 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 2050 at an approximate amount of $2.2 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 2021 was $119.3 million with pledged revenues of $252.0 million. This provided a coverage ratio of 2.1 and pledged revenues represented 59.0%of all net operating revenues. Direct Borrowings and Direct Placements The District did not have any bonds and notes from direct borrowings in the fiscal years ending June 30, 2021 and 2020. As stated previously, the District had direct placement bonds of $5,620,000 and $0 in the fiscal years ending June 30, 2021 and 2020, respectively. In addition, the District had no unused lines of credit and had no assets pledged as collateral for bonds from direct placements in the fiscal years ending June 30, 2021 and 2020. The District has authorized the issuance of Wastewater System Senior Refunding Revenue Bonds,Direct Placement Series 2022A,Series 2023A and Series 2025A to be issued on May 3, 2022, May 1, 2023,and May 1, 2025, respectively.The par amount of the bonds will total $196,445,000 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 Senior Revenue Bonds Series 2012B, Series 2013B, and Series 2015B. Wastewater System Senior Refunding Revenue Bonds, Direct Placement Series 2021A, renamed Series 2021C due to the timing of their issuance, was included in the original authorization, and was issued on May 3, 2021,and the $5,620,000 proceeds were used to refund the outstanding Wastewater System Senior Revenue Bonds Series 2011B. See the explanation for Series 2021C above for further information. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 69 The Amended and Restated Forward Delivery Bond Purchase Agreement for the Series 2022A, Series 2023A, and Series 2025A Bonds contains terms regarding events of default between closing and settlement with finance-related consequences that are classified as (1) an event of default under other debt instruments, (2) repudiation of the District’s obligations under the Agreement, (3) dissolution, (4) bankruptcy, (5) consolidation or merger into another entity resulting in materially weaker creditworthiness, (6) misrepresentation, (7) significant rating downgrade or rating withdrawal or (8) refusal or inability of bond counsel to deliver an opinion that the interest on the Bonds is excludable from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended, and is exempt from income taxation by the State of Missouri. Upon the occurrence of an event of default the District may be required to make a termination payment to the purchaser of the Bonds equal to fees and expenses, and on demand of the purchaser, a make-whole termination payment. 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. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 70 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. Effective August 27, 2011, Ordinance No. 13288 amended the Pension Plan to include the following: “Upon termination or complete discontinuance of contributions under the Pension 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.” Effective September 14, 2017, Ordinance No. 14776 amended the Pension Plan to require enrollment in Medicare Parts A and B when Members first become eligible for such Medicare programs due to disability in order to receive, or continue to receive, retiree medical benefits under the Pension Plan and to clarify that any retiree medical benefits under the Pension Plan will be secondary to Medicare disability benefits in accordance with the Medicare secondary payor rules. Effective February 14, 2019, Ordinance No. 15110 amended the Pension Plan to update the language of Pension Plan benefits for death of a member after retirement and retiree medical coverage. 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 METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 71 The Pension Plan reports financial data on a calendar year basis and issues a publicly available financial report that includes audited financial statements and required supplementary information. That report is available on the District’s website at msdprojectclear.org and 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, 2020, and 2019, 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 $12,771,525 and $13,062,014, excluding certain professional fees paid by the District, were made to the Pension Plan during the District’s fiscal years ended June 30, 2021, and 2020, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations performed at December 31, 2020, and 2019, respectively. Net Pension Liability The net pension liability was measured as of December 31, 2020, and 2019 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Increase 2020 2019 (Decrease) Active plan members 450 493 (43) Retirees and beneficiaries currently receiving benefits 800 771 29 Terminated members entitled to receive benefits 172 180 (8) Total 1,422 1,444 (22) As of December 31, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 72 Actuarial Assumptions. The total pension liability in the December 31, 2020, and 2019 actuarial valuations were determined using the following actuarial assumptions, applied to all periods included in the measurement: Effective December 31, 2020, and 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-2020 and MP-2019 improvement scale (improvement scale updates published annually), respectively. The actuarial assumptions are based on prior and current year experiences. 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, 2020, and 2019 are as follows: Inflation 2.50 percent Salary Increases 4.25 percent, average, including inflation Investment Rate of Return 6.75 percent, net of pension plan investment expense, including inflation for years ended December 31, 2020 and 2019 Long-Term Expected Arithmetic Target Real Rate Asset Class Allocation of Return Large Cap US Equity 25.0% 4.2% Domestic Core Bonds 14.0% 0.1% Core "Plus" Bonds 13.0% 0.7% Real Estate 12.0% 2.9% Developed International Equity 12.0% 5.0% Small Cap US Equity 10.0% 4.7% Global Fixed Income 8.0% 3.5% Emerging Markets Equity 6.0% 5.2% Total 100.0% December 31, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 73 Discount Rate. The discount rate used to measure the total pension liability at December 31, 2020,and 2019, was 6.75 percent. The Pension Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. Lon g-Term Expe cted Arithme tic Target Real Rate Asset Class Allocation of Return Domestic Fixe d Income 27.0% ** Large Cap US Equity 25.0%4.2% Develo ped Internat io nal Equit y 12.0%5.0% Re al Estate 12.0%3.4% Small Cap US Equit y 10.0%4.7% Glo bal Fixe d Income 8.0%2.9% Emerging Markets Equity 6.0%5.6% Total 100.0% Expected to earn less than inf latio n December 31, 2019 Increase (Decrease) Total Pension Plan Fidu ciary Net Pension Liability Net Position Liability Ch ange s in Net Pension Liability (a)(b)(a) - (b) Balanc es as of December 31, 2019 353,995,560$ 296,202,647$ 57,792,913$ Change s for the year: Servic e cost 4,832,125 —4,832,125 Interest 23,581,022 —23,581,022 Effect of economic /demographic gains or losses (6,727,748)—(6,727,748) Effect of assumptions changes or inputs ——— Be ne fit payme nt s (19,273,097)(19,273,097)— Emplo yer contribut ions —13,398,565 (13,398,565) Net inve stment inc ome —36,584,569 (36,584,569) Balanc es as of December 31, 2020 356,407,862$ 326,912,684$ 29,495,178$ Changes in Net Pens ion Liability for th e Year Ending December 31, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 74 Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability calculated using the 6.75 percent discount rate for December 31, 2020,and December 31, 2019, 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. Increase (Decrease) Total Pension Plan Fidu ciary Net Pension Liability Net Position Liability Ch ange s in Net Pension Liability (a)(b)(a) - (b) Balanc es as of Decembe r 31, 2018 334,957,313$ 260,560,576$ 74,396,737$ Change s 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 change s or input s 11,910,886 —11,910,886 Be nefit payments (18,626,890)(18,626,890)— Emplo yer contributio ns —12,725,462 (12,725,462) Net inve stment inc ome —41,543,499 (41,543,499) Balanc es as of Decembe r 31, 2019 353,995,560$ 296,202,647$ 57,792,913$ Changes in Net Pension Liability for the Year Ending December 31, 2019 1%Cu rrent 1% Decrease Discou nt Rate Increase 5.75%)(6.75%)(7.75%) Net Pension Liabilit y 68,384,716$ 29,495,178$ (3,623,239)$ December 31, 2020 1%Current 1% Decrease Discou nt Rate Increase 5.75%)(6.75%)(7.75%) Net Pension Liabilit y 97,289,377$ 57,792,913$ 24,254,799$ December 31, 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 75 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the years ended June 30, 2021,and 2020, the District recognized pension expense of $5,192,722 and $17,831,390, 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: In the years ending June 30, 2021,and 2020, amounts currently reported as deferred outflows of resources, $6,506,124 and $7,133,164, respectively, related to the District’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the years ended June 30, 2022,and 2021, respectively. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Payable to The Pension Plan At June 30, 2021,and 2020, the District did not have outstanding required contributions to the Pension Plan. Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Dif ferences between expected and actual experience —$ 5,077,158$ —$ 3,031,605$ Changes of assumptions 3,970,296 —8,540,488 — Net difference between projected and actual earnings —17,594,240 —4,118,093 Contribut io ns made subsequent to measurement date 6,506,124 —7,133,164 — Total 10,476,420$ 22,671,398$ 15,673,652$ 7,149,698$ June 30, 2021 June 30, 2020 Net Deferrals of Resources Year ended June 30,: 2022 (3,717,338)$ 2023 (3,482,577) 2024 (8,132,308) 2025 (3,368,879) 18,701,102)$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 76 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 (“DF Plan”), available to all District employees, permits them to defer a portion of their salary up to Internal Revenue Code limits. T he District does not contribute to the DF 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 DF Plan. At June 30, 2021,and 2020, the District had outstanding liabilities owed to the DF Plan of $176,954 and $150,307, respectively. The DF 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 DF 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 DF 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 audited financial statements and supplementary information. That report is available on the District’s website at msdprojectclear.org and 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 METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 77 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. 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. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 78 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 $2,816,157 and $2,483,566 for the years ended June 30, 2021, and 2020, respectively. Forfeitures were 99,855 and $61,807, for the years ended June 30, 2021, and 2020, respectively, and the balances in the prepaid forfeitures account as of June 30, 2021, and 2020 were $6,097 and $4,073, respectively. At June 30, 2021, and 2020, the District had outstanding liabilities owed to the DC Plan of $101,147 and $81,163, respectively. Vesting: As of any time before the normal retirement age of a participant, the first day of the month coinciding with or next following a person’s sixty-fifth birthday and completion of sixty months of continuous service (other than upon death or permanent disability), the vested percentage of the amounts credited to the participant’s Employer Basic Contributions account shall be determined in accordance with the following schedule: Months Of Continuous Service Vested (Non- Forfeitable) Percentage Less than 12 0% 12 but less than 24 20% 24 but less than 36 40% 36 but less than 48 60% 48 but less than 60 80% 60 100% The Metropolitan St. Louis Sewer District Defined Contribution Plan issues a publicly available financial report that includes audited financial statements and supplementary information. That report is available on the District’s website at msdprojectclear.org and may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103-2555. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 79 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 (“OPEB Plan”), provides retiree medical coverage 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 OPEB Plan is a single employer defined benefit OPEB plan administered by the District. The OPEB 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 OPEB Plan in its entirety. The District offers two medical plan options, a traditional open access plan and a high deductible health plan, and both 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 OPEB 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 the last six months of fiscal year 2021 the monthly amount the District paid towards the retiree’s premium was $610.52 for retirees qualifying for the wellness incentive ($621.36 for retirees with wellness qualified spouse). The $610.52 paid by the District equates to 86% of the traditional plan’s premium and 93% of the high deductible plan’s premium. For retirees not qualifying for the wellness incentive, the District paid $567.19 of the premium which equates to 80% for the traditional plan and 86% for the high deductible plan. The retiree paid 100% of the spousal, children or family premium incremental increases in addition to the remaining 7-20% of the retiree’s total monthly premium. The OPEB Plan also provided life insurance coverage for a very small closed group of disabled former employees. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 80 The monthly premiums for calendar year 2021 plans and coverage tiers are as follows: In fiscal year 2020, and in the first six months of fiscal year 2021,the monthly amount the District paid towards the retiree’s premium was $580.25 for retirees qualifying for the wellness incentive. The $580.25 paid by the District equates to 85% of the traditional plan’s premium and 91% of the high deductible plan’s premium. For retirees not qualifying for the wellness incentive, the District paid 547.75 of the premium which equates to 80% for the traditional plan and 86% for the high deductible plan. The retiree paid 100% of the spousal, children or family premium incremental increases in addition to the remaining 9-20% of the retiree’s total monthly premium. The OPEB Plan also provided life insurance coverage for a very small closed group of disabled former employees. Total Retiree OPEB Benefit Net Cos t Coverage Tier Premium Paid by Dis trict to Retiree Tr ad itio nal Plan wi th wellne ss inc entive Retiree 708.99$ 610.52$ 98.47$ Retiree + Spouse 1,510.35 621.36 888.99 Retiree + Child (ren)1,372.31 610.52 761.79 Retiree + Family 2,093.26 621.36 1,471.90 Tr ad itio nal Plan wi th no wellne ss inc entive Retiree 708.99 567.19 141.80 Retiree + Spouse 1,510.35 567.19 943.16 Retiree + Child (ren)1,372.31 567.19 805.12 Retiree + Family 2,093.26 567.19 1,526.07 High Deductible Plan with wellne ss inc entive Retiree 659.68 610.52 49.16 Retiree + Spouse 1,405.26 621.36 783.90 Retiree + Child (ren)1,276.83 610.52 666.31 Retiree + Family 1,947.61 621.36 1,326.25 High Deductible Plan with no we llne ss inc entive Retiree 659.68 567.19 92.49 Retiree + Spouse 1,405.26 567.19 838.07 Retiree + Child (ren)1,276.83 567.19 709.64 Retiree + Family 1,947.61 567.19 1,380.42 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 81 The monthly premiums for calendar year 2020 plans and coverage tiers are as follows: The ordinance establishing the OPEB 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 OPEB Plan does not issue a publicly available report. Employees Covered by Benefit Terms. At June 30, 2021 and 2020, the following employees were covered by the benefit terms: Total Retiree OPEB Benefit Net Cost Coverage Tier Premium Paid by District to Retiree Tr aditional Plan wi th wellne ss ince ntive 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 Tr aditional Plan wi th no wellness inc entive 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 De ductible Plan wi th 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 De ductible Plan wi th no wellne ss inc entive 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 June 30, 2021 June 30, 2020 Inactive employees or ben eficiaries currently receiving benefit paym en ts 117 122 Ac tive employees 956 955 Tot al 1,073 1,077 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 82 Total OPEB Liability The District’s total OPEB liability measured as of December 31, 2020,and December 31, 2019,was $24,920,628 and $23,164,618, respectively. The District’s total OPEB liabilities for both years were determined based on an actuarial valuation as of June 30, 2019,and both were calculated based on the discount rates and actuarial assumptions below and were then projected forward to the measurement dates. There have been no significant changes between the valuation date of June 30, 2019,and the reporting fiscal year end dates of June 30, 2021,and June 30, 2020. Actuarial Assumptions and Other Inputs. The total OPEB liabilities based on the June 30, 2019 actuarial valuation were determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: 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-2020 scale for the measurement date of December 31, 2020,and using the MP-2019 scale for the measurement date of December 31, 2019. The actuarial assumptions are based on prior and current year experiences. The plan has not had a formal actuarial experience study performed. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 83 Changes in the Total OPEB Liability The plan change reflected in the calculation of the December 31, 2019 total OPEB liability 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. Likewise, the economic/demographic gains reflected in the calculation of the December 31, 2019,total OPEB liability 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 of assumptions or other inputs reflect a change in the discount rate from 2.74 percent in 2019 to 2.12 percent in 2020 and from 4.10 percent in 2018 to 2.74 percent in 2019 and the change in mortality assumptions referenced above. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 84 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, 2020, calculated using the discount rate of 2.12%, 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 (1.12%) or 1-percentage-point higher (3.12%) than the current 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. 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, 2020, 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 (3.90% decreasing to 2.70%) or 1-percentage-point higher (5.90% decreasing to 4.70%) than the current range of healthcare cost trend rates of 4.90% decreasing to 3.70%. Current Healthcare Cos t Trend 1% Decrease Rates 1% Increa se 3.90% (4.90% (5.90% decreasing decreasing decreasing to 2.70%)to 3.70%)to 4.70%) Total OPEB Liability 22,177,915$ 24,920,628$ 28,178,622$ December 31, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 85 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%. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the years ended June 30, 2021 and 2020, the District recognized OPEB expense of $2,343,501 and $2,266,677,respectively. At June 30, 2021 and 2020, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: In the years ending June 30, 2021 and 2020, amounts currently reported as deferred outflows of resources, $862,060 and $769,270, respectively, related to the District’s benefit payments subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the years ended June 30, 2022 and 2021, respectively. Current Healthcare Cos t Trend 1% Decrease Rates 1% Increa se 5.40% (6.40% (7.40% decreasing decreasing decreasing to 2.70%)to 3.70%)to 4.70%) Total OPEB Liability 20,892,086$ 23,164,618$ 25,844,165$ December 31, 2019 Deferred Deferred Deferred Defer red Outflows of In flows of Outflows of In flows of Resources Resources Resources Resources Differences between expected and actual experience —$ 3,201,103$ —$ 3,543, 833$ Changes of assumptions or other inputs 2,674,856 686, 982 2,073, 599 786, 834 Benefit paym ents made subsequent to measurement date 862,060 — 769, 270 — Total 3,536,916$ 3,888,085$ 2,842, 869$ 4,330, 667$ June 30, 2021 June 30, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 86 Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: 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, 2021 and 2020, these liabilities amounted to $5,148,770 and $4,755,168, respectively. The claims liabilities reported are based on the requirements of GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability for claims be reported if information obtained prior to the issuance of the financial statements indicates it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Changes in the balance of claims liabilities during fiscal 2021, 2020,and 2019 were as follows: 2021 2020 2019 Liability - Beginning of Year 4,755,168$ 7,920,684$ 4,026, 003$ Cu rrent year claims and changes in estimates 17,588,499 18,916,140 19,320, 396 Cl aim paymen ts (17,194,897)(22,081,656)(15,425, 715) Liability - End of Year 5,148,770$ 4,755,168$ 7,920, 684$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 87 The District obtains periodic funding valuations from the third-party administrators managing the self-insurance programs and adjusts the charges as required to maintain the appropriate level of estimated claims liability. The District also maintains excess liability insurance coverage for workers' compensation and medical and hospitalization claims; general liability; and water backup damage to customers’ property. The District purchases commercial insurance for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three years. 11.Closure and Post-Closure Care Costs State and federal laws and regulations require the District to place a final cover on its Prospect Hill Reclamation Project landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and post-closure care costs will be paid only near or after the date that the landfill stops accepting waste, the District reports a portion of these closure and post-closure care costs as an operating expense in each fiscal year. The $686,968 and $622,913 reported as landfill closure and post- closure care liabilities at June 30, 2021 and 2020, respectively, represent the cumulative amounts reported at fiscal year-end and represent 75.5%and 71.2%of the estimated closure and post-closure care costs of the landfill for fiscal years ended June 30, 2021 and 2020, respectively, and the financial assurance requirements will be paid from unrestricted net position. T hese amounts are based on what it would cost to perform all closure and post-closure care in 2021 and 2020, 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 8-11 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 annually the remaining $222,963 and $251,537 of estimated cost of closure and post-closure care as of June 30, 2021 and 2020, respectively, based on capacity used in future years. The landfill THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 88 capacity used to date for fiscal years ended June 30, 2021 and 2020 are 75.5% and 71.2%, respectively. 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. 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”). At the time the District entered into the CD, 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. The amount the District is required to spend in 2018 dollars pursuant to the CD is $6 billion. 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, 2021 and 2020 financial statements. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 89 The District has entered into construction and other contracts amounting to approximately $470,000,000 and $521,000,000 at June 30, 2021 and 2020, respectively, and through the respective audit report date. The District had 853,126,796 and $598,428,796 in revenue bonds authorized by the voters but unissued as of June 30, 2021 and 2020, respectively. The voters authorized an additional $500,000,000 in revenue bonds in April 2021 and like the four preceding authorizations, 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 $97,919,614 and $97,034,022 of restricted net position at June 30, 2021 and 2020, respectively, of which $68,212,821 and 63,177,454 are restricted due to enabling legislation, as of June 30, 2021 and 2020, respectively. 14.Segment Information The District issued wastewater revenue bonds to finance wastewater infrastructure projects. The District accounts for both wastewater and stormwater activities in a single enterprise fund, but investors in those bonds rely solely on the revenue generated by the wastewater activities for repayment. Fiscal year 2021 and 2020 summary financial information for each business segment is presented below. A segment is an identifiable activity reported as a stand-alone entity for which one or more revenue bonds are outstanding. A segment has a specifically identifiable revenue stream pledged in support of the revenue bonds and has related expenses, gains and losses and assets, deferred outflows,liabilities and deferred inflows that are required by external parties to be accounted for separately. The wastewater system is the only reportable segment that meets the requirements of GASB Statement No. 34, Basic Financial Statements -and Management’s Discussion and Analysis -for State and Local Governments. The stormwater system is reported on for informational purposes only. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 90 Financial information as of and for the years ended June 30, 2021 and 2020 of the District’s Wastewater Segment is as follows: 2021 2020 Assets Cu rrent As sets Un restricted Cu rrent As sets Cash and cash equivalents 88,014,051$ 65,310, 175$ In vestme nts 201, 964,355 251,848, 341 Se wer se rvice charges re ceivable, less allo wance of 70,561,791 in 2021 and $65,949,200 in 2020 66,333,963 67,437, 606 Unbille d se wer service charges receivable 34,970,247 33,342, 430 Accrued income on in vestments 1,386,438 1,826,954 O th er receivables, less allo wance of 60,373 in 2021 and $58,209 in 2020 2,340,234 5,168,412 Supplie s inventory 8,475,419 8,013,597 Total Un restricted Cu rrent Assets 403, 484,707 432,947, 515 Restricted Cu rrent As sets O th er receivables 43,590 48,273 Total Res tricted Cu rrent Assets 43,590 48,273 Total Current Assets 403, 528,297 432,995, 788 No n-Cu rrent As sets Restricted As sets Cash and cash equivalents 20,680,722 22,700, 689 In vestments 110, 366,490 75,085, 334 Lo ng-term in vestments 5,996,719 10,850,625 Pr operty taxes re ceivable (17,971)(17,972) Accrued in co me on investments (120,562)8,088 Total Restricted Non-Current Assets 136, 905,398 108,626, 764 Other As sets Notes receivable 9,694,702 10,410, 729 Lo ng-term in vestments 189,961,198 150,664,647 Total Other As sets 199, 655,900 161,075, 376 Capital As sets Depreciable: Treatment and dispo sal plan t and e quipment 1,303,648,712 1,289,884,442 Co lle ction and pumpin g plant 2,411, 802,786 2,308, 600, 323 G eneral plant and e quipm ent 86,303,314 84,157, 157 3,801,754,812 3,682,641,922 Less:Accumulate d de pre ciation 1,459, 412,219 1,382, 418, 916 Net de pre ciable assets 2,342,342,593 2,300,223,006 Non-depreciable: Land 71,102,122 70,404, 826 Co nstruction in progress 1,163, 985,241 981,883, 959 Net Capital Assets 3,577, 429,956 3,352, 511, 791 Total Non-Current As sets 3,913, 991,254 3,622, 213, 931 Total As sets 4,317, 519,551 4,055, 209, 719 Deferred Ou tflows of Resources : Bo nds and notes payable-Deferred loss on refundin g 5,469,323 5,888,796 Pensio n-relate d o utflows 9,199,570 13,677,832 O PEB-re late d o utflows 3,049,400 2,451,365 Total Defer red Outflows of Res ources 17,718,293 22,017, 993 WASTEWATER SEGMENT STATEM ENTS OF NET POSITION June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 91 2021 2020 Li abilities Current Liabilities-Payable From Unrestricted Assets Contracts and accounts payable 40,758, 309$ 36,287, 980$ Deposits and accrued expenses 33,961, 774 32,216, 981 Retainage payable 20,326, 492 16,728, 922 Current por tion of bonds and notes payable 61,157, 300 56,629, 100 Total Current Liabilities-Payable From Unrestricted Assets 156, 203, 875 141,862, 983 Current Liabilities-Payable From Restricted Assets Contracts and accounts payable 510 — Total Current Liabilities-Payable From Restricted Assets 510 — Total Current Liabilities 156, 204, 385 141,862, 983 Non-Current Liabilities Deposits and accrued expenses 9,202, 567 7,559, 792 Net pension liability 24,550, 973 48,934, 083 Total OPEB liability 21,498, 182 19,985, 093 Bonds and notes payable 1,768, 769,051 1,633, 705, 811 Total Non-Current Liabilities 1,824, 020,773 1,710, 184, 779 Total Liab ilities 1,980, 225,158 1,852, 047, 762 Deferred Infl ows of Resources : Bon ds and Notes payable - Defer red gain on refunding 2,793, 162 1,393, 209 Pension-related inflows 20,238, 170 6,863, 696 OPEB-r elated inflows 3,328, 967 3,710, 324 Total Deferred In flows of Resources 26,360, 299 11,967, 229 Net Position Net investment in capital assets 1,799, 548,193 1,690, 960, 722 Restricted for: Debt service 29,706, 793 33,856, 568 Subdistrict construction and improvement 1,957, 758 1,965, 621 Unrestricted 497, 439, 643 486, 429, 810 Total Net Position 2,328, 652,387$ 2,213, 212, 721$ June 30, WASTEW ATER SEGMENT STATEMEN TS OF NET POSITION (Continued) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 92 2021 2020 Operating Revenues Sewer service charges 425,250,174$ 430,399,893$ Recovery of (provision for) doubtful sewer service charge accounts (5,353,771) (5,623,090) Licenses, per mits, and other fees 3,753,797 3,012,368 Other 3,495,172 10,192,865 Total Operating Revenues 427,145,372 437,982,036 Operating Exp enses Pumping and treatment 64,475,064 62,030,454 Collection system maintenance 35,006,085 34,416,498 Engineer ing 902,282 937,892 General and adm inistrative 55,337,571 64,650, 994 Water backup claims 3,984,849 4,653, 281 Depr ec iation 80,604,140 77,279,885 Asset management 15,141,153 13,998,739 Total Operating Exp ens es 255,451,144 257,967,743 Operating Income 171,694,228 180,014,293 Non-Operating Revenues Property taxes levied by the District 47 Investment income 1,304,545 14,210,947 Rent and other income 323,662 301,631 Total Non-Operating Revenues 1,628,207 14,512,625 Non-Operating Exp enses Net loss on disposal and sale of capital assets 608,073 781,346 Non-recurring projects and studies 10,555,396 8,887,933 Interest expen se 56,615,868 36,119,362 Total Non-Operating Exp enses 67,779,337 45,788,641 Income Before Capital Grants And Contributions 105,543,098 148,738,277 Capital Grants And Contributions Capital assets contributed 8,608,123 3,081,055 Grant revenue 1,288,445 ( 101, 054) Total Capital Grants And Contributions 9,896,568 2,980, 001 Change In Net Position 115, 439,666 151, 718, 278 Net Position - Begi nning Of Year 2,213,212,721 2,061,494,443 Net Position - End Of Year 2,328,652,387$ 2,213,212,721$ WASTEW ATER SEGMENT STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITIO N For The Yea rs En ded June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 93 2021 2020 Cash Flows From Operating Activities Received from customers 427,556,320$ 427,486,543$ Paid to employees for services (105,930,520) (104,218,386) Paid to suppliers for goods and services (83,426,791) (77,443,593) Net Cash Provided By Operating Activities 238,199,009 245,824,564 Cash Flows Provided By Non-Capital Financing Activities Taxes levied and collected 4,032 37,227 Cash Flows From Capital And Related Financing Activities Proceeds from capital grants 3,067,953 1,099,045 Proceeds from issuance of debt 172,012,156 97,928,346 Premium on sale of bonds 37,194,202 12,059,976 Principal paid on debt (62,599,880) (52,603,763) Interest and fees paid on debt (62,785,704) (88,951,050) Payments for capital assets (290,256,122) (265,681,966) Proceeds from sale of capital assets 158,652 83,130 Proceeds from note receivable for other organization's contribution to — — construction of treatment plant 1,154,696 1,154,696 Proceeds from insurance on destroyed capital assets 1,088,835 — Build America Bond tax credit 1,642,857 1,636,759 Net Cash (Used In) Capital And Related Financing Activities (199,322,355) (293,274,827) Cash Flows From Investing Activities Purchase of investments (557,806,139) (526,749,101) Proceeds from sale and maturity of investments 530,033,856 600,558,868 Investment income 9,337,384 9,727,441 Proceeds from rents 238,122 241,167 Net Cash (Used In) Provided By Investing Activities (18,196,777) 83,778,375 Net Increase In Cash And Cash Equivalents 20,683,909 36,365,339 Cash And Cash Equivalents At Beginning Of Year 88,010,864 51,645,525 Cash And Cash Equivalents At End Of Year 108,694,773$ 88,010,864$ Ended June 30, WASTEWATER SEGMENT STATEMENTS OF CASH FLOWS For The Years THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 94 Financial information as of and for the years ended June 30, 2021 and 2020 of the District’s Stormwater Segment is as follows: 2021 2020 Assets Current Assets Unrestricted Current Assets Cash and cash equivalents 3,323,792$ 2,492,697$ Investments 8,976,389 12,474,187 Sewer service charges receivable, less allowance of 104,297 in 2021 and $111, 954 in 2020 53, 337 60,927 Proper ty taxes receivable, less allowance of $7,430 in 2021 and $8,604 in 2020 363, 496 421, 059 Accrued income on investments 48, 449 64,080 Total Unrestricted Current Assets 12,765,463 15,512,950 Restricted Current Assets Cash and cash equivalents 4,629,689 3,580,818 Investments 12,587,475 17,921,368 Total Restricted Current Assets 17,217,164 21,502,186 Total Current Assets 29,982,627 37,015,136 Non-Current Assets Restricted Assets Cash and cash equivalents 5,616,581 3,040,332 Investments 15,270,584 15,216,125 Long-term investments 26,202,398 19,832,238 Property taxes receivable, less allowance of $36,447 in 2021 and $29,497 in 2020 1,768,587 1,407,947 Accrued income on investments 289,739 367,588 Total Restricted Non-Current Assets 49,147,889 39,864,230 Other Assets Long-term investments 8,442,904 7,465,594 Total Other Assets 8,442,904 7,465,594 Capital Assets Deprec iable: Collection and pumping plant 681,265,978 665,941,716 General plant and equipm ent 17,213,330 16,792,580 698,479,308 682,734,296 Less:Accumulated depr eciation 236,082,317 226,327,691 Net depr ec iable assets 462,396,991 456,406,605 Non-depr eciable: Land 8,467,188 7,928,803 Construction in progress 30,048,200 31,041,970 Net Capital Assets 500,912,379 495,377,378 Total Non-Current Assets 558,503,172 542,707,202 Total Assets 588,485,799 579,722,338 Defer red Out flows of Resources : Pension-related outflows 1,276,850 1,995,820 OPEB-related outflows 487,516 391,504 Total Deferred Outflows of Resources 1,764,366 2,387,324 STORMWATER SEGMENT STATEMENTS OF NET POSITION June 30, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 95 2021 2020 Li abilities Current Liabilities-Payable From Unrestricted Assets Contracts and accounts payable 39,113$ 29,732$ Deposits and accrued expenses 8,314,797 9,955,546 Retainage payable 7,262 Total Current Liab ilities-Payable From Unrestricted Assets 8,353,910 9,992,540 Current Liabilities-Payable From Restricted Assets Contracts and accounts payable 701,665 912,704 Retainage payable 561, 310 843,548 Total Current Liab ilities-Payable From Restricted Assets 1,262,975 1,756,252 Total Current Liab ilities 9,616,885 11,748,792 Non-Current Liabilities Net pension liability 4,944,205 8,858,830 Total OPEB liability 3,422,446 3,179,525 Total Non-Current Liabilities 8,366,651 12,038,355 Total Liabilit ies 17,983,536 23,787,147 Defer red Inflows of Resources : Pension-r elated inflows 2,433,228 286,002 OPEB-related inflows 559, 118 620,343 Total Deferred Inflows of Resources 2,992,346 906,345 Net Position Net investment in capital assets 499,759,396 493,775,710 Res tricted for: Subdistrict construction and improvement 66,255,063 61,211,833 Unrestricted 3,259,824 2,428,627 Total Net Position 569,274,283$ 557,416,170$ June 30, STORMWATER SEGMENT STATEM EN TS OF NET POSITION (Con tinued) THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 96 2021 2020 Operating Revenues Sewer service charges (2,391)$ (1,801)$ Rec over y of (provision for)doubtful sewer service charge accounts 6,352 11,541 Other 2,229 263 Total Operating Revenues 6,190 10,003 Operating Exp en ses Collection system maintenance 13,106,911 13,235,760 En gineer ing 10,598,514 10,690,194 Gener al and administrative (326,038)1,295,690 Depr eciation 10,748,129 10,353,427 Asset managem ent 882,830 3,196,582 To tal Operating Exp en ses 35,010,346 38,771,653 Operating (Loss)(35,004,156)(38,761,650) Non-Operating Revenues Property taxes levied by the District 43,624,302 35,439,394 Investment income 87,733 2,048,235 To tal Non-Operating Revenues 43,712,035 37,487,629 Non-Operating Exp enses Net loss on disposal and sale of capital assets 382,035 180,130 Non-recurring projects and studies 1,272,327 3,570,298 Total Non-Operating Exp enses 1,654,362 3,750,428 Income (Loss)Before Capital Contributions 7,053,517 (5,024,449) Capital Contributions Capital assets contributed 4,334,972 3,410,906 Grant revenue 469,624 — To tal Capital Contributions 4,804,596 3,410,906 Change In Net Position 11,858,113 (1,613,543) Net Position - Beginning Of Year 557,416,170 559,029,713 Net Position - En d Of Year 569,274,283$ 557,416,170$ STORMWATER SEGMENT STATEM EN TS 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 97 2021 2020 Cash Flows From Operating Activities Rec eived from customers (1,627,308)$ 1,717,045$ Paid to suppl iers for goods and ser vices (25,897,686) (30,571,361) Net Cash (Us ed In ) Operating Activities (27,524,994) (28,854,316) Cash Flows Provided By Non-Capital Financing Activities Taxes levied and collected 42,684,514 34,946,298 Cash Flows From Capital And Related Fi nancing Activities Proceeds from capi tal grants 469,624 — Paymen ts for capi tal assets (12,783,904) (12,108,973) Proceeds from sale of capital assets —22,098 Net Cash (Us ed In ) Capital And Related Fi nancing Activities (12,314,280) (12,086,875) Cash Flows From Investing Activities Purchase of investments (75,869,353) (66,407,633) Proceeds