F I S C A L Y E A R N o v e m b e r C A M P B E L L S R UN R O A D P I T T S B U R G H, PA

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1 ELIZABETH TOWNSHIP SANITARY ALLEGHENY COUNTY, PENNSYLVANIA F I S C A L Y E A R C O N S U L T I N G E N G I N E E R S A N N U A L R E P O R T N o v e m b e r C A M P B E L L S R UN R O A D P I T T S B U R G H, PA

2 ELIZABETH TOWNSHIP SANITARY ALLEGHENY COUNTY, PENNSYLVANIA FISCAL YEAR 2017 CONSULTING ENGINEER S ANNUAL REPORT Table of Contents Executive Summary... 1 I. Introduction... 2 II. Review of Physical Condition of the Sewer System... 5 III. Maintenance, Repair and Operation of the Sewer System IV. Existing and Projected Sewer System Customers V. Review of Financial Condition VI. Schedule of Sewer Charges VII. Conclusions and Recommendations Tables Table 1 Table 2 Table 3 Table 4 Tables 5 Tables 6 Tables 7 Tables 8 Tables 9 Tables 10 Tables 11 Tables 12 Schedule of Implementation Elizabeth Township Customer Breakdown EDU Breakdown Ten Largest Sewer Customers Year 2016 Billing and Revenue BVSTP Hydraulic Loadings BVSTP Organic Loadings Balance of Funds Projected and Budgeted Revenues Projected and Budgeted Expenses Projected and Budgeted Net Income Sewer System Rates Historic and Current Figures Figure 1 Figure 2 BVSTP 5-Year Measured and Projected Hydraulic Loading BVSTP 5-Year Measured and Projected Organic Loading Elizabeth Township Sanitary FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No i

3 Appendices Appendix A Appendix B Appendix C Appendix D Sewer Service Area Map Debt Service Schedules May 2016 PA DEP Consent Order and Agreement FY 2017 Quarterly Budget Elizabeth Township Sanitary FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No ii

4 EXECUTIVE SUMMARY ELIZABETH TOWNSHIP SANITARY ALLEGHENY COUNTY, PENNSYLVANIA FISCAL YEAR 2017 CONSULTING ENGINEER S ANNUAL REPORT This annual report has been prepared to satisfy the requirements of the Consulting Engineer as set forth in Section 7.14 of Elizabeth Township s (Township) Trust Indenture dated January 1, 2003, and each Supplemental Trust Indenture thereafter. In the opinion of KLH Engineers, Inc. each of the items contained in the budget are reasonable and appropriate and that Elizabeth Township manages and operates properly and that the physical facilities are well maintained. It is also in the opinion of KLH Engineers, Inc. that the current rates and charges are sufficient to (1) pay the operating expenses and (2) meet the coverage requirements outlined in the Trust Indenture. The Township will need to monitor the implementation schedules of the Act 537 Plan and capital requirements/improvements listed in the Plan and the actual costs incurred versus the project estimates. The Township will need to evaluate the sewer use charges annually to ensure adequate revenue is available to fund the capital requirements/improvements and still meet the coverage requirements of the 2003, 2008, 2009, 2011, and 2012 Trust Indentures. KLH Engineers, Inc. recommends that Elizabeth Township adopt the Budget for Fiscal Year Respectfully submitted, KLH ENGINEERS, INC. Bryan M. Churilla, P.E. Elizabeth Township Sanitary 1 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

5 I. INTRODUCTION I.A. GENERAL The Elizabeth Township Sanitary Authority (ETSA) completed a Sewer Revenue Bond Issue in 2003 to finance system purchase and various capital projects. Additional bonds were issues in 2008, 2009, and 2011 under the 2003 Bond Trust Indenture. In 2012 another bond issues was completed to refinance the debt from the 2003 and 2008 bond issues at terms more favorable to ETSA. Since that time, the ETSA has been dissolved and the Township currently has control of all operation and maintenance of sanitary assets. This annual report has been prepared to satisfy the requirements of Section 7.14 of Elizabeth Township s Trust Indenture dated January 1, 2003, and each Supplemental Trust Indenture thereafter, which requires the Consulting Engineer to prepare and file with the Township and with the Trustee on or before January 1, 2004, and on or before November 1 of each year thereafter a report setting forth the following: a. Its advice and recommendations as to the proper maintenance, repair and operation of the Sewer System during the next fiscal year, its estimate for said fiscal year of the amounts of money that will be required to be expended for current expenses and its estimate of the gross revenues of the Sewer System for said fiscal year; b. A form of budget, prepared on a quarterly basis for the next fiscal year which shall reflect the recommendations made in said report pursuant to paragraph (a) above; c. Its advice and recommendation as to the Capital Additions and extraordinary repairs and maintenance that should be made during the next fiscal year and its estimate of the amounts of money necessary for such purposes; d. Its recommendations as to any necessary or advisable revision of rates and charges; and e. Its findings whether the properties of the Sewer System have been maintained in good repair, working order and sound operating condition and its estimate of the amount, if any, required to place such properties in such condition and the details of such expenditures and the approximate time required therefore. The Township is required to prepare and adopt the budget on or before December 1 each year and adopt a budget of current expenses and capital expenditures for the next succeeding fiscal year in accordance with the advice and recommendations of the Consulting Engineer. A copy of such budget shall be promptly filed with the Trustee. Elizabeth Township Sanitary 2 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

