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Home My WebLink AboutAnnual Reports - 4/1/2014Q�PLLEY AR/lo °Q WATER UTILITY MMISSI N ANNUAL REPORT APRIL 2014 ORD VALLEY CAP WATER WHEELING s�o zt a a< ALERTIN61: TOWN OF ORO VALLEY WATER UTILITY COMMISSIONANNUAL REPORT APRIL 2014 TABLE OF CONTENTS Page About the Water Utility Commission......................................................................I ExecutiveSummary................................................................................................4 CustomerService.....................................................................................................7 MetersDivision........................................................................................................9 WaterQuality...........................................................................:............................10 CurrentWater Supply............................................................................................13 Water Resource Planning and Management..........................................................17 Water Conservation Program.................................................................................19 Utility Operations Production and Distribution.....................................................21 Security and Emergency Response Plan................................................................24 Engineeringand Planning......................................................................................25 FinancialHighlights...............................................................................................28 Appendices A. Utility Statistics B. Capital Improvement Program TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT 2014 ORO VALLEY TOWN COUNCIL Satish I. Hiremath, D.D.S., Mayor Lou Waters, Vice Mayor Brendan Burns, Councilmember William Garner, Councilmember Joe Hornat, Councilmember Mary Snider, Councilmember Mike Zinkin, Councilmember ORO VALLEY WATER UTILITY COMMISSION Robert Milkey, Chair Rick Davis, Vice Chair Javier Arriaga, Commissioner Anne Campbell, Commissioner Rick Reynolds, Commissioner Elizabeth Shapiro, Commissioner Richard Verlaque, Commissioner TOWN STAFF Greg Caton, Town Manager Philip C. Saletta, P.E., Water Utility Director David Ruiz, Engineering Division Manager Shirley S eng, Water Utility Administrator Special recognition to OVWU staff that provided graphics, data, photos and their time to assist in the preparation of this report: Kam Boyce Iris L. Chaparro Robert Jacklitch Jeff Kane George Kendrick Mary C. Kobida Skip Kyle Mark Moore Carolyn Schneider Charles Soper ABOUT THE WATER UTILITY COMMISSION The Town of Oro Valley Water Utility Commission is a seven member commission that is appointed by the Town Council. The Commission meets the second Monday of each month to discuss and review matters pertaining to the Water Utility. The Commission serves in an advisory capacity to Council making recommendations on water policies, water rates and fees, renewable water supplies and water conservation. In 2013, the Commission met nine times to conduct business. All meeting agendas were noticed in accordance with statutory requirements through the Town Clerk's Office and on the Town website. The meetings were broadcast over the internet through the Granicus System. Meeting minutes were taken, posted and then finalized after approval by the Commission. In addition to the regular Commission meetings, there were several meetings conducted by the three Subcommittees. The three Subcommittees include the Finance Subcommittee, the Conservation Subcommittee and the Water Resources Subcommittee. Some specific actions by the Water Utility Commission and recommendations to Council for 2013 include the following: ➢ Election of officers ➢ Review of Water Utility Commission agendas ➢ Recommendation for acceptance of the Annual Report ➢ Recommendation to approve refunding of the 2003 bonds ➢ Recommendation for an increase in water rates and fees ➢ Recommendation to approve a loan with the Water Infrastructure Finance Authority of Arizona for the Advanced Metering Infrastructure Project ➢ Review and approval of meeting minutes There are numerous issues that will be addressed as we move forward in 2014. Some of the major issues include: ➢ Comprehensive planning for long-term CAP water delivery ➢ Review of water rates analysis and developing a Preferred Financial Scenario ➢ Review of water development impact fee studies ➢ Review of reclaimed water IGA ➢ Review possible acquisition of Groundwater Extinguishment Credits ➢ Review of cash reserve policy The Water Utility Commission welcomes our customers, citizens and public to attend its meetings. The Commission and staff thank and acknowledge John Hoffmann and Winston Tustison for their dedication and service on the Water Utility Commission through December of 2013. -1- WATER UTILITY COMMISSION 2014 Robert Milkey, Chair Residential (Town) Finance Subcommittee , K„ Anne Campbell, Commissioner Residential (Town) Conservation Subcommittee Richard Davis Vice Chair Residential (Town) Conservation Subcommittee Javier Arriaga, Commissioner Residential (Town) Water Resources Subcommittee -2- Richard Verlaque, Commissioner Residential (Town) Finance Subcommittee Elizabeth Shapiro, Commissioner Residential (Countryside) Finance Subcommittee Rick Reynolds, Commissioner Commercial/Turf Representative Water Resources Subcommittee -3 - EXECUTIVE SUMMARY TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2014 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 eighteenth Annual Report. It includes topics on customer service, water quality, water supply, water resource planning, conservation, and capital improvements. This report covers information and activities primarily for calendar year (CY) 2013 ending on December 31, 2013. However, some information is only as of fiscal year ending June 30, 2013 and is noted as such in the report. CUSTOMER SERVICE The Town of Oro Valley Water Utility (Water Utility or Utility) has 18,872 customer connections serving a population of 41,816. This includes both the customers within the Town boundaries and the Countryside area. The Utility installed 157 new water connections in CY 2013, a 0.84% growth rate. Approximately 2.33 billion gallons (7,141 acre feet) of potable water was delivered to our customers. In addition, approximately 715 million gallons (2,194 acre feet) of reclaimed water was delivered for golf course irrigation and other uses. WATER QUALITY For the twelfth consecutive year, the Utility is proud to report that it did not experience any water quality violations. The number of tests performed in CY 2013 was 4,021 and our water quality was in compliance with all standards established by federal and state agencies. In addition to testing for water quality, the Water Utility administers a backflow prevention program to protect our water system from potential contamination. CURRENT WATER SUPPLY Oro Valley currently delivers water from three sources of supply. Groundwater is pumped from wells in the aquifer below the Town and delivered through the potable water distribution system. Central Arizona Project (CAP) water is delivered to the Oro Valley potable water system through Tucson Water's Distribution System. Reclaimed water is used for turf irrigation and is delivered through a separate reclaimed water distribution system. Oro Valley also uses its CAP water indirectly through groundwater storage credits. Groundwater levels continue to decline in the Oro Valley aquifer but to a significantly lesser extent than in previous years because of the decrease in groundwater pumping. Operation of the reclaimed water system and the delivery of CAP water have slowed the groundwater decline, thus conserving, preserving and protecting our aquifer and our groundwater supply. Plans for future use of an additional 500 acre feet of CAP water are complete with deliveries expected to start in April of 2014. -4- Planning also continues for the delivery of our remaining CAP water allocation. This will serve as the source of supply for new growth and development. In CY 2013, the Utility pumped 5,993 acre feet (1.95 billion gallons) of groundwater from its wells. The wells in the Oro Valley Water Service Area produced 5,271 acre feet (1.72 billion gallons) and the wells in the Countryside Water Service Area produced 722 acre feet (235.26 million gallons). The total pumped from our wells was 168 acre feet (54.74 million gallons) less than in 2012. This reduction is due to the delivery of our CAP water for an entire calendar year and water conservation efforts in 2013. Well water levels declined an average