Loading...
HomeMy WebLinkAboutMount Pleasant Waterworks - Public Financial ReportMOUNT PLEASANT WATERWORKS POPULAR ANNUAL FINANCIAL REPORT For the Fiscal Years Ended June 30, 2021 Mount Pleasant, South Carolina Henry Clay Duffie, General Manager Mount Pleasant Waterworks March 1989 – June 2021 In 1989, Duffie was selected to serve as general manager of a water and wastewater utility in a small South Carolina town called Mount Pleasant with a population of 6,000. It was at that utility, Mount Pleasant Waterworks (MPW), where he worked resolutely for the next 32 years to advance water quality and conservation through serving as a leader, advisor, and mentor locally and statewide. The population for Mount Pleasant as of the 2020 Census was 90,801. Awards & Achievements 1986 The South Carolina 5S Society 1996 Dennis Pittman Award 2005 George Warren Fuller Award 2007 Herman F. Wiedeman Award 2012 Golden Manhole Award 2017 William Linton Award 2018 L.A. Graham Leadership in Management Award 2021 Order of the Palmetto “The Order of the Palmetto is the State of South Carolina’s highest civilian honor presented in recognition of a lifetime of extraordinary achievement, service and contributions on a national or statewide scale. An individual must be nominated for the Order of the Palmetto. This once in a lifetime award may only be presented to natives or residents of the State of South Carolina.” Mr. Duffie retired June 30, 2021 after 32 years at the helm of Mount Pleasant Waterworks. As a tribute for his devoted service to the Utility, the Community of Mount Pleasant and the water industry, the Rifle Range Road Wastewater Treatment Plant was renamed to the Henry Clay Duffie Water Resource Facility. Allan Clum, General Manager Mount Pleasant Waterworks, July 1, 2021 Clum has more than 20 years of experience working in water resource management. In addition to his role as MPW’s Operations Manager, he also spent time as the utility’s director of laboratory and wastewater operations. He also served as Director of Environmental Resources at Charleston Water System. Clum has remained actively involved in industry research and environmental protection through his service as a research chemist investigating the impact of emerging contaminants on the environment. Clum has a master’s in environmental studies from the Medical University of South Carolina and a bachelor’s in science from the College of Charleston. i MOUNT PLEASANT WATERWORKS POPULAR ANNUAL FINANCIAL REPORT For the Fiscal Years Ended June 30, 2021 Prepared By: Financial Services | Mark L. Coffin, CGMA | Chief Financial Officer Mount Pleasant Waterworks | Mount Pleasant, South Carolina 29464 ii VISION Mount Pleasant Waterworks strives to be a trusted leader in our community and the water industry. MISSION The MPW team provides water services of exceptional quality, value, and reliability, while protecting public health, safety, and the environment. VALUES The MPW team is passionately committed to: • HONESTY: In all actions by employees and commissioners • FAIRNESS: To our customers, employees, and other stakeholders • QUALITY: Of our products, services, and processes • INNOVATION: By seeking positive change Mount Pleasant, South Carolina iii Contents Title Page i Vision, Mission & Values and Service Area Map ii Table of Contents iii GFOA Awards for Outstanding Achievement iv About this Report v Profile and History of the Government vi-vii Elected Commissioners and Management Team viii Financial Activity & Performance Production and Statistics 1 Net Position 2 Capital Assets 3 Capital Improvement Plan (CIP) 3 Debt Service Coverage 4 Bond Ratings 4 Long-Term Debt 4 Revenue & Expenses 5 Contributed Capital 5 Financial Awards 6 Contact Us 7 iv Finance and Accounting Team Mark L. Coffin, CGMA Chief Financial Officer Jeff Clark Accounting Supervisor Brian King Budget and Procurement Supervisor Kelly Hobart Business Data Analyst Quinteria Mazyck-Wilson Project Accountant Dianna Kirkpatrick Financial Specialist Angie Kuras Financial Specialist Mark King Inventory Technician Mark Levy Inventory Technician Sharoma Fortune Finance Temp v It is with great pleasure for the Commission to present the 2021 Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2021. The financial information presented was derived from the Commission’s Annual Comprehensive Financial Report (ACFR). The ACFR is prepared in conformance with generally accepted accounting principles (GAAP) and Governmental Accounting Standards Board (GASB) pronouncements applicable to an enterprise fund, and includes financial statements audited by Mauldin & Jenkins, LLC. The ACFR includes financial statements, notes, schedules, and statistical information. The PAFR is unaudited and not presented in conformity with GAAP and is presented in a less technical format for easier reading to increase the public awareness about the Commission’s financial conditions and its financial performance. The information in this report is an unaudited financial summary of the ACFR. For those interested in additional details, the ACFR, along with the PAFR, are available online at the Commission’s website at: mountpleasantwaterworks.com Sincerely, Mark L. Coffin, CGMA Chief Financial Officer Mount Pleasant Waterworks About This Report vi PROFILE OF THE GOVERNMENT The Commission, empowered by South Carolina Code of Laws section 5-31-210, is governed by seven Commissioners: five elected by the public for staggered terms of six years, the Mayor, and the Chairman of the Water Supply Committee of Town Council. Only Town Council is empowered to approve the borrowing of money for system purposes; however, the sole power to impose and fix rates, dispose of surplus revenues, and otherwise control and direct the fiscal affairs of the system, is vested with the Commissioners. The Commission was originally designated to provide water and wastewater services within the corporate limits of the Town of Mount Pleasant. In accordance with the Water Quality Management Plan required by PL 92-500, Section 208, the wastewater service area was expanded in 1985 to include all areas within Charleston County between the Wando River, the Intracoastal Waterway and the Town of Awendaw, including the Town of Mount Pleasant. With the merger of the Bulls Bay Rural Community Water District in March 1990, the water service area was extended from the Santee River to the Cooper River, an area 42 miles in length. Enlargement of the Commission’s service area demonstrated the need for progressive provision of adequate water and wastewater services to the East Cooper area of Charleston County. The popular name of the Commission is Mount Pleasant Waterworks (MPW). HISTORY & SYSTEM The Town of Mount Pleasant began operating its water system in 1935, and designed the system to have 160,000 gallons per day capacity. The system initially included 179 water meters to serve the Town’s population. Now, MPW serves more than 41,908 water accounts, with an average daily usage of 9.2 million gallons a day (MGD). MPW purchases approximately 68% of its water from the Charleston Water System (CWS) and operates four reverse osmosis plants (RO), six deep wells, eight ground storage and one elevated storage facilities, with 593 miles of water mains. The wastewater system began operations in 1942 by collecting wastewater for discharge into the Charleston Harbor. Construction started on the first primary treatment facility in 1969 and commenced operations in June 1970. This initial facility had a treatment capacity of 1.4 MGD but was expanded in 1976 to process as much as 3.7 MGD. In 1989, an outfall line was constructed to transport all of MPW’s treated wastewater 4,700 feet into the Charleston Harbor, to ensure maximum dilution. In 1995, the Rifle Range Road Treatment Plant came online with an initial capacity of 3 MGD, later increased by 6 MGD for a maximum capacity of 9.2 MGD. The Commission during fiscal year 2021 renamed the plant The Henry Clay Duffie Water Resource Facility (HCD WRF). With the substantial completion of the HCD WRF, the Commission added another 3.2 MGD capacity bringing the total for the plant to 9.2 MGD. The total wastewater treatment capacity increased 12.9 MGD. The Commission treated an average 8.3 MGD during fiscal year 2021. The system includes 527 miles of lines, and 165 wastewater pump stations. General Trends and Significant Events Per the 2020 Census by the United States Census Bureau, the Town’s population is 90,801, an increase of 34% since the 2010 Census. The Commission’s customer base grew by 2.6% during fiscal year 2021 and 1.7% during fiscal year 2021. Total water gallons, including irrigation gallons sold, increased by 2.1% in fiscal year 2021 as compared to the 1.6% decrease during fiscal year 2020. The Commission was impacted by the COVID-19 pandemic during fiscal year 2019 and the affects continued into fiscal year 2021 and beyond. The Commission executed its Emergency Management Plan (EMP), partnered with the Medical University of South Carolina (MUSC) in the Back2Business program to help the Commission effectively manage the pandemic, implemented teleworking options for employees, undertook fiscal actions to include no rate increases