REPORT OF CONSOLIDATION FEASIBILITY ASSESSMENT

Transcription

1 REPORT OF CONSOLIDATION FEASIBILITY ASSESSMENT September 10, 2015 Revised: September 18, Prepared by Central Arkansas Water Staff Utilizing information from Hawkins Weir Engineers, Inc. Raftelis Financial Consultants, Inc. 1 See Appendix 9 for an outline of changes between the September 10 and September 18 documents.

2 REPORT OF CONSOLIDATION FEASIBILITY ASSESSMENT 1. PURPOSE The purpose of this Feasibility Assessment (the Assessment ) is to evaluate if consolidation of the water systems of Maumelle Water Management ( MWM ) and Central Arkansas Water ( CAW ) benefits customers of both systems. This study also evaluates the relative benefits of several scenarios regarding future management and operation of the wastewater functions of MWM. This Assessment examines a wide range of factors (including, but not limited to, the economic, human resource, practical and engineering factors) relevant to the operation and/or consolidation of the water or wastewater systems for the benefit of each entity s respective ratepayers. Specifically, the Assessment compares MWM s continued operation as a joint water and wastewater entity with two scenarios wherein the water and wastewater functions are separated. Each scenario includes the consolidation of MWM s Water System with CAW. The two scenarios differ by the treatment of the wastewater portion and are as follows: 1) MWM continues to operate MWM s Wastewater System as an independent, wastewateronly utility; or 2) MWM s Wastewater System is consolidated with North Little Rock Wastewater ( NLRWW ). The Assessment does not discuss other options for continued operation of MWM s Wastewater System under a legal form different from MWM s current status as a Suburban Improvement District (SID) without consolidation with NLRWW. The specific legal form does not have direct bearing on the financial management, financial requirements, human resources, capital infrastructure needs, or day-today operation of MWM s Wastewater System under different governance. Page 1 of 34

3 2. EXECUTIVE SUMMARY OF REPORT CAW has discovered nothing in the completion of this Assessment that requires MWM to consolidate MWM s Water System with CAW or MWM s Wastewater System with NLRWW. MWM can continue to operate as a joint water and wastewater system, but continuing to do so subjects its ratepayers to increasing operating costs and capital demands on a relatively small customer base. Consolidation with CAW, however, would allow MWM to addresses the significant water-related capital funding shortfall that persists even after implementation of the proposed rate increases of 48.5% to water and sewer rates and 50% to debt service fees spread over the course of three years that received preliminary approval in June of Upon connection to the CAW distribution system, CAW would be able to provide MWM a sufficient supply of water that will satisfy Maumelle peak water demands at full build-out, eliminating the risk of water shortages experienced in 2012 by MWM, and eliminating the costly water supply and treatment capacity expansions necessary to address these capacity issues. Consolidation would allow CAW to utilize stranded capital investments in the vicinity of MWM s service area as well as available supply and treatment capacity made available by reduced wholesale demand. Given that a consolidation would result in the current customers of MWM bearing the costs of the consolidation with CAW, these benefits can be achieved with little to no net cost to CAW. The addition of 10,500 accounts would also benefit CAW financially through the added revenue stability as well as an additional return on the utility s rate base. Consolidation with MWM would have little long-term impact on CAW s capacity. Even at full-build out, MWM s peak demand represents only 6.7% of CAW s treatment capacity. Consolidation with NLRWW addresses MWM s greatest long-term wastewater capital expense expansion of the wastewater treatment plan to provide sufficient capacity for additional growth. MWM s wastewater system is currently operating at over 90% of capacity based on the most conservative estimate of the aeration capacity of the treatment plant, suggesting that significant capacity expansions are necessary at some time in the future. However, NLRWW has sufficient capacity to treat and discharge MWM s current wastewater flows. NLRWW would, therefore, be able to provide MWM a sufficient amount of wastewater capacity to satisfy Maumelle s long-term wastewater demands. Consolidation with NLRWW also transfers substantial future environmental compliance liability to an operator with a much larger population base to absorb the costs of complying with those future regulatory challenges. These economies of scale should substantially stabilize any future rate increases. Figure 1 below illustrates a combined monthly average water and wastewater bill (assuming a 5/8 meter using 4,400 gallons per month). In the near-term, the combined billing amount for the four scenarios varies widely, with both a water-only consolidation and a less-aggressive MWM rate increase yielding the lowest rates. However, the capacity expansions for water and wastewater (future debt service increases primarily for capacity expansion of water and wastewater systems are represented by the dotted lines that occur at an unspecified future date) have significant impacts on long-term rates as well as rate stability. It is clear that significant benefits in water and wastewater rates hinge on the timing of the additional debt surcharges related to the capacity expansions and other unfunded near-term capital needs. It is unclear when MWM would make these improvements, but these improvements will be required at some time in the future. Therefore, the debt surcharges shown as dotted line increases on Figure 1 are important items to consider in evaluating the impacts of any scenario. Page 2 of 34

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5 3. BACKGROUND & LEGAL MATTERS 3.1 BACKGROUND MWM, in various legal forms, has provided water and sewer services to residents of the City of Maumelle since the 1970s. As the City of Maumelle has grown, MWM has continued to provide water and wastewater services necessary to accommodate this growth. Growth of surrounding municipalities and water service territories, however, has led to MWM s water service territory being bordered on three sides by CAW s water service territory and by the Arkansas River on the fourth side. NLRWW s service area is adjacent to the southeastern portion of the City of Maumelle. Figure 2 below provides a map of the various territories and service areas. Figure 2. MWM Service Area Map Given MWM s proximity to CAW s water system, multiple discussions and evaluations have taken place over the past two decades regarding various forms of partnerships between MWM and CAW. The most recent formal evaluation was performed by Hawkins-Weir Engineers, Inc. ( Hawkins Weir ) in 2013 as a part of the preparation of a water master plan for MWM. That evaluation determined that is was not economical for MWM to become a CAW wholesale customer, and no material changes have occurred to suggest that MWM becoming a CAW wholesale customer would be any more economical today. Page 4 of 34

6 On June 9, 2015, MWM gave preliminary approval to a 48.5% increase to water and sewer rates and a 50% increase to debt service fees spread over the course of three years ( Option 1 Rates ). These increases were deemed necessary to meet financial and operational requirements for the MWM water and wastewater systems and would result in an increase of $24.64 in the average monthly bill. The rate increase would also have led to approximately $15,625,000 in water and wastewater infrastructure improvements that would present significant financial obstacles for any future consolidation with CAW. MWM s rate increase proposal was met by significant concern from Maumelle residents and the Maumelle City Council. MWM also considered an alternative rate increase at the June 9, 2015, meeting that consisted of a 27.5% increase to water and wastewater rates and a 17.25% increase to the debt service fee spread over three years (the Option 2 Rates ). At a special MWM meeting held on June 18, 2015, CAW asked MWM to consider consolidation of the two water systems. As part of the request, CAW agreed to complete this Assessment and provide the results to MWM in September of MWM s commission unanimously voted to delay the aforementioned rate increase in order to provide time for CAW to conduct this Assessment. Both CAW and MWM executed a Proposal to Study Consolidation Options (the Proposal ) at that time. At a June 23, 2015, meeting of the MWM Commission, an interim rate increase was approved in order to collect approximately $600,000 over 12 months to ensure that MWM remained within bond covenant requirements of 1.20x debt service coverage. The rates adopted at this meeting (the Existing Rates ) included a 9% increase to water and sewer charges, a 15% increase to sprinkler charges, and a 5% increase to the debt service fee. Following a public hearing on July 6, 2015, the Maumelle City Council approved the Existing Rates and the rates were implemented September 1, In order to complete this Assessment in the short period of time set forth in the Proposal, CAW (with the consent of MWM) hired Hawkins Weir to prepare two preliminary engineering reports necessary for the analysis in this Assessment: the Preliminary Engineering Report Water System (the Water PER ) and the Preliminary Engineering Report Wastewater System (the Wastewater PER), that are attached hereto as Appendices 1 and 2, respectively. CAW also hired Raftelis Financial Consultants, Inc. ( Raftelis ) to develop a financial model that reflects the various assumptions, capital needs, operational changes, and other considerations, as well as determine the rates needed to fully fund potential operations and debt service. In addition, representatives of CAW and NLRWW have completed thorough investigation and research into MWM s water and wastewater operations and facilities. MWM s staff has been very helpful with the gathering of information and CAW s understanding of the existing MWM systems necessary to complete this Assessment. 3.2 LEGAL MATTERS MWM s status as a suburban improvement district ( SID ) creates some unique challenges related to the consolidation or transfer of assets to another utility. Arkansas law clearly provides that MWM may: i. lease its water and wastewater systems to a provider (Ark. Code Ann (1)); ii. sell its water and wastewater systems to any adjacent or nearby municipality, to an improvement district therein, to public service corporations serving on behalf of the property owners of the district, or to any other corporation, organization or person (Ark. Code Ann (b); see also Ark. Code Ann (sell land for price and on terms it deems best)); or Page 5 of 34

7 iii. turn over the operation and maintenance of its water and wastewater systems to a municipal water works or municipal sewer system in order to secure more adequate service for the inhabitants within the district. Ark. Code Ann (a). After all bonds or other evidences of indebtedness plus interest have been paid in full, an SID may be dissolved by a unanimous vote of the board of commissioners of the district, if title to and control of the facilities constructed by the district have been taken over or assumed by any political subdivision, municipal utility commission or agency, or any regulated utility. Ark. Code Ann (a)(1). At the very least, this last section implies that an SID also has the authority to permit a political subdivision to take over or assume title to and control of the district s facilities; otherwise the code section is meaningless, regardless of whether that authority is contained within Ark. Code Ann (a). But, it does leave unanswered the question of whether or not an SID may wrap up its affairs and dissolve if its outstanding debt has been assumed by another political subdivision, rather than been paid in full. This distinction is important because it is our understanding that MWM desires to dissolve as soon as possible after completion of any proposed consolidation of the water and wastewater systems. NLRWW and any sewer committee that the City of Maumelle would establish would qualify as a municipal wastewater system. CAW is a political subdivision of the State (Ark. Code Ann (a)), granted, among other things, all of the powers and authority relating to the ownership and operation of waterworks systems as are now by law given to municipalities and municipal water commissions. Ark. Code Ann (a)(14). CAW has specific statutory authority to provide water services to any consumer located outside the cities of Little Rock and North Little Rock. Ark. Code Ann (a)(1). CAW also has the authority to purchase, receive, own, hold, improve, use, lease, sell, convey, exchange, transfer, assign, mortgage, pledge, and otherwise acquire, dispose of, and deal with real and personal property and any legal or equitable interest therein in its own name. Ark. Code Ann (a)(9). The powers particularly relevant to this Assessment are the powers to purchase, receive, and otherwise acquire. Given the statutory limitations of an SID, it is recommended that CAW purchase MWM s water system if CAW and MWM move forward with consolidation of their water systems. It is similarly recommended that the future wastewater provider purchase MWM s wastewater system if MWM moves forward with consolidation of its wastewater system with another entity, likely NLRWW or the City of Maumelle. Page 6 of 34

8 4. ASSUMPTION SUMMARY 4.1. MWM This Assessment assumes a 2% annual increase in O&M expenses for MWM water and wastewater. It should be noted that historical trends suggest that MWM experiences approximately a 5% increase in O&M expenses each year. However, for comparison purposes of this Assessment, CAW, NLRWW, and an independent MWM wastewater provider were assumed to have the same annual increase of O&M expenses of 2%. For this reason, it can be assumed that the rates provided in this Assessment for an independent MWM wastewater entity are low-end estimates. Additionally, the Assessment assumes that if MWM continues operation as a joint water and wastewater entity, MWM will impose either the Option 1 Rates that received preliminary approval at the June 9, 2015, meeting or the Option 2 Rates that were presented as an alternative at the June 9, 2015, meeting. In addition, it is assumed that MWM will construct a portion of the near-term capital improvements identified in Sections and that are funded by Option 1 or Option 2 Rates. These capital improvements are only intended to address the capital infrastructure that MWM s must build within the next 1-5 years, but, as discussed in more detail in these Sections, the aforementioned increases will not address all of the 1-5 year construction needs identified in the Water or Wastewater PERs. It is assumed and understood that there are substantial water and wastewater capital infrastructure needs that are not a component of the Option 1 or Option 2 Rates that must be considered when examining the long-term effect on MWM customers. These expenses include, but are not limited to, capacity expansions of both the water and wastewater treatment systems. Collectively and individually, these long-term expenses are referred to in this Assessment as Long-Term Capacity Improvements and are described in Sections and The Option 1 and Option 2 Rates discussed above include rate increases for 2015 through This Assessment, however, forecasts rates and water bills through It is assumed and understood that additional rate increases will be necessary in 2018 through 2020 in keeping with typical utility practices of regular rate increases. Therefore, it is assumed that both Option 1 and Option 2 will have a 3% rate increase each year for base and volume charges for water and wastewater from 2018 through It should be noted that these increases are for discussion purposes only and should not be construed to represent what an actual rate increase should or would be in these years under the Option 1 or Option 2 scenario. These assumed rates are only intended to represent that it is unrealistic to assume flat rates for a joint MWM water and wastewater utility from 2018 through A detail cost allocation analysis was completed as part of this Assessment for MWM s budget in order to assign O&M expenses to the appropriate water and wastewater functions of the utility. The cost allocation was then used to determine operating expenses and revenue requirements for the respective services for a given year under each operational scenario. It reasonable to assume, however, that costs of operating an independent MWM wastewater utility will be higher than the allocated wastewater costs of a joint water and wastewater utility. Therefore, the administrative expenses for a scenario that envisions an independent MWM wastewater entity are assumed to be double the allocated wastewater administrative expenses of a joint MWM water and wastewater utility. These increased administrative expenses drive both revenue requirements and associated rate increases in this Assessment for an independent MWM wastewater provider. Finally, Hawkins Weir is currently developing a Critical Action Plan for the wastewater functions of MWM. This plan is expected to identify additional expenditures related to previously unidentified Page 7 of 34

9 capital and/or operational needs. Therefore, the wastewater rates as well as wastewater surcharge for an independent MWM wastewater provider outlined in this Assessment are assumed to be low-end estimates. 4.2 CAW This Assessment assumes that CAW will continue to operate consistent with historical trends of the CAW system. This includes approving modest rate increases in 3 to 5 year increments that have adjustments both to the volumetric and base charges of its retail customers. The Assessment also assumes no modification to the governing structure of CAW and no change in the 1.3x differential in the base rate or the 1.6x differential in volumetric rates between inside-city and outside-city retail rates. A 2% O&M increase is assumed annually for CAW. The Assessment also anticipates the adoption of the rate increases for 2017 and 2018 that are currently in development but not yet finalized in CAW s rate analysis for years In order to address revenue instability related to a reduction in water consumption over recent years (due in part to weather-related impacts and in part to conservation), CAW will likely recommend larger increases to the base charge in 2017 and 2018 as compared to the volumetric rate. Rates in 2019 and 2020 are assumed to remain flat in accordance with the rate model currently in development. Rate adjustments beyond 2020 cannot be forecast with any degree of certainty and are therefore excluded from this Assessment, but CAW shall continue to establish rates utilizing nationally accepted cost of service rate setting standards for the water industry promulgated by the American Water Works Association and set forth in the Principles of Water Rates, Fees and Charges, Manual of Water Supply Practices M1. CAW has consistently endeavored to treat all customer classes fairly and equitably. 4.3 NLRWW This Assessment assumes that NLRWW will continue to operate consistent with historical trends of NLRWW. The Assessment also assumes that the well-publicized rate increases over a five year period of time currently under development by NLRWW and the City of North Little Rock will be adopted. The proposed NLRWW rate increase is included as Appendix 3. Rate adjustments beyond 2020 cannot be forecast with any degree of certainty and are therefore excluded from this Assessment. 4.4 REGOGNITION OF ESTIMATES BASED ON TIMING AND INFORMATION RECEIVED It is recognized and accepted that the timeline, rates, financial details, and other information in this Assessment are best estimates given the information available and assumptions made in this Assessment. The Assessment represents a snap-shot in time given the available information and assumptions outlined in this Assessment. Variation from key assumptions may result in actual occurrences differing from the estimates contained in this Assessment and, consequently, result in the estimated rates and example bills differing from what is presented herein. For example, as set forth in the Proposal, the Assessment assumes that consolidation of MWM s water and wastewater systems will occur on January 1, Should a delay in consolidation occur, the actual timelines, rates, financial details, and other information in this Assessment may vary from the estimates. Specifically, if the consolidation were to be delayed, the payoff amount for the existing MWM debt will vary based on timing of debt service payments as well as interest accumulated during the delay. In addition, the amount of new debt surcharges will change to address the variability in the payoff amount of the existing MWM debt and the timeline for the repayment of the new debt outlined will be extended by at least the amount of the delay. Additional costs are also expected to be incurred Page 8 of 34

10 under a delay as a result of partial-year operation of MWM, resulting in additional administrative, accounting, reporting, auditing, and other expenses. Likewise, the financial information, expenses, and rates and surcharges outlined in this Assessment are based on information received on or before September 1, Any additional costs identified or information discovered or disclosed after this date may not be included in this Assessment. If additional information is discovered or disclosed and incorporated into the financial analyses and other elements of this Assessment, the results may vary from the estimates reported in this Assessment. 4.5 Rates and Debt The rates included in this Assessment represent base charges, volumetric charges, and debt service surcharges (when applicable). The rates and example bills discussed in this Assessment do not include taxes, franchise fees, Safe Drinking Water Act fees, watershed protection fees, billing fees, or other miscellaneous fees and charges that may be found on a typical bill. This Assessment examines a 5-year timeframe from for the purposes of rate and bill comparisons. During this 5-year timeframe, the rates included in this Assessment are those that have been publically presented, are currently under development and have been shared with CAW, that are consistent with standard utility practices, or that are dictated by projected revenue requirements and are based on cost allocation analyses completed as part of this Assessment. Operational rate adjustments beyond 2020 cannot be forecast with any degree of certainty and are therefore excluded from this Assessment. It should be noted that these rates are estimated rates that are used for purposes of this Assessment and should not be used in future years as detailed budgeting and rate studies will yield more accurate revenue needs and associated rate increases than the calculations used for this Assessment. The Assessment does, however, include increases in debt service expenses at an unspecified Future date. The amounts of these Future surcharges are identified within the text of the Assessment and are shown as dotted lines in an unspecified Future time on the Figures within the Assessment. It should be noted that these dotted lines represent only debt service charges for those capital infrastructure expenses that are reasonably expected to occur at some time in the future. These dotted lines do not include increases in O&M expenses and associated rate changes beyond Future debt issuances in this Assessment and the related debt surcharges assume 3.5% interest for 2 and 10 year debt and 3.85% interest for 30 year debt. Debt surcharges for any new debt are assumed to include the additional 20% of coverage for compliance with the debt service coverage requirement. In addition, there is a 10% contingency included for bond payments. The net result of these assumptions is that additional revenue will be generated from future debt surcharges that can only be used to retire debt; operating revenue is not used to meet debt coverage requirements. Consequently, the debt surcharge amounts estimated in this Assessment for MWM are assumed to be conservatively high for the amount financed. Example bills shown in this Assessment are based on consumption in gallons. When rates are calculated in hundred cubic feet (CCF), the CCF amount is calculated by dividing the number of gallons by 750 and then calculating an example bill. The CCF amounts shown in this Assessment may be rounded for brevity purposes; however, calculations for example bills are completed using the unrounded CCF amounts. Therefore, a calculation of example bills using the CCF numbers shown in this Assessment may vary slightly from the amounts displayed in this Assessment due to rounding. Page 9 of 34

11 5. WATER EVALUATION 5.1 MWM RETAINS OWNERSHIP AND OPERATION OF WATER SYSTEM Governing Authority Maumelle Suburban Improvement District ( SID ) No. 500 d/b/a Maumelle Water Management provides water and wastewater services to the City of Maumelle. MWM is governed by a board of three (3) commissioners. When a vacancy on the commission occurs, it is filled by a vote of the remaining two (2) commission members. In response to the City s desire for directly appointed representation on the commission, MWM created two non-voting liaison positions on the Board. MWM has also been working towards converting from an SID to a public water authority ( PWA ) in order to increase the number of voting board members from three (3) to five (5), among other reasons. The transition to the PWA was delayed by the need for the significant rate increase discussed in Section 3.1 and then for the completion of this Assessment. Should the consolidation not be completed, it is assumed that MWM will continue either as an SID or PWA with either the Option 1 or Option 2 Rates proposed at MWM s June 9, 2015, meeting Capital Infrastructure Needs As discussed previously, MWM gave preliminary approval to the Option 1 Rates in June of 2015 in order to complete approximately $15,625,000 of capital improvements in 1-5 years ( Near-Term Capital Improvements ) and to meet other necessary financial and operational requirements. Of this amount, approximately $11,575,000 is related to water improvements and $4,050,000 is related to wastewater improvements. The $11,575,000 of water-related Near-Term Capital Improvements identified in the Option 1 Rates, however, will not address MWM s existing long-term water supply or peak demand issues. Namely, the peak daily usage is projected to increase from 6.68 million gallons per day (MGD) to approximately 10.2 MGD at full build out. Current well capacity however is at 7.8 MGD and treatment capacity is 6.84 MGD. Therefore, in addition to the $11,575,000 in water-related Near-Term Capital Improvements included in the Option 1 Rates, an additional $24,163,000 of unfunded water infrastructure improvements could be necessary to address water supply and peak demand issues (due to the difference in projects and cost-estimates identified in the Option 1 Rate presentation and Water PER, this capital funding shortfall was determined as the difference between the total water infrastructure needs identified in Table 1 below and the $11,575,000 of water infrastructure needs identified in the Option 1 Rate presentation). This unfunded amount would increase by $5,075,000 for Option 2 Rates as these rates include less funding for water-related capital infrastructure needs. The specific water-related infrastructure improvements that are identified in the Water PER for MWM are shown in Table 1 below and are summarized following the table. A more detailed description of these projects is set forth in the Water PER. Table 1 MWM Water Infrastructure Needs Description Cost Manitou Booster Pump Station 1 3 $500,000 Ground Storage Tank #1 & #2 Maintenance 1 3 $1,200,000 New 2.5 MG Storage Tank 1 4 $3,000,000 Flushing System 1 3 $150,000 Page 10 of 34