of 2.76 feet in the Oro Valley Water Service Area and declined 2.21 feet in the Countryside Water Service Area in CY 2013. In 2013, the Utility also delivered 1,530 acre feet (498.55 million gallons) of its CAP through a wheeling agreement with Tucson Water. The Utility also stored CAP water through an agreement with Kai Farms and through permits to store in Central Arizona Water Conservation District recharge projects to obtain groundwater storage credits within the Tucson Active Management Area. The use of our existing groundwater allowance account and groundwater storage credits reduces our obligations to the Central Arizona Groundwater Replenishment District. The following are some of the Utility's resources and assets as of December 31, 2013: Resources: Employees: 36 Groundwater Supply (Assured Water Supply): 13,3 84 acre feet per year Reclaimed Water: 2,227 acre feet per year Effluent Water: 1,773 acre feet per year CAP Water Allocation: 10,3 05 acre feet per year Long Term Storage Credits: 9,508 acre feet Groundwater Allowance Account: 13,759 acre feet Assets: Water Distribution Storage Reservoirs: 19 Potable Water Reservoir Capacity: 11,600,000 gallons Reclaimed Water Reservoir Capacity: 1,500,000 gallons Potable Water Mains: 345.7 miles Reclaimed Water Mains 12.8 miles Potable Water Booster Stations: 25 Reclaimed Water Booster Stations: 2 Operating Wells: 22 WATER CONSERVATION The Water Conservation Program continues to be a vital asset in assisting the Utility to achieve its overall water management goals. In 2013, 125 water audits were performed. Since the program's inception in 2003, participating customers received 1,752 free water audits, which saved our customers both water and money. -5- The Utility encourages water conservation by educating our customers. A Youth Water Conservation Education Program for elementary schools in Oro Valley has been developed and will be implemented in 2014. FINANCIAL HIGHLIGHTS, WATER RATES AND 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 2013, recommendations regarding water rates, fees and charges were provided in the Water Rates Analysis Report. A cost of service study was performed in 2013 which resulted in a change in the rate structure to eliminate tiers for commercial and master -metered multifamily customer classifications. There was also a recommendation for a slight increase in water rates and fees in 2013. There were no changes to the tiered rate structures for single family residential and irrigation classifications. The rate structure change and rate increase were approved by Council on January 15, 2014. The Utility continues to be fiscally sound with cash reserves at 37% of the annual budget. Water rates include a Groundwater Preservation Fee which is used to fund the development of our renewable reclaimed and CAP water supplies. Water development impact fees, which fund expansion of the water delivery system, have been collected to ensure that growth pays its fair share. An impact fee study was completed in compliance with the new legislation. The new impact fee amounts are expected to be approved in April of 2014. The Water Utility refinanced the 2003 Series bonds on June 26, 2013 at a significantly lower interest rate of 1.45% for a six -year term, which will save substantial financing costs. The Water Utility applied for a loan with the Water Infrastructure Finance Authority of Arizona in 2013 to finance the Advanced Metering Infrastructure and Meter Replacement Project. The amount of the loan was for up to $5,000,000 at an interest rate of 2.652%. The loan was approved by Town Council on January 15, 2014 and closed on January 24, 2014. 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 this Annual Report to the Mayor and Council for their consideration. Any questions regarding this report should be directed to Philip Saletta, Director, Oro Valley Water Utility at 229-5010. Additional information for the Oro Valley Water Utility can also be found on the Town website at www.orovalleyaz.gov/Town_GovernmentlWaterUtility W CUSTOMER SERVICE Customer Service personnel include Customer Service Representatives (CSRs) and Utility Operators. This staff is responsible for meter reading, meter installation, billing and collection and customer service for 18,872 water service connections serving 41,816 people. The Utility has grown over the past year and in 2013 an additional 157 meters were installed for a growth rate of 0.84%. Over 5,591 customer accounts were changed in 2013, primarily due to opening and closing of accounts for new move -ins and winter residents. In 2013 the Utility delivered: • 2.33 billion gallons (7,141 acre feet) of potable water • 715 million gallons (2,194 acre feet) of reclaimed water for irrigation to five golf courses and a school athletic field. • Combined total of 3.04 billion gallons (9,335 acre feet) of water delivered and billed to our customers. The Customer Service Division mailed and processed 224,901 bills and 12,478 delinquent notices to our customers during calendar year 2013. The Customer Service Division responds to customer concerns that arise from the operation and management of the water system and in 2013 responded to 34,068 customer contacts averaging 137 contacts per day. Customer contacts can range from handling a payment to responding to questions or problems related to billing, opening or closing an account, water quality or pressure and flow problems. CSRs work closely with field personnel to respond in a timely manner to customer concerns. CSRs are generally the first and sometimes the only contact our customers may have with the Utility. Providing professional and courteous service is paramount to the successful operations of the Water Utility. Customer Service staff collected and posted $24.7 million in payments for the Water Utility, Pima County Regional Wastewater Reclamation Department and the Town's Storm Water Utility. The Customer Service Division bills the Town's Storm Water Utility charges to residents within the Town that are Oro Valley Water customers, Tucson Water customers and Metro Water customers. The Water Utility also collects taxes on water use that are imposed by the State of Arizona and the Town of Oro Valley. These payments and taxes are then distributed to the State, Pima County and the Town. The Water Utility receives all of its revenues from water rates and fees and does not receive any funding from taxes. In 2013 the Utility updated the customer account information on the Water -on -the -Web site. This now includes the ability to view the current water bill and a two year history of billing, payment and water usage information and also pay their water bill online. The Utility provides convenient alternative payment methods for our customers. During 2013, the Utility received $1.9 million in credit card payments. Credit card and other payment options are listed below: J• Toll free telephone number via IVR (Interactive Voice Response) that accepts credit cards for payment • Online credit card payments accepted at the Water -on -the -Web site. • Credit card payments accepted at the Utility office. -7- • Automated Clearing House (ACH) which automatically pays the customer's water bill on the due date from their bank account. • Electronic Funds Transfer — A "paperless" bank to bank transfer of payment funds, which are received faster than traditional paper checks. The Utility also offers "paperless" e-billing feature which sends customers an electronic notification that their current water bill is ready to view on the Water -on -the -Web site. Utility customers may request e-billing online. As part of the original 2011 AMI (Advanced Metering Infrastructure) project in Countryside, FlexNet software continues to enable Customer Service staff to view customer consumption data and accurately determine high water use on their computers while communicating directly with the customer in person or on the telephone. Where AMI equipment is installed, FlexNet software facilitates the monitoring of leaks on a daily basis. Utility Operators provide early leak notification to our customers that conserves water by reducing the amount of water wasted by leaks and also saves our customer's money. This new technology monitors water use on an hourly basis, can trigger alerts and allows for better utilization of resources with the least amount of waste. Since the installation of AMI, the lost and unaccounted for water has decreased. In 2013 the Utility launched AquaHawk, a customer web portal. This web portal utilizes the water usage data from FlexNet. Once a customer is enrolled in this on-line service, they will be able to view their individual water use on an