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HomeMy WebLinkAboutAnnual Reports - 4/1/2008Water Utility Commission ANNUAL REPORT APRIL,2008 != TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2008 ORO VALLEY TOWN COUNCIL Paul Loomis, Mayor Al Kunisch, Vice Mayor Paula Abbott, Council Member K.C. Carter, Council Member Helen Dankwerth, Council Member Barry Gillaspie, Council Member Terry Parish, Council Member ORO VALLEY WATER UTILITY COMMISSION Dave Powell, Chair Winston Tustison, Vice Chair George Calabro, Commissioner Brent Egbert, Commissioner John Hoffmann, Commissioner Robert Milkey, Commissioner Elizabeth Shapiro, Commissioner Harold Vaubel, Commissioner Rick Davis, Commissioner TOWN STAFF David Andrews, Town Manager Philip C. Saletta, P.E., Water Utility Director Shirley Seng, Water Utility Administrator David Ruiz, Engineering Division Manager Kam Boyce, Water Conservation Specialist Charles Soper, Lead Operator/Water Quality Special recognition to OVWU staff who provided graphics, data, photos and, most of all, their time to assist in the preparation of this report: George Kendrick Robert Jacklitch Mary C. Kobida Iris Chaparro Carolyn Schneider Jeff Kane Mary Miller Paul Anzalone Irene Swanson Christian Swanson SECTION TITLE List of Acronyms Executive Summary Introduction Customer Service Water Quality Current Water Supply Water Resource Planning & Management Water Conservation Program Utility Operations Security Engineering & Planning -New Development -Capital Improvements Financial Highlights Water Rates Analysis Appendices A. Utility Statistics B. Water Quality C. Static Water Level Measurements D. Five -Year Capital Improvement Program E. Water Utility Commission and Staff Photos TABLE OF CONTENTS TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL, 2008 PAGE i 1 4 6 8 11 13 16 20 23 24 30 32 LIST OF ACRONYMS LIST OF ACRONYMS USED IN THIS REPORT ACH Automated Clearing House (automatic payment program) ADEQ Arizona Department of Environmental Quality ADWR Arizona Department of Water Resources AF Acre Feet AWWA American Water Works Association CAGRD Central Arizona Groundwater Replenishment District CAP Central Arizona Project CAWCD Central Arizona Water Conservation District CIP Capital Improvement Program CY Calendar Year EPA Environmental Protection Agency ERP Emergency Response Plan FY Fiscal Year GIS Geographic Information System GPM Gallons Per Minute IGA Intergovernmental Agreement MCL Maximum Contaminate Level ppb Parts Per Billion ppm Parts Per Million SCADA Supervisory Control And Data Acquisition SSF/RO Slow Sand Filtration / Reverse Osmosis TDS Total Dissolved Solids WATER CASA Water Conservation Alliance of Southern Arizona WOW Water on the Web EXECUTIVE SUMMARY TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2008 In October 1996 the Oro Valley Town Council (Mayor and Council) formed the Oro Valley Water Utility Commission (Commission) to act as the official advisory body to the Mayor and Council regarding water related issues. The Commission is required to prepare an annual report to the Mayor and Council each year. This report is the Commission's tenth Annual Report. It includes topics on customer service, water quality, water supply, water resource planning, conservation, and capital improvements. This report covers information from fiscal year 2006-07 and calendar year 2007. The Executive Summary contains a briefing on several of the Utility's significant operations during this past year as well as projects specific to water issues facing the Town of Oro Valley (Town) in the future. Explanations that are more detailed may be found in the report and the appendices. CUSTOMER SERVICE The Town of Oro Valley Water Utility has 18,035 connections serving a population of approximately 47,000. This includes both the customers within the Town boundaries and the Countryside area. During CY 2007, 383 new connections were installed and approximately 2.8 billion gallons of potable water was delivered to our customers. In addition, approximately 500 million gallons of reclaimed water was delivered for golf course irrigation. WATER QUALITY For the sixth consecutive year, the Utility is proud to report that it did not experience any water quality violations for Total Coliform bacteria. The number of tests performed in 2007 was 5998 and no contaminant was found to exceed the Maximum Contaminant Level established by Federal and State Standards. This accomplishment is due to Staff's diligent operation and monitoring of the water system for our customers. CURRENT WATER SUPPLY Oro Valley currently delivers water from two sources of supply. Groundwater is pumped from wells in the aquifer below the Town and delivered through the potable water distribution system. Reclaimed water is used for irrigation and delivered through a separate reclaimed t water distribution system. In addition, Oro Valley has an allocation of Central Arizona J Project (CAP) Water that is used indirectly through storage credits. J Although there have been recent rains, continuation of a long-term drought persists. Both the J drought and the continued pumping of groundwater have caused groundwater levels to further J J -I- J decline, which in turn reduced the production capability of the existing system. Implementation of the first phase of the reclaimed water system has slowed the groundwater decline to an extent, thus preserving and protecting our aquifer and our groundwater supply. The use of reclaimed water is a significant accomplishment, but it is not the only renewable source of supply to assure a sustained reliable water supply. The Utility will continue its water resource planning effort to meet existing and future demands through the development of CAP water. In CY 2007 approximately 9291 acre-feet of groundwater was pumped from the aquifer. This is only slightly more than CY 2006. Approximately 1500 acre-feet of reclaimed water was delivered for golf course irrigation. Delivering reclaimed water significantly reduces our demands on the aquifer and groundwater supplies. Well water levels declined an average of 5.04 feet in the Oro Valley Water Service Area and increased 0.66 feet in the Countryside Water Service Area in the last year. The Utility continues to use its CAP water through an agreement with Kai Farms. This agreement allows the Utility to obtain long-term groundwater storage credits within the Tucson Active Management Area for irrigation use. Participation in the Lower Santa Cruz River Managed Recharge Project also provides the Utility with long term storage credits. These long-term storage credits are used to offset groundwater pumping costs assessed by the Central Arizona Groundwater Replenishment District (CAGRD). The Water Utility continues to plan for the direct delivery and treatment of its CAP Water. RECLAIMED WATER SYSTEM In October 2005, the Town of Oro Valley began delivering reclaimed water to the three existing golf courses north of Tangerine Road. As previously mentioned in 2007 these three golf courses used approximately 500 million gallons or 1,500 acre feet of reclaimed water. This reduced our groundwater pumping approximately 15%. To further protect and preserve our groundwater supply, the Utility is expanding the Reclaimed Water System. Phase 2 of the Reclaimed Water System is currently under construction and is expected to be completed by the fall of 2008. Phase 2 includes extending the reclaimed water system to deliver reclaimed water for irrigation of the Painted Sky Elementary School athletic fields and the two El Conquistador Golf Courses. When completed, Phase 2 will deliver approximately 326 million gallons or 1000 acre feet per year of reclaimed water to these three locations. Between Phase 1 and Phase 2, we will save approximately 815 million gallons or 2,500 acre feet of potable water annually. This represents approximately 25% of our total annual water demand. Phase 2 is expected to cost approximately $5,000,000. WATER CONSERVATION The Water Conservation Program continues to be a vital asset in assisting the Utility to achieve its overall water management goals. During the past year, the primary focus of the conservation program continued to be on residential water use audits. Since the program's inception in 2003, participating customers have received over 900 free water audits, which saves our customers both water and money. The Utility encourages water conservation by educating our customers, which is a key component of the Water Conservation Program. n n n In spring of 2007, voluntary water restrictions were implemented under the Town's Drought Preparedness Plan. The voluntary restrictions were lifted due to very good monsoon rains n during this past summer. Oro Valley continues to participate regionally with other water providers through the Water Conservation Alliance of Southern Arizona (Water CASA). WATER RATES AND IMPACT FEES The functions and duties of the Water Utility Commission and Staff include reviewing and developing recommendations for water revenue requirements, water rates and fee