6 I.B. HISTORY OF LEGAL AUTHORITY The Sanitary Authority of Elizabeth Township (SAET) was organized by the Township in the early 1960s to undertake the construction of sanitary sewerage facilities within the Township. SAET was incorporated in accordance with the PA Municipal Authorities Act of 1945 as amended. The Authority was empowered to exercise any and all powers (granted by the said Act) required for the construction, improvement, operation and maintenance of the public sewer system, pump stations and sewage treatment facilities. The Authority was also the body responsible for establishing rates and collecting revenues from the operation of the Sewer System. The Township provided financing for the construction of initial facilities and also financing for expansions and improvements made in 1982, 1990 and After the initial sewage facilities in the Township were constructed by the SAET, these facilities were leased to the Township for operation and maintenance. In 1982 the Township refinanced debt and assumed ownership of the sewer system but retained the SAET for the purpose of the management of the sewage system. The Township established rates and collected revenues and provided the SAET adequate funds to manage the system operations and meet debt service requirements. The SAET s charter was to expire in approximately Because of the Township s desire to decrease municipal debt level, a proposal to transfer sewage system ownership to the SAET was presented. The Township elected to retire the SAET (due to chartered life limitation) and create a new Authority, ETSA effective November 15, The ETSA assumed the outstanding debt (bonds) which the Township previously provided (through a General Obligation Bond issue), and concurrently provided for new funds to provide for essential capital improvements to expand and strengthen the Authority. The Authority also collected sewer revenues and operated and maintained the entire sewerage system consisting of approximately 100 miles of collection sewers, five pump stations and the Buena Vista sewage treatment plant (with an additional pump station). In 2008, ETSA entered into a comprehensive Administrative Consent Order (ACO) with the Allegheny County Health Department, as the local agent for the Pennsylvania Department of Environmental Protection (DEP). This Consent Order sets up a frame work, requiring certain work to be performed on the Authority s system at certain times. This Consent Order required conveyance of the Authority s Buena Vista sewershed flows to the City of McKeesport Municipal Authority (MACM) at the time the City of McKeesport Municipal Authority is prepared to accept them. Elizabeth Township Sanitary 3 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

7 In December 2013, the ETSA was disbanded and the Elizabeth Township Authority (ETA) assumed all finances and operations previously managed by the ETSA with the exception of ownership of the sewage facilities and bonds previously financed through the ETSA. Ownership and Bonds were to remain the responsibility of Elizabeth Township with cost to be covered by the Authority. The ETA elected to contest the requirements of the 2008 ACO, evaluating options to rehabilitate and maintain the existing Buena Vista Sewage Treatment Plant. In December 2015, the ETA submitted Revised Act 537 Plans for both the Boston and Buena Vista Watersheds. The DEP reviewed only the Buena Vista Watershed Act 537 Plan and provided an unfavorable comment letter on March 1, Subsequent to this letter, in March 2016, the Township rescinded both Plan submissions, dissolved the ETA, and took control of all operation and maintenance of assets. In May 2016, the Township signed into a new Consent Order and Agreement (COA) with the PA DEP, which stipulates that the Township must convey all flow to the Municipal Authority of the City of McKeesport, as well providing other milestone requirements and timelines. A copy of this COA can be found in Appendix C. The Township has appointed the following personnel or consultants for assistance in operations. Consulting Engineering KLH Engineers, Inc. Solicitor Racunas Law Group, LLC Auditor Annual Appointment The current requirements of the COA will be discussed in further detail later in this report. Elizabeth Township Sanitary 4 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

8 II. II.A. REVIEW OF PHYSICAL CONDITION OF THE SEWER SYSTEM GENERAL The Township of Elizabeth is located in Allegheny County about 25 miles southeast of the City of Pittsburgh and lies between the Monongahela River to the west and the Youghiogheny to the east. It is easily accessible from the north, east and west by following PA Route 48 from Monroeville, PA which is at exit No. 57 on the PA Turnpike. Access from the south is via Route 51 and Interstate 70. The Township is primarily residential with several commercial establishments (such as restaurants and retail), institutional establishments (high school and elementary school) and small industrial service units distributed throughout the municipality according to zoning use districts. II.B. DESCRIPTION OF THE SYSTEM The existing sewerage facilities in the Township are divided into three (3) primary sewersheds. Buena Vista Sewershed Elizabeth Borough Sewershed McKeesport Sewershed An expanded description of each watershed is as follows. II.B.1. Buena Vista Sewershed Sewage from approximately 2,600 Township customers is collected and conveyed through three (3) pump stations to the Township s Buena Vista Sewage Treatment Plant (BVSTP) and discharged to the Youghiogheny River. This sewershed also accepts sewage from approximately 45 customers in Forward Township and approximately 500 customers in the Suttersville/Sewickley area in Westmoreland County. This sewershed has the following major components: 1. Sewage Collection System Most of the system consists of sewer lines which existed prior to 1975, and those added after Sewers prior to 1996 consist of about 275,000 lineal feet of 6 through 30 diameter sewer pipes. While these sewer lines are in generally good structural conditions, some areas are subject to excessive infiltration and inflow (I/I) during wet weather conditions. Elizabeth Township Sanitary 5 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

9 Additional treatment capacity was made available at the BVSTP in 1995 through the rerating of the sewage treatment plant from 1.0 MGD to 1.4 MGD. Therefore, a project to extend service to the Arrowhead Lakes Area was undertaken in three (3) phases during 1998, 1999 and 2001 along with some smaller extensions and development activity. A total of about 75,000 feet of sewers were added to the system. Sewer lines extensions were constructed in 2005 (by private developers) in a development identified as Brandywine. These lines connect to the BVSTP. The initial phase is for 50 lots of a total proposal of 425 lots at completion in 7 to 10 years. A sewer construction project to serve about 18 residents on Belsare Road and High Street was completed in These are connected to existing sewers and served by the BVSTP. There are also a total of 12 patio type homes (8 currently built) on Ridge Road at Swallow Drive, and a proposed nearby development for about 20 acres at the end of Swallow Drive. 2. Pump Stations Three (3) pump stations are located within the service area and are identified as Simpson- Howell, Duncan Station and Lovedale Pump Stations. These three (3) pump stations delivered sewage to the fourth, main influent pump station at the BVSTP. Flow from a collection system extension constructed upstream from the plant in the Arrowhead Lakes Area is received at the sewage treatment plant where the main pump station is considered an integral part of sewage treatment plant process. 3. Buena Vista Sewage Treatment Plant (BVSTP) The Buena Vista Sewage Treatment Plant is an activated sludge facility comprised of the treatment units described below. Preliminary Treatment Comminutor and bypass screen Grit removal tank (with degritter) Primary Treatment Aeration tanks (with blowers, air diffusers and froth spray system) Secondary Treatment Final clarifiers Chlorine contact tanks (with gaseous chlorination system) Outfall sewer to the Youghiogheny River through an 18 inch diameter outfall pipe Elizabeth Township Sanitary 6 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