hourly, daily, weekly or monthly basis. Customers can tailor personal notifications based on their individual needs and receive alerts by e-mail, text or telephone. Currently, the web portal is available for those customers that have had their meters replaced with AMI equipment. As the Customer Service Division looks to the future they will continue to select new technology to streamline procedures and increase efficiencies. Utilizing computer tablets, staff is now electronically sending and distributing work orders, service requests, -and new and closed account paperwork from CSRs to the Utility Operators. Employing this technology has reduced staff travel time, wear and tear on vehicles and gasoline and has resulted in higher efficiency and productivity. Utility statistics including meter installations, the number of customer contacts, and water deliveries for CY 2013 may be found in Appendix A. -8- METERS DIVISION Advanced Metering Infrastructure Project The Meter Operations team started 2013 with excitement, and high expectations, to continue with the Advanced Metering Infrastructure (AMI) project and meter replacement program. The Meters Division team worked closely with external contractors and took the lead role in organizing, planning, and scheduling work. Phase I of the program continued in the Oro Valley Water service area and the project included the installation of a monopole and S 5 0 base station, a Metro 50 base station, and installation of approximately 2,400 Sensus water meters and smartpoints. The remaining phases of the project will be completed over the next two years. It is anticipated that all the meters will be equipped with AMI by the end of FY 2016. A $5,000,000 loan from the Water Infrastructure Finance Authority of Arizona was acquired to finance this project. Using AMI technology provides customers with accurate and complete water use information. With AMI software, staff can review water use history on an hourly, daily, weekly and/or monthly basis. This is extremely valuable in assisting our customers. Understanding the benefits and efficiencies gained by using AMI, the Meters Division is excited about expansion of this technology throughout the Oro Valley Water service area. The AMI and meter replacement program provides for more accurate measurements of water usage and also assures that the volume of water billed is accurate. Additionally, the technology provides an opportunity to use existing resources more efficiently by eliminating the need for manual meter reading. The Meters team will be able to redirect their focus and capabilities to other responsibilities such as customer work orders, meter box cleaning, angle meter stop repairs, and meter testing procedures. In 2013, 147 new residential meters were installed and 2,215 residential meters were replaced. In addition, 10 new commercial and irrigation meters were installed and 239 commercial and irrigation meters were replaced. All new meters are AMI- compatible and the replaced meters are equipped with AMI technology. In 2013, there were 224,901 meter readings for billing purposes. Technological Advancements In 2013, the Meters Division team members actively participated in the programming of the electronic meters using new Sensus AR5501 handheld units. These advanced handheld units are capable of data logging, scanning, troubleshooting, and programming that currently require multiple devices. In addition, the technological advancement with the AMI project prompted the water utility to incorporate the use of computer tablets. These tablets allow the Meters Division team to generate or close work orders, receive and send reports, view real time customer usage, and verify delinquent account payments in the field. The team will operate more efficiently and increase productivity with these two technologies since there will no longer be a need to return to a central location to get the required equipment. In WATER QUALITY There is a complex and extensive framework of regulatory requirements and sampling methodology 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 Oro Valley and in many areas throughout the United States are among the cleanest and safest in the world. Water Quality Testing The Water Utility operates two separate 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. In 2013 the Utility received 4,021 analytical results for required water sampling and operational data. 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 required by ADEQ. These stations are located in neighborhoods throughout the water distribution system specifically selected to represent the water quality that is delivered to our customers. The Utility has an additional twenty-nine sampling stations that can be used during emergencies and to meet future testing requirements. Water samples are taken from 50 private residences within the Oro Valley area and tested for lead and copper. 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 website for ADEQ is www.azdeq.gov The Town's water system is in full compliance with all State and Federal regulations. -10- The Utility's State certified water operators are responsible for the health and safety of our customers. The operators meet this responsibility by maintaining a daily vigilance over the system's production, distribution, and water quality. All of our 19 water operators are licensed by ADEQ and attend continuing education and training through Personal Development Hours required by ADEQ. 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 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 on the website. Detection of a contaminant in drinking water does not necessarily represent a threat to public health. Due to current technology, water utilities are now able 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. 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 sodium hypochlorite at a level of 0.2 to 0.8 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 possible unwanted bacteria. During 2013, the Utility collected 696 samples for analysis of Total Coliform bacteria, all samples were negative for bacteria. This is a direct result of a successful disinfection program, effective system monitoring, proficient sampling methods, and routine maintenance. Water hardness is also tested and is a measurement of the concentration of calcium and magnesium. During CY 2013, the hardness levels in Oro Valley range from 1.8 to 12.0 grains per gallon. On average our water quality is in the soft to moderately hard range, which is considered acceptable. In October of 2013, the utility was required to start sampling under the STAGE 2 Disinfectants and Disinfection By -Products Rule. This rule is an important component to EPA's multi -pronged strategy to reduce drinking water risks to human health through improved standards for pathogens as well as disinfection by-products. In compliance with the schedule, the utility began sampling under these new requirements in October of 2013. Compliance with the new Groundwater Rule began on December 1, 2009, and 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 for lead and copper were published in 2006 AI.- Proposed and Pending USEPA Regulations: • Revised Total Coliform Rule November 2012 • Third Unregulated Contaminant Monitoring Rule March 2012 • Revised Long -Term Lead and Copper Rule 2014 • Carcinogenic Volatile Organic Chemicals Rule 2015 • Epichlorohydrin and Acrylamide TBD Oro Valley is a growing community in an and environment. The future of drinking water quality will require continued 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. BACKFLOW PREVENTION Backflow prevention is an important component of water quality. The Town of Oro Valley Water Utility implemented the Backflow Prevention Program in response to requirements set forth in the Arizona State Drinking Water. Regulations. The Backflow Prevention Section administers these requirements in accordance with the Town of Oro Valley Ordinance No. (0) 07-21, the Arizona Department of Environmental Quality Administrative Code, section R18-4-B 115, the International Plumbing Code and the guidelines of the University of Southern California Foundation for Cross Connection Control and Hydraulic Research. The Backflow Prevention Program is designed to protect the public water system from high risk service connections which include, but are not limited to, commercial, fire and irrigation. By state statute single family residences are exempt unless a known hazard exists on the premises. The Backflow Prevention Section oversees 1,307 backflow prevention assemblies. The Utility is required to notify each customer on an annual basis to have each active assembly