Macon Water Authority 2021 Popular Annual Financial Report

The Future of Water MWA 2021 POPULAR ANNUAL FINANCIAL REPORT

Fiscal Year Ended September 30, 2021 Macon-Bibb, Georgia

MaconWater.org • 1

Welcome Year in Review - The Best of 2021!

As our Fiscal Year 2021 began, everyone was looking forward to a year with far fewer pandemic-related disruptions and the ability to return to “normalcy.” While our 2021 operating year did in fact see far fewer disruptions from COVID-19 than the previous year, it was still filled with changes, challenges, and as always, many bright spots.

Samuel F. Hart, Sr.

For starters, the national economic conditions made operational planning more challenging.

Despite the fact that local unemployment rates fell from 6.3% in October to under 3% in September, attracting new employment talent proved to be extremely challenging. In addition, inflationary pressures added challenges to our project planning and forecasting schedules.

Inflation hit nearly 3% by late March and would continue to grow to nearly 6% by the end of September, with prices of materials, supplies and labor increasing by double digit percentages.

Finally, managing supply chain shortages, both domestic and international, added to operational and capital project challenges in 2021.

Solid financial planning, forecasting, and anticipating impacts from economic events well beyond our control permitted the MWA to continue to provide clean, affordable, and reliable water service and environmentally friendly wastewater and stormwater services without missing a beat. We delivered our services without disruption, without additional cost, and without inconveniencing our customers.

Joey S. Leverette

Fiscal Year 2021 also saw us officially enter the stormwater utility business. We began providing stormwater services to all of Macon-Bibb County beginning in January. Services were implemented with no additional fee to our customers during 2021. While a modest service fee of $4.99/per 2,200 sq. ft. of impervious service area was implemented in January 2022. The MWA Board and Administration wanted to provide a full year of services to residents and businesses prior to the fee being implemented. This first year of service was funded by the MWA at a cost of $3,600,000.

FY 2021 saw the retirement of long-time MWA Executive Director Tony Rojas in May, after 18 years of dedicated service to the Authority. On January 1, 2022, the MWA gained new leadership under the direction of the Authority’s new Executive Director, Mr. Joey S. Leverette.

This PAFR is a way of keeping our customers and community apprised of our past year of financial performance and our overall system operations. In addition, we share the many “bright spots” we have had over the past year, including our involvement with economic development, major projects, industry awards, and our partnerships with various organizations in our community.

Guy Boyle

MWA water professionals work diligently to ensure that our essential services continue without disruption. Through all of the challenges, the MWA had another exceptional year. We expect this positive trend to continue as we move forward into 2022.

With Warm Regards from the entire MWA family.

Sincerely,

Samuel F. Hart, Sr.

MWA Chairman-At-Large

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Joey S. Leverette

Executive Director & President

Guy Boyle

Executive Vice President of Business Operations

Meet the Board

Samuel F. Hart, Sr. Chairman

Frank Patterson Vice Chairman, District 4

Dr. Anissa Jones-Aiken District 1

Desmond Brown District 2

Dwight Jones District 3

Valerie Wynn Macon-Bibb Representative

Bill Howell Macon-Bibb Representative

Known for producing the Best Tasting Drinking Water in North America as a model water utility in Georgia, the Macon Water Authority (MWA) is governed by a seven-member Board of Directors that consists of a Chairman elected countywide, four Members elected within respective Districts, and two Members appointed from the elected Macon-Bibb County Commission.

The MWA is an autonomous enterprise established through an Act of the Georgia General Assembly. Board Meetings are held on the first Thursday of every month, while Committee Meetings are held on the third Thursday, when referrals for projects and policies are deliberated by the standing committees prior to consideration by the full Board.

For complete bios on all MWA Board Members, please visit www.maconwater.org.

MWA Honors Herbert Dennard, Sr. The Macon Water Authority (MWA) hosted a special dedication of the MWA Support Services Building in honor of Mr. Herbert Dennard, Sr., a local business, civic, and civil rights leader in Macon-Bibb County who served 16 years as an elected member of the Authority Board, from 1981-1996.