10 Sludge Processing Return sludge pumps (from clarifiers to aeration tanks) Sludge holding tanks (aerated) Sludge thickening tank (added in 1994) with associated pumps Disposal of digested and thickened sludge to McKeesport STP A control building accommodates an office, a laboratory, chlorination room, blowers and electrical control system. A garage building houses an emergency generator and three (3) garage bays for vehicle and equipment storage and maintenance. The STP was originally permitted for an average flow of 0.5 MGD. In 1981 the plant was expanded to handle a flow of 1.00 MGD. In the 1980s the flow sometimes exceeded the permitted flows and sewer rehabilitation measures brought the flows within the permitted capacity. In the early 1990s the flows started to again approach the permitted capacities, but the effluent quality maintained compliance with the permit conditions. After discussions with the PA DEP, a re-rating study was conducted for the plant in 1994 and As a part of the study, continuous composite effluent samplers were installed and test conducted. Based on that study, the plant was re-rated by the PA DEP to a capacity of 1.4 MGD in September The Buena Vista sewage plant provides limited service to other adjoining municipalities including Lincoln Borough and Forward Township in Allegheny County as well as Suttersville Borough and Sewickley Township in Westmoreland County. A restaurant called the Carriage Inn, located on Lovedale Road in Lincoln Borough, has installed a grinder pump and pumps sewage to the Lovedale Pump Station, which in turn pumps sewage to a high point on Broad Lawn Drive, and eventually to the Buena Vista sewage plant. This small service is within Lincoln Borough, Allegheny County. A portion of adjoining Forward Township (upstream from the Buena Vista STP) is also now served. An agreement was executed with Forward Township and PA DEP s approval was secured through submission of a Planning Module. The projects involved the construction of a sewer line from an existing sewage treatment plant and connecting approximately 50 customers from Forward Township. The area is near the Route 48 and Route 51 intersection and was completed in An area called Suttersville Borough/Sewickley Township which is located in Westmoreland County across the Youghiogheny River approached the Authority for sewer service to approximately 500 customers. After securing PA DEP s planning approval, an agreement for sewer service was reached and service is now provided. The connection was completed in Elizabeth Township Sanitary 7 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

11 While the Lovedale and Simpson-Howell pump stations currently pump sewage to the Buena Vista sewage treatment plant, they are physically located in the Elizabeth Borough watershed and can flow by gravity to the Wylie Run pump station. A proposal to construct a gravity sewer along Lovedale Road was considered but determined to not be feasible at the time based on preliminary cost estimates. If it is constructed, Lovedale Pump Station would be eliminated from this sewershed along with diversion of Simpson Howell Pump Station to the Wyle Run system. The Lovedale interceptor, when constructed, will also extend service to a portion of Lincoln Borough. II.B.2. Elizabeth Borough Sewershed Sewage from about 1,210 Township customers is collected and conveyed by the Wylie Run Pump Stations. Sewage is pumped to Elizabeth Borough s sewage treatment plant for treatment and discharge to the Monongahela River. A service contract has been in place since the mid- 1950s. Limited service (for conveyance only) is provided to Lincoln Borough, a neighboring community (17 services allowed by agreement). A substantial portion of Elizabeth Township slopes westerly towards the Monongahela River and Elizabeth Township sewage is delivered to and is treated at Elizabeth Borough Municipal Authority (EBMA) sewage treatment plant. The collection system and a pump station (Wylie Run) within the Township are owned and operation by the Township. Sewage delivered to Elizabeth Borough s sewage treatment plant is treated and discharged into the Monongahela River. Elizabeth Township s sewers connect to the Elizabeth Borough combined sewer system at two locations. A small area near the Borough known as Blaine Hill also connects directly to the Borough s collection system. Area 1: This is the area which generally lies in the Wylie Run Watershed. This area consists of Happy Hollow Road, Lovedale Road and an area identified as Fox Run which is under development. Collection system in this area consists of about 15,800 feet of 8 through 18 diameter sewers. The collection lines discharge into a pump station identified as Wylie Run Pump Station. This pump station is located north of Elizabeth Borough near the confluence of the Monongahela River and Wylie Run. A 10 diameter force main from this pump station delivers sewage to the head of the Borough s sewage treatment plant. These facilities were constructed in the 1960s. Facilities in this watershed serve 9 existing customers from the Patterson Hill Area of Lincoln Borough. Elizabeth Township Sanitary 8 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

