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The Path to Sustainability Newport News Waterworks Report to the Community Fiscal Years 2011-2012


With a history of more than a century of service, Newport News Waterworks has long understood that a sustainable water utility plays a key role in ensuring the social, environmental, and economic sustainability of the communities that it serves. But the Path to Sustainability is never straight, and the journey never ends. In this report to the community, we will review both new and ongoing projects, outline our responses to some of our most recent challenges, and highlight some of the successes we have had along our path to sustainability.

Revitalization project is one of many recent examples of this approach, as it was tied to the following strategic initiatives of the Newport News City Council:

For over a decade, Waterworks has experienced significantly decreasing demands. We have responded by truing-up demand forecasts and proposing rate structures that will contribute to the Department’s long-term financial viability. Going forward, we will focus on identifying the drivers of this trend, thus gaining broader insight for future forecasting.

• Environmentally Sustainable Local Government Policies,

The health of a utility’s water infrastructure is an important aspect of the organization’s sustainability. For the best return on our limited resources and to ensure that upgrades are made in the most efficient and cost-effective manner possible, Waterworks has continued forecasting and monitoring the rate of infrastructure replacement. This process helps to keep our distribution system sufficiently funded, operated, maintained, and replaced over time. Waterworks attempts to align infrastructure renewal projects with community priorities. The Lower Jefferson Avenue

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• Southeast Community Redevelopment initiative, • Community Maintenance, and • Operational Performance and Efficiency. Waterworks has a proud history of good stewardship, achieved by conscientiously preserving and maintaining the natural resources in our care. The successes achieved through two decades of source water protection efforts are evidence of this legacy. The impacts of climate change present Waterworks with multiple challenges, including the potential for increased frequency and duration of droughts, floods associated with intense precipitation events and coastal storms, degraded water quality, coastal erosion, and demand changes due to resulting shifts in service area populations and demographics. This report outlines how Waterworks has embarked on a long-term process of assessing and preparing for these impacts. An overview of some initial assessments is provided in this report.

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Managing Declining Demand For any water utility to maintain financial sustainability, it is critical that water rates produce sufficient revenue to pay the full cost not only of operating and maintaining the system, but also for capital improvement projects and debt service. As per capita usage in Waterworks’ service area has dropped from a high in 1996 of more than 120 gallons per day (gpd) to about 85 gpd today, Waterworks has confronted a number of challenges in meeting this objective. Historically, more than 80 percent of Waterworks’ revenues has been derived from volumetric charges, while approximately 90 percent of our expenses have been fixed and do not vary with demand. Because the commercial, military, and industrial sectors account for a large percentage of Waterworks’ sales, these sectors have a substantial impact on the Department’s revenues. In fact, Waterworks’ 50 largest customers account for 28 percent of total demand. However, in recent years, our industrial customers have undergone substantial water efficiency retooling efforts, reducing overall water use. At the same time, parts of our service area have experienced commercial and industrial development, which has added to Waterworks’ customer base. We have further augmented this base through the acquisition of a well system previously operated by York County, which includes a hospital and several big box stores

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among its customers. Yet this growth has only partially offset the demand reductions experienced elsewhere due to increased water conservation by most customers, wetter weather, and the economic downturn.

Historically, more than 80 percent of Waterworks’ revenues have been derived from volumetric charges while approximately 90 percent of our expenses have been fixed. In response to this trend, Waterworks has reduced demand projections in each of the past four fiscal-year budgets. But system-wide demand has fallen faster – and at a greater rate – than anyone anticipated. In fact, budgeted water sales volume for FY 2013 is down a full 5 percent from FY 2011 projections and is nearly 14 percent less than our FY 2010 projection of 44 MGD. Furthermore, Waterworks anticipates that demand will continue to drop by as much as 4 percent per year for the near future. Despite austerity measures that include a reduction of the workforce to its lowest point in more than 20 years, a longstanding hiring slowdown, and the postponement and downsiz-

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ing of numerous capital projects, Waterworks has been forced to rely on reserves to meet revenue shortfalls for the past four budget cycles. Further program and staffing cuts are likely to have more severe impacts on operational efficiency and system integrity. To address this problem and return the Department to a path of financial sustainability, Waterworks engaged Raftelis Financial Consultants, Inc. to conduct a comprehensive Cost of Service and Rate Design Study during the FY 2012 budget planning cycle. The objectives of the study were to: 1) determine the effectiveness of existing rate structures; 2) identify opportunities for improvement; and 3) develop viable rate structure alternatives. The consultants recommended a new, multi-tiered rate structure with a two-block inclining residential rate category, a two-block declining industrial rate category (to better balance the cost-of-service burden placed on industrial customers) and a uniform general rate category for all other customers (commer-