structures. In 2007, recommendations regarding water rates were provided in a separate report. The Water Rates Analysis Report was submitted to the Town Council and a water rate increase was approved on July 18, 2007. The approved water rates included adding a fourth tier to the water rates and an increase in the Groundwater Preservation Fee. The increases went into effect on August 18, 2007. On June 20, 2007, the Town Council approved increases in the water development impact fees. The Potable Water System Development Impact Fees were increased and approved by Ordinance (0) 07-31. The Alternative Water Resources Development Impact Fees were increased and approved by Ordinance (0) 07-32. Both of these fees went into effect on September 19, 2007. CONCLUSION The Oro Valley Water Utility Commission is proud to serve the Mayor and Council of the Town of Oro Valley and its residents and customers. We are pleased to present our 2008 Annual Report to the Mayor and Council for their consideration. While much has been accomplished in the past year, the Water Utility Commission and Staff look forward to direction regarding those items detailed in the Report. We thank the Mayor and Council for their consideration, direction and guidance. Any questions regarding this report should be directed to Philip Saletta, Director, Oro Valley Water Utility at 229-5010. -3- INTRODUCTION The Oro Valley Water Utility is completing its eleventh year of operation. During this time, the Utility has achieved a number of significant goals. The Utility has grown 2.17% in this last year and now serves 18,035 water customers. The Superior Court recently validated the Town's subcontract with the Central Arizona Water Conservation District (CAWCD) for a total of 10,305 acre feet (AF) of Central Arizona Project Water. We continue to operate under the Intergovernmental Agreement with Tucson Water regarding the delivery of reclaimed water to the Thornydale Pump Station. Phase 2 of the reclaimed water system is now under construction and anticipated to be complete in fall of 2008. The Utility has also implemented several programs including system -wide continuous disinfection, water conservation, and security. The Utility's infrastructure has grown to meet existing and growing demands with the addition of 1,000,000 gallons new reservoir capacity, the addition of one new booster pump station and two miles of water main. The Utility continues to be fiscally sound and has implemented appropriate increases in water development fees which are paid by new growth. In addition, the Utility has taken steps to keep pace with rising costs for operations and maintenance performing a rates analysis and getting an approved rate structure. The new rate structure included the addition of a fourth -tier for customers that use high amounts of water. It also included an increase in the Groundwater Preservation Fee which will pay for renewable water supplies that will reduce existing demands on our aquifer. In addition, the Utility received a low interest loan from the Arizona Water Infrastructure Authority for Phase 2 of the Reclaimed Water System. The following are some of the Utility's resources and assets as of December 31, 2007: Resources: Employees: Groundwater Supply (Assured Water Supply) Reclaimed Water: Effluent Water: CAP Water: Long Term Storage Credits: Groundwater Allowance Account Assets: Water Service Areas: Water Distribution Storage Reservoirs: Potable Water Reservoir Capacity: Reclaimed Water Reservoir Capacity: Water Mains: Potable Water Booster Stations Reclaimed Water Booster Stations: Operating Wells: Well Pumping Capacity 35.5 13,384 AF/year 1,500 AF/year 1,000 AF/year 10,305 AF/year 17,028 AF 13,632 AF Oro Valley Water Service Area and Countryside Water Service Area 18 8,700,000 Gals. 1,500,000 Gals. 328 miles 27 1 20 10,899 GPM The Utility continues to plan for future water supply both for existing customers and new growth. This is demonstrated by the cooperative regional planning for the delivery and treatment of CAP water. This cooperative effort is with our neighboring water providers: Metro Water, Town of Marana and Flowing Wells. -5- CUSTOMER SERVICE Customer Service personnel include Customer Service Representatives and Utility Operators. This Staff is responsible for meter reading, billing and collection for 18,035 water connections. The Utility has grown and, in 2007, an additional 383 meters were installed. The Utility delivered 2.8 billion gallons (8,571 AF) of potable water to our customers in 2007 and over 500 million gallons of reclaimed water for irrigation to three golf courses. Over 4,965 customer accounts were changed in 2007 primarily due to opening and closing of accounts for new move -ins and winter residents. This 8,571 AF is the amount that was billed to our customers based upon billing meter readings. The billed amount is approximately 7.75 % less than the well production amount of 9,291 AF. This is due to what is known in the water industry as unaccounted-for water. Unaccounted-for water is a result of the timing differential of billing meter readings, under registration of older billing meters, and unmeasured system losses from pipeline leaks and breaks. The Customer Service Section mailed 214,390 billings to our customers during this last year. The Customer Service Division also responds to customer concerns that arise from the operation and management of the water system and, in 2007, responded to 41,507 customer contacts. This is an average of 165 customer contacts per day for 2007. Customer Service These inquiries range from general questions to specific questions or problems that may occur related to billing, opening or closing an account, or water quality, pressure and flow problems. Customer Service Representatives (CSR) work closely with field personnel to respond in a timely manner to customer concerns. Customer Service Representatives are generally the first, and sometimes the only contact our customers may have with Utility personnel. Their training and skills are implemented on a daily basis to address customer concerns. Ongoing training provided to CSRs include: stress management, dealing with difficult people, utility billing software, and security. Staying abreast of new information is a key element to consistently improving customer service, as well as, providing for the mental and physical well being of Utility employees. M n Meter Readers are licensed operators and conducted 210,352 meter readings in 2007. Field Staff responded to 2,037 Work Orders generated by the CSRs. These include checking meter accuracy, meter replacement, water quality, water pressure and leaks. Staff works closely with the builders and contractors of Oro Valley to ensure that the water meters are installed on a timely basis. The Customer Service Supervisor also prepares information regarding water usage for the Annual Water Withdrawal and Use Report that is submitted to the Arizona Department of Water Resources. This report is required under the State Groundwater Code. This report also accounts for water use as part of the Assured Water Supply Program and assists with determining the obligation due to the Central Arizona Groundwater Replenishment District. The Customer Service Division recently took on the additional responsibility of billing the Stormwater Utility fee for Oro Valley water customers and for the Oro Valley residents who get their water from City of Tucson and Metro Water. In addition, staff collects and posts payments for the Water Utility, Pima County Regional Wastewater Reclamation Dept. and the Stormwater Utility. The Utility has received a positive response from customers regarding the information provided by Water on the Web (WOW) site through the Water Utility Website. The WOW site allows access to customer account information. The information is updated weekly to provide current billing and payment information as well as a two year history of water usage. The Utility currently offers an automatic payment program via an Automated Clearing House (ACH) in which the amount of the customer's water bill is automatically deducted from their checking or savings account. The Utility recently is now also able to accept credits cards to make a payment. The Utility frequently receives inquiries regarding on-line payment capability to facilitate payment of water bills. The Customer Service Division will be examining this possibility in 2008. In addition to providing enhanced customer service, successful implementation of alternative payment methods could reduce the volume of delinquent accounts and assist those customers who frequently travel. Over this past year, the Customer Service Division has received numerous complimentary letters regarding their personal and helpful customer assistance. This level of professional and courteous service is paramount to the successful operation of the Water Utility. Utility statistics including new meter installations, customer contacts, and water deliveries for CY 2007 may be found in Appendix A. 7- n WATER QUALITY There is a