12 Area 2: This area lies along the southern boundary of the Township and is easily accessible from PA Route 51. It generally covers the Weigle s Hill, Opferville, Fallen, Timber Run and Firden areas of the Township. Area 2 did not have any sewer lines until To comply with an order issued by the PA DEP in 1994, Elizabeth Township in cooperation with adjoining Forward Township, constructed a 10 diameter interceptor sewer along Fallen Timber Run and PA Route 51. The collection systems serving these areas were constructed by ETSA and connect to the interceptor at three locations. The interceptor along Fallen Timber Run is about 9,700 feet long and connects directly to the Monongahela River. Sewage from Area 2 is them pumped to the borough s sewage treatment plant through 8 diameter force main. The interceptor along Fallen Timber Run also collects sewage from about 320 residences in Forward Township and leachate from KRS Landfill located on Route 51. The Township collects a transmission fee from Forward Township for this service. EBMA s sewage treatment plant was originally constructed in the 1950s to handle a flow of 0.6 MGD. The plant was upgraded in 1970 by adding additional aeration tanks. A major expansion was carried out in 1992 and 1993 raising the capacity to 1.2 MGD. This expansion enabled EBMA to accept additional customers along Fallen Timber Run (PA Route 51) and along Happy Hollow Road (in Elizabeth Township). EBMA is beginning the process to evaluate flows and determine if and what upgrades will be required at the sewage treatment plant under the Act 537 Plan process. The collection system within Elizabeth Borough is owned and operated by the EBMA and is a combined sewer system which receives both sanitary and storm water flows. The Borough s pump station is sized to meet all dry weather flows. In prolonged wet weather, flow delivered to the Borough s pump station can exceed the capacity pumps. The flows then back-up in the collection system which is owned and operated by the EBMA. Five (5) permitted combined sewage overflow structures discharge excess flows to the Monongahela River. Major improvements to the overflow and control structures were carried out in 2001 with funding from the U.S. Corps of Engineers. A project to construct a gravity sewer along Wylie Run/Lovedale Hollow was considered by ETA but was determined to not be feasible from the cost standpoint at the time. If constructed, the Lovedale Pump Station could be eliminated. The Simpson-Howell Pump Station would be diverted to convey flow to the Wylie Run Pump Station and then on to the Elizabeth Borough STP. About 413 customers would then be diverted from the Buena Vista Watershed to the Elizabeth Borough Watershed. This would release average daily capacity at the Buena Vista plant, future pump station and the collection system. This proposal has received planning approved by the PA DEP. Elizabeth Township Sanitary 9 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

13 II.B.3. McKeesport Sewershed Sewage from about 1,400 Township customers is collected and conveyed by gravity to the Boston Pump Station near the Boston Bridge on PA Route 48. From this point sewage is pumped across the Youghiogheny River into the Versailles Borough system. Sewage is ultimately conveyed to and treated at the Municipal Authority of the City of McKeesport s (MACM) sewage treatment plant and discharged into the Monongahela River. A service contract has been in place since the 1960s. These areas slope toward the Youghiogheny River in the north end of Elizabeth Township and are identified as Boston and Greenock. No significant growth has occurred in this watershed in the last 20 years. The collection system consists mostly of vitrified clay pipes and is in good to fair condition. The system has adequate capacity to handle existing and projected population in the sewershed. This sewershed has the following major facilities: Sewage Collection System consisting of approximately 142,511 feet of 8 through 27 diameter sewer pipes. Boston Pump Station located below the Boston Bridge on the bank of the Youghiogheny River. A 12 ductile iron force main attached to the Boston Bridge delivers sewage across the river to the existing sewer in the Borough of Versailles. Sewage is ultimately conveyed to the sewage treatment plant owned and operated by the MACM. Substantial efforts and funds were expended between 1984 and 1986 to perform sewer system evaluation by internal inspection. Major defects were repaired; however, infiltration and inflow continue to be a problem during rain events. There is now a ten (10) year corrective action plan in effect to rehabilitate this system. This was a condition of approval by PA DEP for the McKeesport Act 537 Plan approval. The Boston Pump has three pumps, each sized to deliver 950 GPM. Sewage is delivered across the Youghiogheny River through a 12 diameter force main which is supported on the Boston Bridge structure. Plans are underway to reconstruct the Boston Pump Station to handle wet weather flows and redirect the flows along the Great Allegheny Passage to a vault and force main connection constructed by MACM with flows directed through the MACM West Shore Pump Station which ultimately discharges to the McKeesport treatment plant. A project identified as Turkeyfoot-Hankins Sewer System was undertaken by ETSA with grant assistance from Allegheny County Department of Development through the Twin Rivers Council of Governments (TRCOG). This project is completed and has added approximately 40 customers to this watershed. Elizabeth Township Sanitary 10 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

14 III. MAINTENANCE, REPAIR AND OPERATION OF THE SEWER SYSTEM III.A. GENERAL The Township owns, operates and maintains all components of the Sewer System within the municipal boundaries of Elizabeth Township. The Township provides only sewage conveyance and treatment service to communities outside of Elizabeth Township. Each separate municipality owns, operates, and maintains their individual sewage collection systems. Since 2007 the Authority had contracted Veolia Water, Inc. to oversee operations of its treatment facility. In 2009, the parties extended this Agreement to enable Veolia Water to provide workers, on an as needed basis, for collection systems and pump station monitoring and repairs. The current agreement is for a 6 month renewable term beginning on July 1, Under the terms of the current Agreement, Veolia Water, Inc. receives a sum of $21, per month for the operation of the treatment facility and collection system. The contract workers are paid for additional work on an as needed basis according to the schedule of duties and related fees as provided in the Agreement. In July 2016, this Agreement was renewed with the Township at a sum of $29,438 per month for operation of the sewage treatment plant and collection system. The Township conducts an ongoing program for routine and preventive maintenance of the sewer system. Repairs are completed on an as needed basis. Some of the more significant maintenance and repair activities completed in 2015 include the cleaning and televising of 62,000 linear feet of the sewers, 702 linear feet of excavation repairs and 327 linear feet of lining repairs, a new pump at the Boston Pump Station, rebuilding pump and other miscellaneous repairs at the remote pump stations as well as the WWTP, and an on-going program for cleaning flushing sewer lines and clearing of right-of-way for access to the sewer lines. In 2014, ETA began a dye testing program for the McKeesport Sewershed to detect and eliminate illegal storm water connections that are contributing to the I&I problem in this sewershed. There were 966 dye tests completed in 2015, thus completing all dye testing required in the McKeesport Sewershed. The properties of the sewer systems have generally been maintained in good repair and sound operating conditions. An ongoing collection system Operation and Maintenance program in the Buena Vista sewershed is required under the Consent Order. Additional I/I reduction work will be needed in the McKeesport and Elizabeth Borough sewersheds to reduce excess wet weather flows. In 2015, the Operation and Maintenance program was expanded to include all three sewersheds in Elizabeth Township. Elizabeth Township Sanitary 11 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