from sale and maturity of investments 76,520,644 75,139,517 Investment income 959,684 1,268,317 Net Cash Provided By Investing Act ivities 1,610,975 10,000,201 Net Increase In Cash And Cash Equi valents 4,456,215 4,005,308 Cash And Cash Equivalent s At Begi nning Of Yea r 9,113,847 5,108,539 Cash And Cash Equivalent s At End Of Year 13,570,062$ 9,113,847$ En ded June 30, STORMWATER SEGMENT STATEMENTS OF CASH FLO WS For The Yea rs THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 98 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 99 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 Developm ent Redevelopment Redevelopment Total Tax or City Zones Bonds Authority Corporation s Abate me nts St Louis County —$188,439$—$13,375$201,814$ Bellerive —3,239 ——3,239 Berkeley 692 ———692 Brentwood ———17,459 17,459 Bridgeton —549 —5,934 6,483 Clayton —38,950 —3,844 42,794 Edmundson ———23,493 23,493 Eureka —309 ——309 Ferguson —6,357 —1,047 7,404 Frontenac ———8,780 8,780 Hazelwood 8,287 39,089 —99,767 147,143 Kinloch ———45,862 45,862 Je nnings —151 ——151 Map lewood ———13,617 13,617 Maryland Heights —404 —7,406 7,810 Normand y ———3,025 3,025 Olivette ———2,566 2,566 Ove rland ———9,067 9,067 Richmond Heights ———18,263 18,263 Rock Hill ———2,749 2,749 St . Ann —700 ——700 Su nset Hills ———495 495 University City ——10,276 —10,276 Wellston ———713 713 Woodson Terrace ———199 199 Total Tax Abatements 8,979$278,187$10,276$277,661$575,103$ For the Year Ended June 30, 2021 Land Enhanced Industrial Clearance for Urban St. Louis County Enterprise Developm ent 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 Je nnings —153 ——153 Map lewood ———7,092 7,092 Maryland Heights —406 —7,470 7,876 Normand y ———3,022 3,022 Ove rland ———5,165 5,165 Richmond Heights ———11,463 11,463 Rock Hill ———3,219 3,219 Su nset 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 100 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 1078 and $.1077 per $100 of assessed value for fiscal 2021 and 2020, respectively, that were abated by St. Louis City are reported in the following tables. Tax Increment Financing utilized by St. Louis County, Cities located in St. Louis County and St. Louis City Missouri’s Real Property Tax Increment Allocation Redevelopment Act enables cities to finance certain redevelopment costs with the revenue generated from (i) payments in lieu of real estate taxes, as measured by the net increase in assessed valuation resulting from redevelopment and (ii) a portion of the increase in other local tax revenue associated with new economic activity. When a tax increment financing (“TIF”) plan is adopted, real estate taxes in the redevelopment are frozen at their current level. By applying the real estate tax rate of all taxing districts Reduced Unabated Tax Abated Tax Tax St. Louis City Values Revenue Values Revenue Revenue Residential 147,239,040$ 158,724$ 110,822,179$ 22,706$ 136,018$ Comme rcial 190,333,200 205,179 148,956,196 51,336 153,843 Total 337,572,240$ 363,903$ 259,778,375$ 74,042$ 289,861$ For th e Year Ended June 30, 2021 Reduced Un abate d Tax Abated Tax Tax St. Lou is City Values Revenue Values Revenue Revenue Residential 178,760,490$ 192,525$ 35,055,120$ 37,754$ 154,771$ Comme rcial 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 101 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 2021and 2020 as a result of the programs of other governments are as follows: TI F TIF Incremental Reduced Incremental Reduced St. Louis County or City Values Tax Revenues Values Tax Revenues St . Louis County and Citie s Located in St. Louis County 541, 545, 970$ 583,787$ 580,156,870$ 624,829$ St . Louis County PILOTs Received —(55,007)—(34,565) St . Louis City 1,309, 205, 243 401,965 1,308,525,243 334,873 St . Louis City PILOTs Received —(44,808)—(42,175) Total 1,850, 751, 213$ 885,937$ 1,888,682,113$ 882,962$ June 30, 2021 For the Years Ended June 30, 2020 Reduced Reduced St. Louis County or City Tax Revenues Tax Revenues St . Louis County and Cities Located in St. Louis Co unty - Tax Abate me nts 575,103$ 386,802$ St . Lo uis City - Tax Abate me nts 289,861 332,860 St . Louis County and Cities Located in St. Louis Co unty - TIFs 528,780 590,264 St . Lo uis City - TIFs 357,157 292,698 Total Reduced Tax Revenues 1,750,901$ 1,602,624$ For the Years Ended June 30, 2021 June 30, 2020 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 102 16.Fiduciary Pension Trust Fund Cash and Investments The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Pension Plan”) is reported as a Fiduciary Pension Trust Fund. The Pension Plan reports financial data on a calendar year basis and issues a publicly available financial report with audited financial statements which can be found on the District’s www.msdprojectclear.org website or may be obtained by writing: The Metropolitan St. Louis Sewer District, 2350 Market Street, St. Louis, MO 63103- 2555. The cash and investment information for this plan is included below and the fair value measurement and application is included in Note 17. Categories of Asset Risk Concentration of credit risk is the risk of loss attributed to the magnitude of the Pension Plan’s investment in a single issuer. Pursuant to Resolution 3597, the Pension Plan is authorized to invest in the following; Equity Investments: Common stocks of corporations, mutual funds, or co- mingled equity funds (Domestic and International, target range 6% to 25%, allowable range 2% to 30% ). Fixed Income Investments: U.S. government and agency securities, corporate bonds, debentures, notes, or other evidence of indebtedness assumed or guaranteed by corporations (Domestic and International, target range 8% to 14%, allowable range 3% to 19%). Short-term Securities: Commercial paper, treasury bills, certificates of deposit, and/or money market funds. Real Estate Investments: Real estate investment trusts and multi-employer property trusts (Target range 12%, allowable range 0% to 15%). Hedge Funds, Global Tactical, Real Assets, Market Neutral, and Absolute Return Investments; these investment strategies help diversify the investment portfolio. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 103 The fair value of investments managed consisted of the following: Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Pension Plan does not have a formal investment policy that limits investment maturities as a means of managing its exposure to interest rates. The Pension Plan had the following debt securities and maturities: As of December 31, 2020 2019 Investm ents, at Fair Value Collective Investment Funds 171,767,753$ 136,062,084$ Mutual Funds 60,179,174 70,580,513 Real Es tate Investment s 30,265,219 32,566,168 Corp ora te Ob ligations 27,630,867 21,981,050 Domestic C om mon Stocks 18,552,256 14,868,772 US Treasury a nd A gency Ob ligations 13,994,724 16,428,797 Money M arket Funds 3,237,837 3,110,257 Municipal Obligations 1,292,527 554,136 Total Investments 326,920,357$ 296,151,777$ As of D ecember 3 1, 2 020 Weighted Average Maturity Inve stment Type Fair Value (in Years) Corporate Obligations 27,630,867$3.92 U.S. Treasury and Agency Obligations 13,994,724 5.46 Municipal Obligations 1,292,527 3.57 Total 42,918,118$ Portf olio Weighted Average Maturity in Years 4.42 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 104 The Pension Plan will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by: Structuring the investment portfolio so that securities mature to meet cash requirements for benefit payments, thereby avoiding the need to sell securities on the open market prior to maturity; and Monitoring fixed income investment managers’ performances to be sure the fixed income portion of the investment portfolio is managed to predetermined indexes. Credit Risk Investment credit risk is the risk that the issuer or other counterparty to an investment will not fulfill its obligations. The Pension Plan does not have a formal credit risk policy. The Pension Plan will minimize credit risk by: Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Pension Plan will do business; and Diversifying the portfolio so that potential losses on individual securities will be minimized. As of D ecember 3 1, 2 019 Weighted Average Maturity Investment Type Fair Value (in Y ears) Corporate Obligations 21,981,050$3.67 U.S. Treasury and Agency Obligations 16,428,797 5.34 Municipal Obligations 554,136 2.72 Total 38,963,983$ Portf olio Weighted Average Maturity in Years 4.36 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 105 The following tables provide information on the credit ratings associated with the Pension Plan’s investments in debt securities: U.S. Treasury S & P & Agenc y Munic ipal Corporate Rating Obligations Obligations Obligations Total AAA —$ —$ 3,328,025$ 3,328,025$ AA 13,994,724 1,039,765 876,954 15,911,443 A —221,605 5,645,923 5,867,528 BBB —31,157 12,531,702 12,562,859 BB ——221,720 221,720 Not Rated ——5,026,543 5,026,543 Total 13,994,724$ 1,292,527$ 27,630,867$ 42,918,118$ Credit Rating by Inve stment as of December 31, 2020 U.S. Treasury S & P & Agenc y Munic ipal Corporate Rating Obligations Obligations Obligations Total AAA —$ —$ 3,322,315$ 3,322,315$ AA 16,428,797 524,046 795,055 17,747,898 A ——4,013,879 4,013,879 BBB —30,090 9,862,765 9,892,855 Not Rated ——3,987,036 3,987,036 Total 16,428,797$ 554,136$ 21,981,050$ 38,963,983$ Credit Rating by Inve stment as of December 31, 2019 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 106 Investments Greater Than 5% of Net Position Restricted for Pension Benefits or Total Investments Investments that exceed 5% of net position restricted for pension benefits or total investments at December 31, 2020 or 2019 are as follows: 2020 %2019 % BlackRock Russell 1000 Index Fund Non-Lending 83,783,652$ 26% 73,563,571$ 25% Prudential Core Plus B ond Fund 40,461,722 12% 36,944,488 12% Morgan Stanley International Eq uity Fund I 40,216,372 12% 35,694,985 12% UBS Trumbull Property Fund 30,265,219 9%32,566,282 11% Brandywine Global Bond Opportuni stic Fixed Income 27,297,538 8%24,337,678 8% Morgan Stanley Emergi ng M arkets Fund I 19,962,802 6%18,621,570 6% TimesSquare Small Cap Growth Fund 19,005,439 6%16,325,240 6% Kennedy M id Cap V alue 18,571,060 6%14,892,847 5% December 3 1, THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 107 17.Fiduciary Pension Trust Fund Fair Value Measurement and Application The Pension Plan categorizes its fair value measurements within the fair value hierarchy established by U.S. generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset and give the highest priority to unadjusted quoted process in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The Pension Plan had the following fair value measurements of invested assets as of December 31, 2020 and December 31, 2019: In vestments Measured at Fair Value Fair Value Measurements Using Quoted Prices in Active Significant Market s for Other Significant Identical Observable Unobservab le Assets In puts In puts In vestments by Fair Value Lev el 12/31/2020 (Lev el 1)(Level 2)(Level 3) Debt Securities: Cor porate Obligations 27,630,867$ —$ 27,630,867$ —$ US Treasury Notes and Bonds 8,491,150 8,491,150 —— US Gover nment Agency Obligations 5,503,574 —5,503,574 — Municipal Obligations 1,292,527 —1,292,527 — Total Debt Securities 42,918,118 8,491,150 34,426,968 — Equ ity Securities: Dom estic Equities 18,552,256 18,552,256 —— International Equities 40,216,372 —40,216,372 — Emerging Markets Fund 19,962,802 —19,962,802 — Total Equity Securities 78,731,430 18,552,256 60,179,174 — Total Investm ents by Fair Value Level 121,649,548 27,043,406$ 94,606,142$ —$ Unfunded Redem ption Redem ption Investments Measured at the Net Asset Value (NAV)Com mitments Frequency Notice Period Domestic Equities (1)102,789,091 —Daily Varies Core Plus Bond Commingled Trust Fund (2)40,461,722 —Daily 5 Days Real Estate Funds (3)30,265,219 —Quarterly 60 Days Global Fixed Income Collective Trust Fund (4)27,297,538 —Daily 10 Days Diversified Hedg e Fund of Fund (5)1,219,402 —Quarterly 90 Days Total Investm ents Measured at the Net Asset Value 202,032,972 Money Market at Amor tized Cost 3,237,837 Total Investm ents at Fair Value 326,920,357$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 108 1)Domestic Equities –These funds seek long-term capital appreciation through passive or active management of equity securities listed on U.S. stock exchanges. Redemption is daily and the notice period is two days or less. 2)Core Plus Bond Commingled Trust Fund –Seeks to outperform the Barclays Capital U.S. Aggregate Bond Index by investing primarily in fixed income securities in the U.S. investment grade sectors, as well as U.S. fixed income securities below investment grade, the debt of developed international markets, and the debt of emerging markets. Redemption is daily with a 1-day notice. 3)Real Estate Funds –The portfolio assets in this investment consist primarily of high-quality real estate investments located in major markets throughout the U.S. and are diversified by property type, geographic region and economic sector. The majority of the investments are stable, primarily income-oriented properties. The fair values of the investments in this type have In vestments Measured at Fair Value Fair Value Measurements Using Quoted Prices in Active Significant Market s for Other Significant Identical Observable Unobservab le Assets In puts In puts In vestments by Fair Value Lev el 12/31/2019 (Lev el 1)(Level 2)(Level 3) Debt Securities: Cor porate Obligations 21,981,050$ —$ 21,981,050$ —$ US Treasury Notes and Bonds 13,242, 420 13,242,420 —— US Gover nment Agency Obligations 3,186, 377 —3,186,377 — Municipal Obligations 554, 136 —554,136 — Total Debt Securities 38, 963, 983 13,242,420 25,721,563 — Equ ity Securities: Dom estic Equities 31,132,731 14,868,772 16,263,959 — International Equities 35,694,984 —35,694,983 — Emerging Markets Fund 18,621,570 —18,621,570 — Total Equity Securities 85,449,285 14,868,772 70,580,512 — Total Investm ents by Fair Value Level 124,413,267 28,111,192$ 96,302,075$ —$ Unfunded Redem ption Redem ption Investments Measured at the Net Asset Value (NAV)Com mitments Frequency Notice Period Domestic Equities (1) 73,563, 551 —Daily Varies Core Plus Bond Commingled Trust Fund (2) 36,944, 488 —Daily 5 Days Real Estate Funds (3) 32,566, 168 —Quarterly 60 Days Global Fixed Income Collective Trust Fund (4) 24,337, 678 —Daily 10 Days Diversified Hedg e Fund of Fund (5) 1,216, 368 —Quarterly 90 Days Total Investm en ts Measured at the Net Asset Value 168, 628, 253 Money Market at Amor tized Cost 3,110, 257 Total Investm en ts at Fair Value 296, 151, 777$ THE METROPOLITAN ST. LOUIS SEWER DISTRICT Notes to Financial Statements (Continued) Page 109 been determined using the NAV per share (or its equivalent) of the investments. The District has elected to liquidate holdings in the UBS Trumbull Property Fund. Redemption requests from fund investors currently exceed the amount available for redemption. Redemptions are calculated on a pro rata basis according to the ratio of the requesting investor's units to the total of all investors then requesting redemptions. Any redemption request that is not fully honored will be deemed effective in following quarters until completed. 4)Global Fixed Income Collective Trust Fund –This fund invests in sovereign debt and currencies of countries in its benchmark index, the investment-grade corporate bond and mortgage-backed securities markets in those countries, as well as, to limited degrees, emerging market, high yield debt, and securities of countries rated A or better by a nationally recognized statistical rating organization. Redemption is daily with a 10-day notice. 5)Diversified Hedge Fund of Fund –Seeks return, long-term capital growth and diversification through a combination of Managers trading a range of strategies, including, but not limited to, hedging, distressed securities, arbitrage and special situations. The fair values of the investments in this type have been determined using the NAV per share (or its equivalent) of the investments. The District’s remaining investment in this fund is limited to its pro rata interest in Peruvian sovereign bonds held through an investment in the Fund, whose advisor has endeavored to sell said interest, on a best efforts’ basis, and distribute any proceeds to shareholders. 18.Subsequent Events In preparing these financial statements the District has evaluated events and transactions for potential recognition or disclosure through October 21, 2021, the date the financial statements were available to be issued. The District has authorized the issuance of Wastewater System Refunding Revenue Bonds, Series 2026A to be issued on May 1, 2026. The par amount of the bonds will total $106,930,000 and the bonds will be purchased by Barclays Capital Inc. pursuant to the Forward Delivery Bond Purchase Agreement dated October 6, 2021. Upon issuance, the District plans to use the proceeds of the bonds to refund the outstanding Wastewater System Revenue Bonds, Series 2016C. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 110 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS June 30, 2021 Ca l e n d a r Y e a r E n d i n g D e c e m b e r 3 1 20 2 0 20 1 9 20 1 8 20 1 7 20 1 6 20 1 5 20 1 4 To t a l P e n s i o n L i a b i l i t y Se r v i c e c o s t 4, 8 3 2 4, 9 0 2 5, 2 3 9 5, 1 5 7 5, 1 0 7 5, 2 5 3 5, 4 0 9 In t e r e s t o n t o t a l p e n s i o n l i a b i l i t y 23 5 8 1 2 2 8 1 8 2 2 3 0 7 2 2 0 7 9 2 0 6 0 9 2 0 1 9 9 1 9 9 0 1 Ef f e c t o f p l a n c h a n g e s Ef f e c t o f e c o n o m i c d e m o g r a p h i c g a i n s o r l o s s e s 6 7 2 7 1 9 6 7 2 0 4 2 4 7 2 9 8 8 3 4 5 7 7 3 6 6 8 Ef f e c t o f a s s u m p t i o n c h a n g e s o r i n p u t s 11 9 1 1 1, 6 6 7 11 6 6 5 6, 5 0 0 Be n e f i t p a y m e n t s 1 9 2 7 3 1 8 6 2 7 1 6 9 1 2 1 5 8 5 8 1 5 2 6 1 1 4 4 7 5 1 3 3 8 7 Ne t C h a n g e i n T o t a l P e n s i o n L i a b i l i t y 2, 4 1 3 1 9 0 3 7 8, 5 9 2 8, 3 1 6 2 1 2 3 7 6, 4 0 0 1 4 7 5 5 To t a l P e n s i o n L i a b i l i t y B e g i n n i n g 35 3 9 9 4 3 3 4 9 5 7 3 2 6 3 6 5 3 1 8 0 4 9 2 9 6 8 1 2 2 9 0 4 1 2 2 7 5 6 5 7 To t a l P e n s i o n L i a b i l i t y E n d i n g a 35 6 4 0 7 3 5 3 9 9 4 3 3 4 9 5 7 3 2 6 3 6 5 3 1 8 0 4 9 2 9 6 8 1 2 2 9 0 4 1 2 Pl a n F i d u c i a r y N e t P o s i t i o n Em p l o y e r c o n t r i b u t i o n s 13 3 9 9 1 2 7 2 5 1 2 4 9 4 1 2 3 2 8 1 0 1 4 6 1 0 0 5 9 1 0 6 7 6 M e m b e r c o n t r i b u t i o n s In v e s t m e n t i n c o m e n e t o f i n v e s t m e n t e x p e n s e s 36 5 8 5 4 1 5 4 3 1 2 9 9 8 3 0 4 9 6 1 1 9 1 3 1 8 8 8 6 9 8 0 Be n e f i t p a y m e n t s 1 9 2 7 3 1 8 6 2 7 1 6 9 1 2 1 5 8 5 8 1 5 2 6 1 1 4 4 7 5 1 3 3 8 7 Ad m i n i s t r a t i v e e x p e n s e s Ne t C h a n g e i n P l a n F i d u c i a r y N e t P o s i t i o n 30 7 1 1 3 5 6 4 1 1 7 4 1 6 2 6 9 6 6 6, 7 9 8 6 3 0 4 4 2 6 9 Pl a n F i d u c i a r y N e t P o s i t i o n B e g i n n i n g 29 6 2 0 1 2 6 0 5 6 0 2 7 7 9 7 6 2 5 1 0 1 0 2 4 4 2 1 2 2 5 0 5 1 6 2 4 6 2 4 7 Pl a n F i d u c i a r y N e t P o s i t i o n E n d i n g b 32 6 9 1 2 2 9 6 2 0 1 2 6 0 5 6 0 2 7 7 9 7 6 2 5 1 0 1 0 2 4 4 2 1 2 2 5 0 5 1 6 Ne t P e n s i o n L i a b i l i t y E n d i n g a b 29 4 9 5 57 7 9 3 74 3 9 7 48 3 8 9 67 0 3 9 52 6 0 0 39 8 9 6 Fi d u c i a r y N e t P o s i t i o n a s a o f T o t a l P e n s i o n L i a b i l i t y 9 1 7 2 8 3 6 7 7 7 7 9 8 5 1 7 7 8 9 2 8 2 2 8 8 6 2 6 Co v e r e d P a y r o l l 34 3 9 1 36 7 9 3 39 4 3 7 41 8 6 9 42 0 5 5 43 3 4 5 44 6 6 4 Ne t P e n s i o n L i a b i l i t y a s a o f C o v e r e d P a y r o l l 85 7 6 1 5 7 0 8 1 8 8 6 5 1 1 5 5 7 1 5 9 4 1 1 2 1 3 5 8 9 3 2 No t e s t o S c h e d u l e 1. C h a n g e s o f A s s u m p t i o n s T h e a c t u a r i a l d i s c o u n t r a t e a n d t h e l o n g t e r m e x p e c t e d r a t e o f r e t u r n w e r e b o t h r e d u c e d t o 6 7 5 i n 2 0 1 9 B o t h r a t e s w e r e c h a n g e d t o 6 9 0 i n 2 0 1 7 a n d b o t h r a t e s w e r e 7 0 0 i n 2 0 1 6 a n d a l l p r i o r y e a r s T h e m o r t a l i t y t a b l e s u t i l i z e d w e r e c h a n g e d i n 2 0 1 9 t o t h e P u b 2 0 1 0 G e n e r a l A m o u n t W e i g h t e d M o r t a l i t y T a b l e s a n d t h e e f f e c t i s a l s o r e f l e c t e d i n t h e a s s u m p t i o n c h a n g e s I n 2 0 1 6 t h e a m o u n t r e p o r t e d a s c h a n g e o f a s s u m p t i o n s r e s u l t e d f r o m c h a n g i n g t o t h e R P 2 0 1 4 M o r t a l i t y f o r E m p l o y e e s a n d H e a l t h y A n n u i t a n t s a n d D i s a b l e d M o r t a l i t y t a b l e s w h i l e t h e 2 0 1 4 c h a n g e r e s u l t e d p r i m a r i l y f r o m a d j u s t m e n t s t o t h e d i s c o u n t r a t e a n d e m p l o y e e r a t e i n c r e a s e s 2. T h i s s c h e d u l e w i l l u l t i m a t e l y p r e s e n t t e n y e a r s o f i n f o r m a t i o n w h e n a v a i l a b l e Sc h e d u l e o f C h a n g e s i n N e t P e n s i o n L i a b i l i t y a n d R e l a t e d R a t i o s In 0 0 0 s THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 111 REQUIRED SUPPLEMENTARY INFORMATION (Continued) SCHEDULE OF EMPLOYER CONTRIBUTIONS TO EMPLOYEES’ PENSION PLAN June 30, 2021 Schedule of Em ployer Contributions To E mployees' Pension Plan Fiscal Y ear 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% 2021 12,771,525 12,771,525 —35,509,063 35.97% Notes to Schedule: 1.This schedule will ultimately present ten ye ars of inform ation when a va ilable. 2.V aluation Da te: A ct ua ri ally determined contribution rates are ca lculated as of January 1 of the fiscal year i n whi ch the cont ributions are reported. M ethods and assumptions us ed to determine contri bution ra tes: A ctua rial Cost Method:Entry A ge Normal A mortization M ethod:Level dollar layered, 20 ye ar periods A sset Valuation M ethod:3-year s moothing p eriod Inflation:2.50% S alary Increa ses:4.25%, a ve ra ge, including inflation Inves tment Rate of Return:6.75%, net of pens ion p lan inves tment expens e, incl uding i nflation for 2020 and 2 021 6.90%, net of pens ion p lan inves tment expens e, incl uding inflation for 2018 and 2 019 7.00%, net of pens ion p lan inves tment expens e, incl uding i nflation for all years prior to 2018 M ortality:In the 2 021 and 2 020 actuarial va luations, a ssumed life expectanci es were ca lculated us ing the Pub-2010 Genera l Amount -Weight ed M ortality T ables wi th genera tional projection based on S cale M P-2020 and 2019, res pectively. In t he 2019, 2018 and 2017 actuarial valuations , assumed life expectancies were calculated us ing t he R P-2014 Em ployee and Healthy A nnuitant Mortality Table (with genera tional proj ect ions from 2006 based on the most current M P improvem ent scale which i s updated annua lly) and t he R P-2014 Di sabled Mort ality Table. In t he 2 016 and 2015 actuarial va luations, a ssumed life expectancies were ca lculated us ing t he RP-2000 Healthy A nnuitant Mort ality Table and t he R P-2000 Disabled Mort ality Ta ble. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 112 REQUIRED SUPPLEMENTARY INFORMATION (Continued) SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY June 30, 2021 2020 2019 2018 2017 Total OPEB Liab ility Servi ce cost 1,827$ 1,397$ 1,781$ 1,622$ Interest on total OPEB l iability 663 1,017 865 895 Ef fect of plan changes — 86 — — Ef fect of econom ic/demogra phic ga ins or (losses)— (3,887) — — Changes of assumptions or other inputs 898 1,926 ( 987)438 Benefit paym ents (1,631)(1,539)(1,689)(1,600) Net change in total OPEB liability 1,757 (1,000)(30)1,355 Total OPEB Liability - Beginning 23,165 24,164 24,194 22,839 Total OPEB Liability - Ending 24,921$ 23,165$ 24,164$ 24,194$ Notes to Schedule: 1.Changes of assumptions and other input s reflect the effects of changes in the discount rate each period. The following a re the discount ra tes us ed in each period: 2020 2.12% 2019 2.74% 2018 4.10% 2017 3.44% 2016 3.78% 2.N o assets are accumul ated in a trus t that meets t he criteria in paragraph 4 of GA SB Statement N o. 7 5 to pay related benefits. 3.This schedul e will ultimately present ten years of information when ava ilable. 4.Contributions to the OPEB plan are not based on a measure of pay so accordingl y, no measure of payroll is presented. Calendar Year Ending Dec ember 31, Schedule of Changes in T otal OPEB Liab ility In (000's) Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. Statistical Section METROPOLITAN ST. LOUIS SEWER DISTRICT This part of the District’s annual comprehensive 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 ......................................113 –114 Revenue Capacity These schedules contain information to help the reader assess the District’s most significant local revenue source, the user charge ......................................................................................115 – 122 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 .............................................................................123 – 125 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 ...........................................................................................126 – 128 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 ...............................................129 – 130 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 113 2012 2013 2014 2015 a 2016 a Net Position Net investmen t in capi tal assets 1,928,200$ 1,877, 692$ 1,845,394$ 1,805,453$ 1,809,386$ Restricted 106,693 111, 066 142,764 142,445 136,547 Unrestricted 175,010 251, 300 279,794 330,218 381,124 Total Net Position 2,209,903$ 2,240, 058$ 2,267,952$ 2,278,116$ 2,327,057$ 2017 a 2018 a 2019 a 2020 a 2021 a Net Position Net investmen t in capi tal assets 1,876,249$ 1,968, 740$ 2,063,519$ 2,184,736$ 2,299,308$ Restricted 135,259 129, 579 127,414 97,034 97,920 Unrestricted 379,660 392, 997 429,591 488,859 500,699 Total Net Position 2,391,168$ 2,491, 316$ 2,620,524$ 2,770,629$ 2,897,927$ a Years 2015 to current include a change in the calculation of the net pos ition componen ts which is not reflected in years prior. NET POS IT ION BY COM PONENT LAST TEN FISCAL YEARS 000's) Fiscal Year Fiscal Year THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 114 In come before Non-operating Capital Capital Change Fiscal Operat ing Operat ing Operat ing Revenue/Grants and Grants and in Net Year Revenues Exp ens es In come (Exp ens es )Contributions Contributions Pos ition 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 2021 427,151,562 290,461,490 136,690,072 (24,093,457) 112,596,615 14,701,164 127,297,779 CHANGES IN NET POSITION LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 115 OPERATING REVENUES BY SOURCE LAST TEN FISCAL YEARS Li censes, Fi scal Sewer Service Permits, and Yea r Ch arges , Net Other Fees Ot her 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 2021 419,900, 364 3,753,797 3,497,401 427,151,562 Total Operating Revenues THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 116 Fi scal Em ployment Materials and Contracted Chemical Year Costs Utilities Supplies Services Supplies 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 2021 106,790,672 14,948,574 13,089,179 51,735,701 2,793,263 Fi scal Year In surance Other 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 2021 4,410,048 5,341,784 199,109,221 91,352,269 290,461,490 Note: Balances in FY18 and prior were restated in FY19 to accurately reflect expen ses in the appropr iate category. The majority of the changes were increases to Employment Cos ts and Other and decreases to Materials and Supplies and Con tracted Ser vices. OPERATING EX PENS ES LAST TEN FISCAL YEARS Subtotal, Exp enses before Depreciation Total Operating Exp ensesDepreciation THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 117 2012 2013 2014 2015 2016 Non-oper ating revenues Property taxes levied by the District 24,604,173$ 26,016,135$ 27,450, 319$ 24,764, 324$ 25,671,058$ Investment income 2,407,485 1,056,966 2,966, 549 3,000, 591 4,635,866 Rent and ot her income 294,591 293,159 302,506 37,321 102,865 Total non-oper ating revenues 27,306,249 27,366,260 30,719, 374 27,802, 236 30,409,789 Non-operating expenses Interest expense 16,365,309 21,062,474 25,661,127 27,138,546 28,943,200 Net loss on disposal and sale of capital assets 3,162,723 795,527 5,248,443 1,420,902 324,513 Non-recurring projects and studies 6,402,888 4,676,203 3,492, 667 12,317, 488 11,000,403 Legal claims 5,000 — — — — Total non-oper ating expenses 25,935,920 26,534,204 34,402,237 40,876,936 40,268,116 Net non-operating revenue (expense)1,370,329$ 832,056$ (3,682, 863)$ (13,074, 700)$ (9,858,327)$ 2017 2018 2019 2020 2021 Non-operating revenues Property taxes levied by the District 32,458,054$ 33,748,932$ 34,107, 619$ 35,439, 441$ 43,624,302$ Investment income 2,902,624 7,405,957 16,699, 153 16,259, 182 1,392,278 Rent and ot her income 106,562 253,799 301, 446 301, 631 323,662 Total non-oper ating revenues 35,467,240 41,408,688 51,108, 218 52,000, 254 45,340,242 Non-operating expenses Interest expense 31,250,777 36,695,083 33,082, 384 36,119, 362 56,615,868 Net loss on disposal and sale of capital assets 673,044 1,833,908 970, 825 961, 476 990,108 Non-recurring projects and studies 7,459,538 9,296,358 15,628, 590 12,458, 231 11,827,723 Total non-oper ating expenses 39,383,359 47,825,349 49,681,799 49,539,069 69,433,699 Net non-operating revenue (expense)(3,916,119)$ (6,416,661)$ 1,426, 419$ 2,461, 185$ (24,093,457)$ NON-OPERAT ING REVENUES AND EXPENSES LAST TEN FISCAL YEARS Fiscal Year Fiscal Year Note: Interest expense increased in FY21 due to the implementation of GASB Statement No. 89, Accountin g for Interest Cost Incurred Be fo re the End of a Construction Period , resulting in all interest cost incurred in FY21 being charged to interest expense in the period in which it was incurred. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 118 Ty pe of Monthly Charge Unmeter ed c Residential c Non-Residential Wastewater User Charge Base Charge 26.40$ 26.40$ 26.40$ Com pliance Charge a Tier 1 ——4.44 Tier 2 ——62.16 Tier 3 ——133.20 Tier 4 ——177.60 Tier 5 ——222.00 Volume Char ges per Ccf b —5.00 5.00 per room 2.95 —— per water closet 11.02 —— per bath 9.19 —— per separate shower 9.19 —— Extra Strength Surcharges a Suspen ded Solids ("SS") over 300 milligram s per liter ——302.67 Biochemical Oxygen Dem and ("BOD") over 300 ——812.94 milligrams per liter Chemical Oxygen Demand ("COD") over 600 milligrams ——406.47 per liter Notes: a Applicable only to non-residential customers, Extra Stren gth Surcharges pr iced per ton b Ccf = Hundred cubic feet c User charges for certain low income residen tial users will be 50 percent of the regular user charge Source: Finance Departmen t US ER CHARGE RAT ES As of June 30, 2021 Metered THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 119 Fi scal Yea r Wastewater Charges Billed1 Wastewater Charges Collect ed2 Collect ions as a % of Wastewater Charges Billed 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% 2021 420,781,206 417,788,153 99.29% 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. US ER CH ARGE REVENUES LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 120 2012 a 2013 b 2014 2015 2016 Residential: Single-Family/Unit 1 347.64$ 379.56$ 421.08$ 434.76$ 491.52$ Multi-Family/U nit 296.28 324.12 360.36 434.04 490.80 Commercial/Industrial: Ser vice Charge/Unit 2 525.60 478.56 412.56 348.12 296.80 Sanitary Sewer Usage Charge per Ccf 2.11 2.28 2.50 2.82 3.21 Extra Str en gth Surcharges: SS ov er 300 milligrams per liter (pr ice per ton)231.35 231.35 231.35 244.03 251.88 BOD over 300 milligrams per liter (pr ice per ton)620.14 620.14 620.14 620.14 632.38 COD over 600 milligrams per liter (pr ice per ton)310.07 310.07 310.07 310.07 316.19 2017 c 2018 2019 2020 2021 d,e Residential: Single-Family/Unit 1 535.08$ 591.72$ 602.76$ 666.84$ 674.31$ Multi-Family/U nit 492.00 544.08 602.76 666.84 674.31 Commercial/Industrial: Ser vice Charge/Unit 2 336.69 363.53 395.42 428.90 435.83 Sanitary Sewer Usage Charge per Ccf 3.59 3.97 4.40 4.87 4.97 Extra Str en gth Surcharges: SS ov er 300 milligrams per liter (pr ice per ton)262.00 269.07 277.03 283.87 297.97 BOD over 300 milligrams per liter (pr ice per ton)654.00 671.63 691.50 708.56 786.85 COD over 600 milligrams per liter (pr ice per ton)327.00 335.82 345.76 354.30 393.43 Notes: 1 Based on average usage of a typical single-fam ily during the fiscal year listed. 2 Service Charge/Unit for Commercial/Industrial is calculated by using the sum of annualized base charge and compliance charge. Starting FY 2013, MSD im plem ented 5-tier Compliance Charge Rate Model, so the Service Charge/Unit is based on calculated weighted average com pliance charge. FY 2013, FY 2014 & FY 2015 Service Charge/Unit were adj usted to reflect the weighted average compliance charge calculations. Prior to FY 2013, there was on ly one tier compliance charge. 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. d Ordinance 15418, effective October 1, 2020, changed wastewater rates through June 30, 2021. The FY21 rates are blen ded rates du e to the Board approving a delay fr om July to October for the FY21 rate increase due to the COVID-19 pandemic. e Ordinance 15669, effective July 1, 2021, changed wastewater rates through FY 2024. Source: Finance Departmen t SEWER USER CHARGES (COM POSITE-ANNUAL) LAST TEN FISCAL YEARS Fiscal Year Fiscal Year THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 121 Single-Multi- Fi scal Family Family Non-Total Year Residen tial Residential Residential Account s 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 2021 362,803 41,533 23,960 428,296 Source: Finance Depar tm en t Note: Total ac counts listed above are as of June 30 for eac h fisc al year listed. NUM BER OF CUS TOMERS BY TYPE LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 122 Cus tomer Am ount % InBev Anheuser-Busch 5,329,515$ 1.25% City of St. Louis 2,088,772 0.49% Sigm a-Aldrich 1,839,263 0.43% Missouri-Am er ican Water Co.1,728,302 0.41% Washington University 1,688,185 0.40% GKN Aeros pac e N America Inc.1,064,644 0.25% Jost Real Estate LLC 1,064,622 0.25% The Boei ng Com pany 1,051,546 0.25% BJC Health System 1,034,101 0.24% St Louis University 948,931 0.22% Subtotal (10 largest)17,837,881 4.19% Balance fr om other customers 407,409,902 95.81% Gr and totals 425,247,783$ 100.00% Cus tomer Am ount % An heuser-Bu sch 4,142,554$ 1.82% Washington University 1,384,757 0.61% Mallinck rodt 1,117,808 0.49% City of St. Louis 811,729 0.36% Cott Bev er ages 744,933 0.33% Zoolog ical Gardens 727,895 0.32% Boeing 693,364 0.30% The Dial Cor por ation 546,024 0.24% Sigm a-Aldrich 540,757 0.24% BJC Health Systems 528,696 0.23% Subtotal (10 largest)11,238,517 4.94% Balance fr om other customers 216,438,913 95.06% Gr and totals 227,677,430$ 100.00% User Charges TEN LARGEST CUS TOMERS CUR RENT YEAR AND NINE YEARS AGO Fi scal Year 2021 User Charges Fi scal Year 2012 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 123 Unamortized Fi scal Subordinate Capital Premium, Net Year Senior Subordinate Direct Loans Lease of Discount Amount Per Capita 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 3.07 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 2021 1,262,436,480 88,780,000 315,849,539 — 162,860,332 1,829,926,351 1,417 3.64 Notes: Calculation of "Per Capita" for 2012 through 2013 is based on estimated popu lation levels. Calculation of "As a Share of Personal Income (%)" for 2012 through 2013 is based on estimated income levels. Fiscal years 2012 through 2019 "Per Capita" and "As a Share of Personal Income (%)" were restated to conform to the calculation used for fiscal year 2020. In FY 2012, a dec ision was made to discontinue consider ing SRF receivable amounts as liabilities. The liability is now recorded when the funds are received. Sources: Regional Economic Infor mation System, Bureau of Econom ic 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 124 Amount of Debt Percentage of Debt within within Governmental Unit Debt Outstanding District Boundary District Boundary City of St. Louis 74,895,000$ 74,895,000$ 100.0% St. Louis Cou nty 68,775,000 68,224,800 99.2 Municipalities 127,401,115 124,996,115 98.1 City of St. Louis School District 210,359,000 210,359,000 100.0 St. Louis Cou nty School Districts 1,675,769,095 1,660,594,375 99.1 Fire Districts 151,258,773 143,182,290 94.7 2,308,457,983$ 2,282,251,580 98.9% Total Dir ec t Debt 1,829,926,351 Total Dir ec t and Overlapping Debt 4,112,177,931$ Sou rces: City of St. Louis, Office of Com ptr ol ler St. Louis Cou nty, Depar tm en t of Rev en ue St. Louis Public Schools, Financ ial/Treasurer Offic e Missouri Depar tm en t of Edu cation, School Finance Polled Governments Polled Fire Districts Note: Although the District comprises all of the St. Louis City and most of St. Louis Cou nty, it does not en tirely match the Cou nty's boundaries. The calculation of over lapping debt is based on the per centage that a political jurisdiction's territory lies within the District's territory. These per centages are weighted against the debt ou tstanding thus pr ov iding the amount of debt within District Bou ndary. COM PUT AT ION OF OVERL APPING DEBT As Of June 30, 2021 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 125 Les s: Operating Exp en ses exc luding Non-dep reciation,Net Fi scal Operating operating Gross GASB 68 &Available Year Revenues Revenues Revenues GASB 75)Revenues 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 2021 427,145,372 5,740,323 432,885,695 180,843,680 252,042,015 Fi scal Coverage Year Principal In terest Total Ratio 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 2021 58,574,100 60,727,474 119,301,574 2.1 Fi scal Coverage Year Principal In terest Total Ratio 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 2021 28,575,000 53,110,268 81,685,268 3.1 PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Senior and Subordinate Debt Service Senior Debt Service Note: The methodology used to calculate the net available reve nues and the coverage ratio was adjusted during fiscal year 2013 and all previo us years were restate d for comparative purposes. The 2013 change in methodology consiste d of removing agency fees, previously reflected as a deduction from net available reve nues, and now combining them with in te rest in the de bt service section. In fiscal year 2017 th e methodology was changed to exclude GASB non-cash transactions from the debt se rvice co ve rage calculatio n. Fiscal years 2015 and 2016 have be en adjusted to also exclude the GASB 68 non-cash pensio n expe nse. In fiscal year 2021 the methodology was changed to exclude non-cash unrealized gain/loss on investments from the de bt se rvice co verage calc ulatio n. THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 126 Per Personal Capita Total Medi an Fiscal In come Personal Number of Househ old Labor Year Populations (millions)1 In come 1 Households 2 In come 3 City County State Force 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 30,026 543,991 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 2021 1,291, 665 50,269 38,918 547,936 61,326 7.4 5.3 5.1 687,043 Notes: 1The data in fiscal years 2012-2019 were restated to conform to the calculation used for fiscal year 2020. 