A native of Macon, Mr. Dennard, grew up in Buffalo, NY, before returning home after military service in the U.S. Marine Corps during the Vietnam War. He worked 37 years for Norfolk Southern Railway while attending Middle Georgia State University (formerly Macon Junior College) and Fort Valley State University.

In addition to serving on the MWA Board, he was engaged as a civil rights leader and community activist. Mr. Dennard was a founding member of the Macon Chapter of the Southern Christian Leadership Conference (SCLC), a Member of the Board of Directors for the Coliseum Hospital of HCA, and a Member of the Macon-Bibb Board of Tax Assessors. He also led a small group called the Black Liberation Front and co-founded the Medgar Malcolm Martin Educational Center.

As a Member of the MWA Board, he was Chair of the Finance Committee and championed several policies, which are still in effect today.

“Mr. Dennard is a community stalwart and deserves this great recognition,” said Sam Hart, Chairman of the MWA Board of Directors.“The impact of his actions is immeasurable and will be felt for generations to come.”

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What We Stand For

2021 Year in Review January: The MWA takes over the Stormwater Management Program from Macon-Bibb County, overseeing stormwater services through the operation of a Stormwater Utility. The Authority Board approves the recommendation of a new MWA Brand, accordingly.

February: The MWA partners with Macon-Bibb County for the “Clean Streets Matter” initiative to complement Street Sweeping Services, within concentrated neighborhood cleanup areas.

March: The MWA celebrates Women’s History Month with the dedication of the Dorothy “Dot” Black Training Center within the Human Resources & Engineering Building, honoring the former long-time District 1 Board Member.

Our Vision

April:

We will be a regional public utility that embraces innovation, while focused on the comprehensive management of water resources and be recognized for superior customer service, financial and environmental stewardship, community service, and leadership.

Our Mission Our mission is to provide quality water, sewer, and stormwater services for the enhancement of the quality of life and economic well‐being of the customers and communities we serve.

Our Core Values Our core values are manifested in the everyday work of more than 200 employees who are dedicated to operating the very best water, sewer, and stormwater utility possible. Those core values personified by MWA employees include:

Service

Professionalism

Integrity

Innovation

Stewardship

Safety & Wellness

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The MWA receives the Georgia Association of Water Professionals (GAWP) Platinum Award for the Frank C. Amerson, Jr. Water Treatment Plant for achieving a grade of 95% or higher on its annual review by industry judges for seven consecutive years.

May: The MWA recognizes its employees as “Water Heroes” on Water Professionals Appreciation Day, to kick off national Drinking Water Week. The MWA honors Tony Rojas upon his retirement after 18 years of dedicated service to the Authority.

June: The MWA releases its annual Water Quality Report to inform the public of “what is in their drinking water and why,” as the utility meets or exceeds all regulatory standards for drinking water quality.

System Overview July: MWA Director of Operations Gary McCoy receives the prestigious Hugh A. Wyckoff Award for outstanding service to the Georgia Association of Water Professionals.

August: The MWA provides 5,000 new water bottles, to supplement the 24,000 provided the previous school year, for Bibb County Schools to distribute to students for the Healthy Schools Water Initiative.

September: The MWA receives the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA).

November: The MWA receives the GAWP Collection System and Water Distribution System Platinum Awards, for achieving the highest grades possible on the annual reviews of these systems for at least five consecutive years, in addition to the Laboratory QA/QC Award.

December: The MWA expands its Intergovernmental Marketing Agreement for the recruitment of business and industry, in partnership with the Macon-Bibb County Industrial Authority. The Authority also continues marketing efforts to inform customers of Stormwater Utility Fees coming in 2022.

Water + Sewer + Stormwater = The MWA

The Cycle of Water Rain hits the ground, runs off into water bodies that collect this raw water for treatment and distribution, which is then collected and conveyed after use for wastewater treatment and recycling. This is the Cycle of Water and the MWA has the enormous responsibility of overseeing this entire process.

The MWA and its more than 200 employees are dedicated to providing customers with water, wastewater, and stormwater services, 24 hours a day and 365 days a year.

America’s Best Tasting Drinking Water is the end result of the Authority’s stewardship of the Cycle of Water.