15 III.B. HISTORY OF THE ACT 537 PLAN In order to comply with the Pennsylvania Department of Environmental Protection (PADEP) and the United States Environmental Protection Agency (USEPA) requirements, the Township initiated the Act 537 Sewage Facilities Planning Study process in October On October 31, 2008 Elizabeth Township Sanitary Authority submitted an Act 537 Sewage Facilities Plan update to the PA DEP recommending abandonment of the Buena Vista sewage treatment plant and conveyance of sewage via pumping and gravity sewers to the MACM for treatment and disposal. This alternative was determined to be the most cost effective, long term solution to meet the sewage needs within the Buena Vista and McKeesport sewersheds at that time. The scope of the project included the following major elements: 1. Construct a new pump station at the Buena Vista STP site. The new Buena Vista pump station will be sized to pump all Buena Vista sewershed flows, including peak wet weather flows, a total distance of 58,200 lf to a new pump station to be constructed by the City of McKeesport Municipal Authority. 2. Construct approximately 52,200 lf of new force main to convey flows from the new Buena Vista pump station to a point of connection with City of McKeesport Municipal Authority in Liberty Borough. The force main was anticipated to generally follow an alignment along the Youghiogheny River in the formed CSX Railroad right of way. 3. Construct a new Boston pump station and connect it to the new force mains. The existing force main that conveys flows across the Boston Bridge to the MACM collection system will be taken out of service at a future date. 4. Connect the new Authority force main to a force maim owned and operated by The Municipal Authority of the City of McKeesport. The project was approved by the PADEP and design and permitting efforts were moving forward. Service agreements with MACM have been negotiated and executed. The estimated cost for this project was approximately $27.8 million and was to be paid out of current and future bond issues. McKeesport also adopted a Plan Update of its own dated July 2009 to accept the Buena Vista flows in its WPCP upgrade project. The Implementation Schedule in the October 2008 Plan Update called for all construction of the new sewerage facilities to be completed by December 31, However, the October 2008 Plan Update was never implemented, the ETSA was dissolved, and the ETA Board was appointed. Elizabeth Township Sanitary 12 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

16 The ETA elected to contest the requirements of the 2008 ACO, evaluating options to rehabilitate and maintain the existing Buena Vista Sewage Treatment Plant. In December 2015, the ETA submitted Revised Act 537 Plans for the Boston and Buena Vista Watersheds due to treatment cost increases from the MACM. The new recommended option included the following. 1. Reconstruction of the Boston Pump Station to increase capacity to handle both dry weather and wet weather flows. 2. Installation of 1.64 miles of forcemain from the Boston Pump Station to the new MACM forcemain valve vault to convey flows from the Boston Sewershed to the City of McKeesport for treatment. 3. Upgrade the Buena Vista Pump Station to handle both dry weather and wet weather flows. 4. Replace the existing Buena Vista Sewage Treatment Plant with a new Sequencing Batch Reactor Treatment Plant to treat all flows from the Buena Vista Sewershed. The total project was estimated to cost approximately $20.5 million to be paid out of current and future bond issues. The DEP reviewed only the Buena Vista Watershed Act 537 Plan and provided an unfavorable comment letter on March 1, Based on the content of the letter, the Township elected to rescind both Revised Act 537 submissions. In March 2016, the Township dissolved the ETA and took control of all operation and maintenance of assets. In May 2016, the Township signed into a new Consent Order and Agreement (COA) with the PA DEP, which stipulates that the Township must convey all flow to the Municipal Authority of the City of McKeesport, as well providing other milestone requirements and timelines. A stipulation of the new COA is that the Township is required to submit a final Revised Official Act 537 Plan, with updated flows and alternative alignments to convey flow to the MACM. In November 2016, KLH Engineers submitted this Plan on behalf of the Township. The Plan defines the following objectives as related to the future sanitary operations. 1. Construct a new pump station and equalization basin at the Buena Vista STP site. The new Buena Vista pump station will be sized to pump Buena Vista flows a total distance of 43,500 LF to an upgraded Boston Pump Station. 2. Upgrade the Boston Pump Station to convey all flow from the Boston Sewershed, as well as flows from the new Buena Vista Pump Station. 3. Install approximately 8,600 LF of forcemain from the Boston Pump Station to the new MACM forcemain valve vault to convey flows from the Boston Sewershed to the City of McKeesport for treatment. This project is estimated to cost $23.0 million to be paid out of current and future bond issues. Elizabeth Township Sanitary 13 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

17 III.C. WORK COMPLETED IN 2016 An aggressive design schedule was adopted to meet implementation schedules contained in the Consent Order and Agreement. The Act 537 was updated and submitted to the PA DEP on November 9, Design is underway to meet the deadlines set forth in the Agreement, outlined as follows. TABLE 1 Schedule of Implementation Activity Completion Date Submit the Plan Update to the PADEP November 9, 2016 * PADEP Review and Approval of the Plan Update December 31, 2016 Complete Design December 31, 2016 Submit Necessary WQM Part II Permits January 8, 2017 ** Obtain Construction Financing July 15, 2017 Begin Construction September 1, 2017 Decommission BVSTP April 1, 2018 *** Complete Construction May 1, 2018 **** * Within 180 days of May 13, 2016 Consent Order and Agreement ** Within 45 days of Plan approval, or 240 days after execution of COA, whichever is later *** Within 24 months of the execution of COA May 13, 2018 deadline **** Within 750 days of issuance of Part II Permits (assumed to be March 2017) Elizabeth Township Sanitary 14 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