2 The number of households was taken from http://www.census.gov/quickfacts/fact/table/US-MO: 2021 figure is based on 2015-2019 data; 2020 figure is based on 2014-2018 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 data; 2015 is based on 2013 data; 2014 is based on 2012 data; 2012- 2013 are based on 2010 census. 3 Median Household Income added to this schedu le in fiscal year 2020 and all prior years updated to include this data. Sources: Regional Econom ic Information System, Bureau of Econom ic An alysis, U.S. Depar tment of Com merce, and Missouri Economic Resource and Information Cen ter (MERIC) http://www.bea.gov/regional/reis/scb.cfm Footnot es-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 127 Percentage Percentage Em ployer Em ployees of Total Rank Em ployees of Total Rank BJC HealthCare 29,660 5%1 24,882 4%1 Washington University in St. Louis 18,488 3%2 13,483 2%3 Mercy 15,587 2%3 8,926 1%8 Boeing Defense, Spac e & Security 15,418 2%4 15,600 3%2 Scott Air Force Base 13,000 2%5 12,344 2%5 SSM Health 11,446 2%6 12,548 2%4 Schnuck Mar kets Inc 9,576 1%7 10,951 2%6 Saint Louis University 6,636 1%8 N/A N/A City of St. Louis 6,625 1%9 N/A N/A Spec ial School District of St. Louis Cou nty 6,151 1%10 N/A N/A Wal-Mart Stores Inc.N/A N/A 10,800 2%7 AT &T N/A N/A 8,900 1%9 United Postal Service N/A N/A 7,872 1%10 132,587 20%126,306 20% Total Em ploymen t 647,437 100%622,629 100% Note: Employees are for the St. Louis area which includes several counties not served by the District. Sources: St. Louis Business Journal's Bo ok of Lists 2021 as of June 2021 St. Louis Business Journal's Bo ok of Lists 2012 PRINCIPAL EMPLOYERS (ST. LOUIS METROPOL ITAN AREA) CURRENT YEAR AND NINE YEARS AGO Fi scal Yea r 2021 Fiscal Year 2012 THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 128 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Adm inistrative 129 124 122 129 126 131 129 127 117 121 Offic e/Cler ical 85 86 82 84 82 82 75 73 84 78 Plant Operation & Laboratory 244 249 252 236 226 227 222 228 231 237 Engineer ing & Technical 153 148 151 155 152 151 150 166 174 176 Sewer Con struction Maintenance 311 324 328 345 358 360 365 341 349 344 Total Em pl oyees 922 931 935 949 944 951 941 935 955 956 Note: The total em ployees listed above ar e as of June 30 for eac h respec tive year. Sour ce: Human Resources Depar tm en t EMPL OYMENT LEVEL LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 129 Average Sewage Fi scal Tr ea tment in Millions Yea r of Gal lons per Day 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 2021 300.6 Source: Oper ations Depar tm ent AVERAGE FLOW LA ST TEN FIS CAL YEARS THE METROPOLITAN ST. LOUIS SEWER DISTRICT Page 130 2012 2013 2014 2015 2016 Miles of sewers 9,738 9,578 9,563 9,531 9,700 Number of treatment plants 7 7 7 7 7 Treatment capacity (MGD) a 528 528 533 538 538 Annual engineer ing maxim um plant capac ity millions of gallons)192, 629 192, 629 194, 454 196, 279 196, 279 Amount treated annually (millions of gallons)109,518 119,253 99,945 119,547 122,366 Unused capacity (millions of gallons)83,111 73,376 94,509 76,732 73,913 Percentage of capacity utilized 57% 62% 51% 61% 62% 2017 2018 2019 2020 2021 Miles of sewers 9,400 9,400 9,400 9,400 9,400 Number of treatment plants 7 7 7 7 7 Treatment capacity (MGD) a 593 593 593 593 811 Annual engineer ing maxim um plant capac ity millions of gallons)216, 354 216, 354 216, 354 216, 354 216, 354 Am ount treated annually (millions of gallons)120, 033 96,534 144, 754 134, 502 109, 195 Unused capacity (m illions of gallons)96,321 119, 820 71,600 81,852 107, 159 Percentage of capacity utilized 55% 45%67% 62% 50% Sources: Oper ations Depar tm en t and En gineer ing Department Note: a Million gallons per day - treatment capacity changed in fiscal year 2021 to reflec t pr imar y treatment capacity. Prior years reflect per mitted secondary aver age treatment capac ity. Fiscal Year Fiscal Year OPERAT ING AND CAPITAL INDICAT ORS LAST TEN FISCAL YEARS THE METROPOLITAN ST. LOUIS SEWERDISTRICT2350MARKETSTREET, ST. LOUIS, MISSOURI63103WWW.MSDPROJECTCLEAR.ORG • 314-768-6200 APPENDIX B Information Regarding the District’s Service Area [ THIS PAGE INTENTIONALLY LEFT BLANK ] B-1 INFORMATION REGARDING THE DISTRICT’S SERVICE AREA The Series 2022B Bonds are special, limited obligations of The Metropolitan St. Louis Sewer District (the “District”) and are not obligations of The City of St. Louis, Missouri (the “City”), St. Louis County, Missouri (the “County”), the State of Missouri (the “State”), or any political subdivision of the City, the County or the State. The Series 2022B Bonds are payable solely from the revenues described in this Official Statement. As described elsewhere in this Official Statement, the service area of the District consists of the City and most of the County. The following information regarding the City and the County has been obtained from sources that the District believes to be reliable, but should not be construed as an indication that the Series 2022B Bonds are payable from any source other than the revenues of the District described in this Official Statement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS,” “THE DISTRICT,” and “THE CIRP” in this Official Statement. Such information is not guaranteed as to accuracy or completeness by the Underwriters and is not to be construed as a representation by the Underwriters. The Underwriters have not verified this information. No representation is made by the Underwriters as to the accuracy or adequacy of such information or as to the absence of material adverse changes in such information subsequent to the date as to which such information is provided. The delivery of this Official Statement, including this Appendix B, is not intended to create any implication that there has been no change in the affairs of the District, the City or the County since the date hereof or that the information contained or incorporated by reference in this Appendix B is correct as of any time subsequent to its date. THE SERVICE AREA As more fully described in this Official Statement under the caption “THE DISTRICT - General”, the District was created in 1954 pursuant to Article VI, Section 30 of the State Constitution, which empowers the people of the City and the County “to establish a metropolitan district for the functional administration of services common to the area.” The District provides a metropolitan-wide system of wastewater treatment and sanitary sewerage facilities for the collection, treatment and disposal of sewage within the City and most of the more heavily populated areas of the County. When the District began operations, it took over the publicly-owned wastewater and stormwater drainage facilities within its then-existing jurisdiction and began the construction of an extensive system of collector and interceptor sewers and treatment facilities. In subsequent years, voters have approved the District’s annexation of a 270 square mile area of the lower Missouri River and lower Meramec River watersheds in the County, and the District purchased various investor-owned or municipally-operated systems serving areas of the County. The District’s service area now encompasses approximately 520 square miles, including all of the City’s approximately 66 square miles and approximately 454 square miles (approximately 87%) of the County. A map showing the District’s current service area appears on the back cover of this Official Statement. The current population served by the District is approximately 1.3 million representing approximately 428,000 accounts. The City of St. Louis, Missouri The history of the City dates to 1764 when Pierre Laclède and Auguste Chouteau selected the site as a fur trading post due in large part to its proximity to the confluence of the Mississippi and Missouri Rivers. The City was incorporated in 1823, and its current boundaries were established in 1876, when voters approved separation from the County and establishment of a home rule charter. The City is a constitutional charter city not a part of any county, and exists under and pursuant to its Charter and the laws of the State. The eastern boundary of the City is formed by the Mississippi River, and the City is bordered on the north, west and south by the County. The City occupies approximately 66 square miles, all of which lie within the service area of the District. B-2 St. Louis County, Missouri The County was formed by a proclamation of Governor William Clark on October 1, 1812, nine years before Missouri attained statehood in 1821. In 1876, by vote of the entire county (which at the time included both City and County), the City separated itself from the County. The City of Clayton, Missouri is the County seat and located in the east central part of the County. Approximately sixty-six percent of the land area of the County is occupied by approximately 88 self-governing municipalities, containing approximately two-thirds of the County’s population. The remaining unincorporated area comes under the direct jurisdiction of the County government. The County is a constitutional charter county operating and existing under its Charter and the laws of the State. The County covers an area of approximately 524 square miles, approximately 454 square miles of which lie within the service area of the District. ECONOMIC AND DEMOGRAPHIC DATA Population The City and the County are a part of the St. Louis, Missouri-Illinois Metropolitan Statistical Area (the “St. Louis MSA”), comprised of: the City, the County, and the counties of Franklin, Jefferson, Lincoln, St. Charles, and Warren in Missouri; the counties of Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe and St. Clair in Illinois; and a portion of the City of Sullivan located in Crawford County, Missouri. According to the U.S. Census Bureau, the population patterns for the City, the County, and the St. Louis MSA have been as stated directly below. City County St. Louis MSA(1) Percentage Percentage Percentage Year Population Change(2) Population Change(2) Population Change(2) 2010 319,294 - 998,954 - 2,787,701 - 2011 319,417 0.04% 999,961 0.00% 2,795,155 +0.27% 2012 319,387 -0.01 1,000,742 +0.08 2,796,682 +0.05 2013 318,459 -0.29 1,000,471 -0.03 2,799,472 +0.10 2014 317,395 -0.33 1,000,588 +0.01 2,803,430 +0.14 2015 315,878 -0.48 1,001,213 +0.06 2,807,503 +0.15 2016 312,389 -1.10 998,025 -0.32 2,805,502 -0.07 2017 307,866 -1.45 996,648 -0.14 2,805,758 -0.01 2018 302,838 -1.63 996,945 +0.03 2,803,958 -0.06 2019 300,576 -0.75 994,205 -0.27 2,803,228 -0.03 2020 301,578 +0.33 1,004,125 +1.00 2,820,253 +0.61 2021 293,310 -2.74 997,187 -0.69 2,809,299 -0.39 _____________________ Source: U.S. Census Bureau Population for the years 2010 and 2020; Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2019 of the U.S. Census Bureau, Population Division for the years 2011 through 2019; Annual Estimates of the Resident Population: April 1, 2020 to July 1, 2021 of the U.S. Census Bureau, Population Division for year 2021; Annual Estimates of the Resident Population for Metropolitan Statistical Areas in the United States and Puerto Rico: April 1, 2010 to July 1, 2019. (1) Washington County, Missouri was removed from the St. Louis MSA statistics effective retroactively to the 2010 Census. (2) Percentages are rounded to the nearest hundredth. B-3 The largest municipalities within the District’s service area are as set forth in the below table. Population Population Population Municipality 2020 2010 2000 St. Louis (City) 297,645 319,294 348,189 Florissant 50,795 52,158 50,497 Chesterfield 47,570 47,484 46,802 Wildwood 35,460 35,517 32,884 University City 34,049 35,371 37,428 Ballwin 30,094 30,404 31,283 Kirkwood 27,866 27,540 27,324 Maryland Heights 26,895 27,472 25,756 Hazelwood 25,042 25,703 26,206 Webster Groves 22,896 22,995 23,230 ______________ Source: Missouri Census Data Center Employment The below table sets forth information relating to the average composition of employment in the City and the County for the years 2000, 2010, and 2020. County Employment City Employment Industry 2000(1) 2010(2) 2020(2) 2000(1) 2010(2) 2020(2) Agriculture, forestry, fishing and hunting, and mining 1,146 1,719 2,675 419 334 575 Construction 24,817 23,053 22,835 5,652 6,492 5,513 Manufacturing 64,212 51,177 48,985 17,220 12,810 13,627 Wholesale trade 21,290 17,504 15,505 4,062 3,483 3,206 Retail trade 57,061 54,052 52,084 13,903 14,425 14,153 Transportation and warehousing, and utilities 27,141 23,409 23,142 8,405 7,199 8,059 Information 19,021 14,137 11,340 4,587 3,810 3,420 Finance, insurance, real estate, and rental and leasing 45,603 45,095 49,396 9,470 9,382 10,504 Professional, scientific, management, administrative, and waste management services 56,101 59,328 64,426 13,991 16,308 18,301 Educational, health and social services 109,440 118,122 129,695 33,767 39,514 45,654 Arts, entertainment, recreation, accommodation and food services 38,345 43,743 41,601 15,045 18,285 19,217 Other services (except public administration) 24,398 22,837 23,155 8,486 7,275 8,318 Public administration 16,675 15,325 15,072 8,843 7,836 6,875 Total: 505,250 489,501 499,911 143,850 147,153 157,422 (1) Source: U.S. Census Bureau, 2000 Decennial Census. (2) Source: American Community Survery 5-Year Estimates Data Profiles. B-4 The below table sets forth the total labor force, number of employed and unemployed workers in the City and the County, for 2012 through 2021. City(1) County(1) Labor Force Labor Force Year Employed Unemployed Total Employed Unemployed Total 2012 146,076 14,052 160,128 488,787 35,009 523,796 2013 145,939 13,403 159,342 489,821 32,941 522,762 2014 147,413 12,146 159,559 496,520 30,814 527,334 2015 148,980 9,830 158,810 505,340 25,031 530,371 2016 148,669 8,529 157,198 508,770 22,294 531,064 2017 147,268 6,869 154,137 507,484 18,116 525,600 2018 145,297 5,871 151,168 510,372 15,859 526,231 2019 146,448 5,877 152,325 516,814 16,206 533,020 2020 139,334 12,958 152,292 491,901 32,820 524,721 2021 143,249 7,810 151,058 510,671 19,909 530,580 _________________________________________ Source: Missouri Local Area Unemployment Statistics (LAUS) as produced by Missouri Economic Resource and Information Center (MERIC) in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics. (1)Figures are annual averages based on estimates and are not seasonally adjusted. The below table sets forth unemployment rates for the City, County, State and the United States of America (the “Country”) for 2012 through 2021. Unemployment Rates Fiscal Year City(1) County(1) State (1) Country(2) 2012 9.7% 6.9% 7.0% 8.5% 2013 10.5 7.3 7.1 7.8 2014 9.6 6.9 6.6 6.8 2015 7.1 5.5 5.8 5.7 2016 5.9 4.6 4.9 5.0 2017 4.7 3.7 4.9 4.7 2018 4.3 3.3 3.5 4.1 2019 4.3 3.3 3.3 3.8 2020 12.0 8.9 7.9 6.0 2021 7.4 5.3 5.1 6.9 _______________________________________ (1) Source: District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020. (2) Source: United States Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, Seasonally Adjusted as of June 30. B-5 Principal Employers The below table sets forth the names and approximate number of employees of principal employers within the St. Louis area as of June 2021. St. Louis MSA Principal Employers Company Nature of Business Approximate Number of Employees(1) BJC HealthCare Healthcare 29,660 Washington University in St. Louis Education 18,488 Mercy Healthcare 15,587 Boeing Defense, Space & Security Manufacturing 15,418 Scott Air Force Base Government 13,000 SSM Health Healthcare 11,446 Schnuck Markets Inc. Retail 9,576 Saint Louis University Education 6,636 The City of St. Louis, Missouri Government 6,625 Special School District of St. Louis County Education 6,151 ____________________ Source: District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020. (1) Employees are for the St. Louis area, which includes several counties not served by the District. [The remainder of this page is intentionally left blank.] B-6 Per Capita Personal Income The below table presents per capita personal income for the District, the State and the Country for the years 2012 through 2021, the latest date for which such information is available. District(2) State(3) Country(3) Year(1) Per Capita Personal Income Per Capita Personal Income Per Capita Personal Income 2012 $29,490 $40,308 $44,528 2013 31,105 40,565 44,760 2014 30,026 41,955 46,859 2015 31,969 43,316 48,694 2016 32,482 44,400 49,588 2017 32,705 45,375 51,551 2018 33,897 47,225 53,851 2019 37,150 48,914 55,744 2020 37,159 51,656 59,161 2021 38,918 55,149 63,444 _______________________________________ Source: District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020; and Federal Reserve Bank of St. Louis and U.S. Bureau of Economic Analysis, Per Capita Personal Income in Missouri and Personal Income Per Capita, retrieved from FRED, Federal Reserve Bank of St. Louis. (1) Figures are presented on a fiscal-year basis for the District and on a calendar-year basis for the State and the Country. (2) In the District’s Annual Comprehensive Financial Report Fiscal Years Ended June 30, 2021 and 2020, the data in Fiscal Years 2012-2019 were restated to conform to the calculation used for Fiscal Year 2020. (3) Figures for 2012-2020 are based on the seasonally adjusted average annual rate. Figures for 2021 are based on the seasonally adjusted annual rate, as of on or about October 1, 2021. *** APPENDIX C Definitions and Summaries of Certain Provisions of the Bond Ordinance and the Continuing Disclosure Agreement [ THIS PAGE INTENTIONALLY LEFT BLANK ] C-1 The following is a brief summary of certain provisions of the Master Bond Ordinance adopted by the District on April 22, 2004, as supplemented by Ordinance No. 15906 adopted by the District on May 12, 2022 authorizing the issuance of the Series 2022B Bonds (the “Bond Ordinance”). This summary is not to be considered as a full statement of the provisions of such documents and is qualified by reference to and is subject to the complete Bond Ordinance, copies of which may be obtained from PFM Financial Advisors, LLC or Independent Public Advisors, LLC, as Co-Financial Advisors to the District. After delivery of the Series 2022B Bonds, copies of such documents will be available for inspection at the corporate trust office of the Paying Agent in St. Louis, Missouri or at such other office as shall be designated by the Paying Agent. DEFINITIONS The definitions of certain words and terms used in this Official Statement with respect to the Series 2022B Bonds are set forth below: “Accumulation Payments” shall have the meaning ascribed therefor under the caption “Sinking Fund – Debt Service Reserve Account” in this Appendix C. “Additional Interest” means, for any period during which any Pledged Bonds are owned by a Credit Facility Provider pursuant to a Credit Facility or Credit Facility Agreement, the amount of interest accrued on such Pledged Bonds at the Pledged Bond Rate less the amount of interest which would have accrued during such period on an equal Principal amount of Bonds at the Bond Rate. “Annual Budget” means the annual budget of the District relating to the System (which shall include all costs, obligations and expenses properly allocable to the System), as amended or supplemented in accordance with established procedures of the District, adopted or in effect for a particular Fiscal Year. “Bond Counsel” means any firm of nationally recognized bond counsel experienced in matters relating to tax-exempt financing, appointed by the District. “Bond Ordinance” means the Master Bond Ordinance adopted by the Board of Trustees of the District on April 22, 2004 and the Ordinance adopted by the Board of Trustees of the District on May 12, 2022 authorizing the issuance of the Series 2022B, as the same may from time to time be modified, supplemented or amended by Supplemental Ordinances. “Bond Rate” means the rate of interest per annum payable on specified Bonds other than Pledged Bonds. “Bond Register” means the books for the registration, transfer and exchange of Bonds maintained by the Bond Registrar. “Bond Registrar” means any bank or trust company designated as such by the District in the Bond Ordinance with respect to any of the Bonds. Such Bond Registrar shall perform the duties required of the Bond Registrar in the Bond Ordinance. UMB Bank, N.A. has been designated as Bond Registrar for the Bonds; provided, however, that in connection with the issuance of any SRF Bonds, the District shall appoint such separate Bond Registrar designated by the issuer of the SRF Bonds. “Bondholder” means the registered owner of one or more Bonds. C-2 “Bonds” means any revenue bonds authorized by and authenticated and delivered pursuant to the Bond Ordinance, including the Series 2022B Bonds, any other Senior Bonds, and any Subordinate Bonds. “Business Day” means a day other than a Saturday, Sunday or holiday on which the Paying Agent, Bond Registrar or applicable Credit Facility Provider is scheduled in the normal course of its operations to be open to the public for conduct of its banking operations. “Charter” means the District’s Charter (Plan) approved by the voters of the City of St. Louis, Missouri and St. Louis County, Missouri on February 9, 1954 and amended on November 7, 2000, June 5, 2012 and April 6, 2021, and as further amended from time to time in accordance with its terms. “Chief Financial Officer” means the individual presently holding the office of Secretary-Treasurer of the District or the individual presently holding the office of Assistant Secretary-Treasurer of the District, and any successors who might hereafter hold either such office, and any individual, body or authority to whom or to which may hereafter be delegated by law the duties, powers, authority, obligations or liabilities of either such office. “Chief Officer” means the individual presently holding the office of Executive Director or Acting Executive Director of the District as appointed by the Governing Body and any successor who might hereafter hold such office, and any individual, body or authority to whom or which may hereafter be delegated by law the duties, powers, authority, obligations or liabilities of such office. “Code” means the Internal Revenue Code of 1986, as amended, and the applicable regulations of the Treasury Department proposed or promulgated thereunder. “Consultant” means an independent engineer or utility consultant or firm of independent engineers or utility consultants experienced in the planning and management of wastewater systems and having a nationally recognized reputation for such work. “Continuing Disclosure Agreement” means (i) with respect to the Series 2022B Bonds, the Disclosure Dissemination Agent Agreement dated as of June 1, 2022 between the District and Digital Assurance Certification, L.L.C., as Dissemination Agent, as amended from time to time in accordance with its terms, in substantially the form attached as an exhibit to the Bond Ordinance, and (ii) with respect to any other series of Bonds, the continuing disclosure agreement relating to such series of Bonds, as amended from time to time in accordance with its terms. “Costs,” with respect to any Project, means the total cost, paid or incurred, to study, plan, design, finance, acquire, construct, reconstruct, renovate, repair, replace, equip, install, or otherwise develop such Project and shall include, but shall not be limited to, the following costs and expenses relating to such Project and the reimbursement to the District for any such items previously paid by the District: (i) the cost of all lands, real or personal properties, rights, easements, and franchises acquired; (ii) the cost of all machinery and equipment, financing charges, and interest prior to and during construction and for six months after completion of construction; (iii) the cost of the acquisition, construction, reconstruction or installation of such Project; C-3 (iv) the cost of engineering, architectural, development and supervisory services, fiscal agents’ and legal expenses, plans and specifications, and other expenses necessary or incident to determining the feasibility or practicability of any Projects, administrative expenses, and such other expenses as may be necessary or incident to any financing by Bonds; (v) the cost of placing such Project in operation; (vi) the cost of condemnation of property necessary for such construction and operation; (vii) Costs of Issuance; and (viii) any other costs which may be incident to such Project. “Costs of Issuance” means issuance costs with respect to the Bonds, including but not limited to the following: underwriters’ spread (whether realized directly or derived through purchase of Bonds at a discount below the price at which they are expected to be sold to the public), management fee and expenses; Credit Facility fees and Reserve Account Credit Facility fees; counsel fees (including Bond Counsel, underwriter’s counsel, District’s counsel, as well as any other specialized counsel fees incurred in connection with the borrowing); financial advisor fees of any financial advisor to the District incurred in connection with the issuance of the Bonds; rating agency fees; escrow agent and paying agent fees; accountant fees and other expenses related to issuance of the Bonds; printing costs (for the Bonds and of the preliminary and final official statement relating to the Bonds); and fees and expenses of the District incurred in connection with the issuance of the Bonds. “Credit Facility” means any letter of credit, insurance policy, guaranty, surety bond, standby bond purchase agreement, line of credit, revolving credit agreement, or similar obligation, arrangement, or instrument issued by a bank, insurance company, or other financial institution which is used by the District to perform one or more of the following tasks: (i) enhancing the District’s credit by assuring owners of any of the Bonds that Principal of and interest on such Bonds will be paid promptly when due; (ii) providing liquidity for the owners of Bonds through undertaking to cause Bonds to be bought from the owners thereof when submitted pursuant to an arrangement prescribed by a Series Ordinance; or (iii) remarketing any Bonds so submitted to the Credit Facility Provider (whether or not the same Credit Facility Provider is remarketing the Bonds). The term Credit Facility shall not include a Reserve Account Credit Facility. “Credit Facility Agreement” means an agreement between the District and a Credit Facility Provider pursuant to which the Credit Facility Provider issues a Credit Facility and may include the promissory note or other instrument evidencing the District’s obligations to a Credit Facility Provider pursuant to a Credit Facility Agreement. The term Credit Facility Agreement shall not include a Reserve Account Credit Facility Agreement. “Credit Facility Provider” means any issuer of a Credit Facility then in effect for all or part of the Bonds. The term Credit Facility Provider shall not include any Reserve Account Credit Facility Provider. Whenever in the Bond Ordinance the consent of the Credit Facility Provider is required, such consent shall only be required from the Credit Facility Provider whose Credit Facility is issued with respect to the series of Bonds for which the consent is required. “Debt Service Requirement” means the total Principal and interest coming due on Senior Bonds, or all Bonds, as applicable, whether at maturity or upon mandatory redemption, in any specified period; provided, however, that (i) Debt Service Requirement with respect to SRF Bonds shall mean the C-4 net amount of Principal and interest coming due on such SRF Bonds after taking into account any so- called “SRF Subsidy” (i.e., the amount of anticipated investment earnings which will accrue on any reserve account relating to the SRF Bonds and which will reduce the debt service payments of the District with respect to such SRF Bonds), and (ii) Debt Service Requirement with respect to Bonds issued as “build America bonds” shall mean the net amount of Principal and interest coming due on such Bonds after taking into account the anticipated receipt of U.S. Treasury Interest Subsidy payments on such Bonds. If any Bonds Outstanding or proposed to be issued shall bear interest at a Variable Rate, the interest coming due in any specified future period shall be determined as if the Variable Rate in effect at all times during such future period equaled the average of the BMA Municipal Bond Index (formerly PSA Municipal Bond Index) for the prior 5 calendar years, or any successor index as certified by a Financial Advisor. With respect to any Bonds secured by a Credit Facility, Debt Service Requirement shall include (i) any upfront or periodic commission or commitment fee obligations with respect to such Credit Facility, (ii) the outstanding amount of any Reimbursement Obligation owed to the applicable Credit Facility Provider and interest thereon, (iii) any Additional Interest owed on Pledged Bonds to a Credit Facility Provider, and (iv) any remarketing agent fees. With respect to any Hedged Bonds, the interest on such Hedged Bonds during any Hedge Period and for so long as the provider of the related Hedge Agreement has not defaulted on its payment obligations thereunder shall be calculated by adding (x) the amount of interest payable by the District on such Hedged Bonds pursuant to their terms and (y) the amount of Hedge Payments payable by the District under the related Hedge Agreement and subtracting (z) the amount of Hedge Receipts payable by the provider of the related Hedge Agreement at the rate specified in the related Hedge Agreement; provided, however, that to the extent that the provider of any Hedge Agreement is in default thereunder, the amount of interest payable by the District on the related Hedged Bonds shall be the interest calculated as if such Hedge Agreement had not been executed. In determining the amount of Hedge Payments or Hedge Receipts payable or receivable for any future period which are not fixed throughout the Hedge Period (i.e., which are variable), such Hedge Payments or Hedge Receipts for any period of calculation (the “Determination Period”) shall be computed by assuming that the variables comprising the calculation (e.g., indices) applicable to the Determination Period are equal to the average of the actual variables which were in effect (weighted according to the length of the period during which each such variable was in effect) for the most recent twelve-month period immediately preceding the date of calculation for which such information is available (or shorter period if such information is not available for a twelve-month period). The Principal of and interest on Bonds and Hedge Payments shall be excluded from the determination of Debt Service Requirement to the extent that (1) the same were or are expected to be paid with amounts on deposit on the date of calculation (or Bond proceeds to be deposited on the date of issuance of proposed Bonds) in the Project Fund, the Sinking Fund or a similar fund for Subordinate Bonds or (2) cash or non-callable Government Securities are on deposit in an irrevocable escrow or trust account in accordance with the provisions of the Bond Ordinance (or a similar escrow or trust account for Subordinate Bonds) and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay Principal or interest and are sufficient to pay such Principal or interest. “Debt Service Reserve Account” means the account by that name within the Sinking Fund established in the Bond Ordinance. “Debt Service Reserve Requirement” means an amount determined from time to time by the District as a reasonable reserve for the payment of Principal of and interest on Senior Bonds which are not Senior SRF Bonds or Senior Uncovered Bonds. On the date of issue of a series of Senior Bonds, this amount shall be the least of (a) 10% of the stated Outstanding Principal amount of the Senior Bonds which are not Senior SRF Bonds or Senior Uncovered Bonds, (b) the maximum annual Principal and interest requirements (taking into account the anticipated receipt of U.S. Treasury Interest Subsidy payments on the Series 2010B Bonds) on the Senior Bonds which are not Senior SRF Bonds or Senior Uncovered Bonds (determined as of the issue date of each series of Senior Bonds which are not Senior C-5 SRF Bonds or Senior Uncovered Bonds), or (c) 125% of the average annual Principal and interest requirements (taking into account the anticipated receipt of U.S. Treasury Interest Subsidy payments on the Series 2010B Bonds) on the Senior Bonds which are not Senior SRF Bonds or Senior Uncovered Bonds (determined as of the issue date of each series of Senior Bonds which are not Senior SRF Bonds or Senior Uncovered Bonds). The District may in its sole discretion change, reduce or increase this amount from time to time by Supplemental Ordinance, but in no event may the District reduce this amount (A) below the greater of (1) while the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds or the Series 2013B Bonds are Outstanding, the least of (x) the aggregate of 10% of the stated Outstanding Principal amounts of the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds and the Series 2013B Bonds, (y) the aggregate of the maximum annual Principal and interest requirements on the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds and the Series 2013B Bonds (taking into account the anticipated receipt of U.S. Treasury Interest Subsidy payments on the Series 2010B Bonds) (determined as of their respective issue dates), or (z) the aggregate of 125% of the average annual Principal and interest requirements on the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds and the Series 2013B Bonds (taking into account the anticipated receipt of U.S. Treasury Interest Subsidy payments on the Series 2010B Bonds) (determined as of their respective issue dates), or (2) 50% of the average annual Debt Service Requirement with respect to Senior Bonds (other than Senior SRF Bonds and Senior Uncovered Bonds) in the then current or any succeeding Fiscal Year, and (B) unless each Rating Agency indicates in writing to the District that such reduction will not, by itself, result in a reduction or withdrawal of its current Rating on the Senior Bonds. If the aggregate initial offering price of a series of Bonds to the public is less than 98% or more than 102% of par, such offering price shall be used in lieu of the stated Principal amount. Notwithstanding anything in the Bond Ordinance to the contrary, (1) when all or a portion (the “Refunding Portion”) of a series of Senior Bonds is issued to refund a portion of a series of Outstanding Senior Bonds (the “Refunded Series”), the annual Principal and interest requirements to be used for purposes of clauses (b), (c), (A)(1)(y) and (A)(1)(z) above shall not include both the Principal and interest requirements of the Refunding Portion and the Refunded Series, but instead shall be, as between the Refunding Portion and the Refunded Series, the one that, when added to the Principal and interest requirements for all other Senior Bonds included in such computation, results in the greatest aggregate amount; (2) in no event shall the deposit to the Debt Service Reserve Requirement for each series of Senior Bonds exceed an amount permitted for a reasonably required reserve fund under the Code; and (3) the Debt Service Reserve Requirement, if any, in connection with any Senior SRF Bonds or any Subordinate Bonds, including Subordinate SRF Bonds, shall be as provided in the Series Ordinance authorizing the issuance of such Senior SRF Bonds or such Subordinate Bonds. “Depository” means the depository of each fund established under the Bond Ordinance, and any successor depository of such fund hereafter designated by the District from time to time by Supplemental Ordinance. The Depository for the Senior Bonds is U.S. Bank, N.A., St. Louis, Missouri. “District” means The Metropolitan St. Louis Sewer District, a body corporate, a municipal corporation and a political subdivision duly created and existing under the laws of the State, and any successor thereto. “DTC” means The Depository Trust Company, New York, New York, or its nominee, or its successors and assigns, or any other depository performing similar functions under the Bond Ordinance. “Event of Default” means any of the events defined as such in the Bond Ordinance. “Expenses of Operation and Maintenance” means all expenses reasonably incurred in connection with the operation, maintenance and repair of the System, including salaries, wages, the cost of materials and supplies, rentals of leased property, if any, management fees, payments to others for the C-6 treatment and disposal of sewage, the cost of audits and periodic Consultant’s reports, Paying Agent’s and Bond Registrar’s fees and expenses, payment of premiums for insurance required by the Bond Ordinance and other insurance which the District deems prudent to carry on the System and its operations and personnel, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, short-term obligations incurred and payable within a particular Fiscal Year, other obligations or indebtedness incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and, generally, all expenses, exclusive of interest on the Bonds and depreciation or amortization, which under accounting principles generally accepted for municipal utility purposes are properly allocable to operation and maintenance; however, only such expenses as are reasonable and necessary or desirable for the proper operation and maintenance of the System shall be