System Excellence is Evident The MWA boasts award-winning Water and Sewer Systems, complemented by a newly formed Stormwater Division. As a reflection of outstanding operations during 2021, the MWA received the Georgia Association of Water Professionals (GAWP) Distribution System (Water) and Collection System (Sewer) Platinum Awards for achieving a grade of 95% or higher on its annual industry review of these respective systems for at least five consecutive years!

MWA customers benefit from the quality and capacity of award-winning systems that feature: • Javors Lucas Lake and its 5.8 billion gallons of raw water at full pool.

• Withdrawal permits that allow for an additional 35-110 million gallons per day (MGD) from the Ocmulgee River.

• The Frank C. Amerson, Jr. Water Treatment Plant, which is a multiple winner of the “Plant of the Year” Award in Georgia, and its production capacity of 60 MGD, which can expand to 90 MGD in the future, if/when necessary.

• The 36.9 million gallons of finished drinking storage in 23 water tanks, distributed to customers through 1,664 miles of transmission mains and water lines.

• AMR (Automated Meter Reading) technology for even more efficient operations.

• A continual reinvestment in MWA Systems, including: ~ More than $50 million for the new and improved Rocky Creek and Lower Poplar Water Reclamation Facilities. ~ A new Booster Pump Station to improve system efficiency. ~ A new Atlantic Mills Water Tank, coming online in 2022, to increase water storage capacity and system flexibility.

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A New Customer Service Experience Enhancing the Customer Service Experience The MWA continually works to improve the Customer Experience by enhancing the capabilities and expanding the reach of its Customer Care Department.

Within the last five years, MWA Customer Care has included the adoption of an upgraded Cayenta billing and financial software, the implementation of a Customer Care Improvement Project, the installation of Automated Meter Reading (AMR) technology, and now the redesign and rehabilitation of the Customer Lobby and Drive Thru, as well as overall construction to provide a new and improved MWA Albert Billingslea Headquarters campus on Second Street.

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Improvements You May Not See Some improvements to MWA Customer Care might not be visible, but we sure hope they’ll be felt when customers do business with us.

The MWA Board of Directors appropriated $500,000 to improve the Customer Experience in 2021. That investment included: • Hiring a new Executive Vice President to oversee operations in Customer and Metered Services.

• Adding 8 new Customer Care Representative positions for the Call Center.

• Revising the automated Interactive Voice Response (IVR) System for customers preferring to do business over the phone.

• Strengthening the Meter-to-Cash process to include real time meter readings and billing.

• Implementing a Quick Pay Service for customers to pay their MWA bill at local Kroger, Walmart, and other retailers.

Improvements You’re Going to See…and Love Pardon Our Progress. But we think the current construction and transformation going on at the MWA Albert Billingslea Headquarters is going to be worth it.

Included in the approximately $8 million in renovations will be three primary phases: • The 1st Floor additions of a new entry, drive-thru tellers, restrooms and more.

• The new Customer Lobby and 3rd Floor renovations.

• The new 2nd Floor renovations and new Board Room.

Among the unique features of the new Headquarters will be permeable pavers for a number of employee and guest parking spaces.

Gas lines and power lines are being installed underground.

In addition, the MWA Board of Directors was committed to providing jobs locally and keeping its dollars at home in and around Macon-Bibb County, by employing 34 locally-owned, minorityowned, or women-owned business enterprises (LMWBE) to work on the project. Nearly 35% of the work will be completed

by LMWBE individuals or companies

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MWA Capital Improvement Projects FOCUS ON THE FUTURE Each year, the MWA continually invests in long-term capital improvements to assure water, wastewater, and now stormwater infrastructure is in peak condition and capable of optimal performance.

During 2021, the MWA put the finishing touches on one of the largest and most ambitious capital improvement projects in the history of the utility – the Wastewater Treatment Facilities Rehabilitation project.