tested. An initial notification letter is mailed followed by a second and final letter. The backflow prevention assemblies must also be tested if they are replaced, relocated or repaired. Test data must be kept by the Water Utility for 3 years and all assemblies are surveyed on a 3 year cycle. The backflow assemblies that are owned by the Town and in service are maintained, tested and inspected by the Water Utility Backflow Prevention Section. The following are some of the major activities and accomplishments that were performed by the Backflow Prevention Section in 2013: ➢ 190 backflow assemblies owned by the Town of Oro Valley were tested ➢ 58 repairs on in -ground and construction water backflow prevention assemblies ➢ 57 permits for new and replacement backflow prevention assemblies The program works to keep the water supply safe from contaminants that could be introduced into the distribution system through backflow, backsiphonage or backpressure from our customers plumbing systems or internal processes. -12- CURRENT WATER SUPPLY Developed Water Resources • Groundwater: 13,384 acre feet per year • CAP Water: 1,500 acre feet per year • Reclaimed water: 2,227 acre feet per year The Town of Oro Valley has a groundwater supply of 13,384 acre feet per year based on its Designation of Assured Water Supply (DAWS) from ADWR. Under our DAWS for each calendar year our groundwater pumping cannot exceed this amount. This amount is an upper limit of pumping and even though we pump less than this amount, we are required to replace or replenish the total amount pumped. In addition, our sustainable groundwater production is modeled to be 5,500 acre feet per year which we are currently exceeding and this has caused significant groundwater level declines over the years. Developing our renewable water supplies reduces our replacement requirements and decreases our ground water level declines protecting and preserving our aquifer. On June 7, 2013, The Arizona Department of Water Resources renewed our Designation of Assured Water Supply for an additional ten years through December 31, 2023. This renewal allows the Town to grow since it has been demonstrated that it has an adequate water supply. A requirement of our DAWS is that the Town must be a member of the Central Arizona Groundwater Replenishment District (CAGRD). The Town has a Member Service Area Agreement with CAGRD that was approved by Resolution (R) 97-06. All of our wells are now classified as recovery wells. That combined with the recent delivery of our CAP water has eliminated the need to rely on CAGRD to replenish groundwater on our behalf. Annual payments for replenishment to CAGRD are no longer required which saves a significant amount of money. We will still remain a member of CAGRD if replenishment is required in the future and to comply with our DAWS. The Water Utility operates in two water service areas: the Oro Valley Water Service Area (OVWSA) and the Countryside Water Service Area (CSWSA). In 2013, Oro Valley pumped 5,993 acre feet of groundwater from our wells and aquifer. This total is 168 acre feet less groundwater pumping than 2012 due to our CAP water deliveries and water conservation. The wells in the Oro Valley Water Service Area produced 5,271 acre feet and the wells in the Countryside Water Service Area produced 722 acre feet. The table below provides the total water delivery capacities and water demands for both water service areas. The maximum daily usage occurred on June 24, 2013 for the OVWSA and on June 4, 2013 for the CSWSA. Water Service Well Capacity CAP Capacity Average Maximum Demand Area (MGD) (MGD) Demand (MGD) (MGD) Oro Valley 14.63 1.37 6.1 8.65 (OVWSA) Countryside 2.61 0 0.65 1.01 (CSWSA) -13- The following table lists all production wells, the amount of groundwater pumped and their water level changes as measured in January of 2014: Well Water Level Change Summary .Annual. I YEAR 5 YEAR 5 YEAR Pumped CHANGE CHANGE - CS-1 374 2-7 1 9.7 1 -1.9 CS-2 348 -1.8 -18.6 -3.3 C-4 42 -3.3 -1.1.2 2.2 C-5 245 -3.0 -8.3 -1.7 +C-6 385 -3.2 -3.9 -0.8 C-7 319 -2.5 -19.0 -3.8 +C-8 287 -2.3 -13.9 -2.8 C 9 385 -4.5 -16.3 3.3 p-1 77 -1.3 1.5 +0.3 D-4 87 -4.8 -15.7 3.1 D-5 0 -0.9 4.4 -8.9 C-6 182 -19.3 -1t8 2.3 D-7 270 -1.8 20-3 -4.1 D-8 332 2.5 -27.5 -5.5 D 9 540 -0.1 -1.2-1 -2.4 E-1 B 280 0-0 1 2.3 NA E.2 190 -1A 2.8 0.5 E-3 229 -1.5 -5.8 -1.2 E-58 287 -1.8 8.9 1.8 E-66 311 2.5 -6.6 -1.3 E-7B 320 4.2 -9A -1.9 F-1 502 -2.8 -7.3 -1.5 Evotwte-- Well E-lb has only 3 yew of data Groundwater studies indicate that the Oro Valley aquifer has a sustainable groundwater production rate of approximately 5,500 acre feet per year. In 2013, Oro Valley pumped 493 acre feet more than the sustainable groundwater production rate for our wells. In the OVWSA, the average annual well water level decline for the last 5 years is 2.01 feet and for calendar year 2013 there was an average well water level decline of 2.76 feet. For wells in the CSWSA, the average annual well water level decline for the last 5 years is 2.63 feet and for calendar year 2013 there was an average well water decline of 2.21 feet. For all wells, water level changes in CY 2013 varied from no decline to up to 10.33 feet of decline. The continued use of our renewable water resources in 2013 has reduced our reliance on groundwater. The use of reclaimed water since October of 2005 has helped to reduce the impact on the Oro Valley aquifer over the last eight years. The Town of Oro Valley currently has a reclaimed water supply of approximately 2,227 acre feet per year. This was acquired in 2003 under an Intergovernmental Agreement (IGA) with Tucson Water (TW). Groundwater pumping was further reduced this year through the delivery of our CAP water under a wheeling agreement with Tucson Water. Future development of these renewable water resources will further reduce our groundwater production. and will help achieve our goal of protecting and preserving our aquifer. it L. -14- The diversification of our supply has benefited our aquifer by preserving and protecting our groundwater. The following table graphs water usage from 2004 trough 2013 depicting our reduction of groundwater usage, the use of reclaimed and delivery of our CAP water. 12,000 1 0.t000 8YO00 �- 6.1000 41000 Z000 0 TOTAL. ANNUAL WATER PRODUCTION 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CALENDAR YEAR Undeveloped Water Resources • Central Arizona Project Water: • Long -Term Storage Credits: • Ground Water Allowance Account: • Effluent Water: C= CAP WATF2 . RECLAIMED WATER � GROUND WATER i��`SUSTAINABLE G+i'#1 RATE 8,805 acre feet per year 9,508 acre feet 13,759 acre feet 1,773 acre feet per year The Town currently has undeveloped water resources that consist of our CAP water allocation, Long -Term Groundwater Storage Credits, Groundwater Allowance Account and effluent water. In 2013, 1,530 acre feet of our CAP water were delivered (wheeled) to the Oro Valley Water Utility service area through a connection to the Tucson Water system. Development of our reclaimed water system and our CAP water provide "wet" renewable water supply to our community reducing groundwater use and eliminating our obligations to the CAGRD. The long-term groundwater storage credits are used indirectly through recovery wells as "paper water" credits that offset groundwater usage and reduce CAGRD obligations. The Town currently has a total allocation of CAP water in the amount of 10,305 acre feet per year under a Municipal and Industrial (M&I) subcontract with Central Arizona Water Conservation District (CAWCD). -15- 11 Of this amount, 1,500 acre feet are developed through the first phase of the IGA with Tucson. The remaining 8,805 acre feet of our CAP M&I subcontract water is critical to the Town and its future water supply. In 2014, an additional 500 acre feet of our CAP water will be developed to further reduce our reliance on groundwater and to protect and preserve our aquifer. At this point there is no infrastructure in place to directly deliver or directly recover the remaining amount of our CAP water. The infrastructure to deliver our remaining CAP water will be developed based upon our water demands, aquifer conditions and new growth. The Utility has obtained permits to store CAP water at the various recharge facilities listed below and has stored the following amounts in 2013. • Kai Farms 4,000 acre feet • Lower Santa Cruz Replenishment Project 1,400 acre feet • Central Avra Valley Storage and Recovery Project 1,600 acre feet • Total amount stored in 2013 7,000 acre feet The Utility will continue to recharge CAP water for our recovery wells and to build long- term storage credits until such time that our CAP water is