1. Hernando County’s Utilities Infrastructure Opportunity through the American Recovery and Reinvestment Act of 2009 (the Federal Stimulus Package)

2. The Glen WWTP ……………….$20,000,000 SR50/US19 FM & LS ………….….…$4,000,000 Northcliffe FM & LS ……...……….…$1,500,000 The Glen Reclaimed Water System ……….$3,000,000 Weeki Wachee FM & LS ……………..…..$2,750,000 Phase 1 SRF Funding

3. Quality Dr to Airport FM ………………...$5,000,000 Airport WWTP Expansion ………………$45,000,000 County Line Rd FM ………………..$7,000,000 Spring Hill Master Lift Station …………..…….$2,000,000 County Line Rd RCW Main ….………….….$5,000,000 County Line Rd FM, US19- Cobblestone (under const)........................$3,000,000 Phase 2A SRF Funding

4. SR50/Kettering LS Bypass & FM ……………………..$1,250,000 Ridge Manor RCW & FM ……………….…….$4,500,000 Ridge Manor WWTP …………………....$24,000,000 US301/Kettering Rd FM ……………………..$2,250,000 Phase 2B SRF Funding

5. Phase 1 –“Fully Funded” status for $45,000,000 in low interest loans through the Clean Water State Revolving Fund (SRF) Phase 2 –Number 1 Ranking on “Contingency List” for $109,000,000 in Clean Water SRF funding Hernando County’s Current Status

6. Choices Do Nothing –Doesn’t replace aging infrastructure –Doesn’t solve odor problems at Spring Hill Plant and Berkeley Manor –Doesn’t get key infrastructure out of storm surge zone –Doesn’t expand water re-use capability –Doesn’t meet commitments for expanded capacity –Operation and Maintenance Costs Rise

7. Choices (cont.) Fund program with reserves –Reserves………..$30,000,000 –Cost estimate…$150,000,000 Obviously, Reserves are not adequate. Do Something #1…

8. Funding program with reserves and cash requires an immediate and drastic increase in rates to fund construction over a 10 year period. How much?? 91% water 129% sewer Choices (cont.) Do Something #2…

9. Use combination of reserves and borrowed funds obtained through Revenue Bonds (if even available…) –Revenue Bond Interest rate is about 6.0% –6.0% Interest rate over the life of the bond yields a total interest cost of about $112 M. –Debt Service starts immediately. –Rate Increase required, immediately…. 60% Choices (cont.) Do Something #3…

10. Choices (cont.) Use Reserves in Combination with SRF funding –$10,000,000* per year “draw down” from SRF –Reserves to fund excess needs in early years, to be replenished as necessary from SRF draw downs in the out-years Requires a rate increase of 21.6% for water (based on NON-emergency rates), and 44.9% for sewer spread over five years Debt Service begins in 2012; total interest cost of $60,510,842 over the life of the borrowing. –* Rules Change proposed to increase annual “Segment Cap” to $15,000,000 (total interest cost reduced to approximately $53,000,000) Do Something #4…

11. Funding SRF $10M

12. Funding SRF $15 M

13. Choice (cont.) The choice is really Do Something” vs “Do Nothing.” The best “Do Something” option is proceeding with the SRF financing alternative, which will has the least rate impact

14. Utility Rates & Charges Basic Principles Recognition of User Classes –Residential –Commercial/Industrial –Irrigation Each User Class pays its fair share, and doesn’t subsidize the others Capital Cost Recovery –Growth pays for growth –Current Users pay current costs –Future Users pay future costs Impact of Conservation

15. Paradoxical…. Necessity in this climate, and geography Promotes a reduction in water use, and therefore lower revenues The fixed costs of the utility must still be paid, and therefore conservation imposes upward pressure on rates to make up the lost revenues resulting from lower sales.

16. Water Rate Comparison

17. Sewer Rate Comparison

18. Typical Bill Water

19. Typical Bill Water & Sewer

20. Typical Bill Water & Sewer (5,000/10,000)

21. Residential Tap-In Fee Current Cost (Long Side +Short Side) / 2 = Fee Proposed Cost (Long Side +Short Side) / 4 = Fee Lot 2Lot 3Lot 5 Lot 9Lot 6Lot 10 MM 6” WM MM (Long Side) 1” Tap, 48’-1” pipe, Meter Box, 1” wye branch, 2 Meters (Short Side) 1” Tap, 8’-1” pipe, Meter Box, 1” wye branch, 2 Meters Lot 4 Lot 8Lot 7 Lot 1

22. Cost Calculation for Tap-In Fee

23. Information from Developer’s Engineer: Sewer Flow-- 2250 Gallons per day Water Demand-- 2813 Gallons per day ERU Calculation: 2250 / 280 = 8.04 Sewer 2813 / 350 = 8.04 Water ERU Billed To Date: 4.50 for $18,000 ERU, based on Water Use, about ) 0.5 2 Floors, 3 Units Each 1 Floor, 6 Units 1” M1..5” Service 1” M 6” Fire Line 1..5” Service