12 Water Transmission Improvements 1 4 $5,500,000 WTP Residual Handling 1 4 $1,000,000 New Wells (4) 1 4 $800,000 Emergency Generators & Platforms for 5 Wells 1 4 $425,000 Expansion of WTP to 12 MGD 2 4 $22,250,000 Meter Replacement 1 3 $888,000 Permanent Chlorine Dioxide Feed System 1 3 $25,000 Entergy Power Distribution in Well Field 1 4 TBD 5 Future Improvements Required for Water Quality 2 4 TBD 5 Total Budget $35,738,000 1 Water-related Near-Term Capital Improvements 2 Water-related Long-Term Capacity Improvements 3 This expense is required under both water scenarios. 4 This expense is not required if MWM consolidates with CAW 5 TBD amounts not included in Total Budget amount Manitou Booster Pump Station The current design and location of this pump station have led to fire flow capacity and water tank turnover issues, potentially leading to water quality and compliance concerns. Ground Storage Tank #1 & #2 Maintenance Tank #1 is in need of structural repair. In addition, both tanks need cleaning and painting to prevent corrosion and possible water contamination. Both tanks currently have coating repair needs due to failure or expected failure. New 2.5 MG Storage Tank Additional storage is necessary to ensure maintenance of fire flows and current ISO ratings. Flushing System - An additional thirty (30) automatic flushers are needed to eliminate the need for regular manual flushing in order to maintain water quality and compliance. Water Transmission Improvements - A larger raw water transmission collector line would allow the wells to operate within their designed parameters, reduce future well maintenance costs, and extend well life. Additional transmission lines are required as set forth in MWM s Short & Long Range Plan, 2015 Update. WTP Residual Handling A modified method for handling residual solids at the water treatment plant is required in order to reduce annual O&M costs by approximately $120,000. New Wells (4) One new functional well is required to provide a minimum redundant capacity of 8.0 MGD. Three additional functional wells are required to expand well capacity to meet peak demand needs of 10.2 MGD. Emergency Generators & Platforms for 5 Wells An elevated dedicated generator is required for 5 wells in order to comply with regulatory requirements for average daily flow of water supply in an emergency. Expansion of WTP to 12 MGD As discussed above, the treatment plant must be upgraded to 12 MGD in order to comply with peak demand needs. Meter Replacement Meters must be regularly replaced in order to ensure they register accurate volume readings and, subsequently, provide accurate information for billing purposes. Permanent Chlorine Dioxide Feed System This would make the 2013 pilot of this system permanent and is necessary to reduce disinfection by-product (DBP) formation and comply with increasing federal requirements for DBP control. Entergy Power Distribution in Well Field Transformers and switches in the well field must be relocated in order to prevent damage during a flood. The cost is TBD because detailed coordination with Entergy is required prior to developing an estimate. Page 11 of 34

13 5.1.3 Employment and O&M changes No significant modifications to compensation and benefits is anticipated for MWM under this scenario. In addition, no significant changes in O&M are expected other than a 2% increase per year discussed previously Other Considerations As discussed in Section above, an additional $24,163,000 in unfunded water-related Near-Term Capital Improvements and Long-Term Capacity Improvements that were not part of the Option 1 Rates may be required in the future. The shortfall is $29,238,000 under Option 2 Rates. The financial evaluation for this Assessment, however, does not account for additional debt to fund these improvements. As a result, the financial estimates and subsequent rate modeling presents a low-end estimate as it does not include financing for these improvements. During the summer of 2012, extremely high demands among MWM s customers and numerous issues with MWM s wells led to the implementation of mandatory water restrictions on lawn irrigation. These restrictions demonstrated a clear need for future capacity expansion. Should future weather patterns mirror those of the summer of 2012, MWM would not be able to avoid mandatory water restrictions on lawn irrigation unless the Long-Term Capacity Improvements are complete Rates As discussed previously, the analysis of MWM retaining ownership and operation of the water system relies upon the Option 1 Rates fulfilling a portion of the Near-Term Capital Improvement needs. However, there is an additional $24,163,000 or $29,238,000 in unfunded water-related Near-Term Capital Improvements and Long-Term Capacity Improvements that were not part of the Option 1 or Option 2 Rates, respectively. Example bills for the Option 1 Rates that received preliminary approval in June 2015 are shown in Table 2 below. Example bills for the Option 2 Rates considered at the June 2015 meeting are shown in Table 3 below. As discussed in Section 4.1, a 3% increase is added to the base and volume charges for of Option 1 and Option 2. The example bill amounts in Tables 2 and 3 below also include the entire MWM debt surcharge under Option 1 or Option 2 Rates. Using the same debt to debt surcharge ratio established for issuing new debt as part of the financial plan for this Assessment, it was determined that every $1,000,000 in new debt by MWM as a standalone utility results in a debt surcharge of approximately $ Therefore, should MWM continue as a standalone utility and determine that it is necessary to complete the unfunded waterrelated Near-Term Capital Improvements and the Long-Term Capacity Improvements using debt capital, the additional financing will result in an additional $13.09 debt surcharge under Option 1 Rates. The additional $13.09 surcharge, however, is not included in the rates shown below as the timing of these expenses has yet to be determined. It is assumed that the total amount of the Future surcharge for Option 2 would need to be larger and would eventually be equal to the total difference between the Option 1 and Option 2 rates due to the need to construct all the capital projects identified in Option 1 as well as the unfunded capital projects. 2 Calculated based on a $9.35 surcharge per $17,255,000 in 30 year debt at 3.85%. The surcharge includes funds for debt service coverage requirements. Page 12 of 34

14 Table 2. MWM Monthly Bills Under Option 1 Rates Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF Existing Rates $ $ $ $ $ $ Sprinkler 5/8 Meter with usage of 11,000 gallons / 14.7 CCF Existing Rates $ $ $ $ $ $ Table 3. MWM Monthly Bills Under Option 2 Rates Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF Existing Rates $ $ $ $ $ $ Sprinkler 5/8 Meter with usage of 11,000 gallons / 14.7 CCF Existing Rates $ $ $ $ $ $ Page 13 of 34

15 5.2 CONSOLIDATION OF CAW AND MWM Governing Authority CAW provides water to approximately 400,000 individuals throughout Central Arkansas through 125,000 residential, commercial, industrial, and master-metered customers in Pulaski, Saline, Lonoke, and Grant counties. CAW was established in 2001 through the Regional Water Authority of Central Arkansas Consolidation Agreement between the Cities of Little Rock and North Little Rock under the Consolidated Waterworks Authorization Act (Act 982 of the 83rd General Assembly of the State of Arkansas). CAW is governed by a seven member Board of Commissioners serving staggered seven year terms. Four members must reside within the City of Little Rock and three members must reside within the City of North Little Rock. Both the City of Little Rock Board of Directors and North Little Rock City Council confirm the appointment of Commissioners to the CAW Board. CAW Board members and staff have made it clear that modification of this governing structure is not part of the consolidation scenario. CAW s exemplary history of governance and management is evidenced by receipt of the Gold Award for Exceptional Utility Performance in 2001 and Platinum Award for Utility Excellence in 2012 from the Association of Metropolitan Water Agencies. Furthermore, CAW has received the Government Finance Officer Association s (GFOA) Certificate of Achievement for Excellence in Financial Reporting every year since 2009 for its Comprehensive Annual Financial Report and CAW has also received the GFOA s Distinguished Budget Presentation Award every year since Capital Infrastructure Needs While consolidation with CAW would negate the need for a number of the capital infrastructure needs identified in Table 1 above, additional and different improvements will be necessary in order to meet the regulatory and quality of service requirements evaluated as part of this Assessment. In order to provide a reasonable comparison of the MWM water utility scenario and the consolidation scenario, the PER examined necessary infrastructure needs that would result in the consolidation achieving comparable or improved services and regulatory compliance in the following categories (note that this is not an exhaustive list): Water quality Water supply capacity Water supply reliability Water pressure Fire service flows and related insurance ratings Customer service Other miscellaneous items for regulatory compliance not specifically identified above Consolidation with CAW would allow MWM to addresses the significant capital funding shortfall that persists even after implementation of the Option 1 Rates or the Option 2 Rates that were considered in June of Upon connection to the CAW distribution system, CAW will be able to provide MWM a sufficient supply of water that will satisfy Maumelle peak water demands at full build-out. Therefore, the capacity enhancements implicit in connecting to CAW will substantially reduce Maumelle residents future rate increases needed to build capacity infrastructure. Consolidation would also allow CAW to utilize stranded capital investments in the vicinity of MWM s service area as well as available supply and treatment capacity. CAW s Northbelt Page 14 of 34

16 Transmission Line contains excess capacity and is within close proximity to the City of Maumelle. In addition, current wholesale customers have significantly reduced both their average and peak usages in recent years due in large part to the Lonoke-White water treatment plant project that provides an alternative source of water for many of CAW s wholesale customers north of the Arkansas River. Consolidation with MWM could allow CAW to utilize the available capacity created by the reduction in wholesale demand. The Water PER identifies $11,529,000 of capital infrastructure needs that would be required in order to complete the consolidation and ensure that the services and compliance related to the above categories would be the same or improved as compared to MWM ownership and management of the water system. The specific infrastructure improvements are identified in Table 4 below and are summarized following the table. Additional discussion can be found in the Water PER. $1,200,000 Table 4. CAW Consolidation Infrastructure Needs Description Budget Estimate Manitou Booster Pump Station 1 $500,000 Ground Storage Tank #1 & #2 Maintenance 1 Flushing System 1 $150,000 Distribution System Improvements 2 $71, CAW Transmission Main 2 $8,320,000 New High Service Pump at Jack Wilson 2 $375,000 Meter Replacement 1 $888,000 Permanent Chlorine Dioxide Feed System 1 $25,000 Total Budget $11,529,000 1 This expense is required under both water scenarios. 2 This expense is required only if MWM consolidates with CAW Manitou Booster Pump Station The same improvements as identified in the MWM scenario. Ground Storage Tank #1 & #2 Maintenance The same improvements as identified in the MWM scenario above. Flushing System - The same improvements as identified in the MWM scenario above. Distribution System Improvements These improvements are necessary to maintain target water pressures and fire flows in all areas of the MWM service territory as indicated by hydraulic modeling described in the Water PER. 30 CAW Transmission Main The consolidation would require a 30 main and associated infrastructure to connect the CAW system to the MWM system. This would ensure that average and peak daily demand could be supplied from the CAW system as well as meeting the maximum hourly peak demand through existing storage. New High Service Pump at Jack Wilson An additional high service pump is required at CAW s Jack Wilson treatment plant in order to have enough pump capacity to meet MWM s max daily demands. Meter Replacement The same improvements as identified in the MWM scenario above. Permanent Chlorine Dioxide Feed System The same improvements as identified in the MWM scenario above Employment and O&M changes As part of the Proposal, CAW committed to MWM that a condition of consolidation, and therefore an item to evaluate in the Assessment, would be an offer of employment to all MWM employees. There Page 15 of 34

17 are a number of policy differences between CAW and MWM related to employment compensation and benefits that will result in an O&M increase not contained within MWM s Existing Rates (but that are contained within CAW s rates). This Assessment contemplates that the additional O&M costs will be paid by MWM customers through a surcharge (see Section below) during years 2016 and The total dollar impact of the employment related O&M expenses is an additional $200,000 per year over the 2016 and 2017 period, or $400,000 net increase in O&M related to labor and benefits in 2016 and In 2018 and beyond, the additional labor and benefits costs are absorbed into CAW and will be covered within the applicable CAW rates. The specific employment and compensation policies that drive these O&M changes are listed below: Adjustment of compensation levels of MWM employees commensurate with those of CAW employees (note that the Assessment did not assume pay cuts) Participation in Arkansas Public Employee Retirement System Additional retirement plan benefits in the 1% match 401A plan Adjustment of medical and dental insurance coverage of MWM employees commensurate with that provided to CAW employees Provision of Accidental Death & Dismemberment Insurance, Short Term Disability, and Long Term Disability plans Health Care Assistance Plan and pre-tax deductions of insurance premiums, unreimbursed medical expenses, and dependent care expenses Wellness benefits Other miscellaneous compensation and benefits adjustments CAW currently has a ratio of approximately 4.52 employees for every million gallons of average daily demand and 1.78 employees for every million gallons of maximum daily treatment capacity. MWM has 33 employees but 8 are linked to wastewater services. Therefore, MWM has a ratio of approximately 8.99 water employees for every million gallons of average daily demand and 3.65 water employees for every million gallons of maximum daily treatment capacity. Clearly, CAW s size and regional presence provides operational efficiencies that benefit all ratepayers. This efficiency continues even if CAW were to absorb all 33 MWM employees along with the 10,436 meters from MWM. CAW currently has 2.24 employees for every 1,000 meters. With 10,436 meters, CAW would absorb approximately 3.16 employees for every 1,000 MWM meters. Therefore, using a per meter analysis, the consolidation results in an extra 9 employees beyond CAW s current employee ratio. However, CAW s current rate of attrition will absorb these 9 additional employees within the 2 year transition period. As a result, the Assessment does not include additional charges for MWM customers related to increased staffing beyond Financing the Consolidation Transition and Capital Needs As contemplated by the Proposal, existing customers of MWM will bear the costs of consolidating with CAW. The Assessment assumes that a transition period of approximately 2 years will be necessary to complete the capital infrastructure improvements necessary to consolidate MWM with CAW. As outlined in the Proposal, the specific capital infrastructure expenses identified for the water consolidation will be paid for by debt that will be repaid by MWM customers. However, there are also O&M increases during the 2 year transition period as well as capital infrastructure expenses that, according to financial best practices, should not be financed over a 30 year period (a meter with a year life, for example, should not be financed over 30 years). As such, the Assessment contemplates a series of rates and surcharges that will be used to achieve the intent of the Proposal in the most fiscally responsible manner. These rates and surcharges are shown in Table 5 below. Page 16 of 34

18 During the 2 year transition period, CAW will continue to operate MWM s existing wells, water treatment plant, and distribution system as they are currently. Hawkins Weir has concluded that there are no anticipated supply needs during the transition period and that the capacity of the wells is adequate to provide the necessary water supply to MWM s service area over the transition period. The transition period will end when CAW fully connects to the MWM water system and all MWM customers begin receiving CAW water (the Transition Date ). CAW will continue to charge MWM customers MWM s Existing Rates during this 2 year transition period. MWM s Existing Rates, however, are insufficient to cover the costs of operating MWM s water system during this period due to the increased O&M expenses as well as immediate capital needs that must be met. In order to recover expenses associated with this shortfall, a Transition Surcharge for 2016 and 2017 will have to be collected by CAW. In order to fund the construction of capital improvements that financial best management practices dictate should not be financed over 30 years, CAW will advance funds to MWM for payment of these shorter-term expenses and construction costs. Repayment of this debt will be secured by an Intermediate Debt Service Fee collected by CAW. The Intermediate Debt Service Fee will have a 10 year term and the debt will be retired by or before As part of the consolidation, it will be necessary for MWM s existing debt to be refinanced, separating it between water and wastewater related principal. At the same time, new debt sufficient to finance the construction of the consolidation capital improvements identified in Section will need to be issued. Repayment of the refunded debt and new debt will be secured by a Long-Term Debt Service Fee collected by CAW. The Long-Term Debt Service Fee will have a 30 year term. However, due to the financing approach used, it is anticipated that this debt will be retired before For all fees and surcharges related to a consolidation with CAW, the fee and surcharge amounts are assumed to be high-end estimates. CAW will only seek to recover the actual amounts expended during a given period. Therefore, if expenses are lower than forecasted, CAW will reduce the amount of the fee or surcharge or use excess fee or surcharge revenue to retire debt early, thereby shortening the term of the fee or surcharge. On the Transition Date, CAW will cease collecting MWM s Existing Rates as well as the Transition Surcharge and will begin charging MWM customers the outside-city CAW rates established in CAW s rate resolution. Former MWM customers will then be charged the sum of 1) CAW outsidecity rates; 2) the Intermediate Debt Service Fee; and 3) the Long-Term Debt Service Fee. The two debt service fees will continue to be collected by CAW until the respective debt is retired. Page 17 of 34

19 Table 5. Monthly Water Surcharges and Fees for Transition and Capital Needs (shown for a 5/8 meter) Scenario Surcharge/Fee Date Expires Amount CAW Water & MWM Wastewater CAW Water & NLRWW Wastewater Transition Surcharge Intermediate Debt Service Fee Long-Term Debt Service Fee Transition Surcharge Intermediate Debt Service Fee Long-Term Debt Service Fee Upon transition to CAW water; estimated in 2018 Page 18 of 34 Total Surcharge during Period $7.69 $ $2.18 $ $9.34 $9.34 Upon transition to CAW water; estimated in See Section for a discussion of the Transition Surcharge differential of $ See Section for a discussion of the Intermediate Debt Service Fee differential of $ Other Considerations Surplus Water vs Retail Water $ $ $ $ $9.34 $9.34 As discussed in Section 3.1, there have been multiple discussions and evaluations between MWM and CAW regarding various forms of partnerships. The most recent evaluation in 2013 examined MWM becoming a CAW wholesale customer. One core difference between the wholesale customer relationship evaluated in 2013 and the consolidation option evaluated in this Assessment is the concept of surplus water. Under state law (Ark. Code Ann (1)(2)), CAW is only authorized to sell surplus water to wholesale customers. Consequently, CAW s wholesale water contracts are required to include a provision that states water will be provided as long as surplus water is available. The surplus water restriction does not apply, however, to retail customers (Ark. Code Ann (a)(1)). If consolidated, MWM customers would become direct, retail customers of CAW Potential Billing Partnership As a regional water utility with robust billing and collections processes and procedures, CAW enjoys a 99.4% collection rate. Because of this collection rate and the economies of scale achieved by a regional utility billing service, CAW has numerous billing partnership arrangements with municipal service providers across the region for collection of sewer, solid waste, and other various charges. Should the consolidation occur, CAW would be able and willing to enter into a similar billing partnership agreement with the wastewater provider and the City of Maumelle to collect various fees and charges from their respective customers and residents. CAW does collect a nominal fee from its billing partners for providing these billing and collection services; this fee is not included in this Assessment Wells and Wastewater Treatment Plant Past Transition Date Currently it is anticipated that the MWM wells and water treatment plant will be abandoned, dismantled, or idled after the Transition Date.