18 IV. EXISTING AND PROJECTED SEWER SYSTEM CUSTOMERS IV.A. GENERAL According to Township billing records as of October 2016, there were approximately 5,148 customers within Elizabeth Township, as well as 45 in Forward Township and 506 in Suttersville/Sewickley. The trend in customer growth is shown in the following table. TABLE 2 Elizabeth Township Customer Breakdown Residential 4,915 4,871 4,934 4,939 4,944 4,949 4,947 4,930 Commercial TOTAL 5,155 5,107 5,142 5,149 5,160 5,164 5,162 5,148 When looking at sewer revenue, it is important to note that higher use customers are billed as multiple EDUs. The following is a breakdown of the total EDUs billed as of October TABLE 3 EDU Breakdown Elizabeth Township Residential 4,952 Commercial 874 Forward Township 45 Suttersville / Sewickley 506 TOTAL 6,377 Elizabeth Township Sanitary 15 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

19 The top ten (10) highest billed customers during 2016 are as follows. TABLE 4 Ten Largest Sewer Customers January 2016 thru October 2016 Customer EDUs YTD Bill Projected 2016 Virginia Manor Inc 122 $43,227 $64,841 Elizabeth Forward High School 27 $24,207 $36,311 Five Star Quality Care 33 $17,411 $26,117 Mt. Vernon Apartments #4 32 $12,462 $18,693 Mt. Vernon Apartments #1 32 $12,287 $18,431 Mt. Vernon Apartments #3 32 $11,818 $17,727 Mt. Vernon Apartments #5 32 $11,220 $16,830 Youghiogheny County Club 26 $8,736 $13,104 Mt. Vernon Apartments #6 19 $7,890 $11,835 Mt. Vernon Apartments #2 19 $7,742 $11,613 TOTAL 374 $157,000 $235,502 The total estimated sewer charge revenues from Elizabeth Township customers during this time period are as follows. TABLE 5 Year 2016 Billing and Revenue January 2016 thru October 2016 EDUs YTD Bill Projected 2016 Elizabeth Township 5,826 $2,528,543 $3,792,815 Forward 45 $31,447 $41,930 Suttersville/Sewickley 506 $155,607 $207,476 TOTAL 6,377 $2,715,597 $4,042,221 The total reported Year 2015 operating sewer revenue was $4,071,835. Elizabeth Township Sanitary 16 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

20 IV.B. WWTP OPERATIONS The following tables depict the average monthly flows and organic loadings at the STP. TABLE 6 Buena Vista Sewage Treatment Facility 2011 to 2015 Monthly Average Hydraulic Loadings (MGD) Month January February March April May June July August September October November December Annual Average These hydraulic loadings do not include any sanitary sewer overflows that occurred prior to the STP. Elizabeth Township Sanitary 17 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

21 TABLE 7 Buena Vista Sewage Treatment Facility 2011 to 2015 Monthly Average Organic Loading (#/DAY) Month January February March April May June 1,061 1,067 1,013 1,174 1,027 July 1, ,284 August September October November December 1,565 1, Annual Average These organic loadings do not include any sanitary sewer overflows that occurred prior to the STP. The following figures depict the 5-Year measured and projected hydraulic and organic loadings at the STP. Elizabeth Township Sanitary 18 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

22 FIGURE MGD 5-Year Measured and Projected Hydraulic Loads Buena Vista Sewage Treatment Plant, PA Precip (in) Jul 2020 Apr 2020 Jan 2020 Oct 2019 Jul 2019 Apr 2019 Jan 2019 Oct 2018 Jul 2018 Apr 2018 Jan 2018 Oct 2017 Jul 2017 Apr 2017 Jan 2017 Oct 2016 Jul 2016 Apr 2016 Jan 2016 Oct 2015 Jul 2015 Apr 2015 Jan 2015 Oct 2014 Jul 2014 Apr 2014 Jan 2014 Oct 2013 Jul 2013 Apr 2013 Jan 2013 Oct 2012 Jul 2012 Apr 2012 Jan 2012 Oct 2011 Jul 2011 Apr 2011 Jan 2011 Average Flows Hydraulic Design Capacity 3-Month Max Flows FIGURE 2 4,000 5-Year Measured and Projected Organic Loads Buena Vista Sewage Treatment Plant, PA ,500 3,000 2,500 2,000 1,500 1, Jul 2020 Apr 2020 Jan 2020 Oct 2019 Jul 2019 Apr 2019 Jan 2019 Oct 2018 Jul 2018 Apr 2018 Jan 2018 Oct 2017 Jul 2017 Apr 2017 Jan 2017 Oct 2016 Jul 2016 Apr 2016 Jan 2016 Oct 2015 Jul 2015 Apr 2015 Jan 2015 Oct 2014 Jul 2014 Apr 2014 Jan 2014 Oct 2013 Jul 2013 Apr 2013 Jan 2013 Oct 2012 Jul 2012 Apr 2012 Jan 2012 Oct 2011 Jul 2011 Apr 2011 Jan 2011 Average Loads Organic Design Capacity Max Loads Elizabeth Township Sanitary 19 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

23 C. CAPITAL EXPENDITURES Beyond the current regulatory mandated capital project previously discussed, no other major capital projects are planned. Elizabeth Township Sanitary 20 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