needed for future delivery. In addition to our long-term storage credits, our Groundwater Allowance Account (GWA) must be used wisely and carefully managed over the next several years. Additional purchases of Groundwater Extinguishment Credits will be evaluated and considered in the future to increase the balance of the Groundwater Allowance Account. Included in the Town's DAWS is 2,227 acre feet per year of reclaimed water which is derived from our wastewater effluent. Oro Valley owns its wastewater effluent through an IGA with the City of Tucson. The Utility delivered 2,194 acre feet of reclaimed water in 2013. The reclaimed water system supplies irrigation for five golf courses and the athletic fields at one elementary school. The remaining amount of undeveloped wastewater effluent is used for obligations to Pima County and for the Southern Arizona Water Rights Settlement Act (SAWRSA) obligations. In 2013, the Utility extended the term of the Reclaimed Water Intergovernmental Agreement with Tucson Water for an additional year through October of 2014. This extension will allow for time to evaluate if interruptible reclaimed water service from Tucson Water is feasible. The Reclaimed IGA will also be reviewed for any other potential changes. Under our Designation of Assured Water Supply, we are required to comply with the Third Management Plan in the Tucson Active Management Area. We have been in compliance with the Assured Water Supply Program and expect to meet all the requirements of this program in 2014. WATER RESOURCE PLANNING AND MANAGEMENT The Utility's water resource planning effort incorporates previous studies and reports that have been developed over recent years. These reports provide the framework for water resource planning and 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. Water resource planning will involve investigating alternatives for future water supply and delivery and will include the following: ➢ Groundwater development ➢ Reclaimed water system ➢ CAP water planning and development ➢ Water conservation Potable Water System The potable water system improvements are included in the Fifteen Year Capital Projects Program. The demand on our wells has been significantly reduced due to use of reclaimed water for irrigation and the delivery of our CAP water through the Tucson Water system. The use of reclaimed and CAP water preserves and protects our aquifer and valuable groundwater. All groundwater depletions must be replaced through the use of our recovery wells, our Groundwater Allowance Account and our Long -Term Storage Credits. We are no longer reliant on the Central Arizona Groundwater Replenishment District (CAGRD) for replenishment. Our aquifer has benefited from the development of our renewable water and because water levels are declining less, we have been able to permit all of our wells as recovery wells in 2013 through the Arizona Department of Water Resources. jReclaimed Water The use of reclaimed water for turf irrigation has a beneficial impact on the Town's aquifer. The Utility will continue to look for opportunities to expand the customer base of the reclaimed water system for turf irrigation. In addition, non -turf irrigation uses such as landscape irrigation, construction water, dust control and street cleaning uses may also be served with reclaimed water to help reduce demands on the groundwater aquifer. The Development and Infrastructure Service Department is currently using reclaimed water for street cleaning and other approved maintenance purposes. This saves the Town both water and money. In 2014, the reclaimed water system will be extended to deliver water to Naranj a Park. -17- Central Arizona Project Water The Utility has developed studies that look at various alternatives and the associated costs for a future delivery of our CAP water. These studies will provide the basis for determining which projects will be built in the future. The Town has executed an Intergovernmental Agreement with the City of Tucson to deliver a portion of the Town's CAP water wheeled through the Tucson Water system via a connection to the Oro Valley Water Utility system. The IGA with Tucson allows for up to 2 000 acre feet per year of Oro Valley's CAP water to be delivered (wheeled) through the Tucson Water (TW) system. This is a mutually beneficial project in that Tucson Water uses its excess capacity and receives revenues that shares in operations and maintenance costs. Oro Valley benefits in that it receives "wet" (actual) water deliveries of renewable CAP water and reduces its reliance on groundwater. In 2013, there was a delivery capacity of 1,500 acre feet per year of our CAP water. In 2014, an additional capacity of 500 acre feet per year will be added for a total delivery capacity of 2,000 acre feet per year. As part of our long-term planning an additional 1,500 acre feet of renewable CAP water will be developed for new growth in the next 10 years. This will increase our total renewable CAP water deliveries to 3,500 acre feet per year. Funding for the development of renewable CAP water for new growth under the water resource planning effort has been included in the g Utility's budget under the Alternative Water Resources Development Impact Fee Fund budget. Oro Valley's CAP water is delivered from the CAP canal and TW's recharge facilities at the Central Avra Valley Storage and Recovery Project and/or the Southern Avra Valley Storage and Recovery Project. The water is then pumped into the TW distribution system and delivered to the northern part of the TW system. A connection to the Oro Valley system was made near Naranja and Shannon at the TW Naranja C-Zone Reservoir site. A pump and pipeline were installed by Oro Valley to deliver its CAP water to the Oro Valley water distribution system. All water is accurately metered and accounted for billing purposes and to assure delivery volumes. In 2014, the additional 500 acre feet per year of delivery capacity will be added to the south end of the Oro Valley Water Service Area and to the Countryside Water Service Area. The development of a portion of our CAP water through the Tucson Water IGA provides L financial benefit to our customers in that it defers significant expense to develop a major capital project. Oro Valley Water Utility will continue to plan for the development of the r remaining portion of our CAP water. Long-term plans for recharge and recovery and/or L treatment and direct delivery of our CAP water will be developed to determine the best alternative and plan for delivering our CAP water in the future. I The Town of Oro Valley is committed to the use and future delivery of our CAP water to meet the demands of new growth. We will continue to work regionally to deliver our CAP water to our community. -18- WATER CONSERVATION PROGRAM Water conservation is an important factor in balancing our current and future water supply needs. Climate and the demands on our water supply place a significant impact on our water resources. Combine the state's and climate with persistent drought conditions and the importance of managing our water resources effectively becomes even greater. The Utility recognizes the complexity and importance of sustained reliability. The Water Conservation Program is an important element in the overall water resource management efforts of the Utility. The following are services we provide to educate and inform our customers through the Conservation Program. ➢ Water Audits Water audits are the assessment of water use both inside and outside the home or business and include residential, commercial, and neighborhood common areas. Water audits are provided free of charge to utility customers. ■ 125 audits were completed in 2013 ■ 1,752 audits have been completed since the program began in 2003 ■ Average water savings of 14% in the first year after the audit for audits completed in 2012 ➢ AquaHawk Alerting AquaHawk Alerting is a free service for Oro Valley Water Utility customers that will assist them in efficiently managing their water usage and lowering their monthly bills. The features and benefits of AquaHawk Alerting include: ■ Timely leak alerts that can be sent to a cell phone, home phone or email ■ Water use monitoring to identify problems more quickly ■ Water expense monitoring -19- ➢ Conservation Resources A wide variety of conservation literature is available to Oro Valley customers at no cost r and is offered at the library and our main office. The Oro Valley Water Education L Activity Booklet for children is now available as well. In additional to traditional literature, the utility provides public outreach efforts with the following: ■ Water -Wise Landscaping for