for fiscal year 2021, and established an employee awareness initiative to educate employees to ensure continuance of operations. Mount Pleasant Waterworks ranked as one of the Best Places to Work in South Carolina in the small-to-medium employer category for the sixth consecutive year. Mount Pleasant Waterworks vii Commissioners Back Row: Mac Jenkinson, Linda Page, Town Council Member and Chair of the Town’s Water Supply Committee Jake Rambo, and Mayor Will Haynie Front Row: Vice-Chairman Susan Mellichamp, Chairman Rick Crosby and Diane Lauritsen, Ph.D. Secretary-Treasurer Managing Team TEAM MEMBERS YEAR FIRST APPOINTED POSITION H. Clay Duffie 1989 General Manager David P. Niesse 2004 Engineering Manager Brian P. Head 2006 Technical Services Manager Nicole F. Bates 2006 Customer Services Manager Christi A. Fowler 2009 Human Resources Manager Mark L. Coffin, CGMA 2013 Chief Financial Officer Ross Wattay 2015 Field Services Manager Franklin Allan Clum, Jr. 2016 Operations Manager Natalie J. Lawrence 2019 Communications Manager H. Clay Duffie retired as of June 30, 2021 and Franklin Allan Clum Jr. was appointed as the General Manager Popular Annual Financial Report 2021 1 | Page Financial Position and Performance Production and Statistics During fiscal year 2021, total water gallons sold increased by 1.2% which includes a 2.3% decrease in irrigation gallons sold. Wastewater gallons billed increased by 2.0%. The 2020 Census count put the population of the Town of Mount Pleasant at 90,801. This is a 34% increase from the 2010 Census count. Water customer accounts increased by 2.1% during fiscal year 2021. The five-year average is 2.4% Due to the Covid-19 pandemic, the Commission did not increase rates for fiscal year 2021. A typical bill is based on 5,000 gallons of usage per month. The average residential usage for fiscal year 2021 was approximately 4,500 gallons. Popular Annual Financial Report 2021 2 | Page Abbreviated Statement of Net Position Balance Sheet (in 1,000) The Statements of Net Position serve as a useful indicator of the Commission’s financial position. Net Position continues to improve as revenues exceed expenditures. The net position increased by $12.17 million or 4% during fiscal year 2021 as compared to the increase of $15.92 million or 5% during fiscal year 2020. The improving net position is the result of the Commission’s strong financial policies and practices and management strategies guided by the Commission’s Cost Recovery Policy. Net position is the difference between total assets and deferred outflows of resources less total liabilities and deferred inflows of resources. Deferred Outflows of Resources and Deferred Inflows of Resources In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense) until then. The Commission has items that qualified for reporting in this category. They are the differences between expected and actual experience, the difference in investment earnings, the changes in proportion and differences in employer contributions and proportionate share of contribution, and the pension contributions and OPEB contribution subsequent to the measurement date which are consumptions of net position in future periods, resulting in recognition as deferred outflows of resources. In addition to liabilities, the Statements of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Commission has items that qualified for reporting in this category. They are the differences between earning expected and actual experience, and the difference in investment earnings, resulting in recognition as deferred inflows of resources. Popular Annual Financial Report 2021 3 | Page Capital Asset & Capital Improvement Plan Total capital assets continue to increase as the Commission invests in the system infrastructure. The total for fiscal year 2021 includes $107.64 million of construction in process. Of this, $74 million is associated with the Henry Clay Duffie Water Resource Facility (formerly the Rifle Range Road Wastewater Treatment) Plant Expansion and Rehabilitation Project. This project added 3.2 million gallons a day (MGD) capacity for a total of 12.2 MGD at the plant. The plant reached substantial completion in June 2021. The Commission is planning to expend up to $128.4 million for capital improvement to the system infrastructure to include rehabilitation and renewal projects, and growth-related projects as the Commission’s service area continues to grow. Popular Annual Financial Report 2021 4 | Page Debt Analysis Debt Service Coverage Earnings coverage of principal and interest payments is a primary industry indicator of financial