24 V. REVIEW OF FINANCIAL CONDITION V.A. OUTSTANDING FINANCING The Township s long term debt includes debt service on the 2003, 2008 and 2009, 2011, and 2012 bond issues and is discussed in the following sections: 1. Revenue Bonds Series 2003 The ETSA issued a Sewer Revenue Bond series of 2003 in the amount of $9,165,000. The bond issue was used for the following: 1. Retiring the General Obligation Bonds issued by Elizabeth Township in The Authority had no assumed the obligation of those Bonds through the new bond issue. 2. Completion of the Belsar-High Street sewer extension in Purchase of the building which had been previously rented for the Authority office. 4. Construction of the Boyds Hollow interceptor in 2008 to eliminate a pump station. 5. Provide the local share of the Turkeyfoot-Hankins sewer project in The 2003 Bonds funds were fully expended in 2008 and the remaining debt was refinanced in a 2012 bond issue. 2. Revenue Bonds Series 2008 In December 2008, the ETSA issued a Sewer Revenue Bond Series of 2008 in the amount of $5,000,000. This bond issue provided funds to finance capital improvements to the sewer system, including, but not limited to, expansion of sewer lines and construction of pump stations to send flows to the MACM wastewater treatment facility. The 2008 Bonds funds were fully expanded in 2008 and the remaining debt was refinanced in a 2012 bond issue. 3. Revenue Bonds Series 2009 In December 2009, the ETSA issued a Sewer Revenue Bond Series of 2009 in the amount of $8,000,000. This bond issue provided funds to finance capital improvements to the sewer system, including but not limited to, expansion of sewer lines and construction of pump stations to send flows to the City of McKeesport wastewater treatment facility. As of October 31, 2016 the series 2009 Construction Fund balance was $2,136, Elizabeth Township Sanitary 21 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

25 4. Revenue Bond Series 2011 In December 2011, the ETSA issued a Sewer Revenue Bond Series of 2011 in the amount of $8,000,00. This bond issue provided funds to finance capital improvements to the sewer system, including but not limited to, expansion of sewer lines and construction of pump stations to send flows to the City of McKeesport wastewater treatment facility. As of October 31, 2016 the series 2011 Construction Fund balance was $7,217, Revenue Bonds Series 2012 In July 2012, the ETSA issued a Sewer Revenue Bond series of 2012 in the amount of $15,925,000. This bond issue provides funds to advance refund outstanding Series 2003 and Series 2008 bonds and to finance capital improvements to the sewer system, including but not limited to, expansion of sewer lines and construction of pump stations to send flows to the City of McKeesport wastewater treatment facility. As of October 31, 2016 the series 2011 Construction Fund balance was $1,850, The 2009, 2011 and 2012 Revenue Bonds will require the Township to pay the Trustee semiannual payments according to the Debt Service Schedule shown in Appendix B. It is the Township s obligation to establish a sewer service rate schedule which will generate adequate revenues to meet the new debt service requirements in addition to the costs of operation and maintenance of the existing system in compliance with the requirements of State and Federal regulations. V.B. STATUS OF FUNDS The following is the status of sanitary funds as reported by the Township as of October 31, TABLE 8 Balance of Funds Fund Balance Operating Fund $ 1,508, Capital Fund 1,385, Debt Service Cash Fund 513, Debt Service Reserve Fund 1,786, Total Funds $ 5,195, The Township has all trust funds invested in interest bearing instruments to maximize interest returns at minimal risk. Elizabeth Township Sanitary 22 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

26 V.C. ESTIMATED FY 2017 OPERATING REVENUE, EXPENSES & CAPITAL EXPENDITURES The following Tables 9, 10, and 11 present the following. Table 9 Table 10 Table 10 Projected and Budgeted Revenues Projected and Budgeted Operating Expenses Projected and Budgeted Net Income TABLE 9 FY 2016 Projected Revenues and FY 2017 Budgeted Revenues OPERATING REVENUES PROJECTED INCREASE (DECREASE) EDUs REVENUES BUDGET 2016 VS 2017 Elizabeth T ownship Sewer Revenue 5,826 $ 3,800,161 $ 3,860,000 $ 59,839 Suttersville/Sewickley Sewer Revenue , ,000 7,524 Forward T ownship Sewer Revenue ,929 40,000 6,400 Subtotal Operating Revenues 6,377 $ 4,049,566 $ 4,115,000 $ 73,763 NON-OPERATING REVENUES Tap-In Fees $ 24,000 $ 30,000 $ 6,000 Interest Income 18,632 17,000 (1,632) State Grant Act 339 2,500 2,500 - Sewer Certifications 8,225 9, Sale of Property - 125, ,000 Miscellaneous Income ,901 Subtotal Non-Operating Revenues $ 53,596 $ 184,000 $ 132,044 TOTAL REVENUE $ 4,103,162 $ 4,299,000 $ 205,807 Elizabeth Township Sanitary 23 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

27 TABLE 10 FY 2016 Projected Operating Expenses and FY 2017 Budgeted Operating Expenses OPERATING EXPENSES PROJECTED INCREASE (DECREASE) COSTS BUDGET 2016 VS GENERAL ADMINISTRATION $ 156,601 $ 142,150 $ (14,451) 5064 PERMIT FEES $ 1,250 $ 1, LAW/LEGAL FEES 99,070 12,350 (86,720) 5500 ENGINEERING FEES 461,329 65,000 (396,329) 5600 SEWAGE T REAT MENT PLANT 539, ,600 (39,728) 5683 ACO EXPENSE - MONIT ORING 62,737 69,000 6, TREATMENT /TRANSPORT FEE'S 1,081,059 1,206, , SLUDGE DISPOSAL 95, ,000 8, SANITARY SEWER LINES 266,405 18,800 (247,605) 6000 PUMP ST AT IONS 65,598 46,000 (19,598) 6100 SANITARY AUTHORITY VEHICLES 86,463 23,317 (63,146) 6200 PAYROLL & LABOR 41,837 33,480 (8,357) 6400 REFUNDS/REIMBURSEMENT S 2,026 2,000 (26) TOTAL OPERATING EXPENSE $ 2,959,022 $ 2,223,197 $ (735,825) Elizabeth Township Sanitary 24 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