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cial, institutional, etc.). Meter service fees were also adjusted to better balance the actual cost-of-service related to each customer. The recommended rate structure, with corresponding water rates and service fees, was adopted by City Council in May 2011 and became effective July 1, 2011. These changes helped put the Department back on a path to financial sustainability, but this programatic approach to rebalance revenues and costs will continue for several years. Rates were adjusted again for FY 2012, with further adjustments anticipated going forward As part of the rate study, Department staff identified three pricing priorities: financial sufficiency, revenue stability, and customer understanding. Adoption of the new pricing structure was the first step in meeting those objectives. As we move forward, we will continue working toward those goals by focusing future efforts on truing-up demand forecasts while continuing to move revenues incrementally from volumetric to fixed charges.

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Infrastructure maintenance and renewal, such as the Walkers Dam rehabilitation work pictured here, are vital to the long-term sustainability of the Waterworks system. Two additional dam revitalization projects were underway during FY 11-12.

Maintaining Structural Integrity A sustainable future hinges on having strong, robust, and dependable infrastructure. Although budget cutbacks have triggered necessary postponements of some projects and revisions of others, Waterworks continues to pursue a modified longterm Capital Improvements Program (CIP) to assure the sustained operation of our facilities. The projects included in the program were scheduled across a six-year time frame (FY 2011 – 2016) with total costs estimated at approximately $65.8 million. Waterworks expects to finance the projects through a combination of rate-generated revenues and proceeds from revenue bonds and general obligation bonds. All projects in the CIP are reviewed and approved annually by City Council with appropriations made on a case-by-case basis. LEE HALL DAM IMPROVEMENTS The Lee Hall Reservoir system consists of two interconnected impoundments, originally constructed more than 100 years ago, with a combined storage capacity of 900 million gallons. Nearly 70 percent of the water delivered to Waterworks’ customers passes through the Lee Hall Reservoir system; hence it is a critical asset to maintain. In 2009, after completing a seepage repair project on the Lee Hall dam, Waterworks began the process of upgrading the entire structure to bring it into full compliance with more stringent dam safety requirements adopted by the state in 2008.

The preliminary design phase, which included impact assessments to environmental and cultural resources, geotechnical studies, and hydraulic analyses, was completed in spring 2012. As FY 2012 came to a close, the project’s final design phase got underway, with construction expected to begin early in FY2014. Waterworks anticipates completion of the project in FY 2016, at an estimated cost of $20 million.

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WALKERS DAM REHABILITATION Waterworks is in the

second phase of a two-part project to stabilize and rehabilitate Walkers Dam on the Chickahominy River, the principal source of raw water for the system, constructed in the 1940s. The dam was breached in March 2007, resulting in significant damage to a portion of the dam and the failure of the associated boat lock structure shortly thereafter. Phase I of the project stabilized the existing structure and re-established a functioning dam. Phase II construction activities have been ongoing since 2010, although they are curtailed each spring as the contractor halts all in-stream work to comply with a regulatory requirement established to protect migrating fish traveling up the Chickahominy River. The second phase includes rehabilitation of the remaining structure, including replacement of the boat lock, to extend its useful life for an estimated 60 years.

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Skiffes Creek Dam before rehabilitation

HARWOOD’S MILL TREATMENT PLANT MODERNIZATION

Originally constructed in 1988 and designed to operate for 50 years or more, Waterworks’ Harwood’s Mill Treatment Plant is entering middle age. To prepare the plant for successful performance in the second half of its life, Waterworks has begun a modernization project that will bring the plant’s capacity to approximately the same level as its sister plant at Lee Hall. Initial planning for this project began in 2006, shortly after the new Lee Hall plant came online. It is currently in the preliminary engineering stage. Waterworks will replace its current use of chlorine gas with sodium hypochlorite, more commonly known as bleach. The elimination of chlorine gas will reduce the risk of accidental exposure and environmental risks, and will increase employee and public safety. The addition of one raw water pump and one finished water pump will increase the plant’s firm pumping capacity to more than 50 MGD, while the addition of two more filters will increase the plant’s filtering capacity by 25 percent. Improvements to the filter valves will increase the plant’s reliability. The plant’s raw water screening system will undergo enhancements to prevent leaves from accumulating in the raw water

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Skiffes Creek Dam after rehabilitation

pumping station, and the concrete structures will undergo minor repairs to address imperfections, increasing their longevity. Construction is expected to start in 2013 and be completed in 2015 at a projected cost of $8 million. SKIFFES CREEK DAM REHABILITATION In 2010, Waterworks embarked on an effort to rehabilitate the Skiffes Creek Reservoir dam. After extensive review, it was determined that the project could be completed in-house at significant cost savings.