Southern Arizona CD ■ Water Ways Newsletter published in the Oro Valley Vista ■ Conservation staff participates in events and public speaking opportunities ➢ Youth Water Conservation Education Program As part of our water conservation education efforts, the Water Utility, with the help of Environmental Education Exchange developed a youth water conservation education program for Oro Valley schools called Conservation Kids. Conservation Kids is an interdisciplinary program that has been specifically designed for first through third grade learners and focuses on the water cycle, water supply, and water conservation in Oro Valley and the Tucson Basin. This program meets state education requirements and will serve over 500 students in the first year. To view the Conservation Kids video go to the following website: http://vavNv.yout-Libe.com/watch?feature=i)layer embedded&v=2zDNyEHTN3A ➢ Incentives The current incentive program includes irrigation system rain sensors which are sold at a reduced rate to our customers. It also includes low -flow shower heads and low -flow sink aerators at no cost to our customers. ■ Approximately 670 rain sensors have been sold to date ■ A Rain Sensor Installation Guide is distributed by the Utility and is also available on our website. The Guide is available in English and Spanish. -20- WATER UTILITY OPERATIONS - PRODUCTION AND DISTRIBUTION All Production Division and Distribution Division personnel are operators licensed and certified by the Arizona Department of Environmental Quality (ADEQ). The operators have the direct responsibility to operate the water system(s) according to the regulations and rules set forth by the EPA (40CFRI41) and ADEQ (Arizona Administrative Code Title 18). Water systems are classified by the level of operator certification required by ADEQ. Operator certifications are classified into one of four grades with Grade 1 being the most simple and Grade 4 being the most complex. For more information please visit the ADEQ website at tivtivw trzdey. kov. Production and Distribution personnel work very closely to address any water system problems. The Production and Distribution Divisions also provide on -call staffing to respond to water system problems 24-hour 7 days per week. This on -call staffing utilizes a tiered level after-hours response protocol that is in accordance with the developed Emergency Response Plan. Production Facilities Division Water 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. There are a total of 49 sites that are maintained by the Production Facilities staff. In 2013, a new Electrical/Control Technician was added to the Production Division to reduce the need for outside electrical services. The two potable water systems are chlorinated systems controlled and monitored by the Production Facilities Division. Chlorine dosage rates and residuals are monitored on a daily basis. The potable system located within the Town of Oro Valley Water Service Area (OVWSA) is a Grade IV Water Distribution and a Grade II Water Treatment system and currently delivers water to twenty pressure zones and a consecutive system located at La Cholla Air Park. The potable system that is not located within the Town boundaries, known as the Countryside Water Service Area (CSWSA), is a Grade III Water Distribution 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 14.63 million gallons per day (10,162 gpm) with a storage capacity of 10.7 million gallons. The groundwater production capacity within the CSWSA is currently 2.39 million gallons per day (1,660 gpm) with a storage capacity of 0.90 million gallons. The CAP delivery capacity into the OVWSA system is 1.44 million gallons per day (1000 gpm). The Production Facility Staff continues to be proactive in the implementation of facility upgrades and a preventive maintenance program. Facility sites are evaluated annually to determine necessary upgrades to ensure efficient operation of the facilities. -21- A continuing effort to retrofit water level sensing equipment in each production well will help the Utility collect monthly water level data and will assist in the development of a more accurate water level database and to analyze trends. Monthly monitoring of the water levels 11 also helps 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 of the Production Facilities Division in CY 2013: ➢ Maintained disinfection injection pumps and tested disinfection residuals daily at well site injection points on systems AZ0410164 and AZ0410175 . ➢ Performed mechanical and general maintenance at 22 wells, 27 booster stations and 19 storage tanks including follow-up electrical preventative maintenance. ➢ Performed the annual groundwater level survey and report. ➢ Assisted with five reservoir exterior and interior inspections. ➢ Assisted with the well monitoring capital project and quarterly reports. ➢ Competently operated the potable and reclaimed systems utilizing the SCADA p y p system. ➢ Responded to after hours calls totaling 359 work hours ➢ Completed 4,772 work hours related to assigned work orders. ➢ Performed SCADA network system maintenance on forty-four Remote Terminal Units two Master Controllers, two Human Machine Interfaces, and two Network Servers. ➢ Performed daily chlorine tests and routine site checks. ➢ Completed SCADA equipment upgrades. ➢ Maintained operational balance for CAP water delivery to the 10-164 system. ➢ Continued well meter replacement program with the installation of 10 ultrasonic now meters. ➢ Assisted Engineering with Energy Efficiency Program and pump curve testing. ➢ Electrical preventative maintenance cataloging of all production sites has been initiated. ➢ Converted to paperless work -order and reporting systems. ➢ Installed 6 new groundwater level sensors. ➢ Completed installation of larger battery back-up systems at reservoirs. p ➢ Constructed 400 square foot workshop at reclaimed water booster facility. ➢ Installed 7 air temperature transmitters and one solar radiation transmitter to track ambient conditions via SCADA. ➢ Develop p and implement work program for new Electrical and Control Technician. The Supervisory Control and Data Acquisition (SCADA) system is continuously updated, T p y . improved and programmed to streamline operational control, data trending, and alarm 1 p p g annunciation. The SCADA system, a centralized industrial network, currently monitors and ann Y . controls all potable and reclaimed system facility sites. Utility staff monitors and operate all co p weekwatersYstems via the SCADA system on a twenty four hour seven clay a (24/7) basis. Production facilities staff is also responsible for the installation and maintenance of security devic es at the Utility's facilities. The SCADA system has been updated with new HMI and main servers, monitors, and the latest RSView32 software. -22- Distribution Facilities Division Utility personnel in the Distribution Facilities Division are responsible for the operation and maintenance of 345.7 miles of potable water mains, 12.8 miles of reclaimed water mains for a combined total of 358.5 miles of water mains. There are 2,109 fire hydrants and 7,690 valves on the water distribution system. The staff conducts maintenance programs and repairs that keep the distribution system functioning properly and minimizes problems that are inherent to water distribution systems. Data bases have been established for the documentation of maintenance and replacement of hydrants; pressure reducing valves, and air release valves. A valve exercising program that helps monitor equipment and develop maintenance cycles has been established. The program provides information and equipment history data that facilitate a proactive replacement program. The Distribution Division also has significant direct customer contact and responds to customers regarding pressure or flow related problems in the field. The Distribution staff will continue to provide a high level of professional performance and courteous service to our customers. The Division works closely with Customer Service and responds to complex customer work orders such as high/low pressure complaints, water quality, service line breaks, hydrant repairs, system pressure regulating valves, system air relief valves and system flushing. Repair of water line leaks are always treated as an emergency and are repaired quickly to minimize impacts to our customers. The Distribution staff has also taken on more construction responsibilities by repairing more main line and service line breaks. The Division also is responsible for bluestaking all underground water mains. The Division is responsible for maintaining 15 active and 7 inactive pressure reducing valves (PRV) for