28 TABLE 11 FY 2016 Projected Net Income and FY 2017 Budgeted Net Income PROJECTED BUDGET Subtotal Operating Revenues $ 4,049,566 $ 4,115,000 Subtotal Non-Operating Revenues $ 53,596 $ 184,000 TOTAL REVENUE $ 4,103,162 $ 4,299,000 OPERATING EXPENSES 5000 GENERAL ADMINISTRATION $ 156,601 $ 142, PERMIT FEES $ 1,250 $ 1, LAW/LEGAL FEES 99,070 12, ENGINEERING FEES 461,329 65, SEWAGE T REAT MENT PLANT 539, , ACO EXPENSE - MONIT ORING 62,737 69, TREATMENT /TRANSPORT FEE'S 1,081,059 1,206, SLUDGE DISPOSAL 95, , SANITARY SEWER LINES 266,405 18, PUMP ST AT IONS 65,598 46, SANITARY AUTHORITY VEHICLES 86,463 23, PAYROLL & LABOR 41,837 33, REFUNDS/REIMBURSEMENT S 2,026 2,000 Subtotal Operating Expense $ 2,959,022 $ 2,223,197 DEBT SERVICE REQUIREMENTS Series Bond $ 1,778,746 $ 1,777,504 Subtotal Debt Service Expense $ 1,778,746 $ 1,777,504 TOTAL EXPENSE $ 4,737,768 $ 4,000,701 NET INCOME (DEFICIT) $ (634,606) $ 298,299 Elizabeth Township Sanitary 25 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

29 As seen in Table 10, the Township has drastically cut expenses by consolidating Township and prior ETA staff and resources. The projected FY 2017 Net Income is therefore $298,299. In compliance with Section 7.14 of the 2003 Trust Indenture the following is a computation of the coverage requirement for the Fiscal Year 2017 Budget. Calculated Coverage for the current year s bond debt requirement for Fiscal Year 2017: Budget FY 2017 Gross Revenues $ 4,299,000 Less Operating Expenses 2,223,197 Net Operating Revenue $ 2,075,803 Annual Bond Debt Service 2012 Series Bond 1,777,504 Total Annual Bond Debt Service $ 1,777,504 Bond Coverage 117% The Township s projected sanitary revenues are adequate to meet the debt service coverage requirement of 110% defined in 2003 Trust Indenture. Elizabeth Township Sanitary 26 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

30 VI. SCHEDULE OF SEWER CHARGES Sewer rates were adjusted in 2009, 2010 and 2012 to cover the sewer system expenditures and long term debt service. A listing of rate adjustments since 2002 is shown in the table below. Effective Date TABLE 12 Sewer System Rates Historic & Current Charge Per Month Monthly Fee Charge Per Quarter Gallons Allowed Minimum Per Month Gallons Allowed Minimum Per Quarter Cost Per Additional 1,000 Gallons Residential 1/1/2012 $ ,000 6,000 $ 7.50 Commercial 1/1/2012 $ ,000 6,000 $ 7.50 Residential 1/1/2010 $ ,000 6,000 $ 6.00 Commercial 1/1/2010 $ ,000 6,000 $ 6.00 Residential 1/1/2009 $ ,000 6,000 $ 4.95 Commercial 1/1/2009 $ ,000 6,000 $ 4.95 Residential 1/1/ $ ,000 $ 3.95 Commercial 1/1/2008 $ $ ,000 $ 3.95 Residential 1/1/ $ ,000 $ 3.95 Commercial 1/1/2007 $ $ ,000 $ 3.95 Residential 1/1/ $ ,000 $ 3.95 Commercial 1/1/2006 $ $ ,000 $ 3.95 The following is a list of the Township s current schedule of charges, effective January 1, 2016: Sewer Tap-In Fee = $6,000 Base Rate Monthly Charge = $42.00 / EDU Consumption Monthly Charge = $7.50 / 1,000 gal in excess of 2,000 gal Elizabeth Township Sanitary 27 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No

31 VII. CONCLUSIONS AND RECOMMENDATIONS The sewer system has been subject to excessive flows from the intrusion of storm water and groundwater. This is a result of system age, I/I from private laterals and wet weather. A significant amount of this work has been competed or is in progress for removal of excess flows in the Buena Vista sewershed. The capital requirements contained in this report are based on estimates and are proposed to be implemented on an aggressive schedule. The Township will need to continue to monitor the implementation schedule of the capital requirements and the actual costs incurred versus the project estimates. The Township will need to evaluate the sewer use charges annually to ensure adequate revenue is available to fund the capital requirements and still meet the coverage requirements of the Trust Indenture. After reviewing the Township s current budget and the projected budget for Fiscal Year 2017, it was determined that the Township s revenues do meet the coverage requirements of the 2003 trust indenture. The Township has drastically cut expenses by consolidating Township and prior ETA staff and resources. The Township s projected revenues will also allow it to continue with the implementation of its proposed 537 Plan. We recommend that the proposed Sanitary budget for Fiscal Year 2017 be adopted and that the current user charges be maintained at their present levels. We also recommend that the Township continue with the implementation of the repairs, replacements, and the capital improvements detailed in the Revised Official Act 537 Plan. ACKNOWLEDGEMENTS The Township is governed by a Board of seven (7) elected Commissioners. The Board members and the expiration dates of their current terms are as follows: Rob Rhoderick, President Joanne Beckowitz, Vice President Donald Similo J. Paul Saxon Andrew Kuzma Jane Blake-Kerin Chris Evans Elizabeth Township Sanitary 28 FY 2017 Consulting Engineer s Annual Report November 2016 Ref. No