During 2012, crews from Waterworks’ Natural Resources, Facilities and General Services divisions accomplished the repair of the dam face and reinforcement of several breached areas. Through a combination of modified work schedules and overtime, they were able to complete the job in only 35 working days. In the process, they removed over 150 trees, brought in more than 50 loads of fill material to backfill stump holes, hauled more than 25 loads of mulch, and armored the dam face with more than 200 tons of riprap. The project was completed at a cost of only $80,729, and doing the work in house saved the Department nearly a quarter of a million dollars.

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The 60th Street Ground tank after rehabilitation with the 60th street elevated tank in the background

STORAGE TANK AND PUMP STATION MAINTENANCE

Waterworks performs regular evaluations of the anti-corrosion coating systems used to protect the four ground and six elevated storage tanks in our distribution system. Recent assessments revealed these coating systems were approaching the end of their useful lives, so Waterworks launched an initiative to refurbish all the tanks in the system. In 2009, the Copeland Park tank was the first to be rehabilitated. During FY 11-12, Waterworks rehabilitated the 60th Street and Mercury-Lasalle ground tanks and the Kingsmill elevated tank. Re-coating projects on the remaining tanks are planned annually over the next three to five years to extend the service life of the remainder of these storage facilities. Along with the tank rehabilitation program, Waterworks is conducting hydraulic modeling and cost benefit analyses to determine the feasibility of decommissioning and removing some of the storage tanks in lieu of rehabilitation work. While these projects are underway, we will also evaluate the pumping stations associated with the ground storage tanks to

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ensure that they can continue performing reliably. These evaluations will include a review of the structural, electrical, and hydraulic components of each station, comparing them to the current and future needs of our system. Determinations regard-

ing each pump station’s status will be made on a case-by-case basis. Depending on the results of the assessments, Waterworks will make physical improvements as necessary to renew these facilities and prolong their service life.

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Renewing Infrastructure REPAIR AND REPLACEMENT The Waterworks distribution

system includes some 1,740 miles of treated water pipeline installed between 1891 and today. Waterworks has assets still in service from as early as 1893, earning the Department a listing in the American Water Works Association’s (AWWA) Centurion Club. Some pipes are reaching the end of — or have already exceeded — their life expectancy and need to be replaced. Thanks to a well-established Distribution System Improvement (DSI) program, our overall pipe failure rate has been decreasing over the last 18 years, bringing us nearly into alignment with the AWWA recommendation of fewer than 15 failures per 100 miles of pipe per year. This failure rate currently ranges between 15 and 20 leaks per 100 miles of pipeline per year, with the variation occurring primarily due to increased rates of failure during cold weather. These leaks and breaks are generally dependent upon pipe age, pipe material, and soil type. The DSI program is an ongoing renewal effort with variations in the amounts of pipeline replaced and funds expended annually. While there is no established formula to determine the appropriate rate of annual investment, Waterworks has projected future repair and replacement costs based on observed and expected failure rates and other factors. We currently budget approximately $1.3 million per year to the DSI program. Pipelines are assessed through a continuous improvement approach within a framework of lifecycle cost and are identified for replacement based on a set of established criteria that

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includes life expectancy, frequency of breaks, water quality, fire protection, pipe material, and soil conditions. Additional considerations include interruption-of-service data, coordination with jurisdictional paving operations, and other empirical data. By applying this information to the entire distribution system, we arrive at a projection of repair and replacement costs. As new information becomes available, the variables are easily changed, and a new projection is created. Although an initial assessment was prepared in 2003 by a consultant, today assessments are prepared in house, and Waterworks tracks actual expenditures costs against the projected costs. Waterworks’ main objective is to strike an appropriate balance between replacement and repair expenditures so that the leak rate is maintained at a manageable level and overall costs are minimized. If replacement rates are inadequate, the failure rate will increase over time and could reach the point where failures occur more rapidly than we are able to repair. Our goal is to minimize the total lifecycle cost of owning and operating the assets while continuously delivering a level of service commensurate with the expectations of Waterworks customers. The keys to successfully meeting our future infrastructure replacement challenges will be continually monitoring and reassessing our assumptions regarding failure rates and maintaining an appropriate level of funding. This funding must necessarily increase over the next 20 to 30 years to sustain the Peninsula’s water supply system.

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Discolored Water Complaints 1997-2002

Main Breaks 1997-2002

Discolored Water Complaints 2005 -2010

Main Breaks 2005-2010

These images illustrate the progress Waterworks has made over time in reducing the number of distribution system main breaks and discolored water complaints. Each set of maps depicts the density of all reported discolored water complaints (left) and main breaks (right) within the five-year periods noted. Sustainable investment is essential to continuing – and improving upon – this progress, as more of our infrastructure reaches the end of its useful life and replacement costs escalate in the coming years.