a total of 22 PRVs, 789 air relief valves and 873 drain valve assemblies. The following are some of the major activities and accomplishments that were performed by the Distribution Facilities Division in CY 2013: ➢ Maintained, replaced and/or repaired 78 fire hydrants ➢ Flow tested 50 fire hydrants to assure fire protection ➢ Performed 100 tests and/or repairs for the maintenance and operation of the 22 pressure reducing valves ➢ Maintained, replaced and/or repaired 83 air relief valves ➢ Maintained, replaced and/or repaired 10 drain valve assemblies ➢ Performed 3,589 bluestakes for underground pipeline and facilities locations ➢ Responded to and repaired 4 water pipeline break ➢ Responded to 276 customer inquiries in the field ➢ Responded to and repaired 21 service line breaks ➢ Responded to 181 after hour call outs ➢ Installed 55 new hydrant defenders ➢ Maintained 290 water valves/Replaced 6 main line valves -23 - SECURITY AND EMERGENCY RESPONSE Under current Federal guidelines, water operations personnel are considered first responders. U g • ... Though primarily mandated by State rules with public health responsibilities, water operators g p Y o have a public safety responsibility with relevance to the water systems they are charged also p y p with operating. eratin . First response staff and vehicles are placed in an after hours position to directly respond to an emergency in order to minimize any impact on the water system. p Production Facilities and Distribution Facilities staffs coordinate their response actions and w pan ill respond with an appropriate level of personnel to mitigate the problem. Any facilities security situations also directly involve the Oro Valley Police Department as a first response action. 13 Utility personnel, with the assistance of a security consultant, reviewed, refined and In20 yp � updated the securityram, Emergency Response Plan, and the Business Continuity Plan g The ERP and BCP are currently up to date regarding the Utility operational or (BCP). response situations contact information and procedures. The changes are designed to protect and g "harden" the facilities against potential threats from the acts of people who wish to do harm to the residents of Oro Valley. In2 ypro 013 under the security ram, a series of training classes and exercises were made g available and completed by the Utility Staff. This training is done on an annual basis as per the guidelines from the Department of Homeland Security, FEMA, and the EPA. A town - wide security training table -to exercise involving water utility personnel was conducted this wid y g p year b the Oro Valley Police Department. Operations personnel also receive emergency courses provided by ADEQ. The Utility will continue to implement the management elem ents defined in the VA, ERP and the BCP as well as those that may be identified through the course of business. The ro hydrant lock ram continues to be implemented through the new development y program process and all hydrants within Oro Valley systems are protected from illegal entry and use. In 20y 13 55 new hydrant defenders and locks were installed. Security features, which include perimeter fencing,it walls, warning signage, motion sensors, and cameras at all active y production facilities, were inspected to maintain integrity. e Water Utility also has the equipment and capability to test water samples under a first The y q response ("fingerprint") scenario. A continuing program has been initiated to chemically characterize the water produced. This will help identify any anomalies during a suspected event involving water quality. These baseline data are taken on a monthly basis. The Utility is kept abreast of local, regional and national security issues via weekly situation reports provided by Water Information Sharing and Analysis Center (Water ISAC). The Utility is also a member of the Arizona Water/Wastewater Agency Response Network (AZWARN) which mutually cooperates with other water and wastewater providers in an emergency. -24- ENGINEERING AND PLANNING The Engineering and Planning Division is responsible for planning and managing the design, construction and inspection of all new water infrastructures for the Town of Oro Valley as well as planning for the delivery of new water resources to the Town. New water infrastructure is constructed both through the new development process where the developer finances the project and through the Water Utility's capital improvement program. Geographic Information System (GIS) The GIS section is responsible for managing and maintaining a Geographic Information System data base on all existing water system infrastructure in coordination with the Information Technology Department. Maps produced by GIS staff facilitate Operations and Planning and Engineering. New Development The New Development Section is responsible for facilitating development by reviewing and approving water improvement plans for proposed new developments. In 2013, the New Development Section reviewed and approved 14 water improvement plans for construction. Eight plans were constructed, inspected, approved as -built, and placed into service. The completion of these New Development projects together with Capital projects added approximately 2.6 additional miles of pipeline to the existing water distribution system. Construction Inspection All new development and capital projects are inspected during construction for conformance with the approved design as well as material and installation standards. The Water Utility has two full time Construction Inspectors and utilizes the services of a consultant inspector to assist when specialized inspections are required. CAPITAL PROJECTS The Engineering and Planning Division manages the design and construction of capital projects identified in the capital improvement program and annual operating budget. These projects are designed to improve efficiencies to existing facilities and improve service levels. These capital projects are described below. Design Projects ➢ Completed engineering design for a Chlorine Delivery System and a Retention Basin Liner located at the Reclaim Facility. Construction is scheduled to commence in April 2014. ➢ Completed design for a CAP Interconnect Metering Site in the vicinity of Northern and Hardy and for interconnect at our Countryside Service area. Construction is scheduled to commence in March of 2014. ➢ Currently, we are designing a main replacement in the Countryside service area near well CS2 on Hartman Lane. Construction is scheduled for FY 14/15. -25- Planning Studies The Water Utility completed a CAP water quality study for the connections at Northern and Hardy and at the Countryside service area. The study included the evaluation of blending groundwater and CAP water to further reduce total dissolved solids and hardness. Completed Construction Projects Rancho Vistoso Retail Center Valve Replacement Project The contractor removed non -operating valves at the retail center located at the entrance of the Rancho- Vistoso and Oracle Road. New valves were installed and pavement repaired. Well Flow Meter Project Water Utility staff purchased and installed 10 new flow meters for various production wells in the Town. Tangerine Hills Valve and Hydrant Replacement Project The contractor installed over 30 new isolation valves, 18 fire hydrants and 200 feet of 6- inch pipe. The project was completed in the summer of 2013. -26- Current Construction Projects Naranja Park Potable and Reclaim Water Project Water Utility staff is installing 1,400 feet of 8-inch potable water main to serve the park. In addition a contractor will install 3,200 feet of 12-inch reclaim main on Naranja Road to the park entrance. Water Utility staff will then install 1,400 feet of the remaining 12-inch reclaimed water line within the park for irrigation of the fields. Security Wall at Countryside Well CS2 Contractor is building a stucco security wall at well CS2 on Hartman lane. The existing chain link fence will be removed and new site grading and drainage will be completed. Future Projects: Capital improvement projects planned for FY 2014-15 include the following: ➢ AMI Meter Replacement Phase 3 ➢ Relocate existing main on Naranja - DIS Road Improvement Project ➢ Install new Pressure Reducing Valve (PRV) on Cliff Dweller ➢ SCADA Legacy Equipment Replacement ➢ Water Main Valve Replacement Program J ➢ Energy Efficiency Booster Station Upgrade Program ➢ Construct Security Wall Well C-8 (Highlands) ➢ W Lambert Lane 12 Inch Main Design — DIS Road Improvement 1 ➢ System Connection Upgrades � ➢ Tangerine 12 Inch Potable Main Relocation —Design ➢ Tangerine 24 Inch Reclaim Main Relocation —Design 1 ➢ La Cholla D-E Blending Booster Station J ➢ Countryside — CS to CS2 12 Inch Main Replacement The capital projects for existing system improvements FY 2014-15 are planned to be cash funded. It is proposed that projects in future years will be cash funded and/or debt financed through loan or bond proceeds. i � Please see Appendix B for the 15 Year Capital Project Program. _27_ I FINANCIAL HIGHLIGHTS �Ll 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 Operating Fund provides funding for the Water Utility administration and operations as well as existing system improvements. The sources of revenue for this fund are water sales and service related charges. ➢ The Potable Water System Development Impact Fee Fund provides funding for expansion related projects for new growth. The source of revenue for this fund is potable water development impact fees. These fees are paid at the time a meter is purchased. The funds collected ensure that system expansion is paid for by new development. ➢ The Alternative Water Resources Development Impact Fee Fund provides funding for the development of renewable sources of water supply, specifically reclaimed water and CAP water and any infrastructure required for delivery of those resources. The sources of revenues for this fund are impact fees and Groundwater Preservation Fees (GPF). Alternative water resources development impact fees are paid by new development for that portion of renewable water supply and infrastructure attributed to new growth. The GPF is paid by existing customers for their portion of renewable water supply and related infrastructure. The following table contains the actual revenue received for FY 2012-13 for all funds within the Utility: Revenue Source Amount Received Potable Water Sales: Residential $ 7065370 Commercial $ 9511598 Irrigation $ 1,03501 Turf $ 133,300 Construction $ 192,388 Reclaimed Water Sales: Turf $ 1553 55844 Construction $ 888 Irrigation $ 195000 Misc. Service Fees & Charges $ 6355623 Total Enterprise Fund $1291709612 Groundwater Preservation Fees $ 2A%520 Alternative Water Resources Development Impact Fees $ 1,253,055 Development Impact Fees Potable Water System $ 709,15 9 Interest Income (Loss) ( $ 15,889 ) Total All Funds for FY 2012-13 $1696069457 -28- The budgeted expenditures (excluding depreciation and amortization) for the Operating Fund are compared to the actual expenditures for FY 2012-13 in the following table: Expenditures Budget FY 2012-13 Actual Spent FY 2012-13 Difference Under (Over) Budget Percentage Under (Over) Budget Personnel $ 25547,470 $ 2,5379150 $ 105320 .5 % O&M $ 606,851 $ 552355002 $ 7715849 13 % Capital $ 351845500 $ 350285605 $ 1555895 5 % Totals $1197389821 $1098009757 9389064 8 % The Utility's O&M expenditures were under budget as a result of not being able to purchase Groundwater Extinguishment Credits and CAGRD savings resulting from the efficient management of our water resources. Debt Service The following table is a summary of the outstanding debt and the next annual debt service payments (principal and interest) for all funds within the Utility: Fund Bond Series Outstanding Debt As of 12/31/13 Debt Service Payments FY 2014-15 Maturity Dates of Bonds /Loans Operating 2003 $ 0 $ 0 07/01/2019 Operating 2003 $ 0 $ 0 07/01/2028 Operating 2005 $ 15420,650 $ 152,516 07/01/2025 Operating 2007 $143890.5300 $ L2555948 07/01/2026 Operating (WIFA) 2009 $ L8%858 $ 149,368 07/01/2029 Operating 2012 $ 4,8191674 $ 582,284 07/01/2028 Operating 2013 $ 6,35500 $ L046,558 07/01/2019 Operating (WIFA) 2014 $ $ 405,961 07/01/2029 AWRDIF 2003 $ 0 $ 0 07/01/2028 AWRDIF (WIFA) 2008 $ 3,4295474 $ 316,526 07/01/2027 AWRDIF 2012 $ 8,785,169 $1061372 07/01/2028 PWSDIF 2003 $ 0 $ 0 07/01/2023 PWSDIF 2003 $ 0 $ 0 07/01/2028 PWSDIF 2012 $ 2,710,156 $ 327,424 07/01/2028 Totals $44,2799281 $ 5,297,957 In June 2013 the Utility refinanced the last of the 2003 bonds at a lower interest rate to reduce annual debt service payments but did not extend the term of the bonds. The Utility is financing the AMI and meter replacement project with a WIFA loan. The loan is in the amount of $5,000,,000 with an interest rate of 2.652% and a 15 year term. This loan closed on January 24, 2014; therefore, no funds were drawn on the loan in 2013 resulting in no outstanding debt at December 31. The Water Utility and Finance Department will continue to review outstanding bonds to look for opportunities to reduce debt service payments. -2 7 Water Rates and Development Fees 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. In 2013 the Utility hired a consultant, CH2M HILL, to perform a cost of service study and development impact fee study. The water rates analysis for 2013 was performed as part of the study. The cost of service study and water rates analysis resulted in the restructuring of the water rate design for the commercial and multifamily customer classifications by eliminating the tiers within their commodity rates. The existing tiers did not change for the residential and irrigation customer classifications. To remain revenue neutral with the new rate structure, a modest rate increase to all potable commodity rates was recommended. There were no increases to the monthly base rates or the groundwater preservation fees. The reclaimed water rates did not increase since that classification is generating sufficient revenue to meet its revenue requirements. Other fees and charges that were increased include the new development plan review fee, the construction inspection fee and the late payment fee. The Town Council approved the new rate structure and the rate increases on January 15, 2014. To meet the state statute regarding development impact fees, CH2M HILL performed an impact fee analysis on the Utility's Alternative Water Resources Development Impact Fee and Potable Water System Development Impact Fee. The study was completed in October of 2013. The revised impact fees will be considered for adoption by the Town Council on April 25 2014. If approved, the new impact fees will become effective on July 1, 2014. It is proposed that there will be a decrease in the Potable Water System Development Impact Fees and the Alternative Water Resources Development Impact Fees for residential, commercial and multifamily. There is a proposed increase in these fees for irrigation meters. All current water rates, fees and charges including impact fees are available to view on the Town website at http:llinviv.orovalleya.:r.gov/Toivn_GovernmentlfVaterUtility/TVater Rates and Fees. htin -30- o JP`-EY ROUND ED �g'l TOWN OF ORO VALLEY WATER UTILITY COMMISSION 2014 ANNUAL REPORT APPENDIX A UTILITY STATISTICS YEAR 2011 2012 2013 Customer Base 181545 187716 187872 Water Deliveries in Gallons 2139571421000 272667515, 000 2, 326, 944, 000 Reclaimed Water Deliveries in Gallons 735, 065, 000 683, 925, 000 714, 880, 000 B I uestakes 21880 31537 31589 Customer Contacts Customer Service 337718 317437 341068 Field Operations 5,290 31241 81635 Water Conservation -Audits 119 143 125 Water Quality Samples 27969 21250 4,021 Meter Reads 2191973 2221304 224,901 Billing Collection Rate 99.83% 99.99% 99.99% A-1 Reclaimed Water Deliveries in Gallons ' 7141880,000 bu;svzbuuu 750,000,000 — ' 700,000,000 650,000,000 600,000,000 550, 000, 000 — 500, 000, 000 — 450,000,000 40070007000 _ 2011 2012 2013 B I u esta kes 34537 3 589 41000 a2�880j 3,500 s { 31000 21500 i 21000 1,500 11000 500 _.._.�v._. __...... 2011 2012 2013 A-2 A-3 Meter Reads 2199973 222,304 2249901 250,000 - 200,000 1507000 100,000 50,000 2011 2012 2013 A-4 $952,0% 1.751.434.000 Accounts By User Type As of December 31, 2013 17,777 Gallons Sold By User Type January - December 2013 2355628,000 711,215,000 11,000 41,484,000 Revenue By User Type January -December 2013 $7.827.979 $130,076 lil ,637,U6U 11067,679 ■Construction - 1 % oCommercial - 2% ■Residential - 95% ■ Irrigation - 2% o Reclaimed - 0% ■ Potable Turf - 0% ■Construction - 1 % oCommercial - 7% ■ Residential - 58% ■ Irrigation - 8% o Reclaimed - 24% ■ Potable Turf - 2% ■Construction - 2% oCommercial - 8% ■ Residential - 66% ■ Irrigation - 9% o Reclaimed - 14% ■ Potable Turf - 1 % A-5 E 2 Im 0 m 0 CN 0 t- M CL CCU > 0 CL CL 0 > C3aarr C) 0 C:� C) C) C) C) C) Ct C� C) C) 0 Cr C) m C� C� 0 C) C) 0 C) a C� C� C) 0 0 0 C� 0 0 C) a CD C� C� C> 0 0 a 0 a C� Ci 0 C) o 0 C� 0 C) 0 C) 0 C� Ct C) 0 0 C) C) C) C� C� C) 0 0 0 C) 0 Ct 0 C) o 0 a a C) 0 0 & CT 0 0 0 & C) 0 a 0 0 a Ld CT 0 C) 0 a a C) L6 o 0 a CD C) a a & & C) C) 0 C) 0 0 & & 0 C) a 0 0 0 & & 0 a a 0 a 0 & a C) 0 C) CD a C) a a CD 0 C) & & C) 0 0 a 0 C) & & 0 CD 0 6 O O N 0 1� to N a N co cm O a (D 603 U") M C14 691 69. 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