complex and extensive framework in place to ensure clean, safe drinking water is served by every public water system in Arizona. Protection of drinking water quality starts with an assessment of the drinking water source quality and continues through regulations that govern water system design and construction. Finally, drinking water quality is assured through scheduled tests required of all public water systems for a wide variety of potential contaminants. As a result of these regulations and continued testing, drinking water supplies in the United States are among the cleanest and safest in the world. Water Quality Testing The Water Utility operates two potable water systems. The Oro Valley Water Service Area (OVWSA) that has a Public Water System Number of AZ0410164. It also operates a potable system that is not located within the Town boundaries, known as the Countryside Water Service Area (CSWSA) that has a Public Water System Number of AZ0410175. Over the course of a year the Utility collects hundreds of water samples from approximately 19 "point of entry" sites. These sites include groundwater wells, reservoirs and pumping stations. The Utility also samples from 58 "sampling stations" located in neighborhoods throughout the water distribution system specifically selected to represent the water quality that is delivered to our customers. Lead and copper samples are taken from 50 private residences within the Oro Valley area. The Utility provides all water quality testing results to the Arizona Department of Environmental Quality (ADEQ) and works closely with that agency to ensure all federal and state standards are met. The Utility's State certified water operators are legally responsible for the health and safety of J our customers. The operators meet this responsibility by maintaining a daily vigilance over the system's production, distribution, and water quality. All our Operators are licensed and J attend continuing education and training through Personal Development Hours required by J ADEQ. This also benefits our community and adds value to the Water Utility. Additionally, J J _8_ J rrn n n n comprehensive emergency plans have been developed to ensure an immediate response to any adverse water situation. The Town's water system is in full compliance with all State and Federal regulations. In 2007 the Utility received 5,988 analytical results for required water sampling and operational data. Please refer to Appendix B for the Environmental Protection Agency's required contaminant monitoring list and the Utility's most recent analysis. Drinking water standards are regulations that the Environmental Protection Agency (EPA) sets to control the level of contaminants in the nation's drinking water. These standards are part of the Safe Drinking Water Act's "multiple barrier" approach to drinking water protection which includes, assessing and protecting drinking water sources; protecting wells and collection systems; making sure water is treated by qualified operators; ensuring the integrity of distribution systems; and making information available to the public on the quality of their drinking water. Community water suppliers throughout the country are required to provide an annual water quality report to their customers. The report provides information about your drinking water's source, and any contaminants detected in the water. The OVWSA and the CSWSA Consumer Confidence Reports are annually distributed to all customers in June. The Report is also available in the Utility's office and website. There are two categories of drinking water standards. A National Primary Drinking Water Regulation or primary standard is a legally enforceable standard that applies to public water systems. Primary standards protect drinking water quality by limiting the levels of specific contaminants that can adversely affect public health and are known or anticipated to occur in water. They take the form of Maximum Contaminant Levels (MCL) or Treatment Techniques. A National Secondary Drinking Water Regulation or secondary standard is a non -enforceable guideline regarding contaminants that may cause cosmetic effects (such as skin or tooth discoloration) or aesthetic effects (such as taste, odor, or color) in drinking water. The EPA recommends secondary standards to water systems but does not require systems to comply. However, ADEQ requires the Utility to sample these contaminants every three years. A contaminant list and the most recent analysis for the Utility are included in Appendix B. It is important to remember that the detection of a contaminant in drinking water does not necessarily represent a threat to public health. Current technology allows water utilities to detect extremely low levels of contaminants in drinking water. All drinking water, including bottled water, may reasonably be expected to contain at least small amounts of some contaminants. Oro Valley's groundwater contains naturally occurring dissolved minerals and organic compounds, which have been leached from the rock, sediments, and plant materials through which the water traveled. One would expect to find minerals such as calcium, magnesium, chloride, bicarbonate, sulfate, and metals such as iron, copper, arsenic and lead, which may be either beneficial or harmless at low concentrations. However, these are harmful at high concentrations. Other contaminants that may be present in source water are microbial contaminants, such as viruses and bacteria. The Utility disinfects its water source by adding chlorine at a level of 0.2 to 0.5 parts per million (ppm), as a precaution against bacterial growth. The Total Coliform bacteria group is used as an indicator to more closely monitor the distribution system for '® n n n n possible unwanted bacteria. During 2007, the Utility collected 696 samples for analysis of ,1 Total Coliform bacteria, none of which resulted in a detection. This is a direct result of a successful disinfection program, effective system monitoring, proficient sampling methods and routine maintenance. Two inorganic compounds found in groundwater are presently of special interest. These compounds are arsenic and fluoride. Arizona is among a handful of western states whose soil contains naturally high levels of arsenic, which can increase risks for some types of cancer. As of January 2006, all water systems needed to comply with the EPA's new MCL for arsenic of no more than 10 parts per billion (ppb) as compared to the previous standard of 50 ppb. EPA estimates that approximately one-third of the systems nationwide subject to the new standard presently exceed the 10 ppb arsenic standard. In 2007, the Utility conducted compliance tests for arsenic in its wells. All "points of entry" to the drinking water system were reported less than 5 parts per billion. These results are significantly below the new arsenic MCL. Fluoride at a level of 1.0 ppm has been shown to help prevent tooth decay. In high concentrations, however, fluoride can be harmful. Oro Valley's groundwater has fluoride at low concentrations ranging from 0.14 to 0.62 ppm. The Utility regularly receives inquiries concerning water hardness. Water hardness is a measurement of the concentration of calcium and magnesium. The hardness levels in Oro Valley range from 1.8 to 6.4 grains per gallon. These levels are considered low and as such water softeners would not be required. Hardness levels above 10 grains per gallon could shorten the life of water using appliances. Water quality standards are continually researched and regularly modified and changed. In early 2006, EPA released the STAGE 2 Disinfectants and Disinfection By -Products Rule. This is an important component to the agency's multi -pronged strategy to reduce drinking water risks to human health through improved standards for pathogens as well as disinfection by-products. The new Ground Water Rule is expected to require many small groundwater systems to add disinfection to their systems. The Utility's disinfection program was implemented for both systems in 2002 and presently meets the Ground Water Rule requirement. EPA's rule revisions to Lead and Copper was published in 2006. The revisions are a targeted update of the current rule including guidance on lead in drinking water in schools, including information on improved testing, monitoring and maintenance efforts. Oro Valley is a growing community in an and environment. The future of drinking water quality will continue to command serious attention by everyone involved with water supply for the community. Water quality compliance requirements will continue to increase in both complexity and cost, requiring the support and resources needed to ensure regulatory compliance and to provide a safe and reliable water supply to our customers. 