MIDDLE GROUND BOULEVARD As a cost-saving measure,

Waterworks often partners with local and state agencies to install system improvements when they perform road construction and other projects. An excellent example of this is the Middle Ground Boulevard Project, where the Virginia Department of Transportation is building a new four-lane road connecting Warwick Boulevard and Jefferson Avenue, the two largest thoroughfares in Newport News. Although more than 3,300 linear feet of water line will be installed within the project boundaries, the majority of this is new pipe, the cost of which is incorporated into the project budget. Therefore, the only cost to Waterworks will be approximately $112,000 of betterment to replace 500 linear feet of existing

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8-inch main with 12-inch pipe. The new and upgraded mains will improve flow and increase reliability in the mid-town area of the city.

SOUTH JEFFERSON AVENUE REVITALIZATION In September 2010, the Newport News City Council unanimously endorsed a set of strategic initiatives for priority attention by city staff. Of those initiatives, Waterworks has been most heavily involved in the revival of the Southeast Community, with its focus on revitalizing the utility infrastructure along the South Jefferson Avenue corridor in order to encourage reinvestment in this part of the city. The cornerstone of this plan is a mixed-use develop-

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Employees from Waterworks’ Distribution Division replaced 500 feet of existing 8-inch main with 12-inch pipeline as part of the Middle Ground Boulevard Extension project. An additional 2,800 feet of new pipeline wil be installed before the end of the project, improving flow and increasing reliability for customers in the mid-town section of Newport News.

ment, including retail, commercial, and residential components, on a 14-acre site known as the Southeast Commerce Center.

ficient to meet the area’s anticipated residential and commercial expansion.

The beautification project includes burying all existing above-ground utilities, repaving the roadway, and installing streetscape and landscape improvements. Water infrastructure in the area dates to the Department’s earliest days and is nearing the end of its useful life, so the revitalization project presented an opportunity for Waterworks to perform needed system upgrades while improving fire flows for future commercial development.

To prepare for future growth and ensure service reliability to existing customers, Waterworks is extending its existing distribution system to the Lightfoot area, adding nearly six miles of 24-inch transmission main in a $9 million two-phase project the cost of which will be shared with York County and the Colonial Williamsburg Foundation.

The water utility portion of the project was completed in summer 2012 at a cost of $610,000 and included installation of more than 3,000 linear feet of pipe in diameters ranging from four to 18 inches. Whenever possible when such projects are undertaken in its service area, Waterworks cooperates with the local government agencies because of the considerable cost savings achieved by completing upgrades when street work is already being done. TRANSMISSION MAIN EXTENSION In 2010, Waterworks

expanded its service area through the acquisition of a groundwater well system in the Lightfoot area of York County. This system, which is physically independent of Waterworks’ existing distribution system, serves approximately 400 customer accounts, including a hospital, a hotel/water park resort complex, and several big box retailers. The surrounding area is prime for future development, but due to drawdown limitations imposed by a State permit, the well system’s capacity is considered insuf-

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Phase I, which covers approximately 2.4 miles, was launched in December 2011 after approval of a project development agreement. The project progressed through 2012 with archaeological studies, geotechnical testing, corrosion engineering, wetlands permitting, and negotiations for rights-of-way with the National Park Service, Dominion Virginia Power, and the Virginia Department of Transportation. Waterworks anticipates completion of final design work by the end of 2012 and initial construction to begin in spring 2013. Meanwhile, to keep the project on track, Waterworks is proceeding with Phase II design work, which covers the remaining distance to Lightfoot. If all goes as planned, there will be no break between Phase I and Phase II construction work. At the completion of Phase II, our Lightfoot area customers will be connected to our treated surface water system. Most importantly, Waterworks’ distribution system will extend the entire length of the service area, from Foxhill to Lightfoot, bringing adequate capacity to serve the needs of our northern York County customers for decades to come.

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Protecting Source Water A LEGACY OF OWNERSHIP It has always been Waterworks’

philosophy that good water quality starts at the source and that ownership of watershed land is key. That philosophy was put into action over a century ago when the Old Dominion Land Company began buying surrounding farmland to protect the drainage areas for the reservoirs being developed for Waterworks’ predecessor, the Newport News Light & Water Company. The acquisition of critical lands continues today. For example, in late 2010, Waterworks acquired the 75-acre Curtis Farm, a critical part of the Harwood’s Mill watershed. The farm, which had been zoned for commercial development will now be protected through a conservation easement. Land ownership is our preferred choice for absolute assurance of watershed protection. However, the prohibitive cost of acquiring every parcel of private land that falls within our reservoirs’ watersheds makes it impractical to rely solely on that method of source water protection. Therefore, over several decades Waterworks has developed and implemented additional options, creating a multi-faceted approach to address the real-world issues we face. To neutralize or minimize potential impacts from spills or other contamination events, Waterworks relies on a Source Water Assessment Plan. Development of a Source Water Assessment Program was a requirement of the Safe Drinking Water Act Amendments of 1996. The regional plan participated in and relied upon by Water-

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works was prepared by the Hampton Roads Planning District on behalf of the 16 local government members in Hampton Roads and was completed in May 2001. It identifies an assessment area for each water source in the region and provides an inventory of the land use activities in each area and an analysis of the potential for contamination.