included. “Expenses of Operation and Maintenance” also includes the District’s obligations under any contract with any other political subdivision or public agency or authority of one or more political subdivisions pursuant to which the District undertakes to make payments measured by the expenses of operating and maintaining any facility which constitutes part of the System and which is owned or operated in part by the District and in part by others. “Financial Advisor” means an investment banking or financial advisory firm, commercial bank, or any other Person who or which is appointed by the District for the purpose of passing on questions relating to the availability and terms of specified types of Bonds and is actively engaged in and, in the good faith opinion of the District, has a favorable reputation for skill and experience in underwriting or providing financial advisory services in respect of similar types of securities. “Fiscal Year” means the 12-month period used by the District for its general accounting purposes, as it may be changed from time to time. The Fiscal Year at the time the Bond Ordinance was adopted begins on July 1 and ends on June 30 of the immediately following calendar year. “Fitch” means Fitch, Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the District. At the time the Bond Ordinance was adopted, the notice address of Fitch is One State Street Plaza, New York, New York 10004. “Forecast Period” means a period of three consecutive Fiscal Years commencing with the Fiscal Year in which any proposed Senior Bonds are to be issued. “Governing Body” means the Board of Trustees of the District and any predecessor or successor in office to such present body, and any Person to whom or which may hereafter be delegated by law the duties, powers, authority, obligations, or liabilities of the present body, either in whole or in relation to the System. “Government Loans” means loans to the District by the government of the United States or the State, or by any department, authority or agency of either, for the purpose of acquiring, constructing, reconstructing, improving, bettering or extending any part of the System. “Government Obligations” means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged or (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of and the interest on which is fully and unconditionally guaranteed as a full faith and credit obligation of the United States of America (including any securities described in (a) or (b) issued or held in book-entry form on the books of the Department of the Treasury of the United States of America), which obligations, in either case, (i) are not C-7 subject to redemption or prepayment prior to maturity except at the option of the holder of such obligations and (ii) may include U.S. Treasury Trust Receipts. “Hedge Agreement” means, without limitation, (i) any contract provided by a Qualified Hedge Provider known as or referred to or which performs the function of an interest rate swap agreement, currency swap agreement, forward payment conversion agreement, or futures contract; (ii) any contract provided by a Qualified Hedge Provider providing for payments based on levels of, or changes or differences in, interest rates, currency exchange rates, or stock or other indices; (iii) any contract provided by a Qualified Hedge Provider to exchange cash flows or payments or series of payments; (iv) any type of contract provided by a Qualified Hedge Provider called, or designed to perform the function of, interest rate floors, collars, or caps, options, puts, or calls, to hedge or minimize any type of financial risk, including, without limitation, payment, currency, rate, or other financial risk; and (v) any other type of contract or arrangement provided by a Qualified Hedge Provider that the District determines is to be used, or is intended to be used, to manage or reduce the cost of any Bonds, to convert any element of any Bonds from one form to another, to maximize or increase investment return, to minimize investment return risk, or to protect against any type of financial risk or uncertainty. “Hedge Contingency Payments” means amounts payable by the District pursuant to any Hedge Agreement as termination payments, fees, expenses and indemnity payments. “Hedge Payments” means amounts payable by the District pursuant to any Hedge Agreement, other than Hedge Contingency Payments. “Hedge Period” means the period during which a Hedge Agreement is in effect. “Hedge Receipts” means amounts payable by any provider of a Hedge Agreement pursuant to such Hedge Agreement, other than termination payments, fees, expenses and indemnity payments. “Hedged Bonds” means any Bonds for which the District shall have entered into a Hedge Agreement. “Independent Certified Public Accountant” means a certified public accountant, or a firm of certified public accountants, who or which is “independent” as that term is defined in Rule 101 and related interpretations of the Code of Professional Ethics of the American Institute of Certified Public Accountants, of recognized standing, who or which does not devote his or its full time to the District (but who or which may be regularly retained by the District). “Interest Payment Date” means each date on which interest is to become due on any Bonds, as established in the Series Ordinance for such Bonds, and with respect to the Series 2022B Bonds, shall be as specified in the Bond Ordinance. “Investment Earnings” means all interest received on and profits derived from investments of moneys in all funds and accounts of the District other than investments derived from or with respect to (a) stormwater revenues, (b) all funds and accounts established in connection with SRF Bonds and (c) obligations issued by the District on behalf of any of its subdistricts. “Maximum Annual Debt Service” means the maximum amount of Debt Service Requirements as computed for the then current or any future Fiscal Year. “Moody’s” means Moody’s Investors Service, Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized C-8 securities rating agency as may be designated in writing by the District. At the time the Bond Ordinance was adopted, the notice address of Moody’s is 99 Church Street, New York, New York 10007. “Net Operating Revenues” means Operating Revenues, after provision for payment of all Expenses of Operation and Maintenance. “Operating Revenues” means all income and revenue of any nature derived from the operation of the System, including periodic wastewater billings, service charges, other charges for wastewater service and the availability thereof (other than any special assessment proceeds), connection or tap fees (whether accounted for as revenues or as contributed capital), net proceeds from business interruption insurance, the principal of gifts, bequests, contributions, grants and donations available to pay debt service of Bonds, and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on Bonds, but excluding (a) any profits or losses on the early extinguishment of debt or on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and local, state or federal grants or other moneys received for the payment of Expenses of Operation and Maintenance, (b) local, state, or federal grants, loans (including Government Loans), capital improvement contract payments, or other moneys received for capital improvements to the System, (c) Investment Earnings, (d) any stormwater charges and (e) any property tax revenues. “Other System Obligations” means obligations of any kind, including but not limited to, Government Loans, general obligation bonds, revenue bonds, capital leases, installment purchase agreements, or notes (but excluding Bonds and related obligations to Credit Facility Providers, Reserve Account Credit Facility Providers and Qualified Hedge Providers), incurred or issued by the District to finance or refinance the cost of acquiring, constructing, reconstructing, improving, equipping, bettering, or extending any part of the System. “Outstanding” means, when used in reference to Bonds, all Bonds which have been duly authenticated and delivered under the Bond Ordinance, with the exception of (a) Bonds in lieu of which other Bonds have been issued under agreement to replace lost, mutilated, stolen, or destroyed obligations, (b) Bonds surrendered by the owners in exchange for other Bonds under the Bond Ordinance, and (c) Bonds for the payment of which provision has been made in accordance with the Bond Ordinance. “Paying Agent” means any bank or trust company, including any successors and assigns thereof, authorized by the District in the Bond Ordinance to pay the Principal of, premium, if any, or interest on any Bonds on behalf of the District. Such Paying Agent shall perform the duties required of the Paying Agent in the Bond Ordinance. UMB Bank, N.A. is designated as Paying Agent for the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds, the Series 2013B Bonds, the Series 2015B Bonds, the Series 2016C Bonds, the Series 2017A Bonds, the Series 2019B Bonds, the Series 2019C Bonds, the Series 2020B Bonds, the Series 2021C Bonds, the Series 2022A Bonds and the Series 2022B Bonds. “Payments Account” means the account by that name within the Sinking Fund established in the Bond Ordinance. “Permitted Investments” means obligations in which the District is permitted to invest moneys of the District pursuant to applicable law, which have (or are collateralized by obligations which have) a Rating by any Rating Agency which is equal to or greater than the third highest long-term Rating of such Rating Agency, or which bears (or are collateralized by obligations which bear) the second highest short- term Rating of such Rating Agency. As of the date of adoption of the Master Bond Ordinance, C-9 obligations in which the District is permitted to invest proceeds of Bonds are described in Section 7.020 of the Charter. “Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, body, authority, government, or agency or political subdivision thereof. “Pledged Bond” means any Bond purchased and held by a Credit Facility Provider pursuant to a Credit Facility Agreement. A Bond shall be deemed a Pledged Bond only for the actual period during which such Bond is owned by a Credit Facility Provider pursuant to a Credit Facility Agreement. “Pledged Bond Rate” means the rate of interest payable on Pledged Bonds, as may be provided in a Credit Facility or Credit Facility Agreement. “Pledged Revenues” means Net Operating Revenues, Investment Earnings, Hedge Receipts, and all moneys paid or required to be paid into, and all moneys and securities on deposit from time to time in, the funds and accounts specified in the Bond Ordinance, but excluding any amounts required in the Bond Ordinance to be set aside pending, or used for, rebate to the United States government pursuant to Section 148(f) of the Code, including, but not limited to, amounts in the Rebate Fund. “Principal” means, with respect to a Current Interest Bond, the principal amount of such Bond. “Principal Maturity Date” means each date on which Principal is to become due on any Bonds, by maturity or mandatory sinking fund redemption, as established in the Series Ordinance for such Bonds. “Project” means the acquisition, construction, reconstruction, improvement, betterment, extension or equipping of the System, in whole or in part, with the proceeds of a series of Bonds, including, but not limited to, the Series 2022B Project. “Project Fund” means the fund by that name established in the Bond Ordinance. “Qualified Hedge Provider” means an entity whose senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, or whose payment obligations under the related Hedge Agreement are absolutely and unconditionally guaranteed by an entity whose senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, are rated either (i) at least as high as the third highest Rating of each Rating Agency, but in no event lower than any Rating on the related Hedged Bonds at the time of execution of the Hedge Agreement, or (ii) in any such lower Rating which each Rating Agency indicates in writing to the District will not, by itself, result in a reduction or withdrawal of its Rating on the related Hedged Bonds that is in effect prior to entering into the Hedge Agreement. An entity’s status as a “Qualified Hedge Provider” is determined only at the time the District enters into a Hedge Agreement with such entity and shall not be redetermined with respect to that Hedge Agreement. “Rating” means a rating in one of the categories by a Rating Agency, disregarding pluses, minuses, and numerical gradations. “Rating Agencies” or “Rating Agency” means Fitch, Moody’s, and S&P or any successors thereto and any other nationally recognized credit rating agency then maintaining a rating on any Bonds at the request of the District. If at any time a particular Rating Agency does not have a rating outstanding with respect to the relevant Bonds, then a reference to Rating Agency or Rating Agencies shall not include such Rating Agency. C-10 “Rebate Fund” means the fund by that name established in the Bond Ordinance. “Record Date” means, with respect to any semiannual Interest Payment Date, the 15th day of the calendar month immediately preceding such Interest Payment Date, and any record dates designated by the District in a Series Ordinance. “Reimbursement Obligation” means the obligation of the District to directly reimburse any Credit Facility Provider for amounts paid by such Credit Facility Provider under a Credit Facility, whether or not such obligation to so reimburse is evidenced by a promissory note or other similar instrument. “Renewal and Extension Fund” means the fund by that name established in the Bond Ordinance. “Replenishment Payments” shall have the meaning ascribed therefor in under the caption “Sinking Fund – Debt Service Reserve Account” in this Appendix C. “Reserve Account Credit Facility” means any letter of credit, insurance policy, line of credit, or surety bond, together with any substitute or replacement therefor, if any, complying with the provisions of the Bond Ordinance, thereby fulfilling all or a portion of the Debt Service Reserve Requirement. “Reserve Account Credit Facility Agreement” means any agreement between the District and a Reserve Account Facility Provider relating to the issuance of a Reserve Account Credit Facility, as such agreement may be amended from time to time. “Reserve Account Credit Facility Provider” means any provider of a Reserve Account Credit Facility. “Revenue Fund” means the fund by that name established in the Bond Ordinance. “Senior Bonds” means the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds, the Series 2013B Bonds, the Series 2015B Bonds, the Series 2016C Bonds, the Series 2017A Bonds, the Series 2018A Bond, the Series 2019B Bonds, the Series 2019C Bonds, the Series 2020B Bonds, the Series 2021C Bonds, the Series 2022A Bonds, the Series 2022B Bonds, and any Bonds, including Senior SRF Bonds and Senior Uncovered Bonds, issued with a right to payment and secured by a lien on a parity with the Series 2010B Bonds, the Series 2012A Bonds, the Series 2012B Bonds, the Series 2013B Bonds, the Series 2015B Bonds, the Series 2016C Bonds, the Series 2017A Bonds, the Series 2018A Bond, the Series 2019B Bonds, the Series 2019C Bonds, the Series 2020B Bonds, the Series 2021C Bonds, the Series 2022A Bonds and the Series 2022B Bonds (except with respect to any Credit Facility which may be available only to one or more series of Senior Bonds and except that Senior SRF Bonds and Senior Uncovered Bonds shall not be secured by the Debt Service Reserve Account) pursuant to the Bond Ordinance. “Senior Hedge Agreements” means Hedge Agreements relating to Hedged Bonds which are Senior Bonds. “Senior SRF Bonds” means SRF Bonds which are Senior Bonds. C-11 “Senior Uncovered Bonds” means all series of Senior Bonds, other than Senior SRF Bonds, with respect to which the District has specified pursuant to a Series Ordinance authorizing such series of Senior Bonds that such series of Senior Bonds will not be secured by the Debt Service Reserve Account. “Series 2022B Bonds” means the District’s Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B, issued in the original aggregate Principal amount of $109,070,000. “Series 2022B Project” means the project as particularly described in plans and specifications on file from time to time with the District. “Series 2022B Project Account” means the account by that name within the Project Fund established in the Bond Ordinance “Series 2022B Rebate Account” means the account by that name within the Rebate Fund established in the Bond Ordinance. “Series Ordinance” means a bond ordinance or bond ordinances of the District (which may be supplemented by one or more bond ordinances) to be adopted prior to and authorizing the issuance and delivery of any series of Bonds. The Master Bond Ordinance shall constitute a Master Bond Ordinance for Senior Bonds and Subordinate Bonds. Such a bond ordinance as supplemented shall establish the date or dates of the pertinent series of Bonds, the schedule of maturities of such Bonds, whether any such Bonds will be capital appreciation bonds, the name of the purchaser(s) of such series of Bonds, the purchase price thereof, the rate or rates of interest to be borne thereby, whether fixed or variable, the interest payment dates for such Bonds, the terms and conditions, if any, under which such Bonds may be made subject to redemption (mandatory or optional) prior to maturity, the form of such Bonds, and such other details as the District may determine. “Sinking Fund” means the fund by that name established in the Bond Ordinance. “SRF Bonds” means such Bonds or other obligations issued in connection with the District’s participation in the Missouri State Revolving Fund Program of the Missouri Department of Natural Resources and the State Environmental Improvement and Energy Resources Authority, which SRF Bonds may be Senior SRF Bonds or Subordinate SRF Bonds. “Standard and Poor’s” or “S&P” means S&P Global Ratings, a division of S&P Global Inc., or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the District. At the time the Master Bond Ordinance was adopted, the notice address of S&P is 25 Broadway, New York, New York 10004. “State” means the State of Missouri. “Subordinate Bonds” means Bonds, including Subordinate SRF Bonds, issued with a right to payment from the Pledged Revenues and secured by a lien on the Pledged Revenues expressly junior and subordinate to the Senior Bonds. “Subordinate Hedge Agreements” means Hedge Agreements relating to Hedged Bonds which are Subordinate Bonds. “Subordinate SRF Bonds” means SRF Bonds which are Subordinate Bonds. C-12 “Supplemental Ordinance” means (a) any Series Ordinance and (b) any modification, amendment, or supplement to the Master Bond Ordinance other than a Series Ordinance. “System” means the sanitary sewer system of the District, as it now exists and as it may be hereafter added to, extended, improved and equipped, either from the proceeds of the Bonds or from any other sources at any time hereafter, including, without limitation, (a) all sanitary sewers, all combined sewers, all pumping stations, all wastewater treatment plants, and all equipment used in connection therewith, all facilities for the collection, treatment and disposal of sewage and wastewater, including industrial wastes, and (b) all other facilities or property of any nature or description, real or personal, tangible or intangible, now or hereafter owned or used by the District in the collection, treatment and disposal of sewage. The District may own a partial interest in any sanitary sewer facility, the remaining interest in which may be owned by or on behalf of a political subdivision of the State or any agency or authority thereof. In case of such ownership, the rights and interests possessed by the District in such facility shall be included as part of the System. “Tax-Exempt Bonds” means any Bonds the interest on which has been determined, in an opinion of Bond Counsel, to be excludable from the gross income of the owners thereof for federal income tax purposes. “Underwriter” means (i) with respect to the Series 2022B Bonds, BofA Securities, Inc., as representative of the original purchasers of the Series 2022B Bonds, and (ii) with respect to any additional series of Bonds, the underwriter(s) specified in the Series Ordinance authorizing such series of Bonds. “U.S. Treasury Trust Receipts” means receipts or certificates which evidence an undivided ownership interest in the right to the payment of portions of the principal of or interest on obligations described in clauses (a) or (b) of the term Government Obligations, provided that such obligations are held by a bank or trust company organized under the laws of the United States acting as custodian of such obligations, in a special account separate from the general assets of such custodian. “U.S. Treasury Interest Subsidy” means any interest subsidy paid by the United States Treasury to the District. “Variable Rate” means a rate of interest applicable to Bonds, other than a fixed rate of interest which applies to a particular maturity of Bonds, so long as that maturity of Bonds remains Outstanding. FUNDS AND ACCOUNTS The District establishes or ratifies the establishment of the following funds and accounts, and the moneys deposited in such funds and accounts shall be held in trust for the purposes set forth in the Bond Ordinance: (a) The Metropolitan St. Louis Sewer District Wastewater Revenue Fund (the “Revenue Fund”), to be held by the Depository for the account of the District. (b) The Metropolitan St. Louis Sewer District Wastewater Sinking Fund (the “Sinking Fund”), to be held by the Depository for the account of the District, and within said Sinking Fund a Payments Account and a Debt Service Reserve Account. C-13 (c) The Metropolitan St. Louis Sewer District Wastewater Renewal and Extension Fund (the “Renewal and Extension Fund”), to be held by the Depository for the account of the District. (d) The Metropolitan St. Louis Sewer District Wastewater Rebate Fund (the “Rebate Fund”), to be held by the Depository for the account of the District, and within said Rebate Fund a Series 2022B Rebate Account. (e) The Metropolitan St. Louis Sewer District Wastewater Project Fund (the “Project Fund”), to be held by the Depository for the account of the District, and within said Project Fund a Series 2022B Project Account. Each account listed above shall be held within the fund under which it is created. The District reserves the right, in its sole discretion, to create additional subaccounts or to abolish any subaccounts within any account from time to time. Revenue Fund The District shall deposit and continue to deposit all Operating Revenues in the Revenue Fund from time to time as and when received. Moneys in the Revenue Fund shall be applied by the District from time to time to the following purposes and, prior to the occurrence and continuation of an Event of Default, in the following order of priority: (1) to pay Expenses of Operation and Maintenance, (2) to deposit into the Sinking Fund the amounts required by the Bond Ordinance and described below under the caption “FUNDS AND ACCOUNTS – Sinking Fund,” (3) to make Replenishment Payments to the Debt Service Reserve Account and to pay to any Credit Facility Provider any amounts due under a Credit Facility Agreement, including Additional Interest, in accordance with the Bond Ordinance and described below under the caption “FUNDS AND ACCOUNTS – Sinking Fund – Debt Service Reserve Account,” (4) to deposit into the Rebate Fund the amounts required by the Bond Ordinance, (5) to pay any amounts due any Reserve Account Credit Facility Provider pursuant to the Reserve Account Credit Facility Agreement, (6) to deposit the amounts required to be deposited into the funds and accounts created by any Series Ordinance authorizing the issuance of Subordinate Bonds, for the purpose of paying Principal of (whether at maturity, upon mandatory redemption or as otherwise required by a Series Ordinance relating to Subordinate SRF Bonds) and interest on Subordinate Bonds, making Hedge Contingency Payments under Senior Hedge Agreements, making Contingency Payments under Senior Hedge Agreements, making Hedge Payments and making Hedge Contingency Payments under Subordinate Hedge Agreements, and accumulating reserves for such payments, (7) to make Accumulation Payments to the Debt Service Reserve Account in accordance with the Bond Ordinance and described below under the caption “FUNDS AND ACCOUNTS – Sinking Fund – Debt Service Reserve Account,” and (8) to pay any amounts required to be paid with respect to any Other System Obligations. In addition to, and after, the deposits described above, the District may from time to time deposit into the Renewal and Extension Fund any moneys and securities held in the Revenue Fund in excess of 45 days’ estimated Expenses of Operation and Maintenance. Any money withdrawn from the funds and accounts described in clause (6) above relating to Subordinate Bonds for use in making payments described in said clause (6) shall be released from the lien of the Bond Ordinance. If at any time the amounts in any account of the Sinking Fund are less than the amounts required by the Bond Ordinance, and there are not on deposit in the Renewal and Extension Fund available moneys sufficient to cure any such deficiency, then the District shall withdraw from the funds and accounts of the District relating to Subordinate Bonds and deposit in such account of the C-14 Sinking Fund, as the case may be, the amount necessary (or all the moneys in such funds and accounts, if less than the amount required) to make up such deficiency. Sinking Fund Payments Account-General. Sufficient moneys shall be paid in periodic installments from the Revenue Fund into the Payments Account for the purpose of paying the Principal of and interest (excluding Additional Interest) on the Senior Bonds as they become due and payable and for the purpose of making Hedge Payments under Senior Hedge Agreements. Amounts held in the Payments Account shall be used solely to pay interest (excluding Additional Interest) and Principal of the Senior Bonds as the same become due and payable (whether at maturity or upon redemption) and to pay Hedge Payments under Senior Hedge Agreements when due. Amounts held in the Payments Account shall not be used to pay Additional Interest. Interest. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the 30th day preceding each Interest Payment Date for Senior Bonds (or, in the case of Senior Bonds bearing interest at a Variable Rate, on or before the Business Day preceding each Interest Payment Date), the District shall deposit in the Payments Account an amount which, together with any other moneys already on deposit therein and available to make such payment and, in the case of Senior SRF Bonds, anticipated investment earnings on reserve funds held by a bond trustee relating to such Senior SRF Bonds, is not less than the interest (excluding Additional Interest) coming due on such Senior Bonds on such Interest Payment Date. The District shall also deposit and continue to deposit all Hedge Receipts under Senior Hedge Agreements in the Payments Account from time to time as and when received. Principal. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the 30th day preceding each Principal Maturity Date for Senior Bonds, the District shall deposit in the Payments Account an amount which, together with any other moneys already on deposit therein and available to make such payment, is not less than the Principal coming due on such Senior Bonds on such Principal Maturity Date. Hedge Payments. On or before the 30th day preceding each payment date for Hedge Payments under Senior Hedge Agreements, the District shall deposit in the Payments Account an amount which, together with any other moneys already on deposit therein and available to make such payment, is not less than such Hedge Payments coming due on such payment date. Application of Moneys in Payments Account. No further payments need be made into the Payments Account whenever the amount available in the Payments Account, if added to the amount then in the Debt Service Reserve Account (without taking into account any amount available to be drawn on any Reserve Account Credit Facility), is sufficient to retire all Senior Bonds then Outstanding and to pay all unpaid interest accrued and to accrue prior to such retirement. No moneys in the Payments Account shall be used or applied to the optional purchase or redemption of Senior Bonds prior to maturity unless: (i) provision shall have been made for the payment of all of the Senior Bonds; or (ii) such moneys are applied to the purchase and cancellation of Senior Bonds which are subject to mandatory redemption on the next mandatory redemption date, which falls due within 12 months, such Senior Bonds are purchased at a price not more than would be required for mandatory redemption, and such Senior Bonds are cancelled upon purchase; or (iii) such moneys are applied to the purchase and cancellation of Senior Bonds at a price less than the amount of Principal which would be payable on such Senior Bonds, together with interest accrued through the date of purchase, and such Senior Bonds are cancelled upon purchase; or (iv) such moneys are in excess of the then required balance of the Payments Account and are C-15 applied to redeem a part of the Senior Bonds Outstanding on the next succeeding redemption date for which the required notice of redemption may be given. Debt Service Reserve Account. With respect to Senior Bonds which are not Senior Uncovered Bonds, there shall be deposited into the Debt Service Reserve Account the amounts specified in Series Ordinances with respect to Senior Bonds. Notwithstanding the foregoing, there shall be no deposit into the Debt Service Reserve Account with respect to any SRF Bonds or Senior Uncovered Bonds nor shall the Debt Service Reserve Account secure any SRF Bonds or Senior Uncovered Bonds. After the issuance of any Senior Bonds, the increase in the amount of the Debt Service Reserve Requirement resulting from the issuance of such Senior Bonds shall be accumulated, to the extent not covered by deposits from Bond proceeds or funds on hand, over a period not exceeding 61 months from the date of delivery of such Senior Bonds in monthly deposits (“Accumulation Payments”), none of which is less than 1/60 of the amount to be accumulated. The balance of the Debt Service Reserve Account shall be maintained at an amount equal to the Debt Service Reserve Requirement (or such lesser amount that is required to be accumulated in the Debt Service Reserve Account in connection with the periodic accumulation to the Debt Service Reserve Requirement after the issuance of Senior Bonds or upon the failure of the District to provide a substitute Reserve Account Credit Facility in certain events). There shall be transferred from the Revenue Fund on a pro rata basis (1) to the Debt Service Reserve Account the amount necessary to restore, as further described below, the amount of cash and securities in the Debt Service Reserve Account to an amount equal to the difference between (a) the Debt Service Reserve Requirement (or such lesser monthly amount that is required to be deposited into the Debt Service Reserve Account after the issuance of Senior Bonds or upon the failure of the District to provide a substitute Reserve Account Credit Facility in certain events) and (b) the portion of the required balance of the Debt Service Reserve Account satisfied by means of a Reserve Account Credit Facility, and (2) to any Reserve Account Credit Facility Provider the amount necessary to reinstate any Reserve Account Credit Facility which has been drawn down. Whenever for any reason the amount in the Payments Account is insufficient to pay all interest or Principal becoming due on the Senior Bonds within the next seven days (or, in the case of Senior Bonds bearing interest at a Variable Rate, on the next Business Day), the District shall make up any deficiency by transfers first from the Renewal and Extension Fund and second from the funds and accounts of the District relating to Subordinate Bonds which are not Subordinate SRF Bonds. Whenever, on the date that such interest or Principal is due, there are insufficient moneys in the Payments Account available to make such payment, the District shall, without further instructions, apply so much as may be needed of the moneys in the Debt Service Reserve Account to prevent default in the payment of such interest or Principal, with priority to interest payments. Whenever by reason of any such application or otherwise (other than required Accumulation Payments), the amount remaining to the credit of the Debt Service Reserve Account is less than the amount then required to be in the Debt Service Reserve Account, such deficiency shall be remedied by monthly deposits (“Replenishment Payments”) from the Revenue Fund, to the extent funds are available in the Revenue Fund for such purpose after all required transfers set forth above have been made. The District may elect to satisfy in whole or in part the Debt Service Reserve Requirement by means of a Reserve Account Credit Facility, subject to the following requirements: (A) the Reserve Account Credit Facility Provider must have a credit rating issued by a Rating Agency not less than the then current Rating on the related series of Senior Bonds (or, in the case of a series of Senior Bonds supported by a Credit Facility, the underlying rating on such Senior Bonds); (B) the District shall not secure any obligation to the Reserve Account Credit Facility Provider by a lien equal to or superior to the lien granted to the related series of Senior Bonds; (C) each Reserve Account Credit Facility shall have a term of at least one (1) year (or, if less, the remaining term of the related series of Senior Bonds) and shall entitle the District to draw upon or demand payment and receive the amount so requested in immediately available funds on the date of such draw or demand; (D) the Reserve Account Credit Facility shall permit a drawing by the District for the full stated amount in the event (i) the Reserve Account Credit Facility C-16 expires or terminates for any reason prior to the final maturity of the related series of Senior Bonds, and (ii) the District fails to satisfy the Debt Service Reserve Requirement by the deposit to the Debt Service Reserve Account of cash, obligations, a substitute Reserve Account Credit Facility, or any combination thereof, on or before the date of such expiration or termination; (E) if the Rating issued by the Rating Agency to the Reserve Account Credit Facility Provider is withdrawn or reduced below the Rating assigned to the related series of Senior Bonds immediately prior to such action by the Rating Agency, the District shall provide a substitute Reserve Account Credit Facility within sixty (60) days after such rating change, and, if no substitute Reserve Account Credit Facility is obtained by such date, shall fund the Debt Service Reserve Requirement in not more than twenty-four (24) equal monthly deposits commencing not later than the first day of the month immediately succeeding the date representing the end of such sixty (60) day period; (F) if the Reserve Account Credit Facility Provider commences any insolvency proceedings or is determined to be insolvent or fails to make payments when due on its obligations, the District shall provide a substitute Reserve Account Credit Facility within sixty (60) days thereafter, and, if no substitute Reserve Account Credit Facility is obtained by such date, shall fund the Debt Service Reserve Requirement in not more than twenty-four (24) equal monthly deposits commencing not later than the first day of the month immediately succeeding the date representing the end of such sixty (60) day period; and (G) the prior written consent of the Credit Facility Provider, as to the provider and the structure of the Reserve Account Credit Facility, shall be obtained by the District. If the events described in either clauses (E) or (F) above occur, the District shall not relinquish the Reserve Account Credit Facility at issue until after the Debt Service Reserve Requirement is fully satisfied by the provision of cash, obligations, or a substitute Reserve Account Credit Facility or any combination thereof. Any amount received from the Reserve Account Credit Facility shall be deposited directly into the Payments Account, and such deposit shall constitute the application of amounts in the Debt Service Reserve Account. Repayment of any draw-down on the Reserve Account Credit Facility (other than repayments which reinstate the Reserve Account Credit Facility) and any interest or fees due the Reserve Account Credit Facility Provider under such Reserve Account Credit Facility shall be secured by a lien on the Pledged Revenues subordinate to payments into the Sinking Fund and the Rebate Fund and payments to any Credit Facility Provider securing Senior Bonds. Any such Reserve Account Credit Facility shall be pledged to the benefit of the owners of all of the Senior Bonds. The District reserves the right, if it deems it necessary in order to acquire such a Reserve Account Credit Facility, to amend the Bond Ordinance without the consent of any of the owners of the Bonds in order to grant to the Reserve Account Credit Facility Provider such additional rights as it may demand, provided that such amendment shall not, in the written opinion of Bond Counsel filed with the District, impair or reduce the security granted to the owners of Senior Bonds or any of them. The Series 2022B Bonds are Senior Uncovered Bonds and therefore are not secured by the Debt Service Reserve Account. Renewal and Extension Fund In addition to the deposits to be made to the Renewal and Extension Fund pursuant to the Bond Ordinance, the District shall deposit in the Renewal and Extension Fund all termination payments received under any Hedge Agreements. All sums accumulated and retained in the Renewal and Extension Fund shall be used first to prevent default in the payment of interest on or Principal of the Senior Bonds when due and then shall be applied by the District from time to time, as and when the District