10- CURRENT WATER SUPPLY Developed Water Resources • Groundwater: 13,384 acre feet per year • Reclaimed water: 1,500 acre feet per year The Town of Oro Valley has a groundwater supply of 13,384 acre feet (AF) per year and is allowed to pump up to this amount based on the Arizona Department of Water Resources (ADWR) Designation of Assured Water Supply. In 2007, Oro Valley pumped 9,291 AF. A requirement of our Assured Water Supply Designation is that the Town must be a member of the Central Arizona Groundwater Replenishment District (CAGRD). Each year, the CAGRD assesses the Town an increasing portion of the annual groundwater pumped at an increasing rate to replenish what is deemed "excess groundwater withdrawal". The Utility took steps last year to decrease our excess groundwater withdrawals by applying for recovery well permits. In the short term future, this will help to defray the increasing CAGRD costs. It should be pointed out that being a member of CAGRD does meet the regulatory requirements for Assured Water Supply; however, it does not provide "wet' water to the Town of Oro Valley. This is because the CAGRD does not have recharge projects in the vicinity of the Oro Valley aquifer. The Water Utility operates in two water service areas: The Oro Valley Water Service Area (OVWSA) and the Countryside Water Service Area (CSWSA). The current well capacity that the potable water system could deliver at a peak flow is 9122 gallons per minute (gpm) in the OVWSA and 1777 gpm in the CSWSA. This is equal to 13.14 million gallons per day (MGD) for the OVWSA and 2.56 MGD for the CSWSA. For the average annual day in 2007, our potable water customers used 7.64 MG in the OVWSA and 0.62 MG in the CSWSA. The peak day was 11.61 MGD for the OVWSA and 1.98 MGD for the CSWSA which occurred on July 2, 2007. Recent groundwater studies indicate that the Oro Valley aquifer has a sustainable groundwater production rate of approximately 5,500 AF per year. In 2007, our customers consumed 8,571 AF of groundwater. This resulted in an overdraft of the aquifer of 3,071 AF. To monitor the impact on the Oro Valley aquifer, each year the Utility measures the groundwater levels in all of its wells. For wells in the OVWSA, the average annual groundwater level decline for the last 5 years is 4.73 feet and the average groundwater decline for calendar year 2007 is 5.04 feet. For wells in the CSWSA, the average annual groundwater level decline for the last 5 years is 2.86 feet and the average groundwater rise for calendar year 2007 is 0.66 feet. Decline in individual wells ranged from 0.75 feet to 15.72 feet. Static water levels rose in four of the wells: CS-2, D8, El, and F1 increased an average of 4.52 feet. Detailed information on the individual wells and their associated water levels may be found in Appendix C. Water level declines combined with taking wells temporarily out of service due to pump problems or well bore casing problems has caused a decrease in production capacity in our wells. In 2007, we estimate a production capacity loss of 12.3% for the wells in the OVWSA, and 1.4% in the CSWSA. The Water Utility Staff will continue to monitor our wells and plan for future well replacements and improvements to minimize well production capacity losses. -11- J However, over the long term, reducing groundwater production to a sustainable amount provides the only assurance of minimizing water level declines and production capacity losses. Current system demands, coupled with less than average rainfall over the last several years, are large contributors to declining groundwater levels. Although there have been recent rains, we are currently in the midst of one of the worst droughts Arizona has seen in a very long time. How severe this current drought will be and how long it will last cannot be predicted, but even under normal rainfall conditions it would take many years for the water table to recover to previous levels. The use of reclaimed water has helped to reduce the impact on the Oro Valley aquifer this last year. The Town of Oro Valley currently has a reclaimed water supply of approximately 1,500 AF per year. This was acquired in 2003 through an Intergovernmental Agreement (IGA) with Tucson Water. The IGA contains a complex formula for computing the annual allotment of effluent produced from the wastewater from Oro Valley. The Town's effluent is treated at Pima County Wastewater Facilities and then delivered through Tucson Water's reclaimed water conveyance system. Undeveloped Water Resources • Central Arizona Project Water: 10,305 acre feet per year • Effluent Water: 2,500 acre feet per year • Long Term Storage Credits: 17,028 acre feet • Ground Water Allowance Account 13,632 acre feet The Town currently has an allocation of CAP water in the amount of 10,305 AF per year under the recent contract with CAWCD. The executed contract was validated by Pima County Superior Court on December 27, 2007. This subcontract for an additional amount of Central Arizona Project Water is critical to the Town and its future water supply. At this point in time, the infrastructure necessary to convey CAP water to the Town does not exist. The Water Utility is cooperating regionally with Metropolitan Domestic Water Improvement District, Flowing Wells Irrigation District, the Town of Marana to build a treatment and delivery system for CAP Water. Currently, the only CAP water the Town utilizes is for recharge pursuant to an agreement with Kai Farms. The Utility stored 4,871 acre-feet of CAP water in 2007 under the Kai Farms Agreement. Long term storage credits have accumulated to approximately 17,028 acre-feet. Additionally, the Utility is a partner in the Lower Santa Cruz Managed Recharge Project in which effluent water is recharged in the lower Santa Cruz River. Long term storage credits accrued through this project were approximately 154 acre-feet. The Utility will continue to use long term storage credits to reduce a portion of the costs that are assessed annually by the CAGRD. The Utility will continue to recharge CAP water until such time the water is needed for direct delivery. Included in the Town's Designation of Assured Water Supply is 4,000 AF per year of effluent which is the source of supply for our reclaimed water. The Town is currently using 1,500 AF of this effluent supply to irrigate three of the local golf courses with reclaimed water. The second phase of the Reclaimed Water Delivery System is expected to be completed by the fall 12- of 2008 and will provide reclaimed water to athletic fields at Painted Sky Elementary School and to two 18-hole Hilton El Conquistador Golf Courses. It is estimated that approximately 1,000 AF per year of reclaimed water will be delivered to these customers. After Phase 2 of the Reclaimed Water System, a remaining amount of 1,500 AF per year of effluent will be available to the Town in the future due to additional growth. This effluent will be used for reclaimed water or for groundwater storage credits. WATER RESOURCE PLANNING & MANAGEMENT The Utility has a water resource planning effort that incorporates a Groundwater Action Plan, the Potable Water System Master Plan, the Reclaimed Water System Master Plan and the Northwest CAP Water System Cost Estimate and Alternatives Review Study. Water resource planning will investigate alternatives for future water supply and delivery. It will include the following: ➢ Groundwater development (new and replacement wells) ➢ Reclaimed water (Phase 2 Expansion) ➢ Central Arizona Project Water (new CAP water treatment and delivery) ➢ Water Conservation and Drought Management Water resource planning will involve technical, financial, legal, political, institutional and environmental issues. Involving the public will be a key aspect of a successful program for future water supply. Funding for the Water Resource Plan has been included in the Utility's budget for FY 2008-09. Reclaimed Water The second phase of the Reclaimed Water Delivery System is currently under construction and is expected to be completed by fall of 2008. The use of reclaimed water for turf irrigation will have a beneficial impact on the Utility's ability to meet potable water demands during peak use months. The Utility will continue to look for opportunities to expand the customer base of the reclaimed water system for turf irrigation such as the proposed Naranja Town Site. In addition, non -turf irrigation uses such as landscape irrigation, construction water, dust control, car washes, street cleaning and recreational uses may also be served with reclaimed water and help reduce demands on the groundwater aquifer. Even with the use of reclaimed water, Oro Valley will remain dependent on groundwater for a portion of their water supply now and in the future. The Potable Water System Master Plan indicates the need to continue to add new wells and rehabilitate existing wells even with implementation and expansion of the reclaimed water system. CAP Water Delivery System The Town has been cooperating with other Northwest area water providers, Metropolitan Domestic Water Improvement District, Flowing Wells Irrigation District, the Town of Marana (Northwest Water Providers) and the United States Bureau of Reclamation to develop a regional CAP water treatment and delivery system within the northwest Tucson area. These four entities cooperate