It has always been Waterworks’ philosophy that good water quality starts at the source and that ownership of watershed land is key. In addition to identifying potential threats to surface water supplies, the plan documents threats that are in close proximity to groundwater wells that are public water supply sources, laying the groundwork for further source water protection. LEGISLATIVE CONTROLS Legislative controls are essential for

dealing with the impacts of development on private lands that drain to the reservoirs. Well before the Chesapeake Bay Act became a reality, the City of Newport News and York County established regulations that provided similar protections for the drinking water reservoirs whose watersheds lay within their boundaries. Both localities approved controversial ordinances in 1987 that provided protection from future development near the Lee Hall, Harwood’s Mill, and Skiffe’s Creek reservoirs. When the governing bodies of James City and New Kent Counties adopted local versions of the Chesapeake Bay Preservation

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Act, legislative protections became effective to afford comparable protection for Diascund and Little Creek reservoirs. These protections prescribe buffers along streams, much like the setbacks for homes along streets. The Newport News and York County ordinances also made it illegal to manufacture or store within the drinking water drainage areas petroleum, chemical, asphalt products, or any hazardous substances for bulk distribution. STRUCTURAL IMPROVEMENTS Local regulations also deal

with new development activities by requiring the developers to minimize the impact of earth-disturbing activities during construction and to control storm water runoff after development. The goal is to intercept the stormwater before it can impact drinking water supplies. Whenever possible, Waterworks collaborates with developers on new projects to implement measures that will also capture runoff from older developments. This helps to mitigate stormwater impacts that originate on previously developed private lands and on highways that, in many cases, were constructed decades ago. For example, Waterworks has constructed four detention ponds on watershed lands. The detention ponds naturally treat stormwater while also serving as spill containment basins. In each case, a significant portion of the cost was provided by others who were benefitting from the pollutant removal capability of the ponds, while Waterworks benefitted from capturing the runoff from existing developments.

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INTERNAL PROGRAMS Our strategy is to retain as much

forested land as possible. As a result, of the 3,319 acres that comprise the drainage area of Harwood’s Mill Reservoir, some 61 percent remains forested, and most of it is owned and managed by Waterworks. We are continually assessing and implementing options to better manage the lands surrounding our drinking water supplies. On the 12,000 acres jointly managed by Waterworks and the City’s Department of Parks, Recreation & Tourism, we’ve identified opportunities to keep our own house in order. For example, we’ve replaced open areas of turf with trees, wildflowers and other vegetation. Further operations and maintenance improvements made at the Deer Run Golf Course on the Lee Hall Reservoir received an award from the state for minimizing runoff impacts. Over the past two decades, Waterworks has made significant improvement in intercepting and treating nutrients and preventing metals from entering our reservoirs. Strategic barriers have been established between our reservoirs and potential sources of contamination. Most importantly, we’ve established good working relationships with internal and external agencies to improve water quality protection.

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Adapting to a Changing World CLIMATE CHANGE PREPAREDNESS Another important

aspect of source water sustainability is preparation for the potential impacts of climate change. The issues of global warming and climate change have been the focus of global climate scientists, planners, and politicians for decades. Geologic data gathered from deep ice-cores collected from the Antarctic confirm that the planet has experienced regular cycles of warming and cooling over time.1 Satellite data from the last two decades and sea-level data from the last half century provide increasing evidence of a warming planet. While some still debate the specific causes of climate change, the scientific community continues to study the complex atmospheric interactions that control climate and global temperature. Model predictions released by the Intergovernmental Panel on Climate Change (IPCC) and climate scientists at numerous other research agencies around the world generally agree on projections for continued warming and changing climates over large regions of the planet. These predicted changes in temperature, precipitation, and sea-level could have significant implications for water utilities. Complex models have been developed that may someday prove useful in guiding how industrial societies can safely interact with our atmosphere, oceans, and environment. But it is imperative that water utilities identify and prepare today for the potential impacts of climate change.

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Since the early 1990s there has been a steady increase in research on the topic of global warming and the societal implications of climate change. Many models are capable of making predictions for geographic regions of the North American continent, including the mid-Atlantic region. Waterworks has worked with many governmental and research agencies to help identify the potential ranges and types of climate impacts that our region should integrate into sustainability planning, and we’ve used data from several regional studies to better understand, plan and prepare for an increasingly uncertain climate.