20 Capacity Limitations During CAW Transition As discussed previously, extremely high demands among MWM s customers and numerous issues with MWM s wells led to the implementation of mandatory water restrictions on lawn irrigation in the summer of Should weather patterns during 2016 and 2017 mirror those of 2012, it is possible that CAW may need to implement similar mandatory water restrictions on lawn irrigation. As stated in the Water PER Not only would expansion of the WTP be cost prohibitive [in 2016 or 2017 to address capacity needs], the design and construction of those improvements would likely take longer than the projected [2 year] transition period. CAW will endeavor to avoid mandatory water restrictions for MWM customers during 2016 and 2017, however, circumstances beyond CAW s control may necessitate these restrictions Long-Term Capacity Consolidation with MWM will have little long-term impact on CAW s capacity. MWM s peak demand is expected to be 10.2 MGD at full build out. CAW s current treatment capacity is 152 MGD. Therefore, MWM s water supply needs at full build out represent 6.7% of CAW s current treatment capacity Benefits to CAW As discussed previously, a consolidation between CAW and MWM s water system would afford a number of benefits to CAW, including the ability to more fully utilize stranded capital. In addition, the approximately 10,500 accounts that would be absorbed into the CAW system would provide additional revenue stability for CAW due to the base charges from these customers. The accounts would also provide an additional customer base upon which a reasonable return on investment can be achieved. Finally, the water-related assets of MWM are typically years old and in relatively good repair, in contrast to other consolidations or mergers that CAW has completed Rates Monthly water bills for an average MWM customer under the consolidation scenario with CAW are outlined below. Specific base charge, volumetric rates, and surcharges are identified in Appendix 4. Additional tables for example bills are also shown in Appendix 5. Page 19 of 34

21 Scenario Existing Rates Table 6. Proposed CAW Monthly Water Bill for MWM Customers Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF ~ CAW/MWM $ $ $ $ $ $ ~ CAW/NLRWW $ $ $ $ $ $ ~ 2026 (or before) Surcharge is reduced $2.18 Surcharge is reduced $4.27 ~ ~ ~ 2046 (or before) Surcharge is eliminated Surcharge is eliminated Sprinkler 5/8 Meter with usage of 11,000 gallons / 14.7 CCF Existing ~ Rates (or before) CAW/MWM $ $ $ $ $ $ ~ Surcharge is reduced $2.18 CAW/NLRWW $ $ $ $ $ $ ~ Surcharge is reduced $ Includes Transition Surcharge, Intermediate Debt Service Fee, and Long Term Debt Service Fee plus MWM s Existing Rates 2 Includes Intermediate Debt Service Fee and Long Term Debt Service Fee plus CAW outside-city rates ~ ~ ~ 2046 (or before) Surcharge is eliminated Surcharge is eliminated Page 20 of 34

22 5.3 RATE COMPARISON OF CONTINUED MWM OPERATION OF WATER SYSTEM AND CAW CONSOLIDATION SCENARIOS The results of rate modeling for the water system consolidation analysis are shown below in Table 7 for a 5/8 residential meter with average consumption of 4,400 gallons and a 5/8 sprinkler meter with consumption of 11,000 gallons. A graphical representation of these comparisons is shown in Figure 3 for residential use and Figure 4 for sprinkler use. As discussed in Sections 5.1.2, 5.1.4, and 5.1.5, the forecasted MWM rates and associated bills shown in Table 7 do not include debt service for approximately $24,163,000 in infrastructure improvements needed to address capacity and peak demand issues (or more for Option 2 Rates). Figures 3 and 4 below, however, illustrate a future debt service fee increase of $13.09 for MWM discussed in Section that is related to these currently unfunded MWM water improvement needs. The scale and timing of the $13.09 additional debt surcharge, however, is extremely variable due to payment/financing methods, timing of projects and funding, etc. The $13.09 debt service increase is shown as a dotted line at an unspecified future date on Figures 3 and 4 and is primarily for discussion purposes. As discussed in Section the amount of the Future surcharge for Option 2 Rates will need to be larger than that of Option 1 Rates due to additional unfunded capital needs; it is assumed, however, that the combined rate and surcharge amounts for Option 1 and Option 2, however, will eventually be equal and is shown this way at the Future time in the Figure. Specific rate components and bill comparisons for the water consolidation scenarios can be seen in Appendices 4 and 5, respectively. Table 7. Rate Comparisons of Water Scenarios Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF Scenario Existing (Water Wastewater) Rates CAW - MWM $ $ $ $ $ $ CAW - NLRWW $ $ $ $ $ $ MWM MWM (Option 1) 1 $ $ $ $ $ $ MWM MWM (Option 2) 1 $ $ $ $ $ $ Sprinkler 5/8 Meter with usage of 11,000 gallons / 14.7 CCF Scenario Existing (Water Wastewater) Rates CAW - MWM $ $ $ $ $ $ CAW - NLRWW $ $ $ $ $ $ MWM MWM (Option 1) 1 $ $ $ $ $ $ MWM MWM (Option 2) 1 $ $ $ $ $ $ MWM rates in this table do not include the $13.09 debt service surcharge discussed previously that is related to currently unfunded MWM capital improvement needs. Page 21 of 34

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25 6. WASTEWATER EVALUATION 6.1 MWM Retains Ownership and Operation of Wastewater System Governing Authority Subject to the considerations set forth below, MWM would continue to govern the wastewater system similar to the discussion outlined in Section above Capital Infrastructure Needs As discussed previously, MWM gave preliminary approval to Option 1 Rates in June of 2015 in order to complete approximately $15,625,000 of Near-Term Capital Improvements and to meet other necessary financial and operational requirements. Of this amount, approximately $4,050,000 is related to wastewater improvements required to meet immediate needs. In addition to the $4,050,000 in wastewater-related Near-Term Capital Improvements included in the June 2015 rate increase, an additional $10,670,000 of infrastructure improvements could be necessary to address other wastewater Near-Term Capital Improvements as well as additional Long-Term Capacity Improvements (calculated as the difference between the needs identified in Table 8 and the $4,050,000 of funding in the Option 1 Rates; however, as discussed in footnote 3 on the table below, $2,000,000 for sludge disposal is not included in this calculation). This shortfall will increase by $400,000 for Option 2 rates due to the reduced capital funding for wastewater projects included in Option 2 Rates. The specific wastewater-related infrastructure improvements required for MWM are shown in Table 8 below and are summarized following the table. A more detailed description of these projects is set forth in the Wastewater PER. Table 8 MWM Wastewater Infrastructure Needs Description Estimated Cost Notes Sewer Rehabilitation 1 $2,370,000 WWTP Expansion 2 $10,000,000 Page 24 of 34 Cost based on Pipe Bursting. CIPP Could be Considered for Cost Reduction More study of existing capacity is needed Mechanical Bar Screen 1 $750,000 ½ Clear Spacing Aeration Improvements 1 $600,000 Fine Bubble Diffusers WWTP Blower 1 $100,000 Redundant PD Blower Rehabilitate Secondary Clarifier 1 $50,000 Replace Sludge Scrapers Sludge Dewatering Container 1 $150,000 Flow Trend Sludge Mate Disinfection System 1 $200,000 Effluent Pump Station 1 $500,000 Safety Systems and Compound Loop Chemical Controls. More study recommended for better estimate Expansion to 5 MGD, Pump Replacement Only. More study

26 recommended for better estimate Sludge Disposal 3 $2,000,000 Water plant sludge stored in portion of abandoned sewer lagoon. Budget Total $16,720,000 1 Near-Term Capital Improvements 2 Water-related Long-Term Capacity Improvements 3 Not included in any debt calculations, except for Intermediate Debt for CAW if NLRWW is selected as wastewater provider Sewer Rehabilitation Three specific projects that contribute significantly to inflow and infiltration and are historical causes of pipeline failures need to be replaced. These are identified in the Wastewater PER. WWTP Expansion This project needs additional study to determine cost, extent, and timing. The Wastewater PER states that On the average day the WWTP is operating at over 90% of its capacity based on the most conservative estimate of the aeration capacity used for this report. Additional study is needed to determine the true average day limitation of the system. A conservative, high-end cost of $10,000,000 is used for purposes of this Assessment. Mechanical Bar Screen This is needed to address maintenance issues caused by rags entering the plant that cause clogging and unnecessary wear and tear on the pumps. Aeration Improvements The current diffusers need to be upgraded to a more efficient diffuser to achieve better treatment and add to the capacity of the aeration basins. WWTP Blower A new blower is needed to provide redundancy for providing dissolved oxygen in the aeration basin. Rehabilitate Secondary Clarifier This will ensure the secondary clarifier is immediately available to provide system redundancy when needed. Sludge Dewatering Container This will dewater sludge in order to allow for efficient disposal in compliance with regulations. Because an alternative process can currently be used, this is a long-term project. Disinfection System Improvements are needed to improve safety and reduce chemical usage. Effluent Pump Station The project is needed to expand capacity because the system is currently at 87% of max discharge capacity. Sludge Disposal This project also requires additional study. Due to the possibility of alternatives to traditional landfill disposal, it is likely that this project will not be necessary if MWM continues operation of the wastewater system Employment and O&M changes No significant modifications to compensation and benefits are anticipated for MWM under this scenario. In addition, no significant changes in O&M are expected other than a 2% increase per year discussed previously Other Considerations As discussed in Section 4.1, a detailed budget analysis was completed for MWM as part of this Assessment in order to determine the allocation of various water and wastewater related revenues and expenses. As a joint water and wastewater provider, the current operating structure of MWM does not Page 25 of 34

27 clearly distinguish between water and wastewater revenues and expenses. If water and wastewater are separated through the proposed consolidation, rates for water service and rates for wastewater service must be established at levels to satisfy their respective O&M and debt service expenses. Therefore, the results of the MWM wastewater rate analysis vary depending the entity that provides water service. If MWM remains the water provider, MWM may continue with their current cost allocation policies that result in a single debt service fee for both water and wastewater debt service expenses. There is also assumed to be economies of scale of expenses for a joint water and wastewater utility, particularly for administrative expenses. Furthermore, as a joint utility, water and wastewater revenues are pooled to address water and wastewater O&M expenses, allowing one service to assist the other if expenses increase unexpectedly. However, if CAW is the water provider, CAW will not be able to assist with wastewater expenses and will not collect a wastewater debt service fee. Therefore, MWM s wastewater charges will increase in order to cover expenses if the CAW consolidation occurs. In addition, as discussed in Section 4.1, it is assumed that administrative expenses for an independent MWM wastewater utility would be twice the amount of the allocated wastewater administrative expenses of a joint water and wastewater utility due to the loss of the economies of scale. Specifically, there is surcharge per 5/8 and 3/4 meter of $5.67 for wastewater-related debt that would be allocated to MWM wastewater bills if MWM retains responsibility for wastewater and CAW assumes the water system. This results from 30 year wastewater debt of $7,825,000. Also under the CAW-MWM scenario, the Assessment also forecasts rate increases of 9% in 2016 and 2% in for wastewater rates for an independent MWM wastewater utility due to revenue requirements associated with the increases in the administrative expenses cost category as compared to a joint water and wastewater MWM utility. As outlined in Section 4.5, these rate increases are only forecasted in order to meet revenue requirements associated with the assumptions of this Assessment. Future rate increase needs may vary from these estimates Rates As discussed previously, the Option 1 Rates do not include up to $10,670,000 in wastewater capital needs, both Near-Term Capital Improvements and Long-Term Capacity Improvements. Option 2 Rates leave a shortfall of $11,070,000. Using the same debt to debt surcharge ratio established for issuing new wastewater debt as part of the financial plan for this Assessment, it was determined that every $1,000,000 in new wastewater debt by MWM as a standalone wastewater utility results in a wastewater debt surcharge of approximately $ Therefore, the additional wastewater debt surcharge to finance these additional capital improvements is estimated to be $7.73 for MWM wastewater customers at an undetermined time in the future or a larger amount for Option 2 Rates. The additional $7.73 wastewater debt surcharge, however, is not included in the rates shown below as the timing of these expenses has yet to be determined. Similar to the Future surcharge for water infrastructure, the sum of the Option 1 and Option 2 rates and Future surcharge are expected to be equal at some time in the future due to the need to construct all the capital improvements. Example bills for Option 1 and Option 2 Rates are shown in Table 9 below and include the 3% rate increases in for base and volume rates discussed previously. Should the CAW consolidation occur, MWM wastewater rates will need to increase as shown in the CAW row in order to ensure that MWM wastewater revenues satisfy MWM wastewater expenses. This includes 3 The same ratio as identified in Section cannot be used due to the difference in numbers of water and wastewater customers. The ratio is calculated based on a $5.67 surcharge per $7,825,000 in 30 year debt at 3.85%. Page 26 of 34

28 increases of 9% in 2016 and 2% in for wastewater rates. Additional rate tables are shown in Appendix 6 and wastewater bill comparisons are shown in Appendix 7. Table 9. MWM Monthly Wastewater Bills Under Various MWM Scenarios Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF Existing Scenario Rates MWM Option 1 $ $ $ $ $ $ MWM Option 2 $ $ $ $ $ $ Consolidation with CAW 1 $ $ $ $ $ $ As discussed in Section above, MWM wastewater rates are higher if CAW consolidation occurs due to increased wastewater administrative expenses and the $5.67 surcharge for wastewater debt service. Page 27 of 34

29 6.2 CONSOLIDATION OF NLRWW AND MWM Governing Authority NLRWW was established in 1961 and is governed by a five member Committee appointed by the Mayor and City Council. Each member of the Committee serves a five year term staggered from the others. NLRWW provides sewer services to approximately 33,900 residential, commercial and industrial customers representing a population in excess of 65,000 individuals. The service area includes all or part of North Little Rock, Sherwood, Pulaski County and Morgan. NLRWW currently operates three wastewater treatment plants (Faulkner Lake, Five Mile Creek and White Oak Bayou), 48 sewage pump stations, and approximately 550 miles of gravity collection pipelines. This governing structure is expected to continue in its present form under the consolidation scenario Capital Infrastructure Needs NLRWW has committed to repay MWM s existing debt attributable to wastewater and complete all capital infrastructure needs except for the removal of existing sludge from the wastewater lagoons from proceeds of NLRWW s proposed rate schedule, eliminating the need for a wastewater debt surcharge for the bulk of the capital improvement needs. Consolidation with NLRWW would not reduce the Near-Term Capital Improvement needs identified in Table 8 above, but consolidation would eliminate the need for expansion of the wastewater treatment plant in the future. It is anticipated that future treatment capacity needs would be met by construction of an interceptor line to transfer excess flow to NLRWW s existing White Oak treatment facility. However, consolidation with NLRWW would require removal of water and wastewater treatment residuals from an abandoned wastewater lagoon at MWM s wastewater treatment facility. NLRWW desires to operate this lagoon in the future. While the exact costs are unknown at this time, the Wastewater PER includes a rough estimate of approximately $2,000,000. NLRWW has indicated that they will not assume responsibility for this project as the project is a result of deferred maintenance that should be borne by MWM customers. Given that most of the residuals in the lagoon are water residuals from the water treatment plant, not wastewater sludge, CAW has agreed to finance removal of the water residuals from the lagoon over a ten year period from proceeds of the Intermediate Debt Service Fee, should MWM agree to consolidate water services with CAW and wastewater services with NLRWW. The lagoon would be emptied following the Transition Date in 2018 and after the existing MWM water treatment plant is dismantled or idled. If this were to occur, the Intermediate Debt Service Fee would increase by $2.09, or be extended until this additional amount is recovered by CAW. NLRWW escrows money each year to cover future sludge removal expenses, ensuring the cost of removing the sludge is borne by those that create the sludge. Given that existing NLRWW customers have already paid rates sufficient to escrow funds to remove the sludge currently in place at NLRWW s existing wastewater treatment facilities, NLRWW has requested that MWM wastewater customers similarly escrow an amount sufficient to remove the sludge currently existing at the southern lagoon at the MWM wastewater treatment facility estimated to be about 2.5 feet. It is currently estimated that it would take $600,000 to remove the existing sludge in this lagoon. MWM customers would need to fund this escrow amount at a $0.47 per month for 10 years for a 5/8 meter (the Sludge Escrow Surcharge ). A detailed schedule for the Sludge Escrow Surcharge is shown in Appendix 6. Page 28 of 34

30 Consolidation with NLRWW addresses MWM s greatest long-term wastewater capital expense expansion of the wastewater treatment plan to provide sufficient capacity for additional growth. Consolidation with NLRWW also transfers substantial future environmental compliance liability to an operator with a much larger population base to absorb the costs of complying with those future regulatory challenges. These economies of scale should substantially stabilize any future rate increases Employment and O&M changes As discussed above, CAW committed to MWM that CAW would offer employment to all MWM employees. NLRWW, however, would need the wastewater employees to operate the collection system and treatment plant beginning January 1, 2016, and continuing for a period of time thereafter. Therefore, if desired, CAW would agree to lease the MWM employees to NLRWW (at no additional cost to CAW) until NLRWW can hire its own additional employees, either from the MWM employee pool or elsewhere. NLRWW indicated that it will absorb any O&M increases associated with leasing employees from CAW in revenue from its rates, eliminating the need for a wastewater-related transition surcharge. In the cost allocation analysis discussed in Section above, it was also determined that the current MWM budget contains approximately $300,000 of administrative expenses per year that can be allocated to wastewater operations. This amount includes both labor and benefits costs as well as costs unrelated to personnel. Consolidation with NLRWW would eliminate the need for these administrative expenses because they would be absorbed within NLRWW s rates upon consolidation. It will, however, take time to transition away from a number of these costs. As a result, CAW has committed to assume responsibility for any of the $300,000 of administrative costs during the 2 year transition period and recover these costs through the water Transition Surcharge. Therefore, if consolidation with NLRWW occurs, the water Transition Surcharge will increase by an additional $2.35. If, however, these expenses do not occur, CAW will be able to reduce the amount of the water Transition Surcharge or dedicate the additional water Transition Surcharge revenue for early repayment of the other debt service fees Financing the Consolidation Transition and Capital Needs As mentioned above, except for the money required to remove the water residuals from the northern wastewater lagoon and the Sludge Escrow Surcharge, all capital improvements needed to MWM s wastewater system to make it compatible with NLRWW s requirements will be paid from NLRWW rate revenue. As part of the consolidation, it will be necessary to refinance MWM s existing debt, separating it between water and wastewater related principal. NLRWW will make payment on the refinanced wastewater debt from NLRWW rate revenues Rates North Little Rock is in the process of a rate modification. The proposed rate schedule is attached as Appendix 3. NLRWW rates are the same for inside city customers and outside city customers. Should the consolidation with NLRWW occur, NLRWW will begin charging MWM wastewater customers NLRWW rates as of the effective date of the consolidation (currently proposed in early 2016). Example wastewater bills for MWM customers under the NLRWW consolidation scenario are shown in Table 10 below. Page 29 of 34

31 Existing MWM Rates Table 10. Proposed NLRWW Monthly Wastewater Bill for MWM Customers Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF $ $ $ $ $ $ Page 30 of 34

32 6.3 RATE COMPARISON OF CONTINUED MWM WASTEWATER OPERATION AND NLRWW CONSOLIDATION SCENARIOS The results of the wastewater system consolidation analysis are shown below in Table 11 for a typical MWM customer. Additional rate comparisons for the wastewater consolidation scenario can be seen in Appendix 6 and bill comparisons in Appendix 7. Unlike the water scenarios where CAW rates are consistently less than those of MWM after the 2 year transition period, the lesser of the wastewater rates between MWM and NLRWW hinges on the timing of the additional $7.73 wastewater debt surcharge related to the wastewater treatment plant expansion and other unfunded capital needs. As discussed previously, it is unclear when MWM would make these improvements, but these improvements will be required at some time in the future. Therefore, the $7.73 surcharge is shown graphically on Figure 5 as a dotted line increase at an undetermined time in the future. The surcharge is not shown in Table 11 as it may be levied at any time. As discussed previously, the amount of the Future surcharge for Option 2 Rates will need to be larger than that of Option 1 Rates due to additional unfunded capital needs; it is assumed, however, that the combined rate and surcharge amounts for Option 1 and Option 2, however, will eventually be equal and is shown this way at the Future time in the Figure. Table 11. Rate Comparisons of Wastewater Scenarios Residential 5/8 meter with average usage of 4,400 gallons / 5.9 CCF Existing MWM Rates MWM Option 1 1 $ $ $ $ $ $ MWM Option 2 1 $ $ $ $ $ $ MWM with CAW Consolidation 1 $ $ $ $ $ $ NLRWW $ $ $ $ $ $ The $7.73 debt service increase is not shown in this table. The unfunded, wastewater-related Near-Term Capital Improvements and Long-Term Capacity Improvements may occur during or after the timeframe year shown on this table and will carry forward from that point forward. The timing of these expenses depends on a wide range of factors that are beyond the scope of the Assessment. The $7.73 debt service increase, however, is shown in Figure 5 below. Page 31 of 34

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34 7. COMPARISON OF ALL WATER AND WASTEWATER SCENARIOS 7.1 RATE COMPARISONS Table 12 below and Figure 1 (shown in Section 2) show the combined rate comparison for an average residential MWM customer under each of the scenarios evaluated in this Assessment. As discussed and shown in Sections 5.3 and 6.3, the dotted lines on Figure 1 illustrate future debt service fee increases related to future MWM water and wastewater capacity improvements not modeled in the financial analysis. The scale and timing of the future MWM rate increase for these water and wastewater projects are extremely variable due to payment/financing methods, timing of projects and funding, project need, etc. Appendix 8 provides additional bill comparison options for combined monthly water and wastewater bills under each scenario. Table 12. Combined Water and Wastewater Rates for Various Scenarios (shown for 5/8 residential meter with 4,400 gallons usage) Water Existing Wastewater MWM Rates CAW Water Consolidation & MWM Wastewater $ $ $ $ $ $ CAW Water Consolidation & NLRWW Wastewater Consolidation 1 $ $ $ $ $ $ MWM Retains Water & Wastewater (Option 1) $ $ $ $ $ $ MWM Retains Water & Wastewater (Option 2) $ $ $ $ $ $ This scenario includes an additional $2.09 added to the Intermediate Debt Service Fee as a result of the $2,000,000 necessary for sludge removal and an additional $2.35 added to the Transition Surcharge as a result of the $600,000 necessary for transition administrative costs. It is clear that significant benefits in water and wastewater rates hinge on the timing of the additional debt surcharges related to future capacity expansions and other unfunded Near-Term Capital Improvements. It is unclear when MWM would make these improvements, but it is expected that these improvements will be required at some time in the future to meet the service demands of MWM customers. Therefore, the debt surcharges shown as dotted line increases on Figure 1 are important items to consider in evaluating the impacts of any scenario. The specific debt surcharges for each scenario are illustrated in Figure 6 below and are shown through 2046, when all debt is projected to be retired. As seen in this Figure, the MWM capacity expansions represent a significant increase in debt service fees for MWM customers. It should be noted that the date for the capacity expansion was chosen for illustration and discussion purposes only. It is expected that the capital infrastructure improvements that will necessitate this increase will occur during this timeframe. However, the projects may be delayed or completed in phases so that there is not one large increase as shown below. Page 33 of 34

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36 Appendix 1

37 Appendix 1

38 Appendix 1 Table of Contents 1. Introduction History of Maumelle Water Management (MWM) Consolidation of MWM and Central Arkansas Water (CAW) About this Report Capacity Requirements Service Area Demographics Historical Water Demand Significant Water Users Demand Projections Current Usage Factors Growth Projections Existing Water System Water Source Source Overview System Inventory Water Quality Capacity and Reliability Treatment Treatment Overview Chemical Usage Chlorine Dioxide WTP Residuals System Inventory Capacity Limitations Water Quality Distribution System System Inventory Pressure Zones & Booster Pump Stations Storage Post Treatment Aeration Storage Tank Maintenance Needs Metering Service Lines...26