together under a Memorandum of Understanding. In 2007 a study -13- J n rn 'l 1 entitled Northwest CAP Water System Cost Estimate and Alternatives Review Study was conducted by Carollo Engineers for the Northwest Water Providers. In addition, a financial study was conducted by Stone & Youngberg to estimate the debt service for the individual l Northwest Water Providers. The report by Carollo Engineers included costs for a proposed treatment plant, booster pump station and pipeline alignment from the CAP canal near 1-10 and Tangerine Road. The pipeline would be aligned along Tangerine Road and would j bifurcate to deliver water to Marana, Flowing Wells, Metro and Oro Valley. Another alignment was also investigated along I-10 south to Linda Vista. Additional alignments will r� also be investigated to determine the best alternative. In addition to these facilities, a reliability water storage reservoir would be needed to be constructed by the U.S. Bureau of Reclamation as part of the Central Arizona Project. Central Arizona Project Canal The system would be designed to deliver 30,000 acre-feet per year (24 millions gallons per day) of CAP water into the northwest area. Oro Valley would participate in the project for 10,000 AF or approximately one-third of the project. Costs will be split among the four participating water providers according to their system capacity and delivery location. Oro Valley's share of this project is estimated to be 65 million dollars in capital costs with a debt service of approximately 4.1 million dollars per year for Phase 1 of this project. The Northwest area water providers are planning for delivery of CAP water to start in 2012 to 2014. The Town of Oro Valley is committed to the direct use of CAP water and will continue to work with our partners to see that this concept becomes a reality for our communities. CAP Water Treatment Pilot Study Project The Town of Oro Valley, along with the other Northwest Water Providers, has developed a pilot study in cooperation with the Bureau of Reclamation and the University of Arizona to investigate water quality and salinity issues related to the treatment of CAP water. This pilot study will be conducted for several years to investigate several alternatives for the treatment -14- J n n n n n of CAP water. It also includes studying concentrate management options such as the use of halophyte (salt tolerant plants) irrigation as a means of disposing of the concentrate (salts) n created by using reverse osmosis. This project is located on the west side of Interstate 10 and just south of Tangerine Road. The results of this study are encouraging in terms of concentrate management. Slow -sand filtration has shown that other alternatives such as micro -filtration should be studied and this is planned for 2008. Reverse osmosis (RO) has shown to be a very effective treatment alternative but has significant water loss to concentrate. A new RO enhancement treatment technique called VSEP, which employs a vibratory separation process to minimize water losses, is also planned to be studied. Water Conservation Water conservation will continue to be an important element in the overall management of our water resources. With declining water levels and potential water shortages on the Colorado River, educating our customers in conservation methods should remain a priority. The Utility's water conservation program is discussed in the following section. J -15- 1 r, WATER CONSERVATION PROGRAM Although there has been significant rainfall this past winter, there is still a long-term drought r in Southern Arizona. Drought conditions may become accepted as a normal condition in the future. Drought conditions will affect both the natural environment and ultimately the way in which water is managed by the Town. Over the past couple of years the amount of natural recharge for the Town has declined due to the diminished rainfall resulting from a persistent drought. The reduction is illustrated by the water level decline in our aquifer. The Utility recognizes the complexity and importance of sustained reliability. The water conservation program continues to be an important element in the overall water resource management efforts of the Utility. The following paragraphs provide insight into the various policies and programs that support water conservation for our customers and community. Water Audits Residential and commercial water audits continue to function as a key tool in the water conservation program. Audits are valuable to education and create an awareness of water consumption by homeowners, businesses and communities as a whole. Two hundred and five (205) water audits were completed in 2007. (Figure 1) illustrates the number of audits conducted on a monthly basis for 2007. Figure 1 MONTHLY PARTICIPATION CALENDAR YEAR 2007 25 O W 20 J 4' 15 2 O U 10 N F- 5 -- 7 Q 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC MONTH Audits allow for a number of important conservation issues to be addressed while maintaining a cooperative relationship with our citizens and customers. As part of these free audits, customers are informed on general water conservation practices and principles. Irrigation systems and swimming pools, as well as interior household fixtures and appliances, are assessed for efficiency and proper use methods. Water use strategies are specifically tailored n n n n to the individual's water use habits and landscape needs. In addition, any observed leaks or equipment malfunctions are brought to the attention of the customer as well as any code violations with regard to backflow prevention. Data collected during the audit is used to assess and recommend changes that may be needed to improve water use management. The Utility also uses the data collected in audits to identify the concerns of customers and help direct the focus of the conservation program. Analysis of these statistics allows the Utility to identify trends in town -wide water consumption and helps evaluate the progress of the program. From 2003 through 2006, water consumption dropped an average of 17.5% in the first year after the audit resulting in an average water savings of over 2.2 million gallons. This is illustrated in (Figure 2). Water use by audit participants is tracked for the year prior to the audit and then compared to their use for a minimum of one full year after the audit. Figure 2 Post Audit Water Use (1 Year Later) 17, 000, 000 15,000,000 R 13,000,000 m y CM 11,000,000 ■ Pre Audit 9,000,000 ❑Post Audit v 7,000,000 - - ia 3 5,000,000 -- — -- 3,000,000 - 1,000,000 2006 2005 2004 2003 Year Water Audit was Conducted Education and Resources Enhancing education, communication and water conservation related services for customers and the community is a very important aspect of the conservation program. The Utility is continually revising and expanding its literature offerings. These resources are offered to customers at no charge. Landscape irrigation schedule cards are also available for watering guidelines related to plant types. Literature available for younger residents has also been revised to include activity booklets with a companion teacher's guide that promote water conservation, protecting our groundwater and respecting our water supply. In addition to literature, the Utility also offers toilet dye strips for leak detection purposes along with low flow shower heads, faucet aerators and in -line shut off valves to retrofit existing shower heads. J J -17- J i The water conservation staff continues to work with all divisions of the Utility and other departments within the Town. In addition, the Utility maintains memberships in professional organizations as a means of keeping up to date on current technology and providing progressive training for staff. The memberships include the American Water Works Association, the Irrigation Association and the Water Conservation Alliance of Southern Arizona (Water CASA). Reclaimed Water System Currently the Utility is expanding the reclaimed water delivery system and planning is under way for the future delivery of CAP water. These steps will bring renewable water to our community and will reduce the demands placed upon the aquifer. However, it will not eliminate the necessity for continued pumping of groundwater at flowrates that may exceed the capacity of natural recharge. Conservation of groundwater resources is an integral part of the Town's future sustainability. Drought Preparedness Plan The Utility has complied with a directive from ADWR by creating and filing a Drought Preparedness Plan (DPP). In 2007, voluntary restrictions were put in place under Stage 1 and 2 of the DPP. These restrictions were lifted after significant summer rains. The Plan uses specific climatic conditions and groundwater levels to identify a particular stage of drought for the Utility's water service area. Each stage identifies specific actions and restrictions that apply to all Utility customers as well as actions to be taken by the Utility itself. The Plan was designed using parameters that would be