Wastewater Treatment Facilities Rehabilitation The Wastewater Treatment Facilities Rehabilitation Program included four key phases: Planning, Contractor Selection, Design/Pre-Construction Services, and Construction and Commissioning, for the MWA’s two Water Reclamation Facilities (WRF) – the Lower Poplar WRF and the Rocky Creek WRF. The planning for this Rehab Program began in 2015, with design completed two years later and the groundbreaking for construction starting in 2018. The MWA and its design/build team scheduled the commissioning or opening of these two facilities in May of 2022, with a total investment of approximately $52 million to upgrade these two critical assets.

Automated Meter Reading (AMR) Another major Capital Improvement underway at the MWA is the Automated Meter Reading (AMR) project.

This Capital Project enhances the Water side of MWA Operations by replacing an estimated 43,375 manual read residential and non-residential water meters with AMR technology, which is much more cost-effective for water operations, maintenance, and billing.

All state and federal agencies providing oversight signed off on the project, including Georgia EPD, U.S. EPA, the U.S. Department of the Interior, the U.S. Army Corps of Engineers, and the Historical Preservation Society. The MWA will pay for the AMR project through a 10-year low interest loan from the Georgia Environment Finance Authority (GEFA). Total investment for this project is $10 million dollars.

To date, the MWA has more than 27% of its meters now automated, including those for fire lines, hydrants, and irrigation.

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Additional Capital Projects in 2021 During 2021, the MWA completed additional capital improvements, including: • An investment of more than $8 million to upgrade the Second Street Albert Billingslea Headquarters Complex, with approximately 26.5% of the work completed by 34 contractors that are locally-owned, minority-owned, or women-owned business enterprises (LMWBE).

• More than $8.5 million invested in a new 3 million gallon (MG) above ground water storage tank, which is now online.

• Almost $6 million invested in a new booster pump station.

• $2.5 million invested in new water mains.

• Sewer line extensions, including one in the Sardis Church/ Nowell Road area, to facilitate new industrial development in Macon-Bibb County.

• Continued relocation of water and sewer utility infrastructure to accommodate a number of Georgia DOT projects, including the new I-75/I-16 interchange.

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MWA Takes Over Stormwater Management in 2021 The MWA began offering Stormwater Management Program Services on January 1, 2021, with an Operations & Maintenance Budget of approximately $5.4 million, a Capital Budget of $356,000, and SPLOST dollars to fund $2.4 million in additional Capital Improvements.

• Cleaning and maintaining pipes, catch basins and culverts

This entire first year of MWA Stormwater Program Management was dedicated solely to the operation and maintenance of the stormwater system and infrastructure, with continued assessment of the condition of these assets inherited from Macon-Bibb County Government.

• Repairing and replacing catch basins

Customers received Stormwater Utility services at no cost throughout 2021, prior to having to pay for those services beginning January 1, 2022.

The level and extent of Stormwater Services the MWA now oversees and manages include:

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• Repairing, replacing, and installing stormwater pipe • Maintaining stormwater ditches in rural areas • Maintaining public (NOT private) detention ponds • Addressing sink holes and cave ins • Preventive maintenance • Maintaining compliance with water quality issues • Street sweeping and more For more information on the MWA Stormwater Management Program, please refer to our website at www.maconwater.org.

Stormwater Success in 2021 Was Evident Some of the work is out of sight and out of mind, while some is in direct response to citizen requests.

Either way, Key Performance Indicators provide evidence of the successful implementation of MWA Stormwater Utility Services during 2021, and at no cost to customers.

Success in MWA Stormwater Management is reflected in the Utility’s:

Some of the Stormwater Services the MWA provides, which are continuously tracked and monitored in comparison to goals and monthly performance measures, include: Street Sweeping, Ditch Cleaning, Catch Basin Cleaning, Stormwater Pipe Repair/Replacement, and Citizen Request Work Orders.

• Cleaning 3,187 Catch Basins.

• Completing approximately 667 miles of Street Sweeping.

• Cleaning more than 44,000 feet of Ditches, which is more than 8 miles.

• Repairing and/or Replacing 2,200 feet of Stormwater Pipe.

• Completing more than 2,500 Work Orders of Citizen Requests to address Stormwater issues throughout the community.