39 Appendix Line Breakages System Flushing Program Fire Protection Consolidation with Central Arkansas Water Raw Water Supply and Transmission Water Treatment Distribution System Transmission Main Storage Distribution System Water Meter Replacement CAW System Improvements Improvements Schedule Conclusion...41 List of Figures Figure 2.1 Age Distribution for the City of Maumelle from 2010 Census... 3 Figure 2.2 Historic Population Growth for Maumelle, Arkansas... 3 Figure 2.3 Historical Water Demand vs. Treatment Capacity... 4 Figure 2.4 Significant Water Users... 5 Figure 3.1 Specific Capacity Curve from Well Drawdown Test...11 List of Tables Table 2.1 Significant Water Users... 5 Table 2.2 Water Usage Factors by Maumelle Service Population... 6 Table 2.3 Estimated Average Daily Demands for Proposed Land Use to Buildout... 7 Table 2.4 Estimated Max Daily Demands for Proposed Land Use to Buildout... 8 Table 3.1 Raw Water Transmission Main... 9 Table 3.2 Raw Water Quality Test... 9 Table 3.3 Specific Capacity and Maximum Feasible Yield as Estimated from Well Test...11 Table 3.4 Current Pump Settings and Expected Flow Rates...12 Table 3.5 Chemical Usage in WTP...14 Table 3.6 Annual Chemical Cost...15 Table 3.7 MWM s Water Treatment Plant System Components...17 Table 3.8 Water Quality Violations...18 Table 3.9 MWM s Water Distribution System Pipe Inventory...18

40 Appendix 1 Table 3.10 MWM Water Main Pipe Material...19 Table 3.11 MWM Meters...24 Table 3.12 Typical Water Meter Lifespan...24 Table 3.13 Water Meter Accuracy Test Report (Master Meter, Inc.,2012)...25 Table 3.14 System Flushing Program...27 Table 3.15 Maumelle ISO Public Protection Classification (PPC) Rating...28 Table 3.16 Water Supply FSRS Credits...30 Table 4.1 Preliminary Estimated Cost of CAW Transmission Main...33 Table 4.2 Current and Projected Finished Water Storage Requirements...34 Table 4.3 ADD & FF Finished Water Storage Comparison...34 Table 4.4 Peak Demand Finished Water Storage Comparison...35 Table 4.5 Preliminary Estimated Cost of Water Storage Improvements...36 Table 4.6 Modeled Demands to Full Buildout...38 Table 4.7 Preliminary Estimated Cost of Distribution System Improvements...39 Table 4.8 CAW Meter Replacement Program...39 Table 4.9 Meter Replacement Costs...40 Table 4.10 Recommended Capital Improvement Projects...40 Table 5.1 Capital Improvement Projects Required for MWM (12 MGD)...41 List of Exhibits Exhibit 2.1 Future Development for MWM Service Area by Land Use Type... 7 Exhibit 3.1 WTP Aerial Photo...12 Exhibit 3.2 Process Flow Diagram of MWM s Water Treatment Plant...13 Exhibit 3.3 Typical Chemical Process Flow in WTP (Typical Both Treatment Trains)...14 Exhibit 3.4 Location of Pressure Zones in MWM s Service Area...19 Exhibit 3.5 Pine Ridge Booster Pump Station...20 Exhibit 3.6 Manitou Booster Pump Station...21 Exhibit 3.7 Location of MWM Storage Tanks...22 Exhibit 3.8 Line Breakages by Pressure Zone...26 Exhibit 3.9 Automatic Flusher Locations...27 Exhibit 4.1 Preliminary Route of Proposed CAW Transmission Main...32 Exhibit 4.2 Modeled Demands to Full Buildout...37 Exhibit 4.3 Modeled Distribution System Pressure Issues...38

41 Appendix 1 1. Introduction 1.1. History of Maumelle Water Management (MWM) The City of Maumelle began as Maumelle New Town (MNT) in the mid 1960 s. Maumelle New Town Water and Sewer Improvement District No. 306 was established in 1970 to provide water and sewer services to the eastern one-third of MNT. The suburban improvement district (SID) acquired approximately $10.6 million in funding to construct water and sewer infrastructure for the development. A second SID, Maumelle Suburban Improvement District No. 500, was organized in 1975 as a result of new legislation that expanded the authority of SID s to include all of the services traditionally provided by a municipality with the exception of police powers. In 1979 SID No. 306 was absorbed by SID No. 500, which is now known as Maumelle Water Management. When the City of Maumelle was incorporated in 1985, MWM conveyed all known assets to the City which were not directly related to its water and sewer services. Since that time, MWM has limited its activities to providing water and sewer services to the City of Maumelle. MWM is governed by a board of three (3) commissioners. When a vacancy on the commission occurs, it is filled by a vote of the remaining two (2) commission members. In response to the City s desire for directly appointed representation on the commission, MWM created two non-voting liaison positions on the Board. MWM has also been working towards converting the Utility from an SID to a public water authority (PWA) so that they can increase the number of board members from three (3) to five (5). The PWA has been formed and the two (2) new positions have been appointed by the City Council. The transition to the PWA, including a transfer of assets, was slated to occur in mid-2015 but was delayed by the need for a significant rate increase to refinance existing debt and issue new debt required for capital improvements Consolidation of MWM and Central Arkansas Water (CAW) MWM s water service area is bordered on the north, east, and west by CAW s service area and to the south by the Arkansas River. Multiple discussions and evaluations have taken place over the past two decades regarding various forms of partnerships between MWM and CAW. The most recent formal evaluation was performed by Hawkins-Weir Engineers, Inc. in 2013 as a part of the preparation of a water master plan for MWM. That evaluation determined that is was not economical for MWM to become a CAW wholesale customer. One June 8, 2015, a MWM representative was sent to CAW to advise them of water infrastructure improvements that were planned as a part of an upcoming rate increase. CAW was advised that those investments in MWM s water treatment and distribution system would present additional financial obstacles to the two utilities ever reaching a partnering agreement. MWM s representative asked CAW to reconsider potential opportunities for regionalization. At their regular meeting on the afternoon of June 10, 2015, MWM s commission approved a recommended rate increase that would increase the average bill by approximately 48.5% over a three-year period. This rate increase was projected to provide for the Utility s increased O&M costs, to allow the Utility to resume funding reserve accounts, to allow the Utility to refinance its existing debt of about $11.2 million, and to allow the Utility to issue 1

42 Appendix 1 approximately $15.6 million in new debt for a variety of infrastructure projects. The Utility s rate increase proposal was met by initial concern from residents of Maumelle and the Maumelle City Council. A public hearing was scheduled for July 6, Before that meeting would take place, a special meeting of the Maumelle Water Management Commission was called on June 18 at the request of CAW. At that meeting CAW s CEO, Mr. Graham Rich, P.E., requested that MWM enter into an agreement that would allow CAW a limited amount of time to evaluate the consolidation of MWM s water and wastewater systems into CAW. It was suggested that if the consolidation were feasible MWM s users would pay CAW s outside city water rates plus a debt service fee. The debt service fee would retire MWM s existing debt and fund any new infrastructure required to connect the systems. MWM s commission unanimously voted to enter into the agreement with CAW About this Report At the June 18 th Special Meeting, CAW committed to provide the results of the feasibility study to MWM in September This aggressive schedule was believed necessary due to MWM s need to move forward with the formation of a public water authority should the consolidation not prove to be beneficial for all parties. As a result of the limited time afforded by this schedule, Hawkins-Weir Engineers, Inc. (HW) was only allowed about a month to plan and prepare this preliminary engineering report. That amount of time did not allow HW the time needed to perform detailed evaluations in many areas and support this report s conclusions at the level that is the standard for our firm. Consequently this report relies heavily on the conclusions of prior evaluations and unverified statements from MWM and CAW staff. This report meticulously identifies the sources of the information it contains and identifies areas where additional study might be beneficial. 2. Capacity Requirements 2.1. Service Area Demographics MWM service area is comprised largely of the City of Maumelle. In order to determine the service area demographic, PRIZM 1 psychographic profiles were analyzed. PRIZM is a system for characterizing neighborhoods and local workforce into one of 65 specific market segments. The PRIZM classification system provides a breakdown of people and neighborhoods based on attitude, interests, opinions and lifestyle. According to Maumelle Forward 2 and based on PRIZM characteristics, over 70% of Maumelle households fall into Younger Years and Family Life lifestyle groups. These lifestyle groups are classified as households with young to midlife success, accumulated wealth, and sustaining families. The City of Maumelle consists primarily of upper middle class and upper class residential areas. Nearly 75% of all Maumelle households are represented in Lifestage Groups which portray wealthy lifestyles. Lifestage groups reflect household affluence, head of householder age and household composition. 1 Nielsen PRIZM Lifestage Groups. (2015). Retrieved July 24, Crafton Tull (2013). Maumelle Forward: Forward Thinking, Forward Vision, Forward Progress. Little Rock, AR: Julie Luther, AICP, ASLA. 2

43 Appendix 1 From 2000 to 2014, the population of Maumelle increased by nearly 60%. Compared to the national averages in the 2010 Census, Maumelle has more individuals between the ages 25 and 54, more owner occupied households, and more households with 2-4 residents. A breakdown of age distribution within the City of Maumelle can be seen below in Figure 2.1. Figure 2.1 Age Distribution for the City of Maumelle from 2010 Census 50% 45% Percent of Maumelle Population 40% 35% 30% 25% 20% 15% 10% 5% 0% Under to to to and older Age (Years) The population of Maumelle was 17,163, in 2010 according to the latest census. The current population of the City is approximately 18,000. Maumelle s population has grown at an average annual rate of approximately 4.5% as shown below in Figure 2.2. Figure 2.2 Historic Population Growth for Maumelle, Arkansas. 20,000 18,000 16,000 Population 14,000 12,000 10,000 8,000 6, Year 3

44 Appendix 1 Maumelle Forward cites studies performed by Metroplan that project the population of Maumelle at 27,718 by the year Based on the slower growth rate of Maumelle between 2008 and 2012, the planning document projects a slightly lower 2030 population of 24,235. The population of Maumelle is projected to be 47,091 at full buildout by the Maumelle Forward report. Based on a linear projection of current growth, the City of Maumelle could reach its projected maximum capacity around the year Historical Water Demand MWM s historical water demand from 2002 to 2014 is displayed by Figure 2.3 below. Figure Historical Water Demand vs. Treatment Capacity Demand (MGD) Peak Day Average Day Minimum Day Existing WTP Capacity 80% Treatment Capacity MWM s peak day capacity approached the treatment plant s maximum capacity during the summer of During that time the Utility was forced to enact mandatory water restrictions on lawn irrigation to ensure that adequate supply would be available for emergency and health purposes. Primarily due to unseasonably wet summers, water demand has plummeted since that time. The reader should note, however, that the minimum day flow has also decreased during that period. Minimum days typically occur during winter months when no lawn irrigation is taking place. The downturn in minimum demand could indicate that the recent decreasing usage trend is also due in part to modernization of plumbing fixtures. 4

45 Appendix Significant Water Users For the purpose of this report, the seven (7) largest water users in MWM s system were analyzed. The identity of the users is kept confidential. A summary of each customer s usage is presented in Table 2.1. Figure 2.4 illustrates the variation in demand from each user. The combined usage of these seven (7) customers represents approximately 17% of MWM s total demand. The significant water user identified as A is in the process of a significant expansion. That user s water demand is expected to increase by as much as 20,000 gallons per day over the next few years. Table 2.1 Significant Water Users Water Customer Monthly Volume, Gallons Flow, gpd Percent of Total Peak Average Minimum Peak Average Demand, 2014 A 9,576,449 5,851,644 3,141, , , % B 6,294,400 3,145,958 1,238, , , % C 2,050,400 1,336, ,600 68,347 44, % D 681, , ,300 22,713 14, % E 541, ,613 8,400 18,060 7, % F 240, , ,700 8,017 4, % G 169,060 85,565 36,980 5,635 2, % Figure 2.4 Significant Water Users 8,000,000 7,000,000 Monthly Usage, Gallons 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, / /2006 2/2008 7/ /2010 4/2012 8/ /2014 5/2016 A B C D E F G 5

46 Appendix Demand Projections Current Usage Factors Currently, MWM s service area averages 2.78 million gallons per day (MGD) of water usage. With a peak day demand of approximately 6.68 MGD, the peak day to average day factor is 2.4. MWM s service population is composed of approximately 72% residential, 4% commercial and 24% industrial. Considering this service population, a peak day to average day demand ratio range of would be typical. Current water usage factors for each service population are shown below in Table 2.2. Table Water Usage Factors by Maumelle Service Population Land Use Typical Avg. Day Demand (Gal/Acre Day) Typical Avg. Day Demand (Gal/ft2 Day) Residential Commercial Industrial 1, These factors were estimated using historical water usage based on land use per acre per day. Sprinkler usage was also incorporated into each water usage factor. Of the total recorded sprinkler usage for MWM s service area, 84.3% was residential, 6.2% was commercial and 9.5% was industrial Growth Projections In order to estimate MWM s future water usage, their existing water demand records were analyzed based on type of service population within the existing service area. Service populations were categorized by future land use as residential, commercial, industrial, low density residential and open space areas, as projected by the Maumelle Forward. Exhibit 2.1 graphically depicts future development to full buildout based on projected land use. Using usage factors from Table 2.2 for the service populations and the Land Use Plan Element found in the Maumelle Forward for areas of projected development, it was determined that MWM would see an additional average daily demand of 1.40 MGD after full buildout. Water usage factors for low density residential and open space land types were scaled from textbook values 3 for the average daily demands of commercial, residential, and industrial. The additional growth consists primarily of industrial and residential growth, with development to full buildout approximately 45% industrial and 34% residential service areas. The projected land use to full build out and estimated average daily demands are shown below in Table LAND USE/WATER SUPPLY ANALYSIS GUIDEBOOK. (2007). Sacramento Valley, California: Tully and Young Comprehensive Water Planning. 6

47 Appendix 1 Exhibit 2.1 Future Development for MWM Service Area by Land Use Type Table 2.3 Estimated Average Daily Demands for Proposed Land Use to Buildout Proposed Land Use to Buildout Proposed Area to Buildout (Ac) Avg. Daily Demand (MGD) Open Space Low Density Residential Commercial Industrial Using the peaking factor of 2.4 and the estimated average daily demands for each service population, peak day demand increases by an additional 3.35 MGD to approximately 10.2 MGD at full buildout. Based on the population projections discussed in a previous section and barring unpredictable changes such as the addition of significant industrial users, it is estimated that it will take approximately 45 years for this peak demand to be realized. Estimated maximum daily demands per land use for the projected developed area to full buildout are listed in Table 2.4 below. 7

48 Appendix 1 Table 2.4 Estimated Max Daily Demands for Proposed Land Use to Buildout Proposed Land Use to Buildout Area (Ac) Typical Avg. Day Demand (Gal/Acre Day) Max Daily Demand (MGD) Open Space Low Density Residential Commercial Industrial Existing Water System 3.1. Water Source Source Overview MWM utilizes ground water to supply the needs of its service area. The maximum capacity of the MWM s wells is approximately 7.8 MGD with two redundant wells on standby. Groundwater sources, capacity, and overall availability were previously determined by reviewing studies and publications from sources such as the United States Geological Service (USGS) and the Arkansas Natural Resources Commission (ANRC). Data gathered from pump tests conducted for MWM were also used to determine groundwater availability and capacity. Groundwater sources may be categorized by the geologic formation in which the aquifer resides. Arkansas geology may be generalized into several hydrogeologic units which indicate groundwater aquifer characteristics. MWM currently pumps from the Quaternary Alluvium hydrogeologic unit 110ALVM in the Arkansas River Valley. This aquifer resides within the 1 to 5 mile wide Arkansas River Valley, and may be found in several disconnected pockets of alluvial deposits between Fort Smith and Little Rock. The average well yields upstream from Little Rock range from 300 to 700 gpm. Aside from the alluvial aquifer, the Arkansas Water Plan states that there are no other regionally significant water-bearing formations in the Arkansas River Basin area. The alluvium aquifer that MWM currently utilizes for water supply is most likely the only groundwater source in the area that will provide significant yields. The available capacity from this groundwater source will depend upon the aquifer, in addition to the well installation, pump capacity, and well characteristics as discussed hereinafter. It may be expected that any additional wells drilled in this aquifer would yield similar quantities and quality water as the existing wells System Inventory MWM operates twelve wells and currently pumps from eleven of these wells to provide their primary water supply source. Two additional well sites have been approved by ADH for future wells. MWM s wells are located on the northern bank of the Arkansas River. Each well is approximately 80 feet deep with the water table depth ranging between 17 and 29 feet below ground surface. Each well has a capacity of between 400 and 600 8

49 Appendix 1 gpm. The newest well to be placed online, #13, has exhibited high TOC levels. MWM is currently monitoring the water quality from that well to see if it improves with pumping. Raw water is delivered to the WTP from the wells through approximately 27,920 LF of pipe. Table 3.1 below provides a further breakdown of the raw water transmission main. Table 3.1 Raw Water Transmission Main Water Quality Diameter (in) 9 Length (LF) 8 2, , ,970 The raw water quality of a municipality s water supply source is important because it controls the amount and type of treatment necessary. Raw water samples were taken by MWM in 2012 for the purposes of their master plan and were tested for several parameters. The results of this test are shown in Table 3.2. Table 3.2 Raw Water Quality Test Parameter MWM Raw Water Sample 1 SCML (mg/l) Alkalinity as CaCO 3 (mg/l) 180 NA ph Phosphorus (mg/l) 0.48 NA Total Organic Carbon (mg/l) 5.4 NA Hardness (mg/l) 190 NA Iron (mg/l) Manganese (mg/l) Copper (mg/l) < Sodium (mg/l) 46 NA Turbidity (NTU) 0.5 NA 2 1 Values obtained from raw water sample analyzed Nov 2012 by American Interplex Corp for MWM except turbidity 2 Turbidity is a regulated contaminant under EPA s surface water treatment rule requiring a varying MCL depending on the type of filtration used in the treatment process The hardness measured in MWM s raw water sample was 190 mg/l. Generally a hardness between mg/l is considered extremely hard, while a hardness of 0 to 60 mg/l is considered soft water. While water hardness normally poses no health risk, it can be associated with potential precipitates that may interfere with treatment processes. Minerals such as iron and manganese were also found at higher concentrations in the water sampled from MWM wells. These minerals are found in higher concentrations in groundwater (1-10 mg/l) than in surface water ( mg/l). These minerals do not pose a health risk, but it is recommended that iron levels stay below 0.2 mg/l for industry use and manganese levels stay below 0.4 mg/l to avoid unpleasant taste.