unique to the Town of Oro Valley. Incentives Currently the Utility has one incentive program available and that is the Rain Sensor program. To date, approximately 600 rain sensors have been sold to customers with active accounts and demand continues to be steady. In an effort to better serve the customers, a Rain Sensor Installation Guide has been developed and is now distributed by the Utility. Research Partnerships with manufacturers, organizations and professionals in the water management industry continue to be an ongoing enterprise of the water conservation program. Currently the Utility tests new apparatus and equipment developed for use in landscape irrigation as well as cooperate by providing data for research studies being done by others in the field. Viable and practical technologies and methodologies are then passed on to our customers through education channels, audits, consultations and other means which may be helpful to incorporate those methods for use by Oro Valley residents. Policy The Water Utility Commission recommended that Town Council approve three new ordinances to provide Oro Valley customers more options to expand their conservation efforts. Changes were made to the Water Code to encourage the use of graywater and J J -18- .J i rainwater as alternative water sources for landscape irrigation. The Code changes also included guidelines and restrictions for the installation and use of graywater and rainwater. The Utility worked with the Building Safety Department in changing the Building Code to mandate the installation of under the counter electrical outlets for point of service hot water recirculation pumps. Water Conservation Audits Short Term Goals The Utility continually strives to provide a high level of service when performing residential and commercial water audits. This program encompasses a wide variety of water users and therefore constant reassessment of the conservation program is important to ensure its longevity. The Utility also looks to enhance communication efforts by improving the website and creating a customer service guide. In addition, the Water Ways is now published as part of the Oro Valley Vista magazine. Long Term Goals As previously noted, the Utility filed with ADWR a "Drought Preparedness Plan". The Plan uses climatic conditions to indicate if or when a particular stage of drought should be declared. To better assess local conditions, the Utility will consider the purchase of a solar powered weather station. This pilot study may in the future supply weather data directly to customers for use in irrigation timer scheduling. -19- n n n f"1 UTILITY OPERATIONS Production Facilities Division Utility personnel in the Production Facilities Division are responsible for the operation and maintenance of the wells, booster pumps and reservoirs on two potable water distribution systems and the booster pumps, metering stations and reservoir on the reclaimed water delivery system. All Production Facilities personnel are operators licensed by the Arizona Department of Environmental Quality (ADEQ). The potable systems are chlorinated systems and the Production Facilities Division controls and monitor the chlorine dosage rates and residuals on a daily basis. The potable system located within the Town of Oro Valley Water Service Area (OVWSA) is a Grade IV system and currently delivers water to twenty pressure zones and a consecutive system located at La Cholla Air Park. The Public Water System Number is AZ0410164 for OVWSA. The potable system that is not located within the Town boundaries, known as the Countryside Water Service Area (CSWSA), is a Grade III system that currently delivers water to a single pressure zone at the Countryside development. The Public Water System Number is AZ0410175 for CSWSA. The groundwater production capacity within the OVWSA is currently 13.0 MGD with a storage capacity of 7.79 MG. The groundwater production capacity within the CSWSA is currently 2.6 MGD with a storage capacity of 0.87 MG. Production Facility SCADA Operations J The Utility continues to be proactive in the implementation of maintenance programs and facility upgrades. The development of an overall preventive maintenance program is in progress. Facility sites are evaluated annually to determine necessary upgrades to ensure efficient operation of the facilities. A continuing effort to retrofit water level sensing equipment in each production well will help the Utility collect monthly water level data and J J l -20- J will assist in the development of an accurate water level database and to analyze trends. Monthly monitoring of the water levels will also help the Utility identify potential problems with either the pumping unit and/or the well itself and schedule required maintenance before a well and/or pumps fail. The following are some of the major activities and accomplishments that were performed by the Production Facilities Division in 2007: ➢ Assisted with the pump replacement at wells C6 and D7. ➢ Performed mechanical maintenance for 27 booster stations and 22 wells. ➢ Assisted with five reservoir inspections. ➢ Installed seventeen site security intrusion devices. ➢ Installed six water level transducers. ➢ Collected annual water level data at 26 wells. ➢ Assisted with a major reclaimed SCADA master program modification that improves the operational efficiency of the reclaimed booster station. ➢ Assisted with the Well Monitoring capital project. ➢ Commissioned and put into service Water Plants 15 and 16. ➢ Efficiently operated the potable and reclaimed systems with the use of SCADA. The Supervisory Control and Data Acquisition (SCADA) system is in a constant state of improvement and programming to streamline operational control and data trending. The SCADA system is centralized and currently monitors and controls all potable and reclaimed system facility sites. Utility staff continuously monitors the SCADA system on a 24 hour seven day a week basis. Production facilities staff is also responsible for the installation of security devices at the Utility's facilities as well as the security program in general. Distribution Facilities Division Utility personnel in the Distribution Facilities Division are responsible for the operation and maintenance of over 328 miles of water main, approximately 1,843 fire hydrants, and 6,790 valves. The Staff conducts maintenance programs that keep the distribution system functioning properly and minimize problems that are inherent to water distribution systems. Data bases have been established for hydrants; pressure reducing valves, air release valves and a valve exercising program that helps identify maintenance cycles and monitor equipment to provide for proactive replacement programs. All Distribution Facility personnel are operators licensed by ADEQ. The Division works closely with Customer Service and installed 383 new meters in 2007. It also turned off and on 4,965 customer accounts. The Division also responded to approximately 7 water pipeline leaks. These leaks were repaired in a timely manner to minimize impacts to our customers. The Division also worked with local fire protection agencies to test and repair approximately 50 fire hydrants. This year the Distribution personnel purchased a new utility vacuum pot hole machine with a swivel mounted valve operator. This piece of equipment will cleanout valve boxes, excavate for line location or leaks in even the hardest soils without harming utilities. It also will allow the distribution crew to turn valves safely and easily for emergency or routine maintenance. It -21- automatically captures valve data, such as size, number of turns, location and date of maintenance which can be down loaded to the utility computer system. The Division also has significant direct customer contact and responded to 2,037 customer inquiries in the field. The Division in conjunction with the Production Facilities Division provides 24-hour on -call standby to respond to water system problems. During this past year, the Utility received numerous letters from customers who received assistance from Distribution personnel that exceeded their expectations. This is confirmation of the professional and courteous performance of Utility personnel. -22- n n ENGINEERING & PLANNING The Engineering & Planning divisions are responsible for new development and Capital Improvements in the water service areas. This includes reviewing plans built by developers. It also includes managing and administering contracts for designing and building new water facilities that are installed by the Water Utility for existing system improvements or expansion related projects. In addition it is responsible to operate and update the Geographic Information System in coordination with the Information Technology Department. New Development The New Development Section is responsible for reviewing Water Improvement Plans for new development and assisting with planning for future water system expansion. Once all Water Utility standards are met, the plans are approved for construction. This section