Complex models have been developed that may someday prove useful in guiding how industrial societies can safely interact with our atmosphere, oceans, and environment. But it is imperative that water utilities identify and prepare today for the potential impacts of climate change. In addition to the Hampton Roads Planning District Commission, the NASA Langley Applied Research Center (NASA 1. Climate and atmospheric history of the past 420,000 years from the Vostok ice core, Antarctica. 1999. Petit J.R., et al. Nature 399: 429-436.

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EFFECTS AND IMPACTS OF CLIMATE CHANGE OBSERVED EFFECT

OBSERVED OR POSSIBLE GENERAL IMPACTS

WATERWORKS-SPECIFIC IMPACTS & RESPONSE

Increase in atmospheric temperature

Reduction in long-term runoff from basins fed by snowpack or glacier melting.

No impact to Waterworks. No changes required.

Increase in surface water temperature

Reduction in dissolved oxygen levels and changes in stratification patterns. Increased algal blooms and changes in algal species and distributions.

Minor impact to Waterworks. Changes in treatment processes have been implemented and reservoir mixing options using solarpowered aeration are being evaluated. Evaporation losses have been quantified.

Sea-level rise

Changes in salt water- fresh water gradients in both surface water estuaries and in coastal aquifers.

Potentially significant impact on primary water supply intake on Chickahominy River estuary. Modeling study and assessment performed by VIMS and USGS.

Shifts in precipitation patterns; more frequent and intense extreme events

Increased difficulty in managing flood events and increased erosion and sedimentation rates. Longer or more intense droughts can impact water availability and water quality.

Spillways are being upgraded to pass maximum flood predictions. Desalting facilities including drought-tolerant deep wells were completed in 1998.

Increase in inter-annual precipitation variability

Changes in seasonal water transfers and pumping rates, including reservoir drawdown and refill cycles. Impacts to infrastructure and energy costs.

Minor impact to Waterworks due to integrated resources planning and flexibility in pumping rates and source water supply interconnections.

Increased evaporation and evapotranspiration

Lowering of water table and decreasing discharges to streams and reservoirs. Increased losses from reservoirs during warm seasons.

No significant decreasing trend in stream flows identified in Chesapeake Bay basin watersheds over past 80 years (USGS 20125151). Variable evaporation rates have been modeled in Waterworks safe-yield model with no significant reduction in yield.

LARC) in Hampton has been an excellent source of climate change research. In conjunction with the Goddard Institute for Space Studies (GISS), NASA LARC used 16 global climate models with multiple emission scenarios to estimate future climate conditions in Hampton Roads. The NASA-GISS studies generally confirm work published by the US Environmental Protection Agency (EPA) and others that predict changes for the Mid-Atlantic region during the coming century, including: • • • •

1 to 5 degrees of warming, longer periods of seasonal high temperatures, increases in average annual precipitation, and 2 to 50 inches of sea-level rise, and an increase in threshold level climate events (flood and drought) for the Tidewater region.2 Waterworks staff have used these specific regional predictions to examine potential impacts to the water resources, finished water quality, and delivery reliability of our system. Waterworks has also participated in numerous workshops and regional utility assessments sponsored by the EPA, the AWWA, and the US Geological Survey (USGS). In particular, the USGS conducted two important studies: one to calculate

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potential changes in regional stream flow characteristics and another to assess potential saltwater encroachment into freshwater estuaries due to sea-level rise. For the three sea-level rise scenarios analyzed in the second study, the modeling concluded that under normal and dry year conditions, Waterworks could expect brackish water to reach Walker’s Dam at a much higher frequency than historically observed, potentially impacting our primary raw water source. Adaptation measures Waterworks is considering include modifying the dam structure to raise the normal pool of fresh water in Chickahominy Lake and temporarily raising the pool during tidal excursions when brackish water is present downstream. The table above provides a very brief summary of the predicted long-term regional effects of climate change along with the possible impacts and adaptive measures Waterworks has already initiated or that we anticipate may be needed to deal with the noted impacts over time. Our ability to successfully adapt to climate change is critical to our future.

2. Projected Climate Change Impacts for NASA Langley Research Center and the Hampton Roads Region of Virginia. 2012. Goddard Institute for Space Studies, NP-2012-01-356-LaRC.