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Economic Development The MWA continues to work in partnership with the Macon-Bibb County Industrial Authority (MBCIA) to recruit business and industry to our community. The Authority invests $704,000 annually into a revolving fund for use in developing “ready to go” industrial sites that are attractive to companies looking to locate here. In addition, the MWA provides $400,000 annually to the MBCIA for marketing and recruitment efforts, an increase of $50,000 compared to last year.

Local Companies the MWA Serves:

Continued Economic Development Success The continued economic development success of the MWA and Industrial Authority includes:

Population Jobs New Jobs Created in 2021

MACON

FOUNDED IN 1823

New Private Investments Square Footage in New Construction

157,346 104,000 4,200 Jobs $500 Million 2.5 Million

For more information on Macon's Labor Force, please visit www.mbcia.com.

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Financial Summary Our fiscal year started on October 1, 2020, and thus concluded on September 30, 2021. During this past Fiscal Year (FY 2021), the MWA continued to operate through the challenges of the COVID-19 pandemic.

Even with the challenges that FY 2021 presented, revenues increased over the prior year and the MWA’s net position was better as well, indicating an improving economic landscape. Unbudgeted expenses caused by the pandemic were negligible in the current fiscal year, but operating costs overall increased significantly due to inflationary pressures. The cost of labor, materials, contractors, and critical infrastructure projects were all impacted by inflation. The Authority’s cash reserves did remain exceptionally strong throughout the year.

During FY 2021, the Authority’s water and sewer operating revenues rose to $64,123,616, while operating expenses, which included depreciation, were $53,552,699. The Authority also added $3,074,181 in stormwater income from SPLOST funds. (However, this income can only be used for capital projects.) The Amerson Water Treatment Plant produced and delivered over 9.2 billion gallons of drinking water to MWA customers during the year. The Rocky Creek and Lower Poplar Water Reclamation Facilities treated approximately 12.6 billion gallons of wastewater during this same period.

For complete details, the MWA Comprehensive Annual Financial Report (CAFR) is located online at www.maconwater.org.

Financial Leverage – Outstanding Debt As of September 30, 2021, the MWA had $151,043,183 in outstanding debt, including future interest payments. This compares with $150,453,412 that was outstanding at the end of the previous fiscal year.

Revenue Total Operating Revenue = $67,197,797 The Authority’s Operating Revenue increased 9.2% vs. 2020 Water revenues increased 1.0% vs. 2020 Sewer revenues increased .3% over 2020 Stormwater revenues totaled $3,074,181 from SPLOST proceeds.

These revenues are restricted to stormwater capital projects.

Other operating revenues, including various types of permits and fees, increased 66% versus fiscal year 2020. Non-Operating revenues decreased 68.5%* versus fiscal year 2020

A measure of financial stability and responsible stewardship of financial resources may be found in a healthy debt coverage ratio. The MWA’s coverage for 2021 was an exceptionally healthy 6.88, which was up significantly from the 2.95 coverage the previous fiscal year, due to the step debt strategy employed for 2021. The Authority Board sets a target for coverage at 1.75, so achieving a ratio of 6.88 significantly improved upon both the bond covenant requirements and the MWA Board target.

*excludes gains on disposal of capital assets

The MWA maintained its strong, investment grade “AA” bond rating with Standard & Poor’s and “Aa1” with Moody’s. These ratings reflect continued strong financial stewardship by both the MWA Board and Staff during 2021.

Total Operating Expenses = $57,121,433

Macon-Bibb County Industrial Authority Board

Expenses Operating Expenses increased $4,717,921 or 9.0% versus fiscal year 2020. The primary driver of this increase when compared to 2020 was increasing labor costs, materials, and supply chain increases.

Inflationary pressures continued to drive up costs must faster than revenue increases.

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Competitiveness The following “Value Ranking” is based on a family using 5,500 or 7,500 gallons of water for one month. Sewer Rates are also included in these calculations.