also inspects all water facilities that are constructed by developers prior to final acceptance and operation of those facilities. This Section also assists in the preparation and development of water system master plans These facilities include primarily pipelines and appurtenances, such as valves and hydrants, but can also include water storage reservoirs and booster pump stations. This section also prepares Line Extension Agreements (LEA) and administers those LEAS and, when applicable, associated protected mains. When required, the New Development Section works closely with the Pima County Department of Environmental Quality to acquire Approval of Construction prior to placing new water facilities in service. Coordination with Planning and Zoning, Public Works and Building Safety Departments is critical to this water improvement plan process and to ensure quality construction and that adequate water facilities are constructed in accordance with approved standards as our community grows. This last year, 35 Water Improvement Plans were reviewed and approved to be constructed as designed. In addition, 22 plans were constructed, inspected, approved as -built, and placed into operation. This includes approximately 9 additional miles of pipeline which was added to the water distribution system in 2007. CAPITAL IMPROVEMENTS Potable Water System: This past year the Engineering and Planning Division completed the design for a production well located south of Pusch View Lane, constructed two reservoirs one located in Stone Canyon and another in La Reserve, completed the installation of one booster pump station and installed approximately 5,000 feet of new water main. The projects are identified in the Potable Water System Master Plan adopted by Mayor and Council in August of 2006. They are designed to improve existing facilities and help the Utility keep pace with increased demands due to growth within the Town and water service areas. Redesign El Conquistador "C-D" Zone Booster Pump: The existing facility has been in operation since the early 1980's and a redesign was required to improve system capacity and efficiency. The redesign is complete and will replace the older facility with a new pump station sized to efficiently meet water demands. Construction is expected to start in FY 2009-2010. -24- r� '1 Oro Valley Drive Main Extension: This project is complete and the Utility installed over 3,000 linear feet of 8-inch water main in the Oro Valley Country Club area. This replaced older plastic pipelines smaller in diameter to improve water service and fire flow capability. As part of this project, over 4,200 linear feet of private water service lines and 5 fire hydrants l were installed and connected to the new 8-inch line. Pusch View Lane Well C-9 Construction: This new well is located behind the Rock Ridge r% Apartments east of the Pusch View Lane Bridge. The new well will be equipped and construction will begin in May of 2008 and completed by November of 2008. In addition, an r% access bridge to this well will be constructed. The new well is designed to pump 700 gallons per minute into our water distribution system. The facility includes a disinfection system, an © equipment noise barrier and a secure stucco perimeter wall. Highlands Main Replacement - Construction: This project is located in the Highlands Mobile Home Park on Lambert Lane. The design is complete and construction will begin in April of 2008 and expected to be complete by the end of this calendar year. This project includes the installation of approximately 16,000 linear feet of 8-inch and 6-inch ductile -iron mains within the existing private right-of-way. This new pipe will replace an older plastic pipeline smaller in diameter. Also included is the relocation and replacement of 280 existing water meters from the back side to front curb of the lot. Fire hydrants will be installed every 500 feet to provide fire protection. North La Canada "E" Zone Reservoir - Design: This design is scheduled to be complete in June of 2008. The reservoir site is located in the vicinity of Moore Road and King Air. The design is for a 3.0 million gallon (MG) concrete in -ground reservoir. The design will include provisions for a future booster pump station which will provide service to areas west and north of the site. Another feature includes the capability to expand the reservoir for future potable CAP water. Construction is planned to start in FY 2009-2010. Pusch Ridge Reservoir: The reservoir is located in the La Reserve subdivision. This is a 500,000 gallon in -ground concrete reservoir equipped with pumping station. The project started in October of 2006 and was completed in June of 2007 and is now operating. The project was a joint effort between the developer and Oro Valley Water Utility. Pusch Ridge Reservoir -25- Water Plant 15 Reservoir Stone Canyon: The 500,000-gallon steel above -ground reservoir operates as a floating "H" zone system. This reservoir will provide for increased service reliability, fire flow capability, operational flexibility, reduced cycle time for wells, fewer pressure fluctuations and reliability during power outages. The project started in January of 2007 and was completed in October of 2007. Water Plant 15 Reservoir Stone Canyon Future Proiects FY 2008-2009 Potable Water Capital Improvement projects planned for FY 08-09 include the following: • Complete pump installation for well C-9 - Pusch View Lane. • Drill and begin construction for a new well - Steam Pump. • Install 8-inch main and private services lines — Highland's project. • Install 2,000 LF of 16-Inch main replacement - Innovation Park Drive. • Relocate water mains on Oracle Rd — ADOT • Design and install 12-Inch main on Lambert Lane between La Canada and La Cholla. Design and construct the water main coordinating with the Public Works road widening project. Construction cost increases in the past 12 months have stabilized from the rapid increase of the prior 24 months. We expect construction costs to remain stable or possibly experience a slight decrease from prior years. CAPITAL IMPROVEMENTS Reclaimed Water System Phase 2: In October, 2005, the Town of Oro Valley completed Phase 1 of the Reclaimed Water System and began delivering reclaimed water to the three golf courses north of Tangerine Road. This reduced our groundwater pumping approximately 15%. To further protect and preserve our groundwater supply, the Utility is expanding the Reclaimed Water System. -26- Phase 2 of the Reclaimed Water System is currently under construction and is expected to be completed by the fall of 2008. Phase 2 includes extending the reclaimed water system to deliver reclaimed water for irrigation of the Painted Sky Elementary School athletic fields located on Woodburne Avenue south of Moore Road and the two El Conquistador golf courses located on La Canada Drive south of Tangerine Road. When completed, Phase 2 will deliver approximately 326 million gallons or 1,000 acre feet per year of reclaimed water to these three locations. When Phase 2 is complete, the Utility will save approximately 827 million gallons (approximately 2,500 acre-feet) of potable ground water annually. This amount represents approximately 25% of the total ground water pumped annually. Oro Valley Water Utility is reusing its wastewater effluent as the source of supply for reclaimed water. Under an Intergovernmental Agreement with the City of Tucson, the Town's wastewater effluent is treated by Tucson Water to a Class A Reclaimed Water Standard for irrigation purposes. Oro Valley paid for building two booster pump stations that are owned and operated by Tucson Water to deliver our reclaimed water. Our reclaimed water is pumped into Oro Valley's 24-inch ductile iron pipeline, which delivers our reclaimed water from the Thornydale Pump Station to OVWU's Reclaimed Water Reservoir for distribution. Thornvdale Reclaimed Booster Reclaimed water is pumped from Tucson Water's Thomydale Reclaimed Reservoir into the OVWU Reclaimed Water System through this booster pump station. -27- Lining Hilton EI Conquistador Golf Course North Pond The El Conquistador Hilton Golf Course will receive reclaimed water as part of Phase 2 Reclaimed Water System. This pond is being relined as a requirement to store reclaimed water. jPhase 2 is expected to cost approximately $5,000.000. A low interest loan was granted by the Arizona Water Infrastructure Financing Authority to fund this project. J J -28- J J Five Year Capital Improvement Program: The following table summarizes the Utility's proposed five year Capital Improvement Program (CIP). A detailed schedule of the capital improvements program may be found in Appendix D. C.I.P. FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 5 Year Total Existing System $ 4,180,000 $ 3,615,000 $ 5,690,000 $ 1,020,000 $ 0 $ 14,505,000 Expansion Related $ 570,000 $ 500,000 $ 750,000 $ 2,540,000 $ 7,845,000 $ 12,205,000 Reclaimed System $ 623,000 $ 0 $ 0 $ 0 $ 0 $ 623,000 CAP Delivery $ 0 $ 0 $ 17,583,334 $ 31,833,334 $ 15,916,666 $ 65,333,334 Total $ 