strength and additional borrowing capacity. Bond ordinance requires a debt service coverage of 100% for net operating earnings and 120% for net earnings. Net earnings include impact fees. The Commission has established an internal policy of 200% for net operating earnings. The debt service coverage for the fiscal years as shown has exceeded both bond ordinance and the Commission’s Cost Recovery Policy requirement. Bond Ratings Strong credit ratings are important metrics of the quality of the bonds. Long Term Debt (in millions) Total bonds and loans as of June 30, 2021 was $187 million as compared to $191 million for June 30, 2020. During fiscal year 2021, the Commission retired two loans totaling $6.5 million, made principal payments of $6.7 million and received $9.95 million in SRF construction loan draws. The issuance of debt was to finance the continued investment into the water and wastewater infrastructure. Aa1 Moody's AA+ Standard & Poor's Popular Annual Financial Report 2021 5 | Page Revenues & Expenses (in millions) Net Position remains strong over the reported five years and for fiscal year 2021 increased by $12.2 million. Operating revenues consist of water and wastewater volumetric charges, basic facility charges and other direct fees and charges. During fiscal year 2021water revenues increased 1%, wastewater revenues increased 2%, and miscellaneous fees & charges increased 10% over the previous fiscal year. The Commission utilized a rate model to establish rates ensuring financial viability. Financial viability provides for the proper funding of operations, asset management (CIP) and cash reserves. The largest component of operating expenses is employee compensation and benefits. The increase over the reported five-year period is due to the addition of employees (140 as of June 30, 2021), ensuring a high quality of service and reliability. Increases in state retirements and health costs are also drivers for the increase in cost of personnel. Contributed Capital There are two components to contributed capital: impact fees paid by developers and customers for capacity, and developer contributions of system infrastructure. Approximately 882 water and 898 wastewater impact fees were received during fiscal year 2021. Developer contributions including lines, hydrants, manholes, pump stations and other system assets which are conveyed to the Commission upon completion of the development project. Popular Annual Financial Report 2021 6 | Page Popular Annual Financial Award Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to Mount Pleasant Waterworks for its Popular Annual Financial Report for the fiscal year ended June 30, 2020. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. This was the second consecutive year for this award. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability, and reader appeal. An Award for Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. Mount Pleasant Waterworks has received a Popular Award for fiscal year 2020. Mount Pleasant Waterworks believes our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA to determine its eligibility for another award. Annual Comprehensive Financial Reporting Mount Pleasant Waterworks’ Annual Comprehensive Financial Report for the year ended 2020 was awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. This was the twenty-fifth consecutive year that the Commission has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Annual Comprehensive Financial Report (ACFR), whose contents conform to program standards. As such, the ACFR must satisfy both Generally Accepted Accounting Principles (GAAP) and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. Mount Pleasant Waterworks believes its current ACFR continues to conform to the Certificate of Achievement program requirements and is submitting the ACFR for the current year to the GFOA to determine its eligibility for another certificate. Distinguished Budget Presentation Award The GFOA also presented the Commission with a Distinguished Budget Presentation Award for the annual budget beginning July 1, 2021. This was the eleventh consecutive year that the Commission has achieved this prestigious award. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. GFOA's Triple Crown recognizes governments who have received GFOA's Certificate of Achievement for Excellence in Financial Reporting, Popular Annual Financial Reporting Award, and the Distinguished Budget Presentation Award. Financial Awards Mount Pleasant Waterworks 1619 Rifle Range Road Mount Pleasant, South Carolina 29464 (843) 884-9626 www.mountpleasantwaterworks.com