1. Driving the Conversation
Government Finance Officers Association
Washington Metropolitan Area
November 7, 2018 (DRAFT)
Henderson Brown, IV General Counsel
Henderson Brown, IV
General Counsel

2. Who We Are
Distribute drinking water to 700,000 residents and 21 million visitors to the District of Columbia
Collect wastewater from nearly 2 million residents and treat at the world’s largest advanced wastewater treatment plant
Diverse group of people who have come together as one team to
Improve the environment,
Protect the public health and safety, and
Deliver exceptional service to our local and regional customers

3. Every Problem We Face is Financial
How do we
Address legacy infrastructure
Meet our mandates
Deliver exceptional service to local and regional customers
And still maintain affordability?
Ratepayer Funded
Our Risk: Simply being a passenger

4. We are Driven by our Legacy
Water main break on a pipe from 1860
In May of last year, a 30” pipe from 1860 reminded us that Mother Nature and Father time are our unofficial bosses as well
While our lifestyles today have little resemblance to those before the Civil War, some of our infrastructure is the same
Before the Clean Water Act, water and sewer Pipes were only (median age) 44 and 41 years old, respectively, but they’ve continued to age
Today, we have 700 miles of unlined cast iron pipe with a median age of 100 years
Nine percent of our infrastructure was installed between the Civil War and the 1890s
But following an influx of grant spending in the 70s, mandates have continued to increase, while federal support is going down

5. We are Driven by our Mandates
$ Per ERU
Clean Rivers Impervious Area Charge Per ERU
DC Water takes seriously its commitment to cleaning up our waters, but it comes at a significant cost
DC Water’s consent decree is the 4th most expensive in the country according to EPA data, and distributed over a relatively small population
The good news is– it’s working
We’ve had a very wet spring and summer and since March, the completed section of the Anacostia tunnel has captured 2 billion gallons of stormwater and sewage that would have otherwise entered the river
The bad news is– it’s not free
We’re paying for it through a dedicated fee assessed on the impervious area of property
This charge has increased from $1.24 in 2009 to $23.00 per ERU in 2019, and while there’s a small dip this year because we’ve reassessed some of our costs, the fee will continue to rise
Customers are really taking notice of this fee increase, and it’s been a source of concern raised to us and the District

6. Driven by our Mandates (Clean Rivers)
How will you challenge your organization’s culture and better integrate finance throughout?
How will you drive the values, needs, and mission of your organization?

7. Driven by our Mandates (Clean Rivers)
By the numbers:
DC Clean Rivers: $2.7 Billion
Nitrogen Removal: $950 million
Total >$3.5 billion
25 year implementation ( )
96% reduction in CSOs and flood relief in Northeast boundary
Projected 1 million lb/year nitrogen reduction

8. And our Roadmap is Clear
Customer Bills Will Increase
FY 2019 Approved CIP and Average Residential Customer Bill
($000)
($)
A $4 billion dollar Capital Investment Program will drive future rate increases
Clean Rivers– ranges from a high of 48% in 2019 to a low of 17% in 2025
Wastewater treatment– somewhat more consistent, but ranges from 19% in 2019 to 27% in 2027
Water and Sewer ranges from 24% in 2019 to 61% in 2024
Our average residential customer’s bill is projected to increase from $102/month to $154/month now to 2027
While we may have lags in investment due to the schedule of Clean Rivers, rates will need to continue increasing to meet continued debt service requirements and ensure adequate funding for the next set of Clean Rivers’ investments in the late 2020s

9. The End of the Road? Where is the point of no return?
Where do we go when we’ve reached it?
We heard directly from customers in a series of Town Hall meetings, and we know some are facing significant hardship
Rock Creek Church Cemetery’s bill went from $3,500 in 2008 to nearly $200,000 in 2016
Nonprofits and residents implored DC Water and the District for assistance

10. When Policy becomes a New Mandate
Mayor’s summit yielded new program commitments
DC Water Funded
DOEE Funded
CAP
(<60% SMI)
CAP2
(<80% AMI)
CAP3 (80-100% AMI)
Non-Profit
(Hardship and Mitigation)
Funding
$1.2M Recovered through rates
$6.0M from Rate Stabilization Fund $1.2M from DOEE
$1.3M from DOEE
$3.35M from DOEE
Forecasted Customers
3,575
12,840
4,900
Impacted Charges
4 CCF
Water, Sewer, PILOT, ROW
50% CRIAC
100% WSRF
3 CCF
Water, Sewer
Determined by DOEE for CRIAC only
Determined by DOEE for up to 90% CRIAC
SMI= State Median Income, Current LIHEAP eligibility
AMI= Area Median Income
Next Steps/Timeline:
DC Water Program benefits cannot begin until program regulations for CAP2, CAP3 and CRIAC Relief Program are approved by the DCWater Board.
Process includes: 10/19/2018 – Public comment period 11/19/ /30/2018 – Public Hearing
11/28 or 29/2018 – Special Retail Rates Committee meeting for final recommendation of CAP regulations
12/06/2018 – Board Approval of final CAP regulations 12/21/2018 –
Publication of Notice of Final Rulemaking (NOFR) for CAP regulations
DOEE Program benefits associated with CRIAC Relief Program begin after regulations are approved

11. Leadership: Driving the Conversation
Learning from our customers:
Water is personal-- direct, face-to-face contact more meaningful than other media approaches
Ratepayers who attend town halls are committed, care and are not shy about speaking up
Financial leaders need to take the wheel in designing the response to their concerns

12. Finance as the Creative Driver
What we’re good at:
Detailed accounting
Setting budgets and reacting to overages
Calculating rate impacts from needed investments
Relying on the engineers
Reporting
What we need to be good at:
Big picture strategy and solutions
Identifying and selecting alternatives
Finding efficiencies and streamlining projects
Helping them design solutions
Communicating needs and impacts
Responsive
Proactive
Need to turn the corner and shift from consulting/reporting on the back-end to engaged strategically and throughout project lifecycles
We can put all the information out there we like in annual reports, but nobody reads them. Town Halls demonstrate we need to be better at delivering our message

13. Driving Unity
Reminding the team that a dollar spent in one part of the organization is a dollar that can’t be spent elsewhere
New Strategic Plan
Vision: We will be known for superior service, ingenuity and stewardship to advance the health and well-being of our diverse workforce and communities.
Mission: Exceed expectations by providing high quality water services in a safe, environmentally friendly, and efficient manner.
Strategic Programs:
Driving Performance
The Employee Experience
Leveraging Technology
Operational Safety
Customer Affordability
Resilience and Readiness

14. Driving Planning & Execution
What do we really need? And how do we ensure one doesn’t become the other halfway through the project?
Graphics: Ford Taurus, Lamborghini
Do we really need custom, or will off-the-shelf do?
How do we ensure accountability throughout the planning and project lifecycle to avoid a Taurus from becoming a Lamborghini?

15. Charting the Course
How will you challenge your organization’s culture and better integrate finance throughout?
How will you challenge your organization’s culture and better integrate finance throughout?
How will you drive the values, needs, and mission of your organization?
How will you drive the values, needs, and mission of your organization?