shall determine, to the following purposes and, prior to the occurrence and continuation of an Event of Default, in the order of priority determined by the District in its sole discretion: (a) for the purposes for which moneys held in the Revenue Fund may be applied under the Bond Ordinance, (b) to pay any amounts which may then be due and owing under any Hedge Agreement (including termination payments, fees, expenses, and indemnity payments), (c) to pay any governmental charges and assessments against the C-17 System or any part thereof which may then be due and owing, (d) to make acquisitions, betterments, extensions, repairs, or replacements or other capital improvements (including the purchase of equipment) to the System deemed necessary by the District (including payments under contracts with vendors, suppliers, and contractors for the foregoing purposes), (e) to acquire Senior Bonds by redemption or by purchase in the open market at a price not exceeding the callable price as provided and in accordance with the terms and conditions of the Bond Ordinance, which Senior Bonds may be any of the Senior Bonds, prior to their respective maturities, and when so used for such purposes the moneys shall be withdrawn from the Renewal and Extension Fund and deposited into the Payments Account for the Senior Bonds to be so redeemed or purchased and (f) for any other purpose of the District. Payments for the purposes set forth in clause (e) of the preceding sentence are not “required payments” for purposes of the District’s rate covenant set forth in the Bond Ordinance. Rebate Fund The District shall calculate, from time to time, as required in order to comply with the provisions of Section 148(f) of the Code, the amounts required to be rebated (including penalties) to the United States and shall deposit or cause to be deposited into the Rebate Fund any and all of such amounts promptly following a determination of any such amount. The District shall direct the Depository of the Rebate Fund to keep all moneys held therein invested in Permitted Investments. To the extent and at the times required in order to comply with Section 148(f) of the Code, the District may withdraw funds from the Rebate Fund for the purpose of making rebate payments (including penalties) to the United States as required by Section 148(f) of the Code. Except as otherwise specifically provided in the Bond Ordinance, moneys in the Rebate Fund may not be withdrawn from the Rebate Fund for any other purpose. All earnings on investments held in the Rebate Fund shall be retained in the Rebate Fund and shall become part of the Rebate Fund. Moneys held in the Rebate Fund, including the Investment Earnings thereon, if any, shall not be subject to a pledge in favor of the owners of the Bonds under the Bond Ordinance and may not be used to pay amounts due on the Bonds or under any Credit Facility Agreements or Hedge Agreements or amounts required for the operation, maintenance, enlargement, or extension of the System. Project Fund The District shall establish within the Project Fund a separate account for each Project. Except as may be otherwise provided in the Series Ordinance authorizing the issuance of SRF Bonds, moneys in the Project Fund shall be held by the Depository, or such other bank as may from time to time be designated by the District, and applied to the payment of the Costs of the Project, or for the repayment of advances made for that purpose in accordance with and subject to the provisions and restrictions set forth in the Bond Ordinance. The District covenants that it will not cause or permit to be paid from the Project Fund any sums except in accordance with such provisions and restrictions; provided, however, that any moneys in the Project Fund not presently needed for the payment of current obligations during the course of construction may be invested in Permitted Investments maturing not later than (i) the date upon which such moneys will be needed according to a schedule of anticipated payments from the Project Fund filed with the District by the Consultant in charge of the Project or (ii) in the absence of such schedule, 36 months from the date of purchase, in either case upon written direction of the District. Any such investments shall be held by the Depository, in trust, for the account of the Project Fund until maturity or until sold, and at maturity or upon such sale the proceeds received therefrom including accrued interest and premium, if any, shall be immediately deposited by the Depository in the Project Fund and shall be disposed of in the manner and for the purposes provided in the Bond Ordinance. C-18 Moneys in each separate account in the Project Fund shall be used for the payment or reimbursement of the Costs of the Project for which such account was established as provided in the Bond Ordinance. All payments from the Project Fund shall be made upon draft except as provided in the Bond Ordinance, signed by an officer of the District properly authorized to sign on its behalf, but before such officer shall sign any such draft, there shall be filed with the Depository a requisition for such payment, in substantially the form attached as an exhibit to the Bond Ordinance, stating each amount to be paid and the name of the person to whom payment is due, and certifying: (a) That an obligation in the stated amount has been incurred by the District and that the same is a proper charge against the Project Fund and has not been paid and stating that the bill or statement of account for such obligation, or a copy thereof, is on file in the office of the District; (b) That the signer has no notice of any vendor’s, mechanic’s, or other liens or rights to liens, chattel mortgages, or conditional sales contracts which should be satisfied or discharged before such payment is made; and (c) That such requisition contains no item representing payment on account of any retained percentages which the District is, at the date of any such certificate, entitled to retain. In the event the United States government or government of the State, or any department, authority, or agency of either, agrees to allocate moneys to be used to defray any part of the Cost of any Project upon the condition that the District appropriate a designated amount of moneys for such purpose, and it is required of the District that its share of such cost be deposited in a special account, the District shall have the right to withdraw any sum so required from the Project Fund by appropriate transfer and deposit the same in a special account for that particular Project; provided, however, that all payments thereafter made from such special account shall be made only in accordance with the requirements set forth in the Bond Ordinance. Withdrawals for investment purposes only may be made by the Depository to comply with written directions from the District without any requisition other than such direction. For each series of Bonds, the District shall, when a Project has been completed, and may, when a Project has been substantially completed, file with the Depository a certificate signed by the Chief Financial Officer estimating what portion of the funds remaining in the separate account relating to such Project will be required by the District for the payment or reimbursement of the Costs of such Project. The Chief Financial Officer shall attach to his or her certificate a certificate of the supervising engineer certifying that such Project has been completed or substantially completed, as the case may be, in accordance with the plans and specifications therefor and approving the estimates of the Chief Financial Officer with respect to the portion of funds in the account required for Costs of the Project. Such funds that will not be used shall be (1) transferred to the Payments Account and used to redeem Bonds of the related series on the next redemption date or to pay Principal of such Bonds on the next Principal Maturity Date, or (2) transferred to the Payments Account and used to pay interest on Bonds of the related series, provided that the District shall first obtain an opinion of Bond Counsel to the effect that, under existing law, the application of such moneys to pay interest on such Bonds (a) is allowed under State law, and (b) if such Bonds are Tax-Exempt Bonds, will not, by itself and without more, adversely affect the exclusion from gross income for federal income tax purposes of interest payable on such Bonds. When all moneys have been withdrawn or transferred from any separate account within the Project Fund in C-19 accordance with the provisions of the Bond Ordinance, such separate account shall terminate and cease to exist. DEPOSITS AND INVESTMENTS All moneys in the funds and accounts established under the Bond Ordinance, except those funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds, shall be held by the District in one or more Depositories qualified for use by the District. Uninvested moneys shall, at least to the extent not guaranteed by the Federal Deposit Insurance Corporation, be secured to the fullest extent required by the laws of the State for the security of public funds. Moneys in the funds and accounts established under the Bond Ordinance, except those funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds, shall be invested and reinvested in Permitted Investments bearing interest at the highest rates reasonably available (except to the extent that a restricted yield is required or advisable under Section 148 of the Code) and containing such maturities as are deemed suitable by the District; provided, however, that without the prior written consent of the Credit Facility Provider, investments of moneys in the Debt Service Reserve Account shall not have maturities extending beyond five years. Investment of moneys in funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds shall be as set forth in such Series Ordinance. Investment Earnings in each fund and account (except the Debt Service Reserve Account) shall be retained therein. Investment Earnings from the investment of moneys in the Debt Service Reserve Account shall be retained in the Debt Service Reserve Account at all times the balance is less than the Debt Service Reserve Requirement; thereafter and at all times the balance of the Debt Service Reserve Account is equal to or greater than the Debt Service Reserve Requirement, such Investment Earnings shall be deposited in the Payments Account. The Series Ordinance authorizing the issuance of any Subordinate Bonds shall specify any maturity limitations and allocations of Investment Earnings on investments of moneys in the funds and accounts relating to such Subordinate Bonds. Moneys in each of such funds shall be accounted for as a separate and special fund apart from all other District funds, provided that investments of moneys therein may be made in a pool of investments together with other moneys of the District so long as sufficient Permitted Investments in such pool, not allocated to other investments of contractually or legally limited duration, are available to meet the requirements of the foregoing provisions. All investments made under the Bond Ordinance shall, for purposes of the Bond Ordinance, be valued at fair market value on the 45th day (or the next succeeding Business Day if such 45th day is not a Business Day) prior to each Interest Payment Date. The valuation of the investment of moneys in funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds shall be as set forth in such Series Ordinance. C-20 MAINTENANCE OF SYSTEM The District covenants that it will enforce reasonable rules and regulations governing the System and the operation thereof, that it will operate the System in an efficient and economical manner and will at all times maintain the System in good repair and in sound operating condition, that it will make all necessary repairs, renewals, and replacements to the System, and that it will comply with all valid acts, rules, regulations, orders, and directions of any legislative, executive, administrative, or judicial body applicable to the System and the District’s operation thereof. RATE COVENANT See the heading “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022B BONDS – Rate Covenant.” INSURANCE With respect to the System, the District will carry adequate public liability, fidelity and property insurance, such as is maintained by similar utilities as the System. The District shall indemnify itself against the usual hazards incident to the construction of any Project, and without in any way limiting the generality of the above, shall: (a) require each construction contractor and each subcontractor to furnish a bond, or bonds, of such type and in amounts adequate to assure the faithful performance of their contracts and the payment of all bills and claims for labor and material arising by virtue of such contracts; and (b) require each construction contractor or the subcontractor to maintain at all times until the completion and acceptance of the Project adequate compensation insurance for all of their employees and adequate public liability and property damage insurance for the full and complete protection of the District from any and all claims of every kind and character which may arise by virtue of the operations under their contracts, whether such operations be by themselves or by anyone directly or indirectly for them, or under their control. All such policies shall be for the benefit of and made payable to the District and shall be on deposit with the District; provided, however, the District may elect to be a self-insurer with respect to any risks for which insurance is required under the Bond Ordinance. The cost of such insurance may be paid as an Expense of Operation and Maintenance. All moneys received for losses under any such insurance policies, except public liability policies, are pledged by the District as security for the Bonds until and unless such proceeds are paid out in making good the loss or damage in respect of which such proceeds are received, either by repairing the property damaged or replacing the property destroyed or by depositing the same in the Renewal and Extension Fund. Adequate provision for making good such loss and damage shall be made within 120 days from the date of the loss. Insurance proceeds not used in making such provision shall be deposited in the Renewal and Extension Fund on the expiration of such 120-day period. Such insurance proceeds shall be payable to the District by appropriate clause to be attached to or inserted in the policies. NO SALE, LEASE OR ENCUMBRANCE; EXCEPTIONS Except as expressly permitted in the Bond Ordinance, the District irrevocably covenants, binds, and obligates itself not to sell, lease, encumber, or in any manner dispose of the System as a whole or in C-21 part until all of the Bonds and all interest thereon shall have been paid in full or provision for payment has been made in accordance with the Bond Ordinance. The District shall have and reserves the right to sell, lease, or otherwise dispose of any of the property comprising a part of the System in the following manner, if any one of the following conditions exists: (i) such property is not necessary for the operation of the System; (ii) such property is not useful in the operation of the System; (iii) such property is not profitable in the operation of the System; or (iv) the disposition of such property will be advantageous to the System and will not adversely affect the security for the Bondholders. All proceeds of any such sale, lease or other disposition shall be deposited in the Renewal and Extension Fund. Prior to any such sale, lease or other disposition, there shall be filed with the District: (i) an opinion of Bond Counsel to the effect that such sale, lease or other disposition will not adversely affect the extent to which interest on any Tax-Exempt Bonds is excluded from gross income for federal income tax purposes (provided that such opinion shall not be required if the Chief Financial Officer determines that such portion of the System was not financed with the proceeds of any Tax-Exempt Bonds); and (ii) an opinion of a Consultant expressing the view that such sale, lease or other disposition will not result in any diminution of Net Operating Revenues to the extent that in any future Fiscal Year the Net Operating Revenues and Investment Earnings will be less than (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds to be Outstanding after such sale, lease or other disposition or (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds to be Outstanding after such sale, lease or other disposition. In reaching this conclusion, the Consultant shall take into consideration such factors as the Consultant may deem significant, including (i) anticipated diminution of Operating Revenues, (ii) anticipated increase or decrease in Expenses of Operation and Maintenance attributable to the sale, lease or other disposition, and (iii) reduction in the annual Debt Service Requirement attributable to the application of the proceeds of such sale, lease or other disposition to the provision for payment of Bonds theretofore Outstanding. Such sale, lease or other disposition may include a partial interest in a sanitary sewer facility owned or to be owned in whole or in part by the District. The District reserves the right to transfer the System as a whole to any political subdivision or authority or agency of one or more political subdivisions of the State to which may be delegated the legal authority to own and operate the System, or any portion thereof, on behalf of the public, and which undertakes in writing, filed with the District, the District’s obligations under the Bond Ordinance, provided that there shall be first filed with the District: (i) an opinion of Bond Counsel to the effect that such sale will not adversely affect the extent to which interest on any Tax-Exempt Bonds is excluded from gross income for federal income tax purposes; and (ii) an opinion of a Consultant expressing the view that such transfer will not result in any diminution of Net Operating Revenues to the extent that in any future Fiscal Year the Net Operating Revenues and Investment Earnings will be less than (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds to be Outstanding after such transfer or (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds to be Outstanding after such transfer. In reaching this conclusion, the Consultant shall take into consideration such factors as the Consultant may deem significant, including any rate schedule adopted by the transferee political subdivision, authority, or agency. Upon receipt of an opinion of Bond Counsel to the effect that such action will not adversely affect the extent to which interest on any Tax-Exempt Bonds is excluded from gross income for federal income tax purposes, the District may enter into such management contracts and sale/leaseback agreements as the District may deem appropriate, and such management contracts and sale/leaseback agreements shall not constitute a sale, lease or other disposition within the meaning of the Bond Ordinance. C-22 ENFORCEMENT OF CHARGES AND CONNECTIONS Except as otherwise determined in accordance with District policy and provided that such action or inaction will not materially impair the rights of the Bondholders, the District shall compel the prompt payment of rates, fees, and charges imposed for service rendered on every lot or parcel connected with the System, and to that end will vigorously enforce all of the provisions of any resolution or ordinance of the District having to do with sanitary sewer connections and with sanitary sewer charges, and all of the rights and remedies permitted the District under law. The District expressly covenants and agrees that such charges will be enforced and promptly collected to the full extent permitted by law, including the requirement for the making of reasonable deposits by customers of the System to the extent required by the District and the securing of injunctions against the disposition of sewage or industrial waste into the System by any premises delinquent in the payment of such charges. None of the facilities or services afforded by the System will be furnished to any user without a reasonable charge being made therefor. ANNUAL BUDGET The District agrees to adopt an Annual Budget for the System for each Fiscal Year in compliance with the Charter and the rate covenants as stated in the Bond Ordinance. BOOKS AND AUDITS The District will install and maintain proper books, records and accounts for the System according to standard accounting practices for the operation of facilities comparable to the System. Annual audits will be made by a certified public accountant. SENIOR AND SUBORDINATE LIEN BONDS No Prior Lien Bonds nor Senior Bonds Except as Permitted in the Bond Ordinance All Senior Bonds shall have complete parity of lien on the Pledged Revenues despite the fact that any of the Senior Bonds may be delivered at an earlier date than any other of the Senior Bonds. The District may issue Senior Bonds in accordance with the Bond Ordinance, but the District shall issue no other obligations of any kind or nature payable from or enjoying a lien on the Pledged Revenues or any part thereof having priority over or, except as permitted in the Bond Ordinance, on a parity with the Senior Bonds. Refunding Bonds Any or all of the Senior Bonds may be refunded prior to maturity, upon redemption in accordance with their terms, or with the consent of the owners of such Senior Bonds, and the refunding Bonds so issued shall constitute Senior Bonds, if: (a) The District shall have obtained a report from an Independent Certified Public Accountant or a Financial Advisor demonstrating that the refunding will reduce the total debt service payments on Outstanding Senior Bonds on a present value basis. C-23 (b) As an alternative to, and in lieu of, satisfying the requirements of paragraph (a) above, all Outstanding Senior Bonds are being refunded under arrangements which immediately result in making provision for the payment of the refunded Bonds. (c) The requirements described in paragraphs (e) and (g) below under the caption “SENIOR AND SUBORDINATE LIEN BONDS – Senior Bonds”) are met with respect to such refunding Bonds. Senior Bonds Bonds (including refunding Bonds which do not meet the requirements of the Bond Ordinance described above under the caption “SENIOR AND SUBORDINATE LIEN BONDS – Refunding Bonds”) may also be issued on a parity with the Outstanding Senior Bonds and any Senior Bonds hereafter issued pursuant to a Series Ordinance, and the Bonds so issued shall constitute Senior Bonds, if all of the following conditions are satisfied: (a) There shall have been filed with the District either: (i) a report by an Independent Certified Public Accountant to the effect that the historical Net Operating Revenues and Investment Earnings for a period of 12 consecutive months of the most recent 18 consecutive months prior to the issuance of the proposed Senior Bonds were equal to at least (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds and (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds, or (ii) a report by a Consultant to the effect that the forecasted Net Operating Revenues and Investment Earnings for each Fiscal Year in the Forecast Period are expected to equal at least (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds and (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds. The report by the Independent Certified Public Accountant that is required by the Bond Ordinance and described in subparagraph (i) above may contain pro forma adjustments to historical Net Operating Revenues equal to 100% of the increased annual amount attributable to any revision in the schedule of rates, fees, and charges for the services, facilities, and commodities furnished by the System, adopted prior to the date of delivery of the proposed Senior Bonds and not fully reflected in the historical Net Operating Revenues actually received during such 12-month period. Such pro forma adjustments shall be based upon a report of a Consultant as to the amount of Operating Revenues which would have been received during such 12-month period had the new rate schedule been in effect throughout such 12- month period. The report by the Consultant that is required by the Bond Ordinance and described in subparagraph (ii) above may not take into consideration any rate schedule to be imposed in the future, unless such rate schedule has been adopted by ordinance of the Governing Body. Such rate schedule adopted by ordinance may contain, however, future effective dates. C-24 (b) The District shall have received, at or before issuance of the Senior Bonds, a report from an Independent Certified Public Accountant to the effect that the payments required to be made into each account of the Sinking Fund have been made and the balance in each account of the Sinking Fund is not less than the balance required by the Bond Ordinance as of the date of issuance of the proposed Senior Bonds. (c) Except with respect to Senior SRF Bonds, the Series Ordinance authorizing the proposed Senior Bonds must either (a) state that the proposed Senior Bonds are Senior Uncovered Bonds and thus not secured by the Debt Service Reserve Account or (b) require (i) that the amount to be accumulated and maintained in the Debt Service Reserve Account be increased to not less than 100% of the Debt Service Reserve Requirement computed on a basis which includes all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds and (ii) that the amount of such increase be deposited in such account on or before the date and at least as fast as specified in the Bond Ordinance. (d) The Series Ordinance authorizing the proposed Senior Bonds must require the proceeds of such proposed Senior Bonds to be used solely to make capital improvements to the System, to fund interest on the proposed Senior Bonds, to acquire existing or proposed sanitary sewer utilities, to refund other obligations issued for such purposes (whether or not such refunding Bonds satisfy the requirements of the Bond Ordinance described above under the caption “SENIOR AND SUBORDINATE LIEN BONDS – Refunding Bonds”), and to pay expenses incidental thereto and to the issuance of the proposed Senior Bonds. (e) If any Senior Bonds would bear interest at a Variable Rate, the Series Ordinance under which such Senior Bonds are issued shall provide a maximum rate of interest per annum which such Senior Bonds may bear. (f) The Chief Officer shall have certified, by written certificate dated as of the date of issuance of the Senior Bonds, that the District is in compliance with all requirements of the Bond Ordinance. (g) The District shall have received an opinion of Bond Counsel, dated as of the date of issuance of the Senior Bonds, to the effect that the Series Ordinance and any related Supplemental Ordinance authorizing the issuance of Senior Bonds have been duly adopted by the District. Subordinate Bonds Bonds may also be issued on a subordinate basis to the Outstanding Senior Bonds and any Senor Bonds hereafter issued pursuant to a Series Ordinance, and the Bonds so issued shall constitute Subordinate Bonds, if all of the following conditions are satisfied: (a) There shall have been filed with the District either: (i) a report by an Independent Certified Public Accountant to the effect that the historical Net Operating Revenues and Investment Earnings for a period of 12 consecutive months of the most recent 18 consecutive months prior to the issuance of the proposed Subordinate Bonds were equal to at least (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds and (B) 115% of the Maximum C-25 Annual Debt Service Requirement on all Bonds which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds, or (ii) a report by a Consultant to the effect that the forecasted Net Operating Revenues and Investment Earnings for each Fiscal Year in the Forecast Period are expected to equal at least (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds and (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds. The report by the Independent Certified Public Accountant that is required by the Bond Ordinance and described in subparagraph (i) above may contain pro forma adjustments to historical Net Operating Revenues equal to 100% of the increased annual amount attributable to any revision in the schedule of rates, fees, and charges for the services, facilities, and commodities furnished by the System, adopted prior to the date of delivery of the proposed Subordinate Bonds and not fully reflected in the historical Net Operating Revenues actually received during such 12-month period. Such pro forma adjustments shall be based upon a report of a Consultant as to the amount of Operating Revenues which would have been received during such 12-month period had the new rate schedule been in effect throughout such 12-month period. The report by the Consultant that is required by the Bond Ordinance and described in subparagraph (ii) above may not take into consideration any rate schedule to be imposed in the future, unless such rate schedule has been adopted by ordinance of the Governing Body. Such rate schedule adopted by ordinance may contain, however, future effective dates. (b) The Series Ordinance authorizing the Subordinate Bonds shall provide that such Subordinate Bonds shall be junior and subordinate in lien and right of payment to all Senior Bonds Outstanding at any time. (c) The Series Ordinance authorizing the Subordinate Bonds shall establish funds and accounts for the moneys to be used to pay debt service on the Subordinate Bonds, to pay Hedge Payments under Subordinate Hedge Agreements, and to provide reserves therefor. (d) The requirements of the Bond Ordinance described in paragraphs (d), (e) and (g) above under the caption “SENIOR AND SUBORDINATE LIEN BONDS – Senior Bonds” are met with respect to such Subordinate Bonds (as if such Bonds constituted Senior Bonds). In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization, or other similar proceedings in connection therewith, relative to the District or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution, or other winding up of the District, whether or not involving insolvency or bankruptcy, the owners of all Senior Bonds then Outstanding and related Qualified Hedge Providers shall be entitled to receive payment in full of all Principal and interest due on all such Senior Bonds in accordance with the provisions of the Bond Ordinance and related Hedge Payments in accordance with the provisions of the Senior Hedge Agreements before the owners of the Subordinate Bonds or related Qualified Hedge Providers are entitled to receive any payment from the Pledged Revenues or the amounts held in the funds and accounts created under the Bond Ordinance on account of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate Hedge Agreements. C-26 In the event that any of the Subordinate Bonds are declared due and payable before their expressed maturities because of the occurrence of an Event of Default (under circumstances when the provisions of preceding paragraph are not be applicable), no owners of Subordinate Bonds or related Qualified Hedge Providers may receive any accelerated payment from the Pledged Revenues or the amounts held in the funds and accounts created under the Bond Ordinance of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate Hedge Agreements, until the owners of all Senior Bonds Outstanding and related Qualified Hedge Providers have received timely payment when due of all Principal of and interest on all such Senior Bonds and all Hedge Payments under related Senior Hedge Agreements. If any Event of Default shall have occurred and be continuing (under circumstances when the provisions of second preceding paragraph are not applicable), the owners of all Senior Bonds then Outstanding and related Qualified Hedge Providers shall be entitled to receive payment in full of all Principal and interest then due on all such Senior Bonds and all Hedge Payments under related Senior Hedge Agreements before the owners of the Subordinate Bonds or related Qualified Hedge Providers are entitled to receive any Payment from the Pledged Revenues or the amounts held in the funds and accounts created under the Bond Ordinance of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate Hedge Agreements. The obligations of the District to pay to the owners of the Subordinate Bonds the Principal of, premium, if any, and interest thereon in accordance with their terms and to pay Hedge Payments to related Qualified Hedge Providers in accordance with the terms of the Subordinate Hedge Agreements shall be unconditional and absolute. Nothing in the Bond Ordinance shall prevent the owners of the Subordinate Bonds or related Qualified Hedge Providers from exercising all remedies otherwise permitted by applicable law or under the Bond Ordinance or the Subordinate Hedge Agreements upon default thereunder, subject to the rights contained in the Bond Ordinance of the owners of Senior Bonds and related Qualified Hedge Providers to receive cash, property, or securities otherwise payable or deliverable to the owners of the Subordinate Bonds and related Qualified Hedge Providers, and any Series Ordinance authorizing Subordinate Bonds may provide that, insofar as a trustee or paying agent for the Subordinate Bonds is concerned, the foregoing provisions shall not prevent the application by such trustee or paying agent of any moneys deposited with such trustee or paying agent for the purpose of the payment of or on account of the Principal of, premium, if any, and interest on such Subordinate Bonds and Hedge Payments under Subordinate Hedge Agreements if such trustee or paying agent did not have knowledge at the time of such application that such payment was prohibited by the foregoing provisions. Any series of Subordinate Bonds and related Subordinate Hedge Agreements may have such rank or priority with respect to any other series of Subordinate Bonds and related Subordinate Hedge Agreements as may be provided in the Series Ordinance authorizing such series of Subordinate Bonds and may contain such other provisions as are not in conflict with the provisions of the Bond Ordinance. Accession of Subordinate Bonds and Related Subordinate Hedge Agreements to Senior Status By proceedings authorizing all or any Subordinate Bonds, the District may provide for the accession of such Subordinate Bonds and related Subordinate Hedge Agreements to the status of complete parity with the Senior Bonds and related Senior Hedge Agreements if, as of the date of accession, the conditions of the Bond Ordinance described in subparagraphs (a), (e) and (f) above under the caption “SENIOR AND SUBORDINATE LIEN BONDS – Senior Bonds” are satisfied, on a basis which includes all Outstanding Senior Bonds and such Subordinate Bonds, and if on the date of accession: C-27 (a) the Debt Service Reserve Account contains an amount equal to the Debt Service Reserve Requirement computed on a basis which includes all Outstanding Senior Bonds and such Subordinate Bonds (but which excludes, in the case of both Outstanding Senior Bonds and such Subordinate Bonds, any SRF Bonds and Senior Uncovered Bonds); and (b) the Payments Account contains the amount which would have been required to be accumulated therein on the date of accession if the Subordinate Bonds had originally been issued as Senior Bonds. Credit Facilities and Hedge Agreements In connection with the issuance of any Bonds under the Bond Ordinance, the District may obtain or cause to be obtained one or more Credit Facilities providing for payment of all or a portion of the Principal of, premium, if any, or interest due or to become due on such Bonds, providing for the purchase of such Bonds by the Credit Facility Provider, or providing funds for the purchase of such Bonds by the District. In connection therewith the District shall enter into Credit Facility Agreements with such Credit Facility Providers providing for, among other things, (i) the payment of fees and expenses to such Credit Facility Providers for the issuance of such Credit Facilities; (ii) the terms and conditions of such Credit Facilities and the Bonds affected thereby; and (iii) the security, if any, to be provided for the issuance of such Credit Facilities. The District may secure any Credit Facility by an agreement providing for the purchase of the Bonds secured thereby with such adjustments to the rate of interest, method of determining interest, maturity, or redemption provisions as are specified by the District in the applicable Series Ordinance. The District may in a Credit Facility Agreement agree to directly reimburse such Credit Facility Provider for amounts paid under the terms of such Credit Facility, together with interest thereon; provided, however, that no Reimbursement Obligation shall be created for purposes of the Bond Ordinance until amounts are paid under such Credit Facility. Any such Reimbursement Obligation shall be deemed to be a part of the Bonds to which the Credit Facility relates which gave rise to such Reimbursement Obligation, and references to Principal and interest payments with respect to such Bonds shall include Principal and interest (except for Additional Interest and Principal amortization requirements with respect to the Reimbursement Obligation that are more accelerated than the amortization requirements for the related Bonds, without acceleration) due on the Reimbursement Obligation incurred as a result of payment of such Bonds with the Credit Facility. All other amounts payable under the Credit Facility Agreement (including any Additional Interest and Principal amortization requirements with respect to the Reimbursement obligation that are more accelerated than the amortization requirements for the related Bonds, without acceleration) shall be fully subordinate to the payment of debt service on the related class of Bonds. Any such Credit Facility shall be for the benefit of and secure such Bonds or portion thereof as specified in the applicable Series Ordinance. In connection with the issuance of any Bonds or at any time thereafter so long as such Bonds remain Outstanding, the District may enter into Hedge Agreements with Qualified Hedge Providers, and no other providers, with respect to any