50 Appendix 1 Total organic carbon (TOC) is used as an indicator to denote the level of natural organic matter present in water. A higher TOC concentration tends to react with and consume more disinfectants than waters containing lower levels; and therefore, increases the required disinfectant dosage for residuals at the treatment plant and through the distribution system. The reaction of organic matter in the water with free chlorine added from disinfectants such as chlorine, chloramine, or chlorine dioxide leads to the formation of disinfection by-products (DBPs). TOC is used as a primary surrogate for the determination of precursors to DBP formation. Water sources with increased TOC levels typically have a greater potential for DBP formation. TOC also reacts with and consumes coagulants, increasing the dosage needed to achieve effective turbidity removal. It is expected that groundwater TOC levels range from 0.1 to 2 mg/l and surface water levels range from 1 to 20 mg/l. In this case, the samples taken from MWM wells were significantly greater than the average range for groundwater. Turbidity is the measure of suspended particles in water and generally indicates the overall quality of the water. Turbidity in groundwater is typically around 5 NTU with an upper limit of 10 NTU. For lakes and reservoirs the range is 1 to 20 NTU. Turbidity may vary greatly in surface water especially in cases of high flow, resulting in turbidity readings from 10 to 4,000 plus NTU. The composite turbidity measured from MWM s wells was greater than the expected range for groundwater. MWM has also recorded the turbidity from several individual wells from around 20 NTU to upwards of 100 NTU; these readings are significantly greater than the expected values. The overall water quality of MWM s wells exhibit uncharacteristic qualities for groundwater. The mineral content and hardness from MWM well water is considered significantly higher than normal groundwater. It is expected that surface water will have lower mineral content than groundwater and can be more favorable for treating to potable water. However, mineral content does not generally render non-potable water. The total organic carbon and turbidity are indicators of water quality for domestic use. The samples taken from MWM s wells are above the normal groundwater range for both of these parameters, and therefore require a higher degree of treatment than typical groundwater sources Capacity and Reliability Groundwater availability and supply are dependent upon the characteristics of the aquifer, capacity of the pumps, and condition of the wells. In early 2010 and again in 2013, well tests were performed in select wells in order to measure flow rate, pressure and drawdown at various pump flow rates. Flow rates versus drawdown results from these tests are graphically depicted in Figure 3.1 below. Note that not all of MWM s current wells are included in this Figure since they were not in operation at the time of the tests. Based on data from these tests, specific capacity and maximum yield were estimated for each well. The specific capacity denotes the flow rate required to drawdown the water surface in the well one foot, and is measured in gpm/ft. The maximum feasible yield is estimated from the specific capacity curve. It is expected that this curve remain linear; any deviation of the curve from a linear trend is a possible indication of deficient well capacity at the tested pumping rate. The maximum feasible yield may then be approximated from this point of deviation on the specific capacity curve. The maximum feasible yield is an indicator of well performance as determined 10

51 Appendix 1 from the drawdown to pumping ratio and does not measure pump performance. Both specific capacity and maximum feasible yield of the wells are shown below in Table 3.3. Figure Specific Capacity Curve from Well Drawdown Test 1000 Drawdown Test - Specific Capacity Curve Flow (gpm) Well 2 (2010) Well 2 (2013) Well 3 (2010) Well 4 (2010) Well 4 (2013) Well 6 (2010) Well 11 (2010) Well 11 (2013) Well 12 (2013) Well 16 (2013) Drawdown (ft) Table 3.3 Specific Capacity and Maximum Feasible Yield as Estimated from Well Test Well Number Specific Capacity (gpm/ft) Max Feasible Yield (gpm) 2010 Test 2013 Test 2010 Test 2013 Test Well Well NA 610 NA Well Well NA 630 NA Well Well 12 NA 31.2 NA 650 Well 16 NA 16.5 NA 700 Pump performance curves for well pumps were developed using pump flow rates and discharge pressures data gathered from the well tests. Approximate pumping capacities were determined using the backpressure sustaining valve settings that MWM currently uses for each pump. Estimated pumping capacities are depicted below in Table 3.4. It should be noted that since the well tests in 2013, well 11 has been abandoned and a new well site 17 has been put in service. Wells 1 and 9 have also been abandoned and a new well (Well 13) has been drilled. It should also be noted that the pump rates shown in Table 3.4 are representative of independent operation of each pump. During normal operation of multiple well pumps, individual pump performance is anticipated to be slightly lower due to the increase in operating pressures. The existing source reliability and capacity will be dependent on the continuation of maintaining the wells, pumps, and other pumping appurtenances. 11

52 Appendix 1 Table 3.4 Current Pump Settings and Expected Flow Rates Well Number Pressure Setting Operating Flow Rate (gpm) Max Flow Rate 1 (gpm) Total 9.5 MGD 10.9 MGD 1 Flow Rate at 30 psi 3.2. Treatment 2 Flow Rate at 15 psi Treatment Overview MWM s water treatment plant (WTP) is located in the Southwest portion of Maumelle at the end of Club Manor Drive and is surrounded by the Maumelle Country Club golf course. The WTP consists of two separate parallel trains of conventional treatment technologies. Each train is made up of a forced draft aerator, a solids contact clarifier, rapid sand filters, and a clearwell. Each train was designed to treat a peak capacity of 4 million gallons per day (MGD); however, the rated treatment capacity of the WTP is currently limited to 6.84 MGD based on the current filtration rating of 3 gpm/ft 2 imposed by the Arkansas Department of Health (ADH). Exhibit 3.1 is an aerial photo of the treatment plant. Exhibit 3.2 provides a process flow diagram for the plant. Exhibit 3.1 WTP Aerial Photo 12

53 Appendix 1 Exhibit 3.2 Process Flow Diagram of MWM s Water Treatment Plant Raw water from the wells is pumped to the plant where it is split between the two parallel trains. Raw water in each train first enters a forced/induced draft aerator for the purpose of oxidizing iron and manganese and removing objectionable gases, taste and odor causing compounds, and volatile organic compounds (VOC). Each aerator is designed to treat a peak capacity of 4.35 MGD. Each treatment train contains a 66 foot diameter Contraflo solids contact clarifier. These clarifiers function to provide flash mixing, flocculation, and solids settling. Both clarifiers are designed to treat a peak capacity of 4 MGD. The detention time for each clarifier, based on design peak flow, is approximately 2.80 hours. This detention period is within the typical design range of 2-4 hours for clarifiers that treat surface water or groundwater under the influence of surface water. The upflow rate for each clarifier at design capacity is 0.81 gpm/ft 2 ; this value is below the typical maximum upflow rate of 1 gpm/ft 2. Weir loading rates for each clarifier were estimated to be approximately 5.0 gpm/ft, which is below the typical maximum weir loading rate of 10.0 gpm/ft. All design parameters for these clarifiers are below typical maximum recommended design values, which leaves the potential for slightly uprating the clarifiers; however, continuous operation near the maximum design value is typically not recommended. Currently each treatment train has four rapid sand filters, each with a bed composed of sand and anthracite. Filter backwash for each bed is aided by air scour. Each filter measures 11 ft x 18 ft for a total individual filter bed area of 198 ft 2. The current filter loading rate set by the ADH on MWM s filters is 3 gpm/ft 2, which is within the typical loading rate range of 2-4 gpm/ft 2 for these types of filters. Based on this loading rate, the allowable peak filter capacity for each train is 3.42 MGD. With all filter beds in service, 13

54 Appendix 1 the combined peak filter capacity is 6.84 MGD with the current filter rating. The filters are the limiting component to the overall treatment capacity of the plant. Each train includes a 150,000 gallon clearwell for a total clearwell capacity of 300,000 gallons. Chlorine, polyphosphate, and fluoride are injected into the clearwell. The original clearwell has a total of three (3) high service pumps; two (2) of which are rated for 1,000 gpm and run 100 HP, and one (1) rated for 2,000 gpm and runs 200 HP. A 4th pump has been installed (200hp), but has yet to be put online. The new clearwell has a total of two (2) high service pumps; both pumps are rated for 2,000 gpm and run 200 HP Chemical Usage Chemicals used in the treatment process are shown below in Exhibit 3.3. A description of chemical usage is reflected in Table 3.5. Exhibit 3.3 Typical Chemical Process Flow in WTP (Typical Both Treatment Trains) Table 3.5 Chemical Usage in WTP Chemical Pre-Aeration Chlorine Post-Aeration Chlorine Dioxide Sodium Hydroxide Aluminum Chlorohydrate (ACH) Polymer Pre-Filtration Chlorine Post Filtration Chlorine Hydrofluorosilicic Acid Polyphosphate Usage Controls Iron Bacteria Disinfection Softening and Raises ph Coagulant to Form Floc Coagulant Aid in Floc Formation Reduces Organic Load in Filters Disinfection Reduces Tooth Decay Sequesters Iron and Manganese in Distribution System 14

55 Appendix 1 Table 3.6 lists the average annual costs for chemicals used at the WTP. Table 3.6 Annual Chemical Cost Chlorine Dioxide Chemical Annual Cost 1 ACH $150,221 Fluoride $10,944 Polyphosphate $19,097 Chlorine $21,840 Sodium Hydroxide, 50% $147,646 Polymer $15,298 Sodium Chlorite, 25% $61,205 Calcium Hypo, 70% $5,834 Total Annual Cost $432,084 1 Based on 2014 Chemical Usage, Total treated volume = 29,260,545 gallons In an effort to reduce THMs in the Maumelle Water Management (MWM) distribution system, MWM performed a Chlorine Dioxide Pilot Study at the WTP in The information generated from the trial was favorable and supported the continued use of chlorine dioxide as a pre-oxidant and primary disinfectant for the purpose of reducing disinfection by product formation, namely trihalomethanes. Chlorine Dioxide is generated at the site using a 25% sodium chlorite solution feed system and chlorine gas from the existing chlorine manifold in the chlorine room. The sodium chlorite is currently fed from stationary totes. The discharge from the chlorine dioxide system is split and plumbed to the two aerator discharge lines where chlorine is being fed through an injection quill(s). The chlorine dioxide produced was fed in conjunction with sodium permanganate at a reduced dose of permanganate and in place of free chlorine previously being fed after the aeration system(s). Since chlorine dioxide is a fast and strong oxidant for the purpose of iron and manganese removal, it was possible to reduce the amount of caustic being fed to the clarifiers by half. The pilot study was conducted by Utility staff and with the assistance of D&F Services, LLC of Kansas City. The purpose of the trial was to yield better overall plant performance with respect to disinfection by product reduction at the source water supply. Since chlorine dioxide does not form THMs or HAA5s, the objective of the evaluation was to reduce DBP formation by in the plant. The evaluation did not include the reduction of DBP's in the distribution system. A summary report of the findings and recommendations for ongoing monitoring and control is scheduled to be provided by D&F Services, LLC of Kansas City for submittal to the ADH. Upon approval of the report by ADH plans and specifications for the permanent installation are to be submitted to ADH. It is unclear at this point if ADH would allow MWM to continue to operate the temporary sodium chlorite feed system during a transition period if the decision were made to consolidate the system with CAW. 15

56 Appendix WTP Residuals Water treatment residual solids are generated at the WTP as the result of backwashing the filter plant's sand filters and the blow down of the plant s clarifiers. The backwash water flows from the filter plant to the backwash/blowdown water settling pond located on the water treatment plant site. The pond is permitted under Arkansas Water Treatment Plant General Permit ARG The permit coverage expires on 11/30/2016. The settling pond has a liquid surface area of approximately 180' in diameter and a liquid/residual depth of approximately 12'. The total storage capacity of the settling pond is approximately 250,300 ft 3 or 1,872,200 gallons. After each backwashing of the sand filters and blow down of the clarifiers the backwash/blowdown waters flow into the settling pond and decanted over a period of time to allow settling of the backwash/blowdown solids. Residual solids are allowed to collect in the pond until the quantity of solids inhibits the settling process. The solids are then removed and either land applied for beneficial use by a properly permitted contractor or delivered to the residual storage pond located at the MWM wastewater treatment plant. After decanting and settling approximately 1,000 dry tons per year of water treatment residuals are generated. In the past two to three years the residuals have been agitated and mixed with water to facilitate pumping and are then hauled by tanker trucks to the MWM WWTP and off loaded at the residuals storage pond. According to MWM staff, the settling pond has to be emptied about once every three months at a cost of $30,000 per occurrence. Hauled residuals contain approximately 15% to 25% solids. Up until 1999 water plant residuals were excavated from the settling pond and hauled to a landfill for disposal. From 1999 to present most water plant residuals were excavated from the settling pond and hauled to the residuals storage pond. It is estimated that the excavated residuals contained in excess of 50% solids. The MWM water treatment plant operated as a well water lime softening plant until January, The use of lime in the softening water plant process produced the bulk of the water plant residuals. Since January, 2011 the softening process has been changed to a sodium hydroxide process which has greatly changed the type of residuals being produced. The water treatment residuals are primarily non-hazardous lime solids, with small quantities of heavy metals contained in the solids System Inventory The major system components of MWM s water treatment plant are listed below in Table

57 Appendix 1 Table 3.7 MWM s Water Treatment Plant System Components Train Component Quantity Description Aerator 1 Forced/Induced Draft Aerator Clarifier 1 Contraflo Solids Contact Clarifier, 66' DIAM 1 Filter 4 Rapid Sand Filters, 11'x18' Clearwell 1 150,000 gallon capacity High Service ,000 GPM Pump High Service ,000 GPM Pump Aerator 1 Forced/Induced Draft Aerator Clarifier 1 Contraflo Solids Contact Clarifier, 66' DIAM 2 Filter 4 Rapid Sand Filters, 11'x18' Clearwell 1 150,000 gallon capacity High Service Pump ,000 GPM Capacity Limitations Overall capacity for the water treatment plant is limited by the rapid sand filters. Filter operating parameters were compared to typical design parameters given in Ten State Standards. The current filter loading rate set by the ADH on MWM s filters is 3 gpm/ft 2, which is within the typical loading rate range of 2-4 gpm/ft 2 for these types of filters. Based on this loading rate, the allowable peak filter capacity for each train is 3.42 MGD. With all filter beds in service, the combined peak filter capacity is 6.84 MGD with the current filter rating. Based upon the typical design range of these type of filters, it may be possible to uprate the existing filter loading rate which would in turn increase the overall treatment capacity of the plant. The process to uprate the filters would require pilot testing at the WTP to demonstrate successful filtering at the desired increased loading rate. The process would require approval from the ADH and a significant increase cannot be guaranteed Water Quality A list of every water quality violation reported by ADH for MWM for the past 10 years is provided by Table 3.8 below. The violations for coliform were believed to be due to sampling errors. The enforcement of more rigid sampling protocol along with the addition of designated sampling stations have helped MWM overcome that issue. Difficulties obtaining the required disinfection byproduct concentrations have been resolved by the post aeration system that was installed in MWM s twin ground storage reservoirs in

58 Appendix 1 Table 3.8 Water Quality Violations Date Description 6/1/2006 Fecal Coliform 5/1/2009 Fecal Coliform 8/1/2010 Fecal Coliform 10/1/2011 THM > 80 ppb 1/1/2012 THM > 80 ppb 7/1/2012 > 5% Coliform when >= 40 Samples 1/1/2014 Failure to take bacteriological samples in multiple sampling periods 3.4. Distribution System System Inventory MWM currently distributes treated water to its service area through over 600,000 feet of water mains. The system is fed by the high service pumps at the WTP, two ground storage tanks, and two booster pump stations within the distribution system. MWM s water distribution system consists of PVC, ductile iron, and transite pipe ranging in size from 2-inch to 16-inch with 1,117 valves throughout the service area. An inventory of valves and pipe lengths by size is shows below in Table 3.9. Table 3.9 MWM s Water Distribution System Pipe Inventory Diameter (in) Pipe Length (LF) Valves (EA) 2 57, , , , , , , , Total 613,507 1,177 A breakdown of diameter by pipe material throughout the distribution system is shown below in Table

59 Appendix 1 Table 3.10 MWM Water Main Pipe Material Diameter Pipe Length Pipe Material (in) (LF) 2 57,920 PVC 3 49,486 PVC 4 2,226 PVC 52,303 PVC 6 12,344 Transite 220,640 PVC 8 24,586 Transite 2,019 Ductile Iron 38,004 PVC Ductile Iron 18,918 Transite 53,342 PVC 12 59,884 Ductile Iron 1,998 Transite 16 4,043 PVC 20,929 Ductile Iron According to MWM, the vast majority of the existing PVC pipe in the system and all new PVC pipe added to the system is SDR 21 with a working pressure rating of 200 psi. Additionally, MWM distributes water to approximately 10,400 metered service connections ranging in size from 5/8-inch to 4-inch PVC and Polybutylene tubing. A breakdown of meters and service connections by size is provided in a later section Pressure Zones & Booster Pump Stations MWM s total service area is approximately 9,100 acres. The area currently being served is approximately 4,700 acres and consists of three pressure zones: Main City, Pine Ridge, and Osage. Exhibit 3.4 graphically depicts approximate locations of the pressure zones in MWM s service area. Exhibit 3.4 Location of Pressure Zones in MWM s Service Area 19

60 Appendix 1 The majority of the system lies within the Main City pressure zone, consisting of approximately 4,490 acres. This pressure zone receives water from both the WTP high service pump station and the two (2) water storage tanks. The Hydraulic Grade Line (HGL) is governed by the overflow elevations of the storage tanks at approximately 530 Mean Sea Level (MSL). The Pine Ridge pressure zone is comprised of approximately 118 acres. The ground elevation within the Pine Ridge pressure zone ranges from approximately 440 to 515 MSL, which is considerably higher in elevation with respect to the majority of the distribution system. Consequently, the Pine Ridge pressure zone requires the use of booster pumps to increase the pressure to its service area. This zone is isolated from the Main City zone and relies on pump discharge pressure to provide the HGL to its pressure zone. There is no storage within this pressure zone. The Pine Ridge pressure zone is fed by the Pine Ridge booster pump station. The pump station is located on the same property as the water storage tanks. The pump station was pre-manufactured by Flow-Pak in 2007 and consists of three (3) 100-hp close coupled end suction Patterson pumps (1, total dynamic head (TDH)) and one (1) 100hp Grundfos vertical multistage centrifugal jockey pump with a capacity of TDH. The station was designed to deliver a total flow of 2,652 gpm at a discharge pressure of 81 PSI. This pump station is equipped with a stand-by diesel generator with an automatic transfer switch. According to MWM personnel, this station is operating well and has no immediate need for significant improvements. Exhibit 3.5 Pine Ridge Booster Pump Station The Osage pressure zone consists of approximately 93 acres and the ground elevation ranges from approximately 380 to 510. Like the Pine Ridge pressure zone, the Osage pressure zone requires the use of booster pumps to increase the pressure in order to distribute water to its service area. This zone is isolated from the Main City zone and 20

61 Appendix 1 relies solely on pump discharge pressure to provide the required HGL for the zone. There is no storage within this pressure zone. The Manitou Pump Station (MPS) was constructed in 2006 to serve the Osage area. It is located directly behind a residence at 124 Manitou Drive. As demonstrated by Exhibit 3.6, the shroud of the pump station was constructed to blend into the neighborhood. MWM owns a small track of land on Rector Mountain that was intended to be the location of a stand-pipe type storage tank for this area. Based on engineer s recommendations at the time that the pump station was installed, the storage tank was not constructed. The pump station was pre-manufactured on a skid and consists of three (3) Goulds pumps. It was designed to supply a peak demand of 1,500 gpm at approximately 95 psi. This pump station is equipped with a stand-by diesel generator with an automatic transfer switch. Exhibit 3.6 Manitou Booster Pump Station The suction pressure requirements of the Osage pump station limit the available storage capacity of MWM s twin 2.5 MG storage tanks. According to MWM, when the tanks drop to approximately seventeen (17) feet below full it causes the larger two pumps in the MPS to cavitate. Consequently, they have limited the minimum elevation of the storage tanks to prevent the cavitation from occurring. This limitation has had a negative impact on the available fire flow capacity and tank turnover. Possible solutions for this issue range from replacing the pumps to relocating the pump station to a lower elevation. MWM s Short and Long Range Master Plan 2015 Update identifies this issue as the Osage Booster Pump Station Modifications and assigns it a cost of $150,000. More study is needed to develop the alternative solutions necessary to develop a defensible cost estimate. The cost to correct this issue could range from $100,000 to $500, Storage MWM currently utilizes two 2.5 MG ground water storage tanks in the water distribution system; the East tank (Tank 1) and the West tank (Tank 2). Tank 1 stores approximately 2.17 MG of treated water and Tank 2 stores roughly 2.16 MG, yielding total storage volume of 4.33 MG. Overflow elevations of the storage tanks are and Both tanks are located approximately 1.5 miles northeast of MWM s WTP at 34 51' 48" N, 92 24' 46" W; the location of which may be seen in Exhibit

62 Appendix 1 The high service pumps at the WTP deliver treated water into the distribution system and indirectly to the storage tanks. The tanks fill when the water demand is less than the production rate of the WTP. During times of high demand, both the WTP effluent and the storage tanks deliver water into the distribution system. One tank is taken offline during the winter months to increase turnover in the operating tank for DBP management. Exhibit 3.7 Location of MWM Storage Tanks Currently the storage tanks are not being utilized to their full capacity due to operational limitations. Tank levels are required to be maintained at a level where approximately only half of total tank capacity is utilized. This is required to maintain adequate suction pressure to the pumps at the Manitou booster pump station to prevent pump cavitation. This method of operation does not allow for the most effective use of storage tank capacity, and it does not facilitate tank turnover which in turn causes water age issues inside the tank. Operating the tanks in this manner also drastically reduces the net effective storage available for fire flows. MWM has a lease agreement with a mobile phone provider for the use of a small portion of the tank site for a tower. The mobile phone tower is completely separate from the tanks and has its own backup power. There are three smaller antennas attached to the tank structures. Those antennas are used by MWM, the Maumelle Fire Dept., and the Arkansas Highway Dept. No formal agreements are known to exist regarding the fire department s or highway department s use of the tanks as an antenna base. 22

63 Appendix Post Treatment Aeration In early summer of 2013 in an effort to reduce THMs in the Maumelle Water Management (MWM) distribution system, MWM installed spray Post Treatment Aeration in their distribution system s two ground storage reservoirs. Tees and valves were installed on each of the tanks existing drain lines to provide suction to each of the recirculation spray pumps. Each pump discharges to a recirculation header line which carries the recirculation water vertically to the top of each tank. At the top of each tank six recirculation lines extend off each header and deliver water to six stainless steel spray nozzles. The six spray nozzles are located at six lift-off ventilation caps. Each recirculation line penetrates the side wall of the vent and is weld sealed to prevent vector entry into the tanks. The recirculation pump motors are equipped with variable speed motor controls to allow the pumps to be operated at various flow rates. Forced air ventilation is provided at the center vent of each tank. Sodium hypochlorite is periodically manually added to the tanks to maintain adequate chlorine residual in each tank. THM and chlorine residual data was collected on a regular basis for one year to determine the effectiveness and impact of the aeration process. The aeration system has been found to reduce THM levels from a range of 60 to 110+ ug/l to < 30 ug/l Storage Tank Maintenance Needs As identified in the Maumelle Water Management Short and Long Range Plans, inspections of the existing water storage tanks performed around 2013 identified the necessity for cleaning and painting. The cover of Tank #1 was damaged by overpressure several years ago and temporary repairs were made in Inspection of the Tank #1 coating at the time of the repairs showed that the coating would have to be redone within the next 2 years. Combining the repair and the recoating could reduce the total cost. Inspection of Tank #2 revealed coating failure. Cleaning and painting are required to prevent corrosion damage to the tank and possible water contamination Metering MWM s distribution system currently measures water usage through 10,426 water and sprinkler meters. The meters measure flow in gallons. A breakdown of the number of meters by size and type is displayed below in Table MWM s meters are manually read during the first two (2) weeks of every month using a Psion Handheld mobile computing device. 23