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Preparing the Leaders of Tomorrow WORKFORCE DEVELOPMENT Workforce planning issues

HAMPTON ROADS PUBLIC WORKS ACADEMY To help

are another critical component of Waterworks’ sustainable future. The Department’s employees range from entry level construction workers to degreed engineers, creating a wide span of socio-economic and educational diversity. The Department’s workforce also has broad gender, ethnic, and generational representation. These demographic variations create an environment where employees’ needs and motivational factors vary extensively.

ensure the region has a pool of well-trained, reliable employees in the future, Waterworks has been a member of the Hampton Roads Public Works Academy (HRPWA) since 2008. This program exposes high school juniors and seniors to the public works and utilities industry, promotes a good work ethic, teaches them needed work skills, and provides them with training and internship opportunities.

Personnel cutbacks due to decreased revenues in recent years have reduced Waterworks staffing to its lowest level since the 1980s. Further staff reductions are anticipated over the next decade, but with 50 percent of the Department’s workforce eligible for retirement within the next five years, the recruitment and retention of qualified personnel is one of Waterworks most important strategic challenges. Because of this, Waterworks has placed renewed emphasis on employee training that will prepare the remaining workforce and newly hired employees for their future roles. To facilitate these efforts, Waterworks has expanded its internal training program to include new courses. Among these is a class for new supervisors, in which they learn leadership skills and management techniques. As an additional resource, Waterworks’ training staff regularly facilitates a roundtable forum, where supervisors can review common goals, deliberate new approaches, discuss unique challenges, and brainstorm innovative solutions in an open, positive, and collegial environment.

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Currently, seven Waterworks employees act as subject matter experts, teaching five different program courses, and we’ve offered internships to eight cadets over the last three summers. In addition to the cadet program, the academy provides training opportunities for existing employees, allowing costly out-oftown training to be brought to the local area at considerable cost savings. Thanks to this comprehensive training program, as baby boomers retire, Waterworks’ younger generations will be well prepared to assume new leadership roles within the Department.

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Comparative Financial Highlights Sources and Uses of Funds (Cash Flows)

FISCAL YEAR ENDED JUNE 30, 2011 FUNDS AT THE BEGINNING OF THE YEAR $ 90,340,521

Interest received Capital assets contributions

What We Received Receipts from customers

$ 73,799,024

93.55%

Capital assets contributions

4,810,036

6.10%

Proceeds from sale of capital assets

46,893

0.06%

Interest received

235,100

0.30%

Total Sources

$ 78,891,053

100.00%

Proceeds from sale of capital assets

Receipts from customers

How It Was Used Payments to suppliers

$ 16,676,380

19.11%

Payments to employees

21,306,208

24.41%

Other payments

3,540,119

4.06%

Acquisition of capital assets

13,571,586

15.55%

Repayment and retirement of long-term debt

13,635,000

15.62%

Interest paid

8,546,234

9.79%

Transfer to other funds

10,000,000

11.46%

Total Uses

$ 87,275,527

100.00%

Transfer to other funds Interest paid Payments to suppliers

Payments to employees

Other payments

FUNDS AT THE END OF THE YEAR

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$ 81,956,047

Repayment and retirement of long-term debt

Acquisition of capital assets

NEWPORT NEWS WATERWORKS


FISCAL YEAR ENDED JUNE 30, 2012 FUNDS AT THE BEGINNING OF THE YEAR $ 81,956,046 Capital assets contributions

What We Received Receipts from customers

$ 73,244,759

94.61%

Capital assets contributions

3,475,356

4.49%

Proceeds from sale of capital assets

485,231

0.63%

Interest received

213,743

0.28%

Total Sources

$ 77,419,089

100.00%

Interest received Proceeds from sale of capital assets

Receipts from customers

How It Was Used Payments to suppliers

$ 16,855,549

19.01%

Payments to employees

21,549,392

24.30%

Other payments

4,172,499

4.70%

Acquisition of capital assets

13,936,717

15.72%

Repayment and retirement of long-term debt

10,982,008

12.38%

Interest paid

11,295,801

12.74%

Transfer to other funds

9,891,000

11.15%

Total Uses

$ 88,682,966

100.00%

FUNDS AT THE END OF THE YEAR

Transfer to other funds Interest paid Payments to suppliers

Payments to employees

Other payments

$ 70,692,169

REPORT TO THE COMMUNITY - FISCAL YEARS 2011-2012

Repayment and retirement of long-term debt

Acquisition of capital assets

17


Balance Sheet Fiscal Years 2011 & 2012 ASSETS CURRENT ASSETS: Cash & Cash Equivlalents Unrestricted Restricted Receivables (Net of Allowance) Inventories Total Current Assets NON CURRENT ASSETS: Capital Assets (Net of Depreciation) Other Assets Total Non Current Assets TOTAL ASSETS LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts Payable and Accrued Expenses Construction Payable From Restricted Cash Accrued Liabilities Bonds Payable - Current Portion Deferred Revenue Total Current Liabilities