Bonds. The District shall authorize the execution, delivery, and performance of each Hedge Agreement in a Supplemental Ordinance, in which it shall designate the related Hedged Bonds. The District’s obligation to pay Hedge Payments may be secured by a pledge of, and lien on, the Pledged Revenues on a parity with the lien created by the Bond Ordinance to secure the related Hedged Bonds, or may be subordinated in lien and right of payment to the payment of the Bonds, as determined by the District. C-28 Other Obligations The District expressly reserves the right, at any time, to adopt one or more other bond ordinances and reserves the right, at any time, to issue any other obligations not secured by the amounts pledged under the Bond Ordinance. DEFAULT AND ENFORCEMENT Events of Default An “Event of Default” shall mean the occurrence of any one or more of the following: (a) failure to pay the Principal or redemption price of any Bond when the same shall become due and payable, either at maturity or by proceedings for redemption or otherwise; or (b) failure to pay any installment of interest on any Bond when and as such installment of interest shall become due and payable; or (c) default shall be made by the District in the performance of any obligation in respect to the Debt Service Reserve Account and such default shall continue for 30 days thereafter; or (d) the District shall (1) admit in writing its inability to pay its debts generally as they become due, (2) file a petition in bankruptcy or take advantage of any insolvency act, (3) make an assignment for the benefit of its creditors, (4) consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or (5) be adjudicated a bankrupt; or (e) a court of competent jurisdiction shall enter an order, judgment, or decree appointing a receiver of the System or any of the funds or accounts established in the Bond Ordinance, or of the whole or any substantial part of the District’s property, or approving a petition seeking reorganization of the District under the federal bankruptcy laws or any other applicable law or statute of the United States of America or the State, and such order, judgment, or decree shall not be vacated or set aside or stayed within 60 days from the date of the entry thereof; or (f) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of any of the funds or accounts established in the Bond Ordinance, or of the whole or any substantial part of the District’s property, and such custody or control shall not be terminated or stayed within 60 days from the date of assumption of such custody or control; or (g) the District shall fail to perform any of the other covenants, conditions, agreements, and provisions contained in the Bonds or in the Bond Ordinance (other than the covenant in the Bond Ordinance relating to continuing disclosure) on the part of the District to be performed, and such failure shall continue for 90 days after written notice specifying such failure and requiring it to be remedied shall have been given to the District by the owners of not less than, or a Credit Facility Provider securing not less than, 25% in aggregate Principal of the Bonds then Outstanding; provided, however, if the failure stated in such notice can be corrected, but not within such 90-day period, the District shall have 180 days after such written notice to cure such default if corrective action is instituted by the District within such 90-day period and diligently pursued until the failure is corrected; or C-29 (h) (1) an Event of Default relating to the non-payment of the Principal or redemption price or installment of interest shall occur under any Series Ordinance or (2) an Event of Default, other than as described in clause (h)(1) shall occur under any Series Ordinance; or (i) failure by any Credit Facility Provider to pay the purchase price of Bonds under any Credit Facility then in effect; or (j) delivery to the District by a Credit Facility Provider of written notice stating that an “Event of Default” has occurred under any Credit Facility Agreement; or (k) delivery to the District by a Qualified Hedge Provider of written notice stating that an “event of default” has occurred under any Senior Hedge Agreement. Remedies Upon the happening and continuance of any Event of Default described in clauses (a), (b) and (h)(1) above under the caption “Events of Default” as to any Senior Bond, then and in every such case, upon the written declaration of the owners of more than 50% in aggregate Principal of all Senior Bonds then Outstanding or upon the written demand of a Credit Facility Provider securing more than 50% in aggregate Principal of the Senior Bonds then Outstanding, the Principal of all Senior Bonds then Outstanding shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds to the contrary notwithstanding. With respect to any Senior Bonds secured by a Credit Facility, only the applicable Credit Facility Provider may give written demand to declare the Principal of and accrued interest on such Senior Bonds to be immediately due and payable. Upon the happening and continuance of any Event of Default described in clause (i) above under the caption “Events of Default”, then and in every such case, upon the written declaration of the owners of more than 50% in aggregate Principal of the Senior Bonds of the affected series then Outstanding, the Principal of all Senior Bonds of the affected series then Outstanding shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds of the affected series shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds of the affected series to the contrary notwithstanding. Upon the happening and continuance of any Event of Default described in clause (k) above under the caption “Events of Default”, then and in every such case, upon the written declaration of the owners of more than 50% in aggregate Principal of the Senior Bonds of the affected series then Outstanding, the Principal of all Senior Bonds of the affected series then Outstanding shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds of the affected series shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds of the affected series to the contrary notwithstanding. Notwithstanding the foregoing, with respect to any Senior Bonds secured by a Credit Facility, only the applicable Credit Facility Provider may give written demand to declare the Principal of and accrued interest on such Senior Bonds to be immediately due and payable. Upon any declaration of acceleration under the Bond Ordinance, the District shall immediately draw under the applicable Credit Facility to the extent permitted by the terms thereof that amount which, together with other amounts on deposit under the Bond Ordinance, shall be sufficient to pay the Principal of and accrued interest on the related Senior Bonds so accelerated. C-30 The above provisions, however, are subject to the condition that if, after the Principal of the Senior Bonds shall have been so accelerated, all arrears of interest upon such Bonds, and interest on overdue installments of interest at the rate on such Bonds, shall have been paid by the District, the Principal of such Bonds which has matured (except the Principal of any Bonds not then due by their terms except as provided above) have been paid, and the District shall also have performed all other things in respect to which it may have been in default under the Bond Ordinance, and, if applicable, each Credit Facility Provider shall have reinstated the Credit Facility in the full amount available to be drawn thereunder by written notice to the District, then, in every such case, the owners of more than 50% in aggregate Principal of all Senior Bonds then Outstanding by written notice to the District, may waive such default and its consequences and such waiver shall be binding upon the District and upon all owners of the Bonds; but no such waiver shall extend to or affect any subsequent default or impair any right or remedy consequent thereon. Notwithstanding the foregoing, as long as the applicable Credit Facility Provider shall not then continue to dishonor draws under the Credit Facility, no Event of Default with respect to the related Senior Bonds may be waived without the express written consent of such Credit Facility Provider. Upon the happening and continuance of any Event of Default, any owner of Senior Bonds then Outstanding affected by the Event of Default or a duly authorized agent for such owner may proceed to protect and enforce its rights and the rights of the owners of Senior Bonds by such of the following remedies as it shall deem most effectual to protect and enforce such rights: (1) by mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the owners of Senior Bonds, including the right to require the appointment of a receiver for the System or to exercise any other right or remedy provided by the Constitution and laws of the State and the Charter and to require the District to perform any other covenant or agreement contained in the Bond Ordinance; (2) by action or suit in equity, require the District to account as if it were the trustee of an express trust for the owners of the Senior Bonds; (3) by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the owners of the Senior Bonds; or (4) by pursuing any other available remedy at law or in equity or by statute. In the enforcement of any remedy under the Bond Ordinance, owners of Senior Bonds shall be entitled to sue for, enforce payment on, and receive any and all amounts then or during any default becoming, and at any time remaining, due from the District for Principal, redemption premium, interest, or otherwise, under any provision of the Bond Ordinance or of the Senior Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in such Senior Bonds, together with any and all costs and expenses of collection and of all proceedings under the Bond Ordinance and under such Senior Bonds, without prejudice to any other right or remedy of the owners of Senior Bonds, and to recover and enforce a judgment or decree against the District for any portion of such amounts remaining unpaid, with interest, costs, and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable. If no Senior Bonds are then Outstanding or if no Event of Default with respect to any Senior Bonds has then occurred and is continuing, in the enforcement of any remedy under the Bond Ordinance, owners of Subordinate Bonds shall be entitled to sue for, enforce payment on, and receive any and all amounts then or during any default becoming, and at any time remaining, due from the District for C-31 Principal, redemption premium, interest, or otherwise, under any provision of the Bond Ordinance or of the Subordinate Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in such Subordinate Bonds, together with any and all costs and expenses of collection and of all proceedings under the Bond Ordinance and under such Subordinate Bonds, without prejudice to any other right or remedy of the owners of Subordinate Bonds, and to recover and enforce a judgment or decree against the District for any portion of such amounts remaining unpaid, with interest, costs, and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable. Nothing in this paragraph is intended to diminish the rights of the owners of Subordinate Bonds described in clauses (1) through (4) above. No remedy conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Bond Ordinance or now or hereafter existing at law or in equity or by statute. Application of Moneys After Default If an Event of Default occurs and shall not have been remedied, the District or a receiver appointed for the purpose shall apply all Pledged Revenues (except with respect to the Debt Service Reserve Account which does not secure Subordinate Bonds, Senior SRF Bonds and Senior Uncovered Bonds) as follows and in the following order of priority: (a) Expenses of Receiver and Paying Agent and Bond Registrar - to the payment of the reasonable and proper charges, expenses, and liabilities of any receiver and the Paying Agent and Bond Registrar under the Bond Ordinance; (b) Expenses of Operation and Maintenance and Renewals and Replacements - to the payment of all reasonable and necessary Expenses of Operation and Maintenance and major renewals and replacements to the System; (c) Principal or Redemption Price, Interest, and Hedge Payments Relating to Senior Bonds - to the payment of the interest and Principal or redemption price then due on the Senior Bonds and Hedge Payments then due under Senior Hedge Agreements, as follows: (i) Unless the Principal of all the Senior Bonds shall have become due and payable, all such moneys shall be applied as follows: first: To the payment to the persons entitled thereto of all installments of interest then due on the Senior Bonds, in the order of the maturity of such installments (with interest on defaulted installments of interest at the rate or rates borne by the Senior Bonds with respect to which such interest is due, but only to the extent permitted by law), and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference. If some of the Senior Bonds bear interest payable at different intervals or upon different dates and if at any time moneys from the Debt Service Reserve Account must be used to pay any such interest, the moneys in the Debt Service Reserve Account shall be applied (to the extent necessary) to the payment of all interest becoming due on the dates upon which such interest is payable to and including the next succeeding semiannual Interest Payment Date specified for the Senior Bonds. After such date, moneys in the Debt Service C-32 Reserve Account plus any other moneys available in the Payments Account shall be set aside for the payment of interest on Senior Bonds of each class (a class consisting of all Senior Bonds payable as to interest on the same dates) pro rata among Senior Bonds of the various classes on a daily basis so that there shall accrue to each owner of a Senior Bond throughout each Fiscal Year the same proportion of the total interest payable to such owner of a Senior Bond as shall so accrue to every other owner of a Senior Bond during such Fiscal Year. second: To the payment of the Hedge Payments due under any Senior Hedge Agreements pursuant to their terms. third: To the payment to the persons entitled thereto of the unpaid Principal of any of the Senior Bonds which shall have become due at maturity or upon mandatory redemption prior to maturity (other than Senior Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of the Bond Ordinance), in the order of their due dates, with interest upon such Senior Bonds from the respective dates upon which they became due, and, if the amount available shall not be sufficient to pay in full Senior Bonds due on any particular date, together with such interest, then to the payment first of such interest, ratably according to the amount of such interest due on such date, and then to the payment of such Principal, ratably according to the amount of such Principal due on such date, to the persons entitled thereto without any discrimination or preference. If some of the Senior Bonds mature (including mandatory redemption prior to maturity as a maturity) upon a different date or dates, and if at any time moneys from the Debt Service Reserve Account must be used to pay any such Principal becoming due, the moneys in the Debt Service Reserve Account not required to pay interest under paragraph first above shall be applied to the extent necessary to the payment of all Principal becoming due on the dates upon which such Principal is payable to and including the final annual Principal Maturity Date specified for the Senior Bonds. After such date, moneys in the Debt Service Reserve Account not required to pay interest plus any other moneys available in the Payments Account shall be set aside for the payment of Principal of Senior Bonds of each class (a class consisting of all Senior Bonds payable as to Principal on the same date) pro rata among Senior Bonds of the various classes which mature or must be redeemed pursuant to mandatory redemption prior to maturity throughout each Fiscal Year in such proportion of the total Principal payable on each such Senior Bond as shall be equal among all classes of Senior Bonds maturing or subject to mandatory redemption within such Fiscal Year. fourth: To the payment of the redemption premium on and the Principal of any Senior Bonds called for optional redemption pursuant to their terms. (ii) If the Principal of all the Senior Bonds shall have become due and payable, all such moneys shall be applied to the payment of the Principal and interest then due and unpaid upon the Senior Bonds, with interest thereon as aforesaid, and due and unpaid Hedge Payments under Senior Hedge Agreements, without preference or priority of Principal over interest or Hedge Payments or of interest over Principal or Hedge Payments, or of Hedge Payments over Principal or interest, or of any installment of interest over any other installment of interest, or of any Senior Bond over any other Senior Bonds, or of any such Hedge Payment over any other C-33 such Hedge Payment, ratably, according to the amounts due respectively for Principal, interest, and Hedge Payments, to the persons entitled thereto without any discrimination or preference. Rights of Credit Facility Provider Notwithstanding any other provision of the Bond Ordinance, in the event that the District shall draw under a Credit Facility any amount for the payment of Principal of or interest on any Bonds, then upon such payment the related Credit Facility Provider shall succeed to and become subrogated to the rights of the recipients of such payments and such Principal or interest shall be deemed to continue to be unpaid and Outstanding for all purposes and shall continue to be fully secured by the Bond Ordinance until the Credit Facility Provider, as successor and subrogee, has been paid all amounts owing in respect of such subrogated payments of Principal and interest. Such rights shall be limited and evidenced by having the District note the Credit Facility Provider’s rights as successor and subrogee on its records, and the District shall, upon request, deliver to the Credit Facility Provider (i) in the case of interest on the Bonds, an acknowledgment of the Credit Facility Provider’s ownership of interest to be paid on the Bonds specifying the amount of interest owed, the period represented by such interest, and the CUSIP numbers of the Bonds on which such interest is owed and (ii) in the case of Principal of the Bonds, either the Bonds themselves duly assigned to the Credit Facility Provider or new Bonds registered in the name of the Credit Facility Provider or in such other name as the Credit Facility Provider shall specify. Whenever moneys become available for the payment of any interest then overdue, the Credit Facility Provider shall be treated as to interest owed to it as and as if it had been the Bondholder of the Bonds upon which such interest is payable on any special record date therefor. No Obligation to Levy Taxes Nothing contained in the Bond Ordinance shall be construed as imposing on the District any duty or obligation to levy any taxes either to meet any obligation incurred in the Bond Ordinance or to pay the Principal of or interest on the Bonds. DEFEASANCE Except as otherwise provided in any Series Ordinance with respect to Bonds secured by a Credit Facility, Bonds for the payment or redemption of which sufficient moneys or sufficient Government Obligations shall have been deposited with the Paying Agent or the Depository of the Sinking Fund (whether upon or prior to the maturity or the redemption date of such Bonds) shall be deemed to be paid and no longer Outstanding under the Bond Ordinance; provided, however, that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been duly given as provided in the Bond Ordinance or firm and irrevocable arrangements shall have been made for the giving of such notice; and, provided, further, that Bonds bearing interest at a Variable Rate shall not be deemed to have been paid and discharged within the meaning of the Bond Ordinance unless the interest rate payable on such Bonds is calculated at the maximum interest rate specified for such Bonds to the earlier of the first tender or redemption date. Government Obligations shall be considered sufficient for purposes of the Bond Ordinance only: (i) if such Government Obligations are not callable by the issuer of the Government Obligations prior to their stated maturity; and (ii) if such Government Obligations fall due and bear interest in such amounts and at such times as will assure sufficient cash to pay currently maturing interest and to pay Principal and redemption premiums, if any, when due on the Bonds without rendering the interest on any Tax-Exempt Bonds includable in gross income of any owner thereof for federal income tax purposes. C-34 The District may at any time surrender to the Bond Registrar for cancellation by it any Bonds previously authenticated and delivered under the Bond Ordinance which the District may have acquired in any manner whatsoever. All such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. SUPPLEMENTAL ORDINANCES Supplemental Ordinances Not Requiring Consent of Bondholders The District, from time to time and at any time, subject to the conditions and restrictions in the Bond Ordinance, may adopt one or more Supplemental Ordinances which thereafter shall form a part of the Bond Ordinance, for any one or more or all of the following purposes: (a) To add to the covenants and agreements of the District in the Bond Ordinance other covenants and agreements thereafter to be observed or to surrender, restrict, or limit any right or power reserved in the Bond Ordinance to or conferred upon the District (including but not limited to the right to issue Senior Bonds); (b) To make such provisions for the purpose of curing any ambiguity, or of curing, correcting, or supplementing any defective provision contained in the Bond Ordinance, or in regard to matters or questions arising under the Bond Ordinance, as the District may deem necessary or desirable and not inconsistent with the Bond Ordinance; (c) To subject to the lien and pledge of the Bond Ordinance additional revenues, receipts, properties, or other collateral; (d) To evidence the appointment of successors to any Depository, Paying Agent, or Bond Registrar; (e) To modify, amend, or supplement the Bond Ordinance in such manner as to permit the qualification of the Bond Ordinance under the Trust Indenture Act of 1939 or any federal statute hereinafter in effect, and similarly to add to the Bond Ordinance such other terms, conditions, and provisions as may be permitted or required by such Trust Indenture Act of 1939 or any similar federal statute; (f) To make any modification or amendment of the Bond Ordinance required in order to make any Bonds eligible for acceptance by DTC or any similar holding institution or to permit the issuance of any Bonds or interests therein in book-entry form; (g) To modify any of the provisions of the Bond Ordinance in any respect if such modification shall not become effective until after the Bonds Outstanding immediately prior to the effective date of such Supplemental Ordinance shall cease to be Outstanding and if any Bonds issued contemporaneously with or after the effective date of such Supplemental Ordinance shall contain a specific reference to the modifications contained in such subsequent proceedings; (h) Subject to the provisions of the Bond Ordinance relating to the Project Fund, to modify the provisions of the Bond Ordinance with respect to the disposition of any moneys remaining in the Project Fund upon the completion of any Project; C-35 (i) To increase the size or scope of the System, to add other utilities to the System, to create additional subaccounts or to abolish any subaccounts within any account, or to change the amount of the Debt Service Reserve Requirement, but not below the amount specified in such definition; (j) To modify the Bond Ordinance to permit the qualification of any Bonds for offer or sale under the securities laws of any state in the United States of America; (k) To modify the Bond Ordinance to provide for the issuance of Senior Bonds or Subordinate Bonds, and such modification may deal with any subjects and make any provisions which the District deems necessary or desirable for that purpose; (l) To make such modifications in the provisions of the Bond Ordinance as may be deemed necessary by the District to accommodate the issuance of capital appreciation bonds or Bonds which bear interest at a Variable Rate; and (m) To modify any of the provisions of the Bond Ordinance in any respect (other than a modification of the type described below under the caption “SUPPLEMENTAL ORDINANCES – Supplemental Ordinances Requiring Consent of Bondholders”) requiring the unanimous written consent of the Bondholders); provided that for (i) any Outstanding Bonds which are assigned a Rating and which are not secured by a Credit Facility providing for the payment of the full amount of Principal and interest to be paid thereon, each Rating Agency shall have given written notification to the District that such modification will not cause the then applicable Rating on any Bonds to be reduced or withdrawn, and (ii) any Outstanding Bonds which are secured by Credit Facilities providing for the payment of the full amount of the Principal and interest to be paid thereon, each Credit Facility Provider shall have consented in writing to such modification. Any Supplemental Ordinance of the District may modify the provisions of the Bond Ordinance in such a manner, and to such extent and containing such provisions, as the District may deem necessary or desirable to effect any of the purposes stated above. As used in the Bond Ordinance, the term “modify” shall mean “modify, amend, or supplement” and the term “modification” shall mean “modification, amendment, or supplement.” Supplemental Ordinances Requiring Consent of Bondholders With the consent (evidenced as provided in the Bond Ordinance) of the owners of not less than a majority in aggregate Principal of the Outstanding Bonds of each class (senior and subordinate), voting separately by class, the District may from time to time and at any time adopt a Supplemental Ordinance for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Bond Ordinance or of any Supplemental Ordinance; provided, however, that no such Supplemental Ordinance shall: (1) extend the maturity date or due date of any mandatory sinking fund redemption with respect to any Bond Outstanding under the Bond Ordinance; (2) reduce or extend the time for payment of Principal of, redemption premium, or interest on any Bond Outstanding under the Bond Ordinance; (3) reduce any premium payable upon the redemption of any Bond under the Bond Ordinance or advance the date upon which any Bond may first be called for redemption prior to its stated maturity date; (4) give to any Senior Bond or Senior Bonds (or related Senior Hedge Agreements) a preference over any other Senior Bond or Senior Bonds (or related Senior Hedge Agreements); (5) permit the creation of any lien or any other encumbrance on the Pledged Revenues having a lien equal to or prior to the lien created under the Bond Ordinance for the Senior Bonds; (6) reduce the percentage of owners of C-36 senior or subordinate classes of Bonds required to approve any such Supplemental Ordinance; or (7) deprive the owners of the Bonds of the right to payment of the Bonds or from the Pledged Revenues (except as otherwise provided herein with respect to the Debt Service Reserve Account), without, in each case, the consent of the owners of all the affected Bonds then Outstanding. No amendment may be made under the Bond Ordinance which affects the rights or duties of any Credit Facility Provider securing any of the Bonds or any Qualified Hedge Provider under any Hedge Agreement without its written consent. If the District intends to enter into or adopt any Supplemental Ordinance as described in this caption, the District shall mail, by registered or certified mail, to the registered owners of the Bonds at their addresses as shown on the Bond Register, a notice of such intention along with a description of such Supplemental Ordinance not less than 30 days prior to the proposed effective date of such Supplemental Ordinance. The consents of the registered owners of the Bonds need not approve the particular form of wording of the proposed Supplemental Ordinance, but it shall be sufficient if such consents approve the substance thereof. Failure of the owner of any Bond to receive the notice required in the Bond Ordinance shall not affect the validity of any Supplemental Ordinance if the required number of owners of the Bonds of each class shall provide their written consent to such Supplemental Ordinance. Notwithstanding any provision of the Bond Ordinance to the contrary, upon the issuance of a Credit Facility to secure any Bonds and for the period in which such Credit Facility is outstanding, the Credit Facility Provider may have the consent rights of the owners of the Bonds which are secured by such Credit Facility pertaining to some or all of the amendments or modifications of the Bond Ordinance, to the extent provided in the applicable Series Ordinance. Notwithstanding the foregoing, if a Credit Facility Provider is granted the consent rights of the owners of any Bonds in a Series Ordinance and refuses to exercise such consent rights, either affirmatively or negatively, then the registered owners of the Bonds secured by the related Credit Facility may exercise such consent rights. Notice of Supplemental Ordinances The District shall cause the Bond Registrar to mail a notice by registered or certified mail to the registered owners of all Bonds Outstanding, at their addresses shown on the Bond Register or at such other address as has been furnished in writing by such registered owner to the Bond Registrar, setting forth in general terms the substance of any Supplemental Ordinance which has been adopted and approved. * * * C-37 SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT The following is a summary of certain provisions and covenants contained in the Continuing Disclosure Agreement. Such summary does not purport to be a complete statement of the terms of the Continuing Disclosure Agreement and accordingly is qualified in its entirety by reference thereto and is subject to the full text thereof. Definitions In addition to the definitions set forth in the Continuing Disclosure Agreement, the following capitalized terms shall have the following meanings: “Annual Filing Date” means the date, set in the Continuing Disclosure Agreement, by which the Annual Report is to be filed with the MSRB. “Annual Financial Information” means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in the Continuing Disclosure Agreement. “Annual Report” means an Annual Report containing Annual Financial Information described in and consistent with the Continuing Disclosure Agreement. “Audited Financial Statements” means the annual financial statements (if any) of the District for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i)(B) of the Rule and as specified in the Continuing Disclosure Agreement. “Certification” means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be submitted to the MSRB under the Continuing Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the District and shall include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies. “Disclosure Dissemination Agent” means Digital Assurance Certification, L.L.C., acting in its capacity as Disclosure Dissemination Agent (“DAC”) under the Continuing Disclosure Agreement, or any successor Disclosure Dissemination Agent designated in writing by the District pursuant to the Continuing Disclosure Agreement. “Disclosure Representative” means the Secretary-Treasurer of the District or his or her designee, or such other person as the District shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent. “Failure to File Event” means the District’s failure to file an Annual Report on or before the Annual Filing Date. “Financial Obligation” as used in the Continuing Disclosure Agreement is defined in the Rule, as may be amended, as (i) a debt obligation; (ii) derivative instrument entered into in connection with, or C-38 pledged as a security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “Force Majeure Event” means: (i) acts of God, war, or terrorist action; (ii) failure or shut-down of the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent beyond the Disclosure Dissemination Agent’s reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in Internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect Internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement. “Holder” means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. “Information” means, collectively, the Annual Reports, the Audited Financial Statements, the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures. “MSRB” means the Municipal Securities Rulemaking Board, or any successor thereto, established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934. “Notice Event” means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed in the Continuing Disclosure Agreement. “Obligated Person” means any person, including the District, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the Bonds (other than providers of municipal bond insurance, letters of credit, or other liquidity facilities). “Official Statement” means that Official Statement prepared by the District in connection with the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “Voluntary Event Disclosure” means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(10) of Section 2 of the Continuing Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of the Continuing Disclosure Agreement. “Voluntary Financial Disclosure” means information of the category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of the Continuing Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of the Continuing Disclosure Agreement. C-39 Provision of Annual Reports The District shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, not later than the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not later than 180 days after the end of each fiscal year of the District, commencing with the fiscal year ending June 30, 2022. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in the Continuing Disclosure Agreement. If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the District of its undertaking to provide the Annual Report. Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification) no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the District will not be able to file the Annual Report within the time required under the Continuing Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form specified in the Continuing Disclosure Agreement. If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 10:00 a.m. Eastern time on the Annual Filing Date (or, if such Annual Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to File Event shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form specified in the Continuing Disclosure Agreement. If Audited Financial Statements of the District are prepared but not available prior to the Annual Filing Date, the District shall, when the Audited Financial Statements are available, provide at such time an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification for filing with the MSRB. The District may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Paying Agent (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. Content of Annual Reports Each Annual Report shall contain Annual Financial Information with respect to the District, including the information provided in the Official Statement under the headings: “MANAGEMENT’S DISCUSSION AND ANALYSIS - Historical and Projected Sewer Rates and Charges,” “- Customer Accounts,” “- Largest User Charge Customers,” and “ – User Charge Revenues.” Each Annual Report shall include Audited Financial Statements prepared as described in the Official Statement. If Audited Financial Statements are not available, then, unaudited financial statements, prepared in accordance with generally accepted accounting principles or alternate accounting principles as described in the Official Statement will be included in the Annual Report. C-40 Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the District is an Obligated Person (as defined by the Rule), which have been previously filed with each of the Securities and Exchange Commission or available on the MSRB Internet Website. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The District will clearly identify each such document so incorporated by reference. Reporting of Notice Events The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; 7. Modifications to rights of Bondholders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person; For the purposes of the event described in this subsection, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person. C-41 13. The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; 15. Incurrence of a Financial Obligation of an Obligated Person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of an Obligated Person, any of which affect security holders, if material; and 16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of an Obligated Person, any of which reflect financial difficulties. The District shall, in a timely manner not later than nine business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence and shall be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has occurred, include the text of the disclosure that the District desires to make, contain the written authorization of the District for the Disclosure Dissemination Agent to disseminate such information, and identify the date the District desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). The Disclosure Dissemination Agent is under no obligation to notify the District or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within two business days of receipt of such notice (but in any event not later than the tenth business day after the occurrence of the Notice Event, if the District determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that either (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to the Continuing Disclosure Agreement, together with a Certification. Such Certification shall identify the Notice Event that has occurred, include the text of the disclosure that the District desires to make, contain the written authorization of the District for the Disclosure Dissemination Agent to disseminate such information, and identify the date the District desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). If the Disclosure Dissemination Agent has been instructed by the District to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with the MSRB in accordance with the Continuing Disclosure Agreement. Voluntary Filings The District may instruct the Disclosure Dissemination Agent to file a Voluntary Event Disclosure or a Voluntary Financial Disclosure with the MSRB, from time to time pursuant to a Certification of the Disclosure Representative. C-42 Nothing in the Continuing Disclosure Agreement shall be deemed to prevent the District from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in the Continuing Disclosure Agreement or including any other information in any Annual Report, Audited Financial Statement, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure, in addition to that required by the Continuing Disclosure Agreement. If the District chooses to include any information in any Annual Report, Audited Financial Statement, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure in addition to that which is specifically required by the Continuing Disclosure Agreement, the District shall have no obligation under the Continuing Disclosure Agreement to update such information or include it in any future Annual Report, Audited Financial Statement, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure. Termination of Reporting Obligation The obligations of the District and the Disclosure Dissemination Agent under the Continuing Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the District is no longer an Obligated Person, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of counsel experienced in federal securities laws to the effect that continuing disclosure is no longer required. Disclosure Dissemination Agent The District has appointed Digital Assurance Certification, L.L.C. (“DAC”) as exclusive Disclosure Dissemination Agent under the Continuing Disclosure Agreement. The District may, upon thirty days written notice to the Disclosure Dissemination Agent, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC’s services as Disclosure Dissemination Agent, whether by notice of the District or DAC, the District agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under the Continuing Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the District shall remain liable to the Disclosure Dissemination Agent until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days’ prior written notice to the District. Remedies in Event of Default In the event of a failure of the District or the Disclosure Dissemination Agent to comply with any provision of the Continuing Disclosure Agreement, the Holders’ rights to enforce the provisions of the Continuing Disclosure Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties’ obligation under the Continuing Disclosure Agreement. Any failure by a party to perform in accordance with the Continuing Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated in the Continuing Disclosure Agreement. Amendment; Waiver Notwithstanding any other provision of the Continuing Disclosure Agreement, the District and the Disclosure Dissemination Agent may amend the Continuing Disclosure Agreement and any provision of the Continuing Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the District and the Disclosure C-43 Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings in the Continuing Disclosure Agreement to violate the Rule if such amendment or waiver had been effective on the date of the Continuing Disclosure Agreement but taking into account any subsequent change in or official interpretation of the Rule; provided neither the District or the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to the Continuing Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposed amendment to the District. No such amendment shall become effective if the District shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. * * * [ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX D Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B [ THIS PAGE INTENTIONALLY LEFT BLANK ] 3013 Main Street Kansas City, MO 64108 www.raftelis.com May 9, 2022 Board of Trustees The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-2555 Raftelis Financial Consultants, Inc. (“Raftelis”) is submitting herewith our Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B prepared at the request of The Metropolitan St. Louis Sewer District (“District”) in connection with the issuance of its Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B (the “Series 2022B Bonds”). The purpose of the report is to set forth the findings of studies performed by Raftelis related to the wastewater system of the District (“System”). The report provides a financial feasibility analysis of the District’s Capital Improvement and Replacement Program (“CIRP”) as it relates to the issuance of the Series 2022B Bonds. The report also addresses other technical and financial issues that affect the operation of the System and the District’s ability to issue and repay wastewater revenue bonds issued during the study period of fiscal years 2022 through 2024. The District’s fiscal year ends on June 30 of each year. In preparing the report, Raftelis has examined the financial operations of the District through reviews of financial reports, operating and capital budgets, and other statistical and financial information as well as discussions with the District’s management and financial staff. We have performed various financial tests and analyses necessary to support our findings and opinions. In the development of the forecast of future financial operations summarized in the report, Raftelis has made certain assumptions with respect to conditions, events, and circumstances which may occur. The methodologies utilized in performing our studies follow generally accepted industry practice. Even though Raftelis believes such assumptions are reasonable and attainable for the purpose of forecasting the District’s future operations, the actual results may differ materially from the forecasts as the financial results are influenced by the conditions, events, and circumstances which actually occur. Subject to the limitations set forth herein, the report is based on information not within the control of Raftelis. Raftelis has not been requested to make an independent analysis, to verify the accuracy of information provided to us, or to render independent judgment of the validity of information provided by others. As such, Raftelis cannot, and does not, guarantee the accuracy thereof to the extent that such information, data, or opinions were based on information provided by others. Page 2 May 9, 2022 D-2 Use of the report, or any information contained therein, by a third party shall constitute a waiver and release of Raftelis from and against all claims and liability, including, but not limited to, liability for special, incidental, indirect, or consequential damages in connection with such use. In addition, to the extent permitted by applicable law, use of the report, or any information contained therein by a third party (other than the underwriters of the Series 2022B Bonds), shall constitute an agreement to defend and indemnify Raftelis from and against any claims and liability, including, but not limited to, liability for special, incidental, indirect, or consequential damages in connection with such use. The benefit of such releases, waivers, or limitations of liability shall extend to the related companies and subcontractors of any tier of Raftelis and the directors, officers, partners, employees, and agents of all released or indemnified parties. Raftelis shall have no liability to a third party for any losses or damages arising from or in any way related to this report and/or the information contained therein. Such express waiver of liability by the third party shall include all claims that the third party may allege in connection with Raftelis’ report including, but not limited to, breach of contract, breach of warranty, strict liability, negligence, and/or negligent misrepresentation. Our principal findings and opinions, which are discussed more fully in the report, are as follows: Wastewater System Financing  The District has developed a detailed CIRP required to meet regulatory requirements, maintain the integrity of the System, and continue to address water quality issues. During the three-year study period (“study period”) the District plans to spend approximately $1.27 billion on major capital improvements to the System.  As shown in Table 2 of the report, capital program requirements are projected to be funded from a combination of available funds on hand, senior and subordinate revenue bond proceeds, annual operating revenues, grants and contributions and interest income. Approximately 32 percent of total major capital improvement expenditures are anticipated to be funded from operating revenues and the drawdown of available fund balances and approximately 65 percent will be debt financed. Less than 3 percent of major capital improvements are anticipated to be financed by grants and contributions and interest earned on construction funds.  The average number of wastewater customers served by the District during fiscal year 2021 was approximately 428,200. Slight increases in the number of customers are projected during the study period based on analysis of historical trends.  District revenue is derived principally from charges for wastewater service. The existing schedule of wastewater rates has been in effect since July 1, 2021. The Board adopted these wastewater rates on June 10, 2021 by Ordinance 15669. Page 3 May 9, 2022 D-3  The District has thirteen senior revenue bond issues currently outstanding (excluding the Series 2022B Bonds) and eighteen subordinate series of revenue bonds issued under the state’s revolving fund program (“SRF”) and Department of Natural Resources Direct Loan program currently outstanding. The thirteen senior revenue bonds include a loan with the United States Environmental Protection Agency under the Water Infrastructure Finance and Innovation Act (“WIFIA”) loan program in December 2018. The District’s previous bond authorizations from elections on February 3, 2004 ($500 million), August 5, 2008 ($275 million), and June 5, 2012 ($945 million) have been fully utilized. The District’s bond authorization of $900 million approved by voters on April 5, 2016 has been partially utilized. After the issuance of the 2022B Bonds, the District will have $253.1 million of remaining bond authorization from the 2016 election and $500 million of bond authorization received at the election held on April 6, 2021.  The proceeds of the Series 2022B Bonds will be used to finance additions, extensions, and improvements to the System and pay the costs of issuance of the Series 2022B Bonds.  The District may issue a refunding portion of up to $12.72 million of Series 2022B Bonds that would refund the remainder of the currently outstanding Series 2012A Bonds and Series 2012B Bonds. The analysis in this report assumes that this refunding will not occur. If it does occur, the District intends to maintain a similar repayment schedule as the currently outstanding bonds with lower total payments each year.  The Master Bond Ordinance adopted by the Board on April 22, 2004, as supplemented and amended by ordinances adopted by the Board for each bond issue, including the ordinance adopted by the Board for the Series 2022B Bonds (the “Bond Ordinance”), establishes covenants between the District and bondholders and various terms and conditions related to the Bonds.  The cash flow analysis of projected wastewater utility revenue and revenue requirements presented in Table 9 of the report shows that projected revenues, including projected revenue increases, will be sufficient to fund the operation and maintenance of the System, provide debt service coverage in excess of the requirements of the Bond Ordinance and continue full funding of the CIRP.  Based on the financial projections and analyses presented in the report, it is our opinion that the District will be able to adequately finance the CIRP, meet all known cash requirements of the System, and comply with all Bond Ordinance financial and rate covenants during the study period. Bond Covenant Compliance  The adopted wastewater charges for fiscal years 2022 through 2024 will allow the District to issue additional revenue bonds within the study period as currently anticipated and make needed improvements and replacements of the System. Page 4 May 9, 2022 D-4  Indicated debt service coverage levels are above the minimum requirements set forth in the Bond Ordinance.  The additional bonds test required for the issuance of the Series 2022B Bonds has been met, as shown in the Additional Bonds Tests on page D-30. Conclusion  Based on the financial study performed by Raftelis related to the System, it is our opinion that the District’s organizational structure, planned CIRP, and financing plans are sound for purposes of supporting the Series 2022B Bonds and subsequent bonds required to support the full implementation of the CIRP for the 2022 through 2024 fiscal years. The summary statements presented in this letter do not address all of the issues examined and described in the full report. Accordingly, the findings and conclusions presented herein should not be considered complete except in the context of the detailed descriptions and information contained in the report. We appreciate the opportunity to be of service to the District in this important matter. Very truly yours, RAFTELIS FINANCIAL CONSULTANTS, INC. Thomas A. Beckley Vice President The Metropolitan St. Louis Sewer District Contents D-5 Contents Page Introduction ........................................................................................................................... D-6 Purpose .............................................................................................................................. D-6 Scope ................................................................................................................................. D-6 Raftelis Financial Consultants' Qualifications .................................................................. D-7 Wastewater System Financing .............................................................................................. D-8 Capital Improvement and Replacement Program ............................................................. D-8 CIRP Financing ............................................................................................................... D-10 Wastewater Service Charges .......................................................................................... D-12 Wastewater Service Charge Components ................................................................... D-12 Other Charges and Fees .............................................................................................. D-14 Revenues ......................................................................................................................... D-15 Customer Growth ........................................................................................................ D-15 Wastewater Volumes .................................................................................................. D-16 Wastewater Revenues Under Projected Rates ............................................................ D-17 Other Operating Revenues .......................................................................................... D-18 Revenue Requirements ................................................................................................... D-20 Operation and Maintenance Expense .......................................................................... D-20 Routine Capital Improvements ................................................................................... D-21 Cash Financing of Capital Improvements ................................................................... D-21 Debt Service ................................................................................................................ D-21 Operating Reserve Allowance ........................................................................................ D-24 Financial Analysis ........................................................................................................... D-24 Wastewater Bill Comparison .......................................................................................... D-27 Bond Covenant Compliance ............................................................................................... D-29 Rate Covenants ............................................................................................................... D-29 Reasonable Charges ........................................................................................................ D-29 Adequate Maintenance ................................................................................................... D-30 Additional Bonds Tests ................................................................................................... D-30 Principal Assumptions ........................................................................................................ D-33 The Metropolitan St. Louis Sewer District Wastewater System Financing D-6 Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B Introduction The Metropolitan St. Louis Sewer District (“District”) is responsible for providing wastewater and stormwater services for the City of St. Louis, Missouri (“City”) and most of St. Louis County, Missouri (“County”). In order to continue to improve and expand its wastewater system (“System”), provide reliable service to its customers, and maintain compliance with state and federal environmental laws and regulations, the District has developed a major capital improvement and replacement program (“CIRP”). In order to provide for equitable recovery of capital financing costs from existing and future wastewater customers, the District plans to partially finance System improvements through the issuance of long-term debt. The remainder of the funds required to finance the CIRP will be obtained from annual operating revenues, interest income, grants and contributions, and funds on hand. Revenue bonds are issued pursuant to the District’s Charter, which was approved by the voters of the City and the County at a special election held on February 4, 1954 and amended at special elections held on November 7, 2000, June 5, 2012, and April 6, 2021 (“Charter”). All bonds are issued under the provisions of the Master Bond Ordinance adopted by the Board of Trustees (“Board”) on April 22, 2004, as supplemented and amended by ordinances adopted by the Board for each bond issue including the ordinance adopted by the Board on May 12, 2022 (the “Bond Ordinance”) for the Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B (the “Series 2022B Bonds”). Purpose The purpose of this report is to summarize findings of the financial feasibility study performed by Raftelis Financial Consultants, Inc. (“Raftelis”) related to the System and independently assess the financial feasibility of the District’s issuance of the Series 2022B Bonds. This report addresses financial issues that affect the operation of the System and the District’s ability to issue and repay wastewater revenue bonds. Scope This report addresses the organization and management of the District. Also included are the results of analyses related to existing and future financial requirements of the System based on a review of financial reports, ordinances, budgets and other information. Information The Metropolitan St. Louis Sewer District Wastewater System Financing D-7 from these documents was supplemented through meetings and conversations with key District representatives. Projections of revenue and revenue requirements of the System are shown in this report for a study period that includes fiscal years 2022 through 2024. Evaluation of the financial feasibility of the Series 2022B Bonds is based upon a review of historical financial information provided by the District, an examination of revenue and expenditure projections by District staff and Raftelis, and the preparation of cash flow analyses examining projected System operation and capital programming financing through fiscal year 2024. The level of debt service coverage for the Series 2022B Bonds and subsequent bonds projected to be issued through fiscal year 2024 is determined and compared with requirements of the Bond Ordinance. Raftelis Financial Consultants' Qualifications Raftelis was founded in 1993 and has grown to become one of the largest and most respected utility financial, rate, and management consulting firms in the nation. Raftelis has experience providing these services to hundreds of utilities across the country and abroad. Raftelis staff has provided bond feasibility reports for dozens of utilities throughout the United States for billions of dollars in bonds. Raftelis is a Registered Municipal Advisor with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. Raftelis began working with the District in 2007 as the Consultant to the Rate Commission and was selected by the District in 2012 and again in 2017 to provide bond feasibility and rate consulting services to the District. The Metropolitan St. Louis Sewer District Wastewater System Financing D-8 Wastewater System Financing The general objectives of the District’s wastewater CIRP are to provide the facilities necessary to meet federal and state requirements, maintain the integrity of the System, and provide satisfactory levels of service and performance to customers. To accomplish these objectives, the District must have sufficient operating revenues and adequate funding for CIRP projects. The District uses proceeds of revenue bonds along with wastewater service charge revenues, grants, other revenues and available fund balances to meet the costs of the ongoing CIRP. Capital Improvement and Replacement Program Table 1 presents a summary of the historical and projected CIRP for fiscal years 2021 through 2024. These costs were obtained from the District’s supplemental budget documents and other data provided by District staff. Me t r o p o l i t a n S t . L o u i s S e w e r D i s t r i ct W a s t e w a t e r S y s t e m F i n a n c i n g D - 9 Table 1: Capital Improvement & Replacement Program Fiscal Year Ending June 30 2021 - 2024 Capital Improvement and Replacement Progam Needs FY 2021 FY 2022 FY 2023 FY 2024 Total Actual Budget Projected (1) Projected (1) 1. Asset Management - Capacity 124,335,000$ 116,852,075$ 92,405,406$ 111,622,715$ 445,215,196$ 2. Asset Management - Renewal 37,743,000 26,897,817 39,270,139 44,927,634 148,838,591 3. Cityshed 9,043,000 18,465,199 20,171,426 25,522,708 73,202,333 4. Combined Sewer Overflow 20,260,000 14,327,519 13,553,614 52,013,855 100,154,988 5. Districtwide - - 5,125,615 3,869,653 8,995,268 6. Sanitary Sewer Overflow (2) 92,840,000 70,787,521 93,257,668 53,756,856 310,642,046 7. Treatment Plants (3) 19,950,000 68,126,095 160,445,343 240,342,169 488,863,607 8.Subtotal: CIRP 304,171,000$ 315,456,226$ 424,229,212$ 532,055,591$ 1,575,912,028$ 9. Less: Capital Funded in O&M (Asset Management) (15,141,153) (8,936,609) (9,260,767) (10,527,929) (55,552,752) 10. Less: Non-recurring Projects & Studies (10,555,396) (10,915,553) (10,520,321) (8,999,673) (48,094,748) 11. Less: Project Liquidations - (29,203,553) (23,551,553) (27,273,812) (107,302,730) 12. Plus: Capitalized Internal Labor 10,618,145 10,936,689 11,264,790 11,602,733 56,373,172 13.Total: CIRP Needs (4)289,092,596$ 277,337,200$ 392,161,361$ 496,856,909$ 1,421,334,971$ (1) Budgeted and projected CIRP amounts are adjusted for historical levels of project delays and include 3.1% inflation from the estimated costs in FY 2021 dollars. (2) The investment is driven by Consent Decree requirements to eliminate at least 85% of all constructed SSO's by 12/31/2023. (3) The investment is necessary to repair aging infrastructure and to meet regulatory requirements. (4) CIRP costs for FY 2021 represent new appropriations approved in that year, and FY 2022 through FY 2024 represent estimated appropriations adjusted for inflation and net of prior years’ unspent appropriations released for future use. The Metropolitan St. Louis Sewer District Wastewater System Financing D-10 Table 3 Capital Improvement and Replacement Program The proposed (FY 2022 – FY 2024) CIRP is primarily focused on collection system improvement projects to meet the District’s Consent Decree requirements that include an estimated $217 million to eliminate sanitary sewer overflows and $80 million to reduce or eliminate combined sewer overflows. About $505 million is earmarked for system improvements throughout the District that includes asset management and collection system improvements. Improvements related to existing treatment plants are expected to cost about $469 million during the three-year study period. CIRP Financing Table 2 presents the proposed CIRP financing plan and summarizes the projected source and application of funds over the three-year study period. This plan reflects the recommendations of the Rate Commission and anticipates that proposed capital improvements will be financed from a combination of bond proceeds, annual operating revenues, and interest income. Interest income earned on invested capital improvement funds is available to meet capital improvement expenditures. Interest earnings are based on an assumed 2 percent average annual interest rate on funds maintained in the construction account. Line 10 indicates the estimated interest income earned on capital improvement program balances. D - 1 1 Me t r o p o l i t a n S t . L o u i s S e w e r D i s t r i ct W a s t e w a t e r S y s t e m F i n a n c i n g t Table 2: Capital Improvement & Replacement Program Financing Plan Fiscal Year Ending June 30 2021 - 2024 FY 2021 FY 2022 FY 2023 FY 2024 Total Actual Projected Projected Projected Sources of Funds 1. Beginning Year Balance (1) 179,379,861$ 285,537,380$ 315,231,086$ 319,361,566$ 2. Revenue Bond Proceeds (2)157,194,201 134,122,073 153,767,351 263,938,949 709,022,575 3. Cash Financing of Construction (PAYGO) 137,578,156 116,500,000 111,000,000 109,000,000 474,078,156 4. State Revolving Loan Proceeds (2) 85,101,000 40,201,000 115,000,000 55,000,000 295,302,000 5. WIFIA Loan - - - - - 6. Capitalized Internal Labor 10,618,145 10,936,689 11,264,790 11,602,733 44,422,357 7. Commercial Paper - - - - - 8. Line of Credit - - - - - 9. Grants & Contributions 1,288,446 716,027 747,480 780,317 3,532,271 10. Interest Income 4,535,702 5,660,000 6,690,000 8,890,000 25,775,702 11.Subtotal: Available Funds 575,695,511$ 593,673,170$ 713,700,707$ 768,573,566$ 1,552,133,060$ Uses of Funds 12. Major Capital Improvements (289,092,596)$ (277,337,200)$ (392,161,361)$ (496,856,909)$ (1,455,448,066)$ 13. Issuance Costs (1,065,534) (1,104,884) (2,177,780) (2,812,903) (7,161,101) 14. Commercial Paper & Line of Credit Payments - - - - - 15.Subtotal: Uses of Funds (290,158,130)$ (278,442,084)$ (394,339,141)$ (499,669,812)$ (1,462,609,167)$ 16.End of Year Balance 285,537,380$ 315,231,086$ 319,361,566$ 268,903,753$ (1) Includes balance in Sanitary Replacement Fund, Project Bond Funds, WW OMCI and Construction Funds, Capital Improvement Surcharge Fund, and the Bond Place Special Taxing Subdistrict Fund. (2) Issuance costs are included in the total proceeds shown. The Metropolitan St. Louis Sewer District Wastewater System Financing D-12 Wastewater Service Charges Table 3 presents a summary of the District-wide charges imposed by the District since the beginning of fiscal year 2015 as well as the approved charges for the forecast period. Wastewater Service Charge Components The previous wastewater rates were adopted on June 9, 2016 and became effective on July 1, 2016, with a schedule of rate increases to take effect on July 1 of 2016, 2017, 2018 and 2019. A new wastewater rate change proposal was submitted to the Rate Commission on March 4, 2019. Under this proposal wastewater bills for typical residential customers were projected to increase by about 3 percent per year in fiscal years 2021 through 2024. Due to COVID-19, the rate increase proposed to go into effect on July 1, 2020 was postponed until October 1; the planned schedule of rate increases resumed July 1, 2021. These rates are part of the fifth set of rates to go through the Rate Commission review procedures mandated by the Charter The Rate Commission completed its deliberations and submitted a Rate Recommendation Report to the Board of Trustees on August 16, 2019.The Board has approved the rate increases from the Rate Recommendation Report for fiscal years 2021 through 2024. The next rate increase is schedule to go into effect on July 1, 2022. The rates consist of a monthly base charge, a uniform volume charge, and extra strength surcharges for biochemical oxygen demand (“BOD”) in excess of 300 milligrams per liter (“mg/l”) or chemical oxygen demand (“COD”) in excess of 600 mg/l, and suspended solids (“SS”) in excess of 300 mg/l. The base charge includes a billing and collection charge component and a system availability charge component that are applicable to all customer classes. A compliance charge is applied to certain non-residential customers, in addition to the base charge, to recover monitoring and pretreatment program related costs. As a part of the 2011 Rate Commission proceedings, the District further differentiated the compliance charge into tiers to better reflect the cost of providing these services to different non-residential customers served by the District. D - 1 3 Me t r o p o l i t a n S t . L o u i s S e w e r D i s t r i c t W a s t e w a t e r S y s t e m F i n a n c i n g The Metropolitan St. Louis Sewer District Wastewater System Financing D-14 Other Charges and Fees In addition to the normal and excess strength wastewater service charges, the District also imposes a number of other charges to meet cost related to growth and system operations. The District imposes District-wide sewer system connection fees per Ordinance 14854 adopted in 2018. Under this system of capital recovery charges, new customers buy into the wastewater system so that they are on an equal equity basis with customers having similar service requirements. The current charge is based on a unit equity value of $2.73 per gallon of wastewater per day attributed to each new customer. For all single-family residential customers, the sewer system connection fee is $1,126. For non-residential customers, the charge varies from $1,126 for customers served by a 5/8 or 3/4-inch water meter to $65,493 for customers served by a 10-inch water meter. A $0.08 per gallon charge for septage or other wastewater hauled to the Bissell Wastewater Treatment Plant is imposed on all permitted waste haulers that serve customers having septic tanks, cesspools, private treatment facilities, or customers otherwise not connected to the District’s sewer system per Ordinance 12716, adopted on August 14, 2008. Costs incurred for sampling and testing wastewater samples from industrial users are recovered by a system of wastewater monitoring fees. These fees are typically published in ordinances updating the wastewater service charges. A number of engineering and service fees are also applied to reimburse the District for various services such as plan review, construction permits, construction related inspections, machine taps, project bid fees, provision of blueprint and microfilm copies, and permitting pretreatment customers. The Metropolitan St. Louis Sewer District Wastewater System Financing D-15 Revenues District revenue is derived primarily from charges for wastewater service, including revenues from extra strength surcharges. Other sources of income include dedicated subdistrict assessments, connection fees, waste hauler permits, industrial monitoring charges, various engineering fees, interest earnings, late charges and other operating income. Customer Growth Table 4 presents a summary of the historical and projected average number of wastewater customers served by the District. Customer projections in FY 2023 and FY 2024 are based on an analysis of historic growth patterns by customer class during the past five years; projections for FY 2022 are based on actual customer connections through February 2022 as well as a forecast of accounts for the remainder of the fiscal year. As indicated by Table 4, the number of metered customers is projected by the District to remain fairly stable reflecting continuation of the modest growth experienced in recent years. Likewise, the number of unmetered customers, principally located within the City of St. Louis, is projected to increase modestly during the study period. Table 4. Historical and Projected Average Customer Accounts Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Metered Customers 1. Single Family 305,900 306,500 306,700 306,700 2. Multi-Family 20,600 20,600 20,500 20,500 3. Non-Residential 24,000 24,000 24,000 24,000 4.Subtotal: Metered Customers 350,500 351,100 351,200 351,200 Unmetered Customers 5. Single Family 56,800 57,000 57,000 57,100 6. Multi-Family 20,900 20,900 21,000 21,000 7. Non-Residential - - - - 8.Subtotal: Unmetered Customers 77,700 77,900 78,000 78,100 Total Customer Accounts 9. Single Family 362,700 363,500 363,700 363,800 10. Multi-Family 41,500 41,500 41,500 41,500 11. Non-Residential 24,000 24,000 24,000 24,000 12.Total: Customer Accounts 428,200 429,000 429,200 429,300 13.% Change 0.2% 0.0% 0.0% The Metropolitan St. Louis Sewer District Wastewater System Financing D-16 Wastewater Volumes Table 5 presents a summary of historical and projected contributed or billed wastewater volumes. Billed wastewater volume is the amount of wastewater flow contributed to the System by residential and non-residential customers. The determination of contributed wastewater volume for unmetered residential customers is based on an analysis of customers with similar characteristics using statistical methods and was updated in the past three years for the most recent Rate Change Proposal. The indicated unit volumes which became effective on July 1, 2016 are shown along with the current allowance below:  14.5 gallons per day (“gpd”) for each room  54.2 gpd for each water closet  45.2 gpd for each bath or separate shower Billable wastewater volumes for all single-family customers with metered water usage are determined on the basis of water billed during the period best equated to contributed wastewater volume. For District customers, this period is from January 1 through March 31. Billed wastewater volume for non-residential customers is equal to actual metered water usage less exemption allowances for any water that does not enter the sewer system. Multifamily customers are either billed based on actual annual water usage or the average annual water usage established during the best equated period for wastewater contribution, depending on the billing method selected by each multifamily customer. The selected billing basis is permanent and cannot be changed. Other projected volumes are based on the recognition of historical billing volumes and trends. Also considered are projections of numbers of customers and average historic billed volume per customer. The District’s FY 2023 budget expects metered residential wastewater volumes to decrease by approximately 6% based on preliminary analysis of winter period water use. Table 7 Historical an The Metropolitan St. Louis Sewer District Wastewater System Financing D-17 Wastewater Revenues Under Approved Rates A summary of historical revenues for fiscal year 2021 and projected wastewater revenues under approved rates for fiscal years 2022 through 2024 is presented in Table 6. Projected billed wastewater revenues do not include allowances for bad debt, refunds or billing adjustments. These billing adjustments are included with other operating revenues in Table 7. Table 5. Historical and Projected Contributed Wastewater Volumes (Ccf) Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Metered Customers 1. Single Family 19,424,215 19,749,033 18,576,389 18,093,409 2. Multi-Family 7,925,390 7,943,288 7,377,197 7,183,946 3. Non-Residential 17,890,592 19,770,557 20,759,085 21,174,267 4.Subtotal: Metered Customers 45,240,197 47,462,878 46,712,671 46,451,621 Unmetered Customers 5. Single Family 6,234,970 6,273,811 6,280,140 6,287,078 6. Multi-Family 4,030,607 4,040,007 4,045,844 4,050,253 7. Non-Residential - - - - 8.Subtotal: Unmetered Customers 10,265,578 10,313,818 10,325,983 10,337,331 Total Contributed Wastewater Volume 9. Single Family 25,659,185 26,022,844 24,856,529 24,380,487 10. Multi-Family 11,955,997 11,983,295 11,423,041 11,234,198 11. Non-Residential 17,890,592 19,770,557 20,759,085 21,174,267 12.Total: Contributed Volumes 55,505,775 57,776,696 57,038,654 56,788,952 13.% Change 4.1% -1.3% -0.4% The Metropolitan St. Louis Sewer District Wastewater System Financing D-18 Other Operating Revenues Projected other wastewater utility revenues are presented in Table 7. These revenues are grouped in the same manner as summarized in the District’s budget documents. All of these revenues are used to offset operating costs. The District anticipates receiving contributions from Missouri American Water for a share of capacity in the Lower Meramec River Wastewater Treatment Plant. District staff estimates that this revenue will average about $1.7 million per year for FY 2022-2024. Table 8 Historical and Projected Billed Wastewater Service Revenue Table 6. Historical and Projected Wastewater Revenues under Approved and Recommended Rates Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Metered 1. Residential 260,617,803$ 273,260,284$ 274,955,791$ 281,363,685$ Non-Residential 2. Normal Strength 102,123,668 113,844,118 122,298,088 129,359,752 3. Extra Strength 5,816,416 6,006,802 6,636,607 6,823,134 4.Subtotal: Metered Customers 368,557,888$ 393,111,204$ 403,890,486$ 417,546,571$ Unmetered 5. Residential 50,768,635$ 53,133,283$ 55,389,104$ 57,501,930$ Total Wastewater Revenues 6. Residential 311,386,438$ 326,393,568$ 330,344,896$ 338,865,615$ 7. Non-Residential 107,940,084 119,850,920 128,934,695 136,182,886 8.Total: Wastewater Revenues 419,326,522$ 446,244,487$ 459,279,591$ 475,048,501$ 9.