64 Appendix 1 Table 3.11 MWM Meters Meter Size (in) Water Meters Sprinkler Meters 5/8 1, /4 5, / Total 7,421 3,005 Meter Type Neptune T-10 Master Meter Octave With the exception of new services or meters that were replaced due to maintenance issues, MWM s water meters are approximately 10 years old on average. Water meters 1-1/2-inch or larger in size are typically replaced by MWM after a life span of 10 years. Water meters smaller than 1-inch are typically replaced after 1.5 MG of throughput. In order to approximate the lifespan of the 3/4 and 5/8 inch water service meters, information from the 2011 Water Research Foundation s publication of Accuracy of In- Service Water Meters at Low and High Flow Rates 4 was consulted. Meter life in the referenced report was based on water usage of 100 gallons per day per person, with four (4) persons per residence and service connection. A full life throughput of 2-3 MGD was calculated for the meters, as shown below in Table Table 3.12 Typical Water Meter Lifespan Note. Adapted from Accuracy of In-Service Water Meters and Low and High Flow Rates, p. 50, by Barfuss, S., Johnson, M., & Neilsen, M, 2011, Logan, Utah: Water Research Foundation. To approximate meter life within MWM s service area, the typical 5/8 & 3/4 inch service connection meter life from the referenced study was scaled to the MWM demographic of 2.59 people per residence with a water usage of 100 gallons per day per person. Water meter life for this criteria ranged from approximately years. Many other studies have been conducted to help utilities determine the best service life for their meters. The majority of those studies recommend meter replacement somewhere between 10 to 20 years of age. 4 Barfuss, S., Johnson, M., & Neilsen, M. (2011). Accuracy of In-Service Water Meters at Low and High Flow Rates. Logan, Utah: Water Research Foundation. 24

65 Appendix 1 Water loss within MWM s system in 2014 was around 20%. Concern exists that the useful lifespan of the meters in MWM s distribution system may have been shortened by calcium plating during the period of time that the WTP utilized a lime as a coagulant aid. A limited scale evaluation of meter accuracy was performed in 2012 by MWM. For that evaluation MWM selected twenty (20) 5/8-in meters across their system and sent them to Master Meter, Inc. for accuracy testing. As shown in Table 3.13, only four (4) of the twenty (20) meters were given a passing rating. A new bench scale study of a larger number of representative water meters may be warranted to confirm that the relatively high percentage of water loss observed in MWM s distribution system is largely attributable to meter error. Table 3.13 Water Meter Accuracy Test Report (Master Meter, Inc., 2012) Water Meter Accuracy Test Report Address: High Flow Intermediate Flow Low Flow Tank Usage Passed 117 PIN OAK LOOP Gallons No 103 OAKRIDGE CV Gallons No 17 PIN OAK LOOP Gallons Yes 31 CLUB MANOR Gallons No 10 CLUB MANOR Gallons No 7 RED OAK PLACE Gallons No 4 GREEN OAKS CV Gallons No 10 WILLOW OAK LP Gallons Yes 55 PIN OAK LOOP Gallons Yes 32 WILLOW OAK LP Gallons Yes 5 GARDEN OAKS LN Gallons No 24 WILLOW OAK LP Gallons No 11 CLUB MANOR Gallons No 31 CLUB MANOR Gallons No 25 HOGAN DR LOOSE DIALOG MAGNET 0 Gallons No 10 CLUB MANOR Gallons No 2 CLUB MANOR Gallons No 5 ARNOLD PALMER Gallons No 23 CLUB MANOR Gallons No 5 HOGAN DR Gallons No Accuracy limits according to the latest revision of the AWWA Standard C-708 Multi - Jet Meters 98.5% % for Intermediate and High Flows 97.0% % for Low Flows Accuracy limits for new, rebuilt, and repaired cold water meter according to the M6 Manual Table % % for Intermediate and High Flows for Multi-Jet and Positive Displacement Meters 90.0% % for Low Flows for Multi - Jet Meters 90.0% % for Lows Flows for Positive Displacements Meters Accuracy limits for meters removed from service according to the M6 Manual Table % % for Intermediate and High Flows for Multi - Jet and Positive Displacement Meters 80.0% % for Low Flows for Multi -Jet Meters 80.0% % for Low Flows for Positive Displacement Meters 25

66 Appendix Service Lines MWM currently distributes water to over 10,400 metered service connections through SDR 9 polybutylene and PVC material tubing. The service lines are owned by the utility up to the meter. The service line downstream of the meter is owned by the property owner who is responsible for it maintenance. As a service to their customers, MWM often maintains the service connection up to three (3) feet beyond the meter. Approximately 99% of the total service connection lines currently in MWM service area are polybutylene. Recently, MWM changed the standard for service lines to be CPVC tubing. CPVC is more durable and maintains better flexibility to allow for easier connection. New service connection installations and repairs to existing service lines are constructed with CPVC material Line Breakages CAW requested an analysis of line breakages within MWM s distribution system. This analysis is intended to be used to approximate the cost of maintaining MWM s distribution system by comparing the number of line breaks in Maumelle to the average number of breaks experienced by CAW over a similar period of time. In order to assess line breakages within MWM s service area, work orders for the service lines and water mains had to be reviewed to extract the pertinent information. Since early 2010, MWM provided maintenance and repairs on nearly seven hundred (700) service line leaks and approximately seventy five (75) transmission main leaks. Since MWM distributes treated water over approximately 615,000 linear feet of water line (116 miles), approximately one (1) break has occurred for every eight (8) miles of pipe per year since Repairs were required to approximately one (1) out of every fourteen (14) service lines over that same five (5) year period. It should be noted, however, that in several cases multiple repairs have been made to the same section of transmission main or the same service line. Repairs and maintenance issues were consistently responded to and/or resolved within one to three days, as reasonable. There are three (3) pressure zones in MWM s service area: Main City, Pine Ridge, and Osage. The Main City pressure zone is the largest and encompasses approximately 4,490 acres. Historic line breakages are show graphically by Exhibit 3.8 with respect to these pressure zones. Exhibit 3.8 Line Breakages by Pressure Zone 26

67 Appendix System Flushing Program MWM s existing water system utilizes an automatic flushing system consisting of six (6) automatic flushers located throughout the service area. Automatic flushers run on cycles from 30 minutes to an hour at various times twice a day. Table 3.14 lists flusher locations with times and durations of each flusher cycle. Exhibit 3.9 illustrates approximate locations for the automatic flushing systems. Table 3.14 System Flushing Program Approximate Flush Time Duration of Location AM PM Flush Cycle Settlement Road 10:00 10:00 1 Hour Windsor Town 10:15 10:15 30 Mins Homes 63 Oak Forrest 10:30 10:30 1 Hour Loop Traveler Lane 10:45 10:45 30 Mins Country Club 11:00 11:00 1 Hour Parkway First Security Bank 11:30 11:30 30 Mins Exhibit 3.9 Automatic Flusher Locations 27

68 Appendix 1 Periodic inspections of blow-off hydrants and valves are conducted to ensure that the automatic flushers are operating correctly and on time. Manual flushing of system lines is also performed frequently by MWM employees. MWM operations staff estimated that an additional thirty (30) automatic flushers might be needed to eliminate the need for regular manual flushing. The need for a good flushing program may prove particularly critical during a transition from ground water to surface water since the variations in water chemistry might accelerate the dislodging of calcium deposits from MWM s distribution system. The estimated cost to install 30 new flushing stations based on using MWM personnel for the installation work is approximately $150, Fire Protection The Insurance Services Office (ISO) is an independent company that evaluates and assigns ratings to a community s structure fire suppression capabilities. ISO analyzes fire suppression capabilities using their Fire Suppression Rating Schedule (FSRS) and assigns a Public Protection Classification (PPC) number to the community. Insurance companies use a community s PPC ratings in developing premiums for residential and commercial fire insurance policies. ISO evaluates three primary components of a community s fire protection capabilities in determining their PPC rating. Each component accounts for a percentage of the total classification: Fire Department (50%) Water Supply (40%) Receiving and Handling Fire Alarms (10%) A community s PPC score is based on the total credits earned through ISO s evaluation of the FSRS items within each of the three categories. A divergence factor accounting for the relative difference in the fire department and water supply scores is deducted from the total score. The PPC rating system scale ranges from 1 to 10, with 1 representing exemplary protection and 10 representing a program that is below ISO s minimum standards. Table 3.15 summarizes Maumelle s current rating as published in the ISO PPC Summary Report dated April 1, Table 3.15 Maumelle ISO Public Protection Classification (PPC) Rating FSRS Item Credit Earned Credit Available PPC Rating Fire Department Class 4 Water Supply Class 1 Receiving and Handling Fire Alarms Class 3 Divergence Total Class 3 28

69 Appendix 1 The discussion of this section focuses on the Water Supply component of ISO s PPC rating. As previously mentioned, Water Supply accounts for 40% of a community s PPC rating. ISO s evaluation of the Water Supply system is broken down into three subcategories. Each subcategory is weighted as follows: Supply System (35 Points) Hydrant Size, Type, and Installation (2 Points) Inspection/Condition of Hydrants (3 points) As part of their evaluation of the Supply System, ISO randomly selects buildings of various sizes and hazard classifications throughout the community. ISO calculates the Needed Fire Flow at each location and compares it to the actual fire flow that is attainable at the location during the maximum demand of the system. The ratio of the available fire flow to the Needed Fire Flow is used to calculate the credits earned in the FSRS. To earn full credit, the water supply system must be able to deliver the needed flow rate, for the duration specified by ISO, while retaining a minimum 20 psi residual pressure in the distribution system. Needed Fire Flows for individual buildings selected by ISO within Maumelle ranged from 500 gpm to 7,000 gpm and the Basic Fire Flow was determined to be 3,000 gpm. ISO requires a duration of 2 hours for fire flows less than 3,000 gpm and 3 hours for fire flow of 3,000 gpm to 3,500 gpm. ISO s PPC program ratings are limited to small and average sized buildings within the community. Buildings with needed fire flows in excess of 3,500 gpm are evaluated separately and assigned an individual classification from ISO. Therefore, the largest fire flow to be delivered by the water distribution system for full credit is 3,500 gpm for a duration of 3 hours. Maumelle s supply system, MWM, received approximately 98% of the available credit (33.94/35.00) for this subcategory in The second subcategory evaluated for the water supply rating is the size, type, and installation of fire hydrants. To receive full credit for this subcategory, all fire hydrants must have a pumper outlet, 6 or larger branch connection, uniform size operating nut, and should operate in a uniform direction in accordance with AWWA C-502 Standard for Dry-Barrel Fire Hydrants or AWWA C-503 Standard for Wet-Barrel Fire Hydrants. Maumelle received full credit (2.00/2.00) for this subcategory in The third subcategory evaluated for the Water Supply rating is Inspection/Condition of Fire Hydrants. To receive full credit for this subcategory, all hydrants must be tested twice a year, well located for use by a pumper, and in good condition. There were 20 hydrants examined and Maumelle received 71% of the available credit (2.14/3.00) for this subcategory in A breakdown of the Water Supply subcategories is provided below in Table Maumelle received approximately 95% of the available credit (38.07/40.00) for this FSRS item in ISO relatively classifies the Water System as Class 1, thereby considering it to provide exemplary public protection. 29

70 Appendix 1 Table 3.16 Water Supply FSRS Credits FSRS Water Supply Sub-Item Credit Earned Credit Available Supply System Hydrant Size, Type, and Installation 2 2 Hydrant Inspection/Condition Total It is reasonable to assume that the proposed consolidation with CAW would not have a detrimental impact on the City s ISO rating. Assuming that the storage volume remained unchanged, the major difference would be that the water supply would come from the new 30 transmission main rather than the WTP. The transmission main s connection is proposed to be located in an area of Maumelle that is closer to the larger individual fire flow demands than the WTP. If the feasibility study concludes that consolidation should proceed, however, a full fire flow analysis of the distribution system is recommended as a part of the design of the new transmission main. 4. Consolidation with Central Arkansas Water 4.1. Raw Water Supply and Transmission The maximum capacity of MWM s wells is approximately 7.6 MGD with one redundant well on standby. Based on growth rates and water demands as discussed in previous sections of this report, there are no anticipated supply needs during the transition period. It is expected that the capacity of the wells is adequate to provide the necessary water supply to MWM s service area over the transition period. In the MWM Short and Long Range Plan 2015 Update, multiple improvement projects are recommended for the well field and raw water transmission main. Those projects along with their preliminary cost estimates are listed below. None of these improvements are projected to be needed during a transition to CAW and they would also not be required after the consolidation was complete. Addition of 1 Well - $200,000: MWM s well system has a current peak capacity of approximately 9.5 MGD and a peak redundant capacity (2 largest wells out of service) of approximately 7.8 MGD. The addition of one (1) new wells is needed to provide a minimum redundant capacity of 8 MGD. New wells have recently cost MWM approximately $100,000 each. Total build-out of the well sites is estimated to cost around $200,000. Raw Water Transmission - $2.5 Million: The existing collection line from the well field is 16" in diameter. A 200-hp inline booster pump is required to deliver adequate flow to the plant through that line. The booster pump reduces backpressure on the wells which causes them to operate beyond their design 30

71 Appendix 1 capacity. The resulting increased velocity across the well screens damages the well pack and surrounding aquifer strata. This results in increased well maintenance costs and reduced well life. The installation of a larger diameter collector line would allow the wells to operate within their designed parameters and eliminate the need for the inline booster pump. The raw water collection line improvement is estimated to cost $2.5 million based on approximately 9,000 feet of C-905 DR18 PVC ranging in diameter from 12 to 30. Emergency Generators and Platforms for 5 Wells - $425,000: Currently there are no dedicated emergency generators for any of the wells. In accordance with ADH requirements, at least five (5) wells will need a dedicated generator mounted on a platform above the l00 year flood level to ensure that MWM is able to minimally provide their system s average daily flow in an emergency situation. This estimate is based on the purchase of government surplus generators at a cost of approximately $10,000 each and installation performed by utility personnel. Entergy Power Distribution Relocation in Well Field TBD: The transformers and switches at Well 6 through 8 are on the ground. Power will be lost and the transformers damaged in a flood. Relocating the transformers and switches on a platform will prevent this. Coordination with Entergy will be required for feasibility and pricing Water Treatment The only improvement found to be immediately necessary at the water treatment plant if MWM is consolidated into CAW is the addition of a permanent chlorine dioxide feed system. A preliminary cost estimate for that system is $25,000. The plant s peak capacity of around 6.8 MGD could be taxed if the city were subjected to a hot dry summer similar to 2012 during the multi-year transition phase. If that circumstance should arise, restrictions on outdoor water uses, such as irrigation, would be recommended. Not only would expansion of the WTP be cost prohibitive, the design and construction of those improvements would likely take longer than the projected transition period. The WTP would require continued maintenance during the transition period and certain projects such as the permanent sodium chlorite feed system may be required. CAW may also elect to make additional improvements to improve water quality or operator safety. The only immediate project need included in the MWM Short and Long Range Plan 2015 Update was for WTP residuals handling. The budgetary estimate for that project was $1 million. At the current pace that the WTP is generating residuals, the settling pond has to be emptied approximately once every three (3) months at an annual cost of about $120,000. Based on the assumption that the transition period would only last approximately 3 5 years; this project, which has an estimated payback period of 10 years, would not provide a return on investment. 31

72 Appendix Distribution System Transmission Main The consolidation of CAW and MWM would require the construction of a dedicated transmission main to deliver water from CAW to MWM s distribution system. The proposed transmission main would connect onto CAW s existing 42 Northbelt Transmission main near the I-40/I-430 interchange. The preliminary alignment as proposed by CAW Engineering would extend along the North side of Interstate-40 and would cross under the interstate through an existing encasement near Kelly Road. This main would traverse through the eastern boundary of MWM s service area and would ultimately connect to MWM s distribution system at the intersection of Maumelle Boulevard and Carnahan Drive. The preliminarily proposed transmission main would include intermediate swing connections to MWM s distribution system in five locations along its length. The preliminary alignment of this main is approximately 31,900 feet and is shown below in Exhibit 4.1. Exhibit 4.1 Preliminary Route of Proposed CAW Transmission Main The proposed transmission main would include a Remote Operated Valve (ROV) and a Pressure Sustaining Valve (PSV) just upstream of the first connection to MWM s system near Counts Massie Road. The ROV would be operated through CAW s Supervisory Control and Data Acquisition (SCADA) system and would allow for the control of water supplied into MWM s distribution system. Storage tank levels would also be monitored by CAW s SCADA system. This control scheme would provide CAW the means to draft the storage tanks for control of system water age. Based on CAW s hydraulic analysis, it was estimated that a 24 transmission main could provide 8 MGD at an average Hydraulic Grade Line (HGL) of 540 feet Mean Sea Level 32

73 Appendix 1 (MSL) with a maximum HGL of 585 feet MSL at the proposed ROV location. Additionally, CAW estimated that a 30 transmission could provide 12 MGD at an average HGL of 546 feet MSL with a maximum HGL of 570 feet MSL at the proposed ROV location. As previously discussed in this study, the projected maximum day demand of MWM s service area at full buildout is estimated to reach 10.2 MGD. Based on typical diurnal patterns, MWM s hydraulic water model indicates that the total peak hourly demand of the system would be approximately 14 MGD at system full buildout. If the consolidation of the water systems proves feasible, our current recommendation is that a 30 transmission main be constructed to supply MWM s projected maximum day system demands. During a maximum system demand of 14 MGD, 12 MGD could be provided by the 30 transmission main with the balance of the demand being supplied from storage. Results from the hydraulic modeling analysis, discussed in the next section, indicate that a 30 transmission main would provide acceptable velocities in conveying the projected full buildout peak demands of the system. Using the HGL s provided by CAW, the model also indicates that a 30 main would allow for MWM s existing storage tank levels to be adequately maintained at system full buildout demands. A preliminary estimate of probable cost prepared by CAW Engineering for the proposed 30 transmission main and appurtenances is provided below in Table 4.1. Table 4.1 Preliminary Estimated Cost of CAW Transmission Main Storage Description of Improvements 30 Transmission Main, Swing Connections, and Appurtenances Capital Costs $7,190,000 SCADA Controls $30,000 Engineering $900,000 Easements $200,000 Total $8,320,000 The state adopted standards minimally require that the finished water storage capacity within the distribution system equal the average daily demand (ADD) of the system. In addition, these standards also require that storage facilities be sized to include the capacity to supply the appropriate fire flow (FF) demand as established by ISO. A minimum pressure of 35 psi in the distribution system under normal conditions and a minimum pressure of 20 psi under all flow conditions (including fire flows) is also a requirement of these standards. The maximum required fire flow, as determined by ISO, for the Maumelle community is 3,500 gpm for 3 hours (630,000 gal). Table 4.2 provides a summary of the current and projected full buildout minimum storage requirements for MWM s distribution system based on the requirements of these standards. 33

74 Appendix 1 Table 4.2 Current and Projected Finished Water Storage Requirements Required Storage Current Buildout Full Buildout ADD (MG) Maximum FF (MG) Total (MG) As previously mentioned in Section , MWM s two existing ground storage tanks have a combined total storage volume of 4.3 MG. Based on a static hydraulic analysis of MWM s distribution system, a minimum HGL of 512 in the main city pressure zone is needed to maintain the required minimum pressure of 35 psi at all locations during normal conditions. At this HGL, the combined total effective storage volume of the tanks is 2.37 MG. This analysis also indicated that the combined total storage volume of both tanks (4.32 MG) could be utilized while still maintaining 20 psi at all locations within the main city pressure zone. This evaluation was performed under the assumption that the improvements listed in Table 4.7 are implemented and a HGL of 489 at the existing tanks provides adequate suction head to the Pine Ridge Booster Pumps. Table 4.3 provides a summary of the effective storage volume of MWM s existing tanks in comparison to the minimum requirements of the standards for current and projected buildout. Table 4.3 ADD & FF Finished Water Storage Comparison System Condition Current Buildout ADD Current Buildout ADD + FF Full Buildout ADD Full Buildout ADD + FF Storage Available (MG) Storage Required (MG) Excess (+) Deficit (-) Capacity (MG) The primary intent of the state adopted storage standards is to ensure the demands of the system are met under all conditions with redundant capacity in the event of supply system failure. The standards allow for the minimum storage requirements to be reduced when source and treatment facilities have sufficient capacity with standby power to supplement peak demands of the system. Table 4.4 compares the current and projected maximum daily demands (MDD) of the system to the effective storage volume of the existing tanks. 34