Typical Family of 1-4

Typical Family of 2-4

Water Used

5,500 Gallons

7,500 Gallons

Typical MWA monthly bill

$54.16

$67.31

Average monthly bill for utilities in the study

$66.24

$82.09

Highest rate charged by utilities in the study

$199.38

$212.18

Percent that a typical MWA monthly bill is lower than the average utility in the study

-18.2%

-18.0%

Amount that a typical MWA monthly bill is lower than the highest utility in the study

$145.22

$144.87

The following value ranking is based on a sub-sample of the 363 utilities in the study. This sub-sample is comprised of 43 water and sewer utilities in Georgia that serve customers with similar income levels as those found in the Macon-Bibb area.

Typical Family of 1-4

Typical Family of 2-4

Water Used

5,500 Gallons

7,500 Gallons

Typical MWA monthly bill

$54.16

$67.31

Average monthly bill for utilities in the study

$69.73

$86.53

Highest rate charged by utilities in the study

$123.75

$176.25

Percent that a typical MWA monthly bill is lower than the average utility in the study

-22.3%

-22.2%

Amount that a typical MWA bill is lower than the highest utility in the study

$69.59

$108.94

Affordability

Typical Family of 1-4 People, Using 5,500 Gallons a Month Sewer Bill Below 2% Considered Affordable

Sewer Bill Below 2% Considered Affordable

2.00%

MWA Sewer Bill as % of MHI

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2.00%

MWA Water Bill as % of Annual Income

0.82%

0.44%

1.17%

Water Bill Below 2% Considered Affordable

2.00%

MWA Water Bill as % of MHI

2.00%

MWA Sewer Bill as % of Annual Income

0.75%

Water Bill Below 2% Considered Affordable

0.00%

Affordability for Family of 4 at the Federal Poverty Level

0.88%

1.32%

1.76%

2.20%

0.00%

1.28%

0.44%

0.88%

1.32%

1.76%

2.20%

Monthly Bill Comparisons of Water Providers in Georgia*

Typical Family of 1-4

Typical Family of 2-4

System

5,500 Gallons of Water Used

7,500 Gallons of Water Used

Atlanta Athens-Clarke County Paulding County Jackson County Water & Sewer Authority Polk County Water Authority Rockdale County Water & Sewer Authority Cowetta County Water & Sewer Authority Gwinnett County Douglasville-Douglas County Water & Sewer Authority Forsyth County Twiggs County Carroll County Marietta Power and Water College Park Newton County Water & Sewer Authority Henry County Water & Sewer Authority McDonough Fulton County City of Augusta City of Monroe Cherokee County Water & Sewer Authority Clayton County Water Authority Jones County Butts County Water & Sewer Authority Cobb County Macon Water Authority Columbus Water Works Columbia County Savannah - (Inside City Limits)

$136.57 $118.06 $116.38 $107.13 $104.65 $101.84 $96.47 $89.07 $86.34 $86.32 $83.76 $82.30 $82.16 $80.79 $80.72 $80.44 $76.26 $71.35 $70.79 $70.15 $68.83 $68.68 $67.25 $65.38 $63.82 $54.15 $53.59 $51.40 $47.21

$194.99 $136.87 $154.88 $145.47 $140.36 $129.97 $125.41 $116.91 $115.57 $110.70 $104.76 $107.32 $109.06 $105.94 $107.84 $105.70 $100.06 $93.93 $87.75 $90.10 $93.93 $95.18 $84.41 $87.88 $84.84 $67.31 $68.00 $60.94 $62.18 * Rate Survey Data updated as of July 2021

Revenue 2013

Operating Expenses 2014

2015

2016

2017

2018

2019

2020

2021

Macon-Bibb County

$35M

$70M

$30M

$60M

$25M

$50M

$20M

$40M

Macon-Bibb County Industrial Authority Interest & Fiscal Charges Depreciation General & Administrative Customer Care Engineering

$15M

$30M

$10M

$20M

$5M

$10M

Maintenance Sewer Conveyance

$0

Water Revenue

Sewer Revenue

Stormwater Revenue

Other Operating Revenue

Non-Operating Revenue

$0

Stormwater Water Reclamation Water Distribution

2017

2018

2019

2020

2021

Amerson Water Treatment Plant

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790 2nd Street Macon-Bibb, GA (478) 464-5600 A digital copy of the MWA's 2021 PAFR is available online at maconwater.org

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