18

NON CURRENT LIABIILITIES: Accumulated Leave Total Customer Deposits Bonds Payable (Net of Current Portion) Total Non Current Liabilities TOTAL LIABILITIES

JUNE 30, 2012

$

JUNE 30, 2011

35,155,625 35,536,544 14,114,617 3,332,390 88,139,176

$

$

$

398,763,273 3,086,412 401,849,685

$

399,216,815 1,872,550 401.089,365

$

489,988,861

$

501,276,763

$

1,424,035 1,721,891 3,541,248 12,162,500 34,430,193 53,279,867

$

1,753,477 831,522 2,770,265 14,285,000 35,344,827 54,985,091

$

$

$

$

$

$

$

1,830,424 3,804,499 153,944,025 159,578,948

$

1,954,732 4,014,041 165,041,145 171,009,918

$

212,858,815

$

225,995,009

$

$ $

251,759,910 23,521,844 275,281,754

$

501,276,763

NET ASSETS: Invested In Capital Assets, Net of Related Debt Unrestricted Total net Assets

$

257,644,908 19,485,138 277,130,046

TOTAL LIABILITIES AND NET ASSETS

$

489,988,861

$

39,197,421 42,758,626 14.936,189 3,295,162 100,187,398

NEWPORT NEWS WATERWORKS


Income Statement Fiscal Years 2011 & 2012 OPERATING REVENUES: Water Sales Water Standby Fee Charges for Services Miscellaneous Total Operating Revenues OPERATING EXPENSES: Personnel Services Contractual Services (Sch#1) Internal Services (Sch #1) Total Material & Supplies Depreciation (Sch #1) Other (Sch #1) Total Operating Expenses

$

$

$

$

JUNE 30, 2011 59,789,186 914,634 11,137,673 2,655,521 74,497,014

$

$

21,632,442 10,836,818 1,409,401 5,487,109 14,004,936 4,172,499 57,543,205

$

21,724,308 10,759430 1,370,511 4,971,857 14,074,366 3,540,119 56,440,591

$

15,794,616

$

18,056,423

$

$

$

3,475,357 213,743 (7,053,640) (135,824) (4,040) (550,920) (9,891,000) (13,946,324)

$

4,810,036 235,100 (6,957,131) (154,210) (249,458) (728,476) 10,000,000) (13,044,139)

$

1,848,292

$

5,012,284

NET ASSETS, BEGINNING OF YEAR

$

275,281,754

$

270,269,470

NET ASSETS, END OF YEAR

$

277,130,046

$

275,281,754

Operating Income (Loss) NON OPERATING REVENUES (EXPENSES): Capital contributions for capital assets Interest Revenue Interest Expense Amortization, Cost Of Issuing Bonds (Sch#1) Gain (Loss) On Disposal Of Capital Assets Loss On Long Term Debt (Sch #1) Transfers Out (Sch #1) Total Non Operating Revenues (net) Increase in Net Assets

$

JUNE 30, 2012 57,588,343 914,634 12,280,098 2,554,746 73,337,821


Newport News City Council

McKinley L. Price, D.D.S. Mayor (At-Large) Term Expires June 30, 2014

Herbert H. Bateman, Jr. Central District 2, Seat B Term Expires June 30, 2014

Term Expires June 30, 2016

North District 1, Seat A

Madeline McMillan Councilwoman/Vice Mayor Term Expired June 30, 2012

Sharon P. Scott North District 1, Seat B Term Expires June 30, 2014

Tina Vick South District 3, Seat A Term Expires June 30, 2016

Joe Whitaker South District 3, Seat B Term Expires June 30, 2014

Dr. Patrica P. Woodbury Central District 2, Seat A Term Expires June 30, 2016

City Manager

Robert S. Coleman

Waterworks Management

Neil Morgan City Manager 2009 - Present

REPORT TO THE COMMUNITY - FISCAL YEARS 2011-2012

Brian L. Ramaley, P.E. Director April 1994 - Present

Eileen Leininger, P.E. Assistant Director March 1996 - May 2012

Scott Dewhirst, P.E. Assistant Director Oct 2012 -Present

20


Newport News Waterworks Customer Service Center (City Center at Oyster Point) 700 Town Center Drive Newport News, Virginia 23606 Monday -Friday 8 a.m. - 5 p.m. Newport News Treasurer’s Office (Payments Only) 2400 Washington Avenue Newport News, Virginia 23607 Monday - Friday 8 a.m. - 4 p.m. Customer Service Call Center 757-926-1000 757-926-1100 TDD Emergency Service Dispatcher (After Hours, Weekends & Holidays) 757-234-4800 757-234-4933 TDD Online www.nngov.com/waterworks Find us on Facebook www.facebook.com/nnwaterworks

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