5,373,000 $ 4,115,000 $ 24,023,334 $ 35,393,334 $ 23,761,666 $ 92,666,334 The capital projects for existing system improvements FY 08-09 and FY 09-10 will be financed with cash reserves. It is proposed that the remaining projects in future years will be financed with proceeds from a future bond issue. All expansion related improvements will be financed with remaining Series 2003 bond proceeds and with cash generated from the Potable Water System Development Impact Fees. Reclaimed water system improvements are financed through WIFA loan proceeds in FY 2008-09. Funds from the Alternative Water Resources Development Fees and the Groundwater Preservation Fees pay for the debt incurred for the financing of the Reclaimed Water System. -29- FINANCIAL HIGHLIGHTS The Utility's revenue consists of potable and reclaimed water sales, groundwater preservation fees, miscellaneous service fees and charges, water development impact fees and interest income. The Water Utility has three funds: ➢ The Enterprise Fund provides funding for the Water Utility administration and operations as well as existing system improvements. The source of revenue for this fund are water sales and service charges. ➢ The Potable Water System Development Impact Fee Fund provides funding for expansion related projects for new growth. The source of revenues for this fund is from impact fees paid by new development at the time a meter is purchased. ➢ The Alternative Water Resources Development Impact Fee Fund provides funding for the development of renewable sources of water supply, namely reclaimed water and CAP Project water, and related infrastructure. The sources of revenues for this fund are impact fees and Groundwater Preservation Fees. Impact fees are paid by new development for that portion of renewable water supply and infrastructure attributed to new growth. Groundwater Preservation Fees are paid by existing customers for their portion of renewable water supply and infrastructure. The following table contains the actual revenue received for FY 2006-07 for all funds within the Utility: Revenue Source Amount Received Potable Water Sales: Residential $ 7,247,964 Commercial $ 610,833 Irrigation $ 983,314 Turf $ 641,654 Construction $ 472,217 Reclaimed Water Sales: Turf $ 903,143 Misc. Service Fees & Charges $ 553,511 Total Enterprise Fund $11,412,636 Groundwater Preservation Fees $ 767,993 Alternative Water Resources Development Impact Fees $ 183,200 Potable Water System Development Impact Fees $ 1,050,471 Interest Income $ 1,157,834 Total for FY 2006-07 $14,572,134 Town Council approved a water rate increase in FY 2007-08. The average customer had an increase of 10.1% or approximately $3.69 per month. This included an increase in the Groundwater Preservation Fees of $0.15 from $0.25 to $0.40 per 1,000 gallons for potable water customers. -30- J J For reclaimed water the increase was $0.04 from $0.21 to $0.25 per 1,000 gallons. In addition, a fourth tier was added to the water rates structure based upon the amount of water used to provide for conservation pricing. The new water rates were adopted by Council on July 19, 2007 and became effective on August 18, 2007. The Utility also increased the Potable Water System Development Impact Fees (PWSDIF) and the Alternative Water Resources Development Impact Fees (AWRDIF). These fees are charged at the time a new meter is purchased to pay for growth -related infrastructure and renewable water resources. A detailed report for each of these fees is available on the Water Utility website. A public process involving the community and development interests was implemented prior to approval of these fees. The current fees are also on the Water Utility website and the Town website in the Town Code — Chapter 15 Water Code. The AWRDIF was approved in a five -increment approach through 2011. Each year, on or before September 28th, an accounting of the water development impact fees is presented in a report that is required by Arizona Statute. In 2007, Oro Valley Water Utility acquired a low interest loan from the Water Infrastructure Financing Authority of Arizona (WIFA) for Phase 2 of the Reclaimed Water System. The loan amount is for up to $6,000,000 at an annual interest rate of 3.536%. This loan will save the Utility significant costs in terms of interest payments over the 20-year life of the loan. In March of 2007, The Water Utility and the Town Finance Department requested and received Town Council approval for a bond refunding. Excise Tax Revenue Refunding Bonds, Series 2007 were issued to refinance outstanding obligations. This resulted in a net present value debt service savings of $997,782 to the Water Utility which is a significant financial benefit to our customers. The Utility used cash reserves to finance the existing system capital projects in FY 2007-08. It is anticipated that in FY 2008-09 cash reserves will also be used to finance existing system improvements. The budgeted expenditures are combined for all funds and are compared to the actual expenditures for FY 2006-07 in the following table: Expenditures Budget FY 2006-07 Actual Spent FY 2006-07 Difference Under Over Personnel $ 2,178,533 $ 2,086,959 $ 91,574 O&M $ 3,716,267 $ 3,462,595 $ 253,672 Capital $ 12,731,950 $ 4,275,554 $8,456,396 Debt Service $ 5,161,085 $ 4,138,034 $1,023,051 Totals $23,787,835 $13,963,142 $9,824,693 The Utility's actual expenditures for personnel and operations/maintenance were approximately seven percent under the budgeted costs. The capital expenditures were under budget as a result of delays in construction of potable water projects and debt service was under budget as a result of the bond refunding. -31- WATER RATES ANALYSIS FOR FY 2008-09 The functions and duties of the Commission include reviewing and developing recommendations for water revenue requirements, water rates and fee structures. The Commission annually evaluates staff recommendations based on a water rates analysis to assure the recommendations meet Town policies and bond covenants. The Utility bases its financial analysis on the American Water Works Association (AWWA) Cash Needs Approach. A Water Rates Analysis Report will be prepared that contains detailed information on the three funds that comprise the Oro Valley Water Utility. Each fund is individually analyzed with regard to revenue and revenue requirements. A Preferred Financial Scenario will be developed that includes five year projections for each fund. This will allow the Utility to evaluate the impact of future costs and the revenue sources that will be required to meet those costs. Based on the Water Rates Analysis Report and the Preferred Financial Scenario, the Commission makes recommendations to the Town Council on Water Utility rates and other service fees and charges. It is anticipated that the Water Rates Analysis Report will be provided to the Water Utility Commission on April 14, 2008. It will be provided to Town Council on April 16, 2008 as part of the Town's Notice of Intent to Increase Water Rates as required by Arizona Statutes. _32_ p,LLE ,, ,pro �aMDED,9 �< TOWN OF ORO VALLEY WATER UTILITY COMMISSION 2008 ANNUAL REPORT APPENDIX A UTILITY STATISTICS Year Customer Base Water Deliveries Gallons Reclaimed Water Deliveries in Gallons Bluestakes Customer Contacts Customer Service Field Operations Water Conservation - Audits Water Quality Samples Meter Reads Billing Collection Rate 2005 17,272 2006 17,652 3,255,300,000 2,754,933,000 59,909,000 487,702,000 5,542 5,523 2007 18,035 2, 791, 092, 000 500,894,000 4,796 41,014 41,142 41,507 1,851 1,724 2,037 276 206 205 1,630 943 5,998 204,853 209,053 210,352 99.90% 99.90% 99.90% A-1 Potable Water Deliveries in Gallons 3,500,000,000 Z.04,9ss,000 2,791 3,000,000,000 "^ 2,500,000,000 2,000.000,000 1,500.000,000 1,000,000.000 .......... 500,000,000 2005 2006 2Cl LI i A-2 A-3 A-0 1.930,849,000 Gallons Sold By User Type January - December 2007 284.305,000 }- 500,894,000 L 1.16.347.000 147,546,000 ■ Construction - 3% ❑ Commercial - 4% ■ Residential - 59% ❑ Irrigation - 9% ❑ Reclaimed - 15% O Turf - 10% Revenue By User Type January - December 2007 $1.120.573 $967.599 $7,497.3'15 '107 ?20 ■ Construction - 6% ❑ Commercial - 5% ■ Residential - 65% ❑ Irrigation - 10% ❑ Reclaimed - 8% ❑ Turf - 6% Accounts By User Type As of December 31, 2007 16.997 ■ Construction - 2% ❑ Commercial - 2% ■ Residential - 94% ❑ Irrigation - 2% ❑ Reclaimed - 0% Turf - 0% A-5 o�o�PLLEV ARiZo9 �a/NOED 1�p TOWN OF ORO VALLEY WATER UTILITY COMMISSION 2008 ANNUAL REPORT APPENDIX B WATER QUALITY 0 0 o o ca a 0 0 W 0 V V V y R 773 R z vU M 0 M S Z O O c O. 0� N — E E O V 0 1 0 0 O O r co;O O V- II w II C N Di0 O E R C T -o a L p,L p_ :EC C 0 R co J� m Om 0 w O N (D a0- cc E N ` _ O > •` O U O m m w I o we co R C OC R dwCO 0 ui O U N Q E a a > r- O o o O R R J c o o O � oOU O E E a0 N R L N m d w N N V N y O E ¢ N Q di V7 Q R o Y r c Nn E 0 a W R c a W R 0 y a° L U c7 y O O m N = O d Y o O Y O R o O N C C d O a -It CO N N `o O m O Nto p �`•� N CO I� O N C O Qol 6 O. 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