75 Appendix 1 Table 4.4 Peak Demand Finished Water Storage Comparison System Condition Current Buildout MDD Current Buildout MDD + FF Full Buildout MDD Full Buildout MDD + FF Storage Available (MG) System Demand (MG) Excess (+) Deficit (-) Capacity (MG) The results of this analysis indicate that additional storage capacity or equivalent source and treatment capacity with standby power is currently needed to meet the minimum requirements of the standards. As previously mentioned, MWM currently experiences water age issues that can be partially contributed to the total storage volume of the existing tanks and the ability to turn them over. To remedy this issue, one of the tanks is taken out of service during periods of below average system demands. Based on the history of these issues, it is recommended that additional source and treatment capacity be dedicated to supplying the current deficit capacity rather than constructing additional storage capacity within the system. The proposed CAW transmission main will supply the additional capacity needed to supplement the existing storage volume and meet system demands under all conditions. To meet the requirements of the standards for current peak demands, CAW will minimally dedicate an uninterrupted supply of 4.31 MGD to MWM s service area. It is projected that an uninterrupted minimum supply of 7.83 MGD would be required to meet the full buildout peak demands of the system if additional system storage is not constructed in the future. It is recommended that these source supplemental flows be verified through an extended period simulation model analysis prior to committing to an uninterruptable flow allocation. Inspection of tanks #1 & #2 performed in 2013 revealed coating failure. Cleaning and painting are required to prevent corrosion damage to the tanks and possible water contamination. The cover of the tank #1 was damaged by over-pressure around 2005 and requires repair. MWM Short and Long Range Plan, 2015 Update estimated the cost of the tank recoating and repairs to be $1.2 million. Table 4.7 details each of the potential capital needs associated with water storage. 35

76 Appendix 1 Table 4.5 Preliminary Estimated Cost of Water Storage Improvements Description of Improvements Capital Costs Tank Recoating & Repair $1,200,000 Total $1,200, Distribution System MWM s computerized hydraulic water model was used to evaluate the existing distribution system when supplied through the proposed CAW transmission main. These modeling scenarios considered MWM s wells, water treatment plant, and high service pumps to be offline with CAW supplying the entirety of the system s demand. The intent of the modeling analysis was to determine any immediate or long term distribution system improvements that would be needed to convey the current and projected maximum day demands of MWM s service area. A full fire flow analysis of the distribution system was not performed at this time. Two scenarios were considered as part of this hydraulic evaluation. The first scenario analyzed MWM s existing distribution system during Current Maximum Day Demand. The second scenario analyzed MWM s existing distribution system at Full Buildout Maximum Day Demand. Both scenarios were evaluated with a 30 transmission main connecting the two systems as described in the previous section. The results of both scenarios were evaluated based on the following criteria: Maintain system pressures above 35 psi at all locations within the distribution system. This is the minimum acceptable working pressure required under the state adopted standards. Maintain pipe velocities below 7 fps for all pipes in the distribution system. This maximum velocity was chosen as a threshold to identify excessive head loss in pipes throughout the distribution system. The following assumptions were made in performing the Current Maximum Day Demand hydraulic modeling analysis: The 2012 maximum day demand (6.68 MGD) was modeled as the Current Maximum Day Demand of the system. This is the largest known maximum day demand of the system to date. CAW 30 Transmission Main HGL at ROV 546 MSL. Tank 2 (West Tank) is provided with an altitude valve or other means to prevent overfilling. This assumption is made to allow Tank 1 (East Tank) to be completely filled. CAW ROV Open Tank 1 (East Tank) Level < 31.8 feet. CAW ROV Closed Tank 1 (East Tank) Level > 36.8 feet. 36

77 Appendix 1 Current Maximum Day Demand Modeling Results: Tank 1 (West Tank) level is maintained within 7.3 feet from full. Tank 2 (East Tank) level is maintained within 5.6 feet from full. Leisurewood Ln. Below Acceptable System Pressures. Stoneledge Dr. Below Acceptable System Pressures. All Pipe Velocities < 7 fps. The following assumptions were made in performing the Full Buildout Maximum Day Demand hydraulic modeling analysis: The projected full buildout maximum day demand (10.2 MGD) was modeled as the Full Buildout Maximum Day Demand of the system. Projected additional demands, as described in Section 3.2, were distributed among twelve locations within and along the perimeter of the existing distribution system. These additional demands were allocated based on the projected Land Use Plan Element provided in Maumelle Forward. See Exhibit 4.2 and Table 4.6. CAW 30 Transmission Main HGL at ROV 546 MSL. Tank 2 (West Tank) is provided with an altitude valve or other means to prevent overfilling. This assumption is made to allow Tank 1 (East Tank) to be completely filled. CAW ROV Open Tank 1 (East Tank) Level < 35.8 feet. CAW ROV Closed Tank 1 (East Tank) Level > 36.8 feet. Exhibit 4.2 Modeled Demands to Full Buildout 37

78 Appendix 1 Table 4.6 Modeled Demands to Full Buildout Model Node # Demand (GPD) 1 220, , , , , , , , , , , ,000 Total 3,350,000 Full Buildout Maximum Day Demand Modeling Results: Tank 1 (West Tank) level is maintained within 8.8 feet from full. Tank 2 (East Tank) level is maintained within 6.6 feet from full. Leisurewood Ln. Below Acceptable System Pressures. Stoneledge Dr. Below Acceptable System Pressures. All Pipe Velocities < 7 fps. Both the Current Maximum Day and Full Buildout Maximum Day model scenarios indicated pressure issues in the Leisurewood Lane and Stoneledge Drive areas during maximum day demand. Both of these areas are located in the Main City Pressure Zone, on the fringe of the Pine Ridge Pressure Zone. These areas are shown below in Exhibit 4.3. Exhibit 4.3 Modeled Distribution System Pressure Issues 38

79 Appendix 1 For both scenarios, the model indicated that these pressure issues are resolved by reconfiguring both areas into the Pine Ridge Pressure Zone. Preliminary budget costs to remediate these issues are included below in Table 4.7. Prior to implementing these improvements, it is recommended that field measurements be taken to verify these issues and ensure proper calibration of the hydraulic model in these areas. Table 4.7 Preliminary Estimated Cost of Distribution System Improvements Description of Improvements Capital Costs Leisurewood Ln. Improvements $56,700 Stoneledge Dr. Improvements $14,300 Total $71, Water Meter Replacement CAW s meter replacement program utilizes the design life assumptions listed in Table 4.8. Based on design life alone, the majority of MWM s meters would need to be replaced within the first 5 years after consolidation. MWM s meters may need to be replaced sooner if it is determined that they exhibit a high percentage of error resulting from meter tube plating. It should also be noted that MWM s meters measure flow in gallons rather than the CAW standard which is measurement in cubic feet. Table 4.8 CAW Meter Replacement Program Meter Size (in) Meter Life (Years) 5/8 16 3/ ½ Based on the information available at the time of this report, it is recommended that all of the existing water meters be replaced during the transition period if the consolidation of MWM into CAW proves feasible. CAW logged the replacement of over 500 meters per month in A total of four employees currently work in CAW s meter shop section, two of which work in the meter shop and two in the field changing meters. Of the two that work in the meter shop, one tests meters and the other is the meter shop foreman. If no additional employees were added to this crew, it could take from 2 4 years to replace all of the meters in Maumelle. The preliminary cost estimate to replace the meters, including capital and labor costs, is detailed in Table

80 Appendix 1 Table 4.9 Meter Replacement Costs Meter Size # of Meters Capital Cost 40 Labor Cost Total Cost 5/8" 1,848 $37 $20 $105,336 3/4" 8,296 $54 $20 $613,904 1" 98 $85 $25 $10, " 49 $230 $35 $12,985 2" 67 $305 $50 $23,785 3" 71 $1,309 $200 $107,139 4" 7 $1,739 $250 $13,923 Total 10,436 $888, CAW System Improvements CAW s existing Jack Wilson Water Treatment Plant (JWWTP) is currently rated for 133 MGD. CAW engineering indicated that the JWWTP had enough available capacity to treat MWM s current max daily demands. The plant has a current pump rating of 108 MGD, while the total demand at future max day conditions with existing meter customers using their maximum contract amounts is 105 MGD. If a third pump were installed at the Wilson High Service Pump Station, the increased pump capacity would be sufficient to supply MWM s water needs. The budgetary cost provided by CAW Engineering for the additional pump at JWWTP is $375, Improvements Schedule The capital improvements that are recommended to consolidate MWM s water system into CAW along with their respective budgetary costs are listed in Table Table 4.10 Recommended Capital Improvement Projects Description Budget Implementation Estimate Manitou Booster Pump Station $500, months Ground Storage Tank #1 & #2 $1,200,000 8 months Maintenance Flushing System $150,000 6 months Distribution System Improvements $71,000 6 months 30 CAW Transmission Main $8,320, months New High Service Pump at Jack Wilson $375,000 8 months Meter Replacement $888, months Permanent Chlorine Dioxide Feed System $25, months Total Budget $11,529, Months 1 1 Critical Path not including the time required for full meter replacement Table 4.10 lists estimated implementation times for each of these projects. The time periods listed are for design, bidding, and construction only; they do not include any time required to secure the necessary funding. Many of the recommended projects could be implemented along parallel schedules to minimize the overall length of the transition period.

81 Appendix 1 5. Conclusion The final determination as to the feasibility of consolidating MWM into CAW will be dependent on many more factors than the capital costs discussed in this preliminary engineering report. It will be important for those individuals who are charged with evaluating that feasibility, however, to compare the estimated capital costs presented in this report with the estimated capital costs for MWM to obtain the same capacity and level of service independently. Those projects and their corresponding costs are discussed in MWM s water master plan and MWM s Short & Long Range Plan, 2015 Update. For the reader s convenience they are also listed in Table 5.1. Approximately $13,088,000 of the total budget cost listed in Table 5.1 would be required to be implemented by MWM over the same period as a potential CAW transition. Table 5.1 Capital Improvement Projects Required for MWM (12 MGD) 1 Description Cost Manitou Booster Pump Station 2 $500,000 Ground Storage Tank #1 & #2 Maintenance 2 $1,200,000 New 2.5 MG Storage Tank 2 $3,000,000 Flushing System 2 $150,000 Water Transmission Improvements 2 $5,500,000 WTP Residual Handling 2 $1,000,000 New Wells (4) 1,3 $800,000 Emergency Generators & Platforms for 5 Wells 2 $425,000 Expansion of WTP to 12 MGD $22,250,000 Meter Replacement $888,000 Permanent Chlorine Dioxide Feed System 2 $25,000 Entergy Power Distribution in Well Field 2 TBD Future Improvements Required for Water TBD Quality Total Budget $35,738,000 1 Assuming well field firm capacity of 12 MGD is achievable 2 Required in the next 1 5 years 3 One new well required over the next 1 5 years 41

82 Appendix 2

83 Appendix 2

84 Appendix 2 Table of Contents 1. Introduction History of Maumelle Water Management (MWM) Consolidation of MWM and Central Arkansas Water (CAW) About this Report Capacity Requirements Service Area Demographics Historical Wastewater Flows Significant Industrial Dischargers Flow Projections Existing Wastewater System Collection System Collection System Overview System Inventory Pump Stations System Capacity Limitations & Maintenance Concerns Treatment Treatment Overview Influent WWTP Ponds Aeration Secondary Clarification Disinfection Solids Handling WWTP Available Capacity Influent Characterization Effluent Quality Capital Needs of Existing Wastewater System Collection System Pump Stations Treatment...19

85 Appendix Mechanical Bar Screen Aeration Basins Secondary Clarification Sludge Handling Disinfection Effluent Pump Station Water Treatment Sludge Recommended Capital Improvements Conclusion...22 List of Figures Figure 2.1 Age Distribution for the City of Maumelle from 2010 Census... 3 Figure 2.2 Historic Population Growth for Maumelle, Arkansas... 4 Figure 2.3 Historical Wastewater Flow vs. WWTP Capacity... 5 Figure 3.1 MWM Effluent Quality...17 List of Tables Table 3.1 Gravity Sewer Inventory... 6 Table 3.2 Force Main Inventory... 7 Table 3.3. Pump Station SCADA Breakdown... 8 Table 3.4 Causes of Reported Collection System Overflows ( )... 8 Table 3.5 Approximate Capacity of WWTP Unit Processes...15 Table 3.6 MWM Influent Wastewater Characteristics...15 Table 3.7 MWM Influent Wastewater Characteristics...16 Table 4.1 Recommended Capital Improvements...22 List of Exhibits Exhibit 3.1 WWTP Aerial Photo...11 Exhibit 3.2 WWTP Process Flow Diagram...11 Exhibit 3.3 Aerial Photo of WWTP Ponds...12 Exhibit 4.1 Required Sewer System Rehabilitation...18

86 Appendix 2 1. Introduction 1.1. History of Maumelle Water Management (MWM) The City of Maumelle began as Maumelle New Town (MNT) in the mid 1960 s. Maumelle New Town Water and Sewer Improvement District No. 306 was established in 1970 to provide water and sewer services to the eastern one-third of MNT. The suburban improvement district (SID) acquired approximately $10.6 million in funding to construct water and sewer infrastructure for the development. A second SID, Maumelle Suburban Improvement District No. 500, was organized in 1975 as a result of new legislation that expanded the authority of SID s to include all of the services traditionally provided by a municipality with the exception of police powers. In 1979 SID No. 306 was absorbed by SID No. 500, which is now known as Maumelle Water Management. When the City of Maumelle was incorporated in 1985, MWM conveyed all of its assets to the City which were not directly related to its water and sewer services. Since that time, MWM has limited its activities to providing water and sewer services to the City of Maumelle. MWM is governed by a board of three (3) commissioners. When a vacancy on the commission occurs, it is filled by a vote of the remaining two (2) commission members. In response to the City s desire for directly appointed representation on the commission, MWM created two non-voting liaison positions on the Board. MWM has also been working towards converting the Utility from an SID to a public water authority (PWA) so that they can increase the number of board members from three (3) to five (5). The PWA has been formed and the two (2) new positions have been appointed by the City Council. The transition to the PWA, including a transfer of assets, was slated to occur in mid-2015 but was delayed by the need for a significant rate increase to refinance existing debt and issue new debt required for capital improvements Consolidation of MWM and Central Arkansas Water (CAW) MWM s water service area is bordered on the north, east, and west by CAW s service area and to the south by the Arkansas River. Multiple discussions and evaluations have taken place over the past two decades regarding various forms of partnerships between MWM and CAW. The most recent formal evaluation was performed by Hawkins-Weir Engineers, Inc. in 2013 as a part of the preparation of a water master plan for MWM. That evaluation determined that is was not economical for MWM to become a CAW wholesale customer. One June 8, 2015, a MWM representative was sent to CAW to advise them of water infrastructure improvements that were planned as a part of an upcoming rate increase. CAW was advised that those investments in MWM s water treatment and distribution system would present additional financial obstacles to the two utilities ever reaching a partnering agreement. MWM s representative asked CAW to reconsider potential opportunities for regionalization. 1

87 Appendix 2 At their regular meeting on the afternoon of June 10, 2015, MWM s commission approved a recommended rate increase that would increase the average bill by approximately 48.5% over a three-year period. This rate increase was projected to provide for the Utilities increased O&M costs, to allow the Utility to resume funding reserve accounts, to allow the Utility to refinance its existing debt of about $11.2 million, and to allow the Utility to issue approximately $15.6 million in new bonds for a variety of infrastructure projects. The Utility s rate increase proposal was met by initial concern from residents of Maumelle and the Maumelle City Council. A public hearing was scheduled for July 6, Before that meeting would take place, a special meeting of the Maumelle Water Management Commission was called on June 18 at the request of CAW. At that meeting CAW s CEO, Graham Rich, requested that MWM enter into an agreement that would allow CAW a limited amount of time to evaluate the consolidation of MWM s water and wastewater systems into CAW. It was suggested that if the consolidation was feasible MWM s users would pay CAW s outside city water rates plus a debt service fee. The debt service fee would retire MWM s existing debt and fund any new infrastructure required to connect the systems. MWM s commission unanimously voted to enter into the agreement with CAW About this Report CAW committed to provide the results of the feasibility study to MWM in September This aggressive schedule was believed necessary due to MWM s need to move forward with the formation of a public water authority should the consolidation not prove to be beneficial for all parties. As a result of the limited time afforded by this schedule, Hawkins-Weir Engineers, Inc. (HW) was only allowed about a month to plan and prepare this preliminary engineering report. That amount of time did not allow HW the time needed to perform a detailed evaluation and support this report s conclusions at the level that is the standard for our firm. Consequently this report relies heavily on the conclusions of prior evaluations and unverified statements from MWM and CAW staff. This report meticulously identifies the sources of the information it contains and identifies areas where additional study might be beneficial. 2. Capacity Requirements 2.1. Service Area Demographics MWM service area is comprised largely of the City of Maumelle. In order to determine the service area demographic, PRIZM 1 psychographic profiles were analyzed. PRIZM is a system for characterizing neighborhoods and local workforce into one of 65 specific market segments. The PRIZM classification system provides a breakdown of people and 1 Nielsen PRIZM Lifestage Groups. (2015). Retrieved July 24,

88 Appendix 2 neighborhoods based on attitude, interests, opinions and lifestyle. According to the Maumelle Forward 2 and based on PRIZM characteristics, over 70% of Maumelle households fall into Younger Years and Family Life lifestyle groups. These lifestyle groups are classified as households with young to midlife success, accumulated wealth, and sustaining families. The City of Maumelle consists primarily of upper middle class and upper class residential areas. Nearly 75% of all Maumelle households are represented in Lifestage Groups which portray wealthy lifestyles. Lifestage groups reflect household affluence, head of householder age and household composition. From 2000 to 2014, the population of Maumelle increased by nearly 60%. Compared to the national averages in the 2010 Census, Maumelle has more individuals between the ages 25 and 54, more owner occupied households, and more households with 2-4 residents. A breakdown of age distribution within the City of Maumelle can be seen below in Figure 2.1. Figure 2.1 Age Distribution for the City of Maumelle from 2010 Census 50% 45% Percent of Maumelle Population 40% 35% 30% 25% 20% 15% 10% 5% 0% Under to to to and older Age (Years) The population of Maumelle was 17,163, in 2010 according to the latest census. The current population of the City is approximately 18,000. Maumelle s population has grown at an average annual rate of approximately 4.5% as shown below in Figure Crafton Tull (2013). Maumelle Forward: Forward Thinking, Forward Vision, Forward Progress. Little Rock, AR: Julie Luther, AICP, ASLA. 3

89 Appendix 2 Figure 2.2 Historic Population Growth for Maumelle, Arkansas. 20,000 18,000 16,000 Population 14,000 12,000 10,000 8,000 6, Year Maumelle Forward cites studies performed by Metroplan that project the population of Maumelle at 27,718 by the year Based on the slower growth rate of Maumelle between 2008 and 2012, the planning document projects a slightly lower 2030 population of 24,235. The population of Maumelle is projected to be 47,091 at full buildout, per the Maumelle Forward planning document. Based on a linear projection of current growth, the City of Maumelle could reach its projected maximum capacity around the year Historical Wastewater Flows The peak influent flow measured at the plant since 2012 has averaged around 3 MGD. The effluent flow at MWM s WWTP has averaged 2.08 MGD over the past several years with a max day average of 2.80 MGD. Figure 2.3 below illustrates the flow variation with time. All influent flow into MWM s WWTP is pumped by their influent pump station, also referred to as Pump Station #2. The influent pump station has a maximum capacity of approximately 4.5 MGD. There is one notable peak influent flow measurement, illustrated on Figure 2.3, of 4.88 MGD was recorded in May It is believed that the pump station was capable of producing that high flow as a result of a flooded wet well which reduced the static lift on the pumps. According to MWM, the influent pump station has no difficulty keeping up with influent flow during wet weather. The only noted exceptions to that claim occurred during instances of an electrical or mechanical failure at the pump station. The fact that MWM s WWTP has a wet weather peaking factor of less than 2 is a good indication that I&I is not a significant problem within the Utility s collection system. 4

90 Appendix 2 Figure Historical Wastewater Flow vs. WWTP Capacity Influent Flow, MGD /2011 4/ /2012 5/ /2013 6/ /2014 7/2015 Influent Avg Day Influent Max Month Average Flow Peak WWTP Capacity Effluent Avg Day Effluent Max Month Significant Industrial Dischargers MWM is not required to have an ADEQ approved industrial pretreatment program. MWM regulates each industry on a case by case basis, utilizing individual agreements as needed. Agreements include surcharges when appropriate. Currently MWM has agreements with most industrial dischargers. Only Kimberly Clark, Molex and Cintas have monitored discharges. Kimberly Clark and Cintas are subject to surcharges while Molex is subject to EPA Metal Finishing Categorical Standards and local metal limitations. Molex reports all Categorical Metal discharge concentrations to ADEQ and is required to monitor for Lead, Nickel, Copper and ph for MWM. All past evaluations indicate no impact on sludge disposal. MWM's monitoring of bio-solids also indicates this to be the case. MWM also has an agreement with Kimberly Clark to refund them monthly for wastewater charge associated with water consumed in their industrial process. There is no meter measuring Kimberly Clark s wastewater discharge, rather, Kimberly Clark uses a proprietary formula to calculate the volume that they report to MWM Flow Projections The preliminary engineering report evaluating the capital needs for MWM to consolidate into CAW identified a projected increase in the peak water demand of approximately 50% to 10.2 MGD at full buildout. That projected increase was estimated to occur over a period of 5

91 Appendix 2 45 years based on Maumelle s historic population growth. Applying the same growth rate to MWM s wastewater peak flow yields a projected peak of 5.2 MGD. This simplified projection assumes that MWM s collection system is maintained to prevent a significant increase in the contribution of infiltration and inflow (I&I). 3. Existing Wastewater System 3.1. Collection System Collection System Overview The Maumelle wastewater collection system encompasses approximately 6,400 of the 8,300 acres within the City limits of Maumelle. There is an elevation differential of 300 feet across the service of area of Maumelle Water Management. The wastewater collection system is a combination of gravity mains, pumping stations and force mains. The flows are collected at a centrally located wastewater treatment facility described in Section 3.2 of this report System Inventory The gravity collection system consists of six inch through twenty-four inch gravity sewer mains with total footages as shown in the Table 3.1. Pipe materials are concrete, PVC, and ductile iron. Table 3.1 Gravity Sewer Inventory PIPE DIA (IN) LENGTH (FT) 6 18, , , , , , , , ,500 TOTAL 620,445 The collection system includes approximately 3,100 manholes. There is no tabulation for services lines. Force mains vary in size from two inch through twenty inch as shown in Table 3.2. Pipe material is typically PVC for all sizes with the exception of the twenty inch pipe which is ductile iron. 6