% Change -6.4%2.9%3.4% The Metropolitan St. Louis Sewer District Wastewater System Financing D-19 Table 7. Projected Other Wastewater Operating Revenues Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Other Operating Revenue 1. Billing Adjustments (1) 4,181,157$ 5,091,997$ 4,793,200$ 4,980,400$ 2. Bad Debt Provision (5,353,771) (5,470,118) (5,735,040) (5,964,000) Other Fees 3. Construction Inspection Fees 595,194$ 891,615$ 853,000$ 853,000$ 4. Waste Hauler Fees 628,679 671,055 668,000 668,000 5. All Other Fees (2) 867,050 830,286 784,000 784,000 6.Subtotal: Other Fees 2,090,923$ 2,392,956$ 2,305,000$ 2,305,000$ 7. Miscellaneous Revenues (3) 5,308,489 6,437,168 3,890,022 4,167,200 8.Subtotal: Other Operating Revenue 6,226,797$ 8,452,003$ 5,253,182$ 5,488,600$ 9. Other Non-Operating Revenue (4) (284,410) (543,623) 544,000 544,000 10. Connection Fee Revenue 1,592,052 1,257,842 1,124,000 1,124,000 11.Total: Other Miscellaneous Revenue 7,534,439$ 9,166,222$ 6,921,182$ 7,156,600$ % Change 21.7% -24.5% 3.4% (1) Includes late charges, refunds, adjustments, lien interest and fees, and other adjustments. (2) Includes plan review fees, submittal fees, monitoring cost fees, pretreatment discharge permits, and all other fees. (3) Includes reimbursements, reimbursable engineering and maintenance, Missouri American Water contributions, settlement proceeds, and all other miscellaneous revenue. (4) Includes rental income, clean water surcharge, and sale of fixed assets. The Metropolitan St. Louis Sewer District Wastewater System Financing D-20 Revenue Requirements The revenue required to provide for the continued operation of the District must be sufficient to meet the cash requirements for System operation. Revenue requirements include (1) total System operation and maintenance expenses; (2) expenditures for routine and major capital improvements met directly from revenues; (3) total System debt service (consisting of principal and interest payments); and (4) provision for an adequate operating reserve. Projections of the cash requirements to meet these System expenditures for the period of 2022 through 2024 from the rates approved by the Board for those years are presented in this section. Operation and Maintenance Expense Operation and maintenance expense includes the total annual salaries and wages of District personnel, costs for materials and supplies, fuel and electrical power costs and other costs such as employee benefits, insurance, and contract services. Since these costs are an ongoing annual obligation of the District, they are met from wastewater and stormwater operating revenues as they are incurred. Wastewater related operation and maintenance expense for fiscal year 2021 are actual results, fiscal year 2022 are forecasted using actual results through February 2022 and projections for the remainder of the year, and fiscal years 2023 and 2024 are the District’s preliminary budgets for those years. The Metropolitan St. Louis Sewer District Wastewater System Financing D-21 Routine Capital Improvements Expenditures for routine annual capital improvements include those costs that tend to be routinely incurred each year for normal replacements such as vehicles and office equipment, and minor improvements or repairs. Since the costs of these improvements are a continuing expense to be met each year, the District appropriately finances these expenditures from current wastewater revenues. These expenditures are included in the District's annual budgets as Capital Outlay costs. Cash Financing of Capital Improvements In addition to cash financing routine capital improvements, the District partially finances major capital improvements on a cash or pay-as-you-go basis. The District is expected to continue to cash finance all routine capital improvements and a portion of the CIRP. The amount of projected cash financing of the major capital improvement program was previously identified on Line 3 of Table 2. Debt Service The District issued its first District-wide series of revenue bonds in April 2004 and additional Senior Bonds were issued in November 2006, November 2008, January 2010, December 2011, August 2012, November 2012, December 2013, December 2015, December 2016, December 2017, December 2018, November 2019, December 2020, May 2021, and May 2022 with the 2010 issue being issued under the Build America Bond federally subsidized program, the 2018A WIFIA loan with the EPA, and the 2021 and 2022 issues as Direct Placement Bonds with Morgan Stanley that are on parity with the District’s Senior Bonds. Total Parity Debt issued to date totals $2,150,587,204 as indicated by the table below. The District has also issued eighteen subordinate series of revenue bonds through the Missouri State Revolving Fund (“SRF”) and Department of Natural Resources Direct Loan program. The total amount of Subordinate Bonds issued to date is $769,771,000. The Metropolitan St. Louis Sewer District Wastewater System Financing D-22 Additional revenue bonds are assumed to have 30-year terms with an assumed interest rate scale of approximately 4.35 percent in fiscal years 2023 and 2024. Additional revenue bonds issued as part of the SRF loan program are expected to have 20-year terms and a net effective annual interest and administration cost of about 1.75 percent per year to 2.25 percent per year. Table 8 presents debt service in two ways: by Payments to Sinking Fund, which is used for modeling the District's cash flow in Table 9, and Payments to Bondholders, which is used to determine coverage in accordance with the District's bond covenants. The Payments to Bondholders for FY 2021 through FY 2024 shown in Table 8 were provided by the District's co-Financial Advisor, PFM Financial Advisors, LLC. The scheduling of the proposed revenue bond issues and SRF loans reflects current planning considerations, as recognized for purposes of this report. This is not intended to preclude the possible modification or rescheduling of issues, if desirable, due to market conditions, local financing policy, or other practical considerations. The Metropolitan St. Louis Sewer District Wastewater System Financing D-23 Table 8. Projected Debt Service Requirements Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Payments to Sinking Fund Revenue Bonds Existing 81,376,563$ 82,202,907$ 81,834,129$ 77,950,189$ Projected - 390,040 14,358,644 28,068,951 Subtotal: Revenue Bonds 81,376,563$ 82,592,946$ 96,192,773$ 106,019,139$ SRF Loans Existing 38,397,368$ 39,508,542$ 40,751,249$ 41,989,369$ Projected - - 2,219,250 5,794,740 Subtotal: SRF Loans 38,397,368$ 39,508,542$ 42,970,499$ 47,784,109$ Total: Debt Service to Sinking Fund 119,773,931$ 122,101,488$ 139,163,271$ 153,803,249$ Payments to Bondholders Revenue Bonds Existing 81,685,268$ 82,124,136$ 84,577,942$ 80,013,224$ Projected - - 12,130,058 25,428,326 Subtotal: Revenue Bonds 81,685,268$ 82,124,136$ 96,708,000$ 105,441,550$ SRF Loans Existing 37,616,306$ 40,459,625$ 41,792,693$ 44,155,085$ Projected - - - 4,438,500 Subtotal: SRF Loans 37,616,306$ 40,459,625$ 41,792,693$ 48,593,585$ Total: Debt Service to Bondholders 119,301,574$ 122,583,762$ 138,500,693$ 154,035,135$ The Metropolitan St. Louis Sewer District Wastewater System Financing D-24 Operating Reserve Allowance The operating reserve allowance is a recommended balance to accommodate fluctuations in annual revenues and expenditures. The existing revenue bond covenants require the District to maintain a minimum balance equal to 45 days of operation and maintenance expense. For this report, an operating reserve allowance equal to 60 days or about 16.4 percent of annual operating expense is assumed to be maintained, as provided by the current budget. Operating expense, as routinely presented in the District's annual budgets, is equal to the sum of operation and maintenance expense and routine annual capital improvements. The operating reserve for wastewater operations is projected to increase to about $138 million in fiscal year 2024. Financial Analysis A pro forma cash flow statement showing projected wastewater revenues and revenue requirements for the District during the study period is presented in Table 9. System revenues must be at least sufficient to finance the costs of operation and maintenance expense, routine annual capital improvements, and debt service costs on existing and proposed debt, while maintaining adequate operating reserve funds and complying with all revenue bond debt service coverage requirements. Annual revenues can also be used to finance a portion of the major capital improvement program. Table 9 presents annual wastewater revenues and expenditures. Line 1 of Table 9 shows projected revenue under the approved rates for each year of the study period. The Metropolitan St. Louis Sewer District Wastewater System Financing D-25 Table 9. Comparison of Projected Wastewater Revenue with Projected Revenue Requirements Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Wastewater Revenue 1 User Charge Revenue 419,326,522$ 446,244,487$ 459,279,591$ 475,048,501$ Other Miscellaneous Revenue 2. Other Operating Revenue (1) 6,226,797$ 8,452,003$ 5,253,182$ 5,488,600$ 3. Connection Fee Revenue 1,592,052 1,257,842 1,124,000 1,124,000 4.Subtotal: Other Miscellaneous Revenue 7,818,849$ 9,709,844$ 6,377,182$ 6,612,600$ 5. Interest Income - Operating and Capital (2) 5,740,324 7,435,003 8,616,024 11,264,405 6.Total: Wastewater Revenue 432,885,695$ 463,389,335$ 474,272,797$ 492,925,506$ Operating Expenses 7. General Fund Operating Expenses 165,055,194$ 169,911,058$ 184,014,455$ 189,459,921$ 8. Other Operating Expenses 15,788,482 2,524,128 4,472,778 5,549,774 9.Subtotal: Operating Expenses (O&M)180,843,676$ 172,435,186$ 188,487,233$ 195,009,695$ 10.Net Revenue Available for Debt Service 252,042,019$ 290,954,149$ 285,785,564$ 297,915,811$ Debt Service (Payments to Sinking Fund) Revenue Bonds 11. Existing 81,376,563$ 82,202,907$ 81,834,129$ 77,950,189$ 12. Projected - 390,040 14,358,644 28,068,951 13.Subtotal: Revenue Bonds 81,376,563$ 82,592,946$ 96,192,773$ 106,019,139$ SRF Loans 14. Existing 38,397,368$ 39,508,542$ 40,751,249$ 41,989,369$ 15. Projected - - 2,219,250 5,794,740 16.Subtotal: SRF Loans 38,397,368$ 39,508,542$ 42,970,499$ 47,784,109$ 17.Total: Debt Service 119,773,931$ 122,101,488$ 139,163,271$ 153,803,249$ Other Revenues and Expenditures 18. Other Non-Operating Revenue (284,410)$ (543,623)$ 544,000$ 544,000$ 19. Routine Annual Capital Improvements (2,848,166) 4,297,138 5,054,200 5,160,338 20. Cash Financing of Capital Improvements (3) 140,111,095 122,160,000 117,690,000 117,890,000 21. Non-recurring Projects & Studies 10,555,396 10,915,553 10,520,321 8,999,673 22. Commercial Paper & Line of Credit Payments - - - - 23.Subtotal: Other Expenditures 147,818,325$ 137,372,691$ 133,264,521$ 132,050,012$ 24.Net Annual Balance (4) (15,834,647)$ 30,936,348$ 13,901,772$ 12,606,551$ 25. Beginning Balance (5) 96,667,659$ 80,833,012$ 111,769,359$ 125,671,131$ 26. Ending Balance (5) 80,833,012 111,769,359 125,671,131 138,277,683 Debt Service (Payments to Bondholders) 27. Revenue Bonds 81,685,268$ 82,124,136$ 96,708,000$ 105,441,550$ 28. SRF Loans 37,616,306 40,459,625 41,792,693 48,593,585 29.Total: Debt Service 119,301,574$ 122,583,762$ 138,500,693$ 154,035,135$ Debt Service Coverage 30. Revenue Bonds 3.09 3.54 2.96 2.83 31. Total Debt 2.11 2.37 2.06 1.93 (1) Includes interest earned from the Missouri American Water Loan and City of Arnold. (2) Does not match ACFR due to exclusion of $4,435,778 net unrealized losses. (3) Includes return of interest to capital funds. (4) Net Annual Balance is Net Revenue Available for Debt Service (Line 10) less Debt Service and Other Expenditures (Lines 17 and 23) plus Other Non-Operating Revenue (Line 18) (5) Includes funds set aside for a minimum operating reserve equal to 60 days of operating expenses. The Metropolitan St. Louis Sewer District Wastewater System Financing D-26 As indicated on Lines 2 and 3 of Table 9, other operating revenue and connection fee revenue, previously projected in Table 7, are available for the wastewater system. Projected revenue from District-wide connection fees are expended as part of the cash financing of major improvements line item (Line 20), which is the sum of Line 3 and Line 10 of Table 2. Interest income that is available from restricted or reserve funds for operating purposes is shown on Line 5 of Table 9. Interest income is estimated based on a 2.0 percent annual interest rate applied to the average beginning and end of year fund balances. Total revenue available for wastewater utility operations is shown on Line 6 of Table 9. Total operation and maintenance expense for the wastewater system, is shown on Lines 7 and 8 of Table 9. Line 10 shows the estimated net revenue remaining after deducting total projected operation and maintenance expense (Line 9) from total wastewater revenue (Line 6). This net wastewater revenue is available or pledged for debt service coverage purposes. Debt service requirements on existing and projected revenue bonds and SRF loans are presented on Lines 11 through 17. This debt financing program will provide a mechanism to spread the costs of major capital improvements over a portion of their useful lives and more equitably recover these costs from both current and future users of the improvements. Line 18 of Table 9 shows other non-operating revenue of the wastewater utility, previously shown on Line 9 of Table 7. Line 19 of Table 9 shows the total amount of routine annual improvements which are completely financed by annual revenues. Funds used to finance a portion of the major capital improvement program are reported as a cost on Line 20 of Table 9 and as a source of funds on Line 3 of Table 2. The net annual balance of annual revenues less expenditures is presented on Line 24. Lines 25 and 26 of Table 9 show the projected combined beginning and ending cash balances of the wastewater utility for each year of the study period exclusive of the targeted operating reserve balances. District staff provided information regarding the unencumbered balance of funds available at the beginning of fiscal year 2022. The Metropolitan St. Louis Sewer District Wastewater System Financing D-27 Wastewater Bill Comparison Table 10 presents a comparison of typical wastewater service bills under approved rates for fiscal years 2022 through 2024 for various billable wastewater volumes and customer types. As indicated in the table, the monthly wastewater bill for the average metered residential customer contributing 6 Ccf of wastewater per month will increase by 3.4 percent in 2022 with additional increases averaging 3.6 percent in FY 2023 and 2024. T Table 11 presents the results of a rate survey of the 50 largest U.S. cities based on published rates as of April 2022. St. Louis’ rates have risen more quickly than some of the other large cities in this survey, resulting in above average residential charges while the commercial charges are still below average for the representative customers. Table 10. Typical Bill Comparison Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Actual Proposed Proposed Wastewater Bills Single Family Residential (Metered) 1. 1 Ccf per month $ 31.40 $ 32.48 $ 33.61 $ 34.84 2. 5 Ccf per month $ 51.40 $ 53.16 $ 55.01 $ 57.04 3. 6 Ccf per month $ 56.40 $ 58.33 $ 60.36 $ 62.59 4. 10 Ccf per month $ 76.40 $ 79.01 $ 81.76 $ 84.79 5. 15 Ccf per month $ 101.40 $ 104.86 $ 108.51 $ 112.54 6. 20 Ccf per month $ 126.40 $ 130.71 $ 135.26 $ 140.29 Multi-Family Residential (Metered) 7. 20 Ccf per month $ 126.40 $ 130.71 $ 135.26 $ 140.29 8. 40 Ccf per month $ 226.40 $ 234.11 $ 242.26 $ 251.29 9. 60 Ccf per month $ 326.40 $ 337.51 $ 349.26 $ 362.29 Non-Residential (Normal Strength Wastewater) 10. 70 Ccf per month $ 380.84 $ 393.76 $ 407.47 $ 422.64 11. 100 Ccf per month $ 530.84 $ 548.86 $ 567.97 $ 589.14 12. 160 Ccf per month $ 830.84 $ 859.06 $ 888.97 $ 922.14 Non-Residential (Excess Strength Wastewater) (1) 13. 70 Ccf per month $ 593.27 $ 611.24 $ 632.31 $ 653.84 14. 100 Ccf per month $ 771.16 $ 794.90 $ 822.33 $ 850.69 15. 160 Ccf per month $ 1,099.05 $ 1,133.65 $ 1,172.85 $ 1,214.05 (1) The 70, 100, and 160 Ccf bills assume excess strength of 150, 200, and 250 mg/l, respectively, of suspended solids and BOD. The Metropolitan St. Louis Sewer District Wastewater System Financing D-28 Meter Size 5/8" 5/8" 3/4" 1" 2" Gallons 4,488 5,984 11,221 74,805 7,480,500 Ccf 6.0 Rank 8.0 Rank 15.0 Rank 100.0 Rank 10000.0 Rank Population Rank ($) ($) ($) ($) ($) Albuquerque 32 NM 13.10 49 16.47 49 28.24 44 174.10 44 17,128.35 44 Arlington 50 TX 37.03 24 44.93 25 72.58 27 419.20 28 39,587.40 28 Atlanta 38 GA 76.70 6 108.08 4217.91 3 1,551.56 2 156,882.56 2 Austin 11 TX 59.76 9 79.64 8147.87 9 920.30 8 91,010.30 8 Bakersfield 48 CA 18.36 47 18.36 48 18.36 50 169.00 46 16,900.00 46 Baltimore 30 MD 69.94 7 88.90 7163.96 7 993.70 6 94,976.24 6 Boston 24 MA 45.12 16 62.36 13 117.00 12 813.00 9 77,295.00 9 Charlotte 16 NC 45.50 15 56.36 16 94.37 17 568.98 18 54,373.85 17 Chicago 3 IL 18.54 46 24.71 43 46.34 39 308.94 39 30,894.47 38 Colorado Springs 40 CO 30.83 33 35.93 36 53.78 38 315.76 38 28,530.76 39 Columbus 14 OH 43.31 17 53.03 17 87.05 19 500.15 22 52,414.15 18 Dallas 9 TX 29.11 36 37.20 34 67.32 31 350.65 33 34,139.87 33 Denver 19 CO 36.03 25 43.49 26 76.45 26 407.35 29 37,436.82 29 Detroit 27 MI 32.15 30 40.68 30 70.57 28 442.23 26 42,718.59 26 El Paso 23 TX 34.73 28 39.71 32 57.14 37 294.53 40 25,021.92 40 Fort Worth 13 TX 31.87 32 40.21 31 69.70 29 421.75 27 40,642.19 27 Fresno 34 CA 25.75 41 25.75 42 25.75 46 197.30 43 19,730.00 43 Houston 4 TX 53.50 12 74.50 9148.00 8 752.45 11 74,018.03 10 Indianapolis 15 IN 60.41 8 73.46 10 121.83 10 722.33 12 70,661.87 11 Jacksonville 12 FL 45.96 14 58.74 15 110.52 14 530.88 20 47,969.60 21 Kansas City 36 MO 86.81 4 107.29 5178.97 6 1,049.37 5 102,425.37 5 Las Vegas 26 NV 20.50 43 20.50 45 20.50 48 ‐ ‐ Long Beach 42 CA 9.80 51 10.58 51 13.34 51 50.28 48 3,979.74 48 Los Angeles 2 CA 34.80 26 46.40 23 87.00 20 580.00 17 58,000.00 16 Louisville 29 KY 42.06 19 49.78 20 76.80 25 484.54 25 46,540.51 24 Memphis 28 TN 10.17 50 13.57 50 25.44 47 169.58 45 16,958.29 45 Mesa 37 AZ 32.04 31 38.14 33 59.49 34 337.21 36 32,215.21 35 Miami 44 FL 27.64 38 41.28 29 89.00 18 700.65 14 69,771.96 13 Milwaukee 31 WI 18.57 45 22.63 44 36.84 42 214.10 42 20,319.19 42 Minneapolis 46 MN 37.36 23 47.38 22 86.10 23 519.25 21 50,158.40 20 Nashville 21 TN 33.76 29 46.28 24 119.94 11 663.38 15 62,723.93 15 New York City 1 NY 39.11 22 52.15 19 97.79 16 651.90 16 65,190.00 14 Oakland 45 CA 23.91 42 26.65 41 28.02 45 156.37 47 13,719.37 47 Oklahoma City 22 OK 28.64 37 35.80 37 60.89 32 368.89 31 35,860.81 31 Omaha 39 NE 54.68 11 60.88 14 82.58 24 346.08 35 31,036.08 37 Philadelphia 6 PA 27.42 39 34.16 38 59.71 33 350.40 34 33,736.22 34 Phoenix 5 AZ 14.84 48 19.79 47 37.10 41 220.00 41 22,000.00 41 Portland 25 OR 79.81 5 102.91 6183.76 5 1,265.85 3 125,708.85 3 Raleigh 41 NC 39.82 21 49.02 21 86.32 21 487.46 24 46,083.26 25 Sacramento 35 CA 19.85 44 19.85 46 19.85 49 ‐ ‐ San Antonio 7 TX 26.14 40 33.11 39 58.94 35 357.22 32 34,863.71 32 San Diego 8 CA 43.16 18 52.73 18 86.23 22 493.04 23 47,874.44 22 San Francisco 17 CA 101.03 2 132.97 2244.76 2 951.21 7 94,605.21 7 San Jose 10 CA 41.64 20 41.64 28 41.64 40 763.00 10 47,700.00 23 Seattle 18 WA 102.06 1 136.08 1255.15 1 1,701.00 1 170,100.00 1 Tucson 33 AZ 34.77 27 42.03 27 67.44 30 375.90 30 36,303.00 30 Tulsa 47 OK 50.81 13 64.81 12 113.83 13 713.71 13 70,047.04 12 Virginia Beach 43 VA 30.81 34 30.81 40 30.81 43 39.32 49 117.98 49 Washington, D.C. 20 DC 88.79 3 110.07 3184.55 4 1,088.95 4 106,424.95 4 Wichita 49 KS 29.71 35 36.04 35 58.19 36 327.16 37 31,653.25 36 St. Louis MSD MO 58.33 10 68.67 11 104.86 15 548.86 19 51,731.86 19 Median 34.80 43.49 76.45 442.23 42,718.59 Average 41.11 51.30 88.05 526.06 50,591.78 (a) Las Vegas and Virginia Beach Commercial Rates are based on the type of business and number of fixtures. Each customer will have a different rate. (b) Oklahoma City Rates are based on a meter multiplier. This must be combined with the base rate in order to calculate an exact bill. (c ) Sacramento's commerical sewer rate is charged based on a factor associated with square footage, not consumption as in our analysis. (d) Half of Washington's combined Water and Sewer Metering Fee is included. Table 11 ‐ Survey of Typical Monthly Wastewater Bill ‐ 50 Largest US Cities Residential Non‐Residential Small Medium Large Commercial Industrial The Metropolitan St. Louis Sewer District Bond Covenant Compliance D-29 Bond Covenant Compliance Rate Covenants The majority of all District wastewater and stormwater revenues are deposited into and accounted for by separate wastewater and stormwater operating funds. Portions of these revenues are transferred to the General Fund, as required, to pay each utility’s portion of operation and maintenance expense and routine capital expenditures. Section 6.1 of the Master Bond Ordinance requires the District to operate the System on a revenue producing basis and at all times to prescribe, fix, maintain, and collect rates, fees, and other charges for the services, facilities, and commodities furnished by the System fully sufficient at all times to pay annual operation and maintenance expense, provide a reasonable operating reserve, produce net revenues in each fiscal year equal to at least 1.25 times the Debt Service Requirement on all Senior Bonds currently outstanding and 1.15 times the Debt Service Requirement on all Bonds then outstanding and accumulate sufficient funds to meet the costs of major renewals, replacements, repairs, additions, betterments, and improvements to the System to keep it in good working condition. In addition, Section 3.020(16) of the Charter requires the District to establish fair and reasonable schedules of charges and Section 7.130 of the Charter requires a balanced budget. Based on the detailed analysis of the System’s revenue and revenue requirements, as presented in this report, the District will continue to meet the rate covenant requirements after issuance of the Series 2022B Bonds. In addition, the existing wastewater rates in effect for fiscal year 2022 and the rates approved for fiscal years 2023 and 2024 are projected to provide sufficient user charge revenues, together with other available revenue sources, to meet all projected revenue requirements related to the proposed CIRP and remain in compliance with the rate covenants throughout the study period. Reasonable Charges Section 6.7 of the Master Bond Ordinance requires that: “None of the facilities or services afforded by the System will be furnished to any user without a reasonable charge being made therefor.” Current and future rates for the System are based on detailed cost of service analyses to provide reasonable assurance that each customer class pays its proportionate share of the costs required to provide utility service. All users of the System are required to pay their proportionate share of operating and maintenance expenses in compliance with the Master Capitalized terms are defined in the Bond Ordinance. The Metropolitan St. Louis Sewer District Bond Covenant Compliance D-30 Bond Ordinance requirement and Federal user charge requirements. No free service is being provided by the District. Adequate Maintenance Section 6.2 of the Bond Ordinance requires the District to operate the System in an efficient and economical manner and maintain the System at all times in good repair and sound operating condition. The System has historically been adequately maintained and found to be in good working order. Although costs are considered reasonable and result in rates comparable to similar sized utilities, the District is continuously looking at ways to enhance efficiency to manage costs and keep utility rates as low as possible. Additional Bonds Tests In order to issue additional revenue bonds on parity with prior Senior Bonds, the District must have sufficient revenues to meet either a preceding year or ensuing year additional bonds coverage test. Section 5.3 of the Master Bond Ordinance requires historical Net Operating Revenues and Investment Earnings (“net revenues”) for a period of 12 consecutive months of the most recent 18 consecutive months prior to the issuance of the proposed Senior Bonds to be at least equal to (i) 1.25 times the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds, and (ii) 1.15 times the Maximum Annual Debt Service Requirement on all Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds. For the ensuing year additional bonds test, the Master Bond Ordinance requires the forecasted net revenues for each fiscal year in the Forecast Period (the three consecutive fiscal years commencing with the fiscal year in which any proposed Senior Bonds are to be issued) to be at least (i) 1.25 times the Maximum Annual Debt Service Requirement on all Senior Bonds that will be Outstanding immediately after the issuance of the proposed Senior Bonds, and (ii) 1.15 times the Maximum Annual Debt Service Requirement on all Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds. Revenue adjustments are allowed for the preceding year test for any rate increase enacted prior to the delivery date of the proposed Senior Bonds and not fully reflected in the historical Net Operating Revenues actually received during the 12-month period. A similar adjustment is allowed for the ensuing year test if the rates were actually adopted by ordinance prior to issuance of the bonds. Without a future rate adjustment provision for the ensuing year test, the normal inflationary increases in operation and maintenance expenses could outpace the revenues obtained from a relatively stable customer base such that future net revenues and ensuing year debt service coverage may significantly decrease towards the end of the Forecast Period. This may require the District to enact multiple year rate increases prior to issuance of The Metropolitan St. Louis Sewer District Bond Covenant Compliance D-31 the bonds, set rates at a current year debt service coverage level of 1.50 times the Debt Service Requirement or higher to account for the expected coverage deterioration, or only rely on the historic year test to issue additional Senior Bonds. The Master Bond Ordinance also specifies additional bond tests for the issuance of any Subordinate Bonds. These tests are identical to the additional Senior Bond tests. The District has never defaulted on any District-wide or subdistrict revenue bond payment and is expected to be able to issue additional revenue bonds throughout the study period. Table 12 presents the results of the rate covenant and additional bond coverage tests during the study period and projects revenue based on the approved rate increases through 2024. As indicated by Line 4 of Table 12, the indicated annual rate covenant coverage ranges from 2.83 times annual debt service to 3.65 times annual senior lien debt service, exceeding the 1.25 minimum requirement. Likewise, the additional bond coverage levels for Senior Bonds, as shown on Lines 11 and 16 of Table 12, exceed their 1.25 minimum requirements throughout the study period. Coverage indicated for total debt is also above the 1.15 minimum requirement throughout the study period, as shown on Lines 12 and 17 of Table 12. Lines 19 and 20 present the ensuing year additional bonds test as calculated for the Series 2022B Bonds and does not consider the potential impact of future rate increases or bond issues. The District is in compliance with the ensuing year additional bonds test as the senior lien coverage exceed 1.25 times and total debt coverage exceed 1.15 times in each of the next two years. The Metropolitan St. Louis Sewer District Bond Covenant Compliance D-32 a Table 12. Debt Service Coverage under Projected Revenue Levels Fiscal Year Ending June 30 FY 2021 FY 2022 FY 2023 FY 2024 Actual Projected Projected Projected Rate Covenant Coverage 1. Projected Net Revenue (1) 252,042,019$ 290,954,149$ 285,785,564$ 297,915,811$ Projected Debt Service to Bondholders (2) 2. Senior Lien Bonds 81,685,268$ 82,124,136$ 96,708,000$ 105,441,550$ 3. Total Debt (3) 119,301,574$ 122,583,762$ 138,500,693$ 154,035,135$ Debt Service Coverage Levels 4. Senior Lien Bonds (4) 3.09 3.54 2.96 2.83 5. Total Debt (5) 2.11 2.37 2.06 1.93 Additional Parity Test Coverage Projected Maximum Annual Debt Service (6) 6. Senior Lien Bonds 102,095,982$ 108,569,232$ 117,804,732$ 133,653,982$ 7. Total Debt 130,222,365 136,696,865 145,932,865 168,936,125 Preceding Year Test 8. Net Revenue for Prior Fiscal Year 432,500,409$ 252,042,019$ 290,954,149$ 285,785,564$ 9. Net Revenue Adjustment (7) 46,061,294 26,464,412 6,400,991 9,716,709 10. Adjusted Net Revenue 478,561,702$ 278,506,431$ 297,355,140$ 295,502,273$ Preceding Year Debt Service Coverage Levels 11. Senior Lien Bonds (8) 4.69 2.57 2.52 2.21 12. Total Debt (9) 3.67 2.04 2.04 1.75 Ensuing Year Tes t 13. Net Revenue for Ensuing Fiscal Year 290,954,149$ 285,785,564$ 297,915,811$ 332,294,545$ 14. Net Revenue Adjustment (10) - - - - 15. Adjusted Net Revenue 290,954,149$ 285,785,564$ 297,915,811$ 332,294,545$ Ensuing Year Debt Service Coverage Levels 16. Senior Lien Bonds (11) 2.85 2.63 2.53 2.49 17. Total Debt (12) 2.23 2.09 2.04 1.97 Ensuing Year Additional Bonds Test - Current Issue 18. Net Revenue for Ensuing Year (13) 190,443,611$ 225,564,307$ 257,265,444$ 19. Senior Lien Bonds (13) 1.75 2.08 2.37 20. Total Debt (13) 1.39 1.65 1.88 (1) Net revenue as shown on Line 10 of Table 9. Includes the impact of approved rate increases each year. (2) Projected actual payments to of principal and interest from the sinking fund to bondholders. (3) Includes senior revenue bonds and subordinate debt obligations. (4) Line 1 / Line 2. The Bond Ordinance requires net revenue to equal or exceed 1.25 times actual senior lien debt service. (5) Line 1 / Line 3. The Bond Ordinance requires net revenue to equal or exceed 1.15 times actual total debt service. (6) Maximum future debt service for all series of revenue bonds issued in previous years or during the current fiscal year. (7) Adjustment for revenues increases to be fully operative July 1 of the current fiscal year as allowed by the Bond Ordinance. (8) Line 10 / Line 6. The Bond Ordinance requires adjusted net revenue for the preceding fiscal year to equal or exceed 1.25 times the maximum annual debt service on all then outstanding senior lien obligations. (9) Line 10 / Line 7. The Bond Ordinance requires adjusted net revenue for the preceding fiscal year to equal or exceed 1.15 times the maximum annual debt service on all then outstanding debt obligations. (10) Adjustment for revenues increases not permitted for ensuing year coverage test unless already adopted by the Board. (11) Line 15 / Line 6. The Bond Ordinance requires net revenue for the ensuing three fiscal years to equal or exceed 1.25 times the maximum annual debt service on all then outstanding senior lien revenue bonds. (12) Line 15 / Line 7. The Bond Ordinance requires net revenue for the ensuing three fiscal years to equal or exceed 1.15 times the maximum annual debt service on all then outstanding bonds. (13) The test for the currently proposed issue considers the next two fiscal years, with adjustments for future rate increases adopted by the Board. The Metropolitan St. Louis Sewer District Principal Assumptions D-33 Principal Assumptions In conducting our analyses and in forming an opinion of future operations summarized in this report, Raftelis has made certain assumptions with respect to conditions, events, and circumstances that may occur in the future. The methodology utilized by Raftelis in performing the analysis follows generally accepted practices for such projections. Such assumptions and methodologies are summarized in this report and are reasonable and appropriate for the purpose for which they are used. While we believe the assumptions are reasonable and the projection methodology valid, actual results may differ materially from those projected, as influenced by the conditions, events, and circumstances that actually occur. The principal assumptions used in the forecast of future operations are as follows: 1. In preparation of this report, Raftelis has relied on certain historical, financial, and statistical data supplied by District staff. While such data is considered reliable, Raftelis has not independently verified the detailed accuracy of such data. 2. The District’s estimates of content, scheduling, and cost of the capital improvement program will continue as projected and will be sufficient to comply with the initial terms of the Consent Decree. 3. Billed wastewater volume will continue to decrease slightly over the forecast period. 4. Debt service for the revenue bonds proposed to be issued, including the Series 2022B Bonds, will be approximately as estimated as of the date of this report 5. The District will maintain a minimum operating reserve balance at all times that is at least equal to 60 days of operating expenditures. 6. There will be no material changes in federal and state laws or regulations that would adversely impact the District’s ability to secure tax-exempt financing for its System, place more stringent limitations on wastewater effluent discharges, materially increase the cost of constructing or operating the wastewater system, or otherwise adversely impact operations of the System. 7. The general economy that impacts System costs and users’ capabilities to pay wastewater service charges will remain relatively stable at current conditions. [ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX E Form of Opinion of Co-Bond Counsel [ THIS PAGE INTENTIONALLY LEFT BLANK ] E-1 FORM OF OPINION OF CO-BOND COUNSEL (SERIES 2022B BONDS) Gilmore & Bell, P.C., St. Louis, Missouri, and White Coleman & Associates, LLC, St. Louis, Missouri, Co-Bond Counsel, propose to issue their approving opinions upon the issuance of the Series 2022B Bonds in substantially the following form: The Metropolitan St. Louis Sewer District St. Louis, Missouri BofA Securities, Inc. St. Louis, Missouri Re: $109,070,000 The Metropolitan St. Louis Sewer District, Wastewater System Improvement and Refunding Revenue Bonds, Series 2022B Ladies and Gentlemen: We have acted as co-bond counsel in connection with the issuance by The Metropolitan St. Louis Sewer District (the “District”), of the above-captioned bonds (the “Bonds”). In this capacity, we have examined the District’s Charter, the law and the certified proceedings, certifications and other documents that we deem necessary to render this opinion. The Bonds are issued pursuant to Master Bond Ordinance No. 11713 adopted by the Board of Trustees of the District on April 22, 2004, as supplemented by Ordinance No. 15906 adopted by the Board of Trustees of the District on May 12, 2022 (collectively, the “Bond Ordinance”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Bond Ordinance. Regarding questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based on and subject to the foregoing, we are of the opinion, under existing law, as follows: 1. The Bonds have been duly authorized, executed and delivered by the District and are valid and legally binding limited obligations of the District, payable solely from the Pledged Revenues of the District’s sanitary sewer system, after providing for the costs of operation and maintenance thereof. The Bonds do not constitute general obligations of the District nor do they constitute an indebtedness of the District within the meaning of any constitutional, statutory or charter provision, limitation or restriction, and the taxing power of the District is not pledged to the payment of the Bonds. 2. The Bond Ordinance has been duly adopted by the Board of Trustees of the District and constitutes a valid and legally binding obligation of the District enforceable against the District. The Bond Ordinance creates a valid lien on the revenues and other funds pledged by the Bond Ordinance for the security of the Bonds on a parity with any Senior Bonds issued or to be issued as provided under the Bond Ordinance. E-2 3. The interest on the Bonds is excludable from gross income for federal income tax purposes and is exempt from income taxation by the State of Missouri. The interest on the Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax. The opinions set forth in this paragraph are subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The District has covenanted to comply with all of these requirements. Failure to comply with certain of these requirements may cause the interest on the Bonds to be included in gross income for federal and State of Missouri income tax purposes retroactive to the date of issuance of the Bonds. The Bonds have not been designated as “qualified tax-exempt obligations” for purposes of Section 265(b) of the Code. We express no opinion regarding the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds (except to the extent, if any, stated in the Official Statement). Further, we express no opinion regarding the perfection or priority of the lien on revenues or other funds pledged under the Bond Ordinance or tax consequences arising with respect to the Bonds other than as expressly set forth in this opinion. The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Ordinance may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and by equitable principles, whether considered at law or in equity, and their enforcement may be subject to the exercise of judicial discretion in appropriate cases. This opinion is given as of its date, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may come to our attention or any changes in law that may occur after the date of this opinion. 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CLAIR COUNTY MADISONCOUNTY LEGEND #*TREATMENT PLANTS !(MAINTENANCE YARDS ST. LOUIS COUNTY MSD BOUNDARY BISSELL POINT COLDWATER LEMAY MISSOURI RIVER LOWER MERAMEC The Metropolitan St. Louis Sewer District JEFFERSON COUNTY FR A N K L I N C O U N T Y 1 Fy �