92 Appendix 2 Table 3.2 Force Main Inventory PIPE DIA (IN) LENGTHS (FT) 2 3, , , , , , ,500 TOTAL 69, Pump Stations There are currently twenty-five (25) active pump stations in the collection system maintained by Maumelle Water Management. All pump stations are equipped to accommodate dual submersible pumps, with the exception of the pump station at Murphy Drive which is equipped with two vertical wet-pit turbine pumps. The pump stations are monitored and controlled by means of a Supervisory Control and Data Acquisition (SCADA) network. Table 3.3 provides available data for the various pump stations System Capacity Limitations & Maintenance Concerns Wastewater collection systems are designed to convey sewage, not stormwater. Even so, there are many areas within sewage collection systems that can handle large amounts of stormwater flow from inflow and infiltration (I&I). I&I enters collection systems through leaking pipe joints, pipe breaks, illegal connections, and other areas. There are bottlenecks within most sewer systems that prevent the complete conveyance of wet weather flows which often result in sanitary sewer overflows (SSOs). This is a very common problem in sewage systems nationwide which is in no way unique to MWM s collection system. As discussed earlier in this report, the fact that the ratio of dry to wet weather flow, as recorded at MWM s WWTP, is less than 2.0 indicates that MWM s collection system is not subject to significant I&I. MWM reported the sixty-two (62) SSOs to ADEQ that occurred between November 2010 and October Table 3.4 categorizes each of the SSOs reported during that time period into one (1) of seven (7) groups based on their cause. As a result of the reported SSO s, ADEQ issued a draft Consent Administrative Order (CAO) to MWM on February 5,

93 Appendix 2 Table 3.3 Pump Station SCADA Breakdown STATION PUMPS PUMP DESIGN PUMP VOLTS GEN LOCATION ID HP CAPACITY BRAND SET Lift Sta # ' Allis Chalmers 480/3 X Murphy Dr. Lift Sta # Peabody Barnes 230/1 147 Ridgeland Lift Sta # Peabody Barnes 230/1 Ridgeland & Odom Lift Sta # Homa 480/3 193 Diamond Point Lift Sta # ' Peabody Barnes 230/1 Odom & Ouachita Lift Sta # Hydromatic 230/1 13 Shara Lane Lift Sta # Homa 230/1 12 Masters Place Lift Sta # Peabody Barnes 230/1 61 Northfork Dr. Lift Sta # Hydromatic 480/3 6 Crystal Mtn Lane Lift Sta # HOMA 230/3 9 Breezewood Dr. Lift Sta # Hydromatic 230/3 122 Quapaw Trail Lift Sta # ' HOMA 230/3 Counts Massie & Country Club Lift Sta # Fairbanks 480/3 X 140 Maumelle Valley Dr. Lift Sta # Hydromatic 230/1 119 Bouriese Dr. Lift Sta # Hydromatic 230/1 215 Maranes Dr. Lift Sta # ' Hydromatic 230/3 112 Seminole Dr. Lift Sta # EMU/USEMCO 480/3 Carnahan Lift Sta # Hydromatic 480/3 Odom & Melville Lift Sta # Hydromatic 230/1 Seminole Lift Sta # Hydromatic 480/3 Maumelle Blvd. & Crystal Hill Lift Sta # Hydromatic 230/1 Savanna Lift Sta # Myers 480/3 Naylor Dr. Lift Sta # Gould 480/3 CCA Ball Fields Lift Sta # Hydromatic 480/3 151 Lake Valley Lift Sta # ' Hydromatic 480/3 High School Campus Table 3.4 Causes of Reported Collection System Overflows ( ) Year WWTP Equalization Basin Sludge Drying Beds WTP Backwash Power Failure Mechanical Failure Capacity Sewer Clog Annual Total Total The causes of the reported SSOs are further detailed below. MWM determined that many of the reported incidents were misreported and did not qualify as SSOs. WWTP Equalization Basin MWM s WWTP includes primary and secondary equalization basins. When the primary equalization basin fills beyond its capacity during wet weather it can overflow into the secondary equalization basin. These overflows were incorrectly reported as SSOs eleven (11) times during the period. These occurrences do not qualify as SSOs since they did not originate from the 8

94 Appendix 2 sanitary sewer collection system and they should not have been reported as such by MWM. No sewage escaped treatment as a result of these events. The practice of overflowing the primary equalization basin into the secondary equalization basin became standard practice at the WWTP following the renewal of our NPDES permit in January Sludge Drying Beds MWM s solids handling process includes sludge drying beds. Four (4) of the reported SSOs during the period were instances where a quantity of digested waste activated sludge spilled during transfer to or from the drying beds. In each instance the spill was promptly cleaned and disinfected and the plant s BMPs were reviewed to prevent reoccurrence. These occurrences do not qualify as SSOs since they did not originate from the sanitary sewer collection system and they should not have been reported as such by MWM. WTP Backwash MWM altered the handling of the water treatment plant s (WTP) backwash and sludge blowdown stream when the treatment process was changed from lime softening to sodium hydroxide (NaOH) softening. When operating as a lime softening plant the backwash and blowdown stream was sent to the on-site sludge settling/storage basin and the settled water was pumped to the sanitary sewer. The WTP treatment process was changed to NaOH softening and the operators were told that the NaOH sludge discharge did not have to be settled and the wastewater treatment plant (WWTP) would have no problem handling this type of waste. After a year of operation the WTP operators discovered, due to SSOs submitted by the WWTP operators, that they had been misinformed. The NaOH sludge settled and plated the sanitary sewer lines causing reduction in diameter. When this was discovered the WTP sludge settling/storage basin was placed back in service and only settled water was sent to the sewer. The sewer lines were cleaned and televised to ensure the problem would not recur. There has not been any SSOs caused by the WTP since Power Failure Electrical service is provided to MWM by Entergy Arkansas. Seven (7) SSOs were reported at MWM lift stations during the period that were a direct result of loss of power to those stations. MWM utilizes portable generators to energize the pump stations during power outages. During widespread outages the generators have to be continuously moved between the affected pump stations to prevent their wet wells from overflowing. The overflows that were reported were the result of the inability to provide temporary power quickly enough to a particular lift station. Mechanical Failure Mechanical failures at lift stations or the WWTP can adversely impact the collection system and occasionally result in an SSO. SSOs of this nature were reported five (5) times within MWM s collection system during the approximate four (4) year period. One of the instances resulted from a failure at the WWTP that caused the collection system to backup and overflow a nearby manhole. Another of 9

95 Appendix 2 the occurrences was due to an air relief valve sticking open. The three (3) remaining SSOs occurred due to a mechanical failure at a lift station. One of those issues was reported to have only consisted of five (5) gallons spilled. Capacity An SSO is caused by a capacity issue when the sewer collection system is insufficient to convey the instantaneous flow by gravity. When the system fills up and is overwhelmed, the system becomes pressurized and overflows can occur from manholes or through sewer service laterals. Only three (3) capacity related SSOs have been recorded from MWM s collection system during the period. Each occurred at a manhole and was the direct result of one of two significant wet weather events. MWM conceded that only forty-seven (47) of the reported sixty-two (62) events were actually SSOs that occurred within their collection system over the approximate 3-year period. Only three (3) of those events resulted from capacity limitations within the collection system. One of those events occurred on December 26, 2011 while the other two (2) overflows occurred on April 2, Abnormally high rainfall and localized flooding occurred on each of these two days. The extremely limited number of SSOs resulting from wet weather events over the three (3) year period indicates that capacity issues are not significant within MWM s collection system. Thirty-nine (39) overflows were determined to be caused by clogging of the sewer and power or mechanical failures within the collection system. To address these issues MWM agreed to develop a continuous Critical Action Plan (CAP) for its collection system. The primary focus of the CAP, which has not yet been written, will be to identify all feasible steps to mitigate the impact of non-wet weather related SSOs in their collection system. Due in part to MWM s commitment to complete the CAP within six (6) months and implement its findings within two (2) years, ADEQ agreed to withdraw the proposed CAO on June 19, Treatment Treatment Overview MWM s wastewater treatment plant (WWTP) utilizes the extended aeration modification of the activated sludge process. Exhibit 3.1 is an aerial photo of the primary portion of the treatment plant. Exhibit 3.2 provides a process flow diagram for the plant. The WWTP is permitted at a flow of 3.5 mgd as a plug flow activated sludge plant. It is currently being operated as an extended aeration facility with two extended aeration cells in series Influent Influent from the collection system flows through one (1) of three (3) parallel grinders before being lifted into the WWTP by an influent pump station. According to MWM, the influent pump station has a peak capacity of 4.5 MGD. 10

96 Appendix 2 Exhibit 3.1 WWTP Aerial Photo Exhibit WWTP Process Flow Diagram WWTP Ponds Three (3) ponds are located at the MWM WWTP. An aerial photo of the ponds is included as Exhibit 3.3. Two (2) ponds (Primary and Secondary EQ Basins) are operated as influent flow equalization. The Primary EQ Basin has a two and one half (2.5) million gallon volume and is mixed by surface aerators. All influent flow enters the 11

97 Appendix 2 treatment process through this basin. In addition to providing equalization, this pond is designed to the first stage in the WWTP s biological treatment process. Per MWM, flow can be pumped from the primary EQ basin to the WWTP aeration basin at a maximum rate of 3.5 MGD. The Secondary EQ Basin has an approximate volume of fourteen (14) million gallons and receives Primary EQ Basin overflows and storage during force main shut down or failure, effluent pump station shut down or failure, and any other WWTP failure. All waters diverted to the Secondary EQ Basin are pumped back to the head of the WWTP for processing through the full WWTP processes. Exhibit 3.3 Aerial Photo of WWTP Ponds Solids retained in the Primary EQ basin are minimal since it is completely mixed. As a part of this evaluation, staff from North Little Rock Wastewater measured the depth of the sludge blanket in the Secondary EQ basin. They determined that the average sludge blanket depth in the basin was approximately twenty-four (24) inches. It is worth noting that they began measuring the sludge blanket depth at the relatively dilute concentration of 1,000 mg/l. The total volume of sludge contained in the basin cannot be determined without additional profiling of the solids concentration within the sludge blanket. The third pond located at the WWTP site is currently being used to store residuals generated at MWM s water treatment plant (WTP). The sludge storage pond has an 12

98 Appendix 2 area of approximately nine (9) acres. It has a total sidewall depth of seven (7) feet, a maximum water depth of five (5) feet, and 3:1 interior side slopes. The pond has a storage volume of approximately seventeen (17) million gallons with zero freeboard. Settled solids from the WTP backwash and clarifier blow down have been hauled from the WTP settling pond and deposited in the pond for more than 15-years. The storage facility is permitted to store water treatment plant residuals and bio-solids under ADEQ State Permit 4632-WR-2. Prior to 1999 the pond had been used as a polishing pond in past MWM wastewater treatment plant processes. Neither the quantity of sludge stored in the third pond nor its remaining useful life are known at this time Aeration As discussed in the previous section, the aeration process at MWM s WWTP begins in the Primary EQ Basin which utilizes five (5) floating aerators to mix the pond and provide a degree of BOD removal. Mixed Liquor Suspended Solids (MLSS) is pumped from the Primary EQ Basin to the WWTP s traditional complete mix aerations basins at a maximum rate of 3.5 MGD. MWM operates their aeration basin at a MLSS between 2,500 mg/l and 5,500 mg/l and a sludge age of 7 13 days based on flows and seasonal variations. Based on Ten States Standards 3 conservative loading criteria of 50-lb BOD 5 /day/1,000 ft 3, the plant s traditional aeration basin has a capacity of 2.25 MGD at normal flow. Metcalf & Eddy, on the other hand, lists a loading rate ranging from BOD 5 /day/1,000 ft 3 in their 4 th Edition of Wastewater Engineering: Treatment & Reuse 4. Based on that loading rate, the aeration basin has a capacity of approximately 5 MGD. The combination of the aerated Primary EQ Basin and the traditional plug flow basins have been permitted by ADEQ for a flow of up to 3.5 MGD. A more detailed analysis is needed to determine the true capacity of the biological capacity of the WWTP. The aeration basin utilizes coarse bubble diffusers. The aeration basin can be divided and isolated with a 33/67% split of the volume if diffuser or other maintenance is required. Air flow to the basin is provided by two positive displacement blowers. The un-enclosed blowers are located immediately south of the aeration basin. According to MWM, both blowers need to be operated simultaneously during the majority of the year to maintain an adequate dissolved oxygen concentration. The installation of a third blower is recommended to provide redundancy. 3 Recommended standards for wastewater facilities: Policies for the design, review and approval of plans and specifications for wastewater collection and treatment facilities: A report of the Wastewater Committee of the Great Lakes--Upper Mississippi River (2004 ed.). (2004). Albany, N.Y.: Health Education Services. 4 Metcalf & Eddy, Inc. (2003). Wastewater Engineering: Treatment and Reuse. McGraw Hill, Table 8-16: Typical Design Parameters for Commonly Used Activated-Sludge Processes, pg

99 Appendix Secondary Clarification During normal operations, mixed liquor from the aeration basin is sent to a single 80-foot diameter secondary clarifier with an average flow capacity of 3.5 MGD and a peak day capacity of 7 MGD. A second secondary clarifier (50-foot diameter) with an average day capacity of 1.2 MGD and a peak day capacity of 2.4 MGD can also be operated in parallel with the larger clarifier if needed. The smaller clarifier has not been operated for an extended period and will require mechanical rehabilitation before it can be placed into service Disinfection Disinfection is accomplished by chlorination in a contact chamber with a peak capacity of 6 MGD based on a required contact time of 15 minutes. The effluent is de-chlorinated with sulfur dioxide and pumped to the Arkansas River by an effluent pump station with a reported peak capacity of 3.2 MGD. The effluent force main is constructed of 20-in diameter ductile iron pipe and was installed around When plant flow exceeds the capacity of this pump station, operators have the option to divert a portion of effluent to the secondary equalization basin. This is a limited duration strategy since the diversion has to be discontinued once the 14 million gallon equalization basin becomes full. All volume stored in that basin is ultimately returned to the biological treatment train when peak flows subside Solids Handling Waste sludge (WAS) from the WWTP is pumped to a single lightly aerated tank that is considered to be an aerobic digester by MWM. Aeration is provided by a single floating aerator. MWM operations staff has the option to pump the sludge to either a series of gravity drying beds or a Flo Trend Sludge Mate Dewatering Container. Polymer can be added to the sludge prior to it being pumped to either location. After sufficient dewatering has occurred, the solids are ultimately hauled by a private contractor to a Subtitle D landfill for final disposal WWTP Available Capacity On the average day the WWTP is operating at over 90% of its capacity based on the most conservative estimate of the aeration capacity used for this report. Additional study is needed to determine the true average day limitation of the system. The plant is limited to a peak capacity of 3.5 MGD which, according to MWM, is the most flow that can be pumped to the river and diverted to the secondary equalization basin without causing an overflow of the chlorine contact basin. Wastewater Characteristics Table 3.5 lists the approximate capacities of each component of the WWTP. 14

100 Appendix 2 Table 3.5 Approximate Capacity of WWTP Unit Processes Unit Process Capacity (MGD) Influent Grinders 9.5 Influent Pump Station 4.5 Primary Equalization Basin 2.5 MG Secondary Equalization Basin 14 MG Primary Equalization Pump Station 3.5 Secondary Equalization Pump Station 3.5 Aeration Clarifier #1 3.5 Clarifier #2 1.2 Disinfection 6 Effluent Pump Station 3.2 Total Available Capacity More study is needed to approximate the limiting biological capacity of the aeration basins Influent Characterization Influent measurements recorded by MWM at their WWTP were evaluated for this report over a period from January 2012 through June The results of that evaluation are summarized in Table 3.6 below. This information indicates that MWM s influent wastewater could be characterized as medium strength 5. HW noted that the TSS levels in the influent were elevated during the summer months. It can be speculated that this seasonal variation is caused by algae growth in the plant s equalization basin. Table MWM Influent Wastewater Characteristics Constituent Concentration (mg/l) Influent BOD 194 Influent TSS 227 The alkalinity in MWM s drinking water typically exceeds 150 mg/l as CaCO 3. The current influent alkalinity at MWM s WWTP ranges from mg/l as CaCO 3. Alkalinity is of particular importance in wastewater treatment when nitrification is required. Approximately 7.2 mg/l of alkalinity is consumed in the nitrification process for every 1.0 mg/l of ammonia nitrified. The influent ammonia concentration in medium strength wastewater typically averages around 25 mg/l 4. MWM s current NPDES Permit does not include an ammonia limit. Little Rock Wastewater, who also discharges into the Arkansas River, on the other hand, has been put on notice that their NPDES permit 5 Metcalf & Eddy, Inc. (2003). Wastewater Engineering: Treatment and Reuse. McGraw Hill, Table 3-15: Typical Composition of Untreated Domestic Wastewater, pg

101 Appendix 2 will include an ammonia limit by That limit is anticipated to be 6 mg/l at one of their WWTPs and 12 mg/l at the other. The current level of alkalinity at MWM s WWTP would not be a limiting factor in the plant s ability to comply with a future ammonia limit. The alkalinity in CAW s finished water, on the other hand averages 10 mg/l as CaCO 3. Unless sufficient alkalinity is added from other sources, such as industrial discharges, the low level of background alkalinity provided by CAW could result in difficulties in meeting a future ammonia limit. In a worst case scenario this limitation could be overcome by supplementing alkalinity at the WWTP which would increase the plant s operating costs. Considering MWM s existing NPDES Permit requirements and based on typical permitting practices, ammonia removal should not be required at MWM s WWTP over the next 5 10 years Effluent Quality MWM s WWTP s minimum effluent quality is dictated by NPDES Permit AR issued by the Arkansas Department of Environmental Quality (ADEQ). The effective date of this permit was January 1, 2015 and the permit expires on December 31, The key effluent limitations stipulated by that permit are listed in Table 3.7 below: Table MWM Influent Wastewater Characteristics Effluent Characteristic Flow Discharge Limitation Mass Concentration lbs/day mg/l mg/l Monthly Monthly 7-Day Avg. Avg. Avg. N/A Report, Report, MGD MGD Daily Max BOD TSS DO N/A 2.0 (Inst. Min) FCB Colonies/100 ml April - Sept N/A Oct - Mar N/A TRC N/A No Measurable ph N/A Minimum 6.0 Maximum

102 Appendix 2 Figure 3.1 below illustrates the WWTP s compliance with its BOD 5 and TSS effluent limits from August 2012 through June It also shows that the plant remained in consistent compliance for minimum DO levels. The plant did have one exceedance for 7-day Fecal in April of 2014 due to a mechanical failure at the plant which has since been resolved. Figure MWM Effluent Quality Concentration (mg/l) /2012 1/2013 8/2013 3/2014 9/2014 4/2015 BOD Avg BOD Max TSS Avg TSS Max DO Avg BOD/TSS Limit Max BOD/TSS Limit 4. Capital Needs of Existing Wastewater System 4.1. Collection System MWM s collection system is relatively new given that the City is only 40 years old. As discussed briefly in Section 2.1.2, the influent flow at MWM s WWTP is reported to increase by a factor of less than 2.0 during significant rainfall events. MWM has only reported 3 capacity related SSOs since These factors support MWM s belief that I&I is not a significant issue within their collection system. MWM has worked diligently to address any known sources of I&I within their system. From approximately 2005 through 2009 the utility evaluated all of the manholes in the system and repaired any deficiency that were discovered. They also conducted studies on areas of expected I&I which mostly centered on older concrete pipelines which were sources of historic failures. The projects listed below were identified by those studies and are listed as immediate needs in MWM s Short and Long Range Plan, 2015 Update. No new CCTV studies, smoke testing, or other evaluations of MWM s collection system are believed to be necessary at this time. Rehabilitate 24 Collector across Wetlands near WWTP: An I&I study of this line showed the inner walls to be greatly eaten away by sewer gases. Being that this line runs through the wetlands, a failure could cause millions of gallons of inflow to the 17

103 Appendix 2 treatment facility and potentially drain the wetlands. This line section is estimated to cost $825,000 based on bursting approximately 3,500 feet of 24 RCP. Cured in place pipe (CIPP) may be an alternative method for this repair. Rehabilitate Maumelle Blvd Crossing: This sewer section is known to have multiple failures and to be a significant source of I&I in the system. This section is estimated to cost $345,000 based on bursting approximately 3,700 feet of 12 RCP. Cured in place pipe (CIPP) may be an alternative method for this repair. Rehabilitate 21" Collector from Diamond Point Lift Station towards Lift Station #1: This is a concrete line that is failing and has multiple known infiltration issues. This section is estimated to cost $1.2 million based on bursting approximately 5,000 feet of 21 RCP. Cured in place pipe (CIPP) may be an alternative method for this repair. Exhibit 4.1 shows the locations of each of these line segments. Exhibit 4.1 Required Sewer System Rehabilitation 18